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  2. Royce Discovery Fund (RYDFX)

    Service Class
    MICRO-CAP

    Micro-Cap Funds generally invest in micro-caps, those companies with market capitalizations up to $500 million, using our core investment approach.

     

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    1. Open to New Investors

      NAV as of 2/3/2012  $5.79
      Daily NAV change  +$0.10 (+1.76%)

    1. Management Team

      Portfolio Managers

      George Necakov
      James J. Harvey

      Assistant Portfolio Manager

      Charles M. Royce

      Top 10 Positions
      as of Quarter-End 12/31/2011
      % of Net Assets (Subject to Change)

      Drew Industries 2.2%
      Richmont Mines 1.8%
      Integrated Silicon Solution 1.8%
      Hi-Tech Pharmacal 1.7%
      PetroQuest Energy 1.6%
      Xyratex 1.6%
      Metropolitan Health Networks 1.6%
      G-III Apparel Group 1.5%
      Universal Stainless & Alloy Products 1.4%
      Dynamics Research 1.4%
      Top 10 as % of Total 16.6%

      Relative Risk Spectrum

      Risk Assessment

      go View the complete spectrum

      Literature & Research

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    2. Royce Discovery Fund (RDF) seeks long-term growth of capital. Royce invests the Fund's assets primarily in a broadly diversified portfolio of micro-cap companies, those with market capitalizations up to $500 million. Royce selects securities identified by a proprietary quantitative investment model that implements a value approach. These candidates are then evaluated by the Fund's portfolio managers using both quantitative and qualitative analysis that is focused on balance sheet quality, cash flow levels and various measures of a company’s profitability. We believe that investors in the Fund should have a long-term investment horizon of at least three years.

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      Average Annual Total Returns
      as of Quarter-End 12/31/11 as of Month-End 1/31/12

        4Q* YTD* 1YR 3YR 5YR Since Inception  Inception Date
      RYDFX 13.09% -2.24% -2.24% 13.76% -2.42% 4.50% 10/3/2003 
      Russell Microcap 13.83% -9.27% -9.27% 14.23% -3.75% 2.81% N/A
      Annual Operating Expenses: Gross 3.04% Net 1.49%

      * Not Annualized

      1. Fund Statistics
        as of Quarter-End 12/31/2011

        Fund Net Assets (All Classes) $4 million
        Ticker Symbol RYDFX
        Number of Holdings 101
        Average Market Capitalization* $339 million
        Weighted Average P/E Ratio** 10.4x
        Weighted Average P/B Ratio 1.4x
        U.S. Investments
        (% of Net Assets)        		 84.6%
        Non-U.S. Investments
        (% of Net Assets)        		 9.7%
        Portfolio Turnover as of 6/30/2011 44%
        Minimum Investment $2,000
        Cusip Number 780905477
        Fund Number 220
        Fund Inception Date 10/3/2003
        Benchmark Index Russell Microcap

        * Geometrically calculated
        ** The Fund's P/E ratio calculation excludes companies with zero or negative earnings (2% of portfolio holdings as of 12/31/2011).

      2. Value of $10,000 Invested on 10/3/03
        As of Quarter-End 12/31/2011

        RYDFX vs Russell 2000

    1. Value of $10,000 Invested on 10/3/03
      As of Quarter-End 12/31/2011

      RYDFX vs Russell 2000

      Calendar Year Total Returns
      as of Quarter-End 12/31/2011

      Calendar Year Total Returns

      Performance Breakdown by Sector
      for Quarter Ended 12/31/2011

        Sector Name Gain/Loss*
      (in millions)
      1 Information Technology $0.12
      2 Consumer Discretionary $0.10
      3 Industrials $0.08
      4 Materials $0.04
      5 Health Care $0.03
      6 Energy $0.03
      7 Consumer Staples $0.01
      8 Financials $0.01

      *Represents net realized and unrealized gains and losses during the three-month period ended 12/31/2011. Performance results are estimates based upon unaudited portfolio results.

      Top 5 Winners*
      for Quarter Ended 12/31/2011

      Company Gain*
      (in millions)
      Metropolitan Health Networks $0.02
      Standard Motor Products $0.02
      Xyratex $0.02
      Universal Stainless & Alloy Products $0.02
      Force Protection $0.02

      *Represents net realized and unrealized gains and losses during the three-month period ended 12/31/2011. Performance results are estimates based upon unaudited portfolio results.

      Top 5 Losers*
      for Quarter Ended 12/31/2011

      Company Loss*
      (in millions)
      Wet Seal (The) Cl. A -$0.01
      JAKKS Pacific -$0.01
      Artio Global Investors Cl. A -$0.01
      Kensey Nash -$0.01
      Amedisys -$0.00

      *Represents net realized and unrealized gains and losses during the three-month period ended 12/31/2011. Performance results are estimates based upon unaudited portfolio results.

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    2. Average Annual Total Returns
      as of Quarter-End 12/31/11 as of Month-End 1/31/12

        4Q* YTD* 1YR 3YR 5YR Since Inception  Inception Date
      RYDFX 13.09% -2.24% -2.24% 13.76% -2.42% 4.50% 10/3/2003
      Russell Microcap 13.83% -9.27% -9.27% 14.23% -3.75% 2.81% N/A
      Annual Operating Expenses: Gross 3.04% Net 1.49%

      * Not Annualized


      Micro-Cap Maket Cycle Performance as of Quarter-End 12/31/11

      RYDFX

      View how RDF performed during down markets.

      Absolute Return Focus: Five Year Monthly Rolling Return Periods 
      as of Quarter-End 12/31/11
      Number of Five-Year Average Annual Return Periods since RDF's Inception

      RYDFX

      Relative Return Focus: Five Year Monthly Rolling Return Periods 
      as of Quarter-End 12/31/11
      RDF Spread vs. Russell Microcap since RDF's Inception

      RYDFX

      Distribution History

      5-Year Distribution History
      Record Date Payable Date Ordinary Income S/T Gains L/T Gains Total Reinvest Price
      12/7/11 12/8/11 $0.0028 $— $— $0.00 $4.99
      12/8/08 12/9/08 $0.0000 $0.1146 $0.1835 $0.30 $3.26
      12/6/07 12/7/07 $0.0000 $0.0500 $0.4616 $0.51 $5.88
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      1. NAV History

        Previous 12 Months Ending 1/31/2012
        High $5.66 4/6/11
        Low $4.30 10/3/11
        Previous Month Ending 1/31/2012
        High $5.61 1/27/12
        Low $5.12 1/1/12

        NAV Search


      2. Year-End NAVs

        Year NAV
        2011 $5.12
        2010 $5.24
        2009 $4.38
        2008 $3.48
        2007 $5.85
        2006 $6.87
        2005 $6.33
        2004 $6.39
        2003 $5.70

  3. Portfolio Managers

    George Necakov

    George Necakov

    • Portfolio Manager and Director of Quantitative Strategies
    • CFA

    George Necakov, CFA, is a Portfolio Manager and the Director of Quantitative Strategies for Royce & Associates, LLC, investment adviser to The Royce Funds.

    View Full Bio

    Education

    • BA, New York University

    Experience

    • 17 Years of Experience
    • 17 Years at Royce
    James J. Harvey

    James J. Harvey

    • Portfolio Manager
    • CFA

    James J. Harvey, CFA, is a Portfolio Manager for Royce & Associates, LLC, investment adviser to The Royce Funds.

    View Full Bio

    Education

    • BS, State University of New York, Albany
    • MBA, New York University

    Experience

    • 19 Years of Experience
    • 13 Years at Royce

    Assistant Portfolio Manager

    Charles M. Royce

    Charles M. Royce

    • President and Co-Chief Investment Officer

    Charles M. Royce is President and Co-Chief Investment Officer of Royce & Associates, LLC and President of The Royce Funds, a position he has held since 1972.

    View Full Bio

    Education

    • BA, Brown University,
    • MBA, Columbia University,

    Experience

    • 49 Years of Experience
    • 39 Years at Royce

    1. Portfolio Statistics
      as of Quarter-End 12/31/2011

      Fund Net Assets (All Classes) $4 million
      Number of Holdings 101
      Average Market Capitalization* $339 million
      Weighted Average P/E Ratio** 10.4x
      Weighted Average P/B Ratio 1.4x
      Portfolio Turnover as of 6/30/2011 44%

      *Geometrically calculated
      **The Fund's P/E ratio calculation excludes companies with zero or negative earnings (2% of portfolio holdings as of 12/31/2011).

      Market Cap Exposure (In Millions)
      as of Quarter-End 12/31/2011

      Royce Discovery Fund

      Companies by Market Capitalization
      as of Quarter-End 12/31/2011

      Companies by Market Capitalization
      Source: Compustat; U.S. Companies

    2. Top 10 Positions
      as of Quarter-End 12/31/2011
      % of Net Assets (Subject to Change)

      Drew Industries 2.2%
      Richmont Mines 1.8%
      Integrated Silicon Solution 1.8%
      Hi-Tech Pharmacal 1.7%
      PetroQuest Energy 1.6%
      Xyratex 1.6%
      Metropolitan Health Networks 1.6%
      G-III Apparel Group 1.5%
      Universal Stainless & Alloy Products 1.4%
      Dynamics Research 1.4%
      Top 10 as % of Total 16.6%

      Portfolio Holdings
      as of Quarter-End 12/31/2011

      View the complete list of holdings for Royce Discovery Fund as of 12/31/2011. Not posted sooner than 15 days after the end of the period. Unaudited schedule of portfolio holdings is presented for informational purposes only.

    3. Portfolio Sector Breakdown
      as of Quarter-End 12/31/2011
      % of Net Assets (Subject to Change)

      Information Technology 27.3%
      Consumer Discretionary 20.8%
      Industrials 13.6%
      Materials 10.7%
      Health Care 9.6%
      Energy 7.5%
      Financials 2.8%
      Consumer Staples 1.9%
      Treasuries, Cash & Cash Equivalents 5.7%

      Asset Allocation
      as of 12/31/2011
      % of Net Assets (Subject to Change)

      Royce Discovery Fund Asset Allocation

    1. Relative Risk Spectrum

      Risk Assessment

      go View the complete spectrum

      Five-Year Morningstar Statistical Measures as of 12/31/2011*

        RDF Category Median Best Breakpoint
      Sharpe Ratio -0.05 0.04 0.22
      Standard Deviation 23.17 24.47 23.19

      *Five years ended 12/31/2011. Category Median and Best Decile Breakpoint based on 22 micro-cap objective funds (oldest class only) with at least five years of history.

      Royce Discovery Fund's value approach produced below average volatility relative to micro-cap objective funds.

      Risk Disclosure

      The Sharpe Ratio is calculated for a specified period by dividing a fund's annualized excess returns by its annualized standard deviation. The higher the Sharpe Ratio, the better the fund's historical risk-adjusted performance. Standard deviation is a statistical measure within which a fund's total returns have varied over time. The greater the standard deviation, the greater a fund's volatility.

      Risk/Return Comparison
      Five-Year Period Ended 12/31/2011

        Average Annual Total Return Standard Deviation Return Efficiency*
      RDF -2.42 23.17 -0.10
      Russell Microcap -3.75 25.29 -0.15

      *Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period. Please read the prospectus for a more complete discussion of risk.

      Russell Microcap Down Quarters
      Performance Comparison Since RDF's Inception Through 12/31/11

      Quarter Russell Microcap RDF Spread
      9/30/11 -22.7% -15.8% +6.9% 
      6/30/11 -3.5 -3.4 +0.1 
      6/30/10 -8.9 -7.2 +1.7 
      12/31/09 -0.5 +0.2 +0.7 
      3/31/09 -15.2 -13.5 +1.7 
      12/31/08 -28.1 -22.5 +5.6 
      9/30/08 -0.8 -3.2 -2.4 
      6/30/08 -3.5 -4.5 -1.0 
      3/31/08 -12.4 -9.4 +3.0 
      12/31/07 -7.5 -4.5 +3.0 
      9/30/07 -4.6 -4.0 +0.6 
      9/30/06 -0.7 +1.1 +1.8 
      6/30/06 -6.8 -6.9 -0.1 
      3/31/05 -7.4 -4.4 +3.0 
      9/30/04 -5.6 -5.5 +0.1 
      6/30/04 -1.8 -2.8 -1.0 

      Royce Discovery Fund outperformed the Russell Microcap in 12 out of 16 down quarters.

    2. Down Market Performance Comparison (In Percentages):
      as of Quarter-End 12/31/2011

      RDF vs Russell 2000

      Average Annual Total Returns
      as of Quarter-End 12/31/11 as of Month-End 1/31/12

        4Q* YTD* 1YR 3YR 5YR Since Inception  Inception Date
      RYDFX 13.09% -2.24% -2.24% 13.76% -2.42% 4.50% 10/3/2003 
      Russell Microcap 13.83% -9.27% -9.27% 14.23% -3.75% 2.81% N/A
      Annual Operating Expenses: Gross 3.04% Net 1.49%

      * Not Annualized

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    1. Shareholder Fees

      (fees paid directly from your investment)
      Maximum sales charge (load) imposed on purchases 0.00%
      Maximum deferred sales charge 0.00%
      Maximum sales charge (load) imposed on reinvested dividends 0.00%
      Redemption fee (as a percentage of amount redeemed on shares held for less than 180 days) 1.00%

    2. Annual Fund Operating Expenses

      (expenses that you pay each year as a percentage of the value of your investment)
      Management fees 1.00%
      Distribution (12b-1) fees 0.25%
      Other expenses 1.79%
      Total annual Fund operating expenses 3.04%
      Fee waivers and/or expense reimbursements (1.55)%
      Total annual Fund operating expenses after fee waivers and/or expense reimbursements 1.49%

      Royce has contractually agreed to waive fees and/or reimburse expenses to the extent necessary to maintain the Fund's net annual operating expenses at or below 1.49% through April 30, 2012 and at or below 1.99% through April 30, 2021.

    3. Account Minimums

      To Open an Account
      Regular $2,000
      Traditional/Roth IRA/Coverdell ESA $1,000
      Automatic Investment and Direct Deposit Plans $1,000
      401(k)s none
      Subsequent Investments
      All Account Types $50


  8. © Royce & Associates, LLC, 745 Fifth Avenue, New York, NY 10151, (800) 221-4268. All rights reserved. Distributor of The Royce Fund and Royce Capital Fund: Royce Fund Services, Inc., a wholly owned subsidiary of Royce & Associates. The Royce Funds are offered and sold only to persons residing in the United States and are offered by prospectus only. The prospectuses include investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. View our Policies & Procedures, including, among others, our Sarbanes-Oxley Code of Ethics, Privacy Policy and Proxy Voting Guidelines and Procedures.