FUND
R
| Prospectus | |||||||
| Consultant and R Class Shares | |||||||
| May 1, 2023 | |||||||
|
FUND |
CONSULTANT |
R |
|||||
| 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 | |||||||
| As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved of these securities, or determined that the information in this prospectus is accurate or complete. It is a crime to represent otherwise. | |||||||
| royceinvest.com | |
||||||
Table of Contents
| Consultant Class Shares of The Royce Funds are generally offered only through certain broker-dealers. R Class Shares of The Royce Funds are generally offered only through certain broker-dealers to “Retirement Plans” held on the books of the Funds through omnibus account arrangements. |
The Royce Fund Prospectus 2023 | 1
Royce Micro-Cap Fund’s investment goal is long-term growth of capital.
The following table presents the fees and expenses that you may pay if you buy and hold shares of the Fund. Shares of the Fund purchased or held through a third party, such as a broker-dealer, bank, or other financial intermediary, may incur fees and expenses that are not reflected in the tables and examples below.
| CONSULTANT CLASS | |
| Maximum sales charge (load) imposed on purchases | |
| Maximum deferred sales charge on purchases held for less than 365 days (as a percentage of net asset value | |
| at the time of purchase or redemption, whichever is less) | |
| Maximum sales charge (load) imposed on reinvested dividends | |
| Management fees | |
| Distribution and/or service (12b-1) fees | |
| Other expenses | |
| Total annual Fund operating expenses | |
| Fee waivers and/or expense reimbursements | - |
| Total annual Fund operating expenses after fee waivers and/or expense reimbursements |
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5 % return each year and that the Fund’s total operating expenses (net of fee waivers and/or expense reimbursements in year one) remain the same. Although your actual costs may be higher or lower, based on the assumptions your costs would be: |
| CONSULTANT CLASS | ||
| 1 Year | $ |
|
| 3 Years | $ |
|
| 5 Years | $ |
|
| 10 Years | $ |
|
The Fund
pays transaction costs, such as commissions, when it buys and sells securities
(or “turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
2 | The Royce Fund Prospectus 2023
Royce Micro-Cap Fund (continued)
Royce Investment Partners (“Royce”), the Fund’s investment adviser, invests the Fund’s assets primarily in equity securities of micro-cap companies. Micro-cap companies are those that have a market capitalization not greater than that of the largest company in the Russell Microcap® Index at the time of its most recent reconstitution. Royce uses multiple investment themes and offers wide exposure to micro-cap stocks by investing in companies with strong fundamentals and/or prospects selling at prices that Royce believes do not fully reflect these attributes. Royce considers companies with strong balance sheets, attractive growth prospects, and/or the potential for improvement in cash flow levels and internal rates of return, among other factors.
The Royce Fund Prospectus 2023 | 3
Royce Micro-Cap Fund (concluded)
 |
During the
period shown in the bar chart, the
The table
also presents the impact of taxes on the Fund’s returns. In calculating these
figures,
| 1 YEAR | 5 YEAR | 10 YEAR | |
| Consultant Class | |||
| Return Before Taxes | - |
||
| Return After Taxes on Distributions | - |
||
| Return After Taxes on Distributions and Sale of | |||
| Fund Shares | - |
||
| Russell Microcap Index | |||
| - |
|||
| Russell 2000 Index | |||
| (Reflects no deductions for fees, expenses, or taxes) | - |
|
Investment Adviser and Portfolio Management
Royce & Associates, LP is the Fund’s investment adviser and a limited partnership organized under the laws of Delaware. Royce & Associates primarily conducts its business under the name Royce Investment Partners. James P. Stoeffel is the Fund’s lead portfolio manager, and Portfolio Manager Brendan J. Hartman manages the Fund with him. Mr. Stoeffel previously co-managed the Fund (2015). Mr. Hartman was previously assistant portfolio manager (2013-2015).
How to Purchase and Sell Fund Shares
Minimum initial investments for shares of the Fund’s Consultant Class purchased directly from The Royce Fund:
| ACCOUNT TYPE | MINIMUM |
| Regular Account | $2,000 |
| IRA | $1,000 |
| Automatic Investment or Direct Deposit Plan Accounts | $1,000 |
| 401(k) Accounts | None |
The minimum for subsequent investments is $50, regardless of account type.
Consultant Class shares of the Fund purchased through a third party, such as a broker-dealer, bank, or other financial intermediary, may be subject to investment minimums that differ from those described in this Prospectus.
You may request to sell shares in your account at any time online, by telephone, and/or by mail. You may also purchase or sell Fund shares through a third party, such as a broker-dealer, bank, or other financial intermediary.
Tax Information
The Fund intends to make distributions that are expected to be taxable to you as ordinary income or capital gains unless you are tax exempt or your investment is in an IRA, a 401(k) plan, or is otherwise tax deferred.
Financial Intermediary Compensation
If you purchase the Fund through a financial intermediary (such as a broker-dealer or bank), the Fund and its related companies may pay such intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
4 | The Royce Fund Prospectus 2023
Royce Pennsylvania Mutual Fund’s investment goal is long-term growth of capital.
The following table presents the fees and expenses that you may pay if you buy and hold shares of the Fund. Shares of the Fund purchased or held through a third party, such as a broker-dealer, bank, or other financial intermediary, may incur fees and expenses that are not reflected in the tables and examples below.
| CONSULTANT CLASS | |
| Maximum sales charge (load) imposed on purchases | |
| Maximum deferred sales charge on purchases held for less than 365 days (as a percentage of net asset value at the time of purchase or | |
| redemption, whichever is less) | |
| Maximum sales charge (load) imposed on reinvested dividends | |
| Management fees | |
| Distribution and/or service (12b-1) fees | |
| Other expenses | |
| Acquired fund fees and expenses | |
| Total annual Fund operating expenses |
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s total operating expenses remain the same. Although your actual costs may be higher or lower, based on the assumptions your costs would be: |
| CONSULTANT CLASS | ||
| 1 Year | $ |
|
| 3 Years | $ |
|
| 5 Years | $ |
|
| 10 Years | $ |
|
The Fund
pays transaction costs, such as commissions, when it buys and sells securities
(or “turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Royce Fund Prospectus 2023 | 5
Royce Pennsylvania Mutual Fund (continued)
Royce Investment Partners (“Royce”), the Fund’s investment adviser, invests the Fund’s assets primarily in equity securities of small- and micro-cap companies that it believes are trading below its estimate of their current worth. Small- and micro-cap companies are 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 Fund uses multiple investment disciplines in an effort to provide exposure to approaches that have historically performed well in different market environments. These disciplines include “High Quality,” which looks for companies that have high returns on invested capital and that Royce believes have significant competitive advantages; “Emerging Quality,” which seeks companies that are newer in their lifecycle but that Royce believes can become High Quality in the future; “Traditional Value,” which looks for companies trading at prices below Royce’s estimate of their current worth; and “Quality Value,” which seeks companies with attractive profit margins, strong free cash flows, and lower leverage that also trade at what Royce believes are attractive valuations. The Fund’s portfolio managers generally focus on one of these approaches in managing segments of the Fund’s assets, while the Lead Portfolio Manager collaborates with the managers across all segments.
6 | The Royce Fund Prospectus 2023
Royce Pennsylvania Mutual Fund (concluded)
 |
During the
period shown in the bar chart, the
The table
also presents the impact of taxes on the Fund’s returns. In calculating these
figures,
| 1 YEAR | 5 YEAR | 10 YEAR | |
| Consultant Class | |||
| Return Before Taxes | - |
||
| Return After Taxes on Distributions | - |
||
| Return After Taxes on Distributions and Sale of | |||
| Fund Shares | - |
||
| Russell 2000 Index | |||
| - |
Investment Adviser and Portfolio Management
Royce & Associates, LP is the Fund’s investment adviser and a limited partnership organized under the laws of Delaware. Royce & Associates primarily conducts its business under the name Royce Investment Partners. Charles M. Royce is the Fund’s lead portfolio manager. Portfolio Managers Jay S. Kaplan, Lauren A. Romeo, Steven G. McBoyle, Miles Lewis, and Andrew S. Palen manage the Fund with him. They are assisted by James P. Stoeffel. Mr. Royce has been portfolio manager since 1972. Mr. Kaplan and Ms. Romeo became portfolio managers in 2016 and were previously assistant portfolio managers from 2003 and 2006, respectively, through 2015. Mr. McBoyle became portfolio manager in 2019. Mr. Lewis became portfolio manager on February 1, 2021. Mr. Palen became portfolio manager on May 1, 2021 and was previously assistant portfolio manager from 2018. Mr. Stoeffel became assistant portfolio manager in 2017.
How to Purchase and Sell Fund Shares
Minimum initial investments for shares of the Fund’s Consultant Class purchased directly from The Royce Fund:
| ACCOUNT TYPE | MINIMUM |
| Regular Account | $2,000 |
| IRA | $1,000 |
| Automatic Investment or Direct Deposit Plan Accounts | $1,000 |
| 401(k) Accounts | None |
The minimum for subsequent investments is $50, regardless of account type.
Consultant Class shares of the Fund purchased through a third party, such as a broker-dealer, bank, or other financial intermediary, may be subject to investment minimums that differ from those described in this Prospectus.
You may request to sell shares in your account at any time online, by telephone, and/or by mail. You may also purchase or sell Fund shares through a third party, such as a broker-dealer, bank, or other financial intermediary.
Tax Information
The Fund intends to make distributions that are expected to be taxable to you as ordinary income or capital gains unless you are tax exempt or your investment is in an IRA, a 401(k) plan, or is otherwise tax deferred.
Financial Intermediary Compensation
If you purchase the Fund through a financial intermediary (such as a broker-dealer or bank), the Fund and its related companies may pay such intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
The Royce Fund Prospectus 2023 | 7
Royce Premier Fund’s investment goal is long-term growth of capital.
The following table presents the fees and expenses that you may pay if you buy and hold shares of the Fund. Shares of the Fund purchased or held through a third party, such as a broker-dealer, bank, or other financial intermediary, may incur fees and expenses that are not reflected in the tables and examples below.
| CONSULTANT CLASS | |
| Maximum sales charge (load) imposed on purchases | |
| Maximum deferred sales charge on purchases held for less than 365 days (as a percentage of net asset value at the time of purchase or | |
| redemption, whichever is less) | |
| Maximum sales charge (load) imposed on reinvested dividends | |
| Management fees | |
| Distribution and/or service (12b-1) fees | |
| Other expenses | |
| Total annual Fund operating expenses | |
| Fee waivers and/or expense reimbursements | - |
| Total annual Fund operating expenses after fee waivers and/or expense reimbursements |
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s total operating expenses (net of fee waivers and/or expense reimbursements in year one) remain the same. Although your actual costs may be higher or lower, based on the assumptions your costs would be: |
| CONSULTANT CLASS | ||
| 1 Year | $ |
|
| 3 Years | $ |
|
| 5 Years | $ |
|
| 10 Years | $ |
|
The Fund
pays transaction costs, such as commissions, when it buys and sells securities
(or “turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
8 | The Royce Fund Prospectus 2023
Royce Premier Fund (continued)
Royce Investment Partners (“Royce”), the Fund’s investment adviser, invests the Fund’s assets in a limited number (generally less than 100) of equity securities of primarily small-cap companies at the time of investment. Small-cap companies are 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. Royce looks for companies that it considers “premier”—those that it believes are trading below its estimate of their current worth that also have excellent business strengths, strong balance sheets and/or improved prospects for growth, the potential for improvement in cash flow levels and internal rates of return, and franchise sustainability.
The Royce Fund Prospectus 2023 | 9
Royce Premier Fund (continued)
 |
During the
period shown in the bar chart, the
The table
also presents the impact of taxes on the Fund’s returns. In calculating these
figures,
| 1 YEAR | 5 YEAR | 10 YEAR | |
| Consultant Class | |||
| Return Before Taxes | - |
||
| Return After Taxes on Distributions | - |
||
| Return After Taxes on Distributions and Sale of | |||
| Fund Shares | - |
||
| Russell 2000 Index | |||
| - |
Investment Adviser and Portfolio Management
Royce & Associates, LP is the Fund’s investment adviser and a limited partnership organized under the laws of Delaware. Royce & Associates primarily conducts its business under the name Royce Investment Partners. Portfolio Managers Lauren A. Romeo and Steven G. McBoyle are the Fund’s co-lead portfolio managers. Portfolio Manager Charles M. Royce manages the Fund with them. They are assisted by Portfolio Manager Andrew S. Palen. Ms. Romeo and Mr. McBoyle became co-lead portfolio managers on April 1, 2022. Ms. Romeo (2016-2022) and Mr. McBoyle (2016-2022) were previously the Fund’s portfolio managers. Prior to that, Ms. Romeo (2006-2015) and Mr. McBoyle (2014-2015) were the Fund’s assistant portfolio managers. Mr. Royce has been portfolio manager since the Fund’s inception. Mr. Palen became assistant portfolio manager on February 7, 2022.
How to Purchase and Sell Fund Shares
Minimum initial investments for shares of the Fund’s Consultant Class purchased directly from The Royce Fund:
| ACCOUNT TYPE | MINIMUM |
| Regular Account | $2,000 |
| IRA | $1,000 |
| Automatic Investment or Direct Deposit Plan Accounts | $1,000 |
| 401(k) Accounts | None |
The minimum for subsequent investments is $50, regardless of account type.
Consultant Class shares of the Fund purchased through a third party, such as a broker-dealer, bank, or other financial intermediary, may be subject to investment minimums that differ from those described in this Prospectus.
You may request to sell shares in your account at any time online, by telephone, and/or by mail. You may also purchase or sell Fund shares through a third party, such as a broker-dealer, bank, or other financial intermediary.
10 | The Royce Fund Prospectus 2023
Royce Premier Fund (concluded)
Tax Information
The Fund intends to make distributions that are expected to be taxable to you as ordinary income or capital gains unless you are tax exempt or your investment is in an IRA, a 401(k) plan, or is otherwise tax deferred.
Financial Intermediary Compensation
If you purchase the Fund through a financial intermediary (such as a broker-dealer or bank), the Fund and its related companies may pay such intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
The Royce Fund Prospectus 2023 | 11
Royce Small-Cap Opportunity Fund’s investment goal is long-term growth of capital.
The following table presents the fees and expenses that you may pay if you buy and hold shares of the Fund. Shares of the Fund purchased or held through a third party, such as a broker-dealer, bank, or other financial intermediary, may incur fees and expenses that are not reflected in the tables and examples below.
| CONSULTANT CLASS | R CLASS | |
| Maximum sales charge (load) imposed on purchases | ||
| Maximum deferred sales charge on purchases held for less than 365 days (as a percentage of net asset value | ||
| at the time of purchase or redemption, whichever is less) | ||
| Maximum sales charge (load) imposed on reinvested dividends | ||
| Management fees | ||
| Distribution and/or service (12b-1) fees | ||
| Other expenses | ||
| Total annual Fund operating expenses | ||
| Fee waivers and/or expense reimbursements | - |
|
| Total annual Fund operating expenses after fee waivers and/or expense reimbursements | ||
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s total operating expenses (net of fee waivers and/or expense reimbursements for the Consultant Class in year one) remain the same. Although your actual costs may be higher or lower, based on the assumptions your costs would be: |
| CONSULTANT CLASS | R CLASS | |
| 1 Year | $ |
$ |
| 3 Years | $ |
$ |
| 5 Years | $ |
$ |
| 10 Years | $ |
$ |
The Fund
pays transaction costs, such as commissions, when it buys and sells securities
(or “turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
12 | The Royce Fund Prospectus 2023
Royce Small-Cap Opportunity Fund (continued)
Royce Investment Partners (“Royce”), the Fund’s investment adviser, invests the Fund’s assets primarily in equity securities of small- and micro-cap companies in an attempt to take advantage of what it believes are opportunistic situations for undervalued securities. Small-and micro-cap companies are 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.
Such opportunistic situations may include turnarounds, emerging growth companies with interrupted earnings patterns, companies with unrecognized asset values, or undervalued growth companies. Although the Fund generally focuses on securities of small- and micro-cap companies it may, in certain market environments, invest an equal or greater percentage of its assets in securities of larger-cap companies and may invest up to 10% of its net assets (measured at the time of investment) in securities of companies headquartered in foreign countries.
The Royce Fund Prospectus 2023 | 13
Royce Small-Cap Opportunity Fund (concluded)
illustrative
purposes—returns differ by Class).
 |
During the
period shown in the bar chart, the
The table
also presents the impact of taxes on the Fund’s returns (Consultant Class again
used for illustrative purposes). In calculating these figures,
| 1 YEAR | 5 YEAR | 10 YEAR | |
| Consultant Class | |||
| Return Before Taxes | - |
||
| Return After Taxes on Distributions | - |
||
| Return After Taxes on Distributions and Sale of | |||
| Fund Shares | - |
||
| R Class | |||
| Return Before Taxes | - |
||
| Russell 2000 Value Index | |||
| - |
|||
| Russell 2000 Index | |||
| (Reflects no deductions for fees, expenses, or taxes) | - |
Investment Adviser and Portfolio Management
Royce & Associates, LP is the Fund’s investment adviser and a limited partnership organized under the laws of Delaware. Royce & Associates primarily conducts its business under the name Royce Investment Partners. The Fund is managed by a team consisting of Portfolio Managers James P. Stoeffel, Brendan J. Hartman, and James J. Harvey. They are assisted by Portfolio Manager Kavitha Venkatraman. Messrs. Stoeffel, Hartman, and Harvey became portfolio managers in April 2021. Ms. Venkatraman became assistant portfolio manager in October 2021.
How to Purchase and Sell Fund Shares
The Fund’s R Class Shares are generally offered only through certain broker-dealers to “Retirement Plans” with accounts held on the books of the Fund through omnibus account arrangements (either at the plan level or at the level of the financial intermediary).
Minimum initial investments for shares of the Fund’s Consultant Class purchased directly from The Royce Fund:
| ACCOUNT TYPE | MINIMUM |
| Regular Account | $2,000 |
| IRA | $1,000 |
| Automatic Investment or Direct Deposit Plan Accounts | $1,000 |
| 401(k) Accounts | None |
The minimum for subsequent investments is $50, regardless of account type.
Consultant and R Class shares of the Fund purchased through a third party, such as a broker-dealer, bank, or other financial intermediary, may be subject to investment minimums that differ from those described in this Prospectus.
You may request to sell shares in your account at any time online, by telephone, and/or by mail. You may also purchase or sell Fund shares through a third party, such as a broker-dealer, bank, or other financial intermediary.
Tax Information
The Fund intends to make distributions that are expected to be taxable to you as ordinary income or capital gains unless you are tax exempt or your investment is in an IRA, a 401(k) plan, or is otherwise tax deferred.
Financial Intermediary Compensation
If you purchase the Fund through a financial intermediary (such as a broker-dealer or bank), the Fund and its related companies may pay such intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
14 | The Royce Fund Prospectus 2023
Royce Small-Cap Special Equity Fund’s investment goal is long-term growth of capital.
The following table presents the fees and expenses that you may pay if you buy and hold shares of the Fund. Shares of the Fund purchased or held through a third party, such as a broker-dealer, bank, or other financial intermediary, may incur fees and expenses that are not reflected in the tables and examples below.
| CONSULTANT CLASS | |
| Maximum sales charge (load) imposed on purchases | |
| Maximum deferred sales charge on purchases held for less than 365 days (as a percentage of net asset value | |
| at the time of purchase or redemption, whichever is less) | |
| Maximum sales charge (load) imposed on reinvested dividends | |
| Management fees | |
| Distribution and/or service (12b-1) fees | |
| Other expenses | |
| Total annual Fund operating expenses | |
| Fee waivers and/or expense reimbursements | - |
| Total annual Fund operating expenses after fee waivers and/or expense reimbursements |
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s total operating expenses (net of fee waivers and/or expense reimbursements in year one) remain the same. Although your actual costs may be higher or lower, based on the assumptions your costs would be: |
| CONSULTANT CLASS | ||
| 1 Year | $ |
|
| 3 Years | $ |
|
| 5 Years | $ |
|
| 10 Years | $ |
|
The Fund
pays transaction costs, such as commissions, when it buys and sells securities
(or “turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Royce Fund Prospectus 2023 | 15
Royce Small-Cap Special Equity Fund (continued)
Royce Investment Partners (“Royce”), the Fund’s investment adviser, invests the Fund’s assets primarily in equity securities of small-cap companies. Small-cap companies are 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 portfolio manager applies an intensive value approach in managing the Fund’s assets. This approach, which attempts to combine classic value analysis, the identification of good businesses, and accounting cynicism, has its roots in the teachings of Benjamin Graham and Abraham Briloff.
16 | The Royce Fund Prospectus 2023
Royce Small-Cap Special Equity Fund (concluded)
 |
During the
period shown in the bar chart, the
The table
also presents the impact of taxes on the Fund’s returns. In calculating these
figures,
| 1 YEAR | 5 YEAR | 10 YEAR | |
| Consultant Class | |||
| Return Before Taxes | - |
||
| Return After Taxes on Distributions | - |
||
| Return After Taxes on Distributions and Sale of | |||
| Fund Shares | - |
||
| Russell 2000 Value Index | |||
| - |
|||
| Russell 2000 Index | |||
| (Reflects no deductions for fees, expenses, or taxes) | - |
Investment Adviser and Portfolio Management
Royce & Associates, LP is the Fund’s investment adviser and a limited partnership organized under the laws of Delaware. Royce & Associates primarily conducts its business under the name Royce Investment Partners. Charles R. Dreifus is the Fund’s portfolio manager. He is assisted by Portfolio Manager Steven G. McBoyle. Mr. Dreifus has been portfolio manager since the Fund’s inception. Mr. McBoyle became assistant portfolio manager in 2014.
How to Purchase and Sell Fund Shares
Minimum initial investments for shares of the Fund’s Consultant Class purchased directly from The Royce Fund:
| ACCOUNT TYPE | MINIMUM |
| Regular Account | $2,000 |
| IRA | $1,000 |
| Automatic Investment or Direct Deposit Plan Accounts | $1,000 |
| 401(k) Accounts | None |
The minimum for subsequent investments is $50, regardless of account type.
Consultant Class shares of the Fund purchased through a third party, such as a broker-dealer, bank, or other financial intermediary, may be subject to investment minimums that differ from those described in this Prospectus.
You may request to sell shares in your account at any time online, by telephone, and/or by mail. You may also purchase or sell Fund shares through a third party, such as a broker-dealer, bank, or other financial intermediary.
Tax Information
The Fund intends to make distributions that are expected to be taxable to you as ordinary income or capital gains unless you are tax exempt or your investment is in an IRA, a 401(k) plan, or is otherwise tax deferred.
Financial Intermediary Compensation
If you purchase the Fund through a financial intermediary (such as a broker-dealer or bank), the Fund and its related companies may pay such intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
The Royce Fund Prospectus 2023 | 17
Royce Small-Cap Total Return Fund’s investment goals are long-term growth of capital and current income.
The following table presents the fees and expenses that you may pay if you buy and hold shares of the Fund. Shares of the Fund purchased or held through a third party, such as a broker-dealer, bank, or other financial intermediary, may incur fees and expenses that are not reflected in the tables and examples below.
| CONSULTANT CLASS | R CLASS | |
| Maximum sales charge (load) imposed on purchases | ||
| Maximum deferred sales charge on purchases held for less than 365 days (as a percentage of net asset value | ||
| at the time of purchase or redemption, whichever is less) | ||
| Maximum sales charge (load) imposed on reinvested dividends | ||
| Management fees | ||
| Distribution and/or service (12b-1) fees | ||
| Other expenses | ||
| Acquired fund fees and expenses | ||
| Total annual Fund operating expenses | ||
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s total operating expenses remain the same. Although your actual costs may be higher or lower, based on the assumptions your costs would be: |
| CONSULTANT CLASS | R CLASS | |
| 1 Year | $ |
$ |
| 3 Years | $ |
$ |
| 5 Years | $ |
$ |
| 10 Years | $ |
$ |
The Fund
pays transaction costs, such as commissions, when it buys and sells securities
(or “turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
18 | The Royce Fund Prospectus 2023
Royce Small-Cap Total Return Fund (continued)
Royce Investment Partners (“Royce”), the Fund’s investment adviser, invests the Fund’s assets primarily in dividend-paying securities of small-cap companies that it believes are trading below its estimate of their current worth. Small-cap companies are 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. Royce believes that regular dividend payments, and/or other methods of returning capital to shareholders such as issuer share repurchases, are often a positive signal that may indicate attractive attributes, including a stable business model, shareholder-friendly management, disciplined capital allocation practices, and a conservative financial culture. The Fund seeks to achieve its investment objectives by primarily investing in companies that pay regular dividends and/or return capital to shareholders. Royce favors companies that fall into one of three investment themes: “Compounder” companies possess what Royce believes are outstanding business models, strong financial characteristics, and above-average growth potential. “Quality Value” companies have attractive profit margins, strong free cash flows, high returns on invested capital, and low leverage that also trade at what Royce believes are attractive valuations. “Special Situations” are companies that may have complex business models and/or require a catalyst for growth, such as spin offs, turnarounds, and/or unrecognized asset values.
The Royce Fund Prospectus 2023 | 19
Royce Small-Cap Total Return Fund (continued)
During the
period shown in the bar chart, the
The table
also presents the impact of taxes on the Fund’s returns (Consultant Class again
used for illustrative purposes). In calculating these figures,
| 1 YEAR | 5 YEAR | 10 YEAR | |
| Consultant Class | |||
| Return Before Taxes | - |
||
| Return After Taxes on Distributions | - |
- |
|
| Return After Taxes on Distributions and Sale of | |||
| Fund Shares | - |
||
| R Class | |||
| Return Before Taxes | - |
||
| Russell 2000 Value Index | |||
| - |
|||
| Russell 2000 Index | |||
| (Reflects no deductions for fees, expenses, or taxes) | - |
Investment Adviser and Portfolio Management
Royce & Associates, LP is the Fund’s investment adviser and a limited partnership organized under the laws of Delaware. Royce & Associates primarily conducts its business under the name Royce Investment Partners. Miles Lewis is the Fund’s lead portfolio manager. Portfolio Manager Charles M. Royce manages the Fund with him. They are assisted by Portfolio Manager Joseph Hintz, CFA® Mr. Lewis became lead portfolio manager on May 1, 2021 and previously was portfolio manager (May 2020-May 2021). Mr. Royce has been portfolio manager since the Fund’s inception. Mr. Hintz became assistant portfolio manager on May 1, 2022.
How to Purchase and Sell Fund Shares
The Fund’s R Class Shares are generally offered only through certain broker-dealers to “Retirement Plans” with accounts held on the books of the Fund through omnibus account arrangements (either at the plan level or at the level of the financial intermediary).
Minimum initial investments for shares of the Fund’s Consultant Class purchased directly from The Royce Fund:
| ACCOUNT TYPE | MINIMUM |
| Regular Account | $2,000 |
| IRA | $1,000 |
| Automatic Investment or Direct Deposit Plan Accounts | $1,000 |
| 401(k) Accounts | None |
The minimum for subsequent investments is $50, regardless of account type.
20 | The Royce Fund Prospectus 2023
Royce Small-Cap Total Return Fund (concluded)
Consultant and R Class shares of the Fund purchased through a third party, such as a broker-dealer, bank, or other financial intermediary, may be subject to investment minimums that differ from those described in this Prospectus.
You may request to sell shares in your account at any time online, by telephone, and/or by mail. You may also purchase or sell Fund shares through a third party, such as a broker-dealer, bank, or other financial intermediary.
Tax Information
The Fund intends to make distributions that are expected to be taxable to you as ordinary income or capital gains unless you are tax exempt or your investment is in an IRA, a 401(k) plan, or is otherwise tax deferred.
Financial Intermediary Compensation
If you purchase the Fund through a financial intermediary (such as a broker-dealer or bank), the Fund and its related companies may pay such intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
The Royce Fund Prospectus 2023 | 21
This page intentionally left blank
22 | The Royce Fund Prospectus 2023
Financial Highlights
This table is intended to help you understand each Fund Class’s financial performance for the past five years (or since inception if a Fund Class has less than five years of history). The table reflects financial results for a single share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all distributions). This information has been audited by PricewaterhouseCoopers LLP, whose report, along with the Fund’s financial statements, is included in each Fund’s 2022 Annual Report to Shareholders, which is available at www.royceinvest.com or upon request.
| Ratio of Expenses to Average Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 |
Distributionsfrom 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) |
Prior to
Fee Waivers, Expense Reimbursements and Balance Credits |
Prior to
Fee Waivers and Expense Reimbursements |
Net of
Fee Waivers and Expense Reimbursements |
Ratio of NetInvestment Income (Loss) to Average Net Assets |
Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||||||||
| Royce Micro-Cap Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||||||||||||||||||
| 2018 | 9.10 | (0.14 | ) | (0.72 | ) | (0.86 | ) | – | (1.01 | ) | (1.01 | ) | 7.23 | (9.93 | ) | 16,680 | 2.56 | 2.56 | 2.56 | (1.50 | ) | 24 | ||||||||||||||||||||||||||||||||||||||
| Royce Pennsylvania Mutual Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||||||||||||||||||
| 2018 | 8.46 | (0.06 | ) | (0.77 | ) | (0.83 | ) | – | (1.45 | ) | (1.45 | ) | 6.18 | (10.56 | ) | 249,004 | 1.93 | 1.93 | 1.93 | (0.69 | ) | 35 | ||||||||||||||||||||||||||||||||||||||
| Royce Premier Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||||||||||||||||||
| 2018 | 13.21 | (0.12 | ) | (1.27 | ) | (1.39 | ) | – | (2.65 | ) | (2.65 | ) | 9.17 | (11.41 | ) | 21,370 | 2.21 | 2.21 | 2.21 | (0.93 | ) | 23 | ||||||||||||||||||||||||||||||||||||||
| Royce Small-Cap Opportunity Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||||||||||||||||||
| 2018 | 11.19 | (0.16 | ) | (2.12 | ) | (2.28 | ) | – | (0.82 | ) | (0.82 | ) | 8.09 | (20.81 | ) | 9,831 | 2.30 | 2.29 | 2.29 | (1.39 | ) | 47 | ||||||||||||||||||||||||||||||||||||||
| Royce Small-Cap Opportunity Fund–R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||||||||||||||||||
| 2018 | 12.25 | (0.11 | ) | (2.33 | ) | (2.44 | ) | – | (0.91 | ) | (0.91 | ) | 8.90 | (20.42 | ) | 26,337 | 1.84 | 1.84 | 1.84 | (0.93 | ) | 47 | ||||||||||||||||||||||||||||||||||||||
| Royce Small-Cap Special Equity Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | ||||||||||||||||||||||||||||||||||||||||
| 2018 | 19.86 | 0.01 | (2.10 | ) | (2.09 | ) | (0.01 | ) | (1.86 | ) | (1.87 | ) | 15.90 | (10.83 | ) | 30,234 | 2.19 | 2.19 | 2.19 | 0.04 | 21 | |||||||||||||||||||||||||||||||||||||||
The Royce Fund Prospectus 2023 | 23
Financial Highlights
This table is intended to help you understand each Fund Class’s financial performance for the past five years (or since inception if a Fund Class has less than five years of history). The table reflects financial results for a single share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all distributions). This information has been audited by PricewaterhouseCoopers LLP, whose report, along with the Fund’s financial statements, is included in each Fund’s 2022 Annual Report to Shareholders, which is available at www.royceinvest.com or upon request.
| Ratio of Expenses to Average Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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) |
Prior to
Fee Waivers, Expense Reimbursements and Balance Credits |
Prior to
Fee Waivers and Expense Reimbursements |
Net of
Fee Waivers and Expense Reimbursements |
Ratio of
Net Investment Income (Loss) to Average Net Assets |
Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||||||||
| Royce Small-Cap Total Return Fund–Consultant Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | ||||||||||||||||||||||||||||||||||||||||||
| 2018 | 13.95 | 0.06 | (1.82 | ) | (1.76 | ) | (0.02 | ) | (2.15 | ) | (2.17 | ) | 10.02 | (13.26 | ) | 160,540 | 2.17 | 2.17 | 2.17 | 0.45 | 22 | |||||||||||||||||||||||||||||||||||||||
| Royce Small-Cap Total Return Fund–R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | ||||||||||||||||||||||||||||||||||||||||||
| 2018 | 13.99 | 0.11 | (1.83 | ) | (1.72 | ) | (0.06 | ) | (2.15 | ) | (2.21 | ) | 10.06 | (12.96 | ) | 45,145 | 1.81 | 1.81 | 1.81 | 0.82 | 22 | |||||||||||||||||||||||||||||||||||||||
24 | The Royce Fund Prospectus 2023
This page intentionally left blank
The Royce Fund Prospectus 2023 | 25
This page intentionally left blank
26 | The Royce Fund Prospectus 2023
Royce’s Investment Universe
Investing in Small-Cap Companies
The large and diverse universe of small-cap companies available for investment by the Funds consists primarily of 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 (that is, the reconstitution rank date), which was $6.4 billion in May 2022. Certain Funds in this Prospectus may also invest a portion of their assets in mid-cap securities. Royce defines mid-cap as those that have a market capitalization not greater than that of the largest company in the Russell Midcap® Index at the time of its most recent reconstitution (that is, the reconstitution rank date)—$46.5 billion in May 2022.
Compared to larger-cap companies, small-cap companies offer different investment opportunities and are subject to additional risks. They may not be well known to the investing public, may not be significantly owned by institutional investors, and may not have steady earnings growth. The securities of such companies may also be more volatile in price, have wider spreads between their bid and ask prices, and have significantly lower trading volumes than the securities of larger capitalization companies. As a result, the Funds may have difficulty selling holdings or may only be able to sell holdings at prices substantially lower than what Royce believes they are worth. In addition, the purchase or sale of more than a limited number of shares of the securities of a small-cap company may affect its market price. Royce may need a considerable amount of time to purchase or sell its positions in these securities, particularly when other Royce-managed accounts and/ or other investors are also seeking to purchase or sell them. Accordingly, Royce’s investment focus on the securities of small-cap companies generally leads it to have a long-term investment outlook of at least two years for a portfolio security.
Within small-cap, Royce further defines companies as micro-cap that have a market capitalization not greater than that of the largest company in the Russell Microcap® Index at the time of its most recent reconstitution (that is, the reconstitution rank date), which was $1.4 billion in May 2022. These companies are followed by few, if any, securities analysts, and there tends to be less publicly available information about them than about larger small-cap companies. Their securities generally have even more limited trading volumes and are subject to even more abrupt or erratic market price movements than larger small-cap securities and mid-cap securities, and Royce may be able to deal with only a few market-makers when purchasing and selling micro-cap securities. Such companies may also have limited markets, financial resources or product lines, may lack management depth, and may be more vulnerable to adverse business or market developments. These conditions, which create greater opportunities to find securities trading below Royce’s estimate of the company’s current worth, also involve increased risk.
Certain Funds may invest a portion of their assets in “growth” stocks while other Funds may invest primarily in “value” stocks. Growth stocks as a group may be out of favor and underperform the overall equity market when the market concentrates on value stocks or during periods of increasing interest rates, and value stocks may be out of favor and underperform when the market concentrates on growth stocks or during periods of declining interest rates. Additionally, growth securities may not meet expectations and value securities may continue to underperform, or undervaluation may become more severe. This may result in the total returns of a Fund being lower relative to Funds investing primarily in securities of the other designation.
Companies within the Russell 2000 Index with higher market caps than the largest company in the Russell Microcap Index have a relatively higher level of institutional investor ownership and more research coverage by securities analysts than generally exists for micro-cap companies. This greater attention makes the market for such securities more efficient compared to micro-cap securities because they have somewhat greater trading volumes and narrower bid/ask prices. In general, mid-cap stocks share many of the same characteristics as those larger small-cap companies. As a result, Royce may employ a more concentrated approach when investing in these companies, holding proportionately larger positions in a relatively limited number of securities.
The Funds may invest in other investment companies that invest in equity securities.
The Funds may also invest in foreign securities to varying degrees. For more information regarding investing in foreign securities, see page 30.
Investment Approaches
Royce’s portfolio managers use various methods primarily rooted in the valuation of each stock and evaluation of each company in managing the Funds’ assets. In selecting securities for the Funds, they evaluate the quality of a company’s balance sheet and other measures of a company’s financial condition and profitability, such as the history and/or potential for improvement in cash flow generation, internal rates of return, and sustainable earnings. The portfolio managers may also consider other factors, such as a company’s unrecognized asset values, its future growth prospects (especially in Royce Micro-Cap, Small-Cap Opportunity, and Small-Cap Total Return Funds), or its turnaround potential following an earnings disappointment or other business difficulties (especially in Royce Small-Cap Opportunity and Small-Cap Total Return Funds). The portfolio managers then use these factors to assess the company’s current worth, basing this assessment on either what they believe a knowledgeable buyer might pay to acquire the entire company or what they think the value of the company should be in the stock market.
Royce’s portfolio managers generally invest in equity securities of companies that are trading below their estimate of the company’s current
The Royce Fund Prospectus 2023 | 27
| Market capitalization is the number of a company’s outstanding shares of stock multiplied by its most recent closing price per share. |
worth in an attempt to reduce the risk of overpaying for such companies. For these purposes, the term “equity security” has the meaning set forth in the Securities Exchange Act of 1934, as amended, and includes (without limitation) common stocks, preferred stocks, convertible securities, warrants, and rights. In addition, seeking long-term growth of capital, Royce’s portfolio managers generally consider the prospects for the market price of the company’s securities to increase over a two- to five-year period toward this estimate.
Royce’s valuation-based approaches to stock selection strive to reduce some of the other risks of investing in the securities of small-cap and/ or mid-cap companies (for each Fund’s portfolio taken as a whole) by evaluating other risk factors. For example, its portfolio managers generally attempt to lessen financial risk by buying companies with strong balance sheets. Royce Micro-Cap and Small-Cap Opportunity Funds may place less emphasis on balance sheet quality if other factors warrant, such as a company’s potential ability to generate free cash flow. Royce attempts to mitigate company-specific risk for Royce Micro-Cap, Pennsylvania Mutual, and Small-Cap Opportunity Funds by investing in a relatively larger number of issuers.
While there can be no assurance that these or other approaches will be successful, Royce believes that it can reduce some of the risks of investing in small-cap and mid-cap companies whose businesses can be less diversified and whose securities exhibit substantially greater market price volatility than those of larger-cap companies. For more information regarding the specific approach used for each Fund’s portfolio, see pages 2-22.
Royce Premier Fund typically invests a significant portion of its assets in a limited number of issuers. As of December 31, 2022, each of Royce Small-Cap Special Equity and Small-Cap Total Return Funds also invested a significant portion of its assets in a limited number of issuers. Each of these portfolios may involve considerably more risk to investors than one that invests in a larger number of issuers because such a portfolio may be more susceptible to any single corporate, economic, political, regulatory, or market event.
Each Fund also may, from time to time, invest a significant portion of its assets in companies from a single sector or a limited number of sectors. Such an investment approach may involve considerably more risk to investors than one that is more broadly diversified across economic sectors because it may be more susceptible to corporate, economic, political, regulatory, or market events that adversely affect the relevant sector(s). As of December 31, 2022, each of Royce Micro-Cap, Pennsylvania Mutual, Premier, Small-Cap Opportunity and Small-Cap Total Return Funds invested a significant portion of its assets in companies from a single sector or a limited number of sectors.
Although Royce’s security selection methods may reduce downside risk to Fund portfolios, especially during periods of broad small-company stock market declines, they may also potentially have the effect of limiting gains in strong small-company up markets.
Environmental, Social, and Governance (“ESG”)
Investment Considerations and Risks
Royce believes certain material ESG factors have the potential to contribute to a stock’s long-term performance, and therefore Royce may evaluate the potential impacts of ESG considerations when assessing a company’s financial condition and profitability. This analysis allows Royce’s portfolio managers to determine whether a company’s ESG practices pose a material financial risk or create an opportunity for investment. The Funds’ investments in cash and cash equivalents and any securities lending activities will not be assessed for ESG factors. Consideration of ESG factors and risks is only one component of Royce’s assessment of potential investments and, as with its consideration of other factors and risks, may not be a determinative factor in any decision to purchase, sell, or hold a security. In addition, where ESG factors are considered, the weight given to ESG factors may vary between Funds and across different types of investments, sectors, industries, regions, and issuers; and ESG factors and weights considered may change over time. Royce may not assess every investment for ESG factors and, when it does, not every ESG factor may be identified or evaluated. Royce’s assessment of a company’s ESG factors is subjective and may differ from that of institutional investors, third-party service providers (e.g., ratings providers), and/or other funds, and may be dependent on the availability of timely, complete, and accurate ESG data reports from issuers and/ or third-party research providers, the timeliness, completeness, and accuracy of which is outside of Royce’s control. ESG factors are often not uniformly measured or defined, which could impact Royce’s ability to evaluate a company. While Royce views certain ESG factors as having the potential to contribute to a stock’s long-term performance, there is no guarantee that such results will be achieved.
Certain Additional Risks
Certain risks are much broader than the company-specific risks described above. The market values of equity securities will fluctuate, sometimes sharply and unpredictably, due to changes in general market conditions, overall economic trends or events, governmental actions or intervention, actions taken by the U.S. Federal Reserve or foreign central banks, market disruptions caused by trade disputes or other factors, political developments, armed conflicts, economic sanctions and countermeasures in response to sanctions, major cybersecurity events and acts of terrorism, investor sentiment, the global and domestic effects of a pandemic, and other factors that may or may not be related to the issuer of the security or other asset. Economies and financial markets throughout the world are increasingly interconnected. Economic, financial or political events, trading and tariff arrangements, public health events, terrorism, wars, natural disasters and other circumstances in one country or region could have profound impacts on global economies or markets. As a result, whether or not a
28 | The Royce Fund Prospectus 2023
Fund invests in securities of issuers located in or with significant exposure to the countries or markets directly affected, the value and liquidity of the Fund’s investments may be negatively affected. Following Russia’s invasion of Ukraine, Russian stocks lost all, or nearly all, of their market value. Other securities or markets could be similarly affected by past or future geopolitical or other events or conditions.
The fallout from the COVID-19 pandemic and its subsequent variants, and the long-term impact on economies, markets, industries and individual issuers, are not known. Some sectors of the economy and individual issuers have experienced or may experience particularly large losses. Periods of extreme volatility in the financial markets; reduced liquidity of many instruments; and disruptions to supply chains, consumer demand and employee availability, may continue for some time.
In recent years, the U.S. Federal Reserve and other central banks have reversed many of their accommodative policies. The U.S. Federal Reserve has increased the overnight Federal Funds rate several times and may do so again in the near future. Although the effect that Federal Funds rate increases or the elimination or reduction of other monetary policies may have on financial markets and the overall economy is uncertain, those policy changes may lead to higher interest rates, declines in the prices of financial assets, banking industry instability, adverse effects on currency exchange rates, changes in inflation rates, and increased market volatility.
Any failure to increase the ceiling on U.S. government debt (i.e., the total amount that the U.S. government is authorized to borrow) could lead to a default on U.S. government obligations, with unpredictable consequences for economies and markets in the U.S. and elsewhere. Recently, inflation and interest rates have increased and may rise further. These circumstances could adversely affect the value and liquidity of each Fund’s investments, impair each Fund’s ability to satisfy redemption requests, and negatively impact each Fund’s performance.
An investment in any of the Funds may not be appropriate for all investors. None of the Funds is intended to be a complete investment program or a short-term trading vehicle. The Funds are designed for long-term investors who can accept the risks associated with owning shares in an actively managed fund that invests: (i) primarily in micro-cap companies (in the case of Royce Micro-Cap Fund); (ii) primarily in small-cap companies (in the case of Royce Small-Cap Opportunity and Pennsylvania Mutual Funds); and (iii) in a limited number of small-cap companies (in the case of Royce Premier, Small-Cap Special Equity, and Small-Cap Total Return Funds);
Due to the increased use of technology across the investment management industry, the Funds may have an increased exposure to operational and information security risks resulting from cybersecurity incidents. A cybersecurity incident refers to intentional or unintentional acts which may allow an unauthorized party to gain access to certain proprietary information, including Fund holdings, Fund or shareholder data, and/or material non-public information. Examples of cybersecurity incidents include one or more unauthorized parties obtaining access to a Fund’s digital information and/or systems through “hacking” and/ or malicious software attacks, including denial-of-service and/or cyber extortion (i.e., “ransomware”) attacks.
Cybersecurity incidents may cause the Funds and/or Royce to suffer data breaches, data corruption, and/or loss of operational functionality. These incidents also may result in disruptions to Fund operations, potentially resulting in significant losses; interference with a Fund’s ability to calculate its NAV, process shareholder transactions, or otherwise transact business with shareholders; impediments to trading; violations of applicable privacy and other laws; regulatory fines; penalties; third-party claims in litigation; reputational damage; reimbursement or other compensation costs; additional compliance and cybersecurity risk management costs; and other adverse consequences. Cybersecurity incidents involving the Funds’ third-party service providers, brokers or other trading counterparties, or companies in which a Fund invests may also subject the Funds to many of the same risks associated with direct cybersecurity incidents. Moreover, cybersecurity breaches involving trading counterparties or issuers in which a Fund invests could adversely impact such counterparties or issuers and cause the Fund’s investment to lose value. The Funds and Royce have established business continuity plans and risk management systems designed to reduce the risks associated with cybersecurity incidents. However, there are inherent limitations in these plans and systems because different or unknown threats may emerge in the future. Additionally, the Funds and Royce have limited ability to prevent or mitigate cybersecurity incidents affecting third-party service providers, and such service providers may have limited indemnification obligations to the Funds or Royce. As such, there is no guarantee that these efforts will succeed. There is also a risk that cybersecurity breaches may not be detected.
Investment Objectives, Policies, and Limitations
Each of Royce Small-Cap Opportunity and Small-Cap Special Equity Funds may not invest more than 25% of its total assets in the securities of foreign issuers (i.e., those issuers headquartered outside of the United States). The investment policies referenced in this paragraph are considered “fundamental” (as defined in the Investment Company Act of 1940 (the “1940 Act”)) and therefore cannot be changed without the approval of the Board of Trustees of the Trust (the “Board”) and a “majority of the outstanding voting securities” (as defined in the 1940 Act) of the relevant Fund.
Each Fund’s investment objective and the investment policies described in this Prospectus are not considered fundamental (except as described immediately above) and, therefore, may be changed by a majority vote of the Board without shareholder approval.
Temporary Investments
Each of the Funds may invest without limit in short-term fixed income securities for temporary defensive purposes. If a Fund should implement a temporary investment policy, such policy would be inconsistent with its investment goal and the Fund may not achieve its investment goal while that policy is in effect. Each Fund also may invest in short-term fixed income securities in order to invest uncommitted cash balances or to maintain liquidity to meet shareholder redemptions.
The Royce Fund Prospectus 2023 | 29
Investing in Foreign Securities
Royce defines “foreign” as those securities of companies headquartered outside the United States. Royce believes that investing in foreign securities offers both enhanced investment opportunities and additional risks beyond those present in U.S. securities. Investing in foreign securities may provide increased diversification by adding securities from various foreign countries (i) that offer different investment opportunities, (ii) that generally are affected by different economic trends, and (iii) whose stock markets may not be correlated with U.S. markets. At the same time, these opportunities and trends involve risks that may not be encountered in U.S. investments. Each Fund may invest in the securities of companies whose economic fortunes are linked to non-U.S. countries but that do not meet the Fund’s definition of a foreign security. To the extent a Fund invests in this manner, the percentage of the Fund’s portfolio that is exposed to non-U.S. country risks may be greater than the percentage of the Fund’s assets that the Fund defines as representing foreign securities.
The following considerations comprise both risks and opportunities not typically associated with investing in U.S. securities: fluctuations in exchange rates of foreign currencies because the Funds do not intend to hedge their foreign currency exposure; possible imposition of exchange control regulations or currency restrictions that would prevent cash from being brought back to the United States; less public information with respect to issuers of securities; less government supervision of stock exchanges, securities brokers, and issuers of securities; lack of uniform accounting, auditing, and financial reporting standards; lack of uniform settlement periods and trading practices; less liquidity and frequently greater price volatility in foreign markets than in the United States; possible imposition of foreign taxes; the possibility of expropriation or confiscatory taxation, seizure, or nationalization of foreign bank deposits or other assets, the adoption of foreign government restrictions, and other adverse political, social, or diplomatic developments that could affect investment; possible difficulties in obtaining and/or enforcing legal judgments in foreign courts; restrictions or prohibitions on foreign investment, including prohibitions or restrictions on investments in specific industries or market sectors; limitations on the total amount or type of position in any single issue; possible imposition by foreign governments of prohibitions or substantial restrictions on foreign investments in their capital markets or in certain industries; sometimes less advantageous legal, operational, and financial protections applicable to foreign sub-custodial arrangements; and the historically lower level of responsiveness of foreign management to shareholder concerns (such as dividends and return on investment).
Developing Countries
The risks described above for foreign securities, including the risks of nationalization and expropriation of assets, are typically increased to the extent that a Fund invests in companies headquartered in developing, or emerging market, countries. Developing (or emerging market) countries include every country in the world other than the United States, Canada, Japan, Australia, New Zealand, Hong Kong, Singapore, South Korea, Taiwan, Bermuda, Israel, and Western European countries (as defined in the Funds’ Statement of Additional Information). Investments in securities of companies headquartered in such countries may be considered speculative and subject to certain special risks. The political and economic structures in many of these countries may be in their infancy and developing rapidly, and such countries may lack the social, political, legal, and economic characteristics of more developed countries. Certain of these countries have in the past failed to recognize private property rights and have at times nationalized and expropriated the assets of private companies. Some countries have inhibited the conversion of their currency to another. The currencies of certain developing countries have experienced devaluation relative to the U.S. dollar, and future devaluations may adversely affect the value of each Fund’s assets denominated in such currencies because the Funds do not intend to hedge their foreign currency exposure. Some developing countries have experienced substantial rates of inflation for many years. Continued inflation may adversely affect the economies and securities markets of such countries. In addition, unanticipated political or social developments may affect the value of a Fund’s investments in these countries and the availability to the Fund of additional investments in these countries. The small size, limited trading volume, and relative inexperience of the securities markets in these countries may make a Fund’s investments in such countries less liquid and more volatile than investments in more developed countries, and the Fund may be required to establish special custodial or other arrangements before making investments in these countries. There may be little ESG, financial, or accounting information available with respect to companies headquartered in these countries, and it may be difficult as a result to assess the value or prospects of an investment in such companies.
30 | The Royce Fund Prospectus 2023
This page intentionally left blank
The Royce Fund Prospectus 2023 | 31
Management of the Funds
Royce & Associates, LP, a limited partnership organized under the laws of Delaware, is the Funds’ investment adviser and is responsible for the management of their assets. Royce & Associates primarily conducts its business under the name Royce Investment Partners (“Royce”). Royce has been investing in smaller-company securities with a value approach for more than 50 years. Its offices are located at 745 Fifth Avenue, New York, NY 10151. Royce is a majority-owned subsidiary of Franklin Resources, Inc. (“Franklin Resources”). Franklin Resources, whose principal executive offices are at One Franklin Parkway, San Mateo, California 94403, is a global investment management organization operating, together with its subsidiaries, as Franklin Templeton. As of December 31, 2022, Franklin Templeton’s asset management operations had aggregate assets under management of approximately $1,387.5 billion. As part of Franklin Templeton, Royce continues to retain operating control of its investment organization, portfolio management teams, and brand.
 |
Charles Royce Portfolio Manager Founded Royce in 1972
Portfolio Manager for: Royce Pennsylvania Mutual Fund (Lead) Royce Premier Fund Royce Small-Cap Total Return Fund |
 |
Christopher D. Clark Chief Executive Officer, President, Co-Chief Investment Officer Employed by Royce since 2007 |
 |
Francis D. Gannon Co-Chief Investment Officer Employed by Royce since 2006 |
 |
Charles R. Dreifus Portfolio Manager Employed by Royce since 1998
Portfolio Manager for: Royce Small-Cap Special Equity Fund |
 |
Jay S. Kaplan Portfolio Manager Employed by Royce since 2000
Portfolio Manager for: Royce Pennsylvania Mutual Fund |
 |
Lauren A. Romeo Portfolio Manager Employed by Royce since 2004
Portfolio Manager for: Royce
Pennsylvania Mutual Fund |
 |
Steven G. McBoyle Portfolio Manager Employed by Royce since 2007
Portfolio Manager for: Royce Pennsylvania Mutual Fund Royce Premier Fund (Co-Lead)
Assistant Portfolio Manager* for: Royce Small-Cap Special Equity Fund |
 |
James P. Stoeffel Portfolio Manager Employed by Royce since 2009
Portfolio Manager for: Royce Micro-Cap Fund (Lead) Royce Small-Cap Opportunity Fund
Assistant Portfolio Manager* for: Royce Pennsylvania Mutual Fund |
 |
Brendan J. Hartman Portfolio Manager Employed by Royce since 2009
Portfolio Manager for: Royce Micro-Cap Fund Royce Small-Cap Opportunity Fund |
 |
Miles Lewis Portfolio Manager Employed by Royce since 2020
Portfolio Manager for: Royce Pennsylvania Mutual Fund Royce Small-Cap Total Return Fund (Lead) |
Previously a Portfolio Manager (2014-2020) and investment analyst (2010-2014) for the Small-Cap Value Fund and Strategy at American Century Investments.
* Assistant portfolio managers may have investment discretion over a portion of a Fund’s portfolio subject to supervision by the Fund’s portfolio manager(s).
32 | The Royce Fund Prospectus 2023
 |
James J. Harvey Portfolio Manager Employed by Royce since 1999
Portfolio Manager for: Royce Small-Cap Opportunity Fund |
 |
Andrew S. Palen Portfolio Manager Employed by Royce since 2015
Portfolio Manager for: Royce Pennsylvania Mutual Fund
Assistant Portfolio Manager* for: Royce Premier Fund |
Previously a Senior Analyst at Armistice Capital (2013-2015), a Summer Associate at UBS Global Management (2012), and an Associate at Comvest Partners (2008-2011).
 |
Kavitha Venkatraman Portfolio Manager Employed by Royce since 2021
Assistant Portfolio Manager* for: Royce Small-Cap Opportunity Fund |
Previously an Equity Analyst at Alpine Peaks Capital (2020-2021), Pzena Investment Management (2016-2020), Steinberg Asset Management (2014-2016), and Blackrock (2010-2013).
 |
Joseph Hintz, CFA® Portfolio Manager Employed by Royce since 2021
Assistant Portfolio Manager* for: Royce Small-Cap Total Return Fund |
Previously a Senior Investment Analyst (2021) at American Century Investments, as well as an Investment Analyst (2015-2021) and an Investment Analyst Summer Associate (2014).
* Assistant portfolio managers may have investment discretion over a portion of a Fund’s portfolio subject to supervision by the Fund’s portfolio manager(s).
The Fund’s Statement of Additional Information provides more information about the structure of the portfolio managers’ compensation, other accounts that they manage, and their ownership of shares in the Fund(s) that each manages.
Royce Fund Services, LLC (“RFS”) and Rule 12b-1 Plan
RFS distributes the Funds’ shares. The Royce Fund (the “Trust”) has adopted a distribution plan for the Consultant and R Classes of the Funds under Rule 12b-1(the “Plan”). Under the Plan and the distribution agreements, the Consultant and R Classes are obligated to pay a fee to RFS at the annual rate of up to 1.00% and 0.50% per year of their respective average net assets. RFS will use these fees primarily to cover sales-related and account maintenance costs and to pay service and other fees to financial intermediaries that introduce investors to the Consultant and/ or R Classes of the Funds. Because these fees are paid out of each Fund’s assets in the Consultant and R Classes on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. Neither the Plan nor the distribution agreements currently provide for any suspension or reduction of the 1.00% or 0.50% fees payable by the Consultant or R Class, respectively, of any Fund if it closes to new investors. In addition, the Plan may be terminated with respect to the Consultant or R Class shares of a Fund by vote of a majority of the outstanding shares of the Consultant or R Class or by vote of a majority of the Trustees who are not “interested persons” of the Trust (as defined in the 1940 Act) and who have no direct or indirect financial interest in the operation of the plan, on subsequent written notice to shareholders.
Other Types of Financial Intermediary Compensation
If you purchase Fund shares through a third party, such as a broker-dealer, bank, or other financial intermediary, or through a firm that provides recordkeeping and other shareholder services to employee benefit plans (“Retirement Plan Recordkeepers”), the shares may be held in the name of that party on the Fund’s books. RFS, Royce, and/ or certain of their affiliates may compensate broker-dealers, Retirement Plan Recordkeepers, and other financial intermediaries that introduce investors to the Fund, provide the opportunity to distribute the Fund through their sales personnel, provide access to their sales personnel and branch offices, place the Funds on the financial intermediaries’ list of offered funds, and/or provide certain administrative services to their customers who own Fund shares. Certain of such payments, sometimes referred to as “revenue sharing,” may be made from the resources of Royce and/or certain of its affiliates, which resources may include profits from their relationships with the Funds.
In addition, the Board has authorized the Funds to compensate financial intermediaries for services which are non-distribution-related, including recordkeeping, account maintenance, or other shareholder services. The actual services provided, and the payments made for such services, vary from firm to firm.
Payments to third parties (each, a “financial intermediary”) may: (i) be substantial to any given financial intermediary, (ii) be more or less
The Royce Fund Prospectus 2023 | 33
than the payments received by a financial intermediary with respect to other mutual funds, and (iii) exceed the costs and expenses incurred by the financial intermediary for any servicing activities in respect of the Funds. Revenue sharing and shareholder servicing arrangements are separately negotiated between Royce and/or its affiliates and the financial intermediaries receiving these payments.
Revenue sharing and shareholder servicing payments may influence financial intermediaries to recommend or sell a Fund over other mutual funds. You may ask your financial intermediary about these differing interests and how the financial intermediary and its employees and associated persons are compensated for administering your Fund investment. Revenue-sharing and shareholder servicing payments may benefit Royce to the extent that the payments result in more assets, on which fees are charged by Royce, being invested in a Fund.
For the year ended December 31, 2022, Royce made payments for distribution and/or administrative services related to the Investment, Service, and Institutional Class shares of the Funds to broker-dealers, Retirement Plan Recordkeepers, and other financial intermediaries out of its own resources in the amount of $507,837. More information about these arrangements can be found in the Funds’ Statement of Additional Information.
Custodian and Transfer Agent
State Street Bank and Trust Company (“State Street”) is the custodian of the Funds’ securities, cash, and other assets. SS&C Global Investor & Distribution Solutions, Inc. (“SS&C GIDS, Inc.”) is the Funds’ transfer agent.
Investment Advisory Services Provided By Royce
Royce receives advisory fees monthly as compensation for its services to the Funds. The annual rates of these fees, before any waiver or expense reimbursements to cap the expense ratios for certain Fund share classes at specified levels as shown under each Fund’s respective “Fees and Expenses” table, are as follows:
Annual Rate of Fund’s Average Net Assets
ROYCE MICRO-CAP, PREMIER, SMALL-CAP OPPORTUNITY, SMALL-CAP SPECIAL EQUITY, AND SMALL-CAP TOTAL RETURN FUNDS
| ● | 1.00% of the first $2,000,000,000 |
| ● | 0.95% of the next $1,000,000,000 |
| ● | 0.90% of the next $1,000,000,000 |
| ● | 0.85% of any additional average net assets |
ROYCE PENNSYLVANIA MUTUAL FUND
| ● | 1.00% of the first $50,000,000 |
| ● | 0.875% of the next $50,000,000 |
| ● | 0.75% of any additional average net assets |
2022 Actual Net Investment Advisory Fees (After waivers, paid to Royce on average net assets)
| Royce Micro-Cap Fund | 1.00% |
| Royce Pennsylvania Mutual Fund | 0.76% |
| Royce Premier Fund | 1.00% |
| Royce Small-Cap Opportunity Fund | 1.00% |
| Royce Small-Cap Special Equity Fund | 1.00% |
| Royce Small-Cap Total Return Fund | 1.00% |
For a discussion of the basis of the Board’s most recent approval of the Funds’ investment advisory agreements, please see the Funds’ 2022 Semiannual Report to Shareholders.
34 | The Royce Fund Prospectus 2023
General Shareholder Information
For a more detailed discussion of The Royce Fund policies regarding direct ownership of Fund shares, including information on opening accounts, buying, redeeming, exchanging, and transferring ownership of Consultant Class shares, please see the Guide for Direct Shareholders, which begins on page 40.
Purchasing Shares
Consultant Class Shares of The Royce Funds are generally offered only through certain broker-dealers, and R Class Shares are generally offered only through certain broker-dealers to “Retirement Plans” held on the books of the Funds through omnibus account arrangements. “Retirement Plans” include 401(k) plans, 457 plans, employer sponsored 403(b) plans, defined benefit pension plans, profit sharing plans, nonqualified deferred compensation plans, and other similar employer-sponsored retirement plans and rollover accounts from such plans to individual retirement vehicles, such as Traditional and Roth IRAs. “Retirement Plans” do not include individual retirement vehicles, such as Traditional and Roth IRAs, Coverdell Education Savings Accounts, individual 403(b)(7) custodian accounts, Keogh plans, or Section 529 college savings accounts. R Class shares are also not available to retail non-retirement accounts, SEPs, SARSEPs, or SIMPLE IRAs.
Purchasing Shares
Minimum initial investments for Consultant Class shares purchased directly from The Royce Fund.
| ACCOUNT TYPE | MINIMUM |
| Regular Account | $2,000 |
| IRA | $1,000 |
| Automatic Investment or Direct Deposit Plan Accounts | $1,000 |
| 401(k) Accounts | None |
The minimum for subsequent investments is $50, regardless of account type.
If you purchase Fund shares through a third party, such as a broker-dealer, bank, or other financial intermediary, or through Retirement Plan Recordkeepers, share class eligibility, investment minimums, commissions, fees, policies, and procedures may differ from those described in this Prospectus. Such third parties may convert Fund shares of one class held by you for shares of another class of that Fund in order to ensure compliance with such eligibility requirements, policies, and procedures. For example, a conversion of Consultant Class shares to Service Class shares (or the appropriate share class) of the Fund may be initiated by a third party (and not by a Fund or RFS), as described in more detail below, if such Consultant Class shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of such third party. Such conversions would be effected solely on the basis of the relative net asset values of the respective shares to be converted without the imposition of any sales charges by the Fund or RFS. The class of shares received by you in such a conversion may be subject to higher fees and expenses than the class of shares held by you immediately prior to such conversion.
The Royce Fund reserves the right both to suspend the offering of any Fund’s shares to new investors and to reject any specific purchase request. The Funds do not offer their shares for sale outside of the United States.
The Royce Fund reserves the right to reinvest the proceeds from any dividends from net investment income, distributions from net realized capital gains, or redemptions of shares which a shareholder has chosen to receive by check if the check remains uncashed for more than 180 days. No interest will accrue on the amount of such uncashed checks, which will be reinvested in additional shares of the applicable Fund at the net asset value per share at the time of the reinvestment. If a shareholder has chosen to receive distributions in cash and a check remains uncashed for more than 180 days, subsequent dividends and distributions may be reinvested automatically in additional shares of the applicable Fund. In addition, a shareholder’s participation in an automatic withdrawal plan may be terminated if a check remains uncashed. These policies may be waived for closed accounts as well as for certain retirement or other qualified plans.
Customer Identification Program
To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. The Fund has appointed an anti-money laundering compliance officer. When you open a new account to buy shares of the Fund, the Fund or your financial intermediary may ask for your name, address, date of birth, Social Security or Taxpayer Identification Number, and other information that will allow the Fund to identify you. If the Fund or your financial intermediary is unable to adequately verify your identity within the time frames set forth in the law, your account may not be opened or your shares may be automatically redeemed. If the net asset value per share has decreased since your purchase, you will lose money as a result of this automatic redemption. If you need help completing your account application for direct investment in The Royce Funds please call Shareholder Services at (800) 841-1180.
The Royce Fund Prospectus 2023 | 35
Redeeming Shares
You may request to redeem shares in your account at any time. The Funds, however, are intended primarily for long-term investment purposes and are not intended to provide a means of speculating on short-term market movements. Please see “Frequent Trading of Fund Shares” below.
Contingent Deferred Sales Charge for Consultant Class Shares
A 1.00% contingent deferred sales charge (“CDSC”) is assessed on new purchases of Consultant Class shares held for less than 365 days. The CDSC is based on the net asset value at the time of purchase or redemption, whichever is less, and therefore you do not pay a sales charge on amounts representing appreciation or depreciation. The CDSC is payable to RFS as compensation for its expenses in selling shares, including paying compensation to broker-dealers and other financial intermediaries.
Each CDSC will be paid to RFS out of the proceeds otherwise payable to you. RFS generally pays broker-dealers and other financial intermediaries selling Consultant Class shares a commission of 1.00% of the purchase price of those shares, and RFS will retain the CDSC and an annual distribution/service fee of 1.00% of the average daily net assets of the Consultant Class shares not redeemed during such period. Starting on the 365th day after purchase, the third-party broker-dealers or other financial intermediaries will receive an annual distribution/service fee of up to 1.00% of the average daily net assets of the Consultant Class shares that they service.
When you request a redemption, shares held for 365 days or longer, and therefore not subject to a CDSC, will be redeemed first.
You will not pay a CDSC on:
| ● | Exchanges between Consultant Classes of The Royce Funds |
| ● | Shares acquired through reinvestment of distributions |
| ● | Shares no longer subject to the contingent deferred sales charge |
The CDSC will generally be waived for:
| ● | Participants in Automatic Investment or Withdrawal Plans |
| ● | Certain profit sharing or retirement plans |
| ● | Certain pre-approved group investment plans and charitable organizations |
Please note that these exemptions may not be available to investors who hold Consultant Class shares through certain broker-dealers and other financial intermediaries. In addition, it is the investor’s responsibility in all instances to notify the applicable broker-dealer or financial intermediary, at or before the time of redemption, of their eligibility for any CDSC exemption. Such broker-dealers or financial intermediaries will determine your eligibility for a CDSC exemption and will apply it to your redemption as appropriate. Please see Appendix A to this Prospectus for more information about CDSC waivers at certain specific broker-dealers.
Other Redemption Information
The Funds will normally make redemptions in cash for shareholders who hold shares that are registered in their own name. Each Fund typically expects to send (via check, wire, or ACH) redemption payments to such shareholders within two business days after the transfer agent’s receipt of a redemption request in Good Order (as defined on pages 42-43). For accounts held through financial intermediaries, the length of time that a Fund typically expects to pay redemption proceeds depends, in part, on the terms of the agreement in place between the financial intermediary and the Fund. For redemption proceeds for intermediary-held accounts that are paid either directly to you from a Fund or to your financial intermediary for transmittal to you, the Fund typically expects to make payments by wire, by ACH, or by issuing a check on the next business day following receipt of a redemption request in Good Order. Redemption requests that are processed through investment professionals that utilize the National Securities Clearing Corporation will generally settle one to three business days following receipt of a redemption request in Good Order. The financial intermediary, if applicable, is responsible for transmitting redemption proceeds to shareholders. Under certain circumstances and when deemed to be in the best interest of a Fund, redemption proceeds may take up to seven calendar days to be sent after receipt of a redemption request in Good Order. In addition, with respect to investors redeeming shares that were purchased by check or through ACH, redemption proceeds may not be sent until payment for the entire purchase is collected, which may take up to 15 calendar days.
The Funds typically expect to satisfy redemption requests either by using available cash (or cash equivalents) or by selling portfolio securities. The Funds may use other methods to satisfy redemption requests, including using a line of credit or participating in an inter-fund lending program in reliance on exemptive relief from the SEC. These methods may be used during both normal and stressed market conditions.
The Royce Fund also reserves the right to satisfy a shareholder’s redemption request through the distribution of a Fund’s portfolio securities to such shareholder in full or partial satisfaction of such redemption request. The distribution of a Fund’s portfolio securities to a shareholder in full or partial satisfaction of a redemption request is often referred to as a “redemption-in-kind.” Redemptions-in-kind may be used for a variety of reasons, including, without limitation, to mitigate the potential dilutive effects of large redemptions on the Fund and its remaining shareholders. However, because shareholders who receive portfolio securities from a Fund as part of a redemption-in-kind may sell some or all such securities, no assurance can be given that such actions will not negatively affect the market value of the portfolio securities distributed as part of the redemption-in-kind and, in turn, the net asset value per share of the Fund.
A shareholder will receive either a pro rata basket of Fund portfolio securities (allowing for adjustments to prevent distributions of restricted shares, fractional shares, and odd-lot numbers of shares), or a custom basket of Fund portfolio securities, as part of any redemption-in-kind.
36 | The Royce Fund Prospectus 2023
Royce may, in its discretion, omit a security from a custom basket, or adjust the weighting of a security included in a custom basket, when processing a redemption-in-kind for a variety of reasons, including, without limitation, changes in the applicable Fund’s investment strategy and portfolio holdings, possession of material non-public information related to the relevant security, corporate actions, or because the relevant security is being “fair valued.” All portfolio securities distributed in connection with a redemption-in-kind will be valued for such purposes at the same value assigned to them in calculating the relevant Fund’s net asset value per share.
Redemptions-in-kind are typically effected by delivering the relevant portfolio securities to the redeeming shareholder within seven days after the receipt of a redemption request in Good Order. Redeeming shareholders will bear market, liquidity, and other risks associated with all securities received as part of a redemption-in-kind. Redeeming shareholder may also have pay transaction costs to dispose of such securities and may incur adverse tax consequences in connection with the redemption-in-kind.
The Royce Fund reserves the right to involuntarily redeem Fund shares in any account that falls below the minimum initial investment due to redemptions by the shareholder. If at any time the balance in an account does not have a value at least equal to the minimum initial investment, you may be notified that the value of your account is below a Fund’s minimum account balance requirement. You would have 60 days to increase your account balance before the account is closed. Proceeds would be paid promptly to the shareholder.
The Royce Fund also may suspend redemption privileges or postpone payment for the Funds beyond seven days (1) for any period (A) during which the New York Stock Exchange (“NYSE”) is closed other than customary weekend and holiday closings or (B) during which trading on the NYSE is restricted; (2) for any period during which an emergency exists as a result of which (A) disposal by a Fund of securities owned by it is not reasonably practicable or (B) it is not reasonably practicable for a Fund fairly to determine the value of its net assets; or (3) for such other periods as the SEC may by order permit for the protection of the Fund’s shareholders. The Royce Fund also reserves the right to revise or suspend the exchange privilege at any time.
Frequent Trading of Fund Shares
Large, frequent, and short-term trades in a Fund’s shares increase the administrative costs associated with processing its shareholder transactions. This kind of trading may also potentially interfere with the efficient management of a Fund’s portfolio and increase the costs associated with trading its portfolio securities. In addition, under certain circumstances frequent trading may dilute the returns earned on shares held by a Fund’s other shareholders.
The Board has determined that the Funds are not designed to serve as vehicles for frequent trading in response to short-term fluctuations in the securities markets. As a result, the Board has adopted a policy that is intended to detect and discourage excessive trading and market timing abuses (i.e., from trading that could be detrimental to long-term shareholders of the Funds) (the “Policy”).
The Policy provides that the Funds will monitor shareholder trading activity and will seek to restrict a shareholder’s trading privileges in a Fund if that shareholder is found to have engaged in multiple “Round Trip” transactions. A “Round Trip” is defined as a purchase (including subscriptions and exchanges) into a Fund either preceded or followed by a sale (including redemptions and exchanges) of the same or a similar number of shares out of the Fund within 30 days of the purchase. The Funds will make inquiries or take action against any such shareholder whose trading appears inconsistent with the Policy. Purchases and sales of Fund shares made through an automatic investment plan, systematic withdrawal plan, or initiated by a third party to ensure compliance with its eligibility requirements, policies, and procedures are not considered when determining Round Trips. In addition, as described above, the Funds impose a redemption fee on certain short-term redemptions to discourage frequent trading.
The Funds may reject any purchase or exchange order by any investor for any reason, including orders the Funds believe are made by short-term investors. In particular, under the Policy the Funds reserve the right to restrict or reject purchases of shares (including exchanges) without prior notice whenever they detect a pattern of excessive trading. With respect to accounts where shareholder transactions are processed, or records are kept, by third-party intermediaries, the Funds use reasonable efforts to monitor such accounts to detect suspicious trading patterns. Transactions placed through the same financial intermediary or omnibus account may be deemed part of a group for this purpose and therefore be rejected. For any account that is so identified, the Funds will make further inquiries and take any other necessary actions to enforce the Policy against the shareholder(s) trading through this account and, if necessary, the third-party intermediary maintaining this account. However, the Funds may not be able to determine that a specific order, especially an order made through an omnibus, retirement plan, or similar account, is short term or excessive and/or whether it may be disruptive to the Funds. There is no assurance, therefore, that the Funds will reject all such orders. The Funds do not have any arrangements with any investor or financial intermediary to permit frequent purchases and redemptions of their shares. The Funds may accept undertakings from intermediaries to enforce frequent trading and market timing policies on behalf of the Funds that provide a substantially similar level of protection against excessive trading.
Although the Funds will monitor shareholder transactions for certain patterns of excessive trading activity and/or market timing, there can be no assurance that all such trading activity can be identified, prevented, or terminated.
Net Asset Value Per Share
Net asset value per share (“NAV”) is calculated by dividing the value of a Fund’s net assets by the number of its outstanding shares. Equity securities that are owned by the Funds and listed on an exchange or
The Royce Fund Prospectus 2023 | 37
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. If the value of a portfolio security held by a Fund cannot be determined solely by reference to these inputs, such portfolio security will be “fair valued.” The Board 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 Board and policies and procedures adopted by Royce in its capacity as valuation designee for the Trust.
In certain cases, market value may be determined using information provided by a pricing service approved by the Board. Valuing securities at their fair values involves greater reliance on judgment than valuation of securities based on readily available market quotations. When using fair value methods to price securities, the Funds may value those securities higher or lower than another fund using not readily available market quotations or its own fair value methods to price the same securities. No assurance can be given that the Funds could obtain the fair value price assigned to a security if it were to sell the security at approximately the time at which the Fund determines its net asset value. Because trading hours for certain non-U.S. securities end before the close of the NYSE (generally 4 p.m. Eastern time), closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. If an issuer-specific event has occurred during this time that, in Royce’s judgment, is likely to have affected the closing price of a security, it may fair value the security. The Funds use an independent pricing service to provide fair value estimates for relevant non-U.S. equity securities on days when the U.S. market volatility exceeds a certain threshold. This pricing service uses proprietary correlations it has developed between the movement of prices of non-U.S. equity securities and indices of U.S.-traded securities, futures contracts, and other indications to estimate the fair value of relevant non-U.S. securities. Over-the-counter equity securities other than those traded on OTC Market Group Inc.’s OTC Link ATS or other alternative trading system are fair valued in accordance with the policies and procedures referenced above. When fair value pricing is employed, the price of securities used by a Fund may differ from quotes or published prices for the same security. The Funds value their non-U.S. securities in U.S. dollars on the basis of foreign currency exchange rates provided to the Funds by their custodian, State Street Bank and Trust Company. Certain bonds and other fixed income securities may be valued by reference to other securities with comparable ratings, interest rates, and maturities, using established independent pricing services. Investments in money market funds are valued at net asset value per share.
The date on which your purchase, redemption, or exchange of shares is processed is the trade date, and the price used for the transaction is based on the next calculation of net asset value after the order is processed. The NAV for each Class of a Fund is calculated as of the close of regular trading on the NYSE (generally 4 p.m. Eastern time) and is determined every day that the NYSE is open. Securities in each Fund’s portfolio that primarily trade on a foreign exchange may change in value on a day that the NYSE is closed and the Fund’s shareholders are not able to redeem shares in the Fund. If the Fund, its transfer agent, or any other authorized agent receives your trade order by the close of regular trading on the NYSE, your order will receive that day’s NAV. If your order is received after the close of regular trading, it will receive the next business day’s NAV. If you place your order through a financial intermediary rather than with the Fund or its transfer agent directly, the financial intermediary is responsible for transmitting your order to the Fund’s transfer agent in a timely manner.
Portfolio Disclosure Policy
A description of the Funds’ policy and procedures with respect to the disclosure of its portfolio securities holdings is available in the Funds’ Statement of Additional Information on The Royce Funds’ website, www.royceinvest.com. The Funds’ complete portfolio holdings are also available on The Royce Funds’ website, www.royceinvest.com, approximately 15 to 20 days after each calendar quarter end (month end in the case of Royce Small-Cap Opportunity Fund) and remain available until the next holdings are posted. The Funds’ portfolio holdings are also available in their annual and semiannual reports to shareholders, copies of which can be accessed at www.royceinvest.com/literature and are also filed with the SEC on Form N-CSR. In addition, the Funds’ portfolio holdings as of their first and third fiscal quarter ends are available on Form N-PORT, which is filed with the SEC within 60 days of the end of the relevant fiscal quarter, and can be obtained at www.sec.gov. Such first and third fiscal quarter end portfolio holdings for the Funds are also available at www.royceinvest.com/literature.
Reports
The Royce Fund mails shareholder reports semiannually and, to reduce expenses, may mail only one copy to shareholders with the same last name and sharing the same address. Directly registered shareholders can choose to receive separate report copies for accounts registered to different members of the same household by calling Shareholder Services at (800) 841-1180. Please allow 30 days for your request to be processed. Shareholders may also elect to receive these reports electronically. Please go to www.royceinvest.com/edelivery for more details.
38 | The Royce Fund Prospectus 2023
Dividends, Distributions, and Taxes
Royce Small-Cap Total Return Fund pays any dividends from net investment income on a quarterly basis and make any distributions from net realized capital gains annually in December. The other Funds pay any dividends from net investment income and make any distributions from net realized capital gains annually in December. Unless you choose otherwise, dividends and distributions will be reinvested automatically in additional shares of the applicable Fund.
Unless your account is an IRA, a 401(k), or is otherwise exempt from taxation, dividends and distributions will be taxable to you whether paid in cash or reinvested in additional shares. The tax character of distributions (as ordinary income or capital gain) is determined at the Fund level and is not related to how long you have owned a Fund’s shares. To the extent a Fund makes any distributions derived from long-term capital gains or qualifying dividends, such distributions will generally be eligible for taxation to non-corporate shareholders at a reduced rate, provided (in the case of qualifying dividends) that certain holding period and other requirements are met.
Selling or exchanging shares is a taxable event, and you may realize a taxable gain or loss. Each Fund will report the proceeds of your redemption(s) to you. The tax consequences of a redemption depend on your cost basis and holding period, so you should retain all account statements for use in determining the tax consequences of redemptions. In addition, each Fund is generally required by law to provide you and the Internal Revenue Service (the “IRS”) with cost basis information on the redemption or exchange of any of your shares in a Fund purchased on or after January 1, 2012 (including any shares that you acquire through reinvestment of distributions).
If you redeem shares of a Fund held for six months or less, and you received a capital gain distribution from the Fund during the time you held the shares, you will be required to treat any loss on the redemption as a long-term capital loss up to the amount of the distribution.
You should carefully consider the tax implications of purchasing shares shortly before a distribution. At the time of purchase, a Fund’s net asset value may include undistributed income or capital gains. When the Fund subsequently distributes these amounts, they are taxable to you, even though the distribution is economically a return of part of your investment.
In certain circumstances, you may be subject to back-up withholding taxes on distributions to you from a Fund if you fail to provide the Fund with your correct Social Security Number or other taxpayer identification number, or to make required certifications, or if you have been notified by the IRS that you are subject to back-up withholding.
A 3.8% Medicare contribution tax is imposed on the net investment income (which includes interest, dividends, and capital gains) of U.S. individuals with income exceeding $200,000, or $250,000 if married filing jointly, and of certain trusts and estates.
The above discussion is only a summary of some of the important tax considerations affecting each Fund and its shareholders. Always consult a tax advisor with questions about federal, state, or local tax consequences. Please see the Funds’ Statement of Additional Information for additional U.S. federal income tax information.
Contractual Arrangements
The Trust is party to contractual arrangements with various parties who provide services to the Funds, including Royce, RFS, State Street, and SS&C GIDS, Inc., among others. Fund shareholders are not parties to, or intended (“third-party”) beneficiaries of, any such contractual arrangements, and such contractual arrangements are not intended to create in any individual investor or group of investors any right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the Trust or any Fund.
Also, while this Prospectus and the Statement of Additional Information describe pertinent information about the Trust and the Funds, neither this Prospectus nor the Statement of Additional Information represents a contract between the Trust or any Fund and any shareholder or any other party.
Escheatment
Mutual fund accounts can be considered abandoned property. States increasingly are looking at inactive mutual fund accounts as possible abandoned or unclaimed property. Under certain circumstances, the Trust may be legally obligated to escheat (or transfer) an investor’s account to the appropriate state’s unclaimed property administrator. Neither the Trust nor any Fund will be liable to investors or their representatives for good faith compliance with state unclaimed or abandoned property (escheatment) laws. If you invest in a Fund through a financial intermediary, we encourage you to contact your financial intermediary regarding applicable state escheatment laws.
Escheatment laws vary by state, and states have different criteria for defining inactivity and abandoned property. Generally, a mutual fund account may be subject to “escheatment” (i.e., considered to be abandoned or unclaimed property) if the account owner has not initiated any activity in the account or contacted the fund for an “inactivity period” as specified in applicable state laws. If the Trust or its service providers are unable to establish contact with an investor, the Trust will determine whether the investor’s account must legally be considered abandoned and whether the assets in the account must be transferred to the appropriate state’s unclaimed property administrator. Typically, an investor’s last known address of record determines the state that has jurisdiction.
The Royce Fund Prospectus 2023 | 39
Guide For Direct Shareholders
Services and Policies
This Guide for Direct Shareholders describes the shareholder services available to direct shareholders of the Consultant Classes of The Royce Funds. It also provides important policy information regarding Royce Fund accounts.
If you purchase Fund shares through a third party, such as a broker-dealer, bank, or other financial intermediary, account minimums, fees, policies, and procedures may differ from those described in this Guide. Fund shares purchased through a third-party intermediary may be held in the name of that party on the Fund’s books. RFS, the distributor of Fund shares, Royce Investment Partners, the Fund’s investment adviser, and/or the Funds may pay fees to broker-dealers, financial intermediaries, and other service providers that introduce investors to the Funds and/ or provide certain administrative services to its customers who own Fund shares.
For information and policies on Individual Retirement Account (IRA), please refer also to the booklet that deals separately with them, as many services offered in this guide are not available for those types of accounts. You must use separate applications and other forms to open these accounts. Please call Investor Services at (800) 221-4268 or visit www.royceinvest.com to obtain these materials.
Account Information
The Funds pay their own management fees and other operating expenses as outlined in their respective Prospectuses.
Please mail all account-related correspondence, including Account Applications, subsequent investments, and written requests for redemption—
by regular mail to:
The Royce Funds
c/o SS&C GIDS, Inc.
PO Box 219012
Kansas City, MO 64121-9012
by registered mail or overnight courier to:
The Royce Funds
c/o SS&C GIDS, Inc.
330 West 9th Street
Kansas City, MO 64105
How to Open an Account
You may open an account by mail or through a financial intermediary. You can download a Prospectus and an Account Application from www.royceinvest.com.
By Mail
Complete and sign the enclosed Account Application. Make your check payable to The Royce Fund and mail it, together with your Application, to The Royce Funds, c/o SS&C GIDS, Inc. (see mailing addresses to the left).
Special Notice To Non-U.S. Investors
The Funds do not offer their shares for sale outside of the United States. We mail prospectuses and other information to U.S. addresses only, and we can accept new account requests from U.S. addresses only.
Managing Your Account Online
Online access gives you the ability to manage your account(s) online. To access or register for online services, go to www.royceinvest.com. First-time users need to register for the services by creating a Username and Password. Once registered, you can login with your unique Username.
You then have the ability to:
| 1. | Check your most recent account value |
| 2. | Sign up for eDelivery to have Prospectuses, Financial Reports, semiannual account statements, transaction confirmation statements, duplicate confirmation statements, and tax forms e-mailed to you |
| 3. | Review your recent account history, including distributions |
| 4. | Change your address (a redemption restriction of 30 days applies) |
| 5. | Make subsequent purchases¹ ($50 minimum) |
| 6. | Exchange between funds |
| 7. | Redeem fund shares¹ ($50,000 maximum) |
| 8. | Establish an Automatic Investment Plan |
| 9. | View average cost and tax summary information |
| 1 | Bank information must be established on your account prior to purchasing shares. |
About Online Security
Your Username and Password allow you to login and access portfolio information. Both your Username and Password are encrypted when you login to access your account.
Royce Investment Partners uses industry best practices to ensure the confidentiality and safety of your information and transactions.
40 | The Royce Fund Prospectus 2023
Shareholders who wish to sign up for account access must have a secure web browser that uses Secure Sockets Layer (SSL) technology with 128-bit encryption. This helps to keep your use of account access confidential.
Your Username and Password are Encrypted
When you login, your Username and Password are both encrypted. Although you will not see an “https” address or the lock symbol at the bottom of your browser window until you have logged in, we assure you that your personal information is secure as it is accepted by our transfer agent’s secure server.
Three Wrong Passwords and You’re Out
We have limited the number of times that a user can enter an incorrect Password to three in order to deter unauthorized users. Once your Password has been entered incorrectly three times, you will be locked out of the system. To re-establish access, you need to telephone Shareholder Services at (800) 841-1180, Monday through Friday, 9 a.m. to 6 p.m. Eastern time.
Also, if there is no activity for 15 minutes, you will be automatically logged off the system. If you leave your computer unattended, this time-out feature helps to prevent an unauthorized user from accessing the account(s).
How to Purchase Additional Shares
You may purchase additional Fund shares online, by telephone, and by mail.
Online
Once you have registered to access your account online, you can purchase Fund shares after logging in. Funds are debited from your bank checking account through ACH. ($50 minimum—bank information must be established on your account before purchasing shares.)
By Telephone
To pay using the Automated Clearing House (ACH):
By establishing the Expedited Purchase option on your Account Application, a telephone call allows you to have funds automatically debited from your bank checking account through ACH. Call Shareholder Services at (800) 841-1180 between 9 a.m. and 6 p.m. Eastern time or call our automated Royce Infoline at (800) 78-ROYCE at any time to buy additional Fund shares ($50 minimum). If your purchase request is received after the market closes (generally 4 p.m. Eastern time), it will receive the next business day’s NAV.
To pay by bank wire:
Please note that payments for wire purchases must be received by the close of regular trading on the NYSE (generally 4 p.m. Eastern time) ($500 minimum).
| SS&C GIDS, Inc. (“SS&C GIDS”) SS&C GIDS serves as the Funds’ transfer agent. State Street Bank and Trust Company is the custodian for securities, cash, and other assets of the Funds. |
Wiring instructions are:
State Street Bank and Trust Co., Inc.
ABA # 011000028
Credit DDA # 9904-712-8
Name of Royce Fund–Consultant Class
Account Number
Account Name
By Mail
Make your check—$50 minimum—payable to The Royce Fund. Fill out the amount of your purchase on the investment form found at the bottom of your latest statement. If you do not have a form, simply write the name of the Fund in which you are investing and your account number clearly on the check. Mail to The Royce Funds, c/o SS&C GIDS, Inc. (see mailing addresses on page 40).
Please note that the Funds do not accept third-party checks, “starter” checks, or money orders for initial or subsequent purchases.
Convenient Methods of Making Regular, Automatic
Expedited Purchases
Select the following services on your Account Application or, if you have an existing Royce Funds account, call Investor Services at (800) 221-4268 for an enrollment form or download one at www.royceinvest.com. You may also establish these services online.
Automatic Investment Plan
You can make regular purchases to your Royce Fund account directly from your bank account through ACH on a monthly or quarterly basis on the date you select ($50 minimum).
Direct Deposit Payroll Deduction Plan
You can make investments from your payroll or government check into your Royce Fund account each payment or pay period. Your employer must have direct deposit through ACH available for employees. You may cancel the option by giving written notice to your employer or government agency, as appropriate. The Fund is not responsible for the efficiency of the employer or government agency making the payment or of any financial institution transmitting payments. To sign up, you need to complete an Authorization for Direct Deposit form, which you can download by going to the Fund Literature page on www.royceinvest.com, clicking on How to Invest at the foot of the page, and clicking Applications & Special Forms or by calling Investor Services at (800) 221-4268.
The Royce Fund Prospectus 2023 | 41
Important Information about Purchases
| ● | If your check or wire does not clear, or if the Funds or their transfer agent do not receive payment for any telephone or online purchase, the transaction will be cancelled and you will be responsible for any loss that the Fund incurs. If you are already a shareholder, the Fund can redeem shares from any identically registered Royce Fund account as reimbursement for any loss. |
| ● | The Funds do not accept third-party checks, “starter” checks, or money orders for initial or subsequent purchases. |
| ● | In order to avoid lengthy processing delays caused by clearing foreign checks, the Funds will only accept a foreign check that has been drawn in U.S. dollars and has been issued by a foreign bank with a U.S. correspondent bank. |
| ● | The Funds reserve the right both to suspend the offering of Fund shares to new investors and to reject any specific purchase request. |
| ● | You may have your bank account information taken from your initial investment check. Otherwise, you must include a voided check with your Account Application for Expedited Purchases and Redemptions. It can take up to three weeks to establish these services; you will receive confirmation of their activation by mail. |
Important Information about Telephone and Online Transactions
Neither the Funds nor their transfer agent will be liable for following instructions reasonably believed to be genuine that are received by telephone or made online. The transfer agent uses certain procedures designed to confirm that instructions are genuine. Procedures may include requiring some form of personal identification prior to acting on the instructions, such as providing written confirmation of the transaction and/or recording incoming calls. If the Funds or their transfer agent do not follow such procedures, then they may be liable for any losses due to unauthorized or fraudulent transactions.
How to Sell Shares
You may sell shares in your account at any time and make requests online, by telephone, and by mail. SS&C GIDS, Inc. will generally send the proceeds within two business days of receiving the request.
Redemptions from Royce-sponsored retirement plan accounts— IRA—and from accounts for which share certificates are outstanding must be made in writing.
Certain other redemption requests must be made in writing and also require a medallion guarantee of the signature(s) of the shareholder(s). These include redemption requests for $50,000 or more, for a payee(s) other than the shareholder(s), or for proceeds to be sent to an address other than the address of record.
Online
Once you have registered to access your account at www.royceinvest.com, login, and click the Fund you want to sell, and select Redeem from the Account Actions dropdown menu. Proceeds may be sent by check, by bank wire, or through ACH.
By Telephone
For any amount less than $50,000, you may call Shareholder Services at (800) 841-1180 between 9 a.m. and 6 p.m. Eastern time or call the automated Royce Infoline at (800) 78-ROYCE at any time and SS&C GIDS, Inc. will mail a check to the address of record on the account. If your redemption request is received after the market closes (generally 4 p.m. Eastern time), it will receive the next business day’s NAV. You may also establish the Expedited Redemption option, which allows you to have proceeds sent to your bank by wire—usually credited within one business day—and/or by ACH—usually credited within two business days.
By Mail
Mail your letter to The Royce Funds, c/o SS&C GIDS, Inc. (see page 40 for mailing addresses). Written requests must be in Good Order, meaning that the request meets the Fund’s legal and processing requirements.
All written requests to sell shares must contain at least the following to be in Good Order:
| ● | The name(s) and signature(s) of each shareholder named in the account registration with medallion guarantee(s) if required |
| ● | The Fund name and account number |
| ● | The dollar or share amount you want to sell |
| ● | The address to which you want proceeds sent |
| ● | Certificates, if you are holding any |
In addition:
| ● | Trusts and Corporate Retirement Plan Accounts require a letter of instruction signed by the trustee(s) named in the account registration. Redemptions involving third parties, trustees not named in the account registration, successor trustees, or other situations require additional documentation. Please call Shareholder Services at (800) 841-1180 with any questions. |
| ● | Corporate Accounts require a letter of instruction signed by an officer of the corporation and a certified copy of a Corporate Resolution that authorizes the assigning officer to effect transactions. The same party cannot certify the Corporate Resolution and sign the letter of instruction. |
| ● | Partnership/Sole Proprietorship Accounts require a letter of instruction signed by the general partner(s)/sole proprietor named in the account registration. |
| ● | Nominee Accounts require a medallion-guaranteed letter of instruction signed by a general partner or a nominee facsimile stamp. |
| ● | Transfer on Death Accounts require a medallion-guaranteed letter of instruction signed by the beneficiary(ies) named in the account registration, a certified copy of the deceased shareholder’s Death Certificate, a tax waiver if required by the deceased’s former state of residence, and an affidavit signed by the beneficiary(ies) that states: “Under penalty of perjury, I/we swear that there are no known disputes as to the persons entitled to a distribution under the nonprobate transfer or the amounts to be distributed to each person and no known claims that would affect the distribution requested.” |
42 | The Royce Fund Prospectus 2023
| ● | Administrators/executors of shareholder estates must provide a medallion-guaranteed letter of instruction, certified copy of Letters Testamentary, which authorize the signing party to act on behalf of the deceased shareholder and, if required by the deceased’s state of former residence, a certified tax waiver. |
If you have any questions about how to ensure that your written redemption request is in Good Order, please call Shareholder Services at (800) 841-1180, or contact us at www.royceinvest.com.
Automatic Withdrawal Plan
This option allows you to automatically redeem shares from your Fund account and have the proceeds transferred directly to your bank account through ACH on a monthly, quarterly, or annual basis generally on the 15th day of the month. You must have at least $25,000 in a Fund account to be eligible for this feature.
Important Information About Redemptions
| ● | Telephone and online redemptions will not be permitted for 30 days after a change in the address of record. |
| ● | If you are redeeming shares recently purchased by check or through ACH, proceeds may not be sent until payment for the purchase is collected, which may take up to 15 calendar days. Otherwise, redemption proceeds must be sent to you within seven days of receipt of your request in Good Order. |
| ● | If you have difficulty making a redemption by telephone or online, you may want to make your redemption request by regular or express mail (See “How to Sell Shares: By Mail” on page 42 for processing information). The Funds reserve the right to revise or terminate telephone or online redemption privileges at any time. |
| ● | The Funds may suspend redemption privileges or postpone payment beyond seven days (1) for any period (A) during which the NYSE is closed other than customary weekend and holiday closings or (B) during which trading on the NYSE is restricted; (2) for any period during which an emergency exists as a result of which (A) disposal by the Funds of securities owned by them is not reasonably practicable or (B) it is not reasonably practicable for the Funds fairly to determine the value of their respective net assets; or (3) for such other periods as the SEC may by order permit for the protection of the Funds’ shareholders. |
| ● | The Funds will normally make redemptions in cash, but reserve the right to satisfy a redemption request under certain circumstances by effecting a redemption-in-kind through a pro rata distribution of the Fund’s portfolio securities (allowing for adjustments to prevent distributions of restricted shares, fractional shares and odd-lot numbers of shares). |
How to Exchange Shares
You may make exchanges between Royce Funds in the Consultant Class. However, you must meet the minimum initial investment when you open an account by exchange.
You may make exchanges online, by telephone, and by mail. An exchange involves a purchase and a redemption; therefore you may realize a taxable gain or loss. Also, exchanges are permitted only if both the registration and the Social Security or Taxpayer Identification Number of the two accounts are identical. You may make an exchange only for shares of a class or series offered for sale in your state of residence. The Fund reserves the right to revise or suspend the exchange privilege at any time.
How to Transfer Ownership
You may transfer the ownership of any of your Fund shares to another person by writing to The Royce Funds, c/o SS&C GIDS, Inc..
As with selling shares, your request must be in Good Order (see “How To Sell Shares” on pages 42-43 for information regarding Good Order). Please call Shareholder Services at (800) 841-1180 for instructions.
Statements and Reports
| ● | A confirmation statement is sent to you, electronically or by mail, each time there is a transaction in your account. You can also review your recent account history once you have registered for online account access. |
| ● | Year-to-date account statements are sent semiannually. |
| ● | The Royce Fund mails shareholder reports semiannually and, to reduce expenses, may mail only one copy to shareholders with the same last name and sharing the same address. Directly registered shareholders can choose to receive separate report copies for accounts registered to different members of the same household by calling Investor Services at (800) 221-4268. Please allow 30 days for your request to be processed. Shareholders may also elect to receive these reports via eDelivery. Please go to www.royceinvest.com for more details. |
Other Information
Certificates
The Royce Funds do not issue certificates. If a certificate is lost, stolen, or destroyed, you may have to pay the expense to replace it. You must return certificates with any redemption request. For these reasons, the Funds generally discourage the issuing of certificates.
Minimum Account Balance
Due to the relatively high cost of maintaining low-balance accounts, The Royce Funds reserve the right to redeem shares in the account of any Fund if the account falls below the minimum initial investment because of redemptions by the shareholder.
The Fund may notify you if, due to redemption(s), the balance in your account is less than the appropriate minimum initial investment (see page 35), or if you discontinue an Automatic Investment Plan before your account reaches the $2,000 minimum initial investment. You would then have 60 days to increase your balance before the Fund would close your account.
In each of the cases described above, the Fund would promptly pay redemption proceeds to the shareholder.
If you have any questions about the material in this Shareholder Guide, please call Investor Services at (800) 221-4268, or contact us at www.royceinvest.com.
The Royce Fund Prospectus 2023 | 43
Appendix A
Information Regarding Contingent Deferred Sales Charge Waivers at Certain Financial Intermediaries
Shareholders purchasing Consultant Class shares through a Merrill Lynch platform or account will be eligible only for the CDSC waivers described below, which may differ from those disclosed elsewhere in this Prospectus or SAI.
CDSC Waivers on Consultant Class Shares Available at Merrill Lynch:
| ● | Death or disability of the shareholder |
| ● | Shares sold as part of a systematic withdrawal plan as described in the Prospectus |
| ● | Return of excess contributions from an IRA |
| ● | Shares sold as part of a required minimum distribution for IRA and retirement accounts pursuant to the Internal Revenue Code of 1986 |
| ● | Shares sold to pay Merrill Lynch fees but only if the transaction is initiated by Merrill Lynch |
| ● | Shares received through an exchange due to the holdings moving from a Merrill Lynch affiliated investment advisory program to a Merrill Lynch brokerage (non-advisory) account pursuant to Merrill Lynch’s policies relating to sales load discounts and waivers |
With respect to Raymond James & Associates, Inc., Raymond James Financial Services, Inc., and each entity’s affiliates (collectively, “Raymond James”), shareholders purchasing Consultant Class shares through a Raymond James platform or account, or through an introducing broker-dealer or independent registered investment adviser for which Raymond James provides trade execution, clearance, and/or custody services, will be eligible only for the CDSC waivers described below, which may differ from those disclosed elsewhere in this Prospectus.
CDSC Waivers on Consultant Class Shares Available at Raymond James:
| ● | Death or disability of the shareholder. |
| ● | Shares sold as part of a systematic withdrawal plan as described in the Prospectus. |
| ● | Return of excess contributions from an IRA. |
| ● | Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 70½ as described in the Prospectus. |
| ● | Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James. |
Shareholders purchasing Consultant Class shares through an Oppenheimer & Co. Inc. (“OPCO”) platform or account are eligible only for the following contingent deferred sales charge waivers and discounts, which may differ from those disclosed elsewhere in this Prospectus or SAI.
CDSC Waivers on Consultant Class Shares Available at OPCO:
| ● | Death or disability of the shareholder |
| ● | Shares sold as part of a systematic withdrawal plan as described in this Prospectus |
| ● | Return of excess contributions from an IRA Account |
| ● | Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable IRS regulations as described in this Prospectus |
| ● | Shares sold to pay OPCO fees but only if the transaction is initiated by OPCO |
In addition, shareholders in the Fund’s Consultant Class shares will have their shares converted at net asset value to Service Class shares (or the appropriate share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of Raymond James or OPCO, as applicable.
If you want to learn more about CDSC waivers, contact your Financial Advisor or consult the Statement of Additional Information. If you want to learn more about the above-described share class conversions, contact your Raymond James or OPCO Financial Advisor.
44 | The Royce Fund Prospectus 2023
This page intentionally left blank
This page intentionally left blank
This page intentionally left blank
This page intentionally left blank
More
information on The Royce Fund is available free upon request, including the
following:
Annual/Semiannual
Reports
Additional
information about a Fund’s investments, together with a discussion of market
conditions and investment strategies that significantly affected the Fund’s
performance, is available in the Funds’ annual and semiannual reports to
shareholders. These reports are also available (without charge) online at
www.royceinvest.com/literature and upon request, by calling (800)
421-4268.
Statement
of Additional Information (“SAI”)
The SAI provides more details about The
Royce Fund and its policies. A current SAI is available at
www.royceinvest.com/ literature and upon request by calling (800)
421-4268. It is also on file with the SEC and is incorporated by reference into
this prospectus (is legally considered part of this
prospectus).
To obtain more information:
By Mail: The Royce Funds, 745 Fifth Avenue, New York, NY 10151
By Telephone: (800) 221-4268
Through the Internet: Prospectuses, applications, IRA forms, and additional information are available through our website at www.royceinvest.com/literature.
Text only versions of the Funds’ prospectus, SAI, and other documents filed with the SEC can be viewed online or downloaded from www.sec.gov.
You can also obtain copies of documents filed with the SEC by visiting the SEC’s Public Reference Room in Washington, DC (telephone (202) 551-8090) or by sending your request and a duplicating fee to the SEC’s Public Reference Section, Washington, DC 20549-1520. You may also make your request by e-mail at [email protected] after paying a duplicating fee.
SEC File # 811-03599 CR-PRO-0523