SECURITIES AND EXCHANGE COMMISSION
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-03599
Name of Registrant: The Royce Fund
Address of Registrant: 745 Fifth Avenue
New York, NY 10151
Name and address of agent for service: | John E. Denneen, Esquire | |
745 Fifth Avenue | ||
New York, NY 10151 |
Registrant’s telephone number, including area code: (212) 508-4500
Date of fiscal year end: December 31
Date of reporting period: January 1, 2013 - December 31, 2013
Item 1. Reports to Shareholders.
ANNUAL
REVIEW AND REPORT
TO SHAREHOLDERS
BROADLY DIVERSIFIED Royce Pennsylvania Mutual Fund Royce Micro-Cap Fund Royce Total Return Fund Royce Low-Priced Stock Fund Royce Heritage Fund Royce Opportunity Fund Royce Value Plus Fund Royce Dividend Value Fund Royce International Smaller-Companies Fund FOCUSED Royce Premier Fund Royce Special Equity Fund Royce Value Fund Royce 100 Fund Royce Global Value Fund Royce Special Equity Multi-Cap Fund | ||
www.roycefunds.com |
www.roycefunds.com |
GET THE LATEST INSIGHTS AND NEWS ON THE ROYCE FUNDS DISCOVER TWO NEW WAYS TO VIEW FUND PERFORMANCE Chuck on Royce A new feature on roycefunds.com that brings you closer to Chuck’s thoughts on the small-cap market, value investing, and our company culture. |
eDelivery Saves! Sign Up Now. eDelivery saves paper, time, and fund expenses.1 Sign up now to view statements, prospectuses, financial reports, and tax forms online. > www.roycefunds.com/edelivery 1 Any direct Royce Funds IRA investor who chooses eDelivery of prospectuses, financial reports, and RWord will be exempt from the $15 annual IRA maintenance fee. (We will continue to also waive the fee for investors with more than $20,000 invested in Royce IRAs at the time the fee is charged, and for new transfer and rollover accounts in their first year.) Stay Informed Follow us on Twitter, watch us on YouTube, subscribe to our RSS feed, and sign up for our monthly eWord newsletter to stay up to date on the latest from The Royce Funds. www.twitter.com/roycefunds www.youtube.com/roycefunds www.roycefunds.com/eword |
This page is not part of the 2013 Annual Report to Shareholders |
Table of Contents | |
Annual Review | |
Royce Featured Fund Guide | 2 |
Portfolio Characteristics | 4 |
Performance and Expenses | 5 |
U.S. Small-Cap Market Cycle and Risk Adjusted Performance | 6 |
Letter to Our Shareholders | 7 |
Fund Focus | 14 |
2013 In Quotes | 136 |
Postscript: It’s a Small World | Inside Back Cover |
Annual Report to Shareholders | 15 |
This page is not part of the 2013 Annual Report to Shareholders | 1 |
Royce Featured Fund Guide |
Value-Oriented Small-Cap Offerings Tailored to Specific Investor Needs |
INVESTMENT UNIVERSE BREAKDOWN1 |
The size and diversity of the small-company universe make it a unique and fertile area for investment. For more than 40 years, it has been our primary area of focus. Over that time, this universe has evolved into an established asset class used by a wide range of investors, including institutions, consultants, advisors, and individuals. Today, there are numerous small-cap and micro-cap indexes and ETFs. Importantly, the continuous regeneration of the asset class, through the entrance of new companies, spin-offs, and IPOs, makes it an evergreen source of investment opportunities. This is why we have elected to focus on the smaller-company universe and believe it is ideally suited for a variety of distinct offerings. Our Featured Funds offer broad exposure to this large and diverse universe. Market Cap The smaller company universe consists of more than 3,9001 publicly traded companies in the U.S. (and more than 22,6001 outside the U.S.). We break it down into two distinct market segments: micro-cap—companies with market caps up to $750 million—and small-cap—companies with market caps between $750 million and $2.5 billion. Sorting the universe into two markets is critical because, in our experience, each requires a portfolio approach based primarily on diversification needs. Our portfolio managers share a common investment approach, one that emphasizes paying attention to risk and buying what each thinks are strong businesses at discounted prices, but our portfolios also possess important differences that make each one unique. Portfolio Approach Our portfolio managers possess broad latitude within our investment universe, though in general they seek a combination of quality—measured by the balance sheet and returns on invested capital—and valuation. Portfolios that invest more heavily in micro-caps are, in general, more broadly diversified due to liquidity considerations; those that invest primarily in the upper end of the small-cap universe tend to be more focused. In addition, we seek to take advantage of pockets of opportunity, such as dividend-paying companies, low-priced companies, turnarounds, special situations, etc., within each universe. Broadly Diversified Portfolios A broadly diversified portfolio at Royce is one that generally holds more than 100 securities and whose top positions generally do not exceed 2% of net assets. Focused Portfolios A focused portfolio at Royce is one that either (i) generally invests in no more than 100 companies and whose top positions generally exceed 2% of net assets, or (ii) invests primarily in a single sector. |
The Royce Funds invest primarily in micro-cap, small-cap, and/or mid-cap stocks, which may involve considerably more risk than investing in larger-cap stocks (please see “Primary Risks for Fund Investors” in the prospectus). Each Fund may invest a portion of its net assets in foreign securities, which may involve political, economic, currency, and other risks not encountered in U.S. investments (please see “Investing in Foreign Securities” in the prospectus). Distributor: Royce Fund Services, Inc. |
2 | This page is not part of the 2013 Annual Report to Shareholders |
This guide is designed to help investors better understand both the different approaches and the common ground among our portfolios. Looking closely at our Featured Funds allows investors to see other important differences—in levels of volatility, sector orientation, and investment themes—within the context of our two key differentiators, namely, market cap and portfolio approach. We think that understanding these differences can inform asset allocation decisions, especially when investors incorporate more than one Royce offering within their portfolios. Listed below are our Funds arranged by average market cap. For a complete listing of our Funds and their attributes please visit our website at www.roycefunds.com. |
Fund Tools Go online for more tools to help you better understand our Funds. Compare Funds > www.roycefunds.com/compare Prices & Performance > www.roycefunds.com/prices |
1 Only available to existing investors and relationships. |
2 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. |
This page is not part of the 2013 Annual Report to Shareholders | 3 |
Portfolio Characteristics | Through December 31, 2013 |
Longevity | Average | 2014 | % of | ||||||||||||||||||||||||
of Fund | Market | Number of | Turnover | Non-U.S. | |||||||||||||||||||||||
Fund | Portfolio Manager(s) | (in years) | Cap1 | Holdings | Rate | Securities | |||||||||||||||||||||
BROADLY DIVERSIFIED | |||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund | Chuck Royce | 41 | $ | 1,968 | 573 | 26 | % | 7.8 | % | ||||||||||||||||||
Royce Micro-Cap Fund | Jenifer Taylor | 22 | 449 | 210 | 22 | 15.2 | |||||||||||||||||||||
Royce Total Return Fund | Chuck Royce, Jay Kaplan | 20 | 2,386 | 507 | 21 | 11.6 | |||||||||||||||||||||
Royce Low-Priced Stock Fund | Whitney George | 20 | 1,289 | 100 | 16 | 37.7 | |||||||||||||||||||||
Royce Heritage Fund | Chuck Royce, Jim Harvey, Steven McBoyle | 18 | 3,175 | 193 | 79 | 23.0 | |||||||||||||||||||||
Royce Opportunity Fund | Buzz Zaino, Bill Hench | 17 | 849 | 320 | 39 | 4.5 | |||||||||||||||||||||
Royce Value Plus Fund | Chip Skinner | 12 | 2,013 | 100 | 45 | 11.4 | |||||||||||||||||||||
Royce Dividend Value Fund | Chuck Royce, Jay Kaplan | 9 | 3,084 | 277 | 36 | 23.5 | |||||||||||||||||||||
Royce International Smaller-Companies Fund | David Nadel | 5 | 1,079 | 111 | 64 | 94.3 | |||||||||||||||||||||
FOCUSED | |||||||||||||||||||||||||||
Royce Premier Fund | Chuck Royce, Whitney George | 22 | 2,910 | 78 | 11 | 10.7 | |||||||||||||||||||||
Royce Special Equity Fund | Charlie Dreifus | 15 | 1,912 | 48 | 28 | 0.0 | |||||||||||||||||||||
Royce Value Fund | Jay Kaplan | 12 | 2,670 | 52 | 51 | 7.8 | |||||||||||||||||||||
Royce 100 Fund | Chuck Royce, Lauren Romeo | 10 | 2,116 | 94 | 31 | 6.5 | |||||||||||||||||||||
Royce Global Value Fund | Whitney George | 7 | 1,785 | 68 | 41 | 75.9 | |||||||||||||||||||||
Royce Special Equity Multi-Cap Fund | Charlie Dreifus | 3 | 25,847 | 30 | 44 | 0.0 | |||||||||||||||||||||
4 | This page is not part of the 2013 Annual Report to Shareholders |
Performance and Expenses | Through December 31, 2013 |
Average Annual Total Returns | ||||||||||||||||||||||||||||||||
Gross Annual | Net Annual | |||||||||||||||||||||||||||||||
40-Year or Since | Inception | Operating | Operating | |||||||||||||||||||||||||||||
Fund | 1-Year | 5-Year | 10-Year | 20-Year | Inception | Date | Expenses | Expenses | ||||||||||||||||||||||||
BROADLY DIVERSIFIED | ||||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund | 35.25 | % | 20.18 | % | 10.06 | % | 11.32 | % | 14.52 | % | n.a. | 0.90 | % | 0.90 | % | |||||||||||||||||
Royce Micro-Cap Fund | 21.29 | 18.45 | 8.82 | 11.38 | 12.67 | 12/31/91 | 1.49 | 1.49 | ||||||||||||||||||||||||
Royce Total Return Fund | 32.76 | 18.41 | 9.10 | 11.75 | 11.72 | 12/15/93 | 1.14 | 1.14 | ||||||||||||||||||||||||
Royce Low-Priced Stock Fund | 12.91 | 15.27 | 7.05 | 11.67 | 11.65 | 12/15/93 | 1.58 | 1.50 | ||||||||||||||||||||||||
Royce Heritage Fund | 25.99 | 20.38 | 10.10 | n.a. | 14.00 | 12/27/95 | 1.51 | 1.51 | ||||||||||||||||||||||||
Royce Opportunity Fund | 43.50 | 27.13 | 9.95 | n.a. | 13.84 | 11/19/96 | 1.14 | 1.14 | ||||||||||||||||||||||||
Royce Value Plus Fund | 32.52 | 18.40 | 9.38 | n.a. | 12.87 | 6/14/01 | 1.46 | 1.46 | ||||||||||||||||||||||||
Royce Dividend Value Fund | 30.74 | 21.20 | n.a. | n.a. | 10.41 | 5/3/04 | 1.52 | 1.52 | ||||||||||||||||||||||||
Royce International Smaller-Companies Fund | 12.73 | 15.76 | n.a. | n.a. | 7.02 | 6/30/08 | 2.15 | 1.71 | ||||||||||||||||||||||||
FOCUSED | ||||||||||||||||||||||||||||||||
Royce Premier Fund | 27.73 | 18.92 | 11.64 | 12.21 | 12.67 | 12/31/91 | 1.06 | 1.06 | ||||||||||||||||||||||||
Royce Special Equity Fund | 29.36 | 18.06 | 9.52 | n.a. | 10.35 | 5/1/98 | 1.13 | 1.13 | ||||||||||||||||||||||||
Royce Value Fund | 27.76 | 18.57 | 11.11 | n.a. | 11.76 | 6/14/01 | 1.45 | 1.45 | ||||||||||||||||||||||||
Royce 100 Fund | 30.85 | 18.63 | 11.50 | n.a. | 11.99 | 6/30/03 | 1.48 | 1.48 | ||||||||||||||||||||||||
Royce Global Value Fund | 6.28 | 16.08 | n.a. | n.a. | 5.42 | 12/29/06 | 1.81 | 1.70 | ||||||||||||||||||||||||
Royce Special Equity Multi-Cap Fund | 36.26 | n.a. | n.a. | n.a. | 17.70 | 12/31/10 | 1.36 | 1.24 | ||||||||||||||||||||||||
INDEX | ||||||||||||||||||||||||||||||||
Russell 2000 Index | 38.82 | 20.08 | 9.07 | 9.27 | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||||||||||
Russell Microcap Index | 45.62 | 21.05 | 6.99 | n.a. | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||||||||||
Russell Global ex-U.S. Small Cap Index | 17.21 | 17.83 | 9.77 | n.a. | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||||||||||
Russell Global Small Cap Index | 24.77 | 18.49 | 9.23 | n.a. | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||||||||||
Russell 1000 Index | 33.11 | 18.59 | 7.78 | 9.38 | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||||||||||
Important Performance, Expense, and Risk Information
All performance information in this Review and Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares of Royce Global Value and International Smaller-Companies Funds redeemed within 180 days of purchase may be subject to a 2% redemption fee payable to, The Royce Funds. Shares of all other Funds redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund. Redemption fees are not reflected in the performance shown above; if they were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. All performance and expense information reflects results of the Fund’s oldest share Class (Investment Class or Service Class, as the case may be). Price and total return information is based on net asset values calculated for shareholder transactions. Price and total return information is based on net asset values calculated for shareholder transactions. Certain immaterial adjustments were made to the net assets of Royce Global Value Fund at 12/31/13 for financial reporting purposes, and as a result the net asset values for shareholder transactions on that date and the total returns based on those net asset values differ from the adjusted net asset values and total returns reported in the Financial Highlights. Gross annual operating expenses reflect the Fund’s gross total annual operating expenses and include management fees, any 12b-1 distribution and service fees, other expenses, and any applicable acquired fund fees and expenses. Net annual operating expenses reflect contractual fee waivers and/or reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses, other than acquired fund fees and expenses, if any, to the extent necessary to maintain net operating expenses at or below: 1.49% for Royce Low-Priced Stock Fund; 1.69% for Royce Global Value and International Smaller-Companies Funds through April 30, 2014; 1.24% for Royce Special Equity Multi-Cap Fund through April 30, 2014; and at or below 1.99% for Royce Global Value and International Smaller-Companies Funds through April 30, 2023. Acquired fund fees and expenses reflect the estimated amount of fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Shares of the Funds’ Service, Consultant, R, and K Classes bear an annual distribution expense that is not borne by the Funds’ Investment Class. Investments in securities of micro-cap, small-cap, and/or mid-cap companies may involve considerably more risk than investments in securities of larger-cap companies. (Please see “Primary Risks for Fund Investors” in the prospectus.) Royce Global Value and International Smaller-Companies Funds invest a significant portion of their respective assets in foreign companies which may be subject to different risks than investments in securities of U.S. companies, including adverse political, social, economic, or other developments that are unique to a particular country or region. (Please see “Investing in foreign securities” in the prospectus.) Therefore, the prices of securities of foreign companies in particular countries or regions may, at times, move in a different direction than those of securities of U.S. companies. (Please see “Primary Risk of Fund Investors” in the prospectus.) Please read the prospectus carefully before investing or sending money. Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. The Russell 2000 Index is an unmanaged, capitalization-weighted index of domestic small-cap stocks. It measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 Index. The Russell Microcap Index includes 1,000 of the smallest securities in the Russell 2000 Index, along with the next smallest eligible securities as determined by Russell. The Russell Global Small Cap Index is an index of global small-cap stocks. The Russell Global ex-U.S. Small Cap Index is an index of global small-cap stocks, excluding the United States. The Russell 1000 is an unmanaged, capitalization-weighted index of domestic large-cap stocks. It measures the performance of the 1,000 largest publicly traded U.S. companies in the Russell 3,000 Index. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index. Distributor: Royce Fund Services, Inc. |
This page is not part of the 2013 Annual Report to Shareholders | 5 |
U.S. Small-Cap Market Cycle and Risk Adjusted Performance |
We believe strongly in the idea that a long-term investment perspective is crucial for determining the success of a particular investment approach. While flourishing in an up market is wonderful, surviving a bear market by losing less (or not at all) is at least as good. However, the true test of a portfolio’s mettle is performance over full market cycle periods, which include both an up and down market period. |
Since the inception of the Russell 2000 index on 12/31/78, there have been 10 full market cycles, with the most recent peaking on 4/29/11. Market cycles are defined as those that have retreated at least 15% from a previous market peak and have rebounded to establish a new peak above the previous one. Each market cycle contains a peak-to-trough and a trough-to-peak period. Interestingly, over the small-cap index’s 30+ year history, each style index—the Russell 2000 Value Index and the Russell 2000 Growth Index—outperformed in five of the 10 full market cycles. In fact, leadership has alternated between growth and value over the last six cycles. If history were to adhere to this pattern, value would lead in the current cycle that began on 4/29/11. |
RISK / RETURN PROFILE 10-YEAR PERIOD ENDED DECEMBER 31, 2013 |
For the 10-year period ended 12/31/13, nine out of 11 Royce Funds with 10 years of history outperformed the Russell 2000, while eight of the 11 did so with better risk-adjusted returns and Sharpe ratios. | ||
In addition, for the 10-year period ended 12/31/13, five of the 11 Royce Funds outperformed the Russell 2000 with lower volatility. |
SMALL-CAP MARKET CYCLE: RUSSELL 2000 INDEXES TOTAL RETURNS |
ROYCE U.S. EQUITY FUNDS VS. RUSSELL 2000 INDEX: | ||||||||||||
MARKET CYCLE RESULTS | ||||||||||||
Peak-to- | Peak-to- | Peak-to- | ||||||||||
Peak | Peak | Current | ||||||||||
3/9/00– | 7/13/07– | 4/29/11 | ||||||||||
Fund | 7/13/07 | 4/29/11 | 12/31/13 | |||||||||
BROADLY DIVERSIFIED | ||||||||||||
Royce Pennsylvania Mutual Fund | 207.1 | % | 11.6 | % | 33.1 | % | ||||||
Royce Micro-Cap Fund | 197.4 | 24.9 | 4.8 | |||||||||
Royce Total Return Fund | 193.9 | 6.8 | 37.5 | |||||||||
Royce Low-Priced Stock Fund | 198.9 | 27.2 | -7.6 | |||||||||
Royce Heritage Fund | 150.4 | 25.3 | 18.2 | |||||||||
Royce Opportunity Fund | 191.8 | 6.9 | 42.0 | |||||||||
Royce Value Plus Fund | n.a. | -3.0 | 25.3 | |||||||||
Royce Dividend Value Fund | n.a. | 21.6 | 34.9 | |||||||||
FOCUSED | ||||||||||||
Royce Premier Fund | 198.1 | 29.9 | 25.1 | |||||||||
Royce Special Equity Fund | 227.4 | 20.8 | 39.2 | |||||||||
Royce Value Fund | n.a. | 17.4 | 15.9 | |||||||||
Royce 100 Fund | n.a. | 27.6 | 23.6 | |||||||||
INDEX | ||||||||||||
Russell 2000 | 54.8 | 6.6 | 39.7 | |||||||||
Russell 2000 Value | 189.4 | -1.4 | 38.5 | |||||||||
Russell 2000 Growth | -14.8 | 14.3 | 40.9 | |||||||||
All performance information above reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Please see page 5 for 1-, 5-, and 10-year average annual total return information. |
6 | This page is not part of the 2013 Annual Report to Shareholders |
Letter to Our Shareholders |
Everybody Had a Good Year | ||
2013 will enter the annals of history as one of the stock market’s better years. Not only were there healthy double-digit returns for all of the major U.S. indexes, but there were also no major corrections along the way. The closest the market came to a bearish phase was during the second quarter, when the rate on the 10-year Treasury began to rise off its calendar-year low in early May, mostly as a result of talk that the Federal Reserve would begin to reduce its $85 billion monthly bond-buying program. The Fed’s intentions to taper, made official by an announcement in June, then sent markets across the globe into a tailspin, while the 10-year Treasury rate mostly kept rising. (From its low on May 2 through the end of the year, it climbed more than 83%.) Yet by mid-summer, all or most of this seemed to be forgotten. Share prices climbed more or less uninterruptedly into December, where a couple of unsettled weeks in the middle of the month failed to put a Scrooge-like face on returns. Stocks quietly rallied through the last weeks of the year, making the fourth quarter as solidly bullish as the first and third. The market’s ability to shrug off negative news—potential or otherwise—may have been its most salient trait in 2013. Here at home, investors had to cope with the sequester, the government shutdown, questions about Fed policy, and who would succeed Federal Reserve Chairman Ben Bernanke. Outside the U.S., it was not much quieter. There was economic uncertainty in Europe, China, and Brazil, among other places, unrest in the | The market’s ability to shrug off negative news—potential or otherwise—may have been its most salient trait in 2013. |
This page is not part of the 2013 Annual Report to Shareholders | 7 |
Charles M. Royce, President In addition to staying on top of the performance of The Royce Funds, we also regularly review returns for the major indexes, especially those that invest mostly or exclusively in small-cap stocks. Each month, we also carefully look over long-term results on an annualized basis. For the period ended December 31, 2013, the returns both for our portfolios and for the small-cap Russell 2000 Index were of particular interest to us. (These results can be found on page 5.) Seen from the perspective of long-term market history, we think the results look improbable, even absurd, and certainly counterintuitive. We have always been fond of the idea that a healthy target for absolute long-term returns should be low-to-mid double digits. So what does it mean when these results are in the range of the high teens to the mid-twenties? Did we and others do something different or unusually smart to achieve these results? We suspect that the answer is both a lot simpler and less flattering to our stock-picking acumen. The high five-year returns are in part a consequence of the market’s Continued on page 10... | Letter to Our Shareholders Mideast, and a significant, still-brewing political scandal in Turkey. Yet none of these things, taken alone or in concert, possessed enough force to slow the pace of the rally. Even murmurings later in the year about overvalued stocks and a market bubble gave investors little pause. The rally seemed to gain strength from the notion that the U.S. economy was finally entering a faster, more historically typical expansion after five years of slow and uncertain growth. This would be more than welcome news. Consider for a moment how strange and singular our present situation is. The economy has received unprecedented levels of federal stimulus in the form of both quantitative easing and historically low interest rates even as the economy has looked strong enough to stand more firmly on its own for more than a year. However, we still face stubbornly high, only slowly declining unemployment, still-stagnant levels of demand, and lower consumer confidence. On the other hand, we have robust housing and auto sales, record corporate revenues, and companies sitting on piles of cash. This complicated economic picture is set against the political background of a falling federal deficit, a national healthcare plan that refuses to be anything less than wildly controversial, and a culture in Washington so dysfunctional that it now plays like a bleak tragicomedy worthy of Samuel Beckett. (Or at least it would if politicians weren’t so verbose.) All of this makes the question of what happens next even harder to answer than it would be in more sanguine times. Resisting the temptation to prognosticate at length on larger matters, we’ll say only that we agree with the consensus that the economy is indeed growing faster and stronger. For reasons we’ll detail later, we also think this is good news both for small-cap stocks and our own disciplined approach to stock selection. As measured by the Russell 2000 Index, the small-cap market has been on a remarkable run since the bottom in March 2009. However, there were a number of notable twists prior to last year’s mostly smooth ascent. The three years prior to 2013 all exhibited a similar performance pattern in the first half of the year. During 2010, 2011, and 2012, the opening quarter extended a bull run that had gotten underway no later than the previous year’s fourth quarter. These gains were then eroded to varying degrees by a bearish second quarter, with the market starting to reverse course in April, making it indeed the cruelest month. The motive force behind each reversal was macro oriented—recurring fears about the uneasy state of the U.S., Chinese, and/or developed European economies. (The persistence of macro factors influencing sell-offs at the expense of company fundamentals was the most troubling element to us.) In 2010 and 2012, the third quarter saw a resumption of rising stock prices, while in 2011 the third quarter was the year’s worst—political dithering in Europe and contention in the U.S. exacerbating economic and fiscal concerns. The fourth quarter was positive for small-caps in all three years (as it was in 2009), though in 2011 its gains were not enough to keep the major indexes from finishing the year in the red. | ||
8 | This page is not part of the 2013 Annual Report to Shareholders |
| ||||
Everybody Saw the Sunshine | ||||
Small-caps were once again leaders in what was a magnificent year for equities. For the full year, the Russell 2000 (+38.8%) and the tech-centric Nasdaq Composite (+38.3%) outpaced the large-cap Russell 1000 (+33.1%) and S&P 500 (+32.4%) Indexes. The Russell 2000 enjoyed its best calendar-year performance since 2003. 2013 was also the best since 1995 for the Russell 1000, since 1997 for the S&P 500, and since 2009 for the Nasdaq Composite. The latter index, however, has not yet topped the high it made back on March 10, 2000. By contrast, the small-cap index, the Russell 1000, and the S&P 500 all established new highs on the last day of 2013. It was also the first year since 1996 in which the Russell 2000 posted positive returns in all four quarters. | ||||
After a strong first half, in which all the major domestic indexes were positive both through the end of June and for the more volatile second quarter, both small-cap and large-cap stocks sailed through the rest of the year. As it did in the second quarter, the Nasdaq led in the third, up an impressive 10.8% compared to a 10.2% gain for the Russell 2000 and respective increases of 5.2% and 6.0% for the S&P 500 and Russell 1000. As mentioned, December saw a brief squall of volatility, though fourth-quarter results for all four indexes wound up solidly positive. The Nasdaq marked its third consecutive quarter of market leadership, advancing 10.7% for the fourth quarter versus 8.7% for the Russell 2000 Index, 10.2% for the Russell 1000, and 10.5% for the S&P 500. It was also notable that from the 10-year Treasury yield low of 1.66% on May 2, 2013 through the end of the year small-caps were strong. The Russell 2000 gained 25.0% during this period versus respective gains of 17.9% and 17.4% for the Russell 1000 and S&P 500. (The 10-year yield finished 2013 at 3.04%.) Outside the U.S., life was generally less bullish in 2013. Most non-U.S. indexes finished behind their stateside cousins in the first quarter and were in the red for the second. Results improved significantly in the second half, with European indexes turning in conspicuously high returns. For the third quarter, the Russell Global ex-U.S. Small Cap Index advanced 10.7% while the Russell Global ex-U.S. Large Cap Index increased 10.4%. The indexes also ended the year on a high note. For the fourth quarter, the Russell Global ex-U.S. Small Cap | Small-caps were once again leaders in what was a magnificent year for equities. For the full year, the Russell 2000 (+38.8%) and the tech-centric Nasdaq Composite (+38.3%) outpaced the large-cap Russell 1000 (+33.1%) and S&P 500 (+32.4%) Indexes. |
This page is not part of the 2013 Annual Report to Shareholders | 9 |
recent strength (especially in 2013) and, more important, the result of dropping some unusually bad results from the fourth quarter of 2008—the onset of the Financial Crisis. The five-year average annual total return for the Russell 2000 as of December 31, 2012 was 3.6% (+19.1% on a cumulative basis). Yet when we fast-forward to the end of December 2013, we see the five-year return for the Russell 2000 jump to 20.1% (+149.7% on a cumulative basis). Most of the time, a five-year period would capture a variety of experiences, perhaps an entire market cycle or two. But occasionally it does not, and the result is a distortion springing from an uncommonly steady, mostly bullish period. So as wonderful as they are, it seems clear to us that the five-year returns for several mutual funds, indexes, and ETFs are simply too good to last. Markets simply do not move up forever, or even for several years in a row. We believe in reversion to the mean; the cyclical nature of markets is very real to us. Of course, we do not pretend to know how to time market cycles. All we know is that at some point, the current cycle will change. No one knows exactly when or to what degree, but it will shift. This helps to explain why we think it’s important to never get too excited during bullish phases like the current period, just as we believe investors should not get too upset during corrections. Continued on page 12... | |||
Letter to Our Shareholders | ||
rose 4.0% while the Russell Global ex-U.S. Large Cap was up 5.0%. Calendar-year results were solid, though each index lagged its domestic peers. For 2013, the Russell Global ex-U.S. Small Cap Index climbed 17.2% while its large-cap sibling gained 16.1%. The Russell Microcap Index posted impressive results for both the third (+11.6%) and fourth (+10.3%) quarters of 2013. This second-half strength helped the micro-cap index achieve an eye-catching 45.6% return for the calendar year. Results for both the second half and full year were not quite as robust for mid-cap stocks, as measured by the Russell Midcap Index, though they were more than respectable on an absolute basis. For the third quarter, the mid-cap index advanced 7.7% before rising 8.4% in the fourth, leading to a terrific 34.8% return for the full year. | ||
Fixing a Hole For the most part, calendar-year returns for our Featured Funds left us with mixed emotions. We were pleased, for the most part, with the Funds’ absolute results. However, most underperformed on a relative basis. The two noteworthy exceptions were Royce Opportunity and Special Equity Multi-Cap Funds, each of which handily outpaced their respective benchmarks in 2013. Results for the remaining 13 portfolios ranged more widely, from those with more-than-respectable absolute results—Royce Pennsylvania Mutual Fund, Premier, Total Return, Heritage, Special Equity, Value, Value Plus, 100, and Dividend Value Funds—to those that were solid but disappointing owing to the spread between them and their respective benchmarks—Royce Micro-Cap, Low-Priced Stock, Global Value, and International Smaller-Companies Funds. Our disciplined, risk-averse approach has often left us looking up at benchmarks during dynamic bull markets. In a more historically typical market cycle, 2013’s results would have given us less to explain or complain about. But these calendar-year results came after several portfolios underperformed their benchmarks in 2012 and 2011. The last three years, then, have left us increasingly frustrated, even as the reasons behind these underperformances are clear. Small-cap companies with high returns on invested capital (ROIC) and low-debt balance sheets have, as a group, underperformed their more leveraged counterparts. In addition, more economically sensitive cyclical sectors, including Energy, Industrials, Materials, and Information Technology—have trailed more defensive areas (such as Utilities) and less conservatively capitalized, higher-yielding vehicles (e.g., REITs and MLPs) where we have little if any exposure. Over the last several years, we have found many of what we think are highly attractive opportunities in cyclical sectors and/or in companies with strong balance sheets and high ROIC. Most have had only limited participation in the rally that began in March 2009. There have also been industries, such as precious metals & mining, that did very well in the initial phase of the recovery following the Financial Crisis before they began to correct sharply in 2011 and are yet to recover. So while nearly all sectors and industries across all asset classes did well |
10 | This page is not part of the 2013 Annual Report to Shareholders |
2013 TOTAL RETURNS FOR THE ROYCE FUNDS VS. BENCHMARK INDEXES As of 12/31/13 | ||
1 Price and total return information is based on net asset values calculated for shareholder transactions. Certain immaterial adjustments were made to the net assets of Royce Global Value Fund at 12/31/13 for financial reporting purposes, and as a result the net asset values for shareholder transactions on that date and the total returns based on those net asset values differ from the adjusted net asset values and total returns reported in the Financial Highlights. | ||
in 2013, companies with many of the qualities that we look for have not yet led for long. Our approach leads us to conservatively capitalized companies with high ROIC and strong cash flow characteristics, among other attributes. Investors have still not gravitated to these kinds of companies in comparatively large numbers. However, it’s worth mentioning that many quality small-cap companies did very well on an absolute basis in 2013, particularly in the year’s last eight months. Let It Be There have also been signs over the last year-and-a-half that this leadership pattern is beginning to change. Two dates stand out to us as significant. The first was June 4, 2012. From that year’s small-cap low through the end of December 2012, investors showed a preference for companies with those quality characteristics mentioned earlier at the expense of high-yield vehicles, highly leveraged stocks, and explosive growth stories. (This helps to explain why many of our portfolios | Along with the onset of tapering, rising rates—though still historically low on an absolute basis—strongly suggest to us that we are moving closer, if at times by fits and starts, to a stock market that will reward quality businesses, especially those poised to benefit from a healthy, growing economy. |
This page is not part of the 2013 Annual Report to Shareholders | 11 |
Markets are always changing. We work hard to be prepared for these changes, which is why we use volatility and falling share prices to our advantage. Related to this is the idea of rotation. We cannot say for sure what part of the equity market will lead next—we are obviously hoping that it’s high quality—but it’s clear that a move will come. So we do not expect five-year returns to remain this robust, but we are still enthusiastic about the potential for small-cap returns. Equally important, we have always thought that any evaluation of returns must be both long-term and multi-dimensional in order to measure more accurately what is being accomplished. For example, rolling returns are an excellent tool to examine mutual fund performance. It allows us to look at returns over multiple time periods and to gauge the experience of investors who enter the market at different points of time. We always try to keep in mind the following maxim: If the number looks too high, it probably is. | Letter to Our Shareholders outpaced their benchmarks in the final half of 2012.) Unfortunately, this quality rally was short lived, petering out early in the first quarter of 2013. But we saw it as a significant step in the right direction. After all, we have been arguing for some time now that many quality stocks underperformed over the last several years because the Fed’s zero-interest-rate policies and multiple rounds of quantitative easing led to an outsized hunger for high yield and too few consequences for businesses carrying a lot of debt. This in turn led to a comparative neglect of companies with more pristine balance sheets and those with steady, but lower, dividends. We have also insisted, however, that these advantages have largely played themselves out in the context of a strengthening economy. So it probably comes as no surprise that our second important date is the May 2, 2013 low for the 10-year Treasury yield, which marked the beginning of a rising interest-rate environment. Along with the onset of tapering, rising rates—though still historically low on an absolute basis—strongly suggest to us that we are moving closer, if at times by fits and starts, to a stock market that will reward quality businesses, especially those poised to benefit from a healthy, growing economy. In addition to the mini-rally in 2012, we saw improved results for many cyclical companies in the second half of 2013, especially compared to more defensive sectors. We have also seen a recovery in M&A and IPO activity. Most important, there have been increased levels of overall business activity, evidenced by the final revision of third-quarter GDP, which leaped from 3.6% to 4.1%. |
12 | This page is not part of the 2013 Annual Report to Shareholders |
We’ve Got a Feeling Of course, considering where we have been over the last five-plus, even 13-plus, years, it seems fair to ask what a return to an ‘Old Normal’ would look like in the market. Our sense is that small-caps are not on a collision course with a sustained decline or a catastrophic correction such as we saw in late 2008-early 2009. It seems more likely to us that the market will undergo a series of small corrections that will slow the current breakneck pace of returns. From our perspective, this would be part of the larger normalization process affecting the economy and the financial markets. Corrections are a fact of life, and we have not seen one in more than a year. So there will be some pullback, but we believe it will be manageable, at least for those of us with a disciplined, long-term approach. As of this writing, the Russell 2000 Index may have hit, or may be nearing, another peak. Nonetheless, we see opportunity in our chosen asset class. So while the index as a whole looked overvalued to us at year-end, the primary selection universe for our domestic small-cap portfolios is much wider than the Russell 2000. It encompasses more than 4,000 companies with market caps up to $2.5 billion; we are also active in mid-cap stocks, a segment where the market caps fall between $2.5 billion and $5 billion. This area provides more than 400 additional names. Indeed, no small-cap index, including the Russell 2000, takes in the full measure of small-cap valuations or offers the most appropriate selection space. In these days of ETFs and strong relative results for index-based investing, we think the enormous breadth of the small-cap world has been forgotten to some degree. In our position as bottom-up stock pickers, we have always thought less about markets and indexes than we do about stocks and businesses. As has always been the case, our daily work focuses squarely on finding what we think are great companies at attractive prices. Our goal remains strong absolute returns over long-term periods. We cannot say for sure when conservatively capitalized, well-managed, and fundamentally sound businesses might assume market leadership. However, we are confident that they will in the not-too-distant future as the expanding economy leads investors to focus once more on fundamentals, particularly those that reveal high quality. Sincerely, | In our position as bottom-up stock pickers, we have always thought less about markets and indexes than we do about stocks and businesses. As has always been the case, our daily work focuses squarely on finding what we think are great companies at attractive prices. | |||||
Charles M. Royce | W. Whitney George | Jack E. Fockler, Jr. | ||||
President | Vice President | Vice President | ||||
January 31, 2014 |
This page is not part of the 2013 Annual Report to Shareholders | 13 |
Fund Focus |
For more than 40 years, we have invested primarily—for many years exclusively—in small-cap stocks. Throughout his more than three decades as a portfolio manager, Charlie Dreifus has done much the same. So it probably came as a bit of a surprise at the end of 2010 when Royce Special Equity Multi-Cap Fund (RSM) was launched with Charlie at the helm because the Fund invests primarily in large-cap stocks.
Yet the portfolio takes full advantage of his 45 years of investment experience. While his emphasis and attention as a portfolio manager has been on the small-cap side for most of his career, Charlie also spent several years during the ’70s and ’80s as Director of Research at two different companies. Each firm focused its stock selection process on large-caps, and through this work he developed a substantial knowledge base about the domestic large-cap space.
Prior to the Fund’s debut, which followed the Financial Crisis of 2008-9, Charlie believed the large-cap asset class looked attractively cheap. Applying his singular approach, which combines classic value analysis and accounting cynicism, he brings a methodology honed over more than 30 years—15 of them at Royce.
He looks for companies with high, sustainable returns on invested capital and strong levels of free cash flow from operations, among other attributes, that are also inexpensive on an absolute basis. In RSM, it is not uncommon to see many household, “dividend aristocrat” type names. In fact, these companies, which are usually defined as those in the S&P 500 Index that have increased their dividend for 25 consecutive years, are well represented in the portfolio. Charlie believes that they represent some of the highest-quality businesses available to investors. Their compellingly low valuations around the time of the Fund’s inception made many of them early selections. While there is no guarantee that a company will continue to pay a dividend, Charlie also believes that the Fund’s early emphasis on dividend payers will prove rewarding, especially in the current interest rate environment, in which rates are rising but remain low on an absolute basis.
Regardless of market cap, every company that Charlie analyzes receives his strict attention to accounting and financials. Indeed, his well-deserved reputation for close scrutiny of financial reports was something he learned from accounting guru Abe Briloff, who was both his teacher and good friend. (Abe recently passed away at the age of 96.) While large-cap companies are well covered on Wall Street, Charlie thinks that his ‘special sauce’ can be a benefit. It involves a deep dive into the financials that is designed, among other things, to uncover whether the company’s accounting practices are aggressive or conservative—he prefers companies with conservative, transparent accounting. His exhaustive analysis should also reveal how inexpensive the business is on an absolute basis.
With three years of history in the books, the early results have been highly encouraging. The Fund outperformed its benchmark, the Russell 1000 Index, for the one- and three-year/since inception (12/31/10) periods ended December 31, 2013. We think that, after 40 years in business, our first foray into a large-cap mutual fund is going pretty well.
Royce Special Equity Multi-Cap Fund vs the Russell 1000: Performance and Expense Information | Through December 31, 2013 |
Average Annual Total Returns | ||||||||||||||||||||
Since Inception | Gross Annual | Net Annual | ||||||||||||||||||
One-Year | Three-Year | (12/31/10) | Operating Expenses | Operating Expenses | ||||||||||||||||
Royce Special Equity Multi-Cap Fund | 36.26 | % | 17.70 | % | 17.70 | % | 1.36 | % | 1.24 | % | ||||||||||
Russell 1000 | 33.11 | 16.30 | 16.30 | n.a. | n.a. | |||||||||||||||
The Fund invests primarily in mid-cap and large-cap stocks. (Please see “Primary Risks for Fund Investors” in the prospectus.) In addition, as of 12/31/13 the Fund held a limited number of stocks, which may involve considerably more risk than a less concentrated portfolio because a decline in the value of any one of these stocks would cause the Fund’s overall value to decline to a greater degree. The Fund may invest up to 25% of its net assets in foreign securities, which may involve political, economic, currency, and other risks not encountered in U.S. investments. (Please see “Investing in Foreign Securities” in the prospectus.)
14 | This page is not part of the 2013 Annual Report to Shareholders |
Table of Contents | ||
Annual Report to Shareholders | ||
Managers’ Discussions of Fund Performance | ||
BROADLY DIVERSIFIED | ||
Royce Pennsylvania Mutual Fund | 16 | |
Royce Micro-Cap Fund | 18 | |
Royce Total Return Fund | 20 | |
Royce Low-Priced Stock Fund | 22 | |
Royce Heritage Fund | 24 | |
Royce Opportunity Fund | 26 | |
Royce Value Plus Fund | 28 | |
Royce Dividend Value Fund | 30 | |
Royce International Smaller-Companies Fund | 32 | |
FOCUSED | ||
Royce Premier Fund | 34 | |
Royce Special Equity Fund | 36 | |
Royce Value Fund | 38 | |
Royce 100 Fund | 40 | |
Royce Global Value Fund. | 42 | |
Royce Special Equity Multi-Cap Fund | 44 | |
Schedules of Investments and Financial Statements | 46 | |
Notes to Financial Statements | 114 | |
Report of Independent Registered Public Accounting Firm | 129 | |
Understanding Your Fund’s Expenses | 130 | |
Trustees and Officers | 133 | |
Results of Shareholder Meeting | 134 | |
Notes to Performance and Other Important Information | 135 | |
The Royce Funds 2013 Annual Report to Shareholders | 15 |
Royce Pennsylvania Mutual Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | |||||||||||
July–December 20131 | 21.23 | % | |||||||||
One-Year | 35.25 | ||||||||||
Three-Year | 14.09 | ||||||||||
Five-Year | 20.18 | ||||||||||
10-Year | 10.06 | ||||||||||
15-Year | 11.22 | ||||||||||
20-Year | 11.32 | ||||||||||
25-Year | 11.45 | ||||||||||
30-Year | 11.69 | ||||||||||
35-Year | 13.67 | ||||||||||
40-Year | 14.52 | ||||||||||
ANNUAL EXPENSE RATIO | |||||||||||
Operating Expenses | 0.90 | % | |||||||||
1 Not annualized | |||||||||||
CALENDAR YEAR TOTAL RETURNS | |||||||||||
Year | PMF | Year | PMF | ||||||||
2013 | 35.3 | % | 2005 | 12.5 | % | ||||||
2012 | 14.6 | 2004 | 20.2 | ||||||||
2011 | -4.2 | 2003 | 40.3 | ||||||||
2010 | 23.9 | 2002 | -9.2 | ||||||||
2009 | 36.3 | 2001 | 18.4 | ||||||||
2008 | -34.8 | 2000 | 18.3 | ||||||||
2007 | 2.8 | 1999 | 6.0 | ||||||||
2006 | 14.8 | 1998 | 4.2 | ||||||||
TOP 10 POSITIONS % of Net Assets | |||||||||||
Reliance Steel & Aluminum | 1.0 | % | |||||||||
Helmerich & Payne | 1.0 | ||||||||||
Unit Corporation | 0.9 | ||||||||||
NVR | 0.8 | ||||||||||
Federated Investors Cl. B | 0.8 | ||||||||||
Kennametal | 0.8 | ||||||||||
HEICO Corporation | 0.7 | ||||||||||
Ascena Retail Group | 0.7 | ||||||||||
Oil States International | 0.7 | ||||||||||
IPG Photonics | 0.7 | ||||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | |||||||||||
Industrials | 25.5 | % | |||||||||
Information Technology | 20.2 | ||||||||||
Consumer Discretionary | 14.4 | ||||||||||
Financials | 9.9 | ||||||||||
Materials | 8.8 | ||||||||||
Energy | 7.2 | ||||||||||
Health Care | 6.3 | ||||||||||
Consumer Staples | 1.5 | ||||||||||
Telecommunication Services | 0.1 | ||||||||||
Utilities | 0.0 | ||||||||||
Miscellaneous | 3.8 | ||||||||||
Cash and Cash Equivalents | 2.3 | ||||||||||
Manager’s Discussion We were mostly pleased with the performance of our flagship, Royce Pennsylvania Mutual Fund (PMF), in 2013. The Fund achieved a strong absolute return for the calendar year, rising 35.3%. Of course, we would have preferred a better relative showing, as PMF underperformed its small-cap benchmark, the Russell 2000 Index, which rose 38.8% in 2013. However, in the current context of equity returns, we were very satisfied. The last three years saw higher returns from fast-growing, lower-quality companies, often carrying ample leverage on their balance sheets, which even in an era of easy money and zero interest rates strikes us as a dubious practice. In this challenging environment, the Fund acquitted itself nicely on an absolute basis. The year began with a strong first quarter for stocks, particularly small-caps. It marked the fourth consecutive year in which the markets began the year with a fast start. After beating its benchmark in the second half of 2012 (+10.2% versus +7.2%), PMF fell behind the Russell 2000 in the first quarter of 2013, up 10.2% versus 12.4%. Taper talk brought a wave of volatility in the second quarter, tamping down returns to the low single digits. PMF rose 1.3% versus 3.1% for the Russell 2000 for this period. The third quarter quickly resumed the red-hot pace of the first, with returns for most small-cap indexes rising into double digits. The Russell 2000 gained 10.2% while PMF climbed 10.7%. The fourth quarter saw a less frenetic pace and a bit more volatility, though it was not as rocky as the second quarter. More important, PMF again beat the Russell 2000, up 9.5% versus 8.7%, giving the Fund two straight years of outperformance for the second half of the calendar year. This second-half performance edge in 2013 can be traced to an earlier date in the year—the low for 10-year Treasury yields that occurred on May 2. With rates mostly on the rise since this low, PMF narrowly beat the Russell 2000 from May 2 through December 31, 2013, up 25.9% compared to 25.0%. The Fund also outperformed its benchmark for the five-, 10-, 15-, 20-, 25-, 30-, and 35-year periods ended December 31, 2013. PMF’s average annual total return for the 40-year period ended December 31, 2013 was 14.5%, a long-term record in which we take great pride. In June 2013, we received the first substantial announcement that the pace of the Fed’s accommodative QE programs would be slowed. The news at first sent the markets into a tailspin while quickly catapulting the term “taper” into daily usage. After their initially bearish reaction, the domestic equity markets adjusted quite well by the end of the year. When the |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Nu Skin Enterprises Cl. A | 0.64% | ||||||||||
Towers Watson & Company Cl. A | 0.53 | ||||||||||
Oil States International | 0.53 | ||||||||||
AAON | 0.48 | ||||||||||
Helmerich & Payne | 0.47 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Investment Class (its oldest class). Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the Fund’s most current prospectus and include management fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investment in mutual funds, hedge funds, private equity funds, and other investment companies. Shares of PMF’s Service, Consultant, R, and K Classes bear an annual distribution expense that is not borne by the Investment Class. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
16 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review third-quarter GDP estimate was revised upward in December, the news further helped to reassure nervous investors that the economy was sturdy enough to begin standing on its own feet (something that we have been convinced of for at least a year). The slow but steady tick down in the unemployment rate, as well as December’s budget deal, also aided in the impression that the U.S. economy was moving out of its slow and uncertain growth phase and into a more historically typical pace of growth. We see this as welcome news for many portfolio holdings, especially those in cyclical areas such as Energy and Materials, many of which have not participated fully, if at all, in the bull phase that took up nearly all of 2013. In 2013, nine of the Fund’s 11 sectors finished the period with net gains, an unsurprising development in such a bullish climate. While notable contributions came from the Information Technology, Consumer Discretionary, and Financials sectors, Industrials led the way by a comfortable margin. The sector’s net gains came from a number of industry groups, most notably machinery companies, which was the top performing group for the calendar year. Solid net gains also came from the sector’s professional services, aerospace & defense, building products, and electrical equipment groups. The first of these was home to one of PMF’s top performers. Towers Watson & Company provides human resource, financial consulting, and other related services. Its price rose more or less steadily throughout the year. In May the firm’s management raised adjusted EPS (earnings per share) guidance for fiscal 2013 while the stock also gained from the opening of Obamacare insurance exchanges in October. It then raised its dividend in November. We have liked its core business and steady earnings for several years having first bought shares in PMF’s portfolio in 2006. We began to take gains in August 2013. Nu Skin Enterprises develops and distributes personal care skin products worldwide. After enjoying a strong first half, its share price gained additional momentum in the year’s last six months. In October, the company announced stronger-than-anticipated third-quarter earnings and raised its full-year guidance for 2013, driven by the success of a limited-time offer for its new weight management system. We began to reduce our position in March. We also sold some shares of NETGEAR, though we still held a good-sized position at year-end, confident that it would benefit from a potential pick-up in its global business in 2014. We also reduced our stake in clothing retailer American Eagle Outfitters, though we still think it is capable of surviving increased competition in the malls and declining sales owing to its strong niche in the teen clothing market. |
GOOD IDEAS AT THE TIME | |
American Eagle Outfitters | -0.16% |
NETGEAR | -0.16 |
Seabridge Gold | -0.16 |
Acacia Research | -0.15 |
Agnico Eagle Mines | -0.14 |
1 Net of dividends | |
ROYCE PENNSYLVANIA MUTUAL FUND VS. RUSSELL 2000 Value of $10,000 Invested on 12/31/78 (Russell 2000 Inception) | |
Includes reinvestment of distributions. | |||
PORTFOLIO DIAGNOSTICS | |||
Fund Net Assets | $7,287 million | ||
Number of Holdings | 573 | ||
Turnover Rate | 26% | ||
Average Market Capitalization1 | $1,968 million | ||
Weighted Average P/E Ratio2,3 | 21.3x | ||
Weighted Average P/B Ratio2 | 2.3x | ||
U.S. Investments (% of Net Assets) | 89.9% | ||
Non-U.S. Investments (% of Net Assets) | 7.8% | ||
Symbol | |||
Investment Class | PENNX | ||
Service Class | RYPFX | ||
Consultant Class | RYPCX | ||
Institutional Class | RPMIX | ||
R Class | RPMRX | ||
K Class | RPMKX | ||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
PMF | 1.02 | 20.06 | |
Russell 2000 | 0.98 | 20.93 | |
Category Median | 1.04 | 20.17 | |
Best Quartile Breakpoint | 1.14 | 19.06 | |
1 Five years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 357 small-cap objective funds (oldest class only) with at least five years of history. | |||
The Fund beat the Russell 2000 on a risk-adjusted basis, as shown by its Sharpe ratio. In addition, the Fund produced lower volatility than the Russell 2000 and 50% of small-cap objective funds, as shown by its standard deviation. | |||
DOWN MARKET PERFORMANCE COMPARISON | |||
The Royce Funds 2013 Annual Report to Shareholders | 17 |
Royce Micro-Cap Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | ||||||||||
July–December 20131 | 17.71 | % | ||||||||
One-Year | 21.29 | |||||||||
Three-Year | 4.82 | |||||||||
Five-Year | 18.45 | |||||||||
10-Year | 8.82 | |||||||||
15-Year | 11.36 | |||||||||
20-Year | 11.38 | |||||||||
Since Inception (12/31/91) | 12.67 | |||||||||
ANNUAL EXPENSE RATIO | ||||||||||
Operating Expenses | 1.49 | % | ||||||||
1 Not annualized | ||||||||||
CALENDAR YEAR TOTAL RETURNS | ||||||||||
Year | RMC | Year | RMC | |||||||
2013 | 21.3 | % | 2005 | 11.5 | % | |||||
2012 | 8.0 | 2004 | 15.8 | |||||||
2011 | -12.1 | 2003 | 52.6 | |||||||
2010 | 30.1 | 2002 | -13.4 | |||||||
2009 | 55.7 | 2001 | 23.1 | |||||||
2008 | -40.9 | 2000 | 16.7 | |||||||
2007 | 7.1 | 1999 | 13.7 | |||||||
2006 | 22.3 | 1998 | -3.3 | |||||||
TOP 10 POSITIONS % of Net Assets | ||||||||||
Patriot Transportation Holding | 1.5 | % | ||||||||
Marten Transport | 1.3 | |||||||||
Shoe Carnival | 1.3 | |||||||||
ATMI | 1.3 | |||||||||
Capella Education | 1.2 | |||||||||
Total Energy Services | 1.2 | |||||||||
Universal Stainless & Alloy Products | 1.2 | |||||||||
Kennedy-Wilson Holdings | 1.2 | |||||||||
Global Power Equipment Group | 1.2 | |||||||||
U.S. Physical Therapy | 1.1 | |||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | ||||||||||
Industrials | 23.7 | % | ||||||||
Consumer Discretionary | 16.1 | |||||||||
Information Technology | 15.2 | |||||||||
Health Care | 10.2 | |||||||||
Materials | 9.3 | |||||||||
Energy | 7.8 | |||||||||
Financials | 7.5 | |||||||||
Consumer Staples | 1.0 | |||||||||
Utilities | 0.1 | |||||||||
Miscellaneous | 5.0 | |||||||||
Cash and Cash Equivalents | 4.1 | |||||||||
Manager’s Discussion Royce Micro-Cap Fund (RMC) enjoyed a solid year on an absolute basis, though it remained behind its micro-cap benchmark and the small-cap Russell 2000 Index. The Fund rose 21.3% in 2013, trailing its benchmark, the Russell Microcap Index, and the Russell 2000 Index, which had respective gains of 45.6% and 38.8% for the same period. A stronger, highly encouraging second half on both an absolute and relative basis was not enough to close the gap between RMC and these two indexes. We were pleased, though, to see a narrowing of the spread. As was the case in 2010, 2011, and 2012, the equity markets kicked the year off in bullish fashion. RMC, however, failed to participate, gaining 2.4% in the first quarter versus 12.6% for its benchmark and 12.4% for the small-cap index. Indeed, the first quarter accounted for most of the Fund’s relative underperformance for the year. Data from FactSet showed that within the Russell 2000 REITs, commercial banks, and biotech were the small-cap index’s top contributing industries in the first quarter. None of these are areas that draw a significant amount of our attention because they typically fail to meet the portfolio’s balance sheet criteria and our general preference for high returns on invested capital. Volatility was a more forceful presence in the second quarter than it was in any other part of the year, though the month of December was close. From the beginning of April through the end of June, RMC picked up 0.6% versus 5.1% for the micro-cap index and 3.1% for the small-cap index. The second quarter saw the first round of tapering talk from the Fed, which initially panicked many investors. Discouraging news out of China, Brazil, Turkey, and Europe also contributed to falling share prices, which did not begin climbing again until early July. The resurgent third quarter was RMC’s strongest on both an absolute and relative basis. The Fund gained 10.0% for the quarter, while the Russell Microcap was up 11.6% and the Russell 2000 rose 10.2%. The Fed talked more about tapering through the summer and early fall, comments that included reassurances that it would begin slowing the pace of its bond-buying program only if it saw solid evidence of a sturdy economy. Along with an economy that kept growing and a federal deficit and unemployment rate that kept declining, investors seemed reassured, even if the rate of change seemed painfully slow. Following a short wave of volatility, which cooled the pace of returns in mid-December, stocks rallied later in the month. For the fourth quarter RMC was up 7.0%, again trailing its benchmark (+10.3%) and the small-cap index (+8.7%). |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Kirkland’s | 1.02% | ||||||||||
Graham Corporation | 0.95 | ||||||||||
hhgregg | 0.77 | ||||||||||
Marten Transport | 0.77 | ||||||||||
Stein Mart | 0.76 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Investment Class (its oldest class). Price and total return information is based on net asset values calculated for shareholder transactions. Certain immaterial adjustments were made to the net assets of Royce Micro-Cap Fund at 12/30/11 for financial reporting purposes, and as a result the net asset values for shareholder transactions on that date and the calendar year total returns based on those net asset values differ from the adjusted net asset values and calendar year total returns reported in the Financial Highlights. Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the Fund’s most current prospectus and include management fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses 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. Shares of RMC’s Service and Consultant Classes bear an annual distribution expense that is not borne by the Investment Class. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
18 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review |
For the periods ended December 31, 2013, the Fund was behind both indexes for one-, three-, and five-year spans, as well as in recent market cycle periods. (Market cycle results can be found on page 6.) However, the Fund outpaced the Russell Microcap for the 10-year period and beat the Russell 2000 for the 15-, 20-year, and since inception (12/31/91) periods ended December 31, 2013. (Data for the Russell Microcap Index only goes back to June 30, 2000.) RMC’s average annual total return since inception was 12.7%. We are quite proud of the Fund’s long-term record. PDI provides outsourced sales and other commercial services to pharmaceutical, biotechnology, and healthcare companies in the U.S. Its contract sales business did not grow as we had anticipated, which hurt results and led us to reduce our position between April and July. As a group, investments in the Materials sector, particularly those in the metals & mining category, detracted most from the portfolio’s calendar-year results. Three of the portfolio’s five largest detractors were precious metals miners. We reduced the Fund’s exposure to this industry, holding positions only in those companies that are well funded or, in the case of Pilot Gold, particularly well managed. Each in our view is capable of weathering a very challenging period for mining businesses—challenges that include rising operating costs and declining commodity prices—and benefiting from a recovery of commodity prices. We added a small number of shares of Endeavour Silver in March and April, trimmed our position in Pilot Gold in March, and bought shares of McEwen Mining in late summer. We also reduced our stake in Sprott Resource, a Toronto-based firm that invests and operates in oil and gas, energy, agriculture, precious metals, and other natural resources. (Four of RMC’s top five detractors were holdovers from the year’s first half.) A rising stock price led us to reduce our position in Kirkland’s, which profited from the resurgence in the housing industry as well as from analytical tools that allowed it to better understand and respond to sales activity at its stores. This created greater efficiency and better inventory management that in turn helped margins. Graham Corporation manufactures custom vacuum and heat transfer equipment. We bought shares when its niche business was slow and its valuation looked particularly attractive to us. Growing sales and record revenue in its fiscal fourth quarter drove its stock price upward, especially in the first half. We trimmed our position throughout the year, with the largest trims in July and October. A retailer specializing in consumer electronics, home appliances, and other items, hhgregg benefited from growing home sales and improving consumer confidence. We began to take gains in April. |
GOOD IDEAS AT THE TIME | |
Endeavour Silver | -0.52% |
Pilot Gold | -0.51 |
Sprott Resource | -0.43 |
PDI | -0.36 |
McEwen Mining | -0.36 |
1 Net of dividends | |
ROYCE MICRO-CAP FUND VS. RUSSELL MICROCAP AND RUSSELL 2000 Value of $10,000 Invested on 6/30/00 (Russell Microcap Inception) | |
Includes reinvestment of distributions. |
PORTFOLIO DIAGNOSTICS | |||||
Fund Net Assets | $848 million | ||||
Number of Holdings | 210 | ||||
Turnover Rate | 22% | ||||
Average Market Capitalization1 | $449 million | ||||
Weighted Average P/E Ratio2,3 | 19.8x | ||||
Weighted Average P/B Ratio2 | 1.7x | ||||
U.S. Investments (% of Net Assets) | 80.7% | ||||
Non-U.S. Investments (% of Net Assets) | 15.2% | ||||
Symbol | |||||
Investment Class | RYOTX | ||||
Service Class | RMCFX | ||||
Consultant Class | RYMCX | ||||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||||
3 The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (28% of portfolio holdings as of 12/31/13). | |||||
MORNINGSTAR STATISTICAL MEASURES1 | |||||
Sharpe Ratio | Standard Deviation | ||||
RMC | 0.95 | 20.00 | |||
Russell Microcap | 0.98 | 22.07 | |||
Category Median | 1.07 | 21.09 | |||
Best Quartile Breakpoint | 1.15 | 20.04 | |||
1 Five years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 18 micro-cap objective funds (oldest class only) with at least five years of history. | |||||
| |||||
DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7.5% or Greater Over the Last 7 Years, in Percentages(%) | |||||
The Royce Funds 2013 Annual Report to Shareholders | 19 |
Royce Total Return Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | |||||||||||
July–December 20131 | 17.65 | % | |||||||||
One-Year | 32.76 | ||||||||||
Three-Year | 14.31 | ||||||||||
Five-Year | 18.41 | ||||||||||
10-Year | 9.10 | ||||||||||
15-Year | 10.13 | ||||||||||
20-Year | 11.75 | ||||||||||
Since Inception (12/15/93) | 11.72 | ||||||||||
ANNUAL EXPENSE RATIO | |||||||||||
Operating Expenses | 1.14 | % | |||||||||
1 Not annualized | |||||||||||
CALENDAR YEAR TOTAL RETURNS | |||||||||||
Year | RTR | Year | RTR | ||||||||
2013 | 32.8 | % | 2005 | 8.2 | % | ||||||
2012 | 14.4 | 2004 | 17.5 | ||||||||
2011 | -1.7 | 2003 | 30.0 | ||||||||
2010 | 23.5 | 2002 | -1.6 | ||||||||
2009 | 26.2 | 2001 | 14.8 | ||||||||
2008 | -31.2 | 2000 | 19.4 | ||||||||
2007 | 2.4 | 1999 | 1.5 | ||||||||
2006 | 14.5 | 1998 | 4.8 | ||||||||
TOP 10 POSITIONS % of Net Assets | |||||||||||
E-L Financial | 1.1 | % | |||||||||
Balchem Corporation | 1.0 | ||||||||||
Towers Watson & Co. Cl. A | 0.9 | ||||||||||
Federated Investors Cl. B | 0.9 | ||||||||||
SEI Investments | 0.8 | ||||||||||
HEICO Corporation | 0.8 | ||||||||||
Genworth MI Canada | 0.8 | ||||||||||
Bank of Hawaii | 0.8 | ||||||||||
Helmerich & Payne | 0.8 | ||||||||||
Cato Corporation (The) Cl. A | 0.8 | ||||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | |||||||||||
Financials | 24.2 | % | |||||||||
Industrials | 19.9 | ||||||||||
Consumer Discretionary | 12.2 | ||||||||||
Materials | 8.8 | ||||||||||
Information Technology | 7.2 | ||||||||||
Health Care | 5.8 | ||||||||||
Energy | 4.0 | ||||||||||
Consumer Staples | 2.8 | ||||||||||
Utilities | 2.6 | ||||||||||
Telecommunication Services | 0.7 | ||||||||||
Diversified Investment Companies | 0.4 | ||||||||||
Miscellaneous | 4.9 | ||||||||||
Bond | 0.1 | ||||||||||
Cash and Cash Equivalents | 6.4 | ||||||||||
Managers’ Discussion Based on the calendar-year performance of Royce Total Return Fund (RTR), certain small-cap stock investors chose other opportunities than those present in moderate dividend-paying companies. The Fund, which invests primarily in dividend-paying small-cap companies, gained 32.8% in 2013, lagging its small-cap benchmark, the Russell 2000 Index, which was up 38.8% for the same period. We were satisfied with the Fund’s results on an absolute basis. While we would have welcomed a stronger relative showing, 2013 performance remained consistent with how RTR has performed in other dynamic bull phases. In addition, non-dividend-paying companies within the Russell 2000 once again outperformed those that do, as was the case in 2011 and 2012. After beating the Russell 2000 in the second half of 2012 (+9.8% versus +7.2%), the Fund slipped behind the small-cap index in the first quarter of 2013 as faster-growing, higher-leveraged issues once more led the small-cap run. For the opening quarter, RTR was up 10.6%—a fine absolute result—compared to 12.4% for the Russell 2000. The second quarter saw more volatility, with April mostly bearish and June fairly unsettled; in the latter case the cause was taper talk on the part of the Fed and rapidly rising interest rates. For the quarter as a whole, the Fund was up 2.0% compared to a 3.1% gain for the Russell 2000. The markets settled down and share prices began moving up again early in July. While generally not as robust as the first quarter, the third was nonetheless strong. RTR gained 8.2% versus a 10.2% increase for the small-cap index from the beginning of July through the end of September. The fast pace relented a bit in the fourth quarter—mid-December was particularly rocky—though small-cap results remained firmly in the black. The Fund was essentially even with the Russell 2000 in this period, both climbing 8.7%. While relative results over the last three calendar years have worn away RTR’s performance edge during certain intermediate-term and market cycle periods, results remained strong over longer-term spans. (Market cycle results can be found on page 6.) The Fund beat the Russell 2000 for the 10-, 15-, 20-year, and since inception (12/15/93) periods ended December 31, 2013. RTR’s average annual total return since inception was 11.7%. We are quite proud of the Fund’s two full decades of performance. Small-cap stocks are an asset class in which dividends are often ignored and volatility can be high, yet we see dividends as one of the strongest links on a company’s capital allocation chain |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Nu Skin Enterprises Cl. A | 1.09% | ||||||||||
Towers Watson & Company Cl. A | 0.71 | ||||||||||
E-L Financial | 0.66 | ||||||||||
G-III Apparel Group | 0.64 | ||||||||||
GameStop Corporation Cl. A | 0.63 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Investment Class (its oldest class). Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the Fund’s most current prospectus and include management fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses 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. Shares of RTR’s Service, Consultant, R, and K Classes bear an annual distribution expense that is not borne by the Investment Class. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
20 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review and a key element of strong, long-term total returns. It seems doubtful to us that the market can sustain its currently fervid pace, so we see the potential attraction in the kinds of conservatively capitalized, dividend-paying small-cap companies that we seek for RTR’s portfolio. Investors began to pay more attention to business fundamentals in the last six months of 2012, and while the flirtation was all too brief, we see the possibility of greater commitment in a more challenging market, especially one with rising interest rates, which is likely to provide renewed interest in businesses with strong balance sheets. We are very comfortable with the way the portfolio is positioned as we look forward. The top sectors for the calendar year were Financials, which led by a wide margin, and Industrials, which also posted impressive net gains. Other notable contributions came from the Consumer Discretionary and Energy sectors. Ten of the Fund’s 11 equity sectors finished the year in the black, an unsurprising development in such a vigorously bullish year. At the industry level, insurance companies and capital markets stocks, both from the Financials sector, were the standouts. In the insurance industry, E-L Financial, an investment and insurance holding company based in Toronto, was the top contributor. We like its core business and dividend and were pleased to see other investors attracted to the RTR’s largest holding at year-end. Nu Skin Enterprises develops and distributes personal care skin products worldwide. After enjoying a strong first half, its share price gained additional momentum in the year’s last six months. In October, the company announced stronger-than-anticipated third-quarter earnings and raised its full-year guidance for 2013, driven by the success of a limited-time offer for its new weight management system. Towers Watson & Company provides human resource, financial consulting, and other related services. Its price rose more or less steadily throughout the year. In May the firm’s management raised adjusted EPS (earnings per share) guidance for fiscal 2013 while the stock also gained from the opening of Obamacare insurance exchanges in October. It then raised its dividend in November. We have liked its core business and steady earnings for several years having first bought shares in the portfolio in 2003. We added to our stake in clothing retailer American Eagle Outfitters because we think its niche in teen clothing is strong enough to withstand increased competition and recent declines in sales. Nam Tai Electronics makes components including LCD (liquid crystal display) modules and panels. Slumping demand led the company to ponder a halt in production, which sparked a significant sell-off in late April. We significantly reduced our position between May and July. |
GOOD IDEAS AT THE TIME | |
American Eagle Outfitters | -0.25% |
Nam Tai Electronics | -0.17 |
Central Fund of Canada Cl. A | -0.16 |
NETGEAR | -0.15 |
IAMGOLD Corporation | -0.08 |
1 Net of dividends | |
ROYCE TOTAL RETURN FUND VS. RUSSELL 2000 Value of $10,000 Invested on 12/15/93 | |
Includes reinvestment of distributions. | |||
PORTFOLIO DIAGNOSTICS | |||
Fund Net Assets | $5,695 million | ||
Number of Holdings | 507 | ||
Turnover Rate | 21% | ||
Average Market Capitalization1 | $2,386 million | ||
Weighted Average P/E Ratio2,3 | 19.0x | ||
Weighted Average P/B Ratio2 | 2.1x | ||
U.S. Investments (% of Net Assets) | 82.0% | ||
Non-U.S. Investments (% of Net Assets) | 11.6% | ||
Symbol | |||
Investment Class | RYTRX | ||
Service Class | RYTFX | ||
Consultant Class | RYTCX | ||
Institutional Class | RTRIX | ||
W Class | RTRWX | ||
R Class | RTRRX | ||
K Class | RTRKX | ||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
RTR | 1.09 | 16.82 | |
Russell 2000 | 0.98 | 20.93 | |
Category Median | 1.04 | 20.17 | |
Best Decile Breakpoint | 1.23 | 17.77 | |
1 Five years ended 12/31/13. Category Median and Best Decile Breakpoint based on 357 small-cap objective funds (oldest class only) with at least five years of history. | |||
The Fund beat the Russell 2000 and performed within the top 50% of small-cap objective funds on a risk-adjusted basis, as shown by its Sharpe ratio. In addition, the Fund produced lower volatility than the Russell 2000 and 90% of small-cap objective funds, as shown by its standard deviation. | |||
DOWN MARKET PERFORMANCE COMPARISON | |||
The Royce Funds 2013 Annual Report to Shareholders | 21 |
Royce Low-Priced Stock Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | ||||||||||
July–December 20131 | 14.31 | % | ||||||||
One-Year | 12.91 | |||||||||
Three-Year | 0.25 | |||||||||
Five-Year | 15.27 | |||||||||
10-Year | 7.05 | |||||||||
15-Year | 11.01 | |||||||||
20-Year | 11.67 | |||||||||
Since Inception (12/15/93) | 11.65 | |||||||||
ANNUAL EXPENSE RATIOS | ||||||||||
Gross Operating Expenses | 1.58 | % | ||||||||
Net Operating Expenses | 1.50 | |||||||||
1 Not annualized | ||||||||||
CALENDAR YEAR TOTAL RETURNS | ||||||||||
Year | RLP | Year | RLP | |||||||
2013 | 12.9 | % | 2005 | 9.7 | % | |||||
2012 | 4.5 | 2004 | 13.6 | |||||||
2011 | -14.6 | 2003 | 44.0 | |||||||
2010 | 31.5 | 2002 | -16.3 | |||||||
2009 | 53.6 | 2001 | 25.1 | |||||||
2008 | -36.0 | 2000 | 24.0 | |||||||
2007 | 2.3 | 1999 | 29.8 | |||||||
2006 | 19.0 | 1998 | 2.4 | |||||||
TOP 10 POSITIONS % of Net Assets | ||||||||||
Value Partners Group | 2.1 | % | ||||||||
Thor Industries | 2.1 | |||||||||
Fairchild Semiconductor International | 2.0 | |||||||||
Kennedy-Wilson Holdings | 2.0 | |||||||||
Calfrac Well Services | 2.0 | |||||||||
Trican Well Service | 2.0 | |||||||||
Medicines Company (The) | 1.9 | |||||||||
Cirrus Logic | 1.9 | |||||||||
Buckle (The) | 1.9 | |||||||||
MKS Instruments | 1.9 | |||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | ||||||||||
Information Technology | 23.9 | % | ||||||||
Materials | 14.5 | |||||||||
Financials | 13.5 | |||||||||
Industrials | 12.8 | |||||||||
Energy | 12.8 | |||||||||
Consumer Discretionary | 11.8 | |||||||||
Health Care | 4.1 | |||||||||
Consumer Staples | 4.0 | |||||||||
Utilities | 0.2 | |||||||||
Miscellaneous | 1.3 | |||||||||
Cash and Cash Equivalents | 1.1 | |||||||||
Manager’s Discussion It was a challenging and disappointing year for Royce Low-Priced Stock Fund (RLP). The Fund was up 12.9% in 2013, trailing its small-cap benchmark, the Russell 2000 Index, which gained 38.8% for the same period. In light of the generally robust performance for stocks since the post-Financial Crisis bottom on March 9, 2009 and the Fund’s once-stalwart intermediate- and long-term advantage relative to the Russell 2000, the last three years have been particularly tough. The year began with a bang for many stocks, with most of the major domestic indexes touching double-digit returns in the first quarter. RLP, however, barely participated in the good times, up 1.4% compared to 12.4% for the Russell 2000. This wide spread accounted for the bulk of the Fund’s relative disadvantage for the year. In the more volatile second quarter RLP fell 2.6% versus a gain of 3.1% for the Russell 2000. On both an absolute and relative basis, the Fund recovered somewhat in the third quarter, gaining 9.9% versus 10.2%, sparked by strong results from the Materials, Financials, and Industrials sectors. When the markets cooled off a bit in the year’s final quarter, RLP was unable to keep up this promising momentum; the Fund was up 4.0% while its benchmark rose 8.7%. The difficult year hurt performance over intermediate- and market cycle periods. (Market cycle performance can be found on page 6.) RLP outperformed the Russell 2000 for the 15-, 20-year, and since inception (12/15/93) periods ended December 31, 2013. The Fund’s average annual total return since inception was 11.7%. We remain very proud of the Fund’s long-term record. The portfolio’s heavy concentration in more economically sensitive cyclical sectors such as Energy, Industrials, Materials, and Technology continued to work against it in 2013—especially in the first half of the year—as did the market’s ongoing penchant for defensive stocks and fast-growing companies that in many cases were carrying considerable debt. For much of 2013, investors also remained enamored with higher-yielding vehicles, especially REITs, MLPs, and Utilities, while also demonstrating a preference for fixed-income securities. It bears repeating that these are not the sorts of investments that we seek in RLP’s portfolio, focusing instead on companies with solid balance sheets, high returns on invested capital, and positive cash flow. Many companies that fit those criteria have been out of favor in the |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Nu Skin Enterprises Cl. A | 2.66% | ||||||||||
E-House China Holdings ADR | 1.04 | ||||||||||
Kennedy-Wilson Holdings | 0.84 | ||||||||||
Medicines Company (The) | 0.82 | ||||||||||
GameStop Corporation Cl. A | 0.80 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Service Class (its oldest class). Price and total return information is based on net asset values for shareholder transactions. Certain immaterial adjustments were made to the net assets of Royce Low-Priced Stock Fund at 6/30/13 for financial reporting purposes, and as a result the net asset values for shareholder transactions and the calendar year total returns based on those net asset values differ from the adjusted net asset values and calendar year total returns reported in the Financial Highlights. Gross operating expenses reflect the Fund’s gross total annual operating expenses for the Service Class, including management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Net operating expenses reflect contractual fee waivers and/or expense reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the Service Class’s net annual operating expenses, other than acquired fund fees and expenses, at or below 1.49% through April 30, 2014. Acquired fund fees and expenses 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. Shares of RLP’s R Class bear an annual distribution expense that is higher than that of the Service Class. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
22 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review |
era of multiple rounds of quantitative easing and zero interest rates. In addition, a number of industries that had been very successful in the initial recovery phase following the Financial Crisis began correcting sharply in 2011, such as precious metals mining companies, and are yet to make recoveries. Indeed, the metals & mining industry remained a trouble spot in 2013, accounting for four of RLP’s top five, eight of its top 10, and 12 of its top 20 detractors. We sold our shares of Allied Nevada Gold, reduced our position in Pretium Resources, and in the second half added to our stakes in Hochschild Mining and Pan American Silver, believing that each was a well-managed business with the resources to turn things around. Performance for several industries in other cyclical sectors that we have liked best over the last several years—Energy, Industrials, and Technology—began to pick up in the second half of 2013. The Fund’s top-contributing sectors for the period were Information Technology, Financials, Industrials, and Consumer Discretionary while the top industry groups were semiconductor & semiconductor equipment (Information Technology), personal products (Consumer Staples), and energy equipment & services. RLP’s top contributor by a wide margin was Nu Skin Enterprises, which develops and distributes personal care skin products worldwide. A top net gainer in the first half, its share price gained additional momentum after the company announced stronger-than-anticipated third-quarter earnings and raised its full-year guidance for 2013 in October, driven by the success of a limited-time offer for its new weight management system. Shanghai-based E-House China Holdings is a leading real estate services business in China whose shares took off in the second half, in particular following the September announcement by Chinese President Xi Jinping that the government was committed to solving the economy’s problems. Over the last year, we have sought to high-grade the portfolio by selling positions that we thought had reached or exceeded their full value and those in which our conviction level had declined. This resulted in the portfolio holding a significantly lower number of securities at the end of 2013 than it did at the end of 2012, 100 versus 154. With substantial investments of our own in the Fund, we understand how hard the last few years have been. However, we firmly believe that a business buyer’s approach to investing, as unpopular as it has been over the last few years, remains viable within the low-priced universe and elsewhere. While many of what we regard as the most compelling values that we have found during this period have not developed as we expected, we have chosen to remain patient with many of them, encouraged by some of the subtle shifts that we saw in the last six months of 2013 as expectations about tapering have begun to create a more historically typical interest-rate environment. |
GOOD IDEAS AT THE TIME | |
Allied Nevada Gold | -2.11% |
Hochschild Mining | -1.41 |
Pretium Resources | -1.18 |
Pan American Silver | -0.72 |
Acacia Research | -0.65 |
1 Net of dividends | |
ROYCE LOW-PRICED STOCK FUND VS. RUSSELL 2000 Value of $10,000 Invested on 12/15/93 | |
Includes reinvestment of distributions. |
PORTFOLIO DIAGNOSTICS | |||||
Fund Net Assets | $1,450 million | ||||
Number of Holdings | 100 | ||||
Turnover Rate | 16% | ||||
Average Market Capitalization1 | $1,289 million | ||||
Weighted Average P/E Ratio2,3 | 19.3x | ||||
Weighted Average P/B Ratio2 | 1.6x | ||||
U.S. Investments (% of Net Assets) | 61.2% | ||||
Non-U.S. Investments (% of Net Assets) | 37.7% | ||||
Symbol | |||||
Investment Class | RLPHX | ||||
Service Class | RYLPX | ||||
Institutional Class | RLPIX | ||||
R Class | RLPRX | ||||
K Class | RLPKX | ||||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||||
3 The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (24% of portfolio holdings as of 12/31/13). | |||||
MORNINGSTAR STATISTICAL MEASURES1 | |||||
Sharpe Ratio | Standard Deviation | ||||
RLP | 0.75 | 21.94 | |||
Russell 2000 | 0.98 | 20.93 | |||
Category Median | 1.04 | 20.17 | |||
Best Quartile Breakpoint | 1.14 | 19.06 | |||
1 Five years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 357 small-cap objective funds (oldest class only) with at least five years of history. | |||||
DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7.5% or Greater Over the Last 7 Years, in Percentages(%) | |||||
The Royce Funds 2013 Annual Report to Shareholders | 23 |
Royce Heritage Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | |||||||||||
July–December 20131 | 15.15 | % | |||||||||
One-Year | 25.99 | ||||||||||
Three-Year | 9.30 | ||||||||||
Five-Year | 20.38 | ||||||||||
10-Year | 10.10 | ||||||||||
15-Year | 12.16 | ||||||||||
Since Inception (12/27/95) | 14.00 | ||||||||||
ANNUAL EXPENSE RATIO | |||||||||||
Operating Expenses | 1.51 | % | |||||||||
1 Not annualized | |||||||||||
CALENDAR YEAR TOTAL RETURNS | |||||||||||
Year | RHF | Year | RHF | ||||||||
2013 | 26.0 | % | 2005 | 8.7 | % | ||||||
2012 | 14.3 | 2004 | 20.4 | ||||||||
2011 | -9.3 | 2003 | 38.1 | ||||||||
2010 | 27.5 | 2002 | -18.9 | ||||||||
2009 | 51.8 | 2001 | 20.5 | ||||||||
2008 | -36.2 | 2000 | 11.7 | ||||||||
2007 | 1.2 | 1999 | 41.7 | ||||||||
2006 | 22.6 | 1998 | 19.5 | ||||||||
TOP 10 POSITIONS % of Net Assets | |||||||||||
Copart | 2.5 | % | |||||||||
DENTSPLY International | 1.5 | ||||||||||
KKR & Co. L.P. | 1.5 | ||||||||||
Reliance Steel & Aluminum | 1.4 | ||||||||||
Transocean | 1.3 | ||||||||||
Ritchie Bros. Auctioneers | 1.2 | ||||||||||
ManpowerGroup | 1.0 | ||||||||||
Donaldson Company | 1.0 | ||||||||||
Signet Jewelers | 1.0 | ||||||||||
Expeditors International of Washington | 1.0 | ||||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | |||||||||||
Industrials | 22.8 | % | |||||||||
Information Technology | 16.5 | ||||||||||
Financials | 14.7 | ||||||||||
Consumer Discretionary | 9.7 | ||||||||||
Materials | 8.9 | ||||||||||
Health Care | 4.9 | ||||||||||
Energy | 4.8 | ||||||||||
Consumer Staples | 0.8 | ||||||||||
Utilities | 0.2 | ||||||||||
Miscellaneous | 4.8 | ||||||||||
Cash and Cash Equivalents | 11.9 | ||||||||||
Managers’ Discussion While it might be hard to tell by looking only at its calendar-year return, we were not entirely pleased with the 2013 performance of Royce Heritage Fund (RHF), which turned in a fine performance on an absolute level but came well short of its small-cap benchmark. The Fund rose 26.0% in 2013, lagging its benchmark, the Russell 2000 Index, which increased 38.8% for the same period. RHF trailed in each of the year’s four quarters, with its relative disadvantage consistent through most of 2013. So while the Fund took part in the primarily bullish market, its participation was limited. Considering our disciplined value approach this was not a disappointment in itself. The highly bullish first quarter saw many cyclical stocks fall behind more defensive areas after leading through the second half of 2012, when RHF handily beat the Russell 2000 (+11.6% versus +7.2%). RHF was up 9.2% in the first quarter compared to a 12.4% increase for the small-cap index. Volatility returned to the markets in the second quarter, starting with a bearish April. Negative macro news kept share prices moving in contrasting directions through much of the quarter. Challenges for China, unrest in developing nations such as Turkey and Brazil, a sharp rise in the 10-year Treasury rate during May and June, and word from the Fed that it would slow the pace of bond purchases at the end of 2013 all worried investors, primarily in April and June. However, unlike in 2011 and 2012, the domestic equity markets ultimately handled this news well in 2013. For the second quarter, RHF gained 0.2% while the Russell 2000 rose 3.1%. Perhaps the most convincing sign that investors were able to shrug off potentially disturbing macro developments was the generally strong showing for stocks in the third quarter, a period in which the Fund gained 8.4% compared to a 10.2% increase for its benchmark. The fourth quarter was not quite as robust—December proving somewhat volatile—but returns were solidly positive. RHF was up 6.2% in the year’s last three months compared to 8.7% for the Russell 2000. As highly risk-conscious managers, we were often frustrated navigating a market that exhibited only one direction—2013 being largely free of corrections—and showed the most favor to companies that we would deem low quality as so many small-cap performance leaders had high leverage, low ROIC (return on invested capital) and low rates of profitability. We were therefore not entirely surprised to have underperformed for the period. |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
WisdomTree Investments | 0.98% | ||||||||||
ManpowerGroup | 0.97 | ||||||||||
Towers Watson & Company Cl. A | 0.89 | ||||||||||
KKR & Co. L.P. | 0.73 | ||||||||||
TD Ameritrade Holding Corporation | 0.58 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Service Class (its oldest class). Price and total return information is based on net asset values calculated for shareholder transactions. Certain immaterial adjustments were made to the net assets of Royce Heritage Fund at 12/30/11 for financial reporting purposes, and as a result the net asset values for shareholder transactions on that date and the calendar year total returns based on those net asset values differ from the adjusted net asset values and calendar year total returns reported in the Financial Highlights. Operating expenses reflect the Fund’s total annual operating expenses for the Service Class as of the Fund’s most current prospectus and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Shares of RHF’s Consultant and R Classes bear an annual distribution expense that is higher than that of the Service Class. Acquired fund fees and expenses 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. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
24 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review Relative results improved over longer time spans. (Market cycle results are on page 6.) The Fund outpaced its benchmark for the five-, 10-, 15-year, and since inception (12/27/95) periods ended December 31, 2013. RHF’s average annual total return since inception was 14.0%, a long-term record in which we take considerable pride. The precious metals mining industry endured a miserable 2013, with respective silver and gold price declines of 36% and 28% in 2013 combining with rising operational costs to create an inhospitable environment. Valuations for several companies dropped to levels comparable to or lower than those of the market bottom in early 2009, which meant that, for now, the Fund has paid a hefty price for this exposure. Of the positions that detracted most from performance for the period, four of the top five, seven of the top 10, and 10 of the top 20 came from the metals & mining industry; all but two were involved in precious metals mining. Our view of the fundamentals and/or long-term prospects for individual businesses guided our actions through these difficult days. We sold our positions in Hochschild Mining, Allied Nevada Gold, and Gold Fields while we built positions Randgold Resources and Pan American Silver, confident that the latter two could eventually turn around. Elsewhere in the portfolio, the news was mostly positive. Eight of the Fund’s 11 equity sectors posted net gains for the period, led by Industrials and Financials. More-than-respectable net gains also came from the Information Technology and Consumer Discretionary sectors. Interestingly, each of RHF’s top contributors through the end of June made the same list for the full year, though in a slightly altered order. The Fund’s top contributor for the year was WisdomTree Investments, an asset management company that primarily sponsors exchange traded funds. Robust inflows and strong product line growth drove results. We sold our shares at rising prices between January and September. Although we still like its business, we also parted ways with Towers Watson & Company. The company offers human resource and financial consulting services and also manages employee benefit programs. One key to its strong year was its launch of One Exchange, the industry’s first health benefits solution that leverages private and public health insurance exchanges. Top-ten position Manpower Group runs a global business providing employment services that include temporary staffing services, contract services, and training and testing of temporary and permanent workers. It benefited from the ongoing shift from permanent to temporary labor in certain countries and a slow recovery in France, its largest market. We were also intrigued by Manpower’s decision to collapse what were effectively two business models (centralized infrastructure and local branch infrastructure) into one as a significant reset to the company’s overall profitability. |
GOOD IDEAS AT THE TIME | |
Hochschild Mining | -0.56% |
Allied Nevada Gold | -0.49 |
Gold Fields ADR | -0.48 |
Randgold Resources ADR | -0.40 |
Acacia Research | -0.32 |
1 Net of dividends | |
ROYCE HERITAGE FUND VS. RUSSELL 2000 Value of $10,000 Invested on 12/27/95 | |
Includes reinvestment of distributions. | |||
PORTFOLIO DIAGNOSTICS | |||
Fund Net Assets | $370 million | ||
Number of Holdings | 193 | ||
Turnover Rate | 79% | ||
Average Market Capitalization1 | $3,175 million | ||
Weighted Average P/E Ratio2,3 | 22.0x | ||
Weighted Average P/B Ratio2 | 2.8x | ||
U.S. Investments (% of Net Assets) | 65.1% | ||
Non-U.S. Investments (% of Net Assets) | 23.0% | ||
Symbol | |||
Investment Class | RHFHX | ||
Service Class | RGFAX | ||
Consultant Class | RYGCX | ||
R Class | RHFRX | ||
K Class | RHFKX | ||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
RHF | 0.98 | 21.28 | |
Russell 2000 | 0.98 | 20.93 | |
Category Median | 1.04 | 20.17 | |
Best Quartile Breakpoint | 1.14 | 19.06 | |
1 Five years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 357 small-cap objective funds (oldest class only) with at least five years of history. | |||
DOWN MARKET PERFORMANCE COMPARISON | |||
The Royce Funds 2013 Annual Report to Shareholders | 25 |
Royce Opportunity Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | ||||||||||
July–December 20131 | 21.10 | % | ||||||||
One-Year | 43.50 | |||||||||
Three-Year | 15.26 | |||||||||
Five-Year | 27.13 | |||||||||
10-Year | 9.95 | |||||||||
15-Year | 13.74 | |||||||||
Since Inception (11/19/96) | 13.84 | |||||||||
ANNUAL EXPENSE RATIO | ||||||||||
Operating Expenses | 1.14 | % | ||||||||
1 Not annualized | ||||||||||
CALENDAR YEAR TOTAL RETURNS | ||||||||||
Year | ROF | Year | ROF | |||||||
2013 | 43.5 | % | 2005 | 4.8 | % | |||||
2012 | 22.6 | 2004 | 17.5 | |||||||
2011 | -13.0 | 2003 | 72.9 | |||||||
2010 | 33.8 | 2002 | -17.0 | |||||||
2009 | 62.1 | 2001 | 17.3 | |||||||
2008 | -45.7 | 2000 | 19.8 | |||||||
2007 | -2.0 | 1999 | 32.3 | |||||||
2006 | 18.8 | 1998 | 4.9 | |||||||
TOP 10 POSITIONS % of Net Assets | ||||||||||
Commercial Metals | 0.8 | % | ||||||||
NCI Building Systems | 0.8 | |||||||||
Sanmina Corporation | 0.7 | |||||||||
OM Group | 0.7 | |||||||||
Unifi | 0.7 | |||||||||
Kaiser Aluminum | 0.7 | |||||||||
SunEdison | 0.7 | |||||||||
Federal Signal | 0.7 | |||||||||
Cambrex Corporation | 0.7 | |||||||||
Ingram Micro Cl. A | 0.7 | |||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | ||||||||||
Information Technology | 25.8 | % | ||||||||
Industrials | 20.2 | |||||||||
Consumer Discretionary | 12.6 | |||||||||
Financials | 9.7 | |||||||||
Materials | 8.2 | |||||||||
Energy | 5.4 | |||||||||
Health Care | 5.2 | |||||||||
Consumer Staples | 0.6 | |||||||||
Telecommunication Services | 0.4 | |||||||||
Miscellaneous | 4.9 | |||||||||
Preferred Stock | 0.1 | |||||||||
Cash and Cash Equivalents | 6.9 | |||||||||
Managers’ Discussion In 2013, Royce Opportunity Fund (ROF) continued to be one of the happy exceptions in a now-three-year period of challenging times for active management in the small-cap space. The Fund gained 43.5% in 2013, outpacing its small-cap benchmark, the Russell 2000 Index, which was up 38.8% for the same period. ROF’s calendar-year result formed part of a longer-term trend of outstanding absolute and relative returns. Small-caps made a fast start to the year, and the Fund was near the front of the field. During the bullish first quarter, ROF gained 13.3% compared to a 12.4% increase for its benchmark. Performance was again dominated by faster-growing, defensive areas of the market, as well as by higher-yielding, but arguably lower-quality issues, all at the expense of more cyclical areas once again. This bull phase was in contrast to the second half of 2012, which saw much-improved results from higher-quality companies—that is, those with higher returns on invested capital. Yet the Fund managed very well in both market phases. Volatility returned to the markets in the form of a bearish April that gave way to a bullish May, while June was already proving to be a volatile month when the Fed announced on the 19th that it would likely begin to taper its bond-buying program later in 2013. Along with a fast-rising rate on the 10-year Treasury, underwhelming news out of China, and growing unrest in the developing world, the global markets swooned, though most domestic indexes were recovering by the end of the month. The Fund did well in this more challenging environment. ROF gained 4.6% for the second quarter, ahead of the Russell 2000, which was up 3.1%. The third quarter saw a resumption of the red-hot pace of the first. The Fed signaled that tapering would be very gradual and in any case would not be starting for a few months, and the U.S. economy continued to expand, although at a slower pace than most of us would prefer. In this more placid climate, ROF fell behind the Russell 2000, gaining 9.4% in the third quarter while the small-cap index was up 10.2%. The market’s pace slowed a bit in the fourth quarter with more volatility in December. The Fund reasserted its edge, beating the Russell 2000 with a gain of 10.7% compared to 8.7% for the benchmark. We were very pleased with ROF’s sterling results over recent calendar year and market cycle periods on both an absolute and relative basis. (Market cycle results can be found on page 6.) The Fund outperformed the Russell 2000 for the one-, five-, 10-, 15-year, and since |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
SunPower Corporation | 1.17% | ||||||||||
SunEdison | 0.87 | ||||||||||
Tower International | 0.70 | ||||||||||
Unifi | 0.67 | ||||||||||
Radian Group | 0.63 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Investment Class (its oldest class). Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the Fund’s most current prospectus and include management fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses 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. Shares of ROF’s Service, Consultant, R, and K Classes bear an annual distribution expense that is not borne by the Investment Class. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
26 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review inception (11/19/96) periods ended December 31, 2013. (And it trailed the Russell 2000 very narrowly for the three-year period, +15.3% versus +15.7%.) ROF’s average annual total return for the since inception period was 13.8%. We remain very proud of the Fund’s long-term record. We are also pleased that, effective October 22, 2013, Bill Hench began to serve as a portfolio manager after serving as assistant portfolio manager since 2004. Information Technology led all sectors, closely followed by Industrials. Consumer Discretionary and Financials also made strong net contributions. The strength of tech holdings was in part the result of the sector’s substantial overweight in the Fund throughout 2013. The portfolio holds several technology businesses that we think are just beginning to recover. ROF’s two top contributors came from the semiconductor group, though the market’s interest in each company had more to do with their respective roles in the red-hot solar energy industry. We reduced our position in both stocks as their respective share prices moved past our sell targets. SunPower Corporation manufactures high-performance solar electric equipment. SunEdison produces electronic-grade polysilicon used for electronics, solar cells, and film devices while also developing solar power projects. In spite of fears that reduced government subsidies would derail growth, the demand for solar technology shows few signs of cooling off. Many lesser-quality players have either exited the business or lost market share. Technological efficiency has improved, which has helped bring down costs, while China called for a five-fold increase in installed solar capacity in 2013. Tower International operates a global business manufacturing metal automotive components for OEMs (original equipment manufacturers). Demand for auto parts has held up well worldwide, attracting interest to its shares. We began to take gains in May as its stock price revved up. The rising share price of Unifi also led us to sell shares through much of 2013. The North Carolina-based textile maker with operations in China reversed course after its shares were sold off in part because cotton prices were high. Their subsequent decline, along with the introduction of a polyester fabric made from recycled materials, reignited interest in its shares. Weaker earnings hurt the Fund’s two largest detractors. Walter Energy produces metallurgical coal. Prices fell in the wake of slack demand in China. We sold our shares shortly after the company’s efforts to refinance its debt looked murky, then reinitiated a position when a new plan was announced. We chose to add to our stake in oil and gas driller Layne Christensen throughout the year based on our belief that its industry niche and efforts to improve operations would eventually help it to reverse course. |
GOOD IDEAS AT THE TIME | |
Walter Energy | -0.37% |
Layne Christensen | -0.18 |
Tower Group International | -0.16 |
GSE Holding | -0.15 |
Coldwater Creek | -0.14 |
1 Net of dividends | |
ROYCE OPPORTUNITY FUND VS. RUSSELL 2000 Value of $10,000 Invested on 11/19/96 | |
Includes reinvestment of distributions. | |||
PORTFOLIO DIAGNOSTICS | |||
Fund Net Assets | $2,548 million | ||
Number of Holdings | 320 | ||
Turnover Rate | 39% | ||
Average Market Capitalization1 | $849 million | ||
Weighted Average P/B Ratio2 | 1.6x | ||
U.S. Investments (% of Net Assets) | 88.6% | ||
Non-U.S. Investments (% of Net Assets) | 4.5% | ||
Symbol | |||
Investment Class | RYPNX | ||
Service Class | RYOFX | ||
Consultant Class | ROFCX | ||
Institutional Class | ROFIX | ||
R Class | ROFRX | ||
K Class | ROFKX | ||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
ROF | 1.03 | 26.80 | |
Russell 2000 | 0.98 | 20.93 | |
Category Median | 1.04 | 20.17 | |
Best Quartile Breakpoint | 1.14 | 19.06 | |
1 Five years ended 12/31/13 Category Median and Best Quartile Breakpoint based on 357 small-cap objective funds (oldest class only) with at least five years of history. | |||
The Fund beat the Russell 2000 on a risk-adjusted basis, as shown by its Sharpe ratio. | |||
DOWN MARKET PERFORMANCE COMPARISON | |||
The Royce Funds 2013 Annual Report to Shareholders | 27 |
Royce Value Plus Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | ||||||||||
July–December 20131 | 17.93 | % | ||||||||
One-Year | 32.52 | |||||||||
Three-Year | 11.19 | |||||||||
Five-Year | 18.40 | |||||||||
10-Year | 9.38 | |||||||||
Since Inception (6/14/01) | 12.87 | |||||||||
ANNUAL EXPENSE RATIO | ||||||||||
Operating Expenses | 1.46 | % | ||||||||
1 Not annualized | ||||||||||
CALENDAR YEAR TOTAL RETURNS | ||||||||||
Year | RVP | Year | RVP | |||||||
2013 | 32.5 | % | 2007 | 3.2 | % | |||||
2012 | 15.2 | 2006 | 19.3 | |||||||
2011 | -10.0 | 2005 | 13.2 | |||||||
2010 | 19.7 | 2004 | 28.2 | |||||||
2009 | 41.4 | 2003 | 79.9 | |||||||
2008 | -41.1 | 2002 | -14.7 | |||||||
TOP 10 POSITIONS % of Net Assets | ||||||||||
Rogers Corporation | 2.2 | % | ||||||||
InvenSense | 1.8 | |||||||||
Myriad Genetics | 1.7 | |||||||||
Carter’s | 1.7 | |||||||||
FLIR Systems | 1.6 | |||||||||
Sierra Wireless | 1.6 | |||||||||
Cubist Pharmaceuticals | 1.6 | |||||||||
Infinera Corporation | 1.6 | |||||||||
Beacon Roofing Supply | 1.6 | |||||||||
UCB | 1.6 | |||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | ||||||||||
Information Technology | 27.0 | % | ||||||||
Industrials | 16.0 | |||||||||
Consumer Discretionary | 12.1 | |||||||||
Financials | 11.4 | |||||||||
Health Care | 11.0 | |||||||||
Materials | 6.7 | |||||||||
Energy | 2.9 | |||||||||
Consumer Staples | 1.8 | |||||||||
Miscellaneous | 4.8 | |||||||||
Cash and Cash Equivalents | 6.3 | |||||||||
Manager’s Discussion Royce Value Plus Fund (RVP) turned in a terrific performance on an absolute basis in 2013. The Fund gained 32.5% in 2013, trailing its small-cap benchmark, the Russell 2000 Index, which was up 38.8% for the same period. For more than two years, we have been utilizing more of a GARP (growth at a reasonable price) approach in the portfolio, focusing on businesses with better-than-average current growth prospects that also possess attractive valuations. While these efforts have not yet resulted in improved relative performance, they have led to stronger absolute results. We took particular encouragement from the Fund’s strong showing in the second half of 2012. Although this was admittedly a short-term span, we were still pleased that RVP beat its benchmark (+8.8% versus +7.2%). In the first quarter of 2013, investors once more looked to fast-growing and/or defensive areas of the equity marketplace, which caused the more cyclical areas that we tend to favor to give up their briefly held leadership position. The Fund underperformed the Russell 2000 in the opening quarter in part due to the struggles of the Fund’s last remaining holdings in precious metals companies. RVP gained 9.4% compared to 12.4% for the small-cap index in the first quarter. The more volatile second quarter featured rising interest rates, the announcement by the Fed that it would begin to taper the pace of its monthly bond-buying program later in the year, and discouraging news out of China and other key spots in the developing world. For the quarter, the Fund was up 2.7% while the Russell 2000 gained 3.1%. Once the markets began to digest all of these developments, however, they quickly resumed the fast pace set earlier in the year. The Fund participated, climbing 9.1% compared to the 10.2% increase for its benchmark. December was difficult at times, which led to slightly more subdued results in the fourth quarter. Anxiety about tapering, talk of a possible equity bubble, and concern over holiday retail sales all may have played a role in the mid-December slide, but share prices recovered nicely by the end of the month. RVP again did well on an absolute basis while trailing the small-cap index. For the fourth quarter, the Fund rose 8.1% while the Russell 2000 was up 8.7%. One consequence of continuing to trail the benchmark is that RVP’s performance advantage was limited to longer-term time spans. The Fund outperformed the Russell 2000 for the 10-year and since inception (6/14/01) periods ended December 31, 2013. (Market cycle results can be found on page 6.) RVP’s average annual total return since inception was 12.9%. Information Technology, the Fund’s largest sector, was also its top performer in 2013. Four of RVP’s five best-performing industry groups were tech businesses—electronic equipment, instruments & components; communications equipment; software; and semiconductors & |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Sierra Wireless | 1.03% | ||||||||||
Worthington Industries | 1.02 | ||||||||||
Splunk | 0.94 | ||||||||||
LSI Corporation | 0.93 | ||||||||||
InvenSense | 0.89 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Service Class (its oldest class). Operating expenses reflect the Fund’s total annual operating expenses for the Service Class as of the Fund’s most current prospectus and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses reflect the estimated amount of fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Shares of RVP’s Consultant and R Classes bear an annual distribution expense that is higher than that of the Service Class. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
28 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review semiconductor equipment. In addition, two important technology-related themes remain prominent—big data and machine-to-machine (M2M) technology, also known as the “Internet of Things.” The latter typically involves sensors or other technology on one piece of equipment that can capture information that is then relayed through a wireless or wired network to a computer that translates what is gathered into meaningful data. The data can then make machines work better. Sierra Wireless is a wireless data communications equipment company with a global business providing M2M communications and mobile components. We think it’s a well-managed business that executes very effectively. Although we trimmed our stake as its share price rose in 2013, it was RVP’s sixth-largest holding at the end of 2013. Strong net gains for the period also came from the Industrials, Consumer Discretionary, Financials, and Health Care sectors. Worthington Industries, from the Materials sector, is a diversified steel processing company. The CEO and son of the firm’s founder made the strategic decision about four years ago to focus on returns and profitability. The firm sold several non-core segments and kept or acquired higher-margin, faster-growing areas such as gas and liquid steel cylinders. Worthington also embarked on a comprehensive lean manufacturing effort that began to bear fruit before the steel-processing business had fully recovered. Its stock price began to slowly recover in the summer of 2012, when we began gradually taking gains. Net losses were comparatively modest. During the first half of 2013, we reduced the portfolio’s overall exposure to Materials companies, which included selling three precious metals miners that posted large net losses for the calendar year—McEwen Mining, Hochschild Mining, and Alamos Gold. Myriad Genetics detracted most from performance for the period. The company performs molecular diagnostic tests, specializing in genetic testing for cancer—it’s a market leader for the breast cancer gene tests. The company faced several headwinds in 2013: reimbursement change concerns from payers, a Supreme Court decision in June that held that human genes cannot be patented, and new competition in the breast cancer gene testing market. This led its stock to fall, though the company retained its patents on certain genetic testing processes. While reimbursement issues remained unresolved entering 2014, we think that the quality of its predictive tests remains the industry’s gold standard and that the firm is more than capable of holding onto market share in this important healthcare niche. We also like much of its existing and emergent pipeline of new products and services. Statistically, it was arguably one of the Fund’s cheapest positions at the end of December as well as one of its fastest growing—a highly promising combination in our view. It was the Fund’s third-largest holding at year-end. |
GOOD IDEAS AT THE TIME | |
Myriad Genetics | -0.42% |
McEwen Mining | -0.30 |
Hochschild Mining | -0.28 |
Alamos Gold | -0.26 |
Quanex Building Products | -0.26 |
1 Net of dividends | |
ROYCE VALUE PLUS FUND VS. RUSSELL 2000 Value of $10,000 Invested on 6/14/01 | |
Includes reinvestment of distributions. | |||
PORTFOLIO DIAGNOSTICS | |||
Fund Net Assets | $1,248 million | ||
Number of Holdings | 100 | ||
Turnover Rate | 45% | ||
Average Market Capitalization1 | $2,013 million | ||
Weighted Average P/E Ratio2,3 | 26.6x | ||
Weighted Average P/B Ratio2 | 2.7x | ||
U.S. Investments (% of Net Assets) | 82.3% | ||
Non-U.S. Investments (% of Net Assets) | 11.4% | ||
Symbol | |||
Investment Class | RVPHX | ||
Service Class | RYVPX | ||
Consultant Class | RVPCX | ||
Institutional Class | RVPIX | ||
R Class | RVPRX | ||
K Class | RVPKX | ||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
RVP | 0.95 | 19.81 | |
Russell 2000 | 0.98 | 20.93 | |
Category Median | 1.04 | 20.17 | |
Best Quartile Breakpoint | 1.14 | 19.06 | |
1 Five years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 357 small-cap objective funds (oldest class only) with at least five years of history. | |||
The Fund produced lower volatility than the Russell 2000 and 50% of small-cap objective funds, as shown by its standard deviation. | |||
DOWN MARKET PERFORMANCE COMPARISON | |||
The Royce Funds 2013 Annual Report to Shareholders | 29 |
Royce Dividend Value Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | ||||||||||
July–December 20131 | 17.90 | % | ||||||||
One-Year | 30.74 | |||||||||
Three-Year | 13.43 | |||||||||
Five-Year | 21.20 | |||||||||
Since Inception (5/3/04) | 10.41 | |||||||||
ANNUAL EXPENSE RATIO | ||||||||||
Operating Expenses | 1.52 | % | ||||||||
1 Not annualized | ||||||||||
CALENDAR YEAR TOTAL RETURNS | ||||||||||
Year | RDV | Year | RDV | |||||||
2013 | 30.7 | % | 2008 | -31.5 | % | |||||
2012 | 16.9 | 2007 | 0.0 | |||||||
2011 | -4.5 | 2006 | 19.9 | |||||||
2010 | 30.1 | 2005 | 7.3 | |||||||
2009 | 37.7 | |||||||||
TOP 10 POSITIONS % of Net Assets | ||||||||||
KKR & Co. L.P. | 1.4 | % | ||||||||
Reliance Steel & Aluminum | 1.4 | |||||||||
Federated Investors Cl. B | 1.3 | |||||||||
Transocean | 1.3 | |||||||||
Genworth MI Canada | 1.2 | |||||||||
Reinsurance Group of America | 1.1 | |||||||||
Expeditors International of Washington | 1.1 | |||||||||
Buckle (The) | 1.1 | |||||||||
Helmerich & Payne | 1.0 | |||||||||
Ascena Retail Group | 1.0 | |||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | ||||||||||
Financials | 24.7 | % | ||||||||
Industrials | 18.3 | |||||||||
Materials | 12.1 | |||||||||
Consumer Discretionary | 10.2 | |||||||||
Information Technology | 9.1 | |||||||||
Energy | 5.3 | |||||||||
Health Care | 4.7 | |||||||||
Consumer Staples | 1.9 | |||||||||
Telecommunication Services | 0.9 | |||||||||
Miscellaneous | 4.6 | |||||||||
Cash and Cash Equivalents | 8.2 | |||||||||
Managers’ Discussion In 2013, Royce Dividend Value Fund (RDV) did quite well on an absolute basis, although we were not as pleased with its relative results. The Fund rose 30.7% for the calendar year, lagging its small-cap benchmark, the Russell 2000 Index, which was up 38.8% for the same period. This was not only discouraging for its own sake but also in light of the Fund’s strong showing in the second half of 2012, a period in which it handily beat its benchmark, up 11.5% versus 7.2%. However, in 2013 market leadership was once again found among defensive, fast-growing and/or highly levered stocks, as well as in high-yielding (though arguably lower-quality) vehicles. Indeed, the constant hunger for higher yield has only occasionally benefited dividend payers in the small- and mid-cap spaces. Within the Russell 2000, companies that do not pay dividends once again outpaced those that do. Perhaps needless to say, this remains a source of frustration. After higher-quality stocks (as measured by returns on invested capital) briefly captured market leadership between early June and the end of December 2012, they again took a back seat in the dynamically bullish opening quarter of 2013. The Russell 2000 increased 12.4% between the beginning of January and the end of March while RDV was up 9.5%, a strong absolute performance that was nonetheless behind its benchmark. The more eventful second quarter featured a bearish April and an unsettled June that was marked by rising interest rates and the panicky reaction to the first public comments from the Fed that it would begin to taper its monthly bond-buying program some time before the end of 2013. In this more challenging period, the Fund was a relative disappointment, up 1.2% versus 3.1% for the Russell 2000. Once the equity markets had digested some of this news, share prices were mostly on the upswing again. The third quarter was in fact similar to the first, although not quite as strong. RDV gained 8.6% in the third quarter while the small-cap index increased 10.2%. As the pace of the rally began to slacken somewhat toward the end of the year—December being slightly bearish in the middle of the month—the Fund did better on a relative basis. For the fourth quarter, RDV again gained 8.6% compared to a 8.7% increase for the Russell 2000. Now in its tenth year of operation, the Fund held on to its longer-term edge over the benchmark. Its market cycle results, which can be found on page 6, were, however, more mixed. RDV outpaced the Russell 2000 for the five-year and since inception (5/3/04) periods ended December 31, 2013. The Fund’s average annual total return since inception was 10.4%. |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Nu Skin Enterprises Cl. A | 1.33% | ||||||||||
Towers Watson & Company Cl. A | 0.87 | ||||||||||
Pandora | 0.76 | ||||||||||
KKR & Co. L.P. | 0.73 | ||||||||||
ManpowerGroup | 0.70 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Service Class (its oldest class). Operating expenses reflect the Fund’s gross total annual operating expenses for the Service Class as of the Fund’s most current prospectus and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses 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. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
30 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review Net losses at the sector, industry, and position level were comparatively modest. However, holdings in the metals & mining industry—primarily gold and silver mining companies—remained major disappointments and detracted most from performance in 2013. Randgold Resources, Fresnillo, and Pan American Silver boasted very attractive valuations (and a dividend that we liked in the case of the third company) throughout 2013. However, we continued to carefully review the long-term prospects for these businesses as ongoing stock price declines during the period were troubling. We finished selling our shares of Gold Fields in December. Outside the mining industry, we increased our position in clothing retailer American Eagle Outfitters through most of the year as its stock price was falling. The firm has faced increased competition in the malls and poor sales, but we think its savvy management and strong niche in the teen clothing market can help its business to eventually reverse course. Nu Skin Enterprises was RDV’s top contributor for the period. The company develops and distributes personal care skin products worldwide. After enjoying a strong first half, its share price gained additional momentum in the year’s last six months. In October, the company announced stronger-than-anticipated third-quarter earnings and raised its full-year guidance for 2013, driven by the success of a limited-time offer for its new weight management system. Towers Watson & Company provides human resource, financial consulting and other related services. Its price rose more or less steadily throughout the year. In May the firm’s management raised adjusted EPS (earnings per share) guidance for fiscal 2013 while the stock also gained from the opening of Obamacare insurance exchanges in October. It then increased its dividend in November. We have liked its core business and steady earnings for several years having first bought shares in RDV’s portfolio in 2007. Timely selling throughout the year helped to make Pandora A/S a top contributor for the year. A Danish designer, maker, and distributor of hand-finished jewelry, its share price has been mostly on the rise since we first bought shares in July 2012. KKR & Co. is a private equity and venture capital firm that specializes in acquisitions, leveraged buyouts, management buyouts, special situations, and growth equity. We have long admired its business expertise, industry leadership, pristine balance sheet, and dividend. Liking its prospects for continued success, we bought shares in December. It was the Fund’s largest holding at the end of 2013. |
GOOD IDEAS AT THE TIME | |
Gold Fields ADR | -0.65% |
Fresnillo | -0.53 |
Randgold Resources ADR | -0.50 |
American Eagle Outfitters | -0.34 |
Pan American Silver | -0.29 |
1 Net of dividends | |
ROYCE DIVIDEND VALUE FUND VS. RUSSELL 2000 Value of $10,000 Invested on 5/3/04 | |
Includes reinvestment of distributions. | |||
PORTFOLIO DIAGNOSTICS | |||
Fund Net Assets | $650 million | ||
Number of Holdings | 277 | ||
Turnover Rate | 36% | ||
Average Market Capitalization1 | $3,084 million | ||
Weighted Average P/E Ratio2,3 | 18.0x | ||
Weighted Average P/B Ratio2 | 2.3x | ||
U.S. Investments (% of Net Assets) | 68.3% | ||
Non-U.S. Investments (% of Net Assets) | 23.5% | ||
Symbol | |||
Investment Class | RDVIX | ||
Service Class | RYDVX | ||
Institutional Class | RDIIX | ||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
RDV | 1.16 | 18.02 | |
Russell 2000 | 0.98 | 20.93 | |
Category Median | 1.04 | 20.17 | |
Best Quartile Breakpoint | 1.14 | 19.06 | |
1 Five years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 357 small-cap objective funds (oldest class only) with at least five years of history. | |||
The Fund beat the Russell 2000 and performed within the top 25% of small-cap objective funds on a risk-adjusted basis, as shown by its Sharpe ratio. In addition, the Fund produced lower volatility than the Russell 2000 and 75% of small-cap objective funds, as shown by its standard deviation. | |||
DOWN MARKET PERFORMANCE COMPARISON | |||
The Royce Funds 2013 Annual Report to Shareholders | 31 |
Royce International Smaller-Companies Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | ||||||||||
July–December 20131 | 13.54 | % | ||||||||
One-Year | 12.73 | |||||||||
Three-Year | 3.03 | |||||||||
Five-Year | 15.76 | |||||||||
Since Inception (6/30/08) | 7.02 | |||||||||
ANNUAL EXPENSE RATIOS | ||||||||||
Gross Operating Expenses | 2.15 | % | ||||||||
Net Operating Expenses | 1.71 | |||||||||
1 Not annualized | ||||||||||
CALENDAR YEAR TOTAL RETURNS | ||||||||||
Year | RIS | Year | RIS | |||||||
2013 | 12.7 | % | 2010 | 26.5 | % | |||||
2012 | 19.4 | 2009 | 50.3 | |||||||
2011 | -18.7 | |||||||||
TOP 10 POSITIONS % of Net Assets | ||||||||||
Mayr-Melnhof Karton | 1.4 | % | ||||||||
EPS Corporation | 1.4 | |||||||||
Semperit AG Holding | 1.4 | |||||||||
Consort Medical | 1.3 | |||||||||
E2V Technologies | 1.3 | |||||||||
Midland Holdings | 1.3 | |||||||||
Inversiones La Construccion | 1.3 | |||||||||
Pico Far East Holdings | 1.2 | |||||||||
New World Department Store China | 1.2 | |||||||||
Recordati | 1.2 | |||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | ||||||||||
Consumer Discretionary | 23.2 | % | ||||||||
Health Care | 14.9 | |||||||||
Industrials | 14.4 | |||||||||
Financials | 11.5 | |||||||||
Information Technology | 10.5 | |||||||||
Materials | 10.0 | |||||||||
Consumer Staples | 6.2 | |||||||||
Energy | 3.6 | |||||||||
Cash and Cash Equivalents | 5.7 | |||||||||
PORTFOLIO COUNTRY BREAKDOWN1,2 % of Net Assets | ||||||||||
Japan | 12.7 | % | ||||||||
United Kingdom | 12.5 | |||||||||
Hong Kong | 10.4 | |||||||||
France | 9.3 | |||||||||
India | 5.1 | |||||||||
Switzerland | 4.3 | |||||||||
Germany | 4.3 | |||||||||
South Africa | 3.5 | |||||||||
Italy | 3.4 | |||||||||
Malaysia | 3.0 | |||||||||
Brazil | 3.0 | |||||||||
1 Represents countries that are 3% or more of net assets. | ||||||||||
2 Securities are categorized by the country of their headquarters. | ||||||||||
Manager’s Discussion In many cases, companies outside the U.S. saw substantially lower returns overall than their domestic counterparts in 2013, which in large part accounts for the underwhelming calendar-year performance for Royce International Smaller-Companies Fund (RIS). The Fund was up 12.7% in 2013, trailing its benchmark, the Russell Global ex-U.S. Small Cap Index, which increased 17.2% for the same period. Non-U.S. equities not only posted lower returns in 2013—they also added the dubious distinction of being generally more volatile than their U.S. counterparts. (In addition, it was also a difficult year for many of the foreign currencies to which portfolio holdings had exposure, including the Japanese yen, South African rand, Indian rupee, and Turkish lira, all of which weakened versus the U.S. dollar.) The first quarter of 2013 was bullish across much of the globe, though results for non-U.S. companies were generally lower. The Fund’s participation in the rally was limited, with RIS gaining 3.2% in the first quarter versus 6.5% for its benchmark. This was in stark contrast with the Fund’s strong absolute and relative results in 2012, which featured a second-half advantage when RIS advanced 14.3% versus 13.5% for the Russell Global ex-U.S. Small Cap. While the domestic markets righted themselves in time for most U.S. indexes to finish the more volatile second quarter slightly in the black, many indexes elsewhere were negative—some dramatically—over the same period. International investors had to cope with a larger number of macro challenges. RIS held investments headquartered in Brazil, which declined by about a third in U.S. dollar terms in the first half. It also held positions in Turkey, which like Brazil suffered declining markets, a battered currency, and protests. During the spring and early summer months, China was attempting to deal with a slowing economy, credit and banking issues, and its overheated real estate market. Japan was trying to galvanize its economy with monetary stimulus, uncertainty was prevalent throughout several emerging markets nations, and there were ongoing, still unresolved issues in the eurozone. All of these situations made the pullback in share prices unsurprising. RIS slipped 3.8% in the second quarter while its benchmark declined 4.5%. We were pleased to see the Fund better preserve its value during this difficult period. While none of these situations were resolved in the third quarter, most had settled down enough for many international markets to heat up again. As it did in the first quarter, the Fund enjoyed more modest participation in the bull phase, gaining 7.9% compared to 10.7% |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Recordati | 0.73% | ||||||||||
Clinigen Group | 0.68 | ||||||||||
Kakaku.com | 0.64 | ||||||||||
Boiron | 0.63 | ||||||||||
Pacific Textiles Holdings | 0.62 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 2% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Gross operating expenses reflect total gross annual operating expenses and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by any applicable Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Net operating expenses reflect contractual fee waivers and/or expense reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive its fees and/or reimburse operating expenses to the extent necessary to maintain the Fund’s net annual operating expenses, other than acquired fund fees and expenses, at or below 1.69% through April 30, 2014 and at or below 1.99% through April 30, 2023. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
32 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review for the Russell Global ex-U.S. Small Cap Index. Curiously, and somewhat symmetrically, RIS then once again outpaced its benchmark when the markets grew more volatile in the fourth quarter, up 5.3% versus 4.0% for the Russell Global ex-U.S. Small Cap Index. While the Fund’s shorter-term results have not been as strong as we would ideally prefer, we were pleased that RIS outperformed the Russell ex-U.S. Global Small Cap Index for the since inception (6/30/08) periods ended December 31, 2013. In October, we made changes to the Fund’s portfolio management: Charles Royce rotated off the Fund; David Nadel now serves as the Fund’s portfolio manager, assisted by Dilip P. Badlani and Mark Rayner. David began to manage the Fund in 2011 and served as assistant portfolio manager from 2009-2011. Dilip and Mark became the Fund’s assistant portfolio managers in October 2013. Seven of the Fund’s nine sectors posted net gains for the period, led by Health Care companies. Recordati, a top-ten holding at year-end, is a pharmaceutical business based in Milan with a growing global reach. Steadily increasing growth and earnings helped its share price to rise, as did its acquisition in October of Tunisian pharmaceutical business Opalia Pharma. This move was consistent with the company’s expanding global footprint, which saw previous growth from high-demand markets such as Russia, Turkey, and Eastern Europe. Clinigen Group is a U.K.-based specialty pharmaceuticals and pharmaceutical services business serving patients, the medical community, and the healthcare industry. Its share price rose based on the impressive growth in its global business and consequent earnings improvement. We sold our shares between May and October. A slumping share price led us to more than triple our position in Daphne International Holdings during 2013. Daphne is a Chinese footwear maker and retailer, which sells Aerosole shoes in China. Its strong management and market position gave us confidence in the company’s long-term potential, though we recognize that this investment is likely to require patience. The overall slowdown in the Chinese economy has taken its toll on Daphne’s business as lower levels of consumer spending in particular caused sales and revenues to decline. The bulk of the Fund’s largest remaining net losses at the position level came from holdings in the metals & mining industry, part of the Materials sector that posted a sizable net loss in 2013. Metals & mining companies accounted for four of the Fund’s five, and six of its ten, largest detractors for the period. The businesses that were involved in precious metals mining could not shake the negative impact on revenue and stock prices of the respective 36% and 28% drops in silver and gold prices in 2013. |
GOOD IDEAS AT THE TIME | |
Daphne International Holdings | -0.95% |
Hochschild Mining | -0.83 |
Koza Altin Isletmeleri | -0.44 |
Maharashtra Seamless | -0.43 |
Medusa Mining | -0.38 |
1 Net of dividends | |
ROYCE INTERNATIONAL SMALLER-COMPANIES FUND VS. RUSSELL GLOBAL EX-U.S. SMALL CAP Value of $10,000 Invested on 6/30/08 | |
Includes reinvestment of distributions. | |||
PORTFOLIO DIAGNOSTICS | |||
Fund Net Assets | $38 million | ||
Number of Holdings | 111 | ||
Turnover Rate | 64% | ||
Average Market Capitalization1 | $1,079 million | ||
Weighted Average P/E Ratio2,3 | 15.6x | ||
Weighted Average P/B Ratio2 | 2.1x | ||
Ticker Symbol | |||
Service Class | RYGSX | ||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
RIS | 0.83 | 19.85 | |
Russell Global ex-U.S. Small Cap | 0.92 | 19.98 | |
Category Median | 0.98 | 19.84 | |
Best Quartile Breakpoint | 1.09 | 18.59 | |
1 Five years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 58 foreign small/mid objective funds (oldest class only) with at least Five years of history. | |||
The Fund produced lower volatility than the Russell Global ex-U.S. Small Cap, as shown by its standard deviation. | |||
The Royce Funds 2013 Annual Report to Shareholders | 33 |
Royce Premier Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | ||||||||||
July–December 20131 | 18.40 | % | ||||||||
One-Year | 27.73 | |||||||||
Three-Year | 12.17 | |||||||||
Five-Year | 18.92 | |||||||||
10-Year | 11.64 | |||||||||
15-Year | 12.05 | |||||||||
20-Year | 12.21 | |||||||||
Since Inception (12/31/91) | 12.67 | |||||||||
ANNUAL EXPENSE RATIO | ||||||||||
Operating Expenses | 1.06 | % | ||||||||
1 Not annualized | ||||||||||
CALENDAR YEAR TOTAL RETURNS | ||||||||||
Year | RPR | Year | RPR | |||||||
2013 | 27.7 | % | 2005 | 17.1 | % | |||||
2012 | 11.4 | 2004 | 22.8 | |||||||
2011 | -0.9 | 2003 | 38.7 | |||||||
2010 | 26.5 | 2002 | -7.8 | |||||||
2009 | 33.3 | 2001 | 9.6 | |||||||
2008 | -28.3 | 2000 | 17.1 | |||||||
2007 | 12.7 | 1999 | 11.5 | |||||||
2006 | 8.8 | 1998 | 6.7 | |||||||
TOP 10 POSITIONS % of Net Assets | ||||||||||
Thor Industries | 3.3 | % | ||||||||
Nu Skin Enterprises Cl. A | 2.9 | |||||||||
Lincoln Electric Holdings | 2.9 | |||||||||
Alleghany Corporation | 2.6 | |||||||||
Reliance Steel & Aluminum | 2.6 | |||||||||
Westlake Chemical | 2.5 | |||||||||
Woodward | 2.5 | |||||||||
Unit Corporation | 2.1 | |||||||||
Cognex Corporation | 1.9 | |||||||||
Myriad Genetics | 1.9 | |||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | ||||||||||
Industrials | 24.5 | % | ||||||||
Information Technology | 18.9 | |||||||||
Consumer Discretionary | 11.0 | |||||||||
Materials | 11.0 | |||||||||
Financials | 10.0 | |||||||||
Energy | 8.2 | |||||||||
Health Care | 5.8 | |||||||||
Consumer Staples | 5.8 | |||||||||
Miscellaneous | 1.4 | |||||||||
Cash and Cash Equivalents | 3.4 | |||||||||
Managers’ Discussion The calendar-year performance of Royce Premier Fund (RPR) did little to resolve our conflicted feelings about the portfolio’s recent results, as once again the Fund achieved a solid absolute return while falling short on a relative scale. The Fund gained 27.7% in 2013, trailing its small-cap benchmark, the Russell 2000 Index, which rose 38.8% for the same period. A large number of what we deemed high-quality stocks finished 2012 on a roll, which was instrumental in the Fund outpacing the small-cap index in the last six months of 2012 (+8.6% versus +7.2%). Yet many of these same stocks fell behind in the first three months of 2013. While the Russell 2000 increased 12.4% in the first quarter, the Fund gained only 6.7%. The next quarter brought increased volatility. The 10-year Treasury yield reached its 2013 low on May 2. The rapid rise of rates during May and June acted as one catalyst. Another was that the Fed began talking taper, announcing in June that it would begin reducing the pace of its monthly bond-buying program later in 2013. Then-Chairman Ben Bernanke was light on the details, neglecting to provide a specific date or dollar amount. And even though he made his comments in the context of a strengthening economy while reiterating that no tapering would begin without a consensus that the expansion was continuing, the markets swooned from roughly mid-June until early July, making for a volatile end to the second quarter. Hopeful that several positions in the portfolio would hold their value effectively in the face of falling stock prices, we were disappointed with its relative showing. RPR gained 1.1% in the second quarter compared to a 3.1% rise for its benchmark. Rising interest rates, however, indicated to us that the economy and equity markets were moving into a more historically typical environment, an observation that seemed justified in light of the Fund’s stronger results in both the second half and from that early May Treasury yield low. RPR underperformed the small-cap index in the third quarter, though by a much narrower margin, rising 9.8% versus 10.2% for the Russell 2000. A similar pattern held in the fourth quarter, in which the Fund gained 7.9% compared to 8.7% for the benchmark. So while the Fund continued to cede the advantage to the small-cap index for short- and intermediate-term intervals, it held onto its performance edge over the benchmark for longer-term periods. (Recent market cycle results can be found on page 6.) RPR outpaced the Russell 2000 for the 10-, 15-, 20-year, and since inception (12/31/91) periods ended |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Nu Skin Enterprises Cl. A | 5.03% | ||||||||||
Lincoln Electric Holdings | 1.70 | ||||||||||
Cognex Corporation | 1.44 | ||||||||||
Thor Industries | 1.40 | ||||||||||
Towers Watson & Company Cl. A | 1.40 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Investment Class (its oldest class). Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the Fund’s most current prospectus and include management fees and other expenses. Shares of RPR’s Service, Consultant, R, and K Classes bear an annual distribution expense that is not borne by the Investment Class. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
34 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review |
December 31, 2013. The Fund’s average annual total return since inception was 12.7%, a long-term record that gives us great pride. Information Technology, Industrials, and Consumer Staples led all of RPR’s sectors, followed by solid net contributions from Consumer Discretionary and Financials. In fact, seven of the portfolio’s eight equity sectors finished the period in the black. Materials posted a very modest net loss. Within the sector, net gains from chemical companies and, to a lesser degree, paper & forest products were outweighed by net losses in the metals & mining group. For the period, the Fund’s top four largest detractors—and five of its top six—were gold or silver miners. During the first half, we sold our positions in Allied Nevada Gold, Pretium Resources, and Seabridge Gold while we opted to add shares of Pan American Silver and held our stake in Silver Standard Resources. The first half of 2013 was an especially miserable time for mining companies, which dealt with rapidly falling gold and silver commodity prices and increased operational costs. This was part of a string of difficulties that began in 2011 and had not reversed course by the end of 2013. However, we remain optimistic that the most productive and best-managed of these companies can eventually turn things around. We had at least as much confidence in the turnaround potential of genetic diagnostics company—and top-ten holding—Myriad Genetics. The company specializes in genetic testing for cancer and ended 2013 facing increased competition, particularly in breast cancer screening tests, and some still unresolved reimbursement issues that remained under federal review at the end of December. However, we think that the quality of its predictive tests remains the industry’s gold standard and that the firm is more than capable of holding onto market share in this important healthcare niche. The Fund’s top contributor by an impressively large margin was Nu Skin Enterprises. RPR’s second-largest holding at the end of December, the company develops and distributes personal care skin products worldwide. A top net gainer in the first half, its share price gained additional momentum after the company announced stronger-than-anticipated third-quarter earnings and raised its full-year guidance for 2013 in October, driven by the success of a limited-time-offer for its new weight management system. Lincoln Electric Holdings is one of our longest-tenured holdings firm-wide. Its stock price began to soar in May. Earnings for this welding and cutting products maker kept growing as it’s been able to effectively cut costs in a challenging environment. |
GOOD IDEAS AT THE TIME | |
Allied Nevada Gold | -0.82% |
Pretium Resources | -0.63 |
Pan American Silver | -0.62 |
Silver Standard Resources | -0.59 |
Myriad Genetics | -0.48 |
1 Net of dividends | |
ROYCE PREMIER FUND VS. RUSSELL 2000 Value of $10,000 Invested on 12/31/91 | |
Includes reinvestment of distributions. |
PORTFOLIO DIAGNOSTICS | |||||
Fund Net Assets | $7,065 million | ||||
Number of Holdings | 78 | ||||
Turnover Rate | 11% | ||||
Average Market Capitalization1 | $2,910 million | ||||
Weighted Average P/E Ratio2,3 | 21.8x | ||||
Weighted Average P/B Ratio2 | 2.3x | ||||
U.S. Investments (% of Net Assets) | 85.9% | ||||
Non-U.S. Investments (% of Net Assets) | 10.7% | ||||
Symbol | |||||
Investment Class | RYPRX | ||||
Service Class | RPFFX | ||||
Consultant Class | RPRCX | ||||
Institutional Class | RPFIX | ||||
W Class | RPRWX | ||||
R Class | RPRRX | ||||
K Class | RPRKX | ||||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||||
3 The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (13% of portfolio holdings as of 12/31/13). | |||||
MORNINGSTAR STATISTICAL MEASURES1 | |||||
Sharpe Ratio | Standard Deviation | ||||
RPR | 1.00 | 19.22 | |||
Russell 2000 | 0.98 | 20.93 | |||
Category Median | 1.04 | 20.17 | |||
Best Quartile Breakpoint | 1.14 | 19.06 | |||
1 Five years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 357 small-cap objective funds (lowest expense class only) with at least five years of history. | |||||
The Fund beat the Russell 2000 on a risk-adjusted basis, as shown by its Sharpe ratio. In addition, the Fund produced lower volatility than the Russell 2000 and 50% of small-cap objective funds, as shown by its standard deviation. | |||||
DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7.5% or Greater Over the Last 7 Years, in Percentages(%) | |||||
The Royce Funds 2013 Annual Report to Shareholders | 35 |
Royce Special Equity Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | |||||||||||
July–December 20131 | 15.09 | % | |||||||||
One-Year | 29.36 | ||||||||||
Three-Year | 14.31 | ||||||||||
Five-Year | 18.06 | ||||||||||
10-Year | 9.52 | ||||||||||
15-Year | 11.36 | ||||||||||
Since Inception (5/1/98) | 10.35 | ||||||||||
ANNUAL EXPENSE RATIO | |||||||||||
Operating Expenses | 1.13 | % | |||||||||
1 Not annualized | |||||||||||
CALENDAR YEAR TOTAL RETURNS | |||||||||||
Year | RSE | Year | RSE | ||||||||
2013 | 29.4 | % | 2005 | -1.0 | % | ||||||
2012 | 15.4 | 2004 | 13.9 | ||||||||
2011 | 0.1 | 2003 | 27.6 | ||||||||
2010 | 19.6 | 2002 | 15.3 | ||||||||
2009 | 28.4 | 2001 | 30.7 | ||||||||
2008 | -19.6 | 2000 | 16.3 | ||||||||
2007 | 4.7 | 1999 | -9.6 | ||||||||
2006 | 14.0 | ||||||||||
TOP 10 POSITIONS % of Net Assets | |||||||||||
Minerals Technologies | 5.1 | % | |||||||||
EnerSys | 4.6 | ||||||||||
UniFirst Corporation | 4.4 | ||||||||||
Bed Bath & Beyond | 4.3 | ||||||||||
Finish Line (The) Cl. A | 3.9 | ||||||||||
Schweitzer-Mauduit International | 3.8 | ||||||||||
AVX Corporation | 3.6 | ||||||||||
Teradyne | 3.5 | ||||||||||
Children’s Place Retail Stores | 3.3 | ||||||||||
Plantronics | 2.8 | ||||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | |||||||||||
Consumer Discretionary | 25.8 | % | |||||||||
Industrials | 20.2 | ||||||||||
Information Technology | 16.7 | ||||||||||
Materials | 13.4 | ||||||||||
Consumer Staples | 7.8 | ||||||||||
Health Care | 3.9 | ||||||||||
Energy | 0.8 | ||||||||||
Cash and Cash Equivalents | 11.4 | ||||||||||
Manager’s Discussion The first and second halves of 2013 each featured two different market climates, and we were pleased with the absolute results for Royce Special Equity Fund (RSE) in both of them. The Fund advanced 29.4% for the calendar year, trailing its small-cap benchmark, the Russell 2000 Index, which was up 38.8% for the same period. The first quarter was a bullish period that in many ways continued the trend that began following the small-cap low on June 4, 2012. However, it actually saw a return to leadership for lower-quality companies. For example, RSE outpaced the Russell 2000 through the last six months of 2012 (+8.8% versus +7.2%) but trailed the small-cap index in 2013’s first quarter, up 8.7% compared to 12.4%. The more volatile second quarter saw improvement on a relative basis. Although small-cap results were often dominated by many of the same lower-quality issues that led in the first quarter, there was enough differentiation at the company, industry, and sector levels in the period for the Fund to narrowly outpace the small-cap index (+3.4% versus +3.1%). The bullish phase then resumed in earnest in the third quarter and extended into the first two months of the fourth in spite of the government shutdown in October. Volatility was not a significant factor until December. Leadership remained with lower-quality stocks, but we were pleased with RSE’s absolute results. For the third quarter, the Fund gained 8.3% compared to a 10.2% increase for the Russell 2000. While not as volatile as the second quarter, the fourth saw a rocky December in which share prices re-started their upward movement in the last two weeks of the year. RSE was again behind its benchmark, with the Fund up 6.3% versus 8.7% for the small-cap index. We were pleased that RSE outperformed the Russell 2000 for the 10-, 15-year, and since inception (5/1/98) periods ended December 31, 2013. RSE’s average annual total return since inception was 10.3%. For most of the year, lower-quality stocks outperformed. Companies with low prices, smaller market caps, no earnings, no dividend, low returns on equity, and high beta outperformed. We seek to avoid these very characteristics in the names we choose, and this hurt our relative performance. In addition, areas such as Health Care and REITs, where we had little to no representation, respectively, saw rising share prices. We strongly believe that as the market goes higher, and with less stimulus provided by the Fed, investors will again seek quality names, which could benefit many portfolio holdings. As you would expect from our disciplined approach, as share prices rose, it became easier to find things to sell than to buy. We will not abandon our methodology. If the markets |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Molex Cl. A | 3.09% | ||||||||||
EnerSys | 2.83 | ||||||||||
Minerals Technologies | 2.06 | ||||||||||
UniFirst Corporation | 1.74 | ||||||||||
Bed Bath & Beyond | 1.65 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Investment Class (its oldest class). Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the Fund’s most current prospectus and include management fees and other expenses. Shares of RSE’s Service and Consultant Classes bear an annual distribution expense that is not borne by the Investment Class. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
36 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review continue to rise and we cannot find replacements for the issues we sold, cash will likely increase as a percentage of the portfolio. While that might reduce our performance if the market continues its bull run, it will ultimately benefit our performance when the market declines—it will give us the ability to buy attractive names without the need to sell any of our remaining attractive holdings. In 2013, we saw a few dips—the sharpest based upon “taper tantrums” and government shutdown issues—and used both to find new names as well as to add to existing ones. Six of the Fund’s seven equity sectors finished the year with net gains while the seventh, Energy, was essentially flat for the period. Consumer Discretionary, Industrials, and Information Technology led by a wide margin. At the industry level, the electronic equipment, instruments & components group led with a net gain higher than three of the portfolio’s sectors. Molex, a maker of electronic components for products such as the iPhone, agreed to a $7.2 billion acquisition by Koch Industries in September, which helped drive results for that industry group. The electrical equipment, specialty retail, chemicals, and media industries also did well. Four of the Fund’s top five contributors for the period were also top-four positions at the end of December. EnerSys makes industrial batteries and related products such as chargers, power equipment, and battery accessories. Mineral Technologies develops and produces performance-enhancing minerals and mineral-based and synthetic mineral products for use in the paper, steel, polymer, and other manufacturing industries. UniFirst Corporation provides workplace uniforms and protective clothing serving customer locations in the U.S., Canada, and Europe. Bed Bath & Beyond operates a nationwide chain of retail stores that sell domestics merchandise and home furnishings as well as food, giftware, health and beauty care items, and infant and toddler merchandise. Net losses were comparatively modest. Top-20 position American Eagle Outfitters retails casual apparel, footwear, outerwear, and accessories for men and women, including jeans, khakis, and T-shirts. Leapfrog Enterprises designs and develops technology-based educational products, including educational games and learning books, that are sold through retailers, distributors, and directly to schools. |
GOOD IDEAS AT THE TIME | |
American Eagle Outfitters | -1.07% |
Leapfrog Enterprises Cl. A | -0.05 |
Ampco-Pittsburgh | -0.04 |
Hawkins | -0.02 |
National Beverage | -0.01 |
1 Net of dividends | |
ROYCE SPECIAL EQUITY FUND VS. RUSSELL 2000 Value of $10,000 Invested on 5/1/98 | |
Includes reinvestment of distributions. | |||
PORTFOLIO DIAGNOSTICS | |||
Fund Net Assets | $3,618 million | ||
Number of Holdings | 48 | ||
Turnover Rate | 28% | ||
Average Market Capitalization1 | $1,912 million | ||
Weighted Average P/E Ratio2,3 | 19.6x | ||
Weighted Average P/B Ratio2 | 2.2x | ||
U.S. Investments (% of Net Assets) | 88.6% | ||
Non-U.S. Investments (% of Net Assets) | 0.0% | ||
Symbol | |||
Investment Class | RYSEX | ||
Service Class | RSEFX | ||
Consultant Class | RSQCX | ||
Institutional Class | RSEIX | ||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
RSE | 1.11 | 16.08 | |
Russell 2000 | 0.98 | 20.93 | |
Category Median | 1.04 | 20.17 | |
Best Decile Breakpoint | 1.23 | 17.77 | |
1 Five years ended 12/31/13 Category Median and Best Decile Breakpoint based on 357 small-cap objective funds (oldest class only) with at least five years of history. | |||
The Fund beat the Russell 2000 and performed within the top 50% of small-cap objective funds on a risk-adjusted basis, as shown by its Sharpe ratio. In addition, the Fund produced lower volatility than the Russell 2000 and 90% of small-cap objective funds, as shown by its standard deviation. | |||
DOWN MARKET PERFORMANCE COMPARISON | |||
The Royce Funds 2013 Annual Report to Shareholders | 37 |
Royce Value Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | |||||||||||
July–December 20131 | 17.79 | % | |||||||||
One-Year | 27.76 | ||||||||||
Three-Year | 9.03 | ||||||||||
Five-Year | 18.57 | ||||||||||
10-Year | 11.11 | ||||||||||
Since Inception (6/14/01) | 11.76 | ||||||||||
ANNUAL EXPENSE RATIO | |||||||||||
Operating Expenses | 1.45 | % | |||||||||
1 Not annualized | |||||||||||
CALENDAR YEAR TOTAL RETURNS | |||||||||||
Year | RVV | Year | RVV | ||||||||
2013 | 27.8 | % | 2007 | 3.8 | % | ||||||
2012 | 9.6 | 2006 | 16.8 | ||||||||
2011 | -7.4 | 2005 | 17.2 | ||||||||
2010 | 25.0 | 2004 | 30.9 | ||||||||
2009 | 44.7 | 2003 | 54.3 | ||||||||
2008 | -34.2 | 2002 | -23.5 | ||||||||
TOP 10 POSITIONS % of Net Assets | |||||||||||
Genworth MI Canada | 3.1 | % | |||||||||
Atwood Oceanics | 3.0 | ||||||||||
Helmerich & Payne | 3.0 | ||||||||||
Reinsurance Group of America | 3.0 | ||||||||||
Vishay Intertechnology | 3.0 | ||||||||||
Buckle (The) | 3.0 | ||||||||||
Unit Corporation | 3.0 | ||||||||||
NETGEAR | 2.9 | ||||||||||
Ascena Retail Group | 2.8 | ||||||||||
Innospec | 2.8 | ||||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | |||||||||||
Consumer Discretionary | 29.2 | % | |||||||||
Information Technology | 19.7 | ||||||||||
Financials | 13.3 | ||||||||||
Energy | 11.6 | ||||||||||
Materials | 9.0 | ||||||||||
Industrials | 8.2 | ||||||||||
Health Care | 5.5 | ||||||||||
Consumer Staples | 1.3 | ||||||||||
Cash and Cash Equivalents | 2.2 | ||||||||||
Manager’s Discussion A very solid absolute return in 2013 was not enough to give Royce Value Fund (RVV) an advantage over its small-cap benchmark. The Fund gained 27.8% for the calendar year, trailing the 38.8% increase for the Russell 2000 Index for the same period. We were frustrated by coming up short versus the benchmark, notwithstanding RVV’s strong absolute result. The equity markets started strong in 2013, as they did in the previous three years. The Russell 2000 climbed 12.4% in the first quarter, while the Fund managed a 3.1% gain. RVV’s failure to more fully participate in the dynamic first quarter accounted for the bulk of RVV’s calendar-year disadvantage versus the benchmark. Over the previous two calendar years, the Fund’s results were not as strong as we would have liked, which led us to make changes to the portfolio during the first quarter of 2013. Some of these changes quickly bore fruit and were a factor in the Fund’s results in the second quarter, the year’s most volatile and challenging period. The rise in interest rates, which began following the 2013 low for 10-year Treasury yields on May 2, was quickly followed by the first instance of taper talk, which sent share prices plummeting from mid-May until the beginning of July. RVV outpaced the Russell 2000 in the second quarter, up 5.2% versus 3.1%. The market then resumed its fast pace of growth early in the third quarter, in which the Fund gained 8.6% compared to a 10.2% advance for the small-cap index. Stock prices kept moving mostly upward into the fourth quarter—the Russell 2000 reached a new high on the last day of the year. December was a more volatile, at times bearish month, though not enough to keep fourth-quarter returns from remaining solidly positive. The Fund gained 8.4% in the year’s final quarter compared to a gain of 8.7% for the Russell 2000. However, relative results over the last one-, three-, and five-year periods ended December 31, 2013 remained disappointing. Recent market cycle results through the end of 2013, which can be found on page 6, were also underwhelming on a relative basis. Over longer-term periods, however, we were pleased with RVV’s performance. The Fund outperformed the Russell 2000 for the 10-year and since inception (6/14/01) periods ended December 31, 2013. RVV’s average annual total return since inception was 11.8%. There were three significant changes to the portfolio in the first half. First, Whitney George, who served as co-manager from 2004-2012, became assistant portfolio manager on March 6, 2013. Jay Kaplan now serves as portfolio manager after having served as co-manager from 2003 through 2012. Second, we substantially reduced the Fund’s exposure to the Materials sector, which accounted for 17.9% of net assets at December 31, 2012 but only 9.0% of net assets at |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Nu Skin Enterprises Cl. A | 3.77% | ||||||||||
GameStop Corporation Cl. A | 2.60 | ||||||||||
Molex Cl. A | 1.75 | ||||||||||
Helmerich & Payne | 1.46 | ||||||||||
Reinsurance Group of America | 1.41 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Service Class (its oldest class). Operating expenses reflect the Fund’s total annual operating expenses for the Service Class as of the Fund’s most current prospectus and include management fees, 12b-1 distribution and service fees, and other expenses. Shares of RVV’s Consultant and R Classes bear an annual distribution expense that is higher than that of the Service Class. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
38 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review the end of 2013. Finally, we increased the portfolio’s exposure to U.S. stocks, which went from 81.1% of net assets as of December 31, 2012 to 89.9% of net assets at the end of 2013. This shift was fortuitously timed as a number of non-U.S. stocks performed poorly in the second quarter. Many of RVV’s non-U.S. holdings that we sold came from the metals & mining and capital markets industries. The first of these groups, in the Materials sector, has struggled since 2011. However, we sold based on a diminished emphasis in the portfolio on many commodity-based areas—energy, steel, and chemicals being exceptions. The general dependence of commodity-based industries on capital markets, along with the cash flow characteristics of many of these businesses, was a growing source of concern. This led us to sell Allied Nevada Gold, Silver Standard Resources, Hochschild Mining, and Seabridge Gold, among other smaller holdings in the metals & mining group. Consumer Discretionary led all of the Fund’s sectors by a wide margin in 2013, though Financials, Information Technology, Consumer Staples, and Energy also made notable net contributions. The Consumer Staples sector was home to RVV’s top performer for the calendar year. Nu Skin Enterprises develops and distributes personal care skin products worldwide. After enjoying a strong first half, its share price gained additional momentum in the year’s last six months. In October, the company announced stronger-than-anticipated third-quarter earnings and raised its full-year guidance for 2013, driven by the success of a limited-time-offer for its new weight management system. We reduced our position at rising prices through much of 2013. Both the Fund’s second-largest contributor and second-largest detractor came from the Consumer Discretionary sector. GameStop Corporation is a video game retailer that sells new and pre-owned gaming products, including hardware and software. Most of Wall Street thought that its business was destined for obsolescence, similar to Blockbuster Video. We saw value and a well-managed business with advantages that Blockbuster never had. Its business recovered very nicely throughout 2013. We reduced our position as its share price soared, though we held enough to make it the Fund’s thirteenth largest holding at year-end. One of RVV’s 10 biggest contributors in 2012, clothing retailer American Eagle Outfitters, struggled with stiff competition in malls and declines in sales. We sold some shares in 2013, though we still think this well-managed business with a strong niche in teen clothing can turn things around. It was a top-thirty holding at the end of December. |
GOOD IDEAS AT THE TIME | |
Allied Nevada Gold | -1.02% |
American Eagle Outfitters | -0.89 |
Silver Standard Resources | -0.49 |
Hochschild Mining | -0.49 |
Seabridge Gold | -0.49 |
1 Net of dividends | |
ROYCE VALUE FUND VS. RUSSELL 2000 Value of $10,000 Invested on 6/14/01 | |
Includes reinvestment of distributions. | |||
PORTFOLIO DIAGNOSTICS | |||
Fund Net Assets | $1,182 million | ||
Number of Holdings | 52 | ||
Turnover Rate | 51% | ||
Average Market Capitalization1 | $2,670 million | ||
Weighted Average P/E Ratio2,3 | 16.6x | ||
Weighted Average P/B Ratio2 | 1.9x | ||
U.S. Investments (% of Net Assets) | 90.0% | ||
Non-U.S. Investments (% of Net Assets) | 7.8% | ||
Symbol | |||
Investment Class | RVVHX | ||
Service Class | RYVFX | ||
Consultant Class | RVFCX | ||
Institutional Class | RVFIX | ||
R Class | RVVRX | ||
K Class | RVFKX | ||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
RVV | 0.95 | 20.04 | |
Russell 2000 | 0.98 | 20.93 | |
Category Median | 1.04 | 20.17 | |
Best Quartile Breakpoint | 1.14 | 19.06 | |
1 Five years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 357 small-cap objective funds (oldest class only) with at least five years of history. | |||
DOWN MARKET PERFORMANCE COMPARISON | |||
The Royce Funds 2013 Annual Report to Shareholders | 39 |
Royce 100 Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | |||||||||||
July–December 20131 | 18.36 | % | |||||||||
One-Year | 30.85 | ||||||||||
Three-Year | 10.90 | ||||||||||
Five-Year | 18.63 | ||||||||||
10-Year | 11.50 | ||||||||||
Since Inception (6/30/03) | 11.99 | ||||||||||
ANNUAL EXPENSE RATIO | |||||||||||
Operating Expenses | 1.48 | % | |||||||||
1 Not annualized | |||||||||||
CALENDAR YEAR TOTAL RETURNS | |||||||||||
Year | ROH | Year | ROH | ||||||||
2013 | 30.9 | % | 2008 | -29.2 | % | ||||||
2012 | 11.5 | 2007 | 7.3 | ||||||||
2011 | -6.5 | 2006 | 13.7 | ||||||||
2010 | 24.8 | 2005 | 14.9 | ||||||||
2009 | 38.0 | 2004 | 27.2 | ||||||||
TOP 10 POSITIONS % of Net Assets | |||||||||||
Federated Investors Cl. B | 1.7 | % | |||||||||
CIRCOR International | 1.7 | ||||||||||
Reliance Steel & Aluminum | 1.7 | ||||||||||
Pason Systems | 1.6 | ||||||||||
Jacobs Engineering Group | 1.5 | ||||||||||
Forward Air | 1.5 | ||||||||||
Haynes International | 1.4 | ||||||||||
ADTRAN | 1.4 | ||||||||||
Kennametal | 1.4 | ||||||||||
Darling International | 1.4 | ||||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | |||||||||||
Industrials | 27.4 | % | |||||||||
Information Technology | 23.8 | ||||||||||
Materials | 8.8 | ||||||||||
Energy | 8.0 | ||||||||||
Consumer Discretionary | 6.0 | ||||||||||
Health Care | 4.6 | ||||||||||
Financials | 4.2 | ||||||||||
Consumer Staples | 2.3 | ||||||||||
Miscellaneous | 4.6 | ||||||||||
Cash and Cash Equivalents | 10.3 | ||||||||||
Managers’ Discussion A strong absolute performance but a disappointing relative result left us with mixed emotions about the calendar-year showing for Royce 100 Fund (ROH). The Fund gained 30.9% in 2013, trailing its small-cap benchmark, the Russell 2000 Index, which was up 38.8% for the same period. After finishing 2012 by beating its benchmark in the second half of the year (+9.6% versus +7.2%), we were confident that the kind of stocks that we favor—those with strong balance sheets, high returns on invested capital, and the ability to generate free cash flow, many in cyclical sectors—were poised for a solid run of market leadership after lagging more defensive areas of the market in 2011 and the first half of 2012. This was not the case, however, as 2013 saw a resurgence from those same defensive areas. And while the performance of several Fund holdings in cyclical sectors picked up nicely in the second half of 2013, their improved performance was not enough to vault the Fund past its benchmark for the calendar year. The opening quarter of 2013 was highly bullish, especially for micro-, small-, and mid-cap stocks. The Fund did very well on an absolute basis in this period, though it fell behind the Russell 2000, up 11.1% compared to 12.4% for the small-cap index. ROH then fell further behind in the far more volatile second quarter, which was disappointing—our disciplined approach has historically helped the Fund to weather down and/or volatile periods effectively by losing less than its benchmark. In the second quarter, however, ROH fell 0.5% versus a 3.1% gain for the Russell 2000. We were pleased to see the Fund bounce back strong in the third quarter, which was a more placid bull phase like the first quarter. Investors had plenty to digest between the end of March and early July: rising interest rates—the 10-year Treasury yield hit a 2013 low on May 2—less-than-encouraging news out of China and other important developing economies, and the Fed’s initially vague promise in June that it would begin to taper its monthly bond-buying program by some amount at some point later in the year. Indeed, investors were uncommonly sanguine through much of 2013. Good contrarians that we are, this new-found serenity was cause for a bit of worry on our part, though it did not keep us from smiling at the Fund’s strong third quarter—up 10.6% versus 10.2% for the Russell 2000. ROH’s fourth-quarter results were more subdued on a relative basis, with the Fund increasing 7.0% compared to 8.7% for its benchmark. |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Towers Watson & Company Cl. A | 1.26% | ||||||||||
ManpowerGroup | 1.07 | ||||||||||
CIRCOR International | 0.92 | ||||||||||
Harman International Industries | 0.89 | ||||||||||
Federated Investors Cl. B | 0.84 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Service Class (its oldest class). Operating expenses reflect the Fund’s gross total annual operating expenses for the Service Class as of the Fund’s most current prospectus, and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses 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. Shares of ROH’s R Class bear an annual distribution expense that is higher than that of the Service Class. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
40 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review The Fund, which marked its first full decade of history at the end of June, also beat the Russell 2000 for the 10-year and since inception (6/30/03) periods ended December 31, 2013. (Please see page 6 for market cycle results.) ROH’s average annual total return since inception was 12.0%. Industrials led all of the Fund’s equity sectors by a comfortable margin, though strong contributions also came from Information Technology, and all eight sector groups ended the year with net gains. Three of ROH’s top performers came from the Industrials sector. Towers Watson & Company saw multiple expansion as several notable client wins and strong enrollment growth solidified its position as the leading provider and manager of private health insurance exchanges. We see this as a significant emerging growth opportunity that can supplement the firm’s dominant but mature benefits and consulting business. So while we took gains as its stock price soared, it was a top-30 position at year-end. Manpower Group runs a global business providing employment services that include temporary staffing services, contract services, and training and testing of temporary and permanent workers. With almost two-thirds of its revenues coming from Europe, this Milwaukee-based firm has become a bellwether for European economic recovery. The company faced staffing growth declines in most European countries, though this came in the context that 2014 would see a rebound. Manpower’s aggressive $150 million SG&A (Selling, General and Administrative Expenses) reduction and tax benefits from a French stimulus plan (France is one of Manpower’s largest revenue sources) powered the rise in its stock price. Operating and share-price results for CIRCOR International were revitalized by a new CEO who appears to have a solid plan to unlock the untapped earnings power and potentially double profit margins over time for this specialty valve maker. Fresnillo and Randgold Resources ADR were part of a number of disappointments in the metals & mining industry, which could not escape the negative impact on revenue and stock prices of the 36% and 28% drops in silver and gold prices, respectively, in 2013. Acacia Research was challenged by slow-to-materialize deals with higher valuations as well as increased resistance from certain potential patent licensees—both cyclical characteristics of the tech licensing and patent enforcement business that typically leads to lumpiness in results. This model does not play well on Wall Street, so it was no surprise that its stock’s subsequent earnings disappointments led its share price to fall. We initiated a position in July and built it into September. |
GOOD IDEAS AT THE TIME | |
Fresnillo | -0.52% |
Acacia Research | -0.39 |
Randgold Resources ADR | -0.33 |
Major Drilling Group International | -0.32 |
Intrepid Potash | -0.20 |
1 Net of dividends | |
ROYCE 100 FUND VS. RUSSELL 2000 Value of $10,000 Invested on 6/30/03 | |
Includes reinvestment of distributions. | |||
PORTFOLIO DIAGNOSTICS | |||
Fund Net Assets | $297 million | ||
Number of Holdings | 94 | ||
Turnover Rate | 31% | ||
Average Market Capitalization1 | $2,116 million | ||
Weighted Average P/E Ratio2,3 | 24.1x | ||
Weighted Average P/B Ratio2 | 2.4x | ||
U.S. Investments (% of Net Assets) | 83.2% | ||
Non-U.S. Investments (% of Net Assets) | 6.5% | ||
Symbol | |||
Investment Class | ROHHX | ||
Service Class | RYOHX | ||
R Class | ROHRX | ||
K Class | ROHKX | ||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
ROH | 0.94 | 20.41 | |
Russell 2000 | 0.98 | 20.93 | |
Category Median | 1.04 | 20.17 | |
Best Quartile Breakpoint | 1.14 | 19.06 | |
1 Five years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 357 small-cap objective funds (oldest class only) with at least five years of history. | |||
The Fund produced lower volatility than the Russell 2000, as shown by its standard deviation. | |||
DOWN MARKET PERFORMANCE COMPARISON | |||
The Royce Funds 2013 Annual Report to Shareholders | 41 |
Royce Global Value Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | ||||||||||
July–December 20131 | 11.61 | % | ||||||||
One-Year | 6.28 | |||||||||
Three-Year | -1.37 | |||||||||
Five-Year | 16.08 | |||||||||
Since Inception (12/29/06) | 5.42 | |||||||||
ANNUAL EXPENSE RATIOS | ||||||||||
Gross Operating Expenses | 1.81 | % | ||||||||
Net Operating Expenses | 1.70 | |||||||||
1 Not annualized | ||||||||||
CALENDAR YEAR TOTAL RETURNS | ||||||||||
Year | RGV | Year | RGV | |||||||
2013 | 6.3 | % | 2009 | 61.9 | % | |||||
2012 | 11.0 | 2008 | -39.9 | |||||||
2011 | -18.7 | 2007 | 14.3 | |||||||
2010 | 35.7 | |||||||||
TOP 10 POSITIONS % of Net Assets | ||||||||||
Western Digital | 4.0 | % | ||||||||
Helmerich & Payne | 3.7 | |||||||||
Semperit AG Holding | 3.7 | |||||||||
Mayr-Melnhof Karton | 3.7 | |||||||||
Ashmore Group | 2.8 | |||||||||
Luk Fook Holdings (International) | 2.4 | |||||||||
Myriad Genetics | 2.2 | |||||||||
Kennedy-Wilson Holdings | 2.1 | |||||||||
EPS Corporation | 2.1 | |||||||||
Pason Systems | 2.0 | |||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | ||||||||||
Industrials | 16.2 | % | ||||||||
Consumer Discretionary | 15.6 | |||||||||
Materials | 15.2 | |||||||||
Financials | 14.4 | |||||||||
Information Technology | 10.3 | |||||||||
Energy | 10.3 | |||||||||
Health Care | 10.2 | |||||||||
Consumer Staples | 5.1 | |||||||||
Cash and Cash Equivalents | 2.7 | |||||||||
PORTFOLIO COUNTRY BREAKDOWN1,2 % of Net Assets | ||||||||||
United States | 21.4 | % | ||||||||
Japan | 11.4 | |||||||||
Canada | 9.2 | |||||||||
Austria | 7.4 | |||||||||
Hong Kong | 7.1 | |||||||||
United Kingdom | 6.9 | |||||||||
France | 4.1 | |||||||||
Brazil | 3.7 | |||||||||
1 Represents countries that are 3% or more of net assets. | ||||||||||
2 Securities are categorized by their country of headquarters. | ||||||||||
Manager’s Discussion It was a very disappointing year for Royce Global Value Fund (RGV) on both an absolute and relative basis. The Fund was up 6.3%, lagging its global small-cap benchmark, the Russell Global Small Cap Index, which gained 24.8% for the same period. So while non-U.S. equities trailed their domestic cousins in 2013, our own results were well short both of the benchmark and our own expectations for the portfolio. (2013 was also a difficult year for many of the foreign currencies to which portfolio holdings had exposure, including the Japanese yen, South African rand, Indian rupee, and Turkish lira, all of which weakened versus the U.S. dollar.) The first quarter was a solidly bullish period for many stocks around the world but was particularly good for U.S. companies—non-U.S. equities generally had lower returns. In this otherwise robust period, RGV underperformed its benchmark by a wide margin, gaining 0.8% in the year’s opening quarter while the global small-cap index rose 8.6%. This left the Fund with a lot of ground to make up versus the benchmark at the beginning of the second quarter, a far more volatile period than the first. RGV failed to hold its value when global share prices were mostly falling from April through June. For the quarter as a whole, RGV fell 5.5% compared to a decline of 1.7% for the benchmark. While most U.S. indexes finished the more unsettled second quarter in the black, many non-U.S. companies did not begin to recover until the third quarter was underway. For the most part, their rebound was less pronounced than that of their U.S. peers, also giving the global indexes lower returns in the bullish third quarter as investors throughout the world adjusted to rising rates and taper talk here in the U.S., ongoing uncertainty and, in some countries, recession in Europe, and less-than-stellar news out of China, Turkey, and Brazil. All that considered, the developed world’s stock markets were remarkably resilient in the second half of 2013. For the third quarter, RGV rose 7.1%, behind its benchmark’s 10.5% increase. The fourth quarter brought more rising stock prices across the globe, though mostly at a more subdued pace than in the third. The Fund was again behind the Russell Global Small Cap Index, up 4.2% versus 5.8% for its benchmark. The Fund did, however, manage to stay ahead of the global small-cap index for the since inception (12/29/06) period ended December 31, 2013. In October, we made a change to RGV’s portfolio management: |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Western Digital | 2.13% | ||||||||||
Helmerich & Payne | 1.45 | ||||||||||
Recordati | 1.23 | ||||||||||
Nihon M&A Center | 1.08 | ||||||||||
Industrias Bachoco ADR | 0.81 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 2% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Service Class (its oldest class). Price and total return information is based on net asset values calculated for shareholder transactions. Certain immaterial adjustments were made to the net assets of Royce Global Value Fund at 12/31/13 for financial reporting purposes, and as a result the net asset values for shareholder transactions on that date and the total returns based on those net asset values differ from the adjusted net asset values and total returns reported in the Financial Highlights. Gross operating expenses reflect gross total annual operating expenses for the Service Class and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses 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. Net operating expenses reflect contractual fee waivers and/or reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the Fund’s net annual operating expenses, other than acquired fund fees and expenses, at or below 1.69% through April 30, 2014. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
42 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review |
Whitney George manages the Fund, assisted by David Nadel. Whitney has managed the Fund since its inception. David served as assistant portfolio manager from the Fund’s inception until 2009 and as co-manager of the Fund with Whitney from 2009 through October 21, 2013. Materials was the only sector to finish the period in the red. By far, the bulk of its losses came from holdings in the metals & mining industry, which endured plummeting revenue and stock prices in light of the respective 36% and 28% drops in silver and gold prices in 2013. During various points in the year, this drove many companies’ valuations to what we saw as rock-bottom levels that have not been reached since the lows of late 2008-early 2009. Still, during May we chose to sell some of the Fund’s largest detractors in the industry, such as Allied Nevada Gold, Medusa Mining, and B2Gold. After first reducing our stake in Hochschild Mining—one of 2012’s top contributors—we added shares in the fourth quarter. We also chose to build our position in Pan American Silver with purchases in February and May as we think it is well positioned for an eventual turnaround for the industry. A slumping share price led us to more than triple our position in Daphne International Holdings during 2013. Daphne is a Chinese footwear maker and retailer, which sells Aerosole shoes in China. Its strong management and market position gave us confidence in company’s long-term potential, though we recognize that this investment is likely to require patience. The overall slowdown in the Chinese economy has taken its toll on Daphne’s business as lower levels of consumer spending in particular caused sales and revenues to decline. We also increased our stake in Maharashtra Seamless, an Indian company that makes seamless and ERW (electric resistance welded) pipes and tubes. Slowing growth in the Indian economy and ongoing pipe dumping in that country led to a steep decline in demand and order inflow. RGV’s two top contributors were both closer to home and its two largest holdings at the end of the period. Irvine, CA-based hard disk drive maker Western Digital is one of two firms that dominate disk drive production worldwide. Its core business, which involves solutions for the collection, storage, management, and protection of digital content, has long interested us. The company made several savvy acquisitions in 2013, including Virident, sTec and VeloBit. These moves made Western a stronger player in both the hard disk drive and flash technology markets, in addition to its growing presence in cloud storage technology. Helmerich & Payne provides contract drilling of oil and gas wells in the Gulf of Mexico and South America and also operates land and platform rigs. The company continued to leverage its technological leadership in the drilling rig business into market share gains as E&P (exploration & production) companies upgrade their fleets to improve drilling efficiencies and lower their total well costs. |
GOOD IDEAS AT THE TIME Top Detractors from 2013 Performance1 | |||||||||||
Hochschild Mining | -1.67% | ||||||||||
Allied Nevada Gold | -1.38 | ||||||||||
Daphne International Holdings | -1.29 | ||||||||||
Medusa Mining | -0.87 | ||||||||||
Maharashtra Seamless | -0.83 | ||||||||||
1 Net of dividends | |||||||||||
ROYCE GLOBAL VALUE FUND VS. RUSSELL GLOBAL SMALL CAP Value of $10,000 Invested on 12/29/06 | |||||||||||
Includes reinvestment of distributions. |
PORTFOLIO DIAGNOSTICS | |||||
Fund Net Assets | $233 million | ||||
Number of Holdings | 68 | ||||
Turnover Rate | 41% | ||||
Average Market Capitalization1 | $1,785 million | ||||
Weighted Average P/E Ratio2,3 | 14.8x | ||||
Weighted Average P/B Ratio2 | 1.9x | ||||
Ticker Symbol | |||||
Investment Class | RGVIX | ||||
Service Class | RIVFX | ||||
Consultant Class | RGVHX | ||||
R Class | RGVRX | ||||
K Class | RGVKX | ||||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||||
MORNINGSTAR STATISTICAL MEASURES1 | |||||
Sharpe Ratio | Standard Deviation | ||||
RGV | 0.82 | 20.60 | |||
Russell Global Small Cap | 0.97 | 19.35 | |||
Category Median | 1.03 | 19.51 | |||
Best Quartile Breakpoint | 1.10 | 18.27 | |||
1 Five years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 16 world stock small-cap objective funds (oldest class only) with at least five years of history. | |||||
DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7.5% or Greater in Percentages(%) | |||||
The Royce Funds 2013 Annual Report to Shareholders | 43 |
Royce Special Equity Multi-Cap Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | ||||||||||
July–December 20131 | 15.66 | % | ||||||||
One-Year | 36.26 | |||||||||
Three-Year | 17.70 | |||||||||
Since Inception (12/31/10) | 17.70 | |||||||||
ANNUAL EXPENSE RATIOS | ||||||||||
Gross Operating Expenses | 1.36 | % | ||||||||
Net Operating Expenses | 1.24 | |||||||||
1 Not annualized | ||||||||||
CALENDAR YEAR TOTAL RETURNS | ||||||||||
Year | RSM | Year | RSM | |||||||
2013 | 36.3 | % | 2011 | 7.2 | % | |||||
2012 | 11.6 | |||||||||
TOP 10 POSITIONS % of Net Assets | ||||||||||
Emerson Electric | 5.2 | % | ||||||||
Microsoft Corporation | 5.2 | |||||||||
Nordstrom | 5.0 | |||||||||
Bed Bath & Beyond | 4.7 | |||||||||
KLA-Tencor | 4.6 | |||||||||
Occidental Petroleum | 4.6 | |||||||||
Gap (The) | 4.3 | |||||||||
Parker Hannifin | 4.3 | |||||||||
Cisco Systems | 4.3 | |||||||||
Dover Corporation | 3.8 | |||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | ||||||||||
Consumer Discretionary | 27.1 | % | ||||||||
Industrials | 22.7 | |||||||||
Information Technology | 19.5 | |||||||||
Health Care | 13.6 | |||||||||
Energy | 8.0 | |||||||||
Financials | 3.7 | |||||||||
Cash and Cash Equivalents | 5.4 | |||||||||
Manager’s Discussion The first and second halves of 2013 each featured two different market climates, and we were pleased with the absolute and relative results for Royce Special Equity Multi-Cap Fund (RSM) in both of them. The Fund gained 36.3% for the calendar year, outpacing its benchmark, the Russell 1000 Index, which was up 33.1% for the same period. The first quarter was a bullish period that in many ways carried on the run that began following the market lows in June 2012. RSM was behind the Russell 1000 through the last six months of 2012 (+4.6% versus +6.4%) and continued to trail the large-cap index in 2013’s first quarter, up 10.3% compared to 11.0%. This nine-month underperformance was no surprise—lower-quality companies have mostly dominated the market over the last few years. We were pleased that the more volatile second quarter saw marked improvement on a relative basis—in addition to a strong absolute showing. Markets were roiled following the Fed’s announcement that it would likely begin tapering the pace of monthly bond purchases later in 2013. In this more uncertain environment, which also included rising interest rates, the Fund more than doubled the return of its benchmark, gaining 6.8% compared to 2.7% for the Russell 1000. Strong results from holdings in the Consumer Discretionary sector, which also made a notable contribution in the first quarter, helped make the difference. The bullish phase then resumed in earnest in the third quarter and extended into the first two months of the fourth in spite of the government shutdown in October. Volatility was not a significant factor until December. Leadership remained with lower-quality stocks, which made third-quarter results all the more pleasing. For the third quarter, the Fund gained 8.3% compared to a 6.0% increase for the Russell 1000. While not as volatile as the second quarter, the fourth saw a rocky December in which share prices re-started their upward movement in the last two weeks of the year. RSM slipped behind its benchmark, with the Fund up 6.8% versus 10.2% for the large-cap index. We were pleased that RSM outperformed the Russell 1000 for the one- and three-year/since inception (12/31/10) periods ended December 31, 2013. RSM’s average annual total return since inception was 17.7%. We offer a hypothesis as to why the market keeps rising despite valuation and other concerns such as national and world events that would have caused a correction in the past. We have observed that a number of U.S. companies whose operating margins, which are unaffected by lower interest rates or the benefits from lower taxes, etc., have risen on falling sales. This is occurring after, we must assume, all of the low-hanging cost savings, and probably some of the harder-to-reach ones, have been harvested over these past five years. Could the market, as has happened in the |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Molex Cl. A | 3.59% | ||||||||||
Bed Bath & Beyond | 2.01 | ||||||||||
Dover Corporation | 1.89 | ||||||||||
Microsoft Corporation | 1.82 | ||||||||||
Parker Hannifin | 1.77 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Service Class (its oldest class). Gross operating expenses reflect gross total annual operating expenses for the Service Class and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses 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. Net operating expenses reflect contractual fee waivers and/or reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the Service Classes’s net annual operating expenses, other than acquired fund fees and expenses, at or below 1.24% through April 30, 2014. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
44 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review |
past, be predicting some positive outcome that most of us have not considered? The much-spoken-about peak profit margin risk might be a myth. What if the cost structures of U.S. companies have changed such that if we see more sustainable revenue growth, companies will reap huge incremental operation margins and thus much higher-than-expected earnings? We raise this issue now only as a question for discussion. Surely some of the recent rising profitability could be a result of low inflation and thus lower or flat incoming costs to companies. However, it appears it could be more than that. If in time we see that this prediction of higher profitability becomes a reality, the now somewhat elevated P/Es were justified. For now, despite any welcome pauses or consolidations, we believe the market is still headed higher, buoyed by similar factors that occurred in the 1990s when the combination of low inflation, accommodative monetary policy, falling commodity prices, and improving leading economic indicators were the causes. The outcome of which, if our incremental margin hypothesis proves correct, will be much higher-than-expected earnings in future years, and thus lower multiples than are currently assumed. Each of the Fund’s seven equity sectors finished 2013 in the black. Information Technology and Industrials led by a considerable margin while Consumer Discretionary also made a notable net contribution. At the industry level, machinery companies were the leaders, sparked by Dover Corporation, Parker Hannifin, and Illinois Tool Works. The specialty retail group, electronic equipment, instruments & components companies, health care equipment & supplies stocks, and the semiconductor & semiconductor equipment industry all turned in strong net gains. Health care providers & services was the only industry group to post a net loss for the period. The top contributing position in 2013 was Molex, a maker of electronic components for products such as the iPhone that agreed to a $7.2 billion acquisition by Koch Industries in September. The substantial better than 50% premium which Koch offered for the shares helped to drive RSM’s impressive results in the Information Technology sector. Bed Bath & Beyond, the Fund’s fourth-largest holding at year-end, operates a nationwide chain of retail stores that sell domestics merchandise and home furnishings as well as food, giftware, health and beauty care items, and infant and toddler merchandise. Net losses at the individual position level were scant and modest. Quest Diagnostics provides diagnostic testing, information, and services. The company operates a national network of full-service laboratories and patient service centers and provides routine and esoteric medical testing. It was RSM’s twelfth-largest holding at year-end. We sold our position in department store operator Kohl’s Corporation in mid-January of 2013. |
GOOD IDEAS AT THE TIME | |
Quest Diagnostics | -0.23% |
Kohl’s Corporation | -0.06 |
Jacobs Engineering Group | -0.01 |
Fluor Corporation | 0.01 |
United Technologies | 0.11 |
1 Net of dividends | |
ROYCE SPECIAL EQUITY MULTI-CAP FUND VS. RUSSELL 1000 Value of $10,000 Invested on 12/31/10 | |
Includes reinvestment of distributions. |
PORTFOLIO DIAGNOSTICS | ||||
Fund Net Assets | $189 million | |||
Number of Holdings | 30 | |||
Turnover Rate | 44% | |||
Average Market Capitalization1 | $25,847 million | |||
Weighted Average P/E Ratio2,3 | 15.9x | |||
Weighted Average P/B Ratio2 | 3.1x | |||
U.S. Investments (% of Net Assets) | 94.6% | |||
Non-U.S. Investments (% of Net Assets) | 0.0% | |||
Symbol | ||||
Investment Class | RSMCX | |||
Service Class | RSEMX | |||
Institutional Class | RMUIX | |||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | ||||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | ||||
3 The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (0% of portfolio holdings as of 12/31/13). | ||||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
RSM | 1.40 | 12.15 | |
Russell 1000 | 1.28 | 12.43 | |
Category Median | 1.14 | 13.18 | |
Best Quartile Breakpoint | 1.26 | 12.11 | |
1 Three years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 1,089 large-cap objective funds (oldest class only) with at least three years of history. | |||
The Fund beat the Russell 1000 and performed within the top 25% of large-cap objective funds on a risk-adjusted basis, as shown by its Sharpe ratio. In addition, the Fund produced lower volatility than the Russell 1000 and 50% of large-cap objective funds, as shown by its standard deviation. | |||
The Royce Funds 2013 Annual Report to Shareholders | 45 |
Schedules of Investments |
Royce Pennsylvania Mutual Fund |
SHARES | VALUE | |||||||
COMMON STOCKS – 97.7% | ||||||||
Consumer Discretionary – 14.4% | ||||||||
Auto Components - 1.2% | ||||||||
Dorman Products 1 | 336,600 | $ | 18,873,162 | |||||
Drew Industries | 656,788 | 33,627,546 | ||||||
Gentex Corporation | 576,285 | 19,011,642 | ||||||
Spartan Motors | 87,700 | 587,590 | ||||||
STRATTEC SECURITY | 150,000 | 6,700,500 | ||||||
Superior Industries International | 488,000 | 10,067,440 | ||||||
88,867,880 | ||||||||
Automobiles - 1.0% | ||||||||
Thor Industries | 901,750 | 49,803,653 | ||||||
Winnebago Industries 1 | 890,000 | 24,430,500 | ||||||
74,234,153 | ||||||||
Distributors - 0.5% | ||||||||
Pool Corporation | 248,300 | 14,436,162 | ||||||
Weyco Group 2 | 590,500 | 17,378,415 | ||||||
31,814,577 | ||||||||
Diversified Consumer Services - 0.7% | ||||||||
Capella Education | 33,226 | 2,207,535 | ||||||
Lincoln Educational Services | 54,800 | 272,904 | ||||||
Sotheby’s | 653,600 | 34,771,520 | ||||||
7,000 | 241,290 | |||||||
Universal Technical Institute | 768,700 | 10,692,617 | ||||||
48,185,866 | ||||||||
Hotels, Restaurants & Leisure - 0.1% | ||||||||
Bob Evans Farms | 12,000 | 607,080 | ||||||
CEC Entertainment | 140,600 | 6,225,768 | ||||||
Monarch Casino & Resort 1 | 49,503 | 994,020 | ||||||
7,826,868 | ||||||||
Household Durables - 2.5% | ||||||||
Ethan Allen Interiors | 1,097,998 | 33,401,099 | ||||||
Garmin | 1,400 | 64,708 | ||||||
Harman International Industries | 282,400 | 23,114,440 | ||||||
La-Z-Boy | 689,500 | 21,374,500 | ||||||
Lifetime Brands | 294,007 | 4,624,730 | ||||||
Mohawk Industries 1 | 207,600 | 30,911,640 | ||||||
Natuzzi ADR 1 | 2,096,300 | 5,429,417 | ||||||
NVR 1 | 58,853 | 60,383,767 | ||||||
Skyline Corporation 1 | 183,400 | 944,510 | ||||||
962,235 | 3,694,982 | |||||||
183,943,793 | ||||||||
Leisure Equipment & Products - 0.1% | ||||||||
Arctic Cat | 92,036 | 5,244,211 | ||||||
Callaway Golf | 250,000 | 2,107,500 | ||||||
73,400 | 582,796 | |||||||
7,934,507 | ||||||||
Media - 1.4% | ||||||||
448,600 | 15,925,300 | |||||||
Morningstar | 463,700 | 36,210,333 | ||||||
Rentrak Corporation 1 | 293,165 | 11,108,022 | ||||||
Saga Communications Cl. A | 159,471 | 8,021,391 | ||||||
Scholastic Corporation | 393,900 | 13,396,539 | ||||||
Wiley (John) & Sons Cl. A | 300,200 | 16,571,040 | ||||||
World Wrestling Entertainment Cl. A | 118,289 | 1,961,232 | ||||||
| 103,193,857 | |||||||
Multiline Retail - 0.1% | ||||||||
Dollar Tree 1 | 5,600 | 315,952 | ||||||
30,000 | 1,471,200 | |||||||
Tuesday Morning 1 | 495,233 | 7,903,919 | ||||||
| ||||||||
| 9,691,071 | |||||||
| ||||||||
Specialty Retail - 4.7% | ||||||||
Advance Auto Parts | 3,100 | 343,108 | ||||||
10,000 | 90,900 | |||||||
American Eagle Outfitters | 1,546,491 | 22,269,470 | ||||||
711,516 | 30,047,321 | |||||||
Ascena Retail Group 1 | 2,447,749 | 51,794,369 | ||||||
Buckle (The) | 672,404 | 35,341,554 | ||||||
341,500 | 1,854,345 | |||||||
Cato Corporation (The) Cl. A | 665,163 | 21,152,183 | ||||||
Christopher & Banks 1 | 81,452 | 695,600 | ||||||
Destination Maternity | 101,300 | 3,026,844 | ||||||
Finish Line (The) Cl. A | 7,500 | 211,275 | ||||||
GameStop Corporation Cl. A | 548,500 | 27,019,110 | ||||||
Genesco 1 | 462,200 | 33,768,332 | ||||||
Guess? | 541,714 | 16,831,054 | ||||||
Le Chateau Cl. A 1 | 685,000 | 2,166,722 | ||||||
Monro Muffler Brake | 308,400 | 17,381,424 | ||||||
Penske Automotive Group | 389,200 | 18,354,672 | ||||||
Pier 1 Imports | 963,600 | 22,239,888 | ||||||
Ross Stores | 2,400 | 179,832 | ||||||
Shoe Carnival | 861,098 | 24,980,453 | ||||||
Stage Stores | 11,300 | 251,086 | ||||||
Stein Mart | 1,112,869 | 14,968,088 | ||||||
| ||||||||
| 344,967,630 | |||||||
| ||||||||
Textiles, Apparel & Luxury Goods - 2.1% | ||||||||
Barry (R.G.) | 220,808 | 4,261,595 | ||||||
Columbia Sportswear | 241,309 | 19,003,084 | ||||||
Crocs 1 | 1,458,620 | 23,221,230 | ||||||
Crown Crafts | 395,200 | 3,070,704 | ||||||
Culp | 65,400 | 1,337,430 | ||||||
210,291 | 17,761,178 | |||||||
G-III Apparel Group 1 | 466,494 | 34,422,592 | ||||||
Gildan Activewear | 3,000 | 159,930 | ||||||
Movado Group | 105,000 | 4,621,050 | ||||||
Steven Madden 1 | 555,792 | 20,336,429 | ||||||
956,380 | 22,991,375 | |||||||
| ||||||||
| 151,186,597 | |||||||
| ||||||||
Total (Cost $609,583,519) | 1,051,846,799 | |||||||
| ||||||||
| ||||||||
Consumer Staples – 1.5% | ||||||||
Beverages - 0.0% | ||||||||
9,075 | 80,223 | |||||||
| ||||||||
Food & Staples Retailing - 0.1% | ||||||||
Village Super Market Cl. A | 161,206 | 4,998,998 | ||||||
| ||||||||
Food Products - 0.7% | ||||||||
94,677 | 1,492,109 |
46 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | |||||||
Consumer Staples (continued) | ||||||||
Food Products (continued) | ||||||||
20,000 | $ | 38,800 | ||||||
Calavo Growers | 63,477 | 1,920,814 | ||||||
Cal-Maine Foods | 233,321 | 14,052,924 | ||||||
Farmer Bros. 1 | 92,400 | 2,149,224 | ||||||
Industrias Bachoco ADR | 112,586 | 4,533,838 | ||||||
Sanderson Farms | 366,900 | 26,537,877 | ||||||
SunOpta 1 | 219,000 | 2,192,190 | ||||||
52,917,776 | ||||||||
Household Products - 0.2% | ||||||||
Harbinger Group 1 | 1,009,600 | 11,963,760 | ||||||
Orchids Paper Products | 42,900 | 1,408,836 | ||||||
13,372,596 | ||||||||
Personal Products - 0.5% | ||||||||
Inter Parfums | 608,936 | 21,805,998 | ||||||
Nu Skin Enterprises Cl. A | 77,185 | 10,668,511 | ||||||
Nutraceutical International 1 | 312,500 | 8,368,750 | ||||||
40,843,259 | ||||||||
Total (Cost $53,783,408) | 112,212,852 | |||||||
Energy – 7.2% | ||||||||
Energy Equipment & Services - 6.4% | ||||||||
Atwood Oceanics 1 | 627,993 | 33,528,546 | ||||||
121,977 | 2,817,669 | |||||||
CARBO Ceramics | 170,000 | 19,810,100 | ||||||
Ensign Energy Services | 1,710,100 | 26,933,371 | ||||||
Exterran Holdings 1 | 699,900 | 23,936,580 | ||||||
Helmerich & Payne | 851,483 | 71,592,691 | ||||||
816,700 | 2,695,110 | |||||||
Matrix Service 1 | 1,082,329 | 26,484,590 | ||||||
Newpark Resources 1 | 130,700 | 1,606,303 | ||||||
Oil States International 1 | 500,577 | 50,918,692 | ||||||
Pason Systems | 2,146,200 | 46,429,443 | ||||||
Patterson-UTI Energy | 419,800 | 10,629,336 | ||||||
Rowan Companies Cl. A 1 | 9,000 | 318,240 | ||||||
RPC | 1,280,475 | 22,856,479 | ||||||
156,600 | 1,398,438 | |||||||
SEACOR Holdings 1 | 393,036 | 35,844,883 | ||||||
Superior Energy Services 1 | 73,200 | 1,947,852 | ||||||
Tidewater | 82,000 | 4,860,140 | ||||||
Trican Well Service | 1,220,200 | 14,910,046 | ||||||
Unit Corporation 1 | 1,260,237 | 65,053,434 | ||||||
Willbros Group 1 | 90,000 | 847,800 | ||||||
465,419,743 | ||||||||
Oil, Gas & Consumable Fuels - 0.8% | ||||||||
Cimarex Energy | 301,100 | 31,588,401 | ||||||
13,000 | 58,760 | |||||||
SM Energy | 229,100 | 19,040,501 | ||||||
Sprott Resource | 2,688,200 | 5,871,145 | ||||||
VAALCO Energy 1 | 208,700 | 1,437,943 | ||||||
57,996,750 | ||||||||
Total (Cost $251,247,145) | 523,416,493 | |||||||
Financials – 9.9% | ||||||||
Capital Markets - 4.6% | ||||||||
Affiliated Managers Group 1 | 134,000 | 29,061,920 | ||||||
AllianceBernstein Holding L.P. | 1,628,960 | 34,762,006 | ||||||
ASA Gold and Precious Metals | 88,100 | 1,080,106 | ||||||
Cohen & Steers | 488,904 | 19,585,494 | ||||||
Cowen Group 1 | 2,152,377 | 8,415,794 | ||||||
Diamond Hill Investment Group | 136,350 | 16,135,659 | ||||||
Federated Investors Cl. B | 2,091,882 | 60,246,202 | ||||||
Financial Engines | 51,631 | 3,587,322 | ||||||
GFI Group | 580,000 | 2,267,800 | ||||||
INTL FCStone 1 | 61,217 | 1,134,963 | ||||||
Lazard Cl. A | 903,375 | 40,940,955 | ||||||
Manning & Napier Cl. A | 677,292 | 11,954,204 | ||||||
MVC Capital | 263,600 | 3,558,600 | ||||||
Oppenheimer Holdings Cl. A | 25,000 | 619,500 | ||||||
SEI Investments | 1,235,500 | 42,908,915 | ||||||
Sprott | 2,687,500 | 6,628,619 | ||||||
Stifel Financial 1 | 38,000 | 1,820,960 | ||||||
Waddell & Reed Financial Cl. A | 416,927 | 27,150,286 | ||||||
Westwood Holdings Group | 392,335 | 24,289,460 | ||||||
WisdomTree Investments 1 | 80,000 | 1,416,800 | ||||||
337,565,565 | ||||||||
Commercial Banks - 0.2% | ||||||||
BCB Holdings 1 | 209,426 | 50,286 | ||||||
City Holding Company | 249,570 | 11,562,578 | ||||||
11,612,864 | ||||||||
Diversified Financial Services - 0.3% | ||||||||
PICO Holdings 1 | 1,056,784 | 24,422,278 | ||||||
Insurance - 3.5% | ||||||||
Alleghany Corporation 1 | 11,800 | 4,719,528 | ||||||
Allied World Assurance Company Holdings | 108,436 | 12,232,665 | ||||||
Aspen Insurance Holdings | 314,958 | 13,010,915 | ||||||
Baldwin & Lyons Cl. B | 290,700 | 7,941,924 | ||||||
Brown & Brown | 695,100 | 21,819,189 | ||||||
E-L Financial | 48,500 | 32,417,039 | ||||||
Erie Indemnity Cl. A | 293,500 | 21,460,720 | ||||||
Gallagher (Arthur J.) & Co. | 234,400 | 11,000,392 | ||||||
Greenlight Capital Re Cl. A 1 | 891,749 | 30,060,859 | ||||||
MBIA 1 | 1,750,177 | 20,897,113 | ||||||
PartnerRe | 194,881 | 20,546,304 | ||||||
Platinum Underwriters Holdings | 27,700 | 1,697,456 | ||||||
ProAssurance Corporation | 40,400 | 1,958,592 | ||||||
Reinsurance Group of America | 442,721 | 34,271,033 | ||||||
RLI Corp. | 65,231 | 6,352,195 | ||||||
Stewart Information Services | 216,600 | 6,989,682 | ||||||
Validus Holdings | 89,100 | 3,589,839 | ||||||
250,965,445 | ||||||||
Real Estate Management & Development - 0.6% | ||||||||
E-House (China) Holdings ADR | 108,703 | 1,639,241 | ||||||
Forestar Group 1 | 50,000 | 1,063,500 | ||||||
Jones Lang LaSalle | 253,500 | 25,955,865 | ||||||
105,000 | 2,014,950 | |||||||
Tejon Ranch 1 | 412,127 | 15,149,789 | ||||||
45,823,345 | ||||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 47 |
Schedules of Investments |
Royce Pennsylvania Mutual Fund (continued) |
SHARES | VALUE | |||||||
Financials (continued) | ||||||||
Thrifts & Mortgage Finance - 0.7% | ||||||||
BofI Holding 1 | 24,300 | $ | 1,905,849 | |||||
Genworth MI Canada | 1,013,500 | 34,948,934 | ||||||
TrustCo Bank Corp. NY | 1,764,151 | 12,666,604 | ||||||
49,521,387 | ||||||||
Total (Cost $513,368,835) | 719,910,884 | |||||||
Health Care – 6.3% | ||||||||
Biotechnology - 0.3% | ||||||||
120,000 | 398,400 | |||||||
42,000 | 98,700 | |||||||
246,250 | 1,679,425 | |||||||
40,908 | 236,858 | |||||||
85,000 | 223,550 | |||||||
137,600 | 822,848 | |||||||
Lexicon Pharmaceuticals 1 | 1,522,400 | 2,740,320 | ||||||
754,900 | 15,837,802 | |||||||
216,000 | 330,480 | |||||||
68,000 | 295,120 | |||||||
22,663,503 | ||||||||
Health Care Equipment & Supplies - 1.7% | ||||||||
Analogic Corporation | 314,400 | 27,843,264 | ||||||
Atrion Corporation | 2,665 | 789,506 | ||||||
CryoLife | 83,027 | 920,769 | ||||||
DENTSPLY International | 12,300 | 596,304 | ||||||
Exactech 1 | 57,000 | 1,354,320 | ||||||
244,600 | 26,018,102 | |||||||
Invacare Corporation | 154,200 | 3,578,982 | ||||||
Medical Action Industries 1 | 304,262 | 2,604,483 | ||||||
Merit Medical Systems 1 | 534,586 | 8,414,384 | ||||||
STERIS Corporation | 521,700 | 25,067,685 | ||||||
SurModics 1 | 346,900 | 8,460,891 | ||||||
Teleflex | 60,000 | 5,631,600 | ||||||
Thoratec Corporation 1 | 348,300 | 12,747,780 | ||||||
Trinity Biotech ADR Cl. A | 67,600 | 1,699,464 | ||||||
125,727,534 | ||||||||
Health Care Providers & Services - 2.1% | ||||||||
Almost Family 1 | 34,147 | 1,103,972 | ||||||
Chemed Corporation | 271,260 | 20,783,941 | ||||||
Cross Country Healthcare 1 | 240,700 | 2,402,186 | ||||||
HealthSouth Corporation | 773,500 | 25,773,020 | ||||||
Landauer 2 | 492,200 | 25,894,642 | ||||||
Magellan Health Services 1 | 250,822 | 15,026,746 | ||||||
MEDNAX 1 | 150,234 | 8,019,491 | ||||||
Owens & Minor | 744,000 | 27,200,640 | ||||||
Psychemedics Corporation | 70,200 | 1,031,238 | ||||||
Schein (Henry) 1 | 2,400 | 274,224 | ||||||
U.S. Physical Therapy | 574,464 | 20,255,601 | ||||||
VCA Antech 1 | 38,750 | 1,215,200 | ||||||
148,980,901 | ||||||||
Life Sciences Tools & Services - 2.2% | ||||||||
Bio-Rad Laboratories Cl. A 1 | 95,812 | 11,843,321 | ||||||
Covance 1 | 323,000 | 28,443,380 | ||||||
Furiex Pharmaceuticals 1 | 43,625 | 1,832,686 | ||||||
ICON 1 | 210,200 | 8,494,182 | ||||||
Mettler-Toledo International 1 | 118,600 | 28,771,174 | ||||||
PAREXEL International 1 | 270,000 | 12,198,600 | ||||||
PerkinElmer | 795,420 | 32,795,167 | ||||||
Techne Corporation | 353,500 | 33,465,845 | ||||||
157,844,355 | ||||||||
Pharmaceuticals - 0.0% | ||||||||
19,900 | 45,770 | |||||||
Total (Cost $296,453,028) | 455,262,063 | |||||||
Industrials – 25.5% | ||||||||
Aerospace & Defense - 1.7% | ||||||||
AeroVironment 1 | 31,900 | 929,247 | ||||||
American Science & Engineering | 57,305 | 4,120,802 | ||||||
Astronics Corporation 1 | 21,120 | 1,077,120 | ||||||
CPI Aerostructures 1 | 125,391 | 1,885,881 | ||||||
Cubic Corporation | 263,063 | 13,852,898 | ||||||
Curtiss-Wright | 273,820 | 17,039,819 | ||||||
HEICO Corporation | 791,335 | 45,857,863 | ||||||
HEICO Corporation Cl. A | 189,940 | 8,000,273 | ||||||
Kratos Defense & Security Solutions 1 | 95,578 | 734,039 | ||||||
Orbital Sciences 1 | 100,000 | 2,330,000 | ||||||
Teledyne Technologies 1 | 277,000 | 25,445,220 | ||||||
121,273,162 | ||||||||
Air Freight & Logistics - 1.2% | ||||||||
50,000 | 1,074,000 | |||||||
Expeditors International of Washington | 4,300 | 190,275 | ||||||
Forward Air | 829,000 | 36,401,390 | ||||||
Hub Group Cl. A 1 | 247,500 | 9,870,300 | ||||||
Pacer International 1 | 817,040 | 6,748,751 | ||||||
UTi Worldwide | 1,696,100 | 29,783,516 | ||||||
104,200 | 2,739,418 | |||||||
86,807,650 | ||||||||
Building Products - 1.8% | ||||||||
AAON | 1,175,575 | 37,559,621 | ||||||
American Woodmark 1 | 410,774 | 16,237,896 | ||||||
Gibraltar Industries 1 | 615,120 | 11,435,081 | ||||||
Insteel Industries | 360,935 | 8,204,053 | ||||||
Owens Corning 1 | 364,600 | 14,846,512 | ||||||
Simpson Manufacturing | 1,017,200 | 37,361,756 | ||||||
WaterFurnace Renewable Energy | 103,800 | 2,344,233 | ||||||
127,989,152 | ||||||||
Commercial Services & Supplies - 2.6% | ||||||||
Brink’s Company (The) | 829,300 | 28,312,302 | ||||||
Copart 1 | 1,195,152 | 43,802,321 | ||||||
Healthcare Services Group | 677,275 | 19,214,292 | ||||||
264,734 | 5,424,400 | |||||||
Mine Safety Appliances | 288,500 | 14,774,085 | ||||||
Ritchie Bros. Auctioneers | 1,679,200 | 38,504,056 | ||||||
Team 1 | 596,148 | 25,240,906 | ||||||
Tetra Tech 1 | 67,140 | 1,878,577 | ||||||
UniFirst Corporation | 98,997 | 10,592,679 | ||||||
Viad Corporation | 203,666 | 5,657,841 | ||||||
193,401,459 | ||||||||
48 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | |||||||
Industrials (continued) | ||||||||
Construction & Engineering - 1.1% | ||||||||
Ameresco Cl. A 1 | 173,700 | $ | 1,677,942 | |||||
Chicago Bridge & Iron | 23,000 | 1,912,220 | ||||||
Comfort Systems USA | 553,491 | 10,732,190 | ||||||
EMCOR Group | 732,200 | 31,074,568 | ||||||
Foster Wheeler 1 | 15,000 | 495,300 | ||||||
Jacobs Engineering Group 1 | 5,700 | 359,043 | ||||||
KBR | 929,800 | 29,651,322 | ||||||
101,200 | 1,728,496 | |||||||
MYR Group 1 | 37,000 | 927,960 | ||||||
Pike Corporation 1 | 61,558 | 650,668 | ||||||
Sterling Construction 1 | 244,671 | 2,869,991 | ||||||
82,079,700 | ||||||||
Electrical Equipment - 2.5% | ||||||||
AZZ | 215,958 | 10,551,708 | ||||||
Brady Corporation Cl. A | 614,600 | 19,009,578 | ||||||
Encore Wire | 319,079 | 17,294,082 | ||||||
EnerSys | 124,600 | 8,733,214 | ||||||
Franklin Electric | 923,000 | 41,202,720 | ||||||
Global Power Equipment Group | 679,105 | 13,290,085 | ||||||
1,629,806 | 18,302,721 | |||||||
Powell Industries | 377,031 | 25,257,307 | ||||||
Preformed Line Products 2 | 349,478 | 25,567,810 | ||||||
179,209,225 | ||||||||
Industrial Conglomerates - 0.5% | ||||||||
Carlisle Companies | 24,900 | 1,977,060 | ||||||
Raven Industries | 773,570 | 31,824,670 | ||||||
33,801,730 | ||||||||
Machinery - 7.7% | ||||||||
Alamo Group | 341,057 | 20,698,749 | ||||||
Astec Industries | 51,312 | 1,982,183 | ||||||
Briggs & Stratton | 252,600 | 5,496,576 | ||||||
Chart Industries 1 | 19,500 | 1,864,980 | ||||||
CIRCOR International | 414,752 | 33,503,667 | ||||||
CLARCOR | 517,500 | 33,301,125 | ||||||
Columbus McKinnon 1 | 166,550 | 4,520,167 | ||||||
Donaldson Company | 715,400 | 31,091,284 | ||||||
Foster (L.B.) Company | 181,898 | 8,601,956 | ||||||
FreightCar America | 33,700 | 897,094 | ||||||
Gorman-Rupp Company (The) | 62,166 | 2,078,209 | ||||||
Graco | 539,449 | 42,141,756 | ||||||
Graham Corporation | 95,248 | 3,456,550 | ||||||
Hurco Companies | 30,552 | 764,106 | ||||||
IDEX Corporation | 343,500 | 25,367,475 | ||||||
Kadant | 74,800 | 3,030,896 | ||||||
Kennametal | 1,104,698 | 57,521,625 | ||||||
Lincoln Electric Holdings | 425,460 | 30,352,316 | ||||||
Lindsay Corporation | 36,100 | 2,987,275 | ||||||
Miller Industries | 125,443 | 2,337,003 | ||||||
Nordson Corporation | 379,400 | 28,189,420 | ||||||
Proto Labs 1 | 75,110 | 5,346,330 | ||||||
RBC Bearings 1 | 675,100 | 47,763,325 | ||||||
Standex International | 33,600 | 2,112,768 | ||||||
Sun Hydraulics | 513,700 | 20,974,371 | ||||||
Tennant Company | 562,000 | 38,109,220 | ||||||
Valmont Industries | 276,000 | 41,157,120 | ||||||
WABCO Holdings 1 | 354,100 | 33,076,481 | ||||||
Wabtec Corporation | 478,422 | 35,532,402 | ||||||
564,256,429 | ||||||||
Marine - 0.1% | ||||||||
Kirby Corporation 1 | 106,800 | 10,599,900 | ||||||
Professional Services - 3.5% | ||||||||
Acacia Research | 1,646,516 | 23,940,343 | ||||||
Advisory Board (The) 1 | 706,400 | 44,976,488 | ||||||
Barrett Business Services | 160,800 | 14,912,592 | ||||||
Corporate Executive Board | 402,500 | 31,165,575 | ||||||
CRA International 1 | 470,448 | 9,314,870 | ||||||
Exponent | 257,639 | 19,951,564 | ||||||
GP Strategies 1 | 96,615 | 2,878,161 | ||||||
Heidrick & Struggles International | 14,632 | 294,688 | ||||||
Huron Consulting Group 1 | 3,000 | 188,160 | ||||||
Korn/Ferry International 1 | 50,000 | 1,306,000 | ||||||
ManpowerGroup | 357,230 | 30,671,768 | ||||||
On Assignment 1 | 85,000 | 2,968,200 | ||||||
Robert Half International | 476,400 | 20,004,036 | ||||||
Towers Watson & Co. Cl. A | 370,200 | 47,241,222 | ||||||
TrueBlue 1 | 287,700 | 7,416,906 | ||||||
257,230,573 | ||||||||
Road & Rail - 1.0% | ||||||||
Knight Transportation | 401,100 | 7,356,174 | ||||||
Landstar System | 571,800 | 32,849,910 | ||||||
Marten Transport | 51,750 | 1,044,832 | ||||||
Patriot Transportation Holding 1 | 254,400 | 10,560,144 | ||||||
Universal Truckload Services | 685,784 | 20,923,270 | ||||||
72,734,330 | ||||||||
Trading Companies & Distributors - 1.4% | ||||||||
Air Lease Cl. A | 594,800 | 18,486,384 | ||||||
Applied Industrial Technologies | 930,490 | 45,677,754 | ||||||
MSC Industrial Direct Cl. A | 473,100 | 38,259,597 | ||||||
102,423,735 | ||||||||
Transportation Infrastructure - 0.4% | ||||||||
Wesco Aircraft Holdings 1 | 1,233,187 | 27,031,459 | ||||||
Total (Cost $959,573,960) | 1,858,838,504 | |||||||
Information Technology – 20.2% | ||||||||
Communications Equipment - 1.6% | ||||||||
ADTRAN | 1,149,565 | 31,049,751 | ||||||
Bel Fuse Cl. B | 25,937 | 552,717 | ||||||
Black Box | 142,502 | 4,246,560 | ||||||
55,000 | 409,750 | |||||||
CalAmp Corporation 1 | 52,100 | 1,457,237 | ||||||
Digi International 1 | 388,644 | 4,710,365 | ||||||
Emulex Corporation 1 | 20,000 | 143,200 | ||||||
Finisar Corporation 1 | 74,000 | 1,770,080 | ||||||
Harmonic 1 | 150,000 | 1,107,000 | ||||||
NETGEAR 1 | 1,204,618 | 39,680,117 | ||||||
Oplink Communications 1 | 68,467 | 1,273,486 | ||||||
Plantronics | 376,902 | 17,507,098 | ||||||
Polycom 1 | 165,000 | 1,852,950 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 49 |
Schedules of Investments |
Royce Pennsylvania Mutual Fund (continued) |
SHARES | VALUE | |||||||
Information Technology (continued) | ||||||||
Communications Equipment (continued) | ||||||||
TESSCO Technologies | 209,781 | $ | 8,458,370 | |||||
114,218,681 | ||||||||
Computers & Peripherals - 0.9% | ||||||||
Diebold | 863,500 | 28,504,135 | ||||||
Intevac 1 | 186,700 | 1,387,181 | ||||||
Qumu Corporation 1 | 153,000 | 1,958,400 | ||||||
124,600 | 1,670,886 | |||||||
Stratasys 1 | 247,435 | 33,329,494 | ||||||
Western Digital | 6,400 | 536,960 | ||||||
67,387,056 | ||||||||
Electronic Equipment, Instruments & Components - 8.2% | ||||||||
Anixter International | 353,264 | 31,737,238 | ||||||
Avnet | 8,300 | 366,113 | ||||||
AVX Corporation | 1,466,821 | 20,432,817 | ||||||
Badger Meter | 273,514 | 14,906,513 | ||||||
Benchmark Electronics 1 | 918,700 | 21,203,596 | ||||||
Cognex Corporation 1 | 974,890 | 37,221,300 | ||||||
Coherent 1 | 639,200 | 47,550,088 | ||||||
Dolby Laboratories Cl. A 1 | 726,950 | 28,031,192 | ||||||
1,044,829 | 25,054,999 | |||||||
Electro Rent | 77,074 | 1,427,411 | ||||||
Fabrinet 1 | 1,727,113 | 35,509,443 | ||||||
FARO Technologies 1 | 378,900 | 22,089,870 | ||||||
FEI Company | 12,750 | 1,139,340 | ||||||
FLIR Systems | 906,600 | 27,288,660 | ||||||
Hollysys Automation Technologies 1 | 225,800 | 4,274,394 | ||||||
IPG Photonics 1 | 653,230 | 50,697,180 | ||||||
697,735 | 7,689,040 | |||||||
Littelfuse | 9,822 | 912,758 | ||||||
815,044 | 1,532,283 | |||||||
Maxwell Technologies 1 | 71,723 | 557,288 | ||||||
Methode Electronics | 5,269 | 180,147 | ||||||
MTS Systems | 533,974 | 38,045,648 | ||||||
National Instruments | 1,266,700 | 40,559,734 | ||||||
Newport Corporation 1 | 1,636,722 | 29,575,567 | ||||||
Park Electrochemical | 32,200 | 924,784 | ||||||
Plexus Corporation 1 | 748,800 | 32,415,552 | ||||||
223,173 | 644,970 | |||||||
Richardson Electronics | 127,551 | 1,448,979 | ||||||
Rofin-Sinar Technologies 1 | 1,000,768 | 27,040,751 | ||||||
Rogers Corporation 1 | 174,842 | 10,752,783 | ||||||
TTM Technologies 1 | 300,000 | 2,574,000 | ||||||
2,589,209 | 34,332,911 | |||||||
Vishay Precision Group 1 | 21,200 | 315,668 | ||||||
Zygo Corporation 1 | 34,900 | 515,822 | ||||||
598,948,839 | ||||||||
Internet Software & Services - 0.2% | ||||||||
CoStar Group 1 | 25,000 | 4,614,500 | ||||||
RealNetworks 1 | 70,450 | 531,897 | ||||||
Responsys 1 | 150,000 | 4,111,500 | ||||||
20,000 | 1,672,600 | |||||||
Stamps.com 1 | 18,600 | 783,060 | ||||||
Support.com 1 | 820,905 | 3,111,230 | ||||||
United Online | 28,971 | 398,641 | ||||||
38,723 | 2,201,403 | |||||||
17,424,831 | ||||||||
IT Services - 2.7% | ||||||||
Computer Task Group | 361,272 | 6,828,041 | ||||||
Convergys Corporation | 878,831 | 18,499,392 | ||||||
CoreLogic 1 | 319,000 | 11,334,070 | ||||||
Fiserv 1 | 5,000 | 295,250 | ||||||
Forrester Research | 312,400 | 11,952,424 | ||||||
Hackett Group (The) | 649,896 | 4,035,854 | ||||||
169,488 | 415,246 | |||||||
ManTech International Cl. A | 937,670 | 28,064,463 | ||||||
MAXIMUS | 696,500 | 30,639,035 | ||||||
MoneyGram International 1 | 1,061,539 | 22,058,780 | ||||||
Sapient Corporation 1 | 1,881,000 | 32,654,160 | ||||||
ServiceSource International 1 | 815,761 | 6,836,077 | ||||||
Sykes Enterprises 1 | 187,902 | 4,098,143 | ||||||
Syntel 1 | 197,700 | 17,980,815 | ||||||
195,691,750 | ||||||||
Office Electronics - 0.3% | ||||||||
Zebra Technologies Cl. A 1 | 448,211 | 24,239,251 | ||||||
Semiconductors & Semiconductor Equipment - 3.7% | ||||||||
Advanced Energy Industries 1 | 646,214 | 14,772,452 | ||||||
132,126 | 1,918,469 | |||||||
Amtech Systems 1 | 149,000 | 1,037,040 | ||||||
ATMI 1 | 298,348 | 9,013,093 | ||||||
Cabot Microelectronics 1 | 550,939 | 25,177,912 | ||||||
375,500 | 7,671,465 | |||||||
Diodes 1 | 1,288,300 | 30,352,348 | ||||||
Entegris 1 | 296,200 | 3,435,920 | ||||||
Entropic Communications 1 | 121,953 | 574,399 | ||||||
Exar Corporation 1 | 824,441 | 9,720,159 | ||||||
Fairchild Semiconductor International 1 | 1,136,800 | 15,176,280 | ||||||
Integrated Device Technology 1 | 300,000 | 3,057,000 | ||||||
Integrated Silicon Solution 1 | 447,433 | 5,409,465 | ||||||
International Rectifier 1 | 844,009 | 22,003,315 | ||||||
IXYS Corporation | 891,892 | 11,567,839 | ||||||
Kulicke & Soffa Industries 1 | 139,400 | 1,854,020 | ||||||
LTX-Credence Corporation 1 | 92,900 | 742,271 | ||||||
Micrel | 1,080,800 | 10,667,496 | ||||||
MKS Instruments | 960,100 | 28,745,394 | ||||||
Nanometrics 1 | 298,571 | 5,687,778 | ||||||
OmniVision Technologies 1 | 301,700 | 5,189,240 | ||||||
Photronics 1 | 189,260 | 1,709,018 | ||||||
Rudolph Technologies 1 | 101,722 | 1,194,216 | ||||||
Silicon Motion Technology ADR | 111,600 | 1,579,140 | ||||||
Skyworks Solutions 1 | 9,700 | 277,032 | ||||||
90,000 | 141,300 | |||||||
Supertex 1 | 334,000 | 8,366,700 | ||||||
217,200 | 11,253,132 | |||||||
976,496 | 17,205,860 | |||||||
Tessera Technologies | 79,300 | 1,563,003 | ||||||
TriQuint Semiconductor 1 | 252,446 | 2,105,400 | ||||||
Veeco Instruments 1 | 217,400 | 7,154,634 | ||||||
266,322,790 | ||||||||
50 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | |||||||
Information Technology (continued) | ||||||||
Software - 2.6% | ||||||||
Accelrys 1 | 82,850 | $ | 790,389 | |||||
ACI Worldwide 1 | 453,700 | 29,490,500 | ||||||
Actuate Corporation 1 | 213,572 | 1,646,640 | ||||||
American Software Cl. A | 181,124 | 1,787,694 | ||||||
ANSYS 1 | 377,900 | 32,952,880 | ||||||
Blackbaud | 676,691 | 25,477,416 | ||||||
177,700 | 4,774,799 | |||||||
150,098 | 510,333 | |||||||
FactSet Research Systems | 110,900 | 12,041,522 | ||||||
Fair Isaac | 481,600 | 30,263,744 | ||||||
Manhattan Associates 1 | 244,349 | 28,706,121 | ||||||
Mentor Graphics | 4,500 | 108,315 | ||||||
MICROS Systems 1 | 3,100 | 177,847 | ||||||
Monotype Imaging Holdings | 668,400 | 21,295,224 | ||||||
190,023,424 | ||||||||
Total (Cost $991,156,930) | 1,474,256,622 | |||||||
Materials – 8.8% | ||||||||
Chemicals - 3.1% | ||||||||
Balchem Corporation | 434,700 | 25,516,890 | ||||||
Cabot Corporation | 481,700 | 24,759,380 | ||||||
Hawkins | 29,617 | 1,101,456 | ||||||
Innophos Holdings | 199,547 | 9,697,984 | ||||||
Innospec | 996,382 | 46,052,776 | ||||||
Intrepid Potash 1 | 108,000 | 1,710,720 | ||||||
KMG Chemicals | 66,600 | 1,124,874 | ||||||
Minerals Technologies | 267,432 | 16,064,640 | ||||||
OM Group 1 | 106,100 | 3,863,101 | ||||||
Quaker Chemical | 389,088 | 29,987,012 | ||||||
Schulman (A.) | 269,690 | 9,509,270 | ||||||
Stepan Company | 315,814 | 20,726,873 | ||||||
Westlake Chemical | 300,900 | 36,730,863 | ||||||
226,845,839 | ||||||||
Construction Materials - 0.2% | ||||||||
Ash Grove Cement 4 | 50,018 | 9,803,528 | ||||||
Containers & Packaging - 0.9% | ||||||||
AptarGroup | 547,800 | 37,146,318 | ||||||
Greif Cl. A | 536,468 | 28,110,923 | ||||||
UFP Technologies 1 | 40,198 | 1,013,794 | ||||||
66,271,035 | ||||||||
Metals & Mining - 4.2% | ||||||||
Agnico Eagle Mines | 30,000 | 791,400 | ||||||
Allegheny Technologies | 613,046 | 21,842,829 | ||||||
Carpenter Technology | 42,900 | 2,668,380 | ||||||
Commercial Metals | 338,700 | 6,885,771 | ||||||
Compass Minerals International | 182,726 | 14,627,216 | ||||||
Franco-Nevada Corporation | 66,200 | 2,696,988 | ||||||
Geodrill 1 | 497,300 | 346,436 | ||||||
Globe Specialty Metals | 1,431,803 | 25,786,772 | ||||||
Haynes International | 583,795 | 32,248,836 | ||||||
Hecla Mining | 228,300 | 703,164 | ||||||
Horsehead Holding Corporation 1 | 588,700 | 9,542,827 | ||||||
Major Drilling Group International | 2,147,200 | 15,544,333 | ||||||
Olympic Steel | 129,000 | 3,738,420 | ||||||
Pan American Silver | 127,600 | 1,492,920 | ||||||
2,302,187 | 11,876,663 | |||||||
Reliance Steel & Aluminum | 972,320 | 73,740,749 | ||||||
Schnitzer Steel Industries Cl. A | 617,810 | 20,183,853 | ||||||
Seabridge Gold 1 | 1,930,404 | 14,091,949 | ||||||
1,719,470 | 16,575,691 | |||||||
Steel Dynamics | 383,521 | 7,494,000 | ||||||
Universal Stainless & Alloy Products 1 | 70,000 | 2,524,200 | ||||||
Worthington Industries | 523,733 | 22,038,685 | ||||||
307,442,082 | ||||||||
Paper & Forest Products - 0.4% | ||||||||
Glatfelter | 5,000 | 138,200 | ||||||
Stella-Jones | 1,203,100 | 30,863,238 | ||||||
31,001,438 | ||||||||
Total (Cost $459,158,173) | 641,363,922 | |||||||
Telecommunication Services – 0.1% | ||||||||
Diversified Telecommunication Services - 0.1% | ||||||||
Premiere Global Services 1 | 601,500 | 6,971,385 | ||||||
Total (Cost $5,026,491) | 6,971,385 | |||||||
Utilities – 0.0% | ||||||||
Gas Utilities - 0.0% | ||||||||
UGI Corporation | 9,900 | 410,454 | ||||||
Total (Cost $411,457) | 410,454 | |||||||
Miscellaneous 5 – 3.8% | ||||||||
Total (Cost $246,487,430) | 274,958,912 | |||||||
TOTAL COMMON STOCKS | ||||||||
(Cost $4,386,250,376) | 7,119,448,890 | |||||||
REPURCHASE AGREEMENT – 2.3% | ||||||||
Fixed Income Clearing Corporation, | ||||||||
0.00% dated 12/31/13, due 1/2/14, | ||||||||
maturity value $165,200,000 (collateralized | ||||||||
by obligations of various U.S. Government | ||||||||
Agencies, 1.00% due 9/30/19, valued at | ||||||||
$168,508,138) | ||||||||
(Cost $165,200,000) | 165,200,000 | |||||||
PRINCIPAL | ||||||||
AMOUNT | ||||||||
COLLATERAL RECEIVED FOR SECURITIES | ||||||||
LOANED – 1.7% | ||||||||
U.S. Treasury Bills | ||||||||
due 4/3/14-12/11/14 | $ | 2,425,828 | 2,425,863 | |||||
U.S. Treasury Bonds | ||||||||
2.125%-5.375% | ||||||||
due 2/15/31-2/15/40 | 3,680,423 | 3,746,723 | ||||||
U.S. Treasury Notes | ||||||||
0.125%-4.125% | ||||||||
due 2/15/14-7/15/23 | 35,665,051 | 35,790,702 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 51 |
Schedules of Investments |
Royce Pennsylvania Mutual Fund (continued) |
VALUE | |||||||||
COLLATERAL RECEIVED FOR SECURITIES LOANED (continued) | |||||||||
Money Market Funds | |||||||||
Federated Government Obligations Fund | |||||||||
(7 day yield-0.0099%) | $ | 86,323,156 | |||||||
TOTAL COLLATERAL RECEIVED FOR | |||||||||
SECURITIES LOANED | |||||||||
(Cost $128,286,444) | 128,286,444 | ||||||||
TOTAL INVESTMENTS – 101.7% | |||||||||
(Cost $4,679,736,820) | 7,412,935,334 | ||||||||
LIABILITIES LESS CASH | |||||||||
AND OTHER ASSETS – (1.7)% | (126,075,650 | ) | |||||||
NET ASSETS – 100.0% | $ | 7,286,859,684 | |||||||
Royce Micro-Cap Fund
SHARES | VALUE | |||||||
COMMON STOCKS – 95.9% | ||||||||
Consumer Discretionary – 16.1% | ||||||||
Auto Components - 1.1% | ||||||||
Drew Industries | 152,978 | $ | 7,832,474 | |||||
Fuel Systems Solutions 1 | 97,971 | 1,358,858 | ||||||
9,191,332 | ||||||||
Diversified Consumer Services - 3.2% | ||||||||
American Public Education 1 | 193,930 | 8,430,137 | ||||||
Capella Education | 158,300 | 10,517,452 | ||||||
61,034 | 1,483,126 | |||||||
Lincoln Educational Services 2 | 1,295,222 | 6,450,206 | ||||||
26,880,921 | ||||||||
Household Durables - 0.9% | ||||||||
Cavco Industries 1 | 107,810 | 7,406,547 | ||||||
Internet & Catalog Retail - 0.2% | ||||||||
Vitacost.com 1 | 353,400 | 2,046,186 | ||||||
Leisure Equipment & Products - 1.8% | ||||||||
169,800 | 2,263,434 | |||||||
Callaway Golf | 588,654 | 4,962,353 | ||||||
461,100 | 3,661,134 | |||||||
350,165 | 4,723,726 | |||||||
15,610,647 | ||||||||
Media - 0.2% | ||||||||
Saraiva S/A Livreiros Editores | 156,700 | 1,724,912 | ||||||
Specialty Retail - 7.5% | ||||||||
Buckle (The) | 121,275 | 6,374,214 | ||||||
Cato Corporation (The) Cl. A | 208,250 | 6,622,350 | ||||||
Citi Trends 1 | 436,324 | 7,417,508 | ||||||
†Destination Maternity | 260,456 | 7,782,425 | ||||||
195,547 | 2,731,792 | |||||||
Kirkland’s 1 | 328,769 | 7,781,962 | ||||||
Shoe Carnival | 378,014 | 10,966,186 | ||||||
Stein Mart | 671,484 | 9,031,460 | ||||||
Zumiez 1 | 187,600 | 4,877,600 | ||||||
63,585,497 | ||||||||
Textiles, Apparel & Luxury Goods - 1.2% | ||||||||
Culp | 155,138 | 3,172,572 | ||||||
Perry Ellis International 1 | 425,748 | 6,722,561 | ||||||
9,895,133 | ||||||||
Total (Cost $97,548,868) | 136,341,175 | |||||||
Consumer Staples – 1.0% | ||||||||
Beverages - 0.1% | ||||||||
191,900 | 800,223 | |||||||
Food Products - 0.6% | ||||||||
Asian Citrus Holdings | 4,092,900 | 1,124,264 | ||||||
Sipef | 46,948 | 3,726,631 | ||||||
2,760,860 | 411,368 | |||||||
5,262,263 | ||||||||
Personal Products - 0.3% | ||||||||
98,800 | 2,581,644 | |||||||
Total (Cost $7,470,614) | 8,644,130 | |||||||
52 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | |||||||
Energy – 7.8% | ||||||||
Energy Equipment & Services - 6.2% | ||||||||
Canadian Energy Services & Technology | 141,200 | $ | 3,073,235 | |||||
Dawson Geophysical 1 | 125,333 | 4,238,762 | ||||||
Geospace Technologies 1 | 9,116 | 864,470 | ||||||
Gulf Island Fabrication | 335,944 | 7,800,620 | ||||||
Lamprell 1 | 815,056 | 1,892,943 | ||||||
Natural Gas Services Group 1 | 269,649 | 7,434,223 | ||||||
Tesco Corporation 1 | 477,100 | 9,437,038 | ||||||
TGC Industries 1 | 973,772 | 7,108,536 | ||||||
Total Energy Services | 534,100 | 10,367,749 | ||||||
52,217,576 | ||||||||
Oil, Gas & Consumable Fuels - 1.6% | ||||||||
Contango Oil & Gas 1 | 51,073 | 2,413,710 | ||||||
Gran Tierra Energy 1 | 256,800 | 1,877,208 | ||||||
Renewable Energy Group 1 | 75,374 | 863,786 | ||||||
Sprott Resource | 1,645,800 | 3,594,499 | ||||||
Triangle Petroleum 1 | 636,363 | 5,294,540 | ||||||
14,043,743 | ||||||||
Total (Cost $37,563,519) | 66,261,319 | |||||||
Financials – 7.5% | ||||||||
Capital Markets - 3.5% | ||||||||
FBR & Co. 1 | 228,334 | 6,023,451 | ||||||
Gluskin Sheff + Associates | 91,600 | 2,216,164 | ||||||
GMP Capital | 515,600 | 3,407,401 | ||||||
INTL FCStone 1 | 353,455 | 6,553,056 | ||||||
†JMP Group | 348,749 | 2,580,743 | ||||||
†Silvercrest Asset Management | ||||||||
Group Cl. A | 170,200 | 2,901,910 | ||||||
U.S. Global Investors Cl. A | 381,749 | 969,642 | ||||||
Westwood Holdings Group | 87,372 | 5,409,200 | ||||||
30,061,567 | ||||||||
Commercial Banks - 1.1% | ||||||||
BCB Holdings 1 | 2,760,860 | 662,918 | ||||||
64,700 | 899,330 | |||||||
Pacific Continental | 296,897 | 4,732,538 | ||||||
229,157 | 2,717,802 | |||||||
9,012,588 | ||||||||
Diversified Financial Services - 0.4% | ||||||||
133,823 | 3,092,650 | |||||||
Insurance - 0.2% | ||||||||
Navigators Group (The) 1 | 34,164 | 2,157,798 | ||||||
Real Estate Management & Development - 2.3% | ||||||||
AV Homes 1 | 161,500 | 2,934,455 | ||||||
Brasil Brokers Participacoes | 1,099,600 | 2,726,570 | ||||||
Kennedy-Wilson Holdings | 450,581 | 10,025,427 | ||||||
Midland Holdings | 7,132,400 | 3,440,050 | ||||||
19,126,502 | ||||||||
Total (Cost $50,201,055) | 63,451,105 | |||||||
Health Care – 10.2% | ||||||||
Biotechnology - 1.0% | ||||||||
32,000 | 482,880 | |||||||
Burcon NutraScience 1 | 279,600 | 810,840 | ||||||
Dyax Corporation 1 | 467,319 | 3,518,912 | ||||||
38,275 | 573,742 | |||||||
Lexicon Pharmaceuticals 1 | 1,678,871 | 3,021,968 | ||||||
8,408,342 | ||||||||
Health Care Equipment & Supplies - 5.3% | ||||||||
Cerus Corporation 1 | 814,254 | 5,251,938 | ||||||
CryoLife | 285,855 | 3,170,132 | ||||||
Cynosure Cl. A 1 | 146,269 | 3,902,457 | ||||||
750,000 | 1,530,000 | |||||||
Exactech 1 | 189,514 | 4,502,853 | ||||||
5,900 | 139,240 | |||||||
Merit Medical Systems 1 | 241,420 | 3,799,951 | ||||||
RTI Surgical 1 | 461,500 | 1,633,710 | ||||||
SurModics 1 | 230,722 | 5,627,310 | ||||||
Syneron Medical 1 | 672,374 | 8,270,200 | ||||||
Trinity Biotech ADR Cl. A | 125,020 | 3,143,003 | ||||||
241,572 | 4,568,126 | |||||||
45,538,920 | ||||||||
Health Care Providers & Services - 2.5% | ||||||||
69,900 | 1,785,246 | |||||||
CorVel Corporation 1 | 115,565 | 5,396,886 | ||||||
IPC The Hospitalist 1 | 34,234 | 2,033,157 | ||||||
PDI 1 | 491,819 | 2,365,649 | ||||||
U.S. Physical Therapy | 272,440 | 9,606,234 | ||||||
21,187,172 | ||||||||
Life Sciences Tools & Services - 0.3% | ||||||||
Furiex Pharmaceuticals 1 | 55,607 | 2,336,050 | ||||||
Pharmaceuticals - 1.1% | ||||||||
Unichem Laboratories | 637,279 | 2,009,044 | ||||||
Vetoquinol | 112,865 | 4,766,737 | ||||||
746,000 | 2,566,240 | |||||||
9,342,021 | ||||||||
Total (Cost $50,945,015) | 86,812,505 | |||||||
Industrials – 23.7% | ||||||||
Aerospace & Defense - 0.7% | ||||||||
AeroVironment 1 | 102,000 | 2,971,260 | ||||||
American Science & Engineering | 42,418 | 3,050,278 | ||||||
6,021,538 | ||||||||
Building Products - 2.1% | ||||||||
AAON | 155,166 | 4,957,554 | ||||||
Quanex Building Products | 340,500 | 6,782,760 | ||||||
WaterFurnace Renewable Energy | 282,800 | 6,386,794 | ||||||
18,127,108 | ||||||||
Commercial Services & Supplies - 1.8% | ||||||||
Courier Corporation | 196,782 | 3,559,786 | ||||||
Ennis | 454,251 | 8,040,243 | ||||||
Heritage-Crystal Clean 1 | 98,580 | 2,019,904 | ||||||
450,904 | 1,668,345 | |||||||
15,288,278 | ||||||||
Construction & Engineering - 2.5% | ||||||||
Layne Christensen 1 | 335,960 | 5,738,197 | ||||||
200,700 | 5,033,556 | |||||||
Severfield-Rowen 1 | 4,975,958 | 4,964,562 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 53 |
Schedules of Investments |
Royce Micro-Cap Fund (continued) |
SHARES | VALUE | |||||||
Industrials (continued) | ||||||||
Construction & Engineering (continued) | ||||||||
Sterling Construction 1 | 433,948 | $ | 5,090,210 | |||||
20,826,525 | ||||||||
Electrical Equipment - 3.0% | ||||||||
Global Power Equipment Group | 510,812 | 9,996,591 | ||||||
Graphite India | 3,227,991 | 4,174,913 | ||||||
LSI Industries | 840,136 | 7,283,979 | ||||||
Powell Industries | 62,300 | 4,173,477 | ||||||
25,628,960 | ||||||||
Machinery - 6.7% | ||||||||
AIA Engineering | 309,087 | 2,389,047 | ||||||
†CIRCOR International | 31,259 | 2,525,102 | ||||||
Foster (L.B.) Company | 172,856 | 8,174,360 | ||||||
FreightCar America | 330,009 | 8,784,839 | ||||||
Gorman-Rupp Company (The) | 88,713 | 2,965,676 | ||||||
Graham Corporation | 224,187 | 8,135,746 | ||||||
Kadant | 183,516 | 7,436,068 | ||||||
370,814 | 5,313,765 | |||||||
RBC Bearings 1 | 64,869 | 4,589,482 | ||||||
Semperit AG Holding | 133,778 | 6,624,459 | ||||||
56,938,544 | ||||||||
Professional Services - 3.6% | ||||||||
CRA International 1 | 299,783 | 5,935,704 | ||||||
Exponent | 54,335 | 4,207,702 | ||||||
GP Strategies 1 | 303,918 | 9,053,717 | ||||||
Kforce | 241,658 | 4,944,323 | ||||||
†Resources Connection | 464,200 | 6,651,986 | ||||||
30,793,432 | ||||||||
Road & Rail - 2.8% | ||||||||
Marten Transport | 554,471 | 11,194,770 | ||||||
Patriot Transportation Holding 1 | 296,869 | 12,323,032 | ||||||
23,517,802 | ||||||||
Trading Companies & Distributors - 0.5% | ||||||||
Houston Wire & Cable | 297,600 | 3,981,888 | ||||||
Total (Cost $142,254,352) | 201,124,075 | |||||||
Information Technology – 15.2% | ||||||||
Communications Equipment - 2.0% | ||||||||
586,700 | 1,742,499 | |||||||
COM DEV International 1 | 432,800 | 1,523,815 | ||||||
Digi International 1 | 384,834 | 4,664,188 | ||||||
KVH Industries 1 | 373,300 | 4,864,099 | ||||||
Parrot 1 | 68,200 | 1,857,689 | ||||||
150,700 | 2,263,514 | |||||||
16,915,804 | ||||||||
Computers & Peripherals - 1.1% | ||||||||
Avid Technology 1 | 159,343 | 1,298,646 | ||||||
Super Micro Computer 1 | 470,231 | 8,069,164 | ||||||
Xyratex | 28,600 | 380,094 | ||||||
9,747,904 | ||||||||
Electronic Equipment, Instruments & Components - 2.0% | ||||||||
Electro Rent | 190,400 | 3,526,208 | ||||||
Fabrinet 1 | 330,945 | 6,804,229 | ||||||
GSI Group 1 | 503,400 | 5,658,216 | ||||||
166,296 | 1,050,991 | |||||||
17,039,644 | ||||||||
Internet Software & Services - 0.8% | ||||||||
QuinStreet 1 | 505,200 | 4,390,188 | ||||||
World Energy Solutions 1 | 457,400 | 1,966,820 | ||||||
6,357,008 | ||||||||
IT Services - 0.6% | ||||||||
CSE Global | 2,776,500 | 1,683,127 | ||||||
EPAM Systems 1 | 99,917 | 3,491,100 | ||||||
5,174,227 | ||||||||
Semiconductors & Semiconductor Equipment - 6.8% | ||||||||
Advanced Energy Industries 1 | 232,274 | 5,309,784 | ||||||
ATMI 1 | 352,100 | 10,636,941 | ||||||
AXT 1 | 1,348,164 | 3,518,708 | ||||||
†Brooks Automation | 603,400 | 6,329,666 | ||||||
Cascade Microtech 1 | 15,194 | 141,608 | ||||||
GSI Technology 1 | 776,061 | 5,153,045 | ||||||
Integrated Silicon Solution 1 | 679,000 | 8,209,110 | ||||||
491,961 | 3,930,768 | |||||||
M/A-COM Technology Solutions Holdings 1 | 246,658 | 4,190,720 | ||||||
314,500 | 2,839,935 | |||||||
Rudolph Technologies 1 | 92,565 | 1,086,713 | ||||||
Sigma Designs 1 | 958,842 | 4,525,734 | ||||||
Ultra Clean Holdings 1 | 185,257 | 1,858,128 | ||||||
57,730,860 | ||||||||
Software - 1.9% | ||||||||
Monotype Imaging Holdings | 212,487 | 6,769,836 | ||||||
TeleNav 1 | 464,900 | 3,063,691 | ||||||
VASCO Data Security International 1 | 776,009 | 5,998,549 | ||||||
15,832,076 | ||||||||
Total (Cost $104,662,588) | 128,797,523 | |||||||
Materials – 9.3% | ||||||||
Chemicals - 2.4% | ||||||||
62,312 | 466,094 | |||||||
C. Uyemura & Co. | 50,300 | 2,197,132 | ||||||
FutureFuel Corporation | 283,100 | 4,472,980 | ||||||
LSB Industries 1 | 64,600 | 2,649,892 | ||||||
Quaker Chemical | 92,160 | 7,102,771 | ||||||
Societe Internationale de Plantations d’Heveas | 44,237 | 3,109,783 | ||||||
19,998,652 | ||||||||
Metals & Mining - 6.9% | ||||||||
Alamos Gold | 237,900 | 2,882,347 | ||||||
Argonaut Gold 1 | 187,500 | 939,044 | ||||||
Bear Creek Mining 1 | 674,600 | 927,198 | ||||||
Endeavour Mining 1 | 1,312,600 | 593,126 | ||||||
951,100 | 3,452,493 | |||||||
Geodrill 1 | 1,912,300 | 1,332,174 | ||||||
1,290,000 | 877,200 | |||||||
Goldgroup Mining 1 | 1,340,000 | 100,918 | ||||||
Haynes International | 118,830 | 6,564,169 |
54 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | |||||||
Materials (continued) | ||||||||
Metals & Mining (continued) | ||||||||
Horsehead Holding Corporation 1 | 513,071 | $ | 8,316,881 | |||||
Imdex | 1,170,165 | 647,801 | ||||||
Lumina Copper 1 | 440,000 | 2,605,413 | ||||||
1,577,704 | 3,092,300 | |||||||
Olympic Steel | 300,959 | 8,721,792 | ||||||
Pilot Gold 1 | 2,864,500 | 2,319,106 | ||||||
Quaterra Resources 1 | 1,885,000 | 188,500 | ||||||
Silvercorp Metals | 730,200 | 1,672,158 | ||||||
Synalloy Corporation | 175,942 | 2,702,469 | ||||||
Universal Stainless & Alloy Products 1 | 278,152 | 10,030,161 | ||||||
Western Copper and Gold 1 | 1,471,000 | 1,029,700 | ||||||
58,994,950 | ||||||||
Total (Cost $74,934,217) | 78,993,602 | |||||||
Utilities – 0.1% | ||||||||
Independent Power Producers & Energy Traders - 0.1% | ||||||||
Alterra Power 1 | 3,498,400 | 971,549 | ||||||
Total (Cost $4,304,472) | 971,549 | |||||||
Miscellaneous 5 – 5.0% | ||||||||
Total (Cost $38,216,931) | 42,064,227 | |||||||
TOTAL COMMON STOCKS | ||||||||
(Cost $608,101,631) | 813,461,210 | |||||||
REPURCHASE AGREEMENT – 4.9% | ||||||||
Fixed Income Clearing Corporation, 0.00% dated 12/31/13, due 1/2/14, maturity value $41,674,000 (collateralized by obligations of various U.S. Government Agencies, 0.50%-5.25% due 4/18/16-5/31/18, valued at $42,508,075) | ||||||||
(Cost $41,674,000) | 41,674,000 | |||||||
COLLATERAL RECEIVED FOR SECURITIES | ||||||||
LOANED – 3.1% | ||||||||
Money Market Funds | ||||||||
Federated Government Obligations Fund | ||||||||
(7 day yield-0.0099%) | ||||||||
(Cost $26,212,865) | 26,212,865 | |||||||
TOTAL INVESTMENTS – 103.9% | ||||||||
(Cost $675,988,496) | 881,348,075 | |||||||
LIABILITIES LESS CASH | ||||||||
AND OTHER ASSETS – (3.9)% | (33,147,280 | ) | ||||||
NET ASSETS – 100.0% | $ | 848,200,795 | ||||||
Royce Premier Fund
SHARES | VALUE | |||||||
COMMON STOCKS – 96.6% | ||||||||
Consumer Discretionary – 11.0% | ||||||||
Automobiles - 3.3% | ||||||||
Thor Industries 2 | 4,216,757 | $ | 232,891,489 | |||||
Distributors - 1.3% | ||||||||
Pool Corporation | 1,540,300 | 89,553,042 | ||||||
Diversified Consumer Services - 1.8% | ||||||||
Sotheby’s | 1,783,694 | 94,892,521 | ||||||
1,018,485 | 35,107,178 | |||||||
129,999,699 | ||||||||
Media - 1.3% | ||||||||
Morningstar | 1,171,500 | 91,482,435 | ||||||
Specialty Retail - 1.3% | ||||||||
Buckle (The) | 1,730,836 | 90,972,740 | ||||||
Textiles, Apparel & Luxury Goods - 2.0% | ||||||||
Columbia Sportswear | 1,071,813 | 84,405,274 | ||||||
Wolverine World Wide | 1,779,074 | 60,417,353 | ||||||
144,822,627 | ||||||||
Total (Cost $494,222,239) | 779,722,032 | |||||||
Consumer Staples – 5.8% | ||||||||
Food Products - 2.8% | ||||||||
Cal-Maine Foods 2 | 1,721,686 | 103,697,148 | ||||||
Sanderson Farms 2 | 1,329,008 | 96,127,148 | ||||||
199,824,296 | ||||||||
Personal Products - 3.0% | ||||||||
Nu Skin Enterprises Cl. A | 1,500,494 | 207,398,281 | ||||||
Total (Cost $111,204,686) | 407,222,577 | |||||||
Energy – 8.2% | ||||||||
Energy Equipment & Services - 8.2% | ||||||||
Ensign Energy Services | 7,128,000 | 112,263,064 | ||||||
Pason Systems | 4,016,300 | 86,885,925 | ||||||
SEACOR Holdings 1 | 735,065 | 67,037,928 | ||||||
Tidewater | 1,124,127 | 66,627,007 | ||||||
Trican Well Service 2 | 8,077,100 | 98,696,878 | ||||||
2,810,073 | 145,055,968 | |||||||
Total (Cost $368,126,700) | 576,566,770 | |||||||
Financials – 10.0% | ||||||||
Capital Markets - 5.1% | ||||||||
Affiliated Managers Group 1 | 288,700 | 62,613,256 | ||||||
†Artisan Partners Asset Management Cl. A | 450,536 | 29,370,442 | ||||||
Federated Investors Cl. B | 3,939,300 | 113,451,840 | ||||||
Partners Group Holding | 91,613 | 24,432,187 | ||||||
Stifel Financial 1 | 2,690,777 | 128,942,034 | ||||||
358,809,759 | ||||||||
Insurance - 3.0% | ||||||||
Alleghany Corporation 1 | 459,525 | 183,791,619 | ||||||
ProAssurance Corporation | 573,298 | 27,793,487 | ||||||
211,585,106 | ||||||||
Real Estate Management & Development - 1.9% | ||||||||
Jones Lang LaSalle | 1,066,203 | 109,168,525 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 55 |
Schedules of Investments |
Royce Premier Fund (continued) |
SHARES | VALUE | |||||||
Financials (continued) | ||||||||
Real Estate Management & Development (continued) | ||||||||
1,574,700 | $ | 30,218,493 | ||||||
139,387,018 | ||||||||
Total (Cost $415,534,044) | 709,781,883 | |||||||
Health Care – 5.8% | ||||||||
Biotechnology - 1.9% | ||||||||
6,343,965 | 133,096,386 | |||||||
Health Care Equipment & Supplies - 1.2% | ||||||||
IDEXX Laboratories 1 | 827,200 | 87,989,264 | ||||||
Life Sciences Tools & Services - 1.2% | ||||||||
PerkinElmer | 1,983,200 | 81,767,336 | ||||||
Pharmaceuticals - 1.5% | ||||||||
2,753,525 | 106,341,135 | |||||||
Total (Cost $287,060,938) | 409,194,121 | |||||||
Industrials – 24.5% | ||||||||
Air Freight & Logistics - 1.6% | ||||||||
Forward Air | 1,363,628 | 59,876,905 | ||||||
UTi Worldwide | 3,244,700 | 56,976,932 | ||||||
116,853,837 | ||||||||
Building Products - 1.4% | ||||||||
Simpson Manufacturing 2 | 2,705,933 | 99,388,919 | ||||||
Commercial Services & Supplies - 3.2% | ||||||||
Copart 1 | 3,158,100 | 115,744,365 | ||||||
Ritchie Bros. Auctioneers | 4,697,750 | 107,719,408 | ||||||
223,463,773 | ||||||||
Construction & Engineering - 1.4% | ||||||||
EMCOR Group | 2,291,400 | 97,247,016 | ||||||
Electrical Equipment - 1.7% | ||||||||
Brady Corporation Cl. A | 1,602,363 | 49,561,088 | ||||||
6,144,076 | 68,997,973 | |||||||
118,559,061 | ||||||||
Machinery - 9.9% | ||||||||
Kennametal | 1,563,500 | 81,411,445 | ||||||
Lincoln Electric Holdings | 2,872,370 | 204,914,876 | ||||||
Rational | 56,866 | 18,861,378 | ||||||
Semperit AG Holding 2 | 1,917,496 | 94,951,140 | ||||||
Valmont Industries | 672,800 | 100,327,936 | ||||||
Wabtec Corporation | 361,274 | 26,831,820 | ||||||
Woodward 2 | 3,806,024 | 173,592,755 | ||||||
700,891,350 | ||||||||
Marine - 0.3% | ||||||||
Kirby Corporation 1 | 229,835 | 22,811,124 | ||||||
Professional Services - 2.0% | ||||||||
3,152,289 | 45,834,282 | |||||||
Towers Watson & Co. Cl. A | 743,521 | 94,880,715 | ||||||
140,714,997 | ||||||||
Road & Rail - 1.4% | ||||||||
Landstar System | 1,675,300 | 96,245,985 | ||||||
Trading Companies & Distributors - 1.6% | ||||||||
Air Lease Cl. A | 1,254,760 | 38,997,941 | ||||||
MSC Industrial Direct Cl. A | 952,284 | 77,011,207 | ||||||
116,009,148 | ||||||||
Total (Cost $926,135,200) | 1,732,185,210 | |||||||
Information Technology – 18.9% | ||||||||
Communications Equipment - 1.0% | ||||||||
ADTRAN | 2,619,434 | 70,750,912 | ||||||
Electronic Equipment, Instruments & Components - 6.1% | ||||||||
Anixter International | 980,700 | 88,106,088 | ||||||
2,843,900 | 65,637,212 | |||||||
Cognex Corporation 1 | 3,544,914 | 135,344,816 | ||||||
FEI Company | 127,044 | 11,352,652 | ||||||
National Instruments | 4,147,101 | 132,790,174 | ||||||
433,230,942 | ||||||||
IT Services - 2.3% | ||||||||
Gartner 1 | 1,000,700 | 71,099,735 | ||||||
Jack Henry & Associates | 1,586,640 | 93,944,955 | ||||||
165,044,690 | ||||||||
Office Electronics - 1.8% | ||||||||
Zebra Technologies Cl. A 1 | 2,323,325 | 125,645,416 | ||||||
Semiconductors & Semiconductor Equipment - 5.8% | ||||||||
1,720,272 | 78,616,431 | |||||||
4,420,181 | 90,304,298 | |||||||
6,833,112 | 91,222,045 | |||||||
MKS Instruments 2 | 3,071,910 | 91,972,985 | ||||||
Veeco Instruments 1 | 1,643,164 | 54,076,527 | ||||||
406,192,286 | ||||||||
Software - 1.9% | ||||||||
Fair Isaac | 1,732,600 | 108,876,584 | ||||||
SimCorp | 664,700 | 26,170,015 | ||||||
135,046,599 | ||||||||
Total (Cost $839,769,530) | 1,335,910,845 | |||||||
Materials – 11.0% | ||||||||
Chemicals - 3.8% | ||||||||
Cabot Corporation | 1,675,800 | 86,136,120 | ||||||
Westlake Chemical | 1,455,555 | 177,679,599 | ||||||
263,815,719 | ||||||||
Metals & Mining - 6.8% | ||||||||
Globe Specialty Metals 2 | 5,532,472 | 99,639,821 | ||||||
Pan American Silver 2 | 8,194,097 | 95,870,935 | ||||||
Reliance Steel & Aluminum | 2,379,800 | 180,484,032 | ||||||
Schnitzer Steel Industries Cl. A 2 | 2,008,038 | 65,602,602 | ||||||
4,115,069 | 28,640,880 | |||||||
1,248,571 | 12,036,224 | |||||||
482,274,494 | ||||||||
Paper & Forest Products - 0.4% | ||||||||
Stella-Jones | 1,139,212 | 29,224,313 | ||||||
Total (Cost $554,764,571) | 775,314,526 | |||||||
Miscellaneous 5 – 1.4% | ||||||||
Total (Cost $91,115,467) | 96,968,231 | |||||||
56 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
VALUE | ||||||||
TOTAL COMMON STOCKS | ||||||||
(Cost $4,087,933,375) | $ | 6,822,866,195 | ||||||
REPURCHASE AGREEMENT – 3.7% | ||||||||
Fixed Income Clearing Corporation, | ||||||||
0.00% dated 12/31/13, due 1/2/14, | ||||||||
maturity value $260,913,000 (collateralized | ||||||||
by obligations of various U.S. Government | ||||||||
Agencies, 1.00%-1.375% due 9/30/19-1/31/20, | ||||||||
valued at $266,131,625) | ||||||||
(Cost $260,913,000) | 260,913,000 | |||||||
COLLATERAL RECEIVED FOR SECURITIES | ||||||||
LOANED – 3.3% | ||||||||
Money Market Funds | ||||||||
Federated Government Obligations Fund | ||||||||
(7 day yield-0.0099%) | ||||||||
(Cost $232,758,018) | 232,758,018 | |||||||
TOTAL INVESTMENTS – 103.6% | ||||||||
(Cost $4,581,604,393) | 7,316,537,213 | |||||||
LIABILITIES LESS CASH | ||||||||
AND OTHER ASSETS – (3.6)% | (251,123,026 | ) | ||||||
NET ASSETS – 100.0% | $ | 7,065,414,187 | ||||||
Royce Low-Priced Stock Fund
SHARES | VALUE | |||||||
COMMON STOCKS – 98.9% | ||||||||
Consumer Discretionary – 11.8% | ||||||||
Automobiles - 2.1% | ||||||||
Thor Industries | 541,803 | $ | 29,923,780 | |||||
Diversified Consumer Services - 1.4% | ||||||||
Universal Technical Institute 2 | 1,468,679 | 20,429,325 | ||||||
Media - 0.7% | ||||||||
Pico Far East Holdings | 30,000,000 | 10,484,505 | ||||||
Specialty Retail - 7.6% | ||||||||
Buckle (The) | 534,575 | 28,097,262 | ||||||
Cato Corporation (The) Cl. A | 452,350 | 14,384,730 | ||||||
Chico’s FAS | 781,000 | 14,714,040 | ||||||
Finish Line (The) Cl. A | 297,400 | 8,377,758 | ||||||
GameStop Corporation Cl. A | 400,000 | 19,704,000 | ||||||
Lewis Group | 1,443,747 | 9,758,023 | ||||||
Luk Fook Holdings (International) | 3,977,800 | 15,132,907 | ||||||
110,168,720 | ||||||||
Total (Cost $96,609,077) | 171,006,330 | |||||||
Consumer Staples – 4.0% | ||||||||
Food Products - 2.5% | ||||||||
Asian Citrus Holdings | 28,018,000 | 7,696,161 | ||||||
Industrias Bachoco ADR | 695,850 | 28,021,879 | ||||||
35,718,040 | ||||||||
Personal Products - 1.5% | ||||||||
Nu Skin Enterprises Cl. A | 154,729 | 21,386,643 | ||||||
Total (Cost $32,431,961) | 57,104,683 | |||||||
Energy – 12.8% | ||||||||
Energy Equipment & Services - 12.3% | ||||||||
416,246 | 9,615,283 | |||||||
Calfrac Well Services | 986,100 | 28,777,689 | ||||||
Ensign Energy Services | 504,100 | 7,939,367 | ||||||
Lamprell 1 | 2,282,838 | 5,301,822 | ||||||
Pason Systems | 952,550 | 20,606,824 | ||||||
Tesco Corporation 1 | 979,216 | 19,368,893 | ||||||
TGS-NOPEC Geophysical | 435,000 | 11,532,488 | ||||||
Total Energy Services | 1,016,700 | 19,735,800 | ||||||
Trican Well Service | 2,349,800 | 28,713,019 | ||||||
Unit Corporation 1 | 519,600 | 26,821,752 | ||||||
178,412,937 | ||||||||
Oil, Gas & Consumable Fuels - 0.5% | ||||||||
Sprott Resource | 2,980,100 | 6,508,667 | ||||||
Total (Cost $97,568,108) | 184,921,604 | |||||||
Financials – 13.5% | ||||||||
Capital Markets - 9.3% | ||||||||
Ashmore Group | 3,730,363 | 24,789,482 | ||||||
Federated Investors Cl. B | 846,900 | 24,390,720 | ||||||
INTL FCStone 1 | 509,900 | 9,453,546 | ||||||
Jupiter Fund Management | 2,421,349 | 15,437,086 | ||||||
Sprott | 9,859,700 | 24,318,582 | ||||||
Stifel Financial 1 | 122,714 | 5,880,455 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 57 |
Schedules of Investments |
Royce Low-Priced Stock Fund (continued) |
SHARES | VALUE | |||||||
Financials (continued) | ||||||||
Capital Markets (continued) | ||||||||
Value Partners Group | 39,084,500 | $ | 30,292,592 | |||||
134,562,463 | ||||||||
Real Estate Management & Development - 4.2% | ||||||||
Brasil Brokers Participacoes | 2,000,000 | 4,959,203 | ||||||
E-House (China) Holdings ADR | 1,277,072 | 19,258,246 | ||||||
501,200 | 8,119,440 | |||||||
Kennedy-Wilson Holdings | 1,300,830 | 28,943,467 | ||||||
61,280,356 | ||||||||
Total (Cost $160,727,041) | 195,842,819 | |||||||
Health Care – 4.1% | ||||||||
Biotechnology - 1.7% | ||||||||
1,173,437 | 24,618,708 | |||||||
Pharmaceuticals - 2.4% | ||||||||
730,537 | 28,213,339 | |||||||
Recordati | 324,800 | 4,673,812 | ||||||
258,000 | 2,342,640 | |||||||
35,229,791 | ||||||||
Total (Cost $37,360,370) | 59,848,499 | |||||||
Industrials – 12.8% | ||||||||
Aerospace & Defense - 1.4% | ||||||||
Orbital Sciences 1 | 902,523 | 21,028,786 | ||||||
Building Products - 1.3% | ||||||||
WaterFurnace Renewable Energy 2 | 814,500 | 18,394,780 | ||||||
Commercial Services & Supplies - 2.0% | ||||||||
Ennis | 665,562 | 11,780,447 | ||||||
Moshi Moshi Hotline | 1,575,600 | 16,861,658 | ||||||
28,642,105 | ||||||||
Construction & Engineering - 0.7% | ||||||||
Raubex Group | 4,619,801 | 9,578,710 | ||||||
Electrical Equipment - 2.1% | ||||||||
2,366,176 | 26,572,156 | |||||||
Powell Industries | 50,148 | 3,359,415 | ||||||
29,931,571 | ||||||||
Marine - 1.1% | ||||||||
†Clarkson | 500,000 | 16,567,779 | ||||||
Professional Services - 3.8% | ||||||||
†Acacia Research | 1,356,647 | 19,725,648 | ||||||
Kforce | 448,774 | 9,181,916 | ||||||
Korn/Ferry International 1 | 667,740 | 17,441,369 | ||||||
Resources Connection | 132,300 | 1,895,859 | ||||||
TrueBlue 1 | 262,494 | 6,767,095 | ||||||
55,011,887 | ||||||||
Road & Rail - 0.4% | ||||||||
Heartland Express | 206,545 | 4,052,413 | ||||||
Universal Truckload Services | 71,344 | 2,176,705 | ||||||
6,229,118 | ||||||||
Total (Cost $146,367,037) | 185,384,736 | |||||||
Information Technology – 23.9% | ||||||||
Communications Equipment - 3.6% | ||||||||
ADTRAN | 640,400 | 17,297,204 | ||||||
ARRIS Group 1 | 438,671 | 10,688,219 | ||||||
350,000 | 3,423,000 | |||||||
KVH Industries 1 | 539,615 | 7,031,183 | ||||||
NETGEAR 1 | 399,300 | 13,152,942 | ||||||
51,592,548 | ||||||||
Computers & Peripherals - 0.3% | ||||||||
Xyratex | 323,266 | 4,296,205 | ||||||
Electronic Equipment, Instruments & Components - 3.5% | ||||||||
AVX Corporation | 742,847 | 10,347,859 | ||||||
GSI Group 1 | 163,285 | 1,835,324 | ||||||
TTM Technologies 1 | 2,332,635 | 20,014,008 | ||||||
Vishay Intertechnology 1 | 1,456,550 | 19,313,853 | ||||||
51,511,044 | ||||||||
IT Services - 3.1% | ||||||||
Convergys Corporation | 1,285,730 | 27,064,616 | ||||||
TeleTech Holdings 1 | 751,673 | 17,995,052 | ||||||
45,059,668 | ||||||||
Semiconductors & Semiconductor Equipment - 13.4% | ||||||||
Advanced Energy Industries 1 | 451,400 | 10,319,004 | ||||||
Aixtron ADR 1 | 201,990 | 2,932,895 | ||||||
ATMI 1 | 655,967 | 19,816,763 | ||||||
Brooks Automation | 506,482 | 5,312,996 | ||||||
1,378,300 | 28,158,669 | |||||||
Fairchild Semiconductor International 1 | 2,191,139 | 29,251,706 | ||||||
International Rectifier 1 | 812,213 | 21,174,393 | ||||||
Lam Research 1 | 98,800 | 5,379,660 | ||||||
MKS Instruments | 937,627 | 28,072,552 | ||||||
OmniVision Technologies 1 | 1,120,191 | 19,267,285 | ||||||
1,412,975 | 24,896,620 | |||||||
194,582,543 | ||||||||
Total (Cost $248,261,757) | 347,042,008 | |||||||
Materials – 14.5% | ||||||||
Chemicals - 0.5% | ||||||||
Intrepid Potash 1 | 454,700 | 7,202,448 | ||||||
Construction Materials - 0.4% | ||||||||
Mardin Cimento Sanayii | 2,538,100 | 5,031,320 | ||||||
Metals & Mining - 13.6% | ||||||||
Alamos Gold | 2,179,300 | 26,403,945 | ||||||
AuRico Gold | 997,500 | 3,650,850 | ||||||
Centamin 1 | 9,397,400 | 6,988,888 | ||||||
Endeavour Mining 1 | 3,625,000 | 1,638,033 | ||||||
Globe Specialty Metals | 1,502,906 | 27,067,337 | ||||||
Hochschild Mining | 7,859,794 | 18,384,288 | ||||||
Horsehead Holding Corporation 1 | 509,535 | 8,259,562 | ||||||
742,200 | 1,795,673 | |||||||
Major Drilling Group International | 2,836,800 | 20,536,589 | ||||||
6,208,918 | 12,169,479 | |||||||
Pan American Silver | 702,876 | 8,223,649 | ||||||
Pretium Resources 1 | 4,106,000 | 21,182,283 | ||||||
Reliance Steel & Aluminum | 50,000 | 3,792,000 |
58 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | |||||||
Materials (continued) | ||||||||
Metals & Mining (continued) | ||||||||
Schnitzer Steel Industries Cl. A | 177,100 | $ | 5,785,857 | |||||
2,476,592 | 18,079,122 | |||||||
1,778,611 | 12,379,133 | |||||||
Silvercorp Metals | 476,900 | 1,092,101 | ||||||
197,428,789 | ||||||||
Total (Cost $248,755,710) | 209,662,557 | |||||||
Utilities – 0.2% | ||||||||
Independent Power Producers & Energy Traders - 0.2% | ||||||||
Alterra Power 1 | 9,732,900 | 2,702,947 | ||||||
Total (Cost $12,581,546) | 2,702,947 | |||||||
Miscellaneous 5 – 1.3% | ||||||||
Total (Cost $15,404,737) | 19,394,268 | |||||||
TOTAL COMMON STOCKS | ||||||||
(Cost $1,096,067,344) | 1,432,910,451 | |||||||
REPURCHASE AGREEMENT – 8.1% | ||||||||
Fixed Income Clearing Corporation, | ||||||||
0.00% dated 12/31/13, due 1/2/14, | ||||||||
maturity value $117,585,000 (collateralized | ||||||||
by obligations of various U.S. Government | ||||||||
Agencies, 3.50% due 5/15/20, valued at | ||||||||
$119,938,613) | ||||||||
(Cost $117,585,000) | 117,585,000 | |||||||
PRINCIPAL | ||||||||
AMOUNT | ||||||||
COLLATERAL RECEIVED FOR SECURITIES | ||||||||
LOANED – 8.5% | ||||||||
U.S. Treasury Bills | ||||||||
due 4/3/14-12/11/14 | $ | 3,634,347 | 3,634,399 | |||||
U.S. Treasury Bonds | ||||||||
2.125% | ||||||||
due 2/15/40 | 1,119,357 | 1,126,770 | ||||||
U.S. Treasury Notes | ||||||||
0.125%-4.125% | ||||||||
due 2/15/14-7/15/23 | 21,085,476 | 21,148,858 | ||||||
Money Market Funds | ||||||||
Federated Government Obligations Fund | ||||||||
(7 day yield-0.0099%) | 97,432,898 | |||||||
TOTAL COLLATERAL RECEIVED FOR | ||||||||
SECURITIES LOANED | ||||||||
(Cost $123,342,925) | 123,342,925 | |||||||
TOTAL INVESTMENTS – 115.5% | ||||||||
(Cost $1,336,995,269) | 1,673,838,376 | |||||||
LIABILITIES LESS CASH | ||||||||
AND OTHER ASSETS – (15.5)% | (224,109,010 | ) | ||||||
NET ASSETS – 100.0% | $ | 1,449,729,366 | ||||||
Royce Total Return Fund | ||||||||
SHARES | VALUE | |||||||
COMMON STOCKS – 93.5% | ||||||||
Consumer Discretionary – 12.2% | ||||||||
Auto Components - 0.8% | ||||||||
Autoliv | 29,300 | $ | 2,689,740 | |||||
Gentex Corporation | 1,171,127 | 38,635,480 | ||||||
Spartan Motors | 47,557 | 318,632 | ||||||
Standard Motor Products | 109,406 | 4,026,141 | ||||||
Superior Industries International | 5,401 | 111,422 | ||||||
45,781,415 | ||||||||
Automobiles - 0.7% | ||||||||
Thor Industries | 708,974 | 39,156,634 | ||||||
Distributors - 0.1% | ||||||||
Weyco Group | 282,000 | 8,299,260 | ||||||
Diversified Consumer Services - 0.3% | ||||||||
DeVry Education Group | 82,900 | 2,942,950 | ||||||
Hillenbrand | 243,625 | 7,167,448 | ||||||
Regis Corporation | 231,100 | 3,353,261 | ||||||
Sotheby’s | 6,300 | 335,160 | ||||||
21,000 | 723,870 | |||||||
Universal Technical Institute | 3,500 | 48,685 | ||||||
14,571,374 | ||||||||
Hotels, Restaurants & Leisure - 0.6% | ||||||||
Abu Dhabi National Hotels | 1,200,000 | 1,012,796 | ||||||
Ambassadors Group | 29,970 | 139,360 | ||||||
Bob Evans Farms | 430,673 | 21,787,747 | ||||||
Cheesecake Factory | 59,100 | 2,852,757 | ||||||
Churchill Downs | 17,100 | 1,533,015 | ||||||
DineEquity | 61,030 | 5,099,057 | ||||||
Ruth’s Hospitality Group | 30,700 | 436,247 | ||||||
32,860,979 | ||||||||
Household Durables - 0.7% | ||||||||
Blyth | 5,638 | 61,341 | ||||||
Ethan Allen Interiors | 1,170,250 | 35,599,005 | ||||||
Harman International Industries | 8,600 | 703,910 | ||||||
La-Z-Boy | 48,100 | 1,491,100 | ||||||
Leggett & Platt | 39,003 | 1,206,753 | ||||||
39,062,109 | ||||||||
Internet & Catalog Retail - 0.1% | ||||||||
25,655 | 835,840 | |||||||
NutriSystem | 21,760 | 357,734 | ||||||
PetMed Express | 141,000 | 2,344,830 | ||||||
3,538,404 | ||||||||
Leisure Equipment & Products - 0.3% | ||||||||
Arctic Cat | 114,465 | 6,522,216 | ||||||
Callaway Golf | 962,900 | 8,117,247 | ||||||
Hasbro | 12,438 | 684,214 | ||||||
Polaris Industries | 16,700 | 2,432,188 | ||||||
17,755,865 | ||||||||
Media - 0.7% | ||||||||
CTC Media | 180,100 | 2,502,490 | ||||||
Harte-Hanks | 7,788 | 60,902 | ||||||
Meredith Corporation | 99,620 | 5,160,316 | ||||||
Morningstar | 30,501 | 2,381,823 | ||||||
Saga Communications Cl. A | 180,261 | 9,067,128 | ||||||
Scholastic Corporation | 81,499 | 2,771,781 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 59 |
Schedules of Investments |
Royce Total Return Fund (continued) |
SHARES | VALUE | |||||||
Consumer Discretionary (continued) | ||||||||
Media (continued) | ||||||||
Wiley (John) & Sons Cl. A | 100,000 | $ | 5,520,000 | |||||
World Wrestling Entertainment Cl. A | 779,074 | 12,917,047 | ||||||
40,381,487 | ||||||||
Multiline Retail - 0.0% | ||||||||
Dillard’s Cl. A | 26,786 | 2,603,867 | ||||||
Specialty Retail - 5.4% | ||||||||
Aaron’s | 61,700 | 1,813,980 | ||||||
Abercrombie & Fitch Cl. A | 58,500 | 1,925,235 | ||||||
American Eagle Outfitters | 2,201,023 | 31,694,731 | ||||||
Ascena Retail Group 1 | 1,968,218 | 41,647,493 | ||||||
Buckle (The) | 835,016 | 43,888,441 | ||||||
Cato Corporation (The) Cl. A | 1,403,808 | 44,641,095 | ||||||
Chico’s FAS | 188,200 | 3,545,688 | ||||||
Finish Line (The) Cl. A | 1,424 | 40,114 | ||||||
Foot Locker | 91,592 | 3,795,573 | ||||||
GameStop Corporation Cl. A | 751,943 | 37,040,712 | ||||||
Guess? | 817,905 | 25,412,308 | ||||||
Men’s Wearhouse (The) | 178,439 | 9,114,664 | ||||||
PetSmart | 3,900 | 283,725 | ||||||
159,981 | 415,951 | |||||||
Rent-A-Center | 254,029 | 8,469,327 | ||||||
Shoe Carnival | 577,351 | 16,748,953 | ||||||
Signet Jewelers | 15,700 | 1,235,590 | ||||||
Stage Stores | 87,678 | 1,948,205 | ||||||
Stein Mart | 606,694 | 8,160,034 | ||||||
Systemax 1 | 295,961 | 3,329,561 | ||||||
Tiffany & Co. | 237,500 | 22,035,250 | ||||||
Williams-Sonoma | 4,500 | 262,260 | ||||||
307,448,890 | ||||||||
Textiles, Apparel & Luxury Goods - 2.5% | ||||||||
Barry (R.G.) 2 | 1,045,808 | 20,184,094 | ||||||
Columbia Sportswear | 61,282 | 4,825,958 | ||||||
G-III Apparel Group 1 | 556,551 | 41,067,898 | ||||||
Jones Group (The) | 348,123 | 5,207,920 | ||||||
Movado Group | 7,400 | 325,674 | ||||||
Steven Madden 1 | 963,199 | 35,243,451 | ||||||
1,395,468 | 33,547,051 | |||||||
Wolverine World Wide | 84,634 | 2,874,171 | ||||||
143,276,217 | ||||||||
Total (Cost $450,278,659) | 694,736,501 | |||||||
Consumer Staples – 2.8% | ||||||||
Beverages - 0.0% | ||||||||
43,380 | 383,479 | |||||||
Food & Staples Retailing - 0.4% | ||||||||
Village Super Market Cl. A 2 | 732,024 | 22,700,064 | ||||||
Food Products - 1.8% | ||||||||
Cal-Maine Foods | 20,098 | 1,210,502 | ||||||
Farmer Bros. 1 | 492,300 | 11,450,898 | ||||||
Flowers Foods | 1,059,125 | 22,739,414 | ||||||
Fresh Del Monte Produce | 117,700 | 3,330,910 | ||||||
Hershey Creamery 4 | 882 | 1,896,309 | ||||||
Lancaster Colony | 104,000 | 9,167,600 | ||||||
Seaboard Corporation 1 | 10,476 | 29,280,106 | ||||||
Tootsie Roll Industries | 700,866 | 22,806,180 | ||||||
101,881,919 | ||||||||
Household Products - 0.1% | ||||||||
WD-40 Company | 23,411 | 1,748,334 | ||||||
Personal Products - 0.5% | ||||||||
Inter Parfums | 192,499 | 6,893,389 | ||||||
Nu Skin Enterprises Cl. A | 158,521 | 21,910,773 | ||||||
28,804,162 | ||||||||
Tobacco - 0.0% | ||||||||
Universal Corporation | 29,664 | 1,619,654 | ||||||
Total (Cost $88,266,719) | 157,137,612 | |||||||
Diversified Investment Companies – 0.4% | ||||||||
Closed-End Funds - 0.4% | ||||||||
British Empire Securities and General | ||||||||
Trust | 601,182 | 4,828,307 | ||||||
Central Fund of Canada Cl. A | 1,040,500 | 13,786,625 | ||||||
RIT Capital Partners | 100,000 | 2,086,497 | ||||||
Total (Cost $21,203,132) | 20,701,429 | |||||||
Energy – 4.0% | ||||||||
Energy Equipment & Services - 3.0% | ||||||||
CARBO Ceramics | 229,495 | 26,743,052 | ||||||
Core Laboratories | 100 | 19,095 | ||||||
Exterran Partners L.P. | 629,700 | 19,035,831 | ||||||
Helmerich & Payne | 539,573 | 45,367,298 | ||||||
Oceaneering International | 9,201 | 725,775 | ||||||
Oil States International 1 | 276,030 | 28,077,772 | ||||||
Patterson-UTI Energy | 58,877 | 1,490,766 | ||||||
Precision Drilling | 611,050 | 5,725,538 | ||||||
RPC | 197,900 | 3,532,515 | ||||||
SEACOR Holdings 1 | 297,477 | 27,129,902 | ||||||
Tidewater | 150,000 | 8,890,500 | ||||||
166,738,044 | ||||||||
Oil, Gas & Consumable Fuels - 1.0% | ||||||||
Apco Oil and Gas International 1 | 600 | 9,354 | ||||||
Arch Coal | 111,518 | 496,255 | ||||||
Baytex Energy | 45,900 | 1,797,444 | ||||||
Cimarex Energy | 235,190 | 24,673,783 | ||||||
Delek US Holdings | 15,203 | 523,135 | ||||||
Energen Corporation | 1,200 | 84,900 | ||||||
Energy XXI (Bermuda) | 44,200 | 1,196,052 | ||||||
Hugoton Royalty Trust | 558,500 | 4,188,750 | ||||||
Natural Resource Partners L.P. | 225,900 | 4,504,446 | ||||||
NuStar GP Holdings LLC | 369,200 | 10,370,828 | ||||||
Pengrowth Energy | 243,257 | 1,508,193 | ||||||
633,760 | 5,976,357 | |||||||
†Penn West Petroleum | 30,200 | 252,472 | ||||||
QEP Resources | 100 | 3,065 | ||||||
Sabine Royalty Trust | 700 | 35,392 | ||||||
San Juan Basin Royalty Trust | 920 | 15,401 | ||||||
SM Energy | 18,342 | 1,524,404 |
60 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | |||||||
Energy (continued) | ||||||||
Oil, Gas & Consumable Fuels (continued) | ||||||||
W&T Offshore | 77,700 | $ | 1,243,200 | |||||
58,403,431 | ||||||||
Total (Cost $135,427,783) | 225,141,475 | |||||||
Financials – 24.2% | ||||||||
Capital Markets - 6.6% | ||||||||
AGF Management Cl. B | 815,600 | 10,188,762 | ||||||
AllianceBernstein Holding L.P. | 1,770,400 | 37,780,336 | ||||||
AP Alternative Assets L.P. 1 | 46,000 | 1,299,500 | ||||||
Apollo Global Management LLC Cl. A | 501,100 | 15,839,771 | ||||||
Apollo Investment | 1,161,400 | 9,848,672 | ||||||
ASA Gold and Precious Metals | 578,892 | 7,097,216 | ||||||
Banca Generali | 86,000 | 2,663,161 | ||||||
Banque Privee Edmond de Rothschild | 205 | 3,286,251 | ||||||
CI Financial | 740,100 | 24,629,357 | ||||||
Cohen & Steers | 285,337 | 11,430,600 | ||||||
Coronation Fund Managers | 1,315,000 | 10,023,584 | ||||||
Egyptian Financial Group-Hermes Holding Company 1 | 1,032,032 | 1,289,195 | ||||||
Egyptian Financial Group-Hermes Holding Company GDR 1 | 90,000 | 202,050 | ||||||
Federated Investors Cl. B | 1,689,323 | 48,652,502 | ||||||
Fortress Investment Group LLC Cl. A | 11,700 | 100,152 | ||||||
GAMCO Investors Cl. A | 278,300 | 24,203,751 | ||||||
Investec | 118,000 | 855,080 | ||||||
Janus Capital Group | 215,209 | 2,662,135 | ||||||
KKR & Co. L.P. | 1,315,600 | 32,021,704 | ||||||
Lazard Cl. A | 246,890 | 11,189,055 | ||||||
MVC Capital | 475,000 | 6,412,500 | ||||||
Oppenheimer Holdings Cl. A | 200,779 | 4,975,304 | ||||||
Paris Orleans | 523,921 | 12,829,489 | ||||||
Raymond James Financial | 418,525 | 21,842,820 | ||||||
Schroders | 111,100 | 4,779,697 | ||||||
SEI Investments | 1,370,446 | 47,595,590 | ||||||
Teton Advisors Cl. A 4 | 1,297 | 40,207 | ||||||
†Value Partners Group | 1,500,000 | 1,162,581 | ||||||
Vontobel Holding | 75,400 | 3,123,177 | ||||||
Waddell & Reed Financial Cl. A | 199,600 | 12,997,952 | ||||||
Westwood Holdings Group | 45,895 | 2,841,359 | ||||||
373,863,510 | ||||||||
Commercial Banks - 3.5% | ||||||||
Ames National | 394,806 | 8,839,706 | ||||||
Banco Latinoamericano de Comercio Exterior Cl. E | 110,575 | 3,098,311 | ||||||
Bank of Hawaii | 782,001 | 46,247,539 | ||||||
BLOM Bank GDR | 684,500 | 5,920,925 | ||||||
BOK Financial | 521,582 | 34,591,318 | ||||||
Canadian Western Bank | 933,200 | 33,963,297 | ||||||
CapitalSource | 152,800 | 2,195,736 | ||||||
City Holding Company | 489,972 | 22,700,403 | ||||||
Farmers & Merchants Bank of Long Beach 4 | 479 | 2,490,800 | ||||||
First Citizens BancShares Cl. A | 88,526 | 19,708,543 | ||||||
First National Bank Alaska | 3,110 | 5,445,610 | ||||||
Peapack-Gladstone Financial 2 | 604,692 | 11,549,617 | ||||||
Sun Bancorp 1 | 284,428 | 1,001,187 | ||||||
197,752,992 | ||||||||
Consumer Finance - 0.0% | ||||||||
Cash America International | 50,600 | 1,937,980 | ||||||
Nelnet Cl. A | 8,500 | 358,190 | ||||||
2,296,170 | ||||||||
Diversified Financial Services - 0.9% | ||||||||
Leucadia National | 433,800 | 12,293,892 | ||||||
NASDAQ OMX Group (The) | 17,500 | 696,500 | ||||||
Sofina | 225,872 | 25,725,500 | ||||||
TMX Group | 230,000 | 11,049,094 | ||||||
49,764,986 | ||||||||
Insurance - 9.6% | ||||||||
Alleghany Corporation 1 | 99,522 | 39,804,819 | ||||||
Allied World Assurance Company Holdings | 284,537 | 32,098,619 | ||||||
American Equity Investment Life Holding Company | 6,600 | 174,108 | ||||||
American Financial Group | 167,000 | 9,639,240 | ||||||
American National Insurance | 145,093 | 16,618,952 | ||||||
AmTrust Financial Services | 43,538 | 1,423,257 | ||||||
Argo Group International Holdings | 200 | 9,298 | ||||||
Aspen Insurance Holdings | 523,108 | 21,609,591 | ||||||
Assurant | 29,559 | 1,961,831 | ||||||
Assured Guaranty | 252,342 | 5,952,748 | ||||||
Baldwin & Lyons Cl. B | 67,443 | 1,842,543 | ||||||
Cincinnati Financial | 280,000 | 14,663,600 | ||||||
Crawford & Company Cl. B | 27,841 | 257,251 | ||||||
E-L Financial | 90,288 | 60,347,828 | ||||||
EMC Insurance Group | 102,664 | 3,143,572 | ||||||
Employers Holdings | 100,500 | 3,180,825 | ||||||
Erie Indemnity Cl. A | 571,900 | 41,817,328 | ||||||
Everest Re Group | 6,900 | 1,075,503 | ||||||
FBL Financial Group Cl. A | 2,800 | 125,412 | ||||||
Fidelity National Financial | 1,097,852 | 35,625,297 | ||||||
First American Financial | 284,561 | 8,024,620 | ||||||
Gallagher (Arthur J.) & Co. | 792,400 | 37,187,332 | ||||||
Infinity Property & Casualty | 55,962 | 4,015,273 | ||||||
Kansas City Life Insurance | 2,247 | 107,272 | ||||||
Markel Corporation 1 | 67,900 | 39,405,765 | ||||||
Meadowbrook Insurance Group | 7,046 | 49,040 | ||||||
Mercury General | 189,200 | 9,405,132 | ||||||
Montpelier Re Holdings | 157,607 | 4,586,364 | ||||||
National Western Life Insurance Cl. A | 3,200 | 715,360 | ||||||
Old Republic International | 747,000 | 12,900,690 | ||||||
PartnerRe | 365,011 | 38,483,110 | ||||||
Platinum Underwriters Holdings | 195,406 | 11,974,480 | ||||||
Primerica | 29,700 | 1,274,427 | ||||||
Protective Life | 9,432 | 477,825 | ||||||
Reinsurance Group of America | 556,577 | 43,084,626 | ||||||
RenaissanceRe Holdings | 9,809 | 954,808 | ||||||
RLI Corp. | 131,835 | 12,838,092 | ||||||
StanCorp Financial Group | 8,800 | 583,000 | ||||||
State Auto Financial | 392,000 | 8,326,080 | ||||||
Stewart Information Services | 91,300 | 2,946,251 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 61 |
Schedules of Investments |
Royce Total Return Fund (continued) |
SHARES | VALUE | |||||||
Financials (continued) | ||||||||
Insurance (continued) | ||||||||
Symetra Financial | 426,044 | $ | 8,077,794 | |||||
Torchmark Corporation | 42,800 | 3,344,820 | ||||||
United Fire Group | 87,974 | 2,521,335 | ||||||
White Mountains Insurance Group | 3,534 | 2,131,285 | ||||||
544,786,403 | ||||||||
Real Estate Investment Trusts (REITs) - 1.9% | ||||||||
Colony Financial | 1,744,149 | 35,388,783 | ||||||
Cousins Properties | 421,710 | 4,343,613 | ||||||
DCT Industrial Trust | 1,121,600 | 7,997,008 | ||||||
Lexington Realty Trust | 707,006 | 7,218,531 | ||||||
MFA Financial | 692,000 | 4,885,520 | ||||||
National Health Investors | 159,570 | 8,951,877 | ||||||
National Retail Properties | 650,000 | 19,714,500 | ||||||
PS Business Parks | 118,500 | 9,055,770 | ||||||
Rayonier | 315,000 | 13,261,500 | ||||||
110,817,102 | ||||||||
Real Estate Management & Development - 0.5% | ||||||||
Alexander & Baldwin | 694,700 | 28,989,831 | ||||||
Thrifts & Mortgage Finance - 1.2% | ||||||||
Genworth MI Canada | 1,354,270 | 46,699,845 | ||||||
TrustCo Bank Corp. NY | 3,477,549 | 24,968,802 | ||||||
71,668,647 | ||||||||
Total (Cost $880,289,871) | 1,379,939,641 | |||||||
Health Care – 5.8% | ||||||||
Health Care Equipment & Supplies - 2.7% | ||||||||
Analogic Corporation | 231,500 | 20,501,640 | ||||||
Atrion Corporation | 600 | 177,750 | ||||||
Cantel Medical | 88,313 | 2,994,694 | ||||||
Carl Zeiss Meditec | 50,000 | 1,665,628 | ||||||
Hill-Rom Holdings | 524,270 | 21,673,322 | ||||||
379,600 | 40,378,052 | |||||||
Invacare Corporation | 54,161 | 1,257,077 | ||||||
ResMed | 46,800 | 2,203,344 | ||||||
STERIS Corporation | 655,108 | 31,477,939 | ||||||
Teleflex | 309,700 | 29,068,442 | ||||||
151,397,888 | ||||||||
Health Care Providers & Services - 2.6% | ||||||||
Chemed Corporation | 482,464 | 36,966,392 | ||||||
Ensign Group (The) | 18,215 | 806,378 | ||||||
Landauer | 427,671 | 22,499,771 | ||||||
Magellan Health Services 1 | 314,128 | 18,819,408 | ||||||
MEDNAX 1 | 380,632 | 20,318,136 | ||||||
Omnicare | 67,299 | 4,062,168 | ||||||
Owens & Minor | 935,750 | 34,211,020 | ||||||
U.S. Physical Therapy | 242,964 | 8,566,911 | ||||||
146,250,184 | ||||||||
Health Care Technology - 0.0% | ||||||||
Computer Programs and Systems | 5,800 | 358,498 | ||||||
Life Sciences Tools & Services - 0.5% | ||||||||
Nordion 1 | 7,530 | 63,930 | ||||||
PerkinElmer | 712,600 | 29,380,498 | ||||||
29,444,428 | ||||||||
Pharmaceuticals - 0.0% | ||||||||
Recordati | 110,000 | 1,582,879 | ||||||
Total (Cost $168,779,228) | 329,033,877 | |||||||
Industrials – 19.9% | ||||||||
Aerospace & Defense - 1.6% | ||||||||
American Science & Engineering | 148,329 | 10,666,338 | ||||||
Cubic Corporation | 472,974 | 24,906,811 | ||||||
HEICO Corporation | 464,843 | 26,937,652 | ||||||
HEICO Corporation Cl. A | 488,666 | 20,582,612 | ||||||
National Presto Industries 1 | 63,726 | 5,129,943 | ||||||
Triumph Group | 24,376 | 1,854,282 | ||||||
90,077,638 | ||||||||
Air Freight & Logistics - 0.8% | ||||||||
Aramex | 1,600,000 | 1,324,258 | ||||||
C. H. Robinson Worldwide | 256,000 | 14,935,040 | ||||||
Expeditors International of Washington | 458,400 | 20,284,200 | ||||||
UTi Worldwide | 588,900 | 10,341,084 | ||||||
46,884,582 | ||||||||
Building Products - 0.7% | ||||||||
Insteel Industries | 72,000 | 1,636,560 | ||||||
Smith (A.O.) Corporation | 697,788 | 37,638,685 | ||||||
39,275,245 | ||||||||
Commercial Services & Supplies - 2.9% | ||||||||
ABM Industries | 665,200 | 19,018,068 | ||||||
Ennis | 378,529 | 6,699,963 | ||||||
G&K Services Cl. A | 1,955 | 121,660 | ||||||
Healthcare Services Group | 108,764 | 3,085,635 | ||||||
HNI Corporation | 474,573 | 18,427,669 | ||||||
Kimball International Cl. B | 724,600 | 10,890,738 | ||||||
McGrath RentCorp | 291,300 | 11,593,740 | ||||||
Mine Safety Appliances | 196,000 | 10,037,160 | ||||||
Progressive Waste Solutions | 9,000 | 222,750 | ||||||
Ritchie Bros. Auctioneers | 1,740,720 | 39,914,710 | ||||||
Rollins | 833,625 | 25,250,501 | ||||||
UniFirst Corporation | 150,955 | 16,152,185 | ||||||
US Ecology | 49,705 | 1,848,529 | ||||||
Viad Corporation | 17,840 | 495,595 | ||||||
163,758,903 | ||||||||
Construction & Engineering - 0.3% | ||||||||
Comfort Systems USA | 256,131 | 4,966,380 | ||||||
EMCOR Group | 69,239 | 2,938,503 | ||||||
Granite Construction | 205,075 | 7,173,524 | ||||||
Great Lakes Dredge & Dock 1 | 4,432 | 40,774 | ||||||
KBR | 51,113 | 1,629,994 | ||||||
URS Corporation | 47,800 | 2,532,922 | ||||||
19,282,097 | ||||||||
Electrical Equipment - 2.0% | ||||||||
Acuity Brands | 11,668 | 1,275,546 | ||||||
AZZ | 10,160 | 496,418 | ||||||
Brady Corporation Cl. A | 751,908 | 23,256,514 | ||||||
Franklin Electric | 733,800 | 32,756,832 | ||||||
Hubbell Cl. B | 303,521 | 33,053,437 | ||||||
LSI Industries | 1,104,161 | 9,573,076 |
62 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | |||||||
Industrials (continued) | ||||||||
Electrical Equipment (continued) | ||||||||
Preformed Line Products | 211,371 | $ | 15,463,902 | |||||
Regal-Beloit | 1,302 | 95,983 | ||||||
115,971,708 | ||||||||
Industrial Conglomerates - 0.2% | ||||||||
Raven Industries | 312,402 | 12,852,218 | ||||||
Machinery - 7.6% | ||||||||
Alamo Group | 477,305 | 28,967,640 | ||||||
American Railcar Industries | 269,194 | 12,315,625 | ||||||
Ampco-Pittsburgh | 189,320 | 3,682,274 | ||||||
Briggs & Stratton | 388,230 | 8,447,885 | ||||||
CIRCOR International | 6,500 | 525,070 | ||||||
CLARCOR | 248,000 | 15,958,800 | ||||||
Crane Company | 290,000 | 19,502,500 | ||||||
Donaldson Company | 69,602 | 3,024,903 | ||||||
Foster (L.B.) Company | 3,000 | 141,870 | ||||||
FreightCar America | 10,539 | 280,548 | ||||||
Gorman-Rupp Company (The) | 720,791 | 24,096,043 | ||||||
Kennametal | 405,109 | 21,094,026 | ||||||
Lincoln Electric Holdings | 171,400 | 12,227,676 | ||||||
Lindsay Corporation | 225,282 | 18,642,086 | ||||||
Miller Industries | 247,666 | 4,614,018 | ||||||
116,700 | 3,571,020 | |||||||
Mueller Industries | 384,862 | 24,250,155 | ||||||
Nordson Corporation | 493,100 | 36,637,330 | ||||||
Standex International | 45,031 | 2,831,549 | ||||||
Starrett (L.S.) Company (The) Cl. A 2 | 529,400 | 7,713,358 | ||||||
Sun Hydraulics | 935,949 | 38,214,798 | ||||||
Tennant Company | 600,496 | 40,719,634 | ||||||
Timken Company (The) | 45,632 | 2,512,954 | ||||||
Toro Company (The) | 606,450 | 38,570,220 | ||||||
Trinity Industries | 645,587 | 35,197,403 | ||||||
Wabtec Corporation | 16,000 | 1,188,320 | ||||||
Watts Water Technologies Cl. A | 300 | 18,561 | ||||||
Woodward | 609,200 | 27,785,612 | ||||||
432,731,878 | ||||||||
Marine - 0.3% | ||||||||
Euroseas | 57,246 | 83,007 | ||||||
Matson | 594,700 | 15,527,617 | ||||||
15,610,624 | ||||||||
Professional Services - 2.3% | ||||||||
Corporate Executive Board | 236,000 | 18,273,480 | ||||||
Heidrick & Struggles International | 123,832 | 2,493,976 | ||||||
Kelly Services Cl. A | 634,200 | 15,816,948 | ||||||
ManpowerGroup | 462,152 | 39,680,371 | ||||||
Resources Connection | 124,622 | 1,785,833 | ||||||
Robert Half International | 26,300 | 1,104,337 | ||||||
Towers Watson & Co. Cl. A | 418,100 | 53,353,741 | ||||||
132,508,686 | ||||||||
Road & Rail - 0.3% | ||||||||
Arkansas Best | 246,081 | 8,288,008 | ||||||
Knight Transportation | 376,671 | 6,908,146 | ||||||
15,196,154 | ||||||||
Trading Companies & Distributors - 0.9% | ||||||||
Applied Industrial Technologies | 711,170 | 34,911,335 | ||||||
Houston Wire & Cable 2 | 1,216,073 | 16,271,057 | ||||||
MFC Industrial | 4,159 | 33,231 | ||||||
Watsco | 6,402 | 614,976 | ||||||
51,830,599 | ||||||||
Total (Cost $501,363,980) | 1,135,980,332 | |||||||
Information Technology – 7.2% | ||||||||
Communications Equipment - 1.8% | ||||||||
ADTRAN | 442,832 | 11,960,892 | ||||||
Bel Fuse Cl. A | 22,350 | 434,037 | ||||||
Bel Fuse Cl. B | 74,000 | 1,576,940 | ||||||
Black Box | 353,533 | 10,535,284 | ||||||
Comtech Telecommunications | 113,300 | 3,571,216 | ||||||
NETGEAR 1 | 1,271,498 | 41,883,144 | ||||||
Plantronics | 709,882 | 32,974,019 | ||||||
102,935,532 | ||||||||
Computers & Peripherals - 0.4% | ||||||||
Diebold | 654,100 | 21,591,841 | ||||||
Xyratex | 200 | 2,658 | ||||||
21,594,499 | ||||||||
Electronic Equipment, Instruments & Components - 2.1% | ||||||||
AVX Corporation | 1,296,692 | 18,062,920 | ||||||
Belden | 18,703 | 1,317,626 | ||||||
Cognex Corporation 1 | 711,100 | 27,149,798 | ||||||
Daktronics | 34,798 | 545,633 | ||||||
Electro Rent | 271,889 | 5,035,384 | ||||||
FLIR Systems | 144,500 | 4,349,450 | ||||||
Littelfuse | 89,579 | 8,324,577 | ||||||
Methode Electronics | 1,122,273 | 38,370,514 | ||||||
MTS Systems | 140,581 | 10,016,396 | ||||||
Nam Tai Electronics | 580,500 | 4,144,770 | ||||||
Park Electrochemical | 111,728 | 3,208,828 | ||||||
120,525,896 | ||||||||
Internet Software & Services - 0.1% | ||||||||
EarthLink Holdings | 137,952 | 699,417 | ||||||
IAC/InterActiveCorp | 8,700 | 597,603 | ||||||
j2 Global | 63,200 | 3,160,632 | ||||||
United Online | 43,775 | 602,344 | ||||||
5,059,996 | ||||||||
IT Services - 1.8% | ||||||||
Amdocs | 78,400 | 3,233,216 | ||||||
Broadridge Financial Solutions | 584,200 | 23,087,584 | ||||||
Calian Technologies | 106,104 | 2,019,697 | ||||||
Computer Sciences | 1,900 | 106,172 | ||||||
Convergys Corporation | 1,326,555 | 27,923,983 | ||||||
Forrester Research | 77,326 | 2,958,493 | ||||||
Global Payments | 5,846 | 379,931 | ||||||
Jack Henry & Associates | 18,000 | 1,065,780 | ||||||
ManTech International Cl. A | 960,445 | 28,746,119 | ||||||
MAXIMUS | 143,420 | 6,309,046 | ||||||
Syntel 1 | 16,600 | 1,509,770 | ||||||
Total System Services | 224,495 | 7,471,193 | ||||||
104,810,984 | ||||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 63 |
Schedules of Investments |
Royce Total Return Fund (continued) |
SHARES | VALUE | |||||||
Information Technology (continued) | ||||||||
Semiconductors & Semiconductor Equipment - 0.7% | ||||||||
Brooks Automation | 89,081 | $ | 934,460 | |||||
Marvell Technology Group | 233,000 | 3,350,540 | ||||||
Micrel | 163,060 | 1,609,402 | ||||||
MKS Instruments | 768,588 | 23,011,525 | ||||||
765,746 | 13,492,444 | |||||||
42,398,371 | ||||||||
Software - 0.3% | ||||||||
Ebix | 137,745 | 2,027,606 | ||||||
FactSet Research Systems | 24,400 | 2,649,352 | ||||||
Fair Isaac | 175,657 | 11,038,286 | ||||||
15,715,244 | ||||||||
Total (Cost $314,132,572) | 413,040,522 | |||||||
Materials – 8.8% | ||||||||
Chemicals - 4.6% | ||||||||
Albemarle Corporation | 447,900 | 28,392,381 | ||||||
Balchem Corporation | 952,549 | 55,914,626 | ||||||
Cabot Corporation | 781,000 | 40,143,400 | ||||||
Chase Corporation 2 | 773,974 | 27,321,282 | ||||||
FutureFuel Corporation | 190,447 | 3,009,063 | ||||||
H.B. Fuller Company | 9,022 | 469,505 | ||||||
Innophos Holdings | 203,273 | 9,879,068 | ||||||
Innospec | 218,247 | 10,087,376 | ||||||
International Flavors & Fragrances | 255,300 | 21,950,694 | ||||||
Methanex Corporation | 310,710 | 18,406,460 | ||||||
Minerals Technologies | 59,457 | 3,571,582 | ||||||
NewMarket Corporation | 8,526 | 2,848,963 | ||||||
Quaker Chemical | 432,729 | 33,350,424 | ||||||
Stepan Company | 770 | 50,535 | ||||||
Westlake Chemical | 38,700 | 4,724,109 | ||||||
260,119,468 | ||||||||
Construction Materials - 0.1% | ||||||||
Ash Grove Cement 4 | 39,610 | 7,763,560 | ||||||
Containers & Packaging - 1.2% | ||||||||
AptarGroup | 91,300 | 6,191,053 | ||||||
Bemis Company | 464,800 | 19,038,208 | ||||||
Greif Cl. A | 586,801 | 30,748,372 | ||||||
Mayr-Melnhof Karton | 13,100 | 1,621,950 | ||||||
Myers Industries | 59,000 | 1,246,080 | ||||||
Sealed Air | 13 | 443 | ||||||
Sonoco Products | 305,778 | 12,757,058 | ||||||
71,603,164 | ||||||||
Metals & Mining - 2.0% | ||||||||
Agnico Eagle Mines | 697,000 | 18,386,860 | ||||||
Carpenter Technology | 312,775 | 19,454,605 | ||||||
Commercial Metals | 85,000 | 1,728,050 | ||||||
Gold Fields ADR | 396,200 | 1,267,840 | ||||||
IAMGOLD Corporation | 896,620 | 2,985,745 | ||||||
Olympic Steel | 39,297 | 1,138,827 | ||||||
Reliance Steel & Aluminum | 581,513 | 44,101,946 | ||||||
1,000,000 | 9,640,000 | |||||||
Worthington Industries | 308,300 | 12,973,264 | ||||||
111,677,137 | ||||||||
Paper & Forest Products - 0.9% | ||||||||
Deltic Timber | 172,000 | 11,685,680 | ||||||
Domtar Corporation | 187,000 | 17,641,580 | ||||||
Schweitzer-Mauduit International | 420,098 | 21,622,444 | ||||||
50,949,704 | ||||||||
Total (Cost $286,416,424) | 502,113,033 | |||||||
Telecommunication Services – 0.7% | ||||||||
Diversified Telecommunication Services - 0.3% | ||||||||
Atlantic Tele-Network | 284,203 | 16,077,364 | ||||||
Wireless Telecommunication Services - 0.4% | ||||||||
Telephone and Data Systems | 822,190 | 21,196,058 | ||||||
USA Mobility | 143,566 | 2,050,122 | ||||||
23,246,180 | ||||||||
Total (Cost $28,844,739) | 39,323,544 | |||||||
Utilities – 2.6% | ||||||||
Electric Utilities - 0.9% | ||||||||
ALLETE | 199,147 | 9,933,452 | ||||||
ITC Holdings | 250,000 | 23,955,000 | ||||||
PNM Resources | 638,900 | 15,410,268 | ||||||
49,298,720 | ||||||||
Gas Utilities - 1.1% | ||||||||
AGL Resources | 312,558 | 14,762,114 | ||||||
National Fuel Gas | 61,676 | 4,403,667 | ||||||
Piedmont Natural Gas | 539,500 | 17,889,820 | ||||||
UGI Corporation | 660,076 | 27,366,751 | ||||||
64,422,352 | ||||||||
Water Utilities - 0.6% | ||||||||
Aqua America | 1,024,707 | 24,172,838 | ||||||
Consolidated Water | 25,427 | 358,521 | ||||||
SJW | 400,400 | 11,927,916 | ||||||
36,459,275 | ||||||||
Total (Cost $93,409,681) | 150,180,347 | |||||||
Miscellaneous5 – 4.9% | ||||||||
Total (Cost $248,539,265) | 278,072,715 | |||||||
TOTAL COMMON STOCKS | ||||||||
(Cost $3,216,952,053) | 5,325,401,028 | |||||||
PRINCIPAL | ||||||||
AMOUNT | ||||||||
CORPORATE BOND – 0.1% | ||||||||
Leucadia National 3.75% | ||||||||
Conv. Senior Note due 4/15/14 | ||||||||
(Cost $3,000,000) | $3,000,000 | 4,035,000 | ||||||
64 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
PRINCIPAL | ||||||||
AMOUNT | VALUE | |||||||
REPURCHASE AGREEMENT – 6.6% | ||||||||
Fixed Income Clearing Corporation, | ||||||||
(Cost $377,765,000) | $ | 377,765,000 | ||||||
COLLATERAL RECEIVED FOR SECURITIES | ||||||||
LOANED – 0.8% | ||||||||
U.S. Treasury Bills | ||||||||
due 4/3/14-12/11/14 | $ | 688,364 | 688,374 | |||||
U.S. Treasury Bonds | ||||||||
2.125% | ||||||||
due 2/15/40 | 212,012 | 213,416 | ||||||
U.S. Treasury Notes | ||||||||
0.125%-4.125% | ||||||||
due 2/15/14-7/15/23 | 3,993,698 | 4,005,702 | ||||||
Money Market Funds | ||||||||
Federated Government Obligations Fund | ||||||||
(7 day yield-0.0099%) | 38,212,143 | |||||||
TOTAL COLLATERAL RECEIVED FOR | ||||||||
SECURITIES LOANED | ||||||||
(Cost $43,119,635) | 43,119,635 | |||||||
TOTAL INVESTMENTS – 101.0% | ||||||||
(Cost $3,640,836,688) | 5,750,320,663 | |||||||
LIABILITIES LESS CASH | ||||||||
AND OTHER ASSETS – (1.0)% | (55,441,103 | ) | ||||||
NET ASSETS – 100.0% | $ | 5,694,879,560 | ||||||
Royce Heritage Fund
SHARES | VALUE | |||||||
COMMON STOCKS – 88.1% | ||||||||
Consumer Discretionary – 9.7% | ||||||||
Auto Components - 1.7% | ||||||||
Drew Industries | 44,900 | $ | 2,298,880 | |||||
Nokian Renkaat | 28,000 | 1,343,178 | ||||||
†Selamat Sempurna | 4,624,100 | 1,310,858 | ||||||
†Standard Motor Products | 37,400 | 1,376,320 | ||||||
6,329,236 | ||||||||
Automobiles - 0.9% | ||||||||
Thor Industries | 60,050 | 3,316,561 | ||||||
Distributors - 1.0% | ||||||||
†Core-Mark Holding Company | 38,400 | 2,915,712 | ||||||
Genuine Parts | 7,420 | 617,270 | ||||||
3,532,982 | ||||||||
Household Durables - 2.0% | ||||||||
Ethan Allen Interiors | 55,900 | 1,700,478 | ||||||
Harman International Industries | 16,400 | 1,342,340 | ||||||
Mohawk Industries 1 | 17,900 | 2,665,310 | ||||||
NVR 1 | 1,525 | 1,564,665 | ||||||
7,272,793 | ||||||||
Internet & Catalog Retail - 0.2% | ||||||||
25,000 | 814,500 | |||||||
Multiline Retail - 0.2% | ||||||||
New World Department Store China | 1,115,000 | 626,930 | ||||||
Specialty Retail - 3.0% | ||||||||
Advance Auto Parts | 4,461 | 493,744 | ||||||
Ascena Retail Group 1 | 40 | 846 | ||||||
†Destination Maternity | 56,700 | 1,694,196 | ||||||
Luk Fook Holdings (International) | 250,000 | 951,085 | ||||||
49,000 | 1,355,401 | |||||||
Monro Muffler Brake | 33,400 | 1,882,424 | ||||||
Ross Stores | 1,800 | 134,874 | ||||||
Signet Jewelers | 47,120 | 3,708,344 | ||||||
USS | 70,000 | 959,833 | ||||||
11,180,747 | ||||||||
Textiles, Apparel & Luxury Goods - 0.7% | ||||||||
Wolverine World Wide | 80,000 | 2,716,800 | ||||||
Total (Cost $25,546,760) | 35,790,549 | |||||||
Consumer Staples – 0.8% | ||||||||
Food & Staples Retailing - 0.3% | ||||||||
FamilyMart | 19,500 | 889,730 | ||||||
Food Products - 0.5% | ||||||||
Darling International 1 | 95,500 | 1,994,040 | ||||||
Total (Cost $1,997,258) | 2,883,770 | |||||||
Energy – 4.8% | ||||||||
Energy Equipment & Services - 4.8% | ||||||||
Ensign Energy Services | 24,800 | 390,590 | ||||||
Helmerich & Payne | 35,900 | 3,018,472 | ||||||
Oil States International 1 | 21,300 | 2,166,636 | ||||||
Pason Systems | 72,700 | 1,572,743 | ||||||
SEACOR Holdings 1 | 6,600 | 601,920 | ||||||
TGS-NOPEC Geophysical | 68,200 | 1,808,082 | ||||||
Tidewater | 32,900 | 1,949,983 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 65 |
Schedules of Investments |
Royce Heritage Fund (continued) |
SHARES | VALUE | ||||||
Energy (continued) | |||||||
Energy Equipment & Services (continued) | |||||||
†Transocean | 95,900 | $ | 4,739,378 | ||||
Trican Well Service | 125,600 | 1,534,750 | |||||
Total (Cost $12,727,973) | 17,782,554 | ||||||
Financials – 14.7% | |||||||
Capital Markets - 10.4% | |||||||
AllianceBernstein Holding L.P. | 139,641 | 2,979,939 | |||||
ARA Asset Management | 955,000 | 1,407,583 | |||||
†Artisan Partners Asset Management Cl. A | 25,400 | 1,655,826 | |||||
Ashmore Group | 345,600 | 2,296,625 | |||||
Blackstone Group L.P. | 60,000 | 1,890,000 | |||||
Coronation Fund Managers | 200,000 | 1,524,500 | |||||
Egyptian Financial Group-Hermes Holding Company 1 | 298,500 | 372,881 | |||||
Federated Investors Cl. B | 79,600 | 2,292,480 | |||||
Invesco | 32,400 | 1,179,360 | |||||
Jupiter Fund Management | 375,900 | 2,396,516 | |||||
KKR & Co. L.P. | 220,800 | 5,374,272 | |||||
Lazard Cl. A | 47,500 | 2,152,700 | |||||
Schwab (Charles) | 75,700 | 1,968,200 | |||||
SEI Investments | 57,500 | 1,996,975 | |||||
Sprott | 600,000 | 1,479,878 | |||||
State Street | 46,300 | 3,397,957 | |||||
TD Ameritrade Holding Corporation | 50,600 | 1,550,384 | |||||
Value Partners Group | 3,492,100 | 2,706,565 | |||||
38,622,641 | |||||||
Consumer Finance - 0.3% | |||||||
†Shriram Transport Finance | 92,000 | 996,673 | |||||
Diversified Financial Services - 1.8% | |||||||
Bolsa Mexicana de Valores | 780,000 | 1,788,626 | |||||
Moody’s Corporation | 40,500 | 3,178,035 | |||||
Warsaw Stock Exchange | 114,000 | 1,566,012 | |||||
6,532,673 | |||||||
Insurance - 1.8% | |||||||
Alleghany Corporation 1 | 1,800 | 719,928 | |||||
†Fairfax Financial Holdings | 6,400 | 2,555,240 | |||||
Marsh & McLennan | 73,900 | 3,573,804 | |||||
6,848,972 | |||||||
Real Estate Management & Development - 0.3% | |||||||
Kennedy-Wilson Holdings | 46,700 | 1,039,075 | |||||
Thrifts & Mortgage Finance - 0.1% | |||||||
30,000 | 381,900 | ||||||
Total (Cost $39,134,032) | 54,421,934 | ||||||
Health Care – 4.9% | |||||||
Biotechnology - 0.1% | |||||||
10,458 | 219,409 | ||||||
Health Care Equipment & Supplies - 2.7% | |||||||
Analogic Corporation | 19,480 | 1,725,149 | |||||
Atrion Corporation | 5,087 | 1,507,023 | |||||
†DENTSPLY International | 117,900 | 5,715,792 | |||||
52,000 | 1,203,800 | ||||||
10,151,764 | |||||||
Life Sciences Tools & Services - 1.6% | |||||||
Bio-Rad Laboratories Cl. A 1 | 6,400 | 791,104 | |||||
8,200 | 1,989,238 | ||||||
Techne Corporation | 18,100 | 1,713,527 | |||||
Waters Corporation 1 | 13,250 | 1,325,000 | |||||
5,818,869 | |||||||
Pharmaceuticals - 0.5% | |||||||
Adcock Ingram Holdings | 101,762 | 687,791 | |||||
†Recordati | 86,000 | 1,237,524 | |||||
1,925,315 | |||||||
Total (Cost $15,308,532) | 18,115,357 | ||||||
Industrials – 22.8% | |||||||
Aerospace & Defense - 1.0% | |||||||
HEICO Corporation | 34,178 | 1,980,615 | |||||
Teledyne Technologies 1 | 19,300 | 1,772,898 | |||||
3,753,513 | |||||||
Air Freight & Logistics - 2.4% | |||||||
Expeditors International of Washington | 83,050 | 3,674,963 | |||||
Forward Air | 66,200 | 2,906,842 | |||||
UTi Worldwide | 136,600 | 2,398,696 | |||||
8,980,501 | |||||||
Building Products - 0.3% | |||||||
AAON | 39,475 | 1,261,226 | |||||
Commercial Services & Supplies - 5.2% | |||||||
Cintas Corporation | 31,400 | 1,871,126 | |||||
Copart 1 | 255,180 | 9,352,347 | |||||
Heritage-Crystal Clean 1 | 119,427 | 2,447,059 | |||||
Kaba Holding | 1,800 | 874,727 | |||||
Ritchie Bros. Auctioneers | 186,100 | 4,267,273 | |||||
Team 1 | 8,176 | 346,172 | |||||
19,158,704 | |||||||
Construction & Engineering - 2.1% | |||||||
Fluor Corporation | 18,600 | 1,493,394 | |||||
Jacobs Engineering Group 1 | 50,130 | 3,157,689 | |||||
KBR | 99,200 | 3,163,488 | |||||
7,814,571 | |||||||
Electrical Equipment - 0.3% | |||||||
EnerSys | 12,900 | 904,161 | |||||
Industrial Conglomerates - 0.6% | |||||||
Raven Industries | 50,400 | 2,073,456 | |||||
Machinery - 6.2% | |||||||
Burckhardt Compression Holding | 2,000 | 876,633 | |||||
†CIRCOR International | 21,000 | 1,696,380 | |||||
†Donaldson Company | 87,100 | 3,785,366 | |||||
Foster (L.B.) Company | 33,700 | 1,593,673 | |||||
Graco | 30,400 | 2,374,848 | |||||
Kennametal | 66,000 | 3,436,620 | |||||
Pfeiffer Vacuum Technology | 12,000 | 1,633,175 | |||||
26,200 | 1,853,650 | ||||||
†Rotork | 20,000 | 950,515 | |||||
Sun Hydraulics | 36,388 | 1,485,722 | |||||
Valmont Industries | 16,070 | 2,396,358 |
66 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | ||||||
Industrials (continued) | |||||||
Machinery (continued) | |||||||
16,600 | $ | 655,534 | |||||
WABCO Holdings 1 | 2,900 | 270,889 | |||||
23,009,363 | |||||||
Marine - 0.3% | |||||||
Clarkson | 33,300 | 1,103,414 | |||||
Professional Services - 2.5% | |||||||
Advisory Board (The) 1 | 34,200 | 2,177,514 | |||||
Equifax | 24,150 | 1,668,523 | |||||
ManpowerGroup | 44,325 | 3,805,745 | |||||
Verisk Analytics Cl. A 1 | 25,800 | 1,695,576 | |||||
9,347,358 | |||||||
Road & Rail - 1.6% | |||||||
Landstar System | 44,000 | 2,527,800 | |||||
Patriot Transportation Holding 1 | 79,512 | 3,300,543 | |||||
5,828,343 | |||||||
Trading Companies & Distributors - 0.3% | |||||||
†Applied Industrial Technologies | 24,400 | 1,197,796 | |||||
Total (Cost $58,101,158) | 84,432,406 | ||||||
Information Technology – 16.5% | |||||||
Communications Equipment - 0.7% | |||||||
ADTRAN | 31,950 | 862,970 | |||||
Plantronics | 34,987 | 1,625,146 | |||||
2,488,116 | |||||||
Computers & Peripherals - 0.7% | |||||||
Western Digital | 28,865 | 2,421,773 | |||||
Electronic Equipment, Instruments & Components - 7.3% | |||||||
Amphenol Corporation Cl. A | 21,900 | 1,953,042 | |||||
Anixter International | 35,500 | 3,189,320 | |||||
AVX Corporation | 102,863 | 1,432,882 | |||||
†Badger Meter | 21,000 | 1,144,500 | |||||
Coherent 1 | 46,600 | 3,466,574 | |||||
†Domino Printing Sciences | 84,000 | 1,064,113 | |||||
FEI Company | 31,100 | 2,779,096 | |||||
FLIR Systems | 83,700 | 2,519,370 | |||||
IPG Photonics 1 | 32,014 | 2,484,607 | |||||
†LPKF Laser & Electronics | 49,200 | 1,257,576 | |||||
National Instruments | 83,850 | 2,684,877 | |||||
Rogers Corporation 1 | 12,500 | 768,750 | |||||
Trimble Navigation 1 | 44,200 | 1,533,740 | |||||
Vaisala Cl. A | 27,500 | 878,074 | |||||
27,156,521 | |||||||
Internet Software & Services - 0.7% | |||||||
91,700 | 780,367 | ||||||
459,972 | 1,743,294 | ||||||
2,523,661 | |||||||
IT Services - 2.8% | |||||||
Computer Task Group | 57,600 | 1,088,640 | |||||
†eClerx Services | 72,000 | 1,233,853 | |||||
Fiserv 1 | 43,860 | 2,589,933 | |||||
MAXIMUS | 52,200 | 2,296,278 | |||||
†Metrofile Holdings | 2,423,896 | 1,081,395 | |||||
Sapient Corporation 1 | 119,800 | 2,079,728 | |||||
10,369,827 | |||||||
Office Electronics - 0.4% | |||||||
Zebra Technologies Cl. A 1 | 30,170 | 1,631,594 | |||||
Semiconductors & Semiconductor Equipment - 1.7% | |||||||
Diodes 1 | 138,400 | 3,260,704 | |||||
Teradyne 1 | 110,900 | 1,954,058 | |||||
Veeco Instruments 1 | 30,400 | 1,000,464 | |||||
6,215,226 | |||||||
Software - 2.2% | |||||||
ANSYS 1 | 24,500 | 2,136,400 | |||||
Mentor Graphics | 12,000 | 288,840 | |||||
MICROS Systems 1 | 31,700 | 1,818,629 | |||||
SimCorp | 49,000 | 1,929,187 | |||||
†Totvs | 131,000 | 2,052,246 | |||||
8,225,302 | |||||||
Total (Cost $43,185,118) | 61,032,020 | ||||||
Materials – 8.9% | |||||||
Chemicals - 3.4% | |||||||
Airgas | 9,200 | 1,029,020 | |||||
Cabot Corporation | 37,500 | 1,927,500 | |||||
Innospec | 56,628 | 2,617,346 | |||||
†Rockwood Holdings | 25,100 | 1,805,192 | |||||
Sigma-Aldrich Corporation | 14,000 | 1,316,140 | |||||
Tronox Cl. A | 39,800 | 918,186 | |||||
Victrex | 39,900 | 1,213,750 | |||||
Westlake Chemical | 15,200 | 1,855,464 | |||||
12,682,598 | |||||||
Containers & Packaging - 0.9% | |||||||
Greif Cl. A | 59,400 | 3,112,560 | |||||
Metals & Mining - 4.0% | |||||||
Compass Minerals International | 24,400 | 1,953,220 | |||||
Fresnillo | 48,000 | 592,565 | |||||
Major Drilling Group International | 212,000 | 1,534,743 | |||||
Pan American Silver | 211,300 | 2,472,210 | |||||
Randgold Resources ADR | 31,600 | 1,984,796 | |||||
Reliance Steel & Aluminum | 66,580 | 5,049,427 | |||||
137,800 | 1,328,392 | ||||||
14,915,353 | |||||||
Paper & Forest Products - 0.6% | |||||||
Stella-Jones | 84,000 | 2,154,860 | |||||
Total (Cost $30,112,385) | 32,865,371 | ||||||
Utilities – 0.2% | |||||||
Gas Utilities - 0.2% | |||||||
UGI Corporation | 16,800 | 696,528 | |||||
Total (Cost $565,085) | 696,528 | ||||||
Miscellaneous 5 – 4.8% | |||||||
Total (Cost $18,269,864) | 18,008,331 | ||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 67 |
Schedules of Investments |
Royce Heritage Fund (continued) |
VALUE | |||||||
TOTAL COMMON STOCKS | |||||||
(Cost $244,948,165) | $ | 326,028,820 | |||||
REPURCHASE AGREEMENT – 10.4% | |||||||
Fixed Income Clearing Corporation, | |||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||
maturity value $38,369,000 (collateralized | |||||||
by obligations of various U.S. Government | |||||||
Agencies, 1.00% due 5/31/18, valued at | |||||||
$39,140,213) | |||||||
(Cost $38,369,000) | 38,369,000 | ||||||
COLLATERAL RECEIVED FOR SECURITIES | |||||||
LOANED – 0.7% | |||||||
Money Market Funds | |||||||
Federated Government Obligations Fund | |||||||
(7 day yield-0.0099%) | |||||||
(Cost $2,797,942) | 2,797,942 | ||||||
TOTAL INVESTMENTS – 99.2% | |||||||
(Cost $286,115,107) | 367,195,762 | ||||||
CASH AND OTHER ASSETS | |||||||
LESS LIABILITIES – 0.8% | 2,809,692 | ||||||
NET ASSETS – 100.0% | $ | 370,005,454 | |||||
Royce Opportunity Fund |
SHARES | VALUE | ||||||
COMMON STOCKS – 93.0% | |||||||
Consumer Discretionary – 12.6% | |||||||
Auto Components - 1.8% | |||||||
Cooper Tire & Rubber | 94,100 | $ | 2,262,164 | ||||
Dana Holding Corporation | 654,236 | 12,836,111 | |||||
Fuel Systems Solutions 1 | 315,700 | 4,378,759 | |||||
Spartan Motors | 664,406 | 4,451,520 | |||||
Tower International 1 | 661,868 | 14,163,975 | |||||
Visteon Corporation 1 | 82,700 | 6,772,303 | |||||
44,864,832 | |||||||
Distributors - 0.5% | |||||||
VOXX International Cl. A 1 | 710,866 | 11,871,462 | |||||
Diversified Consumer Services - 0.4% | |||||||
†DeVry Education Group | 258,100 | 9,162,550 | |||||
Hotels, Restaurants & Leisure - 1.7% | |||||||
Carrols Restaurant Group 1 | 1,004,605 | 6,640,439 | |||||
Isle of Capri Casinos 1 | 885,486 | 7,969,374 | |||||
Jamba 1 | 475,450 | 5,909,843 | |||||
Krispy Kreme Doughnuts 1 | 37,323 | 719,961 | |||||
Orient-Express Hotels Cl. A 1 | 986,619 | 14,907,813 | |||||
Ruby Tuesday 1 | 893,500 | 6,191,955 | |||||
42,339,385 | |||||||
Household Durables - 1.6% | |||||||
715,190 | 1,430,380 | ||||||
802,653 | 10,595,020 | ||||||
Ethan Allen Interiors | 194,400 | 5,913,648 | |||||
1,202,959 | 1,227,018 | ||||||
M.D.C. Holdings 1 | 262,250 | 8,454,940 | |||||
Standard Pacific 1 | 872,400 | 7,895,220 | |||||
122,572 | 2,442,860 | ||||||
963,981 | 4,193,317 | ||||||
42,152,403 | |||||||
Internet & Catalog Retail - 0.5% | |||||||
1,763,615 | 1,551,276 | ||||||
Gaiam Cl. A 1 | 716,304 | 4,741,933 | |||||
1-800-FLOWERS.COM Cl. A 1 | 94,732 | 512,500 | |||||
Vitacost.com 1 | 1,183,322 | 6,851,434 | |||||
13,657,143 | |||||||
Leisure Equipment & Products - 0.5% | |||||||
372,145 | 4,960,693 | ||||||
Callaway Golf | 932,926 | 7,864,566 | |||||
12,825,259 | |||||||
Media - 1.3% | |||||||
Ballantyne Strong 1 | 548,758 | 2,540,749 | |||||
Harris Interactive 1 | 1,325,535 | 2,651,070 | |||||
Martha Stewart Living Omnimedia Cl. A 1 | 1,615,757 | 6,786,179 | |||||
McClatchy Company (The) Cl. A 1 | 2,103,754 | 7,152,764 | |||||
Media General 1 | 196,043 | 4,430,572 | |||||
New York Times Cl. A | 580,299 | 9,209,345 | |||||
32,770,679 | |||||||
Multiline Retail - 0.3% | |||||||
Dillard’s Cl. A | 44,400 | 4,316,124 | |||||
445,531 | 4,076,609 | ||||||
8,392,733 | |||||||
68 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | ||||||
Consumer Discretionary (continued) | |||||||
Specialty Retail - 1.6% | |||||||
257,100 | $ | 2,337,039 | |||||
bebe stores | 1,219,021 | 6,485,192 | |||||
Destination Maternity | 210,670 | 6,294,820 | |||||
MarineMax 1 | 503,550 | 8,097,084 | |||||
832,201 | 2,779,551 | ||||||
Sears Hometown and Outlet Stores 1 | 155,700 | 3,970,350 | |||||
West Marine 1 | 799,147 | 11,371,862 | |||||
41,335,898 | |||||||
Textiles, Apparel & Luxury Goods - 2.4% | |||||||
823,700 | 906,070 | ||||||
Jones Group (The) | 1,077,127 | 16,113,820 | |||||
Quiksilver 1 | 1,560,145 | 13,682,472 | |||||
Skechers U.S.A. Cl. A 1 | 358,858 | 11,888,965 | |||||
Unifi 1 | 685,834 | 18,682,118 | |||||
61,273,445 | |||||||
Total (Cost $231,479,789) | 320,645,789 | ||||||
Consumer Staples – 0.6% | |||||||
Food & Staples Retailing - 0.2% | |||||||
SUPERVALU 1 | 862,100 | 6,284,709 | |||||
Food Products - 0.1% | |||||||
Inventure Foods 1 | 129,212 | 1,713,351 | |||||
Household Products - 0.3% | |||||||
Central Garden & Pet 1 | 961,064 | 6,602,510 | |||||
Total (Cost $13,658,000) | 14,600,570 | ||||||
Energy – 5.4% | |||||||
Energy Equipment & Services - 3.2% | |||||||
Basic Energy Services 1 | 605,795 | 9,559,445 | |||||
375,900 | 8,683,290 | ||||||
1,404,031 | 2,822,102 | ||||||
Hercules Offshore 1 | 1,127,400 | 7,361,922 | |||||
Key Energy Services 1 | 1,023,900 | 8,088,810 | |||||
Matrix Service 1 | 659,883 | 16,147,337 | |||||
Newpark Resources 1 | 611,677 | 7,517,510 | |||||
Patterson-UTI Energy | 490,900 | 12,429,588 | |||||
Willbros Group 1 | 843,500 | 7,945,770 | |||||
80,555,774 | |||||||
Oil, Gas & Consumable Fuels - 2.2% | |||||||
446,200 | 7,594,324 | ||||||
Matador Resources 1 | 290,036 | 5,406,271 | |||||
Pengrowth Energy | 1,295,900 | 8,034,580 | |||||
Penn Virginia 1 | 430,850 | 4,062,915 | |||||
Scorpio Tankers | 687,626 | 8,107,111 | |||||
118,300 | 1,288,287 | ||||||
StealthGas 1 | 827,745 | 8,434,722 | |||||
Stone Energy 1 | 121,735 | 4,210,814 | |||||
753,851 | 10,176,988 | ||||||
57,316,012 | |||||||
Total (Cost $103,198,617) | 137,871,786 | ||||||
Financials – 9.7% | |||||||
Capital Markets - 0.9% | |||||||
Harris & Harris Group 1 | 932,997 | 2,780,331 | |||||
Piper Jaffray 1 | 314,500 | 12,438,475 | |||||
Stifel Financial 1 | 150,300 | 7,202,376 | |||||
22,421,182 | |||||||
Commercial Banks - 3.2% | |||||||
BancorpSouth | 252,100 | 6,408,382 | |||||
BankUnited | 299,398 | 9,856,182 | |||||
Boston Private Financial Holdings | 924,746 | 11,670,295 | |||||
Columbia Banking System | 276,900 | 7,617,519 | |||||
First Bancorp | 167,408 | 2,782,321 | |||||
FirstMerit Corporation | 126,100 | 2,803,203 | |||||
Guaranty Bancorp | 229,730 | 3,227,707 | |||||
Old National Bancorp | 345,800 | 5,314,946 | |||||
State Bank Financial | 337,159 | 6,132,922 | |||||
†Trustmark Corporation | 408,600 | 10,966,824 | |||||
Umpqua Holdings | 495,300 | 9,480,042 | |||||
Valley National Bancorp | 357,668 | 3,619,600 | |||||
Virginia Commerce Bancorp 1 | 185,667 | 3,154,482 | |||||
83,034,425 | |||||||
Insurance - 2.1% | |||||||
Ambac Financial Group 1 | 483,898 | 11,884,535 | |||||
†Assured Guaranty | 576,400 | 13,597,276 | |||||
Hilltop Holdings 1 | 486,824 | 11,260,239 | |||||
Kemper Corporation | 190,700 | 7,795,816 | |||||
Navigators Group (The) 1 | 39,175 | 2,474,293 | |||||
Old Republic International | 239,000 | 4,127,530 | |||||
407,700 | 1,378,026 | ||||||
52,517,715 | |||||||
Real Estate Investment Trusts (REITs) - 2.1% | |||||||
LaSalle Hotel Properties | 524,100 | 16,173,726 | |||||
Mack-Cali Realty | 522,150 | 11,215,782 | |||||
PennyMac Mortgage Investment Trust | 303,100 | 6,959,176 | |||||
RAIT Financial Trust | 380,500 | 3,413,085 | |||||
Rouse Properties | 381,233 | 8,459,560 | |||||
Ryman Hospitality Properties | 174,700 | 7,298,966 | |||||
53,520,295 | |||||||
Real Estate Management & Development - 0.0% | |||||||
Maui Land & Pineapple 1 | 205,561 | 1,251,867 | |||||
Thrifts & Mortgage Finance - 1.4% | |||||||
Berkshire Hills Bancorp | 168,200 | 4,586,814 | |||||
Brookline Bancorp | 328,700 | 3,145,659 | |||||
MGIC Investment 1 | 1,076,585 | 9,086,377 | |||||
Radian Group | 617,200 | 8,714,864 | |||||
Washington Federal | 395,500 | 9,211,195 | |||||
34,744,909 | |||||||
Total (Cost $183,998,667) | 247,490,393 | ||||||
Health Care – 5.2% | |||||||
Health Care Equipment & Supplies - 2.4% | |||||||
926,300 | 8,068,073 | ||||||
Alere 1 | 371,200 | 13,437,440 | |||||
AngioDynamics 1 | 528,803 | 9,090,124 | |||||
Exactech 1 | 314,423 | 7,470,690 | |||||
Invacare Corporation | 665,700 | 15,450,897 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 69 |
Schedules of Investments |
Royce Opportunity Fund (continued) |
SHARES | VALUE | ||||||
Health Care (continued) | |||||||
Health Care Equipment & Supplies (continued) | |||||||
Merit Medical Systems 1 | 553,600 | $ | 8,713,664 | ||||
62,230,888 | |||||||
Health Care Providers & Services - 0.8% | |||||||
Kindred Healthcare | 525,200 | 10,367,448 | |||||
Select Medical Holdings | 812,914 | 9,437,931 | |||||
19,805,379 | |||||||
Health Care Technology - 0.5% | |||||||
743,100 | 11,488,326 | ||||||
Life Sciences Tools & Services - 1.0% | |||||||
Albany Molecular Research 1 | 922,510 | 9,298,901 | |||||
Cambrex Corporation 1 | 944,654 | 16,843,181 | |||||
26,142,082 | |||||||
Pharmaceuticals - 0.5% | |||||||
254,605 | 13,305,657 | ||||||
Total (Cost $83,359,269) | 132,972,332 | ||||||
Industrials – 20.2% | |||||||
Aerospace & Defense - 1.7% | |||||||
Curtiss-Wright | 126,000 | 7,840,980 | |||||
Hexcel Corporation 1 | 246,747 | 11,027,124 | |||||
Kratos Defense & Security Solutions 1 | 1,060,702 | 8,146,191 | |||||
651,335 | 9,600,678 | ||||||
Moog Cl. A 1 | 86,400 | 5,870,016 | |||||
42,484,989 | |||||||
Air Freight & Logistics - 0.8% | |||||||
Atlas Air Worldwide Holdings 1 | 223,500 | 9,197,025 | |||||
400,100 | 10,518,629 | ||||||
19,715,654 | |||||||
Airlines - 0.4% | |||||||
730,900 | 6,249,195 | ||||||
Republic Airways Holdings 1 | 407,686 | 4,358,163 | |||||
10,607,358 | |||||||
Building Products - 3.0% | |||||||
Apogee Enterprises | 340,941 | 12,243,191 | |||||
Builders FirstSource 1 | 795,400 | 5,679,156 | |||||
Griffon Corporation | 597,800 | 7,896,938 | |||||
Insteel Industries | 436,927 | 9,931,351 | |||||
NCI Building Systems 1 | 1,140,990 | 20,012,965 | |||||
PGT 1 | 587,008 | 5,940,521 | |||||
Quanex Building Products | 756,500 | 15,069,480 | |||||
76,773,602 | |||||||
Commercial Services & Supplies - 1.4% | |||||||
†ABM Industries | 317,800 | 9,085,902 | |||||
Interface | 625,000 | 13,725,000 | |||||
1,712,926 | 12,230,292 | ||||||
35,041,194 | |||||||
Construction & Engineering - 2.6% | |||||||
Aegion Corporation 1 | 645,553 | 14,131,155 | |||||
Ameresco Cl. A 1 | 663,599 | 6,410,366 | |||||
Furmanite Corporation 1 | 918,230 | 9,751,603 | |||||
601,187 | 10,268,274 | ||||||
MasTec 1 | 198,795 | 6,504,572 | |||||
Northwest Pipe 1 | 334,283 | 12,622,526 | |||||
Pike Corporation 1 | 569,621 | 6,020,894 | |||||
65,709,390 | |||||||
Electrical Equipment - 0.7% | |||||||
†General Cable | 460,944 | 13,556,363 | |||||
166,017 | 3,971,127 | ||||||
17,527,490 | |||||||
Machinery - 6.7% | |||||||
770,300 | 2,873,219 | ||||||
Albany International Cl. A | 337,500 | 12,126,375 | |||||
Astec Industries | 392,228 | 15,151,768 | |||||
Barnes Group | 395,149 | 15,138,158 | |||||
CIRCOR International | 60,580 | 4,893,652 | |||||
Commercial Vehicle Group 1 | 1,154,740 | 8,394,960 | |||||
Dynamic Materials | 308,199 | 6,700,246 | |||||
Federal Signal 1 | 1,170,379 | 17,146,052 | |||||
Flow International 1 | 318,772 | 1,287,839 | |||||
Hardinge 2 | 629,571 | 9,109,892 | |||||
Hurco Companies | 198,595 | 4,966,861 | |||||
John Bean Technologies | 128,900 | 3,780,637 | |||||
Lydall 1 | 321,500 | 5,664,830 | |||||
Meritor 1 | 1,495,421 | 15,597,241 | |||||
Mueller Industries | 245,714 | 15,482,439 | |||||
Mueller Water Products Cl. A | 1,788,729 | 16,760,391 | |||||
NN | 486,083 | 9,814,016 | |||||
Trinity Industries | 89,150 | 4,860,458 | |||||
169,749,034 | |||||||
Marine - 0.3% | |||||||
Diana Shipping 1 | 652,000 | 8,665,080 | |||||
Professional Services - 0.6% | |||||||
483,837 | 2,709,487 | ||||||
Hill International 1 | 639,507 | 2,526,053 | |||||
Hudson Global 1 | 739,944 | 2,974,575 | |||||
Kelly Services Cl. A | 319,100 | 7,958,354 | |||||
16,168,469 | |||||||
Road & Rail - 0.6% | |||||||
Arkansas Best | 215,139 | 7,245,882 | |||||
399,834 | 8,880,313 | ||||||
16,126,195 | |||||||
Trading Companies & Distributors - 1.1% | |||||||
Aceto Corporation | 407,660 | 10,195,576 | |||||
198,300 | 7,604,805 | ||||||
Kaman Corporation | 289,331 | 11,495,121 | |||||
29,295,502 | |||||||
Transportation Infrastructure - 0.3% | |||||||
Wesco Aircraft Holdings 1 | 336,500 | 7,376,080 | |||||
Total (Cost $327,762,203) | 515,240,037 | ||||||
Information Technology – 25.8% | |||||||
Communications Equipment - 3.2% | |||||||
ARRIS Group 1 | 486,100 | 11,843,826 | |||||
Aviat Networks 1 | 2,060,084 | 4,655,790 | |||||
504,400 | 12,070,292 | ||||||
364,534 | 3,196,963 |
70 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | ||||||
Information Technology (continued) | |||||||
Communications Equipment (continued) | |||||||
461,300 | $ | 2,361,856 | |||||
Emulex Corporation 1 | 1,011,025 | 7,238,939 | |||||
1,519,847 | 10,638,929 | ||||||
Finisar Corporation 1 | 385,055 | 9,210,516 | |||||
1,109,977 | 2,763,843 | ||||||
Oplink Communications 1 | 611,536 | 11,374,570 | |||||
UTStarcom Holdings 1 | 794,697 | 2,201,311 | |||||
Westell Technologies Cl. A 1 | 1,239,531 | 5,020,100 | |||||
82,576,935 | |||||||
Computers & Peripherals - 1.5% | |||||||
Avid Technology 1 | 825,996 | 6,731,867 | |||||
Cray 1 | 462,319 | 12,695,280 | |||||
Datalink Corporation 1 | 703,609 | 7,669,338 | |||||
Dot Hill Systems 1 | 1,637,871 | 5,519,625 | |||||
384,001 | 1,488,004 | ||||||
Intevac 1 | 585,144 | 4,347,620 | |||||
38,451,734 | |||||||
Electronic Equipment, Instruments & Components - 6.9% | |||||||
Benchmark Electronics 1 | 649,700 | 14,995,076 | |||||
CTS Corporation | 413,903 | 8,240,809 | |||||
†Daktronics | 649,625 | 10,186,120 | |||||
1,251,586 | 2,690,910 | ||||||
FEI Company | 67,675 | 6,047,438 | |||||
Frequency Electronics 1 | 223,663 | 2,610,147 | |||||
GSI Group 1 | 360,450 | 4,051,458 | |||||
1,684,292 | 969,647 | ||||||
Ingram Micro Cl. A 1 | 716,700 | 16,813,782 | |||||
KEMET Corporation 1 | 1,753,154 | 9,887,789 | |||||
Maxwell Technologies 1 | 575,860 | 4,474,432 | |||||
Mercury Systems 1 | 677,578 | 7,419,479 | |||||
Newport Corporation 1 | 795,884 | 14,381,624 | |||||
Park Electrochemical | 366,034 | 10,512,497 | |||||
1,625,599 | 4,129,021 | ||||||
RadiSys Corporation 1 | 1,107,798 | 2,536,857 | |||||
Sanmina Corporation 1 | 1,131,623 | 18,898,104 | |||||
354,872 | 3,140,617 | ||||||
TTM Technologies 1 | 818,925 | 7,026,377 | |||||
Viasystems Group 1 | 317,947 | 4,349,515 | |||||
1,033,023 | 13,697,885 | ||||||
Vishay Precision Group 1 | 149,742 | 2,229,658 | |||||
Zygo Corporation 1 | 392,214 | 5,796,923 | |||||
175,086,165 | |||||||
Internet Software & Services - 2.2% | |||||||
Bankrate 1 | 347,900 | 6,241,326 | |||||
Blucora 1 | 285,330 | 8,320,223 | |||||
EarthLink Holdings | 1,676,300 | 8,498,841 | |||||
Monster Worldwide 1 | 1,427,600 | 10,178,788 | |||||
Perficient 1 | 267,826 | 6,272,485 | |||||
QuinStreet 1 | 904,539 | 7,860,444 | |||||
Support.com 1 | 1,327,634 | 5,031,733 | |||||
ValueClick 1 | 106,391 | 2,486,357 | |||||
54,890,197 | |||||||
IT Services - 0.2% | |||||||
CIBER 1 | 1,563,273 | 6,471,950 | |||||
Semiconductors & Semiconductor Equipment - 10.9% | |||||||
Advanced Energy Industries 1 | 687,707 | 15,720,982 | |||||
Alpha & Omega Semiconductor 1 | 946,493 | 7,297,461 | |||||
ANADIGICS 1 | 2,244,614 | 4,130,090 | |||||
ATMI 1 | 425,434 | 12,852,361 | |||||
Axcelis Technologies 1 | 1,255,794 | 3,064,137 | |||||
AXT 1 | 639,230 | 1,668,390 | |||||
Brooks Automation | 1,223,800 | 12,837,662 | |||||
723,141 | 2,111,572 | ||||||
Cohu | 510,826 | 5,363,673 | |||||
Exar Corporation 1 | 835,237 | 9,847,444 | |||||
Fairchild Semiconductor International 1 | 977,120 | 13,044,552 | |||||
FormFactor 1 | 1,060,661 | 6,385,179 | |||||
Ikanos Communications 1 | 172,200 | 206,640 | |||||
Integrated Silicon Solution 1 | 300,775 | 3,636,370 | |||||
International Rectifier 1 | 629,902 | 16,421,545 | |||||
†Intersil Corporation Cl. A | 930,599 | 10,673,971 | |||||
Kulicke & Soffa Industries 1 | 687,500 | 9,143,750 | |||||
LTX-Credence Corporation 1 | 1,388,705 | 11,095,753 | |||||
Microsemi Corporation 1 | 653,854 | 16,313,657 | |||||
Nanometrics 1 | 766,671 | 14,605,083 | |||||
NeoPhotonics Corporation 1 | 951,755 | 6,719,390 | |||||
553,711 | 9,523,829 | ||||||
1,380,517 | 12,231,381 | ||||||
1,041,843 | 10,366,338 | ||||||
Rudolph Technologies 1 | 689,911 | 8,099,555 | |||||
1,313,240 | 1,230,506 | ||||||
712,000 | 9,889,680 | ||||||
660,120 | 316,924 | ||||||
SunEdison 1 | 1,328,209 | 17,333,127 | |||||
264,153 | 7,874,401 | ||||||
TriQuint Semiconductor 1 | 1,205,814 | 10,056,489 | |||||
Ultra Clean Holdings 1 | 442,806 | 4,441,344 | |||||
Vitesse Semiconductor 1 | 927,978 | 2,709,696 | |||||
277,212,932 | |||||||
Software - 0.9% | |||||||
Actuate Corporation 1 | 844,783 | 6,513,277 | |||||
Cinedigm Cl. A 1 | 1,659,136 | 3,351,455 | |||||
Mentor Graphics | 404,900 | 9,745,943 | |||||
Smith Micro Software 1 | 1,791,903 | 2,652,016 | |||||
22,262,691 | |||||||
Total (Cost $536,585,569) | 656,952,604 | ||||||
Materials – 8.2% | |||||||
Chemicals - 2.7% | |||||||
Chemtura Corporation 1 | 455,550 | 12,718,956 | |||||
Ferro Corporation 1 | 365,111 | 4,684,374 | |||||
510,500 | 11,767,025 | ||||||
Material Sciences 1 | 487,227 | 5,754,151 | |||||
OM Group 1 | 516,959 | 18,822,477 | |||||
†Schulman (A.) | 384,319 | 13,551,088 | |||||
67,298,071 | |||||||
Construction Materials - 0.5% | |||||||
198,645 | 13,662,803 | ||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 71 |
Schedules of Investments |
Royce Opportunity Fund (continued) |
SHARES | VALUE | ||||||
Materials (continued) | |||||||
Metals & Mining - 4.9% | |||||||
867,200 | $ | 7,111,040 | |||||
Carpenter Technology | 225,136 | 14,003,459 | |||||
Century Aluminum 1 | 1,143,300 | 11,958,918 | |||||
Commercial Metals | 1,014,661 | 20,628,058 | |||||
Haynes International | 215,681 | 11,914,219 | |||||
Kaiser Aluminum | 253,100 | 17,777,744 | |||||
1,133,000 | 6,367,460 | ||||||
†Pan American Silver | 758,200 | 8,870,940 | |||||
RTI International Metals 1 | 418,600 | 14,320,306 | |||||
U.S. Silica Holdings | 126,200 | 4,304,682 | |||||
Walter Energy | 448,800 | 7,463,544 | |||||
124,720,370 | |||||||
Paper & Forest Products - 0.1% | |||||||
Louisiana-Pacific Corporation 1 | 145,900 | 2,700,609 | |||||
Total (Cost $140,208,389) | 208,381,853 | ||||||
Telecommunication Services – 0.4% | |||||||
Diversified Telecommunication Services - 0.3% | |||||||
1,136,106 | 7,112,024 | ||||||
Wireless Telecommunication Services - 0.1% | |||||||
352,459 | 2,259,262 | ||||||
Total (Cost $10,909,569) | 9,371,286 | ||||||
Miscellaneous 5 – 4.9% | |||||||
Total (Cost $107,609,675) | 125,278,730 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $1,738,769,747) | 2,368,805,380 | ||||||
PREFERRED STOCK – 0.1% | |||||||
Hovnanian Enterprises 7.25% Conv. | |||||||
(Cost $1,078,007) | 70,600 | 2,268,378 | |||||
REPURCHASE AGREEMENT – 6.8% | |||||||
Fixed Income Clearing Corporation, | |||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||
maturity value $172,925,000 (collateralized | |||||||
by obligations of various U.S. Government | |||||||
Agencies, 1.00% due 5/31/18, valued at | |||||||
$176,385,431) | |||||||
(Cost $172,925,000) | 172,925,000 | ||||||
�� | |||||||
PRINCIPAL | |||||||
AMOUNT | |||||||
COLLATERAL RECEIVED FOR SECURITIES | |||||||
LOANED – 5.6% | |||||||
U.S. Treasury Bonds | |||||||
5.375% | |||||||
due 2/15/31 | $ | 1,427,361 | 1,457,216 | ||||
U.S. Treasury Notes | |||||||
0.125%-3.125% | |||||||
due 4/15/14-8/15/23 | 10,434,407 | 10,474,785 | |||||
Money Market Funds | |||||||
Federated Government Obligations Fund | |||||||
(7 day yield-0.0099%) | 131,260,209 | ||||||
TOTAL COLLATERAL RECEIVED FOR | |||||||
SECURITIES LOANED | |||||||
(Cost $143,192,210) | 143,192,210 | ||||||
TOTAL INVESTMENTS – 105.5% | |||||||
(Cost $2,055,964,964) | 2,687,190,968 | ||||||
LIABILITIES LESS CASH | |||||||
AND OTHER ASSETS – (5.5)% | (139,554,113 | ) | |||||
NET ASSETS – 100.0% | $ | 2,547,636,855 | |||||
72 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
Royce Special Equity Fund |
SHARES | VALUE | ||||||
COMMON STOCKS – 88.6% | |||||||
Consumer Discretionary – 25.8% | |||||||
Auto Components - 2.4% | |||||||
Dorman Products 1 | 73,000 | $ | 4,093,110 | ||||
2,250,000 | 82,800,000 | ||||||
86,893,110 | |||||||
Hotels, Restaurants & Leisure - 0.5% | |||||||
Bowl America Cl. A 2 | 343,047 | 4,912,433 | |||||
Frisch’s Restaurants 2 | 505,100 | 12,945,713 | |||||
17,858,146 | |||||||
Household Durables - 0.8% | |||||||
CSS Industries 2 | 974,000 | 27,934,320 | |||||
Leisure Equipment & Products - 0.9% | |||||||
4,100,000 | 32,554,000 | ||||||
Media - 4.9% | |||||||
Meredith Corporation | 1,544,000 | 79,979,200 | |||||
Scholastic Corporation 2 | 2,910,000 | 98,969,100 | |||||
178,948,300 | |||||||
Specialty Retail - 16.3% | |||||||
American Eagle Outfitters | 4,855,000 | 69,912,000 | |||||
Bed Bath & Beyond 1 | 1,935,000 | 155,380,500 | |||||
Buckle (The) | 1,713,000 | 90,035,280 | |||||
2,100,000 | 119,637,000 | ||||||
Finish Line (The) Cl. A 2 | 4,958,000 | 139,666,860 | |||||
Stage Stores | 658,500 | 14,631,870 | |||||
589,263,510 | |||||||
Total (Cost $714,761,169) | 933,451,386 | ||||||
Consumer Staples – 7.8% | |||||||
Food & Staples Retailing - 2.5% | |||||||
Arden Group Cl. A 2 | 243,000 | 30,741,930 | |||||
Weis Markets | 1,144,500 | 60,154,920 | |||||
90,896,850 | |||||||
Food Products - 3.3% | |||||||
J&J Snack Foods | 447,500 | 39,644,025 | |||||
Lancaster Colony | 906,000 | 79,863,900 | |||||
119,507,925 | |||||||
Tobacco - 2.0% | |||||||
Universal Corporation 2 | 1,296,000 | 70,761,600 | |||||
Total (Cost $186,444,916) | 281,166,375 | ||||||
Energy – 0.8% | |||||||
Energy Equipment & Services - 0.8% | |||||||
RPC | 1,525,500 | 27,230,175 | |||||
Total (Cost $27,422,525) | 27,230,175 | ||||||
Health Care – 3.9% | |||||||
Health Care Equipment & Supplies - 1.4% | |||||||
Atrion Corporation 2 | 167,000 | 49,473,750 | |||||
Life Sciences Tools & Services - 2.5% | |||||||
Bio-Rad Laboratories Cl. A 1 | 750,500 | 92,769,305 | |||||
Total (Cost $76,637,064) | 142,243,055 | ||||||
Industrials – 20.2% | |||||||
Aerospace & Defense - 1.5% | |||||||
656,500 | $ | 52,848,250 | |||||
Commercial Services & Supplies - 4.4% | |||||||
UniFirst Corporation 2 | 1,481,570 | 158,527,990 | |||||
Electrical Equipment - 7.7% | |||||||
EnerSys 2 | 2,391,000 | 167,585,190 | |||||
Hubbell Cl. B | 752,000 | 81,892,800 | |||||
Regal-Beloit | 412,000 | 30,372,640 | |||||
279,850,630 | |||||||
Industrial Conglomerates - 1.1% | |||||||
Carlisle Companies | 480,000 | 38,112,000 | |||||
Machinery - 4.0% | |||||||
Ampco-Pittsburgh | 252,000 | 4,901,400 | |||||
Foster (L.B.) Company 2 | 1,000,000 | 47,290,000 | |||||
Hurco Companies 2 | 471,000 | 11,779,710 | |||||
Standex International | 432,000 | 27,164,160 | |||||
Valmont Industries | 362,500 | 54,056,000 | |||||
145,191,270 | |||||||
Trading Companies & Distributors - 1.5% | |||||||
Applied Industrial Technologies | 1,108,500 | 54,416,265 | |||||
Total (Cost $415,643,792) | 728,946,405 | ||||||
Information Technology – 16.7% | |||||||
Communications Equipment - 2.8% | |||||||
Plantronics 2 | 2,215,000 | 102,886,750 | |||||
Electronic Equipment, Instruments & Components - 8.9% | |||||||
AVX Corporation 2 | 9,298,500 | 129,528,105 | |||||
Littelfuse | 1,023,500 | 95,113,855 | |||||
Park Electrochemical 2 | 2,011,000 | 57,755,920 | |||||
930,000 | 39,459,900 | ||||||
321,857,780 | |||||||
Semiconductors & Semiconductor Equipment - 5.0% | |||||||
Entegris 1 | 4,739,000 | 54,972,400 | |||||
7,134,000 | 125,701,080 | ||||||
180,673,480 | |||||||
Total (Cost $466,055,881) | 605,418,010 | ||||||
Materials – 13.4% | |||||||
Chemicals - 9.6% | |||||||
Hawkins 2 | 989,000 | 36,780,910 | |||||
Minerals Technologies 2 | 3,075,000 | 184,715,250 | |||||
†NewMarket Corporation | 86,000 | 28,736,900 | |||||
Schulman (A.) 2 | 1,487,000 | 52,431,620 | |||||
Stepan Company | 668,000 | 43,840,840 | |||||
346,505,520 | |||||||
Metals & Mining - 0.1% | |||||||
Central Steel & Wire 4 | 5,550 | 4,107,000 | |||||
Paper & Forest Products - 3.7% | |||||||
Schweitzer-Mauduit International 2 | 2,638,557 | 135,806,529 | |||||
Total (Cost $326,365,657) | 486,419,049 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $2,213,331,004) | 3,204,874,455 | ||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 73 |
Schedules of Investments |
Royce Special Equity Fund (continued) |
VALUE | |||||||
REPURCHASE AGREEMENT – 11.5% | |||||||
Fixed Income Clearing Corporation, | |||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||
maturity value $418,376,000 (collateralized | |||||||
by obligations of various U.S. Government | |||||||
Agencies, 1.375%-3.50% due 5/15/20-6/30/20, | |||||||
valued at $426,748,800) | |||||||
(Cost $418,376,000) | $ | 418,376,000 | |||||
COLLATERAL RECEIVED FOR SECURITIES | |||||||
LOANED – 1.0% | |||||||
Money Market Funds | |||||||
Federated Government Obligations Fund | |||||||
(7 day yield-0.0099%) | |||||||
(Cost $35,100,554) | 35,100,554 | ||||||
TOTAL INVESTMENTS – 101.1% | |||||||
(Cost $2,666,807,558) | 3,658,351,009 | ||||||
LIABILITIES LESS CASH | |||||||
AND OTHER ASSETS – (1.1)% | (40,519,931 | ) | |||||
NET ASSETS – 100.0% | $ | 3,617,831,078 | |||||
Royce Value Fund | |||||||
SHARES | VALUE | ||||||
COMMON STOCKS – 97.8% | |||||||
Consumer Discretionary – 29.2% | |||||||
Auto Components - 1.4% | |||||||
†Gentex Corporation | 504,401 | $ | 16,640,189 | ||||
Automobiles - 1.9% | |||||||
Thor Industries | 416,060 | 22,978,994 | |||||
Household Durables - 1.5% | |||||||
17,377 | 17,828,976 | ||||||
Specialty Retail - 14.1% | |||||||
American Eagle Outfitters | 1,752,986 | 25,242,998 | |||||
Ascena Retail Group 1 | 1,592,664 | 33,700,770 | |||||
Buckle (The) | 670,497 | 35,241,322 | |||||
GameStop Corporation Cl. A | 628,007 | 30,935,625 | |||||
347,560 | 25,392,734 | ||||||
Guess? | 508,949 | 15,813,046 | |||||
166,326,495 | |||||||
Textiles, Apparel & Luxury Goods - 10.3% | |||||||
Crocs 1 | 1,741,811 | 27,729,631 | |||||
119,775 | 10,116,196 | ||||||
434,750 | 32,080,203 | ||||||
Steven Madden 1 | 772,753 | 28,275,032 | |||||
994,531 | 23,908,525 | ||||||
122,109,587 | |||||||
Total (Cost $243,299,172) | 345,884,241 | ||||||
Consumer Staples – 1.3% | |||||||
Personal Products - 1.3% | |||||||
Nu Skin Enterprises Cl. A | 107,207 | 14,818,152 | |||||
Total (Cost $4,060,221) | 14,818,152 | ||||||
Energy – 11.6% | |||||||
Energy Equipment & Services - 11.1% | |||||||
Atwood Oceanics 1 | 671,928 | 35,874,236 | |||||
Helmerich & Payne | 422,499 | 35,523,716 | |||||
Oil States International 1 | 249,377 | 25,366,628 | |||||
Unit Corporation 1 | 679,683 | 35,085,237 | |||||
131,849,817 | |||||||
Oil, Gas & Consumable Fuels - 0.5% | |||||||
Cimarex Energy | 54,392 | 5,706,264 | |||||
Total (Cost $98,189,546) | 137,556,081 | ||||||
Financials – 13.3% | |||||||
Capital Markets - 2.5% | |||||||
Federated Investors Cl. B | 1,009,043 | 29,060,438 | |||||
Insurance - 7.7% | |||||||
Allied World Assurance Company | |||||||
Holdings | 154,991 | 17,484,534 | |||||
Aspen Insurance Holdings | 219,067 | 9,049,658 | |||||
PartnerRe | 282,074 | 29,739,062 | |||||
Reinsurance Group of America | 456,890 | 35,367,855 | |||||
91,641,109 | |||||||
74 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | ||||||
Financials (continued) | |||||||
Thrifts & Mortgage Finance - 3.1% | |||||||
Genworth MI Canada | 1,050,100 | $ | 36,211,027 | ||||
Total (Cost $106,256,953) | 156,912,574 | ||||||
Health Care – 5.5% | |||||||
Health Care Providers & Services - 5.5% | |||||||
Chemed Corporation | 372,883 | 28,570,295 | |||||
Magellan Health Services 1 | 341,625 | 20,466,754 | |||||
MEDNAX 1 | 293,528 | 15,668,525 | |||||
Total (Cost $44,425,331) | 64,705,574 | ||||||
Industrials – 8.2% | |||||||
Aerospace & Defense - 1.2% | |||||||
Cubic Corporation | 268,158 | 14,121,200 | |||||
Commercial Services & Supplies - 0.9% | |||||||
†UniFirst Corporation | 97,900 | 10,475,300 | |||||
Machinery - 2.8% | |||||||
Kennametal | 386,152 | 20,106,934 | |||||
Lincoln Electric Holdings | 176,746 | 12,609,060 | |||||
32,715,994 | |||||||
Road & Rail - 1.0% | |||||||
†Knight Transportation | 657,100 | 12,051,214 | |||||
Trading Companies & Distributors - 2.3% | |||||||
Applied Industrial Technologies | 560,898 | 27,534,483 | |||||
Total (Cost $69,014,199) | 96,898,191 | ||||||
Information Technology – 19.7% | |||||||
Communications Equipment - 4.3% | |||||||
NETGEAR 1 | 1,026,254 | 33,804,807 | |||||
Plantronics | 378,646 | 17,588,107 | |||||
51,392,914 | |||||||
Electronic Equipment, Instruments & Components - 4.0% | |||||||
Littelfuse | 17,458 | 1,622,372 | |||||
†MTS Systems | 145,447 | 10,363,099 | |||||
2,664,517 | 35,331,495 | ||||||
47,316,966 | |||||||
IT Services - 5.0% | |||||||
Convergys Corporation | 1,290,098 | 27,156,563 | |||||
ManTech International Cl. A | 1,078,224 | 32,271,244 | |||||
59,427,807 | |||||||
Office Electronics - 0.4% | |||||||
Zebra Technologies Cl. A 1 | 80,560 | 4,356,685 | |||||
Semiconductors & Semiconductor Equipment - 6.0% | |||||||
Cabot Microelectronics 1 | 183,223 | 8,373,291 | |||||
MKS Instruments | 712,767 | 21,340,244 | |||||
340,000 | 17,615,400 | ||||||
Teradyne 1 | 1,323,847 | 23,326,184 | |||||
70,655,119 | |||||||
Total (Cost $213,680,661) | 233,149,491 | ||||||
Materials – 9.0% | |||||||
Chemicals - 5.0% | |||||||
Innophos Holdings | 229,973 | 11,176,688 | |||||
†Innospec | 712,940 | 32,952,087 | |||||
Westlake Chemical | 127,113 | 15,516,684 | |||||
59,645,459 | |||||||
Metals & Mining - 2.6% | |||||||
Reliance Steel & Aluminum | 398,043 | 30,187,581 | |||||
Paper & Forest Products - 1.4% | |||||||
†Schweitzer-Mauduit International | 324,200 | 16,686,574 | |||||
Total (Cost $80,671,654) | 106,519,614 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $859,597,737) | 1,156,443,918 | ||||||
REPURCHASE AGREEMENT – 1.8% | |||||||
Fixed Income Clearing Corporation, | |||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||
maturity value $21,023,000 (collateralized | |||||||
by obligations of various U.S. Government | |||||||
Agencies, 0.625% due 7/15/16, valued at | |||||||
$21,445,974) | |||||||
(Cost $21,023,000) | 21,023,000 | ||||||
PRINCIPAL | |||||||
AMOUNT | |||||||
COLLATERAL RECEIVED FOR SECURITIES | |||||||
LOANED – 3.8% | |||||||
U.S. Treasury Bonds | |||||||
5.375% | |||||||
due 2/15/31 | $ | 183,345 | 187,180 | ||||
U.S. Treasury Notes | |||||||
0.125%-3.125% | |||||||
due 4/15/14-1/15/23 | 1,339,949 | 1,345,135 | |||||
Money Market Funds | |||||||
Federated Government Obligations Fund | |||||||
(7 day yield-0.0099%) | 43,782,942 | ||||||
TOTAL COLLATERAL RECEIVED FOR | |||||||
SECURITIES LOANED | |||||||
(Cost $45,315,257) | 45,315,257 | ||||||
TOTAL INVESTMENTS – 103.4% | |||||||
(Cost $925,935,994) | 1,222,782,175 | ||||||
LIABILITIES LESS CASH | |||||||
AND OTHER ASSETS – (3.4)% | (40,289,453 | ) | |||||
NET ASSETS – 100.0% | $ | 1,182,492,722 | |||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 75 |
Schedules of Investments |
Royce Value Plus Fund |
SHARES | VALUE | ||||||
COMMON STOCKS – 93.7% | |||||||
Consumer Discretionary – 12.1% | |||||||
Hotels, Restaurants & Leisure - 2.6% | |||||||
Buffalo Wild Wings 1 | 74,900 | $ | 11,025,280 | ||||
†Churchill Downs | 125,000 | 11,206,250 | |||||
Red Robin Gourmet Burgers 1 | 143,000 | 10,516,220 | |||||
32,747,750 | |||||||
Household Durables - 1.4% | |||||||
iRobot Corporation 1 | 267,000 | 9,283,590 | |||||
580,000 | 8,491,200 | ||||||
17,774,790 | |||||||
Internet & Catalog Retail - 1.2% | |||||||
HomeAway 1 | 350,500 | 14,328,440 | |||||
Leisure Equipment & Products - 1.2% | |||||||
†Arctic Cat | 252,000 | 14,358,960 | |||||
Specialty Retail - 3.1% | |||||||
5,000 | 233,050 | ||||||
60,000 | 4,032,600 | ||||||
Monro Muffler Brake | 127,000 | 7,157,720 | |||||
Tractor Supply | 198,000 | 15,360,840 | |||||
Zumiez 1 | 476,000 | 12,376,000 | |||||
39,160,210 | |||||||
Textiles, Apparel & Luxury Goods - 2.6% | |||||||
Carter’s | 287,200 | 20,618,088 | |||||
Gildan Activewear | 221,833 | 11,825,917 | |||||
32,444,005 | |||||||
Total (Cost $90,383,512) | 150,814,155 | ||||||
Consumer Staples – 1.8% | |||||||
Food & Staples Retailing - 0.8% | |||||||
United Natural Foods 1 | 133,517 | 10,065,847 | |||||
Food Products - 0.6% | |||||||
Snyder’s-Lance | 275,000 | 7,898,000 | |||||
Personal Products - 0.4% | |||||||
Female Health | 556,000 | 4,726,000 | |||||
Total (Cost $15,787,617) | 22,689,847 | ||||||
Energy – 2.9% | |||||||
Energy Equipment & Services - 2.7% | |||||||
Helmerich & Payne | 88,000 | 7,399,040 | |||||
Pason Systems | 539,000 | 11,660,362 | |||||
Trican Well Service | 383,800 | 4,689,785 | |||||
Unit Corporation 1 | 185,400 | 9,570,348 | |||||
33,319,535 | |||||||
Oil, Gas & Consumable Fuels - 0.2% | |||||||
Sprott Resource | 1,515,000 | 3,308,826 | |||||
Total (Cost $32,136,956) | 36,628,361 | ||||||
Financials – 11.4% | |||||||
Capital Markets - 4.0% | |||||||
Affiliated Managers Group 1 | 73,800 | 16,005,744 | |||||
†Alaris Royalty | 378,300 | 10,637,629 | |||||
Northern Trust | 239,000 | 14,791,710 | |||||
Oaktree Capital Group LLC Cl. A | 145,600 | 8,567,104 | |||||
50,002,187 | |||||||
Commercial Banks - 4.6% | |||||||
Associated Banc-Corp | 636,000 | 11,066,400 | |||||
Columbia Banking System | 287,500 | 7,909,125 | |||||
Enterprise Financial Services | 594,800 | 12,145,816 | |||||
Fifth Third Bancorp | 594,800 | 12,508,644 | |||||
Umpqua Holdings | 670,300 | 12,829,542 | |||||
56,459,527 | |||||||
Diversified Financial Services - 1.2% | |||||||
PICO Holdings 1 | 656,222 | 15,165,290 | |||||
Real Estate Management & Development - 0.9% | |||||||
†Jones Lang LaSalle | 112,000 | 11,467,680 | |||||
Thrifts & Mortgage Finance - 0.7% | |||||||
Berkshire Hills Bancorp | 319,592 | 8,715,274 | |||||
Total (Cost $106,510,856) | 141,809,958 | ||||||
Health Care – 11.0% | |||||||
Biotechnology - 4.6% | |||||||
Actelion | 198,000 | 16,724,735 | |||||
Cubist Pharmaceuticals 1 | 286,000 | 19,696,820 | |||||
984,893 | 20,663,055 | ||||||
57,084,610 | |||||||
Health Care Equipment & Supplies - 2.5% | |||||||
2,479,500 | 15,992,775 | ||||||
488,229 | 4,560,059 | ||||||
Thoratec Corporation 1 | 293,600 | 10,745,760 | |||||
31,298,594 | |||||||
Health Care Providers & Services - 0.5% | |||||||
377,000 | 5,786,950 | ||||||
Life Sciences Tools & Services - 0.8% | |||||||
236,582 | 9,938,810 | ||||||
Pharmaceuticals - 2.6% | |||||||
Medicines Company (The) 1 | 355,000 | 13,710,100 | |||||
UCB | 260,000 | 19,364,895 | |||||
33,074,995 | |||||||
Total (Cost $102,411,682) | 137,183,959 | ||||||
Industrials – 16.0% | |||||||
Building Products - 1.1% | |||||||
Apogee Enterprises | 380,198 | 13,652,910 | |||||
Commercial Services & Supplies - 2.1% | |||||||
338,000 | 13,918,840 | ||||||
UniFirst Corporation | 110,400 | 11,812,800 | |||||
25,731,640 | |||||||
Electrical Equipment - 3.3% | |||||||
Acuity Brands | 115,095 | 12,582,186 | |||||
6,250,000 | 8,062,500 | ||||||
†EnerSys | 140,000 | 9,812,600 | |||||
†Powell Industries | 164,462 | 11,017,309 | |||||
41,474,595 | |||||||
76 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | ||||||
Industrials (continued) | |||||||
Industrial Conglomerates - 1.5% | |||||||
Carlisle Companies | 229,900 | $ | 18,254,060 | ||||
Machinery - 1.8% | |||||||
Tennant Company | 116,437 | 7,895,593 | |||||
Valmont Industries | 10,400 | 1,550,848 | |||||
Wabtec Corporation | 181,464 | 13,477,331 | |||||
22,923,772 | |||||||
Professional Services - 1.4% | |||||||
277,514 | 17,405,678 | ||||||
Road & Rail - 0.7% | |||||||
Celadon Group | 439,600 | 8,563,408 | |||||
Trading Companies & Distributors - 3.3% | |||||||
482,390 | 19,430,669 | ||||||
Grainger (W.W.) | 36,600 | 9,348,372 | |||||
Watsco | 135,100 | 12,977,706 | |||||
41,756,747 | |||||||
Transportation Infrastructure - 0.8% | |||||||
478,000 | 10,477,760 | ||||||
Total (Cost $125,874,096) | 200,240,570 | ||||||
Information Technology – 27.0% | |||||||
Communications Equipment - 5.6% | |||||||
2,167,234 | 10,316,034 | ||||||
Infinera Corporation 1 | 1,990,833 | 19,470,347 | |||||
1,030,200 | 13,341,090 | ||||||
Plantronics | 137,000 | 6,363,650 | |||||
823,200 | 19,896,744 | ||||||
69,387,865 | |||||||
Computers & Peripherals - 0.7% | |||||||
Immersion Corporation 1 | 805,595 | 8,362,076 | |||||
Electronic Equipment, Instruments & Components - 10.2% | |||||||
FLIR Systems | 683,900 | 20,585,390 | |||||
1,073,400 | 22,305,252 | ||||||
245,132 | 19,024,694 | ||||||
Littelfuse | 132,744 | 12,335,900 | |||||
Mercury Systems 1 | 1,321,749 | 14,473,152 | |||||
†Methode Electronics | 340,605 | 11,645,285 | |||||
Rogers Corporation 1 | 437,693 | 26,918,119 | |||||
127,287,792 | |||||||
Internet Software & Services - 1.2% | |||||||
511,877 | 14,578,257 | ||||||
IT Services - 2.1% | |||||||
Genpact 1 | 883,000 | 16,220,710 | |||||
265,100 | 10,097,659 | ||||||
26,318,369 | |||||||
Semiconductors & Semiconductor Equipment - 2.6% | |||||||
International Rectifier 1 | 478,048 | 12,462,711 | |||||
LSI Corporation | 1,017,000 | 11,207,340 | |||||
Ultratech 1 | 307,740 | 8,924,460 | |||||
32,594,511 | |||||||
Software - 4.6% | |||||||
Informatica Corporation 1 | 246,000 | 10,209,000 | |||||
Manhattan Associates 1 | 81,000 | 9,515,880 | |||||
PTC 1 | 497,000 | 17,588,830 | |||||
Splunk 1 | 187,304 | 12,862,166 | |||||
421,000 | 7,582,210 | ||||||
57,758,086 | |||||||
Total (Cost $226,820,983) | 336,286,956 | ||||||
Materials – 6.7% | |||||||
Chemicals - 1.1% | |||||||
†Rockwood Holdings | 193,000 | 13,880,560 | |||||
Construction Materials - 1.5% | |||||||
Eagle Materials | 244,000 | 18,892,920 | |||||
Metals & Mining - 4.1% | |||||||
Horsehead Holding Corporation 1 | 1,180,353 | 19,133,522 | |||||
Reliance Steel & Aluminum | 174,100 | 13,203,744 | |||||
Worthington Industries | 454,466 | 19,123,929 | |||||
51,461,195 | |||||||
Total (Cost $48,732,353) | 84,234,675 | ||||||
Miscellaneous 5 – 4.8% | |||||||
Total (Cost $49,396,785) | 59,771,347 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $798,054,840) | 1,169,659,828 | ||||||
REPURCHASE AGREEMENT – 6.6% | |||||||
Fixed Income Clearing Corporation, | |||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||
maturity value $82,948,000 (collateralized | |||||||
by obligations of various U.S. Government | |||||||
Agencies, 0.25%-2.00% due 4/30/16-5/15/16, valued | |||||||
at $84,610,579) | |||||||
(Cost $82,948,000) | 82,948,000 | ||||||
COLLATERAL RECEIVED FOR SECURITIES | |||||||
LOANED – 7.6% | |||||||
Money Market Funds | |||||||
Federated Government Obligations Fund | |||||||
(7 day yield-0.0099%) | |||||||
(Cost $94,323,980) | 94,323,980 | ||||||
TOTAL INVESTMENTS – 107.9% | |||||||
(Cost $975,326,820) | 1,346,931,808 | ||||||
LIABILITIES LESS CASH | |||||||
AND OTHER ASSETS – (7.9)% | (99,173,740 | ) | |||||
NET ASSETS – 100.0% | $ | 1,247,758,068 | |||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 77 |
Schedules of Investments |
Royce 100 Fund |
SHARES | VALUE | ||||||
COMMON STOCKS – 89.7% | |||||||
Consumer Discretionary – 6.0% | |||||||
Auto Components - 1.0% | |||||||
Drew Industries | 55,656 | $ | 2,849,587 | ||||
Household Durables - 1.7% | |||||||
Ethan Allen Interiors | 67,500 | 2,053,350 | |||||
Harman International Industries | 35,900 | 2,938,415 | |||||
4,991,765 | |||||||
Internet & Catalog Retail - 0.9% | |||||||
81,900 | 2,668,302 | ||||||
Media - 0.5% | |||||||
Morningstar | 21,072 | 1,645,513 | |||||
Specialty Retail - 1.9% | |||||||
Ascena Retail Group 1 | 167,300 | 3,540,068 | |||||
†Destination Maternity | 71,000 | 2,121,480 | |||||
5,661,548 | |||||||
Total (Cost $9,438,131) | 17,816,715 | ||||||
Consumer Staples – 2.3% | |||||||
Food Products - 2.3% | |||||||
Darling International 1 | 197,500 | 4,123,800 | |||||
Sanderson Farms | 36,200 | 2,618,346 | |||||
Total (Cost $3,712,440) | 6,742,146 | ||||||
Energy – 8.0% | |||||||
Energy Equipment & Services - 8.0% | |||||||
Ensign Energy Services | 182,000 | 2,866,425 | |||||
Helmerich & Payne | 43,725 | 3,676,398 | |||||
Oil States International 1 | 28,400 | 2,888,848 | |||||
Pason Systems | 213,000 | 4,607,898 | |||||
SEACOR Holdings 1 | 31,500 | 2,872,800 | |||||
Trican Well Service | 245,000 | 2,993,740 | |||||
Unit Corporation 1 | 71,800 | 3,706,316 | |||||
Total (Cost $13,024,032) | 23,612,425 | ||||||
Financials – 4.2% | |||||||
Capital Markets - 4.2% | |||||||
AllianceBernstein Holding L.P. | 128,769 | 2,747,930 | |||||
Federated Investors Cl. B | 180,200 | 5,189,760 | |||||
Lazard Cl. A | 49,000 | 2,220,680 | |||||
SEI Investments | 66,000 | 2,292,180 | |||||
Total (Cost $8,754,801) | 12,450,550 | ||||||
Health Care – 4.6% | |||||||
Health Care Equipment & Supplies - 1.6% | |||||||
Analogic Corporation | 25,800 | 2,284,848 | |||||
†Atrion Corporation | 8,400 | 2,488,500 | |||||
4,773,348 | |||||||
Life Sciences Tools & Services - 2.3% | |||||||
Bio-Rad Laboratories Cl. A 1 | 19,500 | 2,410,395 | |||||
PerkinElmer | 47,400 | 1,954,302 | |||||
Techne Corporation | 27,300 | 2,584,491 | |||||
6,949,188 | |||||||
Pharmaceuticals - 0.7% | |||||||
53,200 | 2,054,584 | ||||||
Total (Cost $10,784,261) | 13,777,120 | ||||||
Industrials – 27.4% | |||||||
Aerospace & Defense - 1.3% | |||||||
HEICO Corporation Cl. A | 91,050 | 3,835,026 | |||||
Air Freight & Logistics - 3.9% | |||||||
Expeditors International of | |||||||
Washington | 82,800 | 3,663,900 | |||||
Forward Air | 100,014 | 4,391,615 | |||||
UTi Worldwide | 206,300 | 3,622,628 | |||||
11,678,143 | |||||||
Building Products - 1.0% | |||||||
Simpson Manufacturing | 81,200 | 2,982,476 | |||||
Commercial Services & Supplies - 1.3% | |||||||
Heritage-Crystal Clean 1 | 189,008 | 3,872,774 | |||||
Construction & Engineering - 2.8% | |||||||
Jacobs Engineering Group 1 | 70,700 | 4,453,393 | |||||
KBR | 118,800 | 3,788,532 | |||||
8,241,925 | |||||||
Electrical Equipment - 2.7% | |||||||
Global Power Equipment Group | 138,000 | 2,700,660 | |||||
GrafTech International 1 | 273,300 | 3,069,159 | |||||
Regal-Beloit | 29,100 | 2,145,252 | |||||
7,915,071 | |||||||
Machinery - 5.9% | |||||||
†CIRCOR International | 63,218 | 5,106,750 | |||||
Hyster-Yale Materials Handling Cl. A | 36,000 | 3,353,760 | |||||
Kennametal | 80,900 | 4,212,463 | |||||
Valmont Industries | 20,300 | 3,027,136 | |||||
Wabtec Corporation | 26,200 | 1,945,874 | |||||
17,645,983 | |||||||
Professional Services - 5.7% | |||||||
†Acacia Research | 137,690 | 2,002,012 | |||||
Advisory Board (The) 1 | 29,182 | 1,858,018 | |||||
59,100 | 2,051,361 | ||||||
ManpowerGroup | 46,166 | 3,963,813 | |||||
Robert Half International | 49,500 | 2,078,505 | |||||
Towers Watson & Co. Cl. A | 25,900 | 3,305,099 | |||||
Verisk Analytics Cl. A 1 | 23,100 | 1,518,132 | |||||
16,776,940 | |||||||
Trading Companies & Distributors - 2.8% | |||||||
Air Lease Cl. A | 94,200 | 2,927,736 | |||||
Applied Industrial Technologies | 70,000 | 3,436,300 | |||||
MSC Industrial Direct Cl. A | 25,800 | 2,086,446 | |||||
8,450,482 | |||||||
Total (Cost $48,607,155) | 81,398,820 | ||||||
Information Technology – 23.8% | |||||||
Communications Equipment - 1.4% | |||||||
ADTRAN | 157,400 | 4,251,374 | |||||
78 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | ||||||
Information Technology (continued) | |||||||
Computers & Peripherals - 0.9% | |||||||
Diebold | 85,100 | $ | 2,809,151 | ||||
Electronic Equipment, Instruments & Components - 11.3% | |||||||
Coherent 1 | 48,700 | 3,622,793 | |||||
Dolby Laboratories Cl. A 1 | 52,500 | 2,024,400 | |||||
FARO Technologies 1 | 49,187 | 2,867,602 | |||||
FLIR Systems | 72,800 | 2,191,280 | |||||
IPG Photonics 1 | 35,600 | 2,762,916 | |||||
Littelfuse | 37,500 | 3,484,875 | |||||
MTS Systems | 30,600 | 2,180,250 | |||||
National Instruments | 95,200 | 3,048,304 | |||||
195,400 | 2,641,808 | ||||||
Plexus Corporation 1 | 86,300 | 3,735,927 | |||||
Rofin-Sinar Technologies 1 | 115,600 | 3,123,512 | |||||
32,100 | 1,974,150 | ||||||
33,657,817 | |||||||
Internet Software & Services - 1.2% | |||||||
89,300 | 3,598,790 | ||||||
IT Services - 1.1% | |||||||
Sapient Corporation 1 | 182,300 | 3,164,728 | |||||
Office Electronics - 1.0% | |||||||
Zebra Technologies Cl. A 1 | 57,600 | 3,115,008 | |||||
Semiconductors & Semiconductor Equipment - 5.4% | |||||||
99,900 | 3,017,979 | ||||||
Cabot Microelectronics 1 | 74,800 | 3,418,360 | |||||
Diodes 1 | 127,800 | 3,010,968 | |||||
International Rectifier 1 | 80,300 | 2,093,421 | |||||
Nanometrics 1 | 143,560 | 2,734,818 | |||||
49,800 | 1,638,918 | ||||||
15,914,464 | |||||||
Software - 1.5% | |||||||
ANSYS 1 | 31,000 | 2,703,200 | |||||
Blackbaud | 42,600 | 1,603,890 | |||||
4,307,090 | |||||||
Total (Cost $47,504,956) | 70,818,422 | ||||||
Materials – 8.8% | |||||||
Chemicals - 1.2% | |||||||
Innospec | 75,400 | 3,484,988 | |||||
Containers & Packaging - 1.2% | |||||||
Greif Cl. A | 67,800 | 3,552,720 | |||||
Metals & Mining - 6.4% | |||||||
Globe Specialty Metals | 194,900 | 3,510,149 | |||||
Haynes International | 77,133 | 4,260,827 | |||||
Major Drilling Group International | 317,000 | 2,294,874 | |||||
Randgold Resources ADR | 26,900 | 1,689,589 | |||||
Reliance Steel & Aluminum | 64,900 | 4,922,016 | |||||
Steel Dynamics | 129,200 | 2,524,568 | |||||
19,202,023 | |||||||
Total (Cost $19,620,277) | 26,239,731 | ||||||
Miscellaneous 5 – 4.6% | |||||||
Total (Cost $12,285,458) | 13,692,206 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $173,731,511) | 266,548,135 | ||||||
REPURCHASE AGREEMENT – 9.4% | |||||||
Fixed Income Clearing Corporation, | |||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||
maturity value $27,942,000 (collateralized | |||||||
by obligations of various U.S. Government | |||||||
Agencies, 0.52%-3.25% due 5/20/16-7/15/16, valued | |||||||
at $28,292,757) | |||||||
(Cost $27,942,000) | 27,942,000 | ||||||
COLLATERAL RECEIVED FOR SECURITIES | |||||||
LOANED – 0.9% | |||||||
Money Market Funds | |||||||
Federated Government Obligations Fund | |||||||
(7 day yield-0.0099%) | |||||||
(Cost $2,636,004) | 2,636,004 | ||||||
TOTAL INVESTMENTS – 100.0% | |||||||
(Cost $204,309,515) | 297,126,139 | ||||||
CASH AND OTHER ASSETS | |||||||
LESS LIABILITIES – 0.0% | 36,196 | ||||||
NET ASSETS – 100.0% | $ | 297,162,335 | |||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 79 |
Schedules of Investments |
Royce Dividend Value Fund |
SHARES | VALUE | ||||||
COMMON STOCKS – 91.8% | |||||||
Consumer Discretionary – 10.2% | |||||||
Auto Components - 0.5% | |||||||
Autoliv | 33,300 | $ | 3,056,940 | ||||
Automobiles - 0.2% | |||||||
Thor Industries | 27,040 | 1,493,419 | |||||
Diversified Consumer Services - 0.4% | |||||||
Benesse Holdings | 4,000 | 160,479 | |||||
Regis Corporation | 127,800 | 1,854,378 | |||||
Weight Watchers International 3 | 23,500 | 773,855 | |||||
2,788,712 | |||||||
Hotels, Restaurants & Leisure - 0.1% | |||||||
Abu Dhabi National Hotels | 642,000 | 541,846 | |||||
Household Durables - 0.7% | |||||||
Harman International Industries | 44,100 | 3,609,585 | |||||
Hunter Douglas | 27,600 | 1,249,190 | |||||
4,858,775 | |||||||
Media - 0.5% | |||||||
Pico Far East Holdings | 490,000 | 171,247 | |||||
Saga Communications Cl. A | 16,210 | 815,363 | |||||
Value Line | 169,000 | 1,962,090 | |||||
2,948,700 | |||||||
Specialty Retail - 5.4% | |||||||
American Eagle Outfitters | 314,000 | 4,521,600 | |||||
Ascena Retail Group 1 | 298,084 | 6,307,458 | |||||
Buckle (The) | 130,579 | 6,863,232 | |||||
Cato Corporation (The) Cl. A | 41,310 | 1,313,658 | |||||
Fielmann | 3,200 | 374,322 | |||||
GameStop Corporation Cl. A | 85,930 | 4,232,912 | |||||
40,400 | 2,951,624 | ||||||
Guess? | 90,500 | 2,811,835 | |||||
Lewis Group | 196,000 | 1,324,728 | |||||
Shoe Carnival | 53,544 | 1,553,311 | |||||
Signet Jewelers | 14,500 | 1,141,150 | |||||
Stein Mart | 60,239 | 810,215 | |||||
USS | 70,000 | 959,833 | |||||
35,165,878 | |||||||
Textiles, Apparel & Luxury Goods - 2.4% | |||||||
Barry (R.G.) | 16,469 | 317,852 | |||||
225,828 | 3,595,182 | ||||||
Pandora | 34,000 | 1,843,345 | |||||
Stella International Holdings | 604,000 | 1,539,151 | |||||
80,350 | 2,940,006 | ||||||
210,300 | 5,055,612 | ||||||
15,291,148 | |||||||
Total (Cost $55,692,862) | 66,145,418 | ||||||
Consumer Staples – 1.9% | |||||||
Food & Staples Retailing - 0.5% | |||||||
FamilyMart | 16,850 | 768,818 | |||||
Village Super Market Cl. A | 72,016 | 2,233,216 | |||||
3,002,034 | |||||||
Food Products - 1.1% | |||||||
Hormel Foods | 115,600 | 5,221,652 | |||||
Industrias Bachoco ADR | 6,100 | 245,647 | |||||
J&J Snack Foods | 10,300 | 912,477 | |||||
Lancaster Colony | 3,000 | 264,450 | |||||
Super Group | 283,400 | 853,378 | |||||
7,497,604 | |||||||
Personal Products - 0.3% | |||||||
Nu Skin Enterprises Cl. A | 15,745 | 2,176,274 | |||||
Total (Cost $7,807,726) | 12,675,912 | ||||||
Energy – 5.3% | |||||||
Energy Equipment & Services - 4.4% | |||||||
Ensco Cl. A | 66,600 | 3,808,188 | |||||
Ensign Energy Services | 25,300 | 398,465 | |||||
Helmerich & Payne | 80,000 | 6,726,400 | |||||
Oil States International 1 | 42,700 | 4,343,444 | |||||
TGS-NOPEC Geophysical | 19,200 | 509,020 | |||||
Tidewater | 76,500 | 4,534,155 | |||||
†Transocean | 168,400 | 8,322,328 | |||||
28,642,000 | |||||||
Oil, Gas & Consumable Fuels - 0.9% | |||||||
Cimarex Energy | 5,800 | 608,478 | |||||
†HollyFrontier Corporation | 97,000 | 4,819,930 | |||||
Natural Resource Partners L.P. | 37,500 | 747,750 | |||||
6,176,158 | |||||||
Total (Cost $27,810,030) | 34,818,158 | ||||||
Financials – 24.7% | |||||||
Capital Markets - 12.1% | |||||||
†Alaris Royalty | 33,000 | 927,945 | |||||
AllianceBernstein Holding L.P. | 155,100 | 3,309,834 | |||||
Apollo Global Management LLC Cl. A | 81,900 | 2,588,859 | |||||
ARA Asset Management | 1,388,200 | 2,046,081 | |||||
Ashmore Group | 464,250 | 3,085,093 | |||||
Close Brothers Group | 18,000 | 408,953 | |||||
Coronation Fund Managers | 518,000 | 3,948,454 | |||||
†Diamond Hill Investment Group | 32,500 | 3,846,050 | |||||
Egyptian Financial Group-Hermes Holding | |||||||
Company 1 | 159,000 | 198,620 | |||||
Federated Investors Cl. B | 290,400 | 8,363,520 | |||||
Gluskin Sheff + Associates | 32,200 | 779,044 | |||||
GMP Capital | 296,000 | 1,956,150 | |||||
Invesco | 79,600 | 2,897,440 | |||||
Investec | 88,500 | 641,310 | |||||
Jupiter Fund Management | 550,000 | 3,506,474 | |||||
KKR & Co. L.P. | 386,600 | 9,409,844 | |||||
Lazard Cl. A | 67,700 | 3,068,164 | |||||
†Oaktree Capital Group LLC Cl. A | 32,900 | 1,935,836 | |||||
Och-Ziff Capital Management Group LLC | |||||||
Cl. A | 108,100 | 1,599,880 | |||||
SEI Investments | 146,600 | 5,091,418 | |||||
Sprott | 735,700 | 1,814,577 | |||||
State Street | 71,500 | 5,247,385 | |||||
T. Rowe Price Group | 9,100 | 762,307 |
80 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | ||||||
Financials (continued) | |||||||
Capital Markets (continued) | |||||||
Value Partners Group | 4,597,000 | $ | 3,562,923 | ||||
VZ Holding | 8,300 | 1,548,254 | |||||
Waddell & Reed Financial Cl. A | 18,410 | 1,198,859 | |||||
Westwood Holdings Group | 78,473 | 4,858,263 | |||||
78,601,537 | |||||||
Commercial Banks - 1.8% | |||||||
Ames National | 30,039 | 672,573 | |||||
Bank of Hawaii | 70,700 | 4,181,198 | |||||
BLOM Bank GDR | 63,000 | 544,950 | |||||
BOK Financial | 30,400 | 2,016,128 | |||||
City Holding Company | 37,795 | 1,751,043 | |||||
First Republic Bank | 48,100 | 2,518,035 | |||||
11,683,927 | |||||||
Diversified Financial Services - 2.3% | |||||||
Bolsa Mexicana de Valores | 753,000 | 1,726,712 | |||||
Hellenic Exchanges | 158,000 | 1,738,884 | |||||
KKR Financial Holdings LLC | 228,350 | 2,783,587 | |||||
Moody’s Corporation | 76,600 | 6,010,802 | |||||
Singapore Exchange | 140,000 | 805,420 | |||||
Warsaw Stock Exchange | 135,400 | 1,859,982 | |||||
14,925,387 | |||||||
Insurance - 5.7% | |||||||
Allied World Assurance Company | |||||||
Holdings | 29,898 | 3,372,793 | |||||
Aspen Insurance Holdings | 19,624 | 810,667 | |||||
Cincinnati Financial | 46,700 | 2,445,679 | |||||
E-L Financial | 7,000 | 4,678,748 | |||||
Erie Indemnity Cl. A | 24,200 | 1,769,504 | |||||
Marsh & McLennan | 85,900 | 4,154,124 | |||||
Montpelier Re Holdings | 5,397 | 157,053 | |||||
PartnerRe | 40,306 | 4,249,462 | |||||
Reinsurance Group of America | 95,355 | 7,381,431 | |||||
†Symetra Financial | 181,100 | 3,433,656 | |||||
Willis Group Holdings | 110,700 | 4,960,467 | |||||
37,413,584 | |||||||
Real Estate Investment Trusts (REITs) - 1.3% | |||||||
†Columbia Property Trust | 209,995 | 5,249,875 | |||||
DCT Industrial Trust | 98,400 | 701,592 | |||||
Essex Property Trust | 8,000 | 1,148,080 | |||||
National Health Investors | 19,300 | 1,082,730 | |||||
8,182,277 | |||||||
Thrifts & Mortgage Finance - 1.5% | |||||||
Genworth MI Canada | 218,448 | 7,532,831 | |||||
TrustCo Bank Corp. NY | 298,460 | 2,142,943 | |||||
9,675,774 | |||||||
Total (Cost $115,001,994) | 160,482,486 | ||||||
Health Care – 4.7% | |||||||
Health Care Equipment & Supplies - 1.3% | |||||||
Atrion Corporation | 13,200 | 3,910,500 | |||||
Carl Zeiss Meditec | 2,200 | 73,288 | |||||
†DENTSPLY International | 92,500 | 4,484,400 | |||||
8,468,188 | |||||||
Health Care Providers & Services - 2.2% | |||||||
Chemed Corporation | 54,658 | 4,187,896 | |||||
Landauer | 53,000 | 2,788,330 | |||||
MEDNAX 1 | 35,600 | 1,900,328 | |||||
OdontoPrev | 38,400 | 159,996 | |||||
Owens & Minor | 150,800 | 5,513,248 | |||||
14,549,798 | |||||||
Life Sciences Tools & Services - 0.7% | |||||||
†Techne Corporation | 44,700 | 4,231,749 | |||||
Pharmaceuticals - 0.5% | |||||||
Adcock Ingram Holdings | 98,000 | 662,364 | |||||
Hikma Pharmaceuticals | 11,000 | 218,767 | |||||
Recordati | 93,000 | 1,338,253 | |||||
Santen Pharmaceutical | 18,100 | 843,040 | |||||
3,062,424 | |||||||
Total (Cost $25,153,166) | 30,312,159 | ||||||
Industrials – 18.3% | |||||||
Aerospace & Defense - 1.0% | |||||||
American Science & Engineering | 49,545 | 3,562,781 | |||||
Cubic Corporation | 24,916 | 1,312,076 | |||||
HEICO Corporation Cl. A | 36,132 | 1,521,880 | |||||
6,396,737 | |||||||
Air Freight & Logistics - 1.6% | |||||||
Expeditors International of | |||||||
Washington | 156,600 | 6,929,550 | |||||
Forward Air | 70,400 | 3,091,264 | |||||
UTi Worldwide | 16,700 | 293,252 | |||||
10,314,066 | |||||||
Building Products - 1.0% | |||||||
AAON | 92,525 | 2,956,174 | |||||
Geberit | 1,000 | 303,234 | |||||
Simpson Manufacturing | 57,600 | 2,115,648 | |||||
TOTO | 74,000 | 1,171,380 | |||||
6,546,436 | |||||||
Commercial Services & Supplies - 2.1% | |||||||
Brink’s Company (The) | 108,500 | 3,704,190 | |||||
†Cintas Corporation | 103,500 | 6,167,565 | |||||
Kaba Holding | 2,100 | 1,020,514 | |||||
Mine Safety Appliances | 35,000 | 1,792,350 | |||||
Ritchie Bros. Auctioneers | 9,000 | 206,370 | |||||
Societe BIC | 6,600 | 808,631 | |||||
13,699,620 | |||||||
Construction & Engineering - 0.5% | |||||||
KBR | 100,000 | 3,189,000 | |||||
Electrical Equipment - 1.9% | |||||||
AZZ | 64,100 | 3,131,926 | |||||
Brady Corporation Cl. A | 54,300 | 1,679,499 | |||||
Hubbell Cl. B | 45,700 | 4,976,730 | |||||
Regal-Beloit | 36,000 | 2,653,920 | |||||
12,442,075 | |||||||
Machinery - 7.3% | |||||||
Alamo Group | 28,282 | 1,716,435 | |||||
Burckhardt Compression Holding | 3,000 | 1,314,949 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 81 |
Schedules of Investments |
Royce Dividend Value Fund (continued) |
SHARES | VALUE | ||||||
Industrials (continued) | |||||||
Machinery (continued) | |||||||
CLARCOR | 75,200 | $ | 4,839,120 | ||||
Donaldson Company | 111,000 | 4,824,060 | |||||
Flowserve Corporation | 20,100 | 1,584,483 | |||||
Graco | 65,400 | 5,109,048 | |||||
IDEX Corporation | 44,500 | 3,286,325 | |||||
John Bean Technologies | 97,356 | 2,855,451 | |||||
Kennametal | 65,114 | 3,390,486 | |||||
Lincoln Electric Holdings | 30,050 | 2,143,767 | |||||
Lindsay Corporation | 32,800 | 2,714,200 | |||||
†Luxfer Holdings ADR | 199,714 | 4,166,034 | |||||
Miller Industries | 17,051 | 317,660 | |||||
Nordson Corporation | 15,400 | 1,144,220 | |||||
Pfeiffer Vacuum Technology | 13,500 | 1,837,322 | |||||
Spirax-Sarco Engineering | 35,148 | 1,740,280 | |||||
Tennant Company | 18,400 | 1,247,704 | |||||
Valmont Industries | 20,600 | 3,071,872 | |||||
47,303,416 | |||||||
Professional Services - 1.4% | |||||||
ManpowerGroup | 52,300 | 4,490,478 | |||||
Towers Watson & Co. Cl. A | 36,400 | 4,645,004 | |||||
9,135,482 | |||||||
Road & Rail - 0.6% | |||||||
Landstar System | 66,300 | 3,808,935 | |||||
Trading Companies & Distributors - 0.9% | |||||||
Applied Industrial Technologies | 123,290 | 6,052,306 | |||||
Total (Cost $78,043,491) | 118,888,073 | ||||||
Information Technology – 9.1% | |||||||
Communications Equipment - 0.4% | |||||||
Plantronics | 58,708 | 2,726,987 | |||||
Computers & Peripherals - 0.3% | |||||||
Diebold | 48,800 | 1,610,888 | |||||
Electronic Equipment, Instruments & Components - 4.6% | |||||||
Amphenol Corporation Cl. A | 47,100 | 4,200,378 | |||||
AVX Corporation | 142,300 | 1,982,239 | |||||
Cognex Corporation 1 | 20,000 | 763,600 | |||||
Domino Printing Sciences | 115,000 | 1,456,822 | |||||
FLIR Systems | 142,900 | 4,301,290 | |||||
Littelfuse | 33,958 | 3,155,717 | |||||
MTS Systems | 50,293 | 3,583,376 | |||||
National Instruments | 130,900 | 4,191,418 | |||||
Vaisala Cl. A | 48,000 | 1,532,639 | |||||
379,000 | 5,025,540 | ||||||
30,193,019 | |||||||
IT Services - 2.5% | |||||||
†Broadridge Financial Solutions | 99,100 | 3,916,432 | |||||
Convergys Corporation | 182,315 | 3,837,731 | |||||
Jack Henry & Associates | 32,300 | 1,912,483 | |||||
ManTech International Cl. A | 79,536 | 2,380,512 | |||||
†Western Union | 241,900 | 4,172,775 | |||||
16,219,933 | |||||||
Semiconductors & Semiconductor Equipment - 0.2% | |||||||
MKS Instruments | 30,000 | 898,200 | |||||
Teradyne 1 | 20,000 | 352,400 | |||||
1,250,600 | |||||||
Software - 1.1% | |||||||
†SimCorp | 87,000 | 3,425,292 | |||||
†Totvs | 243,500 | 3,814,670 | |||||
7,239,962 | |||||||
Total (Cost $45,827,189) | 59,241,389 | ||||||
Materials – 12.1% | |||||||
Chemicals - 3.0% | |||||||
Balchem Corporation | 50,150 | 2,943,805 | |||||
Cabot Corporation | 98,393 | 5,057,400 | |||||
International Flavors & Fragrances | 27,100 | 2,330,058 | |||||
Quaker Chemical | 57,600 | 4,439,232 | |||||
Stepan Company | 60,600 | 3,977,178 | |||||
Victrex | 7,500 | 228,149 | |||||
Westlake Chemical | 4,300 | 524,901 | |||||
19,500,723 | |||||||
Containers & Packaging - 1.5% | |||||||
AptarGroup | 86,200 | 5,845,222 | |||||
Greif Cl. A | 68,600 | 3,594,640 | |||||
9,439,862 | |||||||
Metals & Mining - 7.6% | |||||||
†Agnico Eagle Mines | 195,000 | 5,144,100 | |||||
Allegheny Technologies | 134,200 | 4,781,546 | |||||
Carpenter Technology | 59,000 | 3,669,800 | |||||
Commercial Metals | 18,700 | 380,171 | |||||
Compass Minerals International | 37,600 | 3,009,880 | |||||
Fresnillo | 254,000 | 3,135,657 | |||||
Hecla Mining | 270,000 | 831,600 | |||||
†Major Drilling Group International | 409,400 | 2,963,790 | |||||
Pan American Silver | 284,000 | 3,322,800 | |||||
Randgold Resources ADR | 75,300 | 4,729,593 | |||||
Reliance Steel & Aluminum | 123,406 | 9,359,111 | |||||
Schnitzer Steel Industries Cl. A | 32,600 | 1,065,042 | |||||
240,000 | 2,313,600 | ||||||
Steel Dynamics | 21,000 | 410,340 | |||||
Worthington Industries | 103,800 | 4,367,904 | |||||
49,484,934 | |||||||
Total (Cost $70,013,200) | 78,425,519 | ||||||
Telecommunication Services – 0.9% | |||||||
Diversified Telecommunication Services - 0.5% | |||||||
†Inmarsat | 265,000 | 3,317,530 | |||||
Wireless Telecommunication Services - 0.4% | |||||||
†Telephone and Data Systems | 109,200 | 2,815,176 | |||||
Total (Cost $5,448,785) | 6,132,706 | ||||||
Miscellaneous 5 – 4.6% | |||||||
Total (Cost $26,201,966) | 30,043,469 | ||||||
82 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
VALUE | |||||||
TOTAL COMMON STOCKS | |||||||
(Cost $457,000,409) | $ | 597,165,289 | |||||
REPURCHASE AGREEMENT – 7.0% | |||||||
Fixed Income Clearing Corporation, | |||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||
maturity value $45,730,000 (collateralized | |||||||
by obligations of various U.S. Government | |||||||
Agencies, 0.50%-2.00% due 4/29/16-4/30/16, valued | |||||||
at $46,646,917) | |||||||
(Cost $45,730,000) | 45,730,000 | ||||||
COLLATERAL RECEIVED FOR SECURITIES | |||||||
LOANED – 0.5% | |||||||
Money Market Funds | |||||||
Federated Government Obligations Fund | |||||||
(7 day yield-0.0099%) | |||||||
(Cost $3,073,773) | 3,073,773 | ||||||
TOTAL INVESTMENTS – 99.3% | |||||||
(Cost $505,804,182) | 645,969,062 | ||||||
CASH AND OTHER ASSETS | |||||||
LESS LIABILITIES – 0.7% | 4,454,809 | ||||||
NET ASSETS – 100.0% | $ | 650,423,871 | |||||
Royce Global Value Fund | |||||||
SHARES | VALUE | ||||||
COMMON STOCKS – 97.3% | |||||||
Austria – 7.4% | |||||||
Mayr-Melnhof Karton | 69,500 | $ | 8,604,999 | ||||
Semperit AG Holding | 174,000 | 8,616,184 | |||||
Total (Cost $17,900,686) | 17,221,183 | ||||||
Belgium – 1.9% | |||||||
Sipef | 55,500 | 4,405,471 | |||||
Total (Cost $5,382,630) | 4,405,471 | ||||||
Bermuda – 2.0% | |||||||
†Signet Jewelers | 60,000 | 4,722,000 | |||||
Total (Cost $4,120,534) | 4,722,000 | ||||||
Brazil – 3.7% | |||||||
Brasil Brokers Participacoes | 1,700,000 | 4,215,323 | |||||
†CETIP - Mercados Organizados | 150,000 | 1,538,624 | |||||
Eternit | 800,000 | 2,963,654 | |||||
Total (Cost $10,327,522) | 8,717,601 | ||||||
Canada – 9.2% | |||||||
†Alamos Gold | 145,000 | 1,756,790 | |||||
Major Drilling Group International | 464,500 | 3,362,678 | |||||
Pan American Silver | 330,000 | 3,861,000 | |||||
Pason Systems | 220,500 | 4,770,148 | |||||
Sprott | 1,450,000 | 3,576,371 | |||||
Trican Well Service | 345,000 | 4,215,674 | |||||
Total (Cost $37,325,318) | 21,542,661 | ||||||
Chile – 0.5% | |||||||
†Inversiones La Construccion | 85,000 | 1,197,069 | |||||
Total (Cost $1,165,552) | 1,197,069 | ||||||
China – 2.0% | |||||||
Daphne International Holdings 3 | 5,500,000 | 2,475,401 | |||||
E-House (China) Holdings ADR | 140,000 | 2,111,200 | |||||
Total (Cost $6,534,402) | 4,586,601 | ||||||
Denmark – 0.6% | |||||||
SimCorp | 35,000 | 1,377,991 | |||||
Total (Cost $572,663) | 1,377,991 | ||||||
France – 4.1% | |||||||
Alten | 62,000 | 2,814,681 | |||||
Societe Internationale de Plantations | |||||||
d’Heveas | 48,000 | 3,374,315 | |||||
†Stallergenes | 45,800 | 3,418,132 | |||||
Total (Cost $10,203,658) | 9,607,128 | ||||||
Germany – 1.0% | |||||||
Carl Zeiss Meditec | 32,500 | 1,082,658 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 83 |
Schedules of Investments |
Royce Global Value Fund (continued) |
SHARES | VALUE | ||||||
Germany (continued) | |||||||
Pfeiffer Vacuum Technology | 9,500 | $ | 1,292,931 | ||||
Total (Cost $1,821,290) | 2,375,589 | ||||||
Hong Kong – 7.1% | |||||||
Luk Fook Holdings (International) | 1,450,000 | 5,516,294 | |||||
†New World Department Store China | 6,750,000 | 3,795,314 | |||||
†Television Broadcasts | 450,000 | 3,000,271 | |||||
Value Partners Group | 5,500,000 | 4,262,796 | |||||
Total (Cost $14,925,756) | 16,574,675 | ||||||
India – 2.6% | |||||||
Graphite India | 2,300,000 | 2,974,699 | |||||
Maharashtra Seamless | 1,200,000 | 3,184,544 | |||||
Total (Cost $12,104,877) | 6,159,243 | ||||||
Italy – 2.0% | |||||||
Recordati | 320,000 | 4,604,741 | |||||
Total (Cost $2,322,097) | 4,604,741 | ||||||
Japan – 11.4% | |||||||
Benesse Holdings | 83,200 | 3,337,954 | |||||
†C. Uyemura & Co. | 32,500 | 1,419,618 | |||||
EPS Corporation | 3,700 | 4,848,542 | |||||
FamilyMart | 76,250 | 3,479,074 | |||||
†Miraial | 90,000 | 1,345,171 | |||||
MISUMI Group | 37,900 | 1,189,436 | |||||
Moshi Moshi Hotline | 350,000 | 3,745,608 | |||||
Nihon M&A Center | 16,000 | 1,077,201 | |||||
Santen Pharmaceutical | 40,000 | 1,863,071 | |||||
USS | 220,000 | 3,016,618 | |||||
†Zuiko Corporation | 23,000 | 1,384,674 | |||||
Total (Cost $23,394,762) | 26,706,967 | ||||||
Jersey – 0.9% | |||||||
Randgold Resources ADR | 34,200 | 2,148,102 | |||||
Total (Cost $2,450,135) | 2,148,102 | ||||||
Malaysia – 0.8% | |||||||
†Silverlake Axis | 2,500,000 | 1,743,334 | |||||
Total (Cost $1,683,911) | 1,743,334 | ||||||
Mexico – 1.7% | |||||||
†Industrias Bachoco ADR | 97,500 | 3,926,325 | |||||
Total (Cost $2,009,701) | 3,926,325 | ||||||
Norway – 2.7% | |||||||
†Spectrum | 430,600 | 2,626,779 | |||||
TGS-NOPEC Geophysical | 140,000 | 3,711,605 | |||||
Total (Cost $6,377,865) | 6,338,384 | ||||||
South Africa – 2.6% | |||||||
Lewis Group | 500,000 | 3,379,409 | |||||
Raubex Group | 1,280,000 | 2,653,956 | |||||
Total (Cost $8,719,250) | 6,033,365 | ||||||
Sweden – 1.2% | |||||||
Autoliv | 30,000 | 2,754,000 | |||||
Total (Cost $2,036,380) | 2,754,000 | ||||||
Switzerland – 2.5% | |||||||
†Garmin | 97,500 | 4,506,450 | |||||
Partners Group Holding | 4,700 | 1,253,439 | |||||
Total (Cost $4,006,713) | 5,759,889 | ||||||
Turkey – 1.1% | |||||||
Mardin Cimento Sanayii | 1,325,000 | 2,626,570 | |||||
Total (Cost $5,520,760) | 2,626,570 | ||||||
United Kingdom – 6.9% | |||||||
Ashmore Group | 1,000,000 | 6,645,327 | |||||
†Clarkson | 61,680 | 2,043,801 | |||||
Hochschild Mining | 925,000 | 2,163,602 | |||||
Jupiter Fund Management | 617,500 | 3,936,814 | |||||
Spirax-Sarco Engineering | 25,000 | 1,237,823 | |||||
Total (Cost $16,070,120) | 16,027,367 | ||||||
United States – 21.4% | |||||||
191,000 | 3,902,130 | ||||||
†Cubic Corporation | 35,000 | 1,843,100 | |||||
Helmerich & Payne | 102,500 | 8,618,200 | |||||
Kennametal | 60,000 | 3,124,200 | |||||
Kennedy-Wilson Holdings | 219,600 | 4,886,100 | |||||
Lincoln Electric Holdings | 15,000 | 1,070,100 | |||||
†Lindsay Corporation | 41,000 | 3,392,750 | |||||
72,500 | 2,799,950 | ||||||
250,000 | 5,245,000 | ||||||
Teradyne 1 | 210,000 | 3,700,200 | |||||
†Valmont Industries | 14,800 | 2,206,976 | |||||
Western Digital | 110,000 | 9,229,000 | |||||
Total (Cost $39,225,777) | 50,017,706 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $236,202,359) | 227,173,962 | ||||||
REPURCHASE AGREEMENT – 2.3% | |||||||
Fixed Income Clearing Corporation, | |||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||
maturity value $5,262,000 (collateralized | |||||||
by obligations of various U.S. Government | |||||||
Agencies, 1.00% due 5/31/18, valued at $5,368,444) | |||||||
(Cost $5,262,000) | 5,262,000 | ||||||
84 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
PRINCIPAL | |||||||
AMOUNT | VALUE | ||||||
COLLATERAL RECEIVED FOR SECURITIES | |||||||
LOANED – 3.5% | |||||||
U.S. Treasury Bonds | |||||||
2.75%-4.375% | |||||||
due 2/15/38-5/15/43 | $ | 322,456 | $ | 328,849 | |||
U.S. Treasury Notes | |||||||
0.625%-2.625% | |||||||
due 6/30/14-4/30/20 | 16,785 | 16,790 | |||||
Money Market Funds | |||||||
Federated Government Obligations Fund | |||||||
(7 day yield-0.0099%) | 7,934,105 | ||||||
TOTAL COLLATERAL RECEIVED FOR | |||||||
SECURITIES LOANED | |||||||
(Cost $8,279,744) | 8,279,744 | ||||||
TOTAL INVESTMENTS – 103.1% | |||||||
(Cost $249,744,103) | 240,715,706 | ||||||
LIABILITIES LESS CASH | |||||||
AND OTHER ASSETS – (3.1)% | (7,298,375 | ) | |||||
NET ASSETS – 100.0% | $ | 233,417,331 | |||||
Royce International Smaller-Companies Fund | |||||||
SHARES | VALUE | ||||||
COMMON STOCKS – 94.3% | |||||||
Austria – 2.8% | |||||||
Mayr-Melnhof Karton | 4,400 | $ | 544,777 | ||||
Semperit AG Holding | 10,500 | 519,942 | |||||
Total (Cost $891,494) | 1,064,719 | ||||||
Belgium – 2.7% | |||||||
EVS Broadcast Equipment | 4,500 | 290,899 | |||||
Sipef | 5,200 | 412,765 | |||||
Van de Velde | 6,500 | 325,490 | |||||
Total (Cost $918,438) | 1,029,154 | ||||||
Brazil – 3.0% | |||||||
Brasil Brokers Participacoes | 135,000 | 334,746 | |||||
†CETIP - Mercados Organizados | 30,000 | 307,725 | |||||
Eternit | 76,900 | 284,881 | |||||
Fleury | 27,000 | 210,576 | |||||
Total (Cost $1,374,023) | 1,137,928 | ||||||
Canada – 1.1% | |||||||
Major Drilling Group International | 33,500 | 242,518 | |||||
Sprott | 80,000 | 197,317 | |||||
Total (Cost $498,382) | 439,835 | ||||||
Chile – 1.3% | |||||||
†Inversiones La Construccion | 34,000 | 478,828 | |||||
Total (Cost $462,298) | 478,828 | ||||||
China – 2.2% | |||||||
ANTA Sports Products | 135,600 | 168,226 | |||||
Daphne International Holdings | 600,000 | 270,044 | |||||
Pacific Online | 837,800 | 400,840 | |||||
Total (Cost $920,279) | 839,110 | ||||||
Cyprus – 1.0% | |||||||
Globaltrans Investment GDR | 25,000 | 397,500 | |||||
Total (Cost $357,243) | 397,500 | ||||||
Finland – 0.9% | |||||||
†F-Secure | 130,000 | 334,432 | |||||
Total (Cost $337,750) | 334,432 | ||||||
France – 9.3% | |||||||
Altamir | 21,600 | 306,660 | |||||
Alten | 6,000 | 272,388 | |||||
Audika Groupe 1 | 23,600 | 345,444 | |||||
Boiron | 5,000 | 352,454 | |||||
Manutan International | 5,810 | 365,831 | |||||
Parrot 1 | 11,800 | 321,418 | |||||
Societe Internationale de Plantations | |||||||
d’Heveas | 4,900 | 344,461 | |||||
†Stallergenes | 5,800 | 432,864 | |||||
Vetoquinol | 10,500 | 443,457 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 85 |
Schedules of Investments |
Royce International Smaller-Companies Fund (continued) |
SHARES | VALUE | ||||||
France (continued) | |||||||
Virbac | 1,600 | $ | 341,834 | ||||
Total (Cost $2,974,833) | 3,526,811 | ||||||
Germany – 4.3% | |||||||
†Bertrandt | 2,300 | 351,216 | |||||
Carl Zeiss Meditec | 8,100 | 269,832 | |||||
KWS Saat | 1,245 | 428,186 | |||||
†LPKF Laser & Electronics | 10,000 | 255,605 | |||||
PUMA | 1,000 | 323,289 | |||||
Total (Cost $1,258,708) | 1,628,128 | ||||||
Hong Kong – 10.4% | |||||||
†I.T | 983,000 | 253,537 | |||||
Luk Fook Holdings (International) | 75,000 | 285,325 | |||||
Media Chinese International | 900,000 | 267,898 | |||||
Midland Holdings | 1,000,000 | 482,313 | |||||
New World Department Store China | 835,000 | 469,494 | |||||
Pacific Textiles Holdings | 175,800 | 267,975 | |||||
Pico Far East Holdings | 1,360,000 | 475,298 | |||||
Stella International Holdings | 157,500 | 401,351 | |||||
Television Broadcasts | 59,100 | 394,036 | |||||
Value Partners Group | 450,000 | 348,774 | |||||
Xtep International Holdings | 575,000 | 296,610 | |||||
Total (Cost $3,657,127) | 3,942,611 | ||||||
India – 5.1% | |||||||
AIA Engineering | 42,500 | 328,498 | |||||
†FAG Bearings India | 11,800 | 308,301 | |||||
Graphite India | 200,000 | 258,670 | |||||
23,000 | 270,140 | ||||||
Maharashtra Seamless | 90,000 | 238,841 | |||||
†Shriram Transport Finance | 25,000 | 270,835 | |||||
†Thomas Cook (India) | 195,000 | 265,128 | |||||
Total (Cost $2,022,176) | 1,940,413 | ||||||
Indonesia – 0.7% | |||||||
Selamat Sempurna | 900,000 | 255,136 | |||||
Total (Cost $258,241) | 255,136 | ||||||
Italy – 3.4% | |||||||
†De’Longhi | 28,500 | 465,392 | |||||
DiaSorin | 7,500 | 351,732 | |||||
Recordati | 32,500 | 467,669 | |||||
Total (Cost $894,850) | 1,284,793 | ||||||
Japan – 12.7% | |||||||
†Asahi Company | 17,500 | 243,946 | |||||
Benesse Holdings | 10,000 | 401,196 | |||||
BML | 8,200 | 277,201 | |||||
C. Uyemura & Co. | 7,500 | 327,604 | |||||
Dr.Ci:Labo | 94 | 286,972 | |||||
EPS Corporation | 400 | 524,167 | |||||
FamilyMart | 9,500 | 433,458 | |||||
Hogy Medical | 5,000 | 263,033 | |||||
Milbon | 6,400 | 250,385 | |||||
Miraial | 22,000 | 328,820 | |||||
MISUMI Group | 10,000 | 313,835 | |||||
Moshi Moshi Hotline | 32,500 | 347,807 | |||||
Santen Pharmaceutical | 8,000 | 372,614 | |||||
USS | 17,500 | 239,958 | |||||
†Zuiko Corporation | 4,000 | 240,813 | |||||
Total (Cost $4,340,142) | 4,851,809 | ||||||
Jersey – 0.7% | |||||||
Randgold Resources ADR | 4,300 | 270,083 | |||||
Total (Cost $297,682) | 270,083 | ||||||
Malaysia – 3.0% | |||||||
†CB Industrial Product Holding | 315,000 | 308,701 | |||||
†Media Prima | 350,000 | 279,957 | |||||
Padini Holdings | 523,000 | 289,003 | |||||
26,800 | 260,730 | ||||||
Total (Cost $951,898) | 1,138,391 | ||||||
Mexico – 1.5% | |||||||
Grupo SIMEC Ser. B 1 | 69,000 | 287,489 | |||||
Industrias Bachoco ADR | 7,000 | 281,890 | |||||
Total (Cost $382,664) | 569,379 | ||||||
Netherlands – 0.6% | |||||||
†Beter Bed Holding | 10,000 | 242,192 | |||||
Total (Cost $177,529) | 242,192 | ||||||
Norway – 2.5% | |||||||
Ekornes | 22,500 | 305,117 | |||||
†Spectrum | 48,400 | 295,253 | |||||
TGS-NOPEC Geophysical | 13,700 | 363,207 | |||||
Total (Cost $1,031,671) | 963,577 | ||||||
Singapore – 1.8% | |||||||
ARA Asset Management | 192,000 | 282,991 | |||||
Biosensors International Group | 375,400 | 248,392 | |||||
†CSE Global | 245,000 | 148,520 | |||||
Total (Cost $680,060) | 679,903 | ||||||
South Africa – 3.5% | |||||||
†Blue Label Telecoms | 440,000 | 356,530 | |||||
325,000 | 172,259 | ||||||
†Foschini Group | 20,000 | 182,555 | |||||
Lewis Group | 54,000 | 364,976 | |||||
Raubex Group | 120,000 | 248,809 | |||||
Total (Cost $1,508,259) | 1,325,129 | ||||||
86 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | ||||||
South Korea – 0.8% | |||||||
Handsome | 10,700 | $ | 319,880 | ||||
Total (Cost $281,701) | 319,880 | ||||||
Sweden – 1.0% | |||||||
Lundin Petroleum 1 | 19,200 | 374,337 | |||||
Total (Cost $315,543) | 374,337 | ||||||
Switzerland – 4.3% | |||||||
†Forbo Holding | 500 | 427,106 | |||||
Kaba Holding | 880 | 427,644 | |||||
VZ Holding | 2,000 | 373,073 | |||||
Zehnder Group | 9,000 | 413,654 | |||||
Total (Cost $1,277,049) | 1,641,477 | ||||||
Turkey – 1.2% | |||||||
Koza Altin Isletmeleri | 17,500 | 180,782 | |||||
Mardin Cimento Sanayii | 138,550 | 274,650 | |||||
Total (Cost $743,385) | 455,432 | ||||||
United Kingdom – 12.5% | |||||||
Ashmore Group | 60,000 | 398,720 | |||||
†Consort Medical | 32,000 | 507,118 | |||||
Domino Printing Sciences | 27,500 | 348,371 | |||||
†E2V Technologies | 195,000 | 484,365 | |||||
†Elementis | 70,000 | 311,699 | |||||
EnQuest 1 | 150,000 | 334,336 | |||||
Hochschild Mining | 90,000 | 210,513 | |||||
Homeserve | 100,000 | 455,883 | |||||
Jupiter Fund Management | 35,000 | 223,139 | |||||
†Lancashire Holdings | 14,000 | 188,017 | |||||
Oxford Instruments | 11,000 | 321,867 | |||||
†Savills | 17,500 | 187,205 | |||||
Spirax-Sarco Engineering | 3,850 | 190,625 | |||||
Spirent Communications | 185,000 | 317,992 | |||||
Victrex | 9,500 | 288,988 | |||||
Total (Cost $3,974,858) | 4,768,838 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $32,788,283) | 35,899,825 | ||||||
REPURCHASE AGREEMENT – 3.9% | |||||||
Fixed Income Clearing Corporation, | |||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||
maturity value $1,469,000 (collateralized | |||||||
by obligations of various U.S. Government | |||||||
Agencies, 0.52% due 5/20/16, valued at $1,503,119) | |||||||
(Cost $1,469,000) | 1,469,000 | ||||||
TOTAL INVESTMENTS – 98.2% | |||||||
(Cost $34,257,283) | $ | 37,368,825 | |||||
CASH AND OTHER ASSETS | |||||||
LESS LIABILITIES – 1.8% | 690,308 | ||||||
NET ASSETS – 100.0% | $ | 38,059,133 | |||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 87 |
Schedules of Investments |
Royce Special Equity Multi-Cap Fund |
SHARES | VALUE | ||||||
COMMON STOCKS – 94.6% | |||||||
Consumer Discretionary – 27.1% | |||||||
Auto Components - 3.4% | |||||||
†Lear Corporation | 79,500 | $ | 6,437,115 | ||||
Distributors - 2.9% | |||||||
Genuine Parts | 67,000 | 5,573,730 | |||||
Media - 1.5% | |||||||
Scripps Networks Interactive Cl. A | 32,000 | 2,765,120 | |||||
Multiline Retail - 5.0% | |||||||
Nordstrom | 153,500 | 9,486,300 | |||||
Specialty Retail - 12.7% | |||||||
Bed Bath & Beyond 1 | 110,500 | 8,873,150 | |||||
Gap (The) | 207,500 | 8,109,100 | |||||
Staples | 439,000 | 6,975,710 | |||||
23,957,960 | |||||||
Textiles, Apparel & Luxury Goods - 1.6% | |||||||
†Coach | 52,500 | 2,946,825 | |||||
Total (Cost $41,709,123) | 51,167,050 | ||||||
Energy – 8.0% | |||||||
Energy Equipment & Services - 3.4% | |||||||
†Helmerich & Payne | 75,500 | 6,348,040 | |||||
Oil, Gas & Consumable Fuels - 4.6% | |||||||
Occidental Petroleum | 91,000 | 8,654,100 | |||||
Total (Cost $13,805,949) | 15,002,140 | ||||||
Financials – 3.7% | |||||||
Capital Markets - 3.7% | |||||||
†Franklin Resources | 121,500 | 7,014,195 | |||||
Total (Cost $5,911,748) | 7,014,195 | ||||||
Health Care – 13.6% | |||||||
Health Care Equipment & Supplies - 9.5% | |||||||
C.R. Bard | 42,000 | 5,625,480 | |||||
Medtronic | 101,500 | 5,825,085 | |||||
Stryker Corporation | 85,500 | 6,424,470 | |||||
17,875,035 | |||||||
Health Care Providers & Services - 3.7% | |||||||
Quest Diagnostics | 130,500 | 6,986,970 | |||||
Pharmaceuticals - 0.4% | |||||||
Johnson & Johnson | 8,500 | 778,515 | |||||
Total (Cost $21,258,805) | 25,640,520 | ||||||
Industrials – 22.7% | |||||||
Aerospace & Defense - 2.2% | |||||||
Raytheon Company | 46,000 | 4,172,200 | |||||
Construction & Engineering - 1.0% | |||||||
†Fluor Corporation | 22,900 | 1,838,641 | |||||
Electrical Equipment - 5.2% | |||||||
Emerson Electric | 141,000 | 9,895,380 | |||||
Industrial Conglomerates - 2.3% | |||||||
3M | 30,500 | 4,277,625 | |||||
Machinery - 12.0% | |||||||
Cummins | 11,500 | 1,621,155 | |||||
Dover Corporation | 75,000 | 7,240,500 | |||||
Illinois Tool Works | 68,500 | 5,759,480 | |||||
Parker Hannifin | 62,500 | 8,040,000 | |||||
22,661,135 | |||||||
Total (Cost $29,248,351) | 42,844,981 | ||||||
Information Technology – 19.5% | |||||||
Communications Equipment - 4.3% | |||||||
Cisco Systems | 358,000 | 8,037,100 | |||||
Electronic Equipment, Instruments & Components - 1.1% | |||||||
Avnet | 49,500 | 2,183,445 | |||||
Semiconductors & Semiconductor Equipment - 9.0% | |||||||
Analog Devices | 82,500 | 4,201,725 | |||||
Intel Corporation | 155,000 | 4,023,800 | |||||
KLA-Tencor | 135,000 | 8,702,100 | |||||
16,927,625 | |||||||
Software - 5.1% | |||||||
Microsoft Corporation | 260,000 | 9,731,800 | |||||
Total (Cost $30,196,015) | 36,879,970 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $142,129,991) | 178,548,856 | ||||||
REPURCHASE AGREEMENT – 5.7% | |||||||
Fixed Income Clearing Corporation, | |||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||
maturity value $10,697,000 (collateralized | |||||||
by obligations of various U.S. Government | |||||||
Agencies, 3.25% due 6/30/16, valued at | |||||||
$10,748,766) | |||||||
(Cost $10,697,000) | 10,697,000 | ||||||
TOTAL INVESTMENTS – 100.3% | |||||||
(Cost $152,826,991) | 189,245,856 | ||||||
LIABILITIES LESS CASH | |||||||
AND OTHER ASSETS – (0.3)% | (562,794 | ) | |||||
NET ASSETS – 100.0% | $ | 188,683,062 | |||||
88 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 89 |
Statements of Assets and Liabilities |
Royce | Royce | Royce | Royce | |||||||||||||||||
Pennsylvania | Micro-Cap | Premier | Low-Priced | |||||||||||||||||
Mutual Fund | Fund | Fund | Stock Fund | |||||||||||||||||
ASSETS: | ||||||||||||||||||||
Investments at value (including collateral on loaned securities) | ||||||||||||||||||||
Non-Affiliated Companies | $ | 7,112,408,125 | $ | 827,109,881 | $ | 5,089,677,713 | $ | 1,491,230,709 | ||||||||||||
Affiliated Companies | 135,327,209 | 12,564,194 | 1,965,946,500 | 65,022,667 | ||||||||||||||||
Repurchase agreements (at cost and value) | 165,200,000 | 41,674,000 | 260,913,000 | 117,585,000 | ||||||||||||||||
Cash and foreign currency | 1,714 | 66,056 | 161 | 419,901 | ||||||||||||||||
Receivable for investments sold | 29,025,534 | 9,822,457 | 1,916,967 | 43,272,455 | ||||||||||||||||
Receivable for capital shares sold | 6,407,542 | 421,790 | 39,260,984 | 911,483 | ||||||||||||||||
Receivable for dividends and interest | 7,808,014 | 1,398,370 | 11,869,357 | 1,825,447 | ||||||||||||||||
Prepaid expenses and other assets | 2,027,293 | 2,489 | 20,355 | 6,138 | ||||||||||||||||
Total Assets | 7,458,205,431 | 893,059,237 | 7,369,605,037 | 1,720,273,800 | ||||||||||||||||
LIABILITIES: | ||||||||||||||||||||
Payable for collateral on loaned securities | 128,286,444 | 26,212,865 | 232,758,018 | 123,342,925 | ||||||||||||||||
Payable for investments purchased | 17,468,176 | 15,500,642 | 1,201,809 | 2,315,867 | ||||||||||||||||
Payable for capital shares redeemed | 16,866,894 | 1,539,655 | 60,867,708 | 141,967,870 | ||||||||||||||||
Payable for investment advisory fees | 4,559,008 | 929,440 | 5,550,165 | 1,562,112 | ||||||||||||||||
Accrued expenses | 4,165,225 | 675,840 | 3,813,150 | 1,355,660 | ||||||||||||||||
Total Liabilities | 171,345,747 | 44,858,442 | 304,190,850 | 270,544,434 | ||||||||||||||||
Net Assets | $ | 7,286,859,684 | $ | 848,200,795 | $ | 7,065,414,187 | $ | 1,449,729,366 | ||||||||||||
ANALYSIS OF NET ASSETS: | ||||||||||||||||||||
Paid-in capital | $ | 4,445,490,013 | $ | 637,539,813 | $ | 4,167,181,330 | $ | 1,100,074,879 | ||||||||||||
Undistributed net investment income (loss) | (1,998,921 | ) | (3,027,856 | ) | (2 | ) | (3,745,157 | ) | ||||||||||||
Accumulated net realized gain (loss) on investments and | ||||||||||||||||||||
foreign currency | 110,172,865 | 8,321,931 | 163,245,321 | 16,559,150 | ||||||||||||||||
Net unrealized appreciation (depreciation) on investments and | ||||||||||||||||||||
foreign currency | 2,733,195,727 | 205,366,907 | 2,734,987,538 | 336,840,494 | ||||||||||||||||
Net Assets | $ | 7,286,859,684 | $ | 848,200,795 | $ | 7,065,414,187 | $ | 1,449,729,366 | ||||||||||||
Investment Class | $ | 5,033,317,904 | $ | 650,772,497 | $ | 5,096,792,378 | $ | 88,568,414 | ||||||||||||
Service Class | 591,534,207 | 79,890,185 | 318,859,891 | 1,008,207,335 | ||||||||||||||||
Consultant Class | 788,017,107 | 117,538,113 | 66,712,377 | |||||||||||||||||
Institutional Class | 818,211,644 | 989,100,230 | 345,982,786 | |||||||||||||||||
W Class | 552,731,910 | |||||||||||||||||||
R Class | 44,094,364 | 32,577,069 | 3,129,925 | |||||||||||||||||
K Class | 11,684,458 | 8,640,332 | 3,840,906 | |||||||||||||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | ||||||||||||||||||||
Investment Class | 341,720,332 | 39,017,226 | 230,477,487 | 6,513,213 | ||||||||||||||||
Service Class | 40,263,851 | 4,848,305 | 14,694,417 | 74,036,075 | ||||||||||||||||
Consultant Class | 60,826,122 | 8,117,880 | 3,407,763 | |||||||||||||||||
Institutional Class | 55,457,772 | 44,332,615 | 25,427,865 | |||||||||||||||||
W Class | 24,946,659 | |||||||||||||||||||
R Class | 3,092,069 | 1,532,966 | 235,789 | |||||||||||||||||
K Class | 896,381 | 1,074,034 | 557,328 | |||||||||||||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | ||||||||||||||||||||
Investment Class1 | $14.73 | $16.68 | $22.11 | $13.60 | ||||||||||||||||
Service Class1 | 14.69 | 16.48 | 21.70 | 13.62 | ||||||||||||||||
Consultant Class2 | 12.96 | 14.48 | 19.58 | |||||||||||||||||
Institutional Class3 | 14.75 | 22.31 | 13.61 | |||||||||||||||||
W Class3 | 22.16 | |||||||||||||||||||
R Class3 | 14.26 | 21.25 | 13.27 | |||||||||||||||||
K Class3 | 13.04 | 8.04 | 6.89 | |||||||||||||||||
Investments at identified cost | $ | 4,514,536,820 | $ | 634,314,496 | $ | 4,320,691,393 | $ | 1,219,410,269 | ||||||||||||
Market value of loaned securities | 125,823,716 | 25,407,315 | 227,903,266 | 120,750,889 |
90 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
Royce | Royce | Royce | Royce | |||||||||||||||||
Total Return | Heritage | Opportunity | Special Equity | |||||||||||||||||
Fund | Fund | Fund | Fund | |||||||||||||||||
ASSETS: | ||||||||||||||||||||
Investments at value (including collateral on loaned securities) | ||||||||||||||||||||
Non-Affiliated Companies | $ | 5,263,245,171 | $ | 328,826,762 | $ | 2,441,404,935 | $ | 1,431,642,079 | ||||||||||||
Affiliated Companies | 109,310,492 | – | 72,861,033 | 1,808,332,930 | ||||||||||||||||
Repurchase agreements (at cost and value) | 377,765,000 | 38,369,000 | 172,925,000 | 418,376,000 | ||||||||||||||||
Cash and foreign currency | 12,579 | 1,179 | 559 | 994 | ||||||||||||||||
Receivable for investments sold | 11,792,298 | 5,784,573 | 10,245,237 | 797,604 | ||||||||||||||||
Receivable for capital shares sold | 32,937,040 | 1,257,793 | 6,651,175 | 8,074,514 | ||||||||||||||||
Receivable for dividends and interest | 6,880,012 | 447,311 | 899,375 | 848,948 | ||||||||||||||||
Prepaid expenses and other assets | 15,276 | 891 | 6,599 | 10,046 | ||||||||||||||||
Total Assets | 5,801,957,868 | 374,687,509 | 2,704,993,913 | 3,668,083,115 | ||||||||||||||||
LIABILITIES: | ||||||||||||||||||||
Payable for collateral on loaned securities | 43,119,635 | 2,797,942 | 143,192,210 | 35,100,554 | ||||||||||||||||
Payable for investments purchased | 8,630,943 | – | 2,402,646 | 358,844 | ||||||||||||||||
Payable for capital shares redeemed | 47,377,717 | 1,338,385 | 8,658,501 | 10,287,451 | ||||||||||||||||
Payable for investment advisory fees | 4,540,410 | 306,755 | 2,077,094 | 2,939,112 | ||||||||||||||||
Accrued expenses | 3,409,603 | 238,973 | 1,026,607 | 1,566,076 | ||||||||||||||||
Total Liabilities | 107,078,308 | 4,682,055 | 157,357,058 | 50,252,037 | ||||||||||||||||
Net Assets | $ | 5,694,879,560 | $ | 370,005,454 | $ | 2,547,636,855 | $ | 3,617,831,078 | ||||||||||||
ANALYSIS OF NET ASSETS: | ||||||||||||||||||||
Paid-in capital | $ | 3,455,156,891 | $ | 285,654,172 | $ | 1,852,034,583 | $ | 2,561,650,713 | ||||||||||||
Undistributed net investment income (loss) | (5,494,463 | ) | 45,409 | 25,570 | – | |||||||||||||||
Accumulated net realized gain (loss) on investments and | ||||||||||||||||||||
foreign currency | 135,728,273 | 3,264,465 | 64,350,530 | 64,636,914 | ||||||||||||||||
Net unrealized appreciation (depreciation) on investments and | ||||||||||||||||||||
foreign currency | 2,109,488,859 | 81,041,408 | 631,226,172 | 991,543,451 | ||||||||||||||||
Net Assets | $ | 5,694,879,560 | $ | 370,005,454 | $ | 2,547,636,855 | $ | 3,617,831,078 | ||||||||||||
Investment Class | $ | 3,657,903,931 | $ | 117,306,473 | $ | 1,426,214,347 | $ | 2,510,345,486 | ||||||||||||
Service Class | 493,111,169 | 223,533,024 | 208,236,785 | 335,952,457 | ||||||||||||||||
Consultant Class | 404,498,509 | 15,941,839 | 18,642,697 | 71,332,785 | ||||||||||||||||
Institutional Class | 621,446,682 | 853,886,331 | 700,200,350 | |||||||||||||||||
W Class | 249,034,585 | |||||||||||||||||||
R Class | 72,540,661 | 6,804,894 | 22,729,415 | |||||||||||||||||
K Class | 196,344,023 | 6,419,224 | 17,927,280 | |||||||||||||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | ||||||||||||||||||||
Investment Class | 222,144,401 | 7,224,615 | 91,760,372 | 100,338,293 | ||||||||||||||||
Service Class | 29,695,912 | 13,802,194 | 13,959,178 | 13,455,944 | ||||||||||||||||
Consultant Class | 24,244,504 | 1,268,016 | 1,329,872 | 3,026,109 | ||||||||||||||||
Institutional Class | 38,010,591 | 54,359,491 | 28,145,590 | |||||||||||||||||
W Class | 15,142,159 | |||||||||||||||||||
R Class | 4,336,922 | 585,248 | 1,543,214 | |||||||||||||||||
K Class | 15,836,741 | 548,607 | 1,308,956 | |||||||||||||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | ||||||||||||||||||||
Investment Class1 | $16.47 | $16.24 | $15.54 | $25.02 | ||||||||||||||||
Service Class1 | 16.61 | 16.20 | 14.92 | 24.97 | ||||||||||||||||
Consultant Class2 | 16.68 | 12.57 | 14.02 | 23.57 | ||||||||||||||||
Institutional Class3 | 16.35 | 15.71 | 24.88 | |||||||||||||||||
W Class3 | 16.45 | |||||||||||||||||||
R Class3 | 16.73 | 11.63 | 14.73 | |||||||||||||||||
K Class3 | 12.40 | 11.70 | 13.70 | |||||||||||||||||
Investments at identified cost | $ | 3,263,071,688 | $ | 247,746,107 | $ | 1,883,039,964 | $ | 2,248,431,558 | ||||||||||||
Market value of loaned securities | 42,096,444 | 2,730,683 | 139,476,221 | 33,819,203 | ||||||||||||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 91 |
Statements of Assets and Liabilities |
Royce | Royce | Royce | Royce | |||||||||||||||||
Value | Value Plus | 100 | Dividend | |||||||||||||||||
Fund | Fund | Fund | Value Fund | |||||||||||||||||
ASSETS: | ||||||||||||||||||||
Investments at value (including collateral on loaned securities) | ||||||||||||||||||||
Non-Affiliated Companies | $ | 1,201,759,175 | $ | 1,250,642,718 | $ | 269,184,139 | $ | 600,239,062 | ||||||||||||
Affiliated Companies | – | 13,341,090 | – | – | ||||||||||||||||
Repurchase agreements (at cost and value) | 21,023,000 | 82,948,000 | 27,942,000 | 45,730,000 | ||||||||||||||||
Cash and foreign currency | 432 | 677 | 953 | 13,584 | ||||||||||||||||
Receivable for investments sold | 7,533,865 | – | 6,254,868 | 7,981,234 | ||||||||||||||||
Receivable for capital shares sold | 897,555 | 750,245 | 258,164 | 1,561,146 | ||||||||||||||||
Receivable for dividends and interest | 544,317 | 672,887 | 343,360 | 545,410 | ||||||||||||||||
Prepaid expenses and other assets | 3,454 | 3,763 | 834 | 1,617 | ||||||||||||||||
Total Assets | 1,231,761,798 | 1,348,359,380 | 303,984,318 | 656,072,053 | ||||||||||||||||
LIABILITIES: | ||||||||||||||||||||
Payable for collateral on loaned securities | 45,315,257 | 94,323,980 | 2,636,004 | 3,073,773 | ||||||||||||||||
Payable for investments purchased | 555,681 | 283,480 | 3,327,975 | 307,544 | ||||||||||||||||
Payable for capital shares redeemed | 1,473,611 | 3,755,556 | 341,613 | 1,301,287 | ||||||||||||||||
Payable for investment advisory fees | 985,382 | 1,072,590 | 247,130 | 536,227 | ||||||||||||||||
Accrued expenses | 939,145 | 1,165,706 | 269,261 | 429,351 | ||||||||||||||||
Total Liabilities | 49,269,076 | 100,601,312 | 6,821,983 | 5,648,182 | ||||||||||||||||
Net Assets | $ | 1,182,492,722 | $ | 1,247,758,068 | $ | 297,162,335 | $ | 650,423,871 | ||||||||||||
ANALYSIS OF NET ASSETS: | ||||||||||||||||||||
Paid-in capital | $ | 869,054,080 | $ | 832,711,678 | $ | 200,954,865 | $ | 503,319,746 | ||||||||||||
Undistributed net investment income (loss) | (5,366 | ) | (1,324,204 | ) | (10,102 | ) | 1,341,761 | |||||||||||||
Accumulated net realized gain (loss) on investments and | ||||||||||||||||||||
foreign currency | 16,595,235 | 44,762,547 | 3,400,590 | 5,633,368 | ||||||||||||||||
Net unrealized appreciation (depreciation) on investments and | ||||||||||||||||||||
foreign currency | 296,848,773 | 371,608,047 | 92,816,982 | 140,128,996 | ||||||||||||||||
Net Assets | $ | 1,182,492,722 | $ | 1,247,758,068 | $ | 297,162,335 | $ | 650,423,871 | ||||||||||||
Investment Class | $ | 196,854,676 | $ | 244,268,749 | $ | 60,155,661 | $ | 211,589,122 | ||||||||||||
Service Class | 680,673,908 | 835,378,703 | 231,879,483 | 407,598,530 | ||||||||||||||||
Consultant Class | 31,603,813 | 22,614,566 | ||||||||||||||||||
Institutional Class | 219,666,732 | 142,923,241 | 31,236,219 | |||||||||||||||||
R Class | 37,408,883 | 1,605,040 | 2,806,846 | |||||||||||||||||
K Class | 16,284,710 | 967,769 | 2,320,345 | |||||||||||||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | ||||||||||||||||||||
Investment Class | 14,559,364 | 14,342,113 | 5,948,283 | 23,782,076 | ||||||||||||||||
Service Class | 50,500,679 | 49,355,623 | 23,080,421 | 45,379,998 | ||||||||||||||||
Consultant Class | 2,492,000 | 1,414,046 | ||||||||||||||||||
Institutional Class | 16,234,273 | 8,363,585 | 3,518,160 | |||||||||||||||||
R Class | 2,835,147 | 97,704 | 221,608 | |||||||||||||||||
K Class | 1,529,106 | 80,913 | 180,721 | |||||||||||||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | ||||||||||||||||||||
Investment Class1 | $13.52 | $17.03 | $10.11 | $8.90 | ||||||||||||||||
Service Class1 | 13.48 | 16.93 | 10.05 | 8.98 | ||||||||||||||||
Consultant Class2 | 12.68 | 15.99 | ||||||||||||||||||
Institutional Class3 | 13.53 | 17.09 | 8.88 | |||||||||||||||||
R Class3 | 13.19 | 16.43 | 12.67 | |||||||||||||||||
K Class3 | 10.65 | 11.96 | 12.84 | |||||||||||||||||
Investments at identified cost | $ | 904,912,994 | $ | 892,378,820 | $ | 176,367,515 | $ | 460,074,182 | ||||||||||||
Market value of loaned securities | 44,405,756 | 92,949,292 | 2,157,806 | 3,006,019 | ||||||||||||||||
92 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
Royce | Royce | Royce | |||||||||||||
Global | International Smaller- | Special Equity | |||||||||||||
Value Fund | Companies Fund | Multi-Cap Fund | |||||||||||||
ASSETS: | |||||||||||||||
Investments at value (including collateral on loaned securities) | |||||||||||||||
Non-Affiliated Companies | $ | 235,453,706 | $ | 35,899,825 | $ | 178,548,856 | |||||||||
Repurchase agreements (at cost and value) | 5,262,000 | 1,469,000 | 10,697,000 | ||||||||||||
Cash and foreign currency | 44,576 | 811 | 126 | ||||||||||||
Receivable for investments sold | 413,626 | 622,916 | 40,193 | ||||||||||||
Receivable for capital shares sold | 879,297 | 90,917 | 728,724 | ||||||||||||
Receivable for dividends and interest | 500,166 | 103,706 | 286,927 | ||||||||||||
Prepaid expenses and other assets | 775 | 93 | 606 | ||||||||||||
Total Assets | 242,554,146 | 38,187,268 | 190,302,432 | ||||||||||||
LIABILITIES: | |||||||||||||||
Payable for collateral on loaned securities | 8,279,744 | – | – | ||||||||||||
Payable for investments purchased | 72,565 | – | 1,318,572 | ||||||||||||
Payable for capital shares redeemed | 338,138 | 48,036 | 114,140 | ||||||||||||
Payable for investment advisory fees | 243,677 | 19,699 | 147,006 | ||||||||||||
Accrued expenses | 202,691 | 60,400 | 39,652 | ||||||||||||
Total Liabilities | 9,136,815 | 128,135 | 1,619,370 | ||||||||||||
Net Assets | $ | 233,417,331 | $ | 38,059,133 | $ | 188,683,062 | |||||||||
ANALYSIS OF NET ASSETS: | |||||||||||||||
Paid-in capital | $ | 296,239,749 | $ | 34,860,360 | $ | 148,728,271 | |||||||||
Undistributed net investment income (loss) | 176,389 | (19,501 | ) | 2,791 | |||||||||||
Accumulated net realized gain (loss) on investments and | |||||||||||||||
foreign currency | (53,979,390 | ) | 114,432 | 3,533,135 | |||||||||||
Net unrealized appreciation (depreciation) on investments and foreign currency | (9,019,417 | ) | 3,103,842 | 36,418,865 | |||||||||||
Net Assets | $ | 233,417,331 | $ | 38,059,133 | $ | 188,683,062 | |||||||||
Investment Class | $ | 159,366,381 | $ | 62,386,972 | |||||||||||
Service Class | 48,244,259 | $ | 38,059,133 | 78,233,135 | |||||||||||
Consultant Class | 25,662,742 | ||||||||||||||
Institutional Class | 48,062,955 | ||||||||||||||
R Class | 99,725 | ||||||||||||||
K Class | 44,224 | ||||||||||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | |||||||||||||||
Investment Class | 11,722,338 | 4,182,466 | |||||||||||||
Service Class | 3,527,273 | 3,173,305 | 5,229,813 | ||||||||||||
Consultant Class | 1,895,235 | ||||||||||||||
Institutional Class | 3,221,319 | ||||||||||||||
R Class | 9,830 | ||||||||||||||
K Class | 4,358 | ||||||||||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | |||||||||||||||
Investment Class1 | $13.60 | $14.92 | |||||||||||||
Service Class, 1, | 13.68 | $11.99 | 14.96 | ||||||||||||
Consultant Class2 | 13.54 | ||||||||||||||
Institutional Class3 | 14.92 | ||||||||||||||
R Class3 | 10.15 | ||||||||||||||
K Class3 | 10.15 | ||||||||||||||
Investments at identified cost | $ | 244,482,103 | $ | 32,788,283 | $ | 142,129,991 | |||||||||
Market value of loaned securities | 8,003,015 | ||||||||||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 93 |
Statements of Changes in Net Assets |
Royce Pennsylvania | ||||||||||||||||||||||||||||||
Mutual Fund | Royce Micro-Cap Fund | Royce Premier Fund | ||||||||||||||||||||||||||||
Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | |||||||||||||||||||||||||
12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||||||||
INVESTMENT OPERATIONS: | ||||||||||||||||||||||||||||||
Net investment income (loss) | $ | 7,661,265 | $ | 63,191,199 | $ | (5,870,665 | ) | $ | 1,716,521 | $ | (452,026 | ) | $ | 80,158,458 | ||||||||||||||||
Net realized gain (loss) on investments and | ||||||||||||||||||||||||||||||
foreign currency | 471,075,967 | 378,839,758 | 80,848,944 | 42,923,758 | 873,083,934 | 279,919,593 | ||||||||||||||||||||||||
Net change in unrealized appreciation | ||||||||||||||||||||||||||||||
(depreciation) on investments and | ||||||||||||||||||||||||||||||
foreign currency | 1,515,290,678 | 334,772,475 | 90,069,276 | 35,269,614 | 820,330,897 | 365,993,509 | ||||||||||||||||||||||||
Net increase (decrease) in net assets from | ||||||||||||||||||||||||||||||
investment operations | 1,994,027,910 | 776,803,432 | 165,047,555 | 79,909,893 | 1,692,962,805 | 726,071,560 | ||||||||||||||||||||||||
DISTRIBUTIONS: | ||||||||||||||||||||||||||||||
Net investment income | ||||||||||||||||||||||||||||||
Investment Class | (431,367 | ) | (54,629,386 | ) | (699,816 | ) | (251,657 | ) | – | (56,492,020 | ) | |||||||||||||||||||
Service Class | – | (3,420,121 | ) | – | – | – | (3,868,028 | ) | ||||||||||||||||||||||
Consultant Class | – | (921,895 | ) | – | – | – | (58,930 | ) | ||||||||||||||||||||||
Institutional Class | (937,016 | ) | (7,313,426 | ) | – | (12,152,037 | ) | |||||||||||||||||||||||
W Class | – | (7,061,577 | ) | |||||||||||||||||||||||||||
R Class | – | (151,956 | ) | – | (116,893 | ) | ||||||||||||||||||||||||
K Class | – | (58,794 | ) | – | (211,170 | ) | ||||||||||||||||||||||||
Net realized gain on investments and | ||||||||||||||||||||||||||||||
foreign currency | ||||||||||||||||||||||||||||||
Investment Class | (260,021,200 | ) | (228,773,446 | ) | (45,125,296 | ) | (44,059,505 | ) | (488,208,024 | ) | (277,063,842 | ) | ||||||||||||||||||
Service Class | (31,628,047 | ) | (25,136,819 | ) | (5,609,190 | ) | (7,356,916 | ) | (46,637,769 | ) | (34,158,623 | ) | ||||||||||||||||||
Consultant Class | (45,624,009 | ) | (39,332,146 | ) | (9,087,282 | ) | (7,779,887 | ) | (6,977,329 | ) | (3,996,638 | ) | ||||||||||||||||||
Institutional Class | (41,396,200 | ) | (25,463,721 | ) | (90,956,054 | ) | (51,201,959 | ) | ||||||||||||||||||||||
W Class | (52,811,951 | ) | (32,235,493 | ) | ||||||||||||||||||||||||||
R Class | (2,317,940 | ) | (1,791,694 | ) | (3,194,633 | ) | (1,746,454 | ) | ||||||||||||||||||||||
K Class | (689,970 | ) | (502,561 | ) | (1,877,675 | ) | (1,257,434 | ) | ||||||||||||||||||||||
Total distributions | (383,045,749 | ) | (387,495,965 | ) | (60,521,584 | ) | (59,447,965 | ) | (690,663,435 | ) | (481,621,098 | ) | ||||||||||||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||||||||||||||||
Net capital share transactions | ||||||||||||||||||||||||||||||
Investment Class | (353,912,164 | ) | (335,995,316 | ) | (172,590,098 | ) | (180,722,729 | ) | (240,379,249 | ) | (81,178,362 | ) | ||||||||||||||||||
Service Class | (15,357,868 | ) | 38,274,164 | (39,264,005 | ) | (15,930,771 | ) | (309,788,929 | ) | (91,558,488 | ) | |||||||||||||||||||
Consultant Class | (29,907,854 | ) | (52,892,588 | ) | (15,225,756 | ) | (14,554,956 | ) | (1,639,240 | ) | (1,059,390 | ) | ||||||||||||||||||
Institutional Class | 181,494,950 | 232,958,907 | (11,316,540 | ) | 25,599,256 | |||||||||||||||||||||||||
W Class | (61,008,076 | ) | (37,012,083 | ) | ||||||||||||||||||||||||||
R Class | 1,818,243 | 8,694,966 | (437,535 | ) | 4,268,797 | |||||||||||||||||||||||||
K Class | 482,011 | 2,702,838 | (1,286,771 | ) | 1,447,345 | |||||||||||||||||||||||||
Shareholder redemption fees | ||||||||||||||||||||||||||||||
Investment Class | 75,224 | 159,022 | 35,746 | 29,714 | 190,877 | 151,679 | ||||||||||||||||||||||||
Service Class | 52,548 | 45,638 | 27,157 | 9,218 | 8,112 | 32,028 | ||||||||||||||||||||||||
Net increase (decrease) in net assets from | ||||||||||||||||||||||||||||||
capital share transactions | (215,254,910 | ) | (106,052,369 | ) | (227,016,956 | ) | (211,169,524 | ) | (625,657,351 | ) | (179,309,218 | ) | ||||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | 1,395,727,251 | 283,255,098 | (122,490,985 | ) | (190,707,596 | ) | 376,642,019 | 65,141,244 | ||||||||||||||||||||||
NET ASSETS: | �� | |||||||||||||||||||||||||||||
Beginning of year | 5,891,132,433 | 5,607,877,335 | 970,691,780 | 1,161,399,376 | 6,688,772,168 | 6,623,630,924 | ||||||||||||||||||||||||
End of year | $ | 7,286,859,684 | $ | 5,891,132,433 | $ | 848,200,795 | $ | 970,691,780 | $ | 7,065,414,187 | $ | 6,688,772,168 | ||||||||||||||||||
UNDISTRIBUTED NET INVESTMENT INCOME | ||||||||||||||||||||||||||||||
(LOSS) AT END OF YEAR | $ | (1,998,921 | ) | $ | (3,692,596 | ) | $ | (3,027,856 | ) | $ | (4,217,174 | ) | $ | (2 | ) | $ | 8,060,497 |
94 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
Royce Low-Priced Stock Fund | Royce Total Return Fund | Royce Heritage Fund | ||||||||||||||||||||||||||||
Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | |||||||||||||||||||||||||
12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||||||||
INVESTMENT OPERATIONS: | ||||||||||||||||||||||||||||||
Net investment income (loss) | $ | 1,768,327 | $ | 24,690,528 | $ | 46,503,739 | $ | 81,188,302 | $ | 107,612 | $ | 1,469,368 | ||||||||||||||||||
Net realized gain (loss) on investments and | ||||||||||||||||||||||||||||||
foreign currency | 338,510,647 | 151,259,303 | 516,234,642 | 184,938,882 | 42,713,139 | 11,021,118 | ||||||||||||||||||||||||
Net change in unrealized appreciation | ||||||||||||||||||||||||||||||
(depreciation) on investments and | ||||||||||||||||||||||||||||||
foreign currency | (105,343,208 | ) | (19,676,712 | ) | 895,364,319 | 334,217,094 | 28,856,933 | 23,058,809 | ||||||||||||||||||||||
Net increase (decrease) in net assets from | ||||||||||||||||||||||||||||||
investment operations | 234,935,766 | 156,273,119 | 1,458,102,700 | 600,344,278 | 71,677,684 | 35,549,295 | ||||||||||||||||||||||||
DISTRIBUTIONS: | ||||||||||||||||||||||||||||||
Net investment income | ||||||||||||||||||||||||||||||
Investment Class | (323,323 | ) | (4,662,575 | ) | (30,314,036 | ) | (53,669,916 | ) | (349,578 | ) | (349,590 | ) | ||||||||||||||||||
Service Class | (379,805 | ) | (21,186,960 | ) | (2,207,261 | ) | (3,010,686 | ) | (47,427 | ) | (611,643 | ) | ||||||||||||||||||
Consultant Class | – | (359,919 | ) | – | – | |||||||||||||||||||||||||
Institutional Class | (1,777,124 | ) | (17,457,085 | ) | (6,005,663 | ) | (8,049,250 | ) | ||||||||||||||||||||||
W Class | (1,936,210 | ) | (2,959,883 | ) | ||||||||||||||||||||||||||
R Class | – | (42,427 | ) | (134,138 | ) | (267,095 | ) | – | (1,807 | ) | ||||||||||||||||||||
K Class | (6,881 | ) | (134,605 | ) | (751,220 | ) | (2,164,963 | ) | – | (41,464 | ) | |||||||||||||||||||
Net realized gain on investments and | ||||||||||||||||||||||||||||||
foreign currency | ||||||||||||||||||||||||||||||
Investment Class | (12,723,954 | ) | (17,157,473 | ) | (295,570,600 | ) | (133,827,796 | ) | (12,211,788 | ) | (918,362 | ) | ||||||||||||||||||
Service Class | (131,337,387 | ) | (116,022,410 | ) | (42,384,314 | ) | (11,891,556 | ) | (23,990,047 | ) | (5,058,972 | ) | ||||||||||||||||||
Consultant Class | (31,920,900 | ) | (14,383,518 | ) | (2,187,387 | ) | (427,725 | ) | ||||||||||||||||||||||
Institutional Class | (63,367,740 | ) | (59,427,238 | ) | (47,200,579 | ) | (17,842,030 | ) | ||||||||||||||||||||||
W Class | (19,766,304 | ) | (7,371,475 | ) | ||||||||||||||||||||||||||
R Class | (414,282 | ) | (371,144 | ) | (5,693,320 | ) | (2,086,921 | ) | (994,363 | ) | (155,993 | ) | ||||||||||||||||||
K Class | (832,746 | ) | (647,596 | ) | (20,859,671 | ) | (9,380,378 | ) | (1,055,146 | ) | (230,237 | ) | ||||||||||||||||||
Total distributions | (211,163,242 | ) | (237,109,513 | ) | (504,744,216 | ) | (267,265,386 | ) | (40,835,736 | ) | (7,795,793 | ) | ||||||||||||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||||||||||||||||
Net capital share transactions | ||||||||||||||||||||||||||||||
Investment Class | (170,583,797 | ) | (10,702,232 | ) | (16,146,326 | ) | (292,787,502 | ) | 73,588,985 | 16,574,511 | ||||||||||||||||||||
Service Class | (804,469,884 | ) | (652,700,848 | ) | 147,512,588 | (40,417,979 | ) | (4,880,969 | ) | (38,109,460 | ) | |||||||||||||||||||
Consultant Class | 4,827,235 | (23,892,297 | ) | 899,381 | (1,264,043 | ) | ||||||||||||||||||||||||
Institutional Class | (631,338,844 | ) | 11,456,233 | 118,224,237 | (9,567,656 | ) | ||||||||||||||||||||||||
W Class | 38,979,851 | 29,048,933 | ||||||||||||||||||||||||||||
R Class | (2,714,812 | ) | (1,360,956 | ) | 12,568,863 | 11,084,404 | 1,571,248 | 288,324 | ||||||||||||||||||||||
K Class | (2,166,084 | ) | (1,987,623 | ) | 2,762,456 | (26,785,638 | ) | (1,331,961 | ) | (1,534,883 | ) | |||||||||||||||||||
Shareholder redemption fees | ||||||||||||||||||||||||||||||
Investment Class | 17,171 | 8,999 | 75,527 | 99,541 | 669 | 9,332 | ||||||||||||||||||||||||
Service Class | 48,913 | 89,425 | 45,568 | 16,129 | 11,734 | 11,091 | ||||||||||||||||||||||||
Net increase (decrease) in net assets from | ||||||||||||||||||||||||||||||
capital share transactions | (1,611,207,337 | ) | (655,197,002 | ) | 308,849,999 | (353,202,065 | ) | 69,859,087 | (24,025,128 | ) | ||||||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | (1,587,434,813 | ) | (736,033,396 | ) | 1,262,208,483 | (20,123,173 | ) | 100,701,035 | 3,728,374 | |||||||||||||||||||||
NET ASSETS: | ||||||||||||||||||||||||||||||
Beginning of year | 3,037,164,179 | 3,773,197,575 | 4,432,671,077 | 4,452,794,250 | 269,304,419 | 265,576,045 | ||||||||||||||||||||||||
End of year | $ | 1,449,729,366 | $ | 3,037,164,179 | $ | 5,694,879,560 | $ | 4,432,671,077 | $ | 370,005,454 | $ | 269,304,419 | ||||||||||||||||||
UNDISTRIBUTED NET INVESTMENT INCOME | ||||||||||||||||||||||||||||||
(LOSS) AT END OF YEAR | $ | (3,745,157 | ) | $ | (38,478,936 | ) | $ | (5,494,463 | ) | $ | (6,473,757 | ) | $ | 45,409 | $ | (105,508 | ) | |||||||||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 95 |
Statements of Changes in Net Assets |
Royce Opportunity Fund | Royce Special Equity Fund | Royce Value Fund | ||||||||||||||||||||||||||||
Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | |||||||||||||||||||||||||
12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||||||||
INVESTMENT OPERATIONS: | ||||||||||||||||||||||||||||||
Net investment income (loss) | $ | (8,323,304 | ) | $ | 102,039 | $ | 3,797,163 | $ | 60,607,144 | $ | (1,046,544 | ) | $ | 14,771,880 | ||||||||||||||||
Net realized gain (loss) on investments and | ||||||||||||||||||||||||||||||
foreign currency | 324,683,300 | 109,724,848 | 366,833,496 | 141,201,929 | 104,447,215 | 52,407,833 | ||||||||||||||||||||||||
Net change in unrealized appreciation | ||||||||||||||||||||||||||||||
(depreciation) on investments and | ||||||||||||||||||||||||||||||
foreign currency | 492,429,616 | 244,768,732 | 485,484,439 | 181,861,687 | 192,266,104 | 61,602,303 | ||||||||||||||||||||||||
Net increase (decrease) in net assets from | ||||||||||||||||||||||||||||||
investment operations | 808,789,612 | 354,595,619 | 856,115,098 | 383,670,760 | 295,666,775 | 128,782,016 | ||||||||||||||||||||||||
DISTRIBUTIONS: | ||||||||||||||||||||||||||||||
Net investment income | ||||||||||||||||||||||||||||||
Investment Class | – | – | (2,784,704 | ) | (42,635,374 | ) | (430,335 | ) | (2,519,414 | ) | ||||||||||||||||||||
Service Class | – | – | – | (4,207,327 | ) | – | (7,612,610 | ) | ||||||||||||||||||||||
Consultant Class | – | – | – | (638,032 | ) | – | (90,458 | ) | ||||||||||||||||||||||
Institutional Class | (506,976 | ) | – | (1,484,535 | ) | (13,115,881 | ) | (801,517 | ) | (2,720,021 | ) | |||||||||||||||||||
R Class | – | – | – | (226,100 | ) | |||||||||||||||||||||||||
K Class | – | – | – | (231,059 | ) | |||||||||||||||||||||||||
Net realized gain on investments and | ||||||||||||||||||||||||||||||
foreign currency | ||||||||||||||||||||||||||||||
Investment Class | (115,737,752 | ) | (50,051,234 | ) | (205,169,213 | ) | (100,542,375 | ) | (13,405,198 | ) | (9,221,480 | ) | ||||||||||||||||||
Service Class | (33,239,063 | ) | (9,506,373 | ) | (27,558,217 | ) | (12,209,477 | ) | (47,070,978 | ) | (37,662,892 | ) | ||||||||||||||||||
Consultant Class | (1,843,343 | ) | (699,843 | ) | (6,115,330 | ) | (2,985,183 | ) | (2,278,341 | ) | (1,611,685 | ) | ||||||||||||||||||
Institutional Class | (77,841,147 | ) | (36,267,105 | ) | (57,360,331 | ) | (27,981,290 | ) | (14,980,670 | ) | (8,879,772 | ) | ||||||||||||||||||
R Class | (2,051,002 | ) | (374,879 | ) | (2,587,581 | ) | (1,683,262 | ) | ||||||||||||||||||||||
K Class | (1,712,998 | ) | (504,189 | ) | (1,401,823 | ) | (1,016,272 | ) | ||||||||||||||||||||||
Total distributions | (232,932,281 | ) | (97,403,623 | ) | (300,472,330 | ) | (204,314,939 | ) | (82,956,443 | ) | (73,475,025 | ) | ||||||||||||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||||||||||||||||
Net capital share transactions | ||||||||||||||||||||||||||||||
Investment Class | 214,071,968 | (96,250,867 | ) | 74,313,256 | 245,485,021 | (42,051,102 | ) | (20,874,943 | ) | |||||||||||||||||||||
Service Class | (59,230,398 | ) | 18,730,839 | 36,500,115 | 19,208,306 | (280,452,969 | ) | (288,914,041 | ) | |||||||||||||||||||||
Consultant Class | 3,337,411 | (1,632,584 | ) | 3,787,713 | 3,989,935 | (6,913,766 | ) | (3,805,405 | ) | |||||||||||||||||||||
Institutional Class | (49,903,561 | ) | 25,874,792 | 19,319,756 | 54,304,122 | (19,355,348 | ) | 4,907,087 | ||||||||||||||||||||||
R Class | 13,341,482 | 2,950,304 | (6,762,442 | ) | 2,483,316 | |||||||||||||||||||||||||
K Class | 6,241,844 | 1,362,780 | (4,715,820 | ) | 3,867,457 | |||||||||||||||||||||||||
Shareholder redemption fees | ||||||||||||||||||||||||||||||
Investment Class | 33,487 | 34,806 | 98,785 | 131,211 | 5,728 | 11,705 | ||||||||||||||||||||||||
Service Class | 21,097 | 1,830 | 20,039 | 29,902 | 28,188 | 63,509 | ||||||||||||||||||||||||
Net increase (decrease) in net assets from | ||||||||||||||||||||||||||||||
capital share transactions | 127,913,330 | (48,928,100 | ) | 134,039,664 | 323,148,497 | (360,217,531 | ) | (302,261,315 | ) | |||||||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | 703,770,661 | 208,263,896 | 689,682,432 | 502,504,318 | (147,507,199 | ) | (246,954,324 | ) | ||||||||||||||||||||||
NET ASSETS: | ||||||||||||||||||||||||||||||
Beginning of year | 1,843,866,194 | 1,635,602,298 | 2,928,148,646 | 2,425,644,328 | 1,329,999,921 | 1,576,954,245 | ||||||||||||||||||||||||
End of year | $ | 2,547,636,855 | $ | 1,843,866,194 | $ | 3,617,831,078 | $ | 2,928,148,646 | $ | 1,182,492,722 | $ | 1,329,999,921 | ||||||||||||||||||
UNDISTRIBUTED NET INVESTMENT INCOME | ||||||||||||||||||||||||||||||
(LOSS) AT END OF YEAR | $ | 25,570 | $ | (718,346 | ) | $ | – | $ | 104,734 | $ | (5,366 | ) | $ | 1,227,883 |
96 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
Royce Value Plus Fund | Royce 100 Fund | Royce Dividend Value Fund | ||||||||||||||||||||||||||||
Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | |||||||||||||||||||||||||
12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||||||||
INVESTMENT OPERATIONS: | ||||||||||||||||||||||||||||||
Net investment income (loss) | $ | (8,792,263 | ) | $ | (4,512,013 | ) | $ | (899,035 | ) | $ | 3,820,129 | $ | 5,283,336 | $ | 6,466,075 | |||||||||||||||
Net realized gain (loss) on investments and | ||||||||||||||||||||||||||||||
foreign currency | 236,175,134 | 73,209,917 | 42,762,789 | 22,129,056 | 37,699,702 | 4,715,713 | ||||||||||||||||||||||||
Net change in unrealized appreciation | ||||||||||||||||||||||||||||||
(depreciation) on investments and | ||||||||||||||||||||||||||||||
foreign currency | 163,082,996 | 200,771,476 | 37,488,379 | 10,234,695 | 100,268,425 | 43,493,780 | ||||||||||||||||||||||||
Net increase (decrease) in net assets from | ||||||||||||||||||||||||||||||
investment operations | 390,465,867 | 269,469,380 | 79,352,133 | 36,183,880 | 143,251,463 | 54,675,568 | ||||||||||||||||||||||||
DISTRIBUTIONS: | ||||||||||||||||||||||||||||||
Net investment income | ||||||||||||||||||||||||||||||
Investment Class | (47,920 | ) | – | (171,769 | ) | (1,109,858 | ) | (2,101,030 | ) | (1,908,107 | ) | |||||||||||||||||||
Service Class | – | – | (134,400 | ) | (2,171,815 | ) | (2,644,407 | ) | (2,958,083 | ) | ||||||||||||||||||||
Consultant Class | – | – | ||||||||||||||||||||||||||||
Institutional Class | (426,647 | ) | – | (395,915 | ) | (249,765 | ) | |||||||||||||||||||||||
R Class | – | – | – | – | ||||||||||||||||||||||||||
K Class | (525 | ) | – | – | (13,851 | ) | ||||||||||||||||||||||||
Net realized gain on investments and | ||||||||||||||||||||||||||||||
foreign currency | ||||||||||||||||||||||||||||||
Investment Class | (18,415,039 | ) | – | (7,553,032 | ) | (5,347,166 | ) | (12,036,485 | ) | (281,579 | ) | |||||||||||||||||||
Service Class | (67,233,777 | ) | – | (29,276,357 | ) | (17,649,123 | ) | (23,009,857 | ) | (594,951 | ) | |||||||||||||||||||
Consultant Class | (1,776,890 | ) | – | |||||||||||||||||||||||||||
Institutional Class | (11,711,029 | ) | – | (1,765,841 | ) | (55,684 | ) | |||||||||||||||||||||||
R Class | (124,722 | ) | – | (287,743 | ) | (157,770 | ) | |||||||||||||||||||||||
K Class | (102,394 | ) | – | (232,789 | ) | (235,061 | ) | |||||||||||||||||||||||
Total distributions | (99,838,943 | ) | – | (37,656,090 | ) | (26,684,644 | ) | (41,953,535 | ) | (6,048,169 | ) | |||||||||||||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||||||||||||||||
Net capital share transactions | ||||||||||||||||||||||||||||||
Investment Class | (32,018,470 | ) | (113,741,824 | ) | (17,441,016 | ) | 4,430,476 | 60,601,532 | 18,217,648 | |||||||||||||||||||||
Service Class | (327,083,427 | ) | (637,273,254 | ) | (20,217,752 | ) | (98,413,720 | ) | 91,250,464 | 19,094,095 | ||||||||||||||||||||
Consultant Class | (921,317 | ) | (3,330,475 | ) | ||||||||||||||||||||||||||
Institutional Class | (116,016,594 | ) | (81,721,749 | ) | 2,508,270 | 21,931,199 | ||||||||||||||||||||||||
R Class | 101,478 | (15,162 | ) | (129,512 | ) | (1,037,720 | ) | |||||||||||||||||||||||
K Class | 376,308 | �� | (84,938 | ) | (1,936,637 | ) | (1,079,162 | ) | ||||||||||||||||||||||
Shareholder redemption fees | ||||||||||||||||||||||||||||||
Investment Class | 18,252 | 5,789 | 3,349 | 3,283 | 9,399 | 19,184 | ||||||||||||||||||||||||
Service Class | 27,203 | 43,741 | 10,454 | 22,175 | 33,408 | 11,034 | ||||||||||||||||||||||||
Net increase (decrease) in net assets from | ||||||||||||||||||||||||||||||
capital share transactions | (475,516,567 | ) | (836,117,872 | ) | (39,711,114 | ) | (96,074,668 | ) | 154,403,073 | 59,273,160 | ||||||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | (184,889,643 | ) | (566,648,492 | ) | 1,984,929 | (86,575,432 | ) | 255,701,001 | 107,900,559 | |||||||||||||||||||||
NET ASSETS: | ||||||||||||||||||||||||||||||
Beginning of year | 1,432,647,711 | 1,999,296,203 | 295,177,406 | 381,752,838 | 394,722,870 | 286,822,311 | ||||||||||||||||||||||||
End of year | $ | 1,247,758,068 | $ | 1,432,647,711 | $ | 297,162,335 | $ | 295,177,406 | $ | 650,423,871 | $ | 394,722,870 | ||||||||||||||||||
UNDISTRIBUTED NET INVESTMENT INCOME | ||||||||||||||||||||||||||||||
(LOSS) AT END OF YEAR | $ | (1,324,204 | ) | $ | (4,144,731 | ) | $ | (10,102 | ) | $ | 528,222 | $ | 1,341,761 | $ | 1,527,478 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 97 |
Statements of Changes in Net Assets |
Royce International Smaller- | Royce Special Equity | |||||||||||||||||||||||||||||
Royce Global Value Fund | Companies Fund | Multi-Cap Fund | ||||||||||||||||||||||||||||
Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | |||||||||||||||||||||||||
12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||||||||
INVESTMENT OPERATIONS: | ||||||||||||||||||||||||||||||
Net investment income (loss) | $ | 2,504,441 | $ | 3,023,958 | $ | 358,526 | $ | 312,115 | $ | 1,342,234 | $ | 1,123,620 | ||||||||||||||||||
Net realized gain (loss) on investments and | ||||||||||||||||||||||||||||||
foreign currency | (6,776,633 | ) | (35,393,527 | ) | 2,832,920 | (470,078 | ) | 12,335,278 | 1,858,816 | |||||||||||||||||||||
Net change in unrealized appreciation | ||||||||||||||||||||||||||||||
(depreciation) on investments and | ||||||||||||||||||||||||||||||
foreign currency | 18,965,587 | 61,537,989 | 847,718 | 4,127,441 | 32,879,863 | 2,863,481 | ||||||||||||||||||||||||
Net increase (decrease) in net assets from | ||||||||||||||||||||||||||||||
investment operations | 14,693,395 | 29,168,420 | 4,039,164 | 3,969,478 | 46,557,375 | 5,845,917 | ||||||||||||||||||||||||
DISTRIBUTIONS: | ||||||||||||||||||||||||||||||
Net investment income | ||||||||||||||||||||||||||||||
Investment Class | (1,815,601 | ) | (2,257,000 | ) | (479,420 | ) | (375,548 | ) | ||||||||||||||||||||||
Service Class | (410,885 | ) | (672,322 | ) | (426,886 | ) | (351,848 | ) | (469,302 | ) | (329,533 | ) | ||||||||||||||||||
Consultant Class | (89,199 | ) | (28,794 | ) | ||||||||||||||||||||||||||
Institutional Class | (408,331 | ) | (400,930 | ) | ||||||||||||||||||||||||||
R Class | (1,123 | ) | (950 | ) | ||||||||||||||||||||||||||
K Class | (603 | ) | (565 | ) | ||||||||||||||||||||||||||
Net realized gain on investments and | ||||||||||||||||||||||||||||||
foreign currency | ||||||||||||||||||||||||||||||
Investment Class | – | – | (3,236,281 | ) | (280,238 | ) | ||||||||||||||||||||||||
Service Class | – | – | (1,677,475 | ) | – | (4,025,428 | ) | (388,479 | ) | |||||||||||||||||||||
Consultant Class | – | – | ||||||||||||||||||||||||||||
Institutional Class | (2,507,671 | ) | (273,181 | ) | ||||||||||||||||||||||||||
R Class | – | – | ||||||||||||||||||||||||||||
K Class | – | – | ||||||||||||||||||||||||||||
Total distributions | (2,317,411 | ) | (2,959,631 | ) | (2,104,361 | ) | (351,848 | ) | (11,126,433 | ) | (2,047,909 | ) | ||||||||||||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||||||||||||||||
Net capital share transactions | ||||||||||||||||||||||||||||||
Investment Class | (27,207,321 | ) | 23,272,708 | 16,706,332 | 34,833,917 | |||||||||||||||||||||||||
Service Class | (53,137,199 | ) | (34,945,055 | ) | 9,745,965 | 2,636,481 | 21,021,702 | 2,291,212 | ||||||||||||||||||||||
Consultant Class | 1,094,999 | 3,019,093 | ||||||||||||||||||||||||||||
Institutional Class | 6,547,957 | 31,218,929 | ||||||||||||||||||||||||||||
R Class | 17,056 | 76,841 | ||||||||||||||||||||||||||||
K Class | 603 | 42,936 | ||||||||||||||||||||||||||||
Shareholder redemption fees | ||||||||||||||||||||||||||||||
Investment Class | 162,054 | 51,565 | 1,051 | 2,238 | ||||||||||||||||||||||||||
Service Class | 14,010 | 31,111 | 7,479 | 13,906 | 5,239 | 14,274 | ||||||||||||||||||||||||
Net increase (decrease) in net assets from | ||||||||||||||||||||||||||||||
capital share transactions | (79,055,798 | ) | (8,450,801 | ) | 9,753,444 | 2,650,387 | 44,282,281 | 68,360,570 | ||||||||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | (66,679,814 | ) | 17,757,988 | 11,688,247 | 6,268,017 | 79,713,223 | 72,158,578 | |||||||||||||||||||||||
NET ASSETS: | ||||||||||||||||||||||||||||||
Beginning of year | 300,097,145 | 282,339,157 | 26,370,886 | 20,102,869 | 108,969,839 | 36,811,261 | ||||||||||||||||||||||||
End of year | $ | 233,417,331 | $ | 300,097,145 | $ | 38,059,133 | $ | 26,370,886 | $ | 188,683,062 | $ | 108,969,839 | ||||||||||||||||||
UNDISTRIBUTED NET INVESTMENT INCOME | ||||||||||||||||||||||||||||||
(LOSS) AT END OF YEAR | $ | 176,389 | $ | (26,269 | ) | $ | (19,501 | ) | $ | (42,855 | ) | $ | 2,791 | $ | 17,610 |
98 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
Statements of Operations | Year Ended December 31, 2013 |
Royce | Royce | Royce | Royce | Royce | |||||||||||||||||||||
Pennsylvania | Micro-Cap | Premier | Low-Priced | Total Return | |||||||||||||||||||||
Mutual Fund | Fund | Fund | Stock Fund | Fund | |||||||||||||||||||||
INVESTMENT INCOME: | |||||||||||||||||||||||||
Income: | |||||||||||||||||||||||||
Dividends | |||||||||||||||||||||||||
Non-Affiliated Companies | $ | 74,486,181 | $ | 8,596,940 | $ | 45,970,331 | $ | 29,941,204 | $ | 111,653,691 | |||||||||||||||
Affiliated Companies | 2,379,200 | 457,282 | 32,748,596 | 3,547,871 | 1,944,050 | ||||||||||||||||||||
Foreign withholding tax | (1,664,380 | ) | (440,955 | ) | (2,896,989 | ) | (1,841,782 | ) | (2,989,790 | ) | |||||||||||||||
Interest | 177,019 | 10,532 | 43,401 | 6,817 | 155,294 | ||||||||||||||||||||
Securities lending | 1,806,591 | 336,109 | 489,675 | 639,345 | 561,993 | ||||||||||||||||||||
Total income | 77,184,611 | 8,959,908 | 76,355,014 | 32,293,455 | 111,325,238 | ||||||||||||||||||||
Expenses: | |||||||||||||||||||||||||
Investment advisory fees | 49,966,499 | 11,524,346 | 65,018,474 | 25,166,375 | 50,001,013 | ||||||||||||||||||||
Distribution fees | 8,756,251 | 1,362,792 | 2,049,030 | 3,364,442 | 5,638,903 | ||||||||||||||||||||
Shareholder servicing | 7,571,531 | 1,152,561 | 6,101,736 | 2,754,913 | 6,052,977 | ||||||||||||||||||||
Shareholder reports | 1,369,570 | 394,374 | 1,645,247 | 569,290 | 1,502,809 | ||||||||||||||||||||
Administrative and office facilities | 707,610 | 104,051 | 769,414 | 295,296 | 552,288 | ||||||||||||||||||||
Custody | 514,804 | 187,229 | 540,572 | 412,921 | 452,321 | ||||||||||||||||||||
Trustees’ fees | 249,031 | 35,554 | 268,797 | 98,306 | 195,193 | ||||||||||||||||||||
Registration | 100,391 | 45,727 | 106,381 | 53,380 | 141,557 | ||||||||||||||||||||
Audit | 76,449 | 58,275 | 76,798 | 47,510 | 81,626 | ||||||||||||||||||||
Legal | 50,085 | 7,057 | 53,924 | 19,470 | 39,176 | ||||||||||||||||||||
Other expenses | 164,277 | 29,761 | 179,192 | 90,837 | 166,982 | ||||||||||||||||||||
Total expenses | 69,526,498 | 14,901,727 | 76,809,565 | 32,872,740 | 64,824,845 | ||||||||||||||||||||
Compensating balance credits | (3,152 | ) | (558 | ) | (2,525 | ) | (657 | ) | (3,346 | ) | |||||||||||||||
Fees waived by distributor | – | – | – | (133,218 | ) | – | |||||||||||||||||||
Expenses reimbursed by investment adviser | – | (70,596 | ) | – | (2,213,737 | ) | – | ||||||||||||||||||
Net expenses | 69,523,346 | 14,830,573 | 76,807,040 | 30,525,128 | 64,821,499 | ||||||||||||||||||||
Net investment income (loss) | 7,661,265 | (5,870,665 | ) | (452,026 | ) | 1,768,327 | 46,503,739 | ||||||||||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | |||||||||||||||||||||||||
Net realized gain (loss): | |||||||||||||||||||||||||
Investments in Non-Affiliated Companies | 451,344,048 | 88,716,899 | 610,256,253 | 347,535,614 | 516,286,074 | ||||||||||||||||||||
Investments in Affiliated Companies | 19,770,643 | (7,667,683 | ) | 262,800,780 | (8,922,607 | ) | 18,795 | ||||||||||||||||||
Foreign currency transactions | (38,724 | ) | (200,272 | ) | 26,901 | (102,360 | ) | (70,227 | ) | ||||||||||||||||
Net change in unrealized appreciation (depreciation): | |||||||||||||||||||||||||
Investments and foreign currency translations | 1,515,287,002 | 90,061,589 | 820,253,659 | (105,331,367 | ) | 895,356,626 | |||||||||||||||||||
Other assets and liabilities denominated in foreign currency | 3,676 | 7,687 | 77,238 | (11,841 | ) | 7,693 | |||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency | 1,986,366,645 | 170,918,220 | 1,693,414,831 | 233,167,439 | 1,411,598,961 | ||||||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | |||||||||||||||||||||||||
FROM INVESTMENT OPERATIONS | $ | 1,994,027,910 | $ | 165,047,555 | $ | 1,692,962,805 | $ | 234,935,766 | $ | 1,458,102,700 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 99 |
Statements of Operations | Year Ended December 31, 2013 |
Royce | Royce | Royce | Royce | Royce | |||||||||||||||||||||
Heritage | Opportunity | Special Equity | Value | Value Plus | |||||||||||||||||||||
Fund | Fund | Fund | Fund | Fund | |||||||||||||||||||||
INVESTMENT INCOME: | |||||||||||||||||||||||||
Income: | |||||||||||||||||||||||||
Dividends | |||||||||||||||||||||||||
Non-Affiliated Companies | $ | 4,660,359 | $ | 16,456,655 | $ | 17,379,672 | $ | 15,975,989 | $ | 10,197,121 | |||||||||||||||
Affiliated Companies | – | 48,629 | 24,950,359 | – | – | ||||||||||||||||||||
Foreign withholding tax | (150,561 | ) | (96,473 | ) | – | (269,910 | ) | (251,662 | ) | ||||||||||||||||
Interest | 1,540 | 24,506 | 56,167 | 6,235 | 7,233 | ||||||||||||||||||||
Securities lending | 13,874 | 1,644,078 | 14,028 | 340,604 | 848,802 | ||||||||||||||||||||
Total income | 4,525,212 | 18,077,395 | 42,400,226 | 16,052,918 | 10,801,494 | ||||||||||||||||||||
Expenses: | |||||||||||||||||||||||||
Investment advisory fees | 3,117,097 | 22,472,299 | 32,834,168 | 12,229,311 | 13,926,058 | ||||||||||||||||||||
Distribution fees | 738,330 | 983,245 | 1,397,359 | 2,379,417 | 2,570,221 | ||||||||||||||||||||
Shareholder servicing | 320,806 | 1,890,057 | 2,870,264 | 1,669,926 | 2,252,107 | ||||||||||||||||||||
Shareholder reports | 84,615 | 332,678 | 686,338 | 346,079 | 529,511 | ||||||||||||||||||||
Administrative and office facilities | 32,321 | 234,365 | 356,139 | 142,771 | 161,422 | ||||||||||||||||||||
Custody | 90,863 | 223,440 | 255,957 | 129,954 | 141,445 | ||||||||||||||||||||
Trustees’ fees | 11,448 | 83,333 | 126,046 | 49,137 | 55,358 | ||||||||||||||||||||
Registration | 42,696 | 60,863 | 92,511 | 61,113 | 60,603 | ||||||||||||||||||||
Audit | 35,086 | 53,489 | 64,907 | 42,579 | 41,988 | ||||||||||||||||||||
Legal | 2,288 | 16,804 | 25,436 | 9,748 | 10,917 | ||||||||||||||||||||
Other expenses | 19,329 | 51,134 | 74,962 | 40,482 | 48,725 | ||||||||||||||||||||
Total expenses | 4,494,879 | 26,401,707 | 38,784,087 | 17,100,517 | 19,798,355 | ||||||||||||||||||||
Compensating balance credits | (479 | ) | (1,008 | ) | (2,703 | ) | (1,055 | ) | (473 | ) | |||||||||||||||
Fees waived by distributor | (64,347 | ) | – | – | – | (188,179 | ) | ||||||||||||||||||
Expenses reimbursed by investment adviser | (12,453 | ) | – | (178,321 | ) | – | (15,946 | ) | |||||||||||||||||
Net expenses | 4,417,600 | 26,400,699 | 38,603,063 | 17,099,462 | 19,593,757 | ||||||||||||||||||||
Net investment income (loss) | 107,612 | (8,323,304 | ) | 3,797,163 | (1,046,544 | ) | (8,792,263 | ) | |||||||||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | |||||||||||||||||||||||||
Net realized gain (loss): | |||||||||||||||||||||||||
Investments in Non-Affiliated Companies | 42,819,919 | 321,726,879 | 182,578,101 | 104,439,732 | 254,482,045 | ||||||||||||||||||||
Investments in Affiliated Companies | – | 2,958,314 | 184,255,395 | – | (18,321,136 | ) | |||||||||||||||||||
Foreign currency transactions | (106,780 | ) | (1,893 | ) | – | 7,483 | 14,225 | ||||||||||||||||||
Net change in unrealized appreciation (depreciation): | |||||||||||||||||||||||||
Investments and foreign currency translations | 28,896,842 | 492,429,255 | 485,484,439 | 192,265,363 | 163,078,791 | ||||||||||||||||||||
Other assets and liabilities denominated in foreign currency | (39,909 | ) | 361 | – | 741 | 4,205 | |||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency | 71,570,072 | 817,112,916 | 852,317,935 | 296,713,319 | 399,258,130 | ||||||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | |||||||||||||||||||||||||
FROM INVESTMENT OPERATIONS | $ | 71,677,684 | $ | 808,789,612 | $ | 856,115,098 | $ | 295,666,775 | $ | 390,465,867 |
100 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
Statements of Operations | Year Ended December 31, 2013 |
Royce | Royce | Royce | Royce International | Royce | |||||||||||||||||||||
100 | Dividend | Global | Smaller- | Special Equity | |||||||||||||||||||||
Fund | Value Fund | Value Fund | Companies Fund | Multi-Cap Fund | |||||||||||||||||||||
INVESTMENT INCOME: | |||||||||||||||||||||||||
Income: | |||||||||||||||||||||||||
Dividends | $ | 3,367,291 | $ | 12,909,400 | $ | 7,492,444 | $ | 961,467 | $ | 3,221,730 | |||||||||||||||
Foreign withholding tax | (62,996 | ) | (337,672 | ) | (641,558 | ) | (68,830 | ) | – | ||||||||||||||||
Interest | 1,130 | 3,022 | 1,782 | 177 | 1,124 | ||||||||||||||||||||
Securities lending | 24,047 | 74,438 | 36,413 | – | – | ||||||||||||||||||||
Total income | 3,329,472 | 12,649,188 | 6,889,081 | 892,814 | 3,222,854 | ||||||||||||||||||||
Expenses: | |||||||||||||||||||||||||
Investment advisory fees | 2,972,121 | 5,407,774 | 3,364,125 | 395,241 | 1,552,111 | ||||||||||||||||||||
Distribution fees | 589,648 | 845,802 | 424,673 | 79,048 | 152,481 | ||||||||||||||||||||
Shareholder servicing | 403,386 | 640,438 | 339,457 | 51,330 | 106,410 | ||||||||||||||||||||
Shareholder reports | 170,877 | 219,808 | 88,295 | 10,944 | 113,853 | ||||||||||||||||||||
Administrative and office facilities | 33,940 | 52,951 | 32,559 | 3,173 | 14,853 | ||||||||||||||||||||
Custody | 31,807 | 119,587 | 158,445 | 66,689 | 25,140 | ||||||||||||||||||||
Trustees’ fees | 11,704 | 19,139 | 11,147 | 1,137 | 5,405 | ||||||||||||||||||||
Registration | 32,964 | 54,727 | 47,904 | 22,502 | 41,347 | ||||||||||||||||||||
Audit | 31,468 | 41,888 | 41,607 | 23,990 | 31,433 | ||||||||||||||||||||
Legal | 2,311 | 3,864 | 2,241 | 228 | 1,105 | ||||||||||||||||||||
Other expenses | 11,821 | 15,045 | 12,173 | 1,629 | 3,904 | ||||||||||||||||||||
Total expenses | 4,292,047 | 7,421,023 | 4,522,626 | 655,911 | 2,048,042 | ||||||||||||||||||||
Compensating balance credits | (261 | ) | (1,066 | ) | (145 | ) | (30 | ) | (46 | ) | |||||||||||||||
Fees waived by investment adviser and distributor | (45,467 | ) | (37,292 | ) | – | (121,593 | ) | (25,588 | ) | ||||||||||||||||
Expenses reimbursed by investment adviser | (17,812 | ) | (16,813 | ) | (137,841 | ) | – | (141,788 | ) | ||||||||||||||||
Net expenses | 4,228,507 | 7,365,852 | 4,384,640 | 534,288 | 1,880,620 | ||||||||||||||||||||
Net investment income (loss) | (899,035 | ) | 5,283,336 | 2,504,441 | 358,526 | 1,342,234 | |||||||||||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | |||||||||||||||||||||||||
Net realized gain (loss): | |||||||||||||||||||||||||
Investments | 42,761,767 | 37,735,825 | (6,761,549 | ) | 2,856,363 | 12,335,278 | |||||||||||||||||||
Foreign currency transactions | 1,022 | (36,123 | ) | (15,084 | ) | (23,443 | ) | – | |||||||||||||||||
Net change in unrealized appreciation (depreciation): | |||||||||||||||||||||||||
Investments and foreign currency translations | 37,487,250 | 100,304,189 | 18,946,711 | 855,268 | 32,879,863 | ||||||||||||||||||||
Other assets and liabilities denominated in foreign currency | 1,129 | (35,764 | ) | 18,876 | (7,550 | ) | – | ||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency | 80,251,168 | 137,968,127 | 12,188,954 | 3,680,638 | 45,215,141 | ||||||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | |||||||||||||||||||||||||
FROM INVESTMENT OPERATIONS | $ | 79,352,133 | $ | 143,251,463 | $ | 14,693,395 | $ | 4,039,164 | $ | 46,557,375 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 101 |
|
Financial Highlights |
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| Net |
| Net Realized and Unrealized |
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| Distributions from Net |
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| Ratio of Expenses to Average Net Assets |
| Ratio of Net Investment |
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| Value, |
| Investment |
| Gain (Loss) on |
| Total from Investment Operations |
| from Net Investment Income |
| Realized Gain on |
| Distributions |
| Total Distributions |
| Shareholder Redemption Fees |
| Net Asset |
| Total Return |
| Net Assets, |
| Prior to Fee |
| Prior |
| Net of |
| Income (Loss) |
| Portfolio Turnover Rate |
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Royce Pennsylvania Mutual Fund – Investment Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 11.50 |
| $ | 0.03 |
| $ | 3.99 |
| $ | 4.02 |
| $ | (0.00 | ) | $ | (0.79 | ) | $ | – |
| $ | (0.79 | ) | $ | – |
| $ | 14.73 |
|
| 35.25 | % | $ | 5,033,318 |
|
| 0.92 | % |
|
| 0.92 | % |
|
| 0.92 | % |
|
| 0.24 | % |
|
| 26 | % |
|
2012 |
|
| 10.76 |
|
| 0.15 |
|
| 1.39 |
|
| 1.54 |
|
| (0.15 | ) |
| (0.65 | ) |
| – |
|
| (0.80 | ) |
| – |
|
| 11.50 |
|
| 14.58 |
|
| 4,232,988 |
|
| 0.89 |
|
|
| 0.89 |
|
|
| 0.89 |
|
|
| 1.19 |
|
|
| 22 |
|
|
2011 |
|
| 11.65 |
|
| 0.01 |
|
| (0.50 | ) |
| (0.49 | ) |
| (0.02 | ) |
| (0.38 | ) |
| – |
|
| (0.40 | ) |
| – |
|
| 10.76 |
|
| (4.17 | ) |
| 4,266,754 |
|
| 0.90 |
|
|
| 0.90 |
|
|
| 0.90 |
|
|
| 0.11 |
|
|
| 20 |
|
|
2010 |
|
| 9.45 |
|
| 0.06 |
|
| 2.19 |
|
| 2.25 |
|
| (0.05 | ) |
| – |
|
| – |
|
| (0.05 | ) |
| – |
|
| 11.65 |
|
| 23.86 |
|
| 4,735,403 |
|
| 0.90 |
|
|
| 0.90 |
|
|
| 0.90 |
|
|
| 0.63 |
|
|
| 25 |
|
|
2009 |
|
| 6.94 |
|
| 0.02 |
|
| 2.50 |
|
| 2.52 |
|
| (0.01 | ) |
| – |
|
| – |
|
| (0.01 | ) |
| – |
|
| 9.45 |
|
| 36.28 |
|
| 3,555,507 |
|
| 0.92 |
|
|
| 0.92 |
|
|
| 0.92 |
|
|
| 0.33 |
|
|
| 23 |
|
|
Royce Pennsylvania Mutual Fund – Service Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 11.51 |
| $ | (0.01 | ) | $ | 3.98 |
| $ | 3.97 |
| $ | – |
| $ | (0.79 | ) | $ | – |
| $ | (0.79 | ) | $ | – |
| $ | 14.69 |
|
| 34.77 | % | $ | 591,534 |
|
| 1.25 | % |
|
| 1.25 | % |
|
| 1.25 | % |
|
| (0.08 | )% |
|
| 26 | % |
|
2012 |
|
| 10.75 |
|
| 0.10 |
|
| 1.40 |
|
| 1.50 |
|
| (0.09 | ) |
| (0.65 | ) |
| – |
|
| (0.74 | ) |
| – |
|
| 11.51 |
|
| 14.15 |
|
| 473,624 |
|
| 1.24 |
|
|
| 1.24 |
|
|
| 1.24 |
|
|
| 0.90 |
|
|
| 22 |
|
|
2011 |
|
| 11.65 |
|
| (0.02 | ) |
| (0.50 | ) |
| (0.52 | ) |
| – |
|
| (0.38 | ) |
| – |
|
| (0.38 | ) |
| – |
|
| 10.75 |
|
| (4.42 | ) |
| 406,052 |
|
| 1.19 |
|
|
| 1.19 |
|
|
| 1.19 |
|
|
| (0.18 | ) |
|
| 20 |
|
|
2010 |
|
| 9.41 |
|
| 0.02 |
|
| 2.20 |
|
| 2.22 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 0.02 |
|
| 11.65 |
|
| 23.80 |
|
| 448,784 |
|
| 1.27 |
|
|
| 1.27 |
|
|
| 1.25 |
|
|
| 0.18 |
|
|
| 25 |
|
|
2009 |
|
| 6.90 |
|
| (0.00 | ) |
| 2.49 |
|
| 2.49 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 0.02 |
|
| 9.41 |
|
| 36.38 |
|
| 609,445 |
|
| 1.31 |
|
|
| 1.31 |
|
|
| 1.29 |
|
|
| (0.05 | ) |
|
| 23 |
|
|
Royce Pennsylvania Mutual Fund – Consultant Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 10.29 |
| $ | (0.09 | ) | $ | 3.55 |
| $ | 3.46 |
| $ | – |
| $ | (0.79 | ) | $ | – |
| $ | (0.79 | ) | $ | – |
| $ | 12.96 |
|
| 33.94 | % | $ | 788,017 |
|
| 1.94 | % |
|
| 1.94 | % |
|
| 1.94 | % |
|
| (0.78 | )% |
|
| 26 | % |
|
2012 |
|
| 9.69 |
|
| 0.01 |
|
| 1.25 |
|
| 1.26 |
|
| (0.01 | ) |
| (0.65 | ) |
| – |
|
| (0.66 | ) |
| – |
|
| 10.29 |
|
| 13.27 |
|
| 654,642 |
|
| 1.97 |
|
|
| 1.97 |
|
|
| 1.97 |
|
|
| 0.12 |
|
|
| 22 |
|
|
2011 |
|
| 10.61 |
|
| (0.09 | ) |
| (0.45 | ) |
| (0.54 | ) |
| – |
|
| (0.38 | ) |
| – |
|
| (0.38 | ) |
| – |
|
| 9.69 |
|
| (5.05 | ) |
| 664,778 |
|
| 1.85 |
|
|
| 1.85 |
|
|
| 1.85 |
|
|
| (0.85 | ) |
|
| 20 |
|
|
2010 |
|
| 8.65 |
|
| (0.03 | ) |
| 1.99 |
|
| 1.96 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 10.61 |
|
| 22.66 |
|
| 841,525 |
|
| 1.87 |
|
|
| 1.87 |
|
|
| 1.87 |
|
|
| (0.36 | ) |
|
| 25 |
|
|
2009 |
|
| 6.40 |
|
| (0.05 | ) |
| 2.30 |
|
| 2.25 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 8.65 |
|
| 35.16 |
|
| 757,734 |
|
| 1.89 |
|
|
| 1.89 |
|
|
| 1.89 |
|
|
| (0.64 | ) |
|
| 23 |
|
|
Royce Pennsylvania Mutual Fund – Institutional Class a | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 11.52 |
| $ | 0.05 |
| $ | 3.99 |
| $ | 4.04 |
| $ | (0.02 | ) | $ | (0.79 | ) | $ | – |
| $ | (0.81 | ) | $ | – |
| $ | 14.75 |
|
| 35.34 | % | $ | 818,212 |
|
| 0.79 | % |
|
| 0.79 | % |
|
| 0.79 | % |
|
| 0.40 | % |
|
| 26 | % |
|
2012 |
|
| 10.79 |
|
| 0.13 |
|
| 1.43 |
|
| 1.56 |
|
| (0.18 | ) |
| (0.65 | ) |
| – |
|
| (0.83 | ) |
| – |
|
| 11.52 |
|
| 14.72 |
|
| 488,052 |
|
| 0.80 |
|
|
| 0.80 |
|
|
| 0.80 |
|
|
| 1.53 |
|
|
| 22 |
|
|
2011 |
|
| 12.19 |
|
| 0.03 |
|
| (1.05 | ) |
| (1.02 | ) |
| – |
|
| (0.38 | ) |
| – |
|
| (0.38 | ) |
| – |
|
| 10.79 |
|
| (8.33 | )1 |
| 241,951 |
|
| 0.78 |
|
| 0.78 |
|
| 0.78 |
|
| 0.46 |
|
| 20 |
|
| ||||
Royce Pennsylvania Mutual Fund – R Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 11.22 |
| $ | (0.05 | ) | $ | 3.88 |
| $ | 3.83 |
| $ | – |
| $ | (0.79 | ) | $ | – |
| $ | (0.79 | ) | $ | – |
| $ | 14.26 |
|
| 34.42 | % | $ | 44,094 |
|
| 1.56 | % |
|
| 1.56 | % |
|
| 1.56 | % |
|
| (0.39 | )% |
|
| 26 | % |
|
2012 |
|
| 10.50 |
|
| 0.07 |
|
| 1.35 |
|
| 1.42 |
|
| (0.05 | ) |
| (0.65 | ) |
| – |
|
| (0.70 | ) |
| – |
|
| 11.22 |
|
| 13.79 |
|
| 32,977 |
|
| 1.50 |
|
|
| 1.50 |
|
|
| 1.50 |
|
|
| 0.70 |
|
|
| 22 |
|
|
2011 |
|
| 11.43 |
|
| (0.05 | ) |
| (0.50 | ) |
| (0.55 | ) |
| – |
|
| (0.38 | ) |
| – |
|
| (0.38 | ) |
| – |
|
| 10.50 |
|
| (4.77 | ) |
| 22,542 |
|
| 1.51 |
|
|
| 1.51 |
|
|
| 1.51 |
|
|
| (0.47 | ) |
|
| 20 |
|
|
2010 |
|
| 9.28 |
|
| 0.01 |
|
| 2.14 |
|
| 2.15 |
|
| (0.00 | ) |
| – |
|
| – |
|
| (0.00 | ) |
| – |
|
| 11.43 |
|
| 23.21 |
|
| 17,868 |
|
| 1.51 |
|
|
| 1.51 |
|
|
| 1.51 |
|
|
| 0.06 |
|
|
| 25 |
|
|
2009 |
|
| 6.87 |
|
| (0.05 | ) |
| 2.46 |
|
| 2.41 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 9.28 |
|
| 35.08 |
|
| 9,808 |
|
| 1.95 |
|
|
| 1.95 |
|
|
| 1.84 |
|
|
| (0.61 | ) |
|
| 23 |
|
|
Royce Pennsylvania Mutual Fund – K Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 10.29 |
| $ | (0.02 | ) | $ | 3.56 |
| $ | 3.54 |
| $ | – |
| $ | (0.79 | ) | $ | – |
| $ | (0.79 | ) | $ | – |
| $ | 13.04 |
|
| 34.72 | % | $ | 11,685 |
|
| 1.37 | % |
|
| 1.37 | % |
|
| 1.37 | % |
|
| (0.19 | )% |
|
| 26 | % |
|
2012 |
|
| 9.68 |
|
| 0.09 |
|
| 1.24 |
|
| 1.33 |
|
| (0.07 | ) |
| (0.65 | ) |
| – |
|
| (0.72 | ) |
| – |
|
| 10.29 |
|
| 14.04 |
|
| 8,849 |
|
| 1.26 |
|
|
| 1.26 |
|
|
| 1.26 |
|
|
| 0.94 |
|
|
| 22 |
|
|
2011 |
|
| 10.57 |
|
| (0.05 | ) |
| (0.46 | ) |
| (0.51 | ) |
| – |
|
| (0.38 | ) |
| – |
|
| (0.38 | ) |
| – |
|
| 9.68 |
|
| (4.78 | ) |
| 5,800 |
|
| 1.55 |
|
|
| 1.55 |
|
|
| 1.55 |
|
|
| (0.49 | ) |
|
| 20 |
|
|
2010 |
|
| 8.59 |
|
| 0.00 |
|
| 1.98 |
|
| 1.98 |
|
| (0.00 | ) |
| – |
|
| – |
|
| (0.00 | ) |
| – |
|
| 10.57 |
|
| 23.11 |
|
| 3,760 |
|
| 1.61 |
|
|
| 1.61 |
|
|
| 1.59 |
|
|
| 0.01 |
|
|
| 25 |
|
|
2009 |
|
| 6.34 |
|
| (0.02 | ) |
| 2.27 |
|
| 2.25 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 8.59 |
|
| 35.49 |
|
| 1,920 |
|
| 1.79 |
|
|
| 1.79 |
|
|
| 1.59 |
|
|
| (0.34 | ) |
|
| 23 |
|
|
Royce Micro-Cap Fund – Investment Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 14.78 |
| $ | (0.08 | ) | $ | 3.19 |
| $ | 3.11 |
| $ | (0.02 | ) | $ | (1.19 | ) | $ | – |
| $ | (1.21 | ) | $ | – |
| $ | 16.68 |
|
| 21.29 | % | $ | 650,773 |
|
| 1.53 | % |
|
| 1.53 | % |
|
| 1.53 | % |
|
| (0.52 | )% |
|
| 22 | % |
|
2012 |
|
| 14.55 |
|
| 0.05 |
|
| 1.07 |
|
| 1.12 |
|
| (0.01 | ) |
| (0.88 | ) |
| – |
|
| (0.89 | ) |
| – |
|
| 14.78 |
|
| 7.93 |
|
| 740,364 |
|
| 1.47 |
|
|
| 1.47 |
|
|
| 1.47 |
|
|
| 0.29 |
|
|
| 15 |
|
|
2011 |
|
| 17.57 |
|
| (0.07 | ) |
| (2.05 | ) |
| (2.12 | ) |
| (0.20 | ) |
| (0.70 | ) |
| – |
|
| (0.90 | ) |
| – |
|
| 14.55 |
|
| (12.04 | ) |
| 904,168 |
|
| 1.50 |
|
|
| 1.50 |
|
|
| 1.50 |
|
|
| (0.50 | ) |
|
| 35 |
|
|
2010 |
|
| 13.71 |
|
| (0.03 | ) |
| 4.14 |
|
| 4.11 |
|
| (0.25 | ) |
| – |
|
| – |
|
| (0.25 | ) |
| – |
|
| 17.57 |
|
| 30.06 |
|
| 1,085,782 |
|
| 1.50 |
|
|
| 1.50 |
|
|
| 1.50 |
|
|
| (0.27 | ) |
|
| 36 |
|
|
2009 |
|
| 8.93 |
|
| (0.06 | ) |
| 5.02 |
|
| 4.96 |
|
| (0.18 | ) |
| – |
|
| – |
|
| (0.18 | ) |
| – |
|
| 13.71 |
|
| 55.67 |
|
| 844,859 |
|
| 1.54 |
|
|
| 1.54 |
|
|
| 1.54 |
|
|
| (0.41 | ) |
|
| 34 |
|
|
102 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
|
Financial Highlights |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Net Asset |
| Net |
| Net Realized and Unrealized |
|
| Distributions |
| Distributions from Net |
|
|
|
|
|
|
|
|
| Ratio of Expenses to Average Net Assets |
| Ratio of Net Investment |
|
| ||||||||||||||||||||||||||||||||
|
| Value, |
| Investment |
| Gain (Loss) on |
| Total from Investment Operations |
| from Net Investment Income |
| Realized Gain on |
| Distributions |
| Total Distributions |
| Shareholder Redemption Fees |
| Net Asset |
| Total Return |
| Net Assets, |
| Prior to Fee |
| Prior |
| Net of |
| Income (Loss) |
| Portfolio Turnover Rate |
| ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royce Micro-Cap Fund – Service Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 14.61 |
| $ | (0.10 | ) | $ | 3.16 |
| $ | 3.06 |
| $ | – |
| $ | (1.19 | ) | $ | – |
| $ | (1.19 | ) | $ | – |
| $ | 16.48 |
|
| 21.20 | % | $ | 79,890 |
|
| 1.74 | % |
|
| 1.74 | % |
|
| 1.66 | % |
|
| (0.66 | )% |
|
| 22 | % |
|
2012 |
|
| 14.41 |
|
| 0.02 |
|
| 1.06 |
|
| 1.08 |
|
| – |
|
| (0.88 | ) |
| – |
|
| (0.88 | ) |
| – |
|
| 14.61 |
|
| 7.76 |
|
| 109,457 |
|
| 1.74 |
|
|
| 1.74 |
|
|
| 1.66 |
|
|
| 0.14 |
|
|
| 15 |
|
|
2011 |
|
| 17.43 |
|
| (0.10 | ) |
| (2.04 | ) |
| (2.14 | ) |
| (0.18 | ) |
| (0.70 | ) |
| – |
|
| (0.88 | ) |
| – |
|
| 14.41 |
|
| (12.23 | ) |
| 122,479 |
|
| 1.76 |
|
|
| 1.76 |
|
|
| 1.66 |
|
|
| (0.65 | ) |
|
| 35 |
|
|
2010 |
|
| 13.61 |
|
| (0.08 | ) |
| 4.14 |
|
| 4.06 |
|
| (0.24 | ) |
| – |
|
| – |
|
| (0.24 | ) |
| – |
|
| 17.43 |
|
| 29.85 |
|
| 139,911 |
|
| 1.78 |
|
|
| 1.78 |
|
|
| 1.66 |
|
|
| (0.41 | ) |
|
| 36 |
|
|
2009 |
|
| 8.87 |
|
| (0.10 | ) |
| 5.01 |
|
| 4.91 |
|
| (0.18 | ) |
| – |
|
| – |
|
| (0.18 | ) |
| 0.01 |
|
| 13.61 |
|
| 55.49 |
|
| 84,771 |
|
| 1.77 |
|
|
| 1.77 |
|
|
| 1.66 |
|
|
| (0.53 | ) |
|
| 34 |
|
|
Royce Micro-Cap Fund – Consultant Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 13.08 |
| $ | (0.21 | ) | $ | 2.80 |
| $ | 2.59 |
| $ | – |
| $ | (1.19 | ) | $ | – |
| $ | (1.19 | ) | $ | – |
| $ | 14.48 |
|
| 20.08 | % | $ | 117,538 |
|
| 2.52 | % |
|
| 2.52 | % |
|
| 2.52 | % |
|
| (1.51 | )% |
|
| 22 | % |
|
2012 |
|
| 13.11 |
|
| (0.10 | ) |
| 0.95 |
|
| 0.85 |
|
| – |
|
| (0.88 | ) |
| – |
|
| (0.88 | ) |
| – |
|
| 13.08 |
|
| 6.77 |
|
| 120,871 |
|
| 2.55 |
|
|
| 2.55 |
|
|
| 2.55 |
|
|
| (0.77 | ) |
|
| 15 |
|
|
2011 |
|
| 15.91 |
|
| (0.21 | ) |
| (1.84 | ) |
| (2.05 | ) |
| (0.05 | ) |
| (0.70 | ) |
| – |
|
| (0.75 | ) |
| – |
|
| 13.11 |
|
| (12.86 | ) |
| 134,752 |
|
| 2.42 |
|
|
| 2.42 |
|
|
| 2.42 |
|
|
| (1.41 | ) |
|
| 35 |
|
|
2010 |
|
| 12.45 |
|
| (0.15 | ) |
| 3.74 |
|
| 3.59 |
|
| (0.13 | ) |
| – |
|
| – |
|
| (0.13 | ) |
| – |
|
| 15.91 |
|
| 28.85 |
|
| 181,746 |
|
| 2.43 |
|
|
| 2.43 |
|
|
| 2.43 |
|
|
| (1.20 | ) |
|
| 36 |
|
|
2009 |
|
| 8.14 |
|
| (0.13 | ) |
| 4.53 |
|
| 4.40 |
|
| (0.09 | ) |
| – |
|
| – |
|
| (0.09 | ) |
| – |
|
| 12.45 |
|
| 54.14 |
|
| 149,454 |
|
| 2.46 |
|
|
| 2.46 |
|
|
| 2.46 |
|
|
| (1.30 | ) |
|
| 34 |
|
|
Royce Premier Fund – Investment Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 19.16 |
| $ | 0.00 |
| $ | 5.22 |
| $ | 5.22 |
| $ | – |
| $ | (2.27 | ) | $ | – |
| $ | (2.27 | ) | $ | – |
| $ | 22.11 |
|
| 27.73 | % | $ | 5,096,793 |
|
| 1.09 | % |
|
| 1.09 | % |
|
| 1.09 | % |
|
| 0.02 | % |
|
| 11 | % |
|
2012 |
|
| 18.52 |
|
| 0.24 |
|
| 1.85 |
|
| 2.09 |
|
| (0.24 | ) |
| (1.21 | ) |
| – |
|
| (1.45 | ) |
| – |
|
| 19.16 |
|
| 11.45 |
|
| 4,629,272 |
|
| 1.06 |
|
|
| 1.06 |
|
|
| 1.06 |
|
|
| 1.19 |
|
|
| 7 |
|
|
2011 |
|
| 20.35 |
|
| (0.02 | ) |
| (0.17 | ) |
| (0.19 | ) |
| (0.05 | ) |
| (1.59 | ) |
| – |
|
| (1.64 | ) |
| – |
|
| 18.52 |
|
| (0.86 | ) |
| 4,539,127 |
|
| 1.09 |
|
|
| 1.09 |
|
|
| 1.09 |
|
|
| (0.11 | ) |
|
| 18 |
|
|
2010 |
|
| 16.31 |
|
| (0.01 | ) |
| 4.32 |
|
| 4.31 |
|
| – |
|
| (0.27 | ) |
| – |
|
| (0.27 | ) |
| – |
|
| 20.35 |
|
| 26.46 |
|
| 4,961,891 |
|
| 1.12 |
|
|
| 1.12 |
|
|
| 1.12 |
|
|
| (0.07 | ) |
|
| 10 |
|
|
2009 |
|
| 12.24 |
|
| (0.02 | ) |
| 4.09 |
|
| 4.07 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 16.31 |
|
| 33.25 |
|
| 3,911,502 |
|
| 1.15 |
|
|
| 1.15 |
|
|
| 1.15 |
|
|
| (0.14 | ) |
|
| 14 |
|
|
Royce Premier Fund – Service Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 18.89 |
| $ | (0.07 | ) | $ | 5.15 |
| $ | 5.08 |
| $ | – |
| $ | (2.27 | ) | $ | – |
| $ | (2.27 | ) | $ | – |
| $ | 21.70 |
|
| 27.39 | % | $ | 318,860 |
|
| 1.38 | % |
|
| 1.38 | % |
|
| 1.38 | % |
|
| (0.33 | )% |
|
| 11 | % |
|
2012 |
|
| 18.23 |
|
| 0.19 |
|
| 1.81 |
|
| 2.00 |
|
| (0.13 | ) |
| (1.21 | ) |
| – |
|
| (1.34 | ) |
| – |
|
| 18.89 |
|
| 11.14 |
|
| 560,553 |
|
| 1.33 |
|
|
| 1.33 |
|
|
| 1.32 |
|
|
| 0.92 |
|
|
| 7 |
|
|
2011 |
|
| 20.07 |
|
| (0.07 | ) |
| (0.16 | ) |
| (0.23 | ) |
| (0.02 | ) |
| (1.59 | ) |
| – |
|
| (1.61 | ) |
| – |
|
| 18.23 |
|
| (1.07 | ) |
| 628,824 |
|
| 1.34 |
|
|
| 1.34 |
|
|
| 1.32 |
|
|
| (0.33 | ) |
|
| 18 |
|
|
2010 |
|
| 16.12 |
|
| (0.05 | ) |
| 4.27 |
|
| 4.22 |
|
| – |
|
| (0.27 | ) |
| – |
|
| (0.27 | ) |
| – |
|
| 20.07 |
|
| 26.22 |
|
| 584,817 |
|
| 1.39 |
|
|
| 1.39 |
|
|
| 1.37 |
|
|
| (0.30 | ) |
|
| 10 |
|
|
2009 |
|
| 12.14 |
|
| (0.06 | ) |
| 4.04 |
|
| 3.98 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 16.12 |
|
| 32.78 |
|
| 377,079 |
|
| 1.44 |
|
|
| 1.44 |
|
|
| 1.43 |
|
|
| (0.41 | ) |
|
| 14 |
|
|
Royce Premier Fund – Consultant Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 17.35 |
| $ | (0.20 | ) | $ | 4.70 |
| $ | 4.50 |
| $ | – |
| $ | (2.27 | ) | $ | – |
| $ | (2.27 | ) | $ | – |
| $ | 19.58 |
|
| 26.47 | % | $ | 66,712 |
|
| 2.13 | % |
|
| 2.13 | % |
|
| 2.13 | % |
|
| (1.02 | )% |
|
| 11 | % |
|
2012 |
|
| 16.87 |
|
| 0.02 |
|
| 1.69 |
|
| 1.71 |
|
| (0.02 | ) |
| (1.21 | ) |
| – |
|
| (1.23 | ) |
| – |
|
| 17.35 |
|
| 10.24 |
|
| 60,568 |
|
| 2.12 |
|
|
| 2.12 |
|
|
| 2.12 |
|
|
| 0.13 |
|
|
| 7 |
|
|
2011 |
|
| 18.81 |
|
| (0.21 | ) |
| (0.14 | ) |
| (0.35 | ) |
| – |
|
| (1.59 | ) |
| – |
|
| (1.59 | ) |
| – |
|
| 16.87 |
|
| (1.80 | ) |
| 59,766 |
|
| 2.05 |
|
|
| 2.05 |
|
|
| 2.05 |
|
|
| (1.07 | ) |
|
| 18 |
|
|
2010 |
|
| 15.24 |
|
| (0.17 | ) |
| 4.01 |
|
| 3.84 |
|
| – |
|
| (0.27 | ) |
| – |
|
| (0.27 | ) |
| – |
|
| 18.81 |
|
| 25.24 |
|
| 71,686 |
|
| 2.08 |
|
|
| 2.08 |
|
|
| 2.08 |
|
|
| (1.04 | ) |
|
| 10 |
|
|
2009 |
|
| 11.55 |
|
| (0.15 | ) |
| 3.84 |
|
| 3.69 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 15.24 |
|
| 31.95 |
|
| 58,241 |
|
| 2.14 |
|
|
| 2.14 |
|
|
| 2.14 |
|
|
| (1.13 | ) |
|
| 14 |
|
|
Royce Premier Fund – Institutional Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 19.30 |
| $ | 0.03 |
| $ | 5.25 |
| $ | 5.28 |
| $ | – |
| $ | (2.27 | ) | $ | – |
| $ | (2.27 | ) | $ | – |
| $ | 22.31 |
|
| 27.85 | % | $ | 989,100 |
|
| 0.98 | % |
|
| 0.98 | % |
|
| 0.98 | % |
|
| 0.13 | % |
|
| 11 | % |
|
2012 |
|
| 18.66 |
|
| 0.26 |
|
| 1.87 |
|
| 2.13 |
|
| (0.28 | ) |
| (1.21 | ) |
| – |
|
| (1.49 | ) |
| – |
|
| 19.30 |
|
| 11.57 |
|
| 866,277 |
|
| 0.98 |
|
|
| 0.98 |
|
|
| 0.98 |
|
|
| 1.30 |
|
|
| 7 |
|
|
2011 |
|
| 20.49 |
|
| 0.00 |
|
| (0.16 | ) |
| (0.16 | ) |
| (0.08 | ) |
| (1.59 | ) |
| – |
|
| (1.67 | ) |
| – |
|
| 18.66 |
|
| (0.73 | ) |
| 813,837 |
|
| 0.97 |
|
|
| 0.97 |
|
|
| 0.97 |
|
|
| 0.02 |
|
|
| 18 |
|
|
2010 |
|
| 16.40 |
|
| 0.01 |
|
| 4.35 |
|
| 4.36 |
|
| – |
|
| (0.27 | ) |
| – |
|
| (0.27 | ) |
| – |
|
| 20.49 |
|
| 26.62 |
|
| 706,870 |
|
| 0.99 |
|
|
| 0.99 |
|
|
| 0.99 |
|
|
| 0.07 |
|
|
| 10 |
|
|
2009 |
|
| 12.30 |
|
| (0.00 | ) |
| 4.10 |
|
| 4.10 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 16.40 |
|
| 33.33 |
|
| 516,900 |
|
| 1.03 |
|
|
| 1.03 |
|
|
| 1.03 |
|
|
| (0.01 | ) |
|
| 14 |
|
|
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 103 |
|
Financial Highlights |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Net Asset |
| Net |
| Net Realized and Unrealized |
|
| Distributions |
| Distributions from Net |
|
|
|
|
|
|
|
|
| Ratio of Expenses to Average Net Assets |
| Ratio of Net Investment |
|
| ||||||||||||||||||||||||||||||||
|
| Value, |
| Investment |
| Gain (Loss) on |
| Total from Investment Operations |
| from Net Investment Income |
| Realized Gain on |
| Distributions |
| Total Distributions |
| Shareholder Redemption Fees |
| Net Asset |
| Total Return |
| Net Assets, |
| Prior to Fee |
| Prior |
| Net of |
| Income (Loss) |
| Portfolio Turnover Rate |
| ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royce Premier Fund – W Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 19.20 |
| $ | 0.00 |
| $ | 5.23 |
| $ | 5.23 |
| $ | – |
| $ | (2.27 | ) | $ | – |
| $ | (2.27 | ) | $ | – |
| $ | 22.16 |
|
| 27.73 | % | $ | 552,732 |
|
| 1.09 | % |
|
| 1.09 | % |
|
| 1.09 | % |
|
| 0.01 | % |
|
| 11 | % |
|
2012 |
|
| 18.57 |
|
| 0.25 |
|
| 1.85 |
|
| 2.10 |
|
| (0.26 | ) |
| (1.21 | ) |
| – |
|
| (1.47 | ) |
| – |
|
| 19.20 |
|
| 11.46 |
|
| 533,763 |
|
| 1.05 |
|
|
| 1.05 |
|
|
| 1.05 |
|
|
| 1.19 |
|
|
| 7 |
|
|
2011 |
|
| 20.40 |
|
| (0.01 | ) |
| (0.15 | ) |
| (0.16 | ) |
| (0.08 | ) |
| (1.59 | ) |
| – |
|
| (1.67 | ) |
| – |
|
| 18.57 |
|
| (0.75 | ) |
| 549,648 |
|
| 1.00 |
|
|
| 1.00 |
|
|
| 1.00 |
|
|
| (0.01 | ) |
|
| 18 |
|
|
2010 |
|
| 16.33 |
|
| 0.01 |
|
| 4.33 |
|
| 4.34 |
|
| – |
|
| (0.27 | ) |
| – |
|
| (0.27 | ) |
| – |
|
| 20.40 |
|
| 26.61 |
|
| 425,397 |
|
| 1.02 |
|
|
| 1.02 |
|
|
| 1.02 |
|
|
| 0.04 |
|
|
| 10 |
|
|
2009 |
|
| 12.25 |
|
| (0.01 | ) |
| 4.09 |
|
| 4.08 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 16.33 |
|
| 33.31 |
|
| 319,120 |
|
| 1.07 |
|
|
| 1.07 |
|
|
| 1.07 |
|
|
| (0.06 | ) |
|
| 14 |
|
|
Royce Premier Fund – R Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 18.61 |
| $ | (0.13 | ) | $ | 5.04 |
| $ | 4.91 |
| $ | – |
| $ | (2.27 | ) | $ | – |
| $ | (2.27 | ) | $ | – |
| $ | 21.25 |
|
| 26.88 | % | $ | 32,577 |
|
| 1.74 | % |
|
| 1.74 | % |
|
| 1.74 | % |
|
| (0.63 | )% |
|
| 11 | % |
|
2012 |
|
| 17.99 |
|
| 0.11 |
|
| 1.80 |
|
| 1.91 |
|
| (0.08 | ) |
| (1.21 | ) |
| – |
|
| (1.29 | ) |
| – |
|
| 18.61 |
|
| 10.75 |
|
| 28,632 |
|
| 1.68 |
|
|
| 1.68 |
|
|
| 1.68 |
|
|
| 0.57 |
|
|
| 7 |
|
|
2011 |
|
| 19.91 |
|
| (0.14 | ) |
| (0.15 | ) |
| (0.29 | ) |
| (0.04 | ) |
| (1.59 | ) |
| – |
|
| (1.63 | ) |
| – |
|
| 17.99 |
|
| (1.38 | ) |
| 23,653 |
|
| 1.66 |
|
|
| 1.66 |
|
|
| 1.66 |
|
|
| (0.63 | ) |
|
| 18 |
|
|
2010 |
|
| 16.07 |
|
| (0.11 | ) |
| 4.22 |
|
| 4.11 |
|
| – |
|
| (0.27 | ) |
| – |
|
| (0.27 | ) |
| – |
|
| 19.91 |
|
| 25.61 |
|
| 10,185 |
|
| 1.78 |
|
|
| 1.78 |
|
|
| 1.78 |
|
|
| (0.64 | ) |
|
| 10 |
|
|
2009 |
|
| 12.15 |
|
| (0.12 | ) |
| 4.04 |
|
| 3.92 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 16.07 |
|
| 32.26 |
|
| 2,634 |
|
| 2.26 |
|
|
| 2.26 |
|
|
| 1.84 |
|
|
| (0.83 | ) |
|
| 14 |
|
|
Royce Premier Fund – K Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 8.19 |
| $ | (0.04 | ) | $ | 2.16 |
| $ | 2.12 |
| $ | – |
| $ | (2.27 | ) | $ | – |
| $ | (2.27 | ) | $ | – |
| $ | 8.04 |
|
| 27.01 | % | $ | 8,640 |
|
| 1.59 | % |
|
| 1.59 | % |
|
| 1.59 | % |
|
| (0.50 | )% |
|
| 11 | % |
|
2012 |
|
| 8.67 |
|
| 0.08 |
|
| 0.85 |
|
| 0.93 |
|
| (0.20 | ) |
| (1.21 | ) |
| – |
|
| (1.41 | ) |
| – |
|
| 8.19 |
|
| 11.00 |
|
| 9,707 |
|
| 1.47 |
|
|
| 1.47 |
|
|
| 1.47 |
|
|
| 0.79 |
|
|
| 7 |
|
|
2011 |
|
| 10.46 |
|
| (0.05 | ) |
| (0.09 | ) |
| (0.14 | ) |
| (0.06 | ) |
| (1.59 | ) |
| – |
|
| (1.65 | ) |
| – |
|
| 8.67 |
|
| (1.20 | ) |
| 8,776 |
|
| 1.49 |
|
|
| 1.49 |
|
|
| 1.49 |
|
|
| (0.46 | ) |
|
| 18 |
|
|
2010 |
|
| 8.53 |
|
| (0.04 | ) |
| 2.24 |
|
| 2.20 |
|
| – |
|
| (0.27 | ) |
| – |
|
| (0.27 | ) |
| – |
|
| 10.46 |
|
| 25.86 |
|
| 3,845 |
|
| 1.63 |
|
|
| 1.63 |
|
|
| 1.59 |
|
|
| (0.47 | ) |
|
| 10 |
|
|
2009 |
|
| 6.44 |
|
| (0.05 | ) |
| 2.14 |
|
| 2.09 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 8.53 |
|
| 32.45 |
|
| 1,551 |
|
| 2.39 |
|
|
| 2.39 |
|
|
| 1.59 |
|
|
| (0.60 | ) |
|
| 14 |
|
|
Royce Low-Priced Stock Fund – Investment Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 13.83 |
| $ | 0.05 |
| $ | 1.71 |
| $ | 1.76 |
| $ | (0.05 | ) | $ | (1.94 | ) | $ | – |
| $ | (1.99 | ) | $ | – |
| $ | 13.60 |
|
| 13.17 | % | $ | 88,568 |
|
| 1.37 | % |
|
| 1.37 | % |
|
| 1.24 | % |
|
| 0.18 | % |
|
| 16 | % |
|
2012 |
|
| 14.34 |
|
| 0.15 |
|
| 0.50 |
|
| 0.65 |
|
| (0.25 | ) |
| (0.91 | ) |
| – |
|
| (1.16 | ) |
| – |
|
| 13.83 |
|
| 4.79 |
|
| 255,335 |
|
| 1.26 |
|
|
| 1.26 |
|
|
| 1.24 |
|
|
| 0.86 |
|
|
| 8 |
|
|
2011 |
|
| 18.31 |
|
| (0.06 | ) |
| (2.57 | ) |
| (2.63 | ) |
| (0.14 | ) |
| (1.20 | ) |
| – |
|
| (1.34 | ) |
| – |
|
| 14.34 |
|
| (14.37 | ) |
| 276,247 |
|
| 1.26 |
|
|
| 1.26 |
|
|
| 1.24 |
|
|
| (0.15 | ) |
|
| 22 |
|
|
2010 |
|
| 14.08 |
|
| (0.03 | ) |
| 4.50 |
|
| 4.47 |
|
| (0.10 | ) |
| (0.14 | ) |
| – |
|
| (0.24 | ) |
| – |
|
| 18.31 |
|
| 31.77 |
|
| 148,144 |
|
| 1.26 |
|
|
| 1.26 |
|
|
| 1.24 |
|
|
| (0.10 | ) |
|
| 24 |
|
|
2009 |
|
| 9.17 |
|
| (0.01 | ) |
| 4.96 |
|
| 4.95 |
|
| (0.04 | ) |
| – |
|
| – |
|
| (0.04 | ) |
| – |
|
| 14.08 |
|
| 54.04 |
|
| 94,966 |
|
| 1.27 |
|
|
| 1.27 |
|
|
| 1.24 |
|
|
| (0.14 | ) |
|
| 22 |
|
|
Royce Low-Priced Stock Fund – Service Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 13.84 |
| $ | (0.00 | ) | $ | 1.72 |
| $ | 1.72 |
| $ | (0.00 | ) | $ | (1.94 | ) | $ | – |
| $ | (1.94 | ) | $ | – |
| $ | 13.62 |
|
| 12.91 | % | $ | 1,008,207 |
|
| 1.65 | % |
|
| 1.65 | % |
|
| 1.49 | % |
|
| (0.02 | )% |
|
| 16 | % |
|
2012 |
|
| 14.31 |
|
| 0.11 |
|
| 0.49 |
|
| 0.60 |
|
| (0.16 | ) |
| (0.91 | ) |
| – |
|
| (1.07 | ) |
| – |
|
| 13.84 |
|
| 4.48 |
|
| 1,800,089 |
|
| 1.57 |
|
|
| 1.57 |
|
|
| 1.49 |
|
|
| 0.54 |
|
|
| 8 |
|
|
2011 |
|
| 18.26 |
|
| (0.06 | ) |
| (2.60 | ) |
| (2.66 | ) |
| (0.09 | ) |
| (1.20 | ) |
| – |
|
| (1.29 | ) |
| – |
|
| 14.31 |
|
| (14.58 | ) |
| 2,489,189 |
|
| 1.56 |
|
|
| 1.56 |
|
|
| 1.49 |
|
|
| (0.39 | ) |
|
| 22 |
|
|
2010 |
|
| 14.05 |
|
| (0.05 | ) |
| 4.47 |
|
| 4.42 |
|
| (0.07 | ) |
| (0.14 | ) |
| – |
|
| (0.21 | ) |
| – |
|
| 18.26 |
|
| 31.49 |
|
| 3,456,142 |
|
| 1.60 |
|
|
| 1.60 |
|
|
| 1.49 |
|
|
| (0.37 | ) |
|
| 24 |
|
|
2009 |
|
| 9.16 |
|
| (0.04 | ) |
| 4.95 |
|
| 4.91 |
|
| (0.02 | ) |
| – |
|
| – |
|
| (0.02 | ) |
| – |
|
| 14.05 |
|
| 53.58 |
|
| 2,669,235 |
|
| 1.60 |
|
|
| 1.60 |
|
|
| 1.49 |
|
|
| (0.38 | ) |
|
| 22 |
|
|
Royce Low-Priced Stock Fund – Institutional Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 13.84 |
| $ | 0.05 |
| $ | 1.71 |
| $ | 1.76 |
| $ | (0.05 | ) | $ | (1.94 | ) | $ | – |
| $ | (1.99 | ) | $ | – |
| $ | 13.61 |
|
| 13.20 | % | $ | 345,983 |
|
| 1.22 | % |
|
| 1.22 | % |
|
| 1.22 | % |
|
| 0.26 | % |
|
| 16 | % |
|
2012 |
|
| 14.36 |
|
| 0.16 |
|
| 0.49 |
|
| 0.65 |
|
| (0.26 | ) |
| (0.91 | ) |
| – |
|
| (1.17 | ) |
| – |
|
| 13.84 |
|
| 4.81 |
|
| 969,664 |
|
| 1.20 |
|
|
| 1.20 |
|
|
| 1.20 |
|
|
| 0.92 |
|
|
| 8 |
|
|
2011 |
|
| 18.33 |
|
| (0.01 | ) |
| (2.61 | ) |
| (2.62 | ) |
| (0.15 | ) |
| (1.20 | ) |
| – |
|
| (1.35 | ) |
| – |
|
| 14.36 |
|
| (14.35 | ) |
| 991,706 |
|
| 1.17 |
|
|
| 1.17 |
|
|
| 1.17 |
|
|
| (0.07 | ) |
|
| 22 |
|
|
2010 |
|
| 14.09 |
|
| (0.02 | ) |
| 4.50 |
|
| 4.48 |
|
| (0.10 | ) |
| (0.14 | ) |
| – |
|
| (0.24 | ) |
| – |
|
| 18.33 |
|
| 31.82 |
|
| 1,077,659 |
|
| 1.18 |
|
|
| 1.18 |
|
|
| 1.18 |
|
|
| (0.04 | ) |
|
| 24 |
|
|
2009 |
|
| 9.18 |
|
| (0.01 | ) |
| 4.96 |
|
| 4.95 |
|
| (0.04 | ) |
| – |
|
| – |
|
| (0.04 | ) |
| – |
|
| 14.09 |
|
| 53.97 |
|
| 673,846 |
|
| 1.24 |
|
|
| 1.24 |
|
|
| 1.24 |
|
|
| (0.15 | ) |
|
| 22 |
|
|
104 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
|
Financial Highlights |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Net Asset |
| Net |
| Net Realized and Unrealized |
|
| Distributions |
| Distributions from Net |
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|
|
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|
| Ratio of Expenses to Average Net Assets |
| Ratio of Net Investment |
|
| ||||||||||||||||||||||||||||||||
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| Value, |
| Investment |
| Gain (Loss) on |
| Total from Investment Operations |
| from Net Investment Income |
| Realized Gain on |
| Distributions |
| Total Distributions |
| Shareholder Redemption Fees |
| Net Asset |
| Total Return |
| Net Assets, |
| Prior to Fee |
| Prior |
| Net of |
| Income (Loss) |
| Portfolio Turnover Rate |
| ||||||||||||||||||||||
|
|
|
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|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Royce Low-Priced Stock Fund – R Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 13.58 | $ | (0.05 | ) | $ | 1.68 |
| $ | 1.63 |
| $ | – |
| $ | (1.94 | ) | $ | – | $ | (1.94 | ) | $ | – | $ | 13.27 | 12.44 | % | $ | 3,130 | 2.21 | % | 2.21 | % | 1.84 | % | (0.37 | )% | 16 | % | |||||||||||||||||
2012 | 14.05 | 0.04 |
| 0.50 |
| 0.54 |
| (0.10 | ) | (0.91 | ) | – | (1.01 | ) | – | 13.58 | 4.10 | 5,823 | 2.05 | 2.05 | 1.84 | 0.22 | 8 | ||||||||||||||||||||||||||||||||||
2011 | 18.05 | (0.19 | ) | (2.49 | ) | (2.68 | ) | (0.12 | ) | (1.20 | ) | – | (1.32 | ) | – | 14.05 | (14.86 | ) | 7,337 | 1.95 | 1.95 | 1.84 | (0.72 | ) | 22 | ||||||||||||||||||||||||||||||||
2010 | 13.95 | (0.12 | ) | 4.44 | 4.32 | (0.08 | ) | (0.14 | ) | – | (0.22 | ) | – | 18.05 | 31.00 | 2,925 | 2.21 | 2.21 | 1.84 | (0.67 | ) | 24 | |||||||||||||||||||||||||||||||||||
2009 | 9.11 | (0.09 | ) | 4.92 | 4.83 | (0.00 | ) | – | – | (0.00 | ) | 0.01 | 13.95 | 53.13 | 1,134 | 3.02 | 3.02 | 1.84 | (0.76 | ) | 22 | ||||||||||||||||||||||||||||||||||||
Royce Low-Priced Stock Fund – K Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 7.90 | $ | (0.00 | ) | $ | 0.94 |
| $ | 0.94 |
| $ | (0.01 | ) | $ | (1.94 | ) | $ | – | $ | (1.95 | ) | $ | – | $ | 6.89 | 12.74 | % | $ | 3,841 | 1.92 | % | 1.92 | % | 1.59 | % | (0.12 | )% | 16 | % | |||||||||||||||||
2012 | 8.65 | 0.07 |
| 0.27 |
| 0.34 |
| (0.18 | ) | (0.91 | ) | – | (1.09 | ) | – | 7.90 | 4.42 | 6,253 | 1.71 | 1.71 | 1.59 | 0.40 | 8 | ||||||||||||||||||||||||||||||||||
2011 | 11.70 | (0.08 | ) | (1.63 | ) | (1.71 | ) | (0.14 | ) | (1.20 | ) | – | (1.34 | ) | – | 8.65 | (14.71 | ) | 8,719 | 1.68 | 1.68 | 1.59 | (0.48 | ) | 22 | ||||||||||||||||||||||||||||||||
2010 | 9.09 | (0.08 | ) | 2.93 | 2.85 | (0.10 | ) | (0.14 | ) | – | (0.24 | ) | – | 11.70 | 31.44 | 4,782 | 1.78 | 1.78 | 1.59 | (0.40 | ) | 24 | |||||||||||||||||||||||||||||||||||
2009 | 5.95 | (0.10 | ) | 3.28 | 3.18 | (0.04 | ) | – | – | (0.04 | ) | – | 9.09 | 53.45 | 676 | 4.75 | 4.75 | 1.59 | (0.44 | ) | 22 | ||||||||||||||||||||||||||||||||||||
Royce Total Return Fund – Investment Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 13.63 | $ | 0.16 | $ | 4.24 |
| $ | 4.40 |
| $ | (0.14 | ) | $ | (1.42 | ) | $ | – | $ | (1.56 | ) | $ | – | $ | 16.47 | 32.76 | % | $ | 3,657,904 | 1.13 | % | 1.13 | % | 1.13 | % | 1.00 | % | 21 | % | ||||||||||||||||||
2012 | 12.68 | 0.26 | 1.54 |
| 1.80 |
| (0.23 | ) | (0.62 | ) | – | (0.85 | ) | – | 13.63 | 14.42 | 3,044,664 | 1.10 | 1.10 | 1.10 | 1.89 | 17 | |||||||||||||||||||||||||||||||||||
2011 | 13.17 | 0.15 | (0.37 | ) | (0.22 | ) | (0.12 | ) | (0.15 | ) | – | (0.27 | ) | – | 12.68 | (1.68 | ) | 3,106,208 | 1.12 | 1.12 | 1.12 | 1.10 | 21 | ||||||||||||||||||||||||||||||||||
2010 | 10.81 | 0.19 | 2.32 | 2.51 | (0.15 | ) | – | – | (0.15 | ) | – | 13.17 | 23.47 | 3,562,002 | 1.14 | 1.14 | 1.14 | 1.64 | 15 | ||||||||||||||||||||||||||||||||||||||
2009 | 8.70 | 0.16 | 2.09 | 2.25 | (0.14 | ) | – | – | (0.14 | ) | – | 10.81 | 26.22 | 3,077,099 | 1.17 | 1.17 | 1.17 | 1.74 | 20 | ||||||||||||||||||||||||||||||||||||||
Royce Total Return Fund – Service Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 13.72 | $ | 0.11 | $ | 4.27 | $ | 4.38 | $ | (0.07 | ) | $ | (1.42 | ) | $ | – | $ | (1.49 | ) | $ | – | $ | 16.61 | 32.38 | % | $ | 493,111 | 1.48 | % | 1.48 | % | 1.48 | % | 0.68 | % | 21 | % | ||||||||||||||||||||
2012 | 12.71 | 0.22 | 1.55 | 1.77 | (0.14 | ) | (0.62 | ) | – | (0.76 | ) | – | 13.72 | 14.11 | 264,528 | 1.39 | 1.39 | 1.39 | 1.58 | 17 | |||||||||||||||||||||||||||||||||||||
2011 | 13.19 | 0.11 | (0.38 | ) | (0.27 | ) | (0.06 | ) | (0.15 | ) | – | (0.21 | ) | – | 12.71 | (2.01 | ) | 282,704 | 1.41 | 1.41 | 1.41 | 0.82 | 21 | ||||||||||||||||||||||||||||||||||
2010 | 10.81 | 0.16 | 2.32 | 2.48 | (0.10 | ) | – | – | (0.10 | ) | – | 13.19 | 23.11 | 295,656 | 1.42 | 1.42 | 1.42 | 1.39 | 15 | ||||||||||||||||||||||||||||||||||||||
2009 | 8.67 | 0.14 | 2.09 | 2.23 | (0.10 | ) | – | – | (0.10 | ) | 0.01 | 10.81 | 26.16 | 215,939 | 1.42 | 1.42 | 1.42 | 1.49 | 20 | ||||||||||||||||||||||||||||||||||||||
Royce Total Return Fund – Consultant Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 13.81 | $ | (0.00 | ) | $ | 4.29 | $ | 4.29 | $ | – | $ | (1.42 | ) | $ | – | $ | (1.42 | ) | $ | – | $ | 16.68 | 31.38 | % | $ | 404,498 | 2.15 | % | 2.15 | % | 2.15 | % | (0.02 | )% | 21 | % | ||||||||||||||||||||
2012 | 12.77 | 0.11 | 1.56 | 1.67 | (0.01 | ) | (0.62 | ) | – | (0.63 | ) | – | 13.81 | 13.19 | 331,116 | 2.20 | 2.20 | 2.20 | 0.80 | 17 | |||||||||||||||||||||||||||||||||||||
2011 | 13.27 | 0.02 | (0.37 | ) | (0.35 | ) | – | (0.15 | ) |
| – | (0.15 | ) | – | 12.77 | (2.64 | ) | 328,610 | 2.07 | 2.07 | 2.07 | 0.15 | 21 | ||||||||||||||||||||||||||||||||||
2010 | 10.90 | 0.08 | 2.33 | 2.41 | (0.04 | ) | – |
| – | (0.04 | ) | – | 13.27 | 22.18 | 391,886 | 2.09 | 2.09 | 2.09 | 0.68 | 15 | |||||||||||||||||||||||||||||||||||||
2009 | 8.76 | 0.07 | 2.12 | 2.19 | (0.05 | ) | – |
| – | (0.05 | ) | – | 10.90 | 25.12 | 366,367 | 2.12 | 2.12 | 2.12 | 0.78 | 20 | |||||||||||||||||||||||||||||||||||||
Royce Total Return Fund – Institutional Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 13.55 | $ | 0.18 | $ | 4.21 | $ | 4.39 | $ | (0.17 | ) | $ | (1.42 | ) | $ | – | $ | (1.59 | ) | $ | – | $ | 16.35 | 32.93 | % | $ | 621,447 | 1.00 | % | 1.00 | % | 1.00 | % | 1.15 | % | 21 | % | ||||||||||||||||||||
2012 | 12.64 | 0.27 | 1.54 | 1.81 | (0.28 | ) | (0.62 | ) | – | (0.90 | ) | – | 13.55 | 14.48 | 408,551 | 1.02 | 1.02 | 1.02 | 2.02 | 17 | |||||||||||||||||||||||||||||||||||||
2011 | 13.14 | 0.16 | (0.37 | ) | (0.21 | ) | (0.14 | ) | (0.15 | ) |
| – | (0.29 | ) | – | 12.64 | (1.55 | ) | 390,277 | 1.00 | 1.00 | 1.00 | 1.26 | 21 | |||||||||||||||||||||||||||||||||
2010 | 10.80 | 0.21 | 2.31 | 2.52 | (0.18 | ) | – |
| – | (0.18 | ) | – | 13.14 | 23.56 | 356,038 | 1.01 | 1.01 | 1.01 | 1.79 | 15 | |||||||||||||||||||||||||||||||||||||
2009 | 8.70 | 0.17 | 2.09 | 2.26 | (0.16 | ) | – |
| – | (0.16 | ) | – | 10.80 | 26.41 | 264,041 | 1.04 | 1.04 | 1.04 | 1.87 | 20 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 105 |
|
Financial Highlights |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Net Asset |
| Net |
| Net Realized and Unrealized |
|
| Distributions |
| Distributions from Net |
|
|
|
|
|
|
|
|
| Ratio of Expenses to Average Net Assets |
| Ratio of Net Investment |
|
| ||||||||||||||||||||||||||||||||||||||
|
| Value, |
| Investment |
| Gain (Loss) on |
| Total from Investment Operations |
| from Net Investment Income |
| Realized Gain on |
| Distributions |
| Total Distributions |
| Shareholder Redemption Fees |
| Net Asset |
| Total Return |
| Net Assets, |
| Prior to Fee |
| Prior |
| Net of |
| Income (Loss) |
| Portfolio Turnover Rate |
| ||||||||||||||||||||||||||||
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| ||||||
Royce Total Return Fund – W Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 13.62 | $ | 0.16 | $ | 4.23 | $ | 4.39 | $ | (0.14 | ) | $ | (1.42 | ) | $ | – | $ | (1.56 | ) | $ | – | $ | 16.45 | 32.71 | % | $ | 249,035 | 1.15 | % | 1.15 | % | 1.15 | % | 0.99 | % | 21 | % | ||||||||||||||||||||||||||
2012 | 12.69 | 0.26 | 1.54 | 1.80 | (0.25 | ) | (0.62 | ) | – | (0.87 | ) | – | 13.62 | 14.41 | 171,603 | 1.12 | 1.12 | 1.12 | 1.97 | 17 | |||||||||||||||||||||||||||||||||||||||||||
2011 | 13.19 | 0.16 | (0.37 | ) | (0.21 | ) | (0.14 | ) | (0.15 | ) |
| – | (0.29 | ) | – | 12.69 | (1.58 | ) | 132,488 | 1.05 | 1.05 | 1.05 | 1.27 | 21 | |||||||||||||||||||||||||||||||||||||||
2010 | 10.83 | 0.20 | 2.32 | 2.52 | (0.16 | ) | – |
| – | (0.16 | ) | – | 13.19 | 23.44 | 75,063 | 1.09 | 1.09 | 1.09 | 1.74 | 15 | |||||||||||||||||||||||||||||||||||||||||||
2009 | 8.71 | 0.16 | 2.10 | 2.26 | (0.14 | ) | – |
| – | (0.14 | ) | – | 10.83 | 26.28 | 48,058 | 1.13 | 1.13 | 1.13 | 1.78 | 20 | |||||||||||||||||||||||||||||||||||||||||||
Royce Total Return Fund – R Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 13.82 | $ | 0.06 | $ | 4.30 | $ | 4.36 | $ | (0.03 | ) | $ | (1.42 | ) | $ | – | $ | (1.45 | ) | $ | – | $ | 16.73 | 31.95 | % | $ | 72,541 | 1.75 | % | 1.75 | % | 1.75 | % | 0.39 | % | 21 | % | ||||||||||||||||||||||||||
2012 | 12.79 | 0.18 | 1.55 | 1.73 | (0.08 | ) | (0.62 | ) | – | (0.70 | ) | – | 13.82 | 13.66 | 48,797 | 1.74 | 1.74 | 1.74 | 1.36 | 17 | |||||||||||||||||||||||||||||||||||||||||||
2011 | 13.28 | 0.08 | (0.38 | ) | (0.30 | ) | (0.04 | ) | (0.15 | ) | – | (0.19 | ) | – | 12.79 | (2.23 | ) | 34,695 | 1.68 | 1.68 | 1.68 | 0.62 | 21 | ||||||||||||||||||||||||||||||||||||||||
2010 | 10.88 | 0.15 | 2.32 | 2.47 | (0.07 | ) | – | – | (0.07 | ) | – | 13.28 | 22.76 | 20,011 | 1.71 | 1.71 | 1.71 | 1.20 | 15 | ||||||||||||||||||||||||||||||||||||||||||||
2009 | 8.74 | 0.10 | 2.10 | 2.20 | (0.06 | ) | – | – | (0.06 | ) | – | 10.88 | 25.43 | 6,450 | 1.85 | 1.85 | 1.84 | 1.05 | 20 | ||||||||||||||||||||||||||||||||||||||||||||
Royce Total Return Fund – K Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 10.53 | $ | 0.07 | $ | 3.27 | $ | 3.34 | $ | (0.05 | ) | $ | (1.42 | ) | $ | – | $ | (1.47 | ) | $ | – | $ | 12.40 | 32.20 | % | $ | 196,344 | 1.50 | % | 1.50 | % | 1.50 | % | 0.62 | % | 21 | % | ||||||||||||||||||||||||||
2012 | 9.90 | 0.17 | 1.21 | 1.38 | (0.13 | ) | (0.62 | ) | – | (0.75 | ) | – | 10.53 | 14.08 | 163,412 | 1.43 | 1.43 | 1.43 | 1.51 | 17 | |||||||||||||||||||||||||||||||||||||||||||
2011 | 10.31 | 0.09 | (0.30 | ) | (0.21 | ) | (0.05 | ) | (0.15 | ) | – | (0.20 | ) | – | 9.90 | (1.97 | ) | 177,812 | 1.44 | 1.44 | 1.44 | 0.90 | 21 | ||||||||||||||||||||||||||||||||||||||||
2010 | 8.47 | 0.13 | 1.81 | 1.94 | (0.10 | ) | – | – | (0.10 | ) | – | 10.31 | 23.08 | 95,319 | 1.43 | 1.43 | 1.43 | 1.46 | 15 | ||||||||||||||||||||||||||||||||||||||||||||
2009 | 6.81 | 0.11 | 1.63 | 1.74 | (0.08 | ) | – | – | (0.08 | ) | – | 8.47 | 25.89 | 43,281 | 1.42 | 1.42 | 1.42 | 1.44 | 20 | ||||||||||||||||||||||||||||||||||||||||||||
Royce Heritage Fund – Investment Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 14.48 | $ | 0.03 | $ | 3.71 | $ | 3.74 | $ | (0.05 | ) | $ | (1.93 | ) | $ | – | $ | (1.98 | ) | $ | – | $ | 16.24 | 26.37 | % | $ | 117,306 | 1.13 | % | 1.13 | % | 1.13 | % | 0.36 | % | 79 | % | ||||||||||||||||||||||||||
2012 | 13.07 | 0.10 | 1.80 | 1.90 | (0.13 | ) | (0.36 | ) | – | (0.49 | ) | – | 14.48 | 14.70 | 40,374 | 1.20 | 1.20 | 1.20 | 0.94 | 39 | |||||||||||||||||||||||||||||||||||||||||||
2011 | 15.10 | 0.01 | (1.41 | ) | (1.40 | ) | (0.05 | ) | (0.59 | ) | – | (0.64 | ) | 0.01 | 13.07 | (9.16 | ) | 21,088 | 1.22 | 1.22 | 1.22 | 0.15 | 51 | ||||||||||||||||||||||||||||||||||||||||
2010 | 12.12 | 0.04 | 3.31 | 3.35 | (0.08 | ) | (0.29 | ) | – | (0.37 | ) | – | 15.10 | 27.71 | 13,313 | 1.25 | 1.25 | 1.24 | 0.35 | 66 | |||||||||||||||||||||||||||||||||||||||||||
2009 | 7.97 | 0.02 | 4.13 | 4.15 | – | – | – | – | – | 12.12 | 52.07 | 10,052 | 1.34 | 1.34 | 1.24 | 0.19 | 59 | ||||||||||||||||||||||||||||||||||||||||||||||
Royce Heritage Fund – Service Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 14.45 | $ | 0.00 | $ | 3.68 | $ | 3.68 | $ | (0.00 | ) | $ | (1.93 | ) | $ | – | $ | (1.93 | ) | $ | – | $ | 16.20 | 25.99 | % | $ | 223,533 | 1.45 | % | 1.45 | % | 1.42 | % | 0.02 | % | 79 | % | ||||||||||||||||||||||||||
2012 | 13.00 | 0.08 | 1.78 | 1.86 | (0.05 | ) | (0.36 | ) | – | (0.41 | ) | – | 14.45 | 14.39 | 203,112 | 1.46 | 1.46 | 1.45 | 0.56 | 39 | |||||||||||||||||||||||||||||||||||||||||||
2011 | 15.03 | (0.01 | ) | (1.40 | ) | (1.41 | ) | (0.03 | ) | (0.59 | ) | – | (0.62 | ) | – | 13.00 | (9.39 | ) | 218,770 | 1.47 | 1.47 | 1.44 | (0.07 | ) | 51 | ||||||||||||||||||||||||||||||||||||||
2010 | 12.07 | 0.03 | 3.28 | 3.31 | (0.06 | ) | (0.29 | ) | – | (0.35 | ) | – | 15.03 | 27.50 | 243,822 | 1.47 | 1.47 | 1.38 | 0.21 | 66 | |||||||||||||||||||||||||||||||||||||||||||
2009 | 7.95 | (0.00 | ) | 4.12 | 4.12 | – | – | – | – | – | 12.07 | 51.82 | 182,690 | 1.51 | 1.51 | 1.42 | (0.02 | ) | 59 | ||||||||||||||||||||||||||||||||||||||||||||
Royce Heritage Fund – Consultant Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 11.68 | $ | (0.12 | ) | $ | 2.94 | $ | 2.82 | $ | – | $ | (1.93 | ) | $ | – | $ | (1.93 | ) | $ | – | $ | 12.57 | 24.73 | % | $ | 15,942 | 2.37 | % | 2.37 | % | 2.37 | % | (0.93 | )% | 79 | % | ||||||||||||||||||||||||||
2012 | 10.64 | (0.04 | ) | 1.44 | 1.40 | – | (0.36 | ) | – | (0.36 | ) | – | 11.68 | 13.30 | 13,909 | 2.41 | 2.41 | 2.41 | (0.39 | ) | 39 | ||||||||||||||||||||||||||||||||||||||||||
2011 | 12.50 | (0.11 | ) | (1.16 | ) | (1.27 | ) | – | (0.59 | ) | – | (0.59 | ) | – | 10.64 | (10.14 | ) | 13,850 | 2.28 | 2.28 | 2.28 | (0.91 | ) | 51 | |||||||||||||||||||||||||||||||||||||||
2010 | 10.14 | (0.08 | ) | 2.73 | 2.65 | – | (0.29 | ) | – | (0.29 | ) | – | 12.50 | 26.22 | 12,801 | 2.36 | 2.36 | 2.36 | (0.77 | ) | 66 | ||||||||||||||||||||||||||||||||||||||||||
2009 | 6.75 | (0.09 | ) | 3.48 | 3.39 | – | – | – | – | – | 10.14 | 50.22 | 7,485 | 2.55 | 2.55 | 2.49 | (1.05 | ) | 59 |
106 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
|
Financial Highlights |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Net |
| Net |
| Net Realized and Unrealized |
|
| Distributions |
| Distributions from Net |
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| Ratio of Expenses to Average Net Assets |
| Ratio of Net Investment |
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| Asset Value, |
| Investment |
| Gain (Loss) on |
| Total from Investment Operations |
| from Net Investment Income |
| Realized Gain on |
| Distributions |
| Total Distributions |
| Shareholder Redemption Fees |
| Net Asset |
| Total Return |
| Net Assets, |
| Prior to Fee |
| Prior |
| Net of |
| Income (Loss) |
| Portfolio Turnover Rate |
| ||||||||||||||||||||||
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|
Royce Heritage Fund – R Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 10.86 | $ | (0.05 | ) | $ | 2.75 | $ | 2.70 | $ | – |
| $ | (1.93 | ) | $ | – | $ | (1.93 | ) | $ | – | $ | 11.63 | 25.51 | % | $ | 6,805 | 1.90 | % | 1.90 | % | 1.84 | % | (0.39 | )% | 79 | % | |||||||||||||||||||
2012 | 9.87 | 0.02 | 1.34 | 1.36 | (0.01 | ) | (0.36 | ) | – | (0.37 | ) | – | 10.86 | 13.88 | 4,832 | 1.95 | 1.95 | 1.84 | 0.17 | 39 | |||||||||||||||||||||||||||||||||||||
2011 | 11.63 | (0.06 | ) | (1.07 | ) | (1.13 | ) | (0.04 | ) | (0.59 | ) | – | (0.63 | ) | – | 9.87 | (9.73 | ) | 4,081 | 1.90 | 1.90 | 1.84 | (0.45 | ) | 51 | ||||||||||||||||||||||||||||||||
2010 | 9.43 | (0.03 | ) | 2.55 | 2.52 | (0.03 | ) | (0.29 | ) | – | (0.32 | ) | – | 11.63 | 26.84 | 1,909 | 2.22 | 2.22 | 1.84 | (0.25 | ) | 66 | |||||||||||||||||||||||||||||||||||
2009 | 6.23 | (0.05 | ) | 3.25 | 3.20 | – | – | – | – | – | 9.43 | 51.36 | 832 | 4.03 | 4.03 | 1.84 | (0.56 | ) | 59 | ||||||||||||||||||||||||||||||||||||||
Royce Heritage Fund – K Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 10.90 | $ | (0.02 | ) | $ | 2.75 | $ | 2.73 | $ | – |
| $ | (1.93 | ) | $ | – | $ | (1.93 | ) | $ | – | $ | 11.70 | 25.69 | % | $ | 6,419 | 1.70 | % | 1.70 | % | 1.59 | % | (0.15 | )% | 79 | % | |||||||||||||||||||
2012 | 9.93 | 0.04 | 1.36 | 1.40 | (0.07 | ) | (0.36 | ) | – | (0.43 | ) | – | 10.90 | 14.22 | 7,077 | 1.61 | 1.61 | 1.59 | 0.42 | 39 | |||||||||||||||||||||||||||||||||||||
2011 | 11.68 | (0.04 | ) | (1.08 | ) | (1.12 | ) | (0.04 | ) | (0.59 | ) | – | (0.63 | ) | – | 9.93 | (9.53 | ) | 7,787 | 1.66 | 1.66 | 1.59 | (0.24 | ) | 51 | ||||||||||||||||||||||||||||||||
2010 | 9.46 | (0.03 | ) | 2.60 | 2.57 | (0.06 | ) | (0.29 | ) | – | (0.35 | ) | – | 11.68 | 27.29 | 5,214 | 1.67 | 1.67 | 1.59 | (0.00 | ) | 66 | |||||||||||||||||||||||||||||||||||
2009 | 6.24 | (0.02 | ) | 3.24 | 3.22 | – | – | – | – | – | 9.46 | 51.60 | 287 | 5.82 | 5.82 | 1.59 | (0.26 | ) | 59 | ||||||||||||||||||||||||||||||||||||||
Royce Opportunity Fund – Investment Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 11.95 | $ | (0.05 | ) | $ | 5.18 | $ | 5.13 | $ | – |
| $ | (1.54 | ) | $ | – | $ | (1.54 | ) | $ | – | $ | 15.54 | 43.50 | % | $ | 1,426,214 | 1.16 | % | 1.16 | % | 1.16 | % | (0.36 | )% | 39 | % | |||||||||||||||||||
2012 | 10.32 | 0.00 | 2.30 | 2.30 | – | (0.67 | ) | – | (0.67 | ) | – | 11.95 | 22.59 | 921,473 | 1.13 | 1.13 | 1.13 | 0.02 | 34 | ||||||||||||||||||||||||||||||||||||||
2011 | 12.08 | (0.04 | ) | (1.53 | ) | (1.57 | ) | – | (0.19 | ) | – | (0.19 | ) | – | 10.32 | (12.95 | ) | 878,824 | 1.16 | 1.16 | 1.16 | (0.38 | ) | 35 | |||||||||||||||||||||||||||||||||
2010 | 9.03 | (0.04 | ) | 3.09 | 3.05 | – | – | – | – | – | 12.08 | 33.78 | 1,170,607 | 1.17 | 1.17 | 1.17 | (0.44 | ) | 47 | ||||||||||||||||||||||||||||||||||||||
2009 | 5.57 | (0.03 | ) | 3.49 | 3.46 | (0.00 | ) | – | – | (0.00 | ) | – | 9.03 | 62.14 | 836,268 | 1.22 | 1.22 | 1.22 | (0.43 | ) | 44 | ||||||||||||||||||||||||||||||||||||
Royce Opportunity Fund – Service Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 11.55 | $ | (0.09 | ) | $ | 5.00 | $ | 4.91 | $ | – |
| $ | (1.54 | ) | $ | – | $ | (1.54 | ) | $ | – | $ | 14.92 | 43.10 | % | $ | 208,237 | 1.47 | % | 1.47 | % | 1.47 | % | (0.67 | )% | 39 | % | |||||||||||||||||||
2012 | 10.03 | (0.04 | ) | 2.23 | 2.19 | – | (0.67 | ) | – | (0.67 | ) | – | 11.55 | 22.14 | 205,084 | 1.46 | 1.46 | 1.46 | (0.32 | ) | 34 | ||||||||||||||||||||||||||||||||||||
2011 | 11.78 | (0.08 | ) | (1.49 | ) | (1.57 | ) | – | (0.19 | ) | – | (0.19 | ) | 0.01 | 10.03 | (13.20 | ) | 160,496 | 1.48 | 1.48 | 1.48 | (0.73 | ) | 35 | |||||||||||||||||||||||||||||||||
2010 | 8.83 | (0.08 | ) | 3.03 | 2.95 | – | – | – | – | – | 11.78 | 33.41 | 312,728 | 1.46 | 1.46 | 1.46 | (0.78 | ) | 47 | ||||||||||||||||||||||||||||||||||||||
2009 | 5.46 | (0.05 | ) | 3.42 | 3.37 | – | – | – | – | – | 8.83 | 61.72 | 298,410 | 1.47 | 1.47 | 1.47 | (0.69 | ) | 44 | ||||||||||||||||||||||||||||||||||||||
Royce Opportunity Fund – Consultant Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 11.01 | $ | (0.20 | ) | $ | 4.75 | $ | 4.55 | $ | – |
| $ | (1.54 | ) | $ | – | $ | (1.54 | ) | $ | – | $ | 14.02 | 41.93 | % | $ | 18,643 | 2.31 | % | 2.31 | % | 2.31 | % | (1.51 | )% | 39 | % | |||||||||||||||||||
2012 | 9.67 | (0.13 | ) | 2.14 | 2.01 | – | (0.67 | ) | – | (0.67 | ) | – | 11.01 | 21.09 | 11,930 | 2.36 | 2.36 | 2.36 | (1.22 | ) | 34 | ||||||||||||||||||||||||||||||||||||
2011 | 11.46 | (0.15 | ) | (1.45 | ) | (1.60 | ) | – | (0.19 | ) | – | (0.19 | ) | – | 9.67 | (13.91 | ) | 11,884 | 2.24 | 2.24 | 2.24 | (1.44 | ) | 35 | |||||||||||||||||||||||||||||||||
2010 | 8.66 | (0.15 | ) | 2.95 | 2.80 | – | – | – | – | – | 11.46 | 32.33 | 13,126 | 2.29 | 2.29 | 2.29 | (1.56 | ) | 47 | ||||||||||||||||||||||||||||||||||||||
2009 | 5.42 | (0.11 | ) | 3.35 | 3.24 | – | – | – | – | – | 8.66 | 59.78 | 7,500 | 2.45 | 2.45 | 2.45 | (1.66 | ) | 44 | ||||||||||||||||||||||||||||||||||||||
Royce Opportunity Fund – Institutional Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 12.06 | $ | (0.03 | ) | $ | 5.23 | $ | 5.20 | $ | (0.01 | ) | $ | (1.54 | ) | $ | – | $ | (1.55 | ) | $ | – | $ | 15.71 | 43.69 | % | $ | 853,886 | 1.03 | % | 1.03 | % | 1.03 | % | (0.23 | )% | 39 | % | |||||||||||||||||||
2012 | 10.40 | 0.01 |
| 2.32 | 2.33 | – | (0.67 | ) | – | (0.67 | ) | – | 12.06 | 22.70 | 689,939 | 1.04 | 1.04 | 1.04 | 0.11 | 34 | |||||||||||||||||||||||||||||||||||||
2011 | 12.16 | (0.03 | ) | (1.54 | ) | (1.57 | ) | – | (0.19 | ) | – | (0.19 | ) | – | 10.40 | (12.86 | ) | 574,826 | 1.03 | 1.03 | 1.03 | (0.24 | ) | 35 | |||||||||||||||||||||||||||||||||
2010 | 9.07 | (0.03 | ) | 3.12 | 3.09 | – | – | – | – | – | 12.16 | 34.07 | 702,220 | 1.04 | 1.04 | 1.04 | (0.32 | ) | 47 | ||||||||||||||||||||||||||||||||||||||
2009 | 5.60 | (0.02 | ) | 3.50 | 3.48 | (0.01 | ) | – | – | (0.01 | ) | – | 9.07 | 62.23 | 502,300 | 1.04 | 1.04 | 1.04 | (0.26 | ) | 44 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 107 |
|
Financial Highlights |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Net Asset |
| Net |
| Net Realized and Unrealized |
|
| Distributions |
| Distributions from Net |
|
|
|
|
|
|
|
|
| Ratio of Expenses to Average Net Assets |
| Ratio of Net Investment |
|
| ||||||||||||||||||||||||||||||||
|
| Value, |
| Investment |
| Gain (Loss) on |
| Total from Investment Operations |
| from Net Investment Income |
| Realized Gain on |
| Distributions |
| Total Distributions |
| Shareholder Redemption Fees |
| Net Asset |
| Total Return |
| Net Assets, |
| Prior to Fee |
| Prior |
| Net of |
| Income (Loss) |
| Portfolio Turnover Rate |
| ||||||||||||||||||||||
|
|
|
|
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royce Opportunity Fund – R Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 11.46 | $ | (0.14 | ) | $ | 4.95 | $ | 4.81 | $ | – | $ | (1.54 | ) | $ | – | $ | (1.54 | ) | $ | – | $ | 14.73 | 42.56 | % | $ | 22,730 | 1.82 | % | 1.82 | % | 1.82 | % | (1.02 | )% | 39 | % | ||||||||||||||||||||
2012 |
|
| 9.98 |
|
| (0.07 | ) |
| 2.22 |
|
| 2.15 |
|
| – |
|
| (0.67 | ) |
| – |
|
| (0.67 | ) |
| �� |
|
| 11.46 |
|
| 21.85 |
|
| 6,612 |
|
| 2.01 |
|
|
| 2.01 |
|
|
| 1.84 |
|
|
| (0.62 | ) |
|
| 34 |
|
|
2011 |
|
| 11.78 |
|
| (0.10 | ) |
| (1.51 | ) |
| (1.61 | ) |
| – |
|
| (0.19 | ) |
| – |
|
| (0.19 | ) |
| – |
|
| 9.98 |
|
| (13.62 | ) |
| 3,088 |
|
| 2.03 |
|
|
| 2.03 |
|
|
| 1.84 |
|
|
| (0.98 | ) |
|
| 35 |
|
|
2010 |
|
| 8.86 |
|
| (0.11 | ) |
| 3.03 |
|
| 2.92 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 11.78 |
|
| 32.96 |
|
| 1,407 |
|
| 2.88 |
|
|
| 2.88 |
|
|
| 1.84 |
|
|
| (1.06 | ) |
|
| 47 |
|
|
2009 |
|
| 5.50 |
|
| (0.07 | ) |
| 3.43 |
|
| 3.36 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 8.86 |
|
| 61.09 |
|
| 341 |
|
| 9.91 |
|
|
| 9.91 |
|
|
| 1.84 |
|
|
| (1.05 | ) |
|
| 44 |
|
|
Royce Opportunity Fund – K Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 10.70 | $ | (0.08 | ) | $ | 4.62 | $ | 4.54 | $ | – | $ | (1.54 | ) | $ | – | $ | (1.54 | ) | $ | – | $ | 13.70 | 43.07 | % | $ | 17,927 | 1.46 | % | 1.46 | % | 1.46 | % | (0.65 | )% | 39 | % | ||||||||||||||||||||
2012 |
|
| 9.33 |
|
| (0.04 | ) |
| 2.08 |
|
| 2.04 |
|
| – |
|
| (0.67 | ) |
| – |
|
| (0.67 | ) |
| – |
|
| 10.70 |
|
| 22.19 |
|
| 8,828 |
|
| 1.52 |
|
|
| 1.52 |
|
|
| 1.52 |
|
|
| (0.36 | ) |
|
| 34 |
|
|
2011 |
|
| 10.98 |
|
| (0.07 | ) |
| (1.39 | ) |
| (1.46 | ) |
| – |
|
| (0.19 | ) |
| – |
|
| (0.19 | ) |
| – |
|
| 9.33 |
|
| (13.25 | ) |
| 6,484 |
|
| 1.46 |
|
|
| 1.46 |
|
|
| 1.46 |
|
|
| (0.68 | ) |
|
| 35 |
|
|
2010 |
|
| 8.24 |
|
| (0.07 | ) |
| 2.81 |
|
| 2.74 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 10.98 |
|
| 33.25 |
|
| 6,657 |
|
| 1.63 |
|
|
| 1.63 |
|
|
| 1.59 |
|
|
| (0.76 | ) |
|
| 47 |
|
|
2009 |
|
| 5.11 |
|
| (0.06 | ) |
| 3.19 |
|
| 3.13 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 8.24 |
|
| 61.25 |
|
| 286 |
|
| 6.85 |
|
|
| 6.85 |
|
|
| 1.59 |
|
|
| (0.86 | ) |
|
| 44 |
|
|
Royce Special Equity Fund – Investment Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 21.13 | $ | 0.03 |
| $ | 6.09 | $ | 6.12 | $ | (0.03 | ) | $ | (2.20 | ) | $ | – | $ | (2.23 | ) | $ | – | $ | 25.02 | 29.36 | % | $ | 2,510,346 | 1.13 | % | 1.13 | % | 1.13 | % | 0.13 | % | 28 | % | |||||||||||||||||||
2012 |
|
| 19.70 |
|
| 0.46 |
|
| 2.53 |
|
| 2.99 |
|
| (0.46 | ) |
| (1.10 | ) |
| – |
|
| (1.56 | ) |
| – |
|
| 21.13 |
|
| 15.36 |
|
| 2,048,091 |
|
| 1.13 |
|
|
| 1.13 |
|
|
| 1.13 |
|
|
| 2.20 |
|
|
| 31 |
|
|
2011 |
|
| 20.87 |
|
| 0.05 |
|
| (0.05 | ) |
| 0.00 |
|
| (0.09 | ) |
| (1.08 | ) |
| – |
|
| (1.17 | ) |
| – |
|
| 19.70 |
|
| 0.08 |
|
| 1,677,393 |
|
| 1.15 |
|
|
| 1.15 |
|
|
| 1.15 |
|
|
| 0.23 |
|
|
| 23 |
|
|
2010 |
|
| 17.50 |
|
| 0.14 |
|
| 3.29 |
|
| 3.43 |
|
| (0.06 | ) |
| – |
|
| – |
|
| (0.06 | ) |
| – |
|
| 20.87 |
|
| 19.61 |
|
| 1,487,632 |
|
| 1.17 |
|
|
| 1.16 |
|
|
| 1.16 |
|
|
| 0.78 |
|
|
| 21 |
|
|
2009 |
|
| 13.69 |
|
| 0.07 |
|
| 3.80 |
|
| 3.87 |
|
| (0.07 | ) |
| – |
|
| – |
|
| (0.07 | ) |
| 0.01 |
|
| 17.50 |
|
| 28.38 |
|
| 842,678 |
|
| 1.17 |
|
|
| 1.17 |
|
|
| 1.17 |
|
|
| 0.62 |
|
|
| 10 |
|
|
Royce Special Equity Fund – Service Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | $ | 21.12 | $ | (0.03 | ) | $ | 6.08 | $ | 6.05 | $ | – | $ | (2.20 | ) | $ | – | $ | (2.20 | ) | $ | – | $ | 24.97 | 29.04 | % | $ | 335,952 | 1.45 | % | 1.45 | % | 1.39 | % | (0.13 | )% | 28 | % | ||||||||||||||||||||
2012 |
|
| 19.66 |
|
| 0.42 |
|
| 2.52 |
|
| 2.94 |
|
| (0.38 | ) |
| (1.10 | ) |
| – |
|
| (1.48 | ) |
| – |
|
| 21.12 |
|
| 15.10 |
|
| 250,915 |
|
| 1.43 |
|
|
| 1.43 |
|
|
| 1.39 |
|
|
| 1.90 |
|
|
| 31 |
|
|
2011 |
|
| 20.83 |
|
| 0.00 |
|
| (0.05 | ) |
| (0.05 | ) |
| (0.05 | ) |
| (1.08 | ) |
| – |
|
| (1.13 | ) |
| 0.01 |
|
| 19.66 |
|
| (0.12 | ) |
| 216,143 |
|
| 1.45 |
|
|
| 1.45 |
|
|
| 1.39 |
|
|
| 0.00 |
|
|
| 23 |
|
|
2010 |
|
| 17.48 |
|
| 0.10 |
|
| 3.27 |
|
| 3.37 |
|
| (0.03 | ) |
| – |
|
| – |
|
| (0.03 | ) |
| 0.01 |
|
| 20.83 |
|
| 19.33 |
|
| 160,870 |
|
| 1.48 |
|
|
| 1.48 |
|
|
| 1.39 |
|
|
| 0.56 |
|
|
| 21 |
|
|
2009 |
|
| 13.69 |
|
| (0.00 | ) |
| 3.84 |
|
| 3.84 |
|
| (0.06 | ) |
| – |
|
| – |
|
| (0.06 | ) |
| 0.01 |
|
| 17.48 |
|
| 28.11 |
|
| 72,360 |
|
| 1.52 |
|
|
| 1.52 |
|
|
| 1.39 |
|
|
| 0.29 |
|
|
| 10 |
|
|
Royce Special Equity Fund – Consultant Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 20.20 |
| $ | (0.21 | ) | $ | 5.78 |
| $ | 5.57 |
| $ | – |
| $ | (2.20 | ) | $ | – |
| $ | (2.20 | ) | $ | – |
| $ | 23.57 |
|
| 27.97 | % | $ | 71,333 |
|
| 2.17 | % |
|
| 2.17 | % |
|
| 2.17 | % |
|
| (0.90 | )% |
|
| 28 | % |
|
2012 |
|
| 18.88 |
|
| 0.23 |
|
| 2.42 |
|
| 2.65 |
|
| (0.23 | ) |
| (1.10 | ) |
| – |
|
| (1.33 | ) |
| – |
|
| 20.20 |
|
| 14.20 |
|
| 57,755 |
|
| 2.18 |
|
|
| 2.18 |
|
|
| 2.18 |
|
|
| 1.13 |
|
|
| 31 |
|
|
2011 |
|
| 20.16 |
|
| (0.15 | ) |
| (0.05 | ) |
| (0.20 | ) |
| – |
|
| (1.08 | ) |
| – |
|
| (1.08 | ) |
| – |
|
| 18.88 |
|
| (0.93 | ) |
| 50,253 |
|
| 2.16 |
|
|
| 2.16 |
|
|
| 2.16 |
|
|
| (0.77 | ) |
|
| 23 |
|
|
2010 |
|
| 17.03 |
|
| (0.04 | ) |
| 3.17 |
|
| 3.13 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 20.16 |
|
| 18.38 |
|
| 38,497 |
|
| 2.17 |
|
|
| 2.17 |
|
|
| 2.17 |
|
|
| (0.22 | ) |
|
| 21 |
|
|
2009 |
|
| 13.42 |
|
| (0.06 | ) |
| 3.67 |
|
| 3.61 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 17.03 |
|
| 26.90 |
|
| 20,891 |
|
| 2.23 |
|
|
| 2.23 |
|
|
| 2.23 |
|
|
| (0.41 | ) |
|
| 10 |
|
|
Royce Special Equity Fund – Institutional Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 21.02 |
| $ | 0.06 |
| $ | 6.06 |
| $ | 6.12 |
| $ | (0.06 | ) | $ | (2.20 | ) | $ | – |
| $ | (2.26 | ) | $ | – |
| $ | 24.88 |
|
| 29.51 | % | $ | 700,200 |
|
| 1.01 | % |
|
| 1.01 | % |
|
| 1.01 | % |
|
| 0.26 | % |
|
| 28 | % |
|
2012 |
|
| 19.63 |
|
| 0.49 |
|
| 2.51 |
|
| 3.00 |
|
| (0.51 | ) |
| (1.10 | ) |
| – |
|
| (1.61 | ) |
| – |
|
| 21.02 |
|
| 15.46 |
|
| 571,388 |
|
| 1.02 |
|
|
| 1.02 |
|
|
| 1.02 |
|
|
| 2.28 |
|
|
| 31 |
|
|
2011 |
|
| 20.79 |
|
| 0.07 |
|
| (0.03 | ) |
| 0.04 |
|
| (0.12 | ) |
| (1.08 | ) |
| – |
|
| (1.20 | ) |
| – |
|
| 19.63 |
|
| 0.25 |
|
| 481,855 |
|
| 1.03 |
|
|
| 1.03 |
|
|
| 1.03 |
|
|
| 0.36 |
|
|
| 23 |
|
|
2010 |
|
| 17.44 |
|
| 0.16 |
|
| 3.27 |
|
| 3.43 |
|
| (0.08 | ) |
| – |
|
| – |
|
| (0.08 | ) |
| – |
|
| 20.79 |
|
| 19.69 |
|
| 445,168 |
|
| 1.04 |
|
|
| 1.04 |
|
|
| 1.04 |
|
|
| 0.91 |
|
|
| 21 |
|
|
2009 |
|
| 13.65 |
|
| 0.11 |
|
| 3.77 |
|
| 3.88 |
|
| (0.09 | ) |
| – |
|
| – |
|
| (0.09 | ) |
| – |
|
| 17.44 |
|
| 28.42 |
|
| 280,253 |
|
| 1.05 |
|
|
| 1.05 |
|
|
| 1.05 |
|
|
| 0.81 |
|
|
| 10 |
|
|
108 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
|
Financial Highlights |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Net Asset |
| Net |
| Net Realized and Unrealized |
|
| Distributions |
| Distributions from Net |
|
|
|
|
|
|
|
|
| Ratio of Expenses to Average Net Assets |
| Ratio of Net Investment |
|
| ||||||||||||||||||||||||||||||||||||||
|
| Value, |
| Investment |
| Gain (Loss) on |
| Total from Investment Operations |
| from Net Investment Income |
| Realized Gain on |
| Distributions |
| Total Distributions |
| Shareholder Redemption Fees |
| Net Asset |
| Total Return |
| Net Assets, |
| Prior to Fee |
| Prior |
| Net of |
| Income (Loss) |
| Portfolio Turnover Rate |
| ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Royce Value Fund – Investment Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 11.37 |
| $ | 0.02 |
| $ | 3.13 |
| $ | 3.15 |
| $ | (0.03 | ) | $ | (0.97 | ) | $ | – |
| $ | (1.00 | ) | $ | – |
| $ | 13.52 |
|
| 28.06 | % | $ | 196,854 |
|
| 1.21 | % |
|
| 1.21 | % |
|
| 1.21 | % |
|
| 0.11 | % |
|
| 51 | % |
| ||||||
2012 |
|
| 10.97 |
|
| 0.15 |
|
| 0.92 |
|
| 1.07 |
|
| (0.14 | ) |
| (0.53 | ) |
| – |
|
| (0.67 | ) |
| – |
|
| 11.37 |
|
| 9.88 |
|
| 206,316 |
|
| 1.19 |
|
|
| 1.19 |
|
|
| 1.19 |
|
|
| 1.22 |
|
|
| 25 |
|
| ||||||
2011 |
|
| 12.70 |
|
| 0.00 |
|
| (0.92 | ) |
| (0.92 | ) |
| (0.07 | ) |
| (0.75 | ) |
| – |
|
| (0.82 | ) |
| 0.01 |
|
| 10.97 |
|
| (7.17 | ) |
| 218,126 |
|
| 1.17 |
|
|
| 1.17 |
|
|
| 1.17 |
|
|
| 0.09 |
|
|
| 35 |
|
| ||||||
2010 |
|
| 10.16 |
|
| 0.03 |
|
| 2.55 |
|
| 2.58 |
|
| (0.04 | ) |
| – |
|
| – |
|
| (0.04 | ) |
| – |
|
| 12.70 |
|
| 25.42 |
|
| 115,007 |
|
| 1.16 |
|
|
| 1.16 |
|
|
| 1.16 |
|
|
| 0.32 |
|
|
| 35 |
|
| ||||||
2009 |
|
| 7.00 |
|
| 0.01 |
|
| 3.15 |
|
| 3.16 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 10.16 |
|
| 45.14 |
|
| 67,249 |
|
| 1.14 |
|
|
| 1.14 |
|
|
| 1.14 |
|
|
| 0.06 |
|
|
| 49 |
|
| ||||||
Royce Value Fund – Service Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 11.34 |
| $ | (0.02 | ) | $ | 3.13 |
| $ | 3.11 |
| $ | – |
| $ | (0.97 | ) | $ | – |
| $ | (0.97 | ) | $ | – |
| $ | 13.48 |
|
| 27.76 | % | $ | 680,674 |
|
| 1.48 | % |
|
| 1.48 | % |
|
| 1.48 | % |
|
| (0.17 | )% |
|
| 51 | % |
| ||||||
2012 |
|
| 10.94 |
|
| 0.12 |
|
| 0.91 |
|
| 1.03 |
|
| (0.10 | ) |
| (0.53 | ) |
| – |
|
| (0.63 | ) |
| – |
|
| 11.34 |
|
| 9.56 |
|
| 831,673 |
|
| 1.45 |
|
|
| 1.45 |
|
|
| 1.45 |
|
|
| 0.90 |
|
|
| 25 |
|
| ||||||
2011 |
|
| 12.65 |
|
| (0.03 | ) |
| (0.92 | ) |
| (0.95 | ) |
| (0.02 | ) |
| (0.75 | ) |
| – |
|
| (0.77 | ) |
| 0.01 |
|
| 10.94 |
|
| (7.41 | ) |
| 1,083,903 |
|
| 1.45 |
|
|
| 1.45 |
|
|
| 1.44 |
|
|
| (0.23 | ) |
|
| 35 |
|
| ||||||
2010 |
|
| 10.13 |
|
| 0.00 |
|
| 2.53 |
|
| 2.53 |
|
| (0.01 | ) |
| – |
|
| – |
|
| (0.01 | ) |
| – |
|
| 12.65 |
|
| 24.97 |
|
| 1,415,766 |
|
| 1.46 |
|
|
| 1.46 |
|
|
| 1.44 |
|
|
| 0.04 |
|
|
| 35 |
|
| ||||||
2009 |
|
| 7.00 |
|
| (0.03 | ) |
| 3.16 |
|
| 3.13 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 10.13 |
|
| 44.71 |
|
| 1,178,806 |
|
| 1.47 |
|
|
| 1.47 |
|
|
| 1.45 |
|
|
| (0.31 | ) |
|
| 49 |
|
| ||||||
Royce Value Fund – Consultant Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 10.81 |
| $ | (0.12 | ) | $ | 2.96 |
| $ | 2.84 |
| $ | – |
| $ | (0.97 | ) | $ | – |
| $ | (0.97 | ) | $ | – |
| $ | 12.68 |
|
| 26.61 | % | $ | 31,604 |
|
| 2.29 | % |
|
| 2.29 | % |
|
| 2.29 | % |
|
| (0.97 | )% |
|
| 51 | % |
| ||||||
2012 |
|
| 10.46 |
|
| 0.02 |
|
| 0.89 |
|
| 0.91 |
|
| (0.03 | ) |
| (0.53 | ) |
| – |
|
| (0.56 | ) |
| – |
|
| 10.81 |
|
| 8.77 |
|
| 33,480 |
|
| 2.26 |
|
|
| 2.26 |
|
|
| 2.26 |
|
|
| 0.15 |
|
|
| 25 |
|
| ||||||
2011 |
|
| 12.21 |
|
| (0.11 | ) |
| (0.89 | ) |
| (1.00 | ) |
| – |
|
| (0.75 | ) |
| – |
|
| (0.75 | ) |
| – |
|
| 10.46 |
|
| (8.20 | ) |
| 36,104 |
|
| 2.17 |
|
|
| 2.17 |
|
|
| 2.17 |
|
|
| (0.94 | ) |
|
| 35 |
|
| ||||||
2010 |
|
| 9.84 |
|
| (0.07 | ) |
| 2.44 |
|
| 2.37 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 12.21 |
|
| 24.09 |
|
| 35,167 |
|
| 2.18 |
|
|
| 2.18 |
|
|
| 2.18 |
|
|
| (0.69 | ) |
|
| 35 |
|
| ||||||
2009 |
|
| 6.85 |
|
| (0.09 | ) |
| 3.08 |
|
| 2.99 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 9.84 |
|
| 43.65 |
|
| 27,625 |
|
| 2.23 |
|
|
| 2.23 |
|
|
| 2.23 |
|
|
| (1.09 | ) |
|
| 49 |
|
| ||||||
Royce Value Fund – Institutional Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 11.38 |
| $ | 0.04 |
| $ | 3.13 |
| $ | 3.17 |
| $ | (0.05 | ) | $ | (0.97 | ) | $ | – |
| $ | (1.02 | ) | $ | – |
| $ | 13.53 |
|
| 28.22 | % | $ | 219,667 |
|
| 1.05 | % |
|
| 1.05 | % |
|
| 1.05 | % |
|
| 0.27 | % |
|
| 51 | % |
| ||||||
2012 |
|
| 10.98 |
|
| 0.17 |
|
| 0.92 |
|
| 1.09 |
|
| (0.16 | ) |
| (0.53 | ) |
| – |
|
| (0.69 | ) |
| – |
|
| 11.38 |
|
| 10.04 |
|
| 202,643 |
|
| 1.05 |
|
|
| 1.05 |
|
|
| 1.05 |
|
|
| 1.41 |
|
|
| 25 |
|
| ||||||
2011 |
|
| 12.71 |
|
| 0.03 |
|
| (0.94 | ) |
| (0.91 | ) |
| (0.07 | ) |
| (0.75 | ) |
| – |
|
| (0.82 | ) |
| – |
|
| 10.98 |
|
| (7.12 | ) |
| 190,591 |
|
| 1.04 |
|
|
| 1.04 |
|
|
| 1.04 |
|
|
| 0.19 |
|
|
| 35 |
|
| ||||||
2010 |
|
| 10.17 |
|
| 0.05 |
|
| 2.54 |
|
| 2.59 |
|
| (0.05 | ) |
| – |
|
| – |
|
| (0.05 | ) |
| – |
|
| 12.71 |
|
| 25.52 |
|
| 219,111 |
|
| 1.04 |
|
|
| 1.04 |
|
|
| 1.04 |
|
|
| 0.45 |
|
|
| 35 |
|
| ||||||
2009 |
|
| 7.00 |
|
| 0.01 |
|
| 3.16 |
|
| 3.17 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 10.17 |
|
| 45.29 |
|
| 167,215 |
|
| 1.04 |
|
|
| 1.04 |
|
|
| 1.04 |
|
|
| 0.10 |
|
|
| 49 |
|
| ||||||
Royce Value Fund – R Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 11.16 |
| $ | (0.06 | ) | $ | 3.06 |
| $ | 3.00 |
| $ | – |
| $ | (0.97 | ) | $ | – |
| $ | (0.97 | ) | $ | – |
| $ | 13.19 |
|
| 27.21 | % | $ | 37,409 |
|
| 1.83 | % |
|
| 1.83 | % |
|
| 1.83 | % |
|
| (0.52 | )% |
|
| 51 | % |
| ||||||
2012 |
|
| 10.78 |
|
| 0.07 |
|
| 0.91 |
|
| 0.98 |
|
| (0.07 | ) |
| (0.53 | ) |
| – |
|
| (0.60 | ) |
| – |
|
| 11.16 |
|
| 9.18 |
|
| 37,679 |
|
| 1.85 |
|
|
| 1.85 |
|
|
| 1.85 |
|
|
| 0.59 |
|
|
| 25 |
|
| ||||||
2011 |
|
| 12.54 |
|
| (0.06 | ) |
| (0.91 | ) |
| (0.97 | ) |
| (0.04 | ) |
| (0.75 | ) |
| – |
|
| (0.79 | ) |
| – |
|
| 10.78 |
|
| (7.75 | ) |
| 34,151 |
|
| 1.68 |
|
|
| 1.68 |
|
|
| 1.68 |
|
|
| (0.44 | ) |
|
| 35 |
|
| ||||||
2010 |
|
| 10.05 |
|
| (0.02 | ) |
| 2.51 |
|
| 2.49 |
|
| (0.00 | ) |
| – |
|
| – |
|
| (0.00 | ) |
| – |
|
| 12.54 |
|
| 24.81 |
|
| 26,524 |
|
| 1.68 |
|
|
| 1.67 |
|
|
| 1.67 |
|
|
| (0.16 | ) |
|
| 35 |
|
| ||||||
2009 |
|
| 6.97 |
|
| (0.06 | ) |
| 3.14 |
|
| 3.08 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 10.05 |
|
| 44.19 |
|
| 6,114 |
|
| 2.08 |
|
|
| 2.08 |
|
|
| 1.84 |
|
|
| (0.68 | ) |
|
| 49 |
|
| ||||||
Royce Value Fund – K Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 9.14 |
| $ | (0.03 | ) | $ | 2.51 |
| $ | 2.48 |
| $ | – |
| $ | (0.97 | ) | $ | – |
| $ | (0.97 | ) | $ | – |
| $ | 10.65 |
|
| 27.55 | % | $ | 16,285 |
|
| 1.62 | % |
|
| 1.62 | % |
|
| 1.62 | % |
|
| (0.30 | )% |
|
| 51 | % |
| ||||||
2012 |
|
| 8.95 |
|
| 0.09 |
|
| 0.75 |
|
| 0.84 |
|
| (0.12 | ) |
| (0.53 | ) |
| – |
|
| (0.65 | ) |
| – |
|
| 9.14 |
|
| 9.49 |
|
| 18,209 |
|
| 1.53 |
|
|
| 1.53 |
|
|
| 1.53 |
|
|
| 0.98 |
|
|
| 25 |
|
| ||||||
2011 |
|
| 10.54 |
|
| (0.03 | ) |
| (0.77 | ) |
| (0.80 | ) |
| (0.04 | ) |
| (0.75 | ) |
| – |
|
| (0.79 | ) |
| – |
|
| 8.95 |
|
| (7.54 | ) |
| 14,079 |
|
| 1.54 |
|
|
| 1.54 |
|
|
| 1.54 |
|
|
| (0.33 | ) |
|
| 35 |
|
| ||||||
2010 |
|
| 8.46 |
|
| (0.00 | ) |
| 2.10 |
|
| 2.10 |
|
| (0.02 | ) |
| – |
|
| – |
|
| (0.02 | ) |
| – |
|
| 10.54 |
|
| 24.82 |
|
| 13,195 |
|
| 1.50 |
|
|
| 1.50 |
|
|
| 1.50 |
|
|
| 0.01 |
|
|
| 35 |
|
| ||||||
2009 |
|
| 5.91 |
|
| (0.03 | ) |
| 2.58 |
|
| 2.55 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 8.46 |
|
| 43.15 |
|
| 4,721 |
|
| 1.73 |
|
|
| 1.73 |
|
|
| 1.59 |
|
|
| (0.43 | ) |
|
| 49 |
|
|
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 109 |
|
Financial Highlights |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Net |
| Net |
| Net Realized and Unrealized |
|
| Distributions |
| Distributions from Net |
|
|
|
|
|
|
|
|
| Ratio of Expenses to Average Net Assets |
| Ratio of Net Investment |
|
| ||||||||||||||||||||||||||||||||
|
| Asset Value, |
| Investment |
| Gain (Loss) on |
| Total from Investment Operations |
| from Net Investment Income |
| Realized Gain on |
| Distributions |
| Total Distributions |
| Shareholder Redemption Fees |
| Net Asset |
| Total Return |
| Net Assets, |
| Prior to Fee |
| Prior |
| Net of |
| Income (Loss) |
| Portfolio Turnover Rate |
| ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royce Value Plus Fund – Investment Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 13.90 |
| $ | (0.09 | ) | $ | 4.57 |
| $ | 4.48 |
| $ | (0.00 | ) | $ | (1.35 | ) | $ | – |
| $ | (1.35 | ) | $ | – |
| $ | 17.03 |
|
| 32.59 | % | $ | 244,269 |
|
| 1.37 | % |
|
| 1.37 | % |
|
| 1.37 | % |
|
| (0.59 | )% |
|
| 45 | % |
|
2012 |
|
| 12.04 |
|
| (0.02 | ) |
| 1.88 |
|
| 1.86 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 13.90 |
|
| 15.45 |
|
| 228,016 |
|
| 1.27 |
|
|
| 1.27 |
|
|
| 1.27 |
|
|
| (0.14 | ) |
|
| 32 |
|
|
2011 |
|
| 13.52 |
|
| (0.06 | ) |
| (1.27 | ) |
| (1.33 | ) |
| (0.15 | ) |
| – |
|
| – |
|
| (0.15 | ) |
| – |
|
| 12.04 |
|
| (9.79 | ) |
| 298,073 |
|
| 1.13 |
|
|
| 1.13 |
|
|
| 1.13 |
|
|
| (0.42 | ) |
|
| 49 |
|
|
2010 |
|
| 11.31 |
|
| (0.02 | ) |
| 2.31 |
|
| 2.29 |
|
| (0.08 | ) |
| – |
|
| – |
|
| (0.08 | ) |
| – |
|
| 13.52 |
|
| 20.25 |
|
| 305,161 |
|
| 1.08 |
|
|
| 1.08 |
|
|
| 1.08 |
|
|
| (0.14 | ) |
|
| 48 |
|
|
2009 |
|
| 7.97 |
|
| 0.01 |
|
| 3.33 |
|
| 3.34 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 11.31 |
|
| 41.91 |
|
| 261,906 |
|
| 1.06 |
|
|
| 1.06 |
|
|
| 1.06 |
|
|
| 0.13 |
|
|
| 39 |
|
|
Royce Value Plus Fund – Service Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 13.83 |
| $ | (0.11 | ) | $ | 4.56 |
| $ | 4.45 |
| $ | – |
| $ | (1.35 | ) | $ | – |
| $ | (1.35 | ) | $ | – |
| $ | 16.93 |
|
| 32.52 | % | $ | 835,379 |
|
| 1.48 | % |
|
| 1.48 | % |
|
| 1.46 | % |
|
| (0.69 | )% |
|
| 45 | % |
|
2012 |
|
| 12.00 |
|
| (0.04 | ) |
| 1.87 |
|
| 1.83 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 13.83 |
|
| 15.25 |
|
| 966,735 |
|
| 1.45 |
|
|
| 1.45 |
|
|
| 1.44 |
|
|
| (0.33 | ) |
|
| 32 |
|
|
2011 |
|
| 13.42 |
|
| (0.08 | ) |
| (1.26 | ) |
| (1.34 | ) |
| (0.08 | ) |
| – |
|
| – |
|
| (0.08 | ) |
| – |
|
| 12.00 |
|
| (9.98 | ) |
| 1,417,973 |
|
| 1.44 |
|
|
| 1.44 |
|
|
| 1.42 |
|
|
| (0.74 | ) |
|
| 49 |
|
|
2010 |
|
| 11.24 |
|
| (0.06 | ) |
| 2.27 |
|
| 2.21 |
|
| (0.03 | ) |
| – |
|
| – |
|
| (0.03 | ) |
| – |
|
| 13.42 |
|
| 19.70 |
|
| 2,454,325 |
|
| 1.44 |
|
|
| 1.44 |
|
|
| 1.42 |
|
|
| (0.53 | ) |
|
| 48 |
|
|
2009 |
|
| 7.95 |
|
| (0.02 | ) |
| 3.31 |
|
| 3.29 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 11.24 |
|
| 41.38 |
|
| 2,505,017 |
|
| 1.47 |
|
|
| 1.47 |
|
|
| 1.45 |
|
|
| (0.25 | ) |
|
| 39 |
|
|
Royce Value Plus Fund – Consultant Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 13.24 |
| $ | (0.24 | ) | $ | 4.34 |
| $ | 4.10 |
| $ | – |
| $ | (1.35 | ) | $ | – |
| $ | (1.35 | ) | $ | – |
| $ | 15.99 |
|
| 31.31 | % | $ | 22,614 |
|
| 2.36 | % |
|
| 2.36 | % |
|
| 2.36 | % |
|
| (1.58 | )% |
|
| 45 | % |
|
2012 |
|
| 11.60 |
|
| (0.15 | ) |
| 1.79 |
|
| 1.64 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 13.24 |
|
| 14.14 |
|
| 19,618 |
|
| 2.37 |
|
|
| 2.37 |
|
|
| 2.37 |
|
|
| (1.21 | ) |
|
| 32 |
|
|
2011 |
|
| 12.99 |
|
| (0.19 | ) |
| (1.20 | ) |
| (1.39 | ) |
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 11.60 |
|
| (10.70 | ) |
| 20,245 |
|
| 2.19 |
|
|
| 2.19 |
|
|
| 2.19 |
|
|
| (1.50 | ) |
|
| 49 |
|
|
2010 |
|
| 10.93 |
|
| (0.14 | ) |
| 2.20 |
|
| 2.06 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 12.99 |
|
| 18.85 |
|
| 30,279 |
|
| 2.16 |
|
|
| 2.16 |
|
|
| 2.16 |
|
|
| (1.26 | ) |
|
| 48 |
|
|
2009 |
|
| 7.79 |
|
| (0.09 | ) |
| 3.23 |
|
| 3.14 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 10.93 |
|
| 40.31 |
|
| 31,154 |
|
| 2.20 |
|
|
| 2.20 |
|
|
| 2.20 |
|
|
| (0.98 | ) |
|
| 39 |
|
|
Royce Value Plus Fund – Institutional Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 13.94 |
| $ | (0.03 | ) | $ | 4.57 |
| $ | 4.54 |
| $ | (0.04 | ) | $ | (1.35 | ) | $ | – |
| $ | (1.39 | ) | $ | – |
| $ | 17.09 |
|
| 32.99 | % | $ | 142,923 |
|
| 1.07 | % |
|
| 1.07 | % |
|
| 1.07 | % |
|
| (0.30 | )% |
|
| 45 | % |
|
2012 |
|
| 12.05 |
|
| 0.01 |
|
| 1.88 |
|
| 1.89 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 13.94 |
|
| 15.68 |
|
| 216,572 |
|
| 1.06 |
|
|
| 1.06 |
|
|
| 1.06 |
|
|
| 0.08 |
|
|
| 32 |
|
|
2011 |
|
| 13.52 |
|
| (0.01 | ) |
| (1.30 | ) |
| (1.31 | ) |
| (0.16 | ) |
| – |
|
| – |
|
| (0.16 | ) |
| – |
|
| 12.05 |
|
| (9.70 | ) |
| 261,425 |
|
| 1.05 |
|
|
| 1.05 |
|
|
| 1.05 |
|
|
| (0.36 | ) |
|
| 49 |
|
|
2010 |
|
| 11.31 |
|
| (0.01 | ) |
| 2.30 |
|
| 2.29 |
|
| (0.08 | ) |
| – |
|
| – |
|
| (0.08 | ) |
| – |
|
| 13.52 |
|
| 20.25 |
|
| 425,911 |
|
| 1.04 |
|
|
| 1.04 |
|
|
| 1.04 |
|
|
| (0.12 | ) |
|
| 48 |
|
|
2009 |
|
| 7.97 |
|
| 0.01 |
|
| 3.33 |
|
| 3.34 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 11.31 |
|
| 41.91 |
|
| 357,734 |
|
| 1.06 |
|
|
| 1.06 |
|
|
| 1.06 |
|
|
| 0.08 |
|
|
| 39 |
|
|
Royce Value Plus Fund – R Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 13.51 |
| $ | (0.16 | ) | $ | 4.43 |
| $ | 4.27 |
| $ | – |
| $ | (1.35 | ) | $ | – |
| $ | (1.35 | ) | $ | – |
| $ | 16.43 |
|
| 31.95 | % | $ | 1,605 |
|
| 2.41 | % |
|
| 2.41 | % |
|
| 1.84 | % |
|
| (1.06 | )% |
|
| 45 | % |
|
2012 |
|
| 11.77 |
|
| (0.09 | ) |
| 1.83 |
|
| 1.74 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 13.51 |
|
| 14.78 |
|
| 1,221 |
|
| 2.35 |
|
|
| 2.35 |
|
|
| 1.84 |
|
|
| (0.66 | ) |
|
| 32 |
|
|
2011 |
|
| 13.24 |
|
| (0.15 | ) |
| (1.23 | ) |
| (1.38 | ) |
| (0.09 | ) |
| – |
|
| – |
|
| (0.09 | ) |
| – |
|
| 11.77 |
|
| (10.40 | ) |
| 1,079 |
|
| 2.45 |
|
|
| 2.45 |
|
|
| 1.84 |
|
|
| (1.12 | ) |
|
| 49 |
|
|
2010 |
|
| 11.13 |
|
| (0.11 | ) |
| 2.26 |
|
| 2.15 |
|
| (0.04 | ) |
| – |
|
| – |
|
| (0.04 | ) |
| – |
|
| 13.24 |
|
| 19.34 |
|
| 942 |
|
| 2.75 |
|
|
| 2.75 |
|
|
| 1.84 |
|
|
| (0.90 | ) |
|
| 48 |
|
|
2009 |
|
| 7.91 |
|
| (0.06 | ) |
| 3.28 |
|
| 3.22 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 11.13 |
|
| 40.71 |
|
| 642 |
|
| 3.76 |
|
|
| 3.76 |
|
|
| 1.84 |
|
|
| (0.70 | ) |
|
| 39 |
|
|
Royce Value Plus Fund – K Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 10.10 |
| $ | (0.10 | ) | $ | 3.31 |
| $ | 3.21 |
| $ | (0.00 | ) | $ | (1.35 | ) | $ | – |
| $ | (1.35 | ) | $ | – |
| $ | 11.96 |
|
| 32.31 | % | $ | 968 |
|
| 2.62 | % |
|
| 2.62 | % |
|
| 1.59 | % |
|
| (0.82 | )% |
|
| 45 | % |
|
2012 |
|
| 8.78 |
|
| (0.04 | ) |
| 1.36 |
|
| 1.32 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 10.10 |
|
| 15.03 |
|
| 486 |
|
| 2.96 |
|
|
| 2.96 |
|
|
| 1.59 |
|
|
| (0.45 | ) |
|
| 32 |
|
|
2011 |
|
| 9.77 |
|
| (0.08 | ) |
| (0.91 | ) |
| (0.99 | ) |
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 8.78 |
|
| (10.13 | ) |
| 501 |
|
| 1.86 |
|
|
| 1.86 |
|
|
| 1.59 |
|
|
| (0.86 | ) |
|
| 49 |
|
|
2010 |
|
| 8.22 |
|
| (0.06 | ) |
| 1.67 |
|
| 1.61 |
|
| (0.06 | ) |
| – |
|
| – |
|
| (0.06 | ) |
| – |
|
| 9.77 |
|
| 19.55 |
|
| 1,851 |
|
| 1.88 |
|
|
| 1.88 |
|
|
| 1.59 |
|
|
| (0.67 | ) |
|
| 48 |
|
|
2009 |
|
| 5.82 |
|
| (0.03 | ) |
| 2.43 |
|
| 2.40 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 8.22 |
|
| 41.24 |
|
| 1,363 |
|
| 2.46 |
|
|
| 2.45 |
|
|
| 1.59 |
|
|
| (0.38 | ) |
|
| 39 |
|
|
110 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
Financial Highlights |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Net |
| Net |
| Net Realized and Unrealized |
|
| Distributions |
| Distributions from Net |
|
|
|
|
|
|
|
|
| Ratio of Expenses to Average Net Assets |
| Ratio of Net Investment |
|
| ||||||||||||||||||||||||||||||||||||||
|
| Asset Value, |
| Investment |
| Gain (Loss) on |
| Total from Investment Operations |
| from Net Investment Income |
| Realized Gain on |
| Distributions |
| Total Distributions |
| Shareholder Redemption Fees |
| Net Asset |
| Total Return |
| Net Assets, |
| Prior to Fee |
| Prior |
| Net of |
| Income (Loss) |
| Portfolio Turnover Rate |
| ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Royce 100 Fund – Investment Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 8.85 |
| $ | (0.00 | ) | $ | 2.71 |
| $ | 2.71 |
| $ | (0.03 | ) | $ | (1.42 | ) | $ | – |
| $ | (1.45 | ) | $ | – |
| $ | 10.11 |
|
| 31.24 | % | $ | 60,156 |
|
| 1.20 | % |
|
| 1.20 | % |
|
| 1.20 | % |
|
| (0.07 | )% |
|
| 31 | % |
| ||||||
2012 |
|
| 8.74 |
|
| 0.12 |
|
| 0.88 |
|
| 1.00 |
|
| (0.15 | ) |
| (0.74 | ) |
| – |
|
| (0.89 | ) |
| – |
|
| 8.85 |
|
| 11.78 |
|
| 68,395 |
|
| 1.19 |
|
|
| 1.19 |
|
|
| 1.19 |
|
|
| 1.31 |
|
|
| 13 |
|
| ||||||
2011 |
|
| 9.82 |
|
| (0.03 | ) |
| (0.60 | ) |
| (0.63 | ) |
| (0.00 | ) |
| (0.45 | ) |
| – |
|
| (0.45 | ) |
| – |
|
| 8.74 |
|
| (6.31 | ) |
| 63,012 |
|
| 1.17 |
|
|
| 1.17 |
|
|
| 1.17 |
|
|
| (0.27 | ) |
|
| 27 |
|
| ||||||
2010 |
|
| 7.94 |
|
| 0.03 |
|
| 1.96 |
|
| 1.99 |
|
| – |
|
| (0.11 | ) |
| – |
|
| (0.11 | ) |
| – |
|
| 9.82 |
|
| 25.06 |
|
| 66,011 |
|
| 1.17 |
|
|
| 1.17 |
|
|
| 1.17 |
|
|
| 0.33 |
|
|
| 27 |
|
| ||||||
2009 |
|
| 5.74 |
|
| 0.00 |
|
| 2.20 |
|
| 2.20 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 7.94 |
|
| 38.33 |
|
| 35,165 |
|
| 1.22 |
|
|
| 1.22 |
|
|
| 1.22 |
|
|
| 0.03 |
|
|
| 42 |
|
| ||||||
Royce 100 Fund – Service Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 8.81 |
| $ | (0.04 | ) | $ | 2.70 |
| $ | 2.66 |
| $ | (0.00 | ) | $ | (1.42 | ) | $ | – |
| $ | (1.42 | ) | $ | – |
| $ | 10.05 |
|
| 30.85 | % | $ | 231,879 |
|
| 1.50 | % |
|
| 1.50 | % |
|
| 1.48 | % |
|
| (0.36 | )% |
|
| 31 | % |
| ||||||
2012 |
|
| 8.67 |
|
| 0.11 |
|
| 0.86 |
|
| 0.97 |
|
| (0.09 | ) |
| (0.74 | ) |
| – |
|
| (0.83 | ) |
| – |
|
| 8.81 |
|
| 11.52 |
|
| 220,674 |
|
| 1.46 |
|
|
| 1.46 |
|
|
| 1.42 |
|
|
| 1.03 |
|
|
| 13 |
|
| ||||||
2011 |
|
| 9.76 |
|
| (0.05 | ) |
| (0.59 | ) |
| (0.64 | ) |
| – |
|
| (0.45 | ) |
| – |
|
| (0.45 | ) |
| – |
|
| 8.67 |
|
| (6.52 | ) |
| 310,825 |
|
| 1.47 |
|
|
| 1.47 |
|
|
| 1.42 |
|
|
| (0.53 | ) |
|
| 27 |
|
| ||||||
2010 |
|
| 7.91 |
|
| 0.00 |
|
| 1.96 |
|
| 1.96 |
|
| – |
|
| (0.11 | ) |
| – |
|
| (0.11 | ) |
| – |
|
| 9.76 |
|
| 24.77 |
|
| 366,184 |
|
| 1.50 |
|
|
| 1.50 |
|
|
| 1.46 |
|
|
| 0.03 |
|
|
| 27 |
|
| ||||||
2009 |
|
| 5.73 |
|
| (0.01 | ) |
| 2.19 |
|
| 2.18 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 7.91 |
|
| 38.05 |
|
| 197,607 |
|
| 1.54 |
|
|
| 1.54 |
|
|
| 1.49 |
|
|
| (0.19 | ) |
|
| 42 |
|
| ||||||
Royce 100 Fund – R Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 10.84 |
| $ | (0.09 | ) | $ | 3.34 |
| $ | 3.25 |
| $ | – |
| $ | (1.42 | ) | $ | – |
| $ | (1.42 | ) | $ | – |
| $ | 12.67 |
|
| 30.45 | % | $ | 2,807 |
|
| 2.28 | % |
|
| 2.28 | % |
|
| 1.84 | % |
|
| (0.72 | )% |
|
| 31 | % |
| ||||||
2012 |
|
| 10.46 |
|
| 0.05 |
|
| 1.07 |
|
| 1.12 |
|
| – |
|
| (0.74 | ) |
| – |
|
| (0.74 | ) |
| – |
|
| 10.84 |
|
| 10.95 |
|
| 2,554 |
|
| 2.57 |
|
|
| 2.57 |
|
|
| 1.84 |
|
|
| 0.46 |
|
|
| 13 |
|
| ||||||
2011 |
|
| 11.72 |
|
| (0.10 | ) |
| (0.71 | ) |
| (0.81 | ) |
| – |
|
| (0.45 | ) |
| – |
|
| (0.45 | ) |
| – |
|
| 10.46 |
|
| (6.88 | ) |
| 3,469 |
|
| 2.70 |
|
|
| 2.69 |
|
|
| 1.84 |
|
|
| (0.88 | ) |
|
| 27 |
| |||||||
2010 |
|
| 9.52 |
|
| (0.03 | ) |
| 2.34 |
|
| 2.31 |
|
| – |
|
| (0.11 | ) |
| – |
|
| (0.11 | ) |
| – |
|
| 11.72 |
|
| 24.26 |
|
| 1,358 |
|
| 2.22 |
|
|
| 2.21 |
|
|
| 1.84 |
|
|
| (0.29 | ) |
|
| 27 |
|
| ||||||
2009 |
|
| 6.93 |
|
| (0.05 | ) |
| 2.64 |
|
| 2.59 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 9.52 |
|
| 37.37 |
|
| 296 |
|
| 6.58 |
|
|
| 6.57 |
|
|
| 1.84 |
|
|
| (0.56 | ) |
|
| 42 |
|
| ||||||
Royce 100 Fund – K Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 10.95 |
| $ | (0.06 | ) | $ | 3.37 |
| $ | 3.31 |
| $ | – |
| $ | (1.42 | ) | $ | – |
| $ | (1.42 | ) | $ | – |
| $ | 12.84 |
|
| 30.69 | % | $ | 2,320 |
|
| 1.78 | % |
|
| 1.78 | % |
|
| 1.59 | % |
|
| (0.50 | )% |
|
| 31 | % |
| ||||||
2012 |
| 10.56 |
|
| 0.11 |
|
| 1.06 |
|
| 1.17 |
|
| (0.04 | ) |
| (0.74 | ) |
| – |
|
| (0.78 | ) |
| – |
|
| 10.95 |
|
| 11.37 |
|
| 3,554 |
|
| 1.68 |
|
|
| 1.68 |
|
|
| 1.59 |
|
|
| 0.88 |
|
|
| 13 |
|
| |||||||
2011 |
|
| 11.81 |
|
| (0.08 | ) |
| (0.72 | ) |
| (0.80 | ) |
| – |
|
| (0.45 | ) |
| – |
|
| (0.45 | ) |
| – |
|
| 10.56 |
|
| (6.75 | ) |
| 4,447 |
|
| 1.66 |
|
|
| 1.66 |
|
|
| 1.59 |
|
|
| (0.68 | ) |
|
| 27 |
|
| ||||||
2010 |
|
| 9.57 |
|
| 0.02 |
|
| 2.33 |
|
| 2.35 |
|
| – |
|
| (0.11 | ) |
| – |
|
| (0.11 | ) |
| – |
|
| 11.81 |
|
| 24.55 |
|
| 2,915 |
|
| 1.89 |
|
|
| 1.89 |
|
|
| 1.59 |
|
|
| 0.20 |
|
|
| 27 |
|
| ||||||
2009 |
|
| 6.94 |
|
| (0.03 | ) |
| 2.66 |
|
| 2.63 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 9.57 |
|
| 37.90 |
|
| 186 |
|
| 5.78 |
|
|
| 5.78 |
|
|
| 1.59 |
|
|
| (0.41 | ) |
|
| 42 |
|
| ||||||
Royce Dividend Value Fund – Investment Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 7.29 |
| $ | 0.09 |
| $ | 2.15 |
| $ | 2.24 |
| $ | (0.10 | ) | $ | (0.53 | ) | $ | – |
| $ | (0.63 | ) | $ | – |
| $ | 8.90 |
|
| 31.23 | % | $ | 211,589 |
|
| 1.21 | % |
|
| 1.21 | % |
|
| 1.21 | % |
|
| 1.13 | % |
|
| 36 | % |
| ||||||
2012 |
|
| 6.34 |
|
| 0.14 |
|
| 0.95 |
|
| 1.09 |
|
| (0.12 | ) |
| (0.02 | ) |
| – |
|
| (0.14 | ) |
| – |
|
| 7.29 |
|
| 17.26 |
|
| 118,820 |
|
| 1.19 |
|
|
| 1.19 |
|
|
| 1.19 |
|
|
| 1.99 |
|
|
| 28 |
|
| ||||||
2011 | 6.80 | 0.07 | (0.37 | ) | (0.30 | ) | (0.07 | ) | (0.09 | ) |
| – |
| (0.16 | ) | – | 6.34 | (4.46 | ) | 85,188 | 1.20 |
| 1.20 |
| 1.20 |
| 1.14 |
| 14 |
| |||||||||||||||||||||||||||||||||
2010 | 5.31 | 0.09 | 1.51 | 1.60 | (0.08 | ) | (0.03 | ) |
| – |
| (0.11 | ) | – | 6.80 | 30.46 | 35,626 | 1.38 |
| 1.38 |
| 1.24 |
| 1.56 |
| 21 |
| ||||||||||||||||||||||||||||||||||||
2009 | 3.90 | 0.07 | 1.40 | 1.47 | (0.06 | ) | – |
| – |
| (0.06 | ) | – | 5.31 | 38.22 | 13,208 | 1.69 |
| 1.69 |
| 1.24 |
| 1.70 |
| 43 |
| |||||||||||||||||||||||||||||||||||||
Royce Dividend Value Fund – Service Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 7.35 |
| $ | 0.07 |
| $ | 2.16 |
| $ | 2.23 |
| $ | (0.07 | ) | $ | (0.53 | ) | $ | – |
| $ | (0.60 | ) | $ | – |
| $ | 8.98 |
|
| 30.74 | % | $ | 407,599 |
|
| 1.48 | % |
|
| 1.48 | % |
|
| 1.46 | % |
|
| 0.87 | % |
|
| 36 | % |
| ||||||
2012 |
|
| 6.38 |
|
| 0.12 |
|
| 0.95 |
|
| 1.07 |
|
| (0.08 | ) |
| (0.02 | ) |
| – |
|
| (0.10 | ) |
| – |
|
| 7.35 |
|
| 16.95 |
|
| 252,443 |
|
| 1.48 |
|
|
| 1.48 |
|
|
| 1.46 |
|
|
| 1.74 |
|
|
| 28 |
|
| ||||||
2011 | 6.82 | 0.05 | (0.36 | ) | (0.31 | ) | (0.04 | ) | (0.09 | ) |
| – |
| (0.13 | ) | – | 6.38 | (4.55 | ) | 201,634 | 1.48 |
| 1.48 |
| 1.46 |
| 0.84 |
| 14 |
| |||||||||||||||||||||||||||||||||
2010 | 5.33 | 0.08 | 1.51 | 1.59 | (0.07 | ) | (0.03 | ) |
| – |
| (0.10 | ) | – | 6.82 | 30.11 | 117,304 | 1.56 |
| 1.56 |
| 1.49 |
| 1.32 |
| 21 |
| ||||||||||||||||||||||||||||||||||||
2009 | 3.92 | 0.07 | 1.39 | 1.46 | (0.05 | ) | – |
| – |
| (0.05 | ) | – | 5.33 | 37.73 | 16,107 | 2.04 |
| 2.04 |
| 1.49 |
| 1.45 |
| 43 |
| |||||||||||||||||||||||||||||||||||||
Royce Dividend Value Fund – Institutional Class b | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 7.28 |
| $ | 0.11 |
| $ | 2.14 |
| $ | 2.25 |
| $ | (0.12 | ) | $ | (0.53 | ) | $ | – |
| $ | (0.65 | ) | $ | – |
| $ | 8.88 |
|
| 31.46 | % | $ | 31,236 |
|
| 1.11 | % |
|
| 1.11 | % |
|
| 1.04 | % |
|
| 1.29 | % |
|
| 36 | % |
| ||||||
2012 |
|
| 6.80 |
|
| 0.08 |
|
| 0.50 |
|
| 0.58 |
|
| (0.08 | ) |
| (0.02 | ) |
| – |
|
| (0.10 | ) |
| – |
|
| 7.28 |
|
| 8.51 |
| 23,460 |
|
| 1.33 |
|
| 1.33 |
|
| 1.04 |
|
| 3.48 |
|
| 28 |
|
|
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 111 |
Financial Highlights |
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Net |
| Net |
| Net Realized and Unrealized |
|
| Distributions |
| Distributions from Net |
|
|
|
|
|
|
|
|
| Ratio of Expenses to Average Net Assets |
| Ratio of Net Investment |
|
| |||||||||||||||||||||||||||||||||||
|
| Asset Value, |
| Investment |
| Gain (Loss) on |
| Total from Investment Operations |
| from Net Investment Income |
| Realized Gain on |
| Distributions |
| Total Distributions |
| Shareholder Redemption Fees |
| Net Asset |
| Total Return |
| Net Assets, |
| Prior to Fee |
| Prior |
| Net of |
| Income (Loss) |
| Portfolio Turnover Rate |
| |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Royce Global Value Fund – Investment Class c | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 12.91 |
| $ | 0.16 |
| $ | 0.68 |
| $ | 0.84 |
| $ | (0.16 | ) | $ | – |
| $ | – |
| $ | (0.16 | ) | $ | 0.01 |
| $ | 13.60 |
|
| 6.59 | % | $ | 159,366 |
|
| 1.49 | % |
|
| 1.49 | % |
|
| 1.49 | % |
|
| 1.08 | % |
|
| 41 | % |
| |||
2012 |
|
| 11.74 |
|
| 0.14 |
|
| 1.19 |
|
| 1.33 |
|
| (0.16 | ) |
| – |
|
| – |
|
| (0.16 | ) |
| – |
|
| 12.91 |
|
| 11.37 |
|
| 178,319 |
|
| 1.47 |
|
|
| 1.47 |
|
|
| 1.44 |
|
|
| 1.16 |
|
|
| 36 |
|
| |||
2011 |
|
| 14.54 |
|
| 0.13 |
|
| (2.82 | ) |
| (2.69 | ) |
| (0.12 | ) |
| – |
|
| – |
|
| (0.12 | ) |
| 0.01 |
|
| 11.74 |
|
| (18.48 | ) |
| 141,180 |
|
| 1.42 |
|
|
| 1.42 |
|
|
| 1.42 |
|
|
| 0.80 |
|
|
| 77 |
|
| |||
2010 |
|
| 11.02 |
|
| (0.06 | ) |
| 3.68 |
|
| 3.62 |
|
| (0.10 | ) |
| – |
|
| – |
|
| (0.10 | ) |
| – |
|
| 14.54 |
|
| 32.88 |
| 6,626 |
|
| 2.07 |
|
| 2.07 |
|
| 1.44 |
|
| (0.58 | )2 |
|
| 42 |
|
| |||||||
Royce Global Value Fund – Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 12.98 |
| $ | 0.15 |
| $ | 0.66 |
| $ | 0.81 |
| $ | (0.11 | ) | $ | – |
| $ | – |
| $ | (0.11 | ) | $ | – |
| $ | 13.68 |
|
| 6.28 | % | $ | 48,244 |
|
| 1.83 | % |
|
| 1.83 | % |
|
| 1.69 | % |
|
| 0.84 | % |
|
| 41 | % |
| |||
2012 |
|
| 11.77 |
|
| 0.12 |
|
| 1.18 |
|
| 1.30 |
|
| (0.09 | ) |
| – |
|
| – |
|
| (0.09 | ) |
| – |
|
| 12.98 |
|
| 11.03 |
|
| 98,274 |
|
| 1.80 |
|
|
| 1.80 |
|
|
| 1.69 |
|
|
| 0.88 |
|
|
| 36 |
|
| |||
2011 |
|
| 14.56 |
|
| 0.07 |
|
| (2.80 | ) |
| (2.73 | ) |
| (0.07 | ) |
| – |
|
| – |
|
| (0.07 | ) |
| 0.01 |
|
| 11.77 |
|
| (18.69 | ) |
| 122,574 |
|
| 1.77 |
|
|
| 1.77 |
|
|
| 1.69 |
|
|
| 0.41 |
|
|
| 77 |
|
| |||
2010 |
|
| 10.79 |
|
| (0.03 | ) |
| 3.87 |
|
| 3.84 |
|
| (0.08 | ) |
| – |
|
| – |
|
| (0.08 | ) |
| 0.01 |
|
| 14.56 |
|
| 35.69 |
|
| 141,992 |
|
| 1.84 |
|
|
| 1.84 |
|
|
| 1.69 |
|
|
| 0.01 |
|
|
| 42 |
|
| |||
2009 |
|
| 6.70 |
|
| 0.01 |
|
| 4.13 |
|
| 4.14 |
|
| (0.06 | ) |
| – |
|
| – |
|
| (0.06 | ) |
| 0.01 |
|
| 10.79 |
|
| 61.89 |
|
| 50,946 |
|
| 1.88 |
|
|
| 1.88 |
|
|
| 1.69 |
|
|
| 0.11 |
|
|
| 71 |
|
| |||
Royce Global Value Fund – Consultant Class d | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 12.88 |
| $ | 0.01 |
| $ | 0.70 |
| $ | 0.71 |
| $ | (0.05 | ) | $ | – |
| $ | – |
| $ | (0.05 | ) | $ | – |
| $ | 13.54 |
|
| 5.50 | % | $ | 25,663 |
|
| 2.53 | % |
|
| 2.53 | % |
|
| 2.44 | % |
|
| 0.11 | % |
|
| 41 | % |
| |||
2012 |
|
| 11.71 |
|
| 0.02 |
|
| 1.17 |
|
| 1.19 |
|
| (0.02 | ) |
| – |
|
| – |
|
| (0.02 | ) |
| – |
|
| 12.88 |
|
| 10.13 |
|
| 23,383 |
|
| 2.55 |
|
|
| 2.55 |
|
|
| 2.44 |
|
|
| 0.16 |
|
|
| 36 |
|
| |||
2011 |
|
| 15.66 |
|
| (0.09 | ) |
| (3.80 | ) |
| (3.89 | ) |
| (0.06 | ) |
| – |
|
| – |
|
| (0.06 | ) |
| – |
|
| 11.71 |
|
| (24.82 | )1 |
| 18,585 |
|
| 2.64 |
|
| 2.64 |
|
| 2.44 |
|
| (0.77 | )2 |
|
| 77 |
| |||||||
Royce Global Value Fund – R Class e | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 9.69 |
| $ | 0.05 |
| $ | 0.53 |
| $ | 0.58 |
| $ | (0.12 | ) | $ | – |
| $ | – |
| $ | (0.12 | ) | $ | – |
| $ | 10.15 |
|
| 5.98 | % | $ | 100 |
|
| 9.50 | % |
|
| 9.50 | % |
|
| 1.99 | % |
|
| 0.48 | % |
|
| 41 | % |
| |||
2012 |
|
| 10.00 |
|
| 0.02 |
|
| (0.21 | ) |
| (0.19 | ) |
| (0.12 | ) |
| – |
|
| – |
|
| (0.12 | ) |
| – |
|
| 9.69 |
|
| (1.90 | )1 |
| 80 |
|
| 19.19 |
|
| 19.19 |
|
| 1.99 |
|
| 0.70 |
|
| 36 |
|
| |||||||
Royce Global Value Fund – K Class e | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 9.69 |
| $ | 0.08 |
| $ | 0.52 |
| $ | 0.60 |
| $ | (0.14 | ) | $ | – |
| $ | – |
| $ | (0.14 | ) | $ | – |
| $ | 10.15 |
|
| 6.24 | % | $ | 44 |
|
| 19.21 | % |
|
| 19.21 | % |
|
| 1.74 | % |
|
| 0.80 | % |
|
| 41 | % |
| |||
2012 |
|
| 10.00 |
|
| 0.09 |
|
| (0.27 | ) |
| (0.18 | ) |
| (0.13 | ) |
| – |
|
| – |
|
| (0.13 | ) |
| – |
|
| 9.69 |
|
| (1.74 | )1 |
| 41 |
|
| 29.99 |
|
| 29.98 |
|
| 1.74 |
|
| 1.20 |
|
| 36 |
|
| |||||||
Royce International Smaller-Companies Fund – Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 11.28 |
| $ | 0.12 |
| $ | 1.30 |
| $ | 1.42 |
| $ | (0.15 | ) | $ | (0.56 | ) | $ | – |
| $ | (0.71 | ) | $ | – |
| $ | 11.99 |
|
| 12.73 | % | $ | 38,059 |
|
| 2.07 | % |
|
| 2.07 | % |
|
| 1.69 | % |
|
| 1.13 | % |
|
| 64 | % |
| |||
2012 |
|
| 9.58 |
|
| 0.14 |
|
| 1.70 |
|
| 1.84 |
|
| (0.15 | ) |
| – |
|
| – |
|
| (0.15 | ) |
| 0.01 |
|
| 11.28 |
|
| 19.39 |
|
| 26,371 |
|
| 2.13 |
|
|
| 2.13 |
|
|
| 1.69 |
|
|
| 1.29 |
|
|
| 44 |
|
| |||
2011 | 12.85 | 0.10 | (2.51 | ) | (2.41 | ) | (0.08 | ) | (0.78 | ) |
| (0.01 | ) | (0.87 | ) | 0.01 |
| 9.58 | (18.75 | ) | 20,103 | 2.15 |
| 2.15 |
| 1.69 |
| 0.88 |
| 38 |
| |||||||||||||||||||||||||||||
2010 | 10.49 | 0.03 | 2.72 | 2.75 | (0.10 | ) | (0.30 | ) |
| – |
| (0.40 | ) | 0.01 |
| 12.85 | 26.45 | 18,297 | 2.35 |
| 2.35 |
| 1.69 |
| 0.45 |
| 55 |
| ||||||||||||||||||||||||||||||||
2009 | 6.99 | (0.02 | ) | 3.53 | 3.51 | (0.02 | ) | – |
| – |
| (0.02 | ) | 0.01 |
| 10.49 | 50.31 | 7,871 | 3.01 |
| 3.01 |
| 1.69 |
| (0.18 | ) |
| 38 |
| |||||||||||||||||||||||||||||||
Royce Special Equity Multi-Cap Fund – Investment Class f | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 11.64 |
| $ | 0.12 |
| $ | 4.11 |
| $ | 4.23 |
| $ | (0.12 | ) | $ | (0.83 | ) | $ | – |
| $ | (0.95 | ) | $ | – |
| $ | 14.92 |
|
| 36.62 | % | $ | 62,387 |
|
| 1.16 | % |
|
| 1.16 | % |
|
| 1.15 | % |
|
| 0.93 | % |
|
| 44 | % |
| |||
2012 |
|
| 11.54 |
|
| 0.12 |
|
| 0.22 |
|
| 0.34 |
|
| (0.14 | ) |
| (0.10 | ) |
| – |
|
| (0.24 | ) |
| – |
|
| 11.64 |
|
| 3.00 |
| 34,375 |
|
| 1.19 |
|
| 1.19 |
|
| 1.16 |
|
| 1.55 |
|
| 14 |
|
| ||||||||
Royce Special Equity Multi-Cap Fund – Service Class g | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 11.68 |
| $ | 0.09 |
| $ | 4.12 |
| $ | 4.21 |
| $ | (0.10 | ) | $ | (0.83 | ) | $ | – |
| $ | (0.93 | ) | $ | – |
| $ | 14.96 |
|
| 36.26 | % | $ | 78,233 |
|
| 1.61 | % |
|
| 1.61 | % |
|
| 1.38 | % |
|
| 0.69 | % |
|
| 44 | % |
| |||
2012 |
|
| 10.64 |
|
| 0.13 |
|
| 1.10 |
|
| 1.23 |
|
| (0.09 | ) |
| (0.10 | ) |
| – |
|
| (0.19 | ) |
| – |
|
| 11.68 |
|
| 11.62 |
|
| 43,690 |
|
| 1.51 |
|
| 1.51 |
|
| 1.36 |
|
| 1.15 |
|
| 14 |
|
| |||||||
2011 |
|
| 10.00 |
|
| 0.06 |
|
| 0.65 |
|
| 0.71 |
|
| (0.06 | ) |
| (0.02 | ) |
| – |
|
| (0.08 | ) |
| 0.01 |
|
| 10.64 |
|
| 7.20 |
| 36,811 |
|
| 1.97 |
|
| 1.97 |
|
| 1.39 |
|
| 1.45 |
|
| 5 |
|
|
112 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
Financial Highlights |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Net |
| Net |
| Net Realized and Unrealized |
|
| Distributions |
| Distributions from Net |
|
|
|
|
|
|
|
|
| Ratio of Expenses to Average Net Assets |
| Ratio of Net Investment |
|
| ||||||||||||||||||||||||||||||||
|
| Asset Value, |
| Investment |
| Gain (Loss) on |
| Total from Investment Operations |
| from Net Investment Income |
| Realized Gain on |
| Distributions |
| Total Distributions |
| Shareholder Redemption Fees |
| Net Asset |
| Total Return |
| Net Assets, |
| Prior to Fee |
| Prior |
| Net of |
| Income (Loss) |
| Portfolio Turnover Rate |
| ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royce Special Equity Multi-Cap Fund – Institutional Class h | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 11.64 |
| $ | 0.15 |
| $ | 4.10 |
| $ | 4.25 |
| $ | (0.14 | ) | $ | (0.83 | ) | $ | – |
| $ | (0.97 | ) | $ | – |
| $ | 14.92 |
|
| 36.73 | % | $ | 48,063 |
|
| 1.10 | % |
|
| 1.10 | % |
|
| 1.04 | % |
|
| 1.02 | % |
|
| 44 | % |
|
2012 |
|
| 11.83 |
|
| 0.10 |
|
| (0.03 | ) |
| 0.07 |
|
| (0.16 | ) |
| (0.10 | ) |
| – |
|
| (0.26 | ) |
| – |
|
| 11.64 |
|
| 0.61 |
| 30,905 |
|
| 1.21 |
|
| 1.21 |
|
| 1.04 |
|
| 1.76 |
|
| 14 |
|
|
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 113 |
Notes to Financial Statements | |
Summary of Significant Accounting Policies: |
Royce Pennsylvania Mutual Fund, Royce Micro-Cap Fund, Royce Premier Fund, Royce Low-Priced Stock Fund, Royce Total Return Fund, Royce Heritage Fund, Royce Opportunity Fund, Royce Special Equity Fund, Royce Value Fund, Royce Value Plus Fund, Royce 100 Fund, Royce Dividend Value Fund, Royce Global Value Fund, Royce International Smaller-Companies Fund and Royce Special Equity Multi-Cap Fund (the “Fund” or “Funds”), are fifteen series of The Royce Fund (the “Trust”), a diversified open-end management investment company organized as a Delaware statutory trust. |
Royce International Smaller-Companies Fund | 12 | % |
Valuation of Investments: |
Securities are valued as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq’s Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their bid price. Other over-the-counter securities for which market quotations are readily available are valued at their highest bid price, except in the case of some bonds and other fixed income securities which may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. The Funds value their non-U.S. dollar denominated securities in U.S. dollars daily at the prevailing foreign currency exchange rates as quoted by a major bank. Securities for which market quotations are not readily available are valued at their fair value in accordance with the provisions of the 1940 Act, under procedures approved by the Fund's Board of Trustees, and are reported as Level 3 securities. As a general principle, the fair value of a security is the amount which the Fund might reasonably expect to receive for the security upon its current sale. However, in light of the judgment involved in fair valuations, there can be no assurance that a fair value assigned to a particular security will be the amount which the Fund might be able to receive upon its current sale. In addition, if, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, a Fund may fair value the security. The Funds use an independent pricing service to provide fair value estimates for relevant non-U.S. equity securities on days when the U.S. market volatility exceeds a certain threshold. This pricing service uses proprietary correlations it has developed between the movement of prices of non-U.S. equity securities and indices of U.S.-traded securities, futures contracts and other indications to estimate the fair value of relevant non-U.S. securities. When fair value pricing is employed, the prices of securities used by a Fund may differ from quoted or published prices for the same security. Investments in money market funds are valued at net asset value per share. |
Various inputs are used in determining the value of each Fund’s investments, as noted above. These inputs are summarized in the three broad levels below: | |||
Level 1 – quoted prices in active markets for identical securities. | |||
Level 2 – other significant observable inputs (including quoted prices for similar securities, foreign securities that may be fair valued and repurchase agreements). The table below includes all Level 2 securities. Level 2 securities with values based on quoted prices for similar securities are noted in the Schedules of Investments. | |||
Level 3 – significant unobservable inputs (including last trade price before trading was suspended, or at a discount thereto for lack of marketability or otherwise, market price information regarding other securities, information received from the company and/or published documents, including SEC filings and financial statements, or other publicly available information). | |||
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. | |||
The following is a summary of the inputs used to value each Fund’s investments as of December 31, 2013. For a detailed breakout of common stocks by sector classification or country, please refer to the Schedules of Investments. |
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Royce Pennsylvania Mutual Fund | ||||||||||||||
Common Stocks | $ | 7,092,950,648 | $ | 26,498,242 | $ | – | $ | 7,119,448,890 | ||||||
Cash Equivalents | 128,286,444 | 165,200,000 | – | 293,486,444 | ||||||||||
Royce Micro-Cap Fund | ||||||||||||||
Common Stocks | 812,150,512 | 899,330 | 411,368 | 813,461,210 | ||||||||||
Cash Equivalents | 26,212,865 | 41,674,000 | – | 67,886,865 |
114 | The Royce Funds 2013 Annual Report to Shareholders |
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Royce Premier Fund | ||||||||||||||
Common Stocks | $ | 6,810,829,971 | $ | 12,036,224 | $ | – | $ | 6,822,866,195 | ||||||
Cash Equivalents | 232,758,018 | 260,913,000 | – | 493,671,018 | ||||||||||
Royce Low-Priced Stock Fund | ||||||||||||||
Common Stocks | 1,432,910,451 | – | – | 1,432,910,451 | ||||||||||
Cash Equivalents | 123,342,925 | 117,585,000 | – | 240,927,925 | ||||||||||
Royce Total Return Fund | ||||||||||||||
Common Stocks | 5,299,615,653 | 25,785,375 | – | 5,325,401,028 | ||||||||||
Corporate Bonds | 4,035,000 | – | – | 4,035,000 | ||||||||||
Cash Equivalents | 43,119,635 | 377,765,000 | – | 420,884,635 | ||||||||||
Royce Heritage Fund | ||||||||||||||
Common Stocks | 324,700,428 | 1,328,392 | – | 326,028,820 | ||||||||||
Cash Equivalents | 2,797,942 | 38,369,000 | – | 41,166,942 | ||||||||||
Royce Opportunity Fund | ||||||||||||||
Common Stocks | 2,368,488,456 | 316,924 | – | 2,368,805,380 | ||||||||||
Preferred Stocks | 2,268,378 | – | – | 2,268,378 | ||||||||||
Cash Equivalents | 143,192,210 | 172,925,000 | – | 316,117,210 | ||||||||||
Royce Special Equity Fund | ||||||||||||||
Common Stocks | 3,200,767,455 | 4,107,000 | – | 3,204,874,455 | ||||||||||
Cash Equivalents | 35,100,554 | 418,376,000 | – | 453,476,554 | ||||||||||
Royce Value Fund | ||||||||||||||
Common Stocks | 1,156,443,918 | – | – | 1,156,443,918 | ||||||||||
Cash Equivalents | 45,315,257 | 21,023,000 | – | 66,338,257 | ||||||||||
Royce Value Plus Fund | ||||||||||||||
Common Stocks | 1,169,659,828 | – | – | 1,169,659,828 | ||||||||||
Cash Equivalents | 94,323,980 | 82,948,000 | – | 177,271,980 | ||||||||||
Royce 100 Fund | ||||||||||||||
Common Stocks | 266,548,135 | – | – | 266,548,135 | ||||||||||
Cash Equivalents | 2,636,004 | 27,942,000 | – | 30,578,004 | ||||||||||
Royce Dividend Value Fund | ||||||||||||||
Common Stocks | 594,851,689 | 2,313,600 | – | 597,165,289 | ||||||||||
Cash Equivalents | 3,073,773 | 45,730,000 | – | 48,803,773 | ||||||||||
Royce Global Value Fund | ||||||||||||||
Common Stocks | 227,173,962 | – | – | 227,173,962 | ||||||||||
Cash Equivalents | 8,279,744 | 5,262,000 | – | 13,541,744 | ||||||||||
Royce International Smaller-Companies Fund | ||||||||||||||
Common Stocks | 35,899,825 | – | – | 35,899,825 | ||||||||||
Cash Equivalents | – | 1,469,000 | – | 1,469,000 | ||||||||||
Royce Special Equity Multi-Cap Fund | ||||||||||||||
Common Stocks | 178,548,856 | – | – | 178,548,856 | ||||||||||
Cash Equivalents | – | 10,697,000 | – | 10,697,000 | ||||||||||
For the year ended December 31, 2013, certain securities have transferred in and out of Level 1 and Level 2 measurements as a result of the fair value pricing procedures for international equities. The Funds recognize transfers between levels as of the end of the reporting period. At December 31, 2013, the following Funds had securities transfer from Level 1 to Level 2 and from Level 2 to Level 1 within the fair value hierarchy: |
Transfers from | Transfers from | Transfers from | Transfers from | |||||||||||||||||||
Level 1 | Level 2 | Level 1 | Level 2 | |||||||||||||||||||
to Level 2 | to Level 1 | to Level 2 | to Level 1 | |||||||||||||||||||
Royce Pennsylvania Mutual Fund | $ | 16,575,691 | $ | – | Royce Opportunity Fund | $ | 316,924 | $ | – | |||||||||||||
Royce Micro-Cap Fund | – | 49,753,709 | Royce Value Plus Fund | – | 36,089,630 | |||||||||||||||||
Royce Premier Fund | 12,036,224 | 138,244,706 | Royce Dividend Value Fund | 2,313,600 | 49,674,780 | |||||||||||||||||
Royce Low-Priced Stock Fund | – | 191,552,090 | Royce Global Value Fund | – | 103,164,282 | |||||||||||||||||
Royce Total Return Fund | 12,130,800 | 78,148,696 | Royce International Smaller-Companies Fund | – | 24,340,871 | |||||||||||||||||
Royce Heritage Fund | 1,328,392 | 27,347,849 |
Level 3 Reconciliation: | ||||||||||||||||
Realized and Unrealized | ||||||||||||||||
Balance as of 12/31/12 | Gain (Loss)1 | Balance as of 12/31/13 | ||||||||||||||
Royce Micro-Cap Fund | ||||||||||||||||
Common Stocks | $403,638 | $7,730 | $411,368 |
1 | The net change in unrealized appreciation (depreciation) is included in the accompanying Statement of Operations. Change in unrealized appreciation (depreciation) includes net unrealized appreciation (depreciation) resulting from changes in investment values during the reporting period and the reversal of previously recorded unrealized appreciation (depreciation) when gains or losses are realized. Net realized gain (loss) from investments and foreign currency transactions is included in the accompanying Statement of Operations. |
The Royce Funds 2013 Annual Report to Shareholders | 115 |
Notes to Financial Statements (continued) | |
Repurchase Agreements:
The Funds may enter into repurchase agreements with institutions that the Funds’ investment adviser has determined are creditworthy. Each Fund restricts repurchase agreements to maturities of no more than seven days. Securities pledged as collateral for repurchase agreements, which are held until maturity of the repurchase agreements, are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). Repurchase agreements could involve certain risks in the event of default or insolvency of the counter-party, including possible delays or restrictions upon the ability of each Fund to dispose of its underlying securities.
Foreign Currency:
Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, expiration of currency forward contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on each Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, including investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.
Securities Lending:
The Funds loan securities through a lending agent to qualified institutional investors for the purpose of realizing additional income. Collateral for the Funds on all securities loaned is accepted in cash and cash equivalents and invested temporarily by the custodian. The collateral maintained is at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. The Funds retain the risk of any loss on the securities on loan as well as incurring the potential loss on investments purchased with cash collateral received for securities lending. The Funds’ securities lending income consists of the income earned on investing cash collateral, plus any premium payments received for lending certain securities, less any rebates paid to borrowers and lending agent fees associated with the loan. The lending agent is not affiliated with Royce.
The following table presents by financial instrument, each Fund’s assets and liabilities net of related collateral held by each Fund at December 31, 2013:
Gross Amount of Assets and | ||||||||||||||||
Liabilities in the Statements of | ||||||||||||||||
Assets and Liabilities1 | Collateral Received and Pledged | Net Amount | ||||||||||||||
Royce Pennsylvania Mutual Fund | ||||||||||||||||
Securities on Loan/Collateral on Loaned Securities | $ | 128,286,444 | $ | (128,286,444 | ) | $ | – | |||||||||
Royce Micro-Cap Fund | ||||||||||||||||
Securities on Loan/Collateral on Loaned Securities | 26,212,865 | (26,212,865 | ) | – | ||||||||||||
Royce Premier Fund | ||||||||||||||||
Securities on Loan/Collateral on Loaned Securities | 232,758,018 | (232,758,018 | ) | – | ||||||||||||
Royce Low-Priced Stock Fund | ||||||||||||||||
Securities on Loan/Collateral on Loaned Securities | 123,342,925 | (123,342,925 | ) | – | ||||||||||||
Royce Total Return Fund | ||||||||||||||||
Securities on Loan/Collateral on Loaned Securities | 43,119,635 | (43,119,635 | ) | – | ||||||||||||
Royce Heritage Fund | ||||||||||||||||
Securities on Loan/Collateral on Loaned Securities | 2,797,942 | (2,797,942 | ) | – | ||||||||||||
Royce Opportunity Fund | ||||||||||||||||
Securities on Loan/Collateral on Loaned Securities | 143,192,210 | (143,192,210 | ) | – | ||||||||||||
Royce Special Equity Fund | ||||||||||||||||
Securities on Loan/Collateral on Loaned Securities | 35,100,554 | (35,100,554 | ) | – | ||||||||||||
Royce Value Fund | ||||||||||||||||
Securities on Loan/Collateral on Loaned Securities | 45,315,257 | (45,315,257 | ) | – | ||||||||||||
Royce Value Plus Fund | ||||||||||||||||
Securities on Loan/Collateral on Loaned Securities | 94,323,980 | (94,323,980 | ) | – | ||||||||||||
Royce 100 Fund | ||||||||||||||||
Securities on Loan/Collateral on Loaned Securities | 2,636,004 | (2,636,004 | ) | – | ||||||||||||
Royce Dividend Value Fund | ||||||||||||||||
Securities on Loan/Collateral on Loaned Securities | 3,073,773 | (3,073,773 | ) | – | ||||||||||||
Royce Global Value Fund | ||||||||||||||||
Securities on Loan/Collateral on Loaned Securities | 8,279,744 | (8,279,744 | ) | – |
1 Absent an event of default, assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities.
116 | The Royce Funds 2013 Annual Report to Shareholders |
Distributions and Taxes:
As qualified regulated investment companies under Subchapter M of the Internal Revenue Code, the Funds are not subject to income taxes to the extent that each Fund distributes substantially all of its taxable income for its fiscal year.
Royce Total Return Fund and Royce Dividend Value Fund pay any dividends from net investment income quarterly and make any distributions from net realized gains annually in December. The other Funds pay any dividends and capital gain distributions annually in December. Dividends from net investment income are determined at a class level and distributions from capital gains are determined at a Fund level. Because federal income tax regulations differ from generally accepted accounting principles, income and capital gain distributions determined in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Accordingly, the character of distributions and composition of net assets for tax purposes differ from those reflected in the accompanying financial statements.
Investment Transactions and Related Investment Income:
Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date. Non-cash dividend income is recorded at the fair market value of the securities received. Interest income is recorded on an accrual basis. Premium and discounts on debt securities are amortized using the effective yield-to-maturity method. Realized gains and losses from investment transactions are determined on the basis of identified cost for book and tax purposes.
Expenses:
The Funds incur direct and indirect expenses. Expenses directly attributable to a Fund are charged to the Fund’s operations, while expenses applicable to more than one of the Royce Funds are allocated equitably. Certain personnel, occupancy costs and other administrative expenses related to the Royce Funds are allocated by Royce under an administration agreement and are included in administrative and office facilities and legal expenses. The Fund has adopted a deferred fee agreement that allows the Trustees to defer the receipt of all or a portion of trustees’ fees otherwise payable. The deferred fees are invested in certain Royce Funds until distributed in accordance with the agreement.
Compensating Balance Credits:
The Funds have arrangements with their custodian bank and transfer agent, whereby a portion of the custodian’s fee and transfer agent’s fee is paid indirectly by credits earned on a Fund’s cash on deposit with the bank and transfer agent. These deposit arrangements are an alternative to purchasing overnight investments. Conversely, a Fund pays interest to the custodian on any cash overdrafts, to the extent they are not offset by credits earned on positive cash balances.
Line of Credit:
The Funds, along with certain other Royce Funds, participate in a $75 million line of credit (“Credit Agreement”) to be used for temporary or emergency purposes. This 364-day revolving Credit Agreement expires on July 11, 2014. Pursuant to the Credit Agreement, each participating Fund is liable only for principal and interest payments related to borrowings made by that Fund. Borrowings under the Credit Agreement bear interest at a rate equal to the higher of the federal funds rate + 1.25% or overnight LIBOR + 1.25%. The Funds did not utilize the line of credit during the year ended December 31, 2013.
Shares issued for | Net increase (decrease) from | |||||||||||||||||||||||||||||||
Shares sold | reinvestment of distributions | Shares redeemed | capital share transactions | |||||||||||||||||||||||||||||
Period ended | Period ended | Period ended | Period ended | Period ended | Period ended | Period ended | Period ended | |||||||||||||||||||||||||
12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund | ||||||||||||||||||||||||||||||||
Investment Class | $ | 605,005,254 | $ | 662,607,895 | $ | 240,617,073 | $ | 257,795,544 | $ | (1,199,534,491 | ) | $ | (1,256,398,755 | ) | $ | (353,912,164 | ) | $ | (335,995,316 | ) | ||||||||||||
Service Class | 158,543,673 | 165,003,710 | 31,528,901 | 28,468,833 | (205,430,442 | ) | (155,198,379 | ) | (15,357,868 | ) | 38,274,164 | |||||||||||||||||||||
Consultant Class | 35,995,184 | 34,093,194 | 44,509,769 | 39,215,706 | (110,412,807 | ) | (126,201,488 | ) | (29,907,854 | ) | (52,892,588 | ) | ||||||||||||||||||||
Institutional Class | 227,429,558 | 261,272,296 | 42,182,078 | 32,724,191 | (88,116,686 | ) | (61,037,580 | ) | 181,494,950 | 232,958,907 | ||||||||||||||||||||||
R Class | 12,175,418 | 15,853,054 | 2,317,814 | 1,943,538 | (12,674,989 | ) | (9,101,626 | ) | 1,818,243 | 8,694,966 | ||||||||||||||||||||||
K Class | 3,353,854 | 4,442,442 | 615,573 | 491,916 | (3,487,416 | ) | (2,231,520 | ) | 482,011 | 2,702,838 | ||||||||||||||||||||||
Royce Micro-Cap Fund | ||||||||||||||||||||||||||||||||
Investment Class | 98,858,542 | 110,135,135 | 43,274,805 | 40,891,444 | (314,723,445 | ) | (331,749,308 | ) | (172,590,098 | ) | (180,722,729 | ) | ||||||||||||||||||||
Service Class | 24,900,898 | 77,650,222 | 5,561,270 | 7,331,533 | (69,726,173 | ) | (100,912,526 | ) | (39,264,005 | ) | (15,930,771 | ) | ||||||||||||||||||||
Consultant Class | 4,190,480 | 5,379,491 | 8,921,529 | 7,635,941 | (28,337,765 | ) | (27,570,388 | ) | (15,225,756 | ) | (14,554,956 | ) | ||||||||||||||||||||
Royce Premier Fund | ||||||||||||||||||||||||||||||||
Investment Class | 643,271,846 | 747,646,770 | 461,289,856 | 313,244,907 | (1,344,940,951 | ) | (1,142,070,039 | ) | (240,379,249 | ) | (81,178,362 | ) | ||||||||||||||||||||
Service Class | 91,471,655 | 137,054,293 | 46,476,184 | 37,837,318 | (447,736,768 | ) | (266,450,099 | ) | (309,788,929 | ) | (91,558,488 | ) | ||||||||||||||||||||
Consultant Class | 3,234,960 | 4,914,067 | 6,793,623 | 3,975,657 | (11,667,823 | ) | (9,949,114 | ) | (1,639,240 | ) | (1,059,390 | ) | ||||||||||||||||||||
Institutional Class | 171,612,186 | 163,632,309 | 88,971,062 | 58,694,049 | (271,899,788 | ) | (196,727,102 | ) | (11,316,540 | ) | 25,599,256 | |||||||||||||||||||||
W Class | 67,696,518 | 113,845,651 | 41,113,353 | 29,318,980 | (169,817,947 | ) | (180,176,714 | ) | (61,008,076 | ) | (37,012,083 | ) | ||||||||||||||||||||
R Class | 7,171,068 | 11,096,351 | 3,194,633 | 1,863,347 | (10,803,236 | ) | (8,690,901 | ) | (437,535 | ) | 4,268,797 | |||||||||||||||||||||
K Class | 1,843,765 | 2,923,140 | 1,872,975 | 1,464,327 | (5,003,511 | ) | (2,940,122 | ) | (1,286,771 | ) | 1,447,345 | |||||||||||||||||||||
The Royce Funds 2013 Annual Report to Shareholders | 117 |
Notes to Financial Statements (continued) | |
Capital Share Transactions (in dollars) (continued): |
Shares issued for | Net increase (decrease) from | |||||||||||||||||||||||||||||||
Shares sold | reinvestment of distributions | Shares redeemed | capital share transactions | |||||||||||||||||||||||||||||
Period ended | Period ended | Period ended | Period ended | Period ended | Period ended | Period ended | Period ended | |||||||||||||||||||||||||
12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||||||||
Royce Low-Priced Stock Fund | ||||||||||||||||||||||||||||||||
Investment Class | $ | 25,018,884 | $ | 121,523,266 | $ | 11,573,545 | $ | 19,845,684 | $ | (207,176,226 | ) | $ | (152,071,182 | ) | $ | (170,583,797 | ) | $ | (10,702,232 | ) | ||||||||||||
Service Class | 96,303,157 | 239,998,652 | 129,195,821 | 135,141,136 | (1,029,968,862 | ) | (1,027,840,636 | ) | (804,469,884 | ) | (652,700,848 | ) | ||||||||||||||||||||
Institutional Class | 52,909,521 | 216,954,398 | 65,125,731 | 76,401,516 | (749,374,096 | ) | (281,899,681 | ) | (631,338,844 | ) | 11,456,233 | |||||||||||||||||||||
R Class | 710,708 | 1,545,216 | 412,286 | 413,318 | (3,837,806 | ) | (3,319,490 | ) | (2,714,812 | ) | (1,360,956 | ) | ||||||||||||||||||||
K Class | 1,531,364 | 1,898,473 | 838,644 | 781,650 | (4,536,092 | ) | (4,667,746 | ) | (2,166,084 | ) | (1,987,623 | ) | ||||||||||||||||||||
Royce Total Return Fund | ||||||||||||||||||||||||||||||||
Investment Class | 528,999,533 | 419,303,349 | 304,734,722 | 173,830,152 | (849,880,581 | ) | (885,921,003 | ) | (16,146,326 | ) | (292,787,502 | ) | ||||||||||||||||||||
Service Class | 269,258,191 | 69,272,271 | 44,274,371 | 14,854,646 | (166,019,974 | ) | (124,544,896 | ) | 147,512,588 | (40,417,979 | ) | |||||||||||||||||||||
Consultant Class | 28,057,748 | 20,173,454 | 30,943,470 | 14,273,391 | (54,173,983 | ) | (58,339,142 | ) | 4,827,235 | (23,892,297 | ) | |||||||||||||||||||||
Institutional Class | 215,408,392 | 92,895,625 | 52,099,575 | 23,588,680 | (149,283,730 | ) | (126,051,961 | ) | 118,224,237 | (9,567,656 | ) | |||||||||||||||||||||
W Class | 74,148,184 | 56,620,882 | 21,587,603 | 10,281,660 | (56,755,936 | ) | (37,853,609 | ) | 38,979,851 | 29,048,933 | ||||||||||||||||||||||
R Class | 21,893,247 | 19,963,699 | 5,827,458 | 2,354,016 | (15,151,842 | ) | (11,233,311 | ) | 12,568,863 | 11,084,404 | ||||||||||||||||||||||
K Class | 107,190,612 | 96,984,981 | 21,610,891 | 11,545,341 | (126,039,047 | ) | (135,315,960 | ) | 2,762,456 | (26,785,638 | ) | |||||||||||||||||||||
Royce Heritage Fund | ||||||||||||||||||||||||||||||||
Investment Class | 66,008,028 | 25,279,973 | 12,527,322 | 1,251,617 | (4,946,365 | ) | (9,957,079 | ) | 73,588,985 | 16,574,511 | ||||||||||||||||||||||
Service Class | 14,757,297 | 23,331,563 | 23,773,697 | 5,597,731 | (43,411,963 | ) | (67,038,754 | ) | (4,880,969 | ) | (38,109,460 | ) | ||||||||||||||||||||
Consultant Class | 1,263,011 | 1,725,731 | 2,151,535 | 423,298 | (2,515,165 | ) | (3,413,072 | ) | 899,381 | (1,264,043 | ) | |||||||||||||||||||||
R Class | 1,847,167 | 1,916,645 | 992,495 | 157,800 | (1,268,414 | ) | (1,786,121 | ) | 1,571,248 | 288,324 | ||||||||||||||||||||||
K Class | 1,250,136 | 4,681,526 | 1,055,146 | 271,701 | (3,637,243 | ) | (6,488,110 | ) | (1,331,961 | ) | (1,534,883 | ) | ||||||||||||||||||||
Royce Opportunity Fund | ||||||||||||||||||||||||||||||||
Investment Class | 332,616,686 | 128,158,726 | 109,717,251 | 47,244,802 | (228,261,969 | ) | (271,654,395 | ) | 214,071,968 | (96,250,867 | ) | |||||||||||||||||||||
Service Class | 143,463,729 | 70,636,968 | 33,163,722 | 9,474,766 | (235,857,849 | ) | (61,380,895 | ) | (59,230,398 | ) | 18,730,839 | |||||||||||||||||||||
Consultant Class | 4,118,375 | 1,688,984 | 1,776,385 | 671,947 | (2,557,349 | ) | (3,993,515 | ) | 3,337,411 | (1,632,584 | ) | |||||||||||||||||||||
Institutional Class | 166,839,476 | 158,959,803 | 73,390,855 | 34,022,248 | (290,133,892 | ) | (167,107,259 | ) | (49,903,561 | ) | 25,874,792 | |||||||||||||||||||||
R Class | 13,143,525 | 4,090,762 | 2,051,002 | 374,879 | (1,853,045 | ) | (1,515,337 | ) | 13,341,482 | 2,950,304 | ||||||||||||||||||||||
K Class | 8,593,690 | 2,701,921 | 1,712,998 | 504,189 | (4,064,844 | ) | (1,843,330 | ) | 6,241,844 | 1,362,780 | ||||||||||||||||||||||
Royce Special Equity Fund | ||||||||||||||||||||||||||||||||
Investment Class | 493,764,184 | 577,591,163 | 187,724,022 | 130,040,727 | (607,174,950 | ) | (462,146,869 | ) | 74,313,256 | 245,485,021 | ||||||||||||||||||||||
Service Class | 80,216,174 | 95,889,522 | 25,988,233 | 15,496,840 | (69,704,292 | ) | (92,178,056 | ) | 36,500,115 | 19,208,306 | ||||||||||||||||||||||
Consultant Class | 5,375,063 | 8,002,331 | 6,011,027 | 3,566,493 | (7,598,377 | ) | (7,578,889 | ) | 3,787,713 | 3,989,935 | ||||||||||||||||||||||
Institutional Class | 125,908,328 | 142,834,981 | 56,838,996 | 38,652,965 | (163,427,568 | ) | (127,183,824 | ) | 19,319,756 | 54,304,122 | ||||||||||||||||||||||
Royce Value Fund | ||||||||||||||||||||||||||||||||
Investment Class | 39,278,557 | 70,246,479 | 13,139,768 | 10,320,986 | (94,469,427 | ) | (101,442,408 | ) | (42,051,102 | ) | (20,874,943 | ) | ||||||||||||||||||||
Service Class | 57,608,008 | 109,344,849 | 46,173,865 | 44,267,749 | (384,234,842 | ) | (442,526,639 | ) | (280,452,969 | ) | (288,914,041 | ) | ||||||||||||||||||||
Consultant Class | 2,142,085 | 3,482,363 | 2,179,045 | 1,631,878 | (11,234,896 | ) | (8,919,646 | ) | (6,913,766 | ) | (3,805,405 | ) | ||||||||||||||||||||
Institutional Class | 25,750,530 | 45,645,269 | 15,708,560 | 11,504,828 | (60,814,438 | ) | (52,243,010 | ) | (19,355,348 | ) | 4,907,087 | |||||||||||||||||||||
R Class | 8,633,738 | 12,801,375 | 2,587,581 | 1,909,362 | (17,983,761 | ) | (12,227,421 | ) | (6,762,442 | ) | 2,483,316 | |||||||||||||||||||||
K Class | 5,372,313 | 9,830,058 | 1,401,823 | 1,247,136 | (11,489,956 | ) | (7,209,737 | ) | (4,715,820 | ) | 3,867,457 | |||||||||||||||||||||
Royce Value Plus Fund | ||||||||||||||||||||||||||||||||
Investment Class | 45,014,700 | 69,004,335 | 17,699,284 | – | (94,732,454 | ) | (182,746,159 | ) | (32,018,470 | ) | (113,741,824 | ) | ||||||||||||||||||||
Service Class | 72,297,178 | 123,835,229 | 65,183,044 | – | (464,563,649 | ) | (761,108,483 | ) | (327,083,427 | ) | (637,273,254 | ) | ||||||||||||||||||||
Consultant Class | 1,097,991 | 1,261,129 | 1,733,762 | – | (3,753,070 | ) | (4,591,604 | ) | (921,317 | ) | (3,330,475 | ) | ||||||||||||||||||||
Institutional Class | 25,026,020 | 50,704,394 | 10,959,037 | – | (152,001,651 | ) | (132,426,143 | ) | (116,016,594 | ) | (81,721,749 | ) | ||||||||||||||||||||
R Class | 998,626 | 737,783 | 124,721 | – | (1,021,869 | ) | (752,945 | ) | 101,478 | (15,162 | ) | |||||||||||||||||||||
K Class | 453,654 | 159,051 | 102,901 | – | (180,247 | ) | (243,989 | ) | 376,308 | (84,938 | ) | |||||||||||||||||||||
Royce 100 Fund | ||||||||||||||||||||||||||||||||
Investment Class | 18,939,455 | 28,275,102 | 7,654,869 | 5,900,826 | (44,035,340 | ) | (29,745,452 | ) | (17,441,016 | ) | 4,430,476 | |||||||||||||||||||||
Service Class | 33,984,238 | 31,574,384 | 28,928,569 | 19,484,774 | (83,130,559 | ) | (149,472,878 | ) | (20,217,752 | ) | (98,413,720 | ) | ||||||||||||||||||||
R Class | 1,077,565 | 2,369,785 | 287,743 | 157,770 | (1,494,820 | ) | (3,565,275 | ) | (129,512 | ) | (1,037,720 | ) | ||||||||||||||||||||
K Class | 1,143,767 | 1,218,557 | 231,871 | 248,406 | (3,312,275 | ) | (2,546,125 | ) | (1,936,637 | ) | (1,079,162 | ) | ||||||||||||||||||||
Royce Dividend Value Fund | ||||||||||||||||||||||||||||||||
Investment Class | 95,594,378 | 73,458,760 | 13,847,962 | 2,119,445 | (48,840,808 | ) | (57,360,557 | ) | 60,601,532 | 18,217,648 | ||||||||||||||||||||||
Service Class | 133,082,533 | 84,975,117 | 23,778,109 | 3,193,010 | (65,610,178 | ) | (69,074,032 | ) | 91,250,464 | 19,094,095 | ||||||||||||||||||||||
Institutional Class | 2,037,602 | 22,056,597 | 2,161,756 | 305,449 | (1,691,088 | ) | (430,847 | ) | 2,508,270 | 21,931,199 | ||||||||||||||||||||||
118 | The Royce Funds 2013 Annual Report to Shareholders |
Capital Share Transactions (in dollars) (continued): |
Shares issued for | Net increase (decrease) from | |||||||||||||||||||||||||||||||
Shares sold | reinvestment of distributions | Shares redeemed | capital share transactions | |||||||||||||||||||||||||||||
Period ended | Period ended | Period ended | Period ended | Period ended | Period ended | Period ended | Period ended | |||||||||||||||||||||||||
12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||||||||
Royce Global Value Fund | ||||||||||||||||||||||||||||||||
Investment Class | $ | 52,876,116 | $ | 91,568,654 | $ | 1,615,070 | $ | 2,219,916 | $ | (81,698,507 | ) | $ | (70,515,862 | ) | $ | (27,207,321 | ) | $ | 23,272,708 | |||||||||||||
Service Class | 11,030,665 | 34,284,203 | 397,892 | 652,820 | (64,565,756 | ) | (69,882,078 | ) | (53,137,199 | ) | (34,945,055 | ) | ||||||||||||||||||||
Consultant Class | 5,883,100 | 7,109,366 | 85,042 | 28,010 | (4,873,143 | ) | (4,118,283 | ) | 1,094,999 | 3,019,093 | ||||||||||||||||||||||
R Class | 48,059 | 75,891 | 1,123 | 950 | (32,126 | ) | – | 17,056 | 76,841 | |||||||||||||||||||||||
K Class | – | 42,371 | 603 | 565 | – | – | 603 | 42,936 | ||||||||||||||||||||||||
Royce International Smaller-Companies Fund | ||||||||||||||||||||||||||||||||
Service Class | 15,275,210 | 10,558,425 | 2,054,964 | 336,519 | (7,584,209 | ) | (8,258,463 | ) | 9,745,965 | 2,636,481 | ||||||||||||||||||||||
Royce Special Equity Multi-Cap Fund | ||||||||||||||||||||||||||||||||
Investment Class | 19,293,138 | 36,724,835 | 3,704,628 | 653,344 | (6,291,434 | ) | (2,544,262 | ) | 16,706,332 | 34,833,917 | ||||||||||||||||||||||
Service Class | 27,040,616 | 34,106,088 | 4,412,868 | 705,194 | (10,431,782 | ) | (32,520,070 | ) | 21,021,702 | 2,291,212 | ||||||||||||||||||||||
Institutional Class | 10,145,425 | 30,548,000 | 2,916,002 | 674,111 | (6,513,470 | ) | (3,182 | ) | 6,547,957 | 31,218,929 | ||||||||||||||||||||||
Capital Share Transactions (in shares): |
Shares issued for | Net increase (decrease) in | |||||||||||||||||||||||||||||||
Shares sold | reinvestment of distributions | Shares redeemed | shares outstanding | |||||||||||||||||||||||||||||
Period ended | Period ended | Period ended | Period ended | Period ended | Period ended | Period ended | Period ended | |||||||||||||||||||||||||
12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund | ||||||||||||||||||||||||||||||||
Investment Class | 46,226,486 | 57,315,522 | 16,992,836 | 23,088,722 | (89,595,361 | ) | (108,721,143 | ) | (26,376,039 | ) | (28,316,899 | ) | ||||||||||||||||||||
Service Class | 12,154,062 | 14,331,989 | 2,231,345 | 2,555,226 | (15,280,852 | ) | (13,503,390 | ) | (895,445 | ) | 3,383,825 | |||||||||||||||||||||
Consultant Class | 3,060,812 | 3,295,095 | 3,572,100 | 3,937,320 | (9,417,039 | ) | (12,234,852 | ) | (2,784,127 | ) | (5,002,437 | ) | ||||||||||||||||||||
Institutional Class | 16,645,215 | 22,317,425 | 2,974,759 | 2,922,651 | (6,539,897 | ) | (5,277,914 | ) | 13,080,077 | 19,962,162 | ||||||||||||||||||||||
R Class | 954,600 | 1,421,548 | 168,937 | 179,128 | (969,814 | ) | (809,427 | ) | 153,723 | 791,249 | ||||||||||||||||||||||
K Class | 277,728 | 428,087 | 49,089 | 49,436 | (290,287 | ) | (217,025 | ) | 36,530 | 260,498 | ||||||||||||||||||||||
Royce Micro-Cap Fund | ||||||||||||||||||||||||||||||||
Investment Class | 6,259,092 | 7,184,519 | 2,671,284 | 2,883,568 | (20,014,977 | ) | (22,127,390 | ) | (11,084,601 | ) | (12,059,303 | ) | ||||||||||||||||||||
Service Class | 1,576,795 | 5,290,434 | 347,362 | 522,645 | (4,567,474 | ) | (6,819,080 | ) | (2,643,317 | ) | (1,006,001 | ) | ||||||||||||||||||||
Consultant Class | 305,187 | 390,707 | 633,631 | 607,577 | (2,064,361 | ) | (2,035,352 | ) | (1,125,543 | ) | (1,037,068 | ) | ||||||||||||||||||||
Royce Premier Fund | ||||||||||||||||||||||||||||||||
Investment Class | 30,376,140 | 38,100,247 | 21,769,221 | 16,634,759 | (63,250,311 | ) | (58,228,633 | ) | (11,104,950 | ) | (3,493,627 | ) | ||||||||||||||||||||
Service Class | 4,393,188 | 7,053,893 | 2,235,507 | 2,043,052 | (21,601,163 | ) | (13,922,293 | ) | (14,972,468 | ) | (4,825,348 | ) | ||||||||||||||||||||
Consultant Class | 172,593 | 274,128 | 361,940 | 233,450 | (616,805 | ) | (560,084 | ) | (82,272 | ) | (52,506 | ) | ||||||||||||||||||||
Institutional Class | 8,056,109 | 8,171,315 | 4,163,363 | 3,090,868 | (12,779,832 | ) | (9,977,508 | ) | (560,360 | ) | 1,284,675 | |||||||||||||||||||||
W Class | 3,209,870 | 5,771,151 | 1,936,569 | 1,552,912 | (8,004,577 | ) | (9,121,752 | ) | (2,858,138 | ) | (1,797,689 | ) | ||||||||||||||||||||
R Class | 355,469 | 580,289 | 156,830 | 102,157 | (518,060 | ) | (458,782 | ) | (5,761 | ) | 223,664 | |||||||||||||||||||||
K Class | 207,939 | 318,350 | 242,928 | 181,684 | (562,131 | ) | (326,918 | ) | (111,264 | ) | 173,116 | |||||||||||||||||||||
Royce Low-Priced Stock Fund | ||||||||||||||||||||||||||||||||
Investment Class | 1,774,622 | 8,187,882 | 879,449 | 1,478,272 | (14,606,981 | ) | (10,464,863 | ) | (11,952,910 | ) | (798,709 | ) | ||||||||||||||||||||
Service Class | 6,805,969 | 16,082,356 | 9,802,415 | 10,083,981 | (72,626,280 | ) | (70,093,267 | ) | (56,017,896 | ) | (43,926,930 | ) | ||||||||||||||||||||
Institutional Class | 3,751,445 | 14,658,805 | 4,945,006 | 5,682,348 | (53,328,942 | ) | (19,337,316 | ) | (44,632,491 | ) | 1,003,837 | |||||||||||||||||||||
R Class | 51,145 | 104,095 | 32,085 | 31,455 | (276,221 | ) | (229,127 | ) | (192,991 | ) | (93,577 | ) | ||||||||||||||||||||
K Class | 185,404 | 207,241 | 125,734 | 102,021 | (545,525 | ) | (525,629 | ) | (234,387 | ) | (216,367 | ) | ||||||||||||||||||||
Royce Total Return Fund | ||||||||||||||||||||||||||||||||
Investment Class | 34,008,791 | 31,093,660 | 19,177,169 | 12,992,846 | (54,422,666 | ) | (65,700,802 | ) | (1,236,706 | ) | (21,614,296 | ) | ||||||||||||||||||||
Service Class | 18,008,716 | 5,140,212 | 2,760,845 | 1,104,895 | (10,349,897 | ) | (9,205,687 | ) | 10,419,664 | (2,960,580 | ) | |||||||||||||||||||||
Consultant Class | 1,777,940 | 1,485,792 | 1,916,004 | 1,051,103 | (3,421,705 | ) | (4,288,883 | ) | 272,239 | (1,751,988 | ) | |||||||||||||||||||||
Institutional Class | 14,208,470 | 6,887,862 | 3,302,136 | 1,770,103 | (9,643,829 | ) | (9,394,490 | ) | 7,866,777 | (736,525 | ) | |||||||||||||||||||||
W Class | 4,762,342 | 4,191,083 | 1,360,229 | 768,514 | (3,582,702 | ) | (2,800,377 | ) | 2,539,869 | 2,159,220 | ||||||||||||||||||||||
R Class | 1,406,109 | 1,471,260 | 360,304 | 173,782 | (960,345 | ) | (827,928 | ) | 806,068 | 817,114 | ||||||||||||||||||||||
K Class | 8,917,924 | 9,249,102 | 1,801,787 | 1,117,868 | (10,408,606 | ) | (12,806,385 | ) | 311,105 | (2,439,415 | ) | |||||||||||||||||||||
Royce Heritage Fund | ||||||||||||||||||||||||||||||||
Investment Class | 3,942,621 | 1,804,807 | 800,468 | 88,973 | (306,338 | ) | (718,974 | ) | 4,436,751 | 1,174,806 | ||||||||||||||||||||||
Service Class | 922,749 | 1,676,233 | 1,522,989 | 400,670 | (2,701,430 | ) | (4,845,156 | ) | (255,692 | ) | (2,768,253 | ) | ||||||||||||||||||||
Consultant Class | 97,007 | 151,913 | 177,373 | 37,493 | (197,298 | ) | (299,964 | ) | 77,082 | (110,558 | ) | |||||||||||||||||||||
R Class | 157,302 | 189,339 | 88,537 | 15,043 | (105,420 | ) | (173,028 | ) | 140,419 | 31,354 | ||||||||||||||||||||||
K Class | 103,658 | 440,847 | 93,541 | 25,725 | (298,103 | ) | (601,164 | ) | (100,904 | ) | (134,592 | ) | ||||||||||||||||||||
The Royce Funds 2013 Annual Report to Shareholders | 119 |
Notes to Financial Statements (continued) | |
Capital Share Transactions (in shares) (continued): |
Shares issued for | Net increase (decrease) in | |||||||||||||||||||||||||||||||
Shares sold | reinvestment of distributions | Shares redeemed | shares outstanding | |||||||||||||||||||||||||||||
Period ended | Period ended | Period ended | Period ended | Period ended | Period ended | Period ended | Period ended | |||||||||||||||||||||||||
12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||||||||
Royce Opportunity Fund | ||||||||||||||||||||||||||||||||
Investment Class | 23,132,726 | 11,028,382 | 7,393,346 | 4,137,014 | (15,864,897 | ) | (23,238,518 | ) | 14,661,175 | (8,073,122 | ) | |||||||||||||||||||||
Service Class | 10,451,801 | 6,304,466 | 2,327,279 | 857,445 | (16,570,321 | ) | (5,418,150 | ) | (3,791,241 | ) | 1,743,761 | |||||||||||||||||||||
Consultant Class | 311,452 | 156,945 | 132,566 | 63,752 | (197,400 | ) | (366,220 | ) | 246,618 | (145,523 | ) | |||||||||||||||||||||
Institutional Class | 11,676,520 | 13,339,942 | 4,892,724 | 2,950,759 | (19,424,495 | ) | (14,367,297 | ) | (2,855,251 | ) | 1,923,404 | |||||||||||||||||||||
R Class | 956,791 | 368,584 | 145,771 | 34,204 | (136,455 | ) | (134,921 | ) | 966,107 | 267,867 | ||||||||||||||||||||||
K Class | 657,201 | 255,383 | 130,963 | 49,285 | (304,568 | ) | (174,304 | ) | 483,596 | 130,364 | ||||||||||||||||||||||
Royce Special Equity Fund | ||||||||||||||||||||||||||||||||
Investment Class | 20,852,805 | 27,211,249 | 7,776,472 | 6,281,951 | (25,209,775 | ) | (21,715,568 | ) | 3,419,502 | 11,777,632 | ||||||||||||||||||||||
Service Class | 3,403,756 | 4,525,611 | 1,078,798 | 749,726 | (2,906,242 | ) | (4,387,157 | ) | 1,576,312 | 888,180 | ||||||||||||||||||||||
Consultant Class | 237,789 | 393,687 | 264,105 | 180,399 | (335,357 | ) | (375,603 | ) | 166,537 | 198,483 | ||||||||||||||||||||||
Institutional Class | 5,326,316 | 6,717,922 | 2,368,292 | 1,874,538 | (6,731,297 | ) | (5,963,143 | ) | 963,311 | 2,629,317 | ||||||||||||||||||||||
Royce Value Fund | ||||||||||||||||||||||||||||||||
Investment Class | 3,135,123 | 6,106,020 | 1,007,651 | 928,146 | (7,726,784 | ) | (8,777,389 | ) | (3,584,010 | ) | (1,743,223 | ) | ||||||||||||||||||||
Service Class | 4,676,686 | 9,480,588 | 3,551,836 | 3,991,686 | (31,037,970 | ) | (39,259,385 | ) | (22,809,448 | ) | (25,787,111 | ) | ||||||||||||||||||||
Consultant Class | 183,439 | 315,057 | 178,027 | 154,388 | (967,471 | ) | (822,780 | ) | (606,005 | ) | (353,335 | ) | ||||||||||||||||||||
Institutional Class | 2,092,657 | 3,985,141 | 1,203,721 | 1,034,607 | (4,871,428 | ) | (4,574,089 | ) | (1,575,050 | ) | 445,659 | |||||||||||||||||||||
R Class | 708,108 | 1,126,145 | 203,266 | 175,010 | (1,452,191 | ) | (1,092,910 | ) | (540,817 | ) | 208,245 | |||||||||||||||||||||
K Class | 541,528 | 1,047,488 | 136,497 | 139,501 | (1,140,643 | ) | (768,482 | ) | (462,618 | ) | 418,507 | |||||||||||||||||||||
Royce Value Plus Fund | ||||||||||||||||||||||||||||||||
Investment Class | 2,851,911 | 5,344,485 | 1,079,225 | – | (5,994,135 | ) | (13,687,043 | ) | (2,062,999 | ) | (8,342,558 | ) | ||||||||||||||||||||
Service Class | 4,643,803 | 9,451,131 | 3,998,960 | – | (29,187,654 | ) | (57,686,001 | ) | (20,544,891 | ) | (48,234,870 | ) | ||||||||||||||||||||
Consultant Class | 72,690 | 97,660 | 112,509 | – | (252,539 | ) | (361,007 | ) | (67,340 | ) | (263,347 | ) | ||||||||||||||||||||
Institutional Class | 1,576,410 | 3,813,004 | 666,203 | – | (9,418,226 | ) | (9,966,075 | ) | (7,175,613 | ) | (6,153,071 | ) | ||||||||||||||||||||
R Class | 66,892 | 56,661 | 7,884 | – | (67,496 | ) | (57,916 | ) | 7,280 | (1,255 | ) | |||||||||||||||||||||
K Class | 39,389 | 16,250 | 8,932 | – | (15,469 | ) | (25,241 | ) | 32,852 | (8,991 | ) | |||||||||||||||||||||
Royce 100 Fund | ||||||||||||||||||||||||||||||||
Investment Class | 1,918,300 | 3,117,457 | 786,729 | 686,458 | (4,481,066 | ) | (3,286,242 | ) | (1,776,037 | ) | 517,673 | |||||||||||||||||||||
Service Class | 3,419,533 | 3,400,812 | 2,991,579 | 2,288,621 | (8,383,582 | ) | (16,496,087 | ) | (1,972,470 | ) | (10,806,654 | ) | ||||||||||||||||||||
R Class | 85,981 | 212,108 | 23,585 | 15,083 | (123,506 | ) | (323,459 | ) | (13,940 | ) | (96,268 | ) | ||||||||||||||||||||
K Class | 92,262 | 108,470 | 18,760 | 23,523 | (254,841 | ) | (228,464 | ) | (143,819 | ) | (96,471 | ) | ||||||||||||||||||||
Royce Dividend Value Fund | ||||||||||||||||||||||||||||||||
Investment Class | 11,682,957 | 10,955,363 | 1,624,572 | 306,194 | (5,819,566 | ) | (8,396,697 | ) | 7,487,963 | 2,864,860 | ||||||||||||||||||||||
Service Class | 15,995,933 | 12,321,600 | 2,758,492 | 458,132 | (7,734,636 | ) | (10,025,848 | ) | 11,019,789 | 2,753,884 | ||||||||||||||||||||||
Institutional Class | 245,393 | 3,238,890 | 254,395 | 43,093 | (202,230 | ) | (61,381 | ) | 297,558 | 3,220,602 | ||||||||||||||||||||||
Royce Global Value Fund | ||||||||||||||||||||||||||||||||
Investment Class | 4,055,905 | 7,291,263 | 122,354 | 175,061 | (6,270,310 | ) | (5,672,627 | ) | (2,092,051 | ) | 1,793,697 | |||||||||||||||||||||
Service Class | 840,469 | 2,693,567 | 29,962 | 51,403 | (4,915,611 | ) | (5,587,200 | ) | (4,045,180 | ) | (2,842,230 | ) | ||||||||||||||||||||
Consultant Class | 452,132 | 564,189 | 6,467 | 2,221 | (378,187 | ) | (338,661 | ) | 80,412 | 227,749 | ||||||||||||||||||||||
R Class | 4,926 | 8,118 | 114 | 100 | (3,429 | ) | – | 1,611 | 8,218 | |||||||||||||||||||||||
K Class | – | 4,237 | 61 | 59 | – | – | 61 | 4,296 | ||||||||||||||||||||||||
Royce International Smaller-Companies Fund | ||||||||||||||||||||||||||||||||
Service Class | 1,306,197 | 1,000,016 | 176,089 | 30,648 | (646,447 | ) | (791,871 | ) | 835,839 | 238,793 | ||||||||||||||||||||||
Royce Special Equity Multi-Cap Fund | ||||||||||||||||||||||||||||||||
Investment Class | 1,419,512 | 3,113,219 | 256,021 | 56,659 | (446,425 | ) | (216,520 | ) | 1,229,108 | 2,953,358 | ||||||||||||||||||||||
Service Class | 1,938,884 | 2,986,622 | 303,917 | 61,008 | (754,027 | ) | (2,765,871 | ) | 1,488,774 | 281,759 | ||||||||||||||||||||||
Institutional Class | 791,666 | 2,597,051 | 201,381 | 58,422 | (426,933 | ) | (268 | ) | 566,114 | 2,655,205 | ||||||||||||||||||||||
120 | The Royce Funds 2013 Annual Report to Shareholders |
Investment Adviser and Distributor:
Investment Adviser: Under the Trust’s investment advisory agreements with Royce, Royce is entitled to receive Investment Advisory fees that are computed daily and payable monthly. Royce’s commitment to waive its fees and reimburse class-specific expenses to the extent necessary to maintain certain Funds’ net annual operating expense ratios at specified levels through April 30, 2014, is shown below to the extent that it impacted net expenses for the year ended December 31, 2013. See the Prospectus for contractual waiver expiration dates.
Annual contractual advisory fee as a | Committed net annual | Year ended | ||||||||||||||||||||||||||||||||||||||||||
operating expense ratio cap | December 31, 2013 | |||||||||||||||||||||||||||||||||||||||||||
percentage of | Investment | Service | Consultant | Institutional | Net advisory | Advisory | ||||||||||||||||||||||||||||||||||||||
average net assets1 | Class3 | Class3 | Class3 | Class3 | W Class3 | R Class3 | K Class3 | fees | fees waived | |||||||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund | 0.75 | %2 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $ | 49,966,499 | $ | – | |||||||||||||||||||||||||||||||
Royce Micro-Cap Fund | 1.30 | % | N/A | 1.66% | N/A | N/A | N/A | N/A | N/A | 11,524,346 | – | |||||||||||||||||||||||||||||||||
Royce Premier Fund | 0.94 | % | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 65,018,474 | – | |||||||||||||||||||||||||||||||||
Royce Low-Priced Stock Fund | 1.14 | % | 1.24% | 1.49% | N/A | N/A | N/A | 1.84% | 1.59% | 25,166,375 | – | |||||||||||||||||||||||||||||||||
Royce Total Return Fund | 0.96 | % | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 50,001,013 | – | |||||||||||||||||||||||||||||||||
Royce Heritage Fund | 1.00 | % | N/A | N/A | N/A | N/A | N/A | 1.84% | 1.59% | 3,117,097 | – | |||||||||||||||||||||||||||||||||
Royce Opportunity Fund | 0.99 | % | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 22,472,299 | – | |||||||||||||||||||||||||||||||||
Royce Special Equity Fund | 0.98 | % | N/A | 1.39% | N/A | N/A | N/A | N/A | N/A | 32,834,168 | – | |||||||||||||||||||||||||||||||||
Royce Value Fund | 1.00 | % | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 12,229,311 | – | |||||||||||||||||||||||||||||||||
Royce Value Plus Fund | 1.00 | % | N/A | N/A | N/A | N/A | N/A | 1.84% | 1.59% | 13,926,058 | – | |||||||||||||||||||||||||||||||||
Royce 100 Fund | 1.00 | % | N/A | N/A | N/A | N/A | N/A | 1.84% | 1.59% | 2,972,121 | – | |||||||||||||||||||||||||||||||||
Royce Dividend Value Fund | 1.00 | % | N/A | N/A | N/A | 1.04% | N/A | N/A | N/A | 5,404,314 | 3,460 | |||||||||||||||||||||||||||||||||
Royce Global Value Fund | 1.25 | % | N/A | 1.69% | 2.44% | N/A | N/A | 1.99% | 1.74% | 3,364,125 | – | |||||||||||||||||||||||||||||||||
Royce International Smaller- | ||||||||||||||||||||||||||||||||||||||||||||
Companies Fund | 1.25 | % | N/A | 1.69% | N/A | N/A | N/A | N/A | N/A | 273,648 | 121,593 | |||||||||||||||||||||||||||||||||
Royce Special Equity Multi-Cap Fund | 1.00 | % | N/A | 1.39% | N/A | 1.04% | N/A | N/A | N/A | 1,538,722 | 13,389 |
1 | From a base annual rate of 1.00% (1.30% for Royce Micro-Cap Fund, 1.15% for Royce Low-Priced Stock Fund and 1.25% for Royce Global Value Fund and Royce International Smaller-Companies Fund), the annual rates of investment advisory fees payable by each of the Funds, other than Royce Pennsylvania Mutual Fund, are reduced by the indicated amount at the following breakpoints applicable to a Fund’s net assets in excess of $2 billion: more than $2 billion to $4 billion – .05% per annum; more than $4 billion to $6 billion – .10% per annum; over $6 billion – .15% per annum. |
2 | Royce Pennsylvania Mutual Fund’s fees are calculated at the annual rate of 1.00% of the first $50 million of the Fund’s average net assets, 0.875% of the next $50 million of average net assets and 0.75% of average net assets in excess of $100 million. |
3 | Committed net annual operating expense ratio cap excludes acquired fund fees and expenses. |
Distributor: Royce Fund Services, Inc. (“RFS”), the distributor of the Trust’s shares, is a wholly owned subsidiary of Royce. RFS is entitled to receive distribution fees that are computed daily and payable monthly.
Year ended December 31, 2013 | ||||||||||||||
Annual contractual distribution fee as | Net distribution | Distribution fees | ||||||||||||
a percentage of average net assets | fees | waived | ||||||||||||
Royce Pennsylvania Mutual Fund – Service Class | 0.25 | % | $ | 1,389,655 | $ | – | ||||||||
Royce Pennsylvania Mutual Fund – Consultant Class | 1.00 | % | 7,144,150 | – | ||||||||||
Royce Pennsylvania Mutual Fund – R Class | 0.50 | % | 196,720 | – | ||||||||||
Royce Pennsylvania Mutual Fund – K Class | 0.25 | % | 25,726 | – | ||||||||||
Royce Micro-Cap Fund – Service Class | 0.25 | % | 216,293 | – | ||||||||||
Royce Micro-Cap Fund – Consultant Class | 1.00 | % | 1,146,499 | – | ||||||||||
Royce Premier Fund – Service Class | 0.25 | % | 1,240,493 | – | ||||||||||
Royce Premier Fund – Consultant Class | 1.00 | % | 627,413 | – | ||||||||||
Royce Premier Fund – R Class | 0.50 | % | 159,350 | – | ||||||||||
Royce Premier Fund – K Class | 0.25 | % | 21,774 | – | ||||||||||
Royce Low-Priced Stock Fund – Service Class | 0.25 | % | 3,197,222 | 133,218 | ||||||||||
Royce Low-Priced Stock Fund – R Class | 0.50 | % | 21,083 | – | ||||||||||
Royce Low-Priced Stock Fund – K Class | 0.25 | % | 12,919 | – | ||||||||||
Royce Total Return Fund – Service Class | 0.25 | % | 1,159,279 | – | ||||||||||
Royce Total Return Fund – Consultant Class | 1.00 | % | 3,699,899 | – | ||||||||||
Royce Total Return Fund – R Class | 0.50 | % | 310,584 | – | ||||||||||
Royce Total Return Fund – K Class | 0.25 | % | 469,141 | – | ||||||||||
Royce Heritage Fund – Service Class | 0.25 | % | 471,881 | 64,347 | ||||||||||
Royce Heritage Fund – Consultant Class | 1.00 | % | 151,380 | – | ||||||||||
Royce Heritage Fund – R Class | 0.50 | % | 31,831 | – | ||||||||||
Royce Heritage Fund – K Class | 0.25 | % | 18,891 | – | ||||||||||
Royce Opportunity Fund – Service Class | 0.25 | % | 732,275 | – | ||||||||||
Royce Opportunity Fund – Consultant Class | 1.00 | % | 150,646 | – | ||||||||||
Royce Opportunity Fund – R Class | 0.50 | % | 68,568 | – | ||||||||||
Royce Opportunity Fund – K Class | 0.25 | % | 31,756 | – |
The Royce Funds 2013 Annual Report to Shareholders | 121 |
Distributor (continued):
Year ended December 31, 2013 | ||||||||||||||
Annual contractual distribution fee as | Net distribution | Distribution fees | ||||||||||||
a percentage of average net assets | fees | waived | ||||||||||||
Royce Special Equity Fund – Service Class | 0.25 | % | $ | 751,774 | $ | – | ||||||||
Royce Special Equity Fund – Consultant Class | 1.00 | % | 645,585 | – | ||||||||||
Royce Value Fund – Service Class | 0.25 | % | 1,836,897 | – | ||||||||||
Royce Value Fund – Consultant Class | 1.00 | % | 310,686 | – | ||||||||||
Royce Value Fund – R Class | 0.50 | % | 187,650 | – | ||||||||||
Royce Value Fund – K Class | 0.25 | % | 44,184 | – | ||||||||||
Royce Value Plus Fund – Service Class | 0.25 | % | 2,164,052 | 188,179 | ||||||||||
Royce Value Plus Fund – Consultant Class | 1.00 | % | 208,923 | – | ||||||||||
Royce Value Plus Fund – R Class | 0.50 | % | 7,193 | – | ||||||||||
Royce Value Plus Fund – K Class | 0.25 | % | 1,874 | – | ||||||||||
Royce 100 Fund – Service Class | 0.25 | % | 522,875 | 45,467 | ||||||||||
Royce 100 Fund – R Class | 0.50 | % | 12,651 | – | ||||||||||
Royce 100 Fund – K Class | 0.25 | % | 8,655 | – | ||||||||||
Royce Dividend Value Fund – Service Class | 0.25 | % | 811,970 | 33,832 | ||||||||||
Royce Global Value Fund – Service Class | 0.25 | % | 177,262 | – | ||||||||||
Royce Global Value Fund – Consultant Class | 1.00 | % | 246,819 | – | ||||||||||
Royce Global Value Fund – R Class | 0.50 | % | 487 | – | ||||||||||
Royce Global Value Fund – K Class | 0.25 | % | 105 | – | ||||||||||
Royce International Smaller-Companies Fund – Service Class | 0.25 | % | 79,048 | – | ||||||||||
Royce Special Equity Multi-Cap Fund – Service Class | 0.25 | % | 140,282 | 12,199 |
Purchases | Sales | Purchases | Sales | |||||||||||
Royce Pennsylvania Mutual Fund | $ | 1,681,690,785 | $ | 2,353,671,665 | Royce Value Plus Fund | $ | 602,025,454 | $ | 1,252,952,829 | |||||
Royce Micro-Cap Fund | 183,025,122 | 484,640,058 | Royce 100 Fund | 86,618,861 | 189,036,006 | |||||||||
Royce Premier Fund | 737,924,592 | 2,024,518,169 | Royce Dividend Value Fund | 254,995,995 | 180,475,756 | |||||||||
Royce Low-Priced Stock Fund | 342,488,020 | 2,129,693,986 | Royce Global Value Fund | 105,715,907 | 177,767,797 | |||||||||
Royce Total Return Fund | 1,033,198,910 | 1,433,506,345 | Royce International Smaller- | |||||||||||
Royce Heritage Fund | 222,630,635 | 228,451,134 | Companies Fund | 25,788,538 | 19,177,975 | |||||||||
Royce Opportunity Fund | 804,747,619 | 966,002,654 | Royce Special Equity Multi- | |||||||||||
Royce Special Equity Fund | 817,881,442 | 1,030,414,009 | Cap Fund | 95,268,025 | 64,615,138 | |||||||||
Royce Value Fund | 606,106,039 | 1,060,994,536 | ||||||||||||
Class Level | |||||||||||||||||||||||||||||||||||
Transfer | Expenses | ||||||||||||||||||||||||||||||||||
Net | Agent | Reimbursed by | |||||||||||||||||||||||||||||||||
Distribution | Shareholder | Shareholder | Balance | Investment | |||||||||||||||||||||||||||||||
Fees | Servicing | Reports | Registration | Credits | Total | Adviser | |||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund – Investment Class | $ | – | $ | 5,501,570 | $ | 899,277 | $ | 52,559 | $ | (1,818 | ) | $ | 6,451,588 | $ | – | ||||||||||||||||||||
Royce Pennsylvania Mutual Fund – Service Class | 1,389,655 | 980,924 | 204,704 | 14,323 | (44 | ) | 2,589,562 | – | |||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund – Consultant Class | 7,144,150 | 949,260 | 205,373 | 14,481 | (490 | ) | 8,312,774 | – | |||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund – Institutional Class | – | 7,707 | 49,161 | 16,627 | (5 | ) | 73,490 | – | |||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund – R Class | 196,720 | 101,617 | 8,084 | 1,201 | (23 | ) | 307,599 | – | |||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund – K Class | 25,726 | 30,453 | 2,971 | 1,200 | (3 | ) | 60,347 | – | |||||||||||||||||||||||||||
8,756,251 | 7,571,531 | 1,369,570 | 100,391 | (2,383 | ) | ||||||||||||||||||||||||||||||
Royce Micro-Cap Fund – Investment Class | – | 920,082 | 321,799 | 22,161 | (417 | ) | 1,263,625 | – | |||||||||||||||||||||||||||
Royce Micro-Cap Fund – Service Class | 216,293 | 75,184 | 38,951 | 11,386 | (43 | ) | 341,771 | 70,596 | |||||||||||||||||||||||||||
Royce Micro-Cap Fund – Consultant Class | 1,146,499 | 157,295 | 33,624 | 12,180 | (98 | ) | 1,349,500 | – | |||||||||||||||||||||||||||
1,362,792 | 1,152,561 | 394,374 | 45,727 | (558 | ) | 70,596 |
122 | The Royce Funds 2013 Annual Report to Shareholders |
Class Level | |||||||||||||||||||||||||||||||||||
Transfer | Expenses | ||||||||||||||||||||||||||||||||||
Net | Agent | Reimbursed by | |||||||||||||||||||||||||||||||||
Distribution | Shareholder | Shareholder | Balance | Investment | |||||||||||||||||||||||||||||||
Fees | Servicing | Reports | Registration | Credits | Total | Adviser | |||||||||||||||||||||||||||||
Royce Premier Fund – Investment Class | $ | – | $ | 4,701,398 | $ | 1,261,715 | $ | 44,480 | $ | (1,363 | ) | $ | 6,006,230 | $ | – | ||||||||||||||||||||
Royce Premier Fund – Service Class | 1,240,493 | 720,971 | 111,002 | 12,214 | (100 | ) | 2,084,580 | – | |||||||||||||||||||||||||||
Royce Premier Fund – Consultant Class | 627,413 | 73,765 | 16,685 | 11,445 | (46 | ) | 729,262 | – | |||||||||||||||||||||||||||
Royce Premier Fund – Institutional Class | – | 10,584 | 77,962 | 16,163 | (10 | ) | 104,699 | – | |||||||||||||||||||||||||||
Royce Premier Fund – W Class | – | 487,634 | 167,140 | 19,678 | (223 | ) | 674,229 | – | |||||||||||||||||||||||||||
Royce Premier Fund – R Class | 159,350 | 78,301 | 8,506 | 1,201 | (8 | ) | 247,350 | – | |||||||||||||||||||||||||||
Royce Premier Fund – K Class | 21,774 | 29,083 | 2,237 | 1,200 | (2 | ) | 54,292 | – | |||||||||||||||||||||||||||
2,049,030 | 6,101,736 | 1,645,247 | 106,381 | (1,752 | ) | ||||||||||||||||||||||||||||||
Royce Low-Priced Stock Fund – Investment Class | – | 245,842 | 27,896 | 16,171 | (13 | ) | 289,896 | 204,801 | |||||||||||||||||||||||||||
Royce Low-Priced Stock Fund – Service Class | 3,197,222 | 2,461,696 | 329,775 | 19,921 | (631 | ) | 6,007,983 | 1,976,356 | |||||||||||||||||||||||||||
Royce Low-Priced Stock Fund – Institutional Class | – | 8,012 | 206,572 | 14,888 | (5 | ) | 229,467 | – | |||||||||||||||||||||||||||
Royce Low-Priced Stock Fund – R Class | 21,083 | 18,378 | 2,612 | 1,200 | (5 | ) | 43,268 | 15,764 | |||||||||||||||||||||||||||
Royce Low-Priced Stock Fund – K Class | 12,919 | 20,985 | 2,435 | 1,200 | (2 | ) | 37,537 | 16,816 | |||||||||||||||||||||||||||
3,231,224 | 2,754,913 | 569,290 | 53,380 | (656 | ) | 2,213,737 | |||||||||||||||||||||||||||||
Royce Total Return Fund – Investment Class | – | 3,975,533 | 850,307 | 35,680 | (1,488 | ) | 4,860,032 | – | |||||||||||||||||||||||||||
Royce Total Return Fund – Service Class | 1,159,279 | 695,160 | 364,332 | 52,382 | (39 | ) | 2,271,114 | – | |||||||||||||||||||||||||||
Royce Total Return Fund – Consultant Class | 3,699,899 | 488,177 | 104,511 | 14,777 | (226 | ) | 4,307,138 | – | |||||||||||||||||||||||||||
Royce Total Return Fund – Institutional Class | – | 16,026 | 67,759 | 15,327 | (29 | ) | 99,083 | – | |||||||||||||||||||||||||||
Royce Total Return Fund – W Class | – | 241,120 | 87,049 | 20,987 | (7 | ) | 349,149 | – | |||||||||||||||||||||||||||
Royce Total Return Fund – R Class | 310,584 | 151,570 | 11,803 | 1,201 | (26 | ) | 475,132 | – | |||||||||||||||||||||||||||
Royce Total Return Fund – K Class | 469,141 | 485,391 | 17,048 | 1,203 | (8 | ) | 972,775 | – | |||||||||||||||||||||||||||
5,638,903 | 6,052,977 | 1,502,809 | 141,557 | (1,823 | ) | ||||||||||||||||||||||||||||||
Royce Heritage Fund – Investment Class | – | 25,867 | 5,008 | 11,879 | (7 | ) | 42,747 | – | |||||||||||||||||||||||||||
Royce Heritage Fund – Service Class | 471,881 | 224,259 | 64,614 | 17,806 | (258 | ) | 778,302 | – | |||||||||||||||||||||||||||
Royce Heritage Fund – Consultant Class | 151,380 | 28,129 | 8,585 | 10,607 | (25 | ) | 198,676 | – | |||||||||||||||||||||||||||
Royce Heritage Fund – R Class | 31,831 | 18,198 | 2,410 | 1,202 | (5 | ) | 53,636 | 4,068 | |||||||||||||||||||||||||||
Royce Heritage Fund – K Class | 18,891 | 24,353 | 3,998 | 1,202 | (2 | ) | 48,442 | 8,385 | |||||||||||||||||||||||||||
673,983 | 320,806 | 84,615 | 42,696 | (297 | ) | 12,453 | |||||||||||||||||||||||||||||
Royce Opportunity Fund – Investment Class | – | 1,311,856 | 199,583 | 19,470 | (581 | ) | 1,530,328 | – | |||||||||||||||||||||||||||
Royce Opportunity Fund – Service Class | 732,275 | 489,502 | 73,811 | 12,868 | (20 | ) | 1,308,436 | – | |||||||||||||||||||||||||||
Royce Opportunity Fund – Consultant Class | 150,646 | 26,607 | 5,756 | 10,874 | (15 | ) | 193,868 | – | |||||||||||||||||||||||||||
Royce Opportunity Fund – Institutional Class | – | 7,351 | 46,957 | 15,249 | (5 | ) | 69,552 | – | |||||||||||||||||||||||||||
Royce Opportunity Fund – R Class | 68,568 | 35,662 | 3,898 | 1,201 | (9 | ) | 109,320 | – | |||||||||||||||||||||||||||
Royce Opportunity Fund – K Class | 31,756 | 19,079 | 2,673 | 1,201 | (3 | ) | 54,706 | – | |||||||||||||||||||||||||||
983,245 | 1,890,057 | 332,678 | 60,863 | (633 | ) | ||||||||||||||||||||||||||||||
Royce Special Equity Fund – Investment Class | – | 2,342,361 | 536,424 | 52,421 | (1,016 | ) | 2,930,190 | – | |||||||||||||||||||||||||||
Royce Special Equity Fund – Service Class | 751,774 | 444,620 | 118,400 | 15,072 | (413 | ) | 1,329,453 | 178,321 | |||||||||||||||||||||||||||
Royce Special Equity Fund – Consultant Class | 645,585 | 74,565 | 18,135 | 11,257 | (49 | ) | 749,493 | – | |||||||||||||||||||||||||||
Royce Special Equity Fund – Institutional Class | – | 8,718 | 13,379 | 13,761 | (6 | ) | 35,852 | – | |||||||||||||||||||||||||||
1,397,359 | 2,870,264 | 686,338 | 92,511 | (1,484 | ) | 178,321 | |||||||||||||||||||||||||||||
Royce Value Fund – Investment Class | – | 236,677 | 81,803 | 13,287 | (319 | ) | 331,448 | – | |||||||||||||||||||||||||||
Royce Value Fund – Service Class | 1,836,897 | 1,215,083 | 235,970 | 22,150 | (463 | ) | 3,309,637 | – | |||||||||||||||||||||||||||
Royce Value Fund – Consultant Class | 310,686 | 56,818 | 10,866 | 10,492 | (21 | ) | 388,841 | – | |||||||||||||||||||||||||||
Royce Value Fund – Institutional Class | – | 7,245 | 3,551 | 12,780 | (4 | ) | 23,572 | – | |||||||||||||||||||||||||||
Royce Value Fund – R Class | 187,650 | 103,755 | 6,394 | 1,203 | (13 | ) | 298,989 | – | |||||||||||||||||||||||||||
Royce Value Fund – K Class | 44,184 | 50,348 | 7,495 | 1,201 | (3 | ) | 103,225 | – | |||||||||||||||||||||||||||
2,379,417 | 1,669,926 | 346,079 | 61,113 | (823 | ) | ||||||||||||||||||||||||||||||
Royce Value Plus Fund – Investment Class | – | 650,042 | 138,028 | 14,989 | (22 | ) | 803,037 | – | |||||||||||||||||||||||||||
Royce Value Plus Fund – Service Class | 2,164,052 | 1,525,807 | 334,750 | 20,906 | (429 | ) | 4,045,086 | – | |||||||||||||||||||||||||||
Royce Value Plus Fund – Consultant Class | 208,923 | 48,982 | 9,127 | 10,297 | (15 | ) | 277,314 | – | |||||||||||||||||||||||||||
Royce Value Plus Fund – Institutional Class | – | 9,308 | 45,329 | 12,011 | (4 | ) | 66,644 | – | |||||||||||||||||||||||||||
Royce Value Plus Fund – R Class | 7,193 | 10,075 | 1,336 | 1,200 | (2 | ) | 19,802 | 8,201 | |||||||||||||||||||||||||||
Royce Value Plus Fund – K Class | 1,874 | 7,893 | 941 | 1,200 | (1 | ) | 11,907 | 7,745 | |||||||||||||||||||||||||||
2,382,042 | 2,252,107 | 529,511 | 60,603 | (473 | ) | 15,946 | |||||||||||||||||||||||||||||
Royce 100 Fund – Investment Class | – | 70,286 | 16,954 | 12,613 | (63 | ) | 99,790 | – | |||||||||||||||||||||||||||
Royce 100 Fund – Service Class | 522,875 | 302,728 | 150,956 | 17,949 | (195 | ) | 994,313 | – | |||||||||||||||||||||||||||
Royce 100 Fund – R Class | 12,651 | 15,941 | 1,497 | 1,201 | (1 | ) | 31,289 | 11,081 | |||||||||||||||||||||||||||
Royce 100 Fund – K Class | 8,655 | 14,431 | 1,470 | 1,201 | (2 | ) | 25,755 | 6,731 | |||||||||||||||||||||||||||
544,181 | 403,386 | 170,877 | 32,964 | (261 | ) | 17,812 |
The Royce Funds 2013 Annual Report to Shareholders | 123 |
Class Level | |||||||||||||||||||||||||||||||||||
Transfer | Expenses | ||||||||||||||||||||||||||||||||||
Net | Agent | Reimbursed by | |||||||||||||||||||||||||||||||||
Distribution | Shareholder | Shareholder | Balance | Investment | |||||||||||||||||||||||||||||||
Fees | Servicing | Reports | Registration | Credits | Total | Adviser | |||||||||||||||||||||||||||||
Royce Dividend Value Fund – Investment Class | $ | – | $ | 212,180 | $ | 64,940 | $ | 16,393 | $ | (21 | ) | $ | 293,492 | $ | – | ||||||||||||||||||||
Royce Dividend Value Fund – Service Class | 811,970 | 422,274 | 154,362 | 28,011 | (820 | ) | 1,415,797 | – | |||||||||||||||||||||||||||
Royce Dividend Value Fund – Institutional Class | – | 5,984 | 506 | 10,323 | – | 16,813 | 16,813 | ||||||||||||||||||||||||||||
811,970 | 640,438 | 219,808 | 54,727 | (841 | ) | 16,813 | |||||||||||||||||||||||||||||
Royce Global Value Fund – Investment Class | – | 172,987 | 52,418 | 20,305 | (8 | ) | 245,702 | – | |||||||||||||||||||||||||||
Royce Global Value Fund – Service Class | 177,262 | 125,283 | 29,535 | 14,276 | (106 | ) | 346,250 | 99,671 | |||||||||||||||||||||||||||
Royce Global Value Fund – Consultant Class | 246,819 | 29,264 | 5,800 | 10,923 | (31 | ) | 292,775 | 23,503 | |||||||||||||||||||||||||||
Royce Global Value Fund – R Class | 487 | 5,981 | 280 | 1,200 | – | 7,948 | 7,319 | ||||||||||||||||||||||||||||
Royce Global Value Fund – K Class | 105 | 5,942 | 262 | 1,200 | – | 7,509 | 7,348 | ||||||||||||||||||||||||||||
424,673 | 339,457 | 88,295 | 47,904 | (145 | ) | 137,841 | |||||||||||||||||||||||||||||
Royce Special Equity Multi-Cap Fund – Investment Class | – | 16,402 | 22,728 | 13,633 | (4 | ) | 52,759 | – | |||||||||||||||||||||||||||
Royce Special Equity Multi-Cap Fund – Service Class | 140,282 | 83,984 | 90,460 | 15,039 | (22 | ) | 329,743 | 122,424 | |||||||||||||||||||||||||||
Royce Special Equity Multi-Cap Fund – Institutional Class | – | 6,024 | 665 | 12,675 | – | 19,364 | 19,364 | ||||||||||||||||||||||||||||
140,282 | 106,410 | 113,853 | 41,347 | (26 | ) | 141,788 | |||||||||||||||||||||||||||||
Net Unrealized | ||||||||||||||||||||
Appreciation | Gross Unrealized | |||||||||||||||||||
Tax Basis Cost | (Depreciation) | Appreciation | Depreciation | |||||||||||||||||
Royce Pennsylvania Mutual Fund | $ | 4,676,702,665 | $ | 2,736,232,669 | $ | 2,905,560,465 | $ | 169,327,796 | ||||||||||||
Royce Micro-Cap Fund | 687,596,764 | 193,751,311 | 259,417,563 | 65,666,252 | ||||||||||||||||
Royce Premier Fund | 4,604,961,472 | 2,711,575,741 | 3,001,967,400 | 290,391,659 | ||||||||||||||||
Royce Low-Priced Stock Fund | 1,386,155,151 | 287,683,225 | 442,960,833 | 155,277,608 | ||||||||||||||||
Royce Total Return Fund | 3,612,822,589 | 2,137,498,074 | 2,256,830,353 | 119,332,279 | ||||||||||||||||
Royce Heritage Fund | 286,931,283 | 80,264,479 | 87,017,840 | 6,753,361 | ||||||||||||||||
Royce Opportunity Fund | 2,064,774,589 | 622,416,379 | 747,369,960 | 124,953,581 | ||||||||||||||||
Royce Special Equity Fund | 2,666,830,722 | 991,520,287 | 993,639,392 | 2,119,105 | ||||||||||||||||
Royce Value Fund | 926,367,611 | 296,414,564 | 316,729,084 | 20,314,520 | ||||||||||||||||
Royce Value Plus Fund | 976,418,284 | 370,513,524 | 389,544,418 | 19,030,894 | ||||||||||||||||
Royce 100 Fund | 204,427,291 | 92,698,848 | 94,865,303 | 2,166,455 | ||||||||||||||||
Royce Dividend Value Fund | 507,305,645 | 138,663,417 | 151,645,653 | 12,982,236 | ||||||||||||||||
Royce Global Value Fund | 250,973,245 | (10,257,539 | ) | 33,679,276 | 43,936,815 | |||||||||||||||
Royce International Smaller-Companies Fund | 34,425,881 | 2,942,944 | 4,988,527 | 2,045,583 | ||||||||||||||||
Royce Special Equity Multi-Cap Fund | 152,839,734 | 36,406,122 | 37,032,665 | 626,543 |
Ordinary Income | Long-Term Capital Gains | ||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||
Royce Pennsylvania Mutual Fund | $ | 68,505,591 | $ | 83,523,200 | $ | 314,540,158 | $ | 303,972,765 | |||||
Royce Micro-Cap Fund | 698,929 | 3,824,113 | 59,822,655 | 55,623,852 | |||||||||
Royce Premier Fund | – | 89,857,357 | 690,663,435 | 391,763,741 | |||||||||
Royce Low-Priced Stock Fund | 2,484,427 | 43,483,652 | 208,678,815 | 193,625,861 | |||||||||
Royce Total Return Fund | 86,549,887 | 79,171,771 | 418,194,329 | 188,093,615 | |||||||||
Royce Heritage Fund | 7,208,445 | 1,004,504 | 33,627,291 | 6,791,289 | |||||||||
Royce Opportunity Fund | 3,806,785 | 19,148,442 | 229,125,496 | 78,255,181 | |||||||||
Royce Special Equity Fund | 36,829,522 | 60,596,614 | 263,642,808 | 143,718,325 | |||||||||
Royce Value Fund | 45,747,747 | 14,199,753 | 37,208,696 | 59,275,272 | |||||||||
124 | The Royce Funds 2013 Annual Report to Shareholders |
Tax Information (continued):
Ordinary Income | Long-Term Capital Gains | ||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||
Royce Value Plus Fund | $ | 474,414 | $ | – | $ | 99,364,529 | $ | – | |||||
Royce 100 Fund | 1,704,252 | 3,453,944 | 35,951,838 | 23,230,700 | |||||||||
Royce Dividend Value Fund | 14,413,334 | 5,115,955 | 27,540,201 | 932,214 | |||||||||
Royce Global Value Fund | 2,317,411 | 2,959,631 | – | – | |||||||||
Royce International Smaller-Companies Fund | 673,503 | 351,848 | 1,430,858 | – | |||||||||
Royce Special Equity Multi-Cap Fund | 3,019,600 | 1,157,045 | 8,106,833 | 890,864 |
Qualified | |||||||||||||||||||||||||||||||||||
Late Year | |||||||||||||||||||||||||||||||||||
Undistributed | Ordinary | ||||||||||||||||||||||||||||||||||
Long-Term | and | ||||||||||||||||||||||||||||||||||
Undistributed | Capital Gains or | Capital Loss | Net Unrealized | Post-October | Total | Capital Loss | |||||||||||||||||||||||||||||
Ordinary | (Capital Loss | Carryforward | Appreciation | Loss | Distributable | Carryforward | |||||||||||||||||||||||||||||
Income | Carryforward) | to 12/31/171 | (Depreciation)2 | Deferrals3 | Earnings | Utilized | |||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund | $ | 16,870,226 | $ | 92,997,444 | $ | – | $ | 2,731,502,001 | $ | – | $ | 2,841,369,671 | $ | – | |||||||||||||||||||||
Royce Micro-Cap Fund | – | 17,207,281 | – | 193,758,635 | (304,934 | ) | 210,660,982 | – | |||||||||||||||||||||||||||
Royce Premier Fund | – | 186,602,400 | – | 2,711,630,457 | – | 2,898,232,857 | – | ||||||||||||||||||||||||||||
Royce Low-Priced Stock Fund | – | 63,941,197 | – | 287,680,614 | (1,967,324 | ) | 349,654,487 | – | |||||||||||||||||||||||||||
Royce Total Return Fund | 9,858,346 | 104,641,096 | – | 2,125,223,227 | – | 2,239,722,669 | – | ||||||||||||||||||||||||||||
Royce Heritage Fund | 890,006 | 3,252,705 | �� | – | 80,225,234 | (16,663 | ) | 84,351,282 | – | ||||||||||||||||||||||||||
Royce Opportunity Fund | 9,173,920 | 63,986,233 | – | 622,443,446 | (1,327 | ) | 695,602,272 | – | |||||||||||||||||||||||||||
Royce Special Equity Fund | 12,577,088 | 52,082,992 | – | 991,520,285 | – | 1,056,180,365 | – | ||||||||||||||||||||||||||||
Royce Value Fund | 7,850,323 | 9,176,530 | – | 296,417,156 | (5,367 | ) | 313,438,642 | – | |||||||||||||||||||||||||||
Royce Value Plus Fund | – | 45,854,008 | – | 370,516,584 | (1,324,202 | ) | 415,046,390 | 89,797,502 | |||||||||||||||||||||||||||
Royce 100 Fund | 504,021 | 3,451,967 | – | 92,689,329 | (437,847 | ) | 96,207,470 | – | |||||||||||||||||||||||||||
Royce Dividend Value Fund | 3,525,275 | 4,937,629 | – | 138,641,221 | – | 147,104,125 | – | ||||||||||||||||||||||||||||
Royce Global Value Fund | 1,011,922 | (41,893,172 | ) | (7,981,106 | ) | (10,248,562 | ) | (3,711,500 | ) | (62,822,418 | ) | – | |||||||||||||||||||||||
Royce International Smaller- | |||||||||||||||||||||||||||||||||||
Companies Fund | 378,655 | – | – | 2,935,245 | (115,127 | ) | 3,198,773 | 645,622 | |||||||||||||||||||||||||||
Royce Special Equity Multi-Cap | |||||||||||||||||||||||||||||||||||
Fund | 2,294,404 | 1,254,265 | – | 36,406,122 | – | 39,954,791 | – |
1 | On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted. Under the Act, net capital losses may be carried forward indefinitely, and their character is retained as short term and/or long-term losses. Previously, net capital losses were carried forward for eight years and treated as short term losses. As a transition rule, the Act requires that postenactment net capital losses be used before pre-enactment net capital losses. As a result of this ordering rule, pre-enactment capital loss carryforwards may expire unused, whereas under the previous rules these losses may have been utilized. This change is effective for fiscal years beginning after the date of enactment. |
2 | Includes timing differences on foreign currency, recognition of losses on securities sold, investments in Real Estate Investment Trusts, investments in publicly traded partnerships and Trusts and mark-to-market of Passive Foreign Investment Companies. |
3 | Under the current tax law, capital losses and qualified late year ordinary losses incurred after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. |
Undistributed | Accumulated | ||||||||||||||
Net Investment | Net Realized | Paid–in | |||||||||||||
Income (Loss) | Gain (Loss) | Capital | |||||||||||||
Royce Pennsylvania Mutual Fund | $ | (4,599,208 | ) | $ | 5,865,063 | $ | (1,265,855 | ) | |||||||
Royce Micro-Cap Fund | 7,759,800 | (3,951,393 | ) | (3,808,407 | ) | ||||||||||
Royce Premier Fund | (7,608,473 | ) | (23,513,391 | ) | 31,121,864 | ||||||||||
Royce Low-Priced Stock Fund | 35,452,586 | (39,266,768 | ) | 3,814,182 | |||||||||||
Royce Total Return Fund | (4,175,916 | ) | 4,227,791 | (51,875 | ) | ||||||||||
Royce Heritage Fund | 440,309 | (1,531,403 | ) | 1,091,094 | |||||||||||
Royce Opportunity Fund | 9,574,196 | (26,074,196 | ) | 16,500,000 | |||||||||||
Royce Special Equity Fund | 367,342 | (21,267,342 | ) | 20,900,000 | |||||||||||
Royce Value Fund | 1,045,146 | (1,045,146 | ) | – | |||||||||||
Royce Value Plus Fund | 12,087,883 | (1,040,739 | ) | (11,047,144 | ) |
The Royce Funds 2013 Annual Report to Shareholders | 125 |
Undistributed | Accumulated | ||||||||||||||
Net Investment | Net Realized | Paid–in | |||||||||||||
Income (Loss) | Gain (Loss) | Capital | |||||||||||||
Royce 100 Fund | $ | 666,879 | $ | (4,366,879 | ) | $ | 3,700,000 | ||||||||
Royce Dividend Value Fund | (327,701 | ) | 329,372 | (1,671 | ) | ||||||||||
Royce Global Value Fund | 15,629 | (15,629 | ) | – | |||||||||||
Royce International Smaller- | |||||||||||||||
Companies Fund | 91,714 | (91,714 | ) | – | |||||||||||
Royce Special Equity Multi-Cap Fund | – | – | – |
Market | Realized | Market | ||||||||||||||||||||||||||||||||||||
Shares | Value | Cost of | Cost of | Gain | Dividend | Shares | Value | |||||||||||||||||||||||||||||||
Affiliated Company | 12/31/12 | 12/31/12 | Purchases | Sales | (Loss) | Income | 12/31/12 | 12/31/13 | ||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund | ||||||||||||||||||||||||||||||||||||||
America’s Car-Mart | 556,600 | $ | 22,553,432 | $ | 8,614,112 | $ | 2,481,073 | $ | (68,894 | ) | $ | – | 711,516 | $ | 30,047,321 | |||||||||||||||||||||||
CRA International1 | 592,143 | 11,706,667 | 2,634,333 | 11,602,504 | (6,861,811 | ) | – | |||||||||||||||||||||||||||||||
DTS | 1,167,789 | 19,502,076 | 3,317,427 | 7,064,691 | (1,157,620 | ) | – | 1,044,829 | 25,054,999 | |||||||||||||||||||||||||||||
Ethan Allen Interiors1 | 1,573,910 | 40,465,226 | – | 16,272,852 | (1,963,477 | ) | 388,604 | |||||||||||||||||||||||||||||||
Hi-Tech Pharmacal1 | 997,731 | 34,900,630 | 6,132,222 | 27,220,575 | 22,809,306 | – | ||||||||||||||||||||||||||||||||
Key Tronic | 7,502,675 | – | – | – | 697,735 | 7,689,040 | ||||||||||||||||||||||||||||||||
Landauer | 370,334 | 22,668,144 | 6,958,410 | – | – | 1,000,340 | 492,200 | 25,894,642 | ||||||||||||||||||||||||||||||
Maidenform Brands1 | 988,207 | 19,260,154 | 3,802,112 | 27,882,908 | 64,237 | – | ||||||||||||||||||||||||||||||||
Pervasive Software1 | 1,461,500 | 13,021,965 | – | 6,076,523 | 7,369,277 | – | ||||||||||||||||||||||||||||||||
Preformed Line Products | 311,088 | 18,484,849 | 3,206,914 | – | – | 194,331 | 349,478 | 25,567,810 | ||||||||||||||||||||||||||||||
Seabridge Gold1 | 446,200 | 8,018,214 | 22,409,094 | 12,016,269 | (4,538,646 | ) | – | |||||||||||||||||||||||||||||||
Shoe Carnival1 | 1,227,698 | 25,155,532 | – | 6,878,531 | 3,207,550 | 210,510 | ||||||||||||||||||||||||||||||||
Stanley Furniture | 912,235 | 4,105,058 | 361,594 | 161,090 | (3,890 | ) | – | 962,235 | 3,694,982 | |||||||||||||||||||||||||||||
U.S. Physical Therapy1 | 656,893 | 18,090,833 | 1,779,212 | 2,919,595 | 1,838,204 | 266,545 | ||||||||||||||||||||||||||||||||
Weyco Group | 590,500 | 13,794,080 | – | – | – | 318,870 | 590,500 | 17,378,415 | ||||||||||||||||||||||||||||||
Winnebago Industries1 | 1,504,450 | 25,771,229 | – | 17,298,383 | (923,593 | ) | – | |||||||||||||||||||||||||||||||
297,498,089 | 19,770,643 | 2,379,200 | 135,327,209 | |||||||||||||||||||||||||||||||||||
Royce Micro-Cap Fund | ||||||||||||||||||||||||||||||||||||||
AXT1 | 1,808,161 | 5,080,932 | – | 3,533,808 | (2,480,513 | ) | – | |||||||||||||||||||||||||||||||
Graham Corporation1 | 601,249 | 11,724,355 | – | 5,892,058 | 4,883,372 | 46,671 | ||||||||||||||||||||||||||||||||
Key Technology | 421,814 | 4,403,738 | – | 770,856 | (73,206 | ) | – | 370,814 | 5,313,765 | |||||||||||||||||||||||||||||
Lincoln Educational Services | 1,520,827 | 8,501,423 | 195,692 | 3,703,528 | (2,308,702 | ) | 410,611 | 1,295,222 | 6,450,206 | |||||||||||||||||||||||||||||
Novatel Wireless1 | 2,142,033 | 2,870,325 | – | 6,741,889 | (3,861,821 | ) | – | |||||||||||||||||||||||||||||||
PDI1 | 982,694 | 7,468,475 | – | 4,617,409 | (2,267,695 | ) | – | |||||||||||||||||||||||||||||||
Truett-Hurst Cl. A | 1,148,176 | – | – | – | 191,900 | 800,223 | ||||||||||||||||||||||||||||||||
World Energy Solutions1 | 733,900 | 3,192,465 | – | 2,685,378 | (1,559,118 | ) | – | |||||||||||||||||||||||||||||||
43,241,713 | (7,667,683 | ) | 457,282 | 12,564,194 | ||||||||||||||||||||||||||||||||||
Royce Premier Fund | ||||||||||||||||||||||||||||||||||||||
Acacia Research | 74,064,062 | – | – | 695,448 | 3,152,289 | 45,834,282 | ||||||||||||||||||||||||||||||||
ADTRAN1 | 3,245,434 | 63,415,780 | – | 16,768,179 | (1,061,315 | ) | 1,096,176 | |||||||||||||||||||||||||||||||
Benchmark Electronics | 2,843,900 | 47,265,618 | – | – | – | – | 2,843,900 | 65,637,212 | ||||||||||||||||||||||||||||||
Cabot Microelectronics | 2,086,191 | 74,080,642 | – | 11,951,042 | 2,139,732 | – | 1,720,272 | 78,616,431 | ||||||||||||||||||||||||||||||
Cal-Maine Foods | 1,721,686 | 69,246,211 | – | – | – | 1,187,963 | 1,721,686 | 103,697,148 | ||||||||||||||||||||||||||||||
Cirrus Logic | 85,437,569 | – | – | – | 4,420,181 | 90,304,298 | ||||||||||||||||||||||||||||||||
Cognex Corporation1 | 3,052,717 | 112,401,040 | – | 37,076,104 | 29,335,982 | – | ||||||||||||||||||||||||||||||||
Fair Isaac1 | 1,832,600 | 77,024,178 | – | 3,812,963 | 1,689,321 | 144,608 | ||||||||||||||||||||||||||||||||
Fairchild Semiconductor | ||||||||||||||||||||||||||||||||||||||
International | 6,508,112 | 93,716,813 | 5,676,910 | 1,571,115 | (185,290 | ) | – | 6,833,112 | 91,222,045 | |||||||||||||||||||||||||||||
Globe Specialty Metals | 3,632,763 | 49,950,491 | 24,942,621 | – | – | 1,266,667 | 5,532,472 | 99,639,821 | ||||||||||||||||||||||||||||||
Lincoln Electric Holdings1 | 5,074,994 | 247,050,708 | – | 36,003,485 | 103,257,876 | 3,252,975 | ||||||||||||||||||||||||||||||||
MKS Instruments | 2,971,910 | 76,615,840 | 2,945,000 | – | – | 1,902,022 | 3,071,910 | 91,972,985 | ||||||||||||||||||||||||||||||
Myriad Genetics | 5,114,765 | 139,377,346 | 33,056,008 | – | – | – | 6,343,965 | 133,096,386 | ||||||||||||||||||||||||||||||
Nu Skin Enterprises Cl. A1 | 3,816,994 | 141,419,628 | – | 47,641,253 | 188,053,885 | 3,858,383 | ||||||||||||||||||||||||||||||||
Pan American Silver | 5,188,544 | 97,181,429 | 37,266,105 | 773,000 | (88,462 | ) | 3,157,839 | 8,194,097 | 95,870,935 |
126 | The Royce Funds 2013 Annual Report to Shareholders |
Market | Realized | Market | ||||||||||||||||||||||||||||||||||||
Shares | Value | Cost of | Cost of | Gain | Dividend | Shares | Value | |||||||||||||||||||||||||||||||
Affiliated Company | 12/31/12 | 12/31/12 | Purchases | Sales | (Loss) | Income | 12/31/13 | 12/31/13 | ||||||||||||||||||||||||||||||
Royce Premier Fund (continued) | ||||||||||||||||||||||||||||||||||||||
Sanderson Farms | 1,880,191 | $ | 89,403,082 | $ | 1,624,956 | $ | 26,231,623 | $ | 14,035,026 | $ | 1,144,493 | 1,329,008 | $ | 96,127,148 | ||||||||||||||||||||||||
Schnitzer Steel Industries Cl. A | 2,108,038 | 63,936,793 | – | 8,323,038 | (5,329,038 | ) | 1,581,029 | 2,008,038 | 65,602,602 | |||||||||||||||||||||||||||||
Seabridge Gold1 | 3,342,400 | 60,062,928 | – | 82,761,348 | (49,170,228 | ) | – | |||||||||||||||||||||||||||||||
Semperit AG Holding | 1,894,996 | 78,103,926 | 1,150,446 | – | – | 1,487,818 | 1,917,496 | 94,951,140 | ||||||||||||||||||||||||||||||
Silver Standard Resources | 4,115,069 | 61,273,377 | – | – | – | – | 4,115,069 | 28,640,880 | ||||||||||||||||||||||||||||||
Simpson Manufacturing | 3,387,886 | 111,088,782 | – | 19,735,779 | 3,166,827 | 1,144,713 | 2,705,933 | 99,388,919 | ||||||||||||||||||||||||||||||
Strayer Education | 1,068,485 | 60,016,803 | – | 8,131,143 | (6,428,665 | ) | – | 1,018,485 | 35,107,178 | |||||||||||||||||||||||||||||
Thor Industries | 4,166,757 | 155,961,714 | 2,064,815 | – | – | 7,665,498 | 4,216,757 | 232,891,489 | ||||||||||||||||||||||||||||||
Trican Well Service | 8,027,100 | 105,876,702 | 701,110 | – | – | 1,945,036 | 8,077,100 | 98,696,878 | ||||||||||||||||||||||||||||||
Unit Corporation | 2,896,073 | 130,468,089 | – | 4,596,393 | (224,801 | ) | – | 2,810,073 | 145,055,968 | |||||||||||||||||||||||||||||
Veeco Instruments1 | 2,708,912 | 79,967,082 | – | 57,371,413 | (17,851,789 | ) | – | |||||||||||||||||||||||||||||||
Woodward | 3,906,024 | 148,936,695 | – | 2,360,425 | 1,461,719 | 1,217,928 | 3,806,024 | 173,592,755 | ||||||||||||||||||||||||||||||
2,433,841,697 | 262,800,780 | 32,748,596 | 1,965,946,500 | |||||||||||||||||||||||||||||||||||
Royce Low-Priced Stock Fund | ||||||||||||||||||||||||||||||||||||||
Gladstone Land | 7,514,356 | – | – | 746,728 | 501,200 | 8,119,440 | ||||||||||||||||||||||||||||||||
Globe Specialty Metals1 | 4,026,606 | 55,365,832 | – | 49,236,319 | (12,128,058 | ) | 763,891 | |||||||||||||||||||||||||||||||
Houston Wire & Cable1 | 1,591,200 | 19,524,024 | – | 29,133,637 | (7,254,989 | ) | 266,840 | |||||||||||||||||||||||||||||||
KVH Industries1 | 777,804 | 10,873,700 | – | 3,111,055 | 105,353 | – | ||||||||||||||||||||||||||||||||
PCTEL1 | 995,592 | 7,168,262 | – | 6,813,850 | 1,002,458 | 57,317 | ||||||||||||||||||||||||||||||||
Pretium Resources1 | 4,335,000 | 57,265,350 | 10,059,412 | 12,181,073 | 5,430,851 | – | ||||||||||||||||||||||||||||||||
Seabridge Gold | 1,111,783 | 19,978,741 | 22,385,455 | 19,857,200 | (6,889,983 | ) | – | 2,476,592 | 18,079,122 | |||||||||||||||||||||||||||||
Sigma Designs1 | 1,720,358 | 8,859,844 | – | 25,559,680 | (17,092,008 | ) | – | |||||||||||||||||||||||||||||||
Tesco Corporation1 | 2,682,105 | 30,549,176 | – | 18,160,538 | 6,914,883 | – | ||||||||||||||||||||||||||||||||
Total Energy Services1 | 1,866,700 | 28,130,926 | – | 8,678,488 | 4,967,530 | 234,147 | ||||||||||||||||||||||||||||||||
TrueBlue1 | 3,262,691 | 51,387,383 | – | 45,813,680 | 17,344,665 | – | ||||||||||||||||||||||||||||||||
Universal Technical Institute | 1,655,679 | 16,623,017 | – | 3,628,350 | (943,179 | ) | 662,272 | 1,468,679 | 20,429,325 | |||||||||||||||||||||||||||||
WaterFurnace Renewable Energy | 970,500 | 14,088,690 | – | 3,895,974 | (380,130 | ) | 816,676 | 814,500 | 18,394,780 | |||||||||||||||||||||||||||||
319,814,945 | (8,922,607 | ) | 3,547,871 | 65,022,667 | ||||||||||||||||||||||||||||||||||
Royce Total Return Fund | ||||||||||||||||||||||||||||||||||||||
Barry (R.G.) | 1,048,496 | 14,857,188 | – | 32,186 | 18,795 | 282,852 | 1,045,808 | 20,184,094 | ||||||||||||||||||||||||||||||
Chase Corporation | 773,974 | 14,395,916 | – | – | – | 348,288 | 773,974 | 27,321,282 | ||||||||||||||||||||||||||||||
Houston Wire & Cable | 59,164 | 725,942 | 16,369,966 | – | – | 274,375 | 1,216,073 | 16,271,057 | ||||||||||||||||||||||||||||||
Mueller (Paul) Company | 116,700 | 2,520,720 | – | – | – | – | 116,700 | 3,571,020 | ||||||||||||||||||||||||||||||
Peapack-Gladstone Financial | 475,350 | 6,692,928 | 2,198,814 | – | – | 95,070 | 604,692 | 11,549,617 | ||||||||||||||||||||||||||||||
Starrett (L.S.) Company (The) Cl. A | 529,400 | 5,135,180 | – | – | – | 211,760 | 529,400 | 7,713,358 | ||||||||||||||||||||||||||||||
Village Super Market Cl. A | 726,483 | 23,872,231 | 182,577 | – | – | 731,705 | 732,024 | 22,700,064 | ||||||||||||||||||||||||||||||
68,200,105 | 18,795 | 1,944,050 | 109,310,492 | |||||||||||||||||||||||||||||||||||
Royce Opportunity Fund | ||||||||||||||||||||||||||||||||||||||
BTU International | 686,756 | 1,366,644 | 111,959 | – | – | – | 723,141 | 2,111,572 | ||||||||||||||||||||||||||||||
ClearOne1 | 556,620 | 2,248,745 | 47,989 | 793,046 | 886,410 | – | ||||||||||||||||||||||||||||||||
Comstock Holding Companies Cl. A1 | 1,285,590 | 1,491,285 | 18,088 | 620,969 | 776,407 | – | ||||||||||||||||||||||||||||||||
CTPartners Executive Search | 338,890 | 1,558,894 | 774,664 | – | – | – | 483,837 | 2,709,487 | ||||||||||||||||||||||||||||||
deLiA*s1 | 1,602,615 | 1,875,059 | 175,452 | 23,680 | (8,889 | ) | – | |||||||||||||||||||||||||||||||
Dixie Group | 829,519 | 2,745,708 | 39,478 | 489,663 | (105,535 | ) | – | 802,653 | 10,595,020 | |||||||||||||||||||||||||||||
Hardinge | 569,291 | 5,658,753 | 790,945 | – | – | 48,629 | 629,571 | 9,109,892 | ||||||||||||||||||||||||||||||
Interphase Corporation | 298,743 | 773,744 | 327,068 | – | – | – | 384,001 | 1,488,004 | ||||||||||||||||||||||||||||||
Kid Brands | 953,809 | 1,478,404 | 355,151 | – | – | – | 1,202,959 | 1,227,018 | ||||||||||||||||||||||||||||||
LMI Aerospace | 12,289,904 | 63,383 | 862 | – | 651,335 | 9,600,678 | ||||||||||||||||||||||||||||||||
Magnetek | 155,445 | 1,601,084 | 201,806 | 16,174 | (2,972 | ) | – | 166,017 | 3,971,127 | |||||||||||||||||||||||||||||
MarineMax1 | 1,357,850 | 12,139,179 | 498,370 | 9,355,236 | 1,414,715 | – | ||||||||||||||||||||||||||||||||
Pericom Semiconductor | 1,240,848 | 9,964,009 | 985,597 | – | – | – | 1,380,517 | 12,231,381 | ||||||||||||||||||||||||||||||
Planar Systems | 1,554,792 | 2,223,352 | 154,698 | 19,919 | (2,684 | ) | – | 1,625,599 | 4,129,021 | |||||||||||||||||||||||||||||
SigmaTron International | 344,172 | 1,400,780 | 46,224 | – | – | – | 354,872 | 3,140,617 | ||||||||||||||||||||||||||||||
Spire Corporation | 448,074 | 224,485 | 124,579 | – | – | – | 660,120 | 316,924 | ||||||||||||||||||||||||||||||
TRC Companies | 1,683,765 | 9,799,512 | 183,230 | – | – | – | 1,712,926 | 12,230,292 | ||||||||||||||||||||||||||||||
56,549,637 | 2,958,314 | 48,629 | 72,861,033 | |||||||||||||||||||||||||||||||||||
Royce Special Equity Fund | ||||||||||||||||||||||||||||||||||||||
Ampco-Pittsburgh1 | 987,000 | 19,720,260 | – | 20,027,452 | (6,828,466 | ) | 652,386 | |||||||||||||||||||||||||||||||
Applied Industrial Technologies1 | 2,430,400 | 102,101,104 | 1,382,963 | 50,280,338 | 14,622,285 | 1,617,805 | ||||||||||||||||||||||||||||||||
Arden Group Cl. A | 232,001 | 20,873,130 | 1,684,523 | 593,664 | 178,913 | 245,068 | 243,000 | 30,741,930 | ||||||||||||||||||||||||||||||
Atrion Corporation | 165,000 | 32,340,000 | 4,153,108 | 3,778,390 | 1,433,602 | 428,275 | 167,000 | 49,473,750 | ||||||||||||||||||||||||||||||
AVX Corporation | 5,931,800 | 63,944,804 | 41,646,828 | – | – | 2,612,238 | 9,298,500 | 129,528,105 |
The Royce Funds 2013 Annual Report to Shareholders | 127 |
Market | Realized | Market | ||||||||||||||||||||||||||||||||||||
Shares | Value | Cost of | Cost of | Gain | Dividend | Shares | Value | |||||||||||||||||||||||||||||||
Affiliated Company | 12/31/12 | 12/31/12 | Purchases | Sales | (Loss) | Income | 12/31/13 | 12/31/13 | ||||||||||||||||||||||||||||||
Royce Special Equity Fund (continued) | ||||||||||||||||||||||||||||||||||||||
Bowl America Cl. A | 342,575 | $ | 4,282,187 | $ | 6,413 | $ | – | $ | – | $ | 169,624 | 343,047 | $ | 4,912,433 | ||||||||||||||||||||||||
Children’s Place Retail Stores | 1,318,056 | 58,376,700 | 39,739,598 | – | – | – | 2,100,000 | 119,637,000 | ||||||||||||||||||||||||||||||
Clearwater Paper1 | 1,956,000 | 76,596,960 | – | 57,076,903 | 37,974,080 | – | ||||||||||||||||||||||||||||||||
CSS Industries | 974,100 | 21,323,049 | – | 2,805 | 61 | 584,460 | 974,000 | 27,934,320 | ||||||||||||||||||||||||||||||
Dorman Products1 | 2,306,679 | 81,518,036 | – | 10,589,253 | 88,328,687 | – | ||||||||||||||||||||||||||||||||
EnerSys | 2,284,700 | 85,973,261 | 21,989,134 | 14,092,922 | 10,157,424 | 964,854 | 2,391,000 | 167,585,190 | ||||||||||||||||||||||||||||||
Finish Line (The) Cl. A | 4,462,000 | 84,465,660 | 9,064,180 | 21,697 | 3,789 | 1,388,492 | 4,958,000 | 139,666,860 | ||||||||||||||||||||||||||||||
Foster (L.B.) Company | 928,875 | 40,350,330 | 3,097,427 | – | – | 119,640 | 1,000,000 | 47,290,000 | ||||||||||||||||||||||||||||||
Frisch’s Restaurants | 505,100 | 9,344,350 | – | – | – | 343,468 | 505,100 | 12,945,713 | ||||||||||||||||||||||||||||||
Hawkins | 911,020 | 35,201,813 | 4,491,353 | 1,493,036 | (63,214 | ) | 718,713 | 989,000 | 36,780,910 | |||||||||||||||||||||||||||||
Hurco Companies | 435,179 | 10,009,117 | 969,813 | 12,159 | (2,081 | ) | 70,631 | 471,000 | 11,779,710 | |||||||||||||||||||||||||||||
LeapFrog Enterprises Cl. A | 34,480,755 | – | – | – | 4,100,000 | 32,554,000 | ||||||||||||||||||||||||||||||||
Littelfuse1 | 1,375,583 | 84,887,227 | – | 20,666,488 | 4,799,235 | 950,422 | ||||||||||||||||||||||||||||||||
Minerals Technologies | 2,851,200 | 113,819,904 | 16,460,275 | 6,302,298 | 4,068,725 | 621,405 | 3,075,000 | 184,715,250 | ||||||||||||||||||||||||||||||
National Presto Industries | 656,500 | 45,364,150 | – | – | – | – | 656,500 | 52,848,250 | ||||||||||||||||||||||||||||||
Park Electrochemical | 2,011,012 | 51,743,338 | – | 396 | (49 | ) | 6,033,035 | 2,011,000 | 57,755,920 | |||||||||||||||||||||||||||||
Plantronics | 2,077,278 | 76,589,240 | 7,364,108 | 1,429,977 | (61,451 | ) | 871,910 | 2,215,000 | 102,886,750 | |||||||||||||||||||||||||||||
Scholastic Corporation | 2,400,207 | 70,950,119 | 14,658,340 | 186,815 | 379 | 1,437,336 | 2,910,000 | 98,969,100 | ||||||||||||||||||||||||||||||
Schulman (A.) | 1,472,577 | 42,601,652 | 12,482,116 | 10,415,186 | 3,661,617 | 814,508 | 1,487,000 | 52,431,620 | ||||||||||||||||||||||||||||||
Schweitzer-Mauduit International | 118,013,321 | – | – | 2,248,844 | 2,638,557 | 135,806,529 | ||||||||||||||||||||||||||||||||
Standard Motor Products | 66,874,440 | 1,990,219 | 225,889 | 562,538 | 2,250,000 | 82,800,000 | ||||||||||||||||||||||||||||||||
Standex International1 | 831,990 | 42,672,767 | – | 11,690,728 | 11,523,773 | 216,526 | ||||||||||||||||||||||||||||||||
Stepan Company1 | 1,252,900 | 69,586,066 | – | 21,912,317 | 12,896,762 | 622,173 | ||||||||||||||||||||||||||||||||
UniFirst Corporation | 1,469,012 | 107,707,960 | 6,973,291 | 3,732,750 | 1,335,435 | 215,608 | 1,481,570 | 158,527,990 | ||||||||||||||||||||||||||||||
Universal Corporation | 65,298,652 | – | – | 440,400 | 1,296,000 | 70,761,600 | ||||||||||||||||||||||||||||||||
1,452,343,184 | 184,255,395 | 24,950,359 | 1,808,332,930 | |||||||||||||||||||||||||||||||||||
Royce Value Plus Fund | ||||||||||||||||||||||||||||||||||||||
Cerus Corporation1 | 2,884,500 | 9,115,020 | – | 3,120,771 | (934,633 | ) | – | |||||||||||||||||||||||||||||||
Cosi1 | 6,833,770 | 5,316,673 | – | 24,930,625 | (21,203,397 | ) | – | |||||||||||||||||||||||||||||||
Immersion Corporation1 | 1,578,109 | 10,841,609 | – | 4,613,903 | 3,968,522 | – | ||||||||||||||||||||||||||||||||
NumereX Corporation Cl. A | 302,701 | 3,977,491 | 9,814,211 | 1,778,593 | (151,628 | ) | – | 1,030,200 | 13,341,090 | |||||||||||||||||||||||||||||
29,250,793 | (18,321,136 | ) | – | 13,341,090 |
1 | Not an Affiliated Company at December 31, 2013. |
128 | The Royce Funds 2013 Annual Report to Shareholders |
Report of Independent Registered Public Accounting Firm |
To the Board of Trustees of The Royce Fund and the Shareholders of |
The Royce Funds 2013 Annual Report to Shareholders | 129 |
As a shareholder of a mutual fund, you pay ongoing expenses, including management fees and other Fund expenses including, for some funds, distribution and/or service (12b-1) fees. Using the information below, you can estimate how these ongoing expenses (in dollars) affect your investment and compare them with the ongoing expenses of other funds. You may also incur one-time transaction expenses, including redemption fees, which are not shown in this section and would result in higher total costs. The example is based on an investment of $1,000 invested at July 1, 2013, and held for the entire six-month period ended December 31, 2013. Service, Consultant, R and K Class shares are generally available only through certain brokers or retirement plan administrators who receive distribution and/or service fees from the Fund for services that they perform. Institutional and W Class shares are generally available only to institutions or intermediaries with a minimum account size of $1 million.
Actual | Hypothetical (5% per year return before expenses) | ||||||||||||||||||||||||||||||||||
Beginning | Ending | Expenses Paid | Beginning | Ending | Expenses Paid | Annualized | |||||||||||||||||||||||||||||
Account Value | Account Value | During the | Account Value | Account Value | During the | Expense | |||||||||||||||||||||||||||||
7/1/13 | 12/31/13 | Period1 | 7/1/13 | 12/31/13 | Period1 | Ratio2 | |||||||||||||||||||||||||||||
Investment Class | |||||||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund | $ | 1,000.00 | $ | 1,212.31 | $ | 5.13 | $ | 1,000.00 | $ | 1,020.57 | $ | 4.69 | 0.92 | % | |||||||||||||||||||||
Royce Micro-Cap Fund | 1,000.00 | 1,177.10 | 8.29 | 1,000.00 | 1,017.59 | 7.68 | 1.51 | % | |||||||||||||||||||||||||||
Royce Premier Fund | 1,000.00 | 1,184.01 | 6.00 | 1,000.00 | 1,019.71 | 5.55 | 1.09 | % | |||||||||||||||||||||||||||
Royce Low-Priced Stock Fund | 1,000.00 | 1,144.97 | 6.70 | 1,000.00 | 1,018.95 | 6.31 | 1.24 | % | |||||||||||||||||||||||||||
Royce Total Return Fund | 1,000.00 | 1,176.49 | 6.20 | 1,000.00 | 1,019.51 | 5.75 | 1.13 | % | |||||||||||||||||||||||||||
Royce Heritage Fund3 | 1,000.00 | 1,153.01 | 6.08 | 1,000.00 | 1,019.56 | 5.70 | 1.12 | % | |||||||||||||||||||||||||||
Royce Opportunity Fund | 1,000.00 | 1,211.00 | 6.46 | 1,000.00 | 1,019.36 | 5.90 | 1.16 | % | |||||||||||||||||||||||||||
Royce Special Equity Fund | 1,000.00 | 1,150.89 | 6.18 | 1,000.00 | 1,019.46 | 5.80 | 1.14 | % | |||||||||||||||||||||||||||
Royce Value Fund | 1,000.00 | 1,178.95 | 6.59 | 1,000.00 | 1,019.16 | 6.11 | 1.20 | % | |||||||||||||||||||||||||||
Royce Value Plus Fund | 1,000.00 | 1,179.16 | 7.74 | 1,000.00 | 1,018.10 | 7.17 | 1.41 | % | |||||||||||||||||||||||||||
Royce 100 Fund | 1,000.00 | 1,183.96 | 6.61 | 1,000.00 | 1,019.16 | 6.11 | 1.20 | % | |||||||||||||||||||||||||||
Royce Dividend Value Fund | 1,000.00 | 1,181.06 | 6.87 | 1,000.00 | 1,018.90 | 6.36 | 1.25 | % | |||||||||||||||||||||||||||
Royce Global Value Fund | 1,000.00 | 1,117.89 | 8.11 | 1,000.00 | 1,017.54 | 7.73 | 1.52 | % | |||||||||||||||||||||||||||
Royce Special Equity Multi-Cap Fund | 1,000.00 | 1,158.26 | 6.31 | 1,000.00 | 1,019.36 | 5.90 | 1.16 | % | |||||||||||||||||||||||||||
Service Class | |||||||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund | 1,000.00 | 1,210.00 | 7.07 | 1,000.00 | 1,018.80 | 6.46 | 1.27 | % | |||||||||||||||||||||||||||
Royce Micro-Cap Fund | 1,000.00 | 1,176.61 | 9.11 | 1,000.00 | 1,016.84 | 8.44 | 1.66 | % | |||||||||||||||||||||||||||
Royce Premier Fund | 1,000.00 | 1,182.52 | 7.65 | 1,000.00 | 1,018.20 | 7.07 | 1.39 | % | |||||||||||||||||||||||||||
Royce Low-Priced Stock Fund | 1,000.00 | 1,143.13 | 8.05 | 1,000.00 | 1,017.69 | 7.58 | 1.49 | % | |||||||||||||||||||||||||||
Royce Total Return Fund | 1,000.00 | 1,173.61 | 8.55 | 1,000.00 | 1,017.34 | 7.93 | 1.56 | % | |||||||||||||||||||||||||||
Royce Heritage Fund3 | 1,000.00 | 1,151.49 | 7.70 | 1,000.00 | 1,018.05 | 7.22 | 1.42 | % | |||||||||||||||||||||||||||
Royce Opportunity Fund | 1,000.00 | 1,209.04 | 8.35 | 1,000.00 | 1,017.64 | 7.63 | 1.50 | % | |||||||||||||||||||||||||||
Royce Special Equity Fund | 1,000.00 | 1,149.91 | 7.53 | 1,000.00 | 1,018.20 | 7.07 | 1.39 | % | |||||||||||||||||||||||||||
Royce Value Fund | 1,000.00 | 1,177.87 | 8.12 | 1,000.00 | 1,017.74 | 7.53 | 1.48 | % | |||||||||||||||||||||||||||
Royce Value Plus Fund | 1,000.00 | 1,179.34 | 8.02 | 1,000.00 | 1,017.85 | 7.43 | 1.46 | % | |||||||||||||||||||||||||||
Royce 100 Fund | 1,000.00 | 1,183.60 | 8.20 | 1,000.00 | 1,017.69 | 7.58 | 1.49 | % | |||||||||||||||||||||||||||
Royce Dividend Value Fund | 1,000.00 | 1,179.04 | 8.13 | 1,000.00 | 1,017.74 | 7.53 | 1.48 | % | |||||||||||||||||||||||||||
Royce Global Value Fund | 1,000.00 | 1,116.11 | 9.01 | 1,000.00 | 1,016.69 | 8.59 | 1.69 | % | |||||||||||||||||||||||||||
Royce International Smaller-Companies Fund | 1,000.00 | 1,135.38 | 9.10 | 1,000.00 | 1,016.69 | 8.59 | 1.69 | % |
130 | The Royce Funds 2013 Annual Report to Shareholders |
Actual | Hypothetical (5% per year return before expenses) | ||||||||||||||||||||||||||||||||||
Beginning | Ending | Expenses Paid | Beginning | Ending | Expenses Paid | Annualized | |||||||||||||||||||||||||||||
Account Value | Account Value | During the | Account Value | Account Value | During the | Expense | |||||||||||||||||||||||||||||
7/1/13 | 12/31/13 | Period1 | 7/1/13 | 12/31/13 | Period1 | Ratio2 | |||||||||||||||||||||||||||||
Service Class (continued) | |||||||||||||||||||||||||||||||||||
Royce Special Equity Multi-Cap Fund | $ | 1,000.00 | $ | 1,156.63 | $ | 7.56 | $ | 1,000.00 | $ | 1,018.20 | $ | 7.07 | 1.39 | % | |||||||||||||||||||||
Consultant Class | |||||||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund | 1,000.00 | 1,206.88 | 11.01 | 1,000.00 | 1,015.22 | 10.06 | 1.98 | % | |||||||||||||||||||||||||||
Royce Micro-Cap Fund | 1,000.00 | 1,171.27 | 13.96 | 1,000.00 | 1,012.35 | 12.93 | 2.55 | % | |||||||||||||||||||||||||||
Royce Premier Fund | 1,000.00 | 1,178.46 | 11.75 | 1,000.00 | 1,014.42 | 10.87 | 2.14 | % | |||||||||||||||||||||||||||
Royce Total Return Fund | 1,000.00 | 1,169.78 | 11.92 | 1,000.00 | 1,014.22 | 11.07 | 2.18 | % | |||||||||||||||||||||||||||
Royce Heritage Fund3 | 1,000.00 | 1,145.30 | 13.09 | 1,000.00 | 1,013.01 | 12.28 | 2.42 | % | |||||||||||||||||||||||||||
Royce Opportunity Fund | 1,000.00 | 1,203.89 | 12.94 | 1,000.00 | 1,013.46 | 11.82 | 2.33 | % | |||||||||||||||||||||||||||
Royce Special Equity Fund | 1,000.00 | 1,144.85 | 11.79 | 1,000.00 | 1,014.22 | 11.07 | 2.18 | % | |||||||||||||||||||||||||||
Royce Value Fund | 1,000.00 | 1,172.82 | 12.60 | 1,000.00 | 1,013.61 | 11.67 | 2.30 | % | |||||||||||||||||||||||||||
Royce Value Plus Fund | 1,000.00 | 1,173.91 | 13.10 | 1,000.00 | 1,013.16 | 12.13 | 2.39 | % | |||||||||||||||||||||||||||
Royce Global Value Fund | 1,000.00 | 1,111.02 | 12.98 | 1,000.00 | 1,012.91 | 12.38 | 2.44 | % | |||||||||||||||||||||||||||
Institutional Class | |||||||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund | 1,000.00 | 1,213.32 | 4.41 | 1,000.00 | 1,021.22 | 4.02 | 0.79 | % | |||||||||||||||||||||||||||
Royce Premier Fund | 1,000.00 | 1,185.15 | 5.34 | 1,000.00 | 1,020.32 | 4.94 | 0.97 | % | |||||||||||||||||||||||||||
Royce Low-Priced Stock Fund | 1,000.00 | 1,144.41 | 6.59 | 1,000.00 | 1,019.06 | 6.21 | 1.22 | % | |||||||||||||||||||||||||||
Royce Total Return Fund | 1,000.00 | 1,176.43 | 5.54 | 1,000.00 | 1,020.11 | 5.14 | 1.01 | % | |||||||||||||||||||||||||||
Royce Opportunity Fund | 1,000.00 | 1,211.79 | 5.74 | 1,000.00 | 1,020.01 | 5.24 | 1.03 | % | |||||||||||||||||||||||||||
Royce Special Equity Fund | 1,000.00 | 1,152.02 | 5.48 | 1,000.00 | 1,020.11 | 5.14 | 1.01 | % | |||||||||||||||||||||||||||
Royce Value Fund | 1,000.00 | 1,179.59 | 5.71 | 1,000.00 | 1,019.96 | 5.30 | 1.04 | % | |||||||||||||||||||||||||||
Royce Value Plus Fund | 1,000.00 | 1,181.53 | 5.83 | 1,000.00 | 1,019.86 | 5.40 | 1.06 | % | |||||||||||||||||||||||||||
Royce Dividend Value Fund | 1,000.00 | 1,182.19 | 5.72 | 1,000.00 | 1,019.96 | 5.30 | 1.04 | % | |||||||||||||||||||||||||||
Royce Special Equity Multi-Cap Fund | 1,000.00 | 1,158.29 | 5.66 | 1,000.00 | 1,019.96 | 5.30 | 1.04 | % | |||||||||||||||||||||||||||
W Class | |||||||||||||||||||||||||||||||||||
Royce Premier Fund | 1,000.00 | 1,184.18 | 6.06 | 1,000.00 | 1,019.66 | 5.60 | 1.10 | % | |||||||||||||||||||||||||||
Royce Total Return Fund | 1,000.00 | 1,175.89 | 6.42 | 1,000.00 | 1,019.31 | 5.96 | 1.17 | % | |||||||||||||||||||||||||||
R Class | |||||||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund | 1,000.00 | 1,208.49 | 8.85 | 1,000.00 | 1,017.19 | 8.08 | 1.59 | % | |||||||||||||||||||||||||||
Royce Premier Fund | 1,000.00 | 1,180.06 | 9.78 | 1,000.00 | 1,016.23 | 9.05 | 1.78 | % | |||||||||||||||||||||||||||
Royce Low-Priced Stock Fund | 1,000.00 | 1,140.36 | 9.93 | 1,000.00 | 1,015.93 | 9.35 | 1.84 | % | |||||||||||||||||||||||||||
Royce Total Return Fund | 1,000.00 | 1,172.66 | 9.75 | 1,000.00 | 1,016.23 | 9.05 | 1.78 | % | |||||||||||||||||||||||||||
Royce Heritage Fund | 1,000.00 | 1,149.29 | 9.97 | 1,000.00 | 1,015.93 | 9.35 | 1.84 | % | |||||||||||||||||||||||||||
Royce Opportunity Fund | 1,000.00 | 1,206.60 | 10.23 | 1,000.00 | 1,015.93 | 9.35 | 1.84 | % | |||||||||||||||||||||||||||
Royce Value Fund | 1,000.00 | 1,175.25 | 10.20 | 1,000.00 | 1,015.83 | 9.45 | 1.86 | % | |||||||||||||||||||||||||||
Royce Value Plus Fund | 1,000.00 | 1,177.47 | 10.10 | 1,000.00 | 1,015.93 | 9.35 | 1.84 | % | |||||||||||||||||||||||||||
Royce 100 Fund | 1,000.00 | 1,181.32 | 10.12 | 1,000.00 | 1,015.93 | 9.35 | 1.84 | % | |||||||||||||||||||||||||||
Royce Global Value Fund | 1,000.00 | 1,113.79 | 10.60 | 1,000.00 | 1,015.17 | 10.11 | 1.99 | % | |||||||||||||||||||||||||||
K Class | |||||||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund | 1,000.00 | 1,210.68 | 7.69 | 1,000.00 | 1,018.25 | 7.02 | 1.38 | % | |||||||||||||||||||||||||||
Royce Premier Fund | 1,000.00 | 1,180.71 | 8.96 | 1,000.00 | 1,016.99 | 8.29 | 1.63 | % | |||||||||||||||||||||||||||
Royce Low-Priced Stock Fund | 1,000.00 | 1,141.87 | 8.58 | 1,000.00 | 1,017.19 | 8.08 | 1.59 | % | |||||||||||||||||||||||||||
Royce Total Return Fund | 1,000.00 | 1,174.19 | 8.38 | 1,000.00 | 1,017.49 | 7.78 | 1.53 | % | |||||||||||||||||||||||||||
Royce Heritage Fund | 1,000.00 | 1,150.30 | 8.62 | 1,000.00 | 1,017.19 | 8.08 | 1.59 | % | |||||||||||||||||||||||||||
Royce Opportunity Fund | 1,000.00 | 1,209.18 | 8.19 | 1,000.00 | 1,017.80 | 7.48 | 1.47 | % | |||||||||||||||||||||||||||
Royce Value Fund | 1,000.00 | 1,176.37 | 9.16 | 1,000.00 | 1,016.79 | 8.49 | 1.67 | % | |||||||||||||||||||||||||||
Royce Value Plus Fund | 1,000.00 | 1,178.44 | 8.73 | 1,000.00 | 1,017.19 | 8.08 | 1.59 | % | |||||||||||||||||||||||||||
Royce 100 Fund | 1,000.00 | 1,181.74 | 8.74 | 1,000.00 | 1,017.19 | 8.08 | 1.59 | % | |||||||||||||||||||||||||||
Royce Global Value Fund | 1,000.00 | 1,115.36 | 9.28 | 1,000.00 | 1,016.43 | 8.84 | 1.74 | % | |||||||||||||||||||||||||||
The Royce Funds 2013 Annual Report to Shareholders | 131 |
2013 Supplemental Tax Information:
% | Long-Term Capital | |||||||||||||||||||
% | % U.S. Govt | Income Qualifying | Gain Distribution or | |||||||||||||||||
Fund | QDI | Income | For DRD | Maximum Allowable (000’s) | ||||||||||||||||
Royce Pennsylvania Mutual Fund | 100.00 | % | N/A | 85.00 | % | $ | 314,540 | |||||||||||||
Royce Micro-Cap Fund | 100.00 | % | N/A | 100.00 | % | 59,823 | ||||||||||||||
Royce Premier Fund | N/A | N/A | N/A | 723,053 | ||||||||||||||||
Royce Low-Priced Stock Fund | 100.00 | % | N/A | 100.00 | % | 238,479 | ||||||||||||||
Royce Total Return Fund | 100.00 | % | N/A | 71.82 | % | 418,194 | ||||||||||||||
Royce Heritage Fund | 61.09 | % | N/A | 27.58 | % | 34,727 | ||||||||||||||
Royce Opportunity Fund | 21.38 | % | N/A | 100.00 | % | 245,625 | ||||||||||||||
Royce Special Equity Fund | 100.00 | % | N/A | 100.00 | % | 284,543 | ||||||||||||||
Royce Value Fund | 37.20 | % | N/A | 27.76 | % | 37,209 | ||||||||||||||
Royce Value Plus Fund | 100.00 | % | N/A | 100.00 | % | 99,365 | ||||||||||||||
Royce 100 Fund | 100.00 | % | N/A | 100.00 | % | 39,652 | ||||||||||||||
Royce Dividend Value Fund | 79.12 | % | N/A | 42.86 | % | 27,540 | ||||||||||||||
Royce Global Value Fund | 100.00 | % | N/A | 0.00 | % | – | ||||||||||||||
Royce International Smaller-Companies Fund | 89.52 | % | N/A | 0.00 | % | 1,431 | ||||||||||||||
Royce Special Equity Multi-Cap Fund | 100.00 | % | N/A | 100.00 | % | 8,107 |
Definitions:
% QDI: Qualified Dividend Income; % of net investment income and/or short-term capital gains distributions that qualify for treatment at long-term capital gain rates.
% U.S. Govt Income: % of investment income paid from U.S. Government obligations.
% Income Qualifying for DRD: % of investment income eligible for the corporate dividend received deduction.
Net Foreign | ||||||||||||||||||||
Net Foreign | Source Income | Foreign | Foreign | |||||||||||||||||
Fund | Source Income | Per Share | Tax | Tax Per Share | ||||||||||||||||
Royce Global Value Fund | $ | 2,302,765 | $ | 0.1338 | $ | 638,532 | $ | 0.0371 | ||||||||||||
Royce International Smaller-Companies Fund | 583,564 | 0.1960 | 68,814 | 0.0231 | ||||||||||||||||
132 | The Royce Funds 2013 Annual Report to Shareholders |
Trustees and Officers |
All Trustees and Officers may be reached c/o The Royce Funds, 745 Fifth Avenue, New York, NY 10151 |
Charles M. Royce, Trustee1, President
Age: 74 | Number of Funds Overseen: 34 | Tenure: Since 1982
Non-Royce Directorships: Director of TICC Capital Corp.
Principal Occupation(s) During Past Five Years: President, Co-Chief Investment Officer, and Member of Board of Managers of Royce & Associates, LLC (“Royce”), the Trust’s investment adviser.
W. Whitney George, Vice President
Age: 55 | Number of Funds Overseen: 34 | Tenure: Since September 2013
Non-Royce Directorships: None
Principal Occupation(s) During Past Five Years: Co-Chief Investment Officer, Managing Director and Vice President of Royce, having been employed by Royce since October 1991.
Patricia W. Chadwick, Trustee
Age: 65 | Number of Funds Overseen: 34 | Tenure: Since 2009
Non-Royce Directorships: Trustee of ING Mutual Funds and Director of Wisconsin Energy Corp.
Principal Occupation(s) During Past 5 Years: Consultant and President of Ravengate Partners LLC (since 2000).
Richard M. Galkin, Trustee
Age: 75 | Number of Funds Overseen: 34 | Tenure: Since 1982
Non-Royce Directorships: None
Principal Occupation(s) During Past Five Years: Private investor. Mr. Galkin’s prior business experience includes having served as President of Richard M. Galkin Associates, Inc., telecommunications consultants, President of Manhattan Cable Television (a subsidiary of Time, Inc.), President of Haverhills Inc. (another Time, Inc. subsidiary), President of Rhode Island Cable Television, and Senior Vice President of Satellite Television Corp. (a subsidiary of Comsat).
Stephen L. Isaacs, Trustee
Age: 74 | Number of Funds Overseen: 34 | Tenure: Since 1989
Non-Royce Directorships: None
Principal Occupation(s) During Past Five Years: Attorney and President of Health Policy Associates, Inc., consultants. Mr. Isaacs’s prior business experience includes having served as President of the Center for Health and Social Policy (from 1996 to 2012); Director of Columbia University Development Law and Policy Program and Professor at Columbia University (until August 1996).
Arthur S. Mehlman, Trustee
Age: 71 | Number of Funds Overseen: 52 | Tenure: Since 2004
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 18 Legg Mason Funds.
Principal Occupation(s) During Past Five Years: Director of The League for People with Disabilities, Inc.; and Director of University of Maryland Foundation (non-profits). Formerly: Director of Municipal Mortgage & Equity, LLC (from October 2004 to April 1, 2011); Director of University of Maryland College Park Foundation (non-profit) (from 1998 to 2005); Partner, KPMG LLP (international accounting firm) (from 1972 to 2002); Director of Maryland Business Roundtable for Education (from July 1984 to June 2002).
David L. Meister, Trustee
Age: 74 | Number of Funds Overseen: 34 | Tenure: Since 1982
Non-Royce Directorships: None
Principal Occupation(s) During Past Five Years: Consultant. Chairman and Chief Executive Officer of The Tennis Channel (from June 2000 to March 2005). Mr. Meister’s prior business experience includes having served as Chief Executive Officer of Seniorlife.com, a consultant to the communications industry, President of Financial News Network, Senior Vice President of HBO, President of Time-Life Films, and Head of Broadcasting for Major League Baseball.
G. Peter O’Brien, Trustee
Age: 68 | Number of Funds Overseen: 52 | Tenure: Since 2001
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 18 Legg Mason Funds; Director of TICC Capital Corp.
Principal Occupation(s) During Past Five Years: Trustee Emeritus of Colgate University (since 2005); Board Member of Hill House, Inc. (since 1999); Formerly: Trustee of Colgate University (from 1996 to 2005), President of Hill House, Inc. (from 2001 to 2005) and Managing Director/Equity Capital Markets Group of Merrill Lynch & Co. (from 1971 to 1999).
John D. Diederich, Vice President and Treasurer
Age: 62 | Tenure: Since 2001
Principal Occupation(s) During Past Five Years: Chief Operating Officer, Managing Director and member of the Board of Managers of Royce; Chief Financial Officer of Royce; Director of Administration of the Trust; and President of RFS, having been employed by Royce since April 1993.
Jack E. Fockler, Jr., Vice President
Age: 55 | Tenure: Since 1995
Principal Occupation(s) During Past Five Years: Managing Director and Vice President of Royce, and Vice President of RFS, having been employed by Royce since October 1989.
Daniel A. O’Byrne, Vice President and Assistant Secretary
Age: 51 | Tenure: Since 1994
Principal Occupation(s) During Past Five Years: Principal and Vice President of Royce, having been employed by Royce since October 1986.
John E. Denneen, Secretary and Chief Legal Officer
Age: 46 | Tenure: 1996-2001 and Since April 2002
Principal Occupation(s) During Past Five Years: General Counsel, Principal, Chief Legal and Compliance Officer, and Secretary of Royce; Secretary and Chief Legal Officer of The Royce Funds.
Lisa Curcio, Chief Compliance Officer
Age: 54 | Tenure: Since 2004
Principal Occupation(s) During Past Five Years: Chief Compliance Officer of The Royce Funds (since October 2004) and Compliance Officer of Royce (since June 2004).
Trustees will hold office until their successors have been duly elected and qualified or until their earlier resignation or removal. The Statement of Additional Information, which contains additional information about the Trust’s trustees and officers, is available and can be obtained without charge at www.roycefunds.com or by calling (800) 221-4268.
The Royce Funds 2013 Annual Report to Shareholders | 133 |
Results of Shareholder Meeting |
VOTES FOR | VOTES WITHHELD | |||||||
Charles M. Royce | 1,255,647,085 | 15,877,503 | ||||||
W. Whitney George | 1,256,250,821 | 15,273,767 | ||||||
Patricia W. Chadwick | 1,257,215,461 | 14,309,127 | ||||||
Richard M. Galkin | 1,255,002,808 | 16,521,780 | ||||||
Stephen L. Isaacs | 1,255,174,877 | 16,349,712 | ||||||
Arthur S. Mehlman | 1,255,230,246 | 16,294,342 | ||||||
David L. Meister | 1,254,852,641 | 16,671,948 | ||||||
G. Peter O’Brien | 1,256,368,727 | 15,155,862 | ||||||
134 | The Royce Funds 2013 Annual Report to Shareholders |
Notes to Performance and Other Important Information |
The thoughts expressed in this report concerning recent market movements and future prospects for small company stocks are solely the opinion of Royce at December 31, 2013, and, of course, historical market trends are not necessarily indicative of future market movements. Statements regarding the future prospects for particular securities held in the Funds’ portfolios and Royce’s investment intentions with respect to those securities reflect Royce’s opinions as of December 31, 2013 and are subject to change at any time without notice. There can be no assurance that securities mentioned in this report will be included in any Royce-managed portfolio in the future. Sector weightings are determined using the Global Industry Classification Standard (“GICS”). GICS was developed by, and is the exclusive property of, Standard & Poor’s Financial Services LLC (“S&P”) and MSCI Inc. (“MSCI”). GICS is the trademark of S&P and MSCI. “Global Industry Classification Standard (GICS)” and “GICS Direct” are service marks of S&P and MSCI. All indexes referred to are unmanaged and capitalization weighted. Each index’s returns include net reinvested dividends and/or interest income. Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. The Russell 2000 is an index of domestic small-cap stocks. It measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 Index. The Russell 1000 Index is an index of domestic large-cap stocks. It measures the performance of the 1,000 largest publicly traded U.S. companies in the Russell 3000 Index. The Russell Microcap Index includes 1,000 of the smallest securities in the Russell 2000 Index, along with the next smallest eligible securities as determined by Russell. The Russell 2500 is an index of domestic small- to mid-cap stocks. It includes approximately 2,500 of the smallest securities in the Russell 3000 Index. The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe. It includes approximately 800 of the smallest securities in the Russell 1000 Index. The Russell Global Small Cap Index is an index of global small-cap stocks. The Russell Global ex-U.S. Small Cap Index is an index of global small-cap stocks, excluding the United States. The Russell Global ex-U.S. Large Cap Index is an index of global large-cap stocks, excluding the United States. The CBOE Volatility Index (VIX) measures market expectations of near-term volatility conveyed by S&P 500 Stock index option prices. The S&P 500 is an index of U.S. large-cap stocks, selected by Standard & Poor’s based on market size, liquidity, and industry grouping, among other factors. The Nasdaq Composite is an index of the more than 3,000 common equities listed on the Nasdaq stock exchange. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index. Returns for the market indexes used in this report were based on information supplied to Royce by Russell Investments. Royce has not independently verified the above described information. The Price-Earnings, or P/E, Ratio is calculated by dividing a company’s share price by its trailing 12-month earnings-per share (EPS). The Price-to-Book, or P/B, Ratio is calculated by dividing a company’s share price by its book value per share. The Sharpe Ratio is calculated for a specified period by dividing a fund’s annualized excess returns by its annualized standard deviation. The higher the Sharpe Ratio, the better the fund’s historical risk-adjusted performance. Standard deviation is a statistical measure within which a fund’s total returns have varied over time. The greater the standard deviation, the greater a fund’s volatility. The Royce Funds is a service mark of The Royce Funds. Distributor: Royce Fund Services, Inc. Investments in securities of micro-cap, small-cap and/or mid-cap companies may involve considerably more risk than investments in securities of larger-cap companies. (Please see “Primary Risks for Fund Investors” in the prospectus.) Certain Royce Funds may invest up to 25% (100% for Royce Global Value and International Smaller-Companies Funds, 35% of Heritage, Low-Priced Stock, and Micro-Cap Funds, 10% of Opportunity Fund, and 5% of Special Equity Fund) of their respective assets in foreign securities, which generally may involve political, economic, currency, and other risks not encountered in U.S. investments. (Please see “Investing in Foreign Securities” in the prospectus.) Please read the prospectus carefully before investing or sending money. A copy of the Funds’ current prospectus and Statement of Additional Information may be obtained by calling (800) 221-4268 or by visiting www.roycefunds.com. All publicly released material Fund information is disclosed by the Funds on their website at www.roycefunds.com. |
Forward-Looking Statements | |
This material contains forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve risks and uncertainties, including, among others, statements as to: | |
• | the Funds’ future operating results, |
• | the prospects of the Funds’ portfolio companies, |
• | the impact of investments that the Funds have made or may make, |
• | the dependence of the Funds’ future success on the general economy and its impact on the companies and industries in which the Funds invest, and |
• | the ability of the Funds’ portfolio companies to achieve their objectives. |
This review and report use words such as “anticipates,” “believes,” “expects,” “future,” “intends,” and similar expressions to identify forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements for any reason. | |
The Royce Funds have based the forward-looking statements included in this review and report on information available to us on the date of the report, and we assume no obligation to update any such forward-looking statements. Although The Royce Funds undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise, you are advised to consult any additional disclosures that we may make through future shareholder communications or reports. |
Proxy Voting |
A copy of the policies and procedures that The Royce Funds use to determine how to vote proxies relating to portfolio securities and information regarding how each of The Royce Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available, without charge, on The Royce Funds’ website at www.roycefunds.com, by calling (800) 221-4268 (toll-free) and on the website of the Securities and Exchange Commission (“SEC”) at www.sec.gov. |
Form N-Q Filing |
The Funds file their complete schedules of investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at www.sec.gov. The Royce Funds’ holdings are also on the Funds’ website approximately 15 to 20 days after each calendar quarter end and remain available until the next quarter’s holdings are posted. The Funds’ Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. To find out more about this public service, call the SEC at (202) 942-8090. The Funds’ complete schedules of investments are updated quarterly and are available at www.roycefunds.com. |
The Royce Funds 2013 Annual Report to Shareholders | 135 |
2013 In Quotes |
Things turn out best for people who make the best of the way things turn out. - John Wooden |
Points to Ponder Supply will be constrained, and demand will be strong, coming from corporate buyers and individual and institutional investors, who will begin to reallocate funds toward the equity market and out of bonds. There will be a great migration or great rotation, or whatever you want to call it. It will intensify as the year continues. - Brian Rodgers, Barron’s, January 26, 2013 While absolute skill tends to improve, relative skill tends to become more uniform. In plain words, that means that the difference between the best and the average is less than what it used to be. So, the best hitter in baseball is closer to an average player today than was the case 50 years ago. - Michael Mauboussin, Morningstar Advisor, April/May 2013 Solid companies selling at depressed prices have consistently helped generations of the world’s most successful investors preserve capital, minimize risk, and achieve long-term, market-trampling returns. - Rex Moore, The Motley Fool, May 24, 2013 Over the long term, while there is no perfect predictor, the only factor that has decent predictive power is, “What price am I paying against fundamentals?” - Cliff Asness, Barron’s, August 31, 2013 In Absolute Agreement It’s not during up years that great investment track records are made. - Charles de Vaulx, International Value Advisers, The Art of Value Investing Most risk management is really just advanced contingency planning and disciplining yourself to realize that, given enough time, very low probability events not only can happen, but they absolutely will happen. - Lloyd Blankfein, CNBC, July 25, 2013 Throughout the post-World War II era, the average stock-market decline in a bear market is about 25% and lasts about 10 months. So the bear market that ended in March of ’09 was twice as severe as the average. Most bear markets are induced by economic contractions. During the average recession in the postwar period, real gross domestic product goes down 2% from peak-to-trough. The most recent recession was about twice as severe in magnitude, so you had a bear market twice as severe as the average bear market, and the market discounted twice as severe an economic contraction. - Leon Cooperman, Barron’s, May 18, 2013 We are different from most fund managers in how we think about risk. To most managers, and most fund evaluation services, risk is defined either as volatility of returns or deviation from the S&P returns. We define risk as losing money. - Bill Nygren, Oakmark Funds Third Quarter 2013 Report Adopt simple rules and stick to them. - Benjamin Graham Cocktail Conversation Commodities are not an investment. An investment by definition is either current income or a stream of future income. When you buy a commodity, you have to be assuming that you are going to be able to sell it at a higher price to someone else, because it has no income. Thus, it is not investing — it is speculating. - Barton Biggs, Diary of a Hedgehog There are two elephants in the room that no one wants to talk about: inflation and higher rates. - David Winters, Barron’s, March 23, 2013 Many who abandoned equities in the “flight to safety” have begun to slowly migrate from cash and bonds to high dividend, low volatility stocks, and very recently, to more cyclical stocks. The timid move back into equities is in early stages with much money still on the sidelines, but flows could occur sporadically. - Longleaf Partners Fund, First Quarter 2013 Report Value investing works because it is contrary to naïve strategies of other investors, which include extrapolating past earnings growth too far into the future and assuming that a well-run company will always be a good investment, regardless of price. - Josef Lakonishok, Institutional Investor, May 12, 2013 Markets can remain irrational a lot longer than you and I can remain solvent. - John Maynard Keynes Timeless Tidbits Incompetence is the disease of idiots. Overconfidence is the mistake of experts… Incompetence irritates me. Overconfidence terrifies me. - Malcolm Gladwell There are more fools among buyers than among sellers. - Proverb A creative man is motivated by the desire to achieve, not by the desire to beat others. - Ayn Rand |
The thoughts expressed above represent solely the opinions of the persons quoted and, of course, there can be no assurance of future market trends or performance. |
136 | This page is not part of the 2013 Annual Report to Shareholders |
It’s a Small World |
Co-Chief Investment Officer and Managing Director Francis Gannon looks at the geographic sources of small-cap revenues and discusses Royce’s expansion into international investing.
These issues interest us for two related reasons: Many of the cyclical sectors in which we routinely find bargains that we like—industrials, information technology, energy, and materials—often derive a sizable chunk of their respective revenues from outside the U.S. We also have been expanding our activities in non-U.S. investing over the last several years. All of this makes the state of international investing particularly interesting to us.
Earlier in 2013, some observers claimed that because many companies in the small-cap Russell 2000 Index are more closely tied to domestic growth, the index was able to hold an advantage over its large-cap counterparts. (This advantage held true for the year as a whole—small-cap led the domestic indexes, and all had higher returns than their non-U.S. counterparts.) The argument developed the idea that greater stateside focus benefited smaller companies particularly earlier this year when investors were worried about economic growth in Europe and Asia.
2013’s results notwithstanding, others see a greater focus on the U.S. as a potential disadvantage, believing that the typically higher percentage of domestically generated revenue for small companies may keep them from enjoying the benefits of faster-growing foreign economies.
We examine the source of revenues for each company that we look at, though we are only concerned with their geographic origin if our analysis suggests that location is a potential threat to their sustainability. However, we suspect that the weighted average percentage of revenue being generated outside of the U.S. for many of our portfolios that invest primarily in U.S. smaller companies would be greater than that of the Russell 2000.
This is in large part a matter of what we choose to own versus what we do not—a clear benefit of active management in our view. For example, we are generally underweight, or do not own, utilities, real estate investment trusts, and small banks, all of which make up a good-sized portion of the Russell 2000 and generate most of their income domestically. At the same time, we have greater exposure to more cyclical areas of the market that are more closely tied to the global economy, such as information technology, industrials, materials, and energy.
In addition, we embrace the idea that quality is a global concept that transcends borders. The same attributes that we seek in smaller U.S. companies—strong balance sheets, an established record of profitability, high returns on invested capital, and the ability to generate free cash flow—can be found in international businesses. This is why investing in non-U.S. companies has become an important part of our asset management efforts.
The thoughts in this essay concerning the stock market are solely those of Royce & Associates and, of course, there can be no assurance with regard to future market movements. |
This page is not part of the 2013 Annual Report to Shareholders |
About The Royce Funds Wealth Of Experience With approximately $39 billion in total assets under management, Royce & Associates is committed to the same small-company investing principles that have served us well for 40 years. Charles M. Royce, our President and Co-Chief Investment Officer, enjoys one of the longest tenures of any active mutual fund manager. Royce’s investment staff includes 22 portfolio managers and analysts, and nine traders. Multiple Funds, Common Focus Our goal is to offer both individual and institutional investors the best available smaller-cap portfolios. Unlike a lot of mutual fund groups with broad product offerings, we have chosen to concentrate on smaller-company investing by providing investors with a range of funds that take full advantage of this large and diverse sector. Consistent Discipline Our approach emphasizes paying close attention to risk and maintaining the same discipline, regardless of market movements and trends. The price we pay for a security must be significantly below our appraisal of its current worth. This requires a thorough analysis of the financial and business dynamics of an enterprise, as though we were purchasing the entire company. Co-Ownership Of Funds It is important that our employees and shareholders share a common financial goal; our officers, employees, and their families currently have approximately $200 million invested in The Royce Funds. This Review and Report must be accompanied or preceded by a current prospectus for the Funds. Please read the prospectus carefully before investing or sending money. | |||||||||||||||||||
Contact Us | |||||||||||||||||||
General Information Additional Report Copies and Prospectus Inquiries (800) 221-4268 | RIA/BD Services Fund Materials and Performance Updates (800) 33-ROYCE (337-6923) | Shareholder Services Transactions and Account Inquiries (800) 841-1180 | Royce InfoLine 24-Hour Automated Telephone Service (800) 78-ROYCE (787-6923) | ||||||||||||||||
ANNUAL
REVIEW AND REPORT
TO SHAREHOLDERS
Royce Select Fund I Royce Select Fund II Royce Enterprise Select Fund Royce Opportunity Select Fund Royce Micro-Cap Discovery Fund Royce Financial Services Fund Royce SMid-Cap Value Fund Royce Focus Value Fund Royce Partners Fund Royce European Smaller-Companies Fund Royce Global Dividend Value Fund Royce International Micro-Cap Fund Royce International Premier Fund | ||
www.roycefunds.com |
www.roycefunds.com |
GET THE LATEST INSIGHTS AND NEWS ON THE ROYCE FUNDS DISCOVER TWO NEW WAYS TO VIEW FUND PERFORMANCE Chuck on Royce A new feature on roycefunds.com that brings you closer to Chuck’s thoughts on the small-cap market, value investing, and our company culture. |
eDelivery Saves! Sign Up Now. eDelivery saves paper, time, and fund expenses.1 Sign up now to view statements, prospectuses, financial reports, and tax forms online. > www.roycefunds.com/edelivery 1 Any direct Royce Funds IRA investor who chooses eDelivery of prospectuses, financial reports, and RWord will be exempt from the $15 annual IRA maintenance fee. (We will continue to also waive the fee for investors with more than $20,000 invested in Royce IRAs at the time the fee is charged, and for new transfer and rollover accounts in their first year.) Stay Informed Follow us on Twitter, watch us on YouTube, subscribe to our RSS feed, and sign up for our monthly eWord newsletter to stay up to date on the latest from The Royce Funds. www.twitter.com/roycefunds www.youtube.com/roycefunds www.roycefunds.com/eword |
This page is not part of the 2013 Annual Report to Shareholders |
Table of Contents | |
Annual Review | |
Fund Guide | 2 |
Portfolio Characteristics | 4 |
Performance and Expenses | 5 |
Letter to Our Shareholders | 6 |
2013: In Quotes | 91 |
Postscript: It’s a Small World | Inside Back Cover |
Annual Report to Shareholders | 13 |
This page is not part of the 2013 Annual Report to Shareholders | 1 |
Royce Fund Guide |
Value-Oriented Small-Cap Offerings Tailored to Specific Investor Needs |
INVESTMENT UNIVERSE BREAKDOWN1 |
The size and diversity of the small-company universe make it a unique and fertile area for investment. For 40 years, it has been our primary area of focus. Over that time, this universe has evolved into an established asset class, used by a wide range of investors, including institutions, consultants, advisors, and individuals. Today, there are numerous small-cap and micro-cap indexes and ETFs. Importantly, the continuous regeneration of the asset class, through the entrance of new companies, spin-offs, and IPOs, makes it an evergreen source of investment opportunities. This is why we have elected to focus on the smaller-company universe and believe it is ideally suited for a variety of distinct offerings. Market Cap The smaller company universe consists of more than 3,9001 publicly traded companies in the U.S. (and more than 22,6001 outside the U.S.). We break it down into two distinct market segments: micro-cap—companies with market caps up to $750 million—and small-cap—companies with market caps between $750 million and $2.5 billion. Sorting the universe into two markets is critical because, in our experience, each requires a portfolio approach based primarily on diversification needs. Our portfolio managers share a common investment approach, one that emphasizes paying attention to risk and buying what each thinks are strong businesses at discounted prices, but our portfolios also possess important differences that make each one unique. Portfolio Approach Our portfolio managers possess broad latitude within our investment universe, though in general they seek a combination of quality—measured by the balance sheet and returns on invested capital—and valuation. Portfolios that invest more heavily in micro-caps are, in general, more broadly diversified due to liquidity considerations; those that invest primarily in the upper end of the small-cap portfolios tend to be more focused. In addition, we seek to take advantage of pockets of opportunity, such as dividend-paying companies, low-priced companies, turnarounds, special situations, etc., within each universe. Broadly Diversified Portfolios A broadly diversified portfolio at Royce is one that generally holds more than 100 securities and whose top positions generally do not exceed 2% of net assets. Focused Portfolios A focused portfolio at Royce is one that either (i) generally invests in no more than 100 companies and whose top positions generally exceed 2% of net assets, or (ii) invests primarily in a single sector. |
The Royce Funds, other than Royce Special Equity Multi-Cap Fund, invest primarily in micro-cap, small-cap, and/or mid-cap stocks, which may involve considerably more risk than investing in larger-cap stocks (please see “Primary Risks for Fund Investors” in the prospectus). Each Fund may invest a portion of its net assets in foreign securities, which may involve political, economic, currency, and other risks not encountered in U.S. investments (please see “Investing in Foreign Securities” in the prospectus). Distributor: Royce Fund Services, Inc. |
2 | This page is not part of the 2013 Annual Report to Shareholders |
This guide is designed to help investors better understand both the different approaches and the common ground among our portfolios. Looking closely at our Fund Guide allows investors to see other important differences—in levels of volatility, sector orientation, and investment themes—within the context of our two key differentiators, namely market cap and portfolio approach. We think that understanding these differences can inform asset allocation decisions, especially when investors incorporate more than one Royce offering within their portfolios. Listed below are the Royce Funds included in this Annual Report, arranged by average market cap. For a complete listing of our Funds and their attributes please visit our website at www.roycefunds.com. |
Fund Tools Go online for more tools to help you better understand our Funds. Compare Funds > www.roycefunds.com/compare Prices & Performance > www.roycefunds.com/prices |
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. |
This page is not part of the 2013 Annual Report to Shareholders | 3 |
Portfolio Characteristics | Through December 31, 2013 |
�� | Longevity | Average | 2013 | % of | ||||||||||||||||||
of Fund | Market | Number of | Turnover | Non-U.S. | ||||||||||||||||||
Fund | Portfolio Manager(s) | (in years) | Cap1 | Holdings | Rate | Securities | ||||||||||||||||
Royce Select Fund I | Lauren Romeo | 15 | $ | 2,373 | 74 | 56 | % | 9.4 | % | |||||||||||||
Royce Select Fund II | Jim Harvey | 8 | 795 | 92 | 159 | 63.0 | 2 | |||||||||||||||
Royce Enterprise Select Fund | Steven McBoyle | 6 | 4,283 | 64 | 154 | 3.2 | ||||||||||||||||
Royce Opportunity Select Fund | Bill Hench | 3 | 794 | 109 | 129 | 5.9 | 2 | |||||||||||||||
Royce Financial Services Fund | Chuck Royce | 10 | 2,310 | 94 | 23 | 33.2 | ||||||||||||||||
Royce Micro-Cap Discovery Fund | George Necakov, Jim Harvey | 10 | 446 | 89 | 81 | 2.1 | ||||||||||||||||
Royce SMid-Cap Value Fund | Steven McBoyle, Whitney George | 6 | 3,847 | 49 | 31 | 27.2 | ||||||||||||||||
Royce Focus Value Fund | George Wyper | 4 | 6,710 | 58 | 167 | 18.2 | ||||||||||||||||
Royce Partners Fund | Chuck Royce | 4 | 3,016 | 62 | 53 | 30.0 | ||||||||||||||||
Royce European Smaller-Companies Fund | David Nadel, Mark Rayner | 7 | 1,190 | 77 | 53 | 93.7 | ||||||||||||||||
Royce Global Dividend Value Fund | Chuck Royce | 3 | 1,117 | 147 | 82 | 81.0 | ||||||||||||||||
Royce International Micro-Cap Fund | Jim Harvey, Dilip Badlani | 3 | 412 | 124 | 103 | 94.0 | ||||||||||||||||
Royce International Premier Fund | David Nadel | 3 | 1,653 | 50 | 51 | 94.2 | ||||||||||||||||
4 | This page is not part of the 2013 Annual Report to Shareholders |
Performance and Expenses | Through December 31, 2013 |
Since | Gross Annual | Net Annual | ||||||||||||||||||||||||||||||
Since | Inception | Operating | Operating | |||||||||||||||||||||||||||||
Fund | 1-Year | 3-Year | 5-Year | 10-Year | Inception | Date | Expenses | Expenses | ||||||||||||||||||||||||
Royce Select Fund I | 25.99 | % | 11.35 | % | 17.89 | % | 10.99 | % | 14.18 | % | 11/18/98 | 1.15 | % | 1.15 | % | |||||||||||||||||
Royce Select Fund II | 23.51 | 6.51 | 19.48 | n.a. | 8.27 | 6/30/05 | 3.08 | 1.60 | ||||||||||||||||||||||||
Royce Enterprise Select Fund | 28.68 | 14.43 | 16.68 | n.a. | 8.01 | 9/28/07 | 3.86 | 1.24 | ||||||||||||||||||||||||
Royce Opportunity Select Fund | 44.61 | 17.43 | n.a. | n.a. | 24.98 | 8/31/10 | 2.67 | 1.38 | ||||||||||||||||||||||||
Royce Micro-Cap Discovery Fund | 35.29 | 10.89 | 15.48 | 5.81 | 7.02 | 10/3/03 | 2.94 | 1.49 | ||||||||||||||||||||||||
Royce Financial Services Fund | 42.00 | 14.99 | 18.94 | 8.97 | 8.97 | 12/31/03 | 1.96 | 1.58 | ||||||||||||||||||||||||
Royce SMid-Cap Value Fund | 22.91 | 7.86 | 15.27 | n.a. | 6.02 | 9/28/07 | 1.90 | 1.35 | ||||||||||||||||||||||||
Royce Focus Value Fund | 23.77 | 5.19 | n.a. | n.a. | 16.03 | 2/27/09 | 1.91 | 1.21 | ||||||||||||||||||||||||
Royce Partners Fund | 32.22 | 12.14 | n.a. | n.a. | 15.16 | 4/27/09 | 4.70 | 1.22 | ||||||||||||||||||||||||
Royce European Smaller-Companies Fund | 20.83 | 6.03 | 20.51 | n.a. | 4.73 | 12/29/06 | 2.16 | 1.72 | ||||||||||||||||||||||||
Royce Global Dividend Value Fund | 15.78 | 6.28 | n.a. | n.a. | 6.28 | 12/31/10 | 2.87 | 1.70 | ||||||||||||||||||||||||
Royce International Micro-Cap Fund | 18.95 | 1.98 | n.a. | n.a. | 1.98 | 12/31/10 | 3.97 | 1.76 | ||||||||||||||||||||||||
Royce International Premier Fund | 18.31 | 6.72 | n.a. | n.a. | 6.72 | 12/31/10 | 3.54 | 1.69 | ||||||||||||||||||||||||
Important Performance, Expense, and Risk Information All performance information in this Review and Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund (2% for Royce Select II, European Smaller-Companies, Global Dividend Value, International Micro-Cap, and International Premier Funds). Redemption fees are not reflected in the performance shown above; if they were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. All performance and expense information reflects results of the Fund’s oldest share Class (Investment Class or Service Class, as the case may be). Price and total return information is based on net asset values calculated for shareholder transactions. Gross annual operating expenses reflect the Fund’s gross total annual operating expenses and include management fees, any 12b-1 distribution and service fees, other expenses, and any applicable acquired fund fees and expenses. Net annual operating expenses reflect contractual fee waivers and/or reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses, other than acquired fund fees and expenses, if any, to the extent necessary to maintain net operating expenses at or below: 1.20% for Royce Focus Value and Partners Funds; 1.49% for Royce Micro-Cap Discovery and Financial Services Funds; and 1.69% for Royce European Smaller-Companies, Global Dividend Value, International Micro-Cap, and International Premier Funds through April 30, 2014, at or below: 1.24% for Royce Enterprise Select and Opportunity Select Funds; and 1.49% for Royce Select Fund II through April 30, 2015, at or below: 1.99% for Royce Select Fund II, Enterprise Select, Opportunity Select, Micro-Cap Discovery, Focus Value, Partners, European Smaller-Companies, Global Dividend Value, International Micro-Cap, and International Premier Funds through April 30, 2023. Acquired fund fees and expenses reflect the estimated amount of fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Shares of the Funds’ Service Class bear an annual distribution expense that is not borne by the Funds’ Investment Class. Investments in securities of micro-cap, small-cap, and/or mid-cap companies may involve considerably more risk than investments in securities of larger-cap companies. (Please see “Primary Risks for Fund Investors” in the prospectus.) Royce Select I, Select II, Enterprise Select, and Opportunity Select Funds may sell securities short which involves selling a security it does not own in anticipation that the security’s price will decline. Short sales present unlimited risk on an individual stock basis since the Fund may be required to buy a security sold short at a time when the security has appreciated in value. Royce European Smaller-Companies, Global Dividend Value, International Micro-Cap, and International Premier Funds invest a significant portion of their respective assets in foreign companies that may be subject to different risks than investments in securities of U.S. companies, including adverse political, social, economic, or other developments that are unique to a particular country or region. (Please see “Investing in Foreign Securities” in the prospectus.) Therefore, the prices of securities of foreign companies in particular countries or regions may, at times, move in a different direction than those of securities of U.S. companies. (Please see “Primary Risk of Fund Investors” in the prospectus.) Please read the prospectus carefully before investing or sending money. Distributor: Royce Fund Services, Inc. |
This page is not part of the 2013 Annual Report to Shareholders | 5 |
Charles M. Royce, President In addition to staying on top of the performance of The Royce Funds, we also regularly review returns for the major indexes, especially those that invest mostly or exclusively in small-cap stocks. Each month, we also carefully look over long-term results on an annualized basis. For the period ended December 31, 2013, the returns both for our portfolios and for the small-cap Russell 2000 Index were of particular interest to us. (These results can be found on page 7.) Seen from the perspective of long-term market history, we think the results look improbable, even absurd, and certainly counterintuitive. We have always been fond of the idea that a healthy target for absolute long-term returns should be low- to-mid double digits. So what does it mean when these results are in the range of the high teens to the mid-twenties? Did we and others do something different or unusually smart to achieve these results? Continued on page 8... | Letter to Our Shareholders “Everybody Had a Good Year” 2013 will enter the annals of history as one of the stock market’s better years. Not only were there healthy double-digit returns for all of the major U.S. indexes, but there were also no major corrections along the way. The closest the market came to a bearish phase was during the second quarter, when the rate on the 10-year Treasury began to rise off its calendar-year low in early May, mostly as a result of talk that the Federal Reserve would begin to reduce its $85 billion monthly bond-buying program. The Fed’s intentions to taper, made official by an announcement in June, then sent markets across the globe into a tailspin, while the 10-year Treasury rate mostly kept rising. (From its low on May 2 through the end of the year, it climbed more than 83%.) Yet by mid-summer, all or most of this seemed to be forgotten. Share prices climbed more or less uninterruptedly into December, where a couple of unsettled weeks in the middle of the month failed to put a Scrooge-like face on returns. Stocks quietly rallied through the last weeks of the year, making the fourth quarter as solidly bullish as the first and third. The market’s ability to shrug off negative news—potential or otherwise—may have been its most salient trait in 2013. Here at home, investors had to cope with the sequester, the government shutdown, questions about Fed policy, and who would succeed Federal Reserve Chairman Ben Bernanke. Outside the U.S., it was not much quieter. There was economic uncertainty in Europe, China, and Brazil, among other places, unrest in the Mideast, and a significant, still-brewing political scandal in Turkey. Yet none of these things, taken alone or in concert, possessed enough force to slow the pace of the rally. Even murmurings later in the year about overvalued stocks and a market bubble gave investors little pause. | ||
6 | This page is not part of the 2013 Annual Report to Shareholders |
The rally seemed to gain strength from the notion that the U.S. economy was finally entering a faster, more historically typical expansion after five years of slow and uncertain growth. This would be more than welcome news. Consider for a moment how strange and singular our present situation is. The economy has received unprecedented levels of federal stimulus in the form of both quantitative easing and historically low interest rates even as the economy has looked strong enough to stand more firmly on its own for more than a year. However, we still face stubbornly high, only slowly declining unemployment, still-stagnant levels of demand, and lower consumer confidence. On the other hand, we have robust housing and auto sales, record corporate revenues, and companies sitting on piles of cash. This complicated economic picture is set against the political background of a falling federal deficit, a national healthcare plan that refuses to be anything less than wildly controversial, and a culture in Washington so dysfunctional that it now plays like a bleak tragicomedy worthy of Samuel Beckett. (Or at least it would if politicians weren’t so verbose.) All of this makes the question of what happens next even harder to answer than it would be in more sanguine times. Resisting the temptation to prognosticate at length on larger matters, we’ll say only that we agree with the consensus that the economy is indeed growing faster and stronger. For reasons we’ll detail later, we also think this is good news both for small-cap stocks and our own disciplined approach to stock selection. | The market’s ability to shrug off negative news—potential or otherwise—may have been its most salient trait in 2013. | |||
As measured by the Russell 2000 Index, the small-cap market has been on a remarkable run since the bottom in March 2009. However, there were a number of notable twists prior to last year’s mostly smooth ascent. The three years prior to 2013 all exhibited a similar performance pattern in the first half of the year. During 2010, 2011, and 2012, the opening quarter extended a bull run that had gotten underway no later than the previous year’s fourth quarter. These gains were then eroded to varying degrees by a bearish second quarter, with the market starting to reverse course in April, making it indeed the cruelest month. The motive force behind each reversal was macro oriented—recurring fears about the uneasy state of the U.S., Chinese, and/or developed European economies. (The persistence of macro factors influencing sell-offs at the expense of company fundamentals was the most troubling element to us.) In 2010 and 2012, the third quarter saw a resumption of rising stock prices, while in 2011 the third quarter was the year’s worst—political dithering in Europe and contention in the U.S. exacerbating the economic and fiscal concerns. The fourth quarter was positive for small-caps in all three years (as it was in 2009), though in 2011 its gains were not enough to keep the major indexes from finishing the year in the red. This pattern is worth mentioning because we saw a more muted version of it play out in 2013. The critical difference was that initially rattled investors recovered their confidence in equities before the second quarter had ended and before quarterly returns turned negative. | Small-caps were once again leaders in what was a magnificent year for equities. For the full year, the Russell 2000 (+38.8%) and the tech-centric Nasdaq Composite (+38.3%) outpaced the large-cap Russell 1000 (+33.1%) and S&P 500 (+32.4%) Indexes. |
This page is not part of the 2013 Annual Report to Shareholders | 7 |
We suspect that the answer is both a lot simpler and less flattering to our stock-picking acumen. The high five-year returns are in part a consequence of the market’s recent strength (especially in 2013) and, more important, the result of dropping some unusually bad results from the fourth quarter of 2008—the onset of the Financial Crisis. The five-year average annual total return for the Russell 2000 as of December 31, 2012 was 3.6% (+19.1% on a cumulative basis). Yet when we fast-forward to the end of December 2013, we see the five-year return for the Russell 2000 jump to 20.1% (+149.7% on a cumulative basis). Most of the time, a five-year period would capture a variety of experiences, perhaps an entire market cycle or two. But occasionally it does not, and the result is a distortion springing from an uncommonly steady, mostly bullish period. So as wonderful as they are, it seems clear to us that the five-year returns for several mutual funds, indexes, and ETFs are simply too good to last. Markets simply do not move up forever, or even for several years in a row. Continued on page 10... | |||
Letter to Our Shareholders | ||
This suggests perhaps not so much a new-found confidence as it does a steadier sense of conviction. With the economy improving and our fiscal situation increasingly more manageable, investors appear to be seeing the value of staying invested. We see this as one of several encouraging signs for active management as we enter 2014. It makes sense to us that longer investment horizons will lead larger numbers of investors to higher-quality companies. | ||
“Everybody Saw the Sunshine” Small-caps were once again leaders in what was a magnificent year for equities. For the full year, the Russell 2000 (+38.8%) and the tech-centric Nasdaq Composite (+38.3%) outpaced the large-cap Russell 1000 (+33.1%) and S&P 500 (+32.4%) Indexes. The Russell 2000 enjoyed its best calendar-year performance since 2003. 2013 was also the best since 1995 for the Russell 1000, since 1997 for the S&P 500, and since 2009 for the Nasdaq Composite. The latter index, however, has not yet topped the high it made back on March 10, 2000. By contrast, the small-cap index, the Russell 1000, and the S&P 500 all established new highs on the last day of 2013. It was also the first year since 1996 in which the Russell 2000 posted positive returns in all four quarters. After a strong first half, in which all the major domestic indexes were positive both through the end of June and for the more volatile second quarter, both small-cap and large-cap stocks sailed through the rest of the year. As it did in the second quarter, the Nasdaq led in the third, up an impressive 10.8% compared to a 10.2% gain for the Russell 2000 and respective increases of 5.2% and 6.0% for the S&P 500 and Russell 1000. As mentioned, December saw a brief squall of volatility, though fourth-quarter results for all four indexes wound up solidly positive. The Nasdaq marked its third consecutive quarter of market leadership, advancing 10.7% for the fourth quarter versus 8.7% for the Russell 2000 Index, 10.2% for the Russell 1000, and 10.5% for the S&P 500. It was also notable that from the 10-year Treasury yield low of 1.66% on May 2, 2013 through the end of the year small-caps were strong. The Russell 2000 gained 25.0% during this period versus respective gains of 17.9% and 17.4% for the Russell 1000 and S&P 500. (The 10-year yield finished 2013 at 3.04%.) Outside the U.S., life was generally less bullish in 2013. Most non-U.S. indexes finished behind their stateside cousins in the first quarter and were in the red for the second. Results improved significantly in the second half, with European indexes turning in conspicuously high returns. For the third quarter, the Russell Global ex-U.S. Small Cap Index advanced 10.7% while the Russell Global ex-U.S. Large Cap Index increased 10.4%. The indexes also ended the year on a high note. For the fourth quarter, the Russell Global ex-U.S. Small Cap rose 4.0% while the Russell Global ex-U.S. Large Cap was up 5.0%. Calendar-year results were solid, though each index lagged its domestic peers. For 2013, the Russell Global ex-U.S. Small Cap Index climbed 17.2% while its large-cap sibling gained 16.1%. The Russell Microcap Index posted impressive results for both the third (+11.6%) and fourth (+10.3%) quarters of 2013. This second-half strength helped the micro-cap |
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index achieve an eye-catching 45.6% return for the calendar year. Results for both the second half and full year were not quite as robust for mid-cap stocks, as measured by the Russell Midcap Index, though they were more than respectable on an absolute basis. For the third quarter, the mid-cap index advanced 7.7% before rising 8.4% in the fourth, leading to a terrific 34.8% return for the full year. | Along with the onset of tapering, rising rates—though still historically low on an absolute basis—strongly suggest to us that we are moving closer, if at times by fits and starts, to a stock market that will reward quality businesses, especially those poised to benefit from a healthy, growing economy. | |||
Our disciplined, risk-averse approach has often left us looking up at benchmarks during dynamic bull markets. In a more historically typical market cycle, 2013’s results would have given us less to explain or complain about. But these calendar-year results came after several portfolios underperformed their benchmarks in 2012 and 2011. The last three years, then, have left us increasingly frustrated, even as the reasons behind these underperformances are clear. Small-cap companies with high returns on invested capital (ROIC) and low-debt balance sheets have, as a group, underperformed their more leveraged counterparts. In addition, more economically sensitive cyclical sectors, including Energy, Industrials, Materials, and Information Technology have trailed more defensive areas (such as Utilities) and less conservatively capitalized, higher-yielding vehicles (e.g., REITs and MLPs) where we have little if any exposure. Over the last several years, we have found many of what we think are highly attractive opportunities in cyclical sectors and/or in companies with strong balance sheets and high ROIC. Most have had only limited participation in the rally that began in March 2009. There have also been industries, such as precious metals & mining, that did very well in the initial phase of the recovery following the Financial Crisis before they began to correct sharply in 2011 and are yet to recover. So while nearly all sectors and industries across all asset classes did well in 2013, companies with many of the qualities that we look for have not yet led for long. Our approach leads us to conservatively capitalized companies with high ROIC and strong cash flow characteristics, among other attributes. Investors have still not gravitated to these kinds of companies in comparatively large numbers. However, it’s worth mentioning that many quality small-cap companies did very well on an absolute basis in 2013, particularly in the year’s last eight months. |
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We believe in reversion to the mean; the cyclical nature of markets is very real to us. Of course, we do not pretend to know how to time market cycles. All we know is that at some point, the current cycle will change. No one knows exactly when or to what degree, but it will shift. This helps to explain why we think it’s important to never get too excited during bullish phases like the current period, just as we believe investors should not get too upset during corrections. Markets are always changing. We work hard to be prepared for these changes, which is why we use volatility and falling share prices to our advantage. Related to this is the idea of rotation. We cannot say for sure what part of the equity market will lead next—we are obviously hoping that it’s high quality—but it’s clear that a move will come. So we do not expect five-year returns to remain this robust, but we are still enthusiastic about the potential for small-cap returns. Continued on page 12... | Letter to Our Shareholders 2013 TOTAL RETURNS FOR THE ROYCE FUNDS VS. BENCHMARK INDEXES As of 12/31/13 Let It Be There have also been signs over the last year and a half that this leadership pattern is beginning to change. Two dates stand out to us as significant. The first was June 4, 2012, that year’s domestic small-cap low. From that year’s small-cap low through the end of December 2012, investors showed a preference for companies with those quality characteristics mentioned earlier at the expense of high-yield vehicles, highly leveraged stocks, and explosive growth stories. (This helps to explain why many of our portfolios outpaced their benchmarks in the final half of 2012.) Unfortunately, this quality rally was short lived, petering out early in the first quarter of 2013. But we saw it as a significant step in the right direction. After all, we have been arguing for some time now that many quality stocks underperformed over the last several years because the Fed’s zero-interest-rate policies and multiple rounds of quantitative easing led to an outsized hunger for high yield and too few consequences for businesses carrying a lot of debt. This in turn led to a comparative neglect of companies with | ||
10 | This page is not part of the 2013 Annual Report to Shareholders |
more pristine balance sheets and those with steady, but lower, dividends. We have also insisted, however, that these advantages have largely played themselves out in the context of a strengthening economy. So it probably comes as no surprise that our second important date is the May 2, 2013 low for the 10-year Treasury yield, which marked the beginning of a rising interest-rate environment. Along with the onset of tapering, rising rates—though still historically low on an absolute basis—strongly suggest to us that we are moving closer, if at times by fits and starts, to a stock market that will reward quality businesses, especially those poised to benefit from a healthy, growing economy. In addition to the mini-rally in 2012, we saw improved results for many cyclical companies in the second half of 2013, especially compared to more defensive sectors. We have also seen a recovery in M&A and IPO activity. Most important, there have been increased levels of overall business activity, evidenced by the final revision of third-quarter GDP, which leaped from 3.6% to 4.1%. We’ve Got a Feeling Of course, considering where we have been over the last five-plus, even 13-plus, years, it seems fair to ask what a return to an “Old Normal” would look like in the market. Our sense is that small-caps are not on a collision course with a sustained decline or a catastrophic correction such as we saw in late 2008-early 2009. It seems more likely to us that the market will undergo a series of small corrections that will slow the current breakneck pace of returns. From our perspective, this would be part of the larger | In our position as bottom-up stock pickers, we have always thought less about markets and indexes than we do about stocks and businesses. As has always been the case, our daily work focuses squarely on finding what we think are great companies at attractive prices. |
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Equally important, we have always thought that any evaluation of returns must be both long-term and multi-dimensional in order to measure more accurately what is being accomplished. For example, rolling returns are an excellent tool to examine mutual fund performance. It allows us to look at returns over multiple time periods and to gauge the experience of investors who enter the market at different points of time. We always try to keep in mind the following maxim: If the number looks too high, it probably is. | normalization process affecting the economy and the financial markets. Corrections are a fact of life, and we have not seen one in more than a year. So there will be some pullback, but we believe it will be manageable, at least for those of us with a disciplined, long-term approach. As of this writing, the Russell 2000 Index may have hit, or may be nearing, another peak. Nonetheless, we see opportunity in our chosen asset class. So while the index as a whole looked overvalued to us at year-end, the primary selection universe for our domestic small-cap portfolios is much wider than the Russell 2000. It encompasses more than 4,000 companies with market caps up to $2.5 billion; we are also active in mid-cap stocks, a segment where the market caps fall between $2.5 billion and $5 billion. This area provides more than 400 additional names. Finally, there is the vast international space, where we have been finding a number of potential opportunities over the last several years. Indeed, no small-cap index, including the Russell 2000, takes in the full measure of small-cap valuations or offers the most appropriate selection space. In these days of ETFs and strong relative results for index-based investing, we think the enormous breadth of the small-cap world has been forgotten to some degree. In our position as bottom-up stock pickers, we have always thought less about markets and indexes than we do about stocks and businesses. As has always been the case, our daily work focuses squarely on finding what we think are great companies at attractive prices. Our goal remains strong absolute returns over long-term periods. We cannot say for sure when conservatively capitalized, well-managed, and fundamentally sound businesses might assume market leadership. However, we are confident that they will in the not-too-distant future as the expanding economy leads investors to focus once more on fundamentals, particularly those that reveal high quality. Sincerely, | |||||
Charles M. Royce | W. Whitney George | Jack E. Fockler, Jr. | ||||
President | Vice President | Vice President | ||||
January 31, 2013 |
12 | This page is not part of the 2013 Annual Report to Shareholders |
Table of Contents | ||
Annual Report to Shareholders | ||
Managers’ Discussions of Fund Performance | ||
Royce Select Fund I | 14 | |
Royce Select Fund II | 16 | |
Royce Enterprise Select Fund | 18 | |
Royce Opportunity Select Fund | 20 | |
Royce Micro-Cap Discovery Fund | 22 | |
Royce Financial Services Fund | 24 | |
Royce SMid-Cap Value Fund | 26 | |
Royce Focus Value Fund | 28 | |
Royce Partners Fund | 30 | |
Royce European Smaller-Companies Fund | 32 | |
Royce Global Dividend Value Fund | 34 | |
Royce International Micro-Cap Fund | 36 | |
Royce International Premier Fund | 38 | |
Schedules of Investments and Financial Statements | 40 | |
Notes to Financial Statements | 78 | |
Report of Independent Registered Public Accounting Firm | 85 | |
Understanding Your Fund’s Expenses | 86 | |
Trustees and Officers | 88 | |
Results of Shareholder Meeting | 89 | |
Notes to Performance and Other Important Information | 90 |
The Royce Funds 2013 Annual Report to Shareholders | 13 |
Royce Select Fund I |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | |||||||||||
July–December 20131 | 18.06 | % | |||||||||
One-Year | 25.99 | ||||||||||
Three-Year | 11.35 | ||||||||||
Five-Year | 17.89 | ||||||||||
10-Year | 10.99 | ||||||||||
15-Year | 13.72 | ||||||||||
Since Inception (11/18/98) | 14.18 | ||||||||||
ANNUAL EXPENSE RATIO | |||||||||||
Operating Expenses | 1.15 | % | |||||||||
1 Not annualized | |||||||||||
CALENDAR YEAR TOTAL RETURNS | |||||||||||
Year | RS1 | Year | RS1 | ||||||||
2013 | 26.0 | % | 2005 | 10.9 | % | ||||||
2012 | 13.7 | 2004 | 19.1 | ||||||||
2011 | -3.6 | 2003 | 48.7 | ||||||||
2010 | 18.2 | 2002 | -15.8 | ||||||||
2009 | 39.6 | 2001 | 24.5 | ||||||||
2008 | -25.9 | 2000 | 15.0 | ||||||||
2007 | 10.7 | 1999 | 35.4 | ||||||||
2006 | 15.0 | ||||||||||
TOP 10 POSITIONS % of Net Assets | |||||||||||
Helmerich & Payne | 3.4 | % | |||||||||
Unit Corporation | 3.2 | ||||||||||
Federated Investors Cl. B | 2.8 | ||||||||||
MKS Instruments | 2.6 | ||||||||||
Minerals Technologies | 2.4 | ||||||||||
Lazard Cl. A | 2.3 | ||||||||||
Techne Corporation | 2.1 | ||||||||||
Reliance Steel & Aluminum | 2.0 | ||||||||||
Innospec | 1.9 | ||||||||||
Nanometrics | 1.9 | ||||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | |||||||||||
Information Technology | 21.2 | % | |||||||||
Industrials | 20.6 | ||||||||||
Energy | 13.1 | ||||||||||
Financials | 9.7 | ||||||||||
Consumer Discretionary | 9.1 | ||||||||||
Health Care | 8.8 | ||||||||||
Materials | 7.7 | ||||||||||
Consumer Staples | 1.6 | ||||||||||
Miscellaneous | 4.0 | ||||||||||
Cash and Cash Equivalents | 4.2 | ||||||||||
Manager’s Discussion By the end of 2013, we were still a bit vexed by the performance of Royce Select Fund I (RS1), its strong absolute result notwithstanding. Still, the Fund’s 2013 showing was not entirely surprising considering its disciplined value approach, which has historically produced better relative results in flat or down markets than in the almost uninterrupted bull run of 2013. The Fund gained 26.0% for the calendar year, trailing its small-cap benchmark, the Russell 2000 Index, which was up 38.8% for the same period. The Fund’s strong second half of 2012, a period in which it beat its benchmark (+10.6% versus +7.2%), inspired our confidence that the kind of stocks that we favor—those with strong balance sheets, high returns on invested capital, and the ability to generate free cash flow, many in cyclical sectors—were poised for a solid run of market leadership after lagging more defensive areas of the market over the last few years. This was not the case, however, as 2013 saw a resurgence from those same defensive areas. And while the performance of several Fund holdings in cyclical sectors picked up nicely in the second half of 2013, their improved performance was not enough to vault the Fund past its benchmark for the calendar year. As was the case in the previous three calendar years, the opening quarter of 2013 was highly bullish, especially for micro-, small-, and mid-cap stocks. The Fund performed solidly on an absolute basis in this period, though it lagged the Russell 2000. RS1 was up 7.3% compared to 12.4% for the small-cap index in the first quarter. RS1 then fell further behind its benchmark in the far more volatile second quarter, which was disappointing—our disciplined approach has historically helped the Fund to weather down and/or volatile periods more effectively, typically by losing less than its benchmark. In the second quarter, however, RS1 fell 0.5% versus a 3.1% gain for the Russell 2000. We were pleased to see the Fund rebound in the third quarter, which was a more bullish phase like the first quarter. Investors had plenty to digest between the end of March and early July: rising interest rates—the 10-year Treasury yield hit a 2013 low on May 2—less-than-encouraging news out of China and other important developing economies, and the Fed’s initially vague promise in June that it would begin to taper its monthly bond-buying program by some amount at some point later in the year. Indeed, investors were uncommonly sanguine through much of 2013. Good contrarians that we are, this new-found serenity was cause for a bit of worry on our part, though we were pleased |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Helmerich & Payne | 1.42% | ||||||||||
Oil States International | 1.22 | ||||||||||
Jazz Pharmaceuticals | 1.03 | ||||||||||
Lazard Cl. A | 0.94 | ||||||||||
Minerals Technologies | 0.90 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in performance shown above. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the Fund’s most current prospectus and include management fees, and other expenses. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
14 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review with third-quarter results on an absolute basis—the Fund advanced 8.6% versus 10.2% for the Russell 2000. RS1’s fourth-quarter results were strong on both an absolute and relative basis, with the Fund even with the small-cap index, both increasing 8.7%. RS1 also held a performance advantage over its benchmark for longer-term periods, outpacing the Russell 2000 for the 10-year, 15-year, and since inception (11/18/98) periods ended December 31, 2013. The Fund’s average annual total return since inception was 14.2%. Each of the Fund’s equity sectors contributed to performance in 2013, led by Industrials and Information Technology. Net losses at the industry and position level were modest. Major Drilling Group International provides contract drilling services for the metals industry. Slumping demand for gold drilling services, which accounts for about 50% of the firm’s revenues, and other minerals such as iron ore sped its stock-price decline, as did the drop in commodities prices. In some cases miners cancelled or scaled back their exploration plans, which resulted in excess contract drilling capacity and pricing pressure. After buying shares in the first quarter, we reduced our position between May and October. Intrepid Potash mines and markets potash for fertilizer. The breakup of one of the two key global potash marketing consortia—it remained to be seen at year-end whether the breakup was permanent or temporary—was a major driver in the more than 25% drop in potash prices in 2013. Another significant factor was the 2013 bumper crop in corn and wheat here in the U.S., which increased the likelihood of lower fertilizer application in 2014 as farmers face lower farm income and may plant less acreage. We finished selling our position in August. Helmerich & Payne provides contract drilling of oil and gas wells in the Gulf of Mexico and South America and also operates land and platform rigs. The company continued to leverage its technological leadership in the drilling rig business into market share gains as E&P (exploration & production) companies upgrade their fleets to improve drilling efficiencies and lower their total well costs. Based in Houston, Oil States International provides products and services to oil and gas companies. Its share price skyrocketed at the end of April on news that activist shareholders were asking the company’s management to create a REIT from its oilfield accommodation business. We think that management unlocked significant shareholder value through its decision to spin off its accommodations business, sell its energy pipe distribution segment, and increase its share repurchase program. We took gains throughout the year. |
GOOD IDEAS AT THE TIME | |
Intrepid Potash | -0.55% |
Major Drilling Group International | -0.53 |
TGS-NOPEC Geophysical | -0.46 |
Myriad Genetics | -0.39 |
American Eagle Outfitters | -0.24 |
1 Net of dividends | |
ROYCE SELECT FUND I VS. RUSSELL 2000 Value of $10,000 Invested on 11/18/98 | |
Includes reinvestment of distributions. | |||
PORTFOLIO DIAGNOSTICS | |||
Fund Net Assets | $47 million | ||
Number of Holdings | 74 | ||
Turnover Rate | 56% | ||
Average Market Capitalization1 | $2,373 million | ||
Weighted Average P/E Ratio2,3 | 21.5x | ||
Weighted Average P/B Ratio2 | 2.1x | ||
U.S. Investments (% of Net Assets) | 86.4% | ||
Non-U.S. Investments (% of Net Assets) | 9.4% | ||
Symbol | RYSFX | ||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
RS1 | 0.97 | 18.74 | |
Russell 2000 | 0.98 | 20.93 | |
Category Median | 1.04 | 20.17 | |
Best Quartile Breakpoint | 1.14 | 19.06 | |
1 Five years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 357 small-cap objective funds (oldest class) with at least five years of history. | |||
The Fund produced lower volatility than the Russell 2000 and 75% of small-cap objective funds, as shown by its standard deviation. | |||
DOWN MARKET PERFORMANCE COMPARISON | |||
The Royce Funds 2013 Annual Report to Shareholders | 15 |
Royce Select Fund II |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | ||||||||||
July–December 20131 | 16.11 | % | ||||||||
One-Year | 23.51 | |||||||||
Three-Year | 6.51 | |||||||||
Five-Year | 19.48 | |||||||||
Since Inception (6/30/05) | 8.27 | |||||||||
ANNUAL EXPENSE RATIOS | ||||||||||
Gross Operating Expenses | 3.08 | % | ||||||||
Net Operating Expenses | 1.60 | |||||||||
1 Not Annualized | ||||||||||
CALENDAR YEAR TOTAL RETURNS | ||||||||||
Year | RS2 | Year | RS2 | |||||||
2013 | 23.5 | % | 2009 | 66.6 | % | |||||
2012 | 13.8 | 2008 | -33.4 | |||||||
2011 | -14.0 | 2007 | -5.5 | |||||||
2010 | 21.0 | 2006 | 19.8 | |||||||
TOP 10 LONG POSITIONS % of Net Assets | ||||||||||
Computer Task Group | 2.6 | % | ||||||||
TGS-NOPEC Geophysical | 2.2 | |||||||||
Television Broadcasts | 2.2 | |||||||||
Nautilus | 2.2 | |||||||||
Invacare Corporation | 2.0 | |||||||||
Acacia Research | 2.0 | |||||||||
Signet Jewelers | 1.9 | |||||||||
Global Mediacom | 1.9 | |||||||||
Littelfuse | 1.9 | |||||||||
Blue Label Telecoms | 1.9 | |||||||||
SHORT POSITIONS % of Net Assets | ||||||||||
VelocityShares Daily Inverse VIX Short-Term ETN | -3.0 | % | ||||||||
iShares Micro-Cap ETF | -1.8 | |||||||||
Buffalo Wild Wings | -1.2 | |||||||||
iShares 20+ Year Treasury Bond ETF | -1.1 | |||||||||
Vipshop Holdings ADR | -0.7 | |||||||||
Middleby Corporation | -0.5 | |||||||||
Direxion Daily Financial Bear 3X Shares | -0.3 | |||||||||
Pandora Media | -0.1 | |||||||||
PORTFOLIO SECTOR BREAKDOWN1 % of Net Assets | ||||||||||
Consumer Discretionary | 29.9 | % | ||||||||
Information Technology | 24.4 | |||||||||
Industrials | 19.0 | |||||||||
Financials | 8.2 | |||||||||
Consumer Staples | 5.7 | |||||||||
Materials | 4.2 | |||||||||
Health Care | 4.0 | |||||||||
Energy | 3.0 | |||||||||
Telecommunication Services | 0.0 | |||||||||
Miscellaneous | 4.7 | |||||||||
Cash and Cash Equivalents | -3.1 | |||||||||
1 Long positions only | ||||||||||
Manager’s Discussion The calendar-year return for Royce Select Fund II (RS2) tracked its long-only global benchmark much more closely than it did the long-only domestic small-cap index that we also use to compare its performance. RS2 increased 23.5% in 2013. This result narrowly trailed the 24.8% calendar-year gain for its global benchmark, the Russell Global Small Cap Index, while considerably lagging the 38.8% advance of the Russell 2000 Index in 2013. RS2’s expanding number of investments headquartered or trading outside the U.S. did not serve it well in 2013, but we believe that the Fund is well positioned for a more widespread economic recovery in the years to come. Since May 1, 2011, RS2 has had the ability to invest at least 80% of its net assets in the stocks of U.S. and/or non-U.S. companies with market capitalizations up to $5 billion. At year-end, the Fund had close to 60% of its net assets invested in foreign stocks, with the bulk invested in companies headquartered in Japan, Canada, and Hong Kong. Given RS2’s portfolio composition through much of the year, it was not surprising that its performance matched more closely with its global benchmark for most of the year. The first quarter of 2013 was bullish, but it was again led by more defensive sectors and industries. RS2 was up 5.9% in the first quarter, trailing both the Russell 2000, which climbed 12.4%, and the global small-cap index, which advanced 8.6%. The second quarter brought a wave of volatility, more uncertainty, and enough variation in sector, industry, and company results to rekindle our hopes that the long period of close correlation and higher returns for lower-quality businesses was drawing to a close. While the Fund fell further behind the Russell 2000 between the beginning of April and the end of June, it outpaced its small-cap global benchmark over the same period. For the second quarter, the Fund finished with a slight gain of 0.4% versus a 3.1% gain for the Russell 2000 and a loss of 1.7% for the Russell Global Small Cap Index. Much of the portfolio’s net losses in the second quarter came from holdings in the metals & mining group. Resembling the dynamic first quarter, the third quarter saw a furious rally. For the quarter, RS2 matched the Russell 2000’s 10.2% advance but narrowly missed the Russell Global Small Cap’s 10.5% return. European stocks led in this period, followed by U.S. small-caps. The fourth quarter saw a more subdued pace, as well as a brief run of volatility in mid-December. RS2 gained 5.4% in the year’s closing quarter versus the Russell 2000’s 8.7% increase and the Russell Global Small Cap’s 5.8% gain. The Fund outperformed the Russell Global Small Cap for the five-year |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
E-House China Holdings ADR | 1.71% | ||||||||||
Astronics Corporation | 1.25 | ||||||||||
Bankrate | 1.23 | ||||||||||
Amira Nature Foods | 0.94 | ||||||||||
Sarin Technologies | 0.94 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 2% redemption fee, payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Price and total return information is based on net asset values calculated for shareholder transactions. Certain immaterial adjustments were made to the net assets of Royce Select Fund II at 12/30/11 for financial reporting purposes, and as a result the net asset values for shareholder transactions on that date and the calendar-year total returns based on those net asset values differ from the adjusted net asset values and calendar-year total returns reported in the Financial Highlights. Gross operating expenses reflect the Fund’s total gross annual operating expenses and include management fees, other expenses, and acquired fund fees and expenses. Net operating expenses reflect contractual fee waivers and/or expense reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the Fund’s net annual operating expenses, other than dividends on securities sold short, acquired fund fees and expenses, and interest expense of borrowing, at or below 1.49% through April 30, 2015 and at or below 1.99% through April 30, 2023. Acquired fund fees and expenses 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. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
16 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review |
and since inception (6/30/05) periods ended December 31, 2013 while narrowly trailing the Russell 2000 for the since inception period (+8.3% versus +8.7%). Seven of the Fund’s nine sectors finished 2013 with net gains. Information Technology, RS2’s second-largest sector at year-end, led by a wide margin, though Industrials, Consumer Discretionary, and Financials also turned in solid contributions. The Fund’s biggest net-gaining position was E-House China Holdings, a real estate services company based in Shanghai, China. Its shares soared in the second half of the year following Chinese President Xi Jinping’s announcement in September that the government was committed to fixing the country’s fundamental economic troubles. We reduced our position in 2013. Based in East Aurora, NY, Astronics Corporation makes advanced high-performance lighting, electrical power, and automated test systems for the global aerospace & defense industries. We began trimming our position in February after record first-quarter earnings helped its share price to soar. It followed those impressive results with another record quarter as well as some acquisitions later in the year that investors seemed to like. Its stock price rose more or less steadily through 2013. By November we had sold the last of our shares. Bankrate aggregates and distributes personal finance content on the Internet and owns several financial services websites and lead generation properties. Its stock price cruised upward due to improved EPS (earnings per share) and better-than-expected guidance. We sold our shares in July and October. Daphne International Holdings is a Chinese footwear maker and retailer that sells Aerosole shoes in China. The overall slowdown in the Chinese economy has taken its toll on Daphne’s business as lower levels of consumer spending led to a decline in sales and revenues. We like its management and market position, both of which gave us the confidence to build our position significantly as its share price slipped. We also added shares of Acacia Research, a Newport, CA-based patent licensing company that has recently been embroiled in lawsuits with tech giant Microsoft. Two consecutive quarterly losses did little to attract investors in 2013. Three precious metals related holdings were carryovers from the “Good Ideas at the Time” list from the first half of 2013. These positions, like the industry as a whole, could not escape the negative impact on revenue and stock prices of the respective 36% and 28% drops in silver and gold prices in 2013. In July, we sold our shares of Hochschild Mining while also parting ways with the Market Vectors Junior Gold Miners ETF. We chose to add shares of Sprott, a Canadian investment management company that has been in business since 1981 and has expertise in natural resource and commodity-based investing. We felt confident that it could benefit from an eventual recovery in commodity prices. |
GOOD IDEAS AT THE TIME | |
Daphne International Holdings | -1.32% |
Acacia Research | -0.85 |
Hochschild Mining | -0.81 |
Market Vectors Junior Gold Miners ETF | -0.77 |
Sprott | -0.46 |
1 Net of dividends | |
ROYCE SELECT FUND II VS. RUSSELL 2000 AND RUSSELL GLOBAL SMALL CAP Value of $10,000 Invested on 6/30/05 | |
Includes reinvestment of distributions. |
PORTFOLIO DIAGNOSTICS | |||||
Fund Net Assets | $5 million | ||||
Number of Holdings | 92 | ||||
Turnover Rate | 159% | ||||
Average Market Capitalization1,4 | $795 million | ||||
Weighted Average P/E Ratio2,3,4 | 15.8x | ||||
Weighted Average P/B Ratio2,4 | 2.0x | ||||
Symbol | RSFDX | ||||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||||
MORNINGSTAR STATISTICAL MEASURES1 | |||||
Sharpe Ratio | Standard Deviation | ||||
RS2 | 0.99 | 19.99 | |||
Russell 2000 | 0.98 | 20.93 | |||
Category Median | 1.04 | 20.17 | |||
Best Quartile Breakpoint | 1.14 | 19.06 | |||
1 Five years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 357 small-cap objective funds (oldest class) with at least five years of history. | |||||
PORTFOLIO COUNTRY BREAKDOWN1,2 % of Net Assets | |||||
United States | 40.1 | % | |||
Japan | 12.9 | ||||
Canada | 7.0 | ||||
Hong Kong | 6.8 | ||||
China | 4.3 | ||||
Singapore | 4.2 | ||||
Indonesia | 3.7 | ||||
Brazil | 3.6 | ||||
United Kingdom | 3.4 | ||||
2 Long positions only are represented above and except in the case of ETF’s securities are categorized by the country of their headquarters. | |||||
DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7.5% or Greater in Percentages (%) | |||||
The Royce Funds 2013 Annual Report to Shareholders | 17 |
Royce Enterprise Select Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | ||||||||||
July–December 20131 | 15.42 | % | ||||||||
One-Year | 28.68 | |||||||||
Three-Year | 14.43 | |||||||||
Five-Year | 16.68 | |||||||||
Since Inception (9/28/07) | 8.01 | |||||||||
ANNUAL EXPENSE RATIOS | ||||||||||
Gross Operating Expenses | 3.86 | % | ||||||||
Net Operating Expenses | 1.24 | |||||||||
1 Not annualized | ||||||||||
CALENDAR YEAR TOTAL RETURNS | ||||||||||
Year | RSS | Year | RSS | |||||||
2013 | 28.7 | % | 2010 | 17.2 | % | |||||
2012 | 15.7 | 2009 | 23.1 | |||||||
2011 | 0.7 | 2008 | -25.5 | |||||||
TOP 10 POSITIONS % of Net Assets | ||||||||||
Thor Industries | 3.1 | % | ||||||||
DENTSPLY International | 2.4 | |||||||||
AVX Corporation | 2.2 | |||||||||
Curtiss-Wright | 2.2 | |||||||||
ManpowerGroup | 2.2 | |||||||||
Kennedy-Wilson Holdings | 2.1 | |||||||||
Mohawk Industries | 2.1 | |||||||||
Copart | 2.1 | |||||||||
EnerSys | 2.0 | |||||||||
iShares 1-3 Year Treasury Bond ETF | 1.9 | |||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | ||||||||||
Industrials | 21.5 | % | ||||||||
Consumer Discretionary | 16.0 | |||||||||
Information Technology | 13.6 | |||||||||
Health Care | 5.6 | |||||||||
Materials | 5.1 | |||||||||
Financials | 4.8 | |||||||||
Energy | 2.8 | |||||||||
Utilities | 1.7 | |||||||||
Miscellaneous | 1.7 | |||||||||
Government Bonds | 1.9 | |||||||||
Cash and Cash Equivalents | 25.3 | |||||||||
Manager’s Discussion It might not be obvious by looking only at its calendar-year return, but we were not entirely pleased with the 2013 performance of Royce Enterprise Select Fund (RSS). The Fund turned in a solid performance on an absolute level, but it fell short of its small- and mid-cap benchmark. The Fund rose 28.7% in 2013, lagging the Russell 2500 Index, which increased 36.8% for the same period. RSS trailed in three of the year’s four quarters. So while the Fund took part in the year’s dynamic bull market, its participation was limited, which, considering our disciplined value approach, was not a disappointment in itself—only the degree to which it finished behind the Russell 2500 left us frustrated. We were pleased, however, that the Fund outpaced its benchmark in the year’s most challenging quarter. The first two quarters of 2013 were similar to the comparable periods in the three preceding years. During the bullish first quarter, RSS gained 8.3% and fell behind the streaking Russell 2500, which advanced 12.9%. When markets turned more volatile in the second quarter—giving us the year’s only hint of a correction—RSS advanced 2.9%, edging past its benchmark, which rose 2.3%. Challenges for China, unrest in developing nations such as Turkey and Brazil, a sharp rise in the 10-year Treasury rate during May and June, and word from the Fed that it would slow the pace of bond purchases at the end of 2013 all worried investors, primarily during April and June. However, unlike in 2011 and 2012, the domestic equity markets ultimately handled this news well in 2013. Perhaps the most convincing sign that in 2013 investors were able to shrug off potentially disturbing macro developments in 2013 was the strong showing for stocks in the third quarter, a period in which the Fund gained 7.7% compared to a 9.1% increase for its benchmark. The fourth quarter was only slightly less bullish— mid-December proving somewhat volatile—but returns remained solidly positive. RSS was up 7.2% in the year’s last three months compared to 8.7% for the Russell 2500. We launched the Fund in September 2007, just two months after a historic peak for U.S. small-caps and near the onset of the Financial Crisis of 2008-09. The Fund has thus seen its fair share of market volatility. We remain encouraged, the relative disappointment of 2013 notwithstanding, that our vigilance with regard to risk and consistent focus on what we think are quality companies with high internal rates of return and strong balance sheets can help RSS’s relative results going forward. The Fund was even with the Russell 2500 for the since inception (9/28/07) period ended December 31, 2013, each gaining 8.0%. |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Methode Electronics | 1.55% | ||||||||||
Western Digital | 1.48 | ||||||||||
Towers Watson & Company Cl. A | 1.39 | ||||||||||
ManpowerGroup | 1.33 | ||||||||||
Thor Industries | 1.20 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee, payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Gross operating expenses reflect the Fund’s total gross annual operating expenses and include management fees and other expenses. Net operating expenses reflect contractual fee waivers and/or expense reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the Fund’s net annual operating expenses, other than interest expense on borrowings, at or below 1.24% through April 30, 2015 and at or below 1.99% through April 30, 2023. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
18 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review |
All but one of RSS’s nine equity sectors finished the year in the black. Industrials led by a considerable margin while Consumer Discretionary and Information Technology also posted strong net gains. The electronic equipment, instruments & components group and professional services companies (from the Industrials sector) were the top contributing industries in 2013. Methode Electronics, the Fund’s top net gainer, manufactures electronic components primarily for the automotive industry. It also makes components for non-automotive uses. Over the years, Methode has undergone a transformation from a commodity component vendor to a patented, highly engineered product company, particularly in automotive components. This transformation was helped by the recovery of the auto industry. The resulting improvement in margins helped its share price to rev up in 2013, leading us to take gains. Hard disk drive maker Western Digital is one of two firms that dominate disk drive production worldwide. Its core business, which involves solutions for the collection, storage, management, and protection of digital content, has long interested us. The company made several savvy acquisitions in 2013, including Virident, sTec, and VeloBit. These moves made Western a stronger player in both the hard disk drive and flash technology markets, in addition to its growing presence in cloud storage technology. Although we reduced our position, it was the Fund’s fifteenth-largest holding at year-end. Net losses at the position level were comparably minor. Myriad Genetics detracted most from performance for the period. The company performs molecular diagnostic tests, specializing in genetic testing for cancer (it’s also a market leader in the breast cancer gene tests). The company faced several headwinds in 2013: reimbursement change concerns from payers, a Supreme Court decision in June that held that human genes cannot be patented, and new competition in the breast cancer gene testing market. This led its stock to fall, though the company retained its patents on certain genetic testing processes. While we think that the quality of its predictive tests remains the industry’s gold standard, reimbursement issues remained unresolved entering 2014, which influenced the decision to sell our shares in October. We also parted ways with specialty chemicals and performance materials company Cabot Corporation in the spring following an earnings miss. |
GOOD IDEAS AT THE TIME | |
Myriad Genetics | -0.57% |
Cabot Corporation | -0.32 |
Ascena Retail Group | -0.12 |
Pan American Silver | -0.12 |
Pason Systems | -0.07 |
1 Net of dividends | |
ROYCE ENTERPRISE SELECT FUND VS. RUSSELL 2500 Value of $10,000 Invested on 9/28/07 | |
Includes reinvestment of distributions. |
PORTFOLIO DIAGNOSTICS | |||||
Fund Net Assets | $3 million | ||||
Number of Holdings | 64 | ||||
Turnover Rate | 154% | ||||
Average Market Capitalization1 | $4,283 million | ||||
Weighted Average P/E Ratio2,3 | 20.6x | ||||
Weighted Average P/B Ratio2 | 2.6x | ||||
U.S. Investments (% of Net Assets) | 71.5% | ||||
Non-U.S. Investments (% of Net Assets) | 3.2% | ||||
Symbol | RMISX | ||||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||||
MORNINGSTAR STATISTICAL MEASURES1 | |||||
Sharpe Ratio | Standard Deviation | ||||
RSS | 1.14 | 14.38 | |||
Russell 2500 | 1.11 | 19.58 | |||
Category Median | 1.12 | 18.26 | |||
Best Decile Breakpoint | 1.29 | 15.85 | |||
1 Five years ended 12/31/13. Category Median and Best Decile Breakpoint based on 315 mid-cap objective funds (oldest class) with at least five years of history. | |||||
The Fund beat the Russell 2500 and performed within the top 50% of mid-cap objective funds on a risk-adjusted basis, as shown by its Sharpe ratio. In addition, the Fund produced lower volatility than the Russell 2500 and 90% of mid-cap objective funds, as shown by its standard deviation. | |||||
DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7.5% or Greater in Percentages (%) | |||||
The Royce Funds 2013 Annual Report to Shareholders | 19 |
Royce Opportunity Select Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | |||||||||||
July–December 20131 | 22.68 | % | |||||||||
One-Year | 44.61 | ||||||||||
Three-Year | 17.43 | ||||||||||
Since Inception (8/31/10) | 24.98 | ||||||||||
ANNUAL EXPENSE RATIOS | |||||||||||
Gross Operating Expenses | 2.67 | % | |||||||||
Net Operating Expenses | 1.38 | ||||||||||
1 Not annualized | |||||||||||
CALENDAR YEAR TOTAL RETURNS | |||||||||||
Year | ROS | Year | ROS | ||||||||
2013 | 44.6 | % | 2011 | -17.1 | % | ||||||
2012 | 35.1 | ||||||||||
TOP 10 LONG POSITIONS % of Net Assets | |||||||||||
Extreme Networks | 2.3 | % | |||||||||
M.D.C. Holdings | 2.2 | ||||||||||
Kennedy-Wilson Holdings | 2.2 | ||||||||||
Independent Bank Group | 2.1 | ||||||||||
JetBlue Airways | 2.0 | ||||||||||
Air Lease Cl. A | 2.0 | ||||||||||
Orient-Express Hotels Cl. A | 1.9 | ||||||||||
Swift Energy | 1.7 | ||||||||||
Kratos Defense & Security Solutions | 1.7 | ||||||||||
Quanex Building Products | 1.7 | ||||||||||
TOP 10 SHORT POSITIONS % of Net Assets | |||||||||||
Vitamin Shoppe | -0.9 | % | |||||||||
Lithia Motors Cl. A | -0.6 | ||||||||||
Lumber Liquidators Holdings | -0.6 | ||||||||||
Fiesta Restaurant Group | -0.5 | ||||||||||
Life Time Fitness | -0.5 | ||||||||||
Fresh Market (The) | -0.5 | ||||||||||
Trex Company | -0.5 | ||||||||||
Dr Pepper Snapple Group | -0.4 | ||||||||||
SeaWorld Entertainment | -0.4 | ||||||||||
Fleetmatics Group | -0.4 | ||||||||||
PORTFOLIO SECTOR BREAKDOWN1 % of Net Assets | |||||||||||
Information Technology | 28.2 | % | |||||||||
Industrials | 22.4 | ||||||||||
Consumer Discretionary | 13.1 | ||||||||||
Financials | 11.4 | ||||||||||
Energy | 10.0 | ||||||||||
Materials | 6.8 | ||||||||||
Health Care | 1.7 | ||||||||||
Miscellaneous | 5.0 | ||||||||||
Cash and Cash Equivalents | 1.4 | ||||||||||
1 Long positions only | |||||||||||
Manager’s Discussion In 2013, Royce Opportunity Select Fund (ROS) continued to be a happy exception in a now three-year period of challenging times for active management in the small-cap space. The Fund gained 44.6% in 2013, outpacing its small-cap benchmark, the Russell 2000 Index, which was up 38.8% for the same period. ROS’s calendar-year result formed part of a longer-term trend of outstanding absolute and relative returns. Small-caps made a fast start to the year, which marked the return to market leadership of more defensive sectors and high-yielding equities at the expense of cyclical areas across most asset classes. The Fund managed the transition well, though it lagged its benchmark, gaining 11.5% versus 12.4% for the small-cap index. This bull phase was in contrast to the second half of 2012, which saw much-improved results from higher-quality companies—that is, those with higher returns on invested capital. Yet the Fund managed very well in both market phases. Volatility returned to the markets in the form of a bearish April that gave way to a bullish May, while June was already proving to be a volatile month when the Fed announced on the 19th that it would likely begin to taper its bond-buying program later this year. Along with a fast-rising rate on the 10-year Treasury, underwhelming news out of China, and growing unrest in the developing world, the global markets swooned, though most domestic indexes were recovering by the end of the month. The Fund fared well in this more uncertain environment, rising 5.7% for the second quarter, ahead of the Russell 2000’s 3.1% increase. The third quarter saw a resumption of the red-hot pace of the first. The Fed signaled that tapering would be very gradual and in any case would not be starting for a few months, and the U.S. economy continued to expand, although at a slower pace than most of us would prefer. In this more placid climate, ROS stayed ahead of the Russell 2000, gaining 11.5% in the third quarter while the small-cap index was up 10.2%. The market’s pace slowed a bit in the fourth quarter as more volatility arrived in December. The Fund maintained its edge, beating the Russell 2000 with a gain of 10.0% compared to 8.7% for the benchmark. We were very pleased with ROS��s sterling results over recent calendar year and market cycle periods on both an absolute and relative basis. The Fund outperformed the Russell 2000 for the one- and three-year/since inception (8/31/10) periods ended December 31, 2013. ROS’s average annual total return for the three-year/since inception period was 25.0%. |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
SunEdison | 2.55% | ||||||||||
Radian Group | 1.98 | ||||||||||
SunPower Corporation | 1.73 | ||||||||||
BofI Holding | 1.69 | ||||||||||
Quiksilver | 1.49 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee, payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Gross operating expenses reflect the Fund’s total gross annual operating expenses and include management fees and other expenses. Net operating expenses reflect contractual fee waivers and/or expense reimbursements. All expense information is reported as of the Funds most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the Fund’s net annual operating expenses, other than dividends on securities sold short, acquired fund fees and expenses, and interest expense on borrowing, at or below 1.24% through April 30, 2015 and at or below 1.99% through April 30, 2023. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
20 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review Information Technology led all sectors by a comfortable margin, though Financials also posted substantial net gains followed in turn by the Industrials and Consumer Discretionary areas. The strength of tech holdings was in part the result of the sector’s substantial overweight in the Fund throughout 2013. The portfolio holds several technology businesses that we think are just beginning to recover, though several in the semiconductor & semiconductor equipment industry enjoyed robust results in 2013. Two of ROS’s top three net contributors came from this group, though the market’s interest in each company had more to do with their respective roles in the red-hot solar energy industry. We reduced our position in both stocks as their respective share prices moved past our sell targets. SunPower Corporation manufactures high-performance solar electric equipment. SunEdison produces electronic-grade polysilicon used for electronics, solar cells, and film devices while also developing solar power projects. In spite of fears that reduced government subsidies would derail growth, the demand for solar technology shows no signs of cooling off. Many lesser-quality players have either exited the business or lost market share. Technological efficiency has improved, which has helped bring down costs, while China in 2013 called for a five-fold increase in installed solar capacity. Radian Group provides financial guarantee insurance. Its services allow people to buy homes more quickly (often with smaller down payments), protect lenders against loan default, and lower the costs of mortgage origination and servicing. The housing industry’s rebound, as well as a decline in the number of defaults, helped its business to grow. We took gains through much of the first half and began selling again in November. BofI Holdings saw its web-based banking services in both the consumer and commercial markets in high demand. We liked its long-term prospects, but its soaring stock price convinced us to sell off our position. A volatile stock price allowed us to buy shares of Quiksilver in 2013 when its valuation was more to our liking. The company produces and distributes clothing and accessories under its own brand name as well as DC, Roxy, and Hawk Skateboarding. It has seen uneven revenue growth—down in the U.S., rising in developing markets—and is not yet profitable. It has made moves in that direction, however, and we like its prospects in a strengthening economy. Weaker earnings hurt results for Walter Energy, which produces metallurgical coal. Prices fell in the wake of slack demand in China. We sold our shares when the company’s efforts to refinance its debt looked a bit murky. We also parted ways with dry shipping business Genco Shipping & Trading after its shares began to suffer in the wake of debt finance concerns. |
GOOD IDEAS AT THE TIME | |
Walter Energy | -1.43% |
Genco Shipping & Trading | -0.81 |
Mindspeed Technologies | -0.64 |
Molycorp | -0.34 |
CIBER | -0.32 |
1 Net of dividends | |
ROYCE OPPORTUNITY SELECT FUND VS. RUSSELL 2000 Value of $10,000 Invested on 8/31/10 | |
Includes reinvestment of distributions. | |||
PORTFOLIO DIAGNOSTICS | |||
Fund Net Assets | $17 million | ||
Number of Holdings | 109 | ||
Turnover Rate | 129% | ||
Average Market Capitalization1,3 | $794 million | ||
Weighted Average P/B Ratio2,3 | 1.6x | ||
U.S. Investments3 (% of Net Assets) | 92.7% | ||
Non-U.S. Investments3 (% of Net Assets) | 5.9% | ||
Symbol | ROSFX | ||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
ROS | 0.91 | 19.75 | |
Russell 2000 | 0.96 | 16.68 | |
Category Median | 0.96 | 16.52 | |
Best Quartile Breakpoint | 1.06 | 15.60 | |
1 Three years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 379 small-cap objective funds (oldest class) with at least three years of history. | |||
DOWN MARKET PERFORMANCE COMPARISON | |||
The Royce Funds 2013 Annual Report to Shareholders | 21 |
Royce Micro-Cap Discovery Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | |||||||||||
July–December 20131 | 20.54 | % | |||||||||
One-Year | 35.29 | ||||||||||
Three-Year | 10.89 | ||||||||||
Five-Year | 15.48 | ||||||||||
10-Year | 5.81 | ||||||||||
Since Inception (10/3/03) | 7.02 | ||||||||||
ANNUAL EXPENSE RATIOS | |||||||||||
Gross Operating Expenses | 2.94 | % | |||||||||
Net Operating Expenses | 1.49 | ||||||||||
1 Not annualized | |||||||||||
CALENDAR YEAR TOTAL RETURNS | |||||||||||
Year | RDF | Year | RDF | ||||||||
2013 | 35.3 | % | 2008 | -35.1 | % | ||||||
2012 | 3.1 | 2007 | -7.4 | ||||||||
2011 | -2.2 | 2006 | 16.8 | ||||||||
2010 | 19.6 | 2005 | 7.6 | ||||||||
2009 | 25.9 | 2004 | 13.3 | ||||||||
TOP 10 POSITIONS % of Net Assets | |||||||||||
Standard Motor Products | 2.3 | % | |||||||||
Computer Task Group | 2.3 | ||||||||||
Comtech Telecommunications | 2.2 | ||||||||||
Lifetime Brands | 2.0 | ||||||||||
Alamo Group | 2.0 | ||||||||||
Miller Industries | 1.9 | ||||||||||
National HealthCare | 1.9 | ||||||||||
Capella Education | 1.8 | ||||||||||
Invacare Corporation | 1.7 | ||||||||||
John B. Sanfilippo & Son | 1.7 | ||||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | |||||||||||
Information Technology | 21.1 | % | |||||||||
Industrials | 16.1 | ||||||||||
Consumer Discretionary | 14.8 | ||||||||||
Health Care | 12.0 | ||||||||||
Materials | 6.9 | ||||||||||
Financials | 6.8 | ||||||||||
Consumer Staples | 5.6 | ||||||||||
Energy | 5.5 | ||||||||||
Telecommunication Services | 1.4 | ||||||||||
Miscellaneous | 4.8 | ||||||||||
Cash and Cash Equivalents | 5.0 | ||||||||||
Managers’ Discussion Royce Micro-Cap Discovery Fund (RDF) gained 35.3% in 2013, trailing both its benchmark, the Russell Microcap Index, which was up 45.6%, and the small-cap Russell 2000 Index, which advanced 38.8% for the same period. So while RDF’s results were more than respectable on an absolute basis, its relative results were disappointing. The bulk of the Fund’s relative disadvantage for the calendar year was solidified during the highly bullish first quarter. This dynamic upswing followed a solid third quarter and more volatile fourth quarter in 2012. RDF posted a solid result on an absolute basis even as its relative performance fell short. For the first quarter, the Fund gained 8.2% versus 12.6% for its benchmark and 12.4% for the small-cap index. The second quarter brought more volatility and lower returns for equities across the board. Markets all over the world convulsed late in June following the announcement by Fed Chairman Bernanke that the central bank would consider tapering the pace of monthly bond purchases later in the year—a promise made good on in December. Along with less-than-stellar news out of China, Brazil, Turkey, and Europe, stocks fell precipitously for several sessions before beginning to find their feet again. The upshot was a rougher quarter for stocks, though the U.S. fared better on the whole than foreign markets. RDF was up 3.7% for the second quarter, which was a mixed performance on a relative basis—the Russell Microcap rose 5.1% while the small-cap index advanced 3.1% for the same period. The third quarter saw investors shaking off these potentially worrisome developments, and the market quickly resumed the feverish pace established earlier in the year. The Fund participated, advancing 8.4% while the micro-cap index climbed 11.6% and the small-cap index increased 10.2%. Although December brought a small wave of volatility, the fourth quarter also saw strong results for equities as a whole, and micro-caps in particular. RDF outpaced both indexes in the year’s final frame, rising 11.3% in the fourth quarter compared to respective gains of 10.3% and 8.7% for the Russell Microcap and Russell 2000 Indexes. Longer-term results were less encouraging as the Fund lagged both indexes for the three-, five-, 10-year, and since inception (10/3/03) periods ended December 31, 2013. During RDF’s stock selection process, we seek micro-cap companies with the same high-quality features found in most other Royce-run portfolios—strong balance sheets, high returns on invested capital, and positive cash flow. However, what differentiates the Fund is the use of a |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
PC Connection | 1.42% | ||||||||||
Capella Education | 1.31 | ||||||||||
Alamo Group | 1.23 | ||||||||||
Standard Motor Products | 1.13 | ||||||||||
Obagi Medical Products | 1.01 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Price and total return information is based on net asset values calculated for shareholder transactions. Certain immaterial adjustments were made to the net assets of Royce Micro-Cap Discovery Fund at 6/29/12 for financial reporting purposes, and as a result the net asset values for shareholder transactions on that date and calendar-year total returns based on those net asset values differ from the adjusted net asset values and calendar-year total returns reported in the Financial Highlights. Gross operating expenses reflect the Fund’s gross total annual operating expenses for the Service Class and include management fees, 12b-1 distribution and service fees, and other expenses. Net operating expenses reflect contractual fee waivers and/or expense reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the Service Class’s net annual operating expense ratio at or below 1.49% through April 30, 2014 and at or below 1.99% through April 30, 2023. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
22 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review proprietary quantitative screening model, which has been in place for more than a decade, that attempts to enhance the discovery of micro-cap companies exhibiting certain key characteristics. We believe that this complementary tool provides us with an invaluable starting point to perform traditional fundamental analysis. It identifies micro-cap companies with certain qualities that we find attractive in a business, particularly those characteristics that Royce has enjoyed success with throughout our more than 40-year history of applying bottom up, fundamental analysis to small-cap stocks. The model combs through an extensive amount of data in an effort to capture three key attributes—valuation, profitability, and earnings yield. The managers then evaluate the effectiveness and appropriate weightings for each of these three attributes. Information Technology and Industrials led all of the Fund’s sectors, each of which finished 2013 in the black. Consumer Discretionary, Health Care, Materials, and Financials also posted notable net gains. Net losses at the industry level were few and minimal while strong contributions came from machinery stocks, health care equipment & supplies businesses, and insurance companies. At the individual position level, net losses were comparatively modest. We sold our shares in Canadian silver producer Endeavour Silver in August. Precious metals miners endured an awful year in 2013, faced with commodity price weakness and increased mine operating costs. Texas-based energy producer and explorer VAALCO Energy stumbled with a fiscal fourth-quarter earnings miss, rising costs, lower energy prices, and a stalled project in Angola, all of which affected margins and kept its stock price slumping. Still confident in its long-term potential, we increased our position with small buys in February and March. Four of the Fund’s top contributors for the year were also top positions at the end of December. (The exception was Obagi Medical Products, which was acquired in April by Valeant Pharmaceuticals.) We took gains in PC Connection at various points during the year. The company provides a full range of information technology (IT) solutions to business, government, and educational customers. Its growing business, solid earnings, and steady dividends, as well as a tech-friendlier market, appeared to give a boost to its share price. It was RDF’s twelfth-largest holding at year-end. Capella Education benefited from a rebound in the for-profit education business as well as its own revenue and enrollment growth. Automotive parts maker Standard Motor Products enjoyed revenue growth (primarily via acquisitions) and strong cash flows while also experiencing ongoing growth in the auto aftermarket business. Alamo Group manufactures and distributes heavy duty, tractor-mounted mowing and vegetation maintenance equipment and replacement parts. Increased demand for industrial infrastructure companies helped it to achieve record revenues for its fiscal third quarter. |
GOOD IDEAS AT THE TIME | |
Endeavour Silver | -0.43% |
VAALCO Energy | -0.36 |
TransGlobe Energy | -0.35 |
PhotoMedex | -0.34 |
Nevsun Resources | -0.30 |
1 Net of dividends | |
ROYCE MICRO-CAP DISCOVERY FUND VS. RUSSELL MICROCAP Value of $10,000 Invested on 6/30/00 (Russell Microcap Inception) | |
Includes reinvestment of distributions. | |||
PORTFOLIO DIAGNOSTICS | |||
Fund Net Assets | $6 million | ||
Number of Holdings | 89 | ||
Turnover Rate | 81% | ||
Average Market Capitalization1 | $446 million | ||
Weighted Average P/E Ratio2,3 | 16.6x | ||
Weighted Average P/B Ratio2 | 1.6x | ||
U.S. Investments (% of Net Assets) | 92.9% | ||
Non-U.S. Investments (% of Net Assets) | 2.1% | ||
Symbol | RYDFX | ||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
RDF | 0.80 | 20.76 | |
Russell Microcap | 0.98 | 22.07 | |
Category Median | 1.07 | 21.09 | |
Best Quartile Breakpoint | 1.15 | 20.04 | |
1 Five years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 18 micro-cap objective funds (oldest class only) with at least five years of history. | |||
The Fund produced lower volatility than the Russell Microcap and 50% of micro-cap objective funds, as shown by its standard deviation. | |||
DOWN MARKET PERFORMANCE COMPARISON | |||
The Royce Funds 2013 Annual Report to Shareholders | 23 |
Royce Financial Services Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | |||||||||||
July–December 20131 | 19.44 | % | |||||||||
One-Year | 42.00 | ||||||||||
Three-Year | 14.99 | ||||||||||
Five-Year | 18.94 | ||||||||||
10-Year | 8.97 | ||||||||||
Since Inception (12/31/03) | 8.97 | ||||||||||
ANNUAL EXPENSE RATIOS | |||||||||||
Gross Operating Expenses | 1.96 | % | |||||||||
Net Operating Expenses | 1.58 | ||||||||||
1 Not annualized | |||||||||||
CALENDAR YEAR TOTAL RETURNS | |||||||||||
Year | RFS | Year | RFS | ||||||||
2013 | 42.0 | % | 2008 | -35.4 | % | ||||||
2012 | 20.7 | 2007 | -4.7 | ||||||||
2011 | -11.3 | 2006 | 24.8 | ||||||||
2010 | 18.5 | 2005 | 12.2 | ||||||||
2009 | 32.1 | 2004 | 15.1 | ||||||||
TOP 10 POSITIONS % of Net Assets | |||||||||||
Sprott | 2.0 | % | |||||||||
Greenlight Capital Re Cl. A | 1.9 | ||||||||||
KKR & Co. L.P. | 1.9 | ||||||||||
Ashmore Group | 1.7 | ||||||||||
Towers Watson & Co. Cl. A | 1.7 | ||||||||||
RLI Corp. | 1.7 | ||||||||||
Thomas Cook (India) | 1.7 | ||||||||||
Lazard Cl. A | 1.6 | ||||||||||
Moody’s Corporation | 1.6 | ||||||||||
Value Partners Group | 1.6 | ||||||||||
PORTFOLIO INDUSTRY BREAKDOWN % of Net Assets | |||||||||||
Capital Markets | 44.5 | % | |||||||||
Diversified Financial Services | 11.2 | ||||||||||
Insurance | 7.7 | ||||||||||
Commercial Banks | 3.7 | ||||||||||
IT Services | 2.7 | ||||||||||
Professional Services | 2.4 | ||||||||||
Software | 2.0 | ||||||||||
Real Estate Management & Development | 1.9 | ||||||||||
Hotel, Restaurants & Leisure | 1.7 | ||||||||||
Trading Companies & Distributors | 1.0 | ||||||||||
Consumer Finance | 0.8 | ||||||||||
Media | 0.7 | ||||||||||
Closed-End Funds | 0.6 | ||||||||||
Miscellaneous | 1.2 | ||||||||||
Cash and Cash Equivalents | 17.9 | ||||||||||
Manager’s Discussion Royce Financial Services Fund (RFS) continued its run of strong absolute and relative results with a terrific showing in 2013. The Fund gained 42.0% in 2013, outpacing its benchmarks, the small-cap Russell 2000 Index, which rose 38.8%, and the Russell 2500 Financial Services Index, which advanced 30.4% for the same period. The first quarter was a mostly consistent bull phase, with domestic share prices showing strength across all asset classes in the form of double-digit returns for most major U.S. indexes. The Fund fully participated in the good times, rising 14.2% versus respective gains of 12.4% for the Russell 2000 and 14.0% for the financial services component of the Russell 2500. This marked the third consecutive quarter in which RFS achieved positive quarterly performance and beat both its benchmark and the financial services companies in the Russell 2500. The second quarter saw the Fund go four-for-four. This was a far more volatile period than the year’s first quarter, somewhat similar to 2012’s second and fourth quarters. The period between the beginning of April and the end of June saw underwhelming economic news from China (along with credit issues and the threat of an overheated real estate market), fresh attempts at fiscal stimulus in Japan, unrest—and plunging markets—in Turkey and Brazil, a spike in the 10-year Treasury note between mid-May and mid-June, and word from the Federal Reserve that it would likely begin to taper the pace of its bond purchase program later in the year. All of this was enough to send financial markets into a brief frenzy of selling, especially outside the U.S. Indeed, the major domestic equity indexes stabilized and finished the quarter in the black. RFS wound up the second quarter with a gain of 4.1% compared to respective advances of 3.1% and 1.3% for the Russell 2000 and Russell 2500 Financial Services Index. The third quarter saw a return to the red-hot pace of the first. The Fed signaled that tapering would occur gradually (it got off to a modest, barely noticeable start in December), while the U.S. economy continued to expand. In this more hospitable climate, RFS slipped behind one index while staying well ahead of the other. The Fund increased 8.3% in the third quarter while the Russell 2000 was up 10.2% and the financial services component of the Russell 2500 gained 4.0%. The market’s pace slowed a bit in the fourth quarter as December saw more volatility. RFS reasserted its advantage, its 10.3% increase beating both the Russell 2000 (+8.7%) and the Russell 2500 Financial Services Index (+8.6%). The Fund also outpaced the latter index for the three-, five-, and 10-year/since inception (12/31/03) periods ended December 31, 2013. RFS |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
WisdomTree Investments | 2.46% | ||||||||||
Apollo Global Management LLC Cl. A | 2.08 | ||||||||||
Regional Management | 1.39 | ||||||||||
Artisan Partners Asset Management | 1.35 | ||||||||||
Towers Watson & Company Cl. A | 1.31 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Gross operating expenses reflect the Fund’s gross total annual operating expenses for the Service Class and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Net operating expenses reflect contractual fee waivers and/ or expense reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse expenses to the extent necessary to maintain the Fund’s net annual operating expenses, other than acquired fund fees and expenses, at or below 1.49% through April 30, 2014. Acquired fund fees and expenses 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. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
24 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review lagged the Russell 2000 for these periods, though not by much. Average annual total returns for the three-year (+15.0% versus +15.7%), five-year (+18.9% versus +20.1%), and 10-year/since inception (+9.0% versus +9.1%) periods were quite close. We have been pleased with the Fund’s performance and very happy that it marked its first full decade at the end of 2013. The portfolio’s substantial overweight in capital markets was a net positive for the year. The industry was more than well represented among RFS’s top contributors, where it accounted for three of the Fund’s five best performers, as well as eight of its top 10 and 13 of its top 20. The Fund’s top-two contributors for the year were holdovers from the first half. WisdomTree Investments is an asset management company that primarily sponsors ETFs (exchange traded funds). Robust inflows and strong product line growth helped to attract investors to its stock. With its price on the rise, we trimmed our position, though it was the Fund’s twenty-third-largest holding at the end of the year. New York City-based Apollo Global Management, RFS’s fifteenth-largest position, offers alternative asset and other investment management services including private equity, credit, and real estate funds. We like its core business, dividend, solid earnings history, and positive cash flows and were content to hold our shares as its earnings remained solid. Net losses at the position level were scant and modest. The Fund’s most significant detractor for the calendar year was Sprott, a Canadian investment management company with a history dating back to 1981. The firm saw its share price decline as assets and fees declined, in large part the result of its significant exposure to the precious metals mining and energy industries, both of which suffered through much of the year. The former industry was especially hard hit, unable to escape the negative impact on revenue and stock prices of the respective 36% and 28% drops in silver and gold prices. We more than quintupled our position in Sprott in 2013, confident that this well-managed firm with long-term asset management expertise, particularly in natural resources investments, can right the ship. It was RFS’s largest holding at year-end. Similar issues plagued U.S. Global Investors, a boutique registered investment advisory firm specializing in natural resources and emerging markets, two poor-performing areas of the market in 2013. It reported a net loss in August for fiscal 2013 as assets and revenues declined. We increased our position more than four-fold in the calendar year while other investors were fleeing the stock. Our confidence was bolstered by management’s decisions to exit the money market fund business, streamline costs, and reposition their products and services to focus on what the firm does best. It was the Fund’s twenty-fourth largest holding at the end of December. |
GOOD IDEAS AT THE TIME | |
Sprott | -0.73% |
U.S. Global Investors Cl. A | -0.17 |
Xoom Corporation | -0.10 |
Novation Company | -0.10 |
Citadel Capital | -0.10 |
1 Net of dividends | |
ROYCE FINANCIAL SERVICES FUND VS. RUSSELL 2000 AND RUSSELL 2500 FINANCIAL SERVICES Value of $10,000 Invested on 12/31/03 | |
Includes reinvestment of distributions. | |||
PORTFOLIO DIAGNOSTICS | |||
Fund Net Assets | $48 million | ||
Number of Holdings | 94 | ||
Turnover Rate | 23% | ||
Average Market Capitalization1 | $2,310 million | ||
Weighted Average P/E Ratio2,3 | 18.1x | ||
Weighted Average P/B Ratio2 | 2.3x | ||
U.S. Investments (% of Net Assets) | 48.9% | ||
Non-U.S. Investments (% of Net Assets) | 33.2% | ||
Symbol | RYFSX | ||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
RFS | 0.95 | 20.39 | |
Russell 2000 | 0.98 | 20.93 | |
Category Median | 0.79 | 21.79 | |
Best Quartile Breakpoint | 0.91 | 19.64 | |
1 Five years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 27 financial services objective funds (oldest class only) with at least five years of history. | |||
The Fund performed within the top 25% of financial services objective funds on a risk-adjusted basis, as shown by its Sharpe ratio. In addition, the Fund produced lower volatility than the Russell 2000 and 50% of financial services objective funds, as shown by its standard deviation. | |||
DOWN MARKET PERFORMANCE COMPARISON | |||
The Royce Funds 2013 Annual Report to Shareholders | 25 |
Royce SMid-Cap Value Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | |||||||||||
July–December 20131 | 17.27 | % | |||||||||
One-Year | 22.91 | ||||||||||
Three-Year | 7.86 | ||||||||||
Five-Year | 15.27 | ||||||||||
Since Inception (9/28/07) | 6.02 | ||||||||||
ANNUAL EXPENSE RATIOS | |||||||||||
Gross Operating Expenses | 1.90 | % | |||||||||
Net Operating Expenses | 1.35 | ||||||||||
1 Not annualized | |||||||||||
CALENDAR YEAR TOTAL RETURNS | |||||||||||
Year | RSV | Year | RSV | ||||||||
2013 | 22.9 | % | 2010 | 26.0 | % | ||||||
2012 | 15.4 | 2009 | 28.7 | ||||||||
2011 | -11.6 | 2008 | -29.3 | ||||||||
TOP 10 POSITIONS % of Net Assets | |||||||||||
Western Digital | 4.7 | % | |||||||||
Helmerich & Payne | 4.3 | ||||||||||
Jacobs Engineering Group | 4.0 | ||||||||||
Reliance Steel & Aluminum | 3.9 | ||||||||||
Thor Industries | 3.8 | ||||||||||
Semperit AG Holding | 3.2 | ||||||||||
Kennedy-Wilson Holdings | 3.1 | ||||||||||
Valmont Industries | 3.0 | ||||||||||
Westlake Chemical | 3.0 | ||||||||||
Signet Jewelers | 3.0 | ||||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | |||||||||||
Industrials | 16.9 | % | |||||||||
Information Technology | 16.0 | ||||||||||
Financials | 15.8 | ||||||||||
Materials | 15.2 | ||||||||||
Consumer Discretionary | 11.4 | ||||||||||
Energy | 11.3 | ||||||||||
Health Care | 4.9 | ||||||||||
Consumer Staples | 1.1 | ||||||||||
Cash and Cash Equivalents | 7.4 | ||||||||||
Managers’ Discussion We were not happy with the calendar-year return for Royce SMid-Cap Value Fund (RSV). While the Fund posted a decent performance on an absolute level, it fell far short of its small- and mid-cap benchmark. The Fund rose 22.9% in 2013, lagging the Russell 2500 Index, which increased 36.8% for the same period. RSV was behind its benchmark in each of the year’s four quarters, providing only limited participation in the bull market that spanned nearly all of 2013. The bulk of the Fund’s relative disadvantage came in the first quarter, which saw a return to market leadership for those areas of the market with more defensive or high-yielding characteristics. This left the portfolio at a disadvantage from the beginning of the year as our contrarian positioning continued to favor more economically sensitive and cyclical businesses at a time when fears persisted about the general health of the global economy. It was not entirely surprising, then, that RSV got off to a slow start in the year’s dynamic first quarter, managing an increase of only 4.4% compared to the 12.9% advance for its benchmark. This upswing then gave way to more volatility as macro concerns surfaced that stymied both fixed income and equity investors. Credit tightening in China orchestrated by its central bank to address the excessive speculation in the housing market and unchecked lending in its shadow banking industry once again raised important questions about the sustainability of that nation’s remarkable growth rate. Perhaps more significantly, Fed Chairman Ben Bernanke surprised financial markets in June by signaling that the central bank would taper the pace of its monthly bond purchases. A sharp rise in the 10-year Treasury rate during May and June also worried investors. What distinguished 2013 from the previous three calendar years was how quickly and easily the domestic equity markets shook off these concerns. Second-quarter returns were clearly more subdued—RSV gained 0.4% in the second quarter versus a 2.3% increase for the Russell 2500—but still positive. The market then resumed its feverish pace in the third quarter, when the Fund advanced 8.8% compared to 9.1% for the Russell 2500. Although a mini-wave of volatility hit the markets in mid-December, the fourth quarter ultimately proved only slightly less bullish than the first and third. RSV gained 7.8% in the year’s final three months versus 8.7% for the Russell 2500. |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Western Digital | 3.56% | ||||||||||
Helmerich & Payne | 1.96 | ||||||||||
Thor Industries | 1.50 | ||||||||||
Jacobs Engineering Group | 1.45 | ||||||||||
Westlake Chemical | 1.35 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Gross operating expenses reflect gross total annual operating expenses for the Service Class and include management fees, 12b-1 distribution and service fees, and other expenses. Net operating expenses reflect contractual fee waivers and/or expense reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the Service Class’s net annual operating expenses at or below 1.35% through April 30, 2014. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
26 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review Six of the portfolio’s eight equity sectors posted net gains for the calendar year. Information Technology led by a sizable margin, followed by a strong contribution from Industrials. Financials and Consumer Discretionary also posted notable net gains. Materials and, to a lesser degree, Health Care were in the red. The former sector is home to the metals & mining group, which housed a disproportionate number of “Good Ideas at the Time”—five of RSV’s 10 largest detractors were precious metals & mining businesses, which were a bright spot for the portfolio in 2010 and the first half of 2011. Most of these companies could not shake off the negative impact on revenue and stock prices of the respective 36% and 28% drops in silver and gold prices in 2013. We sold our shares in Hochschild Mining in December after further declines in its share price and did the same in October with Pretium Resources. We built our stake in Pan American Silver thinking that this well-managed business was better positioned for an eventual turnaround. In the Health Care sector we also added to our shares of Myriad Genetics. The company performs molecular diagnostic tests, specializing in genetic testing for cancer (it’s also a market leader in the breast cancer gene tests). The company faced several headwinds in 2013: reimbursement change concerns from payers, a Supreme Court decision in June that held that human genes cannot be patented, and new competition in the breast cancer gene testing market. This led its stock to fall, though the company retained its patents on certain genetic testing processes. While reimbursement issues remained unresolved entering 2014, we think that the quality of its predictive tests remains the industry’s gold standard and that the firm is more than capable of holding onto market share in this important healthcare niche. We also like much of its existing and emergent pipeline of new products and services. RSV’s two largest holdings at year-end also topped our list of net-gaining positions. Hard disk drive maker Western Digital is one of two firms that dominate disk drive production worldwide. Its core business, which involves solutions for the collection, storage, management, and protection of digital content, has long interested us. The company made several savvy acquisitions in 2013, including Virident, sTec, and VeloBit. These moves made Western a stronger player in both the hard disk drive and flash technology markets, in addition to its growing presence in cloud storage technology. Helmerich & Payne provides contract drilling of oil and gas wells in the Gulf of Mexico and South America and also operates land and platform rigs. The company continued to leverage its technological leadership in the drilling rig business into market share gains as E&P (exploration & production) companies upgrade their fleets to improve drilling efficiencies and lower their total well costs. |
GOOD IDEAS AT THE TIME | |
Hochschild Mining | -1.38% |
Pan American Silver | -1.03 |
Pretium Resources | -0.89 |
Myriad Genetics | -0.79 |
Sprott | -0.63 |
1 Net of dividends | |
ROYCE SMID-CAP VALUE FUND VS. RUSSELL 2500 Value of $10,000 Invested on 9/28/07 | |
Includes reinvestment of distributions. |
PORTFOLIO DIAGNOSTICS | |||||
Fund Net Assets | $12 million | ||||
Number of Holdings | 49 | ||||
Turnover Rate | 31% | ||||
Average Market Capitalization1 | $3,847 million | ||||
Weighted Average P/E Ratio2,3 | 17.4x | ||||
Weighted Average P/B Ratio2 | 2.3x | ||||
U.S. Investments (% of Net Assets) | 65.4% | ||||
Non-U.S. Investments (% of Net Assets) | 27.2% | ||||
Symbol | RMVSX | ||||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||||
MORNINGSTAR STATISTICAL MEASURES1 | |||||
Sharpe Ratio | Standard Deviation | ||||
RSV | 0.82 | 19.57 | |||
Russell 2500 | 1.11 | 19.58 | |||
Category Median | 1.12 | 18.26 | |||
Best Quartile Breakpoint | 1.21 | 17.06 | |||
1 Five years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 315 mid-cap objective funds (oldest class only) with at least five years of history. | |||||
| |||||
DOWN MARKET PERFORMANCE COMPARISON | |||||
The Royce Funds 2013 Annual Report to Shareholders | 27 |
Royce Focus Value Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | ||||||||||
July–December 20131 | 18.54 | % | ||||||||
One-Year | 23.77 | |||||||||
Three-Year | 5.19 | |||||||||
Since Inception (2/27/09) | 16.03 | |||||||||
ANNUAL EXPENSE RATIOS | ||||||||||
Gross Operating Expenses | 1.91 | % | ||||||||
Net Operating Expenses | 1.21 | |||||||||
1 Not annualized | ||||||||||
CALENDAR YEAR TOTAL RETURNS | ||||||||||
Year | RFV | Year | RFV | |||||||
2013 | 23.8 | % | 2011 | -13.9 | % | |||||
2012 | 9.2 | 2010 | 15.2 | |||||||
TOP 10 POSITIONS % of Net Assets | ||||||||||
Franklin Resources | 3.7 | % | ||||||||
ING U.S. | 3.6 | |||||||||
Berkshire Hathaway Cl. B | 3.5 | |||||||||
Valeant Pharmaceuticals International | 3.4 | |||||||||
Exxon Mobil | 3.0 | |||||||||
Western Digital | 2.9 | |||||||||
RigNet | 2.7 | |||||||||
McGraw Hill Financial | 2.6 | |||||||||
Kennedy-Wilson Holdings | 2.5 | |||||||||
Cubist Pharmaceuticals | 2.4 | |||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | ||||||||||
Financials | 22.9 | % | ||||||||
Industrials | 16.9 | |||||||||
Information Technology | 16.0 | |||||||||
Consumer Discretionary | 10.4 | |||||||||
Energy | 9.9 | |||||||||
Materials | 8.1 | |||||||||
Health Care | 7.3 | |||||||||
Consumer Staples | 3.8 | |||||||||
Miscellaneous | 1.4 | |||||||||
Government Bonds | 1.2 | |||||||||
Cash and Cash Equivalents | 2.1 | |||||||||
Manager’s Discussion Coming off a difficult first half of 2013, Royce Focus Value Fund (RFV) gained a bit of ground to finish off the year, though it was not enough to catch its benchmark. RFV rose 23.8% in 2013 versus 36.8% for its benchmark, the Russell 2500 Index, for the same period. 2013’s result was thus added to a string of disappointing relative performances that date back to 2010. For most of this time, the market has been characterized by closely correlated returns, strong performance for defensive and/or fast-growing stocks, and a distinct preference for higher-yielding vehicles such as REITs, MLPs (master limited partnerships), and fixed-income securities over many equities. Needless to say, when making selections for RFV’s portfolio, we choose to focus instead on small to mid-cap companies with strong balance sheets, high returns on invested capital, and what look to us like compelling valuations. 2013’s first quarter was a pleasantly, smoothly bullish period for most stocks. The Russell 2500 rose 12.9% in this period while the Fund managed a 2.7% return. This made the task of a strong absolute first-half return, as well as narrowing the gap with the benchmark, more than a little challenging. The Fund fell further behind in the second quarter, fueling our frustration. Negative macro news kept share prices moving in contrasting directions through much of the quarter. Challenges for China, a sharp rise in the 10-year Treasury rate during May and June, and word from the Fed that it would slow the pace of bond purchases at the end of 2013 all worried investors, primarily in April and June. However, unlike in 2011 and 2012, the domestic equity markets ultimately handled this news well in 2013. For the second quarter RFV gained 1.7% while the benchmark advanced 2.3%. Much of the portfolio’s first-half underperformance came from holdings in the metals & mining industry. Perhaps the most convincing sign that investors were able to shrug off potentially disturbing macro developments was the generally strong showing for stocks in the third quarter, a period in which RFV advanced 7.0% compared to a 9.1% gain for the Russell 2500. The fourth quarter was less dynamic—and more volatile—than the first and third quarters of the year, but returns were solidly positive. We were pleased that RFV was able to outpace its benchmark during the last three months of the year, increasing 10.8% versus 8.7% for the Russell 2500. The Fund lagged the Russell 2500 for the one-, three-year, and since inception (2/27/09) periods ended December 31, 2013. These results were disappointing. So while RFV’s average annual total return since inception of 16.0% was notable from an absolute standpoint, we were not pleased by how much it lagged its benchmark’s 28.0% gain for the same period. |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Western Digital | 2.91% | ||||||||||
eHealth | 2.14 | ||||||||||
Franklin Resources | 1.36 | ||||||||||
CIRCOR International | 1.28 | ||||||||||
Berkshire Hathaway Cl. B | 1.25 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Gross operating expenses reflect total gross annual operating expenses and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Net operating expenses reflect contractual fee waivers and/or reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive its fees and/or reimburse operating expenses to the extent necessary to maintain the Fund’s net annual operating expenses, other than acquired fund fees and expenses, at or below 1.20% through April 30, 2014. Acquired fund fees and expenses 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. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
28 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review (In May we made changes to the Fund’s portfolio management: George Wyper manages RFV, assisted by Whitney George. George Wyper served as co-manager from 2010 through 2012 while Whitney previously served as co-manager from 2010 through 2012 after serving as the Fund’s primary portfolio manager from 2009 to 2010.) Eight of the Fund’s nine sectors made contributions to performance. Financials led by a wide margin, with notable contributions also coming from Industrials and Information Technology. The lone sector to detract from performance was Materials, home to the metals & mining industry. This group accounted for all of RFV’s five largest detractors, as well as six of its top 10 and 11 of its top-20 detractors. The industry endured plummeting revenue and stock prices in light of the respective 36% and 28% drops in silver and gold prices in 2013. We reduced the Fund’s exposure to this industry in 2013, choosing to hold positions only in companies that we believe are well funded, well managed, and situated to benefit when the industry rebounds. We sold our positions in Allied Nevada Gold, Pretium Resources, Newmont Mining, and Fresnillo—four of the Fund’s top detractors from 2013 performance—in the second quarter. We kept some shares in Randgold Resources, though we reduced our position in December. Western Digital was both RFV’s top contributor and a top-ten position at year-end. The Irvine, CA-based hard disk drive maker is one of two firms that dominate disk drive production worldwide. Its core business, which involves solutions for the collection, storage, management, and protection of digital content, has long interested us. The company made several savvy acquisitions in 2013, including Virident, sTec, and VeloBit. These moves made Western a stronger player in both the hard disk drive and flash technology markets, in addition to its growing presence in cloud storage technology. eHealth provides online private health insurance services for individuals, families, and small businesses in the U.S. Its shares soared following the announcement in July that the firm had received permission from the U.S. government to enroll customers in subsidized plans offered under the new federal health-care law. We finished selling our shares in October. Franklin Resources is an asset manager that provides investment advisory services to mutual fund, retirement, institutional/separate accounts, and high net worth investors. A rising stock market helped its assets under management to grow and its earnings to recover. It was the Fund’s top holding at year-end. CIRCOR International designs and manufactures specialty valves and fluid control systems. We began trimming our shares late in the year after better-than-expected third-quarter earnings led its stock price to jump significantly. |
GOOD IDEAS AT THE TIME Top Detractors from 2013 Performance1 | |||||||||||
Allied Nevada Gold | -1.55% | ||||||||||
Pretium Resources | -1.12 | ||||||||||
Newmont Mining | -0.86 | ||||||||||
Fresnillo | -0.77 | ||||||||||
Randgold Resources ADR | -0.52 | ||||||||||
1 Net of dividends | |||||||||||
ROYCE FOCUS VALUE FUND VS. RUSSELL 2500 Value of $10,000 Invested on 2/27/09 | |||||||||||
Includes reinvestment of distributions. | |||
PORTFOLIO DIAGNOSTICS | |||
Fund Net Assets | $12 million | ||
Number of Holdings | 58 | ||
Turnover Rate | 167% | ||
Average Market Capitalization1 | $6,710 million | ||
Weighted Average P/E Ratio2,3 | 22.2x | ||
Weighted Average P/B Ratio2 | 2.2x | ||
U.S. Investments (% of Net Assets) | 79.7% | ||
Non-U.S. Investments (% of Net Assets) | 18.2% | ||
Symbol | RYFVX | ||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
RFV | 0.37 | 17.73 | |
Russell 2500 | 1.03 | 15.85 | |
Category Median | 0.96 | 15.31 | |
Best Quartile Breakpoint | 1.08 | 14.10 | |
1 Three years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 340 mid-cap objective funds (oldest class only) with at least three years of history. | |||
DOWN MARKET PERFORMANCE COMPARISON | |||
The Royce Funds 2013 Annual Report to Shareholders | 29 |
Royce Partners Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | ||||||||||
July–December 20131 | 17.92 | % | ||||||||
One-Year | 32.22 | |||||||||
Three-Year | 12.14 | |||||||||
Since Inception (4/27/09) | 15.16 | |||||||||
ANNUAL EXPENSE RATIOS | ||||||||||
Gross Operating Expenses | 4.70 | % | ||||||||
Net Operating Expenses | 1.22 | |||||||||
1 Not annualized | ||||||||||
CALENDAR YEAR TOTAL RETURNS | ||||||||||
Year | PTR | Year | PTR | |||||||
2013 | 32.2 | % | 2011 | -11.7 | % | |||||
2012 | 20.7 | 2010 | 18.7 | |||||||
TOP 10 POSITIONS % of Net Assets | ||||||||||
E-L Financial | 2.9 | % | ||||||||
Value Partners Group | 2.3 | |||||||||
State Street | 2.3 | |||||||||
MasterCard Cl. A | 2.1 | |||||||||
Atrion Corporation | 2.1 | |||||||||
Ashmore Group | 1.9 | |||||||||
Towers Watson & Co. Cl. A | 1.8 | |||||||||
Heritage-Crystal Clean | 1.8 | |||||||||
ManpowerGroup | 1.7 | |||||||||
Zebra Technologies Cl. A | 1.7 | |||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | ||||||||||
Financials | 29.6 | % | ||||||||
Industrials | 20.0 | |||||||||
Information Technology | 14.0 | |||||||||
Materials | 8.6 | |||||||||
Energy | 5.2 | |||||||||
Health Care | 4.8 | |||||||||
Consumer Discretionary | 2.3 | |||||||||
Telecommunication Services | 1.5 | |||||||||
Miscellaneous | 0.5 | |||||||||
Cash and Cash Equivalents | 13.5 | |||||||||
Manager’s Discussion Following a strong relative and absolute calendar-year performance in 2012, Royce Partners Fund (PTR) was unable to beat its benchmark in 2013, its solid absolute results notwithstanding. PTR gained 32.2% for the calendar year, trailing the 36.8% increase for its benchmark, the Russell 2500 Index, for the same period. After finishing 2012 on a high note by outperforming the small- to mid-cap index in 2012, the Fund was unable to keep up the pace through the consistently bullish first quarter of 2013. PTR did well on an absolute basis but lost ground against the Russell 2500, gaining 10.7% versus 12.9% for the index. The Fund fell further behind in the second quarter, a far more volatile period than this year’s first quarter and somewhat similar to the second and fourth quarters of 2012, which only served to exacerbate our frustration. The period between the beginning of April and the end of June saw underwhelming economic news from China (along with credit issues and the threat of an overheated real estate market), new attempts at fiscal stimulus in Japan, unrest—and plunging markets—in Turkey and Brazil, a spike in the 10-year Treasury rate between mid-May and mid-June, and word from the Federal Reserve that it would likely begin to taper its bond purchase program later in 2013. All of this was enough to push financial markets into a round of selling, especially outside the U.S. Indeed, the major domestic equity indexes stabilized and finished the second quarter in the black. For the second quarter as a whole the Fund gained 1.3% while the Russell 2500 advanced 2.3%. The bull then began to run again in the third quarter, lifting equities as a whole and pushing most U.S. small-cap and European index returns into double digits. Indeed, investors recovered from the previous quarter’s macro headwinds with remarkable equanimity, making third-quarter returns in some cases similar to those of the year’s first quarter. PTR returned 8.3% in the third quarter, falling behind its benchmark’s 9.1% increase. After lagging the Russell 2500 for most of the year, PTR mounted something of a comeback in 2013’s final quarter. Although a brief wave of volatility hit the markets in mid-December, the tone in the fourth quarter was decidedly, though less dynamically, bullish. PTR narrowly outpaced its benchmark for the quarter with an 8.9% gain compared to the Russell 2500’s 8.7% return. PTR’s average annual total return since inception (4/27/09) was 15.2%, a solid absolute showing that nonetheless lagged its benchmark’s 23.7% increase for the same period. All eight of the Fund’s equity sectors were positive contributors to 2013 performance, with Financials, PTR’s largest sectors, leading by a wide margin. Industrials and Information |
GOOD IDEAS THAT WORKED 1 Top Contributors to 2013 Performance | |||||||||||
WisdomTree Investments | 1.89% | ||||||||||
Towers Watson & Company Cl. A | 1.84 | ||||||||||
E-L Financial | 1.38 | ||||||||||
ManpowerGroup | 1.33 | ||||||||||
MasterCard Cl. A | 1.24 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Gross operating expenses reflect total gross annual operating expenses and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Net operating expenses reflect contractual fee waivers and/or reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive its fees and/or reimburse operating expenses to the extent necessary to maintain the Fund’s net annual operating expenses, other than acquired fund fees and expenses, at or below 1.20% through April 30, 2014 and 1.99% through April 30, 2023. Acquired fund fees and expenses 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. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
30 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review Technology also made sizable contributions to performance. Capital markets led at the industry level and was largely responsible for the lofty net gains in the Financials sector. The industry group’s net gains were substantially bigger than those of any of the portfolio’s other sectors. The Fund’s top contributor to 2013 performance was New York based asset management firm WisdomTree Investments, which sponsors ETFs (exchanged-traded funds) and other financial products to both retail and institutional investors. Robust inflows and strong product line growth helped to attract investors to its stock. After taking gains earlier in the year, we sold our remaining stake in September. Also showing strength in the capital markets group was top-ten holding State Street, which just missed making a second straight appearance on the “Good Ideas that Worked” list. Towers Watson & Company saw multiple expansion as several notable client wins and strong enrollment growth solidified its position as the leading provider and manager of private health insurance exchanges. We see this is as a significant emerging growth opportunity that can supplement the firm’s dominant but mature benefits and consulting business. Towers Watson & Company also raised its dividend in November in what we see as a positive sign of shareholder-friendly capital allocation. So while we took gains as its stock price soared, it was a top-ten position at year-end. In the insurance industry, E-L Financial, an investment and insurance holding company based in Toronto, was the top contributor. We like its core business and dividend and were pleased to see other investors attracted to the Fund’s largest holding at year-end. Two of PTR’s five-largest detractors came from the metals & mining group and engage in precious metals mining. This industry could not escape the negative impact on revenue and stock prices of the respective 36% and 28% drops in silver and gold prices in 2013. In August we sold our position in Gold Fields, a mining company with operations in Australia, Ghana, Peru, and South Africa. We chose to hold our shares of Fresnillo because we think the London-based gold and silver miner, which operates most of its lower-cost properties in Mexico, is well positioned for an eventual industry turnaround. Sprott is one of Canada’s largest hedge fund managers and focuses primarily on commodities and commodity-oriented businesses. Commodity price weakness hurt its business in 2013. Acacia Research endured slow-to-materialize deals with higher valuations as well as increased resistance from certain potential patent licensees—both cyclical characteristics of the tech licensing and patent enforcement business that typically leads to lumpiness in results. This model does not play well on Wall Street, so it was no surprise that subsequent earnings disappointments led its share price to fall. |
GOOD IDEAS AT THE TIME | |
Gold Fields ADR | -0.98% |
Acacia Research | -0.57 |
Fresnillo | -0.46 |
Sprott | -0.39 |
GrafTech International | -0.31 |
1 Net of dividends | |
ROYCE PARTNERS FUND VS. RUSSELL 2500 Value of $10,000 Invested on 4/27/09 | |
Includes reinvestment of distributions. | |||
PORTFOLIO DIAGNOSTICS | |||
Fund Net Assets | $3 million | ||
Number of Holdings | 62 | ||
Turnover Rate | 53% | ||
Average Market Capitalization1 | $3,016 million | ||
Weighted Average P/E Ratio2,3 | 19.0x | ||
Weighted Average P/B Ratio2 | 2.1x | ||
U.S. Investments (% of Net Assets) | 56.5% | ||
Non-U.S. Investments (% of Net Assets) | 30.0% | ||
Symbol | RPTRX | ||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
PTR | 0.79 | 16.02 | |
Russell 2500 | 1.03 | 15.85 | |
Category Median | 0.96 | 15.31 | |
Best Quartile Breakpoint | 1.08 | 14.10 | |
1 Three years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 340 mid-cap objective funds (oldest class only) with at least three years of history. | |||
DOWN MARKET PERFORMANCE COMPARISON | |||
The Royce Funds 2013 Annual Report to Shareholders | 31 |
Royce European Smaller-Companies Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | |||||||||||
July–December 20131 | 18.10 | % | |||||||||
One-Year | 20.83 | ||||||||||
Three-Year | 6.03 | ||||||||||
Five-Year | 20.51 | ||||||||||
Since Inception (12/29/06) | 4.73 | ||||||||||
ANNUAL EXPENSE RATIOS | |||||||||||
Gross Operating Expenses | 2.16 | % | |||||||||
Net Operating Expenses | 1.72 | ||||||||||
1 Not annualized | |||||||||||
CALENDAR YEAR TOTAL RETURNS | |||||||||||
Year | RES | Year | RES | ||||||||
2013 | 20.8 | % | 2009 | 57.7 | % | ||||||
2012 | 23.8 | 2008 | -46.4 | ||||||||
2011 | -20.3 | 2007 | 1.4 | ||||||||
2010 | 35.2 | ||||||||||
TOP 10 POSITIONS % of Net Assets | |||||||||||
Mayr-Melnhof Karton | 2.4 | % | |||||||||
Semperit AG Holding | 2.2 | ||||||||||
Forbo Holding | 2.1 | ||||||||||
Stallergenes | 2.1 | ||||||||||
E2V Technologies | 2.1 | ||||||||||
Zehnder Group | 2.0 | ||||||||||
Parrot | 1.9 | ||||||||||
Vetoquinol | 1.9 | ||||||||||
EVS Broadcast Equipment | 1.8 | ||||||||||
Recordati | 1.8 | ||||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | |||||||||||
Health Care | 18.2 | % | |||||||||
Industrials | 17.5 | ||||||||||
Information Technology | 17.3 | ||||||||||
Consumer Discretionary | 14.3 | ||||||||||
Materials | 7.5 | ||||||||||
Financials | 7.4 | ||||||||||
Energy | 7.1 | ||||||||||
Consumer Staples | 3.9 | ||||||||||
Telecommunication Services | 0.5 | ||||||||||
Cash and Cash Equivalents | 6.3 | ||||||||||
PORTFOLIO COUNTRY BREAKDOWN1,2 % of Net Assets | |||||||||||
United Kingdom | 25.3 | % | |||||||||
France | 17.1 | ||||||||||
Germany | 13.2 | ||||||||||
Switzerland | 8.2 | ||||||||||
Italy | 5.2 | ||||||||||
Belgium | 4.8 | ||||||||||
Norway | 4.6 | ||||||||||
Austria | 4.5 | ||||||||||
Finland | 3.0 | ||||||||||
1 Represents countries that are 3% or more of net assets. | |||||||||||
2 Securities are categorized by the country of their headquarters. | |||||||||||
Managers’ Discussion European stocks enjoyed a strong second half, though they still could not quite match the blistering pace of returns shown by their U.S. peers. Nonetheless, returns for the calendar year were robust. Many of the ever-present headlines about the eurozone’s still knotty debt issues were overshadowed by renewed investor concern over the health of certain emerging market economies and the impact of the U.S. Federal Reserve’s decision to taper the pace of its monthly bond purchases, the mere mention of which sent global markets into a brief tailspin in June. Royce European Smaller- Companies Fund (RES), with its charter to invest in the highest conviction ideas we find in our research and analysis of European companies, had a solid absolute showing but disappointed on a relative basis. The Fund advanced 20.8% in 2013, lagging its benchmark, the Russell Europe Small Cap Index, which increased 36.6% over the same period. The first quarter saw RES gain 2.5% as it fell behind the European small-cap index, which gained 5.2%. Markets experienced a significant spike in volatility in the second quarter—the year’s most eventful—as fragile eurozone economies came to grips with the potential for a reduction in U.S. monetary stimulus and higher interest rates. April and May were bullish, continuing the positive momentum of the first quarter, while June turned decidedly bearish. RES lost 0.2% in 2013’s second quarter compared to a slightly better performance by the benchmark, with the Russell Europe Small Cap Index gaining 0.5%. Although they were slower to rebound than their U.S. cousins, European stocks enjoyed an explosive third quarter, which saw a resumption of the more straight-ahead bullishness that characterized the first. In this environment, it was not surprising to see the Fund, with its disciplined value approach, underperform. As was the case in the U.S., the rally for European stocks was led by lower-quality companies (as measured by returns on invested capital). For the third quarter, RES advanced 11.7%—a more than respectable showing—while its benchmark rose an impressive 16.9%. While not as unsettled as the second, the fourth quarter saw the return of volatility and results that were more modest though still very strong. RES was up 5.7% in the year’s final quarter compared to a 10.5% gain for the Russell Europe Small Cap Index, capping a dynamic second half of 2013. While we would have preferred to see better short- and intermediate-term relative results, we were pleased that the Fund maintained its performance advantage over its benchmark for the since inception (12/29/06) period ended December 31, 2013. In October, we made changes to RES’s portfolio management: David A. Nadel and Mark |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Boiron | 1.41% | ||||||||||
Recordati | 1.19 | ||||||||||
Azimut Holding | 1.13 | ||||||||||
Clarkson | 1.04 | ||||||||||
Let’s GOWEX | 1.02 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 2% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Gross operating expenses reflect total gross annual operating expenses and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Net operating expenses reflect contractual fee waivers and/or expense reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive its fees and/or reimburse operating expenses to the extent necessary to maintain the Fund’s net annual operating expenses, other than acquired fund fees and expenses, at or below 1.69% through April 30, 2014 and at or below 1.99% through April 30, 2023. Acquired fund fees and expenses 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. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
32 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review Rayner co-manage the Fund. David began to manage the Fund in 2011 and served as assistant portfolio manager from 2009 through 2011. Mark served as the assistant portfolio manager from May 1, 2013 through October 21, 2013. Seven of RES’s nine equity sectors posted net gains for the year, with only Materials and Energy detracting from performance. We reduced our exposure to the former sector in 2013. Unhappy with ongoing share price declines over the past year, we sold our shares of Hochschild Mining. This U.K.-based gold and silver mining company with operations primarily in South America saw its shares begin to fall sharply in the first quarter, closely tracking the steep losses experienced in the physical gold market. Mining companies also faced increased operating costs, creating a nightmarish scenario. We felt better about the future prospects for Paris-based Parrot. RES’s seventh-largest holding at year-end, Parrot specializes in technologies involving voice recognition, such as Bluetooth hands free car kits, and signal processing for embedded products. It also makes drones for gaming and more serious uses. Its shares suffered from a product life cycle trough as sales declined for automotive semiconductors, part of a more general weakness in Europe’s automobile market and the timing of Parrot’s new product launches. We continue to believe that Parrot’s prospects for 2014 and beyond are bright and that the stock was attractively priced at year-end. Top contributions came from some of the portfolio’s larger holdings. Boiron is the global leader in homeopathic remedies, a branch of medicine which is considered mainstream across much of Europe. We have been shareholders in the company since shortly after RES’s inception and we have long admired its strong competitive position, high profitability, and conservative balance sheet as well as being attracted to the stock’s low valuation. This patience bore fruit in 2013 as the stock price doubled. As this move was driven primarily by strong earnings growth, the stock remained cheap in our view, leading us to hold our shares throughout the year. Recordati is a family owned and run pharmaceutical company, with a focus on cardiovascular and urological treatments. It also has an increasing exposure to very rare (known as “orphan”) diseases. In addition to its attractive valuation, we were initially drawn to its impressive profitability and strong balance sheet several years ago. We reasoned that this compelling valuation was related to its being headquartered and listed in Italy, one of the countries then in the eye of the euro storm. Our contention was that Recordati’s domicile created a perception of inefficiency, especially since the majority—and an increasing share—of its revenues were derived from outside its domestic market. Operationally the company continued to execute very effectively, and as Italian stocks have come back into favor, its shares performed consistently well during 2013. |
GOOD IDEAS AT THE TIME | |
Hochschild Mining | -1.69% |
Parrot | -0.58 |
Spectrum | -0.46 |
Mardin Cimento Sanayii | -0.41 |
Koza Altin Isletmeleri | -0.38 |
1 Net of dividends | |
ROYCE EUROPEAN SMALLER-COMPANIES FUND VS. RUSSELL EUROPE SMALL CAP Value of $10,000 Invested on 12/29/06 | |
Includes reinvestment of distributions. | |||
PORTFOLIO DIAGNOSTICS | |||
Fund Net Assets | $28 million | ||
Number of Holdings | 77 | ||
Turnover Rate | 53% | ||
Average Market Capitalization1 | $1,190 million | ||
Weighted Average P/E Ratio2,3 | 17.6x | ||
Weighted Average P/B Ratio2 | 2.6x | ||
Symbol | RISCX | ||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | |||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | |||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
RES | 0.99 | 21.09 | |
Russell Europe Small Cap | 0.94 | 23.38 | |
Category Median | 0.68 | 22.18 | |
Best Quartile Breakpoint | 0.87 | 20.97 | |
1 Five years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 21 European stock objective funds (oldest class only) with at least five years of history. | |||
The Fund beat the Russell Europe Small Cap and performed within the top 25% of European stock objective funds on a risk-adjusted basis, as shown by its Sharpe ratio. In addition, the Fund produced lower volatility than the Russell Europe Small Cap and 50% of European stock objective funds, as shown by its standard deviation. | |||
DOWN MARKET PERFORMANCE COMPARISON | |||
The Royce Funds 2013 Annual Report to Shareholders | 33 |
Royce Global Dividend Value Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | ||||||||||
July–December 20131 | 13.55 | % | ||||||||
One-Year | 15.78 | |||||||||
Three-Year | 6.28 | |||||||||
Since Inception (12/31/10) | 6.28 | |||||||||
ANNUAL EXPENSE RATIOS | ||||||||||
Gross Operating Expenses | 2.87 | % | ||||||||
Net Operating Expenses | 1.70 | |||||||||
1 Not annualized | ||||||||||
CALENDAR YEAR TOTAL RETURNS | ||||||||||
Year | RGD | Year | RGD | |||||||
2013 | 15.8 | % | 2011 | -15.4 | % | |||||
2012 | 22.5 | |||||||||
TOP 10 POSITIONS % of Net Assets | ||||||||||
Totvs | 1.4 | % | ||||||||
Brasil Brokers Participacoes | 1.1 | |||||||||
WaterFurnace Renewable Energy | 1.1 | |||||||||
Television Broadcasts | 1.0 | |||||||||
Domino Printing Sciences | 1.0 | |||||||||
Stella-Jones | 1.0 | |||||||||
Value Partners Group | 1.0 | |||||||||
Midland Holdings | 0.9 | |||||||||
Mayr-Melnhof Karton | 0.9 | |||||||||
Lewis Group | 0.9 | |||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | ||||||||||
Consumer Discretionary | 19.1 | % | ||||||||
Industrials | 17.4 | |||||||||
Information Technology | 16.0 | |||||||||
Financials | 14.6 | |||||||||
Materials | 9.1 | |||||||||
Health Care | 5.6 | |||||||||
Consumer Staples | 3.0 | |||||||||
Energy | 2.8 | |||||||||
Diversified Investment Companies | 0.2 | |||||||||
Cash and Cash Equivalents | 12.2 | |||||||||
Manager’s Discussion 2013 was a remarkable year for equities as a whole, but based on the calendar-year performance of Royce Global Dividend Value Fund (RGD), many small-cap stock investors seemed more interested in other options than those provided by many dividend-paying companies. Indeed, considering the market’s stellar performance, we were disappointed in Royce Global Dividend Value Fund’s (RGD) relative and absolute results. The Fund, which invests primarily in dividend-paying small-cap companies both in and outside the U.S., was up 15.8% for the year, trailing its global small-cap benchmark, the Russell Global Small Cap Index, which gained 24.8% for the same period. Many stocks around the world participated in the bullish first quarter, although non-U.S. equities generally saw lower returns. In the first three months of 2013, RGD underperformed its benchmark by a considerable margin, gaining 4.1% versus its benchmark’s 8.6% gain. Stock prices were driven lower globally in the more volatile second quarter, with those outside the U.S. suffering more as a group. Investors were increasingly anxious over credit issues and slower growth in China, social unrest and stock market declines in emerging market countries such as Brazil and Turkey, uncertainty over the fiscal health of some of Europe’s developed countries, and rising interest rates and talk from the Federal Reserve about tapering here in the U.S. RGD finished the second quarter in the red, losing 2.0% versus the Russell Global Small Cap Index’s 1.7% decline. In contrast to their domestic counterparts, which for the most part finished the second quarter in the black, non-U.S. companies did not begin to recover until early in the third quarter, with most global markets settling down in July. While generally not as robust as the first quarter in the U.S., the third was strong nonetheless, particularly in Europe. Unfortunately, the Fund again fell short of its benchmark in this period, gaining 9.1% in the third quarter versus 10.5% for the global small-cap index. The fast pace slackened in the fourth quarter—December was particularly rocky—though small-cap results in many places remained in the black. The Fund advanced 4.1% in the fourth quarter versus 5.8% for the Russell Global Small Cap Index. After outperforming the global small-cap index in the second half of 2012 (+15.8% versus +11.0%), the Fund’s underperformance in 2013 eroded its longer-term relative advantage for the three-year/since inception (12/31/10) periods ended December 31, 2013. It seems doubtful to us that the market can sustain its recently feverish pace, so we see the potential attraction in the kinds of conservatively capitalized, dividend-paying small-cap |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Photo-Me International | 0.57% | ||||||||||
Apollo Global Management LLC Cl. A | 0.54 | ||||||||||
Jupiter Fund Management | 0.50 | ||||||||||
Boiron | 0.48 | ||||||||||
Pacific Textiles Holdings | 0.47 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 2% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Gross operating expenses reflect total gross annual operating expenses and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Net operating expenses reflect contractual fee waivers and/or expense reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive its fees and/or reimburse operating expenses to the extent necessary to maintain the Fund’s net annual operating expenses, other than acquired fund fees and expenses, at or below 1.69% through April 30, 2014 and at or below 1.99% through April 30, 2023. Acquired fund fees and expenses 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. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
34 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review |
companies that we seek for RGD’s portfolio. Investors in the U.S. began to pay more attention to business fundamentals in the last six months of 2013. This flirtation was both too brief and too localized to benefit the Fund’s relative calendar-year results. However, we see the possibility of greater commitment in a more challenging market, especially one with rising interest rates, which is likely to provide renewed interest in businesses with strong balance sheets. We are very comfortable with the way the portfolio is positioned as we look forward. Eight of the Fund’s nine equity sectors contributed positively to performance in 2013. Information Technology, Industrials, and Consumer Discretionary led by a wide margin, with Materials the only sector to finish the period in the red. Heavy losses came from holdings in the metals & mining industry—eight out of the Fund’s 10 leading detractors came from this category. Sharp declines in silver and gold prices continued to drive stock prices and revenue downward throughout the year. Believing that it is well positioned for an eventual turnaround in the industry, we initiated a position in Gold Fields in March and added shares in June. We did the same with Imdex, an Australian firm that provides drilling fluids and downhole survey instruments to the mining, oil and gas, water well, HDD, and civil engineering industries worldwide. In May, however, we chose to sell our position in Hochschild Mining. We increased our stake in Sprott, a Canadian investment management company with a history dating back to 1981. Its share price declined primarily due to its high exposure to the precious metals & mining industry. Daphne International Holdings is a maker and retailer of Chinese footwear and sells Aerosole shoes in China. China’s economic slowdown has greatly influenced Daphne’s share price as a cutback in consumer spending has contributed to declining sales and revenues. After trimming our stake a bit in February, we began adding to our share in May as valuations dropped down to our liking. The company’s strong management and market position gave us confidence in its long-term potential. Photo-Me International is a U.K.-based consumer goods company that operates, sells, and services photo equipment such as photo booths and digital photo kiosks. After building a position earlier in the year, we sold our stake in October. New York City-based Apollo Global Management is a global asset manager that invests in private equity, credit-oriented capital markets, and real estate. At the end July, we sold our shares after news that Apollo would be acquiring Pitney Bowes Management Services for approximately $400 million in cash drove its stock price up. |
GOOD IDEAS AT THE TIME | |
Daphne International Holdings | -0.64% |
Gold Fields ADR | -0.55 |
Hochschild Mining | -0.45 |
Imdex | -0.44 |
Sprott | -0.39 |
1 Net of dividends | |
ROYCE GLOBAL DIVIDEND VALUE FUND VS. RUSSELL GLOBAL SMALL CAP Value of $10,000 Invested on 12/31/10 | |
Includes reinvestment of distributions. |
PORTFOLIO DIAGNOSTICS | ||||
Fund Net Assets | $10 million | |||
Number of Holdings | 147 | |||
Turnover Rate | 82% | |||
Average Market Capitalization1 | $1,117 million | |||
Weighted Average P/E Ratio2,3 | 16.1x | |||
Weighted Average P/B Ratio2 | 2.1x | |||
Symbol | RGVDX | |||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | ||||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | ||||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
RGD | 0.46 | 16.11 | |
Russell Global Small Cap | 0.57 | 15.81 | |
Category Median | 0.55 | 16.09 | |
Best Quartile Breakpoint | 0.78 | 15.51 | |
1 Three years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 17 world stock small-cap objective funds (oldest class only) with at least three years of history. | |||
PORTFOLIO COUNTRY BREAKDOWN1,2 % of Net Assets | ||||||||||
Hong Kong | 12.5 | % | ||||||||
United Kingdom | 10.3 | |||||||||
Canada | 7.8 | |||||||||
United States | 6.8 | |||||||||
South Africa | 5.9 | |||||||||
Brazil | 5.4 | |||||||||
Japan | 5.3 | |||||||||
Switzerland | 4.6 | |||||||||
Germany | 3.5 | |||||||||
1 Represents countries that are 3% or more of net assets. | ||||||||||
2 Securities are categorized by the country of their headquarters. | ||||||||||
The Royce Funds 2013 Annual Report to Shareholders | 35 |
Royce International Micro-Cap Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | ||||||||||
July–December 20131 | 19.50 | % | ||||||||
One-Year | 18.95 | |||||||||
Three-Year | 1.98 | |||||||||
Since Inception (12/31/10) | 1.98 | |||||||||
ANNUAL EXPENSE RATIOS | ||||||||||
Gross Operating Expenses | 3.97 | % | ||||||||
Net Operating Expenses | 1.76 | |||||||||
1 Not annualized | ||||||||||
CALENDAR YEAR TOTAL RETURNS | ||||||||||
Year | RMI | Year | RMI | |||||||
2013 | 18.9 | % | 2011 | -21.5 | % | |||||
2012 | 13.6 | |||||||||
TOP 10 POSITIONS % of Net Assets | ||||||||||
Pico Far East Holdings | 1.5 | % | ||||||||
Miraial | 1.5 | |||||||||
Nemetschek | 1.3 | |||||||||
CB Industrial Product Holding | 1.3 | |||||||||
E2V Technologies | 1.3 | |||||||||
Consort Medical | 1.3 | |||||||||
Huvis Corporation | 1.3 | |||||||||
Blue Label Telecoms | 1.3 | |||||||||
EPS Corporation | 1.3 | |||||||||
C. Uyemura & Co. | 1.3 | |||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | ||||||||||
Industrials | 26.8 | % | ||||||||
Consumer Discretionary | 24.2 | |||||||||
Information Technology | 21.0 | |||||||||
Materials | 7.0 | |||||||||
Health Care | 5.8 | |||||||||
Consumer Staples | 3.9 | |||||||||
Financials | 3.3 | |||||||||
Energy | 2.4 | |||||||||
Cash and Cash Equivalents | 5.6 | |||||||||
Manager’s Discussion We were pleased with the calendar-year performance of Royce International Micro-Cap Fund (RMI) on both an absolute and relative basis, especially considering that non-U.S. companies generally provided lower returns than their domestic cousins. The Fund gained 19.0% in 2013, outperforming its benchmark, the Russell Global ex-U.S. Small Cap Index, which gained 17.2% for the same period. During the bullish first quarter, RMI’s diverse assemblage of what we deem to be quality micro-cap companies struggled to keep pace with the solid gains turned in by its benchmark index, which rose 6.5% for the period versus the Fund’s 2.2% advance. This stood in contrast with the more uncertain second quarter in which international markets diverged meaningfully from the generally positive results in the U.S. First-quarter gains gave way to a more volatile market as investors weighed developing economic risks around events in the emerging world, Europe, and the U.S. China was back in the spotlight as growing credit risks in its increasingly overheated real estate market brought swift action by that country’s central bank to improve and gain greater control over lending standards. Volatility in global bond markets also gave investors pause as the possibility—and later reality—of tapering the pace of the U.S. Federal Reserve’s monthly bond purchases (quantitative easing) was introduced and reinforced in May and June, sending yields 100 basis points higher on the 10-year Treasury note. RMI benefited from its margin of safety discipline (a hallmark of the Royce investment approach) during this period by falling a modest 2.6% compared to the Russell Global ex-U.S. Small Cap, which lost 4.5% in the second quarter. Despite the international market’s ongoing challenges, equities as a whole rallied once again in the third quarter, with Europe showing particular strength. During this period, RMI gained 12.0% versus its benchmark’s 10.7% increase. The Fund’s fourth-quarter performance nicely enhanced its solid calendar year record. Despite a brief period of volatility, the last three months of the year were strong, though not as wildly bullish as the first and third quarters. RMI outpaced its benchmark in the year’s final quarter, up 6.7% compared to the international small-cap index’s 4.1% gain. The Fund’s three-year/since inception (12/31/10) results were less inspiring, though we remain confident in the Fund’s long-term potential. On October 22, 2013, Jim Harvey and Dilip Badlani began to co-manage the portfolio with David Nadel—who had served as the Fund’s portfolio manager from its inception through October 21, 2013—remaining as assistant portfolio manager. |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
TFS Corporation | 1.00% | ||||||||||
Clinigen Group | 0.97 | ||||||||||
Century Casinos | 0.96 | ||||||||||
Makalot Industrial | 0.92 | ||||||||||
Clarkson | 0.88 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 2% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Gross operating expenses reflect total gross annual operating expenses and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Net operating expenses reflect contractual fee waivers and/or expense reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive its fees and/or reimburse operating expenses, to the extent necessary to maintain the Fund’s net annual operating expenses other than acquired fund fees and expenses, at or below 1.69% through April 30, 2014 and at or below 1.99% though April 30, 2023. Expenses are estimated for the current fiscal year. Acquired fund fees and expenses 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. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
36 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review |
Seven of the Fund’s nine equity sectors contributed positively to calendar-year performance, led by Industrials, which was out in front by a good-sized margin. Information Technology, Consumer Discretionary, and Health Care also posted sizable net gains. Energy and Materials ended 2013 in the red, though the former’s net losses were fairly modest. The metals & mining industry was the most significant detractor within the Materials sector. Precious metals miners—an ample presence among our holdings in the industry—endured plummeting revenues and stock prices in light of the respective 36% and 28% drops in silver and gold prices in 2013. We reduced RMI’s exposure to the industry as a whole, holding positions only in those companies that we believe are well funded, conservatively managed, or otherwise well positioned to rebound when the metals & mining industry recovers. We parted ways with Australian gold miners Evolution Mining and Troy Resources in October after selling our shares in French mineral driller Foraco International in May. We also sold our position in Indian specialty pipe and tube maker Maharashtra Seamless in November as slowing growth in the Indian economy and ongoing pipe dumping in that country led to a steep decline in demand and order inflow. Beginning in March, we gradually added to our stake in Imdex, an Australian company that supplies drilling fluids and downhole survey instruments to the mining, oil and gas, water well, HDD, and civil engineering industries worldwide. We like its low-debt balance sheet and position as an industry leader, though with mineral drilling activity likely to remain subdued, we recognize the possible need for patience. TFS Corporation was the Fund’s top contributor in 2013 and its fifteenth-largest position at year-end. Based in Australia, TFS manages the globe’s largest sustainable supply of Indian Sandalwood while also offering a sustainable supply of Western Australian Sandalwood oil and wood products for the global market. Its products have uses in the pharmaceutical and fragrance industries. The company survived the fallout from widespread collapses in Australian MIS (managed investment scheme) vehicles and also saw the harvest of its first Indian sandalwood plantation, planted in 1999. Clinigen Group is a UK-based specialty pharmaceuticals and pharmaceutical services business serving patients, the medical community, and the healthcare industry. Its share price rose based on the impressive growth in its global business and consequent earnings improvement. We sold our shares between May and October. The latter month also saw us selling our position in Century Casinos as its rising share price proved to be a winning bet for the Fund. Based in Colorado Springs, the company owns and operates casinos, hotels, and resorts in the U.S., Canada, South Africa, and the Czech Republic and also operates casinos on luxury cruise ships. Strong earnings seemed to draw investors to the stock. |
GOOD IDEAS AT THE TIME | |
Evolution Mining | -0.82% |
Maharashtra Seamless | -0.78 |
Imdex | -0.74 |
Troy Resources | -0.69 |
Foraco International | -0.57 |
1 Net of dividends | |
ROYCE INTERNATIONAL MICRO-CAP FUND VS. RUSSELL GLOBAL EX-U.S. SMALL CAP Value of $10,000 Invested on 12/31/10 | |
Includes reinvestment of distributions. |
PORTFOLIO DIAGNOSTICS | ||||
Fund Net Assets | $5 million | |||
Number of Holdings | 124 | |||
Turnover Rate | 103% | |||
Average Market Capitalization1 | $412 million | |||
Weighted Average P/E Ratio2,3 | 13.1x | |||
Weighted Average P/B Ratio2 | 1.7x | |||
Symbol | ROIMX | |||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | ||||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | ||||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
RMI | 0.20 | 17.79 | |
Russell Global ex-U.S. Small Cap | 0.33 | 16.45 | |
Category Median | 0.64 | 16.34 | |
Best Quartile Breakpoint | 0.75 | 14.96 | |
1 Three years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 68 foreign small/mid objective funds (oldest class only) with at least three years of history. | |||
PORTFOLIO COUNTRY BREAKDOWN1,2 % of Net Assets | ||||||||||
Japan | 16.2 | % | ||||||||
Hong Kong | 12.3 | |||||||||
United Kingdom | 9.3 | |||||||||
Canada | 7.2 | |||||||||
India | 6.0 | |||||||||
Australia | 4.7 | |||||||||
Germany | 4.4 | |||||||||
South Korea | 3.7 | |||||||||
Malaysia | 3.5 | |||||||||
1 Represents countries that are 3% or more of net assets. | ||||||||||
2 Securities are categorized by the country of their headquarters. | ||||||||||
The Royce Funds 2013 Annual Report to Shareholders | 37 |
Royce International Premier Fund |
AVERAGE ANNUAL TOTAL RETURNS Through 12/31/13 | ||||||||||
July–December 20131 | 13.11 | % | ||||||||
One-Year | 18.31 | |||||||||
Three-Year | 6.72 | |||||||||
Since Inception (12/31/10) | 6.72 | |||||||||
ANNUAL EXPENSE RATIOS | ||||||||||
Gross Operating Expenses | 3.54 | % | ||||||||
Net Operating Expenses | 1.69 | |||||||||
1 Not annualized | ||||||||||
CALENDAR YEAR TOTAL RETURNS | ||||||||||
Year | RIP | Year | RIP | |||||||
2013 | 18.3 | % | 2011 | -16.8 | % | |||||
2012 | 23.4 | |||||||||
TOP 10 POSITIONS % of Net Assets | ||||||||||
EVS Broadcast Equipment | 2.7 | % | ||||||||
Mayr-Melnhof Karton | 2.6 | |||||||||
Virbac | 2.5 | |||||||||
Semperit AG Holding | 2.5 | |||||||||
Forbo Holding | 2.4 | |||||||||
Nokian Renkaat | 2.3 | |||||||||
Clarkson | 2.3 | |||||||||
Domino Printing Sciences | 2.3 | |||||||||
Stella International Holdings | 2.2 | |||||||||
KWS Saat | 2.2 | |||||||||
PORTFOLIO SECTOR BREAKDOWN % of Net Assets | ||||||||||
Information Technology | 19.4 | % | ||||||||
Consumer Discretionary | 18.3 | |||||||||
Industrials | 17.6 | |||||||||
Health Care | 15.7 | |||||||||
Financials | 11.4 | |||||||||
Materials | 6.7 | |||||||||
Consumer Staples | 5.1 | |||||||||
Cash and Cash Equivalents | 5.8 | |||||||||
Manager’s Discussion Royce International Premier Fund (RIP) enjoyed a solid calendar year on both a relative and absolute basis. The Fund was up 18.3% in 2013, outperforming its benchmark, the Russell Global ex-U.S. Small Cap Index, which gained 17.2% for the same period. This result came in the context of markedly lower 2013 performance—and greater levels of volatility—for non-U.S. companies in relation to their domestic peers. Stocks around the world enjoyed a bullish first quarter, although those outside the U.S. generally turned in lower returns. RIP participated in the rally, though not to the same extent as its benchmark. The Fund gained 4.1% versus its benchmark’s 6.5% gain in the opening quarter of 2013. The global investment environment became more volatile in the second quarter. An overheated real estate market in China stole many of the headlines as policy makers there sought to cool speculation through credit restrictions that had the unintended consequence of rejuvenating fears of an economic slowdown. Civil unrest in developing nations such as Turkey and Brazil also challenged the underpinnings of the emerging market’s secular growth thesis. The sharp rise in the yield of the 10-year U.S. Treasury note during May and June provided yet another headwind as Ben Bernanke and the U.S. Federal Reserve began to guide financial markets toward a likely reduction in the central bank’s monthly bond purchase program. In this uncertain second quarter, RIP advanced 0.5% compared to a 4.5% decline for the benchmark index, highlighting the defensive and high-quality attributes of the Fund’s positions. The global markets recovered nicely in the third quarter, with the European and U.S. small-cap markets especially robust. Indeed, it was notable just how quickly and thoroughly investors managed to shake off many of the same macro concerns that brought considerably more volatility—and lower returns—to stocks in the previous three years. RIP gained 8.2% in the third quarter, a solid gain though it was not quite strong enough to match its benchmark’s 10.7% return. The rally extended through the end of the year. While more subdued for non-U.S. equities than the first and third quarters, the year’s last three months wound up solidly bullish. RIP outperformed its benchmark for the fourth quarter, advancing 4.5% compared to 4.1% for the Russell Global ex-U.S. Small Cap. In its three-year history, we believe the Fund has established a solid track record during a challenging period for many markets outside the U.S. The Fund outperformed the Russell Global ex-U.S. Small Cap in the one- and three-year/since inception (12/31/10) periods ended December 31, 2013. Six of the Fund’s seven equity sectors contributed positively to calendar-year performance, with half of the Fund’s positive contributors at the sector level posting sizable net gains. Health |
GOOD IDEAS THAT WORKED Top Contributors to 2013 Performance1 | |||||||||||
Kakaku.com | 1.97% | ||||||||||
Recordati | 1.23 | ||||||||||
M3 | 0.95 | ||||||||||
Stallergenes | 0.90 | ||||||||||
Domino Printing Sciences | 0.89 | ||||||||||
1 Includes dividends | |||||||||||
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 2% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Gross operating expenses reflect total gross annual operating expenses and include management fees, 12b-1 distribution and service fees, and other expenses. Net operating expenses reflect contractual fee waivers and/or expense reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive its fees and/or reimburse operating expenses to the extent necessary to maintain the Fund’s net annual operating expenses, at or below 1.69% through April 30, 2014 and at or below 1.99% through April 30, 2023. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013. |
38 | The Royce Funds 2013 Annual Report to Shareholders |
Performance and Portfolio Review |
Care led by a wide margin, followed by Industrials and Information Technology. The net loss for Consumer Discretionary was minimal. At the industry level, pharmaceuticals, electronic equipment, instruments & components, health care equipment & supplies, and machinery were the leaders. The textiles, apparel & luxury goods group was the largest detractor at the industry level. The bulk of its net losses came from the Fund’s largest detractor for the calendar year, Daphne International Holdings, which led all of the portfolio’s “Good Ideas at the Time” by a wide margin. Beginning in March 2013, we used its slumping share price to substantially add to our position. The overall slowdown in the Chinese economy has taken its toll on Daphne’s business as lower levels of consumer spending in particular caused sales and revenues to decline. The company is a Chinese footwear maker and retailer that sells Aerosole shoes in China. Its strong management and market position gave us confidence in the company’s long-term potential, though we recognize that this investment is likely to require patience. We did not feel as sanguine about the recovery prospects for South African retailer Lewis Group, which sells household furniture, electrical appliances, and home electronics primarily on credit. Flat sales, high levels of indebtedness in the unsecured credit market, and operational problems at some of its credit-based competitors all hurt its near-term results. Its value was also hampered by the sharp decline of the rand (South Africa’s currency) versus the dollar. Each of these factors led us to sell our shares in the fall. Tokyo-based Kakaku.com was RIP’s top contributor in 2013. The company provides websites that offer price comparison services and product information on restaurants, hotels, and consumer appliances. An increase in the number of PC and smartphone users, a move into profitability in its travel & real estate segment, and a positive momentum in its restaurant segment helped spark impressive earnings growth. We trimmed shares in August and sold the rest of our position at the end of September. Recordati is a family owned and run pharmaceutical company, with a focus on cardiovascular and urological treatments. It also has an increasing exposure to very rare (known as “orphan”) diseases. In addition to its attractive valuation, we were initially drawn to its impressive profitability and strong balance sheet several years ago. We reasoned that this compelling valuation was related to its being headquartered and listed in Italy, one of the countries then in the eye of the euro storm. Our contention was that Recordati’s domicile created a perception of inefficiency, especially since the majority—and an increasing share—of its revenues were derived from outside its domestic market. Operationally the company continued to execute very effectively, and as Italian stocks have come back into favor, its shares performed consistently well during 2013. |
GOOD IDEAS AT THE TIME | |
Daphne International Holdings | -2.38% |
Lewis Group | -0.53 |
Lopes Brasil-Consultoria de Imoveis SA | -0.30 |
Media Chinese International | -0.27 |
MegaStudy | -0.21 |
1 Net of dividends | |
ROYCE INTERNATIONAL PREMIER FUND VS. RUSSELL GLOBAL EX-U.S. SMALL CAP Value of $10,000 Invested on 12/31/10 | |
Includes reinvestment of distributions. |
PORTFOLIO DIAGNOSTICS | ||||
Fund Net Assets | $9 million | |||
Number of Holdings | 50 | |||
Turnover Rate | 51% | |||
Average Market Capitalization1 | $1,653 million | |||
Weighted Average P/E Ratio2,3 | 18.7x | |||
Weighted Average P/B Ratio2 | 3.4x | |||
Symbol | RYIPX | |||
1 Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median. | ||||
2 Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. | ||||
MORNINGSTAR STATISTICAL MEASURES1 | |||
Sharpe Ratio | Standard Deviation | ||
RIP | 0.49 | 15.61 | |
Russell Global ex-U.S. Small Cap | 0.33 | 16.45 | |
Category Median | 0.64 | 16.34 | |
Best Quartile Breakpoint | 0.75 | 14.96 | |
1 Three years ended 12/31/13. Category Median and Best Quartile Breakpoint based on 68 foreign small/mid objective funds (oldest class only) with at least three years of history. | |||
The Fund beat the Russell Global ex-U.S. Small Cap on a risk-adjusted basis, as shown by its Sharpe ratio. In addition, the Fund produced lower volatility than the Russell Global ex-U.S. Small Cap and 50% of foreign small/mid objective funds, as shown by its standard deviation. |
PORTFOLIO COUNTRY BREAKDOWN1,2 % of Net Assets | ||||||||||
United Kingdom | 26.7 | % | ||||||||
Switzerland | 13.4 | |||||||||
Germany | 8.5 | |||||||||
Hong Kong | 5.6 | |||||||||
Austria | 5.1 | |||||||||
Brazil | 4.7 | |||||||||
Japan | 4.7 | |||||||||
France | 4.6 | |||||||||
Italy | 3.9 | |||||||||
Malaysia | 3.6 | |||||||||
1 Represents countries that are 3% or more of net assets. | ||||||||||
2 Securities are categorized by the country of their headquarters. | ||||||||||
The Royce Funds 2013 Annual Report to Shareholders | 39 |
Schedules of Investments |
Royce Select Fund I |
SHARES | VALUE | ||||||||
COMMON STOCKS – 95.8% | |||||||||
Consumer Discretionary – 9.1% | |||||||||
Auto Components - 1.3% | |||||||||
Drew Industries | 6,096 | $ | 312,115 | ||||||
Gentex Corporation | 8,800 | 290,312 | |||||||
602,427 | |||||||||
Automobiles - 1.3% | |||||||||
Thor Industries | 11,000 | 607,530 | |||||||
Household Durables - 2.6% | |||||||||
†Harman International Industries | 4,900 | 401,065 | |||||||
800 | 820,808 | ||||||||
1,221,873 | |||||||||
Media - 0.9% | |||||||||
†Wiley (John) & Sons Cl. A | 7,700 | 425,040 | |||||||
Specialty Retail - 3.0% | |||||||||
Ascena Retail Group 1 | 40,500 | 856,980 | |||||||
8,000 | 584,480 | ||||||||
1,441,460 | |||||||||
Total (Cost $3,103,074) | 4,298,330 | ||||||||
Consumer Staples – 1.6% | |||||||||
Food Products - 1.6% | |||||||||
Cal-Maine Foods | 12,462 | 750,586 | |||||||
Total (Cost $356,563) | 750,586 | ||||||||
Energy – 13.1% | |||||||||
Energy Equipment & Services - 13.1% | |||||||||
Helmerich & Payne | 19,000 | 1,597,520 | |||||||
Oil States International 1 | 5,100 | 518,772 | |||||||
Pason Systems | 40,100 | 867,496 | |||||||
7,299 | 665,669 | ||||||||
Superior Energy Services 1 | 13,200 | 351,252 | |||||||
†TGS-NOPEC Geophysical | 26,200 | 694,601 | |||||||
Unit Corporation 1 | 29,050 | 1,499,561 | |||||||
Total (Cost $4,060,315) | 6,194,871 | ||||||||
Financials – 9.7% | |||||||||
Capital Markets - 6.5% | |||||||||
Federated Investors Cl. B | 45,200 | 1,301,760 | |||||||
Lazard Cl. A | 23,600 | 1,069,552 | |||||||
SEI Investments | 19,500 | 677,235 | |||||||
3,048,547 | |||||||||
Insurance - 3.2% | |||||||||
Alleghany Corporation 1 | 2,155 | 861,914 | |||||||
Validus Holdings | 16,400 | 660,756 | |||||||
1,522,670 | |||||||||
Total (Cost $3,141,635) | 4,571,217 | ||||||||
Health Care – 8.8% | |||||||||
Biotechnology - 1.7% | |||||||||
38,600 | 809,828 | ||||||||
Health Care Providers & Services - 0.4% | |||||||||
VCA Antech 1 | 6,710 | 210,426 | |||||||
Life Sciences Tools & Services - 3.9% | |||||||||
Bio-Rad Laboratories Cl. A 1 | 6,600 | 815,826 | |||||||
Techne Corporation | 10,614 | 1,004,827 | |||||||
1,820,653 | |||||||||
Pharmaceuticals - 2.8% | |||||||||
5,800 | 734,048 | ||||||||
14,900 | 575,438 | ||||||||
1,309,486 | |||||||||
Total (Cost $3,354,728) | 4,150,393 | ||||||||
Industrials – 20.6% | |||||||||
Aerospace & Defense - 0.7% | |||||||||
†Cubic Corporation | 6,300 | 331,758 | |||||||
Commercial Services & Supplies - 0.4% | |||||||||
Tetra Tech 1 | 6,300 | 176,274 | |||||||
Electrical Equipment - 4.1% | |||||||||
†EnerSys | 10,100 | 707,909 | |||||||
Global Power Equipment Group | 35,018 | 685,302 | |||||||
GrafTech International 1 | 47,646 | 535,065 | |||||||
1,928,276 | |||||||||
Machinery - 9.4% | |||||||||
Astec Industries | 9,534 | 368,299 | |||||||
†CIRCOR International | 10,519 | 849,725 | |||||||
Columbus McKinnon 1 | 17,600 | 477,664 | |||||||
Kennametal | 12,000 | 624,840 | |||||||
Lincoln Electric Holdings | 4,150 | 296,061 | |||||||
†Timken Company (The) | 13,900 | 765,473 | |||||||
Valmont Industries | 5,000 | 745,600 | |||||||
Wabtec Corporation | 4,468 | 331,838 | |||||||
4,459,500 | |||||||||
Professional Services - 4.9% | |||||||||
CRA International 1 | 10,036 | 198,713 | |||||||
15,504 | 538,144 | ||||||||
Robert Half International | 17,428 | 731,801 | |||||||
Towers Watson & Co. Cl. A | 4,300 | 548,723 | |||||||
TrueBlue 1 | 10,887 | 280,667 | |||||||
2,298,048 | |||||||||
Trading Companies & Distributors - 1.1% | |||||||||
MSC Industrial Direct Cl. A | 6,352 | 513,686 | |||||||
Total (Cost $6,712,363) | 9,707,542 | ||||||||
Information Technology – 21.2% | |||||||||
Communications Equipment - 1.4% | |||||||||
ADTRAN | 24,200 | 653,642 | |||||||
Electronic Equipment, Instruments & Components - 5.1% | |||||||||
Coherent 1 | 5,181 | 385,414 | |||||||
Dolby Laboratories Cl. A 1 | 13,700 | 528,272 | |||||||
FEI Company | 2,252 | 201,239 | |||||||
IPG Photonics 1 | 9,990 | 775,324 | |||||||
Rofin-Sinar Technologies 1 | 18,832 | 508,841 | |||||||
2,399,090 | |||||||||
IT Services - 1.6% | |||||||||
Sykes Enterprises 1 | 34,300 | 748,083 | |||||||
40 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | ||||||||
Information Technology (continued) | |||||||||
Office Electronics - 0.8% | |||||||||
Zebra Technologies Cl. A 1 | 7,000 | $ | 378,560 | ||||||
Semiconductors & Semiconductor Equipment - 12.3% | |||||||||
Aixtron ADR 1 | 11,607 | 168,533 | |||||||
ATMI 1 | 20,870 | 630,483 | |||||||
Cabot Microelectronics 1 | 8,191 | 374,329 | |||||||
54,900 | 636,840 | ||||||||
Integrated Silicon Solution 1 | 69,314 | 838,006 | |||||||
†MKS Instruments | 40,700 | 1,218,558 | |||||||
Nanometrics 1 | 46,444 | 884,758 | |||||||
Teradyne 1 | 34,900 | 614,938 | |||||||
Veeco Instruments 1 | 14,500 | 477,195 | |||||||
5,843,640 | |||||||||
Total (Cost $7,443,338) | 10,023,015 | ||||||||
Materials – 7.7% | |||||||||
Chemicals - 4.2% | |||||||||
†Innospec | 19,325 | 893,202 | |||||||
Minerals Technologies | 18,640 | 1,119,705 | |||||||
2,012,907 | |||||||||
Metals & Mining - 2.5% | |||||||||
Major Drilling Group International | 31,900 | 230,935 | |||||||
Reliance Steel & Aluminum | 12,300 | 932,832 | |||||||
1,163,767 | |||||||||
Paper & Forest Products - 1.0% | |||||||||
†Schweitzer-Mauduit International | 9,300 | 478,671 | |||||||
Total (Cost $2,543,145) | 3,655,345 | ||||||||
Miscellaneous 4 – 4.0% | |||||||||
Total (Cost $1,680,014) | 1,874,752 | ||||||||
TOTAL COMMON STOCKS | |||||||||
(Cost $32,395,175) | 45,226,051 | ||||||||
REPURCHASE AGREEMENT – 4.2% | |||||||||
Fixed Income Clearing Corporation, | |||||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||||
maturity value $1,998,000 (collateralized | |||||||||
by obligations of various U.S. Government | |||||||||
Agencies, 1.00% due 5/31/18, valued at $2,040,694) | |||||||||
(Cost $1,998,000) | 1,998,000 | ||||||||
TOTAL INVESTMENTS – 100.0% | |||||||||
(Cost $34,393,175) | 47,224,051 | ||||||||
CASH AND OTHER ASSETS | |||||||||
LESS LIABILITIES – 0.0% | 13,790 | ||||||||
NET ASSETS – 100.0% | $ | 47,237,841 | |||||||
Royce Micro-Cap Discovery Fund |
SHARES | VALUE | ||||||||
COMMON STOCKS – 95.0% | |||||||||
Consumer Discretionary – 14.8% | |||||||||
Auto Components - 2.3% | |||||||||
Standard Motor Products | 3,600 | $ | 132,480 | ||||||
Diversified Consumer Services - 2.4% | |||||||||
Capella Education | 1,600 | 106,304 | |||||||
Corinthian Colleges 1 | 17,800 | 31,684 | |||||||
137,988 | |||||||||
Hotels, Restaurants & Leisure - 1.2% | |||||||||
Monarch Casino & Resort 1 | 3,500 | 70,280 | |||||||
Household Durables - 2.0% | |||||||||
†Lifetime Brands | 7,500 | 117,975 | |||||||
Leisure Equipment & Products - 1.9% | |||||||||
Arctic Cat | 800 | 45,584 | |||||||
Johnson Outdoors Cl. A | 2,400 | 64,680 | |||||||
110,264 | |||||||||
Multiline Retail - 0.8% | |||||||||
Fred’s Cl. A | 2,500 | 46,300 | |||||||
Specialty Retail - 2.2% | |||||||||
†Big 5 Sporting Goods | 3,500 | 69,370 | |||||||
2,400 | 61,200 | ||||||||
130,570 | |||||||||
Textiles, Apparel & Luxury Goods - 2.0% | |||||||||
Barry (R.G.) | 2,200 | 42,460 | |||||||
Culp | 3,600 | 73,620 | |||||||
116,080 | |||||||||
Total (Cost $697,007) | 861,937 | ||||||||
Consumer Staples – 5.6% | |||||||||
Food & Staples Retailing - 1.6% | |||||||||
Village Super Market Cl. A | 2,900 | 89,929 | |||||||
Food Products - 2.8% | |||||||||
Calavo Growers | 2,200 | 66,572 | |||||||
John B. Sanfilippo & Son | 4,000 | 98,720 | |||||||
165,292 | |||||||||
Household Products - 1.2% | |||||||||
Oil-Dri Corporation of America | 1,900 | 71,896 | |||||||
Total (Cost $287,100) | 327,117 | ||||||||
Energy – 5.5% | |||||||||
Energy Equipment & Services - 2.5% | |||||||||
Matrix Service 1 | 3,400 | 83,198 | |||||||
4,800 | 58,992 | ||||||||
142,190 | |||||||||
Oil, Gas & Consumable Fuels - 3.0% | |||||||||
Hallador Energy | 9,100 | 73,346 | |||||||
VAALCO Energy 1 | 7,600 | 52,364 | |||||||
Warren Resources 1 | 16,100 | 50,554 | |||||||
176,264 | |||||||||
Total (Cost $268,720) | 318,454 | ||||||||
Financials – 6.8% | |||||||||
Consumer Finance - 1.7% | |||||||||
EZCORP Cl. A 1 | 3,300 | 38,577 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 41 |
Schedules of Investments |
Royce Micro-Cap Discovery Fund (continued) |
SHARES | VALUE | ||||||||
Financials (continued) | |||||||||
Consumer Finance (continued) | |||||||||
Nicholas Financial | 3,700 | $ | 58,238 | ||||||
96,815 | |||||||||
Insurance - 5.1% | |||||||||
Baldwin & Lyons Cl. B | 2,100 | 57,372 | |||||||
EMC Insurance Group | 1,700 | 52,054 | |||||||
†Employers Holdings | 2,000 | 63,300 | |||||||
†Kansas City Life Insurance | 1,000 | 47,740 | |||||||
Safety Insurance Group | 700 | 39,410 | |||||||
United Fire Group | 1,400 | 40,124 | |||||||
300,000 | |||||||||
Total (Cost $336,141) | 396,815 | ||||||||
Health Care – 12.0% | |||||||||
Health Care Equipment & Supplies - 8.5% | |||||||||
AngioDynamics 1 | 2,300 | 39,537 | |||||||
Anika Therapeutics 1 | 1,600 | 61,056 | |||||||
Atrion Corporation | 200 | 59,250 | |||||||
CryoLife | 8,000 | 88,720 | |||||||
Invacare Corporation | 4,300 | 99,803 | |||||||
5,900 | 76,405 | ||||||||
Symmetry Medical 1 | 6,900 | 69,552 | |||||||
494,323 | |||||||||
Health Care Providers & Services - 2.8% | |||||||||
National HealthCare | 2,000 | 107,820 | |||||||
2,500 | 53,750 | ||||||||
161,570 | |||||||||
Pharmaceuticals - 0.7% | |||||||||
SciClone Pharmaceuticals 1 | 8,700 | 43,848 | |||||||
Total (Cost $544,356) | 699,741 | ||||||||
Industrials – 16.1% | |||||||||
Aerospace & Defense - 1.1% | |||||||||
National Presto Industries 1 | 800 | 64,400 | |||||||
Commercial Services & Supplies - 2.0% | |||||||||
1,000 | 67,440 | ||||||||
Courier Corporation | 2,500 | 45,225 | |||||||
112,665 | |||||||||
Construction & Engineering - 2.2% | |||||||||
Comfort Systems USA | 1,589 | 30,811 | |||||||
MYR Group 1 | 3,900 | 97,812 | |||||||
128,623 | |||||||||
Machinery - 7.9% | |||||||||
Alamo Group | 1,900 | 115,311 | |||||||
†Altra Industrial Motion | 2,000 | 68,440 | |||||||
Lydall 1 | 3,700 | 65,194 | |||||||
Miller Industries | 5,820 | 108,426 | |||||||
Standex International | 1,300 | 81,744 | |||||||
Twin Disc | 800 | 20,712 | |||||||
459,827 | |||||||||
Professional Services - 2.9% | |||||||||
†CDI Corporation | 3,600 | 66,708 | |||||||
ICF International 1 | 1,200 | 41,652 | |||||||
VSE Corporation | 1,300 | 62,413 | |||||||
170,773 | |||||||||
Total (Cost $714,827) | 936,288 | ||||||||
Information Technology – 21.1% | |||||||||
Communications Equipment - 4.2% | |||||||||
Bel Fuse Cl. B | 1,000 | 21,310 | |||||||
Comtech Telecommunications | 4,100 | 129,232 | |||||||
Oplink Communications 1 | 2,600 | 48,360 | |||||||
TESSCO Technologies | 1,100 | 44,352 | |||||||
243,254 | |||||||||
Computers & Peripherals - 1.1% | |||||||||
QLogic Corporation 1 | 5,100 | 60,333 | |||||||
Electronic Equipment, Instruments & Components - 6.6% | |||||||||
Daktronics | 5,200 | 81,536 | |||||||
8,000 | 62,160 | ||||||||
†Mesa Laboratories | 700 | 55,006 | |||||||
Nam Tai Electronics | 8,500 | 60,690 | |||||||
PC Connection | 3,700 | 91,945 | |||||||
†Richardson Electronics | 3,000 | 34,080 | |||||||
385,417 | |||||||||
Internet Software & Services - 1.1% | |||||||||
Dice Holdings 1 | 6,800 | 49,300 | |||||||
United Online | 1,128 | 15,521 | |||||||
64,821 | |||||||||
IT Services - 3.0% | |||||||||
Computer Task Group | 7,000 | 132,300 | |||||||
Sykes Enterprises 1 | 1,900 | 41,439 | |||||||
173,739 | |||||||||
Semiconductors & Semiconductor Equipment - 1.1% | |||||||||
Kulicke & Soffa Industries 1 | 4,700 | 62,510 | |||||||
Software - 4.0% | |||||||||
Actuate Corporation 1 | 7,100 | 54,741 | |||||||
American Software Cl. A | 6,100 | 60,207 | |||||||
ePlus 1 | 1,000 | 56,840 | |||||||
VASCO Data Security International 1 | 8,000 | 61,840 | |||||||
233,628 | |||||||||
Total (Cost $985,243) | 1,223,702 | ||||||||
Materials – 6.9% | |||||||||
Chemicals - 4.0% | |||||||||
5,000 | 62,750 | ||||||||
FutureFuel Corporation | 5,100 | 80,580 | |||||||
KMG Chemicals | 2,400 | 40,536 | |||||||
Schulman (A.) | 1,400 | 49,364 | |||||||
233,230 | |||||||||
Construction Materials - 0.9% | |||||||||
United States Lime & Minerals 1 | 900 | 55,053 | |||||||
Metals & Mining - 2.0% | |||||||||
Haynes International | 1,400 | 77,336 |
42 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | ||||||||
Materials (continued) | |||||||||
Metals & Mining (continued) | |||||||||
Materion Corporation | 1,200 | $ | 37,020 | ||||||
114,356 | |||||||||
Total (Cost $309,863) | 402,639 | ||||||||
Telecommunication Services – 1.4% | |||||||||
Diversified Telecommunication Services - 1.4% | |||||||||
6,833 | 79,195 | ||||||||
Total (Cost $69,191) | 79,195 | ||||||||
Miscellaneous 4 – 4.8% | |||||||||
Total (Cost $272,356) | 276,655 | ||||||||
TOTAL COMMON STOCKS | |||||||||
(Cost $4,484,804) | 5,522,543 | ||||||||
REPURCHASE AGREEMENT – 3.3% | |||||||||
Fixed Income Clearing Corporation, | |||||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||||
maturity value $194,000 (collateralized | |||||||||
by obligations of various U.S. Government | |||||||||
Agencies, 0.52% due 5/20/16, valued at $199,750) | |||||||||
(Cost $194,000) | 194,000 | ||||||||
TOTAL INVESTMENTS – 98.3% | |||||||||
(Cost $4,678,804) | 5,716,543 | ||||||||
CASH AND OTHER ASSETS | |||||||||
LESS LIABILITIES – 1.7% | 99,655 | ||||||||
NET ASSETS – 100.0% | $ | 5,816,198 | |||||||
Royce Financial Services Fund |
SHARES | VALUE | ||||||||
COMMON STOCKS – 82.1% | |||||||||
Capital Markets - 44.5% | |||||||||
AllianceBernstein Holding L.P. | 14,500 | $ | 309,430 | ||||||
Apollo Global Management LLC Cl. A | 22,000 | 695,420 | |||||||
†Artisan Partners Asset Management Cl. A | 7,500 | 488,925 | |||||||
Ashmore Group | 125,000 | 830,666 | |||||||
Banque Privee Edmond de Rothschild | 12 | 192,366 | |||||||
†CETIP - Mercados Organizados | 64,000 | 656,480 | |||||||
Citadel Capital 1 | 150,000 | 75,340 | |||||||
125,348 | 0 | ||||||||
Coronation Fund Managers | 62,000 | 472,595 | |||||||
Cowen Group 1 | 112,600 | 440,266 | |||||||
Diamond Hill Investment Group | 2,500 | 295,850 | |||||||
Egyptian Financial Group-Hermes Holding Company 1 | 255,000 | 318,541 | |||||||
Federated Investors Cl. B | 11,900 | 342,720 | |||||||
Financial Engines | 6,800 | 472,464 | |||||||
GMP Capital | 90,000 | 594,775 | |||||||
Invesco | 13,800 | 502,320 | |||||||
IOOF Holdings | 11,528 | 92,229 | |||||||
Jupiter Fund Management | 100,000 | 637,541 | |||||||
KKR & Co. L.P. | 37,600 | 915,184 | |||||||
Lazard Cl. A | 17,100 | 774,972 | |||||||
Manning & Napier Cl. A | 15,800 | 278,870 | |||||||
†Monroe Capital | 58,050 | 708,210 | |||||||
MVC Capital | 29,700 | 400,950 | |||||||
Northern Trust | 8,400 | 519,876 | |||||||
Oaktree Capital Group LLC Cl. A | 4,700 | 276,548 | |||||||
Och-Ziff Capital Management Group LLC Cl. A | 15,300 | 226,440 | |||||||
Oppenheimer Holdings Cl. A | 11,500 | 284,970 | |||||||
Partners Group Holding | 1,000 | 266,689 | |||||||
Piper Jaffray 1 | 13,600 | 537,880 | |||||||
Raymond James Financial | 5,100 | 266,169 | |||||||
Reinet Investments 1 | 5,500 | 104,756 | |||||||
RHJ International 1 | 94,000 | 477,175 | |||||||
Samsung Securities | 1,791 | 74,756 | |||||||
†Schwab (Charles) | 15,000 | 390,000 | |||||||
SEI Investments | 18,400 | 639,032 | |||||||
SHUAA Capital 1 | 580,000 | 162,646 | |||||||
†Silvercrest Asset Management Group Cl. A | 41,600 | 709,280 | |||||||
Sprott | 391,500 | 965,620 | |||||||
State Street | 6,400 | 469,696 | |||||||
Stifel Financial 1 | 6,073 | 291,018 | |||||||
T. Rowe Price Group | 3,500 | 293,195 | |||||||
TD Ameritrade Holding Corporation | 15,500 | 474,920 | |||||||
Tokai Tokyo Financial Holdings | 9,400 | 90,688 | |||||||
U.S. Global Investors Cl. A | 225,200 | 572,008 | |||||||
UOB-Kay Hian Holdings | 95,000 | 124,589 | |||||||
Value Partners Group | 960,000 | 744,052 | |||||||
Vontobel Holding | 3,000 | 124,264 | |||||||
Waddell & Reed Financial Cl. A | 4,100 | 266,992 | |||||||
Westwood Holdings Group | 11,798 | 730,414 | |||||||
WisdomTree Investments 1 | 33,500 | 593,285 | |||||||
Total (Cost $16,227,167) | 21,173,072 | ||||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 43 |
Schedules of Investments |
Royce Financial Services Fund (continued) |
SHARES | VALUE | ||||||||
Closed-End Funds - 0.6% | |||||||||
RIT Capital Partners | 12,867 | $ | 268,470 | ||||||
Total (Cost $244,876) | 268,470 | ||||||||
Commercial Banks - 3.7% | |||||||||
BLOM Bank GDR | 8,000 | 69,200 | |||||||
BOK Financial | 4,100 | 271,912 | |||||||
†CIT Group | 13,500 | 703,755 | |||||||
First Citizens BancShares Cl. A | 1,900 | 422,997 | |||||||
First Republic Bank | 5,600 | 293,160 | |||||||
Total (Cost $1,442,373) | 1,761,024 | ||||||||
Consumer Finance - 0.8% | |||||||||
Credit Acceptance 1 | 848 | 110,231 | |||||||
World Acceptance 1 | 3,000 | 262,590 | |||||||
Total (Cost $141,103) | 372,821 | ||||||||
Diversified Financial Services - 11.2% | |||||||||
†Bolsa Mexicana de Valores | 121,000 | 277,467 | |||||||
Bolsas y Mercados Espanoles | 4,000 | 152,207 | |||||||
†Bursa Malaysia | 160,000 | 402,015 | |||||||
†CRISIL | 28,000 | 538,679 | |||||||
Hellenic Exchanges | 36,000 | 396,202 | |||||||
Interactive Brokers Group Cl. A | 12,800 | 311,552 | |||||||
†Japan Exchange Group | 17,500 | 496,700 | |||||||
†JSE | 74,700 | 638,974 | |||||||
Leucadia National | 9,801 | 277,760 | |||||||
Moody’s Corporation | 9,600 | 753,312 | |||||||
MSCI 1 | 2,800 | 122,416 | |||||||
Singapore Exchange | 63,000 | 362,439 | |||||||
Warsaw Stock Exchange | 44,800 | 615,415 | |||||||
Total (Cost $4,312,030) | 5,345,138 | ||||||||
Hotels, Restaurants & Leisure - 1.7% | |||||||||
†Thomas Cook (India) | 588,300 | 799,871 | |||||||
Total (Cost $648,907) | 799,871 | ||||||||
Insurance - 7.7% | |||||||||
E-L Financial | 600 | 401,036 | |||||||
First American Financial | 5,000 | 141,000 | |||||||
Greenlight Capital Re Cl. A 1 | 27,361 | 922,339 | |||||||
Marsh & McLennan | 9,500 | 459,420 | |||||||
Platinum Underwriters Holdings | 5,500 | 337,040 | |||||||
RLI Corp. | 8,400 | 817,992 | |||||||
State Auto Financial | 14,022 | 297,827 | |||||||
Willis Group Holdings | 6,100 | 273,341 | |||||||
Total (Cost $2,859,776) | 3,649,995 | ||||||||
IT Services - 2.7% | |||||||||
†Broadridge Financial Solutions | 12,800 | 505,856 | |||||||
Vantiv Cl. A 1 | 10,000 | 326,100 | |||||||
Western Union | 26,400 | 455,400 | |||||||
Total (Cost $944,224) | 1,287,356 | ||||||||
Media - 0.7% | |||||||||
Morningstar | 4,600 | 359,214 | |||||||
Total (Cost $181,189) | 359,214 | ||||||||
Professional Services - 2.4% | |||||||||
Towers Watson & Co. Cl. A | 6,500 | 829,465 | |||||||
Verisk Analytics Cl. A 1 | 5,100 | 335,172 | |||||||
Total (Cost $612,812) | 1,164,637 | ||||||||
Real Estate Management & Development - 1.9% | |||||||||
Kennedy-Wilson Holdings | 19,676 | 437,791 | |||||||
†Midland Holdings | 800,000 | 385,850 | |||||||
223,459 | 67,038 | ||||||||
Total (Cost $608,828) | 890,679 | ||||||||
Software - 2.0% | |||||||||
Fair Isaac | 7,400 | 465,016 | |||||||
†SimCorp | 12,000 | 472,454 | |||||||
Total (Cost $421,695) | 937,470 | ||||||||
Trading Companies & Distributors - 1.0% | |||||||||
Air Lease Cl. A | 15,700 | 487,956 | |||||||
Total (Cost $356,874) | 487,956 | ||||||||
Miscellaneous 4 - 1.2% | |||||||||
Total (Cost $593,337) | 575,574 | ||||||||
TOTAL COMMON STOCKS | |||||||||
(Cost $29,595,191) | 39,073,277 | ||||||||
REPURCHASE AGREEMENT – 17.7% | |||||||||
Fixed Income Clearing Corporation, | |||||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||||
maturity value $8,421,000 (collateralized | |||||||||
by obligations of various U.S. Government | |||||||||
Agencies, 5.125% due 1/2/14, valued at $8,589,900) | |||||||||
(Cost $8,421,000) | 8,421,000 | ||||||||
TOTAL INVESTMENTS – 99.8% | |||||||||
(Cost $38,016,191) | 47,494,277 | ||||||||
CASH AND OTHER ASSETS | |||||||||
LESS LIABILITIES – 0.2% | 98,540 | ||||||||
NET ASSETS – 100.0% | $ | 47,592,817 | |||||||
44 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
Royce Select Fund II |
SHARES | VALUE | ||||||||
COMMON STOCKS – 103.1% | |||||||||
Consumer Discretionary – 29.9% | |||||||||
Auto Components - 5.2% | |||||||||
†Automodular Corporation | 29,000 | $ | 66,613 | ||||||
Drew Industries | 801 | 41,011 | |||||||
†Selamat Sempurna | 302,100 | 85,641 | |||||||
†Standard Motor Products | 1,700 | 62,560 | |||||||
255,825 | |||||||||
Household Durables - 1.2% | |||||||||
†Lifetime Brands | 3,800 | 59,774 | |||||||
Leisure Equipment & Products - 2.2% | |||||||||
12,700 | 107,061 | ||||||||
Media - 6.0% | |||||||||
†Asian Pay Television Trust | 108,000 | 63,330 | |||||||
†Global Mediacom | 601,000 | 93,829 | |||||||
IMAX Corporation 1 | 1,000 | 29,480 | |||||||
†Television Broadcasts | 16,200 | 108,010 | |||||||
294,649 | |||||||||
Multiline Retail - 2.8% | |||||||||
†Golden Eagle Retail Group | 60,100 | 79,366 | |||||||
3,500 | 55,860 | ||||||||
135,226 | |||||||||
Specialty Retail - 9.4% | |||||||||
†Asahi Company | 3,200 | 44,607 | |||||||
10,000 | 54,300 | ||||||||
3,000 | 89,640 | ||||||||
Luk Fook Holdings (International) | 8,900 | 33,859 | |||||||
†Oriental Watch Holdings | 175,000 | 46,265 | |||||||
†Padini Holdings | 101,100 | 55,866 | |||||||
Signet Jewelers | 1,200 | 94,440 | |||||||
†USS | 3,000 | 41,136 | |||||||
460,113 | |||||||||
Textiles, Apparel & Luxury Goods - 3.1% | |||||||||
Daphne International Holdings | 189,400 | 85,244 | |||||||
†MC Group | 84,000 | 29,653 | |||||||
Stella International Holdings | 13,300 | 33,892 | |||||||
148,789 | |||||||||
Total (Cost $1,373,075) | 1,461,437 | ||||||||
Consumer Staples – 5.7% | |||||||||
Food & Staples Retailing - 1.8% | |||||||||
FamilyMart | 1,900 | 86,692 | |||||||
Food Products - 3.9% | |||||||||
2,600 | 60,476 | ||||||||
First Resources | 39,000 | 65,517 | |||||||
SunOpta 1 | 6,300 | 63,063 | |||||||
189,056 | |||||||||
Total (Cost $226,635) | 275,748 | ||||||||
Energy – 3.0% | |||||||||
Energy Equipment & Services - 3.0% | |||||||||
TGS-NOPEC Geophysical | 4,100 | 108,697 | |||||||
Total Energy Services | 1,900 | 36,882 | |||||||
Total (Cost $139,418) | 145,579 | ||||||||
Financials – 8.2% | |||||||||
Capital Markets - 4.4% | |||||||||
Ashmore Group | 11,400 | 75,757 | |||||||
†CETIP - Mercados Organizados | 4,400 | 45,133 | |||||||
Sprott | 18,100 | 44,643 | |||||||
Value Partners Group | 62,800 | 48,673 | |||||||
214,206 | |||||||||
Real Estate Management & Development - 3.8% | |||||||||
†Brasil Brokers Participacoes | 33,600 | 83,314 | |||||||
E-House (China) Holdings ADR 5 | 2,961 | 44,652 | |||||||
Midland Holdings | 124,900 | 60,241 | |||||||
188,207 | |||||||||
Total (Cost $388,554) | 402,413 | ||||||||
Health Care – 4.0% | |||||||||
Health Care Equipment & Supplies - 3.0% | |||||||||
Analogic Corporation 5 | 500 | 44,280 | |||||||
Invacare Corporation 5 | 4,300 | 99,803 | |||||||
144,083 | |||||||||
Health Care Providers & Services - 1.0% | |||||||||
2,200 | 49,390 | ||||||||
Total (Cost $162,415) | 193,473 | ||||||||
Industrials – 19.0% | |||||||||
Air Freight & Logistics - 2.4% | |||||||||
†Aramex | 71,300 | 59,012 | |||||||
†Clarke | 8,000 | 60,174 | |||||||
119,186 | |||||||||
Building Products - 2.5% | |||||||||
Insteel Industries | 3,573 | 81,214 | |||||||
WaterFurnace Renewable Energy | 1,700 | 38,393 | |||||||
119,607 | |||||||||
Commercial Services & Supplies - 3.0% | |||||||||
†Blue Label Telecoms | 114,600 | 92,860 | |||||||
1,244 | 52,671 | ||||||||
145,531 | |||||||||
Machinery - 6.4% | |||||||||
†Lindsay Corporation | 700 | 57,925 | |||||||
†Obara Group | 1,600 | 49,986 | |||||||
Sarin Technologies | 54,400 | 79,750 | |||||||
Sun Hydraulics 5 | 1,100 | 44,913 | |||||||
†Zuiko Corporation | 1,300 | 78,264 | |||||||
310,838 | |||||||||
Marine - 1.8% | |||||||||
Clarkson | 2,700 | 89,466 | |||||||
Professional Services - 2.9% | |||||||||
Acacia Research 5 | 6,600 | 95,964 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 45 |
Schedules of Investments |
Royce Select Fund II (continued) |
SHARES | VALUE | ||||||||
Industrials (continued) | |||||||||
Professional Services (continued) | |||||||||
†Nihon M&A Center | 700 | $ | 47,128 | ||||||
143,092 | |||||||||
Total (Cost $813,414) | 927,720 | ||||||||
Information Technology – 24.4% | |||||||||
Communications Equipment - 0.9% | |||||||||
Plantronics | 1,000 | 46,450 | |||||||
Electronic Equipment, Instruments & Components - 3.1% | |||||||||
†Littelfuse | 1,000 | 92,930 | |||||||
Vishay Intertechnology 1 | 4,300 | 57,018 | |||||||
149,948 | |||||||||
IT Services - 4.2% | |||||||||
Computer Task Group 5 | 6,629 | 125,288 | |||||||
†Metrofile Holdings | 108,800 | 48,540 | |||||||
Total System Services 5 | 1,000 | 33,280 | |||||||
207,108 | |||||||||
Semiconductors & Semiconductor Equipment - 8.6% | |||||||||
†Eugene Technology | 3,808 | 60,619 | |||||||
Kulicke & Soffa Industries 1 | 4,100 | 54,530 | |||||||
Miraial | 6,000 | 89,678 | |||||||
MKS Instruments | 2,388 | 71,497 | |||||||
5,340 | 48,220 | ||||||||
Silicon Motion Technology ADR | 2,900 | 41,035 | |||||||
2,950 | 51,979 | ||||||||
417,558 | |||||||||
Software - 7.6% | |||||||||
6,600 | 50,886 | ||||||||
American Software Cl. A 5 | 5,164 | 50,969 | |||||||
1,500 | 44,385 | ||||||||
†Nexon | 9,500 | 87,684 | |||||||
7,300 | 88,768 | ||||||||
†Totvs | 3,000 | 46,998 | |||||||
369,690 | |||||||||
Total (Cost $1,032,005) | 1,190,754 | ||||||||
Materials – 4.2% | |||||||||
Chemicals - 1.2% | |||||||||
†C. Uyemura & Co. | 1,400 | 61,153 | |||||||
Metals & Mining - 3.0% | |||||||||
†Franco-Nevada Corporation | 1,000 | 40,740 | |||||||
†Imdex | 123,500 | 68,369 | |||||||
Royal Gold | 800 | 36,856 | |||||||
145,965 | |||||||||
Total (Cost $213,758) | 207,118 | ||||||||
Telecommunication Services – 0.0% | |||||||||
Diversified Telecommunication Services - 0.0% | |||||||||
100 | 1,159 | ||||||||
Total (Cost $1,097) | 1,159 | ||||||||
Miscellaneous 4 – 4.7% | |||||||||
Total (Cost $210,991) | 228,282 | ||||||||
TOTAL COMMON STOCKS | |||||||||
(Cost $4,561,362) | 5,033,683 | ||||||||
TOTAL INVESTMENTS – 103.1% | |||||||||
(Cost $4,561,362) | 5,033,683 | ||||||||
LIABILITIES LESS CASH | |||||||||
AND OTHER ASSETS – (3.1)% | (151,988 | ) | |||||||
NET ASSETS – 100.0% | $ | 4,881,695 | |||||||
SECURITIES SOLD SHORT | |||||||||
COMMON STOCKS – 7.5% | |||||||||
Consumer Discretionary – 1.9% | |||||||||
Hotels, Restaurants & Leisure - 1.2% | |||||||||
Buffalo Wild Wings | 400 | $ | 58,880 | ||||||
Internet & Catalog Retail - 0.7% | |||||||||
Vipshop Holdings ADR | 400 | 33,472 | |||||||
Total (Proceeds $92,707) | 92,352 | ||||||||
Diversified Investment Companies – 4.8% | |||||||||
Exchange Traded Funds - 4.8% | |||||||||
iShares Micro-Cap ETF | 1,200 | 90,264 | |||||||
VelocityShares Daily Inverse VIX Short-Term ETN | 4,200 | 144,396 | |||||||
Total (Proceeds $197,720) | 234,660 | ||||||||
Financials – 0.3% | |||||||||
Commercial Banks - 0.3% | |||||||||
Direxion Daily Financial Bear 3X Shares | 700 | 15,043 | |||||||
Total (Proceeds $36,763) | 15,043 | ||||||||
Industrials – 0.5% | |||||||||
Machinery - 0.5% | |||||||||
Middleby Corporation | 100 | 23,997 | |||||||
Total (Proceeds $21,504) | 23,997 | ||||||||
Information Technology – 0.0% | |||||||||
Internet Software & Services - 0.0% | |||||||||
Pandora Media | 100 | 2,660 | |||||||
Total (Proceeds $2,829) | 2,660 | ||||||||
FIXED INCOME– 1.2% | |||||||||
Government Bonds – 1.2% | |||||||||
iShares 20+ Year Treasury Bond ETF | 550 | 56,023 | |||||||
Total (Proceeds $63,699) | 56,023 | ||||||||
TOTAL SECURITIES SOLD SHORT | |||||||||
(Proceeds $415,222) | $ | 424,735 | |||||||
46 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
Royce European Smaller-Companies Fund |
SHARES | VALUE | ||||||||
COMMON STOCKS – 93.7% | |||||||||
Austria – 4.5% | |||||||||
Mayr-Melnhof Karton | 5,325 | $ | 659,304 | ||||||
Semperit AG Holding | 12,200 | 604,123 | |||||||
Total (Cost $1,126,630) | 1,263,427 | ||||||||
Belgium – 4.8% | |||||||||
EVS Broadcast Equipment | 8,000 | 517,153 | |||||||
Sipef | 6,200 | 492,143 | |||||||
Van de Velde | 6,900 | 345,520 | |||||||
Total (Cost $1,333,550) | 1,354,816 | ||||||||
Cyprus – 1.3% | |||||||||
†Globaltrans Investment GDR | 23,500 | 373,650 | |||||||
Total (Cost $351,770) | 373,650 | ||||||||
Denmark – 0.9% | |||||||||
H. Lundbeck | 10,000 | 252,639 | |||||||
Total (Cost $156,494) | 252,639 | ||||||||
Finland – 3.0% | |||||||||
†F-Secure | 145,000 | 373,021 | |||||||
Nokian Renkaat | 9,600 | 460,518 | |||||||
Total (Cost $772,334) | 833,539 | ||||||||
France – 17.1% | |||||||||
Altamir | 22,000 | 312,339 | |||||||
Alten | 4,700 | 213,371 | |||||||
Audika Groupe 1 | 29,000 | 424,486 | |||||||
Beneteau 1 | 10,000 | 186,682 | |||||||
bioMerieux | 3,300 | 346,251 | |||||||
Boiron | 6,350 | 447,617 | |||||||
Manutan International | 6,285 | 395,740 | |||||||
Parrot 1 | 20,000 | 544,777 | |||||||
Societe Internationale de Plantations d’Heveas | 4,300 | 302,282 | |||||||
Stallergenes | 8,000 | 597,054 | |||||||
Vetoquinol | 12,700 | 536,371 | |||||||
Virbac | 2,250 | 480,704 | |||||||
Total (Cost $4,314,844) | 4,787,674 | ||||||||
Germany – 13.2% | |||||||||
Aixtron 1 | 19,500 | 282,077 | |||||||
†Amadeus Fire | 3,500 | 262,896 | |||||||
†Bertrandt | 2,400 | 366,486 | |||||||
Carl Zeiss Meditec | 9,700 | 323,132 | |||||||
†Gerry Weber International | 7,500 | 318,457 | |||||||
KWS Saat | 950 | 326,729 | |||||||
†LPKF Laser & Electronics | 15,000 | 383,407 | |||||||
†Mobotix | 10,500 | 210,895 | |||||||
Nemetschek | 2,400 | 166,141 | |||||||
PUMA | 1,200 | 387,947 | |||||||
†SMT Scharf | 11,700 | 314,510 | |||||||
†SNP Schneider-Neureither & Partner | 9,200 | 143,081 | |||||||
Takkt | 12,000 | 222,698 | |||||||
Total (Cost $3,332,191) | 3,708,456 | ||||||||
Italy – 5.2% | |||||||||
Azimut Holding | 8,500 | 231,881 | |||||||
†De’Longhi | 23,400 | 382,111 | |||||||
DiaSorin | 7,000 | 328,283 | |||||||
Recordati | 35,000 | 503,644 | |||||||
Total (Cost $920,307) | 1,445,919 | ||||||||
Netherlands – 1.8% | |||||||||
Beter Bed Holding | 12,500 | 302,740 | |||||||
Fugro | 3,600 | 214,518 | |||||||
Total (Cost $432,346) | 517,258 | ||||||||
Norway – 4.6% | |||||||||
Ekornes | 20,000 | 271,215 | |||||||
Fred. Olsen Energy | 5,100 | 207,605 | |||||||
225,392 | 79,153 | ||||||||
†Spectrum | 46,100 | 281,223 | |||||||
TGS-NOPEC Geophysical | 17,500 | 463,951 | |||||||
Total (Cost $1,575,029) | 1,303,147 | ||||||||
Slovenia – 1.0% | |||||||||
†Krka d.d., Novo mesto | 3,300 | 272,388 | |||||||
Total (Cost $258,885) | 272,388 | ||||||||
Spain – 0.5% | |||||||||
†Let’s GOWEX | 7,200 | 129,261 | |||||||
Total (Cost $51,364) | 129,261 | ||||||||
Sweden – 1.2% | |||||||||
Lundin Petroleum 1 | 17,500 | 341,193 | |||||||
Total (Cost $375,110) | 341,193 | ||||||||
Switzerland – 8.2% | |||||||||
Burckhardt Compression Holding | 500 | 219,158 | |||||||
†Forbo Holding | 700 | 597,949 | |||||||
Partners Group Holding | 800 | 213,351 | |||||||
†Straumann Holding | 700 | 130,889 | |||||||
Sulzer | 1,300 | 209,708 | |||||||
VZ Holding | 2,000 | 373,073 | |||||||
Zehnder Group | 12,000 | 551,539 | |||||||
Total (Cost $1,709,854) | 2,295,667 | ||||||||
Turkey – 1.1% | |||||||||
Mardin Cimento Sanayii | 150,000 | 297,348 | |||||||
Total (Cost $506,749) | 297,348 | ||||||||
United Kingdom – 25.3% | |||||||||
Ashmore Group | 67,500 | 448,560 | |||||||
†Aveva Group | 7,500 | 268,761 | |||||||
Clarkson | 14,000 | 463,898 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 47 |
Schedules of Investments |
Royce European Smaller-Companies Fund (continued) |
SHARES | VALUE | ||||||||
United Kingdom (continued) | |||||||||
†Consort Medical | 30,000 | $ | 475,423 | ||||||
†Devro | 59,000 | 281,379 | |||||||
Domino Printing Sciences | 30,000 | 380,040 | |||||||
†E2V Technologies | 240,000 | 596,142 | |||||||
†Elementis | 103,500 | 460,870 | |||||||
EnQuest 1 | 179,300 | 399,643 | |||||||
†Fidessa Group | 6,500 | 242,506 | |||||||
†Homeserve | 70,000 | 319,118 | |||||||
Jupiter Fund Management | 45,000 | 286,893 | |||||||
†Lancashire Holdings | 15,000 | 201,446 | |||||||
Latchways | 16,700 | 348,445 | |||||||
†Photo-Me International | 68,100 | 148,575 | |||||||
Rotork | 7,500 | 356,443 | |||||||
†Sepura | 70,000 | 162,283 | |||||||
Severfield-Rowen 1 | 280,000 | 279,359 | |||||||
Spirax-Sarco Engineering | 4,815 | 238,405 | |||||||
Spirent Communications | 210,000 | 360,964 | |||||||
Victrex | 12,500 | 380,247 | |||||||
Total (Cost $5,755,153) | 7,099,400 | ||||||||
TOTAL COMMON STOCKS | |||||||||
(Cost $22,972,610) | 26,275,782 | ||||||||
REPURCHASE AGREEMENT – 6.3% | |||||||||
Fixed Income Clearing Corporation, | |||||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||||
maturity value $1,768,000 (collateralized | |||||||||
by obligations of various U.S. Government | |||||||||
Agencies, 0.52% due 5/20/16, valued at $1,807,738) | |||||||||
(Cost $1,768,000) | 1,768,000 | ||||||||
TOTAL INVESTMENTS – 100.0% | |||||||||
(Cost $24,740,610) | 28,043,782 | ||||||||
CASH AND OTHER ASSETS | |||||||||
LESS LIABILITIES – 0.0% | 2,188 | ||||||||
NET ASSETS – 100.0% | $ | 28,045,970 | |||||||
Royce Enterprise Select Fund |
SHARES | VALUE | ||||||||
COMMON STOCKS – 72.8% | |||||||||
Consumer Discretionary – 16.0% | |||||||||
Auto Components - 0.9% | |||||||||
†Standard Motor Products | 600 | $ | 22,080 | ||||||
Automobiles - 3.1% | |||||||||
Thor Industries 5 | �� | 1,470 | 81,188 | ||||||
Distributors - 2.4% | |||||||||
†Core-Mark Holding Company | 365 | 27,714 | |||||||
Genuine Parts | 430 | 35,772 | |||||||
63,486 | |||||||||
Household Durables - 4.4% | |||||||||
Garmin | 238 | 11,000 | |||||||
Harman International Industries | 230 | 18,826 | |||||||
Mohawk Industries 1 | 370 | 55,093 | |||||||
NVR 1 | 30 | 30,780 | |||||||
115,699 | |||||||||
Multiline Retail - 1.1% | |||||||||
530 | 29,903 | ||||||||
Specialty Retail - 3.5% | |||||||||
Advance Auto Parts | 340 | 37,631 | |||||||
†Finish Line (The) Cl. A | 700 | 19,719 | |||||||
†Ross Stores | 200 | 14,986 | |||||||
Signet Jewelers | 250 | 19,675 | |||||||
92,011 | |||||||||
Textiles, Apparel & Luxury Goods - 0.6% | |||||||||
Gildan Activewear | 300 | 15,993 | |||||||
Total (Cost $354,010) | 420,360 | ||||||||
Energy – 2.8% | |||||||||
Energy Equipment & Services - 2.8% | |||||||||
Helmerich & Payne | 420 | 35,314 | |||||||
420 | 38,304 | ||||||||
Total (Cost $62,872) | 73,618 | ||||||||
Financials – 4.8% | |||||||||
Capital Markets - 0.7% | |||||||||
Federated Investors Cl. B | 700 | 20,160 | |||||||
Diversified Financial Services - 1.1% | |||||||||
Moody’s Corporation | 370 | 29,034 | |||||||
Real Estate Management & Development - 3.0% | |||||||||
Jones Lang LaSalle | 220 | 22,526 | |||||||
Kennedy-Wilson Holdings | 2,500 | 55,625 | |||||||
78,151 | |||||||||
Total (Cost $107,169) | 127,345 | ||||||||
Health Care – 5.6% | |||||||||
Health Care Equipment & Supplies - 3.2% | |||||||||
DENTSPLY International | 1,300 | 63,024 | |||||||
IDEXX Laboratories 1 | 200 | 21,274 | |||||||
84,298 | |||||||||
Health Care Providers & Services - 0.9% | |||||||||
Schein (Henry) 1 | 210 | 23,995 | |||||||
48 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | ||||||||
Health Care (continued) | |||||||||
Life Sciences Tools & Services - 1.5% | |||||||||
†Techne Corporation | 400 | $ | 37,868 | ||||||
Total (Cost $126,165) | 146,161 | ||||||||
Industrials – 21.5% | |||||||||
Aerospace & Defense - 2.2% | |||||||||
Curtiss-Wright | 930 | 57,874 | |||||||
Air Freight & Logistics - 0.3% | |||||||||
Expeditors International of Washington | 200 | 8,850 | |||||||
Commercial Services & Supplies - 5.3% | |||||||||
Cintas Corporation | 500 | 29,795 | |||||||
Copart 1 | 1,500 | 54,975 | |||||||
Ritchie Bros. Auctioneers | 1,600 | 36,688 | |||||||
UniFirst Corporation | 165 | 17,655 | |||||||
139,113 | |||||||||
Construction & Engineering - 2.3% | |||||||||
Jacobs Engineering Group 1 | 590 | 37,164 | |||||||
KBR | 700 | 22,323 | |||||||
59,487 | |||||||||
Electrical Equipment - 2.0% | |||||||||
†EnerSys | 750 | 52,567 | |||||||
Machinery - 6.8% | |||||||||
†AGCO Corporation | 630 | 37,290 | |||||||
Donaldson Company | 691 | 30,031 | |||||||
Kennametal | 520 | 27,076 | |||||||
Mueller Industries | 340 | 21,423 | |||||||
Valmont Industries | 300 | 44,736 | |||||||
WABCO Holdings 1 | 200 | 18,682 | |||||||
179,238 | |||||||||
Professional Services - 2.6% | |||||||||
184 | 11,541 | ||||||||
ManpowerGroup | 670 | 57,526 | |||||||
69,067 | |||||||||
Total (Cost $473,217) | 566,196 | ||||||||
Information Technology – 13.6% | |||||||||
Communications Equipment - 0.7% | |||||||||
†Plantronics | 400 | 18,580 | |||||||
Computers & Peripherals - 1.7% | |||||||||
Western Digital | 520 | 43,628 | |||||||
Electronic Equipment, Instruments & Components - 6.7% | |||||||||
Avnet | 800 | 35,288 | |||||||
AVX Corporation | 4,160 | 57,949 | |||||||
Coherent 1 | 270 | 20,085 | |||||||
†Methode Electronics | 517 | 17,676 | |||||||
Rogers Corporation 1 | 758 | 46,617 | |||||||
177,615 | |||||||||
IT Services - 2.3% | |||||||||
†DST Systems | 400 | 36,296 | |||||||
Fiserv 1 | 400 | 23,620 | |||||||
59,916 | |||||||||
Semiconductors & Semiconductor Equipment - 1.5% | |||||||||
Diodes 1 | 600 | 14,136 | |||||||
900 | 25,704 | ||||||||
39,840 | |||||||||
Software - 0.7% | |||||||||
MICROS Systems 1 | 300 | 17,211 | |||||||
Total (Cost $292,618) | 356,790 | ||||||||
Materials – 5.1% | |||||||||
Chemicals - 3.9% | |||||||||
†Axiall Corporation | 440 | 20,874 | |||||||
†Innospec | 126 | 5,824 | |||||||
†Rockwood Holdings | 500 | 35,960 | |||||||
Westlake Chemical | 330 | 40,283 | |||||||
102,941 | |||||||||
Metals & Mining - 1.2% | |||||||||
Reliance Steel & Aluminum | 430 | 32,611 | |||||||
Total (Cost $120,070) | 135,552 | ||||||||
Utilities – 1.7% | |||||||||
Gas Utilities - 1.7% | |||||||||
UGI Corporation | 1,100 | 45,606 | |||||||
Total (Cost $35,656) | 45,606 | ||||||||
Miscellaneous 4 – 1.7% | |||||||||
Total (Cost $41,258) | 44,127 | ||||||||
TOTAL COMMON STOCKS | |||||||||
(Cost $1,613,035) | 1,915,755 | ||||||||
FIXED INCOME – 1.9% | |||||||||
Government Bonds – 1.9% | |||||||||
†iShares 1-3 Year Treasury Bond ETF | 590 | 49,784 | |||||||
TOTAL FIXED INCOME | |||||||||
(Cost $49,848) | 49,784 | ||||||||
REPURCHASE AGREEMENT – 25.6% | |||||||||
Fixed Income Clearing Corporation, | |||||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||||
maturity value $673,000 (collateralized | |||||||||
by obligations of various U.S. Government | |||||||||
Agencies, 0.50% due 4/29/16, valued at $690,000) | |||||||||
(Cost $673,000) | 673,000 | ||||||||
TOTAL INVESTMENTS – 100.3% | |||||||||
(Cost $2,335,883) | 2,638,539 | ||||||||
LIABILITIES LESS CASH | |||||||||
AND OTHER ASSETS – (0.3)% | (8,607 | ) | |||||||
NET ASSETS – 100.0% | $ | 2,629,932 | |||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 49 |
Schedules of Investments |
Royce SMid-Cap Value Fund |
SHARES | VALUE | ||||||||
COMMON STOCKS – 92.6% | |||||||||
Consumer Discretionary – 11.4% | |||||||||
Auto Components - 0.3% | |||||||||
Autoliv | 370 | $ | 33,966 | ||||||
Automobiles - 3.8% | |||||||||
Thor Industries | 7,900 | 436,317 | |||||||
Household Durables - 2.2% | |||||||||
Garmin | 5,500 | 254,210 | |||||||
Multiline Retail - 1.2% | |||||||||
Dollar Tree 1 | 2,400 | 135,408 | |||||||
Specialty Retail - 3.9% | |||||||||
†Chico’s FAS | 6,100 | 114,924 | |||||||
Signet Jewelers | 4,320 | 339,984 | |||||||
454,908 | |||||||||
Total (Cost $964,130) | 1,314,809 | ||||||||
Consumer Staples – 1.1% | |||||||||
Food Products - 1.1% | |||||||||
Sanderson Farms | 1,700 | 122,961 | |||||||
Total (Cost $90,213) | 122,961 | ||||||||
Energy – 11.3% | |||||||||
Energy Equipment & Services - 10.4% | |||||||||
Helmerich & Payne | 5,900 | 496,072 | |||||||
Pason Systems | 14,700 | 318,010 | |||||||
Trican Well Service | 20,500 | 250,497 | |||||||
Unit Corporation 1 | 2,600 | 134,212 | |||||||
1,198,791 | |||||||||
Oil, Gas & Consumable Fuels - 0.9% | |||||||||
†HollyFrontier Corporation | 2,200 | 109,318 | |||||||
Total (Cost $1,114,816) | 1,308,109 | ||||||||
Financials – 15.8% | |||||||||
Capital Markets - 11.5% | |||||||||
†Artisan Partners Asset Management Cl. A | 2,600 | 169,494 | |||||||
Ashmore Group | 45,300 | 301,033 | |||||||
Federated Investors Cl. B | 7,900 | 227,520 | |||||||
Partners Group Holding | 400 | 106,676 | |||||||
Sprott | 89,800 | 221,488 | |||||||
Value Partners Group | 384,000 | 297,621 | |||||||
1,323,832 | |||||||||
Diversified Financial Services - 0.5% | |||||||||
Leucadia National | 1,950 | 55,263 | |||||||
Real Estate Management & Development - 3.8% | |||||||||
Jones Lang LaSalle | 830 | 84,984 | |||||||
Kennedy-Wilson Holdings | 16,000 | 356,000 | |||||||
440,984 | |||||||||
Total (Cost $1,628,248) | 1,820,079 | ||||||||
Health Care – 4.9% | |||||||||
Biotechnology - 3.8% | |||||||||
1,900 | 130,853 | ||||||||
Myriad Genetics 1 | 14,500 | 304,210 | |||||||
435,063 | |||||||||
Pharmaceuticals - 1.1% | |||||||||
3,500 | 135,170 | ||||||||
Total (Cost $591,600) | 570,233 | ||||||||
Industrials – 16.9% | |||||||||
Construction & Engineering - 4.0% | |||||||||
Jacobs Engineering Group 1 | 7,300 | 459,827 | |||||||
Machinery - 10.5% | |||||||||
†AGCO Corporation | 1,400 | 82,866 | |||||||
Kennametal | 3,200 | 166,624 | |||||||
Lincoln Electric Holdings | 1,900 | 135,546 | |||||||
†Lindsay Corporation | 700 | 57,925 | |||||||
Semperit AG Holding | 7,400 | 366,435 | |||||||
Valmont Industries | 2,325 | 346,704 | |||||||
Wabtec Corporation | 700 | 51,989 | |||||||
1,208,089 | |||||||||
Marine - 0.6% | |||||||||
Kirby Corporation 1 | 700 | 69,475 | |||||||
Professional Services - 1.8% | |||||||||
ManpowerGroup | 2,000 | 171,720 | |||||||
Towers Watson & Co. Cl. A | 300 | 38,283 | |||||||
210,003 | |||||||||
Total (Cost $1,406,776) | 1,947,394 | ||||||||
Information Technology – 16.0% | |||||||||
Computers & Peripherals - 6.9% | |||||||||
SanDisk Corporation | 3,700 | 260,998 | |||||||
Western Digital | 6,400 | 536,960 | |||||||
797,958 | |||||||||
Electronic Equipment, Instruments & Components - 1.5% | |||||||||
AVX Corporation | 12,200 | 169,946 | |||||||
Semiconductors & Semiconductor Equipment - 7.6% | |||||||||
Analog Devices | 2,300 | 117,139 | |||||||
13,100 | 267,633 | ||||||||
International Rectifier 1 | 6,342 | 165,336 | |||||||
Teradyne 1 | 18,350 | 323,327 | |||||||
873,435 | |||||||||
Total (Cost $1,331,465) | 1,841,339 | ||||||||
Materials – 15.2% | |||||||||
Chemicals - 3.0% | |||||||||
Westlake Chemical | 2,800 | 341,796 | |||||||
Metals & Mining - 10.5% | |||||||||
Alamos Gold | 8,400 | 101,773 | |||||||
Globe Specialty Metals | 17,200 | 309,772 | |||||||
Pan American Silver | 17,700 | 207,090 | |||||||
†Randgold Resources ADR | 2,300 | 144,463 | |||||||
Reliance Steel & Aluminum | 5,900 | 447,456 | |||||||
1,210,554 | |||||||||
50 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | ||||||||
Materials (continued) | |||||||||
Paper & Forest Products - 1.7% | |||||||||
Stella-Jones | 7,600 | $ | 194,963 | ||||||
Total (Cost $1,519,674) | 1,747,313 | ||||||||
TOTAL COMMON STOCKS | |||||||||
(Cost $8,646,922) | 10,672,237 | ||||||||
REPURCHASE AGREEMENT – 4.6% | |||||||||
Fixed Income Clearing Corporation, | |||||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||||
maturity value $525,000 (collateralized | |||||||||
by obligations of various U.S. Government | |||||||||
Agencies, 0.52% due 5/20/16, valued at $539,325) | |||||||||
(Cost $525,000) | 525,000 | ||||||||
TOTAL INVESTMENTS – 97.2% | |||||||||
(Cost $9,171,922) | 11,197,237 | ||||||||
CASH AND OTHER ASSETS | |||||||||
LESS LIABILITIES – 2.8% | 323,016 | ||||||||
NET ASSETS – 100.0% | $ | 11,520,253 | |||||||
Royce Focus Value Fund |
SHARES | VALUE | ||||||||
COMMON STOCKS – 96.7% | |||||||||
Consumer Discretionary – 10.4% | |||||||||
Automobiles - 1.4% | |||||||||
Thor Industries | 3,000 | $ | 165,690 | ||||||
Leisure Equipment & Products - 1.6% | |||||||||
22,800 | 192,204 | ||||||||
Media - 2.9% | |||||||||
9,500 | 206,340 | ||||||||
†Sirius XM Canada Holdings Cl. A | 14,300 | 133,274 | |||||||
339,614 | |||||||||
Specialty Retail - 4.5% | |||||||||
Buckle (The) | 3,500 | 183,960 | |||||||
GameStop Corporation Cl. A | 3,100 | 152,706 | |||||||
†Lowe’s Companies | 3,900 | 193,245 | |||||||
529,911 | |||||||||
Total (Cost $937,875) | 1,227,419 | ||||||||
Consumer Staples – 3.8% | |||||||||
Food Products - 3.8% | |||||||||
Cal-Maine Foods | 2,000 | 120,460 | |||||||
Industrias Bachoco ADR | 4,500 | 181,215 | |||||||
Sanderson Farms | 2,000 | 144,660 | |||||||
Total (Cost $211,314) | 446,335 | ||||||||
Energy – 9.9% | |||||||||
Energy Equipment & Services - 4.4% | |||||||||
Helmerich & Payne | 2,400 | 201,792 | |||||||
6,600 | 316,338 | ||||||||
518,130 | |||||||||
Oil, Gas & Consumable Fuels - 5.5% | |||||||||
Africa Oil 1 | 15,000 | 130,337 | |||||||
1,700 | 89,862 | ||||||||
Exxon Mobil | 3,500 | 354,200 | |||||||
3,900 | 76,037 | ||||||||
650,436 | |||||||||
Total (Cost $891,459) | 1,168,566 | ||||||||
Financials – 22.9% | |||||||||
Capital Markets - 7.4% | |||||||||
Affiliated Managers Group 1 | 600 | 130,128 | |||||||
Franklin Resources | 7,500 | 432,975 | |||||||
†Och-Ziff Capital Management Group LLC Cl. A | 10,000 | 148,000 | |||||||
Sprott | 67,050 | 165,376 | |||||||
876,479 | |||||||||
Diversified Financial Services - 11.8% | |||||||||
Berkshire Hathaway Cl. B 1 | 3,500 | 414,960 | |||||||
†ING U.S. | 12,200 | 428,830 | |||||||
†JPMorgan Chase & Co. | 4,100 | 239,768 | |||||||
†McGraw Hill Financial | 4,000 | 312,800 | |||||||
1,396,358 | |||||||||
Real Estate Investment Trusts (REITs) - 1.2% | |||||||||
12,500 | 138,946 | ||||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 51 |
Schedules of Investments |
Royce Focus Value Fund (continued) |
SHARES | VALUE | ||||||||
Financials (continued) | |||||||||
Real Estate Management & Development - 2.5% | |||||||||
Kennedy-Wilson Holdings | 13,400 | $ | 298,150 | ||||||
Total (Cost $1,982,133) | 2,709,933 | ||||||||
Health Care – 7.3% | |||||||||
Biotechnology - 3.0% | |||||||||
4,200 | 289,254 | ||||||||
Myriad Genetics 1 | 3,100 | 65,038 | |||||||
354,292 | |||||||||
Pharmaceuticals - 4.3% | |||||||||
2,700 | 104,274 | ||||||||
3,400 | 399,160 | ||||||||
503,434 | |||||||||
Total (Cost $738,054) | 857,726 | ||||||||
Industrials – 16.9% | |||||||||
Aerospace & Defense - 1.1% | |||||||||
1,500 | 130,545 | ||||||||
Building Products - 2.4% | |||||||||
6,500 | 287,235 | ||||||||
Construction & Engineering - 2.1% | |||||||||
Jacobs Engineering Group 1 | 4,000 | 251,960 | |||||||
Electrical Equipment - 3.4% | |||||||||
†AZZ | 4,000 | 195,440 | |||||||
3,600 | 203,053 | ||||||||
398,493 | |||||||||
Machinery - 3.1% | |||||||||
†CIRCOR International | 2,700 | 218,106 | |||||||
Lincoln Electric Holdings | 2,000 | 142,680 | |||||||
360,786 | |||||||||
Marine - 2.7% | |||||||||
†Clarkson | 5,000 | 165,678 | |||||||
1,600 | 158,800 | ||||||||
324,478 | |||||||||
Road & Rail - 2.1% | |||||||||
Patriot Transportation Holding 1 | 6,000 | 249,060 | |||||||
Total (Cost $1,548,249) | 2,002,557 | ||||||||
Information Technology – 16.0% | |||||||||
Computers & Peripherals - 3.9% | |||||||||
Apple | 200 | 112,222 | |||||||
Western Digital | 4,100 | 343,990 | |||||||
456,212 | |||||||||
Electronic Equipment, Instruments & Components - 3.3% | |||||||||
†LPKF Laser & Electronics | 10,900 | 278,609 | |||||||
1,900 | 116,850 | ||||||||
395,459 | |||||||||
Internet Software & Services - 1.3% | |||||||||
17,000 | 147,730 | ||||||||
IT Services - 1.4% | |||||||||
†MasterCard Cl. A | 200 | 167,092 | |||||||
Semiconductors & Semiconductor Equipment - 2.0% | |||||||||
MKS Instruments | 8,000 | 239,520 | |||||||
Software - 4.1% | |||||||||
4,300 | 246,691 | ||||||||
Microsoft Corporation | 6,500 | 243,295 | |||||||
489,986 | |||||||||
Total (Cost $1,530,700) | 1,895,999 | ||||||||
Materials – 8.1% | |||||||||
Chemicals - 3.0% | |||||||||
†Methanex Corporation | 2,000 | 118,480 | |||||||
2,400 | 237,288 | ||||||||
355,768 | |||||||||
Metals & Mining - 5.1% | |||||||||
32,900 | 184,898 | ||||||||
Randgold Resources ADR | 2,500 | 157,025 | |||||||
Reliance Steel & Aluminum | 3,500 | 265,440 | |||||||
607,363 | |||||||||
Total (Cost $808,472) | 963,131 | ||||||||
Miscellaneous 4 – 1.4% | |||||||||
Total (Cost $166,665) | 169,989 | ||||||||
TOTAL COMMON STOCKS | |||||||||
(Cost $8,814,921) | 11,441,655 | ||||||||
FIXED INCOME – 1.2% | |||||||||
Government Bonds – 1.2% | |||||||||
ProShares UltraShort 20+ Year Treasury 1 | 1,750 | 138,600 | |||||||
TOTAL FIXED INCOME | |||||||||
(Cost $185,658) | 138,600 | ||||||||
REPURCHASE AGREEMENT – 3.3% | |||||||||
Fixed Income Clearing Corporation, | |||||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||||
maturity value $396,000 (collateralized | |||||||||
by obligations of various U.S. Government | |||||||||
Agencies, 5.125% due 1/2/14, valued at $405,863) | |||||||||
(Cost $396,000) | 396,000 | ||||||||
TOTAL INVESTMENTS – 101.2% | |||||||||
(Cost $9,396,579) | 11,976,255 | ||||||||
LIABILITIES LESS CASH | |||||||||
AND OTHER ASSETS – (1.2)% | (142,648 | ) | |||||||
NET ASSETS – 100.0% | $ | 11,833,607 | |||||||
52 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
Royce Partners Fund |
SHARES | VALUE | |||||
COMMON STOCKS – 86.5% | ||||||
Consumer Discretionary – 2.3% | ||||||
Household Durables - 1.0% | ||||||
Hunter Douglas | 600 | $ | 27,157 | |||
Media - 1.3% | ||||||
Morningstar | 480 | 37,483 | ||||
Total (Cost $38,308) | 64,640 | |||||
Energy – 5.2% | ||||||
Energy Equipment & Services - 5.2% | ||||||
Ensco Cl. A | 560 | 32,021 | ||||
Schlumberger | 288 | 25,952 | ||||
Tidewater | 720 | 42,674 | ||||
Transocean | 900 | 44,478 | ||||
Total (Cost $117,920) | 145,125 | |||||
Financials – 29.6% | ||||||
Capital Markets - 22.9% | ||||||
†ASA Gold and Precious Metals | 2,700 | 33,102 | ||||
Ashmore Group | 8,000 | 53,163 | ||||
†Aurelius | 900 | 36,525 | ||||
Bank of New York Mellon (The) | 1,360 | 47,518 | ||||
Coronation Fund Managers | 4,300 | 32,777 | ||||
Jupiter Fund Management | 7,300 | 46,540 | ||||
KKR & Co. L.P. | 1,040 | 25,313 | ||||
†Monroe Capital | 3,390 | 41,358 | ||||
Northern Trust | 448 | 27,727 | ||||
8,000 | 40,611 | |||||
†Schwab (Charles) | 1,656 | 43,056 | ||||
SEI Investments | 1,152 | 40,009 | ||||
†Sprott | 18,200 | 44,890 | ||||
State Street | 886 | 65,023 | ||||
Value Partners Group | 84,000 | 65,104 | ||||
642,716 | ||||||
Diversified Financial Services - 1.5% | ||||||
Moody’s Corporation | 525 | 41,197 | ||||
Insurance - 2.9% | ||||||
E-L Financial | 120 | 80,207 | ||||
Real Estate Management & Development - 2.3% | ||||||
Jones Lang LaSalle | 320 | 32,765 | ||||
†Midland Holdings | 64,000 | 30,868 | ||||
63,633 | ||||||
Total (Cost $637,574) | 827,753 | |||||
Health Care – 4.8% | ||||||
Biotechnology - 0.7% | ||||||
Myriad Genetics 1 | 880 | 18,462 | ||||
Health Care Equipment & Supplies - 2.1% | ||||||
†Atrion Corporation | 200 | 59,250 | ||||
Health Care Providers & Services - 0.9% | ||||||
†Landauer | 500 | 26,305 | ||||
Pharmaceuticals - 1.1% | ||||||
Adcock Ingram Holdings | 4,400 | 29,739 | ||||
Total (Cost $127,942) | 133,756 | |||||
Industrials – 20.0% | ||||||
Air Freight & Logistics - 1.7% | ||||||
Expeditors International of | ||||||
Washington | 1,040 | 46,020 | ||||
Commercial Services & Supplies - 1.8% | ||||||
2,400 | 49,176 | |||||
Machinery - 6.7% | ||||||
Foster (L.B.) Company | 640 | 30,265 | ||||
Graco | 576 | 44,997 | ||||
560 | 39,620 | |||||
Spirax-Sarco Engineering | 770 | 38,125 | ||||
Valmont Industries | 240 | 35,789 | ||||
188,796 | ||||||
Professional Services - 6.0% | ||||||
†Acacia Research | 1,700 | 24,718 | ||||
ManpowerGroup | 560 | 48,082 | ||||
Towers Watson & Co. Cl. A | 392 | 50,023 | ||||
Verisk Analytics Cl. A 1 | 698 | 45,872 | ||||
168,695 | ||||||
Road & Rail - 2.7% | ||||||
Landstar System | 640 | 36,768 | ||||
Patriot Transportation Holding 1 | 960 | 39,850 | ||||
76,618 | ||||||
Trading Companies & Distributors - 1.1% | ||||||
†Applied Industrial Technologies | 640 | 31,418 | ||||
Total (Cost $356,806) | 560,723 | |||||
Information Technology – 14.0% | ||||||
Computers & Peripherals - 1.2% | ||||||
†Western Digital | 400 | 33,560 | ||||
Electronic Equipment, Instruments & Components - 7.3% | ||||||
Amphenol Corporation Cl. A | 300 | 26,754 | ||||
Anixter International | 400 | 35,936 | ||||
FARO Technologies 1 | 600 | 34,980 | ||||
IPG Photonics 1 | 440 | 34,148 | ||||
†National Instruments | 1,200 | 38,424 | ||||
6,700 | 34,673 | |||||
204,915 | ||||||
IT Services - 2.1% | ||||||
MasterCard Cl. A | 71 | 59,318 | ||||
Office Electronics - 1.7% | ||||||
Zebra Technologies Cl. A 1 | 880 | 47,590 | ||||
Software - 1.7% | ||||||
†SimCorp | 1,200 | 47,245 | ||||
Total (Cost $234,921) | 392,628 | |||||
Materials – 8.6% | ||||||
Chemicals - 0.6% | ||||||
Airgas | 160 | 17,896 | ||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 53 |
Schedules of Investments |
Royce Partners Fund (continued) |
SHARES | VALUE | ||||||||
Materials (continued) | |||||||||
Containers & Packaging - 3.0% | |||||||||
Greif Cl. A | 704 | �� | $ | 36,890 | |||||
Mayr-Melnhof Karton | 375 | 46,430 | |||||||
83,320 | |||||||||
Metals & Mining - 3.7% | |||||||||
†Fresnillo | 2,000 | 24,690 | |||||||
†Pan American Silver | 3,200 | 37,440 | |||||||
Reliance Steel & Aluminum | 560 | 42,471 | |||||||
104,601 | |||||||||
Paper & Forest Products - 1.3% | |||||||||
†Stella-Jones | 1,400 | 35,914 | |||||||
Total (Cost $217,934) | 241,731 | ||||||||
Telecommunication Services – 1.5% | |||||||||
Diversified Telecommunication Services - 1.5% | |||||||||
5,900 | 43,070 | ||||||||
Total (Cost $25,114) | 43,070 | ||||||||
Miscellaneous 4 – 0.5% | |||||||||
Total (Cost $12,482) | 13,520 | ||||||||
TOTAL COMMON STOCKS | |||||||||
(Cost $1,769,001) | 2,422,946 | ||||||||
REPURCHASE AGREEMENT – 11.0% | |||||||||
Fixed Income Clearing Corporation, | |||||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||||
maturity value $308,000 (collateralized | |||||||||
by obligations of various U.S. Government | |||||||||
Agencies, 0.52% due 5/20/16, valued at $314,606) | |||||||||
(Cost $308,000) | 308,000 | ||||||||
TOTAL INVESTMENTS – 97.5% | |||||||||
(Cost $2,077,001) | 2,730,946 | ||||||||
CASH AND OTHER ASSETS | |||||||||
LESS LIABILITIES – 2.5% | 70,087 | ||||||||
NET ASSETS – 100.0% | $ | 2,801,033 | |||||||
Royce Opportunity Select Fund |
SHARES | VALUE | ||||||||
COMMON STOCKS – 98.6% | |||||||||
Consumer Discretionary – 13.1% | |||||||||
Auto Components - 1.4% | |||||||||
11,500 | $ | 246,100 | |||||||
Diversified Consumer Services - 0.6% | |||||||||
4,000 | 109,280 | ||||||||
Hotels, Restaurants & Leisure - 1.9% | |||||||||
Orient-Express Hotels Cl. A 1 | 21,500 | 324,865 | |||||||
Household Durables - 3.1% | |||||||||
12,000 | 158,400 | ||||||||
M.D.C. Holdings 1 | 12,000 | 386,880 | |||||||
545,280 | |||||||||
Multiline Retail - 1.9% | |||||||||
†Fred’s Cl. A | 12,000 | 222,240 | |||||||
J.C. Penney Company 1 | 11,000 | 100,650 | |||||||
322,890 | |||||||||
Specialty Retail - 1.3% | |||||||||
Zumiez 1 | 9,000 | 234,000 | |||||||
Textiles, Apparel & Luxury Goods - 2.9% | |||||||||
†Jones Group (The) | 18,000 | 269,280 | |||||||
Quiksilver 1 | 28,000 | 245,560 | |||||||
514,840 | |||||||||
Total (Cost $1,965,624) | 2,297,255 | ||||||||
Energy – 10.0% | |||||||||
Energy Equipment & Services - 5.5% | |||||||||
9,000 | 207,900 | ||||||||
Hercules Offshore 1 | 37,000 | 241,610 | |||||||
Key Energy Services 1 | 6,000 | 47,400 | |||||||
24,500 | 224,420 | ||||||||
Newpark Resources 1 | 2,000 | 24,580 | |||||||
Patterson-UTI Energy | 8,500 | 215,220 | |||||||
961,130 | |||||||||
Oil, Gas & Consumable Fuels - 4.5% | |||||||||
Goodrich Petroleum 1 | 9,500 | 161,690 | |||||||
Scorpio Tankers | 16,000 | 188,640 | |||||||
Swift Energy 1 | 22,500 | 303,750 | |||||||
42,500 | 133,450 | ||||||||
787,530 | |||||||||
Total (Cost $1,528,018) | 1,748,660 | ||||||||
Financials – 11.4% | |||||||||
Commercial Banks - 6.3% | |||||||||
7,000 | 226,100 | ||||||||
†Guaranty Bancorp | 7,000 | 98,350 | |||||||
7,500 | 372,450 | ||||||||
16,000 | 189,760 | ||||||||
†Trustmark Corporation | 8,000 | 214,720 | |||||||
1,101,380 | |||||||||
Real Estate Investment Trusts (REITs) - 2.1% | |||||||||
LaSalle Hotel Properties 5 | 5,300 | 163,558 | |||||||
RAIT Financial Trust | 23,000 | 206,310 | |||||||
369,868 | |||||||||
54 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | ||||||||
Financials (continued) | |||||||||
Real Estate Management & Development - 2.2% | |||||||||
†Kennedy-Wilson Holdings | 17,000 | $ | 378,250 | ||||||
Thrifts & Mortgage Finance - 0.8% | |||||||||
Radian Group | 10,000 | 141,200 | |||||||
Total (Cost $1,560,463) | 1,990,698 | ||||||||
Health Care – 1.7% | |||||||||
Health Care Equipment & Supplies - 1.7% | |||||||||
Accuray 1 | 18,000 | 156,780 | |||||||
21,500 | 135,235 | ||||||||
Total (Cost $206,807) | 292,015 | ||||||||
Industrials – 22.4% | |||||||||
Aerospace & Defense - 1.7% | |||||||||
Kratos Defense & Security Solutions 1 | 38,000 | 291,840 | |||||||
Air Freight & Logistics - 1.4% | |||||||||
XPO Logistics 1 | 9,500 | 249,755 | |||||||
Airlines - 2.0% | |||||||||
JetBlue Airways 1 | 41,000 | 350,550 | |||||||
Building Products - 4.2% | |||||||||
Builders FirstSource 1 | 26,500 | 189,210 | |||||||
NCI Building Systems 1 | 14,500 | 254,330 | |||||||
†Quanex Building Products | 14,500 | 288,840 | |||||||
732,380 | |||||||||
Construction & Engineering - 1.0% | |||||||||
18,000 | 173,880 | ||||||||
Electrical Equipment - 3.3% | |||||||||
†General Cable | 8,500 | 249,985 | |||||||
7,500 | 132,000 | ||||||||
11,300 | 194,021 | ||||||||
576,006 | |||||||||
Machinery - 5.4% | |||||||||
43,000 | 160,390 | ||||||||
20,000 | 145,400 | ||||||||
Hardinge | 9,500 | 137,465 | |||||||
Meritor 1 | 25,000 | 260,750 | |||||||
Mueller Water Products Cl. A | 25,000 | 234,250 | |||||||
938,255 | |||||||||
Road & Rail - 1.5% | |||||||||
Arkansas Best | 5,300 | 178,504 | |||||||
Swift Transportation Cl. A 1 | 4,000 | 88,840 | |||||||
267,344 | |||||||||
Trading Companies & Distributors - 1.9% | |||||||||
†Air Lease Cl. A | 11,000 | 341,880 | |||||||
Total (Cost $3,214,498) | 3,921,890 | ||||||||
Information Technology – 28.2% | |||||||||
Communications Equipment - 4.2% | |||||||||
57,000 | 399,000 | ||||||||
2,500 | 82,350 | ||||||||
Oclaro 1 | 42,500 | 105,825 | |||||||
Westell Technologies Cl. A 1 | 36,000 | 145,800 | |||||||
732,975 | |||||||||
Computers & Peripherals - 3.2% | |||||||||
Datalink Corporation 1 | 19,500 | 212,550 | |||||||
†Logitech International | 17,000 | 232,730 | |||||||
10,000 | 118,300 | ||||||||
563,580 | |||||||||
Electronic Equipment, Instruments & Components - 2.0% | |||||||||
Audience 1 | 13,000 | 151,320 | |||||||
Newport Corporation 1 | 10,500 | 189,735 | |||||||
341,055 | |||||||||
Semiconductors & Semiconductor Equipment - 18.3% | |||||||||
Alpha & Omega Semiconductor 1 | 12,000 | 92,520 | |||||||
2,300 | 69,483 | ||||||||
16,500 | 194,535 | ||||||||
18,000 | 240,300 | ||||||||
FormFactor 1 | 23,500 | 141,470 | |||||||
7,500 | 96,750 | ||||||||
Integrated Silicon Solution 1 | 13,500 | 163,215 | |||||||
9,000 | 234,630 | ||||||||
†Intersil Corporation Cl. A | 18,500 | 212,195 | |||||||
LTX-Credence Corporation 1 | 25,500 | 203,745 | |||||||
9,000 | 175,500 | ||||||||
57,000 | 156,180 | ||||||||
NeoPhotonics Corporation 1 | 35,000 | 247,100 | |||||||
OmniVision Technologies 1 | 11,500 | 197,800 | |||||||
Rubicon Technology 1 | 24,000 | 238,800 | |||||||
19,000 | 223,060 | ||||||||
SunEdison 1 | 15,500 | 202,275 | |||||||
TriQuint Semiconductor 1 | 10,000 | 83,400 | |||||||
Ultratech 1 | 1,000 | 29,000 | |||||||
3,201,958 | |||||||||
Software - 0.5% | |||||||||
Smith Micro Software 1 | 55,000 | 81,400 | |||||||
Total (Cost $4,026,104) | 4,920,968 | ||||||||
Materials – 6.8% | |||||||||
Chemicals - 2.7% | |||||||||
10,500 | 242,025 | ||||||||
OM Group 1 | 6,000 | 218,460 | |||||||
460,485 | |||||||||
Metals & Mining - 2.9% | |||||||||
32,000 | 262,400 | ||||||||
Carpenter Technology | 4,000 | 248,800 | |||||||
511,200 | |||||||||
Paper & Forest Products - 1.2% | |||||||||
Louisiana-Pacific Corporation 1 | 11,500 | 212,865 | |||||||
Total (Cost $1,006,984) | 1,184,550 | ||||||||
Miscellaneous 4 – 5.0% | |||||||||
Total (Cost $854,602) | 867,665 | ||||||||
TOTAL COMMON STOCKS | |||||||||
(Cost $14,363,100) | 17,223,701 | ||||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 55 |
Schedules of Investments |
Royce Opportunity Select Fund (continued) |
SHARES | VALUE | ||||||||
REPURCHASE AGREEMENT – 3.9% | |||||||||
Fixed Income Clearing Corporation, | |||||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||||
maturity value $672,000 (collateralized | |||||||||
by obligations of various U.S. Government | |||||||||
Agencies, 0.625% due 7/15/16, valued at $687,757) | |||||||||
(Cost $672,000) | $ | 672,000 | |||||||
TOTAL INVESTMENTS – 102.5% | |||||||||
(Cost $15,035,100) | 17,895,701 | ||||||||
LIABILITIES LESS CASH | |||||||||
AND OTHER ASSETS – (2.5)% | (434,586 | ) | |||||||
NET ASSETS – 100.0% | $ | 17,461,115 | |||||||
SECURITIES SOLD SHORT | |||||||||
COMMON STOCKS – 6.6% | |||||||||
Consumer Discretionary – 4.3% | |||||||||
Hotels, Restaurants & Leisure - 1.5% | |||||||||
Fiesta Restaurant Group | 1,800 | $ | 94,032 | ||||||
Life Time Fitness | 2,000 | 94,000 | |||||||
SeaWorld Entertainment | 2,500 | 71,925 | |||||||
259,957 | |||||||||
Household Durables - 0.2% | |||||||||
iRobot Corporation | 1,000 | 34,770 | |||||||
Specialty Retail - 2.6% | |||||||||
Guess? | 1,500 | 46,605 | |||||||
Lithia Motors Cl. A | 1,500 | 104,130 | |||||||
Lumber Liquidators Holdings | 1,000 | 102,890 | |||||||
Sonic Automotive Cl. A | 2,000 | 48,960 | |||||||
Vitamin Shoppe | 3,000 | 156,030 | |||||||
458,615 | |||||||||
Total (Proceeds $702,387) | 753,342 | ||||||||
Consumer Staples – 1.2% | |||||||||
Beverages - 0.4% | |||||||||
Dr Pepper Snapple Group | 1,500 | 73,080 | |||||||
Food & Staples Retailing - 0.8% | |||||||||
Fresh Market (The) | 2,000 | 81,000 | |||||||
Sprouts Farmers Markets | 1,500 | 57,645 | |||||||
138,645 | |||||||||
Total (Proceeds $218,877) | 211,725 | ||||||||
Industrials – 0.7% | |||||||||
Building Products - 0.5% | |||||||||
Trex Company | 1,000 | 79,530 | |||||||
Commercial Services & Supplies - 0.2% | |||||||||
Mobile Mini | 1,000 | 41,180 | |||||||
Total (Proceeds $99,697) | 120,710 | ||||||||
Information Technology – 0.4% | |||||||||
Software - 0.4% | |||||||||
Fleetmatics Group | 1,500 | 64,875 | |||||||
Total (Proceeds $69,929) | 64,875 | ||||||||
TOTAL SECURITIES SOLD SHORT | |||||||||
(Proceeds $1,090,890) | $ | 1,150,652 | |||||||
56 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
Royce Global Dividend Value Fund |
SHARES | VALUE | ||||||||
COMMON STOCKS – 87.8% | |||||||||
Australia – 0.4% | |||||||||
†Imdex | 65,000 | $ | 35,984 | ||||||
Total (Cost $69,732) | 35,984 | ||||||||
Austria – 1.7% | |||||||||
Mayr-Melnhof Karton | 700 | 86,669 | |||||||
Semperit AG Holding | 1,500 | 74,277 | |||||||
Total (Cost $158,732) | 160,946 | ||||||||
Belgium – 0.5% | |||||||||
EVS Broadcast Equipment | 800 | 51,715 | |||||||
Total (Cost $49,577) | 51,715 | ||||||||
Brazil – 5.4% | |||||||||
†Brasil Brokers Participacoes | 42,500 | 105,383 | |||||||
†CETIP - Mercados Organizados | 6,600 | 67,700 | |||||||
Eternit | 14,000 | 51,864 | |||||||
Grendene | 5,900 | 45,239 | |||||||
†Iguatemi Empresa de Shopping Centers | 4,000 | 37,809 | |||||||
†MAHLE Metal Leve | 6,200 | 72,006 | |||||||
†Totvs | 8,700 | 136,294 | |||||||
Total (Cost $560,728) | 516,295 | ||||||||
Canada – 7.8% | |||||||||
†Aimia | 3,000 | 55,100 | |||||||
†Alaris Royalty | 2,000 | 56,239 | |||||||
Canadian Energy Services & Technology | 1,207 | 26,271 | |||||||
†Computer Modelling Group | 2,700 | 67,637 | |||||||
E-L Financial | 70 | 46,787 | |||||||
†Gluskin Sheff + Associates | 1,800 | 43,549 | |||||||
†GMP Capital | 11,000 | 72,695 | |||||||
†KP Tissue | 3,000 | 48,463 | |||||||
Major Drilling Group International | 7,500 | 54,295 | |||||||
Pan American Silver | 5,700 | 66,690 | |||||||
Sprott | 22,500 | 55,495 | |||||||
Stella-Jones | 3,840 | 98,508 | |||||||
Trican Well Service | 4,200 | 51,321 | |||||||
Total (Cost $800,542) | 743,050 | ||||||||
Chile – 1.0% | |||||||||
†Forus | 4,000 | 20,173 | |||||||
†Inversiones La Construccion | 4,000 | 56,333 | |||||||
†Sonda | 8,000 | 19,183 | |||||||
Total (Cost $115,024) | 95,689 | ||||||||
China – 1.0% | |||||||||
Daphne International Holdings | 100,000 | 45,007 | |||||||
Pacific Online | 105,000 | 50,237 | |||||||
Total (Cost $109,996) | 95,244 | ||||||||
Cyprus – 0.7% | |||||||||
Globaltrans Investment GDR | 4,000 | 63,600 | |||||||
Total (Cost $54,719) | 63,600 | ||||||||
Denmark – 1.3% | |||||||||
H. Lundbeck | 2,000 | 50,528 | |||||||
2,600 | 71,919 | ||||||||
Total (Cost $97,353) | 122,447 | ||||||||
Finland – 1.7% | |||||||||
†F-Secure | 23,100 | 59,426 | |||||||
Nokian Renkaat | 1,200 | 57,565 | |||||||
†Tieto | 1,900 | 42,971 | |||||||
Total (Cost $153,611) | 159,962 | ||||||||
France – 2.0% | |||||||||
Alten | 1,500 | 68,097 | |||||||
bioMerieux | 400 | 41,970 | |||||||
Vetoquinol | 1,900 | 80,244 | |||||||
Total (Cost $164,542) | 190,311 | ||||||||
Germany – 3.5% | |||||||||
†Amadeus Fire | 500 | 37,556 | |||||||
†Aurelius | 1,500 | 60,875 | |||||||
†LPKF Laser & Electronics | 2,400 | 61,345 | |||||||
Nemetschek | 700 | 48,458 | |||||||
Pfeiffer Vacuum Technology | 430 | 58,522 | |||||||
†RIB Software | 6,500 | 64,383 | |||||||
Total (Cost $236,990) | 331,139 | ||||||||
Hong Kong – 12.5% | |||||||||
Arts Optical International Holdings | 82,000 | 18,506 | |||||||
†Bonjour Holdings | 215,000 | 46,858 | |||||||
†Bosideng International Holdings | 150,000 | 28,242 | |||||||
†Dickson Concepts (International) | 105,000 | 63,913 | |||||||
†Goldlion Holdings | 60,000 | 28,861 | |||||||
Le Saunda Holdings | 120,000 | 56,949 | |||||||
Lung Kee (Bermuda) Holdings | 150,000 | 53,777 | |||||||
Media Chinese International | 160,000 | 47,626 | |||||||
Midland Holdings | 185,000 | 89,228 | |||||||
New World Department Store China | 135,000 | 75,906 | |||||||
†Oriental Watch Holdings | 207,000 | 54,724 | |||||||
Pacific Textiles Holdings | 52,500 | 80,027 | |||||||
Pico Far East Holdings | 175,000 | 61,160 | |||||||
†Regent Manner International Holdings | 437,000 | 76,080 | |||||||
Stella International Holdings | 32,500 | 82,819 | |||||||
Television Broadcasts | 15,000 | 100,009 | |||||||
Value Partners Group | 120,000 | 93,006 | |||||||
VTech Holdings | 3,000 | 38,998 | |||||||
Win Hanverky Holdings | 276,000 | 33,458 | |||||||
Xtep International Holdings | 135,000 | 69,639 | |||||||
Total (Cost $1,164,188) | 1,199,786 | ||||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 57 |
Schedules of Investments |
Royce Global Dividend Value Fund (continued) |
SHARES | VALUE | ||||||||
India – 0.8% | |||||||||
†Graphite India | 58,000 | $ | 75,014 | ||||||
Total (Cost $79,747) | 75,014 | ||||||||
Indonesia – 0.5% | |||||||||
Selamat Sempurna | 180,000 | 51,027 | |||||||
Total (Cost $24,794) | 51,027 | ||||||||
Israel – 0.8% | |||||||||
†Hilan | 10,000 | 79,983 | |||||||
Total (Cost $73,037) | 79,983 | ||||||||
Italy – 1.2% | |||||||||
DiaSorin | 1,000 | 46,898 | |||||||
Recordati | 5,000 | 71,949 | |||||||
Total (Cost $90,738) | 118,847 | ||||||||
Japan – 5.3% | |||||||||
Dr.Ci:Labo | 12 | 36,635 | |||||||
EPS Corporation | 50 | 65,521 | |||||||
FamilyMart | 1,500 | 68,441 | |||||||
Hogy Medical | 800 | 42,085 | |||||||
Miraial | 3,500 | 52,312 | |||||||
Moshi Moshi Hotline | 5,600 | 59,930 | |||||||
Santen Pharmaceutical | 1,000 | 46,577 | |||||||
TOTO | 4,000 | 63,318 | |||||||
USS | 5,000 | 68,559 | |||||||
Total (Cost $413,841) | 503,378 | ||||||||
Malaysia – 2.6% | |||||||||
CB Industrial Product Holding | 75,000 | 73,500 | |||||||
†Media Prima | 65,000 | 51,992 | |||||||
Padini Holdings | 70,000 | 38,681 | |||||||
†Silverlake Axis | 115,000 | 80,194 | |||||||
Total (Cost $204,285) | 244,367 | ||||||||
Mexico – 1.8% | |||||||||
Bolsa Mexicana de Valores | 23,500 | 53,888 | |||||||
†Fresnillo | 6,800 | 83,947 | |||||||
Industrias Bachoco ADR | 800 | 32,216 | |||||||
Total (Cost $178,263) | 170,051 | ||||||||
Netherlands – 1.1% | |||||||||
†Exact Holding | 2,000 | 64,658 | |||||||
Hunter Douglas | 900 | 40,734 | |||||||
Total (Cost $87,892) | 105,392 | ||||||||
Norway – 1.5% | |||||||||
†Fred. Olsen Energy | 1,000 | 40,707 | |||||||
†Oslo Bors VPS Holding | 3,500 | 35,200 | |||||||
TGS-NOPEC Geophysical | 2,500 | 66,279 | |||||||
Total (Cost $126,500) | 142,186 | ||||||||
Poland – 0.4% | |||||||||
Warsaw Stock Exchange | 3,000 | 41,211 | |||||||
Total (Cost $44,626) | 41,211 | ||||||||
Singapore – 2.3% | |||||||||
ARA Asset Management | 39,050 | 57,556 | |||||||
ComfortDelGro Corporation | 40,000 | 63,711 | |||||||
†CSE Global | 40,000 | 24,248 | |||||||
†Pan-United Corporation | 94,000 | 71,509 | |||||||
Total (Cost $193,875) | 217,024 | ||||||||
South Africa – 5.9% | |||||||||
ADvTECH | 51,000 | 31,942 | |||||||
†Afrimat | 55,600 | 66,254 | |||||||
†AVI | 6,400 | 35,008 | |||||||
†Blue Label Telecoms | 50,000 | 40,515 | |||||||
†Cashbuild | 3,500 | 51,716 | |||||||
Coronation Fund Managers | 9,200 | 70,127 | |||||||
†Foschini Group | 4,000 | 36,511 | |||||||
†Gold Fields ADR | 12,200 | 39,040 | |||||||
JSE | 6,000 | 51,323 | |||||||
Lewis Group | 12,500 | 84,485 | |||||||
Raubex Group | 26,000 | 53,908 | |||||||
Total (Cost $584,824) | 560,829 | ||||||||
South Korea – 0.7% | |||||||||
GS Home Shopping | 135 | 39,284 | |||||||
Hanssem | 600 | 28,597 | |||||||
Total (Cost $36,656) | 67,881 | ||||||||
Sweden – 0.4% | |||||||||
†Bjoern Borg | 9,100 | 43,011 | |||||||
Total (Cost $40,976) | 43,011 | ||||||||
Switzerland – 4.6% | |||||||||
Belimo Holding | 20 | 55,154 | |||||||
†Forbo Holding | 70 | 59,795 | |||||||
Kaba Holding | 150 | 72,894 | |||||||
LEM Holding | 80 | 62,597 | |||||||
†Transocean | 1,600 | 79,072 | |||||||
VZ Holding | 335 | 62,490 | |||||||
Zehnder Group | 1,100 | 50,557 | |||||||
Total (Cost $347,402) | 442,559 | ||||||||
Turkey – 0.5% | |||||||||
Mardin Cimento Sanayii | 22,500 | 44,602 | |||||||
Total (Cost $83,722) | 44,602 | ||||||||
United Arab Emirates – 0.8% | |||||||||
†Aramex | 92,000 | 76,145 | |||||||
Total (Cost $57,210) | 76,145 | ||||||||
United Kingdom – 10.3% | |||||||||
Ashmore Group | 12,100 | 80,408 |
58 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | ||||||||
United Kingdom (continued) | |||||||||
†Aveva Group | 1,312 | $ | 47,015 | ||||||
Clarkson | 1,900 | 62,958 | |||||||
Close Brothers Group | 1,200 | 27,264 | |||||||
†Consort Medical | 4,200 | 66,559 | |||||||
De La Rue | 2,700 | 38,943 | |||||||
Diploma | 3,500 | 39,122 | |||||||
Domino Printing Sciences | 7,800 | 98,810 | |||||||
†E2V Technologies | 21,500 | 53,404 | |||||||
†Fidessa Group | 1,800 | 67,155 | |||||||
†Homeserve | 14,000 | 63,824 | |||||||
Investec | 5,000 | 36,232 | |||||||
Jupiter Fund Management | 12,500 | 79,693 | |||||||
Latchways | 2,400 | 50,076 | |||||||
Michael Page International | 3,500 | 28,284 | |||||||
Rathbone Brothers | 700 | 18,709 | |||||||
RIT Capital Partners | 1,000 | 20,865 | |||||||
Spirax-Sarco Engineering | 950 | 47,037 | |||||||
†Victrex | 2,000 | 60,840 | |||||||
Total (Cost $759,086) | 987,198 | ||||||||
United States – 6.8% | |||||||||
†Cabot Corporation | 1,000 | 51,400 | |||||||
†Commercial Metals | 3,825 | 77,762 | |||||||
Expeditors International of Washington | 1,100 | 48,675 | |||||||
FLIR Systems | 1,650 | 49,665 | |||||||
†Fresh Del Monte Produce | 2,300 | 65,090 | |||||||
†Haynes International | 900 | 49,716 | |||||||
KBR | 2,200 | 70,158 | |||||||
†National Instruments | 2,000 | 64,040 | |||||||
†Sun Hydraulics | 1,700 | 69,411 | |||||||
WaterFurnace Renewable Energy | 4,500 | 101,629 | |||||||
Total (Cost $551,663) | 647,546 | ||||||||
TOTAL COMMON STOCKS | |||||||||
(Cost $7,714,871) | 8,384,419 | ||||||||
REPURCHASE AGREEMENT – 14.5% | |||||||||
Fixed Income Clearing Corporation, | |||||||||
0.00% dated 12/31/13, due 1/2/14, | |||||||||
maturity value $1,391,000 (collateralized | |||||||||
by obligations of various U.S. Government | |||||||||
Agencies, 0.52% due 5/20/16, valued at $1,423,219) | |||||||||
(Cost $1,391,000) | 1,391,000 | ||||||||
TOTAL INVESTMENTS – 102.3% | |||||||||
(Cost $9,105,871) | 9,775,419 | ||||||||
LIABILITIES LESS CASH | |||||||||
AND OTHER ASSETS – (2.3)% | (218,990 | ) | |||||||
NET ASSETS – 100.0% | $ | 9,556,429 | |||||||
Royce International Micro-Cap Fund |
SHARES | VALUE | ||||||||
COMMON STOCKS – 94.4% | |||||||||
Australia – 4.7% | |||||||||
†Collection House | 34,500 | $ | 57,914 | ||||||
Imdex | 84,500 | 46,779 | |||||||
11,100 | 20,219 | ||||||||
†Programmed Maintenance Services | 18,100 | 56,565 | |||||||
TFS Corporation | 68,851 | 62,399 | |||||||
Total (Cost $257,953) | 243,876 | ||||||||
Belgium – 1.4% | |||||||||
EVS Broadcast Equipment | 600 | 38,787 | |||||||
400 | 13,487 | ||||||||
†Van de Velde | 400 | 20,030 | |||||||
Total (Cost $59,856) | 72,304 | ||||||||
Bermuda – 1.0% | |||||||||
Northern Offshore | 35,000 | 54,532 | |||||||
Total (Cost $62,262) | 54,532 | ||||||||
Brazil – 1.6% | |||||||||
Brasil Brokers Participacoes | 25,000 | 61,990 | |||||||
9,100 | 20,829 | ||||||||
Total (Cost $90,684) | 82,819 | ||||||||
Canada – 7.2% | |||||||||
†AirBoss of America | 3,500 | 25,535 | |||||||
2,600 | 29,984 | ||||||||
†Contrans Group Cl. A | 4,400 | 55,008 | |||||||
†HNZ Group | 1,200 | 24,299 | |||||||
†Lassonde Industries Cl. A | 210 | 20,386 | |||||||
†Magellan Aerospace | 7,900 | 63,215 | |||||||
Major Drilling Group International | 8,500 | 61,535 | |||||||
†MTY Food Group | 800 | 25,817 | |||||||
17,600 | 29,326 | ||||||||
Total Energy Services | 2,000 | 38,823 | |||||||
Total (Cost $348,253) | 373,928 | ||||||||
China – 1.8% | |||||||||
†Daphne International Holdings | 86,000 | 38,706 | |||||||
Pacific Online | 110,000 | 52,629 | |||||||
Qunxing Paper Holdings 2 | 41,000 | 529 | |||||||
Total (Cost $92,459) | 91,864 | ||||||||
France – 2.6% | |||||||||
800 | 36,307 | ||||||||
†MGI Coutier | 180 | 24,253 | |||||||
Neurones | 2,800 | 48,496 | |||||||
†Tessi | 200 | 24,906 | |||||||
Total (Cost $108,453) | 133,962 | ||||||||
Germany – 4.4% | |||||||||
†Amadeus Fire | 300 | 22,534 | |||||||
Bertrandt | 200 | 30,541 | |||||||
LPKF Laser & Electronics | 2,200 | 56,233 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 59 |
Schedules of Investments |
Royce International Micro-Cap Fund (continued) |
SHARES | VALUE | ||||||||
Germany (continued) | |||||||||
Nemetschek | 1,000 | $ | 69,225 | ||||||
†RIB Software | 5,000 | 49,525 | |||||||
Total (Cost $148,420) | 228,058 | ||||||||
Hong Kong – 12.3% | |||||||||
†Anxin-China Holdings | 100,000 | 31,853 | |||||||
†China Metal International Holdings | 92,000 | 32,983 | |||||||
Dickson Concepts (International) | 75,000 | 45,652 | |||||||
Embry Holdings | 35,000 | 24,238 | |||||||
Goldlion Holdings | 115,000 | 55,318 | |||||||
†I.T | 179,000 | 46,168 | |||||||
Le Saunda Holdings | 82,100 | 38,963 | |||||||
Lung Kee (Bermuda) Holdings | 92,000 | 32,983 | |||||||
†Media Chinese International | 126,800 | 37,744 | |||||||
Midland Holdings | 80,000 | 38,585 | |||||||
Oriental Watch Holdings | 183,000 | 48,379 | |||||||
Pico Far East Holdings | 227,000 | 79,333 | |||||||
†Regent Manner International Holdings | 250,000 | 43,524 | |||||||
†Tongda Group Holdings | 400,000 | 26,824 | |||||||
Tse Sui Luen Jewellery (International) | 61,000 | 25,960 | |||||||
†Xtep International Holdings | 60,000 | 30,950 | |||||||
Total (Cost $656,515) | 639,457 | ||||||||
India – 6.0% | |||||||||
AIA Engineering | 5,200 | 40,193 | |||||||
eClerx Services | 2,000 | 34,274 | |||||||
FAG Bearings India | 1,700 | 44,416 | |||||||
Graphite India | 26,200 | 33,886 | |||||||
†Infotech Enterprises | 10,800 | 59,364 | |||||||
†McLeod Russel India | 6,900 | 35,702 | |||||||
†Solar Industries India | 2,000 | 29,424 | |||||||
†Unichem Laboratories | 10,800 | 34,047 | |||||||
Total (Cost $299,659) | 311,306 | ||||||||
Indonesia – 1.4% | |||||||||
Selamat Sempurna | 185,000 | 52,444 | |||||||
1,100,000 | 22,145 | ||||||||
Total (Cost $67,209) | 74,589 | ||||||||
Isle of Man – 0.4% | |||||||||
Geodrill 1 | 30,000 | 20,899 | |||||||
Total (Cost $61,537) | 20,899 | ||||||||
Israel – 0.7% | |||||||||
†Sarin Technologies | 25,000 | 36,650 | |||||||
Total (Cost $38,671) | 36,650 | ||||||||
Japan – 16.2% | |||||||||
Asahi Company | 2,500 | 34,849 | |||||||
BML | 1,500 | 50,707 | |||||||
C. Uyemura & Co. | 1,500 | 65,521 | |||||||
EPS Corporation | 50 | 65,521 | |||||||
†Freund Corporation | 2,200 | 33,425 | |||||||
†G-Tekt Corporation | 1,200 | 40,908 | |||||||
Hogy Medical | 300 | 15,782 | |||||||
Mandom Corporation | 900 | 28,459 | |||||||
Milbon | 900 | 35,210 | |||||||
Miraial | 5,300 | 79,216 | |||||||
Moshi Moshi Hotline | 1,700 | 18,193 | |||||||
†Nishikawa Rubber | 2,900 | 49,926 | |||||||
†Nitto Kohki | 1,700 | 30,510 | |||||||
†Obara Group | 1,300 | 40,613 | |||||||
†Pasona Group | 4,000 | 28,107 | |||||||
†Polatechno Company | 3,900 | 28,479 | |||||||
†Relo Holdings | 700 | 35,828 | |||||||
†Ryobi | 7,000 | 28,117 | |||||||
†Tokai Corporation/Gifu | 1,400 | 40,813 | |||||||
†Trancom | 1,500 | 48,215 | |||||||
†Zuiko Corporation | 800 | 48,163 | |||||||
Total (Cost $833,907) | 846,562 | ||||||||
Malaysia – 3.5% | |||||||||
†Asia Brands | 32,200 | 39,322 | |||||||
CB Industrial Product Holding | 70,000 | 68,600 | |||||||
Coastal Contracts | 45,000 | 47,123 | |||||||
Padini Holdings | 50,000 | 27,629 | |||||||
Total (Cost $140,265) | 182,674 | ||||||||
Netherlands – 1.2% | �� | ||||||||
Beter Bed Holding | 1,300 | 31,485 | |||||||
†Exact Holding | 1,000 | 32,329 | |||||||
Total (Cost $46,012) | 63,814 | ||||||||
Norway – 0.6% | |||||||||
†Spectrum | 5,500 | 33,551 | |||||||
Total (Cost $50,652) | 33,551 | ||||||||
Philippines – 1.1% | |||||||||
†GMA Holdings PDR | 306,000 | 55,502 | |||||||
Total (Cost $51,767) | 55,502 | ||||||||
Singapore – 2.5% | |||||||||
CSE Global | 31,600 | 19,156 | |||||||
Hour Glass (The) | 28,000 | 37,054 | |||||||
†Pan-United Corporation | 46,000 | 34,994 | |||||||
†Sheng Siong Group | 80,000 | 38,670 | |||||||
Total (Cost $138,373) | 129,874 | ||||||||
South Africa – 2.8% | |||||||||
†Blue Label Telecoms | 81,000 | 65,634 | |||||||
60,000 | 31,802 | ||||||||
†Metrofile Holdings | 109,000 | 48,629 | |||||||
Total (Cost $163,245) | 146,065 | ||||||||
South Korea – 3.7% | |||||||||
†Eugene Technology | 4,002 | 63,707 | |||||||
Handsome | 1,200 | 35,874 |
60 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
SHARES | VALUE | ||||||||
South Korea (continued) | |||||||||
†Huvis Corporation | 6,600 | $ | 65,666 | ||||||
†Samjin Pharmaceutical | 2,140 | 29,301 | |||||||
Total (Cost $179,374) | 194,548 | ||||||||
Sri Lanka – 0.9% | |||||||||
Distilleries Company of Sri Lanka | 30,000 | 44,725 | |||||||
Total (Cost $38,581) | 44,725 | ||||||||
Sweden – 0.7% | |||||||||
†Nolato Cl. B | 1,700 | 38,721 | |||||||
Total (Cost $35,976) | 38,721 | ||||||||
Switzerland – 2.5% | |||||||||
Inficon Holding | 65 | 25,048 | |||||||
LEM Holding | 40 | 31,299 | |||||||
VZ Holding | 200 | 37,307 | |||||||
Zehnder Group | 800 | 36,769 | |||||||
Total (Cost $87,280) | 130,423 | ||||||||
Taiwan – 1.6% | |||||||||
Makalot Industrial | 7,500 | 40,515 | |||||||
†Silicon Motion Technology ADR | 2,900 | 41,035 | |||||||
Total (Cost $57,762) | 81,550 | ||||||||
Thailand – 1.1% | |||||||||
†MC Group | 82,200 | 29,018 | |||||||
†RS | 135,000 | 29,169 | |||||||
Total (Cost $75,285) | 58,187 | ||||||||
United Arab Emirates – 0.8% | |||||||||
Aramex | 52,000 | 43,038 | |||||||
Total (Cost $25,530) | 43,038 | ||||||||
United Kingdom – 9.3% | |||||||||
Clarkson | 1,900 | 62,958 | |||||||
†Consort Medical | 4,200 | 66,559 | |||||||
†E2V Technologies | 27,500 | 68,308 | |||||||
†Games Workshop Group | 2,500 | 28,586 | |||||||
†Hogg Robinson Group | 12,200 | 15,909 | |||||||
†Hyder Consulting | 2,500 | 26,288 | |||||||
Latchways | 3,000 | 62,595 | |||||||
†Luxfer Holdings ADR | 2,400 | 50,064 | |||||||
Severfield-Rowen 1 | 40,000 | 39,908 | |||||||
†Vitec Group (The) | 2,000 | 21,163 | |||||||
†Xchanging | 15,800 | 40,162 | |||||||
Total (Cost $420,819) | 482,500 | ||||||||
United States – 0.4% | |||||||||
WaterFurnace Renewable Energy | 900 | 20,326 | |||||||
Total (Cost $21,830) | 20,326 | ||||||||
TOTAL COMMON STOCKS | |||||
(Cost $4,658,589) | 4,916,304 | ||||
REPURCHASE AGREEMENT – 5.2% | |||||
Fixed Income Clearing Corporation, | |||||
0.00% dated 12/31/13, due 1/2/14, | |||||
maturity value $272,000 (collateralized | |||||
by obligations of various U.S. Government | |||||
Agencies, 5.125% due 1/2/14, valued at $282,563) | |||||
(Cost $272,000) | 272,000 | ||||
TOTAL INVESTMENTS – 99.6% | |||||
(Cost $4,930,589) | 5,188,304 | ||||
CASH AND OTHER ASSETS | |||||
LESS LIABILITIES – 0.4% | 20,358 | ||||
NET ASSETS – 100.0% | $ | 5,208,662 | |||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 61 |
Schedules of Investments |
Royce International Premier Fund |
SHARES | VALUE | ||||||||
COMMON STOCKS – 94.2% | |||||||||
Austria – 5.1% | |||||||||
Mayr-Melnhof Karton | 2,000 | $ | 247,626 | ||||||
Semperit AG Holding | 4,700 | 232,736 | |||||||
Total (Cost $427,953) | 480,362 | ||||||||
Belgium – 2.7% | |||||||||
EVS Broadcast Equipment | 4,000 | 258,576 | |||||||
Total (Cost $239,296) | 258,576 | ||||||||
Bermuda – 2.0% | |||||||||
†Signet Jewelers | 2,400 | 188,880 | |||||||
Total (Cost $165,930) | 188,880 | ||||||||
Brazil – 4.7% | |||||||||
†CETIP - Mercados Organizados | 10,200 | 104,626 | |||||||
†LPS Brasil Consultoria de Imoveis | 24,000 | 146,894 | |||||||
†Totvs | 12,500 | 195,825 | |||||||
Total (Cost $480,741) | 447,345 | ||||||||
China – 1.8% | |||||||||
Daphne International Holdings | 382,000 | 171,928 | |||||||
Total (Cost $317,585) | 171,928 | ||||||||
Finland – 2.3% | |||||||||
Nokian Renkaat | 4,500 | 215,868 | |||||||
Total (Cost $200,577) | 215,868 | ||||||||
France – 4.6% | |||||||||
Stallergenes | 2,695 | 201,132 | |||||||
Virbac | 1,100 | 235,011 | |||||||
Total (Cost $357,150) | 436,143 | ||||||||
Germany – 8.5% | |||||||||
Carl Zeiss Meditec | 4,500 | 149,907 | |||||||
Fielmann | 980 | 114,636 | |||||||
KWS Saat | 610 | 209,794 | |||||||
†LPKF Laser & Electronics | 6,500 | 166,143 | |||||||
†STRATEC Biomedical | 4,000 | 166,460 | |||||||
Total (Cost $668,027) | 806,940 | ||||||||
Hong Kong – 5.6% | |||||||||
Media Chinese International | 500,000 | 148,832 | |||||||
Stella International Holdings | 82,500 | 210,232 | |||||||
†Television Broadcasts | 26,000 | 173,349 | |||||||
Total (Cost $580,185) | 532,413 | ||||||||
India – 1.6% | |||||||||
†Bajaj Finance | 6,100 | 155,816 | |||||||
Total (Cost $147,833) | 155,816 | ||||||||
Italy – 3.9% | |||||||||
DiaSorin | 3,500 | 164,142 | |||||||
Recordati | 14,000 | 201,457 | |||||||
Total (Cost $230,965) | 365,599 | ||||||||
Japan – 4.7% | |||||||||
FamilyMart | 3,500 | 159,695 | |||||||
MISUMI Group | 6,000 | 188,301 | |||||||
USS | 7,000 | 95,984 | |||||||
Total (Cost $352,558) | 443,980 | ||||||||
Malaysia – 3.6% | |||||||||
Media Prima | 230,000 | 183,972 | |||||||
†Silverlake Axis | 225,000 | 156,900 | |||||||
Total (Cost $323,238) | 340,872 | ||||||||
South Africa – 1.8% | |||||||||
†Metrofile Holdings | 382,000 | 170,425 | |||||||
Total (Cost $181,619) | 170,425 | ||||||||
South Korea – 1.2% | |||||||||
Binggrae | 1,200 | 110,409 | |||||||
Total (Cost $107,461) | 110,409 | ||||||||
Switzerland – 13.4% | |||||||||
Belimo Holding | 65 | 179,250 | |||||||
Burckhardt Compression Holding | 400 | 175,326 | |||||||
†Forbo Holding | 270 | 230,637 | |||||||
Kaba Holding | 400 | 194,384 | |||||||
LEM Holding | 200 | 156,493 | |||||||
Partners Group Holding | 635 | 169,348 | |||||||
VZ Holding | 900 | 167,883 | |||||||
Total (Cost $932,213) | 1,273,321 | ||||||||
United Kingdom – 26.7% | |||||||||
Abcam | 21,600 | 175,623 | |||||||
Ashmore Group | 30,000 | 199,360 | |||||||
Aveva Group | 5,000 | 179,174 | |||||||
†Clarkson | 6,500 | 215,381 | |||||||
†Consort Medical | 12,500 | 198,093 | |||||||
Domino Printing Sciences | 17,000 | 215,356 | |||||||
†Elementis | 43,000 | 191,473 | |||||||
†Fidessa Group | 3,500 | 130,580 | |||||||
†Lancashire Holdings | 10,000 | 134,298 | |||||||
†Latchways | 8,500 | 177,352 | |||||||
Oxford Instruments | 7,000 | 204,824 | |||||||
Rotork | 4,000 | 190,103 | |||||||
Spirax-Sarco Engineering | 2,400 | 118,831 | |||||||
Victrex | 6,500 | 197,729 | |||||||
Total (Cost $2,050,036) | 2,528,177 | ||||||||
62 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
VALUE | |||||
TOTAL COMMON STOCKS | |||||
(Cost $7,763,367) | $ | 8,927,054 | |||
REPURCHASE AGREEMENT – 5.7% | |||||
Fixed Income Clearing Corporation, | |||||
0.00% dated 12/31/13, due 1/2/14, | |||||
maturity value $536,000 (collateralized | |||||
by obligations of various U.S. Government | |||||
Agencies, 0.625% due 7/15/16, valued at $547,194) | |||||
(Cost $536,000) | 536,000 | ||||
TOTAL INVESTMENTS – 99.9% | |||||
(Cost $8,299,367) | 9,463,054 | ||||
CASH AND OTHER ASSETS | |||||
LESS LIABILITIES – 0.1% | 6,526 | ||||
NET ASSETS – 100.0% | $ | 9,469,580 | |||
† | New additions in 2013. |
1 | Non-income producing. |
2 | Securities for which market quotations are not readily available represent 0.0% and 0.0% of net assets for Royce Financial Services Fund and Royce International Micro-Cap Fund. These securities have been valued at their fair value under procedures approved by the Fund’s Board of Trustees. These securities are defined as Level 3 securities due to the use of significant unobservable inputs in the determination of fair value. See Notes to Financial Statements. |
3 | This security is defined as a Level 2 security due to the fair value being based on quoted prices for similar securities. See Notes to Financial Statements. |
4 | Includes securities first acquired in 2013 and less than 1% of net assets. |
5 | All or a portion of these securities have been segregated as collateral for short sales. |
Securities of Global/International Funds are categorized by the country of their headquarters, with the exception of exchange-traded funds. | |
Bold indicates a Fund’s 20 largest equity holdings in terms of December 31, 2013, market value. |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 63 |
Statements of Assets and Liabilities |
Royce | Royce Micro-Cap | Royce | Royce | ||||||||||||||||
Select | Discovery | Financial | Select | ||||||||||||||||
Fund I | Fund | Services Fund | Fund II | ||||||||||||||||
ASSETS: | |||||||||||||||||||
Investments at value | $ | 45,226,051 | $ | 5,522,543 | $ | 39,073,277 | $ | 5,033,683 | |||||||||||
Repurchase agreements (at cost and value) | 1,998,000 | 194,000 | 8,421,000 | – | |||||||||||||||
Deposits with brokers for securities sold short | – | – | – | 214,135 | |||||||||||||||
Cash and foreign currency | 192 | 28 | 30,533 | 45,244 | |||||||||||||||
Receivable for investments sold | 135,960 | 142,994 | 967,576 | 21,019 | |||||||||||||||
Receivable for capital shares sold | 22,017 | 103 | 803,882 | – | |||||||||||||||
Receivable for dividends and interest | 30,717 | 2,701 | 7,472 | 4,645 | |||||||||||||||
Prepaid expenses and other assets | 116 | 15 | 84 | – | |||||||||||||||
Total Assets | 47,413,053 | 5,862,384 | 49,303,824 | 5,318,726 | |||||||||||||||
LIABILITIES: | |||||||||||||||||||
Securities sold short, at fair value | – | – | – | 424,735 | |||||||||||||||
Payable for investments purchased | 103,992 | – | 1,531,103 | 1,574 | |||||||||||||||
Payable for capital shares redeemed | – | 19,786 | 94,468 | – | |||||||||||||||
Payable for dividends and interest | – | – | – | 184 | |||||||||||||||
Payable for investment advisory fees | 39,946 | – | 13,265 | – | |||||||||||||||
Accrued expenses | 31,274 | 26,400 | 72,171 | 10,538 | |||||||||||||||
Total Liabilities | 175,212 | 46,186 | 1,711,007 | 437,031 | |||||||||||||||
Net Assets | $ | 47,237,841 | $ | 5,816,198 | $ | 47,592,817 | $ | 4,881,695 | |||||||||||
ANALYSIS OF NET ASSETS: | |||||||||||||||||||
Paid-in capital | $ | 34,064,922 | $ | 4,631,613 | $ | 36,916,955 | $ | 4,162,855 | |||||||||||
Undistributed net investment income (loss) | (122 | ) | – | 128,921 | (26,152 | ) | |||||||||||||
Accumulated net realized gain (loss) on investments and foreign currency | 342,156 | 146,846 | 1,090,731 | 282,177 | |||||||||||||||
Net unrealized appreciation (depreciation) on investments and foreign currency | 12,830,885 | 1,037,739 | 9,456,210 | 462,815 | |||||||||||||||
Net Assets | $ | 47,237,841 | $ | 5,816,198 | $ | 47,592,817 | $ | 4,881,695 | |||||||||||
Investment Class | $ | 47,237,841 | $ | 4,881,695 | |||||||||||||||
Service Class | $ | 5,816,198 | $ | 47,592,817 | |||||||||||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | |||||||||||||||||||
Investment Class | 2,402,319 | 414,080 | |||||||||||||||||
Service Class | 846,562 | 4,916,164 | |||||||||||||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | |||||||||||||||||||
Investment Class1 | $19.66 | $11.79 | |||||||||||||||||
Service Class2 | $6.87 | $9.68 | |||||||||||||||||
Investments at identified cost | $ | 32,395,175 | $ | 4,484,804 | $ | 29,595,191 | $ | 4,561,362 | |||||||||||
Proceeds of short sales | – | – | – | 415,222 | |||||||||||||||
Aggregate value of segregated securities | – | – | – | 792,767 |
64 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
Royce | Royce | Royce | Royce | |||||||||||||||||
European Smaller- | Enterprise Select | SMid-Cap | Focus Value | |||||||||||||||||
Companies Fund | Fund | Value Fund | Fund | |||||||||||||||||
ASSETS: | ||||||||||||||||||||
Investments at value | $ | 26,275,782 | $ | 1,965,539 | $ | 10,672,237 | $ | 11,580,255 | ||||||||||||
Repurchase agreements (at cost and value) | 1,768,000 | 673,000 | 525,000 | 396,000 | ||||||||||||||||
Cash and foreign currency | 32,495 | 888 | 3,185 | 489 | ||||||||||||||||
Receivable for investments sold | – | 2,838 | – | 64,364 | ||||||||||||||||
Receivable for capital shares sold | 324,767 | – | 346,029 | 541 | ||||||||||||||||
Receivable for dividends and interest | 43,123 | 1,631 | 14,329 | 10,358 | ||||||||||||||||
Prepaid expenses and other assets | 58 | 5 | 31 | 28 | ||||||||||||||||
Total Assets | 28,444,225 | 2,643,901 | 11,560,811 | 12,052,035 | ||||||||||||||||
LIABILITIES: | ||||||||||||||||||||
Payable for investments purchased | 317,556 | – | – | 185,849 | ||||||||||||||||
Payable for capital shares redeemed | 16,485 | – | 6,978 | 1,240 | ||||||||||||||||
Payable for investment advisory fees | 12,252 | – | – | – | ||||||||||||||||
Payable to brokers for securities sold short | – | 382 | – | – | ||||||||||||||||
Accrued expenses | 51,962 | 13,587 | 33,580 | 31,339 | ||||||||||||||||
Total Liabilities | 398,255 | 13,969 | 40,558 | 218,428 | ||||||||||||||||
Net Assets | $ | 28,045,970 | $ | 2,629,932 | $ | 11,520,253 | $ | 11,833,607 | ||||||||||||
ANALYSIS OF NET ASSETS: | ||||||||||||||||||||
Paid-in capital | $ | 26,352,428 | $ | 2,259,697 | $ | 14,950,754 | $ | 9,149,278 | ||||||||||||
Undistributed net investment income (loss) | (183,963 | ) | (884 | ) | – | (64,367 | ) | |||||||||||||
Accumulated net realized gain (loss) on investments and foreign currency | (1,425,310 | ) | 68,463 | (5,455,965 | ) | 168,966 | ||||||||||||||
Net unrealized appreciation (depreciation) on investments and foreign currency | 3,302,815 | 302,656 | 2,025,464 | 2,579,730 | ||||||||||||||||
Net Assets | $ | 28,045,970 | $ | 2,629,932 | $ | 11,520,253 | $ | 11,833,607 | ||||||||||||
Investment Class | $ | 2,629,932 | ||||||||||||||||||
Service Class | $ | 28,045,970 | $ | 11,520,253 | $ | 11,833,607 | ||||||||||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | ||||||||||||||||||||
Investment Class | 216,966 | |||||||||||||||||||
Service Class | 2,257,785 | 804,975 | 677,294 | |||||||||||||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | ||||||||||||||||||||
Investment Class1 | $12.12 | |||||||||||||||||||
Service Class2 | $12.42 | $14.31 | $17.47 | |||||||||||||||||
Investments at identified cost | $ | 22,972,610 | $ | 1,662,883 | $ | 8,646,922 | $ | 9,000,579 | ||||||||||||
Aggregate value of segregated securities | – | 86,513 | – | – |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 65 |
Statements of Assets and Liabilities |
Royce | Royce | Royce | |||||||||||||
Partners | Opportunity | Global Dividend | |||||||||||||
Fund | Select Fund | Value Fund | |||||||||||||
ASSETS: | |||||||||||||||
Investments at value | $ | 2,422,946 | $ | 17,223,701 | $ | 8,384,419 | |||||||||
Repurchase agreements (at cost and value) | 308,000 | 672,000 | 1,391,000 | ||||||||||||
Deposits with brokers for securities sold short | – | 839,080 | – | ||||||||||||
Cash and foreign currency | 383 | 949 | 1,101 | ||||||||||||
Receivable for investments sold | 68,848 | 68,680 | 11,201 | ||||||||||||
Receivable for capital shares sold | – | 117,570 | 150 | ||||||||||||
Receivable for dividends and interest | 4,456 | 4,584 | 28,393 | ||||||||||||
Prepaid expenses and other assets | 7 | 14 | 25 | ||||||||||||
Total Assets | 2,804,640 | 18,926,578 | 9,816,289 | ||||||||||||
LIABILITIES: | |||||||||||||||
Securities sold short, at fair value | – | 1,150,652 | – | ||||||||||||
Payable for investments purchased | – | 273,136 | 235,208 | ||||||||||||
Payable for capital shares redeemed | – | 15,848 | – | ||||||||||||
Payable for dividends and interest | – | 1,420 | – | ||||||||||||
Payable for investment advisory fees | – | 3,402 | – | ||||||||||||
Accrued expenses | 3,607 | 21,005 | 24,652 | ||||||||||||
Total Liabilities | 3,607 | 1,465,463 | 259,860 | ||||||||||||
Net Assets | $ | 2,801,033 | $ | 17,461,115 | $ | 9,556,429 | |||||||||
ANALYSIS OF NET ASSETS: | |||||||||||||||
Paid-in capital | $ | 2,098,288 | $ | 14,476,563 | $ | 8,941,881 | |||||||||
Undistributed net investment income (loss) | 235 | 294 | (58,505 | ) | |||||||||||
Accumulated net realized gain (loss) on investments and foreign currency | 48,538 | 183,420 | 3,457 | ||||||||||||
Net unrealized appreciation (depreciation) on investments and foreign currency | 653,972 | 2,800,838 | 669,596 | ||||||||||||
Net Assets | $ | 2,801,033 | $ | 17,461,115 | $ | 9,556,429 | |||||||||
Investment Class | $ | 17,461,115 | |||||||||||||
Service Class | $ | 2,801,033 | $ | 9,556,429 | |||||||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | |||||||||||||||
Investment Class | 973,847 | ||||||||||||||
Service Class | 193,765 | 853,852 | |||||||||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | |||||||||||||||
Investment Class1 | $17.93 | ||||||||||||||
Service Class2 | $14.46 | $11.19 | |||||||||||||
Investments at identified cost | $ | 1,769,001 | $ | 14,363,100 | $ | 7,714,871 | |||||||||
Proceeds of short sales | – | 1,090,890 | – | ||||||||||||
Aggregate value of segregated securities | – | 1,117,768 | – |
66 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
December 31, 2013 |
Royce | Royce | |||||||||
International | International | |||||||||
Micro-Cap Fund | Premier Fund | |||||||||
ASSETS: | ||||||||||
Investments at value | $ | 4,916,304 | $ | 8,927,054 | ||||||
Repurchase agreements (at cost and value) | 272,000 | 536,000 | ||||||||
Cash and foreign currency | 404 | 15,639 | ||||||||
Receivable for investments sold | 85,722 | 139,468 | ||||||||
Receivable for capital shares sold | 8,249 | – | ||||||||
Receivable for dividends and interest | 10,791 | 15,021 | ||||||||
Prepaid expenses and other assets | 14 | 22 | ||||||||
Total Assets | 5,293,484 | 9,633,204 | ||||||||
LIABILITIES: | ||||||||||
Payable for investments purchased | 7,872 | 132,782 | ||||||||
Payable for capital shares redeemed | 66,374 | – | ||||||||
Accrued expenses | 10,576 | 30,842 | ||||||||
Total Liabilities | 84,822 | 163,624 | ||||||||
Net Assets | $ | 5,208,662 | $ | 9,469,580 | ||||||
ANALYSIS OF NET ASSETS: | ||||||||||
Paid-in capital | $ | 5,776,361 | $ | 8,540,365 | ||||||
Undistributed net investment income (loss) | (33,960 | ) | (75,124 | ) | ||||||
Accumulated net realized gain (loss) on investments and foreign currency | (788,381 | ) | (158,732 | ) | ||||||
Net unrealized appreciation (depreciation) on investments and foreign currency | 254,642 | 1,163,071 | ||||||||
Net Assets | $ | 5,208,662 | $ | 9,469,580 | ||||||
Service Class | $ | 5,208,662 | $ | 9,469,580 | ||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | ||||||||||
Service Class | 518,982 | 811,676 | ||||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | ||||||||||
Service Class1 | $10.04 | $11.67 | ||||||||
Investments at identified cost | $ | 4,658,589 | $ | 7,763,367 |
1 | Offering and redemption price per share; shares held less than 180 days may be subject to a 2% redemption fee, payable to the Fund. |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 67 |
Statements of Changes in Net Assets |
Royce Micro-Cap | |||||||||||||||||||||||||||||||
Royce Select Fund I | Discovery Fund | Royce Financial Services Fund | |||||||||||||||||||||||||||||
Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | ||||||||||||||||||||||||||
12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | ||||||||||||||||||||||||||
INVESTMENT OPERATIONS: | |||||||||||||||||||||||||||||||
Net investment income (loss) | $ | (173,025 | ) | $ | 829,042 | $ | (17,307 | ) | $ | 34,721 | $ | 174,781 | $ | 241,534 | |||||||||||||||||
Net realized gain (loss) on investments and foreign currency | 5,751,191 | 3,357,629 | 751,485 | 583 | 1,875,121 | 705,504 | |||||||||||||||||||||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency | 5,364,056 | 2,098,657 | 853,810 | 125,030 | 7,876,724 | 1,868,205 | |||||||||||||||||||||||||
Net increase (decrease) in net assets from investment operations | 10,942,222 | 6,285,328 | 1,587,988 | 160,334 | 9,926,626 | 2,815,243 | |||||||||||||||||||||||||
DISTRIBUTIONS: | |||||||||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||||||||
Investment Class | (6,345 | ) | (805,821 | ) | |||||||||||||||||||||||||||
Service Class | – | (40,240 | ) | (82,981 | ) | (153,360 | ) | ||||||||||||||||||||||||
Net realized gain on investments and foreign currency | |||||||||||||||||||||||||||||||
Investment Class | (4,865,772 | ) | (4,035,586 | ) | |||||||||||||||||||||||||||
Service Class | (164,762 | ) | – | – | – | ||||||||||||||||||||||||||
Total distributions | (4,872,117 | ) | (4,841,407 | ) | (164,762 | ) | (40,240 | ) | (82,981 | ) | (153,360 | ) | |||||||||||||||||||
CAPITAL SHARE TRANSACTIONS: | |||||||||||||||||||||||||||||||
Net capital share transactions | |||||||||||||||||||||||||||||||
Investment Class | (8,691,735 | ) | 1,066,334 | ||||||||||||||||||||||||||||
Service Class | (75,668 | ) | 727,013 | 20,843,034 | 127,677 | ||||||||||||||||||||||||||
Shareholder redemption fees | |||||||||||||||||||||||||||||||
Investment Class | 3,350 | 635 | |||||||||||||||||||||||||||||
Service Class | 414 | 357 | 17,751 | 3,274 | |||||||||||||||||||||||||||
Net increase (decrease) in net assets from capital share transactions | (8,688,385 | ) | 1,066,969 | (75,254 | ) | 727,370 | 20,860,785 | 130,951 | |||||||||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | (2,618,280 | ) | 2,510,890 | 1,347,972 | 847,464 | 30,704,430 | 2,792,834 | ||||||||||||||||||||||||
NET ASSETS: | |||||||||||||||||||||||||||||||
Beginning of year | 49,856,121 | 47,345,231 | 4,468,226 | 3,620,762 | 16,888,387 | 14,095,553 | |||||||||||||||||||||||||
End of year | $ | 47,237,841 | $ | 49,856,121 | $ | 5,816,198 | $ | 4,468,226 | $ | 47,592,817 | $ | 16,888,387 | |||||||||||||||||||
UNDISTRIBUTED NET INVESTMENT INCOME | $ | (122 | ) | $ | 6,316 | $ | – | $ | – | $ | 128,921 | $ | 63,430 |
68 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
Royce European Smaller- | |||||||||||||||||||||||||||||||
Royce Select Fund II | Companies Fund | Royce Enterprise Select Fund | |||||||||||||||||||||||||||||
Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | ||||||||||||||||||||||||||
12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | ||||||||||||||||||||||||||
INVESTMENT OPERATIONS: | |||||||||||||||||||||||||||||||
Net investment income (loss) | $ | 38,380 | $ | 66,556 | $ | 119,035 | $ | 201,539 | $ | (8,011 | ) | $ | 2,143 | ||||||||||||||||||
Net realized gain (loss) on investments and foreign currency | 710,266 | 134,060 | 1,143,566 | (220,323 | ) | 301,701 | 127,475 | ||||||||||||||||||||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency | 163,490 | 277,321 | 2,645,740 | 3,337,255 | 192,389 | 46,734 | |||||||||||||||||||||||||
Net increase (decrease) in net assets from investment operations | 912,136 | 477,937 | 3,908,341 | 3,318,471 | 486,079 | 176,352 | |||||||||||||||||||||||||
DISTRIBUTIONS: | |||||||||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||||||||
Investment Class | (85,215 | ) | (55,366 | ) | (2,071 | ) | (80 | ) | |||||||||||||||||||||||
Service Class | (232,856 | ) | (225,920 | ) | |||||||||||||||||||||||||||
Net realized gain on investments and foreign currency | |||||||||||||||||||||||||||||||
Investment Class | (416,296 | ) | (160,636 | ) | (228,780 | ) | (119,739 | ) | |||||||||||||||||||||||
Service Class | – | – | |||||||||||||||||||||||||||||
Total distributions | (501,511 | ) | (216,002 | ) | (232,856 | ) | (225,920 | ) | (230,851 | ) | (119,819 | ) | |||||||||||||||||||
CAPITAL SHARE TRANSACTIONS: | |||||||||||||||||||||||||||||||
Net capital share transactions | |||||||||||||||||||||||||||||||
Investment Class | 850,978 | (61,887 | ) | 1,075,981 | 119,229 | ||||||||||||||||||||||||||
Service Class | 8,500,963 | (3,163,201 | ) | ||||||||||||||||||||||||||||
Shareholder redemption fees | |||||||||||||||||||||||||||||||
Investment Class | 34 | – | – | – | |||||||||||||||||||||||||||
Service Class | 15,318 | 6,989 | |||||||||||||||||||||||||||||
Net increase (decrease) in net assets from capital share transactions | 851,012 | (61,887 | ) | 8,516,281 | (3,156,212 | ) | 1,075,981 | 119,229 | |||||||||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | 1,261,637 | 200,048 | 12,191,766 | (63,661 | ) | 1,331,209 | 175,762 | ||||||||||||||||||||||||
NET ASSETS: | |||||||||||||||||||||||||||||||
Beginning of year | 3,620,058 | 3,420,010 | 15,854,204 | 15,917,865 | 1,298,723 | 1,122,961 | |||||||||||||||||||||||||
End of year | $ | 4,881,695 | $ | 3,620,058 | $ | 28,045,970 | $ | 15,854,204 | $ | 2,629,932 | $ | 1,298,723 | |||||||||||||||||||
UNDISTRIBUTED NET INVESTMENT INCOME | |||||||||||||||||||||||||||||||
(LOSS) AT END OF YEAR | $ | (26,152 | ) | $ | (1,421 | ) | $ | (183,963 | ) | $ | (68,643 | ) | $ | (884 | ) | $ | 2,068 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 69 |
Statements of Changes in Net Assets |
Royce SMid-Cap Value Fund | Royce Focus Value Fund | Royce Partners Fund | |||||||||||||||||||||||||||||
Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | ||||||||||||||||||||||||||
12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | ||||||||||||||||||||||||||
INVESTMENT OPERATIONS: | |||||||||||||||||||||||||||||||
Net investment income (loss) | $ | 15,704 | $ | (3,245 | ) | $ | (8,319 | ) | $ | 31,675 | $ | 16,343 | $ | 6,241 | |||||||||||||||||
Net realized gain (loss) on investments and foreign currency | 488,966 | (206,122 | ) | 833,397 | (105,119 | ) | 276,797 | 70,836 | |||||||||||||||||||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency | 1,788,073 | 1,627,478 | 1,405,566 | 871,968 | 389,385 | 274,404 | |||||||||||||||||||||||||
Net increase (decrease) in net assets from investment operations | 2,292,743 | 1,418,111 | 2,230,644 | 798,524 | 682,525 | 351,481 | |||||||||||||||||||||||||
DISTRIBUTIONS: | |||||||||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||||||||
Service Class | (16,014 | ) | – | (3,516 | ) | (155,697 | ) | (20,237 | ) | (632 | ) | ||||||||||||||||||||
Net realized gain on investments and foreign currency | |||||||||||||||||||||||||||||||
Service Class | – | – | (480,474 | ) | (1,950 | ) | (225,475 | ) | (76,810 | ) | |||||||||||||||||||||
Total distributions | (16,014 | ) | – | (483,990 | ) | (157,647 | ) | (245,712 | ) | (77,442 | ) | ||||||||||||||||||||
CAPITAL SHARE TRANSACTIONS: | |||||||||||||||||||||||||||||||
Net capital share transactions | |||||||||||||||||||||||||||||||
Service Class | (1,897,564 | ) | (613,301 | ) | 1,211,969 | (494,067 | ) | 280,953 | 126,723 | ||||||||||||||||||||||
Shareholder redemption fees | |||||||||||||||||||||||||||||||
Service Class | 647 | 8,222 | 41 | 664 | 218 | 31 | |||||||||||||||||||||||||
Net increase (decrease) in net assets from capital share transactions | (1,896,917 | ) | (605,079 | ) | 1,212,010 | (493,403 | ) | 281,171 | 126,754 | ||||||||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | 379,812 | 813,032 | 2,958,664 | 147,474 | 717,984 | 400,793 | |||||||||||||||||||||||||
NET ASSETS: | |||||||||||||||||||||||||||||||
Beginning of year | 11,140,441 | 10,327,409 | 8,874,943 | 8,727,469 | 2,083,049 | 1,682,256 | |||||||||||||||||||||||||
End of year | $ | 11,520,253 | $ | 11,140,441 | $ | 11,833,607 | $ | 8,874,943 | $ | 2,801,033 | $ | 2,083,049 | |||||||||||||||||||
UNDISTRIBUTED NET INVESTMENT INCOME | |||||||||||||||||||||||||||||||
(LOSS) AT END OF YEAR | $ | – | $ | – | $ | (64,367 | ) | $ | (67,891 | ) | $ | 235 | $ | 5,492 |
70 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
Royce Global Dividend | ||||||||||||||||
Royce Opportunity Select Fund | Value Fund | |||||||||||||||
Year ended | Year ended | Year ended | Year ended | |||||||||||||
12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||
INVESTMENT OPERATIONS: | ||||||||||||||||
Net investment income (loss) | $ | (66,078 | ) | $ | 16,146 | $ | 144,174 | $ | 110,305 | |||||||
Net realized gain (loss) on investments and foreign currency | 755,058 | 219,405 | 319,945 | (71,639 | ) | |||||||||||
Net change in unrealized appreciation (depreciation) on investments and foreign | ||||||||||||||||
currency | 2,394,936 | 522,838 | 726,373 | 1,214,840 | ||||||||||||
Net increase (decrease) in net assets from investment operations | 3,083,916 | 758,389 | 1,190,492 | 1,253,506 | ||||||||||||
DISTRIBUTIONS: | ||||||||||||||||
Net investment income | ||||||||||||||||
Investment Class | – | (27,185 | ) | |||||||||||||
Service Class | (207,184 | ) | (109,924 | ) | ||||||||||||
Net realized gain on investments and foreign currency | ||||||||||||||||
Investment Class | (510,854 | ) | (205,395 | ) | ||||||||||||
Service Class | (182,756 | ) | – | |||||||||||||
Total distributions | (510,854 | ) | (232,580 | ) | (389,940 | ) | (109,924 | ) | ||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||
Net capital share transactions | ||||||||||||||||
Investment Class | 11,683,077 | 570,739 | ||||||||||||||
Service Class | 2,041,765 | (571,143 | ) | |||||||||||||
Shareholder redemption fees | ||||||||||||||||
Investment Class | 6,573 | – | ||||||||||||||
Service Class | 5,944 | 1,040 | ||||||||||||||
Net increase (decrease) in net assets from capital share transactions | 11,689,650 | 570,739 | 2,047,709 | (570,103 | ) | |||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | 14,262,712 | 1,096,548 | 2,848,261 | 573,479 | ||||||||||||
NET ASSETS: | ||||||||||||||||
Beginning of year | 3,198,403 | 2,101,855 | 6,708,168 | 6,134,689 | ||||||||||||
End of year | $ | 17,461,115 | $ | 3,198,403 | $ | 9,556,429 | $ | 6,708,168 | ||||||||
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) AT END OF YEAR | $ | 294 | $ | (1,590 | ) | $ | (58,505 | ) | $ | (2,214 | ) |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 71 |
Statements of Changes in Net Assets |
Royce International | Royce International | |||||||||||||||
Micro-Cap Fund | Premier Fund | |||||||||||||||
Year ended | Year ended | Year ended | Year ended | |||||||||||||
12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||
INVESTMENT OPERATIONS: | ||||||||||||||||
Net investment income (loss) | $ | 56,707 | $ | 68,271 | $ | 81,523 | $ | 49,640 | ||||||||
Net realized gain (loss) on investments and foreign currency | 186,907 | (138,773 | ) | 340,325 | (382,792 | ) | ||||||||||
Net change in unrealized appreciation (depreciation) on investments and foreign | ||||||||||||||||
currency | 556,066 | 572,117 | 852,808 | 1,268,471 | ||||||||||||
Net increase (decrease) in net assets from investment operations | 799,680 | 501,615 | 1,274,656 | 935,319 | ||||||||||||
DISTRIBUTIONS: | ||||||||||||||||
Net investment income | ||||||||||||||||
Service Class | (100,087 | ) | (79,547 | ) | (129,813 | ) | (76,745 | ) | ||||||||
Net realized gain on investments and foreign currency | ||||||||||||||||
Service Class | – | – | – | – | ||||||||||||
Total distributions | (100,087 | ) | (79,547 | ) | (129,813 | ) | (76,745 | ) | ||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||
Net capital share transactions | ||||||||||||||||
Service Class | (98,141 | ) | 608,323 | 1,879,090 | 1,495,086 | |||||||||||
Shareholder redemption fees | ||||||||||||||||
Service Class | 3,765 | 1,344 | 1,734 | 462 | ||||||||||||
Net increase (decrease) in net assets from capital share transactions | (94,376 | ) | 609,667 | 1,880,824 | 1,495,548 | |||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | 605,217 | 1,031,735 | 3,025,667 | 2,354,122 | ||||||||||||
NET ASSETS: | ||||||||||||||||
Beginning of year | 4,603,445 | 3,571,710 | 6,443,913 | 4,089,791 | ||||||||||||
End of year | $ | 5,208,662 | $ | 4,603,445 | $ | 9,469,580 | $ | 6,443,913 | ||||||||
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) AT END OF YEAR | $ | (33,960 | ) | $ | (13,170 | ) | $ | (75,124 | ) | $ | (23,382 | ) |
72 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
Statements of Operations | Year Ended December 31, 2013 |
Royce | Royce | Royce | Royce | Royce | ||||||||||||||||
Select | Micro-Cap | Financial | Select | European Smaller- | ||||||||||||||||
Fund I | Discovery Fund | Services Fund | Fund II | Companies Fund | ||||||||||||||||
INVESTMENT INCOME: | ||||||||||||||||||||
Income: | ||||||||||||||||||||
Dividends | $ | 406,964 | $ | 61,057 | $ | 637,796 | $ | 82,911 | $ | 527,650 | ||||||||||
Foreign withholding tax | (12,772 | ) | (338 | ) | (18,383 | ) | (5,378 | ) | (60,237 | ) | ||||||||||
Interest | 656 | 44 | 329 | 75 | 121 | |||||||||||||||
Total income | 394,848 | 60,763 | 619,742 | 77,608 | 467,534 | |||||||||||||||
Expenses: | ||||||||||||||||||||
Investment advisory fees | 471,970 | 52,399 | 298,701 | 28,434 | 257,827 | |||||||||||||||
Distribution fees | – | 13,100 | 74,675 | – | 51,565 | |||||||||||||||
Shareholder servicing | 26,751 | 12,952 | 42,174 | 3,527 | 35,065 | |||||||||||||||
Custody | 15,275 | 9,129 | 37,576 | 19,116 | 46,791 | |||||||||||||||
Shareholder reports | 15,025 | 11,178 | 68,429 | 874 | 37,636 | |||||||||||||||
Registration | 14,946 | 15,621 | 22,612 | 2,496 | 18,642 | |||||||||||||||
Audit | 14,554 | 15,215 | 15,236 | 7,502 | 15,229 | |||||||||||||||
Administrative and office facilities | 5,418 | 548 | 2,518 | 223 | 2,041 | |||||||||||||||
Trustees’ fees | 1,915 | 194 | 933 | 76 | 731 | |||||||||||||||
Legal | 400 | 39 | 186 | 20 | 146 | |||||||||||||||
Dividends on securities sold short | – | – | – | 3,667 | – | |||||||||||||||
Interest expense | – | – | – | 1,678 | – | |||||||||||||||
Other expenses | 1,634 | 728 | 1,205 | 4,000 | 1,198 | |||||||||||||||
Total expenses | 567,888 | 131,103 | 564,245 | 71,613 | 466,871 | |||||||||||||||
Compensating balance credits | (15 | ) | (15 | ) | (53 | ) | (1 | ) | (37 | ) | ||||||||||
Fees waived by investment adviser and distributor | – | (52,399 | ) | (119,231 | ) | (28,434 | ) | (118,335 | ) | |||||||||||
Expenses reimbursed by investment adviser | – | (619 | ) | – | (3,950 | ) | – | |||||||||||||
Net expenses | 567,873 | 78,070 | 444,961 | 39,228 | 348,499 | |||||||||||||||
Net investment income (loss) | (173,025 | ) | (17,307 | ) | 174,781 | 38,380 | 119,035 | |||||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | ||||||||||||||||||||
Net realized gain (loss): | ||||||||||||||||||||
Investments | 5,750,059 | 751,485 | 1,878,190 | 709,044 | 1,150,608 | |||||||||||||||
Foreign currency transactions | 1,132 | – | (3,069 | ) | 1,222 | (7,042 | ) | |||||||||||||
Net change in unrealized appreciation (depreciation): | ||||||||||||||||||||
Investments and foreign currency translations | 5,363,941 | 853,810 | 7,898,605 | 163,484 | 2,645,698 | |||||||||||||||
Other assets and liabilities denominated in foreign currency | 115 | – | (21,881 | ) | 6 | 42 | ||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency | 11,115,247 | 1,605,295 | 9,751,845 | 873,756 | 3,789,306 | |||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | ||||||||||||||||||||
FROM INVESTMENT OPERATIONS | $ | 10,942,222 | $ | 1,587,988 | $ | 9,926,626 | $ | 912,136 | $ | 3,908,341 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 73 |
Statements of Operations | Year Ended December 31, 2013 | |
Royce | Royce | Royce | Royce | Royce | ||||||||||||||||
Enterprise Select | SMid-Cap | Focus Value | Partners | Opportunity | ||||||||||||||||
Fund | Value Fund | Fund | Fund | Select Fund | ||||||||||||||||
INVESTMENT INCOME: | ||||||||||||||||||||
Income: | ||||||||||||||||||||
Dividends | $ | 16,760 | $ | 172,806 | $ | 131,169 | $ | 52,890 | $ | 40,030 | ||||||||||
Foreign withholding tax | (105 | ) | (6,694 | ) | (2,564 | ) | (3,235 | ) | – | |||||||||||
Interest | 50 | 170 | 44 | 26 | 29 | |||||||||||||||
Total income | 16,705 | 166,282 | 128,649 | 49,681 | 40,059 | |||||||||||||||
Expenses: | ||||||||||||||||||||
Investment advisory fees | 19,934 | 111,558 | 101,474 | 24,698 | 82,256 | |||||||||||||||
Distribution fees | – | 27,889 | 25,369 | 6,175 | – | |||||||||||||||
Shareholder servicing | 6,273 | 16,405 | 12,131 | 10,274 | 7,935 | |||||||||||||||
Custody | 9,546 | 29,540 | 30,532 | 29,129 | 16,133 | |||||||||||||||
Shareholder reports | 2,222 | 23,375 | 9,864 | 4,858 | 4,647 | |||||||||||||||
Registration | 7,376 | 18,442 | 15,067 | 7,911 | 11,106 | |||||||||||||||
Audit | 15,236 | 15,221 | 15,982 | 15,975 | 14,953 | |||||||||||||||
Administrative and office facilities | 175 | 1,253 | 1,053 | 258 | 549 | |||||||||||||||
Trustees’ fees | 65 | 437 | 373 | 92 | 217 | |||||||||||||||
Legal | 13 | 88 | 74 | 18 | 43 | |||||||||||||||
Dividends on securities sold short | – | – | – | – | 2,567 | |||||||||||||||
Interest expense | 1 | – | – | – | 1,630 | |||||||||||||||
Other expenses | 588 | 915 | 884 | 807 | 4,077 | |||||||||||||||
Total expenses | 61,429 | 245,123 | 212,803 | 100,195 | 146,113 | |||||||||||||||
Compensating balance credits | (3 | ) | (20 | ) | (15 | ) | (15 | ) | (11 | ) | ||||||||||
Fees waived by investment adviser and distributor | (19,934 | ) | (94,525 | ) | (75,820 | ) | (24,698 | ) | (39,965 | ) | ||||||||||
Expenses reimbursed by investment adviser | (16,776 | ) | – | – | (42,144 | ) | – | |||||||||||||
Net expenses | 24,716 | 150,578 | 136,968 | 33,338 | 106,137 | |||||||||||||||
Net investment income (loss) | (8,011 | ) | 15,704 | (8,319 | ) | 16,343 | (66,078 | ) | ||||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | ||||||||||||||||||||
Net realized gain (loss): | ||||||||||||||||||||
Investments | 301,701 | 489,014 | 834,982 | 277,124 | 755,058 | |||||||||||||||
Foreign currency transactions | – | (48 | ) | (1,585 | ) | (327 | ) | – | ||||||||||||
Net change in unrealized appreciation (depreciation): | ||||||||||||||||||||
Investments and foreign currency translations | 192,387 | 1,787,801 | 1,405,486 | 389,358 | 2,394,936 | |||||||||||||||
Other assets and liabilities denominated in foreign currency | 2 | 272 | 80 | 27 | – | |||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency | 494,090 | 2,277,039 | 2,238,963 | 666,182 | 3,149,994 | |||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | ||||||||||||||||||||
FROM INVESTMENT OPERATIONS | $ | 486,079 | $ | 2,292,743 | $ | 2,230,644 | $ | 682,525 | $ | 3,083,916 |
74 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
Statements of Operations | Year Ended December 31, 2013 | |
Royce | Royce | Royce | ||||||||||
Global Dividend | International | International | ||||||||||
Value Fund | Micro-Cap Fund | Premier Fund | ||||||||||
INVESTMENT INCOME: | ||||||||||||
Income: | ||||||||||||
Dividends | $ | 305,506 | $ | 146,219 | $ | 228,164 | ||||||
Foreign withholding tax | (22,094 | ) | (10,952 | ) | (20,806 | ) | ||||||
Interest | 89 | 29 | 44 | |||||||||
Total income | 283,501 | 135,296 | 207,402 | |||||||||
Expenses: | ||||||||||||
Investment advisory fees | 103,066 | 60,460 | 93,114 | |||||||||
Distribution fees | 20,613 | 11,627 | 18,623 | |||||||||
Shareholder servicing | 16,133 | 10,960 | 14,506 | |||||||||
Custody | 46,671 | 47,318 | 37,297 | |||||||||
Shareholder reports | 20,681 | 8,448 | 9,159 | |||||||||
Registration | 18,942 | 18,942 | 18,942 | |||||||||
Audit | 17,738 | 20,130 | 16,818 | |||||||||
Administrative and office facilities | 852 | 512 | 760 | |||||||||
Trustees’ fees | 303 | 180 | 277 | |||||||||
Legal | 61 | 36 | 56 | |||||||||
Other expenses | 810 | 754 | 768 | |||||||||
Total expenses | 245,870 | 179,367 | 210,320 | |||||||||
Compensating balance credits | (8 | ) | (26 | ) | (11 | ) | ||||||
Fees waived by investment adviser and distributor | (103,066 | ) | (60,925 | ) | (84,430 | ) | ||||||
Expenses reimbursed by investment adviser | (3,469 | ) | (39,827 | ) | – | |||||||
Net expenses | 139,327 | 78,589 | 125,879 | |||||||||
Net investment income (loss) | 144,174 | 56,707 | 81,523 | |||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | ||||||||||||
Net realized gain (loss): | ||||||||||||
Investments | 324,152 | 183,674 | 344,104 | |||||||||
Foreign currency transactions | (4,207 | ) | 3,233 | (3,779 | ) | |||||||
Net change in unrealized appreciation (depreciation): | ||||||||||||
Investments and foreign currency translations | 726,550 | 559,275 | 853,432 | |||||||||
Other assets and liabilities denominated in foreign currency | (177 | ) | (3,209 | ) | (624 | ) | ||||||
Net realized and unrealized gain (loss) on investments and foreign currency | 1,046,318 | 742,973 | 1,193,133 | |||||||||
NET INCREASE (DECREASE) IN NET ASSETS | ||||||||||||
FROM INVESTMENT OPERATIONS | $ | 1,190,492 | $ | 799,680 | $ | 1,274,656 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 75 |
|
Financial Highlights |
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| Net Asset |
| Net |
| and Unrealized |
| Total from Investment Operations |
| Distributions |
| from Net |
| Distributions |
| Total Distributions |
| Shareholder Redemption Fees |
| Net Asset |
| Total |
| Net Assets, |
| Prior to Fee |
| Prior to Fee |
| Net of Fee |
| Investment |
| Portfolio Turnover Rate |
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Royce Select Fund I – Investment Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 17.40 |
| $ | (0.07 | ) | $ | 4.48 |
| $ | 4.41 |
| $ | (0.00 | ) | $ | (2.15 | ) | $ | – |
| $ | (2.15 | ) | $ | – |
| $ | 19.66 |
|
| 25.99 | % | $ | 47,238 |
|
| 1.20 | % |
|
| 1.20 | % |
|
| 1.20 | % |
|
| (0.36 | )% |
|
| 56 | % |
|
2012 |
|
| 16.93 |
|
| 0.31 |
|
| 1.95 |
|
| 2.26 |
|
| (0.30 | ) |
| (1.49 | ) |
| – |
|
| (1.79 | ) |
| – |
|
| 17.40 |
|
| 13.68 |
|
| 49,856 |
|
| 0.00 |
|
|
| 0.00 |
|
|
| 0.00 |
|
|
| 1.68 |
|
|
| 54 |
|
|
2011 |
|
| 20.32 |
|
| (0.16 | ) |
| (0.67 | ) |
| (0.83 | ) |
| – |
|
| (2.56 | ) |
| – |
|
| (2.56 | ) |
| – |
|
| 16.93 |
|
| (3.61 | ) |
| 47,345 |
|
| 1.45 |
|
|
| 1.45 |
|
|
| 1.45 |
|
|
| (0.78 | ) |
|
| 63 |
|
|
2010 |
|
| 17.42 |
|
| (0.23 | ) |
| 3.39 |
|
| 3.16 |
|
| – |
|
| (0.26 | ) |
| – |
|
| (0.26 | ) |
| – |
|
| 20.32 |
|
| 18.15 |
|
| 58,788 |
|
| 2.37 |
|
|
| 2.37 |
|
|
| 2.37 |
|
|
| (1.26 | ) |
|
| 49 |
|
|
2009 |
|
| 12.59 |
|
| 0.15 |
|
| 4.83 |
|
| 4.98 |
|
| (0.15 | ) |
| – |
|
| – |
|
| (0.15 | ) |
| – |
|
| 17.42 |
|
| 39.59 |
|
| 33,896 |
|
| 0.01 |
|
|
| 0.01 |
|
|
| 0.01 |
|
|
| 1.28 |
|
|
| 80 |
|
|
Royce Micro-Cap Discovery Fund – Service Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 5.23 |
| $ | (0.02 | ) | $ | 1.86 |
| $ | 1.84 |
| $ | – |
| $ | (0.20 | ) | $ | – |
| $ | (0.20 | ) | $ | – |
| $ | 6.87 |
|
| 35.29 | % | $ | 5,816 |
|
| 2.50 | % |
|
| 2.50 | % |
|
| 1.49 | % |
|
| (0.33 | )% |
|
| 81 | % |
|
2012 |
|
| 5.12 |
|
| 0.04 |
|
| 0.12 |
|
| 0.16 |
|
| (0.05 | ) |
| – |
|
| – |
|
| (0.05 | ) |
| – |
|
| 5.23 |
|
| 3.10 |
|
| 4,468 |
|
| 2.94 |
|
|
| 2.94 |
|
|
| 1.49 |
|
|
| 0.85 |
|
|
| 87 |
|
|
2011 |
|
| 5.24 |
|
| (0.04 | ) |
| (0.09 | ) |
| (0.13 | ) |
| (0.00 | ) |
| – |
|
| – |
|
| (0.00 | ) |
| 0.01 |
|
| 5.12 |
|
| (2.24 | ) |
| 3,621 |
|
| 2.99 |
|
|
| 2.99 |
|
|
| 1.49 |
|
|
| (0.71 | ) |
|
| 72 |
|
|
2010 |
|
| 4.38 |
|
| (0.01 | ) |
| 0.87 |
|
| 0.86 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 5.24 |
|
| 19.63 |
|
| 3,637 |
|
| 3.04 |
|
|
| 3.04 |
|
|
| 1.49 |
|
|
| (0.19 | ) |
|
| 105 |
|
|
2009 |
|
| 3.48 |
|
| (0.01 | ) |
| 0.91 |
|
| 0.90 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 4.38 |
|
| 25.86 |
|
| 2,910 |
|
| 3.56 |
|
|
| 3.56 |
|
|
| 1.49 |
|
|
| (0.30 | ) |
|
| 13 |
|
|
Royce Financial Services Fund – Service Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 6.83 |
| $ | 0.04 |
| $ | 2.82 |
| $ | 2.86 |
| $ | (0.02 | ) | $ | – |
| $ | – |
| $ | (0.02 | ) | $ | 0.01 |
| $ | 9.68 |
|
| 42.00 | % | $ | 47,593 |
|
| 1.89 | % |
|
| 1.89 | % |
|
| 1.49 | % |
|
| 0.59 | % |
|
| 23 | % |
|
2012 |
|
| 5.71 |
|
| 0.10 |
|
| 1.08 |
|
| 1.18 |
|
| (0.06 | ) |
| – |
|
| – |
|
| (0.06 | ) |
| – |
|
| 6.83 |
|
| 20.72 |
|
| 16,888 |
|
| 1.87 |
|
|
| 1.87 |
|
|
| 1.49 |
|
|
| 1.53 |
|
|
| 26 |
|
|
2011 |
|
| 6.50 |
|
| 0.05 |
|
| (0.78 | ) |
| (0.73 | ) |
| (0.06 | ) |
| – |
|
| – |
|
| (0.06 | ) |
| – |
|
| 5.71 |
|
| (11.29 | ) |
| 14,096 |
|
| 1.84 |
|
|
| 1.84 |
|
|
| 1.49 |
|
|
| 0.73 |
|
|
| 23 |
|
|
2010 |
|
| 5.57 |
|
| 0.07 |
|
| 0.96 |
|
| 1.03 |
|
| (0.10 | ) |
| – |
|
| – |
|
| (0.10 | ) |
| – |
|
| 6.50 |
|
| 18.45 |
|
| 14,688 |
|
| 1.94 |
|
|
| 1.94 |
|
|
| 1.49 |
|
|
| 1.14 |
|
|
| 16 |
|
|
2009 |
|
| 4.25 |
|
| 0.04 |
|
| 1.31 |
|
| 1.35 |
|
| (0.04 | ) |
| – |
|
| – |
|
| (0.04 | ) |
| 0.01 |
|
| 5.57 |
|
| 32.13 |
|
| 13,525 |
|
| 2.06 |
|
|
| 2.06 |
|
|
| 1.49 |
|
|
| 0.90 |
|
|
| 34 |
|
|
Royce Select Fund II – Investment Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 10.68 |
| $ | 0.10 |
| $ | 2.35 |
| $ | 2.45 |
| $ | (0.23 | ) | $ | (1.11 | ) | $ | – |
| $ | (1.34 | ) | $ | – |
| $ | 11.79 |
|
| 23.51 | % | $ | 4,882 |
|
| 1.65 | % |
|
| 1.65 | % |
|
| 0.91 | % |
|
| 0.89 | % |
|
| 159 | % |
|
2012 |
|
| 9.95 |
|
| 0.20 |
|
| 1.19 |
|
| 1.39 |
|
| (0.17 | ) |
| (0.49 | ) |
| – |
|
| (0.66 | ) |
| – |
|
| 10.68 |
|
| 14.23 |
|
| 3,620 |
|
| 0.19 |
|
|
| 0.19 |
|
|
| 0.19 |
|
|
| 1.86 |
|
|
| 123 |
|
|
2011 |
|
| 13.90 |
|
| (0.01 | ) |
| (2.04 | ) |
| (2.05 | ) |
| – |
|
| (1.90 | ) |
| – |
|
| (1.90 | ) |
| – |
|
| 9.95 |
|
| (14.35 | ) |
| 3,420 |
|
| 1.29 |
|
|
| 1.29 |
|
|
| 1.29 |
|
|
| (0.09 | ) |
|
| 153 |
|
|
2010 |
|
| 11.62 |
|
| (0.18 | ) |
| 2.60 |
|
| 2.42 |
|
| (0.00 | ) |
| (0.15 | ) |
| – |
|
| (0.15 | ) |
| 0.01 |
|
| 13.90 |
|
| 20.96 |
|
| 5,141 |
|
| 2.77 |
|
|
| 2.77 |
|
|
| 2.77 |
|
|
| (1.47 | ) |
|
| 126 |
|
|
2009 |
|
| 7.02 |
|
| 0.03 |
|
| 4.64 |
|
| 4.67 |
|
| (0.07 | ) |
| – |
|
| – |
|
| (0.07 | ) |
| – |
|
| 11.62 |
|
| 66.58 |
|
| 4,109 |
|
| 0.67 |
|
|
| 0.67 |
|
|
| 0.67 |
|
|
| 0.53 |
|
|
| 114 |
|
|
Royce European Smaller-Companies Fund – Service Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 10.37 |
| $ | 0.04 |
| $ | 2.11 |
| $ | 2.15 |
| $ | (0.11 | ) | $ | – |
| $ | – |
| $ | (0.11 | ) | $ | 0.01 |
| $ | 12.42 |
|
| 20.83 | % | $ | 28,046 |
|
| 2.26 | % |
|
| 2.26 | % |
|
| 1.69 | % |
|
| 0.58 | % |
|
| 53 | % |
|
2012 |
|
| 8.50 |
|
| 0.14 |
|
| 1.88 |
|
| 2.02 |
|
| (0.15 | ) |
| – |
|
| – |
|
| (0.15 | ) |
| – |
|
| 10.37 |
|
| 23.83 |
|
| 15,854 |
|
| 2.13 |
|
|
| 2.13 |
|
|
| 1.69 |
|
|
| 1.29 |
|
|
| 22 |
|
|
2011 |
|
| 10.79 |
|
| 0.10 |
|
| (2.31 | ) |
| (2.21 | ) |
| (0.10 | ) |
| – |
|
| – |
|
| (0.10 | ) |
| 0.02 |
|
| 8.50 |
|
| (20.32 | ) |
| 15,918 |
|
| 2.09 |
|
|
| 2.09 |
|
|
| 1.69 |
|
|
| 0.95 |
|
|
| 36 |
|
|
2010 |
|
| 8.06 |
|
| 0.03 |
|
| 2.79 |
|
| 2.82 |
|
| (0.10 | ) |
| – |
|
| – |
|
| (0.10 | ) |
| 0.01 |
|
| 10.79 |
|
| 35.20 |
|
| 15,369 |
|
| 2.57 |
|
|
| 2.57 |
|
|
| 1.69 |
|
|
| 0.70 |
|
|
| 32 |
|
|
2009 |
|
| 5.19 |
|
| 0.06 |
|
| 2.93 |
|
| 2.99 |
|
| (0.12 | ) |
| – |
|
| – |
|
| (0.12 | ) |
| – |
|
| 8.06 |
|
| 57.69 |
|
| 6,887 |
|
| 3.21 |
|
|
| 3.21 |
|
|
| 1.69 |
|
|
| 1.11 |
|
|
| 51 |
|
|
Royce Enterprise Select Fund – Investment Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 10.36 |
| $ | (0.05 | ) | $ | 2.98 |
| $ | 2.93 |
| $ | (0.01 | ) | $ | (1.16 | ) | $ | – |
| $ | (1.17 | ) | $ | – |
| $ | 12.12 |
|
| 28.68 | % | $ | 2,630 |
|
| 3.08 | % |
|
| 3.08 | % |
|
| 1.24 | % |
|
| (0.40 | )% |
|
| 154 | % |
|
2012 |
|
| 9.88 |
|
| 0.02 |
|
| 1.51 |
|
| 1.53 |
|
| (0.00 | ) |
| (1.05 | ) |
| – |
|
| (1.05 | ) |
| – |
|
| 10.36 |
|
| 15.68 |
|
| 1,299 |
|
| 0.98 |
|
| 0.98 |
|
| 0.81 |
|
| 0.18 |
|
| 127 |
|
| ||||
2011 |
|
| 10.43 |
|
| (0.04 | ) |
| 0.09 |
|
| 0.05 |
|
| – |
|
| (0.60 | ) |
| – |
|
| (0.60 | ) |
| – |
|
| 9.88 |
|
| 0.66 |
|
| 1,123 |
|
| 1.31 |
|
|
| 1.31 |
|
|
| 1.31 |
|
|
| (0.42 | ) |
|
| 136 |
|
|
2010 |
|
| 8.95 |
|
| 0.05 |
|
| 1.49 |
|
| 1.54 |
|
| (0.06 | ) |
| – |
|
| – |
|
| (0.06 | ) |
| – |
|
| 10.43 |
|
| 17.22 |
|
| 1,158 |
|
| 0.70 |
|
|
| 0.70 |
|
|
| 0.70 |
|
|
| 0.50 |
|
|
| 166 |
|
|
2009 |
|
| 7.33 |
|
| 0.07 |
|
| 1.62 |
|
| 1.69 |
|
| (0.07 | ) |
| – |
|
| – |
|
| (0.07 | ) |
| – |
|
| 8.95 |
|
| 23.13 |
|
| 1,150 |
|
| 0.03 |
|
|
| 0.03 |
|
|
| 0.03 |
|
|
| 0.88 |
|
|
| 415 |
|
|
76 | The Royce Funds 2013 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
|
Financial Highlights |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| Net Realized |
|
|
| Distributions |
|
|
|
|
|
|
|
|
| Ratio of Expenses to Average Net Assets |
| Ratio of Net |
|
| |||||||||||||||||||||||||||||||||||
|
| Net Asset |
| Net |
| and Unrealized |
| Total from Investment Operations |
| Distributions |
| from Net |
| Distributions |
| Total Distributions |
| Shareholder Redemption Fees |
| Net Asset |
| Total |
| Net Assets, |
| Prior to Fee |
| Prior to Fee |
| Net of Fee |
| Investment |
| Portfolio Turnover Rate |
| ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royce SMid-Cap Value Fund – Service Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 11.66 |
| $ | 0.02 |
| $ | 2.65 |
| $ | 2.67 |
| $ | (0.02 | ) | $ | – |
| $ | – |
| $ | (0.02 | ) | $ | – |
| $ | 14.31 |
|
| 22.91 | % | $ | 11,520 |
|
| 2.20 | % |
|
| 2.20 | % |
|
| 1.35 | % |
|
| 0.14 | % |
|
| 31 | % |
|
2012 |
|
| 10.10 |
|
| (0.00 | ) |
| 1.55 |
|
| 1.55 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 0.01 |
|
| 11.66 |
|
| 15.45 |
|
| 11,140 |
|
| 1.90 |
|
|
| 1.90 |
|
|
| 1.35 |
|
|
| (0.03 | ) |
|
| 46 |
|
|
2011 |
|
| 11.44 |
|
| (0.06 | ) |
| (1.27 | ) |
| (1.33 | ) |
| (0.02 | ) |
| – |
|
| – |
|
| (0.02 | ) |
| 0.01 |
|
| 10.10 |
|
| (11.57 | ) |
| 10,327 |
|
| 1.95 |
|
|
| 1.95 |
|
|
| 1.49 |
|
|
| (0.54 | ) |
|
| 54 |
|
|
2010 |
|
| 9.08 |
|
| (0.03 | ) |
| 2.39 |
|
| 2.36 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 11.44 |
|
| 25.99 |
|
| 6,195 |
|
| 2.40 |
|
|
| 2.40 |
|
|
| 1.49 |
|
|
| (0.26 | ) |
|
| 126 |
|
|
2009 |
|
| 7.06 |
|
| (0.01 | ) |
| 2.03 |
|
| 2.02 |
|
| (0.01 | ) |
| – |
|
| – |
|
| (0.01 | ) |
| 0.01 |
|
| 9.08 |
|
| 28.75 |
|
| 7,365 |
|
| 2.03 |
|
|
| 2.03 |
|
|
| 1.49 |
|
|
| (0.20 | ) |
|
| 216 |
|
|
Royce Focus Value Fund – Service Class a | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 14.74 |
| $ | (0.01 | ) | $ | 3.48 |
| $ | 3.47 |
| $ | (0.00 | ) | $ | (0.74 | ) | $ | – |
| $ | (0.74 | ) | $ | – |
| $ | 17.47 |
|
| 23.77 | % | $ | 11,834 |
|
| 2.10 | % |
|
| 2.10 | % |
|
| 1.35 | % |
|
| (0.08 | )% |
|
| 167 | % |
|
2012 |
|
| 13.75 |
|
| 0.06 |
|
| 1.20 |
|
| 1.26 |
|
| (0.27 | ) |
| (0.00 | ) |
| – |
|
| (0.27 | ) |
| – |
|
| 14.74 |
|
| 9.20 |
|
| 8,875 |
|
| 2.05 |
|
|
| 2.05 |
|
|
| 1.35 |
|
|
| 0.35 |
|
|
| 21 |
|
|
2011 |
|
| 16.59 |
|
| (0.05 | ) |
| (2.25 | ) |
| (2.30 | ) |
| – |
|
| (0.54 | ) |
| – |
|
| (0.54 | ) |
| – |
|
| 13.75 |
|
| (13.88 | ) |
| 8,727 |
|
| 1.97 |
|
|
| 1.97 |
|
|
| 1.49 |
|
|
| (0.31 | ) |
|
| 25 |
|
|
2010 |
|
| 14.82 |
|
| (0.06 | ) |
| 2.30 |
|
| 2.24 |
|
| (0.06 | ) |
| (0.41 | ) |
| – |
|
| (0.47 | ) |
| – |
|
| 16.59 |
|
| 15.16 |
|
| 8,942 |
|
| 1.95 |
|
|
| 1.95 |
|
|
| 1.49 |
|
|
| (0.32 | ) |
|
| 31 |
|
|
2009 |
|
| 10.00 |
|
| 0.00 |
|
| 5.31 |
|
| 5.31 |
|
| (0.05 | ) |
| (0.44 | ) |
| – |
|
| (0.49 | ) |
| – |
|
| 14.82 |
|
| 53.27 | 1 |
| 4,796 |
|
| 2.97 |
|
| 2.97 |
|
| 1.49 |
|
| 0.17 |
|
| 21 |
|
| ||||
Royce Partners Fund – Service Class b | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 12.04 |
| $ | 0.09 |
| $ | 3.73 |
| $ | 3.82 |
| $ | (0.12 | ) | $ | (1.28 | ) | $ | – |
| $ | (1.40 | ) | $ | – |
| $ | 14.46 |
|
| 32.22 | % | $ | 2,801 |
|
| 4.06 | % |
|
| 4.06 | % |
|
| 1.35 | % |
|
| 0.66 | % |
|
| 53 | % |
|
2012 |
|
| 10.37 |
|
| 0.04 |
|
| 2.10 |
|
| 2.14 |
|
| (0.01 | ) |
| (0.46 | ) |
| – |
|
| (0.47 | ) |
| – |
|
| 12.04 |
|
| 20.74 |
|
| 2,083 |
|
| 4.83 |
|
|
| 4.83 |
|
|
| 1.35 |
|
|
| 0.33 |
|
|
| 31 |
|
|
2011 |
|
| 13.15 |
|
| (0.03 | ) |
| (1.52 | ) |
| (1.55 | ) |
| (0.05 | ) |
| (1.18 | ) |
| – |
|
| (1.23 | ) |
| – |
|
| 10.37 |
|
| (11.66 | ) |
| 1,682 |
|
| 4.25 |
|
|
| 4.25 |
|
|
| 1.49 |
|
|
| (0.25 | ) |
|
| 44 |
|
|
2010 |
|
| 11.56 |
|
| 0.01 |
|
| 2.14 |
|
| 2.15 |
|
| (0.16 | ) |
| (0.41 | ) |
| – |
|
| (0.57 | ) |
| 0.01 |
|
| 13.15 |
|
| 18.74 |
|
| 1,771 |
|
| 3.72 |
|
|
| 3.72 |
|
|
| 1.49 |
|
|
| (0.10 | ) |
|
| 38 |
|
|
2009 |
|
| 10.00 |
|
| (0.05 | ) |
| 1.61 |
|
| 1.56 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 11.56 |
|
| 15.60 |
| 1,501 |
|
| 5.27 |
|
| 5.27 |
|
| 1.49 |
|
| (0.71 | )2 |
|
| 14 |
|
| ||||
Royce Opportunity Select Fund – Investment Class c | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 12.81 |
| $ | (0.13 | ) | $ | 5.79 |
| $ | 5.66 |
| $ | – |
| $ | (0.55 | ) | $ | – |
| $ | (0.55 | ) | $ | 0.01 |
| $ | 17.93 |
|
| 44.61 | % | $ | 17,461 |
|
| 1.78 | % |
|
| 1.78 | % |
|
| 1.29 | % |
|
| (0.80 | )% |
|
| 129 | % |
|
2012 |
|
| 10.33 |
|
| 0.07 |
|
| 3.50 |
|
| 3.57 |
|
| (0.13 | ) |
| (0.96 | ) |
| – |
|
| (1.09 | ) |
| – |
|
| 12.81 |
|
| 35.14 |
|
| 3,198 |
|
| 0.29 |
|
| 0.29 |
|
| 0.25 |
|
| 0.64 |
|
| 196 |
|
| ||||
2011 |
|
| 12.99 |
|
| 0.01 |
|
| (2.26 | ) |
| (2.25 | ) |
| (0.02 | ) |
| (0.39 | ) |
| – |
|
| (0.41 | ) |
| – |
|
| 10.33 |
|
| (17.14 | ) |
| 2,102 |
|
| 1.14 |
|
|
| 1.14 |
|
|
| 1.14 |
|
|
| 0.08 |
|
|
| 299 |
|
|
2010 |
|
| 10.00 |
|
| (0.43 | ) |
| 3.42 |
|
| 2.99 |
|
| – |
|
| – |
|
| – |
|
| – |
|
| – |
|
| 12.99 |
|
| 29.90 | 1 |
| 1,913 |
|
| 4.01 | 1 |
|
| 4.01 | 1 |
|
| 4.01 | 1 |
|
| (3.79 | )1 |
|
| 95 |
|
|
Royce Global Dividend Value Fund – Service Class d | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 10.10 |
| $ | 0.18 |
| $ | 1.38 |
| $ | 1.56 |
| $ | (0.26 | ) | $ | (0.22 | ) | $ | – |
| $ | (0.48 | ) | $ | 0.01 |
| $ | 11.19 |
|
| 15.78 | % | $ | 9,556 |
|
| 2.98 | % |
|
| 2.98 | % |
|
| 1.69 | % |
|
| 1.75 | % |
|
| 82 | % |
|
2012 |
|
| 8.39 |
|
| 0.17 |
|
| 1.71 |
|
| 1.88 |
|
| (0.17 | ) |
| – |
|
| – |
|
| (0.17 | ) |
| – |
|
| 10.10 |
|
| 22.52 |
|
| 6,708 |
|
| 2.86 |
|
|
| 2.86 |
|
|
| 1.69 |
|
|
| 1.72 |
|
|
| 36 |
|
|
2011 |
|
| 10.00 |
|
| 0.08 |
|
| (1.62 | ) |
| (1.54 | ) |
| (0.07 | ) |
| (0.01 | ) |
| – |
|
| (0.08 | ) |
| 0.01 |
|
| 8.39 |
|
| (15.37 | )1 |
| 6,135 |
|
| 3.47 |
|
| 3.47 |
|
| 1.69 |
|
| 1.10 |
|
| 20 |
|
| ||||
Royce International Micro-Cap Fund – Service Class d | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 8.61 |
| $ | 0.11 |
| $ | 1.51 |
| $ | 1.62 |
| $ | (0.20 | ) | $ | – |
| $ | – |
| $ | (0.20 | ) | $ | 0.01 |
| $ | 10.04 |
|
| 18.95 | % | $ | 5,209 |
|
| 3.86 | % |
|
| 3.86 | % |
|
| 1.69 | % |
|
| 1.22 | % |
|
| 103 | % |
|
2012 |
|
| 7.72 |
|
| 0.13 |
|
| 0.92 |
|
| 1.05 |
|
| (0.16 | ) |
| – |
|
| – |
|
| (0.16 | ) |
| – |
|
| 8.61 |
|
| 13.59 |
|
| 4,603 |
|
| 3.90 |
|
|
| 3.90 |
|
|
| 1.69 |
|
|
| 1.63 |
|
|
| 62 |
|
|
2011 |
|
| 10.00 |
|
| 0.10 |
|
| (2.26 | ) |
| (2.16 | ) |
| (0.12 | ) |
| – |
|
| (0.01 | ) |
| (0.13 | ) |
| 0.01 |
|
| 7.72 |
|
| (21.51 | )1 |
| 3,572 |
|
| 3.92 |
|
| 3.92 |
|
| 1.69 |
|
| 1.08 |
|
| 71 |
|
| ||||
Royce International Premier Fund – Service Class d | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 |
| $ | 10.01 |
| $ | 0.10 |
| $ | 1.73 |
| $ | 1.83 |
| $ | (0.17 | ) | $ | – |
| $ | – |
| $ | (0.17 | ) | $ | – |
| $ | 11.67 |
|
| 18.31 | % | $ | 9,470 |
|
| 2.82 | % |
|
| 2.82 | % |
|
| 1.69 | % |
|
| 1.09 | % |
|
| 51 | % |
|
2012 |
|
| 8.26 |
|
| 0.12 |
|
| 1.81 |
|
| 1.93 |
|
| (0.18 | ) |
| – |
|
| – |
|
| (0.18 | ) |
| – |
|
| 10.01 |
|
| 23.40 |
|
| 6,444 |
|
| 3.54 |
|
|
| 3.54 |
|
|
| 1.69 |
|
|
| 1.18 |
|
|
| 103 |
|
|
2011 |
|
| 10.00 |
|
| 0.05 |
|
| (1.73 | ) |
| (1.68 | ) |
| (0.06 | ) |
| (0.00 | ) |
| (0.01 | ) |
| (0.07 | ) |
| 0.01 |
|
| 8.26 |
|
| (16.75 | )1 |
| 4,090 |
|
| 3.77 |
|
| 3.77 |
|
| 1.69 |
|
| 0.67 |
|
| 42 |
|
|
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. | The Royce Funds 2013 Annual Report to Shareholders | 77 |
Notes to Financial Statements |
Summary of Significant Accounting Policies: |
Royce Select Fund I, Royce Micro-Cap Discovery Fund, Royce Financial Services Fund, Royce Select Fund II, Royce European Smaller-Companies Fund, Royce Enterprise Select Fund, Royce SMid-Cap Value Fund, Royce Focus Value Fund, Royce Partners Fund, Royce Opportunity Select Fund, Royce Global Dividend Value Fund, Royce International Micro-Cap Fund and Royce International Premier Fund (the “Fund” or “Funds”), are thirteen series of The Royce Fund (the “Trust”), a diversified open-end management investment company organized as a Delaware statutory trust. |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. |
At December 31, 2013, officers, employees of Royce & Associates, LLC (“Royce”), Fund trustees, the Royce retirement plans and other affiliates owned more than 10% of the following Funds: |
Royce Select Fund I | 14 | % | Royce Partners Fund | 79 | % | ||||
Royce Micro-Cap Discovery Fund | 68 | % | Royce Opportunity Select Fund | 21 | % | ||||
Royce Select Fund II | 44 | % | Royce Global Dividend Value Fund | 14 | % | ||||
Royce Enterprise Select Fund | 50 | % | Royce International Micro-Cap Fund | 25 | % | ||||
Royce SMid-Cap Value Fund | 45 | % | Royce International Premier Fund | 18 | % | ||||
Royce Focus Value Fund | 77 | % | |||||||
Valuation of Investments: |
Securities are valued as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq’s Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their highest bid price (in the case of long positions) or at the lowest ask price (in the case of short positions). Other over-the-counter securities for which market quotations are readily available are valued at their highest bid price, except in the case of some bonds and other fixed income securities which may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. The Funds value their non-U.S. dollar denominated securities in U.S. dollars daily at the prevailing foreign currency exchange rates as quoted by a major bank. Securities for which market quotations are not readily available are valued at their fair value in accordance with the provisions of the 1940 Act, under procedures approved by the Fund’s Board of Trustees, and are reported as Level 3 securities. As a general principle, the fair value of a security is the amount which the Fund might reasonably expect to receive for the security upon its current sale. However, in light of the judgment involved in fair valuations, there can be no assurance that a fair value assigned to a particular security will be the amount which the Fund might be able to receive upon its current sale. In addition, if, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, a Fund may fair value the security. The Funds use an independent pricing service to provide fair value estimates for relevant non-U.S. equity securities on days when the U.S. market volatility exceeds a certain threshold. This pricing service uses proprietary correlations it has developed between the movement of prices of non-U.S. equity securities and indices of U.S.-traded securities, futures contracts and other indications to estimate the fair value of relevant non-U.S. securities. When fair value pricing is employed, the prices of securities used by a Fund may differ from quoted or published prices for the same security. Investments in money market funds are valued at net asset value per share. |
Various inputs are used in determining the value of each Fund’s investments, as noted above. These inputs are summarized in the three broad levels below: | ||
Level 1 – quoted prices in active markets for identical securities. | ||
Level 2 – other significant observable inputs (including quoted prices for similar securities, foreign securities that may be fair valued and repurchase agreements). The table below includes all Level 2 securities. Level 2 securities with values based on quoted prices for similar securities are noted in the Schedules of Investments. | ||
Level 3 – significant unobservable inputs (including last trade price before trading was suspended, or at a discount thereto for lack of marketability or otherwise, market price information regarding other securities, information received from the company and/or published documents, including SEC filings and financial statements, or other publicly available information). | ||
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. | ||
The following is a summary of the inputs used to value each Fund’s investments as of December 31, 2013. For a detailed breakout of common stocks by sector classification or country, please refer to the Schedules of Investments. |
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Royce Select Fund I | ||||||||||||||
Common Stocks | $ | 45,226,051 | $ | – | $ | – | $ | 45,226,051 | ||||||
Cash Equivalents | – | 1,998,000 | – | 1,998,000 | ||||||||||
Royce Micro-Cap Discovery Fund | ||||||||||||||
Common Stocks | 5,522,543 | – | – | 5,522,543 | ||||||||||
Cash Equivalents | – | 194,000 | – | 194,000 |
78 | The Royce Funds 2013 Annual Report to Shareholders |
Valuation of Investments (continued): | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Royce Financial Services Fund | ||||||||||||||
Common Stocks | $ | 39,006,240 | $ | 67,037 | $ | 0 | $ | 39,073,277 | ||||||
Cash Equivalents | – | 8,421,000 | – | 8,421,000 | ||||||||||
Royce Select Fund II | ||||||||||||||
Common Stocks | 5,033,683 | – | – | 5,033,683 | ||||||||||
Royce European Smaller-Companies Fund | ||||||||||||||
Common Stocks | 26,275,782 | – | – | 26,275,782 | ||||||||||
Cash Equivalents | – | 1,768,000 | �� | – | 1,768,000 | |||||||||
Royce Enterprise Select Fund | ||||||||||||||
Common Stocks | 1,915,755 | – | – | 1,915,755 | ||||||||||
Fixed Income | 49,784 | – | – | 49,784 | ||||||||||
Cash Equivalents | – | 673,000 | – | 673,000 | ||||||||||
Royce SMid-Cap Value Fund | ||||||||||||||
Common Stocks | 10,672,237 | – | – | 10,672,237 | ||||||||||
Cash Equivalents | – | 525,000 | – | 525,000 | ||||||||||
Royce Focus Value Fund | ||||||||||||||
Common Stocks | 11,441,655 | – | – | 11,441,655 | ||||||||||
Fixed Income | 138,600 | – | – | 138,600 | ||||||||||
Cash Equivalents | – | 396,000 | – | 396,000 | ||||||||||
Royce Partners Fund | ||||||||||||||
Common Stocks | 2,422,946 | – | – | 2,422,946 | ||||||||||
Cash Equivalents | – | 308,000 | – | 308,000 | ||||||||||
Royce Opportunity Select Fund | ||||||||||||||
Common Stocks | 17,223,701 | – | – | 17,223,701 | ||||||||||
Cash Equivalents | – | 672,000 | – | 672,000 | ||||||||||
Royce Global Dividend Value Fund | ||||||||||||||
Common Stocks | 8,384,419 | – | – | 8,384,419 | ||||||||||
Cash Equivalents | – | 1,391,000 | – | 1,391,000 | ||||||||||
Royce International Micro-Cap Fund | ||||||||||||||
Common Stocks | 4,915,775 | – | 529 | 4,916,304 | ||||||||||
Cash Equivalents | – | 272,000 | – | 272,000 | ||||||||||
Royce International Premier Fund | ||||||||||||||
Common Stocks | 8,927,054 | – | – | 8,927,054 | ||||||||||
Cash Equivalents | – | 536,000 | – | 536,000 | ||||||||||
Short positions: | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Royce Select Fund II | ||||||||||||||
Common Stocks | $ | (368,712 | ) | $ | – | $ | – | $ | (368,712 | ) | ||||
Fixed Income | (56,023 | ) | – | – | (56,023 | ) | ||||||||
Royce Opportunity Select Fund | ||||||||||||||
Common Stocks | (1,150,652 | ) | – | – | (1,150,652 | ) | ||||||||
For the year ended December 31, 2013, certain securities have transferred in and out of Level 1 and Level 2 measurements as a result of the fair value pricing procedures for international equities. The Funds recognize transfers between levels as of the end of the reporting period. At December 31, 2013, the following Funds had securities transfer from Level 2 to Level 1 within the fair value hierarchy: |
Transfers from | Transfers from | |||||||||
Level 2 | Level 2 | |||||||||
to Level 1 | to Level 1 | |||||||||
Royce Financial Services Fund | $ | 6,583,625 | Royce Partners Fund | $ | 300,909 | |||||
Royce Select Fund II | 770,774 | Royce Global Dividend Value Fund | 3,954,956 | |||||||
Royce European Smaller-Companies Fund | 17,132,889 | Royce International Micro-Cap Fund | 2,126,309 | |||||||
Royce SMid-Cap Value Fund | 1,071,765 | Royce International Premier Fund | 5,615,509 |
Level 3 Reconciliation: | ||||||||||||||||
Realized and Unrealized | ||||||||||||||||
Balance as of 12/31/12 | Purchases | Gain (Loss)1 | Balance as of 12/31/13 | |||||||||||||
Royce Financial Services Fund | ||||||||||||||||
Common Stocks | $ | – | $ | 0 | $ | – | $ | 0 | ||||||||
Royce International Micro-Cap Fund | ||||||||||||||||
Common Stocks | 2,184 | – | (1,655 | ) | 529 |
The Royce Funds 2013 Annual Report to Shareholders | 79 |
Notes to Financial Statements (continued) |
Repurchase Agreements: |
The Funds may enter into repurchase agreements with institutions that the Funds’ investment adviser has determined are creditworthy. Each Fund restricts repurchase agreements to maturities of no more than seven days. Securities pledged as collateral for repurchase agreements, which are held until maturity of the repurchase agreements, are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). Repurchase agreements could involve certain risks in the event of default or insolvency of the counter-party, including possible delays or restrictions upon the ability of each Fund to dispose of its underlying securities. |
Foreign Currency: |
Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, expiration of currency forward contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on each Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, including investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates. |
Short Sales: |
The Funds may sell securities they do not own in anticipation of a decline in the fair value of that security. When a Fund sells a security short, it must borrow the security sold short and deliver it to the broker-dealer through which it made the short sale. A gain, limited to the price at which the Fund sold the security short, or a loss, unlimited in size, will be recognized upon the termination of a short sale. On ex-dividend date, dividends on short sales are recorded as an expense to the Fund. |
Distributions and Taxes: |
As qualified regulated investment companies under Subchapter M of the Internal Revenue Code, the Funds are not subject to income taxes to the extent that each Fund distributes substantially all of its taxable income for its fiscal year. |
Royce Global Dividend Value Fund pays any dividends from net investment income quarterly and makes any distributions from net realized gains annually in December. The other Funds pay any dividends and capital gain distributions annually in December. Because federal income tax regulations differ from generally accepted accounting principles, income and capital gain distributions determined in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Accordingly, the character of distributions and composition of net assets for tax purposes differ from those reflected in the accompanying financial statements. |
Investment Transactions and Related Investment Income: |
Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date. Non-cash dividend income is recorded at the fair market value of the securities received. Interest income is recorded on an accrual basis. Premium and discounts on debt securities are amortized using the effective yield-to-maturity method. Realized gains and losses from investment transactions are determined on the basis of identified cost for book and tax purposes. |
Expenses: |
The Funds incur direct and indirect expenses. Expenses directly attributable to a Fund are charged to the Fund’s operations, while expenses applicable to more than one of the Royce Funds are allocated equitably. Certain personnel, occupancy costs and other administrative expenses related to the Royce Funds are allocated by Royce under an administration agreement and are included in administrative and office facilities and legal expenses. The Fund has adopted a deferred fee agreement that allows the Trustees to defer the receipt of all or a portion of trustees’ fees otherwise payable. The deferred fees are invested in certain Royce Funds until distributed in accordance with the agreement. |
Compensating Balance Credits: |
The Funds have arrangements with their custodian bank and transfer agent, whereby a portion of the custodian’s fee and transfer agent’s fee is paid indirectly by credits earned on a Fund’s cash on deposit with the bank and transfer agent. These deposit arrangements are an alternative to purchasing overnight investments. Conversely, a Fund pays interest to the custodian on any cash overdrafts, to the extent they are not offset by credits earned on positive cash balances. |
Line of Credit: |
The Funds, along with certain other Royce Funds, participate in a $75 million line of credit (“Credit Agreement”) to be used for temporary or emergency purposes. This 364-day revolving Credit Agreement expires on July 11, 2014. Pursuant to the Credit Agreement, each participating Fund is liable only for principal and interest payments related to borrowings made by that Fund. Borrowings under the Credit Agreement bear interest at a rate equal to the higher of the federal funds rate + 1.25% or overnight LIBOR + 1.25%. The Funds did not utilize the line of credit during the year ended December 31, 2013. |
80 | The Royce Funds 2013 Annual Report to Shareholders |
Capital Share Transactions (in dollars): |
Shares issued for | Net increase (decrease) from | |||||||||||||||||||||||||||||||
Shares sold | reinvestment of distributions | Shares redeemed | capital share transactions | |||||||||||||||||||||||||||||
Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | |||||||||||||||||||||||||
12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||||||||
Royce Select Fund I | ||||||||||||||||||||||||||||||||
Investment Class | $ | 4,142,661 | $ | 5,074,208 | $ | 4,632,626 | $ | 4,672,287 | $ | (17,467,022 | ) | $ | (8,680,161 | ) | $ | (8,691,735 | ) | $ | 1,066,334 | |||||||||||||
Royce Micro-Cap Discovery Fund | ||||||||||||||||||||||||||||||||
Service Class | 1,631,092 | 1,050,076 | 158,366 | 37,994 | (1,865,126 | ) | (361,057 | ) | (75,668 | ) | 727,013 | |||||||||||||||||||||
Royce Financial Services Fund | ||||||||||||||||||||||||||||||||
Service Class | 26,878,008 | 4,612,568 | 81,782 | 149,100 | (6,116,756 | ) | (4,633,991 | ) | 20,843,034 | 127,677 | ||||||||||||||||||||||
Royce Select Fund II | ||||||||||||||||||||||||||||||||
Investment Class | 962,146 | 6,284 | 484,786 | 215,961 | (595,954 | ) | (284,132 | ) | 850,978 | (61,887 | ) | |||||||||||||||||||||
Royce European Smaller-Companies Fund | ||||||||||||||||||||||||||||||||
Service Class | 12,749,215 | 3,702,876 | 225,822 | 219,038 | (4,474,074 | ) | (7,085,115 | ) | 8,500,963 | (3,163,201 | ) | |||||||||||||||||||||
Royce Enterprise Select Fund | ||||||||||||||||||||||||||||||||
Investment Class | 1,042,236 | – | 230,142 | 119,819 | (196,397 | ) | (590 | ) | 1,075,981 | 119,229 | ||||||||||||||||||||||
Royce SMid-Cap Value Fund | ||||||||||||||||||||||||||||||||
Service Class | 918,483 | 4,410,001 | 15,362 | – | (2,831,409 | ) | (5,023,302 | ) | (1,897,564 | ) | (613,301 | ) | ||||||||||||||||||||
Royce Focus Value Fund | ||||||||||||||||||||||||||||||||
Service Class | 2,098,908 | 701,475 | 481,464 | 157,460 | (1,368,403 | ) | (1,353,002 | ) | 1,211,969 | (494,067 | ) | |||||||||||||||||||||
Royce Partners Fund | ||||||||||||||||||||||||||||||||
Service Class | 159,415 | 128,126 | 243,024 | 76,833 | (121,486 | ) | (78,236 | ) | 280,953 | 126,723 | ||||||||||||||||||||||
Royce Opportunity Select Fund | ||||||||||||||||||||||||||||||||
Investment Class | 12,259,644 | 352,527 | 502,868 | 227,344 | (1,079,435 | ) | (9,132 | ) | 11,683,077 | 570,739 | ||||||||||||||||||||||
Royce Global Dividend Value Fund | ||||||||||||||||||||||||||||||||
Service Class | 3,160,309 | 1,477,197 | 387,794 | 109,376 | (1,506,338 | ) | (2,157,716 | ) | 2,041,765 | (571,143 | ) | |||||||||||||||||||||
Royce International Micro-Cap Fund | ||||||||||||||||||||||||||||||||
Service Class | 1,892,877 | 1,435,544 | 98,903 | 78,472 | (2,089,921 | ) | (905,693 | ) | (98,141 | ) | 608,323 | |||||||||||||||||||||
Royce International Premier Fund | ||||||||||||||||||||||||||||||||
Service Class | 2,799,696 | 2,793,388 | 128,291 | 76,745 | (1,048,897 | ) | (1,375,047 | ) | 1,879,090 | 1,495,086 |
Capital Share Transactions (in shares): |
Shares issued for | Net increase (decrease) in | |||||||||||||||||||||||||||||||
Shares sold | reinvestment of distributions | Shares redeemed | shares outstanding | |||||||||||||||||||||||||||||
Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | |||||||||||||||||||||||||
12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||||||||
Royce Select Fund I | ||||||||||||||||||||||||||||||||
Investment Class | 220,662 | 280,124 | 247,999 | 276,467 | (931,946 | ) | (488,288 | ) | (463,285 | ) | 68,303 | |||||||||||||||||||||
Royce Micro-Cap Discovery Fund | ||||||||||||||||||||||||||||||||
Service Class | 272,296 | 210,468 | 23,995 | 7,462 | (304,432 | ) | (70,120 | ) | (8,141 | ) | 147,810 | |||||||||||||||||||||
Royce Financial Services Fund | ||||||||||||||||||||||||||||||||
Service Class | 3,162,045 | 713,267 | 8,765 | 22,252 | (728,338 | ) | (729,615 | ) | 2,442,472 | 5,904 | ||||||||||||||||||||||
Royce Select Fund II | ||||||||||||||||||||||||||||||||
Investment Class | 82,539 | 593 | 42,863 | 20,866 | (50,269 | ) | (26,289 | ) | 75,133 | (4,830 | ) | |||||||||||||||||||||
Royce European Smaller-Companies Fund | ||||||||||||||||||||||||||||||||
Service Class | 1,112,607 | 388,293 | 18,850 | 21,926 | (403,204 | ) | (752,653 | ) | 728,253 | (342,434 | ) | |||||||||||||||||||||
Royce Enterprise Select Fund | ||||||||||||||||||||||||||||||||
Investment Class | 88,545 | – | 19,654 | 11,724 | (16,561 | ) | (59 | ) | 91,638 | 11,665 | ||||||||||||||||||||||
Royce SMid-Cap Value Fund | ||||||||||||||||||||||||||||||||
Service Class | 69,873 | 390,512 | 1,118 | – | (221,303 | ) | (457,720 | ) | (150,312 | ) | (67,208 | ) | ||||||||||||||||||||
Royce Focus Value Fund | ||||||||||||||||||||||||||||||||
Service Class | 136,032 | 48,418 | 28,675 | 10,988 | (89,541 | ) | (91,922 | ) | 75,166 | (32,516 | ) | |||||||||||||||||||||
Royce Partners Fund | ||||||||||||||||||||||||||||||||
Service Class | 11,894 | 11,070 | 17,559 | 6,589 | (8,706 | ) | (6,930 | ) | 20,747 | 10,729 | ||||||||||||||||||||||
Royce Opportunity Select Fund | ||||||||||||||||||||||||||||||||
Investment Class | 763,033 | 28,178 | 30,076 | 18,773 | (68,900 | ) | (754 | ) | 724,209 | 46,197 |
The Royce Funds 2013 Annual Report to Shareholders | 81 |
Notes to Financial Statements (continued) |
Capital Share Transactions (in shares)(continued): |
Shares issued for | Net increase (decrease) in | |||||||||||||||||||||||||||||||
Shares sold | reinvestment of distributions | Shares redeemed | shares outstanding | |||||||||||||||||||||||||||||
Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | |||||||||||||||||||||||||
12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||||||||
Royce Global Dividend Value Fund | ||||||||||||||||||||||||||||||||
Service Class | 294,486 | 156,760 | 35,717 | 11,645 | (140,394 | ) | (235,478 | ) | 189,809 | (67,073 | ) | |||||||||||||||||||||
Royce International Micro-Cap Fund | ||||||||||||||||||||||||||||||||
Service Class | 205,642 | 170,805 | 10,123 | 9,342 | (231,571 | ) | (108,278 | ) | (15,806 | ) | 71,869 | |||||||||||||||||||||
Royce International Premier Fund | ||||||||||||||||||||||||||||||||
Service Class | 254,662 | 291,121 | 11,434 | 7,855 | (97,880 | ) | (150,814 | ) | 168,216 | 148,162 |
Investment Adviser and Distributor: |
Investment Adviser: Under the Trust’s investment advisory agreements with Royce, Royce is entitled to receive Investment Advisory fees that are computed daily and payable monthly. Royce’s commitment to waive its fees and reimburse class-specific expenses to the extent necessary to maintain certain Funds’ net annual operating expense ratios at specified levels through April 30, 2014, is shown below to the extent that it impacted net expenses for the year ended December 31, 2013. See the Prospectus for contractual waiver expiration dates. |
Effective September 28, 2012, Royce Select Fund I and Royce Select Fund II have a traditional management fee structure consistent with the other series of The Royce Fund. Previously, for its services and for paying certain other ordinary expenses, Royce received from each Fund a performance fee of 12.5% of each Fund’s pre-fee total return, subject to a high watermark test. Royce waived its compensation for services provided by it under the new agreement until a Fund’s pre-fee cumulative return exceeded its pre-fee total return as of the day on which a fee was last accrued under its former Investment Advisory Agreement, and agreed to reimburse certain ordinary operating expenses as well. Royce Select Fund I reached its high watermark on January 2, 2013 and Royce Select Fund II reached its high watermark on July 10, 2013. |
Committed net annual | Year ended | |||||||||||||||||||
Annual contractual | operating expense ratio cap | December 31, 2013 | ||||||||||||||||||
advisory fee as a | ||||||||||||||||||||
percentage of | Investment | Service | Net advisory | Advisory | ||||||||||||||||
average net assets1 | Class2 | Class2 | fees | fees waived | ||||||||||||||||
Royce Select Fund I | 1.00 | % | N/A | N/A | $ | 471,970 | $ | – | ||||||||||||
Royce Micro-Cap Discovery Fund | 1.00 | % | N/A | 1.49% | – | 52,399 | ||||||||||||||
Royce Financial Services Fund | 1.00 | % | N/A | 1.49% | 185,444 | 113,257 | ||||||||||||||
Royce Select Fund II | 1.25 | % | 1.49% | N/A | – | 28,434 | ||||||||||||||
Royce European Smaller-Companies Fund | 1.25 | % | N/A | 1.69% | 139,492 | 118,335 | ||||||||||||||
Royce Enterprise Select Fund | 1.00 | % | 1.24% | N/A | – | 19,934 | ||||||||||||||
Royce SMid-Cap Value Fund | 1.00 | % | N/A | 1.35% | 17,033 | 94,525 | ||||||||||||||
Royce Focus Value Fund | 1.00 | % | N/A | 1.35% | 25,654 | 75,820 | ||||||||||||||
Royce Partners Fund | 1.00 | % | N/A | 1.35% | – | 24,698 | ||||||||||||||
Royce Opportunity Select Fund | 1.00 | % | 1.24% | N/A | 42,291 | 39,965 | ||||||||||||||
Royce Global Dividend Value Fund | 1.25 | % | N/A | 1.69% | – | 103,066 | ||||||||||||||
Royce International Micro-Cap Fund | 1.30 | % | N/A | 1.69% | – | 60,460 | ||||||||||||||
Royce International Premier Fund | 1.25 | % | N/A | 1.69% | 10,919 | 82,195 |
Distributor: Royce Fund Services, Inc. (“RFS”), the distributor of the Trust’s shares, is a wholly owned subsidiary of Royce. RFS is entitled to receive distribution fees that are computed daily and payable monthly. |
Year ended December 31, 2013 | ||||||||||||
Annual contractual distribution fee as | Net distribution | Distribution fees | ||||||||||
a percentage of average net assets | fees | waived | ||||||||||
Royce Micro-Cap Discovery Fund – Service Class | 0.25 | % | $ | 13,100 | $ | – | ||||||
Royce Financial Services Fund – Service Class | 0.25 | % | 68,701 | 5,974 | ||||||||
Royce European Smaller-Companies Fund – Service Class | 0.25 | % | 51,565 | – | ||||||||
Royce SMid-Cap Value Fund – Service Class | 0.25 | % | 27,889 | – | ||||||||
Royce Focus Value Fund – Service Class | 0.25 | % | 25,369 | – | ||||||||
Royce Partners Fund – Service Class | 0.25 | % | 6,175 | – | ||||||||
Royce Global Dividend Value Fund – Service Class | 0.25 | % | 20,613 | – | ||||||||
Royce International Micro-Cap Fund – Service Class | 0.25 | % | 11,162 | 465 | ||||||||
Royce International Premier Fund – Service Class | 0.25 | % | 16,388 | 2,235 | ||||||||
82 | The Royce Funds 2013 Annual Report to Shareholders |
Purchases and Sales of Investment Securities: |
For the year ended December 31, 2013, the costs of purchases and the proceeds from sales of investment securities, other than short-term securities, were as follows: |
Short | Purchases to | |||||||||||||||
Purchases | Sales | Sales | Cover Short Sales | |||||||||||||
Royce Select Fund I | $ | 24,511,413 | $ | 36,715,615 | $ | – | $ | – | ||||||||
Royce Micro-Cap Discovery Fund | 3,966,056 | 4,208,427 | – | – | ||||||||||||
Royce Financial Services Fund | 18,935,942 | 5,916,969 | – | – | ||||||||||||
Royce Select Fund II | 5,657,772 | 5,049,714 | 1,007,886 | 874,463 | ||||||||||||
Royce European Smaller-Companies Fund | 17,656,055 | 10,260,363 | – | – | ||||||||||||
Royce Enterprise Select Fund | 2,633,692 | 2,220,429 | 41,961 | 42,335 | ||||||||||||
Royce SMid-Cap Value Fund | 3,103,761 | 5,025,179 | – | – | ||||||||||||
Royce Focus Value Fund | 17,152,384 | 16,431,221 | – | – | ||||||||||||
Royce Partners Fund | 1,180,422 | 1,454,375 | – | – | ||||||||||||
Royce Opportunity Select Fund | 16,630,291 | 5,712,635 | 4,000,532 | 3,440,434 | ||||||||||||
Royce Global Dividend Value Fund | 7,081,196 | 6,319,104 | – | – | ||||||||||||
Royce International Micro-Cap Fund | 4,566,210 | 4,747,980 | – | – | ||||||||||||
Royce International Premier Fund | 5,258,111 | 3,628,668 | – | – |
Tax Information: |
At December 31, 2013, net unrealized appreciation (depreciation) based on identified cost for tax purposes was as follows: |
Net Unrealized | ||||||||||||||||
Appreciation | Gross Unrealized | |||||||||||||||
Tax Basis Cost | (Depreciation) | Appreciation | Depreciation | |||||||||||||
Royce Select Fund I | $ | 34,404,726 | $ | 12,819,325 | $ | 13,349,157 | $ | 529,832 | ||||||||
Royce Micro-Cap Discovery Fund | 4,678,804 | 1,037,739 | 1,138,896 | 101,157 | ||||||||||||
Royce Financial Services Fund | 38,181,912 | 9,312,365 | 10,369,405 | 1,057,040 | ||||||||||||
Royce Select Fund II | 4,200,694 | 408,254 | 717,078 | 308,824 | ||||||||||||
Royce European Smaller-Companies Fund | 24,949,912 | 3,093,870 | 4,139,735 | 1,045,865 | ||||||||||||
Royce Enterprise Select Fund | 2,336,396 | 302,143 | 304,086 | 1,943 | ||||||||||||
Royce SMid-Cap Value Fund | 9,185,690 | 2,011,547 | 2,668,343 | 656,796 | ||||||||||||
Royce Focus Value Fund | 9,456,434 | 2,519,821 | 2,695,034 | 175,213 | ||||||||||||
Royce Partners Fund | 2,079,032 | 651,914 | 699,415 | 47,501 | ||||||||||||
Royce Opportunity Select Fund | 13,981,604 | 2,763,445 | 2,970,364 | 206,919 | ||||||||||||
Royce Global Dividend Value Fund | 9,218,370 | 557,049 | 1,108,737 | 551,688 | ||||||||||||
Royce International Micro-Cap Fund | 5,001,150 | 187,154 | 506,213 | 319,059 | ||||||||||||
Royce International Premier Fund | 8,377,744 | 1,085,310 | 1,325,471 | 240,161 |
The primary difference between book and tax basis cost is the timing of the recognition of losses on securities sold, investments in Real Estate Investment Trusts, investments in publicly traded partnerships and mark-to-market of Passive Foreign Investment Companies. |
Distributions during the years ended December 31, 2013 and 2012, were characterized as follows for tax purposes: |
Ordinary Income | Long-Term Capital Gains | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Royce Select Fund I | $ | 817,571 | $ | 1,075,598 | $ | 4,054,546 | $ | 3,765,809 | ||||||||
Royce Micro-Cap Discovery Fund | – | 40,240 | 164,762 | – | ||||||||||||
Royce Financial Services Fund | 82,981 | 153,360 | – | – | ||||||||||||
Royce Select Fund II | 291,068 | 165,593 | 210,443 | 50,409 | ||||||||||||
Royce European Smaller-Companies Fund | 232,856 | 225,920 | – | – | ||||||||||||
Royce Enterprise Select Fund | 155,551 | 60,711 | 75,300 | 59,108 | ||||||||||||
Royce SMid-Cap Value Fund | 16,014 | – | – | – | ||||||||||||
Royce Focus Value Fund | 404,171 | 156,029 | 79,819 | 1,618 | ||||||||||||
Royce Partners Fund | 58,459 | 41,598 | 187,253 | 35,844 | ||||||||||||
Royce Opportunity Select Fund | 186,736 | 203,478 | 324,118 | 29,102 | ||||||||||||
Royce Global Dividend Value Fund | 389,940 | 109,924 | – | – | ||||||||||||
Royce International Micro-Cap Fund | 100,087 | 79,547 | – | – | ||||||||||||
Royce International Premier Fund | 129,813 | 76,745 | – | – |
The Royce Funds 2013 Annual Report to Shareholders | 83 |
Notes to Financial Statements (continued) |
Tax Information (continued): |
The tax basis components of distributable earnings at December 31, 2013, were as follows: |
Qualified | ||||||||||||||||||||||||||||
Late Year | ||||||||||||||||||||||||||||
Undistributed | Ordinary | |||||||||||||||||||||||||||
Long-Term | and | |||||||||||||||||||||||||||
Undistributed | Capital Gains or | Capital Loss | Net Unrealized | Post-October | Total | Capital Loss | ||||||||||||||||||||||
Ordinary | (Capital Loss | Carryforward | Appreciation | Loss | Distributable | Carryforward | ||||||||||||||||||||||
Income | Carryforward) | to 12/31/171 | (Depreciation)2 | Deferrals3 | Earnings | Utilized | ||||||||||||||||||||||
Royce Select Fund I | $ | 213,664 | $ | 140,042 | $ | – | $ | 12,819,335 | $ | (122 | ) | $ | 13,172,919 | $ | – | |||||||||||||
Royce Micro-Cap Discovery Fund | – | 146,844 | – | 1,037,741 | – | 1,184,585 | 280,364 | |||||||||||||||||||||
Royce Financial Services Fund | 219,345 | 1,367,107 | – | 9,089,410 | – | 10,675,862 | 487,520 | |||||||||||||||||||||
Royce Select Fund II | 117,028 | 193,111 | – | 408,701 | – | 718,840 | – | |||||||||||||||||||||
Royce European Smaller- | ||||||||||||||||||||||||||||
Companies Fund | 13,377 | – | (1,361,060 | ) | 3,093,513 | (52,288 | ) | 1,693,542 | 1,152,664 | |||||||||||||||||||
Royce Enterprise Select Fund | 41,129 | 27,846 | – | 302,144 | (884 | ) | 370,235 | – | ||||||||||||||||||||
Royce SMid-Cap Value Fund | – | – | (5,442,197 | ) | 2,011,696 | – | (3,430,501 | ) | 491,281 | |||||||||||||||||||
Royce Focus Value Fund | 99,740 | 71,034 | – | 2,519,874 | (6,319 | ) | 2,684,329 | 123,732 | ||||||||||||||||||||
Royce Partners Fund | 24,138 | 28,175 | – | 651,940 | (1,508 | ) | 702,745 | – | ||||||||||||||||||||
Royce Opportunity Select Fund | 163,809 | 57,003 | – | 2,763,740 | – | 2,984,552 | – | |||||||||||||||||||||
Royce Global Dividend Value Fund | 77,721 | – | – | 557,098 | (20,271 | ) | 614,548 | 121,216 | ||||||||||||||||||||
Royce International Micro-Cap | ||||||||||||||||||||||||||||
Fund | 26,099 | (688,937 | ) | – | 184,081 | (88,942 | ) | (567,699 | ) | 257,226 | ||||||||||||||||||
Royce International Premier Fund | 2,691 | (112,378 | ) | – | 1,084,696 | (45,794 | ) | 929,215 | 341,141 |
For financial reporting purposes, capital accounts and distributions to shareholders are adjusted to reflect the tax character of permanent book/tax differences. For the year ended December 31, 2013, the Funds recorded the following permanent reclassifications, which relate primarily to current net operating losses, distribution reclassifications, Real Estate Investment Trusts, publicly traded partnerships, foreign currency transactions, equalization and gains from the sale of Passive Foreign Investment Companies. Results of operations and net assets were not affected by these reclassifications. |
Undistributed | Accumulated | |||||||||||
Net Investment | Net Realized | Paid–in | ||||||||||
Income (Loss) | Gain (Loss) | Capital | ||||||||||
Royce Select Fund I | $ | 172,932 | $ | (542,932 | ) | $ | 370,000 | |||||
Royce Micro-Cap Discovery Fund | 17,307 | (11,852 | ) | (5,455 | ) | |||||||
Royce Financial Services Fund | (26,310 | ) | 26,482 | (172 | ) | |||||||
Royce Select Fund II | 22,104 | (22,104 | ) | – | ||||||||
Royce European Smaller- | ||||||||||||
Companies Fund | (1,498 | ) | 1,498 | – | ||||||||
Royce Enterprise Select Fund | 7,130 | (7,130 | ) | – | ||||||||
Royce SMid-Cap Value Fund | 310 | 48 | (358 | ) | ||||||||
Royce Focus Value Fund | 15,359 | (15,348 | ) | (11 | ) | |||||||
Royce Partners Fund | (1,363 | ) | 1,471 | (108 | ) | |||||||
Royce Opportunity Select Fund | 67,962 | (67,962 | ) | – | ||||||||
Royce Global Dividend Value Fund | 6,719 | (6,719 | ) | – | ||||||||
Royce International Micro-Cap Fund | 22,590 | (22,590 | ) | – | ||||||||
Royce International Premier Fund | (3,453 | ) | 3,453 | – |
Management has analyzed the Funds’ tax positions taken on federal income tax returns for all open tax years (2010 - 2013) and has concluded that as of December 31, 2013, no provision for income tax is required in the Funds’ financial statements. |
84 | The Royce Funds 2013 Annual Report to Shareholders |
Report of Independent Registered Public Accounting Firm | |
Baltimore, Maryland
February 24, 2014
The Royce Funds 2013 Annual Report to Shareholders | 85 |
Understanding Your Fund’s Expenses (unaudited) |
As a shareholder of a mutual fund, you pay ongoing expenses, including management fees and other Fund expenses including, for some funds, distribution and/or service (12b-1) fees. Using the information below, you can estimate how these ongoing expenses (in dollars) affect your investment and compare them with the ongoing expenses of other funds. You may also incur one-time transaction expenses, including redemption fees, which are not shown in this section and would result in higher total costs. The example is based on an investment of $1,000 invested at July 1, 2013, and held for the entire six-month period ended December 31, 2013. Service Class shares are generally available only through certain brokers or retirement plan administrators who receive distribution and/or service fees from the Fund for services that they perform.
Actual Expenses
The first part of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value at December 31, 2013, by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second part of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, this section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Actual | Hypothetical (5% per year return before expenses) | |||||||||||||||||||||||||||
Beginning | Ending | Expenses Paid | Beginning | Ending | Expenses Paid | Annualized | ||||||||||||||||||||||
Account Value | Account Value | During the | Account Value | Account Value | During the | Expense | ||||||||||||||||||||||
7/1/13 | 12/31/13 | Period1 | 7/1/13 | 12/31/13 | Period1 | Ratio2 | ||||||||||||||||||||||
Investment Class | ||||||||||||||||||||||||||||
Royce Select Fund I | $ | 1,000.00 | $ | 1,180.55 | $ | 6.87 | $ | 1,000.00 | $ | 1,018.90 | $ | 6.36 | 1.25 | % | ||||||||||||||
Royce Select Fund II | 1,000.00 | 1,161.15 | 8.66 | 1,000.00 | 1,017.19 | 8.08 | 1.59 | % | ||||||||||||||||||||
Royce Enterprise Select Fund | 1,000.00 | 1,154.21 | 6.73 | 1,000.00 | 1,018.95 | 6.31 | 1.24 | % | ||||||||||||||||||||
Royce Opportunity Select Fund | 1,000.00 | 1,226.82 | 7.30 | 1,000.00 | 1,018.65 | 6.61 | 1.30 | % | ||||||||||||||||||||
Service Class | ||||||||||||||||||||||||||||
Royce Micro-Cap Discovery Fund | 1,000.00 | 1,205.40 | 8.28 | 1,000.00 | 1,017.69 | 7.58 | 1.49 | % | ||||||||||||||||||||
Royce Financial Services Fund | 1,000.00 | 1,194.38 | 8.24 | 1,000.00 | 1,017.69 | 7.58 | 1.49 | % | ||||||||||||||||||||
Royce European Smaller- | ||||||||||||||||||||||||||||
Companies Fund | 1,000.00 | 1,180.97 | 9.29 | 1,000.00 | 1,016.69 | 8.59 | 1.69 | % | ||||||||||||||||||||
Royce SMid-Cap Value Fund | 1,000.00 | 1,172.73 | 7.39 | 1,000.00 | 1,018.40 | 6.87 | 1.35 | % | ||||||||||||||||||||
Royce Focus Value Fund | 1,000.00 | 1,185.41 | 7.44 | 1,000.00 | 1,018.40 | 6.87 | 1.35 | % | ||||||||||||||||||||
Royce Partners Fund | 1,000.00 | 1,179.17 | 7.42 | 1,000.00 | 1,018.40 | 6.87 | 1.35 | % | ||||||||||||||||||||
Royce Global Dividend | ||||||||||||||||||||||||||||
Value Fund | 1,000.00 | 1,135.48 | 9.10 | 1,000.00 | 1,016.69 | 8.59 | 1.69 | % | ||||||||||||||||||||
Royce International Micro- | ||||||||||||||||||||||||||||
Cap Fund | 1,000.00 | 1,195.01 | 9.35 | 1,000.00 | 1,016.69 | 8.59 | 1.69 | % | ||||||||||||||||||||
Royce International | ||||||||||||||||||||||||||||
Premier Fund | 1,000.00 | 1,131.12 | 9.08 | 1,000.00 | 1,016.69 | 8.59 | 1.69 | % |
86 | The Royce Funds 2013 Annual Report to Shareholders |
Federal Tax Information | |
% | Long-Term Capital | |||||||||||||
% | % U.S. Govt | Income Qualifying | Gain Distribution or | |||||||||||
Fund | QDI | Income | For DRD | Maximum Allowable (000’s) | ||||||||||
Royce Select Fund I | 45.61 | % | N/A | 35.60 | % | $ | 4,425 | |||||||
Royce Micro-Cap Discovery Fund | N/A | N/A | N/A | 165 | ||||||||||
Royce Financial Services Fund | 100.00 | % | N/A | 100.00 | % | N/A | ||||||||
Royce Select Fund II | 19.70 | % | N/A | 5.11 | % | 210 | ||||||||
Royce European Smaller-Companies Fund | 100.00 | % | N/A | 0.00 | % | N/A | ||||||||
Royce Enterprise Select Fund | 10.12 | % | N/A | 9.40 | % | 75 | ||||||||
Royce SMid-Cap Value Fund | 100.00 | % | N/A | 100.00 | % | N/A | ||||||||
Royce Focus Value Fund | 29.60 | % | N/A | 21.57 | % | 80 | ||||||||
Royce Partners Fund | 78.70 | % | N/A | 25.87 | % | 187 | ||||||||
Royce Opportunity Select Fund | 13.46 | % | N/A | 14.22 | % | 324 | ||||||||
Royce Global Dividend Value Fund | 52.83 | % | N/A | 0.00 | % | N/A | ||||||||
Royce International Micro-Cap Fund | 90.04 | % | N/A | 0.00 | % | N/A | ||||||||
Royce International Premier Fund | 100.00 | % | N/A | 0.00 | % | N/A |
% QDI: Qualified Dividend Income; % of net investment income and/or short-term capital gains distributions that qualify for treatment at long-term capital gain rates.
% U.S. Govt Income: % of investment income paid from U.S. Government obligations.
% Income Qualifying for DRD: % of investment income eligible for the corporate dividend received deduction.
For the year ended December 31, 2013, the following funds had elected to pass through the credit for tax paid in foreign countries. The net foreign source income and foreign tax per share outstanding on the dividend distribution date are as follows:
Net Foreign | ||||||||||||||||
Net Foreign | Source Income | Foreign | Foreign | |||||||||||||
Fund | Source Income | Per Share | Tax | Tax Per Share | ||||||||||||
Royce European Smaller-Companies Fund | $ | 289,757 | $ | 0.1322 | $ | 60,237 | $ | 0.0275 | ||||||||
Royce Global Dividend Value Fund | 192,712 | 0.2360 | 22,023 | 0.0270 | ||||||||||||
Royce International Micro-Cap Fund | 92,142 | 0.1803 | 10,952 | 0.0214 | ||||||||||||
Royce International Premier Fund | 174,111 | 0.2229 | 20,774 | 0.0266 |
The Royce Funds 2013 Annual Report to Shareholders | 87 |
Trustees and Officers |
All Trustees and Officers may be reached c/o The Royce Funds, 745 Fifth Avenue, New York, NY 10151 |
Charles M. Royce, Trustee1, President
Age: 74 | Number of Funds Overseen: 34 | Tenure: Since 1982
Non-Royce Directorships: Director of TICC Capital Corp.
Principal Occupation(s) During Past Five Years: President, Co-Chief Investment Officer, and Member of Board of Managers of Royce & Associates, LLC (“Royce”), the Trust’s investment adviser.
W. Whitney George, Trustee1, Vice President
Age: 55 | Number of Funds Overseen: 34 | Tenure: Since 2013
Non-Royce Directorships: None
Principal Occupation(s) During Past Five Years: Co-Chief Investment Officer, Managing Director and Vice President of Royce, having been employed by Royce since October 1991.
Patricia W. Chadwick, Trustee
Age: 65 | Number of Funds Overseen: 34 | Tenure: Since 2009
Non-Royce Directorships: Trustee of ING Mutual Funds and Director of Wisconsin Energy Corp.
Principal Occupation(s) During Past 5 Years: Consultant and President of Ravengate Partners LLC (since 2000).
Richard M. Galkin, Trustee
Age: 75 | Number of Funds Overseen: 34 | Tenure: Since 1982
Non-Royce Directorships: None
Principal Occupation(s) During Past Five Years: Private investor. Mr. Galkin’s prior business experience includes having served as President of Richard M. Galkin Associates, Inc., telecommunications consultants, President of Manhattan Cable Television (a subsidiary of Time, Inc.), President of Haverhills Inc. (another Time, Inc. subsidiary), President of Rhode Island Cable Television, and Senior Vice President of Satellite Television Corp. (a subsidiary of Comsat).
Stephen L. Isaacs, Trustee
Age: 74 | Number of Funds Overseen: 34 | Tenure: Since 1989
Non-Royce Directorships: None
Principal Occupation(s) During Past Five Years: Attorney and President of Health Policy Associates, Inc., consultants. Mr. Isaacs’s prior business experience includes having served as President of the Center for Health and Social Policy (from 1996 to 2012); Director of Columbia University Development Law and Policy Program and Professor at Columbia University (until August 1996).
Arthur S. Mehlman, Trustee
Age: 71 | Number of Funds Overseen: 52 | Tenure: Since 2004
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 18 Legg Mason Funds.
Principal Occupation(s) During Past Five Years: Director of The League for People with Disabilities, Inc.; Director of University of Maryland Foundation (non-profits). Formerly: Director of Municipal Mortgage & Equity, LLC (from October 2004 to April 1, 2011); Director of University of Maryland College Park Foundation (non-profit) (from 1998 to 2005); Partner, KPMG LLP (international accounting firm) (from 1972 to 2002); Director of Maryland Business Roundtable for Education (from July 1984 to June 2002).
David L. Meister, Trustee
Age: 74 | Number of Funds Overseen: 34 | Tenure: Since 1982
Non-Royce Directorships: None
Principal Occupation(s) During Past Five Years: Consultant. Chairman and Chief Executive Officer of The Tennis Channel (from June 2000 to March 2005). Mr. Meister’s prior business experience includes having served as Chief Executive Officer of Seniorlife.com, a consultant to the communications industry, President of Financial News Network, Senior Vice President of HBO, President of Time-Life Films, and Head of Broadcasting for Major League Baseball.
G. Peter O’Brien, Trustee
Age: 68 | Number of Funds Overseen: 52 | Tenure: Since 2001
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 18 Legg Mason Funds; Director of TICC Capital Corp.
Principal Occupation(s) During Past Five Years: Trustee Emeritus of Colgate University (since 2005); Board Member of Hill House, Inc. (since 1999); Formerly: Trustee of Colgate University (from 1996 to 2005), President of Hill House, Inc. (from 2001 to 2005) and Managing Director/Equity Capital Markets Group of Merrill Lynch & Co. (from 1971 to 1999).
John D. Diederich, Vice President and Treasurer
Age: 62 | Tenure: Since 2001
Principal Occupation(s) During Past Five Years: Chief Operating Officer, Managing Director and member of the Board of Managers of Royce; Chief Financial Officer of Royce; Director of Administration of the Trust; and President of RFS, having been employed by Royce since April 1993.
Jack E. Fockler, Jr., Vice President
Age: 55 | Tenure: Since 1995
Principal Occupation(s) During Past Five Years: Managing Director and Vice President of Royce, and Vice President of RFS, having been employed by Royce since October 1989.
Daniel A. O’Byrne, Vice President and Assistant Secretary
Age: 51 | Tenure: Since 1994
Principal Occupation(s) During Past Five Years: Principal and Vice President of Royce, having been employed by Royce since October 1986.
John E. Denneen, Secretary and Chief Legal Officer
Age: 46 | Tenure: 1996-2001 and Since April 2002
Principal Occupation(s) During Past Five Years: General Counsel, Principal, Chief Legal and Compliance Officer, and Secretary of Royce; Secretary and Chief Legal Officer of The Royce Funds.
Lisa Curcio, Chief Compliance Officer
Age: 54 | Tenure: Since 2004
Principal Occupation(s) During Past Five Years: Chief Compliance Officer of The Royce Funds (since October 2004) and Compliance Officer of Royce (since June 2004).
Trustees will hold office until their successors have been duly elected and qualified or until their earlier resignation or removal. The Statement of Additional Information, which contains additional information about the Trust’s trustees and officers, is available and can be obtained without charge at www.roycefunds.com or by calling (800) 221-4268.
88 | The Royce Funds 2013 Annual Report to Shareholders |
Results of Shareholder Meeting |
At a special meeting of Shareholders held on September 26, 2013, the Funds’ shareholders elected eight Trustees, consisting of the following:
VOTES FOR | VOTES WITHHELD | ||||
Charles M. Royce | 1,255,647,085 | 15,877,503 | |||
W. Whitney George | 1,256,250,821 | 15,273,767 | |||
Patricia W. Chadwick | 1,257,215,461 | 14,309,127 | |||
Richard M. Galkin | 1,255,002,808 | 16,521,780 | |||
Stephen L. Isaacs | 1,255,174,877 | 16,349,712 | |||
Arthur S. Mehlman | 1,255,230,246 | 16,294,342 | |||
David L. Meister | 1,254,852,641 | 16,671,948 | |||
G. Peter O'Brien | 1,256,368,727 | 15,155,862 | |||
The Royce Funds 2013 Annual Report to Shareholders | 89 |
Notes to Performance and Other Important Information |
The thoughts expressed in this report concerning recent market movements and future prospects for small company stocks are solely the opinion of Royce at December 31, 2013, and, of course, historical market trends are not necessarily indicative of future market movements. Statements regarding the future prospects for particular securities held in the Funds’ portfolios and Royce’s investment intentions with respect to those securities reflect Royce’s opinions as of December 31, 2013 and are subject to change at any time without notice. There can be no assurance that securities mentioned in this report will be included in any Royce-managed portfolio in the future.
Sector weightings are determined using the Global Industry Classification Standard (“GICS”). GICS was developed by, and is the exclusive property of, Standard & Poor’s Financial Services LLC (“S&P”) and MSCI Inc. (“MSCI”). GICS is the trademark of S&P and MSCI. “Global Industry Classification Standard (GICS)” and “GICS Direct” are service marks of S&P and MSCI.
All indexes referred to are unmanaged and capitalization weighted. Each index’s returns include net reinvested dividends and/or interest income. Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. The Russell 2000 is an index of domestic small-cap stocks. It measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 Index. The Russell 1000 Index is an index of domestic large-cap stocks. It measures the performance of the 1,000 largest publicly traded U.S. companies in the Russell 3000 Index. The Russell Microcap Index includes 1,000 of the smallest securities in the Russell 2000 Index, along with the next smallest eligible securities as determined by Russell. The Russell 2500 is an index of domestic small- to mid-cap stocks. It includes approximately 2,500 of the smallest securities in the Russell 3000 Index. The returns for the Russell 2500—Financial Services Sector represent those of the financial services companies within the Russell 2500 Index. The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe. It includes approximately 800 of the smallest securities in the Russell 1000 Index. The Russell Global Small Cap Index is an index of global small-cap stocks. The Russell Global ex-U.S. Large Cap Index is an index of global large-cap stocks, excluding the United States. The Russell Global ex-U.S. Small Cap Index is an index of global small-cap stocks, excluding the United States. The S&P 500 is an index of U.S. large-cap stocks, selected by Standard & Poor’s based on market size, liquidity, and industry grouping, among other factors. The Russell Europe Small Cap Index is an index of European small-cap stocks. The CBOE Volatility Index (VIX) measures market expectations of near-term volatility conveyed by S&P 500 Stock Index option prices. The Nasdaq Composite is an index of the more than 3,000 common equities listed on the Nasdaq stock exchange. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index. Returns for the market indexes used in this report were based on information supplied to Royce by Russell Investments. Royce has not independently verified the above described information.
The Price-Earnings, or P/E, Ratio is calculated by dividing a company’s share price by its trailing 12-month earnings-per share (EPS). The Price-to-Book, or P/B, Ratio is calculated by dividing a company’s share price by its book value per share. The Sharpe Ratio is calculated for a specified period by dividing a fund’s annualized excess returns by its annualized standard deviation. The higher the Sharpe Ratio, the better the fund’s historical risk-adjusted performance. Standard deviation is a statistical measure within which a fund’s total returns have varied over time. The greater the standard deviation, the greater a fund’s volatility. The Royce Funds is a service mark of The Royce Funds. Distributor: Royce Fund Services, Inc.
Investments in securities of micro-cap, small-cap and/or mid-cap companies may involve considerably more risk than investments in securities of larger-cap companies. (Please see “Primary Risks for Fund Investors” in the prospectus.) Certain Royce Funds may invest up to 25% (100% for Royce Select Fund II, European Smaller-Companies, Global Dividend Value, International Micro-Cap, and International Premier Fund, 35% of Focus Value, Partners, Financial Services and SMid-Cap Value Funds, 10% of Select Fund I and 5% of Special Equity Fund) of their respective assets in foreign securities, which generally may involve political, economic, currency and other risks not encountered in U.S. investments. (Please see “Investing in Foreign Securities” in the prospectus.) Royce Select I, Select II, Enterprise Select, and Opportunity Select Funds may sell securities short which involves selling a security it does not own in anticipation that the security’s price will decline. Short sales present unlimited risk on an individual stock basis since the Fund may be required to buy security sold short at a time when the security has appreciated in value. Please read the prospectus carefully before investing or sending money. A copy of the Funds’ current prospectus and Statement of Additional Information may be obtained by calling (800) 221-4268, or by visiting www.roycefunds.com. All publicly released material Fund information is disclosed by the Funds on their website at www.roycefunds.com.
This material contains forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve risks and uncertainties, including, among others, statements as to:
• | the Funds’ future operating results, |
• | the prospects of the Funds’ portfolio companies, |
• | the impact of investments that the Funds have made or may make, |
• | the dependence of the Funds’ future success on the general economy and its impact on the companies and industries in which the Funds invest, and |
• | the ability of the Funds’ portfolio companies to achieve their objectives. |
Proxy Voting
A copy of the policies and procedures that The Royce Funds use to determine how to vote proxies relating to portfolio securities and information regarding how each of The Royce Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available, without charge, on The Royce Funds’ website at www.roycefunds.com, by calling (800) 221-4268 (toll-free) and on the website of the Securities and Exchange Commission (“SEC”), at www.sec.gov.
Form N-Q Filing
The Funds file their complete schedules of investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at www.sec.gov. The Royce Funds’ holdings are also on the Funds’ website approximately 15 to 20 days after each calendar quarter end and remain available until the next quarter’s holdings are posted. The Funds’ Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. To find out more about this public service, call the SEC at (202) 942-8090. The Funds’ complete schedules of investments are updated quarterly, and are available at www.roycefunds.com.
90 | The Royce Funds 2013 Annual Report to Shareholders |
2013 In Quotes |
Points to Ponder Supply will be constrained, and demand will be strong, coming from corporate buyers and individual and institutional investors, who will begin to reallocate funds toward the equity market and out of bonds. There will be a great migration or great rotation, or whatever you want to call it. It will intensify as the year continues. –Brian Rodgers, Barron’s, January 26, 2013 While absolute skill tends to improve, relative skill tends to become more uniform. In plain words, that means that the difference between the best and the average is less than what it used to be. So, the best hitter in baseball is closer to an average player today than was the case 50 years ago. –Michael Mauboussin, Morningstar Advisor, April/May 2013 Solid companies selling at depressed prices have consistently helped generations of the world’s most successful investors preserve capital, minimize risk, and achieve long-term, market-trampling returns. –Rex Moore, The Motley Fool, May 24, 2013 Over the long term, while there is no perfect predictor, the only factor that has decent predictive power is, “What price am I paying against fundamentals?” –Cliff Asness, Barron’s, August 31, 2013 In Absolute Agreement It’s not during up years that great investment track records are made. –Charles de Vaulx, International Value Advisers, The Art of Value Investing Most risk management is really just advanced contingency planning and disciplining yourself to realize that, given enough time, very low probability events not only can happen, but they absolutely will happen. –Lloyd Blankfein, CNBC, July 25, 2013 Throughout the post-World War II era, the average stock-market decline in a bear market is about 25% and lasts about 10 months. So the bear market that ended in March of ’09 was twice as severe as the average. Most bear markets are induced by economic contractions. During the average recession in the postwar period, real gross domestic product goes down 2% from peak-to-trough. The most recent recession was about twice as severe in magnitude, so you had a bear market twice as severe as the average bear market, and the market discounted twice as severe an economic contraction. –Leon Cooperman, Barron’s, May 18, 2013 We are different from most fund managers in how we think about risk. To most managers, and most fund evaluation services, risk is defined either as volatility of returns or deviation from the S&P returns. We define risk as losing money. –Bill Nygren, Oakmark Funds Third Quarter 2013 Report Adopt simple rules and stick to them. –Benjamin Graham Cocktail Conversation Commodities are not an investment. An investment by definition is either current income or a stream of future income. When you buy a commodity, you have to be assuming that you are going to be able to sell it at a higher price to someone else, because it has no income. Thus, it is not investing — it is speculating. –Barton Biggs, Diary of a Hedgehog There are two elephants in the room that no one wants to talk about: inflation and higher rates. –David Winters, Barron’s, March 23, 2013 Many who abandoned equities in the “flight to safety” have begun to slowly migrate from cash and bonds to high dividend, low volatility stocks, and very recently, to more cyclical stocks. The timid move back into equities is in early stages with much money still on the sidelines, but flows could occur sporadically. –Longleaf Partners Fund, First Quarter 2013 Report Value investing works because it is contrary to naïve strategies of other investors, which include extrapolating past earnings growth too far into the future and assuming that a well-run company will always be a good investment, regardless of price. –Josef Lakonishok, Institutional Investor, May 12, 2013 Markets can remain irrational a lot longer than you and I can remain solvent. –John Maynard Keynes Timeless Tidbits Incompetence is the disease of idiots. Overconfidence is the mistake of experts… Incompetence irritates me. Overconfidence terrifies me. –Malcolm Gladwell There are more fools among buyers than among sellers. –Proverb A creative man is motivated by the desire to achieve, not by the desire to beat others. –Ayn Rand Things turn out best for people who make the best of the way things turn out. –John Wooden |
The thoughts expressed above represent solely the opinions of the persons quoted and, of course, there can be no assurance of future market trends or performance. |
This page is not part of the 2013 Annual Report to Shareholders | 91 |
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92 | This page is not part of the 2013 Annual Report to Shareholders |
It’s a Small World |
Co-Chief Investment Officer and Managing Director Francis Gannon looks at the geographic sources of small-cap revenues and discusses Royce’s expansion into international investing.
This page is not part of the 2013 Annual Report to Shareholders |
About The Royce Funds This Review and Report must be accompanied or preceded by a current prospectus for the Funds. Please read the prospectus carefully before investing or sending money. | |||||||||||||||||||
Contact Us | |||||||||||||||||||
General Information Additional Report Copies and Prospectus Inquiries (800) 221-4268 | RIA Services Fund Materials and Performance Updates (800) 33-ROYCE (337-6923) | Broker/Dealer Services Fund Materials and Performance Updates (800) 59-ROYCE (597-6923) | Shareholder Services Transactions and Account Inquiries (800) 841-1180 | Royce Infoline 24-Hour Automated Telephone Service (800) 78-ROYCE (787-6923) | |||||||||||||||
Item 2. Code(s) of Ethics. As of the end of the period covered by this report, the Registrant had adopted a code of ethics, as defined in Item 2 of Form N-CSR, applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of this code of ethics is filed as an exhibit to this Form N-CSR. No substantive amendments were approved or waivers were granted to this code of ethics during the period covered by this report.
Item 3. Audit Committee Financial Expert.
(a)(1) | The Board of Trustees of the Registrant has determined that it has an audit committee financial expert. |
(a)(2) | Arthur S. Mehlman and Patricia W. Chadwick were designated by the Board of Trustees as the Registrant’s Audit Committee Financial Experts, effective April 15, 2004 and April 8, 2010, respectively. Mr. Mehlman and Ms. Chadwick are “independent” as defined under Item 3 of Form N-CSR. |
Item 4. | Principal Accountant Fees and Services. |
(a) | Audit Fees: |
Year ended December 31, 2013 - $573,835 | |
Year ended December 31, 2012 - $589,919 | |
(b) | Audit-Related Fees: |
Year ended December 31, 2013 - $0 | |
Year ended December 31, 2012 - $0 | |
(c) | Tax Fees: |
Year ended December 31, 2013 - $253,050 – Preparation of tax returns and excise tax review | |
Year ended December 31, 2012 - $276,637 – Preparation of tax returns and excise tax review | |
(d) | All Other Fees: |
Year ended December 31, 2013 - $0 | |
Year ended December 31, 2012 - $0 |
(e)(1) Annual Pre-Approval: On an annual basis, the Registrant’s independent auditor submits to the Audit Committee a schedule of proposed audit, audit-related, tax and other non-audit services to be rendered to the Registrant and/or investment adviser(s) for the following year that require pre-approval by the Audit Committee. This schedule provides a description of each type of service that is expected to require pre-approval and the maximum fees that can be paid for each such service without further Audit Committee approval. The Audit Committee then reviews and determines whether to approve the types of scheduled services and the projected fees for them. Any subsequent revision to already pre-approved services or fees (including fee increases) are presented for consideration at the next regularly scheduled Audit Committee meeting, as needed.
If subsequent to the annual pre-approval of services and fees by the Audit Committee, the Registrant or one of its affiliates determines that it would like to engage the Registrant’s independent auditor to perform a service not already pre-approved, the request is to be submitted to the Registrant’s Chief Financial Officer, and if he or she determines that the service fits within the independence guidelines (e.g., it is not a prohibited service), he or she will then arrange for a discussion of the proposed service and fee to be included on the agenda for the next regularly scheduled Audit Committee meeting so that pre-approval can be considered.
Interim Pre-Approval: If, in the judgment of the Registrant’s Chief Financial Officer, a proposed engagement needs to commence before the next regularly scheduled Audit Committee meeting, he or she shall submit a written summary of the proposed engagement to all members of the Audit Committee, outlining the services, the estimated maximum cost, the category of the services (e.g., audit, audit-related, tax or other) and the rationale for engaging the Registrant’s independent auditor to perform the services. To the extent the proposed engagement involves audit, audit-related or tax services, any individual member of the Audit Committee who is an independent Board member is authorized to pre-approve the engagement. To the extent the proposed engagement involves non-audit services other than audit-related or tax, the Chairman of the Audit Committee is authorized to
pre-approve the engagement. The Registrant’s Chief Financial Officer will arrange for this interim review and coordinate with the appropriate member(s) of the Committee. The independent auditor may not commence the engagement under consideration until the Registrant’s Chief Financial Officer has informed the auditor in writing that pre-approval has been obtained from the Audit Committee or an individual member who is an independent Board member. The member of the Audit Committee who pre-approves any engagements in between regularly scheduled Audit Committee meetings is to report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next regularly scheduled meeting.
(e)(2) | Not Applicable |
(f) | Not Applicable |
(g) | Year ended December 31, 2013 - $253,050 |
Year ended December 31, 2012 - $276,637 | |
(h) | No such services were rendered during 2013 or 2012. |
Item 5. | Audit Committee of Listed Registrants. Not Applicable. |
Item 6. Investments.
(a) See Item 1.
(b) Not Applicable
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not Applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not Applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not Applicable
Item 10. Submission of Matters to a Vote of Security Holders. Not Applicable.
Item 11. Controls and Procedures.
(a) Disclosure Controls and Procedures. The Principal Executive and Financial Officers concluded that the Registrant’s Disclosure Controls and Procedures are effective based on their evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.
(b) Internal Control over Financial Reporting. There were no significant changes in Registrant’s internal control over financial reporting or in other factors that could significantly affect this control subsequent to the date of the evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses during the second fiscal quarter of the period covered by this report.
Item 12. Exhibits. Attached hereto.
(a)(1) The Registrant’s code of ethics pursuant to Item 2 of Form N-CSR.
(a)(2) Separate certifications by the Registrant’s Principal Executive Officer and Principal Financial Officer as required by Rule 30a-2(a) under the Investment Company Act of 1940.
(a)(3) Not Applicable
(b) Separate certifications by the Registrant’s Principal Executive Officer and Principal Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940.
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE ROYCE FUND
BY: | /s/ Charles M. Royce |
Charles M. Royce | |
President |
Date: March 6, 2014
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
THE ROYCE FUND | THE ROYCE FUND | ||
BY: | /s/ Charles M. Royce | BY: | /s/ John D. Diederich |
Charles M. Royce | John D. Diederich | ||
President | Chief Financial Officer | ||
Date: March 6, 2014 | Date: March 6, 2014 |