| The Royce Funds | 745 Fifth Avenue New York, NY 10151 212-508-4500 800-221-4268 e-mail: funds@roycefunds.com website: www.roycefunds.com |
September 7, 2017 |
| Re: | Annual Report to Shareholders for the year ended December 31, 2016 for each of The Royce Fund (File No. 811-03599) and Royce Capital Fund (File No. 811-07537 |
| Response: We confirm that all series of the above Fund’s endeavor to include BDC’s in their calculations of acquired fund fees and expenses for purposes of making disclosures required in the Fee Tables of their Prospectuses. We note, however, that upon reviewing such calculations to support our response to your comment we discovered that one BDC held in Royce Micro-Cap Fund (“RMC”), Royce Low-Priced Stock Fund (“RLP”) and Royce Capital Fund – Micro-Cap Portfolio was miscoded on our systems. This security, Newtech Business Security Corp., therefore was not properly identified by the Funds as a BDC and not properly reflected in their calculations of acquired fund fees and expenses. As a result we have recalculated those expenses, as of December 31, 2016, and supplemented each Fund’s Prospectus to reflect the correct acquired fund fees and expense numbers. Copies of the Prospectus Supplements, filed with the SEC on September 6, 2017, are attached hereto. |
| Very truly yours, | ||
/s/ Peter K. Hoglund Peter K. Hoglund Treasurer | /s/ John E. Denneen John E. Denneen Secretary | |
| cc: | Christopher D. Clark | |
| Mary Macchia | ||
| Frank P. Bruno, Esq. | ||
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment) | ||
| Investment Class | Service Class | |
| Management fees | 1.25% | 1.25% |
| Distribution (12b-1) fees | 0.00% | 0.25% |
| Other expenses | 0.11% | 0.15% |
| Acquired Fund Fees and Expenses | 0.08% | 0.08% |
Total annual Fund operating expenses | 1.44% | 1.73% |
| Fee waivers and/or expense reimbursements | 0.00% | -0.07% |
Total annual Fund operating expenses after fee waivers and/or expense reimbursements | 1.44% | 1.66% |
Royce has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the Service Class’s net annual operating expenses (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below 1.58% through April 30, 2018. Total annual Fund operating expenses may differ from the expense ratio in the Fund’s Financial Highlights because the highlights include only the Fund’s direct operating expenses and do not include acquired fund fees and expenses, which reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. | ||
| EXAMPLE | ||
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s total operating expenses (net of fee waivers and/or expense reimbursements for the Service Class in year one) remain the same. Although your actual costs may be higher or lower, based on the assumptions your costs would be: | ||
| Investment Class | Service Class | |
| 1 Year | $147 | $169 |
| 3 Years | $456 | $538 |
| 5 Years | $787 | $932 |
| 10 Years | $1,724 | $2,035 |
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment) | |
| R Class | |
| Management fees | 1.00% |
| Distribution (12b-1) fees | 0.50% |
| Other expenses | 1.32% |
| Acquired Fund Fees and Expenses | 0.10% |
Total annual Fund operating expenses | 2.92% |
| Fee waivers and/or expense reimbursements | -0.98% |
Total annual Fund operating expenses after fee waivers and/or expense reimbursements | 1.94% |
Royce has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the R Class’s net annual operating expenses (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below 1.84% through April 30, 2018 and at or below 1.99% through April 30, 2027. Total annual Fund operating expenses may differ from the expense ratio in the Fund’s Financial Highlights because the highlights include only the Fund’s direct operating expenses and do not include acquired fund fees and expenses, which reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. | |
| EXAMPLE | |
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s total operating expenses (net of fee waivers and/or expense reimbursements for the periods noted above) remain the same. Although your actual costs may be higher or lower, based on the assumptions your costs would be | |
| R Class | |
| 1 Year | $197 |
| 3 Years | $640 |
| 5 Years | $1,110 |
| 10 Years | $2,409 |
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment) | |
| Consultant Class | |
| Management fees | 1.25% |
| Distribution (12b-1) fees | 1.00% |
| Other expenses | 0.28% |
| Acquired Fund Fees and Expenses | 0.09% |
Total annual Fund operating expenses | 2.62% |
| Total annual Fund operating expenses may differ from the expense ratio in the Fund’s Financial Highlights because the highlights include only the Fund’s direct operating expenses and do not include acquired fund fees and expenses, which reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. | |
| EXAMPLE | |
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s total operating expenses remain the same. Although your actual costs may be higher or lower, based on the assumptions your costs would be | |
| Consultant Class | |
| 1 Year | $265 |
| 3 Years | $814 |
| 5 Years | $1,390 |
| 10 Years | $2,954 |
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment) | ||||||
| Investment Class | Service Class | Institutional Class | ||||
| Management fees | 1.00% | 1.00% | 1.00% | |||
| Distribution (12b-1) fees | 0.00% | 0.25% | 0.00% | |||
| Other expenses | 0.31% | 0.27% | 0.21% | |||
| Acquired Fund Fees and Expenses | 0.10% | 0.10% | 0.10% | |||
Total annual Fund operating expenses | 1.41% | 1.62% | 1.31% | |||
| Fee waivers and/or expense reimbursements | -0.07% | -0.03% | 0.00% | |||
Total annual Fund operating expenses after fee waivers and/or expense reimbursements | 1.34% | 1.59% | 1.31% | |||
Royce has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the Investment and Service Classes’ net annual operating expenses (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below 1.24% and 1.49%, respectively, through April 30, 2018. Total annual Fund operating expenses may differ from the expense ratio in the Fund’s Financial Highlights because the highlights include only the Fund’s direct operating expenses and do not include acquired fund fees and expenses, which reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. | ||||||
| EXAMPLE | ||||||
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s total operating expenses (net of fee waivers and/or expense reimbursements for the Investment and Service Classes in year one) remain the same. Although your actual costs may be higher or lower, based on the assumptions your costs would be: | ||||||
| Investment Class | Service Class | Institutional Class | ||||
| 1 Year | $136 | $162 | $133 | |||
| 3 Years | $439 | $508 | $415 | |||
| 5 Years | $764 | $878 | $718 | |||
| 10 Years | $1,685 | $1,919 | $1,579 | |||
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment) | ||
| Investment Class | Service Class | |
| Management fees | 1.25% | 1.25% |
| Distribution (12b-1) fees | 0.00% | 0.25% |
| Other expenses | 0.23% | 0.33% |
| Acquired Fund Fees and Expenses | 0.09% | 0.09% |
Total annual Fund operating expenses | 1.57% | 1.92% |
| Fee waivers and/or expense reimbursements | 0.00% | -0.22% |
Total annual Fund operating expenses after fee waivers and/or expense reimbursements | 1.57% | 1.70% |
Royce has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the Service Class’s net annual operating expenses (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below 1.61% through April 30, 2018. Total annual Fund operating expenses may differ from the expense ratio in the Fund’s Financial Highlights because the highlights include only the Fund’s direct operating expenses and do not include acquired fund fees and expenses, which reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. | ||
| EXAMPLE | ||
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s total operating expenses (net of fee waivers and/or expense reimbursements for the Service Class in year one) remain the same. Although your actual costs may be higher or lower, based on the assumptions your costs would be: | ||
| Investment Class | Service Class | |
| 1 Year | $160 | $173 |
| 3 Years | $496 | $582 |
| 5 Years | $855 | $1,016 |
| 10 Years | $1,867 | $2,225 |
