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The Royce Funds

Small-cap value investing for more than 35 years

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  1. I Want To . . .
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  2. Royce Discovery Fund (RYDFX)

    Service Class
    MICRO-CAP/OPPORTUNISTIC

    Micro-Cap/Opportunistic Funds generally invest in micro-caps and/or those companies considered more opportunistic.

     

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    1. Open to New Investors

      NAV as of 7/28/2010  $4.54
      Daily NAV change  -$0.06 (-0.01%)

      2. Recent News on this Fund


    1. Management Team

      Portfolio Manager

      George Necakov

      Top 10 Positions As of Quarter-End 6/30/10
      % of Net Assets (Subject to Change)

      NutriSystem 1.4%
      Continucare Corporation 1.4%
      Caribou Coffee 1.3%
      Sinovac Biotech 1.2%
      Molina Healthcare 1.2%
      Stepan Company 1.2%
      Metropolitan Health Networks 1.2%
      Meadowbrook Insurance Group 1.2%
      VAALCO Energy 1.2%
      TransGlobe Energy 1.1%
      Top 10 as % of Total 12.3%

      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 by focusing on factors such as 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 6/30/10

        2Q* YTD* 1YR 3YR 5YR Since Incept
      RYDFX -7.16% -2.28% 12.63% -9.89% -1.18% 2.75%
      Russell Microcap -8.85% 0.12% 20.45% -12.14% -2.41% 1.09%
      Inception Date: 10/3/2003  Annual Operating Expenses: Gross 3.56% Net 1.49%

      * Not Annualized.

      Important Performance and Expense Information

      All performance information reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted.

      Gross operating expenses reflect the Fund's gross total annual operating expenses for the Service Class, and include management fees, 12b-1 distribution and service fees, and other expenses. Net operating expenses reflect contractual fee waivers and/or reimbursements. All expense information is reported as of the Fund's most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the Service Class's net annual operating expense ratio at or below 1.49% through April 30, 2011 and at or below 1.99% through April 30, 2020.

      1. Fund Statistics
        as of Quarter-End 6/30/2010

        Ticker Symbol RYDFX
        Fund Net Assets (All Classes) $3 million
        Number of Holdings 111
        Average Market Capitalization* $252 million
        Weighted Average P/E Ratio** 13.0x
        Weighted Average P/B Ratio 1.2x
        Portfolio Turnover 2009 13%
        Minimum Investment $2,000
        Cusip Number 780905477
        Fund Number 220
        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 (11% of portfolio holdings as of 6/30/2010).

      2. Growth of Hypothetical $10,000 Invested 10/03/2003 As of Quarter-End 6/30/2010

        RYDFX vs Russell 2000

    1. Growth of Hypothetical $10,000 Invested 10/03/2003 As of Quarter-End 6/30/2010

      RYDFX vs Russell 2000

      Calendar Year Total Returns
      as of Quarter-End 6/30/2010

      Calendar Year Total Returns

      Performance Breakdown by Sector
      for Quarter Ended 6/30/2010

        Sector Name Gain/Loss*
      (in millions)
      1 Consumer Products $0.01
      2 Financial Intermediaries -$0.00
      3 Natural Resources -$0.01
      4 Health -$0.02
      5 Consumer Services -$0.03
      6 Industrial Services -$0.03
      7 Industrial Products -$0.05
      8 Technology -$0.09

      *Represents net realized and unrealized gains and losses during the three-month period ended 6/30/2010. Performance results are estimates based upon unaudited portfolio results.

      Top 5 Winners*
      for Quarter Ended 6/30/2010

      Company Gain*
      (in millions)
      DDi Corporation $0.02
      Caribou Coffee $0.01
      TransGlobe Energy $0.01
      HealthTronics $0.01
      NutriSystem $0.01

      *Represents net realized and unrealized gains and losses during the three-month period ended 6/30/2010. Performance results are estimates based upon unaudited portfolio results.

      Top 5 Losers*
      for Quarter Ended 6/30/2010

      Company Loss*
      (in millions)
      L&L Energy -$0.01
      China Security & Surveillance Technology -$0.01
      Hooker Furniture -$0.01
      QKL Stores -$0.01
      Integrated Silicon Solution -$0.01

      *Represents net realized and unrealized gains and losses during the three-month period ended 6/30/2010. Performance results are estimates based upon unaudited portfolio results.

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    2. Average Annual Total Returns
      as of Quarter-End 6/30/10

        2Q* YTD* 1YR 3YR 5YR Since Incept
      RYDFX -7.16% -2.28% 12.63% -9.89% -1.18% 2.75%
      Russell Microcap -8.85% 0.12% 20.45% -12.14% -2.41% 1.09%
      Annual Operating Expenses: Gross 3.56% Net 1.49%
      Inception Date: 10/3/2003

      * Not Annualized.

      Important Performance and Expense Information

      All performance information reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted.

      Gross operating expenses reflect the Fund's gross total annual operating expenses for the Service Class, and include management fees, 12b-1 distribution and service fees, and other expenses. Net operating expenses reflect contractual fee waivers and/or reimbursements. All expense information is reported as of the Fund's most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the Service Class's net annual operating expense ratio at or below 1.49% through April 30, 2011 and at or below 1.99% through April 30, 2020.


      Cumulative Performance Since Inception (10/03/2003)
      and Since Market Cycle Peak as of Quarter-End 6/30/10

      RYDFX

      View how RDF performed during down markets.

      Absolute Return Focus: Five Year Return Periods as of Quarter-End 6/30/10
      Number of Five-Year Average Annual Return Periods 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
      12/08/08 12/09/08 $0.0000 $0.1146 $0.1835 $0.30 $3.26
      12/06/07 12/07/07 $0.0000 $0.0500 $0.4616 $0.51 $5.88
      12/04/06 12/05/06 $0.0000 $0.2067 $0.3138 $0.52 $6.80
      12/01/05 12/02/05 $0.0000 $0.3071 $0.2462 $0.55 $6.42
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      1. NAV History

        Previous 12 Months Ending 6/30/2010
        High $5.06 4/29/10
        Low $3.61 7/09/09
        Previous Month Ending 6/30/2010
        High $4.61 6/03/10
        Low $4.25 6/08/10

        NAV Search


      2. Year-End NAVs

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

  3. Portfolio Manager

    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

    • 16 Years of Experience
    • 16 Years at Royce

    1. Portfolio Statistics
      as of Quarter-End 6/30/2010

      Fund Net Assets (All Classes) $3 million
      Number of Holdings 111
      Average Market Capitalization* $252 million
      Weighted Average P/E Ratio** 13.0x
      Weighted Average P/B Ratio 1.2x
      Portfolio Turnover 2009 13%

      *Geometrically calculated
      **The Fund's P/E ratio calculation excludes companies with zero or negative earnings (11% of portfolio holdings as of 6/30/2010).

      Market Cap Exposure (In Millions)
      as of Quarter-End 6/30/2010

      Royce Discovery Fund

    2. Top 10 Positions
      as of Quarter-End 6/30/2010
      % of Net Assets (Subject to Change)

      NutriSystem 1.4%
      Continucare Corporation 1.4%
      Caribou Coffee 1.3%
      Sinovac Biotech 1.2%
      Molina Healthcare 1.2%
      Stepan Company 1.2%
      Metropolitan Health Networks 1.2%
      Meadowbrook Insurance Group 1.2%
      VAALCO Energy 1.2%
      TransGlobe Energy 1.1%
      Top 10 as % of Total 12.3%

      Portfolio Holdings
      as of Quarter-End 06/30/2010

      View the complete list of holdings for Royce Discovery Fund for the quarter ended 06/30/2010. 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 6/30/2010
      % of Net Assets (Subject to Change)

      Technology 25.0%
      Health 19.2%
      Industrial Products 17.4%
      Consumer Products 9.1%
      Industrial Services 8.5%
      Financial Intermediaries 5.7%
      Natural Resources 5.4%
      Consumer Services 4.8%
      Treasuries, Cash & Cash Equivalents 5.0%

      Asset Allocation
      as of Quarter-End 6/30/2010
      % 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 6/30/2010*

        RDF Category Median Best Breakpoint
      Sharpe Ratio -0.08 0.00 0.21
      Standard Deviation 20.84 22.22 21.00

      *Five years ended 6/30/2010. Category Median and Best Quartile Breakpoint based on 21 micro-cap objective funds (oldest class only) with at least five years of history.

      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.

      Risk/Return Comparison
      Five-Year Period Ended 6/30/2010

        Average Annual Total Return Standard Deviation Return Efficiency*
      RDF -1.18 20.84 -0.06
      Russell 2000 0.37 21.97 0.02

      *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 2000 Down Quarters
      Performance Comparison 15 Years Ended 6/30/10

      Quarter Russell 2000 RDF Spread
      6/30/10 -9.9% -7.2% +2.7% 
      3/31/09 -15.0 -13.5 +1.5 
      12/31/08 -26.1 -22.5 +3.6 
      9/30/08 -1.1 -3.2 -2.1 
      3/31/08 -9.9 -9.4 +0.5 
      12/31/07 -4.6 -4.5 +0.1 
      9/30/07 -3.1 -4.0 -0.9 
      6/30/06 -5.0 -6.9 -1.9 
      3/31/05 -5.3 -4.4 +0.9 
      9/30/04 -2.9 -5.5 -2.6 

      Royce Discovery Fund outperformed the Russell 2000 in six out of 10 down quarters.

    2. Down Market Performance Comparison (In Percentages):
      Royce Discovery Fund vs. Russell 2000

      RDF vs Russell 2000

      Average Annual Total Returns
      as of Quarter-End 6/30/10

        2Q* YTD* 1YR 3YR 5YR Since Incept
      RYDFX -7.16% -2.28% 12.63% -9.89% -1.18% 2.75%
      Russell Microcap -8.85% 0.12% 20.45% -12.14% -2.41% 1.09%
      Annual Operating Expenses: Gross 3.56% Net 1.49%
      Inception Date: 10/3/2003

      * Not Annualized.

      Important Performance and Expense Information

      All performance information reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted.

      Gross operating expenses reflect the Fund's gross total annual operating expenses for the Service Class, and include management fees, 12b-1 distribution and service fees, and other expenses. Net operating expenses reflect contractual fee waivers and/or reimbursements. All expense information is reported as of the Fund's most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the Service Class's net annual operating expense ratio at or below 1.49% through April 30, 2011 and at or below 1.99% through April 30, 2020.

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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 2.31%
      Total annual Fund operating expenses 3.56%
      Fee waivers and/or expense reimbursements (2.07)%
      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, 2011 and at or below 1.99% through April 30, 2020.

    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


  7. This material is not authorized for distribution unless preceded or accompanied by a current prospectus. Please read the prospectus carefully before investing or sending money. The Fund invests primarily in micro-cap stocks, which may involve considerably more risk than investing in larger-cap stocks (Please see “Primary Risks for Fund Investors” in the prospectus). The Russell Microcap Index includes 1000 of the smallest securities in the small-cap Russell 2000 Index.

  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.