UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-03599

Name of Registrant: The Royce Fund

Address of Registrant: 745 Fifth Avenue
New York, NY 10151

Name and address of agent for service:
John E. Denneen, Esquire

745 Fifth Avenue

New York, NY 10151

Registrant’s telephone number, including area code: (212) 508-4500
Date of fiscal year end: December 31
Date of reporting period: January 1, 2009 - December 31, 2009

Item 1.    Reports to Shareholders.

CORE
Royce Pennsylvania Mutual Fund
Royce Heritage Fund
	ANNUAL REVIEW AND REPORT TO SHAREHOLDERS
CORE + DIVIDENDS
Royce Total Return Fund
Royce Dividend Value Fund
QUALITY + FOCUSED
Royce Premier Fund
Royce Special Equity Fund
Royce Value Fund
Royce 100 Fund
Royce SMid-Cap Value Fund
Royce Focus Value Fund
Royce Partners Fund
MICRO-CAP/OPPORTUNISTIC
Royce Micro-Cap Fund
Royce Low-Priced Stock Fund
Royce Opportunity Fund
Royce Value Plus Fund
Royce Discovery Fund
GLOBAL/INTERNATIONAL
Royce European
Smaller-Companies Fund
Royce Global Value Fund
Royce International
Smaller-Companies Fund
Royce Financial Services Fund
www.roycefunds.com

Fund Guide

Understanding How We Think About Our Portfolios

We are often asked, “If small companies are your primary area of focus, why are there so many Royce Funds?” To answer this question, we first point to the distinctive nature of the smaller company universe. Small-cap is significantly larger than large-cap both in terms of names—with more than ten times the number of companies—and potential opportunities.

The universe has evolved over the last 15 years into a recognized, professional asset class with a high level of institutional acceptance. Today, there are many small-cap and micro-cap indices, as well as style indices and sector groupings. This is why we believe the size and diversity of the universe make it ideally suited for multiple offerings.

Small-cap and micro-cap securities also require their own particular approach. In addition, within each universe there are significant pockets of opportunity, such as dividend-paying companies, low-priced companies, high quality companies, etc., that go beyond classification by market cap. So while our portfolio managers share a common investment approach—one that emphasizes paying attention to risk and buying what each thinks are strong companies at attractively discounted prices—our portfolios also possess important distinctions that make each one unique.

Our Fund Guide is designed to help investors better understand both the different approaches and the common ground among our portfolios.

Each Fund Category provides insight into how the respective portfolios are managed, while a closer look at our materials allows investors to see other important differences—capitalization range, volatility, other investment themes, portfolio diversification—within each category. We think that understanding these differences can be helpful in asset allocation decisions, especially when investors incorporate more than one Royce offering within their portfolios.

Investment Universe

Our universe consists of three markets: micro-cap, small-cap and mid-cap companies. The Funds may also invest in foreign securities to varying degrees.

U.S. Micro-Cap Market Caps up to $500 million
•  More than 3,500 companies
•  Approximately $400 billion in total capitalization

This area offers many choices, but also features limited trading volumes and higher volatility.

U.S. Small-Cap Market Caps between $500 million and $2.5 billion
•  Approximately 1,100 companies
•  More than $1.2 trillion in total capitalization

This segment is more efficient, offering greater trading volumes and narrower bid/ask spreads.

U.S. Mid-Cap Market Caps between $2.5 billion and $10 billion
•  More than 500 companies
•  More than $2.4 trillion in total capitalization

Mid-cap companies generally possess more established businesses that attract greater institutional interest and thus enjoy greater liquidity.

Foreign Securities
This market consists of more than 15,600 companies, of which approximately 6,000 are domiciled in Europe.

(Source: FactSet)

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We offer a number of Funds in the smaller company universe.

CORE

Royce Pennsylvania Mutual Fund

Royce Heritage Fund

Core Funds generally invest across a wide spectrum of smaller companies using a diversified approach. We select stocks in these Funds based on balance sheet quality, cash flow characteristics and high returns on invested capital. We developed our core approach during the 1970s and ’80s in our flagship Royce Pennsylvania Mutual Fund. These Funds also incorporate ideas used in other portfolios, such as low-priced stocks, dividend-paying stocks and international securities.

CORE + DIVIDENDS

Royce Total Return Fund

Royce Dividend Value Fund

Core + Dividends Funds generally invest in dividend-paying smaller companies using a diversified approach. We believe that an investment strategy that seeks both long-term growth and current income has the potential to generate above-average absolute returns over full market cycles with less volatility. These Funds may also invest a portion of the portfolio in fixed income securities, such as convertible bonds.

QUALITY + FOCUSED

Royce Premier Fund

Royce Special Equity Fund

Royce Value Fund

Royce 100 Fund

Royce SMid-Cap Value Fund

Royce Focus Value Fund

Royce Partners Fund

Quality + Focused Funds generally employ a more limited portfolio approach—typically holding no more than 100 positions—with holdings that possess what we believe are higher-quality characteristics. These include strong balance sheets, above-average returns on invested capital and the ability to generate free cash flow.

MICRO-CAP/OPPORTUNISTIC

Royce Micro-Cap Fund

Royce Low-Priced Stock Fund

Royce Opportunity Fund

Royce Value Plus Fund

Royce Discovery Fund

Micro-Cap/Opportunistic Funds generally invest in micro-caps and/or those companies considered more opportunistic, including turnarounds, special situations, low-priced stocks and above-average growth companies. Like our Core Funds, these portfolios are highly diversified. We believe they also have the potential for higher returns, commensurate with each Fund’s higher level of risk.

GLOBAL/INTERNATIONAL

Royce European Smaller-Companies Fund

Royce Global Value Fund

Royce International Smaller-Companies Fund

Global/International Funds generally focus on non-U.S. based companies. The same attributes that we seek in smaller domestic companies—strong balance sheets, an established record of earnings, the ability to generate free cash flow and excellent growth prospects—can be found in international businesses as well. We have found that quality is an international concept that recognizes no borders. This universe is enormous, dwarfing the domestic smaller companies market.

    >  Go Online For More Tools To Help You
   Better Understand Our Funds.

• Online Fund Guide www.roycefunds.com/guide

• Compare Funds www.roycefunds.com/compare

• Prices & Performance www.roycefunds.com/prices   

The Royce Funds invest primarily in micro-cap, small-cap and/or mid-cap stocks, which may involve considerably more risk than investing in larger-cap stocks (Please see “Primary Risks for Fund Investors” in the prospectus). Each Fund may invest a portion of its net assets in foreign securities, which may involve political, economic, currency, and other risks not encountered in U.S. investments (Please see “Investing in Foreign Securities” in the prospectus). Distributor: Royce Fund Services, Inc.

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Current Portfolio Characteristics As of December 31, 2009

Investment Universe
Micro-Cap: Market Caps up to $500 million

Small-Cap: Market Caps between $500 million and $2.5 billion

Mid-Cap: Market Caps between $2.5 billion and $10 billion

Non-U.S. Securities: Non-U.S. securities are those securities that do not trade on a U.S. exchange, except in the case of Royce European Smaller-Companies, Global Value and International Funds, where they are defined as those securities issued by companies that are domiciled outside the U.S.

Portfolio Approach
Diversified: A diversified portfolio at Royce is one that generally holds more than 100 securities and whose top positions generally do not exceed 2% of net assets.

Limited: A limited portfolio at Royce is one that either (i) generally invests in no more than 100 companies, and whose top positions generally exceed 2% of net assets, or (ii) invests primarily in a single sector.

Volatility
Each Fund’s volatility is measured using Morningstar’s Risk Ratio, which measures variations in a fund’s monthly returns, with an emphasis on downside performance. Each Royce Fund’s overall Risk Ratio is a weighted combination of its three-, five- and 10-year scores, if applicable. Each Fund’s results reflect its score compared with all small-cap objective funds tracked by Morningstar with at least three years of history (333 funds as of 12/31/09). For Royce European Smaller-Companies Fund, included are all Europe stock funds tracked by Morningstar with at least three years of history (30 funds as of 12/31/09). For Royce Global Value Fund, included are all world stock funds tracked by Morningstar with at least three years of history (143 funds as of 12/31/09). For Royce Financial Services Fund, included are all financial funds tracked by Morningstar with at least three years of history (35 funds as of 12/31/09). We consider funds whose results rank in the top third of the category to have relatively low volatility; those in the middle third to have moderate volatility; and those in the bottom third to have high volatility.

*	The Fund does not have three years of history required for calculating volatility score.
**	Source: FactSet

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Table of Contents
Annual Review
Performance and Expenses	4
Letter to Our Shareholders	5
Small-Cap Market Cycle Performance	12
Fund Focus: Spanning the Globe	13
Online Update	14
Postscript: Cultural Issues	Inside Back Cover
Annual Report to Shareholders	15

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Performance and Expenses¹ Through December 31, 2009

	Average Annual Total Returns
												Gross Annual			Net Annual
CATEGORY								Since		Since		Operating			Operating
Fund		1-Year		5-Year		10-Year		Inception		Inception Date		Expenses			Expenses
CORE
Royce Pennsylvania Mutual Fund		36.28	%	3.35	%	9.73	%		n.a.		n.a.		0.91	%		0.91	%
Royce Heritage Fund		51.82		5.50		9.01			14.12		12/27/95		1.52			1.52
CORE + DIVIDENDS
Royce Total Return Fund		26.22		1.97		8.55			10.56		12/15/93		1.19			1.19
Royce Dividend Value Fund		37.73		3.95		n.a.			5.74		5/3/04		2.72			1.70
QUALITY + FOCUSED
Royce Premier Fund		33.25		6.53		10.72			12.03		12/31/91		1.16			1.16
Royce Special Equity Fund		28.38		4.06		12.02			8.60		5/1/98		1.15			1.15
Royce Value Fund		44.71		6.22		n.a.			11.27		6/14/01		1.46			1.46
Royce 100 Fund		38.05		6.52		n.a.			10.64		6/30/03		1.57			1.49
Royce SMid-Cap Value Fund		28.75		n.a.		n.a.			-3.99		9/28/07		1.76			1.49
Royce Focus Value Fund		n.a.		n.a.		n.a.			53.271		2/27/09		1.75			1.49
Royce Partners Fund		n.a.		n.a.		n.a.			15.601		4/27/09		1.75			1.49
MICRO-CAP/OPPORTUNISTIC
Royce Micro-Cap Fund		55.67		6.07		11.43			13.13		12/31/91		1.69			1.69
Royce Low-Priced Stock Fund		53.58		5.59		10.80			12.77		12/15/93		1.60			1.49
Royce Opportunity Fund		62.14		1.42		9.78			12.13		11/19/96		1.23			1.23
Royce Value Plus Fund		41.38		3.05		n.a.			12.68		6/14/01		1.48			1.48
Royce Discovery Fund		25.86		-1.00		n.a.			3.35		10/3/03		3.33			1.49
GLOBAL/INTERNATIONAL
Royce European Smaller-Companies Fund		57.69		n.a.		n.a.			-4.99		12/29/06		3.52			1.79
Royce Global Value Fund		61.89		n.a.		n.a.			3.59		12/29/06		2.27			2.02
Royce International Smaller-Companies Fund		50.31		n.a.		n.a.			3.34		6/30/08		3.75			1.73
Royce Financial Services Fund		32.13		2.64		n.a.			4.62		12/31/03		2.20			1.74
Russell 2000		27.17		0.51		3.51			n.a.		n.a.		n.a.			n.a.

Royce Pennsylvania Mutual Fund’s average annual total return for the 35-year period ended 12/31/09 was16.79%.
¹Not annualized

Important Performance, Expense and Risk Information
All performance information in this Review and Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee (2% in the case of Royce European Smaller-Companies, Global Value and International Smaller-Companies Funds) payable to the Fund. Redemption fees are not reflected in the performance shown above; if they were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. The performance information in the table above, and in the graphs and tables appearing on pages 16-55, does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. All performance and expense information reflects results of the Fund’s oldest share Class (Investment Class or Service Class, as the case may be). Shares of the Fund’s Service, Consultant, R and K Classes bear an annual distribution expense that is not borne by the Fund’s Investment Class. Gross annual operating expenses reflect the Fund’s gross total annual operating expenses for the Fund’s oldest Class and include management fees, 12b-1distribution and service fees, other expenses and any applicable acquired fund fees and expenses. Net annual operating expenses reflect contractual fee waivers and/or reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses other than acquired fund fees and expenses through April 30, 2010 to the extent necessary to limit total net annual operating expenses to no more than 1.49% for the Service Class of Royce Low-Priced Stock, 100, Discovery, Financial Services, Dividend Value and SMid-Cap Value Funds and 1.69% for Royce European Smaller-Companies, Global Value and International Smaller-Companies Funds. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses other than acquired fund fees and expenses through April 30, 2019 to the extent necessary to limit total net annual operating expenses to no more than 1.99% for the Service Class of Royce Discovery, Dividend Value, European Smaller-Companies and International Smaller-Companies Funds. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses through April 30, 2012 to the extent necessary to limit total net annual operating expenses to no more than 1.49% for the Service Class of Royce Focus Value and Partners Funds. Acquired fund fees and expenses are those incurred indirectly as a result of investment in one or more acquired funds, including mutual funds, hedge funds, private equity funds and other pooled investment vehicles. The Royce Funds invest primarily in securities of micro-, small- and/or mid-cap companies which may involve considerably more risk than investments in securities of larger-cap companies (see “Primary Risks for Fund Investors” in the respective Prospectus). Please read the Prospectus carefully before investing or sending money. The Russell 2000 is an unmanaged, capitalization-weighted index of domestic small-cap stocks. It measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 index.

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Letter to Our Shareholders

Good Day Sunshine
It would be easy, and more than a little tempting, to tell the story of the stock market in 2009 as a stirring tale of triumph over adversity, the saga of plucky equities battling back to positive returns from near certain defeat in the wake of almost total undoing. Undoubtedly, it was a healthy development for share prices to climb back upward almost unimpeded from early March through the end of the year, especially during those times when the bullish phase was accompanied by improved news on the economic front. Moreover, it was a worldwide rally that lifted stock prices in all asset classes and nearly every sector and industry. So why aren’t we feeling cheerier about the Great Rally of 2009?
      Part of the explanation is that the stuff of catchy soundbites and headlines too often fails to account for perspective, such as the longer-term view of things that we assume here at Royce. We were very pleased with the performance of the market—and our Funds—in 2009, but the year’s heady returns must be placed in the larger context of what occurred not only in late 2008, but in the market cycle that began with the respective peaks for small-cap (in July 2007) and large-cap (in October 2007) stocks, peaks that neither index has come close to passing as of this writing. (And this does not include the long-term travails of the Nasdaq,

We were very pleased with the performance of the market—and our Funds—in 2009, but the year’s heady returns must be placed in the larger context of what occurred not only in late 2008, but in the market cycle that began with the respective peaks for small-cap (in July 2007) and large-cap stocks (in October 2007), peaks that neither index has come close to passing as of this writing.

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Charles M. Royce, President

The idea of establishing a “margin of safety” in an investment is a widely shared tenet of value investors, and one that we take very seriously in our security selection processes here at Royce. When we look at small-cap companies, we are always thinking about risk—preserving capital in difficult periods is as important to our portfolio managers as making it grow in healthy ones. With each company, we ask ourselves, “What is the risk of permanent capital impairment? How well-insulated is this firm from bankruptcy? What are the risks compared to the potential reward?”

We try to answer these questions by taking the company through rigorous fundamental analysis, which typically begins with the balance sheet, as financial risk is probably the most important to us. One general guideline that we use is to look for a better than two-to-one ratio of assets to stockholders’ equity for non-financial companies. This represents our primary “margin of safety” measure, providing, in our view, reasonably sufficient financial flexibility for the company to survive difficult periods for its business and/or industry.

Once comfortable with the balance sheet, we move our analysis to an

Letter to Our Shareholders

still not recovered from its dot.com hangover in 2000). Seen from this admittedly more downbeat vantage point, the shine of the rally loses some luster. For our own purposes of managing assets and thinking about where the market may be headed next, this more sobering perspective is necessary. Recalling that overall equity returns still have some ground to cover before results for periods longer than one year are respectably in the black does not diminish the good news of 2009; it just places it in a different, less glaring light in which we think it can be better understood. On that issue (and others), we have more to say below.
      Of course, the passing of 2009 is notable because it marks not just the end of a year, but of a decade. And what a decade it was. Though it ended with a bang, it left most investors whimpering. Perhaps the best way of summing up the last 10 years is to point out that when the decade to which it has most commonly been compared is the 1930s, it was not a good decade. The Aughts (or Zeroes, if you prefer) saw more than their share of significant incidents, whether one’s purview is the stock market or the entire globe. To briefly tick off just a few of the major market events, we saw the bursting of the tech bubble, the proliferation of ETFs (exchange-traded funds), the growth of international investing, and one of the most destructive bear markets since the Great Depression. All of this took place amid horrific terrorist attacks, the bursting of the real estate bubble and a global recession that we are, hopefully, emerging from with the advent of the new decade. If nothing else, they were interesting times, even as many investors are happy to see them go.

“Everybody Had a Good Year...”
That sentiment may be more true for large-cap investors than others, as the S&P 500’s return for the decade was notably negative. Large-caps did, however, enjoy a more than respectable showing in 2009. In fact, results for all three major indexes were outstanding, with the small-cap Russell 2000, S&P 500 and the Nasdaq Composite each posting their strongest calendar year performances since 2003—the Russell 2000 gained 27.2%, compared to 26.5% for the S&P 500 and 43.9% for the Nasdaq Composite. After beginning the year with the most substantial losses, small-caps rallied hardest, leading from the market low on March 9, 2009. From that early March trough through the end of 2009, the Russell 2000 climbed 84.5% versus respective gains of 67.8% and 78.9% for the S&P 500 and Nasdaq Composite.
      While each major index performed very well from the March bottom, all three remained well shy of their respective peaks. From their previous highs in 2007, the Russell 2000 and S&P 500 were off 24.2% and 24.0%, respectively, through December 31, 2009, while the more tech-oriented Nasdaq Composite remained

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55.1% below its high, made during March 2000. Unsurprisingly, then, each index’s stellar one-year result was not enough to put respective three-year returns in positive territory, while their five-year results were only slightly positive. For the decade as a whole, results were equally dismal. The decade was the worst on record for both the small-cap and large-cap indexes. The average annual total return for the 10-year period was 3.5% for the Russell 2000 and -1.0% for the S&P 500. The Nasdaq performed most poorly, losing 5.7% on an average annual total return basis for the decade.
      For the calendar year, the MSCI EAFE (Europe, Australasia and Far East) index gained 31.8% and the MSCI World ex USA Small Core index rose 50.8%. Both indexes posted negative returns for the three-year period. However, five-year and 10-year results were positive—and ahead of the Russell 2000 for the international small-cap index.
      Within small-cap, growth substantially outperformed value in 2009—the Russell 2000 Growth index rose 34.5% versus 20.6% for the Russell 2000 Value index. Small-cap growth also held the performance edge in the three-year and five-year periods ended December 31, 2009. However, small-cap value outperformed in 2009’s rally. From the market low on March 9, 2009 through December 31, 2009, the Russell 2000 Value index was up 88.1% versus 81.0% for the Russell 2000 Growth index. Small-cap value also outpaced its growth sibling for the 10-, 15-, 20- and 25-year periods ended December 31, 2009. Micro-cap results were also very strong for calendar 2009, with the Russell Microcap index up 27.5%. Within micro-cap, growth outperformed value for the one-, three- and five-year periods ended December 31, 2009.

Yesterday
We were very pleased with the calendar-year performances for The Royce Funds. All but five Funds in this Review and Report—Royce Total Return, Discovery, SMid-Cap Value, European Smaller-Companies and International Smaller-Companies Funds—outperformed their respective benchmarks. More important to us was that each portfolio posted absolute results that ranged from the respectable to the noteworthy, with each portfolio returning in excess of 20% for the calendar year. We also remain very pleased that most Funds’ returns in 2009 were a combination of strong relative performance in the downturn that opened the year, as well as terrific showings during the rally that began in March. As always, we are as committed to capital preservation as we are to capital appreciation, our results in 2008 notwithstanding.
       The rally has thus far been attractively egalitarian in nature, bestowing generous favor not only on stocks in all asset classes, but also to most sectors and industries. Of course,

We expect investors to become more discriminating in the next market phase as the economy stabilizes and valuations are no longer at the fire-sale levels of late 2008 and early 2009. Such an environment should favor quality stocks—that is, those companies that have strong balance sheets, steady earnings and high returns on invested capital—in all asset classes.

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assessment of the company’s internal rates of return, particularly its return on invested capital, which gives us a strong sense of the sustainability of the company’s success. This analysis provides an indication of whether or not the company’s operations are likely to generate returns above and beyond the cost of capital, leading to increases in shareholder value. The ability to generate free cash flow and use it productively to grow the business and reward shareholders through dividends and share repurchases is one of the key attributes in our definition of a high-quality business. We like companies with little or no debt, but it’s just as important for the business to be operating in a way that suggests it can maintain the same or a similar level of financial well-being over the long term, consistent with our own investment time horizon.

A third element that our portfolio managers and analysts seek are companies trading for at least a 30% discount to our estimate of their worth as a business, though our preferred discount is 50% to this estimate of intrinsic value. We operate on the assumption that under historically normal operating conditions the discount will narrow, but typically over the course of years, not months.
In fact, if all works out according to plan, our investment in a small-cap stock trading at a 50% discount to its current worth would double over time, providing an average annual total return over four years of 18.9%. Purchasing shares at a 30% discount

Letter to Our Shareholders

some areas did better than others. For the portfolios taken as a whole, the strongest sectors were Natural Resources and Technology. The former sector includes precious metals and mining companies as well as energy services stocks and oil and gas companies, all of which have exhibited considerable strength through the rally. In general, our Consumer and Industrial sectors also did well.
      One curious occurrence has been the thus-far relatively disappointing showing of small-cap companies that pay a dividend, one of our key identifiers of company quality. According to Bank of America-Merrill Lynch, dividend-paying small-cap stocks lagged their ‘dividend-deficient’ small-cap peers by a wide margin. In 2009, these stocks were up 11.1% versus a gain of 40.0% for those small-cap stocks with no dividend yield. We anticipate that the market will move into a less feverishly bullish phase, one that

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should help dividend-paying small-caps to somewhat narrow this performance gap during the next year or so, as investors grow more concerned with quality. We are also expecting frequent and regular leadership rotation between small-cap and large-cap in a return environment that will look more historically typical than what we saw in 2008 and 2009.

Tomorrow Never Knows
The stock market has survived a number of difficulties—severe bear markets, scandals, and indirectly related events such as those of 9/11. So while the past decade was very tough, going forward we are confident that equities will not just survive, but prosper—that is, creating returns in excess of inflation. We fully anticipate that stocks will remain consistent with their historical role of building wealth over the long term and that diversified equity investments are the soundest method for investors to try to realize their goals. While the economic outlook is uncertain, and many investors are still anxious, we accept the idea that, as much as we would like them to be infrequent, bear markets, even historically awful ones, remain a fact of investment life. The best we can do is to act responsibly when they happen, trying to turn their declines to our long-term advantage. So while no one wants a recurrence of the sort of the near-disaster of 2008, we look to the future knowing that there are no guarantees. The only sure thing that we can see is the consistent presence of volatility.
      Whatever else the new decade brings, the history of previous decades suggests that if returns are at or fall below historical levels, small-caps are likely to lead (as they did in the just-concluded decade); if returns exceed historical levels, large-caps are apt to be out in front. This has been the historical pattern regardless of whether an asset class had previously been underperforming. In any case, it seems reasonable to expect better returns in the new decade. The period will likely see its share of worrisome declines and exciting rallies and, as mentioned, several bouts of rotating market leadership between small-cap and large-cap stocks.
      As the economic and financial crises move further back in time, we see the market entering a period of more historically typical returns, with annualized returns somewhere in the high single digits. Although it remains early to pronounce with complete confidence, the market appears to be moving out of the initial recovery phase that began with the early rally in March 2009. This bull phase has been very dynamic and particularly good for non-dividend payers, non-earners and very low-priced stocks. In other words, it was a bull run in which few investors were paying attention to risk. We expect investors to become more discriminating in the next market phase as the

Our approach has always centered on three qualities: ample attention to risk; a concentration on absolute returns; and a long-term investment horizon.

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would yield a 9.4% average annual total return over four years if the market discount gap were to close.

At times, more patience than we originally thought is required. There are also those times when our security selections simply do not work out according to plan. While our margin of safety is designed to help us manage business risk, the vagaries of markets and economies can conspire to make these efforts ineffective. Numerous factors can—and will—get in the way, including the inaccuracy of our estimate and unforeseen changes to the business, its management or its industry, to name just a few. These potential obstacles notwithstanding, we are content to try to get it right, even as we know there have been numerous times in which we have gotten it wrong (as well as those wonderful instances in which our expectations are exceeded).

This is why entry and exit price are so crucial to our total return experience with any stock. Our estimate of the worth of a business helps us to determine an ideal entry price. However, prices move around quite a bit in the course of a single trading day, so we choose not a single price but a range of prices that we are happy to pay for a given stock. Ever cautious, we usually use a dollar-cost-averaging model, which equates to a slow wade into the shallow end of the pool. We tend to use the same practice when selling shares as well. Importantly, any long-term success to which we can lay claim depends on always being cognizant of the need to maintain that margin of safety.

Letter to Our Shareholders

economy stabilizes and valuations are no longer at the fire-sale levels of late 2008 and early 2009. Such an environment should favor quality stocks—that is, those companies that have strong balance sheets, steady earnings and high returns on invested capital—in all asset classes.

Any Time At All

We would happily welcome more investors eager to embrace quality in 2010, though our own time-tested, ‘quality-centric’ style will remain in place regardless of the market’s direction. We remain confident in our consistent, disciplined approach, a confidence rooted in close to four full decades managing small-cap portfolios. This nearly 40-year period, which has seen more than its share of booms and busts, encompasses the life span of one Royce Fund in this Review and Report with more than 35 years of history, four others with more than 15, and a total of eight with performance records of more than 10 years. We believe that each represents an example of helping investors to build wealth over the long term in a variety of market climates.
      Our approach has always centered on three qualities: ample attention to risk; a concentration on absolute returns; and a long-term investment horizon. In order for an investment approach to be successful, we have always believed it must devote significant attention to risk; failing to do so can erode or eradicate returns. Our emphasis on absolute, not relative, returns allows us to offer what we think are more realistic return expectations, especially during very volatile or dynamic short-term periods. Over the long or short run, beating the market is never our objective; it is

10  |  This page is not part of the 2009 Annual Report to Shareholders

instead a happy byproduct of successfully executing our investment discipline. Finally, the habit of looking beyond the current quarter or year greatly enhances our ability to develop an effective investment thesis in a world too often preoccupied with short-term results. We find that it is far easier to have an idea of what’s going to happen than it is to know when it’s going to happen. We seek to turn our patience into potential profit.       We have always believed in the critical importance of focusing on what we know and not concerning ourselves about what we cannot control. Our dedication to a disciplined process is the best way to give our shareholders and ourselves the greatest opportunities to build wealth.
Sincerely,
Charles M. Royce	W. Whitney George	Jack E. Fockler, Jr.
President	Vice President	Vice President
January 31, 2010

Over the long or short run, beating the market is never our objective; it is instead a happy by product of successfully executing our investment discipline.

This page is not part of the 2009 Annual Report to Shareholders  |  11

Small-Cap Market Cycle Performance

We believe strongly in the idea that a long-term investment perspective is crucial for determining the success of a particular investment approach. Flourishing in an up market is wonderful. Surviving a bear market by losing less (or not at all) is at least as good. However, the true test of a portfolio’s mettle is performance over full market cycle periods, which include both up and down market periods.

Since the Russell 2000’s inception on 12/31/78, value—as measured by the Russell 2000 Value Index—outperformed growth—as measured by the Russell 2000 Growth Index—in six of the small-cap index’s eight full market cycles. The most recently concluded cycle, which ran from 3/9/00 through 7/13/07, was the longest in the index’s history, and represented what we believe was a return to more historically typical performance in that value provided a significant advantage during its downturn (3/9/00–10/9/02) and for the full cycle. The market cycle that began on 7/13/07 has so far favored small-cap growth style over small-cap value.

Peak-to-Peak

For the full cycle, value provided a sizeable margin over growth, which finished the period with a loss. All Royce Funds then in existence held a performance advantage over the Russell 2000. Interestingly, our most conservatively managed offering, Royce Special Equity Fund (+227.4%) was our best performer, followed by our flagship, Royce Pennsylvania Mutual Fund (+207.1%). However, each Royce Fund provided a significant edge over the Russell 2000 during the full market cycle.

Peak-to-Current

During the difficult, volatile decline that ended on 3/9/09, both value and growth posted negative returns. Events in the financial markets immediately preceding the end of 2008’s third quarter caused the Russell 2000 to decline significantly. After a brief rally at the end of 2008, the index continued to fall. Since then, the index has recovered significantly, gaining 84.5% from 3/9/09 through 12/31/09.

Led by our more risk-averse funds, 12 of 15 Royce Funds outperformed the Russell 2000 during the decline. Somewhat surprisingly, 7 out of 17 Royce Funds outperformed the index during the recent rally from the 3/9/09 low through 12/31/09. Our most opportunistic funds have performed best, while our most risk- averse funds have trailed the index. For the current cycle to date, 12 out of 15 Royce Funds have outperformed the Russell 2000.

ROYCE U.S. EQUITY FUNDS VS. RUSSELL 2000 INDEX:
MARKET CYCLE RESULTS
	Peak-to-			Peak-to-			Trough-to-			Peak-to
	Peak			Trough			Current			Current
	3/9/00-			7/13/07-			3/9/09-			7/13/07-
	7/13/07			3/9/09			12/31/09			12/31/09
Russell 2000		54.9	%		-58.9	%		84.5	%		-24.2	%
Russell 2000 Value		189.5			-61.1			88.1			-26.9
Russell 2000 Growth		-14.8			-56.8			81.0			-21.8
CORE
Royce Pennsylvania Mutual		207.1			-57.0			87.7			-19.3
Royce Heritage		150.4			-56.6			104.9			-11.0
CORE + DIVIDENDS
Royce Total Return		193.9			-54.2			74.0			-20.4
Royce Dividend Value		n.a.			-53.1			84.3			-13.7
QUALITY + FOCUSED
Royce Premier		198.1			-49.0			78.4			-8.9
Royce Special Equity		227.4			-42.7			64.3			-5.9
Royce Value		n.a.			-54.2			83.2			-16.0
Royce 100		n.a.			-49.7			84.4			-7.3
Royce SMid-Cap Value		n.a.			n.a.			72.5			n.a.
Royce Focus Value		n.a.			n.a.			55.4			n.a.
MICRO-CAP/OPPORTUNISTIC
Royce Micro-Cap		197.4			-56.2			99.4			-12.6
Royce Low-Priced Stock		199.0			-55.9			101.0			-11.3
Royce Opportunity		191.8			-69.2			140.8			-25.9
Royce Value Plus		n.a.			-58.9			79.8			-26.1
Royce Discovery		n.a.			-58.7			77.3			-26.8
GLOBAL/INTERNATIONAL
Royce European
Smaller-Companies		n.a.			-61.2			98.2			-23.1
Royce Global Value		n.a.			-53.4			97.2			-8.1

The thoughts concerning recent market movements and future prospects for smaller-company stocks are solely those of Royce & Associates and, of course, there can be no assurance with regard to future market movements. Smaller-company stocks may involve considerably more risk than larger-cap stocks.

12  |  This page is not part of the 2009 Annual Report to Shareholders

Fund Focus

Spanning the Globe

Over the last 10 years, we have expanded our search for undervalued small companies by looking beyond our borders. Our initial forays into international investing generally involved companies headquartered outside the U.S., but with a strong domestic presence. We also began to see that many successful small-cap companies were establishing a global presence. Since 2000, we have increased our non-U.S. exposure, especially as our interest in the Natural Resources sector developed. In this decade, we were first attracted to precious metals and mining companies, and then to energy services and industrial materials businesses based outside the U.S. These activities led us more recently to expand the scope of our security selection universe to include companies in several other industries whose operations are more international or centered in a particular overseas region such as Europe.

      Our evolution to international investing is firmly rooted in the Royce tradition of attempting to capitalize on market inefficiencies in an effort to generate strong absolute returns, while also giving priority to managing risk. We believe that our disciplined, long-term approach could prove highly effective amidst the more consensus-driven, growth-focused type of investing that seems to dominate

The same attributes that we seek in domestic companies—strong balance sheets, an established record of earnings, the ability to generate free cash flow and excellent growth prospects—are found in international businesses if one is willing to look. It really is a small world after all.

fund management outside the U.S. Economic activity is increasingly global, and foreign markets, such as Europe, with its more than 320 million consumers and massive market capitalization, are simply too important to overlook. It seems likely to us that we are entering the early phases of a long-term outperformance cycle for small companies on a global scale, as international smaller companies follow their U.S. peers and potentially evolve into a professional asset class. Most importantly, we have found that quality is a truly international concept, an idea that recognizes no borders. The same attributes that we seek in domestic companies—strong balance sheets, an established record of earnings, the ability to generate free cash flow and excellent growth prospects—are found in international businesses if one is willing to look. It really is a small world after all.
      The number of opportunities in international investing is vast. There are more companies from which to choose and greater total market capitalization than in the U.S. small-cap market. Our research indicates, for example, that there are nearly four times as many micro-cap companies—those with market capitalizations up to $500 million—in the developed international universe, with approximately three times the total market capitalization of the U.S. micro-cap universe. Average market caps also tend to be smaller in the international market. As of 12/31/09, the non-U.S. micro-cap market has a weighted average market cap of $222 million, compared to $259 million domestically (Source: FactSet). Liquidity issues, therefore, tend to increase as we move down the market-cap scale, which contributes to greater pricing inefficiencies.
      Similarly, in the upper tier of the international small-cap world—market caps between $500 million and $2.5 billion—there are more total companies (1,804 versus 1,069) and greater total market capitalization ($2.1 trillion versus $1.3 trillion) than there are in the U.S. market (Source: FactSet). We believe that these factors give us more opportunities to find quality businesses that are not properly priced.
      We now offer portfolios with a primarily global or international focus, including Royce European Smaller-Companies, Global Value and International Smaller-Companies Funds. Many of our other Funds can invest up to 25% of their net assets in foreign securities. We believe that exporting our disciplined value approach can be potentially successful in the larger, more volatile world of non-U.S. securities.

Important Information on Performance Expenses and Risk

The Funds mentioned above invest primarily in international companies, which may be subject to different risks than investments in securities of U.S. companies, including adverse political, social, economic or other developments that are unique to a particular country or region. Therefore, the prices of the securities of international companies in particular countries or regions may, at times, move in a different direction than those of the securities of U.S. companies. As of 12/31/09, each Fund was also invested primarily in micro-, small- and/or mid-cap stocks, which may involve considerably more risk than investing in larger-cap stocks. (Please see “Primary Risks for Fund Investors” in the prospectus). This material is not authorized for distribution unless preceded or accompanied by a current prospectus. Please read the prospectus carefully before investing or sending money. Distributor: Royce Fund Services, Inc.

This page is not part of the 2009 Annual Report to Shareholders  |  13

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14  |  This page is not part of the 2009 Annual Report to Shareholders

Table of Contents
Annual Report to Shareholders
Managers’ Discussions of Fund Performance
CORE
Royce Pennsylvania Mutual Fund	16
Royce Heritage Fund	18
CORE + DIVIDENDS
Royce Total Return Fund	20
Royce Dividend Value Fund	22
QUALITY + FOCUSED
Royce Premier Fund	24
Royce Special Equity Fund	26
Royce Value Fund	28
Royce 100 Fund	30
Royce SMid-Cap Value Fund	32
Royce Focus Value Fund	34
Royce Partners Fund	36
MICRO-CAP/OPPORTUNISTIC
Royce Micro-Cap Fund	38
Royce Low-Priced Stock Fund	40
Royce Opportunity Fund	42
Royce Value Plus Fund	44
Royce Discovery Fund	46
GLOBAL/INTERNATIONAL
Royce European Smaller-Companies Fund	48
Royce Global Value Fund	50
Royce International Smaller-Companies Fund	52
Royce Financial Services Fund	54
Schedules of Investments and Financial Statements	56
Notes to Financial Statements	135
Report of Independent Registered Public Accounting Firm	151
Understanding Your Fund’s Expenses	152
Trustees and Officers	155
Notes to Performance and Other Important Information	156

The Royce Funds 2009 Annual Report to Shareholders  |  15

CORE
Core Funds generally invest across a wide spectrum of smaller companies using a diversified approach.
AVERAGE ANNUAL TOTAL RETURNS
Through 12/31/09
July-Dec 2009*				25.94	%
One-Year				36.28
Three-Year				-2.98
Five-Year				3.35
10-Year				9.73
20-Year				10.21
25-Year				11.30
35-Year				16.79
ANNUAL EXPENSE RATIO
Operating Expenses				0.91	%
*Not annualized
CALENDAR YEAR TOTAL RETURNS
Year	PMF		Year	PMF
2009	36.3	%	2001	18.4	%
2008	-34.8		2000	18.4
2007	2.8		1999	6.0
2006	14.8		1998	4.2
2005	12.5		1997	25.0
2004	20.2		1996	12.8
2003	40.3		1995	18.7
2002	-9.2		1994	-0.7
TOP 10 POSITIONS % of Net Assets
Dress Barn (The)				1.0	%
Federated Investors Cl. B				0.9
AllianceBernstein Holding L.P.				0.8
Oil States International				0.7
Unit Corporation				0.7
Agnico-Eagle Mines				0.7
Simpson Manufacturing				0.7
CARBO Ceramics				0.6
Ensign Energy Services				0.6
Armstrong World Industries				0.6
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Industrial Products				14.8	%
Technology				14.5
Industrial Services				13.9
Natural Resources				11.4
Financial Intermediaries				7.8
Consumer Products				7.5
Health				7.4
Financial Services				7.0
Consumer Services				6.3
Miscellaneous				4.8
Cash and Cash Equivalents				4.6

Royce Pennsylvania Mutual Fund
Manager’s Discussion We were very pleased to see our flagship, Royce Pennsylvania Mutual Fund (PMF), well out in front during the rally that took up most of 2009. For the calendar year, the Fund gained 36.3%, outpacing its small-cap benchmark, the Russell 2000, which was up 27.2% for the same period. After outperforming its benchmark during both the first-quarter downturn and second-quarter up phase, PMF continued its strong run, beating the small-cap index during the very dynamic third quarter (+20.9% versus +19.3%) and the relatively more subdued, but still solid, fourth quarter (+4.2% versus +3.9%). While we were more than happy that the Fund handily beat the Russell 2000 for the year, we were far more cheered by its strong absolute return in 2009, especially in light of 2008’s disappointments.      The rally that began on March 9, 2009, though it stalled a bit in June and October, rolled on mostly unimpeded through the end of the year. From that early March low through December 31, 2009, PMF rose 87.7% versus a gain of 84.5% for the Russell 2000. This was a strong showing, though we want to offer a word of caution that the bull advance remains a short one for now and in any case has not yet made back the losses incurred during 2008 or since the small-cap peak on July 13, 2007. (For more on the Fund’s results over recent market cycles, please see page 12.)
Over longer-term time periods, the Fund’s returns were strong on a relative basis, with absolute returns showing strength for the one-year and 10-year or longer periods. The three- and five-year time spans fell well short of the strong absolute results that we strive to provide—mostly the effect of the severe bear market of 2008. Still, we were very pleased that our style of active, disciplined management enabled PMF to beat the Russell 2000 for the one-, three-, five-, 10-, 15-, 20- and 25-year periods ended December 31, 2009. The Fund’s average annual total return for the 35-year period was 16.8%, a long-term record in which we take great pride.
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	Dress Barn (The)	0.83	%
	Ivanhoe Mines	0.77
	Oil States International	0.69
	Waddell & Reed Financial Cl. A	0.66
	Diodes	0.65
	*Includes dividends
Two thousand nine was a year for comebacks throughout the stock market, and the Fund provided plenty of examples in each of its equity sectors and in multiple industry groups. The impact of negative performance was generally mild. Still, we were disappointed with the poor showing of BOK Financial, a holding company that provides various financial services. It operates commercial banks, consumer banks and wealth management businesses. The firm continued to suffer from the woes that have been afflicting many banks since September of 2008. Endo Pharmaceuticals Holdings develops branded and generic
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. All performance and risk information for PMF reflects Investment Class results. Shares of PMF’s Service, Consultant, R and K Classes bear an annual distribution expense that is not borne by the Investment Class. Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the date of the Fund’s most current prospectus and include management fees and other expenses. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

16  |  The Royce Funds 2009 Annual Report to Shareholders

Performance and Portfolio Review
prescription drugs primarily for pain management. The company sought to bolster this attractive core business with costly acquisitions and licensing arrangements for new products that have not yet proved profitable.      The resurgent Technology sector provided the largest contribution to calendar-year performance, with notable net gains coming from four industry groups: semiconductors and equipment; components and systems; IT services; and software. Prior to 2009, most Tech companies had struggled since the Internet stock bubble burst in 2000, their bad times punctuated by scattered rallies that proved all too brief. This began to shift during the downturn, as some of the earliest M&A (merger & acquisition) activity was centered on attractive technology businesses that had grown very cheap. Diodes, a maker of semiconductors used in the communications, computing, consumer electronics, industrial, and automotive industries, was the Fund’s top performer in the sector, though it was not an acquisition target.      Natural Resources holdings were also substantial contributors to performance, with two of PMF’s five best-performing industries—energy services companies and precious metals and mining stocks—coming from the sector. Patience is a virtue that every value investor must practice, which was proved by our experience with Ivanhoe Mines. When we first developed an interest in the stock, this Canadian mining business was gaining a substantial presence in Mongolia, whose government must approve all mining operations. An agreement was considered imminent, and our interest grew. Four years and three
			governments later, that agreement was finally ratified, and promising copper mines began to attract investors to Ivanhoe’s stock. We were first drawn to the attractive business and low debt of Oil States International, which provides specialized products and services to oil and gas drilling and production companies across the globe. Its share price gushed in the second half, propelled by better-than-expected earnings for three consecutive quarters.      Each of the Fund’s consumer and industrial sectors also did well in 2009. The Fund’s top performer for the year was Dress Barn, a stock that we have periodically owned in PMF for close to 20 years. We have long been admirers of its conservative financials and intelligent management teams. Like many consumer stocks, its share price fell precipitously in 2008’s decline. True to our contrarian bent, we remained believers in the company’s long-term plans, particularly its acquisition of Tween Brands, which gives it access to a third brand, Justice, which caters to a younger, more fashion-conscious customer.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
BOK Financial	-0.39	%
Endo Pharmaceuticals Holdings	-0.35
Comtech Telecommunications	-0.34
NCI Building Systems	-0.31
Woodward Governor	-0.22
*Net of dividends
ROYCE PENNSYLVANIA MUTUAL FUND VS. RUSSELL 2000 Value of $10,000 Invested on 12/31/79
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*							$1,398 million
Weighted Average P/E Ratio**							18.7x
Weighted Average P/B Ratio							1.9x
U.S. Investments (% of Net Assets)							91.3%
Non-U.S. Investments (% of Net Assets)							4.0%
Fund Net Assets							$4,934 million
Turnover Rate							23%
Number of Holdings							588
Symbol
Investment Class							PENNX
Service Class							RYPFX
Consultant Class							RYPCX
R Class							RPMRX
K Class							RPMKX
*Geometrically calculated
**	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (22% of portfolio holdings as of 12/31/09).
MORNINGSTAR STATISTICAL MEASURES*
		PMF		Category Median		Best Quartile Breakpoint
Sharpe Ratio			0.12		0.01		0.09
Standard Deviation			20.71		20.84		19.75
*	Five years ended 12/31/09. Category Median and Best Quartile Breakpoint based on 314 small-cap objective funds (oldest class only) with at least five years of history.

The Royce Funds 2009 Annual Report to Shareholders  |  17

CORE
Core Funds generally invest across a wide spectrum of smaller companies using a diversified approach.
AVERAGE ANNUAL TOTAL RETURNS
Through 12/31/09
July-Dec 2009*				27.46	%
One-Year				51.82
Three-Year				-0.67
Five-Year				5.50
10-Year				9.01
Since Inception (12/27/95)				14.12
ANNUAL EXPENSE RATIO
Operating Expenses				1.52	%
*Not annualized
CALENDAR YEAR TOTAL RETURNS
Year	RHF		Year	RHF
2009	51.8	%	2002	-18.9	%
2008	-36.2		2001	20.5
2007	1.2		2000	11.7
2006	22.6		1999	41.8
2005	8.7		1998	19.5
2004	20.4		1997	26.0
2003	38.1		1996	25.6
TOP 10 POSITIONS % of Net Assets
Lufkin Industries				1.2	%
Raven Industries				1.0
Ritchie Bros. Auctioneers				1.0
GrafTech International				1.0
Lincoln Electric Holdings				0.9
Oil States International				0.9
SRA International Cl. A				0.9
Cowen Group				0.9
Randgold Resources ADR				0.9
National Instruments				0.8
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Industrial Products				16.8	%
Industrial Services				14.6
Technology				14.3
Financial Services				11.5
Financial Intermediaries				11.0
Natural Resources				8.4
Health				6.1
Consumer Products				5.4
Consumer Services				2.9
Miscellaneous				4.8
Cash and Cash Equivalents				4.2

Royce Heritage Fund
Manager’s Discussion Royce Heritage Fund’s (RHF) diversified portfolio of micro-cap, small-cap and mid-cap stocks went ‘wire to wire’ in 2009, posting terrific results throughout the calendar year. The Fund easily outperformed its small-cap benchmark, the Russell 2000, in 2009, gaining 51.8% versus 27.2% for the small-cap index. Although the year began on a down note, with the severe bear market of 2008 clawing its way into 2009, RHF acquitted itself well, losing less than its benchmark in the first-quarter downdraft, down 7.7% versus a loss of 15.0% for the Russell 2000. When the market shifted in early March, the Fund more than kept pace with the change, outpacing its benchmark in the highly dynamic second (+29.0% versus +20.7%) and third (+20.1% versus +19.3%) quarters, as well as in the more quietly bullish fourth (+6.2% versus +3.9%) quarter.      These strong quarterly performances make it unsurprising that the Fund was also far ahead of the Russell 2000 in the rally that took up most of the year. From the market low on March 9, 2009 through December 31, 2009, RHF gained 104.9% versus a gain of 84.5% for its benchmark. These results were key to re-building the Fund’s long-term absolute returns, which suffered during the difficulties of 2008. (Please see page 12 for the Fund’s recent market cycle results.) We were very pleased with the Fund’s longer-term results, namely, its 10-year and since inception (12/27/95) returns
on an absolute basis. RHF beat the Russell 2000 for the one-, three-, five-, 10-year and since inception periods ended December 31, 2009. The Fund’s average annual total return for the since inception period was 14.1%.      Each of the Fund’s equity sectors posted gains in 2009, led by Financial Services, Technology and Industrial Products. The first of these sectors is home to the investment management group, which was the Fund’s best-performing industry in 2009. This is an area that we believe we know well, and we were happy to see many of these holdings help to drive recent results. London-based Ashmore Group was among the largest detractors to the Fund’s performance in the first half, though its impressive rebound began near the March market low.      The firm is a leading investment manager dedicated to emerging markets. Its success in attracting assets exceeded analysts’ expectations, giving its stock price a boost. We were drawn to its strong balance sheet and think that its area of expertise should assume growing importance in the global economy. Cohen & Steers runs open- and closed-end real estate
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	Randgold Resources ADR	1.29	%
	Ashmore Group	1.22
	Thor Industries	1.04
	Daphne International Holdings	1.02
	Cohen & Steers	1.00
	*Includes dividends
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. All performance and risk information for RHF reflects Service Class results. Shares of the RHF’s Consultant and R Classes bear an annual distribution expense that is higher than that of the Service Class. Operating expenses reflect the Fund’s total annual operating expenses for the Service Class as of the date of the Fund’s most current prospectus and include management fees, 12b-1 distribution and service fees, and other expenses. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

18  |  The Royce Funds 2009 Annual Report to Shareholders

Performance and Portfolio Review
oriented mutual funds and institutional separate accounts. Improved inflows to its mutual funds and a recovering REITs market helped the firms earnings perk up, which seemed to bring more investors to the stock.      Randgold Resources, another London-based business, is a gold mining and exploration company with operations in Africa. We liked its conservative financials, talented management and its ability to remain profitable in the face of the downturn. It benefited from the substantial increase in gold prices in 2009. Although we have been long-term investors in other Royce portfolios, we first bought shares of Thor Industries in RHF during April 2008. The company, which manufactures recreation vehicles (RVs) and small- and mid-sized buses, emerged from a brutal three years for the RV business. It turned around in part owing to its conservative balance sheet and talented management, which bought back shares through much of the economic downturn. The revival of RV sales roughly coincided with the company winning increased market share, as two of its major competitors succumbed to bankruptcy. Earnings have also shown some improvement because revenues have grown and margins have expanded. Daphne International Holdings is China’s second largest maker of women’s shoes. We first began to buy shares at prices between 3x and 8x EBIT (Earnings Before Interest and Taxes), which represented extraordinary value to us. We trimmed our position between April and September before buying shares in November and December.
			Net gains in the Technology sector came primarily from four industries—semiconductors and equipment; components and systems; software; and telecommunications companies. Industrial Products also saw contributions from several industry groups.      Of course, even in the best of years, there are a few disappointments. Aircraft and industrial parts maker Woodward Governor saw its stock price plummet, which, along with a 2008 acquisition that caused more dilution to its balance sheet than we would have liked, led us to sell our position in March. During April, July and December, we added to our position in home furnishings company Ethan Allen Interiors based on our high regard for the company’s brand and its reputation for quality.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
Woodward Governor	-0.62	%
Ethan Allen Interiors	-0.42
Comtech Telecommunications	-0.41
Pason Systems	-0.32
St. Joe Company (The)	-0.26
*Net of dividends
The recession has been particularly tough on consumer durables businesses, while the company has also faced increased competition from imports. Its response has been to shift its business model, converting its U.S. manufacturing to custom-made goods and consolidating its retail network.
ROYCE HERITAGE FUND VS. RUSSELL 2000 Value of $10,000 Invested on 12/27/95
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*							$1,627 million
Weighted Average P/E Ratio**							20.4x
Weighted Average P/B Ratio							2.2x
U.S. Investments (% of Net Assets)							80.9%
Non-U.S. Investments (% of Net Assets)							14.8%
Fund Net Assets							$201 million
Turnover Rate							59%
Number of Holdings							249
Symbol
Investment Class							RHFHX
Service Class							RGFAX
Consultant Class							RYGCX
R Class							RHFRX
K Class							RHFKX
*Geometrically calculated
**	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (19% of portfolio holdings as of 12/31/09).
MORNINGSTAR STATISTICAL MEASURES*
		RHF		Category Median		Best Decile Breakpoint
Sharpe Ratio			0.22		0.01		0.19
Standard Deviation			22.80		20.84		18.56
*	Five years ended 12/31/09. Category Median and Best Decile Breakpoint based on 314 small-cap objective funds (oldest class only) with at least five years of history.

The Royce Funds 2009 Annual Report to Shareholders  |  19

CORE + DIVIDENDS
Core + Dividends Funds generally invest in dividend-paying smaller companies using a diversified approach.
AVERAGE ANNUAL TOTAL RETURNS
Through 12/31/09
July-Dec 2009*				22.19	%
One-Year				26.22
Three-Year				-3.83
Five-Year				1.97
10-Year				8.55
15-Year				10.96
Since Inception (12/15/93)				10.56
ANNUAL EXPENSE RATIO
Operating Expenses				1.19	%
*Not annualized
CALENDAR YEAR TOTAL RETURNS
Year	RTR		Year	RTR
2009	26.2	%	2001	14.8	%
2008	-31.2		2000	19.4
2007	2.4		1999	1.6
2006	14.5		1998	4.8
2005	8.2		1997	23.7
2004	17.5		1996	25.5
2003	30.0		1995	26.9
2002	-1.6		1994	5.1
TOP 10 POSITIONS % of Net Assets
Federated Investors Cl. B				1.1	%
Energen Corporation				1.1
PartnerRe				1.0
Tidewater				1.0
AllianceBernstein Holding L.P.				0.9
Aspen Insurance Holdings				0.9
Dress Barn (The)				0.9
Wolverine World Wide				0.9
Family Dollar Stores				0.9
Ritchie Bros. Auctioneers				0.9
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Financial Intermediaries				21.6	%
Industrial Products				17.4
Natural Resources				10.4
Industrial Services				10.1
Financial Services				8.0
Consumer Services				7.2
Consumer Products				6.8
Technology				4.7
Health				4.0
Utilities				2.3
Diversified Investment Companies				0.1
Miscellaneous				2.7
Bonds and Preferred Stocks				1.2
Cash and Cash Equivalents				3.5

Royce Total Return Fund
Managers’ Discussion While we were satisfied with the absolute result for Royce Total Return Fund (RTR) in 2009, we were less enamored with its relative showing. For the calendar year, the Fund gained 26.2%, narrowly underperforming its small-cap benchmark, the Russell 2000, which was up 27.2% for the same period. After outperforming its benchmark during the bearish first quarter (-12.0% versus -15.0%), the Fund slipped behind the small-cap index in the very dynamic bull period that characterized the second (+17.4% versus + 20.7%) and third (+17.1% versus +19.3%) quarters. The rally continued, but moved at a slower speed during the fourth quarter, in which RTR outpaced its benchmark, up 4.4% versus 3.9%.      RTR outpaced its benchmark in a down quarter and in the less dynamic upswing that closed the year, while lagging the Russell 2000 in the highly bullish period in the middle of the year. The rally that began on March 9, 2009, though it stalled a bit in June and October, rolled on mostly unimpeded through the end of December. From the early March low through December 31, 2009, RTR rose 74.0% versus a gain of 84.5% for the Russell 2000. (For more on the Fund’s results over recent market cycles, please see page 12.) Over longer-term time periods, the Fund’s performance remained strong on a relative basis. We were pleased that our disciplined management approach enabled RTR to beat the Russell 2000 for the three-, five-, 10-, 15-year and since inception (12/15/93) periods ended
December 31, 2009. The Fund’s average annual total return since inception was 10.6%.      One important factor in the Fund’s calendar-year comparative performance was the relatively poor showing of small-cap companies that paid a dividend. According to Bank of America-Merrill Lynch, dividend-paying small-cap stocks lagged their small-cap peers by a wide margin in 2009, rising only 11.1% versus a gain of 40.0% for small-caps that did not. We anticipate that the pace of the rally will slacken, which may help dividend-paying small-caps to narrow this performance gap, as investors grow more concerned with quality.      Importantly, each of the Fund’s equity sectors posted net gains in the more muted fourth quarter. We were encouraged that the quality metrics we use in our stock selection process began to regain some prominence for investors. Thoughts of survival transitioned to thoughts of recovery and growth, leading to a more normal and differentiated performance environment.
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	Dress Barn (The)	0.78	%
	American Eagle Outfitters	0.70
	Helmerich & Payne	0.65
	Reliance Steel & Aluminum	0.64
	Federated Investors Cl. B	0.58
	*Includes dividends
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. All performance and risk information for RTR reflects Investment Class results. Shares of RTR’s Service, Consultant, R and K Classes bear an annual distribution expense that is not borne by the Investment Class. Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the date of the Fund’s most current prospectus and include management fees, other expenses and acquired fund fees and expenses. Acquired fund fees and expenses are those incurred indirectly as a result of investment in one or more acquired funds, including mutual funds, hedge funds, private equity funds and other pooled investment vehicles. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

20  |  The Royce Funds 2009 Annual Report to Shareholders

Performance and Portfolio Review
Each of the Fund’s sectors, other than a small position in Utilities, contributed positively to performance for the year. Natural Resources, a sector whose long-term prospects we have liked for several years but which was badly bruised as the recession hit on a global scale, provided notable returns in 2009. The stock price of Helmerich & Payne, a major provider of contract drilling for oil and gas wells in the Gulf of Mexico and South America, rose steadily from the March low as improving economies led to increased demand for its services. Cimarex Energy, a U.S. based oil and gas exploration company, benefited from the convergence of lower drilling costs and new gas discoveries, primarily in more difficult-to-drill shale acreage. We continue to see a robust opportunity for U.S. natural gas businesses such as Cimarex owing to abundant supply, attractive relative value on a BTU equivalency basis compared to oil, and obvious environmental attributes that will only grow in importance.      Consumer Services was also a strong contributor, as investors took the view that consumer activity would rebound from the very depressed levels of 2008. Dress Barn and American Eagle Outfitters are, in our view, two well-managed businesses. Each enjoyed renewed interest from investors as year-over-year sales comparisons become quite favorable moving into the second half of the year. Reliance Steel and Aluminum benefitted greatly from overly aggressive destocking of steel inventories during the downturn that drew available supplies down to unsustainably low levels even in a state of depressed economic
			activity. The cash for clunkers program was an important catalyst that for better or worse provided incremental demand for finished steel products. The near-zero interest rate environment has pressured near-term profitability for money market specialists such as Federated Investors, but it also forced smaller competitors to exit the field, which helped the firm to gain market share.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
Woodward Governor	-0.39	%
State Auto Financial	-0.38
Wilmington Trust	-0.38
Penn Virginia GP Holdings L.P.	-0.24
Pacer International	-0.20
*Net of dividends
Woodward Governor, a manufacturer of aircraft and industrial parts, suffered not only from depressed order activity in their end markets, but also suffered the consequences of a poorly timed acquisition that added leverage when sales were deteriorating. We maintained a small position. Ongoing difficulties in the insurance industry meant that property, casualty and automotive insurer State Auto Financial could not keep pace with the rally. We reduced our position throughout 2009.
ROYCE TOTAL RETURN FUND VS. RUSSELL 2000 Value of $10,000 Invested on 12/15/93
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*						$1,667 million
Weighted Average P/E Ratio**								14.6x
Weighted Average P/B Ratio								1.6x
U.S. Investments (% of Net Assets)								92.7%
Non-U.S. Investments (% of Net Assets)								3.8%
Fund Net Assets						$4,021 million
Turnover Rate								20%
Number of Holdings								476
Symbol
Investment Class								RYTRX
Service Class								RYTFX
Consultant Class								RYTCX
Institutional Class								RTRIX
W Class								RTRWX
R Class								RTRRX
K Class								RTRKX
*Geometrically calculated
**	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (13% of portfolio holdings as of 12/31/09).
MORNINGSTAR STATISTICAL MEASURES*
		RTR		Category Median			Best Decile Breakpoint
Sharpe Ratio			0.04		0.01			0.19
Standard Deviation			17.53		20.84			18.56
*	Five years ended 12/31/09. Category Median and Best Decile Breakpoint based on 314 small-cap objective funds (oldest class only) with at least five years of history.

The Royce Funds 2009 Annual Report to Shareholders  |  21

CORE + DIVIDENDS
Core + Dividends Funds generally invest in dividend-paying smaller companies using a diversified approach.
AVERAGE ANNUAL TOTAL RETURNS
Through 12/31/09
July-Dec 2009*				23.55	%
One-Year				37.73
Three-Year				-1.91
Five-Year				3.95
Since Inception (5/3/04)				5.74
ANNUAL EXPENSE RATIO
Gross Operating Expenses				2.72	%
Net Operating Expenses				1.70
*Not annualized
CALENDAR YEAR TOTAL RETURNS
Year	RDV		Year	RDV
2009	37.7	%	2006	19.9	%
2008	-31.5		2005	7.3
2007	0.0
TOP 10 POSITIONS % of Net Assets
Nordson Corporation				2.0	%
Federated Investors Cl. B				1.9
Tidewater				1.6
PartnerRe				1.5
Energen Corporation				1.5
China Forestry Holdings				1.5
Harleysville Group				1.4
Family Dollar Stores				1.4
Dress Barn (The)				1.2
Total System Services				1.2
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Financial Intermediaries				19.7	%
Industrial Products				16.6
Financial Services				12.9
Industrial Services				11.5
Natural Resources				8.7
Consumer Services				6.5
Health				5.4
Consumer Products				5.3
Technology				4.6
Utilities				0.5
Miscellaneous				4.6
Cash and Cash Equivalents				3.7

Royce Dividend Value Fund
Managers’ Discussion In a year where small-cap stocks that paid no dividends outperformed those that did, Royce Dividend Value Fund (RDV) offered a happy exception, providing strong results on both an absolute and relative basis. The Fund gained 37.7% for the calendar year, ahead of its small-cap benchmark, the Russell 2000, which was up 27.2% for the same period. There was little evidence at the beginning of the year to suggest a market rebound. The first quarter was a mostly bearish period in which the Fund lost less than the Russell 2000, down 9.0% versus a decline of 15.0%. However, the rally gathered steam quickly, and the Fund participated. During the strong second quarter, RDV outpaced the small-cap index, up 22.5% versus 20.7%. The Fund then lost a bit of ground to its benchmark in the equally dynamic third quarter, up 19.0% versus 19.3% for the benchmark, before going even with the Russell 2000 in the quieter fourth quarter, when each was up 3.9%.      During the rally, the Fund lagged the Russell 2000 only slightly. From the market low on March 9, 2009 through December 31, 2009, the Fund was up 84.3% versus a gain of 84.5% for the Russell 2000. (For more on the Fund’s results over recent market cycles, please see page 12.) The Fund outperformed its benchmark for the one-, three-, five-year and since inception (5/3/04) periods ended December 31, 2009. RDV’s average annual total return since inception was 5.7%.
Adding to our satisfaction with the Fund’s results was a study recently done by Bank of America-Merrill Lynch that dividend-paying small-cap stocks lagged their small-cap peers by a wide margin in 2009, rising only 11.1% versus a gain of 40.0% for small-caps that did not. We anticipate that the pace of the rally will slacken, which may help dividend-paying small-caps to somewhat narrow this performance gap if investors grow more concerned with quality.      All of the Fund’s equity sectors made positive contributions to performance during 2009. Financial Services led by a wide margin, followed by notable net gains in Natural Resources, Industrial Products and Consumer Services. Financial and industrial companies
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	A.F.P. Provida ADR	2.17	%
	Federated Investors Cl. B	1.96
	Randgold Resources ADR	1.80
	Penske Automotive Group Inc.	1.23
	U.S. Global Investors Cl. A	1.10
	*Includes dividends
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. Gross operating expenses reflect the Fund’s gross total annual operating expenses for the Service Class, including management fees, 12b-1 distribution and service fees, other expenses and acquired fund fees and expenses. Net operating expenses reflect contractual fee waivers and/or reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse expenses, other than acquired fund fees and expenses, to the extent necessary to maintain Service Class’s net direct annual operating expense ratio at or below 1.49% through April 30, 2010 and at or below 1.99% through April 30, 2019. Acquired fund fees and expenses are those incurred indirectly as a result of investment in one or more acquired funds, including mutual funds, hedge funds, private equity funds and other pooled investment vehicles. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

22  |  The Royce Funds 2009 Annual Report to Shareholders

Performance and Portfolio Review
have historically made up a sizeable portion of the portfolio, because they generally boast above-average dividend yields.      Having been regular investors in asset management companies for many years in Royce-managed portfolios, we have what we believe is a deep knowledge of the business cultivated over many decades. Our long-term investment horizon made us eager owners of asset management stocks with what we thought were strong fundamentals and excellent businesses. Our thoughts were that many of these stocks were being unfairly oversold; that the crisis would create a demand for responsible and effective financial management; and that the best managed companies would ultimately thrive. We placed no timetable on the recovery, and it is fair to say that the industry rebounded more quickly than we had expected, though we were obviously pleased that it did. We have long liked the business of Chilean private pension fund administrator and investment manager A.F.P. Provida and were pleased to see its earnings recover, which seemed to bring investors back to its stock. The near-zero interest rate environment has pressured near-term profitability for money market specialists such as Federated Investors, but it also forced smaller competitors to exit the field, which helped Federated to gain market share. We built our position in the second half of 2009. Improved earnings gave a boost to the share price of U.S. Global Investors, prompting us to trim our stake in August.
			Randgold Resources is a gold mining and exploration company with conservative financials, talented management and a proven ability to remain profitable in the face of the downturn. It benefited from the substantial increase in gold prices in 2009. Penske Automotive Group is an automotive retailer that also provides repair services, third-party finance and insurance products, and replacement and aftermarket automotive products. This mix of businesses, along with the company’s strong management, appeared to convince investors that it could survive in an extremely difficult environment for its industry. We sold our shares in November.      Pacer International is a transportation and logistics business that suffered in the wake of an earnings miss and the suspension of its dividend. We still liked its prospects in an economic recovery. We also chose to hold on to our position in Bank of N.T. Butterfield & Son, which provides banking and other financial services and saw its share price fall mostly as a result of its industry’s ongoing problems.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
Pacer International	-1.21	%
Bank of N.T. Butterfield & Son	-0.51
Apollo Investment	-0.44
Gallagher (Arthur J.) & Co.	-0.40
Peapack-Gladstone Financial	-0.36
*Net of dividends
ROYCE DIVIDEND VALUE FUND VS. RUSSELL 2000 Value of $10,000 Invested on 5/3/04
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*						$1,470 million
Weighted Average P/E Ratio**								13.4x
Weighted Average P/B Ratio								1.8x
U.S. Investments (% of Net Assets)								79.2%
Non-U.S. Investments (% of Net Assets)								17.1%
Fund Net Assets						$29 million
Turnover Rate								43%
Number of Holdings								180
Symbol
Investment Class								RDVIX
Service Class								RYDVX
*Geometrically calculated
**	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (14% of portfolio holdings as of 12/31/09).
MORNINGSTAR STATISTICAL MEASURES*
		RDV		Category Median			Best Decile Breakpoint
Sharpe Ratio			0.15		0.01			0.19
Standard Deviation			17.88		20.84			18.56
*	Five years ended 12/31/09. Category Median and Best Decile Breakpoint based on 314 small-cap objective funds (oldest class only) with at least five years of history.

The Royce Funds 2009 Annual Report to Shareholders  |  23

QUALITY + FOCUSED
Quality + Focused Funds generally employ a more limited portfolio approach–typically holding no more than 100 positions that we believe possess high quality.
AVERAGE ANNUAL TOTAL RETURNS
Through 12/31/09
July-Dec 2009 *				22.36	%
One-Year				33.25
Three-Year				2.51
Five-Year				6.53
10-Year				10.72
15-Year				11.94
Since Inception (12/31/91)				12.03
ANNUAL EXPENSE RATIO
Operating Expenses				1.16	%
*Not annualized
CALENDAR YEAR TOTAL RETURNS
Year	RPR		Year	RPR
2009	33.3	%	2001	9.6	%
2008	-28.3		2000	17.1
2007	12.7		1999	11.5
2006	8.8		1998	6.7
2005	17.1		1997	18.4
2004	22.8		1996	18.1
2003	38.7		1995	17.8
2002	-7.8		1994	3.3
TOP 10 POSITIONS % of Net Assets
Lincoln Electric Holdings				2.6	%
Unit Corporation				2.4
Fossil				2.3
Thor Industries				2.3
Perrigo Company				2.1
Gardner Denver				2.0
Polo Ralph Lauren Cl. A				2.0
Reliance Steel & Aluminum				2.0
Ensign Energy Services				2.0
Woodward Governor				1.9
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Industrial Products				19.5	%
Natural Resources				14.0
Technology				13.2
Industrial Services				11.6
Consumer Products				11.0
Financial Intermediaries				6.1
Health				4.9
Financial Services				3.9
Consumer Services				0.9
Miscellaneous				1.9
Cash and Cash Equivalents				13.0

Royce Premier Fund
Managers’ Discussion Enough higher-quality businesses enjoyed good times to provide Royce Premier Fund (RPR) with above-average results in 2009. The Fund gained 33.3% for the calendar year, ahead of its small-cap benchmark, the Russell 2000, which was up 27.2% for the same period. RPR first built its relative advantage in the year’s first half, with solid relative down market results in the first quarter (-10.7% versus -15.0%) and strong absolute up market performance during the second (+22.0% versus +20.7%). The Fund slipped behind the Russell 2000 a bit in the very dynamic third quarter, up 18.7% versus 19.3% for the benchmark, and in the more quietly bullish fourth quarter, in which the Fund rose 3.1% compared to 3.9% for the benchmark.      From the market low on March 9, 2009 through December 31, 2009, the Fund was up 78.5% versus a gain of 84.5% for the Russell 2000. We were very pleased with RPR’s results for the year on both an absolute and relative basis, especially considering that, across all asset classes, quality companies—those with strong balance sheets, steady earnings and high returns on invested capital—were not always among the rally’s most enthusiastic participants. This is demonstrated to some degree in the Fund’s results between March 9 and the end of December.
As pleased as we were with RPR’s returns in 2009, there are still some miles to go before the losses of 2008, as well as those from the small-cap market peak on July 13, 2007, are fully recovered, which can be seen in the Fund’s low, though positive, three- and five-year average annual total returns ended December 31, 2009. (Please see page 12 for the Fund’s recent market cycle results.) We were very happy to see the Fund own a decisive performance edge over the Russell 2000 for the one-, three-, five-, 10-, 15-year and since inception (12/31/91) periods ended December 31, 2009. RPR’s average annual total return since inception was 12.0%.
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	Thor Industries	2.49	%
	Reliance Steel & Aluminum	2.12
	Fossil	2.10
	Sims Metal Management ADR	1.77
	Nu Skin Enterprises Cl. A	1.77
	*Includes dividends
Interestingly, four of the portfolio’s top five performers made that same list at the end of 2009’s first half. Thor Industries—one of several old favorites that enjoyed a rebound—survived a brutal three years in its core business of manufacturing recreation vehicles (RVs) (the company also makes small- and mid-sized buses). It came back in part thanks to its conservative capitalization and talented management, which bought back shares through much of the economic downturn. As its business has begun to revive, the company finds itself with a much-improved market share, the result of the bankruptcy of two major
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. All performance and risk information for RPR reflects Investment Class results. Shares of RPR’s Service, Consultant, R and K Classes bear an annual distribution expense that is not borne by the Investment Class. Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the date of the Fund’s most current prospectus and include management fees, and other expenses. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

24  |  The Royce Funds 2009 Annual Report to Shareholders

Performance and Portfolio Review
competitors. Earnings have also shown some improvement as revenues have grown and margins have expanded. We pared back our position a bit between May and October, but it was a top-ten holding at the end of 2009.      Reliance Steel & Aluminum operates metals service centers throughout the U.S and across the globe. Inventory destocking ran its course, which, combined with renewed demand for steel, especially from Asia, and unprecedented pricing discipline by steel manufacturers, bolstered investor confidence in the firm’s prospects. Another large position in a similar business also enjoyed a good year—global scrap metal recycling business Sims Metal Management. The firm’s earnings have yet to regain their pre-recession levels, but scrap metal prices have begun to stabilize in anticipation of a pick-up in global industrial activity from which Sims looks very well-positioned to benefit.      Fashion accessories maker and retailer Fossil continued to deliver beyond our own and Wall Street’s expectations by showing that it could survive profitably through an historically difficult market for consumer goods. Management’s domestic repositioning of its core Fossil brand, international consumers’ desire to buy recognizable brands, and an accelerated roll-out of its own retail stores all proved to be smart, timely strategies which enabled the firm to post strong sales and earnings growth in the face of formidable consumer-spending headwinds. Nu Skin Enterprises develops and distributes personal care products and nutritional supplements worldwide via a direct marketing model. Its stock had been struggling, but we remained patient because we saw potential in its core businesses and liked its global presence. Deriving most of its sales from outside the U.S., Nu Skin benefited from a weaker dollar, improving demand in Japan, which accounts for about one-third of sales, and in China, as well from an enthusiastic reception to its new skin-care products. In addition, rising unemployment has allowed the company to sustain distributor growth, as people seek jobs to supplement their income.
			We were also patient with aircraft and industrial parts maker Woodward Governor as its stock price fell through 2009. Its industry has suffered, and the company made an acquisition in 2008 that added more leverage to its balance sheet than we would have liked. However, we think that an industrial revival would improve its performance. We were less optimistic about Endo Pharmaceuticals Holdings. Its management chose to offset a mature and narrow drug pipeline by diversifying with costly acquisitions and licensing arrangements for new compounds which, thus far, have been slow to deliver the anticipated returns.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
Endo Pharmaceuticals Holdings	-1.10	%
Woodward Governor	-0.69
Lincoln Electric Holdings	-0.46
Simpson Manufacturing	-0.26
Gartner	-0.26
*Net of dividends
ROYCE PREMIER FUND VS. RUSSELL 2000 Value of $10,000 Invested on 12/31/91
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*						$1,890 million
Weighted Average P/B Ratio						2.2x
U.S. Investments (% of Net Assets)						79.5%
Non-U.S. Investments (% of Net Assets)						7.5%
Fund Net Assets						$5,187 million
Turnover Rate						14%
Number of Holdings						68
Symbol
Investment Class						RYPRX
Service Class						RPFFX
Consultant Class						RPRCX
Institutional Class						RPFIX
W Class						RPRWX
R Class						RPRRX
K Class						RPRKX
*Geometrically calculated
MORNINGSTAR STATISTICAL MEASURES*
		RPR		Category Median			Best Decile Breakpoint
Sharpe Ratio			0.27		0.01			0.19
Standard Deviation			19.71		20.84			18.56
*	Five years ended 12/31/09. Category Median and Best Decile Breakpoint based on 314 small-cap objective funds (lowest expense class only) with at least five years of history.

The Royce Funds 2009 Annual Report to Shareholders  |  25

QUALITY + FOCUSED
Quality + Focused Funds generally employ a more limited portfolio approach–typically holding no more than 100 positions that we believe possess high quality.
AVERAGE ANNUAL TOTAL RETURNS
Through 12/31/09
July-Dec 2009*				18.19	%
One-Year				28.38
Three-Year				2.63
Five-Year				4.06
Ten-Year				12.02
Since Inception (5/1/98)				8.60
ANNUAL EXPENSE RATIO
Operating Expenses				1.15	%
*Not annualized
CALENDAR YEAR TOTAL RETURNS
Year	RSE		Year	RSE
2009	28.4	%	2003	27.6	%
2008	-19.6		2002	15.3
2007	4.7		2001	30.8
2006	14.0		2000	16.3
2005	-1.0		1999	-9.6
2004	13.9
TOP 10 POSITIONS % of Net Assets
National Presto Industries				4.5	%
Hubbell Cl. B				2.6
Bio-Rad Laboratories Cl. A				2.5
Lancaster Colony				2.5
Lubrizol Corporation (The)				2.4
Park Electrochemical				2.3
Gymboree Corporation				1.9
Clearwater Paper				1.9
Foster (L.B.) Company Cl. A				1.8
Thomas & Betts				1.8
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Industrial Products				26.9	%
Consumer Products				14.3
Consumer Services				9.0
Industrial Services				8.9
Health				8.8
Technology				8.7
Natural Resources				1.5
Financial Services				1.1
Miscellaneous				2.6
Cash and Cash Equivalents				18.2

Royce Special Equity Fund
Manager’s Discussion During a year in which lower-quality stocks seemingly led the way, many of what we view as higher-quality businesses enjoyed the good times enough to provide Royce Special Equity Fund (RSE) with above-average results in 2009. The Fund gained 28.4% for the calendar year, ahead of its small-cap benchmark, the Russell 2000, which was up 27.2% for the same period. RSE first built its relative advantage in the year’s opening half, with solid relative down market results in the first quarter (-8.5% versus -15.0%) and solid absolute performance in the strong second quarter (+18.7% versus +20.7%). The Fund then fell behind the Russell 2000 in the very dynamic third quarter, up 13.5% versus 19.3% for the benchmark, but in the more quietly bullish fourth quarter, the Fund once again slightly led the benchmark, up 4.1% versus 3.9%.
From the market low on March 9, 2009 through December 31, 2009, the Fund was up 64.3% versus a gain of 84.5% for the Russell 2000. Nevertheless, we were very pleased with RSE’s results for the year on both an absolute and relative basis, especially considering that, across all asset classes, quality companies—those with strong balance sheets, steady earnings and high returns on invested capital—were not always among the rally’s most enthusiastic participants. This was demonstrated to some degree in the Fund’s results between March 9 and the end of December. In addition, and although it represents a short-term period, we were pleased with the Fund’s results from the small-cap peak on July 13, 2007 through the end of 2009, when RSE was down 5.9% for the period versus a decline of 24.2% for the Russell 2000. (Please see page 12 for the Fund’s recent market cycle results.) The Fund also outperformed the Russell 2000 for the one-, three-, five-, 10-year and since inception (5/1/98) periods ended December 31, 2009. RSE’s average annual total return since inception was 8.6%.
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	National Presto Industries	1.80	%
	Lancaster Colony	1.75
	Lubrizol Corporation (The)	1.54
	Meredith Corporation	1.31
	Plantronics	1.09
	*Includes dividends
After the March bottom, the market took on a markedly different tone. Many companies that looked as if they might have been severely damaged, or even disappear, recovered best, at least in terms of their stock price. According to a study by Bank of America-Merrill Lynch, companies with no earnings, no dividends, and the lowest returns on equity were among the market’s leaders in 2009. Obviously, most everything went up, but the Russell 2000 index’s impressive gain off the low was boosted by the survival of companies that in early March looked as though they would be casualties of the struggling economy.
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. All performance and risk information for RSE reflects Investment Class results. Shares of RSE’s Service and Consultant Classes bear an annual distribution expense that is not borne by the Investment Class. Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the date of the Fund’s most current prospectus and include management fees, and other expenses. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

26  |  The Royce Funds 2009 Annual Report to Shareholders

Performance and Portfolio Review
Our practice during the rally was to focus even more on buying during down days. The implementation varied, however. We drew from our experience during the 1973-4 bear market. During that decline, while wishing to be opportunistic and take advantage of the attractive prices, we learned that such markets can continue to decline for a while. Thus, the buying strategy in the current bear phase was to dollar-cost-average over time, trying to do most of the buying when the market looked particularly weak. The expression “trying to catch a falling knife” comes to mind—it is too dangerous in these environments to take a full position size all at once, no matter how attractive it may look. Our mantra remained, “Rate of return is a function of entry level—price matters.” Thus, we bought in an effort to be opportunistic, but in a selective way. We did find some new names to add, and also took advantage of interim declines in some of our existing holdings to build positions at what we deemed were attractive prices. We never lost sight that our first objective is absolute return, while a close second is index-beating results over a full market cycle.      All of the Fund’s equity sectors posted net gains in 2009. Industrial Products led, followed by sizable contributions from Consumer Products, Consumer Services, Technology and Health.
			At the industry level, retail stores, specialty chemicals and materials stocks, and medical products and devices companies were the Fund’s best-performing industries. National Presto Industries remained the Fund’s largest holding at the end of December, as well as its top performer for the calendar year. The Wisconsin-based company is a diversified manufacturing firm, producing, among other things, everything from defense products to small appliances. Consumer goods maker Lancaster Colony was also a top performer, as was specialty chemical producer Lubrizol Corporation and media and marketing business, Meredith Corporation. Along with communications headset manufacturer, Plantronics Corporation, and medical components maker, Atrion Corporation, each was one of the Fund’s 20 largest holdings at the end of 2009. We also continued to hold shares of the Fund’s two most significant detractors from the year’s performance, industrial components manufacturer, Lawson Products, and Southern California supermarket operator, Arden Group.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
Lawson Products	-1.02	%
Arden Group Cl. A	-0.49
Cascade Corporation	-0.48
Standex International	-0.44
Kennametal	-0.21
*Net of dividends
ROYCE SPECIAL EQUITY FUND VS. RUSSELL 2000 Value of $10,000 Invested on 5/1/98
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*						$892 million
Weighted Average P/E Ratio**						16.6x
Weighted Average P/B Ratio						1.9x
U.S. Investments (% of Net Assets)						81.8%
Non-U.S. Investments (% of Net Assets)						0.0%
Fund Net Assets						$1,216 million
Turnover Rate						10%
Number of Holdings						83
Symbol
Investment Class						RYSEX
Service Class						RSEFX
Consultant Class						RSQCX
Institutional Class						RSEIX
*Geometrically calculated
**The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (13% of portfolio holdings as of 12/31/09).
MORNINGSTAR STATISTICAL MEASURES*
		RSE		Category Median			Best Decile Breakpoint
Sharpe Ratio			0.15		0.01			0.19
Standard Deviation			15.67		20.84			18.56
*	Five years ended 12/31/09 Category Median and Best Decile Breakpoint based on 314 small-cap objective funds (oldest class only) with at least five years of history.

The Royce Funds 2009 Annual Report to Shareholders  |  27

QUALITY + FOCUSED
Quality + Focused Funds generally employ a more limited portfolio approach–typically holding no more than 100 positions that we believe possess high quality.
AVERAGE ANNUAL TOTAL RETURNS
Through 12/31/09
July-Dec 2009*				25.53	%
One-Year				44.71
Three-Year				-0.40
Five-Year				6.22
Since Inception (6/14/01)				11.27
ANNUAL EXPENSE RATIO
Operating Expenses				1.46	%
*Not annualized
CALENDAR YEAR TOTAL RETURNS
Year	RVV		Year	RVV
2009	44.7	%	2005	17.2	%
2008	-34.2		2004	30.9
2007	3.8		2003	54.3
2006	16.8		2002	-23.5
TOP 10 POSITIONS % of Net Assets
Federated Investors Cl. B				3.0	%
Comtech Telecommunications				2.8
Reliance Steel & Aluminum				2.7
PartnerRe				2.6
Unit Corporation				2.5
Knight Capital Group Cl. A				2.5
Buckle (The)				2.4
ManTech International Cl. A				2.3
Dress Barn (The)				2.2
NBTY				2.0
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Natural Resources				24.5	%
Financial Intermediaries				12.3
Industrial Products				12.0
Technology				10.3
Consumer Services				9.7
Industrial Services				9.6
Consumer Products				5.9
Health				3.9
Financial Services				3.0
Miscellaneous				1.3
Cash and Cash Equivalents				7.5

Royce Value Fund
Managers’ Discussion The value of strong down market performance can be seen in the calendar-year results for Royce Value Fund (RVV). RVV handily outperformed its small-cap benchmark, the Russell 2000, in 2009, with a gain of 44.7% compared to 27.2% for the small-cap index. While the Fund was ahead of the Russell 2000 in the first three quarters of 2009, and even with the benchmark in the fourth quarter, its widest advantage came in the bearish first quarter, when it fell 6.1% versus a decline of 15.0% for the small-cap index. This outperformance was a significant part of the Fund’s 2009 showing. Of course, we were also pleased with the Fund’s relative and absolute results in the dynamic second quarter (+22.8% versus +20.7%), as well as in the equally robust third (+20.8% versus +19.3%) and quieter fourth quarters, in which both the Fund and the Russell 2000 rose 3.9%.      The Fund only slightly lagged its benchmark during the rally. From the market low on March 9, 2009 through December 31, 2009, the Fund was up 83.2% versus a gain of 84.5% for the Russell 2000. Making RVV’s results for the year even more satisfying on an absolute and relative basis was the fact that the sort of high-quality small-cap and mid-cap stocks we seek for the portfolio—those with strong balance sheets, steady earnings and high returns on invested capital—were not always in high demand between March and December.
Of course, the Fund’s calendar-year results were only the first steps toward making up for the losses of 2008. The Fund remained under water from the small-cap market peak on July 13, 2007. (Please see page 12 for the Fund’s recent market cycle results.) Still, we were very happy to see the Fund own a decisive performance edge over the Russell 2000 for the one-, three-, five-year and since inception (6/14/01) periods ended December 31, 2009. RVV’s average annual total return since inception was 11.3%.
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	NBTY	2.49	%
	Ivanhoe Mines	2.23
	Reliance Steel & Aluminum	2.11
	American Eagle Outfitters	1.93
	Oil States International	1.93
	*Includes dividends
All but one of the Fund’s equity sectors finished the year with net gains. Natural Resources outpaced all other areas and was home to the portfolio’s two top-performing industry groups, energy services and precious metals and mining companies, each of which did better than many portfolio sectors. We first bought shares of Canadian copper and gold mining company, Ivanhoe Mines, in 2005. We liked its capital structure and promising projects in Mongolia. Our patience with the company was tested when the signing of an
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. All performance and risk information for RVV reflects Service Class results. Shares of RVV’s Consultant and R Classes bear an annual distribution expense that is higher than that of the Service Class. Operating expenses reflect the Fund’s total annual operating expenses for the Service Class as of the date of the Fund’s most current prospectus and include management fees, 12b-1 distribution and service fees, and other expenses. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

28  |  The Royce Funds 2009 Annual Report to Shareholders

Performance and Portfolio Review
agreement with that country’s government to move forward with mining projects was delayed until summer 2009, which then pushed its share price higher. Oil States International has a strong balance sheet and a core business that we like. It offers specialized products and services to oil and gas drilling and production companies worldwide. Many energy services stocks grew very cheap during the downturn and this, along with rising oil prices, helped its share price to climb. We were active sellers through much of the year.      Both of the Fund’s consumer sectors posted notable net gains in 2009. NBTY makes and distributes vitamins and other nutritional supplements. The company went through a very difficult second half of 2008, as it fought through increases in the cost of raw materials needed to make vitamins and weaker sales. In 2009, sales growth resumed just as expensive inventories were running down, raw materials costs fell, and the firm bought a competitor out of bankruptcy, all of which seemed to convince investors of its good health. It was a top-ten position at the end of December. American Eagle Outfitters was one of the retailers that effectively managed its way through the recession. We thought that its stock was badly oversold in late 2008, when we added to our position. It was a small-cap company whose early success seemed to escape the notice of many investors. We reduced our position as its price climbed during April and May and throughout the second half.
			When mobile-data communications equipment maker Comtech Telecommunications reduced its sales and profit outlook for fiscal 2009 in March, its stock price suffered its worst decline in 29 years. Ever contrarian, we were focused on the company’s strong balance sheet and attractive long-term prospects, especially in the areas of satellite and mobile-tracking equipment that it provides to the U.S. military, both of which made us significantly confident to build our stake through November. We went the opposite direction with branded and generic prescription drug maker, Endo Pharmaceuticals Holdings, selling our stake in August. We disliked its decision to move away from the core pain management products that were a large part of what originally drew us to the stock.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
Comtech Telecommunications	-1.71	%
Endo Pharmaceuticals Holdings	-0.97
Woodward Governor	-0.95
Carpenter Technology	-0.66
Lincoln Electric Holdings	-0.49
*Net of dividends
ROYCE VALUE FUND VS. RUSSELL 2000 Value of $10,000 Invested on 6/14/01
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*						$2,203 million
Weighted Average P/E Ratio**						12.4x
Weighted Average P/B Ratio						1.8x
U.S. Investments (% of Net Assets)						84.3%
Non-U.S. Investments (% of Net Assets)						8.2%
Fund Net Assets						$1,452 million
Turnover Rate						49%
Number of Holdings						71
Symbol
Investment Class						RVVHX
Service Class						RYVFX
Consultant Class						RVFCX
Institutional Class						RVFIX
R Class						RVVRX
K Class						RVFKX
*Geometrically calculated
**The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (21% of portfolio holdings as of 12/31/09).
MORNINGSTAR STATISTICAL MEASURES*
		RVV		Category Median			Best Decile Breakpoint
Sharpe Ratio			0.26		0.01			0.19
Standard Deviation			22.51		20.84			18.56
*	Five years ended 12/31/09. Category Median and Best Decile Breakpoint based on 314 small-cap objective funds (oldest class only) with at least five years of history.

The Royce Funds 2009 Annual Report to Shareholders  |  29

QUALITY + FOCUSED
Quality + Focused Funds generally employ a more limited portfolio approach–typically holding no more than 100 positions that we believe possess high quality.
AVERAGE ANNUAL TOTAL RETURNS
Through 12/31/09
July-Dec 2009*				23.40	%
One-Year				38.05
Three-Year				1.63
Five-Year				6.52
Since Inception (6/30/03)				10.64
ANNUAL EXPENSE RATIOS
Gross Operating Expenses				1.57	%
Net Operating Expenses				1.49
*Not annualized
CALENDAR YEAR TOTAL RETURNS
Year	ROH		Year	ROH
2009	38.1	%	2006	13.7	%
2008	-29.2		2005	14.9
2007	7.3		2004	27.2
TOP 10 POSITIONS % of Net Assets
Pason Systems				1.4	%
Major Drilling Group International				1.3
Knight Capital Group Cl. A				1.3
Oil States International				1.3
Cal-Maine Foods				1.2
SRA International Cl. A				1.2
Sims Metal Management ADR				1.2
GrafTech International				1.2
Ensign Energy Services				1.2
Corinthian Colleges				1.2
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Industrial Services				20.5	%
Industrial Products				14.4
Natural Resources				11.6
Technology				11.6
Financial Services				9.5
Financial Intermediaries				6.6
Consumer Products				3.8
Health				2.7
Consumer Services				1.7
Miscellaneous				5.0
Cash and Cash Equivalents				12.6
30  |  The Royce Funds 2009 Annual Report to Shareholders

Royce 100 Fund
Manager’s Discussion Although much was written about market leadership in the rally of 2009 coming from companies that lacked earnings and dividends, there were ample strong showings from what we regard as high-quality businesses held in the portfolio of Royce 100 Fund (ROH) in 2009. The Fund gained 38.1% in 2009, outpacing its small-cap benchmark, the Russell 2000, which was up 27.2% for the same period. We were very pleased that ROH built its relative advantage with solid relative down market results in the first quarter (-9.4% versus -15.0%) and strong absolute up market performance during the second (+23.5% versus +20.7%). The Fund mostly kept pace with the Russell 2000 in the dynamic third quarter, up 19.0% versus 19.3% for the benchmark, and in the more subdued fourth quarter, up 3.7% compared to 3.9% for the benchmark.      ROH’s calendar-year returns were thus a function of better down-market results and a competitive up-market showing. From the market low on March 9, 2009 through December 31, 2009, the Fund was up 84.4% versus a gain of 84.5% for the Russell 2000. We were very pleased with ROH’s results for the year on both an absolute and relative basis, especially considering that we bucked a trend in a market where the sort of high-quality companies we seek for the portfolio, those with strong balance sheets, steady earnings and high returns on invested capital, in some cases underperformed in 2009.      As pleased as we were with ROH’s returns in 2009, there are still some miles to go before the losses of 2008, as well as those from the small-cap market peak on July 13, 2007, are fully recovered, which can be seen in the Fund’s three- and five-year average annual total returns ended December 31, 2009. (Please see page 12 for the Fund’s recent market cycle results.) We were very happy to see the Fund own a decisive performance edge over the Russell 2000 for the one-, three-, five-year and since inception (6/30/03) periods ended December 31, 2009. ROH’s average annual total return since inception was 10.6%.
While each of the Fund’s equity sectors was in the black for the calendar year, five posted notable net gains—Financial Services, Technology, Natural Resources, Industrial Services and Industrial Products. The first of these sectors housed ROH’s best-performing industry group, investment management companies. This is an area in which we have actively built positions during the last couple of years, especially through the worst days of the market downturn. We were therefore very pleased that asset management stocks helped to drive 2009 performance,
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	GrafTech International	1.29	%
	Waddell & Reed Financial Cl. A	1.23
	Federated Investors Cl. B	1.21
	Major Drilling Group International	1.19
	Evercore Partners Cl. A	1.18
	*Includes dividends
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. All performance and risk information for ROH reflects Service Class results. Shares of ROH’s R Class bear an annual distribution expense that is higher than that of the Service Class. Gross operating expenses reflect the Fund’s gross total annual operating expenses for the Service Class, including management fees, 12b-1 distribution and service fees, and other expenses. Net operating expenses reflect contractual fee waivers and/or reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses through April 30, 2010 to the extent necessary to limit total annual operating expenses to no more than 1.49% for the Service Class. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

Performance and Portfolio Review
with two of the top three, and four of the top ten, contributors for the year coming from this group. We believed that many of our holdings in this industry possessed unique franchise values, something that seemed borne out during the second half of 2008 and the first quarter of 2009, when many increased market share while competitors struggled.      Waddell & Reed Financial received strong flows into its asset strategy and natural resource funds, which increased assets under management, generated distribution-scale benefits and brought attention to lesser-known products with strong track records. The near-zero interest rate environment has pressured near-term profitability for money market specialists such as Federated Investors, but it also forced smaller competitors to exit the field, which helped Federated to gain market share. Leading boutique investment banking company, Evercore Partners, continued to benefit from the uptick in M&A (merger & acquisition) activity as companies sought new ways to grow revenues. Evercore also made several strategic hires, including a new CEO who was a co-founder of BlackRock, to expand its investment management arm, or a fee-based business that lacks the inherent volatility of their M&A activities.
			Elsewhere in the portfolio, GrafTech International, a leading global producer of graphite electrodes, a key component in electric arc furnace steel production, benefited from a healthy outlook in demand for steel—world steel capacity utilization improved by more than 15% during 2009, as the roots of the global economic recovery began to take hold. It was a top-ten position at the end of December. Major Drilling International provides contract drilling services for metals miners. The outlook for its services in 2010 also improved markedly, as inflation fears helped commodity prices for precious metals and key base industrial metals, such as copper, to surge.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
Woodward Governor	-0.73	%
Ethan Allen Interiors	-0.53
Desarrolladora Homex ADR	-0.51
Tennant Company	-0.40
Grupo Aeroportuario del
Centro Norte ADR	-0.40
*Net of dividends
Woodward Governor manufactures energy control systems for commercial and military aircraft. Its stock price nosedived as the company announced a large acquisition around the same time it revised downward its outlook for the year due to continuing softening conditions in aircraft manufacturing. We sold our shares as the acquisition caused more balance sheet dilution than we could live with. We have long admired the strong brand and business of Ethan Allen Interiors, a leading manufacturer and retailer of home furnishings. In the face of ongoing weakness in spending on consumer durables and increased competition from imports, the company has begun to shift its business model, a move that included converting its U.S. manufacturing to custom-made goods and consolidating its retail network. In December, we repurchased shares.
ROYCE 100 FUND VS. RUSSELL 2000 Value of $10,000 Invested on 6/30/03
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*						$1,650 million
Weighted Average P/E Ratio**						19.4x
Weighted Average P/B Ratio						2.1x
U.S. Investments (% of Net Assets)						80.4%
Non-U.S. Investments (% of Net Assets)						6.9%
Fund Net Assets						$233 million
Turnover Rate						42%
Number of Holdings						100
Symbol
Investment Class						ROHHX
Service Class						RYOHX
R Class						ROHRX
K Class						ROHKX
*Geometrically calculated
**The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (19% of portfolio holdings as of 12/31/09).
MORNINGSTAR STATISTICAL MEASURES*
		ROH		Category Median			Best Decile Breakpoint
Sharpe Ratio			0.27		0.01			0.19
Standard Deviation			19.95		20.84			18.56
*	Five years ended 12/31/09. Category Median and Best Decile Breakpoint based on 314 small-cap objective funds (oldest class only) with at least five years of history.

The Royce Funds 2009 Annual Report to Shareholders  |  31

QUALITY + FOCUSED
Quality + Focused Funds generally employ a more limited portfolio approach–typically holding no more than 100 positions that we believe possess high quality.
AVERAGE ANNUAL TOTAL RETURNS
Through 12/31/09
July-Dec 2009*	21.68	%
One-Year	28.75
Since Inception (9/28/07)	-3.99
ANNUAL EXPENSE RATIO
Gross Operating Expenses	1.76	%
Net Operating Expenses	1.49
*Not annualized
TOP 10 POSITIONS % of Net Assets
International Rectifier	2.4	%
Erie Indemnity Cl. A	2.0
Hertz Global Holdings	2.0
Advisory Board (The)	1.9
Gildan Activewear	1.8
Fluor Corporation	1.7
Dionex Corporation	1.7
AllianceBernstein Holding L.P.	1.7
Gardner Denver	1.7
NBTY	1.6
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Technology	19.0	%
Industrial Services	16.6
Industrial Products	15.1
Financial Intermediaries	8.6
Financial Services	7.2
Health	6.0
Consumer Products	5.5
Natural Resources	2.7
Consumer Services	1.4
Diversified Investment Companies	0.6
Miscellaneous	4.8
Cash and Cash Equivalents	12.5
32  |  The Royce Funds 2009 Annual Report to Shareholders

Royce SMid-Cap Value Fund
Managers’ Discussion Royce SMid-Cap Value Fund (RSV), with its focus on small-cap and mid-cap stocks, enjoyed a solid year on an absolute basis, though it struggled to keep pace through the broad rally that lifted equities of all sizes. For the calendar year, the Fund gained 28.8%, a solid result, though it lagged the 34.4% gain of its small-cap and mid-cap benchmark, the Russell 2500, over the same period. After underperforming the Russell 2500 during the bearish first quarter (-12.8% versus -11.4%), the Fund outpaced it in the second quarter (+21.3% versus +20.3%). The Fund then proceeded to do well on an absolute basis, but slipped behind the benchmark during the equally dynamic bull period of the third quarter (+16.6% versus +20.1%). The fourth quarter saw the market continue its advance, albeit at a much slower pace. Between October and December, RSV gained 4.4% compared to the Russell 2500, which was up 5.1%.      Launched just after the peak for U.S. small-cap stocks in July 2007, RSV began operating in one of the most volatile and challenging environments for stocks of the past several decades. Even in this context, which includes a relative performance advantage over the benchmark since its inception (9/28/07), negative absolute returns are unsatisfying. RSV’s average annual total return since inception was -4.0% versus a loss of 8.8% for the Russell 2500 index over the same period. From the recent small-cap cycle low on March 9, 2009 through December 31, 2009, the Fund lagged its benchmark, gaining 72.5% compared to 85.2% for the Russell 2500 index.
Nine of the Fund’s 11 equity sectors made positive contributions to returns, led by Industrial Products, though Technology and Financial Services also posted impressive gains. Financial Intermediaries and Consumer Services, on the other hand, were modest detractors in what remained a challenging environment for both the consumer—with unemployment steadily on the rise—and banks, which continued to suffer with capital adequacy issues due to increasing non-performing assets. At the industry level, investment management businesses and components and systems manufacturers were standouts. Early in the market recovery, investors embraced two identifiable themes: first, a renewed demand for investment management products to handle increased consumer savings rates and, second, a new business capital investment cycle focused on improved productivity in a low-growth environment.
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	Reliance Steel & Aluminum	1.66	%
	Waddell & Reed Financial Cl. A	1.35
	Federated Investors Cl. B	1.28
	Oil States International	1.18
	Life Technologies	1.09
	*Includes dividends
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. Gross operating expenses reflect the Fund’s estimated gross total annual operating expenses as of the Fund’s most current prospectus and include management fees, 12b-1 distribution and service fees, and other expenses. Net operating expenses reflect contractual fee waivers and/or reimbursements. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to limit net annual operating expenses to no more than 1.49% through April 30, 2010. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

Performance and Portfolio Review
Reliance Steel & Aluminum, the leading steel fabrication and distribution company in the U.S., was the Fund’s top performer in 2009. The company capitalized on the overly aggressive destocking of steel inventories in 2008 and early 2009 that drew available supplies down to unsustainably low levels even in a state of depressed economic activity. When demand ultimately returned, the company was well positioned to serve customers and to gain improved margins throughout its business. The “cash for clunkers” program was an important catalyst that provided incremental demand for finished steel products. Oil States International has a strong balance sheet and a core business that we like. It offers specialized products and services to oil and gas drilling and production companies worldwide. Many energy services stocks grew very cheap during the downturn and this, along with steadily rising oil prices, helped its share price to climb.
			Waddell & Reed Financial and Federated Investors are asset managers that made significant contributions to performance in 2009. Federated manages in excess of $400 billion in money market assets. This segment of its business benefitted from the combination of the flight to safety of investors who fled riskier assets, and a general increase in savings rates as consumer spending was substantially curtailed. The near-zero interest rate environment has pressured near-term profitability for money market specialists, but it also forced smaller competitors to exit the field, which helped Federated to gain market share. Waddell & Reed Financial received strong flows into its asset strategy and natural resource funds, which increased assets under management, generated distribution scale benefits and brought attention to lesser known products with strong track records. We also see the company benefitting from the increasing importance of the independent broker dealer network, an important source of asset flows, capturing market share from troubled Wall Street brokerages.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
Leucadia National	-1.25	%
Cimarex Energy	-0.92
HEICO Corporation	-0.82
KBR	-0.81
Interactive Brokers Group Cl. A	-0.55
*Net of dividends
Leucadia National, a diversified holding company engaged in a broad range of industrial and financial activities, suffered when a short-term mark-to-market price calculation driven by two of its underlying investments wreaked havoc on its stock price. That uproar has since tempered, and both underlying investments posted very strong results in the second quarter. After selling our shares in March, we reinitiated a position in July. We also sold our shares of oil and gas exploration and production company Cimarex Energy in March, as its declining revenues helped to convince us that better opportunities existed elsewhere in the market.
ROYCE SMID-CAP VALUE FUND VS. RUSSELL 2500 Value of $10,000 Invested on 9/28/07
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*	$2,613 million
Weighted Average P/E Ratio**	18.4x
Weighted Average P/B Ratio	2.1x
U.S. Investments (% of Net Assets)	84.5%
Non-U.S. Investments (% of Net Assets)	2.8%
Fund Net Assets	$7 million
Turnover Rate	216%
Number of Holdings	97
Symbol
Service Class	RMVSX
*Geometrically calculated
**The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (18% of portfolio holdings as of 12/31/09).

The Royce Funds 2009 Annual Report to Shareholders  |  33

QUALITY + FOCUSED
Quality + Focused Funds generally employ a more limited portfolio approach–typically holding no more than 100 positions that we believe possess high quality.
CUMULATIVE TOTAL RETURNS
Through 12/31/09
July-Dec 2009*	19.74	%
Since Inception (2/27/09)	53.27
ANNUAL EXPENSE RATIO
Gross Operating Expenses	1.75	%
Net Operating Expenses	1.49
TOP 10 POSITIONS % of Net Assets
Berkshire Hathaway Cl. B	4.1	%
Patriot Transportation Holding	3.9
Cal-Maine Foods	3.6
Knight Capital Group Cl. A	3.2
Jacobs Engineering Group	3.1
Mosaic Company (The)	3.1
Silver Standard Resources	3.0
Nucor Corporation	2.9
Major Drilling Group International	2.9
Gammon Gold	2.8
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Natural Resources	25.7	%
Industrial Products	19.1
Industrial Services	9.2
Financial Services	8.0
Financial Intermediaries	7.3
Consumer Products	7.1
Technology	3.6
Diversified Investment Companies	2.1
Consumer Services	1.8
Cash and Cash Equivalents	16.1

Royce Focus Value Fund
Manager’s Discussion Every once in a while, things work out better than we ever could have planned, something which comes to mind when thinking about the still-new, since-inception (2/27/09) results for Royce Focus Value Fund (RFV). Attempting to introduce new portfolios close to market lows is not part of our strategy. We firmly believe that such an effort would be doomed to fail again and again. So it was really nothing more than luck that saw us launching the Fund so close to the market low on March 9. Of course, this cut both ways to some degree–in the time it took to get the portfolio as fully invested as we wished, the rally had gathered a lot of steam. Still, we were thrilled by the early results, even if they fell a bit short on a relative basis. RFV gained 53.3% from its inception through December 31, 2009 versus a gain of 65.6% for its micro-cap, small-cap and mid-cap benchmark, the Russell 2500 index, over the same period.      In its abridged first quarter, the Fund climbed 8.0% compared to a 9.1% gain for its benchmark for the same period. The market revived fast following the market low in early March, climbing more or less steadily through the end of the year. During this dynamic upswing, the Fund had a harder time keeping pace with its benchmark, gaining 18.5% versus 20.3% in the second quarter, and up 14.5% versus 20.1% in the third. In the quieter atmosphere of the fourth quarter, the same pattern held—RFV gained 4.6% versus 5.1% for the Russell 2500. This also meant that the Fund trailed its benchmark considerably from March 9, 2009 through the end of December, gaining 55.4% versus 85.2%.
Each of the Fund’s sectors finished the year in positive territory, with Natural Resources leading by a wide margin, followed by strong net gains from Industrial Products holdings and solid contributions from holdings in Financial Services and Technology. The Fund’s two leading industry groups came from Natural Resources. Energy services companies and precious metals and mining stocks are two areas in which we have had a long-term interest. In other Royce portfolios, we began seeing what we thought were terrific stock prices for energy companies back around the beginning of the Iraq War, when oil prices were thought to be peaking. The downturn of late 2008-early 2009 made some of these companies attractively cheap to us around the time that we launched RFV, and we were pleased to see them rebound later in 2009.
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	Ivanhoe Mines	3.12	%
	Unit Corporation	2.91
	GrafTech International	2.59
	Fresnillo	2.44
	Franklin Resources	2.23
	*Includes dividends
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. Gross operating expenses reflect estimated gross annual operating expenses, and include management fees, 12b-1 distribution and service fees, and other expenses. Net operating expenses reflect contractual fee waives and/or reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive its fees and/or reimburse operating expenses, to the extent necessary to maintain the Fund’s net annual operating expense ratio at or below 1.49% through April 30, 2012. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

34  |  The Royce Funds 2009 Annual Report to Shareholders

Performance and Portfolio Review
Our investments in precious metals and mining companies were based on the idea that commodity metals prices would recover, and their resurgence (particularly gold’s) was one of the year’s big stories. We still see room to grow for many of our holdings in this industry. Our own analysis suggests that the prices of many mining stocks have not increased proportionally with the surge in commodity prices. We also think that as equity investors begin to see these companies as earnings and cash flow entities, and not simply as asset plays, this will help to boost share prices. Ivanhoe Mines reaped the benefit of finally securing an agreement from the Mongolian government to commence operations in its copper mines in that nation, an event that seemed to lead other investors to the stock. Although we took some gains in July and August, it was one of the portfolio’s 20 largest positions at the end of 2009. Fresnillo is a large silver producer and Mexico’s second largest gold producer. Although the rally in silver prices did not quite match that of gold, the uptick in both metals’ prices helped the company’s share price to rise. Unit Corporation saw its earnings recover as its business picked up. The firm operates as both a contract drilling company and an oil and natural gas exploration business, a hybrid status that has often resulted in it flying under Wall Street’s radar. Its price thus fell precipitously in the downturn, when we first bought shares in the Fund.
			With a more than 20% market share, GrafTech International is the world’s leading manufacturer of graphite electrodes, a key input in steel manufacturing in electric arc furnace steel mills. Its stock price received a boost from an anticipated uptick in the demand for steel, with capacity utilization improving by more than 15% during 2009. We added to our stake through July. The share price of asset management company Franklin Resources suffered during the downturn to the point where we could not believe it was so alluringly cheap. Like many asset managers, its stock roared back during the rally. In Franklin’s case, the stock was helped by asset inflows and improved earnings for the company.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
Sanderson Farms	-0.79	%
Jacobs Engineering Group	-0.34
Kennedy-Wilson Holdings	-0.09
Prospect Acquisition	-0.02
Exxon Mobil	0.10
*Net of dividends
Losses in the portfolio were few, with only four stocks posting negative performance in 2009. We sold our position in Sanderson Farms, more because we saw what we judged to be better opportunities elsewhere. We remain admirers of its well-managed, family-run poultry processing business. Between September and December, we built a position in large-scale engineering and construction business, Jacobs Engineering Group. We were drawn to its strong balance sheet and growth potential in a global economy that should soon begin to build again.
ROYCE FOCUS VALUE FUND VS. RUSSELL 2500 Value of $10,000 Invested on 2/27/09
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*	$3,206 million
Weighted Average P/B Ratio	1.9x
U.S. Investments (% of Net Assets)	72.4%
Non-U.S. Investments (% of Net Assets)	11.4%
Fund Net Assets	$5 million
Turnover Rate	21%
Number of Holdings	44
Symbol
Service Class	RYFVX
*Geometrically calculated

The Royce Funds 2009 Annual Report to Shareholders  |  35

QUALITY + FOCUSED
Quality + Focused Funds generally employ a more limited portfolio approach—typically holding no more than 100 positions that we believe possess high quality.
CUMULATIVE TOTAL RETURNS
Through 12/31/09
July-Dec 2009*	12.67	%
Since Inception (4/27/09)	15.60
ANNUAL EXPENSE RATIO
Gross Operating Expenses	1.75	%
Net Operating Expenses	1.49
TOP 10 POSITIONS % of Net Assets
UltraShort 20+ Year Treasury ProShares	4.0	%
Western Union	2.0
Morningstar	1.9
Bank of New York Mellon (The)	1.9
Cohen & Steers	1.8
CARBO Ceramics	1.8
Fluor Corporation	1.8
Northern Trust	1.7
Invesco	1.7
MasterCard Cl. A	1.7
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Financial Services	16.2	%
Financial Intermediaries	14.8
Industrial Services	14.6
Natural Resources	6.8
Industrial Products	6.2
Diversified Investment Companies	4.0
Technology	2.1
Consumer Products	1.3
Consumer Services	1.2
Cash and Cash Equivalents	32.8

Royce Partners Fund
Manager’s Discussion Considering the challenging timing of its start in mid-year 2009, Royce Partners Fund (PTR) generated a reasonable absolute rate of return, though it lagged substantially on a relative basis. Launched in the midst of one of the most powerful rallies in recent memory, PTR never had the opportunity to fully deploy its cash in typical Royce fashion, instead investing into an environment of mostly increasing prices. For the since inception (4/27/09) period ended December 31, 2009, the Fund gained 15.6%, underperforming its benchmark, the Russell 2500, which was up 36.1% for the same period.       Much of the missed opportunity for relative performance occurred in the Fund’s first full quarter of operation, 2009’s third quarter. Stocks continued the powerful advance that defined the second quarter, with the Russell 2500 returning a hefty +20.1% between July and September. Underinvested, PTR advanced at a much slower pace, gaining only 9.6%. The performance gap narrowed somewhat in the more subdued fourth quarter, in which PTR gained 2.9% versus its benchmark’s gain of 5.1%. At this point, however, the relative performance race had already been won.
PTR joins two other domestic Royce offerings, Royce Heritage and Focus Value, in ranging more freely across the market cap spectrum without constraint. By applying the same rigorous analytical standards and intensive focus on risk management, PTR should be in a unique position to capitalize on market dislocations that historically have offered significant investment opportunities in companies of all sizes. We are also comfortable using the same long-term investment horizon for portfolio holdings that we use in our other funds. Investor holding periods have been compressing for several years as higher market volatility, growing risk aversion, and the ascendance of rapid-trading investment strategies have become established market practices.
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	CARBO Ceramics	1.12	%
	Randgold Resources ADR	1.02
	VZ Holding	0.91
	Cohen & Steers	0.89
	GrafTech International	0.88
	*Includes dividends
We will apply our contrarian approach to purchasing what we estimate to be temporarily troubled businesses with defensive capital structures at times when other participants have lost patience. We believe holding them through a market cycle should provide ample exciting arbitrage opportunities. A significant portion of PTR’s portfolio will still be sourced from our primary investment universe of smaller companies.       During the eight-month period from PTR’s inception through the end of 2009, all of the Fund’s equity sectors made positive contributions to performance. Financial Services provided Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. Gross operating expenses reflect estimated gross annual operating expenses, and include management fees, 12b-1 distribution and service fees, and other expenses. Net operating expenses reflect contractual fee waives and/or reimbursements. All expense information is reported in as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive its fees and/or reimburse operating expenses, to the extent necessary to maintain the Fund’s net annual operating expense ratio at or below 1.49% through April 30, 2012. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

36  |  The Royce Funds 2009 Annual Report to Shareholders

Performance and Portfolio Review
the biggest source of return, with Natural Resources, Financial Intermediaries and Industrial Products each contributing solid net gains. At the industry level, investment management businesses, energy services companies and the financial information and processing group drove results. The portfolio also had mild losses from insurance brokers and engineering and construction companies.       The Fund’s top performer came from the Natural Resource sector and is an old Royce favorite. Carbo Ceramics is the world’s leading producer of ceramic proppants—spherical pellets used during hydraulic fracturing to increase the productivity of oil and gas wells. Well sophistication is an increasingly vital part of energy services, particularly with oil and natural gas deposits becoming more and more difficult to locate. Carbo’s suite of products, pristine balance sheet and superior financial execution in 2009’s second half all converged to spark high levels of investor interest and strong stock market performance. Randgold Resources, a gold mining and exploration company with operations in Africa, was another stellar performer benefitting from the rally in the price of gold, along with increased production tonnage and new exploration discoveries. We remain committed to investments in the precious metals and mining space for both operating and valuation characteristics as well as the natural hedge afforded by these assets against the potential for higher inflation due to global central bank stimulus efforts. VZ Holding, a niche player in the Swiss financial services sector, provides consulting services in retirement planning and wealth management for private clients over the age of 55. Improving capital market performance combined with a resilient fee-oriented business model and a strong balance sheet to produce a powerful rebound in the company’s share price from its March lows.
			Ideas that negatively affected returns were few and well contained. AON Corporation, a large insurance brokerage and human resource consulting business, had difficulty navigating the challenging environment of increasing unemployment and financially constrained customers. As it became clear that a prolonged restructuring would be required, we exited our position in search of more timely investments. Consulting business Towers Watson, formerly Watson & Wyatt, sacrificed balance sheet stability at an inopportune time in order to pursue a strategic merger. Uncomfortable with the new capital structure and industry headwinds, we chose to step aside in the fourth quarter by selling our shares.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
Aon Corporation	-0.29	%
Watson Wyatt Worldwide Cl. A	-0.23
Marsh & McLennan	-0.17
Brink’s Company (The)	-0.12
Bank of New York Mellon (The)	-0.11
*Net of dividends
ROYCE PARTNERS FUND VS. RUSSELL 2500 Value of $10,000 Invested on 4/27/09
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*		$4,641 million
Weighted Average P/E Ratio**		23.0x
Weighted Average P/B Ratio		2.7x
U.S. Investments (% of Net Assets)		58.0%
Non-U.S. Investments (% of Net Assets)		8.6%
Fund Net Assets		$2 million
Turnover Rate		14%
Number of Holdings		50
Symbol Service Class		RPTRX
*	Geometrically calculated
**	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (15% of portfolio holdings as of 12/31/09).

The Royce Funds 2009 Annual Report to Shareholders  |  37

MICRO-CAP/OPPORTUNISTIC
Micro-Cap/Opportunistic Funds generally invest in micro-caps and/or those companies considered more opportunistic.
AVERAGE ANNUAL TOTAL RETURNS
Through 12/31/09
July-Dec 2009*				28.00	%
One-Year				55.67
Three-Year				-0.52
Five-Year				6.07
10-Year				11.43
15-Year				12.12
Since Inception (12/31/91)				13.13
ANNUAL EXPENSE RATIO
Operating Expenses				1.69	%
**Not annualized
CALENDAR YEAR TOTAL RETURNS
Year	RMC		Year	RMC
2009	55.7	%	2001	23.1	%
2008	-40.9		2000	16.7
2007	7.1		1999	13.7
2006	22.3		1998	-3.3
2005	11.5		1997	24.7
2004	15.8		1996	15.5
2003	52.6		1995	19.1
2002	-13.4		1994	3.6
TOP 10 POSITIONS % of Net Assets
Atlantic Tele-Network				1.3	%
Olympic Steel				1.3
T-3 Energy Services				1.3
Allied Nevada Gold				1.2
Patriot Transportation Holding				1.2
Horsehead Holding Corporation				1.1
Silvercorp Metals				1.1
Cavco Industries				1.0
SMART Modular Technologies (WWH)				1.0
Semperit AG Holding				1.0
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Natural Resources				16.3	%
Technology				13.9
Industrial Products				11.6
Industrial Services				11.2
Health				10.6
Consumer Products				7.6
Consumer Services				4.1
Financial Intermediaries				3.9
Financial Services				3.6
Miscellaneous				4.9
Cash and Cash Equivalents				12.3

Royce Micro-Cap Fund
Manager’s Discussion After a red-hot first half, the portfolio of scrutinously selected micro-cap stocks that make up Royce Micro-Cap Fund showed few signs of slowing down in the second half of 2009. RMC gained 55.7% in 2009, substantially ahead of its benchmark, the Russell 2000, which was up 27.2%, and the Russell Microcap index, which was up 27.5% for the same period. During the first half, the Fund offered a highly attractive blend of better relative returns in the first-quarter downturn (-6.9% versus -15.0% for its benchmark) and a terrific relative and absolute showing in the robust rally of the second quarter (+30.7% versus +20.7%). The second half of the year was more consistently bullish. During the dynamic third quarter, the Fund gave back a bit of its relative advantage to the micro-cap index while still outpacing its benchmark, up 20.2% versus respective gains of 19.3% and 20.9% for the Russell 2000 and Russell Microcap index. The Fund then beat both indexes in the year’s final quarter, gaining 6.5% compared to a gain of 3.9% for its benchmark and a loss of 0.5% for the micro-cap index.
The rally that kicked off in early March helped to spur the Fund’s calendar-year performance. From the market low on March 9, 2009 through December 31, 2009, RMC rose 99.4%, while the Russell 2000 gained 84.5% and the Russell Microcap was up 86.0%. We were very happy with the Fund’s results, even as we remain acutely aware that recent gains have not yet erased the losses in the current market cycle that began with the small-cap market peak on July 13, 2007. (Please see page 12 for the Fund’s recent market cycle returns.) Nonetheless, we were very pleased with the Fund’s performance on a relative basis.
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	Allied Nevada Gold	1.63	%
	Fuqi International	1.60
	Aquiline Resources	1.39
	Silvercorp Metals	1.33
	Stein Mart	1.22
	*Includes dividends
RMC beat the Russell Microcap (for which data goes back only to 2003) for the one-, three- and five-year periods ended December 31, 2009, and it outpaced the Russell 2000 for the one-, three-, five-, 10-, 15-year and since inception (12/31/91) periods ended December 31, 2009. The Fund’s average annual total return since inception was 13.1%.       Each of the Fund’s equity sectors finished the year with positive performance, with Natural Resources and Technology providing especially strong showings. Net gains in Technology were concentrated in the semiconductors and equipment industry, though impressive results could also be found in telecommunications holdings and in the components and systems Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. All performance and risk information for RMC reflects Investment Class results. Shares of RMC’s Service and Consultant Classes bear an annual distribution expense that is not borne by the Investment Class. Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the date of the Fund’s most current prospectus and include management fees, other expenses and acquired fund fees and expenses. Acquired fund fees and expenses are those incurred indirectly as a result of investment in one or more acquired funds, including mutual funds, hedge funds, private equity funds and other pooled investment vehicles. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

38  |  The Royce Funds 2009 Annual Report to Shareholders

Performance and Portfolio Review
group. Within Natural Resources, holdings in the precious metals and mining industry did best, easily outpacing all of the Fund’s other industry groups and most of its sectors. Mining businesses benefited chiefly from steadily rising commodity prices, gold in particular. They also seem to be attracting investors’ attention more for their attractive earnings and cash flow characteristics than for their potential or actual commodity production. Even with this newer attention, we still see many companies in the industry as having ample room to grow before reaching what we would regard as full value.       Three of the Fund’s five top-performing holdings came from this group. Allied Nevada Gold operates out of that state and also runs projects in California, Idaho, Colorado, Mexico and Indonesia, among other places. In our view, the company has been highly successful making the transition from being primarily an exploration business to a production business. We trimmed our position early in 2009. Aquiline Resources was among the first of what we estimate could be many acquisitions of smaller mining concerns by larger companies now that credit is easing; in this case, it was acquired by a company that we own in other Royce-managed portfolios, Pan American Silver. We sold our position in Aquiline Resources in October and November. The final two months of 2009 saw us taking some gains in Silvercorp Metals. Although the price of silver remained shy of its spring 2008 high, we remained confident in silver’s long-term prospects and have long liked its hybrid status as a precious metal with multiple applications in industry and medicine.
			In June, we greatly reduced our stake in Fuqi International, which designs and sells jewelry in China. Earnings continued to be positive and beat analysts’ expectations, which helped its price to soar into September before it then slipped through the end of the year. As for those less successful companies in 2009, we sold our shares in media company Journal Communications in March after it proved more disappointing than we anticipated it might. We were more optimistic about Key Technology, which makes process automation systems that integrate electro-optical inspection and sorting, specialized conveying, and product preparation equipment. Its business and share price have been hurt by the recession, but we like its balance sheet and its prospects, especially as the pharmaceutical industry gears up to use the firm’s products. We built our position through August.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
Journal Communications Cl. A	-0.83	%
Key Technology	-0.67
BCB Holdings	-0.34
United Fire & Casualty	-0.29
Kenexa Corporation	-0.27
*Net of dividends
ROYCE MICRO-CAP FUND VS. RUSSELL 2000 Value of $10,000 Invested on 12/31/91
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*						$327 million
Weighted Average P/B Ratio							1.6x
U.S. Investments (% of Net Assets)							65.7%
Non-U.S. Investments (% of Net Assets)							22.0%
Fund Net Assets						$1,079 million
Turnover Rate						34%
Number of Holdings						212
Symbol Investment Class						RYOTX
Service Class						RMCFX
Consultant Class						RYMCX
*	Geometrically calculated
MORNINGSTAR STATISTICAL MEASURES*
				Category			Best Quartile
		RMC		Median			Breakpoint
Sharpe Ratio			0.25		-0.07			0.11
Standard Deviation			20.86		21.86			20.45
*	Five years ended 12/31/09. Category Median and Best Quartile Breakpoint based on 24 micro-cap objective funds (oldest class only) with at least five years of history. (All small-cap objective funds with median market capitalizations below $500 million.)

The Royce Funds 2009 Annual Report to Shareholders  |  39

MICRO-CAP/OPPORTUNISTIC
Micro-Cap/Opportunistic Funds generally invest in micro-caps and/or those companies considered more opportunistic.
AVERAGE ANNUAL TOTAL RETURNS
Through 12/31/09
July-Dec 2009*				31.47	%
One-Year				53.58
Three-Year				0.20
Five-Year				5.59
10-Year				10.80
15-Year				13.47
Since Inception (12/15/93)				12.77
ANNUAL EXPENSE RATIO
Gross Operating Expenses				1.60	%
Net Operating Expenses				1.49
*Not annualized
CALENDAR YEAR TOTAL RETURNS
Year	RLP		Year	RLP
2009	53.6	%	2001	25.1	%
2008	-36.0		2000	24.0
2007	2.3		1999	29.8
2006	19.0		1998	2.4
2005	9.7		1997	19.5
2004	13.6		1996	22.8
2003	44.0		1995	22.5
2002	-16.3		1994	3.0
TOP 10 POSITIONS % of Net Assets
Ivanhoe Mines				1.9	%
Trican Well Service				1.8
Nu Skin Enterprises Cl. A				1.7
Gammon Gold				1.7
Alamos Gold				1.7
Silver Standard Resources				1.6
GrafTech International				1.5
Intrepid Potash				1.5
Pan American Silver				1.5
Kennametal				1.5
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Natural Resources				25.4	%
Technology				16.6
Industrial Products				11.2
Industrial Services				9.4
Consumer Products				7.9
Financial Intermediaries				6.9
Health				4.4
Consumer Services				3.7
Financial Services				3.2
Miscellaneous				4.6
Cash and Cash Equivalents				6.7

Royce Low-Priced Stock Fund
Manager’s Discussion One area of the stock market that received ample attention from investors in 2009 was low-priced stocks, which was clearly reflected in the calendar-year return for Royce Low-Priced Stock Fund (RLP). The Fund rose an eye-catching 53.6% in 2009, trouncing the 27.2% mark posted by its small-cap benchmark, the Russell 2000, for the same period. We were clearly pleased to see such strong performance, but it was not simply the result of investors’ sudden affection for stocks priced in the single digits or slightly higher. The bear market was alive and well through much of the first quarter, a period in which the Fund lost 7.8% versus a decline of 15.0% for the Russell 2000. This early advantage was also a factor in RLP’s 2009 showing.       RLP beat the Russell 2000 in the second (+26.6% versus +20.7%), third (+23.8% versus +19.3%) and fourth (+6.2% versus +3.9%) quarters. From the market low on March 9, 2009 through December 31, 2009, the Fund climbed 101.0% compared to a gain of 84.5% for the small-cap benchmark. These results helped the Fund to re-build its longer-term, absolute return record in the wake of 2008’s bear market. The bear actually first made the scene with the dawn of the current market cycle, which began with the small-cap market peak on July 13, 2007. (Please see page 12 for the Fund’s recent market cycle results.)
So while the Fund’s absolute returns for the three-year and five-year periods ended December 31, 2009 were not ideal, they were improved and positive, and RLP’s longer-term absolute results were strong. We were very pleased with the Fund’s relative results over each of these periods. RLP outpaced the Russell 2000 for the one-, three-, five-, 10-, 15-year and since inception (12/15/93) periods ended December 31, 2009. The Fund’s average annual total return for the since inception period was 12.8%.
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	Ivanhoe Mines	3.38	%
	Nu Skin Enterprises Cl. A	2.27
	Gammon Gold	1.64
	Perot Systems Cl. A	1.52
	Sims Metal Management ADR	1.48
	*Includes dividends
In 2009, Natural Resources led all sectors by a wide margin, followed by Technology. The latter is an area in which we have had perennial interest, considering its importance in the global economy. The 2000 tech bubble created a bear market for the sector that saw a few rallies between 2003 and mid-2008, mostly in the form of short-term upswings that were not particularly robust. These generally low share prices for small-cap technology stocks made us active buyers in the kinds of ‘pick and shovel’ businesses that we have historically favored within technology. Several of the Fund’s Tech industries rebounded nicely in 2009, particularly the semiconductors and equipment Important Performance and Expense Information All performance information in this Report reflects past performance is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. All performance and risk information for RLP reflects Service Class results. Shares of RLP’s R Class bear an annual distribution expense that is higher than that of the Service Class. Gross operating expenses reflect the Fund’s gross total annual operating expenses for the Service Class, including management fees, 12b-1 distribution and service fees, and other expenses. Net operating expenses reflect contractual fee waivers and/or reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses through April 30, 2010 to the extent necessary to limit total annual operating expenses to no more than 1.49% for the Service Class. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

40  |  The Royce Funds 2009 Annual Report to Shareholders

Performance and Portfolio Review
group, telecommunications stocks and IT services companies. Two factors keyed the recovery—tech businesses have been both productive and, in many cases, profitable, and much early M&A (merger & acquisition) activity during the downturn was focused on tech businesses, which seemed to alert other investors to its potential. The sector’s top performer, long-time holding Perot Systems, was one such target—Dell announced it was buying the company in September at a very attractive premium.        The Natural Resources sector is home to two industries in which we have had a long-term interest—energy services companies and precious metals and mining stocks. Our investments in these industries have been based on the idea that certain commodity prices would rise over the long run, and the soaring price of oil and gold were two of the big stories in 2009. In the precious metals and mining group, our analysis suggests that the prices of many of these stocks have not yet increased proportionally with the rise in precious metals commodity prices. We also think that as equity investors begin to see these companies as earnings and cash flow entities, and not simply as asset plays, share prices could be boosted.       Our patience with top performer—and largest holding—Ivanhoe Mines was tested as a supposedly imminent agreement with the Mongolian government to approve the firm’s copper mining plans took four years and three governments to sign. We began to reduce our position in July as its stock price climbed. Another top-ten holding, Gammon Gold, reaped the benefits of successfully making the transition from an exploration business to one more engaged in gold production. Elsewhere in the portfolio, we were pleased to see the rejuvenation of Nu Skin Enterprises.
			The company develops and distributes personal care products and nutritional supplements worldwide via a direct marketing model. Its stock had been struggling, but in 2009 it benefited from a weaker dollar and improving demand in both Japan, which accounts for about one-third of sales, and China, as well from an enthusiastic reception to its new skin-care products.       We still held a position in Endo Pharmaceuticals Holdings, though we remained dissatisfied with its decision to move away from its core pain management products, which were a large part of our initial interest in the company, into new areas. Sensing that we had fallen into a value trap with ViroPharma, a biopharmaceutical company, we began to reduce our stake in March. We were drawn to its balance sheet and the already-effective antibiotic it produces, but were concerned that its stock would have trouble rebounding.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
Endo Pharmaceuticals Holdings	-0.90	%
ViroPharma	-0.60
LECG Corporation	-0.45
Callaway Golf	-0.31
Pason Systems	-0.27
*Net of dividends
ROYCE LOW-PRICED STOCK FUND VS. RUSSELL 2000 Value of $10,000 Invested on 12/15/93
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*						$1,058 million
Weighted Average P/B Ratio						1.8x
U.S. Investments (% of Net Assets)						77.2%
Non-U.S. Investments (% of Net Assets)						15.9%
Fund Net Assets						$3,440 million
Turnover Rate						22%
Number of Holdings						198
Symbol
Investment Class						RLPHX
Service Class						RYLPX
Institutional Class						RLPIX
R Class						RLPRX
K Class						RLPKX
*Geometrically calculated
MORNINGSTAR STATISTICAL MEASURES*
				Category		Best Decile
		RLP		Median		Breakpoint
Sharpe Ratio			0.23		0.01		0.19
Standard Deviation			22.76		20.84		18.56
*	Five years ended 12/31/09 Category Median and Best Decile Breakpoint based on 314 small-cap objective funds (oldest class only) with at least five years of history.

The Royce Funds 2009 Annual Report to Shareholders  |  41

MICRO-CAP/OPPORTUNISTIC
Micro-Cap/Opportunistic Funds generally invest in micro-caps and/or those companies considered more opportunistic.
AVERAGE ANNUAL TOTAL RETURNS
Through 12/31/09
July-Dec 2009*				36.01	%
One-Year				62.14
Three-Year				-4.81
Five-Year				1.42
10-Year				9.78
Since Inception (12/19/96)				12.13
ANNUAL EXPENSE RATIO
Operating Expenses				1.23	%
*Not annualized
CALENDAR YEAR TOTAL RETURNS
Year	ROF		Year	ROF
2009	62.1	%	2002	-17.0	%
2008	-45.7		2001	17.3
2007	-2.0		2000	19.9
2006	18.8		1999	32.3
2005	4.8		1998	4.9
2004	17.5		1997	20.8
2003	72.9
TOP 10 POSITIONS % of Net Assets
Century Aluminum				1.0	%
Bottomline Technologies				0.9
Dillard’s Cl. A				0.9
Collective Brands				0.9
Solutia				0.8
Ferro Corporation				0.8
Hanesbrands				0.7
MarineMax				0.7
Trex Company				0.7
Spartech Corporation				0.7
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Technology				31.2	%
Industrial Products				22.8
Consumer Services				12.8
Industrial Services				8.0
Consumer Products				4.1
Financial Intermediaries				3.8
Natural Resources				3.5
Health				3.3
Financial Services				0.6
Miscellaneous				4.9
Bonds				0.2
Cash and Cash Equivalents				4.8
42  |  The Royce Funds 2009 Annual Report to Shareholders

Royce Opportunity Fund
Manager’s Discussion With a portfolio focused on turnarounds and special situations, Royce Opportunity Fund (ROF) excelled in the powerful rebound for smaller company stocks in 2009. For the calendar year, the Fund gained 62.1%, easily outpacing its small-cap benchmark, the Russell 2000, which was up 27.2% for the same period. After comparable performance with its benchmark during the bearish first quarter (-12.9% versus -15.0%), the Fund catapulted ahead of the small-cap index in the very dynamic bull period that characterized the second (+36.9% versus +20.7%) and third (+32.1% versus +19.3%) quarters. In the year’s concluding quarter, the rally continued, albeit at a slower pace. During this period, ROF gained 3.0% versus 3.9% for the Russell 2000.       We were quite pleased with the Fund’s return on both an absolute and relative basis. Companies of all shapes and sizes performed well in 2009, but it was those smaller and lower-priced stocks that rallied the most as investors reduced their risk aversion and began to sift through the small-cap wreckage for unrecognized value. This area of unloved and underfollowed companies is at the core of ROF’s investment discipline. Importantly, from the market low on March 9, 2009 through December 31, 2009, ROF significantly outperformed its benchmark, climbing 140.8% compared to an 84.5% gain for the Russell 2000. For more on the Fund’s results over recent market cycles, please see page 12.       While 2009 provided ROF’s second-best calendar year performance on record, most recent results have yet to erase the difficulties of 2008. However, on a relative basis, the Fund re-attained its performance edge over the Russell 2000 for the one-, three-, five-, 10-year and since inception (11/19/96) periods ended December 31, 2009. The Fund’s average annual total return since inception was 12.1%.
The initial rise in stock prices from the dark days of early March, 2009 can be explained to some degree as seller’s exhaustion. The absence of selling created the vacuum that gave rise to a very broad rally, lifting many stocks that seemed to have the most to lose from deteriorating economic conditions. However, as the rally took hold mid-year, many companies that benefited were showing fundamental improvement in margins and earnings. So while the rising tide did indeed lift all ships, we still view the investment landscape for special situations and turnarounds as quite robust, with valuations still not completely reflecting the potential for improving operating results.        Technology led all of the Fund’s sectors by a wide margin. It appeared as though investors returned to an area of the market that could boast many companies known for strong balance
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	Dillard’s Cl. A	1.69	%
	Veeco Instruments	1.65
	Temple-Inland	1.54
	Maxwell Technologies	1.42
	Nanometrics	1.30
	*Includes dividends
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. All performance and risk information for ROF reflects Investment Class results. Shares of ROF’s Service, Consultant, R and K Classes bear an annual distribution expense that is not borne by the Investment Class. Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the date of the Fund’s most current prospectus and include management fees, and other expenses. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

Performance and Portfolio Review
sheets, limited business risk and high internal margins. Tech’s leading industry was the semiconductors and equipment group, a somewhat unsurprising development since these businesses provide the crucial components used in an array of devices critical to productivity. Veeco Instruments found itself in the enviable position of having products servicing the LED, data storage and semiconductor markets at a moment when capital expenditures for power savings and cost efficiency solutions began to increase. Similarly, Maxwell Technologies, a developer of products and services for power conversion systems with customers in both the private and public sectors, introduced a new ultra-capacitor attractive to the growing end markets of wind energy, railroads and transportation.       Consumer Services was another bright spot, as the headlines proclaiming the demise of the U.S. consumer proved exaggerated. While consumer activity remains hard to gauge going forward, certain retailers have proven themselves quite adept at inventory management and nimble merchandising. Dillard’s was a case in point, benefitting from its locations in the growing markets of the South and Midwest and solid business initiatives that until recently had been masked by a deteriorating economy. Its policy of owning the land where its stores stand also served it well in what became a very difficult financing environment for many of its competitors.
			First BanCorp of Puerto Rico had the distinction of being a turnaround that failed to materialize as the economic woes that plagued global economies did not leave Puerto Rico immune. Funding from the Federal government’s TARP program was unable to alleviate the capital shortfall and it became clear that additional dilutive capital raises would be necessary. We began to reduce our position in September. We were more optimistic about the prospects for NCI Building Systems, an integrated manufacturer and supplier of engineered metal building systems. The company struggled as the troubles that first hurt the residential housing market spread rapidly into the non-residential sector, NCI’s primary end market. However, aggressive restructuring and a solid cash position should provide for significantly improving margins when industry conditions change. In addition, NCI is moving towards green building practices, with a variety of products that substantially enhance a building’s energy efficiency.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
First BanCorp of Puerto Rico	-0.87	%
NCI Building Systems	-0.65
Penford Corporation	-0.35
Greatbatch	-0.32
Chemtura Corporation	-0.32
*Net of dividends
ROYCE OPPORTUNITY FUND VS. RUSSELL 2000 Value of $10,000 Invested on 11/19/96
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*						$499 million
Weighted Average P/B Ratio								1.2x
U.S. Investments (% of Net Assets)								95.0%
Non-U.S. Investments (% of Net Assets)								0.0%
Fund Net Assets						$1,645 million
Turnover Rate								44%
Number of Holdings								299
Symbol Investment Class								RYPNX
Service Class								RYOFX
Consultant Class								ROFCX
Institutional Class								ROFIX
R Class								ROFRX
K Class								ROFKX
*	Geometrically calculated
MORNINGSTAR STATISTICAL MEASURES*
				Category			Best Quartile
		ROF		Median			Breakpoint
Sharpe Ratio			0.08		0.01			0.09
Standard Deviation			27.26		20.84			19.75
*	Five years ended 12/31/09 Category Median and Best Quartile Breakpoint based on 314 small-cap objective funds (oldest class only) with at least five years of history.

The Royce Funds 2009 Annual Report to Shareholders  |  43

MICRO-CAP/OPPORTUNISTIC
Micro-Cap/Opportunistic Funds generally invest in micro-caps and/or those companies considered more opportunistic.
AVERAGE ANNUAL TOTAL RETURNS
Through 12/31/09
July-Dec 2009*				21.78	%
One-Year				41.38
Three-Year				-4.90
Five-Year				3.05
Since Inception (6/14/01)				12.68
ANNUAL EXPENSE RATIO
Operating Expenses				1.48	%
*Not annualized
CALENDAR YEAR TOTAL RETURNS
Year	RVP		Year	RVP
2009	41.4	%	2005	13.2	%
2008	-41.1		2004	28.2
2007	3.2		2003	79.9
2006	19.4		2002	-14.7
TOP 10 POSITIONS % of Net Assets
Gildan Activewear				1.9	%
Kennametal				1.8
Grainger (W.W.)				1.6
Littelfuse				1.6
SRA International Cl. A				1.5
Knight Capital Group Cl. A				1.4
DreamWorks Animation SKG Cl. A				1.4
Coach				1.3
Unit Corporation				1.2
Gammon Gold				1.2
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Technology				19.8	%
Natural Resources				15.8
Industrial Services				12.4
Financial Intermediaries				11.1
Industrial Products				9.5
Consumer Services				8.1
Consumer Products				5.6
Health				5.6
Financial Services				3.0
Miscellaneous				4.5
Cash and Cash Equivalents				4.6

Royce Value Plus Fund
Manager’s Discussion Royce Value Plus Fund’s portfolio of micro-cap, small-cap and mid-cap stocks enjoyed a strong showing in the calendar year. RVP gained 41.4% in 2009, easily outpacing its benchmark index, the Russell 2000, which was up 27.2% for the same period. The Fund got off to a very strong relative start by losing far less than the Russell 2000 during the primarily bearish first quarter (-6.4% versus -15.0%). RVP then participated in the rally that followed, outgaining its benchmark in the second quarter (+24.1% versus +20.7%). During the second half of the year, the Fund gave up some of its large advantage, though its results were more than respectable on an absolute basis. RVP rose 18.1% in the third quarter, versus 19.3% for the Russell 2000, and was up 3.1% in the fourth quarter, compared to a gain of 3.9% for the benchmark. The relative stall in the year’s last two quarters left the Fund trailing the Russell 2000 during the rally that began in early March. From the market low on March 9, 2009 through December 31, 2009, RVP climbed 79.8% versus 84.5% for its benchmark.       Perhaps needless to say, we were not too troubled by the Fund’s underperformance in this period given its strong absolute result. Such performances are the first efforts toward ultimately moving beyond the losses of 2008—and those of the current market cycle that began with the small-cap market peak on July 13, 2007. (Please see page 12 for the Fund’s recent market cycle results.) We were pleased that RVP outperformed the Russell 2000 for the one-, three-, five-year and since inception (6/14/01) periods ended December 31, 2009. The Fund’s average annual total return since inception was 12.7%.
As was the case in the first half of the year, the Fund’s two largest sectors—Technology and Natural Resources—also made the most significant contributions to performance for the full year. Seeing what we thought were extraordinary opportunities as the bear market worsened, we were very active buyers of tech stocks during the downturn. We first bought shares of data storage equipment maker, Brocade Communications, not long after it announced plans to acquire another portfolio favorite, Foundry Networks, in July 2008. Its share price nearly quadrupled off its March 2009 low before June ended. Stimulus-derived spending on telecom, an expanding partnership with IBM and solid profits all seemed to help the stock to soar. Although we sold our position between June and November, we repurchased shares in December after its share price cooled off. NVIDIA Corporation makes chips used to create video graphics. A
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	Ivanhoe Mines	1.83	%
	Gildan Activewear	1.54
	Brocade Communications Systems	1.42
	NVIDIA Corporation	1.30
	Skyworks Solutions	1.30
	*Includes dividends
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. All performance and risk information for RVP reflects Service Class results. Shares of RVP’s Consultant and R Classes bear an annual distribution expense that is higher than that of the Service Class. Operating expenses reflect the Fund’s total annual operating expenses for the Service Class as of the date of the Fund’s most current prospectus and include management fees, 12b-1 distribution and service fees, and other expenses. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

44  |  The Royce Funds 2009 Annual Report to Shareholders

Performance and Portfolio Review
diverse product line, growing business, positive earnings and a newly favorable environment in its niche industry all helped investors to see its value more clearly. We began to take gains in April as its price rose.       Two of the Fund’s best-performing industries—the energy services group and precious metals and mining companies—came from the Natural Resources sector. Net gains in energy services were spread among several companies, including long-term holdings such as Unit Corporation and Trican Well Service. Ivanhoe Mines offered an important lesson in the value of patience for contrarian investors like ourselves. When we first began to buy the stock in RVP’s portfolio, this Canadian mining business was cultivating a substantial presence in Mongolia, whose government approves all major mining operations. An agreement was considered imminent, and our interest—and position—grew. Four years and three governments later, the agreement was finally ratified, and promising copper and gold mines began to attract investors to Ivanhoe’s stock. We took some gains between August and October as its price began to shine.       Strong fundamentals first drew us to Gildan Activewear, a company that produces blank t-shirts, sport shirts and fleece to wholesale distributors for subsequent screenprinting with designs and logos. Its stock was hammered through the downturn, hurt by rising cotton prices, plant problems and, more generally, the recession. The company battled back by gaining market share, establishing relationships with retailers and expanding its product line further into fleeces and socks. We think it is a well-managed business with room to grow and built our stake through October.
			Our growing interest in the beaten-up banking industry led to us building our position in Synovus Financial, a Georgia-based bank that we first bought in the summer of 2008, though our time frame for its recovery remains long term. Our estimate of its business was based on the idea that it could eventually overcome its losses, mostly in commercial real estate loans, with TARP funds it received. We felt differently about K-V Pharmaceutical, which we first bought in September 2008 as its share price was falling. Between December 2008 and January 2009, the company’s problems grew at a near-exponential rate. Manufacturing problems, multiple drug recalls, and an FDA-mandated suspension of operations all had a predictably negative effect on its stock, leading us to take our losses and move on between January and February.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
Synovus Financial	-0.71	%
K-V Pharmaceutical Cl. A	-0.60
RealNetworks	-0.30
Enterprise Financial Services	-0.24
Brown & Brown	-0.24
*Net of dividends
ROYCE VALUE PLUS FUND VS. RUSSELL 2000 Value of $10,000 Invested on 6/14/01
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*						$1,415 million
Weighted Average P/B Ratio								1.8x
U.S. Investments (% of Net Assets)								89.0%
Non-U.S. Investments (% of Net Assets)								5.9%
Fund Net Assets						$3,158 million
Turnover Rate								39%
Number of Holdings								148
Symbol Investment Class								RVPHX
Service Class								RYVPX
Consultant Class								RVPCX
Institutional Class								RVPIX
R Class								RVPRX
K Class								RVPKX
*	Geometrically calculated
MORNINGSTAR STATISTICAL MEASURES*
				Category			Best Quartile
		RVP		Median			Breakpoint
Sharpe Ratio			0.12		0.01			0.09
Standard Deviation			21.76		20.84			19.75
*	Five years ended 12/31/09. Category Median and Best Quartile Breakpoint based on 314 small-cap objective funds (oldest class only) with at least five years of history.

The Royce Funds 2009 Annual Report to Shareholders  |  45

MICRO-CAP/OPPORTUNISTIC
Micro-Cap/Opportunistic Funds generally invest in micro-caps and/or those companies considered more opportunistic.
AVERAGE ANNUAL TOTAL RETURNS
Through 12/31/09
July-Dec 2009*				15.26	%
One-Year				25.86
Three-Year				-8.89
Five-Year				-1.00
Since Inception (10/3/03)				3.35
ANNUAL EXPENSE RATIO
Gross Operating Expenses				3.33	%
Net Operating Expenses				1.49
*Not annualized
CALENDAR YEAR TOTAL RETURNS
Year	RDF		Year	RDF
2009	25.9	%	2006	16.8	%
2008	-35.1		2005	7.6
2007	-7.4		2004	13.4
TOP 10 POSITIONS % of Net Assets
iGATE Corporation				2.7	%
Neogen Corporation				2.4
Meadowbrook Insurance Group				2.4
CTS Corporation				2.3
Jos. A. Bank Clothiers				2.3
ChinaCast Education				2.2
Super Micro Computer				2.1
Olympic Steel				2.0
USA Mobility				1.9
ATC Technology				1.9
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Technology				20.7	%
Health				17.8
Industrial Products				16.9
Financial Intermediaries				13.9
Industrial Services				13.1
Consumer Products				3.9
Natural Resources				3.7
Consumer Services				3.4
Miscellaneous				2.7
Cash and Cash Equivalents				3.9

Royce Discovery Fund
Manager’s Discussion Royce Discovery Fund gained 25.9% in 2009, underperforming both its benchmark, the Russell Microcap index, which was up 27.5%, and the small-cap Russell 2000, which rose 27.2% for the same period. During the bearish first quarter, the Fund fell 13.5% versus respective declines of 15.2% and 15.0% for the Russell Microcap index and the Russell 2000. The market then rebounded fiercely. In the dynamic second quarter, RDF benefited from its concentration in micro-cap stocks, as the smallest of the small led by the widest margin during the early phase of the recovery. For the second quarter, the Fund gained 26.3% compared to the Russell Microcap index’s 25.0% gain and the Russell 2000’s 20.7% increase. In the equally bullish third quarter, the Fund’s performance began to slip, though it was still very strong on an absolute basis. Between July and September, RDF was up 15.0% versus respective gains of 20.9% and 19.3% for its benchmark and the Russell 2000. When the market quieted down in the fourth quarter, the Fund and the two indexes followed suit, with RDF up 0.2%, the Russell Microcap index down 0.5%, and the Russell 2000 gaining 3.9%.       The rally that began on March 9, 2009, though it stalled a bit in June and October, rolled on mostly unimpeded through the end of the year. From that early March low through December 31, 2009, RDF rose 77.3% versus gains of 86.0% for the Russell Microcap index and 84.5% for the Russell 2000. Of course, the bull’s advance remains a short-term event for now and in any case has not yet made back the losses incurred during 2008 or since the small-cap peak on July 13, 2007. (For more on the Fund’s results over recent market cycles, please see page 12.)
While we were somewhat chagrinned by RDF’s relative showing in 2009, we thought that its strong absolute return somewhat compensated. In addition, the Fund beat the Russell Microcap index for the three-year, five-year and since inception periods (10/3/03) ended December 31, 2009, while it underperformed the Russell 2000 over the three- and five-year periods. The Fund’s average annual total return since inception was 3.4%.       RDF’s proprietary model was created to select a diversified portfolio of statistically inexpensive micro-cap companies that we regard as possessing high quality based on metrics
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	iGATE Corporation	2.59	%
	ChinaCast Education	2.05
	Olympic Steel	1.85
	KapStone Paper and Packaging	1.75
	CTS Corporation	1.71
	*Includes dividends
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. Gross operating expenses reflect the Fund’s gross total annual operating expenses, including management fees, 12b-1 distribution and service fees, and other expenses. Net operating expenses reflect contractual fee waivers and/or reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the Fund’s net annual operating expense ratio at or below 1.49% through April 30, 2010 and at or below 1.99% through April 30, 2019. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

46  |  The Royce Funds 2009 Annual Report to Shareholders

Performance and Portfolio Review
that are built into it. This means that we do not make subjective investigations into industries that may look undervalued as our other portfolio managers do, a factor that helped some other Royce Funds in 2009. The model combines the utilization of traditional measures, such as returns on invested capital, low debt, P/E, price-to-book, etc., with custom proprietary features. The result is a strict focus on bottom-up fundamentals and pricing inefficiencies. The model is not designed to identify specific catalysts for growth, other then the eventual recognition of the qualities for which it screens. The portfolio is diversified in an effort to reduce downside risk from individual holdings and to capture the small return efficiency of a large selection of stocks. It remains important to note that we have not altered our proprietary model during the volatile markets of the past 18 months. In addition, we would expect to be out of sync with both the small-cap market as a whole and the micro-cap segment as a group from time to time and especially over short-term periods.       Moreover, we want to mention that security selection, as opposed to sector allocation, should be the primary determinant of returns. That said, each of the Fund’s equity sectors posted net gains during 2009. As was the case in the first half of the year, the Technology, Industrial Services, and Industrial Products sectors made the most significant contributions to performance for the calendar year.
			Financial Intermediaries was the worst performing sector, although it did positively contribute to performance for the year. At the industry level, commercial industrial services companies, IT Services businesses, and metal fabrication and distribution stocks were the leaders. A global information technology company based in California, iGATE Corporation, was the portfolio’s top performer in 2009. The company provides outsourcing of IT and business process outsourcing services. Hong Kong-based ChinaCast Education provides e-learning and training services in the Peoples Republic of China. Cardiac Science, the most significant detractor to 2009 results, manufactures and sells automated external defibrillators, while VAALCO Energy acquires, explores, and develops crude oil and natural gas properties.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
Cardiac Science	-1.36	%
VAALCO Energy	-1.20
Monarch Casino & Resort	-0.91
Amerisafe	-0.78
Atlantic Tele-Network	-0.71
*Net of dividends
ROYCE DISCOVERY FUND VS. RUSSELL 2000 AND RUSSELL MICROCAP INDICES Value of $10,000 Invested on 10/3/03
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*						$225 million
Weighted Average P/E Ratio**								14.0x
Weighted Average P/B Ratio								1.2x
U.S. Investments (% of Net Assets)								95.6%
Non-U.S. Investments (% of Net Assets)								0.0%
Fund Net Assets						$3 million
Turnover Rate								13%
Number of Holdings								99
Symbol Service Class								RYDFX
*	Geometrically calculated
**	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (26% of portfolio holdings as of 12/31/09).
MORNINGSTAR STATISTICAL MEASURES*
				Category			Best Quartile
		RDF		Median			Breakpoint
Sharpe Ratio			-0.10		0.01			0.09
Standard Deviation			19.97		20.84			19.75
*	Five years ended 12/31/09. Category Median and Best Quartile Breakpoint based on 314 small-cap objective funds (oldest class only) with at least five years of history.

The Royce Funds 2009 Annual Report to Shareholders  |  47

GLOBAL/INTERNATIONAL
Global/International Funds generally focus on non-U.S. based companies using our core approach to security selection.
AVERAGE ANNUAL TOTAL RETURNS
Through 12/31/09
July-Dec 2009*	28.48	%
One-Year	57.69
Three-Year	-4.99
Since Inception (12/29/06)	-4.99
ANNUAL EXPENSE RATIO
Gross Operating Expenses	3.52	%
Net Operating Expenses	1.79
*Not annualized
TOP 10 POSITIONS % of Net Assets
Hochschild Mining	2.8	%
Burckhardt Compression Holding	2.6
Semperit AG Holding	2.5
Pfeiffer Vacuum Technology	2.2
Asian Citrus Holdings	2.0
Lamprell	1.9
Partners Group Holding	1.8
Mayr-Melnhof Karton	1.8
Hunter Douglas	1.8
Societe Internationale de Plantations d’Heveas	1.7
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Industrial Products	22.0	%
Natural Resources	14.9
Consumer Products	14.0
Health	10.2
Financial Services	7.8
Financial Intermediaries	7.2
Technology	7.0
Consumer Services	3.2
Industrial Services	3.0
Cash and Cash Equivalents	10.7

Royce European Smaller-Companies Fund
Manager’s Discussion Stocks enjoyed a stellar year across the globe in 2009, but among smaller companies in the developed world, those in Europe really performed. Royce European Smaller-Companies Fund (RES) fared well on an absolute basis in 2009, gaining 57.7%, while somewhat underperforming its small-cap benchmark, the MSCI Europe Small Core index, which was up 64.6% for the same period. After outpacing the benchmark in the challenging year of 2008, we were not altogether surprised by the underperformance in 2009, especially within the context of RES’s high absolute return.       Quarterly showings were mildly disappointing on a relative basis in all but the final quarter of 2009. In the volatile first quarter, RES declined 8.5% compared to a loss of 6.8% for the European small-cap index. In the dramatic rally that spanned the second and third quarters, RES struggled to keep pace in the broad and undifferentiated move off the March lows for stocks. The Fund gained 34.1% and 21.7%, respectively, for the second and third quarters versus gains of 37.0% and 28.4% for its benchmark. In the more temperate fourth quarter, RES rose 5.6% versus a gain of 0.3% for the MSCI Europe Small Core index. We were encouraged that in the more historically normal fourth quarter, the Fund began to differentiate itself from the index as qualitative metrics were once again a major determinant of individual stock performance.       The Fund recently passed the three-year mark of operating history. While RES’s since inception (12/29/06) relative results demonstrated the importance of our disciplined and defensive approach—the Fund handily beat its European benchmark—its results were still negative. RES had the distinction of being launched just seven months prior to the most recent U.S. small-cap peak in July 2007 and struggled in what we now recognize was the beginning of a severe bear market. For more on the Fund’s results over recent market cycles, please see page 12.
From a sector standpoint, Natural Resources contributed most to the Fund’s performance by a wide margin. Within this sector, the precious metals and mining industry paralleled its sector, leading all of the Fund’s other industry groups. A combination of commodity price appreciation and improved operating conditions helped to renew investor enthusiasm. In addition, increasing global concern over the extent of stimulative measures by central banks to
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	Hochschild Mining	3.69	%
	Northam Platinum	3.18
	Ashmore Group	2.94
	Semperit AG Holding	2.52
	Sipef	2.32
	*Includes dividends
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 2% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. Gross operating expenses reflect total gross annual operating expenses, and include management fees, 12b-1 distribution and service fees, other expenses and acquired fund fees and expenses. Net operating expenses reflect contractual fee waives and/or reimbursements. All expense information is reported in as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive its fees and/or reimburse operating expenses, other than acquired fund fees and expenses, to the extent necessary to maintain the Fund’s net direct annual operating expense ratio at or below 1.69% through April 30, 2010 and at or below 1.99% through April 30, 2019. Acquired fund fees and expenses are those incurred indirectly as a result of investment in one or more acquired funds, including mutual funds, hedge funds, private equity funds and other pooled investment vehicles. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

48  |  The Royce Funds 2009 Annual Report to Shareholders

Performance and Portfolio Review
confront the financial crisis drove investors to seek inflation hedges in a broad array of hard assets. London-based Hochschild Mining, which mines and processes silver and, to a lesser extent, gold, was the Fund’s top individual contributor. Northam Platinum, which mines platinum group metals such as platinum, palladium and Rhodium, among others, was another significant contributor. The combination of increased demand from its industrial customers with substantially increased current production from a new mine helped its stock price to shine. We remain convinced that Northam has room to grow and believe that it still carries a relatively large valuation discount to its major competitors.       Industrial Products and Consumer Products were also large contributors, as both individuals and corporations began to loosen their purse strings following two years of constrained spending. Semperit is an Austrian manufacturer of industrial rubber and plastic products. Economic woes drove its stock down to five-year lows in 2008 before it quickly rebounded in 2009 as its highly robust business model allowed it to report successive quarters of record earnings. The company had just the right balance of disciplined financial management and diversified sales into a wide variety of industrial applications, which provided investors with what we regard as a reasonable margin of financial safety and broad participation in the resurgence in economic activity.       Investment management, an industry for which we hold a particular fondness, also contributed to performance, the result of investor risk aversion beginning to abate and assets moving in. London-based emerging market asset manager, Ashmore Group, recovered nicely from its first quarter lows as investors began allocating assets back into emerging markets, first in fixed income, which is Ashmore’s area of expertise.
			In the area of ideas that looked good at the time, the failure of EFG International, a Swiss bank holding company that offers private banking and asset management services, to execute on a number of aggressive growth initiatives resulted in a series of earnings disappointments and growing concern about balance sheet adequacy. We sold our shares in the first quarter as it became clear that there needed to be a substantial retrenchment in priorities prior to any meaningful improvement in business fundamentals. Natuzzi was another victim of the challenging economic environment, as this Italian furniture manufacturer struggled to adapt to the sudden contraction in demand. While well-capitalized, we made the decision in April to move on and sold our shares.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
EFG International	-1.13	%
Natuzzi ADR	-0.87
Takkt	-0.55
Begbies Traynor	-0.46
Egyptian Financial Group-Hermes Holding	-0.44
*Net of dividends
ROYCE EUROPEAN SMALLER-COMPANIES FUND VS. MSCI EUROPE SMALL CORE Value of $10,000 Invested on 12/29/06
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*		$1,085 million
Weighted Average P/E Ratio**			14.9x
Weighted Average P/B Ratio			2.3x
Fund Net Assets		$7 million
Turnover Rate			51%
Number of Holdings			74
Symbol Service Class			RISCX
*	Geometrically calculated
**	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (15% of portfolio holdings as of 12/31/09).
PORTFOLIO COUNTRY BREAKDOWN % of Net Assets
Germany			10.9	%
United Kingdom			10.9
Switzerland			10.8
France			9.0
Finland			6.9
South Africa			5.3
Netherlands			4.4
Austria			4.3
Belgium			4.0
Norway			3.4
Peru			2.8
Hong Kong			2.0
Italy			2.0
United Arab Emirates			1.9
Australia			1.7
Sweden			1.7
Egypt			1.6
Jersey			1.6
Denmark			1.5
Greece			1.3
Mexico			1.3

The Royce Funds 2009 Annual Report to Shareholders  |  49

GLOBAL/INTERNATIONAL
Global/International Funds generally focus on non-U.S. based companies using our core approach to security selection.
AVERAGE ANNUAL TOTAL RETURNS
Through 12/31/09
July-Dec 2009*	31.80	%
One-Year	61.89
Three-Year	3.59
Since Inception (12/29/06)	3.59
ANNUAL EXPENSE RATIO
Gross Operating Expenses	2.27	%
Net Operating Expenses	2.02
*Not annualized
TOP 10 POSITIONS % of Net Assets
Major Drilling Group International	3.2	%
Burckhardt Compression Holding	2.7
Industrias Bachoco ADR	2.6
Semperit AG Holding	2.5
Silver Standard Resources	2.4
Unit Corporation	2.1
Mayr-Melnhof Karton	2.0
Sipef	2.0
Pfeiffer Vacuum Technology	1.9
Trican Well Service	1.9
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Natural Resources	28.7	%
Industrial Products	19.8
Financial Services	10.3
Consumer Products	9.4
Health	9.1
Financial Intermediaries	4.9
Industrial Services	4.6
Technology	2.8
Consumer Services	0.8
Cash and Cash Equivalents	9.6

Royce Global Value Fund
Manager’s Discussion Royce Global Value Fund (RGV) gained 61.9% in 2009, easily outpacing its global small-cap benchmark, the MSCI WORLD Small Core index, which was up 44.1% for the same period. While the Fund’s advantage over its benchmark was satisfying, we were far happier with its strong absolute return. We also thought that the Fund’s solid results in the year’s bearish and bullish phases were noteworthy. RGV lost 5.7% in the first-quarter downturn versus a loss of 10.5% for its benchmark. In the highly dynamic second (+30.2% versus +28.1%) and third (+20.9% versus +22.2%) quarters, the Fund did very well, as it did in the quieter confines of the fourth quarter (+9.0% versus +2.8%). From the domestic small-cap low on March 9, 2009 through December 31, 2009, RGV rose 97.2%, while its global small-cap benchmark was up 91.8%. So while the Fund has ground to make up before fully recovering its losses from the domestic small-cap market peak on July 13, 2007, we were very happy with its calendar-year results. We were pleased that the Fund outperformed the MSCI WORLD Small Core index for the one-, three-year and since inception (12/29/06) periods.       As might be expected in a year of lofty returns, each of the Fund’s equity sectors made a positive contribution to performance. The leading sector by a comfortable margin was Natural Resources, home to the Fund’s two top-performing industry groups, energy services companies and precious metals and mining stocks. Oil prices recovered strongly, rallying roughly 30%, while natural gas prices languished, due to a slower economy and abundant domestic supplies. However, we remain confident about the prospects for natural gas as a widely available and relatively cheap energy source, based on its BTU-equivalency compared to oil, especially once environmental considerations have been factored in.
Our investments in precious metals and mining companies were based on the idea that commodity metals prices would also recover, and gold’s resurgence was one of the big stories in 2009. (In fact, gold is the only asset that has appreciated every year for the last 10.) We still see room to grow for many of our holdings in this industry. Our own analysis suggests that the prices of many of these stocks have not increased proportionally with the rise in commodity
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	Ivanhoe Mines	3.80	%
	Major Drilling Group International	2.91
	Duratex	2.81
	Semperit AG Holding	2.62
	Sipef	2.54
	*Includes dividends
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 2% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. Gross operating expenses reflect gross total annual operating expenses, and include management fees, 12b-1 distribution and service fees, other expenses and acquired fund fees and expenses. Net operating expenses reflect contractual fee waivers and/or reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses, other than acquired fund fees and expenses, to the extent necessary to maintain the Fund’s net direct annual operating expense ratio at or below 1.69% through April 30, 2010. Acquired fund fees and expenses are those incurred indirectly as a result of investment in one or more acquired funds, including mutual funds, hedge funds, private equity funds and other pooled investment vehicles. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

50  |  The Royce Funds 2009 Annual Report to Shareholders

Performance and Portfolio Review
prices. We think that equity investors will revalue these companies as they begin to produce earnings and free cash flow, attracting a broader investment audience.       After a long wait, the Mongolian government finally gave the go-ahead to Ivanhoe Mines to commence development of its copper mines in that nation, an event that seemed to attract other investors to the stock. We took some gains in July and August. Major Drilling International provides specialized contract drilling services for metals miners. We like its management and low-debt balance sheet, as well as the firm’s ability to remain profitable in the face of a near-60% decline in revenues during the worst days of the recession, a feat it accomplished mostly through effective cost cutting. Its stock price recovered when the outlook for its services in 2010 improved markedly, as inflation fears helped commodity prices for precious metals and key base industrial metals, such as copper, to surge.       Duratex recently merged with its number two rival, creating a dominant player in wood fiberboard, a vital and robust market in Brazil, arguably one of the world’s more important wood markets. Duratex also has the top brand in residential porcelain—that is, sinks and toilets—making the firm very well-positioned to benefit from the country’s booming residential housing markets. Semperit is an Austrian manufacturer of industrial rubber and plastic products. Economic woes drove its stock down to five-year lows in 2008 before it quickly rebounded in 2009 as its highly robust business model allowed it to report successive quarters of record earnings. Sipef operates profitable palm oil and rubber plantations. Demand for palm oil has sharply accelerated recently, driven by the expanding gastronomic tastes of Asia’s fast-emerging middle class. Its share price fell in 2008, the result of plummeting palm oil prices and deflated hype about the use of palm oil as a biofuel, so 2009’s recovery was especially strong. After paring our position in February and March, we bought more shares in August and September.
			Woodward Governor manufactures energy control systems for commercial and military aircraft. Its stock price nosedived as the company announced a large acquisition around the same time it revised downward its outlook for the year due to continuing softening conditions in aircraft manufacturing. We sold our shares in March, as the acquisition added more leverage than we could live with. In June, we parted ways with Kennametal, an industrial tools, components and materials specialist, though with greater reluctance. We thought that it was well-positioned to benefit from a pick-up in infrastructure rebuilding, but we saw more compelling values elsewhere in the market.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
Woodward Governor	-1.29	%
Kennametal	-0.86
Manitou BF	-0.63
Lincoln Electric Holdings	-0.55
Red Back Mining	-0.47
*Net of dividends
ROYCE GLOBAL VALUE FUND VS. MSCI WORLD SMALL CORE Value of $10,000 Invested on 12/29/06
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*		$1,206 million
Weighted Average P/E Ratio**		16.9x
Weighted Average P/B Ratio		2.2x
Fund Net Assets		$51 million
Turnover Rate		71%
Number of Holdings		65
Symbol Service Class		RIVFX
*	Geometrically calculated
**	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (28% of portfolio holdings as of 12/31/09).
PORTFOLIO COUNTRY BREAKDOWN % of Net Assets
Canada		21.1	%
United States		16.4
Hong Kong		5.9
Germany		4.7
Austria		4.6
Switzerland		4.5
Brazil		4.4
South Africa		4.3
Belgium		3.4
China		3.4
Mexico		3.1
France		2.9
United Kingdom		2.5
Peru		1.6
United Arab Emirates		1.6
Australia		1.4
Cayman Islands		1.2
Egypt		1.2
Denmark		0.9
Finland		0.9
South Korea		0.4

The Royce Funds 2009 Annual Report to Shareholders  |  51

GLOBAL/INTERNATIONAL
Global/International Funds generally focus on non-U.S. based companies using our core approach to security selection.
CUMULATIVE TOTAL RETURNS
Through 12/31/09
July-Dec 2009*	25.83	%
One-Year	50.31
Since Inception (6/30/08)	3.34
ANNUAL EXPENSE RATIO
Gross Operating Expenses	3.75	%
Net Operating Expenses	1.73
TOP 10 POSITIONS % of Net Assets
Major Drilling Group International	1.4	%
Enstar Group	1.4
Partners Group Holding	1.1
Industrias Bachoco ADR	1.1
Grupo Aeroportuario del Centro Norte ADR	1.0
Lamprell	1.0
Citic 1616 Holdings	1.0
Ritchie Bros. Auctioneers	1.0
Grupo Aeroportuario del Pacifico ADR	1.0
Value Partners Group	1.0
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets
Financial Services	13.4	%
Industrial Products	12.9
Natural Resources	12.8
Financial Intermediaries	12.2
Consumer Products	10.3
Industrial Services	9.9
Health	8.5
Technology	6.3
Consumer Services	2.3
Diversified Investment Companies	0.2
Cash and Cash Equivalents	11.2

Royce International Smaller-Companies Fund
Manager’s Discussion After a slow start in the year’s difficult first quarter, Royce International Smaller-Companies Fund (RIS) fully participated in the remarkable rebound for global equities in the last three quarters of 2009. RIS, which invests primarily in non-US securities, gained 50.3% in 2009, in line with its small-cap benchmark, the MSCI World ex-USA Small Core index, which climbed 50.8% for the same period. While we were most pleased with the Fund’s absolute performance, we were also happy to see it essentially keep pace with its benchmark in such a dynamically bullish period.      The first quarter brought a continuation of the woes for equity investors around the world that defined 2008’s second half. RIS’s performance was lackluster, especially compared to its international small-cap benchmark, with a decline of 10.3% compared to a loss of 8.9% for the benchmark. However, the rally that began in early March continued mostly unabated through the end of the year, and RIS held a performance advantage over its benchmark for the year’s final three quarters. A return of 33.2% in the second quarter (the year’s best) was followed by gains of 19.8% in the third and 5.1% in the fourth. In comparison, the MSCI World ex-USA Small Core index returned 34.1%, 22.9% and 0.5%, respectively, in 2009’s last three quarters. Since its inception on June 30, 2008, RIS had the preferred combination of positive absolute results and strong relative results, with an average annual total return of 3.3% versus a decline of 8.9% for the MSCI World ex-USA Small Core index over the same period.
The combination of our fundamental belief in a strong margin of safety coupled with a business buyer’s approach to valuation has thus far led us to companies with very specific profiles–strong balance sheets, the ability to generate free cash flow and solid potential to grow. No single market represented more than 15% of the Fund’s allocation, with our bottom-up approach leading us into more than 30 different countries.      Natural Resources and Financial Services led all sectors, each making outsized contributions to performance. Within these two sectors, both investment management companies and precious metals and mining stocks offered standout performance. Our investments in precious metals and mining companies have been based on the idea that certain commodity prices would rise over the long run, and the soaring price of gold was one of the big stories in 2009.
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	Claymore/AlphaShares China Small Cap Index ETF	2.45	%
	Major Drilling Group International	1.69
	Greenlight Capital Re Cl. A	1.58
	Lamprell	1.44
	Ashmore Group	1.43
	*Includes dividends
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 2% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. Gross operating expenses reflect total gross annual operating expenses, and include management fees, 12b-1 distribution and service fees, other expenses and acquired fund fees and expenses. Net operating expenses reflect contractual fee waives and/or reimbursements. All expense information is reported in as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive its fees and/or reimburse operating expenses, other than acquired fund fees and expenses, to the extent necessary to maintain the Fund’s net annual operating expense ratio at or below 1.69% through April 30, 2010 and at or below 1.99% through April 30, 2019. Acquired fund fees and expenses are those incurred indirectly as a result of investment in one or more acquired funds, including mutual funds, hedge funds, private equity funds and other pooled investment vehicles. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

52  |  The Royce Funds 2009 Annual Report to Shareholders

Performance and Portfolio Review
Our analysis suggests that the prices of many of these stocks have not yet increased proportionally with the rise in precious metals commodity prices. We also think that as equity investors begin to see these companies as earnings and cash flow entities, and not simply as asset plays, this could help to boost share prices. London-based emerging market asset manager, Ashmore Group, recovered nicely from it first quarter lows as investors allocated assets back into the emerging market universe, first in fixed income investments, Ashmore’s principal area of expertise. And while still a small component of the asset manager’s overall business, emerging market equities were an important driver of asset flows for the year. We think its valuation remains attractive and continue to be optimistic that emerging market funds will be major recipients of assets over the foreseeable future.      Much of the focus in international investing understandably centers on the most dynamic of these markets, China. First to fall into recession, the Chinese market was also the first to recover when stimulus policies implemented by Chinese monetary officials succeeded in reestablishing the strong growth trajectory of its economy. RIS participated in the recovery for Chinese stocks through an ETF (exchange-traded fund) that seeks to replicate the performance of publicly traded, mainland Chinese small-cap companies. The Claymore/AlphaShares China Small Cap ETF was the Fund’s top single contributor to 2009 performance and proved a very effective vehicle to access a portfolio of smaller businesses. We sold our position in November. Major Drilling Group International provides specialized contract drilling services for metals miners. We like its
			management and low-debt balance sheet, as well as its ability to remain profitable in the face of a near-60% decline in revenues during the worst days of the recession, a feat it accomplished mostly through effective cost cutting. Its stock price recovered when the outlook for its services in 2010 improved markedly, as inflation fears helped commodity prices for precious metals and key base industrial metals, such as copper, to surge.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
EFG International	-0.87	%
ABC-MART	-0.49
SPARX Group	-0.33
Mochida Pharmaceutical	-0.32
Natuzzi ADR	-0.28
*Net of dividends
Our initial attraction to EFG International was to its private banking business and other fee-based operations. At first encouraged by the company’s fast growth, we then became convinced that the firm could not manage this robust expansion effectively, which prompted us to sell our shares in March. ABC-Mart, a Japanese footwear and apparel retailer, failed to gain traction following a disappointing start to the year. While inventory management, a strong yen that lowered input costs and a strong balance sheet gave us comfort, the Japanese economic malaise led us to move on and sell our stake in November.
ROYCE INTERNATIONAL SMALLER-COMPANIES FUND VS. MSCI WORLD EX-U.S.A. SMALL CORE Value of $10,000 Invested on 6/30/08
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market Capitalization*	$1,302 million
Weighted Average P/E Ratio**	16.5x
Weighted Average P/B Ratio	2.4x
Fund Net Assets	$8 million
Turnover Rate	38%
Number of Holdings	195
Symbol
Service Class	RYGSX
*Geometrically calculated
**The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (19% of portfolio holdings as of 12/31/09).
PORTFOLIO COUNTRY BREAKDOWN
% of Net Assets
Canada	12.9	%
China	8.5
Switzerland	7.0
Hong Kong	6.3
Japan	6.0
United Kingdom	5.6
Mexico	4.8
Germany	3.6
France	3.2
United States	3.1
South Korea	3.1
South Africa	2.4
Singapore	2.3
Finland	2.2
Australia	2.0
Bermuda	1.9
Austria	1.6
United Arab Emirates	1.3
Brazil	1.2
Italy	1.2
Luxembourg	1.1
Cayman Islands	1.0
Belgium	0.9
Taiwan	0.9
Egypt	0.7
Greece	0.7
Peru	0.7
Jersey	0.6
Netherlands	0.6
Norway	0.6
British Virgin Islands	0.4
Denmark	0.3
Sweden	0.1

The Royce Funds 2009 Annual Report to Shareholders   |  53

AVERAGE ANNUAL TOTAL RETURNS
Through 12/31/09
July-Dec 2009*				16.02	%
One-Year				32.13
Three-Year				-6.64
Five-Year				2.64
Since Inception (12/31/03)				4.62
ANNUAL EXPENSE RATIOS
Gross Operating Expenses				2.20	%
Net Operating Expenses				1.74
*Not annualized
CALENDAR YEAR TOTAL RETURNS
Year	RFS		Year	RFS
2009	32.1	%	2006	24.8	%
2008	-35.4		2005	12.2
2007	-4.7		2004	15.1
TOP 10 POSITIONS % of Net Assets
Jones Lang LaSalle				2.5	%
Ashmore Group				2.4
Interactive Brokers Group Cl. A				2.3
T. Rowe Price Group				2.2
Enstar Group				2.2
Invesco				2.2
Kennedy-Wilson Holdings				2.1
Lazard Cl. A				2.0
Western Union				2.0
AllianceBernstein Holding L.P.				1.9
PORTFOLIO INDUSTRY BREAKDOWN
% of Net Assets
Investment Management				32.1	%
Securities Brokers				19.8
Insurance				11.5
Information and Processing				8.7
Banking				7.2
Securities Exchanges				3.0
Insurance Brokers				2.7
Real Estate				2.5
Other Financial Services				2.1
Diversified Financial Services				0.5
Other Financial Intermediaries				0.4
Specialty Finance				0.3
Miscellaneous				4.2
Cash & Cash Equivalents				5.0

Royce Financial Services Fund
Manager’s Discussion Royce Financial Services Fund (RFS) gained 32.1% in 2009, outpacing its benchmark, the Russell 2000, which was up 27.2%, and the financial services sector of the Russell 2500 index, which was up 9.1% for the same period. During the bearish first quarter, the Fund fell 8.7%, versus respective losses of 15.0% and 21.2% for the Russell 2000 and the financial services companies in the Russell 2500 index. Losing less in poor markets is always important to us, and, though typically short-term periods of any kind mean far less, doing so in one marked by steep double-digit declines provides something of an exception to that rule. The Fund then continued to outperform in the bullish second quarter, up 24.7% compared to gains of 20.7% for the Russell 2000 and 11.8% for the financial services sector in the Russell 2500 index.      While RFS’s performance cooled down a bit in the second half, it was nonetheless solid on an absolute basis. During the dynamic third quarter, the Fund gained 16.1%, while its benchmark rose 19.3% and the financial services companies in the Russell 2500 index climbed 21.9%. In the less robust fourth quarter, RFS was down, losing 0.1% compared to a gain of 3.9% for the Russell 2000 and 1.6% for the financial services component of the Russell 2500. After the poor results of 2008, the Fund’s performance in 2009 was very encouraging. As of the end of 2009, small-caps remained officially in a bear market, not
having passed their peak made on July 13, 2007. So while the Fund has a few more miles to travel to make those losses back, its recent results offered a promising start to that process. We were happy that the Fund beat its benchmark for the one-year, five-year and since inception (12/31/03) periods ended December 31, 2009. RFS also outpaced the financial services sector of the Russell 2500 index for the one-, three-, five-year and since inception periods.
	GOOD IDEAS THAT WORKED
	Top Contributors to 2009 Performance*
	Waddell & Reed Financial Cl. A	2.41	%
	Ashmore Group	2.23
	Cohen & Steers	1.68
	Jones Lang LaSalle	1.54
	Federated Investors Cl. B	1.47
	*Includes dividends
The industry driving RFS’s 2009 performance was the investment management group, an area in which the Fund was overweight, which helps to explain why RFS’s quarterly results were somewhat out of sync with its small-cap benchmark and more noticeably so with the financial services companies in the Russell 2500 index. We have been regular investors in asset management companies in RFS’s portfolio and for many years in other Royce-managed portfolios as well. We have what we believe is a deep knowledge of the business cultivated over many decades. When many of these stocks were suffering in the early stages of the subprime
Important Performance and Expense Information All performance information in this Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. Gross operating expenses reflect the Fund’s gross total annual operating expenses, including management fees, 12b-1 distribution and service fees, other expenses and acquired fund fees and expenses. Net operating expenses reflect contractual fee waivers and/or reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse expenses, other than acquired fund fees and expenses, to the extent necessary to maintain the Fund’s net direct annual operating expense ratio at or below 1.49% through April 30, 2010. Acquired fund fees and expenses are those incurred indirectly as a result of investment in one or more acquired funds, including mutual funds, hedge funds, private equity funds and other pooled investment vehicles. The sum of all contributions and detractions for all securities would approximate the Fund’s performance for 2009.

54  |   The Royce Funds 2009 Annual Report to Shareholders

Performance and Portfolio Review
implosion (regardless of their respective levels of exposure to toxic mortgage debt), we began to build positions in those companies in which we had the greatest confidence—our long-term perspective making us eager buyers or holders of asset management companies with what we thought were strong fundamentals and excellent businesses. Our thoughts were that many of these stocks were being unfairly oversold; that the crisis would create a demand for responsible and effective financial management; and that those companies that managed best through the difficulties created by the credit collapse and the recession would ultimately thrive. We placed no timetable on the recovery, and it is fair to say that the industry rebounded a little more quickly than we had expected, though we were obviously pleased that it did.      Waddell & Reed Financial received strong flows into its asset strategy and natural resource funds, which increased assets under management, generated distribution-scale benefits and brought attention to lesser-known products with strong track records. Ashmore Group is a London-based asset manager that specializes in emerging markets. We were drawn to its strong balance sheet, think that its area of focus will gain in importance in the global economy and were pleased to see its share price climb. Cohen & Steers runs open- and closed-end real estate oriented mutual funds and institutional separate accounts. Improved inflows to its mutual funds and a recovering REITs market helped the firm’s earnings to perk up, which seemed to bring more investors to the stock. The near-zero interest rate environment has pressured near-term profitability for money market specialists such as Federated Investors, but it also forced
			smaller competitors to exit the field, which helped Federated to gain market share. Additionally, in the real estate group, the stock price of Jones Lang LaSalle began to take off in the rally, something of an anomaly for stocks in that business. We built a position in between May and October 2008 as its share price began to tumble. The firm provides a range of real estate investment products and services in the public and private capital markets. Its recovery was based in part by aggressive cost cutting that helped the firm return to profitability.
GOOD IDEAS AT THE TIME
Top Detractors from 2009 Performance*
Wilmington Trust	-0.87	%
EFG International	-0.57
Bank of N.T. Butterfield & Son	-0.53
Boston Private Financial Holdings	-0.48
Berkley (W.R.)	-0.44
*Net of dividends
The stocks of many banks and insurance companies suffered while others thrived in 2009. We held our shares of Wilmington Trust in the hope that its strong fee-based businesses can ultimately win out over the negative effect of some of its loans. We were initially drawn to the private banking business and other fee-based operations of Swiss bank EFG International. At first encouraged by the company’s fast growth, we then became convinced that the firm could not manage this robust expansion effectively, which led us to sell our shares in March.
ROYCE FINANCIAL SERVICES FUND VS. RUSSELL INDICES Value of $10,000 Invested on 12/31/03
Includes reinvestment of distributions.

PORTFOLIO DIAGNOSTICS
Average Market
Capitalization*						$1,821 million
Weighted Average P/E Ratio**						16.8x
Weighted Average P/B Ratio						1.9x
U.S. Investments (% of Net Assets)						66.8%
Non-U.S. Investments
(% of Net Assets)						28.1%
Fund Net Assets						$14 million
Turnover Rate						34%
Number of Holdings						97
Symbol
Service Class						RYFSX
*Geometrically calculated
**The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (24% of portfolio holdings as of 12/31/09).
MORNINGSTAR STATISTICAL MEASURES*
				Category			Best Quartile
		RFS		Median			Breakpoint
Sharpe Ratio			0.08		-0.30			-0.14
Standard
Deviation			19.45		22.64			21.04
*	Five years ended 12/31/09. Category Median and Best Quartile Breakpoint based on 33 financial services objective funds (oldest class only) with at least five years of history.

The Royce Funds 2009 Annual Report to Shareholders   |  55

Schedules of Investments

Royce Pennsylvania Mutual Fund

	SHARES		VALUE
COMMON STOCKS – 95.4%
Consumer Products – 7.5%
Apparel, Shoes and Accessories - 2.5%
Carter’s a	50,000	$	1,312,500
Columbia Sportswear	313,588		12,242,476
Fossil a	139,969		4,697,360
Gildan Activewear a	56,200		1,370,156
Guess?	291,507		12,330,746
Hanesbrands a	37,000		892,070
K-Swiss Cl. A a	654,450		6,505,233
Movado Group	222,720		2,164,838
Steven Madden a	654,523		26,992,529
Timberland Company (The) Cl. A a	137,387		2,463,349
True Religion Apparel a,b	533,900		9,871,811
Volcom a,b	99,850		1,671,489
Warnaco Group (The) a	58,500		2,468,115
Weyco Group c	590,500		13,959,420
Wolverine World Wide	812,511		22,116,549
			121,058,641
Consumer Electronics - 0.7%
Dolby Laboratories Cl. A a	561,250		26,788,462
Harman International Industries	292,000		10,301,760
			37,090,222
Food/Beverage/Tobacco - 0.4%
Cal-Maine Foods	334,701		11,406,610
Industrias Bachoco ADR	52,253		1,199,729
J & J Snack Foods	137,749		5,504,450
J.M. Smucker Company (The)	300		18,525
National Beverage a	15,000		207,900
			18,337,214
Health, Beauty and Nutrition - 1.4%
Inter Parfums	1,140,450		13,879,276
NBTY a	600,700		26,154,478
Nu Skin Enterprises Cl. A	588,300		15,807,621
Nutraceutical International a,c	737,810		9,126,710
NutriSystem	118,466		3,692,585
Steiner Leisure a	17,105		680,095
			69,340,765
Home Furnishing and Appliances - 1.6%
American Woodmark	652,136		12,834,036
Ethan Allen Interiors c	1,587,541		21,304,800
Furniture Brands International a,b	1,029,400		5,620,524
La-Z-Boy a	957,300		9,123,069
Mohawk Industries a,b	379,900		18,083,240
National Presto Industries	3,012		329,001
Natuzzi ADR a	2,096,300		6,771,049
Stanley Furniture a,c	689,924		7,002,729
			81,068,448
Sports and Recreation - 0.9%
Arctic Cat a	11,619		106,430
Callaway Golf	257,962		1,945,034
Polaris Industries	102,224		4,460,033
RC2 Corporation a	182,400		2,690,400
Thor Industries	570,250		17,905,850

	SHARES		VALUE
Consumer Products (continued)
Sports and Recreation (continued)
Winnebago Industries a	1,399,450	$	17,073,290
			44,181,037
Total (Cost $336,971,147)			371,076,327
Consumer Services – 6.3%
Leisure and Entertainment - 0.8%
DreamWorks Animation SKG Cl. A a	427,300		17,070,635
International Speedway Cl. A	476,796		13,564,846
World Wrestling Entertainment Cl. A	652,901		10,008,972
			40,644,453
Online Commerce - 0.0%
1-800-FLOWERS.COM Cl. A a	96,500		255,725
Restaurants and Lodgings - 0.3%
Ark Restaurants	120,500		1,741,225
Bob Evans Farms	5,855		169,502
CEC Entertainment a	347,181		11,082,018
DineEquity a,b	31,890		774,608
			13,767,353
Retail Stores - 5.1%
Abercrombie & Fitch Cl. A	17,800		620,330
American Eagle Outfitters	476,000		8,082,480
America’s Car-Mart a	436,600		11,495,678
Big Lots a	125,017		3,622,993
BJ’s Wholesale Club a	208,300		6,813,493
Buckle (The) b	803,002		23,511,899
CarMax a,b	495,000		12,003,750
Cash America International	46,600		1,629,136
Cato Corporation (The) Cl. A	1,321,302		26,505,318
Charming Shoppes a	3,523,700		22,798,339
China Nepstar Chain Drugstore ADR	77,000		561,330
Christopher & Banks	50		381
Dollar Tree a	12,400		598,920
Dress Barn (The) a,b	2,136,904		49,362,482
DSW Cl. A a,b	33,500		866,980
EZCORP Cl. A a	137,700		2,369,817
Family Dollar Stores	26,115		726,781
GameStop Corporation Cl. A a	67,300		1,476,562
Gymboree Corporation a	7,100		308,779
Jos. A. Bank Clothiers a,b	123,239		5,199,453
Men’s Wearhouse (The)	198,543		4,181,316
Penske Automotive Group a,b	389,200		5,908,056
Pier 1 Imports a	2,548,800		12,973,392
Regis Corporation	593,200		9,236,124
Rent-A-Center a	75,700		1,341,404
Ross Stores	17,240		736,320
Tiffany & Co.	737,000		31,691,000
Tuesday Morning a	370,000		954,600
Urban Outfitters a	200,000		6,998,000
			252,575,113
Other Consumer Services - 0.1%
First Cash Financial Services a	59,400		1,318,086
Total (Cost $244,859,157)			308,560,730

56  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Diversified Investment Companies – 0.0%
Exchange Traded Funds - 0.0%
†UltraShort 20+ Year Treasury ProShares a,b	5,700	$	285,000
Total (Cost $296,062)			285,000
Financial Intermediaries – 7.8%
Banking - 0.0%
Fifth Third Bancorp	32,600		317,850
Insurance - 5.1%
Alleghany Corporation a	88,170		24,334,920
American Safety Insurance Holdings a	358,640		5,182,348
Amerisafe a	395,290		7,103,361
Aspen Insurance Holdings	746,209		18,991,019
Baldwin & Lyons Cl. B	314,727		7,745,431
Berkley (W.R.)	31,200		768,768
CNA Surety a	761,395		11,337,172
CRM Holdings a	6,244		2,067
E-L Financial	32,500		13,984,152
EMC Insurance Group	92,571		1,991,202
Enstar Group a	159,910		11,676,628
Erie Indemnity Cl. A	508,180		19,829,184
Fidelity National Financial Cl. A	722,400		9,723,504
Greenlight Capital Re Cl. A a	36,400		857,948
Harleysville Group	304,988		9,695,569
Horace Mann Educators	16,539		206,737
Leucadia National a	300,000		7,137,000
Markel Corporation a	9,182		3,121,880
Max Capital Group	586,944		13,088,851
Meadowbrook Insurance Group	1,050,406		7,773,004
Montpelier Re Holdings	829,821		14,372,500
PartnerRe	8,200		612,212
ProAssurance Corporation a	276,154		14,832,231
Reinsurance Group of America	323,100		15,395,715
RenaissanceRe Holdings	171		9,089
RLI	65,354		3,480,100
State Auto Financial	83,744		1,549,264
Stewart Information Services	116,600		1,315,248
Transatlantic Holdings	217		11,308
Validus Holdings	469,300		12,642,942
Wesco Financial	2,376		814,968
White Mountains Insurance Group	7,550		2,511,583
Zenith National Insurance	335,713		9,990,819
			252,088,724
Securities Brokers - 2.2%
DundeeWealth	157,500		2,078,214
†FBR Capital Markets a,b	115,000		710,700
GFI Group	580,000		2,650,600
Interactive Brokers Group Cl. A a,b	738,300		13,082,676
International Assets Holding Corporation a	37,917		551,313
Jefferies Group a	721,300		17,116,449
KBW a,b	208,200		5,696,352
Knight Capital Group Cl. A a	1,521,113		23,425,140
Lazard Cl. A	677,600		25,728,472
Raymond James Financial	50,000		1,188,500
Sanders Morris Harris Group	134,476		739,618

	SHARES		VALUE
Financial Intermediaries (continued)
Securities Brokers (continued)
Stifel Financial a	283,799	$	16,812,253
			109,780,287
Securities Exchanges - 0.3%
Singapore Exchange	57,300		337,769
TMX Group	411,100		13,022,654
			13,360,423
Other Financial Intermediaries - 0.2%
NASDAQ OMX Group (The) a	408,400		8,094,488
Total (Cost $357,476,033)			383,641,772
Financial Services – 7.0%
Diversified Financial Services - 0.1%
Discover Financial Services	150,000		2,206,500
†World Acceptance a,b	126,760		4,541,811
			6,748,311
Information and Processing - 2.1%
Equifax	25,000		772,250
FactSet Research Systems	289,200		19,049,604
Fiserv a	9,300		450,864
Global Payments	91		4,901
Interactive Data	517,200		13,085,160
MoneyGram International a	2,310,000		6,652,800
Morningstar a	494,800		23,918,632
MSCI Cl. A a	339,500		10,796,100
SEI Investments	1,661,300		29,105,976
Western Union	27,600		520,260
			104,356,547
Insurance Brokers - 0.9%
Brown & Brown	1,447,955		26,019,751
Gallagher (Arthur J.) & Co.	718,900		16,182,439
			42,202,190
Investment Management - 3.9%
Affiliated Managers Group a	170,865		11,507,758
AGF Management Cl. B	846,600		13,761,247
AllianceBernstein Holding L.P.	1,323,550		37,191,755
CI Financial	480,000		10,097,050
Cohen & Steers	999,970		22,839,315
Eaton Vance	170,500		5,184,905
Evercore Partners Cl. A	104,500		3,176,800
Federated Investors Cl. B	1,605,358		44,147,345
GAMCO Investors Cl. A	145,200		7,011,708
†Teton Advisors Cl. A	891		11,138
Waddell & Reed Financial Cl. A	910,700		27,812,778
Westwood Holdings Group	243,013		8,831,092
			191,572,891
Specialty Finance - 0.0%
Portfolio Recovery Associates a	9,935		445,883
Other Financial Services - 0.0%
Heartland Payment Systems	1,400		18,382
Total (Cost $390,703,168)			345,344,204

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  | 57

Schedules of Investments

Royce Pennsylvania Mutual Fund (continued)

	SHARES		VALUE
Health – 7.4%
Commercial Services - 0.2%
Owens & Minor	270,000	$	11,591,100
PAREXEL International a	56,900		802,290
			12,393,390
Drugs and Biotech - 1.4%
Celera Corporation a,b	446,300		3,083,933
Emergent Biosolutions a	989,155		13,442,617
Endo Pharmaceuticals Holdings a	770,730		15,807,672
Hi-Tech Pharmacal a	530,400		14,877,720
Lexicon Pharmaceuticals a	1,522,400		2,588,080
Perrigo Company	397,533		15,837,715
Regeneron Pharmaceuticals a	100,000		2,418,000
WuXi PharmaTech Cayman ADR a	28,900		461,244
			68,516,981
Health Services - 3.4%
Advisory Board (The) a	717,179		21,988,708
Air Methods a	23,900		803,518
†Almost Family a,b	300,541		11,880,386
†Amedisys a,b	120,200		5,836,912
Covance a	200,000		10,914,000
Cross Country Healthcare a	240,700		2,385,337
†DaVita a	2,700		158,598
eResearch Technology a	100,820		605,928
†Gentiva Health Services a	605,003		16,341,131
Healthcare Services Group	434,850		9,331,881
HealthSouth Corporation a	915,000		17,174,550
Hooper Holmes a	2,392,970		2,512,619
ICON ADR a	188,300		4,091,759
Lincare Holdings a,b	362,804		13,467,284
On Assignment a	85,000		607,750
Pharmaceutical Product Development	1,290,600		30,251,664
Res-Care a	188,627		2,112,622
U.S. Physical Therapy a,c	905,675		15,333,078
			165,797,725
Medical Products and Devices - 2.4%
C.R. Bard	2,800		218,120
CONMED Corporation a	40,384		920,755
Dentsply International	5,500		193,435
Hill-Rom Holdings	8,875		212,911
Home Diagnostics a,c	878,647		5,359,747
ICU Medical a	3,768		137,306
IDEXX Laboratories a,b	506,597		27,072,544
Immucor a	40,309		815,854
†Kinetic Concepts a	3,200		120,480
Merit Medical Systems a	427,669		8,249,735
Obagi Medical Products a,c	1,143,524		13,722,288
Patterson Companies a	372,535		10,423,529
Schein (Henry) a	79,700		4,192,220
STERIS Corporation	586,831		16,413,663
†SurModics a,b	330,500		7,489,130
Techne Corporation	145,577		9,980,759
Thoratec Corporation a	366,600		9,868,872

	SHARES		VALUE
Health (continued)
Medical Products and Devices (continued)
Young Innovations	111,350	$	2,759,253
			118,150,601
Total (Cost $309,497,925)			364,858,697
Industrial Products – 14.8%
Automotive - 0.9%
Dorman Products a	528,062		8,269,451
Gentex Corporation	517,000		9,228,450
Harley-Davidson	50,000		1,260,000
†Hertz Global Holdings a,b	83,985		1,001,101
Strattec Security a	150,000		2,775,000
Superior Industries International	443,600		6,787,080
WABCO Holdings b	473,822		12,219,869
Wonder Auto Technology a	44,877		527,754
			42,068,705
Building Systems and Components - 2.1%
AAON	614,778		11,982,023
Apogee Enterprises	9,900		138,600
Armstrong World Industries a	818,964		31,882,269
Drew Industries a	621,258		12,828,978
NCI Building Systems a	394,771		714,535
Preformed Line Products	241,085		10,559,523
Quanex Building Products	36,800		624,496
Simpson Manufacturing	1,213,100		32,620,259
			101,350,683
Construction Materials - 0.6%
Ash Grove Cement	50,018		7,302,628
Owens Corning a	850,700		21,811,948
			29,114,576
Industrial Components - 1.8%
Bel Fuse Cl. A	73,105		1,421,161
CLARCOR	575,400		18,665,976
Donaldson Company	210,900		8,971,686
FARO Technologies a	13,087		280,585
GrafTech International a	1,800,600		27,999,330
Hubbell Cl. B	15,700		742,610
PerkinElmer	944,220		19,441,490
Powell Industries a	317,000		9,995,010
			87,517,848
Machinery - 3.1%
Astec Industries a,b	33,800		910,572
Briggs & Stratton	252,600		4,726,146
Cascade Corporation	230,500		6,336,445
Columbus McKinnon a	103,200		1,409,712
Flow International a	20,000		61,600
Franklin Electric	539,700		15,694,476
FreightCar America	9,000		178,470
Gorman-Rupp Company	39,787		1,099,713
Hollysys Automation Technologies a,b	99,455		1,194,454
Lincoln Electric Holdings	500,626		26,763,466
Nordson Corporation	458,332		28,040,752
Regal-Beloit	18,425		956,994
Rofin-Sinar Technologies a	1,198,380		28,293,752

58  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Industrial Products (continued)
Machinery (continued)
Sun Hydraulics	356,000	$	9,345,000
Tennant Company	645,700		16,910,883
Wabtec Corporation	316,800		12,938,112
			154,860,547
Metal Fabrication and Distribution - 2.8%
Allegheny Technologies	262,700		11,761,079
Carpenter Technology	137,500		3,705,625
Castle (A.M.) & Co.	61,700		844,673
Commercial Metals	129,200		2,021,980
Encore Wire	352,579		7,428,840
Foster (L.B.) Company Cl. A a	22,000		655,820
†Fushi Copperweld a	102,300		1,035,276
Gibraltar Industries a	615,120		9,675,838
Haynes International	152,615		5,031,717
Insteel Industries	223,708		2,908,204
Kennametal	767,671		19,898,032
Reliance Steel & Aluminum	667,900		28,866,638
Schnitzer Steel Industries Cl. A	406,810		19,404,837
Sims Metal Management ADR	1,042,515		20,329,042
Steel Dynamics	296,521		5,254,352
Universal Stainless & Alloy Products a	50,000		943,000
			139,764,953
Miscellaneous Manufacturing - 1.1%
Acuity Brands	11,700		416,988
†AZZ a	133,226		4,356,490
Brady Corporation Cl. A	475,700		14,275,757
Crane Company	37,500		1,148,250
Harsco Corporation	27,200		876,656
Matthews International Cl. A	3,890		137,823
Mettler-Toledo International a	181,500		19,055,685
Raven Industries	370,135		11,759,189
Steelcase Cl. A	100,000		636,000
Teleflex	50,000		2,694,500
			55,357,338
Paper and Packaging - 0.5%
AptarGroup	55,732		1,991,862
Greif Cl. A	425,900		22,990,082
†Orchids Paper Products a,b	45,100		902,902
Silgan Holdings	4,800		277,824
			26,162,670
Pumps, Valves and Bearings - 1.2%
Gardner Denver	580,956		24,719,678
Graco	595,449		17,011,978
IDEX Corporation	266,900		8,313,935
Kaydon Corporation	148,931		5,325,772
Robbins & Myers	201,988		4,750,758
			60,122,121
Specialty Chemicals and Materials - 0.6%
Albemarle Corporation	18,300		665,571
Balchem Corporation	32,825		1,099,966
Cabot Corporation	447,570		11,739,761
International Flavors & Fragrances	2,500		102,850
Lubrizol Corporation (The)	3,940		287,423
Olin Corporation	51,400		900,528

	SHARES		VALUE
Industrial Products (continued)
Specialty Chemicals and Materials (continued)
OM Group a	14,800	$	464,572
Quaker Chemical	7,588		156,616
Rogers Corporation a	12,700		384,937
Schulman (A.)	9,257		186,806
Sensient Technologies	50,000		1,315,000
Westlake Chemical	376,000		9,373,680
			26,677,710
Other Industrial Products - 0.1%
Herman Miller	5,572		89,040
MTS Systems	206,432		5,932,856
			6,021,896
Total (Cost $654,414,067)			729,019,047
Industrial Services – 13.9%
Advertising and Publishing - 0.4%
Harte-Hanks	26,100		281,358
Scholastic Corporation	552,165		16,471,082
ValueClick a	254,100		2,571,492
			19,323,932
Commercial Services - 8.0%
Administaff	616,093		14,533,634
ATC Technology a	704,715		16,807,453
Barrett Business Services	146,200		1,796,798
Brink’s Company (The)	577,615		14,059,149
CBIZ a	4,300		33,110
Cintas Corporation	630,000		16,411,500
Convergys Corporation a	279,500		3,004,625
Copart a	713,600		26,139,168
Corinthian Colleges a	611,400		8,418,978
Corporate Executive Board	629,068		14,355,332
CRA International a	446,874		11,909,192
Electro Rent	77,074		889,434
Exponent a	323,893		9,017,181
Forrester Research a	298,200		7,738,290
FTI Consulting a,b	176,400		8,319,024
Gartner a	880,000		15,875,200
Heidrick & Struggles International	17,849		557,603
Hewitt Associates Cl. A a	702,500		29,687,650
ITT Educational Services a	1,311		125,804
Jackson Hewitt Tax Service a,b	2,500		11,000
Kelly Services Cl.A a	4,963		59,209
Korn/Ferry International a	119,448		1,970,892
Landauer	164,700		10,112,580
LECG Corporation a	1,054,448		3,152,799
Lincoln Educational Services a	12,391		268,513
Manpower	430,266		23,483,918
ManTech International Cl. A a	616,486		29,763,944
MAXIMUS	529,885		26,494,250
Monster Worldwide a,b	295,600		5,143,440
Navigant Consulting a	10,000		148,600
†Rentrak Corporation a,b	56,100		991,287
Resources Connection a	15,000		318,300
Ritchie Bros. Auctioneers	1,252,300		28,089,089
Robert Half International	316,500		8,460,045

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  | 59

Schedules of Investments

Royce Pennsylvania Mutual Fund (continued)

	SHARES		VALUE
Industrial Services (continued)
Commercial Services (continued)
Rollins	130	$	2,506
Sotheby’s	875,472		19,680,610
TrueBlue a	199,040		2,947,782
United Rentals a	23,000		225,630
Universal Technical Institute a	774,800		15,650,960
Viad Corporation	278,366		5,742,691
Watson Wyatt Worldwide Cl. A	330,265		15,694,193
			398,091,363
Engineering and Construction - 1.5%
Comfort Systems USA	553,491		6,830,079
Desarrolladora Homex ADR a,b	142,400		4,787,488
EMCOR Group a	60,000		1,614,000
Integrated Electrical Services a	656,156		3,838,513
KBR	1,088,200		20,675,800
NVR a	44,833		31,863,261
Skyline Corporation	183,400		3,374,560
			72,983,701
Food, Tobacco and Agriculture - 0.6%
Harbinger Group a,c	1,009,600		7,087,392
Intrepid Potash a	247,803		7,228,414
Sanderson Farms	351,632		14,824,805
Zhongpin a	58,700		916,307
			30,056,918
Industrial Distribution - 1.0%
Applied Industrial Technologies	634,100		13,994,587
Mine Safety Appliances	350,200		9,290,806
MSC Industrial Direct Cl. A	427,100		20,073,700
Pool Corporation	261,400		4,987,512
			48,346,605
Printing - 0.0%
Courier Corporation	2,506		35,711
Transportation and Logistics - 2.4%
Arkansas Best	192,935		5,678,077
Dynamex a	12,817		231,988
Expeditors International of Washington	34,000		1,180,820
Forward Air	708,900		17,757,945
Hub Group Cl. A a	25,000		670,750
Landstar System	754,800		29,263,596
Pacer International a,b	823,201		2,601,315
Patriot Transportation Holding a	80,800		7,632,368
Star Bulk Carriers	555,077		1,565,317
Tidewater	502,978		24,117,795
Universal Truckload Services	621,343		11,246,308
UTI Worldwide	1,095,500		15,687,560
			117,633,839
Total (Cost $668,453,562)			686,472,069
Natural Resources – 11.4%
Energy Services - 6.3%
Atwood Oceanics a	7,700		276,045
Calfrac Well Services	186,000		3,708,084
CARBO Ceramics	469,900		32,033,083
CE Franklin a	258,653		1,756,254

	SHARES		VALUE
Natural Resources (continued)
Energy Services (continued)
Ensign Energy Services	2,230,000	$	31,983,554
Exterran Holdings a,b	408,100		8,753,745
Helmerich & Payne	537,464		21,434,064
ION Geophysical a	816,700		4,834,864
Lufkin Industries	167,626		12,270,223
Major Drilling Group International	266,400		7,328,324
Oil States International a	918,561		36,090,262
Pason Systems	2,297,000		25,586,892
Patterson-UTI Energy	435,266		6,681,333
Pioneer Drilling a	890,775		7,037,123
Rowan Companies a	604,500		13,685,880
RPC	547,173		5,690,599
SEACOR Holdings a	229,600		17,507,000
ShawCor Cl. A	197,700		5,548,114
Superior Well Services a,b	513		7,316
T-3 Energy Services a	283,200		7,221,600
Trican Well Service	1,523,600		20,482,685
Unit Corporation a	848,180		36,047,650
Willbros Group a	254,500		4,293,415
			310,258,109
Oil and Gas - 0.8%
Bill Barrett a	16,743		520,875
Cimarex Energy	372,007		19,705,211
Frontier Oil	496,407		5,976,740
†Gran Tierra Energy a,b	214,100		1,226,793
St. Mary Land & Exploration	423,300		14,493,792
			41,923,411
Precious Metals and Mining - 3.5%
Agnico-Eagle Mines	646,500		34,911,000
AMCOL International	3,643		103,534
Cliffs Natural Resources	26,000		1,198,340
Eldorado Gold a,b	2,030,650		28,766,710
First Quantum Minerals	16,000		1,227,863
Hecla Mining a,b	2,961,200		18,300,216
International Coal Group a	1,109,640		4,283,210
Ivanhoe Mines a	1,829,700		26,731,917
Pan American Silver a	716,300		17,055,103
Randgold Resources ADR	251,100		19,867,032
Red Back Mining a	391,700		5,617,918
Silver Standard Resources a	679,000		14,849,730
			172,912,573
Real Estate - 0.8%
Jones Lang LaSalle	219,900		13,281,960
PICO Holdings a	291,000		9,524,430
St. Joe Company (The) a,b	496,024		14,330,133
Tejon Ranch a,b	38,900		1,136,658
			38,273,181
Other Natural Resources - 0.0%
†Magma Energy a	200,000		346,130
Total (Cost $388,659,591)			563,713,404

60  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Technology – 14.5%
Aerospace and Defense - 1.3%
Alliant Techsystems a,b	9,210	$	812,967
BE Aerospace a	12,800		300,800
Ceradyne a	36,233		696,036
Curtiss-Wright	272,325		8,529,219
FLIR Systems a	554,538		18,144,483
HEICO Corporation	511,700		22,683,661
HEICO Corporation Cl. A	96,900		3,484,524
Integral Systems a	281,518		2,437,946
Teledyne Technologies a,b	147,700		5,665,772
			62,755,408
Components and Systems - 3.3%
AAC Acoustic Technologies Holdings	686,800		1,135,037
Benchmark Electronics a	900,000		17,019,000
Celestica a	8,600		81,184
Diebold	619,600		17,627,620
Dionex Corporation a	311,526		23,012,425
Energy Conversion Devices a,b	478,200		5,054,574
Intermec a	63,000		810,180
Lexmark International Cl. A a	291,000		7,560,180
Logitech International a,b	607,100		10,381,410
Nam Tai Electronics a	311,397		1,628,606
Newport Corporation a	290,000		2,665,100
Plexus Corporation a	968,900		27,613,650
Rimage Corporation a,c	648,314		11,241,765
†Stratasys a,b	209,335		3,617,309
Synaptics a,b	361,852		11,090,764
Technitrol	1,584,739		6,941,157
Teradata Corporation a	215,400		6,770,022
Thomas & Betts a	41,650		1,490,653
VTech Holdings	93,600		894,800
Western Digital a	29,100		1,284,765
Zebra Technologies Cl. A a	94,122		2,669,300
			160,589,501
Distribution - 0.7%
Anixter International a	71,230		3,354,933
Arrow Electronics a	282,400		8,361,864
ScanSource a	19,700		525,990
Tech Data a	473,391		22,088,424
			34,331,211
Internet Software and Services - 0.2%
EarthLink	1,162,764		9,662,569
Support.com a	15,000		39,600
			9,702,169
IT Services - 1.8%
†AsiaInfo Holdings a,b	11,200		341,264
Black Box	270,700		7,671,638
Jack Henry & Associates	137,369		3,175,972
Sapient Corporation a	1,945,926		16,092,808
SRA International Cl. A a	1,088,480		20,789,968
Sykes Enterprises a,b	20,300		517,041
Syntel	606,267		23,056,334
Total System Services	1,008,500		17,416,795
Yucheng Technologies a	137,125		1,169,676
			90,231,496

	SHARES		VALUE
Technology (continued)
Semiconductors and Equipment - 3.2%
Advanced Energy Industries a	74,362	$	1,121,379
Analog Devices	48,000		1,515,840
Cabot Microelectronics a	238,976		7,876,649
Cirrus Logic a	1,501,900		10,242,958
Cognex Corporation	888,835		15,750,156
Coherent a	658,156		19,566,978
Cymer a	9,000		345,420
Diodes a	948,700		19,400,915
Exar Corporation a	824,441		5,861,775
Fairchild Semiconductor International a	1,170,300		11,691,297
GSI Group a	94,320		80,172
International Rectifier a	515,800		11,409,496
IXYS Corporation a	266,600		1,978,172
Lam Research a	45,750		1,793,857
MEMC Electronic Materials a	266,200		3,625,644
Micrel	986,308		8,087,726
MKS Instruments a	546,820		9,520,136
OmniVision Technologies a	330,600		4,803,618
Sanmina-SCI Corporation a	77,318		852,818
Supertex a	335,600		10,000,880
Tessera Technologies a	77,100		1,794,117
TTM Technologies a	300,000		3,459,000
Varian a	92		4,742
Varian Semiconductor Equipment Associates a	120,879		4,337,138
Verigy a	203,300		2,616,471
			157,737,354
Software - 2.4%
ACI Worldwide a	435,731		7,472,787
ANSYS a	460,400		20,008,984
Autodesk a	36,000		914,760
Blackbaud	674,291		15,933,496
†Blackboard a	238,300		10,816,437
CA	11,000		247,060
Epicor Software a	4,584		34,930
Fair Isaac	625,400		13,327,274
Manhattan Associates a	400,000		9,612,000
MICROS Systems a	32,401		1,005,403
National Instruments	893,100		26,301,795
NCR Corporation a	616,400		6,860,532
Pervasive Software a,c	1,461,500		7,044,430
SkillSoft ADR a	79,100		828,968
			120,408,856
Telecommunications - 1.6%
ADTRAN	932,569		21,029,431
Cogo Group a,b	82,101		605,084
Comtech Telecommunications a	881,404		30,893,210
Digi International a	388,644		3,544,433
Globecomm Systems a	56,270		440,032
Harmonic a	390,100		2,469,333
NETGEAR a	485,735		10,535,592
Plantronics	95,581		2,483,195
Premiere Global Services a	516,500		4,261,125

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  | 61

Schedules of Investments

Royce Pennsylvania Mutual Fund (continued)
	SHARES		VALUE
Technology (continued)
Telecommunications (continued)
Tekelec a	184,800	$	2,823,744
			79,085,179
Total (Cost $676,104,516)			714,841,174
Utilities – 0.0%
†China Natural Gas a,b	12,000		133,440
EQT Corporation	3,930		172,606
UGI Corporation	9,000		217,710
Total (Cost $492,925)			523,756
Miscellaneous d – 4.8%
Total (Cost $209,549,599)			237,507,430
TOTAL COMMON STOCKS
(Cost $4,237,477,752)			4,705,843,610
REPURCHASE AGREEMENT – 4.4%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10,
maturity value $216,867,120 (collateralized
by obligations of various U.S. Government
Agencies, due 2/1/10-2/19/10, valued at
$222,290,000)
(Cost $216,867,000)			216,867,000
COLLATERAL RECEIVED FOR SECURITIES
LOANED – 2.1%
Money Market Funds
Federated Government Obligations Fund
(7 day yield-0.0582%)
(Cost $104,626,220)			104,626,220
TOTAL INVESTMENTS – 101.9%
(Cost $4,558,970,972)			5,027,336,830
LIABILITIES LESS CASH
AND OTHER ASSETS – (1.9)%			(92,922,371	)
NET ASSETS – 100.0%		$	4,934,414,459

Royce Micro-Cap Fund
	SHARES		VALUE
COMMON STOCKS – 87.7%
Consumer Products – 7.6%
Apparel, Shoes and Accessories - 2.3%
Fuqi International a,b	113,901	$	2,044,523
LaCrosse Footwear c	522,669		6,648,350
True Religion Apparel a,b	198,300		3,666,567
Van De Velde	83,208		3,505,229
Volcom a,b	528,000		8,838,720
			24,703,389
Food/Beverage/Tobacco - 2.8%
Anglo-Eastern Plantations	246,611		1,547,067
Asian Citrus Holdings	11,610,000		9,395,482
†Binggrae Company a	97,000		4,290,427
HQ Sustainable Maritime Industries a	59,966		422,161
Sipef	147,000		7,332,353
Societe Internationale de Plantations d’Heveas	106,000		6,958,723
			29,946,213
Health, Beauty and Nutrition - 0.2%
Nutraceutical International a	223,100		2,759,747
Home Furnishing and Appliances - 0.6%
AS Creation Tapeten	127,212		4,617,805
Lumber Liquidators a,b	87,600		2,347,680
			6,965,485
Sports and Recreation - 1.5%
Arctic Cat a,c	1,013,800		9,286,408
Piscines Desjoyaux	277,100		2,607,712
RC2 Corporation a	285,600		4,212,600
			16,106,720
Other Consumer Products - 0.2%
Shamir Optical Industry	221,700		1,773,600
Total (Cost $78,543,254)			82,255,154
Consumer Services – 4.1%
Direct Marketing - 0.4%
Manutan International	77,000		4,413,740
Leisure and Entertainment - 0.5%
Multimedia Games a	901,900		5,420,419
Online Commerce - 1.1%
CryptoLogic c	751,575		2,750,765
†GS Home Shopping	57,000		4,180,958
†Vitacost.com a	450,200		4,691,084
			11,622,807
Retail Stores - 2.1%
Buckle (The) b	183,275		5,366,292
Cache a,c	708,800		3,239,216
Cato Corporation (The) Cl. A	243,250		4,879,595
Jos. A. Bank Clothiers a	118,720		5,008,797
Lewis Group	420,000		3,004,982
Stein Mart a	78,320		834,891
			22,333,773
Total (Cost $31,714,395)			43,790,739

62  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Financial Intermediaries – 3.9%
Banking - 1.0%
Bancorp (The) a	373,567	$	2,562,670
BCB Holdings a	3,320,860		5,176,121
Canadian Western Bank	165,000		3,461,395
			11,200,186
Insurance - 1.4%
American Physicians Service Group	80,000		1,845,600
American Safety Insurance Holdings a	298,000		4,306,100
Argo Group International Holdings a	103,605		3,019,050
Navigators Group a	75,900		3,575,649
United Fire & Casualty	100,000		1,823,000
			14,569,399
Securities Brokers - 1.5%
†FBR Capital Markets a	768,900		4,751,802
†GMP Capital	403,800		4,872,549
Sanders Morris Harris Group	780,000		4,290,000
Thomas Weisel Partners Group a	509,506		1,925,933
			15,840,284
Total (Cost $40,711,834)			41,609,869
Financial Services – 3.6%
Investment Management - 2.8%
CapMan Cl. B a	1,950,000		3,740,924
Deutsche Beteiligungs	207,011		5,072,328
Endeavour Financial b	1,021,000		1,727,944
†Gluskin Sheff + Associates	360,000		7,073,672
Sprott Resource a	1,989,600		7,685,599
U.S. Global Investors Cl. A	166,000		2,043,460
Westwood Holdings Group	87,700		3,187,018
			30,530,945
Other Financial Services - 0.8%
†Kennedy-Wilson Holdings a	988,423		8,846,386
Total (Cost $43,350,243)			39,377,331
Health – 10.6%
Commercial Services - 0.7%
†OdontoPrev	124,500		4,557,382
PDI a,c	740,394		3,568,699
			8,126,081
Drugs and Biotech - 3.6%
Anika Therapeutics a	237,048		1,808,676
†CombiMatrix Corporation a,b	311,900		1,964,970
Dyax Corporation a	877,484		2,974,671
Genoptix a	240,676		8,551,218
Lexicon Pharmaceuticals a	3,004,591		5,107,805
Maxygen a,b	215,800		1,314,222
†Medicines Company (The) a	300,027		2,502,225
Orchid Cellmark a	1,461,322		2,498,861
†Simcere Pharmaceutical Group ADR a	147,000		1,358,280
†Sinovac Biotech a,b	560,000		3,544,800
ULURU a,c	4,423,519		928,939
Vetoquinol	130,000		4,137,579
YM Biosciences a	1,307,600		1,765,260
			38,457,506

	SHARES		VALUE
Health (continued)
Health Services - 0.9%
BioClinica a	569,400	$	2,419,950
CorVel Corporation a	117,855		3,952,857
U.S. Physical Therapy a	231,840		3,925,051
			10,297,858
Medical Products and Devices - 5.4%
ArthroCare Corporation a,b	159,800		3,771,280
Bruker Corporation a	358,637		4,325,162
Cerus Corporation a,b	592,700		1,179,473
Cynosure Cl. A a	447,000		5,136,030
Exactech a	337,978		5,850,399
Merit Medical Systems a,b	75,400		1,454,466
Neogen Corporation a	124,885		2,948,535
SenoRx a	592,267		4,886,203
Solta Medical a,b	1,108,077		2,249,396
STRATEC Biomedical Systems	53,100		2,024,192
†SurModics a,b	109,900		2,490,334
Syneron Medical a,b	910,697		9,516,784
†Virtual Radiologic a,b	550,430		7,023,487
Young Innovations	205,152		5,083,666
			57,939,407
Total (Cost $115,162,968)			114,820,852
Industrial Products – 11.6%
Building Systems and Components - 1.9%
AAON	226,069		4,406,085
Drew Industries a	495,100		10,223,815
LSI Industries	723,850		5,703,938
			20,333,838
Industrial Components - 1.2%
Graham Corporation	406,500		8,414,550
†Voltamp Transformers	239,300		4,667,073
			13,081,623
Machinery - 2.0%
Burckhardt Compression Holding	53,500		9,574,441
Kadant a	418,069		6,672,381
Key Technology a,c	405,314		4,725,961
			20,972,783
Metal Fabrication and Distribution - 4.3%
Castle (A.M.) & Co.	333,779		4,569,435
Foster (L.B.) Company Cl. A a	192,842		5,748,620
Horsehead Holding Corporation a	947,274		12,077,743
Olympic Steel	433,300		14,116,914
†RBC Bearings a	327,821		7,975,885
Samuel Manu-Tech	367,600		1,585,195
			46,073,792
Miscellaneous Manufacturing - 1.1%
Semperit AG Holding	268,100		10,339,646
Synalloy Corporation	190,700		1,668,625
			12,008,271
Pumps, Valves and Bearings - 0.5%
Pfeiffer Vacuum Technology	68,000		5,700,403
Specialty Chemicals and Materials - 0.6%
American Vanguard	276,533		2,295,224

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  | 63

Schedules of Investments

Royce Micro-Cap Fund (continued)

	SHARES		VALUE
Industrial Products (continued)
Specialty Chemicals and Materials (continued)
Phoscan Chemical a	2,968,200	$	1,050,087
Victrex	256,500		3,318,086
			6,663,397
Total (Cost $108,081,993)			124,834,107
Industrial Services – 11.2%
Commercial Services - 4.7%
ATC Technology a	307,863		7,342,533
Barrett Business Services	125,901		1,547,323
Begbies Traynor	1,682,300		2,892,651
CRA International a	169,877		4,527,222
Electro Rent	214,400		2,474,176
Exponent a	240,609		6,698,555
Forrester Research a	78,800		2,044,860
GP Strategies a,c	1,028,900		7,747,617
Healthcare Locums	616,000		2,756,724
Heritage-Crystal Clean a	317,133		3,317,211
Intersections a	480,369		2,353,808
Kforce a	386,167		4,827,088
Lincoln Educational Services a	113,319		2,455,623
			50,985,391
Engineering and Construction - 2.1%
Cavco Industries a	294,078		10,563,282
Layne Christensen a	134,000		3,847,140
Sterling Construction a	405,700		7,781,326
			22,191,748
Food, Tobacco and Agriculture - 0.4%
Harbinger Group a	634,900		4,456,998
Industrial Distribution - 0.3%
Houston Wire & Cable	266,800		3,174,920
Printing - 1.3%
Courier Corporation	266,132		3,792,381
CSS Industries	140,700		2,735,208
Domino Printing Sciences	619,400		3,288,694
Ennis	250,400		4,204,216
			14,020,499
Transportation and Logistics - 2.4%
Euroseas	1,071,202		4,188,400
Marten Transport a	300,250		5,389,487
Patriot Transportation Holding a,b	136,173		12,862,902
Vitran Corporation a	332,050		3,609,383
			26,050,172
Total (Cost $118,141,010)			120,879,728
Natural Resources – 16.3%
Energy Services - 6.5%
Boots & Coots a,b	2,648,500		4,370,025
Dawson Geophysical a,b	215,960		4,990,835
Gulf Island Fabrication	290,038		6,099,499
Lamprell	3,465,000		10,224,397
OYO Geospace a,b	172,975		7,418,898
Pioneer Drilling a	331,900		2,622,010
T-3 Energy Services a	529,505		13,502,377

	SHARES		VALUE
Natural Resources (continued)
Energy Services (continued)
Tesco Corporation a	305,800	$	3,947,878
TGC Industries a,b,c	1,405,193		5,494,305
Total Energy Services	1,109,300		7,371,645
†Union Drilling a,b	552,031		3,450,194
World Energy Solutions a,c	428,100		1,232,928
			70,724,991
Oil and Gas - 1.1%
Approach Resources a	423,300		3,267,876
Gran Tierra Energy a,b	916,700		5,252,691
†Vantage Drilling a,b	1,850,000		2,978,500
			11,499,067
Precious Metals and Mining - 8.3%
Alamos Gold a	664,900		7,985,030
Allied Nevada Gold a	894,200		13,484,536
Bear Creek Mining a	697,600		2,594,697
Eldorado Gold a	327,000		4,633,590
Endeavour Silver a,b	1,031,800		3,755,752
Entree Gold a	1,721,700		4,149,297
Fronteer Development Group a	2,165,000		8,508,450
Gammon Gold a	430,486		4,739,651
Great Basin Gold a	2,648,600		4,583,799
†Keegan Resources a	700,000		4,437,539
Lumina Copper a	1,715,900		1,722,709
Quaterra Resources a,b	844,000		1,613,998
Red Back Mining a	449,700		6,449,777
Silvercorp Metals	1,722,700		11,369,820
US Gold a	2,509,204		6,222,826
Western Copper a	1,840,900		2,886,720
			89,138,191
Other Natural Resources - 0.4%
†Magma Energy a	2,798,700		4,843,570
Total (Cost $135,192,579)			176,205,819
Technology – 13.9%
Aerospace and Defense - 0.7%
Ducommun	204,800		3,831,808
†LaBarge a	339,072		4,085,818
			7,917,626
Components and Systems - 2.5%
LaCie a	504,207		2,119,082
SMART Modular Technologies (WWH) a	1,667,968		10,491,519
Super Micro Computer a,b	596,189		6,629,622
Xyratex a	543,600		7,235,316
			26,475,539
Distribution - 0.6%
Diploma	2,277,000		6,500,585
IT Services - 0.6%
iGATE Corporation	305,021		3,050,210
Neurones	436,000		3,777,835
			6,828,045
Semiconductors and Equipment - 5.1%
Advanced Energy Industries a	291,200		4,391,296
ATMI a	346,800		6,457,416

64  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Technology (continued)
Semiconductors and Equipment (continued)
CEVA a	681,597	$	8,765,337
GSI Technology a,b	785,200		3,517,696
Ikanos Communications a	846,100		1,582,207
Rubicon Technology a	64,955		1,319,236
Rudolph Technologies a	578,500		3,887,520
Sigma Designs a,b	522,375		5,589,413
Smartrac a	140,000		3,012,842
Supertex a	201,800		6,013,640
TTM Technologies a	865,900		9,983,827
			54,520,430
Software - 1.2%
Double-Take Software a	496,350		4,958,537
Fundtech a	328,900		4,035,603
NetScout Systems a	80,435		1,177,568
Phoenix Technologies a	1,012,650		2,784,788
			12,956,496
Telecommunications - 3.2%
Anaren a	393,932		5,928,677
Atlantic Tele-Network	263,300		14,484,133
Ceragon Networks a	411,000		4,825,140
Digi International a	449,600		4,100,352
KVH Industries a	356,400		5,256,900
			34,595,202
Total (Cost $123,748,301)			149,793,923
Miscellaneous d – 4.9%
Total (Cost $43,325,460)			52,958,264
TOTAL COMMON STOCKS
(Cost $837,972,037)			946,525,786
REPURCHASE AGREEMENT – 12.1%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10,
maturity value $130,790,073 (collateralized
by obligations of various U.S. Government
Agencies, 1.50%-4.25% due 8/15/10-11/19/12,
valued at $134,061,981)
(Cost $130,790,000)			130,790,000
COLLATERAL RECEIVED FOR SECURITIES
LOANED – 3.4%
Money Market Funds
Federated Government Obligations Fund
(7 day yield-0.0582%)
(Cost $36,458,587)			36,458,587
TOTAL INVESTMENTS – 103.2%
(Cost $1,005,220,624)			1,113,774,373
LIABILITIES LESS CASH
AND OTHER ASSETS – (3.2)%			(34,690,781	)
NET ASSETS – 100.0%		$	1,079,083,592

Royce Premier Fund
	SHARES		VALUE
COMMON STOCKS – 87.0%
Consumer Products – 11.0%
Apparel, Shoes and Accessories - 5.9%
Columbia Sportswear	856,600	$	33,441,664
Fossil a,c	3,548,290		119,080,612
Polo Ralph Lauren Cl. A	1,294,200		104,804,316
Timberland Company (The) Cl. A a	2,582,279		46,300,263
			303,626,855
Food/Beverage/Tobacco - 1.1%
†Cal-Maine Foods b,c	1,712,686		58,368,339
Health, Beauty and Nutrition - 1.7%
Nu Skin Enterprises Cl. A c	3,381,500		90,860,905
Sports and Recreation - 2.3%
Thor Industries c	3,754,300		117,885,020
Total (Cost $444,869,151)			570,741,119
Consumer Services – 0.9%
Retail Stores - 0.9%
†Buckle (The) b	1,663,536		48,708,334
Total (Cost $45,545,750)			48,708,334
Financial Intermediaries – 6.1%
Insurance - 3.4%
Alleghany Corporation a	324,929		89,680,404
ProAssurance Corporation a,c	1,633,449		87,732,546
			177,412,950
Securities Brokers - 1.4%
Knight Capital Group Cl. A a	4,667,200		71,874,880
Securities Exchanges - 1.3%
TMX Group	2,208,900		69,972,612
Total (Cost $235,229,641)			319,260,442
Financial Services – 3.9%
Information and Processing - 1.9%
Interactive Data	2,669,100		67,528,230
Morningstar a,b	707,375		34,194,507
			101,722,737
Investment Management - 2.0%
Affiliated Managers Group a,b	500,000		33,675,000
Federated Investors Cl. B	2,484,600		68,326,500
			102,001,500
Total (Cost $164,560,166)			203,724,237
Health – 4.9%
Drugs and Biotech - 3.3%
Endo Pharmaceuticals Holdings a	3,084,250		63,257,968
Perrigo Company	2,767,900		110,273,136
			173,531,104
Medical Products and Devices - 1.6%
IDEXX Laboratories a,b	1,536,500		82,110,560
Total (Cost $117,906,792)			255,641,664

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  | 65

Schedules of Investments

Royce Premier Fund (continued)

	SHARES		VALUE
Industrial Products – 19.5%
Building Systems and Components - 1.7%
Simpson Manufacturing c	3,308,986	$	88,978,634
Industrial Components - 1.5%
†GrafTech International a	3,905,176		60,725,487
PerkinElmer	927,100		19,088,989
			79,814,476
Machinery - 5.4%
Lincoln Electric Holdings c	2,512,497		134,318,090
Wabtec Corporation	1,183,237		48,323,399
Woodward Governor c	3,841,024		98,983,188
			281,624,677
Metal Fabrication and Distribution - 6.2%
Kennametal	1,563,500		40,525,920
Reliance Steel & Aluminum	2,419,800		104,583,756
Schnitzer Steel Industries Cl. A c	1,635,238		78,000,853
Sims Metal Management ADR	5,059,714		98,664,423
			321,774,952
Miscellaneous Manufacturing - 1.1%
Rational	329,966		55,896,189
Pumps, Valves and Bearings - 2.1%
Gardner Denver	2,488,400		105,881,420
Specialty Chemicals and Materials - 1.5%
Westlake Chemical	3,174,500		79,140,285
Total (Cost $718,037,250)			1,013,110,633
Industrial Services – 11.6%
Commercial Services - 7.2%
Copart a	1,491,100		54,618,993
Corinthian Colleges a,b	3,535,602		48,685,239
Gartner a	4,607,100		83,112,084
Hewitt Associates Cl. A a	234,700		9,918,422
Ritchie Bros. Auctioneers	3,951,500		88,632,145
Sotheby’s	2,256,294		50,721,489
Watson Wyatt Worldwide Cl. A	741,011		35,212,843
			370,901,215
Food, Tobacco and Agriculture - 1.6%
Sanderson Farms c	1,957,391		82,523,605
Industrial Distribution - 1.3%
MSC Industrial Direct Cl. A	872,184		40,992,648
Pool Corporation	1,511,400		28,837,512
			69,830,160
Transportation and Logistics - 1.5%
Arkansas Best c	1,906,902		56,120,126
UTI Worldwide	1,419,800		20,331,536
			76,451,662
Total (Cost $468,079,450)			599,706,642
Natural Resources – 14.0%
Energy Services - 6.8%
Ensign Energy Services	7,103,000		101,874,074
Pason Systems	3,778,500		42,089,712
Trican Well Service	6,069,100		81,590,616

	SHARES		VALUE
Natural Resources (continued)
Energy Services (continued)
Unit Corporation a,c	2,920,474	$	124,120,145
			349,674,547
Precious Metals and Mining - 4.5%
Pan American Silver a	3,964,244		94,388,650
†Seabridge Gold a,c	2,103,900		51,061,653
Silver Standard Resources a,c	4,116,399		90,025,646
			235,475,949
Real Estate - 2.7%
Jones Lang LaSalle	1,169,700		70,649,880
St. Joe Company (The) a,b	2,377,450		68,684,530
			139,334,410
Total (Cost $569,933,254)			724,484,906
Technology – 13.2%
Components and Systems - 3.6%
Benchmark Electronics a	2,240,000		42,358,400
Dionex Corporation a,c	1,294,500		95,624,715
Zebra Technologies Cl. A a	1,706,500		48,396,340
			186,379,455
IT Services - 0.7%
Jack Henry & Associates	1,573,540		36,380,245
Semiconductors and Equipment - 4.7%
Cabot Microelectronics a,c	2,086,191		68,760,855
Cognex Corporation c	2,957,717		52,410,745
MKS Instruments a,c	2,941,910		51,218,653
Varian Semiconductor Equipment
Associates a	2,009,521		72,101,614
			244,491,867
Software - 2.1%
Fair Isaac	1,682,600		35,856,206
National Instruments	2,508,101		73,863,575
			109,719,781
Telecommunications - 2.1%
ADTRAN	2,922,029		65,891,754
†Comtech Telecommunications a,b	1,153,250		40,421,412
			106,313,166
Total (Cost $652,323,658)			683,284,514
Miscellaneous d – 1.9%
Total (Cost $71,962,810)			97,322,954
TOTAL COMMON STOCKS
(Cost $3,488,447,922)			4,515,985,445

66  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

		VALUE
REPURCHASE AGREEMENT – 12.9%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10,
maturity value $668,302,371 (collateralized
by obligations of various U.S. Government
Agencies, 0.875%-2.875% due 6/30/10-1/31/11,
valued at $692,096,250)
(Cost $668,302,000)	$	668,302,000
COLLATERAL RECEIVED FOR SECURITIES
LOANED – 3.1%
Money Market Funds
Federated Government Obligations Fund
(7 day yield-0.0582%)
(Cost $160,537,960)		160,537,960
TOTAL INVESTMENTS – 103.0%
(Cost $4,317,287,882)		5,344,825,405
LIABILITIES LESS CASH
AND OTHER ASSETS – (3.0)%		(157,798,804	)
NET ASSETS – 100.0%	$	5,187,026,601

Royce Low-Priced Stock Fund
	SHARES		VALUE
COMMON STOCKS – 93.3%
Consumer Products – 7.9%
Apparel, Shoes and Accessories - 2.6%
Fossil a,b	995,550	$	33,410,658
†Gildan Activewear a,b	831,700		20,276,846
K-Swiss Cl. A a,b	852,000		8,468,880
Timberland Company (The) Cl. A a,b	1,501,382		26,919,779
			89,076,163
Food/Beverage/Tobacco - 0.7%
Industrias Bachoco ADR	1,031,165		23,675,549
Health, Beauty and Nutrition - 2.9%
Nu Skin Enterprises Cl. A	2,201,000		59,140,870
NutriSystem	1,291,816		40,265,905
			99,406,775
Home Furnishing and Appliances - 0.5%
Helen of Troy a	751,996		18,393,822
Sports and Recreation - 1.2%
Callaway Golf	2,450,066		18,473,498
RC2 Corporation a	650,062		9,588,414
Winnebago Industries a	1,070,535		13,060,527
			41,122,439
Total (Cost $206,117,164)			271,674,748
Consumer Services – 3.7%
Leisure and Entertainment - 0.3%
DreamWorks Animation SKG Cl. A a	131,650		5,259,417
New Frontier Media a,c	1,903,000		3,596,670
			8,856,087
Retail Stores - 3.4%
American Eagle Outfitters	150,000		2,547,000
Buckle (The) b	704,575		20,629,956
Cato Corporation (The) Cl. A	597,350		11,982,841
Charming Shoppes a	2,423,428		15,679,579
Hibbett Sports a,b	260,137		5,720,413
Lewis Group	1,543,747		11,045,077
Men’s Wearhouse (The)	1,325,675		27,918,716
Pacific Sunwear of California a,b	1,366,800		5,439,864
Tuesday Morning a	1,291,300		3,331,554
Williams-Sonoma	640,405		13,307,616
			117,602,616
Total (Cost $107,524,505)			126,458,703
Financial Intermediaries – 6.9%
Banking - 0.1%
Wilmington Trust	429,500		5,300,030
Insurance - 3.0%
Argo Group International Holdings a	521,897		15,208,078
Aspen Insurance Holdings	753,000		19,163,850
CNA Surety a	424,800		6,325,272
Greenlight Capital Re Cl. A a	573,812		13,524,749
Navigators Group a	100,200		4,720,422
Validus Holdings	1,633,635		44,010,127
			102,952,498

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  | 67

Schedules of Investments

Royce Low-Priced Stock Fund (continued)

	SHARES		VALUE
Financial Intermediaries (continued)
Securities Brokers - 1.9%
Jefferies Group a,b	498,200	$	11,822,286
Knight Capital Group Cl. A a	2,924,500		45,037,300
Thomas Weisel Partners Group a,b	1,134,500		4,288,410
TradeStation Group a,b	593,600		4,683,504
			65,831,500
Securities Exchanges - 0.9%
MarketAxess Holdings	1,062,340		14,766,526
TMX Group	470,500		14,904,303
			29,670,829
Other Financial Intermediaries - 1.0%
KKR Financial Holdings	5,986,960		34,724,368
Total (Cost $204,097,457)			238,479,225
Financial Services – 3.2%
Insurance Brokers - 0.3%
Brown & Brown	550,000		9,883,500
Investment Management - 2.4%
Brait	2,700,000		7,693,322
CapMan Cl. B a	2,918,978		5,599,833
Deutsche Beteiligungs	409,995		10,045,984
Federated Investors Cl. B	949,700		26,116,750
Sprott	5,516,400		23,735,525
U.S. Global Investors Cl. A	653,751		8,047,675
			81,239,089
Other Financial Services - 0.5%
†Kennedy-Wilson Holdings a,b	1,994,994		17,855,196
Total (Cost $120,427,213)			108,977,785
Health – 4.4%
Drugs and Biotech - 2.4%
Cypress Bioscience a	968,949		5,581,146
†Emergent Biosolutions a	1,037,900		14,105,061
Endo Pharmaceuticals Holdings a	1,859,200		38,132,192
Lexicon Pharmaceuticals a,b	2,027,300		3,446,410
Maxygen a	790,200		4,812,318
ViroPharma a,b	1,188,100		9,968,159
VIVUS a	524,150		4,816,939
			80,862,225
Health Services - 1.1%
Cross Country Healthcare a,c	2,328,100		23,071,471
EResearch Technology a	1,786,250		10,735,362
MedQuist	600,200		4,015,338
			37,822,171
Medical Products and Devices - 0.9%
Bruker Corporation a	826,979		9,973,367
Caliper Life Sciences a,b	2,009,729		5,165,003
CONMED Corporation a	255,500		5,825,400
†Immucor a,b	214,019		4,331,745
Medical Action Industries a	394,250		6,331,655
			31,627,170
Total (Cost $152,238,698)			150,311,566

	SHARES		VALUE
Industrial Products – 11.2%
Automotive - 0.8%
Gentex Corporation	844,232	$	15,069,541
Landi Renzo	2,798,000		13,693,217
			28,762,758
Building Systems and Components - 0.8%
AAON	471,250		9,184,663
†WaterFurnace Renewable Energy c	700,500		17,387,752
			26,572,415
Industrial Components - 1.8%
GrafTech International a	3,365,500		52,333,525
Powell Industries a	314,848		9,927,157
			62,260,682
Machinery - 1.0%
Lincoln Electric Holdings	384,663		20,564,084
Woodward Governor	525,700		13,547,289
			34,111,373
Metal Fabrication and Distribution - 4.9%
Castle (A.M.) & Co. c	1,849,667		25,321,941
†Horsehead Holding Corporation a,b	919,800		11,727,450
Kennametal	1,944,500		50,401,440
Olympic Steel	510,800		16,641,864
Schnitzer Steel Industries Cl. A	317,100		15,125,670
Sims Metal Management ADR	2,499,350		48,737,325
			167,955,690
Pumps, Valves and Bearings - 0.9%
Gardner Denver	700,618		29,811,296
Specialty Chemicals and Materials - 1.0%
Schulman (A.)	446,190		9,004,114
Symyx Technologies a	733,123		4,032,177
Victrex	650,000		8,408,405
Westlake Chemical	592,813		14,778,828
			36,223,524
Total (Cost $251,590,146)			385,697,738
Industrial Services – 9.4%
Advertising and Publishing - 0.3%
ValueClick a	1,152,600		11,664,312
Commercial Services - 5.1%
CBIZ a,b	597,600		4,601,520
Copart a,b	311,795		11,421,051
Corinthian Colleges a,b	1,932,792		26,614,546
Exponent a	250,400		6,971,136
Forrester Research a	518,300		13,449,885
Kforce a	740,774		9,259,675
Korn/Ferry International a	1,804,663		29,776,939
LECG Corporation a,c	1,722,490		5,150,245
MAXIMUS	246,891		12,344,550
Monster Worldwide a	225,000		3,915,000
TrueBlue a	2,170,791		32,149,415
Universal Technical Institute a	918,300		18,549,660
			174,203,622
Engineering and Construction - 0.2%
Dycom Industries a	694,100		5,573,623

68  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Industrial Services (continued)
Food, Tobacco and Agriculture - 1.9%
Imperial Sugar c	713,740	$	12,447,625
Intrepid Potash a,b	1,754,900		51,190,433
Omega Protein a,b	396,000		1,726,560
			65,364,618
Industrial Distribution - 0.5%
Houston Wire & Cable c	1,465,700		17,441,830
Printing - 0.5%
Ennis	1,004,600		16,867,234
Transportation and Logistics - 0.9%
Heartland Express	688,366		10,511,349
Universal Truckload Services	387,561		7,014,854
Werner Enterprises	690,600		13,666,974
			31,193,177
Total (Cost $298,196,390)			322,308,416
Natural Resources – 25.4%
Energy Services - 10.3%
Calfrac Well Services	1,305,300		26,022,379
Ensign Energy Services	3,304,100		47,388,727
Global Industries a	1,586,950		11,314,953
Lamprell	5,721,523		16,882,863
Major Drilling Group International	860,800		23,679,510
Oil States International a	786,200		30,889,798
Pason Systems	2,250,700		25,071,143
RPC	1,170,564		12,173,866
Tesco Corporation a,c	3,077,305		39,728,008
Total Energy Services c	1,966,700		13,069,335
Trican Well Service	4,711,500		63,339,571
Unit Corporation a,b	1,013,400		43,069,500
			352,629,653
Oil and Gas - 0.5%
Frontier Oil	500,000		6,020,000
St. Mary Land & Exploration	328,000		11,230,720
			17,250,720
Precious Metals and Mining - 14.6%
Agnico-Eagle Mines	294,200		15,886,800
Alamos Gold a	4,798,400		57,625,763
Allied Nevada Gold a,b	1,950,050		29,406,754
†Centamin Egypt a	6,549,400		13,025,532
Denison Mines a,b	3,096,300		3,901,338
Fronteer Development Group a	3,885,500		15,270,015
Gammon Gold a	5,256,400		57,872,964
Hecla Mining a,b	3,328,115		20,567,750
Ivanhoe Mines a,b	4,357,800		63,667,458
Northam Platinum	2,040,000		13,186,434
Pan American Silver a,b	2,129,053		50,692,752
Red Back Mining a	2,448,200		35,113,066
†Seabridge Gold a,b	1,052,700		25,549,029
Silver Standard Resources a,b	2,458,300		53,763,021
Silvercorp Metals	4,456,400		29,412,240
Thompson Creek Metals a	1,178,000		13,806,160
Uranium Resources a,b	2,746,500		2,114,805

	SHARES		VALUE
Natural Resources (continued)
Precious Metals and Mining (continued)
†US Gold a,b	900,000	$	2,232,000
			503,093,881
Total (Cost $616,250,967)			872,974,254
Technology – 16.6%
Aerospace and Defense - 2.5%
†Ceradyne a,b,c	1,583,100		30,411,351
HEICO Corporation Cl. A	1,201,563		43,208,206
Integral Systems a,c	1,366,294		11,832,106
			85,451,663
Components and Systems - 1.2%
Brocade Communications Systems a	1,449,676		11,061,028
†Littelfuse a,b	258,400		8,307,560
Methode Electronics	1,226,000		10,641,680
†Teradata Corporation a	308,835		9,706,684
Trimble Navigation a	138,000		3,477,600
			43,194,552
Internet Software and Services - 0.3%
iPass	1,326,417		1,379,474
RealNetworks a,b	2,373,900		8,807,169
			10,186,643
IT Services - 1.2%
Jack Henry & Associates	297,100		6,868,952
SRA International Cl. A a,b	1,362,500		26,023,750
Syntel	203,141		7,725,452
			40,618,154
Semiconductors and Equipment - 6.7%
Advanced Energy Industries a	664,100		10,014,628
Brooks Automation a	1,846,182		15,840,242
CEVA a	881,286		11,333,338
Cirrus Logic a	1,478,400		10,082,688
Cognex Corporation	477,738		8,465,517
Exar Corporation a	461,700		3,282,687
Fairchild Semiconductor International a	1,500,800		14,992,992
IPG Photonics a	448,900		7,514,586
Lam Research a,b	343,800		13,480,398
MKS Instruments a	1,419,600		24,715,236
Novellus Systems a,b	650,000		15,171,000
OmniVision Technologies a	877,191		12,745,585
†QLogic Corporation a	300,000		5,661,000
Sigma Designs a,c	2,045,558		21,887,471
Silicon Motion Technology ADR a	745,000		2,540,450
Trident Microsystems a,b	2,050,143		3,813,266
TTM Technologies a,b,c	2,300,035		26,519,403
Varian Semiconductor Equipment Associates a	399,200		14,323,296
Verigy a,b	660,200		8,496,774
			230,880,557
Software - 0.6%
Avid Technology a	674,543		8,607,168
DivX a,b	1,522,431		8,586,511
THQ a,b	462,500		2,331,000
			19,524,679

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  | 69

Schedules of Investments

Royce Low-Priced Stock Fund (continued)
	SHARES		VALUE
Technology (continued)
Telecommunications - 4.1%
ADTRAN	1,795,000	$	40,477,250
Arris Group a,b	1,406,971		16,081,678
Harmonic a	1,722,500		10,903,425
KVH Industries a,c	1,100,200		16,227,950
NETGEAR a	1,292,800		28,040,832
Novatel Wireless a,c	2,292,176		18,268,643
PC-Tel a,c	1,295,592		7,669,905
†Tekelec a,b	300,000		4,584,000
			142,253,683
Total (Cost $561,901,232)			572,109,931
Miscellaneous d – 4.6%
Total (Cost $127,030,936)			159,641,191
TOTAL COMMON STOCKS (Cost $2,645,374,708)			3,208,633,557
REPURCHASE AGREEMENT – 6.9%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10,
maturity value $236,888,132 (collateralized
by obligations of various U.S. Government
Agencies, 0.875%-7.00% due 3/15/10-3/30/10,
valued at $242,813,906)
(Cost $236,888,000)			236,888,000
COLLATERAL RECEIVED FOR SECURITIES LOANED – 4.3%
Money Market Funds
Federated Government Obligations Fund
(7 day yield-0.0582%)
(Cost $149,387,346)			149,387,346
TOTAL INVESTMENTS – 104.5%
(Cost $3,031,650,054)			3,594,908,903
LIABILITIES LESS CASH AND OTHER ASSETS – (4.5)%			(155,052,353	)
NET ASSETS – 100.0%		$	3,439,856,550

Royce Total Return Fund
	SHARES		VALUE
COMMON STOCKS – 95.3%
Consumer Products – 6.8%
Apparel, Shoes and Accessories - 2.6%
Cherokee	29,454	$	524,870
Columbia Sportswear	197,609		7,714,655
Guess?	427,116		18,067,007
Jones Apparel Group	483,500		7,765,010
K-Swiss Cl. A a	158,675		1,577,230
Liz Claiborne a,b	9,890		55,681
Movado Group	75,625		735,075
Phillips-Van Heusen	76,184		3,099,165
Polo Ralph Lauren Cl. A	213,000		17,248,740
Steven Madden a	127,400		5,253,976
Weyco Group	303,655		7,178,404
Wolverine World Wide	1,271,975		34,623,160
			103,842,973
Food/Beverage/Tobacco - 2.0%
Cal-Maine Foods b	120,719		4,114,103
Flowers Foods	400,000		9,504,000
Hershey Creamery	173		289,775
J & J Snack Foods	379,322		15,157,707
J.M. Smucker Company (The)	324,000		20,007,000
Lancaster Colony	398,000		19,780,600
Mannatech b	316,298		986,850
Tootsie Roll Industries	448,207		12,271,908
			82,111,943
Health, Beauty and Nutrition - 0.6%
Inter Parfums	1,107,483		13,478,068
Nu Skin Enterprises Cl. A	36,200		972,694
NutriSystem	279,654		8,716,815
			23,167,577
Home Furnishing and Appliances - 0.9%
Ethan Allen Interiors	1,179,050		15,822,851
Hooker Furniture	20,530		253,956
Kimball International Cl. B	724,600		6,173,592
National Presto Industries	136,557		14,916,121
			37,166,520
Household Products/Wares - 0.1%
Blyth	68,545		2,311,337
Sports and Recreation - 0.6%
Arctic Cat a,b	169,718		1,554,617
Callaway Golf	1,266,461		9,549,116
Hasbro	78,806		2,526,520
Sturm, Ruger & Company	179,504		1,741,189
Thor Industries	341,485		10,722,629
			26,094,071
Total (Cost $244,635,621)			274,694,421
Consumer Services – 7.2%
Leisure and Entertainment - 1.4%
Ambassadors Group	289,962		3,853,595
International Speedway Cl. A	849,547		24,169,612
Regal Entertainment Group Cl. A	396,300		5,722,572
Speedway Motorsports	180,673		3,183,458

70  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Consumer Services (continued)
Leisure and Entertainment (continued)
World Wrestling Entertainment Cl. A	1,135,284	$	17,403,904
			54,333,141
Online Commerce - 0.2%
Systemax	554,738		8,714,934
Restaurants and Lodgings - 0.4%
Bob Evans Farms	426,400		12,344,280
Brinker International	21,250		317,050
DineEquity a,b	61,030		1,482,419
			14,143,749
Retail Stores - 5.2%
Abercrombie & Fitch Cl. A	5,200		181,220
American Eagle Outfitters	1,330,824		22,597,392
bebe Stores	16,300		102,201
Books-A-Million	27		181
Brown Shoe	67,300		664,251
Buckle (The) b	943,010		27,611,333
Cato Corporation (The) Cl. A	1,323,580		26,551,015
Christopher & Banks	55,723		424,609
Dress Barn (The) a	1,542,645		35,635,100
Family Dollar Stores	1,238,157		34,457,909
Finish Line (The) Cl. A	72,800		913,640
Foot Locker	103,900		1,157,446
Men’s Wearhouse (The)	188,452		3,968,799
Pep Boys-Manny, Moe & Jack (The)	742,500		6,281,550
RadioShack Corporation	318,122		6,203,379
Regis Corporation	5,300		82,521
Ross Stores	205,314		8,768,961
Tiffany & Co.	509,100		21,891,300
Tuesday Morning a	2,728		7,038
Village Super Market Cl. A	373,838		10,213,254
Williams-Sonoma	95,300		1,980,334
			209,693,433
Total (Cost $264,894,342)			286,885,257
Diversified Investment Companies – 0.1%
Closed-End Funds - 0.1%
Central Fund of Canada Cl. A	315,000		4,340,700
Total (Cost $3,235,898)			4,340,700
Financial Intermediaries – 21.6%
Banking - 3.2%
Banco Latinoamericano de
Exportaciones Cl. E	298,675		4,151,582
Bancorp Rhode Island c	261,300		6,710,184
Bank of Hawaii	253,401		11,925,051
Bank of N.T. Butterfield & Son	507,173		1,977,975
Bank Sarasin & Cie Cl. B	82,000		3,098,985
BOK Financial	491,382		23,350,473
Canadian Western Bank	783,200		16,430,088
Central Pacific Financial a,b	20,000		26,200
Centrue Financial b	173,755		463,926
Credicorp	235,800		18,161,316
First Citizens BancShares Cl. A	10,800		1,771,308
First Financial Bancorp	150,000		2,184,000

	SHARES		VALUE
Financial Intermediaries (continued)
Banking (continued)
First National Bank Alaska	3,110	$	5,364,750
HopFed Bancorp	134,000		1,273,000
Kearny Financial	440,699		4,442,246
NewAlliance Bancshares	200,000		2,402,000
Oriental Financial Group	119,500		1,290,600
Peapack-Gladstone Financial c	463,145		5,872,679
Provident Financial Services	26,000		276,900
Provident New York Bancorp	50,000		422,000
Sun Bancorp a	284,428		1,066,605
Trustmark Corporation	80,700		1,818,978
Vontobel Holding	55,000		1,570,892
Wilmington Trust	942,100		11,625,514
			127,677,252
Insurance - 14.7%
Alleghany Corporation a	101,793		28,094,868
†Allied World Assurance Company Holdings	641,273		29,543,447
American Financial Group	362,650		9,048,117
American National Insurance	145,093		17,329,908
American Physicians Service Group	20,503		473,004
†Arch Capital Group a,b	377,090		26,980,789
Aspen Insurance Holdings	1,410,033		35,885,340
Assured Guaranty	276,500		6,016,640
Axis Capital Holdings	2,301		65,371
Baldwin & Lyons Cl. B	103,958		2,558,406
Cincinnati Financial	300,000		7,872,000
Donegal Group Cl. A	665,988		10,349,454
E-L Financial	53,588		23,057,930
EMC Insurance Group	323,230		6,952,677
Employers Holdings	73,500		1,127,490
Endurance Specialty Holdings	231,088		8,603,406
Erie Indemnity Cl. A	650,400		25,378,608
Fidelity National Financial Cl. A	969,700		13,052,162
First American	227,400		7,529,214
Flagstone Reinsurance Holdings	252,471		2,762,033
Harleysville Group	546,288		17,366,496
HCC Insurance Holdings	612,046		17,118,927
Infinity Property & Casualty	159,537		6,483,584
Leucadia National a	484,800		11,533,392
Markel Corporation a	67,900		23,086,000
Max Capital Group	897,800		20,020,940
Mercury General	211,000		8,283,860
Montpelier Re Holdings	1,535,610		26,596,765
Old Republic International	1,047,000		10,511,880
OneBeacon Insurance Group Cl. A	523,720		7,216,862
PartnerRe	564,057		42,112,496
Platinum Underwriters Holdings	105,693		4,046,985
Reinsurance Group of America	594,518		28,328,783
RenaissanceRe Holdings	161,100		8,562,465
RLI	165,000		8,786,250
State Auto Financial	515,015		9,527,777
Transatlantic Holdings	298,350		15,547,018
United Fire & Casualty	111,736		2,036,947
Validus Holdings	824,188		22,203,625
Wesco Financial	30,623		10,503,689

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.  The Royce Funds 2009 Annual Report to Shareholders   |   71

Schedules of Investments

Royce Total Return Fund (continued)

	SHARES		VALUE
Financial Intermediaries (continued)
Insurance (continued)
White Mountains Insurance Group	15,760	$	5,242,722
Zenith National Insurance	835,098		24,852,516
			592,650,843
Real Estate Investment Trusts - 2.6%
Annaly Capital Management	703,900		12,212,665
†Colony Financial	286,283		5,831,585
Cousins Properties	597,085		4,555,758
DCT Industrial Trust	1,121,600		5,630,432
Essex Property Trust	83,000		6,942,950
Lexington Realty Trust	1,067,385		6,489,701
MFA Financial	986,200		7,248,570
National Health Investors	278,000		10,283,220
National Retail Properties	650,000		13,793,000
PS Business Parks	168,500		8,433,425
Rayonier	529,400		22,319,504
Starhill Global REIT	400,000		148,205
Suntec Real Estate Investment Trust	400,000		382,599
			104,271,614
Securities Brokers - 0.4%
Investcorp Bank GDR a	40,000		120,400
Oppenheimer Holdings Cl. A	22,567		749,676
Raymond James Financial	597,925		14,212,677
			15,082,753
Securities Exchanges - 0.7%
TMX Group	884,600		28,021,990
Other Financial Intermediaries - 0.0%
KKR Financial Holdings	288,878		1,675,492
Total (Cost $818,960,410)			869,379,944
Financial Services – 8.0%
Diversified Financial Services - 0.0%
Advanta Corporation Cl. B	151,576		4,259
First Marblehead a,b	7,119		15,164
			19,423
Information and Processing - 1.1%
Global Payments	6,786		365,494
Interactive Data	612,900		15,506,370
SEI Investments	1,491,733		26,135,162
			42,007,026
Insurance Brokers - 1.3%
Brown & Brown	1,697,100		30,496,887
Gallagher (Arthur J.) & Co.	978,200		22,019,282
			52,516,169
Investment Management - 5.3%
A.F.P. Provida ADR	311,700		14,135,595
AGF Management Cl. B	815,600		13,257,350
AllianceBernstein Holding L.P.	1,313,200		36,900,920
AP Alternative Assets L.P. a	76,000		498,526
Apollo Investment	1,111,400		10,591,642
CI Financial	883,500		18,584,883
Cohen & Steers	385,630		8,807,789
Federated Investors Cl. B	1,606,663		44,183,233
GAMCO Investors Cl. A	278,300		13,439,107

	SHARES		VALUE
Financial Services (continued)
Investment Management (continued)
Gladstone Capital	80,000	$	616,000
IGM Financial	106,900		4,334,875
Janus Capital Group	497,400		6,690,030
JZ Capital Partners	33,333		129,969
MVC Capital	425,000		5,015,000
Onex Corporation	106,200		2,396,443
Schroders	90,000		1,921,097
T. Rowe Price Group	471,800		25,123,350
†Teton Advisors Cl. A	3,955		49,438
Waddell & Reed Financial Cl. A	253,600		7,744,944
			214,420,191
Specialty Finance - 0.3%
Credit Acceptance a,b	234,005		9,851,611
GATX Corporation	59,000		1,696,250
Portfolio Recovery Associates a	37,580		1,686,590
			13,234,451
Total (Cost $293,510,691)			322,197,260
Health – 4.0%
Commercial Services - 1.3%
Chemed Corporation	637,634		30,587,303
Owens & Minor	543,000		23,310,990
			53,898,293
Drugs and Biotech - 0.2%
Biovail Corporation	557,633		7,784,557
Medicis Pharmaceutical Cl. A	4,213		113,962
Mylan a,b	496		9,141
			7,907,660
Health Services - 0.9%
Computer Programs and Systems	67,050		3,087,653
Healthcare Services Group	48,188		1,034,114
Omnicare	70,000		1,692,600
†Pharmaceutical Product Development	1,115,782		26,153,930
Universal HealthServices Cl. B	106,422		3,245,871
			35,214,168
Medical Products and Devices - 1.3%
Atrion Corporation	15,453		2,406,341
Hill-Rom Holdings	386,763		9,278,444
IDEXX Laboratories a,b	379,600		20,285,824
STERIS Corporation	773,983		21,648,305
West Pharmaceutical Services	1,200		47,040
Young Innovations	22,530		558,293
			54,224,247
Personal Care - 0.3%
Alberto-Culver Company	364,100		10,664,489
Total (Cost $115,620,405)			161,908,857
Industrial Products – 17.4%
Automotive - 0.3%
Gentex Corporation	595,000		10,620,750
Spartan Motors	311,771		1,755,271
Superior Industries International	76,000		1,162,800
			13,538,821

72  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Industrial Products (continued)
Building Systems and Components - 1.2%
Apogee Enterprises	403,437	$	5,648,118
Bunka Shutter	60,000		201,314
LSI Industries	1,159,992		9,140,737
McGrath RentCorp	291,300		6,513,468
Preformed Line Products	204,410		8,953,158
Simpson Manufacturing	638,828		17,178,085
			47,634,880
Construction Materials - 0.4%
Ameron International	168,200		10,673,972
Ash Grove Cement	39,610		5,783,060
Louisiana-Pacific Corporation a	78,000		544,440
			17,001,472
Industrial Components - 1.5%
Bel Fuse Cl. A	22,350		434,484
Bel Fuse Cl. B	151,447		3,254,596
Chase Corporation c	773,974		9,140,633
CLARCOR	360,410		11,691,701
CTS Corporation	20,157		193,910
Donaldson Company	97,800		4,160,412
Hubbell Cl. B	320,377		15,153,832
Mueller Water Products Cl. A	3,500		18,200
PerkinElmer	702,600		14,466,534
Watts Water Technologies Cl. A	129,789		4,013,076
			62,527,378
Machinery - 4.6%
Ampco-Pittsburgh	211,574		6,670,928
Briggs & Stratton	385,640		7,215,324
Cascade Corporation	147,879		4,065,194
Franklin Electric	366,900		10,669,452
FreightCar America	117,712		2,334,229
Gorman-Rupp Company	461,307		12,750,525
Lincoln Electric Holdings	562,665		30,080,071
Lindsay Corporation	194,900		7,766,765
Mueller (Paul) Company c	116,700		2,334,000
Nordson Corporation	354,200		21,669,956
Regal-Beloit	10,107		524,958
Roper Industries	214,500		11,233,365
Snap-on	31,094		1,314,032
Starrett (L.S.) Company (The) Cl. A c	529,400		4,664,014
Sun Hydraulics	681,003		17,876,329
Tennant Company	537,600		14,079,744
Toro Company (The)	328,775		13,746,083
Twin Disc	2,194		22,905
Woodward Governor	609,200		15,699,084
			184,716,958
Metal Fabrication and Distribution - 2.4%
Allegheny Technologies	64,878		2,904,588
Carpenter Technology	375,888		10,130,182
Castle (A.M.) & Co.	169,754		2,323,932
Commercial Metals	8,800		137,720
Encore Wire	97,888		2,062,500
Gerdau Ameristeel	8,451		69,721
Gibraltar Industries a	7,776		122,317
Insteel Industries	72,663		944,619

	SHARES		VALUE
Industrial Products (continued)
Metal Fabrication and Distribution (continued)
Kaiser Aluminum	31,720	$	1,320,186
Kennametal	154,532		4,005,469
Mueller Industries	414,115		10,286,617
Olympic Steel	66,935		2,180,742
Reliance Steel & Aluminum	704,463		30,446,891
Schnitzer Steel Industries Cl. A	252,000		12,020,400
Sims Metal Management ADR	372,275		7,259,363
Timken Company (The)	5,569		132,041
Trinity Industries	507,487		8,850,573
Worthington Industries	3,975		51,953
			95,249,814
Miscellaneous Manufacturing - 2.2%
Acuity Brands	75,701		2,697,984
American RailcarIndustries b	416,029		4,584,639
Brady Corporation Cl. A	456,800		13,708,568
Carlisle Companies	33,300		1,140,858
Crane Company	288,000		8,818,560
HNI Corporation	446,384		12,333,590
Matthews International Cl. A	179,300		6,352,599
Raven Industries	156,201		4,962,506
Smith (A.O.) Corporation	331,929		14,402,399
Standex International	22,808		458,213
Teleflex	309,700		16,689,733
Tredegar Corporation	4,500		71,190
Valmont Industries	19,396		1,521,616
			87,742,455
Paper and Packaging - 1.2%
Albany International Cl. A	342,500		7,692,550
AptarGroup	110,100		3,934,974
Bemis Company	464,800		13,781,320
Greif Cl. A	225,500		12,172,490
Schweitzer-Mauduit International	22,503		1,583,086
Sealed Air	1,213		26,516
Sonoco Products	359,778		10,523,507
			49,714,443
Pumps, Valves and Bearings - 0.5%
CIRCOR International	2,241		56,428
Kaydon Corporation	367,741		13,150,418
Robbins & Myers	281,778		6,627,419
			19,834,265
Specialty Chemicals and Materials - 2.9%
Aceto Corporation	36,783		189,432
Agrium b	5,200		319,800
Albemarle Corporation	443,000		16,111,910
Ashland	4,300		170,366
Balchem Corporation	661,000		22,150,110
Cabot Corporation	770,700		20,215,461
Cytec Industries	700		25,494
H.B. Fuller Company	101,692		2,313,493
Hawkins	154,190		3,365,968
Innospec	67,741		683,507
International Flavors & Fragrances	175,000		7,199,500
Lubrizol Corporation (The)	299,500		21,848,525
Methanex Corporation	364,698		7,107,964

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.  The Royce Funds 2009 Annual Report to Shareholders   |   73

Schedules of Investments

Royce Total Return Fund (continued)

	SHARES		VALUE
Industrial Products (continued)
Specialty Chemicals and Materials (continued)
Minerals Technologies	4,812	$	262,110
NewMarket Corporation	7,688		882,352
Olin Corporation	41,146		720,878
Park Electrochemical	142,263		3,932,149
Quaker Chemical	405,000		8,359,200
Spartech Corporation	4,046		41,512
Westlake Chemical	1,910		47,616
			115,947,347
Other Industrial Products - 0.2%
MTS Systems	224,206		6,443,680
Total (Cost $540,453,925)			700,351,513
Industrial Services – 10.1%
Advertising and Publishing - 0.0%
E.W. Scripps Company Cl. A a	14,370		100,015
Journal Communications Cl. A	90,000		350,100
Scholastic Corporation	6,400		190,912
			641,027
Commercial Services - 4.3%
ABM Industries	704,000		14,544,640
Brink’s Company (The)	4,585		111,599
CDI Corporation	16,599		214,957
Corporate Executive Board	105,800		2,414,356
Heidrick & Struggles International	120,298		3,758,109
Hillenbrand	762,021		14,356,476
Kelly Services Cl.A a	584,576		6,973,992
Landauer	377,500		23,178,500
Manpower	387,452		21,147,130
MAXIMUS	350,003		17,500,150
Ritchie Bros. Auctioneers	1,464,320		32,844,698
Robert Half International	14,323		382,854
Rollins	555,750		10,714,860
UniFirst Corporation	16,710		803,918
Viad Corporation	64,602		1,332,739
Watson Wyatt Worldwide Cl. A	455,800		21,659,616
			171,938,594
Engineering and Construction - 0.4%
Comfort Systems USA	627,007		7,737,266
Granite Construction	227,775		7,666,907
M.D.C. Holdings	5,580		173,203
Ryland Group (The)	4,576		90,147
			15,667,523
Food, Tobacco and Agriculture - 1.2%
Corn Products International	96,183		2,811,429
Farmer Bros.	542,300		10,705,002
Hormel Foods	543,933		20,914,224
Seaboard Corporation	9,476		12,783,124
Terra Industries	66,378		2,136,708
			49,350,487
Industrial Distribution - 1.1%
Applied Industrial Technologies	720,000		15,890,400
Doshisha Company	60,000		1,333,037
Grainger (W.W.)	185,600		17,971,648

	SHARES		VALUE
Industrial Services (continued)
Industrial Distribution (continued)
Houston Wire & Cable	147,640	$	1,756,916
Lawson Products	177		3,124
Mine Safety Appliances	236,200		6,266,386
Watsco	22,075		1,081,233
			44,302,744
Printing - 0.3%
Bowne & Co.	135,878		907,665
Courier Corporation	55,397		789,407
CSS Industries	31,707		616,384
Ennis	528,312		8,870,359
Schawk	3,400		46,240
			11,230,055
Transportation and Logistics - 2.8%
Alexander & Baldwin	494,700		16,933,581
Arkansas Best	304,528		8,962,259
C. H. Robinson Worldwide	256,000		15,034,880
DryShips a,b	8,204		47,747
Euroseas	125,346		490,103
Expeditors International of Washington	458,400		15,920,232
Overseas Shipholding Group	7,800		342,810
SkyWest	337,806		5,715,678
Tidewater	830,071		39,801,904
UTI Worldwide	492,600		7,054,032
			110,303,226
Total (Cost $311,642,975)			403,433,656
Natural Resources – 10.4%
Energy Services - 4.5%
Boardwalk Pipeline Partners L.P.	60,000		1,801,800
CARBO Ceramics	279,100		19,026,247
Energy Transfer Equity L.P.	530,600		16,225,748
Ensign Energy Services	1,136,500		16,300,139
Exterran Partners L.P.	479,700		10,769,265
Helmerich & Payne	312,984		12,481,802
Lufkin Industries	83,529		6,114,323
Major Drilling Group International	270,000		7,427,356
National Fuel Gas	100,528		5,026,400
Nicor	372,892		15,698,753
NuStar GP Holdings	369,200		9,938,864
Patterson-UTI Energy	280,877		4,311,462
Precision Drilling Trust b	861,450		6,245,512
Rowan Companies a	910,005		20,602,513
SEACOR Holdings a	300,600		22,920,750
Trican Well Service	311,700		4,190,373
World Fuel Services	37,700		1,009,983
			180,091,290
Oil and Gas - 4.0%
Cimarex Energy	291,690		15,450,819
Delek US Holdings	122,804		836,295
Energen Corporation	925,081		43,293,791
Enterprise GP Holdings L.P.	285,900		11,141,523
Holly Corporation	75,981		1,947,393
Hugoton Royalty Trust	270,600		4,351,248

74  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Natural Resources (continued)
Oil and Gas (continued)
Magellan Midstream Partners L.P.	423,701	$	18,358,964
Penn Virginia	633,760		13,492,750
Penn Virginia GP Holdings L.P.	305,000		5,087,400
Pioneer Southwest Energy Partners L.P.	638,821		14,341,532
Plains All American Pipeline L.P.	281,530		14,878,861
St. Mary Land & Exploration	46,142		1,579,902
Sunoco Logistics Partners L.P.	231,000		15,451,590
W&T Offshore	97,847		1,144,810
			161,356,878
Precious Metals and Mining - 1.5%
Agnico-Eagle Mines	256,100		13,829,400
Alliance Holdings GP L.P.	528,500		14,507,325
Alliance Resource Partners L.P.	278,000		12,056,860
AMCOL International	22,800		647,976
Gold Fields ADR	434,700		5,698,917
IAMGOLD Corporation	121,000		1,892,440
Lihir Gold ADR	111,000		3,240,090
Natural Resource Partners L.P.	355,402		8,614,944
Titanium Metals a	13,800		172,776
			60,660,728
Real Estate - 0.4%
AMREP Corporation a	23,992		328,691
Deltic Timber	172,000		7,942,960
W.P. Carey & Co.	306,231		8,467,287
			16,738,938
Total (Cost $344,272,225)			418,847,834
Technology – 4.7%
Aerospace and Defense - 0.6%
American Science & Engineering	11,484		870,946
Cubic Corporation	31,509		1,175,286
HEICO Corporation	190,683		8,452,977
HEICO Corporation Cl. A	200,159		7,197,718
Triumph Group	152,988		7,381,671
			25,078,598
Components and Systems - 1.1%
Analogic Corporation	141,400		5,445,314
AVX Corporation	1,136,046		14,393,703
Diebold	18,700		532,015
Methode Electronics	1,348,318		11,703,400
Nam Tai Electronics a	2,038,217		10,659,875
OPTEX Company	30,000		271,157
Sato Corporation	30,000		308,854
			43,314,318
Internet Software and Services - 0.1%
United Online	520,006		3,738,843
IT Services - 1.5%
Black Box	562,222		15,933,371
iGATE Corporation	24,763		247,630
Jack Henry & Associates	685,300		15,844,136
Syntel	2,901		110,325
Total System Services	1,685,525		29,109,017
			61,244,479

	SHARES		VALUE
Technology (continued)
Semiconductors and Equipment - 0.2%
Cognex Corporation	418,300	$	7,412,276
Maxim Integrated Products	36,000		730,800
Melco Holdings	32,000		574,859
Micrel	5,305		43,501
			8,761,436
Software - 0.2%
Fair Isaac	365,090		7,780,068
Telecommunications - 1.0%
ADTRAN	285,100		6,429,005
Atlantic Tele-Network	381,385		20,979,989
CenturyTel	1,951		70,646
Plantronics	31,844		827,307
Shenandoah Telecommunications	108,307		2,204,047
SureWest Communications a,b	271,400		2,703,144
USA Mobility	604,257		6,652,870
			39,867,008
Total (Cost $194,225,741)			189,784,750
Utilities – 2.3%
ALLETE	402,267		13,146,086
Aqua America	819,766		14,354,103
ITC Holdings	250,000		13,022,500
NV Energy	90,000		1,114,200
Otter Tail	15,000		372,000
Piedmont Natural Gas	474,500		12,692,875
PNM Resources	638,900		8,082,085
Portland General Electric	45,400		926,614
SJW	400,400		9,037,028
Southern Union	62,576		1,420,475
UGI Corporation	660,076		15,967,238
Total (Cost $88,764,614)			90,135,204
Miscellaneous d – 2.7%
Total (Cost $103,575,162)			108,425,553
TOTAL COMMON STOCKS
(Cost $3,323,792,009)			3,830,384,949
PREFERRED STOCKS – 0.7%
†LTC Properties 8.00% Ser. F	123,600		3,001,008
MF Global 9.75% Conv.	50,000		4,893,750
Reinsurance Group of America 5.75%
Conv.	94,000		5,918,240
†Urstadt Biddle Properties 8.50% Ser. C	300		29,175
†Urstadt Biddle Properties 7.50% Ser. D	49,200		1,133,568
Vornado Realty Trust 6.75% Ser. F	200,000		4,378,000
Vornado Realty Trust 6.625% Ser. G	400,000		8,660,000
TOTAL PREFERRED STOCKS
(Cost $27,156,025)			28,013,741

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.  The Royce Funds 2009 Annual Report to Shareholders   |   75

Schedules of Investments

Royce Total Return Fund (continued)
		PRINCIPAL
		AMOUNT		VALUE
CORPORATE BONDS – 0.5%
Charming Shoppes 1.125%
Conv. Senior Note due 5/1/14	$	20,000,000	$	14,900,000
Encore Capital Group 3.375%
Conv. Senior Note due 9/19/10		1,000,000		932,500
Leucadia National 3.75%
Conv. Senior Note due 4/15/14		3,000,000		3,607,500
Mueller Industries 6.00%
Sub. Deb. due 11/1/14 b		1,088,000		1,034,960
TOTAL CORPORATE BONDS
(Cost $17,336,790)				20,474,960
REPURCHASE AGREEMENT – 3.3%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10,
maturity value $134,613,075 (collateralized
by obligations of various U.S. Government
Agencies, 0.875%-7.125% due 3/30/10-6/15/10,
valued at $137,979,818)
(Cost $134,613,000)				134,613,000
COLLATERAL RECEIVED FOR SECURITIES
LOANED – 0.2%
Money Market Funds
Federated Government Obligations Fund
(7 day yield-0.0582%)
(Cost $6,822,736)				6,822,736
TOTAL INVESTMENTS – 100.0%
(Cost $3,509,720,560)				4,020,309,386
CASH AND OTHER ASSETS
LESS LIABILITIES – 0.0%				925,141
NET ASSETS – 100.0%			$	4,021,234,527

Royce Heritage Fund
	SHARES		VALUE
COMMON STOCKS – 95.8%
Consumer Products – 5.4%
Apparel, Shoes and Accessories - 1.6%
Anta Sports Products	140,500	$	208,281
Daphne International Holdings	604,900		485,547
Hengdeli Holdings	432,500		163,689
†Luk Fook Holdings (International)	913,600		782,667
Movado Group	55,340		537,905
Stella International Holdings	264,200		478,987
True Religion Apparel a,b	25,300		467,797
			3,124,873
Food/Beverage/Tobacco - 0.5%
Cal-Maine Foods	32,000		1,090,560
Health, Beauty and Nutrition - 0.8%
NBTY a	10,000		435,400
NutriSystem	39,100		1,218,747
			1,654,147
Home Furnishing and Appliances - 1.5%
Ethan Allen Interiors	75,200		1,009,184
Hunter Douglas	19,000		926,971
Mohawk Industries a	20,400		971,040
			2,907,195
Sports and Recreation - 1.0%
†Callaway Golf	105,000		791,700
Thor Industries	39,400		1,237,160
			2,028,860
Total (Cost $7,844,604)			10,805,635
Consumer Services – 2.9%
Leisure and Entertainment - 0.3%
†DreamWorks Animation SKG Cl. A a	14,700		587,265
Online Commerce - 0.0%
1-800-FLOWERS.COM Cl. A a	35,165		93,187
Retail Stores - 2.4%
American Eagle Outfitters	18,300		310,734
Bulgari	58,000		478,895
Cash America International	14,900		520,904
Dress Barn (The) a	48,800		1,127,280
DSW Cl. A a,b	10,800		279,504
EZCORP Cl. A a	43,000		740,030
†GameStop Corporation Cl. A a,b	18,900		414,666
Tiffany & Co.	22,200		954,600
			4,826,613
Other Consumer Services - 0.2%
First Cash Financial Services a	18,900		419,391
Total (Cost $4,478,994)			5,926,456
Financial Intermediaries – 11.0%
Banking - 2.2%
†Bank of New York Mellon (The)	27,900		780,363
Bank Sarasin & Cie Cl. B	12,342		466,435
Banque Privee Edmond de Rothschild	26		648,756
†Julius Baer Group	40,000		1,397,023

76  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Financial Intermediaries (continued)
Banking (continued)
Northern Trust	20,200	$	1,058,480
			4,351,057
Insurance - 2.3%
Berkley (W.R.)	56,200		1,384,768
E-L Financial	2,000		860,563
Fidelity National Financial Cl. A	56,700		763,182
Greenlight Capital Re Cl. A a	13,200		311,124
†Marsh & McLennan	58,600		1,293,888
			4,613,525
Real Estate Investment Trusts - 0.7%
†Cousins Properties	187,858		1,433,357
Securities Brokers - 5.2%
†Cowen Group Cl. A a	294,774		1,745,062
†Egyptian Financial Group-Hermes
Holding	194,000		879,657
FBR Capital Markets a	255,000		1,575,900
Interactive Brokers Group Cl. A a	54,000		956,880
Jefferies Group a	39,200		930,216
Lazard Cl. A	19,400		736,618
Mirae Asset Securities	6,300		350,038
†Raymond James Financial	54,200		1,288,334
†Schwab (Charles)	35,000		658,700
Stifel Financial a,b	22,000		1,303,280
			10,424,685
Securities Exchanges - 0.0%
Singapore Exchange	19,000		112,000
Other Financial Intermediaries - 0.6%
NASDAQ OMX Group (The) a	57,000		1,129,740
Total (Cost $21,411,221)			22,064,364
Financial Services – 11.5%
Diversified Financial Services - 0.4%
†World Acceptance a,b	24,400		874,252
Information and Processing - 3.2%
FactSet Research Systems	3,000		197,610
Interactive Data	28,900		731,170
†MasterCard Cl. A	6,000		1,535,880
Morningstar a	20,000		966,800
Paychex	21,000		643,440
SEI Investments	43,600		763,872
Western Union	84,500		1,592,825
			6,431,597
Insurance Brokers - 0.2%
Gallagher (Arthur J.) & Co.	16,000		360,160
Investment Management - 7.4%
Affiliated Managers Group a	9,450		636,458
AllianceBernstein Holding L.P.	37,500		1,053,750
†Artio Global Investors Cl. A a	57,609		1,468,453
Ashmore Group	353,000		1,534,532
Cohen & Steers	54,700		1,249,348
Evercore Partners Cl. A	13,000		395,200
Federated Investors Cl. B	47,200		1,298,000
Invesco	50,500		1,186,245
Partners Group Holding	7,200		906,834

	SHARES		VALUE
Financial Services (continued)
Investment Management (continued)
Sprott	164,300	$	706,937
T. Rowe Price Group	20,700		1,102,275
Trust Company	34,000		197,551
Value Partners Group a	2,159,000		1,098,440
Waddell & Reed Financial Cl. A	24,460		747,008
Westwood Holdings Group	38,297		1,391,713
			14,972,744
Other Financial Services - 0.3%
†Kennedy-Wilson Holdings a	59,687		534,199
Total (Cost $19,299,026)			23,172,952
Health – 6.1%
Drugs and Biotech - 0.3%
Endo Pharmaceuticals Holdings a	22,000		451,220
WuXi PharmaTech Cayman ADR a	9,195		146,752
			597,972
Health Services - 2.8%
Advisory Board (The) a	31,600		968,856
Air Methods a	8,288		278,643
†Amedisys a,b	33,300		1,617,048
ICON ADR a	24,100		523,693
Pharmaceutical Product Development	65,900		1,544,696
Res-Care a	58,010		649,712
			5,582,648
Medical Products and Devices - 3.0%
†Atrion Corporation	9,800		1,526,056
†Carl Zeiss Meditec	57,000		1,016,707
†Exactech a	57,000		986,670
IDEXX Laboratories a	22,200		1,186,368
Techne Corporation	12,100		829,576
Waters Corporation a	10,000		619,600
			6,164,977
Total (Cost $10,595,135)			12,345,597
Industrial Products – 16.8%
Automotive - 1.2%
Gentex Corporation	40,000		714,000
Minth Group	365,500		538,622
†Nokian Renkaat	28,000		679,367
Norstar Founders Group a,e	533,500		25,115
WABCO Holdings	9,200		237,268
Xinyi Glass Holdings	347,400		313,354
			2,507,726
Building Systems and Components - 2.1%
†AAON	48,900		953,061
Armstrong World Industries a	36,800		1,432,624
Drew Industries a	43,900		906,535
Simpson Manufacturing	32,000		860,480
			4,152,700
Construction Materials - 0.2%
Owens Corning a	17,900		458,956
Industrial Components - 1.8%
†Amphenol Corporation Cl. A	21,900		1,011,342

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.  The Royce Funds 2009 Annual Report to Shareholders   |   77

Schedules of Investments

Royce Heritage Fund (continued)

	SHARES		VALUE
Industrial Products (continued)
Industrial Components (continued)
GrafTech International a	131,600	$	2,046,380
PerkinElmer	27,900		574,461
			3,632,183
Machinery - 4.2%
†Astec Industries a	26,700		719,298
†Burckhardt Compression Holding	3,900		697,950
Franklin Electric	17,500		508,900
Hollysys Automation Technologies a	31,925		383,419
Jinpan International b	22,199		1,058,226
†K-Tron International a	9,086		988,012
Lincoln Electric Holdings	34,000		1,817,640
Rofin-Sinar Technologies a	34,500		814,545
Spirax-Sarco Engineering	48,000		955,629
Tennant Company	17,100		447,849
			8,391,468
Metal Fabrication and Distribution - 3.6%
Allegheny Technologies	21,000		940,170
Carpenter Technology	20,400		549,780
Commercial Metals	9,300		145,545
Foster (L.B.) Company Cl. A a	38,500		1,147,685
Fushi Copperweld a	38,146		386,038
Kennametal	43,800		1,135,296
Nucor Corporation	28,000		1,306,200
†Reliance Steel & Aluminum	16,100		695,842
Schnitzer Steel Industries Cl. A	7,700		367,290
Sims Metal Management ADR	30,400		592,800
			7,266,646
Miscellaneous Manufacturing - 1.3%
China Automation Group	589,400		482,673
Raven Industries	65,200		2,071,404
			2,554,077
Paper and Packaging - 0.6%
†Greif Cl. A	21,500		1,160,570
Pumps, Valves and Bearings - 0.6%
Gardner Denver	21,100		897,805
Kaydon Corporation	10,500		375,480
			1,273,285
Specialty Chemicals and Materials - 0.9%
†Kingboard Chemical Holdings	87,800		348,187
OM Group a	5,100		160,089
†Rogers Corporation a	41,600		1,260,896
			1,769,172
Other Industrial Products - 0.3%
†MTS Systems	23,400		672,516
Total (Cost $25,214,672)			33,839,299
Industrial Services – 14.6%
Advertising and Publishing - 0.2%
ValueClick a	27,500		278,300
Commercial Services - 7.3%
Brink’s Company (The)	45,000		1,095,300
Copart a	27,900		1,021,977
Forrester Research a	14,200		368,490

	SHARES		VALUE
Industrial Services (continued)
Commercial Services (continued)
Gartner a	42,600	$	768,504
Global Sources a	28,930		180,812
Grupo Aeroportuario del Centro Norte ADR b	67,000		891,770
†Grupo Aeroportuario del Pacifico ADR b	29,000		906,540
†Heritage-Crystal Clean a	101,564		1,062,359
Hewitt Associates Cl. A a	13,900		587,414
Manpower	22,000		1,200,760
MAXIMUS	19,500		975,000
†Michael Page International	120,000		727,575
Ritchie Bros. Auctioneers b	91,400		2,050,102
Sotheby’s	52,900		1,189,192
Spherion Corporation a	36,900		207,378
Universal Technical Institute a	15,800		319,160
†Verisk Analytics Cl. A a	39,000		1,180,920
			14,733,253
Engineering and Construction - 1.9%
†Fluor Corporation	27,300		1,229,592
Integrated Electrical Services a	42,300		247,455
KBR	62,800		1,193,200
NVR a	1,600		1,137,136
			3,807,383
Food, Tobacco and Agriculture - 1.8%
Chaoda Modern Agriculture	417,728		444,333
China Green (Holdings)	584,900		553,636
Hanfeng Evergreen a	51,400		363,194
Intrepid Potash a,b	22,900		667,993
†Potash Corporation of Saskatchewan	8,900		965,650
†Sanderson Farms	13,500		569,160
			3,563,966
Printing - 0.3%
CSS Industries	19,057		370,468
Multi-Color Corporation	25,295		308,852
			679,320
Transportation and Logistics - 3.1%
†Expeditors International of Washington	20,000		694,600
Forward Air	47,800		1,197,390
Landstar System	34,200		1,325,934
†Patriot Transportation Holding a	16,504		1,558,968
Universal Truckload Services	46,600		843,460
UTI Worldwide	43,500		622,920
			6,243,272
Total (Cost $26,871,054)			29,305,494
Natural Resources – 8.4%
Energy Services - 5.0%
CE Franklin a	81,100		550,669
Ensign Energy Services	24,800		355,691
Helmerich & Payne	27,000		1,076,760
†Lufkin Industries	32,400		2,371,680
†Major Drilling Group International	25,000		687,718
Oil States International a	45,700		1,795,553
Pason Systems	72,700		809,825

78  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Natural Resources (continued)
Energy Services (continued)
Patterson-UTI Energy	20,900	$	320,815
Rowan Companies a	13,600		307,904
SEACOR Holdings a	8,000		610,000
Trican Well Service	30,800		414,063
Unit Corporation a	6,700		284,750
Willbros Group a	26,400		445,368
			10,030,796
Oil and Gas - 0.4%
†Gran Tierra Energy a,b	67,900		389,067
St. Mary Land & Exploration	9,300		318,432
			707,499
Precious Metals and Mining - 2.3%
†Agnico-Eagle Mines	14,500		783,000
†Pan American Silver a	46,500		1,107,165
Randgold Resources ADR	21,700		1,716,904
Seabridge Gold a	43,500		1,055,745
			4,662,814
Other Natural Resources - 0.7%
†China Forestry Holdings a	2,409,500		680,579
†Magma Energy a	450,000		778,793
			1,459,372
Total (Cost $12,921,467)			16,860,481
Technology – 14.3%
Aerospace and Defense - 0.6%
BE Aerospace a	4,000		94,000
HEICO Corporation	26,200		1,161,446
			1,255,446
Components and Systems - 1.9%
AAC Acoustic Technologies Holdings	215,400		355,980
Benchmark Electronics a	20,000		378,200
Dionex Corporation a	20,000		1,477,400
Synaptics a,b	26,400		809,160
VTech Holdings	33,100		316,430
Western Digital a	9,700		428,255
			3,765,425
IT Services - 2.0%
AsiaInfo Holdings a,b	3,555		108,321
Sapient Corporation a	119,800		990,746
SRA International Cl. A a	93,100		1,778,210
Syntel	18,800		714,964
Yucheng Technologies a	43,390		370,117
			3,962,358
Semiconductors and Equipment - 3.4%
Advanced Energy Industries a	83,000		1,251,640
Analog Devices	49,000		1,547,420
†Chroma ATE	367,608		828,066
Cognex Corporation	50,000		886,000
Diodes a	45,300		926,385
†International Rectifier a	33,000		729,960
Lam Research a	6,600		258,786
MEMC Electronic Materials a	22,000		299,640

	SHARES		VALUE
Technology (continued)
Semiconductors and Equipment (continued)
Varian Semiconductor Equipment
Associates a	4,400	$	157,872
			6,885,769
Software - 4.8%
Adobe Systems a	20,000		735,600
American Software Cl. A	60,830		364,980
ANSYS a	28,400		1,234,264
Autodesk a	23,000		584,430
†Avid Technology a	50,000		638,000
†Blackboard a	23,000		1,043,970
National Instruments	56,300		1,658,035
NCR Corporation a,b	92,000		1,023,960
†Parametric Technology a	56,300		919,942
Pegasystems	28,050		953,700
SkillSoft ADR a	59,000		618,320
			9,775,201
Telecommunications - 1.6%
ADTRAN	32,400		730,620
Cogo Group a	30,705		226,296
Comtech Telecommunications a	22,200		778,110
†Corning	38,400		741,504
Tekelec a	43,900		670,792
			3,147,322
Total (Cost $22,552,341)			28,791,521
Miscellaneous d – 4.8%
Total (Cost $7,923,678)			9,772,506
TOTAL COMMON STOCKS
(Cost $159,112,192)			192,884,305
REPURCHASE AGREEMENT – 3.9%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10,
maturity value $7,800,004 (collateralized
by obligations of various U.S. Government
Agencies, 7.00% due 3/15/10, valued at $7,995,375)
(Cost $7,800,000)			7,800,000
COLLATERAL RECEIVED FOR SECURITIES
LOANED – 3.5%
Money Market Funds
Federated Government Obligations Fund
(7 day yield-0.0582%)
(Cost $7,086,674)			7,086,674
TOTAL INVESTMENTS – 103.2%
(Cost $173,998,866)			207,770,979
LIABILITIES LESS CASH
AND OTHER ASSETS – (3.2)%			(6,425,006	)
NET ASSETS – 100.0%		$	201,345,973

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. Royce Capital Fund 2009 Annual Report to Shareholders  |  79

Schedules of Investments

Royce Opportunity Fund

	SHARES		VALUE
COMMON STOCKS – 95.0%
Consumer Products – 4.1%
Apparel, Shoes and Accessories - 2.4%
Bernard Chaus a	1,006,258	$	291,815
Frederick’s of Hollywood Group a	695,572		1,105,960
Hanesbrands a	510,900		12,317,799
Jones Apparel Group	636,171		10,216,906
Liz Claiborne a,b	1,520,319		8,559,396
Quiksilver a,b	1,499,800		3,029,596
Warnaco Group (The) a	85,079		3,589,483
			39,110,955
Consumer Electronics - 0.4%
Harman International Industries b	196,238		6,923,277
Food/Beverage/Tobacco - 0.1%
Smart Balance a,b	275,200		1,651,200
Home Furnishing and Appliances - 0.9%
Furniture Brands International a	1,348,101		7,360,631
La-Z-Boy a	896,000		8,538,880
			15,899,511
Sports and Recreation - 0.3%
Steinway Musical Instruments a	298,700		4,752,317
Total (Cost $86,596,741)			68,337,260
Consumer Services – 12.8%
Leisure and Entertainment - 0.7%
Cinemark Holdings	496,000		7,127,520
Orient-Express Hotels Cl. A a	422,200		4,281,108
			11,408,628
Media and Broadcasting - 0.1%
Ballantyne Strong a,b	643,150		2,398,949
Online Commerce - 0.5%
Alloy a	359,100		2,793,798
Autobytel a	771,311		771,311
1-800-FLOWERS.COM Cl. A a	1,467,627		3,889,212
			7,454,321
Restaurants and Lodgings - 1.7%
California Pizza Kitchen a,b	430,885		5,795,403
Cheesecake Factory a,b	37,418		807,855
Jamba a,b	2,227,267		3,741,809
Krispy Kreme Doughnuts a,b	2,038,100		6,012,395
†Red Robin Gourmet Burgers a,b	411,076		7,358,260
Ruby Tuesday a,b	597,500		4,302,000
			28,017,722
Retail Stores - 9.8%
bebe Stores	591,200		3,706,824
Brown Shoe	976,044		9,633,554
Cabela’s a,b	162,300		2,314,398
Coldwater Creek a,b	255,500		1,139,530
Collective Brands a	619,900		14,115,123
Conn’s a,b	232,242		1,356,293
Cost Plus a	1,103,440		1,125,509
dELiA*s a,c	2,037,584		3,810,282
Dillard’s Cl. A	766,700		14,145,615
Dress Barn (The) a,b	233,679		5,397,985

	SHARES		VALUE
Consumer Services (continued)
Retail Stores (continued)
Gander Mountain a,b	541,582	$	2,762,068
Genesco a,b	284,500		7,812,370
Group 1 Automotive a,b	167,790		4,756,847
Lithia Motors Cl. A a,b	847,950		6,970,149
MarineMax a,b,c	1,285,700		11,815,583
New York & Company a	1,436,214		6,161,358
Pacific Sunwear of California a	509,500		2,027,810
Penske Automotive Group a,b	515,056		7,818,550
Pep Boys-Manny, Moe & Jack (The)	332,700		2,814,642
†Pier 1 Imports a,b	1,190,700		6,060,663
Rent-A-Center a,b	418,500		7,415,820
REX Stores a,b,c	670,200		9,423,012
Saks a	1,563,750		10,258,200
Talbots (The) a,b	656,200		5,846,742
West Marine a,b	980,282		7,901,073
†Zumiez a,b	347,835		4,424,461
			161,014,461
Total (Cost $228,258,926)			210,294,081
Financial Intermediaries – 3.8%
Banking - 2.2%
Boston Private Financial Holdings	994,830		5,740,169
Cascade Financial b	437,412		971,055
First BanCorp of Puerto Rico b	139,704		321,319
Guaranty Bancorp a,b	768,101		1,013,893
Old National Bancorp	253,500		3,151,005
Pacific Mercantile Bancorp a	121,900		370,576
SPDR KBW Regional Banking ETF	248,600		5,531,350
Sterling Bancorp	521,900		3,726,366
Superior Bancorp a,b	140,300		461,587
†SVB Financial Group a,b	144,900		6,040,881
Texas Capital Bancshares a	237,300		3,312,708
Umpqua Holdings	388,400		5,208,444
			35,849,353
Insurance - 1.1%
Fidelity National Financial Cl. A	490,500		6,602,130
Hilltop Holdings a,b	356,900		4,154,316
MBIA a,b	710,900		2,829,382
Meadowbrook Insurance Group	716,000		5,298,400
			18,884,228
Real Estate Investment Trusts - 0.3%
RAIT Financial Trust a,b	1,014,200		1,328,602
†Walter Investment Management	255,253		3,657,776
			4,986,378
Securities Brokers - 0.2%
†Penson Worldwide a,b	375,130		3,398,678
Total (Cost $78,932,049)			63,118,637
Financial Services – 0.6%
Diversified Financial Services - 0.2%
CIT Group	104,500		2,885,245

80  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Financial Services (continued)
Investment Management - 0.4%
Evercore Partners Cl. A	231,700	$	7,043,680
Total (Cost $7,725,784)			9,928,925
Health – 3.3%
Commercial Services - 0.4%
Greatbatch a	81,842		1,573,822
†PAREXEL International a	384,162		5,416,684
			6,990,506
Drugs and Biotech - 0.9%
Cambrex Corporation a,c	1,595,708		8,904,051
†Kendle International a,b	331,346		6,066,945
			14,970,996
Health Services - 1.1%
Albany Molecular Research a	549,959		4,993,628
†Brookdale Senior Living a,b	330,000		6,002,700
Kindred Healthcare a	342,400		6,320,704
			17,317,032
Medical Products and Devices - 0.6%
AngioDynamics a	277,069		4,455,270
Del Global Technologies a	753,148		451,889
Digirad Corporation a	789,102		1,657,114
Home Diagnostics a,b	583,043		3,556,562
			10,120,835
Personal Care - 0.3%
†Elizabeth Arden a	287,040		4,144,857
Total (Cost $53,244,842)			53,544,226
Industrial Products – 22.8%
Automotive - 1.5%
ArvinMeritor a,b	1,016,705		11,366,762
Cooper Tire & Rubber	207,868		4,167,753
†Dana Holding Corporation a	863,850		9,364,134
			24,898,649
Building Systems and Components - 0.2%
NCI Building Systems a,b	1,069,000		1,934,890
PGT a	903,781		1,897,940
			3,832,830
Construction Materials - 1.4%
Louisiana-Pacific Corporation a	1,488,300		10,388,334
Trex Company a,b	602,640		11,811,744
			22,200,078
Industrial Components - 2.3%
CTS Corporation	1,007,364		9,690,842
Gerber Scientific a,b,c	1,267,500		6,400,875
GrafTech International a	362,460		5,636,253
Hawk Corporation Cl. A a	154,300		2,717,223
Magnetek a	1,243,418		1,914,864
Mueller Water Products Cl. A	561,075		2,917,590
Planar Systems a,b,c	1,372,633		3,912,004
Zygo Corporation a,b	637,150		4,288,019
			37,477,670
Machinery - 2.2%
Astec Industries a,b	232,033		6,250,969

	SHARES		VALUE
Industrial Components (continued)
Machinery (continued)
Baldor Electric	232,300	$	6,525,307
EnPro Industries a	298,000		7,870,180
Flow International a	1,515,796		4,668,652
Hardinge	498,240		2,740,320
Hurco Companies a,b	220,595		3,264,806
Thermadyne Holdings a,b,c	713,971		5,190,569
			36,510,803
Metal Fabrication and Distribution - 3.6%
Carpenter Technology	365,781		9,857,798
Haynes International	303,254		9,998,285
Insteel Industries	509,300		6,620,900
Ladish Company a	465,074		7,013,316
NN a	778,750		3,083,850
Northwest Pipe a	217,620		5,845,273
RTI International Metals a	104,700		2,635,299
Timken Company (The)	454,500		10,776,195
Trinity Industries	177,350		3,092,984
			58,923,900
Miscellaneous Manufacturing - 1.8%
Barnes Group	311,100		5,257,590
Crane Company	332,800		10,190,336
Flanders Corporation a,b	1,266,720		5,649,571
Griffon Corporation a,b	751,927		9,188,548
			30,286,045
Paper and Packaging - 1.6%
Albany International Cl. A	419,800		9,428,708
†Boise a,b	414,000		2,198,340
Graphic Packaging Holding Company a	1,500,800		5,207,776
Temple-Inland	415,600		8,773,316
			25,608,140
Pumps, Valves and Bearings - 0.8%
CIRCOR International	202,567		5,100,637
Gardner Denver	100,000		4,255,000
Robbins & Myers	163,200		3,838,464
			13,194,101
Specialty Chemicals and Materials - 6.6%
Aceto Corporation	652,245		3,359,062
Cytec Industries	237,613		8,653,865
Ferro Corporation	1,537,200		12,666,528
H.B. Fuller Company	446,900		10,166,975
Lydall a,c	874,600		4,556,666
Material Sciences a,c	970,950		1,718,581
OM Group a,b	160,980		5,053,162
Park Electrochemical	398,742		11,021,229
Penford Corporation b	13,212		114,812
PolyOne Corporation a	1,462,050		10,921,514
Quaker Chemical	367,700		7,589,328
Rockwood Holdings a	346,600		8,165,896
Solutia a	1,007,300		12,792,710
Spartech Corporation	1,129,361		11,587,244
			108,367,572
Textiles - 0.8%
Dixie Group a,c	698,444		1,892,783
Interface Cl. A	521,100		4,330,341

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. Royce Capital Fund 2009 Annual Report to Shareholders  |  81

Schedules of Investments

Royce Opportunity Fund (continued)

	SHARES		VALUE
Industrial Products (continued)
Textiles (continued)
Unifi a	1,855,318	$	7,198,634
			13,421,758
Total (Cost $351,843,755)			374,721,546
Industrial Services – 8.0%
Advertising and Publishing - 2.5%
Harris Interactive a,b	1,795,419		2,136,548
Martha Stewart Living Omnimedia Cl. A a	997,556		4,927,927
McClatchy Company (The) Cl. A b	1,134,900		4,017,546
MDC Partners Cl. A a	296,373		2,471,751
Media General Cl. A a	893,200		7,002,688
†New York Times Cl. A a,b	544,300		6,727,548
Scholastic Corporation	332,000		9,903,560
ValueClick a	391,691		3,963,913
			41,151,481
Commercial Services - 2.1%
Cinedigm Digital Cinema Cl. A a	1,235,400		1,531,896
Furmanite Corporation a	1,064,099		4,054,217
Hudson Highland Group a	251,651		1,192,826
†Kansas City Southern a,b	118,000		3,928,220
Rentrak Corporation a,b	263,500		4,656,045
TRC Companies a,c	1,756,647		5,252,375
United Rentals a,b	814,040		7,985,732
Volt Information Sciences a,b	584,079		5,840,790
			34,442,101
Engineering and Construction - 1.7%
Comstock Homebuilding Cl. A a	911,315		738,165
Great Lakes Dredge & Dock	410,600		2,660,688
Hovnanian Enterprises Cl. A a	1,259,532		4,836,603
iShares Dow Jones US Home Construction Index Fund	301,200		3,617,412
M.D.C. Holdings	236,800		7,350,272
Toll Brothers a,b	428,084		8,052,260
			27,255,400
Printing - 0.3%
Bowne & Co.	771,486		5,153,526
Transportation and Logistics - 1.4%
AirTran Holdings a,b	584,800		3,052,656
Atlas Air Worldwide Holdings a	257,000		9,573,250
†JetBlue Airways a	258,400		1,408,280
Overseas Shipholding Group	207,000		9,097,650
			23,131,836
Total (Cost $160,237,859)			131,134,344
Natural Resources – 3.5%
Energy Services - 1.5%
Allis-Chalmers Energy a,b	931,766		3,512,758
Matrix Service a	508,100		5,411,265
Newpark Resources a,b	1,601,600		6,774,768
Rowan Companies a	150,400		3,405,056
StealthGas	841,434		5,242,134
			24,345,981

	SHARES		VALUE
Natural Resources (continued)
Oil and Gas - 1.0%
†Goodrich Petroleum a,b	257,600	$	6,272,560
Stone Energy a	393,700		7,106,285
Swift Energy a,b	148,800		3,565,248
			16,944,093
Precious Metals and Mining - 1.0%
Century Aluminum a,b	983,400		15,921,246
Total (Cost $52,135,451)			57,211,320
Technology – 31.2%
Aerospace and Defense - 2.2%
CPI Aerostructures a	225,853		1,357,377
GenCorp a	680,042		4,760,294
Hexcel Corporation a	623,600		8,094,328
Kaman Corporation	399,013		9,213,210
Mercury Computer Systems a	736,500		8,108,865
Moog Cl. A a	167,300		4,890,179
			36,424,253
Components and Systems - 4.9%
Analogic Corporation	90,637		3,490,431
Benchmark Electronics a	555,650		10,507,341
Cray a	612,468		3,932,045
Data I/O Corporation a	243,500		1,086,010
Dot Hill Systems a,b	2,233,961		4,244,526
Evans & Sutherland Computer a,c	766,730		76,673
Hypercom Corporation a	1,721,316		5,456,572
Interlink Electronics a,c	792,875		261,649
Intermec a	757,850		9,745,951
Interphase Corporation a,b,c	404,700		1,036,032
Keithley Instruments	345,800		1,607,970
KEMET Corporation a,b	1,527,264		1,802,171
Maxwell Technologies a	424,711		7,576,844
Merix Corporation a,c	1,722,167		4,219,309
Network Engines a	1,043,146		1,397,816
Newport Corporation a	943,787		8,673,402
Perceptron a	382,813		1,228,830
SCM Microsystems a	907,420		2,050,769
SigmaTron International a,c	329,572		1,647,860
Vishay Intertechnology a,b	1,335,423		11,150,782
			81,192,983
Distribution - 0.9%
Bell Microproducts a,b	1,253,870		4,451,238
†Ingram Micro Cl. A a,b	602,400		10,511,880
			14,963,118
Internet Software and Services - 1.6%
EarthLink	1,172,800		9,745,968
InfoSpace a	1,031,221		8,837,564
Lionbridge Technologies a	737,310		1,695,813
S1 Corporation a	148,100		965,612
Support.com a,b	1,573,600		4,154,304
WebMediaBrands a,b	1,292,982		1,163,684
			26,562,945
Semiconductors and Equipment - 13.2%
Actel Corporation a	752,563		8,940,448

82  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Technology (continued)
Semiconductors and Equipment (continued)
Advanced Energy Industries a	686,656	$	10,354,772
ANADIGICS a	1,388,830		5,860,863
AXT a,c	1,796,352		5,838,144
Brooks Automation a	934,600		8,018,868
BTU International a,c	622,455		3,952,589
Cascade Microtech a,b	369,372		1,662,174
Cirrus Logic a	299,666		2,043,722
Cohu	523,700		7,305,615
Fairchild Semiconductor International a	1,010,100		10,090,899
FEI Company a	373,600		8,727,296
Ikanos Communications a	1,491,821		2,789,705
International Rectifier a,b	339,002		7,498,724
Intevac a	475,908		5,458,665
Kulicke & Soffa Industries a	1,377,500		7,424,725
LeCroy Corporation a,c	855,536		3,122,706
†LTX-Credence Corporation a,b	1,315,583		2,341,738
MEMC Electronic Materials a	566,800		7,719,816
Mentor Graphics a,b	1,069,700		9,445,451
Microsemi Corporation a	279,500		4,961,125
Nanometrics a	713,836		8,087,762
Novellus Systems a	475,901		11,107,529
Pericom Semiconductor a,b	750,892		8,657,785
PLX Technology a,b	1,329,512		4,294,324
†Rudolph Technologies a	310,408		2,085,942
Sanmina-SCI Corporation a,b	725,800		8,005,574
Silicon Storage Technology a	924,167		2,365,868
Standard Microsystems a	328,900		6,834,542
SunPower Corporation Cl. B a,b	190,968		4,000,780
TranSwitch Corporation a	232,021		487,244
TriQuint Semiconductor a,b	1,006,572		6,039,432
TTM Technologies a	513,000		5,914,890
Ultra Clean Holdings a	505,600		3,534,144
Varian Semiconductor Equipment Associates a	196,900		7,064,772
Veeco Instruments a	191,400		6,323,856
White Electronic Designs a	602,267		2,812,587
Zoran Corporation a	475,339		5,252,496
			216,427,572
Software - 1.9%
Aspen Technology a	642,235		6,293,903
Avid Technology a	335,228		4,277,509
Bottomline Technologies a	848,198		14,902,839
Concurrent Computer a,b,c	459,787		1,839,148
Epicor Software a,b	479,085		3,650,628
			30,964,027
Telecommunications - 6.5%
ADC Telecommunications a,b	989,445		6,144,453
ClearOne Communications a,c	699,862		2,211,564
†Finisar Corporation a,b	550,300		4,908,676
General Communication Cl. A a	903,405		5,763,724
Globecomm Systems a	625,653		4,892,606
Harmonic a	1,112,200		7,040,226
Harris Stratex Networks Cl. A a	1,494,538		10,327,258
Loral Space & Communications a,b	270,909		8,563,433
MasTec a	660,600		8,257,500

		SHARES		VALUE
Technology (continued)
Telecommunications (continued)
Network Equipment Technologies a,b,c		1,830,887	$	7,415,092
Oplink Communications a		669,067		10,966,008
Opnext a		1,039,599		1,975,238
Optical Cable a		307,365		1,014,305
Powerwave Technologies a,b		1,705,150		2,148,489
Symmetricom a,b		1,040,204		5,409,061
Tekelec a		460,650		7,038,732
Tollgrade Communications a		623,388		3,808,901
UTStarcom a		2,457,102		5,381,053
†Veraz Networks a		477,567		453,689
Westell Technologies Cl. A a		2,396,109		2,875,331
				106,595,339
Total (Cost $568,204,998)				513,130,237
Miscellaneous d – 4.9%
Total (Cost $68,841,278)				80,454,474
TOTAL COMMON STOCKS
(Cost $1,656,021,683)				1,561,875,050
	PRINCIPAL
	AMOUNT
CORPORATE BONDS – 0.2%
†ADC Telecommunications 3.50% Conv. Sub. Note due 7/15/15	$	1,467,000		1,118,588
†Powerwave Technologies 3.875% Conv. Sub. Note due 10/1/27		3,393,000		2,196,967
TOTAL CORPORATE BONDS
(Cost $2,168,115)				3,315,555
REPURCHASE AGREEMENT – 4.8%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10, maturity value $79,114,044 (collateralized by obligations of various U.S. Government Agencies, 5.25%-7.125% due 6/15/10-6/28/10, valued at $81,095,806) (Cost $79,114,000)				79,114,000
COLLATERAL RECEIVED FOR SECURITIES
LOANED – 5.3%
Money Market Funds
Federated Government Obligations Fund (7 day yield-0.0582%) (Cost $87,748,466)				87,748,466
TOTAL INVESTMENTS – 105.3%
(Cost $1,825,052,264)				1,732,053,071
LIABILITIES LESS CASH
AND OTHER ASSETS – (5.3)%				(86,947,925	)
NET ASSETS – 100.0%			$	1,645,105,146

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. Royce Capital Funds 2009 Annual Report to Shareholders  |  83

Schedules of Investments

Royce Special Equity Fund

	SHARES		VALUE
COMMON STOCKS – 81.8%
Consumer Products – 14.3%
Apparel, Shoes and Accessories - 3.9%
†Deckers Outdoor a	136,500	$	13,884,780
K-Swiss Cl. A a	646,500		6,426,210
Movado Group b	1,074,300		10,442,196
†Volcom a,b	409,300		6,851,682
Wolverine World Wide	360,000		9,799,200
			47,404,068
Food/Beverage/Tobacco - 3.6%
Lancaster Colony	600,500		29,844,850
National Beverage a	970,071		13,445,184
			43,290,034
Home Furnishing and Appliances - 6.1%
Hooker Furniture c	577,640		7,145,407
Koss Corporation c,e	450,262		225,131
National Presto Industries c	499,500		54,560,385
Universal Electronics a,b	556,500		12,921,930
			74,852,853
Sports and Recreation - 0.7%
†Hasbro	276,000		8,848,560
Total (Cost $119,209,519)			174,395,515
Consumer Services – 9.0%
Leisure and Entertainment - 0.3%
Bowl America Cl. A c	303,587		3,961,810
Restaurants and Lodgings - 1.0%
Frisch’s Restaurants c	506,784		12,086,798
Retail Stores - 7.7%
American Eagle Outfitters	787,200		13,366,656
Arden Group Cl. A	118,500		11,330,970
Barnes & Noble	373,036		7,113,797
Bed Bath & Beyond a	131,900		5,095,297
†Buckle (The) b	374,800		10,974,144
Gymboree Corporation a,b	528,000		22,962,720
†PetSmart	530,300		14,153,707
Tiffany & Co.	201,100		8,647,300
			93,644,591
Total (Cost $82,863,396)			109,693,199
Financial Services – 1.1%
Information and Processing - 1.1%
Interactive Data	518,700		13,123,110
Total (Cost $12,018,470)			13,123,110
Health – 8.8%
Commercial Services - 0.5%
Owens & Minor	141,100		6,057,423
Health Services - 1.2%
†Pharmaceutical Product Development	448,100		10,503,464
Psychemedics Corporation c	436,672		3,209,539
			13,713,003
Medical Products and Devices - 7.1%
Atrion Corporation c	132,000		20,555,040

	SHARES		VALUE
Health (continued)
Medical Products and Devices (continued)
Bio-Rad Laboratories Cl. A a	314,500	$	30,336,670
Mesa Laboratories c	231,644		6,103,820
Schein (Henry) a,b	247,900		13,039,540
STERIS Corporation	436,500		12,208,905
Utah Medical Products	149,216		4,375,013
			86,618,988
Total (Cost $77,086,992)			106,389,414
Industrial Products – 26.9%
Automotive - 1.3%
Dorman Products a,c	1,059,063		16,584,926
Industrial Components - 3.2%
Hubbell Cl. B	675,500		31,951,150
Powell Industries a	220,994		6,967,941
			38,919,091
Machinery - 7.1%
Ampco-Pittsburgh c	536,000		16,900,080
Hurco Companies a,c	334,900		4,956,520
K-Tron International a,b	138,900		15,103,986
Nordson Corporation	137,100		8,387,778
Regal-Beloit	316,000		16,413,040
Rofin-Sinar Technologies a	495,000		11,686,950
Wabtec Corporation	317,000		12,946,280
			86,394,634
Metal Fabrication and Distribution - 3.7%
Carpenter Technology	365,000		9,836,750
Central Steel & Wire	2,250		1,575,000
†Foster (L.B.) Company Cl. A a,c	752,911		22,444,277
Insteel Industries	831,510		10,809,630
			44,665,657
Miscellaneous Manufacturing - 2.5%
Carlisle Companies	437,500		14,988,750
Met-Pro Corporation	621,100		6,596,082
Standex International	480,000		9,643,200
			31,228,032
Paper and Packaging - 1.9%
†Clearwater Paper a	414,300		22,774,071
Pumps, Valves and Bearings - 0.9%
IDEX Corporation	125,300		3,903,095
Kaydon Corporation	194,500		6,955,320
			10,858,415
Specialty Chemicals and Materials - 6.3%
Hawkins	351,843		7,680,733
Lubrizol Corporation (The)	391,900		28,589,105
Park Electrochemical	1,007,000		27,833,480
Schulman (A.)	603,300		12,174,594
			76,277,912
Total (Cost $259,439,436)			327,702,738
Industrial Services – 8.9%
Advertising and Publishing - 1.5%
Meredith Corporation	594,000		18,324,900

84  |   The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Industrial Services (continued)
Commercial Services - 3.2%
†APAC Customer Services a,b	296,705	$	1,768,362
Cintas Corporation	475,400		12,384,170
MPS Group a	500,200		6,872,748
Watson Wyatt Worldwide Cl. A	368,900		17,530,128
			38,555,408
Industrial Distribution - 3.2%
Applied Industrial Technologies	620,000		13,683,400
Lawson Products c	582,700		10,284,655
Watsco	291,500		14,277,670
			38,245,725
Printing - 1.0%
CSS Industries c	646,000		12,558,240
Total (Cost $96,098,391)			107,684,273
Natural Resources – 1.5%
Energy Services - 1.5%
Lufkin Industries	155,800		11,404,560
RPC	622,000		6,468,800
Total (Cost $13,523,128)			17,873,360
Technology – 8.7%
Components and Systems - 3.8%
AVX Corporation	1,007,500		12,765,025
Rimage Corporation a	298,500		5,175,990
Thomas & Betts a	607,000		21,724,530
Zebra Technologies Cl. A a	231,600		6,568,176
			46,233,721
Internet Software and Services - 1.0%
†Computer Services	334,000		11,957,200
IT Services - 1.4%
†Sykes Enterprises a,b	655,500		16,695,585
Semiconductors and Equipment - 0.9%
Advanced Energy Industries a	481,200		7,256,496
MKS Instruments a	261,700		4,556,197
			11,812,693
Software - 0.4%
Versant Corporation a,c	310,614		4,739,970
Telecommunications - 1.2%
Plantronics	570,000		14,808,600
Total (Cost $88,130,493)			106,247,769
Miscellaneous d – 2.6%
Total (Cost $30,000,638)			31,181,351
TOTAL COMMON STOCKS
(Cost $778,370,463)			994,290,729

		VALUE
REPURCHASE AGREEMENT – 18.0%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10,
maturity value $218,352,121 (collateralized
by obligations of various U.S. Government
Agencies, 7.00% due 3/15/10, valued at
$223,813,575)
(Cost $218,352,000)	$	218,352,000
COLLATERAL RECEIVED FOR SECURITIES LOANED – 0.1%
Money Market Funds
Federated Government Obligations Fund
(7 day yield-0.0582%)
(Cost $1,748,662)		1,748,662
TOTAL INVESTMENTS – 99.9%
(Cost $998,471,125)		1,214,391,391
CASH AND OTHER ASSETS LESS LIABILITIES – 0.1%		1,790,331
NET ASSETS – 100.0%	$	1,216,181,722

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. Royce Capital Funds 2009 Annual Report to Shareholders  |  85

Schedules of Investments

Royce Value Fund

	SHARES		VALUE
COMMON STOCKS – 92.5%
Consumer Products – 5.9%
Apparel, Shoes and Accessories - 3.4%
†Coach	596,095	$	21,775,351
Fossil a	714,904		23,992,178
Polo Ralph Lauren Cl. A	46,100		3,733,178
			49,500,707
Health, Beauty and Nutrition - 2.0%
NBTY a,b	662,382		28,840,112
Sports and Recreation - 0.5%
Thor Industries	250,000		7,850,000
Total (Cost $51,633,425)			86,190,819
Consumer Services – 9.7%
Leisure and Entertainment - 1.1%
International Speedway Cl. A	543,695		15,468,123
Retail Stores - 8.6%
American Eagle Outfitters	904,258		15,354,301
Buckle (The) b	1,189,783		34,836,846
Dress Barn (The) a,b	1,370,580		31,660,398
†Family Dollar Stores	771,995		21,484,621
GameStop Corporation Cl. A a,b	974,400		21,378,336
			124,714,502
Total (Cost $133,218,995)			140,182,625
Financial Intermediaries – 12.3%
Insurance - 9.9%
†Allied World Assurance Company Holdings	439,052		20,227,126
†Arch Capital Group a	343,631		24,586,798
Aspen Insurance Holdings	915,100		23,289,295
Max Capital Group	679,197		15,146,093
PartnerRe	503,105		37,561,819
Validus Holdings	843,529		22,724,671
			143,535,802
Securities Brokers - 2.4%
Knight Capital Group Cl. A a	2,319,617		35,722,102
Total (Cost $167,153,419)			179,257,904
Financial Services – 3.0%
Investment Management - 3.0%
Federated Investors Cl. B	1,566,411		43,076,303
Total (Cost $34,011,009)			43,076,303
Health – 3.9%
Health Services - 2.8%
†Gentiva Health Services a	594,787		16,065,197
†Pharmaceutical Product Development	1,057,380		24,784,987
			40,850,184
Medical Products and Devices - 1.1%
†Patterson Companies a	575,729		16,108,897
Total (Cost $49,277,850)			56,959,081

	SHARES		VALUE
Industrial Products – 12.0%
Building Systems and Components - 0.9%
Simpson Manufacturing	492,200	$	13,235,258
Machinery - 2.4%
Lincoln Electric Holdings	466,535		24,940,961
Rofin-Sinar Technologies a	370,986		8,758,979
			33,699,940
Metal Fabrication and Distribution - 5.6%
Reliance Steel & Aluminum	907,600		39,226,472
Schnitzer Steel Industries Cl. A	432,900		20,649,330
Sims Metal Management ADR	1,108,638		21,618,441
			81,494,243
Pumps, Valves and Bearings - 3.1%
Gardner Denver	510,191		21,708,627
Pfeiffer Vacuum Technology	281,000		23,556,079
			45,264,706
Total (Cost $177,325,893)			173,694,147
Industrial Services – 9.6%
Commercial Services - 3.6%
ManTech International Cl. A a	684,686		33,056,640
MAXIMUS	372,092		18,604,600
			51,661,240
Engineering and Construction - 1.2%
†Jacobs Engineering Group a	452,500		17,018,525
Food, Tobacco and Agriculture - 1.7%
Hormel Foods	656,344		25,236,427
Industrial Distribution - 0.4%
Applied Industrial Technologies	232,000		5,120,240
Transportation and Logistics - 2.7%
†Kirby Corporation a	423,849		14,762,661
†Tidewater	518,612		24,867,445
			39,630,106
Total (Cost $126,272,780)			138,666,538
Natural Resources – 24.5%
Energy Services - 10.3%
Ensign Energy Services	1,182,700		16,962,758
Helmerich & Payne	218,100		8,697,828
Major Drilling Group International	808,100		22,229,801
Oil States International a	547,485		21,510,686
Rowan Companies a	923,013		20,897,014
Tesco Corporation a	578,700		7,471,017
Trican Well Service	1,136,800		15,282,696
Unit Corporation a	845,475		35,932,687
			148,984,487
Oil and Gas - 2.2%
Cimarex Energy	140,992		7,468,346
†Energen Corporation	531,566		24,877,289
			32,345,635
Precious Metals and Mining - 11.2%
Agnico-Eagle Mines	197,600		10,670,400
†Fresnillo	1,281,700		16,157,790
Gammon Gold a	2,136,200		23,519,562

86  |  Royce Capital Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Natural Resources (continued)
Precious Metals and Mining (continued)
Ivanhoe Mines a	1,486,600	$	21,719,226
Pan American Silver a	875,430		20,843,989
Randgold Resources ADR	104,100		8,236,392
Red Back Mining a	1,080,900		15,502,701
†Seabridge Gold a	775,900		18,831,093
Silver Standard Resources a	1,260,601		27,569,344
			163,050,497
Real Estate - 0.8%
†PICO Holdings a	347,222		11,364,576
Total (Cost $316,443,243)			355,745,195
Technology – 10.3%
Aerospace and Defense - 0.6%
Ceradyne a	430,000		8,260,300
Components and Systems - 0.3%
†Teradata Corporation a	118,400		3,721,312
IT Services - 1.7%
Total System Services	1,475,200		25,476,704
Semiconductors and Equipment - 4.7%
Advanced Energy Industries a	92,420		1,393,694
Cabot Microelectronics a	298,609		9,842,153
Lam Research a	468,200		18,358,122
MKS Instruments a	777,200		13,531,052
Novellus Systems a	701,131		16,364,397
Varian Semiconductor Equipment Associates a	178,945		6,420,546
Verigy a	236,530		3,044,141
			68,954,105
Telecommunications - 3.0%
Comtech Telecommunications a	1,150,615		40,329,056
NETGEAR a	140,955		3,057,314
			43,386,370
Total (Cost $154,236,101)			149,798,791
Miscellaneous d – 1.3%
Total (Cost $16,739,559)			19,312,286
TOTAL COMMON STOCKS
(Cost $1,226,312,274)			1,342,883,689
REPURCHASE AGREEMENT – 7.3%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10,
maturity value $106,237,059 (collateralized
by obligations of various U.S. Government
Agencies, due 3/29/10, valued at $108,895,525)
(Cost $106,237,000)			106,237,000
COLLATERAL RECEIVED FOR SECURITIES LOANED – 0.4%
Money Market Funds
Federated Government Obligations Fund
(7 day yield-0.0582%)
(Cost $6,143,733)			6,143,733

		VALUE
TOTAL INVESTMENTS – 100.2%
(Cost $1,338,693,007)	$	1,455,264,422
LIABILITIES LESS CASH AND OTHER ASSETS – (0.2)%		(3,534,691	)
NET ASSETS – 100.0%	$	1,451,729,731

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. Royce Capital Funds 2009 Annual Report to Shareholders  |  87

Schedules of Investments

Royce Value Plus Fund

	SHARES		VALUE
COMMON STOCKS – 95.4%
Consumer Products – 5.6%
Apparel, Shoes and Accessories - 3.2%
†Coach	1,130,500	$	41,297,165
Gildan Activewear a,b	2,468,800		60,189,344
			101,486,509
Food/Beverage/Tobacco - 0.5%
Heckmann Corporation a,b	2,550,000		12,724,500
Heckmann Corporation (Warrants) a	2,000,000		1,740,000
			14,464,500
Health, Beauty and Nutrition - 1.6%
Inter Parfums	1,205,304		14,668,550
NutriSystem	1,158,874		36,122,102
			50,790,652
Other Consumer Products - 0.3%
Shamir Optical Industry c	1,257,200		10,057,600
Total (Cost $156,460,493)			176,799,261
Consumer Services – 8.1%
Leisure and Entertainment - 1.4%
DreamWorks Animation SKG Cl. A a	1,130,548		45,165,393
Online Commerce - 1.1%
Liquidity Services a,c	1,748,723		17,609,641
LoopNet a,b	1,676,200		16,661,428
			34,271,069
Restaurants and Lodgings - 0.7%
Chipotle Mexican Grill a	218,000		19,218,880
Cosi a,c	3,997,600		2,398,560
†Cosi (Rights) c,e	3,997,600		97,821
			21,715,261
Retail Stores - 4.9%
A.C. Moore Arts & Crafts a,c	1,883,100		5,536,314
Casual Male Retail Group a,c	4,088,734		9,526,750
Christopher & Banks c	2,253,900		17,174,718
Men’s Wearhouse (The)	1,737,973		36,601,711
Monro Muffler Brake	748,572		25,032,248
O’Reilly Automotive a,b	956,000		36,442,720
Tractor Supply a,b	482,500		25,553,200
			155,867,661
Total (Cost $303,652,697)			257,019,384
Financial Intermediaries – 11.1%
Banking - 4.8%
Bancorp (The) a,b,c	1,317,170		9,035,786
Enterprise Financial Services	524,800		4,046,208
†Fifth Third Bancorp	3,350,000		32,662,500
Marshall & Ilsley	5,914,000		32,231,300
†Northern Trust	542,000		28,400,800
†SVB Financial Group a,b	450,000		18,760,500
Synovus Financial	6,357,000		13,031,850
Umpqua Holdings	1,062,300		14,245,443
			152,414,387

	SHARES		VALUE
Financial Intermediaries (continued)
Insurance - 2.0%
Berkley (W.R.)	557,100	$	13,726,944
†Hanover Insurance Group	727,200		32,309,496
White Mountains Insurance Group	54,000		17,963,640
			64,000,080
Securities Brokers - 3.3%
KBW a,b	453,900		12,418,704
Knight Capital Group Cl. A a	2,942,700		45,317,580
Raymond James Financial	1,140,000		27,097,800
TradeStation Group a,c	2,190,000		17,279,100
			102,113,184
Securities Exchanges - 1.0%
MarketAxess Holdings	630,000		8,757,000
TMX Group	681,700		21,594,609
			30,351,609
Total (Cost $374,501,309)			348,879,260
Financial Services – 3.0%
Diversified Financial Services - 0.7%
†Duff & Phelps Cl. A	1,245,500		22,742,830
Information and Processing - 0.6%
Morningstar a	394,701		19,079,846
Insurance Brokers - 0.8%
Brown & Brown	1,435,100		25,788,747
Investment Management - 0.9%
†T. Rowe Price Group	376,600		20,053,950
U.S. Global Investors Cl. A	500,000		6,155,000
			26,208,950
Total (Cost $88,811,003)			93,820,373
Health – 5.6%
Commercial Services - 1.2%
Affymetrix a	3,260,464		19,041,110
†Genomic Health a,b	966,969		18,913,913
			37,955,023
Drugs and Biotech - 2.6%
Cypress Bioscience a,c	2,259,200		13,012,992
Dyax Corporation a,b	3,188,554		10,809,198
Exelixis a	1,312,400		9,672,388
Forest Laboratories a,b	850,000		27,293,500
Rigel Pharmaceuticals a	850,000		8,083,500
Theratechnologies a,c	3,319,600		14,061,125
			82,932,703
Medical Products and Devices - 1.8%
Caliper Life Sciences a,c	2,990,500		7,685,585
Cerus Corporation a,b,c	2,884,500		5,740,155
HealthTronics a,c	2,518,718		6,649,416
†Zimmer Holdings a,b	588,000		34,756,680
			54,831,836
Total (Cost $211,829,166)			175,719,562

88  |    The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Industrial Products – 9.5%
Industrial Components - 1.8%
CLARCOR	710,300	$	23,042,132
FARO Technologies a,b,c	1,584,700		33,975,968
			57,018,100
Machinery - 2.1%
†Astec Industries a	760,900		20,498,646
Rofin-Sinar Technologies a	953,740		22,517,801
Tennant Company	861,000		22,549,590
			65,566,037
Metal Fabrication and Distribution - 2.7%
Kennametal	2,210,500		57,296,160
Sims Metal Management	506,712		9,918,820
Sims Metal Management ADR	875,125		17,064,938
			84,279,918
Miscellaneous Manufacturing - 1.7%
†Smith (A.O.) Corporation	591,600		25,669,524
†Valmont Industries	375,000		29,418,750
			55,088,274
Pumps, Valves and Bearings - 0.7%
IDEX Corporation	662,400		20,633,760
Specialty Chemicals and Materials - 0.5%
Symyx Technologies a,c	3,132,577		17,229,174
Total (Cost $312,443,722)			299,815,263
Industrial Services – 12.4%
Commercial Services - 5.1%
Cintas Corporation	1,013,700		26,406,885
Copart a	773,637		28,338,323
Resources Connection a	628,900		13,345,258
Ritchie Bros. Auctioneers	1,075,600		24,125,708
Robert Half International	605,800		16,193,034
TrueBlue a	1,345,200		19,922,412
UniFirst Corporation	284,400		13,682,484
Watson Wyatt Worldwide Cl. A	379,723		18,044,437
			160,058,541
Food, Tobacco and Agriculture - 1.3%
†Corn Products International	672,200		19,648,406
†Intrepid Potash a,b	200,000		5,834,000
Sanderson Farms	397,771		16,770,026
			42,252,432
Industrial Distribution - 3.5%
Grainger (W.W.)	525,600		50,893,848
MSC Industrial Direct Cl. A	771,300		36,251,100
Watsco	511,100		25,033,678
			112,178,626
Transportation and Logistics - 2.5%
Celadon Group a,c	1,893,600		20,545,560
Heartland Express	955,000		14,582,850
Knight Transportation	450,100		8,682,429
Universal Truckload Services	593,322		10,739,128
Werner Enterprises	1,186,000		23,470,940
			78,020,907
Total (Cost $361,227,543)			392,510,506

	SHARES		VALUE
Natural Resources – 15.8%
Energy Services - 5.5%
Calfrac Well Services	860,200	$	17,148,893
CARBO Ceramics	225,400		15,365,518
Clean Energy Fuels a,b	1,177,000		18,137,570
Ensign Energy Services	1,731,700		24,836,736
Pason Systems	1,491,000		16,608,644
Patterson-UTI Energy	847,000		13,001,450
Tesco Corporation a	757,700		9,781,907
Trican Well Service	1,553,800		20,888,682
Unit Corporation a	875,400		37,204,500
			172,973,900
Oil and Gas - 1.7%
Bill Barrett a,b	818,200		25,454,202
†Comstock Resources a	700,000		28,399,000
			53,853,202
Precious Metals and Mining - 7.9%
Agnico-Eagle Mines	576,100		31,109,400
Alamos Gold a	2,881,600		34,606,201
†Allied Nevada Gold a,b	2,015,000		30,386,200
Fronteer Development Group a	3,856,000		15,154,080
Gabriel Resources a,b	5,877,300		24,557,825
Gammon Gold a	3,376,200		37,171,962
Hecla Mining a,b	3,249,900		20,084,382
Ivanhoe Mines a	1,690,900		24,704,049
Silver Standard Resources a	1,447,900		31,665,573
			249,439,672
Real Estate - 0.7%
†PICO Holdings a	687,222		22,492,776
Total (Cost $447,573,994)			498,759,550
Technology – 19.8%
Aerospace and Defense - 1.7%
FLIR Systems a,b	863,000		28,237,360
Mercury Computer Systems a,c	2,198,749		24,208,226
			52,445,586
Components and Systems - 4.3%
Brocade Communications Systems a	400,000		3,052,000
Checkpoint Systems a	864,700		13,186,675
Dionex Corporation a	189,300		13,983,591
†Infinera Corporation a,b	1,700,000		15,079,000
Littelfuse a,c	1,549,395		49,813,049
RADVision a,c	1,391,600		8,405,264
Trimble Navigation a	1,231,000		31,021,200
			134,540,779
IT Services - 1.5%
SRA International Cl. A a	2,429,100		46,395,810
Semiconductors and Equipment - 7.7%
Electro Scientific Industries a	1,131,100		12,238,502
Exar Corporation a	2,171,464		15,439,109
†Formfactor a	1,024,900		22,301,824
GSI Group a,b,c	2,538,394		2,157,635
†International Rectifier a	1,603,048		35,459,422
IPG Photonics a	1,985,899		33,243,949
†Microsemi Corporation a	1,586,000		28,151,500
MKS Instruments a	612,900		10,670,589

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. Royce Capital Funds 2009 Annual Report to Shareholders  |  89

Schedules of Investments

Royce Value Plus Fund (continued)

Royce 100 Fund

	SHARES		VALUE
Technology (continued)
Semiconductors and Equipment (continued)
NVIDIA Corporation a	1,780,000	$	33,250,400
Supertex a,c	782,053		23,305,179
Tessera Technologies a	1,221,998		28,435,894
			244,654,003
Software - 2.2%
Avid Technology a,c	2,342,672		29,892,495
DivX a	491,376		2,771,361
Intermap Technologies a	2,308,700		4,017,626
National Instruments	300,223		8,841,567
†Nice Systems ADR a	805,300		24,996,512
			70,519,561
Telecommunications - 2.4%
ADTRAN	927,500		20,915,125
Arris Group a	1,612,200		18,427,446
Comverse Technology a	2,848,400		26,974,348
Digi International a,b	1,213,800		11,069,856
			77,386,775
Total (Cost $637,133,209)			625,942,514
Miscellaneous d – 4.5%
Total (Cost $135,392,553)			142,488,501
TOTAL COMMON STOCKS
(Cost $3,029,025,689)			3,011,754,174
REPURCHASE AGREEMENT – 5.1%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10,
maturity value $161,435,090 (collateralized
by obligations of various U.S. Government
Agencies, 0.875% due 3/30/10-5/24/10, valued at
$165,472,638)
(Cost $161,435,000)			161,435,000
COLLATERAL RECEIVED FOR SECURITIES LOANED – 2.8%
Money Market Funds
Federated Government Obligations Fund
(7 day yield-0.0582%)
(Cost $87,361,318)			87,361,318
TOTAL INVESTMENTS – 103.3%
(Cost $3,277,822,007)			3,260,550,492
LIABILITIES LESS CASH AND OTHER ASSETS – (3.3)%			(102,734,213	)
NET ASSETS – 100.0%		$	3,157,816,279

	SHARES		VALUE
COMMON STOCKS – 87.4%
Consumer Products – 3.8%
Apparel, Shoes and Accessories - 0.8%
Columbia Sportswear	50,300	$	1,963,712
Food/Beverage/Tobacco - 1.2%
†Cal-Maine Foods	84,190		2,869,195
Home Furnishing and Appliances - 1.8%
Ethan Allen Interiors	169,100		2,269,322
Mohawk Industries a	38,300		1,823,080
			4,092,402
Total (Cost $8,358,799)			8,925,309
Consumer Services – 1.7%
Retail Stores - 1.7%
Dress Barn (The) a	108,500		2,506,350
Tiffany & Co.	35,400		1,522,200
Total (Cost $2,538,613)			4,028,550
Financial Intermediaries – 6.6%
Insurance - 2.6%
Berkley (W.R.)	105,100		2,589,664
Markel Corporation a	4,800		1,632,000
†Validus Holdings	69,000		1,858,860
			6,080,524
Securities Brokers - 4.0%
†Cowen Group Cl. A a	376,400		2,228,288
Interactive Brokers Group Cl. A a	113,200		2,005,904
Knight Capital Group Cl. A a	191,300		2,946,020
Lazard Cl. A	54,800		2,080,756
			9,260,968
Total (Cost $14,525,921)			15,341,492
Financial Services – 9.5%
Information and Processing - 3.3%
†Interactive Data	80,300		2,031,590
Morningstar a	32,300		1,561,382
MSCI Cl. A a	43,100		1,370,580
SEI Investments	154,500		2,706,840
			7,670,392
Insurance Brokers - 1.1%
Brown & Brown	141,900		2,549,943
Investment Management - 5.1%
Affiliated Managers Group a	9,397		632,888
AllianceBernstein Holding L.P.	55,100		1,548,310
Cohen & Steers	89,800		2,051,032
Evercore Partners Cl. A	40,500		1,231,200
Federated Investors Cl. B	87,900		2,417,250
Waddell & Reed Financial Cl. A	55,900		1,707,186
Westwood Holdings Group	67,130		2,439,504
			12,027,370
Total (Cost $20,283,977)			22,247,705

90  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Health – 2.7%
Health Services - 2.0%
Advisory Board (The) a	38,900	$	1,192,674
†Amedisys a	45,500		2,209,480
ICON ADR a	54,200		1,177,766
			4,579,920
Medical Products and Devices - 0.7%
IDEXX Laboratories a	29,901		1,597,909
Total (Cost $5,250,117)			6,177,829
Industrial Products – 14.4%
Automotive - 0.6%
Gentex Corporation	84,200		1,502,970
Building Systems and Components - 2.5%
Armstrong World Industries a	56,600		2,203,438
Drew Industries a	77,900		1,608,635
Simpson Manufacturing	75,000		2,016,750
			5,828,823
Industrial Components - 3.7%
CLARCOR	42,200		1,368,968
FARO Technologies a	91,400		1,959,616
GrafTech International a	181,900		2,828,545
PerkinElmer	120,600		2,483,154
			8,640,283
Machinery - 1.7%
Rofin-Sinar Technologies a	83,400		1,969,074
Wabtec Corporation	51,400		2,099,176
			4,068,250
Metal Fabrication and Distribution - 3.5%
Kennametal	103,300		2,677,536
†Reliance Steel & Aluminum	61,000		2,636,420
Sims Metal Management ADR	145,100		2,829,450
			8,143,406
Paper and Packaging - 1.2%
Greif Cl. A	52,000		2,806,960
Pumps, Valves and Bearings - 1.2%
Gardner Denver	62,800		2,672,140
Total (Cost $26,662,649)			33,662,832
Industrial Services – 20.5%
Commercial Services - 10.0%
†Brink’s Company (The)	58,400		1,421,456
Cintas Corporation	73,300		1,909,465
Copart a	43,400		1,589,742
Corinthian Colleges a	204,400		2,814,588
Corporate Executive Board	46,700		1,065,694
CRA International a	63,613		1,695,287
Gartner a	145,000		2,615,800
Hewitt Associates Cl. A a	60,400		2,552,504
Manpower	34,600		1,888,468
†Quanta Services a	95,500		1,990,220
Universal Technical Institute a	98,600		1,991,720
†Verisk Analytics Cl. A a	55,600		1,683,568
			23,218,512

	SHARES		VALUE
Industrial Services (continued)
Engineering and Construction - 1.6%
KBR	131,600	$	2,500,400
NVR a	1,700		1,208,207
			3,708,607
Food, Tobacco and Agriculture - 3.0%
Intrepid Potash a	89,000		2,596,130
Sanderson Farms	66,200		2,790,992
†Terra Industries	51,000		1,641,690
			7,028,812
Industrial Distribution - 0.7%
†Applied Industrial Technologies	76,800		1,694,976
Transportation and Logistics - 5.2%
Arkansas Best	53,400		1,571,562
†Expeditors International of Washington	79,800		2,771,454
†Kirby Corporation a	53,000		1,845,990
Landstar System	72,300		2,803,071
†Patriot Transportation Holding a	19,227		1,816,182
UTI Worldwide	94,900		1,358,968
			12,167,227
Total (Cost $43,843,330)			47,818,134
Natural Resources – 11.6%
Energy Services - 10.9%
CARBO Ceramics	16,000		1,090,720
Ensign Energy Services	196,500		2,818,282
†Helmerich & Payne	46,500		1,854,420
Major Drilling Group International	111,500		3,067,223
Oil States International a	74,400		2,923,176
Pason Systems	302,800		3,372,969
SEACOR Holdings a	33,500		2,554,375
†ShawCor Cl. A	99,400		2,789,492
Trican Well Service	205,700		2,765,351
Unit Corporation a	53,200		2,261,000
			25,497,008
Precious Metals and Mining - 0.7%
†Randgold Resources ADR	19,000		1,503,280
Total (Cost $20,195,881)			27,000,288
Technology – 11.6%
Aerospace and Defense - 0.9%
HEICO Corporation Cl. A	57,400		2,064,104
Components and Systems - 2.3%
Diebold	47,600		1,354,220
Dionex Corporation a	33,000		2,437,710
Plexus Corporation a	58,400		1,664,400
			5,456,330
IT Services - 2.4%
Sapient Corporation a	327,900		2,711,733
SRA International Cl. A a	148,400		2,834,440
			5,546,173
Semiconductors and Equipment - 1.2%
Coherent a	93,700		2,785,701

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  91

Schedules of Investments

Royce 100 Fund (continued)

Royce Discovery Fund

	SHARES		VALUE
Technology (continued)
Software - 3.0%
Blackbaud	39,100	$	923,933
†Blackboard a	40,000		1,815,600
Fair Isaac	73,500		1,566,285
National Instruments	89,000		2,621,050
			6,926,868
Telecommunications - 1.8%
ADTRAN	112,800		2,543,640
†Comtech Telecommunications a	48,000		1,682,400
			4,226,040
Total (Cost $22,582,107)			27,005,216
Miscellaneous d – 5.0%
Total (Cost $10,002,515)			11,648,157
TOTAL COMMON STOCKS
(Cost $174,243,909)			203,855,512
REPURCHASE AGREEMENT – 12.0%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10,
maturity value $28,018,016 (collateralized
by obligations of various U.S. Government
Agencies, 1.625%-2.00% due 11/19/12-11/21/12,
valued at $28,723,181)
(Cost $28,018,000)			28,018,000
TOTAL INVESTMENTS – 99.4%
(Cost $202,261,909)			231,873,512
CASH AND OTHER ASSETS LESS LIABILITIES – 0.6%			1,380,063
NET ASSETS – 100.0%		$	233,253,575

	SHARES		VALUE
COMMON STOCKS – 96.1%
Consumer Products – 3.9%
Food/Beverage/Tobacco - 1.2%
Schiff Nutrition International Cl. A	4,400	$	34,408
Home Furnishing and Appliances - 2.7%
Hooker Furniture	2,100		25,977
National Presto Industries	500		54,615
			80,592
Total (Cost $87,357)			115,000
Consumer Services – 3.4%
Leisure and Entertainment - 1.1%
Monarch Casino & Resort a	3,100		25,110
New Frontier Media a	3,600		6,804
			31,914
Retail Stores - 2.3%
Jos. A. Bank Clothiers a	1,600		67,504
Total (Cost $117,340)			99,418
Financial Intermediaries – 13.9%
Banking - 2.7%
†Capitol Bancorp	5,400		10,584
City Bank a	7,100		12,354
†First Defiance Financial	3,900		44,031
†South Financial Group (The)	19,100		12,314
			79,283
Insurance - 11.2%
American Physicians Service Group	1,600		36,912
American Safety Insurance Holdings a	2,800		40,460
Amerisafe a	800		14,376
Baldwin & Lyons Cl. B	800		19,688
Eastern Insurance Holdings	2,138		18,429
EMC Insurance Group	1,600		34,416
First Mercury Financial	2,500		34,275
Hallmark Financial Services a	3,020		24,039
Meadowbrook Insurance Group	9,399		69,553
SeaBright Insurance Holdings a	2,800		32,172
			324,320
Total (Cost $518,203)			403,603
Health – 17.8%
Drugs and Biotech - 2.4%
Harvard Bioscience a	7,599		27,128
Matrixx Initiatives a	1,400		5,908
Theragenics Corporation a	9,900		13,266
†VIVUS a	2,700		24,813
			71,115
Health Services - 1.4%
Metropolitan Health Networks a	17,448		34,722
Psychemedics Corporation	700		5,145
			39,867
Medical Products and Devices - 13.9%
Atrion Corporation	300		46,716

92  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Health (continued)
Medical Products and Devices (continued)
Bovie Medical a	2,900	$	22,649
Cardiac Science a	7,800		17,394
Cynosure Cl. A a	1,300		14,937
Exactech a	1,800		31,158
HealthTronics a	4,900		12,936
Kensey Nash a	1,367		34,859
Medical Action Industries a	3,200		51,392
Merit Medical Systems a	2,484		47,916
Neogen Corporation a	3,000		70,830
Osteotech a	6,300		20,160
Somanetics Corporation a	1,700		29,835
Utah Medical Products	113		3,313
			404,095
Personal Care - 0.1%
CCA Industries	577		3,202
Total (Cost $596,446)			518,279
Industrial Products – 16.9%
Automotive - 0.1%
Miller Industries a	200		2,270
Building Systems and Components - 1.0%
LSI Industries	3,500		27,580
Industrial Components - 4.7%
Bel Fuse Cl. B	1,800		38,682
CTS Corporation	7,100		68,302
Gerber Scientific a	6,114		30,876
			137,860
Machinery - 3.0%
Ampco-Pittsburgh	1,700		53,601
Core Molding Technologies a	400		1,156
FreightCar America	700		13,881
Hurco Companies a	1,200		17,760
			86,398
Metal Fabrication and Distribution - 5.3%
Foster (L.B.) Company Cl. A a	1,300		38,753
North American Galvanizing & Coatings a	7,500		36,375
Olympic Steel	1,800		58,644
Universal Stainless & Alloy Products a	1,100		20,746
			154,518
Paper and Packaging - 1.8%
KapStone Paper and Packaging a	5,300		52,205
Specialty Chemicals and Materials - 1.0%
Landec Corporation a	4,733		29,534
Other Industrial Products - 0.0%
Media Sciences International a	700		315
Total (Cost $525,692)			490,680
Industrial Services – 13.1%
Commercial Services - 7.0%
ATC Technology a	2,300		54,855
ChinaCast Education a	8,300		62,748
CRA International a	800		21,320
ICF International a	1,400		37,520

	SHARES		VALUE
Industrial Services (continued)
Commercial Services (continued)
Volt Information Sciences a	2,900	$	29,000
			205,443
Industrial Distribution - 3.4%
Houston Wire & Cable	4,000		47,600
Sport Supply Group	4,100		51,619
			99,219
Printing - 2.3%
CSS Industries	1,581		30,735
Ennis	2,100		35,259
			65,994
Transportation and Logistics - 0.4%
Dynamex a	600		10,860
Total (Cost $391,922)			381,516
Natural Resources – 3.7%
Energy Services - 0.9%
Bronco Drilling a	2,400		12,168
Union Drilling a	2,300		14,375
			26,543
Oil and Gas - 1.9%
TransGlobe Energy a	8,100		26,973
VAALCO Energy	6,000		27,300
			54,273
Real Estate - 0.9%
China Housing & Land Development a	6,200		25,606
Total (Cost $194,974)			106,422
Technology – 20.7%
Aerospace and Defense - 2.5%
Ducommun	1,000		18,710
Dynamics Research a	1,700		18,037
LaBarge a	2,900		34,945
			71,692
Components and Systems - 2.0%
Super Micro Computer a	5,400		60,048
IT Services - 5.9%
CIBER a	8,200		28,290
†Computer Task Group a	4,500		36,045
†iGATE Corporation	8,000		80,000
TechTeam Global a	3,500		26,635
			170,970
Semiconductors and Equipment - 3.2%
GSI Group a	3,600		3,060
GSI Technology a	9,600		43,008
Image Sensing Systems a	1,537		17,829
Ultra Clean Holdings a	4,100		28,659
			92,556
Software - 2.9%
American Software Cl. A	3,700		22,200
Double-Take Software a	3,300		32,967
Pervasive Software a	1,400		6,748
Versant Corporation a	1,500		22,890
			84,805

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  93

Schedules of Investments

Royce Discovery Fund (continued)

Royce Financial Services Fund

	SHARES		VALUE
Technology (continued)
Telecommunications - 4.2%
†Globecomm Systems a	4,700	$	36,754
PC-Tel a	1,400		8,288
Soapstone Networks	1,200		840
Telestone Technologies a	1,100		21,824
USA Mobility	5,022		55,293
			122,999
Total (Cost $594,182)			603,070
Miscellaneous d – 2.7%
Total (Cost $41,120)			80,015
TOTAL COMMON STOCKS
(Cost $3,067,236)			2,798,003
REPURCHASE AGREEMENT – 4.6%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10,
maturity value $133,000 (collateralized
by obligations of various U.S. Government
Agencies, due 1/14/10, valued at $140,000)
(Cost $133,000)			133,000
TOTAL INVESTMENTS – 100.7%
(Cost $3,200,236)			2,931,003
LIABILITIES LESS CASH AND OTHER ASSETS – (0.7)%			(20,979	)
NET ASSETS – 100.0%		$	2,910,024

	SHARES		VALUE
COMMON STOCKS – 95.0%
Banking - 7.2%
Bank of N.T. Butterfield & Son	5,362	$	20,912
Bank Sarasin & Cie Cl. B	3,085		116,590
Banque Privee Edmond de Rothschild	3		74,856
BOK Financial	2,427		115,331
Fauquier Bankshares	2,400		29,760
†Julius Baer Group	3,900		136,210
†Northern Trust	3,700		193,880
Peapack-Gladstone Financial	2,835		35,948
Vontobel Holding	3,000		85,685
Wilber Corporation (The)	6,100		43,920
Wilmington Trust	9,800		120,932
Total (Cost $1,243,451)			974,024
Diversified Financial Services - 0.5%
World Acceptance a	2,000		71,660
Total (Cost $59,417)			71,660
Information and Processing - 8.7%
Interactive Data	5,000		126,500
†MasterCard Cl. A	700		179,186
Morningstar a	4,600		222,364
MSCI Cl. A a	7,900		251,220
SEI Investments	7,400		129,648
Western Union	14,000		263,900
Total (Cost $887,899)			1,172,818
Insurance - 11.5%
Alleghany Corporation a	508		140,208
Berkley (W.R.)	7,600		187,264
†Cincinnati Financial	4,200		110,208
CNA Surety a	5,900		87,851
E-L Financial	150		64,542
Enstar Group a	4,000		292,080
Erie Indemnity Cl. A	6,500		253,630
Hilltop Holdings a	5,200		60,528
†Marsh & McLennan	10,800		238,464
RLI	1,100		58,575
Validus Holdings	2,300		61,962
Total (Cost $1,506,441)			1,555,312
Insurance Brokers - 2.7%
†Aon Corporation	2,500		95,850
Brown & Brown	2,600		46,722
Gallagher (Arthur J.) & Co.	5,400		121,554
Willis Group Holdings	4,000		105,520
Total (Cost $382,941)			369,646
Investment Management - 32.1%
Affiliated Managers Group a	1,400		94,290
AGF Management Cl. B	10,600		172,300
AllianceBernstein Holding L.P.	9,200		258,520
†Artio Global Investors Cl. A a	5,000		127,450

94  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Investment Management (continued)
Ashmore Group	75,000	$	326,034
Azimut Holding	10,500		140,163
Cohen & Steers	10,500		239,820
Endeavour Financial	17,900		30,294
Federated Investors Cl. B	6,400		176,000
GAM Holding	3,300		40,156
GAMCO Investors Cl. A	3,300		159,357
Invesco	12,425		291,863
Investec	8,500		58,268
Janus Capital Group	16,700		224,615
MVC Capital	3,800		44,840
Och-Ziff Capital Management Group Cl. A	10,000		137,400
Partners Group Holding	1,250		157,437
RHJ International a	10,000		76,403
SHUAA Capital a	150,000		60,121
SPARX Group a	400		47,026
Sprott	43,900		188,889
T. Rowe Price Group	5,500		292,875
U.S. Global Investors Cl. A	19,700		242,507
Value Partners Group a	250,000		127,193
VZ Holding	3,100		235,934
Waddell & Reed Financial Cl. A	6,400		195,456
Westwood Holdings Group	5,300		192,602
Total (Cost $4,223,481)			4,337,813
Other Financial Intermediaries - 0.4%
KKR & Company (Guernsey) L.P. a	5,500		46,336
Total (Cost $50,481)			46,336
Other Financial Services - 2.1%
†Kennedy-Wilson Holdings a	31,375		280,806
Total (Cost $297,000)			280,806
Real Estate - 2.5%
Jones Lang LaSalle	5,600		338,240
Total (Cost $287,619)			338,240
Securities Brokers - 19.8%
Bolsas y Mercados Espanoles	4,000		128,351
Broadpoint Gleacher Securities Group a	14,000		62,440
Cowen Group Cl. A a	25,700		152,144
FBR Capital Markets a	29,000		179,220
HQ	7,200		119,036
Interactive Brokers Group Cl. A a	17,600		311,872
Investcorp Bank GDR a	20,300		61,103
Jefferies Group a	6,900		163,737
KBW a	5,500		150,480
Kim Eng Holdings	100,000		143,038
Lazard Cl. A	7,000		265,790
MF Global a	11,000		76,450
Mirae Asset Securities	1,081		60,062
Mizuho Securities	10,800		32,326
†Oppenheimer Holdings Cl. A	4,300		142,846
†Raymond James Financial	5,600		133,112

	SHARES		VALUE
Securities Brokers (continued)
Samsung Securities	1,600	$	86,317
Sanders Morris Harris Group	18,200		100,100
Stifel Financial a	2,250		133,290
Thomas Weisel Partners Group a	9,600		36,288
Tokai Tokyo Securities	9,400		36,620
UOB-Kay Hian Holdings	95,000		101,713
Total (Cost $2,525,098)			2,676,335
Securities Exchanges - 3.0%
ASX	4,700		146,381
Hellenic Exchanges	10,500		108,824
Singapore Exchange	25,000		147,368
Total (Cost $351,413)			402,573
Specialty Finance - 0.3%
Credit Acceptance a	1,066		44,879
Total (Cost $20,269)			44,879
Miscellaneous d – 4.2%
Total (Cost $616,870)			572,324
TOTAL COMMON STOCKS
(Cost $12,452,380)			12,842,766
REPURCHASE AGREEMENT – 5.1%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10,
maturity value $693,000 (collateralized
by obligations of various U.S. Government
Agencies, 7.00% due 3/15/10, valued at $714,150)
(Cost $693,000)			693,000
TOTAL INVESTMENTS – 100.1%
(Cost $13,145,380)			13,535,766
LIABILITIES LESS CASH AND OTHER ASSETS – (0.1)%			(10,404	)
NET ASSETS – 100.0%			13,525,362

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  95

Schedules of Investments

Royce Dividend Value Fund

	SHARES	VALUE
COMMON STOCKS – 96.3%
Consumer Products – 5.3%
Apparel, Shoes and Accessories - 1.7%
†Marimekko	12,300	$	181,359
Polo Ralph Lauren Cl. A	1,000		80,980
Wolverine World Wide	8,300		225,926
			488,265
Food/Beverage/Tobacco - 1.5%
†Industrias Bachoco ADR	6,100		140,056
J & J Snack Foods	2,500		99,900
†Lancaster Colony	3,900		193,830
			433,786
Home Furnishing and Appliances - 1.5%
American Woodmark	3,700		72,816
Ethan Allen Interiors	15,200		203,984
†Hunter Douglas	2,500		121,970
Leggett & Platt	2,800		57,120
			455,890
Other Consumer Products - 0.6%
†Societe BIC	2,500		173,030
Total (Cost $1,426,334)			1,550,971
Consumer Services – 6.5%
Leisure and Entertainment - 1.1%
International Speedway Cl. A	6,800		193,460
World Wrestling Entertainment Cl. A	8,400		128,772
			322,232
Retail Stores - 5.4%
American Eagle Outfitters	12,000		203,760
Buckle (The)	11,650		341,112
Cato Corporation (The) Cl. A	5,900		118,354
Dress Barn (The) a	15,400		355,740
†Family Dollar Stores	14,900		414,667
Tiffany & Co.	1,000		43,000
Williams-Sonoma	5,100		105,978
			1,582,611
Total (Cost $1,712,785)			1,904,843
Financial Intermediaries – 19.7%
Banking - 2.0%
Banca Generali	4,200		50,874
Bank of N.T. Butterfield & Son	4,088		15,943
†Bank Sarasin & Cie Cl. B	1,748		66,061
Fauquier Bankshares	4,400		54,560
†Northern Trust	5,400		282,960
Peapack-Gladstone Financial	2,205		27,960
Wilmington Trust	6,300		77,742
			576,100
Insurance - 11.7%
†Allied World Assurance Company Holdings	6,300		290,241
Aspen Insurance Holdings	11,300		287,585
Berkley (W.R.)	5,600		137,984
†Cincinnati Financial	4,700		123,328

	SHARES		VALUE
Financial Intermediaries (continued)
Insurance (continued)
Erie Indemnity Cl. A	7,400	$	288,748
Fidelity National Financial Cl. A	10,000		134,600
Harleysville Group	13,100		416,449
†Marsh & McLennan	5,100		112,608
Max Capital Group	8,500		189,550
Montpelier Re Holdings	16,400		284,048
†Old Republic International	8,600		86,344
PartnerRe	6,000		447,960
Reinsurance Group of America	2,100		100,065
Validus Holdings	10,700		288,258
†White Mountains Insurance Group	400		133,064
Zenith National Insurance	4,300		127,968
			3,448,800
Real Estate Investment Trusts - 4.0%
†Colony Financial	9,500		193,515
†Cousins Properties	23,935		182,624
DCT Industrial Trust	23,400		117,468
Gladstone Commercial	3,800		50,958
†HRPT Properties Trust	25,000		161,750
Lexington Realty Trust	57,567		350,008
†National Health Investors	3,200		118,368
			1,174,691
Securities Brokers - 2.0%
†Egyptian Financial Group-Hermes Holding	48,000		217,647
Lazard Cl. A	1,900		72,143
†Raymond James Financial	4,800		114,096
†Sanders Morris Harris Group	33,000		181,500
			585,386
Total (Cost $5,686,353)			5,784,977
Financial Services – 12.9%
Information and Processing - 1.6%
Fiserv a	2,000		96,960
†Interactive Data	4,400		111,320
SEI Investments	10,000		175,200
Value Line	3,000		75,330
			458,810
Insurance Brokers - 2.2%
Aon Corporation	2,000		76,680
Brown & Brown	16,800		301,896
Gallagher (Arthur J.) & Co.	4,400		99,044
Willis Group Holdings	6,800		179,384
			657,004
Investment Management - 8.4%
†A.F.P. Provida ADR	3,200		145,120
AGF Management Cl. B	7,400		120,285
AllianceBernstein Holding L.P.	9,400		264,140
Apollo Investment	7,300		69,569
BlackRock Kelso Capital	5,200		44,304
CI Financial	2,300		48,382
Cohen & Steers	10,600		242,104
Federated Investors Cl. B	20,500		563,750

96  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Financial Services (continued)
Investment Management (continued)
Invesco	4,000	$	93,960
†Investec	9,600		65,809
Och-Ziff Capital Management Group Cl. A	6,700		92,058
†Partners Group Holding	500		62,974
Sprott	15,900		68,413
U.S. Global Investors Cl. A	10,500		129,255
†VZ Holding	1,000		76,108
Waddell & Reed Financial Cl. A	2,200		67,188
Westwood Holdings Group	8,300		301,622
			2,455,041
Other Financial Services - 0.7%
†Kennedy-Wilson Holdings a	24,297		217,458
Total (Cost $3,494,800)			3,788,313
Health – 5.4%
Commercial Services - 1.3%
†Chemed Corporation	5,800		278,226
†OdontoPrev	3,200		117,138
			395,364
Drugs and Biotech - 0.7%
†Boiron	1,500		63,949
†Recordati	20,000		148,822
			212,771
Health Services - 1.1%
†Pharmaceutical Product Development	13,200		309,408
Medical Products and Devices - 2.3%
†Carl Zeiss Meditec	9,500		169,451
†Fielmann	3,200		235,596
†STERIS Corporation	9,400		262,918
			667,965
Total (Cost $1,392,547)			1,585,508
Industrial Products – 16.6%
Automotive - 0.2%
†Xinyi Glass Holdings	65,000		58,630
Building Systems and Components - 1.4%
†AAON	12,500		243,625
†Preformed Line Products	1,900		83,220
†WaterFurnace Renewable Energy	3,300		81,912
			408,757
Construction Materials - 0.6%
†Geberit	1,000		177,136
Industrial Components - 1.8%
†Amphenol Corporation Cl. A	2,400		110,832
CLARCOR	5,600		181,664
Deswell Industries	11,000		44,440
†Donaldson Company	4,100		174,414
			511,350
Machinery - 5.5%
†Burckhardt Compression Holding	1,600		286,339
Franklin Electric	3,000		87,240
Lincoln Electric Holdings	3,700		197,802
Nordson Corporation	9,700		593,446

	SHARES		VALUE
Industrial Products (continued)
Machinery (continued)
†Regal-Beloit	3,400	$	176,596
†Spirax-Sarco Engineering	5,500		109,499
Tennant Company	6,000		157,140
			1,608,062
Metal Fabrication and Distribution - 0.2%
Carpenter Technology	1,800		48,510
Sims Metal Management ADR	1,150		22,425
			70,935
Miscellaneous Manufacturing - 1.4%
†Rational	1,000		169,400
Raven Industries	7,400		235,098
			404,498
Paper and Packaging - 1.4%
AptarGroup	3,400		121,516
Greif Cl. A	5,300		286,094
			407,610
Pumps, Valves and Bearings - 1.4%
Gardner Denver	2,900		123,395
Graco	7,800		222,846
Kaydon Corporation	1,000		35,760
Robbins & Myers	1,500		35,280
			417,281
Specialty Chemicals and Materials - 2.1%
Balchem Corporation	4,700		157,497
Cabot Corporation	6,500		170,495
Quaker Chemical	6,300		130,032
Schulman (A.)	3,000		60,540
†Victrex	7,500		97,020
			615,584
Textiles - 0.2%
†Interface Cl. A	8,000		66,480
Other Industrial Products - 0.4%
MTS Systems	3,500		100,590
Total (Cost $4,377,858)			4,846,913
Industrial Services – 11.5%
Commercial Services - 6.1%
Brink’s Company (The)	7,400		180,116
†Corporate Executive Board	3,900		88,998
†Grupo Aeroportuario del Centro Norte ADR	14,600		194,326
†Grupo Aeroportuario del Pacifico ADR	6,500		203,190
Hewitt Associates Cl. A a	4,200		177,492
†Hillenbrand	10,300		194,052
Landauer	3,200		196,480
†MAXIMUS	6,600		330,000
†Michael Page International	36,000		218,272
			1,782,926
Engineering and Construction - 0.8%
†Comfort Systems USA	4,500		55,530
†Skyline Corporation	9,700		178,480
			234,010

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  97

Schedules of Investments

Royce Dividend Value Fund (continued)

	SHARES	VALUE
Industrial Services (continued)
Food, Tobacco and Agriculture - 1.2%
Hormel Foods	7,400	$	284,530
Sanderson Farms	1,300		54,808
			339,338
Industrial Distribution - 0.7%
Applied Industrial Technologies	2,700		59,589
Grainger (W.W.)	400		38,732
†Houston Wire & Cable	10,300		122,570
			220,891
Transportation and Logistics - 2.7%
Landstar System	5,500		213,235
Pacer International a	8,000		25,280
Tidewater	9,800		469,910
UTI Worldwide	6,400		91,648
			800,073
Total (Cost $3,092,388)			3,377,238
Natural Resources – 8.7%
Energy Services - 2.9%
Ensign Energy Services	4,600		65,975
Exterran Partners L.P.	6,404		143,770
Helmerich & Payne	3,000		119,640
†Lamprell	50,000		147,538
†Lufkin Industries	3,700		270,840
Oil States International a	2,600		102,154
			849,917
Oil and Gas - 3.1%
Cimarex Energy	2,600		137,722
†Energen Corporation	9,200		430,560
†Pioneer Southwest Energy Partners L.P.	13,100		294,095
Plains All American Pipeline L.P.	1,100		58,135
			920,512
Precious Metals and Mining - 1.2%
†Fresnillo	15,000		189,098
†Randgold Resources ADR	1,900		150,328
			339,426
Other Natural Resources - 1.5%
†China Forestry Holdings a	1,520,000		429,334
Total (Cost $2,128,812)			2,539,189
Technology – 4.6%
Aerospace and Defense - 0.4%
†Ducommun	6,600		123,486
Components and Systems - 0.4%
Diebold	4,400		125,180
Internet Software and Services - 1.0%
†EarthLink	34,800		289,188
IT Services - 1.3%
Jack Henry & Associates	1,000		23,120
Total System Services	20,500		354,035
			377,155
Semiconductors and Equipment - 0.5%
†Analog Devices	3,300		104,214

	SHARES		VALUE
Technology (continued)
Semiconductors and Equipment (continued)
Cognex Corporation	3,000	$	53,160
			157,374
Software - 0.7%
Blackbaud	3,900		92,157
National Instruments	3,600		106,020
			198,177
Telecommunications - 0.3%
†ADTRAN	3,300		74,415
Total (Cost $1,204,591)			1,344,975
Utilities – 0.5%
†Northeast Utilities	4,100		105,739
UGI Corporation	2,000		48,380
Total (Cost $142,288)			154,119
Miscellaneous d – 4.6%
Total (Cost $1,164,125)			1,356,892
TOTAL COMMON STOCKS
(Cost $25,822,881)			28,233,938
REPURCHASE AGREEMENT – 3.7%
State Street Bank & Trust Company, 0.005% dated 12/31/09, due 1/4/10, maturity value $1,094,001 (collateralized by obligations of various U.S. Government Agencies, 7.00% due 3/15/10, valued at $1,122,975) (Cost $1,094,000)			1,094,000
TOTAL INVESTMENTS – 100.0%
(Cost $26,916,881)			29,327,938
LIABILITIES LESS CASH
AND OTHER ASSETS – (0.0)%			(13,250	)
NET ASSETS – 100.0%		$	29,314,688

98   |   The Royce Fund 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

Royce European Smaller-Companies Fund

	SHARES		VALUE
COMMON STOCKS – 89.3%
Australia – 1.7%
†Centamin Egypt a	60,000	$	117,825
Total (Cost $79,261)			117,825
Austria – 4.3%
Mayr-Melnhof Karton	1,200		123,448
Semperit AG Holding	4,500		173,549
Total (Cost $290,600)			296,997
Belgium – 4.0%
EVS Broadcast Equipment	1,000		63,740
GIMV	1,800		94,170
Sipef	2,300		114,724
Total (Cost $316,538)			272,634
Denmark – 1.5%
H Lundbeck	5,600		101,928
Total (Cost $105,190)			101,928
Egypt – 1.6%
†Egyptian Financial Group-Hermes Holding	25,000		113,358
Total (Cost $151,259)			113,358
Finland – 6.9%
Marimekko	3,200		47,183
Nokian Renkaat	4,000		97,053
†Orion Oyj Cl. B	2,600		55,984
†Ponsse OY	10,000		99,758
Vacon	1,700		65,032
Vaisala Cl. A	3,000		107,900
Total (Cost $467,536)			472,910
France – 9.0%
Alten a	2,000		55,515
Beneteau	2,600		39,462
Boiron	2,000		85,266
Manutan International	1,500		85,982
Piscines Desjoyaux	5,000		47,054
Societe BIC	700		48,448
Societe Internationale de Plantations d’Heveas	1,800		118,167
Vetoquinol	2,200		70,020
Virbac	700		72,912
Total (Cost $577,727)			622,826
Germany – 10.9%
AS Creation Tapeten	2,000		72,600
†Carl Zeiss Meditec	5,000		89,185
Deutsche Beteiligungs	2,700		66,157
Fielmann	1,400		103,073
Fuchs Petrolub	1,000		86,994

	SHARES		VALUE
Germany (continued)
Pfeiffer Vacuum Technology	1,800	$	150,893
Rational	600		101,640
Takkt	8,000		82,074
Total (Cost $810,059)			752,616
Greece – 1.3%
†Hellenic Exchanges	8,300		86,022
Total (Cost $94,359)			86,022
Hong Kong – 2.0%
Asian Citrus Holdings	165,000		134,029
Total (Cost $88,441)			134,029
Italy – 2.0%
†Recordati	6,500		48,367
SAES Getters	4,500		38,821
Tod’s	700		51,861
Total (Cost $204,987)			139,049
Jersey – 1.6%
Randgold Resources	1,400		111,239
Total (Cost $61,273)			111,239
Mexico – 1.3%
†Fresnillo	7,000		88,246
Total (Cost $43,148)			88,246
Netherlands – 4.4%
Fugro	1,800		102,792
Hunter Douglas	2,500		121,970
Smartrac a	3,500		75,321
Total (Cost $345,876)			300,083
Norway – 3.4%
Ekornes	5,000		103,590
Fred Olsen Energy	2,000		76,570
Tandberg	2,000		56,974
Total (Cost $217,755)			237,134
Peru – 2.8%
Hochschild Mining	35,000		190,653
Total (Cost $151,161)			190,653
South Africa – 5.3%
†Bell Equipment a	60,000		77,738
Brait	15,000		42,741
†Discovery Holdings	15,000		64,854
Lewis Group	7,500		53,660
†Net 1 UEPS Technologies a	1,800		34,956
Northam Platinum	14,000		90,495
Total (Cost $320,864)			364,444

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  99

Schedules of Investments

Royce European Smaller-Companies Fund (continued) Royce Global Value Fund

	SHARES		VALUE
Sweden – 1.7%
Lundin Petroleum a	9,000	$	70,817
†Q-Med a	7,000		47,077
Total (Cost $147,068)			117,894
Switzerland – 10.8%
Bank Sarasin & Cie Cl. B	2,468		93,272
Banque Privee Edmond de Rothschild	4		99,809
Burckhardt Compression Holding	1,000		178,962
†Geberit	200		35,427
†Inficon Holding	600		68,233
†Julius Baer Group	1,100		38,418
Partners Group Holding	1,000		125,949
VZ Holding	1,400		106,551
Total (Cost $744,042)			746,621
United Arab Emirates – 1.9%
Lamprell	45,000		132,784
Total (Cost $68,513)			132,784
United Kingdom – 10.9%
Anglo-Eastern Plantations	10,000		62,733
Ashmore Group	23,000		99,984
Begbies Traynor	20,000		34,389
Charter International	4,000		46,231
Diploma	30,000		85,647
†Domino Printing Sciences	15,000		79,642
†Hikma Pharmaceuticals	4,000		32,749
JKX Oil & Gas	10,000		45,049
Michael Page International	15,000		90,947
Rotork	2,000		38,279
Spirax-Sarco Engineering	4,000		79,636
Victrex	4,000		51,744
Total (Cost $706,816)			747,030
TOTAL COMMON STOCKS
(Cost $5,992,473)			6,146,322
REPURCHASE AGREEMENT – 10.4%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10,
maturity value $719,000 (collateralized
by obligations of various U.S. Government
Agencies, 7.00% due 3/15/10, valued at $740,025)
(Cost $719,000)			719,000
TOTAL INVESTMENTS – 99.7%
(Cost $6,711,473)			6,865,322
CASH AND OTHER ASSETS
LESS LIABILITIES – 0.3%			21,233
NET ASSETS – 100.0%		$	6,886,555

	SHARES		VALUE
COMMON STOCKS – 90.4%
Australia – 1.4%
Sims Metal Management ADR	37,000	$	721,500
Total (Cost $399,721)			721,500
Austria – 4.6%
Mayr-Melnhof Karton	10,000		1,028,738
Semperit AG Holding	33,500		1,291,974
Total (Cost $2,016,775)			2,320,712
Belgium – 3.4%
GIMV	14,000		732,435
Sipef	20,000		997,599
Total (Cost $1,867,192)			1,730,034
Brazil – 4.4%
†Amil Participacoes	58,000		452,139
†Anhanguera Educacional Participacoes a	30,000		426,315
†Duratex	70,000		645,781
OdontoPrev	20,000		732,109
Total (Cost $1,461,482)			2,256,344
Canada – 21.1%
Ensign Energy Services	55,000		788,832
Gammon Gold a	80,000		880,800
Ivanhoe Mines a	60,000		876,600
†Magma Energy a	328,000		567,653
Major Drilling Group International	60,000		1,650,524
Pason Systems	80,000		891,141
Red Back Mining a	35,600		510,590
†Seabridge Gold a	31,500		764,505
Silver Standard Resources a	57,000		1,246,590
Sprott	200,000		860,544
Tesco Corporation a	56,820		733,546
Trican Well Service	72,000		967,940
Total (Cost $10,837,125)			10,739,265
Cayman Islands – 1.2%
Endeavour Financial	355,100		600,972
Total (Cost $1,885,460)			600,972
China – 3.4%
†China Forestry Holdings a	1,840,000		519,720
†Simcere Pharmaceutical Group ADR a	42,000		388,080
†3SBio ADR a	59,500		814,555
Total (Cost $1,375,834)			1,722,355
Denmark – 0.9%
H Lundbeck	25,000		455,035
Total (Cost $505,298)			455,035

100  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Egypt – 1.2%
†Egyptian Financial Group-Hermes Holding	130,000	$	589,461
Total (Cost $737,682)			589,461
Finland – 0.9%
Nokian Renkaat	18,000		436,736
Total (Cost $478,882)			436,736
France – 2.9%
†Boiron	15,000		639,495
Societe Internationale de Plantations d’Heveas	13,000		853,429
Total (Cost $1,228,388)			1,492,924
Germany – 4.7%
Carl Zeiss Meditec	45,000		802,664
Pfeiffer Vacuum Technology	11,800		989,188
Rational	3,500		592,899
Total (Cost $1,776,347)			2,384,751
Hong Kong – 5.9%
†Asian Citrus Holdings	910,000		743,645
†Citic 1616 Holdings	1,600,000		539,767
†Luk Fook Holdings (International)	385,100		329,909
†Sino Biopharmaceutical	1,852,500		587,842
†Value Partners Group a	1,550,000		788,598
Total (Cost $2,355,122)			2,989,761
Mexico – 3.1%
†Fresnillo	18,000		226,918
Industrias Bachoco ADR	58,000		1,331,680
Total (Cost $1,437,525)			1,558,598
Peru – 1.6%
†Hochschild Mining	150,000		817,086
Total (Cost $798,694)			817,086
South Africa – 4.3%
†Aquarius Platinum a	100,000		644,120
†Discovery Holdings	120,000		518,828
Lewis Group	60,000		429,283
Northam Platinum	95,000		614,074
Total (Cost $1,522,067)			2,206,305
South Korea – 0.4%
†Bukwang Pharmaceutical	18,000		231,670
Total (Cost $221,265)			231,670
Switzerland – 4.5%
Burckhardt Compression Holding	7,600		1,360,107
Partners Group Holding	7,500		944,619
Total (Cost $1,953,992)			2,304,726

	SHARES		VALUE
United Arab Emirates – 1.6%
Lamprell	275,000	$	811,460
Total (Cost $548,599)			811,460
United Kingdom – 2.5%
†Ashmore Group	170,000		739,010
†Aveva Group	34,000		552,616
Total (Cost $941,029)			1,291,626
United States – 16.4%
Fossil a	15,000		503,400
Gardner Denver	18,000		765,900
†GrafTech International a	49,500		769,725
Intrepid Potash a	21,800		635,906
†Jacobs Engineering Group a	12,000		451,320
Knight Capital Group Cl. A a	60,000		924,000
Lincoln Electric Holdings	13,100		700,326
Sanderson Farms	20,000		843,200
Schnitzer Steel Industries Cl. A	16,000		763,200
Sigma Designs a	32,500		347,750
U.S. Global Investors Cl. A	48,000		590,880
Unit Corporation a	25,500		1,083,750
Total (Cost $8,406,848)			8,379,357
TOTAL COMMON STOCKS
(Cost $42,755,327)			46,040,678
REPURCHASE AGREEMENT – 9.3%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10,
maturity value $4,756,003 (collateralized
by obligations of various U.S. Government
Agencies, 7.00% due 3/15/10, valued at $4,880,025)
(Cost $4,756,000)			4,756,000
TOTAL INVESTMENTS – 99.7%
(Cost $47,511,327)			50,796,678
CASH AND OTHER ASSETS
LESS LIABILITIES – 0.3%			149,305
NET ASSETS – 100.0%		$	50,945,983

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  101

Schedules of Investments

Royce SMid-Cap Value Fund

	SHARES		VALUE
COMMON STOCKS – 87.5%
Consumer Products – 5.5%
Apparel, Shoes and Accessories - 2.1%
†Coach	700	$	25,571
Gildan Activewear a	5,400		131,652
			157,223
Food/Beverage/Tobacco - 1.8%
†Cal-Maine Foods	2,500		85,200
†Campbell Soup	1,300		43,940
			129,140
Health, Beauty and Nutrition - 1.6%
NBTY a	2,700		117,558
Total (Cost $321,844)			403,921
Consumer Services – 1.4%
Retail Stores - 1.4%
Dress Barn (The) a	3,100		71,610
Family Dollar Stores	1,200		33,396
Total (Cost $98,235)			105,006
Diversified Investment Companies – 0.6%
Exchange Traded Funds - 0.6%
†UltraShort 20+ Year Treasury ProShares a	800		40,000
Total (Cost $37,559)			40,000
Financial Intermediaries – 8.6%
Banking - 0.9%
†US Bancorp	3,100		69,781
Insurance - 6.2%
Alleghany Corporation a	289		79,764
Berkley (W.R.)	2,300		56,672
Erie Indemnity Cl. A	3,800		148,276
Leucadia National a	2,300		54,717
†PartnerRe	900		67,194
Wesco Financial	140		48,020
			454,643
Real Estate Investment Trusts - 0.8%
†Cousins Properties	7,861		59,979
Other Financial Intermediaries - 0.7%
NASDAQ OMX Group (The) a	2,500		49,550
Total (Cost $603,891)			633,953
Financial Services – 7.2%
Information and Processing - 2.8%
†Equifax	3,630		112,131
†Western Union	5,100		96,135
			208,266
Insurance Brokers - 1.2%
Brown & Brown	5,000		89,850
Investment Management - 3.2%
AllianceBernstein Holding L.P.	4,410		123,921

	SHARES		VALUE
Financial Services (continued)
Investment Management (continued)
Federated Investors Cl. B	3,900	$	107,250
			231,171
Total (Cost $420,083)			529,287
Health – 6.0%
Commercial Services - 1.3%
†AmerisourceBergen Corporation	3,650		95,155
Health Services - 2.5%
Advisory Board (The) a	4,500		137,970
†Amedisys a	1,000		48,560
			186,530
Medical Products and Devices - 2.2%
†C.R. Bard	800		62,320
†Pall Corporation	2,000		72,400
Schein (Henry) a	500		26,300
			161,020
Total (Cost $398,623)			442,705
Industrial Products – 15.1%
Automotive - 2.5%
†Hertz Global Holdings a	12,165		145,007
WABCO Holdings	1,600		41,264
			186,271
Building Systems and Components - 0.9%
Quanex Building Products	1,100		18,667
Simpson Manufacturing	1,800		48,402
			67,069
Industrial Components - 0.9%
PerkinElmer	3,280		67,535
Machinery - 2.3%
Franklin Electric	3,500		101,780
Nordson Corporation	1,100		67,298
			169,078
Metal Fabrication and Distribution - 1.0%
Reliance Steel & Aluminum	900		38,898
Sims Metal Management ADR	1,700		33,150
			72,048
Miscellaneous Manufacturing - 1.0%
Acuity Brands	2,050		73,062
Paper and Packaging - 0.4%
†Greif Cl. A	500		26,990
Pumps, Valves and Bearings - 2.2%
†Flowserve Corporation	400		37,812
Gardner Denver	2,900		123,395
			161,207
Specialty Chemicals and Materials - 3.0%
†Albemarle Corporation	1,800		65,466
Cabot Corporation	2,700		70,821
†Lubrizol Corporation (The)	600		43,770
†Olin Corporation	2,600		45,552
			225,609

102  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
Industrial Products (continued)
Other Industrial Products - 0.9%
†Cooper Industries	1,500	$	63,960
Total (Cost $989,501)			1,112,829
Industrial Services – 16.6%
Advertising and Publishing - 1.3%
†Omnicom Group	2,500		97,875
Commercial Services - 7.5%
Brink’s Company (The)	2,330		56,712
Cintas Corporation	2,650		69,033
Copart a	1,100		40,293
†Gartner a	3,400		61,336
†Quanta Services a	4,500		93,780
†Ritchie Bros. Auctioneers	2,100		47,103
†Spherion Corporation a	13,100		73,622
†Verisk Analytics Cl. A a	3,600		109,008
			550,887
Engineering and Construction - 2.4%
EMCOR Group a	1,800		48,420
†Fluor Corporation	2,800		126,112
			174,532
Food, Tobacco and Agriculture - 1.0%
†American Italian Pasta Cl. A a	2,100		73,059
Industrial Distribution - 0.5%
†Russel Metals	2,350		39,839
Transportation and Logistics - 3.9%
Expeditors International of Washington	3,100		107,663
Forward Air	4,000		100,200
Landstar System	2,100		81,417
			289,280
Total (Cost $1,054,434)			1,225,472
Natural Resources – 2.7%
Energy Services - 2.7%
†ENSCO International ADR	900		35,946
Pason Systems	10,400		115,848
Rowan Companies a	2,200		49,808
Total (Cost $222,724)			201,602
Technology – 19.0%
Aerospace and Defense - 3.6%
Alliant Techsystems a	1,010		89,153
†Rockwell Collins	1,700		94,112
Teledyne Technologies a	2,100		80,556
			263,821
Components and Systems - 2.7%
Diebold	1,200		34,140
Dionex Corporation a	1,700		125,579
Thomas & Betts a	1,000		35,790
			195,509
Distribution - 1.6%
Anixter International a	1,200		56,520

	SHARES		VALUE
Technology (continued)
Distribution (continued)
Arrow Electronics a	2,000	$	59,220
			115,740
IT Services - 1.3%
SRA International Cl. A a	3,200		61,120
Sykes Enterprises a	1,400		35,658
			96,778
Semiconductors and Equipment - 3.5%
†International Rectifier a	7,900		174,748
†Molex Cl. A	4,500		86,085
			260,833
Software - 5.7%
†ANSYS a	2,200		95,612
†Autodesk a	2,700		68,607
†Blackboard a	1,800		81,702
†CA	2,500		56,150
†MICROS Systems a	2,000		62,060
NCR Corporation a	5,200		57,876
			422,007
Telecommunications - 0.6%
ADTRAN	1,800		40,590
Total (Cost $1,212,110)			1,395,278
Miscellaneous d – 4.8%
Total (Cost $343,676)			355,804
TOTAL COMMON STOCKS
(Cost $5,702,680)			6,445,857
REPURCHASE AGREEMENT – 11.4%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10,
maturity value $840,000 (collateralized
by obligations of various U.S. Government
Agencies, 7.00% due 3/15/10, valued at $864,225)
(Cost $840,000)			840,000
TOTAL INVESTMENTS – 98.9%
(Cost $6,542,680)			7,285,857
CASH AND OTHER ASSETS
LESS LIABILITIES – 1.1%			78,788
NET ASSETS – 100.0%		$	7,364,645

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  103

Schedules of Investments

Royce International Smaller-Companies Fund

	SHARES		VALUE
COMMON STOCKS – 88.8%
Australia – 2.0%
ASX	1,000	$	31,145
†IOOF Holdings	10,000		54,000
Platinum Asset Management	8,300		40,995
Trust Company	4,800		27,889
Total (Cost $114,343)			154,029
Austria – 1.6%
Mayr-Melnhof Karton	600		61,725
Semperit AG Holding	1,600		61,706
Total (Cost $115,674)			123,431
Belgium – 0.9%
EVS Broadcast Equipment	500		31,870
Sipef	800		39,904
Total (Cost $72,781)			71,774
Bermuda – 1.9%
†Enstar Group a	1,500		109,530
Lazard Cl. A	1,100		41,767
Total (Cost $118,752)			151,297
Brazil – 1.2%
†Duratex	7,379		68,074
†Saraiva SA Livreiros Editores	1,300		25,243
Total (Cost $52,028)			93,317
British Virgin Islands – 0.4%
UTI Worldwide	2,500		35,800
Total (Cost $39,571)			35,800
Canada – 12.9%
AGF Management Cl. B	2,400		39,011
Dundee Corporation Cl. A a	5,400		62,631
DundeeWealth	3,000		39,585
Ensign Energy Services	3,420		49,051
Gildan Activewear a	3,000		73,140
Gluskin Sheff + Associates	2,100		41,263
†GMP Capital	2,500		30,167
†Ivanhoe Mines a	2,900		42,369
†Magma Energy a	33,000		57,111
Major Drilling Group International	4,000		110,035
Onex Corporation	1,100		24,822
Pan American Silver a	2,300		54,763
Pason Systems	1,300		14,481
Red Back Mining a	1,100		15,777
Ritchie Bros. Auctioneers	3,500		78,505
†Seabridge Gold a	1,300		31,551
†ShawCor Cl. A	2,300		64,546
†Silver Standard Resources a	1,500		32,805
Silvercorp Metals	1,600		10,560
Sprott	14,000		60,238

	SHARES		VALUE
Canada (continued)
†Tesco Corporation a	3,000	$	38,730
TMX Group	375		11,879
Trican Well Service	1,200		16,132
Urbana Corporation a	12,400		17,903
Total (Cost $773,527)			1,017,055
Cayman Islands – 1.0%
Endeavour Financial	9,600		16,247
Greenlight Capital Re Cl. A a	2,500		58,925
Total (Cost $61,709)			75,172
China – 8.5%
†Ajisen China Holdings	25,000		21,310
†China Forestry Holdings a	270,000		76,263
†China High Speed Transmission Equipment Group	11,000		26,626
†Ctrip.com International ADR a	700		50,302
†Duoyuan Global Water ADR a	1,100		39,369
†E-House China Holdings ADR a	2,000		36,240
†Golden Eagle Retail Group	16,000		32,289
Hollysys Automation Technologies a	3,900		46,839
Jiangsu Expressway	12,000		10,675
†Jinpan International	300		14,301
†Kingdee International Software Group	142,000		31,577
Origin Agritech a	3,000		35,310
†Simcere Pharmaceutical Group ADR a	4,800		44,352
†Sinovac Biotech a	5,000		31,650
†3SBio ADR a	3,500		47,915
†Tianneng Power International	76,000		34,971
†WuXi PharmaTech Cayman ADR a	3,200		51,072
†Yingli Green Energy Holding Company ADR a	2,500		39,525
Total (Cost $489,265)			670,586
Denmark – 0.3%
Bang & Olufsen Cl. B a	1,500		21,652
Total (Cost $18,324)			21,652
Egypt – 0.7%
†Egyptian Financial Group-Hermes Holding	12,000		54,412
Total (Cost $60,798)			54,412
Finland – 2.2%
†Marimekko	3,600		53,081
†Nokian Renkaat	1,600		38,821
Vacon	1,000		38,254
Vaisala Cl. A	1,250		44,958
Total (Cost $174,099)			175,114
France – 3.2%
Alten a	600		16,655
Boiron	1,000		42,633
Bollore	225		36,926

104  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	SHARES		VALUE
France (continued)
Fimalac	250	$	13,907
Manutan International	300		17,196
Societe BIC	900		62,291
Societe Internationale de Plantations d’Heveas	300		19,695
Vetoquinol	575		18,301
Virbac	260		27,081
Total (Cost $244,566)			254,685
Germany – 3.6%
†Carl Zeiss Meditec	3,500		62,429
ElringKlinger	600		14,012
†Fielmann	700		51,537
Fuchs Petrolub	200		17,399
Pfeiffer Vacuum Technology	400		33,532
Rational	300		50,820
†STRATEC Biomedical Systems	1,000		38,120
Takkt	1,200		12,311
Total (Cost $241,177)			280,160
Greece – 0.7%
Hellenic Exchanges	5,300		54,930
Total (Cost $60,128)			54,930
Hong Kong – 6.3%
Asian Citrus Holdings	45,000		36,958
China Everbright International	36,000		18,431
†China Green (Holdings)	39,000		36,915
†Citic 1616 Holdings	233,000		78,604
†Digital China Holdings	38,000		50,457
First Shanghai Investments a	64,000		10,132
†Huabao International Holdings	21,000		22,671
†Luk Fook Holdings (International)	32,000		27,414
†Minth Group	28,000		41,262
Orient Overseas International	3,100		14,429
†Pico Far East Holdings	144,000		29,705
Sa Sa International Holdings	24,000		15,892
†Sino Biopharmaceutical	72,000		22,847
Sinolink Worldwide Holdings	72,000		13,812
Value Partners Group a	150,000		76,316
Total (Cost $415,469)			495,845
Italy – 1.2%
†Recordati	7,000		52,088
Tod’s	550		40,747
Total (Cost $79,422)			92,835
Japan – 6.0%
Create S D	700		13,328
Daiseki Company	400		8,054
DISCO Corporation	200		12,449
en-japan	14		16,353
Glory	400		8,846
Ito En	600		8,998

	SHARES		VALUE
Japan (continued)
Japan Logistics Fund	3	$	21,992
kabu.com Securities	15		14,460
Kintetsu World Express	400		10,373
MISUMI Group	600		10,218
mixi a	2		15,645
Mizuho Securities	5,700		17,061
Mochida Pharmaceutical	2,300		20,531
NAMCO BANDAI Holdings	800		7,612
Nifco	400		7,950
Nihon Parkerizing	1,500		17,770
Nomura Research Institute	700		13,711
Osaka Securities Exchange	8		37,933
Otsuka Corporation	200		9,915
Park24	1,200		12,697
Ryohin Keikaku	200		7,265
†Shimano	1,000		40,024
So-net M3	2		6,027
SPARX Group a	180		21,162
Sundrug	600		13,249
Sysmex Corporation	400		20,878
†THK Company	1,500		26,496
Toho Titanium	600		9,015
Tokai Carbon	2,000		9,922
Toyo Tanso	200		9,636
Unicharm PetCare	400		12,233
Yusen Air & Sea Service	600		8,261
Total (Cost $479,808)			470,064
Jersey – 0.6%
Randgold Resources ADR	600		47,472
Total (Cost $26,176)			47,472
Luxembourg – 1.1%
Millicom International Cellular	700		51,639
†Reinet Investments a	2,300		36,255
Total (Cost $65,401)			87,894
Mexico – 4.8%
Bolsa Mexicana de Valores a	29,300		34,402
Desarrolladora Homex ADR a	1,200		40,344
†Fresnillo	5,000		63,033
Grupo Aeroportuario del Centro Norte ADR	6,000		79,860
Grupo Aeroportuario del Pacifico ADR	2,500		78,150
Industrias Bachoco ADR	3,600		82,656
Total (Cost $274,982)			378,445
Netherlands – 0.6%
Hunter Douglas	1,000		48,788
Total (Cost $36,889)			48,788
Norway – 0.6%
Ekornes	1,000		20,718

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  105

Schedules of Investments

Royce International Smaller-Companies Fund (continued)

	SHARES		VALUE
Norway (continued)
Tandberg	915	$	26,065
Total (Cost $29,955)			46,783
Peru – 0.7%
Hochschild Mining	10,000		54,472
Total (Cost $57,748)			54,472
Singapore – 2.3%
†ARA Asset Management	40,000		24,658
†Biosensors International Group a	70,000		39,341
Kim Eng Holdings	21,300		30,467
†Raffles Education	60,000		17,128
Singapore Exchange	8,000		47,158
UOB-Kay Hian Holdings	20,000		21,413
Total (Cost $155,481)			180,165
South Africa – 2.4%
Astral Foods	1,400		19,364
†Bell Equipment a	20,000		25,913
Brait	13,000		37,042
Lewis Group	6,200		44,359
†Net 1 UEPS Technologies a	900		17,478
Northam Platinum	7,000		45,247
Total (Cost $153,677)			189,403
South Korea – 3.1%
†Amorepacific Corporation	30		24,051
†Binggrae Company a	450		19,904
†Green Cross a	350		37,944
GS Holdings	400		11,567
†GS Home Shopping	300		22,005
†MegaStudy Company a	150		30,735
Mirae Asset Securities	530		29,448
Samsung Securities	550		29,671
†Woongjin Coway a	1,200		39,564
Total (Cost $233,160)			244,889
Sweden – 0.1%
Lundin Petroleum a	1,400		11,016
Total (Cost $15,814)			11,016
Switzerland – 7.0%
Bank Sarasin & Cie Cl. B	1,500		56,689
†Banque Privee Edmond de Rothschild	3		74,856
†Burckhardt Compression Holding	400		71,585
†Geberit	300		53,141
†Julius Baer Group	2,000		69,851
†Lindt & Spruengli	2		49,148
Partners Group Holding	700		88,165
Vontobel Holding	1,200		34,274

	SHARES		VALUE
Switzerland (continued)
VZ Holding	700	$	53,275
Total (Cost $516,977)			550,984
Taiwan – 0.9%
†Chroma ATE	20,000		45,052
†St. Shine Optical	5,000		29,736
Total (Cost $57,240)			74,788
United Arab Emirates – 1.3%
†Lamprell	27,000		79,671
SHUAA Capital a	55,000		22,044
Total (Cost $75,302)			101,715
United Kingdom – 5.6%
Ashmore Group	9,500		41,298
Begbies Traynor	6,400		11,005
Burberry Group	4,000		38,350
Diploma	4,700		13,418
†Domino Printing Sciences	10,000		53,095
†Gartmore Group a	6,500		22,520
†Hikma Pharmaceuticals	3,200		26,199
Investec	4,300		29,477
Michael Page International	10,000		60,631
Schroders	1,500		32,018
Spirax-Sarco Engineering	2,700		53,754
Victrex	4,500		58,212
Total (Cost $340,981)			439,977
United States – 3.1%
†Artio Global Investors Cl. A a	2,100		53,529
†Globe Specialty Metals a	4,000		37,600
Invesco	1,100		25,839
†WaterFurnace Renewable Energy	2,000		49,644
†Western Union	4,000		75,400
Total (Cost $211,627)			242,012
TOTAL COMMON STOCKS
(Cost $5,862,851)			6,990,961
REPURCHASE AGREEMENT – 11.1%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10,
maturity value $869,000 (collateralized
by obligations of various U.S. Government
Agencies, 7.00% due 3/15/10, valued at $895,275)
(Cost $869,000)			869,000

106  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

Royce Focus Value Fund

		VALUE
TOTAL INVESTMENTS – 99.9%
(Cost $6,731,851)	$	7,859,961
CASH AND OTHER ASSETS
LESS LIABILITIES – 0.1%		11,247
NET ASSETS – 100.0%	$	7,871,208

	SHARES		VALUE
COMMON STOCKS – 83.9%
Consumer Products – 7.1%
Apparel, Shoes and Accessories - 1.1%
†Coach	1,500	$	54,795
Food/Beverage/Tobacco - 6.0%
†Cal-Maine Foods	5,000		170,400
†Industrias Bachoco ADR	5,000		114,800
			285,200
Total (Cost $240,074)			339,995
Consumer Services – 1.8%
Retail Stores - 1.8%
†Buckle (The)	3,000		87,840
Total (Cost $83,438)			87,840
Diversified Investment Companies – 2.1%
Exchange Traded Funds - 2.1%
†UltraShort 20+ Year Treasury ProShares a	2,000		100,000
Total (Cost $95,210)			100,000
Financial Intermediaries – 7.3%
Insurance - 4.1%
†Berkshire Hathaway Cl. B a	60		197,160
Securities Brokers - 3.2%
†Knight Capital Group Cl. A a	10,000		154,000
Total (Cost $323,267)			351,160
Financial Services – 8.0%
Investment Management - 6.5%
†Federated Investors Cl. B	3,000		82,500
†Franklin Resources	1,000		105,350
†Partners Group Holding	700		88,164
†U.S. Global Investors Cl. A	3,000		36,930
			312,944
Other Financial Services - 1.5%
†Kennedy-Wilson Holdings a	8,000		71,600
Total (Cost $280,229)			384,544
Industrial Products – 19.1%
Building Systems and Components - 1.0%
†WaterFurnace Renewable Energy	2,000		49,644
Industrial Components - 2.0%
†GrafTech International a	6,000		93,300
Metal Fabrication and Distribution - 10.3%
†Horsehead Holding Corporation a	5,000		63,750
†Nucor Corporation	3,000		139,950
†Reliance Steel & Aluminum	3,000		129,660
†Schnitzer Steel Industries Cl. A	2,500		119,250
†Sims Metal Management ADR	2,000		39,000
			491,610
Miscellaneous Manufacturing - 1.4%
†Rational	400		67,760

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  107

Schedules of Investments

Royce Focus Value Fund (continued)

	SHARES		VALUE
Industrial Products (continued)
Pumps, Valves and Bearings - 1.3%
†Gardner Denver	1,500	$	63,825
Specialty Chemicals and Materials - 3.1%
†Mosaic Company (The)	2,500		149,325
Total (Cost $651,117)			915,464
Industrial Services – 9.2%
Commercial Services - 0.8%
†Copart a	1,000		36,630
Engineering and Construction - 3.1%
†Jacobs Engineering Group a	4,000		150,440
Food, Tobacco and Agriculture - 1.4%
†Terra Industries	2,000		64,380
Transportation and Logistics - 3.9%
†Patriot Transportation Holding a	2,000		188,920
Total (Cost $411,666)			440,370
Natural Resources – 25.7%
Energy Services - 8.3%
†Major Drilling Group International	5,000		137,543
†Pason Systems	5,500		61,266
†Schlumberger	800		52,072
†Tesco Corporation a	4,000		51,640
†Unit Corporation a	2,300		97,750
			400,271
Oil and Gas - 2.1%
†Exxon Mobil	1,500		102,285
Precious Metals and Mining - 12.4%
†Fresnillo	3,000		37,820
†Gammon Gold a	12,000		132,120
†Ivanhoe Mines a	7,000		102,270
†Pan American Silver a	2,400		57,144
†Seabridge Gold a	5,000		121,350
†Silver Standard Resources a	6,500		142,155
			592,859
Real Estate - 0.7%
†PICO Holdings a	1,000		32,730
Other Natural Resources - 2.2%
†Magma Energy a	60,200		104,185
Total (Cost $861,552)			1,232,330
Technology – 3.6%
Software - 1.5%
†Microsoft Corporation	2,300		70,127
Telecommunications - 2.1%
†ADTRAN	2,000		45,100
†Corning	3,000		57,930
			103,030
Total (Cost $111,634)			173,157
TOTAL COMMON STOCKS
(Cost $3,058,187)			4,024,860

		VALUE
REPURCHASE AGREEMENT – 16.0%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10,
maturity value $767,000 (collateralized
by obligations of various U.S. Government
Agencies, 1.625% due 11/21/12, valued at $791,025)
(Cost $767,000)	$	767,000
TOTAL INVESTMENTS – 99.9%
(Cost $3,825,187)		4,791,860
CASH AND OTHER ASSETS
LESS LIABILITIES – 0.1%		3,748
NET ASSETS – 100.0%	$	4,795,608

108  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

Royce Partners Fund

	SHARES		VALUE
COMMON STOCKS – 67.2%
Consumer Products – 1.3%
Home Furnishing and Appliances - 1.3%
†Hunter Douglas	400	$	19,515
Total (Cost $10,494)			19,515
Consumer Services – 1.2%
Restaurants and Lodgings - 1.2%
†Starbucks Corporation a	800		18,448
Total (Cost $11,184)			18,448
Diversified Investment Companies – 4.0%
Exchange Traded Funds - 4.0%
†UltraShort 20+ Year Treasury ProShares a	1,200		60,000
Total (Cost $58,695)			60,000
Financial Intermediaries – 14.8%
Banking - 6.1%
†Bank of New York Mellon (The)	1,000		27,970
†Bank Sarasin & Cie Cl. B	514		19,426
†Northern Trust	500		26,200
†State Street	400		17,416
			91,012
Insurance - 5.5%
†Alleghany Corporation a	80		22,080
†Erie Indemnity Cl. A	500		19,510
†Marsh & McLennan	1,100		24,288
†White Mountains Insurance Group	50		16,633
			82,511
Real Estate Investment Trusts - 1.4%
†Cousins Properties	2,814		21,471
Securities Brokers - 1.8%
†Egyptian Financial Group-Hermes Holding	1,000		4,534
†FBR Capital Markets a	1,200		7,416
†Lazard Cl. A	400		15,188
			27,138
Total (Cost $195,669)			222,132
Financial Services – 16.2%
Information and Processing - 5.7%
†MasterCard Cl. A	100		25,598
†Morningstar a	600		29,004
†Western Union	1,600		30,160
			84,762
Investment Management - 10.5%
†Artio Global Investors Cl. A a	600		15,294
†Ashmore Group	4,500		19,562
†Cohen & Steers	1,200		27,408
†Invesco	1,100		25,839
†Partners Group Holding	100		12,595
†T. Rowe Price Group	300		15,975
†VZ Holding	300		22,832

	SHARES		VALUE
Financial Services (continued)
Investment Management (continued)
†Westwood Holdings Group	500	$	18,170
			157,675
Total (Cost $188,682)			242,437
Industrial Products – 6.2%
Industrial Components - 2.5%
†Amphenol Corporation Cl. A	300		13,854
†GrafTech International a	1,500		23,325
			37,179
Machinery - 1.1%
†Spirax-Sarco Engineering	800		15,927
Metal Fabrication and Distribution - 1.5%
†Nucor Corporation	500		23,325
Pumps, Valves and Bearings - 1.1%
†Graco	600		17,142
Total (Cost $70,716)			93,573
Industrial Services – 14.6%
Advertising and Publishing - 1.0%
†Omnicom Group	400		15,660
Commercial Services - 5.5%
†Brink’s Company (The)	800		19,472
†Copart a	300		10,989
†Manpower	200		10,916
†Ritchie Bros. Auctioneers	1,000		22,430
†Sotheby’s	800		17,984
			81,791
Engineering and Construction - 1.8%
†Fluor Corporation	600		27,024
Food, Tobacco and Agriculture - 1.4%
†Potash Corporation of Saskatchewan	200		21,700
Transportation and Logistics - 4.9%
†C. H. Robinson Worldwide	300		17,619
†Expeditors International of Washington	500		17,365
†Landstar System	500		19,385
†Patriot Transportation Holding a	200		18,892
			73,261
Total (Cost $197,887)			219,436
Natural Resources – 6.8%
Energy Services - 3.1%
†CARBO Ceramics	400		27,268
†Schlumberger	300		19,527
			46,795
Oil and Gas - 1.1%
†Transocean a	200		16,560
Precious Metals and Mining - 1.6%
†Randgold Resources ADR	300		23,736
Other Natural Resources - 1.0%
†Magma Energy a	9,000		15,576
Total (Cost $70,362)			102,667

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  109

Schedules of Investments December 31, 2009

Royce Partners Fund (continued)

	SHARES		VALUE
Technology – 2.1%
Software - 1.0%
†Microsoft Corporation	500	$	15,245
Telecommunications - 1.1%
†Corning	800		15,448
Total (Cost $23,403)			30,693
TOTAL COMMON STOCKS
(Cost $827,092)			1,008,901
REPURCHASE AGREEMENT – 34.0%
State Street Bank & Trust Company,
0.005% dated 12/31/09, due 1/4/10,
maturity value $511,000 (collateralized
by obligations of various U.S. Government
Agencies, 7.125% due 6/15/10, valued at $527,238)
(Cost $511,000)			511,000
TOTAL INVESTMENTS – 101.2%
(Cost $1,338,092)			1,519,901
LIABILITIES LESS CASH AND OTHER ASSETS – (1.2)%			(18,561	)
NET ASSETS – 100.0%		$	1,501,340

†	New additions in 2009.
a	Non-income producing.
b	All or a portion of these securities were on loan at December 31, 2009.
c	At December 31, 2009, the Fund owned 5% or more of the Company’s outstanding voting securities thereby making the Company an Affiliated Company as that term is defined in the Investment Company Act of 1940. See notes to financial statements.
d	Includes securities first acquired in 2009 and less than 1% of net assets.
e	Securities for which market quotations are not readily available represent 0.0%, 0.0% and 0.0% of net assets for Royce Heritage Fund, Royce Special Equity Fund and Royce Value Plus Fund, respectively. These securities have been valued at their fair value under procedures established by the Fund’s Board of Trustees.
	Bold indicates a Fund’s 20 largest equity holdings in terms of December 31, 2009 market value.

110  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

Statements of Assets and Liabilities December 31, 2009

	Royce			Royce			Royce			Royce
	Pennsylvania			Micro-Cap			Premier			Low-Priced
	Mutual Fund			Fund			Fund			Stock Fund
ASSETS:
Investments at value
(including collateral on loaned securities)*
Non-Affiliated Companies	$	4,699,287,471		$	937,361,185		$	3,130,449,075		$	3,067,989,197
Affiliated Companies		111,182,359			45,623,188			1,546,074,330			290,031,706
Repurchase agreements (at cost and value)		216,867,000			130,790,000			668,302,000			236,888,000
Cash and foreign currency		15,068			135,015			828			802
Receivable for investments sold		18,615,876			874,623			446,386			947,113
Receivable for capital shares sold		7,857,634			4,109,108			11,511,680			10,759,556
Receivable for dividends and interest		3,570,655			974,115			2,575,052			1,967,897
Prepaid expenses and other assets		1,119,115			15,029			81,588			57,902
Total Assets		5,058,515,178			1,119,882,263			5,359,440,939			3,608,642,173
LIABILITIES:
Payable for collateral on loaned securities		104,626,220			36,458,587			160,537,960			149,387,346
Payable for investments purchased		9,424,774			1,593,017			1,795,399			3,632,791
Payable for capital shares redeemed		5,351,578			1,124,762			5,030,560			11,490,749
Payable for investment advisory fees		3,074,879			1,159,506			4,136,700			3,224,532
Accrued expenses		1,623,268			462,799			913,719			1,050,205
Total Liabilities		124,100,719			40,798,671			172,414,338			168,785,623
Net Assets	$	4,934,414,459		$	1,079,083,592		$	5,187,026,601		$	3,439,856,550
ANALYSIS OF NET ASSETS:
Paid-in capital	$	4,764,986,400		$	1,060,425,584		$	4,166,278,329		$	3,045,683,912
Undistributed net investment income (loss)		7,338,192			(9,466,086	)		(5,508,335	)		(27,279,876	)
Accumulated net realized gain (loss) on investments and
foreign currency		(306,283,165	)		(80,365,343	)		(1,297,794	)		(141,812,080	)
Net unrealized appreciation (depreciation) on investments and
foreign currency		468,373,032			108,489,437			1,027,554,401			563,264,594
Net Assets	$	4,934,414,459		$	1,079,083,592		$	5,187,026,601		$	3,439,856,550
Investment Class	$	3,555,507,123		$	844,859,304		$	3,911,501,485		$	94,965,454
Service Class		609,444,638			84,770,400			377,079,222			2,669,235,401
Consultant Class		757,734,345			149,453,888			58,240,612
Institutional Class								516,900,107			673,845,656
W Class								319,120,363
R Class		9,808,051						2,633,944			1,134,122
K Class		1,920,302						1,550,868			675,917
SHARES OUTSTANDING (unlimited number of $.001 par value):
Investment Class		376,433,348			61,613,798			239,895,157			6,745,575
Service Class		64,742,350			6,228,827			23,387,603			189,950,413
Consultant Class		87,647,717			12,002,421			3,821,705
Institutional Class								31,521,706			47,840,260
W Class								19,540,902
R Class		1,057,068						163,930			81,282
K Class		223,615						181,750			74,325
NET ASSET VALUES (Net Assets ÷ Shares Outstanding):
Investment Class(1)		$9.45			$13.71			$16.31			$14.08
Service Class(1)		9.41			13.61			16.12			14.05
Consultant Class(1)		8.65			12.45			15.24
Institutional Class(2)								16.40			14.09
W Class(2)								16.33
R Class(1)		9.28						16.07			13.95
K Class(1)		8.59						8.53			9.09
* Investments at identified cost	$	4,342,103,972		$	874,430,624		$	3,648,985,882		$	2,794,762,054
Market value of loaned securities		101,155,158			35,086,618			155,066,695			144,471,904

(1)	Offering and redemption price per share; shares redeemed within 180 days of purchase are subject to a 1% redemption fee, payable to the Fund.
(2)	Offering and redemption price per share.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  111

Statements of Assets and Liabilities

	Royce			Royce			Royce			Royce
	Total Return			Heritage			Opportunity			Special Equity
	Fund			Fund			Fund			Fund
ASSETS:
Investments at value
(including collateral on loaned securities)*
Non-Affiliated Companies	$	3,856,974,876		$	199,970,979		$	1,558,441,524		$	799,722,793
Affiliated Companies		28,721,510			–			94,497,547			196,316,598
Repurchase agreements (at cost and value)		134,613,000			7,800,000			79,114,000			218,352,000
Cash and foreign currency		965			6,096			761			485
Receivable for investments sold		9,769,459			1,570,990			4,635,670			–
Receivable for capital shares sold		6,400,914			744,364			2,384,574			8,487,522
Receivable for dividends and interest		7,479,027			161,255			632,150			717,049
Prepaid expenses and other assets		72,413			2,528			26,196			15,145
Total Assets		4,044,032,164			210,256,212			1,739,732,422			1,223,611,592
LIABILITIES:
Payable for collateral on loaned securities		6,822,736			7,086,674			87,748,466			1,748,662
Payable for investments purchased		3,640,045			1,407,088			2,911,357			4,080,069
Payable for capital shares redeemed		8,040,028			158,728			2,307,757			396,713
Payable for investment advisory fees		3,292,313			165,151			1,358,246			985,416
Accrued expenses		1,002,515			92,598			301,450			219,010
Total Liabilities		22,797,637			8,910,239			94,627,276			7,429,870
Net Assets	$	4,021,234,527		$	201,345,973		$	1,645,105,146		$	1,216,181,722
ANALYSIS OF NET ASSETS:
Paid-in capital	$	3,745,124,453		$	185,239,797		$	2,017,701,001		$	1,008,871,326
Undistributed net investment income (loss)		53,726,349			198,755			(696,863	)		146,224
Accumulated net realized gain (loss) on investments and
foreign currency		(288,207,637	)		(17,867,149	)		(278,899,799	)		(8,756,093	)
Net unrealized appreciation (depreciation) on investments and
foreign currency		510,591,362			33,774,570			(92,999,193	)		215,920,265
Net Assets	$	4,021,234,527		$	201,345,973		$	1,645,105,146		$	1,216,181,722
Investment Class	$	3,077,098,681		$	10,051,878		$	836,267,694		$	842,677,752
Service Class		215,938,811			182,689,832			298,410,543			72,360,287
Consultant Class		366,367,288			7,485,384			7,500,565			20,890,469
Institutional Class		264,040,907						502,300,029			280,253,214
W Class		48,058,347
R Class		6,449,570			831,734			340,677
K Class		43,280,923			287,145			285,638
SHARES OUTSTANDING (unlimited number of $.001 par value):
Investment Class		284,568,442			829,234			92,659,109			48,156,301
Service Class		19,978,967			15,135,332			33,811,765			4,139,915
Consultant Class		33,626,128			738,086			865,967			1,226,537
Institutional Class		24,446,196						55,365,412			16,071,643
W Class		4,437,886
R Class		592,825			88,228			38,449
K Class		5,110,245			30,341			34,676
NET ASSET VALUES (Net Assets ÷ Shares Outstanding):
Investment Class(1)		$10.81			$12.12			$9.03			$17.50
Service Class(1)		10.81			12.07			8.83			17.48
Consultant Class(1)		10.90			10.14			8.66			17.03
Institutional Class(2)		10.80						9.07			17.44
W Class(2)		10.83
R Class(1)		10.88			9.43			8.86
K Class(1)		8.47			9.46			8.24
* Investments at identified cost	$	3,375,107,560		$	166,198,866		$	1,745,938,264		$	780,119,125
Market value of loaned securities		6,572,605			6,861,246			83,186,539			1,688,093

(1)	Offering and redemption price per share; shares redeemed within 180 days of purchase are subject to a 1% redemption fee, payable to the Fund.
(2)	Offering and redemption price per share.

112  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	Royce			Royce			Royce			Royce
	Value			Value Plus			100			Discovery
	Fund			Fund			Fund			Fund
ASSETS:
Investments at value
(including collateral on loaned securities)*
Non-Affiliated Companies	$	1,349,027,422		$	2,753,717,379		$	203,855,512		$	2,798,003
Affiliated Companies		–			345,398,113			–			–
Repurchase agreements (at cost and value)		106,237,000			161,435,000			28,018,000			133,000
Cash and foreign currency		93			4,850,372			483			397
Receivable for investments sold		1,584,507			921,906			–			–
Receivable for capital shares sold		3,619,502			5,161,722			1,967,122			2,146
Receivable for dividends and interest		665,484			1,066,967			154,474			291
Prepaid expenses and other assets		21,727			50,355			2,156			53
Total Assets		1,461,155,735			3,272,601,814			233,997,747			2,933,890
LIABILITIES:
Payable for collateral on loaned securities		6,143,733			87,361,318			–			–
Payable for investments purchased		153,557			4,951,519			182,895			–
Payable for capital shares redeemed		1,436,631			18,838,219			273,400			7,491
Payable for investment advisory fees		1,209,207			2,588,257			188,051			–
Accrued expenses		482,876			1,046,222			99,826			16,375
Total Liabilities		9,426,004			114,785,535			744,172			23,866
Net Assets	$	1,451,729,731		$	3,157,816,279		$	233,253,575		$	2,910,024
ANALYSIS OF NET ASSETS:
Paid-in capital	$	1,497,375,356		$	3,608,329,511		$	204,527,332		$	3,764,577
Undistributed net investment income (loss)		(1,856,432	)		(5,416,604	)		126,504			–
Accumulated net realized gain (loss) on investments and
foreign currency		(160,362,399	)		(427,830,403	)		(1,012,576	)		(585,320	)
Net unrealized appreciation (depreciation) on investments and
foreign currency		116,573,206			(17,266,225	)		29,612,315			(269,233	)
Net Assets	$	1,451,729,731		$	3,157,816,279		$	233,253,575		$	2,910,024
Investment Class	$	67,249,329		$	261,905,748		$	35,165,236
Service Class		1,178,806,035			2,505,016,741			197,607,155		$	2,910,024
Consultant Class		27,625,156			31,154,246
Institutional Class		167,214,795			357,733,650
R Class		6,113,715			642,373			295,905
K Class		4,720,701			1,363,521			185,279
SHARES OUTSTANDING (unlimited number of $.001 par value):
Investment Class		6,616,544			23,151,151			4,428,915
Service Class		116,394,319			222,948,419			24,980,650			663,929
Consultant Class		2,807,998			2,850,777
Institutional Class		16,447,544			31,632,445
R Class		608,039			57,704			31,069
K Class		558,282			165,920			19,360
NET ASSET VALUES (Net Assets ÷ Shares Outstanding):
Investment Class(1)		$10.16			$11.31			$7.94
Service Class(1)		10.13			11.24			7.91			$4.38
Consultant Class(1)		9.84			10.93
Institutional Class(2)		10.17			11.31
R Class(1)		10.05			11.13			9.52
K Class(1)		8.46			8.22			9.57
* Investments at identified cost	$	1,232,456,007		$	3,116,387,007		$	174,243,909		$	3,067,236
Market value of loaned securities		5,932,136			83,256,683

(1)	Offering and redemption price per share; shares redeemed within 180 days of purchase are subject to a 1% redemption fee, payable to the Fund.
(2)	Offering and redemption price per share.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  113

Statements of Assets and Liabilities

	Royce			Royce			Royce			Royce
	Financial			Dividend			European Smaller-			Global
	Services Fund			Value Fund			Companies Fund			Value Fund
ASSETS:
Investments at value*
Non-Affiliated Companies	$	12,842,766		$	28,233,938		$	6,146,322		$	46,040,678
Repurchase agreements (at cost and value)		693,000			1,094,000			719,000			4,756,000
Cash and foreign currency		167			138,687			2,282			7,816
Receivable for investments sold		–			147,562			–			–
Receivable for capital shares sold		147,785			1,044,109			31,550			182,840
Receivable for dividends and interest		21,264			62,193			11,066			85,064
Prepaid expenses and other assets		238			228			92			747
Total Assets		13,705,220			30,720,717			6,910,312			51,073,145
LIABILITIES:
Payable for investments purchased		21,569			1,334,470			–			43,984
Payable for capital shares redeemed		131,228			18,243			3,045			–
Payable for investment advisory fees		4,956			20,164			661			48,158
Accrued expenses		22,105			33,152			20,051			35,020
Total Liabilities		179,858			1,406,029			23,757			127,162
Net Assets	$	13,525,362		$	29,314,688		$	6,886,555		$	50,945,983
ANALYSIS OF NET ASSETS:
Paid-in capital	$	14,800,741		$	27,388,287		$	9,637,039		$	60,050,192
Undistributed net investment income (loss)		42,189			62,175			(21,117	)		(160,982	)
Accumulated net realized gain (loss) on investments and
foreign currency		(1,708,324	)		(570,559	)		(2,883,258	)		(12,229,231	)
Net unrealized appreciation (depreciation) on investments and
foreign currency		390,756			2,434,785			153,891			3,286,004
Net Assets	$	13,525,362		$	29,314,688		$	6,886,555		$	50,945,983
Investment Class				$	13,208,065
Service Class	$	13,525,362			16,106,623		$	6,886,555		$	50,945,983
SHARES OUTSTANDING (unlimited number of $.001 par value):
Investment Class					2,488,985
Service Class		2,427,024			3,022,256			854,769			4,719,459
NET ASSET VALUES (Net Assets ÷ Shares Outstanding):
Investment Class(1)				$	5.31
Service Class(1)	$	5.57			5.33		$	8.06	(2)	$	10.79	(2)
*  Investments at identified cost	$	12,452,380		$	25,822,881		$	5,992,473		$	42,755,327

(1)	Offering and redemption price per share; shares redeemed within 180 days of purchase are subject to a 1% redemption fee, payable to the Fund.
(2)	For Royce European Smaller-Companies Fund and Royce Global Value Fund, shares redeemed within 180 days of purchase are subject to a 2% redemption fee, payable to the Fund.

114  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

December 31, 2009

	Royce			Royce			Royce			Royce
	SMid-Cap			International Smaller-			Focus Value			Partners
	Value Fund			Companies Fund			Fund			Fund
ASSETS:
Investments at value*
Non-Affiliated Companies	$	6,445,857		$	6,990,961		$	4,024,860		$	1,008,901
Repurchase agreements (at cost and value)		840,000			869,000			767,000			511,000
Cash and foreign currency		31			62,242			633			28
Receivable for investments sold		70,532			–			–			–
Receivable for capital shares sold		76,010			142,752			18,500			2,500
Receivable for dividends and interest		6,349			6,166			5,409			941
Prepaid expenses and other assets		185			80			44			15
Total Assets		7,438,964			8,071,201			4,816,446			1,523,385
LIABILITIES:
Payable for investments purchased		38,436			173,940			–			6,560
Payable for capital shares redeemed		15,340			5,000			5,008			–
Payable for investment advisory fees		3,304			–			–			–
Accrued expenses		17,239			21,053			15,830			15,485
Total Liabilities		74,319			199,993			20,838			22,045
Net Assets	$	7,364,645		$	7,871,208		$	4,795,608		$	1,501,340
ANALYSIS OF NET ASSETS:
Paid-in capital	$	13,518,493		$	6,717,277		$	3,839,109		$	1,318,381
Undistributed net investment income (loss)		5,578			(16,596	)		(11,624	)		–
Accumulated net realized gain (loss) on investments and
foreign currency		(6,902,619	)		42,615			1,437			1,210
Net unrealized appreciation (depreciation) on investments and
foreign currency		743,193			1,127,912			966,686			181,749
Net Assets	$	7,364,645		$	7,871,208		$	4,795,608		$	1,501,340
Service Class	$	7,364,645		$	7,871,208		$	4,795,608		$	1,501,340
SHARES OUTSTANDING (unlimited number of $.001 par value):
Service Class		811,064			750,544			323,589			129,829
NET ASSET VALUES (Net Assets ÷ Shares Outstanding):
Service Class(1)	$	9.08		$	10.49	(2)	$	14.82		$	11.56
*  Investments at identified cost	$	5,702,680		$	5,862,851		$	3,058,187		$	827,092

(1)	Offering and redemption price per share; shares redeemed within 180 days of purchase are subject to a 1% redemption fee, payable to the Fund.
(2)	For Royce International Smaller-Companies Fund, shares redeemed within 180 days of purchase are subject to a 2% redemption fee, payable to the Fund.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  115

Statements of Changes in Net Assets

	Royce Pennsylvania
	Mutual Fund						Royce Micro-Cap Fund						Royce Premier Fund
	Year ended			Year ended			Year ended			Year ended			Year ended			Year ended
	12/31/09			12/31/08			12/31/09			12/31/08			12/31/09			12/31/08
INVESTMENT OPERATIONS:
Net investment income (loss)	$	4,498,562		$	11,889,650		$	(4,268,637	)	$	5,887,338		$	(6,011,148	)	$	6,714,730
Net realized gain (loss) on investments and
foreign currency		(131,643,031	)		(174,367,554	)		(31,441,694	)		(25,296,173	)		5,687,774			(9,496,142	)
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency		1,353,645,992			(1,461,212,117	)		382,990,029			(407,275,570	)		1,193,921,561			(1,477,972,261	)
Net increase (decrease) in net assets from
investment operations		1,226,501,523			(1,623,690,021	)		347,279,698			(426,684,405	)		1,193,598,187			(1,480,753,673	)
DISTRIBUTIONS:
Net investment income
Investment Class		(2,801,892	)		(2,910,826	)		(11,157,943	)		–			–			–
Service Class		–			–			(1,071,605	)		–			–			–
Consultant Class		–			–			(1,114,364	)		–			–			–
Institutional Class														–			–
W Class														–			–
R Class		–			–									–			–
K Class		–			–									–			–
Net realized gain on investments and
foreign currency
Investment Class		–			(32,769,764	)		–			(16,136,129	)		–			(41,688,986	)
Service Class		–			(1,180,327	)		–			(984,301	)		–			(3,271,933	)
Consultant Class		–			(9,945,072	)		–			(3,946,809	)		–			(493,813	)
Institutional Class														–			(5,473,666	)
W Class														–			(3,711,980	)
R Class		–			(83,681	)								–			(6,661	)
K Class		–			(2,441	)								–			(1,018	)
Total distributions		(2,801,892	)		(46,892,111	)		(13,343,912	)		(21,067,239	)		–			(54,648,057	)
CAPITAL SHARE TRANSACTIONS:
Net capital share transactions
Investment Class		379,027,780			381,055,621			130,266,475			110,775,913			381,703,030			97,436,393
Service Class		352,809,846			89,761,830			31,846,914			17,935,958			85,584,636			51,231,360
Consultant Class		(76,272,328	)		(135,763,968	)		(3,447,974	)		(18,324,406	)		18,288,074			(8,748,050	)
Institutional Class														40,687,524			53,920,359
W Class														3,196,459			17,768,275
R Class		2,069,250			7,327,956									1,890,383			464,210
K Class		752,676			678,840									1,256,498			53,217
Shareholder redemption fees
Investment Class		335,132			362,150			84,891			107,082			249,500			337,593
Service Class		824,379			10,320			29,982			17,510			48,054			93,476
Consultant Class		30,245			59,471			7,092			13,014			1,784			2,306
R Class		13			–									6			–
K Class		824			–									–			–
Net increase (decrease) in net assets from
capital share transactions		659,577,817			343,492,220			158,787,380			110,525,071			532,905,948			212,559,139
NET INCREASE (DECREASE) IN NET ASSETS		1,883,277,448			(1,327,089,912	)		492,723,166			(337,226,573	)		1,726,504,135			(1,322,842,591	)
NET ASSETS:
Beginning of year		3,051,137,011			4,378,226,923			586,360,426			923,586,999			3,460,522,466			4,783,365,057
End of year	$	4,934,414,459		$	3,051,137,011		$	1,079,083,592		$	586,360,426		$	5,187,026,601		$	3,460,522,466
UNDISTRIBUTED NET INVESTMENT INCOME
(LOSS) AT END OF YEAR	$	7,338,192		$	2,818,426		$	(9,466,086	)	$	(217,066	)	$	(5,508,335	)	$	(1,390,524	)

116  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

	Royce Low-Priced Stock Fund						Royce Total Return Fund						Royce Heritage Fund
	Year ended			Year ended			Year ended			Year ended			Year ended			Year ended
	12/31/09			12/31/08			12/31/09			12/31/08			12/31/09			12/31/08
INVESTMENT OPERATIONS:
Net investment income (loss)	$	(9,080,283	)	$	(787,962	)	$	57,021,457		$	75,309,212		$	(69,909	)	$	105,812
Net realized gain (loss) on investments and
foreign currency		(87,267,633	)		(35,335,315	)		(189,731,841	)		(85,073,024	)		(2,351,245	)		(15,159,845	)
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency		1,332,573,466			(1,442,070,890	)		963,763,879			(1,707,650,904	)		59,309,275			(30,870,366	)
Net increase (decrease) in net assets from
investment operations		1,236,225,550			(1,478,194,167	)		831,053,495			(1,717,414,716	)		56,888,121			(45,924,399	)
DISTRIBUTIONS:
Net investment income
Investment Class		(298,274	)		–			(39,146,850	)		(71,303,589	)		–			–
Service Class		(3,209,684	)		–			(1,981,005	)		(3,639,268	)		–			–
Consultant Class								(1,660,454	)		(2,264,372	)		–			–
Institutional Class		(2,037,644	)		–			(3,685,232	)		(5,063,006	)
W Class								(857,210	)		(3,116,039	)
R Class		(31	)		–			(24,161	)		(28,532	)		–			–
K Class		(2,710	)		–			(462,195	)		(224,243	)		–			–
Net realized gain on investments and
foreign currency
Investment Class		–			(1,857,489	)		–			(1,225,833	)		–			(150,338	)
Service Class		–			(53,470,563	)		–			(79,203	)		–			(2,324,338	)
Consultant Class								–			(167,946	)		–			(165,603	)
Institutional Class		–			(15,527,427	)		–			(84,400	)
W Class								–			(31,754	)
R Class		–			(2,930	)		–			(1,343	)		–			(2,463	)
K Class		–			(1,307	)		–			(7,849	)		–			(2,464	)
Total distributions		(5,548,343	)		(70,859,716	)		(47,817,107	)		(87,237,377	)		–			(2,645,206	)
CAPITAL SHARE TRANSACTIONS:
Net capital share transactions
Investment Class		(5,050,009	)		68,103,790			(91,509,188	)		(260,867,768	)		1,444,488			(282,167	)
Service Class		(103,397,366	)		(289,934,048	)		15,019,931			(20,757,447	)		52,835,057			17,369,900
Consultant Class								(59,717,473	)		(108,765,485	)		549,991			785,193
Institutional Class		(172,188,340	)		22,960,668			22,637,144			18,424,027
W Class								(27,447,742	)		(124,452,298	)
R Class		783,751			29,057			2,439,278			2,983,625			650,634			102,463
K Class		549,258			49,503			15,638,522			18,172,213			145,515			102,481
Shareholder redemption fees
Investment Class		12,722			23,963			275,591			393,188			192			–
Service Class		274,606			133,537			299,140			451,899			43,589			10,773
Consultant Class								19,753			36,526			1,526			3,417
R Class		302			–			–			–			–			–
K Class		–			–			164			–			–			–
Net increase (decrease) in net assets from
capital share transactions		(279,015,076	)		(198,633,530	)		(122,344,880	)		(474,381,520	)		55,670,992			18,092,060
NET INCREASE (DECREASE) IN NET ASSETS		951,662,131			(1,747,687,413	)		660,891,508			(2,279,033,613	)		112,559,113			(30,477,545	)
NET ASSETS:
Beginning of year		2,488,194,419			4,235,881,832			3,360,343,019			5,639,376,632			88,786,860			119,264,405
End of year	$	3,439,856,550		$	2,488,194,419		$	4,021,234,527		$	3,360,343,019		$	201,345,973		$	88,786,860
UNDISTRIBUTED NET INVESTMENT INCOME
(LOSS) AT END OF YEAR	$	(27,279,876	)	$	(12,732,104	)	$	53,726,349		$	46,113,954		$	198,755		$	264,443

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  117

Statements of Changes in Net Assets

	Royce Opportunity Fund						Royce Special Equity Fund						Royce Value Fund
	Year ended			Year ended			Year ended			Year ended			Year ended			Year ended
	12/31/09			12/31/08			12/31/09			12/31/08			12/31/09			12/31/08
INVESTMENT OPERATIONS:
Net investment income (loss)	$	(5,600,827	)	$	10,245,358		$	5,014,952		$	6,692,362		$	(2,867,391	)	$	(2,893,793	)
Net realized gain (loss) on investments and
foreign currency		(190,846,794	)		(84,728,386	)		2,358,466			(11,113,882	)		(103,373,697	)		(54,618,165	)
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency		841,768,153			(888,512,442	)		212,821,166			(110,190,095	)		511,404,073			(403,552,866	)
Net increase (decrease) in net assets from
investment operations		645,320,532			(962,995,470	)		220,194,584			(114,611,615	)		405,162,985			(461,064,824	)
DISTRIBUTIONS:
Net investment income
Investment Class		(93,286	)		(5,075,652	)		(3,385,049	)		(4,347,676	)		–			–
Service Class		–			(1,050,627	)		(209,964	)		(68,715	)		–			–
Consultant Class		–			–			–			(13,101	)		–			–
Institutional Class		(776,463	)		(3,488,810	)		(1,273,715	)		(2,355,040	)		–			–
R Class		–			(655	)								–			–
K Class		–			(163	)								–			–
Net realized gain on investments and
foreign currency
Investment Class		–			(34,232,879	)		–			(15,457,809	)		–			–
Service Class		–			(9,392,220	)		–			(261,068	)		–			–
Consultant Class		–			(271,289	)		–			(572,835	)		–			–
Institutional Class		–			(18,309,532	)		–			(7,729,865	)		–			–
R Class		–			(6,063	)								–			–
K Class		–			(1,475	)								–			–
Total distributions		(869,749	)		(71,829,365	)		(4,868,728	)		(30,806,109	)		–			–
CAPITAL SHARE TRANSACTIONS:
Net capital share transactions
Investment Class		(77,385,940	)		(359,296,669	)		373,830,873			25,158,441			36,972,542			14,112,044
Service Class		19,995,582			17,148,289			54,047,538			7,787,357			138,448,254			427,404,422
Consultant Class		257,754			884,215			5,667,472			(749,516	)		4,621,513			9,694,459
Institutional Class		(2,395,697	)		250,846,422			67,463,685			51,078,984			3,381,940			(1,551,339	)
R Class		231,793			2,461									5,247,846			359,023
K Class		205,273			44,928									2,112,321			1,446,184
Shareholder redemption fees
Investment Class		95,640			96,811			416,743			41,696			11,260			6,521
Service Class		115,967			51,654			21,199			3,503			327,594			628,156
Consultant Class		161			1,329			1,795			3,598			9,468			7,790
R Class		–			–									429			530
Net increase (decrease) in net assets from
capital share transactions		(58,879,467	)		(90,220,560	)		501,449,305			83,324,063			191,133,167			452,107,790
NET INCREASE (DECREASE) IN NET ASSETS		585,571,316			(1,125,045,395	)		716,775,161			(62,093,661	)		596,296,152			(8,957,034	)
NET ASSETS:
Beginning of year		1,059,533,830			2,184,579,225			499,406,561			561,500,222			855,433,579			864,390,613
End of year	$	1,645,105,146		$	1,059,533,830		$	1,216,181,722		$	499,406,561		$	1,451,729,731		$	855,433,579
UNDISTRIBUTED NET INVESTMENT INCOME
(LOSS) AT END OF YEAR	$	(696,863	)	$	129,982		$	146,224		$	–		$	(1,856,432	)	$	(5,262	)

118  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

	Royce Value Plus Fund						Royce 100 Fund						Royce Discovery Fund
	Year ended			Year ended			Year ended			Year ended			Year ended			Year ended
	12/31/09			12/31/08			12/31/09			12/31/08			12/31/09			12/31/08
INVESTMENT OPERATIONS:
Net investment income (loss)	$	(4,999,257	)	$	(13,404,858	)	$	(191,502	)	$	(23,531	)	$	(7,605	)	$	(7,225	)
Net realized gain (loss) on investments and
foreign currency		(267,746,788	)		(159,096,016	)		595,396			(1,452,326	)		(321,069	)		(263,982	)
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency		1,150,189,259			(1,164,037,413	)		42,325,144			(16,642,391	)		947,447			(1,092,029	)
Net increase (decrease) in net assets from
investment operations		877,443,214			(1,336,538,287	)		42,729,038			(18,118,248	)		618,773			(1,363,236	)
DISTRIBUTIONS:
Net investment income
Investment Class		–			–			–			–
Service Class		–			–			–			–			–			–
Consultant Class		–			–
Institutional Class		–			–
R Class		–			–			–			–
K Class		–			–			–			–
Net realized gain on investments and
foreign currency
Investment Class		–			(2,470,975	)		–			(231,771	)
Service Class		–			(36,472,282	)		–			(625,590	)		–			(184,460	)
Consultant Class		–			(586,233	)
Institutional Class		–			(2,848,873	)
R Class		–			(7,653	)		–			(874	)
K Class		–			(905	)		–			(1,180	)
Total distributions		–			(42,386,921	)		–			(859,415	)		–			(184,460	)
CAPITAL SHARE TRANSACTIONS:
Net capital share transactions
Investment Class		74,580,764			102,839,374			11,792,285			10,696,770
Service Class		76,229,580			250,105,200			118,681,123			31,819,959			(40,455	)		(32,175	)
Consultant Class		(4,006,240	)		(1,049,159	)
Institutional Class		130,449,239			79,343,121
R Class		196,142			454,846			166,654			100,874
K Class		962,414			50,755			28,845			124,654
Shareholder redemption fees
Investment Class		14,148			30,251			2,116			–
Service Class		434,206			496,765			58,801			35,018			11			268
Consultant Class		4,454			9,342
K Class		–			–			13			–
Net increase (decrease) in net assets from
capital share transactions		278,864,707			432,280,495			130,729,837			42,777,275			(40,444	)		(31,907	)
NET INCREASE (DECREASE) IN NET ASSETS		1,156,307,921			(946,644,713	)		173,458,875			23,799,612			578,329			(1,579,603	)
NET ASSETS:
Beginning of year		2,001,508,358			2,948,153,071			59,794,700			35,995,088			2,331,695			3,911,298
End of year	$	3,157,816,279		$	2,001,508,358		$	233,253,575		$	59,794,700		$	2,910,024		$	2,331,695
UNDISTRIBUTED NET INVESTMENT INCOME
(LOSS) AT END OF YEAR	$	(5,416,604	)	$	(662,129	)	$	126,504		$	44,870		$	–		$	–

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  119

Statements of Changes in Net Assets

													Royce European Smaller-
	Royce Financial Services Fund						Royce Dividend Value Fund						Companies Fund
	Year ended			Year ended			Year ended			Year ended			Year ended			Year ended
	12/31/09			12/31/08			12/31/09			12/31/08			12/31/09			12/31/08
INVESTMENT OPERATIONS:
Net investment income (loss)	$	105,679		$	144,513		$	197,125		$	124,382		$	52,106		$	165,869
Net realized gain (loss) on investments and
foreign currency		(1,443,540	)		(267,159	)		(186,573	)		(296,528	)		(1,353,447	)		(1,484,236	)
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency		4,587,226			(4,379,138	)		4,672,330			(2,296,540	)		3,338,300			(2,689,442	)
Net increase (decrease) in net assets from
investment operations		3,249,365			(4,501,784	)		4,682,882			(2,468,686	)		2,036,959			(4,007,809	)
DISTRIBUTIONS:
Net investment income
Investment Class								(79,110	)		(41,209	)
Service Class		(107,275	)		(119,843	)		(100,822	)		(84,725	)		(101,039	)		(175,631	)
Net realized gain on investments and
foreign currency
Investment Class								–			(1,739	)
Service Class		–			(57,862	)		–			(4,635	)		–			–
Total distributions		(107,275	)		(177,705	)		(179,932	)		(132,308	)		(101,039	)		(175,631	)
CAPITAL SHARE TRANSACTIONS:
Net capital share transactions
Investment Class								9,684,811			803,330
Service Class		811,874			9,572,344			8,370,992			2,870,266			906,650			(1,247,527	)
Shareholder redemption fees
Investment Class								2,257			542
Service Class		18,065			10,181			1,161			1,117			445			5,059
Net increase (decrease) in net assets from
capital share transactions		829,939			9,582,525			18,059,221			3,675,255			907,095			(1,242,468	)
NET INCREASE (DECREASE) IN NET ASSETS		3,972,029			4,903,036			22,562,171			1,074,261			2,843,015			(5,425,908	)
NET ASSETS:
Beginning of year		9,553,333			4,650,297			6,752,517			5,678,256			4,043,540			9,469,448
End of year	$	13,525,362		$	9,553,333		$	29,314,688		$	6,752,517		$	6,886,555		$	4,043,540
UNDISTRIBUTED NET INVESTMENT INCOME
(LOSS) AT END OF YEAR	$	42,189		$	41,236		$	62,175		$	50,808		$	(21,117	)	$	(1,933	)

120  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

													Royce International Smaller-
	Royce Global Value Fund						Royce SMid-Cap Value Fund						Companies Fund
	Year ended			Year ended			Year ended			Year ended			Year ended			Period ended
	12/31/09			12/31/08			12/31/09			12/31/08			12/31/09			12/31/08*
INVESTMENT OPERATIONS:
Net investment income (loss)	$	40,611		$	550,863		$	(16,390	)	$	23,557		$	(8,080	)	$	(3,870	)
Net realized gain (loss) on investments and
foreign currency		(5,113,914	)		(7,090,164	)		(2,379,962	)		(4,522,091	)		46,359			2,084
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency		22,985,888			(19,663,821	)		3,221,156			(2,483,776	)		1,722,089			(594,176	)
Net increase (decrease) in net assets from
investment operations		17,912,585			(26,203,122	)		824,804			(6,982,310	)		1,760,368			(595,962	)
DISTRIBUTIONS:
Net investment income
Service Class		(252,560	)		(124,489	)		(7,303	)		(10,890	)		(11,461	)		–
Net realized gain on investments and
foreign currency
Service Class		–			(1,441	)		–			–			–			–
Total distributions		(252,560	)		(125,930	)		(7,303	)		(10,890	)		(11,461	)		–
CAPITAL SHARE TRANSACTIONS:
Net capital share transactions
Service Class		2,205,902			37,356,376			(7,519,717	)		19,653,492			4,158,315			2,556,170
Shareholder redemption fees
Service Class		40,041			136,353			7,772			19,727			3,778			–
Net increase (decrease) in net assets from
capital share transactions		2,245,943			37,492,729			(7,511,945	)		19,673,219			4,162,093			2,556,170
NET INCREASE (DECREASE) IN NET ASSETS		19,905,968			11,163,677			(6,694,444	)		12,680,019			5,911,000			1,960,208
NET ASSETS:
Beginning of period		31,040,015			19,876,338			14,059,089			1,379,070			1,960,208			–
End of period	$	50,945,983		$	31,040,015		$	7,364,645		$	14,059,089		$	7,871,208		$	1,960,208
UNDISTRIBUTED NET INVESTMENT INCOME
(LOSS) AT END OF PERIOD	$	(160,982	)	$	(21,076	)	$	5,578		$	12,862		$	(16,596	)	$	(742	)

* The Fund commenced operations on July 1, 2008.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  121

Statements of Changes in Net Assets

	Royce			Royce
	Focus Value Fund			Partners Fund
	Period ended			Period ended
	12/31/09*			12/31/09**
INVESTMENT OPERATIONS:
Net investment income (loss)	$	4,490		$	(6,112	)
Net realized gain (loss) on investments and foreign currency		137,666			7,322
Net change in unrealized appreciation (depreciation) on investments and foreign currency		966,686			181,749
Net increase (decrease) in net assets from investment operations		1,108,842			182,959
DISTRIBUTIONS:
Net investment income
Service Class		(15,589	)		–
Net realized gain on investments and foreign currency
Service Class		(136,754	)		–
Total distributions		(152,343	)		–
CAPITAL SHARE TRANSACTIONS:
Net capital share transactions
Service Class		3,839,041			1,318,213
Shareholder redemption fees
Service Class		68			168
Net increase (decrease) in net assets from capital share transactions		3,839,109			1,318,381
NET INCREASE (DECREASE) IN NET ASSETS		4,795,608			1,501,340
NET ASSETS:
Beginning of period		–			–
End of period	$	4,795,608		$	1,501,340
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) AT END OF PERIOD	$	(11,624	)	$	–

*	The Fund commenced operations on March 2, 2009.
**	The Fund commenced operations on April 28, 2009.

122  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

Statements of Operations Period Ended December 31, 2009

	Royce				Royce				Royce				Royce				Royce				Royce				Royce
	Pennsylvania				Micro-Cap				Premier				Low-Priced				Total Return				Heritage				Opportunity
	Mutual Fund				Fund				Fund				Stock Fund				Fund				Fund				Fund
INVESTMENT INCOME:
Income:
Dividends
Non-Affiliated Companies		$	44,436,076			$	7,875,765			$	26,518,131			$	26,651,081			$	98,946,180			$	1,808,656			$	8,797,347
Affiliated Companies			816,464				551,334				13,537,937				3,563,878				1,313,774				–				42,982
Interest			119,750				47,139				184,965				105,604				629,981				2,790				448,239
Securities lending			1,132,868				310,633				806,633				606,123				304,766				66,050				939,708
Total income			46,505,158				8,784,871				41,047,666				30,926,686				101,194,701				1,877,496				10,228,276
Expenses:
Investment advisory fees			28,127,149				10,041,462				39,290,968				31,952,913				34,080,026				1,332,969				12,983,501
Distribution fees			7,423,277				1,307,528				1,072,465				5,238,027				3,938,877				358,251				626,915
Shareholder servicing			3,341,441				806,376				3,535,637				3,007,472				3,303,308				157,918				1,277,156
Shareholder reports			1,728,119				463,912				1,696,235				1,161,475				1,286,741				64,189				387,711
Administrative and office facilities			518,460				103,405				580,776				419,823				539,224				16,229				184,172
Custody			344,403				169,833				335,641				297,850				300,467				49,397				140,277
Registration			151,153				106,676				132,185				53,434				134,250				49,371				61,512
Trustees’ fees			132,837				26,734				147,102				106,312				131,984				4,430				46,108
Legal			82,672				16,605				92,828				67,541				87,281				2,557				30,056
Audit			73,154				38,170				66,013				64,007				76,339				30,725				42,560
Other expenses			155,742				32,829				163,723				122,168				295,070				7,158				63,349
Total expenses			42,078,407				13,113,530				47,113,573				42,491,022				44,173,567				2,073,194				15,843,317
Compensating balance credits			(3	)			–				(4	)			(2	)			–				(11	)			(9	)
Fees waived by distributor			(61,212	)			–				(44,874	)			(439,702	)			–				(102,235	)			(85	)
Expenses reimbursed by investment adviser			(10,596	)			(60,022	)			(9,881	)			(2,044,349	)			(323	)			(23,543	)			(14,120	)
Net expenses			42,006,596				13,053,508				47,058,814				40,006,969				44,173,244				1,947,405				15,829,103
Net investment income (loss)			4,498,562				(4,268,637	)			(6,011,148	)			(9,080,283	)			57,021,457				(69,909	)			(5,600,827	)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss):
Investments in Non-Affiliated Companies			(116,228,097	)			(24,976,006	)			104,778,789				15,117,998				(178,207,662	)			(2,344,205	)			(176,238,113	)
Investments in Affiliated Companies			(15,411,906	)			(6,441,727	)			(99,058,428	)			(102,392,579	)			(11,489,126	)			–				(14,606,324	)
Foreign currency transactions			(3,028	)			(23,961	)			(32,587	)			6,948				(35,053	)			(7,040	)			(2,357	)
Net change in unrealized appreciation (depreciation):
Investments and foreign currency translations			1,353,637,630				383,041,128				1,193,895,559				1,332,561,885				963,753,061				59,306,654				841,767,557
Other assets and liabilities denominated in foreign currency			8,362				(51,099	)			26,002				11,581				10,818				2,621				596
Net realized and unrealized gain(loss) on investments and foreign currency			1,222,002,961				351,548,335				1,199,609,335				1,245,305,833				774,032,038				56,958,030				650,921,359
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS		$	1,226,501,523			$	347,279,698			$	1,193,598,187			$	1,236,225,550			$	831,053,495			$	56,888,121			$	645,320,532

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  123

Statements of Operations Period Ended December 31, 2009

	Royce				Royce				Royce				Royce				Royce				Royce				Royce
	Special Equity				Value				Value Plus				100				Discovery				Financial				Dividend
	Fund				Fund				Fund				Fund				Fund				Services Fund				Value Fund
INVESTMENT INCOME:
Income:
Dividends
Non-Affiliated Companies		$	9,181,413			$	12,093,669			$	26,413,827			$	1,595,105			$	29,991			$	280,484			$	390,172
Affiliated Companies			4,696,282				280,169				1,808,690				–				–				–				–
Interest			117,387				38,834				110,699				8,920				101				620				622
Securities lending			309,237				139,992				1,503,847				–				–				–				–
Total income			14,304,319				12,552,664				29,837,063				1,604,025				30,092				281,104				390,794
Expenses:
Investment advisory fees			7,941,681				10,934,125				24,674,638				1,246,529				25,295				117,879				138,543
Distribution fees			227,504				2,472,379				5,400,930				254,479				6,324				29,470				21,816
Shareholder servicing			555,741				1,295,703				3,035,421				179,415				21,791				32,528				29,974
Shareholder reports			224,717				397,236				1,107,156				62,812				1,961				9,944				8,511
Administrative and office facilities			95,828				149,018				350,903				12,300				382				1,562				1,372
Custody			81,669				102,669				220,846				17,280				4,658				16,797				11,725
Registration			101,522				78,607				88,987				49,595				15,048				19,276				27,578
Trustees’ fees			26,715				39,072				89,787				3,709				95				426				407
Legal			14,953				23,525				56,030				1,886				62				242				211
Audit			37,617				42,179				54,805				22,373				13,110				13,687				22,210
Other expenses			23,734				41,667				102,009				5,269				1,212				1,600				2,640
Total expenses			9,331,681				15,576,180				35,181,512				1,855,647				89,938				243,411				264,987
Compensating balance credits			(1,147	)			(18	)			(12	)			(428	)			(6	)			–				–
Fees waived by investment adviser and distributor			(5,830	)			(149,055	)			(331,584	)			(28,392	)			(25,295	)			(67,986	)			(67,338	)
Expenses reimbursed by investment adviser			(35,337	)			(7,052	)			(13,596	)			(31,300	)			(26,940	)			–				(3,980	)
Net expenses			9,289,367				15,420,055				34,836,320				1,795,527				37,697				175,425				193,669
Net investment income (loss)			5,014,952				(2,867,391	)			(4,999,257	)			(191,502	)			(7,605	)			105,679				197,125
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss):
Investments in Non-Affiliated Companies			504,990				(94,237,700	)			(162,068,632	)			601,330				(321,069	)			(1,446,502	)			(180,078	)
Investments in Affiliated Companies			1,853,476				(9,179,649	)			(105,678,295	)			–				–				–				–
Foreign currency transactions			–				43,652				139				(5,934	)			–				2,962				(6,495	)
Net change in unrealized appreciation (depreciation):
Investments and foreign currency translations			212,821,166				511,399,784				1,150,182,116				42,324,410				947,447				4,586,404				4,674,162
Other assets and liabilities denominated in foreign currency			–				4,289				7,143				734				–				822				(1,832	)
Net realized and unrealized gain (loss) on investments and foreign currency			215,179,632				408,030,376				882,442,471				42,920,540				626,378				3,143,686				4,485,757
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS		$	220,194,584			$	405,162,985			$	877,443,214			$	42,729,038			$	618,773			$	3,249,365			$	4,682,882

124  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

Statements of Operations Period Ended December 31, 2009

	Royce				Royce				Royce				Royce				Royce				Royce
	European Smaller-				Global				SMid-Cap				International Smaller-				Focus Value				Partners
	Companies Fund				Value Fund				Value Fund				Companies Fund				Fund				Fund
INVESTMENT INCOME:
Income:
Dividends		$	131,577			$	672,368			$	106,297			$	67,417			$	42,719			$	6,573
Interest			188				1,286				455				305				185				158
Total income			131,765				673,654				106,752				67,722				42,904				6,731
Expenses:
Investment advisory fees			58,915				468,170				82,629				56,061				25,777				8,618
Distribution fees			11,783				93,634				20,657				11,212				6,445				2,164
Shareholder servicing			24,005				55,539				19,050				10,489				6,152				5,385
Shareholder reports			2,949				10,687				2,713				1,634				298				34
Administrative and office facilities			688				5,187				1,588				412				188				54
Custody			20,909				30,134				7,824				25,704				7,602				5,920
Registration			17,148				21,233				17,913				14,482				13,279				7,766
Trustees’ fees			166				1,352				375				130				70				22
Legal			114				815				243				62				3,101				1,932
Audit			13,113				15,747				13,121				13,674				13,004				13,001
Other expenses			1,397				2,623				1,712				1,037				591				516
Total expenses			151,187				705,121				167,825				134,897				76,507				45,412
Compensating balance credits			–				–				–				(9	)			(18	)			(6	)
Fees waived by investment adviser and distributor			(58,915	)			(72,078	)			(44,683	)			(57,166	)			(32,222	)			(10,782	)
Expenses reimbursed by investment adviser			(12,613	)			–				–				(1,920	)			(5,853	)			(21,781	)
Net expenses			79,659				633,043				123,142				75,802				38,414				12,843
Net investment income (loss)			52,106				40,611				(16,390	)			(8,080	)			4,490				(6,112	)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss):
Investments			(1,353,425	)			(5,110,791	)			(2,379,948	)			43,544				138,192				7,279
Foreign currency transactions			(22	)			(3,123	)			(14	)			2,815				(526	)			43
Net change in unrealized appreciation (depreciation):
Investments and foreign currency translations			3,337,676				22,984,290				3,221,162				1,721,590				966,673				181,810
Other assets and liabilities denominated in foreign currency			624				1,598				(6	)			499				13				(61	)
Net realized and unrealized gain (loss) on investments and foreign currency			1,984,853				17,871,974				841,194				1,768,448				1,104,352				189,071
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS		$	2,036,959			$	17,912,585			$	824,804			$	1,760,368			$	1,108,842			$	182,959

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  125

Financial Highlights

This table is presented to show selected data for a share outstanding throughout each period, and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
	Net		Net			Net Realized and Unrealized						Distributions			Distributions from Net															Ratio of Expenses to Average Net Assets									Ratio of Net Investment
	Asset Value,   Beginning of Period		Investment Income (Loss)			Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			from Net Investment Income			Realized Gain on Investments and Foreign Currency			Total Distributions			Shareholder Redemption   Fees		Net Asset Value, End of Period		Total Return			Net Assets, End of Period (in thousands)		Prior to Fee Waivers and Balance Credits			Prior to Fee Waivers			Net of Fee Waivers			Income (Loss) to Average Net Assets			Portfolio Turnover Rate
Royce Pennsylvania Mutual Fund – Investment Class
2009	$	6.94	$	0.02		$	2.50		$	2.52		$	(0.01	)	$	–		$	(0.01	)	$	–	$	9.45		36.28	%	$	3,555,507		0.92	%		0.92	%		0.92	%		0.33	%		23	%
2008		10.82		0.05			(3.82	)		(3.77	)		(0.01	)		(0.10	)		(0.11	)		–		6.94		(34.78	)		2,293,526		0.90			0.89			0.89			0.55			36
2007		11.57		0.05			0.29			0.34			(0.08	)		(1.01	)		(1.09	)		–		10.82		2.75			3,157,742		0.89			0.88			0.88			0.44			43
2006		10.78		0.04			1.56			1.60			(0.04	)		(0.77	)		(0.81	)		–		11.57		14.78			2,867,562		0.88			0.87			0.87			0.39			38
2005		10.14		0.05			1.22			1.27			–			(0.63	)		(0.63	)		–		10.78		12.50			1,864,481		0.90			0.90			0.90			0.49			26
Royce Pennsylvania Mutual Fund – Service Class(a)
2009	$	6.90	$	(0.00	)	$	2.49		$	2.49		$	–		$	–		$	–		$	0.02	$	9.41		36.38	%	$	609,445		1.31	%		1.31	%		1.29	%		(0.05	)%		23	%
2008		10.78		0.04			(3.82	)		(3.78	)		–			(0.10	)		(0.10	)		–		6.90		(35.00	)		115,959		1.11			1.11			1.11			0.41			36
2007		11.53		0.03			0.28			0.31			(0.05	)		(1.01	)		(1.06	)		–		10.78		2.56			55,478		1.10			1.09			1.09			0.24			43
2006		10.77		(0.04	)		1.61			1.57			(0.04	)		(0.77	)		(0.81	)		–		11.53		14.49			40,049		1.16			1.16			1.14			0.30			38
2005		10.93		0.02			0.45			0.47			–			(0.63	)		(0.63	)		–		10.77		4.27	#		104		26.06	##		26.06	##		1.14	##		1.32	##		26
Royce Pennsylvania Mutual Fund– Consultant Class
2009	$	6.40	$	(0.05	)	$	2.30		$	2.25		$	–		$	–		$	–		$	–	$	8.65		35.16	%	$	757,734		1.89	%		1.89	%		1.89	%		(0.64	)%		23	%
2008		10.09		(0.04	)		(3.55	)		(3.59	)		–			(0.10	)		(0.10	)		–		6.40		(35.52	)		635,688		1.88			1.87			1.87			(0.46	)		36
2007		10.89		(0.06	)		0.27			0.21			–			(1.01	)		(1.01	)		–		10.09		1.73			1,164,136		1.89			1.88			1.88			(0.55	)		43
2006		10.25		(0.07	)		1.48			1.41			–			(0.77	)		(0.77	)		–		10.89		13.71			1,163,265		1.87			1.86			1.86			(0.61	)		38
2005		9.77		(0.04	)		1.15			1.11			–			(0.63	)		(0.63	)		–		10.25		11.32			904,160		1.89			1.89			1.88			(0.52	)		26
Royce Pennsylvania Mutual Fund– R Class(b)
2009	$	6.87	$	(0.05	)	$	2.46		$	2.41		$	–		$	–		$	–		$	–	$	9.28		35.08	%	$	9,808		1.95	%		1.95	%		1.84	%		(0.61	)%		23	%
2008		10.78		(0.00	)		(3.81	)		(3.81	)		–			(0.10	)		(0.10	)		–		6.87		(35.28	)		5,270		1.58			1.57			1.57			(0.03	)		36
2007		12.71		(0.11	)		(0.75	)		(0.86	)		(0.06	)		(1.01	)		(1.07	)		–		10.78		(6.91	)#		871		7.52	##		7.50	##		1.74	##		(0.42	)##		43
Royce Pennsylvania Mutual Fund– K Class(c)
2009	$	6.34	$	(0.02)		$	2.27		$	2.25		$	–		$	–		$	–		$	–	$	8.59		35.49	%	$	1,920		1.79	%		1.79	%		1.59	%		(0.34	)%		23	%
2008		10.00		0.01			(3.57	)		(3.56	)		–			(0.10	)		(0.10	)		–		6.34		(35.53	)#		694		12.12	##		12.12	##		1.59	##		0.13	##		36
Royce Micro-Cap Fund – Investment Class
2009	$	8.93	$	(0.06	)	$	5.02		$	4.96		$	(0.18	)	$	–		$	(0.18	)	$	–	$	13.71		55.67	%	$	844,859		1.54	%		1.54	%		1.54	%		(0.41	)%		34	%
2008		15.72		0.12			(6.58	)		(6.46	)		–			(0.33	)		(0.33	)		–		8.93		(40.94	)		455,077		1.52			1.51			1.51			0.89			43
2007		17.35		0.00			1.22			1.22			(0.45	)		(2.40	)		(2.85	)		–		15.72		7.07			693,320		1.46			1.46			1.46			(0.06	)		49
2006		15.90		(0.06	)		3.58			3.52			(0.28	)		(1.79	)		(2.07	)		–		17.35		22.31			682,513		1.44			1.43			1.43			(0.31	)		42
2005		15.71		(0.10	)		1.90			1.80			(0.13	)		(1.48	)		(1.61	)		–		15.90		11.50			497,917		1.49			1.49			1.48			(0.72	)		31
Royce Micro-Cap Fund – Service Class
2009	$	8.87	$	(0.10	)	$	5.01		$	4.91		$	(0.18	)	$	–		$	(0.18	)	$	0.01	$	13.61		55.49	%	$	84,771		1.77	%		1.77	%		1.66	%		(0.53	)%		34	%
2008		15.63		0.07			(6.51	)		(6.44	)		–			(0.33	)		(0.33	)		0.01		8.87		(40.98	)		28,245		1.79			1.78			1.66			0.58			43
2007		17.27		(0.14	)		1.33			1.19			(0.43	)		(2.40	)		(2.83	)		–		15.63		6.90			27,224		1.72			1.71			1.66			(0.21	)		49
2006		15.85		(0.18	)		3.65			3.47			(0.26	)		(1.79	)		(2.05	)		–		17.27		22.02			7,521		1.93			1.93			1.66			(0.50	)		42
2005		15.68		(0.11	)		1.89			1.78			(0.13	)		(1.48	)		(1.61	)		–		15.85		11.39			2,742		2.75			2.75			1.49			(0.72	)		31

126  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

Financial Highlights

This table is presented to show selected data for a share outstanding throughout each period, and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
	Net		Net			Net Realized and Unrealized						Distributions			Distributions from Net															Ratio of Expenses to Average Net Assets									Ratio of Net Investment
	Asset Value,   Beginning of Period		Investment Income (Loss)			Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			from Net Investment Income			Realized Gain on Investments and Foreign Currency			Total Distributions			Shareholder Redemption   Fees		Net Asset Value, End of Period		Total Return			Net Assets, End of Period (in thousands)		Prior to Fee Waivers and Balance Credits			Prior to Fee Waivers			Net of Fee Waivers			Income (Loss) to Average Net Assets			Portfolio Turnover Rate
Royce Micro-Cap Fund – Consultant Class
2009	$	8.14	$	(0.13	)	$	4.53		$	4.40		$	(0.09	)	$	–		$	(0.09	)	$	–	$	12.45		54.14	%	$	149,454		2.46	%		2.46	%		2.46	%		(1.30	)%		34	%
2008		14.51		0.00			(6.04	)		(6.04	)		–			(0.33	)		(0.33	)		–		8.14		(41.46	)		103,038		2.45			2.45			2.45			0.02			43
2007		16.21		(0.16	)		1.13			0.97			(0.27	)		(2.40	)		(2.67	)		–		14.51		6.01			203,044		2.45			2.45			2.45			(1.06	)		49
2006		14.98		(0.21	)		3.35			3.14			(0.12	)		(1.79	)		(1.91	)		–		16.21		21.10			221,411		2.44			2.42			2.42			(1.30	)		42
2005		14.92		(0.25	)		1.79			1.54			–			(1.48	)		(1.48	)		–		14.98		10.37			173,017		2.49			2.49			2.49			(1.72	)		31
Royce Premier Fund – Investment Class
2009	$	12.24	$	(0.02	)	$	4.09		$	4.07		$	–		$	–		$	–		$	–	$	16.31		33.25	%	$	3,911,502		1.15	%		1.15	%		1.15	%		(0.14	)%		14	%
2008		17.36		0.02			(4.94	)		(4.92	)		–			(0.20	)		(0.20	)		–		12.24		(28.29	)		2,634,045		1.13			1.12			1.12			0.15			11
2007		17.66		0.07			2.21			2.28			(0.28	)		(2.30	)		(2.58	)		–		17.36		12.73			3,702,043		1.10			1.10			1.10			0.29			21
2006		16.86		0.03			1.47			1.50			(0.07	)		(0.63	)		(0.70	)		–		17.66		8.81			3,628,842		1.10			1.09			1.09			0.18			13
2005		15.12		(0.01	)		2.59			2.58			–			(0.84	)		(0.84	)		–		16.86		17.07			3,382,086		1.13			1.13			1.13			(0.09	)		20
Royce Premier Fund – Service Class
2009	$	12.14	$	(0.06	)	$	4.04		$	3.98		$	–		$	–		$	–		$	–	$	16.12		32.78	%	$	377,079		1.44	%		1.44	%		1.43	%		(0.41	)%		14	%
2008		17.25		(0.01	)		(4.91	)		(4.92	)		–			(0.20	)		(0.20	)		0.01		12.14		(28.41	)		209,647		1.37			1.37			1.34			(0.06	)		11
2007		17.56		0.01			2.23			2.24			(0.25	)		(2.30	)		(2.55	)		–		17.25		12.56			246,313		1.38			1.38			1.29			0.12			21
2006		16.77		(0.00	)		1.46			1.46			(0.04	)		(0.63	)		(0.67	)		–		17.56		8.61			193,860		1.38			1.38			1.29			(0.01	)		13
2005		15.07		(0.04	)		2.58			2.54			–			(0.84	)		(0.84	)		–		16.77		16.86			135,927		1.37			1.37			1.29			(0.24	)		20
Royce Premier Fund – Consultant Class
2009	$	11.55	$	(0.15	)	$	3.84		$	3.69		$	–		$	–		$	–		$	–	$	15.24		31.95	%	$	58,241		2.14	%		2.14	%		2.14	%		(1.13	)%		14	%
2008		16.57		(0.13	)		(4.69	)		(4.82	)		–			(0.20	)		(0.20	)		–		11.55		(29.04	)		28,977		2.12			2.11			2.11			(0.84	)		11
2007		16.96		(0.13	)		2.13			2.00			(0.09	)		(2.30	)		(2.39	)		–		16.57		11.60			51,700		2.10			2.09			2.09			(0.70	)		21
2006		16.31		(0.14	)		1.42			1.28			–			(0.63	)		(0.63	)		–		16.96		7.74			50,862		2.12			2.11			2.11			(0.83	)		13
2005		14.80		(0.17	)		2.52			2.35			–			(0.84	)		(0.84	)		–		16.31		15.88			47,310		2.17			2.17			2.17			(1.12	)		20
Royce Premier Fund – Institutional Class
2009	$	12.30	$	(0.00	)	$	4.10		$	4.10		$	–		$	–		$	–		$	–	$	16.40		33.33	%	$	516,900		1.03	%		1.03	%		1.03	%		(0.01	)%		14	%
2008		17.42		0.04			(4.96	)		(4.92	)		–			(0.20	)		(0.20	)		–		12.30		(28.19	)		352,804		1.01			1.01			1.01			0.27			11
2007		17.71		0.06			2.25			2.31			(0.30	)		(2.30	)		(2.60	)		–		17.42		12.86			450,492		1.01			1.00			1.00			0.40			21
2006		16.91		0.05			1.47			1.52			(0.09	)		(0.63	)		(0.72	)		–		17.71		8.88			355,293		1.01			1.00			1.00			0.27			13
2005		15.15		0.01			2.59			2.60			–			(0.84	)		(0.84	)		–		16.91		17.17			235,886		1.02			1.02			1.02			0.04			20
Royce Premier Fund – W Class(d)
2009	$	12.25	$	(0.01	)	$	4.09		$	4.08		$	–		$	–		$	–		$	–	$	16.33		33.31	%	$	319,120		1.07	%		1.07	%		1.07	%		(0.06	)%		14	%
2008		17.36		0.04			(4.95	)		(4.91	)		–			(0.20	)		(0.20	)		–		12.25		(28.23	)		234,618		1.04			1.04			1.04			0.23			11
2007		17.67		0.07			2.21			2.28			(0.29	)		(2.30	)		(2.59	)		–		17.36		12.72			332,720		1.05			1.05			1.05			0.34			21
2006		16.87		0.04			1.46			1.50			(0.07	)		(0.63	)		(0.70	)		–		17.67		8.82			299,129		1.08			1.07			1.07			0.20			13
2005		14.37		0.01			3.33			3.34			–			(0.84	)		(0.84	)		–		16.87		23.25	#		283,095		1.04	##		1.04	##		1.04	##		0.06	##		20
Royce Premier Fund – R Class(b)
2009	$	12.15	$	(0.12	)	$	4.04		$	3.92		$	–		$	–		$	–		$	–	$	16.07		32.26	%	$	2,634		2.26	%		2.26	%		1.84	%		(0.83	)%		14	%
2008		17.36		(0.08	)		(4.93	)		(5.01	)		–			(0.20	)		(0.20	)		–		12.15		(28.81	)		396		3.97			3.97			1.84			(0.54	)		11
2007		20.38		(0.02	)		(0.49	)		(0.51	)		(0.21	)		(2.30	)		(2.51	)		–		17.36		(2.67	)#		97		14.23	##		14.23	##		1.74	##		(0.18	)##		21

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  127

Financial Highlights

This table is presented to show selected data for a share outstanding throughout each period, and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
	Net		Net			Net Realized and Unrealized						Distributions			Distributions from Net															Ratio of Expenses to Average Net Assets									Ratio of Net Investment
	Asset Value,   Beginning of Period		Investment Income (Loss)			Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			from Net Investment Income			Realized Gain on Investments and Foreign Currency			Total Distributions			Shareholder Redemption   Fees		Net Asset Value, End of Period		Total Return			Net Assets, End of Period (in thousands)		Prior to Fee Waivers and Balance Credits			Prior to Fee Waivers			Net of Fee Waivers			Income (Loss) to Average Net Assets			Portfolio Turnover Rate
Royce Premier Fund – K Class(c)
2009	$	6.44	$	(0.05	)	$	2.14		$	2.09		$	–		$	–		$	–		$	–	$	8.53		32.45	%	$	1,551		2.39	%		2.39	%		1.59	%		(0.60	)%		14	%
2008		10.00		(0.02	)		(3.34	)		(3.36	)		–			(0.20	)		(0.20	)		–		6.44		(33.51)	#		35		35.36	##		35.36	##		1.59	##		(0.38	)##		11
Royce Low-Priced Stock Fund – Investment Class(e)
2009	$	9.17	$	(0.01	)	$	4.96		$	4.95		$	(0.04	)	$	–		$	(0.04	)	$	–	$	14.08		54.04	%	$	94,966		1.27	%		1.27	%		1.24	%		(0.14	)%		22	%
2008		14.75		0.03			(5.35	)		(5.32	)		–			(0.27	)		(0.27	)		0.01		9.17		(35.77	)		65,004		1.24			1.24			1.24			0.29			39
2007		17.06		(2.35	)		2.58			0.23			(0.49	)		(2.05	)		(2.54	)		–		14.75		1.15	#		29,260		2.11	##		2.12	##		1.24	##		0.44	##		30
Royce Low-Priced Stock Fund – Service Class
2009	$	9.16	$	(0.04	)	$	4.95		$	4.91		$	(0.02	)	$	–		$	(0.02	)	$	–	$	14.05		53.58	%	$	2,669,235		1.60	%		1.60	%		1.49	%		(0.38	)%		22	%
2008		14.78		(0.01	)		(5.34	)		(5.35	)		–			(0.27	)		(0.27	)		–		9.16		(35.97	)		1,870,016		1.56			1.55			1.49			(0.10	)		39
2007		16.83		0.02			0.40			0.42			(0.42	)		(2.05	)		(2.47	)		–		14.78		2.32			3,337,488		1.53			1.53			1.49			(0.16	)		30
2006		15.53		(0.05	)		3.00			2.95			(0.12	)		(1.53	)		(1.65	)		–		16.83		18.97			4,065,946		1.51			1.51			1.46			(0.37	)		27
2005		15.33		(0.10	)		1.58			1.48			–			(1.28	)		(1.28	)		–		15.53		9.66			3,909,389		1.54			1.54			1.49			(0.68	)		21
Royce Low-Priced Stock Fund – Institutional Class(f)
2009	$	9.18	$	(0.01	)	$	4.96		$	4.95		$	(0.04	)	$	–		$	(0.04	)	$	–	$	14.09		53.97	%	$	673,846		1.24	%		1.24	%		1.24	%		(0.15	)%		22	%
2008		14.76		0.03			(5.34	)		(5.31	)		–			(0.27	)		(0.27	)		–		9.18		(35.75	)		553,070		1.18			1.18			1.18			0.22			39
2007		16.82		(0.04	)		0.51			0.47			(0.48	)		(2.05	)		(2.53	)		–		14.76		2.61			869,042		1.22			1.22			1.22			0.12			30
2006		15.84		(0.18	)		2.87			2.69			(0.18	)		(1.53	)		(1.71	)		–		16.82		16.94	#		608,092		1.20	##		1.19	##		1.19	##		0.02	##		27
Royce Low-Priced Stock Fund – R Class(b)
2009	$	9.11	$	(0.09	)	$	4.92		$	4.83		$	(0.00	)	$	–		$	(0.00	)	$	0.01	$	13.95		53.13	%	$	1,134		3.02	%		3.02	%		1.84	%		(0.76	)%		22	%
2008		14.76		(0.05	)		(5.33	)		(5.38	)		–			(0.27	)		(0.27	)		–		9.11		(36.22	)		74		10.95			10.94			1.84			(0.42	)		39
2007		18.69		(0.02	)		(1.44	)		(1.46	)		(0.42	)		(2.05	)		(2.47	)		–		14.76		(7.96	)#		92		11.93	##		11.93	##		1.74	##		(0.28	)##		30
Royce Low-Priced Stock Fund – K Class(c)
2009	$	5.95	$	(0.10	)	$	3.28		$	3.18		$	(0.04	)	$	–		$	(0.04	)	$	–	$	9.09		53.45	%	$	676		4.75	%		4.75	%		1.59	%		(0.44	)%		22	%
2008		10.00		(0.01	)		(3.77	)		(3.78	)		–			(0.27	)		(0.27	)		–		5.95		(37.47)	#		30		40.19	##		40.19	##		1.59	##		(0.19	)##		39
Royce Total Return Fund – Investment Class
2009	$	8.70	$	0.16		$	2.09		$	2.25		$	(0.14	)	$	–		$	(0.14	)	$	–	$	10.81		26.22	%	$	3,077,099		1.17	%		1.17	%		1.17	%		1.74	%		20	%
2008		12.93		0.20			(4.20	)		(4.00	)		(0.23	)		(0.00	)		(0.23	)		–		8.70		(31.17	)		2,577,031		1.12			1.12			1.12			1.69			25
2007		13.75		0.19			0.16			0.35			(0.17	)		(1.00	)		(1.17	)		–		12.93		2.39			4,214,156		1.08			1.08			1.08			1.29			27
2006		12.60		0.18			1.64			1.82			(0.15	)		(0.52	)		(0.67	)		–		13.75		14.54			4,438,964		1.09			1.09			1.09			1.31			25
2005		12.26		0.14			0.87			1.01			(0.12	)		(0.55	)		(0.67	)		–		12.60		8.23			4,258,135		1.12			1.12			1.12			1.13			24
Royce Total Return Fund – Service Class
2009	$	8.67	$	0.14		$	2.09		$	2.23		$	(0.10	)	$	–		$	(0.10	)	$	0.01	$	10.81		26.16	%	$	215,939		1.42	%		1.42	%		1.42	%		1.49	%		20	%
2008		12.82		0.17			(4.16	)		(3.99	)		(0.18	)		(0.00	)		(0.18	)		0.02		8.67		(31.17	)		155,644		1.37			1.37			1.34			1.49			25
2007		13.61		0.15			0.17			0.32			(0.11	)		(1.00	)		(1.11	)		–		12.82		2.20			268,562		1.39			1.39			1.29			1.09			27
2006		12.46		0.15			1.63			1.78			(0.11	)		(0.52	)		(0.63	)		–		13.61		14.32			371,755		1.34			1.34			1.29			1.12			25
2005		12.12		0.12			0.86			0.98			(0.09	)		(0.55	)		(0.64	)		–		12.46		8.07			315,602		1.36			1.36			1.29			0.98			24

128  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

Financial Highlights

This table is presented to show selected data for a share outstanding throughout each period, and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
	Net		Net			Net Realized and Unrealized						Distributions			Distributions from Net															Ratio of Expenses to Average Net Assets									Ratio of Net Investment
	Asset Value,   Beginning of Period		Investment Income (Loss)			Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			from Net Investment Income			Realized Gain on Investments and Foreign Currency			Total Distributions			Shareholder Redemption   Fees		Net Asset Value, End of Period		Total Return			Net Assets, End of Period (in thousands)		Prior to Fee Waivers and Balance Credits			Prior to Fee Waivers			Net of Fee Waivers			Income (Loss) to Average Net Assets			Portfolio Turnover Rate
Royce Total Return Fund – Consultant Class
2009	$	8.76	$	0.07		$	2.12		$	2.19		$	(0.05	)	$	–		$	(0.05	)	$	–	$	10.90		25.12	%	$	366,367		2.12	%		2.12	%		2.12	%		0.78	%		20	%
2008		12.91		0.08			(4.18	)		(4.10	)		(0.05	)		(0.00	)		(0.05	)		–		8.76		(31.83	)		354,384		2.09			2.08			2.08			0.71			25
2007		13.73		0.04			0.17			0.21			(0.03	)		(1.00	)		(1.03	)		–		12.91		1.35			648,191		2.08			2.07			2.07			0.30			27
2006		12.58		0.05			1.64			1.69			(0.02	)		(0.52	)		(0.54	)		–		13.73		13.45			689,311		2.07			2.06			2.06			0.34			25
2005		12.24		0.02			0.87			0.89			–			(0.55	)		(0.55	)		–		12.58		7.18			606,618		2.10			2.10			2.10			0.17			24
Royce Total Return Fund – Institutional Class
2009	$	8.70	$	0.17		$	2.09		$	2.26		$	(0.16	)	$	–		$	(0.16	)	$	–	$	10.80		26.41	%	$	264,041		1.04	%		1.04	%		1.04	%		1.87	%		20	%
2008		12.95		0.20			(4.19	)		(3.99	)		(0.26	)		(0.00	)		(0.26	)		–		8.70		(31.09	)		191,014		1.00			0.99			0.99			1.82			25
2007		13.77		0.20			0.17			0.37			(0.19	)		(1.00	)		(1.19	)		–		12.95		2.52			257,066		0.99			0.99			0.99			1.38			27
2006		12.63		0.19			1.65			1.84			(0.18	)		(0.52	)		(0.70	)		–		13.77		14.62			282,295		1.00			0.99			0.99			1.42			25
2005		12.30		0.16			0.86			1.02			(0.14	)		(0.55	)		(0.69	)		–		12.63		8.31			214,275		1.00			1.00			1.00			1.30			24
Royce Total Return Fund – W Class(d)
2009	$	8.71	$	0.16		$	2.10		$	2.26		$	(0.14	)	$	–		$	(0.14	)	$	–	$	10.83		26.28	%	$	48,058		1.13	%		1.13	%		1.13	%		1.78	%		20	%
2008		12.95		0.23			(4.23	)		(4.00	)		(0.24	)		(0.00	)		(0.24	)		–		8.71		(31.18	)		65,260		1.08			1.08			1.08			1.66			25
2007		13.76		0.19			0.18			0.37			(0.18	)		(1.00	)		(1.18	)		–		12.95		2.49			250,178		1.06			1.06			1.06			1.31			27
2006		12.61		0.18			1.65			1.83			(0.16	)		(0.52	)		(0.68	)		–		13.76		14.54			220,716		1.10			1.09			1.09			1.33			25
2005		11.97		0.11			1.17			1.28			(0.09	)		(0.55	)		(0.64	)		–		12.61		10.68	#		144,506		1.06	##		1.06	##		1.06	##		1.38	##		24
Royce Total Return Fund – R Class(b)
2009	$	8.74	$	0.10		$	2.10		$	2.20		$	(0.06	)	$	–		$	(0.06	)	$	–	$	10.88		25.43	%	$	6,450		1.85	%		1.85	%		1.84	%		1.05	%		20	%
2008		12.93		0.11			(4.19	)		(4.08	)		(0.11	)		(0.00	)		(0.11	)		–		8.74		(31.67	)		2,946		2.03			2.02			1.84			1.10			25
2007		14.89		(0.02	)		(0.87	)		(0.89	)		(0.07	)		(1.00	)		(1.07	)		–		12.93		(6.15)	#		1,224		6.15	##		6.14	##		1.74	##		0.78	##		27
Royce Total Return Fund – K Class(g)
2009	$	6.81	$	0.11		$	1.63		$	1.74		$	(0.08	)	$	–		$	(0.08	)	$	–	$	8.47		25.89	%	$	43,281		1.42	%		1.42	%		1.42	%		1.44	%		20	%
2008		10.00		0.02			(3.07	)		(3.05	)		(0.14	)		(0.00	)		(0.14	)		–		6.81		(30.56	)#		14,064		1.46	##		1.46	##		1.46	##		1.81	##		25
Royce Heritage Fund – Investment Class(e)
2009	$	7.97	$	0.02		$	4.13		$	4.15		$	–		$	–		$	–		$	–	$	12.12		52.07	%	$	10,052		1.34	%		1.34	%		1.24	%		0.19	%		59	%
2008		12.88		0.04			(4.70	)		(4.66	)		–			(0.25	)		(0.25	)		–		7.97		(36.07	)		5,522		1.39			1.38			1.24			0.40			128
2007		14.03		(0.01	)		0.28			0.27			–			(1.42	)		(1.42	)		–		12.88		1.64	#		8,884		3.33	##		3.33	##		1.24	##		(0.06)	##		138
Royce Heritage Fund – Service Class
2009	$	7.95	$	(0.00	)	$	4.12		$	4.12		$	–		$	–		$	–		$	–	$	12.07		51.82	%	$	182,690		1.51	%		1.51	%		1.42	%		(0.02	)%		59	%
2008		12.88		0.02			(4.70	)		(4.68	)		–			(0.25	)		(0.25	)		–		7.95		(36.22	)		78,526		1.50			1.49			1.49			0.14			128
2007		14.09		(0.02	)		0.22			0.20			–			(1.42	)		(1.42	)		0.01		12.88		1.20			103,652		1.42			1.42			1.27			(0.10	)		138
2006		12.47		0.01			2.82			2.83			–			(1.21	)		(1.21	)		–		14.09		22.62			95,349		1.48			1.47			1.32			(0.05	)		98
2005		13.00		(0.06	)		1.21			1.15			–			(1.68	)		(1.68	)		–		12.47		8.74			58,905		1.58			1.58			1.43			(0.44	)		142
Royce Heritage Fund – Consultant Class
2009	$	6.75	$	(0.09	)	$	3.48		$	3.39		$	–		$	–		$	–		$	–	$	10.14		50.22	%	$	7,485		2.55	%		2.55	%		2.49	%		(1.05	)%		59	%
2008		11.10		(0.08	)		(4.03	)		(4.11	)		–			(0.25	)		(0.25	)		0.01		6.75		(36.81	)		4,609		2.69			2.68			2.49			(0.86	)		128
2007		12.47		(0.17	)		0.21			0.04			–			(1.42	)		(1.42	)		0.01		11.10		0.07			6,728		2.61			2.60			2.49			(1.33	)		138
2006		11.29		(0.14	)		2.53			2.39			–			(1.21	)		(1.21	)		–		12.47		21.08			3,879		3.20			3.18			2.49			(1.12	)		98
2005		12.03		(0.17	)		1.11			0.94			–			(1.68	)		(1.68	)		–		11.29		7.70			2,507		3.99			3.99			2.49			(1.50	)		142

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. The Royce Funds 2009 Annual Report to Shareholders  |  129

Financial Highlights

This table is presented to show selected data for a share outstanding throughout each period, and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
	Net		Net			Net Realized and Unrealized						Distributions			Distributions from Net															Ratio of Expenses to Average Net Assets									Ratio of Net Investment
	Asset Value,   Beginning of Period		Investment Income (Loss)			Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			from Net Investment Income			Realized Gain on Investments and Foreign Currency			Total Distributions			Shareholder Redemption   Fees		Net Asset Value, End of Period		Total Return			Net Assets, End of Period (in thousands)		Prior to Fee Waivers and Balance Credits			Prior to Fee Waivers			Net of Fee Waivers			Income (Loss) to Average Net Assets			Portfolio Turnover Rate
Royce Heritage Fund – R Class(c)
2009	$	6.23	$	(0.05	)	$	3.25		$	3.20		$	–		$	–		$	–		$	–	$	9.43		51.36	%	$	832		4.03	%		4.03	%		1.84	%		(0.56	)%		59	%
2008		10.00		(0.01	)		(3.51	)		(3.52	)		–			(0.25	)		(0.25	)		–		6.23		(35.05	)#		65		19.77	##		19.76	##		1.84	##		(0.27	)##		128
Royce Heritage Fund – K Class(c)
2009	$	6.24	$	(0.02	)	$	3.24		$	3.22		$	–		$	–		$	–		$	–	$	9.46		51.60	%	$	287		5.82	%		5.82	%		1.59	%		(0.26	)%		59	%
2008		10.00		–			(3.51	)		(3.51	)		–			(0.25	)		(0.25	)		–		6.24		(34.95	)#		65		19.53	##		19.53	##		1.59	##		(0.02)	##		128
Royce Opportunity Fund – Investment Class
2009	$	5.57	$	(0.03	)	$	3.49		$	3.46		$	0.00		$	–		$	0.00		$	–	$	9.03		62.14	%	$	836,268		1.22	%		1.22	%		1.22	%		(0.43	)%		44	%
2008		11.02		0.06			(5.12	)		(5.06	)		(0.05	)		(0.34	)		(0.39	)		–		5.57		(45.73	)		581,860		1.17			1.17			1.17			0.63			52
2007		13.04		0.06			(0.27	)		(0.21	)		(0.07	)		(1.74	)		(1.81	)		–		11.02		(2.00	)		1,550,045		1.11			1.10			1.10			0.36			50
2006		12.29		(0.01	)		2.32			2.31			–			(1.56	)		(1.56	)		–		13.04		18.76			1,811,073		1.12			1.11			1.11			(0.05	)		47
2005		13.31		(0.05	)		0.70			0.65			–			(1.67	)		(1.67	)		–		12.29		4.76			1,490,999		1.14			1.14			1.14			(0.38	)		42
Royce Opportunity Fund – Service Class
2009	$	5.46	$	(0.05	)	$	3.42		$	3.37		$	–		$	–		$	–		$	–	$	8.83		61.72	%	$	298,410		1.47	%		1.47	%		1.47	%		(0.69	)%		44	%
2008		10.80		0.04			(5.00	)		(4.96	)		(0.04	)		(0.34	)		(0.38	)		–		5.46		(45.76	)		162,607		1.41			1.41			1.34			0.40			52
2007		12.82		0.02			(0.25	)		(0.23	)		(0.05	)		(1.74	)		(1.79	)		–		10.80		(2.22	)		293,012		1.39			1.39			1.29			0.14			50
2006		12.13		(0.03	)		2.28			2.25			–			(1.56	)		(1.56	)		–		12.82		18.51			291,911		1.40			1.40			1.29			(0.20	)		47
2005		13.17		(0.07	)		0.70			0.63			–			(1.67	)		(1.67	)		–		12.13		4.66			167,369		1.41			1.41			1.29			(0.53	)		42
Royce Opportunity Fund – Consultant Class(h)
2009	$	5.42	$	(0.11	)	$	3.35		$	3.24		$	–		$	–		$	–		$	–	$	8.66		59.78	%	$	7,500		2.45	%		2.45	%		2.45	%		(1.66	)%		44	%
2008		10.78		(0.07	)		(4.95	)		(5.02	)		–			(0.34	)		(0.34	)		–		5.42		(46.40	)		4,707		2.48			2.47			2.47			(0.74	)		52
2007		12.90		(0.14	)		(0.24	)		(0.38	)		–			(1.74	)		(1.74	)		–		10.78		(3.34	)		7,982		2.48			2.46			2.46			(1.03	)		50
2006		14.29		(0.12	)		0.29			0.17			–			(1.56	)		(1.56	)		–		12.90		1.16	#		4,080		3.75	##		3.74	##		2.49	##		(1.24)	##		47
Royce Opportunity Fund – Institutional Class
2009	$	5.60	$	(0.02	)	$	3.50		$	3.48		$	(0.01	)	$	–		$	(0.01	)	$	–	$	9.07		62.23	%	$	502,300		1.04	%		1.04	%		1.04	%		(0.26	)%		44	%
2008		11.09		0.05			(5.13	)		(5.08	)		(0.07	)		(0.34	)		(0.41	)		–		5.60		(45.66	)		310,272		1.04			1.04			1.04			0.60			52
2007		13.11		0.06			(0.25	)		(0.19	)		(0.09	)		(1.74	)		(1.83	)		–		11.09		(1.89	)		333,452		1.02			1.02			1.02			0.47			50
2006		12.34		0.00			2.33			2.33			–			(1.56	)		(1.56	)		–		13.11		18.85			248,710		1.04			1.03			1.03			0.03			47
2005		13.34		(0.04	)		0.71			0.67			–			(1.67	)		(1.67	)		–		12.34		4.90			199,293		1.05			1.05			1.04			(0.28	)		42
Royce Opportunity Fund – R Class(b)
2009	$	5.50	$	(0.07	)	$	3.43		$	3.36		$	–		$	–		$	–		$	–	$	8.86		61.09	%	$	341		9.91	%		9.91	%		1.84	%		(1.05	)%		44	%
2008		11.02		(0.06	)		(5.08	)		(5.14	)		(0.04	)		(0.34	)		(0.38	)		–		5.50		(46.50	)		64		18.28			18.27			1.84			(0.04	)		52
2007		14.43		(0.08	)		(1.57	)		(1.65	)		(0.02	)		(1.74	)		(1.76	)		–		11.02		(11.77)	#		88		14.59	##		14.59	##		1.74	##		(0.92)	##		50
Royce Opportunity Fund – K Class(c)
2009	$	5.11	$	(0.06	)	$	3.19		$	3.13		$	–		$	–		$	–		$	–	$	8.24		61.25	%	$	286		6.85	%		6.85	%		1.59	%		(0.86	)%		44	%
2008		10.00		(0.00	)		(4.51	)		(4.51	)		(0.04	)		(0.34	)		(0.38	)		–		5.11		(44.92	)#		24		44.39	##		44.39	##		1.59	##		(0.06	)##		52

130  |  The Royce Funds 2009 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

Financial Highlights

This table is presented to show selected data for a share outstanding throughout each period, and to assist shareholders in evaluating a Fund’s performance for the periods presented. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.
		Net		Net			Net Realized and Unrealized						Distributions			Distributions from Net															Ratio of Expenses to Average Net Assets									Ratio of Net Investment
		Asset Value,   Beginning of Period		Investment Income (Loss)			Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			from Net Investment Income			Realized Gain on Investments and Foreign Currency			Total Distributions			Shareholder Redemption   Fees		Net Asset Value, End of Period		Total Return			Net Assets, End of Period (in thousands)		Prior to Fee Waivers and Balance Credits			Prior to Fee Waivers			Net of Fee Waivers			Income (Loss) to Average Net Assets			Portfolio Turnover Rate
Royce Special Equity Fund – Investment Class
2009		$	13.69	$	0.07		$	3.80		$	3.87		$	(0.07	)	$	–		$	(0.07	)	$	0.01	$	17.50		28.38	%	$	842,678		1.17	%		1.17	%		1.17	%		0.62	%		10	%
2008			18.27		0.21			(3.83	)		(3.62	)		(0.21	)		(0.75	)		(0.96	)		–		13.69		(19.62	)		316,558		1.15			1.15			1.15			1.32			27
2007			19.72		0.13			0.86			0.99			(0.12	)		(2.32	)		(2.44	)		–		18.27		4.74			385,864		1.12			1.11			1.11			0.57			29
2006			18.70		0.11			2.53			2.64			(0.11	)		(1.51	)		(1.62	)		–		19.72		14.00			438,427		1.13			1.13			1.13			0.51			16
2005			19.61		0.23			(0.42	)		(0.19	)		(0.22	)		(0.50	)		(0.72	)		–		18.70		(0.99	)		523,961		1.14			1.14			1.14			0.94			22
Royce Special Equity Fund – Service Class
2009		$	13.69	$	(0.00	)	$	3.84		$	3.84		$	(0.06	)	$	–		$	(0.06	)	$	0.01	$	17.48		28.11	%	$	72,360		1.52	%		1.52	%		1.39	%		0.29	%		10	%
2008			18.28		0.11			(3.77	)		(3.66	)		(0.19	)		(0.75	)		(0.94	)		0.01		13.69		(19.74	)		9,549		1.83			1.82			1.35			1.27			27
2007			19.73		0.03			0.92			0.95			(0.09	)		(2.32	)		(2.41	)		0.01		18.28		4.58			2,758		2.04			2.03			1.35			0.27			29
2006			18.66		0.10			2.48			2.58			–			(1.51	)		(1.51	)		–		19.73		13.70			1,200		1.69			1.69			1.35			0.52			16
2005			19.56		0.17			(0.41	)		(0.24	)		(0.16	)		(0.50	)		(0.66	)		–		18.66		(1.23	)		7,606		1.48			1.48			1.35			0.65			22
Royce Special Equity Fund – Consultant Class
2009		$	13.42	$	(0.06	)	$	3.67		$	3.61		$	–		$	–		$	–		$	–	$	17.03		26.90	%	$	20,891		2.23	%		2.23	%		2.23	%		(0.41	)%		10	%
2008			17.87		0.03			(3.72	)		(3.69	)		(0.01	)		(0.75	)		(0.76	)		–		13.42		(20.46	)		11,460		2.26			2.26			2.26			0.18			27
2007			19.43		(0.10	)		0.86			0.76			–			(2.32	)		(2.32	)		–		17.87		3.63			15,778		2.20			2.19			2.19			(0.50	)		29
2006			18.55		(0.12	)		2.51			2.39			–			(1.51	)		(1.51	)		–		19.43		12.75			17,231		2.23			2.22			2.22			(0.60	)		16
2005			19.47		(0.03	)		(0.39	)		(0.42	)		–			(0.50	)		(0.50	)		–		18.55		(2.16	)		17,517		2.26			2.26			2.26			(0.15	)		22
Royce Special Equity Fund – Institutional Class
2009		$	13.65	$	0.11		$	3.77		$	3.88		$	(0.09	)	$	–		$	(0.09	)	$	–	$	17.44		28.42	%	$	280,253		1.05	%		1.05	%		1.05	%		0.81	%		10	%
2008			18.22		0.21			(3.80	)		(3.59	)		(0.23	)		(0.75	)		(0.98	)		–		13.65		(19.52	)		161,840		1.05			1.05			1.05			1.43			27
2007			19.68		0.13			0.87			1.00			(0.14	)		(2.32	)		(2.46	)		–		18.22		4.79			157,100		1.04			1.04			1.04			0.64			29
2006			18.66		0.12			2.54			2.66			(0.13	)		(1.51	)		(1.64	)		–		19.68		14.12			147,661		1.05			1.05			1.05			0.58			16
2005			19.58		0.21			(0.39	)		(0.18	)		(0.24	)		(0.50	)		(0.74	)		–		18.66		(0.93	)		154,195		1.05			1.05			1.05			1.08			22
Royce Value Fund – Investment Class(e)
2009		$	7.00	$	0.01		$	3.15		$	3.16		$	–		$	–		$	–		$	–	$	10.16		45.14	%	$	67,249		1.14	%		1.14	%		1.14	%		0.06	%		49	%
2008			10.62		(0.01	)		(3.61	)		(3.62	)		–			–			–			–		7.00		(34.09	)		18,993		1.16			1.16			1.16			(0.06	)		41
2007			11.22		(0.32	)		0.60			0.28			(0.19	)		(0.69	)		(0.88	)		–		10.62		2.36	#		13,233		1.89	##		1.88	##		1.24	##		0.06	##		67
Royce Value Fund – Service Class
2009		$	7.00	$	(0.03	)	$	3.16		$	3.13		$	–		$	–		$	–		$	–	$	10.13		44.71	%	$	1,178,806		1.47	%		1.47	%		1.45	%		(0.31	)%		49	%
2008	<