UNITED STATES |
SECURITIES AND EXCHANGE COMMISSION |
Washington, D.C. 20549 |
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, 2016 - December 31, 2016 | **Explanatory Note**
The Registrant is filing this amendment to its Form N-CSR for the period ended December 31, 2016, originally filed with the Securities and Exchange Commission on March 3, 2017 (Accession Number 0000949377-17-000056), in order to correct the information appearing in the chart of “Top Contributors to Performance and Top Detractors from Performance” in the Managers’ Discussion of Fund Performance for Royce International Premier Fund contained in the 2016 Annual Review and Report to the Registrant’s Shareholders. Other than such change, no other information or disclosures contained in Item 1 of the Registrant’s Form N-CSR for the period ended December 31, 2016, originally filed with the Securities and Exchange Commission on March 3, 2017 (Accession Number 0000949377-17-000056), is being amended or modified by this Form N-CSR/A.
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Item 1. Reports to Shareholders.
DECEMBER 31, 2016 | ||
2016 Annual | ||
Review and Report to Shareholders | ||
Royce Dividend Value Fund | |||
Royce Global Financial Services Fund | |||
Royce Heritage Fund | |||
Royce International Micro-Cap Fund | |||
Royce International Premier Fund | |||
Royce International Small-Cap Fund | |||
Royce Low-Priced Stock Fund | |||
Royce Micro-Cap Fund | |||
Royce Micro-Cap Opportunity Fund | |||
Royce Opportunity Fund | |||
Royce Pennsylvania Mutual Fund | |||
Royce Premier Fund | |||
Royce Small-Cap Leaders Fund | |||
Royce Small-Cap Value Fund | |||
Royce Smaller-Companies Growth Fund | |||
Royce Special Equity Fund | |||
Royce Special Equity Multi-Cap Fund | |||
Royce Total Return Fund | |||
roycefunds.com | |||
Table of Contents | |||
Annual Review | |||
Letter to Our Shareholders | 2 | ||
Performance and Expenses | 6 | ||
The Royce Funds and Rolling Returns | 7 | ||
Annual Report to Shareholders | |||
Managers’ Discussions of Fund Performance | |||
Royce Dividend Value Fund | 8 | ||
Royce Global Financial Services Fund | 10 | ||
Royce Heritage Fund | 12 | ||
Royce International Micro-Cap Fund | 14 | ||
Royce International Premier Fund | 16 | ||
Royce International Small-Cap Fund | 18 | ||
Royce Low-Priced Stock Fund | 20 | ||
Royce Micro-Cap Fund | 22 | ||
Royce Micro-Cap Opportunity Fund | 24 | ||
Royce Opportunity Fund | 26 | ||
Royce Pennsylvania Mutual Fund | 28 | ||
Royce Premier Fund | 30 | ||
Royce Small-Cap Leaders Fund | 32 | ||
Royce Small-Cap Value Fund | 34 | ||
Royce Smaller-Companies Growth Fund | 36 | ||
Royce Special Equity Fund | 38 | ||
Royce Special Equity Multi-Cap Fund | 40 | ||
Royce Total Return Fund | 42 | ||
Schedules of Investments and Financial Statements | 44 | ||
Notes to Financial Statements | 112 | ||
Report of Independent Registered Public Accounting Firm | 129 | �� | |
Understanding Your Fund’s Expenses | 130 | ||
Trustees and Officers | 133 | ||
Notes to Performance and Other Important Information | 134 |
This page is not part of the 2016 Annual Report to Shareholders | 1 |
Letter to Our Shareholders
A MOST WONDERFUL YEAR FOR SMALL-CAPS,
VALUE, AND CYCLICALS
By any measure, 2016 was a terrific year for small-cap stocks, one that featured a double-digit positive return for the Russell 2000 Index, which advanced 21.3%, and a solid advantage over their large-cap counterparts. It was an even better year for small-cap value stocks and a highly rewarding one for cyclical sectors. These last two factors were critical in boosting results for certain active management approaches within the asset class, including a number of our own. Arguably even more important was what these developments may be telling us about the subsequent direction of small-cap equity returns. We flesh out the details later in this letter, but these three reversals—positive results for small-caps, leadership for value over growth, and outperformance for cyclicals—should be key in setting the tone for the direction of small-caps going forward. They coalesced around the central, normalizing force of rising interest rates. |
The major impact of these reversals was both highly welcome and long overdue. We saw 2015—a year in which large-cap beat small-cap, the Russell 2000 had a negative return, and market leadership was extremely narrow—as a hinge year. It marked the transition out of the period that began in 2011, when an unprecedented amount of monetary intervention into the global economy had the unintended effect of stoking an intense appetite |
for yield and safety at one extreme of the U.S. equity markets and a hunger for high risk at the other. The bottom of a commodity super cycle, with the attendant slowdowns in the world’s largest developing markets, only exacerbated the challenges then faced by value stocks and active management approaches. |
As has usually been the case historically, the longer market trends last, the more regularly they are mistaken for permanent realignments. In this most recent instance, the consensus lined up around the perpetuation of near-zero rates, growth stock dominance, and the futility of active management. Whether in good times or bad for our own approaches, however, we have always stayed mindful of the fact that trends do not last forever—they persist, then, more often than not, they reverse. This investment truism should serve as a corrective for those who would take the example of a highly anomalous period for the markets and economy to validate an implacable bias against active management. |
THE POWER OF RATES AND THE IMPACT OF THE PARADIGM SHIFT |
Even as small-cap specialists, we recognize that few forces act as powerfully on the value of investments as interest rates. The effects can be as obvious as they are subtle. We think three conditions matter most: the level of rates, the spread between short- and long-term rates, and the disparity in borrowing rates between better-run companies and |
2 | This page is not part of the 2016 Annual Report to Shareholders |
LETTER TO OUR SHAREHOLDERS
worse ones. Capitalism tends to best foster economic growth when short rates hover a bit above inflation; when long rates are high enough to encourage lenders but not so high as to discourage borrowers; and when there is a premium for fiscal prudence and a commensurate penalty for profligate debtors. During the era of zero (or near-zero) rates—roughly 2011-2015—these historically “normal” conditions were largely absent. Yet we believe they began to manifest themselves again in 2016, marking a paradigm shift to a period of higher rates and a consequent reassessment of the relative values of financial assets. More normalized rates have historically been better for stocks than bonds. More important for our purposes, they have also supported small-caps over large, value over growth stocks, and cyclicals over defensive areas. In many ways, 2016’s results exemplified exactly this shift—and we think it is just the beginning of what could be a steady, though not linear, multi-year run. |
With 2016’s stellar results fresh in the mind, it may be difficult to recall just how poorly the year started and how fatalistic the expectations were for equities. Small-cap stocks plunged from the first peal of 2016’s opening bell. The downdraft exacerbated a trend that had begun the previous summer following the small-cap peak on June 23, 2015. By the time it was all over with the small-cap bottom on February 11, 2016, the Russell 2000 had fallen 25.7%. The last leg of the downdraft included many of the signs of a classic bottoming-out process—panic selling in a number of sectors (most notably within the biopharma complex), small-caps losing more than large-caps, and more resilience from value stocks-to us, the most significant development in the down phase. As unpleasant as any bear market is, we noted that the leadership shift, because it was nearly concomitant with the rate hike, was likely to last. |
Moreover, these signs also gave us some assurance that this was a historically conventional decline, making us confident that the small-cap market was undergoing its own important and familiar shift. The depths plumbed by this bear market were comparable to previous downturns—and that encouraged our belief that the worst was over just before the Russell 2000 rebounded sharply from its February low through the end of the year. These small-cap bear and bull markets received so little comment beyond our own and that |
By any measure, 2016 was a terrific year for small-cap stocks, one that featured a double-digit positive return for the Russell 2000 Index, which advanced 21.3%, and a solid advantage over their large-cap counterparts. It was an even better year for small-cap value stocks and a highly rewarding one for cyclical sectors. |
of fellow small-cap specialists that we refer to them as “stealth” markets. They also reinforced our contention that this small-cap rally has room to run. Despite its strong showing in 2016, the Russell 2000 finished the year only 7.2% above its June 2015 peak. For additional context, it is worth noting that small-cap upswings usually extend well beyond the 47.4% advance the small-cap index made from its February bottom through the end of 2016. There have been 12 declines of 15% or more for the Russell 2000 since its 1979 inception. The median return for the subsequent recovery period was 98.8%. So both history and the currently hospitable economic environment suggest to us that there may well be plenty of life left in the small-cap rally. |
VALUE’S TURN? |
The recent extended run of small-cap growth leadership makes it worth recalling that it is actually small-cap value stocks that own the pronounced long-term historical edge in relative performance. Of course, it makes sense that many investors were not conscious of this history at the beginning of the year. Prior to resuming leadership, the Russell 2000 Value Index trailed the Russell 2000 Growth Index in six out of seven years between 2009 and 2015. Based on their long-term performance and leadership history, this was an inordinately lengthy span. Is it now value’s turn, then? We think so. Prolonged periods of leadership for small-cap growth have historically been followed by long tenures at the helm for value. Multi-year trends typically do not have brief reversals before reappearing. Based on this pattern, we think the current leadership status of small-cap value is likely to last. Further, value stocks have historically outpaced growth issues when the economy is expanding—growth companies generally being most highly valued when growth is scarce in the economy. Rising interest rates have also historically provided a relative headwind for |
This page is not part of the 2016 Annual Report to Shareholders | 3 |
LETTER TO OUR SHAREHOLDERS
We firmly believe that we are back on the road to a more historically normal market environment. We expect a multi-year run for the current environment of increased return dispersion, declining correlation, and a steepening yield curve. |
growth stocks because their valuations typically have a long-duration bond aspect to them that is highly sensitive to changes in rates. |
We saw the post-election rally and the sudden shift in investor perspective that came with it as more symptom than cause of an overall improved environment for both the economy and stocks. After all, some had forecast the pickup in GDP growth prior to any votes being cast just as many investors realized that the era of “lower forever” interest rates had reached its conclusion before the Fed officially announced the hike in December. There were also encouraging pickups in employment and incremental growth in wages. Along with the added certainty that comes after nearly every election, especially a contentious one, all of this stoked bullishness. So while the election was undoubtedly an accelerant, it seemed to us that many investors—and management teams—simply needed the experience of a tangible event before they felt comfortable enough to embrace the good news that had been accumulating prior to November. |
The aftermath of the election has set the stage for changes that could benefit small-cap companies, beginning with a lower corporate tax rate. With the bulk of their money coming from domestic sources, many small-cap businesses would receive a disproportionate benefit from any rate reduction. Also encouraging are the prospects for repatriation. It was not surprising, then, that the post-election period also witnessed a dramatic rotation away from safety—bonds and defensive stocks most notably. Investors are bullish on the potential for accelerated economic growth and the policy shift from monetary to fiscal—chiefly in the form of tax cuts and projected spending increases on infrastructure and defense. The critical question going forward is, how much of this has already been priced in? |
TURN THE PAGE |
All of this has convinced us that we have turned the page on that 2011-2015 period in which financial markets behaved in such odd and unprecedented ways. We firmly believe that we are back on the road to a more historically normal market environment. We expect a multi-year run for the current environment of increased return dispersion, declining correlation, and a steepening yield curve, such as we saw in 2016, and think this will also lead to more historically normal relative return patterns for equity asset classes. |
Only time will tell, of course. However, we do not think a significant correction-that is, a decline of 15% or more—is in the offing. We see no signs of a recession or financial crisis. Still, a downdraft of anywhere from 8-10% would not be at all unexpected, and arguably healthy, given the strength of small-cap’s 2016 run. When one does occur, we are prepared to act opportunistically by trying to turn any volatility to our investors’ long-term advantage. In any event, we see ongoing leadership not only for small-cap value but for many cyclical sectors as well. Cyclicals lagged for so long that, as with value stocks (with which there is substantial overlap), we were anticipating a shift, which is precisely what we are seeing in the current cycle. Financials are benefiting from the steepening yield curve, which should help to lift bank profits, while the potential for accelerated economic growth is boosting Industrials |
If we are correct in our argument that a multi-year period of value leadership is just beginning, then we also expect it to be a strong period for thoughtful and disciplined small-cap active management. |
Equity Indexes as of December 31, 2016 (%) | |||||||||||
1-YR | 3-YR | 5-YR | 10-YR | ||||||||
Russell 2000 | 21.31 | 6.74 | 14.46 | 7.07 | |||||||
Russell 2000 Value | 31.74 | 8.31 | 15.07 | 6.26 | |||||||
Russell 2000 Growth | 11.32 | 5.05 | 13.74 | 7.76 | |||||||
S&P 500 | 11.96 | 8.87 | 14.66 | 6.95 | |||||||
Russell 1000 | 12.05 | 8.59 | 14.69 | 7.08 | |||||||
Nasdaq Composite | 7.50 | 8.83 | 15.62 | 8.34 | |||||||
Russell Midcap | 13.80 | 7.92 | 14.72 | 7.86 | |||||||
Russell Microcap | 20.37 | 5.77 | 15.59 | 5.47 | |||||||
Russell Global ex-U.S. Small Cap | 5.04 | 0.57 | 7.22 | 2.65 | |||||||
Russell Global ex-U.S. Large Cap | 4.30 | -1.51 | 5.35 | 1.24 | |||||||
For details on The Royce Funds’ performance in the period, please turn to the Managers’ Discussions that begin on page 8. |
4 | This page is not part of the 2016 Annual Report to Shareholders |
LETTER TO OUR SHAREHOLDERS
and many Materials stocks. The latter are also benefiting from rebounding commodity prices that ignited energy stocks as well. In addition, the U.S. consumer continues to spend. We see all of these as potentially ongoing trends. And although the global outlook is admittedly less certain, any rebound in worldwide industrial activity would be an additional, and significant, positive. |
A NEW DAY FOR ACTIVE MANAGEMENT |
Ongoing leadership for value and the related strength of cyclicals could produce distinct advantages for small-cap active management. As rates continue to rise and access to capital begins to contract more consistently, the number of bankruptcies should escalate, restoring the healthy, Darwinian force that generally ensures survival for the best-run, most prudently managed enterprises while putting others at potentially greater risk. It creates challenges for more debt-dependent, long-duration growth while offering potential benefits for companies that are conservatively capitalized. If we are correct in our argument that a multi-year period of value leadership is just |
beginning, then we also expect it to be a strong period for thoughtful and disciplined small-cap active management. |
To be sure, this was the case in 2016. Twelve of our 13 domestic small-cap portfolios advanced 16% or more in the calendar year; seven increased at least 23% (and bested their benchmark in the process). These performances were largely rooted in our dogged commitment to disciplined approaches to small-cap stock investing. They support the confidence we have going forward, which is also bolstered by the fact that our analysis of the dynamics in our asset class was sound. We felt validated not only by the high returns for several portfolios but also that performance took place against the backdrop of a gradually growing economy. Historically, value-led periods have been good for many Royce Funds, and we remain committed to the effort of delivering strong results for our investors in the years to come. |
You have our great thanks and deep appreciation for the commitment you have shown to us and our approaches over the years. |
Sincerely, |
Charles M. Royce | Christopher D. Clark | Francis D. Gannon | ||
Chairman, | Chief Executive Officer and | Co-Chief Investment Officer, | ||
Royce & Associates, LP | Co-Chief Investment Officer, | Royce & Associates, LP | ||
Royce & Associates, LP | ||||
January 31, 2017 |
This page is not part of the 2016 Annual Report to Shareholders | 5 |
Performance and Expenses
Performance and Expenses | AVERAGE ANNUAL TOTAL RETURNS (%) | ANNUAL OPERATING EXPENSES (%) | |||||||||||||||||
1-YR | 5-YR | 10-YR | 15-YR | 20-YR | 40-YR/SINCE INCEPTION | INCEPTION DATE | GROSS | NET | |||||||||||
Royce Dividend Value Fund | 16.36 | 10.42 | 6.76 | N/A | N/A | 8.46 | 5/3/04 | 1.39 | 1.39 | ||||||||||
Royce Global Financial Services Fund | 12.93 | 13.80 | 5.02 | N/A | N/A | 7.72 | 12/31/03 | 1.85 | 1.69 | ||||||||||
Royce Heritage Fund | 17.84 | 9.41 | 5.91 | 8.04 | 11.72 | 12.35 | 12/27/95 | 1.37 | 1.37 | ||||||||||
Royce International Micro-Cap Fund | 6.33 | 6.79 | N/A | N/A | N/A | 1.45 | 12/31/10 | 3.11 | 1.64 | ||||||||||
Royce International Premier Fund | -1.06 | 9.03 | N/A | N/A | N/A | 4.24 | 12/31/10 | 2.35 | 1.44 | ||||||||||
Royce International Small-Cap Fund | -1.72 | 3.80 | N/A | N/A | N/A | 3.14 | 6/30/08 | 1.92 | 1.45 | ||||||||||
Royce Low-Priced Stock Fund | 16.09 | 3.46 | 2.97 | 5.99 | 9.27 | 10.08 | 12/15/93 | 1.50 | 1.50 | ||||||||||
Royce Micro-Cap Fund | 19.74 | 5.45 | 3.91 | 7.74 | 9.40 | 11.05 | 12/31/91 | 1.50 | 1.50 | ||||||||||
Royce Micro-Cap Opportunity Fund | 23.85 | 14.09 | N/A | N/A | N/A | 12.26 | 8/31/10 | 1.39 | 1.25 | ||||||||||
Royce Opportunity Fund | 29.86 | 14.46 | 7.03 | 9.93 | 12.07 | 12.28 | 11/19/96 | 1.17 | 1.17 | ||||||||||
Royce Pennsylvania Mutual Fund | 26.47 | 11.50 | 6.45 | 9.10 | 10.33 | 13.19 | N/A | 0.93 | 0.93 | ||||||||||
Royce Premier Fund | 23.00 | 9.36 | 7.76 | 10.09 | 10.71 | 11.49 | 12/31/91 | 1.13 | 1.13 | ||||||||||
Royce Small-Cap Leaders Fund | 25.51 | 9.17 | 6.62 | N/A | N/A | 9.70 | 6/30/03 | 1.54 | 1.49 | ||||||||||
Royce Small-Cap Value Fund | 21.06 | 8.44 | 5.54 | 8.97 | N/A | 9.87 | 6/14/01 | 1.48 | 1.48 | ||||||||||
Royce Smaller-Companies Growth Fund | 9.37 | 11.25 | 4.68 | 10.03 | N/A | 11.04 | 6/14/01 | 1.48 | 1.48 | ||||||||||
Royce Special Equity Fund | 32.21 | 11.82 | 8.50 | 10.18 | N/A | 9.54 | 5/1/98 | 1.15 | 1.15 | ||||||||||
Royce Special Equity Multi-Cap Fund | 13.69 | 10.29 | N/A | N/A | N/A | 9.77 | 12/31/10 | 1.29 | 1.24 | ||||||||||
Royce Total Return Fund | 25.86 | 12.45 | 6.86 | 8.95 | 9.83 | 10.93 | 12/15/93 | 1.22 | 1.22 | ||||||||||
INDEX | |||||||||||||||||||
Russell 2000 Index | 21.31 | 14.46 | 7.07 | 8.49 | 8.25 | N/A | N/A | N/A | N/A | ||||||||||
Russell Microcap Index | 20.37 | 15.59 | 5.47 | 8.16 | N/A | N/A | N/A | N/A | N/A | ||||||||||
Russell 1000 Index | 12.05 | 14.69 | 7.08 | 7.00 | 7.86 | N/A | N/A | N/A | N/A | ||||||||||
Russell Global ex-U.S. Small Cap Index | 5.04 | 7.22 | 2.65 | 9.53 | 5.95 | 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. Investment and Service Class shares redeemed within 30 days of purchase may be subject to a 1% redemption fee payable to the Fund (2% for Royce International Micro-Cap, International Premier, and International Small-Cap 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 Funds’ 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, excluding brokerage commissions, taxes, interest litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business, to the extent necessary to maintain net operating expenses at or below: 1.49% for Royce Global Financial Services and Small-Cap Leaders Funds; 1.64% for Royce International Micro-Cap Fund; 1.44% for Royce International Premier and International Small-Cap Funds; 1.24% for Royce Micro-Cap Opportunity and Special Equity Multi-Cap Funds through April 30, 2017; at or below: 1.99% for Royce International Micro-Cap and International Premier Funds through April 30, 2026. 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.
Service Class shares bear an annual distribution expense that is not borne by the Funds’ Investment Class. If such distribution expenses had been reflected for Funds showing Investment Class performance, returns would have been lower. 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 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.) Certain Funds generally invest a significant portion of their assets in a limited number of stocks, which may involve considerably more risk than a more broadly diversified portfolio because a decline in the value of any of these stocks would cause their overall value to decline to a greater degree. A broadly diversified portfolio, however, does not ensure a profit or guarantee against loss. This Review and Report must be preceded or accompanied by a 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 small-cap Russell 2000 Index along with the next smallest eligible securities as determined by Russell. 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 Russell Global ex-U.S. Small Cap Index is an index of global small-cap stocks, excluding the United States. 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.
6 | This page is not part of the 2016 Annual Report to Shareholders |
The Royce Funds and Rolling Returns
We believe strongly in the idea that a long-term perspective is crucial for determining the success of an investment approach. Flourishing in an up market is wonderful, but surviving a bear market by losing less (or not at all) is equally desirable. In any case, the true tests of a portfolio’s mettle are results over bull and bear periods. This is why we prefer to examine results that include up and down market phases–primarily by looking at rolling return periods.
When evaluating fund performance, it is common practice to review results for the most recent year (often the calendar year) along with its related longer-term trailing periods. However, a calendar-year return is not necessarily any more or less important to consider than any other 12-month period (or related trailing period) during a manager’s tenure. It is also true that few investors buy mutual funds on New Year’s Eve and then sell exactly five or 10 years later. Of course, the reality is that trailing returns ending last month or last quarter are the most commonly available and easily comparable results, so these otherwise arbitrary periods often drive investor decisions and flows. |
Keeping in mind that investors will buy and sell at any time throughout any given year, we think it makes sense to examine performance over a larger series of dates. We believe rolling returns offer a more effective measure because they provide a more accurate and in-depth picture of a portfolio’s performance. Rather than “point-in-time” results anchored by the end of the month or quarter, |
rolling returns account for the fact that investors typically do not invest at the beginning of the current five- or 10-year period but instead are in fact investing over many periods. |
So instead of assuming that an investment was made on January 1, rolling returns calculate all of the periods starting not only in January, but also in February, March, April, etc. For example, a monthly five-year rolling return accounts for all of the five-year returns beginning at a given inception date and advancing one month sequentially. This method allows an investor to evaluate the consistency of a fund’s performance over time—including the ups and downs of market cycles, which are an important test of a manager’s skill. |
We believe that rolling returns provide a particularly robust analytical tool for evaluating manager performance, especially during volatile periods when simply shifting the performance date range one or two months in either direction can paint a very different picture. |
Royce Funds1 vs. The Benchmark2 |
Monthly Rolling Average Annual Return Periods and Relative Results Since Fund Inception or Most Recent 20 Years through December 31, 2016 |
Average Annual 10-Year Rolling Return | Average Annual 5-Year Rolling Return | ||||||||||||||||||||||||||
FUND | PERIODS BEATING THE INDEX | FUND AVG (%)3 | INDEX AVG (%)3 | PERIODS BEATING THE INDEX | FUND AVG (%)3 | INDEX AVG (%)3 | |||||||||||||||||||||
U.S. EQUITY | |||||||||||||||||||||||||||
Dividend Value | 28/32 | 88% | 8.0 | 7.4 | 57/92 | 62% | 8.8 | 7.9 | |||||||||||||||||||
Heritage | 105/121 | 87% | 10.0 | 6.9 | 145/181 | 80% | 10.7 | 7.6 | |||||||||||||||||||
Low-Priced Stock | 72/121 | 60% | 8.9 | 6.9 | 125/181 | 69% | 9.3 | 7.6 | |||||||||||||||||||
Micro-Cap | 60/79 | 76% | 8.3 | 6.2 | 92/139 | 66% | 8.7 | 7.7 | |||||||||||||||||||
Opportunity | 103/121 | 85% | 10.1 | 6.9 | 138/181 | 76% | 11.6 | 7.6 | |||||||||||||||||||
Pennsylvania Mutual | 97/121 | 80% | 9.3 | 6.9 | 133/181 | 73% | 10.1 | 7.6 | |||||||||||||||||||
Premier | 120/121 | 99% | 10.8 | 6.9 | 137/181 | 76% | 11.0 | 7.6 | |||||||||||||||||||
Small-Cap Leaders | 25/43 | 58% | 8.3 | 7.8 | 61/103 | 59% | 7.9 | 7.3 | |||||||||||||||||||
Small-Cap Value | 44/67 | 66% | 9.4 | 7.9 | 76/127 | 60% | 9.8 | 8.5 | |||||||||||||||||||
Smaller-Companies Growth | 37/67 | 55% | 8.8 | 7.9 | 54/127 | 43% | 9.7 | 8.5 | |||||||||||||||||||
Special Equity | 90/104 | 87% | 9.4 | 6.7 | 106/164 | 65% | 10.7 | 8.1 | |||||||||||||||||||
Total Return | 78/121 | 64% | 8.4 | 6.9 | 121/181 | 67% | 9.4 | 7.6 | |||||||||||||||||||
GLOBAL/INTERNATIONAL EQUITY | |||||||||||||||||||||||||||
Global Financial Services | 19/37 | 51% | 7.3 | 7.6 | 29/97 | 30% | 6.7 | 7.3 | |||||||||||||||||||
1 Included are all Royce Funds with at least 12 years of history. |
2 The Russell 2000 Index is the benchmark for most funds. Royce Micro-Cap Fund is compared to the Russell Microcap Index from the inception of that index. |
3 Average return shown is the average of all month-end trailing five- and 10-year total returns. |
Past performance is no guarantee of future results. For more information on performance please see page 6. |
This page is not part of the 2016 Annual Report to Shareholders | 7 |
MANAGERS’ DISCUSSION |
Royce Dividend Value Fund (RDV) |
Chuck Royce Jay Kaplan, CFA |
FUND PERFORMANCE |
Royce Dividend Value Fund advanced 16.4% in 2016, trailing its small-cap benchmark, the Russell 2000 Index, which gained 21.3% for the same period. Three factors had an outsized effect on calendar-year underperformance: At the end of 2016 a significant percentage of the Fund’s assets were invested in mid-cap stocks, which meaningfully underperformed their small-cap peers (the Russell Midcap Index rose 13.8% in 2016); 23.4% of the Fund’s net assets were invested in international stocks, which significantly trailed their domestic counterparts; and the Fund had a high weighting in capital markets companies, a number of which were non-U.S., and the group as a whole underperformed relative to the Russell 2000. However, we were pleased to see value recapture leadership from growth in 2016 and cyclicals beat defensives. Based on history and reversion to the mean, we believe that these two developments should have staying power, in particular because the previous five years (2011-2015) were so odd, with unprecedented levels of monetary policy intervention and little, if any, in the way of fiscal stimulus. Finally, we were intrigued by the number of holdings that entered 2017 with what we thought were very attractive valuations. |
During the first half of 2016, Dividend Value increased 4.4% compared to 2.2% for the small-cap index. During the third quarter the Fund lost some ground, gaining 4.4% versus 9.0% for the benchmark. The Fund also lagged for the fourth quarter, up 6.7% versus 8.8% for the Russell 2000. The Fund’s average annual total return since inception was 8.5%. |
WHAT WORKED...AND WHAT DIDN’T |
Nine of the Fund’s 11 equity sectors showed net gains for 2016. Industrials and Financials led by a sizable margin, followed by a solid contribution from Materials. Telecommunication Services detracted most, albeit modestly, while Health Care saw a very small loss. At the industry level, machinery (Industrials), metals & mining (Materials), capital markets (Financials), and banks (Financials) were the leaders. The biggest detractors among the portfolio’s industry groups were diversified telecommunication services (a low weighting in one of the Fund’s smallest sectors, Telecommunication Services), technology hardware, storage & peripherals (Information Technology), and marine (Industrials). |
The portfolio’s top contributor at the position level was Worthington Industries, a metals manufacturing company that earlier in the year was able to improve margins and keep earnings positive in spite of some sales declines. Its stock was then galvanized by post-election optimism for significant infrastructure spending before pulling back a bit toward the end of the year. We reduced our position in November. Top-10 holding and long-time Royce favorite Reliance Steel & Aluminum distributes metals. Its shares rose through much of the year and gained a similar boost following the election. Not long after Parker Hannifin announced plans to buy the company in December, we began to sell our shares of CLARCOR, which makes replacement filters for trucks and construction equipment. Detracting most on the position level was SEI Investments, an asset manager that also provides technology solutions. We have long liked its core businesses and were happy to hold a good-sized position at the end of 2016 owing to our confidence in its long-term prospects and its previous record of success. London-based Inmarsat has a global business providing satellite broadband services on land, at sea, and in the air. Sales declines were driven by the recession in the commercial shipping industry along with ongoing weakness in international trade. However, the firm also saw better-than-expected growth in its government and aviation businesses before the end of the year, which aided our decision to hold our shares. In spite of its stock price volatility through much of the year, we held on to top-10 position Diebold Nixdorf, which makes software-based self-service delivery and security systems. The company announced an expensive acquisition that, while making the combined company the world’s largest maker of automated teller machines, also sported a price tag which worried other investors. Relative to the Russell 2000, the calendar year’s largest detractor was Financials where, in addition to the previously mentioned overweight and stock selection missteps in capital markets, our underweight in banks created a significant lag. Stock selection in Industrials was also a factor in underperformance. Helping relative results most was our appreciably lower exposure to Health Care—the only sector in the Russell 2000 to show a net loss in 2016. |
Top Contributors to Performance | |||
For 2016 (%)1 | |||
Worthington Industries | 1.02 | ||
Reliance Steel & Aluminum | 0.90 | ||
CLARCOR | 0.86 | ||
Quaker Chemical | 0.66 | ||
TD Ameritrade Holding Corporation | 0.62 | ||
1 Includes dividends |
Top Detractors from Performance | |||
For 2016 (%)2 | |||
SEI Investments | -0.47 | ||
Inmarsat | -0.35 | ||
Diebold Nixdorf | -0.24 | ||
Westwood Holdings Group | -0.21 | ||
MTS Systems | -0.21 | ||
2 Net of dividends |
CURRENT POSITIONING AND OUTLOOK |
We firmly believe that we have turned the page on the anomalous 2011-2015 period, in which extraordinary monetary accommodations caused financial markets to behave in odd and unprecedented ways. In our view, we are on the road back to a more historically normal market environment. We think this bodes well for small-cap stocks. In our view cyclicals look well-positioned for ongoing leadership. In addition to our usual cyclical tilt, we are looking in some defensive areas such as healthcare. It is very much on a stock-by-stock basis, with a focus on individual companies that combine attractive valuations with strong fundamentals. |
8 | The Royce Funds 2016 Annual Report to Shareholders |
PERFORMANCE AND PORTFOLIO REVIEW | TICKER SYMBOLS RYDVX RDVIX RDIIX RDVCX |
Performance and Expenses Average Annual Total Return (%) Through 12/31/16 | ||||||||||||
JUL-DEC 20161 | 1-YR | 3-YR | 5-YR | 10-YR | SINCE INCEPTION (05/03/04) | |||||||
RDV | 11.47 | 16.36 | 2.40 | 10.42 | 6.76 | 8.46 | ||||||
Annual Operating Expenses: 1.39% | ||||||||||||
1 Not Annualized |
Relative Risk Adjusted Returns: Monthly Rolling Sharpe Ratios Since Inception Through 12/31/16 On a monthly rolling risk-adjusted basis, the Fund outperformed the Russell 2000 in 100% of all 10-year periods and 71% of all 5-year periods. |
PERIODS BEATING THE INDEX | FUND AVG (%)1 | INDEX AVG (%)1 | ||||||||||||
10-year | 32/32 | 100% | 0.47 | 0.40 | ||||||||||
5-year | 65/92 | 71% | 0.53 | 0.46 | ||||||||||
The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund's ownership zone may vary. See page 134 for additional information. |
Value of $10,000
Top 10 Positions | |||
% of Net Assets | |||
FLIR Systems | 2.5 | ||
KKR & Co. L.P. | 2.0 | ||
Reliance Steel & Aluminum | 2.0 | ||
First Republic Bank | 1.9 | ||
Diebold Nixdorf | 1.9 | ||
Western Union | 1.8 | ||
Expeditors International of Washington | 1.8 | ||
ManpowerGroup | 1.7 | ||
Donaldson Company | 1.7 | ||
Quaker Chemical | 1.6 | ||
Portfolio Sector Breakdown | |||
% of Net Assets | |||
Financials | 29.4 | ||
Industrials | 24.7 | ||
Materials | 11.6 | ||
Consumer Discretionary | 10.2 | ||
Information Technology | 7.7 | ||
Health Care | 3.5 | ||
Consumer Staples | 2.5 | ||
Energy | 2.4 | ||
Telecommunication Services | 1.7 | ||
Utilities | 1.4 | ||
Real Estate | 0.2 | ||
Miscellaneous | 3.2 | ||
Corporate Bond | 0.2 | ||
Cash and Cash Equivalents | 1.3 | ||
Calendar Year Total Returns (%) | |||
YEAR | RDV | ||
2016 | 16.4 | ||
2015 | -5.7 | ||
2014 | -2.1 | ||
2013 | 30.7 | ||
2012 | 16.9 | ||
2011 | -4.5 | ||
2010 | 30.1 | ||
2009 | 37.7 | ||
2008 | -31.5 | ||
2007 | -0.0 | ||
2006 | 19.9 | ||
2005 | 7.3 | ||
Upside/Downside Capture Ratios | |||
Periods Ended 12/31/16 (%) |
UPSIDE | DOWNSIDE | |||
10-Year | 85 | 81 | ||
From 6/30/04 (Start of Fund’s First Full Quarter) | 86 | 76 | ||
Portfolio Diagnostics | |||
Fund Net Assets | $217 million | ||
Number of Holdings | 137 | ||
Turnover Rate | 21% | ||
Average Market Capitalization1 | $3,414 million | ||
Weighted Average P/E Ratio2,3 | 21.0x | ||
Weighted Average P/B Ratio2 | 2.5x | ||
Active Share4 | 97% | ||
U.S. Investments (% of Net Assets) | 75.3% | ||
Non-U.S. Investments (% of Net Assets) | 23.4% | ||
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 (5% of portfolio holdings as of 12/31/16). |
4 | Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two. |
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 30 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). Certain immaterial adjustments were made to the net assets of Royce Dividend Value Fund at 6/30/15 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 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 “Top Contributors” and “Top Detractors” 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 year-to-date performance for 2016. 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. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters. |
The Royce Funds 2016 Annual Report to Shareholders | 9 |
MANAGERS’ DISCUSSION |
Royce Global Financial Services (RFS) |
Chuck Royce Chris Flynn |
FUND PERFORMANCE |
Royce Global Financial Services Fund gained 12.9% in 2016. Although this result was significantly higher than its long-term returns, it still lagged both its small-cap benchmark, the Russell 2000 Index, and the financial services component of the Russell 2500 Index, which advanced 21.3% and 22.6%, respectively, for the same period. Two related factors contributed to calendar-year underperformance: First was the portfolio’s significantly larger weighting in capital markets companies. This category lagged several other industries in the Financials sector (the second-best performer in the small-cap index) within the Russell 2000. The second factor was the presence of many non-U.S. stocks in this group, which collectively underperformed their domestic counterparts in 2016. |
For the first half of 2016, the Fund increased 0.5% compared to a gain of 2.2% for the Russell 2000 and 5.0% for the financial services companies in the Russell 2500. Global Financial’s results showed marked improvement on an absolute basis in the second half, though it could not keep pace with the two indexes. In the second half of 2016, the Fund rose 12.4% versus respective gains of 18.7% and 16.8% for the Russell 2000 and the financial services component of the Russell 2500, thanks largely to the beneficial effect the steepening yield curve had on banks and thrifts & mortgage finance companies. |
WHAT WORKED... AND WHAT DIDN’T |
We have long seen the capital markets industry as home to many niche companies with talented management, differentiated business models, and attractive financial profiles, which are among the key attributes that we seek. While we remain confident in their long-term prospects, many capital markets holdings did not advance as much as others in the sector. Nonetheless, the overall effect for the group on 2016’s performance was positive. Banks were also a significant contributor to calendar-year results. The Fund’s top three contributors were also top-10 holdings at the end of the year. Ares Management is a global alternative asset manager specializing in credit, private equity and real estate investing. Strong fund performance, improved fee-related earnings, and a bright outlook for future growth seemed to draw investors to its shares in 2016. MBIA provides financial guarantee insurance and other forms of credit protection. The firm has a meaningful exposure to Puerto Rican bonds, which has weighed down its stock price in recent years. Promising signs of a successful resolution to the Puerto Rican debt crisis contributed to a sharp fourth-quarter rally for MBIA’s stock. Popular is a bank holding company that provides commercial banking services through branches in the U.S., Puerto Rico, the British Virgin Islands, and the Dominican Republic. Its shares advanced more or less steadily throughout the year as investors saw more evidence of a turnaround in its U.S. business, as well as progress in Puerto Rico in addressing lingering issues that would enable the bank to capitalize on its leading position in that market. |
As for positions that detracted, four of the top five positions came from the capital markets industry. Value Partners Group is a Hong Kong-based asset manager that emphasizes value approaches similar to some of our own. Subpar short-term performance, net outflows, and a CEO resignation all contributed to investors’ concerns. Because we remain confident in its long-term prospects, particularly in China, as well as in its Chairman, who has assumed CEO responsibilities, we were comfortable holding our stake at the end of 2016. Och-Ziff Capital Management Group is an institutional alternative asset manager that offers multi-strategy, credit, equity, and real estate funds. Its stock declined as the company worked through poor short-term investment performance in key funds and an ongoing Department of Justice investigation into certain international fundraising activities. Although the firm settled in September, its assets under management continued to decline, which influenced our decision to sell our shares in December. Stifel Financial provides wealth management, investment banking, and related financial services. Global volatility hit the advisory fee end of its business particularly hard at the end of 2015 and early in 2016, leading us to sell our position in February. |
Top Contributors to Performance | |||
For 2016 (%)1 | |||
Ares Management L.P. | 1.16 | ||
MBIA | 1.14 | ||
Popular | 1.03 | ||
BM&FBOVESPA | 0.97 | ||
Franco-Nevada Corporation | 0.90 | ||
1 Includes dividends |
Top Detractors from Performance | |||
For 2016 (%)2 | |||
Value Partners Group | -0.55 | ||
Och-Ziff Capital Management Group LLC Cl. A | -0.55 | ||
Stifel Financial | -0.38 | ||
Jupiter Fund Management | -0.32 | ||
Clarkson | -0.31 | ||
2 Net of dividends |
CURRENT POSITIONING AND OUTLOOK |
Using our proprietary industry classification model, the Fund’s three largest industry weighting were in banks, which we expect to continue benefitting from a steepening yield curve and perhaps increased loan demand, specialist vendors, where we often find niche businesses with what we see as sustainable competitive advantages, and alternative asset managers, with a current preference for private credit managers, where we see strong asset growth and undervaluation due to the complexity of the business models. We firmly believe that we have turned the page on the anomalous 2011-2015 period, in which extraordinary monetary accommodations caused financial markets to behave in odd and unprecedented ways. In our view, we are on the road back to a more historically normal market environment. We think this bodes well for small-cap stocks in general, and many of our preferred types of financial companies specifically. In addition, we think an accelerating U.S. economy and increased business confidence can help many capital markets businesses both in and outside the U.S. |
10 | The Royce Funds 2016 Annual Report to Shareholders |
PERFORMANCE AND PORTFOLIO REVIEW | TICKER SYMBOLS RYFSX RGFIX |
Performance and Expenses | ||||||||||||||
Average Annual Total Return (%) Through 12/31/16 | ||||||||||||||
JUL-DEC 20161 | 1-YR | 3-YR | 5-YR | 10-YR | SINCE INCEPTION (12/31/03) | |||||||||
RFS | 12.36 | 12.93 | 3.64 | 13.80 | 5.02 | 7.72 | ||||||||
Annual Gross Operating Expenses: 1.85% Annual Net Operating Expenses: 1.69% | ||||||||||||||
1 Not Annualized |
The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund's ownership zone may vary. See page 134 for additional information. |
Value of $10,000
Top 10 Positions | ||
% of Net Assets | ||
FirstService Corporation | 2.9 | |
E-L Financial | 2.6 | |
Popular | 2.5 | |
First Citizens BancShares Cl. A | 2.5 | |
Ares Management L.P. | 2.3 | |
MBIA | 2.0 | |
BOK Financial | 2.0 | |
Ashmore Group | 2.0 | |
SEI Investments | 2.0 | |
First Republic Bank | 1.9 | |
Portfolio Industry Breakdown | ||
% of Net Assets (Subject to Change) | ||
Capital Markets | 49.5 | |
Banks | 14.7 | |
Insurance | 6.2 | |
Real Estate Management & Development | 4.8 | |
IT Services | 3.6 | |
Software | 2.4 | |
Professional Services | 2.0 | |
Investment Companies | 1.8 | |
Metals & Mining | 1.8 | |
Thrifts & Mortgage Finance | 1.5 | |
Marine | 1.2 | |
Trading Companies & Distributors | 1.0 | |
Diversified Financial Services | 0.5 | |
Hotels, Restaurants & Leisure | 0.2 | |
Internet Software & Services | 0.0 | |
Miscellaneous | 4.5 | |
Cash and Cash Equivalents | 4.3 | |
Upside/Downside Capture Ratios | ||||
Periods Ended 12/31/16 (%) | ||||
UPSIDE | DOWNSIDE | |||
10-Year | 83 | 90 | ||
Fund’s First Full Quarter (12/31/03) | 85 | 81 | ||
Calendar Year Total Returns (%) | ||
YEAR | RFS | |
2016 | 12.9 | |
2015 | -4.7 | |
2014 | 3.5 | |
2013 | 42.0 | |
2012 | 20.7 | |
2011 | -11.3 | |
2010 | 18.5 | |
2009 | 32.1 | |
2008 | -35.4 | |
2007 | -4.7 | |
2006 | 24.8 | |
2005 | 12.2 | |
2004 | 15.1 | |
Portfolio Country Breakdown1,2 | ||
% of Net Assets | ||
United States | 53.6 | |
Canada | 13.7 | |
United Kingdom | 9.7 | |
Singapore | 3.1 | |
Switzerland | 2.3 | |
South Africa | 1.9 | |
Hong Kong | 1.5 | |
1 | Represents countries that are 1.5% or more of net assets. |
2 | Securities are categorized by the country of their headquarters. |
Portfolio Diagnostics | ||
Fund Net Assets | $50 million | |
Number of Holdings | 96 | |
Turnover Rate | 37% | |
Average Market Capitalization1 | $2,006 million | |
Weighted Average P/E Ratio2,3 | 20.2x | |
Weighted Average P/B Ratio2 | 2.0x | |
Active Share4 | 99% | |
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 (11% of portfolio holdings as of 12/31/16). |
4 | Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two. |
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 30 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, (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.49% through April 30, 2017. 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 “Top Contributors” and “Top Detractors” 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 year-to-date performance for 2016. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters. |
The Royce Funds 2016 Annual Report to Shareholders | 11 |
MANAGER’S DISCUSSION | ||
Royce Heritage Fund (RHF) |
Steven McBoyle, CPA, CA |
FUND PERFORMANCE Royce Heritage Fund increased 17.8% versus a gain of 21.3% for its small-cap benchmark, the Russell 2000 Index, for the same period. Despite trailing the small-cap index, we were pleased with the Fund’s absolute performance. The portfolio’s weighted average market cap has moved up over the last few years—it stood at $4.3 billion at year-end, $3.6 billion at the end of 2015, and $2.9 billion at the end of 2014—embracing more fully its ability to invest in both small- and mid-cap stocks that meet our exacting criteria for high quality and attractive valuation. In this light, it is worth noting that the smid-cap Russell 2500 Index gained 17.6% in 2016 and also trailed the small-cap index. In addition, the market saw three reversals that we think bode well for the Fund and active management: Small-caps had positive returns, value recaptured leadership from growth, and cyclical stocks beat their defensive counterparts. During the first half of 2016, Heritage advanced 5.3%, ahead of the 2.2% increase for the Russell 2000. The second half of the year was more rewarding on an absolute basis though less so on a relative scale. The Fund advanced 11.9% in the second half of 2016 compared to 18.7% for the benchmark. Turning to longer-term spans, Heritage outperformed the small-cap index for the 20-year and since inception (12/27/95) periods ended December 31, 2016. The Fund’s average annual total return since inception was 12.3%. |
WHAT WORKED... AND WHAT DIDN’T |
Of the Fund’s 10 equity sectors, seven finished the year with net contributions. Its two largest, Industrials and Consumer Discretionary, also made the biggest positive impact on performance. Of the three sectors that detracted—Real Estate, Health Care, and Energy—only the first had a meaningful negative impact, and the portfolio was significantly underweighted in each throughout 2016. At the industry level, auto components (Consumer Discretionary) had by far the greatest positive effect on returns, led by top-15 holding and significant contributor LCI Industries, while chemicals (Materials) also made a notable positive impact. The effect of detracting industries was more modest, led by real estate management & development (Real Estate) and capital markets (Financials). The first industry was home to three of the Fund’s five top detracting positions. |
The top contributor at the position level was recreational vehicle (RV) maker Thor Industries, the largest manufacturer in its industry and one of three stocks in the top five from the Consumer Discretionary sector. Thor benefited from numerous advantageous developments during the year, including its acquisition of Jayco, which bolstered Thor’s leading market position in low-end towable RVs, its fastest-growing sector. Robust growth in orders from both retail and dealer sources, the growing popularity of RVs, and favorable consumer financing all helped its shares to accelerate. Minerals Technologies produces performance-enhancing minerals, as well as mineral-based and synthetic mineral products. Its stock appreciated through much of the year before spiking after the election. We think the company has done an excellent job improving underperforming operations and maintaining margins in key divisions where organic growth has been modest due to macroeconomic factors. It also continues executing a material penetration opportunity in China of precipitated calcium carbonate (PCC) in paper production, an opportunity that remains large and has been gaining traction generating ample free cash flow. |
Of those positions that detracted, we sold our shares of Signet Jewelers in June before reinitiating a position in November. The company, which operates the Jared, Kay, and Zales chains, was hurt earlier in the year by financing concerns that were followed by allegations of precious stone-swapping by its employees. Jones Lang LaSalle, which provides real estate brokerage and property management services, continues to execute well. However, a deceleration in commercial real estate transaction volumes and a material reset in capital markets fee streams caused an adjustment to certain fundamentals. We reduced our position during the year. |
Relative to the Russell 2000, the Fund was hurt most by its underweight in banks and poor stock selection in capital markets, both of which led Financials to lag considerably. Stock selection challenges also had a meaningful impact in the aforementioned real estate management & development group. In addition, the Fund’s large cash position affected relative results. Conversely, stock selection was a relative strength in Consumer Discretionary, thanks in large part to LCI Industries and Standard Motor Products. We also benefited from having limited exposure to Health Care, which was the only Russell 2000 sector to decline in 2016. |
Top Contributors to Performance For 2016 (%)1 | |||
Thor Industries | 1.69 | ||
Minerals Technologies | 1.43 | ||
LCI Industries | 1.30 | ||
Copart | 1.17 | ||
Standard Motor Products | 1.04 | ||
1 Includes dividends |
Top Detractors from Performance For 2016 (%)2 | |||
Signet Jewelers | -0.67 | ||
Jones Lang LaSalle | -0.47 | ||
Kennedy Wilson Europe Real Estate | -0.43 | ||
Anixter International | -0.35 | ||
Kennedy-Wilson Holdings | -0.29 | ||
2 Net of dividends |
CURRENT POSITIONING AND OUTLOOK |
The politically driven fourth quarter of 2016 notwithstanding, we continue to anticipate lower returns, higher volatility, and lower correlation levels. Evidence is building that a normalization in the markets is taking place, which should make them far more discriminating. For these reasons, we believe our bottom-up, quality-oriented process has the potential to do well. During 2016 we continued to reduce the number of names in the portfolio while raising cash, particularly in the fourth quarter, by selling holdings that had exceeded their reward targets. Portfolio positioning has otherwise remained largely intact. |
12 | The Royce Funds 2016 Annual Report to Shareholders |
PERFORMANCE AND PORTFOLIO REVIEW | TICKER SYMBOLS RGFAX RHFHX RYGCX RHFRX |
Performance and Expenses | ||||||||||||||||
Average Annual Total Return (%) Through 12/31/16 | ||||||||||||||||
JUL-DEC 20161 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | SINCE INCEPTION (12/27/95) | |||||||||
RHF | 11.91 | 17.84 | 2.88 | 9.41 | 5.91 | 8.04 | 11.72 | 12.35 | ||||||||
Annual Operating Expenses: 1.37% | ||||||||||||||||
1 Not Annualized |
Relative Returns: Monthly Rolling Average Annual Return Periods
On a monthly rolling basis, the Fund outperformed the Russell 2000 in 87% of all 10-year periods; 80% of all 5-year periods; and 62% of all 1-year periods. |
PERIODS BEATING THE INDEX | FUND AVG (%)1 | INDEX AVG (%)1 | ||||||||||||
10-year | 105/121 | 87% | 10.0 | 6.9 | ||||||||||
5-year | 145/181 | 80% | 10.7 | 7.6 | ||||||||||
1-year | 142/229 | 62% | 13.3 | 9.2 | ||||||||||
The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund's ownership zone may vary. See page 134 for additional information. |
Invested on 12/27/95 as of 12/31/16 ($)
Top 10 Positions | ||
% of Net Assets | ||
Alleghany Corporation | 3.0 | |
Thor Industries | 2.8 | |
Copart | 2.8 | |
Westlake Chemical | 2.6 | |
Standard Motor Products | 2.5 | |
LKQ Corporation | 2.4 | |
Gentex Corporation | 2.2 | |
ManpowerGroup | 2.1 | |
Hubbell Cl. B | 2.1 | |
Kirby Corporation | 1.9 | |
Portfolio Sector Breakdown | ||
% of Net Assets | ||
Consumer Discretionary | 25.4 | |
Industrials | 21.6 | |
Materials | 9.5 | |
Financials | 7.2 | |
Information Technology | 6.3 | |
Real Estate | 4.7 | |
Utilities | 1.8 | |
Health Care | 1.1 | |
Consumer Staples | 0.3 | |
Miscellaneous | 2.1 | |
Cash and Cash Equivalents | 20.0 | |
Calendar Year Total Returns (%) | ||
YEAR | RHF | |
2016 | 17.8 | |
2015 | -6.5 | |
2014 | -1.1 | |
2013 | 26.0 | |
2012 | 14.3 | |
2011 | -9.3 | |
2010 | 27.5 | |
2009 | 51.8 | |
2008 | -36.2 | |
2007 | 1.2 | |
2006 | 22.6 | |
2005 | 8.7 | |
2004 | 20.4 | |
2003 | 38.1 | |
2002 | -18.9 | |
Upside/Downside Capture Ratios | ||||||||||||||
Periods Ended 12/31/16 (%) | ||||||||||||||
UPSIDE | DOWNSIDE | |||||||||||||
10-Year | 90 | 93 | ||||||||||||
From 12/31/95 (Start of Fund’s First Full Quarter) | 108 | 87 | ||||||||||||
Portfolio Diagnostics | ||
Fund Net Assets | $226 million | |
Number of Holdings | 77 | |
Turnover Rate | 67% | |
Average Market Capitalization1 | $4,311 million | |
Weighted Average P/E Ratio2,3 | 20.2x | |
Weighted Average P/B Ratio2 | 2.6x | |
Active Share4 | 98% | |
U.S. Investments (% of Net Assets) | 73.7% | |
Non-U.S. Investments (% of Net Assets) | 6.3% | |
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 (2% of portfolio holdings as of 12/31/16). |
4 | Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two. |
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 30 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. 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 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 “Top Contributors” and “Top Detractors” 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 year-to-date performance for 2016. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters. |
The Royce Funds 2016 Annual Report to Shareholders | 13 |
MANAGERS’ DISCUSSION | ||
Royce International Micro-Cap Fund (RMI) |
Jim Harvey, CFA Dilip Badlani, CFA |
FUND PERFORMANCE Royce International Micro-Cap Fund advanced 6.3% in 2016, outperforming its benchmark, the Russell Global ex-U.S. Small Cap Index, which was up 5.0% for the same period. We were pleased that this solid performance came in the context of sector results that were choppier than those of domestic micro-caps, with the benchmark’s two cyclical, commodity-based sectors, Energy and Materials, doing best, followed by strong results for defensive Utilities. This stood in sharp contrast to the U.S. small- and micro-cap markets, in which cyclical leadership was more pronounced. During the first half of the calendar year, the Fund gained 0.2% versus 1.0% for its benchmark. The second half was more of a tale of two quarters. The third quarter saw International Micro-Cap advance 9.2% versus 7.9% for the benchmark as many stocks rebounded following the Brexit vote. During the fourth quarter, however, most international small- and micro-caps declined. The Fund fell 2.8% compared to a decline of 3.6% for the Russell Global ex-U.S. Small Cap. A lot of this was due to currency effects as the growing strength of the U.S. dollar affected holdings based in the U.K., where the British pound declined significantly in 2016. |
WHAT WORKED... AND WHAT DIDN’T |
Five of the portfolio’s nine equity sectors made contributions to 2016 performance, led by Information Technology and Consumer Discretionary. Detractors made a far lower impact and were led by Energy (the best-performing sector in the benchmark) and Consumer Staples. The leading industries by contribution were media (Consumer Discretionary), semiconductors & semiconductor equipment (Information Technology), and metals & mining (Materials). As with sectors, detracting industries had much less of an effect on results, with oil, gas & consumable fuels (Energy), commercial services & supplies, and building products (both from Industrials) the leaders. |
The Fund’s top contributor at the position level was Brazil’s T4F Entretenimento. The company operates at multiple levels of the entertainment industry, including venue operation, ticketing, food & beverage, merchandise sales, and corporate sponsorships. T4F participated in a strong rally that saw Brazilian small-caps rise approximately 60% in 2016. After a few difficult years in which profitability suffered from heightened competition, T4F increased its profits for the second consecutive year. We reduced our stake as its shares climbed. Manappuram Finance, one of India’s leading Non-Bank Financial Companies (NBFC), has been enjoying robust market conditions for its specialized lending focus which offers loans against gold collateral. A stable gold market coupled with healthy demand helped Manappuram to continue its mid-double-digit growth rate. We sold the last of our shares in October. Imdex is an Australian company with a global business providing drilling fluids and leading downhole instrumentation to the mining, water well, and civil engineering industries. A summer earnings announcement showed stable profitability and offered a more favorable outlook boosted by the company shedding an unprofitable business segment. The combination helped to send shares soaring between June and year-end. |
Turning to detractors, Banca Sistema is an Italian bank specializing in financing and managing trade receivables owed by the Italian Public Administrations. Despite its unique business model and attractive growth profile, it was initially caught up in the widespread downdraft for Italian banks, considered one of the more vulnerable areas of European finance in the aftermath of Brexit. However, the company continued to execute effectively and delivered strong earnings growth. We think that it is well positioned to take advantage of the large opportunity set in front of it. We also held shares of Ardmore Shipping, which owns and operates shipping tankers, primarily for chemicals. With shipping index volumes bouncing along all-time lows during the first half of the year, its stock was not spared. However, the fact that it was trading at about half its book value or lower through most of the second half made it worth holding as we await a recovery for its industry. Zealand Pharma is a Danish biotechnology company whose share price decline was mostly driven by the sell-off in its industry. Seeing what we thought was better value elsewhere, we sold the last of our shares in May. |
Companies headquartered in Canada and Australia had the largest positive impact on performance while those based in the U.K. and Italy detracted most. Relative to its benchmark, the Fund had significant stock selection advantages in Consumer Discretionary, especially in the media industry, and Information Technology. Conversely poor stock picks in oil, gas & consumable fuels hurt relative performance, as did our substantial underweight in the Materials sector. |
Top Contributors to Performance For 2016 (%)1 | |||
T4F Entretenimento | 1.00 | ||
Manappuram Finance | 0.89 | ||
Imdex | 0.59 | ||
Morneau Shepell | 0.56 | ||
I.T | 0.46 | ||
1 Includes dividends |
Top Detractors from Performance For 2016 (%)2 | |||
Banca Sistema | -0.65 | ||
Ardmore Shipping | -0.46 | ||
Zealand Pharma | -0.45 | ||
GCA | -0.37 | ||
Pendragon | -0.34 | ||
2 Net of dividends |
CURRENT POSITIONING AND OUTLOOK |
We continue to find attractive opportunities in international micro-cap companies as valuations in many parts of the world remain compelling to us. With three times as many small- and micro-cap companies headquartered outside the U.S., we continue to see ample opportunity to uncover well-run, underfollowed micro-cap companies trading at attractive valuations. Of our four largest sectors at year-end—three were overweighted versus the benchmark, Information Technology, Industrials, and Consumer Discretionary. |
14 | The Royce Funds 2016 Annual Report to Shareholders |
PERFORMANCE AND PORTFOLIO REVIEW | TICKER SYMBOL ROIMX |
Performance and Expenses | ||||||||||||
Average Annual Total Return (%) Through 12/31/16 | ||||||||||||
JUL-DEC 20161 | 1-YR | 3-YR | 5-YR | SINCE INCEPTION (12/31/10) | ||||||||
RMI | 6.11 | 6.33 | 0.92 | 6.79 | 1.45 | |||||||
Annual Gross Operating Expenses: 3.11% Annual Net Operating Expenses: 1.64% | ||||||||||||
1 Not Annualized |
The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund's ownership zone may vary. See page 134 for additional information. |
Value of $10,000
Top 10 Positions | ||
% of Net Assets | ||
Magellan Aerospace | 1.7 | |
Exco Technologies | 1.4 | |
Conviviality | 1.3 | |
Irish Continental Group | 1.3 | |
Minerva | 1.3 | |
Broadway Industrial Group | 1.3 | |
Dustin Group | 1.3 | |
Hilton Food Group | 1.2 | |
Irish Residential Properties REIT | 1.2 | |
CANCOM | 1.2 | |
Portfolio Sector Breakdown | ||
% of Net Assets | ||
Information Technology | 20.9 | |
Industrials | 20.2 | |
Consumer Discretionary | 18.6 | |
Consumer Staples | 8.2 | |
Real Estate | 7.9 | |
Materials | 6.3 | |
Financials | 6.0 | |
Health Care | 2.3 | |
Energy | 1.9 | |
Cash and Cash Equivalents | 7.7 | |
Calendar Year Total Returns (%) | ||
YEAR | RMI | |
2016 | 6.3 | |
2015 | -1.0 | |
2014 | -2.4 | |
2013 | 18.9 | |
2012 | 13.6 | |
2011 | -21.5 | |
Portfolio Country Breakdown1,2 | ||
% of Net Assets | ||
United Kingdom | 12.7 | |
Japan | 12.1 | |
Canada | 10.5 | |
Taiwan | 7.4 | |
Germany | 6.1 | |
Hong Kong | 4.3 | |
Sweden | 3.8 | |
South Korea | 3.5 | |
Ireland | 3.1 | |
Australia | 3.1 | |
1 | Represents countries that are 3% or more of net assets. |
2 | Securities are categorized by the country of their headquarters. |
Portfolio Diagnostics | ||
Fund Net Assets | $6 million | |
Number of Holdings | 139 | |
Turnover Rate | 113% | |
Average Market Capitalization1 | $438 million | |
Weighted Average P/E Ratio2,3 | 14.2x | |
Weighted Average P/B Ratio2 | 1.7x | |
Active Share4 | 98% | |
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 (10% of portfolio holdings as of 12/31/16). |
4 | Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two. |
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 30 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, (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.64% through April 30, 2017 and at or below 1.99% through April 30, 2026. Regarding the “Top Contributors” and “Top Detractors” 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 year-to-date performance for 2016. |
The Royce Funds 2016 Annual Report to Shareholders | 15 |
MANAGERS’ DISCUSSION | ||
Royce International Premier Fund (RIP) |
David Nadel Mark Rayner, CA |
FUND PERFORMANCE Royce International Premier Fund declined 1.1% in 2016, trailing its benchmark, the Russell Global ex-U.S. Small Cap Index, which rose 5.0% for the same period. This was a disappointing result, though it was not entirely unexpected in light of the Fund’s performance in 2015 (+16.2%), which was stellar on both an absolute and relative basis. In contrast to their domestic cousins, investors in non-U.S. small-caps generally showed more favor to commodity-based international small-cap companies than they did to the kind of high-quality businesses we seek. During the first half of 2016, International Premier was up 0.8% versus a 1.0% gain the non-U.S. small-cap index. The second half gave us a tale of two quarters. Both the Fund (+5.1%) and its benchmark (+7.9%) showed more life in the third quarter as many stocks bounced back or stabilized following Brexit-bred volatility. During the fourth quarter, however, most international small-caps declined. The Fund fell 6.6% in the year’s final quarter compared to a 3.6% loss for the Russell Global ex-U.S. Small Cap. Much of this can be traced to currency effects. The rising U.S. dollar was particularly strong against the British pound, which declined significantly in the wake of the Brexit vote. We felt better about the Fund’s longer-term results. International Premier outperformed its benchmark for the three-, five-year, and since inception (12/31/10) periods ended December 31, 2016. |
WHAT WORKED... AND WHAT DIDN’T |
Four of the portfolio’s nine equity sectors finished 2016 in the red. Consumer Discretionary and Energy made the largest negative impact while the leading contributors were Information Technology and Financials. The leading detractors at the industry level were pharmaceuticals (Health Care), oil, gas & consumable fuels (Energy), and aerospace & defense (Industrials) while the top-contributing industries were health care providers & services (Health Care), electronic equipment, instruments & components (Information Technology), and consumer finance (Financials). |
The portfolio’s top detractor at the position level was Virbac, a French firm that makes vaccines, antibiotics, and other veterinary medications. Its shares suffered mostly from the negative results of a 2014 FDA investigation of its U.S. plant in St. Louis that were released earlier this year. In December 2016, however, the FDA rescinded the warning letter, leaving the status of Virbac’s U.S. operations where they were at the beginning of the year, which allowed its shares to begin to recover. Gaztransport Et Technigaz is a French engineering company that specializes in cargo containment systems and land storage for liquefied natural gas carriers. Its shares looked less attractive when the Fair Trade Commission of South Korea—a major hub of its business—announced it would investigate whether or not the company was in violation of fair trade laws, which led us to sell our shares in the first quarter. |
OdontoPrev made the largest positive impact at the position level. The company specializes in dental benefits and technology in Brazil, which has one of the largest dentistry markets in the world. Its business was aided by strong earnings and increased membership, as well as the recovery of Brazil’s stock market and currency during the first half. During the summer, it was also helped by the view that a favorable regulatory ruling might free up cash flow to further increase the company’s already-generous dividend. The stock of Swiss private equity business—and top-10 position—Partners Group Holding climbed through the year, boosted by ongoing growth in assets under management, which have grown each year since the firm’s IPO in 2006. Partners Group Holding has garnered a strong track record in more opaque asset classes, which we think makes it very well positioned to continue growing. |
Relative to the Russell Global ex-U.S. Small Cap, the Materials sector made the largest negative impact in large part due to our lack of exposure to metals & mining and poor stock picks in the sector’s containers & packaging industry. Ineffective stock selection created a negative impact for commercial services & supplies (Industrials) while our very low weighting in Energy made that sector a detractor as well. On the positive side, relative results were helped most by successful stock selection in Information Technology. The portfolio derived more modest benefits from stock picking in the otherwise disappointing Health Care sector and its appreciably lower weighting in Consumer Discretionary. Based on geography, the portfolio’s overweights in the U.K. and France created substantial relative performance drags. |
Top Contributors to Performance For 2016 (%)1 | |||
OdontoPrev | 1.24 | ||
Partners Group Holding | 0.74 | ||
Bajaj Finance | 0.71 | ||
LEM Holding | 0.54 | ||
Meitec Corporation | 0.52 | ||
1 Includes dividends |
Top Detractors from Performance For 2016 (%)2 | |||
Virbac | -0.74 | ||
Gaztransport Et Technigaz | -0.68 | ||
Santen Pharmaceutical | -0.65 | ||
Senior | -0.60 | ||
Value Partners Group | -0.59 | ||
2 Net of dividends |
CURRENT POSITIONING AND OUTLOOK |
The narrow sector leadership within international small-cap during 2016 (similar to what afflicted domestic small-caps in 2015) hurt performance but at the same time created potential opportunities, fueling our optimism. Some of these are among our highest-confidence selections in some time, as a number of these stocks entered 2017 near multi-year lows, especially when denominated in U.S. dollars. Many non-U.S. small-caps have also been trading at sizable discounts to international GDP while also offering generous dividend yields. In addition, a large gap can be seen not just in multiples, but also in margins—international equities trade at much lower multiples that are themselves based on lower profit margins. |
16 | The Royce Funds 2016 Annual Report to Shareholders |
PERFORMANCE AND PORTFOLIO REVIEW | TICKER SYMBOLS RYIPX RIPNX RINRX RINPX |
Performance and Expenses | ||||||||||
Average Annual Total Return (%) Through 12/31/16 | ||||||||||
JUL-DEC 20161 | 1-YR | 3-YR | 5-YR | SINCE INCEPTION (12/31/10) | ||||||
RIP | -1.82 | -1.06 | 1.82 | 9.03 | 4.24 | |||||
Annual Gross Operating Expenses: 2.35% Annual Net Operating Expenses: 1.44% | ||||||||||
1 Not Annualized |
The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 134 for additional information. |
Value of $10,000
Top 10 Positions | ||
% of Net Assets | ||
Mayr-Melnhof Karton | 3.2 | |
Meitec Corporation | 3.0 | |
USS | 3.0 | |
Partners Group Holding | 2.9 | |
VZ Holding | 2.8 | |
Relo Group | 2.6 | |
Thermador Groupe | 2.6 | |
Bajaj Finance | 2.5 | |
Santen Pharmaceutical | 2.5 | |
Burckhardt Compression Holding | 2.5 | |
Portfolio Sector Breakdown | ||
% of Net Assets | ||
Industrials | 31.4 | |
Health Care | 20.8 | |
Information Technology | 11.2 | |
Financials | 10.7 | |
Materials | 10.0 | |
Consumer Discretionary | 6.9 | |
Consumer Staples | 3.2 | |
Real Estate | 2.7 | |
Cash and Cash Equivalents | 3.1 | |
Upside/Downside Capture Ratios | ||||||||||||||
Periods Ended 12/31/16 (%) | ||||||||||||||
UPSIDE | DOWNSIDE | |||||||||||||
Fund’s First Full Quarter (12/31/10) | 100 | 83 | ||||||||||||
Calendar Year Total Returns (%) | ||
YEAR | RIP | |
2016 | -1.1 | |
2015 | 16.2 | |
2014 | -8.2 | |
2013 | 18.3 | |
2012 | 23.4 | |
2011 | -16.8 | |
Portfolio Country Breakdown1,2 | ||
% of Net Assets | ||
Japan | 20.0 | |
United Kingdom | 19.7 | |
Switzerland | 11.1 | |
Germany | 8.0 | |
Australia | 6.4 | |
France | 5.0 | |
India | 3.8 | |
Sweden | 3.4 | |
Canada | 3.4 | |
Austria | 3.2 | |
1 | Represents countries that are 3% or more of net assets. |
2 | Securities are categorized by the country of their headquarters. |
Portfolio Diagnostics | ||
Fund Net Assets | $64 million | |
Number of Holdings | 50 | |
Turnover Rate | 67% | |
Average Market Capitalization1 | $1,812 million | |
Weighted Average P/E Ratio2,3 | 22.0x | |
Weighted Average P/B Ratio2 | 3.4x | |
Active Share4 | 99% | |
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 (6% of portfolio holdings as of 12/31/16). |
4 | Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two. |
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 30 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 for shareholder transactions. Certain immaterial adjustments were made to the net assets of Royce International Premier Fund at 6/30/14 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 assets values differ from the adjusted net values and calendar year total returns reported in the Financial Highlights. 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, (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.44% through April 30, 2017 and at or below 1.99% through April 30, 2026. Regarding the “Top Contributors” and “Top Detractors” 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 year-to-date performance for 2016. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s benchmark (Russell Global ex-U.S. Small Cap). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters. |
The Royce Funds 2016 Annual Report to Shareholders | 17 |
MANAGERS’ DISCUSSION | ||
Royce International Small-Cap Fund (RIS) |
Dilip Badlani, CFA Jim Harvey, CFA |
FUND PERFORMANCE Royce International Small-Cap Fund was down 1.7% in 2016, trailing its benchmark, the Russell Global ex-U.S. Small Cap Index, which rose 5.0% for the same period. We were disappointed in this result, especially following underwhelming results for the Fund over the last two years. We were also struck by the contrasting pattern of sector results for international small-caps, which were choppier than those of domestic small-caps. The benchmark’s two cyclical, commodity-based sectors, Energy and Materials, did best in 2016, followed by strong results for the defensive Utilities sector. This stood in sharp contrast to the U.S. small-cap market, in which cyclical leadership was more pronounced. During the first half of the calendar year, the Fund fell 1.6% compared to a gain of 1.0% for the Russell Global ex-U.S. Small Cap. Returns were not much better on an absolute or relative basis in the second half of 2016, in which the Fund fell 0.1% versus a 4.0% gain for its benchmark. |
WHAT WORKED... AND WHAT DIDN’T |
Eight of the Fund’s 11 equity sectors finished 2016 in the black while the top detractors were Health Care, Utilities, and Materials. The last of these sectors was the second-best performer of the benchmark’s sectors in 2016. Real Estate, Industrials, and Information Technology led the list of contributors by a meaningful margin. At the industry level, the leading detractors were textiles, apparel & luxury goods, specialty retail (both from Consumer Discretionary), and metals & mining (Materials) while contributions again came disproportionately from three areas—real estate management & development (Real Estate), auto components (Consumer Discretionary), and consumer finance (Financials). The Fund’s leading detractor at the position level was Banca Sistema, an Italian bank specializing in financing and managing trade receivables owed by the Italian Public Administrations. Despite its unique business model and attractive growth profile, it has been caught up in the widespread downdraft for Italian banks, considered one of the more vulnerable areas of European finance in the aftermath of Brexit. However, the company continued to execute effectively and delivered strong earnings growth. We think that it is well positioned to take advantage of the large opportunity set in front of it and added shares in October and November. We felt less confident in the long-term prospects for Wasion Group Holdings, a Hong Kong-based company that provides smart power, water, heat, and gas meters. Earnings announced early in 2016 were unsteady primarily due to its reliance on the Chinese government’s budgeting. This influenced our decision to move on. Technicolor is a French media and entertainment company engaged in the sale of digital set-top boxes and high-speed gateways for home digital, the replication and distribution of DVD and Blu-ray discs, and special effects services and post-production for studios. It also has a patent portfolio. Technicolor’s shares suffered when it missed consensus revenue growth expectations and gave back some of its gains from 2015. We reduced our position in 2016. The top contributor at the position level was Minth Group, a Chinese auto supplier that has seen a steady increase in operating earnings as investments geared toward greater manufacturing efficiencies have paid off. Although we trimmed our position in 2016, we liked its long-term prospects based on its solid backlog and ability to grow its global business. Manappuram Finance, one of India’s leading Non-Bank Financial companies (NBFC), has been enjoying robust market conditions for its specialized lending focus which offers loans against gold collateral. A stable gold market coupled with healthy demand helped Manappuram to continue its mid-double-digit growth rate. After a strong run, we sold the last of our shares in October. Brazil’s T4F Entretenimento operates at multiple levels of the entertainment industry, including venue operation, ticketing, food & beverage, merchandise sales, and corporate sponsorships. T4F participated in a strong rally that saw Brazilian small-caps rise approximately 60% in 2016. After a few difficult years in which profitability suffered from heightened competition, T4F increased its profits for the second consecutive year. We reduced our stake as its shares climbed. Companies headquartered in Canada, China, and Brazil had the largest positive impact on performance while those based in Australia, Italy, and Hong Kong detracted most. Relative to its benchmark, the Fund suffered somewhat from both its underweight and poor stock selection in the Materials and, to a lesser degree, Energy sectors. Conversely, stock selection was a strength in Real Estate, as was our portfolio underweight. Lower exposure also provided a relative advantage in Health Care. |
Top Contributors to Performance For 2016 (%)1 | ||||
Minth Group | 1.07 | |||
Manappuram Finance | 0.86 | |||
T4F Entretenimento | 0.64 | |||
Morneau Shepell | 0.60 | |||
Haitian International Holdings | 0.47 | |||
1 Includes dividends |
Top Detractors from Performance For 2016 (%)2 | ||||
Banca Sistema | -0.63 | |||
Wasion Group Holdings | -0.51 | |||
Technicolor | -0.43 | |||
Value Partners Group | -0.41 | |||
Saracen Mineral Holdings | -0.41 | |||
2 Net of dividends |
CURRENT POSITIONING AND OUTLOOK |
We continue to find attractive opportunities in international small-cap companies as valuations in many parts of the world remain compelling to us. With three times as many small- and micro-cap companies headquartered outside the U.S., we continue to see ample opportunity to uncover well-run, underfollowed small-cap companies trading at attractive valuations. Two of our three largest sectors at year-end—Industrials and Information Technology—were also overweighted versus the benchmark. |
18 | The Royce Funds 2016 Annual Report to Shareholders |
PERFORMANCE AND PORTFOLIO REVIEW | TICKER SYMBOLS RYGSX RISNX RISIX |
Performance and Expenses | ||||||||||
Average Annual Total Return (%) Through 12/31/16 | ||||||||||
JUL-DEC 20161 | 1-YR | 3-YR | 5-YR | SINCE INCEPTION (6/30/08) | ||||||
RIS | -0.13 | -1.72 | -3.62 | 3.80 | 3.14 | |||||
Annual Gross Operating Expenses: 1.92% Annual Net Operating Expenses: 1.45% | ||||||||||
1 Not Annualized |
The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 134 for additional information. |
Value of $10,000
Top 10 Positions | ||
% of Net Assets | ||
Industrias Bachoco ADR | 2.2 | |
Magellan Aerospace | 1.7 | |
Conviviality | 1.4 | |
Exco Technologies | 1.4 | |
KIWOOM Securities | 1.4 | |
CANCOM | 1.4 | |
Irish Continental Group | 1.3 | |
Hilton Food Group | 1.3 | |
Minerva | 1.3 | |
Dustin Group | 1.3 | |
Portfolio Sector Breakdown | ||
% of Net Assets | ||
Industrials | 20.8 | |
Consumer Discretionary | 17.5 | |
Information Technology | 15.0 | |
Materials | 10.2 | |
Consumer Staples | 9.5 | |
Financials | 9.2 | |
Real Estate | 6.6 | |
Health Care | 3.7 | |
Telecommunication Services | 1.6 | |
Utilities | 0.6 | |
Energy | 0.5 | |
Cash and Cash Equivalents | 4.8 | |
Upside/Downside Capture Ratios | ||||
Periods Ended 12/31/16 (%) | ||||
UPSIDE | DOWNSIDE | |||
From 6/30/08 (Start of Fund’s First Full Quarter) | 91 | 90 | ||
Calendar Year Total Returns (%) | ||
YEAR | RIS | |
2016 | -1.7 | |
2015 | -1.7 | |
2014 | -7.3 | |
2013 | 12.7 | |
2012 | 19.4 | |
2011 | -18.7 | |
2010 | 26.5 | |
2009 | 50.3 | |
Portfolio Country Breakdown1,2 % of Net Assets | ||
Japan | 14.6 | |
United Kingdom | 10.7 | |
Canada | 9.4 | |
South Korea | 6.3 | |
Hong Kong | 6.0 | |
China | 5.7 | |
Taiwan | 5.4 | |
Germany | 5.0 | |
Sweden | 4.6 | |
Australia | 3.5 | |
1 | Represents countries that are 3% or more of net assets. |
2 | Securities are categorized by the country of their headquarters. |
Portfolio Diagnostics | ||
Fund Net Assets | $7 million | |
Number of Holdings | 128 | |
Turnover Rate | 111% | |
Average Market Capitalization1 | $897 million | |
Weighted Average P/E Ratio2,3 | 14.5x | |
Weighted Average P/B Ratio2 | 2.0x | |
Active Share4 | 98% | |
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 (10% of portfolio holdings as of 12/31/16). |
4 | Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two. |
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 30 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). Gross operating expenses reflect total gross annual operating expenses and include management fees, 12b-1 distribution and service fees, and 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, (excluding brokerage commissions, taxes, interest litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.44% through April 30, 2017. 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 “Top Contributors” and “Top Detractors” 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 year-to-date performance for 2016. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s benchmark (Russell Global ex-U.S. Small Cap). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters. |
The Royce Funds 2016 Annual Report to Shareholders | 19 |
MANAGER’S DISCUSSION | ||
Royce Low-Priced Stock Fund (RLP) |
Jim Stoeffel |
FUND PERFORMANCE Royce Low-Priced Stock Fund gained 16.1% in 2016, a solid absolute result that nonetheless fell well short of its small-cap benchmark, the Russell 2000 Index, which advanced 21.3% for the same period. This disappointing relative result notwithstanding, we were encouraged by other developments in 2016. In particular, there were three reversals that we think should continue to bode well for small-cap stocks and active management in that space: the Russell 2000 turned around 2015’s negative results, value outperformed growth, and cyclicals beat defensives. During the first half of 2016, the Fund was down 2.5%, lagging its small-cap benchmark, which gained 2.2% for the same period. Although small-caps stayed strong in the third quarter, much of the action was in growth companies, which edged out their value counterparts. The Fund also enjoyed a strong third quarter on both an absolute and relative basis, advancing 10.4% compared to 9.0% for the small-cap index. The fourth quarter, which saw a robust, post-election rally, was less encouraging in terms of its relative result. The Fund gained 7.7% in the period versus 8.8% for the Russell 2000. The Fund was ahead of the small-cap index for the 20-year and since inception (12/15/93) periods ended December 31, 2016. Low-Priced Stock’s average annual total return since inception was 10.1%. |
WHAT WORKED... AND WHAT DIDN’T |
Ten of the Fund’s 11 equity sectors made net contributions to performance in 2016. Information Technology led by a wide margin, making a contribution more than twice as impactful as that of Industrials, the portfolio’s second-best contributor. These were also our two largest sectors at year-end. Health Care—the only sector within the Russell 2000 with a negative return in 2016—detracted. Two industries made substantial contributions: semiconductors & semiconductor equipment and electronic equipment, instruments & components (both from Information Technology). Software (Information Technology), pharmaceuticals (Health Care), and capital markets (Financials) detracted most, though less meaningfully, on the industry level. The Fund’s top-contributing holding was TTM Technologies, which provides time-critical, one-stop manufacturing services for printed circuit boards. Over the past year the company has begun to benefit from an earlier strategic acquisition of a key competitor that created significant cost savings while also giving TTM a much broader and more diversified product line. We held some shares at year-end as we believe we may be in the early innings of gains driven by TTM’s improved position. Cirrus Logic develops audio and voice semiconductors used primarily in mobile communications. The company is the sole provider of an end-to-end solution that spans the entire audio signal chain, which is allowing it to pick up significant incremental share in its target markets. We think its intermediate-term opportunities remained open-ended at the end of 2016. As for detractors, our view of SeaChange International remained intact. The company provides video-on-demand software to cable television and telecommunications operators. Its efforts to offer a similar turnkey video solution to over-the-top video providers such as Netflix are proving to be a longer-term project than we had originally anticipated and which resulted in an unexpected CEO change. However, we like its inexpensive valuation and long-term prospects for success. ZAIS Group Holdings is an investment manager focused primarily on structured credits. Recent credit market turmoil has caused investment performance to fall below various “high-water” marks, meaningfully dampening profitability and future growth opportunities. We added to our position in 2016 given its highly discounted valuation. On a relative basis in 2016, the Fund was hurt most by both poor stock selection in capital markets and its underweight in banks, both in Financials, a source of strength for small-caps in 2016. Stock picking also detracted in Industrials and Consumer Discretionary. Conversely, savvy stock picking in Information Technology and our underweight in the underperforming Health Care sector both provided sizable relative advantages in 2016. |
Top Contributors to Performance For 2016 (%)1 | ||||
TTM Technologies | 0.87 | |||
Cirrus Logic | 0.84 | |||
PDF Solutions | 0.82 | |||
Hudson Technologies | 0.80 | |||
Alamos Gold Cl. A | 0.63 | |||
1 Includes dividends |
Top Detractors from Performance For 2016 (%)2 | ||||
SeaChange International | -0.82 | |||
ZAIS Group Holdings Cl. A | -0.66 | |||
Lipocine | -0.54 | |||
Ardmore Shipping | -0.51 | |||
Infinera Corporation | -0.49 | |||
2 Net of dividends |
CURRENT POSITIONING AND OUTLOOK |
We were net sellers across the board in the face of the strong post-election rally, as we believe valuations have become extended based on our 2017 estimates. We continue to see a number of secular trends such as The Internet of Things and mobile computing that have positive implications for niche small-cap technology companies. While oil prices remain volatile, they appear to have bottomed in the summer. To the extent this trend holds, we expect well-capitalized companies in our portfolio to begin putting their balance sheets to work to drive long-term shareholder value. We have added slightly to the Consumer Discretionary sector as valuations remain attractive and the U.S. consumer looks reasonably well positioned given the relative strength of our economy. However, fundamental performance continues to disappoint, so we are proceeding cautiously. We were underweight in Health Care, particularly in biotechnology, where multiples have been especially stretched relative to our valuation-sensitive discipline. However, as one of the only small-cap sectors to sit out the year-end rally, valuations in some areas of medical technology are becoming more intriguing to us. |
20 | The Royce Funds 2016 Annual Report to Shareholders |
PERFORMANCE AND PORTFOLIO REVIEW | TICKER SYMBOLS RYLPX RLPHX RLPIX RLPRX |
Performance and Expenses | ||||||||||||||||||
Average Annual Total Return (%) Through 12/31/16 | ||||||||||||||||||
JUL-DEC 20161 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | SINCE INCEPTION (12/15/93) | |||||||||||
RLP | 19.01 | 16.09 | 0.16 | 3.46 | 2.97 | 5.99 | 9.27 | 10.08 | ||||||||||
Annual Operating Expenses: 1.50% | ||||||||||||||||||
1 Not Annualized |
Relative Returns: Monthly Rolling Average Annual Return Periods
On a monthly rolling basis, the Fund outperformed the Russell 2000 in 60% of all 10-year periods; 69% of all 5-year periods; and 54% of all 1-year periods. |
PERIODS BEATING THE INDEX | FUND AVG (%)1 | INDEX AVG (%)1 | |||||||||
10-year | 72/121 | 60% | 8.9 | 6.9 | |||||||
5-year | 125/181 | 69% | 9.3 | 7.6 | |||||||
1-year | 124/229 | 54% | 10.8 | 9.2 | |||||||
The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 134 for additional information. |
Value of $10,000
Top 10 Positions | ||
% of Net Assets | ||
Korn/Ferry International | 1.0 | |
Cirrus Logic | 1.0 | |
Photronics | 1.0 | |
Chico’s FAS | 0.9 | |
American Eagle Outfitters | 0.9 | |
Heidrick & Struggles International | 0.9 | |
Trecora Resources | 0.9 | |
AV Homes | 0.9 | |
Orbotech | 0.9 | |
Lam Research | 0.9 | |
Portfolio Sector Breakdown | ||
% of Net Assets | ||
Information Technology | 23.4 | |
Industrials | 18.4 | |
Consumer Discretionary | 16.6 | |
Financials | 11.7 | |
Energy | 7.7 | |
Health Care | 5.6 | |
Materials | 4.9 | |
Real Estate | 1.4 | |
Consumer Staples | 1.0 | |
Telecommunication Services | 0.5 | |
Miscellaneous | 5.0 | |
Cash and Cash Equivalents | 3.8 | |
Calendar Year Total Returns (%) | ||
YEAR | RLP | |
2016 | 16.1 | |
2015 | -10.4 | |
2014 | -3.4 | |
2013 | 12.9 | |
2012 | 4.5 | |
2011 | -14.6 | |
2010 | 31.5 | |
2009 | 53.6 | |
2008 | -36.0 | |
2007 | 2.3 | |
2006 | 19.0 | |
2005 | 9.7 | |
2004 | 13.6 | |
2003 | 44.0 | |
2002 | -16.3 | |
Upside/Downside Capture Ratios | ||||
Periods Ended 12/31/16 (%) | ||||
UPSIDE | DOWNSIDE | |||
10-Year | 87 | 111 | ||
From 12/31/93 (Start of the Fund’s First Full Quarter) | 101 | 94 | ||
Portfolio Diagnostics | ||
Fund Net Assets | $319 million | |
Number of Holdings | 158 | |
Turnover Rate | 34% | |
Average Market Capitalization1 | $688 million | |
Weighted Average P/B Ratio2 | 1.8x | |
Active Share3 | 95% | |
U.S. Investments (% of Net Assets) | 81.9% | |
Non-U.S. Investments (% of Net Assets) | 14.3% | |
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 | Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two. |
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 30 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. Operating expenses reflect the Fund’s gross total annual operating expenses for the Service Class as of the Fund’s most current prospectus, including 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 “Top Contributors” and “Top Detractors” 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 year-to-date performance for 2016. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters. |
The Royce Funds 2016 Annual Report to Shareholders | 21 |
MANAGERS’ DISCUSSION | ||
Royce Micro-Cap Fund (RMC) |
Jim Stoeffel Brendan Hartman |
FUND PERFORMANCE Royce Micro-Cap Fund gained 19.7% in 2016, a strong absolute result that nonetheless fell short of both its benchmark, the Russell Microcap Index, which rose 20.4%, and the small-cap Russell 2000 Index, which advanced 21.3% for the same period. This disappointing relative result notwithstanding, we were encouraged by other developments in 2016. In particular, there were three reversals that we think should continue to bode well for the Fund, micro-cap and small-cap stocks, and active management: Both the Russell Microcap and Russell 2000 turned around 2015’s negative results, value outperformed growth, and cyclicals beat defensives. During the first half of 2016, the Fund was down 0.7%, ahead of its micro-cap benchmark, the Russell Microcap, which lost 1.7%, while trailing the small-cap index, which rose 2.2% for the same period. The Fund advanced 9.0% in the third quarter compared to respective gains of 11.2% and 9.0% for the micro-cap and small-cap indexes. The Fund gained 10.7% in the fourth quarter versus 10.0% for the Russell Microcap and 8.8% for the Russell 2000. The Fund was ahead of the Russell 2000 for the 20-, 25-year and since inception (12/31/91) periods ended December 31, 2016. (Data for the Russell Microcap only goes back to June 30, 2000.) The Fund’s average annual total return since inception was 11.1%. |
WHAT WORKED... AND WHAT DIDN’T |
Of the Fund’s 11 equity sectors, 10 made net contributions to performance in 2016. Industrials and Information Technology, its two largest sectors at year-end, made by far the biggest positive impact while Financials and Consumer Discretionary made smaller but still notable contributions. Health Care—the only sector within the Russell Microcap with a negative return in 2016—detracted. Three industries made substantial contributions: electronic equipment, instruments & components, semiconductors & semiconductor equipment (both from Information Technology), and machinery (Industrials). Software (Information Technology), pharmaceuticals, and biotechnology (both from Health Care) detracted most, though far less meaningfully, on the industry level. |
The Fund’s top-contributing holding was PDF Solutions, which provides test chips that allow semiconductor companies to rapidly improve initial yields on new designs. Yield improvements are critical drivers of financial results for integrated circuit companies, so a unique gain-sharing model shows PDF’s importance to its customers. While we reduced our stake in 2016, we held some shares as the increasing complexity of semiconductor design makes PDF’s opportunity look somewhat open ended. Hudson Technologies sells refrigerants and provides related services. It benefited in 2016 from improved pricing associated with the legislatively mandated phase out of R-22 refrigerants, which we expect to drive a significant increase in profitability. An unexpected Department of Defense distribution contract associated with a small tuck-in acquisition from a prior year also helped. We reduced our position as its price rose, though we held some shares as we believe we are still in the early stages of price gains associated with the R-22 phase out. |
As for detractors, our view of SeaChange International remained intact. The company provides video-on-demand software to cable television and telecommunications operators. Its efforts to offer a similar turnkey video solution to over-the-top video providers such as Netflix are proving to be a longer-term project than we had originally anticipated and which also resulted in an unexpected CEO change. However, we like its inexpensive valuation and long-term prospects for success. Medical device maker Avinger developed an image-guided, catheter-based system to treat peripheral artery disease. While its long-term promise remains significant, the roll-out has been beset by execution problems and slower-than-expected adoption. Concerns about the company’s liquidity as it was running through cash led us to sell our position. On a relative basis in 2016, the Fund was hurt most by both its underweight and poor stock selection in Financials, a source of strength for micro-caps in 2016, especially in banks. Stock picking and, to a lesser extent, our underweight also detracted in Real Estate. Conversely, our underweight in the underperforming Health Care sector provided a sizable relative advantage, as did savvy stock picking in Information Technology and, to a lesser degree, our overweight in Industrials. |
Top Contributors to Performance For 2016 (%)1 | ||||
PDF Solutions | 0.77 | |||
Hudson Technologies | 0.77 | |||
DTS | 0.75 | |||
Capella Education | 0.63 | |||
CryoLife | 0.61 | |||
1 Includes dividends |
Top Detractors from Performance For 2016 (%)2 | ||||
SeaChange International | -0.68 | |||
Avinger | -0.52 | |||
Dynavax Technologies | -0.52 | |||
Rubicon Project | -0.52 | |||
Ardmore Shipping | -0.48 | |||
2 Net of dividends |
CURRENT POSITIONING AND OUTLOOK |
We were net sellers across the board in the face of the strong post-election rally, as we believe valuations have become extended based on our 2017 estimates. Health Care saw the biggest weighting decline in the portfolio, though we continue to find some pockets of value in that sector, as well as in Information Technology and Industrials. We view them as areas that have selective potential to benefit from the relative strength of the U.S. economy. Consumer companies remain among the most intriguing from a valuation perspective, but fundamentals continue to surprise on the downside, so we are proceeding even more cautiously than usual. Valuations in some areas of medical technology were looking more reasonable to us. This could provide a source of new ideas in 2017. |
22 | The Royce Funds 2016 Annual Report to Shareholders |
PERFORMANCE AND PORTFOLIO REVIEW | TICKER SYMBOLS RYOTX RMCFX RYMCX |
Performance and Expenses | ||||||||||||||||||
Average Annual Total Return (%) Through 12/31/16 | ||||||||||||||||||
JUL-DEC 20161 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | 25-YR | SINCE INCEPTION (12/31/91) | ||||||||||
RMC | 20.61 | 19.74 | -0.16 | 5.45 | 3.91 | 7.74 | 9.40 | 11.05 | 11.05 | |||||||||
Annual Operating Expenses: 1.50% | ||||||||||||||||||
1 Not Annualized |
Relative Returns: Monthly Rolling Average Annual Return Periods
On a monthly rolling basis, the Fund outperformed the Russell Microcap in 76% of all 10-year periods; 66% of all 5-year periods; and 55% of all 1-year periods. |
PERIODS BEATING THE INDEX | FUND AVG (%)1 | INDEX AVG (%)1 | ||||||||||||
10-year | 60/79 | 76% | 8.3 | 6.2 | ||||||||||
5-year | 92/139 | 66% | 8.7 | 7.7 | ||||||||||
1-year | 102/187 | 55% | 10.1 | 9.8 | ||||||||||
The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 134 for additional information. |
Value of $10,000
Inception) as of 12/31/16 ($)
Top 10 Positions | ||
% of Net Assets | ||
ePlus | 1.1 | |
Photronics | 1.0 | |
PC Connection | 0.9 | |
Global Brass and Copper Holdings | 0.8 | |
Vishay Precision Group | 0.8 | |
Zealand Pharma | 0.8 | |
Orbotech | 0.8 | |
Citi Trends | 0.8 | |
AV Homes | 0.8 | |
Ardmore Shipping | 0.8 | |
Portfolio Sector Breakdown | ||
% of Net Assets | ||
Industrials | 20.8 | |
Information Technology | 20.5 | |
Consumer Discretionary | 14.1 | |
Financials | 11.8 | |
Health Care | 7.8 | |
Energy | 5.3 | |
Materials | 3.7 | |
Real Estate | 1.8 | |
Consumer Staples | 0.9 | |
Telecommunication Services | 0.5 | |
Miscellaneous | 4.7 | |
Cash and Cash Equivalents | 8.1 | |
Calendar Year Total Returns (%) | ||
YEAR | RMC | |
2016 | 19.7 | |
2015 | -13.3 | |
2014 | -4.1 | |
2013 | 21.3 | |
2012 | 8.0 | |
2011 | -12.1 | |
2010 | 30.1 | |
2009 | 55.7 | |
2008 | -40.9 | |
2007 | 7.1 | |
2006 | 22.3 | |
2005 | 11.5 | |
2004 | 15.8 | |
2003 | 52.6 | |
2002 | -13.4 | |
Upside/Downside Capture Ratios | ||||||||||||||
Periods Ended 12/31/16 (%) | ||||||||||||||
UPSIDE | DOWNSIDE | |||||||||||||
10-Year | 81 | 85 | ||||||||||||
From 6/30/00 (Russell Microcap Index Inception) | 91 | 81 | ||||||||||||
Portfolio Diagnostics | ||
Fund Net Assets | $244 million | |
Number of Holdings | 163 | |
Turnover Rate | 38% | |
Average Market Capitalization1 | $460 million | |
Weighted Average P/E Ratio2,3 | 19.8x | |
Weighted Average P/B Ratio2 | 1.9x | |
Active Share4 | 89% | |
U.S. Investments (% of Net Assets) | 80.4% | |
Non-U.S. Investments (% of Net Assets) | 11.5% | |
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 (22% of portfolio holdings as of 12/31/16). |
4 | Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two. |
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 30 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. 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. Regarding the “Top Contributors” and “Top Detractors” 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 year-to-date performance for 2016. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s benchmark (Russell Microcap Index). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters. |
The Royce Funds 2016 Annual Report to Shareholders | 23 |
MANAGERS’ DISCUSSION | ||
Royce Micro-Cap Opportunity Fund (ROS) |
Bill Hench Buzz Zaino, CFA |
FUND PERFORMANCE Royce Micro-Cap Opportunity Fund gained 23.8% in 2016, well ahead of the Russell Microcap Index, which was up 20.4% for the same period. This was largely due to the fact that 2016 was particularly favorable to the kind of inexpensive micro-cap stocks that we focus on, as measured by our primary metrics, companies with low P/B (price-to-book) and P/S (price to sales) ratios. Effective stock selection, of course, also played a significant role. The Fund outperformed the Russell Microcap in 2016’s first half, advancing 3.2% versus a decline of 1.7% for the benchmark. This advantage grew in the third quarter, when Micro-Cap Opportunity handily outpaced the micro-cap index, up 13.9% versus 11.2%. The post-election rally that boosted many small- and micro-cap returns saw the Fund actually lose some ground on a relative basis as it gained 5.4% in the fourth quarter while the benchmark gained 10.0%. For the year as a whole, we were pleased to see the Fund participate fully in a period that saw value retake leadership from growth and cyclical stocks outpace defensive areas. We were also happy with Micro-Cap Opportunity’s longer-term absolute returns. The Fund’s average annual total return since inception (8/31/10) was 12.3%. |
WHAT WORKED... AND WHAT DIDN’T |
Seven of the portfolio’s 10 equity sectors contributed to 2016’s return. Information Technology led by a sizable margin while meaningful contributions also came from Industrials, Consumer Discretionary, and Financials. Telecommunication Services and Energy detracted modestly, Health Care more so. The top industries by contribution were semiconductors & semiconductor equipment, electronic equipment, instruments & components (both from Information Technology), and aerospace & defense (Industrials). Those industries that detracted most—health care equipment & supplies, biotechnology (both from Health Care), and electrical equipment (Industrials)—had far less impact. |
As is typically the case in a good year, most of the portfolio’s successes in 2016 resulted from opportunities we pursued in 2015 or earlier, when valuations looked attractively low and the potential for earnings recovery was promising. As is always the case, we were prepared to wait for improvements, usually in the form of earnings recovery, to take effect. Top contributor Amber Road was also a top-10 holding at the end of 2016. A software company with a compelling niche, it develops single platforms to automate and streamline global trade, offering import and export, global logistics, and trade agreement management solutions. We first bought shares in 2014 on the understanding that its turnaround would take time and patience. Throughout 2016, investors anticipated a growing client base for the firm, driving up the value of its shares. Spartan Motors makes chassis for commercial vehicles. We always thought of it as a terrific manufacturer in a very solid niche. The company had high revenues but tended to generate low profits. When the current CEO joined the firm in 2014, he began to revamp the management team, bringing people in who were committed to improving the company’s operational efficiency. We liked his plan and built a large position in the stock. The new team’s efforts came to fruition as earnings and margins began to improve. |
Even a good year has its share of disappointments. Power Solutions International manufactures low-emission engines for off-highway industrial equipment that run primarily on natural gas and propane. We thought its exposure to several different end markets would help it to turn around, but downward revisions to earnings and accounting issues, which we think can be resolved fairly easily, have stalled its progress. With the energy industry recovering, however, we were optimistic about its long-term potential and built our stake in 2016. We did the same with CareDx, which specializes in diagnostic testing for transplant recipients. After receiving an unfavorable reimbursement ruling from the Centers for Medicare & Medicaid Services in September, its stock tumbled, failing to get back to health even when the reimbursement ruling was rescinded in November. We estimated the value of its technology to be in excess of its market cap at the end of 2016. |
The Fund enjoyed its most significant relative advantage in 2016 with stock selection in the Information Technology sector while our lower exposure to Health Care, which corrected through much of 2016, was also a strength. Relative detractors were far less impactful and included an underweight in Financials, poor stock picking in Materials, an underweight in Real Estate, and our cash position. |
Top Contributors to Performance For 2016 (%)1 | ||||
Amber Road | 2.11 | |||
Spartan Motors | 1.82 | |||
PCM | 1.65 | |||
KEMET Corporation | 1.64 | |||
KEYW Holding Corporation | 1.35 | |||
1 Includes dividends |
Top Detractors from Performance For 2016 (%)2 | ||||
Power Solutions International | -1.25 | |||
CareDx | -1.07 | |||
Accuray | -0.76 | |||
Civitas Solutions | -0.73 | |||
SunEdison | -0.71 | |||
2 Net of dividends |
CURRENT POSITIONING AND OUTLOOK |
We anticipate headwinds to start 2017 and tailwinds in its second half. A list of the former would include higher interest rates and uncertainty around federal spending. As for tailwinds, there is the momentum of business improvement since the election and pent-up demand from the inhibited environment of the six months prior to it. In addition, employment is strong, and consumer balance sheets are in better shape. Finally, expansionary fiscal policy should ultimately be implemented at a reasonable pace assuming spending is restrained so as not to balloon the federal deficit. The performance of micro- and small-cap stocks depends on a growing economy and higher earnings. We have focused the portfolio on areas such as on-residential construction, industrial stocks, and technology companies. We are emphasizing turnaround situations that we think are most likely to benefit from a stronger economy. |
24 | The Royce Funds 2016 Annual Report to Shareholders |
PERFORMANCE AND PORTFOLIO REVIEW | TICKER SYMBOLS ROSFX ROSSX |
Performance and Expenses | ||||||||||
Average Annual Total Return (%) Through 12/31/16 | ||||||||||
JUL-DEC 20161 | 1-YR | 3-YR | 5-YR | SINCE INCEPTION (8/31/10) | ||||||
ROS | 20.04 | 23.85 | -0.37 | 14.09 | 12.26 | |||||
Annual Gross Operating Expenses: 1.39% Annual Net Operating Expenses: 1.25% | ||||||||||
1 Not Annualized |
The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 134 for additional information. |
Value of $10,000
Top 10 Positions | ||
% of Net Assets | ||
KEMET Corporation | 2.1 | |
Gencor Industries | 2.1 | |
Spartan Motors | 2.0 | |
Sucampo Pharmaceuticals Cl. A | 1.9 | |
Beazer Homes USA | 1.9 | |
Amber Road | 1.8 | |
Albany Molecular Research | 1.7 | |
Kraton Corporation | 1.7 | |
Nimble Storage | 1.7 | |
FormFactor | 1.7 | |
Portfolio Sector Breakdown | ||
% of Net Assets | ||
Information Technology | 24.8 | |
Industrials | 19.3 | |
Health Care | 16.6 | |
Consumer Discretionary | 10.9 | |
Financials | 8.1 | |
Materials | 7.1 | |
Energy | 3.6 | |
Real Estate | 0.7 | |
Consumer Staples | 0.6 | |
Miscellaneous | 3.1 | |
Cash and Cash Equivalents | 5.2 | |
Calendar Year Total Returns (%) | ||
YEAR | ROS | |
2016 | 23.8 | |
2015 | -16.0 | |
2014 | -5.0 | |
2013 | 44.6 | |
2012 | 35.1 | |
2011 | -17.1 | |
Portfolio Diagnostics | ||
Fund Net Assets | $46 million | |
Number of Holdings | 100 | |
Turnover Rate | 83% | |
Average Market Capitalization1 | $456 million | |
Weighted Average P/B Ratio2 | 1.6x | |
Weighted Average P/S Ratio3 | 1.0x | |
Active Share4 | 94% | |
U.S. Investments (% of Net Assets) | 91.0% | |
Non-U.S. Investments (% of Net Assets) | 3.8% | |
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 | Price to Sales is calculated by dividing the company’s market cap by the revenue in the most recent year. |
4 | Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two. |
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 30 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, (excluding dividend and interest expenses relating to short sale activities, brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.24% through April 30, 2017. Regarding the “Top Contributors” and “Top Detractors” 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 year-to-date performance for 2016. |
The Royce Funds 2016 Annual Report to Shareholders | 25 |
MANAGERS’ DISCUSSION | ||
Royce Opportunity Fund (ROF) |
Buzz Zaino, CFA Bill Hench |
FUND PERFORMANCE Royce Opportunity Fund gained 29.9% in 2016, well ahead of its small-cap benchmark, the Russell 2000 Index, which was up 21.3% for the same period. This was largely due to the fact that 2016 was particularly favorable to the kind of inexpensive small-cap stocks that we focus on, as measured by our primary metrics, companies with low P/B (price-to-book) and P/S (price to sales) ratios. Effective stock selection, of course, also played a significant role. The Fund outperformed the Russell 2000 in 2016’s first half, advancing 3.2% versus 2.2% for the benchmark. The third quarter saw a rebound for many growth stocks as well as inexpensive companies. Opportunity handily outpaced the Russell 2000 for the quarter, up 13.1% versus 9.0%. The Fund then gained 11.2% in the fourth quarter while the benchmark gained 8.8%. We were pleased to see the Fund participate so fully in a period that saw value retake leadership from growth and cyclical stocks outpace defensive areas. We were also happy with Opportunity’s longer-term relative advantages. The Fund beat the Russell 2000 for the one-, 15-, 20-year, and since inception (11/19/96) periods ended December 31, 2016. (The Fund was essentially equal for the five-year period and trailed the benchmark’s 10-year return by only three basis points). Opportunity’s average annual total return since inception was 12.3%. We are very pleased with the Fund’s long-term performance record on both an absolute and relative basis. |
WHAT WORKED... AND WHAT DIDN’T |
Nine of the portfolio’s 11 equity sectors contributed to 2016’s performance. Information Technology led by a sizable margin while meaningful contributions also came from Industrials, Materials, and Financials. Energy detracted modestly, Health Care even more so. The top industries by contribution were semiconductors & semiconductor equipment, electronic equipment, instruments & components (both from Information Technology), and metals & mining (Materials). Those industries that detracted most—specialty retail (Consumer Discretionary), Internet software & services (Information Technology), and health care technology (Health Care)—had far less impact. |
As is typically the case in a good year, most of the portfolio’s successes in 2016 resulted from opportunities we pursued in 2015 or earlier, when valuations looked attractively low and the potential for earnings recovery was promising. As is always the case, we were prepared to wait for catalysts, usually in the form of earnings improvement, to take effect. Kraton Corporation produces engineered polymers, styrenic block copolymers, and specialty products primarily derived from renewable sources. We first bought shares in 2013, gradually building our stake as its management engineered a turnaround. Profitability was stronger than many were anticipating in 2016, thanks in part to an acquisition of a private firm that enhanced earnings. Advanced Energy Industries makes power conversion products for semiconductors and has ample exposure to industry leaders in its growing end market, which helped to drive steady earnings increases throughout the year. |
The Fund’s two biggest detractors struggled to execute turnarounds. Global IT consulting company CIBER divested from its stagnant European business, a move that did little to break a pattern of quarterly earnings misses, which led us to begin reducing our stake. Monster Worldwide is a global online employment solutions company. Its shares first declined in February after it announced strong earnings on disappointing revenues. The company’s inability to gain an edge in an increasingly competitive field made us dubious about its long-term prospects before it was bought by a larger competitor in August for less than what we had been paying for its shares earlier in the year. We held a healthier view of the long-term potential for clinical software developer Allscripts Healthcare Solutions. Its earnings pattern tends to be choppy and a rumored acquisition failed to materialize, both of which hurt its stock. We think it can ultimately thrive in what we anticipate will be a growth industry. |
The Fund enjoyed its most significant relative advantage in 2016 with Information Technology while our lower exposure to Health Care, which corrected through much of 2016, was also a strength. Both a larger weighting and skillful stock-picking gave us a significant edge in Materials and Industrials. Relative detractors were less impactful and included an underweight in Financials, poor stock picking in Energy, a combination of a larger weighting and ineffective selections in Consumer Discretionary, and our cash position. |
Top Contributors to Performance For 2016 (%)1 | ||||
Kraton Corporation | 0.88 | |||
Advanced Energy Industries | 0.77 | |||
MasTec | 0.77 | |||
Commercial Metals | 0.73 | |||
AK Steel Holding Corporation | 0.71 | |||
1 Includes dividends |
Top Detractors from Performance For 2016 (%)2 | ||||
CIBER | -0.51 | |||
Monster Worldwide | -0.49 | |||
Allscripts Healthcare Solutions | -0.43 | |||
Bankrate | -0.35 | |||
Ascena Retail Group | -0.34 | |||
2 Net of dividends |
CURRENT POSITIONING AND OUTLOOK |
We anticipate headwinds to start 2017 and tailwinds in its second half. A list of the former would include higher interest rates and uncertainty around federal spending. As for tailwinds, there is the momentum of business improvement since the election and pent-up demand from the inhibited environment of the six months prior to it. In addition, employment is strong, and consumer balance sheets are in better shape. Finally, expansionary fiscal policy should ultimately be implemented at a reasonable pace assuming spending is restrained so as not to balloon the federal deficit. The performance of small-cap stocks depends on a growing economy and higher earnings. We have focused the portfolio on areas such as non-residential construction, industrial stocks, and technology companies. We are emphasizing turnaround situations that we think are most likely to benefit from a stronger economy. |
26 | The Royce Funds 2016 Annual Report to Shareholders |
PERFORMANCE AND PORTFOLIO REVIEW | TICKER SYMBOLS RYPNX RYOFX ROFCX ROFIX ROFRX ROFKX |
Performance and Expenses | ||||||||||||||||
Average Annual Total Return (%) Through 12/31/16 | ||||||||||||||||
JUL-DEC 20161 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | SINCE INCEPTION (11/19/96) | |||||||||
ROF | 25.82 | 29.86 | 3.76 | 14.46 | 7.03 | 9.93 | 12.07 | 12.28 | ||||||||
Annual Operating Expenses: 1.17% | ||||||||||||||||
1 Not Annualized |
Relative Returns: Monthly Rolling Average Annual Return Periods
On a monthly rolling basis, the Fund outperformed the Russell 2000 in 85% of all 10-year periods; 76% of all 5-year periods; and 66% of all 1-year periods. |
PERIODS BEATING THE INDEX | FUND AVG (%)1 | INDEX AVG (%)1 | |||||||||
10-year | 103/121 | 85% | 10.1 | 6.9 | |||||||
5-year | 138/181 | 76% | 11.6 | 7.6 | |||||||
1-year | 151/229 | 66% | 14.4 | 9.2 | |||||||
The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 134 for additional information. |
Value of $10,000
Top 10 Positions | ||
% of Net Assets | ||
Unisys Corporation | 1.2 | |
Brooks Automation | 1.2 | |
General Cable | 1.2 | |
Tower International | 1.1 | |
Commercial Metals | 1.1 | |
Kulicke & Soffa Industries | 1.0 | |
Dana | 1.0 | |
KEMET Corporation | 0.9 | |
TRC Companies | 0.9 | |
Mueller Industries | 0.9 | |
Portfolio Sector Breakdown | ||
% of Net Assets | ||
Information Technology | 28.4 | |
Industrials | 23.1 | |
Consumer Discretionary | 13.7 | |
Materials | 8.5 | |
Financials | 6.5 | |
Health Care | 4.5 | |
Energy | 3.3 | |
Consumer Staples | 1.4 | |
Telecommunication Services | 0.6 | |
Utilities | 0.2 | |
Real Estate | 0.2 | |
Miscellaneous | 2.7 | |
Cash and Cash Equivalents | 6.9 | |
Calendar Year Total Returns (%) | ||
YEAR | ROF | |
2016 | 29.9 | |
2015 | -13.6 | |
2014 | -0.5 | |
2013 | 43.5 | |
2012 | 22.6 | |
2011 | -13.0 | |
2010 | 33.8 | |
2009 | 62.1 | |
2008 | -45.7 | |
2007 | -2.0 | |
2006 | 18.8 | |
2005 | 4.8 | |
2004 | 17.5 | |
2003 | 72.9 | |
2002 | -17.0 | |
Upside/Downside Capture Ratios | ||||
Periods Ended 12/31/16 (%) | ||||
UPSIDE | DOWNSIDE | |||
10-Year | 120 | 128 | ||
From 12/31/96 (Start of Fund’s First Full Quarter) | 124 | 110 | ||
Portfolio Diagnostics | ||
Fund Net Assets | $1,475 million | |
Number of Holdings | 249 | |
Turnover Rate | 26% | |
Average Market Capitalization1 | $770 million | |
Weighted Average P/B Ratio2 | 1.7x | |
Weighted Average P/S Ratio3 | 0.8x | |
Active Share4 | 91% | |
U.S. Investments (% of Net Assets) | 89.5% | |
Non-U.S. Investments (% of Net Assets) | 3.6% | |
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 | Price to Sales is calculated by dividing the company’s market cap by the revenue in the most recent year. |
4 | Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two. |
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 30 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. Regarding the “Top Contributors” and “Top Detractors” 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 year-to-date performance for 2016. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters. |
The Royce Funds 2016 Annual Report to Shareholders | 27 |
MANAGERS’ DISCUSSION | ||
Royce Pennsylvania Mutual Fund® (PMF) |
Chuck Royce Lauren Romeo, CFA Jay Kaplan, CFA |
FUND PERFORMANCE Royce Pennsylvania Mutual Fund advanced 26.5% in 2016, outperforming its small-cap benchmark, the Russell 2000 Index, which was up 21.3% for the same period. In such a strong year for small-cap stocks, we were pleased with the Fund’s terrific absolute and relative showing—it was the Fund’s fourth-best return in the last 25 years. Penn’s diversified, multi-theme core approach served investors well during a year in which factors such as dividends, low valuation, liquidity, low volatility, and quality all outperformed within the Russell 2000. Calendar-year performance was even more gratifying in light of the questions both active management and value-oriented approaches were facing between 2011 and 2015, which made the year feel very much like a validation for our approach. Keyed by a vigorous rally that began off the 2016 low on February 11th, the Fund outperformed the small-cap index during the first half of 2016, gaining 7.6% versus 2.2%. In the third quarter, small-cap stocks pulled ahead of large-caps, building an advantage that would last through the end of the year. During this period the Fund slipped behind the Russell 2000, up 6.5% versus 9.0% for the benchmark. After a rocky start, the fourth quarter then experienced its own robust rally to close out the year, driven by the aftermath of the election. In the final quarter of 2016, the Fund gained 10.4%, outperforming the small-cap index, which was up 8.8% for the same period. Looking at longer-term periods, we were pleased that Penn outpaced the Russell 2000 for the one-, 15-, 20-, 25-, 30-, and 35-year periods ended December 31, 2016. The Fund’s average annual total return for the 40-year period ended December 31, 2016 was 13.2%, all under the management of Chuck Royce. |
WHAT WORKED... AND WHAT DIDN’T |
Ten of the portfolio’s 11 equity sectors finished 2016 in the black; the eleventh, Utilities, was essentially flat. Industrials led by a considerable margin, followed by a strong contribution from Information Technology that more than doubled the positive impact of Materials, the Fund’s third-highest contributor. Notable net gains also came from the Consumer Discretionary and Financials sectors. This widespread cyclical strength was consistent with trends in the overall small-cap market. Within Industrials, the best-performing industries were machinery (our largest industry weighting in the sector), commercial services & supplies, and road & rail. The portfolio’s top-performing industry, however, came from the Information Technology sector— electronic equipment, instruments & components, which was home to three of the Fund’s top five contributing positions in 2016. Coherent, which manufactures laser diodes and equipment, owned the top spot. Its shares skyrocketed in 2016, lifted by a combination of strong profits, a record backlog, and a robust order pipeline. Quaker Chemical provides process fluids, specialty chemicals, and technical expertise to a wide range of industries. Investors reacted favorably to earnings improvement, solid profits, and acquisitions in 2016, pushing its shares higher. LCI Industries (formerly Drew Industries) saw its stock accelerate in 2016 largely on the strength of the recreational vehicle market. The company supplies components for that industry, as well as for manufactured homes and related aftermarkets. Even in a good year there are a few disappointments. The stock of long-time holding The Advisory Board fell in the fall as this specialist in performance improvement software and solutions to the health care and higher education industries reported disappointing fiscal third-quarter revenues. We opted to sell our position in Liberty Tax, a tax preparation services company, back in May on the heels of another earnings disappointment. We also significantly reduced our position in MTS Systems into June. The company supplies test systems and industrial position sensors. Fiscal second quarter earnings disappointed, leading its shares down as the company faced challenges in converting its project backlog. Relative results in 2016 were driven by our underweight in the lagging Health Care sector, an area that has looked highly valued to us for some time, as well as positive stock selection in the sector. Also aiding relative performance was savvy stock selection in Information Technology. The two largest relative detractors had a similar theme—our underweight in banks caused the Fund to lag in Financials and our underweighting in REITs led to underperformance in the Real Estate sector. The Fund is typically underweight in these interest rate sensitive areas. |
Top Contributors to Performance For 2016 (%)1 | ||||
Coherent | 0.88 | |||
Quaker Chemical | 0.85 | |||
LCI Industries | 0.82 | |||
DTS | 0.76 | |||
Cognex Corporation | 0.67 | |||
1 Includes dividends |
Top Detractors from Performance For 2016 (%)2 | ||||
Advisory Board (The) | -0.37 | |||
Liberty Tax Cl. A | -0.31 | |||
MTS Systems | -0.19 | |||
STRATTEC SECURITY | -0.19 | |||
Stella-Jones | -0.17 | |||
2 Net of dividends |
CURRENT POSITIONING AND OUTLOOK |
We are grateful to have been able to deliver such strong absolute and relative results for our investors and firmly believe that we have turned the page on the anomalous 2011-2015 period, in which extraordinary monetary accommodations caused financial markets to behave in odd and unprecedented ways. In our view, we are on the road back to a more historically normal market environment. We think this bodes well for small-cap stocks. In our view cyclicals look well-positioned for ongoing leadership. In addition to our usual cyclical tilt, we are looking in some defensive areas such as healthcare. It is very much on a stock-by-stock basis, with a focus on individual companies that combine attractive valuations with strong fundamentals. |
28 | The Royce Funds 2016 Annual Report to Shareholders |
PERFORMANCE AND PORTFOLIO REVIEW | TICKER SYMBOLS PENNX RYPFX RPMIX RYPCX RPMRX RPMKX |
Performance and Expenses | ||||||||||||||||||||||
Average Annual Total Return (%) Through 12/31/16 | ||||||||||||||||||||||
JUL-DEC 20161 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | 25-YR | 30-YR | 35-YR | 40-YR | ||||||||||||
PMF | 17.52 | 26.47 | 3.61 | 11.50 | 6.45 | 9.10 | 10.33 | 10.55 | 10.70 | 12.27 | 13.19 | |||||||||||
Annual Operating Expenses: 0.93% | ||||||||||||||||||||||
1 Not Annualized |
Relative Returns: Monthly Rolling Average Annual Return Periods
20 Years Through 12/31/16
On a monthly rolling basis, the Fund outperformed the Russell 2000 in 80% of all 10-year periods; 73% of all 5-year periods; and 55% of all 1-year periods. |
PERIODS BEATING THE INDEX | FUND AVG (%)1 | INDEX AVG (%)1 | |||||||||
10-year | 97/121 | 80% | 9.3 | 6.9 | |||||||
5-year | 133/181 | 73% | 10.1 | 7.6 | |||||||
1-year | 127/229 | 55% | 11.0 | 9.2 | |||||||
The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 134 for additional information. |
Value of $10,000
as of 12/31/16 ($)
Top 10 Positions | ||
% of Net Assets | ||
Quaker Chemical | 1.9 | |
HEICO Corporation | 1.5 | |
Tennant Company | 1.3 | |
First Citizens BancShares Cl. A | 1.2 | |
Landstar System | 1.1 | |
Balchem Corporation | 1.1 | |
FLIR Systems | 1.1 | |
Sun Hydraulics | 1.1 | |
John Bean Technologies | 1.1 | |
LCI Industries | 1.1 | |
Portfolio Sector Breakdown | ||
% of Net Assets | ||
Industrials | 28.6 | |
Information Technology | 17.3 | |
Consumer Discretionary | 14.4 | |
Financials | 13.0 | |
Materials | 9.3 | |
Health Care | 6.8 | |
Energy | 4.2 | |
Consumer Staples | 1.8 | |
Real Estate | 1.8 | |
Telecommunication Services | 0.2 | |
Utilities | 0.0 | |
Miscellaneous | 1.4 | |
Cash and Cash Equivalents | 1.2 | |
Calendar Year Total Returns (%) | ||
YEAR | PMF | |
2016 | 26.5 | |
2015 | -11.4 | |
2014 | -0.7 | |
2013 | 35.3 | |
2012 | 14.6 | |
2011 | -4.2 | |
2010 | 23.9 | |
2009 | 36.3 | |
2008 | -34.8 | |
2007 | 2.8 | |
2006 | 14.8 | |
2005 | 12.5 | |
2004 | 20.2 | |
2003 | 40.3 | |
2002 | -9.2 | |
Upside/Downside Capture Ratios | ||||
Periods Ended 12/31/16 (%) | ||||
UPSIDE | DOWNSIDE | |||
10-Year | 94 | 95 | ||
From 12/31/78 (Russell 2000 Inception) | 89 | 71 | ||
Portfolio Diagnostics | ||
Fund Net Assets | $2,440 million | |
Number of Holdings | 295 | |
Turnover Rate | 18% | |
Average Market Capitalization1 | $1,738 million | |
Weighted Average P/E Ratio2,3 | 22.3x | |
Weighted Average P/B Ratio2 | 2.4x | |
Active Share4 | 88% | |
U.S. Investments (% of Net Assets) | 89.5% | |
Non-U.S. Investments (% of Net Assets) | 9.3% | |
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 (8% of portfolio holdings as of 12/31/16). |
4 | Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two. |
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 30 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. Regarding the “Top Contributors” and “Top Detractors” 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 year-to-date performance for 2016. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters. |
The Royce Funds 2016 Annual Report to Shareholders | 29 |
MANAGERS’ DISCUSSION | ||
Royce Premier Fund (RPR) |
Chuck Royce Lauren Romeo, CFA Steven McBoyle, CPA, CA |
FUND PERFORMANCE Royce Premier Fund gained 23.0% in 2016, outperforming its small-cap benchmark, the Russell 2000 Index, which was up 21.3% for the same period. The Fund benefited from three key reversals in 2016—positive returns for small-cap stocks, a leadership rotation back to value, as well as quality, and significantly improved results for many cyclical businesses. Each contributed to strength for companies with positive earnings, better balance sheets, and higher profitability—the sort of companies that are our primary focus in the portfolio. In many ways, we saw 2016’s performance as a validation of our determinedly active, small-cap quality approach following a dismal 2015. Premier outpaced its benchmark during the more volatile first half of the calendar year, up 6.5% versus 2.2% for the Russell 2000. Much of its relative advantage in 2016 was the result of better performance when shares were tumbling, as they did most notably in January and the first half of February and again in October. In the third quarter, Premier ceded a bit of ground, advancing 6.7% compared to 9.0% for the small-cap index. The Fund then slightly trailed in fourth quarter, up 8.2% versus 8.8% for the Russell 2000. We were also pleased that Premier was ahead of its benchmark for the one-, 10-, 15-, 20-, 25-year, and since inception (12/31/91) periods ended December 31, 2016. (Having just marked a quarter century of history, its 25-year and since inception results are the same.) The Fund’s average annual total return since inception was 11.5%, a long-term record in which we take great pride. |
WHAT WORKED... AND WHAT DIDN’T |
Eight of the portfolio’s nine equity sectors finished 2016 in the black. The Fund’s two largest contributors, Industrials and Information Technology, led by significant margins. Consumer Discretionary and Financials also made noteworthy positive impacts. Health Care made a small contribution while Real Estate was the Fund’s only sector with a loss in 2016. At the industry level, machinery, our largest weighting in Industrials, led comfortably, followed by electronic equipment, instruments & components (Information Technology) and commercial services & supplies (Industrials). Detractions at the industry level were far less impactful and were led by professional services (Industrials), real estate management & development (Real Estate), and biotechnology (Health Care). The Fund’s top contributor at the position level was Cognex Corporation, the market leader in machine vision technology that captures and analyzes visual information to automate tasks that previously relied on human eyesight. This technology is a major driver of industrial and process automation. Sales to the auto industry accelerated, its consumer electronics segment proved better than expected, and it gained share among logistics services providers. MKS Instruments provides components and subsystems that measure and analyze semiconductor performance. The company has been benefiting from a technology inflection point in both chip design and manufacture that requires more spending on capital equipment. Long-time Royce favorite Lincoln Electric Holdings is a global leader in welding equipment and supplies. The company looks poised to benefit from the expectation of accelerating U.S. economic growth in part driven by infrastructure spending. Having effectively managed expenses over the last few years in the face of relatively subpar global growth, the company may also see earnings grow at a faster pace than revenues. Turning to detractors, The Advisory Board, a specialist in performance improvement software and solutions to the health care and higher education industries, saw spending decelerate in its healthcare business, which caused it to lower long-term growth goals. We significantly reduced our stake in 2016. The franchise breast cancer genetic test for Myriad Genetics lost more share in the face of aggressive and competitive pricing during 2016. In addition, its remaining portfolio of genetic tests and international expansion have not ramped revenue fast enough to offset this, resulting in decelerating top line growth. Finally, the company also increased leverage with an acquisition of an earlier stage, unprofitable company. All of these influenced our decision to exit the stock. Outperformance versus the benchmark in 2016 was driven by underweighting the lagging Health Care sector, an area that has looked highly valued to us for some time, as well as positive stock selection. Also aiding relative performance was savvy stock picking in Consumer Discretionary, where Thor Industries was the standout. The Fund’s underweighting in banks led it to trail in Financials, making that sector the portfolio’s leading relative detractor. Poor stock selection in real estate management & development, where Jones Lang LaSalle notably detracted, caused the Real Estate sector to underperform. |
Top Contributors to Performance For 2016 (%)1 | ||||
Cognex Corporation | 2.11 | |||
MKS Instruments | 1.63 | |||
Lincoln Electric Holdings | 1.36 | |||
Copart | 1.23 | |||
Ritchie Bros. Auctioneers | 1.19 | |||
1 Includes dividends |
Top Detractors from Performance For 2016 (%)2 | ||||
Advisory Board (The) | -1.01 | |||
Myriad Genetics | -0.91 | |||
Jones Lang LaSalle | -0.70 | |||
Stifel Financial | -0.51 | |||
comScore | -0.47 | |||
2 Net of dividends |
CURRENT POSITIONING AND OUTLOOK |
We firmly believe that we have turned the page on the anomalous 2011-2015 period, in which extraordinary monetary accommodations caused financial markets to behave in odd and unprecedented ways. In our view, we are on the road back to a more historically normal market environment. In addition, the fact that the market seems to be acting in a more historically familiar way should play a large role in keeping investors focused on high quality, conservatively capitalized companies that are making progress in improving their competitive positions and their profitability. We welcome the renewed attention on these fundamentals. |
30 | The Royce Funds 2016 Annual Report to Shareholders |
PERFORMANCE AND PORTFOLIO REVIEW | TICKER SYMBOLS RYPRX RPFFX RPFIX RPRCX RPRRX RPRWX |
Performance and Expenses | ||||||||||||||||||
Average Annual Total Return (%) Through 12/31/16 | ||||||||||||||||||
JUL-DEC 20161 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | 25-YR | SINCE INCEPTION (12/31/91) | ||||||||||
RPR | 15.48 | 23.00 | 3.19 | 9.36 | 7.76 | 10.09 | 10.71 | 11.49 | 11.49 | |||||||||
Annual Operating Expenses: 1.13% | ||||||||||||||||||
1 Not Annualized |
Relative Returns: Monthly Rolling Average Annual Return Periods
On a monthly rolling basis, the Fund outperformed the Russell 2000 in 99% of all 10-year periods; 76% of all 5-year periods; and 61% of all 1-year periods. |
PERIODS BEATING THE INDEX | FUND AVG (%)1 | INDEX AVG (%)1 | |||||||||
10-year | 120/121 | 99% | 10.8 | 6.9 | |||||||
5-year | 137/181 | 76% | 11.0 | 7.6 | |||||||
1-year | 140/229 | 61% | 11.3 | 9.2 | |||||||
The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 134 for additional information. |
Value of $10,000
Top 10 Positions | ||
% of Net Assets | ||
MKS Instruments | 3.7 | |
Cognex Corporation | 3.6 | |
Lincoln Electric Holdings | 3.3 | |
Copart | 3.2 | |
Landstar System | 3.1 | |
Woodward | 3.1 | |
Kirby Corporation | 2.9 | |
Alleghany Corporation | 2.8 | |
Valmont Industries | 2.7 | |
National Instruments | 2.6 | |
Portfolio Sector Breakdown | ||
% of Net Assets | ||
Industrials | 35.4 | |
Information Technology | 22.0 | |
Financials | 12.5 | |
Consumer Discretionary | 10.1 | |
Materials | 7.4 | |
Health Care | 3.6 | |
Energy | 3.6 | |
Consumer Staples | 2.1 | |
Real Estate | 1.6 | |
Miscellaneous | 0.8 | |
Cash and Cash Equivalents | 0.9 | |
Calendar Year Total Returns (%) | ||
YEAR | RPR | |
2016 | 23.0 | |
2015 | -9.9 | |
2014 | -0.9 | |
2013 | 27.7 | |
2012 | 11.4 | |
2011 | -0.9 | |
2010 | 26.5 | |
2009 | 33.3 | |
2008 | -28.3 | |
2007 | 12.7 | |
2006 | 8.8 | |
2005 | 17.1 | |
2004 | 22.8 | |
2003 | 38.7 | |
2002 | -7.8 | |
Upside/Downside Capture Ratios | ||||
Periods Ended 12/31/16 (%) | ||||
UPSIDE | DOWNSIDE | |||
10-Year | 94 | 87 | ||
From 12/31/91 (Start of Fund’s First Full Quarter) | 91 | 72 | ||
Portfolio Diagnostics | ||
Fund Net Assets | $2,259 million | |
Number of Holdings | 56 | |
Turnover Rate | 15% | |
Average Market Capitalization1 | $3,378 million | |
Weighted Average P/E Ratio2,3 | 24.0x | |
Weighted Average P/B Ratio2 | 2.8x | |
Active Share4 | 97% | |
U.S. Investments (% of Net Assets) | 88.8% | |
Non-U.S. Investments (% of Net Assets) | 10.3% | |
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 (7% of portfolio holdings as of 12/31/16). |
4 | Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two. |
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 30 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. Regarding the “Top Contributors” and “Top Detractors” 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 year-to-date performance for 2016. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters. |
The Royce Funds 2016 Annual Report to Shareholders | 31 |
MANAGER’S DISCUSSION | ||
Royce Small-Cap Leaders Fund (ROH) |
Lauren Romeo, CFA |
FUND PERFORMANCE Royce Small-Cap Leaders Fund gained 25.5% in 2016, outperforming its small-cap benchmark, the Russell 2000 Index, which was up 21.3% for the same period. The Fund benefited from a series of key reversals in 2016, including positive returns for small-cap stocks, a leadership rotation back to value, and significantly improved results for many cyclical businesses. Each contributed to strength for companies with positive earnings, better balance sheets, and higher profitability—the sort of companies that are our primary focus in the portfolio. Small-Cap Leaders outpaced its benchmark during the first half of 2016, up 6.0% versus 2.2% for the Russell 2000. When growth stocks rebounded in the third quarter, Small-Cap Leaders ceded a bit of ground, advancing 6.1% compared to 9.0% for the small-cap index. The Fund then rebounded soundly in the fourth quarter, up 11.7% versus 8.8% for the Russell 2000. |
WHAT WORKED... AND WHAT DIDN’T |
Each of the portfolio’s nine equity sectors finished 2016 in the black. The two areas that made highly outsized contributions to 2016 performance, Information Technology and Industrials, were also our two largest at year-end. Additional solid contributions also came from Consumer Discretionary and Materials while Real Estate, in which we had a very low weighting, made only a modest contribution. Two groups in Information Technology led at the industry level—semiconductors & semiconductor equipment and electronic equipment, instruments & components. They were followed by two from Industrials, machinery and road & rail. Net losses at the industry level were comparatively much less impactful, with biotechnology (Health Care), capital markets (Financials), and professional services (Industrials) detracting most. The Fund’s top-contributing holding was Saia, a less-than-truckload (relatively small freight) trucker. The company’s decision to focus on profitable pricing rather than chasing volume at any cost allowed it to deliver strong performance despite a challenging trucking market in 2016. We reduced our stake as its price rose. Mentor Graphics designs and manufactures electronic design automation software. In November, Siemens agreed to buy it at a roughly 29% premium, which led us to begin selling our shares. Minerals Technologies produces performance-enhancing minerals, mineral-based, and synthetic mineral products. Its stock appreciated through much of the year before spiking post-election. We think the company has done an excellent job improving underperforming operations and maintaining margins in key divisions where organic growth has been modest due to macroeconomic factors. We see it as poised for accelerating earnings growth in a more vibrant economy and added shares in 2016. Clothing retailer The Buckle was the Fund’s top detractor in 2016. The company faced a difficult retail environment while also enduring its own misses on women’s fashion and its (ultimately positive) strategy of reducing price points, particularly in its all-important denim category. Its same-store-sales were negative. However, its trailing 12-month operating margin, while low for The Buckle historically, remains among the best in its industry. If reducing pricing and other actions reinvigorate sales growth, the earnings acceleration should be impressive. TrueBlue’s stock was bruised after this temporary labor provider lost a huge share of its business when Amazon, its largest customer, chose to bring all of its warehouse staffing in house. Temporary staffing growth also turned negative, even excluding the loss of Amazon. A strong fourth quarter erased a portion of the stock’s decline for the year. We held a small position at year-end. Artisan Partners Asset Management suffered ongoing net outflows due to performance challenges in certain strategies and investors’ concerns about the sustainability of its healthy annual dividend. Liking its potential to rebound in a market more conducive to active management, we bought shares through much of the year’s second half. Outperformance in 2016 was driven by stock-selection strength in Information Technology and Industrials as well as by our significant underweight in the lagging Health Care sector. Conversely, the Fund’s underweighting in banks and ineffective stock selection in capital markets led it to trail in Financials, making that sector the portfolio’s leading relative detractor. The Fund’s cash position also affected relative results as did poor stock selection and our underweight in Real Estate. |
Top Contributors to Performance For 2016 (%)1 | |||
Saia | 1.87 | ||
Mentor Graphics | 1.60 | ||
Minerals Technologies | 1.54 | ||
Genworth MI Canada | 1.25 | ||
Thor Industries | 1.24 | ||
1 Includes dividends |
Top Detractors from Performance For 2016 (%)2 | |||
Buckle (The) | -0.67 | ||
TrueBlue | -0.61 | ||
Artisan Partners Asset Management Cl. A | -0.55 | ||
Zealand Pharma | -0.39 | ||
Federal Signal | -0.39 | ||
2 Net of dividends |
CURRENT POSITIONING AND OUTLOOK |
We continue to own companies with durable, high-ROIC business models trading at attractive valuations in pro-cyclical sectors, including Industrials (companies with significant operating leverage that should produce faster absolute and relative earnings growth when revenue growth picks up) and Consumer Discretionary (favorable employment trends, wage gains, and low energy prices are supportive of increased personal consumption expenditures). Within Financials, select asset managers and financial advisory firms have priced in a fair amount of negative expectations, though in the near term the stocks tend to rise and fall with capital market gyrations. As 2016 marked the reversal of what had been a multi-year relative performance run for small-cap growth, defensives, and non-earners, a run for cyclicals, earners, and value in small-cap may have a way to go. Our high-quality company focus could continue to do well in this environment if this situation continues. |
32 | The Royce Funds 2016 Annual Report to Shareholders |
PERFORMANCE AND PORTFOLIO REVIEW | TICKER SYMBOLS RYOHX ROHHX ROHRX |
Performance and Expenses | ||||||||||||
Average Annual Total Return (%) Through 12/31/16 | ||||||||||||
JUL-DEC 20161 | 1-YR | 3-YR | 5-YR | 10-YR | SINCE INCEPTION (06/30/03) | |||||||
ROH | 18.45 | 25.51 | 2.04 | 9.17 | 6.62 | 9.70 | ||||||
Annual Gross Operating Expenses: 1.54% Annual Net Operating Expenses: 1.49% | ||||||||||||
1 Not Annualized |
Relative Returns: Monthly Rolling Average Annual Return Periods
On a monthly rolling basis, the Fund outperformed the Russell 2000 in 58% of all 10-year periods; 59% of all 5-year periods; and 46% of all 1-year periods. |
PERIODS BEATING THE INDEX | FUND AVG (%)1 | INDEX AVG (%)1 | ||||||||||||
10-year | 25/43 | 58% | 8.3 | 7.8 | ||||||||||
5-year | 61/103 | 59% | 7.9 | 7.3 | ||||||||||
1-year | 69/151 | 46% | 9.8 | 9.6 | ||||||||||
The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund's ownership zone may vary. See page 134 for additional information. |
Invested on 6/30/03 as of 12/31/16 ($)
Top 10 Positions | ||
% of Net Assets | ||
Genworth MI Canada | 3.0 | |
Federated Investors Cl. B | 2.9 | |
j2 Global | 2.9 | |
Gentex Corporation | 2.8 | |
Marcus & Millichap | 2.8 | |
Virtus Investment Partners | 2.5 | |
Pason Systems | 2.5 | |
Apogee Enterprises | 2.4 | |
Minerals Technologies | 2.3 | |
Caleres | 2.3 | |
Portfolio Sector Breakdown | ||
% of Net Assets | ||
Industrials | 21.4 | |
Information Technology | 17.4 | |
Financials | 16.3 | |
Consumer Discretionary | 15.0 | |
Consumer Staples | 6.1 | |
Energy | 5.8 | |
Health Care | 5.6 | |
Materials | 4.0 | |
Real Estate | 2.8 | |
Miscellaneous | 1.0 | |
Cash and Cash Equivalents | 4.6 | |
Calendar Year Total Returns (%) | ||
YEAR | ROH | |
2016 | 25.5 | |
2015 | -12.5 | |
2014 | -3.3 | |
2013 | 30.9 | |
2012 | 11.5 | |
2011 | -6.5 | |
2010 | 24.8 | |
2009 | 38.0 | |
2008 | -29.2 | |
2007 | 7.3 | |
2006 | 13.7 | |
2005 | 14.9 | |
2004 | 27.2 | |
Upside/Downside Capture Ratios | ||||||||||||||
Periods Ended 12/31/16 (%) | ||||||||||||||
UPSIDE | DOWNSIDE | |||||||||||||
10-Year | 93 | 93 | ||||||||||||
From 6/30/03 (Start of Fund's First Full Quarter) | 95 | 93 | ||||||||||||
Portfolio Diagnostics | ||
Fund Net Assets | $101 million | |
Number of Holdings | 76 | |
Turnover Rate | 65% | |
Average Market Capitalization1 | $1,859 million | |
Weighted Average P/E Ratio2,3 | 18.9x | |
Weighted Average P/B Ratio2 | 2.5x | |
Active Share4 | 96% | |
U.S. Investments (% of Net Assets) | 82.2% | |
Non-U.S. Investments (% of Net Assets) | 13.2% | |
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 (9% of portfolio holdings as of 12/31/16). |
4 | Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two. |
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 30 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 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 expenses, (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.49% through April 30, 2017. Regarding the “Top Contributors” and “Top Detractors” 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 year-to-date performance for 2016. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters. |
The Royce Funds 2016 Annual Report to Shareholders | 33 |
MANAGER’S DISCUSSION |
Royce Small-Cap Value Fund (RVV) |
Jay Kaplan, CFA |
FUND PERFORMANCE |
Royce Small-Cap Value Fund advanced 21.1% in 2016, very narrowly trailing its small-cap benchmark, the Russell 2000 Index, which was up 21.3% for the same period. While we were satisfied with the Fund’s absolute showing, relative results were disappointing, even by such a razor-thin margin. We were, however, pleased to see the Fund’s contrarian approach do better than the benchmark in both the bearish first quarter and the down month of October. We were also happy to see value recapture leadership from growth in 2016 and cyclical stocks beat their defensive counterparts in 2016, both of which could bode well for the Fund and active small-cap management. The Fund gained 3.3% in the first half of 2016, ahead of the 2.2% increase for the Russell 2000 during the same period. The Fund trailed its benchmark in the third quarter, up 4.2% versus 9.0%. This period wound up sealing the Fund’s slight relative disadvantage for the year. During the fourth quarter, the Fund outpaced the small-cap index, up 12.4% compared to 8.8% for the Russell 2000. Looking at longer-term periods, the Fund outpaced its benchmark for the 15-year, and since inception (6/14/01) periods ended December 31, 2016. Small-Cap Value’s average annual total return since inception was 9.9%. |
WHAT WORKED... AND WHAT DIDN’T |
Net gains came from six of the portfolio’s nine equity sectors in 2016. Three—Financials, Industrials, and Information Technology—made outsized contributions to 2016’s results while Health Care and Materials each had a small net loss and Utilities was basically flat. The top-contributing industries were electronic equipment, instruments & components (Information Technology), and two from Financials, banks and thrifts & mortgage finance. The specialty retail group (Consumer Discretionary) detracted most by a wide margin, followed by multiline retail (also from Consumer Discretionary) and a modest net loss for chemicals (Materials). Saia provides less-than-truckload (relatively small freight) services throughout the U.S. Coming into 2016, the firm had many underpriced routes and was moving to eliminate those that did not make economic sense. Operating results improved more or less steadily throughout 2016 as its industry recovered, and we began to trim our stake as its shares climbed. TrustCo Bank Corp. NY operates what we think is a terrific home mortgage business and also boasts an attractive yield. The steepening yield curve and rising interest rates spurred its shares in 2016. We reduced our stake in the second half of the year, though it was the Fund’s eleventh-largest holding at the end of December. Top-10 position Reinsurance Group of America has a long history of successful execution. Now in the hands of newer executive management, the company handled the transition smoothly. The firm has substantial excess capital, and its stock seemed to benefit from the positive impact rising rates should have on its interest income as well as its solid business. Apparel retailer Express detracted most at the position level and sat high atop of a list of struggling retailers in the portfolio. We sold the last of our shares in August based on what we thought was an extended period of poor execution. We chose to hold our shares of The Buckle, an apparel retailer that remains profitable and in our view well-managed even as its business has had to cope with declining mall traffic and pinched margins, the latter caused by a shift to lower price points for its merchandise. Fitbit, makers of the wrist device that tracks health data, saw its shares fall thanks to slow growth, some analyst downgrades, and manufacturing problems for one of its two new products. Although we like its cash-rich balance sheet, we sold our shares early in 2017. Relative performance was hurt in 2016 primarily by poor stock selection in Consumer Discretionary, though our overweight in the sector was also a factor. The specialty and multiline retail industries were the primary trouble spots. An underweight in Materials also detracted from relative results, as did ineffective stock picks in Energy and our cash position. Finally, the Fund’s cash position also affected relative results. Helping performance versus the benchmark was an underweight in Health Care, the only Russell 2000 sector to finish 2016 with a loss. In addition, stock selection gave the portfolio a sizable relative advantage in Information Technology and was also a factor in Consumer Staples and Financials, albeit to a lesser extent. In Industrials, the Fund was helped mostly by our overweight in the sector, though stock picks contributed to relative results as well. |
Top Contributors to Performance | |||
For 2016 (%)1 | |||
Saia | 1.63 | ||
TrustCo Bank Corp. NY | 1.19 | ||
Reinsurance Group of America | 1.15 | ||
Fabrinet | 1.12 | ||
Spirit Airlines | 1.10 | ||
1 Includes dividends |
Top Detractors from Performance | |||
For 2016 (%)2 | |||
Express | -1.12 | ||
Buckle (The) | -0.61 | ||
Fitbit Cl. A | -0.58 | ||
Dillard’s Cl. A | -0.41 | ||
STRATTEC SECURITY | -0.38 | ||
2 Net of dividends |
CURRENT POSITIONING AND OUTLOOK |
As 2016 drew to a close, we were working to high-grade the portfolio. While many holdings looked pretty richly priced, we have generally been hanging on to those that show high quality and strong fundamentals. We have also been selling or significantly trimming those that looked even more richly priced or have more business risk than we are willing to live with at their current valuation. Given our contrarian approach, it has been hard to find exciting new ideas because most of the cheap stocks we have been investigating have turned out to be priced that way for very good reasons—they look like classic value traps. Patience is therefore key right now. We expect interesting buying opportunities to materialize when some of the current widespread optimism dissipates, and we are prepared to wait. If we do get a correction, we will act opportunistically, consistent with what we have always done when the market trends down. |
34 | The Royce Funds 2016 Annual Report to Shareholders |
PERFORMANCE AND PORTFOLIO REVIEW | TICKER SYMBOLS RYVFX RVVHX RVFIX RVFCX RVVRX RVFKX |
Performance and Expenses Average Annual Total Return (%) Through 12/31/16 | ||||||||||||||
JUL-DEC 20161 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | SINCE INCEPTION (06/14/01) | ||||||||
RVV | 17.15 | 21.06 | 2.32 | 8.44 | 5.54 | 8.97 | 9.87 | |||||||
Annual Operating Expenses: 1.48% | ||||||||||||||
1 Not Annualized |
Relative Returns: Monthly Rolling Average Annual Return Periods Since Inception Through 12/31/16 On a monthly rolling basis, the Fund outperformed the Russell 2000 in 66% of all 10-year periods; 60% of all 5-year periods; and 56% of all 1-year periods. |
PERIODS BEATING THE INDEX | FUND AVG (%)1 | INDEX AVG (%)1 | ||||||||||||
10-year | 44/67 | 66% | 9.4 | 7.9 | ||||||||||
5-year | 76/127 | 60% | 9.8 | 8.5 | ||||||||||
1-year | 98/175 | 56% | 11.4 | 9.9 | ||||||||||
The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund's ownership zone may vary. See page 134 for additional information. |
Value of $10,000
Top 10 Positions | |||
% of Net Assets | |||
Genworth MI Canada | 3.0 | ||
PC Connection | 3.0 | ||
Spirit Airlines | 3.0 | ||
Korn/Ferry International | 3.0 | ||
American Eagle Outfitters | 3.0 | ||
Vishay Intertechnology | 3.0 | ||
Gentex Corporation | 3.0 | ||
Moelis & Company Cl. A | 3.0 | ||
DSW Cl. A | 3.0 | ||
Reinsurance Group of America | 2.7 | ||
Portfolio Sector Breakdown | |||
% of Net Assets | |||
Consumer Discretionary | 24.6 | ||
Financials | 23.1 | ||
Industrials | 21.0 | ||
Information Technology | 12.1 | ||
Energy | 4.9 | ||
Consumer Staples | 1.8 | ||
Health Care | 1.2 | ||
Miscellaneous | 0.5 | ||
Cash and Cash Equivalents | 10.8 | ||
Calendar Year Total Returns (%) | |||
YEAR | RVV | ||
2016 | 21.1 | ||
2015 | -11.5 | ||
2014 | -0.0 | ||
2013 | 27.8 | ||
2012 | 9.6 | ||
2011 | -7.4 | ||
2010 | 25.0 | ||
2009 | 44.7 | ||
2008 | -34.2 | ||
2007 | 3.8 | ||
2006 | 16.8 | ||
2005 | 17.2 | ||
2004 | 30.9 | ||
2003 | 54.3 | ||
Upside/Downside Capture Ratios | |||
Periods Ended 12/31/16 (%) |
UPSIDE | DOWNSIDE | |||
10-Year | 89 | 95 | ||
From 6/30/01 (Start of Fund’s First Full Quarter) | 101 | 91 | ||
Portfolio Diagnostics | |||
Fund Net Assets | $451 million | ||
Number of Holdings | 64 | ||
Turnover Rate | 56% | ||
Average Market Capitalization1 | $1,169 million | ||
Weighted Average P/E Ratio2,3 | 16.7x | ||
Weighted Average P/B Ratio2 | 1.9x | ||
Active Share4 | 98% | ||
U.S. Investments (% of Net Assets) | 86.2% | ||
Non-U.S. Investments (% of Net Assets) | 3.0% | ||
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 (6% of portfolio holdings as of 12/31/16). |
4 | Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two. |
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 30 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). Certain immaterial adjustments were made to the net assets of Royce Small-Cap Value Fund at 6/30/16 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, and other expenses. Regarding the “Top Contributors” and “Top Detractors” 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 year-to-date performance for 2016. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters. |
The Royce Funds 2016 Annual Report to Shareholders | 35 |
MANAGERS’ DISCUSSION |
Royce Smaller-Companies Growth Fund (RVP) |
Chip Skinner, CFA |
FUND PERFORMANCE |
Royce Smaller-Companies Growth Fund gained 9.4% in 2016, trailing its small-cap benchmark, the Russell 2000 Index, which was up 21.3% for the same period. Underperformance in 2016 was not entirely surprising in the context of the Fund having outpaced the small-cap index in a very difficult 2015, the marked shift in leadership from growth to small-cap value in 2016, and the Fund’s growth-at-a-reasonable price approach, which emphasizes companies with superior revenue and/or earnings growth selling at prices that Royce believes do not fully reflect their prospects. During the year’s first half, the Fund was down 3.5% compared to a gain of 2.2% for the small-cap index as the sharp corrections for biotechnology and other growth industries where the Fund typically invests affected small-caps earlier in the year. The second half of the year saw improvement on an absolute basis, though not enough to push it past its benchmark. During the second half of 2016, the Fund increased 13.3% versus 18.7% for the small-cap index. Longer-term relative results were a bit better as Smaller-Companies Growth outperformed the Russell 2000 for the 15-year and since inception (6/14/01) periods ended December 31, 2016. The Fund’s average annual total return since inception was 11.0%. |
WHAT WORKED... AND WHAT DIDN’T |
Eight of the Fund’s 10 equity sectors made contributions to 2016 results, with Energy and Industrials making the largest positive impact. Consumer Staples detracted most while Health Care—the only Russell 2000 sector to finish the year in the red after leading in 2015—had a modest negative impact. Three industries had a significant positive effect—electronic equipment, instruments & components (Information Technology), health care providers & services (Health Care), and energy equipment & services (Energy) while the leading detractors were biotechnology (Health Care), software (Information Technology), and pharmaceuticals (Health Care). Long-time Royce favorite Unit Corporation topped the list of contributors by position. The company operates as a contract driller and exploration & production company while also offering energy-related services. Its stock suffered mightily through much of the recent bear market for oil prices, though it continued to execute effectively in one of the worst periods for energy companies in the last 30 years. Better-than-expected results in a now-resurgent industry helped to bring investors back to its stock in 2016. BioTelemetry is a wireless medical technology company that provides cardiac monitoring services and equipment for cardiac monitoring devices. Its organic growth hit some bumps late in 2015 that our analysis suggested would be temporary. We were proved correct when margin expansion and improvements to its top-line growth aided its stock’s recovery in 2016. The Container Store Group posted the largest net loss at the position level in 2016. We were once confident that the company, a retailer of storage and organizational products, could benefit from its store expansion efforts in an economy with improving employment numbers, confident consumers, low energy prices, and higher levels of new household formation. We sold our position, however, when it became clear to us that management was struggling to make good on this potential in the face of weakening store traffic and the need for a more effective online presence. Top-10 holding Zealand Pharma is a Danish biopharma firm whose share price decline was mostly driven by the sell-off in its industry. We remain optimistic about its long-term growth potential, based in part on the company’s partnership with Sanofi in developing a diabetes drug (which went on the market in January 2017). After trimming our position earlier in the year, we began buying shares in the fourth quarter as its slipping stock made its valuation look attractively low. We had a different take on Lipocine, which we sold off in the first half. An early stage pharmaceuticals company, its shares declined precipitously after it failed to receive FDA approval for its lead product candidate, an oral testosterone replacement therapy. Relative to the Russell 2000, the Fund was hurt most by stock selection in Information Technology, most notably in the software and electronic equipment, instruments & components industries. Stock selection was also an issue in Consumer Staples, Financials, and Industrials. However, successful stock picking created a relative advantage in Health Care, especially in health care providers & services. The Fund’s overweight and stock selection were also relative strengths in Energy. |
Top Contributors to Performance | |||
For 2016 (%)1 | |||
Unit Corporation | 1.24 | ||
BioTelemetry | 1.22 | ||
Mercury Systems | 1.02 | ||
iRobot Corporation | 0.91 | ||
Inogen | 0.89 | ||
1 Includes dividends |
Top Detractors from Performance | |||
For 2016 (%)2 | |||
Container Store Group (The) | -1.07 | ||
Zealand Pharma | -0.89 | ||
Lipocine | -0.85 | ||
Rubicon Project | -0.78 | ||
SPS Commerce | -0.77 | ||
2 Net of dividends |
CURRENT POSITIONING AND OUTLOOK |
We continue to seek companies that look poised for multi-year periods of robust growth driven by sustainable competitive advantages and/or benefiting from secular growth themes that create favorable conditions for the business. After a summer of cautious investing, we were encouraged by the wave of optimism ushered in by the election. Policies regarding corporate tax rates, regulation, and healthcare could shift in ways that could meaningfully boost GDP growth. So while the last year saw tough times for our “GARP” approach, we see ample opportunity. There are four themes about which we were especially confident at year-end: companies involved in infrastructure and defense spending, cloud storage solution businesses, healthcare innovators (with a particular focus on device and drug discovery companies), and automation, robotics, and industrial technology stocks. |
36 | The Royce Funds 2016 Annual Report to Shareholders |
PERFORMANCE AND PORTFOLIO REVIEW | TICKER SYMBOLS RYVPX RVPHX RVPCX RVPIX RVPRX |
Performance and Expenses | ||||||||||||||
Average Annual Total Return (%) Through 12/31/16 | ||||||||||||||
JUL-DEC 20161 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | SINCE INCEPTION (06/14/01) | ||||||||
RVP | 13.32 | 9.37 | 3.71 | 11.25 | 4.68 | 10.03 | 11.04 | |||||||
Annual Operating Expenses: 1.48% | ||||||||||||||
1 Not Annualized |
The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund's ownership zone may vary. See page 134 for additional information. |
Value of $10,000
Top 10 Positions | ||
% of Net Assets | ||
Enterprise Financial Services | 1.9 | |
LCI Industries | 1.9 | |
Eagle Materials | 1.8 | |
ePlus | 1.8 | |
Paylocity Holding Corporation | 1.7 | |
DIRTT Environmental Solutions | 1.7 | |
Zealand Pharma | 1.6 | |
Coherent | 1.6 | |
QAD Cl. A | 1.6 | |
Texas Roadhouse | 1.6 | |
Portfolio Sector Breakdown | ||
% of Net Assets | ||
Information Technology | 28.9 | |
Health Care | 13.5 | |
Consumer Discretionary | 10.9 | |
Industrials | 10.8 | |
Financials | 9.4 | |
Energy | 7.8 | |
Materials | 6.6 | |
Consumer Staples | 2.7 | |
Real Estate | 1.6 | |
Telecommunication Services | 0.8 | |
Miscellaneous | 4.8 | |
Cash and Cash Equivalents | 2.2 | |
Calendar Year Total Returns (%) | ||
YEAR | RVP | |
2016 | 9.4 | |
2015 | -1.8 | |
2014 | 3.9 | |
2013 | 32.5 | |
2012 | 15.3 | |
2011 | -10.0 | |
2010 | 19.7 | |
2009 | 41.4 | |
2008 | -41.1 | |
2007 | 3.2 | |
2006 | 19.3 | |
2005 | 13.2 | |
2004 | 28.2 | |
2003 | 79.9 | |
Upside/Downside Capture Ratios | ||||
Periods Ended 12/31/16 (%) | ||||
UPSIDE | DOWNSIDE | |||
10-Year | 93 | 107 | ||
From 6/30/01 (Start of Fund's First Full Quarter) | 113 | 100 | ||
Portfolio Diagnostics | ||
Fund Net Assets | $416 million | |
Number of Holdings | 110 | |
Turnover Rate | 59% | |
Average Market Capitalization1 | $1,410 million | |
Weighted Average P/B Ratio2 | 3.2x | |
3-5 Year EPS Growth (est.)3 | 17.6% | |
Active Share4 | 95% | |
U.S. Investments (% of Net Assets) | 86.7% | |
Non-U.S. Investments (% of Net Assets) | 11.1% | |
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 3-5 Year EPS Growth (est.) is calculated as a simple weighted average of the pre-calculated mean long-term EPS growth rate estimates by brokerage analysts. Long Term Growth (LTG) is the annual EPS growth that the company can sustain over the next 3 or 5 years. Source: Factset |
4 | Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two. |
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 30 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. Regarding the “Top Contributors” and “Top Detractors” 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 year-to-date performance for 2016. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters. |
The Royce Funds 2016 Annual Report to Shareholders | 37 |
MANAGERS’ DISCUSSION |
Royce Special Equity Fund (RSE) |
Charlie Dreifus, CFA Steven McBoyle, CPA, CA |
FUND PERFORMANCE |
Royce Special Equity Fund was up 32.2% in 2016, posting the highest calendar-year return in its history and handily outperforming its small-cap benchmark, the Russell 2000 Index, which advanced 21.3% for the same period. At the end of last year, we bid 2015 good riddance. We stated our belief that the period was an outlier and remarked that we expected much better times ahead for Special Equity. We were very pleased that 2016 offered exactly that. The Fund’s calendar-year advantage over the small-cap index was mainly the result of better performance during the declines in the first and fourth quarters. The latter period got off to a rocky start with a bearish October. These difficult periods proved again our emphasis on the importance of outperforming on the downside, which the Fund has a long history of accomplishing. During the first half of 2016, Special Equity increased 8.3%, compared to a 2.2% gain for the small-cap index. In the volatile third quarter, the Fund lagged its small-cap benchmark (+5.7% versus +9.0%) The Fund then gained 15.5% in the fourth quarter, well ahead of the 8.8% increase for the Russell 2000. We were also pleased with the Fund’s longer-term advantages as it outpaced the small-cap index for the one-, 10-, 15-year, and since inception (5/1/98) periods ended December 31, 2016. Special Equity’s average annual total return since inception was 9.5%. |
WHAT WORKED... AND WHAT DIDN’T |
Six of the portfolio’s seven equity sectors finished 2016 in the black, with the biggest contribution coming from Consumer Discretionary, which more than doubled the impact of Industrials, the Fund’s second-best contributing sector. Information Technology also made a strong contribution in 2016. At the industry level, four of the portfolio’s top six contributors came from Consumer Discretionary, led by specialty retail and media followed by diversified consumer services and auto components. Commercial services & supplies (Industrials) and electronic equipment, instruments & components (Information Technology) rounded out the top-six industries. As was the case in 2016’s first half, the Fund’s top-performing contributor by a wide margin was Children’s Place, which retails value-priced apparel and accessories for newborn to 12-year-old children. UniFirst Corporation, which provides workplace uniforms and protective clothing, was another holdover from the first half’s top performers. The rising share price of Capella Education, an online postsecondary education services company, was more of a fourth-quarter story, as its stock price began to accelerate in late October. Detractors and disappointments were in short supply in 2016. The capital markets (Financials), building products (Industrials), metals & mining (Materials), and tobacco (Consumer Staples) industries showed modest net losses. By the end of June, we had sold our shares in each of the portfolio’s four top detractors for 2016—specialty chemicals provider Minerals Technologies, specialty retailer Bed Bath & Beyond, cable, wire, and security instrument distributor Anixter International, and asset manager Waddell & Reed Financial. The sale of the second of these companies was part of a revamp of the Consumer Discretionary sector, which included reducing and refining our exposure to the multiline and specialty retail industries. Looking at relative results for the full year, Consumer Discretionary again made by far the largest positive impact. Relative strength also came from Consumer Staples and Industrials. In addition, having no exposure to correcting Health Care stocks had a nicely positive effect in 2016. The portfolio’s very low weighting in Financials, along with its cash position, hurt relative performance most. More modest detractions from relative performance came from Real Estate and from our lack of exposure to Energy and Utilities. |
Top Contributors to Performance | |||
For 2016 (%)1 | |||
Children’s Place | 3.65 | ||
UniFirst Corporation | 2.55 | ||
Capella Education | 2.47 | ||
AVX Corporation | 2.17 | ||
Weis Markets | 2.02 | ||
1 Includes dividends |
Top Detractors from Performance | |||
For 2016 (%)2 | |||
Minerals Technologies | -0.29 | ||
Bed Bath & Beyond | -0.27 | ||
Anixter International | -0.17 | ||
Waddell & Reed Financial Cl. A | -0.11 | ||
Insteel Industries | -0.09 | ||
2 Net of dividends |
CURRENT POSITIONING AND OUTLOOK |
The increased confidence in the equity markets is good in that it removed the excessive hesitancy that we observed earlier this year. Overconfidence, however, is usually a sign of a market top. Have investors pulled forward 2017 returns more than sufficiently? We think so. Clearly, they have already discounted better growth. Perhaps the market is priced to perfection already with no margin of safety for delays, errors, or world events. As a result of unstable economic conditions in many areas outside the U.S., a rising dollar, and the fact that U.S. small-cap companies stand to gain the most from a lower tax rate, U.S. small-caps are being recognized as the sweet spot for current asset allocation. While not a concern with our portfolio, because our companies generally have little to no debt, there is at the same time a potential headwind for other small-cap companies in the form of rising interest rates. For companies in the Russell 2000, 51% of debt is floating rate while for those in the S&P 500, it is only 9%. It seems that the backdrop is therefore close to perfect for high active share portfolios in our view. We think stock picking is ‘in’ again, as market correlations have dropped, valuations are extended, interest rates have risen, and earnings results are more dispersed. Granular portfolio construction once again matters, which we think should benefit us. |
38 | The Royce Funds 2016 Annual Report to Shareholders |
PERFORMANCE AND PORTFOLIO REVIEW | TICKER SYMBOLS RYSEX RSEFX RSEIX RSQCX |
Performance and Expenses Average Annual Total Return (%) Through 12/31/16 | ||||||||||||||
JUL-DEC 20161 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | SINCE INCEPTION (05/01/98) | ||||||||
RSE | 22.08 | 32.21 | 5.42 | 11.82 | 8.50 | 10.18 | 9.54 | |||||||
Annual Operating Expenses: 1.15% | ||||||||||||||
1 Not Annualized |
Relative Risk Adjusted Returns: Monthly Rolling Sharpe Ratios Since Inception Through 12/31/16 On a monthly rolling risk-adjusted basis, the Fund outperformed the Russell 2000 in 100% of all 10-year periods and 77% of all 5-year periods. |
PERIODS BEATING THE INDEX | FUND AVG (%)1 | INDEX AVG (%)1 | ||||||||||||
10-year | 104/104 | 100% | 0.55 | 0.33 | ||||||||||
5-year | 126/164 | 77% | 0.68 | 0.43 | ||||||||||
The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund's ownership zone may vary. See page 134 for additional information. |
Value of $10,000
Top 10 Positions | |||
% of Net Assets | |||
AVX Corporation | 5.5 | ||
UniFirst Corporation | 5.1 | ||
Children’s Place | 5.1 | ||
Scholastic Corporation | 4.8 | ||
Weis Markets | 4.5 | ||
Standard Motor Products | 4.3 | ||
Meredith Corporation | 3.8 | ||
Hubbell Cl. B | 3.8 | ||
Teradyne | 3.6 | ||
Neenah Paper | 3.5 | ||
Portfolio Sector Breakdown | |||
% of Net Assets | |||
Consumer Discretionary | 37.9 | ||
Industrials | 21.0 | ||
Information Technology | 14.3 | ||
Consumer Staples | 6.9 | ||
Materials | 6.9 | ||
Real Estate | 1.6 | ||
Cash and Cash Equivalents | 11.4 | ||
Calendar Year Total Returns (%) | |||
YEAR | RSE | ||
2016 | 32.2 | ||
2015 | -12.4 | ||
2014 | 1.1 | ||
2013 | 29.4 | ||
2012 | 15.4 | ||
2011 | 0.1 | ||
2010 | 19.6 | ||
2009 | 28.4 | ||
2008 | -19.6 | ||
2007 | 4.7 | ||
2006 | 14.0 | ||
2005 | -1.0 | ||
2004 | 13.9 | ||
2003 | 27.6 | ||
2002 | 15.3 | ||
Upside/Downside Capture Ratios | |||
Periods Ended 12/31/16 (%) |
UPSIDE | DOWNSIDE | |||
10-Year | 82 | 64 | ||
From 6/30/98 (Start of Fund’s First Full Quarter) | 74 | 48 | ||
Portfolio Diagnostics | |||
Fund Net Assets | $1,610 million | ||
Number of Holdings | 39 | ||
Turnover Rate | 29% | ||
Average Market Capitalization1 | $1,359 million | ||
Weighted Average P/E Ratio2,3 | 20.8x | ||
Weighted Average P/B Ratio2 | 2.2x | ||
Active Share4 | 98% | ||
U.S. Investments (% of Net Assets) | 88.6% | ||
Non-U.S. Investments (% of Net Assets) | 0.0% | ||
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 (4% of portfolio holdings as of 12/31/16). |
4 | Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two. |
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 30 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. 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. Regarding the “Top Contributors” and “Top Detractors” 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 year-to-date performance for 2016. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters. |
The Royce Funds 2016 Annual Report to Shareholders | 39 |
MANAGERS’ DISCUSSION |
Royce Special Equity Multi-Cap Fund (RSM) |
Charlie Dreifus, CFA Steven McBoyle, CPA, CA |
FUND PERFORMANCE |
Royce Special Equity Multi-Cap Fund advanced 13.7% in 2016, outperforming its large-cap benchmark, the Russell 1000 Index, which was up 12.1% for the same period. Unlike 2015, in which defensive sectors and growth strategies led the equity markets, 2016 saw leadership from cyclical companies and value approaches. The Fund’s classic value approach, which seeks conservatively managed mid- and large-cap companies with long histories of stable earnings, cash flows, and raising dividends consecutively over time—aka “Dividend Aristocrats”—was well-suited to this environment, particularly in the second half of the year. Its highly concentrated portfolio also provided an advantage. The Fund trailed its benchmark in the first half of 2016, down 0.5% versus 3.7%, due to a difficult second quarter. Special Equity Multi-Cap then rebounded considerably in the second half, gaining 14.2% compared to 8.0% for the large-cap index. The Fund’s average annual total return since inception (8/31/10) was 9.8%. |
WHAT WORKED... AND WHAT DIDN’T |
Five of the Fund’s seven equity sectors made a positive contribution in 2016. Industrials led by a wide margin, making more than three times the impact of Consumer Discretionary, the portfolio’s next-best contributor. Consumer Staples and Financials detracted, but their respective negative impacts were markedly modest. At the industry level, machinery (Industrials) made by far the biggest positive impact. It was also the portfolio’s largest industry weighting at year-end. Specialty retail (Consumer Discretionary) and electrical equipment (Industrials) followed. Detracting industries had a much smaller impact and were led by auto components (Consumer Discretionary), software (Information Technology), and textiles, apparel & luxury goods (Consumer Discretionary). The Consumer Discretionary sector was particularly interesting, housing some of the Fund’s very best and worst performers in 2016. The portfolio’s top contributor for the calendar year was retailer Dicks Sporting Goods, which operates stores primarily in the eastern and central U.S. selling a broad selection of brand name sporting goods equipment, apparel, and footwear. It built on a strong first half to finish the year with a considerable positive impact. Three machinery stocks followed closely behind, which gives a sense of the industry’s strength in 2016. Parker Hannifin, a maker of motion control products, also enjoyed a strong first half before enjoying and even better second one, as did Illinois Tool Works, which produces industrial fluids and adhesives, tooling for specialty applications, welding products, and measurement equipment and systems. Finally, long-time Royce favorite Lincoln Electric Holdings also thrived. The company has a global business manufacturing welding, cutting, and brazing products. Apple, the Fund’s largest holding at year-end, rounded out the top five contributors. The top detractors on a position level included Lear Corporation, which makes automobile parts, including seating systems, wiring harnesses, and body control electronics. Although its shares recovered somewhat in the second half of the year, we opted to exit our position. We chose to do the same with both domestic merchandise retailer Bed Bath & Beyond and software giant Microsoft. During 2016, we initiated a position in home improvement retailer Lowe’s Companies and rebuilt a stake in VF Corporation, an apparel company whose roster of brands includes Jansport, Kipling, Lee, Nautica, The North Face, Timberland, and Vans. Relative to the Russell 1000, the Fund enjoyed its largest advantage with both savvy stock selection and its considerable overweight in Industrials. Our much lower exposure to Health Care, the benchmark’s only sector with a negative return, and successful stock picking in Consumer Discretionary also helped. Hurting relative performance were our lower exposure to banks and stock selection in capital markets, thanks to a disappointing result from T. Rowe Price Group, both of which created a lag in Financials. Our lack of exposure to surging energy stocks also impeded relative results as did the Fund’s cash position. |
Top Contributors to Performance | |||
For 2016 (%)1 | |||
Dicks Sporting Goods | 2.09 | ||
Parker Hannifin | 2.07 | ||
Illinois Tool Works | 2.03 | ||
Lincoln Electric Holdings | 1.33 | ||
Apple | 1.12 | ||
1 Includes dividends |
Top Detractors from Performance | |||
For 2016 (%)2 | |||
Lear Corporation | -0.64 | ||
Bed Bath & Beyond | -0.40 | ||
Microsoft Corporation | -0.33 | ||
Lowe’s Companies | -0.19 | ||
VF Corporation | -0.17 | ||
2 Net of dividends |
CURRENT POSITIONING AND OUTLOOK |
We would not be at all surprised if the market pauses to digest its recent advance while also trying to calibrate how well or incorrect expectations are versus actions it sees on the path to successful implementation by the current Administration. It is possible, after all, that perception has overtaken the likely reality. Considering the market’s strength and resilience, we see too much complacency and perhaps too much recent emphasis on direction and strength, as opposed to valuation. Bullishness is too pervasive to us, even if current levels of equity investment appear to indicate otherwise. Presuming lower tax rates, many investors are also deferring capital gains into 2017 so that selling could actually pick up in the new year. On a more positive note, it seems to us that stock picking is ‘in’ again, as market correlations have dropped, valuations are extended, interest rates have risen, and earnings results are more dispersed. Granular portfolio construction once again matters, which we think should benefit us. |
40 | The Royce Funds 2016 Annual Report to Shareholders |
PERFORMANCE AND PORTFOLIO REVIEW | TICKER SYMBOLS RSEMX RSMCX RMUIX RSMLX |
Performance and Expenses | ||||||||||||||
Average Annual Total Return (%) Through 12/31/16 | ||||||||||||||
JUL-DEC 20161 | 1-YR | 3-YR | 5-YR | SINCE INCEPTION (12/31/10) | ||||||||||
RSM | 14.24 | 13.69 | 2.37 | 10.29 | 9.77 | |||||||||
Annual Gross Operating Expenses: 1.29% Annual Net Operating Expenses: 1.24% | ||||||||||||||
1Not Annualized |
The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund's ownership zone may vary. See page 134 for additional information. |
Value of $10,000
Top 10 Positions | ||
% of Net Assets | ||
Apple | 8.6 | |
ManpowerGroup | 7.7 | |
Genuine Parts | 7.1 | |
Illinois Tool Works | 6.9 | |
Dicks Sporting Goods | 6.4 | |
Parker Hannifin | 6.1 | |
Grainger (W.W.) | 4.5 | |
Cisco Systems | 3.7 | |
Robert Half International | 3.4 | |
Rockwell Automation | 2.9 | |
Portfolio Sector Breakdown | ||
% of Net Assets | ||
Industrials | 48.4 | |
Consumer Discretionary | 22.0 | |
Information Technology | 12.3 | |
Consumer Staples | 5.6 | |
Materials | 1.7 | |
Financials | 0.5 | |
Cash and Cash Equivalents | 9.5 | |
Calendar Year Total Returns (%) | ||
YEAR | RSM | |
2016 | 13.7 | |
2015 | -13.6 | |
2014 | 9.3 | |
2013 | 36.3 | |
2012 | 11.6 | |
2011 | 7.2 | |
Portfolio Diagnostics | ||
Fund Net Assets | $115 million | |
Number of Holdings | 29 | |
Turnover Rate | 50% | |
Average Market Capitalization1 | $26,613 million | |
Weighted Average P/E Ratio2,3 | 19.4x | |
Weighted Average P/B Ratio2 | 4.3x | |
Active Share4 | 92% | |
U.S. Investments (% of Net Assets) | 90.5% | |
Non-U.S. Investments (% of Net Assets) | 0.0% | |
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 12/31/16). |
4 | Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two. |
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 30 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 and other 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 fees and/or reimburse operating expenses to the extent necessary to maintain the Service Classes’s net annual operating expenses, (excluding brokerage commissions, taxes, interest litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.24% through April 30, 2017. Regarding the “Top Contributors” and “Top Detractors” 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 year-to-date performance for 2016. |
The Royce Funds 2016 Annual Report to Shareholders | 41 |
MANAGERS’ DISCUSSION | ||
Royce Total Return Fund (RTR) |
Chuck Royce Jay Kaplan, CFA |
FUND PERFORMANCE Royce Total Return Fund advanced 25.9% in 2016, outperforming its small-cap benchmark, the Russell 2000 Index, which gained 21.3% for the same period. In addition to this terrific absolute and relative result, the year gave us a lot to be happy about: small-cap dividends payers generally excelled, value took back leadership from growth, and cyclical stocks (long an area of primary focus) beat defensives. Based on history and reversion to the mean, we believe each of these developments should have staying power, in particular because the previous five years (2011-2015) were so odd, with unprecedented levels of monetary policy intervention and little, if any, in the way of fiscal stimulus. During the first half of 2016, Total Return increased 8.6% compared to 2.2% for the small-cap index. The third quarter saw a brief rebound for many growth stocks and the Fund gained 5.9% versus 9.0% for the benchmark. For the fourth quarter as a whole, the Fund was up 9.4% while the Russell 2000 increased 8.8%. We were pleased that the Fund also held its relative edge over longer-term periods. Total Return outpaced the Russell 2000 for the one-, 15-, 20-year, and since inception (12/15/93) periods ended December 31, 2016. The Fund’s average annual total return since inception was 10.9%, a notable long-term result that makes us quite proud. |
WHAT WORKED… AND WHAT DIDN’T |
Net contributions came from each of the Fund’s 11 equity sectors in 2016. Industrials led by an appreciable margin, followed by noteworthy contributions from Financials and Materials. The leading industries by contribution were chemicals (Materials), machinery (Industrials), banks (Financials), and commercial services & supplies (Industrials). The first two groups were also the largest weightings in their respective sectors. |
The portfolio’s top contributor at the position level was Quaker Chemical, which provides process fluids, specialty chemicals, and technical expertise to a wide range of industries. Investors reacted favorably to earnings improvement, solid profits, and acquisitions in 2016, pushing its shares higher through most of the year. Recreational vehicle (RV) maker Thor Industries has captured more than a third of the RV market with its roster of strong brands such as Airstream, Dutchman, and Keystone. Recent robust sales were driven in part by the favorable demographics of retiring Baby Boomers, with a new tailwind also coming in the form of first-time 30- to 50-year-old buyers. The acquisition of its competitor Jayco in 2016 helped to further strengthen Thor’s position in the entry level space, one of the faster-growing segments of the RV market. Chase Corporation makes protective materials for various applications and operates through Industrial Materials and Construction Materials segments. Expanding margins, steady earnings growth, and an earnings-accretive acquisition in the fall kept investors interested. |
Disappointments were relatively few and decidedly modest in 2016. The biggest detractors among the portfolio’s industry groups were technology hardware, storage & peripherals (Information Technology), life sciences tools & services (Health Care, the only sector in the Russell 2000 to finish the year with a net loss), and multiline retail (Consumer Discretionary). The position that detracted most was SEI Investments, an asset manager that also provides technology solutions. The company disappointed investors as a key division reported results below expectations. Value Partners Group is a Hong Kong-based asset manager that emphasizes value approaches similar to some of our own. Subpar short-term performance, net outflows, and a CEO resignation all contributed to investors’ concerns. Because we remain confident in its long-term prospects, particularly in China, as well as in its Chairman, who has assumed CEO responsibilities, we were comfortable holding our stake at the end of 2016. In spite of its own stock price volatility, we also held a good-sized position in Diebold Nixdorf, which makes software-based self-service delivery and security systems. The company announced an expensive acquisition that, while making the combined company the world’s largest maker of automated teller machines, also sported a price tag which worried other investors. |
Relative to the Russell 2000, the Fund benefited most from its underweight in Health Care and overweights in Materials and Industrials. The calendar year’s largest detractor was Financials, where our underweight in banks and some poor stock selection in capital markets caused the Fund to lag. |
Top Contributors to Performance For 2016 (%)1 | ||||
Quaker Chemical | 0.87 | |||
Thor Industries | 0.87 | |||
Chase Corporation | 0.85 | |||
TMX Group | 0.69 | |||
Ritchie Bros. Auctioneers | 0.61 | |||
1 Includes dividends |
Top Detractors from Performance For 2016 (%)2 | ||||
SEI Investments | -0.21 | |||
Value Partners Group | -0.19 | |||
Diebold Nixdorf | -0.18 | |||
Flowers Foods | -0.13 | |||
Artisan Partners Asset Management Cl. A | -0.13 | |||
2 Net of dividends |
CURRENT POSITIONING AND OUTLOOK |
We are grateful to have been able to deliver such strong absolute and relative results for our investors and firmly believe that we have turned the page on the anomalous 2011-2015 period, in which extraordinary monetary accommodations caused financial markets to behave in unprecedented ways. In our view, we are on the road back to a more historically normal market environment. We think this bodes well for small-cap stocks. In our view cyclicals look well-positioned for ongoing leadership. In addition to our usual cyclical tilt, we are looking in some defensive areas such as healthcare. It is very much on a stock-by-stock basis, with a focus on individual dividend-paying companies that combine attractive valuations with strong fundamentals. |
42 | The Royce Funds 2016 Annual Report to Shareholders |
PERFORMANCE AND PORTFOLIO REVIEW | TICKER SYMBOLS RYTRX RYTFX RTRIX RYTCX RTRRX RTRKX RTRWX |
Performance and Expenses | |||||||||||||||||
Average Annual Total Return (%) Through 12/31/16 | |||||||||||||||||
JUL-DEC 20161 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | SINCE INCEPTION (12/15/93) | ||||||||||
RTR | 15.87 | 25.86 | 5.78 | 12.45 | 6.86 | 8.95 | 9.83 | 10.93 | |||||||||
Annual Operating Expenses: 1.22% | |||||||||||||||||
1 Not Annualized |
Relative Risk Adjusted Returns: Monthly Rolling Sharpe Ratios
On a monthly rolling risk-adjusted basis, the Fund outperformed the Russell 2000 in 98% of all 10-year periods and 92% of all 5-year periods. |
PERIODS BEATING THE INDEX | FUND AVG (%)1 | INDEX AVG (%)1 | |||||||||
10-year | 118/121 | 98% | 0.48 | 0.32 | |||||||
5-year | 167/181 | 92% | 0.60 | 0.39 | |||||||
The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 134 for additional information. |
Value of $10,000
Top 10 Positions | ||
% of Net Assets | ||
Quaker Chemical | 1.8 | |
HEICO Corporation | 1.6 | |
Balchem Corporation | 1.5 | |
Thor Industries | 1.5 | |
Erie Indemnity Cl. A | 1.4 | |
E-L Financial | 1.4 | |
Woodward | 1.3 | |
Tennant Company | 1.3 | |
Gentex Corporation | 1.2 | |
ManpowerGroup | 1.2 | |
Portfolio Sector Breakdown | ||
% of Net Assets | ||
Financials | 25.4 | |
Industrials | 25.1 | |
Consumer Discretionary | 12.6 | |
Materials | 12.0 | |
Information Technology | 6.6 | |
Health Care | 4.8 | |
Consumer Staples | 3.7 | |
Energy | 3.2 | |
Utilities | 1.8 | |
Telecommunication Services | 1.1 | |
Real Estate | 0.1 | |
Miscellaneous | 2.3 | |
Corporate Bond | 0.1 | |
Cash and Cash Equivalents | 1.2 | |
Calendar Year Total Returns (%) | ||
YEAR | RTR | |
2016 | 25.9 | |
2015 | -7.2 | |
2014 | 1.3 | |
2013 | 32.8 | |
2012 | 14.4 | |
2011 | -1.7 | |
2010 | 23.5 | |
2009 | 26.2 | |
2008 | -31.2 | |
2007 | 2.4 | |
2006 | 14.5 | |
2005 | 8.2 | |
2004 | 17.5 | |
2003 | 30.0 | |
2002 | -1.6 | |
Upside/Downside Capture Ratios | ||||
Periods Ended 12/31/16 (%) | ||||
UPSIDE | DOWNSIDE | |||
10-Year | 84 | 79 | ||
From 12/31/93 (Start of Fund’s First Full Quarter) | 82 | 55 | ||
Portfolio Diagnostics | ||
Fund Net Assets | $2,841 million | |
Number of Holdings | 288 | |
Turnover Rate | 16% | |
Average Market Capitalization1 | $2,106 million | |
Weighted Average P/E Ratio2,3 | 20.0x | |
Weighted Average P/B Ratio2 | 2.2x | |
Active Share4 | 90% | |
U.S. Investments (% of Net Assets) | 88.5% | |
Non-U.S. Investments (% of Net Assets) | 10.3% | |
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 (6% of portfolio holdings as of 12/31/16). |
4 | Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two. |
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 30 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. Regarding the “Top Contributors” and “Top Detractors” 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 year-to-date performance for 2016. 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. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters. |
The Royce Funds 2016 Annual Report to Shareholders | 43 |
Schedules of Investments |
Royce Dividend Value Fund |
Common Stocks – 98.5% |
SHARES | VALUE | ||||||
CONSUMER DISCRETIONARY – 10.2% | |||||||
AUTO COMPONENTS - 2.3% | |||||||
Autoliv | 9,600 | $ | 1,086,240 | ||||
Gentex Corporation | 75,996 | 1,496,361 | |||||
Nokian Renkaat | 52,500 | 1,956,908 | |||||
STRATTEC SECURITY | 9,629 | 388,049 | |||||
4,927,558 | |||||||
AUTOMOBILES - 0.6% | |||||||
Thor Industries | 13,040 | 1,304,652 | |||||
HOUSEHOLD DURABLES - 1.0% | |||||||
Flexsteel Industries | 9,100 | 561,197 | |||||
Hunter Douglas | 27,600 | 1,553,085 | |||||
2,114,282 | |||||||
MEDIA - 0.4% | |||||||
Saga Communications Cl. A | 18,835 | 947,400 | |||||
MULTILINE RETAIL - 0.7% | |||||||
Dillard’s Cl. A | 23,800 | 1,492,022 | |||||
SPECIALTY RETAIL - 4.3% | |||||||
American Eagle Outfitters | 99,200 | 1,504,864 | |||||
Buckle (The) | 51,379 | 1,171,441 | |||||
Cato Corporation (The) Cl. A | 41,410 | 1,245,613 | |||||
DSW Cl. A | 65,649 | 1,486,950 | |||||
Fielmann | 6,400 | 421,982 | |||||
Genesco 1 | 15,749 | 978,013 | |||||
Shoe Carnival | 44,568 | 1,202,445 | |||||
Stein Mart | 64,296 | 352,342 | |||||
USS | 70,000 | 1,112,840 | |||||
9,476,490 | |||||||
TEXTILES, APPAREL & LUXURY GOODS - 0.9% | |||||||
Movado Group | 32,100 | 922,875 | |||||
Stella International Holdings | 100,000 | 160,846 | |||||
Steven Madden 1 | 24,208 | 865,436 | |||||
1,949,157 | |||||||
Total (Cost $19,679,476) | 22,211,561 | ||||||
CONSUMER STAPLES – 2.5% | |||||||
FOOD & STAPLES RETAILING - 0.8% | |||||||
FamilyMart UNY Holdings | 6,000 | 398,620 | |||||
Village Super Market Cl. A | 44,137 | 1,363,833 | |||||
1,762,453 | |||||||
FOOD PRODUCTS - 1.7% | |||||||
Hormel Foods | 95,800 | 3,334,798 | |||||
Industrias Bachoco ADR | 6,100 | 299,022 | |||||
3,633,820 | |||||||
Total (Cost $2,942,270) | 5,396,273 | ||||||
ENERGY – 2.4% | |||||||
ENERGY EQUIPMENT & SERVICES - 2.0% | |||||||
Helmerich & Payne | 26,554 | 2,055,279 | |||||
TGS-NOPEC Geophysical | 100,900 | 2,237,718 | |||||
4,292,997 | |||||||
OIL, GAS & CONSUMABLE FUELS - 0.4% | |||||||
Gaztransport Et Technigaz | 22,700 | 979,693 | |||||
Total (Cost $5,089,661) | 5,272,690 | ||||||
FINANCIALS – 29.4% | |||||||
BANKS - 6.6% | |||||||
Ames National | 30,444 | 1,004,652 | |||||
†BGEO Group | 58,000 | 2,136,827 | |||||
BLOM Bank GDR | 63,000 | 686,700 | |||||
BOK Financial | 22,114 | 1,836,347 | |||||
Camden National | 31,233 | 1,388,307 | |||||
City Holding Company | 13,489 | 911,856 | |||||
CNB Financial | 27,700 | 740,698 | |||||
Codorus Valley Bancorp | 3,342 | 95,581 | |||||
First Republic Bank | 44,700 | 4,118,658 | |||||
National Bankshares | 15,700 | 682,165 | |||||
Northrim BanCorp | 24,700 | 780,520 | |||||
14,382,311 | |||||||
CAPITAL MARKETS - 19.8% | |||||||
ARA Asset Management | 1,961,500 | 2,306,849 | |||||
Ashmore Group | 624,000 | 2,177,341 | |||||
AURELIUS Equity Opportunities | 9,000 | 524,963 | |||||
†BM&FBOVESPA | 402,000 | 2,026,708 | |||||
Bolsa Mexicana de Valores | 1,443,000 | 1,897,580 | |||||
Carlyle Group L.P. | 141,000 | 2,150,250 | |||||
Coronation Fund Managers | 266,000 | 1,358,776 | |||||
Federated Investors Cl. B | 54,400 | 1,538,432 | |||||
Gluskin Sheff + Associates | 51,700 | 671,543 | |||||
Interactive Brokers Group Cl. A | 22,600 | 825,126 | |||||
Jupiter Fund Management | 509,500 | 2,776,374 | |||||
KKR & Co. L.P. | 288,000 | 4,432,320 | |||||
Lazard Cl. A | 40,100 | 1,647,709 | |||||
Moelis & Company Cl. A | 44,300 | 1,501,770 | |||||
Northern Trust | 25,000 | 2,226,250 | |||||
Oaktree Capital Group LLC Cl. A | 85,000 | 3,187,500 | |||||
SEI Investments | 53,000 | 2,616,080 | |||||
Singapore Exchange | 70,000 | 345,932 | |||||
Sprott | 735,700 | 1,375,345 | |||||
State Street | 27,900 | 2,168,388 | |||||
†TD Ameritrade Holding Corporation | 74,100 | 3,230,760 | |||||
Value Partners Group | 2,527,200 | 2,010,363 | |||||
42,996,359 | |||||||
INSURANCE - 1.6% | |||||||
Marsh & McLennan | 30,800 | 2,081,772 | |||||
Reinsurance Group of America | 11,955 | 1,504,298 | |||||
3,586,070 | |||||||
THRIFTS & MORTGAGE FINANCE - 1.4% | |||||||
Genworth MI Canada | 60,548 | 1,517,928 | |||||
Southern Missouri Bancorp | 2,500 | 88,450 | |||||
Timberland Bancorp | 5,800 | 119,828 | |||||
TrustCo Bank Corp. NY | 151,560 | 1,326,150 | |||||
3,052,356 | |||||||
Total (Cost $50,477,626) | 64,017,096 | ||||||
HEALTH CARE – 3.5% | |||||||
HEALTH CARE EQUIPMENT & SUPPLIES - 1.5% | |||||||
Dentsply Sirona | 56,000 | 3,232,880 | |||||
HEALTH CARE PROVIDERS & SERVICES - 0.5% | |||||||
Aceto Corporation | 38,500 | 845,845 | |||||
Ensign Group (The) | 13,100 | 290,951 | |||||
1,136,796 | |||||||
HEALTH CARE TECHNOLOGY - 0.1% | |||||||
CompuGroup Medical | 7,300 | 299,249 | |||||
44 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Dividend Value Fund (continued) |
SHARES | VALUE | ||||||
HEALTH CARE (continued) | |||||||
PHARMACEUTICALS - 1.4% | |||||||
Recordati | 82,300 | $ | 2,331,112 | ||||
Santen Pharmaceutical | 52,000 | 635,049 | |||||
2,966,161 | |||||||
Total (Cost $4,854,991) | 7,635,086 | ||||||
INDUSTRIALS – 24.7% | |||||||
AEROSPACE & DEFENSE - 1.1% | |||||||
HEICO Corporation Cl. A | 36,132 | 2,453,363 | |||||
AIR FREIGHT & LOGISTICS - 2.7% | |||||||
C. H. Robinson Worldwide | 28,500 | 2,087,910 | |||||
Expeditors International of Washington | 72,500 | 3,839,600 | |||||
5,927,510 | |||||||
BUILDING PRODUCTS - 0.9% | |||||||
Geberit | 1,000 | 400,193 | |||||
TOTO | 37,000 | 1,460,194 | |||||
1,860,387 | |||||||
COMMERCIAL SERVICES & SUPPLIES - 0.4% | |||||||
Societe BIC | 6,600 | 897,108 | |||||
CONSTRUCTION & ENGINEERING - 1.5% | |||||||
Comfort Systems USA | 30,400 | 1,012,320 | |||||
KBR | 136,900 | 2,284,861 | |||||
3,297,181 | |||||||
ELECTRICAL EQUIPMENT - 1.0% | |||||||
Hubbell Cl. B | 18,200 | 2,123,940 | |||||
MACHINERY - 9.9% | |||||||
Alamo Group | 9,808 | 746,389 | |||||
CLARCOR | 21,800 | 1,797,846 | |||||
Donaldson Company | 88,300 | 3,715,664 | |||||
Federal Signal | 40,929 | 638,902 | |||||
Flowserve Corporation | 20,100 | 965,805 | |||||
Graco | 23,500 | 1,952,615 | |||||
IDEX Corporation | 37,300 | 3,359,238 | |||||
Lincoln Electric Holdings | 27,050 | 2,073,923 | |||||
Lindsay Corporation | 27,500 | 2,051,775 | |||||
Miller Industries | 48,214 | 1,275,260 | |||||
Pfeiffer Vacuum Technology | 13,500 | 1,261,399 | |||||
Spirax-Sarco Engineering | 30,492 | 1,565,965 | |||||
21,404,781 | |||||||
MARINE - 0.8% | |||||||
Clarkson | 67,400 | 1,804,818 | |||||
PROFESSIONAL SERVICES - 3.1% | |||||||
Heidrick & Struggles International | 7,000 | 169,050 | |||||
Korn/Ferry International | 51,000 | 1,500,930 | |||||
ManpowerGroup | 42,300 | 3,759,201 | |||||
Robert Half International | 28,600 | 1,395,108 | |||||
6,824,289 | |||||||
ROAD & RAIL - 1.8% | |||||||
Amerco | 8,442 | 3,120,079 | |||||
Werner Enterprises | 25,400 | 684,530 | |||||
3,804,609 | |||||||
TRADING COMPANIES & DISTRIBUTORS - 1.5% | |||||||
Applied Industrial Technologies | 53,700 | 3,189,780 | |||||
Total (Cost $35,101,846) | 53,587,766 | ||||||
INFORMATION TECHNOLOGY – 7.7% | |||||||
COMMUNICATIONS EQUIPMENT - 0.2% | |||||||
TESSCO Technologies | 25,379 | 329,927 | |||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 3.2% | |||||||
FLIR Systems | 149,700 | 5,417,643 | |||||
Vishay Intertechnology | 92,388 | 1,496,686 | |||||
6,914,329 | |||||||
IT SERVICES - 1.8% | |||||||
Western Union | 181,900 | 3,950,868 | |||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.1% | |||||||
MKS Instruments | 5,308 | 315,295 | |||||
SOFTWARE - 0.6% | |||||||
Computer Modelling Group | 140,000 | 949,912 | |||||
SimCorp | 7,000 | 340,806 | |||||
1,290,718 | |||||||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 1.8% | |||||||
Diebold Nixdorf | 160,000 | 4,024,000 | |||||
Total (Cost $15,688,819) | 16,825,137 | ||||||
MATERIALS – 11.6% | |||||||
CHEMICALS - 1.7% | |||||||
Quaker Chemical | 26,800 | 3,428,792 | |||||
Victrex | 10,000 | 237,017 | |||||
3,665,809 | |||||||
CONTAINERS & PACKAGING - 2.5% | |||||||
AptarGroup | 41,200 | 3,026,140 | |||||
Greif Cl. A | 46,300 | 2,375,653 | |||||
5,401,793 | |||||||
METALS & MINING - 7.4% | |||||||
Carpenter Technology | 69,300 | 2,506,581 | |||||
Compass Minerals International | 38,100 | 2,985,135 | |||||
Franco-Nevada Corporation | 36,000 | 2,151,360 | |||||
Reliance Steel & Aluminum | 53,600 | 4,263,344 | |||||
Royal Gold | 19,900 | 1,260,665 | |||||
Worthington Industries | 62,200 | 2,950,768 | |||||
16,117,853 | |||||||
Total (Cost $18,588,834) | 25,185,455 | ||||||
REAL ESTATE – 0.2% | |||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.2% | |||||||
Relo Group | 2,300 | 328,437 | |||||
Total (Cost $107,244) | 328,437 | ||||||
TELECOMMUNICATION SERVICES – 1.7% | |||||||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.5% | |||||||
Inmarsat | 105,000 | 968,548 | |||||
WIRELESS TELECOMMUNICATION SERVICES - 1.2% | |||||||
Telephone and Data Systems | 91,500 | 2,641,605 | |||||
Total (Cost $3,264,044) | 3,610,153 | ||||||
UTILITIES – 1.4% | |||||||
WATER UTILITIES - 1.4% | |||||||
Aqua America | 104,800 | 3,148,192 | |||||
Total (Cost $2,517,092) | 3,148,192 | ||||||
MISCELLANEOUS2 – 3.2% | |||||||
Total (Cost $5,797,971) | 7,021,194 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $164,109,874) | 214,239,040 | ||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 45 |
Schedules of Investments |
Royce Dividend Value Fund (continued) |
PRINCIPAL | |||||||
AMOUNT | VALUE | ||||||
CORPORATE BOND – 0.2% | |||||||
Unit Corporation 6.625% | |||||||
due 5/15/21 | |||||||
(Cost $377,243) | $ | 458,000 | $ | 444,260 | |||
REPURCHASE AGREEMENT – 1.6% | |||||||
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value $3,414,011 (collateralized by obligations of various U.S. Government Agencies, 2.25% due 11/15/24, valued at $3,485,964) | |||||||
(Cost $3,414,000) | 3,414,000 | ||||||
TOTAL INVESTMENTS – 100.3% | |||||||
(Cost $167,901,117) | 218,097,300 | ||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (0.3)% | (692,953 | ) | |||||
NET ASSETS – 100.0% | $ | 217,404,347 | |||||
Royce Global Financial Services Fund |
Common Stocks – 95.7% |
SHARES | VALUE | ||||||
BANKS - 14.7% | |||||||
BankUnited | 4,100 | $ | 154,529 | ||||
BLOM Bank GDR | 8,000 | 87,200 | |||||
BOK Financial | 12,200 | 1,013,088 | |||||
Capital City Bank Group | 29,822 | 610,755 | |||||
Chemung Financial | 14,512 | 527,511 | |||||
First Citizens BancShares Cl. A | 3,465 | 1,230,075 | |||||
First Republic Bank | 10,400 | 958,256 | |||||
Investors Bancorp | 25,300 | 352,935 | |||||
Live Oak Bancshares | 45,000 | 832,500 | |||||
Popular | 28,900 | 1,266,398 | |||||
Umpqua Holdings | 17,400 | 326,772 | |||||
Total (Cost $5,311,109) | 7,360,019 | ||||||
CAPITAL MARKETS - 49.5% | |||||||
AllianceBernstein Holding L.P. | 11,500 | 269,675 | |||||
ARA Asset Management | 793,320 | 932,995 | |||||
Ares Management L.P. | 59,500 | 1,142,400 | |||||
Ashmore Group | 285,000 | 994,459 | |||||
Associated Capital Group Cl. A | 14,084 | 462,659 | |||||
BM&FBOVESPA | 136,000 | 685,652 | |||||
Carlyle Group L.P. | 41,700 | 635,925 | |||||
Charles Schwab (The) Corporation | 22,000 | 868,340 | |||||
Citadel Capital 1 | 150,000 | 8,356 | |||||
Coronation Fund Managers | 68,000 | 347,356 | |||||
Cowen Group 1 | 12,475 | 193,363 | |||||
CRISIL | 14,000 | 453,161 | |||||
Dundee Corporation Cl. A 1 | 90,000 | 398,838 | |||||
Edmond de Rothschild (Suisse) | 20 | 274,860 | |||||
Egyptian Financial Group-Hermes Holding | |||||||
Company 1 | 246,390 | 344,103 | |||||
Financial Engines | 15,600 | 573,300 | |||||
Fortress Investment Group LLC Cl. A | 102,600 | 498,636 | |||||
Gluskin Sheff + Associates | 70,500 | 915,741 | |||||
GMP Capital 1 | 108,000 | 354,731 | |||||
Hellenic Exchanges - Athens Stock Exchange | 50,000 | 257,355 | |||||
INTL FCStone 1 | 12,100 | 479,160 | |||||
IOOF Holdings | 20,000 | 132,483 | |||||
JSE | 51,000 | 609,845 | |||||
Jupiter Fund Management | 118,800 | 647,366 | |||||
KKR & Co. L.P. | 23,900 | 367,821 | |||||
Lazard Cl. A | 7,900 | 324,611 | |||||
MarketAxess Holdings | 4,600 | 675,832 | |||||
Medley Management Cl. A | 31,302 | 309,890 | |||||
Morningstar | 4,000 | 294,240 | |||||
MSCI | 2,150 | 169,377 | |||||
MVC Capital | 47,100 | 404,118 | |||||
Northern Trust | 8,700 | 774,735 | |||||
†NorthStar Asset Management Group | 31,500 | 469,980 | |||||
NZX | 440,000 | 321,169 | |||||
Oaktree Capital Group LLC Cl. A | 13,400 | 502,500 | |||||
Partners Group Holding | 670 | 313,564 | |||||
Reinet Investments | 7,200 | 132,812 | |||||
Rothschild & Co | 23,500 | 635,525 | |||||
SEI Investments | 19,900 | 982,264 | |||||
Silvercrest Asset Management Group Cl. A | 41,600 | 547,040 | |||||
Singapore Exchange | 105,000 | 518,897 |
46 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Global Financial Services Fund (continued) |
SHARES | VALUE | ||||||
CAPITAL MARKETS (continued) | |||||||
SPARX Group | 220,000 | $ | 426,231 | ||||
Sprott | 460,000 | 859,941 | |||||
TD Ameritrade Holding Corporation | 12,715 | 554,374 | |||||
Tokai Tokyo Financial Holdings | 9,400 | 49,867 | |||||
U.S. Global Investors Cl. A | 359,200 | 488,512 | |||||
UOB-Kay Hian Holdings | 129,000 | 113,125 | |||||
Value Partners Group | 672,000 | 534,570 | |||||
Virtu Financial Cl. A | 35,900 | 572,605 | |||||
VZ Holding | 1,850 | 555,040 | |||||
Warsaw Stock Exchange | 19,000 | 181,291 | |||||
Westwood Holdings Group | 4,400 | 263,956 | |||||
Total (Cost $22,775,959) | 24,824,646 | ||||||
DIVERSIFIED FINANCIAL SERVICES - 0.5% | |||||||
SHUAA Capital 1 | 580,000 | 233,888 | |||||
Total (Cost $308,882) | 233,888 | ||||||
HOTELS, RESTAURANTS & LEISURE - 0.2% | |||||||
Thomas Cook (India) | 30,600 | 86,340 | |||||
Total (Cost $28,633) | 86,340 | ||||||
INSURANCE - 6.2% | |||||||
E-L Financial | 2,400 | 1,304,882 | |||||
Jardine Lloyd Thompson Group | 11,900 | 144,286 | |||||
MBIA 1 | 95,300 | 1,019,710 | |||||
†National Western Life Group Cl. A | 2,000 | 621,600 | |||||
Total (Cost $2,747,518) | 3,090,478 | ||||||
INTERNET SOFTWARE & SERVICES - 0.0% | |||||||
223,459 | 10,279 | ||||||
Total (Cost $101,011) | 10,279 | ||||||
INVESTMENT COMPANIES - 1.8% | |||||||
RIT Capital Partners | 40,000 | 927,467 | |||||
Total (Cost $843,641) | 927,467 | ||||||
IT SERVICES - 3.6% | |||||||
Cass Information Systems | 3,800 | 279,566 | |||||
DST Systems | 2,900 | 310,735 | |||||
GBST Holdings | 105,000 | 284,735 | |||||
PayPal Holdings 1 | 12,800 | 505,216 | |||||
Western Union | 19,800 | 430,056 | |||||
Total (Cost $1,685,282) | 1,810,308 | ||||||
MARINE - 1.2% | |||||||
Clarkson | 22,000 | 589,110 | |||||
Total (Cost $774,855) | 589,110 | ||||||
METALS & MINING - 1.8% | |||||||
Franco-Nevada Corporation | 15,000 | 896,400 | |||||
Total (Cost $782,045) | 896,400 | ||||||
PROFESSIONAL SERVICES - 2.0% | |||||||
IHS Markit 1 | 14,000 | 495,740 | |||||
Verisk Analytics 1 | 6,400 | 519,488 | |||||
Total (Cost $573,159) | 1,015,228 | ||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 4.8% | |||||||
†FirstService Corporation | 31,000 | 1,471,880 | |||||
†Kennedy Wilson Europe Real Estate | 61,000 | 720,632 | |||||
Midland Holdings 1 | 800,000 | 206,071 | |||||
Total (Cost $2,280,660) | 2,398,583 | ||||||
SOFTWARE - 2.4% | |||||||
Bottomline Technologies 1 | 13,600 | 340,272 | |||||
Fair Isaac | 7,400 | 882,228 | |||||
Total (Cost $562,195) | 1,222,500 | ||||||
THRIFTS & MORTGAGE FINANCE - 1.5% | |||||||
25,700 | 733,735 | ||||||
Total (Cost $466,954) | 733,735 | ||||||
TRADING COMPANIES & DISTRIBUTORS - 1.0% | |||||||
Air Lease Cl. A | 13,900 | 477,187 | |||||
Total (Cost $549,398) | 477,187 | ||||||
MISCELLANEOUS2 – 4.5% | |||||||
Total (Cost $2,113,876) | 2,268,456 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $41,905,177) | 47,944,624 | ||||||
REPURCHASE AGREEMENT – 2.8% | |||||||
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value $1,383,005 (collateralized by obligations of various U.S. Government Agencies, 2.25% due 11/15/24, valued at $1,415,242) | |||||||
(Cost $1,383,000) | 1,383,000 | ||||||
TOTAL INVESTMENTS – 98.5% | |||||||
(Cost $43,288,177) | 49,327,624 | ||||||
CASH AND OTHER ASSETS LESS LIABILITIES – 1.5% | 775,159 | ||||||
NET ASSETS – 100.0% | $ | 50,102,783 | |||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 47 |
Schedules of Investments |
Royce Heritage Fund |
Common Stocks – 80.0% |
SHARES | VALUE | ||||||
CONSUMER DISCRETIONARY – 25.4% | |||||||
AUTO COMPONENTS - 7.4% | |||||||
†Cooper Tire & Rubber | 44,300 | $ | 1,721,055 | ||||
Dorman Products 1 | 6,160 | 450,050 | |||||
Gentex Corporation | 252,635 | 4,974,383 | |||||
LCI Industries | 36,300 | 3,911,325 | |||||
Standard Motor Products | 106,400 | 5,662,608 | |||||
16,719,421 | |||||||
AUTOMOBILES - 2.8% | |||||||
Thor Industries | 63,600 | 6,363,180 | |||||
DISTRIBUTORS - 2.8% | |||||||
Genuine Parts | 10,969 | 1,047,978 | |||||
LKQ Corporation 1 | 174,324 | 5,343,031 | |||||
6,391,009 | |||||||
HOUSEHOLD DURABLES - 1.7% | |||||||
Ethan Allen Interiors | 29,668 | 1,093,266 | |||||
Forbo Holding | 500 | 644,816 | |||||
NVR 1 | 1,300 | 2,169,700 | |||||
3,907,782 | |||||||
MEDIA - 2.5% | |||||||
Media General 1 | 117,272 | 2,208,232 | |||||
Meredith Corporation | 56,780 | 3,358,537 | |||||
5,566,769 | |||||||
MULTILINE RETAIL - 0.3% | |||||||
Dollar Tree 1 | 9,635 | 743,629 | |||||
SPECIALTY RETAIL - 6.3% | |||||||
†Camping World Holdings Cl. A | 110,605 | 3,604,617 | |||||
24,200 | 1,558,238 | ||||||
†Dicks Sporting Goods | 78,741 | 4,181,147 | |||||
Monro Muffler Brake | 19,500 | 1,115,400 | |||||
Signet Jewelers | 32,900 | 3,101,154 | |||||
USS | 36,100 | 573,907 | |||||
14,134,463 | |||||||
TEXTILES, APPAREL & LUXURY GOODS - 1.6% | |||||||
Coach | 41,400 | 1,449,828 | |||||
Wolverine World Wide | 100,222 | 2,199,873 | |||||
3,649,701 | |||||||
Total (Cost $41,291,245) | 57,475,954 | ||||||
CONSUMER STAPLES – 0.3% | |||||||
FOOD PRODUCTS - 0.3% | |||||||
Sanderson Farms | 6,200 | 584,288 | |||||
Total (Cost $505,399) | 584,288 | ||||||
FINANCIALS – 7.2% | |||||||
CAPITAL MARKETS - 4.2% | |||||||
Affiliated Managers Group 1 | 14,745 | 2,142,448 | |||||
Federated Investors Cl. B | 35,300 | 998,284 | |||||
Lazard Cl. A | 88,673 | 3,643,574 | |||||
Oaktree Capital Group LLC Cl. A | 28,587 | 1,072,012 | |||||
TMX Group | 16,000 | 852,285 | |||||
Westwood Holdings Group | 11,900 | 713,881 | |||||
9,422,484 | |||||||
INSURANCE - 3.0% | |||||||
Alleghany Corporation 1 | 11,164 | 6,789,052 | |||||
Total (Cost $13,731,247) | 16,211,536 | ||||||
HEALTH CARE – 1.1% | |||||||
HEALTH CARE EQUIPMENT & SUPPLIES - 1.0% | |||||||
Dentsply Sirona | 19,900 | 1,148,827 | |||||
Hill-Rom Holdings | 19,647 | 1,102,983 | |||||
2,251,810 | |||||||
PHARMACEUTICALS - 0.1% | |||||||
Recordati | 13,000 | 368,219 | |||||
Total (Cost $2,450,087) | 2,620,029 | ||||||
INDUSTRIALS – 21.6% | |||||||
AEROSPACE & DEFENSE - 0.4% | |||||||
HEICO Corporation | 10,400 | 802,360 | |||||
AIR FREIGHT & LOGISTICS - 0.3% | |||||||
Expeditors International of Washington | 13,300 | 704,368 | |||||
BUILDING PRODUCTS - 1.9% | |||||||
Apogee Enterprises | 31,700 | 1,697,852 | |||||
Simpson Manufacturing | 61,412 | 2,686,775 | |||||
4,384,627 | |||||||
COMMERCIAL SERVICES & SUPPLIES - 3.7% | |||||||
Cintas Corporation | 16,600 | 1,918,296 | |||||
Copart 1 | 114,635 | 6,351,925 | |||||
8,270,221 | |||||||
CONSTRUCTION & ENGINEERING - 1.3% | |||||||
Valmont Industries | 21,173 | 2,983,276 | |||||
ELECTRICAL EQUIPMENT - 2.1% | |||||||
Hubbell Cl. B | 40,222 | 4,693,907 | |||||
INDUSTRIAL CONGLOMERATES - 0.8% | |||||||
Carlisle Companies | 15,425 | 1,701,223 | |||||
MACHINERY - 2.8% | |||||||
†Flowserve Corporation | 24,400 | 1,172,420 | |||||
Lincoln Electric Holdings | 30,300 | 2,323,101 | |||||
Mueller Industries | 47,944 | 1,915,843 | |||||
Westinghouse Air Brake Technologies | 11,260 | 934,805 | |||||
6,346,169 | |||||||
MARINE - 1.8% | |||||||
Kirby Corporation 1 | 63,000 | 4,189,500 | |||||
PROFESSIONAL SERVICES - 4.3% | |||||||
Equifax | 24,950 | 2,949,838 | |||||
IHS Markit 1 | 58,868 | 2,084,516 | |||||
ManpowerGroup | 54,100 | 4,807,867 | |||||
9,842,221 | |||||||
ROAD & RAIL - 1.6% | |||||||
†Kansas City Southern | 15,209 | 1,290,484 | |||||
Landstar System | 26,400 | 2,251,920 | |||||
3,542,404 | |||||||
TRADING COMPANIES & DISTRIBUTORS - 0.6% | |||||||
Diploma | 114,300 | 1,463,173 | |||||
Total (Cost $36,034,320) | 48,923,449 | ||||||
INFORMATION TECHNOLOGY – 6.3% | |||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 3.5% | |||||||
AVX Corporation | 234,713 | 3,668,564 | |||||
Coherent 1 | 15,275 | 2,098,556 | |||||
IPG Photonics 1 | 22,947 | 2,265,098 | |||||
8,032,218 | |||||||
IT SERVICES - 1.5% | |||||||
DST Systems | 32,026 | 3,431,586 | |||||
48 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Heritage Fund (continued) |
SHARES | VALUE | ||||||
INFORMATION TECHNOLOGY (continued) | |||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.3% | |||||||
Lam Research | 26,900 | $ | 2,844,137 | ||||
Total (Cost $11,578,462) | 14,307,941 | ||||||
MATERIALS – 9.5% | |||||||
CHEMICALS - 6.3% | |||||||
Minerals Technologies | 53,855 | 4,160,299 | |||||
RPM International | 11,000 | 592,130 | |||||
Sensient Technologies | 45,809 | 3,599,671 | |||||
Westlake Chemical | 104,180 | 5,833,038 | |||||
14,185,138 | |||||||
METALS & MINING - 1.4% | |||||||
Kaiser Aluminum | 16,150 | 1,254,694 | |||||
Reliance Steel & Aluminum | 24,650 | 1,960,661 | |||||
3,215,355 | |||||||
PAPER & FOREST PRODUCTS - 1.8% | |||||||
Neenah Paper | 37,045 | 3,156,234 | |||||
Stella-Jones | 27,800 | 902,338 | |||||
4,058,572 | |||||||
Total (Cost $17,792,316) | 21,459,065 | ||||||
REAL ESTATE – 4.7% | |||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 4.7% | |||||||
Colliers International Group | 36,100 | 1,326,675 | |||||
Jones Lang LaSalle | 32,440 | 3,277,738 | |||||
Kennedy Wilson Europe Real Estate | 206,000 | 2,433,610 | |||||
Kennedy-Wilson Holdings | 151,200 | 3,099,600 | |||||
Marcus & Millichap 1 | 16,643 | 444,701 | |||||
Total (Cost $11,943,142) | 10,582,324 | ||||||
UTILITIES – 1.8% | |||||||
GAS UTILITIES - 1.8% | |||||||
UGI Corporation | 89,123 | 4,106,788 | |||||
Total (Cost $2,738,663) | 4,106,788 | ||||||
MISCELLANEOUS2 – 2.1% | |||||||
Total (Cost $4,505,572) | 4,806,065 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $142,570,453) | 181,077,439 | ||||||
REPURCHASE AGREEMENT – 20.9% | |||||||
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value $47,278,158 (collateralized by obligations of various U.S. Government Agencies, 2.25% due 11/15/24, valued at $48,227,461) | |||||||
(Cost $47,278,000) | 47,278,000 | ||||||
COLLATERAL RECEIVED FOR SECURITIES LOANED – 0.7% | |||||||
Money Market Funds | |||||||
Federated Government Obligations Fund (7 day yield-0.3947%) | |||||||
(Cost $1,563,260) | 1,563,260 | ||||||
TOTAL INVESTMENTS – 101.6% | |||||||
(Cost $191,411,713) | 229,918,699 | ||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (1.6)% | (3,610,544 | ) | |||||
NET ASSETS – 100.0% | $ | 226,308,155 | |||||
Royce International Micro-Cap Fund |
Common Stocks – 92.3% |
SHARES | VALUE | ||||||
AUSTRALIA – 3.1% | |||||||
Austal | 37,400 | $ | 46,918 | ||||
Imdex 1 | 50,900 | 21,085 | |||||
10,400 | 16,079 | ||||||
679,200 | 35,557 | ||||||
TFS Corporation | 55,748 | 66,753 | |||||
Total (Cost $197,822) | 186,392 | ||||||
AUSTRIA – 0.7% | |||||||
UBM Development | 1,300 | 42,417 | |||||
Total (Cost $50,345) | 42,417 | ||||||
BELGIUM – 0.6% | |||||||
†Barco | 400 | 33,672 | |||||
Total (Cost $33,381) | 33,672 | ||||||
BRAZIL – 1.9% | |||||||
20,500 | 76,515 | ||||||
T4F Entretenimento | 23,700 | 40,763 | |||||
Total (Cost $118,827) | 117,278 | ||||||
CANADA – 10.5% | |||||||
†AGT Food and Ingredients | 2,100 | 57,307 | |||||
Altus Group | 2,300 | 53,035 | |||||
Dream Global Real Estate Investment Trust | 6,000 | 42,230 | |||||
Exco Technologies | 10,300 | 82,698 | |||||
5,000 | 55,971 | ||||||
Magellan Aerospace | 7,600 | 101,775 | |||||
35,400 | 18,720 | ||||||
RDM Corporation | 13,000 | 46,475 | |||||
12,900 | 50,310 | ||||||
Solium Capital 1 | 9,700 | 60,975 | |||||
Western Forest Products | 48,000 | 67,568 | |||||
Total (Cost $619,762) | 637,064 | ||||||
CHINA – 1.6% | |||||||
124,800 | 29,386 | ||||||
†Xingda International Holdings | 80,300 | 36,194 | |||||
Xtep International Holdings | 76,000 | 31,770 | |||||
Total (Cost $90,974) | 97,350 | ||||||
FINLAND – 0.4% | |||||||
BasWare 1 | 700 | 26,737 | |||||
Total (Cost $35,220) | 26,737 | ||||||
FRANCE – 1.9% | |||||||
Chargeurs | 1,700 | 28,550 | |||||
†Groupe Crit | 300 | 21,470 | |||||
HighCo | 5,200 | 35,187 | |||||
Manutan International | 400 | 29,344 | |||||
Total (Cost $77,822) | 114,551 | ||||||
GEORGIA – 0.6% | |||||||
†BGEO Group | 900 | 33,158 | |||||
Total (Cost $26,047) | 33,158 | ||||||
GERMANY – 6.1% | |||||||
ADLER Real Estate 1 | 3,700 | 56,414 | |||||
Allgeier | 1,100 | 19,945 | |||||
AURELIUS Equity Opportunities | 1,000 | 58,329 | |||||
†CANCOM | 1,500 | 70,773 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 49 |
Schedules of Investments |
Royce International Micro-Cap Fund (continued) |
SHARES | VALUE | ||||||
GERMANY (continued) | |||||||
HolidayCheck Group 1 | 10,300 | $ | 25,446 | ||||
msg life 1 | 8,600 | 26,232 | |||||
mutares | 1,800 | 21,627 | |||||
PNE Wind | 22,800 | 52,331 | |||||
VIB Vermoegen | 1,900 | 39,291 | |||||
Total (Cost $384,922) | 370,388 | ||||||
GREECE – 0.5% | |||||||
Aegean Marine Petroleum Network | 3,000 | 30,450 | |||||
Total (Cost $40,618) | 30,450 | ||||||
HONG KONG – 4.3% | |||||||
China Metal International Holdings | 177,000 | 55,794 | |||||
I.T | 143,300 | 56,929 | |||||
Oriental Watch Holdings | 181,500 | 34,975 | |||||
Pico Far East Holdings | 184,300 | 56,502 | |||||
†Value Partners Group | 29,700 | 23,626 | |||||
VST Holdings | 90,400 | 31,598 | |||||
Total (Cost $264,807) | 259,424 | ||||||
INDIA – 0.9% | |||||||
†IIFL Holdings | 7,200 | 27,460 | |||||
2,900 | 27,986 | ||||||
Total (Cost $56,190) | 55,446 | ||||||
INDONESIA – 0.7% | |||||||
Selamat Sempurna | 578,300 | 41,960 | |||||
Total (Cost $49,312) | 41,960 | ||||||
IRELAND – 3.1% | |||||||
Ardmore Shipping | 4,800 | 35,520 | |||||
†Irish Continental Group | 17,000 | 80,458 | |||||
†Irish Residential Properties REIT | 58,157 | 71,599 | |||||
Total (Cost $216,554) | 187,577 | ||||||
ISRAEL – 2.2% | |||||||
Nova Measuring Instruments 1 | 4,850 | 63,729 | |||||
†Sapiens International | 2,100 | 30,114 | |||||
Sarine Technologies | 33,800 | 41,986 | |||||
Total (Cost $121,586) | 135,829 | ||||||
ITALY – 1.1% | |||||||
Banca Sistema | 28,500 | 65,962 | |||||
Total (Cost $76,557) | 65,962 | ||||||
JAPAN – 12.1% | |||||||
BML | 1,000 | 23,795 | |||||
C. Uyemura & Co. | 500 | 21,782 | |||||
†EM Systems | 1,800 | 24,742 | |||||
†en-japan | 1,200 | 21,386 | |||||
GCA | 3,500 | 24,574 | |||||
G-Tekt | 1,200 | 23,218 | |||||
†Inabata & Co. | 2,600 | 28,588 | |||||
†Kakaku.com | 1,300 | 21,493 | |||||
†Kenedix | 6,700 | 23,769 | |||||
†Kenko Mayonnaise | 1,000 | 28,213 | |||||
†Kintetsu World Express | 1,600 | 22,135 | |||||
Leopalace21 | 4,200 | 23,178 | |||||
Mandom Corporation | 600 | 25,834 | |||||
†Maruwa Unyu Kikan | 700 | 17,297 | |||||
†Meitec Corporation | 600 | 22,931 | |||||
†MISUMI Group | 1,500 | 24,618 | |||||
†Nabtesco | 900 | 20,894 | |||||
†NS Solutions | 1,500 | 26,910 | |||||
Obara Group | 500 | 22,265 | |||||
†Open House | 1,100 | 26,128 | |||||
Outsourcing | 800 | 24,874 | |||||
Pressance | 1,400 | 17,360 | |||||
Relo Group | 200 | 28,560 | |||||
Ryobi | 6,400 | 25,077 | |||||
SPARX Group | 22,200 | 43,011 | |||||
Sun Frontier Fudousan | 2,900 | 25,510 | |||||
Takara Leben | 3,700 | 21,522 | |||||
Tokai Corporation | 700 | 23,820 | |||||
†Tokai Tokyo Financial Holdings | 4,300 | 22,812 | |||||
Trancom | 500 | 24,434 | |||||
Total (Cost $776,821) | 730,730 | ||||||
MEXICO – 0.7% | |||||||
†Rassini | 10,800 | 40,632 | |||||
Total (Cost $49,314) | 40,632 | ||||||
NETHERLANDS – 0.6% | |||||||
6,100 | 35,990 | ||||||
Total (Cost $30,173) | 35,990 | ||||||
NEW ZEALAND – 0.5% | |||||||
New Zealand Refining | 16,400 | 29,607 | |||||
Total (Cost $37,704) | 29,607 | ||||||
NORWAY – 1.2% | |||||||
11,000 | 44,717 | ||||||
3,400 | 26,778 | ||||||
Total (Cost $70,584) | 71,495 | ||||||
PHILIPPINES – 0.6% | |||||||
†Integrated Micro-Electronics | 311,800 | 38,035 | |||||
Total (Cost $38,498) | 38,035 | ||||||
SINGAPORE – 2.0% | |||||||
Broadway Industrial Group 1 | 580,900 | 75,865 | |||||
CSE Global | 147,300 | 46,283 | |||||
Total (Cost $129,400) | 122,148 | ||||||
SOUTH AFRICA – 1.5% | |||||||
Net 1 UEPS Technologies 1 | 5,200 | 59,696 | |||||
Raubex Group | 19,000 | 33,995 | |||||
Total (Cost $109,312) | 93,691 | ||||||
SOUTH KOREA – 3.5% | |||||||
Handsome 1 | 1,700 | 49,067 | |||||
Koh Young Technology | 1,700 | 63,535 | |||||
†KT Skylife | 2,700 | 38,479 | |||||
2,500 | 59,889 | ||||||
Total (Cost $224,348) | 210,970 | ||||||
SPAIN – 1.9% | |||||||
Atento 1 | 6,400 | 48,640 |
50 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce International Micro-Cap Fund (continued) |
SHARES | VALUE | ||||||
SPAIN (continued) | |||||||
†Papeles y Cartones de Europa | 11,800 | $ | 65,145 | ||||
Total (Cost $120,604) | 113,785 | ||||||
SWEDEN – 3.8% | |||||||
7,100 | 38,877 | ||||||
†Byggmax Group | 6,500 | 44,885 | |||||
Dustin Group | 10,800 | 75,777 | |||||
†Knowit | 2,400 | 23,640 | |||||
Proact IT Group | 3,100 | 49,675 | |||||
Total (Cost $235,146) | 232,854 | ||||||
TAIWAN – 7.4% | |||||||
†Chipbond Technology | 16,900 | 23,998 | |||||
4,600 | 37,663 | ||||||
Flytech Technology | 18,224 | 53,084 | |||||
†Posiflex Technology | 4,957 | 27,152 | |||||
†Realtek Semiconductor | 8,400 | 26,413 | |||||
Shih Her Technologies | 36,800 | 34,019 | |||||
†Sitronix Technology | 12,900 | 40,880 | |||||
Sporton International | 10,883 | 57,543 | |||||
†Sunny Friend Environmental Technology | 13,100 | 45,738 | |||||
Taiwan Paiho | 15,200 | 44,748 | |||||
†TCI | 11,800 | 59,926 | |||||
Total (Cost $490,349) | 451,164 | ||||||
TURKEY – 0.8% | |||||||
†Tat Gida Sanayi | 30,300 | 49,179 | |||||
Total (Cost $60,307) | 49,179 | ||||||
UNITED ARAB EMIRATES – 1.0% | |||||||
Aramex | 53,700 | 59,375 | |||||
Total (Cost $29,498) | 59,375 | ||||||
UNITED KINGDOM – 12.7% | |||||||
†Avon Rubber | 3,400 | 43,557 | |||||
BrainJuicer Group | 4,100 | 27,778 | |||||
Character Group | 4,700 | 29,543 | |||||
†Connect Group | 22,700 | 42,692 | |||||
Consort Medical | 2,900 | 37,836 | |||||
Conviviality | 30,400 | 80,550 | |||||
†dotdigital group | 84,500 | 59,878 | |||||
†EMIS Group | 4,400 | 52,306 | |||||
†Epwin Group | 19,200 | 24,169 | |||||
Finsbury Food Group | 29,600 | 43,768 | |||||
†Hilton Food Group | 9,700 | 74,292 | |||||
†Inspired Energy | 204,500 | 34,662 | |||||
Norcros | 25,770 | 56,979 | |||||
Pendragon | 103,700 | 39,813 | |||||
†Rank Group | 12,300 | 29,548 | |||||
Real Estate Investors | 42,500 | 29,106 | |||||
Trifast | 11,300 | 28,563 | �� | ||||
Vertu Motors | 64,300 | 34,463 | |||||
Total (Cost $857,850) | 769,503 | ||||||
UNITED STATES – 1.8% | |||||||
Century Casinos 1 | 8,400 | 69,132 | |||||
1,800 | 41,023 | ||||||
Total (Cost $91,937) | 110,155 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $5,812,591) | 5,594,968 | ||||||
REPURCHASE AGREEMENT – 8.3% | |||||||
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value | |||||||
$501,002 (collateralized by obligations of various U.S. Government Agencies, 2.25% due | |||||||
11/15/24, valued at $511,473) | |||||||
(Cost $501,000) | 501,000 | ||||||
TOTAL INVESTMENTS – 100.6% | |||||||
(Cost $6,313,591) | 6,095,968 | ||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (0.6)% | (36,276 | ) | |||||
NET ASSETS – 100.0% | $ | 6,059,692 | |||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 51 |
Schedules of Investments |
Royce International Premier Fund |
Common Stocks – 96.9% |
SHARES | VALUE | ||||||
AUSTRALIA – 6.4% | |||||||
†ALS | 290,000 | $ | 1,260,676 | ||||
Cochlear | 11,100 | 979,894 | |||||
†IPH | 280,000 | 1,032,779 | |||||
†Spotless Group Holdings | 1,100,000 | 784,334 | |||||
Total (Cost $4,117,225) | 4,057,683 | ||||||
AUSTRIA – 3.2% | |||||||
Mayr-Melnhof Karton | 19,000 | 2,013,857 | |||||
Total (Cost $2,234,828) | 2,013,857 | ||||||
BRAZIL – 2.3% | |||||||
†OdontoPrev | 375,000 | 1,452,570 | |||||
Total (Cost $1,057,443) | 1,452,570 | ||||||
CANADA – 3.4% | |||||||
†Morneau Shepell | 75,000 | 1,071,947 | |||||
†Winpak | 32,500 | 1,099,430 | |||||
Total (Cost $2,170,690) | 2,171,377 | ||||||
CHINA – 1.6% | |||||||
TravelSky Technology | 490,000 | 1,025,936 | |||||
Total (Cost $704,291) | 1,025,936 | ||||||
DENMARK – 2.1% | |||||||
SimCorp | 27,500 | 1,338,881 | |||||
Total (Cost $1,353,542) | 1,338,881 | ||||||
FRANCE – 5.0% | |||||||
Thermador Groupe | 19,000 | 1,669,943 | |||||
Virbac 1 | 8,500 | 1,494,069 | |||||
Total (Cost $3,523,387) | 3,164,012 | ||||||
GERMANY – 8.0% | |||||||
Carl Zeiss Meditec | 30,500 | 1,123,701 | |||||
Fielmann | 19,500 | 1,285,727 | |||||
KWS Saat | 4,500 | 1,335,426 | |||||
STRATEC Biomedical | 27,500 | 1,324,020 | |||||
Total (Cost $4,962,250) | 5,068,874 | ||||||
HONG KONG – 1.5% | |||||||
Value Partners Group | 1,225,000 | 974,476 | |||||
Total (Cost $1,230,457) | 974,476 | ||||||
INDIA – 3.8% | |||||||
Bajaj Finance | 130,000 | 1,615,384 | |||||
†SH Kelkar & Company | 179,100 | 813,120 | |||||
Total (Cost $1,931,698) | 2,428,504 | ||||||
ITALY – 1.7% | |||||||
DiaSorin | 18,500 | 1,095,171 | |||||
Total (Cost $801,006) | 1,095,171 | ||||||
JAPAN – 20.0% | |||||||
†Ai Holdings | 52,500 | 1,042,396 | |||||
Horiba | 23,500 | 1,085,291 | |||||
Meitec Corporation | 50,500 | 1,930,058 | |||||
MISUMI Group | 80,000 | 1,312,937 | |||||
Nihon Kohden | 66,000 | 1,456,472 | |||||
†Relo Group | 11,800 | 1,685,024 | |||||
Santen Pharmaceutical | 130,000 | 1,587,623 | |||||
†Sugi Holdings | 14,500 | 687,090 | |||||
USS | 120,000 | 1,907,725 | |||||
Total (Cost $12,006,191) | 12,694,616 | ||||||
NEW ZEALAND – 2.0% | |||||||
Fisher & Paykel Healthcare | 212,456 | 1,253,943 | |||||
Total (Cost $1,194,020) | 1,253,943 | ||||||
SINGAPORE – 1.7% | |||||||
XP Power | 50,000 | 1,070,596 | |||||
Total (Cost $1,115,281) | 1,070,596 | ||||||
SWEDEN – 3.4% | |||||||
Addtech Cl. B | 72,500 | 1,133,735 | |||||
†Bravida Holding | 175,000 | 1,059,383 | |||||
Total (Cost $2,052,845) | 2,193,118 | ||||||
SWITZERLAND – 11.1% | |||||||
Burckhardt Compression Holding | 6,000 | 1,577,694 | |||||
dormakaba Holding | 1,250 | 929,364 | |||||
LEM Holding | 1,000 | 934,947 | |||||
Partners Group Holding | 3,900 | 1,825,221 | |||||
VZ Holding | 5,900 | 1,770,127 | |||||
Total (Cost $5,678,656) | 7,037,353 | ||||||
UNITED KINGDOM – 19.7% | |||||||
Ashmore Group | 180,000 | 628,079 | |||||
AVEVA Group | 30,000 | 691,356 | |||||
Berendsen | 94,000 | 1,004,139 | |||||
Clarkson | 42,500 | 1,138,053 | |||||
Consort Medical | 110,000 | 1,435,159 | |||||
Elementis | 270,000 | 920,696 | |||||
†Equiniti Group | 425,000 | 1,022,224 | |||||
Exova Group | 420,000 | 985,498 | |||||
ITE Group | 630,000 | 1,195,191 | |||||
Rotork | 330,000 | 975,838 | |||||
Spirax-Sarco Engineering | 20,000 | 1,027,132 | |||||
Victrex | 64,500 | 1,528,763 | |||||
Total (Cost $13,662,738) | 12,552,128 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $59,796,548) | 61,593,095 | ||||||
REPURCHASE AGREEMENT – 2.3% | |||||||
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value | |||||||
$1,475,005 (collateralized by obligations of various U.S. Government Agencies, 2.25% due | |||||||
11/15/24, valued at $1,504,625) | |||||||
(Cost $1,475,000) | 1,475,000 | ||||||
TOTAL INVESTMENTS – 99.2% | |||||||
(Cost $61,271,548) | 63,068,095 | ||||||
CASH AND OTHER ASSETS LESS LIABILITIES – 0.8% | 532,042 | ||||||
NET ASSETS – 100.0% | $ | 63,600,137 | |||||
52 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce International Small-Cap Fund |
Common Stocks – 95.2% |
SHARES | VALUE | ||||||
AUSTRALIA – 3.5% | |||||||
†Austal | 46,000 | $ | 57,706 | ||||
Evolution Mining | 51,000 | 75,047 | |||||
12,900 | 19,944 | ||||||
Saracen Mineral Holdings 1 | 74,000 | 51,047 | |||||
TFS Corporation | 40,000 | 47,897 | |||||
Total (Cost $321,132) | 251,641 | ||||||
AUSTRIA – 1.0% | |||||||
Mayr-Melnhof Karton | 700 | 74,195 | |||||
Total (Cost $73,629) | 74,195 | ||||||
BELGIUM – 0.6% | |||||||
†Barco | 500 | 42,090 | |||||
Total (Cost $41,727) | 42,090 | ||||||
BRAZIL – 2.0% | |||||||
25,800 | 96,296 | ||||||
T4F Entretenimento | 29,000 | 49,879 | |||||
Total (Cost $131,594) | 146,175 | ||||||
CANADA – 9.4% | |||||||
AGT Food and Ingredients | 2,700 | 73,681 | |||||
Altus Group | 3,000 | 69,177 | |||||
6,300 | 71,650 | ||||||
Dream Global Real Estate Investment Trust | 7,300 | 51,380 | |||||
Exco Technologies | 12,700 | 101,967 | |||||
Just Energy Group | 8,200 | 44,772 | |||||
Magellan Aerospace | 9,300 | 124,540 | |||||
16,600 | 64,740 | ||||||
†Western Forest Products | 58,100 | 81,785 | |||||
Total (Cost $665,735) | 683,692 | ||||||
CHINA – 5.7% | |||||||
†China Communications Services | 69,900 | 44,486 | |||||
†China Lesso Group Holdings | 74,600 | 48,213 | |||||
China Medical System Holdings | 30,700 | 48,434 | |||||
98,800 | 46,046 | ||||||
154,900 | 36,474 | ||||||
Haitian International Holdings | 19,205 | 37,436 | |||||
Minth Group | 17,753 | 55,083 | |||||
Tianneng Power International | 63,400 | 58,138 | |||||
Xtep International Holdings | 99,600 | 41,635 | |||||
Total (Cost $411,171) | 415,945 | ||||||
DENMARK – 0.5% | |||||||
†Scandinavian Tobacco Group | 2,300 | 38,686 | |||||
Total (Cost $39,906) | 38,686 | ||||||
FINLAND – 0.4% | |||||||
BasWare 1 | 800 | 30,557 | |||||
Total (Cost $37,496) | 30,557 | ||||||
FRANCE – 2.1% | |||||||
†Elis | 4,700 | 83,794 | |||||
†Groupe Crit | 300 | 21,470 | |||||
Technicolor | 9,418 | 50,944 | |||||
Total (Cost $180,898) | 156,208 | ||||||
GEORGIA – 0.5% | |||||||
†BGEO Group | 1,000 | 36,842 | |||||
Total (Cost $28,636) | 36,842 | ||||||
GERMANY – 5.0% | |||||||
ADLER Real Estate 1 | 4,832 | 73,674 | |||||
AURELIUS Equity Opportunities | 1,201 | 70,053 | |||||
†CANCOM | 2,100 | 99,082 | |||||
Hella KGaA Hueck & Co. | 1,737 | 65,455 | |||||
Takkt | 2,300 | 52,126 | |||||
Total (Cost $375,765) | 360,390 | ||||||
HONG KONG – 6.0% | |||||||
†HKBN | 68,000 | 74,399 | |||||
†Kerry Logistics Network | 24,600 | 30,981 | |||||
†Lee & Man Paper Manufacturing | 95,000 | 73,390 | |||||
Pacific Textiles Holdings | 42,300 | 45,753 | |||||
†Skyworth Digital Holdings | 75,900 | 43,135 | |||||
†Tongda Group Holdings | 205,100 | 52,688 | |||||
Value Partners Group | 97,634 | 77,667 | |||||
VST Holdings | 112,100 | 39,182 | |||||
Total (Cost $461,596) | 437,195 | ||||||
INDIA – 2.9% | |||||||
†Cholamandalam Investment and Finance | 4,800 | 66,629 | |||||
†IIFL Holdings | 8,900 | 33,944 | |||||
3,900 | 37,636 | ||||||
Thomas Cook (India) | 26,000 | 73,361 | |||||
Total (Cost $167,531) | 211,570 | ||||||
INDONESIA – 0.6% | |||||||
Selamat Sempurna | 605,900 | 43,962 | |||||
Total (Cost $52,308) | 43,962 | ||||||
IRELAND – 2.7% | |||||||
†Irish Continental Group | 20,600 | 97,496 | |||||
†Irish Residential Properties REIT | 77,200 | 95,044 | |||||
Total (Cost $206,502) | 192,540 | ||||||
ISRAEL – 1.2% | |||||||
†Sapiens International | 2,500 | 35,850 | |||||
†Sarine Technologies | 40,900 | 50,805 | |||||
Total (Cost $82,735) | 86,655 | ||||||
ITALY – 1.1% | |||||||
Banca Sistema | 35,800 | 82,858 | |||||
Total (Cost $107,071) | 82,858 | ||||||
JAPAN – 14.6% | |||||||
BML | 1,300 | 30,933 | |||||
C. Uyemura & Co. | 700 | 30,494 | |||||
†EM Systems | 2,300 | 31,615 | |||||
en-japan | 1,600 | 28,515 | |||||
GCA | 4,600 | 32,297 | |||||
†G-Tekt | 1,500 | 29,022 | |||||
†Inabata & Co. | 3,400 | 37,385 | |||||
†Itochu Techno-Solutions | 1,100 | 28,570 | |||||
Kakaku.com | 1,700 | 28,107 | |||||
Kenedix | 8,700 | 30,864 | |||||
†Kenko Mayonnaise | 1,200 | 33,856 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 53 |
Schedules of Investments |
Royce International Small-Cap Fund (continued) |
SHARES | VALUE | ||||||
JAPAN (continued) | |||||||
Kintetsu World Express | 1,900 | $ | 26,286 | ||||
Leopalace21 | 5,500 | 30,352 | |||||
Mandom Corporation | 800 | 34,446 | |||||
†Maruwa Unyu Kikan | 900 | 22,239 | |||||
Meitec Corporation | 800 | 30,575 | |||||
Miraca Holdings | 700 | 31,351 | |||||
MISUMI Group | 1,900 | 31,182 | |||||
†Nabtesco | 1,200 | 27,859 | |||||
Nifco | 700 | 36,845 | |||||
†NS Solutions | 1,900 | 34,087 | |||||
Obara Group | 600 | 26,718 | |||||
†Open House | 1,500 | 35,629 | |||||
Outsourcing | 1,000 | 31,093 | |||||
Pressance | 1,700 | 21,080 | |||||
Relo Group | 200 | 28,560 | |||||
†Ryobi | 8,300 | 32,522 | |||||
†Sangetsu | 1,900 | 32,880 | |||||
SPARX Group | 30,900 | 59,866 | |||||
Sun Frontier Fudousan | 3,700 | 32,547 | |||||
Takara Leben | 4,800 | 27,921 | |||||
†Tokai Corporation | 800 | 27,223 | |||||
Tokai Tokyo Financial Holdings | 5,200 | 27,586 | |||||
Trancom | 600 | 29,320 | |||||
Total (Cost $1,141,043) | 1,059,825 | ||||||
MEXICO – 2.2% | |||||||
Industrias Bachoco ADR | 3,283 | 160,933 | |||||
Total (Cost $173,361) | 160,933 | ||||||
NETHERLANDS – 0.6% | |||||||
7,500 | 44,250 | ||||||
Total (Cost $44,789) | 44,250 | ||||||
NEW ZEALAND – 0.5% | |||||||
New Zealand Refining | 20,200 | 36,467 | |||||
Total (Cost $47,275) | 36,467 | ||||||
NORWAY – 0.8% | |||||||
13,600 | 55,286 | ||||||
Total (Cost $61,020) | 55,286 | ||||||
SOUTH AFRICA – 0.6% | |||||||
Raubex Group | 22,900 | 40,973 | |||||
Total (Cost $31,209) | 40,973 | ||||||
SOUTH KOREA – 6.3% | |||||||
CJ Korea Express 1 | 500 | 74,058 | |||||
Handsome 1 | 2,500 | 72,157 | |||||
Hanssem 1 | 300 | 49,111 | |||||
1,700 | 101,072 | ||||||
Koh Young Technology | 2,300 | 85,960 | |||||
3,100 | 74,262 | ||||||
Total (Cost $496,676) | 456,620 | ||||||
SPAIN – 2.0% | |||||||
Atento 1 | 7,724 | 58,703 | |||||
†Papeles y Cartones de Europa | 15,300 | 84,467 | |||||
Total (Cost $180,430) | 143,170 | ||||||
SWEDEN – 4.6% | |||||||
8,600 | 47,091 | ||||||
†Byggmax Group | 7,800 | 53,862 | |||||
†Dustin Group | 13,600 | 95,423 | |||||
Hoist Finance | 8,200 | 76,175 | |||||
†Indutrade | 3,000 | 60,137 | |||||
Total (Cost $345,331) | 332,688 | ||||||
TAIWAN – 5.4% | |||||||
6,000 | 49,126 | ||||||
Flytech Technology | 27,200 | 79,229 | |||||
†Gourmet Master | 4,300 | 32,602 | |||||
†Posiflex Technology | 6,919 | 37,898 | |||||
†Sitronix Technology | 18,000 | 57,042 | |||||
Sporton International | 15,115 | 79,919 | |||||
Taiwan Paiho | 18,600 | 54,758 | |||||
Total (Cost $391,784) | 390,574 | ||||||
TURKEY – 0.6% | |||||||
†Soda Sanayii | 28,749 | 43,078 | |||||
Total (Cost $41,348) | 43,078 | ||||||
UNITED ARAB EMIRATES – 1.1% | |||||||
Aramex | 73,085 | 80,809 | |||||
Total (Cost $59,368) | 80,809 | ||||||
UNITED KINGDOM – 10.7% | |||||||
†Avon Rubber | 4,300 | 55,086 | |||||
Computacenter | 7,400 | 72,539 | |||||
Consort Medical | 3,500 | 45,664 | |||||
Conviviality | 38,800 | 102,808 | |||||
†dotdigital group | 103,800 | 73,555 | |||||
EMIS Group | 7,209 | 85,699 | |||||
Finsbury Food Group | 35,800 | 52,936 | |||||
†Hilton Food Group | 12,700 | 97,269 | |||||
†Micro Focus International | 3,200 | 85,846 | |||||
Pendragon | 149,700 | 57,473 | |||||
†SIG | 36,400 | 46,330 | |||||
Total (Cost $865,612) | 775,205 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $7,264,678) | 6,911,079 | ||||||
REPURCHASE AGREEMENT – 5.5% | |||||||
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value | |||||||
$398,001 (collateralized by obligations of various U.S. Government Agencies, 1.625% due | |||||||
11/15/22, valued at $408,617) | |||||||
(Cost $398,000) | 398,000 | ||||||
TOTAL INVESTMENTS – 100.7% | |||||||
(Cost $7,662,678) | 7,309,079 | ||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (0.7)% | (52,600 | ) | |||||
NET ASSETS – 100.0% | $ | 7,256,479 | |||||
54 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Low-Priced Stock Fund |
Common Stocks – 96.2% |
SHARES | VALUE | ||||||
CONSUMER DISCRETIONARY – 16.6% | |||||||
AUTO COMPONENTS - 2.2% | |||||||
87,400 | $ | 2,425,350 | |||||
Stoneridge 1 | 131,700 | 2,329,773 | |||||
Unique Fabricating | 139,789 | 2,040,919 | |||||
6,796,042 | |||||||
AUTOMOBILES - 0.7% | |||||||
Thor Industries | 21,803 | 2,181,390 | |||||
DISTRIBUTORS - 0.3% | |||||||
353,364 | 996,486 | ||||||
HOTELS, RESTAURANTS & LEISURE - 0.8% | |||||||
Century Casinos 1 | 320,000 | 2,633,600 | |||||
HOUSEHOLD DURABLES - 0.5% | |||||||
TRI Pointe Group 1 | 143,700 | 1,649,676 | |||||
LEISURE PRODUCTS - 2.0% | |||||||
80,300 | 1,692,724 | ||||||
MCBC Holdings | 181,400 | 2,644,812 | |||||
Nautilus 1 | 114,113 | 2,111,091 | |||||
6,448,627 | |||||||
MEDIA - 0.9% | |||||||
Harte-Hanks | 653,400 | 986,634 | |||||
New Media Investment Group | 109,300 | 1,747,707 | |||||
2,734,341 | |||||||
MULTILINE RETAIL - 0.5% | |||||||
185,000 | 1,537,350 | ||||||
SPECIALTY RETAIL - 8.1% | |||||||
American Eagle Outfitters | 189,600 | 2,876,232 | |||||
Ascena Retail Group 1 | 289,000 | 1,788,910 | |||||
Buckle (The) | 84,275 | 1,921,470 | |||||
155,000 | 2,131,250 | ||||||
Cato Corporation (The) Cl. A | 59,850 | 1,800,288 | |||||
Chico’s FAS | 209,300 | 3,011,827 | |||||
160,000 | 1,721,600 | ||||||
Guess? | 140,000 | 1,694,000 | |||||
Kirkland’s 1 | 111,600 | 1,730,916 | |||||
Shoe Carnival | 65,000 | 1,753,700 | |||||
Stein Mart | 376,500 | 2,063,220 | |||||
TravelCenters of America LLC 1 | 156,900 | 1,113,990 | |||||
West Marine 1 | 220,493 | 2,308,562 | |||||
25,915,965 | |||||||
TEXTILES, APPAREL & LUXURY GOODS - 0.6% | |||||||
Vera Bradley 1 | 167,500 | 1,963,100 | |||||
Total (Cost $48,849,751) | 52,856,577 | ||||||
CONSUMER STAPLES – 1.0% | |||||||
FOOD PRODUCTS - 1.0% | |||||||
120,000 | 1,182,000 | ||||||
Landec Corporation 1 | 142,500 | 1,966,500 | |||||
Total (Cost $2,617,164) | 3,148,500 | ||||||
ENERGY – 7.7% | |||||||
ENERGY EQUIPMENT & SERVICES - 5.6% | |||||||
Gulf Island Fabrication | 182,900 | 2,176,510 | |||||
Newpark Resources 1 | 316,100 | 2,370,750 | |||||
Pason Systems | 178,150 | 2,605,941 | |||||
1,293,900 | 1,785,582 | ||||||
Tesco Corporation 1 | 269,816 | 2,225,982 | |||||
TGS-NOPEC Geophysical | 92,000 | 2,040,337 | |||||
Total Energy Services | 218,100 | 2,368,374 | |||||
86,300 | 2,318,881 | ||||||
17,892,357 | |||||||
OIL, GAS & CONSUMABLE FUELS - 2.1% | |||||||
Ardmore Shipping | 354,700 | 2,624,780 | |||||
Panhandle Oil and Gas Cl. A | 80,900 | 1,905,195 | |||||
238,500 | 2,125,035 | ||||||
6,655,010 | |||||||
Total (Cost $18,180,979) | 24,547,367 | ||||||
FINANCIALS – 11.7% | |||||||
BANKS - 2.9% | |||||||
Blue Hills Bancorp | 119,300 | 2,236,875 | |||||
Boston Private Financial Holdings | 120,500 | 1,994,275 | |||||
†Brookline Bancorp | 107,600 | 1,764,640 | |||||
53,100 | 1,026,954 | ||||||
Park Sterling | 217,900 | 2,351,141 | |||||
9,373,885 | |||||||
CAPITAL MARKETS - 6.1% | |||||||
†Ares Management L.P. | 95,000 | 1,824,000 | |||||
Ashmore Group | 465,363 | 1,623,804 | |||||
Dundee Corporation Cl. A 1 | 327,800 | 1,452,657 | |||||
Federated Investors Cl. B | 71,900 | 2,033,332 | |||||
Jupiter Fund Management | 255,349 | 1,391,451 | |||||
Medley Management Cl. A | 159,998 | 1,583,980 | |||||
Newtek Business Services | 123,000 | 1,955,700 | |||||
Silvercrest Asset Management Group Cl. A | 182,500 | 2,399,875 | |||||
Sprott | 1,254,400 | 2,345,022 | |||||
Value Partners Group | 3,015,100 | 2,398,483 | |||||
265,800 | 390,726 | ||||||
19,399,030 | |||||||
INSURANCE - 0.7% | |||||||
MBIA 1 | 224,500 | 2,402,150 | |||||
THRIFTS & MORTGAGE FINANCE - 2.0% | |||||||
Beneficial Bancorp | 108,700 | 2,000,080 | |||||
Clifton Bancorp | 135,000 | 2,284,200 | |||||
Kearny Financial | 125,800 | 1,956,190 | |||||
6,240,470 | |||||||
Total (Cost $32,582,900) | 37,415,535 | ||||||
HEALTH CARE – 5.6% | |||||||
BIOTECHNOLOGY - 1.6% | |||||||
Progenics Pharmaceuticals 1 | 305,174 | 2,636,703 | |||||
175,300 | 2,639,431 | ||||||
5,276,134 | |||||||
HEALTH CARE EQUIPMENT & SUPPLIES - 1.4% | |||||||
108,100 | 2,115,517 | ||||||
CryoLife 1 | 125,100 | 2,395,665 | |||||
4,511,182 | |||||||
HEALTH CARE PROVIDERS & SERVICES - 0.4% | |||||||
597,800 | 1,255,380 | ||||||
HEALTH CARE TECHNOLOGY - 0.7% | |||||||
Allscripts Healthcare Solutions 1 | 205,300 | 2,096,113 | |||||
LIFE SCIENCES TOOLS & SERVICES - 0.5% | |||||||
Harvard Bioscience 1 | 575,200 | 1,754,360 | |||||
PHARMACEUTICALS - 1.0% | |||||||
BioDelivery Sciences International 1 | 190,600 | 333,550 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 55 |
Schedules of Investments |
Royce Low-Priced Stock Fund (continued) |
SHARES | VALUE | ||||||
HEALTH CARE (continued) | |||||||
PHARMACEUTICALS (continued) | |||||||
334,500 | $ | 1,230,960 | |||||
Medicines Company (The) 1 | 45,232 | 1,535,174 | |||||
3,099,684 | |||||||
Total (Cost $15,209,313) | 17,992,853 | ||||||
INDUSTRIALS – 18.4% | |||||||
AEROSPACE & DEFENSE - 2.0% | |||||||
CPI Aerostructures 1 | 248,166 | 2,295,536 | |||||
Kratos Defense & Security Solutions 1 | 310,200 | 2,295,480 | |||||
Wesco Aircraft Holdings 1 | 116,600 | 1,743,170 | |||||
6,334,186 | |||||||
COMMERCIAL SERVICES & SUPPLIES - 2.5% | |||||||
Atento 1 | 180,600 | 1,372,560 | |||||
Heritage-Crystal Clean 1 | 108,700 | 1,706,590 | |||||
Hudson Technologies 1 | 297,013 | 2,379,074 | |||||
Steelcase Cl. A | 136,700 | 2,446,930 | |||||
7,905,154 | |||||||
CONSTRUCTION & ENGINEERING - 2.1% | |||||||
Ameresco Cl. A 1 | 375,500 | 2,065,250 | |||||
IES Holdings 1 | 109,800 | 2,102,670 | |||||
KBR | 155,000 | 2,586,950 | |||||
6,754,870 | |||||||
ELECTRICAL EQUIPMENT - 0.8% | |||||||
LSI Industries | 271,800 | 2,647,332 | |||||
INDUSTRIAL CONGLOMERATES - 0.8% | |||||||
†Raven Industries | 98,600 | 2,484,720 | |||||
MACHINERY - 2.7% | |||||||
Mueller Water Products Cl. A | 172,500 | 2,295,975 | |||||
Porvair | 402,000 | 2,156,552 | |||||
†Trinity Industries | 75,000 | 2,082,000 | |||||
Wabash National 1 | 140,000 | 2,214,800 | |||||
8,749,327 | |||||||
MARINE - 0.9% | |||||||
Clarkson | 103,408 | 2,769,030 | |||||
PROFESSIONAL SERVICES - 5.9% | |||||||
Acacia Research 1 | 229,405 | 1,491,133 | |||||
Heidrick & Struggles International | 116,740 | 2,819,271 | |||||
Kforce | 98,774 | 2,281,679 | |||||
Korn/Ferry International | 107,840 | 3,173,731 | |||||
Navigant Consulting 1 | 86,023 | 2,252,082 | |||||
Resources Connection | 123,500 | 2,377,375 | |||||
RPX Corporation 1 | 188,900 | 2,040,120 | |||||
TrueBlue 1 | 91,794 | 2,262,722 | |||||
18,698,113 | |||||||
ROAD & RAIL - 0.7% | |||||||
Werner Enterprises | 85,000 | 2,290,750 | |||||
Total (Cost $47,648,795) | 58,633,482 | ||||||
INFORMATION TECHNOLOGY – 23.4% | |||||||
COMMUNICATIONS EQUIPMENT - 1.5% | |||||||
310,000 | 1,550,000 | ||||||
177,200 | 1,504,428 | ||||||
Ixia 1 | 101,200 | 1,629,320 | |||||
4,683,748 | |||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 5.8% | |||||||
AVX Corporation | 143,878 | 2,248,813 | |||||
Electro Scientific Industries 1 | 160,000 | 947,200 | |||||
575,000 | 885,500 | ||||||
560,500 | 1,031,320 | ||||||
Novanta 1 | 110,400 | 2,318,400 | |||||
Orbotech 1 | 83,400 | 2,786,394 | |||||
†PC Connection | 79,500 | 2,233,155 | |||||
TTM Technologies 1 | 141,458 | 1,928,073 | |||||
Vishay Intertechnology | 139,150 | 2,254,230 | |||||
105,000 | 1,984,500 | ||||||
18,617,585 | |||||||
INTERNET SOFTWARE & SERVICES - 3.2% | |||||||
Amber Road 1 | 177,000 | 1,607,160 | |||||
Carbonite 1 | 123,100 | 2,018,840 | |||||
EarthLink Holdings | 277,700 | 1,566,228 | |||||
Intralinks Holdings 1 | 169,200 | 2,287,584 | |||||
QuinStreet 1 | 725,642 | 2,728,414 | |||||
10,208,226 | |||||||
IT SERVICES - 0.1% | |||||||
Computer Task Group | 96,800 | 407,528 | |||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 10.7% | |||||||
Brooks Automation | 129,582 | 2,211,965 | |||||
Cirrus Logic 1 | 55,100 | 3,115,354 | |||||
†Cypress Semiconductor | 147,000 | 1,681,680 | |||||
FormFactor 1 | 200,000 | 2,240,000 | |||||
45,900 | 2,048,058 | ||||||
IXYS Corporation | 205,000 | 2,439,500 | |||||
Lam Research | 26,300 | 2,780,699 | |||||
MKS Instruments | 39,427 | 2,341,964 | |||||
Nanometrics 1 | 92,892 | 2,327,873 | |||||
PDF Solutions 1 | 89,300 | 2,013,715 | |||||
Photronics 1 | 270,700 | 3,058,910 | |||||
Rudolph Technologies 1 | 99,800 | 2,330,330 | |||||
198,000 | 1,188,000 | ||||||
Teradyne | 83,275 | 2,115,185 | |||||
Xcerra Corporation 1 | 296,400 | 2,264,496 | |||||
34,157,729 | |||||||
SOFTWARE - 1.3% | |||||||
Computer Modelling Group | 210,900 | 1,430,975 | |||||
Rubicon Project 1 | 192,400 | 1,427,608 | |||||
SeaChange International 1 | 481,575 | 1,107,623 | |||||
3,966,206 | |||||||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 0.8% | |||||||
Super Micro Computer 1 | 94,600 | 2,653,530 | |||||
Total (Cost $53,143,380) | 74,694,552 | ||||||
MATERIALS – 4.9% | |||||||
CHEMICALS - 2.1% | |||||||
348,600 | 1,917,300 | ||||||
Trecora Resources 1 | 203,200 | 2,814,320 | |||||
Victrex | 80,000 | 1,896,141 | |||||
6,627,761 | |||||||
METALS & MINING - 2.8% | |||||||
Alamos Gold Cl. A | 242,800 | 1,674,545 | |||||
†Commercial Metals | 95,000 | 2,069,100 | |||||
Ferroglobe | 205,763 | 2,228,413 | |||||
205,763 | 0 | ||||||
Orocobre 1 | 500,000 | 1,627,210 |
56 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Low-Priced Stock Fund (continued) |
SHARES | VALUE | ||||||
MATERIALS (continued) | |||||||
METALS & MINING (continued) | |||||||
Pretium Resources 1 | 161,200 | $ | 1,335,079 | ||||
8,934,347 | |||||||
Total (Cost $14,532,702) | 15,562,108 | ||||||
REAL ESTATE – 1.4% | |||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.4% | |||||||
177,600 | 2,806,080 | ||||||
Kennedy-Wilson Holdings | 84,460 | 1,731,430 | |||||
Total (Cost $3,137,355) | 4,537,510 | ||||||
TELECOMMUNICATION SERVICES – 0.5% | |||||||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.5% | |||||||
ORBCOMM 1 | 214,200 | 1,771,434 | |||||
Total (Cost $1,397,416) | 1,771,434 | ||||||
MISCELLANEOUS2 – 5.0% | |||||||
Total (Cost $14,763,557) | 15,953,058 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $252,063,312) | 307,112,976 | ||||||
REPURCHASE AGREEMENT – 4.6% | |||||||
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value | |||||||
$14,544,048 (collateralized by obligations of various U.S. Government Agencies, 2.25% | |||||||
due 11/15/24, valued at $14,837,691) | |||||||
(Cost $14,544,000) | 14,544,000 | ||||||
PRINCIPAL | |||||||
AMOUNT | |||||||
COLLATERAL RECEIVED FOR SECURITIES LOANED – 4.4% | |||||||
U.S. Treasury Bills | |||||||
due 1/5/17-12/7/17 | $ | 1,486,158 | 1,486,093 | ||||
U.S. Treasury Bonds | |||||||
0.75%-8.125% | |||||||
due 8/15/19-2/15/46 | 199,046 | 198,918 | |||||
U.S. Treasury Notes | |||||||
0.125%-4.75% | |||||||
due 1/15/17-7/15/26 | 2,155,354 | 2,162,596 | |||||
U.S. Treasury Notes - Floating Rate | |||||||
due 7/31/17-4/30/18 | 1,388 | 1,388 | |||||
U.S. Treasury Strips-Interest | |||||||
due 11/15/25 | 22 | 22 | |||||
Money Market Funds | |||||||
Federated Government Obligations Fund (7 day yield-0.3947%) | 10,342,750 | ||||||
TOTAL COLLATERAL RECEIVED FOR SECURITIES LOANED | |||||||
(Cost $14,191,767) | 14,191,767 | ||||||
TOTAL INVESTMENTS – 105.2% | |||||||
(Cost $280,799,079) | 335,848,743 | ||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (5.2)% | (16,658,744 | ) | |||||
NET ASSETS – 100.0% | $ | 319,189,999 | |||||
Royce Micro-Cap Fund |
Common Stocks – 91.9% |
SHARES | VALUE | ||||||
CONSUMER DISCRETIONARY – 14.1% | |||||||
AUTO COMPONENTS - 4.0% | |||||||
Fox Factory Holding 1 | 66,400 | $ | 1,842,600 | ||||
LCI Industries | 14,078 | 1,516,905 | |||||
Standard Motor Products | 31,300 | 1,665,786 | |||||
Stoneridge 1 | 85,800 | 1,517,802 | |||||
Superior Industries International | 62,100 | 1,636,335 | |||||
Unique Fabricating | 103,800 | 1,515,480 | |||||
9,694,908 | |||||||
DISTRIBUTORS - 0.3% | |||||||
Fenix Parts 1 | 253,300 | 714,306 | |||||
DIVERSIFIED CONSUMER SERVICES - 0.7% | |||||||
Capella Education | 19,951 | 1,751,698 | |||||
HOTELS, RESTAURANTS & LEISURE - 0.5% | |||||||
83,600 | 1,180,432 | ||||||
HOUSEHOLD DURABLES - 0.6% | |||||||
Cavco Industries 1 | 15,510 | 1,548,673 | |||||
LEISURE PRODUCTS - 1.2% | |||||||
51,165 | 1,078,558 | ||||||
MCBC Holdings | 121,000 | 1,764,180 | |||||
2,842,738 | |||||||
MEDIA - 0.6% | |||||||
New Media Investment Group | 95,500 | 1,527,045 | |||||
SPECIALTY RETAIL - 5.0% | |||||||
Buckle (The) | 39,675 | 904,590 | |||||
Build-A-Bear Workshop 1 | 117,500 | 1,615,625 | |||||
Cato Corporation (The) Cl. A | 30,450 | 915,936 | |||||
Citi Trends | 104,724 | 1,973,000 | |||||
†Haverty Furniture | 72,100 | 1,708,770 | |||||
Kirkland’s 1 | 118,340 | 1,835,454 | |||||
Shoe Carnival | 61,211 | 1,651,473 | |||||
Stein Mart | 286,834 | 1,571,850 | |||||
12,176,698 | |||||||
TEXTILES, APPAREL & LUXURY GOODS - 1.2% | |||||||
Culp | 38,474 | 1,429,309 | |||||
Vera Bradley 1 | 127,300 | 1,491,956 | |||||
2,921,265 | |||||||
Total (Cost $24,595,634) | 34,357,763 | ||||||
CONSUMER STAPLES – 0.9% | |||||||
FOOD PRODUCTS - 0.9% | |||||||
†John B. Sanfilippo & Son | 20,100 | 1,414,839 | |||||
2,760,860 | 828,258 | ||||||
Total (Cost $1,575,280) | 2,243,097 | ||||||
ENERGY – 5.3% | |||||||
ENERGY EQUIPMENT & SERVICES - 4.0% | |||||||
Gulf Island Fabrication | 138,318 | 1,645,984 | |||||
Natural Gas Services Group 1 | 55,387 | 1,780,692 | |||||
Newpark Resources 1 | 225,200 | 1,689,000 | |||||
Profire Energy 1 | 968,312 | 1,336,271 | |||||
Tesco Corporation 1 | 205,300 | 1,693,725 | |||||
Total Energy Services | 155,400 | 1,687,507 | |||||
9,833,179 | |||||||
OIL, GAS & CONSUMABLE FUELS - 1.3% | |||||||
Ardmore Shipping | 265,675 | 1,965,995 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 57 |
Schedules of Investments |
Royce Micro-Cap Fund (continued) |
SHARES | VALUE | ||||||
ENERGY (continued) | |||||||
OIL, GAS & CONSUMABLE FUELS (continued) | |||||||
Panhandle Oil and Gas Cl. A | 51,600 | $ | 1,215,180 | ||||
3,181,175 | |||||||
Total (Cost $11,515,454) | 13,014,354 | ||||||
FINANCIALS – 11.8% | |||||||
BANKS - 3.2% | |||||||
Blue Hills Bancorp | 76,800 | 1,440,000 | |||||
†Brookline Bancorp | 90,200 | 1,479,280 | |||||
Caribbean Investment Holdings 1 | 1,858,170 | 217,551 | |||||
County Bancorp | 55,800 | 1,504,926 | |||||
Park Sterling | 166,100 | 1,792,219 | |||||
TriState Capital Holdings 1 | 57,057 | 1,260,960 | |||||
7,694,936 | |||||||
CAPITAL MARKETS - 4.0% | |||||||
444,500 | 1,579,164 | ||||||
FBR & Co. | 62,842 | 816,946 | |||||
GAIN Capital Holdings | 223,200 | 1,468,656 | |||||
Gluskin Sheff + Associates | 122,400 | 1,589,883 | |||||
Newtek Business Services | 78,149 | 1,242,569 | |||||
Silvercrest Asset Management Group Cl. A | 133,300 | 1,752,895 | |||||
Westwood Holdings Group | 20,072 | 1,204,119 | |||||
9,654,232 | |||||||
INSURANCE - 1.1% | |||||||
Atlas Financial Holdings 1 | 98,400 | 1,776,120 | |||||
Blue Capital Reinsurance Holdings | 51,300 | 946,485 | |||||
2,722,605 | |||||||
THRIFTS & MORTGAGE FINANCE - 3.5% | |||||||
Beneficial Bancorp | 83,000 | 1,527,200 | |||||
Clifton Bancorp | 101,200 | 1,712,304 | |||||
†Federal Agricultural Mortgage | 23,300 | 1,334,391 | |||||
HomeStreet 1 | 37,800 | 1,194,480 | |||||
Meridian Bancorp | 79,300 | 1,498,770 | |||||
Western New England Bancorp | 149,700 | 1,399,695 | |||||
8,666,840 | |||||||
Total (Cost $23,756,156) | 28,738,613 | ||||||
HEALTH CARE – 7.8% | |||||||
BIOTECHNOLOGY - 2.2% | |||||||
BioSpecifics Technologies 1 | 24,100 | 1,342,370 | |||||
61,300 | 242,135 | ||||||
Progenics Pharmaceuticals 1 | 193,600 | 1,672,704 | |||||
133,600 | 2,011,568 | ||||||
5,268,777 | |||||||
HEALTH CARE EQUIPMENT & SUPPLIES - 2.5% | |||||||
AtriCure 1 | 82,000 | 1,604,740 | |||||
CryoLife 1 | 90,555 | 1,734,128 | |||||
93,421 | 662,355 | ||||||
Orthofix International 1 | 28,800 | 1,041,984 | |||||
Surmodics 1 | 42,522 | 1,080,059 | |||||
6,123,266 | |||||||
HEALTH CARE PROVIDERS & SERVICES - 1.2% | |||||||
Aceto Corporation | 33,900 | 744,783 | |||||
Landauer | 22,300 | 1,072,630 | |||||
469,500 | 985,950 | ||||||
2,803,363 | |||||||
LIFE SCIENCES TOOLS & SERVICES - 0.6% | |||||||
Harvard Bioscience 1 | 501,779 | 1,530,426 | |||||
PHARMACEUTICALS - 1.3% | |||||||
Agile Therapeutics 1 | 129,582 | 738,617 | |||||
191,900 | 335,825 | ||||||
93,964 | 381,494 | ||||||
Intersect ENT 1 | 68,700 | 831,270 | |||||
255,300 | 939,504 | ||||||
196,684 | 37,370 | ||||||
3,264,080 | |||||||
Total (Cost $19,623,270) | 18,989,912 | ||||||
INDUSTRIALS – 20.8% | |||||||
AEROSPACE & DEFENSE - 1.4% | |||||||
42,100 | 1,424,664 | ||||||
5,640 | 189,786 | ||||||
CPI Aerostructures 1 | 197,418 | 1,826,117 | |||||
3,440,567 | |||||||
COMMERCIAL SERVICES & SUPPLIES - 1.9% | |||||||
Heritage-Crystal Clean 1 | 82,974 | 1,302,692 | |||||
Hudson Technologies 1 | 226,504 | 1,814,297 | |||||
Viad Corporation | 32,800 | 1,446,480 | |||||
4,563,469 | |||||||
CONSTRUCTION & ENGINEERING - 0.7% | |||||||
Northwest Pipe 1 | 103,200 | 1,777,104 | |||||
ELECTRICAL EQUIPMENT - 1.7% | |||||||
†Encore Wire | 30,400 | 1,317,840 | |||||
LSI Industries | 192,936 | 1,879,197 | |||||
189,000 | 1,039,500 | ||||||
4,236,537 | |||||||
INDUSTRIAL CONGLOMERATES - 0.7% | |||||||
Raven Industries | 70,100 | 1,766,520 | |||||
MACHINERY - 8.8% | |||||||
†Alimak Group | 127,600 | 1,809,338 | |||||
CIRCOR International | 25,959 | 1,684,220 | |||||
†Columbus McKinnon | 27,900 | 754,416 | |||||
FreightCar America | 80,709 | 1,204,985 | |||||
†Global Brass and Copper Holdings | 59,700 | 2,047,710 | |||||
Graham Corporation | 79,988 | 1,771,734 | |||||
†Greenbrier Companies (The) | 34,500 | 1,433,475 | |||||
Kadant | 24,376 | 1,491,811 | |||||
121,000 | 1,530,650 | ||||||
Lindsay Corporation | 20,100 | 1,499,661 | |||||
Lydall 1 | 28,000 | 1,731,800 | |||||
RBC Bearings 1 | 16,369 | 1,519,207 | |||||
Sun Hydraulics | 41,400 | 1,654,758 | |||||
Tennant Company | 17,200 | 1,224,640 | |||||
21,358,405 | |||||||
MARINE - 0.8% | |||||||
Clarkson | 73,100 | 1,957,451 | |||||
PROFESSIONAL SERVICES - 4.1% | |||||||
CRA International | 35,383 | 1,295,017 | |||||
GP Strategies 1 | 63,218 | 1,808,035 | |||||
Heidrick & Struggles International | 69,300 | 1,673,595 | |||||
Kforce | 75,358 | 1,740,770 | |||||
Navigant Consulting 1 | 65,600 | 1,717,408 | |||||
Resources Connection | 94,152 | 1,812,426 | |||||
10,047,251 | |||||||
58 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Micro-Cap Fund (continued) |
SHARES | VALUE | ||||||
INDUSTRIALS (continued) | |||||||
ROAD & RAIL - 0.7% | |||||||
Marten Transport | 68,733 | $ | 1,601,479 | ||||
Total (Cost $35,750,351) | 50,748,783 | ||||||
INFORMATION TECHNOLOGY – 20.5% | |||||||
COMMUNICATIONS EQUIPMENT - 0.6% | |||||||
†EMCORE Corporation | 172,400 | 1,499,880 | |||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 7.4% | |||||||
CUI Global 1 | 238,874 | 1,655,397 | |||||
ePlus 1 | 22,667 | 2,611,238 | |||||
Fabrinet 1 | 37,749 | 1,521,285 | |||||
Mesa Laboratories | 9,700 | 1,190,675 | |||||
651,996 | 1,199,673 | ||||||
512,900 | 523,158 | ||||||
Novanta 1 | 71,842 | 1,508,682 | |||||
Orbotech 1 | 59,200 | 1,977,872 | |||||
PC Connection | 82,100 | 2,306,189 | |||||
Rogers Corporation 1 | 19,200 | 1,474,752 | |||||
Vishay Precision Group 1 | 107,900 | 2,039,310 | |||||
18,008,231 | |||||||
INTERNET SOFTWARE & SERVICES - 1.5% | |||||||
Intralinks Holdings 1 | 129,000 | 1,744,080 | |||||
QuinStreet 1 | 480,708 | 1,807,462 | |||||
3,551,542 | |||||||
IT SERVICES - 1.0% | |||||||
Cass Information Systems | 23,800 | 1,750,966 | |||||
Computer Task Group | 194,810 | 820,150 | |||||
2,571,116 | |||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 6.6% | |||||||
Brooks Automation | 98,900 | 1,688,223 | |||||
Nanometrics 1 | 71,000 | 1,779,260 | |||||
NeoPhotonics Corporation 1 | 138,800 | 1,500,428 | |||||
PDF Solutions 1 | 65,200 | 1,470,260 | |||||
Photronics 1 | 205,900 | 2,326,670 | |||||
Rudolph Technologies 1 | 76,051 | 1,775,791 | |||||
Sigma Designs 1 | 108,000 | 648,000 | |||||
Silicon Motion Technology ADR | 39,200 | 1,665,216 | |||||
Ultra Clean Holdings 1 | 174,800 | 1,695,560 | |||||
Xcerra Corporation 1 | 209,361 | 1,599,518 | |||||
16,148,926 | |||||||
SOFTWARE - 2.8% | |||||||
153,000 | 918,000 | ||||||
Computer Modelling Group | 149,400 | 1,013,692 | |||||
QAD Cl. A | 62,200 | 1,890,880 | |||||
Rubicon Project 1 | 179,200 | 1,329,664 | |||||
SeaChange International 1 | 309,107 | 710,946 | |||||
Zix Corporation 1 | 175,000 | 864,500 | |||||
6,727,682 | |||||||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 0.6% | |||||||
Super Micro Computer 1 | 51,246 | 1,437,450 | |||||
Total (Cost $42,159,441) | 49,944,827 | ||||||
MATERIALS – 3.7% | |||||||
CHEMICALS - 2.6% | |||||||
250,512 | 1,377,816 | ||||||
FutureFuel Corporation | 100,100 | 1,391,390 | |||||
Quaker Chemical | 13,360 | 1,709,279 | |||||
Trecora Resources 1 | 138,300 | 1,915,455 | |||||
6,393,940 | |||||||
METALS & MINING - 1.1% | |||||||
Haynes International | 26,230 | 1,127,628 | |||||
McEwen Mining | 215,804 | 627,989 | |||||
119,300 | 775,450 | ||||||
2,531,067 | |||||||
Total (Cost $7,613,100) | 8,925,007 | ||||||
REAL ESTATE – 1.8% | |||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.8% | |||||||
AV Homes 1 | 124,650 | 1,969,470 | |||||
FRP Holdings 1 | 20,575 | 775,678 | |||||
57,300 | 1,531,056 | ||||||
Total (Cost $3,397,348) | 4,276,204 | ||||||
TELECOMMUNICATION SERVICES – 0.5% | |||||||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.5% | |||||||
ORBCOMM 1 | 162,800 | 1,346,356 | |||||
Total (Cost $1,069,928) | 1,346,356 | ||||||
MISCELLANEOUS2 – 4.7% | |||||||
Total (Cost $10,029,351) | 11,394,349 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $181,085,313) | 223,979,265 | ||||||
REPURCHASE AGREEMENT – 8.7% | |||||||
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value | |||||||
$21,137,070 (collateralized by obligations of various U.S. Government Agencies, 2.25% | |||||||
due 11/15/24, valued at $21,561,330) | |||||||
(Cost $21,137,000) | 21,137,000 | ||||||
COLLATERAL RECEIVED FOR SECURITIES LOANED – 2.9% | |||||||
Money Market Funds | |||||||
Federated Government Obligations Fund (7 day yield-0.3947%) | |||||||
(Cost $7,076,975) | 7,076,975 | ||||||
TOTAL INVESTMENTS – 103.5% | |||||||
(Cost $209,299,288) | 252,193,240 | ||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (3.5)% | (8,497,604 | ) | |||||
NET ASSETS – 100.0% | $ | 243,695,636 | |||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 59 |
Schedules of Investments |
Royce Micro-Cap Opportunity Fund |
Common Stocks – 94.8% |
SHARES | VALUE | ||||||
CONSUMER DISCRETIONARY – 10.9% | |||||||
AUTO COMPONENTS - 2.0% | |||||||
Spartan Motors | 100,055 | $ | 925,508 | ||||
HOTELS, RESTAURANTS & LEISURE - 2.1% | |||||||
Belmond Cl. A 1 | 23,000 | 307,050 | |||||
11,752 | 662,813 | ||||||
969,863 | |||||||
HOUSEHOLD DURABLES - 4.7% | |||||||
Beazer Homes USA 1 | 65,000 | 864,500 | |||||
Dixie Group 1 | 21,872 | 78,739 | |||||
Installed Building Products 1 | 3,029 | 125,098 | |||||
M.D.C. Holdings | 15,750 | 404,145 | |||||
New Home 1 | 60,210 | 705,059 | |||||
2,177,541 | |||||||
MEDIA - 0.6% | |||||||
McClatchy Company (The) Cl. A 1 | 20,006 | 263,679 | |||||
SPECIALTY RETAIL - 1.5% | |||||||
Guess? | 13,500 | 163,350 | |||||
TravelCenters of America LLC 1 | 72,599 | 515,453 | |||||
678,803 | |||||||
Total (Cost $4,693,218) | 5,015,394 | ||||||
CONSUMER STAPLES – 0.6% | |||||||
FOOD PRODUCTS - 0.6% | |||||||
Landec Corporation 1 | 21,511 | 296,852 | |||||
Total (Cost $237,765) | 296,852 | ||||||
ENERGY – 3.6% | |||||||
ENERGY EQUIPMENT & SERVICES - 2.3% | |||||||
Helix Energy Solutions Group 1 | 58,083 | 512,292 | |||||
Newpark Resources 1 | 75,000 | 562,500 | |||||
1,074,792 | |||||||
OIL, GAS & CONSUMABLE FUELS - 1.3% | |||||||
Pengrowth Energy 1 | 335,000 | 475,700 | |||||
StealthGas 1 | 30,100 | 101,738 | |||||
577,438 | |||||||
Total (Cost $1,383,596) | 1,652,230 | ||||||
FINANCIALS – 8.1% | |||||||
BANKS - 4.2% | |||||||
†Fidelity Southern | 18,764 | 444,144 | |||||
†Old Line Bancshares | 17,000 | 407,660 | |||||
State Bank Financial | 27,500 | 738,650 | |||||
TriState Capital Holdings 1 | 15,641 | 345,666 | |||||
1,936,120 | |||||||
INSURANCE - 1.1% | |||||||
12,057 | 128,407 | ||||||
James River Group Holdings | 9,006 | 374,199 | |||||
502,606 | |||||||
THRIFTS & MORTGAGE FINANCE - 2.8% | |||||||
BofI Holding 1 | 19,500 | 556,725 | |||||
NMI Holdings Cl. A 1 | 71,550 | 762,008 | |||||
1,318,733 | |||||||
Total (Cost $2,636,674) | 3,757,459 | ||||||
HEALTH CARE – 16.6% | |||||||
BIOTECHNOLOGY - 0.8% | |||||||
CareDx 1 | 128,431 | 346,764 | |||||
HEALTH CARE EQUIPMENT & SUPPLIES - 3.9% | |||||||
Accuray 1 | 105,000 | 483,000 | |||||
Derma Sciences 1 | 55,841 | 290,373 | |||||
Exactech 1 | 24,055 | 656,701 | |||||
Trinity Biotech ADR Cl. A 1 | 50,000 | 346,000 | |||||
1,776,074 | |||||||
HEALTH CARE PROVIDERS & SERVICES - 6.9% | |||||||
Alliance HealthCare Services 1 | 30,073 | 288,701 | |||||
Civitas Solutions 1 | 34,490 | 686,351 | |||||
77,500 | 433,225 | ||||||
42,000 | 655,620 | ||||||
Kindred Healthcare | 65,000 | 510,250 | |||||
37,000 | 586,450 | ||||||
3,160,597 | |||||||
HEALTH CARE TECHNOLOGY - 1.4% | |||||||
134,521 | 665,879 | ||||||
LIFE SCIENCES TOOLS & SERVICES - 1.7% | |||||||
42,800 | 802,928 | ||||||
PHARMACEUTICALS - 1.9% | |||||||
66,069 | 895,235 | ||||||
Total (Cost $7,693,176) | 7,647,477 | ||||||
INDUSTRIALS – 19.3% | |||||||
AEROSPACE & DEFENSE - 4.4% | |||||||
Aerojet Rocketdyne Holdings 1 | 11,546 | 207,251 | |||||
17,013 | 434,852 | ||||||
56,045 | 660,771 | ||||||
Kratos Defense & Security Solutions 1 | 100,011 | 740,081 | |||||
2,042,955 | |||||||
AIR FREIGHT & LOGISTICS - 1.5% | |||||||
Atlas Air Worldwide Holdings 1 | 13,000 | 677,950 | |||||
BUILDING PRODUCTS - 1.2% | |||||||
Builders FirstSource 1 | 24,000 | 263,280 | |||||
PGT Innovations 1 | 26,000 | 297,700 | |||||
560,980 | |||||||
COMMERCIAL SERVICES & SUPPLIES - 0.9% | |||||||
TRC Companies 1 | 39,018 | 413,591 | |||||
CONSTRUCTION & ENGINEERING - 2.6% | |||||||
Great Lakes Dredge & Dock 1 | 75,874 | 318,671 | |||||
42,000 | 456,540 | ||||||
Northwest Pipe 1 | 25,200 | 433,944 | |||||
1,209,155 | |||||||
ELECTRICAL EQUIPMENT - 3.0% | |||||||
Encore Wire | 5,000 | 216,750 | |||||
General Cable | 30,900 | 588,645 | |||||
Power Solutions International 1 | 73,000 | 547,500 | |||||
1,352,895 | |||||||
MACHINERY - 4.3% | |||||||
†FreightCar America | 52,400 | 782,332 | |||||
60,363 | 947,699 | ||||||
Hyster-Yale Materials Handling Cl. A | 4,000 | 255,080 | |||||
1,985,111 | |||||||
MARINE - 0.3% | |||||||
Diana Shipping 1 | 50,000 | 151,000 | |||||
ROAD & RAIL - 1.1% | |||||||
†Celadon Group | 68,000 | 486,200 | |||||
Total (Cost $7,561,724) | 8,879,837 | ||||||
60 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Micro-Cap Opportunity Fund (continued) |
SHARES | VALUE | ||||||
INFORMATION TECHNOLOGY – 24.8% | |||||||
COMMUNICATIONS EQUIPMENT - 2.7% | |||||||
Applied Optoelectronics 1 | 10,500 | $ | 246,120 | ||||
Aviat Networks 1 | 7,525 | 104,447 | |||||
Comtech Telecommunications | 28,215 | 334,348 | |||||
EMCORE Corporation | 35,000 | 304,500 | |||||
Oclaro 1 | 27,000 | 241,650 | |||||
1,231,065 | |||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 4.4% | |||||||
Electro Scientific Industries 1 | 28,516 | 168,815 | |||||
KEMET Corporation 1 | 147,000 | 974,610 | |||||
PCM 1 | 31,588 | 710,730 | |||||
TTM Technologies 1 | 14,000 | 190,820 | |||||
2,044,975 | |||||||
INTERNET SOFTWARE & SERVICES - 5.0% | |||||||
Amber Road 1 | 93,181 | 846,084 | |||||
Angie’s List 1 | 34,045 | 280,190 | |||||
EarthLink Holdings | 65,000 | 366,600 | |||||
Limelight Networks 1 | 95,014 | 239,435 | |||||
MINDBODY Cl. A 1 | 14,051 | 299,286 | |||||
Tremor Video 1 | 114,692 | 285,583 | |||||
2,317,178 | |||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 8.1% | |||||||
Alpha & Omega Semiconductor 1 | 26,194 | 557,146 | |||||
Exar Corporation 1 | 27,500 | 296,450 | |||||
FormFactor 1 | 70,340 | 787,808 | |||||
Inphi Corporation 1 | 10,000 | 446,200 | |||||
Kopin Corporation 1 | 105,096 | 298,473 | |||||
Nanometrics 1 | 30,538 | 765,282 | |||||
Rudolph Technologies 1 | 18,503 | 432,045 | |||||
Sigma Designs 1 | 23,356 | 140,136 | |||||
3,723,540 | |||||||
SOFTWARE - 2.2% | |||||||
A10 Networks 1 | 28,797 | 239,303 | |||||
Bottomline Technologies 1 | 16,064 | 401,921 | |||||
Datawatch Corporation 1 | 72,063 | 396,347 | |||||
1,037,571 | |||||||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 2.4% | |||||||
Intevac 1 | 35,220 | 301,131 | |||||
100,000 | 792,000 | ||||||
1,093,131 | |||||||
Total (Cost $8,076,189) | 11,447,460 | ||||||
MATERIALS – 7.1% | |||||||
CHEMICALS - 3.7% | |||||||
Calgon Carbon | 28,600 | 486,200 | |||||
Ferro Corporation 1 | 20,000 | 286,600 | |||||
Intrepid Potash 1 | 60,000 | 124,800 | |||||
Kraton Corporation 1 | 28,000 | 797,440 | |||||
1,695,040 | |||||||
CONSTRUCTION MATERIALS - 1.3% | |||||||
U.S. Concrete 1 | 9,500 | 622,250 | |||||
METALS & MINING - 0.8% | |||||||
Haynes International | 8,100 | 348,219 | |||||
PAPER & FOREST PRODUCTS - 1.3% | |||||||
27,500 | 618,750 | ||||||
Total (Cost $2,667,097) | 3,284,259 | ||||||
REAL ESTATE – 0.7% | |||||||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITS) - 0.7% | |||||||
RAIT Financial Trust | 94,502 | 317,527 | |||||
Total (Cost $297,817) | 317,527 | ||||||
MISCELLANEOUS2 – 3.1% | |||||||
Total (Cost $1,531,805) | 1,442,977 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $36,779,061) | 43,741,472 | ||||||
REPURCHASE AGREEMENT – 5.7% | |||||||
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value | |||||||
$2,609,009 (collateralized by obligations of various U.S. Government Agencies, 2.25% due | |||||||
11/15/24, valued at $2,661,647) | |||||||
(Cost $2,609,000) | 2,609,000 | ||||||
TOTAL INVESTMENTS – 100.5% | |||||||
(Cost $39,388,061) | 46,350,472 | ||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (0.5)% | (220,663 | ) | |||||
NET ASSETS – 100.0% | $ | 46,129,809 | |||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 61 |
Schedules of Investments |
Royce Opportunity Fund |
Common Stocks – 93.1% |
SHARES | VALUE | ||||||
CONSUMER DISCRETIONARY– 13.7% | |||||||
AUTO COMPONENTS - 3.0% | |||||||
Dana | 746,736 | $ | 14,173,049 | ||||
Spartan Motors | 961,256 | 8,891,618 | |||||
Tower International | 562,354 | 15,942,736 | |||||
1,283,078 | 6,030,467 | ||||||
45,037,870 | |||||||
AUTOMOBILES - 0.4% | |||||||
Winnebago Industries | 172,077 | 5,446,237 | |||||
DIVERSIFIED CONSUMER SERVICES - 0.5% | |||||||
Houghton Mifflin Harcourt 1 | 631,700 | 6,853,945 | |||||
HOTELS, RESTAURANTS & LEISURE - 1.0% | |||||||
Belmond Cl. A 1 | 675,019 | 9,011,504 | |||||
Carrols Restaurant Group 1 | 120,605 | 1,839,226 | |||||
667,002 | 360,181 | ||||||
Ruby Tuesday 1 | 1,063,731 | 3,435,851 | |||||
14,646,762 | |||||||
HOUSEHOLD DURABLES - 2.0% | |||||||
Beazer Homes USA 1 | 696,879 | 9,268,491 | |||||
839,935 | 3,023,766 | ||||||
M.D.C. Holdings | 139,632 | 3,582,957 | |||||
M/I Homes 1 | 243,300 | 6,126,294 | |||||
TRI Pointe Group 1 | 175,772 | 2,017,863 | |||||
279,341 | 5,315,859 | ||||||
29,335,230 | |||||||
INTERNET & DIRECT MARKETING RETAIL - 0.0% | |||||||
EVINE Live 1 | 413,393 | 620,089 | |||||
LEISURE PRODUCTS - 0.2% | |||||||
Black Diamond 1 | 524,482 | 2,805,979 | |||||
MEDIA - 1.2% | |||||||
Ballantyne Strong 1 | 586,737 | 4,693,896 | |||||
Entravision Communications Cl. A | 651,100 | 4,557,700 | |||||
337,705 | 4,450,952 | ||||||
New York Times Cl. A | 326,399 | 4,341,106 | |||||
18,043,654 | |||||||
MULTILINE RETAIL - 0.4% | |||||||
312,296 | 459,075 | ||||||
726,141 | 6,034,232 | ||||||
6,493,307 | |||||||
SPECIALTY RETAIL - 3.8% | |||||||
American Eagle Outfitters | 299,200 | 4,538,864 | |||||
Ascena Retail Group 1 | 787,397 | 4,873,987 | |||||
163,005 | 829,695 | ||||||
Caleres | 63,200 | 2,074,224 | |||||
Chico’s FAS | 266,900 | 3,840,691 | |||||
158,436 | 2,004,215 | ||||||
DSW Cl. A | 304,900 | 6,905,985 | |||||
Guess? | 328,800 | 3,978,480 | |||||
265,620 | 4,180,859 | ||||||
New York & Company 1 | 281,317 | 638,590 | |||||
Rent-A-Center | 363,718 | 4,091,828 | |||||
196,200 | 6,023,340 | ||||||
120,497 | 566,336 | ||||||
TravelCenters of America LLC 1 | 838,614 | 5,954,159 | |||||
West Marine 1 | 552,921 | 5,789,083 | |||||
56,290,336 | |||||||
TEXTILES, APPAREL & LUXURY GOODS - 1.2% | |||||||
Skechers U.S.A. Cl. A 1 | 273,964 | 6,734,035 | |||||
Unifi 1 | 224,767 | 7,334,147 | |||||
772,931 | 3,130,371 | ||||||
17,198,553 | |||||||
Total (Cost $204,800,837) | 202,771,962 | ||||||
CONSUMER STAPLES – 1.4% | |||||||
FOOD & STAPLES RETAILING - 0.4% | |||||||
218,600 | 2,599,154 | ||||||
SUPERVALU 1 | 679,400 | 3,172,798 | |||||
5,771,952 | |||||||
FOOD PRODUCTS - 0.8% | |||||||
215,702 | 2,124,665 | ||||||
Landec Corporation 1 | 427,602 | 5,900,908 | |||||
SunOpta 1 | 608,190 | 4,287,739 | |||||
12,313,312 | |||||||
HOUSEHOLD PRODUCTS - 0.2% | |||||||
Central Garden & Pet 1 | 84,848 | 2,807,620 | |||||
Total (Cost $17,912,462) | 20,892,884 | ||||||
ENERGY – 3.3% | |||||||
ENERGY EQUIPMENT & SERVICES - 1.8% | |||||||
Basic Energy Services 1 | 101,110 | 3,574,238 | |||||
Matrix Service 1 | 326,608 | 7,414,002 | |||||
Newpark Resources 1 | 1,233,531 | 9,251,483 | |||||
Patterson-UTI Energy | 139,900 | 3,766,108 | |||||
Willbros Group 1 | 882,109 | 2,858,033 | |||||
26,863,864 | |||||||
OIL, GAS & CONSUMABLE FUELS - 1.5% | |||||||
Ardmore Shipping | 160,700 | 1,189,180 | |||||
430,000 | 3,005,700 | ||||||
264,700 | 2,173,187 | ||||||
527,700 | 2,364,096 | ||||||
93,800 | 2,416,288 | ||||||
Pengrowth Energy 1 | 2,443,400 | 3,469,628 | |||||
Scorpio Tankers | 771,926 | 3,496,825 | |||||
StealthGas 1 | 979,521 | 3,310,781 | |||||
21,425,685 | |||||||
Total (Cost $61,301,800) | 48,289,549 | ||||||
FINANCIALS – 6.5% | |||||||
BANKS - 3.0% | |||||||
BancorpSouth | 99,600 | 3,092,580 | |||||
Boston Private Financial Holdings | 489,646 | 8,103,641 | |||||
Brookline Bancorp | 50,400 | 826,560 | |||||
CenterState Banks | 219,241 | 5,518,296 | |||||
Fidelity Southern | 96,740 | 2,289,836 | |||||
Guaranty Bancorp | 205,260 | 4,967,292 | |||||
Southern National Bancorp of Virginia | 147,915 | 2,416,931 | |||||
State Bank Financial | 400,059 | 10,745,585 | |||||
Umpqua Holdings | 317,700 | 5,966,406 | |||||
43,927,127 | |||||||
CONSUMER FINANCE - 0.6% | |||||||
Enova International 1 | 766,695 | 9,622,022 | |||||
INSURANCE - 1.6% | |||||||
Ambac Financial Group 1 | 189,446 | 4,262,535 | |||||
Aspen Insurance Holdings | 79,700 | 4,383,500 | |||||
Assured Guaranty | 89,400 | 3,376,638 |
62 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Opportunity Fund (continued) |
SHARES | VALUE | ||||||
FINANCIALS (continued) | |||||||
INSURANCE (continued) | |||||||
MBIA 1 | 1,045,976 | $ | 11,191,943 | ||||
23,214,616 | |||||||
INVESTMENT COMPANIES - 0.2% | |||||||
BlackRock Resources & Commodities | |||||||
Strategy Trust | 307,300 | 2,541,371 | |||||
THRIFTS & MORTGAGE FINANCE - 1.1% | |||||||
181,600 | 5,184,680 | ||||||
MGIC Investment 1 | 377,785 | 3,849,629 | |||||
PHH Corporation 1 | 20,500 | 310,780 | |||||
Radian Group | 210,000 | 3,775,800 | |||||
Walker & Dunlop 1 | 124,537 | 3,885,555 | |||||
17,006,444 | |||||||
Total (Cost $64,546,380) | 96,311,580 | ||||||
HEALTH CARE– 4.5% | |||||||
HEALTH CARE EQUIPMENT & SUPPLIES - 1.8% | |||||||
Accuray 1 | 608,500 | 2,799,100 | |||||
Analogic Corporation | 70,738 | 5,867,717 | |||||
AngioDynamics 1 | 443,641 | 7,484,224 | |||||
Invacare Corporation | 616,825 | 8,049,566 | |||||
RTI Surgical 1 | 458,155 | 1,489,004 | |||||
25,689,611 | |||||||
HEALTH CARE PROVIDERS & SERVICES - 0.9% | |||||||
Brookdale Senior Living 1 | 407,060 | 5,055,685 | |||||
Healthways 1 | 247,434 | 5,629,123 | |||||
Kindred Healthcare | 379,650 | 2,980,253 | |||||
13,665,061 | |||||||
HEALTH CARE TECHNOLOGY - 0.6% | |||||||
Allscripts Healthcare Solutions 1 | 912,236 | 9,313,930 | |||||
LIFE SCIENCES TOOLS & SERVICES - 0.9% | |||||||
704,304 | 13,212,743 | ||||||
PHARMACEUTICALS - 0.3% | |||||||
311,497 | 4,220,784 | ||||||
Total (Cost $55,680,762) | 66,102,129 | ||||||
INDUSTRIALS – 23.1% | |||||||
AEROSPACE & DEFENSE - 3.6% | |||||||
Aerojet Rocketdyne Holdings 1 | 378,040 | 6,785,818 | |||||
397,635 | 4,688,117 | ||||||
Kratos Defense & Security Solutions 1 | 1,645,224 | 12,174,657 | |||||
831,730 | 7,169,513 | ||||||
Mercury Systems 1 | 345,291 | 10,434,694 | |||||
Wesco Aircraft Holdings 1 | 807,100 | 12,066,145 | |||||
53,318,944 | |||||||
AIR FREIGHT & LOGISTICS - 0.5% | |||||||
Atlas Air Worldwide Holdings 1 | 130,600 | 6,810,790 | |||||
BUILDING PRODUCTS - 3.5% | |||||||
298,094 | 3,270,091 | ||||||
Griffon Corporation | 333,500 | 8,737,700 | |||||
Insteel Industries | 195,868 | 6,980,736 | |||||
NCI Building Systems 1 | 742,300 | 11,616,995 | |||||
PGT Innovations 1 | 670,083 | 7,672,450 | |||||
Ply Gem Holdings 1 | 344,392 | 5,596,370 | |||||
Quanex Building Products | 424,586 | 8,619,096 | |||||
52,493,438 | |||||||
COMMERCIAL SERVICES & SUPPLIES - 3.3% | |||||||
ABM Industries | 118,900 | 4,855,876 | |||||
Herman Miller | 247,200 | 8,454,240 | |||||
Interface | 663,916 | 12,315,642 | |||||
Kimball International Cl. B | 154,850 | 2,719,166 | |||||
Steelcase Cl. A | 359,642 | 6,437,592 | |||||
TRC Companies 1 | 1,275,645 | 13,521,837 | |||||
48,304,353 | |||||||
CONSTRUCTION & ENGINEERING - 2.7% | |||||||
Aegion Corporation 1 | 480,689 | 11,392,329 | |||||
Great Lakes Dredge & Dock 1 | 432,700 | 1,817,340 | |||||
978,512 | 10,636,425 | ||||||
212,900 | 8,143,425 | ||||||
Northwest Pipe 1 | 461,994 | 7,955,537 | |||||
39,945,056 | |||||||
ELECTRICAL EQUIPMENT - 2.3% | |||||||
Encore Wire | 245,606 | 10,647,020 | |||||
General Cable | 912,174 | 17,376,915 | |||||
512,305 | 3,842,287 | ||||||
396,413 | 2,180,272 | ||||||
34,046,494 | |||||||
MACHINERY - 6.0% | |||||||
Astec Industries | 78,860 | 5,319,896 | |||||
Commercial Vehicle Group 1 | 686,440 | 3,796,013 | |||||
DMC Global | 341,362 | 5,410,588 | |||||
Federal Signal | 465,732 | 7,270,076 | |||||
Hardinge | 578,497 | 6,409,747 | |||||
Hurco Companies | 202,073 | 6,688,616 | |||||
Hyster-Yale Materials Handling Cl. A | 128,114 | 8,169,830 | |||||
Meritor 1 | 569,619 | 7,074,668 | |||||
Mueller Industries | 330,721 | 13,215,611 | |||||
Mueller Water Products Cl. A | 990,876 | 13,188,560 | |||||
NN | 427,107 | 8,136,388 | |||||
3,334,290 | 3,767,748 | ||||||
88,447,741 | |||||||
MARINE - 0.3% | |||||||
Diana Shipping 1 | 330,580 | 998,352 | |||||
Navios Maritime Holdings 1 | 1,066,449 | 1,503,693 | |||||
Scorpio Bulkers 1 | 303,290 | 1,531,614 | |||||
4,033,659 | |||||||
PROFESSIONAL SERVICES - 0.3% | |||||||
Korn/Ferry International | 145,600 | 4,285,008 | |||||
TRADING COMPANIES & DISTRIBUTORS - 0.6% | |||||||
Univar 1 | 333,939 | 9,473,849 | |||||
Total (Cost $266,245,429) | 341,159,332 | ||||||
INFORMATION TECHNOLOGY – 28.4% | |||||||
COMMUNICATIONS EQUIPMENT - 3.2% | |||||||
247,100 | 5,792,024 | ||||||
ARRIS International 1 | 300,560 | 9,055,873 | |||||
260,029 | 3,609,203 | ||||||
Ciena Corporation 1 | 309,700 | 7,559,777 | |||||
Comtech Telecommunications | 741,357 | 8,785,080 | |||||
EMCORE Corporation | 504,368 | 4,388,002 | |||||
Extreme Networks 1 | 667,341 | 3,356,725 | |||||
Harmonic 1 | 478,119 | 2,390,595 | |||||
Oclaro 1 | 269,875 | 2,415,381 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 63 |
Schedules of Investments |
Royce Opportunity Fund (continued) |
SHARES | VALUE | ||||||
INFORMATION TECHNOLOGY (continued) | |||||||
COMMUNICATIONS EQUIPMENT (continued) | |||||||
Westell Technologies Cl. A 1 | 334,391 | $ | 217,354 | ||||
47,570,014 | |||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 8.0% | |||||||
Benchmark Electronics 1 | 258,000 | 7,869,000 | |||||
Daktronics | 372,225 | 3,982,807 | |||||
230,152 | 1,081,714 | ||||||
Electro Scientific Industries 1 | 425,938 | 2,521,553 | |||||
Frequency Electronics 1 | 224,979 | 2,429,773 | |||||
488,800 | 1,554,384 | ||||||
II-VI 1 | 250,037 | 7,413,597 | |||||
KEMET Corporation 1 | 2,077,667 | 13,774,932 | |||||
397,377 | 6,640,170 | ||||||
Maxwell Technologies 1 | 810,442 | 4,149,463 | |||||
Novanta 1 | 404,160 | 8,487,360 | |||||
Park Electrochemical | 203,034 | 3,786,584 | |||||
PCM 1 | 438,306 | 9,861,885 | |||||
Perceptron 1 | 426,326 | 2,830,805 | |||||
RadiSys Corporation 1 | 568,878 | 2,520,129 | |||||
Sanmina Corporation 1 | 352,223 | 12,908,973 | |||||
344,772 | 1,630,772 | ||||||
Systemax | 51,600 | 452,532 | |||||
TTM Technologies 1 | 585,825 | 7,984,795 | |||||
Vishay Intertechnology | 701,123 | 11,358,193 | |||||
Vishay Precision Group 1 | 215,742 | 4,077,524 | |||||
117,316,945 | |||||||
INTERNET SOFTWARE & SERVICES - 2.2% | |||||||
Amber Road 1 | 216,471 | 1,965,557 | |||||
Blucora 1 | 445,840 | 6,576,140 | |||||
646,837 | 5,543,393 | ||||||
EarthLink Holdings | 1,365,609 | 7,702,035 | |||||
Limelight Networks 1 | 779,069 | 1,963,254 | |||||
526,944 | 1,238,318 | ||||||
QuinStreet 1 | 881,731 | 3,315,309 | |||||
Support.com 1 | 195,397 | 168,041 | |||||
Tremor Video 1 | 1,043,682 | 2,598,768 | |||||
313,480 | 1,122,258 | ||||||
32,193,073 | |||||||
IT SERVICES - 1.6% | |||||||
CIBER 1 | 1,431,573 | 904,468 | |||||
Computer Task Group | 627,263 | 2,640,777 | |||||
Unisys Corporation 1 | 1,226,624 | 18,338,029 | |||||
70,700 | 1,775,984 | ||||||
23,659,258 | |||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 11.9% | |||||||
Advanced Energy Industries 1 | 143,171 | 7,838,612 | |||||
Alpha & Omega Semiconductor 1 | 194,715 | 4,141,588 | |||||
697,399 | 2,963,946 | ||||||
Axcelis Technologies 1 | 106,223 | 1,545,545 | |||||
AXT 1 | 418,192 | 2,007,322 | |||||
Brooks Automation | 1,043,900 | 17,819,373 | |||||
Cohu | 601,806 | 8,365,103 | |||||
399,314 | 10,537,896 | ||||||
Cypress Semiconductor | 514,600 | 5,887,024 | |||||
Exar Corporation 1 | 955,094 | 10,295,913 | |||||
FormFactor 1 | 751,738 | 8,419,466 | |||||
65,600 | 709,792 | ||||||
IXYS Corporation | 836,815 | 9,958,098 | |||||
1,085,122 | 3,081,746 | ||||||
Kulicke & Soffa Industries 1 | 909,188 | 14,501,549 | |||||
MaxLinear Cl. A 1 | 527,222 | 11,493,440 | |||||
Microsemi Corporation 1 | 232,754 | 12,561,733 | |||||
Nanometrics 1 | 429,339 | 10,759,235 | |||||
NeoPhotonics Corporation 1 | 412,996 | 4,464,487 | |||||
608,454 | 376,633 | ||||||
Rudolph Technologies 1 | 320,797 | 7,490,610 | |||||
Sigma Designs 1 | 278,982 | 1,673,892 | |||||
Ultra Clean Holdings 1 | 759,738 | 7,369,459 | |||||
144,600 | 4,215,090 | ||||||
Xcerra Corporation 1 | 945,654 | 7,224,797 | |||||
175,702,349 | |||||||
SOFTWARE - 0.5% | |||||||
A10 Networks 1 | 490,799 | 4,078,540 | |||||
Mentor Graphics | 80,240 | 2,960,053 | |||||
SeaChange International 1 | 223,390 | 513,797 | |||||
7,552,390 | |||||||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 1.0% | |||||||
Avid Technology 1 | 499,580 | 2,198,152 | |||||
Cray 1 | 134,532 | 2,784,812 | |||||
Intevac 1 | 922,612 | 7,888,333 | |||||
298,554 | 2,364,548 | ||||||
15,235,845 | |||||||
Total (Cost $341,765,007) | 419,229,874 | ||||||
MATERIALS – 8.5% | |||||||
CHEMICALS - 3.2% | |||||||
Calgon Carbon | 430,552 | 7,319,384 | |||||
Ferro Corporation 1 | 825,211 | 11,825,273 | |||||
Huntsman Corporation | 497,300 | 9,488,484 | |||||
Kraton Corporation 1 | 246,018 | 7,006,593 | |||||
Olin Corporation | 297,600 | 7,621,536 | |||||
Schulman (A.) | 126,540 | 4,232,763 | |||||
47,494,033 | |||||||
METALS & MINING - 4.9% | |||||||
1,182,925 | 298,097 | ||||||
AK Steel Holding Corporation 1 | 855,800 | 8,737,718 | |||||
Allegheny Technologies 4 | 673,212 | 10,724,267 | |||||
Carpenter Technology | 207,241 | 7,495,907 | |||||
Century Aluminum 1 | 830,103 | 7,105,682 | |||||
Commercial Metals | 716,261 | 15,600,165 | |||||
Haynes International | 263,150 | 11,312,818 | |||||
593,726 | 14,131 | ||||||
Synalloy Corporation 1 | 368,433 | 4,034,341 | |||||
384,758 | 5,956,054 | ||||||
71,279,180 | |||||||
PAPER & FOREST PRODUCTS - 0.4% | |||||||
Louisiana-Pacific Corporation 1 | 323,000 | 6,114,390 | |||||
Total (Cost $98,525,269) | 124,887,603 | ||||||
REAL ESTATE – 0.2% | |||||||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITS) - 0.1% | |||||||
BRT Realty Trust 1 | 144,787 | 1,185,806 | |||||
64 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Opportunity Fund (continued) |
SHARES | VALUE | ||||||
REAL ESTATE (continued) | |||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.1% | |||||||
Tejon Ranch 1 | 58,794 | $ | 1,495,131 | ||||
Total (Cost $2,833,022) | 2,680,937 | ||||||
TELECOMMUNICATION SERVICES – 0.6% | |||||||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.3% | |||||||
535,413 | 5,139,965 | ||||||
WIRELESS TELECOMMUNICATION SERVICES - 0.3% | |||||||
Boingo Wireless 1 | 301,104 | 3,670,458 | |||||
Total (Cost $5,458,428) | 8,810,423 | ||||||
UTILITIES – 0.2% | |||||||
WATER UTILITIES - 0.2% | |||||||
Pure Cycle 1 | 501,799 | 2,759,894 | |||||
Total (Cost $2,097,520) | 2,759,894 | ||||||
MISCELLANEOUS2 – 2.7% | |||||||
Total (Cost $32,783,588) | 39,070,054 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $1,153,950,504) | 1,372,966,221 | ||||||
REPURCHASE AGREEMENT – 7.1% | |||||||
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value $105,163,351 (collateralized by obligations of various U.S. Government Agencies, 1.00%- 3.625% due 8/31/19-2/15/20, valued at $107,266,722) | |||||||
(Cost $105,163,000) | 105,163,000 | ||||||
PRINCIPAL | |||||||
AMOUNT | |||||||
COLLATERAL RECEIVED FOR SECURITIES LOANED – 7.4% | |||||||
U.S. Treasury Bills | |||||||
due 1/5/17-12/7/17 | $ | 1,030,115 | 1,030,069 | ||||
U.S. Treasury Bonds | |||||||
0.75%-8.125% | |||||||
due 8/15/19-5/15/46 | 1,761,096 | 1,768,861 | |||||
U.S. Treasury Notes | |||||||
0.125%-4.75% | |||||||
due 1/15/17-7/15/26 | 6,955,320 | 6,976,435 | |||||
U.S. Treasury Notes - Floating Rate | |||||||
due 7/31/17-4/30/18 | 14,850 | 14,850 | |||||
U.S. Treasury Strips-Interest | |||||||
due 11/15/25 | 178 | 178 | |||||
Money Market Funds | |||||||
Federated Government Obligations Fund (7 day yield-0.3947%) | 99,627,529 | ||||||
TOTAL COLLATERAL RECEIVED FOR SECURITIES LOANED | |||||||
(Cost $109,417,922) | 109,417,922 | ||||||
TOTAL INVESTMENTS – 107.6% | |||||||
(Cost $1,368,531,426) | 1,587,547,143 | ||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (7.6)% | (112,155,207 | ) | |||||
NET ASSETS – 100.0% | $ | 1,475,391,936 | |||||
Royce Pennsylvania Mutual Fund |
Common Stocks – 98.8% |
SHARES | VALUE | ||||||
CONSUMER DISCRETIONARY – 14.4% | |||||||
AUTO COMPONENTS - 4.0% | |||||||
Cooper Tire & Rubber | 98,200 | $ | 3,815,070 | ||||
Dorman Products 1 | 303,800 | 22,195,628 | |||||
Gentex Corporation | 937,834 | 18,465,952 | |||||
LCI Industries | 242,923 | 26,174,953 | |||||
75,000 | 2,019,000 | ||||||
Standard Motor Products | 80,451 | 4,281,602 | |||||
STRATTEC SECURITY 6 | 245,247 | 9,883,454 | |||||
Superior Industries International | 422,900 | 11,143,415 | |||||
97,979,074 | |||||||
AUTOMOBILES - 1.2% | |||||||
Thor Industries | 114,381 | 11,443,819 | |||||
Winnebago Industries | 533,962 | 16,899,897 | |||||
28,343,716 | |||||||
DISTRIBUTORS - 1.5% | |||||||
Core-Mark Holding Company | 481,460 | 20,736,482 | |||||
Weyco Group | 504,800 | 15,800,240 | |||||
36,536,722 | |||||||
DIVERSIFIED CONSUMER SERVICES - 0.0% | |||||||
DeVry Education Group | 46,000 | 1,435,200 | |||||
HOTELS, RESTAURANTS & LEISURE - 0.2% | |||||||
300,000 | 2,835,000 | ||||||
MTY Food Group | 28,600 | 1,076,987 | |||||
3,911,987 | |||||||
HOUSEHOLD DURABLES - 1.4% | |||||||
Cavco Industries 1 | 13,600 | 1,357,960 | |||||
Ethan Allen Interiors | 682,169 | 25,137,928 | |||||
Flexsteel Industries | 90,700 | 5,593,469 | |||||
NVR 1 | 1,820 | 3,037,580 | |||||
35,126,937 | |||||||
LEISURE PRODUCTS - 0.1% | |||||||
Nautilus 1 | 91,000 | 1,683,500 | |||||
MEDIA - 0.4% | |||||||
E.W. Scripps Company Cl. A 1 | 137,267 | 2,653,371 | |||||
Saga Communications Cl. A | 137,734 | 6,928,020 | |||||
9,581,391 | |||||||
MULTILINE RETAIL - 0.4% | |||||||
Dillard’s Cl. A | 141,648 | 8,879,913 | |||||
SPECIALTY RETAIL - 4.6% | |||||||
American Eagle Outfitters | 766,991 | 11,635,254 | |||||
America’s Car-Mart 1 | 375,100 | 16,410,625 | |||||
AutoCanada | 86,200 | 1,484,336 | |||||
Barnes & Noble | 106,000 | 1,181,900 | |||||
Buckle (The) | 537,613 | 12,257,576 | |||||
Caleres | 161,600 | 5,303,712 | |||||
Cato Corporation (The) Cl. A | 227,476 | 6,842,478 | |||||
DSW Cl. A | 509,400 | 11,537,910 | |||||
Genesco 1 | 124,223 | 7,714,248 | |||||
201,200 | 7,504,760 | ||||||
Kirkland’s 1 | 333,051 | 5,165,621 | |||||
Monro Muffler Brake | 207,225 | 11,853,270 | |||||
Murphy USA 1 | 12,000 | 737,640 | |||||
Shoe Carnival | 362,695 | 9,785,511 | |||||
Stein Mart | 383,818 | 2,103,323 | |||||
111,518,164 | |||||||
TEXTILES, APPAREL & LUXURY GOODS - 0.6% | |||||||
Deckers Outdoor 1 | 100,530 | 5,568,357 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 65 |
Schedules of Investments |
Royce Pennsylvania Mutual Fund (continued) |
SHARES | VALUE | ||||||
CONSUMER DISCRETIONARY (continued) | |||||||
TEXTILES, APPAREL & LUXURY GOODS (continued) | |||||||
Movado Group | 223,442 | $ | 6,423,958 | ||||
Steven Madden 1 | 76,246 | 2,725,794 | |||||
Vera Bradley 1 | 82,778 | 970,158 | |||||
15,688,267 | |||||||
Total (Cost $197,000,730) | 350,684,871 | ||||||
CONSUMER STAPLES – 1.8% | |||||||
FOOD & STAPLES RETAILING - 0.3% | |||||||
Village Super Market Cl. A | 218,211 | 6,742,720 | |||||
FOOD PRODUCTS - 0.8% | |||||||
Cal-Maine Foods 4 | 84,170 | 3,718,210 | |||||
Farmer Bros. 1 | 47,777 | 1,753,416 | |||||
Industrias Bachoco ADR | 113,660 | 5,571,613 | |||||
John B. Sanfilippo & Son | 19,300 | 1,358,527 | |||||
Sanderson Farms | 22,000 | 2,073,280 | |||||
Seneca Foods Cl. A 1 | 91,438 | 3,662,092 | |||||
Seneca Foods Cl. B 1 | 7,197 | 302,274 | |||||
SunOpta 1 | 121,339 | 855,440 | |||||
Tootsie Roll Industries | 37,800 | 1,502,550 | |||||
20,797,402 | |||||||
PERSONAL PRODUCTS - 0.7% | |||||||
Inter Parfums | 281,800 | 9,228,950 | |||||
Nutraceutical International | 243,700 | 8,517,315 | |||||
17,746,265 | |||||||
Total (Cost $26,587,658) | 45,286,387 | ||||||
ENERGY – 4.2% | |||||||
ENERGY EQUIPMENT & SERVICES - 4.1% | |||||||
61,000 | 1,079,700 | ||||||
Era Group 1 | 339,840 | 5,767,085 | |||||
Forum Energy Technologies 1 | 99,665 | 2,192,630 | |||||
Frank’s International | 239,000 | 2,942,090 | |||||
Helmerich & Payne | 86,180 | 6,670,332 | |||||
Matrix Service 1 | 438,327 | 9,950,023 | |||||
Oil States International 1 | 70,073 | 2,732,847 | |||||
Pason Systems | 1,321,720 | 19,333,840 | |||||
RPC | 370,175 | 7,333,167 | |||||
SEACOR Holdings 1 | 271,509 | 19,353,161 | |||||
TGS-NOPEC Geophysical | 733,685 | 16,271,359 | |||||
Unit Corporation 1 | 248,884 | 6,687,513 | |||||
100,313,747 | |||||||
OIL, GAS & CONSUMABLE FUELS - 0.1% | |||||||
49,700 | 408,037 | ||||||
San Juan Basin Royalty Trust | 207,033 | 1,370,558 | |||||
World Fuel Services | 41,200 | 1,891,492 | |||||
3,670,087 | |||||||
Total (Cost $69,214,817) | 103,983,834 | ||||||
FINANCIALS – 13.0% | |||||||
BANKS - 2.5% | |||||||
Ames National | 25,433 | 839,289 | |||||
Blue Hills Bancorp | 127,990 | 2,399,812 | |||||
BOK Financial | 24,500 | 2,034,480 | |||||
Camden National | 149,182 | 6,631,140 | |||||
City Holding Company | 63,570 | 4,297,332 | |||||
CNB Financial | 94,300 | 2,521,582 | |||||
Codorus Valley Bancorp | 27,079 | 774,459 | |||||
First Citizens BancShares Cl. A | 81,026 | 28,764,230 | |||||
National Bankshares | 80,000 | 3,476,000 | |||||
Northrim BanCorp | 99,206 | 3,134,910 | |||||
Popular | 123,300 | 5,403,006 | |||||
60,276,240 | |||||||
CAPITAL MARKETS - 6.3% | |||||||
Artisan Partners Asset Management Cl. A | 169,870 | 5,053,633 | |||||
Bolsa Mexicana de Valores | 3,780,000 | 4,970,793 | |||||
Cohen & Steers | 50,000 | 1,680,000 | |||||
382,814 | 5,933,617 | ||||||
Diamond Hill Investment Group | 78,901 | 16,599,192 | |||||
Federated Investors Cl. B | 847,527 | 23,968,064 | |||||
Greenhill & Co. | 32,000 | 886,400 | |||||
Lazard Cl. A | 186,157 | 7,649,191 | |||||
Moelis & Company Cl. A | 369,460 | 12,524,694 | |||||
Morningstar | 154,504 | 11,365,314 | |||||
Reinet Investments | 238,550 | 4,400,313 | |||||
Reinet Investments DR | 1,300,000 | 2,534,970 | |||||
Rothschild & Co | 328,346 | 8,879,655 | |||||
SEI Investments | 353,650 | 17,456,164 | |||||
Sprott | 2,613,700 | 4,886,148 | |||||
Virtus Investment Partners | 48,870 | 5,769,104 | |||||
Westwood Holdings Group | 303,285 | 18,194,067 | |||||
152,751,319 | |||||||
DIVERSIFIED FINANCIAL SERVICES - 0.4% | |||||||
PICO Holdings 1 | 591,841 | 8,966,391 | |||||
INSURANCE - 2.2% | |||||||
Alleghany Corporation 1 | 3,190 | 1,939,903 | |||||
E-L Financial | 41,100 | 22,346,107 | |||||
Greenlight Capital Re Cl. A 1 | 26,000 | 592,800 | |||||
601,577 | 6,436,874 | ||||||
ProAssurance Corporation | 30,000 | 1,686,000 | |||||
Reinsurance Group of America | 92,628 | 11,655,381 | |||||
RLI Corp. | 132,081 | 8,338,273 | |||||
52,995,338 | |||||||
INVESTMENT COMPANIES - 0.3% | |||||||
RIT Capital Partners | 366,500 | 8,497,913 | |||||
THRIFTS & MORTGAGE FINANCE - 1.3% | |||||||
Genworth MI Canada | 885,657 | 22,203,266 | |||||
Southern Missouri Bancorp | 11,100 | 392,718 | |||||
TrustCo Bank Corp. NY | 1,170,451 | 10,241,446 | |||||
32,837,430 | |||||||
Total (Cost $228,323,499) | 316,324,631 | ||||||
HEALTH CARE – 6.8% | |||||||
BIOTECHNOLOGY - 0.2% | |||||||
Progenics Pharmaceuticals 1 | 264,600 | 2,286,144 | |||||
89,437 | 1,346,622 | ||||||
3,632,766 | |||||||
HEALTH CARE EQUIPMENT & SUPPLIES - 1.6% | |||||||
Analogic Corporation | 169,000 | 14,018,550 | |||||
Atrion Corporation | 9,500 | 4,818,400 | |||||
Masimo Corporation 1 | 7,300 | 492,020 | |||||
Merit Medical Systems 1 | 627,786 | 16,636,329 | |||||
Neogen Corporation 1 | 32,400 | 2,138,400 | |||||
38,103,699 | |||||||
66 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Pennsylvania Mutual Fund (continued) |
SHARES | VALUE | ||||||
HEALTH CARE (continued) | |||||||
HEALTH CARE PROVIDERS & SERVICES - 2.3% | |||||||
Aceto Corporation | 314,610 | $ | 6,911,982 | ||||
24,600 | 945,870 | ||||||
Ensign Group (The) | 100,300 | 2,227,663 | |||||
HealthSouth Corporation | 183,713 | 7,576,324 | |||||
Landauer | 399,400 | 19,211,140 | |||||
U.S. Physical Therapy | 290,500 | 20,393,100 | |||||
57,266,079 | |||||||
HEALTH CARE TECHNOLOGY - 0.3% | |||||||
Medidata Solutions 1 | 148,165 | 7,359,355 | |||||
LIFE SCIENCES TOOLS & SERVICES - 2.4% | |||||||
Bio-Rad Laboratories Cl. A 1 | 62,422 | 11,378,282 | |||||
Bio-Techne | 237,840 | 24,457,087 | |||||
ICON 1 | 143,700 | 10,806,240 | |||||
182,800 | 12,013,616 | ||||||
58,655,225 | |||||||
Total (Cost $104,532,490) | 165,017,124 | ||||||
INDUSTRIALS – 28.6% | |||||||
AEROSPACE & DEFENSE - 2.0% | |||||||
HEICO Corporation | 360,835 | 27,838,420 | |||||
HEICO Corporation Cl. A | 123,040 | 8,354,416 | |||||
Teledyne Technologies 1 | 73,000 | 8,979,000 | |||||
Wesco Aircraft Holdings 1 | 304,473 | 4,551,872 | |||||
49,723,708 | |||||||
AIR FREIGHT & LOGISTICS - 1.2% | |||||||
Forward Air | 423,600 | 20,070,168 | |||||
Hub Group Cl. A 1 | 185,000 | 8,093,750 | |||||
28,163,918 | |||||||
AIRLINES - 0.6% | |||||||
239,386 | 13,850,874 | ||||||
BUILDING PRODUCTS - 1.6% | |||||||
American Woodmark 1 | 104,018 | 7,827,355 | |||||
Apogee Enterprises | 259,900 | 13,920,244 | |||||
Gibraltar Industries 1 | 302,920 | 12,616,618 | |||||
Insteel Industries | 60,659 | 2,161,887 | |||||
Simpson Manufacturing | 65,007 | 2,844,056 | |||||
39,370,160 | |||||||
COMMERCIAL SERVICES & SUPPLIES - 2.6% | |||||||
Copart 1 | 387,682 | 21,481,460 | |||||
Healthcare Services Group | 245,700 | 9,624,069 | |||||
Heritage-Crystal Clean 1 | 242,158 | 3,801,881 | |||||
Kimball International Cl. B | 164,800 | 2,893,888 | |||||
Mobile Mini | 229,400 | 6,939,350 | |||||
Ritchie Bros. Auctioneers | 26,190 | 890,460 | |||||
Steelcase Cl. A | 270,470 | 4,841,413 | |||||
Team 1 | 286,082 | 11,228,718 | |||||
UniFirst Corporation | 9,730 | 1,397,714 | |||||
US Ecology | 10,000 | 491,500 | |||||
63,590,453 | |||||||
CONSTRUCTION & ENGINEERING - 2.0% | |||||||
Comfort Systems USA | 278,800 | 9,284,040 | |||||
IES Holdings 1 | 54,762 | 1,048,692 | |||||
Jacobs Engineering Group 1 | 54,000 | 3,078,000 | |||||
KBR | 565,800 | 9,443,202 | |||||
MYR Group 1 | 34,084 | 1,284,285 | |||||
Valmont Industries | 178,875 | 25,203,488 | |||||
49,341,707 | |||||||
ELECTRICAL EQUIPMENT - 1.1% | |||||||
AZZ | 38,652 | 2,469,863 | |||||
Encore Wire | 181,218 | 7,855,800 | |||||
Preformed Line Products 6 | 290,278 | 16,870,957 | |||||
27,196,620 | |||||||
INDUSTRIAL CONGLOMERATES - 0.8% | |||||||
Raven Industries | 777,945 | 19,604,214 | |||||
MACHINERY - 9.9% | |||||||
Alamo Group | 38,362 | 2,919,348 | |||||
CIRCOR International | 388,279 | 25,191,542 | |||||
CLARCOR | 147,100 | 12,131,337 | |||||
Colfax Corporation 1 | 74,543 | 2,678,330 | |||||
Columbus McKinnon | 31,975 | 864,604 | |||||
Federal Signal | 245,517 | 3,832,520 | |||||
Flowserve Corporation | 30,000 | 1,441,500 | |||||
Franklin Electric | 409,248 | 15,919,747 | |||||
Graco | 184,849 | 15,359,104 | |||||
John Bean Technologies | 304,583 | 26,178,909 | |||||
Kadant | 101,500 | 6,211,800 | |||||
Lincoln Electric Holdings | 209,919 | 16,094,490 | |||||
Lindsay Corporation | 106,600 | 7,953,426 | |||||
Lydall 1 | 47,293 | 2,925,072 | |||||
Miller Industries | 256,632 | 6,787,916 | |||||
Nordson Corporation | 164,900 | 18,477,045 | |||||
20,025 | 1,028,284 | ||||||
RBC Bearings 1 | 145,306 | 13,485,850 | |||||
Sun Hydraulics | 684,287 | 27,350,951 | |||||
Tennant Company | 454,900 | 32,388,880 | |||||
Wabash National 1 | 88,300 | 1,396,906 | |||||
Westinghouse Air Brake Technologies | 16,257 | 1,349,656 | |||||
241,967,217 | |||||||
MARINE - 0.4% | |||||||
Diana Shipping 1 | 201,900 | 609,738 | |||||
130,800 | 8,698,200 | ||||||
9,307,938 | |||||||
PROFESSIONAL SERVICES - 3.4% | |||||||
Advisory Board (The) 1 | 394,823 | 13,127,865 | |||||
Exponent | 229,578 | 13,843,554 | |||||
Franklin Covey 1 | 34,900 | 703,235 | |||||
Heidrick & Struggles International | 45,800 | 1,106,070 | |||||
ICF International 1 | 33,270 | 1,836,504 | |||||
Korn/Ferry International | 393,745 | 11,587,915 | |||||
ManpowerGroup | 154,905 | 13,766,407 | |||||
Robert Half International | 333,962 | 16,290,666 | |||||
TrueBlue 1 | 408,949 | 10,080,593 | |||||
82,342,809 | |||||||
ROAD & RAIL - 2.0% | |||||||
Amerco | 1,405 | 519,274 | |||||
Landstar System | 328,760 | 28,043,228 | |||||
Patriot Transportation Holding 1 | 101,504 | 2,365,043 | |||||
Saia 1 | 136,343 | 6,019,544 | |||||
Universal Logistics Holdings | 586,484 | 9,589,013 | |||||
Werner Enterprises | 48,100 | 1,296,295 | |||||
47,832,397 | |||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 67 |
Schedules of Investments |
Royce Pennsylvania Mutual Fund (continued) |
SHARES | VALUE | ||||||
INDUSTRIALS (continued) | |||||||
TRADING COMPANIES & DISTRIBUTORS - 1.0% | |||||||
Air Lease Cl. A | 39,840 | $ | 1,367,707 | ||||
Applied Industrial Technologies | 271,300 | 16,115,220 | |||||
MSC Industrial Direct Cl. A | 18,450 | 1,704,596 | |||||
Richelieu Hardware | 292,800 | 5,574,027 | |||||
24,761,550 | |||||||
Total (Cost $354,298,309) | 697,053,565 | ||||||
INFORMATION TECHNOLOGY – 17.3% | |||||||
COMMUNICATIONS EQUIPMENT - 0.5% | |||||||
ADTRAN | 79,700 | 1,781,295 | |||||
Digi International 1 | 354,544 | 4,874,980 | |||||
NetScout Systems 1 | 88,400 | 2,784,600 | |||||
TESSCO Technologies | 155,517 | 2,021,721 | |||||
11,462,596 | |||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 8.9% | |||||||
Badger Meter | 455,028 | 16,813,285 | |||||
Benchmark Electronics 1 | 203,883 | 6,218,431 | |||||
Cognex Corporation | 346,685 | 22,056,100 | |||||
Coherent 1 | 165,780 | 22,775,685 | |||||
Dolby Laboratories Cl. A | 217,476 | 9,827,740 | |||||
Fabrinet 1 | 56,600 | 2,280,980 | |||||
FARO Technologies 1 | 375,693 | 13,524,948 | |||||
385,983 | 2,825,396 | ||||||
FLIR Systems | 770,700 | 27,891,633 | |||||
HollySys Automation Technologies | 139,100 | 2,548,312 | |||||
IPG Photonics 1 | 199,505 | 19,693,139 | |||||
Methode Electronics | 241,260 | 9,976,101 | |||||
MTS Systems | 68,774 | 3,899,486 | |||||
National Instruments | 511,190 | 15,754,876 | |||||
Orbotech 1 | 103,900 | 3,471,299 | |||||
PC Connection | 490,344 | 13,773,763 | |||||
Plexus Corporation 1 | 174,502 | 9,430,088 | |||||
Richardson Electronics | 157,551 | 992,571 | |||||
ScanSource 1 | 58,766 | 2,371,208 | |||||
Vishay Intertechnology | 715,241 | 11,586,904 | |||||
217,711,945 | |||||||
INTERNET SOFTWARE & SERVICES - 0.7% | |||||||
292,109 | 9,224,802 | ||||||
j2 Global | 83,350 | 6,818,030 | |||||
Stamps.com 1 | 10,600 | 1,215,290 | |||||
17,258,122 | |||||||
IT SERVICES - 0.0% | |||||||
Computer Task Group | 245,171 | 1,032,170 | |||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.9% | |||||||
Advanced Energy Industries 1 | 425,914 | 23,318,791 | |||||
Brooks Automation | 207,500 | 3,542,025 | |||||
Cabot Microelectronics | 265,230 | 16,754,579 | |||||
Cirrus Logic 1 | 157,288 | 8,893,064 | |||||
Diodes 1 | 352,711 | 9,054,091 | |||||
Himax Technologies ADR | 70,000 | 422,800 | |||||
IXYS Corporation | 284,900 | 3,390,310 | |||||
Kulicke & Soffa Industries 1 | 68,100 | 1,086,195 | |||||
MKS Instruments | 244,335 | 14,513,499 | |||||
Nanometrics 1 | 164,481 | 4,121,894 | |||||
Photronics 1 | 148,560 | 1,678,728 | |||||
Rudolph Technologies 1 | 131,800 | 3,077,530 | |||||
Tessera Holding Corporation | 132,930 | 5,875,506 | |||||
95,729,012 | |||||||
SOFTWARE - 2.4% | |||||||
ACI Worldwide 1 | 688,983 | 12,505,042 | |||||
Blackbaud | 168,043 | 10,754,752 | |||||
Computer Modelling Group | 729,400 | 4,949,044 | |||||
Enghouse Systems | 19,600 | 816,612 | |||||
Fair Isaac | 105,000 | 12,518,100 | |||||
Mentor Graphics | 15,490 | 571,426 | |||||
Monotype Imaging Holdings | 556,000 | 11,036,600 | |||||
PTC 1 | 110,700 | 5,122,089 | |||||
58,273,665 | |||||||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 0.9% | |||||||
Diebold Nixdorf | 643,732 | 16,189,860 | |||||
70,300 | 1,162,762 | ||||||
Super Micro Computer 1 | 120,266 | 3,373,461 | |||||
20,726,083 | |||||||
Total (Cost $240,709,090) | 422,193,593 | ||||||
MATERIALS – 9.3% | |||||||
CHEMICALS - 4.3% | |||||||
Balchem Corporation | 333,200 | 27,962,144 | |||||
FutureFuel Corporation | 712,056 | 9,897,578 | |||||
Innospec | 117,278 | 8,033,543 | |||||
Minerals Technologies | 124,402 | 9,610,055 | |||||
Quaker Chemical | 364,300 | 46,608,542 | |||||
Umicore | 47,000 | 2,675,193 | |||||
104,787,055 | |||||||
CONSTRUCTION MATERIALS - 0.1% | |||||||
Ash Grove Cement 3 | 7,584 | 1,971,840 | |||||
CONTAINERS & PACKAGING - 0.8% | |||||||
AptarGroup | 260,400 | 19,126,380 | |||||
METALS & MINING - 3.2% | |||||||
Compass Minerals International | 128,426 | 10,062,177 | |||||
Franco-Nevada Corporation | 280,800 | 16,780,608 | |||||
Gold Fields ADR | 365,000 | 1,098,650 | |||||
Haynes International | 18,393 | 790,715 | |||||
Hecla Mining | 173,300 | 908,092 | |||||
Major Drilling Group International 1 | 1,546,250 | 8,084,516 | |||||
Pretium Resources 1 | 102,600 | 849,746 | |||||
Reliance Steel & Aluminum | 289,210 | 23,003,763 | |||||
Schnitzer Steel Industries Cl. A | 58,200 | 1,495,740 | |||||
Worthington Industries | 342,733 | 16,259,254 | |||||
79,333,261 | |||||||
PAPER & FOREST PRODUCTS - 0.9% | |||||||
Neenah Paper | 6,700 | 570,840 | |||||
Stella-Jones | 638,500 | 20,724,559 | |||||
21,295,399 | |||||||
Total (Cost $114,338,730) | 226,513,935 | ||||||
REAL ESTATE – 1.8% | |||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.8% | |||||||
81,000 | 1,279,800 | ||||||
FRP Holdings 1 | 444,276 | 16,749,205 | |||||
Marcus & Millichap 1 | 251,500 | 6,720,080 | |||||
105,000 | 1,995,000 |
68 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Pennsylvania Mutual Fund (continued) |
SHARES | VALUE | ||||||
REAL ESTATE (continued) | |||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT (continued) | |||||||
689,385 | $ | 17,531,061 | |||||
Total (Cost $39,061,920) | 44,275,146 | ||||||
TELECOMMUNICATION SERVICES – 0.2% | |||||||
WIRELESS TELECOMMUNICATION SERVICES - 0.2% | |||||||
Telephone and Data Systems | 162,000 | 4,676,940 | |||||
Total (Cost $4,308,624) | 4,676,940 | ||||||
UTILITIES – 0.0% | |||||||
GAS UTILITIES - 0.0% | |||||||
Star Gas Partners L.P. | 6,700 | 72,092 | |||||
Total (Cost $73,227) | 72,092 | ||||||
MISCELLANEOUS2 – 1.4% | |||||||
Total (Cost $29,891,156) | 34,660,819 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $1,408,340,250) | 2,410,742,937 | ||||||
REPURCHASE AGREEMENT– 0.9% | |||||||
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value $21,856,073 (collateralized by obligations of various U.S. Government Agencies, 2.25% due 11/15/24, valued at $22,296,262) | |||||||
(Cost $21,856,000) | 21,856,000 | ||||||
PRINCIPAL | |||||||
AMOUNT | |||||||
COLLATERAL RECEIVED FOR SECURITIES LOANED – 1.5% | |||||||
U.S. Treasury Bills | |||||||
due 1/12/17-4/27/17 | $ | 4,578,606 | 4,578,416 | ||||
U.S. Treasury Bonds | |||||||
0.75%-8.125% | |||||||
due 8/15/19-5/15/46 | 2,731,395 | 2,742,333 | |||||
U.S. Treasury Notes | |||||||
0.125%-3.625% | |||||||
due 4/15/17-7/15/26 | 14,470,486 | 14,512,450 | |||||
U.S. Treasury Notes - Floating Rate | |||||||
due 4/30/17-7/31/17 | 122,777 | 122,775 | |||||
Money Market Funds | |||||||
Federated Government Obligations Fund (7 day yield-0.3947%) | 15,070,781 | ||||||
TOTAL COLLATERAL RECEIVED FOR SECURITIES LOANED | |||||||
(Cost $37,026,755) | 37,026,755 | ||||||
TOTAL INVESTMENTS – 101.2% | |||||||
(Cost $1,467,223,005) | 2,469,625,692 | ||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (1.2)% | (29,797,260 | ) | |||||
NET ASSETS – 100.0% | $ | 2,439,828,432 | |||||
Royce Premier Fund |
Common Stocks – 99.1% |
SHARES | VALUE | ||||||
CONSUMER DISCRETIONARY – 10.1% | |||||||
AUTO COMPONENTS - 2.4% | |||||||
Dorman Products 1 | 744,300 | $ | 54,378,558 | ||||
AUTOMOBILES - 1.8% | |||||||
Thor Industries | 414,600 | 41,480,730 | |||||
DISTRIBUTORS - 1.6% | |||||||
Pool Corporation | 336,800 | 35,141,712 | |||||
DIVERSIFIED CONSUMER SERVICES - 0.5% | |||||||
306,200 | 12,205,132 | ||||||
SPECIALTY RETAIL - 0.9% | |||||||
†Camping World Holdings CI. A | 622,400 | 20,284,016 | |||||
TEXTILES, APPAREL & LUXURY GOODS - 2.9% | |||||||
Columbia Sportswear | 627,672 | 36,593,277 | |||||
Wolverine World Wide | 1,257,064 | 27,592,555 | |||||
64,185,832 | |||||||
Total (Cost $103,555,077) | 227,675,980 | ||||||
CONSUMER STAPLES – 2.1% | |||||||
FOOD PRODUCTS - 2.1% | |||||||
Cal-Maine Foods 4 | 314,800 | 13,906,290 | |||||
Sanderson Farms | 355,342 | 33,487,430 | |||||
Total (Cost $17,005,122) | 47,393,720 | ||||||
ENERGY – 3.6% | |||||||
ENERGY EQUIPMENT & SERVICES - 3.6% | |||||||
Pason Systems | 2,724,200 | 39,849,021 | |||||
SEACOR Holdings 1 | 587,802 | 41,898,527 | |||||
Total (Cost $69,185,283) | 81,747,548 | ||||||
FINANCIALS – 12.5% | |||||||
CAPITAL MARKETS - 8.3% | |||||||
Ares Management L.P. | 2,564,076 | 49,230,259 | |||||
Ashmore Group | 9,660,000 | 33,706,909 | |||||
Federated Investors Cl. B | 782,400 | 22,126,272 | |||||
†Lazard Cl. A | 614,300 | 25,241,587 | |||||
Morningstar | 504,100 | 37,081,596 | |||||
TMX Group | 389,100 | 20,726,498 | |||||
188,113,121 | |||||||
INSURANCE - 2.8% | |||||||
Alleghany Corporation 1 | 104,860 | 63,767,463 | |||||
THRIFTS & MORTGAGE FINANCE - 1.4% | |||||||
Genworth MI Canada | 1,210,300 | 30,342,009 | |||||
Total (Cost $188,680,514) | 282,222,593 | ||||||
HEALTH CARE – 3.6% | |||||||
HEALTH CARE EQUIPMENT & SUPPLIES - 2.0% | |||||||
IDEXX Laboratories 1 | 382,900 | 44,902,683 | |||||
LIFE SCIENCES TOOLS & SERVICES - 1.6% | |||||||
Bio-Techne | 358,600 | 36,874,838 | |||||
Total (Cost $36,256,120) | 81,777,521 | ||||||
INDUSTRIALS – 35.4% | |||||||
AIR FREIGHT & LOGISTICS - 2.0% | |||||||
Forward Air | 938,628 | 44,472,194 | |||||
BUILDING PRODUCTS - 1.4% | |||||||
Simpson Manufacturing | 726,333 | 31,777,069 | |||||
COMMERCIAL SERVICES & SUPPLIES - 5.4% | |||||||
Copart 1 | 1,322,600 | 73,285,266 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 69 |
Schedules of Investments |
Royce Premier Fund (continued) |
SHARES | VALUE | ||||||
INDUSTRIALS (continued) | |||||||
COMMERCIAL SERVICES & SUPPLIES (continued) | |||||||
Ritchie Bros. Auctioneers | 1,452,600 | $ | 49,388,400 | ||||
122,673,666 | |||||||
CONSTRUCTION & ENGINEERING - 3.9% | |||||||
EMCOR Group | 390,500 | 27,631,780 | |||||
Valmont Industries | 426,400 | 60,079,760 | |||||
87,711,540 | |||||||
MACHINERY - 12.1% | |||||||
CIRCOR International | 651,632 | 42,277,884 | |||||
Lincoln Electric Holdings | 960,500 | 73,641,535 | |||||
Lindsay Corporation | 525,575 | 39,213,151 | |||||
RBC Bearings 1 | 182,300 | 16,919,263 | |||||
Sun Hydraulics | 804,227 | 32,144,953 | |||||
Woodward | 1,004,001 | 69,326,269 | |||||
273,523,055 | |||||||
MARINE - 2.9% | |||||||
Kirby Corporation 1 | 990,400 | 65,861,600 | |||||
PROFESSIONAL SERVICES - 0.4% | |||||||
Advisory Board (The) 1 | 252,100 | 8,382,325 | |||||
ROAD & RAIL - 3.1% | |||||||
Landstar System | 813,100 | 69,357,430 | |||||
TRADING COMPANIES & DISTRIBUTORS - 4.2% | |||||||
Air Lease Cl. A | 1,705,060 | 58,534,710 | |||||
MSC Industrial Direct Cl. A | 406,900 | 37,593,491 | |||||
96,128,201 | |||||||
Total (Cost $375,104,232) | 799,887,080 | ||||||
INFORMATION TECHNOLOGY – 22.0% | |||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 9.4% | |||||||
Anixter International 1 | 474,700 | 38,474,435 | |||||
Cognex Corporation | 1,271,514 | 80,893,721 | |||||
330,000 | 32,574,300 | ||||||
National Instruments | 1,922,344 | 59,246,642 | |||||
211,189,098 | |||||||
IT SERVICES - 3.6% | |||||||
Gartner 1 | 355,900 | 35,970,813 | |||||
Jack Henry & Associates | 509,500 | 45,233,410 | |||||
81,204,223 | |||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 5.1% | |||||||
Cabot Microelectronics | 505,774 | 31,949,743 | |||||
MKS Instruments | 1,417,300 | 84,187,620 | |||||
116,137,363 | |||||||
SOFTWARE - 3.9% | |||||||
Fair Isaac | 392,600 | 46,805,772 | |||||
PTC 1 | 869,600 | 40,236,392 | |||||
87,042,164 | |||||||
Total (Cost $186,068,769) | 495,572,848 | ||||||
MATERIALS – 7.4% | |||||||
CHEMICALS - 3.8% | |||||||
Minerals Technologies | 592,000 | 45,732,000 | |||||
Westlake Chemical | 699,600 | 39,170,604 | |||||
84,902,604 | |||||||
METALS & MINING - 2.2% | |||||||
Reliance Steel & Aluminum | 637,600 | 50,714,704 | |||||
PAPER & FOREST PRODUCTS - 1.4% | |||||||
Stella-Jones | 994,312 | 32,273,576 | |||||
Total (Cost $80,327,622) | 167,890,884 | ||||||
REAL ESTATE – 1.6% | |||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.6% | |||||||
Jones Lang LaSalle | 182,400 | 18,429,696 | |||||
Kennedy-Wilson Holdings | 869,236 | 17,819,338 | |||||
Total (Cost $21,097,597) | 36,249,034 | ||||||
MISCELLANEOUS2 – 0.8% | |||||||
Total (Cost $17,367,495) | 18,122,297 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $1,094,647,831) | 2,238,539,505 | ||||||
REPURCHASE AGREEMENT – 1.1% | |||||||
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value $24,420,081 (collateralized by obligations of various U.S. Government Agencies, 2.25% due 11/15/24, valued at $24,913,218) | |||||||
(Cost $24,420,000) | 24,420,000 | ||||||
COLLATERAL RECEIVED FOR SECURITIES LOANED – 0.3% | |||||||
Money Market Funds | |||||||
Federated Government Obligations Fund (7 day yield-0.3947%) | |||||||
(Cost $6,380,826) | 6,380,826 | ||||||
TOTAL INVESTMENTS – 100.5% | |||||||
(Cost $1,125,448,657) | 2,269,340,331 | ||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (0.5)% | (10,205,354 | ) | |||||
NET ASSETS – 100.0% | $ | 2,259,134,977 | |||||
70 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Small-Cap Leaders Fund |
Common Stocks – 95.4% |
SHARES | VALUE | ||||||
CONSUMER DISCRETIONARY – 15.0% | |||||||
AUTO COMPONENTS - 5.2% | |||||||
†Cooper Tire & Rubber | 43,000 | $ | 1,670,550 | ||||
Gentex Corporation | 145,434 | 2,863,595 | |||||
LCI Industries | 7,132 | 768,473 | |||||
5,302,618 | |||||||
AUTOMOBILES - 1.3% | |||||||
Thor Industries | 13,405 | 1,341,170 | |||||
MEDIA - 0.9% | |||||||
E.W. Scripps Company Cl. A 1 | 44,990 | 869,657 | |||||
SPECIALTY RETAIL - 5.0% | |||||||
Buckle (The) | 72,700 | 1,657,560 | |||||
†Caleres | 70,600 | 2,317,092 | |||||
Genesco 1 | 17,405 | 1,080,851 | |||||
5,055,503 | |||||||
TEXTILES, APPAREL & LUXURY GOODS - 2.6% | |||||||
Deckers Outdoor 1 | 13,620 | 754,412 | |||||
Movado Group | 50,200 | 1,443,250 | |||||
35,700 | 418,404 | ||||||
2,616,066 | |||||||
Total (Cost $12,103,083) | 15,185,014 | ||||||
CONSUMER STAPLES – 6.1% | |||||||
FOOD PRODUCTS - 5.2% | |||||||
Cal-Maine Foods | 36,758 | 1,623,785 | |||||
Industrias Bachoco ADR | 39,590 | 1,940,702 | |||||
Sanderson Farms | 9,590 | 903,761 | |||||
†Tootsie Roll Industries | 19,000 | 755,250 | |||||
5,223,498 | |||||||
PERSONAL PRODUCTS - 0.9% | |||||||
Inter Parfums | 29,870 | 978,243 | |||||
Total (Cost $5,145,833) | 6,201,741 | ||||||
ENERGY – 5.8% | |||||||
ENERGY EQUIPMENT & SERVICES - 5.8% | |||||||
Helmerich & Payne | 8,685 | 672,219 | |||||
Oil States International 1 | 32,940 | 1,284,660 | |||||
Pason Systems | 171,440 | 2,507,788 | |||||
TGS-NOPEC Geophysical | 61,850 | 1,371,683 | |||||
Total (Cost $3,626,362) | 5,836,350 | ||||||
FINANCIALS – 16.3% | |||||||
CAPITAL MARKETS - 12.5% | |||||||
Artisan Partners Asset Management Cl. A | 74,420 | 2,213,995 | |||||
Federated Investors Cl. B | 105,260 | 2,976,753 | |||||
†Houlihan Lokey Cl. A | 59,100 | 1,839,192 | |||||
Lazard Cl. A | 52,870 | 2,172,428 | |||||
Virtus Investment Partners | 21,500 | 2,538,075 | |||||
Westwood Holdings Group | 15,000 | 899,850 | |||||
12,640,293 | |||||||
DIVERSIFIED FINANCIAL SERVICES - 0.8% | |||||||
PICO Holdings 1 | 48,000 | 727,200 | |||||
THRIFTS & MORTGAGE FINANCE - 3.0% | |||||||
Genworth MI Canada | 121,660 | 3,049,995 | |||||
Total (Cost $13,478,954) | 16,417,488 | ||||||
HEALTH CARE – 5.6% | |||||||
BIOTECHNOLOGY - 0.5% | |||||||
Zealand Pharma 1 | 32,840 | 494,460 | |||||
HEALTH CARE EQUIPMENT & SUPPLIES - 0.7% | |||||||
Atrion Corporation | 1,430 | 725,296 | |||||
HEALTH CARE PROVIDERS & SERVICES - 1.1% | |||||||
†Aceto Corporation | 51,000 | 1,120,470 | |||||
LIFE SCIENCES TOOLS & SERVICES - 3.3% | |||||||
Bio-Rad Laboratories Cl. A 1 | 9,125 | 1,663,305 | |||||
Bio-Techne | 16,144 | 1,660,088 | |||||
3,323,393 | |||||||
Total (Cost $4,041,848) | 5,663,619 | ||||||
INDUSTRIALS – 21.4% | |||||||
BUILDING PRODUCTS - 2.4% | |||||||
Apogee Enterprises | 45,700 | 2,447,692 | |||||
COMMERCIAL SERVICES & SUPPLIES - 3.1% | |||||||
Ritchie Bros. Auctioneers | 13,134 | 446,556 | |||||
Steelcase Cl. A | 117,120 | 2,096,448 | |||||
UniFirst Corporation | 4,300 | 617,695 | |||||
3,160,699 | |||||||
CONSTRUCTION & ENGINEERING - 3.1% | |||||||
†Comfort Systems USA | 42,300 | 1,408,590 | |||||
Valmont Industries | 11,795 | 1,661,915 | |||||
3,070,505 | |||||||
MACHINERY - 7.9% | |||||||
CIRCOR International | 24,970 | 1,620,054 | |||||
Federal Signal | 41,080 | 641,259 | |||||
†Greenbrier Companies (The) | 32,100 | 1,333,755 | |||||
John Bean Technologies | 3,509 | 301,598 | |||||
Kadant | 21,660 | 1,325,592 | |||||
Lydall 1 | 20,360 | 1,259,266 | |||||
RBC Bearings 1 | 10,480 | 972,649 | |||||
Westinghouse Air Brake Technologies | 6,488 | 538,634 | |||||
7,992,807 | |||||||
PROFESSIONAL SERVICES - 2.1% | |||||||
ICF International 1 | 16,743 | 924,214 | |||||
Robert Half International | 13,003 | 634,286 | |||||
TrueBlue 1 | 22,400 | 552,160 | |||||
2,110,660 | |||||||
ROAD & RAIL - 2.1% | |||||||
Landstar System | 16,720 | 1,426,216 | |||||
Saia 1 | 15,320 | 676,378 | |||||
2,102,594 | |||||||
TRADING COMPANIES & DISTRIBUTORS - 0.7% | |||||||
MSC Industrial Direct Cl. A | 8,077 | 746,234 | |||||
Total (Cost $14,711,932) | 21,631,191 | ||||||
INFORMATION TECHNOLOGY – 17.4% | |||||||
COMMUNICATIONS EQUIPMENT - 1.3% | |||||||
NetScout Systems 1 | 42,400 | 1,335,600 | |||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 5.0% | |||||||
Cognex Corporation | 8,240 | 524,229 | |||||
FARO Technologies 1 | 12,660 | 455,760 | |||||
IPG Photonics 1 | 4,040 | 398,788 | |||||
Littelfuse | 4,840 | 734,567 | |||||
Methode Electronics | 37,550 | 1,552,693 | |||||
Orbotech 1 | 40,290 | 1,346,089 | |||||
5,012,126 | |||||||
INTERNET SOFTWARE & SERVICES - 2.9% | |||||||
j2 Global | 35,324 | 2,889,503 | |||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 71 |
Schedules of Investments |
Royce Small-Cap Leaders Fund (continued) |
SHARES | VALUE | ||||||
INFORMATION TECHNOLOGY (continued) | |||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 7.9% | |||||||
Brooks Automation | 31,790 | $ | 542,655 | ||||
Cabot Microelectronics | 11,436 | 722,412 | |||||
MKS Instruments | 20,145 | 1,196,613 | |||||
Nanometrics 1 | 78,948 | 1,978,437 | |||||
62,500 | 1,459,375 | ||||||
Tessera Holding Corporation | 47,430 | 2,096,406 | |||||
7,995,898 | |||||||
SOFTWARE - 0.3% | |||||||
Mentor Graphics | 9,580 | 353,406 | |||||
Total (Cost $10,955,746) | 17,586,533 | ||||||
MATERIALS – 4.0% | |||||||
CHEMICALS - 2.8% | |||||||
Minerals Technologies | 30,356 | 2,345,001 | |||||
Quaker Chemical | 3,690 | 472,099 | |||||
2,817,100 | |||||||
METALS & MINING - 1.2% | |||||||
Compass Minerals International | 9,300 | 728,655 | |||||
Reliance Steel & Aluminum | 6,160 | 489,966 | |||||
1,218,621 | |||||||
Total (Cost $2,672,776) | 4,035,721 | ||||||
REAL ESTATE – 2.8% | |||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 2.8% | |||||||
Marcus & Millichap 1 | 104,410 | 2,789,835 | |||||
Total (Cost $2,385,270) | 2,789,835 | ||||||
MISCELLANEOUS2 – 1.0% | |||||||
Total (Cost $990,242) | 1,042,167 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $70,112,046) | 96,389,659 | ||||||
REPURCHASE AGREEMENT – 5.2% | |||||||
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value $5,226,017 (collateralized by obligations of various U.S. Government Agencies, 2.25% due 11/15/24, valued at $5,333,226) | |||||||
(Cost $5,226,000) | 5,226,000 | ||||||
TOTAL INVESTMENTS – 100.6% | |||||||
(Cost $75,338,046) | 101,615,659 | ||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (0.6)% | (591,637 | ) | |||||
NET ASSETS – 100.0% | $ | 101,024,022 | |||||
Royce Small-Cap Value Fund |
Common Stocks – 89.2% |
SHARES | VALUE | ||||||
CONSUMER DISCRETIONARY – 24.6% | |||||||
AUTO COMPONENTS - 3.8% | |||||||
Gentex Corporation | 683,756 | $ | 13,463,156 | ||||
STRATTEC SECURITY | 88,638 | 3,572,111 | |||||
17,035,267 | |||||||
HOUSEHOLD DURABLES - 1.3% | |||||||
Flexsteel Industries | 94,400 | 5,821,648 | |||||
MEDIA - 1.2% | |||||||
Saga Communications Cl. A | 111,935 | 5,630,330 | |||||
SPECIALTY RETAIL - 16.4% | |||||||
American Eagle Outfitters | 892,086 | 13,532,945 | |||||
Buckle (The) | 368,078 | 8,392,179 | |||||
Cato Corporation (The) Cl. A | 239,690 | 7,209,875 | |||||
DSW Cl. A | 591,402 | 13,395,255 | |||||
Genesco 1 | 98,272 | 6,102,691 | |||||
234,400 | 8,743,120 | ||||||
386,580 | 5,995,856 | ||||||
Shoe Carnival | 400,183 | 10,796,937 | |||||
74,168,858 | |||||||
TEXTILES, APPAREL & LUXURY GOODS - 1.9% | |||||||
Deckers Outdoor 1 | 79,985 | 4,430,369 | |||||
Movado Group | 25,982 | 746,983 | |||||
Steven Madden 1 | 92,095 | 3,292,396 | |||||
8,469,748 | |||||||
Total (Cost $104,443,663) | 111,125,851 | ||||||
CONSUMER STAPLES – 1.8% | |||||||
FOOD & STAPLES RETAILING - 1.8% | |||||||
Village Super Market Cl. A | 266,829 | 8,245,016 | |||||
Total (Cost $7,956,254) | 8,245,016 | ||||||
ENERGY – 4.9% | |||||||
ENERGY EQUIPMENT & SERVICES - 4.9% | |||||||
Helmerich & Payne | 74,499 | 5,766,223 | |||||
Matrix Service 1 | 468,402 | 10,632,725 | |||||
Unit Corporation 1 | 217,378 | 5,840,947 | |||||
Total (Cost $17,571,822) | 22,239,895 | ||||||
FINANCIALS – 23.1% | |||||||
BANKS - 8.4% | |||||||
Ames National | 116,348 | 3,839,484 | |||||
Camden National | 174,783 | 7,769,104 | |||||
City Holding Company | 73,240 | 4,951,024 | |||||
CNB Financial | 153,853 | 4,114,029 | |||||
Codorus Valley Bancorp | 33,122 | 947,289 | |||||
†MidWestOne Financial Group | 127,360 | 4,788,736 | |||||
National Bankshares | 140,761 | 6,116,066 | |||||
Northrim BanCorp | 176,643 | 5,581,919 | |||||
38,107,651 | |||||||
CAPITAL MARKETS - 5.9% | |||||||
Federated Investors Cl. B | 228,149 | 6,452,054 | |||||
†Houlihan Lokey Cl. A | 212,596 | 6,615,988 | |||||
Moelis & Company Cl. A | 395,935 | 13,422,196 | |||||
26,490,238 | |||||||
INSURANCE - 2.7% | |||||||
Reinsurance Group of America | 97,135 | 12,222,497 | |||||
THRIFTS & MORTGAGE FINANCE - 6.1% | |||||||
Genworth MI Canada | 545,700 | 13,680,603 | |||||
Southern Missouri Bancorp | 51,730 | 1,830,208 |
72 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Small-Cap Value Fund (continued) |
SHARES | VALUE | ||||||
FINANCIALS (continued) | |||||||
THRIFTS & MORTGAGE FINANCE (continued) | |||||||
TrustCo Bank Corp. NY | 1,362,704 | $ | 11,923,660 | ||||
27,434,471 | |||||||
Total (Cost $77,290,715) | 104,254,857 | ||||||
HEALTH CARE – 1.2% | |||||||
HEALTH CARE PROVIDERS & SERVICES - 1.2% | |||||||
Aceto Corporation | 145,640 | 3,199,711 | |||||
Ensign Group (The) | 95,093 | 2,112,016 | |||||
Total (Cost $4,940,900) | 5,311,727 | ||||||
INDUSTRIALS – 21.0% | |||||||
AIRLINES - 3.0% | |||||||
234,562 | 13,571,757 | ||||||
BUILDING PRODUCTS - 4.0% | |||||||
121,376 | 9,133,544 | ||||||
†Apogee Enterprises | 169,103 | 9,057,157 | |||||
18,190,701 | |||||||
COMMERCIAL SERVICES & SUPPLIES - 1.1% | |||||||
†Kimball International Cl. B | 282,500 | 4,960,700 | |||||
CONSTRUCTION & ENGINEERING - 1.9% | |||||||
†Comfort Systems USA | 228,400 | 7,605,720 | |||||
MYR Group 1 | 21,908 | 825,493 | |||||
8,431,213 | |||||||
MACHINERY - 4.0% | |||||||
Alamo Group | 44,191 | 3,362,935 | |||||
Federal Signal | 183,938 | 2,871,272 | |||||
Miller Industries | 327,467 | 8,661,502 | |||||
202,800 | 3,208,296 | ||||||
18,104,005 | |||||||
PROFESSIONAL SERVICES - 5.2% | |||||||
Heidrick & Struggles International | 56,400 | 1,362,060 | |||||
Korn/Ferry International | 460,009 | 13,538,065 | |||||
TrueBlue 1 | 336,663 | 8,298,743 | |||||
23,198,868 | |||||||
ROAD & RAIL - 1.8% | |||||||
17,700 | 1,518,483 | ||||||
Saia 1 | 115,898 | 5,116,897 | |||||
Werner Enterprises | 57,202 | 1,541,594 | |||||
8,176,974 | |||||||
Total (Cost $77,366,560) | 94,634,218 | ||||||
INFORMATION TECHNOLOGY – 12.1% | |||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 10.6% | |||||||
Benchmark Electronics 1 | 248,236 | 7,571,198 | |||||
384,286 | 2,812,974 | ||||||
†Methode Electronics | 186,100 | 7,695,235 | |||||
PC Connection | 483,178 | 13,572,470 | |||||
ScanSource 1 | 64,865 | 2,617,303 | |||||
Vishay Intertechnology | 831,222 | 13,465,796 | |||||
47,734,976 | |||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.6% | |||||||
MKS Instruments | 46,447 | 2,758,952 | |||||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 0.9% | |||||||
Super Micro Computer 1 | 140,252 | 3,934,068 | |||||
Total (Cost $43,761,763) | 54,427,996 | ||||||
MISCELLANEOUS2 – 0.5% | |||||||
Total (Cost $1,786,036) | 2,269,855 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $335,117,713) | 402,509,415 | ||||||
REPURCHASE AGREEMENT – 10.7% | |||||||
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value $48,392,161 (collateralized by obligations of various U.S. Government Agencies, 2.25% due 11/15/24, valued at $49,364,620) | |||||||
(Cost $48,392,000) | 48,392,000 | ||||||
PRINCIPAL | |||||||
AMOUNT | |||||||
COLLATERAL RECEIVED FOR SECURITIES LOANED – 2.2% | |||||||
U.S. Treasury Bills | |||||||
due 1/12/17-4/20/17 | $ | 220,613 | 220,611 | ||||
U.S. Treasury Bonds | |||||||
0.75%-8.125% | |||||||
due 8/15/19-5/15/46 | 1,633,883 | 1,642,669 | |||||
U.S. Treasury Notes | |||||||
0.125%-3.625% | |||||||
due 4/15/17-7/15/26 | 6,344,691 | 6,360,574 | |||||
U.S. Treasury Notes - Floating Rate | |||||||
due 7/31/17 | 95,754 | 95,752 | |||||
Money Market Funds | |||||||
Federated Government Obligations Fund (7 day yield-0.3947%) | 1,336,417 | ||||||
TOTAL COLLATERAL RECEIVED FOR SECURITIES LOANED | |||||||
(Cost $9,656,023) | 9,656,023 | ||||||
TOTAL INVESTMENTS – 102.1% | |||||||
(Cost $393,165,736) | 460,557,438 | ||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (2.1)% | (9,376,970 | ) | |||||
NET ASSETS – 100.0% | $ | 451,180,468 | |||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 73 |
Schedules of Investments |
Royce Smaller-Companies Growth Fund |
Common Stocks – 97.8% |
SHARES | VALUE | ||||||
CONSUMER DISCRETIONARY – 10.9% | |||||||
AUTO COMPONENTS - 1.9% | |||||||
LCI Industries | 74,000 | $ | 7,973,500 | ||||
HOTELS, RESTAURANTS & LEISURE - 2.7% | |||||||
85,000 | 4,785,500 | ||||||
Texas Roadhouse | 134,000 | 6,464,160 | |||||
11,249,660 | |||||||
HOUSEHOLD DURABLES - 1.2% | |||||||
87,000 | 5,085,150 | ||||||
INTERNET & DIRECT MARKETING RETAIL - 0.9% | |||||||
69,000 | 3,462,420 | ||||||
LEISURE PRODUCTS - 0.8% | |||||||
†Callaway Golf | 302,000 | 3,309,920 | |||||
SPECIALTY RETAIL - 1.9% | |||||||
Boot Barn Holdings 1 | 449,600 | 5,628,992 | |||||
Tractor Supply | 31,000 | 2,350,110 | |||||
7,979,102 | |||||||
TEXTILES, APPAREL & LUXURY GOODS - 1.5% | |||||||
Carter’s | 29,900 | 2,583,061 | |||||
Columbia Sportswear | 26,000 | 1,515,800 | |||||
Gildan Activewear | 82,666 | 2,097,236 | |||||
6,196,097 | |||||||
Total (Cost $29,175,380) | 45,255,849 | ||||||
CONSUMER STAPLES – 2.7% | |||||||
BEVERAGES - 0.4% | |||||||
MGP Ingredients | 34,000 | 1,699,320 | |||||
FOOD & STAPLES RETAILING - 2.3% | |||||||
304,000 | 3,614,560 | ||||||
125,617 | 5,994,443 | ||||||
9,609,003 | |||||||
Total (Cost $12,623,354) | 11,308,323 | ||||||
ENERGY – 7.8% | |||||||
ENERGY EQUIPMENT & SERVICES - 4.5% | |||||||
53,000 | 3,182,650 | ||||||
Helmerich & Payne | 57,000 | 4,411,800 | |||||
Pason Systems | 378,000 | 5,529,304 | |||||
Unit Corporation 1 | 204,200 | 5,486,854 | |||||
18,610,608 | |||||||
OIL, GAS & CONSUMABLE FUELS - 3.3% | |||||||
220,000 | 4,338,400 | ||||||
Parsley Energy Cl. A 1 | 142,000 | 5,004,080 | |||||
100,000 | 4,462,000 | ||||||
13,804,480 | |||||||
Total (Cost $19,065,389) | 32,415,088 | ||||||
FINANCIALS – 9.4% | |||||||
BANKS - 5.1% | |||||||
†Bank of the Ozarks | 56,000 | 2,945,040 | |||||
Enterprise Financial Services | 187,500 | 8,062,500 | |||||
Live Oak Bancshares | 60,700 | 1,122,950 | |||||
ServisFirst Bancshares | 108,000 | 4,043,520 | |||||
234,057 | 5,172,660 | ||||||
21,346,670 | |||||||
CAPITAL MARKETS - 4.3% | |||||||
Financial Engines | 153,800 | 5,652,150 | |||||
Northern Trust | 71,000 | 6,322,550 | |||||
Oaktree Capital Group LLC Cl. A | 55,800 | 2,092,500 | |||||
WisdomTree Investments | 335,200 | 3,734,128 | |||||
17,801,328 | |||||||
Total (Cost $24,772,068) | 39,147,998 | ||||||
HEALTH CARE – 13.5% | |||||||
BIOTECHNOLOGY - 4.2% | |||||||
76,000 | 3,375,920 | ||||||
Progenics Pharmaceuticals 1 | 513,200 | 4,434,048 | |||||
98,000 | 3,020,360 | ||||||
454,799 | 6,847,749 | ||||||
17,678,077 | |||||||
HEALTH CARE EQUIPMENT & SUPPLIES - 2.7% | |||||||
AtriCure 1 | 68,000 | 1,330,760 | |||||
Inogen 1 | 65,755 | 4,416,764 | |||||
Penumbra 1 | 1,000 | 63,800 | |||||
125,000 | 5,440,000 | ||||||
11,251,324 | |||||||
HEALTH CARE PROVIDERS & SERVICES - 2.7% | |||||||
BioTelemetry 1 | 269,709 | 6,027,996 | |||||
131,000 | 5,308,120 | ||||||
11,336,116 | |||||||
HEALTH CARE TECHNOLOGY - 1.1% | |||||||
HealthStream 1 | 175,000 | 4,383,750 | |||||
LIFE SCIENCES TOOLS & SERVICES - 1.8% | |||||||
Cambrex Corporation 1 | 43,500 | 2,346,825 | |||||
604,000 | 5,176,280 | ||||||
7,523,105 | |||||||
PHARMACEUTICALS - 1.0% | |||||||
44,000 | 3,150,400 | ||||||
Intersect ENT 1 | 71,000 | 859,100 | |||||
4,009,500 | |||||||
Total (Cost $39,938,126) | 56,181,872 | ||||||
INDUSTRIALS – 10.8% | |||||||
AEROSPACE & DEFENSE - 1.2% | |||||||
Mercury Systems 1 | 169,749 | 5,129,815 | |||||
AIR FREIGHT & LOGISTICS - 2.0% | |||||||
74,000 | 3,859,100 | ||||||
Forward Air | 93,000 | 4,406,340 | |||||
8,265,440 | |||||||
BUILDING PRODUCTS - 1.7% | |||||||
DIRTT Environmental Solutions 1 | 1,511,000 | 7,056,172 | |||||
CONSTRUCTION & ENGINEERING - 0.9% | |||||||
NV5 Global 1 | 112,585 | 3,760,339 | |||||
MACHINERY - 4.0% | |||||||
Astec Industries | 51,000 | 3,440,460 | |||||
†KUKA | 40,900 | 4,942,760 | |||||
20,000 | 1,027,000 | ||||||
Tennant Company | 53,937 | 3,840,314 | |||||
Woodward | 50,000 | 3,452,500 | |||||
16,703,034 | |||||||
MARINE - 1.0% | |||||||
Clarkson | 149,976 | 4,016,015 | |||||
Total (Cost $34,702,346) | 44,930,815 | ||||||
74 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Smaller-Companies Growth Fund (continued) |
SHARES | VALUE | ||||||
INFORMATION TECHNOLOGY – 28.9% | |||||||
COMMUNICATIONS EQUIPMENT - 0.5% | |||||||
Infinera Corporation 1 | 230,233 | $ | 1,954,678 | ||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 10.0% | |||||||
206,623 | 2,975,371 | ||||||
Cognex Corporation | 20,000 | 1,272,400 | |||||
Coherent 1 | 48,000 | 6,594,480 | |||||
ePlus 1 | 64,000 | 7,372,800 | |||||
Fabrinet 1 | 81,000 | 3,264,300 | |||||
FARO Technologies 1 | 97,000 | 3,492,000 | |||||
FLIR Systems | 161,600 | 5,848,304 | |||||
IPG Photonics 1 | 47,444 | 4,683,198 | |||||
128,000 | 2,138,880 | ||||||
49,000 | 3,729,880 | ||||||
41,371,613 | |||||||
INTERNET SOFTWARE & SERVICES - 4.7% | |||||||
117,071 | 3,697,102 | ||||||
139,000 | 4,010,150 | ||||||
78,000 | 3,343,860 | ||||||
38,000 | 4,356,700 | ||||||
131,348 | 3,960,142 | ||||||
19,367,954 | |||||||
IT SERVICES - 1.5% | |||||||
Unisys Corporation 1 | 423,000 | 6,323,850 | |||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.7% | |||||||
129,000 | 3,366,900 | ||||||
Inphi Corporation 1 | 76,000 | 3,391,120 | |||||
Integrated Device Technology 1 | 206,100 | 4,855,716 | |||||
86,000 | 3,980,080 | ||||||
15,593,816 | |||||||
SOFTWARE - 7.5% | |||||||
53,000 | 2,186,250 | ||||||
75,000 | 1,072,500 | ||||||
44,000 | 2,068,000 | ||||||
197,000 | 1,510,990 | ||||||
4,000 | 152,480 | ||||||
241,786 | 7,255,998 | ||||||
QAD Cl. A | 213,000 | 6,475,200 | |||||
RingCentral Cl. A 1 | 150,000 | 3,090,000 | |||||
210,288 | 2,226,950 | ||||||
Silver Spring Networks 1 | 396,000 | 5,270,760 | |||||
31,309,128 | |||||||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 1.0% | |||||||
Immersion Corporation 1 | 376,595 | 4,003,205 | |||||
Total (Cost $91,616,519) | 119,924,244 | ||||||
MATERIALS – 6.6% | |||||||
CHEMICALS - 2.6% | |||||||
Albemarle Corporation | 68,000 | 5,853,440 | |||||
178,000 | 5,069,440 | ||||||
10,922,880 | |||||||
CONSTRUCTION MATERIALS - 2.5% | |||||||
Eagle Materials | 78,000 | 7,685,340 | |||||
107,780 | 2,564,086 | ||||||
10,249,426 | |||||||
METALS & MINING - 1.5% | |||||||
Orocobre 1 | 1,985,000 | 6,460,024 | |||||
Total (Cost $20,750,750) | 27,632,330 | ||||||
REAL ESTATE – 1.6% | |||||||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITS) - 1.6% | |||||||
†Community Healthcare Trust | 128,000 | 2,947,840 | |||||
CyrusOne | 78,000 | 3,488,940 | |||||
Total (Cost $5,135,970) | 6,436,780 | ||||||
TELECOMMUNICATION SERVICES – 0.8% | |||||||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.8% | |||||||
ORBCOMM 1 | 398,000 | 3,291,460 | |||||
Total (Cost $2,361,027) | 3,291,460 | ||||||
MISCELLANEOUS2 – 4.8% | |||||||
Total (Cost $19,416,916) | 20,111,420 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $299,557,845) | 406,636,179 | ||||||
REPURCHASE AGREEMENT – 2.8% | |||||||
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value $11,780,039 (collateralized by obligations of various U.S. Government Agencies, 2.00% due 2/15/25, valued at $12,019,622) | |||||||
(Cost $11,780,000) | 11,780,000 | ||||||
PRINCIPAL | |||||||
AMOUNT | |||||||
COLLATERAL RECEIVED FOR SECURITIES LOANED – 9.5% | |||||||
U.S. Treasury Bills | |||||||
due 1/12/17-4/27/17 | $ | 5,099,420 | 5,099,201 | ||||
U.S. Treasury Bonds | |||||||
0.75%-4.75% | |||||||
due 1/15/28-5/15/46 | 1,110,844 | 1,112,262 | |||||
U.S. Treasury Notes | |||||||
0.125%-3.625% | |||||||
due 4/15/17-5/15/26 | 8,629,946 | 8,658,133 | |||||
Money Market Funds | |||||||
Federated Government Obligations Fund (7 day yield-0.3947%) | 24,364,807 | ||||||
TOTAL COLLATERAL RECEIVED FOR SECURITIES LOANED | |||||||
(Cost $39,234,403) | 39,234,403 | ||||||
TOTAL INVESTMENTS – 110.1% | |||||||
(Cost $350,572,248) | 457,650,582 | ||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (10.1)% | (41,935,969 | ) | |||||
NET ASSETS – 100.0% | $ | 415,714,613 | |||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 75 |
Schedules of Investments |
Royce Special Equity Fund |
Common Stocks – 88.6% |
SHARES | VALUE | ||||||
CONSUMER DISCRETIONARY – 37.9% | |||||||
AUTO COMPONENTS - 8.0% | |||||||
†Cooper Tire & Rubber | 990,000 | $ | 38,461,500 | ||||
†Gentex Corporation | 1,067,000 | 21,009,230 | |||||
Standard Motor Products 6 | 1,295,000 | 68,919,900 | |||||
128,390,630 | |||||||
AUTOMOBILES - 2.0% | |||||||
Winnebago Industries | 1,040,000 | 32,916,000 | |||||
DIVERSIFIED CONSUMER SERVICES - 3.1% | |||||||
Capella Education 6 | 577,700 | 50,722,060 | |||||
HOTELS, RESTAURANTS & LEISURE - 0.4% | |||||||
Bowl America Cl. A 6 | 343,000 | 5,916,750 | |||||
HOUSEHOLD DURABLES - 8.4% | |||||||
Bassett Furniture Industries 6 | 735,000 | 22,344,000 | |||||
CSS Industries 6 | 885,000 | 23,956,950 | |||||
Ethan Allen Interiors | 365,000 | 13,450,250 | |||||
Flexsteel Industries 6 | 536,000 | 33,055,120 | |||||
Hooker Furniture 6 | 1,110,000 | 42,124,500 | |||||
134,930,820 | |||||||
LEISURE PRODUCTS - 1.0% | |||||||
†Brunswick Corporation | 290,000 | 15,816,600 | |||||
MEDIA - 8.6% | |||||||
Meredith Corporation | 1,041,600 | 61,610,640 | |||||
Scholastic Corporation | 1,620,000 | 76,933,800 | |||||
138,544,440 | |||||||
SPECIALTY RETAIL - 6.4% | |||||||
Children’s Place | 810,000 | 81,769,500 | |||||
Haverty Furniture | 920,000 | 21,804,000 | |||||
103,573,500 | |||||||
Total (Cost $393,124,264) | 610,810,800 | ||||||
CONSUMER STAPLES – 6.9% | |||||||
FOOD & STAPLES RETAILING - 4.6% | |||||||
Weis Markets | 1,090,000 | 72,855,600 | |||||
FOOD PRODUCTS - 2.2% | |||||||
†John B. Sanfilippo & Son | 507,500 | 35,722,925 | |||||
HOUSEHOLD PRODUCTS - 0.1% | |||||||
†Oil-Dri Corporation of America | 52,000 | 1,986,920 | |||||
Total (Cost $69,463,924) | 110,565,445 | ||||||
INDUSTRIALS – 21.0% | |||||||
AEROSPACE & DEFENSE - 3.0% | |||||||
National Presto Industries 6 | 450,000 | 47,880,000 | |||||
BUILDING PRODUCTS - 1.2% | |||||||
Insteel Industries | 560,000 | 19,958,400 | |||||
COMMERCIAL SERVICES & SUPPLIES - 6.9% | |||||||
Herman Miller | 840,000 | 28,728,000 | |||||
UniFirst Corporation | 574,000 | 82,455,100 | |||||
111,183,100 | |||||||
ELECTRICAL EQUIPMENT - 3.8% | |||||||
Hubbell Cl. B | 525,000 | 61,267,500 | |||||
MACHINERY - 3.0% | |||||||
Hurco Companies 6 | 525,000 | 17,377,500 | |||||
†Kadant | 252,200 | 15,434,640 | |||||
925,000 | 14,633,500 | ||||||
47,445,640 | |||||||
PROFESSIONAL SERVICES - 2.9% | |||||||
Kelly Services Cl. A | 715,200 | 16,392,384 | |||||
†Resources Connection | 1,580,000 | 30,415,000 | |||||
46,807,384 | |||||||
TRADING COMPANIES & DISTRIBUTORS - 0.2% | |||||||
Central Steel & Wire 3 | 6,421 | 2,823,635 | |||||
Total (Cost $185,056,633) | 337,365,659 | ||||||
INFORMATION TECHNOLOGY – 14.3% | |||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 8.9% | |||||||
AVX Corporation | 5,650,000 | 88,309,500 | |||||
Park Electrochemical 6 | 1,950,000 | 36,367,500 | |||||
Vishay Intertechnology | 1,190,000 | 19,278,000 | |||||
143,955,000 | |||||||
IT SERVICES - 1.8% | |||||||
739,862 | 28,743,639 | ||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.6% | |||||||
Teradyne | 2,291,500 | 58,204,100 | |||||
Total (Cost $182,961,859) | 230,902,739 | ||||||
MATERIALS – 6.9% | |||||||
CHEMICALS - 1.3% | |||||||
Hawkins | 391,900 | 21,143,005 | |||||
METALS & MINING - 2.1% | |||||||
Kaiser Aluminum | 448,000 | 34,805,120 | |||||
PAPER & FOREST PRODUCTS - 3.5% | |||||||
Neenah Paper | 655,100 | 55,814,520 | |||||
Total (Cost $74,301,228) | 111,762,645 | ||||||
REAL ESTATE – 1.6% | |||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.6% | |||||||
Marcus & Millichap 1 | 936,680 | 25,028,089 | |||||
Total (Cost $24,915,138) | 25,028,089 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $929,823,046) | 1,426,435,377 | ||||||
REPURCHASE AGREEMENT – 12.2% | |||||||
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value $196,543,655 (collateralized by obligations of various U.S. Government Agencies, 2.25% due 11/15/24, valued at $200,477,663) | |||||||
(Cost $196,543,000) | 196,543,000 | ||||||
TOTAL INVESTMENTS – 100.8% | |||||||
(Cost $1,126,366,046) | 1,622,978,377 | ||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (0.8)% | (12,997,638 | ) | |||||
NET ASSETS – 100.0% | $ | 1,609,980,739 | |||||
76 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Special Equity Multi-Cap Fund |
Common Stocks – 90.5% |
SHARES | VALUE | ||||||
CONSUMER DISCRETIONARY – 22.0% | |||||||
DISTRIBUTORS - 7.1% | |||||||
Genuine Parts | 85,000 | $ | 8,120,900 | ||||
HOTELS, RESTAURANTS & LEISURE - 2.3% | |||||||
†McDonald’s | 21,500 | 2,616,980 | |||||
HOUSEHOLD DURABLES - 1.4% | |||||||
†Leggett & Platt | 33,000 | 1,613,040 | |||||
SPECIALTY RETAIL - 8.6% | |||||||
Dicks Sporting Goods | 138,500 | 7,354,350 | |||||
†Lowe’s Companies | 35,500 | 2,524,760 | |||||
9,879,110 | |||||||
TEXTILES, APPAREL & LUXURY GOODS - 2.6% | |||||||
VF Corporation | 56,000 | 2,987,600 | |||||
Total (Cost $22,130,735) | 25,217,630 | ||||||
CONSUMER STAPLES – 5.6% | |||||||
FOOD PRODUCTS - 1.8% | |||||||
Hormel Foods | 58,500 | 2,036,385 | |||||
HOUSEHOLD PRODUCTS - 3.8% | |||||||
Kimberly-Clark | 20,100 | 2,293,812 | |||||
†Procter & Gamble | 25,500 | 2,144,040 | |||||
4,437,852 | |||||||
Total (Cost $6,717,683) | 6,474,237 | ||||||
FINANCIALS – 0.5% | |||||||
INSURANCE - 0.5% | |||||||
†Brown & Brown | 13,000 | 583,180 | |||||
Total (Cost $582,869) | 583,180 | ||||||
INDUSTRIALS – 48.4% | |||||||
AEROSPACE & DEFENSE - 4.7% | |||||||
†General Dynamics | 16,500 | 2,848,890 | |||||
United Technologies | 23,500 | 2,576,070 | |||||
5,424,960 | |||||||
AIR FREIGHT & LOGISTICS - 0.9% | |||||||
†Expeditors International of Washington | 20,000 | 1,059,200 | |||||
ELECTRICAL EQUIPMENT - 4.0% | |||||||
Emerson Electric | 21,500 | 1,198,625 | |||||
Rockwell Automation | 25,000 | 3,360,000 | |||||
4,558,625 | |||||||
INDUSTRIAL CONGLOMERATES - 2.8% | |||||||
†Carlisle Companies | 16,250 | 1,792,213 | |||||
3M | 7,700 | 1,374,989 | |||||
3,167,202 | |||||||
MACHINERY - 20.4% | |||||||
Cummins | 10,000 | 1,366,700 | |||||
Illinois Tool Works | 65,000 | 7,959,900 | |||||
Lincoln Electric Holdings | 36,000 | 2,760,120 | |||||
Parker Hannifin | 50,000 | 7,000,000 | |||||
†Snap-on | 10,600 | 1,815,462 | |||||
†Stanley Black & Decker | 22,100 | 2,534,649 | |||||
23,436,831 | |||||||
PROFESSIONAL SERVICES - 11.1% | |||||||
ManpowerGroup | 99,000 | 8,798,130 | |||||
Robert Half International | 79,500 | 3,878,010 | |||||
12,676,140 | |||||||
TRADING COMPANIES & DISTRIBUTORS - 4.5% | |||||||
Grainger (W.W.) | 22,200 | 5,155,950 | |||||
Total (Cost $42,547,172) | 55,478,908 | ||||||
INFORMATION TECHNOLOGY – 12.3% | |||||||
COMMUNICATIONS EQUIPMENT - 3.7% | |||||||
Cisco Systems | 140,000 | 4,230,800 | |||||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 8.6% | |||||||
Apple | 85,000 | 9,844,700 | |||||
Total (Cost $10,303,178) | 14,075,500 | ||||||
MATERIALS – 1.7% | |||||||
CHEMICALS - 1.7% | |||||||
†NewMarket Corporation | 4,500 | 1,907,280 | |||||
Total (Cost $1,891,336) | 1,907,280 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $84,172,973) | 103,736,735 | ||||||
REPURCHASE AGREEMENT – 13.4% | |||||||
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value $15,373,051 (collateralized by obligations of various U.S. Government Agencies, 2.25% due 11/15/24, valued at $15,681,870) | |||||||
(Cost $15,373,000) | 15,373,000 | ||||||
TOTAL INVESTMENTS – 103.9% | |||||||
(Cost $99,545,973) | 119,109,735 | ||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (3.9)% | (4,432,051 | ) | |||||
NET ASSETS – 100.0% | $ | 114,677,684 | |||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 77 |
Schedules of Investments |
Royce Total Return Fund |
Common Stocks – 98.7% |
SHARES | VALUE | ||||||
CONSUMER DISCRETIONARY – 12.6% | |||||||
AUTO COMPONENTS - 1.8% | |||||||
Gentex Corporation | 1,774,388 | $ | 34,937,700 | ||||
Nokian Renkaat | 165,800 | 6,180,102 | |||||
Standard Motor Products | 94,006 | 5,002,999 | |||||
STRATTEC SECURITY | 95,334 | 3,841,960 | |||||
49,962,761 | |||||||
AUTOMOBILES - 1.5% | |||||||
Thor Industries | 425,732 | 42,594,487 | |||||
Winnebago Industries | 47,139 | 1,491,949 | |||||
44,086,436 | |||||||
DISTRIBUTORS - 0.3% | |||||||
Weyco Group | 271,800 | 8,507,340 | |||||
DIVERSIFIED CONSUMER SERVICES - 0.1% | |||||||
Capella Education | 34,401 | 3,020,408 | |||||
HOTELS, RESTAURANTS & LEISURE - 0.1% | |||||||
Brinker International | 40,627 | 2,012,255 | |||||
Cheesecake Factory | 33,437 | 2,002,208 | |||||
4,014,463 | |||||||
HOUSEHOLD DURABLES - 1.3% | |||||||
Ethan Allen Interiors | 754,299 | 27,795,918 | |||||
Flexsteel Industries | 98,592 | 6,080,169 | |||||
La-Z-Boy | 75,020 | 2,329,371 | |||||
36,205,458 | |||||||
INTERNET & DIRECT MARKETING RETAIL - 0.3% | |||||||
HSN | 57,722 | 1,979,864 | |||||
PetMed Express | 309,600 | 7,142,472 | |||||
9,122,336 | |||||||
MEDIA - 1.2% | |||||||
Meredith Corporation | 267,300 | 15,810,795 | |||||
Saga Communications Cl. A | 179,919 | 9,049,926 | |||||
Wiley (John) & Sons Cl. A | 174,239 | 9,496,025 | |||||
34,356,746 | |||||||
MULTILINE RETAIL - 0.7% | |||||||
Big Lots | 38,196 | 1,917,821 | |||||
Dillard’s Cl. A | 265,641 | 16,653,034 | |||||
18,570,855 | |||||||
SPECIALTY RETAIL - 4.1% | |||||||
Aaron’s | 38,834 | 1,242,300 | |||||
American Eagle Outfitters | 1,248,605 | 18,941,338 | |||||
Buckle (The) | 630,019 | 14,364,433 | |||||
Caleres | 61,262 | 2,010,619 | |||||
Cato Corporation (The) Cl. A | 587,009 | 17,657,231 | |||||
Children’s Place | 38,782 | 3,915,043 | |||||
DSW Cl. A | 738,409 | 16,724,964 | |||||
GameStop Corporation Cl. A | 86,900 | 2,195,094 | |||||
Genesco 1 | 177,002 | 10,991,824 | |||||
Monro Muffler Brake | 162,000 | 9,266,400 | |||||
Shoe Carnival | 541,538 | 14,610,695 | |||||
Stein Mart | 690,234 | 3,782,482 | |||||
115,702,423 | |||||||
TEXTILES, APPAREL & LUXURY GOODS - 1.2% | |||||||
Columbia Sportswear | 104,358 | 6,084,071 | |||||
J.G. Boswell Company 3 | 1,170 | 716,040 | |||||
Movado Group | 411,928 | 11,842,930 | |||||
Steven Madden 1 | 245,038 | 8,760,109 | |||||
Wolverine World Wide | 321,000 | 7,045,950 | |||||
34,449,100 | |||||||
Total (Cost $266,324,808) | 357,998,326 | ||||||
CONSUMER STAPLES – 3.7% | |||||||
BEVERAGES - 0.2% | |||||||
Compania Cervecerias Unidas ADR | 254,400 | 5,337,312 | |||||
FOOD & STAPLES RETAILING - 0.5% | |||||||
Village Super Market Cl. A | 484,713 | 14,977,631 | |||||
FOOD PRODUCTS - 2.8% | |||||||
Cal-Maine Foods | 30,396 | 1,342,744 | |||||
Farmer Bros. 1 | 352,800 | 12,947,760 | |||||
Flowers Foods | 323,500 | 6,460,295 | |||||
Fresh Del Monte Produce | 225,900 | 13,696,317 | |||||
Hershey Creamery 3 | 806 | 2,156,050 | |||||
Lancaster Colony | 121,500 | 17,178,885 | |||||
Sanderson Farms | 23,234 | 2,189,572 | |||||
Tootsie Roll Industries | 604,075 | 24,011,981 | |||||
79,983,604 | |||||||
HOUSEHOLD PRODUCTS - 0.1% | |||||||
WD-40 Company | 18,378 | 2,148,388 | |||||
PERSONAL PRODUCTS - 0.1% | |||||||
Nu Skin Enterprises Cl. A | 35,100 | 1,677,078 | |||||
Total (Cost $63,282,762) | 104,124,013 | ||||||
ENERGY – 3.2% | |||||||
ENERGY EQUIPMENT & SERVICES - 2.6% | |||||||
248,050 | 3,256,897 | ||||||
CARBO Ceramics 1 | 83,900 | 877,594 | |||||
177,014 | 3,133,148 | ||||||
Helmerich & Payne | 138,170 | 10,694,358 | |||||
Pason Systems | 1,034,400 | 15,130,984 | |||||
SEACOR Holdings 1 | 444,390 | 31,676,119 | |||||
TGS-NOPEC Geophysical | 393,890 | 8,735,527 | |||||
73,504,627 | |||||||
OIL, GAS & CONSUMABLE FUELS - 0.6% | |||||||
Boardwalk Pipeline Partners L.P. | 184,100 | 3,195,976 | |||||
Dorchester Minerals L.P. | 251,420 | 4,412,421 | |||||
Permian Basin Royalty Trust | 762,845 | 5,881,535 | |||||
San Juan Basin Royalty Trust | 408,230 | 2,702,483 | |||||
16,192,415 | |||||||
Total (Cost $75,954,211) | 89,697,042 | ||||||
FINANCIALS – 25.4% | |||||||
BANKS - 7.0% | |||||||
Ames National | 342,640 | 11,307,120 | |||||
Associated Banc-Corp | 475,800 | 11,752,260 | |||||
Bank of Hawaii | 312,001 | 27,671,369 | |||||
BLOM Bank GDR | 252,000 | 2,746,800 | |||||
BOK Financial | 341,668 | 28,372,111 | |||||
Camden National | 350,073 | 15,560,745 | |||||
Canadian Western Bank | 626,500 | 14,157,085 | |||||
City Holding Company | 185,287 | 12,525,401 | |||||
CNB Financial | 293,762 | 7,855,196 | |||||
Codorus Valley Bancorp | 36,977 | 1,057,542 | |||||
Farmers & Merchants Bank of Long Beach 3 | 479 | 3,257,200 | |||||
First Citizens BancShares Cl. A | 79,726 | 28,302,730 |
78 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Total Return Fund (continued) |
SHARES | VALUE | ||||||
FINANCIALS (continued) | |||||||
BANKS (continued) | |||||||
First National Bank Alaska 3 | 3,010 | $ | 5,192,250 | ||||
Landmark Bancorp | 1,610 | 45,128 | |||||
National Bankshares | 156,752 | 6,810,874 | |||||
Northrim BanCorp | 208,777 | 6,597,353 | |||||
Peapack-Gladstone Financial | 533,758 | 16,482,447 | |||||
199,693,611 | |||||||
CAPITAL MARKETS - 7.5% | |||||||
AllianceBernstein Holding L.P. | 417,400 | 9,788,030 | |||||
Apollo Global Management LLC Cl. A | 449,200 | 8,696,512 | |||||
Ares Management L.P. | 327,300 | 6,284,160 | |||||
Artisan Partners Asset Management Cl. A | 156,800 | 4,664,800 | |||||
Ashmore Group | 2,982,700 | 10,407,619 | |||||
Associated Capital Group Cl. A | 196,962 | 6,470,202 | |||||
Bolsa Mexicana de Valores | 5,620,000 | 7,390,438 | |||||
Cohen & Steers | 323,237 | 10,860,763 | |||||
Coronation Fund Managers | 526,000 | 2,686,903 | |||||
Edmond de Rothschild (Suisse) | 244 | 3,353,285 | |||||
Egyptian Financial Group-Hermes Holding | |||||||
Company 1 | 1,182,708 | 1,651,747 | |||||
Federated Investors Cl. B | 842,982 | 23,839,531 | |||||
Fifth Street Finance | 289,100 | 1,552,467 | |||||
Fortress Investment Group LLC Cl. A | 474,780 | 2,307,431 | |||||
GAMCO Investors Cl. A | 259,856 | 8,026,952 | |||||
KKR & Co. L.P. | 1,384,600 | 21,308,994 | |||||
Moelis & Company Cl. A | 495,784 | 16,807,078 | |||||
Morningstar | 33,501 | 2,464,333 | |||||
MVC Capital | 457,800 | 3,927,924 | |||||
Och-Ziff Capital Management Group LLC Cl. A 1 | 655,400 | 2,169,374 | |||||
Oppenheimer Holdings Cl. A | 120,500 | 2,241,300 | |||||
Rothschild & Co | 560,575 | 15,159,962 | |||||
Teton Advisors Cl. A 3 | 1,297 | 53,177 | |||||
TMX Group | 374,800 | 19,964,768 | |||||
Value Partners Group | 11,207,500 | 8,915,458 | |||||
Vontobel Holding | 72,600 | 3,809,876 | |||||
Waddell & Reed Financial Cl. A | 102,281 | 1,995,502 | |||||
Westwood Holdings Group | 83,029 | 4,980,910 | |||||
211,779,496 | |||||||
CONSUMER FINANCE - 0.1% | |||||||
Nelnet Cl. A | 46,516 | 2,360,687 | |||||
DIVERSIFIED FINANCIAL SERVICES - 0.1% | |||||||
First Pacific | 713,200 | 498,135 | |||||
Leucadia National | 136,559 | 3,174,997 | |||||
Sofina | 2,900 | 382,170 | |||||
4,055,302 | |||||||
INSURANCE - 9.2% | |||||||
Alleghany Corporation 1 | 51,300 | 31,196,556 | |||||
American Financial Group | 108,400 | 9,552,208 | |||||
Assured Guaranty | 299,500 | 11,312,115 | |||||
Baldwin & Lyons Cl. B | 268,138 | 6,757,077 | |||||
Cincinnati Financial | 136,100 | 10,309,575 | |||||
E-L Financial | 72,988 | 39,683,640 | |||||
Employers Holdings | 113,163 | 4,481,255 | |||||
Erie Indemnity Cl. A | 362,400 | 40,751,880 | |||||
First American Financial | 81,800 | 2,996,334 | |||||
Gallagher (Arthur J.) & Co. | 262,200 | 13,623,912 | |||||
HCI Group | 58,612 | 2,314,002 | |||||
Horace Mann Educators | 19,300 | 826,040 | |||||
Infinity Property & Casualty | 12,143 | 1,067,370 | |||||
Markel Corporation 1 | 19,900 | 17,999,550 | |||||
Mercury General | 116,600 | 7,020,486 | |||||
National Western Life Group Cl. A | 8,700 | 2,703,960 | |||||
Old Republic International | 567,700 | 10,786,300 | |||||
ProAssurance Corporation | 175,400 | 9,857,480 | |||||
Reinsurance Group of America | 134,284 | 16,896,956 | |||||
RLI Corp. | 136,280 | 8,603,356 | |||||
Selective Insurance Group | 27,078 | 1,165,708 | |||||
State Auto Financial | 180,203 | 4,831,242 | |||||
United Fire Group | 28,417 | 1,397,264 | |||||
United Insurance Holdings | 69,891 | 1,058,150 | |||||
Universal Insurance Holdings | 97,500 | 2,769,000 | |||||
White Mountains Insurance Group | 2,434 | 2,034,946 | |||||
261,996,362 | |||||||
INVESTMENT COMPANIES - 0.1% | |||||||
RIT Capital Partners | 92,000 | 2,133,173 | |||||
THRIFTS & MORTGAGE FINANCE - 1.4% | |||||||
Genworth MI Canada | 870,120 | 21,813,756 | |||||
Southern Missouri Bancorp | 18,691 | 661,288 | |||||
Timberland Bancorp | 59,171 | 1,222,473 | |||||
TrustCo Bank Corp. NY | 1,794,587 | 15,702,636 | |||||
39,400,153 | |||||||
Total (Cost $442,549,387) | 721,418,784 | ||||||
HEALTH CARE – 4.8% | |||||||
HEALTH CARE EQUIPMENT & SUPPLIES - 2.3% | |||||||
Analogic Corporation | 208,200 | 17,270,190 | |||||
Atrion Corporation | 9,284 | 4,708,845 | |||||
Hill-Rom Holdings | 302,000 | 16,954,280 | |||||
Meridian Bioscience | 116,928 | 2,069,625 | |||||
Teleflex | 154,200 | 24,849,330 | |||||
65,852,270 | |||||||
HEALTH CARE PROVIDERS & SERVICES - 2.4% | |||||||
Aceto Corporation | 477,945 | 10,500,452 | |||||
Chemed Corporation | 40,888 | 6,558,844 | |||||
Ensign Group (The) | 137,176 | 3,046,679 | |||||
Landauer 6 | 496,600 | 23,886,460 | |||||
Owens & Minor | 608,600 | 21,477,494 | |||||
U.S. Physical Therapy | 17,325 | 1,216,215 | |||||
66,686,144 | |||||||
HEALTH CARE TECHNOLOGY - 0.0% | |||||||
Computer Programs and Systems | 25,726 | 607,134 | |||||
PHARMACEUTICALS - 0.1% | |||||||
Recordati | 106,000 | 3,002,404 | |||||
Total (Cost $73,744,301) | 136,147,952 | ||||||
INDUSTRIALS – 25.1% | |||||||
AEROSPACE & DEFENSE - 1.6% | |||||||
HEICO Corporation | 217,243 | 16,760,298 | |||||
HEICO Corporation Cl. A | 438,466 | 29,771,841 | |||||
46,532,139 | |||||||
AIR FREIGHT & LOGISTICS - 1.3% | |||||||
C. H. Robinson Worldwide | 218,300 | 15,992,658 | |||||
Expeditors International of Washington | 414,100 | 21,930,736 | |||||
37,923,394 | |||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 79 |
Schedules of Investments |
Royce Total Return Fund (continued) |
SHARES | VALUE | ||||||
INDUSTRIALS (continued) | |||||||
BUILDING PRODUCTS - 1.1% | |||||||
A. O. Smith Corporation | 405,100 | $ | 19,181,485 | ||||
Apogee Enterprises | 210,982 | 11,300,196 | |||||
30,481,681 | |||||||
COMMERCIAL SERVICES & SUPPLIES - 3.9% | |||||||
ABM Industries | 492,800 | 20,125,952 | |||||
Deluxe Corporation | 34,487 | 2,469,614 | |||||
Ennis | 122,071 | 2,117,932 | |||||
HNI Corporation | 340,584 | 19,045,457 | |||||
Kimball International Cl. B | 949,273 | 16,669,234 | |||||
McGrath RentCorp | 308,800 | 12,101,872 | |||||
MSA Safety | 170,212 | 11,800,798 | |||||
Ritchie Bros. Auctioneers | 732,120 | 24,892,080 | |||||
UniFirst Corporation | 21,516 | 3,090,773 | |||||
112,313,712 | |||||||
CONSTRUCTION & ENGINEERING - 1.0% | |||||||
Comfort Systems USA | 429,681 | 14,308,377 | |||||
EMCOR Group | 57,368 | 4,059,360 | |||||
KBR | 424,100 | 7,078,229 | |||||
Valmont Industries | 14,500 | 2,043,050 | |||||
27,489,016 | |||||||
ELECTRICAL EQUIPMENT - 1.8% | |||||||
Hubbell Cl. B | 238,900 | 27,879,630 | |||||
LSI Industries | 963,201 | 9,381,578 | |||||
Preformed Line Products | 226,179 | 13,145,523 | |||||
50,406,731 | |||||||
INDUSTRIAL CONGLOMERATES - 0.5% | |||||||
Raven Industries | 549,926 | 13,858,135 | |||||
MACHINERY - 9.3% | |||||||
Alamo Group | 112,114 | 8,531,875 | |||||
American Railcar Industries | 182,300 | 8,256,367 | |||||
CLARCOR | 97,000 | 7,999,590 | |||||
Federal Signal | 450,793 | 7,036,879 | |||||
Franklin Electric | 658,600 | 25,619,540 | |||||
Gorman-Rupp Company (The) | 490,755 | 15,188,867 | |||||
Kadant | 25,300 | 1,548,360 | |||||
Lincoln Electric Holdings | 158,300 | 12,136,861 | |||||
Lindsay Corporation | 160,649 | 11,986,022 | |||||
Miller Industries | 408,895 | 10,815,273 | |||||
112,500 | 3,127,500 | ||||||
Mueller Industries | 373,448 | 14,922,982 | |||||
Nordson Corporation | 235,700 | 26,410,185 | |||||
Standex International | 45,026 | 3,955,534 | |||||
Starrett (L.S.) Company (The) Cl. A 6 | 491,000 | 4,566,300 | |||||
Sun Hydraulics | 197,448 | 7,891,997 | |||||
Tennant Company | 524,696 | 37,358,355 | |||||
Timken Company (The) | 27,550 | 1,093,735 | |||||
Trinity Industries | 606,162 | 16,827,057 | |||||
Woodward | 546,800 | 37,756,540 | |||||
263,029,819 | |||||||
MARINE - 0.7% | |||||||
Clarkson | 756,200 | 20,249,310 | |||||
PROFESSIONAL SERVICES - 3.3% | |||||||
CEB | 195,100 | 11,823,060 | |||||
Exponent | 63,352 | 3,820,126 | |||||
Heidrick & Struggles International | 130,569 | 3,153,241 | |||||
Kelly Services Cl. A | 418,500 | 9,592,020 | |||||
Korn/Ferry International | 570,518 | 16,790,345 | |||||
ManpowerGroup | 384,352 | 34,157,362 | |||||
Resources Connection | 5,600 | 107,800 | |||||
Robert Half International | 320,030 | 15,611,063 | |||||
95,055,017 | |||||||
ROAD & RAIL - 0.3% | |||||||
Werner Enterprises | 275,887 | 7,435,155 | |||||
TRADING COMPANIES & DISTRIBUTORS - 0.3% | |||||||
Applied Industrial Technologies | 48,200 | 2,863,080 | |||||
Houston Wire & Cable | 702,461 | 4,565,997 | |||||
7,429,077 | |||||||
Total (Cost $314,794,767) | 712,203,186 | ||||||
INFORMATION TECHNOLOGY – 6.6% | |||||||
COMMUNICATIONS EQUIPMENT - 0.2% | |||||||
ADTRAN | 141,729 | 3,167,643 | |||||
Bel Fuse Cl. A | 21,550 | 545,430 | |||||
TESSCO Technologies | 267,933 | 3,483,129 | |||||
7,196,202 | |||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 3.6% | |||||||
AVX Corporation | 933,595 | 14,592,090 | |||||
Cognex Corporation | 248,905 | 15,835,336 | |||||
Kimball Electronics 1 | 523,750 | 9,532,250 | |||||
Littelfuse | 9,600 | 1,456,992 | |||||
Methode Electronics | 699,605 | 28,928,667 | |||||
National Instruments | 267,274 | 8,237,385 | |||||
Systemax | 218,200 | 1,913,614 | |||||
Vishay Intertechnology | 1,336,907 | 21,657,893 | |||||
102,154,227 | |||||||
IT SERVICES - 0.2% | |||||||
Forrester Research | 41,304 | 1,774,007 | |||||
MAXIMUS | 74,633 | 4,163,775 | |||||
5,937,782 | |||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.0% | |||||||
MKS Instruments | 392,740 | 23,328,756 | |||||
Power Integrations | 21,404 | 1,452,261 | |||||
Tessera Holding Corporation | 62,290 | 2,753,218 | |||||
27,534,235 | |||||||
SOFTWARE - 0.9% | |||||||
Ebix | 79,997 | 4,563,829 | |||||
Fair Isaac | 140,100 | 16,702,722 | |||||
Pegasystems | 85,809 | 3,089,124 | |||||
24,355,675 | |||||||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 0.7% | |||||||
Diebold Nixdorf | 794,818 | 19,989,673 | |||||
Total (Cost $115,024,272) | 187,167,794 | ||||||
MATERIALS – 12.0% | |||||||
CHEMICALS - 6.2% | |||||||
Albemarle Corporation | 347,100 | 29,878,368 | |||||
Balchem Corporation | 523,049 | 43,894,272 | |||||
Cabot Corporation | 350,400 | 17,709,216 | |||||
Chase Corporation | 275,655 | 23,030,975 | |||||
FutureFuel Corporation | 182,159 | 2,532,010 | |||||
Innospec | 31,413 | 2,151,791 | |||||
Quaker Chemical | 391,429 | 50,079,426 |
80 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Total Return Fund (continued) |
SHARES | VALUE | ||||||
MATERIALS (continued) | |||||||
CHEMICALS (continued) | |||||||
Umicore | 104,600 | $ | 5,953,727 | ||||
175,229,785 | |||||||
CONSTRUCTION MATERIALS - 0.4% | |||||||
Ash Grove Cement 3 | 38,210 | 9,934,600 | |||||
CONTAINERS & PACKAGING - 2.5% | |||||||
AptarGroup | 111,300 | 8,174,985 | |||||
Bemis Company | 364,500 | 17,430,390 | |||||
Greif Cl. A | 456,144 | 23,404,749 | |||||
Mayr-Melnhof Karton | 57,800 | 6,126,364 | |||||
Sonoco Products | 315,678 | 16,636,231 | |||||
71,772,719 | |||||||
METALS & MINING - 2.1% | |||||||
Agnico Eagle Mines | 63,600 | 2,671,200 | |||||
Alamos Gold Cl. A | 231,300 | 1,595,232 | |||||
Allegheny Technologies 4 | 234,446 | 3,734,725 | |||||
Ampco-Pittsburgh | 144,906 | 2,427,176 | |||||
Carpenter Technology | 154,075 | 5,572,893 | |||||
Commercial Metals | 129,960 | 2,830,529 | |||||
Ferroglobe | 549,203 | 5,947,868 | |||||
569,803 | 0 | ||||||
Franco-Nevada Corporation | 84,800 | 5,067,648 | |||||
Gold Fields ADR | 1,433,843 | 4,315,867 | |||||
Reliance Steel & Aluminum | 29,300 | 2,330,522 | |||||
Schnitzer Steel Industries Cl. A | 259,982 | 6,681,537 | |||||
Worthington Industries | 361,100 | 17,130,584 | |||||
60,305,781 | |||||||
PAPER & FOREST PRODUCTS - 0.8% | |||||||
Deltic Timber | 156,100 | 12,030,627 | |||||
Domtar Corporation | 113,300 | 4,422,099 | |||||
Neenah Paper | 37,800 | 3,220,560 | |||||
Pope Resources L.P. | 13,400 | 887,080 | |||||
Resolute Forest Products 1 | 96,400 | 515,740 | |||||
Schweitzer-Mauduit International | 38,900 | 1,771,117 | |||||
22,847,223 | |||||||
Total (Cost $151,806,684) | 340,090,108 | ||||||
REAL ESTATE – 0.1% | |||||||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITS) - 0.1% | |||||||
Lexington Realty Trust | 392,306 | 4,236,905 | |||||
Total (Cost $2,195,029) | 4,236,905 | ||||||
TELECOMMUNICATION SERVICES – 1.1% | |||||||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.6% | |||||||
ATN International | 200,826 | 16,092,188 | |||||
WIRELESS TELECOMMUNICATION SERVICES - 0.5% | |||||||
Telephone and Data Systems | 509,990 | 14,723,411 | |||||
Total (Cost $16,863,030) | 30,815,599 | ||||||
UTILITIES – 1.8% | |||||||
ELECTRIC UTILITIES - 0.3% | |||||||
ALLETE | 159,567 | 10,242,606 | |||||
WATER UTILITIES - 1.5% | |||||||
Aqua America | 485,107 | 14,572,614 | |||||
SJW | 385,900 | 21,602,682 | |||||
York Water | 160,630 | 6,136,066 | |||||
42,311,362 | |||||||
Total (Cost $20,489,050) | 52,553,968 | ||||||
MISCELLANEOUS2 – 2.3% | |||||||
Total (Cost $58,986,053) | 66,309,366 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $1,602,014,354) | 2,802,763,043 | ||||||
PRINCIPAL | |||||||
AMOUNT | |||||||
CORPORATE BOND – 0.1% | |||||||
Unit Corporation 6.625% | |||||||
(Cost $3,358,120) | $ | 4,077,000 | 3,954,690 | ||||
REPURCHASE AGREEMENT – 1.7% | |||||||
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value $48,674,162 (collateralized by obligations of various U.S. Government Agencies, 2.25% due 11/15/24, valued at $49,647,668) | |||||||
(Cost $48,674,000) | 48,674,000 | ||||||
COLLATERAL RECEIVED FOR SECURITIES LOANED – 0.3% | |||||||
U.S. Treasury Bills | |||||||
due 1/12/17-4/20/17 | 35,850 | 35,850 | |||||
U.S. Treasury Bonds | |||||||
0.75%-8.125% | |||||||
due 8/15/19-5/15/46 | 394,683 | 396,710 | |||||
U.S. Treasury Notes | |||||||
0.125%-3.625% | |||||||
due 4/15/17-7/15/26 | 1,410,253 | 1,413,882 | |||||
U.S. Treasury Notes - Floating Rate | |||||||
due 7/31/17 | 15,560 | 15,560 | |||||
Money Market Funds | |||||||
Federated Government Obligations Fund (7 day yield-0.3947%) | 7,063,323 | ||||||
TOTAL COLLATERAL RECEIVED FOR SECURITIES LOANED | |||||||
(Cost $8,925,325) | 8,925,325 | ||||||
TOTAL INVESTMENTS – 100.8% | |||||||
(Cost $1,662,971,799) | 2,864,317,058 | ||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (0.8)% | (23,775,645 | ) | |||||
NET ASSETS – 100.0% | $ | 2,840,541,413 | |||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 81 |
Schedules of Investments | December 31, 2016 |
† | New additions in 2016. |
1 | Non-income producing. |
2 | Includes securities first acquired in 2016 and less than 1% of net assets. |
3 | These securities are defined as Level 2 securities due to fair value being based on quoted prices for similar securities. See Notes to Financial Statements. |
4 | All or a portion of these securities were on loan at December 31, 2016. |
5 | Securities for which market quotations are not readily available represent 0.0%, 0.4% and 0.0% of net assets for Royce Low-Priced Stock Fund, Royce Micro-Cap Fund and Royce Total Return 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. |
6 | At December 31, 2016, the Fund owned 5% or more of the Company’s outstanding voting securities thereby making the Company an Affiliated Company as that term is defined in the Investment Company Act of 1940. See Notes to Financial Statements. |
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, 2016, market value. | |
82 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Statements of Assets and Liabilities | December 31, 2016 |
Royce Global | ||||||||||||||||
Royce Dividend | Financial Services | Royce Heritage | Royce International | |||||||||||||
Value Fund | Fund | Fund | Micro-Cap Fund | |||||||||||||
ASSETS: | ||||||||||||||||
Investments at value (including collateral on loaned securities) | ||||||||||||||||
Non-Affiliated Companies | $ | 214,683,300 | $ | 47,944,624 | $ | 182,640,699 | $ | 5,594,968 | ||||||||
Repurchase agreements (at cost and value) | 3,414,000 | 1,383,000 | 47,278,000 | 501,000 | ||||||||||||
Cash and foreign currency | 876 | 110 | 933 | 1,418 | ||||||||||||
Receivable for investments sold | 392,671 | – | 1,144,241 | 11,721 | ||||||||||||
Receivable for capital shares sold | 337,116 | 1,027,167 | 44,103 | 55 | ||||||||||||
Receivable for dividends and interest | 272,694 | 73,689 | 196,276 | 4,242 | ||||||||||||
Prepaid expenses and other assets | 1,410 | 298 | 1,264 | 36 | ||||||||||||
Total Assets | 219,102,067 | 50,428,888 | 231,305,516 | 6,113,440 | ||||||||||||
LIABILITIES: | ||||||||||||||||
Payable for collateral on loaned securities | – | – | 1,563,260 | – | ||||||||||||
Payable for investments purchased | 516,390 | – | 3,041,634 | 1,029 | ||||||||||||
Payable for capital shares redeemed | 855,290 | 229,570 | 97,724 | 11,181 | ||||||||||||
Payable for investment advisory fees | 152,609 | 33,418 | 165,324 | 600 | ||||||||||||
Payable for trustees’ fees | 6,562 | 1,261 | 5,936 | 157 | ||||||||||||
Accrued expenses | 166,869 | 61,856 | 123,483 | 40,781 | ||||||||||||
Total Liabilities | 1,697,720 | 326,105 | 4,997,361 | 53,748 | ||||||||||||
Net Assets | $ | 217,404,347 | $ | 50,102,783 | $ | 226,308,155 | $ | 6,059,692 | ||||||||
ANALYSIS OF NET ASSETS: | ||||||||||||||||
Paid-in capital | $ | 158,304,308 | $ | 44,669,829 | $ | 179,510,455 | $ | 6,777,666 | ||||||||
Undistributed net investment income (loss) | 493,362 | 24,145 | (12,969 | ) | (15,542 | ) | ||||||||||
Accumulated net realized gain (loss) on investments and foreign currency | 8,415,042 | (628,200 | ) | 8,307,625 | (484,785 | ) | ||||||||||
Net unrealized appreciation (depreciation) on investments and foreign | 50,191,635 | 6,037,009 | 38,503,044 | (217,647 | ) | |||||||||||
Net Assets | $ | 217,404,347 | $ | 50,102,783 | $ | 226,308,155 | $ | 6,059,692 | ||||||||
Investment Class | $ | 99,462,410 | $ | 88,377,816 | ||||||||||||
Service Class | 115,546,736 | $ | 43,628,890 | 120,253,613 | $ | 6,059,692 | ||||||||||
Consultant Class | 1,572,498 | 11,643,493 | ||||||||||||||
Institutional Class | 822,703 | 6,473,893 | ||||||||||||||
R Class | 1,944,794 | |||||||||||||||
K Class | 4,088,439 | |||||||||||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | ||||||||||||||||
Investment Class | 13,858,606 | 6,037,025 | ||||||||||||||
Service Class | 15,759,163 | 4,875,951 | 8,236,323 | 607,332 | ||||||||||||
Consultant Class | 187,410 | 1,115,699 | ||||||||||||||
Institutional Class | 115,985 | 566,413 | ||||||||||||||
R Class | 203,897 | |||||||||||||||
K Class | 423,613 | |||||||||||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | ||||||||||||||||
Investment Class1 | $ | 7.18 | $ | 14.64 | ||||||||||||
Service Class1 | 7.33 | $ | 8.95 | 14.60 | $ | 9.98 | ||||||||||
Consultant Class2 | 8.39 | 10.44 | ||||||||||||||
Institutional Class3 | 7.09 | 11.43 | ||||||||||||||
R Class3 | 9.54 | |||||||||||||||
K Class3 | 9.65 | |||||||||||||||
Investments at identified cost | $ | 164,487,117 | $ | 41,905,177 | $ | 144,133,713 | $ | 5,812,591 | ||||||||
Market value of loaned securities | – | – | 1,542,656 | – | ||||||||||||
1 | Offering and redemption price per share; shares held less than 30 days may be subject to a 1% redemption fee, or a 2% redemption fee (Royce International Micro-Cap Fund), payable to the Fund. |
2 | Offering and redemption price per share; shares held less than 365 days may be subject to a 1% contingent deferred sales charge, payable to Royce Fund Services, Inc. |
3 | Offering and redemption price per share. |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 83 |
Statements of Assets and Liabilities |
Royce International | Royce International | Royce Low-Priced | Royce Micro-Cap | ||||||||||||||
Premier Fund | Small-Cap Fund | Stock Fund | Fund | ||||||||||||||
ASSETS: | |||||||||||||||||
Investments at value (including collateral on loaned securities) | |||||||||||||||||
Non-Affiliated Companies | $ | 61,593,095 | $ | 6,911,079 | $ | 321,304,743 | $ | 231,056,240 | |||||||||
Repurchase agreements (at cost and value) | 1,475,000 | 398,000 | 14,544,000 | 21,137,000 | |||||||||||||
Cash and foreign currency | 33 | 865 | 19,847 | 272 | |||||||||||||
Receivable for investments sold | 385,964 | – | 220,468 | 69,136 | |||||||||||||
Receivable for capital shares sold | 231,925 | 194 | 58,298 | 374,488 | |||||||||||||
Receivable for dividends and interest | 315,200 | 32,951 | 237,969 | 440,293 | |||||||||||||
Prepaid expenses and other assets | 645 | 72 | 196 | 1,044 | |||||||||||||
Total Assets | 64,001,862 | 7,343,161 | 336,385,521 | 253,078,473 | |||||||||||||
LIABILITIES: | |||||||||||||||||
Payable for collateral on loaned securities | – | – | 14,191,767 | 7,076,975 | |||||||||||||
Payable for investments purchased | – | – | 1,078,050 | 272,507 | |||||||||||||
Payable for capital shares redeemed | 140,015 | 42,865 | 963,340 | 1,541,944 | |||||||||||||
Payable for investment advisory fees | 42,706 | – | 275,410 | 263,079 | |||||||||||||
Payable for trustees’ fees | 3,091 | 350 | 7,545 | 6,431 | |||||||||||||
Accrued expenses | 161,157 | 42,534 | 679,410 | 221,901 | |||||||||||||
Deferred capital gains tax | 54,756 | 933 | – | – | |||||||||||||
Total Liabilities | 401,725 | 86,682 | 17,195,522 | 9,382,837 | |||||||||||||
Net Assets | $ | 63,600,137 | $ | 7,256,479 | $ | 319,189,999 | $ | 243,695,636 | |||||||||
ANALYSIS OF NET ASSETS: | |||||||||||||||||
Paid-in capital | $ | 134,706,483 | $ | 12,476,190 | $ | 258,673,526 | $ | 193,502,253 | |||||||||
Undistributed net investment income (loss) | (919,994 | ) | (34,767 | ) | (517,803 | ) | (888,336 | ) | |||||||||
Accumulated net realized gain (loss) on investments and foreign currency | (71,881,965 | ) | (4,826,341 | ) | 5,984,688 | 8,204,838 | |||||||||||
Net unrealized appreciation (depreciation) on investments and foreign | 1,695,613 | (358,603 | ) | 55,049,588 | 42,876,881 | ||||||||||||
Net Assets | $ | 63,600,137 | $ | 7,256,479 | $ | 319,189,999 | $ | 243,695,636 | |||||||||
Investment Class | $ | 19,556,575 | $ | 980,604 | $ | 22,851,822 | $ | 192,730,512 | |||||||||
Service Class | 38,883,891 | 4,049,918 | 281,873,618 | 17,342,755 | |||||||||||||
Consultant Class | 5,085,625 | 33,622,369 | |||||||||||||||
Institutional Class | 2,225,957 | 12,335,786 | |||||||||||||||
R Class | 51,230 | 1,035,697 | |||||||||||||||
K Class | 22,816 | 1,093,076 | |||||||||||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | |||||||||||||||||
Investment Class | 2,071,859 | 139,034 | 2,765,613 | 16,163,749 | |||||||||||||
Service Class | 3,458,832 | 453,061 | 34,233,269 | 1,483,462 | |||||||||||||
Consultant Class | 414,609 | 3,572,676 | |||||||||||||||
Institutional Class | 306,801 | 1,490,456 | |||||||||||||||
R Class | 5,657 | 132,662 | |||||||||||||||
K Class | 2,551 | 760,899 | |||||||||||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | |||||||||||||||||
Investment Class1 | $ | 9.44 | $ | 7.05 | $ | 8.26 | $ | 11.92 | |||||||||
Service Class1 | 11.24 | 8.94 | 8.23 | 11.69 | |||||||||||||
Consultant Class2 | 12.27 | 9.41 | |||||||||||||||
Institutional Class3 | 7.26 | 8.28 | |||||||||||||||
R Class3 | 9.06 | 7.81 | |||||||||||||||
K Class3 | 8.95 | 1.44 | |||||||||||||||
Investments at identified cost | $ | 59,796,548 | $ | 7,264,678 | $ | 266,255,079 | $ | 188,162,288 | |||||||||
Market value of loaned securities | – | – | 13,831,468 | 6,752,098 | |||||||||||||
1 | Offering and redemption price per share; shares held less than 30 days may be subject to a 2% redemption fee, or a 1% redemption fee (Royce Low-Priced Stock Fund and Royce Micro-Cap Fund), payable to the Fund. |
2 | Offering and redemption price per share; shares held less than 365 days may be subject to a 1% contingent deferred sales charge, payable to Royce Fund Services, Inc. |
3 | Offering and redemption price per share. |
84 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Micro-Cap | Royce Opportunity | Royce Pennsylvania | Royce Premier | ||||||||||||||
Opportunity Fund | Fund | Mutual Fund | Fund | ||||||||||||||
ASSETS: | |||||||||||||||||
Investments at value (including collateral on loaned securities) | |||||||||||||||||
Non-Affiliated Companies | $ | 43,741,472 | $ | 1,460,469,834 | $ | 2,421,015,281 | $ | 2,244,920,331 | |||||||||
Affiliated Companies | – | 21,914,309 | 26,754,411 | – | |||||||||||||
Repurchase agreements (at cost and value) | 2,609,000 | 105,163,000 | 21,856,000 | 24,420,000 | |||||||||||||
Cash and foreign currency | 493 | 809 | 142,501 | 292,901 | |||||||||||||
Receivable for investments sold | 168,127 | 6,528,235 | 12,036,431 | – | |||||||||||||
Receivable for capital shares sold | 32,985 | 1,057,090 | 1,205,367 | 1,444,562 | |||||||||||||
Receivable for dividends and interest | 4,865 | 665,267 | 4,276,707 | 2,697,497 | |||||||||||||
Prepaid expenses and other assets | 246 | 7,768 | 2,324,744 | 11,758 | |||||||||||||
Total Assets | 46,557,188 | 1,595,806,312 | 2,489,611,442 | 2,273,787,049 | |||||||||||||
LIABILITIES: | |||||||||||||||||
Payable for collateral on loaned securities | – | 109,417,922 | 37,026,755 | 6,380,826 | |||||||||||||
Payable for investments purchased | 322,731 | 4,073,810 | 6,817,626 | – | |||||||||||||
Payable for capital shares redeemed | 28,582 | 5,133,182 | 3,032,599 | 4,653,410 | |||||||||||||
Payable for investment advisory fees | 39,250 | 1,263,575 | 1,602,601 | 1,951,025 | |||||||||||||
Payable for trustees’ fees | 1,009 | 36,822 | 69,750 | 61,020 | |||||||||||||
Accrued expenses | 35,807 | 489,065 | 1,233,679 | 1,605,791 | |||||||||||||
Total Liabilities | 427,379 | 120,414,376 | 49,783,010 | 14,652,072 | |||||||||||||
Net Assets | $ | 46,129,809 | $ | 1,475,391,936 | $ | 2,439,828,432 | $ | 2,259,134,977 | |||||||||
ANALYSIS OF NET ASSETS: | |||||||||||||||||
Paid-in capital | $ | 40,620,351 | $ | 1,246,132,374 | $ | 1,366,762,149 | $ | 1,041,557,492 | |||||||||
Undistributed net investment income (loss) | – | (443,702 | ) | (1,728,050 | ) | 214,996 | |||||||||||
Accumulated net realized gain (loss) on investments and foreign currency | (1,452,953 | ) | 10,687,547 | 72,395,385 | 73,695,161 | ||||||||||||
Net unrealized appreciation (depreciation) on investments and foreign | 6,962,411 | 219,015,717 | 1,002,398,948 | 1,143,667,328 | |||||||||||||
Net Assets | $ | 46,129,809 | $ | 1,475,391,936 | $ | 2,439,828,432 | $ | 2,259,134,977 | |||||||||
Investment Class | $ | 45,135,052 | $ | 751,183,748 | $ | 1,671,848,347 | $ | 1,768,580,134 | |||||||||
Service Class | 994,757 | 73,516,750 | 100,597,685 | 46,549,566 | |||||||||||||
Consultant Class | 21,116,241 | 402,114,340 | 31,352,961 | ||||||||||||||
Institutional Class | 583,974,848 | 245,008,768 | 250,825,986 | ||||||||||||||
W Class | 147,937,138 | ||||||||||||||||
R Class | 38,902,657 | 17,059,080 | 13,889,192 | ||||||||||||||
K Class | 6,697,692 | 3,200,212 | |||||||||||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | |||||||||||||||||
Investment Class | 2,625,755 | 58,455,252 | 151,683,883 | 113,997,662 | |||||||||||||
Service Class | 114,851 | 6,118,435 | 9,117,469 | 3,076,862 | |||||||||||||
Consultant Class | 1,972,272 | 45,195,274 | 2,516,352 | ||||||||||||||
Institutional Class | 44,630,693 | 22,200,214 | 15,957,281 | ||||||||||||||
W Class | 9,503,119 | ||||||||||||||||
R Class | 3,334,141 | 1,634,762 | 959,567 | ||||||||||||||
K Class | 632,095 | 351,179 | |||||||||||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | |||||||||||||||||
Investment Class1 | $ | 17.19 | $ | 12.85 | $ | 11.02 | $ | 15.51 | |||||||||
Service Class1 | 8.66 | 12.02 | 11.03 | 15.13 | |||||||||||||
Consultant Class2 | 10.71 | 8.90 | 12.46 | ||||||||||||||
Institutional Class3 | 13.08 | 11.04 | 15.72 | ||||||||||||||
W Class3 | 15.57 | ||||||||||||||||
R Class3 | 11.67 | 10.44 | 14.47 | ||||||||||||||
K Class3 | 10.60 | 9.11 | |||||||||||||||
Investments at identified cost | $ | 36,779,061 | $ | 1,263,368,426 | $ | 1,445,367,005 | $ | 1,101,028,657 | |||||||||
Market value of loaned securities | – | 104,843,754 | 36,097,576 | 6,220,083 | |||||||||||||
1 | Offering and redemption price per share; shares held less than 30 days may be subject to a 1% redemption fee, payable to the Fund. |
2 | Offering and redemption price per share; shares held less than 365 days may be subject to a 1% contingent deferred sales charge, payable to Royce Fund Services, Inc. |
3 | Offering and redemption price per share. |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 85 |
Statements of Assets and Liabilities |
Royce Smaller- | |||||||||||||||||
Royce Small-Cap | Royce Small-Cap | Companies Growth | Royce Special Equity | ||||||||||||||
Leaders Fund | Value Fund | Fund | Fund | ||||||||||||||
ASSETS: | |||||||||||||||||
Investments at value (including collateral on loaned securities) | |||||||||||||||||
Non-Affiliated Companies | $ | 96,389,659 | $ | 412,165,438 | $ | 445,870,582 | $ | 1,049,027,458 | |||||||||
Affiliated Companies | – | – | – | 377,407,919 | |||||||||||||
Repurchase agreements (at cost and value) | 5,226,000 | 48,392,000 | 11,780,000 | 196,543,000 | |||||||||||||
Cash and foreign currency | 18,460 | 677 | 41,542 | 1,000 | |||||||||||||
Receivable for investments sold | – | 6,263,614 | – | 454,509 | |||||||||||||
Receivable for capital shares sold | 160,849 | 65,533 | 267,484 | 2,634,716 | |||||||||||||
Receivable for dividends and interest | 57,460 | 963,403 | 125,823 | 1,477,238 | |||||||||||||
Prepaid expenses and other assets | 329 | 2,347 | 2,111 | 7,935 | |||||||||||||
Total Assets | 101,852,757 | 467,853,012 | 458,087,542 | 1,627,553,775 | |||||||||||||
LIABILITIES: | |||||||||||||||||
Payable for collateral on loaned securities | – | 9,656,023 | 39,234,403 | – | |||||||||||||
Payable for investments purchased | 444,766 | 5,578,691 | 53,165 | 2,419,107 | |||||||||||||
Payable for capital shares redeemed | 161,753 | 699,031 | 2,339,265 | 12,998,138 | |||||||||||||
Payable for investment advisory fees | 87,000 | 392,442 | 370,266 | 1,378,931 | |||||||||||||
Payable for trustees’ fees | 2,905 | 12,791 | 13,075 | 37,948 | |||||||||||||
Accrued expenses | 132,311 | 333,566 | 362,755 | 738,912 | |||||||||||||
Total Liabilities | 828,735 | 16,672,544 | 42,372,929 | 17,573,036 | |||||||||||||
Net Assets | $ | 101,024,022 | $ | 451,180,468 | $ | 415,714,613 | $ | 1,609,980,739 | |||||||||
ANALYSIS OF NET ASSETS: | |||||||||||||||||
Paid-in capital | $ | 73,012,699 | $ | 382,409,934 | $ | 287,460,415 | $ | 1,074,956,198 | |||||||||
Undistributed net investment income (loss) | (1,150 | ) | 118,424 | 180,029 | 40,011 | ||||||||||||
Accumulated net realized gain (loss) on investments and foreign currency | 1,734,781 | 1,260,407 | 20,995,858 | 38,372,199 | |||||||||||||
Net unrealized appreciation (depreciation) on investments and foreign | 26,277,692 | 67,391,703 | 107,078,311 | 496,612,331 | |||||||||||||
Net Assets | $ | 101,024,022 | $ | 451,180,468 | $ | 415,714,613 | $ | 1,609,980,739 | |||||||||
Investment Class | $ | 48,127,624 | $ | 72,863,330 | $ | 98,962,476 | $ | 1,225,095,024 | |||||||||
Service Class | 50,523,496 | 213,067,003 | 284,640,056 | 128,102,065 | |||||||||||||
Consultant Class | 16,483,741 | 10,592,657 | 50,513,687 | ||||||||||||||
Institutional Class | 127,740,840 | 20,522,960 | 206,269,963 | ||||||||||||||
R Class | 1,871,221 | 18,059,633 | 792,982 | ||||||||||||||
K Class | 501,681 | 2,965,921 | 203,482 | ||||||||||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | |||||||||||||||||
Investment Class | 6,763,386 | 7,265,546 | 8,817,582 | 55,631,632 | |||||||||||||
Service Class | 7,190,743 | 21,344,332 | 25,859,154 | 5,827,629 | |||||||||||||
Consultant Class | 1,834,888 | 1,100,418 | 2,505,989 | ||||||||||||||
Institutional Class | 12,738,632 | 1,807,503 | 9,443,958 | ||||||||||||||
R Class | 192,410 | 1,875,733 | 77,151 | ||||||||||||||
K Class | 50,296 | 428,028 | 37,492 | ||||||||||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | |||||||||||||||||
Investment Class1 | $ | 7.12 | $ | 10.03 | $ | 11.22 | $ | 22.02 | |||||||||
Service Class1 | 7.03 | 9.98 | 11.01 | 21.98 | |||||||||||||
Consultant Class2 | 8.98 | 9.63 | 20.16 | ||||||||||||||
Institutional Class3 | 10.03 | 11.35 | 21.84 | ||||||||||||||
R Class3 | 9.73 | 9.63 | 10.28 | ||||||||||||||
K Class3 | 9.97 | 6.93 | 5.43 | ||||||||||||||
Investments at identified cost | $ | 70,112,046 | $ | 344,773,736 | $ | 338,792,248 | $ | 929,823,046 | |||||||||
Market value of loaned securities | – | 9,406,922 | 38,262,305 | – | |||||||||||||
1 | Offering and redemption price per share; shares held less than 30 days may be subject to a 1% redemption fee, payable to the Fund. |
2 | Offering and redemption price per share; shares held less than 365 days may be subject to a 1% contingent deferred sales charge, payable to Royce Fund Services, Inc. |
3 | Offering and redemption price per share. |
86 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2016 |
Royce Special Equity | Royce Total Return | |||||||
Multi-Cap Fund | Fund | |||||||
ASSETS: | ||||||||
Investments at value (including collateral on loaned securities) | ||||||||
Non-Affiliated Companies | $ | 103,736,735 | $ | 2,784,062,798 | ||||
Affiliated Companies | – | 31,580,260 | ||||||
Repurchase agreements (at cost and value) | 15,373,000 | 48,674,000 | ||||||
Cash and foreign currency | 531 | 110,736 | ||||||
Receivable for investments sold | 24,469 | 18,375,688 | ||||||
Receivable for capital shares sold | 19,267 | 2,943,480 | ||||||
Receivable for dividends and interest | 139,843 | 4,858,488 | ||||||
Prepaid expenses and other assets | 1,087 | 15,165 | ||||||
Total Assets | 119,294,932 | 2,890,620,615 | ||||||
LIABILITIES: | ||||||||
Payable for collateral on loaned securities | – | 8,925,325 | ||||||
Payable for investments purchased | 717,046 | 7,166,523 | ||||||
Payable for capital shares redeemed | 3,764,263 | 29,986,474 | ||||||
Payable for investment advisory fees | 80,973 | 2,437,976 | ||||||
Payable for trustees’ fees | 3,251 | 72,965 | ||||||
Accrued expenses | 51,715 | 1,489,939 | ||||||
Total Liabilities | 4,617,248 | 50,079,202 | ||||||
Net Assets | $ | 114,677,684 | $ | 2,840,541,413 | ||||
ANALYSIS OF NET ASSETS: | ||||||||
Paid-in capital | $ | 95,705,619 | $ | 1,595,790,749 | ||||
Undistributed net investment income (loss) | 8,257 | (168,435 | ) | |||||
Accumulated net realized gain (loss) on investments and foreign currency | (599,953 | ) | 43,605,633 | |||||
Net unrealized appreciation (depreciation) on investments and foreign currency | 19,563,761 | 1,201,313,466 | ||||||
Net Assets | $ | 114,677,684 | $ | 2,840,541,413 | ||||
Investment Class | $ | 34,857,824 | $ | 1,835,927,275 | ||||
Service Class | 37,494,667 | 142,606,200 | ||||||
Consultant Class | 4,985,913 | 267,083,231 | ||||||
Institutional Class | 37,339,280 | 420,375,039 | ||||||
W Class | 79,701,850 | |||||||
R Class | 53,895,547 | |||||||
K Class | 40,952,271 | |||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | ||||||||
Investment Class | 2,507,076 | 134,165,476 | ||||||
Service Class | 2,688,366 | 10,202,047 | ||||||
Consultant Class | 546,931 | 18,981,780 | ||||||
Institutional Class | 2,687,966 | 31,085,807 | ||||||
W Class | 5,831,268 | |||||||
R Class | 3,823,896 | |||||||
K Class | 4,512,826 | |||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | ||||||||
Investment Class1 | $ | 13.90 | $ | 13.68 | ||||
Service Class1 | 13.95 | 13.98 | ||||||
Consultant Class2 | 9.12 | 14.07 | ||||||
Institutional Class3 | 13.89 | 13.52 | ||||||
W Class3 | 13.67 | |||||||
R Class3 | 14.09 | |||||||
K Class3 | 9.07 | |||||||
Investments at identified cost | $ | 84,172,973 | $ | 1,614,297,799 | ||||
Market value of loaned securities | – | 8,657,688 | ||||||
1 | Offering and redemption price per share; shares held less than 30 days may be subject to a 1% redemption fee, payable to the Fund. |
2 | Offering and redemption price per share; shares held less than 365 days may be subject to a 1% contingent deferred sales charge, payable to Royce Fund Services, Inc. |
3 | Offering and redemption price per share. |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 87 |
Statements of Changes in Net Assets |
Royce Global Financial | |||||||||||||||||||||||||
Royce Dividend Value Fund | Services Fund | Royce Heritage Fund | |||||||||||||||||||||||
Year Ended 12/31/16 | Year Ended 12/31/15 | Year Ended 12/31/16 | Year Ended 12/31/15 | Year Ended 12/31/16 | Year Ended 12/31/15 | ||||||||||||||||||||
INVESTMENT OPERATIONS: | |||||||||||||||||||||||||
Net investment income (loss) | $ | 3,671,006 | $ | 5,615,411 | $ | 632,883 | $ | 661,280 | $ | 80,363 | $ | 1,105,158 | |||||||||||||
Net realized gain (loss) on investments and foreign | 23,693,288 | 22,090,713 | (622,546 | ) | 3,106,606 | 17,403,296 | 21,906,988 | ||||||||||||||||||
Net change in unrealized appreciation (depreciation) | 8,045,266 | (46,727,540 | ) | 5,831,058 | (7,341,479 | ) | 20,044,069 | (40,815,691 | ) | ||||||||||||||||
Net increase (decrease) in net assets from | 35,409,560 | (19,021,416 | ) | 5,841,395 | (3,573,593 | ) | 37,527,728 | (17,803,545 | ) | ||||||||||||||||
DISTRIBUTIONS: | |||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||
Investment Class | (1,603,952 | ) | (2,391,709 | ) | (349,595 | ) | (723,765 | ) | |||||||||||||||||
Service Class | (1,483,597 | ) | (2,678,378 | ) | (227,361 | ) | (666,857 | ) | (225,517 | ) | (662,286 | ) | |||||||||||||
Consultant Class | (6,858 | ) | (3,857 | ) | – | – | |||||||||||||||||||
Institutional Class | (12,914 | ) | (508,091 | ) | (48,466 | ) | |||||||||||||||||||
R Class | – | (9,229 | ) | ||||||||||||||||||||||
K Class | (8,467 | ) | (24,990 | ) | |||||||||||||||||||||
Net realized gain on investments and foreign | |||||||||||||||||||||||||
Investment Class | (9,347,539 | ) | (10,918,322 | ) | (2,986,270 | ) | (7,909,857 | ) | |||||||||||||||||
Service Class | (10,322,532 | ) | (15,975,223 | ) | (113,915 | ) | (4,550,611 | ) | (4,072,137 | ) | (10,861,670 | ) | |||||||||||||
Consultant Class | (118,406 | ) | (84,309 | ) | (538,174 | ) | (1,306,228 | ) | |||||||||||||||||
Institutional Class | (73,032 | ) | (60,739 | ) | (13,575 | ) | |||||||||||||||||||
R Class | (97,583 | ) | (314,617 | ) | |||||||||||||||||||||
K Class | (203,617 | ) | (506,200 | ) | |||||||||||||||||||||
Total distributions | (22,968,830 | ) | (32,620,628 | ) | (403,317 | ) | (5,217,468 | ) | (8,481,360 | ) | (22,318,842 | ) | |||||||||||||
CAPITAL SHARE TRANSACTIONS: | |||||||||||||||||||||||||
Net capital share transactions | |||||||||||||||||||||||||
Investment Class | (21,449,693 | ) | (39,499,647 | ) | (13,714,678 | ) | (54,256,776 | ) | |||||||||||||||||
Service Class | (59,138,290 | ) | (98,629,025 | ) | (12,648,330 | ) | 7,093,134 | (15,044,344 | ) | (35,002,503 | ) | ||||||||||||||
Consultant Class | (345,496 | ) | 1,137,696 | (901,650 | ) | 243,363 | |||||||||||||||||||
Institutional Class | 134,631 | (39,025,158 | ) | 5,299,129 | |||||||||||||||||||||
R Class | (613,184 | ) | (875,916 | ) | |||||||||||||||||||||
K Class | (235,717 | ) | (732,966 | ) | |||||||||||||||||||||
Shareholder redemption fees | |||||||||||||||||||||||||
Investment Class | 149 | 770 | 2 | 13 | |||||||||||||||||||||
Service Class | 306 | 3,353 | 1,391 | 3,413 | 8 | 404 | |||||||||||||||||||
Net increase (decrease) in net assets from capital | (80,798,393 | ) | (176,012,011 | ) | (7,347,810 | ) | 7,096,547 | (30,509,563 | ) | (90,624,381 | ) | ||||||||||||||
Net Increase (Decrease) In Net Assets | (68,357,663 | ) | (227,654,055 | ) | (1,909,732 | ) | (1,694,514 | ) | (1,463,195 | ) | (130,746,768 | ) | |||||||||||||
NET ASSETS: | |||||||||||||||||||||||||
Beginning of year | 285,762,010 | 513,416,065 | 52,012,515 | 53,707,029 | 227,771,350 | 358,518,118 | |||||||||||||||||||
End of year | $ | 217,404,347 | $ | 285,762,010 | $ | 50,102,783 | $ | 52,012,515 | $ | 226,308,155 | $ | 227,771,350 | |||||||||||||
Undistributed Net Investment Income (Loss) at End of Year | $ | 493,362 | $ | (62,801 | ) | $ | 24,145 | $ | (267,318 | ) | $ | (12,969 | ) | $ | (363,905 | ) | |||||||||
88 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Royce International | Royce International | Royce International | |||||||||||||||||||||||
Micro-Cap Fund | Premier Fund | Small-Cap Fund | |||||||||||||||||||||||
Year Ended 12/31/16 | Year Ended 12/31/15 | Year Ended 12/31/16 | Year Ended 12/31/15 | Year Ended 12/31/16 | Year Ended 12/31/15 | ||||||||||||||||||||
INVESTMENT OPERATIONS: | |||||||||||||||||||||||||
Net investment income (loss) | $ | 40,959 | $ | 28,861 | $ | 440,469 | $ | 112,963 | $ | 97,235 | $ | 336,108 | |||||||||||||
Net realized gain (loss) on investments and foreign | 84,177 | (85,484 | ) | 2,017,787 | 284,340 | (876,851 | ) | (737,386 | ) | ||||||||||||||||
Net change in unrealized appreciation (depreciation) | 243,967 | 15,857 | 2,859,167 | 933,734 | 448,814 | 346,448 | |||||||||||||||||||
Net increase (decrease) in net assets from | 369,103 | (40,766 | ) | 5,317,423 | 1,331,037 | (330,802 | ) | (54,830 | ) | ||||||||||||||||
DISTRIBUTIONS: | |||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||
Investment Class | (578,473 | ) | (94,094 | ) | (50,956 | ) | (11,969 | ) | |||||||||||||||||
Service Class | (94,073 | ) | (15,066 | ) | (884,559 | ) | (226,237 | ) | (145,198 | ) | (366,611 | ) | |||||||||||||
Consultant Class | (74,632 | ) | |||||||||||||||||||||||
Institutional Class | (110,739 | ) | (58,335 | ) | |||||||||||||||||||||
R Class | (1,365 | ) | |||||||||||||||||||||||
K Class | (643 | ) | |||||||||||||||||||||||
Net realized gain on investments and foreign | |||||||||||||||||||||||||
Investment Class | (22,488 | ) | – | – | (5 | ) | |||||||||||||||||||
Service Class | – | – | (37,565 | ) | – | – | (187 | ) | |||||||||||||||||
Consultant Class | (4,771 | ) | |||||||||||||||||||||||
Institutional Class | – | (25 | ) | ||||||||||||||||||||||
R Class | (61 | ) | |||||||||||||||||||||||
K Class | (27 | ) | |||||||||||||||||||||||
Return of capital | |||||||||||||||||||||||||
Investment Class | (2,096 | ) | – | (604 | ) | – | |||||||||||||||||||
Service Class | (3,148 | ) | – | (3,224 | ) | – | (1,722 | ) | – | ||||||||||||||||
Consultant Class | (282 | ) | |||||||||||||||||||||||
Institutional Class | (1,313 | ) | – | ||||||||||||||||||||||
R Class | (5 | ) | |||||||||||||||||||||||
K Class | (2 | ) | |||||||||||||||||||||||
Total distributions | (97,221 | ) | (15,066 | ) | (1,610,193 | ) | (320,331 | ) | (310,532 | ) | (437,132 | ) | |||||||||||||
CAPITAL SHARE TRANSACTIONS: | |||||||||||||||||||||||||
Net capital share transactions | |||||||||||||||||||||||||
Investment Class | (7,619,217 | ) | (416,753 | ) | 723,690 | (804,287 | ) | ||||||||||||||||||
Service Class | (314,555 | ) | (252,087 | ) | (6,346,690 | ) | 4,517,740 | (12,920,755 | ) | (11,759,515 | ) | ||||||||||||||
Consultant Class | (1,615,137 | ) | |||||||||||||||||||||||
Institutional Class | 323,952 | (255,663 | ) | ||||||||||||||||||||||
R Class | 11,570 | ||||||||||||||||||||||||
K Class | 672 | ||||||||||||||||||||||||
Value of shares issued in connection with the | – | 62,822,434 | – | ||||||||||||||||||||||
Shareholder redemption fees | |||||||||||||||||||||||||
Investment Class | 758 | 84 | – | – | |||||||||||||||||||||
Service Class | 3 | 331 | 268 | 9 | 2 | 4 | |||||||||||||||||||
Net increase (decrease) in net assets from capital | (314,552 | ) | (251,756 | ) | 47,254,658 | 4,101,080 | (11,873,111 | ) | (12,819,461 | ) | |||||||||||||||
Net Increase (Decrease) In Net Assets | (42,670 | ) | (307,588 | ) | 50,961,888 | 5,111,786 | (12,514,445 | ) | (13,311,423 | ) | |||||||||||||||
NET ASSETS: | |||||||||||||||||||||||||
Beginning of year | 6,102,362 | 6,409,950 | 12,638,249 | 7,526,463 | 19,770,924 | 33,082,347 | |||||||||||||||||||
End of year | $ | 6,059,692 | $ | 6,102,362 | $ | 63,600,137 | $ | 12,638,249 | $ | 7,256,479 | $ | 19,770,924 | |||||||||||||
Undistributed Net Investment Income (Loss) at End of Year | $ | (15,542 | ) | $ | (15,189 | ) | $ | (919,994 | ) | $ | (166,956 | ) | $ | (34,767 | ) | $ | (71,296 | ) | |||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 89 |
Statements of Changes in Net Assets |
Royce Low-Priced Stock Fund | Royce Micro-Cap Fund | Royce Micro-Cap Opportunity Fund | |||||||||||||||||||||||
Year Ended 12/31/16 | Year Ended 12/31/15 | Year Ended 12/31/16 | Year Ended 12/31/15 | Year Ended 12/31/16 | Year Ended 12/31/15 | ||||||||||||||||||||
INVESTMENT OPERATIONS: | |||||||||||||||||||||||||
Net investment income (loss) | $ | 563,098 | $ | (749,288 | ) | $ | (315,442 | ) | $ | (48,824 | ) | $ | (220,205 | ) | $ | (157,402 | ) | ||||||||
Net realized gain (loss) on investments and foreign | 24,229,523 | 50,049,069 | 24,722,058 | 27,865,387 | (446,685 | ) | (839,817 | ) | |||||||||||||||||
Net change in unrealized appreciation (depreciation) | 18,925,368 | (98,725,108 | ) | 16,232,069 | (80,342,626 | ) | 9,869,805 | (4,189,900 | ) | ||||||||||||||||
Net increase (decrease) in net assets from | 43,717,989 | (49,425,327 | ) | 40,638,685 | (52,526,063 | ) | 9,202,915 | (5,187,119 | ) | ||||||||||||||||
DISTRIBUTIONS: | |||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||
Investment Class | (153,381 | ) | – | (860,802 | ) | – | – | – | |||||||||||||||||
Service Class | (1,280,579 | ) | – | (58,138 | ) | – | – | – | |||||||||||||||||
Consultant Class | – | – | |||||||||||||||||||||||
Institutional Class | (77,571 | ) | (19,349 | ) | |||||||||||||||||||||
R Class | (1,471 | ) | – | ||||||||||||||||||||||
K Class | (34,411 | ) | – | ||||||||||||||||||||||
Net realized gain on investments and foreign | |||||||||||||||||||||||||
Investment Class | (1,891,699 | ) | (2,528,780 | ) | (19,361,347 | ) | (26,296,259 | ) | – | (829 | ) | ||||||||||||||
Service Class | (23,339,027 | ) | (27,485,797 | ) | (1,732,575 | ) | (2,534,611 | ) | – | (52 | ) | ||||||||||||||
Consultant Class | (4,361,373 | ) | (5,795,052 | ) | |||||||||||||||||||||
Institutional Class | (1,002,506 | ) | (3,485,225 | ) | |||||||||||||||||||||
R Class | (92,435 | ) | (100,299 | ) | |||||||||||||||||||||
K Class | (400,675 | ) | (409,904 | ) | |||||||||||||||||||||
Total distributions | (28,273,755 | ) | (34,029,354 | ) | (26,374,235 | ) | (34,625,922 | ) | – | (881 | ) | ||||||||||||||
CAPITAL SHARE TRANSACTIONS: | |||||||||||||||||||||||||
Net capital share transactions | |||||||||||||||||||||||||
Investment Class | (7,100,958 | ) | (15,345,048 | ) | (38,591,832 | ) | (128,962,401 | ) | 1,678,178 | 21,161,499 | |||||||||||||||
Service Class | (50,040,199 | ) | (136,462,314 | ) | (4,084,325 | ) | (11,015,702 | ) | (400,240 | ) | 514,293 | ||||||||||||||
Consultant Class | (8,726,715 | ) | (20,670,449 | ) | |||||||||||||||||||||
Institutional Class | (25,653,966 | ) | (54,117,605 | ) | |||||||||||||||||||||
R Class | (159,633 | ) | (519,308 | ) | |||||||||||||||||||||
K Class | (145,351 | ) | 87,347 | ||||||||||||||||||||||
Shareholder redemption fees | |||||||||||||||||||||||||
Investment Class | – | – | 70 | 1,183 | 412 | 299 | |||||||||||||||||||
Service Class | 69 | 4,987 | – | 110 | 24 | 90 | |||||||||||||||||||
Net increase (decrease) in net assets from capital | (83,100,038 | ) | (206,351,941 | ) | (51,402,802 | ) | (160,647,259 | ) | 1,278,374 | 21,676,181 | |||||||||||||||
Net Increase (Decrease) In Net Assets | (67,655,804 | ) | (289,806,622 | ) | (37,138,352 | ) | (247,799,244 | ) | 10,481,289 | 16,488,181 | |||||||||||||||
NET ASSETS: | |||||||||||||||||||||||||
Beginning of year | 386,845,803 | 676,652,425 | 280,833,988 | 528,633,232 | 35,648,520 | 19,160,339 | |||||||||||||||||||
End of year | $ | 319,189,999 | $ | 386,845,803 | $ | 243,695,636 | $ | 280,833,988 | $ | 46,129,809 | $ | 35,648,520 | |||||||||||||
Undistributed Net Investment Income (Loss) at End of Year | $ | (517,803 | ) | $ | (231,897 | ) | $ | (888,336 | ) | $ | (138,403 | ) | $ | – | $ | (48 | ) | ||||||||
90 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Royce Opportunity Fund | Royce Pennsylvania Mutual Fund | Royce Premier Fund | |||||||||||||||||||||||
Year Ended 12/31/16 | Year Ended 12/31/15 | Year Ended 12/31/16 | Year Ended 12/31/15 | Year Ended 12/31/16 | Year Ended 12/31/15 | ||||||||||||||||||||
INVESTMENT OPERATIONS: | |||||||||||||||||||||||||
Net investment income (loss) | $ | (2,560,355 | ) | $ | (5,300,020 | ) | $ | 11,458,260 | $ | 19,385,314 | $ | 7,651,793 | $ | 20,471,996 | |||||||||||
Net realized gain (loss) on investments and foreign | 81,399,272 | 162,734,316 | 382,217,946 | 490,135,537 | 268,086,942 | 812,018,660 | |||||||||||||||||||
Net change in unrealized appreciation (depreciation) | 286,652,783 | (416,427,869 | ) | 196,021,249 | (985,585,796 | ) | 183,886,343 | (1,203,711,621 | ) | ||||||||||||||||
Net increase (decrease) in net assets from | 365,491,700 | (258,993,573 | ) | 589,697,455 | (476,064,945 | ) | 459,625,078 | (371,220,965 | ) | ||||||||||||||||
DISTRIBUTIONS: | |||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||
Investment Class | – | – | (5,686,548 | ) | (17,117,756 | ) | (4,446,718 | ) | (16,221,798 | ) | |||||||||||||||
Service Class | – | – | (89,747 | ) | (194,886 | ) | – | (130,119 | ) | ||||||||||||||||
Consultant Class | – | – | – | – | – | – | |||||||||||||||||||
Institutional Class | – | – | (1,114,871 | ) | (5,113,765 | ) | (816,383 | ) | (2,635,988 | ) | |||||||||||||||
W Class | (358,070 | ) | (1,657,941 | ) | |||||||||||||||||||||
R Class | – | – | – | – | – | – | |||||||||||||||||||
K Class | – | – | – | – | (36,010 | ) | (59,934 | ) | |||||||||||||||||
Net realized gain on investments and foreign | |||||||||||||||||||||||||
Investment Class | (49,065,228 | ) | (70,548,435 | ) | (107,426,917 | ) | (368,819,105 | ) | (211,537,353 | ) | (408,845,681 | ) | |||||||||||||
Service Class | (5,193,491 | ) | (9,927,530 | ) | (6,455,759 | ) | (19,955,149 | ) | (5,326,941 | ) | (12,422,397 | ) | |||||||||||||
Consultant Class | (1,647,105 | ) | (2,017,485 | ) | (31,772,229 | ) | (94,833,647 | ) | (4,519,182 | ) | (7,902,444 | ) | |||||||||||||
Institutional Class | (37,279,779 | ) | (54,433,028 | ) | (16,986,455 | ) | (92,030,063 | ) | (28,846,485 | ) | (55,307,608 | ) | |||||||||||||
W Class | (18,160,148 | ) | (41,880,612 | ) | |||||||||||||||||||||
R Class | (2,795,339 | ) | (3,175,783 | ) | (1,169,369 | ) | (3,584,148 | ) | (1,735,767 | ) | (3,169,817 | ) | |||||||||||||
K Class | (525,822 | ) | (1,032,939 | ) | (247,212 | ) | (1,005,956 | ) | (1,812,751 | ) | (2,027,347 | ) | |||||||||||||
Total distributions | (96,506,764 | ) | (141,135,200 | ) | (170,949,107 | ) | (602,654,475 | ) | (277,595,808 | ) | (552,261,686 | ) | |||||||||||||
CAPITAL SHARE TRANSACTIONS: | |||||||||||||||||||||||||
Net capital share transactions | |||||||||||||||||||||||||
Investment Class | (130,921,772 | ) | (334,454,709 | ) | (525,830,125 | ) | (1,247,856,329 | ) | (386,079,798 | ) | (1,369,730,313 | ) | |||||||||||||
Service Class | (40,726,682 | ) | (26,205,974 | ) | (14,214,408 | ) | (191,134,871 | ) | (19,076,174 | ) | (90,207,188 | ) | |||||||||||||
Consultant Class | (1,846,769 | ) | 4,226,458 | (70,571,044 | ) | (94,088,549 | ) | (3,272,047 | ) | (11,030,216 | ) | ||||||||||||||
Institutional Class | (125,523,167 | ) | (46,228,790 | ) | (328,652,837 | ) | (135,653,362 | ) | (67,646,777 | ) | (202,700,432 | ) | |||||||||||||
W Class | (59,256,198 | ) | (181,056,608 | ) | |||||||||||||||||||||
R Class | (127,892 | ) | 7,219,677 | (4,149,765 | ) | (11,293,119 | ) | (3,305,881 | ) | (5,916,080 | ) | ||||||||||||||
K Class | (4,132,187 | ) | (10,131,487 | ) | (1,338,061 | ) | (4,790,179 | ) | (1,330,635 | ) | (990,304 | ) | |||||||||||||
Shareholder redemption fees | |||||||||||||||||||||||||
Investment Class | 1,530 | 17,647 | 22,510 | 20,843 | 7,363 | 18,204 | |||||||||||||||||||
Service Class | 124 | 476 | 2,869 | 6,189 | – | 2,449 | |||||||||||||||||||
Net increase (decrease) in net assets from capital | (303,276,815 | ) | (405,556,702 | ) | (944,730,861 | ) | (1,684,789,377 | ) | (539,960,147 | ) | (1,861,610,488 | ) | |||||||||||||
Net Increase (Decrease) In Net Assets | (34,291,879 | ) | (805,685,475 | ) | (525,982,513 | ) | (2,763,508,797 | ) | (357,930,877 | ) | (2,785,093,139 | ) | |||||||||||||
NET ASSETS: | |||||||||||||||||||||||||
Beginning of year | 1,509,683,815 | 2,315,369,290 | 2,965,810,945 | 5,729,319,742 | 2,617,065,854 | 5,402,158,993 | |||||||||||||||||||
End of year | $ | 1,475,391,936 | $ | 1,509,683,815 | $ | 2,439,828,432 | $ | 2,965,810,945 | $ | 2,259,134,977 | $ | 2,617,065,854 | |||||||||||||
Undistributed Net Investment Income (Loss) at End of Year | $ | (443,702 | ) | $ | (4,442 | ) | $ | (1,728,050 | ) | $ | (11,517,236 | ) | $ | 214,996 | $ | 302,315 | |||||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 91 |
Statements of Changes in Net Assets |
Royce Smaller-Companies | |||||||||||||||||||||||||
Royce Small-Cap Leaders Fund | Royce Small-Cap Value Fund | Growth Fund | |||||||||||||||||||||||
Year Ended 12/31/16 | Year Ended 12/31/15 | Year Ended 12/31/16 | Year Ended 12/31/15 | Year Ended 12/31/16 | Year Ended 12/31/15 | ||||||||||||||||||||
INVESTMENT OPERATIONS: | |||||||||||||||||||||||||
Net investment income (loss) | $ | 479,509 | $ | 409,540 | $ | 2,821,887 | $ | 3,900,575 | $ | (3,233,602 | ) | $ | (4,227,601 | ) | |||||||||||
Net realized gain (loss) on investments and foreign | 6,469,616 | 23,376,472 | 10,075,800 | 96,681,216 | 43,532,996 | 116,596,023 | |||||||||||||||||||
Net change in unrealized appreciation (depreciation) | 15,358,937 | (42,012,914 | ) | 77,277,716 | (176,217,796 | ) | (8,118,296 | ) | (111,759,438 | ) | |||||||||||||||
Net increase (decrease) in net assets from | 22,308,062 | (18,226,902 | ) | 90,175,403 | (75,636,005 | ) | 32,181,098 | 608,984 | |||||||||||||||||
DISTRIBUTIONS: | |||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||
Investment Class | (365,134 | ) | (299,189 | ) | (574,909 | ) | (713,642 | ) | – | – | |||||||||||||||
Service Class | (263,257 | ) | (69,461 | ) | (1,164,815 | ) | (1,412,063 | ) | – | – | |||||||||||||||
Consultant Class | – | – | – | – | |||||||||||||||||||||
Institutional Class | (1,204,138 | ) | (1,708,384 | ) | – | – | |||||||||||||||||||
R Class | (1,756 | ) | – | (50,816 | ) | (37,389 | ) | – | – | ||||||||||||||||
K Class | (1,370 | ) | – | (4,294 | ) | (29,293 | ) | – | – | ||||||||||||||||
Net realized gain on investments and foreign | |||||||||||||||||||||||||
Investment Class | (4,574,543 | ) | (9,499,943 | ) | (3,534,812 | ) | (13,129,734 | ) | (10,605,399 | ) | (30,123,120 | ) | |||||||||||||
Service Class | (4,826,822 | ) | (11,237,795 | ) | (10,330,776 | ) | (42,541,960 | ) | (30,194,249 | ) | (84,976,623 | ) | |||||||||||||
Consultant Class | (880,547 | ) | (3,205,916 | ) | (1,333,802 | ) | (3,101,929 | ) | |||||||||||||||||
Institutional Class | (6,259,269 | ) | (25,005,908 | ) | (2,047,317 | ) | (7,731,654 | ) | |||||||||||||||||
R Class | (130,446 | ) | (233,440 | ) | (902,982 | ) | (3,171,360 | ) | (89,046 | ) | (184,149 | ) | |||||||||||||
K Class | (34,032 | ) | (42,755 | ) | (206,890 | ) | (1,271,691 | ) | (38,133 | ) | (96,698 | ) | |||||||||||||
Total distributions | (10,197,360 | ) | (21,382,583 | ) | (25,114,248 | ) | (92,227,340 | ) | (44,307,946 | ) | (126,214,173 | ) | |||||||||||||
CAPITAL SHARE TRANSACTIONS: | |||||||||||||||||||||||||
Net capital share transactions | |||||||||||||||||||||||||
Investment Class | (7,875,386 | ) | (21,274,592 | ) | (14,802,713 | ) | (36,675,861 | ) | (38,505,792 | ) | (131,135,648 | ) | |||||||||||||
Service Class | (13,442,897 | ) | (70,473,027 | ) | (68,631,289 | ) | (143,714,621 | ) | (116,353,750 | ) | (74,835,663 | ) | |||||||||||||
Consultant Class | (4,054,963 | ) | (2,376,947 | ) | (3,295,302 | ) | 673,082 | ||||||||||||||||||
Institutional Class | (42,386,309 | ) | (1,225,100 | ) | (17,982,903 | ) | 9,313,200 | ||||||||||||||||||
R Class | (27,116 | ) | 185,838 | (3,390,856 | ) | (5,896,346 | ) | (63,492 | ) | (274,728 | ) | ||||||||||||||
K Class | 98,793 | (237,762 | ) | (3,533,475 | ) | (1,161,875 | ) | (78,318 | ) | (90,382 | ) | ||||||||||||||
Value of shares issued in connection with the | |||||||||||||||||||||||||
merger of Royce Select Fund I | – | 20,278,826 | – | – | |||||||||||||||||||||
Shareholder redemption fees | |||||||||||||||||||||||||
Investment Class | – | 74 | 1,133 | 797 | 30,251 | 954 | |||||||||||||||||||
Service Class | 72 | 1,268 | 559 | 3,553 | 268 | 859 | |||||||||||||||||||
Net increase (decrease) in net assets from capital | (21,246,534 | ) | (71,519,375 | ) | (136,797,913 | ) | (191,046,400 | ) | (176,249,038 | ) | (196,348,326 | ) | |||||||||||||
Net Increase (Decrease) In Net Assets | (9,135,832 | ) | (111,128,860 | ) | (71,736,758 | ) | (358,909,745 | ) | (188,375,886 | ) | (321,953,515 | ) | |||||||||||||
NET ASSETS: | |||||||||||||||||||||||||
Beginning of year | 110,159,854 | 221,288,714 | 522,917,226 | 881,826,971 | 604,090,499 | 926,044,014 | |||||||||||||||||||
End of year | $ | 101,024,022 | $ | 110,159,854 | $ | 451,180,468 | $ | 522,917,226 | $ | 415,714,613 | $ | 604,090,499 | |||||||||||||
Undistributed Net Investment Income (Loss) at End of Year | $ | (1,150 | ) | $ | – | $ | 118,424 | $ | 305,122 | $ | 180,029 | $ | 58,287 | ||||||||||||
92 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Royce Special Equity | |||||||||||||||||||||||||
Royce Special Equity Fund | Multi-Cap Fund | Royce Total Return Fund | |||||||||||||||||||||||
Year Ended 12/31/16 | Year Ended 12/31/15 | Year Ended 12/31/16 | Year Ended 12/31/15 | Year Ended 12/31/16 | Year Ended 12/31/15 | ||||||||||||||||||||
INVESTMENT OPERATIONS: | |||||||||||||||||||||||||
Net investment income (loss) | $ | 14,034,085 | $ | 17,741,992 | $ | 1,281,579 | $ | 3,460,388 | $ | 27,331,086 | $ | 42,181,172 | |||||||||||||
Net realized gain (loss) on investments and foreign | 144,372,440 | 204,400,312 | 4,070,033 | (4,660,482 | ) | 283,268,348 | 344,246,993 | ||||||||||||||||||
Net change in unrealized appreciation (depreciation) | 258,157,824 | (467,531,429 | ) | 9,868,313 | (30,552,462 | ) | 329,870,012 | (644,769,544 | ) | ||||||||||||||||
Net increase (decrease) in net assets from | 416,564,349 | (245,389,125 | ) | 15,219,925 | (31,752,556 | ) | 640,469,446 | (258,341,379 | ) | ||||||||||||||||
DISTRIBUTIONS: | |||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||
Investment Class | (10,976,670 | ) | (13,685,417 | ) | (444,817 | ) | (1,202,059 | ) | (28,673,118 | ) | (22,091,406 | ) | |||||||||||||
Service Class | (927,113 | ) | (1,017,084 | ) | (339,957 | ) | (1,139,180 | ) | (1,495,071 | ) | (1,206,038 | ) | |||||||||||||
Consultant Class | (98,531 | ) | (75,049 | ) | (44,532 | ) | (177,836 | ) | (99,265 | ) | (449,082 | ) | |||||||||||||
Institutional Class | (2,208,722 | ) | (3,153,305 | ) | (461,530 | ) | (1,027,324 | ) | (7,497,123 | ) | (5,010,012 | ) | |||||||||||||
W Class | (1,459,406 | ) | (1,569,255 | ) | |||||||||||||||||||||
R Class | (302,414 | ) | (233,738 | ) | |||||||||||||||||||||
K Class | (564,903 | ) | (500,451 | ) | |||||||||||||||||||||
Net realized gain on investments and foreign | |||||||||||||||||||||||||
Investment Class | (77,675,819 | ) | (106,125,451 | ) | – | (2,737,673 | ) | (138,580,935 | ) | (236,598,179 | ) | ||||||||||||||
Service Class | (8,070,542 | ) | (11,014,959 | ) | – | (2,876,421 | ) | (10,479,295 | ) | (17,422,849 | ) | ||||||||||||||
Consultant Class | (3,479,624 | ) | (4,478,322 | ) | – | (556,760 | ) | (19,570,898 | ) | (32,205,826 | ) | ||||||||||||||
Institutional Class | (14,305,337 | ) | (21,819,175 | ) | – | (2,139,347 | ) | (31,762,325 | ) | (47,290,489 | ) | ||||||||||||||
W Class | (6,018,247 | ) | (15,056,748 | ) | |||||||||||||||||||||
R Class | (3,941,629 | ) | (6,132,531 | ) | |||||||||||||||||||||
K Class | (4,383,947 | ) | (10,750,317 | ) | |||||||||||||||||||||
Total distributions | (117,742,358 | ) | (161,368,762 | ) | (1,290,836 | ) | (11,856,600 | ) | (254,828,576 | ) | (396,516,921 | ) | |||||||||||||
CAPITAL SHARE TRANSACTIONS: | |||||||||||||||||||||||||
Net capital share transactions | |||||||||||||||||||||||||
Investment Class | (99,953,704 | ) | (544,893,604 | ) | (13,753,944 | ) | (61,315,258 | ) | (250,310,152 | ) | (798,531,569 | ) | |||||||||||||
Service Class | (6,665,803 | ) | (88,375,278 | ) | (14,795,597 | ) | (33,511,548 | ) | (11,414,322 | ) | (63,653,645 | ) | |||||||||||||
Consultant Class | (281,055 | ) | (9,721,161 | ) | (2,264,766 | ) | (377,731 | ) | (32,394,591 | ) | (36,593,875 | ) | |||||||||||||
Institutional Class | (43,764,912 | ) | (376,173,828 | ) | (3,754,867 | ) | (29,458,527 | ) | (21,328,585 | ) | (113,660,287 | ) | |||||||||||||
W Class | (53,411,042 | ) | (119,767,078 | ) | |||||||||||||||||||||
R Class | (3,978,781 | ) | (3,800,528 | ) | |||||||||||||||||||||
K Class | (28,303,584 | ) | (11,885,110 | ) | |||||||||||||||||||||
Shareholder redemption fees | |||||||||||||||||||||||||
Investment Class | 22,992 | 7,435 | 30 | 1,076 | 3,889 | 28,213 | |||||||||||||||||||
Service Class | 1,222 | 7,935 | 84 | 1,547 | 614 | 723 | |||||||||||||||||||
Net increase (decrease) in net assets from capital | (150,641,260 | ) | (1,019,148,501 | ) | (34,569,060 | ) | (124,660,441 | ) | (401,136,554 | ) | (1,147,863,156 | ) | |||||||||||||
Net Increase (Decrease) In Net Assets | 148,180,731 | (1,425,906,388 | ) | (20,639,971 | ) | (168,269,597 | ) | (15,495,684 | ) | (1,802,721,456 | ) | ||||||||||||||
NET ASSETS: | |||||||||||||||||||||||||
Beginning of year | 1,461,800,008 | 2,887,706,396 | 135,317,655 | 303,587,252 | 2,856,037,097 | 4,658,758,553 | |||||||||||||||||||
End of year | $ | 1,609,980,739 | $ | 1,461,800,008 | $ | 114,677,684 | $ | 135,317,655 | $ | 2,840,541,413 | $ | 2,856,037,097 | |||||||||||||
Undistributed Net Investment Income (Loss) at End of Year | $ | 40,011 | $ | 216,962 | $ | 8,257 | $ | 17,514 | $ | (168,435 | ) | $ | (3,485,015 | ) | |||||||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 93 |
Statements of Operations
Royce Global | ||||||||||||||||
Royce Dividend | Financial Services | Royce Heritage | Royce International | |||||||||||||
Value Fund | Fund | Fund | Micro-Cap Fund | |||||||||||||
INVESTMENT INCOME: | ||||||||||||||||
INCOME: | ||||||||||||||||
Dividends | $ | 6,896,019 | $ | 1,376,404 | $ | 2,828,487 | $ | 153,278 | ||||||||
Foreign withholding tax | (176,477 | ) | (48,829 | ) | (19,324 | ) | (14,224 | ) | ||||||||
Interest | 45,210 | 375 | 9,204 | 87 | ||||||||||||
Securities lending | 6,074 | – | 6,859 | – | ||||||||||||
Total income | 6,770,826 | 1,327,950 | 2,825,226 | 139,141 | ||||||||||||
EXPENSES: | ||||||||||||||||
Investment advisory fees | 2,222,307 | 482,668 | 2,040,317 | 74,842 | ||||||||||||
Distribution fees | 361,324 | 107,316 | 424,808 | 14,968 | ||||||||||||
Shareholder servicing | 329,131 | 73,069 | 153,203 | 12,907 | ||||||||||||
Shareholder reports | 87,737 | 16,335 | 53,541 | 4,265 | ||||||||||||
Administrative and office facilities | 68,862 | 13,038 | 59,701 | 1,583 | ||||||||||||
Custody | 67,109 | 35,238 | 45,507 | 46,071 | ||||||||||||
Registration | 52,812 | 45,312 | 55,568 | 16,079 | ||||||||||||
Audit | 35,085 | 32,024 | 34,870 | 28,108 | ||||||||||||
Trustees’ fees | 26,876 | 5,200 | 23,814 | 635 | ||||||||||||
Legal | 5,416 | 1,757 | 4,591 | 119 | ||||||||||||
Other expenses | 19,414 | 3,664 | 20,538 | 935 | ||||||||||||
Total expenses | 3,276,073 | 815,621 | 2,916,458 | 200,512 | ||||||||||||
Compensating balance credits | (1,330 | ) | (86 | ) | (812 | ) | (18 | ) | ||||||||
Fees waived by investment adviser and distributor | (142,952 | ) | (78,268 | ) | (129,425 | ) | (80,231 | ) | ||||||||
Expenses reimbursed by investment adviser | (31,971 | ) | (42,200 | ) | (41,358 | ) | (22,081 | ) | ||||||||
Net expenses | 3,099,820 | 695,067 | 2,744,863 | 98,182 | ||||||||||||
Net investment income (loss) | 3,671,006 | 632,883 | 80,363 | 40,959 | ||||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | ||||||||||||||||
NET REALIZED GAIN (LOSS): | ||||||||||||||||
Investments | 23,633,119 | (621,109 | ) | 17,415,355 | 83,663 | |||||||||||
Foreign currency transactions | 60,169 | (1,437 | ) | (12,059 | ) | 514 | ||||||||||
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION): | ||||||||||||||||
Investments and foreign currency translations | 8,044,742 | 5,831,090 | 20,039,799 | 243,860 | ||||||||||||
Other assets and liabilities denominated in foreign currency | 524 | (32 | ) | 4,270 | 107 | |||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency | 31,738,554 | 5,208,512 | 37,447,365 | 328,144 | ||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS | $ | 35,409,560 | $ | 5,841,395 | $ | 37,527,728 | $ | 369,103 | ||||||||
94 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Year Ended December 31, 2016
Royce International | Royce International | Royce Low-Priced | Royce Micro-Cap | |||||||||||||
Premier Fund | Small-Cap Fund | Stock Fund | Fund | |||||||||||||
INVESTMENT INCOME: | ||||||||||||||||
INCOME: | ||||||||||||||||
Dividends | $ | 1,447,621 | $ | 294,825 | $ | 5,042,321 | $ | 3,408,845 | ||||||||
Foreign withholding tax | (111,469 | ) | (23,670 | ) | (66,869 | ) | (23,504 | ) | ||||||||
Interest | 628 | 169 | 25,729 | 3,959 | ||||||||||||
Securities lending | – | – | 308,794 | 276,984 | ||||||||||||
Total income | 1,336,780 | 271,324 | 5,309,975 | 3,666,284 | ||||||||||||
EXPENSES: | ||||||||||||||||
Investment advisory fees | 629,500 | 125,267 | 3,258,059 | 3,030,754 | ||||||||||||
Distribution fees | 146,608 | 24,955 | 711,509 | 396,510 | ||||||||||||
Shareholder servicing | 153,336 | 32,813 | 485,253 | 246,181 | ||||||||||||
Shareholder reports | 35,826 | 2,578 | 106,515 | 106,955 | ||||||||||||
Administrative and office facilities | 19,108 | 4,339 | 90,115 | 65,851 | ||||||||||||
Custody | 58,507 | 53,590 | 55,946 | 37,629 | ||||||||||||
Registration | 40,599 | 40,216 | 57,860 | 40,713 | ||||||||||||
Audit | 75,517 | 33,730 | 33,878 | 46,281 | ||||||||||||
Trustees’ fees | 8,315 | 1,650 | 35,008 | 25,742 | ||||||||||||
Legal | 1,527 | 345 | 7,062 | 5,178 | ||||||||||||
Other expenses | 5,714 | 2,893 | 25,789 | 17,601 | ||||||||||||
Total expenses | 1,174,557 | 322,376 | 4,866,994 | 4,019,395 | ||||||||||||
Compensating balance credits | (401 | ) | (41 | ) | (980 | ) | (959 | ) | ||||||||
Fees waived by investment adviser and distributor | (82,769 | ) | (78,745 | ) | (56,231 | ) | – | |||||||||
Expenses reimbursed by investment adviser | (195,076 | ) | (69,501 | ) | (62,906 | ) | (36,710 | ) | ||||||||
Net expenses | 896,311 | 174,089 | 4,746,877 | 3,981,726 | ||||||||||||
Net investment income (loss) | 440,469 | 97,235 | 563,098 | (315,442 | ) | |||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | ||||||||||||||||
NET REALIZED GAIN (LOSS): | ||||||||||||||||
Investments | 2,038,125 | (905,633 | ) | 24,256,912 | 24,743,195 | |||||||||||
Foreign currency transactions | (20,338 | ) | 28,782 | (27,389 | ) | (21,137 | ) | |||||||||
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION): | ||||||||||||||||
Investments and foreign currency translations | 2,947,936 | 449,889 | 18,924,731 | 16,222,882 | ||||||||||||
Other assets and liabilities denominated in foreign currency | (88,769 | ) | (1,075 | ) | 637 | 9,187 | ||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency | 4,876,954 | (428,037 | ) | 43,154,891 | 40,954,127 | |||||||||||
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS | $ | 5,317,423 | $ | (330,802 | ) | $ | 43,717,989 | $ | 40,638,685 | |||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 95 |
Statements of Operations
Royce | ||||||||||||||||
Royce Micro-Cap | Royce Opportunity | Pennsylvania | Royce Premier | |||||||||||||
Opportunity Fund | Fund | Mutual Fund | Fund | |||||||||||||
INVESTMENT INCOME: | ||||||||||||||||
INCOME: | ||||||||||||||||
Dividends | ||||||||||||||||
Non-Affiliated Companies | $ | 271,909 | $ | 12,931,167 | $ | 39,776,972 | $ | 32,350,060 | ||||||||
Affiliated Companies | – | – | 384,038 | 2,091,136 | ||||||||||||
Foreign withholding tax | – | (1,607 | ) | (788,321 | ) | (983,106 | ) | |||||||||
Interest | 738 | 50,407 | 77,768 | 38,251 | ||||||||||||
Securities lending | – | 1,311,652 | 264,047 | 1,234,480 | ||||||||||||
Total income | 272,647 | 14,291,619 | 39,714,504 | 34,730,821 | ||||||||||||
EXPENSES: | ||||||||||||||||
Investment advisory fees | 395,532 | 14,138,375 | 19,909,580 | 22,883,808 | ||||||||||||
Distribution fees | 2,448 | 590,800 | 4,234,250 | 510,596 | ||||||||||||
Shareholder servicing | 43,606 | 1,043,061 | 2,027,280 | 1,825,513 | ||||||||||||
Shareholder reports | 4,826 | 195,369 | 432,542 | 431,250 | ||||||||||||
Administrative and office facilities | 9,696 | 375,873 | 723,583 | 627,670 | ||||||||||||
Custody | 17,611 | 146,713 | 251,481 | 202,077 | ||||||||||||
Registration | 29,373 | 84,530 | 106,023 | 99,191 | ||||||||||||
Audit | 24,214 | 40,974 | 49,923 | 46,054 | ||||||||||||
Trustees’ fees | 3,969 | 149,117 | 283,213 | 244,065 | ||||||||||||
Legal | 706 | 37,641 | 56,814 | 50,125 | ||||||||||||
Other expenses | 2,537 | 85,134 | 185,984 | 171,288 | ||||||||||||
Total expenses | 534,518 | 16,887,587 | 28,260,673 | 27,091,637 | ||||||||||||
Compensating balance credits | (38 | ) | (1,603 | ) | (4,429 | ) | (2,424 | ) | ||||||||
Expenses reimbursed by investment adviser | (41,628 | ) | (34,010 | ) | – | (10,185 | ) | |||||||||
Net expenses | 492,852 | 16,851,974 | 28,256,244 | 27,079,028 | ||||||||||||
Net investment income (loss) | (220,205 | ) | (2,560,355 | ) | 11,458,260 | 7,651,793 | ||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | ||||||||||||||||
NET REALIZED GAIN (LOSS): | ||||||||||||||||
Investments in Non-Affiliated Companies | (446,685 | ) | 96,530,010 | 365,047,879 | 279,542,537 | |||||||||||
Investments in Affiliated Companies | – | (15,130,738 | ) | 17,482,757 | (11,560,947 | ) | ||||||||||
Foreign currency transactions | – | – | (312,690 | ) | 105,352 | |||||||||||
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION): | ||||||||||||||||
Investments and foreign currency translations | 9,869,805 | 286,652,783 | 196,064,841 | 183,863,241 | ||||||||||||
Other assets and liabilities denominated in foreign currency | – | – | (43,592 | ) | 23,102 | |||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency | 9,423,120 | 368,052,055 | 578,239,195 | 451,973,285 | ||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS | $ | 9,202,915 | $ | 365,491,700 | $ | 589,697,455 | $ | 459,625,078 | ||||||||
96 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Year Ended December 31, 2016
Royce Smaller- | ||||||||||||||||
Royce Small-Cap | Royce Small-Cap | Companies Growth | Royce Special | |||||||||||||
Leaders Fund | Value Fund | Fund | Equity Fund | |||||||||||||
INVESTMENT INCOME: | ||||||||||||||||
INCOME: | ||||||||||||||||
Dividends | ||||||||||||||||
Non-Affiliated Companies | $ | 1,885,190 | $ | 9,481,234 | $ | 3,167,362 | $ | 15,754,461 | ||||||||
Affiliated Companies | – | – | – | 15,422,778 | ||||||||||||
Foreign withholding tax | (51,461 | ) | (116,068 | ) | (59,092 | ) | – | |||||||||
Interest | 2,130 | 11,279 | 7,969 | 42,405 | ||||||||||||
Securities lending | 4,335 | 43,695 | 493,720 | 360,616 | ||||||||||||
Total income | 1,840,194 | 9,420,140 | 3,609,959 | 31,580,260 | ||||||||||||
EXPENSES: | ||||||||||||||||
Investment advisory fees | 991,420 | 4,825,375 | 4,850,060 | 14,591,383 | ||||||||||||
Distribution fees | 135,844 | 819,325 | 954,411 | 709,812 | ||||||||||||
Shareholder servicing | 131,747 | 501,333 | 593,259 | 1,227,742 | ||||||||||||
Shareholder reports | 31,615 | 88,389 | 152,121 | 242,511 | ||||||||||||
Administrative and office facilities | 26,964 | 133,707 | 137,610 | 381,914 | ||||||||||||
Custody | 23,016 | 58,615 | 59,370 | 122,204 | ||||||||||||
Registration | 45,451 | 66,348 | 71,617 | 79,930 | ||||||||||||
Audit | 30,280 | 33,968 | 32,811 | 39,255 | ||||||||||||
Trustees’ fees | 10,512 | 52,515 | 53,651 | 150,721 | ||||||||||||
Legal | 2,152 | 10,393 | 10,790 | 29,940 | ||||||||||||
Other expenses | 8,169 | 33,481 | 36,248 | 93,636 | ||||||||||||
Total expenses | 1,437,170 | 6,623,449 | 6,951,948 | 17,669,048 | ||||||||||||
Compensating balance credits | (218 | ) | (776 | ) | (1,158 | ) | (2,000 | ) | ||||||||
Fees waived by distributor | (10,169 | ) | (22,020 | ) | (66,185 | ) | – | |||||||||
Expenses reimbursed by investment adviser | (66,098 | ) | (2,400 | ) | (41,044 | ) | (120,873 | ) | ||||||||
Net expenses | 1,360,685 | 6,598,253 | 6,843,561 | 17,546,175 | ||||||||||||
Net investment income (loss) | 479,509 | 2,821,887 | (3,233,602 | ) | 14,034,085 | |||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | ||||||||||||||||
NET REALIZED GAIN (LOSS): | ||||||||||||||||
Investments in Non-Affiliated Companies | 6,472,086 | 10,085,413 | 43,541,804 | 64,913,002 | ||||||||||||
Investments in Affiliated Companies | – | – | – | 79,459,438 | ||||||||||||
Foreign currency transactions | (2,470 | ) | (9,613 | ) | (8,808 | ) | – | |||||||||
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION): | ||||||||||||||||
Investments and foreign currency translations | 15,359,965 | 77,276,670 | (8,118,532 | ) | 258,157,824 | |||||||||||
Other assets and liabilities denominated in foreign currency | (1,028 | ) | 1,046 | 236 | – | |||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency | 21,828,553 | 87,353,516 | 35,414,700 | 402,530,264 | ||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS | $ | 22,308,062 | $ | 90,175,403 | $ | 32,181,098 | $ | 416,564,349 | ||||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 97 |
Statements of Operations | Year Ended December 31, 2016 |
Royce Special | ||||||||
Equity Multi-Cap | Royce Total Return | |||||||
Fund | Fund | |||||||
INVESTMENT INCOME: | ||||||||
INCOME: | ||||||||
Dividends | ||||||||
Non-Affiliated Companies | $ | 2,592,068 | $ | 62,790,533 | ||||
Affiliated Companies | – | 1,027,867 | ||||||
Foreign withholding tax | – | (1,018,931 | ) | |||||
Interest | 3,384 | 435,823 | ||||||
Securities lending | – | 56,443 | ||||||
Total income | 2,595,452 | 63,291,735 | ||||||
EXPENSES: | ||||||||
Investment advisory fees | 1,039,911 | 27,523,193 | ||||||
Distribution fees | 148,710 | 3,277,491 | ||||||
Shareholder servicing | 78,579 | 2,866,728 | ||||||
Shareholder reports | 7,517 | 576,809 | ||||||
Administrative and office facilities | 34,078 | 734,301 | ||||||
Custody | 17,954 | 296,005 | ||||||
Registration | 50,495 | 120,518 | ||||||
Audit | 28,885 | 48,771 | ||||||
Trustees’ fees | 13,258 | 291,385 | ||||||
Legal | 2,757 | 56,791 | ||||||
Other expenses | 11,825 | 171,950 | ||||||
Total expenses | 1,433,969 | 35,963,942 | ||||||
Compensating balance credits | (119 | ) | (3,293 | ) | ||||
Fees waived by investment adviser and distributor | (84,855 | ) | – | |||||
Expenses reimbursed by investment adviser | (35,122 | ) | – | |||||
Net expenses | 1,313,873 | 35,960,649 | ||||||
Net investment income (loss) | 1,281,579 | 27,331,086 | ||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | ||||||||
NET REALIZED GAIN (LOSS): | ||||||||
Investments in Non-Affiliated Companies | 4,070,033 | 264,184,105 | ||||||
Investments in Affiliated Companies | – | 20,100,032 | ||||||
Foreign currency transactions | – | (1,015,789 | ) | |||||
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION): | ||||||||
Investments and foreign currency translations | 9,868,313 | 329,875,506 | ||||||
Other assets and liabilities denominated in foreign currency | – | (5,494 | ) | |||||
Net realized and unrealized gain (loss) on investments and foreign currency | 13,938,346 | 613,138,360 | ||||||
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS | $ | 15,219,925 | $ | 640,469,446 | ||||
98 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Financial Highlights
This table is presented to show selected data for a share outstanding throughout each period and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
Ratio of Expenses to Average Net Assets | Ratio of Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized and | Distributions | Distributions from | Investment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value, | Unrealized Gain (Loss) | Total from | from Net | Net Realized Gain on | Shareholder | Net Asset | Net Assets, | Prior to Fee | Income (Loss) to | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | on Investments and | Investment | Investment | Investments and | Total | Redemption | Value, End of | End of Period | Waivers and | Prior to Fee | Net of Fee | Average Net | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||
Period | Income (Loss) | Foreign Currency | Operations | Income | Foreign Currency | Distributions | Fees | Period | Total Return | (in thousands) | Balance Credits | Waivers | Waivers | Assets | Turnover Rate | |||||||||||||||||||||||||||||||||||||||||||||||||
Royce Dividend Value Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 6.84 | $ | 0.12 | $ | 1.02 | $ | 1.14 | $ | (0.11 | ) | $ | (0.69 | ) | $ | (0.80 | ) | $ | – | $ | 7.18 | 16.75 | % | $ | 99,462 | 1.16 | % | 1.16 | % | 1.11 | % | 1.64 | % | 21 | % | |||||||||||||||||||||||||||||
2015 | 8.12 | 0.12 | (0.57 | ) | (0.45 | ) | (0.13 | ) | (0.70 | ) | (0.83 | ) | – | 6.84 | (5.54 | ) | 116,053 | 1.24 | 1.24 | 1.22 | 1.49 | 14 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 8.90 | 0.11 | (0.29 | ) | (0.18 | ) | (0.10 | ) | (0.50 | ) | (0.60 | ) | – | 8.12 | (1.90 | ) | 176,002 | 1.21 | 1.21 | 1.19 | 1.25 | 22 | ||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Dividend Value Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 6.96 | $ | 0.10 | $ | 1.04 | $ | 1.14 | $ | (0.08 | ) | $ | (0.69 | ) | $ | (0.77 | ) | $ | – | $ | 7.33 | 16.36 | % | $ | 115,547 | 1.43 | % | 1.43 | % | 1.37 | % | 1.39 | % | 21 | % | |||||||||||||||||||||||||||||
2015 | 8.22 | 0.10 | (0.57 | ) | (0.47 | ) | (0.09 | ) | (0.70 | ) | (0.79 | ) | – | 6.96 | (5.72 | ) | 167,165 | 1.49 | 1.49 | 1.47 | 1.25 | 14 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 8.98 | 0.09 | (0.29 | ) | (0.20 | ) | (0.06 | ) | (0.50 | ) | (0.56 | ) | – | 8.22 | (2.14 | ) | 295,560 | 1.47 | 1.47 | 1.44 | 0.98 | 22 | ||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Dividend Value Fund–Consultant Class a | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 7.90 | $ | 0.05 | $ | 1.17 | $ | 1.22 | $ | (0.04 | ) | $ | (0.69 | ) | $ | (0.73 | ) | $ | – | $ | 8.39 | 15.44 | % | $ | 1,572 | 3.26 | % | 3.26 | % | 2.14 | % | 0.58 | % | 21 | % | |||||||||||||||||||||||||||||
2015 | 9.22 | 0.04 | (0.63 | ) | (0.59 | ) | (0.03 | ) | (0.70 | ) | (0.73 | ) | – | 7.90 | (6.39 | ) | 1,886 | 3.78 | 3.78 | 2.24 | 0.46 | 14 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 10.00 | 0.01 | (0.27 | ) | (0.26 | ) | (0.02 | ) | (0.50 | ) | (0.52 | ) | – | 9.22 | (2.43 | )1 | 912 | 9.25 | 2 | 9.25 | 2 | 2.24 | 2 | 0.45 | 2 | 22 | ||||||||||||||||||||||||||||||||||||||
Royce Dividend Value Fund–Institutional Class b | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 6.78 | $ | 0.13 | $ | 1.00 | $ | 1.13 | $ | (0.13 | ) | $ | (0.69 | ) | $ | (0.82 | ) | $ | – | $ | 7.09 | 16.70 | % | $ | 823 | 3.30 | % | 3.30 | % | 0.93 | % | 1.81 | % | 21 | % | |||||||||||||||||||||||||||||
2015 | 8.09 | 0.17 | (0.62 | ) | (0.45 | ) | (0.16 | ) | (0.70 | ) | (0.86 | ) | – | 6.78 | (5.61 | ) | 658 | 1.11 | 1.11 | 1.04 | 1.60 | 14 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 8.88 | 0.12 | (0.29 | ) | (0.17 | ) | (0.12 | ) | (0.50 | ) | (0.62 | ) | – | 8.09 | (1.76 | ) | 40,942 | 1.10 | 1.10 | 1.04 | 1.42 | 22 | ||||||||||||||||||||||||||||||||||||||||||
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 | 1 | 23,460 | 1.33 | 2 | 1.33 | 2 | 1.04 | 2 | 3.48 | 2 | 28 | ||||||||||||||||||||||||||||||||||||||||
Royce Global Financial Services Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 7.99 | $ | 0.11 | $ | 0.92 | $ | 1.03 | $ | (0.05 | ) | $ | (0.02 | ) | $ | (0.07 | ) | $ | – | $ | 8.95 | 12.93 | % | $ | 43,629 | 1.67 | % | 1.67 | % | 1.49 | % | 1.25 | % | 37 | % | |||||||||||||||||||||||||||||
2015 | 9.28 | 0.11 | (0.55 | ) | (0.44 | ) | (0.11 | ) | (0.74 | ) | (0.85 | ) | – | 7.99 | (4.71 | ) | 52,013 | 1.65 | 1.65 | 1.49 | 1.19 | 46 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 9.68 | 0.09 | 0.22 | 0.31 | (0.06 | ) | (0.65 | ) | (0.71 | ) | – | 9.28 | 3.45 | 53,707 | 1.68 | 1.68 | 1.49 | 0.91 | 41 | |||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||
Royce Global Financial Services Fund–Institutional Class c | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 10.00 | $ | 0.18 | $ | 1.36 | $ | 1.54 | $ | (0.09 | ) | $ | (0.02 | ) | $ | (0.11 | ) | $ | – | $ | 11.43 | 15.41 | %1 | $ | 6,474 | 1.85 | %2 | 1.85 | %2 | 1.04 | %2 | 1.82 | %2 | 37 | % | |||||||||||||||||||||||||||||
Royce Heritage Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 12.87 | $ | 0.04 | $ | 2.30 | $ | 2.34 | $ | (0.06 | ) | $ | (0.51 | ) | $ | (0.57 | ) | $ | – | $ | 14.64 | 18.12 | % | $ | 88,378 | 1.02 | % | 1.02 | % | 1.02 | % | 0.22 | % | 67 | % | |||||||||||||||||||||||||||||
2015 | 15.21 | 0.12 | (1.09 | ) | (0.97 | ) | (0.11 | ) | (1.26 | ) | (1.37 | ) | – | 12.87 | (6.33 | ) | 89,766 | 1.10 | 1.10 | 1.10 | 0.54 | 66 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 16.24 | 0.10 | (0.25 | ) | (0.15 | ) | (0.05 | ) | (0.83 | ) | (0.88 | ) | – | 15.21 | (0.81 | ) | 160,558 | 1.09 | 1.09 | 1.09 | 0.66 | 35 | ||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 99 |
Financial Highlights
This table is presented to show selected data for a share outstanding throughout each period and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
Ratio of Expenses to Average Net Assets | Ratio of Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized and | Distributions | Distributions from | Investment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value, | Unrealized Gain (Loss) | Total from | from Net | Net Realized Gain on | Shareholder | Net Asset | Net Assets, | Prior to Fee | Income (Loss) to | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | on Investments and | Investment | Investment | Investments and | Total | Redemption | Value, End of | End of Period | Waivers and | Prior to Fee | Net of Fee | Average Net | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||
Period | Income (Loss) | Foreign Currency | Operations | Income | Foreign Currency | Distributions | Fees | Period | Total Return | (in thousands) | Balance Credits | Waivers | Waivers | Assets | Turnover Rate | |||||||||||||||||||||||||||||||||||||||||||||||||
Royce Heritage Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 12.84 | $ | 0.00 | $ | 2.30 | $ | 2.30 | $ | (0.03 | ) | $ | (0.51 | ) | $ | (0.54 | ) | $ | – | $ | 14.60 | 17.84 | % | $ | 120,254 | 1.36 | % | 1.36 | % | 1.25 | % | (0.01 | )% | 67 | % | |||||||||||||||||||||||||||||
2015 | 15.17 | 0.05 | (1.05 | ) | (1.00 | ) | (0.07 | ) | (1.26 | ) | (1.33 | ) | – | 12.84 | (6.53 | ) | 120,381 | 1.46 | 1.46 | 1.35 | 0.31 | 66 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 16.20 | 0.05 | (0.25 | ) | (0.20 | ) | – | (0.83 | ) | (0.83 | ) | – | 15.17 | (1.14 | ) | 175,433 | 1.43 | 1.43 | 1.40 | 0.32 | 35 | |||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Heritage Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 9.37 | $ | (0.09 | ) | $ | 1.67 | $ | 1.58 | $ | – | $ | (0.51 | ) | $ | (0.51 | ) | $ | – | $ | 10.44 | 16.78 | % | $ | 11,643 | 2.28 | % | 2.28 | % | 2.14 | % | (0.89 | )% | 67 | % | |||||||||||||||||||||||||||||
2015 | 11.47 | (0.06 | ) | (0.78 | ) | (0.84 | ) | – | (1.26 | ) | (1.26 | ) | – | 9.37 | (7.31 | ) | 11,369 | 2.41 | 2.41 | 2.24 | (0.58 | ) | 66 | |||||||||||||||||||||||||||||||||||||||||
2014 | 12.57 | (0.07 | ) | (0.20 | ) | (0.27 | ) | – | (0.83 | ) | (0.83 | ) | – | 11.47 | (2.02 | ) | 13,338 | 2.31 | 2.31 | 2.31 | (0.59 | ) | 35 | |||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||
Royce Heritage Fund–R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 8.56 | $ | (0.05 | ) | $ | 1.54 | $ | 1.49 | $ | – | $ | (0.51 | ) | $ | (0.51 | ) | $ | – | $ | 9.54 | 17.32 | % | $ | 1,945 | 2.27 | % | 2.27 | % | 1.74 | % | (0.51 | )% | 67 | % | |||||||||||||||||||||||||||||
2015 | 10.60 | (0.02 | ) | (0.73 | ) | (0.75 | ) | (0.03 | ) | (1.26 | ) | (1.29 | ) | – | 8.56 | (7.00 | ) | 2,339 | 2.20 | 2.20 | 1.84 | (0.19 | ) | 66 | ||||||||||||||||||||||||||||||||||||||||
2014 | 11.63 | (0.02 | ) | (0.18 | ) | (0.20 | ) | – | (0.83 | ) | (0.83 | ) | – | 10.60 | (1.59 | ) | 3,727 | 1.89 | 1.89 | 1.84 | (0.14 | ) | 35 | |||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Heritage Fund–K Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 8.66 | $ | (0.02 | ) | $ | 1.54 | $ | 1.52 | $ | (0.02 | ) | $ | (0.51 | ) | $ | (0.53 | ) | $ | – | $ | 9.65 | 17.47 | % | $ | 4,088 | 1.89 | % | 1.89 | % | 1.49 | % | (0.24 | )% | 67 | % | ||||||||||||||||||||||||||||
2015 | 10.70 | 0.02 | (0.74 | ) | (0.72 | ) | (0.06 | ) | (1.26 | ) | (1.32 | ) | – | 8.66 | (6.69 | ) | 3,916 | 1.91 | 1.91 | 1.59 | 0.06 | 66 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 11.70 | 0.02 | (0.19 | ) | (0.17 | ) | – | (0.83 | ) | (0.83 | ) | – | 10.70 | (1.32 | ) | 5,462 | 1.87 | 1.87 | 1.59 | 0.14 | 35 | |||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce International Micro-Cap Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 9.54 | $ | 0.07 | $ | 0.53 | $ | 0.60 | $ | (0.16 | ) | $ | – | $ | (0.16 | ) | $ | – | $ | 9.98 | 6.33 | % | $ | 6,060 | 3.35 | % | 3.35 | % | 1.64 | % | 0.68 | % | 113 | % | ||||||||||||||||||||||||||||||
2015 | 9.66 | 0.04 | (0.14 | ) | (0.10 | ) | (0.02 | ) | – | (0.02 | ) | – | 9.54 | (0.99 | ) | 6,102 | 3.14 | 3.14 | 1.67 | 0.44 | 94 | |||||||||||||||||||||||||||||||||||||||||||
2014 | 10.04 | 0.06 | (0.30 | ) | (0.24 | ) | (0.14 | ) | – | (0.14 | ) | – | 9.66 | (2.37 | ) | 6,410 | 3.51 | 3.51 | 1.69 | 0.82 | 91 | |||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||
Royce International Premier Fund–Investment Class d | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 9.82 | $ | 0.10 | $ | (0.19 | ) | $ | (0.09 | ) | $ | (0.28 | ) | $ | (0.01 | ) | $ | (0.29 | ) | $ | – | $ | 9.44 | (0.79 | )% | $ | 19,556 | 1.59 | % | 1.59 | % | 1.19 | % | 0.96 | % | 67 | % | |||||||||||||||||||||||||||
2015 | 8.71 | 0.16 | 1.27 | 1.43 | (0.32 | ) | – | (0.32 | ) | – | 9.82 | 16.42 | 3,623 | 2.80 | 2.80 | 1.38 | 1.72 | 67 | ||||||||||||||||||||||||||||||||||||||||||||||
2014 | 10.00 | 0.03 | (0.85 | ) | (0.82 | ) | (0.16 | ) | (0.31 | ) | (0.47 | ) | – | 8.71 | (8.16 | )1 | 3,481 | 3.17 | 2 | 3.17 | 2 | 1.44 | 2 | 1.00 | 2 | 62 | ||||||||||||||||||||||||||||||||||||||
100 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Financial Highlights
This table is presented to show selected data for a share outstanding throughout each period and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
Ratio of Expenses to Average Net Assets | Ratio of Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized and | Distributions | Distributions from | Investment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value, | Unrealized Gain (Loss) | Total from | from Net | Net Realized Gain on | Shareholder | Net Asset | Net Assets, | Prior to Fee | Income (Loss) to | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | on Investments and | Investment | Investment | Investments and | Total | Redemption | Value, End of | End of Period | Waivers and | Prior to Fee | Net of Fee | Average Net | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||
Period | Income (Loss) | Foreign Currency | Operations | Income | Foreign Currency | Distributions | Fees | Period | Total Return | (in thousands) | Balance Credits | Waivers | Waivers | Assets | Turnover Rate | |||||||||||||||||||||||||||||||||||||||||||||||||
Royce International Premier Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 11.64 | $ | 0.06 | $ | (0.19 | ) | $ | (0.13 | ) | $ | (0.26 | ) | $ | (0.01 | ) | $ | (0.27 | ) | $ | – | $ | 11.24 | (1.06 | )% | $ | 38,884 | 1.84 | % | 1.84 | % | 1.44 | % | 0.66 | % | 67 | % | |||||||||||||||||||||||||||
2015 | 10.28 | (0.00 | ) | 1.66 | 1.66 | (0.30 | ) | – | (0.30 | ) | – | 11.64 | 16.22 | 9,015 | 2.65 | 2.65 | 1.60 | 1.10 | 67 | |||||||||||||||||||||||||||||||||||||||||||||
2014 | 11.67 | 0.17 | (1.13 | ) | (0.96 | ) | (0.12 | ) | (0.31 | ) | (0.43 | ) | – | 10.28 | (8.22 | ) | 4,045 | 2.45 | 2.45 | 1.69 | 1.26 | 62 | ||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||
Royce International Premier Fund–Consultant Class e | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 11.59 | $ | 0.01 | $ | 0.85 | $ | 0.86 | $ | (0.17 | ) | $ | (0.01 | ) | $ | (0.18 | ) | $ | – | $ | 12.27 | 7.49 | %1 | $ | 5,086 | 2.70 | %2 | 2.70 | %2 | 2.19 | %2 | (0.04 | )%2 | 67 | % | |||||||||||||||||||||||||||||
Royce International Premier Fund–R Class e | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 8.64 | $ | (0.02 | ) | $ | 0.70 | $ | 0.68 | $ | (0.25 | ) | $ | (0.01 | ) | $ | (0.26 | ) | $ | – | $ | 9.06 | 7.96 | %1 | $ | 51 | 28.36 | %2 | 28.35 | %2 | 1.74 | %2 | 0.31 | %2 | 67 | % | ||||||||||||||||||||||||||||
Royce International Premier Fund–K Class e | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 8.53 | $ | 0.05 | $ | 0.64 | $ | 0.69 | $ | (0.26 | ) | $ | (0.01 | ) | $ | (0.27 | ) | $ | – | $ | 8.95 | 8.21 | %1 | $ | 23 | 64.22 | %2 | 64.21 | %2 | 1.49 | %2 | 0.61 | %2 | 67 | % | |||||||||||||||||||||||||||||
Royce International Small-Cap Fund–Investment Class d | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 7.55 | $ | (0.48 | ) | $ | 0.36 | $ | (0.12 | ) | $ | (0.38 | ) | $ | – | $ | (0.38 | ) | $ | – | $ | 7.05 | (1.47 | )% | $ | 980 | 6.37 | % | 6.37 | % | 1.19 | % | 0.73 | % | 111 | % | ||||||||||||||||||||||||||||
2015 | 7.91 | 0.17 | (0.30 | ) | (0.13 | ) | (0.23 | ) | (0.00 | ) | (0.23 | ) | – | 7.55 | (1.64 | ) | 326 | 4.17 | 4.17 | 1.38 | 1.06 | 116 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 10.00 | 0.14 | (0.91 | ) | (0.77 | ) | (0.26 | ) | (1.07 | ) | (1.33 | ) | 0.01 | 7.91 | (7.31 | )1 | 1,119 | 5.53 | 2 | 5.53 | 2 | 1.44 | 2 | 1.45 | 2 | 78 | ||||||||||||||||||||||||||||||||||||||
Royce International Small-Cap Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 9.43 | $ | 0.26 | $ | (0.43 | ) | $ | (0.17 | ) | $ | (0.32 | ) | $ | – | $ | (0.32 | ) | $ | – | $ | 8.94 | (1.72 | )% | $ | 4,050 | 2.37 | % | 2.37 | % | 1.44 | % | 0.75 | % | 111 | % | ||||||||||||||||||||||||||||
2015 | 9.80 | 0.17 | (0.34 | ) | (0.17 | ) | (0.20 | ) | (0.00 | ) | (0.20 | ) | – | 9.43 | (1.74 | ) | 17,392 | 2.10 | 2.10 | 1.63 | 1.24 | 116 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 11.99 | 0.21 | (1.11 | ) | (0.90 | ) | (0.22 | ) | (1.07 | ) | (1.29 | ) | – | 9.80 | (7.29 | ) | 29,610 | 1.99 | 1.99 | 1.69 | 1.20 | 78 | ||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||
Royce International Small-Cap Fund–Institutional Class f | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 7.76 | $ | 0.05 | $ | (0.17 | ) | $ | (0.12 | ) | $ | (0.38 | ) | $ | – | $ | (0.38 | ) | $ | – | $ | 7.26 | (1.42 | )% | $ | 2,226 | 2.77 | % | 2.77 | % | 1.19 | % | 0.88 | % | 111 | % | ||||||||||||||||||||||||||||
2015 | 8.12 | 0.12 | (0.25 | ) | (0.13 | ) | (0.23 | ) | (0.00 | ) | (0.23 | ) | – | 7.76 | (1.59 | ) | 2,053 | 2.35 | 2.35 | 1.37 | 1.40 | 116 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 10.00 | 0.17 | (0.72 | ) | (0.55 | ) | (0.26 | ) | (1.07 | ) | (1.33 | ) | – | 8.12 | (5.22 | )1 | 2,353 | 2.63 | 2 | 2.63 | 2 | 1.44 | 2 | 1.58 | 2 | 78 | ||||||||||||||||||||||||||||||||||||||
Royce Low-Priced Stock Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 7.77 | $ | 0.04 | $ | 1.24 | $ | 1.28 | $ | (0.06 | ) | $ | (0.73 | ) | $ | (0.79 | ) | $ | – | $ | 8.26 | 16.42 | % | $ | 22,852 | 1.31 | % | 1.31 | % | 1.24 | % | 0.39 | % | 34 | % | |||||||||||||||||||||||||||||
2015 | 9.46 | 0.00 | (0.97 | ) | (0.97 | ) | – | (0.72 | ) | (0.72 | ) | – | 7.77 | (10.21 | ) | 28,732 | 1.28 | 1.28 | 1.24 | 0.03 | 53 | |||||||||||||||||||||||||||||||||||||||||||
2014 | 13.60 | 0.06 | (0.58 | ) | (0.52 | ) | (0.01 | ) | (3.61 | ) | (3.62 | ) | – | 9.46 | (3.15 | ) | 50,371 | 1.25 | 1.25 | 1.24 | 0.46 | 29 | ||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Low-Priced Stock Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 7.75 | $ | 0.02 | $ | 1.23 | $ | 1.25 | $ | (0.04 | ) | $ | (0.73 | ) | $ | (0.77 | ) | $ | – | $ | 8.23 | 16.09 | % | $ | 281,873 | 1.52 | % | 1.52 | % | 1.49 | % | 0.14 | % | 34 | % | |||||||||||||||||||||||||||||
2015 | 9.46 | (0.02 | ) | (0.97 | ) | (0.99 | ) | – | (0.72 | ) | (0.72 | ) | – | 7.75 | (10.42 | ) | 316,475 | 1.49 | 1.49 | 1.47 | (0.20 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||
2014 | 13.62 | 0.03 | (0.58 | ) | (0.55 | ) | – | (3.61 | ) | (3.61 | ) | – | 9.46 | (3.37 | ) | 520,905 | 1.55 | 1.55 | 1.49 | 0.21 | 29 | |||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 101 |
Financial Highlights
This table is presented to show selected data for a share outstanding throughout each period and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
Ratio of Expenses to Average Net Assets | Ratio of Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized and | Distributions | Distributions from | Investment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value, | Unrealized Gain (Loss) | Total from | from Net | Net Realized Gain on | Shareholder | Net Asset | Net Assets, | Prior to Fee | Income (Loss) to | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | on Investments and | Investment | Investment | Investments and | Total | Redemption | Value, End of | End of Period | Waivers and | Prior to Fee | Net of Fee | Average Net | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||
Period | Income (Loss) | Foreign Currency | Operations | Income | Foreign Currency | Distributions | Fees | Period | Total Return | (in thousands) | Balance Credits | Waivers | Waivers | Assets | Turnover Rate | |||||||||||||||||||||||||||||||||||||||||||||||||
Royce Low-Priced Stock Fund–Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 7.78 | $ | 0.06 | $ | 1.23 | $ | 1.29 | $ | (0.06 | ) | $ | (0.73 | ) | $ | (0.79 | ) | $ | – | $ | 8.28 | 16.50 | % | $ | 12,336 | 1.21 | % | 1.21 | % | 1.21 | % | 0.41 | % | 34 | % | |||||||||||||||||||||||||||||
2015 | 9.46 | 0.01 | (0.97 | ) | (0.96 | ) | (0.00 | ) | (0.72 | ) | (0.72 | ) | – | 7.78 | (10.05 | ) | 39,004 | 1.11 | 1.11 | 1.11 | 0.14 | 53 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 13.61 | 0.08 | (0.58 | ) | (0.50 | ) | (0.04 | ) | (3.61 | ) | (3.65 | ) | – | 9.46 | (3.01 | ) | 101,473 | 1.16 | 1.16 | 1.16 | 0.47 | 29 | ||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Low-Priced Stock Fund–R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 7.38 | $ | (0.01 | ) | $ | 1.18 | $ | 1.17 | $ | (0.01 | ) | $ | (0.73 | ) | $ | (0.74 | ) | $ | – | $ | 7.81 | 15.83 | % | $ | 1,036 | 2.82 | % | 2.82 | % | 1.84 | % | (0.21 | )% | 34 | % | ||||||||||||||||||||||||||||
2015 | 9.08 | (0.05 | ) | (0.93 | ) | (0.98 | ) | – | (0.72 | ) | (0.72 | ) | – | 7.38 | (10.74 | ) | 1,132 | 2.78 | 2.78 | 1.84 | (0.58 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||
2014 | 13.27 | (0.02 | ) | (0.56 | ) | (0.58 | ) | – | (3.61 | ) | (3.61 | ) | – | 9.08 | (3.72 | ) | 1,892 | 2.21 | 2.21 | 1.84 | (0.15 | ) | 29 | |||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Low-Priced Stock Fund–K Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 1.92 | $ | 0.01 | $ | 0.30 | $ | 0.31 | $ | (0.06 | ) | $ | (0.73 | ) | $ | (0.79 | ) | $ | – | $ | 1.44 | 16.22 | % | $ | 1,093 | 2.87 | % | 2.87 | % | 1.59 | % | 0.04 | % | 34 | % | |||||||||||||||||||||||||||||
2015 | 2.95 | (0.01 | ) | (0.30 | ) | (0.31 | ) | – | (0.72 | ) | (0.72 | ) | – | 1.92 | (10.36 | ) | 1,503 | 2.49 | 2.49 | 1.59 | (0.32 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||
2014 | 6.89 | 0.01 | (0.34 | ) | (0.33 | ) | – | (3.61 | ) | (3.61 | ) | – | 2.95 | (3.55 | ) | 2,011 | 2.33 | 2.33 | 1.59 | 0.11 | 29 | |||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Micro-Cap Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 11.09 | $ | 0.01 | $ | 2.18 | $ | 2.19 | $ | (0.06 | ) | $ | (1.30 | ) | $ | (1.36 | ) | $ | – | $ | 11.92 | 19.74 | % | $ | 192,731 | 1.48 | % | 1.48 | % | 1.48 | % | 0.03 | % | 38 | % | |||||||||||||||||||||||||||||
2015 | 14.47 | 0.02 | (1.96 | ) | (1.94 | ) | – | (1.44 | ) | (1.44 | ) | – | 11.09 | (13.32 | ) | 219,272 | 1.51 | 1.51 | 1.51 | 0.15 | 41 | |||||||||||||||||||||||||||||||||||||||||||
2014 | 16.68 | (0.08 | ) | (0.65 | ) | (0.73 | ) | – | (1.48 | ) | (1.48 | ) | – | 14.47 | (4.13 | ) | 414,120 | 1.52 | 1.52 | 1.52 | (0.49 | ) | 18 | |||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Micro-Cap Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 10.90 | $ | (0.01 | ) | $ | 2.15 | $ | 2.14 | $ | (0.05 | ) | $ | (1.30 | ) | $ | (1.35 | ) | $ | – | $ | 11.69 | 19.59 | % | $ | 17,343 | 1.83 | % | 1.83 | % | 1.61 | % | (0.11 | )% | 38 | % | ||||||||||||||||||||||||||||
2015 | 14.26 | 0.00 | (1.92 | ) | (1.92 | ) | – | (1.44 | ) | (1.44 | ) | – | 10.90 | (13.37 | ) | 20,538 | 1.80 | 1.80 | 1.63 | 0.01 | 41 | |||||||||||||||||||||||||||||||||||||||||||
2014 | 16.48 | (0.10 | ) | (0.65 | ) | (0.75 | ) | – | (1.48 | ) | (1.48 | ) | 0.01 | 14.26 | (4.24 | ) | 38,645 | 1.77 | 1.77 | 1.66 | (0.63 | ) | 18 | |||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||
Royce Micro-Cap Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 9.04 | $ | (0.09 | ) | $ | 1.76 | $ | 1.67 | $ | – | $ | (1.30 | ) | $ | (1.30 | ) | $ | – | $ | 9.41 | 18.48 | % | $ | 33,622 | 2.53 | % | 2.53 | % | 2.53 | % | (1.02 | )% | 38 | % | |||||||||||||||||||||||||||||
2015 | 12.23 | (0.10 | ) | (1.65 | ) | (1.75 | ) | – | (1.44 | ) | (1.44 | ) | – | 9.04 | (14.21 | ) | 41,024 | 2.54 | 2.54 | 2.54 | (0.90 | ) | 41 | |||||||||||||||||||||||||||||||||||||||||
2014 | 14.48 | (0.20 | ) | (0.57 | ) | (0.77 | ) | – | (1.48 | ) | (1.48 | ) | – | 12.23 | (5.03 | ) | 75,868 | 2.48 | 2.48 | 2.48 | (1.45 | ) | 18 | |||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||
102 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Financial Highlights
This table is presented to show selected data for a share outstanding throughout each period and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
Ratio of Expenses to Average Net Assets | Ratio of Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized and | Distributions | Distributions from | Investment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value, | Unrealized Gain (Loss) | Total from | from Net | Net Realized Gain on | Shareholder | Net Asset | Net Assets, | Prior to Fee | Income (Loss) to | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | on Investments and | Investment | Investment | Investments and | Total | Redemption | Value, End of | End of Period | Waivers and | Prior to Fee | Net of Fee | Average Net | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||
Period | Income (Loss) | Foreign Currency | Operations | Income | Foreign Currency | Distributions | Fees | Period | Total Return | (in thousands) | Balance Credits | Waivers | Waivers | Assets | Turnover Rate | |||||||||||||||||||||||||||||||||||||||||||||||||
Royce Micro-Cap Opportunity Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 13.88 | $ | (0.08 | ) | $ | 3.39 | $ | 3.31 | $ | – | $ | – | $ | – | $ | – | $ | 17.19 | 23.85 | % | $ | 45,135 | 1.30 | % | 1.30 | % | 1.24 | % | (0.55 | )% | 83 | % | |||||||||||||||||||||||||||||||
2015 | 16.52 | (0.09 | ) | (2.55 | ) | (2.64 | ) | – | (0.00 | ) | (0.00 | ) | – | 13.88 | (15.98 | ) | 34,437 | 1.39 | 1.39 | 1.25 | (0.58 | ) | 105 | |||||||||||||||||||||||||||||||||||||||||
2014 | 17.93 | (0.11 | ) | (0.81 | ) | (0.92 | ) | – | (0.51 | ) | (0.51 | ) | 0.02 | 16.52 | (4.97 | ) | 18,221 | 1.56 | 1.56 | 1.28 | (0.60 | ) | 131 | |||||||||||||||||||||||||||||||||||||||||
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 | 2 | 0.29 | 2 | 0.25 | 2 | 0.64 | 2 | 196 | |||||||||||||||||||||||||||||||||||||||||
Royce Micro-Cap Opportunity Fund–Service Class a | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 7.01 | $ | (0.06 | ) | $ | 1.71 | $ | 1.65 | $ | – | $ | – | $ | – | $ | – | $ | 8.66 | 23.54 | % | $ | 995 | 3.37 | % | 3.37 | % | 1.49 | % | (0.81 | )% | 83 | % | |||||||||||||||||||||||||||||||
2015 | 8.37 | (0.07 | ) | (1.29 | ) | (1.36 | ) | – | (0.00 | ) | (0.00 | ) | – | 7.01 | (16.24 | ) | 1,212 | 3.22 | 3.22 | 1.51 | (0.86 | ) | 105 | |||||||||||||||||||||||||||||||||||||||||
2014 | 10.00 | (0.04 | ) | (1.11 | ) | (1.15 | ) | – | (0.51 | ) | (0.51 | ) | 0.03 | 8.37 | (11.11 | )1 | 939 | 10.50 | 2 | 10.50 | 2 | 1.53 | 2 | (0.65 | )2 | 131 | ||||||||||||||||||||||||||||||||||||||
Royce Opportunity Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 10.57 | $ | (0.02 | ) | $ | 3.19 | $ | 3.17 | $ | – | $ | (0.89 | ) | $ | (0.89 | ) | $ | – | $ | 12.85 | 29.86 | % | $ | 751,184 | 1.19 | % | 1.19 | % | 1.19 | % | (0.18 | )% | 26 | % | |||||||||||||||||||||||||||||
2015 | 13.46 | (0.03 | ) | (1.80 | ) | (1.83 | ) | – | (1.06 | ) | (1.06 | ) | – | 10.57 | (13.57 | ) | 746,052 | 1.17 | 1.17 | 1.17 | (0.27 | ) | 27 | |||||||||||||||||||||||||||||||||||||||||
2014 | 15.54 | (0.05 | ) | (0.09 | ) | (0.14 | ) | – | (1.94 | ) | (1.94 | ) | – | 13.46 | (0.48 | ) | 1,284,044 | 1.14 | 1.14 | 1.14 | (0.30 | ) | 36 | |||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||
Royce Opportunity Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 9.95 | $ | (0.05 | ) | $ | 3.01 | $ | 2.96 | $ | – | $ | (0.89 | ) | $ | (0.89 | ) | $ | – | $ | 12.02 | 29.61 | % | $ | 73,517 | 1.53 | % | 1.53 | % | 1.49 | % | (0.48 | )% | 26 | % | |||||||||||||||||||||||||||||
2015 | 12.80 | (0.07 | ) | (1.72 | ) | (1.79 | ) | – | (1.06 | ) | (1.06 | ) | – | 9.95 | (13.96 | ) | 100,918 | 1.49 | 1.49 | 1.49 | (0.59 | ) | 27 | |||||||||||||||||||||||||||||||||||||||||
2014 | 14.92 | (0.09 | ) | (0.09 | ) | (0.18 | ) | – | (1.94 | ) | (1.94 | ) | – | 12.80 | (0.74 | ) | 155,085 | 1.47 | 1.47 | 1.47 | (0.64 | ) | 36 | |||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||
Royce Opportunity Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 9.01 | $ | (0.12 | ) | $ | 2.71 | $ | 2.59 | $ | – | $ | (0.89 | ) | $ | (0.89 | ) | $ | – | $ | 10.71 | 28.59 | % | $ | 21,116 | 2.28 | % | 2.28 | % | 2.28 | % | (1.27 | )% | 26 | % | |||||||||||||||||||||||||||||
2015 | 11.79 | (0.15 | ) | (1.57 | ) | (1.72 | ) | – | (1.06 | ) | (1.06 | ) | – | 9.01 | (14.56 | ) | 19,464 | 2.26 | 2.26 | 2.26 | (1.34 | ) | 27 | |||||||||||||||||||||||||||||||||||||||||
2014 | 14.02 | (0.19 | ) | (0.10 | ) | (0.29 | ) | – | (1.94 | ) | (1.94 | ) | – | 11.79 | (1.61 | ) | 20,518 | 2.24 | 2.24 | 2.24 | (1.40 | ) | 36 | |||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||
Royce Opportunity Fund–Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 10.74 | $ | (0.01 | ) | $ | 3.24 | $ | 3.23 | $ | – | $ | (0.89 | ) | $ | (0.89 | ) | $ | – | $ | 13.08 | 29.94 | % | $ | 583,975 | 1.07 | % | 1.07 | % | 1.07 | % | (0.06 | )% | 26 | % | |||||||||||||||||||||||||||||
2015 | 13.64 | (0.02 | ) | (1.82 | ) | (1.84 | ) | – | (1.06 | ) | (1.06 | ) | – | 10.74 | (13.46 | ) | 600,945 | 1.05 | 1.05 | 1.05 | (0.15 | ) | 27 | |||||||||||||||||||||||||||||||||||||||||
2014 | 15.71 | (0.03 | ) | (0.10 | ) | (0.13 | ) | – | (1.94 | ) | (1.94 | ) | – | 13.64 | (0.41 | ) | 799,131 | 1.03 | 1.03 | 1.03 | (0.20 | ) | 36 | |||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 103 |
Financial Highlights
This table is presented to show selected data for a share outstanding throughout each period and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
Ratio of Expenses to Average Net Assets | Ratio of Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized and | Distributions | Distributions from | Investment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value, | Unrealized Gain (Loss) | Total from | from Net | Net Realized Gain on | Shareholder | Net Asset | Net Assets, | Prior to Fee | Income (Loss) to | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | on Investments and | Investment | Investment | Investments and | Total | Redemption | Value, End of | End of Period | Waivers and | Prior to Fee | Net of Fee | Average Net | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||
Period | Income (Loss) | Foreign Currency | Operations | Income | Foreign Currency | Distributions | Fees | Period | Total Return | (in thousands) | Balance Credits | Waivers | Waivers | Assets | Turnover Rate | |||||||||||||||||||||||||||||||||||||||||||||||||
Royce Opportunity Fund–R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 9.72 | $ | (0.08 | ) | $ | 2.92 | $ | 2.84 | $ | – | $ | (0.89 | ) | $ | (0.89 | ) | $ | – | $ | 11.67 | 29.08 | % | $ | 38,902 | 1.82 | % | 1.82 | % | 1.82 | % | (0.81 | )% | 26 | % | |||||||||||||||||||||||||||||
2015 | 12.56 | (0.11 | ) | (1.67 | ) | (1.78 | ) | – | (1.06 | ) | (1.06 | ) | – | 9.72 | (14.15 | ) | 32,599 | 1.82 | 1.82 | 1.82 | (0.90 | ) | 27 | |||||||||||||||||||||||||||||||||||||||||
2014 | 14.73 | (0.13 | ) | (0.10 | ) | (0.23 | ) | – | (1.94 | ) | (1.94 | ) | – | 12.56 | (1.12 | ) | 33,699 | 1.78 | 1.78 | 1.78 | (0.93 | ) | 36 | |||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||
Royce Opportunity Fund–K Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 8.88 | $ | (0.07 | ) | $ | 2.68 | $ | 2.61 | $ | – | $ | (0.89 | ) | $ | (0.89 | ) | $ | – | $ | 10.60 | 29.24 | % | $ | 6,698 | 1.75 | % | 1.75 | % | 1.75 | % | (0.74 | )% | 26 | % | |||||||||||||||||||||||||||||
2015 | 11.57 | (0.08 | ) | (1.55 | ) | (1.63 | ) | – | (1.06 | ) | (1.06 | ) | – | 8.88 | (14.06 | ) | 9,706 | 1.62 | 1.62 | 1.62 | (0.73 | ) | 27 | |||||||||||||||||||||||||||||||||||||||||
2014 | 13.70 | (0.10 | ) | (0.09 | ) | (0.19 | ) | – | (1.94 | ) | (1.94 | ) | – | 11.57 | (0.90 | ) | 22,892 | 1.59 | 1.59 | 1.59 | (0.75 | ) | 36 | |||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 9.33 | $ | 0.07 | $ | 2.41 | $ | 2.48 | $ | (0.04 | ) | $ | (0.75 | ) | $ | (0.79 | ) | $ | – | $ | 11.02 | 26.47 | % | $ | 1,671,848 | 0.92 | % | 0.92 | % | 0.92 | % | 0.60 | % | 18 | % | |||||||||||||||||||||||||||||
2015 | 13.00 | 0.09 | (1.58 | ) | (1.49 | ) | (0.10 | ) | (2.08 | ) | (2.18 | ) | – | 9.33 | (11.43 | ) | 1,925,419 | 0.92 | 0.92 | 0.92 | 0.58 | 21 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 14.73 | 0.06 | (0.21 | ) | (0.15 | ) | (0.04 | ) | (1.54 | ) | (1.58 | ) | – | 13.00 | (0.70 | ) | 3,869,579 | 0.91 | 0.91 | 0.91 | 0.35 | 21 | ||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 9.35 | $ | 0.03 | $ | 2.41 | $ | 2.44 | $ | (0.01 | ) | $ | (0.75 | ) | $ | (0.76 | ) | $ | – | $ | 11.03 | 25.99 | % | $ | 100,598 | 1.26 | % | 1.26 | % | 1.26 | % | 0.27 | % | 18 | % | |||||||||||||||||||||||||||||
2015 | 12.96 | 0.05 | (1.56 | ) | (1.51 | ) | (0.02 | ) | (2.08 | ) | (2.10 | ) | – | 9.35 | (11.57 | ) | 102,341 | 1.23 | 1.23 | 1.23 | 0.29 | 21 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 14.69 | 0.00 | (0.19 | ) | (0.19 | ) | – | (1.54 | ) | (1.54 | ) | – | 12.96 | (1.04 | ) | 333,548 | 1.23 | 1.23 | 1.23 | 0.03 | 21 | |||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 7.70 | $ | (0.03 | ) | $ | 1.98 | $ | 1.95 | $ | – | $ | (0.75 | ) | $ | (0.75 | ) | $ | – | $ | 8.90 | 25.20 | % | $ | 402,114 | 1.94 | % | 1.94 | % | 1.94 | % | (0.42 | )% | 18 | % | |||||||||||||||||||||||||||||
2015 | 11.16 | (0.05 | ) | (1.33 | ) | (1.38 | ) | – | (2.08 | ) | (2.08 | ) | – | 7.70 | (12.31 | ) | 416,862 | 1.94 | 1.94 | 1.94 | (0.44 | ) | 21 | |||||||||||||||||||||||||||||||||||||||||
2014 | 12.96 | (0.08 | ) | (0.18 | ) | (0.26 | ) | – | (1.54 | ) | (1.54 | ) | – | 11.16 | (1.72 | ) | 676,347 | 1.91 | 1.91 | 1.91 | (0.64 | ) | 21 | |||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund–Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 9.34 | $ | 0.09 | $ | 2.41 | $ | 2.50 | $ | (0.05 | ) | $ | (0.75 | ) | $ | (0.80 | ) | $ | – | $ | 11.04 | 26.65 | % | $ | 245,009 | 0.83 | % | 0.83 | % | 0.83 | % | 0.63 | % | 18 | % | |||||||||||||||||||||||||||||
2015 | 13.02 | 0.11 | (1.60 | ) | (1.49 | ) | (0.11 | ) | (2.08 | ) | (2.19 | ) | – | 9.34 | (11.34 | ) | 498,374 | 0.81 | 0.81 | 0.81 | 0.68 | 21 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 14.75 | 0.07 | (0.20 | ) | (0.13 | ) | (0.06 | ) | (1.54 | ) | (1.60 | ) | – | 13.02 | (0.58 | ) | 802,517 | 0.79 | 0.79 | 0.79 | 0.48 | 21 | ||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
104 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Financial Highlights
This table is presented to show selected data for a share outstanding throughout each period and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
Ratio of Expenses to Average Net Assets | Ratio of Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized and | Distributions | Distributions from | Investment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value, | Unrealized Gain (Loss) | Total from | from Net | Net Realized Gain on | Shareholder | Net Asset | Net Assets, | Prior to Fee | Income (Loss) to | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | on Investments and | Investment | Investment | Investments and | Total | Redemption | Value, End of | End of Period | Waivers and | Prior to Fee | Net of Fee | Average Net | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||
Period | Income (Loss) | Foreign Currency | Operations | Income | Foreign Currency | Distributions | Fees | Period | Total Return | (in thousands) | Balance Credits | Waivers | Waivers | Assets | Turnover Rate | |||||||||||||||||||||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund–R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 8.90 | $ | (0.01 | ) | $ | 2.30 | $ | 2.29 | $ | – | $ | (0.75 | ) | $ | (0.75 | ) | $ | – | $ | 10.44 | 25.62 | % | $ | 17,059 | 1.63 | % | 1.63 | % | 1.63 | % | (0.11 | )% | 18 | % | |||||||||||||||||||||||||||||
2015 | 12.50 | (0.02 | ) | (1.50 | ) | (1.52 | ) | – | (2.08 | ) | (2.08 | ) | – | 8.90 | (12.10 | ) | 18,675 | 1.65 | 1.65 | 1.65 | (0.15 | ) | 21 | |||||||||||||||||||||||||||||||||||||||||
2014 | 14.26 | (0.03 | ) | (0.19 | ) | (0.22 | ) | – | (1.54 | ) | (1.54 | ) | – | 12.50 | (1.28 | ) | 36,622 | 1.48 | 1.48 | 1.48 | (0.21 | ) | 21 | |||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund–K Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 7.86 | $ | (0.02 | ) | $ | 2.02 | $ | 2.00 | $ | – | $ | (0.75 | ) | $ | (0.75 | ) | $ | – | $ | 9.11 | 25.32 | % | $ | 3,200 | 1.81 | % | 1.81 | % | 1.81 | % | (0.28 | )% | 18 | % | |||||||||||||||||||||||||||||
2015 | 11.30 | (0.00 | ) | (1.36 | ) | (1.36 | ) | – | (2.08 | ) | (2.08 | ) | – | 7.86 | (11.95 | ) | 4,140 | 1.51 | 1.51 | 1.51 | (0.01 | ) | 21 | |||||||||||||||||||||||||||||||||||||||||
2014 | 13.04 | (0.02 | ) | (0.18 | ) | (0.20 | ) | – | (1.54 | ) | (1.54 | ) | – | 11.30 | (1.24 | ) | 10,707 | 1.42 | 1.42 | 1.42 | (0.15 | ) | 21 | |||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Premier Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 14.28 | $ | 0.06 | $ | 3.25 | $ | 3.31 | $ | (0.04 | ) | $ | (2.04 | ) | $ | (2.08 | ) | $ | – | $ | 15.51 | 23.00 | % | $ | 1,768,580 | 1.16 | % | 1.16 | % | 1.16 | % | 0.35 | % | 15 | % | |||||||||||||||||||||||||||||
2015 | 19.72 | 0.13 | (2.11 | ) | (1.98 | ) | (0.13 | ) | (3.33 | ) | (3.46 | ) | – | 14.28 | (9.90 | ) | 2,015,905 | 1.13 | 1.13 | 1.13 | 0.49 | 13 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 22.11 | 0.08 | (0.32 | ) | (0.24 | ) | (0.08 | ) | (2.07 | ) | (2.15 | ) | – | 19.72 | (0.86 | ) | 4,097,961 | 1.10 | 1.10 | 1.10 | 0.34 | 9 | ||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Premier Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 13.98 | $ | 0.00 | $ | 3.19 | $ | 3.19 | $ | – | $ | (2.04 | ) | $ | (2.04 | ) | $ | – | $ | 15.13 | 22.63 | % | $ | 46,550 | 1.50 | % | 1.50 | % | 1.49 | % | 0.02 | % | 15 | % | ||||||||||||||||||||||||||||||
2015 | 19.33 | 0.06 | (2.04 | ) | (1.98 | ) | (0.04 | ) | (3.33 | ) | (3.37 | ) | – | 13.98 | (10.13 | ) | 61,969 | 1.44 | 1.43 | 1.43 | 0.23 | 13 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 21.70 | 0.01 | (0.31 | ) | (0.30 | ) | – | (2.07 | ) | (2.07 | ) | – | 19.33 | (1.16 | ) | 172,810 | 1.38 | 1.38 | 1.38 | 0.05 | 9 | |||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Premier Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 11.89 | $ | (0.09 | ) | $ | 2.70 | $ | 2.61 | $ | – | $ | (2.04 | ) | $ | (2.04 | ) | $ | – | $ | 12.46 | 21.72 | % | $ | 31,353 | 2.22 | % | 2.22 | % | 2.22 | % | (0.72 | )% | 15 | % | |||||||||||||||||||||||||||||
2015 | 17.09 | (0.09 | ) | (1.78 | ) | (1.87 | ) | – | (3.33 | ) | (3.33 | ) | – | 11.89 | (10.80 | ) | 32,982 | 2.17 | 2.17 | 2.17 | (0.55 | ) | 13 | |||||||||||||||||||||||||||||||||||||||||
2014 | 19.58 | (0.13 | ) | (0.29 | ) | (0.42 | ) | – | (2.07 | ) | (2.07 | ) | – | 17.09 | (1.92 | ) | 56,884 | 2.10 | 2.10 | 2.10 | (0.66 | ) | 9 | |||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Premier Fund–Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 14.44 | $ | 0.08 | $ | 3.30 | $ | 3.38 | $ | (0.06 | ) | $ | (2.04 | ) | $ | (2.10 | ) | $ | – | $ | 15.72 | 23.20 | % | $ | 250,826 | 1.07 | % | 1.07 | % | 1.07 | % | 0.44 | % | 15 | % | |||||||||||||||||||||||||||||
2015 | 19.91 | 0.16 | (2.14 | ) | (1.98 | ) | (0.16 | ) | (3.33 | ) | (3.49 | ) | – | 14.44 | (9.82 | ) | 294,477 | 1.02 | 1.02 | 1.02 | 0.60 | 13 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 22.31 | 0.12 | (0.34 | ) | (0.22 | ) | (0.11 | ) | (2.07 | ) | (2.18 | ) | – | 19.91 | (0.79 | ) | 594,463 | 0.98 | 0.98 | 0.98 | 0.45 | 9 | ||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 105 |
Financial Highlights
This table is presented to show selected data for a share outstanding throughout each period and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
Ratio of Expenses to Average Net Assets | Ratio of Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized and | Distributions | Distributions from | Investment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value, | Unrealized Gain (Loss) | Total from | from Net | Net Realized Gain on | Shareholder | Net Asset | Net Assets, | Prior to Fee | Income (Loss) to | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | on Investments and | Investment | Investment | Investments and | Total | Redemption | Value, End of | End of Period | Waivers and | Prior to Fee | Net of Fee | Average Net | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||
Period | Income (Loss) | Foreign Currency | Operations | Income | Foreign Currency | Distributions | Fees | Period | Total Return | (in thousands) | Balance Credits | Waivers | Waivers | Assets | Turnover Rate | |||||||||||||||||||||||||||||||||||||||||||||||||
Royce Premier Fund–W Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 14.32 | $ | 0.06 | $ | 3.27 | $ | 3.33 | $ | (0.04 | ) | $ | (2.04 | ) | $ | (2.08 | ) | $ | – | $ | 15.57 | 23.06 | % | $ | 147,937 | 1.17 | % | 1.17 | % | 1.17 | % | 0.34 | % | 15 | % | |||||||||||||||||||||||||||||
2015 | 19.76 | 0.14 | (2.12 | ) | (1.98 | ) | (0.13 | ) | (3.33 | ) | (3.46 | ) | – | 14.32 | (9.88 | ) | 192,785 | 1.12 | 1.12 | 1.12 | 0.51 | 13 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 22.16 | 0.09 | (0.33 | ) | (0.24 | ) | (0.09 | ) | (2.07 | ) | (2.16 | ) | – | 19.76 | (0.89 | ) | 446,380 | 1.07 | 1.07 | 1.07 | 0.36 | 9 | ||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Premier Fund–R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 13.49 | $ | (0.05 | ) | $ | 3.07 | $ | 3.02 | $ | – | $ | (2.04 | ) | $ | (2.04 | ) | $ | – | $ | 14.47 | 22.18 | % | $ | 13,889 | 1.84 | % | 1.84 | % | 1.84 | % | (0.33 | )% | 15 | % | |||||||||||||||||||||||||||||
2015 | 18.82 | (0.03 | ) | (1.97 | ) | (2.00 | ) | – | (3.33 | ) | (3.33 | ) | – | 13.49 | (10.50 | ) | 16,129 | 1.78 | 1.78 | 1.78 | (0.16 | ) | 13 | |||||||||||||||||||||||||||||||||||||||||
2014 | 21.25 | (0.06 | ) | (0.30 | ) | (0.36 | ) | – | (2.07 | ) | (2.07 | ) | – | 18.82 | (1.48 | ) | 27,355 | 1.71 | 1.71 | 1.71 | (0.28 | ) | 9 | |||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Leaders Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 6.28 | $ | 0.05 | $ | 1.58 | $ | 1.63 | $ | (0.06 | ) | $ | (0.73 | ) | $ | (0.79 | ) | $ | – | $ | 7.12 | 25.84 | % | $ | 48,128 | 1.23 | % | 1.23 | % | 1.23 | % | 0.62 | % | 65 | % | |||||||||||||||||||||||||||||
2015 | 8.74 | 0.03 | (1.09 | ) | (1.06 | ) | (0.04 | ) | (1.36 | ) | (1.40 | ) | – | 6.28 | (12.21 | ) | 50,410 | 1.24 | 1.24 | 1.24 | 0.40 | 64 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 10.11 | (0.00 | ) | (0.32 | ) | (0.32 | ) | – | (1.05 | ) | (1.05 | ) | – | 8.74 | (2.95 | ) | 68,898 | 1.22 | 1.22 | 1.22 | (0.03 | ) | 39 | |||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Leaders Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 6.21 | $ | 0.03 | $ | 1.56 | $ | 1.59 | $ | (0.04 | ) | $ | (0.73 | ) | $ | (0.77 | ) | $ | – | $ | 7.03 | 25.51 | % | $ | 50,523 | 1.58 | % | 1.58 | % | 1.49 | % | 0.37 | % | 65 | % | |||||||||||||||||||||||||||||
2015 | 8.65 | 0.02 | (1.09 | ) | (1.07 | ) | (0.01 | ) | (1.36 | ) | (1.37 | ) | – | 6.21 | (12.50 | ) | 57,729 | 1.54 | 1.54 | 1.49 | 0.18 | 64 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 10.05 | (0.04 | ) | (0.31 | ) | (0.35 | ) | – | (1.05 | ) | (1.05 | ) | – | 8.65 | (3.26 | ) | 149,736 | 1.52 | 1.52 | 1.50 | (0.39 | ) | 39 | |||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Leaders Fund–R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 8.36 | $ | (0.00 | ) | $ | 2.11 | $ | 2.11 | $ | (0.01 | ) | $ | (0.73 | ) | $ | (0.74 | ) | $ | – | $ | 9.73 | 25.18 | % | $ | 1,871 | 2.74 | % | 2.74 | % | 1.84 | % | (0.01 | )% | 65 | % | ||||||||||||||||||||||||||||
2015 | 11.14 | (0.02 | ) | (1.40 | ) | (1.42 | ) | – | (1.36 | ) | (1.36 | ) | – | 8.36 | (12.84 | ) | 1,681 | 2.75 | 2.75 | 1.84 | (0.22 | ) | 64 | |||||||||||||||||||||||||||||||||||||||||
2014 | 12.67 | (0.09 | ) | (0.39 | ) | (0.48 | ) | – | (1.05 | ) | (1.05 | ) | – | 11.14 | (3.61 | ) | 1,983 | 2.23 | 2.23 | 1.84 | (0.73 | ) | 39 | |||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Leaders Fund–K Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 8.56 | $ | 0.02 | $ | 2.15 | $ | 2.17 | $ | (0.03 | ) | $ | (0.73 | ) | $ | (0.76 | ) | $ | – | $ | 9.97 | 25.27 | % | $ | 502 | 5.99 | % | 5.99 | % | 1.59 | % | 0.21 | % | 65 | % | |||||||||||||||||||||||||||||
2015 | 11.34 | 0.01 | (1.43 | ) | (1.42 | ) | – | (1.36 | ) | (1.36 | ) | – | 8.56 | (12.60 | ) | 340 | 5.02 | 5.02 | 1.59 | 0.05 | 64 | |||||||||||||||||||||||||||||||||||||||||||
2014 | 12.84 | (0.07 | ) | (0.38 | ) | (0.45 | ) | – | (1.05 | ) | (1.05 | ) | – | 11.34 | (3.33 | ) | 672 | 2.98 | 2.98 | 1.59 | (0.53 | ) | 39 | |||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
106 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Financial Highlights
This table is presented to show selected data for a share outstanding throughout each period and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
Ratio of Expenses to Average Net Assets | Ratio of Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized and | Distributions | Distributions from | Investment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value, | Unrealized Gain (Loss) | Total from | from Net | Net Realized Gain on | Shareholder | Net Asset | Net Assets, | Prior to Fee | Income (Loss) to | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | on Investments and | Investment | Investment | Investments and | Total | Redemption | Value, End of | End of Period | Waivers and | Prior to Fee | Net of Fee | Average Net | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||
Period | Income (Loss) | Foreign Currency | Operations | Income | Foreign Currency | Distributions | Fees | Period | Total Return | (in thousands) | Balance Credits | Waivers | Waivers | Assets | Turnover Rate | |||||||||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Value Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 8.74 | $ | 0.08 | $ | 1.79 | $ | 1.87 | $ | (0.08 | ) | $ | (0.50 | ) | $ | (0.58 | ) | $ | – | $ | 10.03 | 21.37 | % | $ | 72,863 | 1.24 | % | 1.24 | % | 1.24 | % | 0.72 | % | 56 | % | |||||||||||||||||||||||||||||
2015 | 11.81 | 0.10 | (1.43 | ) | (1.33 | ) | (0.09 | ) | (1.65 | ) | (1.74 | ) | – | 8.74 | (11.25 | ) | 77,821 | 1.23 | 1.23 | 1.23 | 0.69 | 60 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 13.52 | 0.04 | (0.05 | ) | (0.01 | ) | (0.03 | ) | (1.67 | ) | (1.70 | ) | – | 11.81 | 0.27 | 140,163 | 1.18 | 1.18 | 1.18 | 0.32 | 38 | |||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Value Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 8.70 | $ | 0.05 | $ | 1.79 | $ | 1.84 | $ | (0.06 | ) | $ | (0.50 | ) | $ | (0.56 | ) | $ | – | $ | 9.98 | 21.06 | % | $ | 213,067 | 1.49 | % | 1.49 | % | 1.48 | % | 0.48 | % | 56 | % | |||||||||||||||||||||||||||||
2015 | 11.76 | 0.06 | (1.41 | ) | (1.35 | ) | (0.06 | ) | (1.65 | ) | (1.71 | ) | – | 8.70 | (11.51 | ) | 252,814 | 1.48 | 1.48 | 1.48 | 0.45 | 60 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 13.48 | 0.01 | (0.06 | ) | (0.05 | ) | – | (1.67 | ) | (1.67 | ) | – | 11.76 | (0.02 | ) | 477,999 | 1.45 | 1.45 | 1.45 | 0.04 | 38 | |||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Value Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 7.89 | $ | (0.03 | ) | $ | 1.62 | $ | 1.59 | $ | – | $ | (0.50 | ) | $ | (0.50 | ) | $ | – | $ | 8.98 | 20.10 | % | $ | 16,484 | 2.28 | % | 2.28 | % | 2.28 | % | (0.33 | )% | 56 | % | |||||||||||||||||||||||||||||
2015 | 10.87 | (0.04 | ) | (1.29 | ) | (1.33 | ) | – | (1.65 | ) | (1.65 | ) | – | 7.89 | (12.24 | ) | 18,404 | 2.27 | 2.27 | 2.27 | (0.36 | ) | 60 | |||||||||||||||||||||||||||||||||||||||||
2014 | 12.68 | (0.09 | ) | (0.05 | ) | (0.14 | ) | – | (1.67 | ) | (1.67 | ) | – | 10.87 | (0.74 | ) | 26,716 | 2.21 | 2.21 | 2.21 | (0.71 | ) | 38 | |||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Value Fund–Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 8.74 | $ | 0.10 | $ | 1.79 | $ | 1.89 | $ | (0.10 | ) | $ | (0.50 | ) | $ | (0.60 | ) | $ | – | $ | 10.03 | 21.54 | % | $ | 127,741 | 1.08 | % | 1.08 | % | 1.08 | % | 0.86 | % | 56 | % | |||||||||||||||||||||||||||||
2015 | 11.81 | 0.10 | (1.40 | ) | (1.30 | ) | (0.12 | ) | (1.65 | ) | (1.77 | ) | – | 8.74 | (11.05 | ) | 148,652 | 1.06 | 1.06 | 1.06 | 0.83 | 60 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 13.53 | 0.06 | (0.06 | ) | 0.00 | (0.05 | ) | (1.67 | ) | (1.72 | ) | – | 11.81 | 0.35 | 196,543 | 1.05 | 1.05 | 1.05 | 0.46 | 38 | ||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Value Fund–R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 8.42 | $ | 0.01 | $ | 1.73 | $ | 1.74 | $ | (0.03 | ) | $ | (0.50 | ) | $ | (0.53 | ) | $ | – | $ | 9.63 | 20.60 | % | $ | 18,059 | 1.85 | % | 1.85 | % | 1.85 | % | 0.11 | % | 56 | % | |||||||||||||||||||||||||||||
2015 | 11.43 | 0.01 | (1.35 | ) | (1.34 | ) | (0.02 | ) | (1.65 | ) | (1.67 | ) | – | 8.42 | (11.71 | ) | 19,200 | 1.83 | 1.83 | 1.83 | 0.09 | 60 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 13.19 | (0.03 | ) | (0.06 | ) | (0.09 | ) | – | (1.67 | ) | (1.67 | ) | – | 11.43 | (0.34 | ) | 31,043 | 1.77 | 1.77 | 1.77 | (0.26 | ) | 38 | |||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Value Fund–K Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 6.17 | $ | 0.00 | $ | 1.27 | $ | 1.27 | $ | (0.01 | ) | $ | (0.50 | ) | $ | (0.51 | ) | $ | – | $ | 6.93 | 20.52 | % | $ | 2,966 | 1.95 | % | 1.95 | % | 1.95 | % | (0.04 | )% | 56 | % | |||||||||||||||||||||||||||||
2015 | 8.90 | 0.02 | (1.06 | ) | (1.04 | ) | (0.04 | ) | (1.65 | ) | (1.69 | ) | – | 6.17 | (11.69 | ) | 6,026 | 1.80 | 1.80 | 1.80 | 0.11 | 60 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 10.65 | (0.02 | ) | (0.06 | ) | (0.08 | ) | – | (1.67 | ) | (1.67 | ) | – | 8.90 | (0.32 | ) | 9,363 | 1.67 | 1.67 | 1.67 | (0.18 | ) | 38 | |||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 107 |
Financial Highlights
This table is presented to show selected data for a share outstanding throughout each period and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
Ratio of Expenses to Average Net Assets | Ratio of Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized and | Distributions | Distributions from | Investment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value, | Unrealized Gain (Loss) | Total from | from Net | Net Realized Gain on | Shareholder | Net Asset | Net Assets, | Prior to Fee | Income (Loss) to | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | on Investments and | Investment | Investment | Investments and | Total | Redemption | Value, End of | End of Period | Waivers and | Prior to Fee | Net of Fee | Average Net | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||
Period | Income (Loss) | Foreign Currency | Operations | Income | Foreign Currency | Distributions | Fees | Period | Total Return | (in thousands) | Balance Credits | Waivers | Waivers | Assets | Turnover Rate | |||||||||||||||||||||||||||||||||||||||||||||||||
Royce Smaller-Companies Growth Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 11.36 | $ | (0.05 | ) | $ | 1.17 | $ | 1.12 | $ | – | $ | (1.26 | ) | $ | (1.26 | ) | $ | – | $ | 11.22 | 9.67 | % | $ | 98,962 | 1.15 | % | 1.15 | % | 1.15 | % | (0.41 | )% | 59 | % | |||||||||||||||||||||||||||||
2015 | 14.36 | (0.06 | ) | (0.19 | ) | (0.25 | ) | – | (2.75 | ) | (2.75 | ) | – | 11.36 | (1.59 | ) | 139,979 | 1.32 | 1.32 | 1.24 | (0.38 | ) | 45 | |||||||||||||||||||||||||||||||||||||||||
2014 | 17.03 | (0.07 | ) | 0.68 | 0.61 | – | (3.28 | ) | (3.28 | ) | – | 14.36 | 4.04 | 295,412 | 1.33 | 1.33 | 1.33 | (0.40 | ) | 52 | ||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||
Royce Smaller-Companies Growth Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 11.20 | $ | (0.08 | ) | $ | 1.15 | $ | 1.07 | $ | – | $ | (1.26 | ) | $ | (1.26 | ) | $ | – | $ | 11.01 | 9.37 | % | $ | 284,640 | 1.51 | % | 1.51 | % | 1.49 | % | (0.74 | )% | 59 | % | |||||||||||||||||||||||||||||
2015 | 14.23 | (0.08 | ) | (0.20 | ) | (0.28 | ) | – | (2.75 | ) | (2.75 | ) | – | 11.20 | (1.82 | ) | 408,744 | 1.47 | 1.47 | 1.45 | (0.58 | ) | 45 | |||||||||||||||||||||||||||||||||||||||||
2014 | 16.93 | (0.09 | ) | 0.67 | 0.58 | – | (3.28 | ) | (3.28 | ) | – | 14.23 | 3.89 | 572,899 | 1.44 | 1.44 | 1.42 | (0.51 | ) | 52 | ||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||
Royce Smaller-Companies Growth Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 10.01 | $ | (0.14 | ) | $ | 1.02 | $ | 0.88 | $ | – | $ | (1.26 | ) | $ | (1.26 | ) | $ | – | $ | 9.63 | 8.58 | % | $ | 10,593 | 2.35 | % | 2.35 | % | 2.24 | % | (1.50 | )% | 59 | % | |||||||||||||||||||||||||||||
2015 | 13.12 | (0.18 | ) | (0.18 | ) | (0.36 | ) | – | (2.75 | ) | (2.75 | ) | – | 10.01 | (2.61 | ) | 14,411 | 2.32 | 2.32 | 2.24 | (1.36 | ) | 45 | |||||||||||||||||||||||||||||||||||||||||
2014 | 15.99 | (0.22 | ) | 0.63 | 0.41 | – | (3.28 | ) | (3.28 | ) | – | 13.12 | 3.05 | 17,158 | 2.29 | 2.29 | 2.29 | (1.37 | ) | 52 | ||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||
Royce Smaller-Companies Growth Fund–Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 11.48 | $ | (0.05 | ) | $ | 1.18 | $ | 1.13 | $ | – | $ | (1.26 | ) | $ | (1.26 | ) | $ | – | $ | 11.35 | 9.66 | % | $ | 20,523 | 1.15 | % | 1.15 | % | 1.15 | % | (0.41 | )% | 59 | % | |||||||||||||||||||||||||||||
2015 | 14.46 | (0.03 | ) | (0.20 | ) | (0.23 | ) | – | (2.75 | ) | (2.75 | ) | – | 11.48 | (1.45 | ) | 39,763 | 1.10 | 1.10 | 1.10 | (0.22 | ) | 45 | |||||||||||||||||||||||||||||||||||||||||
2014 | 17.09 | (0.03 | ) | 0.68 | 0.65 | – | (3.28 | ) | (3.28 | ) | – | 14.46 | 4.26 | 38,718 | 1.06 | 1.06 | 1.06 | (0.16 | ) | 52 | ||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||||
Royce Smaller-Companies Growth Fund–R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 10.57 | $ | (0.11 | ) | $ | 1.08 | $ | 0.97 | $ | – | $ | (1.26 | ) | $ | (1.26 | ) | $ | – | $ | 10.28 | 8.97 | % | $ | 793 | 3.33 | % | 3.33 | % | 1.84 | % | (1.10 | )% | 59 | % | |||||||||||||||||||||||||||||
2015 | 13.64 | (0.14 | ) | (0.18 | ) | (0.32 | ) | – | (2.75 | ) | (2.75 | ) | – | 10.57 | (2.20 | ) | 886 | 2.99 | 2.99 | 1.84 | (0.97 | ) | 45 | |||||||||||||||||||||||||||||||||||||||||
2014 | 16.43 | (0.15 | ) | 0.64 | 0.49 | – | (3.28 | ) | (3.28 | ) | – | 13.64 | 3.45 | 1,360 | 2.35 | 2.35 | 1.84 | (0.93 | ) | 52 | ||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||
Royce Smaller-Companies Growth Fund–K Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 6.10 | $ | (0.05 | ) | $ | 0.64 | $ | 0.59 | $ | – | $ | (1.26 | ) | $ | (1.26 | ) | $ | – | $ | 5.43 | 9.33 | % | $ | 204 | 8.46 | % | 8.45 | % | 1.59 | % | (0.85 | )% | 59 | % | |||||||||||||||||||||||||||||
2015 | 9.05 | (0.07 | ) | (0.13 | ) | (0.20 | ) | – | (2.75 | ) | (2.75 | ) | – | 6.10 | (1.99 | ) | 307 | 5.44 | 5.44 | 1.59 | (0.72 | ) | 45 | |||||||||||||||||||||||||||||||||||||||||
2014 | 11.96 | (0.08 | ) | 0.45 | 0.37 | – | (3.28 | ) | (3.28 | ) | – | 9.05 | 3.75 | 497 | 3.63 | 3.63 | 1.59 | (0.67 | ) | 52 | ||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||
108 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Financial Highlights
This table is presented to show selected data for a share outstanding throughout each period and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
Ratio of Expenses to Average Net Assets | Ratio of Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized and | Distributions | Distributions from | Investment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value, | Unrealized Gain (Loss) | Total from | from Net | Net Realized Gain on | Shareholder | Net Asset | Net Assets, | Prior to Fee | Income (Loss) to | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | on Investments and | Investment | Investment | Investments and | Total | Redemption | Value, End of | End of Period | Waivers and | Prior to Fee | Net of Fee | Average Net | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||
Period | Income (Loss) | Foreign Currency | Operations | Income | Foreign Currency | Distributions | Fees | Period | Total Return | (in thousands) | Balance Credits | Waivers | Waivers | Assets | Turnover Rate | |||||||||||||||||||||||||||||||||||||||||||||||||
Royce Special Equity Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 17.94 | $ | 0.21 | $ | 5.57 | $ | 5.78 | $ | (0.21 | ) | $ | (1.49 | ) | $ | (1.70 | ) | $ | – | $ | 22.02 | 32.21 | % | $ | 1,225,095 | 1.17 | % | 1.17 | % | 1.17 | % | 0.99 | % | 29 | % | |||||||||||||||||||||||||||||
2015 | 22.86 | 0.22 | (3.04 | ) | (2.82 | ) | (0.24 | ) | (1.86 | ) | (2.10 | ) | – | 17.94 | (12.36 | ) | 1,098,106 | 1.15 | 1.15 | 1.15 | 0.80 | 15 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 25.02 | 0.13 | 0.09 | 0.22 | (0.12 | ) | (2.26 | ) | (2.38 | ) | – | 22.86 | 1.09 | 1,950,211 | 1.12 | 1.12 | 1.12 | 0.47 | 21 | |||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Special Equity Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 17.92 | $ | 0.16 | $ | 5.56 | $ | 5.72 | $ | (0.17 | ) | $ | (1.49 | ) | $ | (1.66 | ) | $ | – | $ | 21.98 | 31.92 | % | $ | 128,102 | 1.50 | % | 1.50 | % | 1.39 | % | 0.77 | % | 29 | % | |||||||||||||||||||||||||||||
2015 | 22.81 | 0.17 | (3.03 | ) | (2.86 | ) | (0.17 | ) | (1.86 | ) | (2.03 | ) | – | 17.92 | (12.55 | ) | 112,315 | 1.47 | 1.47 | 1.39 | 0.57 | 15 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 24.97 | 0.06 | 0.09 | 0.15 | (0.05 | ) | (2.26 | ) | (2.31 | ) | – | 22.81 | 0.80 | 233,791 | 1.44 | 1.44 | 1.39 | 0.20 | 21 | |||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Special Equity Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 16.57 | $ | (0.01 | ) | $ | 5.13 | $ | 5.12 | $ | (0.04 | ) | $ | (1.49 | ) | $ | (1.53 | ) | $ | – | $ | 20.16 | 30.91 | % | $ | 50,514 | 2.20 | % | 2.20 | % | 2.20 | % | (0.04 | )% | 29 | % | ||||||||||||||||||||||||||||
2015 | 21.27 | (0.05 | ) | (2.76 | ) | (2.81 | ) | (0.03 | ) | (1.86 | ) | (1.89 | ) | – | 16.57 | (13.23 | ) | 42,427 | 2.18 | 2.18 | 2.18 | (0.24 | ) | 15 | ||||||||||||||||||||||||||||||||||||||||
2014 | 23.57 | (0.13 | ) | 0.09 | (0.04 | ) | – | (2.26 | ) | (2.26 | ) | – | 21.27 | 0.04 | 63,981 | 2.14 | 2.14 | 2.14 | (0.56 | ) | 21 | |||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Special Equity Fund–Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 17.80 | $ | 0.23 | $ | 5.53 | $ | 5.76 | $ | (0.23 | ) | $ | (1.49 | ) | $ | (1.72 | ) | $ | – | $ | 21.84 | 32.35 | % | $ | 206,270 | 1.07 | % | 1.07 | % | 1.07 | % | 1.10 | % | 29 | % | |||||||||||||||||||||||||||||
2015 | 22.71 | 0.33 | (3.12 | ) | (2.79 | ) | (0.26 | ) | (1.86 | ) | (2.12 | ) | – | 17.80 | (12.27 | ) | 208,952 | 1.04 | 1.04 | 1.04 | 1.02 | 15 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 24.88 | 0.14 | 0.10 | 0.24 | (0.15 | ) | (2.26 | ) | (2.41 | ) | – | 22.71 | 1.17 | 639,723 | 1.02 | 1.02 | 1.02 | 0.56 | 21 | |||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Special Equity Multi-Cap Fund–Investment Class g | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 12.34 | $ | 0.17 | $ | 1.55 | $ | 1.72 | $ | (0.16 | ) | $ | – | $ | (0.16 | ) | $ | – | $ | 13.90 | 13.92 | % | $ | 34,858 | 1.02 | % | 1.02 | % | 0.97 | % | 1.15 | % | 50 | % | ||||||||||||||||||||||||||||||
2015 | 15.55 | 0.40 | (2.48 | ) | (2.08 | ) | (0.35 | ) | (0.78 | ) | (1.13 | ) | – | 12.34 | (13.40 | ) | 43,999 | 1.01 | 1.01 | 0.99 | 1.49 | 31 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 14.92 | 0.10 | 1.30 | 1.40 | (0.11 | ) | (0.66 | ) | (0.77 | ) | – | 15.55 | 9.53 | 123,545 | 0.97 | 0.97 | 0.96 | 0.95 | 39 | |||||||||||||||||||||||||||||||||||||||||||||
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 | 1 | 34,375 | 1.19 | 2 | 1.19 | 2 | 1.16 | 2 | 1.55 | 2 | 14 | ||||||||||||||||||||||||||||||||||||||||
Royce Special Equity Multi-Cap Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 12.38 | $ | 0.13 | $ | 1.57 | $ | 1.70 | $ | (0.13 | ) | $ | – | $ | (0.13 | ) | $ | – | $ | 13.95 | 13.69 | % | $ | 37,495 | 1.34 | % | 1.34 | % | 1.23 | % | 0.89 | % | 50 | % | ||||||||||||||||||||||||||||||
2015 | 15.60 | 0.26 | (2.39 | ) | (2.13 | ) | (0.31 | ) | (0.78 | ) | (1.09 | ) | – | 12.38 | (13.64 | ) | 47,630 | 1.29 | 1.29 | 1.23 | 1.21 | 31 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 14.96 | 0.10 | 1.27 | 1.37 | (0.07 | ) | (0.66 | ) | (0.73 | ) | – | 15.60 | 9.28 | 94,878 | 1.34 | 1.34 | 1.24 | 0.66 | 39 | |||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 109 |
Financial Highlights
This table is presented to show selected data for a share outstanding throughout each period and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
Ratio of Expenses to Average Net Assets | Ratio of Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized and | Distributions | Distributions from | Investment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value, | Unrealized Gain (Loss) | Total from | from Net | Net Realized Gain on | Shareholder | Net Asset | Net Assets, | Prior to Fee | Income (Loss) to | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | on Investments and | Investment | Investment | Investments and | Total | Redemption | Value, End of | End of Period | Waivers and | Prior to Fee | Net of Fee | Average Net | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||
Period | Income (Loss) | Foreign Currency | Operations | Income | Foreign Currency | Distributions | Fees | Period | Total Return | (in thousands) | Balance Credits | Waivers | Waivers | Assets | Turnover Rate | |||||||||||||||||||||||||||||||||||||||||||||||||
Royce Special Equity Multi-Cap Fund–Consultant Class f | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 8.15 | $ | 0.02 | $ | 1.03 | $ | 1.05 | $ | (0.08 | ) | $ | – | $ | (0.08 | ) | $ | – | $ | 9.12 | 12.89 | % | $ | 4,986 | 2.38 | % | 2.38 | % | 1.99 | % | 0.12 | % | 50 | % | ||||||||||||||||||||||||||||||
2015 | 10.72 | 0.09 | (1.63 | ) | (1.54 | ) | (0.25 | ) | (0.78 | ) | (1.03 | ) | – | 8.15 | (14.35 | ) | 6,825 | 2.19 | 2.19 | 1.99 | 0.50 | 31 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 10.00 | (0.04 | ) | 1.48 | 1.44 | (0.06 | ) | (0.66 | ) | (0.72 | ) | – | 10.72 | 14.57 | 1 | 9,223 | 2.54 | 2 | 2.54 | 2 | 1.99 | 2 | (0.05 | )2 | 39 | |||||||||||||||||||||||||||||||||||||||
Royce Special Equity Multi-Cap Fund–Institutional Class h | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 12.33 | $ | 0.16 | $ | 1.57 | $ | 1.73 | $ | (0.17 | ) | $ | – | $ | (0.17 | ) | $ | – | $ | 13.89 | 14.04 | % | $ | 37,339 | 0.99 | % | 0.99 | % | 0.89 | % | 1.22 | % | 50 | % | ||||||||||||||||||||||||||||||
2015 | 15.56 | 0.34 | (2.41 | ) | (2.07 | ) | (0.38 | ) | (0.78 | ) | (1.16 | ) | – | 12.33 | (13.32 | ) | 36,864 | 0.94 | 0.94 | 0.89 | 1.56 | 31 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 14.92 | 0.12 | 1.30 | 1.42 | (0.12 | ) | (0.66 | ) | (0.78 | ) | – | 15.56 | 9.64 | 75,941 | 0.93 | 0.93 | 0.89 | 1.01 | 39 | |||||||||||||||||||||||||||||||||||||||||||||
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 | 1 | 30,905 | 1.21 | 2 | 1.21 | 2 | 1.04 | 2 | 1.76 | 2 | 14 | |||||||||||||||||||||||||||||||||||||||
Royce Total Return Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 11.91 | $ | 0.15 | $ | 2.93 | $ | 3.08 | $ | (0.22 | ) | $ | (1.09 | ) | $ | (1.31 | ) | $ | – | $ | 13.68 | 25.86 | % | $ | 1,835,927 | 1.19 | % | 1.19 | % | 1.19 | % | 1.08 | % | 16 | % | |||||||||||||||||||||||||||||
2015 | 14.74 | 0.17 | (1.23 | ) | (1.06 | ) | (0.12 | ) | (1.65 | ) | (1.77 | ) | – | 11.91 | (7.19 | ) | 1,850,309 | 1.15 | 1.15 | 1.15 | 1.18 | 11 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 16.47 | 0.17 | 0.00 | 0.17 | (0.28 | ) | (1.62 | ) | (1.90 | ) | – | 14.74 | 1.34 | 3,077,951 | 1.13 | 1.13 | 1.13 | 0.95 | 18 | |||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Total Return Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 12.12 | $ | 0.11 | $ | 3.00 | $ | 3.11 | $ | (0.16 | ) | $ | (1.09 | ) | $ | (1.25 | ) | $ | – | $ | 13.98 | 25.60 | % | $ | 142,606 | 1.46 | % | 1.46 | % | 1.46 | % | 0.80 | % | 16 | % | |||||||||||||||||||||||||||||
2015 | 14.98 | 0.13 | (1.25 | ) | (1.12 | ) | (0.09 | ) | (1.65 | ) | (1.74 | ) | – | 12.12 | (7.48 | ) | 137,594 | 1.43 | 1.43 | 1.43 | 0.90 | 11 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 16.61 | 0.12 | 0.01 | 0.13 | (0.14 | ) | (1.62 | ) | (1.76 | ) | – | 14.98 | 1.08 | 232,814 | 1.42 | 1.42 | 1.42 | 0.60 | 18 | |||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Total Return Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 12.15 | $ | 0.01 | $ | 3.01 | $ | 3.02 | $ | (0.01 | ) | $ | (1.09 | ) | $ | (1.10 | ) | $ | – | $ | 14.07 | 24.73 | % | $ | 267,083 | 2.16 | % | 2.16 | % | 2.16 | % | 0.11 | % | 16 | % | |||||||||||||||||||||||||||||
2015 | 15.05 | 0.03 | (1.26 | ) | (1.23 | ) | (0.02 | ) | (1.65 | ) | (1.67 | ) | – | 12.15 | (8.15 | ) | 262,131 | 2.16 | 2.16 | 2.16 | 0.18 | 11 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 16.68 | (0.00 | ) | 0.02 | 0.02 | (0.03 | ) | (1.62 | ) | (1.65 | ) | – | 15.05 | 0.37 | 356,731 | 2.12 | 2.12 | 2.12 | (0.04 | ) | 18 | |||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Total Return Fund–Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 11.78 | $ | 0.18 | $ | 2.90 | $ | 3.08 | $ | (0.25 | ) | $ | (1.09 | ) | $ | (1.34 | ) | $ | – | $ | 13.52 | 26.13 | % | $ | 420,375 | 1.05 | % | 1.05 | % | 1.05 | % | 1.22 | % | 16 | % | |||||||||||||||||||||||||||||
2015 | 14.61 | 0.18 | (1.22 | ) | (1.04 | ) | (0.14 | ) | (1.65 | ) | (1.79 | ) | – | 11.78 | (7.17 | ) | 374,555 | 1.03 | 1.03 | 1.03 | 1.28 | 11 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 16.35 | 0.18 | 0.02 | 0.20 | (0.32 | ) | (1.62 | ) | (1.94 | ) | – | 14.61 | 1.51 | 572,662 | 1.00 | 1.00 | 1.00 | 1.09 | 18 | |||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
110 | The Royce Funds 2016 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Financial Highlights
This table is presented to show selected data for a share outstanding throughout each period and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
Ratio of Expenses to Average Net Assets | Ratio of Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized and | Distributions | Distributions from | Investment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value, | Unrealized Gain (Loss) | Total from | from Net | Net Realized Gain on | Shareholder | Net Asset | Net Assets, | Prior to Fee | Income (Loss) to | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | on Investments and | Investment | Investment | Investments and | Total | Redemption | Value, End of | End of Period | Waivers and | Prior to Fee | Net of Fee | Average Net | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||
Period | Income (Loss) | Foreign Currency | Operations | Income | Foreign Currency | Distributions | Fees | Period | Total Return | (in thousands) | Balance Credits | Waivers | Waivers | Assets | Turnover Rate | |||||||||||||||||||||||||||||||||||||||||||||||||
Royce Total Return Fund–W Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 11.88 | $ | 0.17 | $ | 2.91 | $ | 3.08 | $ | (0.20 | ) | $ | (1.09 | ) | $ | (1.29 | ) | $ | – | $ | 13.67 | 25.96 | % | $ | 79,702 | 1.20 | % | 1.20 | % | 1.20 | % | 1.03 | % | 16 | % | |||||||||||||||||||||||||||||
2015 | 14.72 | 0.16 | (1.23 | ) | (1.07 | ) | (0.12 | ) | (1.65 | ) | (1.77 | ) | – | 11.88 | (7.28 | ) | 118,167 | 1.18 | 1.18 | 1.18 | 1.17 | 11 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 16.45 | 0.15 | 0.03 | 0.18 | (0.29 | ) | (1.62 | ) | (1.91 | ) | – | 14.72 | 1.35 | 261,829 | 1.13 | 1.13 | 1.13 | 0.97 | 18 | |||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Total Return Fund–R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 12.19 | $ | 0.07 | $ | 3.00 | $ | 3.07 | $ | (0.08 | ) | $ | (1.09 | ) | $ | (1.17 | ) | $ | – | $ | 14.09 | 25.14 | % | $ | 53,896 | 1.78 | % | 1.78 | % | 1.78 | % | 0.49 | % | 16 | % | |||||||||||||||||||||||||||||
2015 | 15.07 | 0.08 | (1.25 | ) | (1.17 | ) | (0.06 | ) | (1.65 | ) | (1.71 | ) | – | 12.19 | (7.79 | ) | 50,684 | 1.77 | 1.77 | 1.77 | 0.56 | 11 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 16.73 | 0.07 | 0.01 | 0.08 | (0.12 | ) | (1.62 | ) | (1.74 | ) | – | 15.07 | 0.73 | 65,501 | 1.72 | 1.72 | 1.72 | 0.37 | 18 | |||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Royce Total Return Fund–K Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 8.19 | $ | 0.08 | $ | 2.01 | $ | 2.09 | $ | (0.12 | ) | $ | (1.09 | ) | $ | (1.21 | ) | $ | – | $ | 9.07 | 25.41 | % | $ | 40,952 | 1.55 | % | 1.55 | % | 1.55 | % | 0.67 | % | 16 | % | |||||||||||||||||||||||||||||
2015 | 10.71 | 0.09 | (0.90 | ) | (0.81 | ) | (0.06 | ) | (1.65 | ) | (1.71 | ) | – | 8.19 | (7.54 | ) | 62,597 | 1.49 | 1.49 | 1.49 | 0.85 | 11 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 12.40 | 0.11 | (0.03 | ) | 0.08 | (0.15 | ) | (1.62 | ) | (1.77 | ) | – | 10.71 | 1.01 | 91,271 | 1.47 | 1.47 | 1.47 | 0.55 | 18 | ||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
1 | Not annualized |
2 | Annualized |
a | The Class commenced operations on March 21, 2014. |
b | The Class commenced operations on September 4, 2012. |
c | The Class commenced operations on January 5, 2016. |
d | The Class commenced operations on January 22, 2014. |
e | The Class commenced operations on February 26, 2016. |
f | The Class commenced operations on January 27, 2014. |
g | The Class commenced operations on March 1, 2012. |
h | The Class commenced operations on April 18, 2012. |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2016 Annual Report to Shareholders | 111 |
Notes to Financial Statements
Summary of Significant Accounting Policies:
Royce Dividend Value Fund, Royce Global Financial Services Fund, Royce Heritage Fund, Royce International Micro-Cap Fund, Royce International Premier Fund, Royce International Small-Cap Fund, Royce Low-Priced Stock Fund, Royce Micro-Cap Fund, Royce Micro-Cap Opportunity Fund, Royce Opportunity Fund, Royce Pennsylvania Mutual Fund, Royce Premier Fund, Royce Small-Cap Leaders Fund, Royce Small-Cap Value Fund, Royce Smaller-Companies Growth Fund, Royce Special Equity Fund, Royce Special Equity Multi-Cap Fund and Royce Total Return Fund (the “Fund” or “Funds”), are the eighteen series of The Royce Fund (the “Trust”), a diversified open-end management investment company organized as a Delaware statutory trust.
Classes of shares have equal rights as to earnings and assets, except that each class may bear different fees and expenses for distribution, shareholder servicing, registration and shareholder reports, and receive different compensating balance credits and expense reimbursements. Investment income, realized and unrealized capital gains or losses on investments and foreign currency, and expenses other than those attributable to a specific class are allocated to each class of shares based on its relative net assets.
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.
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 “Financial Services-Investment Companies”.
At December 31, 2016, officers, employees of Royce & Associates (“Royce”), Fund trustees, the Royce retirement plans and other affiliates owned more than 10% of the following Funds:
Royce International Micro-Cap Fund | 52% | Royce International Small-Cap Fund | 33% | |||
Royce International Premier Fund | 12% | Royce Micro-Cap Opportunity Fund | 15% |
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. 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). |
112 | The Royce Funds 2016 Annual Report to Shareholders |
VALUATION OF INVESTMENTS (continued):
The following is a summary of the inputs used to value each Fund’s investments as of December 31, 2016. 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 Dividend Value Fund Common Stocks | $ | 175,588,871 | $ | 38,650,169 | $ | – | $ | 214,239,040 | ||||||||
Corporate Bond | – | 444,260 | – | 444,260 | ||||||||||||
Cash Equivalents | – | 3,414,000 | – | 3,414,000 | ||||||||||||
Royce Global Financial Services Fund Common Stocks | 34,629,136 | 13,315,488 | – | 47,944,624 | ||||||||||||
Cash Equivalents | – | 1,383,000 | – | 1,383,000 | ||||||||||||
Royce Heritage Fund Common Stocks | 175,593,712 | 5,483,727 | – | 181,077,439 | ||||||||||||
Cash Equivalents | 1,563,260 | 47,278,000 | – | 48,841,260 | ||||||||||||
Royce International Micro-Cap Fund Common Stocks | 1,091,991 | 4,502,977 | – | 5,594,968 | ||||||||||||
Cash Equivalents | – | 501,000 | – | 501,000 | ||||||||||||
Royce International Premier Fund Common Stocks | 2,171,378 | 59,421,717 | – | 61,593,095 | ||||||||||||
Cash Equivalents | – | 1,475,000 | – | 1,475,000 | ||||||||||||
Royce International Small-Cap Fund Common Stocks | 983,427 | 5,927,652 | – | 6,911,079 | ||||||||||||
Cash Equivalents | – | 398,000 | – | 398,000 | ||||||||||||
Royce Low-Priced Stock Fund Common Stocks | 288,570,538 | 18,542,438 | 0 | 307,112,976 | ||||||||||||
Cash Equivalents | 14,191,767 | 14,544,000 | – | 28,735,767 | ||||||||||||
Royce Micro-Cap Fund Common Stocks | 217,145,494 | 5,968,143 | 865,628 | 223,979,265 | ||||||||||||
Cash Equivalents | 7,076,975 | 21,137,000 | – | 28,213,975 | ||||||||||||
Royce Micro-Cap Opportunity Fund Common Stocks | 43,741,472 | – | – | 43,741,472 | ||||||||||||
Cash Equivalents | – | 2,609,000 | – | 2,609,000 | ||||||||||||
Royce Opportunity Fund Common Stocks | 1,372,653,993 | 312,228 | – | 1,372,966,221 | ||||||||||||
Cash Equivalents | 109,417,922 | 105,163,000 | – | 214,580,922 | ||||||||||||
Royce Pennsylvania Mutual Fund Common Stocks | 2,359,187,096 | 51,555,841 | – | 2,410,742,937 | ||||||||||||
Cash Equivalents | 37,026,755 | 21,856,000 | – | 58,882,755 | ||||||||||||
Royce Premier Fund Common Stocks | 2,204,832,596 | 33,706,909 | – | 2,238,539,505 | ||||||||||||
Cash Equivalents | 6,380,826 | 24,420,000 | – | 30,800,826 | ||||||||||||
Royce Small-Cap Leaders Fund Common Stocks | 94,523,515 | 1,866,144 | – | 96,389,659 | ||||||||||||
Cash Equivalents | – | 5,226,000 | – | 5,226,000 | ||||||||||||
Royce Small-Cap Value Fund Common Stocks | 402,509,415 | – | – | 402,509,415 | ||||||||||||
Cash Equivalents | 9,656,023 | 48,392,000 | – | 58,048,023 | ||||||||||||
Royce Smaller-Companies Growth Fund Common Stocks | 384,369,632 | 22,266,547 | – | 406,636,179 | ||||||||||||
Cash Equivalents | 39,234,403 | 11,780,000 | – | 51,014,403 | ||||||||||||
Royce Special Equity Fund Common Stocks | 1,394,868,104 | 31,567,273 | – | 1,426,435,377 | ||||||||||||
Cash Equivalents | – | 196,543,000 | – | 196,543,000 | ||||||||||||
Royce Special Equity Multi-Cap Fund Common Stocks | 103,736,735 | – | – | 103,736,735 | ||||||||||||
Cash Equivalents | – | 15,373,000 | – | 15,373,000 | ||||||||||||
Royce Total Return Fund Common Stocks | 2,673,187,819 | 129,575,224 | 0 | 2,802,763,043 | ||||||||||||
Corporate Bond | – | 3,954,690 | – | 3,954,690 | ||||||||||||
Cash Equivalents | 8,925,325 | 48,674,000 | – | 57,599,325 | ||||||||||||
The Royce Funds 2016 Annual Report to Shareholders | 113
Notes to Financial Statements (continued)
VALUATION OF INVESTMENTS (continued):
Certain securities have transferred in and out of Level 1 and Level 2 measurements during the reporting period. The Funds recognize transfers between levels as of the end of the reporting period. For the year ended December 31, 2016, the following Funds had securities transfer from Level 1 to Level 2 within the fair value hierarchy:
TRANSFERS FROM | |||||
LEVEL 1 TO LEVEL 2 | |||||
Royce Global Financial Services Fund | $ | 274,859 | |||
Royce Opportunity Fund | 298,097 | ||||
Royce Total Return Fund | 3,353,286 | ||||
Level 3 Reconciliation:
REALIZED AND | ||||||||||||||||||||||||
UNREALIZED | ||||||||||||||||||||||||
BALANCE AS OF 12/31/15 | PURCHASES | SALES | TRANSFERS IN | GAIN (LOSS)1 | BALANCE AS OF 12/31/16 | |||||||||||||||||||
Royce Low-Priced Stock Fund | ||||||||||||||||||||||||
Common Stocks | $ | – | $ | 0 | $ | – | $ | – | $ | – | $ | 0 | ||||||||||||
Royce Micro-Cap Fund | ||||||||||||||||||||||||
Common Stocks | 810,411 | – | – | – | 55,217 | 865,628 | ||||||||||||||||||
Royce Total Return Fund | ||||||||||||||||||||||||
Common Stocks | – | 0 | – | – | – | 0 | ||||||||||||||||||
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 following table summarizes the valuation techniques used and unobservable inputs approved by the Valuation Committee to determine the fair value of certain, material Level 3 investments. The table does not include Level 3 investments with values derived utilizing prices from prior transactions or third party pricing information with adjustments (e.g. broker quotes, pricing services, net asset values).
FAIR VALUE AT | IMPACT TO VALUATION FROM | |||||||||||||||||||
12/31/16 | VALUATION TECHNIQUE(S) | UNOBSERVABLE INPUT(S) | RANGE AVERAGE | AN INCREASE IN INPUT1 | ||||||||||||||||
Royce Micro-Cap Fund | ||||||||||||||||||||
Discounted Present Value | ||||||||||||||||||||
Common Stocks | $865,628 | Balance Sheet Analysis | Liquidity Discount | 30%-40% | Decrease | |||||||||||||||
1 | This column represents the directional change in the fair value of the Level 3 investments that would result in an increase from the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect. Significant increases and decreases in these unobservable inputs in isolation could result in significantly higher or lower fair value measurements. |
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. The remaining contractual maturities of repurchase agreements held by the Funds at December 31, 2016 are overnight and continuous.
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
114 | The Royce Funds 2016 Annual Report to Shareholders
SECURITIES LENDING (continued):
collateral received for securities lending. Loans of securities generally do not have stated maturity dates, and the Funds may recall a security at any time. 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, 2016:
GROSS AMOUNT OF ASSETS AND | ||||||||||||
LIABILITIES IN THE STATEMENTS OF | ||||||||||||
ASSETS AND LIABILITIES1 | SECURITIES ON LOAN | NET AMOUNT | ||||||||||
Royce Heritage Fund | ||||||||||||
Collateral on Loaned Securities /Securities on Loan | $ | 1,563,260 | $ | (1,542,656 | ) | $ | 20,604 | |||||
Royce Low-Priced Stock Fund | ||||||||||||
Collateral on Loaned Securities /Securities on Loan | 14,191,767 | (13,831,468 | ) | 360,299 | ||||||||
Royce Micro-Cap Fund | ||||||||||||
Collateral on Loaned Securities /Securities on Loan | 7,076,975 | (6,752,098 | ) | 324,877 | ||||||||
Royce Opportunity Fund | ||||||||||||
Collateral on Loaned Securities /Securities on Loan | 109,417,922 | (104,843,754 | ) | 4,574,168 | ||||||||
Royce Pennsylvania Mutual Fund | ||||||||||||
Collateral on Loaned Securities /Securities on Loan | 37,026,755 | (36,097,576 | ) | 929,179 | ||||||||
Royce Premier Fund | ||||||||||||
Collateral on Loaned Securities /Securities on Loan | 6,380,826 | (6,220,083 | ) | 160,743 | ||||||||
Royce Small-Cap Value Fund | ||||||||||||
Collateral on Loaned Securities /Securities on Loan | 9,656,023 | (9,406,922 | ) | 249,101 | ||||||||
Royce Smaller-Companies Growth Fund | ||||||||||||
Collateral on Loaned Securities /Securities on Loan | 39,234,403 | (38,262,305 | ) | 972,098 | ||||||||
Royce Total Return Fund | ||||||||||||
Collateral on Loaned Securities /Securities on Loan | 8,925,325 | (8,657,688 | ) | 267,637 | ||||||||
1 | Absent an event of default, assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities. |
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 Dividend Value Fund and Royce Total Return 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.
CAPITAL GAINS TAXES:
The Funds are subject to a tax imposed on short-term capital gains on securities of issuers domiciled in certain countries. The Funds record an estimated deferred tax liability for these securities that have been held for less than one year. This amount, if any, is reported as deferred capital gains tax in the accompanying Statements of Assets and Liabilities, assuming those positions were disposed of at the end of the period, and accounted for as a reduction in the market value of the security.
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. Premiums 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 Funds are allocated by Royce under an administration agreement and are included in administrative and office facilities and legal expenses. The Trust 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.
The Royce Funds 2016 Annual Report to Shareholders | 115
Notes to Financial Statements (continued)
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 revolving Credit Agreement expires on October 13, 2017. 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 or One-Month LIBOR rate. The Funds did not utilize the line of credit during the year ended December 31, 2016.
SHARES SOLD | SHARES ISSUED FOR REINVESTMENT OF DISTRIBUTIONS | SHARES REDEEMED | NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS | |||||||||||||||||||||||||||||
Period Ended 12/31/16 | Year Ended 12/31/15 | Period Ended 12/31/16 | Year Ended 12/31/15 | Period Ended 12/31/16 | Year Ended 12/31/15 | Period Ended 12/31/16 | Year Ended 12/31/15 | |||||||||||||||||||||||||
Royce Dividend Value Fund | ||||||||||||||||||||||||||||||||
Investment Class | $ | 18,958,290 | $ | 23,649,663 | $ | 9,175,565 | $ | 11,429,125 | $ | (49,583,548 | ) | $ | (74,578,435 | ) | $ | (21,449,693 | ) | $ | (39,499,647 | ) | ||||||||||||
Service Class | 7,065,296 | 16,518,808 | 9,959,042 | 15,761,498 | (76,162,628 | ) | (130,909,331 | ) | (59,138,290 | ) | (98,629,025 | ) | ||||||||||||||||||||
Consultant Class | 145,757 | 1,097,996 | 121,151 | 85,041 | (612,404 | ) | (45,341 | ) | (345,496 | ) | 1,137,696 | |||||||||||||||||||||
Institutional Class | 73,405 | 2,092,529 | 85,945 | 568,830 | (24,719 | ) | (41,686,517 | ) | 134,631 | (39,025,158 | ) | |||||||||||||||||||||
Royce Global Financial Services Fund | ||||||||||||||||||||||||||||||||
Service Class | 10,004,674 | 27,686,991 | 314,467 | 4,744,775 | (22,967,471 | ) | (25,338,632 | ) | (12,648,330 | ) | 7,093,134 | |||||||||||||||||||||
Institutional Class | 5,237,088 | 62,041 | – | 5,299,129 | ||||||||||||||||||||||||||||
Royce Heritage Fund | ||||||||||||||||||||||||||||||||
Investment Class | 3,678,000 | 66,672,423 | 3,292,053 | 8,519,044 | (20,684,731 | ) | (129,448,243 | ) | (13,714,678 | ) | (54,256,776 | ) | ||||||||||||||||||||
Service Class | 1,980,974 | 3,444,092 | 4,133,928 | 10,924,772 | (21,159,246 | ) | (49,371,367 | ) | (15,044,344 | ) | (35,002,503 | ) | ||||||||||||||||||||
Consultant Class | 550,259 | 1,237,684 | 519,489 | 1,234,787 | (1,971,398 | ) | (2,229,108 | ) | (901,650 | ) | 243,363 | |||||||||||||||||||||
R Class | 240,334 | 266,388 | 97,399 | 294,942 | (950,917 | ) | (1,437,246 | ) | (613,184 | ) | (875,916 | ) | ||||||||||||||||||||
K Class | 524,089 | 1,103,442 | 212,068 | 531,190 | (971,874 | ) | (2,367,598 | ) | (235,717 | ) | (732,966 | ) | ||||||||||||||||||||
Royce International Micro-Cap Fund | ||||||||||||||||||||||||||||||||
Service Class | 187,420 | 667,982 | 92,479 | 14,448 | (594,454 | ) | (934,517 | ) | (314,555 | ) | (252,087 | ) | ||||||||||||||||||||
Royce International Premier Fund | ||||||||||||||||||||||||||||||||
Investment Class | 6,174,749 | 2,890,985 | 405,500 | 56,544 | (14,199,466 | ) | (3,364,282 | ) | (7,619,217 | ) | (416,753 | ) | ||||||||||||||||||||
Service Class | 4,838,193 | 5,213,879 | 841,078 | 222,108 | (12,025,961 | ) | (918,247 | ) | (6,346,690 | ) | 4,517,740 | |||||||||||||||||||||
Consultant Class | 378,145 | 69,250 | (2,062,532 | ) | (1,615,137 | ) | ||||||||||||||||||||||||||
R Class | 10,139 | 1,431 | – | 11,570 | ||||||||||||||||||||||||||||
K Class | – | 672 | – | 672 | ||||||||||||||||||||||||||||
Royce International Small-Cap Fund | ||||||||||||||||||||||||||||||||
Investment Class | 836,510 | 280,040 | 35,877 | 9,594 | (148,697 | ) | (1,093,921 | ) | 723,690 | (804,287 | ) | |||||||||||||||||||||
Service Class | 1,554,859 | 11,751,517 | 129,008 | 329,669 | (14,604,622 | ) | (23,840,701 | ) | (12,920,755 | ) | (11,759,515 | ) | ||||||||||||||||||||
Institutional Class | 214,053 | 209,934 | 112,052 | 58,360 | (2,153 | ) | (523,957 | ) | 323,952 | (255,663 | ) | |||||||||||||||||||||
Royce Low-Priced Stock Fund | ||||||||||||||||||||||||||||||||
Investment Class | 1,971,123 | 2,852,531 | 1,820,228 | 2,370,662 | (10,892,309 | ) | (20,568,241 | ) | (7,100,958 | ) | (15,345,048 | ) | ||||||||||||||||||||
Service Class | 7,067,276 | 11,754,025 | 23,428,229 | 25,996,096 | (80,535,704 | ) | (174,212,435 | ) | (50,040,199 | ) | (136,462,314 | ) | ||||||||||||||||||||
Institutional Class | 583,934 | 2,861,159 | 1,067,221 | 3,502,604 | (27,305,121 | ) | (60,481,368 | ) | (25,653,966 | ) | (54,117,605 | ) | ||||||||||||||||||||
R Class | 162,573 | 169,716 | 89,653 | 100,300 | (411,859 | ) | (789,324 | ) | (159,633 | ) | (519,308 | ) | ||||||||||||||||||||
K Class | 107,931 | 194,279 | 434,240 | 408,218 | (687,522 | ) | (515,150 | ) | (145,351 | ) | 87,347 | |||||||||||||||||||||
Royce Micro-Cap Fund | ||||||||||||||||||||||||||||||||
Investment Class | 9,466,655 | 14,926,416 | 18,015,282 | 22,993,887 | (66,073,769 | ) | (166,882,704 | ) | (38,591,832 | ) | (128,962,401 | ) | ||||||||||||||||||||
Service Class | 4,842,797 | 7,415,593 | 1,576,589 | 2,226,657 | (10,503,711 | ) | (20,657,952 | ) | (4,084,325 | ) | (11,015,702 | ) | ||||||||||||||||||||
Consultant Class | 1,293,781 | 2,234,748 | 4,079,826 | 5,416,400 | (14,100,322 | ) | (28,321,597 | ) | (8,726,715 | ) | (20,670,449 | ) | ||||||||||||||||||||
Royce Micro-Cap Opportunity Fund | ||||||||||||||||||||||||||||||||
Investment Class | 6,820,847 | 28,809,329 | – | 796 | (5,142,669 | ) | (7,648,626 | ) | 1,678,178 | 21,161,499 | ||||||||||||||||||||||
Service Class | 291,194 | 1,126,601 | – | 49 | (691,434 | ) | (612,357 | ) | (400,240 | ) | 514,293 | |||||||||||||||||||||
Royce Opportunity Fund | ||||||||||||||||||||||||||||||||
Investment Class | 81,034,611 | 90,459,880 | 41,705,217 | 61,976,576 | (253,661,600 | ) | (486,891,165 | ) | (130,921,772 | ) | (334,454,709 | ) | ||||||||||||||||||||
Service Class | 16,933,706 | 20,524,236 | 4,661,818 | 9,179,243 | (62,322,206 | ) | (55,909,453 | ) | (40,726,682 | ) | (26,205,974 | ) | ||||||||||||||||||||
Consultant Class | 2,287,388 | 7,052,245 | 1,568,020 | 1,937,381 | (5,702,177 | ) | (4,763,168 | ) | (1,846,769 | ) | 4,226,458 | |||||||||||||||||||||
Institutional Class | 58,740,553 | 79,316,517 | 35,837,134 | 52,184,260 | (220,100,854 | ) | (177,729,567 | ) | (125,523,167 | ) | (46,228,790 | ) | ||||||||||||||||||||
R Class | 5,262,774 | 9,316,688 | 2,794,912 | 3,171,431 | (8,185,578 | ) | (5,268,442 | ) | (127,892 | ) | 7,219,677 | |||||||||||||||||||||
K Class | 2,688,304 | 3,218,485 | 525,822 | 1,032,939 | (7,346,313 | ) | (14,382,911 | ) | (4,132,187 | ) | (10,131,487 | ) | ||||||||||||||||||||
116 | The Royce Funds 2016 Annual Report to Shareholders
SHARES SOLD | SHARES ISSUED FOR REINVESTMENT OF DISTRIBUTIONS | SHARES REDEEMED | NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS | |||||||||||||||||||||||||||||
Period Ended 12/31/16 | Year Ended 12/31/15 | Period Ended 12/31/16 | Year Ended 12/31/15 | Period Ended 12/31/16 | Year Ended 12/31/15 | Period Ended 12/31/16 | Year Ended 12/31/15 | |||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund | ||||||||||||||||||||||||||||||||
Investment Class | $ | 101,656,002 | $ | 183,803,935 | $ | 98,152,740 | $ | 333,463,014 | $ | (725,638,867 | ) | $ | (1,765,123,278 | ) | $ | (525,830,125 | ) | $ | (1,247,856,329 | ) | ||||||||||||
Service Class | 27,866,036 | 20,129,821 | 5,127,006 | 14,644,024 | (47,207,450 | ) | (225,908,716 | ) | (14,214,408 | ) | (191,134,871 | ) | ||||||||||||||||||||
Consultant Class | 9,509,567 | 17,170,289 | 29,743,347 | 87,362,626 | (109,823,958 | ) | (198,621,464 | ) | (70,571,044 | ) | (94,088,549 | ) | ||||||||||||||||||||
Institutional Class | 135,118,511 | 101,754,384 | 18,093,080 | 97,120,074 | (481,864,428 | ) | (334,527,820 | ) | (328,652,837 | ) | (135,653,362 | ) | ||||||||||||||||||||
R Class | 2,588,691 | 4,543,292 | 1,140,459 | 3,572,638 | (7,878,915 | ) | (19,409,049 | ) | (4,149,765 | ) | (11,293,119 | ) | ||||||||||||||||||||
K Class | 507,920 | 1,546,689 | 247,212 | 1,005,956 | (2,093,193 | ) | (7,342,824 | ) | (1,338,061 | ) | (4,790,179 | ) | ||||||||||||||||||||
Royce Premier Fund | ||||||||||||||||||||||||||||||||
Investment Class | 132,149,740 | 170,517,972 | 179,639,115 | 348,353,321 | (697,868,653 | ) | (1,888,601,606 | ) | (386,079,798 | ) | (1,369,730,313 | ) | ||||||||||||||||||||
Service Class | 12,022,129 | 17,920,179 | 5,025,159 | 11,888,243 | (36,123,462 | ) | (120,015,610 | ) | (19,076,174 | ) | (90,207,188 | ) | ||||||||||||||||||||
Consultant Class | 1,657,648 | 1,588,805 | 4,316,806 | 7,392,495 | (9,246,501 | ) | (20,011,516 | ) | (3,272,047 | ) | (11,030,216 | ) | ||||||||||||||||||||
Institutional Class | 80,363,260 | 53,675,035 | 29,595,890 | 56,217,898 | (177,605,927 | ) | (312,593,365 | ) | (67,646,777 | ) | (202,700,432 | ) | ||||||||||||||||||||
W Class | 11,616,780 | 28,318,127 | 14,836,924 | 31,614,224 | (85,709,902 | ) | (240,988,959 | ) | (59,256,198 | ) | (181,056,608 | ) | ||||||||||||||||||||
R Class | 452,451 | 1,611,507 | 1,728,030 | 3,169,817 | (5,486,362 | ) | (10,697,404 | ) | (3,305,881 | ) | (5,916,080 | ) | ||||||||||||||||||||
K Class | 1,217,490 | 489,271 | 1,845,074 | 2,060,228 | (4,393,199 | ) | (3,539,803 | ) | (1,330,635 | ) | �� | (990,304 | ) | |||||||||||||||||||
Royce Small-Cap Leaders Fund | ||||||||||||||||||||||||||||||||
Investment Class | 2,943,260 | 4,434,512 | 4,254,065 | 8,279,111 | (15,072,711 | ) | (33,988,215 | ) | (7,875,386 | ) | (21,274,592 | ) | ||||||||||||||||||||
Service Class | 2,746,867 | 6,779,522 | 4,672,613 | 10,255,927 | (20,862,377 | ) | (87,508,476 | ) | (13,442,897 | ) | (70,473,027 | ) | ||||||||||||||||||||
R Class | 390,342 | 627,223 | 132,202 | 233,440 | (549,660 | ) | (674,825 | ) | (27,116 | ) | 185,838 | |||||||||||||||||||||
K Class | 124,715 | 126,570 | 35,143 | 42,291 | (61,065 | ) | (406,623 | ) | 98,793 | (237,762 | ) | |||||||||||||||||||||
Royce Small-Cap Value Fund | ||||||||||||||||||||||||||||||||
Investment Class | 15,238,437 | 11,708,751 | 3,520,923 | 12,030,880 | (33,562,073 | ) | (60,415,492 | ) | (14,802,713 | ) | (36,675,861 | ) | ||||||||||||||||||||
Service Class | 8,438,818 | 16,785,178 | 10,369,371 | 39,154,518 | (87,439,478 | ) | (199,654,317 | ) | (68,631,289 | ) | (143,714,621 | ) | ||||||||||||||||||||
Consultant Class | 923,536 | 2,018,757 | 835,891 | 3,021,011 | (5,814,390 | ) | (7,416,715 | ) | (4,054,963 | ) | (2,376,947 | ) | ||||||||||||||||||||
Institutional Class | 51,211,150 | 39,420,846 | 7,164,497 | 26,023,428 | (100,761,956 | ) | (66,669,374 | ) | (42,386,309 | ) | (1,225,100 | ) | ||||||||||||||||||||
R Class | 2,883,464 | 3,103,823 | 953,798 | 3,208,749 | (7,228,118 | ) | (12,208,918 | ) | (3,390,856 | ) | (5,896,346 | ) | ||||||||||||||||||||
K Class | 1,184,756 | 1,211,209 | 211,184 | 1,300,985 | (4,929,415 | ) | (3,674,069 | ) | (3,533,475 | ) | (1,161,875 | ) | ||||||||||||||||||||
Royce Smaller-Companies Growth Fund | ||||||||||||||||||||||||||||||||
Investment Class | 9,036,660 | 30,013,229 | 8,163,119 | 22,797,506 | (55,705,571 | ) | (183,946,383 | ) | (38,505,792 | ) | (131,135,648 | ) | ||||||||||||||||||||
Service Class | 14,663,751 | 23,912,746 | 28,201,863 | 74,968,068 | (159,219,364 | ) | (173,716,477 | ) | (116,353,750 | ) | (74,835,663 | ) | ||||||||||||||||||||
Consultant Class | 170,036 | 1,404,966 | 1,256,839 | 2,870,073 | (4,722,177 | ) | (3,601,957 | ) | (3,295,302 | ) | 673,082 | |||||||||||||||||||||
Institutional Class | 4,456,412 | 16,958,341 | 1,910,324 | 7,467,312 | (24,349,639 | ) | (15,112,453 | ) | (17,982,903 | ) | 9,313,200 | |||||||||||||||||||||
R Class | 212,289 | 181,933 | 89,046 | 184,149 | (364,827 | ) | (640,810 | ) | (63,492 | ) | (274,728 | ) | ||||||||||||||||||||
K Class | 24,433 | 40,233 | 38,133 | 96,698 | (140,884 | ) | (227,313 | ) | (78,318 | ) | (90,382 | ) | ||||||||||||||||||||
Royce Special Equity Fund | ||||||||||||||||||||||||||||||||
Investment Class | 179,392,659 | 160,549,199 | 75,160,317 | 102,536,424 | (354,506,680 | ) | (807,979,227 | ) | (99,953,704 | ) | (544,893,604 | ) | ||||||||||||||||||||
Service Class | 30,335,347 | 21,007,931 | 6,662,481 | 9,324,097 | (43,663,631 | ) | (118,707,306 | ) | (6,665,803 | ) | (88,375,278 | ) | ||||||||||||||||||||
Consultant Class | 5,012,148 | 3,294,653 | 3,309,705 | 4,202,989 | (8,602,908 | ) | (17,218,803 | ) | (281,055 | ) | (9,721,161 | ) | ||||||||||||||||||||
Institutional Class | 45,055,283 | 65,500,038 | 15,454,797 | 23,629,501 | (104,274,992 | ) | (465,303,367 | ) | (43,764,912 | ) | (376,173,828 | ) | ||||||||||||||||||||
Royce Special Equity Multi-Cap Fund | ||||||||||||||||||||||||||||||||
Investment Class | 9,065,075 | 16,321,320 | 361,721 | 3,027,028 | (23,180,740 | ) | (80,663,606 | ) | (13,753,944 | ) | (61,315,258 | ) | ||||||||||||||||||||
Service Class | 1,179,738 | 3,764,036 | 291,900 | 3,486,934 | (16,267,235 | ) | (40,762,518 | ) | (14,795,597 | ) | (33,511,548 | ) | ||||||||||||||||||||
Consultant Class | 563,388 | 1,607,508 | 37,877 | 613,517 | (2,866,031 | ) | (2,598,756 | ) | (2,264,766 | ) | (377,731 | ) | ||||||||||||||||||||
Institutional Class | 175,067 | 5,688,196 | 461,530 | 3,166,671 | (4,391,464 | ) | (38,313,394 | ) | (3,754,867 | ) | (29,458,527 | ) | ||||||||||||||||||||
Royce Total Return Fund | ||||||||||||||||||||||||||||||||
Investment Class | 294,955,069 | 223,353,957 | 136,990,355 | 211,097,614 | (682,255,576 | ) | (1,232,983,140 | ) | (250,310,152 | ) | (798,531,569 | ) | ||||||||||||||||||||
Service Class | 36,092,000 | 23,141,848 | 10,591,744 | 16,518,400 | (58,098,066 | ) | (103,313,893 | ) | (11,414,322 | ) | (63,653,645 | ) | ||||||||||||||||||||
Consultant Class | 10,401,986 | 16,675,424 | 17,832,355 | 29,482,336 | (60,628,932 | ) | (82,751,635 | ) | (32,394,591 | ) | (36,593,875 | ) | ||||||||||||||||||||
Institutional Class | 293,147,555 | 93,923,141 | 34,001,932 | 48,147,881 | (348,478,072 | ) | (255,731,309 | ) | (21,328,585 | ) | (113,660,287 | ) | ||||||||||||||||||||
W Class | 25,598,918 | 34,272,681 | 5,366,667 | 13,660,313 | (84,376,627 | ) | (167,700,072 | ) | (53,411,042 | ) | (119,767,078 | ) | ||||||||||||||||||||
R Class | 7,424,801 | 8,425,167 | 4,240,875 | 6,361,706 | (15,644,457 | ) | (18,587,401 | ) | (3,978,781 | ) | (3,800,528 | ) | ||||||||||||||||||||
K Class | 22,509,661 | 40,335,096 | 4,948,018 | 11,247,779 | (55,761,263 | ) | (63,467,985 | ) | (28,303,584 | ) | (11,885,110 | ) | ||||||||||||||||||||
The Royce Funds 2016 Annual Report to Shareholders | 117
Notes to Financial Statements (continued)
SHARES SOLD | SHARES ISSUED FOR REINVESTMENT OF DISTRIBUTIONS | SHARES REDEEMED | NET INCREASE (DECREASE) IN SHARES OUTSTANDING | |||||||||||||||||||||||||||||
Period Ended 12/31/16 | Year Ended 12/31/15 | Period Ended 12/31/16 | Year Ended 12/31/15 | Period Ended 12/31/16 | Year Ended 12/31/15 | Period Ended 12/31/16 | Year Ended 12/31/15 | |||||||||||||||||||||||||
Royce Dividend Value Fund | ||||||||||||||||||||||||||||||||
Investment Class | 2,660,858 | 2,973,081 | 1,266,523 | 1,647,017 | (7,026,219 | ) | (9,341,817 | ) | (3,098,838 | ) | (4,721,719 | ) | ||||||||||||||||||||
Service Class | 982,932 | 2,039,493 | 1,347,129 | 2,235,170 | (10,577,464 | ) | (16,214,484 | ) | (8,247,403 | ) | (11,939,821 | ) | ||||||||||||||||||||
Consultant Class | 18,781 | 134,347 | 14,300 | 10,715 | (84,343 | ) | (5,251 | ) | (51,262 | ) | 139,811 | |||||||||||||||||||||
Institutional Class | 10,503 | 265,153 | 11,998 | 72,057 | (3,669 | ) | (5,301,044 | ) | 18,832 | (4,963,834 | ) | |||||||||||||||||||||
Royce Global Financial Services Fund | ||||||||||||||||||||||||||||||||
Service Class | 1,190,188 | 2,873,670 | 35,333 | 596,827 | (2,858,179 | ) | (2,746,430 | ) | (1,632,658 | ) | 724,067 | |||||||||||||||||||||
Institutional Class | 560,952 | 5,461 | – | 566,413 | ||||||||||||||||||||||||||||
Royce Heritage Fund | ||||||||||||||||||||||||||||||||
Investment Class | 281,846 | 4,505,873 | 222,737 | 663,994 | (1,440,664 | ) | (8,755,831 | ) | (936,081 | ) | (3,585,964 | ) | ||||||||||||||||||||
Service Class | 149,122 | 231,619 | 280,456 | 853,498 | (1,565,689 | ) | (3,279,662 | ) | (1,136,111 | ) | (2,194,545 | ) | ||||||||||||||||||||
Consultant Class | 55,903 | 123,855 | 49,287 | 132,204 | (203,096 | ) | (205,388 | ) | (97,906 | ) | 50,671 | |||||||||||||||||||||
R Class | 27,042 | 25,852 | 10,114 | 34,536 | (106,425 | ) | (138,818 | ) | (69,269 | ) | (78,430 | ) | ||||||||||||||||||||
K Class | 56,896 | 104,554 | 21,750 | 61,552 | (107,350 | ) | (224,258 | ) | (28,704 | ) | (58,152 | ) | ||||||||||||||||||||
Royce International Micro-Cap Fund | ||||||||||||||||||||||||||||||||
Service Class | 20,043 | 67,395 | 9,360 | 1,540 | (61,674 | ) | (92,723 | ) | (32,271 | ) | (23,788 | ) | ||||||||||||||||||||
Royce International Premier Fund | ||||||||||||||||||||||||||||||||
Investment Class1 | 3,108,605 | 299,627 | 44,220 | 5,770 | (1,449,841 | ) | (336,327 | ) | 1,702,984 | (30,930 | ) | |||||||||||||||||||||
Service Class1 | 3,645,178 | 442,359 | 77,022 | 19,314 | (1,037,673 | ) | (80,714 | ) | 2,684,527 | 380,959 | ||||||||||||||||||||||
Consultant Class1 | 572,065 | 5,809 | (163,265 | ) | 414,609 | |||||||||||||||||||||||||||
R Class1 | 5,494 | 163 | – | 5,657 | ||||||||||||||||||||||||||||
K Class1 | 2,473 | 78 | – | 2,551 | ||||||||||||||||||||||||||||
Royce International Small-Cap Fund | ||||||||||||||||||||||||||||||||
Investment Class | 110,694 | 34,188 | 5,147 | 1,290 | (19,950 | ) | (133,814 | ) | 95,891 | (98,336 | ) | |||||||||||||||||||||
Service Class | 172,692 | 1,187,879 | 14,610 | 35,525 | (1,579,494 | ) | (2,400,486 | ) | (1,392,192 | ) | (1,177,082 | ) | ||||||||||||||||||||
Institutional Class | 26,925 | 26,702 | 15,628 | 7,639 | (301 | ) | (59,659 | ) | 42,252 | (25,318 | ) | |||||||||||||||||||||
Royce Low-Priced Stock Fund | ||||||||||||||||||||||||||||||||
Investment Class | 256,929 | 310,850 | 219,834 | 306,683 | (1,408,310 | ) | (2,245,155 | ) | (931,547 | ) | (1,627,622 | ) | ||||||||||||||||||||
Service Class | 908,878 | 1,296,920 | 2,839,785 | 3,371,800 | (10,354,471 | ) | (18,913,111 | ) | (6,605,808 | ) | (14,244,391 | ) | ||||||||||||||||||||
Institutional Class | 75,466 | 309,455 | 128,581 | 453,118 | (3,729,447 | ) | (6,476,161 | ) | (3,525,400 | ) | (5,713,588 | ) | ||||||||||||||||||||
R Class | 22,201 | 19,727 | 11,450 | 13,665 | (54,355 | ) | (88,296 | ) | (20,704 | ) | (54,904 | ) | ||||||||||||||||||||
K Class | 57,659 | 68,475 | 301,555 | 213,727 | (381,680 | ) | (179,941 | ) | (22,466 | ) | 102,261 | |||||||||||||||||||||
Royce Micro-Cap Fund | ||||||||||||||||||||||||||||||||
Investment Class | 849,276 | 1,119,726 | 1,510,082 | 2,090,353 | (5,962,181 | ) | (12,065,693 | ) | (3,602,823 | ) | (8,855,614 | ) | ||||||||||||||||||||
Service Class | 435,709 | 549,588 | 134,751 | 205,981 | (971,095 | ) | (1,580,785 | ) | (400,635 | ) | (825,216 | ) | ||||||||||||||||||||
Consultant Class | 148,907 | 216,849 | 433,103 | 603,835 | (1,547,295 | ) | (2,488,065 | ) | (965,285 | ) | (1,667,381 | ) | ||||||||||||||||||||
Royce Micro-Cap Opportunity Fund | ||||||||||||||||||||||||||||||||
Investment Class | 499,875 | 1,882,908 | – | 56 | (354,864 | ) | (504,907 | ) | 145,011 | 1,378,057 | ||||||||||||||||||||||
Service Class | 40,382 | 134,868 | – | 7 | (98,358 | ) | (74,301 | ) | (57,976 | ) | 60,574 | |||||||||||||||||||||
Royce Opportunity Fund | ||||||||||||||||||||||||||||||||
Investment Class | 7,169,819 | 7,107,529 | 3,210,563 | 5,874,610 | (22,519,005 | ) | (37,759,225 | ) | (12,138,623 | ) | (24,777,086 | ) | ||||||||||||||||||||
Service Class | 1,582,515 | 1,686,397 | 383,689 | 923,465 | (5,985,363 | ) | (4,592,032 | ) | (4,019,159 | ) | (1,982,170 | ) | ||||||||||||||||||||
Consultant Class | 254,530 | 643,557 | 144,785 | 215,265 | (586,237 | ) | (439,229 | ) | (186,922 | ) | 419,593 | |||||||||||||||||||||
Institutional Class | 5,099,929 | 6,093,450 | 2,708,778 | 4,867,935 | (19,157,014 | ) | (13,551,380 | ) | (11,348,307 | ) | (2,589,995 | ) | ||||||||||||||||||||
R Class | 525,049 | 786,698 | 236,853 | 326,615 | (781,985 | ) | (441,661 | ) | (20,083 | ) | 671,652 | |||||||||||||||||||||
K Class | 280,506 | 290,724 | 49,097 | 116,453 | (790,088 | ) | (1,294,032 | ) | (460,485 | ) | (886,855 | ) | ||||||||||||||||||||
Royce Pennsylvania Mutual Fund | ||||||||||||||||||||||||||||||||
Investment Class | 10,226,806 | 14,862,269 | 8,810,839 | 35,894,811 | (73,784,191 | ) | (142,082,592 | ) | (54,746,546 | ) | (91,325,512 | ) | ||||||||||||||||||||
Service Class | 2,531,009 | 1,609,207 | 459,821 | 1,574,626 | (4,824,673 | ) | (17,966,775 | ) | (1,833,843 | ) | (14,782,942 | ) | ||||||||||||||||||||
Consultant Class | 1,165,040 | 1,736,718 | 3,308,492 | 11,390,173 | (13,450,271 | ) | (19,579,852 | ) | (8,976,739 | ) | (6,452,961 | ) | ||||||||||||||||||||
Institutional Class | 13,478,552 | 8,202,043 | 1,622,698 | 10,443,019 | (46,263,535 | ) | (26,930,191 | ) | (31,162,285 | ) | (8,285,129 | ) | ||||||||||||||||||||
R Class | 265,258 | 381,495 | 108,100 | 403,232 | (837,492 | ) | (1,615,892 | ) | (464,134 | ) | (831,165 | ) | ||||||||||||||||||||
K Class | 59,680 | 141,199 | 26,841 | 128,639 | (262,303 | ) | (690,774 | ) | (175,782 | ) | (420,936 | ) | ||||||||||||||||||||
1 | Includes shares issued in connection with the merger of Royce European Small-Cap Fund and Royce Global Value Fund (2,460,873 for Investment Class, 3,226,058 for Service Class, 542,120 for Consultant Class, 4,452 for R Class and 2,473 for K Class, for the period ended 12/31/16). |
118 | The Royce Funds 2016 Annual Report to Shareholders
SHARES SOLD | SHARES ISSUED FOR REINVESTMENT OF DISTRIBUTIONS | SHARES REDEEMED | NET INCREASE (DECREASE) IN SHARES OUTSTANDING | |||||||||||||||||||||||||||||
Period Ended 12/31/16 | Year Ended 12/31/15 | Period Ended 12/31/16 | Year Ended 12/31/15 | Period Ended 12/31/16 | Year Ended 12/31/15 | Period Ended 12/31/16 | Year Ended 12/31/15 | |||||||||||||||||||||||||
Royce Premier Fund | ||||||||||||||||||||||||||||||||
Investment Class | 8,812,203 | 9,168,178 | 11,434,739 | 24,566,525 | (47,449,896 | ) | (100,342,919 | ) | (27,202,954 | ) | (66,608,216 | ) | ||||||||||||||||||||
Service Class | 805,849 | 954,405 | 328,013 | 856,502 | (2,490,902 | ) | (6,315,653 | ) | (1,357,040 | ) | (4,504,746 | ) | ||||||||||||||||||||
Consultant Class | 132,228 | 99,248 | 342,061 | 625,952 | (732,856 | ) | (1,277,853 | ) | (258,567 | ) | (552,653 | ) | ||||||||||||||||||||
Institutional Class | 4,672,420 | 2,699,276 | 1,859,039 | 3,920,355 | (10,964,670 | ) | (16,080,233 | ) | (4,433,211 | ) | (9,460,602 | ) | ||||||||||||||||||||
W Class | 769,454 | 1,478,087 | 940,832 | 2,223,223 | (5,671,662 | ) | (12,822,686 | ) | (3,961,376 | ) | (9,121,376 | ) | ||||||||||||||||||||
R Class | 31,848 | 94,287 | 117,873 | 236,554 | (385,875 | ) | (588,753 | ) | (236,154 | ) | (257,912 | ) | ||||||||||||||||||||
K Class | 766,591 | 99,317 | 61,502,453 | 1,219,070 | (63,925,467 | ) | (755,894 | ) | (1,656,423 | ) | 562,493 | |||||||||||||||||||||
Royce Small-Cap Leaders Fund | ||||||||||||||||||||||||||||||||
Investment Class1 | 429,323 | 2,978,457 | 594,974 | 1,309,986 | (2,292,098 | ) | (4,138,621 | ) | (1,267,801 | ) | 149,822 | |||||||||||||||||||||
Service Class | 411,724 | 815,180 | 661,844 | 1,640,948 | (3,183,253 | ) | (10,470,520 | ) | (2,109,685 | ) | (8,014,392 | ) | ||||||||||||||||||||
R Class | 42,261 | 58,655 | 13,532 | 27,724 | (64,382 | ) | (63,346 | ) | (8,589 | ) | 23,033 | |||||||||||||||||||||
K Class | 13,532 | 12,427 | 3,507 | 4,912 | (6,453 | ) | (36,908 | ) | 10,586 | (19,569 | ) | |||||||||||||||||||||
Royce Small-Cap Value Fund | ||||||||||||||||||||||||||||||||
Investment Class | 1,706,503 | 1,053,004 | 347,918 | 1,374,958 | (3,693,241 | ) | (5,393,585 | ) | (1,638,820 | ) | (2,965,623 | ) | ||||||||||||||||||||
Service Class | 918,639 | 1,465,750 | 1,028,707 | 4,495,352 | (9,655,060 | ) | (17,566,808 | ) | (7,707,714 | ) | (11,605,706 | ) | ||||||||||||||||||||
Consultant Class | 112,192 | 215,591 | 92,160 | 381,923 | (700,893 | ) | (724,958 | ) | (496,541 | ) | (127,444 | ) | ||||||||||||||||||||
Institutional Class | 6,021,934 | 3,372,929 | 707,954 | 2,974,106 | (11,003,947 | ) | (5,973,204 | ) | (4,274,059 | ) | 373,831 | |||||||||||||||||||||
R Class | 319,737 | 280,915 | 98,127 | 380,634 | (823,181 | ) | (1,095,792 | ) | (405,317 | ) | (434,243 | ) | ||||||||||||||||||||
K Class | 173,952 | 139,957 | 30,169 | 210,515 | (752,641 | ) | (425,379 | ) | (548,520 | ) | (74,907 | ) | ||||||||||||||||||||
Royce Smaller-Companies Growth Fund | ||||||||||||||||||||||||||||||||
Investment Class | 847,388 | 2,101,946 | 717,953 | 2,020,717 | (5,074,410 | ) | (12,370,706 | ) | (3,509,069 | ) | (8,248,043 | ) | ||||||||||||||||||||
Service Class | 1,409,846 | 1,642,584 | 2,529,315 | 6,741,732 | (14,572,615 | ) | (12,153,321 | ) | (10,633,454 | ) | (3,769,005 | ) | ||||||||||||||||||||
Consultant Class | 18,168 | 117,001 | 128,775 | 288,450 | (486,078 | ) | (273,856 | ) | (339,135 | ) | 131,595 | |||||||||||||||||||||
Institutional Class | 412,595 | 1,145,664 | 166,115 | 655,027 | (2,234,312 | ) | (1,014,525 | ) | (1,655,602 | ) | 786,166 | |||||||||||||||||||||
R Class | 20,463 | 12,908 | 8,546 | 17,538 | (35,661 | ) | (46,370 | ) | (6,652 | ) | (15,924 | ) | ||||||||||||||||||||
K Class | 4,217 | 4,290 | 6,933 | 15,957 | (23,979 | ) | (24,866 | ) | (12,829 | ) | (4,619 | ) | ||||||||||||||||||||
Royce Special Equity Fund | ||||||||||||||||||||||||||||||||
Investment Class | 9,260,512 | 7,510,477 | 3,410,178 | 5,715,510 | (18,239,504 | ) | (37,351,257 | ) | (5,568,814 | ) | (24,125,270 | ) | ||||||||||||||||||||
Service Class | 1,557,578 | 956,841 | 302,840 | 520,318 | (2,299,540 | ) | (5,460,300 | ) | (439,122 | ) | (3,983,141 | ) | ||||||||||||||||||||
Consultant Class | 271,702 | 162,016 | 164,009 | 253,497 | (489,570 | ) | (863,049 | ) | (53,859 | ) | (447,536 | ) | ||||||||||||||||||||
Institutional Class | 2,367,916 | 3,062,860 | 706,990 | 1,327,500 | (5,367,357 | ) | (20,824,726 | ) | (2,292,451 | ) | (16,434,366 | ) | ||||||||||||||||||||
Royce Special Equity Multi-Cap Fund | ||||||||||||||||||||||||||||||||
Investment Class | 704,106 | 1,107,136 | 25,618 | 245,103 | (1,787,819 | ) | (5,730,289 | ) | (1,058,095 | ) | (4,378,050 | ) | ||||||||||||||||||||
Service Class | 92,500 | 247,726 | 20,600 | 281,431 | (1,271,369 | ) | (2,764,259 | ) | (1,158,269 | ) | (2,235,102 | ) | ||||||||||||||||||||
Consultant Class | 64,759 | 169,969 | 4,086 | 75,186 | (358,839 | ) | (268,805 | ) | (289,994 | ) | (23,650 | ) | ||||||||||||||||||||
Institutional Class | 14,101 | 369,024 | 32,709 | 256,618 | (348,109 | ) | (2,515,703 | ) | (301,299 | ) | (1,890,061 | ) | ||||||||||||||||||||
Royce Total Return Fund | ||||||||||||||||||||||||||||||||
Investment Class | 23,095,630 | 15,709,131 | 9,965,626 | 17,555,119 | (54,300,006 | ) | (86,646,668 | ) | (21,238,750 | ) | (53,382,418 | ) | ||||||||||||||||||||
Service Class | 2,651,956 | 1,592,323 | 752,701 | 1,353,217 | (4,555,567 | ) | (7,132,452 | ) | (1,150,910 | ) | (4,186,912 | ) | ||||||||||||||||||||
Consultant Class | 809,896 | 1,202,972 | 1,253,650 | 2,425,951 | (4,654,549 | ) | (5,752,764 | ) | (2,591,003 | ) | (2,123,841 | ) | ||||||||||||||||||||
Institutional Class | 22,240,210 | 6,571,596 | 2,503,885 | 4,027,799 | (25,442,830 | ) | (18,016,463 | ) | (698,735 | ) | (7,417,068 | ) | ||||||||||||||||||||
W Class | 2,022,318 | 2,391,393 | 391,422 | 1,135,774 | (6,527,081 | ) | (11,370,962 | ) | (4,113,341 | ) | (7,843,795 | ) | ||||||||||||||||||||
R Class | 561,428 | 572,835 | 298,296 | 519,876 | (1,194,084 | ) | (1,279,998 | ) | (334,360 | ) | (187,287 | ) | ||||||||||||||||||||
K Class | 2,544,929 | 3,838,974 | 540,978 | 1,364,520 | (6,214,250 | ) | (6,082,012 | ) | (3,128,343 | ) | (878,518 | ) | ||||||||||||||||||||
1 | Includes shares issued in connection with the merger of Royce Select Fund I (2,425,697 for Investment Class for the year ended 12/31/15). |
The Royce Funds 2016 Annual Report to Shareholders | 119
Notes to Financial Statements (continued)
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, 2017, is shown below to the extent that it impacted net expenses for the year ended December 31, 2016. See the Prospectus for contractual waiver expiration dates.
ANNUAL CONTRACTUAL | YEAR ENDED | ||||||||||||||||||||||||||||||||||||||||
ADVISORY FEE AS A | COMMITTED NET ANNUAL OPERATING EXPENSE RATIO CAP | DECEMBER 31, 2016 | |||||||||||||||||||||||||||||||||||||||
PERCENTAGE OF | Investment | Service | Consultant | Institutional | Advisory fees | ||||||||||||||||||||||||||||||||||||
AVERAGE NET ASSETS1 | Class5 | Class5 | Class5 | Class5 | W Class5 | R Class5 | K Class5 | Net advisory fees | waived | ||||||||||||||||||||||||||||||||
Royce Dividend Value Fund | 0.85 | %2 | 1.09 | %6 | 1.34 | %6 | 2.09 | %6 | 0.89 | %6 | N/A | N/A | N/A | $ | 2,093,231 | $ | 129,076 | ||||||||||||||||||||||||
Royce Global Financial Services Fund | 1.00 | % | N/A | 1.49 | % | N/A | 1.04 | % | N/A | N/A | N/A | 408,693 | 73,975 | ||||||||||||||||||||||||||||
Royce Heritage Fund | 0.85 | %2 | N/A | N/A | 2.09 | %7 | N/A | N/A | 1.69 | %7 | 1.44 | %7 | 2,040,317 | – | |||||||||||||||||||||||||||
Royce International Micro-Cap Fund | 1.25 | % | N/A | 1.64 | % | N/A | N/A | N/A | N/A | N/A | – | 74,842 | |||||||||||||||||||||||||||||
Royce International Premier Fund | 1.00 | %3 | 1.19 | %8 | 1.44 | %8 | 2.19 | % | N/A | N/A | 1.74 | % | 1.49 | % | 584,211 | 45,289 | |||||||||||||||||||||||||
Royce International Small-Cap Fund | 1.00 | %3 | 1.19 | %9 | 1.44 | %9 | N/A | 1.19 | %9 | N/A | N/A | N/A | 46,522 | 78,745 | |||||||||||||||||||||||||||
Royce Low-Priced Stock Fund | 1.00 | % | 1.24 | % | 1.49 | % | N/A | N/A | N/A | 1.84 | % | 1.59 | % | 3,258,059 | – | ||||||||||||||||||||||||||
Royce Micro-Cap Fund | 1.25 | % | N/A | 1.61 | % | N/A | N/A | N/A | N/A | N/A | 3,030,754 | – | |||||||||||||||||||||||||||||
Royce Micro-Cap Opportunity Fund | 1.00 | % | 1.24 | % | 1.49 | % | N/A | N/A | N/A | N/A | N/A | 395,532 | – | ||||||||||||||||||||||||||||
Royce Opportunity Fund | 1.00 | % | N/A | 1.49 | % | N/A | N/A | N/A | N/A | N/A | 14,138,375 | – | |||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund | 0.76 | %4 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 19,909,580 | – | ||||||||||||||||||||||||||||||
Royce Premier Fund | 0.99 | % | N/A | 1.49 | % | N/A | N/A | N/A | N/A | 1.99 | % | 22,883,808 | – | ||||||||||||||||||||||||||||
Royce Small-Cap Leaders Fund | 1.00 | % | N/A | 1.49 | % | N/A | N/A | N/A | 1.84 | % | 1.59 | % | 991,420 | – | |||||||||||||||||||||||||||
Royce Small-Cap Value Fund | 1.00 | % | 1.24 | % | N/A | N/A | N/A | N/A | N/A | N/A | 4,825,375 | – | |||||||||||||||||||||||||||||
Royce Smaller-Companies Growth Fund | 1.00 | % | N/A | N/A | 2.24 | % | N/A | N/A | 1.84 | % | 1.59 | % | 4,850,060 | – | |||||||||||||||||||||||||||
Royce Special Equity Fund | 1.00 | % | N/A | 1.39 | % | N/A | N/A | N/A | N/A | N/A | 14,591,383 | – | |||||||||||||||||||||||||||||
Royce Special Equity Multi-Cap Fund | 0.85 | % | N/A | 1.24 | % | 1.99 | % | 0.89 | % | N/A | N/A | N/A | 978,802 | 61,109 | |||||||||||||||||||||||||||
Royce Total Return Fund | 0.99 | % | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 27,523,193 | – | ||||||||||||||||||||||||||||||
1 | From a base annual rate of 1.00% (0.85% for Royce Dividend Value Fund, Royce Heritage Fund and Royce Special Equity Multi-Cap Fund and 1.25% for Royce International Micro-Cap Fund and Royce Micro-Cap 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 Dividend Value Fund and Royce Heritage Fund’s base annual contractual advisory fee was reduced from 1.00% to 0.85%, effective May 1, 2016. |
3 | Royce International Premier Fund and Royce International Small Cap Fund’s base annual contractual advisory fee was reduced from 1.10% to 1.00%, effective January 1, 2016. |
4 | 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. |
5 | Committed net annual operating expense ratio cap excludes acquired fund fees and expenses. |
6 | Royce Dividend Value Fund’s committed net annual operating expense ratio cap was reduced from 2.24% to 2.09% for Consultant Class and from 1.04% to 0.89% for Institutional Class, effective May 1, 2016. |
7 | Royce Heritage Fund’s committed net annual operating expense ratio cap was reduced from 2.24% to 2.09% for Consultant Class, from 1.84% to 1.69% for R Class and from 1.59% to 1.44% for K Class, effective May 1, 2016. |
8 | Royce International Premier Fund’s committed net annual operating expense ratio cap was reduced from 1.29% to 1.19% for Investment Class and from 1.54% to 1.44% for Service Class, effective January 1, 2016. |
9 | Royce International Small-Cap Fund’s committed net annual operating expense ratio cap was reduced from 1.29% to 1.19% for Investment Class and Institutional Class and from 1.54% to 1.44% for Service Class, effective January 1, 2016. |
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.
ANNUAL CONTRACTUAL DISTRIBUTION FEE AS A | YEAR ENDED DECEMBER 31, 2016 | |||||||||||
PERCENTAGE OF AVERAGE NET ASSETS | Net distribution fees | Distribution fees waived | ||||||||||
Royce Dividend Value Fund – Service Class | 0.25 | % | $ | 333,023 | $ | 13,876 | ||||||
Royce Dividend Value Fund – Consultant Class | 1.00 | % | 14,425 | – | ||||||||
Royce Global Financial Services Fund – Service Class | 0.25 | % | 103,023 | 4,293 | ||||||||
Royce Heritage Fund – Service Class | 0.25 | % | 164,724 | 129,425 | ||||||||
Royce Heritage Fund – Consultant Class | 1.00 | % | 110,884 | – | ||||||||
Royce Heritage Fund – R Class | 0.50 | % | 10,240 | – | ||||||||
Royce Heritage Fund – K Class | 0.25 | % | 9,535 | – | ||||||||
Royce International Micro-Cap Fund – Service Class | 0.25 | % | 9,579 | 5,389 | ||||||||
Royce International Premier Fund – Service Class | 0.25 | % | 56,220 | 37,480 | ||||||||
Royce International Premier Fund – Consultant Class | 1.00 | % | 52,672 | – | ||||||||
Royce International Premier Fund – R Class | 0.50 | % | 187 | – | ||||||||
Royce International Premier Fund – K Class | 0.25 | % | 49 | – | ||||||||
Royce International Small-Cap Fund – Service Class | 0.25 | % | 24,955 | – | ||||||||
120 | The Royce Funds 2016 Annual Report to Shareholders
DISTRIBUTOR (continued):
ANNUAL CONTRACTUAL DISTRIBUTION FEE AS A | YEAR ENDED DECEMBER 31, 2016 | |||||||||||
PERCENTAGE OF AVERAGE NET ASSETS | Net distribution fees | Distribution fees waived | ||||||||||
Royce Low-Priced Stock Fund – Service Class | 0.25 | % | $ | 646,658 | $ | 56,231 | ||||||
Royce Low-Priced Stock Fund – R Class | 0.50 | % | 5,565 | – | ||||||||
Royce Low-Priced Stock Fund – K Class | 0.25 | % | 3,055 | – | ||||||||
Royce Micro-Cap Fund – Service Class | 0.25 | % | 42,378 | – | ||||||||
Royce Micro-Cap Fund – Consultant Class | 1.00 | % | 354,132 | – | ||||||||
Royce Micro-Cap Opportunity Fund – Service Class | 0.25 | % | 2,448 | – | ||||||||
Royce Opportunity Fund – Service Class | 0.25 | % | 201,536 | – | ||||||||
Royce Opportunity Fund – Consultant Class | 1.00 | % | 199,548 | – | ||||||||
Royce Opportunity Fund – R Class | 0.50 | % | 172,041 | – | ||||||||
Royce Opportunity Fund – K Class | 0.25 | % | 17,675 | – | ||||||||
Royce Pennsylvania Mutual Fund – Service Class | 0.25 | % | 216,293 | – | ||||||||
Royce Pennsylvania Mutual Fund – Consultant Class | 1.00 | % | 3,926,357 | – | ||||||||
Royce Pennsylvania Mutual Fund – R Class | 0.50 | % | 83,751 | – | ||||||||
Royce Pennsylvania Mutual Fund – K Class | 0.25 | % | 7,849 | – | ||||||||
Royce Premier Fund – Service Class | 0.25 | % | 117,913 | – | ||||||||
Royce Premier Fund – Consultant Class | 1.00 | % | 315,319 | – | ||||||||
Royce Premier Fund – R Class | 0.50 | % | 72,418 | – | ||||||||
Royce Premier Fund – K Class | 0.25 | % | 4,946 | – | ||||||||
Royce Small-Cap Leaders Fund – Service Class | 0.25 | % | 116,942 | 10,169 | ||||||||
Royce Small-Cap Leaders Fund – R Class | 0.50 | % | 7,724 | – | ||||||||
Royce Small-Cap Leaders Fund – K Class | 0.25 | % | 1,009 | – | ||||||||
Royce Small-Cap Value Fund – Service Class | 0.25 | % | 528,482 | 22,020 | ||||||||
Royce Small-Cap Value Fund – Consultant Class | 1.00 | % | 170,963 | – | ||||||||
Royce Small-Cap Value Fund – R Class | 0.50 | % | 87,277 | – | ||||||||
Royce Small-Cap Value Fund – K Class | 0.25 | % | 10,583 | – | ||||||||
Royce Smaller-Companies Growth Fund – Service Class | 0.25 | % | 761,133 | 66,185 | ||||||||
Royce Smaller-Companies Growth Fund – Consultant Class | 1.00 | % | 122,639 | – | ||||||||
Royce Smaller-Companies Growth Fund – R Class | 0.50 | % | 3,874 | – | ||||||||
Royce Smaller-Companies Growth Fund – K Class | 0.25 | % | 580 | – | ||||||||
Royce Special Equity Fund – Service Class | 0.25 | % | 277,923 | – | ||||||||
Royce Special Equity Fund – Consultant Class | 1.00 | % | 431,889 | – | ||||||||
Royce Special Equity Multi-Cap Fund – Service Class | 0.25 | % | 75,196 | 23,746 | ||||||||
Royce Special Equity Multi-Cap Fund – Consultant Class | 1.00 | % | 49,768 | – | ||||||||
Royce Total Return Fund – Service Class | 0.25 | % | 320,043 | – | ||||||||
Royce Total Return Fund – Consultant Class | 1.00 | % | 2,571,720 | – | ||||||||
Royce Total Return Fund – R Class | 0.50 | % | 252,538 | – | ||||||||
Royce Total Return Fund – K Class | 0.25 | % | 133,190 | – | ||||||||
Purchases and Sales of Investment Securities:
For the year ended December 31, 2016, the costs of purchases and the proceeds from sales of investment securities, other than short-term securities and collateral received for securities loaned, were as follows:
PURCHASES | SALES1 | |||||||
Royce Dividend Value Fund | $ | 50,532,737 | $ | 150,140,226 | ||||
Royce Global Financial Services Fund | 17,302,287 | 25,530,702 | ||||||
Royce Heritage Fund | 131,305,761 | 182,968,069 | ||||||
Royce International Micro-Cap Fund | 6,509,709 | 7,129,057 | ||||||
Royce International Premier Fund | 40,341,261 | 51,454,841 | ||||||
Royce International Small-Cap Fund | 13,301,322 | 25,377,571 | ||||||
Royce Low-Priced Stock Fund | 107,083,878 | 217,948,733 | ||||||
Royce Micro-Cap Fund | 87,571,866 | 177,693,856 | ||||||
Royce Micro-Cap Opportunity Fund | 31,670,696 | 31,115,623 | ||||||
Royce Opportunity Fund | 355,301,018 | 788,939,860 | ||||||
Royce Pennsylvania Mutual Fund | 466,176,089 | 1,355,094,636 | ||||||
Royce Premier Fund | 337,080,691 | 1,101,784,379 | ||||||
Royce Small-Cap Leaders Fund | 60,957,376 | 92,190,583 | ||||||
Royce Small-Cap Value Fund | 251,066,841 | 450,957,366 | ||||||
Royce Smaller-Companies Growth Fund | 274,475,296 | 496,477,864 | ||||||
Royce Special Equity Fund | 389,275,814 | 811,340,190 | ||||||
Royce Special Equity Multi-Cap Fund | 56,232,246 | 94,681,334 | ||||||
Royce Total Return Fund | 429,384,185 | 931,017,279 | ||||||
1 | Excludes the value of securities delivered as a result of redemptions-in-kind. |
The Royce Funds 2016 Annual Report to Shareholders | 121
Notes to Financial Statements (continued)
Purchases and Sales of Investment Securities (continued):
Cross trades were executed by the Funds pursuant to Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds to which Royce serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7. Cross trades for the year ended December 31, 2016, were as follows:
COST OF PURCHASES | PROCEEDS FROM SALES | REALIZED GAIN (LOSS) | ||||||||||
Royce Dividend Value Fund | $ | – | $ | 4,053,354 | $ | (126,576 | ) | |||||
Royce Global Financial Services Fund | 204,390 | – | – | |||||||||
Royce Heritage Fund | – | – | – | |||||||||
Royce International Micro-Cap Fund | – | – | – | |||||||||
Royce International Premier Fund | 314,870 | 1,589,637 | (38,090 | ) | ||||||||
Royce International Small-Cap Fund | – | – | – | |||||||||
Royce Low-Priced Stock Fund | 3,302,087 | – | – | |||||||||
Royce Micro-Cap Fund | 8,156,472 | 133,316 | (2,602 | ) | ||||||||
Royce Micro-Cap Opportunity Fund | – | – | – | |||||||||
Royce Opportunity Fund | 1,034,874 | 2,693,816 | 426,551 | |||||||||
Royce Pennsylvania Mutual Fund | 21,934,490 | 48,027,737 | (26,333,074 | ) | ||||||||
Royce Premier Fund | 3,522,055 | 72,600,869 | (20,109,484 | ) | ||||||||
Royce Small-Cap Leaders Fund | 501,750 | – | – | |||||||||
Royce Small-Cap Value Fund | 802,104 | – | – | |||||||||
Royce Smaller-Companies Growth Fund | 1,145,130 | – | – | |||||||||
Royce Special Equity Fund | 13,302 | – | – | |||||||||
Royce Special Equity Multi-Cap Fund | – | – | – | |||||||||
Royce Total Return Fund | 70,815,832 | 27,044,336 | 6,001,103 | |||||||||
Redemptions-In-Kind:
The Funds may make payment for Fund shares redeemed wholly or in part by distributing portfolio securities to shareholders. The net realized gain will not be realized for tax purposes. For the year ended December 31, 2016, the following funds had redemptions in kind:
PROCEEDS | REALIZED GAIN (LOSS) | |||||||
Royce Pennsylvania Mutual Fund | $ | 207,642,555 | $ | 155,771,687 | ||||
Royce Premier Fund | 52,012,068 | 30,858,075 | ||||||
Royce Total Return Fund | 124,096,342 | 70,600,118 | ||||||
Class Specific Expenses:
Class specific expenses, for Funds with multiple classes, were as follows for the period ended December 31, 2016:
NET DISTRIBUTION FEES | SHAREHOLDER SERVICING | SHAREHOLDER REPORTS | REGISTRATION | TRANSFER AGENT BALANCE CREDITS | TOTAL | CLASS LEVEL EXPENSES REIMBURSED BY INVESTMENT ADVISER | ||||||||||||||||||||||
Royce Dividend Value Fund – Investment Class | $ | – | $ | 132,369 | $ | 29,511 | $ | 16,450 | $ | (49 | ) | $ | 178,281 | $ | – | |||||||||||||
Royce Dividend Value Fund – Service Class | 333,023 | 183,386 | 57,495 | 15,609 | (1,271 | ) | 588,242 | – | ||||||||||||||||||||
Royce Dividend Value Fund – Consultant Class | 14,425 | 7,287 | 702 | 10,264 | (9 | ) | 32,669 | 15,365 | ||||||||||||||||||||
Royce Dividend Value Fund – Institutional Class | – | 6,089 | 29 | 10,489 | (1 | ) | 16,606 | 16,606 | ||||||||||||||||||||
347,448 | 329,131 | 87,737 | 52,812 | (1,330 | ) | 31,971 | ||||||||||||||||||||||
Royce Global Financial Services Fund – Service Class | 103,023 | 65,464 | 16,301 | 18,159 | (85 | ) | 202,862 | 7,409 | ||||||||||||||||||||
Royce Global Financial Services Fund – Institutional Class | – | 7,605 | 34 | 27,153 | (1 | ) | 34,791 | 34,791 | ||||||||||||||||||||
103,023 | 73,069 | 16,335 | 45,312 | (86 | ) | 42,200 | ||||||||||||||||||||||
Royce Heritage Fund – Investment Class | – | 18,140 | 2,363 | 13,801 | (19 | ) | 34,285 | – | ||||||||||||||||||||
Royce Heritage Fund – Service Class | 164,724 | 94,803 | 43,803 | 15,627 | (617 | ) | 318,340 | – | ||||||||||||||||||||
Royce Heritage Fund – Consultant Class | 110,884 | 16,610 | 5,304 | 10,798 | (63 | ) | 143,533 | 15,330 | ||||||||||||||||||||
Royce Heritage Fund – R Class | 10,240 | 10,639 | 726 | 4,654 | (11 | ) | 26,248 | 10,757 | ||||||||||||||||||||
Royce Heritage Fund – K Class | 9,535 | 13,011 | 1,345 | 10,688 | (5 | ) | 34,574 | 15,271 | ||||||||||||||||||||
295,383 | 153,203 | 53,541 | 55,568 | (715 | ) | 41,358 | ||||||||||||||||||||||
122 | The Royce Funds 2016 Annual Report to Shareholders
Class Specific Expenses (continued):
NET DISTRIBUTION FEES | SHAREHOLDER SERVICING | SHAREHOLDER REPORTS | REGISTRATION | TRANSFER AGENT BALANCE CREDITS | TOTAL | CLASS LEVEL EXPENSES REIMBURSED BY INVESTMENT ADVISER | ||||||||||||||||||||||
Royce International Premier Fund – Investment Class | $ | – | $ | 40,439 | $ | 10,217 | $ | 14,462 | $ | (19 | ) | $ | 65,099 | $ | 65,099 | |||||||||||||
Royce International Premier Fund – Service Class | 56,220 | 80,463 | 23,599 | 15,068 | (219 | ) | 175,131 | 84,596 | ||||||||||||||||||||
Royce International Premier Fund – Consultant Class | 52,672 | 16,302 | 2,017 | 4,970 | (35 | ) | 75,926 | 23,184 | ||||||||||||||||||||
Royce International Premier Fund – R Class | 187 | 8,058 | (7 | ) | 1,888 | (1 | ) | 10,125 | 9,922 | |||||||||||||||||||
Royce International Premier Fund – K Class | 49 | 8,074 | – | 4,211 | (1 | ) | 12,333 | 12,275 | ||||||||||||||||||||
109,128 | 153,336 | 35,826 | 40,599 | (275 | ) | 195,076 | ||||||||||||||||||||||
Royce International Small-Cap Fund – Investment Class | – | 6,665 | 103 | 11,412 | (2 | ) | 18,178 | 18,178 | ||||||||||||||||||||
Royce International Small-Cap Fund – Service Class | 24,955 | 20,059 | 2,448 | 16,623 | (38 | ) | 64,047 | 33,415 | ||||||||||||||||||||
Royce International Small-Cap Fund – Institutional Class | – | 6,089 | 27 | 12,181 | (1 | ) | 18,296 | 17,908 | ||||||||||||||||||||
24,955 | 32,813 | 2,578 | 40,216 | (41 | ) | 69,501 | ||||||||||||||||||||||
Royce Low-Priced Stock Fund – Investment Class | – | 38,634 | 8,014 | 10,481 | (26 | ) | 57,103 | 17,621 | ||||||||||||||||||||
Royce Low-Priced Stock Fund – Service Class | 646,658 | 423,244 | 90,696 | 21,392 | (807 | ) | 1,181,183 | 18,679 | ||||||||||||||||||||
Royce Low-Priced Stock Fund – Institutional Class | – | 6,534 | 6,485 | 11,386 | (3 | ) | 24,402 | – | ||||||||||||||||||||
Royce Low-Priced Stock Fund – R Class | 5,565 | 8,495 | 857 | 4,509 | (7 | ) | 19,419 | 10,926 | ||||||||||||||||||||
Royce Low-Priced Stock Fund – K Class | 3,055 | 8,346 | 463 | 10,092 | (4 | ) | 21,952 | 15,680 | ||||||||||||||||||||
655,278 | 485,253 | 106,515 | 57,860 | (847 | ) | 62,906 | ||||||||||||||||||||||
Royce Micro-Cap Fund – Investment Class | – | 173,315 | 90,285 | 17,791 | (779 | ) | 280,612 | – | ||||||||||||||||||||
Royce Micro-Cap Fund – Service Class | 42,378 | 24,553 | 5,990 | 10,846 | (23 | ) | 83,744 | 36,710 | ||||||||||||||||||||
Royce Micro-Cap Fund – Consultant Class | 354,132 | 48,313 | 10,680 | 12,076 | (91 | ) | 425,110 | – | ||||||||||||||||||||
396,510 | 246,181 | 106,955 | 40,713 | (893 | ) | 36,710 | ||||||||||||||||||||||
Royce Micro-Cap Opportunity Fund – Investment Class | – | 35,062 | 4,197 | 19,256 | (27 | ) | 58,488 | 23,236 | ||||||||||||||||||||
Royce Micro-Cap Opportunity Fund – Service Class | 2,448 | 8,544 | 629 | 10,117 | (2 | ) | 21,736 | 18,392 | ||||||||||||||||||||
2,448 | 43,606 | 4,826 | 29,373 | (29 | ) | 41,628 | ||||||||||||||||||||||
Royce Opportunity Fund – Investment Class | – | 784,602 | 111,323 | 24,005 | (1,151 | ) | 918,779 | – | ||||||||||||||||||||
Royce Opportunity Fund – Service Class | 201,536 | 128,733 | 39,170 | 12,993 | (52 | ) | 382,380 | 34,010 | ||||||||||||||||||||
Royce Opportunity Fund – Consultant Class | 199,548 | 27,560 | 5,564 | 10,227 | (82 | ) | 242,817 | – | ||||||||||||||||||||
Royce Opportunity Fund – Institutional Class | – | 7,898 | 33,525 | 17,284 | (21 | ) | 58,686 | – | ||||||||||||||||||||
Royce Opportunity Fund – R Class | 172,041 | 74,819 | 3,677 | 10,031 | (31 | ) | 260,537 | – | ||||||||||||||||||||
Royce Opportunity Fund – K Class | 17,675 | 19,449 | 2,110 | 9,990 | (20 | ) | 49,204 | – | ||||||||||||||||||||
590,800 | 1,043,061 | 195,369 | 84,530 | (1,357 | ) | 34,010 | ||||||||||||||||||||||
Royce Pennsylvania Mutual Fund – Investment Class | – | 1,451,623 | 301,368 | 30,183 | (3,389 | ) | 1,779,785 | – | ||||||||||||||||||||
Royce Pennsylvania Mutual Fund – Service Class | 216,293 | 139,964 | 11,631 | 16,846 | (90 | ) | 384,644 | – | ||||||||||||||||||||
Royce Pennsylvania Mutual Fund – Consultant Class | 3,926,357 | 373,487 | 88,047 | 15,578 | (845 | ) | 4,402,624 | – | ||||||||||||||||||||
Royce Pennsylvania Mutual Fund – Institutional Class | – | 8,964 | 26,500 | 25,480 | (45 | ) | 60,899 | – | ||||||||||||||||||||
Royce Pennsylvania Mutual Fund – R Class | 83,751 | 40,817 | 3,994 | 8,026 | (52 | ) | 136,536 | – | ||||||||||||||||||||
Royce Pennsylvania Mutual Fund – K Class | 7,849 | 12,425 | 1,002 | 9,910 | (8 | ) | 31,178 | – | ||||||||||||||||||||
4,234,250 | 2,027,280 | 432,542 | 106,023 | (4,429 | ) | – | ||||||||||||||||||||||
The Royce Funds 2016 Annual Report to Shareholders | 123
Notes to Financial Statements (continued)
Class Specific Expenses (continued):
CLASS LEVEL | ||||||||||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||||
REIMBURSED BY | ||||||||||||||||||||||||||||
NET DISTRIBUTION | SHAREHOLDER | SHAREHOLDER | TRANSFER AGENT | INVESTMENT | ||||||||||||||||||||||||
FEES | SERVICING | REPORTS | REGISTRATION | BALANCE CREDITS | TOTAL | ADVISER | ||||||||||||||||||||||
Royce Premier Fund – Investment Class | $ | – | $ | 1,527,332 | $ | 349,149 | $ | 32,835 | $ | (1,976 | ) | $ | 1,907,340 | $ | – | |||||||||||||
Royce Premier Fund – Service Class | 117,913 | 74,238 | 7,632 | 11,324 | (106 | ) | 211,001 | 4,225 | ||||||||||||||||||||
Royce Premier Fund – Consultant Class | 315,319 | 34,055 | 7,263 | 11,456 | (75 | ) | 368,018 | – | ||||||||||||||||||||
Royce Premier Fund – Institutional Class | – | 7,868 | 22,710 | 15,584 | (12 | ) | 46,150 | – | ||||||||||||||||||||
Royce Premier Fund – W Class | – | 136,909 | 43,021 | 13,916 | (238 | ) | 193,608 | – | ||||||||||||||||||||
Royce Premier Fund – R Class | 72,418 | 35,481 | 1,078 | 4,551 | (13 | ) | 113,515 | – | ||||||||||||||||||||
Royce Premier Fund – K Class | 4,946 | 9,630 | 397 | 9,525 | (4 | ) | 24,494 | 5,960 | ||||||||||||||||||||
510,596 | 1,825,513 | 431,250 | 99,191 | (2,424 | ) | 10,185 | ||||||||||||||||||||||
Royce Small-Cap Leaders Fund – | – | 32,048 | 10,697 | 14,791 | (37 | ) | 57,499 | – | ||||||||||||||||||||
Royce Small-Cap Leaders Fund – | 116,942 | 82,642 | 17,274 | 15,014 | (132 | ) | 231,740 | 34,393 | ||||||||||||||||||||
Royce Small-Cap Leaders Fund – R Class | 7,724 | 10,231 | 1,732 | 5,663 | (32 | ) | 25,318 | 13,941 | ||||||||||||||||||||
Royce Small-Cap Leaders Fund – K Class | 1,009 | 6,826 | 1,912 | 9,983 | (3 | ) | 19,727 | 17,764 | ||||||||||||||||||||
125,675 | 131,747 | 31,615 | 45,451 | (204 | ) | 66,098 | ||||||||||||||||||||||
Royce Small-Cap Value Fund – | – | 100,069 | 16,199 | 12,725 | (41 | ) | 128,952 | 2,400 | ||||||||||||||||||||
Royce Small-Cap Value Fund – Service Class | 528,482 | 315,942 | 60,836 | 14,091 | (539 | ) | 918,812 | – | ||||||||||||||||||||
Royce Small-Cap Value Fund – | 170,963 | 22,638 | 3,872 | 10,305 | (37 | ) | 207,741 | – | ||||||||||||||||||||
Royce Small-Cap Value Fund – | – | 6,749 | 2,817 | 13,707 | (8 | ) | 23,265 | – | ||||||||||||||||||||
Royce Small-Cap Value Fund – R Class | 87,277 | 41,444 | 2,140 | 5,507 | (29 | ) | 136,339 | – | ||||||||||||||||||||
Royce Small-Cap Value Fund – K Class | 10,583 | 14,491 | 2,525 | 10,013 | (7 | ) | 37,605 | – | ||||||||||||||||||||
797,305 | 501,333 | 88,389 | 66,348 | (661 | ) | 2,400 | ||||||||||||||||||||||
Royce Smaller-Companies Growth Fund – | – | 47,098 | 36,176 | 14,770 | (74 | ) | 97,970 | – | ||||||||||||||||||||
Royce Smaller-Companies Growth Fund – | 761,133 | 504,392 | 108,147 | 19,474 | (708 | ) | 1,392,438 | – | ||||||||||||||||||||
Royce Smaller-Companies Growth Fund – | 122,639 | 20,316 | 3,927 | 10,389 | (36 | ) | 157,235 | 13,561 | ||||||||||||||||||||
Royce Smaller-Companies Growth Fund – | – | 6,995 | 3,075 | 12,015 | (5 | ) | 22,080 | – | ||||||||||||||||||||
Royce Smaller-Companies Growth Fund – | 3,874 | 7,926 | 674 | 5,065 | (7 | ) | 17,532 | 11,559 | ||||||||||||||||||||
Royce Smaller-Companies Growth Fund – | 580 | 6,532 | 122 | 9,904 | (3 | ) | 17,135 | 15,924 | ||||||||||||||||||||
888,226 | 593,259 | 152,121 | 71,617 | (833 | ) | 41,044 | ||||||||||||||||||||||
Royce Special Equity Fund – Investment Class | – | 1,014,782 | 186,474 | 43,120 | (1,153 | ) | 1,243,223 | – | ||||||||||||||||||||
Royce Special Equity Fund – Service Class | 277,923 | 162,768 | 38,491 | 13,036 | (634 | ) | 491,584 | 120,873 | ||||||||||||||||||||
Royce Special Equity Fund – Consultant Class | 431,889 | 40,714 | 8,616 | 10,742 | (98 | ) | 491,863 | – | ||||||||||||||||||||
Royce Special Equity Fund – | – | 9,478 | 8,930 | 13,032 | (29 | ) | 31,411 | – | ||||||||||||||||||||
709,812 | 1,227,742 | 242,511 | 79,930 | (1,914 | ) | 120,873 | ||||||||||||||||||||||
Royce Special Equity Multi-Cap Fund – | – | 20,784 | 1,608 | 13,708 | (30 | ) | 36,070 | – | ||||||||||||||||||||
Royce Special Equity Multi-Cap Fund – | 75,196 | 42,688 | 4,845 | 12,796 | (75 | ) | 135,450 | – | ||||||||||||||||||||
Royce Special Equity Multi-Cap Fund – | 49,768 | 8,911 | 1,026 | 12,146 | (9 | ) | 71,842 | 17,044 | ||||||||||||||||||||
Royce Special Equity Multi-Cap Fund – | – | 6,196 | 38 | 11,845 | (1 | ) | 18,078 | 18,078 | ||||||||||||||||||||
124,964 | 78,579 | 7,517 | 50,495 | (115 | ) | 35,122 | ||||||||||||||||||||||
124 | The Royce Funds 2016 Annual Report to Shareholders
Class Specific Expenses (continued):
CLASS LEVEL | ||||||||||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||||
REIMBURSED BY | ||||||||||||||||||||||||||||
NET DISTRIBUTION | SHAREHOLDER | SHAREHOLDER | TRANSFER AGENT | INVESTMENT | ||||||||||||||||||||||||
FEES | SERVICING | REPORTS | REGISTRATION | BALANCE CREDITS | TOTAL | ADVISER | ||||||||||||||||||||||
Royce Total Return Fund – Investment Class | $ | – | $ | 2,103,106 | $ | 420,051 | $ | 47,165 | $ | (2,216 | ) | $ | 2,568,106 | $ | – | |||||||||||||
Royce Total Return Fund – Service Class | 320,043 | 181,610 | 24,786 | 13,118 | (68 | ) | 539,489 | – | ||||||||||||||||||||
Royce Total Return Fund – Consultant Class | 2,571,720 | 224,444 | 54,865 | 13,023 | (515 | ) | 2,863,537 | – | ||||||||||||||||||||
Royce Total Return Fund – Institutional Class | – | 10,671 | 21,123 | 14,522 | (52 | ) | 46,264 | – | ||||||||||||||||||||
Royce Total Return Fund – W Class | – | 118,133 | 41,498 | 16,645 | (35 | ) | 176,241 | – | ||||||||||||||||||||
Royce Total Return Fund – R Class | 252,538 | 108,274 | 6,781 | 5,362 | (90 | ) | 372,865 | – | ||||||||||||||||||||
Royce Total Return Fund – K Class | 133,190 | 120,490 | 7,705 | 10,683 | (31 | ) | 272,037 | – | ||||||||||||||||||||
3,277,491 | 2,866,728 | 576,809 | 120,518 | (3,007 | ) | – | ||||||||||||||||||||||
Tax Information:
At December 31, 2016, net unrealized appreciation (depreciation) based on identified cost for tax purposes was as follows:
NET UNREALIZED | GROSS UNREALIZED | |||||||||||||||
TAX BASIS COST | APPRECIATION (DEPRECIATION) | Appreciation | Depreciation | |||||||||||||
Royce Dividend Value Fund | $ | 167,748,162 | $ | 50,349,138 | $ | 62,735,425 | $ | 12,386,287 | ||||||||
Royce Global Financial Services Fund | 43,507,678 | 5,819,946 | 9,116,790 | 3,296,844 | ||||||||||||
Royce Heritage Fund | 191,643,550 | 38,275,149 | 40,628,492 | 2,353,343 | ||||||||||||
Royce International Micro-Cap Fund | 6,332,808 | (236,840 | ) | 331,846 | 568,686 | |||||||||||
Royce International Premier Fund | 62,092,905 | 975,190 | 4,913,419 | 3,938,229 | ||||||||||||
Royce International Small-Cap Fund | 7,717,743 | (408,664 | ) | 312,423 | 721,087 | |||||||||||
Royce Low-Priced Stock Fund | 282,053,715 | 53,795,028 | 77,594,972 | 23,799,944 | ||||||||||||
Royce Micro-Cap Fund | 210,833,687 | 41,359,553 | 60,438,082 | 19,078,529 | ||||||||||||
Royce Micro-Cap Opportunity Fund | 39,529,033 | 6,821,439 | 9,633,374 | 2,811,935 | ||||||||||||
Royce Opportunity Fund | 1,385,245,010 | 202,302,133 | 389,101,818 | 186,799,685 | ||||||||||||
Royce Pennsylvania Mutual Fund | 1,475,996,669 | 993,629,023 | 1,048,167,074 | 54,538,051 | ||||||||||||
Royce Premier Fund | 1,125,934,101 | 1,143,406,230 | 1,151,122,133 | 7,715,903 | ||||||||||||
Royce Small-Cap Leaders Fund | 76,255,294 | 25,360,365 | 25,871,478 | 511,113 | ||||||||||||
Royce Small-Cap Value Fund | 394,377,176 | 66,180,262 | 76,217,252 | 10,036,990 | ||||||||||||
Royce Smaller-Companies Growth Fund | 352,349,190 | 105,301,392 | 114,819,107 | 9,517,715 | ||||||||||||
Royce Special Equity Fund | 1,126,437,399 | 496,540,978 | 508,457,122 | 11,916,144 | ||||||||||||
Royce Special Equity Multi-Cap Fund | 99,549,569 | 19,560,166 | 20,381,481 | 821,315 | ||||||||||||
Royce Total Return Fund | 1,668,101,429 | 1,196,215,629 | 1,268,160,044 | 71,944,415 | ||||||||||||
The primary causes of the differences between book and tax basis cost are the timing of the recognition of losses on securities sold, investments in Real Estate Investment Trusts, investments in publicly traded partnerships and Trusts, passive activity loss deferrals and mark-to-market of Passive Foreign Investment Companies.
Distributions during the years ended December 31, 2016 and 2015, were characterized as follows for tax purposes:
ORDINARY INCOME | LONG-TERM CAPITAL GAINS | RETURN OF CAPITAL | ||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
Royce Dividend Value Fund | $ | 3,107,321 | $ | 7,156,120 | $ | 19,861,509 | $ | 25,464,508 | $ | – | $ | – | ||||||||||||
Royce Global Financial Services Fund | 308,608 | 1,051,606 | 94,709 | 4,165,862 | – | – | ||||||||||||||||||
Royce Heritage Fund | 583,579 | 1,725,809 | 7,897,781 | 20,593,033 | – | – | ||||||||||||||||||
Royce International Micro-Cap Fund | 94,073 | 15,066 | – | – | 3,148 | – | ||||||||||||||||||
Royce International Premier Fund | 1,604,584 | 320,331 | – | – | 5,609 | – | ||||||||||||||||||
Royce International Small-Cap Fund | 306,893 | 437,046 | – | 86 | 3,639 | – | ||||||||||||||||||
Royce Low-Priced Stock Fund | 1,547,413 | 18,994 | 26,726,342 | 34,010,360 | – | – | ||||||||||||||||||
Royce Micro-Cap Fund | 918,940 | – | 25,455,295 | 34,625,922 | – | – | ||||||||||||||||||
Royce Micro-Cap Opportunity Fund | – | – | – | 595 | – | 286 | ||||||||||||||||||
Royce Opportunity Fund | – | – | 96,506,764 | 141,135,200 | – | – | ||||||||||||||||||
Royce Pennsylvania Mutual Fund | 6,891,166 | 25,887,791 | 164,057,941 | 576,766,684 | – | – | ||||||||||||||||||
Royce Premier Fund | 5,657,181 | 21,088,665 | 271,938,627 | 531,173,021 | – | – | ||||||||||||||||||
Royce Small-Cap Leaders Fund | 630,647 | 981,038 | 9,566,713 | 20,401,545 | – | – | ||||||||||||||||||
Royce Small-Cap Value Fund | 2,998,972 | 7,104,967 | 22,115,276 | 85,122,373 | – | – | ||||||||||||||||||
Royce Smaller-Companies Growth Fund | 159,281 | 14,564,048 | 44,148,665 | 111,650,125 | – | – | ||||||||||||||||||
Royce Special Equity Fund | 14,211,036 | 17,930,855 | 103,531,322 | 143,437,907 | – | – | ||||||||||||||||||
Royce Special Equity Multi-Cap Fund | 1,290,836 | 5,452,733 | – | 6,403,867 | – | – | ||||||||||||||||||
Royce Total Return Fund | 40,091,300 | 31,059,982 | 214,737,276 | 365,456,939 | – | – | ||||||||||||||||||
The Royce Funds 2016 Annual Report to Shareholders | 125
Notes to Financial Statements (continued)
Tax Information (continued):
The tax basis components of distributable earnings at December 31, 2016, were as follows:
UNDISTRIBUTED | QUALIFIED | |||||||||||||||||||||||
LONG-TERM | LATE YEAR | |||||||||||||||||||||||
UNDISTRIBUTED | CAPITAL GAINS OR | NET UNREALIZED | ORDINARY AND | TOTAL | CAPITAL LOSS | |||||||||||||||||||
ORDINARY INCOME | (CAPITAL LOSS CARRYFORWARD) | APPRECIATION (DEPRECIATION)1 | POST-OCTOBER LOSS DEFERRALS2 | DISTRIBUTABLE EARNINGS | CARRYFORWARD UTILIZED | |||||||||||||||||||
Royce Dividend Value Fund | $ | 849,389 | $ | 7,909,050 | $ | 50,344,588 | $ | (2,988 | ) | $ | 59,100,039 | $ | – | |||||||||||
Royce Global Financial Services Fund | 242,003 | (39,280 | ) | 5,817,509 | (587,278 | ) | 5,432,954 | – | ||||||||||||||||
Royce Heritage Fund | 1,740,307 | 6,797,288 | 38,271,209 | (11,104 | ) | 46,797,700 | – | |||||||||||||||||
Royce International Micro-Cap Fund | – | (471,931 | ) | (236,865 | ) | (9,178 | ) | (717,974 | ) | 220,381 | ||||||||||||||
Royce International Premier Fund | – | (71,137,249 | )3 | 874,255 | (843,352 | ) | (71,106,346 | ) | 2,069,589 | |||||||||||||||
Royce International Small-Cap Fund | – | (4,764,337 | ) | (413,666 | ) | (41,708 | ) | (5,219,711 | ) | – | ||||||||||||||
Royce Low-Priced Stock Fund | 1,172,059 | 5,755,092 | 53,794,953 | (205,631 | ) | 60,516,473 | – | |||||||||||||||||
Royce Micro-Cap Fund | 1,560,494 | 7,434,018 | 41,342,482 | (143,611 | ) | 50,193,383 | – | |||||||||||||||||
Royce Micro-Cap Opportunity Fund | – | (1,311,985 | ) | 6,821,443 | – | 5,509,458 | – | |||||||||||||||||
Royce Opportunity Fund | – | 26,957,430 | 202,302,132 | – | 229,259,562 | – | ||||||||||||||||||
Royce Pennsylvania Mutual Fund | 16,895 | 79,434,253 | 993,625,284 | (10,149 | ) | 1,073,066,283 | – | |||||||||||||||||
Royce Premier Fund | 214,997 | 75,367,146 | 1,143,181,883 | (1,186,541 | ) | 1,217,577,485 | – | |||||||||||||||||
Royce Small-Cap Leaders Fund | – | 2,652,030 | 25,360,443 | (1,150 | ) | 28,011,323 | – | |||||||||||||||||
Royce Small-Cap Value Fund | 118,424 | 2,471,848 | 66,180,262 | – | 68,770,534 | – | ||||||||||||||||||
Royce Smaller-Companies Growth Fund | – | 22,923,188 | 105,301,370 | 29,640 | 128,254,198 | – | ||||||||||||||||||
Royce Special Equity Fund | 1,092,121 | 37,391,444 | 496,540,976 | – | 535,024,541 | – | ||||||||||||||||||
Royce Special Equity Multi-Cap Fund | 8,256 | (596,357 | ) | 19,560,166 | – | 18,972,065 | 2,528,314 | |||||||||||||||||
Royce Total Return Fund | 2,275,278 | 47,160,051 | 1,196,183,840 | (868,505 | ) | 1,244,750,664 | – | |||||||||||||||||
1 | 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. |
2 | 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. |
3 | Due to the acquisition of Royce Global Value Fund by Royce International Premier Fund, $7,981,106 of capital loss carryover incurred before the Regulated Investment Company Modernization Act of 2010 was enacted expired on December 31, 2016. The entire amount is comprised of capital loss carryforwards from business combinations, which may be limited in future years under the Internal Revenue Code Sections 381-384. |
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, 2016, the Funds recorded the following permanent reclassifications, which relate primarily to current net operating losses, distribution reclassifications, investments in Real Estate Investment Trusts, publicly traded partnerships and Trusts, foreign currency transactions, foreign capital gains tax, equalization, redemptions-in-kind, non-deductible excise taxes paid 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 Dividend Value Fund | $ | (7,522 | ) | $ | 36,226 | $ | (28,704 | ) | ||||
Royce Global Financial Services Fund | (65,594 | ) | 65,596 | (2 | ) | |||||||
Royce Heritage Fund | 854,151 | (431,381 | ) | (422,770 | ) | |||||||
Royce International Micro-Cap Fund | 52,761 | (52,761 | ) | – | ||||||||
Royce International Premier Fund | 346,165 | (73,438,572 | ) | 73,092,407 | ||||||||
Royce International Small-Cap Fund | 246,188 | (246,188 | ) | – | ||||||||
Royce Low-Priced Stock Fund | 698,408 | (693,865 | ) | (4,543 | ) | |||||||
Royce Micro-Cap Fund | 484,449 | (493,205 | ) | 8,756 | ||||||||
Royce Micro-Cap Opportunity Fund | 220,253 | 6,064 | (226,317 | ) | ||||||||
Royce Opportunity Fund | 2,121,095 | (1,939,553 | ) | (181,542 | ) | |||||||
Royce Pennsylvania Mutual Fund | 5,222,092 | (180,884,515 | ) | 175,662,423 | ||||||||
Royce Premier Fund | (2,081,931 | ) | (75,003,280 | ) | 77,085,211 | |||||||
Royce Small-Cap Leaders Fund | 150,858 | 150,176 | (301,034 | ) | ||||||||
Royce Small-Cap Value Fund | (9,613 | ) | 9,613 | – | ||||||||
Royce Smaller-Companies Growth Fund | 3,355,344 | 314,413 | (3,669,757 | ) | ||||||||
Royce Special Equity Fund | – | – | – | |||||||||
Royce Special Equity Multi-Cap Fund | – | – | – | |||||||||
Royce Total Return Fund | 16,076,794 | (107,622,983 | ) | 91,546,189 | ||||||||
Management has analyzed the Funds’ tax positions taken on federal income tax returns for all open tax years (2013 – 2016) and has concluded that as of December 31, 2016, no provision for income tax is required in the Funds’ financial statements.
126 | The Royce Funds 2016 Annual Report to Shareholders
Transactions in Affiliated Companies:
An “Affiliated Company,” as defined in the Investment Company Act of 1940, is a company in which a fund owns 5% or more of the company’s outstanding voting securities at any time during the period. The following transactions were effected in shares of such companies for the year ended December 31, 2016:
SHARES | MARKET VALUE | COST | PROCEEDS | REALIZED GAIN | DIVIDEND | SHARES | MARKET VALUE | |||||||||||||||||||||||||
AFFILIATED COMPANY | 12/31/15 | 12/31/15 | OF PURCHASES | FROM SALES | (LOSS) | INCOME | 12/31/16 | 12/31/16 | ||||||||||||||||||||||||
Royce Opportunity Fund A. M. Castle & Co.1 | 1,736,183 | $ | 2,760,531 | $ | 197,100 | $ | 734,844 | $ | (3,068,887 | ) | $ | – | ||||||||||||||||||||
Amtech Systems | 743,606 | 4,654,974 | 314,284 | 443,887 | (918,196 | ) | – | 697,399 | $ | 2,963,946 | ||||||||||||||||||||||
Aviat Networks1 | 2,776,332 | 2,131,668 | 427,765 | 227,037 | (171,254 | ) | – | |||||||||||||||||||||||||
Dixie Group | 866,135 | 4,529,886 | 39,588 | 161,150 | (145,942 | ) | – | 839,935 | 3,023,766 | |||||||||||||||||||||||
Echelon Corporation | 163,558 | 922,467 | 369,228 | – | – | – | 230,152 | 1,081,714 | ||||||||||||||||||||||||
Fuel Systems Solutions1 | 919,302 | 4,495,387 | 146,476 | – | – | – | ||||||||||||||||||||||||||
KEMET Corporation1 | 2,221,453 | 5,264,844 | 333,087 | 1,084,187 | (4,055,648 | ) | – | |||||||||||||||||||||||||
LMI Aerospace | 829,530 | 8,353,367 | 174,541 | 134,487 | (99,599 | ) | – | 831,730 | 7,169,513 | |||||||||||||||||||||||
Noranda Aluminum Holding Corporation | 541,092 | 173,150 | 54,889 | 46,904 | (7,711,462 | ) | – | 593,726 | 14,131 | |||||||||||||||||||||||
Northwest Pipe1 | 509,994 | 5,706,833 | – | 588,856 | (569,015 | ) | – | |||||||||||||||||||||||||
PCM1 | 568,244 | 5,642,663 | 275,758 | 3,216,430 | 1,623,396 | – | ||||||||||||||||||||||||||
SigmaTron International | 347,772 | 2,618,723 | – | 15,158 | (14,131 | ) | – | 344,772 | 1,630,772 | |||||||||||||||||||||||
VOXX International Cl. A | 915,791 | 4,817,061 | 1,210,376 | – | – | – | 1,283,078 | 6,030,467 | ||||||||||||||||||||||||
52,071,554 | (15,130,738 | ) | – | 21,914,309 | ||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund DTS1 | 910,629 | 20,562,003 | – | 37,598,901 | 17,006,740 | 17,331 | ||||||||||||||||||||||||||
FRP Holdings1 | 518,912 | 17,611,874 | – | 2,351,794 | 1,312,226 | – | ||||||||||||||||||||||||||
Preformed Line Products | 305,178 | 12,847,994 | – | 536,548 | (293,869 | ) | 232,222 | 290,278 | 16,870,957 | |||||||||||||||||||||||
STRATTEC SECURITY | 260,547 | 14,718,300 | – | 688,019 | (542,340 | ) | 134,485 | 245,247 | 9,883,454 | |||||||||||||||||||||||
65,740,171 | 17,482,757 | 384,038 | 26,754,411 | |||||||||||||||||||||||||||||
Royce Premier Fund Pason Systems1 | 4,219,700 | 59,131,302 | – | 18,251,146 | (1,706,422 | ) | 1,670,026 | |||||||||||||||||||||||||
Sun Hydraulics1 | 1,872,426 | 59,412,077 | – | 32,724,627 | (9,854,525 | ) | 421,110 | |||||||||||||||||||||||||
118,543,379 | (11,560,947 | ) | 2,091,136 | |||||||||||||||||||||||||||||
Royce Special Equity Fund AVX Corporation1 | 8,450,000 | 102,583,000 | – | 37,191,739 | (1,307,577 | ) | 3,033,625 | |||||||||||||||||||||||||
Bassett Furniture Industries | 25,139 | 630,486 | 19,301,880 | – | – | 429,126 | 735,000 | 22,344,000 | ||||||||||||||||||||||||
Bowl America Cl. A | 315,948 | 4,423,272 | 381,090 | – | – | 228,488 | 343,000 | 5,916,750 | ||||||||||||||||||||||||
Capella Education | 505,000 | 23,341,100 | 10,777,200 | 12,787,173 | 4,806,572 | 1,004,927 | 577,700 | 50,722,060 | ||||||||||||||||||||||||
Children’s Place1 | 1,310,000 | 72,312,000 | 12,303,786 | 45,059,681 | 11,237,233 | 580,000 | ||||||||||||||||||||||||||
Computer Services | 27,391,595 | – | – | 612,699 | 739,862 | 28,743,639 | ||||||||||||||||||||||||||
CSS Industries | 840,000 | 23,839,200 | 1,226,327 | – | – | 699,000 | 885,000 | 23,956,950 | ||||||||||||||||||||||||
Finish Line (The) Cl. A1 | 2,467,200 | 44,606,976 | – | 46,201,535 | (543,473 | ) | 123,500 | |||||||||||||||||||||||||
Flexsteel Industries | 209,850 | 9,271,173 | 13,532,160 | – | – | 366,807 | 536,000 | 33,055,120 | ||||||||||||||||||||||||
Haverty Furniture1 | 1,161,200 | 24,896,128 | 2,267,205 | 7,519,195 | (595,867 | ) | 1,427,527 | |||||||||||||||||||||||||
Hawkins1 | 835,000 | 29,867,950 | 4,823,921 | 26,404,624 | 6,134,976 | 682,590 | ||||||||||||||||||||||||||
Hooker Furniture | 622,000 | 15,699,280 | 14,203,835 | – | – | 452,700 | 1,110,000 | 42,124,500 | ||||||||||||||||||||||||
Hurco Companies | 515,900 | 13,702,304 | 252,973 | – | – | 188,550 | 525,000 | 17,377,500 | ||||||||||||||||||||||||
National Presto Industries | 450,000 | 37,287,000 | – | – | – | 2,272,500 | 450,000 | 47,880,000 | ||||||||||||||||||||||||
Neenah Paper1 | 1,150,000 | 71,794,500 | – | 36,911,768 | 10,004,072 | 1,260,600 | ||||||||||||||||||||||||||
Park Electrochemical | 1,792,000 | 26,987,520 | 2,353,703 | – | – | 774,180 | 1,950,000 | 36,367,500 | ||||||||||||||||||||||||
Standard Motor Products | 1,840,000 | 70,012,000 | 4,568,109 | 30,706,225 | 9,310,339 | 1,163,053 | 1,295,000 | 68,919,900 | ||||||||||||||||||||||||
UniFirst Corporation1 | 1,360,000 | 141,712,000 | – | 89,667,637 | 40,413,163 | 122,906 | ||||||||||||||||||||||||||
712,965,889 | 79,459,438 | 15,422,778 | 377,407,919 | |||||||||||||||||||||||||||||
Royce Total Return Fund Chase Corporation1 | 635,674 | 25,891,002 | 1,887,191 | 24,086,118 | 19,609,764 | 264,259 | ||||||||||||||||||||||||||
Landauer | 515,300 | 16,963,676 | – | 899,470 | 557,947 | 561,688 | 496,600 | 23,886,460 | ||||||||||||||||||||||||
Mueller (Paul) Company | 116,700 | 3,034,200 | – | 114,492 | (7,574 | ) | – | 112,500 | 3,127,500 | |||||||||||||||||||||||
Starrett (L.S.) Company (The) Cl. A | 509,400 | 4,951,368 | – | 190,440 | (60,105 | ) | 201,920 | 491,000 | 4,566,300 | |||||||||||||||||||||||
50,840,246 | 20,100,032 | 1,027,867 | 31,580,260 | |||||||||||||||||||||||||||||
The Royce Funds 2016 Annual Report to Shareholders | 127
Notes to Financial Statements (continued)
Merger Information:
On August 10, 2015, Royce Small-Cap Leaders Fund (formerly Royce 100 Fund) acquired all of the assets and assumed all of the liabilities of Royce Select Fund I. Based on the opinion of counsel delivered to Royce Small-Cap Leaders Fund, the acquisition, which was approved by shareholders of Royce Select Fund I on July 27, 2015, qualified as a tax-free reorganization for federal income tax purposes with no gain or loss recognized to the Funds or their shareholders. Royce Select Fund I’s net assets of $20,278,826, including $3,131,917 of unrealized appreciation, were combined with Royce Small-Cap Leaders Fund for total net assets after the acquisition of $155,179,959.
On February 26, 2016, Royce International Premier Fund acquired all of the assets and assumed all of the liabilities of Royce European Small-Cap Fund and Royce Global Value Fund. Based on the opinion of counsel delivered to Royce International Premier Fund, the acquisition, which was approved by shareholders of Royce European Small-Cap Fund and Royce Global Value Fund on January 21, 2016, qualified as a tax-free reorganization for federal income tax purposes with no gain or loss recognized to the Funds or their shareholders. Royce European Small-Cap Fund’s net assets of $19,629,421, including $131,656 of unrealized depreciation and Royce Global Value Fund’s net assets of $43,193,013, including $2,001,574 of unrealized depreciation, were combined with Royce International Premier Fund for total net assets after the acquisition of $74,526,547.
Subsequent Events:
Effective February 8, 2017, all shares of Royce International Premier Fund’s K Class were converted to Service Class shares. Effective February 24, 2017, K Class shares of the following Funds will be converted to Service Class shares: Royce Heritage Fund, Royce Low-Priced Stock Fund, Royce Small-Cap Leaders Fund and Royce Smaller-Companies Growth Fund.
128 | The Royce Funds 2016 Annual Report to Shareholders
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of The Royce Fund and the Shareholders of Royce Dividend Value Fund, Royce Global Financial Services Fund, Royce Heritage Fund, Royce International Micro-Cap Fund, Royce International Premier Fund, Royce International Small-Cap Fund, Royce Low-Priced Stock Fund, Royce Micro-Cap Fund, Royce Micro-Cap Opportunity Fund, Royce Opportunity Fund, Royce Pennsylvania Mutual Fund, Royce Premier Fund, Royce Small-Cap Leaders Fund, Royce Small-Cap Value Fund, Royce Smaller-Companies Growth Fund, Royce Special Equity Fund, Royce Special Equity Multi-Cap Fund and Royce Total Return Fund.
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Royce Dividend Value Fund, Royce Global Financial Services Fund, Royce Heritage Fund, Royce International Micro-Cap Fund, Royce International Premier Fund, Royce International Small-Cap Fund, Royce Low-Priced Stock Fund, Royce Micro-Cap Fund, Royce Micro-Cap Opportunity Fund, Royce Opportunity Fund, Royce Pennsylvania Mutual Fund, Royce Premier Fund, Royce Small-Cap Leaders Fund, Royce Small-Cap Value Fund, Royce Smaller-Companies Growth Fund, Royce Special Equity Fund, Royce Special Equity Multi-Cap Fund and Royce Total Return Fund (constituting The Royce Fund, hereafter referred to as the “Funds”) as of December 31, 2016, the results of their operations, the changes in their net assets and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of December 31, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 21, 2017
The Royce Funds 2016 Annual Report to Shareholders | 129
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, 2016, and held for the entire six-month period ended December 31, 2016. 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 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, 2016, 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 Account | Ending Account Value | Expenses Paid During | Beginning Account | Ending Account Value | Expenses Paid During | Annualized | ||||||||||||||||||||||
Value 7/1/16 | 12/31/16 | the Period1 | Value 7/1/16 | 12/31/16 | the Period1 | Expense Ratio2 | ||||||||||||||||||||||
Investment Class | ||||||||||||||||||||||||||||
Royce Dividend Value Fund | $ | 1,000.00 | $ | 1,116.80 | $ | 5.43 | $ | 1,000.00 | $ | 1,020.01 | $ | 5.18 | $ | 1.02 | % | |||||||||||||
Royce Heritage Fund3 | 1,000.00 | 1,120.22 | 5.12 | 1,000.00 | 1,020.31 | 4.88 | 0.96 | % | ||||||||||||||||||||
Royce International Premier Fund | 1,000.00 | 983.06 | 5.93 | 1,000.00 | 1,019.15 | 6.04 | 1.19 | % | ||||||||||||||||||||
Royce International Small-Cap Fund | 1,000.00 | 999.91 | 5.98 | 1,000.00 | 1,019.15 | 6.04 | 1.19 | % | ||||||||||||||||||||
Royce Low-Priced Stock Fund | 1,000.00 | 1,190.28 | 6.83 | 1,000.00 | 1,018.90 | 6.29 | 1.24 | % | ||||||||||||||||||||
Royce Micro-Cap Fund | 1,000.00 | 1,206.09 | 8.15 | 1,000.00 | 1,017.75 | 7.46 | 1.47 | % | ||||||||||||||||||||
Royce Micro-Cap Opportunity Fund | 1,000.00 | 1,200.42 | 6.86 | 1,000.00 | 1,018.90 | 6.29 | 1.24 | % | ||||||||||||||||||||
Royce Opportunity Fund | 1,000.00 | 1,258.15 | 6.64 | 1,000.00 | 1,019.25 | 5.94 | 1.17 | % | ||||||||||||||||||||
Royce Pennsylvania Mutual Fund | 1,000.00 | 1,175.22 | 4.87 | 1,000.00 | 1,020.66 | 4.52 | 0.89 | % | ||||||||||||||||||||
Royce Premier Fund | 1,000.00 | 1,154.84 | 6.01 | 1,000.00 | 1,019.56 | 5.63 | 1.11 | % | ||||||||||||||||||||
Royce Small-Cap Leaders Fund | 1,000.00 | 1,186.59 | 6.65 | 1,000.00 | 1,019.05 | 6.14 | 1.21 | % | ||||||||||||||||||||
Royce Small-Cap Value Fund | 1,000.00 | 1,174.69 | 6.78 | 1,000.00 | 1,018.90 | 6.29 | 1.24 | % | ||||||||||||||||||||
Royce Smaller-Companies Growth Fund | 1,000.00 | 1,134.67 | 5.69 | 1,000.00 | 1,019.81 | 5.38 | 1.06 | % | ||||||||||||||||||||
Royce Special Equity Fund | 1,000.00 | 1,220.76 | 6.42 | 1,000.00 | 1,019.36 | 5.84 | 1.15 | % | ||||||||||||||||||||
Royce Special Equity Multi-Cap Fund | 1,000.00 | 1,143.80 | 4.96 | 1,000.00 | 1,020.51 | 4.67 | 0.92 | % | ||||||||||||||||||||
Royce Total Return Fund | 1,000.00 | 1,158.66 | 6.40 | 1,000.00 | 1,019.20 | 5.99 | 1.18 | % | ||||||||||||||||||||
Service Class | ||||||||||||||||||||||||||||
Royce Dividend Value Fund | 1,000.00 | 1,114.69 | 6.80 | 1,000.00 | 1,018.70 | 6.50 | 1.28 | % | ||||||||||||||||||||
Royce Global Financial Services Fund | 1,000.00 | 1,123.65 | 7.95 | 1,000.00 | 1,017.65 | 7.56 | 1.49 | % | ||||||||||||||||||||
Royce Heritage Fund3 | 1,000.00 | 1,119.11 | 6.29 | 1,000.00 | 1,019.20 | 5.99 | 1.18 | % | ||||||||||||||||||||
Royce International Micro-Cap Fund | 1,000.00 | 1,061.08 | 8.50 | 1,000.00 | 1,016.89 | 8.31 | 1.64 | % | ||||||||||||||||||||
Royce International Premier Fund | 1,000.00 | 981.85 | 7.17 | 1,000.00 | 1,017.90 | 7.30 | 1.44 | % | ||||||||||||||||||||
Royce International Small-Cap Fund | 1,000.00 | 998.66 | 7.23 | 1,000.00 | 1,017.90 | 7.30 | 1.44 | % | ||||||||||||||||||||
Royce Low-Priced Stock Fund | 1,000.00 | 1,190.08 | 8.20 | 1,000.00 | 1,017.65 | 7.56 | 1.49 | % | ||||||||||||||||||||
Royce Micro-Cap Fund | 1,000.00 | 1,205.81 | 8.93 | 1,000.00 | 1,017.04 | 8.16 | 1.61 | % | ||||||||||||||||||||
Royce Micro-Cap Opportunity Fund | 1,000.00 | 1,199.45 | 8.24 | 1,000.00 | 1,017.65 | 7.56 | 1.49 | % | ||||||||||||||||||||
Royce Opportunity Fund | 1,000.00 | 1,256.97 | 8.45 | 1,000.00 | 1,017.65 | 7.56 | 1.49 | % | ||||||||||||||||||||
Royce Pennsylvania Mutual Fund | 1,000.00 | 1,173.34 | 6.45 | 1,000.00 | 1,019.20 | 5.99 | 1.18 | % | ||||||||||||||||||||
Royce Premier Fund | 1,000.00 | 1,152.89 | 8.06 | 1,000.00 | 1,017.65 | 7.56 | 1.49 | % | ||||||||||||||||||||
Royce Small-Cap Leaders Fund | 1,000.00 | 1,184.55 | 8.18 | 1,000.00 | 1,017.65 | 7.56 | 1.49 | % | ||||||||||||||||||||
Royce Small-Cap Value Fund | 1,000.00 | 1,172.84 | 8.08 | 1,000.00 | 1,017.70 | 7.51 | 1.48 | % | ||||||||||||||||||||
Royce Smaller-Companies Growth Fund | 1,000.00 | 1,133.16 | 7.99 | 1,000.00 | 1,017.65 | 7.56 | 1.49 | % | ||||||||||||||||||||
130 | The Royce Funds 2016 Annual Report to Shareholders
Understanding Your Fund’s Expenses (unaudited) (continued)
ACTUAL | HYPOTHETICAL (5% PER YEAR RETURN BEFORE EXPENSES) | |||||||||||||||||||||||||||
Beginning Account | Ending Account Value | Expenses Paid During | Beginning Account | Ending Account Value | Expenses Paid During | Annualized | ||||||||||||||||||||||
Value 7/1/16 | 12/31/16 | the Period1 | Value 7/1/16 | 12/31/16 | the Period1 | Expense Ratio2 | ||||||||||||||||||||||
Service Class (continued) | ||||||||||||||||||||||||||||
Royce Special Equity Fund | $ | 1,000.00 | $ | 1,219.18 | $ | 7.75 | $ | 1,000.00 | $ | 1,018.15 | $ | 7.05 | $ | 1.39 | % | |||||||||||||
Royce Special Equity Multi-Cap Fund | 1,000.00 | 1,142.41 | 6.57 | 1,000.00 | 1,019.00 | 6.19 | 1.22 | % | ||||||||||||||||||||
Royce Total Return Fund | 1,000.00 | 1,157.93 | 7.81 | 1,000.00 | 1,017.90 | 7.30 | 1.44 | % | ||||||||||||||||||||
Consultant Class | ||||||||||||||||||||||||||||
Royce Dividend Value Fund | 1,000.00 | 1,110.81 | 11.09 | 1,000.00 | 1,014.63 | 10.58 | 2.09 | % | ||||||||||||||||||||
Royce Heritage Fund3 | 1,000.00 | 1,114.32 | 11.11 | 1,000.00 | 1,014.63 | 10.58 | 2.09 | % | ||||||||||||||||||||
Royce International Premier Fund | 1,000.00 | 978.63 | 10.89 | 1,000.00 | 1,014.13 | 11.09 | 2.19 | % | ||||||||||||||||||||
Royce Micro-Cap Fund | 1,000.00 | 1,200.78 | 13.72 | 1,000.00 | 1,012.67 | 12.55 | 2.48 | % | ||||||||||||||||||||
Royce Opportunity Fund | 1,000.00 | 1,252.56 | 12.85 | 1,000.00 | 1,013.72 | 11.49 | 2.27 | % | ||||||||||||||||||||
Royce Pennsylvania Mutual Fund | 1,000.00 | 1,169.98 | 10.42 | 1,000.00 | 1,015.53 | 9.68 | 1.91 | % | ||||||||||||||||||||
Royce Premier Fund | 1,000.00 | 1,149.56 | 11.83 | 1,000.00 | 1,014.13 | 11.09 | 2.19 | % | ||||||||||||||||||||
Royce Small-Cap Value Fund | 1,000.00 | 1,167.01 | 12.31 | 1,000.00 | 1,013.77 | 11.44 | 2.26 | % | ||||||||||||||||||||
Royce Smaller-Companies Growth Fund | 1,000.00 | 1,128.61 | 11.99 | 1,000.00 | 1,013.88 | 11.34 | 2.24 | % | ||||||||||||||||||||
Royce Special Equity Fund | 1,000.00 | 1,214.50 | 12.08 | 1,000.00 | 1,014.23 | 10.99 | 2.17 | % | ||||||||||||||||||||
Royce Special Equity Multi-Cap Fund | 1,000.00 | 1,138.67 | 10.70 | 1,000.00 | 1,015.13 | 10.08 | 1.99 | % | ||||||||||||||||||||
Royce Total Return Fund | 1,000.00 | 1,153.72 | 11.53 | 1,000.00 | 1,014.43 | 10.79 | 2.13 | % | ||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||
Royce Dividend Value Fund | 1,000.00 | 1,116.69 | 4.74 | 1,000.00 | 1,020.66 | 4.52 | 0.89 | % | ||||||||||||||||||||
Royce Global Financial Services Fund | 1,000.00 | 1,125.98 | 5.56 | 1,000.00 | 1,019.91 | 5.28 | 1.04 | % | ||||||||||||||||||||
Royce International Small-Cap Fund | 1,000.00 | 999.96 | 5.98 | 1,000.00 | 1,019.15 | 6.04 | 1.19 | % | ||||||||||||||||||||
Royce Low-Priced Stock Fund | 1,000.00 | 1,192.55 | 6.56 | 1,000.00 | 1,019.15 | 6.04 | 1.19 | % | ||||||||||||||||||||
Royce Opportunity Fund | 1,000.00 | 1,258.43 | 6.07 | 1,000.00 | 1,019.76 | 5.43 | 1.07 | % | ||||||||||||||||||||
Royce Pennsylvania Mutual Fund | 1,000.00 | 1,175.88 | 4.48 | 1,000.00 | 1,021.01 | 4.17 | 0.82 | % | ||||||||||||||||||||
Royce Premier Fund | 1,000.00 | 1,155.96 | 5.69 | 1,000.00 | 1,019.86 | 5.33 | 1.05 | % | ||||||||||||||||||||
Royce Small-Cap Value Fund | 1,000.00 | 1,175.02 | 5.90 | 1,000.00 | 1,019.71 | 5.48 | 1.08 | % | ||||||||||||||||||||
Royce Smaller-Companies Growth Fund | 1,000.00 | 1,134.13 | 6.17 | 1,000.00 | 1,019.36 | 5.84 | 1.15 | % | ||||||||||||||||||||
Royce Special Equity Fund | 1,000.00 | 1,221.30 | 5.97 | 1,000.00 | 1,019.76 | 5.43 | 1.07 | % | ||||||||||||||||||||
Royce Special Equity Multi-Cap Fund | 1,000.00 | 1,144.11 | 4.80 | 1,000.00 | 1,020.66 | 4.52 | 0.89 | % | ||||||||||||||||||||
Royce Total Return Fund | 1,000.00 | 1,159.69 | 5.70 | 1,000.00 | 1,019.86 | 5.33 | 1.05 | % | ||||||||||||||||||||
W Class | ||||||||||||||||||||||||||||
Royce Premier Fund | 1,000.00 | 1,155.58 | 6.12 | 1,000.00 | 1,019.46 | 5.74 | 1.13 | % | ||||||||||||||||||||
Royce Total Return Fund | 1,000.00 | 1,159.84 | 6.35 | 1,000.00 | 1,019.25 | 5.94 | 1.17 | % | ||||||||||||||||||||
R Class | ||||||||||||||||||||||||||||
Royce Heritage Fund | 1,000.00 | 1,115.85 | 8.99 | 1,000.00 | 1,016.64 | 8.57 | 1.69 | % | ||||||||||||||||||||
Royce International Premier Fund | 1,000.00 | 980.87 | 8.66 | 1,000.00 | 1,016.39 | 8.82 | 1.74 | % | ||||||||||||||||||||
Royce Low-Priced Stock Fund | 1,000.00 | 1,188.96 | 10.12 | 1,000.00 | 1,015.89 | 9.32 | 1.84 | % | ||||||||||||||||||||
Royce Opportunity Fund | 1,000.00 | 1,254.62 | 10.20 | 1,000.00 | 1,016.09 | 9.12 | 1.80 | % | ||||||||||||||||||||
Royce Pennsylvania Mutual Fund | 1,000.00 | 1,171.94 | 8.68 | 1,000.00 | 1,017.14 | 8.06 | 1.59 | % | ||||||||||||||||||||
Royce Premier Fund | 1,000.00 | 1,151.00 | 9.73 | 1,000.00 | 1,016.09 | 9.12 | 1.80 | % | ||||||||||||||||||||
Royce Small-Cap Leaders Fund | 1,000.00 | 1,182.45 | 10.09 | 1,000.00 | 1,015.89 | 9.32 | 1.84 | % | ||||||||||||||||||||
Royce Small-Cap Value Fund | 1,000.00 | 1,171.21 | 9.93 | 1,000.00 | 1,015.99 | 9.22 | 1.82 | % | ||||||||||||||||||||
Royce Smaller-Companies Growth Fund | 1,000.00 | 1,130.36 | 9.85 | 1,000.00 | 1,015.89 | 9.32 | 1.84 | % | ||||||||||||||||||||
Royce Total Return Fund | 1,000.00 | 1,156.02 | 9.54 | 1,000.00 | 1,016.29 | 8.92 | 1.76 | % | ||||||||||||||||||||
K Class | ||||||||||||||||||||||||||||
Royce Heritage Fund | 1,000.00 | 1,116.69 | 7.66 | 1,000.00 | 1,017.90 | 7.30 | 1.44 | % | ||||||||||||||||||||
Royce International Premier Fund | 1,000.00 | 982.98 | 7.43 | 1,000.00 | 1,017.65 | 7.56 | 1.49 | % | ||||||||||||||||||||
Royce Low-Priced Stock Fund | 1,000.00 | 1,193.32 | 8.77 | 1,000.00 | 1,017.14 | 8.06 | 1.59 | % | ||||||||||||||||||||
Royce Opportunity Fund | 1,000.00 | 1,255.68 | 9.47 | 1,000.00 | 1,016.74 | 8.47 | 1.67 | % | ||||||||||||||||||||
Royce Pennsylvania Mutual Fund | 1,000.00 | 1,169.83 | 9.33 | 1,000.00 | 1,016.54 | 8.67 | 1.71 | % | ||||||||||||||||||||
Royce Small-Cap Leaders Fund | 1,000.00 | 1,182.30 | 8.72 | 1,000.00 | 1,017.14 | 8.06 | 1.59 | % | ||||||||||||||||||||
Royce Small-Cap Value Fund | 1,000.00 | 1,169.24 | 10.47 | 1,000.00 | 1,015.48 | 9.73 | 1.92 | % | ||||||||||||||||||||
Royce Smaller-Companies Growth Fund | 1,000.00 | 1,132.30 | 8.52 | 1,000.00 | 1,017.14 | 8.06 | 1.59 | % | ||||||||||||||||||||
Royce Total Return Fund | 1,000.00 | 1,156.55 | 8.35 | 1,000.00 | 1,017.39 | 7.81 | 1.54 | % | ||||||||||||||||||||
1 | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value for the period, multiplied by 184 days in the most recent fiscal half-year divided by 366 days (to reflect the half-year period). |
2 | Annualized expense ratio used to derive figures in the table is based on the most recent fiscal half-year. |
3 | GiftShare accounts pay an annual $50 trustee fee to Alliance Trust Company, as trustee. If these fees were included above, your costs would be higher. |
The Royce Funds 2016 Annual Report to Shareholders | 131
Federal Tax Information
In January 2017, taxable shareholders were mailed a Form 1099-DIV reporting the federal tax status of all distributions paid during the calendar year 2016.
2016 Supplemental Tax Information:
LONG-TERM CAPITAL | ||||||||||||||||
% INCOME | GAIN DISTRIBUTION OR | |||||||||||||||
FUND | % QDI | % U.S. GOVT INCOME | QUALIFYING FOR DRD | MAXIMUM ALLOWABLE (OOO’S) | ||||||||||||
Royce Dividend Value Fund | 100.00 | % | N/A | 100.00 | % | $ | 19,862 | |||||||||
Royce Global Financial Services Fund | 100.00 | % | N/A | 100.00 | % | 95 | ||||||||||
Royce Heritage Fund | 100.00 | % | N/A | 100.00 | % | 7,898 | ||||||||||
Royce International Micro-Cap Fund | 94.82 | % | N/A | 0.00 | % | – | ||||||||||
Royce International Premier Fund | 79.94 | % | N/A | 0.00 | % | – | ||||||||||
Royce International Small-Cap Fund | 63.82 | % | N/A | 0.00 | % | – | ||||||||||
Royce Low-Priced Stock Fund | 100.00 | % | N/A | 100.00 | % | 26,726 | ||||||||||
Royce Micro-Cap Fund | 100.00 | % | N/A | 100.00 | % | 25,455 | ||||||||||
Royce Micro-Cap Opportunity Fund | 0.00 | % | N/A | 0.00 | % | – | ||||||||||
Royce Opportunity Fund | 0.00 | % | N/A | 0.00 | % | 96,507 | ||||||||||
Royce Pennsylvania Mutual Fund | 100.00 | % | N/A | 100.00 | % | 186,460 | ||||||||||
Royce Premier Fund | 100.00 | % | N/A | 100.00 | % | 288,853 | ||||||||||
Royce Small-Cap Leaders Fund | 100.00 | % | N/A | 100.00 | % | 9,567 | ||||||||||
Royce Small-Cap Value Fund | 100.00 | % | N/A | 100.00 | % | 22,115 | ||||||||||
Royce Smaller-Companies Growth Fund | 1.91 | % | N/A | 100.00 | % | 44,149 | ||||||||||
Royce Special Equity Fund | 100.00 | % | N/A | 100.00 | % | 103,531 | ||||||||||
Royce Special Equity Multi-Cap Fund | 100.00 | % | N/A | 100.00 | % | – | ||||||||||
Royce Total Return Fund | 100.00 | % | N/A | 100.00 | % | 246,197 | ||||||||||
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.
Foreign Tax Credit:
For the year ended December 31, 2016, 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 | |||||||||||||||
FUND | SOURCE INCOME | INCOME PER SHARE | FOREIGN TAX | FOREIGN TAX PER SHARE | ||||||||||||
Royce International Micro-Cap Fund | $ | 55,090 | $ | 0.0920 | $ | 14,196 | $ | 0.0237 | ||||||||
Royce International Premier Fund | 552,434 | 0.0931 | 111,430 | 0.0188 | ||||||||||||
Royce International Small-Cap Fund | 116,907 | 0.1330 | 23,552 | 0.0268 | ||||||||||||
132 | The Royce Funds 2016 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
Age: 77 | Number of Funds Overseen: 23 | Tenure: Since 1982
Non-Royce Directorships: Director of TICC Capital Corp.
Principal Occupation(s) During Past Five Years: Chairman of the Board of Managers of Royce & Associates, LP (“Royce”), the Trust’s investment adviser; Chief Executive Officer (1972–June 2016), President (1972-July 2014) of Royce.
Christopher D. Clark, Trustee1, President
Age: 51 | Number of Funds Overseen: 23 | Tenure: Since 2014
Principal Occupation(s) During Past Five Years: Chief Executive Officer (since July 2016), President (since July 2014), Co-Chief Investment Officer (Since January 2014), Managing Director and, since June 2015, a Member of the Board of Managers of Royce, having been employed by Royce since May 2007.
Patricia W. Chadwick, Trustee
Age: 68 | Number of Funds Overseen: 23 | 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).
Stephen L. Isaacs, Trustee
Age: 77 | Number of Funds Overseen: 23 | 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: 74 | Number of Funds Overseen: 43 | 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: 77 | Number of Funds Overseen: 23 | 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: 71 | Number of Funds Overseen: 43 | 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).
Michael K. Shields, Trustee
Age: 58 | Number of Funds Overseen: 23 | Tenure: Since 2015
Principal Occupation(s) During Past Five Years: President and Chief Executive Officer of Piedmont Trust Company, a private North Carolina trust company (since May 2012). Mr. Shields’s prior business experience includes owning Shields Advisors, an investment consulting firm (from April 2010 to June 2012).
Francis D. Gannon, Vice President
Age: 49 | Tenure: Since 2014
Principal Occupation(s) During Past Five Years: Co-Chief Investment Officer (since January 2014) and Managing Director of Royce, having been employed by Royce since September 2006.
Daniel A. O’Byrne, Vice President
Age: 54 | Tenure: Since 1994
Principal Occupation(s) During Past Five Years: Principal and Vice President of Royce, having been employed by Royce since October 1986.
Peter K. Hoglund, Treasurer
Age: 50 | Tenure: Since 2015
Principal Occupation(s) During Past Five Years: Chief Financial Officer, Chief Administrative Officer, and Managing Director of Royce, having been employed by Royce since December 2014. Prior to joining Royce, Mr. Hoglund spent more than 20 years with Munder Capital Management in Birmingham, MI, serving as Managing Director and Chief Financial Officer and overseeing all financial aspects of the firm. He began his career at Munder as a portfolio manager.
John E. Denneen, Secretary and Chief Legal Officer
Age: 49 | Tenure: 1996-2001 and Since 2002
Principal Occupation(s) During Past Five Years: General Counsel, Managing Director, and, since June 2015, a Member of the Board of Managers of Royce. Chief Legal and Compliance Officer and Secretary of Royce.
Lisa Curcio, Chief Compliance Officer
Age: 57 | 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).
The Royce Funds 2016 Annual Report to Shareholders | 133 |
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, 2016, 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, 2016 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 Index 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 2000 Value and Growth Indexes consist of the respective value and growth stocks within the Russell 2000 as determined by Russell Investments. 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 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 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 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. 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 Morningstar Style Map uses proprietary scores of a stock’s value and growth characteristics to determine its placement in one of the five categories listed on the horizontal axis. These characteristics are then compared to those of other stocks within the same market capitalization band. Each is scored from zero to 100 for both value and growth attributes. The value score is subtracted from the growth score to determine the overall style score. For the vertical, market cap axis, Morningstar subdivides into size groups. Giant-cap stocks are defined as those that account for the top 40% of the capitalization of each style zone; large-cap stocks represent the next 30%; mid-cap stocks the next 20%; small-cap stocks the next 7%; micro-cap stocks the smallest 3%. 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.) Investments 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.) A Fund that invests a significant portion of its assets in a limited number of stocks may be subject to considerably more risk than a more broadly diversified Fund because a decline in the value of any of these stocks would cause that Fund’s overall value to decline to a greater degree. A broadly diversified portfolio does not, however, ensure a profit for a Fund or guarantee against loss. 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. The Royce Funds is a service mark of The Royce Funds. Distributor: Royce Fund Services, Inc.
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.
134 | The Royce Funds 2016 Annual Report to Shareholders |
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About The Royce Funds | Contact Us | ||||
Unparalleled Knowledge + Experience Pioneers in small-cap investing, with 40+ years of experience, depth of knowledge, and focus. Independent Thinking The confidence to go against consensus, the insight to uncover opportunities others might miss, and the tenacity to stay the course through market cycles. | GENERAL INFORMATION General Royce Funds information including: • How to open an account • An overview of our firm and Funds • Ordering literature including Prospectuses (800) 221-4268 | ||||
Specialized Approaches Strategies that use value, core, or growth investment approaches to select micro-cap, small-cap, and mid-cap companies. | ACCOUNT INFORMATION Speak with a representative about: • Your account, transactions, and forms (800) 841-1180 | ||||
Unwavering Commitment | |||||
Our team of 16 portfolio managers have significant personal investments in the strategies they manage. | FINANCIAL ADVISORS, CONSULTANTS, AND INSTITUTIONS Speak with your regional Royce contact regarding: • Scheduling a meeting or call • Information about our firm, strategies, and funds • Resources for financial professionals, such as portfolio attribution reports (800) 337-6923 | ||||
AUTOMATED ACCOUNT INFORMATION 24-hour Automated Telephone Service (800) 878-6923 | |||||
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, 2016 - $390,287 | ||
Year ended December 31, 2015 - $427,723 | ||
(b) | Audit-Related Fees: | |
Year ended December 31, 2016 - $0 | ||
Year ended December 31, 2015 - $0 | ||
(c) | Tax Fees: | |
Year ended December 31, 2016 - $186,960 – Preparation of tax returns and excise tax review | ||
Year ended December 31, 2015 - $249,023 – Preparation of tax returns and excise tax review | ||
(d) | All Other Fees: | |
Year ended December 31, 2016 - $0 | ||
Year ended December 31, 2015 - $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, 2016 - $186,960 | |
Year ended December 31, 2015 - $249,023 | ||
(h) | No such services were rendered during 2016 or 2015. | |
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/ Christopher D. Clark |
Christopher D. Clark | |
President |
Date: March 28, 2017
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/ Christopher D. Clark | BY: | /s/ Peter K. Hoglund | |
Christopher D. Clark | Peter K. Hoglund | |||
President | Treasurer | |||
Date: March 28, 2017 | Date: March 28, 2017 |