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 of agent for service: John E. Denneen, Esquire
Address of agent for service: 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, 2023 – December 31, 2023
Item 1. | Reports to Shareholders. |
royceinvest.com
The Royce Funds 2023 Annual
Review and Report to Shareholders
December 31, 2023
Royce Dividend Value Fund
Royce Global Financial Services Fund
Royce International Premier Fund
Royce Micro-Cap Fund
Royce Pennsylvania Mutual Fund
Royce Premier Fund
Royce Small-Cap Opportunity Fund
Royce Small-Cap Special Equity Fund
Royce Small-Cap Total Return Fund
Royce Small-Cap Value Fund
Royce Smaller-Companies Growth Fund
Table of Contents
This page is not part of the The Royce Funds 2023 Annual Report to Shareholders | 1
2023: THE DOG THAT DIDN’T BARK
While every year is eventful and interesting in its own right, we think 2023 held particular interest for equity investors—specifically those of us who focus on small-cap stocks. There was no shortage of consequential geopolitical developments. Some, like the war in Ukraine, showed no evidence of ending or abating, while others, like the terrorist attack on Israel and consequent bombings in Gaza, were new events, as were the well publicized implosions of Silicon Valley, Signature, and First Republic Banks. The contagion was contained, however, and the rest the of the economic news was much brighter, at least here in the U.S. The year began with inflation still stubbornly high and, as a consequence, the Fed still hiking rates and committed to doing so until the rate of rising prices slowed. This commitment bred a curious form of cognitive dissonance, with every public statement from a Fed official pledging adherence to the central bank’s target of 2% inflation almost immediately meeting with word from a financial or investment pundit insisting that they really meant 3-4%.
This was understandable to some degree. Many observers pointed to both inflation’s moderating pace (after peaking in June of 2022) and the resilience of the U.S. economy as evidence that the Fed should take a victory lap and leave rates untouched—or cut them. Many investors shared these views while no doubt hoping that the positive returns for equities through the first half of 2023 would not be put at risk by another round of rate hikes. To be sure, some investors were concerned that “higher for longer” might be all it took to snuff out a nascent recovery for stocks. We shared some of this anxiety. After all, 2022 saw the most aggressive rate hike cycle in the Fed’s history. And it was not just a bad year for the capital markets, it was historically awful: the third-worst calendar year performance for both the small-cap Russell 2000 Index and the large-cap Russell 1000 Index since their shared inception date at the end of 1978, with each posting their lowest respective returns since 2008. It was the seventh worst year for the S&P 500 since its inception in 1928, and the worst ever for the Bloomberg Barclays US Aggregate Bond Index since its inception in 1976. As we wrote one year ago, 2022 offered nowhere to run and nowhere to hide.
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LETTER TO OUR SHAREHOLDERS
The most interesting, and ultimately most significant, element to 2023 was perhaps what did not happen.
The most consistently predicted and regularly anticipated recession—said to be imminent since 2021—
once again failed to materialize in 2023.
In this context, the fear of a second straight down year for stocks, which periodically rattled the U.S. equity markets at various times in 2023, seemed almost logical, hitting small-and large-cap stocks at different points—and with different intensities—throughout the year. However, by the end of December these worries had mostly dissipated. With the Fed holding the line on rates, higher for longer ultimately did not hold back returns. A growing economy, burgeoning optimism about a soft landing for inflation, and confidence that the rate hike cycle had ended combined to lift share prices, as did optimism for rate reductions in 2024. Despite these developments, however, the most interesting, and ultimately most significant, element to 2023 was perhaps what did not happen. The most consistently predicted and regularly anticipated recession—said to be imminent since 2021—once again failed to materialize in 2023. Its absence reminded us of “the curious incident of the dog in the night-time” from the famous Sherlock Holmes story, “The Adventure of Silver Blaze.” The iconic detective solves the case by pointing out how odd it was that the dog guarding the pen where the titular racehorse was stabled failed to bark when Silver Blaze was stolen. The phrase has since been used as shorthand to describe situations when what doesn’t happen matters at least as much, if not more, than what does. Which is about as apt a description of 2023 as we think can be found.
THE STATE OF SMALL-CAP
As measured by the Russell 2000 Index, small-cap stocks did quite well in 2023, advancing 16.9%. Yet most of this gain came in a robust rally from the 2023 low on October 31st through the end of the year. So, although small-caps kicked off the year with high returns, they trended mostly downward from early February into Halloween. All told, the Russell 2000 had a positive return in just five months in 2023: January, June, July, November, and December, with the last two months combining to post an impressive gain of 22.4%. Thanks to this exceptional close, the Russell 2000 escaped a bear market at the end of
2023, though the small-cap index remained down -14.3% from its last peak on 11/8/21, while large-caps continued to establish new highs in December and into January 2024. Moreover, as of 12/31/23, the average stock in the small-cap index was -25.1% off its 52-week high. In this context, it was not terribly surprising that small-cap’s excellent finish could not lift its calendar-year return above large-cap’s. The Russell 1000 Index gained 26.5% in 2023 while also beating small-cap for the 3-, 5-, and 10-year periods ended 12/31/23. In fact, large-caps outpaced small-caps in nine of the last 10 calendar years.
Small-Caps Lagged Large-Caps from the Russell 2000’s Last Peak
Russell 2000 and Russell 1000 Cumulative Returns, 11/8/21-12/31/23
Past performance is no guarantee of future results.
This seemingly chronic bout of underperformance has made the current cycle a deeply frustrating one for small-cap investors. At the end of January 2024, 594 days had passed from the current cycle low for the Russell 2000, making it the second longest stretch without recovering its prior peak on record. The two other lengthy small-cap cycles each encompassed dramatic developments: the implosion of high-flying technology stocks in 2000-02, when the Russell 2000 needed 456 days from its trough to match its previous peak, and the 2008-09 Financial Crisis, when 704 days passed before small-caps recovered from the trough during that global financial catastrophe. So, while the current small-cap cycle has taken place amid ample uncertainty along with a record pace of interest rate increases, it
This page is not part of the The Royce Funds 2023 Annual Report to Shareholders | 3
LETTER TO OUR SHAREHOLDERS
has lacked the existential threats that characterized the Internet Bubble and, even more so, the Financial Crisis. The latter period also saw less bifurcation between small- and large-cap returns. The key question, then, is when will this cycle end and potentially usher in a small-cap outperformance run? It’s a point we’ll touch on later in this letter.
Within small-cap, both the value and growth indexes had strong finishes to the year, with the 4Q23 advantage squarely in value’s favor: the Russell 2000 Value Index advanced 15.3% versus 12.7% for the Russell 2000 Growth Index. It’s comparatively rare for small-cap value to beat its growth sibling in a positive quarter, particularly one with double-digit gains. It’s happened in only 42 of 119 positive quarters, or 35% of the time since the Russell 2000’s inception on 12/31/78. The Russell 2000 Value also led from the previous 2023 small-cap high on July 31st, up 4.0% versus -0.2% through the end of December. For 2023 as a whole, however, growth led, gaining 18.7% versus 14.6%. It’s worth noting that 2023’s results contributed to something of a sawtooth pattern of relative performance. The Russell 2000 Value led for the 3-year (in which the Russell 2000 Growth lost -3.5%) and 5-year periods while small-cap growth, in addition to its 1-year advantage, also outperformed for the 10-year period ended 12/31/23.
THE VALUATION SITUATION
Reviewing long-term performance patterns, we find that small-cap enjoyed a longstanding advantage over large-cap— just as small-cap value did versus small-cap growth. Each of these dynamics began to shift in the aftermath of the Financial Crisis, starting in earnest in 2011. In eight of the last 13 years, the Russell 1000 and Russell 2000 Growth each had higher returns than both the Russell 2000 and Russell 2000 Value. Yet prior to that, the long-term edge was with the Russell 2000 and Russell 2000 Value. In light of this dominance from large-caps—and more recently mega-cap stocks—it appears that many investors may have forgotten how anomalous the backdrop to the last 13 years has been until just recently, with anemic economic growth and record low interest rates.
Now that both GDP and rates are returning to more historically typical levels, we expect to see some meaningful long-term mean reversion going forward. To that end, large-cap outperformance cycles have historically peaked when a relatively small number of the largest stocks were winning the lion’s share of performance—which was the case with the S&P 500 and the Nasdaq Composite Indexes in 1973 and March 2000.
We therefore see something of a silver lining to the recent relative performance woes for small-cap stocks versus their
Large-Cap Cycles Peak at Market Tops Crowded with Mega-Caps
Weight of Top 5 S&P 500 Stocks vs. Small-Cap Relative Performance, 9/29/72-12/31/23
Source: Furey Research Partners
Past performance is no guarantee of future results.
4 | This page is not part of the The Royce Funds 2023 Annual Report to Shareholders
LETTER TO OUR SHAREHOLDERS
Relative Valuations for Small Caps vs. Large Caps Are Near Their Lowest in 25 Years
Russell 2000 vs. Russell 1000 Median LTM EV/EBIT¹ (ex. Negative EBIT Companies), 12/31/98 through 12/31/23
1 Earnings Before Interest and Taxes
Past performance is no guarantee of future results. Source: FactSet
larger peers. The Russell 2000 sported a far more attractive valuation than its large-cap counterpart at the end of last year. Using our preferred index valuation metric of enterprise value to earnings before interest and taxes, or EV/EBIT, the Russell 2000 finished 2023 not far from its 25-year low relative to the Russell 1000.
Similarly, small-cap value continued to sell at a below average valuation compared to small-cap growth at the end of the year, as measured by EV/EBIT. Micro-cap stocks also remain very attractively valued relative to large-cap based on EV/EBIT. As small-cap specialists, we see the combination of more attractive valuations and reversals in long-term performance patterns as showing the significant performance potential that exists for small-cap, small-cap value, and micro-cap stocks—especially when stacked against their large- and mega-cap counterparts.
SMALL-CAP OPPORTUNITIES
To be sure, with the Fed’s decision on 1/31/24 to leave interest rates unchanged for a third consecutive time, the backdrop of normalized interest rates, tamer inflation, and a growing, nicely resilient U.S. economy appears amenable to strong equity performance. It also looks to us that small-cap’s
lengthy stretch in the relative performance wilderness has run its course. Our reasoning is rooted in the notion that, as the economy continues to stabilize, valuations are likely to rise for those businesses that have largely sat out the mega-cap performance regime. Such a move looks more likely to benefit small-cap companies than larger ones. Moreover, the early tracking estimates for real GDP in 1Q24 are highly favorable, and ongoing positive GDP growth brings the U.S. economy that much closer to the Fed’s desired “soft landing.”
Of course, we are bottom-up stock pickers and portfolio managers, not economists—and we eschew predictions. But we also understand that long-term mean reversion to small-cap leadership requires a catalyst. For all of the encouraging developments, the U.S. economy is at this writing in something of a schizoid condition, with high levels of consumer spending on one hand and a manufacturing and industrial slowdown on the other. Yet in 2024, the U.S. economy will see more tangible benefits from reshoring, the CHIPS Act, and several infrastructure projects. Closer to our zone of expertise, earnings growth for small-cap companies is currently expected to be higher than for larger-cap businesses in 2024.
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LETTER TO OUR SHAREHOLDERS
We are looking forward to what we think should be a favorable cycle for small-cap stocks
and active management. We are more optimistic about the long-term prospects
for select small-caps than we have been in several years.
Small-Cap’s Estimated Earnings Growth Is Expected to Be Higher in 2024 than Large-Cap’s
One Year EPS Growth as of 12/31/23
Earnings per share (EPS) is calculated as a company’s profit divided by the outstanding shares of its common stock. The EPS Growth Estimates are 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. Both estimates are the average of those provided by analysts working for brokerage firms who provide research coverage on each individual security as reported by FactSet. All non-equity securities, investment companies, and companies without brokerage analyst coverage are excluded.
One critical consequence of interest rates normalizing is that access to capital now has real costs—which should benefit conservatively capitalized, fiscally prudent small-cap companies and the asset managers who hold them. The price of carrying
leverage on the balance sheet began to climb when the Fed first started raising rates in March of 2022—and its increased cost means that advantages should accrue to those businesses with low debt, the ability to generate free cash flow, and proven skill allocating capital prudently and effectively. Returns are thus likely to be spread more widely over the next few years, with the reign of the Magnificent 7—the mega-cap cohort of Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla—likely coming to an end and with it, small-cap’s long stretch of underperformance. To be sure, attractively priced, high-quality and/or growing small-cap businesses that have largely sat out the mega-cap performance regime could be clear beneficiaries. To us, this represents a great opportunity for active managers seeking to identify those small-cap businesses best positioned for long-term success. Our outlook is therefore constructive. Of course, we always put the most stock in what we’re hearing from management teams—most of whom remain cautiously optimistic about 2024. We are therefore looking forward to what we think should be a favorable cycle for small-cap stocks and active management. We are more optimistic about the long-term prospects for select small-caps than we have been in several years.
Sincerely,
Charles M. Royce | Christopher D. Clark | Francis D. Gannon | |
Chairman, | Chief Executive Officer, and | Co-Chief Investment Officer, | |
Royce Investment Partners | Co-Chief Investment Officer, | Royce Investment Partners | |
January 31, 2024 | Royce Investment Partners | ||
6 | This page is not part of the The Royce Funds 2023 Annual Report to Shareholders
Performance and Expenses
As of December 31, 2023 | AVERAGE ANNUAL TOTAL RETURNS (%) | ANNUAL OPERATING | ||||||||
EXPENSES (%) | ||||||||||
SINCE | INCEPTION | |||||||||
1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | INCEPTION | DATE | GROSS | NET | |
Royce Dividend Value Fund | 22.92 | 8.44 | 11.57 | 6.58 | 11.25 | N/A | 8.45 | 5/3/04 | 1.622 | 1.342 |
Royce Global Financial Services Fund | 15.72 | 3.51 | 9.68 | 6.48 | 10.48 | 7.72 | 7.72 | 12/31/03 | 1.982 | 1.572 |
Royce International Premier Fund | 7.62 | -6.07 | 5.18 | 5.18 | N/A | N/A | 5.53 | 12/31/10 | 1.59 2 | 1.44 2 |
Royce Micro-Cap Fund | 19.31 | 6.58 | 12.80 | 5.72 | 9.80 | 7.26 | 10.45 | 12/31/91 | 1.24 | 1.24 |
Royce Pennsylvania Mutual Fund | 26.66 | 8.64 | 13.11 | 8.02 | 11.93 | 9.03 | 13.191 | N/A | 0.96 | 0.96 |
Royce Premier Fund | 22.53 | 6.42 | 12.51 | 8.19 | 11.65 | 9.90 | 11.25 | 12/31/91 | 1.18 | 1.18 |
Royce Small-Cap Opportunity Fund | 19.58 | 9.07 | 16.05 | 8.65 | 14.49 | 9.30 | 11.90 | 11/19/96 | 1.23 | 1.23 |
Royce Small-Cap Special Equity Fund | 12.83 | 8.99 | 9.39 | 5.96 | 9.85 | 7.72 | 8.62 | 5/1/98 | 1.21 | 1.21 |
Royce Small-Cap Total Return Fund | 24.07 | 10.62 | 11.65 | 7.41 | 10.96 | 8.25 | 10.27 | 12/15/93 | 1.26 | 1.26 |
Royce Small-Cap Value Fund | 26.08 | 13.30 | 9.96 | 5.34 | 9.58 | 8.19 | 8.87 | 6/14/01 | 1.592 | 1.492 |
Royce Smaller-Companies Growth Fund | 16.97 | -5.18 | 9.49 | 6.38 | 10.25 | 7.87 | 9.95 | 6/14/01 | 1.552 | 1.492 |
INDEX | ||||||||||
Russell 2000 Index | 16.93 | 2.22 | 9.97 | 7.16 | 11.30 | 8.11 | N/A | N/A | N/A | N/A |
Russell Microcap Index | 9.33 | 0.61 | 8.56 | 5.79 | 10.65 | 6.39 | N/A | N/A | N/A | N/A |
Russell 2000 Value Index | 14.65 | 7.94 | 10.00 | 6.76 | 10.27 | 7.68 | N/A | N/A | N/A | N/A |
Russell 2000 Growth Index | 18.66 | -3.50 | 9.22 | 7.16 | 12.07 | 8.28 | N/A | N/A | N/A | N/A |
Russell 2500 Index | 17.42 | 4.24 | 11.67 | 8.36 | 12.66 | 9.08 | N/A | N/A | N/A | N/A |
MSCI ACWI ex USA Small Cap Index | 15.66 | 1.49 | 7.89 | 4.88 | 9.31 | 7.46 | N/A | N/A | N/A | N/A |
MSCI ACWI Small Cap Index | 16.84 | 3.33 | 9.85 | 6.66 | 11.16 | 8.47 | N/A | N/A | N/A | N/A |
1 | For Royce Pennsylvania Mutual Fund, the average annual total return shown is for the 50-year period ended 12/31/23. |
2 | Reflects Service Class expenses which include a 25bps distribution and/or service fee. |
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 Premier Fund). Redemption fees are not reflected in the performance shown above; if they were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.royceinvest. com. All performance and expense information reflects results of the Funds’ oldest share Class (Investment Class or Service Class, as the case may be). Annual gross operating expenses reflect the Fund’s gross total annual operating expenses and include management fees, any 12b-1 distribution and/or service fees, other expenses, and any applicable acquired fund fees and expenses. Annual 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, 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: 1.34% for Royce Dividend Value Fund; 1.44% for Royce International Premier Fund; and 1.49% for each the Royce Global Financial Services, Small-Cap Value, and Smaller-Companies Growth Funds through April 30, 2024. 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 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. Each series of The Royce Fund is subject to market risk–the possibility that common stock prices will decline, sometimes sharply and unpredictably, over short or extended periods of time. Such declines may be caused by various factors, including market, financial, and economic conditions, governmental or central bank actions, and other factors, such as the recent Covid pandemic or the recent conflicts in Ukraine and the Middle East, that may not be directly related to the issuer of a security held by a Fund. These conflicts and the recent pandemic could adversely affect global market, financial, and economic conditions in ways that cannot necessarily be foreseen. 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. 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. 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. Because such investments are usually denominated in foreign currencies and such Funds do not intend to hedge their foreign currency exposures, the U.S. dollar value of such investments may be harmed by declines in the value of foreign currencies in relation to the U.S. dollar. Certain Funds invest a significant portion of their assets in a limited number of stocks or focus their investments in a particular sector or industry, which may involve considerably more risk than a more broadly diversified portfolio because they may be more susceptible to any single corporate, economic, political, regulatory, or market event. A broadly diversified portfolio, however, does not ensure a profit or guarantee against loss. (Please see “Primary Risks for Fund Investors” and “Investing in Foreign Securities” in the prospectus.) This Review and Report must be preceded or accompanied by a prospectus. Please read the prospectus carefully before investing or sending money. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indexes or any securities or financial products. This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. 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 2000 Value and Growth Indexes consist of the respective value and growth stocks within the Russell 2000 as determined by Russell Investments. The Russell 2500 is an unmanaged, capitalization-weighted index of the 2,500 smallest publicly traded U.S. companies in the Russell 3000 index. The MSCI ACWI ex USA Small Cap Index is an unmanaged, capitalization-weighted index of global small-cap stocks, excluding the United States. The MSCI ACWI Small Cap Index is an unmanaged, capitalization-weighted index of global small- cap stocks. Index returns include net reinvested dividends and/or interest income. The performance of an index does not represent exactly any particular investment as you cannot invest directly in an index. Distributor: Royce Fund Services, LLC.
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MANAGER’S DISCUSSION (UNAUDITED)
Royce Dividend Value Fund (RDV)
Chuck Royce
FUND PERFORMANCE
Royce Dividend Value Fund advanced 22.9% in 2023, outperforming its benchmark, the Russell 2500 Index, which was up 17.4% for the same period.
WHAT WORKED… AND WHAT DIDN’T
Seven of the Fund’s eight equity sectors made positive contributions to 2023’s performance, with the biggest impacts coming from Financials, Industrials, and Consumer Discretionary. Real Estate was the lone detractor while the smallest contributions came from Information Technology and Energy. At the industry level, capital markets (Financials), household durables (Consumer Discretionary), and banks (Financials) contributed most for the calendar year period, while real estate management & development (Real Estate), financial services (Financials), and specialized REITs (Real Estate) were the largest detractors.
The portfolio’s top contributor at the position level for the calendar year was First Citizens BancShares. Although a relative newcomer to the portfolio, it’s a company we have owned in other Royce-managed portfolios for several years. In March of 2023, First Citizens made its FDIC-assisted acquisition of Silicon Valley Bank. The market eventually re-rated its shares, first as it became clear that the acquisition was accretive and again when no systemic banking crisis materialized. Worthington Enterprises makes metal products and operates four segments: Steel Processing, Consumer Products, Building Products, and Sustainable Energy Solutions. In early December, the company separated out its steel processing business, Worthington Steel, into a standalone, publicly traded company. Later that month, Worthington reported solid results for the second quarter of fiscal 2024. The Carlyle Group is a multinational private equity, alternative asset management, and financial services corporation whose shares rose the most in the last two months of 2023, when the company reported lower-than-expected declines in revenues and fee-related earnings, leading investors to its stock.
The top detractor was Lindsay Corporation, which provides center pivot irrigation systems for commercial agriculture. Investors fled the stock in June when Lindsay reported disappointing fiscal third quarter results, which included a double-digit revenue decline from 2022’s third quarter and substantially lower earnings per share than had been expected. We are cautiously optimistic about Lindsay’s long-term prospects, including the potentially positive effect of increased infrastructure spending in 2024. Franco-Nevada is a Toronto-based gold-focused royalty and streaming company with a diversified natural resources portfolio. The company provides cash upfront to miners for building mines or expanding existing assets. In exchange for putting up cash, Franco-Nevada receives the right to buy precious metals at lower rates in the future. Slumping gold prices and a large mine investment that was dormant both hurt its stock price in 2023. BOK Financial is a bank that operates in attractive geographies across the Midwest and Southwest U.S. Despite what we saw as a strong deposit franchise, demand deposits/total deposits declined in 2023, and deposit beta—which measures deposit-rate sensitivity to Fed fund rate changes—was higher than anticipated, pressuring net interest margins. Fears of a commercial real estate (“CRE”) recession also likely kept the stock under pressure, even as CRE comprised only 21.4% of total loans as of 2Q23, with offices only representing 4.3%.
Top Contributors to Performance | Top Detractors from Performance | |||||
For 2023 (%)1 | For 2023 (%)2 | |||||
First Citizens BancShares Cl. A | 2.37 | Lindsay Corporation | -0.99 | |||
Worthington Enterprises | 2.04 | Franco-Nevada | -0.66 | |||
Carlyle Group | 1.62 | BOK Financial | -0.58 | |||
Comfort Systems USA | 1.58 | Kennedy-Wilson Holdings | -0.10 | |||
Evercore Cl. A | 1.56 | NewtekOne | -0.06 | |||
1 Includes dividends | 2 Net of dividends | |||||
The Fund’s advantage over the Russell 2500 in 2023 came overwhelmingly from stock selection, though sector allocation also contributed. Stock selection was strongest in the Financials and Consumer Discretionary sectors, while our significantly lower exposure to Health Care also contributed meaningfully. Conversely, our much lower weighting in Information Technology, stock selection and a much higher weighting in Materials, and stock selection in Industrials detracted most from relative performance.
CURRENT POSITIONING AND OUTLOOK
Our outlook is constructive. First, we suspect that returns are likely to be spread more widely over the next few years and that the reign of the Magnificent 7—the mega-cap cohort of Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla—may be coming to an end, especially if 2023’s fourth quarter and early January 2024 are any indication. The backdrop of moderating inflation, normalized interest rates, and a still growing U.S. economy also bolsters our belief that small-cap’s lengthy stretch in the relative performance wilderness has run its course. We believe moderate economic growth and the more normalized rate environment should support a broadening of equity market returns where dividend paying small-and mid-caps could be clear beneficiaries, especially those businesses that have largely sat out the mega-cap performance regime. Even more important is what we’ve been hearing from management teams—most of whom remain cautiously optimistic about 2024. We see an increasing likelihood, for example, that the U.S. economy will achieve the much-desired soft landing—which is encouraging for many reasons. The next few years will see even more tangible benefits of reshoring, the CHIPS Act, and numerous infrastructure projects, and many of our holdings are poised to benefit from these developments. We’re looking forward to what we think should be a favorable cycle for small- and mid-cap stocks.
8 | The Royce Funds 2023 Annual Report to Shareholders
PERFORMANCE AND PORTFOLIO REVIEW (UNAUDITED) | TICKER SYMBOLS RYDVX RDVIX |
Performance and Expenses
Average Annual Total Return (%) Through 12/31/23
JUL-DEC 20231 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | SINCE INCEPTION (5/3/04) | |
RDV | 9.83 | 22.92 | 8.44 | 11.57 | 6.58 | 11.25 | 8.45 |
Annual Gross Operating Expenses: 1.62% | Annual Net Operating Expenses: 1.34% |
1 Not annualized
Morningstar Style Map™As of 12/31/23
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 84 for additional information.
Value of $10,000
Invested on 5/3/04 as of 12/31/23 ($)
Top 10 Positions
% of Net Assets
Carlyle Group | 4.9 |
HEICO Corporation Cl. A | 4.2 |
SEI Investments | 3.8 |
Applied Industrial Technologies | 3.7 |
Hubbell Incorporated | 3.7 |
Evercore Cl. A | 3.7 |
Graco | 3.5 |
Royal Gold | 3.4 |
Lincoln Electric Holdings | 3.1 |
First Citizens BancShares Cl. A | 3.0 |
Portfolio Sector Breakdown
% of Net Assets
Industrials | 34.9 |
Financials | 34.0 |
Materials | 14.9 |
Consumer Discretionary | 6.1 |
Health Care | 3.8 |
Real Estate | 1.9 |
Energy | 1.6 |
Information Technology | 1.6 |
Cash and Cash Equivalents | 1.2 |
Calendar Year Total Returns (%) | |
YEAR | RDV |
2023 | 22.9 |
2022 | -13.6 |
2021 | 20.1 |
2020 | 4.5 |
2019 | 29.8 |
2018 | -16.2 |
2017 | 21.7 |
2016 | 16.4 |
2015 | -5.7 |
2014 | -2.1 |
2013 | 30.7 |
2012 | 16.9 |
2011 | -4.5 |
2010 | 30.1 |
2009 | 37.7 |
Upside/Downside Capture Ratios
Periods Ended 12/31/23 (%)
UPSIDE | DOWNSIDE | |
10-Year | 93 | 103 |
From 6/30/04 (Start of Fund’s First Full Quarter) | 92 | 92 |
Portfolio Diagnostics
Fund Net Assets | $63 million | |
Number of Holdings | 48 | |
Turnover Rate | 14% | |
Average Market Capitalization 1 | $7,236 million | |
Weighted Average P/E Ratio 2,3 | 15.2x | |
Weighted Average P/B Ratio 2 | 2.8x | |
Active Share 4 | 97% | |
U.S. Investments (% of Net Assets) | 73.8% | |
Non-U.S. Investments (% of Net Assets) | 25.0% |
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 12/31/23). |
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.royceinvest.com. All performance and risk information reflects results of the Service Class (its oldest class). Annual gross operating expenses reflect the total gross operating expenses for the Fund’s Service Class and include management fees, 12b-1 distribution and/or service fees, and other expenses. Annual 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, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the Service Class’s annual net 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 1.34% through April 30, 2024. 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 2023. 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 primary benchmark went up and dividing it by such benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark goes down and dividing it by such benchmark’s return in those quarters.
The Royce Funds 2023 Annual Report to Shareholders | 9
MANAGER’S DISCUSSION (UNAUDITED)
Royce Global Financial Services Fund (RFS)
Chuck Royce
FUND PERFORMANCE
Royce Global Financial Services Fund was up 15.7% in 2023, trailing its broad-based global benchmark, the MSCI ACWI Small Cap Index, which was up 16.8% for the same period.
WHAT WORKED… AND WHAT DIDN’T
During 2023, the Fund had investments in five equity sectors, four of which made a positive impact on calendar-year performance. As we would expect, Financials made the biggest positive contribution by far, followed by Real Estate, Industrials, and Information Technology, while Materials was the lone detractor. At the industry level, two groups from Financials were the top contributors—capital markets and banks—followed by real estate management & development (Real Estate). Only two groups detracted in 2023—metals & mining (Materials) and software (Information Technology)—while professional services (Industrials) made the smallest contribution. Holdings in the U.S., Canada, and the United Kingdom made the biggest positive impact on a country level while the biggest detractors were Israel, South Africa, and New Zealand.
The top-contributing position in 2023 was First Citizens BancShares, which we’ve owned for many years, due mostly to its strong liquidity position and stellar deposit franchise. We began adding shares in late 2022 that were trading at roughly 5x earnings per share. In March 2023, First Citizens was chosen by the FDIC to acquire Silicon Valley Bank, most likely owing to its long history of buying failed banks. Silicon Valley’s travails notwithstanding, the purchase was accretive to First Citizens’ tangible book value and earnings, and helped spur a sharp rise in its stock—as did the lack of a banking crisis in the subsequent months. Private equity business KKR & Co. enjoyed a strong finish to the year, with increased sales and earnings to go with a favorably received acquisition announced in November, a more growth-oriented focus in its business segments, and a raised earnings outlook. Rising rates helped the business of Ares Management, an alternative asset manager which also has a business development company that lends money to companies for long-term growth initiatives. It raises capital of its own at attractive rates before lending it at higher ones. In September, Ares released quarterly results that included its second highest quarter of fundraising ever and market share wins from traditional credit providers in a slower market environment.
Top Contributors to Performance | Top Detractors from Performance | |||||
For 2023 (%)1 | For 2023 (%)2 | |||||
First Citizens BancShares Cl. A | 3.71 | First Republic Bank | -1.96 | |||
KKR & Co. | 2.23 | Charles Schwab | -1.17 | |||
Ares Management Cl. A | 1.59 | Altus Group | -0.99 | |||
Intermediate Capital Group | 1.42 | BOK Financial | -0.84 | |||
FirstService Corporation | 1.40 | Franco-Nevada | -0.84 | |||
1 Includes dividends | 2 Net of dividends | |||||
The top-detracting position was San Francisco-based regional bank, First Republic Bank. It was the third bank to declare insolvency in 2023 (following Silicon Valley and Signature Banks) and the second-largest failure since the fall of Washington Mutual in the 2008 Financial Crisis. It was hurt by having too many uninsured deposits and too many reserves in long-term debt instruments, which began losing value when interest rates began to rise. The result was a bailout by JPMorgan Chase in May. The banking crisis helped drive down the shares of financial services specialist Charles Schwab, which has a banking business in addition to its discount brokerage. Its stock remained underwater as bank deposits declined, net new assets tumbled, and the transition of accounts from TD Ameritrade was rocky. Canada’s Altus Group provides asset and fund intelligence for commercial real estate companies. Revenues and earnings were inconsistent in 2023 as Altus tried to navigate a protracted slump in commercial real estate capital deployment.
The portfolio’s relative performance will typically hinge not just on the performance of financial stocks—which made the fourth biggest impact out of the 11 sectors in the Fund’s benchmark in 2023—but also on those sectors where we have little or no exposure relative to the broad-based global benchmark. The Fund’s relative disadvantage versus its benchmark was rooted in sector allocation. The Fund’s significantly lower weightings in Information Technology and Industrials, along with stock selection in Materials, hurt relative performance most. Conversely, stock selection in Financials, as well as a lack of exposure to both Health Care and Utilities, had the biggest positive effect on relative performance.
CURRENT POSITIONING AND OUTLOOK
Our outlook is constructive. First, we suspect that returns are likely to be spread more widely over the next few years and that the reign of the Magnificent 7—the mega-cap cohort of Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla—may be coming to an end, especially if 2023’s fourth quarter and early January 2024 are any indication. The backdrop of moderating inflation, normalized interest rates, and a still growing U.S. economy also bolsters our belief that global small-cap’s lengthy stretch in the relative performance wilderness has run its course. We believe moderate growth and the more normalized rate environment should support a broadening of equity market returns where small-caps could be clear beneficiaries, especially those businesses that have largely sat out the mega-cap performance regime. Even more important is what we’ve been hearing from management teams—most of whom remain cautiously optimistic about 2024. We see an increasing likelihood, for example, that the U.S. economy will achieve the much-desired soft landing—which is encouraging for many reasons. So, we’re looking forward to what we think should be a favorable cycle for small-cap financial stocks.
10 | The Royce Funds 2023 Annual Report to Shareholders
PERFORMANCE AND PORTFOLIO REVIEW (UNAUDITED) | TICKER SYMBOLS RYFSX RGFIX |
Performance and Expenses
Average Annual Total Return (%) Through 12/31/23
JUL-DEC 20231 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | SINCE INCEPTION (12/31/03) | |
RFS | 11.80 | 15.72 | 3.51 | 9.68 | 6.48 | 10.48 | 7.72 | 7.72 |
Annual Gross Operating Expenses: 1.98% Annual Net Operating Expenses: 1.57% |
1 Not annualized
Morningstar Style Map™ As of 12/31/23
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 84 for additional information.
Portfolio Country Breakdown 1,2
% of Net Assets
United States | 47.0 |
Canada | 26.4 |
Bermuda | 5.6 |
Israel | 4.5 |
United Kingdom | 3.1 |
India | 2.9 |
Panama | 2.3 |
Brazil | 2.0 |
1 Represents countries that are 1.5% or more of net assets.
2 Securities are categorized by the country of their headquarters.
Top 10 Positions
% of Net Assets
First Citizens BancShares Cl. A | 4.7 |
Tel Aviv Stock Exchange | 4.5 |
Sprott | 4.5 |
FirstService Corporation | 4.5 |
KKR & Co. | 4.4 |
E-L Financial | 3.8 |
Popular | 3.5 |
Franco-Nevada | 3.5 |
Carlyle Group | 3.1 |
Intermediate Capital Group | 3.1 |
Portfolio Industry Breakdown
% of Net Assets
Capital Markets | 50.8 |
Banks | 15.7 |
Real Estate Management & Development | 9.0 |
Insurance | 8.7 |
Financial Services | 3.9 |
Metals & Mining | 3.5 |
Consumer Finance | 1.9 |
Trading Companies & Distributors | 1.7 |
Electronic Equipment, Instruments & Components | 1.3 |
Software | 1.1 |
Professional Services | 0.2 |
Cash and Cash Equivalents | 2.2 |
Value of $10,000
Invested on 12/31/03 as of 12/31/23 ($)
Calendar Year Total Returns (%)
YEAR | RFS |
2023 | 15.7 |
2022 | -20.3 |
2021 | 20.3 |
2020 | 15.3 |
2019 | 24.2 |
2018 | -13.4 |
2017 | 22.5 |
2016 | 12.9 |
2015 | -4.7 |
2014 | 3.5 |
2013 | 42.0 |
2012 | 20.7 |
2011 | -11.3 |
2010 | 18.5 |
2009 | 32.1 |
Portfolio Diagnostics
Fund Net Assets | $27 million |
Number of Holdings | 49 |
Turnover Rate | 12% |
Average Market Capitalization 1 | $3,720 million |
Weighted Average P/E Ratio 2,3 | 10.6x |
Weighted Average P/B Ratio 2 | 1.8x |
Active Share 4 | 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 (4% of portfolio holdings as of 12/31/23). |
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. |
Upside/Downside Capture Ratios
Periods Ended 12/31/23 (%)
UPSIDE | DOWNSIDE | |
10-Year | 91 | 88 |
Fund’s First Full Quarter (12/31/03) | 87 | 85 |
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.royceinvest.com. Annual gross operating expenses reflect the total gross operating expenses for the Fund’s Service Class and include management fees, 12b-1 distribution and/or service fees, other expenses and acquired fund fees and expenses. Annual 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 annual net 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, 2024. 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 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 2023. 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. 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. Because such investments are usually denominated in foreign currencies and such Funds do not intend to hedge their foreign currency exposures, the U.S. dollar value of such investments may be harmed by declines in the value of foreign currencies in relation to the U.S. dollar. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark went up and dividing it by such benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark goes down and dividing it by such benchmark’s return in those quarters.
The Royce Funds 2023 Annual Report to Shareholders | 11
MANAGERS’ DISCUSSION (UNAUDITED)
Royce International Premier Fund (RIP)
Mark Fischer, Mark Rayner, CA
FUND PERFORMANCE
Royce International Premier Fund gained 7.6% in 2023, lagging its benchmark, the MSCI ACWI ex USA Small Cap Index, which was up 15.7% for the same period. The portfolio outperformed its benchmark for the 10-year, and since inception (12/31/10) periods ended 12/31/23.
WHAT WORKED… AND WHAT DIDN’T
Six of the portfolio’s eight equity sectors made a positive impact on calendar year performance, led by Information Technology, Financials, and Materials. Communication Services and Real Estate detracted while Consumer Discretionary made the smallest contribution. At the country level, Japan, Switzerland, and Brazil contributed most in 2023, while Australia, South Korea, and Iceland were the largest detractors.
The portfolio’s top contributor at the position level was Maruwa, a Japanese company that manufactures niche ceramic packaging materials found inside various high-end electronics, including EVs, data center servers, and 5G base stations. These manufacturers rely on Maruwa’s high performance ceramics to transfer away the heat emitted from semiconductor chips as a byproduct of normal operation. Investors seemed to recognize Maruwa as a high-quality business exposed to multiple growth drivers, such as AI servers and EVs. Over the past 10 years to the fiscal year ended in March 2023, Maruwa’s return on net operating assets grew from 9% to 43%, driven by expanding earnings. The company’s balance sheet remains rock solid, with tangible equity accounting for 87% of its assets. Despite the combination of a quality franchise, high returns, attractive growth, and low debt, Maruwa receives little analyst coverage and at the end of 2023 was trading at what we believe was an attractive valuation. Odontoprev is the largest provider of corporate dental care plans in Brazil, partnering with a network of 30,000 dentists. We are attracted to Odontoprev’s high margin yet asset-light business model, which enables it to generate strong cash flows and returns on invested capital, as well as its structural growth prospects supported by Brazil’s expanding middle class. Its stock price growth was very impressive early in 2023, rallying more than 50% in U.S. dollar terms as of late February.
Top Contributors to Performance | Top Detractors from Performance | |||||
For 2023 (%)1 | For 2023 (%)2 | |||||
Maruwa | 1.01 | New Work | -0.95 | |||
Odontoprev | 0.99 | IPH | -0.82 | |||
Mortgage Advice Bureau Holdings | 0.91 | Restore | -0.77 | |||
Open Text | 0.83 | NICE Information Service | -0.53 | |||
OBIC Business Consultants | 0.81 | Miura | -0.47 | |||
1 Includes dividends | 2 Net of dividends | |||||
Germany’s New Work was the Fund’s biggest detractor for 2023. The company operates the largest career networking and recruiting platform in the DACH region of Germany, Austria, and Switzerland. It began as a Business-to-Consumer social networking website in 2003 but has since expanded into subscription-based Business-to-Business products. Its stock fell in May, when New Work reported positive first-quarter results albeit with slower revenue growth which, when coupled with management’s decision to still go ahead with planned investments, resulted in reduced profit guidance for the year. The difficult economic environment in Europe kept its shares in a slump through the rest of 2023 and led us to trim our position. Australia’s IPH is the leading intellectual property (“IP”) services group in Australia and Singapore. The company researches, files, enforces, and manages IP such as patents, designs, and trademarks. The disclosure of a cyber attack in March led its shares downward, even after it was revealed in April that only a small number of clients had their data downloaded, with limited personal data compromised, and that the financial impact was expected to be minimal. Meanwhile, IPH made significant strategic progress during 2023, most notably via the acquisitions of two leading Canadian IP services companies.
The portfolio’s disadvantage versus its benchmark in 2023 was attributable to stock selection—our sector allocation decisions were additive in the calendar-year period. Stock selection in Industrials hurt relative results the most by far, followed by stock selection in Communication Services and Health Care (where our higher weighting also detracted). Conversely, stock selection in Financials, a substantially lower weighting in Real Estate, and lack of exposure to the underperforming Consumer Staples sector contributed most to relative results in 2023.
CURRENT POSITIONING AND OUTLOOK
As we begin 2024, we remain steadfast about providing our investors and clients a portfolio of companies with sustainably high returns on invested capital (ROIC), strong balance sheets, attractive long-term growth prospects, and valuations that in aggregate are equal to or better than that of the broader international small-cap market. We found the last months of 2023 particularly encouraging as we observed two consecutive quarters in which the gap between the three-year annualized price performance of high-ROIC stocks and the overall benchmark began to narrow, suggesting we may be in the early innings of a more sustained return to quality. Private and strategic investors took notice of the decoupling of company quality and share prices in the portfolio: three holdings received take-over bids in the fourth quarter, a level of activity never seen before in the Fund’s history. These actions underscore our optimism for 2024 and beyond, and we remain focused on consistently executing our process to identify superior long-term value compounding businesses for the portfolio.
12 | The Royce Funds 2023 Annual Report to Shareholders
PERFORMANCE AND PORTFOLIO REVIEW (UNAUDITED) | TICKER SYMBOLS RYIPX RIPNX RIPIX |
Performance and Expenses
Average Annual Total Return (%) Through 12/31/23
JUL-DEC 20231 | 1-YR | 3-YR | 5-YR | 10-YR | SINCE INCEPTION (12/31/10) | |
RIP | 3.03 | 7.62 | -6.07 | 5.18 | 5.18 | 5.53 |
Annual Gross Operating Expenses: 1.59% Annual Net Operating Expenses: 1.44% |
1 Not annualized
Relative Returns: Monthly Rolling Average Annual Total Return Periods
Since Inception Through 12/31/23
On a monthly rolling basis, The Fund outperformed the MSCI ACWI x USA SC in 100% of all 10-year periods; 93% of all 5-year periods; and 57% of all 1-year periods.
PERIODS BEATING THE INDEX | FUND AVG (%)1 | INDEX AVG (%)1 | ||
10-year | 37/37 | 100% | 7.9 | 6.3 |
5-year | 90/97 | 93% | 8.3 | 5.8 |
1-year | 83/145 | 57% | 7.0 | 6.2 |
1Average of monthly rolling average annual total returns over the specified periods.
Morningstar Style Map™ As of 12/31/23
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 84 for additional information.
Value of $10,000
Invested on 12/31/10 as of 12/31/23 ($)
Top 10 Positions
% of Net Assets
BML | 3.2 |
Hansen Technologies | 3.0 |
TKC Corporation | 2.9 |
IPH | 2.8 |
Riken Keiki | 2.5 |
Restore | 2.4 |
Intertek Group | 2.4 |
JCU | 2.3 |
Zuken | 2.2 |
DiscoverIE Group | 2.1 |
Portfolio Sector Breakdown
% of Net Assets
Industrials | 40.6 |
Information Technology | 21.6 |
Health Care | 11.6 |
Financials | 6.6 |
Materials | 5.7 |
Communication Services | 4.4 |
Consumer Discretionary | 3.5 |
Real Estate | 0.1 |
Preferred Stock | 1.9 |
Cash and Cash Equivalents | 4.0 |
Upside/Downside Capture Ratios
Periods Ended 12/31/23 (%)
UPSIDE | DOWNSIDE | |
10-Year | 102 | 101 |
Fund’s First Full Quarter (12/31/10) | 99 | 94 |
Calendar Year Total Returns (%)
YEAR | RIP |
2023 | 7.6 |
2022 | -27.2 |
2021 | 5.8 |
2020 | 15.7 |
2019 | 34.2 |
2018 | -12.8 |
2017 | 39.8 |
2016 | -1.1 |
2015 | 16.2 |
2014 | -8.2 |
2013 | 18.3 |
2012 | 23.4 |
2011 | -16.8 |
Portfolio Country Breakdown 1,2
% of Net Assets
Japan | 26.7 |
United Kingdom | 24.9 |
Australia | 5.8 |
Sweden | 5.7 |
Italy | 4.0 |
Brazil | 3.6 |
Switzerland | 3.6 |
Germany | 3.5 |
France | 3.0 |
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 | $501 million |
Number of Holdings | 58 |
Turnover Rate | 36% |
Average Market Capitalization 1 | $1,498 million |
Weighted Average P/E Ratio 2,3 | 22.1x |
Weighted Average P/B Ratio 2 | 2.3x |
Active Share 4 | 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 12/31/23). |
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.royceinvest.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 International Premier Fund at 12/31/19 and 12/31/20 for financial reporting purposes, and as a result 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. Annual gross operating expenses reflect the total gross operating expenses for the Fund’s Service Class and include management fees, 12b-1 distribution and/or service fees, and other expenses. Annual 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 annual net 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, 2024. 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 2023. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark went up and dividing it by such benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark goes down and dividing it by such benchmark’s return in those quarters.
The Royce Funds 2023 Annual Report to Shareholders | 13
MANAGERS' DISCUSSION (UNAUDITED)
Jim Stoeffel, Brendan Hartman
FUND PERFORMANCE
Royce Micro-Cap Fund enjoyed a strong year, advancing 19.3% in 2023 and beating both its primary benchmark, the Russell Microcap Index, which was up 9.3%, and its secondary benchmark, the small-cap Russell 2000 Index, which climbed 16.9% for the same period. The Fund also beat both indexes for the 3- and 5-year periods and outperformed the Russell Microcap in the 20-year period.
WHAT WORKED… AND WHAT DIDN’T
Seven of the Fund’s 10 equity sectors finished 2023 in the black, with Industrials, Information Technology, and Consumer Discretionary making the biggest positive contributions while Health Care, Communication Services, and Consumer Staples made small detractions. At the industry level, semiconductors & semiconductor equipment (Information Technology), commercial services & supplies (Industrials), and metals & mining (Materials) contributed most for the calendar year period, while health care equipment & supplies (Health Care), professional services (Industrials), and entertainment (Communication Services) were the largest detractors.
The Fund’s top-contributing position was Applied Optoelectronics, which manufactures optical communications products. Microsoft selected the company to provide a significant number of leading edge components to support Microsoft’s build out of data centers for AI applications. While we were excited about Applied Optoelectronic’s prospects prior to this announcement, we see the relationship as a potential long-term game changer for the company. Modine Manufacturing provides thermal management systems for several industries and was added to the portfolio as a turnaround candidate as it was moving from its historical core of automotive radiators toward newer high growth opportunities. The shift is now paying dividends as the company sees significant wins in areas such as data centers and electric vehicles. Camtek manufactures metrology and inspection tools for the semiconductor equipment industry. Its advanced packaging segment has been benefiting from the shrinking line widths of semiconductors and the corresponding need to stack many semiconductors together to drive improved performance. This phenomenon is even more acute for semiconductors being developed for AI applications, where Camtek is beginning to see significant orders.
Top Contributors to Performance | Top Detractors from Performance | |||||
For 2023 (%)1 | For 2023 (%)2 | |||||
Applied Optoelectronics | 2.75 | Cutera | -1.10 | |||
Modine Manufacturing | 1.71 | Clearfield | -0.90 | |||
Camtek | 1.51 | DZS | -0.82 | |||
Universal Stainless & Alloy Products | 1.45 | Territorial Bancorp | -0.71 | |||
American Superconductor | 1.27 | Chicken Soup for the Soul Entertainment Cl. A | -0.60 | |||
1 Includes dividends | 2 Net of dividends | |||||
The Fund’s top detractor was aesthetic medical device maker Cutera, whose acne treatment Aviclear was supposed to drive its business but has been slower to ramp up than anticipated. When combined with overall weakness in aesthetic procedures related to a weakening economy (these procedures are typically not reimbursed), its shares corrected meaningfully. Clearfield principally provides cable equipment and products to more rural cable companies. Like many telecom related infrastructure providers, it has been hurt by inventory corrections as supply chains have normalized post Covid. DZS manufactures mobile transport and broadband access solutions. Its telecom equipment end markets were weak throughout 2023 as customers worked off excess inventory. DZS also faced additional challenges managing its working capital as it faced payment issues with certain customers in Asia. Finally, the company announced that it would restate financials for 2023’s first quarter because a certain amount of inventory in Asia was not properly accounted for. However, DZS was able to execute a financing plan with its parent company, selling its Asian assets to the parent in early 2023, enabling DZS to strengthen its balance sheet and focus on selling higher margin products.
The Fund’s advantage over the Russell Microcap came overwhelmingly from stock selection in 2023, though sector allocation was also additive. Stock selection boosted relative performance most in Industrials, Information Technology, and Consumer Discretionary—and our larger weighting in the first and third of these sectors also helped. Conversely, stock selection in Health Care, stock selection and a higher weighting in Communication Services, and stock selection in Financials each detracted from relative performance.
CURRENT POSITIONING AND OUTLOOK
As 2023 drew to a close, investors became more hopeful that the Fed had reached the end of its tightening cycle and may be on the verge of cutting rates in 2024. We view financial liquidity as a key element of micro-cap performance, which could be seen in 4Q23 results. Although we believe we have not yet seen the full lagged impact of the Fed’s tightening cycle, the U.S. economy remains fairly resilient and inflationary pressures have eased as supply chains have normalized from Covid related disruptions. In spite of lingering macro uncertainty, we remain upbeat on the intermediate to long-term opportunities for companies in our domestically focused portfolio. Key among these is the ongoing trend towards re-industrialization of the U.S. economy, which we believe is being driven by a desire to shorten supply chains, as well as an increasing realization of the strategic importance of domestic semiconductor manufacturing. The increased fiscal spending on domestic infrastructure projects is also just beginning to take hold, which we expect to provide tailwinds to many of our companies in the near to intermediate term.
14 | The Royce Funds 2023 Annual Report to Shareholders
PERFORMANCE AND PORTFOLIO REVIEW (UNAUDITED) | TICKER SYMBOLS RYOTX RMCFX RYMCX |
Performance and Expenses
Average Annual Total Return (%) Through 12/31/23
JUL-DEC 20231 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | 25-YR | 30-YR | SINCE INCEPTION (12/31/91) | |
RMC | 9.04 | 19.31 | 6.58 | 12.80 | 5.72 | 9.80 | 7.26 | 9.07 | 9.46 | 10.45 |
Annual Operating Expenses: 1.24% | ||||||||||
1 Not annualized |
Morningstar Style Map™As of 12/31/23
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 84 for additional information.
Value of $10,000
Invested on 6/30/00 (Russell Microcap Index Inception) as of 12/31/23 ($)
Top 10 Positions
% of Net Assets
Photronics | 1.5 |
Hovnanian Enterprises Cl. A | 1.5 |
Modine Manufacturing | 1.4 |
Applied Optoelectronics | 1.3 |
Natural Gas Services Group | 1.3 |
Customers Bancorp | 1.3 |
Graham Corporation | 1.3 |
Universal Stainless & Alloy Products | 1.3 |
Camtek | 1.3 |
IES Holdings | 1.2 |
Portfolio Sector Breakdown
% of Net Assets
Information Technology | 25.1 |
Industrials | 24.1 |
Consumer Discretionary | 13.5 |
Financials | 13.4 |
Health Care | 6.6 |
Materials | 6.4 |
Communication Services | 4.2 |
Energy | 3.5 |
Real Estate | 0.6 |
Consumer Staples | 0.5 |
Cash and Cash Equivalents | 2.1 |
Calendar Year Total Returns (%) | |
YEAR | RMC |
2023 | 19.3 |
2022 | -22.6 |
2021 | 31.0 |
2020 | 24.5 |
2019 | 21.2 |
2018 | -8.9 |
2017 | 5.4 |
2016 | 19.7 |
2015 | -13.3 |
2014 | -4.1 |
2013 | 21.3 |
2012 | 8.0 |
2011 | -12.1 |
2010 | 30.1 |
2009 | 55.7 |
Upside/Downside Capture Ratios
Periods Ended 12/31/23 (%)
UPSIDE | DOWNSIDE | |
10-Year | 87 | 84 |
From 6/30/00 (Russell Microcap Index Inception) | 93 | 81 |
Portfolio Diagnostics
Fund Net Assets | $312 million |
Number of Holdings | 125 |
Turnover Rate | 19% |
Average Market Capitalization 1 | $577 million |
Weighted Average P/B Ratio 2 | 1.7x |
Active Share3 | 90% |
U.S. Investments (% of Net Assets) | 87.1% |
Non-U.S. Investments (% of Net Assets) | 10.8% |
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 | 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.royceinvest.com. All performance and risk information reflects results of the Investment Class (its oldest class). Annual operating expenses reflect the total gross operating expenses for the Fund’s 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 2023. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark went up and dividing it by such benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark goes down and dividing it by such benchmark’s return in those quarters.
The Royce Funds 2023 Annual Report to Shareholders | 15
MANAGERS’ DISCUSSION (UNAUDITED)
Royce Pennsylvania Mutual Fund® (PMF)
Steven McBoyle, Jay Kaplan, CFA®, Chuck Royce, Miles Lewis, CFA®, Andrew Palen, Lauren Romeo, CFA®
FUND PERFORMANCE
Our flagship, Royce Pennsylvania Mutual Fund, had a stellar 2023, up 26.7% and outperforming its small-cap benchmark, the Russell 2000 Index, which climbed 16.9% for the same period. The Fund even narrowly outpaced the large-cap Russell 1000 Index, which was up 26.5% in 2023. The Fund also beat the Russell 2000 for the 3-, 5-, 10-, 15-, 20-, 25-, 30-, 35-, 40- and 45-year periods ended 12/31/23. In addition, the Fund’s average annual total return for the 50-year period ended 12/31/23 was 13.2%.
WHAT WORKED… AND WHAT DIDN’T
All 10 equity sectors in which the Fund held investments finished 2023 in the black, with the largest contributions coming from Industrials, Information Technology, and Financials. Communication Services, Energy, and Health Care made the smallest positive contributions. At the industry level, two of the portfolio’s largest industry weights—semiconductors & semiconductor equipment in Information Technology and machinery in Industrials—were the top contributors, followed by another good-sized weighting—building products in Industrials. The top detractors were communications equipment from Information Technology, air freight & logistics in Industrials, and interactive media & services in Communication Services.
The top-contributing position in 2023 was First Citizens BancShares, which the Fund has owned for many years due mostly to its strong liquidity position and stellar deposit franchise. Its valuation looked attractive to us in late 2022, when we began adding shares that were trading at roughly 5x earnings per share. In late March of 2023, First Citizens made its FDIC-assisted acquisition of Silicon Valley Bank. The market eventually re-rated its shares, first as it became clear that this acquisition was accretive and again when there was not a systemic banking crisis. Builders FirstSource manufactures building products for professional homebuilders. It continues to benefit from its merger with BMC Stock Holdings, which expanded its value-added product footprint in fast growing markets, furthered share gains in key product categories (chiefly in manufactured components), and created cost synergies. The company has also enjoyed strong financial results, generated ample free cash flow, and seen widening margins.
Top Contributors to Performance | Top Detractors from Performance | |||||
For 2023 (%)1 | For 2023 (%)2 | |||||
First Citizens BancShares Cl. A | 1.90 | James River Group Holdings | -0.38 | |||
Builders FirstSource | 1.32 | Valmont Industries | -0.33 | |||
Onto Innovation | 1.00 | Forward Air | -0.30 | |||
Arcosa | 0.85 | Forrester Research | -0.25 | |||
Kadant | 0.65 | Mesa Laboratories | -0.22 | |||
1 Includes dividends | 2 Net of dividends | |||||
The Fund’s biggest detractor was James River Group Holdings, which is a specialty insurer and reinsurer. We had thought that the company had put underwriting issues behind it, but they resurfaced in 2023, as did problems in the company’s casualty reinsurance business. A negative restatement of 2Q23 financials worsened an already difficult situation. Valmont Industries manufactures products focused on the infrastructure and agricultural markets, including those used in utility grid resilience, solar energy, upgrades to lighting and transportation infrastructure, and the 5G rollout. The company endured significant impairments in its Agriculture Technology unit, due to slower growth and lower-than-expected adoption rates, while facing inflationary pressures and lower sales in its telecom business. To address these issues, Valmont initiated an organizational realignment that entailed executive leadership changes aimed at improving efficiency and streamlining decision-making, which led to short-term disruptions and uncertainty (as major organizational changes often do) that drove other investors away from its shares.
The Fund’s advantage over the Russell 2000 came mostly from stock selection in 2023, though sector allocation was also highly additive. Altogether, 10 of 11 equity sectors contributed to the Fund’s outperformance. Stock selection and our higher weighting in Industrials and Information Technology, as well as stock selection in Financials helped relative performance. Conversely, stock selection detracted in Communication Services while the smallest contributions to outperformance came from our lower weightings in Consumer Staples and Energy.
CURRENT POSITIONING AND OUTLOOK
Our outlook is constructive. First, we suspect that returns are likely to be spread more widely over the next few years and that the reign of the Magnificent 7—the mega-cap cohort of Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla—may be coming to an end, especially if 2023’s fourth quarter and early January 2024 are any indication. The backdrop of moderating inflation, normalized interest rates, and a still growing U.S. economy also bolsters our belief that small-cap’s lengthy stretch in the relative performance wilderness has run its course. We believe moderate growth and the more normalized rate environment should support a broadening of equity market returns where small-caps could be clear beneficiaries, especially those businesses that have largely sat out the mega-cap performance regime. Even more important is what we’ve been hearing from management teams—most of whom remain cautiously optimistic about 2024. We see an increasing likelihood for example, that the U.S. economy will achieve the much-desired soft landing—which is encouraging for many reasons. The next few years are expected to see even more tangible benefits of reshoring, the CHIPS Act, and numerous infrastructure projects, and we see many of our holdings as poised to benefit from these developments. We’re looking forward to what we think should be a favorable cycle for small-cap stocks.
16 | The Royce Funds 2023 Annual Report to Shareholders
PERFORMANCE AND PORTFOLIO REVIEW (UNAUDITED) | TICKER SYMBOLS PENNX RYPFX RPMIX RYPCX |
Performance and Expenses
Average Annual Total Return (%) Through 12/31/23
JUL-DEC 20231 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | 25-YR | 30-YR | 35-YR | 50-YR | |
PMF | 9.78 | 26.66 | 8.64 | 13.11 | 8.02 | 11.93 | 9.03 | 9.93 | 10.21 | 10.45 | 13.19 |
Annual Operating Expenses: 0.96% |
1 Not annualized
Morningstar Style Map™ As of 12/31/23
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 84 for additional information.
Value of $10,000
Invested on 12/29/78 (Russell 2000 Inception) as of 12/31/23 ($)
Top 10 Positions
% of Net Assets
Arcosa | 1.9 |
Haemonetics Corporation | 1.4 |
Air Lease Cl. A | 1.4 |
First Citizens BancShares Cl. A | 1.4 |
Builders FirstSource | 1.3 |
Element Solutions | 1.3 |
Enovis Corporation | 1.3 |
Onto Innovation | 1.3 |
Innospec | 1.2 |
Lincoln Electric Holdings | 1.2 |
Portfolio Sector Breakdown
% of Net Assets
Industrials | 28.4 |
Information Technology | 18.6 |
Financials | 17.7 |
Consumer Discretionary | 9.5 |
Materials | 8.6 |
Health Care | 8.2 |
Communication Services | 2.3 |
Real Estate | 2.2 |
Energy | 1.6 |
Consumer Staples | 1.1 |
Cash and Cash Equivalents | 1.8 |
Calendar Year Total Returns (%)
YEAR | PMF |
2023 | 26.7 |
2022 | -17.1 |
2021 | 22.0 |
2020 | 14.1 |
2019 | 26.6 |
2018 | -9.7 |
2017 | 16.2 |
2016 | 26.5 |
2015 | -11.4 |
2014 | -0.7 |
2013 | 35.3 |
2012 | 14.6 |
2011 | -4.2 |
2010 | 23.9 |
2009 | 36.3 |
Upside/Downside Capture Ratios
Periods Ended 12/31/23 (%)
UPSIDE | DOWNSIDE | |
10-Year | 96 | 87 |
From 12/31/78 (Russell 2000 Inception) | 91 | 74 |
Portfolio Diagnostics
Fund Net Assets | $1,867 million |
Number of Holdings | 296 |
Turnover Rate | 40% |
Average Market Capitalization 1 | $3,215 million |
Weighted Average P/E Ratio 2,3 | 14.9x |
Weighted Average P/B Ratio 2 | 2.2x |
Active Share 4 | 87% |
U.S. Investments (% of Net Assets) | 84.7% |
Non-U.S. Investments (% of Net Assets) | 13.5% |
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 (16% of portfolio holdings as of 12/31/23). |
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.royceinvest.com. All performance and risk information reflects results of the Investment Class (its oldest class). Annual operating expenses reflect the total gross operating expenses for the Fund’s 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 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 2023. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark went up and dividing it by such benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark goes down and dividing it by such benchmark’s return in those quarters.
The Royce Funds 2023 Annual Report to Shareholders | 17
MANAGERS’ DISCUSSION (UNAUDITED)
Andrew Palen, Lauren Romeo, CFA®, Chuck Royce, Steven McBoyle
FUND PERFORMANCE
Royce Premier Fund gained 22.5% in 2023, outperforming its small-cap benchmark, the Russell 2000 Index, which was up 16.9% for the same period. The Fund also maintained longer-term advantages over the small-cap index, beating it for the 3-, 5-, 10-, 15-, 20-, 25-, 30-year and since inception (12/31/91) periods ended 12/31/23.
WHAT WORKED… AND WHAT DIDN’T
Eight of the portfolio’s nine equity sectors made a positive impact on calendar year performance, led by Industrials, Information Technology, and Materials. Communication Services was the only sector that detracted from performance while the smallest contributions came from Health Care and Real Estate. At the industry level, machinery (Industrials), capital markets (Financials), and semiconductors & semiconductor equipment (Information Technology) contributed most while the top detractors were two areas in Industrials—air freight & logistics and professional services—followed by interactive media & services (Communication Services).
The Fund’s top-contributing position was Stella-Jones, which dominates the railway tie and wood utility pole markets. The company saw significant growth in its residential treated lumber business, which benefited from rising lumber prices and vibrant home repair and remodeling activities. Further bolstering growth was increased demand for utility poles largely driven by expanding broadband networks, the robust renewable energy sector, and growing electric vehicle sales— each a key driver in leading utilities to strengthen their electrical grids. Simpson Manufacturing engineers and manufactures connectors, shear walls, and (through its Simpson Dura-Vent subsidiary) venting systems. Rising demand for its innovative construction and infrastructure products, along with successful expansion into global markets, helped its stock price to climb. Welding and cutting tools maker Lincoln Electric Holdings continued its streak of positive results with record sales, profitability, and cash flows. Recent acquisitions that focus on automation have helped Lincoln to expand its global presence while its focus on cost management and operational improvements led to a notable increase in adjusted operating income margins.
Top Contributors to Performance | Top Detractors from Performance | |||||
For 2023 (%)1 | For 2023 (%)2 | |||||
Stella-Jones | 1.88 | Valmont Industries | -0.91 | |||
Simpson Manufacturing | 1.67 | Forward Air | -0.78 | |||
Lincoln Electric Holdings | 1.50 | Forrester Research | -0.67 | |||
Kadant | 1.38 | Fox Factory Holding Corporation | -0.67 | |||
FormFactor | 1.37 | Lindsay Corporation | -0.58 | |||
1 Includes dividends | 2 Net of dividends | |||||
Premier’s top detractor was Valmont Industries, which makes products for the infrastructure and agricultural markets, including those used in utility grid resilience, solar energy, upgrades to lighting and transportation infrastructure, and the 5G rollout. The company’s Agriculture Technology unit was hampered by slower growth and lower-than-expected adoption rates, while the firm was also facing more widespread inflationary pressures and lower sales in its telecom business. To address these issues, Valmont initiated an organizational realignment that entailed executive leadership changes designed to improve efficiency and streamline decision-making. The ensuing short-term disruptions and uncertainty helped drive its stock down. Forward Air provides transportation services to air freight forwarders, air cargo carriers, and airlines. It also operates a truckload business. While the company endured a slow market for freight carriers, we were more alarmed by its acquisition of Omni Logistics for reasons including the purchase price and the dilutive effect of the merger on Forward Air’s less-than-truckload lanes that, post-merger, would see the company effectively competing with a core customer. After performing our own due diligence, we exited our position. Forrester Research is a research and advisory firm. Approximately half of its clients are in the technology sector, which began to experience a pullback in late 2022 that hurt its Consulting and Events businesses to the degree that Forrester revised full-year guidance, reducing both margin and earnings expectations.
The Fund’s advantage over the Russell 2000 in 2023 came from both sector allocation and stock selection, with the former having the bigger impact. Altogether, nine of 11 equity sectors finished the year ahead of the benchmark, led by stock selection in Materials, Financials, and Information Technology, while stock selection detracted in Communication Services and Consumer Discretionary.
CURRENT POSITIONING AND OUTLOOK
2023 marked the seventh consecutive year that small-cap lagged large-cap—which has created a relative valuation gap that is almost two standard deviations below the norm, an anomaly not seen since the Internet bubble more than 20 years ago. Moderating inflation, the decelerating pace of Fed Fund rate hikes, and a still expanding economy lend weight to the hope that small-cap’s 4Q23 rally—in which it outpaced large-caps by 200 basis points—could prove to be the start of a sustained reversion to the mean for relative performance. We see normalization of interest rates over the past two years from artificially low levels as adding further support to the case for quality recapturing small-cap leadership. Companies with strong balance sheets and the ability to self-fund their growth from free cash flow generation have been regaining importance in investors’ stock selection decisions. Given the Fund’s focus on buying high-quality small-cap companies, we remain optimistic about its long-term prospects. With conviction built from the extensive due diligence and information sharing that form the backbone of our investment process, we believe our portfolio of premier businesses—those with durable competitive advantages and reinvestment opportunities—can continue to compound shareholder value at attractive rates of return well into the future.
18 | The Royce Funds 2023 Annual Report to Shareholders
PERFORMANCE AND PORTFOLIO REVIEW (UNAUDITED) | TICKER SYMBOLS RYPRX RPFFX RPFIX RPRCX |
Performance and Expenses
Average Annual Total Return (%) Through 12/31/23
JUL-DEC 20231 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | 25-YR | 30-YR | SINCE INCEPTION (12/31/91) | |
RPR | 7.19 | 22.53 | 6.42 | 12.51 | 8.19 | 11.65 | 9.90 | 10.49 | 10.85 | 11.25 |
Annual Operating Expenses: 1.18% |
1 Not annualized
Relative Returns: Monthly Rolling Average Annual Total Return Periods
25 Years Through 12/31/23
On a monthly rolling basis, The Fund outperformed the Russell 2000 in 67% of all 10-year periods; 68% of all 5-year periods; and 64% of all 1-year periods.
PERIODS BEATING THE INDEX | FUND AVG (%)1 | INDEX AVG (%)1 | ||
10-year | 121/181 | 67% | 10.0 | 8.4 |
5-year | 164/241 | 68% | 10.7 | 8.6 |
1-year | 186/289 | 64% | 11.8 | 9.7 |
1 Average of monthly rolling average annual total returns over the specified periods.
Morningstar Style Map™ As of 12/31/23
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 84 for additional information.
Value of $10,000
Invested on 12/31/91 as of 12/31/23 ($)
Top 10 Positions
% of Net Assets
Lincoln Electric Holdings | 3.0 |
Kadant | 2.9 |
Innospec | 2.9 |
MKS Instruments | 2.9 |
Quaker Houghton | 2.8 |
Arcosa | 2.8 |
SEI Investments | 2.7 |
Reliance Steel & Aluminum | 2.7 |
Morningstar | 2.7 |
FirstService Corporation | 2.7 |
Portfolio Sector Breakdown
% of Net Assets
Industrials | 34.2 |
Information Technology | 12.3 |
Materials | 11.0 |
Consumer Discretionary | 11.0 |
Financials | 10.1 |
Real Estate | 7.8 |
Health Care | 5.3 |
Consumer Staples | 1.8 |
Communication Services | 1.6 |
Cash and Cash Equivalents | 4.9 |
Calendar Year Total Returns (%)
YEAR | RPR |
2023 | 22.5 |
2022 | -15.5 |
2021 | 16.4 |
2020 | 11.5 |
2019 | 34.1 |
2018 | -10.4 |
2017 | 23.8 |
2016 | 23.0 |
2015 | -9.9 |
2014 | -0.9 |
2013 | 27.7 |
2012 | 11.4 |
2011 | -0.9 |
2010 | 26.5 |
2009 | 33.3 |
Upside/Downside Capture Ratios
Periods Ended 12/31/23 (%)
UPSIDE | DOWNSIDE | |
10-Year | 94 | 84 |
From 12/31/91 (Start of Fund’s First Full Quarter) | 94 | 75 |
Portfolio Diagnostics
Fund Net Assets | $1,443 million |
Number of Holdings | 50 |
Turnover Rate | 15% |
Average Market Capitalization 1 | $5,414 million |
Weighted Average P/E Ratio 2,3 | 24.5x |
Weighted Average P/B Ratio 2 | 2.9x |
Active Share4 | 97% |
U.S. Investments (% of Net Assets) | 85.7% |
Non-U.S. Investments (% of Net Assets) | 9.4% |
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 (12% of portfolio holdings as of 12/31/23). |
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.royceinvest.com. All performance and risk information reflects results of the Investment Class (its oldest class). Annual operating expenses reflect the total gross operating expenses for the Fund’s 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 2023. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark went up and dividing it by such benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark goes down and dividing it by such benchmark’s return in those quarters.
The Royce Funds 2023 Annual Report to Shareholders | 19
MANAGERS’ DISCUSSION (UNAUDITED)
Royce Small-Cap Opportunity Fund (ROF)
Jim Harvey, CFA®, Kavitha Venkatraman, Jim Stoeffel, Brendan Hartman
FUND PERFORMANCE
Royce Small-Cap Opportunity Fund advanced 19.6% in 2023, well ahead of its primary benchmark, the Russell 2000 Value Index, and its secondary benchmark, the Russell 2000 Index, which were up 14.6% and 16.9%, respectively, for the same period. The Fund also beat both indexes for the 3-, 5-, 10-, 15-, 20-, 25-year, and since inception (11/19/96) periods ended 12/31/23.
WHAT WORKED… AND WHAT DIDN’T
Eight of the Fund’s 10 equity sectors made positive contributions to calendar year results, led by Industrials, Consumer Discretionary, and Information Technology. Communication Services and Real Estate detracted, albeit slightly, while Consumer Staples made the smallest contribution. At the industry level, construction & engineering (Industrials), household durables (Consumer Discretionary), and metals & mining (Materials) contributed most for the calendar year period, while communications equipment (Information Technology), pharmaceuticals (Health Care), and energy equipment & services (Energy) were the largest detractors.
The top-contributing position in 2023 was Modine Manufacturing, which provides thermal management systems for several industries. It was first added to the portfolio as a turnaround candidate as it was moving from its historical core of automotive radiators toward newer high growth opportunities. The shift is now paying dividends as the company is seeing significant wins in areas such as data centers and electric vehicles. Limbach Holdings is a specialty contractor focused primarily on heating, cooling, and plumbing systems. The company is refocusing its business away from being a general contractor towards working directly with property owners, a customer base that generates significantly higher profit margins, which has become increasingly apparent in operating results.
Top Contributors to Performance | Top Detractors from Performance | |||||
For 2023 (%)1 | For 2023 (%)2 | |||||
Modine Manufacturing | 1.07 | DZS | -0.73 | |||
Limbach Holdings | 1.02 | ADTRAN Holdings | -0.53 | |||
Carrols Restaurant Group | 0.57 | Babcock & Wilcox Enterprises | -0.51 | |||
Carpenter Technology | 0.57 | Cambium Networks | -0.36 | |||
American Superconductor | 0.55 | TTEC Holdings | -0.34 | |||
1 Includes dividends | 2 Net of dividends | |||||
The Fund’s biggest detractor was DZS, which manufactures mobile transport and broadband access solutions. Its telecom equipment end markets were weak throughout 2023 as customers worked off excess inventory. DZS faced additional challenges managing its working capital as it faced payment issues with certain customers in Asia. Finally, the company announced that it would restate financials for 2023’s first quarter because a certain amount of inventory in Asia was not properly accounted for. However, DZS was able to execute a financing plan with its parent company, selling its Asian assets to the parent in early 2023, enabling DZS to strengthen its balance sheet and focus on selling higher margin products. ADTRAN Holdings sells network access solutions mostly to U.S. and European customers. It endured the same end market weakness in the telecom equipment space as DZS. ADTRAN also announced in its third-quarter earnings release that revenues had dropped significantly and that its business would probably remain challenging through the first half of 2024 because inventory reductions and restrained capital spending across its customer base were likely to continue. We exited the position in November, though it remains on our watchlist.
The Fund’s advantage over the Russell 2000 Value in 2023 came from sector allocation. Our much lower weighting in Financials, higher weighting in Industrials, and both a lower weighting and stock selection in Health Care drove our edge at the sector level. Conversely, stock selection in Information Technology, a higher weighting and stock selection in Communication Services, and stock selection in Energy hurt relative performance most.
CURRENT POSITIONING AND OUTLOOK
With inflation rolling over and the U.S. economy remaining healthy, it appears the “soft landing” scenario is playing out. It also seems increasingly likely to us that the Fed rate hike cycle has ended, with the markets anticipating rate cuts in 2024. Despite wars in the Ukraine and Middle East—and related disruptions to global shipping lanes—energy prices have remained stable but were creeping higher as of this writing and bear watching as we enter 2024. With all of this in mind, we remain generally optimistic on the state of the U.S. economy and remain broadly overweight in Industrials and Information Technology. Many of our portfolio companies are reporting that supply chains have returned to normal or near normal conditions after several years of Covid-related disruptions. Despite our view that the long-term competitive dynamics of the industry are challenging, we have been slowly adding to our bank exposure given the outlook for lower rates in 2024, which should help alleviate the risks associated with credit quality issues. We also continue to look for opportunities to take advantage of unprecedented investments from both the private and public sectors in U.S. infrastructure spending. We see investment as being fueled by the realization that companies need shorter and more secure supply chains, as well as the concerns about strategic imperatives around semiconductor production capabilities. We think the increasing demand for Artificial Intelligence (AI) capabilities is accelerating these trends, which, in addition to driving demand for semiconductor capabilities, are driving significant demand for energy efficiency. We view this investment thesis as being in the early innings.
20 | The Royce Funds 2023 Annual Report to Shareholders
PERFORMANCE AND PORTFOLIO REVIEW (UNAUDITED) | TICKER SYMBOLS RYPNX RYOFX ROFIX ROFCX ROFRX |
Performance and Expenses
Average Annual Total Return (%) Through 12/31/23
JUL-DEC 20231 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | 25-YR | SINCE INCEPTION (11/19/96) | |
ROF | 5.67 | 19.58 | 9.07 | 16.05 | 8.65 | 14.49 | 9.30 | 11.68 | 11.90 |
Annual Operating Expenses: 1.23% |
1 Not annualized
Relative Returns: Monthly Rolling Average Annual Total Return Periods
25 Years Through 12/31/23
On a monthly rolling basis, The Fund outperformed the Russell 2000 Value in 99% of all 10-year periods; 76% of all 5-year periods; and 55% of all 1-year periods.
PERIODS BEATING THE INDEX | FUND AVG (%)1 | INDEX AVG (%)1 | ||
10-year | 180/181 | 99% | 9.8 | 8.2 |
5-year | 184/241 | 76% | 10.8 | 8.8 |
1-year | 159/289 | 55% | 15.1 | 10.5 |
1 Average of monthly rolling average annual total returns over the specified periods.
Morningstar Style Map™ As of 12/31/23
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 84 for additional information.
Value of $10,000
Invested on 11/19/96 as of 12/31/23 ($)
Top 10 Positions
% of Net Assets
Kyndryl Holdings | 0.8 |
Wabash National | 0.8 |
Triumph Group | 0.8 |
Haynes International | 0.8 |
Skyline Champion | 0.7 |
Garrett Motion | 0.7 |
Carpenter Technology | 0.7 |
CECO Environmental | 0.7 |
Stoneridge | 0.7 |
QuinStreet | 0.7 |
Portfolio Sector Breakdown
% of Net Assets
Industrials | 28.3 |
Information Technology | 19.8 |
Consumer Discretionary | 14.8 |
Materials | 8.2 |
Financials | 6.7 |
Energy | 6.5 |
Health Care | 6.4 |
Communication Services | 5.4 |
Consumer Staples | 1.1 |
Real Estate | 0.1 |
Cash and Cash Equivalents | 2.7 |
Calendar Year Total Returns (%)
YEAR | RPR |
2023 | 19.6 |
2022 | -17.1 |
2021 | 30.8 |
2020 | 26.5 |
2019 | 28.2 |
2018 | -20.0 |
2017 | 21.9 |
2016 | 29.9 |
2015 | -13.6 |
2014 | -0.5 |
2013 | 43.5 |
2012 | 22.6 |
2011 | -13.0 |
2010 | 33.8 |
2009 | 62.1 |
Upside/Downside Capture Ratios
Periods Ended 12/31/23 (%)
UPSIDE | DOWNSIDE | |
10-Year | 117 | 110 |
From 12/31/96 (Start of Fund’s First Full Quarter) | 125 | 117 |
Portfolio Diagnostics
Fund Net Assets | $1,287 million |
Number of Holdings | 238 |
Turnover Rate | 35% |
Average Market Capitalization 1 | $1,201 million |
Weighted Average P/B Ratio2 | 1.7x |
Weighted Average P/S Ratio 3 | 0.9x |
Active Share4 | 87% |
U.S. Investments (% of Net Assets) | 90.2% |
Non-U.S. Investments (% of Net Assets) | 7.1% |
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 | 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.royceinvest.com. All performance and risk information reflects results of the Investment Class (its oldest class). Annual operating expenses reflect the total gross operating expenses for the Fund’s 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 2023. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark went up and dividing it by such benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark goes down and dividing it by such benchmark’s return in those quarters.
The Royce Funds 2023 Annual Report to Shareholders | 21
MANAGERS’ DISCUSSION (UNAUDITED)
Royce Small-Cap Special Equity Fund (RSE)
Charlie Dreifus, CFA®, Steven McBoyle
FUND PERFORMANCE
Royce Small-Cap Special Equity Fund increased 12.8% in 2023 versus a 14.6% gain for its primary benchmark, the Russell 2000 Value Index, and 16.9% for its secondary index, the Russell 2000 Index. The portfolio outperformed the small-cap value index for the 3-, 20-, 25-year, and since inception (5/1/98) periods ended 12/31/23—and beat the Russell 2000 in each of those periods except the 20-year span.
WHAT WORKED… AND WHAT DIDN’T
Six of the portfolio’s nine equity sectors made a positive impact on calendar year performance. The sectors making the largest positive contributions were Industrials, Consumer Discretionary, and Materials, while the negative impacts came from Communication Services, Energy, and Financials. At the industry level, electrical equipment (Industrials), machinery (Industrials), and construction materials (Materials) contributed most for the calendar year period, while media (Communication Services), consumer staples distribution & retail (Consumer Staples), and broadline retail (Consumer Discretionary) were the largest detractors.
Encore Wire, which manufactures building electrical wire, was the largest contributor for the year. Its shares surged in mid-February of 2023 after the company reported better-than-expected quarterly earnings, in part due to margins proving more resilient than had been anticipated. After trading rangebound through much of the year, Encore shares broke out again late in 2023 on stronger-than-expected volume sales and optimism due to lower interest rates. United States Lime & Minerals produces lime and limestone products used in various industrial applications. The company posted strong results throughout 2023, including impressive revenue growth and margin expansion driven in large part by continued pricing power. Mueller Industries primarily makes copper tubes, fittings, and climate-related components. Mueller’s market position has allowed for continued pricing power despite declining demand. Similar to Encore Wire, its shares rallied in December due to the impact of lower interest rates on its residential end markets. John B. Sanfilippo & Son processes and distributes nuts and snack products. The company posted excellent results through 2023’s first half as customers continued to gain
Top Contributors to Performance | Top Detractors from Performance | |||||
For 2023 (%)1 | For 2023 (%)2 | |||||
Encore Wire | 2.71 | TEGNA | -1.17 | |||
United States Lime & Minerals | 1.66 | Ingles Markets Cl. A | -0.79 | |||
Mueller Industries | 1.55 | Hurco Companies | -0.36 | |||
John B. Sanfilippo & Son | 1.53 | Macy’s | -0.28 | |||
NVE Corporation | 1.08 | Diamond Hill Investment Group | -0.26 | |||
1 Includes dividends | 2 Net of dividends | |||||
appreciation for category expertise and service. It also introduced new products that have been purchased by large customers.
TEGNA, a TV broadcasting company, was the largest detractor for the year. Its acquisition by Standard General was blocked by the FCC at the end of February, removing the acquisition premium from the stock. Regional grocer Ingles Markets endured stagnating revenue growth and margins that deteriorated from Covid peaks due to cost inflation and raw material shortages that weighed on the stock through much of 2023. Hurco Companies manufactures computer numerical control machines. Its shares declined largely in 2023’s first half as revenue and earnings declined relative to 2022 and because the global machine tool market experienced declining demand. Shares of omnichannel retailer Macy’s were pressured throughout the year by concerns over consumer spending, co-branded credit card performance, and potential credit card regulation, though its shares rose in December following reports that an investor group had offered to acquire the company at a 21% premium to the prior close.
The portfolio’s disadvantage versus its benchmark was primarily attributable to sector allocation in the calendar year period, with the Consumer Discretionary, Communication Services and cash holdings making the most significant negative impact versus the benchmark. Conversely, Industrials, Health Care, and Utilities contributed most to relative calendar year period results.
CURRENT POSITIONING AND OUTLOOK
Slower economic growth during a period when price increases accounted for most revenue gains suggests the possibility of a margin squeeze as revenues may weaken faster than costs. We see earnings levels as reflecting the over-earning based upon inventory building and price increases. This appears to be reversing. However, the degree to which is to be determined. If prices do not hold, we expect trouble. Recent revenue growth has been largely price based. Yet investors insist on fighting the Fed. Chair Powell has made it clear he wishes to be compared to Paul Volcker, not Arthur Burns. Absent additional evidence of some significant slowdown in the economy, or slowdown in Super Core Personal Consumption Expenditures Price Index (services), it is hard for us to envision the magnitude or frequency of rate cuts the market is expecting. The financing needs of the U.S. government will also bias rates higher. So, while much commentary has centered on rates over the next year or two, we have a longer-term outlook. One could argue that rates will remain high compared to the last decade plus. Globalization has decreased as supply chains move back to the U.S., with resulting higher prices. Climate change, green transition initiatives, an aging population, and a tense geopolitical stage, with resulting increases in military spending, are just some of the reasons we expect interest rates to be higher for longer. With so much going on, we think that risk management should be the order of the day, especially since the market has already priced in the expected lower rates.
22 | The Royce Funds 2023 Annual Report to Shareholders
PERFORMANCE AND PORTFOLIO REVIEW (UNAUDITED) | TICKER SYMBOLS RYSEX RSEFX RSEIX RSQCX |
Performance and Expenses
Average Annual Total Return (%) Through 12/31/23
JUL-DEC 20231 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | 25-YR | SINCE INCEPTION (5/1/98) | |
RSE | 4.61 | 12.83 | 8.99 | 9.39 | 5.96 | 9.85 | 7.72 | 9.17 | 8.62 |
Annual Operating Expenses: 1.21% |
1 Not annualized
Relative Risk Adjusted Returns: Monthly Rolling Sharpe Ratios
20 Years Through 12/31/23
On a monthly rolling risk-adjusted basis, the Fund outperformed the Russell 2000 Value in 74% of all 10-year periods and 67% of all 5-year periods.
PERIODS BEATING THE INDEX | FUND AVG1 | INDEX AVG1 | ||||
10-year | 89/121 | 74% | 0.54 | 0.47 | ||
5-year | 121/181 | 67% | 0.49 | 0.43 |
1 Average of monthly rolling Sharpe Ratios over the specified periods.
Morningstar Style Map™ As of 12/31/23
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 84 for additional information.
Value of $10,000
Invested on 5/1/98 as of 12/31/23 ($)
Top 10 Positions
% of Net Assets
Encore Wire | 6.3 |
Ingles Markets Cl. A | 6.2 |
Vishay Intertechnology | 4.9 |
Standard Motor Products | 4.5 |
John B. Sanfilippo & Son | 4.1 |
Marcus & Millichap | 4.0 |
Movado Group | 3.9 |
TEGNA | 3.8 |
United States Lime & Minerals | 3.6 |
Ennis | 3.6 |
Portfolio Sector Breakdown
% of Net Assets
Industrials | 26.2 |
Consumer Discretionary | 15.7 |
Consumer Staples | 11.4 |
Materials | 9.7 |
Information Technology | 8.2 |
Financials | 4.8 |
Real Estate | 4.0 |
Communication Services | 3.9 |
Energy | 1.1 |
Cash and Cash Equivalents | 15.0 |
Calendar Year Total Returns (%)
YEAR | RSE |
2023 | 12.8 |
2022 | -6.3 |
2021 | 22.5 |
2020 | 7.4 |
2019 | 12.6 |
2018 | -9.9 |
2017 | 7.9 |
2016 | 32.2 |
2015 | -12.4 |
2014 | 1.1 |
2013 | 29.4 |
2012 | 15.4 |
2011 | 0.1 |
2010 | 19.6 |
2009 | 28.4 |
Upside/Downside Capture Ratios
Periods Ended 12/31/23 (%)
UPSIDE | DOWNSIDE | |
10-Year | 77 | 72 |
From 6/30/98 (Start of Fund’s First Full Quarter) | 81 | 65 |
Portfolio Diagnostics
Fund Net Assets | $784 million |
Number of Holdings | 35 |
Turnover Rate | 14% |
Average Market Capitalization 1 | $1,569 million |
Weighted Average P/E Ratio 2,3 | 10.7x |
Weighted Average P/B Ratio 2 | 1.7x |
Active Share 4 | 97% |
U.S. Investments (% of Net Assets) | 85.0% |
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 (5% of portfolio holdings as of 12/31/23). |
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.royceinvest.com. All performance and risk information reflects results of the Investment Class (its oldest class). Annual operating expenses reflect the total gross operating expenses for the Fund’s 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 2023. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark went up and dividing it by such benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark goes down and dividing it by such benchmark’s return in those quarters.
The Royce Funds 2023 Annual Report to Shareholders | 23
MANAGERS’ DISCUSSION (UNAUDITED)
Royce Small-Cap Total Return Fund (RTR)
Joe Hintz, CFA®, Chuck Royce, Miles Lewis, CFA®
FUND PERFORMANCE
Royce Small-Cap Total Return Fund gained 24.1% in 2023, outpacing its primary benchmark, the Russell 2000 Value Index, and its secondary benchmark, the Russell 2000 Index, which were up 14.6% and 16.9%, respectively, for the same period. The Fund also beat both benchmarks for the 3-, 5-, 10-, 20-, 25-, 30-year, and since inception (12/15/93) periods ended 12/31/23.
WHAT WORKED… AND WHAT DIDN’T
Six of the Fund’s nine equity sectors finished 2023 in the black, led by Information Technology, Financials, and Industrials (the portfolio’s three largest sector weights) while small detractions came from Real Estate, Energy, and Health Care.
FTAI Aviation is an aircraft engine lessor that spun off several related aerospace businesses in 2022. It was 2023’s top-contributing position. After researching the company before the spin-off, we concluded that the market was drastically undervaluing both its non-leasing assets and their growth potential. In January of 2023, FTAI entered the portfolio as a top-5, high conviction holding. Its strong fundamentals helped to shine a light on the franchise value of its non-leasing assets during 2023. We began adding shares of First Citizens BancShares late in 2022 when they were trading at roughly 5x earnings per share. In March of 2023, First Citizens made its FDIC-assisted acquisition of Silicon Valley Bank. The market eventually re-rated its shares, first as it became clear that the acquisition was accretive and again when no systemic banking crisis materialized. Vontier Corporation is an industrial technology company that offers environmental sensors, fueling equipment, field payment hardware, vehicle tracking, and other related software solutions. It began 2023 as our largest position after finishing 2022 as one of our biggest detractors. However, our research gave us confidence in the business and its management, which allowed us to accumulate shares at what we thought were highly attractive valuations. Its shares rose in 2023 as strong secular tailwinds, healthy end market demand, improving supply chain conditions, and ongoing pricing realization all more than offset a slowdown in Europay, Mastercard, and Visa (“EMV”)-related sales.
Top Contributors to Performance | Top Detractors from Performance | |||||
For 2023 (%)1 | For 2023 (%)2 | |||||
FTAI Aviation | 2.87 | BOK Financial | -0.43 | |||
First Citizens BancShares Cl. A | 1.92 | Dril-Quip | -0.42 | |||
Vontier Corporation | 1.78 | Independent Bank Group | -0.42 | |||
International General Insurance | Healthcare Services Group | -0.39 | ||||
Holdings | 1.70 | UMB Financial | -0.35 | |||
Kyndryl Holdings | 1.68 | 2 Net of dividends | ||||
1 Includes dividends | ||||||
BOK Financial is a bank that operates in attractive geographies across the Midwest and Southwest U.S. Despite what we saw as a strong deposit franchise, demand deposits/total deposits declined in 2023, and deposit beta—which measures deposit-rate sensitivity to Fed fund rate changes—was higher than anticipated, pressuring net interest margins (“NIM”). Fears of a commercial real estate (“CRE”) recession also likely kept the stock under pressure, even as CRE comprised only 21.4% of total loans as of 2Q23, with offices only representing 4.3%. Dril-Quip makes offshore drilling and production equipment for oil companies. Though solid fundamentally and benefiting from increased offshore drilling activity, its stock was hurt as energy services companies spent much of 2023 out of investors’ favor. Independent Bank Group also suffered NIM pressure, which crimped earnings.
The Fund’s advantage over the Russell 2000 Value in 2023 came from both stock selection and sector allocation, with the former making the larger impact—and coming from some of our highest conviction ideas. Stock selection fueled outperformance most in Information Technology, Financials, and Industrials, with the Fund’s larger weightings in the first and third sectors also contributing. Conversely, stock selection hurt relative results in Energy, Real Estate, and Materials.
CURRENT POSITIONING AND OUTLOOK
We were very pleased that the Fund delivered strong performance while maintaining lower volatility than our peers and strong downside protection from the November 2021 small-cap peak. These results were rooted in both our robust process and its implementation. The process is designed to cultivate conviction, which manifests itself in a couple of ways. First, we are able to add weight to names in which we have high conviction, such as FTAI Aviation. A second, related way our research builds conviction is by buying shares in the face of weakness. Of 2023’s top 20 contributors, six were meaningful detractors in 2022. As we look forward, our optimism for small-caps, value stocks, and our high-quality portfolio remains—albeit with relatively less opportunities than were provided in 2022. The strong performance of some of our best stocks, coupled with the small-cap rally that began in late October, created more symmetry from a risk/reward perspective. Nevertheless, we continue to find compelling new ideas, a benefit of having thousands of stocks in our universe. From an industry and sector perspective, we are warming up to both banks and consumer stocks.
We found the banking industry’s leadership in 4Q23 noteworthy as, in our opinion, the group did not lead coming out of the Covid or the Great Financial Crisis bottoms. Fortunately, we have extensive expertise in banks and expect to find more opportunities in 2024. The U.S. consumer has arguably been in a recession for nearly two years. Thus, we think expectations are fairly low for many of the businesses we own and/or are considering, while fundamentals could positively surprise if the U.S. avoids a serious recession.
24 | The Royce Funds 2023 Annual Report to Shareholders
PERFORMANCE AND PORTFOLIO REVIEW (UNAUDITED) | TICKER SYMBOLS RYTRX RYTFX RTRIX RYTCX RTRRX |
Performance and Expenses
Average Annual Total Return (%) Through 12/31/23
SINCE INCEPTION | ||||||||||
JUL-DEC 20231 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | 25-YR | 30YR | (12/15/93) | |
RTR | 13.88 | 24.07 | 10.62 | 11.65 | 7.41 | 10.96 | 8.25 | 9.04 | 10.28 | 10.27 |
Annual Operating Expenses: 1.26% |
1 Not annualized
Relative Risk Adjusted Returns: Monthly Rolling Sharpe Ratios
20 Years Through 12/31/23
On a monthly rolling risk-adjusted basis, the Fund outperformed the Russell 2000 Value in 99% of all 10-year periods and 92% of all 5-year periods.
PERIODS BEATING THE INDEX | FUND AVG1 | INDEX AVG1 | |||
10-year | 120/121 | 99% | 0.54 | 0.47 | |
5-year | 167/181 | 92% | 0.49 | 0.43 |
1 Average of monthly rolling Sharpe Ratios over the specified periods.
Morningstar Style Map™ As of 12/31/23
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 84 for additional information.
Value of $10,000
Invested on 12/15/93 as of 12/31/23 ($)
Top 10 Positions
% of Net Assets
International General Insurance Holdings | 3.4 |
Kyndryl Holdings | 2.6 |
Air Lease Cl. A | 2.6 |
Repay Holdings Cl. A | 2.5 |
Advance Auto Parts | 2.4 |
Coherent | 2.1 |
Home BancShares | 2.1 |
Ziff Davis | 2.0 |
Pason Systems | 2.0 |
Vontier Corporation | 2.0 |
Portfolio Sector Breakdown
% of Net Assets
Financials | 36.9 |
Industrials | 17.0 |
Information Technology | 15.1 |
Consumer Discretionary | 8.7 |
Materials | 6.6 |
Energy | 5.4 |
Communication Services | 3.6 |
Real Estate | 2.5 |
Cash and Cash Equivalents | 4.2 |
Calendar Year Total Returns (%)
YEAR | RTR |
2023 | 24.1 |
2022 | -13.3 |
2021 | 25.8 |
2020 | 3.8 |
2019 | 23.5 |
2018 | -12.5 |
2017 | 13.7 |
2016 | 25.9 |
2015 | -7.2 |
2014 | 1.3 |
2013 | 32.8 |
2012 | 14.4 |
2011 | -1.7 |
2010 | 23.5 |
2009 | 26.2 |
Upside/Downside Capture Ratios
Periods Ended 12/31/23 (%)
UPSIDE | DOWNSIDE | |
10-Year | 89 | 80 |
From 12/31/93 (Start of Fund’s First Full Quarter) | 87 | 71 |
Portfolio Diagnostics
Fund Net Assets | $1,021 million |
Number of Holdings | 69 |
Turnover Rate | 65% |
Average Market Capitalization 1 | $2,149 million |
Weighted Average P/E Ratio 2,3 | 14.9x |
Weighted Average P/B Ratio 2 | 1.6x |
Active Share 4 | 96% |
U.S. Investments (% of Net Assets) | 80.9% |
Non-U.S. Investments (% of Net Assets) | 14.9% |
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 (21% of portfolio holdings as of 12/31/23). |
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.royceinvest.com. All performance and risk information reflects results of the Investment Class (its oldest class). Annual operating expenses reflect the total gross operating expenses for the Fund’s 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 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 2023. 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 primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark went up and dividing it by such benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark goes down and dividing it by such benchmark’s return in those quarters.
The Royce Funds 2023 Annual Report to Shareholders | 25
MANAGER'S DISCUSSION (UNAUDITED)
Royce Small-Cap Value Fund (RVV)
Jay Kaplan, CFA®
FUND PERFORMANCE
Royce Small-Cap Value Fund advanced 26.1% in 2023, handily outperforming its primary small-cap benchmark, the Russell 2000 Value Index, which was up 14.6% for the same period, and the 16.9% gain for its secondary benchmark, the Russell 2000 Index. The Fund also beat both benchmarks for the 3-year, 20-year, and since inception (6/14/01) periods ended 12/31/23, though it lagged for the 5- and 10-year periods.
WHAT WORKED… AND WHAT DIDN’T
Eight of the portfolio’s 10 equity sectors made a positive impact on calendar year performance, led by Consumer Discretionary, Information Technology, and Industrials. The only negative impacts came from Health Care and Materials while Consumer Staples made the smallest contribution. At the industry level, electronic equipment, instruments & components (Information Technology), household durables (Consumer Discretionary), and specialty retail (Consumer Discretionary) contributed most for the calendar year period, while biotechnology (Health Care), leisure products (Consumer Discretionary), and pharmaceuticals (Health Care) were the largest detractors.
The portfolio’s top contributor at the position level in 2023 was Sterling Infrastructure, which provides advanced, large-scale site development services for data centers, manufacturing facilities, and e-commerce distribution centers. The company continues to execute effectively in fast-growing markets in the U.S. as it has transitioned from primarily being a highly levered highway builder to its current mix of businesses. M/I Homes builds single-family homes primarily in the Midwest and Southeast U.S. The company has a low-debt balance sheet, steady cash flows, and strong earnings. Perhaps counterintuitively, M/I benefited from higher mortgage rates as homeowners put off selling to avoid purchasing a new home at increased rates—which spurred demand for newly built homes for first-time home buyers. PulteGroup, which builds homes all over the U.S., benefited from this same dynamic. Each homebuilder company held by the portfolio was a top-10 holding at the end of December.
Resources Connection was the portfolio’s top detractor in 2023. A professional services firm that provides accounting and finance,
Top Contributors to Performance | Top Detractors from Performance | |||||
For 2023 (%)1 | For 2023 (%)2 | |||||
Sterling Infrastructure | 2.11 | Resources Connection | -0.33 | |||
M/I Homes | 1.72 | Northwest Pipe | -0.23 | |||
PulteGroup | 1.66 | Financial Institutions | -0.22 | |||
Jabil | 1.51 | Ironwood Pharmaceuticals Cl. A | -0.21 | |||
ePlus | 1.08 | Mid Penn Bancorp | -0.19 | |||
1 Includes dividends | 2 Net of dividends | |||||
human resources management, and information technology professionals to clients on a project-by-project basis, the company faced slumping demand as many businesses cut back on spending for discretionary services. Northwest Pipe makes large diameter, high pressure steel pipe products used for water transmission and smaller diameter, electric resistance welded pipe for a variety of applications. Its stock suffered from the combination of higher steel prices and projects being pushed forward. We held small positions in both Resources Connection and Northwest Pipe at year end. We opted to sell our shares of Financial Institutions, an upstate New York community bank, based on the belief that it was under-capitalized in what we think may continue to be a challenging period for smaller regional players in the banking industry.
Both sector allocation decisions and, to a lesser degree, stock selection contributed to the Fund’s performance edge over the Russell 2000 Value in 2023. All told, eight of 10 equity sectors outperformed the benchmark, with the most impactful advantages coming from stock selection and our higher weighting in Consumer Discretionary, as well as our higher weighting and stock selection in both Information Technology and Industrials. Conversely, stock selection and a lower weight in Materials and stock selection in the Real Estate and Consumer Staples sectors detracted most (though marginally) from relative performance.
CURRENT POSITIONING AND OUTLOOK
The market rally that ushered out 2023 was rooted more in the momentum fueled by economic hope than in material earnings growth—which in our experience seldom if ever makes for a lasting recovery. This appears particularly true in our current situation as many stocks seem to have priced in significant rate cuts in 2024 in the absence of any clear signals from the Fed about the specific timing and magnitude of those decreases. In our view, the tension between investors’ assumptions and actual Fed actions creates a lot of risk for equity investors. We still do not know whether or not the U.S. economy will achieve the much desired soft landing or slide into recession. As investors are faced with potentially underwhelming or disappointing earnings in the first half of 2024, we could endure a rough first six months. We would argue that an earnings recession is more likely to occur than an economic contraction. However, we also see the probability of more clarity about the state of the U.S. economy in the second half of 2024, which we see as a potentially rewarding period for small-cap investors. We have not made many significant changes to portfolio positioning. We trimmed positions, most prominently in banks, where we felt share prices had climbed past near-term earnings prospects. We added to holdings in trucking and transportation—which we think are well positioned for a stronger second half of the year. We otherwise held sector and industry weights more or less steady.
26 | The Royce Funds 2023 Annual Report to Shareholders
PERFORMANCE AND PORTFOLIO REVIEW (UNAUDITED) | TICKER SYMBOLS RYVFX RVVHX |
Performance and Expenses
Average Annual Total Return (%) Through 12/31/23
JUL-DEC 20231 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | SINCE INCEPTION (6/14/01) | |
RVV | 16.31 | 26.08 | 13.30 | 9.96 | 5.34 | 9.58 | 8.19 | 8.87 |
Annual Gross Operating Expenses: 1.59% Annual Net Operating Expenses: 1.49% | ||||||||
1 Not annualized |
Morningstar Style Map™As of 12/31/23
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 84 for additional information.
Value of $10,000
Invested on 6/14/01 as of 12/31/23 ($)
Top 10 Positions
% of Net Assets
M/I Homes | 1.9 |
Tiptree | 1.9 |
Flex | 1.7 |
Evercore Cl. A | 1.7 |
Shoe Carnival | 1.7 |
Bloomin’ Brands | 1.7 |
ePlus | 1.7 |
PulteGroup | 1.7 |
Buckle (The) | 1.7 |
IBEX | 1.6 |
Portfolio Sector Breakdown
% of Net Assets
Consumer Discretionary | 20.6 |
Industrials | 18.1 |
Financials | 17.7 |
Information Technology | 16.2 |
Energy | 7.7 |
Health Care | 6.0 |
Communication Services | 2.9 |
Consumer Staples | 2.7 |
Materials | 1.3 |
Real Estate | 1.3 |
Cash and Cash Equivalents | 5.5 |
Calendar Year Total Returns (%) | |
YEAR | RVV |
2023 | 26.1 |
2022 | -10.1 |
2021 | 28.2 |
2020 | -6.5 |
2019 | 18.2 |
2018 | -7.2 |
2017 | 5.3 |
2016 | 21.1 |
2015 | -11.5 |
2014 | -0.0 |
2013 | 27.8 |
2012 | 9.6 |
2011 | -7.4 |
2010 | 25.0 |
2009 | 44.7 |
Upside/Downside Capture Ratios
Periods Ended 12/31/23 (%)
UPSIDE | DOWNSIDE | |
10-Year | 86 | 91 |
From 6/30/01 (Start of Fund’s First Full Quarter) | 96 | 90 |
Portfolio Diagnostics
Fund Net Assets | $137 million |
Number of Holdings | 84 |
Turnover Rate | 48% |
Average Market Capitalization 1 | $1,541 million |
Weighted Average P/E Ratio 2,3 | 10.7x |
Weighted Average P/B Ratio 2 | 1.7x |
Active Share 4 | 94% |
U.S. Investments (% of Net Assets) | 94.5% |
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 (2% of portfolio holdings as of 12/31/23). |
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.royceinvest.com. Certain immaterial adjustments were made to the net assets of Royce Small-Cap Value Fund at 12/31/23 for financial reporting purposes, and as a result the net asset value originally calculated on that date and the total return based on that net asset value differs from the adjusted net asset value and total return reported in the Financial Highlights. All performance and risk information reflects results of the Service Class (its oldest class). Annual gross operating expenses reflect the total gross operating expenses for the Fund’s Service Class and include management fees, 12b-1 distribution and/or service fees, and other expenses. Annual 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, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the Service Class’s annual net 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, 2024. 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 2023. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark went up and dividing it by such benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark goes down and dividing it by such benchmark’s return in those quarters.
The Royce Funds 2023 Annual Report to Shareholders | 27
MANAGER’S DISCUSSION (UNAUDITED)
Royce Smaller-Companies Growth Fund (RVP)
Chip Skinner, CFA®
FUND PERFORMANCE
Royce Smaller-Companies Growth Fund gained 17.0% in 2023 versus an 18.7% increase for its primary benchmark, the Russell 2000 Growth Index, and a 16.9% advance for its secondary benchmark, the Russell 2000 Index, for the same period. The Fund outpaced the Russell 2000 Growth for the 5-year and since inception (6/14/01) periods ended 12/31/23, while trailing for the 10-year period.
WHAT WORKED… AND WHAT DIDN’T
Six of the portfolio’s 10 equity sectors made a positive impact on performance in 2023, led by Industrials, Information Technology, and Consumer Discretionary. The largest detractors were Health Care, Materials, and Energy. At the industry level, trading companies & distributors (Industrials), software (Information Technology), and hotels, restaurants & leisure (Consumer Discretionary) contributed most in 2023, while biotechnology (Health Care), pharmaceuticals (Health Care), and communications equipment (Information Technology) were the largest detractors.
The Fund’s top-contributing position was Distribution Solutions Group, which distributes maintenance and repair products. The company was the result of a three-way merger of maintenance, repair, and operations companies. The new CEO has set higher revenue growth and meaningful margin expansion targets, despite recent economic headwinds. It was a top-three position at year-end given the multi-year transformation of the business, improved growth characteristics, and its high-return industrial distributor model. Aehr Test Systems is a semiconductor capital equipment company that focuses on silicon carbide microprocessors, which are well suited for the EV, charging, and power supply markets. Exceptional demand spurred its shares in the first half of 2023, when we chose to take profits. FTAI Aviation provides aircraft engine leasing services to global airlines. The company has benefited from an acute engine supply shortage due in part to lower new aircraft production rates, which created the dual benefit of making FTAI’s inventory of overhauled engines more valuable while also allowing for higher lease rates.
ViewRay, the Fund’s top detractor in 2023, markets a medical system that combines real-time MRI imaging and cancer radiation treatment,
Top Contributors to Performance | Top Detractors from Performance | |||||
For 2023 (%)1 | For 2023 (%)2 | |||||
Distribution Solutions Group | 1.93 | ViewRay | -1.52 | |||
Aehr Test Systems | 1.62 | InMode | -0.99 | |||
FTAI Aviation | 1.57 | Halozyme Therapeutics | -0.97 | |||
TransMedics Group | 1.51 | Harrow | -0.92 | |||
Atlas Technical Consultants Cl. A | 1.50 | AMG Critical Materials | -0.75 | |||
1 Includes dividends | 2 Net of dividends | |||||
resulting in superior patient outcomes, fewer treatment sessions, and fewer side effects. The appeal of its treatment, a new CEO, and more conservative guidance could not compensate for a tighter hospital spending environment, higher financing costs, and lengthening sales cycles that created a significant cash flow crunch. We therefore exited the position in July. InMode is the leader in the aesthetic/plastic surgery “bipolar radio frequency/bipolar RF” systems business and has been both an innovator and a historically solid performer. While new products were its trademark, its latest offerings have been unable to transcend a tougher consumer/economic spending environment and decelerating system utilization and placements. We sold the last of our shares in November. Halozyme Therapeutics has a biotechnology licensing platform that enables large pharmaceutical companies to convert IV therapeutics to subcutaneous injections. The company did not see a previous pattern of rapidly replacing an existing IV therapeutic, followed by a lower market growth rate once maximum penetration rate was reached. Given Halozyme’s product revenue concentration, we exited the position in May.
The portfolio’s disadvantage versus the Russell 2000 Growth was attributable to stock selection in 2023. Our sector allocation decisions were additive. Stock selection hurt most in Health Care, Information Technology, and Materials. Conversely, stock selection in Industrials, Consumer Discretionary, and Consumer Staples contributed most to relative results.
CURRENT POSITIONING AND OUTLOOK
We suspect there is ample room for small-caps to catch up to large-caps in 2024. The primary driver of small-cap’s outperformance in 4Q23 was the combination of more evidence that inflation was moderating and the consequent likelihood that the Fed would be more likely to pause or even cut rates in 2024. While a soft landing for the economy is still a question mark, the market headwinds from monetary tightening appear to be easing. Lower rates should, in our opinion, be a positive backdrop for small-cap equities, capital investment, and risk-taking in general. Of course, many factors drive investor sentiment, and the geopolitical situation has worsened with Israel’s military reaction to a domestic attack and the ongoing Ukraine-Russia conflict. While several of our investment themes and positions have not yet delivered as we had hoped—drug discovery tools, increased electrification, and medical devices, we believe it is only a matter of time before they begin to recover from the temporary headwinds of excess post-pandemic inventories, decelerating electric vehicle demand in the U.S., and concerns over the impact new GLP-1 diabetes drugs may have on medical procedures. We have added to drug discovery tools and software as service stocks after some meaningful valuation contraction, while taking some profits on recent winners, Celsius and DraftKings. We have also added aerospace & defense related stocks given the multi-year demand outlook, while buying a few AI “picks & shovels” names as we monitor the robust spending in that technology innovation.
28 | The Royce Funds 2023 Annual Report to Shareholders
PERFORMANCE AND PORTFOLIO REVIEW (UNAUDITED) | TICKER SYMBOLS RYVPX RVPHX RVPIX |
Performance and Expenses
Average Annual Total Return (%) Through 12/31/23
JUL-DEC 20231 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | SINCE INCEPTION (6/14/01) | |
RVP | 1.42 | 16.97 | -5.18 | 9.49 | 6.38 | 10.25 | 7.87 | 9.95 |
Annual Gross Operating Expenses: 1.55% Annual Net Operating Expenses: 1.49% |
1 Not annualized
Morningstar Style Map™ As of 12/31/23
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 84 for additional information.
Value of $10,000
Invested on 6/14/01 as of 12/31/23 ($)
Top 10 Positions
% of Net Assets
Alphatec Holdings | 3.1 |
VSE Corporation | 3.0 |
Distribution Solutions Group | 2.7 |
FTAI Aviation | 2.7 |
JFrog | 2.7 |
CyberArk Software | 2.4 |
Sprout Social Cl. A | 2.2 |
TransMedics Group | 2.2 |
Freshpet | 2.2 |
Impinj | 2.0 |
Portfolio Sector Breakdown
% of Net Assets
Information Technology | 27.6 |
Industrials | 22.5 |
Health Care | 20.7 |
Financials | 9.3 |
Consumer Discretionary | 7.7 |
Materials | 4.0 |
Consumer Staples | 3.0 |
Energy | 1.9 |
Real Estate | 1.5 |
Cash and Cash Equivalents | 1.8 |
Calendar Year Total Returns (%)
YEAR | RVP |
2023 | 17.0 |
2022 | -32.4 |
2021 | 7.8 |
2020 | 49.3 |
2019 | 23.7 |
2018 | -10.2 |
2017 | 17.8 |
2016 | 9.4 |
2015 | -1.8 |
2014 | 3.9 |
2013 | 32.5 |
2012 | 15.3 |
2011 | -10.0 |
2010 | 19.7 |
2009 | 41.4 |
Upside/Downside Capture Ratios
Periods Ended 12/31/23 (%)
UPSIDE | DOWNSIDE | |
10-Year | 103 | 109 |
From 6/30/01 (Start of Fund’s First Full Quarter) | 106 | 93 |
Portfolio Diagnostics
Fund Net Assets | $181 million |
Number of Holdings | 77 |
Turnover Rate | 65% |
Average Market Capitalization 1 | $2,298 million |
Weighted Average P/B Ratio 2 | 3.5x |
3-5 Year EPS Growth (est.)3 | 25.5% |
Active Share 4 | 93% |
U.S. Investments (% of Net Assets) | 85.8% |
Non-U.S. Investments (% of Net Assets) | 12.4% |
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 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.royceinvest.com. All performance and risk information reflects results of the Service Class (its oldest class). Annual gross operating expenses reflect the total gross operating expenses for the Fund’s Service Class and include management fees, 12b-1 distribution and/or service fees, and other expenses. Annual 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, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the Service Class’s annual net 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, 2024. 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 2023. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark went up and dividing it by such benchmark’s return in those quarters. Downside Capture Ratio measures a manager’s performance in down markets relative to the Fund’s primary benchmark. It is calculated by measuring the Fund’s performance in quarters when the primary benchmark goes down and dividing it by such benchmark’s return in those quarters.
The Royce Funds 2023 Annual Report to Shareholders | 29
Royce Dividend Value Fund | ||||||||
Common Stocks – 98.8% | ||||||||
SHARES | VALUE | |||||||
CONSUMER DISCRETIONARY – 6.1% | ||||||||
HOTELS, RESTAURANTS & LEISURE - 0.2% | ||||||||
†Travel + Leisure | 3,100 | $ | 121,179 | |||||
HOUSEHOLD DURABLES - 4.1% | ||||||||
Vistry Group | 77,500 | 906,356 | ||||||
Worthington Enterprises | 30,000 | 1,726,500 | ||||||
2,632,856 | ||||||||
SPECIALTY RETAIL - 1.8% | ||||||||
USS | 56,000 | 1,126,355 | ||||||
Total (Cost $1,449,792) | 3,880,390 | |||||||
ENERGY – 1.6% | ||||||||
OIL, GAS & CONSUMABLE FUELS - 1.6% | ||||||||
Gaztransport Et Technigaz | 7,800 | 1,032,436 | ||||||
Total (Cost $491,861) | 1,032,436 | |||||||
FINANCIALS – 34.0% | ||||||||
BANKS - 5.1% | ||||||||
BOK Financial | 15,414 | 1,320,209 | ||||||
†First Citizens BancShares Cl. A | 1,314 | 1,864,527 | ||||||
3,184,736 | ||||||||
CAPITAL MARKETS - 25.6% | ||||||||
Artisan Partners Asset Management Cl. A | 25,600 | 1,131,008 | ||||||
B3-Brasil, Bolsa, Balcao | 336,600 | 1,008,220 | ||||||
Bolsa Mexicana de Valores | 444,000 | 918,017 | ||||||
†Canaccord Genuity Group | 31,500 | 180,672 | ||||||
Carlyle Group | 76,020 | 3,093,254 | ||||||
Evercore Cl. A | 13,500 | 2,309,175 | ||||||
KKR & Co. | 19,138 | 1,585,583 | ||||||
Moelis & Company Cl. A | 19,359 | 1,086,621 | ||||||
SEI Investments | 37,900 | 2,408,545 | ||||||
Sprott | 37,500 | 1,270,141 | ||||||
State Street | 15,120 | 1,171,195 | ||||||
16,162,431 | ||||||||
CONSUMER FINANCE - 1.2% | ||||||||
†goeasy | 6,500 | 775,359 | ||||||
INSURANCE - 2.1% | ||||||||
Assured Guaranty | 17,900 | 1,339,457 | ||||||
Total (Cost $10,606,052) | 21,461,983 | |||||||
HEALTH CARE – 3.8% | ||||||||
HEALTH CARE PROVIDERS & SERVICES - 1.1% | ||||||||
Ensign Group (The) | 5,951 | 667,762 | ||||||
PHARMACEUTICALS - 2.7% | ||||||||
Recordati Industria Chimica e Farmaceutica | 24,210 | 1,305,061 | ||||||
Santen Pharmaceutical | 41,600 | 414,525 | ||||||
1,719,586 | ||||||||
Total (Cost $626,525) | 2,387,348 | |||||||
INDUSTRIALS – 34.9% | ||||||||
AEROSPACE & DEFENSE - 4.3% | ||||||||
HEICO Corporation Cl. A | 18,800 | 2,677,872 | ||||||
BUILDING PRODUCTS - 0.8% | ||||||||
Geberit | 800 | 512,692 | ||||||
CONSTRUCTION & ENGINEERING - 2.9% | ||||||||
Comfort Systems USA | 8,959 | 1,842,598 | ||||||
ELECTRICAL EQUIPMENT - 3.7% | ||||||||
Hubbell Incorporated | 7,060 | 2,322,246 | ||||||
MACHINERY - 10.2% | ||||||||
Graco | 25,224 | 2,188,434 | ||||||
Lincoln Electric Holdings | 9,020 | 1,961,489 | ||||||
Lindsay Corporation | 3,843 | 496,362 | ||||||
Spirax-Sarco Engineering | 13,478 | 1,804,731 | ||||||
6,451,016 | ||||||||
MARINE TRANSPORTATION - 2.1% | ||||||||
Clarkson | 33,415 | 1,348,051 | ||||||
PROFESSIONAL SERVICES - 6.4% | ||||||||
KBR | 28,573 | 1,583,230 | ||||||
Korn Ferry | 8,723 | 517,710 | ||||||
ManpowerGroup | 19,300 | 1,533,771 | ||||||
Robert Half | 4,794 | 421,488 | ||||||
4,056,199 | ||||||||
TRADING COMPANIES & DISTRIBUTORS - 4.5% | ||||||||
Applied Industrial Technologies | 13,642 | 2,355,837 | ||||||
†FTAI Aviation | 10,000 | 464,000 | ||||||
2,819,837 | ||||||||
Total (Cost $5,156,332) | 22,030,511 | |||||||
INFORMATION TECHNOLOGY – 1.6% | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 1.6% | ||||||||
Vishay Intertechnology | 42,497 | 1,018,653 | ||||||
Total (Cost $542,214) | 1,018,653 | |||||||
MATERIALS – 14.9% | ||||||||
CHEMICALS - 2.6% | ||||||||
Quaker Houghton | 6,122 | 1,306,557 | ||||||
†Scotts Miracle-Gro Cl. A | 5,000 | 318,750 | ||||||
1,625,307 | ||||||||
CONTAINERS & PACKAGING - 2.0% | ||||||||
AptarGroup | 10,198 | 1,260,677 | ||||||
METALS & MINING - 10.3% | �� | |||||||
Franco-Nevada | 16,500 | 1,828,365 | ||||||
Reliance Steel & Aluminum | 6,228 | 1,741,847 | ||||||
Royal Gold | 17,500 | 2,116,800 | ||||||
†Worthington Steel 1 | 30,000 | 843,000 | ||||||
6,530,012 | ||||||||
Total (Cost $3,403,052) | 9,415,996 | |||||||
REAL ESTATE – 1.9% | ||||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.5% | ||||||||
†RMR Group (The) Cl. A | 32,700 | 923,121 | ||||||
SPECIALIZED REITS - 0.4% | ||||||||
†OUTFRONT Media | 17,900 | 249,884 | ||||||
Total (Cost $1,229,161) | 1,173,005 | |||||||
TOTAL COMMON STOCKS | ||||||||
(Cost $23,504,989) | 62,400,322 | |||||||
REPURCHASE AGREEMENT– 1.3% | ||||||||
Fixed Income Clearing Corporation, 4.75% dated 12/29/23, due 1/2/24, maturity value $817,624 (collateralized by obligations of U.S. Government Agencies, 2.75% due 2/15/28, valued at $833,610) | ||||||||
(Cost $817,192) | 817,192 | |||||||
TOTAL INVESTMENTS – 100.1% | ||||||||
(Cost $24,322,181) | 63,217,514 | |||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (0.1)% | (42,747 | ) | ||||||
NET ASSETS – 100.0% | $ | 63,174,767 |
30 | The Royce Funds 2023 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2023
Royce Global Financial Services Fund | ||||||||
Common Stocks – 97.8% | ||||||||
SHARES | VALUE | |||||||
BANKS - 15.7% | ||||||||
Bank of N.T. Butterfield & Son | 5,805 | $ | 185,818 | |||||
BOK Financial | 9,405 | 805,538 | ||||||
Capital City Bank Group | 16,988 | 499,957 | ||||||
First Citizens BancShares Cl. A | 898 | 1,274,235 | ||||||
Popular | 11,701 | 960,301 | ||||||
†Valley National Bancorp | 5,000 | 54,300 | ||||||
Western Alliance Bancorp | 8,000 | 526,320 | ||||||
Total (Cost $1,938,376) | 4,306,469 | |||||||
CAPITAL MARKETS - 50.8% | ||||||||
Ares Management Cl. A | 4,442 | 528,243 | ||||||
Artisan Partners Asset Management Cl. A | 7,512 | 331,880 | ||||||
B3-Brasil, Bolsa, Balcao | 183,000 | 548,141 | ||||||
Carlyle Group | 21,185 | 862,018 | ||||||
Charles Schwab | 10,270 | 706,576 | ||||||
Coronation Fund Managers | 30,600 | 52,125 | ||||||
CRISIL | 14,000 | 726,635 | ||||||
†Donnelley Financial Solutions 1 | 5,128 | 319,833 | ||||||
EFG Holding 1 | 277,186 | 149,416 | ||||||
GCM Grosvenor Cl. A | 21,300 | 190,848 | ||||||
Intermediate Capital Group | 39,111 | 837,777 | ||||||
JSE | 51,000 | 257,725 | ||||||
KKR & Co. | 14,508 | 1,201,988 | ||||||
MarketAxess Holdings | 1,423 | 416,725 | ||||||
MarketWise Cl. A | 88,300 | 241,059 | ||||||
Morningstar | 1,199 | 343,202 | ||||||
NZX | 580,000 | 399,645 | ||||||
Onex Corporation | 11,615 | 811,091 | ||||||
†Rand Capital | 5,000 | 64,750 | ||||||
SEI Investments | 9,540 | 606,267 | ||||||
Silvercrest Asset Management Group Cl. A | 27,612 | 469,404 | ||||||
Sprott | 36,450 | 1,234,577 | ||||||
StoneX Group 1 | 8,971 | 662,329 | ||||||
Tel Aviv Stock Exchange | 232,705 | 1,237,905 | ||||||
U.S. Global Investors Cl. A | 165,500 | 466,710 | ||||||
Warsaw Stock Exchange | 23,169 | 250,253 | ||||||
Total (Cost $7,275,595) | 13,917,122 | |||||||
CONSUMER FINANCE - 1.9% | ||||||||
†goeasy | 4,300 | 512,930 | ||||||
Total (Cost $400,901) | 512,930 | |||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 1.3% | ||||||||
†Crane NXT | 6,500 | 369,655 | ||||||
Total (Cost $260,788) | 369,655 | |||||||
FINANCIAL SERVICES - 3.9% | ||||||||
Banco Latinoamericano de Comercio | ||||||||
Exterior Cl. E | 25,700 | 635,818 | ||||||
ECN Capital | 100,000 | 226,407 | ||||||
PayPal Holdings 1 | 3,466 | 212,847 | ||||||
Total (Cost $735,194) | 1,075,072 | |||||||
INSURANCE - 8.7% | ||||||||
Assured Guaranty | 7,594 | 568,259 | ||||||
Axis Capital Holdings | 11,554 | 639,745 | ||||||
E-L Financial | 1,327 | 1,049,763 | ||||||
James River Group Holdings | 13,700 | 126,588 | ||||||
Total (Cost $2,005,330) | 2,384,355 | |||||||
METALS & MINING - 3.5% | ||||||||
Franco-Nevada | 8,571 | 949,752 | ||||||
Total (Cost $373,656) | 949,752 | |||||||
PROFESSIONAL SERVICES - 0.2% | ||||||||
Quess Corp 1 | 8,900 | 55,723 | ||||||
Total (Cost $40,821) | 55,723 | |||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 9.0% | ||||||||
Altus Group | 23,760 | 755,629 | ||||||
FirstService Corporation | 7,541 | 1,222,320 | ||||||
Real Matters 1 | 100,000 | 475,454 | ||||||
Total (Cost $1,236,206) | 2,453,403 | |||||||
SOFTWARE - 1.1% | ||||||||
Envestnet 1 | 6,000 | 297,120 | ||||||
Total (Cost $256,690) | 297,120 | |||||||
TRADING COMPANIES & DISTRIBUTORS - 1.7% | ||||||||
†FTAI Aviation | 10,000 | 464,000 | ||||||
Total (Cost $259,576) | 464,000 | |||||||
TOTAL COMMON STOCKS | ||||||||
(Cost $14,783,133) | 26,785,601 | |||||||
REPURCHASE AGREEMENT–- 2.2% | ||||||||
Fixed Income Clearing Corporation, 4.75% dated 12/29/23, due 1/2/24, maturity value $604,054 (collateralized by obligations of U.S. Government Agencies, 2.75% due 2/15/28, valued at $615,886) | ||||||||
(Cost $603,736) | 603,736 | |||||||
TOTAL INVESTMENTS – 100.0% | ||||||||
(Cost $15,386,869) | 27,389,337 | |||||||
CASH AND OTHER ASSETS LESS LIABILITIES – 0.0% | 3,113 | |||||||
NET ASSETS – 100.0% | $ | 27,392,450 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2023 Annual Report to Shareholders | 31 |
Schedules of Investments
Royce International Premier Fund | ||||||||
Common Stocks – 94.1% | ||||||||
SHARES | VALUE | |||||||
AUSTRALIA – 5.8% | ||||||||
Hansen Technologies | 4,283,577 | $ | 14,857,932 | |||||
IPH | 3,241,314 | 14,158,367 | ||||||
Total (Cost $22,408,747) | 29,016,299 | |||||||
BELGIUM – 1.6% | ||||||||
†Azelis Group | 325,125 | 7,960,885 | ||||||
Total (Cost $7,525,339) | 7,960,885 | |||||||
BRAZIL – 3.6% | ||||||||
Odontoprev | 4,249,229 | 10,164,699 | ||||||
TOTVS | 1,150,348 | 7,978,266 | ||||||
Total (Cost $14,238,412) | 18,142,965 | |||||||
CANADA – 2.5% | ||||||||
Altus Group | 16,107 | 512,244 | ||||||
Enghouse Systems | 394,606 | 10,452,942 | ||||||
Open Text | 36,977 | 1,554,091 | ||||||
Total (Cost $12,235,858) | 12,519,277 | |||||||
FINLAND – 1.5% | ||||||||
†Enento Group | 358,164 | 7,702,299 | ||||||
Total (Cost $8,497,191) | 7,702,299 | |||||||
FRANCE – 3.0% | ||||||||
†Antin Infrastructure Partners | 551,816 | 8,394,464 | ||||||
Lectra | 195,804 | 6,754,933 | ||||||
Total (Cost $14,538,034) | 15,149,397 | |||||||
GERMANY – 1.6% | ||||||||
New Work | 70,425 | 6,126,360 | ||||||
Norma Group | 91,683 | 1,622,452 | ||||||
Total (Cost $17,502,191) | 7,748,812 | |||||||
ICELAND – 1.1% | ||||||||
Ossur 1 | 1,322,505 | 5,376,037 | ||||||
Total (Cost $8,016,845) | 5,376,037 | |||||||
ITALY – 4.0% | ||||||||
Carel Industries | 292,993 | 8,021,552 | ||||||
DiaSorin | 62,895 | 6,473,928 | ||||||
GVS 1 | 915,353 | 5,633,560 | ||||||
Total (Cost $19,315,279) | 20,129,040 | |||||||
JAPAN – 26.7% | ||||||||
As One | 266,500 | 10,584,397 | ||||||
BML | 763,000 | 16,234,042 | ||||||
Fukui Computer Holdings | 307,300 | 5,492,170 | ||||||
JCU | 401,100 | 11,321,830 | ||||||
Maruwa | 48,500 | 10,147,163 | ||||||
MEITEC Group Holdings | 400,700 | 8,033,893 | ||||||
†Miura | 477,700 | 9,513,345 | ||||||
NSD | 357,400 | 6,871,712 | ||||||
OBIC Business Consultants | 182,900 | 8,366,702 | ||||||
Riken Keiki | 256,700 | 12,543,709 | ||||||
TKC Corporation | 549,400 | 14,650,667 | ||||||
USS | 432,100 | 8,691,033 | ||||||
Zuken | 382,700 | 10,965,305 | ||||||
Total (Cost $120,603,365) | 133,415,968 | |||||||
JERSEY – 1.0% | ||||||||
†JTC | 471,827 | 4,904,534 | ||||||
Total (Cost $3,950,476) | 4,904,534 | |||||||
NETHERLANDS – 1.0% | ||||||||
IMCD | 29,831 | $ | 5,188,427 | |||||
Total (Cost $1,913,029) | 5,188,427 | |||||||
POLAND – 2.0% | ||||||||
Asseco Poland | 549,897 | 10,216,016 | ||||||
Total (Cost $10,181,877) | 10,216,016 | |||||||
SINGAPORE – 2.0% | ||||||||
XP Power | 564,391 | 9,755,078 | ||||||
Total (Cost $10,649,595) | 9,755,078 | |||||||
SOUTH KOREA – 2.5% | ||||||||
Douzone Bizon | 87,931 | 1,976,553 | ||||||
NICE Information Service | 1,419,879 | 10,440,449 | ||||||
Total (Cost $30,043,387) | 12,417,002 | |||||||
SWEDEN – 5.7% | ||||||||
Alimak Group | 646,301 | 5,260,861 | ||||||
Karnov Group 1 | 1,377,316 | 7,578,887 | ||||||
Loomis | 319,284 | 8,471,146 | ||||||
Norva24 Group 1 | 3,120,497 | 7,332,482 | ||||||
Total (Cost $29,537,725) | 28,643,376 | |||||||
SWITZERLAND – 3.6% | ||||||||
Kardex Holding | 31,123 | 8,067,076 | ||||||
Partners Group Holding | 2,176 | 3,138,325 | ||||||
VZ Holding | 58,127 | 6,786,839 | ||||||
Total (Cost $6,946,069) | 17,992,240 | |||||||
UNITED KINGDOM – 24.9% | ||||||||
Ashmore Group | 1,052,350 | 2,988,590 | ||||||
†Auction Technology Group 1 | 1,307,371 | 8,698,820 | ||||||
Croda International | 130,040 | 8,370,653 | ||||||
†CVS Group | 416,426 | 8,933,321 | ||||||
Diploma | 178,905 | 8,168,439 | ||||||
DiscoverIE Group | 1,051,962 | 10,592,980 | ||||||
Intertek Group | 220,468 | 11,932,091 | ||||||
Learning Technologies Group | 9,930,422 | 10,252,829 | ||||||
Marlowe 1 | 1,799,828 | 9,864,850 | ||||||
Mortgage Advice Bureau Holdings | 670,648 | 7,009,701 | ||||||
Restore | 4,341,662 | 12,175,020 | ||||||
†Rightmove | 1,101,256 | 8,079,790 | ||||||
Spirax-Sarco Engineering | 63,958 | 8,564,104 | ||||||
Victrex | 453,297 | 8,794,041 | ||||||
Total (Cost $127,349,099) | 124,425,229 | |||||||
TOTAL COMMON STOCKS | ||||||||
(Cost $465,452,518) | 470,702,881 | |||||||
PREFERRED STOCK – 1.9% | ||||||||
GERMANY – 1.9% | ||||||||
FUCHS | 215,449 | 9,585,152 | ||||||
(Cost $8,264,979) | 9,585,152 | |||||||
TOTAL INVESTMENTS – 96.0% | ||||||||
(Cost $473,717,497) | 480,288,033 | |||||||
CASH AND OTHER ASSETS LESS LIABILITIES – 4.0% | 20,216,840 | |||||||
NET ASSETS – 100.0% | $ | 500,504,873 |
32 | The Royce Funds 2023 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2023
Royce Micro-Cap Fund | ||||||||
Common Stocks – 97.9% | ||||||||
SHARES | VALUE | |||||||
COMMUNICATION SERVICES – 4.2% | ||||||||
ENTERTAINMENT - 0.8% | ||||||||
IMAX Corporation 1 | 169,100 | $ | 2,539,882 | |||||
INTERACTIVE MEDIA & SERVICES - 1.1% | ||||||||
QuinStreet 1 | 273,446 | 3,505,578 | ||||||
MEDIA - 2.3% | ||||||||
†Entravision Communications Cl. A | 443,721 | 1,850,317 | ||||||
†Innovid Corp. 1 | 810,547 | 1,215,820 | ||||||
Magnite 1 | 220,900 | 2,063,206 | ||||||
Thryv Holdings 1 | 97,704 | 1,988,276 | ||||||
7,117,619 | ||||||||
Total (Cost $11,523,155) | 13,163,079 | |||||||
CONSUMER DISCRETIONARY – 13.5% | ||||||||
AUTOMOBILE COMPONENTS - 2.4% | ||||||||
Modine Manufacturing 1 | 73,788 | 4,405,144 | ||||||
Stoneridge 1 | 153,100 | 2,996,167 | ||||||
7,401,311 | ||||||||
DIVERSIFIED CONSUMER SERVICES - 0.7% | ||||||||
Lincoln Educational Services 1 | 211,808 | 2,126,552 | ||||||
HOTELS, RESTAURANTS & LEISURE - 1.5% | ||||||||
Century Casinos 1 | 346,100 | 1,688,968 | ||||||
Lindblad Expeditions Holdings 1 | 270,400 | 3,047,408 | ||||||
4,736,376 | ||||||||
HOUSEHOLD DURABLES - 2.4% | ||||||||
†Hovnanian Enterprises Cl. A 1 | 29,605 | 4,607,130 | ||||||
Legacy Housing 1 | 117,973 | 2,975,279 | ||||||
7,582,409 | ||||||||
LEISURE PRODUCTS - 1.3% | ||||||||
American Outdoor Brands 1 | 260,456 | 2,187,830 | ||||||
MasterCraft Boat Holdings 1 | 85,300 | 1,931,192 | ||||||
4,119,022 | ||||||||
SPECIALTY RETAIL - 4.3% | ||||||||
Beyond 1 | 67,100 | 1,857,999 | ||||||
Citi Trends 1 | 136,324 | 3,855,243 | ||||||
JOANN 1 | 217,326 | 96,927 | ||||||
OneWater Marine Cl. A 1 | 53,200 | 1,797,628 | ||||||
Shoe Carnival | 109,322 | 3,302,618 | ||||||
Zumiez 1 | 127,900 | 2,601,486 | ||||||
13,511,901 | ||||||||
TEXTILES, APPAREL & LUXURY GOODS - 0.9% | ||||||||
Fossil Group 1 | 443,400 | 647,364 | ||||||
Vera Bradley 1 | 253,100 | 1,948,870 | ||||||
2,596,234 | ||||||||
Total (Cost $31,337,097) | 42,073,805 | |||||||
CONSUMER STAPLES – 0.5% | ||||||||
FOOD PRODUCTS - 0.5% | ||||||||
†Seneca Foods Cl. A 1 | 29,344 | 1,538,799 | ||||||
Total (Cost $1,606,653) | 1,538,799 | |||||||
ENERGY – 3.5% | ||||||||
ENERGY EQUIPMENT & SERVICES - 3.5% | ||||||||
Natural Gas Services Group 1 | 251,612 | 4,045,921 | ||||||
Newpark Resources 1 | 504,400 | 3,349,216 | ||||||
Profire Energy 1 | 1,404,632 | 2,542,384 | ||||||
†Ranger Energy Services Cl. A | 104,261 | 1,066,590 | ||||||
Total (Cost $6,444,294) | 11,004,111 | |||||||
FINANCIALS – 13.4% | ||||||||
BANKS - 8.7% | ||||||||
BayCom Corporation | 155,062 | 3,657,912 | ||||||
†Customers Bancorp 1 | 69,000 | 3,975,780 | ||||||
HarborOne Bancorp | 251,253 | 3,010,011 | ||||||
HBT Financial | 161,072 | 3,400,230 | ||||||
HomeTrust Bancshares | 115,700 | 3,114,644 | ||||||
Investar Holding Corporation | 185,600 | 2,767,296 | ||||||
Midway Investments 1,2 | 1,858,170 | 0 | ||||||
Stellar Bancorp | 99,377 | 2,766,656 | ||||||
Territorial Bancorp | 57,665 | 642,965 | ||||||
Western New England Bancorp | 411,026 | 3,699,234 | ||||||
27,034,728 | ||||||||
CAPITAL MARKETS - 3.8% | ||||||||
B. Riley Financial | 77,920 | 1,635,541 | ||||||
Canaccord Genuity Group | 356,001 | 2,041,891 | ||||||
Silvercrest Asset Management Group Cl. A | 170,773 | 2,903,141 | ||||||
Sprott | 70,380 | 2,383,800 | ||||||
StoneX Group 1 | 41,469 | 3,061,656 | ||||||
12,026,029 | ||||||||
FINANCIAL SERVICES - 0.9% | ||||||||
Cass Information Systems | 60,216 | 2,712,731 | ||||||
Total (Cost $34,434,738) | 41,773,488 | |||||||
HEALTH CARE – 6.6% | ||||||||
BIOTECHNOLOGY - 1.8% | ||||||||
†ARS Pharmaceuticals 1,3 | 179,674 | 984,614 | ||||||
CareDx 1 | 30,800 | 369,600 | ||||||
Dynavax Technologies 1 | 192,200 | 2,686,956 | ||||||
MeiraGTx Holdings 1 | 222,200 | 1,559,844 | ||||||
5,601,014 | ||||||||
HEALTH CARE EQUIPMENT & SUPPLIES - 3.1% | ||||||||
Apyx Medical 1 | 565,127 | 1,480,633 | ||||||
Artivion 1 | 176,155 | 3,149,651 | ||||||
AtriCure 1 | 40,700 | 1,452,583 | ||||||
OrthoPediatrics Corp. 1 | 50,400 | 1,638,504 | ||||||
Profound Medical 1 | 227,300 | 1,904,102 | ||||||
9,625,473 | ||||||||
LIFE SCIENCES TOOLS & SERVICES - 1.3% | ||||||||
†BioLife Solutions 1 | 34,754 | 564,752 | ||||||
Harvard Bioscience 1 | 641,759 | 3,433,411 | ||||||
3,998,163 | ||||||||
PHARMACEUTICALS - 0.4% | ||||||||
†Harrow 1,3 | 125,200 | 1,402,240 | ||||||
Total (Cost $19,325,757) | 20,626,890 | |||||||
INDUSTRIALS – 24.1% | ||||||||
AEROSPACE & DEFENSE - 1.0% | ||||||||
Astronics Corporation 1 | 132,200 | 2,302,924 | ||||||
CPI Aerostructures 1 | 343,190 | 936,909 | ||||||
3,239,833 | ||||||||
BUILDING PRODUCTS - 1.2% | ||||||||
Quanex Building Products | 119,600 | 3,656,172 | ||||||
COMMERCIAL SERVICES & SUPPLIES - 3.7% | ||||||||
Acme United | 80,930 | 3,468,660 | ||||||
†CECO Environmental 1 | 187,800 | 3,808,584 | ||||||
†Montrose Environmental Group 1 | 20,853 | 670,007 | ||||||
VSE Corporation | 57,400 | 3,708,614 | ||||||
11,655,865 | ||||||||
CONSTRUCTION & ENGINEERING - 3.6% | ||||||||
Concrete Pumping Holdings 1 | 322,232 | 2,642,303 | ||||||
Construction Partners Cl. A 1 | 35,604 | 1,549,486 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2023 Annual Report to Shareholders | 33 |
Schedules of Investments
Royce Micro-Cap Fund (continued) | ||||||||
SHARES | VALUE | |||||||
INDUSTRIALS (continued) | ||||||||
CONSTRUCTION & ENGINEERING (continued) | ||||||||
IES Holdings 1 | 48,800 | $ | 3,865,936 | |||||
Northwest Pipe 1 | 105,247 | 3,184,774 | ||||||
11,242,499 | ||||||||
ELECTRICAL EQUIPMENT - 0.9% | ||||||||
American Superconductor 1 | 248,800 | 2,771,632 | ||||||
MACHINERY - 5.3% | ||||||||
Alimak Group | 199,400 | 1,623,107 | ||||||
Commercial Vehicle Group 1 | 262,700 | 1,841,527 | ||||||
Graham Corporation 1 | 208,361 | 3,952,608 | ||||||
Luxfer Holdings | 152,065 | 1,359,461 | ||||||
Porvair | 329,800 | 2,589,539 | ||||||
Shyft Group (The) | 137,531 | 1,680,629 | ||||||
Wabash National | 136,800 | 3,504,816 | ||||||
16,551,687 | ||||||||
MARINE TRANSPORTATION - 1.0% | ||||||||
Clarkson | 78,924 | 3,184,005 | ||||||
PROFESSIONAL SERVICES - 5.0% | ||||||||
CRA International | 27,383 | 2,706,810 | ||||||
Forrester Research 1 | 83,468 | 2,237,777 | ||||||
Kforce | 42,732 | 2,886,974 | ||||||
NV5 Global 1 | 24,400 | 2,711,328 | ||||||
Resources Connection | 217,997 | 3,089,017 | ||||||
†TrueBlue 1 | 121,200 | 1,859,208 | ||||||
15,491,114 | ||||||||
TRADING COMPANIES & DISTRIBUTORS - 2.4% | ||||||||
Distribution Solutions Group 1 | 114,248 | 3,605,667 | ||||||
Transcat 1 | 35,274 | 3,856,506 | ||||||
7,462,173 | ||||||||
Total (Cost $50,132,734) | 75,254,980 | |||||||
INFORMATION TECHNOLOGY – 25.1% | ||||||||
COMMUNICATIONS EQUIPMENT - 4.4% | ||||||||
Applied Optoelectronics 1 | 211,536 | 4,086,875 | ||||||
Clearfield 1 | 55,300 | 1,608,124 | ||||||
Comtech Telecommunications | 159,796 | 1,347,080 | ||||||
Digi International 1 | 102,500 | 2,665,000 | ||||||
EMCORE Corporation 1 | 547,300 | 267,630 | ||||||
Genasys 1 | 524,453 | 1,064,640 | ||||||
Harmonic 1 | 195,900 | 2,554,536 | ||||||
13,593,885 | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 7.0% | ||||||||
Arlo Technologies 1 | 313,500 | 2,984,520 | ||||||
FARO Technologies 1 | 140,445 | 3,164,226 | ||||||
LightPath Technologies Cl. A 1 | 852,684 | 1,074,382 | ||||||
Luna Innovations 1 | 466,864 | 3,104,645 | ||||||
nLIGHT 1 | 273,850 | 3,696,975 | ||||||
PAR Technology 1 | 78,100 | 3,400,474 | ||||||
Powerfleet NJ 1,3 | 433,828 | 1,483,692 | ||||||
VIA optronics ADR 1 | 261,857 | 204,536 | ||||||
Vishay Precision Group 1 | 83,000 | 2,827,810 | ||||||
21,941,260 | ||||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 11.1% | ||||||||
Aehr Test Systems 1,3 | 73,412 | 1,947,620 | ||||||
Amtech Systems 1 | 186,511 | 783,346 | ||||||
Axcelis Technologies 1 | 18,200 | 2,360,358 | ||||||
AXT 1 | 496,600 | 1,191,840 | ||||||
Camtek 1 | 56,650 | 3,930,377 | ||||||
Cohu 1 | 84,900 | 3,004,611 | ||||||
Ichor Holdings 1 | 85,900 | 2,888,817 | ||||||
†inTEST Corporation 1 | 124,456 | 1,692,602 | ||||||
†Kopin Corporation 1 | 418,803 | 850,170 | ||||||
Nova 1 | 25,000 | 3,434,750 | ||||||
NVE Corporation | 36,143 | 2,834,696 | ||||||
PDF Solutions 1 | 71,600 | 2,301,224 | ||||||
Photronics 1 | 147,870 | 4,638,682 | ||||||
Ultra Clean Holdings 1 | 84,600 | 2,888,244 | ||||||
34,747,337 | ||||||||
SOFTWARE - 0.9% | ||||||||
Agilysys 1 | 30,821 | 2,614,237 | ||||||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 1.7% | ||||||||
AstroNova 1 | 198,050 | 3,220,293 | ||||||
Intevac 1 | 504,628 | 2,179,993 | ||||||
5,400,286 | ||||||||
Total (Cost $56,163,407) | 78,297,005 | |||||||
MATERIALS – 6.4% | ||||||||
CHEMICALS - 1.6% | ||||||||
Aspen Aerogels 1 | 221,100 | 3,488,958 | ||||||
†Core Molding Technologies 1 | 80,343 | 1,488,756 | ||||||
4,977,714 | ||||||||
METALS & MINING - 4.8% | ||||||||
Altius Minerals | 114,900 | 1,599,001 | ||||||
Ferroglobe 1 | 310,400 | 2,020,704 | ||||||
Haynes International | 66,081 | 3,769,921 | ||||||
Major Drilling Group International 1 | 507,100 | 3,524,690 | ||||||
Universal Stainless & Alloy Products 1 | 196,735 | 3,950,439 | ||||||
14,864,755 | ||||||||
Total (Cost $12,482,293) | 19,842,469 | |||||||
REAL ESTATE – 0.6% | ||||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.6% | ||||||||
FRP Holdings 1 | 29,575 | 1,859,676 | ||||||
Total (Cost $534,936) | 1,859,676 | |||||||
TOTAL COMMON STOCKS | ||||||||
(Cost $223,985,064) | 305,434,302 | |||||||
REPURCHASE AGREEMENT–- 2.4% | ||||||||
Fixed Income Clearing Corporation, 4.75% dated 12/29/23, due 1/2/24, maturity value $7,377,721 (collateralized by obligations of U.S. Government Agencies, 2.75% due 2/15/28, valued at $7,521,325) | ||||||||
(Cost $7,373,829) | 7,373,829 | |||||||
COLLATERAL RECEIVED FOR SECURITIES LOANED – 0.6% | ||||||||
Money Market Funds | ||||||||
Federated Hermes Government Obligations Fund - Institutional Shares (7 day yield-5.23%) | ||||||||
(Cost $2,056,361) | 2,056,361 | 2,056,361 | ||||||
TOTAL INVESTMENTS – 100.9% | ||||||||
(Cost $233,415,254) | 314,864,492 | |||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (0.9)% | (2,849,772 | ) | ||||||
NET ASSETS – 100.0% | $ | 312,014,720 |
34 | The Royce Funds 2023 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2023
Royce Pennsylvania Mutual Fund
Common Stocks – 98.2%
SHARES | VALUE | ||||||
COMMUNICATION SERVICES – 2.3% | |||||||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.8% | |||||||
Cogent Communications Holdings | 33,060 | $ | 2,514,544 | ||||
†Globalstar 1,3 | 4,708,344 | 9,134,187 | |||||
IDT Corporation Cl. B 1 | 88,069 | 3,002,272 | |||||
Liberty Latin America Cl. C 1 | 187,820 | 1,378,599 | |||||
16,029,602 | |||||||
ENTERTAINMENT - 0.2% | |||||||
IMAX Corporation 1 | 240,219 | 3,608,089 | |||||
INTERACTIVE MEDIA & SERVICES - 1.1% | |||||||
QuinStreet 1 | 77,243 | 990,255 | |||||
Ziff Davis 1 | 282,158 | 18,958,196 | |||||
19,948,451 | |||||||
MEDIA - 0.2% | |||||||
†TEGNA | 216,662 | 3,314,929 | |||||
Total (Cost $47,475,772) | 42,901,071 | ||||||
CONSUMER DISCRETIONARY – 9.5% | |||||||
AUTOMOBILE COMPONENTS - 2.2% | |||||||
†Atmus Filtration Technologies 1,3 | 54,000 | 1,268,460 | |||||
Dorman Products 1 | 154,968 | 12,925,881 | |||||
Fox Factory Holding Corporation 1 | 50,000 | 3,374,000 | |||||
Gentex Corporation | 304,499 | 9,944,937 | |||||
LCI Industries | 79,013 | 9,932,724 | |||||
Modine Manufacturing 1 | 50,000 | 2,985,000 | |||||
Stoneridge 1 | 57,057 | 1,116,606 | |||||
41,547,608 | |||||||
DISTRIBUTORS - 0.1% | |||||||
LKQ Corporation | 13,159 | 628,869 | |||||
Pool Corporation | 2,993 | 1,193,339 | |||||
1,822,208 | |||||||
DIVERSIFIED CONSUMER SERVICES - 0.0% | |||||||
Lincoln Educational Services 1 | 35,517 | 356,591 | |||||
HOTELS, RESTAURANTS & LEISURE - 0.4% | |||||||
Bloomin’ Brands | 125,309 | 3,527,448 | |||||
Century Casinos 1 | 409,352 | 1,997,638 | |||||
Denny’s Corporation 1 | 237,347 | 2,582,335 | |||||
8,107,421 | |||||||
HOUSEHOLD DURABLES - 1.3% | |||||||
Helen of Troy 1 | 43,304 | 5,231,556 | |||||
†Installed Building Products | 10,290 | 1,881,218 | |||||
Legacy Housing 1 | 97,929 | 2,469,770 | |||||
M/I Homes 1 | 28,878 | 3,977,656 | |||||
PulteGroup | 35,587 | 3,673,290 | |||||
Skyline Champion 1 | 76,831 | 5,705,470 | |||||
TopBuild Corp. 1 | 5,047 | 1,888,890 | |||||
24,827,850 | |||||||
LEISURE PRODUCTS - 0.6% | |||||||
Brunswick Corporation | 75,533 | 7,307,818 | |||||
YETI Holdings 1 | 52,302 | 2,708,197 | |||||
10,016,015 | |||||||
SPECIALTY RETAIL - 3.7% | |||||||
Advance Auto Parts | 91,644 | 5,593,033 | |||||
Asbury Automotive Group 1 | 59,499 | 13,385,490 | |||||
Buckle (The) | 70,122 | 3,332,197 | |||||
Caleres | 111,084 | 3,413,611 | |||||
†Destination XL Group 1 | 768,875 | 3,383,050 | |||||
Five Below 1 | 8,674 | 1,848,950 | |||||
Murphy USA | 9,880 | 3,522,813 | |||||
OneWater Marine Cl. A 1 | 241,335 | 8,154,710 | |||||
Shoe Carnival | 274,664 | 8,297,599 | |||||
Signet Jewelers | 35,322 | 3,788,638 | |||||
†Valvoline 1 | 269,222 | 10,117,363 | |||||
Williams-Sonoma | 17,422 | 3,515,411 | |||||
68,352,865 | |||||||
TEXTILES, APPAREL & LUXURY GOODS - 1.2% | |||||||
Carter’s | 93,542 | 7,005,360 | |||||
Kontoor Brands | 58,964 | 3,680,533 | |||||
Movado Group | 199,403 | 6,012,001 | |||||
Ralph Lauren Cl. A | 8,324 | 1,200,321 | |||||
Steven Madden | 102,770 | 4,316,340 | |||||
22,214,555 | |||||||
Total (Cost $119,798,613) | 177,245,113 | ||||||
CONSUMER STAPLES – 1.1% | |||||||
FOOD PRODUCTS - 0.5% | |||||||
Nomad Foods 1 | 534,749 | 9,063,995 | |||||
PERSONAL CARE PRODUCTS - 0.6% | |||||||
Inter Parfums | 86,568 | 12,466,658 | |||||
Total (Cost $11,927,072) | 21,530,653 | ||||||
ENERGY – 1.6% | |||||||
ENERGY EQUIPMENT & SERVICES - 0.9% | |||||||
Core Laboratories | 117,809 | 2,080,507 | |||||
Pason Systems | 1,206,831 | 14,727,336 | |||||
16,807,843 | |||||||
OIL, GAS & CONSUMABLE FUELS - 0.7% | |||||||
Chord Energy | 19,750 | 3,283,043 | |||||
Civitas Resources | 47,080 | 3,219,330 | |||||
Matador Resources | 58,841 | 3,345,699 | |||||
Northern Oil and Gas | 3,787 | 140,384 | |||||
SilverBow Resources 1 | 113,806 | 3,309,479 | |||||
13,297,935 | |||||||
Total (Cost $21,507,754) | 30,105,778 | ||||||
FINANCIALS – 17.7% | |||||||
BANKS - 5.9% | |||||||
Bank of N.T. Butterfield & Son | 190,500 | 6,097,905 | |||||
BankUnited | 182,703 | 5,925,058 | |||||
BOK Financial | 40,738 | 3,489,210 | |||||
CNB Financial | 118,974 | 2,687,623 | |||||
First Bancshares (The) | 154,207 | 4,522,891 | |||||
First Citizens BancShares Cl. A | 18,024 | 25,575,515 | |||||
First Hawaiian | 252,895 | 5,781,180 | |||||
†Hingham Institution for Savings | 19,458 | 3,782,635 | |||||
Home BancShares | 249,980 | 6,331,993 | |||||
Independent Bank Group | 138,696 | 7,056,853 | |||||
Origin Bancorp | 102,630 | 3,650,549 | |||||
Popular | 189,632 | 15,563,098 | |||||
Timberland Bancorp | 88,493 | 2,783,990 | |||||
Triumph Financial 1 | 96,832 | 7,763,990 | |||||
TrustCo Bank Corp NY | 119,367 | 3,706,345 | |||||
†Valley National Bancorp | 246,171 | 2,673,417 | |||||
Western Alliance Bancorp | 40,318 | 2,652,521 | |||||
110,044,773 | |||||||
CAPITAL MARKETS - 5.8% | |||||||
Artisan Partners Asset Management Cl. A | 382,978 | 16,919,968 | |||||
B. Riley Financial | 137,902 | 2,894,563 | |||||
Evercore Cl. A | 31,409 | 5,372,509 | |||||
GCM Grosvenor Cl. A | 961,176 | 8,612,137 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2023 Annual Report to Shareholders | 35 |
Schedules of Investments
Royce Pennsylvania Mutual Fund (continued) | |||||||
SHARES | VALUE | ||||||
FINANCIALS (continued) | |||||||
CAPITAL MARKETS (continued) | |||||||
Houlihan Lokey Cl. A | 45,244 | $ | 5,425,208 | ||||
Lazard | 109,407 | 3,807,364 | |||||
Morningstar | 49,196 | 14,081,863 | |||||
Onex Corporation | 135,000 | 9,427,229 | |||||
SEI Investments | 326,732 | 20,763,819 | |||||
Sprott | 244,764 | 8,290,259 | |||||
TMX Group | 440,088 | 10,644,746 | |||||
Tradeweb Markets Cl. A | 26,995 | 2,453,306 | |||||
108,692,971 | |||||||
CONSUMER FINANCE - 0.2% | |||||||
†goeasy | 8,500 | 1,013,932 | |||||
PRA Group 1 | 118,066 | 3,093,329 | |||||
4,107,261 | |||||||
FINANCIAL SERVICES - 1.0% | |||||||
Compass Diversified Holdings | 124,895 | 2,803,893 | |||||
International Money Express 1 | 163,992 | 3,622,583 | |||||
NewtekOne | 313,177 | 4,321,842 | |||||
Repay Holdings Cl. A 1,3 | 869,055 | 7,421,730 | |||||
18,170,048 | |||||||
INSURANCE - 4.8% | |||||||
Assured Guaranty | 271,543 | 20,319,563 | |||||
Axis Capital Holdings | 54,790 | 3,033,722 | |||||
Berkley (W.R.) | 60,341 | 4,267,315 | |||||
E-L Financial | 23,618 | 18,683,718 | |||||
First American Financial | 22,133 | 1,426,251 | |||||
International General Insurance Holdings | 495,979 | 6,388,209 | |||||
James River Group Holdings | 386,411 | 3,570,438 | |||||
RenaissanceRe Holdings | 35,282 | 6,915,272 | |||||
RLI Corp. | 63,926 | 8,509,829 | |||||
Safety Insurance Group | 68,754 | 5,224,616 | |||||
Stewart Information Services | 28,984 | 1,702,810 | |||||
Tiptree | 185,334 | 3,513,933 | |||||
White Mountains Insurance Group | 3,399 | 5,115,529 | |||||
88,671,205 | |||||||
Total (Cost $245,167,115) | 329,686,258 | ||||||
HEALTH CARE – 8.2% | |||||||
BIOTECHNOLOGY - 0.7% | |||||||
CareDx 1 | 200,005 | 2,400,060 | |||||
Catalyst Pharmaceuticals 1 | 533,179 | 8,962,739 | |||||
†Halozyme Therapeutics 1 | 36,356 | 1,343,718 | |||||
MeiraGTx Holdings 1 | 95,578 | 670,958 | |||||
13,377,475 | |||||||
HEALTH CARE EQUIPMENT & SUPPLIES - 4.3% | |||||||
†Alphatec Holdings 1 | 52,908 | 799,440 | |||||
AtriCure 1 | 24,482 | 873,762 | |||||
Atrion Corporation | 900 | 340,911 | |||||
Cutera 1,3 | 39,800 | 140,295 | |||||
Enovis Corporation 1 | 431,781 | 24,188,372 | |||||
Haemonetics Corporation 1 | 309,157 | 26,436,015 | |||||
†Inspire Medical Systems 1 | 16,314 | 3,318,757 | |||||
†Insulet Corporation 1 | 18,151 | 3,938,404 | |||||
OrthoPediatrics Corp. 1 | 55,623 | 1,808,304 | |||||
Profound Medical 1 | 52,098 | 436,427 | |||||
Surmodics 1 | 160,625 | 5,838,719 | |||||
†TransMedics Group 1,3 | 141,198 | 11,144,758 | |||||
79,264,164 | |||||||
HEALTH CARE PROVIDERS & SERVICES - 0.6% | |||||||
AMN Healthcare Services 1 | 28,681 | 2,147,633 | |||||
Cross Country Healthcare 1 | 150,062 | 3,397,404 | |||||
Molina Healthcare 1 | 13,545 | 4,893,944 | |||||
10,438,981 | |||||||
HEALTH CARE TECHNOLOGY - 0.2% | |||||||
Doximity Cl. A 1 | 81,477 | 2,284,615 | |||||
Simulations Plus | 45,276 | 2,026,101 | |||||
4,310,716 | |||||||
LIFE SCIENCES TOOLS & SERVICES - 2.2% | |||||||
Azenta 1 | 139,528 | 9,088,854 | |||||
BioLife Solutions 1 | 212,353 | 3,450,736 | |||||
Bio-Rad Laboratories Cl. A 1 | 4,739 | 1,530,176 | |||||
Bio-Techne | 96,340 | 7,433,594 | |||||
†Charles River Laboratories International 1 | 6,555 | 1,549,602 | |||||
Harvard Bioscience 1 | 121,940 | 652,379 | |||||
†Medpace Holdings 1,3 | 4,925 | 1,509,660 | |||||
Mesa Laboratories | 94,206 | 9,869,963 | |||||
Quanterix Corporation 1 | 16,148 | 441,486 | |||||
Revvity | 13,358 | 1,460,163 | |||||
Stevanato Group | 173,313 | 4,729,712 | |||||
41,716,325 | |||||||
PHARMACEUTICALS - 0.2% | |||||||
†SIGA Technologies | 599,837 | 3,359,087 | |||||
Total (Cost $138,178,013) | 152,466,748 | ||||||
INDUSTRIALS – 28.4% | |||||||
AEROSPACE & DEFENSE - 1.2% | |||||||
HEICO Corporation | 76,071 | 13,606,820 | |||||
Leonardo DRS 1 | 420,286 | 8,422,531 | |||||
22,029,351 | |||||||
AIR FREIGHT & LOGISTICS - 0.8% | |||||||
Forward Air | 49,160 | 3,090,689 | |||||
Hub Group Cl. A 1 | 132,925 | 12,221,125 | |||||
15,311,814 | |||||||
BUILDING PRODUCTS - 3.5% | |||||||
Advanced Drainage Systems | 11,624 | 1,634,799 | |||||
Builders FirstSource 1 | 150,085 | 25,055,190 | |||||
Carlisle Companies | 12,178 | 3,804,773 | |||||
CSW Industrials | 9,200 | 1,908,172 | |||||
Hayward Holdings 1 | 700 | 9,520 | |||||
†Janus International Group 1 | 63,143 | 824,016 | |||||
Quanex Building Products | 158,052 | 4,831,650 | |||||
Simpson Manufacturing | 64,341 | 12,738,231 | |||||
UFP Industries | 120,796 | 15,165,938 | |||||
65,972,289 | |||||||
COMMERCIAL SERVICES & SUPPLIES - 1.1% | |||||||
Brady Corporation Cl. A | 99,710 | 5,851,980 | |||||
Driven Brands Holdings 1 | 149,046 | 2,125,396 | |||||
GFL Environmental | 67,912 | 2,343,643 | |||||
Healthcare Services Group 1 | 634,604 | 6,580,843 | |||||
†Montrose Environmental Group 1 | 66,224 | 2,127,777 | |||||
RB Global | 26,129 | 1,747,769 | |||||
20,777,408 | |||||||
CONSTRUCTION & ENGINEERING - 3.5% | |||||||
Arcosa | 419,917 | 34,701,941 | |||||
Comfort Systems USA | 7,689 | 1,581,397 | |||||
Construction Partners Cl. A 1 | 141,106 | 6,140,933 | |||||
EMCOR Group | 25,212 | 5,431,421 | |||||
Northwest Pipe 1 | 81,867 | 2,477,295 | |||||
Sterling Infrastructure 1 | 38,196 | 3,358,574 |
36 | The Royce Funds 2023 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2023
Royce Pennsylvania Mutual Fund (continued) | |||||||
SHARES | VALUE | ||||||
INDUSTRIALS (continued) | |||||||
CONSTRUCTION & ENGINEERING (continued) | |||||||
Valmont Industries | 45,106 | $ | 10,532,702 | ||||
WillScot Mobile Mini Holdings Corp. 1 | 40,067 | 1,782,982 | |||||
66,007,245 | |||||||
ELECTRICAL EQUIPMENT - 1.5% | |||||||
†Allient | 24,100 | 728,061 | |||||
American Superconductor 1 | 93,326 | 1,039,652 | |||||
Atkore 1 | 22,775 | 3,644,000 | |||||
Encore Wire | 17,169 | 3,667,298 | |||||
GrafTech International | 171,614 | 375,835 | |||||
Preformed Line Products | 101,976 | 13,650,507 | |||||
†Vertiv Holdings Cl. A | 107,693 | 5,172,495 | |||||
28,277,848 | |||||||
GROUND TRANSPORTATION - 1.1% | |||||||
ArcBest Corporation | 28,443 | 3,419,133 | |||||
Knight-Swift Transportation Holdings | 7,413 | 427,359 | |||||
Landstar System | 67,663 | 13,102,940 | |||||
Schneider National Cl. B | 129,975 | 3,307,864 | |||||
20,257,296 | |||||||
MACHINERY - 7.8% | |||||||
Chart Industries 1 | 4,866 | 663,382 | |||||
Douglas Dynamics | 125,069 | 3,712,048 | |||||
Enpro | 107,596 | 16,864,597 | |||||
ESAB Corporation | 185,748 | 16,089,492 | |||||
ESCO Technologies | 121,707 | 14,243,370 | |||||
Graham Corporation 1 | 91,849 | 1,742,375 | |||||
Helios Technologies | 55,536 | 2,518,558 | |||||
John Bean Technologies | 131,280 | 13,055,796 | |||||
Kadant | 79,945 | 22,409,383 | |||||
Lincoln Electric Holdings | 103,491 | 22,505,153 | |||||
Lindsay Corporation | 30,078 | 3,884,874 | |||||
Miller Industries | 192,159 | 8,126,404 | |||||
RBC Bearings 1 | 56,886 | 16,206,252 | |||||
Wabash National | 128,380 | 3,289,096 | |||||
Westport Fuel Systems 1,3 | 11,598 | 76,779 | |||||
145,387,559 | |||||||
MARINE TRANSPORTATION - 0.7% | |||||||
Clarkson | 30,004 | 1,210,442 | |||||
†Genco Shipping & Trading | 195,335 | 3,240,608 | |||||
Kirby Corporation 1 | 109,926 | 8,626,992 | |||||
13,078,042 | |||||||
PASSENGER AIRLINES - 0.2% | |||||||
Sun Country Airlines Holdings 1 | 194,570 | 3,060,586 | |||||
PROFESSIONAL SERVICES - 2.5% | |||||||
Barrett Business Services | 30,981 | 3,587,600 | |||||
CBIZ 1 | 45,716 | 2,861,364 | |||||
Dun & Bradstreet Holdings | 372,034 | 4,352,798 | |||||
Forrester Research 1 | 359,723 | 9,644,174 | |||||
IBEX 1 | 161,158 | 3,063,614 | |||||
KBR | 265,508 | 14,711,798 | |||||
Korn Ferry | 119,510 | 7,092,918 | |||||
NV5 Global 1 | 10,870 | 1,207,874 | |||||
46,522,140 | |||||||
TRADING COMPANIES & DISTRIBUTORS - 4.5% | |||||||
Air Lease Cl. A | 620,714 | 26,032,745 | |||||
Applied Industrial Technologies | 66,817 | 11,538,628 | |||||
†Core & Main Cl. A 1 | 41,281 | 1,668,165 | |||||
Distribution Solutions Group 1 | 108,002 | 3,408,543 | |||||
EVI Industries | 342,790 | 8,134,407 | |||||
FTAI Aviation | 79,537 | 3,690,517 | |||||
Hudson Technologies 1 | 144,960 | 1,955,510 | |||||
MSC Industrial Direct Cl. A | 16,639 | 1,684,865 | |||||
Richelieu Hardware | 292,057 | 10,575,371 | |||||
Transcat 1 | 134,918 | 14,750,585 | |||||
83,439,336 | |||||||
Total (Cost $281,424,328) | 530,120,914 | ||||||
INFORMATION TECHNOLOGY – 18.6% | |||||||
COMMUNICATIONS EQUIPMENT - 0.8% | |||||||
Aviat Networks 1 | 107,102 | 3,497,951 | |||||
Calix 1 | 41,106 | 1,795,921 | |||||
Digi International 1 | 278,174 | 7,232,524 | |||||
Harmonic 1 | 122,335 | 1,595,249 | |||||
14,121,645 | |||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 7.5% | |||||||
Cognex Corporation | 242,076 | 10,104,252 | |||||
Coherent 1 | 190,230 | 8,280,712 | |||||
Crane NXT | 99,600 | 5,664,252 | |||||
ePlus 1 | 46,305 | 3,696,991 | |||||
Fabrinet 1 | 108,089 | 20,572,579 | |||||
FARO Technologies 1 | 114,396 | 2,577,342 | |||||
Flex 1 | 119,644 | 3,644,356 | |||||
IPG Photonics 1 | 5,843 | 634,199 | |||||
Jabil | 25,997 | 3,312,018 | |||||
Kimball Electronics 1 | 268,406 | 7,233,542 | |||||
Littelfuse | 31,522 | 8,434,026 | |||||
Luna Innovations 1 | 208,588 | 1,387,110 | |||||
Methode Electronics | 111,643 | 2,537,645 | |||||
nLIGHT 1,3 | 80,802 | 1,090,827 | |||||
PAR Technology 1 | 355,975 | 15,499,152 | |||||
Powerfleet NJ 1,3 | 155,315 | 531,177 | |||||
Rogers Corporation 1 | 82,426 | 10,886,002 | |||||
Sanmina Corporation 1 | 62,531 | 3,212,218 | |||||
TD SYNNEX | 30,607 | 3,293,619 | |||||
Teledyne Technologies 1 | 8,140 | 3,632,801 | |||||
Vishay Intertechnology | 135,947 | 3,258,650 | |||||
Vishay Precision Group 1 | 142,655 | 4,860,256 | |||||
Vontier Corporation | 477,159 | 16,485,843 | |||||
140,829,569 | |||||||
IT SERVICES - 0.6% | |||||||
Hackett Group (The) | 142,345 | 3,241,195 | |||||
Kyndryl Holdings 1 | 389,814 | 8,100,335 | |||||
11,341,530 | |||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 6.9% | |||||||
Amkor Technology | 83,462 | 2,776,781 | |||||
Axcelis Technologies 1 | 19,859 | 2,575,514 | |||||
Camtek 1 | 79,224 | 5,496,561 | |||||
Cirrus Logic 1 | 183,529 | 15,267,778 | |||||
Cohu 1 | 96,113 | 3,401,439 | |||||
Diodes 1 | 42,400 | 3,414,048 | |||||
FormFactor 1 | 337,366 | 14,071,536 | |||||
Ichor Holdings 1 | 29,770 | 1,001,165 | |||||
†Impinj 1 | 93,841 | 8,448,505 | |||||
Kulicke & Soffa Industries | 120,453 | 6,591,188 | |||||
MKS Instruments | 151,274 | 15,561,556 | |||||
Nova 1,3 | 52,494 | 7,212,151 | |||||
NVE Corporation | 25,461 | 1,996,906 | |||||
Onto Innovation 1 | 153,651 | 23,493,238 | |||||
Photronics 1 | 132,417 | 4,153,921 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2023 Annual Report to Shareholders | 37 |
Schedules of Investments
Royce Pennsylvania Mutual Fund (continued) | |||||||
SHARES | VALUE | ||||||
INFORMATION TECHNOLOGY (continued) | |||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (continued) | |||||||
Rambus 1 | 79,907 | $ | 5,453,653 | ||||
Silicon Motion Technology ADR | 47,603 | 2,916,636 | |||||
SiTime Corporation 1 | 8,506 | 1,038,412 | |||||
Ultra Clean Holdings 1 | 117,855 | 4,023,570 | |||||
128,894,558 | |||||||
SOFTWARE - 2.7% | |||||||
Adeia | 207,971 | 2,576,761 | |||||
Agilysys 1 | 56,407 | 4,784,442 | |||||
Alkami Technology 1 | 103,991 | 2,521,782 | |||||
†BlackLine 1 | 37,508 | 2,341,999 | |||||
Computer Modelling Group | 2,519,571 | 19,262,106 | |||||
Dolby Laboratories Cl. A | 63,720 | 5,491,390 | |||||
PROS Holdings 1 | 131,878 | 5,115,548 | |||||
†Q2 Holdings 1 | 41,415 | 1,797,825 | |||||
Sapiens International | 66,417 | 1,922,108 | |||||
Teradata Corporation 1 | 77,069 | 3,353,272 | |||||
†Workiva Cl. A 1 | 17,638 | 1,790,786 | |||||
50,958,019 | |||||||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 0.1% | |||||||
AstroNova 1 | 81,672 | 1,327,987 | |||||
Total (Cost $216,744,163) | 347,473,308 | ||||||
MATERIALS – 8.6% | |||||||
CHEMICALS - 5.0% | |||||||
Aspen Aerogels 1 | 127,281 | 2,008,494 | |||||
Balchem Corporation | 58,436 | 8,692,355 | |||||
Element Solutions | 1,045,351 | 24,189,422 | |||||
Ingevity Corporation 1 | 162,162 | 7,657,290 | |||||
Innospec | 183,660 | 22,634,258 | |||||
Minerals Technologies | 156,838 | 11,184,118 | |||||
Quaker Houghton | 75,797 | 16,176,596 | |||||
92,542,533 | |||||||
CONTAINERS & PACKAGING - 0.4% | |||||||
Graphic Packaging Holding Company | 168,706 | 4,158,603 | |||||
Silgan Holdings | 76,830 | 3,476,557 | |||||
7,635,160 | |||||||
METALS & MINING - 2.1% | |||||||
Alamos Gold Cl. A | 1,393,592 | 18,741,790 | |||||
Haynes International | 64,445 | 3,676,587 | |||||
Major Drilling Group International 1 | 285,000 | 1,980,944 | |||||
Materion Corporation | 50,000 | 6,506,500 | |||||
Reliance Steel & Aluminum | 18,717 | 5,234,771 | |||||
†Ryerson Holding Corporation | 101,895 | 3,533,719 | |||||
39,674,311 | |||||||
PAPER & FOREST PRODUCTS - 1.1% | |||||||
Louisiana-Pacific | 78,039 | 5,527,503 | |||||
Stella-Jones | 260,660 | 15,170,823 | |||||
20,698,326 | |||||||
Total (Cost $76,450,876) | 160,550,330 | ||||||
REAL ESTATE – 2.2% | |||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 2.2% | |||||||
Colliers International Group | 40,509 | 5,125,199 | |||||
DigitalBridge Group Cl. A | 118,546 | 2,079,297 | |||||
FirstService Corporation | 42,920 | 6,956,903 | |||||
FRP Holdings 1 | 86,223 | 5,421,702 | |||||
Kennedy-Wilson Holdings | 972,923 | 12,044,787 | |||||
Marcus & Millichap | 152,358 | 6,654,997 | |||||
RMR Group (The) Cl. A | 126,855 | 3,581,117 | |||||
Total (Cost $34,968,851) | 41,864,002 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $1,193,642,557) | 1,833,944,175 | ||||||
REPURCHASE AGREEMENT– 0.3% | |||||||
Fixed Income Clearing Corporation, 4.75% dated 12/29/23, due 1/2/24, maturity value $5,004,265 (collateralized by obligations of U.S. Government Agencies, 2.75% due 2/15/28, valued at $5,101,731) | |||||||
(Cost $5,001,625) | 5,001,625 | ||||||
COLLATERAL RECEIVED FOR SECURITIES LOANED – 0.1% | |||||||
Money Market Funds | |||||||
Federated Hermes Government Obligations Fund - Institutional Shares (7 day yield-5.23%) | |||||||
(Cost $1,502,625) | 1,502,625 | 1,502,625 | |||||
TOTAL INVESTMENTS – 98.6% | |||||||
(Cost $1,200,146,807) | 1,840,448,425 | ||||||
CASH AND OTHER ASSETS LESS LIABILITIES – 1.4% | 26,531,375 | ||||||
NET ASSETS – 100.0% | $ | 1,866,979,800 |
38 | The Royce Funds 2023 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2023
Royce Premier Fund
Common Stocks – 95.1%
SHARES | VALUE | ||||||
COMMUNICATION SERVICES – 1.6% | |||||||
INTERACTIVE MEDIA & SERVICES - 1.6% | |||||||
Ziff Davis 1 | 334,125 | $ | 22,449,859 | ||||
Total (Cost $25,483,035) | 22,449,859 | ||||||
CONSUMER DISCRETIONARY – 11.0% | |||||||
AUTOMOBILE COMPONENTS - 3.1% | |||||||
Dorman Products 1 | 274,316 | 22,880,697 | |||||
LCI Industries | 174,538 | 21,941,172 | |||||
44,821,869 | |||||||
DISTRIBUTORS - 1.4% | |||||||
Pool Corporation | 50,355 | 20,077,042 | |||||
HOUSEHOLD DURABLES - 1.0% | |||||||
†Installed Building Products | 80,073 | 14,638,946 | |||||
LEISURE PRODUCTS - 1.9% | |||||||
Brunswick Corporation | 275,993 | 26,702,323 | |||||
SPECIALTY RETAIL - 1.0% | |||||||
†Valvoline 1 | 366,514 | 13,773,596 | |||||
TEXTILES, APPAREL & LUXURY GOODS - 2.6% | |||||||
Ralph Lauren Cl. A | 264,740 | 38,175,508 | |||||
Total (Cost $99,230,723) | 158,189,284 | ||||||
CONSUMER STAPLES – 1.8% | |||||||
PERSONAL CARE PRODUCTS - 1.8% | |||||||
Inter Parfums | 176,963 | 25,484,442 | |||||
Total (Cost $7,788,861) | 25,484,442 | ||||||
FINANCIALS – 10.1% | |||||||
CAPITAL MARKETS - 10.1% | |||||||
Ares Management Cl. A | 213,781 | 25,422,837 | |||||
Lazard | 436,759 | 15,199,213 | |||||
Morningstar | 135,516 | 38,790,100 | |||||
SEI Investments | 615,771 | 39,132,247 | |||||
TMX Group | 1,136,994 | 27,501,345 | |||||
Total (Cost $67,200,524) | 146,045,742 | ||||||
HEALTH CARE – 5.3% | |||||||
HEALTH CARE EQUIPMENT & SUPPLIES - 3.8% | |||||||
Enovis Corporation 1 | 389,763 | 21,834,523 | |||||
Haemonetics Corporation 1 | 380,779 | 32,560,413 | |||||
54,394,936 | |||||||
LIFE SCIENCES TOOLS & SERVICES - 1.5% | |||||||
Bio-Techne | 288,369 | 22,250,552 | |||||
Total (Cost $56,047,882) | 76,645,488 | ||||||
INDUSTRIALS – 34.2% | |||||||
AEROSPACE & DEFENSE - 2.2% | |||||||
Woodward | 232,215 | 31,611,428 | |||||
BUILDING PRODUCTS - 3.4% | |||||||
Simpson Manufacturing | 170,578 | 33,771,032 | |||||
†UFP Industries | 124,060 | 15,575,733 | |||||
49,346,765 | |||||||
COMMERCIAL SERVICES & SUPPLIES - 1.9% | |||||||
RB Global | 402,022 | 26,891,252 | |||||
CONSTRUCTION & ENGINEERING - 4.4% | |||||||
Arcosa | 481,090 | 39,757,278 | |||||
Valmont Industries | 103,599 | 24,191,402 | |||||
63,948,680 | |||||||
GROUND TRANSPORTATION - 2.2% | |||||||
Landstar System | 161,303 | 31,236,326 | |||||
MACHINERY - 16.3% | |||||||
†Enpro | 103,793 | 16,268,515 | |||||
ESAB Corporation | 245,591 | 21,273,092 | |||||
ESCO Technologies | 268,028 | 31,367,317 | |||||
John Bean Technologies | 306,079 | 30,439,556 | |||||
Kadant | 151,302 | 42,411,464 | |||||
Lincoln Electric Holdings | 197,001 | 42,839,837 | |||||
Lindsay Corporation | 177,011 | 22,862,741 | |||||
RBC Bearings 1 | 99,294 | 28,287,868 | |||||
235,750,390 | |||||||
PROFESSIONAL SERVICES - 2.0% | |||||||
Forrester Research 1 | 733,345 | 19,660,979 | |||||
Korn Ferry | 151,805 | 9,009,627 | |||||
28,670,606 | |||||||
TRADING COMPANIES & DISTRIBUTORS - 1.8% | |||||||
Air Lease Cl. A | 627,000 | 26,296,380 | |||||
Total (Cost $208,630,393) | 493,751,827 | ||||||
INFORMATION TECHNOLOGY – 12.3% | |||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 3.7% | |||||||
Cognex Corporation | 480,757 | 20,066,797 | |||||
†Littelfuse | 58,540 | 15,662,962 | |||||
Rogers Corporation 1 | 142,137 | 18,772,034 | |||||
54,501,793 | |||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 7.0% | |||||||
Cirrus Logic 1 | 291,027 | 24,210,536 | |||||
FormFactor 1 | 826,000 | 34,452,460 | |||||
MKS Instruments | 408,807 | 42,053,976 | |||||
100,716,972 | |||||||
SOFTWARE - 1.6% | |||||||
Fair Isaac 1 | 19,798 | 23,045,070 | |||||
Total (Cost $100,457,680) | 178,263,835 | ||||||
MATERIALS – 11.0% | |||||||
CHEMICALS - 5.7% | |||||||
Innospec | 342,837 | 42,251,232 | |||||
Quaker Houghton | 188,206 | 40,166,924 | |||||
82,418,156 | |||||||
METALS & MINING - 2.7% | |||||||
Reliance Steel & Aluminum | 139,125 | 38,910,480 | |||||
PAPER & FOREST PRODUCTS - 2.6% | |||||||
Stella-Jones | 649,257 | 37,787,782 | |||||
Total (Cost $73,996,844) | 159,116,418 | ||||||
REAL ESTATE – 7.8% | |||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 7.8% | |||||||
Colliers International Group | 251,000 | 31,756,520 | |||||
FirstService Corporation | 239,300 | 38,788,137 | |||||
Kennedy-Wilson Holdings | 2,182,912 | 27,024,451 | |||||
Marcus & Millichap | 360,833 | 15,761,185 | |||||
Total (Cost $105,948,388) | 113,330,293 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $744,784,330) | 1,373,277,188 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2023 Annual Report to Shareholders | 39 |
Schedules of Investments
Royce Premier Fund (continued)
VALUE | |||
REPURCHASE AGREEMENT– 5.0% | |||
Fixed Income Clearing Corporation, 4.75% dated 12/29/23, due 1/2/24, maturity value | |||
(Cost $71,910,219) | $ | 71,910,219 | |
TOTAL INVESTMENTS – 100.1% | |||
(Cost $816,694,549) | 1,445,187,407 | ||
LIABILITIES LESS CASH AND OTHER ASSETS – (0.1)% | (2,132,515) | ||
NET ASSETS – 100.0% | $ | 1,443,054,892 |
Royce Small-Cap Opportunity Fund
Common Stocks – 97.3%
SHARES | VALUE | ||||||
COMMUNICATION SERVICES – 5.4% | |||||||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.5% | |||||||
Ooma 1 | 558,573 | $ | 5,993,488 | ||||
ENTERTAINMENT - 0.3% | |||||||
IMAX Corporation 1 | 236,249 | 3,548,460 | |||||
INTERACTIVE MEDIA & SERVICES - 2.6% | |||||||
Cars.com 1 | 286,100 | 5,427,317 | |||||
DHI Group 1 | 1,451,495 | 3,759,372 | |||||
EverQuote Cl. A 1 | 593,410 | 7,263,339 | |||||
IAC 1 | 142,395 | 7,458,650 | |||||
QuinStreet 1 | 708,100 | 9,077,842 | |||||
32,986,520 | |||||||
MEDIA - 2.0% | |||||||
comScore 1 | 63,653 | 1,063,005 | |||||
†Criteo ADR 1 | 206,245 | 5,222,124 | |||||
Entravision Communications Cl. A | 1,250,211 | 5,213,380 | |||||
†Innovid Corp. 1 | 1,660,838 | 2,491,257 | |||||
Magnite 1 | 748,407 | 6,990,121 | |||||
Thryv Holdings 1 | 258,426 | 5,258,969 | |||||
26,238,856 | |||||||
Total (Cost $75,021,734) | 68,767,324 | ||||||
CONSUMER DISCRETIONARY – 14.8% | |||||||
AUTOMOBILE COMPONENTS - 4.0% | |||||||
Adient 1 | 148,652 | 5,404,987 | |||||
Dana | 313,621 | 4,582,003 | |||||
Garrett Motion 1,3 | 955,540 | 9,240,072 | |||||
†Gentherm 1 | 87,955 | 4,605,324 | |||||
Goodyear Tire & Rubber 1 | 321,578 | 4,604,997 | |||||
Modine Manufacturing 1 | 142,415 | 8,502,175 | |||||
Patrick Industries | 57,304 | 5,750,456 | |||||
Stoneridge 1 | 465,813 | 9,115,960 | |||||
51,805,974 | |||||||
BROADLINE RETAIL - 1.3% | |||||||
Dillard’s Cl. A | 21,910 | 8,843,972 | |||||
Nordstrom | 389,481 | 7,185,924 | |||||
16,029,896 | |||||||
DIVERSIFIED CONSUMER SERVICES - 0.5% | |||||||
†Udemy 1 | 463,544 | 6,828,003 | |||||
HOTELS, RESTAURANTS & LEISURE - 1.0% | |||||||
Carrols Restaurant Group | 486,469 | 3,833,376 | |||||
Century Casinos 1 | 287,694 | 1,403,947 | |||||
Krispy Kreme | 218,347 | 3,294,856 | |||||
Noodles & Company Cl. A 1 | 1,497,196 | 4,716,167 | |||||
13,248,346 | |||||||
HOUSEHOLD DURABLES - 3.5% | |||||||
Beazer Homes USA 1 | 113,199 | 3,824,994 | |||||
Cavco Industries 1 | 19,586 | 6,788,899 | |||||
Century Communities | 41,577 | 3,789,328 | |||||
M/I Homes 1 | 26,667 | 3,673,113 | |||||
Skyline Champion 1 | 126,307 | 9,379,558 | |||||
Taylor Morrison Home 1 | 102,760 | 5,482,246 | |||||
Toll Brothers | 37,455 | 3,849,999 | |||||
Tri Pointe Homes 1 | 113,588 | 4,021,015 | |||||
†Vizio Holding Corp. Cl. A 1 | 467,968 | 3,603,354 | |||||
44,412,506 | |||||||
SPECIALTY RETAIL - 3.2% | |||||||
Asbury Automotive Group 1 | 30,921 | 6,956,297 | |||||
Barnes & Noble Education 1,3 | 1,122,244 | 1,672,144 | |||||
Beyond 1 | 160,339 | 4,439,787 | |||||
Caleres | 231,664 | 7,119,035 |
40 | The Royce Funds 2023 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2023
Royce Small-Cap Opportunity Fund (continued)
SHARES | VALUE | ||||||
CONSUMER DISCRETIONARY (continued) | |||||||
SPECIALTY RETAIL (continued) | |||||||
Designer Brands Cl. A | 426,189 | $ | 3,771,773 | ||||
Express 1,3 | 160,359 | 1,342,205 | |||||
J.Jill 1 | 183,582 | 4,732,744 | |||||
MarineMax 1 | 93,767 | 3,647,536 | |||||
†OneWater Marine Cl. A 1 | 122,230 | 4,130,152 | |||||
Victoria’s Secret & Co. 1 | 130,523 | 3,464,080 | |||||
41,275,753 | |||||||
TEXTILES, APPAREL & LUXURY GOODS - 1.3% | |||||||
Fossil Group 1,3 | 709,218 | 1,035,458 | |||||
Lakeland Industries 4 | 437,480 | 8,110,879 | |||||
Rocky Brands | 176,275 | 5,319,980 | |||||
Vera Bradley 1,3 | 340,407 | 2,621,134 | |||||
17,087,451 | |||||||
Total (Cost $146,997,695) | 190,687,929 | ||||||
CONSUMER STAPLES – 1.1% | |||||||
FOOD PRODUCTS - 0.3% | |||||||
SunOpta 1 | 808,923 | 4,424,809 | |||||
HOUSEHOLD PRODUCTS - 0.5% | |||||||
Spectrum Brands Holdings | 73,618 | 5,872,508 | |||||
PERSONAL CARE PRODUCTS - 0.3% | |||||||
Inter Parfums | 30,072 | 4,330,668 | |||||
Total (Cost $12,531,775) | 14,627,985 | ||||||
ENERGY – 6.5% | |||||||
ENERGY EQUIPMENT & SERVICES - 3.0% | |||||||
Archrock | 395,737 | 6,094,350 | |||||
DMC Global 1 | 211,680 | 3,983,818 | |||||
Mammoth Energy Services 1 | 823,117 | 3,671,102 | |||||
Newpark Resources 1 | 625,874 | 4,155,803 | |||||
Patterson-UTI Energy | 373,749 | 4,036,489 | |||||
†ProPetro Holding Corp. 1 | 304,613 | 2,552,657 | |||||
Ranger Energy Services Cl. A | 368,556 | 3,770,328 | |||||
†Select Water Solutions Cl. A | 678,055 | 5,146,437 | |||||
†Solaris Oilfield Infrastructure Cl. A | 600,448 | 4,779,566 | |||||
38,190,550 | |||||||
OIL, GAS & CONSUMABLE FUELS - 3.5% | |||||||
Ardmore Shipping | 480,518 | 6,770,499 | |||||
Baytex Energy | 1,390,609 | 4,616,822 | |||||
Chesapeake Energy | 52,300 | 4,023,962 | |||||
Matador Resources | 104,677 | 5,951,934 | |||||
Navigator Holdings | 464,592 | 6,759,814 | |||||
Northern Oil and Gas | 188,156 | 6,974,943 | |||||
Scorpio Tankers | 114,898 | 6,985,798 | |||||
Southwestern Energy 1 | 499,497 | 3,271,705 | |||||
45,355,477 | |||||||
Total (Cost $61,001,879) | 83,546,027 | ||||||
FINANCIALS – 6.7% | |||||||
BANKS - 3.3% | |||||||
Axos Financial 1 | 67,543 | 3,687,848 | |||||
BankUnited | 127,310 | 4,128,663 | |||||
BayCom Corporation | 176,305 | 4,159,035 | |||||
†Business First Bancshares | 164,538 | 4,055,862 | |||||
†Customers Bancorp 1 | 54,875 | 3,161,898 | |||||
First Bancshares (The) | 107,504 | 3,153,092 | |||||
†Hanmi Financial | 198,105 | 3,843,237 | |||||
Hilltop Holdings | 174,257 | 6,135,589 | |||||
New York Community Bancorp | 202,700 | 2,073,621 | |||||
Seacoast Banking Corporation of Florida | 137,177 | 3,904,057 | |||||
Western Alliance Bancorp | 58,353 | 3,839,044 | |||||
42,141,946 | |||||||
CAPITAL MARKETS - 2.7% | |||||||
Artisan Partners Asset Management Cl. A | 121,649 | 5,374,453 | |||||
B. Riley Financial | 196,802 | 4,130,874 | |||||
Canaccord Genuity Group | 960,973 | 5,511,788 | |||||
†GCM Grosvenor Cl. A | 504,995 | 4,524,755 | |||||
Moelis & Company Cl. A | 100,573 | 5,645,162 | |||||
†P10 Cl. A | 415,966 | 4,251,173 | |||||
†Perella Weinberg Partners Cl. A | 445,312 | 5,446,166 | |||||
34,884,371 | |||||||
FINANCIAL SERVICES - 0.1% | |||||||
†Acacia Research 1 | 437,625 | 1,715,490 | |||||
INSURANCE - 0.6% | |||||||
Brighthouse Financial 1 | 148,487 | 7,857,932 | |||||
Total (Cost $70,300,422) | 86,599,739 | ||||||
HEALTH CARE – 6.4% | |||||||
BIOTECHNOLOGY - 0.4% | |||||||
MiMedx Group 1 | 538,418 | 4,721,926 | |||||
HEALTH CARE EQUIPMENT & SUPPLIES - 2.2% | |||||||
Accuray 1 | 2,038,653 | 5,769,388 | |||||
Apyx Medical 1 | 848,698 | 2,223,589 | |||||
Artivion 1 | 482,842 | 8,633,215 | |||||
Tactile Systems Technology 1 | 319,246 | 4,565,218 | |||||
Varex Imaging 1 | 373,187 | 7,650,333 | |||||
28,841,743 | |||||||
HEALTH CARE PROVIDERS & SERVICES - 2.5% | |||||||
Community Health Systems 1 | 818,326 | 2,561,360 | |||||
Cross Country Healthcare 1 | 268,516 | 6,079,202 | |||||
†ModivCare 1 | 66,761 | 2,936,817 | |||||
NeoGenomics 1 | 345,447 | 5,589,333 | |||||
†Quipt Home Medical 1 | 682,137 | 3,472,077 | |||||
RadNet 1 | 221,078 | 7,686,882 | |||||
Select Medical Holdings | 165,750 | 3,895,125 | |||||
32,220,796 | |||||||
HEALTH CARE TECHNOLOGY - 0.3% | |||||||
LifeMD 1,3 | 526,366 | 4,363,574 | |||||
LIFE SCIENCES TOOLS & SERVICES - 0.5% | |||||||
Azenta 1 | 94,525 | 6,157,358 | |||||
PHARMACEUTICALS - 0.5% | |||||||
Organon & Co | 395,020 | 5,696,189 | |||||
Societal CDMO 1 | 2,136,457 | 748,828 | |||||
6,445,017 | |||||||
Total (Cost $71,388,062) | 82,750,414 | ||||||
INDUSTRIALS - 28.3% | |||||||
AEROSPACE & DEFENSE - 5.4% | |||||||
AAR Corporation 1 | 121,287 | 7,568,309 | |||||
Astronics Corporation 1 | 452,725 | 7,886,469 | |||||
BWX Technologies | 96,064 | 7,370,991 | |||||
Ducommun 1 | 145,644 | 7,582,226 | |||||
Kaman Corporation | 141,117 | 3,379,752 | |||||
Kratos Defense & Security Solutions 1 | 382,958 | 7,770,218 | |||||
Leonardo DRS 1 | 382,791 | 7,671,132 | |||||
Mercury Systems 1 | 131,328 | 4,802,665 | |||||
Triumph Group 1 | 584,921 | 9,697,990 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2023 Annual Report to Shareholders | 41 |
Schedules of Investments
Royce Small-Cap Opportunity Fund (continued)
SHARES | VALUE | |||||||
INDUSTRIALS (continued) | ||||||||
AEROSPACE & DEFENSE (continued) | ||||||||
†V2X 1 | 127,906 | $ | 5,939,955 | |||||
69,669,707 | ||||||||
AIR FREIGHT & LOGISTICS - 1.0% | ||||||||
Hub Group Cl. A 1 | 92,346 | 8,490,291 | ||||||
Radiant Logistics 1 | 688,870 | 4,574,097 | ||||||
13,064,388 | ||||||||
BUILDING PRODUCTS - 1.5% | ||||||||
Gibraltar Industries 1 | 94,774 | 7,485,251 | ||||||
Insteel Industries | 174,083 | 6,665,638 | ||||||
Resideo Technologies 1 | 256,894 | 4,834,745 | ||||||
18,985,634 | ||||||||
COMMERCIAL SERVICES & SUPPLIES - 2.6% | ||||||||
ACV Auctions Cl. A 1 | 315,038 | 4,772,826 | ||||||
CECO Environmental 1 | 451,777 | 9,162,038 | ||||||
Healthcare Services Group 1 | 737,328 | 7,646,091 | ||||||
†Vestis Corporation | 91,113 | 1,926,129 | ||||||
VSE Corporation | 139,451 | 9,009,929 | ||||||
32,517,013 | ||||||||
CONSTRUCTION & ENGINEERING - 4.8% | ||||||||
Arcosa | 34,337 | 2,837,610 | ||||||
Argan | 113,607 | 5,315,672 | ||||||
Comfort Systems USA | 16,110 | 3,313,344 | ||||||
Concrete Pumping Holdings 1 | 880,319 | 7,218,616 | ||||||
Construction Partners Cl. A 1 | 139,913 | 6,089,014 | ||||||
Limbach Holdings 1 | 156,948 | 7,136,426 | ||||||
Matrix Service 1 | 539,798 | 5,279,224 | ||||||
Northwest Pipe 1 | 245,370 | 7,424,896 | ||||||
Orion Group Holdings 1,3 | 1,156,694 | 5,714,068 | ||||||
Primoris Services | 236,983 | 7,870,205 | ||||||
Sterling Infrastructure 1 | 43,667 | 3,839,639 | ||||||
62,038,714 | ||||||||
ELECTRICAL EQUIPMENT - 0.5% | ||||||||
American Superconductor 1 | 435,499 | 4,851,459 | ||||||
Babcock & Wilcox Enterprises 1 | 1,054,826 | 1,540,046 | ||||||
129,489 | 265,452 | |||||||
6,656,957 | ||||||||
GROUND TRANSPORTATION - 0.3% | ||||||||
Daseke 1 | 475,093 | 3,848,253 | ||||||
MACHINERY - 5.0% | ||||||||
Commercial Vehicle Group 1 | 939,274 | 6,584,311 | ||||||
Enpro | 35,567 | 5,574,772 | ||||||
Evercel 1,5 | 203,243 | 193,081 | ||||||
Helios Technologies | 120,294 | 5,455,333 | ||||||
Hurco Companies | 71,251 | 1,534,034 | ||||||
Luxfer Holdings | 405,961 | 3,629,291 | ||||||
Manitex International 1 | 862,450 | 7,537,813 | ||||||
Mayville Engineering 1,3 | 401,122 | 5,784,179 | ||||||
Shyft Group (The) | 320,419 | 3,915,520 | ||||||
Terex Corporation | 60,500 | 3,476,330 | ||||||
Trinity Industries | 210,595 | 5,599,721 | ||||||
Twin Disc | 280,895 | 4,539,263 | ||||||
Wabash National | 387,185 | 9,919,680 | ||||||
63,743,328 | ||||||||
PASSENGER AIRLINES - 0.3% | ||||||||
Allegiant Travel | 49,027 | 4,050,120 | ||||||
PROFESSIONAL SERVICES - 3.7% | ||||||||
Conduent 1 | 1,324,837 | 4,835,655 | ||||||
HireRight Holdings 1 | 75,651 | 1,017,506 | ||||||
Korn Ferry | 123,048 | 7,302,899 | ||||||
Mistras Group 1 | 902,530 | 6,606,519 | ||||||
Resources Connection | 476,475 | 6,751,651 | ||||||
Sterling Check 1 | 283,686 | 3,948,909 | ||||||
TrueBlue 1 | 301,401 | 4,623,491 | ||||||
TTEC Holdings | 282,216 | 6,115,621 | ||||||
†WNS Holdings ADR 1 | 106,713 | 6,744,262 | ||||||
47,946,513 | ||||||||
TRADING COMPANIES & DISTRIBUTORS - 3.2% | ||||||||
Air Lease Cl. A | 186,420 | 7,818,455 | ||||||
BlueLinx Holdings 1 | 15,431 | 1,748,487 | ||||||
Herc Holdings | 39,895 | 5,939,966 | ||||||
Hudson Technologies 1 | 547,651 | 7,387,812 | ||||||
MRC Global 1 | 617,562 | 6,799,358 | ||||||
NOW 1 | 473,898 | 5,364,525 | ||||||
WESCO International | 36,859 | 6,409,043 | ||||||
41,467,646 | ||||||||
Total (Cost $289,662,003) | 363,988,273 | |||||||
INFORMATION TECHNOLOGY – 19.8% | ||||||||
COMMUNICATIONS EQUIPMENT - 2.8% | ||||||||
Applied Optoelectronics 1 | 373,491 | 7,215,846 | ||||||
Aviat Networks 1 | 187,165 | 6,112,809 | ||||||
†Clearfield 1 | 119,898 | 3,486,634 | ||||||
Comtech Telecommunications | 448,860 | 3,783,890 | ||||||
Digi International 1 | 295,154 | 7,674,004 | ||||||
DZS 1,3 | 964,823 | 1,900,701 | ||||||
Infinera Corporation 1,3 | 566,379 | 2,690,300 | ||||||
Ribbon Communications 1 | 1,158,530 | 3,359,737 | ||||||
36,223,921 | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 6.4% | ||||||||
Advanced Energy Industries | 66,826 | 7,278,688 | ||||||
Arlo Technologies 1,3 | 774,114 | 7,369,565 | ||||||
Avnet | 43,900 | 2,212,560 | ||||||
Benchmark Electronics | 304,202 | 8,408,143 | ||||||
Coherent 1 | 111,904 | 4,871,181 | ||||||
CTS Corporation | 169,939 | 7,433,132 | ||||||
Fabrinet 1 | 23,395 | 4,452,771 | ||||||
Frequency Electronics | 271,693 | 2,975,039 | ||||||
Identiv 1 | 739,251 | 6,091,428 | ||||||
†IPG Photonics 1 | 44,008 | 4,776,628 | ||||||
Knowles Corporation 1 | 489,141 | 8,760,515 | ||||||
nLIGHT 1 | 564,704 | 7,623,504 | ||||||
†SmartRent Cl. A 1 | 798,195 | 2,546,242 | ||||||
VIA optronics ADR 1 | 802,732 | 627,014 | ||||||
Vishay Intertechnology | 106,109 | 2,543,433 | ||||||
Vishay Precision Group 1 | 121,197 | 4,129,182 | ||||||
82,099,025 | ||||||||
IT SERVICES - 1.7% | ||||||||
†Applied Digital 1,3 | 512,061 | 3,451,291 | ||||||
†Endava ADR 1 | 65,240 | 5,078,934 | ||||||
†Grid Dynamics Holdings 1 | 253,233 | 3,375,596 | ||||||
Kyndryl Holdings 1 | 497,045 | 10,328,595 | ||||||
22,234,416 | ||||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 5.7% | ||||||||
Alpha and Omega Semiconductor 1 | 224,883 | 5,860,451 | ||||||
Amkor Technology | 197,588 | 6,573,753 | ||||||
Amtech Systems 1 | 692,350 | 2,907,870 | ||||||
Cohu 1 | 203,796 | 7,212,340 | ||||||
FormFactor 1 | 205,852 | 8,586,087 |
42 | The Royce Funds 2023 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2023
Royce Small-Cap Opportunity Fund (continued) | |||||||
SHARES | VALUE | ||||||
INFORMATION TECHNOLOGY (continued) | |||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (continued) | |||||||
Ichor Holdings 1 | 254,760 | $ | 8,567,579 | ||||
inTEST Corporation 1 | 330,570 | 4,495,752 | |||||
Kulicke & Soffa Industries | 133,556 | 7,308,184 | |||||
Onto Innovation 1 | 31,334 | 4,790,969 | |||||
Ultra Clean Holdings 1 | 244,202 | 8,337,056 | |||||
Veeco Instruments 1 | 290,205 | 9,005,061 | |||||
73,645,102 | |||||||
SOFTWARE - 1.9% | |||||||
A10 Networks | 418,821 | 5,515,873 | |||||
†Everbridge 1 | 128,752 | 3,129,961 | |||||
†LiveRamp Holdings 1 | 117,400 | 4,447,112 | |||||
Marin Software 1 | 545,237 | 199,829 | |||||
SecureWorks Corp. Cl. A 1 | 735,213 | 5,425,872 | |||||
†Viant Technology Cl. A 1 | 722,497 | 4,978,004 | |||||
23,696,651 | |||||||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 1.3% | |||||||
Immersion Corporation | 723,136 | 5,105,340 | |||||
Intevac 1,4 | 1,344,751 | 5,809,325 | |||||
†Xerox Holdings | 332,410 | 6,093,075 | |||||
17,007,740 | |||||||
Total (Cost $200,353,072) | 254,906,855 | ||||||
MATERIALS – 8.2% | |||||||
CHEMICALS - 2.2% | |||||||
Aspen Aerogels 1 | 457,471 | 7,218,892 | |||||
Huntsman Corporation | 189,306 | 4,757,260 | |||||
Livent Corporation 1,3 | 315,074 | 5,665,031 | |||||
†Mativ Holdings | 456,465 | 6,988,479 | |||||
Tronox Holdings | 281,725 | 3,989,226 | |||||
28,618,888 | |||||||
CONSTRUCTION MATERIALS - 0.7% | |||||||
Summit Materials Cl. A 1 | 215,533 | 8,289,399 | |||||
CONTAINERS & PACKAGING - 0.4% | |||||||
TriMas Corporation | 188,410 | 4,772,425 | |||||
METALS & MINING - 4.9% | |||||||
ATI 1 | 189,949 | 8,636,981 | |||||
†Capstone Copper 1 | 929,721 | 4,525,641 | |||||
Carpenter Technology | 130,205 | 9,218,514 | |||||
Commercial Metals | 139,657 | 6,988,436 | |||||
Ferroglobe 1 | 1,247,786 | 8,123,087 | |||||
Haynes International | 169,712 | 9,682,070 | |||||
Major Drilling Group International 1 | 1,000,748 | 6,955,880 | |||||
Noranda Aluminum Holding Corporation 1,2 | 488,157 | 0 | |||||
TimkenSteel Corporation 1 | 380,541 | 8,923,686 | |||||
63,054,295 | |||||||
Total (Cost $62,215,728) | 104,735,007 | ||||||
REAL ESTATE – 0.1% | |||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.1% | |||||||
Fathom Holdings 1,3 | 402,356 | 1,444,458 | |||||
Total (Cost $1,836,944) | 1,444,458 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $991,309,314) | 1,252,054,011 | ||||||
REPURCHASE AGREEMENT– 3.0% | |||||||
Fixed Income Clearing Corporation, 4.75% dated 12/29/23, due 1/2/24, maturity value $37,843,929 (collateralized by obligations of U.S. Government Agencies, 2.375% due 5/15/27, valued at $38,580,535) | |||||||
(Cost $37,823,967) | $ | 37,823,967 | |||||
COLLATERAL RECEIVED FOR SECURITIES LOANED – 0.4% | |||||||
Money Market Funds Federated Hermes Government Obligations Fund - Institutional Shares (7 day yield-5.23%) | |||||||
(Cost $5,433,667) | 5,433,667 | 5,433,667 | |||||
TOTAL INVESTMENTS – 100.7% | |||||||
(Cost $1,034,566,948) | 1,295,311,645 | ||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (0.7)% | (8,488,417 | ||||||
NET ASSETS – 100.0% | $ | 1,286,823,228 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2023 Annual Report to Shareholders | 43 |
Schedules of Investments
Royce Small-Cap Special Equity Fund
Common Stocks – 85.0%
SHARES | VALUE | ||||||
COMMUNICATION SERVICES – 3.9% | |||||||
MEDIA - 3.9% | |||||||
TEGNA | 1,970,000 | $ | 30,141,000 | ||||
Total (Cost $38,059,293) | 30,141,000 | ||||||
CONSUMER DISCRETIONARY – 15.7% | |||||||
AUTOMOBILE COMPONENTS - 4.5% | |||||||
Standard Motor Products | 885,500 | 35,251,755 | |||||
BROADLINE RETAIL - 2.6% | |||||||
Macy’s | 1,005,000 | 20,220,600 | |||||
DIVERSIFIED CONSUMER SERVICES - 1.8% | |||||||
H&R Block | 285,000 | 13,785,450 | |||||
HOTELS, RESTAURANTS & LEISURE - 0.3% | |||||||
Nathan’s Famous | 34,500 | 2,691,345 | |||||
HOUSEHOLD DURABLES - 0.9% | |||||||
Ethan Allen Interiors | 225,000 | 7,182,000 | |||||
SPECIALTY RETAIL - 1.7% | |||||||
†ODP Corporation (The) 1 | 242,000 | 13,624,600 | |||||
TEXTILES, APPAREL & LUXURY GOODS - 3.9% | |||||||
Movado Group | 1,003,500 | 30,255,525 | |||||
Total (Cost $98,287,760) | 123,011,275 | ||||||
CONSUMER STAPLES – 11.4% | |||||||
CONSUMER STAPLES DISTRIBUTION & RETAIL - 6.2% | |||||||
Ingles Markets Cl. A | 565,000 | 48,799,050 | |||||
FOOD PRODUCTS - 4.1% | |||||||
John B. Sanfilippo & Son | 311,500 | 32,096,960 | |||||
HOUSEHOLD PRODUCTS - 1.1% | |||||||
Oil-Dri Corporation of America | 128,000 | 8,586,240 | |||||
Total (Cost $61,627,545) | 89,482,250 | ||||||
ENERGY – 1.1% | |||||||
ENERGY EQUIPMENT & SERVICES - 1.1% | |||||||
RPC | 980,000 | 7,134,400 | |||||
†U.S. Silica Holdings 1 | 145,000 | 1,639,950 | |||||
Total (Cost $9,843,609) | 8,774,350 | ||||||
FINANCIALS – 4.8% | |||||||
CAPITAL MARKETS - 4.8% | |||||||
Diamond Hill Investment Group | 138,800 | 22,983,892 | |||||
Federated Hermes Cl. B | 301,000 | 10,191,860 | |||||
GAMCO Investors Cl. A 5 | 237,400 | 4,550,958 | |||||
Total (Cost $30,166,086) | 37,726,710 | ||||||
INDUSTRIALS – 26.2% | |||||||
BUILDING PRODUCTS - 4.1% | |||||||
Insteel Industries | 413,500 | 15,832,915 | |||||
UFP Industries | 126,500 | 15,882,075 | |||||
31,714,990 | |||||||
COMMERCIAL SERVICES & SUPPLIES - 3.6% | |||||||
Ennis | 1,280,000 | 28,044,800 | |||||
ELECTRICAL EQUIPMENT - 11.3% | |||||||
Atkore 1 | 136,500 | 21,840,000 | |||||
Encore Wire | 229,600 | 49,042,560 | |||||
Preformed Line Products | 134,000 | 17,937,240 | |||||
88,819,800 | |||||||
MACHINERY - 6.3% | |||||||
Gencor Industries 1,4 | 910,000 | 14,687,400 | |||||
Hurco Companies | 301,000 | 6,480,530 | |||||
Miller Industries | 51,000 | 2,156,790 | |||||
Mueller Industries | 559,000 | 26,356,850 | |||||
49,681,570 | |||||||
PROFESSIONAL SERVICES - 0.9% | |||||||
Resources Connection | 491,500 | 6,964,555 | |||||
Total (Cost $126,800,582) | 205,225,715 | ||||||
INFORMATION TECHNOLOGY – 8.2% | |||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 4.9% | |||||||
Vishay Intertechnology | 1,600,000 | 38,352,000 | |||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.3% | |||||||
NVE Corporation 4 | 326,500 | 25,607,395 | |||||
Total (Cost $42,842,014) | 63,959,395 | ||||||
MATERIALS – 9.7% | |||||||
CHEMICALS - 2.5% | |||||||
Huntsman Corporation | 784,000 | 19,701,920 | |||||
CONSTRUCTION MATERIALS - 3.6% | |||||||
United States Lime & Minerals | 123,500 | 28,448,225 | |||||
METALS & MINING - 1.2% | |||||||
†Commercial Metals | 72,000 | 3,602,880 | |||||
TimkenSteel Corporation 1 | 240,000 | 5,628,000 | |||||
9,230,880 | |||||||
PAPER & FOREST PRODUCTS - 2.4% | |||||||
Sylvamo Corporation | 385,500 | 18,931,905 | |||||
Total (Cost $49,209,340) | 76,312,930 | ||||||
REAL ESTATE – 4.0% | |||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 4.0% | |||||||
Marcus & Millichap | 720,000 | 31,449,600 | |||||
Total (Cost $19,001,132) | 31,449,600 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $475,837,361) | 666,083,225 | ||||||
REPURCHASE AGREEMENT– 15.3% | |||||||
Fixed Income Clearing Corporation, 4.75% dated 12/29/23, due 1/2/24, maturity value $120,071,789 (collateralized by obligations of various U.S. Government Agencies, 0.125%-2.375% due 10/15/26-5/15/27, valued at $122,408,710) | |||||||
(Cost $120,008,451) | 120,008,451 | ||||||
TOTAL INVESTMENTS – 100.3% | |||||||
(Cost $595,845,812) | 786,091,676 | ||||||
LIABILITIES LESS CASH AND OTHER ASSETS - (0.3)% | (2,215,647) | ||||||
NET ASSETS – 100.0% | $ | 783,876,029 |
44 | The Royce Funds 2023 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2023
Royce Small-Cap Total Return Fund Common Stocks – 95.8%
| SHARES | VALUE | |||||
COMMUNICATION SERVICES – 3.6% | |||||||
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.2% | |||||||
IDT Corporation Cl. B 1 | 339,722 | $ | 11,581,123 | ||||
INTERACTIVE MEDIA & SERVICES - 2.4% | |||||||
†Shutterstock | 76,239 | 3,680,819 | |||||
Ziff Davis 1 | 310,574 | 20,867,467 | |||||
24,548,286 | |||||||
Total (Cost $35,673,644) | 36,129,409 | ||||||
CONSUMER DISCRETIONARY – 8.7% | |||||||
HOTELS, RESTAURANTS & LEISURE - 1.4% | |||||||
Denny’s Corporation 1 | 1,306,005 | 14,209,334 | |||||
HOUSEHOLD DURABLES - 1.5% | |||||||
Helen of Troy 1 | 131,085 | 15,836,379 | |||||
LEISURE PRODUCTS - 1.4% | |||||||
YETI Holdings 1 | 270,506 | 14,006,801 | |||||
SPECIALTY RETAIL - 4.4% | |||||||
†Academy Sports and Outdoors | 25,212 | 1,663,992 | |||||
Advance Auto Parts | 398,216 | 24,303,122 | |||||
OneWater Marine Cl. A 1 | 564,729 | 19,082,193 | |||||
45,049,307 | |||||||
Total (Cost $71,976,141) | 89,101,821 | ||||||
ENERGY – 5.4% | |||||||
ENERGY EQUIPMENT & SERVICES - 5.4% | |||||||
Cactus Cl. A | 228,060 | 10,353,924 | |||||
Core Laboratories | 691,992 | 12,220,579 | |||||
†Dril-Quip 1 | 526,127 | 12,242,975 | |||||
Pason Systems | 1,682,457 | 20,531,549 | |||||
Total (Cost $50,925,466) | 55,349,027 | ||||||
FINANCIALS – 36.9% | |||||||
BANKS - 15.3% | |||||||
Atlantic Union Bankshares | 275,322 | 10,060,266 | |||||
BankUnited | 452,214 | 14,665,300 | |||||
First Bancshares (The) | 234,486 | 6,877,474 | |||||
HBT Financial | 193,586 | 4,086,600 | |||||
†Hingham Institution for Savings | 92,322 | 17,947,397 | |||||
Home BancShares | 857,928 | 21,731,316 | |||||
Independent Bank Group | 368,394 | 18,743,887 | |||||
Origin Bancorp | 367,782 | 13,082,006 | |||||
†Seacoast Banking Corporation of Florida | 330,737 | 9,412,775 | |||||
TowneBank | 281,055 | 8,364,197 | |||||
Valley National Bancorp | 1,396,466 | 15,165,621 | |||||
Western Alliance Bancorp | 115,774 | 7,616,771 | |||||
†Wintrust Financial | 90,229 | 8,368,740 | |||||
156,122,350 | |||||||
CAPITAL MARKETS - 2.6% | |||||||
†GCM Grosvenor Cl. A | 1,176,161 | 10,538,403 | |||||
Tel Aviv Stock Exchange | 3,071,413 | 16,338,792 | |||||
26,877,195 | |||||||
CONSUMER FINANCE - 2.7% | |||||||
†Encore Capital Group 1 | 231,480 | 11,747,610 | |||||
PRA Group 1 | 590,296 | 15,465,755 | |||||
27,213,365 | |||||||
FINANCIAL SERVICES - 5.5% | |||||||
Compass Diversified Holdings | 770,336 | 17,294,043 | |||||
NewtekOne | 961,315 | 13,266,147 | |||||
Repay Holdings Cl. A 1 | 3,010,096 | 25,706,220 | |||||
56,266,410 | |||||||
INSURANCE - 10.8% | |||||||
Assured Guaranty | 249,603 | 18,677,792 | |||||
Axis Capital Holdings | 348,468 | 19,294,673 | |||||
First American Financial | 127,086 | 8,189,422 | |||||
International General Insurance Holdings 4 | 2,674,312 | 34,445,139 | |||||
RenaissanceRe Holdings | 80,500 | 15,778,000 | |||||
†Skyward Specialty Insurance Group 1,3 | 2,909 | 98,557 | |||||
Stewart Information Services | 229,516 | 13,484,065 | |||||
109,967,648 | |||||||
Total (Cost $298,425,833) | 376,446,968 | ||||||
INDUSTRIALS – 17.0% | |||||||
BUILDING PRODUCTS - 2.1% | |||||||
Simpson Manufacturing | 30,800 | 6,097,784 | |||||
UFP Industries | 121,932 | 15,308,563 | |||||
21,406,347 | |||||||
COMMERCIAL SERVICES & SUPPLIES - 1.8% | |||||||
Healthcare Services Group 1 | 1,741,223 | 18,056,482 | |||||
MACHINERY - 2.5% | |||||||
Douglas Dynamics | 603,254 | 17,904,579 | |||||
Timken Company (The) | 99,038 | 7,937,895 | |||||
25,842,474 | |||||||
PROFESSIONAL SERVICES - 2.5% | |||||||
Barrett Business Services | 150,462 | 17,423,500 | |||||
KBR | 153,020 | 8,478,838 | |||||
25,902,338 | |||||||
TRADING COMPANIES & DISTRIBUTORS - 8.1% | |||||||
Air Lease Cl. A | 631,539 | 26,486,746 | |||||
Applied Industrial Technologies | 80,007 | 13,816,409 | |||||
FTAI Aviation | 408,501 | 18,954,446 | |||||
†MRC Global 1 | 95,428 | 1,050,662 | |||||
MSC Industrial Direct Cl. A | 126,157 | 12,774,658 | |||||
NOW 1 | 824,324 | 9,331,348 | |||||
82,414,269 | |||||||
Total (Cost $126,535,405) | 173,621,910 | ||||||
INFORMATION TECHNOLOGY – 15.1% | |||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 4.9% | |||||||
†Coherent 1 | 499,327 | 21,735,704 | |||||
Methode Electronics | 354,237 | 8,051,807 | |||||
Vontier Corporation | 592,490 | 20,470,530 | |||||
50,258,041 | |||||||
IT SERVICES - 4.4% | |||||||
Hackett Group (The) | 768,870 | 17,507,170 | |||||
Kyndryl Holdings 1 | 1,293,074 | 26,870,078 | |||||
44,377,248 | |||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.8% | |||||||
Kulicke & Soffa Industries | 274,367 | 15,013,362 | |||||
MKS Instruments | 132,057 | 13,584,704 | |||||
28,598,066 | |||||||
SOFTWARE - 3.0% | |||||||
Sapiens International | 412,843 | 11,947,676 | |||||
Teradata Corporation 1 | 438,545 | 19,081,093 | |||||
31,028,769 | |||||||
Total (Cost $115,954,636) | 154,262,124 | ||||||
MATERIALS – 6.6% | |||||||
CHEMICALS - 3.5% | |||||||
Element Solutions | 857,610 | 19,845,096 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2023 Annual Report to Shareholders | 45 |
Schedules of Investments
Royce Small-Cap Total Return Fund (continued)
SHARES | VALUE | ||||||
MATERIALS (continued) | |||||||
CHEMICALS (continued) | |||||||
†Ingevity Corporation 1 | 341,274 | $ | 16,114,958 | ||||
35,960,054 | |||||||
CONTAINERS & PACKAGING - 3.1% | |||||||
Graphic Packaging Holding Company | 492,947 | 12,151,143 | |||||
Silgan Holdings | 425,471 | 19,252,563 | |||||
31,403,706 | |||||||
Total (Cost $53,602,435) | 67,363,760 | ||||||
REAL ESTATE – 2.5% | |||||||
OFFICE REITS - 1.0% | |||||||
Equity Commonwealth | 533,386 | 10,241,011 | |||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.5% | |||||||
Kennedy-Wilson Holdings | 1,254,199 | 15,526,984 | |||||
Total (Cost $32,321,533) | 25,767,995 | ||||||
TOTAL COMMON STOCKS | |||||||
(Cost $785,415,093) | 978,043,014 |
REPURCHASE AGREEMENT– 2.7% | |||||||
Fixed Income Clearing Corporation, 4.75% dated 12/29/23, due 1/2/24, maturity value $28,028,020 (collateralized by obligations of U.S. Government Agencies, 2.75% due 2/15/28, valued at $28,573,501) | |||||||
(Cost $28,013,236) | 28,013,236 | ||||||
COLLATERAL RECEIVED FOR SECURITIES LOANED – 0.0% Money Market Funds Federated Hermes Government Obligations Fund - Institutional Shares (7 day yield-5.23%) | |||||||
(Cost $31,275) | 31,275 | 31,275 | |||||
TOTAL INVESTMENTS – 98.5% | |||||||
(Cost $813,459,604) | 1,006,087,525 | ||||||
CASH AND OTHER ASSETS LESS LIABILITIES – 1.5% | 15,273,392 | ||||||
NET ASSETS - 100.0% | $ | 1,021,360,917 |
Royce Small-Cap Value Fund
Common Stocks – 94.5%
SHARES | VALUE | ||||||
COMMUNICATION SERVICES – 2.9% | |||||||
MEDIA - 2.9% | |||||||
Entravision Communications Cl. A | 174,122 | $ | 726,089 | ||||
Saga Communications Cl. A | 64,159 | 1,428,179 | |||||
†TEGNA | 116,877 | 1,788,218 | |||||
Total (Cost $4,368,959) | 3,942,486 | ||||||
CONSUMER DISCRETIONARY – 20.6% | |||||||
DIVERSIFIED CONSUMER SERVICES - 0.2% | |||||||
Lincoln Educational Services 1 | 25,661 | 257,637 | |||||
HOTELS, RESTAURANTS & LEISURE - 1.7% | |||||||
Bloomin’ Brands | 81,979 | 2,307,709 | |||||
HOUSEHOLD DURABLES - 5.3% | |||||||
M/I Homes 1 | 18,552 | 2,555,352 | |||||
Meritage Homes | 7,710 | 1,343,082 | |||||
PulteGroup | 22,281 | 2,299,845 | |||||
†Tri Pointe Homes 1 | 30,214 | 1,069,576 | |||||
7,267,855 | |||||||
SPECIALTY RETAIL - 9.3% | |||||||
†Arhaus Cl. A 1 | 45,184 | 535,430 | |||||
Buckle (The) | 48,342 | 2,297,212 | |||||
Caleres | 57,749 | 1,774,627 | |||||
†Destination XL Group 1 | 258,807 | 1,138,751 | |||||
Haverty Furniture | 39,946 | 1,418,083 | |||||
Shoe Carnival | 76,791 | 2,319,856 | |||||
†Signet Jewelers | 17,921 | 1,922,206 | |||||
Williams-Sonoma | 6,700 | 1,351,926 | |||||
12,758,091 | |||||||
TEXTILES, APPAREL & LUXURY GOODS - 4.1% | |||||||
Carter’s | 19,331 | 1,447,698 | |||||
Kontoor Brands | 30,612 | 1,910,801 | |||||
Movado Group | 33,405 | 1,007,161 | |||||
Steven Madden | 27,861 | 1,170,162 | |||||
5,535,822 | |||||||
Total (Cost $19,367,165) | 28,127,114 | ||||||
CONSUMER STAPLES – 2.7% | |||||||
CONSUMER STAPLES DISTRIBUTION & RETAIL - 2.7% | |||||||
Ingles Markets Cl. A | 20,730 | 1,790,450 | |||||
Village Super Market Cl. A | 71,627 | 1,878,776 | |||||
Total (Cost $3,457,438) | 3,669,226 | ||||||
ENERGY – 7.7% | |||||||
OIL, GAS & CONSUMABLE FUELS - 7.7% | |||||||
†Berry Corporation | 25,026 | 175,933 | |||||
Chord Energy | 11,430 | 1,900,009 | |||||
Civitas Resources | 24,934 | 1,704,987 | |||||
Dorchester Minerals L.P. | 62,457 | 1,988,006 | |||||
Matador Resources | 27,100 | 1,540,906 | |||||
Riley Exploration Permian | 53,552 | 1,458,757 | |||||
SilverBow Resources 1 | 60,956 | 1,772,600 | |||||
Total (Cost $8,510,669) | 10,541,198 | ||||||
FINANCIALS – 17.7% | |||||||
BANKS - 12.7% | |||||||
Citizens Community Bancorp | 67,992 | 796,186 | |||||
CNB Financial | 86,635 | 1,957,085 | |||||
†Dime Community Bancshares | 68,569 | 1,846,563 | |||||
†Heritage Financial | 45,325 | 969,502 | |||||
Landmark Bancorp | 1,473 | 28,547 | |||||
Mid Penn Bancorp | 62,348 | 1,513,809 | |||||
National Bankshares | 4,871 | 157,577 |
46 | The Royce Funds 2023 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2023
Royce Small-Cap Value Fund (continued)
SHARES | VALUE | |||||||
FINANCIALS (continued) | ||||||||
BANKS (continued) | ||||||||
Princeton Bancorp | 17,312 | $ | 621,501 | |||||
Riverview Bancorp | 95,811 | 613,190 | ||||||
†Summit Financial Group | 37,584 | 1,153,453 | ||||||
Timberland Bancorp | 53,097 | 1,670,432 | ||||||
TrustCo Bank Corp NY | 55,889 | 1,735,353 | ||||||
Unity Bancorp | 61,706 | 1,825,880 | ||||||
†Univest Financial | 65,352 | 1,439,705 | ||||||
Western New England Bancorp | 107,727 | 969,543 | ||||||
17,298,326 | ||||||||
CAPITAL MARKETS - 1.7% | ||||||||
Evercore Cl. A | 13,687 | 2,341,161 | ||||||
FINANCIAL SERVICES - 1.4% | ||||||||
†International Money Express 1 | 89,483 | 1,976,680 | ||||||
INSURANCE - 1.9% | ||||||||
Tiptree | 134,453 | 2,549,229 | ||||||
Total (Cost $19,578,013) | 24,165,396 | |||||||
HEALTH CARE 6.0% | ||||||||
BIOTECHNOLOGY - 1.2% | ||||||||
Catalyst Pharmaceuticals 1 | 97,386 | 1,637,059 | ||||||
HEALTH CARE PROVIDERS & SERVICES - 2.7% | ||||||||
Cross Country Healthcare 1 | 76,587 | 1,733,930 | ||||||
Molina Healthcare 1 | 5,240 | 1,893,264 | ||||||
3,627,194 | ||||||||
PHARMACEUTICALS - 2.1% | ||||||||
Collegium Pharmaceutical 1 | 32,567 | 1,002,412 | ||||||
SIGA Technologies | 346,132 | 1,938,339 | ||||||
2,940,751 | ||||||||
Total (Cost $6,671,404) | 8,205,004 | |||||||
INDUSTRIALS 18.1% | ||||||||
AIR FREIGHT & LOGISTICS - 1.3% | ||||||||
Hub Group Cl. A 1 | 18,654 | 1,715,049 | ||||||
BUILDING PRODUCTS - 2.8% | ||||||||
Quanex Building Products | 67,154 | 2,052,898 | ||||||
UFP Industries | 14,053 | 1,764,354 | ||||||
3,817,252 | ||||||||
CONSTRUCTION & ENGINEERING - 1.8% | ||||||||
Northwest Pipe 1 | 23,309 | 705,330 | ||||||
Sterling Infrastructure 1 | 20,593 | 1,810,743 | ||||||
2,516,073 | ||||||||
ELECTRICAL EQUIPMENT - 1.1% | ||||||||
Preformed Line Products | 11,129 | 1,489,728 | ||||||
GROUND TRANSPORTATION - 3.6% | ||||||||
ArcBest Corporation | 16,441 | 1,976,373 | ||||||
Schneider National Cl. B | 74,912 | 1,906,510 | ||||||
†Universal Logistics Holdings | 36,420 | 1,020,488 | ||||||
4,903,371 | ||||||||
MACHINERY - 1.1% | ||||||||
Wabash National | 56,866 | 1,456,907 | ||||||
MARINE TRANSPORTATION - 2.2% | ||||||||
†Genco Shipping & Trading | 68,879 | 1,142,702 | ||||||
†Pangaea Logistics Solutions | 227,003 | 1,870,505 | ||||||
3,013,207 | ||||||||
PROFESSIONAL SERVICES - 4.2% | ||||||||
Barrett Business Services | 17,281 | 2,001,140 | ||||||
IBEX 1 | 112,161 | 2,132,180 | ||||||
Korn Ferry | 24,499 | 1,454,016 | ||||||
Resources Connection | 13,404 | 189,935 | ||||||
5,777,271 | ||||||||
Total (Cost $16,845,617) | 24,688,858 | |||||||
INFORMATION TECHNOLOGY – 16.2% | ||||||||
COMMUNICATIONS EQUIPMENT - 1.3% | ||||||||
Aviat Networks 1 | 56,018 | 1,829,548 | ||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 13.3% | ||||||||
†Bel Fuse Cl. B | 16,429 | 1,096,964 | ||||||
ePlus 1 | 28,878 | 2,305,620 | ||||||
Flex 1 | 77,238 | 2,352,670 | ||||||
Insight Enterprises 1 | 6,997 | 1,239,798 | ||||||
Jabil | 15,011 | 1,912,401 | ||||||
Kimball Electronics 1 | 64,088 | 1,727,172 | ||||||
PC Connection | 30,104 | 2,023,290 | ||||||
Sanmina Corporation 1 | 36,391 | 1,869,406 | ||||||
TD SYNNEX | 13,366 | 1,438,315 | ||||||
Vishay Intertechnology | 88,100 | 2,111,757 | ||||||
18,077,393 | ||||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.0% | ||||||||
Amkor Technology | 39,789 | 1,323,780 | ||||||
SOFTWARE - 0.6% | ||||||||
Adeia | 70,280 | 870,769 | ||||||
Total (Cost $12,584,771) | 22,101,490 | |||||||
MATERIALS – 1.3% | ||||||||
METALS & MINING - 1.3% | ||||||||
†Ryerson Holding Corporation | 52,973 | 1,837,104 | ||||||
Total (Cost $1,892,807) | 1,837,104 | |||||||
REAL ESTATE – 1.3% | ||||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.3% | ||||||||
RMR Group (The) Cl. A | 62,509 | 1,764,629 | ||||||
Total (Cost $1,761,295) | 1,764,629 | |||||||
TOTAL COMMON STOCKS | ||||||||
(Cost $95,038,138) | 129,042,505 | |||||||
REPURCHASE AGREEMENT – 6.5% | ||||||||
Fixed Income Clearing Corporation, 4.75% dated 12/29/23, due 1/2/24, maturity value $8,851,002 (collateralized by obligations of U.S. Government Agencies, 2.75% due 2/15/28, valued at $9,023,272) | ||||||||
(Cost $8,846,333) | 8,846,333 | |||||||
TOTAL INVESTMENTS – 101.0% | ||||||||
(Cost $103,884,471) | 137,888,838 | |||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (1.0)% | (1,371,094 | ) | ||||||
NET ASSETS – 100.0% | $ | 136,517,744 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2023 Annual Report to Shareholders | 47 |
Schedules of Investments
Royce Smaller-Companies Growth Fund
Common Stocks – 98.2%
SHARES | VALUE | |||||||
CONSUMER DISCRETIONARY – 7.7% | ||||||||
BROADLINE RETAIL - 0.8% | ||||||||
Ollie's Bargain Outlet Holdings 1 | 18,000 | $ | 1,366,020 | |||||
HOTELS, RESTAURANTS & LEISURE - 5.2% | ||||||||
Bragg Gaming Group 1 | 334,000 | 1,709,007 | ||||||
DraftKings Cl. A 1 | 70,000 | 2,467,500 | ||||||
†Kura Sushi USA Cl. A 1 | 27,000 | 2,052,000 | ||||||
Texas Roadhouse | 26,000 | 3,177,980 | ||||||
9,406,487 | ||||||||
HOUSEHOLD DURABLES - 1.7% | ||||||||
†Installed Building Products | 17,000 | 3,107,940 | ||||||
Total (Cost $9,021,690) | 13,880,447 | |||||||
CONSUMER STAPLES 3.0% | ||||||||
BEVERAGES - 0.8% | ||||||||
Celsius Holdings 1 | 27,000 | 1,472,040 | ||||||
FOOD PRODUCTS - 2.2% | ||||||||
Freshpet 1,3 | 45,000 | 3,904,200 | ||||||
Total (Cost $3,329,836) | 5,376,240 | |||||||
ENERGY – 1.9% | ||||||||
ENERGY EQUIPMENT & SERVICES - 1.9% | ||||||||
†Cactus Cl. A | 43,000 | 1,952,200 | ||||||
†Oceaneering International 1 | 72,000 | 1,532,160 | ||||||
Total (Cost $3,404,151) | 3,484,360 | |||||||
FINANCIALS 9.3% | ||||||||
BANKS - 6.4% | ||||||||
Atlantic Union Bankshares | 83,000 | 3,032,820 | ||||||
†Customers Bancorp 1 | 25,000 | 1,440,500 | ||||||
Seacoast Banking Corporation of Florida | 125,000 | 3,557,500 | ||||||
Webster Financial | 70,000 | 3,553,200 | ||||||
11,584,020 | ||||||||
CAPITAL MARKETS - 0.8% | ||||||||
†Open Lending 1 | 176,000 | 1,497,760 | ||||||
FINANCIAL SERVICES - 2.1% | ||||||||
†AvidXchange Holdings 1 | 113,000 | 1,400,070 | ||||||
Cantaloupe 1 | 314,000 | 2,326,740 | ||||||
3,726,810 | ||||||||
Total (Cost $14,307,350) | 16,808,590 | |||||||
HEALTH CARE 20.7% | ||||||||
BIOTECHNOLOGY - 3.7% | ||||||||
†ARS Pharmaceuticals 1,3 | 217,000 | 1,189,160 | ||||||
Avid Bioservices 1 | 291,000 | 1,891,500 | ||||||
MeiraGTx Holdings 1 | 146,337 | 1,027,286 | ||||||
PureTech Health 1 | 1,046,000 | 2,589,237 | ||||||
6,697,183 | ||||||||
HEALTH CARE EQUIPMENT & SUPPLIES - 11.1% | ||||||||
Alphatec Holdings 1 | 371,000 | 5,605,810 | ||||||
Axonics 1 | 37,000 | 2,302,510 | ||||||
†CVRx 1,3 | 114,000 | 3,584,160 | ||||||
Inspire Medical Systems 1 | 7,488 | 1,523,284 | ||||||
SI-BONE 1 | 145,000 | 3,043,550 | ||||||
TransMedics Group 1,3 | 50,000 | 3,946,500 | ||||||
20,005,814 | ||||||||
HEALTH CARE PROVIDERS & SERVICES - 0.7% | ||||||||
Privia Health Group 1 | 57,000 | 1,312,710 | ||||||
LIFE SCIENCES TOOLS & SERVICES - 3.3% | ||||||||
Azenta 1 | 52,000 | 3,387,280 | ||||||
BioLife Solutions 1 | 111,000 | 1,803,750 | ||||||
MaxCyte 1,3 | 170,000 | 799,000 | ||||||
5,990,030 | ||||||||
PHARMACEUTICALS - 1.9% | ||||||||
†Corcept Therapeutics 1 | 64,000 | 2,078,720 | ||||||
†Harrow 1,3 | 116,700 | 1,307,040 | ||||||
3,385,760 | ||||||||
Total (Cost $31,029,864) | 37,391,497 | |||||||
INDUSTRIALS 22.5% | ||||||||
AEROSPACE & DEFENSE - 2.9% | ||||||||
AeroVironment 1 | 25,000 | 3,151,000 | ||||||
BWX Technologies | 26,500 | 2,033,345 | ||||||
5,184,345 | ||||||||
AIR FREIGHT & LOGISTICS - 1.7% | ||||||||
GXO Logistics 1 | 51,000 | 3,119,160 | ||||||
COMMERCIAL SERVICES & SUPPLIES - 4.6% | ||||||||
ACV Auctions Cl. A 1 | 188,000 | 2,848,200 | ||||||
VSE Corporation | 84,000 | 5,427,240 | ||||||
8,275,440 | ||||||||
ELECTRICAL EQUIPMENT - 1.6% | ||||||||
Enovix Corporation 1,3 | 58,000 | 726,160 | ||||||
Shoals Technologies Group Cl. A 1 | 133,000 | 2,066,820 | ||||||
2,792,980 | ||||||||
GROUND TRANSPORTATION - 0.3% | ||||||||
†RXO 1 | 25,000 | 581,500 | ||||||
MACHINERY - 2.4% | ||||||||
ATS Corporation 1 | 66,000 | 2,844,617 | ||||||
Energy Recovery 1 | 16,000 | 301,440 | ||||||
Symbotic Cl. A 1 | 23,500 | 1,206,255 | ||||||
4,352,312 | ||||||||
PROFESSIONAL SERVICES - 2.1% | ||||||||
LegalZoom.com 1 | 227,000 | 2,565,100 | ||||||
Paylocity Holding Corporation 1 | 7,786 | 1,283,522 | ||||||
3,848,622 | ||||||||
TRADING COMPANIES & DISTRIBUTORS - 6.9% | ||||||||
Distribution Solutions Group 1 | 153,111 | 4,832,183 | ||||||
†FTAI Aviation | 104,000 | 4,825,600 | ||||||
†Herc Holdings | 19,000 | 2,828,910 | ||||||
12,486,693 | ||||||||
Total (Cost $28,269,352) | 40,641,052 | |||||||
INFORMATION TECHNOLOGY 27.6% | ||||||||
COMMUNICATIONS EQUIPMENT - 0.9% | ||||||||
†Applied Optoelectronics 1 | 87,000 | 1,680,840 | ||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 3.6% | ||||||||
†Evolv Technologies Holdings 1 | 379,000 | 1,788,880 | ||||||
Iteris 1 | 342,474 | 1,780,865 | ||||||
NAPCO Security Technologies | 82,000 | 2,808,500 | ||||||
6,378,245 | ||||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 7.8% | ||||||||
Aehr Test Systems 1,3 | 1,000 | 26,530 | ||||||
Credo Technology Group Holding 1 | 40,000 | 778,800 | ||||||
Impinj 1 | 40,555 | 3,651,167 | ||||||
indie Semiconductor Cl. A 1 | 410,000 | 3,325,100 | ||||||
PDF Solutions 1 | 77,000 | 2,474,780 | ||||||
†Semtech Corporation 1 | 61,000 | 1,336,510 | ||||||
Silicon Laboratories 1 | 19,000 | 2,513,130 | ||||||
14,106,017 |
48 | The Royce Funds 2023 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2023
Royce Smaller-Companies Growth Fund (continued)
SHARES | VALUE | |||||||
INFORMATION TECHNOLOGY (continued) | ||||||||
SOFTWARE - 13.8% | ||||||||
Agilysys 1 | 42,000 | $ | 3,562,440 | |||||
†Coveo Solutions 1 | 183,000 | 1,325,837 | ||||||
†CyberArk Software 1 | 20,000 | 4,381,000 | ||||||
Descartes Systems Group (The) 1 | 35,033 | 2,944,874 | ||||||
†DoubleVerify Holdings 1 | 37,000 | 1,360,860 | ||||||
JFrog 1 | 139,318 | 4,821,796 | ||||||
†NextNav 1,3 | 368,894 | 1,641,578 | ||||||
†SoundHound AI Cl. A 1 | 110,000 | 233,200 | ||||||
Sprout Social Cl. A 1 | 66,000 | 4,055,040 | ||||||
†Vertex Cl. A 1 | 22,000 | 592,680 | ||||||
24,919,305 | ||||||||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 1.5% | ||||||||
†Super Micro Computer 1 | 9,500 | 2,700,470 | ||||||
Total (Cost $36,028,255) | 49,784,877 | |||||||
MATERIALS 4.0% | ||||||||
CHEMICALS - 1.3% | ||||||||
Bioceres Crop Solutions 1,3 | 165,000 | 2,265,450 | ||||||
METALS & MINING - 2.7% | ||||||||
AMG Critical Materials | 56,000 | 1,410,760 | ||||||
†Carpenter Technology | 39,000 | 2,761,200 | ||||||
†Lithium Royalty 1 | 108,000 | 723,776 | ||||||
4,895,736 | ||||||||
Total (Cost $7,102,508) | 7,161,186 | |||||||
REAL ESTATE 1.5% | ||||||||
OFFICE REITS - 0.5% | ||||||||
Postal Realty Trust Cl. A | 70,000 | 1,019,200 | ||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.0% | ||||||||
†DigitalBridge Group Cl. A | 102,000 | 1,789,080 | ||||||
Total (Cost $2,800,182) | 2,808,280 | |||||||
TOTAL COMMON STOCKS | ||||||||
(Cost $135,293,188) | 177,336,529 | |||||||
REPURCHASE AGREEMENT – 2.2% | ||||||||
Fixed Income Clearing Corporation, 4.75% dated 12/29/23, due 1/2/24, maturity value $4,015,884 (collateralized by obligations of U.S. Government Agencies, 2.375% due 5/15/27, valued at $4,094,068) | ||||||||
(Cost $4,013,766) | $ | 4,013,766 | ||||||
COLLATERAL RECEIVED FOR SECURITIES LOANED – 1.6% | ||||||||
Money Market Funds | ||||||||
Federated Hermes Government Obligations Fund - Institutional Shares (7 day yield-5.23%) | ||||||||
(Cost $2,864,750) | 2,864,750 | 2,864,750 | ||||||
TOTAL INVESTMENTS – 102.0% | ||||||||
(Cost $142,171,704) | 184,215,045 | |||||||
LIABILITIES LESS CASH AND OTHER ASSETS – (2.0)% | (3,627,652 | ) | ||||||
NET ASSETS – 100.0% | $ | 180,587,393 |
ADR- American Depository Receipt
† | New additions in 2023. |
1 | Non-income producing. |
3 | All or a portion of these securities were on loan as of December 31, 2023. |
Securities of Royce International Premier Fund are categorized by the country of their headquarters.
Bold indicates a Fund’s 20 largest equity holdings in terms of December 31, 2023, market value.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2023 Annual Report to Shareholders | 49 |
Statements of Assets and Liabilities
Royce Dividend Value Fund | Royce Global Financial Services Fund | Royce International Premier Fund | Royce Micro-Cap Fund | |||||||||||||
ASSETS: | ||||||||||||||||
Investments at value (including collateral on loaned securities)1 | ||||||||||||||||
Non-Affiliated Companies | $ | 62,400,322 | $ | 26,785,601 | $ | 480,288,033 | $ | 307,490,663 | ||||||||
Repurchase agreements (at cost and value) | 817,192 | 603,736 | – | 7,373,829 | ||||||||||||
Receivable for investments sold | – | – | 21,375,347 | – | ||||||||||||
Receivable for capital shares sold | 16,569 | 2,316 | 927,984 | 135,444 | ||||||||||||
Receivable for dividends and interest | 79,629 | 165,491 | 2,659,802 | 36,985 | ||||||||||||
Receivable for securities lending income | – | – | – | 1,780 | ||||||||||||
Prepaid expenses and other assets | 748 | 368 | 12,422 | 4,435 | ||||||||||||
Total Assets | 63,314,460 | 27,557,512 | 505,263,588 | 315,043,136 | ||||||||||||
LIABILITIES: | ||||||||||||||||
Payable for collateral on loaned securities | – | – | – | 2,056,361 | ||||||||||||
Payable to custodian for cash overdrawn | – | – | 3,491,532 | – | ||||||||||||
Payable for investments purchased | – | – | – | 137,939 | ||||||||||||
Payable for capital shares redeemed | 22,351 | 68,366 | 465,632 | 364,495 | ||||||||||||
Payable for investment advisory fees | 44,867 | 22,995 | 415,463 | 256,206 | ||||||||||||
Payable for trustees' fees | 3,299 | 1,443 | 41,145 | 16,163 | ||||||||||||
Accrued expenses | 69,176 | 44,274 | 344,943 | 197,252 | ||||||||||||
Deferred capital gains tax | – | 27,984 | – | – | ||||||||||||
Total Liabilities | 139,693 | 165,062 | 4,758,715 | 3,028,416 | ||||||||||||
Net Assets | $ | 63,174,767 | $ | 27,392,450 | $ | 500,504,873 | $ | 312,014,720 | ||||||||
ANALYSIS OF NET ASSETS: | ||||||||||||||||
Paid-in capital | $ | 23,291,087 | $ | 15,612,600 | $ | 592,432,882 | $ | 224,073,253 | ||||||||
Total distributable earnings (loss) | 39,883,680 | 11,779,850 | (91,928,009 | ) | 87,941,467 | |||||||||||
Net Assets | $ | 63,174,767 | $ | 27,392,450 | $ | 500,504,873 | $ | 312,014,720 | ||||||||
Investment Class | $ | 44,753,703 | $ | 252,621,442 | $ | 166,476,680 | ||||||||||
Service Class | 18,421,064 | $ | 19,136,426 | 33,645,263 | 134,780,074 | |||||||||||
Consultant Class | 10,757,966 | |||||||||||||||
Institutional Class | 8,256,024 | 214,238,168 | ||||||||||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | ||||||||||||||||
Investment Class | 7,453,191 | 19,256,176 | 15,133,273 | |||||||||||||
Service Class | 2,939,284 | 1,895,783 | 2,125,355 | 12,656,433 | ||||||||||||
Consultant Class | 1,340,235 | |||||||||||||||
Institutional Class | 620,528 | 16,326,859 | ||||||||||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | ||||||||||||||||
Investment Class2 | $6.00 | $13.12 | $11.00 | |||||||||||||
Service Class2 | 6.27 | $10.09 | 15.83 | 10.65 | ||||||||||||
Consultant Class3 | 8.03 | |||||||||||||||
Institutional Class4 | 13.30 | 13.12 | ||||||||||||||
Investments at identified cost - Non-Affiliated Companies | $ | 23,504,989 | $ | 14,783,133 | $ | 473,717,497 | $ | 226,041,425 | ||||||||
Market value of loaned securities5 | – | – | – | 5,812,412 |
1 | See Notes to Financial Statements for information on non-cash collateral on loaned securities. |
2 | 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 Premier Fund), payable to the Fund. |
3 | 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, LLC. |
4 | Offering and redemption price per share. |
5 | Market value of loaned securities backed by non-cash collateral is as of prior business day. |
50 | The Royce Funds 2023 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2023
Royce Pennsylvania Mutual Fund | Royce Premier Fund | Royce Small-Cap Opportunity Fund | Royce Small-Cap Special Equity Fund | |||||||||||||
ASSETS: | ||||||||||||||||
Investments at value (including collateral on loaned securities)1 | ||||||||||||||||
Non-Affiliated Companies | $ | 1,835,446,800 | $ | 1,373,277,188 | $ | 1,243,567,474 | $ | 625,788,430 | ||||||||
Affiliated Companies | – | – | 13,920,204 | 40,294,795 | ||||||||||||
Repurchase agreements (at cost and value) | 5,001,625 | 71,910,219 | 37,823,967 | 120,008,451 | ||||||||||||
Cash | 50,650 | – | 1 | – | ||||||||||||
Foreign currency2 | 92,900 | – | – | – | ||||||||||||
Receivable for investments sold | 29,011,024 | – | 4,417,103 | – | ||||||||||||
Receivable for capital shares sold | 1,142,134 | 1,336,770 | 1,222,663 | 982,865 | ||||||||||||
Receivable for dividends and interest | 1,311,311 | 1,684,498 | 910,795 | 578,921 | ||||||||||||
Receivable for securities lending income | 13,800 | – | 6,332 | – | ||||||||||||
Prepaid expenses and other assets | 1,777,852 | 18,209 | 19,174 | 10,864 | ||||||||||||
Total Assets | 1,873,848,096 | 1,448,226,884 | 1,301,887,713 | 787,664,326 | ||||||||||||
LIABILITIES: | ||||||||||||||||
Payable for collateral on loaned securities | 1,502,625 | – | 5,433,667 | – | ||||||||||||
Payable for investments purchased | 1,866,116 | – | 2,599,234 | 1,729,639 | ||||||||||||
Payable for capital shares redeemed | 1,549,676 | 3,460,351 | 5,374,374 | 1,033,411 | ||||||||||||
Payable for investment advisory fees | 1,167,799 | 1,191,587 | 1,066,795 | 658,100 | ||||||||||||
Payable for trustees' fees | 89,350 | 71,789 | 66,713 | 41,759 | ||||||||||||
Accrued expenses | 692,730 | 448,265 | 523,702 | 325,388 | ||||||||||||
Total Liabilities | 6,868,296 | 5,171,992 | 15,064,485 | 3,788,297 | ||||||||||||
Net Assets | $ | 1,866,979,800 | $ | 1,443,054,892 | $ | 1,286,823,228 | $ | 783,876,029 | ||||||||
ANALYSIS OF NET ASSETS: | ||||||||||||||||
Paid-in capital | $ | 1,212,342,398 | $ | 805,976,072 | $ | 1,021,070,044 | $ | 591,210,024 | ||||||||
Total distributable earnings (loss) | 654,637,402 | 637,078,820 | 265,753,184 | 192,666,005 | ||||||||||||
Net Assets | $ | 1,866,979,800 | $ | 1,443,054,892 | $ | 1,286,823,228 | $ | 783,876,029 | ||||||||
Investment Class | $ | 1,401,590,687 | $ | 1,140,122,077 | $ | 890,662,199 | $ | 605,345,299 | ||||||||
Service Class | 73,661,128 | 34,923,162 | 75,831,198 | 32,296,933 | ||||||||||||
Consultant Class | 193,390,045 | 11,781,812 | 12,897,818 | 15,317,246 | ||||||||||||
Institutional Class | 198,337,940 | 256,227,841 | 262,009,578 | 130,916,551 | ||||||||||||
R Class | 45,422,435 | |||||||||||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | ||||||||||||||||
Investment Class | 152,714,821 | 98,974,544 | 58,928,031 | 35,496,736 | ||||||||||||
Service Class | 8,073,809 | 3,143,043 | 5,510,398 | 1,893,891 | ||||||||||||
Consultant Class | 27,413,304 | 1,355,489 | 1,103,679 | 988,819 | ||||||||||||
Institutional Class | 21,530,032 | 21,885,855 | 16,877,047 | 7,750,247 | ||||||||||||
R Class | 3,445,763 | |||||||||||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | ||||||||||||||||
Investment Class3 | $9.18 | $11.52 | $15.11 | $17.05 | ||||||||||||
Service Class3 | 9.12 | 11.11 | 13.76 | 17.05 | ||||||||||||
Consultant Class4 | 7.05 | 8.69 | 11.69 | 15.49 | ||||||||||||
Institutional Class5 | 9.21 | 11.71 | 15.52 | 16.89 | ||||||||||||
R Class5 | 13.18 | |||||||||||||||
Investments at identified cost - Non-Affiliated Companies | $ | 1,195,145,182 | $ | 744,784,330 | $ | 983,914,104 | $ | 443,866,353 | ||||||||
Investments at identified cost - Affiliated Companies | – | – | 12,828,877 | 31,971,008 | ||||||||||||
Market value of loaned securities6 | 13,919,123 | – | 13,561,151 | – |
1 | See Notes to Financial Statements for information on non-cash collateral on loaned securities. |
2 | The cost of foreign currency is $93,054 for Royce Pennsylvania Mutual Fund. |
3 | Offering and redemption price per share; shares held less than 30 days may be subject to a 1% redemption fee, payable to the Fund. |
4 | 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, LLC. |
5 | Offering and redemption price per share. |
6 | Market value of loaned securities backed by non-cash collateral is as of prior business day. |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2023 Annual Report to Shareholders | 51 |
Statements of Assets and Liabilities | December 31, 2023 |
Royce Small-Cap Total Return Fund | Royce Small-Cap Value Fund | Royce Smaller- Companies Growth Fund | ||||||||||
ASSETS: | ||||||||||||
Investments at value (including collateral on loaned securities)1 | ||||||||||||
Non-Affiliated Companies | $ | 943,629,150 | $ | 129,042,505 | $ | 180,201,279 | ||||||
Affiliated Companies | 34,445,139 | – | – | |||||||||
Repurchase agreements (at cost and value) | 28,013,236 | 8,846,333 | 4,013,766 | |||||||||
Cash | – | 27,179 | – | |||||||||
Foreign currency2 | 136,071 | – | – | |||||||||
Receivable for investments sold | 18,305,350 | – | – | |||||||||
Receivable for capital shares sold | 755,882 | 12,050,187 | 13,193 | |||||||||
Receivable for dividends and interest | 2,870,580 | 177,874 | 8,219 | |||||||||
Receivable for securities lending income | 8 | 15 | 6,195 | |||||||||
Prepaid expenses and other assets | 13,192 | 1,468 | 2,651 | |||||||||
Total Assets | 1,028,168,608 | 150,145,561 | 184,245,303 | |||||||||
LIABILITIES: | ||||||||||||
Payable for collateral on loaned securities | 31,275 | – | 2,864,750 | |||||||||
Payable for investments purchased | 3,698,255 | 13,248,982 | – | |||||||||
Payable for capital shares redeemed | 1,703,937 | 163,571 | 493,735 | |||||||||
Payable for investment advisory fees | 844,835 | 98,086 | 149,692 | |||||||||
Payable for trustees' fees | 51,845 | 5,940 | 10,014 | |||||||||
Accrued expenses | 477,544 | 111,238 | 139,719 | |||||||||
Total Liabilities | 6,807,691 | 13,627,817 | 3,657,910 | |||||||||
Net Assets | $ | 1,021,360,917 | $ | 136,517,744 | $ | 180,587,393 | ||||||
ANALYSIS OF NET ASSETS: | ||||||||||||
Paid-in capital | $ | 820,887,942 | $ | 101,540,055 | $ | 154,809,343 | ||||||
Total distributable earnings (loss) | 200,472,975 | 34,977,689 | 25,778,050 | |||||||||
Net Assets | $ | 1,021,360,917 | $ | 136,517,744 | $ | 180,587,393 | ||||||
Investment Class | $ | 642,545,623 | $ | 37,440,363 | $ | 63,278,874 | ||||||
Service Class | 58,423,971 | 99,077,381 | 112,077,657 | |||||||||
Consultant Class | 85,487,637 | |||||||||||
Institutional Class | 212,581,276 | 5,230,862 | ||||||||||
R Class | 22,322,410 | |||||||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | ||||||||||||
Investment Class | 86,816,092 | 3,634,569 | 9,497,901 | |||||||||
Service Class | 7,591,539 | 9,675,078 | 17,482,523 | |||||||||
Consultant Class | 10,923,963 | |||||||||||
Institutional Class | 29,351,217 | 772,923 | ||||||||||
R Class | 2,844,521 | |||||||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | ||||||||||||
Investment Class3 | $7.40 | $10.30 | $6.66 | |||||||||
Service Class3 | 7.70 | 10.24 | 6.41 | |||||||||
Consultant Class4 | 7.83 | |||||||||||
Institutional Class5 | 7.24 | 6.77 | ||||||||||
R Class5 | 7.85 | |||||||||||
Investments at identified cost - Non-Affiliated Companies | $ | 763,401,016 | $ | 95,038,138 | $ | 138,157,938 | ||||||
Investments at identified cost - Affiliated Companies | 22,045,352 | – | – | |||||||||
Market value of loaned securities6 | 30,492 | – | 10,102,809 |
1 | See Notes to Financial Statements for information on non-cash collateral on loaned securities. |
2 | The cost of foreign currency is $136,297 for Royce Small-Cap Total Return Fund. |
3 | Offering and redemption price per share; shares held less than 30 days may be subject to a 1% redemption fee, payable to the Fund. |
4 | 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, LLC. |
5 | Offering and redemption price per share. |
6 | Market value of loaned securities backed by non-cash collateral is as of prior business day. |
52 | The Royce Funds 2023 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Statements of Operations | Year Ended December 31, 2023 |
Royce Dividend Value Fund | Royce Global Financial Services Fund | Royce International Premier Fund | Royce Micro-Cap Fund | |||||||||||||
INVESTMENT INCOME: | ||||||||||||||||
INCOME: | ||||||||||||||||
Dividends | ||||||||||||||||
Non-Affiliated Companies | $ | 1,304,581 | $ | 917,101 | $ | 15,849,176 | $ | 2,159,163 | ||||||||
Affiliated Companies | – | – | 577,315 | – | ||||||||||||
Foreign withholding tax | (34,433 | ) | (92,696 | ) | (1,560,780 | ) | (25,603 | ) | ||||||||
Interest | 33,204 | 9,411 | 1,388,253 | 277,708 | ||||||||||||
Securities lending | – | – | – | 16,599 | ||||||||||||
Total income | 1,303,352 | 833,816 | 16,253,964 | 2,427,867 | ||||||||||||
EXPENSES: | ||||||||||||||||
Investment advisory fees | 516,954 | 264,649 | 7,228,042 | 2,956,670 | ||||||||||||
Distribution fees | 46,169 | 46,989 | 100,992 | 428,055 | ||||||||||||
Shareholder servicing | 109,959 | 38,399 | 594,709 | 389,126 | ||||||||||||
Administrative and office facilities | 49,442 | 32,582 | 408,662 | 169,755 | ||||||||||||
Registration | 48,922 | 32,888 | 78,942 | 47,563 | ||||||||||||
Audit | 35,313 | 34,901 | 53,797 | 36,191 | ||||||||||||
Custody | 22,259 | 24,565 | 299,562 | 46,323 | ||||||||||||
Trustees' fees | 11,414 | 5,015 | 144,289 | 56,242 | ||||||||||||
Shareholder reports | 8,441 | 2,237 | 104,532 | 44,322 | ||||||||||||
Legal | 2,278 | 992 | 27,956 | 11,172 | ||||||||||||
Other expenses | 8,468 | 3,940 | 70,451 | 26,141 | ||||||||||||
Total expenses | 859,619 | 487,157 | 9,111,934 | 4,211,560 | ||||||||||||
Compensating balance credits | (1,612 | ) | (829 | ) | (58,742 | ) | (13,397 | ) | ||||||||
Fees waived by investment adviser and distributor | – | (7,518 | ) | (703,759 | ) | – | ||||||||||
Expenses reimbursed by investment adviser | (148,979 | ) | (84,484 | ) | (276,265 | ) | (98,199 | ) | ||||||||
Net expenses | 709,028 | 394,326 | 8,073,168 | 4,099,964 | ||||||||||||
Net investment income (loss) | 594,324 | 439,490 | 8,180,796 | (1,672,097 | ) | |||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | ||||||||||||||||
NET REALIZED GAIN (LOSS): | ||||||||||||||||
Investments in Non-Affiliated Companies | 7,409,551 | 2,263,445 | (56,246,245 | ) | 27,691,499 | |||||||||||
Investments in Affiliated Companies | – | – | (3,178,273 | ) | – | |||||||||||
Foreign currency transactions | (7,406 | ) | (8,204 | ) | (41,260 | ) | 649 | |||||||||
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION): | ||||||||||||||||
Investments in Non-Affiliated Companies | 4,554,002 | 1,249,376 | 92,794,571 | 26,342,764 | ||||||||||||
Investments in Affiliated Companies | – | – | (4,700,678 | ) | – | |||||||||||
Other assets and liabilities denominated in foreign currency | 1,771 | (28,009 | ) | 137,997 | – | |||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency | 11,957,918 | 3,476,608 | 28,766,112 | 54,034,912 | ||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS | $ | 12,552,242 | $ | 3,916,098 | $ | 36,946,908 | $ | 52,362,815 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2023 Annual Report to Shareholders | 53 |
Statements of Operations
Royce Pennsylvania Mutual Fund | Royce Premier Fund | Royce Small-Cap Opportunity Fund | Royce Small-Cap Special Equity Fund | |||||||||||||
INVESTMENT INCOME: | ||||||||||||||||
INCOME: | ||||||||||||||||
Dividends | ||||||||||||||||
Non-Affiliated Companies | $ | 19,411,959 | $ | 15,411,698 | $ | 13,691,556 | $ | 13,662,842 | ||||||||
Affiliated Companies | – | – | 215,942 | 2,783,243 | ||||||||||||
Foreign withholding tax | (389,692 | ) | (332,284 | ) | (22,985 | ) | – | |||||||||
Interest | 942,466 | 2,167,280 | 1,267,445 | 4,209,038 | ||||||||||||
Securities lending | 41,412 | – | 156,534 | – | ||||||||||||
Total income | 20,006,145 | 17,246,694 | 15,308,492 | 20,655,123 | ||||||||||||
EXPENSES: | ||||||||||||||||
Investment advisory fees | 12,836,807 | 13,367,670 | 12,604,518 | 7,744,156 | ||||||||||||
Distribution fees | 2,017,126 | 203,603 | 502,468 | 238,355 | ||||||||||||
Shareholder servicing | 1,244,800 | 1,030,353 | 1,305,974 | 765,494 | ||||||||||||
Administrative and office facilities | 851,345 | 686,583 | 666,809 | 411,647 | ||||||||||||
Registration | 87,927 | 79,937 | 85,603 | 68,982 | ||||||||||||
Audit | 54,132 | 44,820 | 50,552 | 43,258 | ||||||||||||
Custody | 171,818 | 102,467 | 167,778 | 65,001 | ||||||||||||
Trustees' fees | 312,049 | 249,354 | 238,914 | 146,017 | ||||||||||||
Shareholder reports | 155,961 | 132,314 | 111,765 | 73,339 | ||||||||||||
Legal | 61,796 | 50,100 | 46,816 | 29,075 | ||||||||||||
Other expenses | 134,850 | 109,459 | 110,497 | 67,353 | ||||||||||||
Total expenses | 17,928,611 | 16,056,660 | 15,891,694 | 9,652,677 | ||||||||||||
Compensating balance credits | (57,665 | ) | (21,887 | ) | (33,226 | ) | (20,190 | ) | ||||||||
Fees waived by distributor | (11,618 | ) | – | – | – | |||||||||||
Expenses reimbursed by investment adviser | (31,005 | ) | (55,437 | ) | (43,344 | ) | (33,564 | ) | ||||||||
Net expenses | 17,828,323 | 15,979,336 | 15,815,124 | 9,598,923 | ||||||||||||
Net investment income (loss) | 2,177,822 | 1,267,358 | (506,632 | ) | 11,056,200 | |||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | ||||||||||||||||
NET REALIZED GAIN (LOSS): | ||||||||||||||||
Investments in Non-Affiliated Companies | 111,724,771 | 93,034,835 | 67,234,628 | 23,779,551 | ||||||||||||
Investments in Affiliated Companies | – | – | 7,442,488 | (4,732,282 | ) | |||||||||||
Foreign currency transactions | (53,091 | ) | (6,882 | ) | (679 | ) | – | |||||||||
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION): | ||||||||||||||||
Investments in Non-Affiliated Companies | 288,599,010 | 179,451,497 | 139,784,179 | 43,248,559 | ||||||||||||
Investments in Affiliated Companies | – | – | 4,002,031 | 19,410,368 | ||||||||||||
Other assets and liabilities denominated in foreign currency | 10 | – | 249 | – | ||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency | 400,270,700 | 272,479,450 | 218,462,896 | 81,706,196 | ||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS | $ | 402,448,522 | $ | 273,746,808 | $ | 217,956,264 | $ | 92,762,396 |
54 | The Royce Funds 2023 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Year Ended December 31, 2023
Royce Small-Cap Total Return Fund | Royce Small-Cap Value Fund | Royce Smaller- Companies Growth Fund | ||||||||||
INVESTMENT INCOME: | ||||||||||||
INCOME: | ||||||||||||
Dividends | ||||||||||||
Non-Affiliated Companies | $ | 18,889,695 | $ | 2,564,015 | $ | 707,015 | ||||||
Affiliated Companies | 862,136 | – | – | |||||||||
Foreign withholding tax | (750,770 | ) | – | (12,364 | ) | |||||||
Interest | 865,591 | 89,165 | 188,589 | |||||||||
Securities lending | 5,097 | 892 | 127,584 | |||||||||
Total income | 19,871,749 | 2,654,072 | 1,010,824 | |||||||||
EXPENSES: | ||||||||||||
Investment advisory fees | 9,563,211 | 1,109,402 | 1,812,539 | |||||||||
Distribution fees | 1,085,380 | 203,088 | 290,368 | |||||||||
Shareholder servicing | 862,536 | 186,553 | 249,036 | |||||||||
Administrative and office facilities | 505,099 | 75,758 | 112,466 | |||||||||
Registration | 70,020 | 50,074 | 55,788 | |||||||||
Audit | 49,246 | 32,215 | 33,024 | |||||||||
Custody | 142,912 | 29,283 | 36,666 | |||||||||
Trustees' fees | 179,306 | 21,050 | 34,688 | |||||||||
Shareholder reports | 128,791 | 17,831 | 24,363 | |||||||||
Legal | 34,813 | 4,315 | 6,374 | |||||||||
Other expenses | 87,262 | 12,077 | 18,284 | |||||||||
Total expenses | 12,708,576 | 1,741,646 | 2,673,596 | |||||||||
Compensating balance credits | (21,989 | ) | (3,563 | ) | (6,444 | ) | ||||||
Expenses reimbursed by investment adviser | (55,245 | ) | (139,982 | ) | (130,619 | ) | ||||||
Net expenses | 12,631,342 | 1,598,101 | 2,536,533 | |||||||||
Net investment income (loss) | 7,240,407 | 1,055,971 | (1,525,709 | ) | ||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | ||||||||||||
NET REALIZED GAIN (LOSS): | ||||||||||||
Investments in Non-Affiliated Companies | 87,635,118 | 8,713,674 | 7,468,779 | |||||||||
Investments in Affiliated Companies | 576,633 | – | – | |||||||||
Foreign currency transactions | (18,763 | ) | – | (5,769 | ) | |||||||
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION): | ||||||||||||
Investments in Non-Affiliated Companies | 100,865,824 | 15,859,268 | 22,084,532 | |||||||||
Investments in Affiliated Companies | 11,961,952 | – | – | |||||||||
Other assets and liabilities denominated in foreign currency | (17,201 | ) | – | – | ||||||||
Net realized and unrealized gain (loss) on investments and foreign currency | 201,003,563 | 24,572,942 | 29,547,542 | |||||||||
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS | $ | 208,243,970 | $ | 25,628,913 | $ | 28,021,833 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2023 Annual Report to Shareholders | 55 |
Statements of Changes in Net Assets
Royce Dividend Value Fund | Royce Global Financial Services Fund | Royce International Premier Fund | ||||||||||||||||||||||
Year Ended 12/31/23 | Year Ended 12/31/22 | Year Ended 12/31/23 | Year Ended 12/31/22 | Year Ended 12/31/23 | Year Ended 12/31/22 | |||||||||||||||||||
INVESTMENT OPERATIONS: | ||||||||||||||||||||||||
Net investment income (loss) | $ | 594,324 | $ | 449,227 | $ | 439,490 | $ | 214,633 | $ | 8,180,796 | $ | 8,874,179 | ||||||||||||
Net realized gain (loss) on investments and foreign currency | 7,402,145 | 350,360 | 2,255,241 | (324,504 | ) | (59,465,778 | ) | (31,109,554 | ) | |||||||||||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency | 4,555,773 | (11,012,658 | ) | 1,221,367 | (7,294,143 | ) | 88,231,890 | (312,277,825 | ) | |||||||||||||||
Net increase (decrease) in net assets from investment operations | 12,552,242 | (10,213,071 | ) | 3,916,098 | (7,404,014 | ) | 36,946,908 | (334,513,200 | ) | |||||||||||||||
DISTRIBUTIONS: | ||||||||||||||||||||||||
Total distributable earnings | ||||||||||||||||||||||||
Investment Class | (5,042,548 | ) | (459,825 | ) | (7,746,903 | ) | (9,009,895 | ) | ||||||||||||||||
Service Class | (2,006,314 | ) | (84,861 | ) | (1,418,068 | ) | (399,279 | ) | (729,574 | ) | (1,026,583 | ) | ||||||||||||
Consultant Class | – | (3,174 | ) | – | (126,023 | ) | ||||||||||||||||||
Institutional Class | (247 | ) | (4,561 | ) | (567,704 | ) | (136,659 | ) | (7,720,585 | ) | (17,241,958 | ) | ||||||||||||
Total distributions | (7,049,109 | ) | (552,421 | ) | (1,985,772 | ) | (535,938 | ) | (16,197,062 | ) | (27,404,459 | ) | ||||||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||||||||||
Net capital share transactions | ||||||||||||||||||||||||
Investment Class | (2,513,377 | ) | (3,483,571 | ) | (3,654,818 | ) | (96,556,648 | ) | ||||||||||||||||
Service Class | 2,961,580 | (2,803,992 | ) | (1,634,082 | ) | (3,264,882 | ) | (1,119,634 | ) | (9,925,065 | ) | |||||||||||||
Consultant Class | (1,669,601 | ) | 467,815 | (5,029,442 | ) | (1,238,324 | ) | |||||||||||||||||
Institutional Class | (135,683 | ) | (686,375 | ) | 161,796 | (144,030 | ) | (250,345,128 | ) | (43,429,085 | ) | |||||||||||||
Shareholder redemption fees | ||||||||||||||||||||||||
Investment Class | 396 | 73 | 1,501 | 24,429 | ||||||||||||||||||||
Service Class | – | – | 31 | 3 | 2,968 | 77 | ||||||||||||||||||
Net increase (decrease) in net assets from capital share transactions | (1,356,685 | ) | (6,506,050 | ) | (1,472,255 | ) | (3,408,909 | ) | (260,144,553 | ) | (151,124,616 | ) | ||||||||||||
Net Increase (Decrease) In Net Assets | 4,146,448 | (17,271,542 | ) | 458,071 | (11,348,861 | ) | (239,394,707 | ) | (513,042,275 | ) | ||||||||||||||
NET ASSETS: | ||||||||||||||||||||||||
Beginning of year | 59,028,319 | 76,299,861 | 26,934,379 | 38,283,240 | 739,899,580 | 1,252,941,855 | ||||||||||||||||||
End of year | $ | 63,174,767 | $ | 59,028,319 | $ | 27,392,450 | $ | 26,934,379 | $ | 500,504,873 | $ | 739,899,580 |
56 | The Royce Funds 2023 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Royce Micro-Cap Fund | Royce Pennsylvania Mutual Fund | Royce Premier Fund | ||||||||||||||||||||||
Year Ended 12/31/23 | Year Ended 12/31/22 | Year Ended 12/31/23 | Year Ended 12/31/22 | Year Ended 12/31/23 | Year Ended 12/31/22 | |||||||||||||||||||
INVESTMENT OPERATIONS: | ||||||||||||||||||||||||
Net investment income (loss) | $ | (1,672,097 | ) | $ | (2,107,683 | ) | $ | 2,177,822 | $ | 3,079,768 | $ | 1,267,358 | $ | (416,685 | ) | |||||||||
Net realized gain (loss) on investments and foreign currency | 27,692,148 | 1,594,469 | 111,671,680 | 25,462,152 | 93,027,953 | 93,957,652 | ||||||||||||||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency | 26,342,764 | (93,507,037 | ) | 288,599,020 | (394,795,614 | ) | 179,451,497 | (357,293,399 | ) | |||||||||||||||
Net increase (decrease) in net assets from investment operations | 52,362,815 | (94,020,251 | ) | 402,448,522 | (366,253,694 | ) | 273,746,808 | (263,752,432 | ) | |||||||||||||||
DISTRIBUTIONS: | ||||||||||||||||||||||||
Total distributable earnings | ||||||||||||||||||||||||
Investment Class | (10,989,696 | ) | (7,366,380 | ) | (65,933,131 | ) | (59,541,547 | ) | (74,373,756 | ) | (84,853,039 | ) | ||||||||||||
Service Class | (8,936,398 | ) | (6,478,764 | ) | (3,275,912 | ) | (2,986,880 | ) | (2,295,254 | ) | (2,108,066 | ) | ||||||||||||
Consultant Class | (707,046 | ) | (509,147 | ) | (8,438,738 | ) | (8,814,162 | ) | (762,327 | ) | (947,447 | ) | ||||||||||||
Institutional Class | (9,421,722 | ) | (6,715,538 | ) | (16,644,913 | ) | (17,404,485 | ) | ||||||||||||||||
R Class | – | (345,932 | ) | – | (509,268 | ) | ||||||||||||||||||
Total distributions | (20,633,140 | ) | (14,354,291 | ) | (87,069,503 | ) | (78,404,059 | ) | (94,076,250 | ) | (105,822,305 | ) | ||||||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||||||||||
Net capital share transactions | ||||||||||||||||||||||||
Investment Class | (175,080 | ) | (5,409,081 | ) | (29,489,951 | ) | (82,899,142 | ) | (4,998,002 | ) | (102,448,486 | ) | ||||||||||||
Service Class | (11,363,544 | ) | (14,429,642 | ) | 3,384,794 | (8,699,031 | ) | 6,039,867 | (3,824,328 | ) | ||||||||||||||
Consultant Class | (606,724 | ) | (1,259,829 | ) | (15,806,157 | ) | (21,132,136 | ) | (913,538 | ) | (1,226,087 | ) | ||||||||||||
Institutional Class | 34,304,093 | (24,377,993 | ) | 18,701,299 | (7,385,423 | ) | ||||||||||||||||||
R Class | (7,470,321 | ) | (377,644 | ) | (6,605,757 | ) | (158,880 | ) | ||||||||||||||||
Shareholder redemption fees | ||||||||||||||||||||||||
Investment Class | 970 | 2,824 | 1,158 | 532 | 447 | 646 | ||||||||||||||||||
Service Class | 1,067 | 586 | 202 | 37 | – | 245 | ||||||||||||||||||
Net increase (decrease) in net assets from capital share transactions | (12,143,311 | ) | (21,095,142 | ) | (15,076,182 | ) | (137,485,377 | ) | 12,224,316 | (115,042,313 | ) | |||||||||||||
Net Increase (Decrease) In Net Assets | 19,586,364 | (129,469,684 | ) | 300,302,837 | (582,143,130 | ) | 191,894,874 | (484,617,050 | ) | |||||||||||||||
NET ASSETS: | ||||||||||||||||||||||||
Beginning of year | 292,428,356 | 421,898,040 | 1,566,676,963 | 2,148,820,093 | 1,251,160,018 | 1,735,777,068 | ||||||||||||||||||
End of year | $ | 312,014,720 | $ | 292,428,356 | $ | 1,866,979,800 | $ | 1,566,676,963 | $ | 1,443,054,892 | $ | 1,251,160,018 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2023 Annual Report to Shareholders | 57 |
Statements of Changes in Net Assets
Royce Small-Cap Opportunity Fund | Royce Small-Cap Special Equity Fund | Royce Small-Cap Total Return Fund | ||||||||||||||||||||||
Year Ended 12/31/23 | Year Ended 12/31/22 | Year Ended 12/31/23 | Year Ended 12/31/22 | Year Ended 12/31/23 | Year Ended 12/31/22 | |||||||||||||||||||
INVESTMENT OPERATIONS: | ||||||||||||||||||||||||
Net investment income (loss) | $ | (506,632 | ) | $ | 153,538 | $ | 11,056,200 | $ | 8,460,718 | $ | 7,240,407 | $ | 9,690,626 | |||||||||||
Net realized gain (loss) on investments and foreign currency | 74,676,437 | 473,845 | 19,047,269 | 43,215,219 | 88,192,988 | 78,077,877 | ||||||||||||||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency | 143,786,459 | (301,654,969 | ) | 62,658,927 | (119,148,828 | ) | 112,810,575 | (263,722,163 | ) | |||||||||||||||
Net increase (decrease) in net assets from investment operations | 217,956,264 | (301,027,586 | ) | 92,762,396 | (67,472,891 | ) | 208,243,970 | (175,953,660 | ) | |||||||||||||||
DISTRIBUTIONS: | ||||||||||||||||||||||||
Total distributable earnings | ||||||||||||||||||||||||
Investment Class | (39,071,925 | ) | (45,279,449 | ) | (31,210,014 | ) | (67,152,279 | ) | (58,941,637 | ) | (84,408,846 | ) | ||||||||||||
Service Class | (3,291,030 | ) | (3,382,755 | ) | (1,555,626 | ) | (3,804,020 | ) | (5,006,920 | ) | (7,882,450 | ) | ||||||||||||
Consultant Class | (559,481 | ) | (558,361 | ) | (657,508 | ) | (1,537,324 | ) | (6,494,539 | ) | (10,861,139 | ) | ||||||||||||
Institutional Class | (12,002,169 | ) | (10,695,245 | ) | (6,876,676 | ) | (13,788,855 | ) | (19,349,504 | ) | (25,579,974 | ) | ||||||||||||
R Class | (1,964,587 | ) | (1,917,058 | ) | (1,761,612 | ) | (2,507,527 | ) | ||||||||||||||||
Total distributions | (56,889,192 | ) | (61,832,868 | ) | (40,299,824 | ) | (86,282,478 | ) | (91,554,212 | ) | (131,239,936 | ) | ||||||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||||||||||
Net capital share transactions | ||||||||||||||||||||||||
Investment Class | (135,355,933 | ) | (151,490,562 | ) | (22,889,342 | ) | (52,903,109 | ) | (22,783,520 | ) | (227,485,345 | ) | ||||||||||||
Service Class | (1,863,203 | ) | (20,199,622 | ) | (4,629,957 | ) | (14,674,150 | ) | (7,348,656 | ) | (3,697,202 | ) | ||||||||||||
Consultant Class | 55,614 | (322,670 | ) | (883,022 | ) | (6,601,167 | ) | (9,626,037 | ) | (1,904,964 | ) | |||||||||||||
Institutional Class | 16,944,127 | (18,386,325 | ) | 6,248,547 | (95,455,503 | ) | 8,493,692 | (38,430,721 | ) | |||||||||||||||
R Class | 1,076,523 | (1,746,516 | ) | (469,274 | ) | (893,138 | ) | |||||||||||||||||
Shareholder redemption fees | ||||||||||||||||||||||||
Investment Class | 12,846 | 30,160 | 1,640 | 844 | 687 | 724 | ||||||||||||||||||
Service Class | 1,305 | 2,437 | 112 | 214 | 293 | 24 | ||||||||||||||||||
Net increase (decrease) in net assets from capital share transactions | (119,128,721 | ) | (192,113,098 | ) | (22,152,022 | ) | (169,632,871 | ) | (31,732,815 | ) | (272,410,622 | ) | ||||||||||||
Net Increase (Decrease) In Net Assets | 41,938,351 | (554,973,552 | ) | 30,310,550 | (323,388,240 | ) | 84,956,943 | (579,604,218 | ) | |||||||||||||||
NET ASSETS: | ||||||||||||||||||||||||
Beginning of year | 1,244,884,877 | 1,799,858,429 | 753,565,479 | 1,076,953,719 | 936,403,974 | 1,516,008,192 | ||||||||||||||||||
End of year | $ | 1,286,823,228 | $ | 1,244,884,877 | $ | 783,876,029 | $ | 753,565,479 | $ | 1,021,360,917 | $ | 936,403,974 |
58 | The Royce Funds 2023 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Royce Small-Cap Value Fund | Royce Smaller-Companies Growth Fund | |||||||||||||||
Year Ended 12/31/23 | Year Ended 12/31/22 | Year Ended 12/31/23 | Year Ended 12/31/22 | |||||||||||||
INVESTMENT OPERATIONS: | ||||||||||||||||
Net investment income (loss) | $ | 1,055,971 | $ | 615,800 | $ | (1,525,709 | ) | $ | (2,357,212 | ) | ||||||
Net realized gain (loss) on investments and foreign currency | 8,713,674 | 3,877,777 | 7,463,010 | (20,942,461 | ) | |||||||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency | 15,859,268 | (18,825,234 | ) | 22,084,532 | (71,120,031 | ) | ||||||||||
Net increase (decrease) in net assets from investment operations | 25,628,913 | (14,331,657 | ) | 28,021,833 | (94,419,704 | ) | ||||||||||
DISTRIBUTIONS: | ||||||||||||||||
Total distributable earnings | ||||||||||||||||
Investment Class | (2,893,809 | ) | (2,107,308 | ) | – | (2,603,831 | ) | |||||||||
Service Class | (6,304,788 | ) | (3,950,446 | ) | – | (4,447,234 | ) | |||||||||
Consultant Class | – | (175,045 | ) | – | (183,821 | ) | ||||||||||
Institutional Class | – | (182,340 | ) | |||||||||||||
R Class | – | (317,866 | ) | |||||||||||||
Total distributions | (9,198,597 | ) | (6,550,665 | ) | – | (7,417,226 | ) | |||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||
Net capital share transactions | ||||||||||||||||
Investment Class | (3,318,421 | ) | (2,457,198 | ) | (7,846,011 | ) | (8,834,564 | ) | ||||||||
Service Class | 19,172,063 | (1,118,738 | ) | (10,576,956 | ) | (12,386,941 | ) | |||||||||
Consultant Class | (3,079,281 | ) | (1,230,672 | ) | (4,414,617 | ) | (776,959 | ) | ||||||||
Institutional Class | 114,033 | (572,961 | ) | |||||||||||||
R Class | (5,632,125 | ) | (1,190,060 | ) | ||||||||||||
Shareholder redemption fees | ||||||||||||||||
Investment Class | 512 | 382 | 8 | 323 | ||||||||||||
Service Class | 544 | 1 | 2,572 | 426 | ||||||||||||
Net increase (decrease) in net assets from capital share transactions | 7,143,292 | (5,996,285 | ) | (22,720,971 | ) | (22,570,676 | ) | |||||||||
Net Increase (Decrease) In Net Assets | 23,573,608 | (26,878,607 | ) | 5,300,862 | (124,407,606 | ) | ||||||||||
NET ASSETS: | ||||||||||||||||
Beginning of year | 112,944,136 | 139,822,743 | 175,286,531 | 299,694,137 | ||||||||||||
End of year | $ | 136,517,744 | $ | 112,944,136 | $ | 180,587,393 | $ | 175,286,531 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2023 Annual Report to Shareholders | 59 |
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.
Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency | Total from Investment Operations | Distributions from Net Investment Income | Distributions from Net Realized Gain on Investments and Foreign Currency | Total Distributions | Net Asset Value, End of Period | Total Return | Net Assets, End of Period (in thousands) | Ratio of Expenses to Average Net Assets | Ratio of Net Investment Income (Loss) to Average Net Assets | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
Prior to Fee Waivers, Expense Reimbursements and Balance Credits | Prior to Fee Waivers and Expense Reimbursements | Net of Fee Waivers and Expense Reimbursements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Royce Dividend Value Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 5.48 | $ | 0.06 | $ | 1.20 | $ | 1.26 | $ | (0.08 | ) | $ | (0.66 | ) | $ | (0.74 | ) | $ | 6.00 | 23.12 | % | $ | 44,754 | 1.28 | % | 1.27 | % | 1.09 | % | 1.05 | % | 14 | % | |||||||||||||||||||||||||||
2022 | 6.40 | 0.04 | (0.90 | ) | (0.86 | ) | (0.05 | ) | (0.01 | ) | (0.06 | ) | 5.48 | (13.45 | ) | 43,264 | 1.27 | 1.27 | 1.09 | 0.80 | 3 | |||||||||||||||||||||||||||||||||||||||
2021 | 6.11 | 0.05 | 1.17 | 1.22 | (0.06 | ) | (0.87 | ) | (0.93 | ) | 6.40 | 20.47 | 54,466 | 1.21 | 1.21 | 1.09 | 0.76 | 0 | ||||||||||||||||||||||||||||||||||||||||||
2020 | 6.21 | 0.07 | 0.20 | 0.27 | (0.11 | ) | (0.26 | ) | (0.37 | ) | 6.11 | 4.57 | 53,421 | 1.26 | 1.26 | 1.09 | 1.27 | 4 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 5.56 | 0.09 | 1.58 | 1.67 | (0.10 | ) | (0.92 | ) | (1.02 | ) | 6.21 | 30.34 | 76,273 | 1.21 | 1.20 | 1.09 | 1.37 | 8 | ||||||||||||||||||||||||||||||||||||||||||
Royce Dividend Value Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 5.71 | $ | 0.05 | $ | 1.25 | $ | 1.30 | $ | (0.06 | ) | $ | (0.68 | ) | $ | (0.74 | ) | $ | 6.27 | 22.92 | % | $ | 18,421 | 1.62 | % | 1.61 | % | 1.34 | % | 0.81 | % | 14 | % | |||||||||||||||||||||||||||
2022 | 6.65 | 0.03 | (0.94 | ) | (0.91 | ) | (0.02 | ) | (0.01 | ) | (0.03 | ) | 5.71 | (13.62 | ) | 14,005 | 1.62 | 1.62 | 1.34 | 0.55 | 3 | |||||||||||||||||||||||||||||||||||||||
2021 | 6.34 | 0.04 | 1.21 | 1.25 | (0.04 | ) | (0.90 | ) | (0.94 | ) | 6.65 | 20.11 | 19,518 | 1.54 | 1.54 | 1.34 | 0.51 | 0 | ||||||||||||||||||||||||||||||||||||||||||
2020 | 6.42 | 0.06 | 0.21 | 0.27 | (0.08 | ) | (0.27 | ) | (0.35 | ) | 6.34 | 4.47 | 19,687 | 1.60 | 1.60 | 1.34 | 1.02 | 4 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 5.73 | 0.08 | 1.61 | 1.69 | (0.06 | ) | (0.94 | ) | (1.00 | ) | 6.42 | 29.78 | 25,256 | 1.53 | 1.52 | 1.34 | 1.14 | 8 | ||||||||||||||||||||||||||||||||||||||||||
Royce Global Financial Services Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 9.41 | $ | 0.16 | 1 | $ | 1.31 | $ | 1.47 | $ | (0.28 | ) | $ | (0.51 | ) | $ | (0.79 | ) | $ | 10.09 | 15.72 | % | $ | 19,136 | 1.92 | % | 1.91 | % | 1.49 | % | 1.65 | %1 | 12 | % | ||||||||||||||||||||||||||
2022 | 12.06 | 0.07 | (2.52 | ) | (2.45 | ) | (0.08 | ) | (0.12 | ) | (0.20 | ) | 9.41 | (20.32 | ) | 19,443 | 1.90 | 1.90 | 1.49 | 0.71 | 10 | |||||||||||||||||||||||||||||||||||||||
2021 | 10.66 | 0.23 | 2 | 1.91 | 2.14 | (0.39 | ) | (0.35 | ) | (0.74 | ) | 12.06 | 20.27 | 28,574 | 1.78 | 1.78 | 1.49 | 1.84 | 2 | 5 | ||||||||||||||||||||||||||||||||||||||||
2020 | 9.91 | 0.07 | 1.42 | 1.49 | (0.04 | ) | (0.70 | ) | (0.74 | ) | 10.66 | 15.25 | 25,919 | 1.88 | 1.88 | 1.49 | 0.80 | 4 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 8.18 | 0.10 | 1.87 | 1.97 | (0.15 | ) | (0.09 | ) | (0.24 | ) | 9.91 | 24.17 | 30,202 | 1.82 | 1.81 | 1.49 | 0.86 | 5 | ||||||||||||||||||||||||||||||||||||||||||
Royce Global Financial Services Fund–Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 12.32 | $ | 0.22 | 1 | $ | 1.71 | $ | 1.93 | $ | (0.28 | ) | $ | (0.67 | ) | $ | (0.95 | ) | $ | 13.30 | 15.72 | % | $ | 8,256 | 1.66 | % | 1.66 | % | 1.49 | % | 1.69 | %1 | 12 | % | ||||||||||||||||||||||||||
2022 | 15.76 | 0.10 | (3.31 | ) | (3.21 | ) | (0.08 | ) | (0.15 | ) | (0.23 | ) | 12.32 | (20.35 | ) | 7,491 | 1.64 | 1.64 | 1.49 | 0.72 | 10 | |||||||||||||||||||||||||||||||||||||||
2021 | 13.81 | 0.32 | 2 | 2.47 | 2.79 | (0.39 | ) | (0.45 | ) | (0.84 | ) | 15.76 | 20.35 | 9,709 | 1.51 | 1.51 | 1.49 | 1.98 | 2 | 5 | ||||||||||||||||||||||||||||||||||||||||
2020 | 12.83 | 0.10 | 1.82 | 1.92 | (0.04 | ) | (0.90 | ) | (0.94 | ) | 13.81 | 15.18 | 7,746 | 1.67 | 1.67 | 1.49 | 0.81 | 4 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 10.55 | 0.14 | 2.42 | 2.56 | (0.16 | ) | (0.12 | ) | (0.28 | ) | 12.83 | 24.35 | 6,738 | 1.60 | 1.60 | 1.33 | 1.04 | 5 | ||||||||||||||||||||||||||||||||||||||||||
Royce International Premier Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 12.54 | $ | 0.13 | $ | 0.84 | $ | 0.97 | $ | (0.39 | ) | $ | – | $ | (0.39 | ) | $ | 13.12 | 7.81 | % | $ | 252,621 | 1.29 | % | 1.29 | % | 1.19 | % | 1.02 | % | 36 | % | ||||||||||||||||||||||||||||
2022 | 17.81 | 0.13 | (4.94 | ) | (4.81 | ) | (0.13 | ) | (0.33 | ) | (0.46 | ) | 12.54 | (26.96 | ) | 248,170 | 1.26 | 1.26 | 1.17 | 0.95 | 31 | |||||||||||||||||||||||||||||||||||||||
2021 | 17.64 | 0.06 | 0.99 | 1.05 | (0.07 | ) | (0.81 | ) | (0.88 | ) | 17.81 | 6.06 | 480,550 | 1.23 | 1.23 | 1.16 | 0.33 | 32 | ||||||||||||||||||||||||||||||||||||||||||
2020 | 15.25 | 0.04 | 2.40 | 2.44 | (0.05 | ) | – | (0.05 | ) | 17.64 | 15.99 | 486,378 | 1.26 | 1.26 | 1.19 | 0.30 | 21 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 11.39 | 0.11 | 3.82 | 3.93 | (0.07 | ) | – | (0.07 | ) | 15.25 | 34.49 | 360,623 | 1.26 | 1.26 | 1.18 | 0.74 | 40 | |||||||||||||||||||||||||||||||||||||||||||
Royce International Premier Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 15.04 | $ | 0.12 | $ | 1.01 | $ | 1.13 | $ | (0.34 | ) | $ | – | $ | (0.34 | ) | $ | 15.83 | 7.62 | % | $ | 33,645 | 1.62 | % | 1.61 | % | 1.44 | % | 0.79 | % | 36 | % | ||||||||||||||||||||||||||||
2022 | 21.33 | 0.11 | (5.92 | ) | (5.81 | ) | (0.08 | ) | (0.40 | ) | (0.48 | ) | 15.04 | (27.21 | ) | 33,163 | 1.59 | 1.59 | 1.44 | 0.63 | 31 | |||||||||||||||||||||||||||||||||||||||
2021 | 21.10 | 0.01 | 1.18 | 1.19 | – | (0.96 | ) | (0.96 | ) | 21.33 | 5.78 | 59,258 | 1.54 | 1.54 | 1.44 | 0.05 | 32 | |||||||||||||||||||||||||||||||||||||||||||
2020 | 18.24 | 0.01 | 2.85 | 2.86 | – | – | – | 21.10 | 15.68 | 69,153 | 1.57 | 1.57 | 1.44 | 0.04 | 21 | |||||||||||||||||||||||||||||||||||||||||||||
2019 | 13.61 | 0.10 | 4.57 | 4.67 | (0.04 | ) | – | (0.04 | ) | 18.24 | 34.29 | 71,350 | 1.58 | 1.58 | 1.41 | 0.63 | 40 |
60 | The Royce Funds 2023 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.
Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency | Total from Investment Operations | Distributions from Net Investment Income | Distributions from Net Realized Gain on Investments and Foreign Currency | Total Distributions | Net Asset Value, End of Period | Total Return | Net Assets, End of Period (in thousands) | Ratio of Expenses to Average Net Assets | Ratio of Net Investment Income (Loss) to Average Net Assets | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
Prior to Fee Waivers, Expense Reimbursements and Balance Credits | Prior to Fee Waivers and Expense Reimbursements | Net of Fee Waivers and Expense Reimbursements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Royce International Premier Fund–Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 12.53 | $ | 0.16 | $ | 0.84 | $ | 1.00 | $ | (0.41 | ) | $ | – | $ | (0.41 | ) | $ | 13.12 | 8.05 | % | $ | 214,238 | 1.21 | % | 1.19 | % | 1.04 | % | 1.24 | % | 36 | % | ||||||||||||||||||||||||||||
2022 | 17.82 | 0.14 | (4.95 | ) | (4.81 | ) | (0.15 | ) | (0.33 | ) | (0.48 | ) | 12.53 | (26.92 | ) | 453,793 | 1.20 | 1.19 | 1.04 | 1.03 | 31 | |||||||||||||||||||||||||||||||||||||||
2021 | 17.64 | 0.08 | 0.99 | 1.07 | (0.09 | ) | (0.80 | ) | (0.89 | ) | 17.82 | 6.23 | 704,714 | 1.16 | 1.16 | 1.04 | 0.44 | 32 | ||||||||||||||||||||||||||||||||||||||||||
2020 | 15.25 | 0.06 | 2.39 | 2.45 | (0.06 | ) | – | (0.06 | ) | 17.64 | 16.12 | 567,878 | 1.20 | 1.20 | 1.04 | 0.44 | 21 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 11.39 | (0.03 | ) | 3.98 | 3.95 | (0.09 | ) | – | (0.09 | ) | 15.25 | 34.68 | 366,870 | 1.19 | 1.19 | 1.04 | 0.57 | 40 | ||||||||||||||||||||||||||||||||||||||||||
Royce Micro-Cap Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 9.88 | $ | (0.04 | ) | $ | 1.93 | $ | 1.89 | $ | – | $ | (0.77 | ) | $ | (0.77 | ) | $ | 11.00 | 19.31 | % | $ | 166,477 | 1.25 | % | 1.25 | % | 1.24 | % | (0.42 | )% | 19 | % | |||||||||||||||||||||||||||
2022 | 13.41 | (0.05 | ) | (2.98 | ) | (3.03 | ) | – | (0.50 | ) | (0.50 | ) | 9.88 | (22.55 | ) | 149,934 | 1.25 | 1.24 | 1.24 | (0.50 | ) | 13 | ||||||||||||||||||||||||||||||||||||||
2021 | 12.74 | (0.07 | ) | 3.84 | 3.77 | – | (3.10 | ) | (3.10 | ) | 13.41 | 31.02 | 209,032 | 1.20 | 1.20 | 1.20 | (0.43 | ) | 26 | |||||||||||||||||||||||||||||||||||||||||
2020 | 11.02 | (0.05 | ) | 2.71 | 2.66 | – | (0.94 | ) | (0.94 | ) | 12.74 | 24.50 | 174,339 | 1.29 | 1.29 | 1.24 | (0.46 | ) | 25 | |||||||||||||||||||||||||||||||||||||||||
2019 | 9.35 | (0.05 | ) | 2.02 | 1.97 | – | (0.30 | ) | (0.30 | ) | 11.02 | 21.16 | 158,112 | 1.51 | 1.50 | 1.36 | (0.46 | ) | 21 | |||||||||||||||||||||||||||||||||||||||||
Royce Micro-Cap Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 9.59 | $ | (0.07 | ) | $ | 1.87 | $ | 1.80 | $ | – | $ | (0.74 | ) | $ | (0.74 | ) | $ | 10.65 | 19.03 | % | $ | 134,780 | 1.55 | % | 1.55 | % | 1.49 | % | (0.67 | )% | 19 | % | |||||||||||||||||||||||||||
2022 | 13.05 | (0.08 | ) | (2.89 | ) | (2.97 | ) | – | (0.49 | ) | (0.49 | ) | 9.59 | (22.76 | ) | 132,133 | 1.54 | 1.54 | 1.49 | (0.75 | ) | 13 | ||||||||||||||||||||||||||||||||||||||
2021 | 12.45 | (0.11 | ) | 3.74 | 3.63 | – | (3.03 | ) | (3.03 | ) | 13.05 | 30.64 | 197,089 | 1.51 | 1.51 | 1.49 | (0.73 | ) | 26 | |||||||||||||||||||||||||||||||||||||||||
2020 | 10.79 | (0.07 | ) | 2.65 | 2.58 | – | (0.92 | ) | (0.92 | ) | 12.45 | 24.26 | 168,285 | 1.60 | 1.60 | 1.49 | (0.71 | ) | 25 | |||||||||||||||||||||||||||||||||||||||||
2019 | 9.15 | (0.01 | ) | 1.94 | 1.93 | – | (0.29 | ) | (0.29 | ) | 10.79 | 21.22 | 164,956 | 1.51 | 1.51 | 1.50 | (0.09 | ) | 21 | |||||||||||||||||||||||||||||||||||||||||
Royce Micro-Cap Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 7.29 | $ | (0.11 | ) | $ | 1.41 | $ | 1.30 | $ | – | $ | (0.56 | ) | $ | (0.56 | ) | $ | 8.03 | 18.03 | % | $ | 10,758 | 2.42 | % | 2.42 | % | 2.30 | % | (1.48 | )% | 19 | % | |||||||||||||||||||||||||||
2022 | 10.00 | (0.13 | ) | (2.21 | ) | (2.34 | ) | – | (0.37 | ) | (0.37 | ) | 7.29 | (23.37 | ) | 10,361 | 2.37 | 2.37 | 2.37 | (1.63 | ) | 13 | ||||||||||||||||||||||||||||||||||||||
2021 | 9.62 | (0.18 | ) | 2.89 | 2.71 | – | (2.33 | ) | (2.33 | ) | 10.00 | 29.56 | 15,777 | 2.30 | 2.30 | 2.30 | (1.53 | ) | 26 | |||||||||||||||||||||||||||||||||||||||||
2020 | 8.42 | (0.13 | ) | 2.04 | 1.91 | – | (0.71 | ) | (0.71 | ) | 9.62 | 23.04 | 14,025 | 2.41 | 2.41 | 2.41 | (1.63 | ) | 25 | |||||||||||||||||||||||||||||||||||||||||
2019 | 7.23 | (0.13 | ) | 1.55 | 1.42 | – | (0.23 | ) | (0.23 | ) | 8.42 | 19.72 | 14,204 | 2.59 | 2.59 | 2.58 | (1.69 | ) | 21 | |||||||||||||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 7.61 | $ | 0.02 | $ | 2.00 | $ | 2.02 | $ | (0.04 | ) | $ | (0.41 | ) | $ | (0.45 | ) | $ | 9.18 | 26.66 | % | $ | 1,401,591 | 0.94 | % | 0.94 | % | 0.94 | % | 0.25 | % | 40 | % | |||||||||||||||||||||||||||
2022 | 9.65 | 0.03 | (1.68 | ) | (1.65 | ) | (0.00 | ) | (0.39 | ) | (0.39 | ) | 7.61 | (17.06 | ) | 1,191,941 | 0.94 | 0.94 | 0.94 | 0.31 | 45 | |||||||||||||||||||||||||||||||||||||||
2021 | 10.24 | 0.02 | 2.11 | 2.13 | (0.01 | ) | (2.71 | ) | (2.72 | ) | 9.65 | 22.05 | 1,605,587 | 0.91 | 0.91 | 0.91 | 0.15 | 60 | ||||||||||||||||||||||||||||||||||||||||||
2020 | 9.44 | 0.03 | 1.29 | 1.32 | (0.06 | ) | (0.46 | ) | (0.52 | ) | 10.24 | 14.08 | 1,426,472 | 0.95 | 0.95 | 0.95 | 0.37 | 32 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 7.75 | 0.04 | 2.01 | 2.05 | (0.02 | ) | (0.34 | ) | (0.36 | ) | 9.44 | 26.56 | 1,429,042 | 0.95 | 0.94 | 0.94 | 0.39 | 30 | ||||||||||||||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 7.56 | $ | (0.01 | ) | $ | 1.99 | $ | 1.98 | $ | (0.01 | ) | $ | (0.41 | ) | $ | (0.42 | ) | $ | 9.12 | 26.31 | % | $ | 73,661 | 1.31 | % | 1.31 | % | 1.25 | % | (0.06 | )% | 40 | % | ||||||||||||||||||||||||||
2022 | 9.62 | (0.00 | ) | (1.67 | ) | (1.67 | ) | – | (0.39 | ) | (0.39 | ) | 7.56 | (17.41 | ) | 58,043 | 1.30 | 1.30 | 1.25 | (0.01 | ) | 45 | ||||||||||||||||||||||||||||||||||||||
2021 | 10.23 | (0.02 | ) | 2.11 | 2.09 | – | (2.70 | ) | (2.70 | ) | 9.62 | 21.64 | 84,060 | 1.27 | 1.27 | 1.27 | (0.22 | ) | 60 | |||||||||||||||||||||||||||||||||||||||||
2020 | 9.42 | 0.02 | 1.28 | 1.30 | (0.03 | ) | (0.46 | ) | (0.49 | ) | 10.23 | 13.88 | 78,789 | 1.25 | 1.24 | 1.13 | 0.23 | 32 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 7.77 | (0.00 | ) | 2.00 | 2.00 | (0.01 | ) | (0.34 | ) | (0.35 | ) | 9.42 | 25.75 | 142,864 | 1.31 | 1.30 | 1.30 | (0.01 | ) | 30 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2023 Annual Report to Shareholders | 61 |
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.
Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency | Total from Investment Operations | Distributions from Net Investment Income | Distributions from Net Realized Gain on Investments and Foreign Currency | Total Distributions | Net Asset Value, End of Period | Total Return | Net Assets, End of Period (in thousands) | Ratio of Expenses to Average Net Assets | Ratio of Net Investment Income (Loss) to Average Net Assets | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
Prior to Fee Waivers, Expense Reimbursements and Balance Credits | Prior to Fee Waivers and Expense Reimbursements | Net of Fee Waivers and Expense Reimbursements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 5.88 | $ | (0.05 | ) | $ | 1.54 | $ | 1.49 | $ | – | $ | (0.32 | ) | $ | (0.32 | ) | $ | 7.05 | 25.39 | % | $ | 193,390 | 1.95 | % | 1.94 | % | 1.94 | % | (0.76 | )% | 40 | % | |||||||||||||||||||||||||||
2022 | 7.53 | (0.04 | ) | (1.31 | ) | (1.35 | ) | – | (0.30 | ) | (0.30 | ) | 5.88 | (17.94 | ) | 175,956 | 1.94 | 1.94 | 1.94 | (0.70 | ) | 45 | ||||||||||||||||||||||||||||||||||||||
2021 | 8.07 | (0.08 | ) | 1.66 | 1.58 | – | (2.12 | ) | (2.12 | ) | 7.53 | 20.78 | 249,816 | 1.92 | 1.92 | 1.92 | (0.86 | ) | 60 | |||||||||||||||||||||||||||||||||||||||||
2020 | 7.47 | (0.04 | ) | 1.00 | 0.96 | – | (0.36 | ) | (0.36 | ) | 8.07 | 12.94 | 238,595 | 1.96 | 1.96 | 1.96 | (0.64 | ) | 32 | |||||||||||||||||||||||||||||||||||||||||
2019 | 6.18 | (0.04 | ) | 1.60 | 1.56 | – | (0.27 | ) | (0.27 | ) | 7.47 | 25.25 | 262,007 | 1.96 | 1.95 | 1.95 | (0.62 | ) | 30 | |||||||||||||||||||||||||||||||||||||||||
Royce Pennsylvania Mutual Fund–Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 7.63 | $ | 0.02 | $ | 2.02 | $ | 2.04 | $ | (0.04 | ) | $ | (0.42 | ) | $ | (0.46 | ) | $ | 9.21 | 26.77 | % | $ | 198,338 | 0.91 | % | 0.91 | % | 0.91 | % | 0.29 | % | 40 | % | |||||||||||||||||||||||||||
2022 | 9.68 | 0.03 | (1.68 | ) | (1.65 | ) | (0.01 | ) | (0.39 | ) | (0.40 | ) | 7.63 | (17.07 | ) | 133,606 | 0.90 | 0.90 | 0.90 | 0.33 | 45 | |||||||||||||||||||||||||||||||||||||||
2021 | 10.27 | 0.03 | 2.12 | 2.15 | (0.01 | ) | (2.73 | ) | (2.74 | ) | 9.68 | 22.10 | 199,842 | 0.86 | 0.86 | 0.86 | 0.21 | 60 | ||||||||||||||||||||||||||||||||||||||||||
2020 | 9.47 | 0.04 | 1.28 | 1.32 | (0.06 | ) | (0.46 | ) | (0.52 | ) | 10.27 | 14.10 | 163,944 | 0.89 | 0.89 | 0.89 | 0.42 | 32 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 7.78 | 0.04 | 2.02 | 2.06 | (0.03 | ) | (0.34 | ) | (0.37 | ) | 9.47 | 26.53 | 106,564 | 0.89 | 0.89 | 0.89 | 0.45 | 30 | ||||||||||||||||||||||||||||||||||||||||||
Royce Premier Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 10.06 | $ | 0.01 | $ | 2.24 | $ | 2.25 | $ | (0.00 | ) | $ | (0.79 | ) | $ | (0.79 | ) | $ | 11.52 | 22.53 | % | $ | 1,140,122 | 1.19 | % | 1.19 | % | 1.19 | % | 0.10 | % | 15 | % | |||||||||||||||||||||||||||
2022 | 12.97 | (0.00 | ) | (2.00 | ) | (2.00 | ) | – | (0.91 | ) | (0.91 | ) | 10.06 | (15.46 | ) | 1,001,894 | 1.18 | 1.18 | 1.18 | (0.02 | ) | 23 | ||||||||||||||||||||||||||||||||||||||
2021 | 13.59 | (0.03 | ) | 2.16 | 2.13 | (0.01 | ) | (2.74 | ) | (2.75 | ) | 12.97 | 16.36 | 1,401,347 | 1.17 | 1.17 | 1.17 | (0.19 | ) | 20 | ||||||||||||||||||||||||||||||||||||||||
2020 | 12.88 | 0.05 | 1.41 | 1.46 | (0.12 | ) | (0.63 | ) | (0.75 | ) | 13.59 | 11.50 | 1,414,718 | 1.21 | 1.21 | 1.21 | 0.41 | 23 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 11.62 | 0.05 | 3.87 | 3.92 | (0.05 | ) | (2.61 | ) | (2.66 | ) | 12.88 | 34.13 | 1,505,821 | 1.20 | 1.19 | 1.19 | 0.32 | 19 | ||||||||||||||||||||||||||||||||||||||||||
Royce Premier Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 9.72 | $ | (0.02 | ) | $ | 2.17 | $ | 2.15 | $ | – | $ | (0.76 | ) | $ | (0.76 | ) | $ | 11.11 | 22.24 | % | $ | 34,923 | 1.63 | % | 1.62 | % | 1.49 | % | (0.19 | )% | 15 | % | |||||||||||||||||||||||||||
2022 | 12.58 | (0.04 | ) | (1.95 | ) | (1.99 | ) | – | (0.87 | ) | (0.87 | ) | 9.72 | (15.79 | ) | 24,968 | 1.59 | 1.59 | 1.49 | (0.33 | ) | 23 | ||||||||||||||||||||||||||||||||||||||
2021 | 13.22 | (0.07 | ) | 2.09 | 2.02 | – | (2.66 | ) | (2.66 | ) | 12.58 | 15.98 | 36,488 | 1.56 | 1.56 | 1.49 | (0.50 | ) | 20 | |||||||||||||||||||||||||||||||||||||||||
2020 | 12.54 | 0.01 | 1.37 | 1.38 | (0.09 | ) | (0.61 | ) | (0.70 | ) | 13.22 | 11.16 | 29,588 | 1.57 | 1.57 | 1.49 | 0.12 | 23 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 11.31 | (0.01 | ) | 3.78 | 3.77 | – | (2.54 | ) | (2.54 | ) | 12.54 | 33.65 | 29,696 | 1.57 | 1.57 | 1.46 | (0.06 | ) | 19 | |||||||||||||||||||||||||||||||||||||||||
Royce Premier Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 7.67 | $ | (0.08 | ) | $ | 1.69 | $ | 1.61 | $ | – | $ | (0.59 | ) | $ | (0.59 | ) | $ | 8.69 | 21.16 | % | $ | 11,782 | 2.36 | % | 2.36 | % | 2.28 | % | (0.99 | )% | 15 | % | |||||||||||||||||||||||||||
2022 | 10.00 | (0.10 | ) | (1.53 | ) | (1.63 | ) | – | (0.70 | ) | (0.70 | ) | 7.67 | (16.36 | ) | 11,265 | 2.33 | 2.33 | 2.33 | (1.17 | ) | 23 | ||||||||||||||||||||||||||||||||||||||
2021 | 10.60 | (0.15 | ) | 1.67 | 1.52 | – | (2.12 | ) | (2.12 | ) | 10.00 | 15.01 | 16,016 | 2.29 | 2.29 | 2.29 | (1.30 | ) | 20 | |||||||||||||||||||||||||||||||||||||||||
2020 | 10.09 | (0.07 | ) | 1.09 | 1.02 | (0.02 | ) | (0.49 | ) | (0.51 | ) | 10.60 | 10.19 | 15,686 | 2.34 | 2.34 | 2.34 | (0.72 | ) | 23 | ||||||||||||||||||||||||||||||||||||||||
2019 | 9.17 | (0.10 | ) | 3.05 | 2.95 | – | (2.03 | ) | (2.03 | ) | 10.09 | 32.55 | 17,585 | 2.26 | 2.26 | 2.26 | (0.91 | ) | 19 | |||||||||||||||||||||||||||||||||||||||||
Royce Premier Fund–Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 10.22 | $ | 0.02 | $ | 2.28 | $ | 2.30 | $ | (0.01 | ) | $ | (0.80 | ) | $ | (0.81 | ) | $ | 11.71 | 22.64 | % | $ | 256,228 | 1.12 | % | 1.12 | % | 1.12 | % | 0.17 | % | 15 | % | |||||||||||||||||||||||||||
2022 | 13.16 | 0.01 | (2.03 | ) | (2.02 | ) | – | (0.92 | ) | (0.92 | ) | 10.22 | (15.37 | ) | 206,916 | 1.11 | 1.11 | 1.11 | 0.05 | 23 | ||||||||||||||||||||||||||||||||||||||||
2021 | 13.80 | (0.02 | ) | 2.19 | 2.17 | (0.02 | ) | (2.79 | ) | (2.81 | ) | 13.16 | 16.39 | 273,853 | 1.09 | 1.09 | 1.09 | (0.11 | ) | 20 | ||||||||||||||||||||||||||||||||||||||||
2020 | 13.08 | 0.05 | 1.44 | 1.49 | (0.13 | ) | (0.64 | ) | (0.77 | ) | 13.80 | 11.53 | 266,587 | 1.15 | 1.15 | 1.15 | 0.44 | 23 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 11.79 | 0.05 | 3.94 | 3.99 | (0.05 | ) | (2.65 | ) | (2.70 | ) | 13.08 | 34.23 | 244,343 | 1.15 | 1.15 | 1.15 | 0.33 | 19 |
62 | The Royce Funds 2023 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.
Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency | Total from Investment Operations | Distributions from Net Investment Income | Distributions from Net Realized Gain on Investments and Foreign Currency | Total Distributions | Net Asset Value, End of Period | Total Return | Net Assets, End of Period (in thousands) | Ratio of Expenses to Average Net Assets | Ratio of Net Investment Income (Loss) to Average Net Assets | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
Prior to Fee Waivers, Expense Reimbursements and Balance Credits | Prior to Fee Waivers and Expense Reimbursements | Net of Fee Waivers and Expense Reimbursements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Opportunity Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 13.22 | $ | (0.00 | ) | $ | 2.57 | $ | 2.57 | $ | – | $ | (0.68 | ) | $ | (0.68 | ) | $ | 15.11 | 19.58 | % | $ | 890,662 | 1.23 | % | 1.23 | % | 1.23 | % | (0.02 | )% | 35 | % | |||||||||||||||||||||||||||
2022 | 16.76 | 0.00 | (2.86 | ) | (2.86 | ) | – | (0.68 | ) | (0.68 | ) | 13.22 | (17.08 | ) | 911,802 | 1.23 | 1.23 | 1.23 | 0.03 | 35 | ||||||||||||||||||||||||||||||||||||||||
2021 | 15.84 | (0.06 | ) | 4.75 | 4.69 | – | (3.77 | ) | (3.77 | ) | 16.76 | 30.85 | 1,332,050 | 1.21 | 1.21 | 1.21 | (0.30 | ) | 69 | |||||||||||||||||||||||||||||||||||||||||
2020 | 12.52 | (0.03 | ) | 3.35 | 3.32 | – | – | – | 15.84 | 26.52 | 786,849 | 1.24 | 1.23 | 1.23 | (0.28 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 9.92 | (0.06 | ) | 2.86 | 2.80 | – | (0.20 | ) | (0.20 | ) | 12.52 | 28.21 | 609,316 | 1.23 | 1.22 | 1.22 | (0.50 | ) | 47 | |||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Opportunity Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 12.07 | $ | (0.04 | ) | $ | 2.35 | $ | 2.31 | $ | – | $ | (0.62 | ) | $ | (0.62 | ) | $ | 13.76 | 19.26 | % | $ | 75,831 | 1.54 | % | 1.54 | % | 1.49 | % | (0.27 | )% | 35 | % | |||||||||||||||||||||||||||
2022 | 15.34 | (0.03 | ) | (2.62 | ) | (2.65 | ) | – | (0.62 | ) | (0.62 | ) | 12.07 | (17.28 | ) | 68,292 | 1.54 | 1.54 | 1.49 | (0.23 | ) | 35 | ||||||||||||||||||||||||||||||||||||||
2021 | 14.66 | (0.11 | ) | 4.39 | 4.28 | – | (3.60 | ) | (3.60 | ) | 15.34 | 30.43 | 109,440 | 1.50 | 1.50 | 1.49 | (0.61 | ) | 69 | |||||||||||||||||||||||||||||||||||||||||
2020 | 11.61 | (0.06 | ) | 3.11 | 3.05 | – | – | – | 14.66 | 26.27 | 131,725 | 1.54 | 1.54 | 1.49 | (0.54 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 9.23 | (0.09 | ) | 2.65 | 2.56 | – | (0.18 | ) | (0.18 | ) | 11.61 | 27.79 | 46,032 | 1.55 | 1.55 | 1.49 | (0.77 | ) | 47 | |||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Opportunity Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 10.33 | $ | (0.12 | ) | $ | 2.01 | $ | 1.89 | $ | – | $ | (0.53 | ) | $ | (0.53 | ) | $ | 11.69 | 18.39 | % | $ | 12,898 | 2.34 | % | 2.34 | % | 2.27 | % | (1.06 | )% | 35 | % | |||||||||||||||||||||||||||
2022 | 13.24 | (0.12 | ) | (2.26 | ) | (2.38 | ) | – | (0.53 | ) | (0.53 | ) | 10.33 | (17.98 | ) | 11,396 | 2.35 | 2.35 | 2.35 | (1.07 | ) | 35 | ||||||||||||||||||||||||||||||||||||||
2021 | 12.61 | (0.21 | ) | 3.78 | 3.57 | – | (2.94 | ) | (2.94 | ) | 13.24 | 29.46 | 14,871 | 2.26 | 2.26 | 2.26 | (1.35 | ) | 69 | |||||||||||||||||||||||||||||||||||||||||
2020 | 10.09 | (0.14 | ) | 2.66 | 2.52 | – | – | – | 12.61 | 24.98 | 13,477 | 2.45 | 2.45 | 2.45 | (1.50 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 8.09 | (0.16 | ) | 2.32 | 2.16 | – | (0.16 | ) | (0.16 | ) | 10.09 | 26.70 | 8,621 | 2.41 | 2.41 | 2.41 | (1.67 | ) | 47 | |||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Opportunity Fund–Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 13.59 | $ | 0.01 | $ | 2.65 | $ | 2.66 | $ | (0.02 | ) | $ | (0.71 | ) | $ | (0.73 | ) | $ | 15.52 | 19.65 | % | $ | 262,010 | 1.12 | % | 1.12 | % | 1.12 | % | 0.10 | % | 35 | % | |||||||||||||||||||||||||||
2022 | 17.21 | 0.02 | (2.94 | ) | (2.92 | ) | – | (0.70 | ) | (0.70 | ) | 13.59 | (16.94 | ) | 214,424 | 1.12 | 1.12 | 1.12 | 0.15 | 35 | ||||||||||||||||||||||||||||||||||||||||
2021 | 16.22 | (0.03 | ) | 4.84 | 4.81 | – | (3.82 | ) | (3.82 | ) | 17.21 | 30.89 | 291,961 | 1.08 | 1.08 | 1.08 | (0.18 | ) | 69 | |||||||||||||||||||||||||||||||||||||||||
2020 | 12.80 | (0.02 | ) | 3.44 | 3.42 | – | – | – | 16.22 | 26.72 | 340,877 | 1.12 | 1.12 | 1.12 | (0.17 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 10.13 | (0.05 | ) | 2.92 | 2.87 | – | (0.20 | ) | (0.20 | ) | 12.80 | 28.36 | 230,439 | 1.12 | 1.12 | 1.12 | (0.39 | ) | 47 | |||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Opportunity Fund–R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 11.61 | $ | (0.08 | ) | $ | 2.25 | $ | 2.17 | $ | – | $ | (0.60 | ) | $ | (0.60 | ) | $ | 13.18 | 18.76 | % | $ | 45,422 | 1.85 | % | 1.85 | % | 1.85 | % | (0.63 | )% | 35 | % | |||||||||||||||||||||||||||
2022 | 14.80 | (0.07 | ) | (2.53 | ) | (2.60 | ) | – | (0.59 | ) | (0.59 | ) | 11.61 | (17.54 | ) | 38,971 | 1.85 | 1.85 | 1.85 | (0.57 | ) | 35 | ||||||||||||||||||||||||||||||||||||||
2021 | 14.03 | (0.16 | ) | 4.20 | 4.04 | – | (3.27 | ) | (3.27 | ) | 14.80 | 30.01 | 51,537 | 1.81 | 1.81 | 1.81 | (0.90 | ) | 69 | |||||||||||||||||||||||||||||||||||||||||
2020 | 11.16 | (0.09 | ) | 2.96 | 2.87 | – | – | – | 14.03 | 25.72 | 36,065 | 1.88 | 1.87 | 1.87 | (0.93 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 8.90 | (0.12 | ) | 2.55 | 2.43 | – | (0.17 | ) | (0.17 | ) | 11.16 | 27.38 | 31,230 | 1.86 | 1.85 | 1.85 | (1.13 | ) | 47 | |||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Special Equity Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 15.92 | $ | 0.24 | $ | 1.80 | $ | 2.04 | $ | (0.25 | ) | $ | (0.66 | ) | $ | (0.91 | ) | $ | 17.05 | 12.83 | % | $ | 605,345 | 1.22 | % | 1.22 | % | 1.22 | % | 1.45 | % | 14 | % | |||||||||||||||||||||||||||
2022 | 19.09 | 0.18 | (1.39 | ) | (1.21 | ) | (0.19 | ) | (1.77 | ) | (1.96 | ) | 15.92 | (6.33 | ) | 587,346 | 1.21 | 1.21 | 1.21 | 1.01 | 23 | |||||||||||||||||||||||||||||||||||||||
2021 | 18.22 | 0.17 | 3.86 | 4.03 | (0.20 | ) | (2.96 | ) | (3.16 | ) | 19.09 | 22.50 | 755,338 | 1.20 | 1.20 | 1.20 | 0.82 | 42 | ||||||||||||||||||||||||||||||||||||||||||
2020 | 17.59 | 0.27 | 1.03 | 1.30 | (0.26 | ) | (0.41 | ) | (0.67 | ) | 18.22 | 7.43 | 702,556 | 1.23 | 1.23 | 1.23 | 1.68 | 39 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 17.43 | 0.21 | 1.98 | 2.19 | (0.21 | ) | (1.82 | ) | (2.03 | ) | 17.59 | 12.63 | 819,015 | 1.21 | 1.21 | 1.21 | 0.99 | 20 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2023 Annual Report to Shareholders | 63 |
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.
Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency | Total from Investment Operations | Distributions from Net Investment Income | Distributions from Net Realized Gain on Investments and Foreign Currency | Total Distributions | Net Asset Value, End of Period | Total Return | Net Assets, End of Period (in thousands) | Ratio of Expenses to Average Net Assets | Ratio of Net Investment Income (Loss) to Average Net Assets | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
Prior to Fee Waivers, Expense Reimbursements and Balance Credits | Prior to Fee Waivers and Expense Reimbursements | Net of Fee Waivers and Expense Reimbursements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Special Equity Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 15.92 | $ | 0.19 | $ | 1.79 | $ | 1.98 | $ | (0.20 | ) | $ | (0.65 | ) | $ | (0.85 | ) | $ | 17.05 | 12.50 | % | $ | 32,297 | 1.58 | % | 1.57 | % | 1.49 | % | 1.16 | % | 14 | % | |||||||||||||||||||||||||||
2022 | 19.06 | 0.12 | (1.37 | ) | (1.25 | ) | (0.13 | ) | (1.76 | ) | (1.89 | ) | 15.92 | (6.56 | ) | 34,729 | 1.57 | 1.57 | 1.49 | 0.70 | 23 | |||||||||||||||||||||||||||||||||||||||
2021 | 18.19 | 0.12 | 3.85 | 3.97 | (0.16 | ) | (2.94 | ) | (3.10 | ) | 19.06 | 22.19 | 57,738 | 1.54 | 1.54 | 1.46 | 0.57 | 42 | ||||||||||||||||||||||||||||||||||||||||||
2020 | 17.56 | 0.24 | 1.04 | 1.28 | (0.24 | ) | (0.41 | ) | (0.65 | ) | 18.19 | 7.29 | 46,671 | 1.60 | 1.60 | 1.39 | 1.49 | 39 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 17.41 | 0.16 | 1.99 | 2.15 | (0.17 | ) | (1.83 | ) | (2.00 | ) | 17.56 | 12.40 | 60,070 | 1.58 | 1.58 | 1.39 | 0.80 | 20 | ||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Special Equity Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 14.49 | $ | 0.05 | $ | 1.63 | $ | 1.68 | $ | (0.09 | ) | $ | (0.59 | ) | $ | (0.68 | ) | $ | 15.49 | 11.64 | % | $ | 15,317 | 2.36 | % | 2.35 | % | 2.31 | % | 0.35 | % | 14 | % | |||||||||||||||||||||||||||
2022 | 17.37 | (0.04 | ) | (1.25 | ) | (1.29 | ) | – | (1.59 | ) | (1.59 | ) | 14.49 | (7.43 | ) | 15,189 | 2.40 | 2.40 | 2.40 | (0.23 | ) | 23 | ||||||||||||||||||||||||||||||||||||||
2021 | 16.60 | (0.05 | ) | 3.50 | 3.45 | (0.01 | ) | (2.67 | ) | (2.68 | ) | 17.37 | 21.16 | 25,068 | 2.31 | 2.31 | 2.31 | (0.29 | ) | 42 | ||||||||||||||||||||||||||||||||||||||||
2020 | 16.05 | 0.09 | 0.92 | 1.01 | (0.09 | ) | (0.37 | ) | (0.46 | ) | 16.60 | 6.27 | 18,852 | 2.31 | 2.31 | 2.31 | 0.59 | 39 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 15.90 | (0.02 | ) | 1.82 | 1.80 | (0.00 | ) | (1.65 | ) | (1.65 | ) | 16.05 | 11.38 | 24,793 | 2.25 | 2.25 | 2.25 | (0.12 | ) | 20 | ||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Special Equity Fund–Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 15.77 | $ | 0.25 | $ | 1.79 | $ | 2.04 | $ | (0.27 | ) | $ | (0.65 | ) | $ | (0.92 | ) | $ | 16.89 | 12.95 | % | $ | 130,917 | 1.14 | % | 1.14 | % | 1.14 | % | 1.55 | % | 14 | % | |||||||||||||||||||||||||||
2022 | 18.92 | 0.19 | (1.37 | ) | (1.18 | ) | (0.21 | ) | (1.76 | ) | (1.97 | ) | 15.77 | (6.27 | ) | 116,301 | 1.12 | 1.12 | 1.12 | 1.08 | 23 | |||||||||||||||||||||||||||||||||||||||
2021 | 18.06 | 0.19 | 3.82 | 4.01 | (0.22 | ) | (2.93 | ) | (3.15 | ) | 18.92 | 22.63 | 238,810 | 1.11 | 1.11 | 1.11 | 0.92 | 42 | ||||||||||||||||||||||||||||||||||||||||||
2020 | 17.43 | 0.30 | 1.01 | 1.31 | (0.28 | ) | (0.40 | ) | (0.68 | ) | 18.06 | 7.52 | 194,911 | 1.15 | 1.15 | 1.15 | 1.84 | 39 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 17.28 | 0.22 | 1.96 | 2.18 | (0.22 | ) | (1.81 | ) | (2.03 | ) | 17.43 | 12.65 | 187,785 | 1.14 | 1.14 | 1.14 | 1.04 | 20 | ||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Total Return Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 6.56 | $ | 0.06 | 1 | $ | 1.50 | $ | 1.56 | $ | (0.25 | ) | $ | (0.47 | ) | $ | (0.72 | ) | $ | 7.40 | 24.07 | % | $ | 642,546 | 1.22 | % | 1.22 | % | 1.22 | % | 0.86 | %1 | 65 | % | ||||||||||||||||||||||||||
2022 | 8.78 | 0.08 | (1.25 | ) | (1.17 | ) | (0.11 | ) | (0.94 | ) | (1.05 | ) | 6.56 | (13.25 | ) | 591,730 | 1.22 | 1.22 | 1.22 | 0.97 | 62 | |||||||||||||||||||||||||||||||||||||||
2021 | 9.34 | 0.12 | 2.21 | 2.33 | (0.13 | ) | (2.76 | ) | (2.89 | ) | 8.78 | 25.78 | 1,016,331 | 1.20 | 1.20 | 1.20 | 1.09 | 64 | ||||||||||||||||||||||||||||||||||||||||||
2020 | 10.93 | 0.17 | 0.19 | 0.36 | (0.21 | ) | (1.74 | ) | (1.95 | ) | 9.34 | 3.82 | 893,868 | 1.24 | 1.24 | 1.24 | 1.88 | 61 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 9.71 | 0.16 | 2.10 | 2.26 | (0.15 | ) | (0.89 | ) | (1.04 | ) | 10.93 | 23.45 | 1,026,074 | 1.21 | 1.21 | 1.21 | 1.42 | 21 | ||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Total Return Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 6.80 | $ | 0.04 | 1 | $ | 1.57 | $ | 1.61 | $ | (0.23 | ) | $ | (0.48 | ) | $ | (0.71 | ) | $ | 7.70 | 23.85 | % | $ | 58,424 | 1.58 | % | 1.58 | % | 1.49 | % | 0.58 | %1 | 65 | % | ||||||||||||||||||||||||||
2022 | 9.08 | 0.06 | (1.30 | ) | (1.24 | ) | (0.07 | ) | (0.97 | ) | (1.04 | ) | 6.80 | (13.54 | ) | 58,571 | 1.57 | 1.57 | 1.49 | 0.74 | 62 | |||||||||||||||||||||||||||||||||||||||
2021 | 9.62 | 0.09 | 2.28 | 2.37 | (0.07 | ) | (2.84 | ) | (2.91 | ) | 9.08 | 25.54 | 80,478 | 1.52 | 1.52 | 1.49 | 0.78 | 64 | ||||||||||||||||||||||||||||||||||||||||||
2020 | 11.27 | 0.16 | 0.18 | 0.34 | (0.19 | ) | (1.80 | ) | (1.99 | ) | 9.62 | 3.51 | 69,634 | 1.55 | 1.55 | 1.49 | 1.64 | 61 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 9.97 | 0.13 | 2.16 | 2.29 | (0.08 | ) | (0.91 | ) | (0.99 | ) | 11.27 | 23.08 | 77,177 | 1.52 | 1.52 | 1.49 | 1.13 | 21 | ||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Total Return Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 6.89 | $ | (0.01 | )1 | $ | 1.58 | $ | 1.57 | $ | (0.14 | ) | $ | (0.49 | ) | $ | (0.63 | ) | $ | 7.83 | 22.91 | % | $ | 85,488 | 2.25 | % | 2.24 | % | 2.24 | % | (0.17 | )%1 | 65 | % | ||||||||||||||||||||||||||
2022 | 9.18 | 0.00 | (1.31 | ) | (1.31 | ) | – | (0.98 | ) | (0.98 | ) | 6.89 | (14.15 | ) | 84,448 | 2.23 | 2.23 | 2.23 | 0.01 | 62 | ||||||||||||||||||||||||||||||||||||||||
2021 | 9.75 | 0.01 | 2.31 | 2.32 | (0.01 | ) | (2.88 | ) | (2.89 | ) | 9.18 | 24.63 | 112,649 | 2.18 | 2.18 | 2.18 | 0.09 | 64 | ||||||||||||||||||||||||||||||||||||||||||
2020 | 11.31 | 0.09 | 0.18 | 0.27 | (0.03 | ) | (1.80 | ) | (1.83 | ) | 9.75 | 2.76 | 110,179 | 2.22 | 2.22 | 2.22 | 0.88 | 61 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 10.02 | 0.05 | 2.17 | 2.22 | (0.02 | ) | (0.91 | ) | (0.93 | ) | 11.31 | 22.18 | 150,175 | 2.20 | 2.20 | 2.20 | 0.43 | 21 |
64 | The Royce Funds 2023 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.
Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency | Total from Investment Operations | Distributions from Net Investment Income | Distributions from Net Realized Gain on Investments and Foreign Currency | Total Distributions | Net Asset Value, End of Period | Total Return | Net Assets, End of Period (in thousands) | Ratio of Expenses to Average Net Assets | Ratio of Net Investment Income (Loss) to Average Net Assets | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
Prior to Fee Waivers, Expense Reimbursements and Balance Credits | Prior to Fee Waivers and Expense Reimbursements | Net of Fee Waivers and Expense Reimbursements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Total Return Fund–Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 6.43 | $ | 0.07 | 1 | $ | 1.46 | $ | 1.53 | $ | (0.27 | ) | $ | (0.45 | ) | $ | (0.72 | ) | $ | 7.24 | 24.12 | % | $ | 212,581 | 1.13 | % | 1.13 | % | 1.13 | % | 0.95 | %1 | 65 | % | ||||||||||||||||||||||||||
2022 | 8.61 | 0.08 | (1.22 | ) | (1.14 | ) | (0.12 | ) | (0.92 | ) | (1.04 | ) | 6.43 | (13.13 | ) | 181,476 | 1.14 | 1.14 | 1.14 | 1.07 | 62 | |||||||||||||||||||||||||||||||||||||||
2021 | 9.17 | 0.13 | 2.17 | 2.30 | (0.14 | ) | (2.72 | ) | (2.86 | ) | 8.61 | 25.91 | 279,510 | 1.10 | 1.10 | 1.10 | 1.19 | 64 | ||||||||||||||||||||||||||||||||||||||||||
2020 | 10.77 | 0.18 | 0.18 | 0.36 | (0.24 | ) | (1.72 | ) | (1.96 | ) | 9.17 | 3.87 | 208,605 | 1.13 | 1.13 | 1.13 | 1.98 | 61 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 9.58 | 0.17 | 2.07 | 2.24 | (0.18 | ) | (0.87 | ) | (1.05 | ) | 10.77 | 23.59 | 232,479 | 1.13 | 1.13 | 1.13 | 1.49 | 21 | ||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Total Return Fund–R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 6.92 | $ | 0.01 | 1 | $ | 1.59 | $ | 1.60 | $ | (0.18 | ) | $ | (0.49 | ) | $ | (0.67 | ) | $ | 7.85 | 23.28 | % | $ | 22,322 | 1.91 | % | 1.91 | % | 1.91 | % | 0.17 | %1 | 65 | % | ||||||||||||||||||||||||||
2022 | 9.20 | 0.03 | (1.32 | ) | (1.29 | ) | (0.01 | ) | (0.98 | ) | (0.99 | ) | 6.92 | (13.87 | ) | 20,180 | 1.91 | 1.91 | 1.91 | 0.32 | 62 | |||||||||||||||||||||||||||||||||||||||
2021 | 9.76 | 0.05 | 2.31 | 2.36 | (0.04 | ) | (2.88 | ) | (2.92 | ) | 9.20 | 25.01 | 27,040 | 1.85 | 1.85 | 1.85 | 0.42 | 64 | ||||||||||||||||||||||||||||||||||||||||||
2020 | 11.38 | 0.12 | 0.18 | 0.30 | (0.12 | ) | (1.80 | ) | (1.92 | ) | 9.76 | 3.08 | 30,027 | 1.89 | 1.88 | 1.88 | 1.23 | 61 | ||||||||||||||||||||||||||||||||||||||||||
2019 | 10.06 | 0.09 | 2.18 | 2.27 | (0.03 | ) | (0.92 | ) | (0.95 | ) | 11.38 | 22.66 | 36,345 | 1.85 | 1.84 | 1.84 | 0.76 | 21 | ||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Value Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 8.85 | $ | 0.11 | $ | 2.21 | $ | 2.32 | $ | (0.12 | ) | $ | (0.75 | ) | $ | (0.87 | ) | $ | 10.30 | 26.39 | % | $ | 37,440 | 1.36 | % | 1.35 | % | 1.24 | % | 1.15 | % | 48 | % | |||||||||||||||||||||||||||
2022 | 10.43 | 0.07 | (1.09 | ) | (1.02 | ) | (0.05 | ) | (0.51 | ) | (0.56 | ) | 8.85 | (9.87 | ) | 35,545 | 1.35 | 1.35 | 1.24 | 0.76 | 62 | |||||||||||||||||||||||||||||||||||||||
2021 | 8.61 | 0.02 | 2.41 | 2.43 | (0.01 | ) | (0.60 | ) | (0.61 | ) | 10.43 | 28.48 | 44,621 | 1.31 | 1.31 | 1.24 | 0.20 | 53 | ||||||||||||||||||||||||||||||||||||||||||
2020 | 9.57 | 0.06 | (0.66 | ) | (0.60 | ) | (0.17 | ) | (0.19 | ) | (0.36 | ) | 8.61 | (6.25 | ) | 34,523 | 1.39 | 1.39 | 1.24 | 0.76 | 61 | |||||||||||||||||||||||||||||||||||||||
2019 | 8.35 | 0.09 | 1.46 | 1.55 | (0.08 | ) | (0.25 | ) | (0.33 | ) | 9.57 | 18.60 | 53,234 | 1.30 | 1.30 | 1.24 | 0.84 | 64 | ||||||||||||||||||||||||||||||||||||||||||
Royce Small-Cap Value Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 8.81 | $ | 0.09 | $ | 2.18 | $ | 2.27 | $ | (0.10 | ) | $ | (0.74 | ) | $ | (0.84 | ) | $ | 10.24 | 25.96 | % | $ | 99,077 | 1.62 | % | 1.62 | % | 1.49 | % | 0.92 | % | 48 | % | |||||||||||||||||||||||||||
2022 | 10.38 | 0.05 | (1.09 | ) | (1.04 | ) | (0.03 | ) | (0.50 | ) | (0.53 | ) | 8.81 | (10.06 | ) | 68,455 | 1.59 | 1.59 | 1.49 | 0.52 | 62 | |||||||||||||||||||||||||||||||||||||||
2021 | 8.58 | (0.01 | ) | 2.41 | 2.40 | – | (0.60 | ) | (0.60 | ) | 10.38 | 28.24 | 81,840 | 1.55 | 1.55 | 1.49 | (0.06 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||
2020 | 9.54 | 0.04 | (0.66 | ) | (0.62 | ) | (0.15 | ) | (0.19 | ) | (0.34 | ) | 8.58 | (6.47 | ) | 75,502 | 1.62 | 1.62 | 1.49 | 0.50 | 61 | |||||||||||||||||||||||||||||||||||||||
2019 | 8.33 | 0.07 | 1.44 | 1.51 | (0.05 | ) | (0.25 | ) | (0.30 | ) | 9.54 | 18.21 | 102,465 | 1.56 | 1.55 | 1.49 | 0.65 | 64 | ||||||||||||||||||||||||||||||||||||||||||
Royce Smaller-Companies Growth Fund–Investment Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 5.69 | $ | (0.04 | ) | $ | 1.01 | $ | 0.97 | $ | – | $ | – | $ | – | $ | 6.66 | 17.05 | % | $ | 63,279 | 1.27 | % | 1.27 | % | 1.24 | % | (0.68 | )% | 65 | % | |||||||||||||||||||||||||||||
2022 | 8.74 | (0.06 | ) | (2.74 | ) | (2.80 | ) | – | (0.25 | ) | (0.25 | ) | 5.69 | (32.07 | ) | 61,107 | 1.26 | 1.26 | 1.24 | (0.97 | ) | 66 | ||||||||||||||||||||||||||||||||||||||
2021 | 11.06 | (0.11 | ) | 0.83 | 0.72 | – | (3.04 | ) | (3.04 | ) | 8.74 | 8.09 | 106,318 | 1.19 | 1.19 | 1.19 | (0.91 | ) | 50 | |||||||||||||||||||||||||||||||||||||||||
2020 | 8.21 | (0.07 | ) | 4.06 | 3.99 | – | (1.14 | ) | (1.14 | ) | 11.06 | 49.61 | 112,668 | 1.25 | 1.25 | 1.24 | (0.86 | ) | 61 | |||||||||||||||||||||||||||||||||||||||||
2019 | 6.86 | (0.05 | ) | 1.68 | 1.63 | – | (0.28 | ) | (0.28 | ) | 8.21 | 23.92 | 91,670 | 1.25 | 1.24 | 1.24 | (0.69 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||
Royce Smaller-Companies Growth Fund–Service Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 5.48 | $ | (0.06 | ) | $ | 0.99 | $ | 0.93 | $ | – | $ | – | $ | – | $ | 6.41 | 16.97 | % | $ | 112,078 | 1.57 | % | 1.57 | % | 1.49 | % | (0.93 | )% | 65 | % | |||||||||||||||||||||||||||||
2022 | 8.45 | (0.08 | ) | (2.65 | ) | (2.73 | ) | – | (0.24 | ) | (0.24 | ) | 5.48 | (32.37 | ) | 105,585 | 1.55 | 1.55 | 1.49 | (1.22 | ) | 66 | ||||||||||||||||||||||||||||||||||||||
2021 | 10.74 | (0.15 | ) | 0.82 | 0.67 | – | (2.96 | ) | (2.96 | ) | 8.45 | 7.78 | 178,553 | 1.51 | 1.51 | 1.49 | (1.21 | ) | 50 | |||||||||||||||||||||||||||||||||||||||||
2020 | 7.99 | (0.09 | ) | 3.95 | 3.86 | – | (1.11 | ) | (1.11 | ) | 10.74 | 49.26 | 181,591 | 1.54 | 1.54 | 1.49 | (1.11 | ) | 61 | |||||||||||||||||||||||||||||||||||||||||
2019 | 6.69 | (0.07 | ) | 1.65 | 1.58 | – | (0.28 | ) | (0.28 | ) | 7.99 | 23.67 | 154,236 | 1.55 | 1.54 | 1.49 | (0.93 | ) | 53 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | The Royce Funds 2023 Annual Report to Shareholders | 65 |
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.
Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency | Total from Investment Operations | Distributions from Net Investment Income | Distributions from Net Realized Gain on Investments and Foreign Currency | Total Distributions | Net Asset Value, End of Period | Total Return | Net Assets, End of Period (in thousands) | Ratio of Expenses to Average Net Assets | Ratio of Net Investment Income (Loss) to Average Net Assets | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
Prior to Fee Waivers, Expense Reimbursements and Balance Credits | Prior to Fee Waivers and Expense Reimbursements | Net of Fee Waivers and Expense Reimbursements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Royce Smaller-Companies Growth Fund–Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 5.77 | $ | (0.04 | ) | $ | 1.04 | $ | 1.00 | $ | – | $ | – | $ | – | $ | 6.77 | 17.33 | % | $ | 5,231 | 1.54 | % | 1.53 | % | 1.21 | % | (0.65 | )% | 65 | % | |||||||||||||||||||||||||||||
2022 | 8.87 | (0.06 | ) | (2.79 | ) | (2.85 | ) | – | (0.25 | ) | (0.25 | ) | 5.77 | (32.17 | ) | 4,400 | 1.53 | 1.53 | 1.16 | (0.89 | ) | 66 | ||||||||||||||||||||||||||||||||||||||
2021 | 11.23 | (0.11 | ) | 0.85 | 0.74 | – | (3.10 | ) | (3.10 | ) | 8.87 | 8.16 | 7,278 | 1.41 | 1.41 | 1.16 | (0.88 | ) | 50 | |||||||||||||||||||||||||||||||||||||||||
2020 | 8.33 | (0.07 | ) | 4.13 | 4.06 | – | (1.16 | ) | (1.16 | ) | 11.23 | 49.70 | 5,646 | 1.44 | 1.44 | 1.23 | (0.85 | ) | 61 | |||||||||||||||||||||||||||||||||||||||||
2019 | 6.95 | (0.05 | ) | 1.72 | 1.67 | – | (0.29 | ) | (0.29 | ) | 8.33 | 24.10 | 8,021 | 1.35 | 1.35 | 1.17 | (0.62 | ) | 53 |
66 | The Royce Funds 2023 Annual Report to Shareholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Summary of Significant Accounting Policies:
Royce Dividend Value Fund, Royce Global Financial Services Fund, Royce International Premier Fund, Royce Micro-Cap Fund, Royce Pennsylvania Mutual Fund, Royce Premier Fund, Royce Small-Cap Opportunity Fund, Royce Small-Cap Special Equity Fund, Royce Small-Cap Total Return Fund, Royce Small-Cap Value Fund and Royce Smaller-Companies Growth Fund (the “Fund” or “Funds”), are the 11 series of The Royce Fund (the “Trust”), an 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 transfer agent 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 of America 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.
Each Fund is an investment company registered under the Investment Company Act of 1940 (the “1940 Act”) 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.”
Royce & Associates, LP, the Funds’ investment adviser, is a majority-owned subsidiary of Franklin Resources, Inc. and primarily conducts business using the name Royce Investment Partners (“Royce”). As of December 31, 2023, officers and employees of Royce, Fund trustees, the Royce retirement plans and other affiliates owned more than 10% of the following Fund:
Royce Global Financial Services Fund 15%
VALUATION OF INVESTMENTS:
Portfolio securities held by the Funds 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. Investments in money market funds are valued at net asset value per share. Values for non-U.S. dollar denominated equity securities are converted to U.S. dollars daily based upon prevailing foreign currency exchange rates as quoted by a major bank.
Portfolio securities that are listed on an exchange or Nasdaq, or traded on OTC Market Group Inc.’s OTC Link ATS or other alternative trading system, are valued: (i) on the basis of their last reported sales prices or official closing prices, as applicable, on a valuation date; or (ii) at their highest reported bid prices in the event such equity securities did not trade on a valuation date. Such inputs are generally referred to as “Level 1” inputs because they represent reliable quoted prices in active markets for identical securities.
If the value of a portfolio security held by a Fund cannot be determined solely by reference to Level 1 inputs, such portfolio security will be “fair valued.” The Trust’s Board of Trustees has designated Royce as valuation designee to perform fair value determinations for such portfolio securities in accordance with Rule 2a-5 under the 1940 Act (“Rule 2a-5”). Pursuant to Rule 2a-5, fair values are determined in accordance with policies and procedures approved by the Trust's Board of Trustees and policies and procedures adopted by Royce in its capacity as valuation designee for the Trust. Fair valued securities are reported as either “Level 2” or “Level 3” securities.
As a general principle, the fair value of a security is the amount which a Fund might reasonably expect to receive for the security upon its current sale. However, in light of the judgment involved in fair valuations, no assurance can be given that a fair value assigned to a particular portfolio security will be the amount which the Fund might be able to receive upon its current sale. When a fair value pricing methodology is used, the fair value prices used by the Fund for such securities will likely differ from the quoted or published prices for the same securities.
Level 2 inputs are other significant observable inputs (e.g., dealer bid side quotes and quoted prices for securities with comparable characteristics). Examples of situations in which Level 2 inputs are used to fair value portfolio securities held by the Funds on a particular valuation date include:
● | Over-the-counter equity securities other than those traded on OTC Market Group Inc.’s OTC Link ATS or other alternative trading system (collectively referred to herein as “Other OTC Equity Securities”) are fair valued at their highest bid price when Royce receives at least two bid side quotes from dealers who make markets in such securities; |
● | Certain bonds and other fixed income securities may be fair valued by reference to other securities with comparable ratings, interest rates, and maturities in accordance with valuation methodologies maintained by certain independent pricing services; and |
● | The Funds use an independent pricing service to fair value certain non-U.S. equity securities when 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 such non-U.S. securities. |
The Royce Funds 2023 Annual Report to Shareholders | 67
Notes to Financial Statements (continued)
VALUATION OF INVESTMENTS (continued):
Level 3 inputs are significant unobservable inputs. Examples of Level 3 inputs include (without limitation) the last trade price for a security before trading was suspended or terminated; discounts to last trade price for lack of marketability or otherwise; market price information regarding other securities; information received from the issuer and/or published documents, including SEC filings and financial statements; and other publicly available information. Pursuant to the above-referenced policies and procedures, Royce may use various techniques in making fair value determinations based upon Level 3 inputs, which techniques may include (without limitation): (i) workout valuation methods (e.g., earnings multiples, discounted cash flows, liquidation values, derivations of book value, firm or probable offers from qualified buyers for the issuer’s ongoing business, etc.); (ii) discount or premium from market, or compilation of other observable market information, for other similar freely traded securities; (iii) conversion from the readily available market price of a security into which an affected security is convertible or exchangeable; and (iv) pricing models or other formulas. In the case of restricted securities, fair value determinations generally start with the inherent or intrinsic worth of the relevant security, without regard to the restrictive feature, and are reduced for any diminution in value resulting from the restrictive feature. Due to the inherent uncertainty of such valuations, these fair values may differ significantly from the values that would have been used had an active market existed.
A security that is valued by reference to Level 1 or Level 2 inputs may drop to Level 3 on a particular valuation date for several reasons, including if:
● | an equity security that is listed on an exchange or Nasdaq, or traded on OTC Market Group Inc.’s OTC Link ATS or other alternative trading system, has not traded and there are no bids; |
● | Royce does not receive at least two bid side quotes for an Other OTC Equity Security; |
● | the independent pricing services are unable to supply fair value prices; or |
● | the Level 1 or Level 2 inputs become otherwise unreliable for any reason (e.g., a significant event occurs after the close of trading for a security but prior to the time a Fund prices its shares). |
The table below shows the aggregate value of the various Level 1, Level 2, and Level 3 securities held by the Funds as of December 31, 2023. Any Level 2 or Level 3 securities held by a Fund are noted in its Schedule of Investments. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with owning those securities.
LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | ||
Royce Dividend Value Fund | |||||
Common Stocks | $ 62,400,322 | $ | – | $ – | $ 62,400,322 |
Repurchase Agreement | – | 817,192 | – | 817,192 | |
Royce Global Financial Services Fund | |||||
Common Stocks | 26,785,601 | – | – | 26,785,601 | |
Repurchase Agreement | – | 603,736 | – | 603,736 | |
Royce International Premier Fund | |||||
Common Stocks | 470,702,881 | – | – | 470,702,881 | |
Preferred Stocks | 9,585,152 | – | – | 9,585,152 | |
Royce Micro-Cap Fund | |||||
Common Stocks | 305,434,302 | – | 0 | 305,434,302 | |
Repurchase Agreement | – | 7,373,829 | – | 7,373,829 | |
Money Market Fund/Collateral Received for Securities Loaned | 2,056,361 | – | – | 2,056,361 | |
Royce Pennsylvania Mutual Fund | |||||
Common Stocks | 1,833,944,175 | – | – | 1,833,944,175 | |
Repurchase Agreement | – | 5,001,625 | – | 5,001,625 | |
Money Market Fund/Collateral Received for Securities Loaned | 1,502,625 | – | – | 1,502,625 | |
Royce Premier Fund | |||||
Common Stocks | 1,373,277,188 | – | – | 1,373,277,188 | |
Repurchase Agreement | – | 71,910,219 | – | 71,910,219 | |
Royce Small-Cap Opportunity Fund | |||||
Common Stocks | 1,251,595,478 | 458,533 | 0 | 1,252,054,011 | |
Repurchase Agreement | – | 37,823,967 | – | 37,823,967 | |
Money Market Fund/Collateral Received for Securities Loaned | 5,433,667 | – | – | 5,433,667 | |
Royce Small-Cap Special Equity Fund | |||||
Common Stocks | 661,532,267 | 4,550,958 | – | 666,083,225 | |
Repurchase Agreement | – | 120,008,451 | – | 120,008,451 |
68 | The Royce Funds 2023 Annual Report to Shareholders
VALUATION OF INVESTMENTS (continued):
LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | ||
Royce Small-Cap Total Return Fund | |||||
Common Stocks | $978,043,014 | $ | – | $ – | $978,043,014 |
Repurchase Agreement | – | 28,013,236 | – | 28,013,236 | |
Money Market Fund/Collateral Received for Securities Loaned | 31,275 | – | – | 31,275 | |
Royce Small-Cap Value Fund | |||||
Common Stocks | 129,042,505 | – | – | 129,042,505 | |
Repurchase Agreement | – | 8,846,333 | – | 8,846,333 | |
Royce Smaller-Companies Growth Fund | |||||
Common Stocks | 177,336,529 | – | – | 177,336,529 | |
Repurchase Agreement | – | 4,013,766 | – | 4,013,766 | |
Money Market Fund/Collateral Received for Securities Loaned | 2,864,750 | – | – | 2,864,750 |
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 as of December 31, 2023, are next business day 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, other than investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.
The Funds do not isolate that portion of the results of operations resulting from fluctuations in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
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. 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. Because such investments in securities of foreign companies are usually denominated in foreign currencies and such Funds do not intend to hedge their foreign currency exposures, the U.S. dollar value of such investments may be harmed by declines in the value of foreign currencies in relation to the U.S. dollar.
SECURITIES LENDING:
The Funds loan securities through a lending agent, State Street Bank and Trust Company, to qualified institutional investors for the purpose of earning additional income. The lending agent receives and holds collateral from such borrowers to secure their obligations to the Funds. Such loans must be secured at all times by collateral in an amount at least equal to the market value of the loaned securities. The market values of the loaned securities and the collateral fluctuate and are determined at the close of each business day by the lending agent. Borrowers are required to post additional collateral to the lending agent on the next succeeding business day in the event of a collateral shortfall. Counterparty risk is further reduced by loaning securities only to parties that participate in a Global Securities Lending Program organized and monitored by the lending agent and that are deemed by it to satisfy its requirements and by having the lending agent enter into securities lending agreements with such borrowers. The lending agent is not affiliated with Royce.
Collateral may be in the form of cash or U.S. Treasuries. Cash collateral is invested in certain money market pooled investment vehicles. The Funds record a liability in their respective Statements of Assets and Liabilities for the return of such cash collateral during periods in which securities are on loan. The Funds bear the risk of loss for any decrease in the market value of the loaned securities or the investments purchased with cash collateral received from the borrowers.
Pursuant to the agreement in place between the Funds and the lending agent, if a borrower fails to return loaned securities, and the cash collateral being maintained by the lending agent on behalf of such borrower is insufficient to cover the value of loaned securities and provided such collateral insufficiency is not the result of investment losses, the lending agent shall, at its option, either replace the loaned securities or pay the amount of the shortfall to the Funds. In the event of the bankruptcy of a borrower, the Funds could experience delay in recovering the loaned securities or only recover cash or a security of equivalent value.
The Royce Funds 2023 Annual Report to Shareholders | 69
Notes to Financial Statements (continued)
SECURITIES LENDING (continued):
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. Pursuant to the agreement in place between the Funds and the lending agent, the Funds are responsible for any shortfall in the event the value of the investments purchased with cash collateral is insufficient to pay the rebate fee to the borrower.
The following table presents cash collateral and the market value of securities on loan collateralized by cash collateral held by the Funds as of December 31, 2023:
SECURITIES ON LOAN COLLATERALIZED | |||
CASH COLLATERAL1 | BY CASH COLLATERAL | NET AMOUNT | |
Royce Micro-Cap Fund | $ 2,056,361 | $ (1,984,945) | $ 71,416 |
Royce Pennsylvania Mutual Fund | 1,502,625 | (1,462,147) | 40,478 |
Royce Small-Cap Opportunity Fund | 5,433,667 | (5,000,068) | 433,599 |
Royce Small-Cap Total Return Fund | 31,275 | (30,492) | 783 |
Royce Smaller-Companies Growth Fund | 2,864,750 | (2,714,204) | 150,546 |
The following table presents non-cash collateral and the market value of securities on loan collateralized by non-cash collateral held by the Funds’ custodian as of December 31, 2023:
SECURITIES ON LOAN COLLATERALIZED | |||
NON-CASH COLLATERAL | BY NON-CASH COLLATERAL | NET AMOUNT | |
Royce Micro-Cap Fund | $ 3,909,453 | $ (3,827,467) | $ 81,986 |
Royce Pennsylvania Mutual Fund | 12,718,988 | (12,456,976) | 262,012 |
Royce Small-Cap Opportunity Fund | 8,750,993 | (8,561,083) | 189,910 |
Royce Smaller-Companies Growth Fund | 7,543,455 | (7,388,605) | 154,850 |
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 Small-Cap 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 and distributions from capital gains are determined at a class 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 may be subject to a tax imposed on capital gains on securities of issuers domiciled in certain countries. The Funds record an estimated deferred tax liability for gains in 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 except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Funds. 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, while expenses applicable to more than one of the Royce Funds are allocated equitably. Certain personnel, occupancy costs and other administrative expenses related to all of the Royce Funds are allocated by Royce under an administration agreement and are included in administrative and office facilities and legal expenses.
COMPENSATING BALANCE CREDITS:
The Funds have an arrangement with their transfer agent, whereby a portion of the transfer agent’s fee is paid indirectly by credits earned on a Fund’s cash on deposit with the transfer agent.
70 | The Royce Funds 2023 Annual Report to Shareholders
LINE OF CREDIT:
The Funds, along with certain other Royce Funds, participate in a $65 million line of credit (“Credit Agreement”) with State Street Bank and Trust Company to be used for temporary or emergency purposes. This revolving Credit Agreement expires on October 4, 2024. Pursuant to the Credit Agreement, each participating Fund is liable for a portion of the commitment fee for the credit facility (i.e., 0.25% of any unused portion of the line of credit) and for principal and interest payments related to borrowings made by that Fund. Borrowings under the Credit Agreement bear interest at a variable rate equal to the Applicable Rate plus the Applicable Margin. The term Applicable Rate means, for any day, a rate equal to the sum of (a) 0.10%, plus (b) the higher of (i) the Federal Funds Effective Rate for such day, or (ii) the Overnight Bank Funding Rate for such day. The term Applicable Margin means 1.25%. The Funds did not utilize the line of credit during the year ended December 31, 2023.
INDEMNIFICATION PROVISIONS:
Reference is made to Delaware law and the Trust’s Certificate of Trust, Trust Instrument, and By-laws, as amended and supplemented, each of which provides for the indemnification by the Trust of the Trust’s officers and trustees under the circumstances and to the extent set forth therein. Reference is also made to the investment advisory agreements between the Trust, on behalf of the Funds, and Royce which provides for the indemnification by the relevant Fund of Royce under the circumstances and to the extent set forth therein. Additionally, in the normal course of business, the Trust, on behalf of the Funds, enters into contracts with service providers that contain general indemnification provisions in favor of such service providers and other covered persons. The amount of any potential Fund liability under these indemnification arrangements, if any, currently cannot be determined with any degree of specificity. The Trust is not currently in possession of any information that would cause it to believe that any Fund is reasonably likely to be subject to any material adverse impact from the operation of these indemnification arrangements. No assurance can be given, however, that any Fund will not incur any liability from the operation of these indemnification arrangements. Any future liability to a Fund that may arise from the operation of such arrangements will be publicly disclosed to the extent required by relevant accounting guidance and applicable laws, rules, and regulations.
Capital Share Transactions (in dollars):
SHARES SOLD | SHARES ISSUED FOR REINVESTMENT OF DISTRIBUTIONS | SHARES REDEEMED | SHARE CLASS CONVERSIONS | NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS | ||||||
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
12/31/23 | 12/31/22 | 12/31/23 | 12/31/22 | 12/31/23 | 12/31/22 | 12/31/231 | 12/31/22 | 12/31/23 | 12/31/22 | |
Royce Dividend Value Fund | ||||||||||
Investment Class | $ 3,371,909 | $ 5,462,654 | $ 4,622,952 | $ 398,478 | $(10,646,830) | $ (9,344,703) | $ 138,592 | $ (2,513,377) | $ (3,483,571) | |
Service Class | 1,830,118 | 343,158 | 1,771,922 | 71,850 | (2,454,783) | (3,219,000) | 1,814,323 | 2,961,580 | (2,803,992) | |
Consultant Class | 210,153 | 503,470 | – | 2,987 | (65,431) | (38,642) | (1,814,323) | (1,669,601) | 467,815 | |
Institutional Class | 3,063 | 26,893 | 226 | 4,475 | (380) | (717,743) | (138,592) | (135,683) | (686,375) | |
Royce Global Financial Services Fund | ||||||||||
Service Class | 491,150 | 519,913 | 1,249,996 | 363,123 | (3,375,228) | (4,147,918) | (1,634,082) | (3,264,882) | ||
Institutional Class | 3,545 | 2,957 | 286,206 | 136,659 | (127,955) | (283,646) | 161,796 | (144,030) | ||
Royce International Premier Fund | ||||||||||
Investment Class | 107,678,901 | 76,204,270 | 6,060,642 | 6,751,294 | (117,394,361) | (179,512,212) | (3,654,818) | (96,556,648) | ||
Service Class | 2,157,306 | 2,997,323 | 616,946 | 914,665 | (8,592,048) | (13,837,053) | 4,698,162 | (1,119,634) | (9,925,065) | |
Consultant Class | 30,324 | 149,330 | – | 105,632 | (361,604) | (1,493,286) | (4,698,162) | (5,029,442) | (1,238,324) | |
Institutional Class | 42,412,902 | 99,085,388 | 4,586,782 | 11,395,192 | (297,344,812) | (153,909,665) | (250,345,128) | (43,429,085) | ||
Royce Micro-Cap Fund | ||||||||||
Investment Class | 9,635,607 | 9,965,275 | 9,965,314 | 6,703,670 | (19,776,001) | (22,078,026) | (175,080) | (5,409,081) | ||
Service Class | 1,295,075 | 1,724,500 | 8,183,040 | 5,984,514 | (20,841,659) | (22,138,656) | (11,363,544) | (14,429,642) | ||
Consultant Class | 19,443 | 41,889 | 647,373 | 477,041 | (1,273,540) | (1,778,759) | (606,724) | (1,259,829) | ||
Royce Pennsylvania Mutual Fund | ||||||||||
Investment Class | 79,544,369 | 65,094,251 | 59,046,248 | 53,749,475 | (168,080,568) | (201,742,868) | (29,489,951) | (82,899,142) | ||
Service Class | 10,290,971 | 5,348,597 | 2,961,254 | 2,664,829 | (11,876,975) | (16,712,457) | 2,009,544 | 3,384,794 | (8,699,031) | |
Consultant Class | 2,521,669 | 2,842,618 | 7,851,890 | 8,180,229 | (26,179,716) | (32,154,983) | (15,806,157) | (21,132,136) | ||
Institutional Class | 53,155,609 | 20,667,714 | 9,282,608 | 6,645,063 | (28,134,124) | (51,690,770) | 34,304,093 | (24,377,993) | ||
R Class | 158,917 | 578,197 | – | 345,904 | (5,619,694) | (1,301,745) | (2,009,544) | (7,470,321) | (377,644) | |
Royce Premier Fund | ||||||||||
Investment Class | 169,049,919 | 87,824,319 | 58,712,623 | 68,480,604 | (232,760,544) | (258,753,409) | (4,998,002) | (102,448,486) | ||
Service Class | 11,634,237 | 5,324,371 | 2,160,921 | 1,942,373 | (8,257,640) | (11,091,072) | 502,349 | 6,039,867 | (3,824,328) | |
Consultant Class | 690,713 | 532,280 | 730,118 | 895,363 | (2,334,369) | (2,653,730) | (913,538) | (1,226,087) | ||
Institutional Class | 51,805,843 | 32,203,696 | 15,789,022 | 16,488,407 | (48,893,566) | (56,077,526) | 18,701,299 | (7,385,423) | ||
R Class | 183,825 | 212,423 | – | 509,268 | (6,287,233) | (880,571) | (502,349) | (6,605,757) | (158,880) | |
Royce Small-Cap Opportunity Fund | ||||||||||
Investment Class | 165,497,370 | 318,411,947 | 33,252,633 | 38,901,508 | (334,105,936) | (508,804,017) | (135,355,933) | (151,490,562) | ||
Service Class | 14,034,208 | 20,170,973 | 3,169,540 | 3,244,630 | (19,066,951) | (43,615,225) | (1,863,203) | (20,199,622) | ||
Consultant Class | 1,381,496 | 2,341,420 | 512,023 | 507,115 | (1,837,905) | (3,171,205) | 55,614 | (322,670) | ||
Institutional Class | 79,555,925 | 61,510,399 | 9,350,666 | 7,698,601 | (71,962,464) | (87,595,325) | 16,944,127 | (18,386,325) | ||
R Class | 6,503,400 | 4,362,167 | 1,964,573 | 1,917,055 | (7,391,450) | (8,025,738) | 1,076,523 | (1,746,516) |
The Royce Funds 2023 Annual Report to Shareholders | 71
Notes to Financial Statements (continued)
Capital Share Transactions (in dollars) (continued):
SHARES SOLD | SHARES ISSUED FOR REINVESTMENT OF DISTRIBUTIONS | SHARES REDEEMED | SHARE CLASS CONVERSIONS | NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS | ||||||
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
12/31/23 | 12/31/22 | 12/31/23 | 12/31/22 | 12/31/23 | 12/31/22 | 12/31/231 | 12/31/22 | 12/31/23 | 12/31/22 | |
Royce Small-Cap Special Equity Fund | ||||||||||
Investment Class | $ 80,810,358 | $ 74,793,750 | $26,814,396 | $57,163,323 | $(130,514,096) | $(184,860,182) | $(22,889,342) | $ (52,903,109) | ||
Service Class | 4,077,772 | 6,968,245 | 1,106,792 | 3,021,117 | (9,814,521) | (24,663,512) | (4,629,957) | (14,674,150) | ||
Consultant Class | 317,388 | 1,652,880 | 572,830 | 1,374,559 | (1,773,240) | (9,628,606) | (883,022) | (6,601,167) | ||
Institutional Class | 33,909,101 | 32,007,338 | 4,352,603 | 9,529,968 | (32,013,157) | (136,992,809) | 6,248,547 | (95,455,503) | ||
Royce Small-Cap Total Return Fund | ||||||||||
Investment Class | 41,935,943 | 67,023,280 | 51,009,988 | 73,842,790 | (115,729,451) | (368,351,415) | (22,783,520) | (227,485,345) | ||
Service Class | 6,373,369 | 11,930,918 | 4,719,947 | 7,431,362 | (18,441,972) | (23,059,482) | (7,348,656) | (3,697,202) | ||
Consultant Class | 2,057,356 | 6,136,234 | 5,905,962 | 9,977,238 | (17,589,355) | (18,018,436) | (9,626,037) | (1,904,964) | ||
Institutional Class | 23,321,203 | 90,024,255 | 19,219,822 | 25,398,176 | (34,047,333) | (153,853,152) | 8,493,692 | (38,430,721) | ||
R Class | 2,641,296 | 2,628,567 | 1,761,612 | 2,507,527 | (4,872,182) | (6,029,232) | (469,274) | (893,138) | ||
Royce Small-Cap Value Fund | ||||||||||
Investment Class | 2,365,304 | 4,143,624 | 2,665,001 | 1,987,585 | (8,348,726) | (8,588,407) | (3,318,421) | (2,457,198) | ||
Service Class | 21,486,015 | 3,414,009 | 5,843,957 | 3,640,221 | (14,846,995) | (8,172,968) | $6,689,086 | 19,172,063 | (1,118,738) | |
Consultant Class | 897 | 537,262 | – | 166,877 | (190,820) | (1,934,811) | (2,889,358) | (3,079,281) | (1,230,672) | |
R Class | 274,078 | 634,416 | – | 317,866 | (2,106,475) | (2,142,342) | (3,799,728) | (5,632,125) | (1,190,060) | |
Royce Smaller-Companies Growth Fund | ||||||||||
Investment Class | 4,439,689 | 7,127,233 | – | 1,870,679 | (12,285,700) | (17,832,476) | (7,846,011) | (8,834,564) | ||
Service Class | 3,656,743 | 2,229,200 | – | 4,255,864 | (18,187,433) | (18,872,005) | 3,953,734 | (10,576,956) | (12,386,941) | |
Consultant Class | 7,157 | 77,046 | – | 179,296 | (468,040) | (1,033,301) | (3,953,734) | (4,414,617) | (776,959) | |
Institutional Class | 866,567 | 1,561,613 | – | 180,637 | (752,534) | (2,315,211) | 114,033 | (572,961) |
Capital Share Transactions (in shares):
SHARES SOLD | SHARES ISSUED FOR REINVESTMENT OF DISTRIBUTIONS | SHARES REDEEMED | SHARE CLASS CONVERSIONS | NET INCREASE (DECREASE) IN SHARES OUTSTANDING | ||||||
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
12/31/23 | 12/31/22 | 12/31/23 | 12/31/22 | 12/31/23 | 12/31/22 | 12/31/231 | 12/31/22 | 12/31/23 | 12/31/22 | |
Royce Dividend Value Fund | ||||||||||
Investment Class | 570,027 | 987,739 | 774,173 | 74,537 | (1,805,395) | (1,686,240) | 24,530 | (436,665) | (623,964) | |
Service Class | 292,085 | 59,649 | 284,444 | 13,282 | (397,725) | (556,523) | 308,035 | 486,839 | (483,592) | |
Consultant Class | 30,591 | 75,541 | – | 460 | (9,600) | (5,405) | (270,888) | (249,897) | 70,596 | |
Institutional Class | 539 | 4,889 | 41 | 859 | (66) | (132,627) | (24,934) | (24,420) | (126,879) | |
Royce Global Financial Services Fund | ||||||||||
Service Class | 51,084 | 48,678 | 124,999 | 39,172 | (347,129) | (389,775) | (171,046) | (301,925) | ||
Institutional Class | 275 | 223 | 21,715 | 11,257 | (9,753) | (19,358) | 12,237 | (7,878) | ||
Royce International Premier Fund | ||||||||||
Investment Class | 8,187,775 | 5,289,428 | 477,216 | 548,440 | (9,206,880) | (13,017,673) | (541,889) | (7,179,805) | ||
Service Class | 140,416 | 182,020 | 40,244 | 61,921 | (555,432) | (817,074) | 295,668 | (79,104) | (573,133) | |
Consultant Class | 1,803 | 9,100 | – | 6,767 | (21,630) | (88,299) | (280,651) | (300,478) | (72,432) | |
Institutional Class | 3,250,170 | 7,050,212 | 361,164 | 925,686 | (23,493,797) | (11,306,819) | (19,882,463) | (3,330,921) | ||
Royce Micro-Cap Fund | ||||||||||
Investment Class | 900,369 | 919,547 | 930,468 | 680,575 | (1,865,472) | (2,020,079) | (34,635) | (419,957) | ||
Service Class | 128,976 | 159,057 | 789,107 | 625,341 | (2,033,028) | (2,117,819) | (1,114,945) | (1,333,421) | ||
Consultant Class | 2,606 | 4,950 | 82,785 | 65,618 | (166,622) | (226,642) | (81,231) | (156,074) | ||
Royce Pennsylvania Mutual Fund | ||||||||||
Investment Class | 9,342,337 | 7,884,090 | 6,546,147 | 7,044,491 | (19,888,598) | (24,619,020) | (4,000,114) | (9,690,439) | ||
Service Class | 1,224,130 | 636,726 | 330,129 | 351,097 | (1,412,822) | (2,054,556) | 257,965 | 399,402 | (1,066,733) | |
Consultant Class | 383,489 | 446,394 | 1,131,397 | 1,384,133 | (4,015,139) | (5,085,840) | (2,500,253) | (3,255,313) | ||
Institutional Class | 6,259,443 | 2,479,284 | 1,024,570 | 867,502 | (3,256,245) | (6,483,597) | 4,027,768 | (3,136,811) | ||
R Class | 21,258 | 75,395 | – | 49,204 | (760,823) | (169,561) | (279,491) | (1,019,056) | (44,962) | |
Royce Premier Fund | ||||||||||
Investment Class | 15,115,666 | 7,856,376 | 5,177,480 | 6,800,457 | (20,949,988) | (23,106,332) | (656,842) | (8,449,499) | ||
Service Class | 1,099,873 | 490,501 | 197,525 | 199,422 | (771,331) | (1,023,836) | 49,298 | 575,365 | (333,913) | |
Consultant Class | 80,081 | 64,613 | 85,294 | 116,584 | (279,287) | (312,726) | (113,912) | (131,529) | ||
Institutional Class | 4,607,393 | 2,774,442 | 1,369,386 | 1,611,770 | (4,343,129) | (4,940,162) | 1,633,650 | (553,950) | ||
R Class | 18,464 | 20,583 | – | 55,841 | (637,782) | (86,589) | (52,611) | (671,929) | (10,165) |
72 | The Royce Funds 2023 Annual Report to Shareholders
Capital Share Transactions (in shares) (continued):
SHARES SOLD | SHARES ISSUED FOR REINVESTMENT OF DISTRIBUTIONS | SHARES REDEEMED | SHARE CLASS CONVERSIONS | NET INCREASE (DECREASE) IN SHARES OUTSTANDING | ||||||
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
12/31/23 | 12/31/22 | 12/31/23 | 12/31/22 | 12/31/23 | 12/31/22 | 12/31/231 | 12/31/22 | 12/31/23 | 12/31/22 | |
Royce Small-Cap Opportunity Fund | ||||||||||
Investment Class | 11,526,963 | 21,261,017 | 2,246,800 | 2,947,084 | (23,795,316) | (34,745,434) | (10,021,553) | (10,537,333) | ||
Service Class | 1,075,540 | 1,497,972 | 235,304 | 269,264 | (1,458,374) | (3,245,880) | (147,530) | (1,478,644) | ||
Consultant Class | 122,026 | 208,534 | 44,718 | 49,139 | (166,141) | (277,875) | 603 | (20,202) | ||
Institutional Class | 5,334,621 | 4,054,020 | 615,175 | 567,743 | (4,852,493) | (5,805,365) | 1,097,303 | (1,183,602) | ||
R Class | 526,142 | 333,870 | 152,174 | 165,406 | (590,638) | (624,233) | 87,678 | (124,957) | ||
Royce Small-Cap Special Equity Fund | ||||||||||
Investment Class | 4,879,316 | 4,274,293 | 1,581,970 | 3,583,907 | (7,852,907) | (10,534,392) | (1,391,621) | (2,676,192) | ||
Service Class | 246,275 | 390,359 | 65,298 | 189,412 | (599,369) | (1,426,751) | (287,796) | (846,980) | ||
Consultant Class | 21,121 | 104,981 | 37,197 | 94,602 | (117,448) | (594,479) | (59,130) | (394,896) | ||
Institutional Class | 2,056,148 | 1,808,501 | 259,238 | 603,162 | (1,938,056) | (7,662,116) | 377,330 | (5,250,453) | ||
Royce Small-Cap Total Return Fund | ||||||||||
Investment Class | 5,989,446 | 8,441,346 | 7,007,761 | 11,291,465 | (16,402,558) | (45,260,446) | (3,405,351) | (25,527,635) | ||
Service Class | 879,575 | 1,449,780 | 622,548 | 1,099,407 | (2,523,128) | (2,802,333) | (1,021,005) | (253,146) | ||
Consultant Class | 277,558 | 758,766 | 764,031 | 1,465,086 | (2,375,820) | (2,239,607) | (1,334,231) | (15,755) | ||
Institutional Class | 3,368,703 | 11,078,565 | 2,699,062 | 3,957,140 | (4,954,924) | (19,251,358) | 1,112,841 | (4,215,653) | ||
R Class | 357,894 | 322,555 | 227,606 | 366,132 | (657,564) | (711,510) | (72,064) | (22,823) | ||
Royce Small-Cap Value Fund | ||||||||||
Investment Class | 243,757 | 451,885 | 263,861 | 222,325 | (887,380) | (937,108) | (379,762) | (262,898) | ||
Service Class | 2,135,035 | 363,428 | 582,067 | 409,474 | (1,599,835) | (886,422) | 784,184 | 1,901,451 | (113,520) | |
Consultant Class | 114 | 62,235 | – | 21,700 | (23,761) | (247,539) | (394,479) | (418,126) | (163,604) | |
R Class | 31,309 | 72,512 | – | 37,662 | (250,388) | (240,352) | (469,746) | (688,825) | (130,178) | |
Royce Smaller-Companies Growth Fund | ||||||||||
Investment Class | 717,461 | 1,080,273 | – | 325,335 | (1,966,328) | (2,821,049) | (1,248,867) | (1,415,441) | ||
Service Class | 605,212 | 363,858 | – | 766,823 | (3,058,267) | (3,012,840) | 685,222 | (1,767,833) | (1,882,159) | |
Consultant Class | 1,523 | 13,619 | – | 38,808 | (94,490) | (198,445) | (825,397) | (918,364) | (146,018) | |
Institutional Class | 132,361 | 242,144 | – | 30,931 | (121,506) | (331,936) | 10,855 | (58,861) |
The Royce Funds 2023 Annual Report to Shareholders | 73
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 in respect of each Fund that are computed daily and payable monthly. Royce has contractually agreed, without right of termination, to waive fees and/or reimburse 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 certain Funds’ net annual operating expense ratios at specified levels through April 30, 2024. To the extent that they impacted net expenses for the year ended December 31, 2023, the effects of those arrangements are shown below. See the Prospectuses for contractual waivers and expiration dates for all classes of all Funds.
ANNUAL CONTRACTUAL ADVISORY FEE AS A | COMMITTED NET ANNUAL OPERATING EXPENSE RATIO CAP | YEAR ENDED DECEMBER 31, 2023 | ||||||||
PERCENTAGE OF AVERAGE NET ASSETS1 | Investment Class | Service Class | Consultant Class | Institutional Class | R Class | Net advisory fees | Advisory fees waived | |||
Royce Dividend Value Fund | 0.85% | 1.09% | 1.34% | 2.09% | 1.09% | N/A | $ | 516,954 | $ | – |
Royce Global Financial Services Fund | 1.00% | N/A | 1.49%3 | N/A | 1.49%3 | N/A | 264,649 | – | ||
Royce International Premier Fund | 1.00% | 1.19% | 1.44% | 2.19% | 1.04% | N/A | 6,524,283 | 703,759 | ||
Royce Micro-Cap Fund | 1.00% | 1.24% | 1.49% | 2.24%4 | N/A | N/A | 2,956,670 | – | ||
Royce Pennsylvania Mutual Fund | 0.76%2 | N/A | 1.25%3 | N/A | N/A | 1.75%3 | 12,836,807 | – | ||
Royce Premier Fund | 1.00% | N/A | 1.49% | 2.24%4 | N/A | 1.99% | 13,367,670 | – | ||
Royce Small-Cap Opportunity Fund | 1.00% | N/A | 1.49% | 2.24%4 | N/A | N/A | 12,604,518 | – | ||
Royce Small-Cap Special Equity Fund | 1.00% | N/A | 1.49% | 2.24%4 | N/A | N/A | 7,744,156 | – | ||
Royce Small-Cap Total Return Fund | 1.00% | N/A | 1.49%3 | 2.24%3,4 | N/A | N/A | 9,563,211 | – | ||
Royce Small-Cap Value Fund | 1.00% | 1.24% | 1.49% | N/A | N/A | 1.99% | 1,109,402 | – | ||
Royce Smaller-Companies Growth Fund | 1.00% | 1.24% | 1.49% | 2.24% | 1.24%5 | N/A | 1,812,539 | – |
3 | Committed net annual operating expense ratio cap excludes acquired fund fees and expenses. |
5 | Royce Smaller-Companies Growth Fund's committed net annual operating expense ratio cap was increased from 1.16% to 1.24% for Institutional Class, effective May 1, 2023. |
DISTRIBUTOR:
Royce Fund Services, LLC (“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, 2023 | ||
PERCENTAGE OF AVERAGE NET ASSETS | Net distribution fees | Distribution fees waived | |
Royce Dividend Value Fund – Service Class | 0.25% | $ 40,633 | $ – |
Royce Dividend Value Fund – Consultant Class | 1.00% | 5,536 | – |
Royce Global Financial Services Fund – Service Class | 0.25% | 39,471 | 7,518 |
Royce International Premier Fund – Service Class | 0.25% | 85,280 | – |
Royce International Premier Fund – Consultant Class | 1.00% | 15,712 | – |
Royce Micro-Cap Fund – Service Class | 0.25% | 325,787 | – |
Royce Micro-Cap Fund – Consultant Class | 1.00% | 102,268 | – |
Royce Pennsylvania Mutual Fund – Service Class | 0.25% | 152,624 | 11,618 |
Royce Pennsylvania Mutual Fund – Consultant Class | 1.00% | 1,841,246 | – |
Royce Pennsylvania Mutual Fund – R Class | 0.50% | 11,638 | – |
Royce Premier Fund – Service Class | 0.25% | 77,858 | – |
Royce Premier Fund – Consultant Class | 1.00% | 115,728 | – |
Royce Premier Fund – R Class | 0.50% | 10,017 | – |
Royce Small-Cap Opportunity Fund – Service Class | 0.25% | 174,563 | – |
Royce Small-Cap Opportunity Fund – Consultant Class | 1.00% | 121,502 | – |
Royce Small-Cap Opportunity Fund – R Class | 0.50% | 206,403 | – |
Royce Small-Cap Special Equity Fund – Service Class | 0.25% | 85,212 | – |
Royce Small-Cap Special Equity Fund – Consultant Class | 1.00% | 153,143 | – |
Royce Small-Cap Total Return Fund – Service Class | 0.25% | 141,176 | – |
Royce Small-Cap Total Return Fund – Consultant Class | 1.00% | 841,306 | – |
Royce Small-Cap Total Return Fund – R Class | 0.50% | 102,898 | – |
74 | The Royce Funds 2023 Annual Report to Shareholders
DISTRIBUTOR (continued):
ANNUAL CONTRACTUAL DISTRIBUTION FEE AS A | YEAR ENDED DECEMBER 31, 2023 | ||
PERCENTAGE OF AVERAGE NET ASSETS | Net distribution fees | Distribution fees waived | |
Royce Small-Cap Value Fund – Service Class | 0.25% | $ 183,243 | $ – |
Royce Small-Cap Value Fund – Consultant Class | 1.00% | 10,273 | – |
Royce Small-Cap Value Fund – R Class | 0.50% | 9,572 | – |
Royce Smaller-Companies Growth Fund – Service Class | 0.25% | 276,363 | – |
Royce Smaller-Companies Growth Fund – Consultant Class | 1.00% | 14,005 | – |
Purchases and Sales of Investment Securities:
For the year ended December 31, 2023, 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 | SALES | |||
Royce Dividend Value Fund | $ | 8,214,970 | $ | 12,412,240 |
Royce Global Financial Services Fund | 3,136,765 | 6,761,056 | ||
Royce International Premier Fund | 237,358,638 | 481,014,206 | ||
Royce Micro-Cap Fund | 54,829,692 | 89,664,069 | ||
Royce Pennsylvania Mutual Fund | 659,598,726 | 770,260,382 | ||
Royce Premier Fund | 185,965,836 | 270,285,916 | ||
Royce Small-Cap Opportunity Fund | 423,052,609 | 586,272,962 | ||
Royce Small-Cap Special Equity Fund | 89,156,114 | 131,108,475 | ||
Royce Small-Cap Total Return Fund | 605,846,439 | 746,766,077 | ||
Royce Small-Cap Value Fund | 51,892,636 | 56,688,804 | ||
Royce Smaller-Companies Growth Fund | 113,665,821 | 135,812,690 |
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 or an affiliate of Franklin Resources, Inc. serves as investment adviser. The Trust’s Chief Compliance Officer reviews such transactions each quarter for compliance with the requirements and restrictions set forth by Rule 17a-7, and reports the results of that review to the Board of Trustees. Cross trades for the year ended December 31, 2023, were as follows:
COSTS OF PURCHASES | PROCEEDS FROM SALES | REALIZED GAIN (LOSS) | |
Royce Pennsylvania Mutual Fund | $ – | $1,795,290 | $(3,258,506) |
Royce Small-Cap Special Equity Fund | 622,480 | – | – |
Royce Small-Cap Total Return Fund | – | 244,300 | (123,056) |
Class Specific Expenses:
Class specific expenses were as follows for the year ended December 31, 2023:
CLASS LEVEL | ||||||||||||||
EXPENSES | ||||||||||||||
REIMBURSED BY | ||||||||||||||
NET DISTRIBUTION | SHAREHOLDER | SHAREHOLDER | TRANSFER AGENT | INVESTMENT | ||||||||||
FEES | SERVICING | REPORTS | REGISTRATION | BALANCE CREDITS | TOTAL | ADVISER | ||||||||
Royce Dividend Value Fund – | ||||||||||||||
Investment Class | $ | – | $ | 68,730 | $ | 6,290 | $ | 19,433 | $ | (1,050) | $ | 93,403 | $ | 81,298 |
Royce Dividend Value Fund – Service Class | 40,633 | 33,744 | 2,119 | 13,573 | (533) | 89,536 | 44,390 | |||||||
Royce Dividend Value Fund – | ||||||||||||||
Consultant Class | 5,536 | 3,892 | 20 | 11,293 | (16) | 20,725 | 15,084 | |||||||
Royce Dividend Value Fund – | ||||||||||||||
Institutional Class | – | 3,593 | 12 | 4,623 | (13) | 8,215 | 8,207 | |||||||
46,169 | 109,959 | 8,441 | 48,922 | (1,612) | 148,979 | |||||||||
Royce Global Financial Services Fund – | ||||||||||||||
Service Class | 39,471 | 31,638 | 2,216 | 18,648 | (819) | 91,154 | 71,545 | |||||||
Royce Global Financial Services Fund – | ||||||||||||||
Institutional Class | – | 6,761 | 21 | 14,240 | (10) | 21,012 | 12,939 | |||||||
39,471 | 38,399 | 2,237 | 32,888 | (829) | 84,484 | |||||||||
Royce International Premier Fund – | ||||||||||||||
Investment Class | – | 325,347 | 35,986 | 32,291 | (2,652) | 390,972 | – | |||||||
Royce International Premier Fund – | ||||||||||||||
Service Class | 85,280 | 59,295 | 4,240 | 12,792 | (489) | 161,118 | 26,012 | |||||||
Royce International Premier Fund – | ||||||||||||||
Consultant Class | 15,712 | 5,635 | 87 | 11,296 | (50) | 32,680 | 14,590 | |||||||
Royce International Premier Fund – | ||||||||||||||
Institutional Class | – | 204,432 | 64,219 | 22,563 | (55,551) | 235,663 | 235,663 | |||||||
100,992 | 594,709 | 104,532 | 78,942 | (58,742) | 276,265 |
The Royce Funds 2023 Annual Report to Shareholders | 75
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 Micro-Cap Fund – Investment Class | $ | – | $ | 166,762 | $ | 27,198 | $ | 18,515 | $ | (11,672) | $ | 200,803 | $ | 10,271 |
Royce Micro-Cap Fund – Service Class | 325,787 | 205,771 | 15,244 | 16,433 | (1,301) | 561,934 | 75,500 | |||||||
Royce Micro-Cap Fund – Consultant Class | 102,268 | 16,593 | 1,880 | 12,615 | (424) | 132,932 | 12,428 | |||||||
428,055 | 389,126 | 44,322 | 47,563 | (13,397) | 98,199 | |||||||||
Royce Pennsylvania Mutual Fund – | ||||||||||||||
Investment Class | – | 937,025 | 111,783 | 24,908 | (39,517) | 1,034,199 | – | |||||||
Royce Pennsylvania Mutual Fund – | ||||||||||||||
Service Class | 152,624 | 111,492 | 10,066 | 12,689 | (1,726) | 285,145 | 25,859 | |||||||
Royce Pennsylvania Mutual Fund – | ||||||||||||||
Consultant Class | 1,841,246 | 140,166 | 16,841 | 13,897 | (5,094) | 2,007,056 | – | |||||||
Royce Pennsylvania Mutual Fund – | ||||||||||||||
Institutional Class | – | 45,348 | 16,839 | 32,947 | (11,170) | 83,964 | – | |||||||
Royce Pennsylvania Mutual Fund – R Class | 11,638 | 10,769 | 432 | 3,486 | (158) | 26,167 | 5,146 | |||||||
2,005,508 | 1,244,800 | 155,961 | 87,927 | (57,665) | 31,005 | |||||||||
Royce Premier Fund – Investment Class | – | 927,425 | 85,418 | 30,682 | (18,957) | 1,024,568 | – | |||||||
Royce Premier Fund – Service Class | 77,858 | 63,008 | 12,260 | 13,256 | (1,432) | 164,950 | 41,491 | |||||||
Royce Premier Fund – Consultant Class | 115,728 | 17,141 | 1,441 | 12,298 | (365) | 146,243 | 9,292 | |||||||
Royce Premier Fund – Institutional Class | – | 13,498 | 33,058 | 20,234 | (1,092) | 65,698 | – | |||||||
Royce Premier Fund – R Class | 10,017 | 9,281 | 137 | 3,467 | (41) | 22,861 | 4,654 | |||||||
203,603 | 1,030,353 | 132,314 | 79,937 | (21,887) | 55,437 | |||||||||
Royce Small-Cap Opportunity Fund – | ||||||||||||||
Investment Class | – | 1,068,324 | 88,251 | 34,524 | (29,481) | 1,161,618 | – | |||||||
Royce Small-Cap Opportunity Fund – | ||||||||||||||
Service Class | 174,563 | 107,244 | 11,129 | 14,127 | (620) | 306,443 | 35,106 | |||||||
Royce Small-Cap Opportunity Fund – | ||||||||||||||
Consultant Class | 121,502 | 16,043 | 1,435 | 11,882 | (294) | 150,568 | 8,238 | |||||||
Royce Small-Cap Opportunity Fund – | ||||||||||||||
Institutional Class | – | 22,073 | 9,590 | 14,396 | (2,365) | 43,694 | – | |||||||
Royce Small-Cap Opportunity Fund – R Class | 206,403 | 92,290 | 1,360 | 10,674 | (466) | 310,261 | – | |||||||
502,468 | 1,305,974 | 111,765 | 85,603 | (33,226) | 43,344 | |||||||||
Royce Small-Cap Special Equity Fund – | ||||||||||||||
Investment Class | – | 655,555 | 56,206 | 27,890 | (14,125) | 725,526 | – | |||||||
Royce Small-Cap Special Equity Fund – | ||||||||||||||
Service Class | 85,212 | 59,584 | 5,151 | 12,655 | (456) | 162,146 | 28,560 | |||||||
Royce Small-Cap Special Equity Fund – | ||||||||||||||
Consultant Class | 153,143 | 24,041 | 2,722 | 12,631 | (1,338) | 191,199 | 5,004 | |||||||
Royce Small-Cap Special Equity Fund – | ||||||||||||||
Institutional Class | – | 26,314 | 9,260 | 15,806 | (4,271) | 47,109 | – | |||||||
238,355 | 765,494 | 73,339 | 68,982 | (20,190) | 33,564 | |||||||||
Royce Small-Cap Total Return Fund – | ||||||||||||||
Investment Class | – | 601,229 | 70,667 | 22,122 | (16,023) | 677,995 | – | |||||||
Royce Small-Cap Total Return Fund – | ||||||||||||||
Service Class | 141,176 | 104,362 | 8,473 | 12,794 | (930) | 265,875 | 48,074 | |||||||
Royce Small-Cap Total Return Fund – | ||||||||||||||
Consultant Class | 841,306 | 92,351 | 15,406 | 14,002 | (3,761) | 959,304 | 7,171 | |||||||
Royce Small-Cap Total Return Fund – | ||||||||||||||
Institutional Class | – | 11,885 | 31,438 | 13,426 | (602) | 56,147 | – | |||||||
Royce Small-Cap Total Return Fund – R Class | 102,898 | 52,709 | 2,807 | 7,676 | (673) | 165,417 | – | |||||||
1,085,380 | 862,536 | 128,791 | 70,020 | (21,989) | 55,245 |
76 | The Royce Funds 2023 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 Small-Cap Value Fund – | ||||||||||||||
Investment Class | $ | – | $ | 49,806 | $ | 4,952 | $ | 15,105 | $ | (2,239) | $ | 67,624 | $ | 38,714 |
Royce Small-Cap Value Fund – Service Class | 183,243 | 121,793 | 12,563 | 21,130 | (1,162) | 337,567 | 94,681 | |||||||
Royce Small-Cap Value Fund – | ||||||||||||||
Consultant Class | 10,273 | 5,372 | 68 | 10,377 | (66) | 26,024 | – | |||||||
Royce Small-Cap Value Fund – R Class | 9,572 | 9,582 | 248 | 3,462 | (96) | 22,768 | 6,587 | |||||||
203,088 | 186,553 | 17,831 | 50,074 | (3,563) | 139,982 | |||||||||
Royce Smaller-Companies Growth Fund – | ||||||||||||||
Investment Class | – | 64,977 | 9,730 | 15,345 | (4,961) | 85,091 | 16,357 | |||||||
Royce Smaller-Companies Growth Fund – | ||||||||||||||
Service Class | 276,363 | 171,310 | 14,089 | 18,271 | (1,289) | 478,744 | 84,497 | |||||||
Royce Smaller-Companies Growth Fund – | ||||||||||||||
Consultant Class | 14,005 | 5,242 | 98 | 10,535 | (80) | 29,800 | 14,186 | |||||||
Royce Smaller-Companies Growth Fund – | ||||||||||||||
Institutional Class | – | 7,507 | 446 | 11,637 | (114) | 19,476 | 15,579 | |||||||
290,368 | 249,036 | 24,363 | 55,788 | (6,444) | 130,619 |
Tax Information:
As of December 31, 2023, 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 | $ 24,873,589 | $ 38,343,925 | $ 38,412,465 | $ 68,540 |
Royce Global Financial Services Fund | 16,558,680 | 10,830,657 | 11,755,238 | 924,581 |
Royce International Premier Fund | 481,741,117 | (1,453,084) | 68,551,507 | 70,004,591 |
Royce Micro-Cap Fund | 233,637,298 | 81,227,194 | 112,655,565 | 31,428,371 |
Royce Pennsylvania Mutual Fund | 1,211,229,074 | 629,219,351 | 683,066,084 | 53,846,733 |
Royce Premier Fund | 818,476,905 | 626,710,502 | 645,330,862 | 18,620,360 |
Royce Small-Cap Opportunity Fund | 1,048,047,935 | 247,263,710 | 357,282,004 | 110,018,294 |
Royce Small-Cap Special Equity Fund | 595,897,490 | 190,194,186 | 201,212,553 | 11,018,367 |
Royce Small-Cap Total Return Fund | 830,652,326 | 175,435,199 | 202,575,194 | 27,139,995 |
Royce Small-Cap Value Fund | 103,706,506 | 34,182,332 | 35,639,861 | 1,457,529 |
Royce Smaller-Companies Growth Fund | 144,455,997 | 39,759,048 | 46,797,354 | 7,038,306 |
The primary causes of the difference 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, underlying investments and mark-to-market of Passive Foreign Investment Companies.
Distributions during the years ended December 31, 2023 and 2022, were characterized as follows for tax purposes:
ORDINARY INCOME | LONG-TERM CAPITAL GAINS | RETURN OF CAPITAL | ||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
Royce Dividend Value Fund | $ 906,319 | $ 425,788 | $ 6,142,790 | $ 126,633 | $ – | $ – |
Royce Global Financial Services Fund | 668,163 | 213,571 | 1,317,609 | 322,343 | – | 24 |
Royce International Premier Fund | 16,197,062 | 8,603,671 | – | 18,800,788 | – | – |
Royce Micro-Cap Fund | – | 1,948,933 | 20,633,140 | 12,404,460 | – | 898 |
Royce Pennsylvania Mutual Fund | 8,158,858 | 5,035,816 | 78,910,645 | 73,368,243 | – | – |
Royce Premier Fund | 843,270 | – | 93,232,980 | 105,822,305 | – | – |
Royce Small-Cap Opportunity Fund | 4,987,940 | 6,215,236 | 51,901,252 | 55,617,632 | – | – |
Royce Small-Cap Special Equity Fund | 11,151,118 | 17,122,442 | 29,148,706 | 69,160,036 | – | – |
Royce Small-Cap Total Return Fund | 43,148,082 | 18,597,278 | 48,406,130 | 112,642,658 | – | – |
Royce Small-Cap Value Fund | 2,301,024 | 391,419 | 6,897,573 | 6,159,246 | – | – |
Royce Smaller-Companies Growth Fund | – | 3,273,074 | – | 4,143,044 | – | 1,108 |
The Royce Funds 2023 Annual Report to Shareholders | 77
Notes to Financial Statements (continued)
Tax Information (continued):
The tax basis components of distributable earnings as of December 31, 2023, were as follows:
UNDISTRIBUTED | QUALIFIED | |||||
LONG-TERM | LATE YEAR | |||||
UNDISTRIBUTED | CAPITAL GAINS OR | NET UNREALIZED | ORDINARY AND | TOTAL | CAPITAL LOSS | |
ORDINARY | (CAPITAL LOSS | APPRECIATION | POST-OCTOBER LOSS | DISTRIBUTABLE | CARRYFORWARD | |
INCOME | CARRYFORWARD) | (DEPRECIATION)1 | DEFERRALS2 | EARNINGS | UTILIZED | |
Royce Dividend Value Fund | $ 232,744 | $ 1,368,707 | $ 38,343,618 | $ (61,389) | $ 39,883,680 | $ – |
Royce Global Financial Services Fund | 628,067 | 349,262 | 10,802,521 | – | 11,779,850 | 583,010 |
Royce International Premier Fund | 1,099,928 | (63,700,347) | (1,320,793) | (28,006,797) | (91,928,009) | – |
Royce Micro-Cap Fund | – | 6,714,279 | 81,227,188 | – | 87,941,467 | – |
Royce Pennsylvania Mutual Fund | 2,749,132 | 22,669,287 | 629,218,983 | – | 654,637,402 | – |
Royce Premier Fund | 417,941 | 9,952,422 | 626,710,499 | (2,042) | 637,078,820 | – |
Royce Small-Cap Opportunity Fund | 51,547 | 18,437,678 | 247,263,959 | – | 265,753,184 | – |
Royce Small-Cap Special Equity Fund | – | 2,582,276 | 190,194,183 | (110,454) | 192,666,005 | – |
Royce Small-Cap Total Return Fund | 10,727,553 | 14,315,916 | 175,429,506 | – | 200,472,975 | – |
Royce Small-Cap Value Fund | 132,038 | 696,522 | 34,182,330 | (33,201) | 34,977,689 | – |
Royce Smaller-Companies Growth Fund | 508,605 | (14,348,935) | 39,744,966 | (126,586) | 25,778,050 | 6,222,844 |
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, 2023, the Funds recorded the following permanent reclassifications, which relate primarily to current net operating losses and publicly traded partnerships. Results of operations and net assets were not affected by these reclassifications.
PAID-IN | ||
TOTAL DISTRIBUTABLE EARNINGS (LOSS) | CAPITAL | |
Royce Dividend Value Fund | $ – | $ – |
Royce Global Financial Services Fund | – | – |
Royce International Premier Fund | – | – |
Royce Micro-Cap Fund | 1,629,124 | (1,629,124) |
Royce Pennsylvania Mutual Fund | – | – |
Royce Premier Fund | 4,674 | (4,674) |
Royce Small-Cap Opportunity Fund | – | – |
Royce Small-Cap Special Equity Fund | – | – |
Royce Small-Cap Total Return Fund | – | – |
Royce Small-Cap Value Fund | – | – |
Royce Smaller-Companies Growth Fund | – | – |
Management has analyzed the Funds’ tax positions taken on federal income tax returns for all open tax years (2020 – 2023) and has concluded that as of December 31, 2023, no provision for income tax is required in the Funds’ financial statements.
Transactions in Affiliated Companies:
An “Affiliated Company,” as defined in the 1940 Act, 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, 2023:
CHANGE IN NET | |||||||||
MARKET | REALIZED | UNREALIZED | MARKET | ||||||
SHARES | VALUE | COSTS OF | PROCEEDS | GAIN | APPRECIATION | DIVIDEND | SHARES | VALUE | |
AFFILIATED COMPANY 1 | 12/31/22 | 12/31/22 | PURCHASES | FROM SALES | (LOSS) | (DEPRECIATION) | INCOME | 12/31/23 | 12/31/23 |
Royce International Premier Fund | |||||||||
UNITED KINGDOM – 2.4% | |||||||||
Restore 2 | 4,729,458 | $18,868,340 | $ 9,237,940 | $ 8,052,309 | $(3,178,273) | $ (4,700,678) | $ 577,315 | n/a | n/a |
18,868,340 | (3,178,273) | (4,700,678) | 577,315 | ||||||
Royce Small-Cap Opportunity Fund | |||||||||
CONSUMER DISCRETIONARY – 0.6% | |||||||||
TEXTILES, APPAREL & LUXURY GOODS – 0.6% | |||||||||
Lakeland Industries 3 | 273,810 | 3,641,673 | 2,403,553 | 154,371 | 32,269 | 2,187,755 | 43,817 | 437,480 | $8,110,879 |
3,641,673 | 32,269 | 2,187,755 | 43,817 | 8,110,879 | |||||
INDUSTRIALS – 0.6% | |||||||||
CONSTRUCTION & ENGINEERING – 0.6% | |||||||||
Limbach Holdings 2,4 | 654,981 | 6,818,352 | – | 10,839,548 | 6,703,829 | 4,453,793 | – | n/a | n/a |
6,818,352 | 6,703,829 | 4,453,793 | – |
78 | The Royce Funds 2023 Annual Report to Shareholders
Transactions in Affiliated Companies (continued):
CHANGE IN NET | |||||||||
MARKET | REALIZED | UNREALIZED | MARKET | ||||||
SHARES | VALUE | COSTS OF | PROCEEDS | GAIN | APPRECIATION | DIVIDEND | SHARES | VALUE | |
AFFILIATED COMPANY 1 | 12/31/22 | 12/31/22 | PURCHASES | FROM SALES | (LOSS) | (DEPRECIATION) | INCOME | 12/31/23 | 12/31/23 |
Royce Small-Cap Opportunity Fund (continued) | |||||||||
INFORMATION TECHNOLOGY – 0.7% | |||||||||
COMMUNICATIONS EQUIPMENT – 0.0% | |||||||||
PCTEL 2 | 1,044,693 | $ 4,492,180 | $ 165,529 | $ 7,336,754 | $ 837,396 | $ 1,841,649 | $ 172,125 | n/a | n/a |
SEMICONDUCTORS & SEMICONDUCTOR | |||||||||
EQUIPMENT – 0.2% | |||||||||
Amtech Systems 2,4 | 663,484 | 5,042,478 | 477,207 | 95,804 | (131,006) | (2,385,005) | – | n/a | n/a |
TECHNOLOGY HARDWARE, STORAGE & | |||||||||
PERIPHERALS– 0.5% | |||||||||
Intevac 3,4 | 968,302 | 6,264,914 | 1,640,572 | – | – | (2,096,161) | – | 1,344,751 | $ 5,809,325 |
15,799,572 | 706,390 | (2,639,517) | 172,125 | 5,809,325 | |||||
26,259,597 | 7,442,488 | 4,002,031 | 215,942 | 13,920,204 | |||||
Royce Small-Cap Special Equity Fund | |||||||||
CONSUMER DISCRETIONARY– 4.5% | |||||||||
AUTO COMPONENTS – 4.5% | |||||||||
Standard Motor Products 2 | 1,188,000 | 41,342,400 | 2,844,284 | 14,529,115 | (1,780,124) | 7,374,310 | 1,107,655 | n/a | n/a |
41,342,400 | (1,780,124) | 7,374,310 | 1,107,655 | ||||||
INDUSTRIALS – 2.7% | |||||||||
MACHINERY – 2.7% | |||||||||
Gencor Industries 3,4 | 1,066,000 | 10,766,600 | – | 2,259,411 | (327,983) | 6,508,194 | – | 910,000 | 14,687,400 |
Hurco Companies 2 | 580,000 | 15,155,400 | – | 5,908,182 | (3,537,553) | 770,865 | 281,088 | n/a | n/a |
25,922,000 | (3,865,536) | 7,279,059 | 281,088 | 14,687,400 | |||||
INFORMATION TECHNOLOGY – 3.3% | |||||||||
SEMICONDUCTORS & SEMICONDUCTOR | |||||||||
EQUIPMENT – 3.3% | |||||||||
NVE Corporation 3 | 371,500 | 24,054,625 | 68,050 | 4,185,657 | 913,378 | 4,756,999 | 1,394,500 | 326,500 | 25,607,395 |
24,054,625 | 913,378 | 4,756,999 | 1,394,500 | 25,607,395 | |||||
91,319,025 | (4,732,282) | 19,410,368 | 2,783,243 | 40,294,795 | |||||
Royce Small-Cap Total Return Fund | |||||||||
FINANCIALS – 4.7% | |||||||||
FINANCIAL SERVICES – 1.3% | |||||||||
NewtekOne 2 | 471,100 | 7,655,375 | 15,300,758 | 7,701,253 | (678,074) | (1,310,659) | 746,026 | n/a | n/a |
INSURANCE – 3.4% | |||||||||
International General Insurance Holdings 3 | 2,747,997 | 21,983,976 | 3,593,972 | 5,660,127 | 1,254,707 | 13,272,611 | 116,110 | 2,674,312 | 34,445,139 |
29,639,351 | 576,633 | 11,961,952 | 862,136 | 34,445,139 |
1 | Percentages represent the percentages of the investments in the Affiliated Companies of the Fund's net assets. |
2 | Not an Affiliated Company as of December 31, 2023. |
4 | Non-income producing. |
New Accounting Pronouncements and Regulations:
On October 26, 2022, the SEC adopted rule and form amendments which require open-end mutual funds to transmit streamlined annual and semi-annual reports to shareholders that highlight key information to investors. In connection with these amendments, certain information that was previously disclosed in fund shareholder reports will instead be made available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024, and will have no effect on the Funds' accounting policies or financial statements.
Subsequent Events:
Subsequent events have been evaluated through the date the financial statements were issued and it has been determined that no events have occurred that require disclosure.
The Royce Funds 2023 Annual Report to Shareholders | 79
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of The Royce Fund and Shareholders of Royce Dividend Value Fund, Royce Global Financial Services Fund, Royce International Premier Fund, Royce Micro-Cap Fund, Royce Pennsylvania Mutual Fund, Royce Premier Fund, Royce Small-Cap Opportunity Fund, Royce Small-Cap Special Equity Fund, Royce Small-Cap Total Return Fund, Royce Small-Cap Value Fund and Royce Smaller-Companies Growth Fund:
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Royce Dividend Value Fund, Royce Global Financial Services Fund, Royce International Premier Fund, Royce Micro-Cap Fund, Royce Pennsylvania Mutual Fund, Royce Premier Fund, Royce Small-Cap Opportunity Fund, Royce Small-Cap Special Equity Fund, Royce Small-Cap Total Return Fund, Royce Small-Cap Value Fund and Royce Smaller-Companies Growth Fund (constituting The Royce Fund, hereafter collectively referred to as the “Funds”) as of December 31, 2023, the related statements of operations for the year ended December 31, 2023, the statements of changes in net assets for each of the two years in the period ended December 31, 2023, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2023 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of December 31, 2023, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended December 31, 2023 and each of the financial highlights for each of the five years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.
/s/PricewaterhouseCoopers LLP
New York, New York
February 20, 2024
We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.
80 | The Royce Funds 2023 Annual Report to Shareholders
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 fund share classes, 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, 2023, and held for the entire six-month period ended December 31, 2023. Service, Consultant and R 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 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, 2023, 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 rate of 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 BEFORE EXPENSES) | ||||||||||||
Net Annualized | |||||||||||||
Beginning Account | Ending Account Value | Expenses Paid During | Beginning Account | Ending Account Value | Expenses Paid During | Operating Expense | |||||||
Value 7/1/23 | 12/31/23 | the Period1 | Value 7/1/23 | 12/31/23 | the Period1 | Ratio2 | |||||||
Investment Class | |||||||||||||
Royce Dividend Value Fund | $ | 1,000.00 | $ | 1,096.91 | $ | 5.76 | $ | 1,000.00 | $ | 1,019.71 | $ | 5.55 | 1.09% |
Royce International Premier Fund | 1,000.00 | 1,032.04 | 6.15 | 1,000.00 | 1,019.16 | 6.11 | 1.20% | ||||||
Royce Micro-Cap Fund | 1,000.00 | 1,090.42 | 6.53 | 1,000.00 | 1,018.95 | 6.31 | 1.24% | ||||||
Royce Pennsylvania Mutual Fund3 | 1,000.00 | 1,097.78 | 4.97 | 1,000.00 | 1,020.47 | 4.79 | 0.94% | ||||||
Royce Premier Fund | 1,000.00 | 1,071.85 | 6.21 | 1,000.00 | 1,019.21 | 6.06 | 1.19% | ||||||
Royce Small-Cap Opportunity Fund | 1,000.00 | 1,056.69 | 6.32 | 1,000.00 | 1,019.06 | 6.21 | 1.22% | ||||||
Royce Small-Cap Special Equity Fund | 1,000.00 | 1,046.14 | 6.29 | 1,000.00 | 1,019.06 | 6.21 | 1.22% | ||||||
Royce Small-Cap Total Return Fund | 1,000.00 | 1,138.77 | 6.52 | 1,000.00 | 1,019.11 | 6.16 | 1.21% | ||||||
Royce Small-Cap Value Fund | 1,000.00 | 1,162.75 | 6.76 | 1,000.00 | 1,018.95 | 6.31 | 1.24% | ||||||
Royce Smaller-Companies Growth Fund | 1,000.00 | 1,015.24 | 6.30 | 1,000.00 | 1,018.95 | 6.31 | 1.24% | ||||||
Service Class | |||||||||||||
Royce Dividend Value Fund | 1,000.00 | 1,098.29 | 7.09 | 1,000.00 | 1,018.45 | 6.82 | 1.34% | ||||||
Royce Global Financial Services Fund | 1,000.00 | 1,118.01 | 7.95 | 1,000.00 | 1,017.69 | 7.58 | 1.49% | ||||||
Royce International Premier Fund | 1,000.00 | 1,030.30 | 7.37 | 1,000.00 | 1,017.95 | 7.32 | 1.44% | ||||||
Royce Micro-Cap Fund | 1,000.00 | 1,089.17 | 7.85 | 1,000.00 | 1,017.69 | 7.58 | 1.49% | ||||||
Royce Pennsylvania Mutual Fund3 | 1,000.00 | 1,096.34 | 6.60 | 1,000.00 | 1,018.90 | 6.36 | 1.25% | ||||||
Royce Premier Fund | 1,000.00 | 1,069.42 | 7.77 | 1,000.00 | 1,017.69 | 7.58 | 1.49% | ||||||
Royce Small-Cap Opportunity Fund | 1,000.00 | 1,055.30 | 7.72 | 1,000.00 | 1,017.69 | 7.58 | 1.49% | ||||||
Royce Small-Cap Special Equity Fund | 1,000.00 | 1,044.89 | 7.68 | 1,000.00 | 1,017.69 | 7.58 | 1.49% | ||||||
Royce Small-Cap Total Return Fund | 1,000.00 | 1,138.72 | 8.03 | 1,000.00 | 1,017.69 | 7.58 | 1.49% | ||||||
Royce Small-Cap Value Fund | 1,000.00 | 1,162.01 | 8.12 | 1,000.00 | 1,017.69 | 7.58 | 1.49% | ||||||
Royce Smaller-Companies Growth Fund | 1,000.00 | 1,014.24 | 7.56 | 1,000.00 | 1,017.69 | 7.58 | 1.49% | ||||||
Consultant Class | |||||||||||||
Royce Micro-Cap Fund | 1,000.00 | 1,085.06 | 11.77 | 1,000.00 | 1,013.91 | 11.37 | 2.24% | ||||||
Royce Pennsylvania Mutual Fund3 | 1,000.00 | 1,092.29 | 10.23 | 1,000.00 | 1,015.43 | 9.86 | 1.94% | ||||||
Royce Premier Fund | 1,000.00 | 1,065.68 | 11.66 | 1,000.00 | 1,013.91 | 11.37 | 2.24% | ||||||
Royce Small-Cap Opportunity Fund | 1,000.00 | 1,051.53 | 11.58 | 1,000.00 | 1,013.91 | 11.37 | 2.24% | ||||||
Royce Small-Cap Special Equity Fund | 1,000.00 | 1,040.96 | 11.52 | 1,000.00 | 1,013.91 | 11.37 | 2.24% | ||||||
Royce Small-Cap Total Return Fund | 1,000.00 | 1,133.63 | 12.05 | 1,000.00 | 1,013.91 | 11.37 | 2.24% |
The Royce Funds 2023 Annual Report to Shareholders | 81
Understanding Your Fund’s Expenses (unaudited) (continued)
ACTUAL | HYPOTHETICAL (5% PER YEAR BEFORE EXPENSES) | ||||||||||||
Beginning Account | Ending Account Value | Expenses Paid During | Beginning Account | Ending Account Value | Expenses Paid During | Net Annualized Operating Expense | |||||||
Value 7/1/23 | 12/31/23 | the Period1 | Value 7/1/23 | 12/31/23 | the Period1 | Ratio2 | |||||||
Institutional Class | |||||||||||||
Royce Global Financial Services Fund | $ | 1,000.00 | $ | 1,118.17 | $ | 7.96 | $ | 1,000.00 | $ | 1,017.69 | $ | 7.58 | 1.49% |
Royce International Premier Fund | 1,000.00 | 1,032.71 | 5.33 | 1,000.00 | 1,019.96 | 5.30 | 1.04% | ||||||
Royce Pennsylvania Mutual Fund | 1,000.00 | 1,097.90 | 4.81 | 1,000.00 | 1,020.62 | 4.63 | 0.91% | ||||||
Royce Premier Fund | 1,000.00 | 1,072.20 | 5.90 | 1,000.00 | 1,019.51 | 5.75 | 1.13% | ||||||
Royce Small-Cap Opportunity Fund | 1,000.00 | 1,057.28 | 5.81 | 1,000.00 | 1,019.56 | 5.70 | 1.12% | ||||||
Royce Small-Cap Special Equity Fund | 1,000.00 | 1,047.15 | 5.88 | 1,000.00 | 1,019.46 | 5.80 | 1.14% | ||||||
Royce Small-Cap Total Return Fund | 1,000.00 | 1,138.96 | 6.09 | 1,000.00 | 1,019.51 | 5.75 | 1.13% | ||||||
Royce Smaller-Companies Growth Fund | 1,000.00 | 1,016.52 | 6.30 | 1,000.00 | 1,018.95 | 6.31 | 1.24% | ||||||
R Class | |||||||||||||
Royce Small-Cap Opportunity Fund | 1,000.00 | 1,053.35 | 9.57 | 1,000.00 | 1,015.88 | 9.40 | 1.85% | ||||||
Royce Small-Cap Total Return Fund | 1,000.00 | 1,135.88 | 10.23 | 1,000.00 | 1,015.63 | 9.65 | 1.90% |
2 | Net annualized operating 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. |
Federal Tax Information
In January 2024, taxable shareholders that opted out of e-delivery were mailed a Form 1099-DIV reporting the federal tax status of all distributions paid during the calendar year 2023. Shareholders who elected e-delivery have received electronic notification of the form being available for download via their Online Account Access.
2023 Supplemental Tax Information:
% QDI | % U.S. GOVT INCOME | % INCOME QUALIFYING FOR DRD | LONG-TERM CAPITAL GAIN DISTRIBUTION OR MAXIMUM ALLOWABLE (OOO’S) | |
Royce Dividend Value Fund | 100.00% | N/A | 93.55% | $ 6,143 |
Royce Global Financial Services Fund | 100.00% | N/A | 21.78% | 1,318 |
Royce International Premier Fund | 95.96% | N/A | 0.00% | – |
Royce Micro-Cap Fund | 0.00% | N/A | 0.00% | 20,633 |
Royce Pennsylvania Mutual Fund | 100.00% | N/A | 100.00% | 78,911 |
Royce Premier Fund | 100.00% | N/A | 100.00% | 93,233 |
Royce Small-Cap Opportunity Fund | 100.00% | N/A | 100.00% | 51,901 |
Royce Small-Cap Special Equity Fund | 100.00% | N/A | 100.00% | 29,149 |
Royce Small-Cap Total Return Fund | 59.87% | N/A | 30.62% | 48,406 |
Royce Small-Cap Value Fund | 100.00% | N/A | 99.57% | 6,898 |
Royce Smaller-Companies Growth Fund | 0.00% | N/A | 0.00% | – |
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, 2023, Royce International Premier Fund 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 | ||
SOURCE INCOME | INCOME PER SHARE | FOREIGN TAX | FOREIGN TAX PER SHARE |
$11,490,353 | $0.2790 | $1,560,781 | $0.0379 |
82 | The Royce Funds 2023 Annual Report to Shareholders
All Trustees and Officers may be reached c/o The Royce Funds, 745 Fifth Avenue, New York, NY 10151
Christopher D. Clark, Trustee 1, President
Age: 58 | Number of Funds Overseen: 16 | 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 of Royce, a Member of the Board of Managers of Royce, having been employed by Royce since May 2007.
Patricia W. Chadwick, Trustee
Age: 75 | Number of Funds Overseen: 16 | Tenure: Since 2009
Non-Royce Directorships: Trustee of Voya Mutual Funds
Principal Occupation(s) During Past 5 Years: Consultant and President, Ravengate Partners LLC (since 2000). Formerly Director, Wisconsin Energy Corp. (until 2022).
Christopher C. Grisanti, Trustee
Age: 62 | Number of Funds Overseen: 16 | Tenure: Since 2017
Non-Royce Directorships: None
Principal Occupation(s) During Past Five Years: Chief Equity Strategist and Senior Portfolio Manager, MAI Capital Management LLC (investment advisory firm) (since May 2020). Formerly Co-Founder and Chief Executive Officer, Grisanti Capital Management LLC (investment advisory firm) (from 1999 to 2020); Director of Research and Portfolio Manager, Spears Benzak, Salomon & Farrell (from 1994 to 1999); and Senior Associate, Simpson, Thacher & Bartlett (law firm) (from 1988 to 1994).
Cecile B. Harper, Trustee
Age: 60 | Number of Funds Overseen: 16 | Tenure: Since 2020
Non-Royce Directorships: None
Principal Occupation(s) During Past Five Years: Chief Financial Officer and Chief Operating Officer, College Foundation at the University of Virginia (since October 2019). Formerly Board Member, Pyramid Peak Foundation (January 2012 to 2022); Board Member, Regional One Health Foundation (from June 2013 to September 2019); and Principal, Southeastern Asset Management (from December 1993 to September 2019).
Arthur S. Mehlman, Trustee3
Age: 81 | Number of Funds Overseen: 16 | Tenure: Since 2004
Non-Royce Directorships: None
Principal Occupation(s) During Past Five Years: Director, University of Maryland Foundation (non-profits). Formerly Director/Trustee, registered investment companies constituting the Legg Mason Funds (from 2002 to June 2021); Director, The League for People with Disabilities, Inc. (from June 2003 to June 2018); Director, Municipal Mortgage & Equity, LLC (from October 2004 to April 2011); Director, University of Maryland College Park Foundation (non-profit) (from 1998 to 2005); Director, Maryland Business Roundtable for Education (from July 1984 to June 2002); and Partner, KPMG LLP (international accounting firm) (from 1972 to 2002).
G. Peter O’Brien, Trustee
Age: 78 | Number of Funds Overseen: 71 | Tenure: Since 2001
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 55 Legg Mason Funds.
Principal Occupation(s) During Past Five Years: Trustee Emeritus, Colgate University (since 2005); and Emeritus Board Member, Hill House, Inc. (since 2019). Formerly Director, TICC Capital Corp. (from 2003-2017); Trustee, Colgate University (from 1996 to 2005); President, Hill House, Inc. (from 2001 to 2005); Board Member, Hill House, Inc. (from 1999 to 2019); Director, Bridges School (from 2006 to 2018); and Managing Director/ Equity Capital Markets Group, Merrill Lynch & Co. (from 1971 to 1999).
Julia W. Poston, Trustee2
Age: 63 | Number of Funds Overseen: 16 | Tenure: Since 2023
Non-Royce Directorships: Ohio National Fund, Inc. and The James Advantage Funds
Principal Occupation(s) During Past Five Years: Director, Member of Nominating/Governance Committee, and Chair of Audit Committee, Al. Neyer Corporation (since 2020); Director, Member of Governance Committee, and Chair of Audit Committee, Master Fluid Solutions (since 2021); Trustee and Chair of Finance/Audit Committee, Cincinnati Museum Center (non-profit) (since 2015); and Director and Founder, Cincinnati Women’s Executive Forum (non-profit) (since 2010). Formerly Senior Client Partner (2002-2020) and Assurance Practice Group Leader for Ohio Valley Region (2014-2019), Ernst & Young, LLP (international accounting and services firm); and Audit Partner, Arthur Andersen LLP (international accounting and services firm) (1982-2002).
Michael K. Shields, Trustee
Age: 65 | Number of Funds Overseen: 16 | Tenure: Since 2015
Non-Royce Directorships: None
Principal Occupation(s) During Past Five Years: President and Chief Executive Officer, Piedmont Trust Company (privately-owned North Carolina trust company) (since February 2012); Chairman, UNC Charlotte Investment Fund Board (since February 2016); and Chairman, Halftime Carolinas Board (since February 2011). Formerly Owner, Shields Advisors (investment consulting firm) (from April 2010 to June 2012); President and Chief Executive Officer, Eastover Capital Management (2005-2007); President and Chief Executive Officer, Campbell, Cowperthwait (investment subsidiary of U.S. Trust Corporation) (1997-2002); and equity portfolio manager and co-manager of Quality Growth Team, Scudder, Stevens and Clark (1992-1997).
Francis D. Gannon, Vice President
Age: 56 | 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: 61 | 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: 57 | 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: 56 | 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.
John P. Schwartz, Chief Compliance Officer
Age: 52 | Tenure: Since 2022
Principal Occupation(s) During Past Five Years: Chief Compliance Officer of The Royce Funds (since May 2022) and Associate General Counsel and Compliance Officer of Royce (since March 2013).
1 | Interested Trustee. |
2 | Became a Trustee effective as of the close of business on July 12, 2023. |
The Royce Funds 2023 Annual Report to Shareholders | 83
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, 2023, 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, 2023 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 referenced are unmanaged and capitalization-weighted. Each index’s returns include net reinvested dividends and/or interest income. Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication. The Russell 2000 is an index of domestic small-cap stocks. It measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 Index. The Russell 2000 Value and Growth Indexes consist of the respective value and growth stocks within the Russell 2000 as determined by Russell Investments. 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 2500 Index is an index of the 2,500 smallest publicly traded U.S. companies in the Russell 3000 index. The Russell 1000 Index is an index of domestic large-cap stocks. It measures the performance of the largest 1,000 publicly traded U.S. companies in the Russell 3000 Index. Securities are weighted based on their style score. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indexes or any securities or financial products. This material is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. The MSCI ACWI Small Cap Index is an unmanaged, capitalization-weighted index of global small-cap stocks. The MSCI ACWI ex USA Small Cap Index is an unmanaged, capitalization weighted index of global small-cap stocks, excluding the United States. The S&P 500 Index tracks the stock performance of 500 of the largest companies listed on stock exchanges in the U.S. The Nasdaq Composite Index is a market capitalization-weighted index of more than 3,700 stocks 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. Beta is a measure of the volatility or risk of an investment compared to the market as a whole. Alpha describes an investment strategy’s ability to beat the market. 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%. For the Morningstar Small Blend Category: © 2023 Morningstar. All Rights Reserved. The information regarding the category in this piece is: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Cyclical and Defensive are defined as follows: Cyclical: Communication Services, Consumer Discretionary, Energy, Financials, Industrials, Information Technology, and Materials. Defensive: Consumer Staples, Health Care, Real Estate, and Utilities. Return on Invested Capital is calculated by dividing a company’s past 12 months of operating income (earnings before interest and taxes) by its average invested capital (total equity, less cash and cash equivalents, plus total debt, minority interest, and preferred stock). 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. 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. 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. Because such investments are usually denominated in foreign currencies and such Funds do not intend to hedge their foreign currency exposures, the U.S. dollar value of such investments may be harmed by declines in the value of foreign currencies in relation to the U.S. dollar. Certain Funds invest a significant portion of their assets in a limited number of stocks or focus their investments in a particular sector or industry, which may involve considerably more risk than a more broadly diversified portfolio because they may be more susceptible to any single corporate, economic, political, regulatory, or market event. (Please see “Primary Risks for Fund Investors” and “Investing in Foreign Securities” in the prospectus.) 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.royceinvest.com. All publicly released material Fund information is disclosed by the Funds on their website at www.royceinvest.com. The Royce Funds is a service mark of The Royce Fund Distributor: Royce Fund Services, LLC
84 | The Royce Funds 2023 Annual Report to Shareholders
Notes to Performance and Other Important Information (continued)
Forward-Looking Statements
This material contains forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve risks and uncertainties, including, among others, statements as to:
● | the Funds’ future operating results, |
● | the prospects of the Funds’ portfolio companies, |
● | the impact of investments that the Funds have made or may make, the dependence of the Funds’ future success on the general economy and its impact on the companies and industries in which the Funds invest, and |
● | the ability of the Funds’ portfolio companies to achieve their objectives. |
This review and report use words such as “anticipates,” “believes,” “expects,” “future,” “intends,” and similar expressions to identify forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements for any reason.
The Royce Funds have based the forward-looking statements included in this review and report on information available to us on the date of the report, and we assume no obligation to update any such forward-looking statements. Although The Royce Funds undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise, you are advised to consult any additional disclosures that we may make through future shareholder communications or reports.
Proxy Voting
A copy of the policies and procedures that The Royce Funds use to determine how to vote proxies relating to portfolio securities and information regarding how each of The Royce Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available, without charge, on The Royce Funds’ website at www.royceinvest.com, by calling (800) 221-4268 (tollfree), and on the website of the Securities and Exchange Commission (“SEC”) at www.sec.gov.
Disclosure of Portfolio Holdings
The Funds’ complete portfolio holdings are also available on Exhibit F to Form N-PORT, which filings are made with the SEC within 60 days of the end of the first and third fiscal quarters. The Funds’ Form N-PORT filings are available on the SEC’s website at http://www.sec.gov.
Upcoming Name Change for Royce Pennsylvania Mutual Fund
Effective May 1, 2024, the name of Royce Pennsylvania Mutual Fund will change to Royce Small-Cap Fund and its investment policies will be amended to require the Fund to invest, under normal circumstances, at least 80% of the value of its net assets in equity securities of small-cap companies (i.e., those that have a market capitalization not greater than that of the largest company in the Russell 2000® Index at the time of its most recent reconstitution).
The Royce Funds 2023 Annual Report to Shareholders | 85
About Royce Investment Partners
Unparalleled Knowledge + Experience
Pioneers in small-cap investing, with 50+ 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.
Specialized Approaches
U.S., international, and global investment strategies
that pursue approaches with different risk profiles.
Unwavering Commitment
Our team of 17 portfolio managers has significant
personal investments in the strategies they manage.
Contact Us
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
ACCOUNT INFORMATION
Speak with a representative about:
• | Your account, transactions, and forms |
(800) 841-1180
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) 787-6923
OE-REP-1223
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. During the period covered by this report, the Registrant did not: (i) amend any provision of its code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions or (ii) grant any waiver, including an implicit waiver, from a provision of such code of ethics to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. |
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 serving on its audit committee. |
(a)(2) | Arthur S. Mehlman,[1] Patricia W. Chadwick, and Julia W. Poston[2] were designated by the Board of Trustees as the Registrant’s Audit Committee Financial Experts, effective April 15, 2004, April 8, 2010, and July 13, 2023, respectively. Mr. Mehlman, Ms. Chadwick, and Ms. Poston are “independent” as defined in Section 2(a)(19) of the Investment Company Act of 1940 (the “1940 Act”). |
Item 4. | Principal Accountant Fees and Services. |
(a) | Audit Fees: |
Year ended December 31, 2023 - $312,006
Year ended December 31, 2022 - $294,345
(b) | Audit-Related Fees: |
Year ended December 31, 2023 - $0
Year ended December 31, 2022 - $0
(c) | Tax Fees: |
Year ended December 31, 2023 - $131,320 – Preparation of tax returns and excise tax review
Year ended December 31, 2022 - $123,886 – Preparation of tax returns and excise tax review
(d) | All Other Fees: |
Year ended December 31, 2023 - $0
Year ended December 31, 2022 - $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 its investment adviser and its affiliates 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 associated with them. Any subsequent revision to already pre-approved services or fees 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 and/or its investment adviser and 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 (i.e., it is not a prohibited service), he or she will then arrange for a discussion of the proposed service and fee to be
[1] Retired as Director effective as of the close of business December 31, 2023.
[2] Became a Director effective as of the close of business on July 12, 2023.
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, only 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 Audit Committee. The Registrant’s independent auditor may not commence the engagement under consideration until the Registrant’s Chief Financial Officer has informed the auditor in writing that the required pre-approval has been obtained from an individual member of the Audit Committee who is an independent Board member or the Chairman of the Audit Committee, as applicable. Each 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, 2023 - $131,320 |
Year ended December 31, 2022 - $123,886 |
(h) | No such services were rendered during 2023 or 2022. |
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 period covered by this report.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies. Not applicable.
Item 13. 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 1940 Act.
(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 1940 Act.
[Signature page to follow.]
Pursuant to the requirements of the Securities Exchange Act of 1934 (the “Exchange Act”) and the 1940 Act, 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: February 24, 2024
Pursuant to the requirements of the Exchange Act and the 1940 Act, 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: February 24, 2024 | Date: February 24, 2024 |