Invest in Royce Mutual Funds

Royce mutual funds invest in micro- and small-cap companies, which can be so new, unstable or small that they fall under the radar of the SEC and the Nasdaq, making them hard to research and track efficiently. It's no surprise, then, that these volatile companies are risky investments requiring a mutual funds manager who specializes in them.

Learn the basics. Visit the U.S. Securities and Exchange Commission Web site, listed in Resources below, for definitions on micro- and small-cap companies, the backbone of Royce mutual fund portfolios.

Understand the inherent risks involved in investing in these and other "penny stocks," stocks whose total market capitalization is less than $50 million.

Visit the Royce Funds Web site and explore their mutual funds investment options. (Their site is very thorough and includes interviews with their portfolio manager, recent awards and plenty of background information, too.)

Register for a financial advisor for financial services, tools and Royce Funds literature.

Discuss, with your own broker or a Royce representative, the options available to you and that fit within your budget.

Ask for a prospectus for each Royce mutual fund in which you're planning to invest.

Read each prospectus carefully before committing to a mutual fund (or mutual funds).

Contact your broker or Royce Funds financial advisor to make your investment.

Tips & Warnings

• Eliminate risk by investing in mutual funds that focus on reducing volatility rather than those that make big up and down swings.
• Look for growing businesses that have a strong balance sheet, a record of success and lots of potential. Or find a fund manager that looks for these qualities in businesses or in funds that include those businesses.
• Research companies that are trading below their estimated current worth.
• Due to their relative small size, lack of a proven track record and general inexperience in the marketplace, micro- and small-cap stocks are some of the riskiest investments for inexperienced investors.
• Microcap stocks are subject to large price fluctuations because of their small volume; this also subjects them to price manipulation and other volatile behavior.
• Because small companies do not have to register with the SEC, getting accurate information about particular companies, including their products, services and finances, can be difficult.