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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 Financial Services Fund (RYFSX)

    Service Class

    1. Open to New Investors

      NAV as of 7/28/2010  $5.41
      Daily NAV change  -$0.04 (-0.01%)

      2. Recent News on this Fund


    1. Management Team

      Portfolio Manager

      Charles M. Royce

      Assistant Portfolio Manager

      Chris E. Flynn

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

      AllianceBernstein Holding L.P. 2.2%
      Kennedy-Wilson Holdings 2.1%
      Cohen & Steers 2.0%
      Ashmore Group 2.0%
      Enstar Group 1.9%
      VZ Holding 1.9%
      Marsh & McLennan 1.9%
      Interactive Brokers Group Cl. A 1.9%
      Invesco 1.9%
      Western Union 1.9%
      Top 10 as % of Total 19.7%

      Relative Risk Spectrum

      Risk Assessment

      go View the complete spectrum

      Literature & Research

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    2. Royce Financial Services Fund (RFS) seeks long-term growth of capital. The Fund’s assets are invested in a diversified portfolio of micro-cap, small-cap and/or mid-cap companies “principally” engaged in the financial services industry. Examples of such companies include: commercial and industrial banks, savings and loan associations, companies engaged in consumer and industrial finance, insurance, securities brokerage and investment management, other financial intermediaries and firms that primarily serve the financial services industry. Royce selects securities issued by companies that it believes have excellent business strengths and/or prospects for growth, high internal rates of return and low leverage, and that are trading significantly below its estimate of their current worth.

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

        2Q* YTD* 1YR 3YR 5YR Since Incept
      RYFSX -12.76% -9.16% 5.40% -10.03% 0.94% 2.73%
      Russell 2000 -9.92% -1.95% 21.48% -8.60% 0.37% 2.71%
      Russell 2500 Financial Services -9.46% 0.75% 24.96% -12.15% -3.46% 0.39%
      Inception Date: 12/31/2003  Annual Operating Expenses: Gross 2.14% Net 1.57%

      * 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, other expenses, and acquired fund fees and expenses. Net operating expenses reflect contractual fee waivers and/or reimbursements, exclusive of acquired fund fees and expenses. All expense information is reported as of the Fund's most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses, other than acquired fund fees and expenses, to the extent necessary to maintain the Fund'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. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds and other investment companies.

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

        Ticker Symbol RYFSX
        Fund Net Assets (All Classes) $11 million
        Number of Holdings 98
        Average Market Capitalization* $1.56 billion
        Weighted Average P/E Ratio** 11.5x
        Weighted Average P/B Ratio 1.6x
        Portfolio Turnover 2009 34%
        Minimum Investment $2,000
        Cusip Number 780905469
        Fund Number 268
        Inception Date 12/31/2003
        Benchmark Index Russell 2000

        * Geometrically calculated
        ** The Fund's P/E ratio calculation excludes companies with zero or negative earnings (13% of portfolio holdings as of 6/30/2010).

      2. Growth of Hypothetical $10,000 Invested 12/31/2003 As of Quarter-End 6/30/2010

        RYFSX vs Russell 2000

    1. Growth of Hypothetical $10,000 Invested 12/31/2003 As of Quarter-End 6/30/2010

      RYFSX 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 Bonds & Preferreds $0.03
      2 Technology $0.01
      3 Natural Resources -$0.01
      4 Financial Intermediaries -$0.68
      5 Financial Services -$1.05

      *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)
      Primerica $0.12
      Popular $0.03
      Investcorp Bank GDR $0.02
      Thomas Weisel Partners Group $0.02
      Jupiter Fund Management $0.02

      *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)
      U.S. Global Investors Cl. A -$0.09
      Waddell & Reed Financial Cl. A -$0.08
      HQ -$0.08
      Invesco -$0.06
      Janus Capital Group -$0.06

      *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
      RYFSX -12.76% -9.16% 5.40% -10.03% 0.94% 2.73%
      Russell 2000 -9.92% -1.95% 21.48% -8.60% 0.37% 2.71%
      Russell 2500 Financial Services -9.46% 0.75% 24.96% -12.15% -3.46% 0.39%
      Annual Operating Expenses: Gross 2.14% Net 1.57%
      Inception Date: 12/31/2003

      * 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, other expenses, and acquired fund fees and expenses. Net operating expenses reflect contractual fee waivers and/or reimbursements, exclusive of acquired fund fees and expenses. All expense information is reported as of the Fund's most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses, other than acquired fund fees and expenses, to the extent necessary to maintain the Fund'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. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds and other investment companies.


      Cumulative Performance Since Inception (12/31/2003)
      and Since Market Cycle Peak as of Quarter-End 6/30/10

      RYFSX

      View how RFS 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 RFS's Inception

      RYFSX

      Distribution History

      5-Year Distribution History
      Record Date Payable Date Ordinary Income S/T Gains L/T Gains Total Reinvest Price
      12/08/09 12/09/09 $0.0442 $— $— $0.04 $—
      12/08/08 12/09/08 $0.0553 $0.0061 $0.0206 $0.08 $4.02
      12/06/07 12/07/07 $0.0768 $0.1165 $0.1272 $0.32 $6.89
      12/04/06 12/05/06 $0.0670 $0.0573 $0.3102 $0.43 $7.27
      12/01/05 12/02/05 $0.0353 $0.0497 $0.0078 $0.09 $6.31
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      1. NAV History

        Previous 12 Months Ending 6/30/2010
        High $6.17 4/15/10
        Low $4.60 7/08/09
        Previous Month Ending 6/30/2010
        High $5.42 6/15/10
        Low $5.06 6/30/10

        NAV Search


      2. Year-End NAVs

        Year NAV
        2009 $5.57
        2008 $4.25
        2007 $6.71
        2006 $7.37
        2005 $6.26
        2004 $5.66
        2003 $5.00

  3. Portfolio Manager

    Charles M. Royce

    Charles M. Royce

    • President, Co-Chief Investment Officer and Portfolio Manager

    Charles M. Royce is President, Co-Chief Investment Officer and Portfolio Manager 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

    • 47 Years of Experience
    • 37 Years at Royce

    Assistant Portfolio Manager

    Chris E. Flynn

    Chris E. Flynn

    • Assistant Portfolio Manager, Senior Analyst and Principal

    Chris E. Flynn is a Principal, Assistant Portfolio Manager and Senior Analyst for Royce & Associates, LLC, investment adviser to The Royce Funds.

    View Full Bio

    Education

    • BA, Columbia University,
    • MBA, University of Chicago,

    Experience

    • 26 Years of Experience
    • 17 Years at Royce

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

      Fund Net Assets (All Classes) $11 million
      Number of Holdings 98
      Average Market Capitalization* $1.56 billion
      Weighted Average P/E Ratio** 11.5x
      Weighted Average P/B Ratio 1.6x
      Portfolio Turnover 2009 34%

      *Geometrically calculated
      **The Fund's P/E ratio calculation excludes companies with zero or negative earnings (13% of portfolio holdings as of 6/30/2010).

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

      Royce Financial Services Fund

      Small-Cap Companies by Dividend Yield
      as of Quarter-End 6/30/2010

      Small-Cap Companies by Dividend Yield
      Source: FactSet; U.S. Companies

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

      AllianceBernstein Holding L.P. 2.2%
      Kennedy-Wilson Holdings 2.1%
      Cohen & Steers 2.0%
      Ashmore Group 2.0%
      Enstar Group 1.9%
      VZ Holding 1.9%
      Marsh & McLennan 1.9%
      Interactive Brokers Group Cl. A 1.9%
      Invesco 1.9%
      Western Union 1.9%
      Top 10 as % of Total 19.7%

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

      View the complete list of holdings for Royce Financial Services 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)

      Financial Services 47.8%
      Financial Intermediaries 45.9%
      Technology 1.7%
      Natural Resources 1.3%
      Bonds & Preferreds 0.0%
      Treasuries, Cash & Cash Equivalents 3.3%

      Asset Allocation
      as of Quarter-End 6/30/2010
      % of Net Assets (Subject to Change)

      Royce Financial Services Fund Asset Allocation

    1. Relative Risk Spectrum

      Risk Assessment

      go View the complete spectrum

      Five-Year Morningstar Statistical Measures as of 6/30/2010*

        RFS Category Median Best Breakpoint
      Sharpe Ratio 0.02 -0.25 -0.10
      Standard Deviation 20.49 23.42 21.75

      *Five years ended 6/30/2010. Category Median and Best Quartile Breakpoint based on 33 financial services 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*
      RFS 0.94 20.49 0.05
      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 RFS Spread
      6/30/10 -9.9% -12.8% -2.9% 
      3/31/09 -15.0 -8.7 +6.3 
      12/31/08 -26.1 -25.1 +1.0 
      9/30/08 -1.1 -0.5 +0.6 
      3/31/08 -9.9 -10.4 -0.5 
      12/31/07 -4.6 -3.1 +1.5 
      9/30/07 -3.1 -3.1 0.0 
      6/30/06 -5.0 +1.5 +6.5 
      3/31/05 -5.3 -2.3 +3.0 
      9/30/04 -2.9 +0.8 +3.7 

      Royce Financial Services Fund outperformed the Russell 2000 in seven out of 10 down quarters.

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

      RFS vs Russell 2000

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

        2Q* YTD* 1YR 3YR 5YR Since Incept
      RYFSX -12.76% -9.16% 5.40% -10.03% 0.94% 2.73%
      Russell 2000 -9.92% -1.95% 21.48% -8.60% 0.37% 2.71%
      Russell 2500 Financial Services -9.46% 0.75% 24.96% -12.15% -3.46% 0.39%
      Annual Operating Expenses: Gross 2.14% Net 1.57%
      Inception Date: 12/31/2003

      * 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, other expenses, and acquired fund fees and expenses. Net operating expenses reflect contractual fee waivers and/or reimbursements, exclusive of acquired fund fees and expenses. All expense information is reported as of the Fund's most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses, other than acquired fund fees and expenses, to the extent necessary to maintain the Fund'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. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds and other investment companies.

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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 0.81%
      Acquired fund fees and expenses 0.08%
      Total annual Fund operating expenses 2.14%
      Fee waivers and/or expense reimbursements (0.57)%
      Total annual Fund operating expenses after fee waivers and/or expense reimbursements 1.57%

      Royce has contractually agreed to waive fees and/or reimburse expenses to the extent necessary to maintain the Fund's net annual operating expenses, other than acquired fund fees and expenses, at or below 1.49% through April 30, 2011 and at or below 1.99% through April 30, 2020.

      Total annual Fund operating expenses may differ from the expense ratio in the Fund's Financial Highlights because they include only the Fund's direct operating expenses and do not include acquired fund fees and expenses, which reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds and other investment companies.

    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 equity securities in the financial services sector. The Fund is not a complete investment program. It is designed for long-term investors who can accept the risks of investing in a fund with common stock holdings primarily in smaller-cap financial services companies. Therefore, the Fund is subject to certain risks associated with the industry, including, among other things, changes in government regulations, interest rate levels and general economic conditions. The Fund invests primarily in micro-cap, small-cap and/or mid-cap stocks, which may involve considerably more risk than investing in larger-cap stocks (Please see “Primary Risks for Fund Investors” in the prospectus). The Fund may invest up to 35% of its net assets in foreign securities, which may involve political, economic, currency and other risks not encountered in U.S. investments (Please see “Investing in International Securities” in the prospectus). The Russell 2000 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 2500 index represents the smallest 2,500 companies in the Russell 3000 index. The returns for the Russell 2500—Financial Sector represent those of the financial services companies within the Russell 2500 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.