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, 2014 - December 31, 2014

Item 1. Reports to Shareholders.

DECEMBER 31, 2014

2014 Annual

Review and Report to Shareholders

Royce Pennsylvania Mutual Fund
Royce Micro-Cap Fund
Royce Premier Fund
Royce Low-Priced Stock Fund
Royce Total Return Fund
Royce Heritage Fund
Royce Opportunity Fund
Royce Special Equity Fund
Royce Value Fund
Royce Value Plus Fund
Royce 100 Fund
Royce Dividend Value Fund
Royce Global Value Fund
Royce International Smaller-Companies Fund
Royce Special Equity Multi-Cap Fund
roycefunds.com

Table of Contents
Annual Review
Letter to Our Shareholders	2
Performance and Expenses	6
U.S. Small-Cap Market Cycle and Risk Adjusted Performance	7
Annual Report to Shareholders
Manager’s Discussions of Fund Performance
Royce Pennsylvania Mutual Fund	8
Royce Micro-Cap Fund	10
Royce Premier Fund	12
Royce Low-Priced Stock Fund	14
Royce Total Return Fund	16
Royce Heritage Fund	18
Royce Opportunity Fund	20
Royce Special Equity Fund	22
Royce Value Fund	24
Royce Value Plus Fund	26
Royce 100 Fund	28
Royce Dividend Value Fund	30
Royce Global Value Fund	32
Royce International Smaller-Companies Fund	34
Royce Special Equity Multi-Cap Fund	36
Schedules of Investments and Financial Statements	38
Notes to Financial Statements	100
Report of Independent Registered Public Accounting Firm	115
Understanding Your Fund’s Expenses	116
Federal Tax Information	118
Trustees and Officers	119
Notes to Performance and Other Important Information	120

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Letter to Our Shareholders

A TALE OF TWO MARKETS

It wasn’t the best of times; it wasn’t the worst of times. As 2014 began, it all seemed just right, with small-caps easing into the year on a more mutedly bullish note following their extraordinary run in 2013. So relaxed was the pace of returns, and in such stark contrast to the eventful years of 2008-2013, that in our June 30 Semiannual Review we remarked on how agreeably peaceful and undramatic it all was. During the year’s first six months, inflation was nearly non-existent, most commodity prices were stable, and volatility, as measured by the VIX, reached the end of June at its lowest level since 2007. These factors, along with a sprightly M&A market, looked to us like clear signs of ongoing growth. The case appeared even stronger as the Federal Reserve moved further and further into the background of the U.S. economy. We were not alone in thinking that the anticipated end of QE (“quantitative easing”) and what looked like an inevitable rise in interest rates would set the stage for a more dynamic pace of economic expansion. We also thought an extension of the bull market that began off the March 9, 2009 bottom seemed likely, though we were expecting both lower returns and increased volatility.

     As it happens, this call was somewhat accurate: the economy did pick up speed in the second half while the bull market rolled on for large-cap stocks. More turbulent, small-caps (along with most Energy stocks) could not keep up. Of course, equity markets simply do not stay undisturbed for long, so the increased volatility in the second half of 2014 was not a surprise. Yet its highly selective reach was puzzling, even allowing for the historically higher volatility exhibited by smaller companies. Shortly after the Russell 2000 Index established a year-to-date high on July 3 (a high that would last into late December), small-cap prices began to fall. They slid most precipitously in July and September and rallied to varying degrees in August, October, November, and December. The downdrafts were sharper than the upswings, however—:it took a furious rally in the final two weeks of the year’s closing month to shore up a modest positive return for the Russell 2000 in the second half. Meanwhile, the S&P 500 and Russell 1000 Indexes lost comparatively little in those two bearish months and posted solid gains during the other four. The upshot was such a strong year for large-cap companies that 2014 was the ninth-largest calendar-year spread between the Russell 2000 and the S&P 500 in the 36-year history of the small-cap index.

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LETTER TO OUR SHAREHOLDERS

     What, then, to make of a year in which the Russell 2000 posted a relatively undistinguished single-digit gain of 4.9%, ceded leadership to its larger siblings, and still bested most actively managed small-cap portfolios? A few developments in particular stood out. First, the rotation in leadership from small-cap to large in 2014 looked very much like a classic case of reversion to the mean to us. The former led the market decisively from the bottom in March of 2009 through the end of 2013, a prolonged period of small-cap leadership that made a shift all but inevitable. The second trend was more worrisome. Within small-cap, more economically cyclical sectors continued to lag in spite of the growing economy. The same held true for what we define as quality companies—those with strong balance sheets and high returns on invested capital. Even with the economy accelerating, investors tended to ignore profitable companies with solid fundamentals while they continued to be drawn more to defensive and/or high-growth areas. This included utilities and REITs among the highly successful defensive areas of 2014, and social media, biotech, and pharmaceuticals among the speedy growth industries. In most instances, companies in these sectors and industries do not satisfy our purchase criteria because they lack the combination of balance-sheet strength and a long-term history of profitability that we find most attractive.

Even with the economy accelerating, investors tended to ignore profitable companies with solid fundamentals while they continued to be drawn more to defensive and/or high-growth areas.

     We were hopeful that the end of QE (along with rising rates) would help to reverse this trend. But the strengthening U.S. dollar and monetary stimulus efforts in Japan and Europe conspired to make the October conclusion of QE something of a non-event, while interest rates fell through most of the year. On the whole, then, 2014 was an often confounding period for us, especially its second half. Indeed, if there is a theme that best captures the year, it might be “A Tale of Two Markets.” And we should point out that Dickens’s rubric covers not just the very different halves of the year for small-cap stocks but also the disparity in results and volatility between small-caps and their bigger siblings. (More index returns can be found below.)

VOLATILITY—OUR MUTUAL FRIEND
Yet the level of conviction in our value-oriented approaches remains high. (And as disappointing as recent relative results have been, three- and five-year results through the end of 2014 for many of our Featured Funds were closer to or above their historical averages.) Although it may seem counterintuitive (or

Equity Indexes
As of December 31, 2014 (%)
•	The third quarter was the worst for the Russell 2000 since 9/30/11 and, relative to the S&P 500, was the index’s worst quarterly performance since 3/31/99. It also ended a streak of eight consecutive quarters of positive performance.
•	Small-caps rallied in October and December to outpace their large-cap counterparts in the fourth quarter.
•	2014 marked just the fifth time since its inception in 1979 that the Russell 2000 had a gain in the single digits (+4.9%). Small-caps trailed large-caps by the widest margin since 1998.
•	Within the Russell 2000, Health Care, Utilities, and REITs were the best-performing areas in 2014 while Energy was by far the largest detractor.

	3Q14	1	4Q14	1	1-YR	3-YR	5-YR	10-YR
Russell 2000	-7.36		9.73		4.89	19.21	15.55	7.77
S&P 500	1.13		4.93		13.69	20.41	15.45	7.67
Russell 1000	0.65		4.88		13.24	20.62	15.64	7.96
Nasdaq Composite	1.93		5.40		13.40	22.05	15.85	8.09
Russell Midcap	-1.66		5.94		13.22	21.40	17.19	9.56
Russell Microcap	-8.21		11.19		3.65	21.81	16.14	5.96
Russell Global ex-U.S. Small Cap	-6.21		-4.45		-3.63	10.31	6.40	6.65
Russell Global ex-U.S. Large Cap	-5.35		-3.72		-3.57	9.41	4.80	5.36

¹Not annualized

For details on The Royce Funds’ performance in the period, please turn to the Manager’s Discussions that begin on page 8.

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LETTER TO OUR SHAREHOLDERS    

worse), the current extended period of relative underperformance for many Royce-managed portfolios actually helps to fuel our confidence in the years to come. Let us explain why. First, we have always viewed volatility as an ally, agreeing with Warren Buffett’s statement: “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.” So while many investors think of volatility as being synonymous (or nearly so) with risk or even loss, we have never seen it that way. Instead, we try to take advantage of market movements—an essential skill for any successful active manager. Those times when the market cannot seem to make up its mind are exactly when securities tend to be most mispriced. And therein lies one of the keys to outperformance for active managers—the identification and purchase of mispriced securities.

While many investors think of volatility as being synonymous (or nearly so) with risk or even loss, we have never seen it that way.

     We recently conducted research that looked at some of the market forces that have helped to shape the current cycle, in particular the years from 2011-2014 when many active approaches struggled on a relative basis. (The full results of this research are available on our website at www.roycefunds.com/4qresearch.) As we have previously argued, the Fed’s easy-money policies of QE and ZIRP (“zero-interest rates”) have had the unintentional effect of stoking appetites for high yield and creating too few (if any) consequences for companies carrying a lot of debt. This led many investors to relatively neglect businesses with more pristine balance sheets and/or those with steady but smaller dividends. It also meant that from the beginning of 2011 through the end of 2014, the small-cap market was in a peculiar state, one characterized by a pile-up of anomalies—the combination of declining volatility with higher-than-average returns converging with contracting credit spreads.

     Needless to say, our risk-conscious, balance-sheet-centric approaches have been challenged in this setting, at least on a relative basis. Low volatility has arguably created the highest hurdle. We have always felt most comfortable in markets with higher levels of volatility, which usually create the differentiation that lies at

the core of our active management styles. We analyze, assess, and evaluate multiple aspects of a company before determining whether or not the current stock price reflects the long-term prospects we see. Opportunities to purchase what we deem to be attractively undervalued companies tend to proliferate when stock prices are volatile rather than when markets are calm. Yet for most of the last four years, volatility has been falling, at least until the second half of 2014. This has made it far more difficult for our funds to outpace their respective benchmarks.

GREAT EXPECTATIONS
The questions are: How much longer is this going to last? More specifically, are interest rates going to remain at or near zero? Is the pace of economic growth likely to slacken? Are financial markets going to continue to behave atypically even as the economy continues to normalize? Will small-cap companies indefinitely gain an advantage by carrying more debt? Are three- and five-year average annual total returns for the Russell 2000 going to remain at levels higher than the index’s historical monthly rolling averages of 8.2% and 7.6%, respectively? For those who believe that most, or even some, of these things are likely to happen, then our approach would seem a bit at odds.

     We confess that we have been anticipating some of these shifts for nearly two years. This has meant re-learning the hard lesson that change seldom occurs when we most want it to. Yet we are convinced that markets remain cyclical (recent events notwithstanding). In our view, reversion to the mean is as close to an iron law as the capital markets allow. Most trends reverse, though they may linger for longer than initially anticipated (or desired). Widening credit spreads, increasing volatility, and decreasing stock correlation should all help active management and allow stock pickers the chance to emerge as performance leaders.

      We also expect equity returns to remain attractive, though we see a decrease from the high levels we have seen over the last three to five years. Cyclical companies appear due for a round of revenue acceleration, particularly those in the Consumer Discretionary and Industrials sectors, as do some industries in the Information Technology sector. The best-managed companies within these areas could also see solid margin expansion. Among other cyclical

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LETTER TO OUR SHAREHOLDERS

sectors, we also see a number of profitable, conservatively capitalized businesses that have either been ignored or whose returns have lagged. We expect this to change.

      On the valuation front, the picture looked admittedly tricky at the end of 2014. For example, an examination of trailing 12-month earnings for many companies suggests that small-cap share prices may be on the high side. But if you believe, as we do, that the economy is going to keep growing, that credit spreads will continue to expand, and that a more robust CAPEX cycle is in the offing, then valuations seem pretty reasonable, if not attractive in certain areas, Energy in particular. Many stocks look fairly valued though not fully valued to us. So while we do not shrink from the sobering truth of relative underperformance through much of this now-long bullish cycle, we continue to see good times ahead for our risk-conscious, fundamentally based approach.

While we do not shrink from the sobering truth of relative underperformance through much of this now-long bullish cycle, we continue to see good times ahead for our risk-conscious, fundamentally based approach.

      The argument that we have been making for more than four decades remains the same. Small-cap is an inefficient area of the market in which we search for qualitative advantages and valuation discrepancies. Our belief that fundamentally strong companies trading at discounts to their private worth can outperform over the long term, often with lower volatility, will not change. It is our core investment principle, and it has served us very, very well over most of the last 40+ years.

Sincerely,

Charles M. Royce	Christopher D. Clark	Francis D. Gannon
Chairman and Chief Executive Officer,	President and Co-Chief Investment Officer,	Co-Chief Investment Officer,
Royce & Associates, LLC	Royce & Associates, LLC	Royce & Associates, LLC
January 26, 2015

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Performance and Expenses

Performance and Expenses

As of December 31, 2014

		AVERAGE ANNUAL TOTAL RETURNS (%)							ANNUAL OPERATING EXPENSES (%)
FUND			1-YR	5-YR	10-YR	20-YR	40-YR/ SINCE INCEPTION	INCEPTION DATE	GROSS	NET
	Royce Pennsylvania Mutual Fund		-0.70	12.80	7.97	11.32	16.28	n.a.	0.93	0.93
	Royce Micro-Cap Fund		-4.13	7.50	6.78	10.95	11.89	12/31/91	1.56	1.56
	Royce Premier Fund		-0.86	12.09	9.27	11.98	12.04	12/31/91	1.09	1.09
	Royce Low-Priced Stock Fund		-3.37	5.07	5.33	11.31	10.89	12/15/93	1.51	1.49
	Royce Total Return Fund		1.34	13.32	7.50	11.55	11.21	12/15/93	1.18	1.18
	Royce Heritage Fund		-1.14	10.48	7.96	n.a.	13.15	12/27/95	1.49	1.49
	Royce Opportunity Fund		-0.48	15.31	8.14	n.a.	13.00	11/19/96	1.17	1.17
	Royce Special Equity Fund		1.09	12.55	8.22	n.a.	9.77	5/1/98	1.13	1.13
	Royce Value Fund		-0.02	10.12	8.15	n.a.	10.84	6/14/01	1.48	1.48
	Royce Value Plus Fund		3.89	11.32	7.11	n.a.	12.18	6/14/01	1.49	1.49
	Royce 100 Fund		-3.26	10.49	8.48	n.a.	10.58	6/30/03	1.51	1.51
	Royce Dividend Value Fund		-2.14	13.19	8.47	n.a.	9.17	5/3/04	1.52	1.52
	Royce Global Value Fund		-5.76	4.17	n.a.	n.a.	3.95	12/29/06	1.84	1.70
	Royce International Smaller-Companies Fund		-7.29	5.10	n.a.	n.a.	4.69	6/30/08	2.08	1.70
	Royce Special Equity Multi-Cap Fund		9.28	n.a.	n.a.	n.a.	15.53	12/31/10	1.46	1.24
INDEX
Russell 2000			4.89	15.55	7.77	9.63	n.a.	n.a.	n.a.	n.a.
Russell Microcap			3.65	16.14	5.96	n.a.	n.a.	n.a.	n.a.	n.a.
Russell Global Small Cap			-0.28	9.56	6.87	n.a.	n.a.	n.a.	n.a.	n.a.
Russell Global ex-U.S. Small Cap			-3.63	6.40	6.65	n.a.	n.a.	n.a.	n.a.	n.a.
Russell 1000			13.24	15.64	7.96	10.04	n.a.	n.a.	n.a.	n.a.

Important Performance, Expense, and Risk Information

All performance information in this Review and Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Investment and Service Class shares of Royce Global Value and International Smaller-Companies Funds redeemed within 30 days of purchase may be subject to a 2% redemption fee payable to The Royce Funds. Investment and Service Class shares of all other Funds redeemed within 30 days of purchase may be subject to a 1% redemption fee 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. All performance and expense information reflects results of the Funds’ oldest share Class (Investment Class or Service Class, as the case may be). Price and total return information is based on net asset values calculated for shareholder transactions. Price and total return information is based on net asset values calculated for shareholder transactions. Gross annual operating expenses reflect the Fund’s gross total annual operating expenses and include management fees, any 12b-1 distribution 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, excluding brokerage commissions, taxes, interest litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business, and to the extent necessary to maintain net operating expenses at or below: 1.24% for Royce Special Equity Multi-Cap Fund; 1.49% for Royce Low-Priced Stock Fund; 1.69% for Royce Global Value and International Smaller-Companies Funds through April 30, 2015; and at or below 1.99% for Royce International Smaller-Companies Fund through April 30, 2024. Acquired fund fees and expenses reflect the estimated amount of fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Shares of the Funds’ Service, Consultant, R, and K Classes bear an annual distribution expense that is not borne by the Funds’ Investment Class. Investments in securities of micro-cap, small-cap, and/or mid-cap companies may involve considerably more risk than investments in securities of larger-cap companies. (Please see “Primary Risks for Fund Investors” in the prospectus.) Royce Global Value and International Smaller-Companies Funds invest a significant portion of their respective assets in foreign 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. (Please see “Investing in foreign securities” in the prospectus.) Therefore, the prices of securities of foreign companies in particular countries or regions may, at times, move in a different direction than those of securities of U.S. companies. (Please see “Primary Risk of Fund Investors” in the prospectus.) Please read the prospectus carefully before investing or sending money. Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. The Russell 2000 Index is an unmanaged, capitalization-weighted index of domestic small-cap stocks. It measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 Index. The Russell Microcap Index includes 1,000 of the smallest securities in the Russell 2000 Index, along with the next smallest eligible securities as determined by Russell. The Russell Global Small Cap Index is an index of global small-cap stocks. The Russell Global ex-U.S. Small Cap Index is an index of global small-cap stocks, excluding the United States. The Russell 1000 is an unmanaged, capitalization-weighted index of domestic large-cap stocks. It measures the performance of the 1,000 largest publicly traded U.S. companies in the Russell 3,000 Index. The performance of an index does not represent exactly any particular investment as you cannot invest directly in an index. Distributor: Royce Fund Services, Inc.

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U.S. Small-Cap Market Cycle and Risk-Adjusted Performance

We believe strongly in the idea that a long-term perspective is crucial for determining the success of an investment approach. While flourishing in an up market is wonderful, surviving a bear market by losing less (or not at all) is equally desirable. However, the true test of a portfolio’s results that include up and down market phases by looking at full market cycles.

We have seen 10 full market cycles since the inception of the Russell 2000 Index on December 31, 1978, with the most recent peaking on April 29, 2011. (Royce defines market cycles as those that have retreated at least 15% from a previous market peak and have rebounded to establish a new peak above the previous one.) Each market cycle contains a peak-to-trough and a trough-to-peak period. When evaluating fund performance, it is common practice to review results for the most recent year (often the calendar year) along with its related longer-term trailing periods. However, we think full market cycle results offers an equally, if not more important measure of performance. Interestingly, over the small-cap index’s more-than-30-year history, each style index—the Russell 2000 Value Index and the Russell 2000 Growth Index—outperformed in five of the 10 full market cycles. In fact, leadership has alternated between growth and value over the last six cycles.

Royce U.S. Small-Cap Equity Funds vs. Russell 2000 Index:
Market Cycle Results (%)
	PEAK-TO-PEAK	PEAK-TO-PEAK	PEAK-TO-CURRENT
FUND	3/9/00–7/13/07	7/13/07–4/29/11	4/29/11–12/31/14
Royce Pennsylvania Mutual Fund	207.1	11.6	32.2
Royce Micro-Cap Fund	197.4	24.9	0.5
Royce Premier Fund	198.1	29.9	24.1
Royce Low-Priced Stock Fund	198.9	27.2	-10.7
Royce Total Return Fund	193.9	6.8	39.3
Royce Heritage Fund	150.4	25.3	16.9
Royce Opportunity Fund	191.8	6.9	41.3
Royce Special Equity Fund	227.4	20.8	40.7
Royce Value Fund	n.a.	17.4	15.8
Royce Value Plus Fund	n.a.	-3.0	30.2
Royce 100 Fund	n.a.	27.6	19.6
Royce Dividend Value Fund	n.a.	21.6	32.0
INDEX
Russell 2000	54.8	6.6	46.5
Russell 2000 Value	189.4	-1.4	44.4
Russell 2000 Growth	-14.8	14.3	48.8

Small-Cap Market Cycle: Russell 2000 Indexes Total Returns (%)

From Small-Cap Peak on 3/9/00 through 12/31/14

Risk/Return Profile
For the 10-Year Period Ended December 31, 2014 (%)
•	Eight out of 12 Royce Funds with 10-Years of history outperformed the Russell 2000, while eight of the 12 provided better risk-adjusted returns/Sharpe ratios.

All performance information above reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Current performance may be higher or lower than performance quoted. Standard deviation is a statistical measure within which a fund’s total returns have varied over time. The greater the standard deviation, the greater a fund’s volatility. The Sharpe ratio is calculated for a specified period by dividing a fund’s annualized excess returns by its annualized standard deviation. The higher the Sharpe ratio, the better the fund’s historical risk-adjusted performance.

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	MANAGER’S DISCUSSION
	Royce Pennsylvania Mutual Fund®

Chuck Royce

FUND PERFORMANCE
Our flagship, Royce Pennsylvania Mutual Fund (“PMF”), lost 0.7% in 2014, trailing its small-cap benchmark, the Russell 2000 Index, which gained 4.9% for the same period. This result was made more disappointing coming after a promising first half in which PMF rose 2.0%. The quietly bullish first half of the year, however, gave way to a far more volatile period for small-cap companies in the second. The Fund lost more ground to its benchmark in the bearish third quarter (-7.6% versus -7.4%), an unpleasant surprise considering PMF’s long-term record of better relative results in down market periods. Increased volatility within small-cap extended into the fourth quarter, which was, however, a solidly bullish period thanks in large part to a dynamic rally to close out the year in December. The Fund stayed behind the small-cap index in the year’s final quarter, climbing 5.3% versus a 9.7% advance for its benchmark.

Over the last few years, the Fund has struggled on a relative basis, even when (as in 2010 and 2013) absolute results were more than respectable. The lingering combination of higher-than-average small-cap returns and lower volatility has clearly had an impact on PMF’s results vis-à-vis the benchmark in much of the market cycle since the bottom on March 9, 2009. It is also worth pointing out, however, that the respective five-year average annual total returns for both our flagship (+12.8%) and the Russell 2000 (+15.5%) were higher than their respective historical rolling monthly five-year averages of 9.8% and 7.6%. We remain committed to our risk-conscious approach and are optimistic about the Fund’s long-term prospects. The Fund outpaced the Russell 2000 for the 10-, 15-, 20-, 25-, 30-, and 35-year periods ended December 31, 2014. PMF’s average annual total return for the 40-year period—all under the management of Chuck Royce—was 16.3%. We take great pride in this four-decade result.

WHAT WORKED... AND WHAT DIDN’T
One somewhat counterintuitive result of a year replete with volatility in the small-cap market was that there were no outsized net gains or losses for the Fund at the sector, industry, or position level. The only sizable net gain came from positions in Information Technology. Net losses were concentrated mostly in the Energy and Industrials sectors, though Materials, Consumer Staples, and Telecommunication Services also detracted from 2014’s results. Industrials were a slight sore spot in the otherwise bullish first half, though it remained one of PMF’s largest sectors at the end of the period. The woes for Houston-based engineering and construction firm KBR continued. Earlier in the year, the firm had its fiscal 2014 outlook reduced by cancellations and losses on some engineering and construction bids, as well as on pushed-out start dates for certain LNG (liquefied natural gas) projects. Its shares fell through most of the year, with a somewhat sharp dip in December when it announced plans to restructure its operations and divest or exit some noncore segments. We held a position at year end.

Unlike Industrials, Energy was a stalwart performer in the first half before the nearly 50% decline in oil prices sent shockwaves throughout the industry and elsewhere. Unit Corporation, a top performer in the six-month period ended June 30, 2014, operates as a contract driller and exploration and production company, among other energy-related businesses. With a long history as a successful, well-run business, its rebound potential when oil prices eventually recover looked strong to us, but its short-term prospects were tougher to gauge at the end of December, when it was a top-40 position. Nu Skin Enterprises was also a top-40 holding at the end of the period. The personal care products maker and distributor endured a host of challenges in 2014, including trouble with the Chinese government early in the year and the announcement of new debt arrangements in October. Its consistently punished shares can get off the mat, we suspect, with a comeback for its business in China. Multiline women’s fashion retailer Ascena Retail Group endured sluggish sales for two of its highest profile brands-tween fashion stop Justice and plus-size specialist Lane Bryant. Unsure of its ability to navigate a still-challenging environment for retailers, we reduced our position in the second half.

A rising stock price helped to leave PMF with a sizable position in Core-Mark Holding Company, which distributes and markets various consumer goods to convenience stores, grocery stores, drug stores, and other retail centers. Increased earnings gave investors a convenient reason to buy. Long-time holding Sapient Corporation provides integrated management consulting services, Internet commerce solutions, and systems implementation services. We sold our shares in November shortly after it was announced that French advertising company Publicis Groupe was paying a substantial premium to buy the company.

Top Contributors to Performance For 2014 (%)1
Core-Mark Holding Company	0.27
Sapient Corporation	0.25
NVR	0.18
International Rectifier	0.16
Rentrak Corporation	0.16
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
Nu Skin Enterprises Cl. A	-0.37
Ascena Retail Group	-0.32
Unit Corporation	-0.31
KBR	-0.26
Kennametal	-0.25
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
We believe that increasing volatility and decreasing stock correlation can help stock pickers to emerge as performance leaders. Beyond minor increases or decreases, sector weightings remained largely unchanged from the end of 2013. The Fund was overweight in more economically sensitive areas such as Industrials and Information Technology, which reflected our confidence that the U.S. economy will continue to expand in 2015.

8 | The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS    PENNX RYPFX RPMIX RYPCX RPMRX RPMKX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	10-YR	15-YR	20-YR	25-YR	30-YR	35-YR	40-YR
PMF	-2.68	-0.70	15.45	12.80	7.97	10.74	11.32	10.73	11.55	12.66	16.28
Annual Operating Expenses: 0.93%
*Not Annualized

Relative Returns: Monthly Rolling Average Annual Return Periods

15 Years Through 12/31/14

On a monthly rolling basis, the Fund outperformed the Russell 2000 in 100% of all 10-year periods; 80% of all 5-year periods; 75% of all 3-year periods; and 60% of all 1-year periods.

	PERIODS BEATING THE INDEX		FUND AVG (%)*		INDEX AVG (%)*
10-year	61/61	100%		9.6	7.3
5-year	97/121	80%		9.8	7.6
3-year	109/145	75%		10.5	8.2
1-year	102/169	60%		12.8	9.6

*Average of monthly rolling average annual total returns over the specified periods.

Morningstar Style Map^TM    As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 120 for additional information.

Value of $10,000
Invested on 12/31/78 (Russell 2000 Inception) as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Reliance Steel & Aluminum	1.0
Ritchie Bros. Auctioneers	0.9
HEICO Corporation	0.9
Genesco	0.8
Buckle (The)	0.8
Thor Industries	0.8
Copart	0.8
Forward Air	0.7
Balchem Corporation	0.7
RBC Bearings	0.7

Portfolio Sector Breakdown
% of Net Assets
Industrials	25.5
Information Technology	21.9
Consumer Discretionary	15.3
Financials	11.3
Materials	10.2
Energy	5.7
Health Care	5.1
Consumer Staples	2.2
Telecommunication Services	0.2
Utilities	0.0
Miscellaneous	1.5
Cash and Cash Equivalents	1.1

Calendar Year Total Returns (%)
YEAR	PMF
2014	-0.7
2013	35.3
2012	14.6
2011	-4.2
2010	23.9
2009	36.3
2008	-34.8
2007	2.8
2006	14.8
2005	12.5
2004	20.2
2003	40.3
2002	-9.2
2001	18.4
2000	18.3

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
10-Year	99	96
From 12/31/78
(Russell 2000 Inception)	90	71

Portfolio Diagnostics
Fund Net Assets	$5,729 million
Number of Holdings	411
Turnover Rate	21%
Average Market Capitalization1	$1,679 million
Weighted Average P/E Ratio2,3	19.0x
Weighted Average P/B Ratio2	2.1x
Holdings ≥ 75% of Total Investments	154
Active Share 4	86%
U.S. Investments (% of Net Assets)	89.4%
Non-U.S. Investments (% of Net Assets)	9.5%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (7% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Investment Class (its oldest class). Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the Fund’s most current prospectus and include management fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investment in mutual funds, hedge funds, private equity funds, and other investment companies. Shares of PMF’s Service, Consultant, R, and K Classes bear an annual distribution expense that is not borne by the Investment Class. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders | 9

	MANAGER’S DISCUSSION
Royce Micro-Cap Fund

Jenifer Taylor

FUND PERFORMANCE

Royce Micro-Cap Fund (“RMC”) lost 4.1% in 2014, trailing both its benchmark, the Russell Microcap Index, and the small-cap Russell 2000 Index, which rose 3.6% and 4.9%, respectively, for the same period. The Fund’s participation in the more quietly bullish first half was more limited than we would prefer—RMC was up 1.0% for the six-month period ended June 30, 2014—but things grew worse when a wave of volatility hit the small- and micro-cap markets in the year’s second half. Share prices began to fall following a small-cap high on July 3. In the third-quarter downdraft, the Fund fell 10.0% compared to respective declines of 8.2% and 7.4% for the micro-cap and small-cap indexes. We were frustrated that the Fund was unable to hold its value more effectively in a down phase, which has been one of its historical strengths. RMC’s participation in the fourth-quarter rebound was again limited and contributed to its relative performance disadvantage in the calendar year. The Fund was up 5.5% in the fourth quarter versus 11.2% for the Russell Microcap and 9.7% for the Russell 2000.

An examination of longer-term periods showed more attractive results on both an absolute and relative basis. The Fund outperformed the micro-cap benchmark for the 10-year period ended December 31, 2014. (Data for the Russell Microcap only goes back to June 30, 2000.) RMC also outpaced the Russell 2000 for the 15-, 20-year, and since inception (12/31/91) periods ended December 31, 2014. The Fund’s average annual total return since inception was 11.9%. We remain proud of its long-term performance record.

WHAT WORKED... AND WHAT DIDN’T

Four of RMC’s 10 equity sectors ended the year in the red, with Energy posting the largest net losses followed by Materials. The negative impact of Industrials and Consumer Staples was far more modest. Energy holdings first gave then took away in 2014, going from the portfolio’s top performer in the first half to its worst in the second. The reversal of fortune was keyed by the nearly 50% decline in oil prices during the second half. TGC Industries provides geophysical services to oil and gas companies, such as seismic data acquisition services and gravity data. Its business mirrors that of long-time RMC holding Dawson Geophysical. In October the two firms announced plans to merge, which should provide wider geographical reach, a stronger balance sheet, and more efficient operations, all of which should prove useful while we wait for commodity prices to recover. Total Energy Services, which was the Fund’s twentieth-largest holding at the end of 2014, is a Calgary-based service company that provides contract drilling, equipment rentals, and compression and processing work. Conservatively capitalized, it’s a high-return business that we have long regarded as especially well-run. We trimmed our position in 2014. Like many of our energy services holdings, it continued to execute effectively through the painful industry cycle.

Outside of Energy, maternity apparel retailer Destination Maternity continued to labor through a challenging retail market. A new CEO was hired in August with plans to manage inventories more effectively, improve store layouts, and refresh merchandise, all of which inspired our confidence in a turnaround that will require additional patience. Both Olympic Steel and Universal Stainless & Alloy Products grappled with ongoing sluggishness for industrial metals. Companies in the steel business have had no pricing power due to utilization rates being less than optimal. As with Destination Maternity, the turnaround is taking more time than we had initially anticipated. We held shares of all of these stocks at the end of 2014.

   VASCO Data Security International specializes in bank security and develops security systems to secure and manage access to user digital assets. Its stock made two significant upticks in the first half. In February, its shares rose on better-than-expected fourth quarter of 2013 earnings and a strong outlook for fiscal 2014. Increased revenues and ongoing earnings strength saw the shares getting another major boost late in April, especially with HSBC, USA, its customer, offering VASCO authentication solutions to its retail customers. In October, its stock climbed yet again after beating estimates for third-quarter revenue and earnings. We sold the last of our shares in December. We held a stake in San Jose-based Super Micro Computer, which provides specialized high performance server solutions. Its recent successful forays into cloud computing data storage helped its earnings to soar steadily in 2014.

Top Contributors to Performance For 2014 (%)1
VASCO Data Security International	0.87
Super Micro Computer	0.52
CRA International	0.46
Furiex Pharmaceuticals	0.42
Zumiez	0.41
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
TGC Industries	-0.67
Total Energy Services	-0.65
Destination Maternity	-0.49
Olympic Steel	-0.47
Universal Stainless & Alloy Products	-0.43
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
Sector weightings at year end were relatively unchanged from where they stood at the end of 2013. We continue to emphasize more economically sensitive sectors, such as the Fund’s three largest at the end of the period—Industrials, Information Technology, and Consumer Discretionary. Our view is that many portfolio holdings in these (and other) sectors should benefit from a faster-growing economy that also could reward disciplined approaches that focus on fundamentals. So while we were not pleased with the Fund’s recent performances, we remain confident about its prospects going forward.

10 | The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS   RYOTX RMCFX RYMCX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	10-YR	15-YR	20-YR	SINCE INCEPTION (12/31/91)
RMC	-5.09	-4.13	7.89	7.50	6.78	10.11	10.95	11.89
Annual Operating Expenses: 1.56%
*Not Annualized

Relative Returns: Monthly Rolling Average Annual Return Periods
Since Russell Microcap’s Inception Through 12/31/14

On a monthly rolling basis, the Fund outperformed the Russell Microcap in 100% of all 10-year periods; 80% of all 5-year periods; 62% of all 3-year periods; and 60% of all 1-year periods.

	PERIODS BEATING THE INDEX		FUND AVG (%)*	INDEX AVG (%)*
10-year	55/55	100%	9.9	6.6
5-year	92/115	80%	10.0	6.7
3-year	86/139	62%	10.5	8.8
1-year	98/163	60%	12.4	11.1

*Average of monthly rolling average annual total returns over the specified periods.

Morningstar Style Map ^TM As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 120 for additional information.

Value of $10,000

Invested on 6/30/00 (Russell Microcap Index Inception) as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
FRP Holdings	1.8
Resources Connection	1.8
Shoe Carnival	1.6
Stein Mart	1.5
American Public Education	1.3
Kennedy-Wilson Holdings	1.3
Gulf Island Fabrication	1.3
ePlus	1.2
Marten Transport	1.2
Kirkland’s	1.2

Portfolio Sector Breakdown
% of Net Assets
Industrials	24.1
Information Technology	17.0
Consumer Discretionary	15.3
Health Care	9.9
Financials	9.0
Materials	7.5
Energy	6.8
Consumer Staples	1.2
Telecommunication Services	0.5
Miscellaneous	4.8
Cash and Cash Equivalents	3.9

Calendar Year Total Returns (%)
YEAR	RMC
2014	-4.1
2013	21.3
2012	8.0
2011	-12.1
2010	30.1
2009	55.7
2008	-40.9
2007	7.1
2006	22.3
2005	11.5
2004	15.8
2003	52.6
2002	-13.4
2001	23.1
2000	16.7

Upside/Downside Capture Ratios Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
10-Year	90	82
From 6/30/00 (Russell
Microcap Index Inception)	94	80

Portfolio Diagnostics
Fund Net Assets	$529 million
Number of Holdings	190
Turnover Rate	18%
Average Market Capitalization1	$415 million
Weighted Average P/E Ratio2,3	21.7x
Weighted Average P/B Ratio2	1.6x
Holdings ≥ 75% of Total Investments	94
Active Share4	91%
U.S. Investments (% of Net Assets)	83.4%
Non-U.S. Investments (% of Net Assets)	12.7%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (20% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

 All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Investment Class (its oldest class). Price and total return information is based on net asset values calculated for shareholder transactions. Certain immaterial adjustments were made to the net assets of Royce Micro-Cap Fund at 12/30/11 for financial reporting purposes, and as a result the net asset values for shareholder transactions on that date and the calendar year Total Returns (%) based on those net asset values differ from the adjusted net asset values and calendar year total returns reported in the Financial Highlights. Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the Fund’s most current prospectus and include management fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Shares of RMC’s Service and Consultant Classes bear an annual distribution expense that is not borne by the Investment Class. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell Microcap Index). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders | 11

	MANAGER’S DISCUSSION
	Royce Premier Fund

Chuck Royce

FUND PERFORMANCE

Royce Premier Fund (“RPR”) fell well short of our expectations in 2014. For the calendar year, the Fund was down 0.9%, significantly trailing its small-cap benchmark, the Russell 2000 Index, which gained 4.9% for the same period. The Fund handily outpaced the small-cap index in the year’s first half with a gain of 7.3% compared to 3.2% for the Russell 2000. But small-cap share prices corrected soon after making a high on July 3. Down phases typically result in the Fund holding its value more effectively than its benchmark, as it so often has through its history. The third quarter of 2014, however, offered an ill-timed exception. For the quarter as a whole, the Fund lost 8.6% versus 7.4% for the small-cap index.

The Russell 2000 then rebounded through much of the fourth quarter, when the Fund posted a comparably paltry 1.0% return while the Russell 2000 rose 9.7%. This was an unfortunate end to a frustrating final half. We were pleased, however, with longer-term results. Although the Fund trailed the small-cap index for the three- and five-year periods ended December 31, 2014, it did so with strong absolute returns that were in excess of both its own and its benchmark’s historical three- and five-year monthly rolling average returns (respective rolling returns of +11.8% versus +8.2% for the three-year span and +11.6% versus +7.6% for the five-year period). RPR also outperformed the Russell 2000 for the 10-, 15-, 20-year, and since inception (12/31/91) periods ended December 31, 2014. The Fund’s average annual total return for the since inception period was 12.0%, a long-term record in which we take great pride.

WHAT WORKED... AND WHAT DIDN’T
Energy was one of Premier’s best-performing sectors in the first half before oil prices abruptly plummeted and handed the Fund its largest net losses for the calendar year. An overweight in energy stocks—all of them in the equipment & services industry, and six of the seven not in the Russell 2000—did not help. Trican Well Service is an oilfield services company and the largest pressure pumping service provider in Canada. Over the last few years, its operations in the U.S. and other energy-rich spots around the world have been growing. Yet its ongoing operational successes meant little to anxious investors fleeing energy stocks in the second half. Much the same could be said for the Fund’s other holdings in the industry, most of which are also long-time holdings. Unit Corporation operates several businesses—it explores for oil and natural gas, acquires oil and gas properties, does contract drilling of onshore oil and natural gas wells, and performs gathering and processing of natural gas. Unit has shown over the years that it can be successful at all of them, and its steady execution has made its hard-to-pigeonhole business a Royce favorite. Alberta-based Ensign Energy Services is a global provider of oilfield services such as contract drilling. Drill rig orders were drying up as the oil price plunge was driving its shares into the ground. Ever contrarian, we took an admittedly (and customarily) long-term view and held good-sized positions in each stock at year end in anticipation of an eventual recovery in energy prices.

Elsewhere in the portfolio, we modestly reduced our position in Nu Skin Enterprises. A maker and distributor of personal care products, Nu Skin endured a litany of challenges over the last 18 months, including the restructuring of its debt and trouble in its previously fast-growing—but more recently stagnating—Asian business. It has been handling its difficulties with success, and we think it can engineer a reversal when sales in China improve. We took the opposite tack by selling our shares of GrafTech International, which manufactures synthetic and natural graphite and carbon-based products used in steel production. Ongoing earnings disappointments, most recently resulting from graphite electrode order push outs, weakening international business, and poor sales tied to the Galaxy Samsung 5 phone pushed the stock down more than 50% in the third quarter.

On the positive side, we continued to be pleased with molecular diagnostic company Myriad Genetics. A specialist in genetic testing for cancer, its share price fell rapidly in the second half of 2013 once the Supreme Court held that human genes cannot be patented. The stock then began to get healthy in the first six months of 2014. The first-half acquisition of Crescendo Bioscience diversified Myriad’s already promising pipeline, and its genetic panel test—MyRisk— looked promising. Its stock stumbled in the fourth quarter when the MyRisk adoption proved more expensive than expected, causing sales deferrals and higher operating costs. Still, we remained confident enough in its long-term prospects for Myriad to be the Fund’s thirteenth-largest holding at the end of 2014.

Top Contributors to Performance For 2014 (%)1
Myriad Genetics	1.16
Jones Lang LaSalle	0.69
Zebra Technologies Cl. A	0.58
Strayer Education	0.52
IDEXX Laboratories	0.52
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
Nu Skin Enterprises Cl. A	-1.56
Trican Well Service	-1.03
Unit Corporation	-0.80
Ensign Energy Services	-0.74
GrafTech International	-0.59
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
We reduced our exposure to Materials primarily by selling the Fund’s remaining precious metals & mining holdings. We remained overweight in Industrials and Information Technology, consistent with our view that we will eventually see an earnings-led market. We also had increased exposure to Consumer Discretionary, Financials, and Health Care companies by the end of 2014.

12 | The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS    RYPRX RPFFX RPFIX RPRCX RPRRX RPRKX RPRWX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	10-YR	15-YR	20-YR	SINCE INCEPTION (12/31/91)
RPR	-7.63	-0.86	12.17	12.09	9.27	11.17	11.98	12.04
Annual Operating Expenses: 1.09%
*Not Annualized

Relative Returns: Monthly Rolling Average Annual Return Periods
15 Years Through 12/31/14

On a monthly rolling basis, the Fund outperformed the Russell 2000 in 100% of all 10-year periods; 83% of all 5-year periods; 78% of all 3-year periods; and 67% of all 1-year periods.

	PERIODS BEATING THE INDEX		FUND AVG (%)*	INDEX AVG (%)*
10-year	61/61	100%	11.4	7.3
5-year	101/121	83%	11.6	7.6
3-year	113/145	78%	11.8	8.2
1-year	113/169	67%	13.2	9.6
*Average of monthly rolling average annual total returns over the specified periods.

Morningstar Style Map^TM    As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 120 for additional information.

Value of $10,000

Invested on 12/31/91 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Thor Industries	3.9
Alleghany Corporation	3.1
Lincoln Electric Holdings	3.0
Woodward	2.7
Ritchie Bros. Auctioneers	2.7
Kennedy-Wilson Holdings	2.5
National Instruments	2.3
Federated Investors Cl. B	2.2
Landstar System	2.2
Copart	2.1

Portfolio Sector Breakdown
% of Net Assets
Industrials	26.4
Information Technology	18.9
Consumer Discretionary	12.9
Financials	12.3
Materials	7.5
Health Care	6.7
Energy	6.3
Consumer Staples	3.9
Miscellaneous	3.0
Cash and Cash Equivalents	2.1

Calendar Year Total Returns (%)
YEAR	RPR
2014	-0.9
2013	27.7
2012	11.4
2011	-0.9
2010	26.5
2009	33.3
2008	-28.3
2007	12.7
2006	8.8
2005	17.1
2004	22.8
2003	38.7
2002	-7.8
2001	9.6
2000	17.1

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
10-Year	100	89
From 12/31/91 (Start of Fund’s
First Full Quarter)	93	72

Portfolio Diagnostics
Fund Net Assets	$5,402 million
Number of Holdings	67
Turnover Rate	9%
Average Market Capitalization1	$2,790 million
Weighted Average P/E Ratio2,3	19.5x
Weighted Average P/B Ratio2	2.4x
Holdings ≥ 75% of Total Investments	39
Active Share4	97%
U.S. Investments (% of Net Assets)	88.1%
Non-U.S. Investments (% of Net Assets)	9.8%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (6% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Investment Class (its oldest class). Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the Fund’s most current prospectus and include management fees and other expenses. Shares of RPR’s Service, Consultant, R, and K Classes bear an annual distribution expense that is not borne by the Investment Class. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders | 13

	MANAGER’S DISCUSSION
Royce Low-Priced Stock Fund

Jim Stoeffel

FUND PERFORMANCE
Royce Low-Priced Stock Fund (“RLP”) was down 3.4% in 2014, substantially behind its small-cap benchmark, the Russell 2000 Index, which gained 4.9% for the same period. The year got off to a highly promising start when the Fund posted terrific results on both an absolute and relative basis in the first half, advancing 9.0% and outpacing the 3.2% gain for its benchmark. This was a welcome development after several years of relative performance disappointments for the portfolio.

Small-cap stocks then took a turn for the worse in the third quarter following a high for the Russell 2000 on July 3. RLP fell 9.8% in the third quarter compared to a 7.4% decline for the benchmark over the same span. At this point, the Fund was in negative territory year-to-date, but still ahead of the small-cap index. That changed in the fourth quarter. Small-cap stocks rallied through most of the year’s last three months, with October and December especially robust. The Fund, however, was essentially flat in each of those months and had a loss in November. For the fourth quarter as a whole, RLP lost 1.7% while the Russell 2000 increased 9.7%. The Fund outperformed the benchmark for the 15-, 20-year, and since inception (12/15/93) periods ended December 31, 2014. RLP’s average annual total return since inception was 10.9%. We remain proud of the Fund’s long-term performance record.

WHAT WORKED... AND WHAT DIDN’T
After being the top-contributing sector (and thus a major source of outperformance) in the first half of the year, Energy stocks finished 2014 as the portfolio’s leading detractor. The second-half collapse in energy prices and pressure on other commodities thus took an enormous toll on results for both the second half and full year. Being substantially overweight in the Energy sector versus the Russell 2000 hampered relative results as well. We are well aware of the near-term stresses on energy prices, which include surging supply from U.S. shale plays, weaker European and emerging market economies (the latter having been a key source of incremental demand), and a strong U.S. dollar. However, we have also been quite pleased with the way that many of the portfolio’s energy names have been executing. As such, we have mostly chosen to hold positions in the belief that lower energy prices will ultimately spur demand and thus eventually start the next up cycle in commodity prices. We did, however, trim our position in Trican Well Service, a Canadian oilfield services company and that nation’s largest pressure pumping service provider. In the Materials sector, which posted net losses for the year, we greatly reduced RLP’s exposure to the metals & mining industry, which involved selling most of our positions in Hochschild Mining and Alamos Gold.

Nu Skin Enterprises is a personal care product manufacturer and distributor. The aggressive rollout of its direct marketing model in China set off an investigation by authorities into its sales model. The official result was a modest fine, though it also derailed growth more than we would have expected. The company has been working through inventory issues and rebuilding its sales team in China to create a more sustainable growth model there. At year’s end, we believed we were near the bottom in terms of company fundamentals and remain constructive on Nu Skin going forward. We were less confident in the rebound potential for GrafTech International, which makes graphite and carbon material used in steel production and other industries. Depressed sales and ongoing earnings disappointments influenced our decision to reduce our position.

Information Technology dominated, leading all of the Fund’s equity sectors by a hefty margin. Two top-performing semiconductor companies were takeover targets—OmniVision Technologies and International Rectifier. We sold both as news of their respective acquisitions drove shares higher. From the Health Care sector, Myriad Genetics is a leading provider of diagnostic cancer testing that proved the value of patience. In 2013, its shares fell as Wall Street worried about the firm’s ability to maintain market share and price in the face of creeping competition. However, the accuracy and rapid turnaround times of the company’s tests have proven to be highly effective barriers to entry. We took gains through much of 2014, though we were happy to hold a decent-sized stake at the end of the year.

Top Contributors to Performance For 2014 (%)1
Myriad Genetics	1.00
OmniVision Technologies	0.67
International Rectifier	0.64
Industrias Bachoco ADR	0.48
Cato Corporation (The) Cl. A	0.45
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
Nu Skin Enterprises Cl. A	-1.20
Trican Well Service	-0.90
GrafTech International	-0.84
Hochschild Mining	-0.73
Alamos Gold	-0.69
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
Effective November 10, 2014, Jim Stoeffel became the Fund’s portfolio manager after serving as assistant portfolio manager since 2013. Bill Hench, Jim Harvey, and Carl Brown joined him as assistant portfolio managers. Our general view is that the U.S. economy should remain strong. The Fund remained overweight in Energy at the end of 2014 for the reasons previously discussed. We see Information Technology as a vital source of ideas, particularly in mobile, Big Data, and the Internet of Things. Industrials were also a key investment focus because we suspect that many of our holdings can take advantage of lower energy prices. Finally, there was increased exposure to both consumer sectors for similar reasons—lower gas and heating oil prices should continue to benefit consumers by putting more money in their pockets.

14 | The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS RYLPX RLPHX RLPIX RLPRX RLPKX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	10-YR	15-YR	20-YR	SINCE INCEPTION (12/15/93)
RLP	-11.37	-3.37	4.46	5.07	5.33	8.85	11.31	10.89
Annual Gross Operating Expenses: 1.51%   Annual Net Operating Expenses: 1.49%
*Not Annualized

Relative Returns: Monthly Rolling Average Annual Return Periods
15 Years Through 12/31/14

On a monthly rolling basis, the Fund outperformed the Russell 2000 in 59% of all 10-year periods; 74% of all 5-year periods; 67% of all 3-year periods; and 58% of all 1-year periods.

	PERIODS BEATING THE INDEX		FUND AVG (%)*	INDEX AVG (%)*
10-year	36/61	59%	8.8	7.3
5-year	89/121	74%	8.9	7.6
3-year	97/145	67%	8.8	8.2
1-year	98/169	58%	11.3	9.6
*Average of monthly rolling average annual total returns over the specified periods.

Morningstar Style Map^TM    As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 120 for additional information.

Value of $10,000
Invested on 12/15/93 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Globe Specialty Metals	1.3
Vishay Intertechnology	1.3
Newpark Resources	1.3
Convergys Corporation	1.3
Kforce	1.3
Buckle (The)	1.2
RPX Corporation	1.2
Brocade Communications Systems	1.2
ADTRAN	1.2
Teradyne	1.2

Portfolio Sector Breakdown
% of Net Assets
Information Technology	33.4
Industrials	16.3
Consumer Discretionary	11.5
Energy	8.9
Financials	7.7
Materials	6.7
Health Care	3.1
Consumer Staples	1.8
Miscellaneous	4.9
Cash and Cash Equivalents	5.7

Calendar Year Total Returns (%)
YEAR	RLP
2014	-3.4
2013	12.9
2012	4.5
2011	-14.6
2010	31.5
2009	53.6
2008	-36.0
2007	2.3
2006	19.0
2005	9.7
2004	13.6
2003	44.0
2002	-16.3
2001	25.1
2000	24.0

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
	94	108
From 12/31/93 (Start of the
Fund’s First Full Quarter)	103	92

Portfolio Diagnostics
Fund Net Assets	$677 million
Number of Holdings	133
Turnover Rate	29%
Average Market Capitalization1	$905 million
Weighted Average P/E Ratio2,3	18.7x
Weighted Average P/B Ratio2	1.6x
Holdings ≥ 75% of Total Investments	76
Active Share4	96%
U.S. Investments (% of Net Assets)	77.3%
Non-U.S. Investments (% of Net Assets)	17.0%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (23% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Service Class (its oldest class). Price and total return information is based on net asset values for shareholder transactions. Certain immaterial adjustments were made to the net assets of Royce Low-Priced Stock Fund at 6/30/13 for financial reporting purposes, and as a result the net asset values for shareholder transactions and the calendar year total returns based on those net asset values differ from the adjusted net asset values and calendar year total returns reported in the Financial Highlights. 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 expense reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the Service Class’s net annual operating expenses, excluding brokerage commissions, taxes, interest litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business, at or below 1.49% through April 30, 2015. Shares of RLP’s R Class bear an annual distribution expense that is higher than that of the Service Class. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders | 15

	MANAGER’S DISCUSSION
Royce Total Return Fund

Chuck Royce
Jay Kaplan, CFA

FUND PERFORMANCE
Royce Total Return Fund (“RTR”) finished the calendar year with a gain of 1.3%, behind its small-cap benchmark, the Russell 2000 Index, which was up 4.9% for the same period. This was a discouraging outcome even as the Fund in many ways performed as we would expect it to. The last four years have been characterized by both declining volatility and higher-than-average small-cap returns. In such a climate, we would anticipate beating the index in downdrafts while trailing in upswings, which has pretty much been the case for the 2011-2014 period, a span during which RTR achieved solid results on an absolute basis with noticeably lower volatility than its benchmark. Yet this has not made its frequent periods of underperformance any easier for us to digest.

The year began with lower but positive small-cap returns following a highly dynamic 2013. The Fund trailed its benchmark in the first quarter before outpacing it in the second, finishing the first half with a 2.7% gain versus 3.2% for the Russell 2000. Small-caps established a high on July 3 that would hold until late December. The third quarter turned quickly bearish, and during this period the Fund held its value more effectively than the small-cap index, losing 6.5% versus 7.4%. Helped by a holiday gift in the form of a robust rally spread over most of the end of December, the fourth quarter was highly bullish. RTR finished the closing quarter up 5.5%, a more-than-respectable showing that nonetheless trailed the even more impressive 9.7% advance for the Russell 2000. Another year with a relative performance disadvantage affected longer-term results, pushing the Fund’s edge further out. RTR outpaced its benchmark for the 15-, 20-year, and since inception (12/15/93) periods ended December 31, 2014. The Fund’s average annual total return since inception was 11.2%, a long-term record that gives us great pride.

WHAT WORKED... AND WHAT DIDN’T
Six of RTR’s 10 equity sectors made positive contributions to 2014’s results, with Financials leading a diverse list that also included Health Care, Utilities, Information Technology, Consumer Discretionary, and Telecommunication Services. Three of the Fund’s four best-performing industries are housed within Financials—insurance companies, real estate investment trusts (REITs), and capital markets stocks. REITs, one of the strongest areas for small-caps in 2014, is not an area of primary investment focus, and we were significantly underweight versus the Russell 2000. Net gains came from a large number of companies in these three groups, led by long-term holding and top position Erie Indemnity, a Pennsylvania-based insurer whose shares we have held in the portfolio since 1998. A strong fiscal second quarter keyed an autumn advance for its shares.

   From the Health Care sector, Chemed Corporation operates two different businesses—hospice care provider Vitas and plumbing and drain cleaning service company Roto-Rooter. Its shares seemed to climb mostly as a result of a “no news is good news” scenario concerning Vitas. In 2013 the Justice Department began looking into its Medicare enrollment and billing rates. Offering more critical care than is typical in the hospice industry may have helped to trigger the investigation. However, margins for critical care are not much higher than for other elements of hospice care, and Vitas is one of the few able to deliver it on a nationwide basis. The lack of any additional developments in the investigation seemed to reassure investors. We reduced our position as its stock price rose. A rising share price also led us to take gains in The Cato Corporation, a discount women’s fashion retailer that was nonetheless a top-20 position at the end of 2014. Improved same-store sales drove its recovery.

   After a terrific first half, energy stocks fell so hard in the second half with the precipitous decline of oil prices that the sector became RTR’s hardest hit for the calendar year. Net losses in Consumer Staples, Materials, and Industrials especially had a decidedly less negative impact. While the near-term outlook for the energy industry remained very hard to gauge at this writing, we held shares in a number of companies, with our larger holdings typically slotted in the energy equipment & services group. The stock price of CARBO Ceramics, which manufactures ceramic proppants and other materials used in hydraulic well fracturing, fell more than 55% before the October announcement of better-than-expected earnings for the third quarter, news that did little for its share price. We added to our initially small position in Tidewater, which provides marine service vessels to offshore energy companies. Outside of Energy, we also built our stake in personal care products manufacturer and distributor Nu Skin Enterprises, which survived a multitude of recent challenges and is looking to revive its formerly fast-growing business in Asia.

Top Contributors to Performance For 2014 (%)1
Chemed Corporation	0.26
Cato Corporation (The) Cl. A	0.25
Erie Indemnity Cl. A	0.25
STERIS Corporation	0.23
AllianceBernstein Holding L.P.	0.21
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
Nu Skin Enterprises Cl. A	-0.52
CARBO Ceramics	-0.34
Ascena Retail Group	-0.33
Tidewater	-0.24
GameStop Corporation Cl. A	-0.18
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
While the market continued to show a preference for high yields in 2014, we still believe that steady, consistent dividend-payers offer long-term advantages. The Fund’s sector weightings changed little from the end of 2013 as we again chose to position the portfolio for improved performance from cyclical sectors in 2015. We have based this decision on our confidence in both the ongoing expansion of the U.S. economy and an earnings-led rally for small-cap stocks.

16 | The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS    RYTRX RYTFX RTRIX RYTCX RTRRX RTRKX RTRWX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	10-YR	15-YR	20-YR	SINCE INCEPTION (12/15/93)
RTR	-1.36	1.34	15.47	13.32	7.50	10.12	11.55	11.21
Annual Operating Expenses: 1.18%
*Not Annualized

Relative Returns: Monthly Rolling Average Annual Return Periods
15 Years Through 12/31/14

On a monthly rolling basis, the Fund outperformed the Russell 2000 in 64% of all 10-year periods; 70% of all 5-year periods; 57% of all 3-year periods; and 55% of all 1-year periods.

	PERIODS BEATING THE INDEX		FUND AVG (%)*	INDEX AVG (%)*
10-year	39/61	64%	8.5	7.3
5-year	85/121	70%	8.8	7.6
3-year	83/145	57%	9.6	8.2
1-year	93/169	55%	11.7	9.6
*Average of monthly rolling average annual total returns over the specified periods.

Morningstar Style Map^TM    As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 120 for additional information.

Value of $10,000
Invested on 12/15/93 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Erie Indemnity Cl. A	1.1
E-L Financial	1.0
Markel Corporation	1.0
Alleghany Corporation	1.0
AllianceBernstein Holding L.P.	0.9
Bank of Hawaii	0.9
Gentex Corporation	0.9
Balchem Corporation	0.9
Tennant Company	0.9
Owens & Minor	0.9

Portfolio Sector Breakdown
% of Net Assets
Financials	26.4
Industrials	18.8
Consumer Discretionary	12.4
Materials	11.0
Information Technology	8.2
Health Care	6.1
Energy	4.1
Consumer Staples	3.0
Utilities	2.8
Telecommunication Services	0.9
Miscellaneous	3.4
Cash and Cash Equivalents	2.9

Calendar Year Total Returns (%)
YEAR	RTR
2014	1.3
2013	32.8
2012	14.4
2011	-1.7
2010	23.5
2009	26.2
2008	-31.2
2007	2.4
2006	14.5
2005	8.2
2004	17.5
2003	30.0
2002	-1.6
2001	14.8
2000	19.4

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
10-Year	86	81
From 12/31/93 (Start of Fund’s
First Full Quarter)	82	56

Portfolio Diagnostics
Fund Net Assets	$4,659 million
Number of Holdings	400
Turnover Rate	18%
Average Market Capitalization1	$2,202 million
Weighted Average P/E Ratio2,3	17.3x
Weighted Average P/B Ratio2	1.9x
Holdings ≥ 75% of Total Investments	137
Active Share4	89%
U.S. Investments (% of Net Assets)	85.2%
Non-U.S. Investments (% of Net Assets)	11.9%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (6% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Investment Class (its oldest class). Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the Fund’s most current prospectus and include management fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Shares of RTR’s Service, Consultant, R, and K Classes bear an annual distribution expense that is not borne by the Investment Class. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders | 17

	MANAGER’S DISCUSSION
	Royce Heritage Fund

Chuck Royce
Steven McBoyle, CPA, CA
Jim Harvey, CFA

FUND PERFORMANCE

Royce Heritage Fund (“RHF”) fell 1.1% in 2014, significantly trailing the 4.9% advance for its small-cap benchmark, the Russell 2000 Index, for the same period.

The first six months of 2014, in addition to being a lower-return up phase, saw the Fund stay closer to the small-cap index. For the year-to-date period ended June 30, 2014, RHF increased 2.9% versus a 3.2% gain for the Russell 2000. The gap between the Fund and its benchmark in the second half of the year was primarily the result of poor performance for the former during the fourth quarter.

   The down phase in the third quarter saw both the Fund and the index losing 7.4%. Most small-cap prices recovered later in the year. The fourth-quarter rally, however, was not nearly as bullish for RHF as it was for its benchmark. The Fund gained 3.7% while the Russell 2000 rose 9.7%. Fourth-quarter results were frustrating as we saw outperformance from sectors of the market in which we typically do not participate. Longer-term results, however, were better on both an absolute and relative basis. We were pleased to see the Fund outpace its benchmark for the 10-, 15-year, and since inception (12/27/95) periods ended December 31, 2014. The Fund’s average annual total return since inception was 13.2%, a long-term record in which we take great pride.

WHAT WORKED... AND WHAT DIDN’T
Six of the Fund’s nine equity sectors made a net contribution to calendar-year results. Information Technology was the leader while Consumer Discretionary and Financials also posted solid results. The leading industry groups were capital markets stocks, IT services companies, distributors (from the Consumer Discretionary sector), and semiconductors & semiconductor equipment businesses. The third of these groups was home to Core-Mark Holding Company, a marketer and distributor of consumer goods to convenience stores, grocery stores, drug stores, and other retail centers. Improved second- and third-quarter earnings and an increased dividend offered investors a convenient reason to buy. We reduced our stake by taking gains at various times as the stock appreciated by some 60% during the year. The Fund’s third-largest holding at the end of 2014, Rogers Corporation is a technology company that manufactures specialty materials and components, including printed circuit materials, high-performance foams, and power electronic solutions. Somewhat volatile into the third quarter, its stock price soared in October after it reported record quarterly revenues, which capped a seventh consecutive quarter of year-over-year revenue growth. We were pleased to see each of its three core businesses contributing to its growth as we were buyers of its shares throughout 2014.

   Industrials, RHF’s largest sector and a significant overweight versus the Russell 2000 at year end, detracted most from calendar-year results. Of the 21 industry groups that suffered net losses in 2014, nine are slotted in that sector, with machinery stocks and construction & engineering companies registering the largest negative impact. Houston-based KBR came from the latter group. Its shares plummeted as the company contended with several troubles (some related to energy’s woes), such as cancellations and losses of projects as well as the pushed-out start dates for some of its LNG (liquefied natural gas) ventures. We were encouraged by a restructuring plan unveiled later in the year by the company’s CEO, which entailed streamlining operations and reducing overhead costs, refocusing on core areas of traditional strength, and exiting four non-core businesses that were more heavily fixed-price project oriented. We built our position as its price slipped.

   When oil prices declined by 50% in the second half, it had a predictably depressing effect on energy and related stocks throughout the equity market. And some parts of the industry felt much of the brunt more immediately than others. This was the case with many offshore drillers because of the higher operating costs inherent in that business. Based in Switzerland, Transocean is the world’s largest offshore driller. Its shares corrected significantly as pre-existing industry oversupply of ultra-deep water drilling was compounded by the severe commodity-price decline. Unit Corporation is a long-time Royce holding that has always been something of an anomaly in its business because the energy industry traditionally, if not rigidly, separates oil and gas producers from service providers.

Top Contributors to Performance
For 2014 (%)1
Core-Mark Holding Company	0.47
Rogers Corporation	0.36
ePlus	0.27
Pan American Silver	0.26
Bed Bath & Beyond	0.25
1Includes dividends

Top Detractors from Performance
For 2014 (%)2
Transocean	-0.71
Unit Corporation	-0.41
KBR	-0.36
Trican Well Service	-0.32
Reliance Steel & Aluminum	-0.29
2Net of dividends

CURRENT POSITIONING AND OUTLOOK

As the year came to an end, we attempted to take advantage by buying shares of companies that saw their valuations disconnect from fundamentals due to concerns over European growth and more general deflation in basic materials. Effective February 2, 2015, Steven McBoyle became the Fund’s lead portfolio manager after serving as portfolio manager since 2012. Chuck Royce and James Harvey continue to serve as portfolio managers.

18 | The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS RGFAX RHFHX RYGCX RHFRX RHFKX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	10-YR	15-YR	SINCE INCEPTION (12/27/95)
RHF	-3.92	-1.14	12.50	10.48	7.96	9.50	13.15
Annual Operating Expenses: 1.49%
*Not Annualized

Relative Returns: Monthly Rolling Average Annual Return Periods
15 Years Through 12/31/14

On a monthly rolling basis, the Fund outperformed the Russell 2000 in 100% of all 10-year periods; 90% of all 5-year periods; 67% of all 3-year periods; and 57% of all 1-year periods.

	PERIODS BEATING THE INDEX		FUND AVG (%)*	INDEX AVG (%)*
10-year	61/61	100%	9.6	7.3
5-year	109/121	90%	9.7	7.6
3-year	97/145	67%	9.8	8.2
1-year	96/169	57%	11.7	9.6

*Average of monthly rolling average annual total returns over the specified periods.

Morningstar Style Map^TM    As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 120 for additional information.

Value of $10,000
Invested on 12/27/95 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Copart	1.8
Ritchie Bros. Auctioneers	1.6
Rogers Corporation	1.5
DENTSPLY International	1.5
Expeditors International of Washington	1.4
Diodes	1.4
KKR & Co. L.P.	1.4
Bed Bath & Beyond	1.3
Reliance Steel & Aluminum	1.2
Anixter International	1.2

Portfolio Sector Breakdown
% of Net Assets
Industrials	25.5
Information Technology	18.5
Financials	17.1
Consumer Discretionary	11.6
Materials	8.6
Health Care	5.6
Energy	4.2
Consumer Staples	0.6
Utilities	0.5
Miscellaneous	4.5
Cash and Cash Equivalents	3.3

Calendar Year Total Returns (%)
YEAR	RHF
2014	-1.1
2013	26.0
2012	14.3
2011	-9.3
2010	27.5
2009	51.8
2008	-36.2
2007	1.2
2006	22.6
2005	8.7
2004	20.4
2003	38.1
2002	-18.9
2001	20.5
2000	11.7

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
10-Year	101	100
From 12/31/95 (Start of Fund’s
First Full Quarter)	112	89

Portfolio Diagnostics
Fund Net Assets	$359 million
Number of Holdings	202
Turnover Rate	35%
Average Market Capitalization1	$2,928 million
Weighted Average P/E Ratio sizes2,3	19.8x
Weighted Average P/B Ratio2	2.5x
Holdings ≥ 75% of Total Investments	96
Active Share 4	95%
U.S. Investments (% of Net Assets)	75.0%
Non-U.S. Investments (% of Net Assets)	21.7%

1	Geometric Average.  This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average.  This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (6% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Service Class (its oldest class). Price and total return information is based on net asset values calculated for shareholder transactions. Certain immaterial adjustments were made to the net assets of Royce Heritage Fund at 12/30/11 for financial reporting purposes, and as a result the net asset values for shareholder transactions on that date and the calendar year total returns based on those net asset values differ from the adjusted net asset values and calendar year total returns reported in the Financial Highlights. Operating expenses reflect the Fund’s total annual operating expenses for the Service Class as of the Fund’s most current prospectus and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Shares of RHF’s Consultant and R Classes bear an annual distribution expense that is higher than that of the Service Class. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders |  19

	MANAGER’S DISCUSSION
	Royce Opportunity Fund

Buzz Zaino, CFA
Bill Hench

FUND PERFORMANCE

Royce Opportunity Fund (“ROF”) posted a loss of 0.5% in 2014, underperforming its small-cap benchmark, the Russell 2000 Index, which increased 4.9% for the same period. After a number of strong calendar-year performances on both an absolute and relative basis, ROF finished further behind its benchmark than we would prefer. And while a year in the red, even slightly, is far from ideal, we remain confident in the Fund’s distinctive opportunistic approach, especially over long-term periods.

   For the first half, the Fund narrowly trailed the Russell 2000, up 3.0% versus 3.2%. The bulk of ROF’s difficulties, on both a relative and absolute basis, were in the bearish third quarter when small-caps began to slide following a high on July 3. For the quarter, the Fund fell 9.0% compared to a loss of 7.4% for the small-cap index. This did not worry us; ROF has historically had a mixed record of success in short-term downdrafts versus the Russell 2000. And while the Fund also underperformed in the bullish fourth quarter, rising 6.1% while the Russell 2000 climbed 9.7%, the quarter included the end of the downturn, which bottomed out on October 13. From that date through the end of December, ROF narrowly outpaced the small-cap index, advancing 15.4% versus 15.2%. The calendar year did little to dent ROF’s longer-term advantage. The Fund outpaced the small-cap index for the three-, 10-, 15-year, and since inception (11/19/96) periods ended December 31, 2014 (and trailed by only 24 basis points for the five-year period). ROF’s average annual total return since inception was 13.0%. We take great pride in the Fund’s nearly two decades of strong long-term results.

WHAT WORKED... AND WHAT DIDN’T
The market hates uncertainty. In that sense, the second half of 2014 reminded us a little of 2011, when political discord made the market nervous and led to a largely negative second half. Although 2014 was a much better year than 2011, we once again saw an exogenous event–the collapse of oil prices—sow the seeds of uncertainty, rattle investors, and help to create both higher volatility and steep losses, at least among certain small-caps and most energy companies. ROF’s exposure to Energy was slight, though not small enough to prevent the sector from detracting most–by a good-sized margin–from 2014’s results. Two holdings from the sector were among the Fund’s loss leaders. Swift Energy is an onshore and offshore exploration & production (“E&P”) company. Offshore has higher costs, which meant being hurt first and hardest in the decline. We reduced our position in December, as we did with Approach Resources, a Texas-based E&P business.

   Outside Energy, we held shares of Quiksilver, which makes and distributes youth-oriented branded apparel, footwear, and accessories. The company operates under its own brand name as well as Roxy and DC. Its turnaround is taking longer than we anticipated, but we like the management team that came on board in 2013 and the strong presence of its brands in high-profile spots such as Macy’s. Our confidence in the likelihood of infrastructure improvements led us to build our position in General Cable, which makes copper, aluminum, and fiber optic wire and cable products for the energy, industrial, construction, specialty, and communications markets. Its international exposure hurt results, but we think it’s well positioned to recover when industrial activity picks up.

   The rising stock price of Century Aluminum prompted us to sell shares through most of 2014. The company produces the metal for sale in the U.S. and Iceland. Earnings recovered in the second half in part the result of the increased use of aluminum-steel hybrids in the aerospace and automotive industries. In February 2014, RF Micro Devices and TriQuint Semiconductor agreed to merge, which seemed to help the shares of each semiconductor business to climb in 2014. We sold the last of our shares of TriQuint in May while holding RF Micro Devices at year end. One of 2013’s top contributors extended its net gains through 2014–SunEdison produces electronic-grade polysilicon used for electronics, solar cells, and film devices while also developing solar power projects. The demand for solar technology keeps heating up, the result of improved technological efficiency that’s helping to lower costs and support for its long-term environmental benefits.

Top Contributors to Performance
For 2014 (%)1
Century Aluminum	0.61
RF Micro Devices	0.47
SunEdison	0.36
Spansion Cl. A	0.35
Planar Systems	0.35
1Includes dividends

Top Detractors from Performance
For 2014 (%)2
Quiksilver	-0.42
Swift Energy	-0.36
General Cable	-0.34
Approach Resources	-0.31
Extreme Networks	-0.28
2Net of dividends

CURRENT POSITIONING AND OUTLOOK
In many ways a restocking year, 2014 saw us trimming or selling positions that had established momentum while looking to find or add to companies that will ideally furnish the next few years with strong performance. Looking ahead, we are constructive on several consumer and technology areas, as well as housing and non-residential construction. Lower energy prices and improved employment rates should help to keep the U.S. consumer active and confident, as was the case in the closing months of 2014 when auto sales remained strong, and holiday sales were robust for many retailers. We anticipate that housing sales should gain momentum in the weeks and months following the Super Bowl, as is often the case, and also expect non-residential construction and infrastructure activity to increase in 2015.

20  | The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS RYPNX RYOFX ROFCX ROFIX ROFRX ROFKX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	10-YR	15-YR	SINCE INCEPTION (11/19/96)
ROF	-3.40	-0.48	20.52	15.31	8.14	11.60	13.00
Annual Operating Expenses: 1.17%
*Not Annualized

Relative Returns: Monthly Rolling Average Annual Return Periods
15 Years Through 12/31/14

On a monthly rolling basis, the Fund outperformed the Russell 2000 in 100% of all 10-year periods; 83% of all 5-year periods; 79% of all 3-year periods; and 67% of all 1-year periods.

	PERIODS BEATING THE INDEX		FUND AVG (%)*	INDEX AVG (%)*
10-year	61/61	100%	9.9	7.3
5-year	100/121	83%	10.3	7.6
3-year	115/145	79%	11.3	8.2
1-year	114/169	67%	14.9	9.6

*Average of monthly rolling average annual total returns over the specified periods.

Morningstar Style Map^TM    As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 120 for additional information.

Value of $10,000

Invested on 11/19/96 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Microsemi Corporation	0.9
Sanmina Corporation	0.8
Mueller Industries	0.8
Advanced Energy Industries	0.8
Commercial Metals	0.8
RTI International Metals	0.8
Mueller Water Products Cl. A	0.8
Ingram Micro Cl. A	0.7
Kaiser Aluminum	0.7
Atlas Air Worldwide Holdings	0.7

Portfolio Sector Breakdown
% of Net Assets
Information Technology	29.6
Industrials	20.1
Consumer Discretionary	12.5
Financials	10.3
Materials	7.8
Health Care	4.0
Energy	2.1
Consumer Staples	1.2
Telecommunication Services	0.6
Miscellaneous	4.8
Cash and Cash Equivalents	7.0

Calendar Year Total Returns (%)
YEAR	ROF
2014	-0.5
2013	43.5
2012	22.6
2011	-13.0
2010	33.8
2009	62.1
2008	-45.7
2007	-2.0
2006	18.8
2005	4.8
2004	17.5
2003	72.9
2002	-17.0
2001	17.3
2000	19.8

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
10-Year	121	128
From 12/31/95 (Start of Fund's First Full Quarter)	126	110

Portfolio Diagnostics
Fund Net Assets	$2,315 million
Number of Holdings	295
Turnover Rate	36%
Average Market Capitalization1	$791 million
Weighted Average P/B Ratio2	1.4x
Holdings ≥ 75% of Total Investments	151
Active Share3	90%
U.S. Investments (% of Net Assets)	83.3%
Non-U.S. Investments (% of Net Assets)	3.7%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Investment Class (its oldest class). Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the Fund’s most current prospectus and include management fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Shares of ROF’s Service, Consultant, R, and K Classes bear an annual distribution expense that is not borne by the Investment Class. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds  2014 Annual Report to Shareholders |  21

	MANAGER’S DISCUSSION
	Royce Special Equity Fund

Charlie Dreifus, CFA

FUND PERFORMANCE

Royce Special Equity Fund (“RSE”) suffered some relative disappointments in 2014. The Fund gained 1.1% in the calendar year, underperforming its small-cap benchmark, the Russell 2000 Index, which advanced 4.9% for the same period. In the context of a market in which many companies with no earnings, no dividend, and other lower-quality attributes continued to outperform, this was hardly surprising. In fact, the strength of low quality was particularly evident even in the first quarter, when RSE was down 0.8% versus a gain of 1.1% for the Russell 2000. Much of this underperformance came from specialty retailers in the Consumer Discretionary sector, and the negative impact was exacerbated by the portfolio’s significant overweight versus the benchmark. However, our patience with many of these holdings would begin to be rewarded later in the year.

   After underperforming again in the second quarter, the Fund finished behind the index in the first half, up 0.2% versus 3.2% for the Russell 2000. When the market became both more volatile and markedly bearish in the third quarter, the Fund had a somewhat curious experience. It lost less than the small-cap index in both the July and September downturns but underperformed in the August recovery, which gave RSE only a narrowly smaller loss than the Russell 2000 for the third quarter as a whole, -7.1% versus -7.4%. We were pleased to see the Fund go on to enjoy a strong rebound when small-cap prices began to recover, thanks in part to a strong showing from specialty retailers. RSE advanced 8.6% in the fourth quarter compared to 9.7% for its benchmark. Considering the Fund’s long-term historical pattern, 2014 results were not surprising as the market continued to favor lower-quality issues that simply do not meet our exacting selection standards. We were pleased with RSE’s longer-term results. The Fund outpaced the Russell 2000 for the 10-, 15-year, and since inception (5/1/98) periods ended December 31, 2014. RSE’s average annual total return since inception was 9.8%.

WHAT WORKED... AND WHAT DIDN’T
Only two of the Fund’s equity sectors—Consumer Staples and Consumer Discretionary—finished the year with net losses, which were modest. The latter group, as mentioned, received a considerable boost in the fourth-quarter rally. Information Technology led the Fund’s five equity sectors that posted net gains in 2014 (Financials were flat for the year). RSE’s three top-performing industry groups were chemicals, media, and commercial services & supplies, while the communications equipment group, semiconductors & semiconductor equipment companies, and electronic equipment, instruments & components stocks all posted solid net gains to galvanize the Information Technology sector.

   The Fund’s top performer and largest holding at the end of the year was UniFirst Corporation, which provides workplace uniforms and protective work wear clothing. We added shares between February and early June. Minerals Technologies, another top-performing top-10 position, is a resource- and technology-based organization that develops and produces performance-enhancing minerals as well as synthetic mineral and mineral-based products. We took gains through much of the year as its price rose. RSE’s leading detractor was also a top-10 holding. Schweitzer-Mauduit International runs a global business from Georgia manufacturing paper and reconstituted tobacco products for the tobacco industry. After buying during the first half, we trimmed in the second, resulting in a small net decrease in the position for the year. The Finish Line ran a poor race in what was often a torturous course for retailers in 2014. The company sells men’s, women’s, and children’s brand name athletic and leisure footwear, activewear, and accessories. It was the Fund’s sixth-largest position at the end of the year.

Top Contributors to Performance
For 2014 (%)1
UniFirst Corporation	0.93
Minerals Technologies	0.81
Meredith Corporation	0.65
Plantronics	0.55
Neenah Paper	0.47
1 Includes dividends

Top Detractors from Performance
For 2014 (%)2
Schweitzer-Mauduit International	-0.62
Finish Line (The) Cl. A	-0.59
LeapFrog Enterprises Cl. A	-0.54
Universal Corporation	-0.52
EnerSys	-0.40
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
The combination of slower growth in healthcare costs on top of lower energy prices is striking—a decade ago, energy and healthcare costs were consuming nearly all of the gains in consumer discretionary income. It is possible, even likely, that profit margins will expand rather than contract, as most expect. Besides the slide in commodity prices, we continue to see the substitution of capital for labor. While having a negative outcome concerning income inequality, it bodes well for the equity market.

   We still believe that more merger and acquisition activity is ahead and that our portfolio should receive its share and then some in light of both our methodology and the attractiveness of the issues. The forces behind more M&A activity include record-low interest rates, little other cost cutting opportunities, many companies being over capitalized (some with sizeable cash balances), activist investing putting deals into play, and the fact that acquiring companies shares have been advancing immediately of late. Market correlations continue to fall, which suggests that the value of stock picking will continue to increase in importance. The more concerned about the market one is, the more we think quality companies—those with high returns on equity, low debt, and stable earnings—make sense.

22  | The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS RYSEX RSEFX RSEIX RSQCX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	10-YR	15-YR	SINCE INCEPTION (5/1/98)
RSE	0.93	1.09	14.69	12.55	8.22	12.19	9.77
Annual Operating Expenses: 1.13%
* Not Annualized

Relative Returns: Monthly Rolling Average Annual Return Periods
15 Years Through 12/31/14

On a monthly rolling basis, the Fund outperformed the Russell 2000 in 80% of all 10-year periods; 72% of all 5-year periods; 48% of all 3-year periods; and 50% of all 1-year periods.

	PERIODS BEATING THE INDEX		FUND AVG (%)*	INDEX AVG (%)*
10-year	49/61	80%	10.1	7.3
5-year	87/121	72%	10.3	7.6
3-year	70/145	48%	11.4	8.2
1-year	84/169	50%	13.2	9.6

*Average of monthly rolling average annual total returns over the specified periods.

Morningstar Style Map^TM  As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM  with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 120 for additional information.

Value of $10,000
Invested on 5/1/98 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
UniFirst Corporation	6.5
Bed Bath & Beyond	6.4
AVX Corporation	4.8
Meredith Corporation	4.5
Children’s Place	4.3
Finish Line (The) Cl. A	4.0
Minerals Technologies	3.9
Scholastic Corporation	3.4
Schweitzer-Mauduit International	3.4
ScanSource	3.3

Portfolio Sector Breakdown
% of Net Assets
Consumer Discretionary	32.8
Industrials	23.2
Information Technology	16.4
Materials	11.6
Consumer Staples	6.6
Health Care	2.5
Energy	1.2
Financials	0.3
Cash and Cash Equivalents	5.4

Calendar Year Total Returns (%)
YEAR	RSE
2014	1.1
2013	29.4
2012	15.4
2011	0.1
2010	19.6
2009	28.4
2008	-19.6
2007	4.7
2006	14.0
2005	-1.0
2004	13.9
2003	27.6
2002	15.3
2001	30.7
2000	16.3

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
10-Year	79	65
From 6/30/98 (Start of Fund's
First Full Quarter)	74	48

Portfolio Diagnostics
Fund Net Assets	$2,888 million
Number of Holdings	40
Turnover Rate	21%
Average Market Capitalization1	$1,934 million
Weighted Average P/E Ratio2,3	18.5x
Weighted Average P/B Ratio2	2.1x
Holdings ≥ 75% of Total Investments	20
Active Share 4	98%
U.S. Investments (% of Net Assets)	94.6%
Non-U.S. Investments (% of Net Assets)	0.0%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (3% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Investment Class (its oldest class). Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the Fund’s most current prospectus and include management fees and other expenses. Shares of RSE’s Service and Consultant Classes bear an annual distribution expense that is not borne by the Investment Class. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders |  23

	MANAGER’S DISCUSSION
	Royce Value Fund

Jay Kaplan, CFA

FUND PERFORMANCE
Royce Value Fund (“RVV”) finished 2014 with a slight loss of 0.02%, well behind its small-cap benchmark, the Russell 2000 Index, which advanced 4.9% for the same period. Making things more frustrating was that RVV was slightly ahead of the small-cap index in the first half, up 3.4% versus 3.2%. This capped a smooth start to 2014 that followed the red-hot pace of returns in 2013. Yet this did not last, at least not for small-caps. Shortly after establishing a high on July 3, returns for the Russell 2000 began to slip. This made for a dismal third quarter in which the Fund fell 5.6%, losing less than its benchmark, which declined 7.4%. At this stage, the Fund remained ahead of the small-cap index for the nine-month period ended September 30, 2014.

The Fund forfeited its relative advantage, then, in the otherwise pleasant fourth quarter. Small-caps remained volatile through the year’s final three months, but returns were generally positive. This was more true in some cases, however, than in others. The Russell 2000 managed a gain in each of the year’s last three months while Halloween marked the final month with a positive return for RVV. For the fourth quarter, the Fund rose 2.4% versus 9.7% for the Russell 2000. Longer-term returns offered something better on a relative (as well as absolute) basis. RVV outpaced the small-cap index for the 10-year and since inception (6/14/01) periods ended December 31, 2014. The Fund’s average annual total return since inception was 10.8%.

WHAT WORKED... AND WHAT DIDN’T
Three of RVV’s equity sector finished the year in the red—Energy, Consumer Staples, and Materials. After finishing the first half as the Fund’s best-performing sector, energy stocks were crushed by the precipitous collapse in oil prices. Atwood Oceanics is an offshore drilling contractor that specializes in deep-water drilling, an area that earlier in the year was suffering from an oversupply problem that hurt pricing for both rigs and drill ships. Atwood’s rigs that are currently under customer contracts make its prospects for 2015 look fairly solid, but 2016’s outlook is murky. The decline in commodity prices also led the company to push out delivery dates for two large new drill ships for which it does not yet have contracts. We think it can benefit from a recovery in oil prices, but the timing on that is obviously impossible to predict. While keeping in mind the daunting short-and intermediate-term prospects for the industry, we were also constructive about the long-term prospects for Unit Corporation, which operates primarily as a contract drilling company that is also involved in exploration and production and engages in midstream activities. These related segments make it an outlier in an otherwise rigidly specialized industry, though we like its unique business model as well as its long history of strong operating results. Outside of Energy, Nu Skin Enterprises settled some issues with the Chinese government by paying fines and improving training, restructuring its debt covenants, and reversing a cash flow problem. This was all good news, but we think the firm also needs improved sales in China to spur a comeback.

The sectors that contributed most to 2014 results were Information Technology (by a sizable margin), Financials, Health Care, Industrials, and Consumer Discretionary. Net gains in the first of these groups were particularly strong in the semiconductors & semiconductor equipment group and communications equipment industry, where Brocade Communications Systems, which provides switching solutions for storage area networks (SAN), was the standout. Knight Transportation, from the Industrials sector, is a short-to medium-haul truckload carrier of general commodities that we regard as a very well-run business. Consolidation and labor tightening in its industry aided the stronger players, and Knight’s stock price accelerated.

The Fund’s top-performing position was Chemed Corporation, which operates two very different businesses—hospice care provider Vitas and plumbing and drain cleaning service company Roto-Rooter—and is slotted in Health Care. Its shares appeared to benefit most from a “no news is good news” scenario regarding Vitas. In 2013 this business became the target of a Justice Department investigation into Medicare enrollment and billing rates. Vitas offers more critical care than is typical in the hospice industry, which might have helped to trigger an inquiry. However, margins for critical care are not much higher than for other elements of hospice care, and the firm is one of the few able to deliver it on a nationwide basis. The absence of news around the investigation seemed to reassure investors who flocked to the stock. We like the consistency and brand value of Roto-Rooter and Vitas’s status as one of the few hospice providers with coast-to-coast reach.

Top Contributors to Performance For 2014 (%)1
Chemed Corporation	0.90
Knight Transportation	0.73
Brocade Communications Systems	0.66
DSW Cl. A	0.60
G-III Apparel Group	0.56
1  Includes dividends

Top Detractors from Performance For 2014 (%)2
Nu Skin Enterprises Cl. A	-1.96
Atwood Oceanics	-1.45
Ascena Retail Group	-1.35
Unit Corporation	-0.88
GameStop Corporation Cl. A	-0.74
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
At the end of 2014, RVV remained heavily overweight in the Consumer Discretionary and Information Technology sectors, which reflected our confidence for strong growth potential in these areas. Biotech was an area that we again avoided. These companies, which have been among small-cap’s best performers over the last couple of years, also tend to have no earnings. We expect interest rates to remain low and for the economy to keep growing. In our view stocks should benefit from earnings growth, and we have carefully positioned the portfolio for this kind of environment.

24  |   The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS RYVFX RVVHX RVFIX RVFCX RVVRX RVFKX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	10-YR	SINCE INCEPTION (6/14/01)
RVV	-3.32	-0.02	11.85	10.12	8.15	10.84
Annual Operating Expenses: 1.48%
*Not Annualized

Relative Returns: Monthly Rolling Average Annual Return Periods
Since Inception Through 12/31/14

On a monthly rolling basis, the Fund outperformed the Russell 2000 in 100% of all 10-year periods; 74% of all 5-year periods; 70% of all 3-year periods; and 63% of all 1-year periods.

	PERIODS BEATING THE INDEX		FUND AVG (%)*	INDEX AVG (%)*
10-year	43/43	100%	11.2	8.3
5-year	76/103	74%	10.7	7.6
3-year	89/127	70%	12.1	9.3
1-year	95/151	63%	13.6	11.0

*Average of monthly rolling average annual total returns over the specified periods.

Morningstar Style Map^TM    As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 120 for additional information.

Value of $10,000
Invested On 6/14/01 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Buckle (The)	3.2
Reinsurance Group of America	3.0
Vishay Intertechnology	3.0
Brocade Communications Systems	3.0
NETGEAR	3.0
Genesco	2.9
Genworth MI Canada	2.8
Innospec	2.7
Nu Skin Enterprises Cl. A	2.7
Steven Madden	2.7

Portfolio Sector Breakdown
% of Net Assets
Consumer Discretionary	28.2
Information Technology	26.1
Financials	12.0
Materials	9.1
Energy	8.6
Industrials	8.1
Consumer Staples	2.8
Health Care	1.9
Miscellaneous	1.8
Cash and Cash Equivalents	1.4

Calendar Year Total Returns (%)
YEAR	RVV
2014	-0.0
2013	27.8
2012	9.6
2011	-7.4
2010	25.0
2009	44.7
2008	-34.2
2007	3.8
2006	16.8
2005	17.2
2004	30.9
2003	54.3
2002	-23.5

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
10-Year	103	101
From 6/30/01 (Start of Fund's First Full Quarter)	109	96

Portfolio Diagnostics
Fund Net Assets	$882 million
Number of Holdings	65
Turnover Rate	38%
Average Market Capitalization1	$2,154 million
Weighted Average P/E Ratio2,3	13.8x
Weighted Average P/B Ratio2	1.7x
Holdings ≥ 75% of Total Investments	31
Active Share4	97%
U.S. Investments (% of Net Assets)	89.0%
Non-U.S. Investments (% of Net Assets)	9.6%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (3% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Service Class (its oldest class). Operating expenses reflect the Fund’s total annual operating expenses for the Service Class as of the Fund’s most current prospectus and include management fees, 12b-1 distribution and service fees, and other expenses. Shares of RVV’s Consultant and R Classes bear an annual distribution expense that is higher than that of the Service Class. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders  |  25

	MANAGER’S DISCUSSION
	Royce Value Plus Fund

Chip Skinner, CFA

FUND PERFORMANCE
Royce Value Plus Fund (“RVP”) gained 3.9% in 2014, trailing its small-cap benchmark, the Russell 2000 Index, which gained 4.9% for the same period. RVP finished the first half of 2014 with an advantage over the small-cap benchmark, up 4.1% versus 3.2%. Holding this gain through the third quarter, when small-cap stock prices began to slip rapidly following a high for the Russell 2000 on July 3, RVP was down 6.5% while the small-cap index declined 7.4%. When small-caps rallied through much of the fourth quarter, however, the Fund could not match the benchmark’s pace. RVP increased 6.8% in the final quarter of 2014, a fine result on an absolute basis, but still behind the 9.7% advance for the Russell 2000. This had its effect on certain intermediate-and long-term results, many of which fell short of what we would like on a relative basis even as they were strong on an absolute basis. The Fund outperformed the Russell 2000 for the since inception (6/14/01) period ended December 31, 2014. RVP’s average annual total return since inception was 12.2%.

WHAT WORKED... AND WHAT DIDN’T
Health Care had a robustly positive effect on calendar-year results, leading all of the Fund’s sectors by a large margin. Two of these holdings were takeover targets in 2014. Furiex Pharmaceuticals first saw strong results in phase III clinical trials for an IBS treatment before being acquired at a healthy premium. The announcement in April prompted us to sell our shares. In February the stock price of InterMune soared on news of positive phase III trial results for a drug that treats IPF (idiopathic pulmonary fibrosis), a chronic and ultimately fatal condition that leads to a decline in lung function. It shot up again in August on news that Roche was buying therm. Elsewhere in the sector, Myriad Genetics was a top contributor after detracting from 2013 results. The company faced several headwinds that year: reimbursement change concerns from payers, a Supreme Court decision in June that held that human genes cannot be patented, and new competition in the breast cancer gene testing market. This led its stock to fall, though the company retained some of its patents on certain genetic testing processes. Its shares then came back strong in the first half. The reimbursement issues were resolved at a rate that was more favorable than many investors were expecting, and the firm has demonstrated an impressive rate of growth. Additionally, competition, especially in the breast cancer genetic screening area, has not materialized to the degree many were anticipating. For example, it has retained about 90% of its market share in breast cancer genetic screening. It was the Fund’s third-largest holding at year end.

We also had success with holdings involved in big data and machine-to-machine (M2M) technology, sometimes known as “the Internet of Things.” The latter typically involves using technology on one piece of equipment that captures and relays information through a wireless or wired network. This information then goes to a computer, which translates it into meaningful data that makes machines work better. Sierra Wireless, a wireless data communications equipment company with a global business providing M2M communications and mobile components, was one beneficiary of solid fundamentals and burgeoning investor interest in this important area. It was RVP’s fourteenth-largest holding at the end of 2014.

Net losses at the sector level were relatively modest. Energy led the detractors followed by Materials, Consumer Staples, and Financials. After increasing our exposure to Energy in the first half, we began to trim as share prices were climbing, a fortuitous shift in light of the rapid decline in oil prices. With Energy, our preference is for service businesses rather than E&P (exploration & production) companies. Triangle Petroleum is involved in several facets of energy, including fracking and well services as well as production. Its shares plummeted with the second-half plunge in commodity prices. As with the Fund’s other holdings in the sector, we like its longer-term potential to recover in an improved business climate for the industry.

E2open initially looked to us like a broken SaaS business (“software as a service,” a software licensing and delivery model in which software is licensed on a subscription basis) that had terrific rebound potential. Three lost customers later, we concluded that its growth potential looked likely to remain untapped for longer than we were willing to wait and sold our shares despite some positive product feedback. SciQuest provides procurement and spending management software on a subscription basis primarily to universities, hospitals, and local and state governments. Its planned expansion into more commercial sectors did not materialize along the lines we had been anticipating. The firm also exhibited an earnings pattern that had grown too consistently inconsistent and was made worse by some recent misses. All of this led us to take our losses and move on, selling the last of our shares in October.

Top Contributors to Performance For 2014 (%)1
InterMune	1.65
Furiex Pharmaceuticals	1.44
Sierra Wireless	1.33
Myriad Genetics	0.95
U.S. Silica Holdings	0.93
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
E2open	-1.31
SciQuest	-0.90
Triangle Petroleum	-0.62
Worthington Industries	-0.53
Medicines Company (The)	-0.47
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
We sought to bring sector weightings more into balance with one another during 2014, reducing some (such as Energy) and adding to others, such as Health Care. Looking forward, the latter sector and Consumer Discretionary are areas of particular interest. While we slightly reduced our overall exposure to Information Technology, the big data and Internet of Things themes remain focal points.

26  |   The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS RYVPX RVPHX RVPCX RVPIX RVPRX RVPKX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	10-YR	SINCE INCEPTION (6/14/01)
RVP	-0.18	3.89	16.64	11.32	7.11	12.18
Annual Operating Expenses: 1.49%
*Not Annualized

Relative Returns: Monthly Rolling Average Annual Return Periods
Since Inception Through 12/31/14

On a monthly rolling basis, the Fund outperformed the Russell 2000 in 79% of all 10-year periods; 52% of all 5-year periods; 52% of all 3-year periods; and 56% of all 1-year periods.

	PERIODS BEATING THE INDEX		FUND AVG (%)*	INDEX AVG (%)*
10-year	34/43	79%	10.5	8.3
5-year	54/103	52%	9.8	7.6
3-year	66/127	52%	12.1	9.3
1-year	85/151	56%	15.0	11.0

*Average of monthly rolling average annual total returns over the specified periods.

Morningstar Style Map^TM    As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 120 for additional information.

Value of $10,000
Invested On 6/14/01 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Rogers Corporation	2.8
IPG Photonics	2.6
Myriad Genetics	2.4
Zumiez	2.4
Paylocity Holding Corporation	2.4
Carter’s	2.1
Mobile Mini	1.9
Actelion	1.8
Mercury Systems	1.8
UCB	1.8

Portfolio Sector Breakdown
% of Net Assets
Information Technology	22.9
Consumer Discretionary	17.5
Industrials	15.3
Health Care	15.2
Financials	9.8
Materials	4.7
Energy	4.0
Consumer Staples	3.6
Telecommunication Services	1.0
Miscellaneous	4.1
Cash and Cash Equivalents	1.9

Calendar Year Total Returns (%)
YEAR	RVP
2014	3.9
2013	32.5
2012	15.2
2011	-10.0
2010	19.7
2009	41.4
2008	-41.1
2007	3.2
2006	19.3
2005	13.2
2004	28.2
2003	79.9
2002	-14.7

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
10-Year	101	107
From 6/30/01 (Start of Fund’s First Full Quarter)	116	99

Portfolio Diagnostics
Fund Net Assets	$926 million
Number of Holdings	92
Turnover Rate	52%
Average Market Capitalization1	$1,724 million
Weighted Average P/E Ratio2,3	22.9x
Weighted Average P/B Ratio2	2.9x
Holdings ≥ 75% of Total Investments	50
Active Share4	96%
U.S. Investments (% of Net Assets)	81.7%
Non-U.S. Investments (% of Net Assets)	16.4%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio's center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio's share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (23% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Service Class (its oldest class). Operating expenses reflect the Fund’s total annual operating expenses for the Service Class as of the Fund’s most current prospectus and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses reflect the estimated amount of fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Shares of RVP’s Consultant and R Classes bear an annual distribution expense that is higher than that of the Service Class. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders  |  27

	MANAGER’S DISCUSSION
	Royce 100 Fund

Lauren Romeo, CFA
Chuck Royce

FUND PERFORMANCE
Royce 100 Fund (“ROH”) was down 3.3% in 2014, underperforming its small-cap benchmark, the Russell 2000 Index, which gained 4.9% for the same period. A difficult year, 2014 began in far more promising fashion, as the year’s first six months were both placid and bullish, albeit in a low key way. The Fund was up 2.8% for the six-month period ended through June 30, 2014 compared to 3.2% for the small-cap index.

The third quarter, however, saw increased volatility within small-cap and mostly staggering share prices. ROH lost a surprising 9.0% in the quarter while the Russell 2000 fell 7.4%. This was particularly discouraging because we expect our risk-conscious approach to weather such periods better than the index, as has usually been the case throughout the Fund’s more-than-10-year history. Compounding its difficulties, the Fund then failed to participate fully in the rally that enlivened much of the fourth quarter, climbing 3.4% versus 9.7% for the Russell 2000. For most of the year, then, the market did not reward the sort of high-quality companies that we seek for the portfolio. Many of the highest returns went instead to faster-growing, often unprofitable businesses. We were more encouraged by the Fund’s longer-term relative and absolute results. ROH outpaced the small-cap index for the 10-year and since inception (6/30/03) periods ended December 31, 2014. The Fund’s average annual total return since inception was 10.6%.

WHAT WORKED... AND WHAT DIDN’T
ROH’s eight equity sectors were split between four that showed net gains and four that sustained net losses. The largest negative impact came from the Industrials sector, home of 10 of the portfolio’s 20 largest detractors in 2014. The stock price of KBR fell throughout the year. During the first half, the company struggled with the cancellation of some engineering and construction projects and losses on a few others while also contending with pushed-out start dates for certain LNG (liquefied natural gas) ventures. Later in the year, the firm’s CEO unveiled a restructuring plan. While the plan showed promise, we chose to sell our shares in ROH’s portfolio and move on. We also chose to exit GrafTech International, which manufactures graphite and carbon material mostly for use in the steel industry. A series of earnings misses, mainly the result of graphite electrode order push outs and weakening international business, helped its shares to decline by more than 50% in the third quarter, eroding our confidence.

The second-half collapse of oil prices caused an unfortunate reversal for many of our Energy holdings. The sector was ROH’s best performing group through the end of June only to finish the year with the portfolio’s second-largest net loss on a sector basis. Our Energy holdings were in the equipment & services industry (as opposed to those exclusively engaged in exploration and production), but these companies were not spared. Unit Corporation, the Fund’s eleventh-largest position at the end of the year, is a long-time holding involved in several energy businesses, including oil and natural gas exploration, oil and gas property acquisition, contract drilling services, and natural gas processing. Its ability to do each of these jobs well makes it something of an anomaly in an otherwise rigidly specialized industry. We built our position in the fourth quarter. The core business of Canadian oilfield service company Trican Well Service took us in the opposite direction. Differentiation has become increasingly difficult to establish in the field of hydraulic fracturing. This development, combined with the capital intensity of fracking fleets, leads both existing and potential customers to price aggressively in downturns in order to maintain fleet utilization, prompting us to sell our shares in ROH in December.

Information Technology led those sectors posting net gains in 2014. Sapient Corporation is a marketing and consulting services firm whose acquisition by French advertising giant Publicis Groupe for a more than 40% premium was announced in November. Our take was that the move proved Sapient’s value and highlighted the increasing importance (and share gains) of digital marketing for more traditional advertising businesses. Marcus & Millichap is a national commercial real estate and financing brokerage firm. A market leader in the private segment of the investment sales market, it has double the market share of its nearest competitor but in our estimation has ample room to grow. Increased commercial real estate activity supplemented by the company’s national network and database of private real estate investors was a key driver of 2014 results.

Top Contributors to Performance For 2014 (%)1
Sapient Corporation	0.58
Marcus & Millichap	0.53
ePlus	0.48
Core-Mark Holding Company	0.45
Liberty Tax	0.43
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
Trican Well Service	-0.78
Unit Corporation	-0.74
KBR	-0.71
GrafTech International	-0.65
Destination Maternity	-0.53
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
Effective November 10, 2014, Lauren Romeo became the Fund’s lead portfolio manager. Chuck Royce manages the Fund with her. Ms. Romeo previously served as co-manager (2013-2014), portfolio manager (2010-2013), and assistant portfolio manager (2006-2010). Mr. Royce has managed the Fund since its inception. We are anticipating accelerated economic growth, with many holdings poised for margin expansion when revenue growth improves. While the near-term outlook for energy-related stocks is grim, we have confidence in the long-term prospects for our holdings in or close to that industry. We believe rising capital spending and signs of an upturn in non-residential construction should help many holdings in Industrials, ROH’s largest sector weighting at year end. We also believe that favorable secular spending trends in semiconductor capital equipment, factory automation, and telecom infrastructure should bode well for many tech-related positions.

28  |   The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS RYOHX ROHHX ROHRX ROHKX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	10-YR	SINCE INCEPTION (6/30/03)
ROH	-5.88	-3.26	12.18	10.49	8.48	10.58
Annual Operating Expenses: 1.51%
*Not Annualized

Relative Returns: Monthly Rolling Average Annual Return Periods
Since Inception Through 12/31/14

On a monthly rolling basis, the Fund outperformed the Russell 2000 in 100% of all 10-year periods; 77% of all 5-year periods; 67% of all 3-year periods; and 50% of all 1-year periods.

	PERIODS BEATING THE INDEX		FUND AVG (%)*	INDEX AVG (%)*
10-year	19/19	100%	10.5	8.8
5-year	61/79	77%	8.3	5.8
3-year	69/103	67%	9.5	7.8
1-year	63/127	50%	12.2	10.9

*Average of monthly rolling average annual total returns over the specified periods.

Morningstar Style Map^TM    As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 120 for additional information.

Value of $10,000
Invested On 6/30/03 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Buckle (The)	2.3
ManpowerGroup	2.1
ePlus	2.0
Reliance Steel & Aluminum	1.8
MKS Instruments	1.8
CIRCOR International	1.7
Valmont Industries	1.7
Pason Systems	1.7
Applied Industrial Technologies	1.6
Bio-Techne	1.6

Portfolio Sector Breakdown
% of Net Assets
Industrials	24.8
Information Technology	23.2
Consumer Discretionary	10.9
Financials	8.4
Energy	8.3
Materials	8.2
Health Care	5.7
Consumer Staples	1.1
Miscellaneous	4.6
Cash and Cash Equivalents	4.8

Calendar Year Total Returns (%)
YEAR	ROH
2014	-3.3
2013	30.9
2012	11.5
2011	-6.5
2010	24.8
2009	38.0
2008	-29.2
2007	7.3
2006	13.7
2005	14.9
2004	27.2

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
10-Year	101	96
From 6/30/03 (Start of Fund’s First Full Quarter)	98	96

Portfolio Diagnostics
Fund Net Assets	$221 million
Number of Holdings	94
Turnover Rate	39%
Average Market Capitalization1	$1,707 million
Weighted Average P/E Ratio2,3	19.7x
Weighted Average P/B Ratio2	2.3x
Holdings ≥ 75% of Total Investments	56
Active Share4	96%
U.S. Investments (% of Net Assets)	88.2%
Non-U.S. Investments (% of Net Assets)	7.0%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (4% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Service Class (its oldest class). Operating expenses reflect the Fund’s gross total annual operating expenses for the Service Class as of the Fund’s most current prospectus, and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Shares of ROH’s R Class bear an annual distribution expense that is higher than that of the Service Class. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders  |  29

	MANAGER’S DISCUSSION
	Royce Dividend Value Fund

Chuck Royce
Jay Kaplan, CFA

FUND PERFORMANCE
It was not a successful year for our strategy of investing in conservatively capitalized, dividend paying micro-cap, small-cap, and mid-cap companies. Royce Dividend Value Fund (“RDV”) finished 2014 with a loss of 2.1%, significantly behind its small-cap benchmark, the Russell 2000 Index, which rose 4.9% for the same period. This was especially dispiriting in the context of a strong start to the year, a period of lower but positive returns for most equities following the sky-high returns of 2013. RDV finished the first half of the year just ahead of the small-cap benchmark, up 3.3% versus 3.2% for the Russell 2000.

After eight consecutive positive quarters, the Russell 2000nished the third quarter in the red. The Fund followed suit, and both fell 7.4% for the quarter. This was something of a disappointment in that RDV has historically lost less than the small-cap index during most down phases, including short-term spans. Unfortunately, the Fund also could not match the fast pace established by the Russell 2000 for most of the year’s final quarter. The small-cap index finished the year with an impressive fourth-quarter gain of 9.7% while RDV mustered an advance of 2.3%. Three months, then, sealed a sizable annual advantage for the benchmark. We were more pleased with longer-term results. The Fund beat the Russell 2000 for the 10-year and since inception (5/3/04) periods ended December 31, 2014. RDV’s average annual total return since inception was 9.2%.

WHAT WORKED... AND WHAT DIDN’T
Of the four equity sectors that posted net losses in the portfolio for 2014, Energy led by a considerable margin, an unsurprising fact in light of the extraordinary decline in oil prices during the second half of the year. Taking our usual contrarian view, we are prepared to live with the negative short-term picture by holding most of our companies in the industry. We believe their long-term prospects will be effectively strengthened in an improved market for energy prices. Having higher operating costs often hurts offshore drillers earlier and harder when crude prices slip, which affected the performance of two companies in the portfolio. Based in Switzerland, Transocean is the world’s largest offshore driller. Its shares fell by nearly 60% in 2014 based on both the collapse of oil prices and an oversupplied ultra-deep water drilling market. Louisiana-based Tidewater provides marine service vessels to offshore energy companies. Its low-debt balance sheet and strong market position gave us confidence going forward.

We thought that Nu Skin Enterprises managed its way well through a highly challenging year. It settled issues with the Chinese government by paying fines and improving training, restructured its debt, and positively reversed its cash flows. These positive developments notwithstanding, a rebound in the Chinese market probably needs to happen before its stock can really come back. We demonstrated our confidence in this eventually occurring by adding shares through most of 2014. The ongoing struggles of tween girl retailer Justice and plus-size women’s retailer Lane Bryant were major factors in depressing the shares of multiline fashion business Ascena Retail Group. We trimmed our stake in 2014. The ongoing strength of the U.S. dollar combined with the Fund’s sizable exposure to non-U.S. companies (more than 24% of net assets at the end of 2014) also created a drag on results, hurting the value of holdings headquartered abroad.

Six equity sectors finished the year in the black, with the largest contribution coming from Financials. Three of RDV’s top four industry groups came from that sector—capital markets stocks, insurance companies, and real estate investment trusts (REITs). The last group, one of the strongest for small-caps in 2014, is not an area of primary investment focus, for us as we were significantly underweight REITs versus the Russell 2000. The Fund’s top performing stock was Cintas Corporation, which provides corporate identity uniforms and related business services. Stronger-than-expected earnings in its first and second fiscal quarters boosted its shares in the second half, when we took gains. Low debt and a solid dividend drew us to C.H. Robinson Worldwide, a third-party logistics company that provides freight transportation services and logistics solutions. Rising earnings drove interest in its stock and led us to reduce our position in November.

Chemed Corporation runs hospice care provider Vitas and plumbing and drain cleaning service company Roto-Rooter. Its shares seemed to climb mostly as a result of a “no news is good news” scenario concerning Vitas. In 2013 the Justice Department began looking into its Medicare enrollment and billing rates. Offering more critical care than is typical in the hospice industry may have been a factor. However, margins for critical care are not much higher than for other elements of hospice care, and Vitas is one of the few delivering it on a nationwide basis. The absence of any additional developments in the investigation appeared to reassure investors. We reduced our position as its stock price rose.

Top Contributors to Performance For 2014 (%)1
Cintas Corporation	0.33
C. H. Robinson Worldwide	0.25
Chemed Corporation	0.24
Coronation Fund Managers	0.23
Hormel Foods	0.21
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
Transocean	-0.98
Nu Skin Enterprises Cl. A	-0.51
Ascena Retail Group	-0.39
Tidewater	-0.34
Reliance Steel & Aluminum	-0.29
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
We continue to focus on what we regard as well-run dividend-paying businesses. We have positioned the portfolio for improved performance from cyclical sectors in 2015, basing this decision on our confidence in both the ongoing expansion of the U.S. economy and an earnings-led rally for small-cap stocks.

30  |   The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS RYDVX RDVIX RDIIX RDVCX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	10-YR	SINCE INCEPTION (5/3/04)
RDV	-5.31	-2.14	14.38	13.19	8.47	9.17
Annual Operating Expenses: 1.52%
*Not Annualized

Relative Returns: Monthly Rolling Average Annual Return Periods

Since Inception Through 12/31/14

On a monthly rolling basis, the fund outperformed the Russell 2000 in 100% of all 10-year periods; 84% of all 5-year periods; 74% of all 3-year period; and 59% of all 1-year periods.

	PERIODS BEATING THE INDEX		FUND AVG (%)*	INDEX AVG (%)*
10-year	8/8	100%	9.6	8.5
5-year	57/68	84%	8.6	6.5
3-year	68/92	74%	8.6	7.0
1-year	68/116	59%	11.4	10.6

*Average of monthly rolling average annual total returns over the specified periods.

Morningstar Style Map^TM    As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 120 for additional information.

Value of $10,000

Invested on 5/3/04 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
FLIR Systems	1.6
Reliance Steel & Aluminum	1.6
Expeditors International of Washington	1.4
Willis Group Holdings	1.2
Buckle (The)	1.2
Vishay Intertechnology	1.2
Reinsurance Group of America	1.2
Genesco	1.1
SEI Investments	1.1
KKR & Co. L.P.	1.1

Portfolio Sector Breakdown
% of Net Assets
Financials	27.3
Industrials	19.2
Materials	14.2
Information Technology	12.8
Consumer Discretionary	10.5
Energy	3.8
Health Care	3.7
Consumer Staples	2.3
Telecommunication Services	1.0
Utilities	0.6
Miscellaneous	4.5
Cash and Cash Equivalents	0.1

Calendar Year Total Returns (%)
YEAR	RDV
2014	-2.1
2013	30.7
2012	16.9
2011	-4.5
2010	30.1
2009	37.7
2008	-31.5
2007	-0.0
2006	19.9
2005	7.3

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
10-Year	92	83
From 6/30/04 (Start of Fund’s
First Full Quarter)	91	80

Portfolio Diagnostics
Fund Net Assets	$513 million
Number of Holdings	267
Turnover Rate	22%
Average Market Capitalization1	$2,989 million
Weighted Average P/E Ratio2,3	17.5x
Weighted Average P/B Ratio2	2.2x
Holdings ≥ 75% of Total Investments	96
Active Share4	96%
U.S. Investments (% of Net Assets)	75.6%
Non-U.S. Investments (% of Net Assets)	24.3%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (6% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information
All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Service Class (its oldest class). Operating expenses reflect the Fund’s gross total annual operating expenses for the Service Class as of the Fund’s most current prospectus and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders | 31

		MANAGERS’ DISCUSSION
	Royce Global Value Fund

David Nadel
Steven McBoyle, CPA, CA
Dilip Badlani, CFA
Jim Harvey, CFA

FUND PERFORMANCE
Royce Global Value Fund (“RGV”) fell 5.8% in 2014, trailing its benchmark, the Russell Global Small Cap Index, which lost 0.3% for the same period. The Fund’s difficulties on both a relative and absolute basis were entirely the result of a poor second half. The year began on a solidly bullish note. For the six-month period ended June 30, 2014, RGV rose 11.0% versus a 5.7% gain for the global small-cap index. During the first half the Fund benefited from a strengthening Europe and ongoing bullishness in the U.S., both of which were compensation for generally less robust Asian markets during the first few months of 2014.

This positive picture began to shift in the third quarter. Stocks across the globe corrected (with the exception of U.S. large-caps), with European shares among the most adversely affected. The Fund lost 9.8% for the third quarter versus a loss of 6.7% for the Russell Global Small Cap. Portfolio holdings in the U.S., Canada, the United Kingdom, and Austria were the largest detractors from quarterly results. While we were not happy with the Fund’s results during the downdraft, we were pleased that at the end of the third quarter RGV remained ahead of its benchmark for the nine-month period ended September 30, 2014. Unfortunately, this advantage was lost in the fourth quarter, a period in which U.S. small-caps rallied off a mid-October low while many non-U.S. companies saw additional losses or treaded water. For the fourth quarter, the Fund was down 5.9% compared to a 1.1% increase for its global benchmark. As in the third quarter, holdings headquartered in Canada, the U.S., and the U.K. had the most significant negative impact. We were also not pleased with the Fund’s longer-term results, which were disappointing on both an absolute and relative basis.

WHAT WORKED... AND WHAT DIDN’T

Three of RGV’s eight equity sectors posted net gains in 2014, with Information Technology and Health Care making the largest net contribution. Myriad Genetics, the market share leader in molecular diagnostic testing for cancer, saw its shares decline materially in June 2013 when the U.S. Supreme Court held that human genes cannot be patented. We took advantage of this share price decline. The stock then returned to health in the first half of 2014, when it also acquired Crescendo Bioscience in a move that diversified Myriad’s already promising pipeline. In addition, MyRisk, its genetic panel test, showed promise. We reduced our position through much of the year as its valuation returned to more normalized levels. Indian specialty pipe and tube maker Maharashtra Seamless also did well after slumping in 2013 when the slow-growing Indian economy and ongoing pipe dumping depressed demand. India’s May elections gave a boost to the economy and markets. Oil pipeline replacements in certain areas are likely, as is nationwide pipe connectivity for natural gas, both of which would likely benefit Maharashtra. After taking gains earlier in the year, we sold the last of our shares in August as it rolled past our sell targets.

Five equity sectors were in the red at the end of 2014. Financials detracted most, losing considerably more than the Fund’s other detractors—Materials, Consumer Staples, Energy, and Industrials. Real estate management & development stocks made the largest negative impact in both Financials and the portfolio as a whole. Three of RGV’s five biggest detracting companies also came from that sector. Brazil’s number one real-estate brokerage, Brasil Brokers Participacoes remained mired in a weak housing market. Disappointment from autumn’s election results exacerbated poor consumer sentiment and did little to revive Brazil’s stagnant economy, which also hurt. We sold our position in November. London-based Ashmore Group is among the world’s leading emerging markets asset management companies. Its shares were challenged by concerns about the debt cycle and worrisome news from Russia and other emerging markets in 2014. Earnings have been hurt, though revenues have remained mostly consistent. We liked its long-term prospects enough for it to be a top-10 holding at the end of the period. We had a similar level of confidence in the eventual recovery of the Fund’s largest position at year end, retailer New World Department Store China. We like how the company is positioned for a pick-up in the Chinese economy as well as its management and very generous dividend policy. The strength of the U.S. dollar was also a factor in the performance of non-U.S. holdings.

Top Contributors to Performance For 2014 (%)1
Myriad Genetics	1.48
Maharashtra Seamless	1.03
Western Digital	0.68
Industrias Bachoco ADR	0.54
Kennedy-Wilson Holdings	0.46
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
Brasil Brokers Participacoes	-0.92
Ashmore Group	-0.84
New World Department Store China	-0.67
Nu Skin Enterprises Cl. A	-0.65
E-House (China) Holdings ADR	-0.59
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
Effective November 10, 2014, David Nadel became Lead Portfolio Manager of the Fund after having previously served as assistant portfolio manager (2013-2014) and co-manager (2009-2013). Steven G. McBoyle, James J. Harvey, and Dilip P. Badlani manage the Fund with him. Messrs. Nadel, Harvey, and Badlani are our most experienced international portfolio managers while Mr. McBoyle, who joined Royce in 2007, brings a disciplined business buyer’s, balance-sheet-centric approach to the portfolio, with particular attention to domestic holdings. At the end of 2014, RGV was overweight in cyclical sectors such as Consumer Discretionary and Industrials while it also had reasonable exposure to Financials and Information Technology. The former group was considerably underweight versus the benchmark. These weightings reflect our belief in the recovery of global economic growth.

32 |  The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS RIVFX RGVIX RGVHX RGVRX RGVKX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	SINCE INCEPTION ( 12/29/06 )
RGV	-15.13	-5.76	3.60	4.17	3.95
Annual Gross Operating Expenses: 1.84%	Annual Net Operating Expenses: 1.70%
*Not Annualized

Morningstar Style Map^TM   As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 120 for additional information.

Value of $10,000

Invested on 12/29/06 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
New World Department Store China	2.4
Mayr-Melnhof Karton	2.0
Television Broadcasts	2.0
Alten	1.9
Value Partners Group	1.8
Obara Group	1.7
Ashmore Group	1.6
Clarkson	1.6
Zuiko Corporation	1.5
Thor Industries	1.5

Portfolio Sector Breakdown
% of Net Assets
Consumer Discretionary	23.9
Industrials	22.3
Financials	14.3
Information Technology	12.4
Materials	7.9
Health Care	5.3
Energy	3.7
Consumer Staples	2.9
Cash and Cash Equivalents	7.3

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
From 12/31/06 (Start of Fund’s
First Full Quarter)	97	97

Calendar Year Total Returns (%)
YEAR	RGV
2014	-5.8
2013	6.3
2012	11.0
2011	-18.7
2010	35.7
2009	61.9
2008	-39.9
2007	14.3

Portfolio Country Breakdown1,2
% of Net Assets
United States	27.3
Japan	13.2
United Kingdom	8.3
Hong Kong	8.3
Austria	3.8
Canada	3.6
Brazil	3.5

1	Represents countries that are 3% or more of net assets.
2	Securities are categorized by the country of their headquarters.

Portfolio Diagnostics
Fund Net Assets	$96 million
Number of Holdings	126
Turnover Rate	54%
Average Market Capitalization1	$1,675 million
Weighted Average P/E Ratio2,3	15.3x
Weighted Average P/B Ratio2	2.1x
Holdings ≥ 75% of Total Investments	63
Active Share4	98%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (4% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information
All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Service Class (its oldest class). Price and total return information is based on net asset values calculated for shareholder transactions. Certain immaterial adjustments were made to the net assets of Royce Global Value Fund at 12/31/13 for financial reporting purposes, and as a result the net asset values for shareholder transactions on that date and the total returns based on those net asset values differ from the adjusted net asset values and total returns reported in the Financial Highlights. Gross operating expenses reflect gross total annual operating expenses for the Service Class and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. 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 expenses, (excluding brokerage commissions, taxes, interest litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.69% through April 30, 2015. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell Global Small Cap). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders | 33

		MANAGER’S DISCUSSION
	Royce International Smaller-Companies Fund

David Nadel

FUND PERFORMANCE
Non-U.S. small-cap indexes trailed their domestic peers once again in 2014, and Royce International Smaller-Companies Fund (“RIS”) was unable to resist the trend. The Fund was down 7.3% in 2014 while its benchmark, the Russell Global ex-U.S. Small Cap Index, lost 3.6% for the same period. Although the Fund also trailed its benchmark in the first half of 2014, its results were both nicely positive and strong on an absolute basis. For the year-to-date period ended June 30, 2014, RIS advanced 6.6% versus 7.5% for the non-U.S. small-cap index.

The Fund’s fortunes began to change when a downdraft hit small-caps across the globe. RIS fell 7.0% in the third quarter while the Russell Global ex-U.S. Small Cap declined 6.2%. All of the Fund’s nine equity sectors detracted from performance in the quarter, with Health Care, Industrials, and Materials registering the largest negative impact. At the country level, companies headquartered in France, the United Kingdom, and Japan were the biggest detractors in aggregate from third-quarter performance.

While U.S. small-caps rallied in the fourth quarter, elsewhere in the world smaller companies in general managed only to lose less than they had in the third quarter. RIS was down 6.4% in the final quarter of 2014 compared to a 4.5% loss for the benchmark. Holdings in the U.K. and Japan were once again significant detractors, as were positions headquartered in Malaysia and Brazil. We remain disappointed with the Fund’s intermediate and long-term relative results. RIS outperformed the Russell Global ex-U.S. Small Cap for the since inception (6/30/08) period ended December 31, 2014.

WHAT WORKED... AND WHAT DIDN’T

For the calendar year, all but one of the Fund’s eight equity sectors were in the red. Consumer Discretionary made the largest negative impact by a good-sized margin, with Energy and Materials also posting sizable net losses. Industrials was RIS’s only sector to post net gains, in part due to the strong showing for the machinery industry. At the country level, India was the top contributor to returns for the year (as was the case in the semiannual period, when in May pro-business Bharatiya Janata Party candidate Narenda Modi was elected Prime Minister by a landslide victory). In fact, four of the Fund’s top-five contributors to 2014 performance were Indian companies, two of them machinery stocks. AIA Engineering manufactures chromium grinding balls used by the mining and cement industries. In May the firm reported an increase in after-tax profit year-over-year for its fiscal fourth quarter, leading us to take more gains as its stock advanced. A strong balance sheet and rising profits initially drew us to rolling-bearings manufacturer FAG Bearings India. We sold our shares between May and August as its stock price began to reach our sell target. Shriram Transport Finance is India’s leading lender to the used truck market and another beneficiary of the country’s improved business conditions. We took gains as its shares rose. Magellan Aerospace is an Ontario-based company that serves the civil aerospace and defense markets. Its shares benefited from a strong aerospace and defense capital spending cycle as well as weakness in the Canadian dollar, which significantly increased its competitiveness versus U.S. suppliers. We trimmed our stake in December, though it was a top-15 holding at the end of 2014.

Globaltrans Investment GDR endured a difficult year, seeing further share price declines in the second half. The company is a leading private freight rail transportation group operating in Russia, the CIS (the Commonwealth of Independent States, including Ukraine), and the Baltics. Globaltrans lost about 70% of its value by year end, hurt by tensions in Ukraine and the weakening ruble. With more than 85% of freight transported by rail in Russia, we believe the company can improve its competitive position in the next couple of years. We like its corporate governance and constructive attitude towards capital allocation. EnQuest is a London-based oil and gas development and production company. A nearly 50% decline in oil prices in the second half keyed the company’s plummeting share price. Brasil Brokers Participacoes is one of Brazil’s two leading real estate brokerages. A weak real estate market and low consumer sentiment contributed to the company’s fading share price, which was also hampered by political uncertainty through the first nine months of the year. As we anticipated, the re-election of president Dilma Rousseff has not yet led to a more business-friendly environment in Brazil. We sold some shares in October and December. The strength of the U.S. dollar also played a role in the performance of non-U.S. holdings.

Top Contributors to Performance For 2014 (%)1
AIA Engineering	0.64
Shriram Transport Finance	0.60
FAG Bearings India	0.55
Thomas Cook (India)	0.53
Magellan Aerospace	0.46
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
Globaltrans Investment GDR	-0.98
EnQuest	-0.67
Brasil Brokers Participacoes	-0.62
New World Department Store China	-0.56
Société Internationale de Plantations d’Hévéas	-0.50
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
Though out of favor at the end of 2014, we continue to believe that the international small-cap market is home to many high-quality companies. We see the most potential for growth in developed nations such as Japan, the U.K., and France as well as in certain emerging markets such as India and Brazil. Our focus remains on some of the more economically sensitive areas of the market, such as Industrials and Consumer Discretionary, though RIS was also overweight in Health Care at year end. We have been populating the portfolio with companies that we believe can remain competitive in a highly challenging environment for non-U.S. small-cap stocks.

34 |  The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS RYGSX RISNX RISIX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	SINCE INCEPTION (6/30/08)
RIS	-13.02	-7.29	7.66	5.10	4.69
Annual Gross Operating Expenses: 2.08%	Annual Net Operating Expenses: 1.70%
*Not Annualized

Morningstar Style Map^TM As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 120 for additional information.

Value of $10,000

Invested on 6/30/08 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Semperit AG Holding	1.8
FamilyMart	1.7
Pico Far East Holdings	1.6
VZ Holding	1.5
Vetoquinol	1.5
CETIP - Mercados Organizados	1.5
Lundin Petroleum	1.5
Mayr-Melnhof Karton	1.5
Kennedy Wilson Europe Real Estate	1.5
E2V Technologies	1.5

Portfolio Sector Breakdown
% of Net Assets
Industrials	22.3
Consumer Discretionary	21.3
Financials	16.5
Health Care	13.0
Materials	8.6
Information Technology	7.9
Consumer Staples	4.6
Energy	4.2
Cash and Cash Equivalents	1.6

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
From 6/30/08 (Start of Fund’s
First Full Quarter)	96	89

Calendar Year Total Returns (%)
YEAR	RIS
2014	-7.3
2013	12.7
2012	19.4
2011	-18.7
2010	26.5
2009	50.3

Portfolio Country Breakdown1,2
% of Net Assets
Japan	17.5
United Kingdom	9.9
France	8.8
Hong Kong	8.7
India	8.5
Brazil	6.9
Switzerland	4.1
Germany	3.6
Austria	3.2

1	Represents countries that are 3% or more of net assets.
2	Securities are categorized by the country of their headquarters.

Portfolio Diagnostics
Fund Net Assets	$33 million
Number of Holdings	95
Turnover Rate	78%
Average Market Capitalization1	$946 million
Weighted Average P/E Ratio2,3	14.4x
Weighted Average P/B Ratio2	1.8x
Holdings ≥ 75% of Total Investments	59
Active Share4	99%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (3% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information
All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and 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. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by any applicable Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Net operating expenses reflect contractual fee waivers and/or expense 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 expenses, (excluding brokerage commissions, taxes, interest litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.69% through April 30, 2015 and at or below 1.99% through April 30, 2024. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell Global ex-U.S. Small Cap). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders | 35

		MANAGER’S DISCUSSION
	Royce Special Equity Multi-Cap Fund

Charlie Dreifus, CFA

FUND PERFORMANCE
While Royce Special Equity Multi-Cap Fund (“RSM”) did well on an absolute basis in 2014, its relative results were slightly disappointing. The Fund gained 9.3% for the calendar year, underperforming its benchmark, the Russell 1000 Index, which advanced 13.2% for the same period. A relatively slow, though still bullish, start to 2014 saw RSM lose some ground to its benchmark early in the year. In the first half, the Fund advanced 5.3% versus a 7.3% increase for the Russell 1000 when overall market leadership remained with lower-quality stocks. Large-cap performance was in general more consistent during these first six months and did not correct as small-caps did from early March through mid-May.

Compared to their smaller siblings, which corrected between July 3 and October 13, large-cap companies were even more stable in the third quarter. For that period, RSM posted a small loss, down 0.4%, while the Russell 1000 managed a slight gain, up 0.7%. Equities were more in line as the year approached its end. For large- and small-cap stocks alike, the fourth quarter was a more dynamic period, one in which both the Fund and its benchmark did well. RSM gained 4.2% in the last quarter of 2014 while the Russell 1000 climbed 4.9%. Keeping in mind our disciplined, scrutinous, and quality-centric approach, the Fund’s calendar-year results were not surprising. Through much of the year the market continued to favor companies without earnings or dividends and with low returns on equity and high betas. These types of businesses simply do not meet our exacting selection standards. Although the Fund underperformed its benchmark for the three-year period ended December 31, 2014 (+18.5% versus +20.6%), we remained pleased with RSM’s longer-term results. The Fund was even with the Russell 1000 for the since inception (12/31/10) period ended December 31, 2014. RSM’s average annual total return since inception was 15.5%.

WHAT WORKED... AND WHAT DIDN’T
Only two of the Fund’s equity sectors—Industrials and Energy—finished the year with net losses. Their negative impact was comparatively modest, however, especially compared to the outsized contribution that came from the Information Technology sector, which more than doubled the net gains from the Fund’s second-best-performing group, Consumer Discretionary. The Health Care sector also made a strong contribution to 2014’s returns, and Financials posted a small net gain. RSM’s top three performing industries came from Information Technology—software companies, semiconductors & semiconductor equipment stocks, and technology hardware storage & peripherals. We had success with multiline retail, the home of Nordstrom, which was the portfolio’s top performer and second-largest holding at the end of the year. The health care equipment & supplies and health care providers & services industries also made solid contributions. The latter was dominated by a terrific performance from diagnostic testing, information, and services company, Quest Diagnostics. Two technology businesses rounded out the list of top contributors, Microsoft Corporation and KLA-Tencor, which makes yield management and process monitoring systems for the semiconductor industry. Hurt by poor sales, office products retailer Staples was a large detractor through most of 2014, which influenced the decision to sell our shares during the third quarter.

Top Contributors to Performance For 2014 (%)1
Nordstrom	1.56
Microsoft Corporation	1.28
KLA-Tencor	1.20
Quest Diagnostics	1.15
Cisco Systems	1.13
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
Staples	-0.83
Fluor Corporation	-0.59
Helmerich & Payne	-0.51
Emerson Electric	-0.50
ManpowerGroup	-0.43
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
Effective on August 1, 2014, the Fund is a “non-diversified” fund within the meaning of the Investment Company Act of 1940. This means that it may invest a larger percentage of its assets in a single issuer or in a smaller number of issuers than a “diversified” fund. As of December 31, 2014, the Fund held 25 equity positions.

The combination of slower growth in healthcare costs on top of lower energy prices is striking—a decade ago, energy and healthcare costs were consuming nearly all of the gains in consumer discretionary income. We believe it is possible, even likely, that profit margins will expand rather than contract, as most expect. We still believe that more merger and acquisition activity is ahead and that our portfolio should receive its share and then some in light of both our methodology and the attractiveness of the issues. The forces behind more M&A activity include record-low interest rates, little other cost cutting opportunities, many companies being over capitalized (some with sizeable cash balances), activist investing putting deals into play, and the fact that acquiring companies shares have been advancing immediately of late.

Market correlation continues to fall, which suggests that the value of stock picking will continue to increase in importance. Inflows into equities (beyond what has been seen recently from individual investors) will likely be funded by the well above historical allocations in bond funds. This could accelerate if yields rise and bond prices fall. The more concerned about the market one is, the more we think quality companies—those with high returns on equity, low debt, and stable earnings—make sense.

36 |  The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS RSEMX RSMCX RMUIX RSMLX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	SINCE INCEPTION (12/31/10)
RSM	3.73	9.28	18.46	15.53
Annual Gross Operating Expenses: 1.46%	Annual Net Operating Expenses: 1.24%
*Not Annualized

Relative Returns: Monthly Rolling Average Annual Return Periods
Since Inception Through 12/31/14

On a monthly rolling basis, the Fund outperformed the Russell 1000 in 62% of all 3-year periods; and 49% of all 1-year periods.

	PERIODS BEATING THE INDEX		FUND AVG (%)*	INDEX AVG (%)*
3-year	8/13	62%	17.2	17.5
1-year	18/37	49%	17.2	17.4

*Average of monthly rolling average annual total returns over the specified periods.

Morningstar Style Map^TM As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 120 for additional information.

Value of $10,000

Invested on 12/31/10 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Bed Bath & Beyond	6.1
Nordstrom	5.5
Lear Corporation	5.2
Emerson Electric	5.1
Quest Diagnostics	4.8
Cisco Systems	4.7
Gap (The)	4.6
Franklin Resources	4.6
Microsoft Corporation	4.5
Helmerich & Payne	4.2

Portfolio Sector Breakdown
% of Net Assets
Consumer Discretionary	30.8
Industrials	19.6
Information Technology	19.6
Financials	8.6
Energy	8.0
Health Care	4.8
Cash and Cash Equivalents	8.6

Calendar Year Total Returns (%)
YEAR	RSM
2014	9.3
2013	36.3
2012	11.6
2011	7.2

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
From 12/31/10 (Start of Fund’s First Full Quarter)	95	82

Portfolio Diagnostics
Fund Net Assets	$304 million
Number of Holdings	25
Turnover Rate	39%
Average Market Capitalization1	$27,015 million
Weighted Average P/E Ratio2,3	16.3x
Weighted Average P/B Ratio2	3.1x
Holdings ≥ 75% of Total Investments	16
Active Share4	91%
U.S. Investments (% of Net Assets)	91.4%
Non-U.S. Investments (% of Net Assets)	0.0%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (0% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information
All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. All performance and risk information reflects results of the Service Class (its oldest class). Gross operating expenses reflect gross total annual operating expenses for the Service Class and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Net operating expenses reflect contractual fee waivers and/or reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the Service Classes’s net annual operating expenses, (excluding brokerage commissions, taxes, interest litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.24% through April 30, 2015. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell 1000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders | 37

Schedules of Investments

Royce Pennsylvania Mutual Fund
Common Stocks – 98.9%
	SHARES		VALUE
CONSUMER DISCRETIONARY – 15.3%
AUTO COMPONENTS - 2.0%
BorgWarner	7,000	$	384,650
Dorman Products 1	410,021		19,791,714
Drew Industries 1	690,183		35,247,646
Gentex Corporation	697,222		25,190,631
Standard Motor Products	113,343		4,320,635
STRATTEC SECURITY 2	263,950		21,796,991
Superior Industries International	488,000		9,657,520
			116,389,787
AUTOMOBILES - 1.1%
Thor Industries	812,450		45,391,582
Winnebago Industries	890,000		19,366,400
			64,757,982
DISTRIBUTORS - 1.1%
Core-Mark Holding Company	620,925		38,453,885
Pool Corporation	111,700		7,086,248
Weyco Group 2	590,500		17,520,135
			63,060,268
DIVERSIFIED CONSUMER SERVICES - 0.7%
American Public Education 1	85,500		3,152,385
†Chegg 1,3	200,000		1,382,000
Sotheby’s	705,500		30,463,490
Universal Technical Institute	753,700		7,416,408
			42,414,283
HOUSEHOLD DURABLES - 1.5%
Ethan Allen Interiors	1,131,088		35,029,795
Garmin	18,100		956,223
La-Z-Boy	482,600		12,952,984
Mohawk Industries 1	2,300		357,328
NVR 1	26,659		33,999,023
			83,295,353
INTERNET & CATALOG RETAIL - 0.1%
FTD Companies 1	237,760		8,278,803
LEISURE PRODUCTS - 0.3%
Arctic Cat	103,200		3,663,600
Nautilus 1	532,500		8,083,350
Smith & Wesson Holding Corporation 1,3	245,800		2,327,726
			14,074,676
MEDIA - 1.6%
DreamWorks Animation SKG Cl. A 1,3	311,654		6,959,234
E.W. Scripps Company Cl. A 1	190,100		4,248,735
Harte-Hanks	234,640		1,816,114
Morningstar	442,400		28,627,704
Rentrak Corporation 1	265,065		19,302,033
Saga Communications Cl. A	168,600		7,330,728
Scholastic Corporation	50,000		1,821,000
Wiley (John) & Sons Cl. A	375,593		22,250,129
			92,355,677
MULTILINE RETAIL - 0.2%
Dollar Tree 1	11,200		788,256
Tuesday Morning 1,3	402,633		8,737,136
			9,525,392
SPECIALTY RETAIL - 5.5%
Advance Auto Parts	3,600		573,408
American Eagle Outfitters	1,026,791		14,251,859
America’s Car-Mart 1,2	500,900		26,738,042
Ascena Retail Group 1	1,866,367		23,441,570
Buckle (The)	909,583		47,771,299
Cato Corporation (The) Cl. A	639,896		26,990,813
Destination Maternity	648,466		10,343,033
DSW Cl. A	509,200		18,993,160
Finish Line (The) Cl. A	191,000		4,643,210
GameStop Corporation Cl. A 3	659,400		22,287,720
Genesco 1	624,333		47,836,394
Monro Muffler Brake	342,900		19,819,620
Penske Automotive Group	194,600		9,549,022
Ross Stores	2,600		245,076
Shoe Carnival	821,381		21,101,278
Stein Mart	1,414,642		20,682,066
			315,267,570
TEXTILES, APPAREL & LUXURY GOODS - 1.2%
G-III Apparel Group 1	96,231		9,720,293
Gildan Activewear	8,800		497,640
Movado Group	599,236		17,000,325
Steven Madden 1	753,047		23,969,486
Vera Bradley 1	91,180		1,858,249
Wolverine World Wide	500,200		14,740,894
			67,786,887
Total (Cost $537,145,959)			877,206,678
CONSUMER STAPLES – 2.2%
FOOD & STAPLES RETAILING - 0.1%
Village Super Market Cl. A	181,297		4,962,099
FOOD PRODUCTS - 0.8%
Cal-Maine Foods	221,040		8,627,191
Farmer Bros. 1	53,177		1,566,063
Industrias Bachoco ADR 1	104,111		5,193,057
Sanderson Farms	331,800		27,879,495
Seneca Foods Cl. A 1	131,589		3,556,851
Seneca Foods Cl. B 1	7,197		231,743
SunOpta 1	96,319		1,141,380
			48,195,780
HOUSEHOLD PRODUCTS - 0.3%
Harbinger Group 1	1,009,600		14,295,936
PERSONAL PRODUCTS - 1.0%
Inter Parfums	547,000		15,015,150
Nu Skin Enterprises Cl. A	784,545		34,284,616
Nutraceutical International 1	312,500		6,737,500
			56,037,266
Total (Cost $95,785,410)			123,491,081
ENERGY – 5.7%
ENERGY EQUIPMENT & SERVICES - 5.5%
Atwood Oceanics 1	630,521		17,887,881
CARBO Ceramics	169,000		6,768,450
Ensign Energy Services	1,710,100		15,013,789
Era Group 1	721,840		15,266,916
Exterran Holdings	745,500		24,288,390
Helmerich & Payne	327,810		22,100,950
ION Geophysical 1	716,700		1,970,925
Matrix Service 1	511,275		11,411,658
Newpark Resources 1	98,900		943,506
Oceaneering International	2,300		135,263
Oil States International 1	579,584		28,341,657
Pason Systems	2,054,900		38,717,302
RPC	1,280,475		16,697,394
SEACOR Holdings 1	529,842		39,107,638

38 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Pennsylvania Mutual Fund (continued)
	SHARES		VALUE
ENERGY (continued)
ENERGY EQUIPMENT & SERVICES (continued)
TGS-NOPEC Geophysical	665,315	$	14,394,982
Tidewater	581,314		18,840,387
Total Energy Services	226,400		2,529,413
Trican Well Service	1,283,200		6,152,026
Unit Corporation 1	988,929		33,722,479
			314,291,006
OIL, GAS & CONSUMABLE FUELS - 0.2%
Cimarex Energy	61,200		6,487,200
Sprott Resource 1	2,688,200		4,349,988
World Fuel Services	12,300		577,239
WPX Energy 1	66,000		767,580
			12,182,007
Total (Cost $272,372,030)			326,473,013
FINANCIALS – 11.3%
BANKS - 0.5%
Ames National	14,900		386,506
Camden National	154,788		6,166,754
City Holding Company	229,470		10,677,239
First Citizens BancShares Cl. A	58,526		14,794,788
			32,025,287
CAPITAL MARKETS - 4.2%
AllianceBernstein Holding L.P.	1,258,960		32,518,937
Artisan Partners Asset Management Cl. A	97,450		4,924,148
ASA Gold and Precious Metals	98,100		991,791
Cowen Group 1	2,152,377		10,331,410
Diamond Hill Investment Group	161,817		22,337,219
Federated Investors Cl. B	1,247,282		41,072,996
Financial Engines	45,000		1,644,750
GFI Group	424,000		2,310,800
INTL FCStone 1	61,217		1,259,234
Lazard Cl. A	340,127		17,016,554
Manning & Napier Cl. A	677,292		9,360,175
†Medley Management Cl. A	177,300		2,606,310
Paris Orleans	178,346		3,837,672
Reinet Investments	238,550		5,108,718
Reinet Investments DR	1,300,000		2,835,280
SEI Investments	977,965		39,157,719
Sprott	4,275,100		8,978,519
Stifel Financial 1	52,600		2,683,652
Waddell & Reed Financial Cl. A	83,300		4,150,006
Westwood Holdings Group	405,035		25,039,264
WisdomTree Investments	180,000		2,821,500
			240,986,654
DIVERSIFIED FINANCIAL SERVICES - 1.1%
Bolsa Mexicana de Valores	7,740,000		14,017,643
PICO Holdings 1,2	1,319,011		24,863,357
Sofina	209,000		21,968,086
			60,849,086
INSURANCE - 3.5%
Alleghany Corporation 1	10,220		4,736,970
Allied World Assurance Company Holdings	258,358		9,796,935
Aspen Insurance Holdings	141,655		6,200,239
E-L Financial	59,500		34,978,912
Erie Indemnity Cl. A	164,300		14,913,511
Greenlight Capital Re Cl. A 1	1,156,104		37,746,796
MBIA 1	2,265,177		21,609,789
PartnerRe	150,581		17,185,809
ProAssurance Corporation	70,400		3,178,560
Reinsurance Group of America	299,521		26,244,030
RLI Corp.	380,681		18,805,641
Validus Holdings	92,460		3,842,638
			199,239,830
INVESTMENT COMPANIES - 0.4%
British Empire Securities and General Trust	183,727		1,467,023
RIT Capital Partners	1,042,300		22,693,274
			24,160,297
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.8%
AV Homes 1	45,500		662,935
Jones Lang LaSalle	114,300		17,136,999
Kennedy-Wilson Holdings	309,100		7,820,230
St. Joe Company (The) 1,3	105,000		1,930,950
Tejon Ranch 1	575,046		16,940,855
			44,491,969
THRIFTS & MORTGAGE FINANCE - 0.8%
Genworth MI Canada	934,377		29,741,145
TrustCo Bank Corp. NY	2,175,051		15,790,870
			45,532,015
Total (Cost $515,005,451)			647,285,138
HEALTH CARE – 5.1%
BIOTECHNOLOGY - 0.3%
ARIAD Pharmaceuticals 1,3	121,250		832,987
Lexicon Pharmaceuticals 1,3	1,522,400		1,385,232
Myriad Genetics 1	419,100		14,274,546
			16,492,765
HEALTH CARE EQUIPMENT & SUPPLIES - 1.6%
Analogic Corporation	251,100		21,245,571
Atrion Corporation	5,603		1,905,076
DENTSPLY International	10,100		538,027
IDEXX Laboratories 1	158,000		23,426,660
Invacare Corporation	118,100		1,979,356
Meridian Bioscience	107,100		1,762,866
Merit Medical Systems 1	534,586		9,264,375
STERIS Corporation	347,800		22,554,830
SurModics 1	346,900		7,666,490
Trinity Biotech ADR Cl. A	72,600		1,271,226
			91,614,477
HEALTH CARE PROVIDERS & SERVICES - 1.3%
Bio-Reference Laboratories 1,3	24,100		774,333
Chemed Corporation	51,948		5,489,345
HealthSouth Corporation	756,513		29,095,490
Landauer	456,500		15,584,910
MEDNAX 1	70,084		4,633,253
U.S. Physical Therapy	445,054		18,674,466
			74,251,797
LIFE SCIENCES TOOLS & SERVICES - 1.6%
Bio-Rad Laboratories Cl. A 1	78,332		9,443,706
Bio-Techne	342,080		31,608,192
ICON 1	210,200		10,718,098
Mettler-Toledo International 1	87,100		26,344,266
PAREXEL International 1	270,000		15,001,200
			93,115,462
PHARMACEUTICALS - 0.3%
Lannett Company 1	147,460		6,323,085

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 39

Schedules of Investments

Royce Pennsylvania Mutual Fund (continued)
	SHARES		VALUE
HEALTH CARE (continued)
PHARMACEUTICALS (continued)
Medicines Company (The) 1	313,722	$	8,680,688
			15,003,773
Total (Cost $182,489,659)			290,478,274
INDUSTRIALS – 25.5%
AEROSPACE & DEFENSE - 1.6%
Astronics Corporation 1	10,120		559,737
Curtiss-Wright	264,320		18,658,349
HEICO Corporation	667,635		40,325,154
HEICO Corporation Cl. A	180,440		8,545,638
Kratos Defense & Security Solutions 1	95,578		479,802
Teledyne Technologies 1	253,800		26,075,412
			94,644,092
AIR FREIGHT & LOGISTICS - 1.9%
Echo Global Logistics 1	316,904		9,253,597
Forward Air	829,000		41,756,730
Hub Group Cl. A 1	247,500		9,424,800
UTi Worldwide 1	3,213,600		38,788,152
XPO Logistics 1,3	287,292		11,744,497
			110,967,776
BUILDING PRODUCTS - 1.7%
AAON	1,428,262		31,978,786
American Woodmark 1	410,774		16,611,701
Gibraltar Industries 1	615,120		10,001,851
Insteel Industries	308,567		7,276,010
Simpson Manufacturing	904,300		31,288,780
			97,157,128
COMMERCIAL SERVICES & SUPPLIES - 2.8%
Copart 1	1,184,352		43,217,005
Healthcare Services Group	677,275		20,948,116
Heritage-Crystal Clean 1	257,656		3,176,898
Ritchie Bros. Auctioneers	1,922,370		51,692,529
Team 1	551,898		22,329,793
UniFirst Corporation	106,526		12,937,583
US Ecology	100,000		4,012,000
			158,313,924
CONSTRUCTION & ENGINEERING - 1.4%
Chicago Bridge & Iron	22,056		925,911
Comfort Systems USA	553,491		9,475,766
EMCOR Group	617,400		27,468,126
Jacobs Engineering Group 1	49,000		2,189,810
KBR	1,556,472		26,382,200
MYR Group 1	503,843		13,805,298
			80,247,111
ELECTRICAL EQUIPMENT - 2.3%
AZZ	215,958		10,132,749
Encore Wire	295,479		11,030,231
EnerSys	100,430		6,198,540
Franklin Electric	789,200		29,618,676
Global Power Equipment Group	638,185		8,813,335
GrafTech International 1	5,171,169		26,166,115
Powell Industries	364,600		17,890,922
Preformed Line Products 2	352,478		19,255,873
			129,106,441
INDUSTRIAL CONGLOMERATES - 0.4%
Carlisle Companies	34,115		3,078,538
Raven Industries	833,570		20,839,250
			23,917,788
MACHINERY - 8.1%
AGCO Corporation	3,600		162,720
Alamo Group	242,426		11,743,116
Chart Industries 1	46,000		1,573,200
CIRCOR International	537,397		32,394,291
CLARCOR	465,700		31,034,248
Columbus McKinnon	126,779		3,554,883
Donaldson Company	616,500		23,815,395
Federal Signal	85,300		1,317,032
Foster (L.B.) Company	191,898		9,320,486
Gorman-Rupp Company (The)	62,166		1,996,772
Graco	371,449		29,782,781
Graham Corporation	41,098		1,182,390
IDEX Corporation	30,000		2,335,200
John Bean Technologies	943,513		31,003,837
Kadant	54,300		2,318,067
Kennametal	919,933		32,924,402
Lincoln Electric Holdings	372,160		25,712,534
Lindsay Corporation	158,000		13,546,920
Lydall 1	46,220		1,516,940
Miller Industries	211,225		4,391,368
Mueller Industries	50,500		1,724,070
Mueller Water Products Cl. A	38,300		392,192
Nordson Corporation	284,600		22,187,416
RBC Bearings	645,100		41,628,303
Semperit AG Holding	39,897		1,930,619
Sun Hydraulics	646,210		25,447,750
Tennant Company	525,000		37,889,250
Timken Company (The)	50,880		2,171,558
Valmont Industries	298,265		37,879,655
Wabtec Corporation	356,587		30,983,845
			463,861,240
PROFESSIONAL SERVICES - 2.3%
Acacia Research	158,100		2,678,214
Advisory Board (The) 1	665,923		32,616,909
Corporate Executive Board	95,600		6,933,868
CRA International 1	363,851		11,031,962
Exponent	269,639		22,245,217
Franklin Covey 1	121,200		2,346,432
ICF International 1	149,860		6,141,263
ManpowerGroup	355,705		24,248,410
Robert Half International	106,090		6,193,534
RPX Corporation 1	316,100		4,355,858
Towers Watson & Co. Cl. A	64,100		7,254,197
TrueBlue 1	229,200		5,099,700
			131,145,564
ROAD & RAIL - 1.3%
FRP Holdings 1	254,400		9,975,024
Knight Transportation	42,483		1,429,978
Landstar System	522,700		37,911,431
Universal Truckload Services	810,784		23,115,452
			72,431,885
TRADING COMPANIES & DISTRIBUTORS - 1.4%
Aceto Corporation	481,700		10,452,890
Air Lease Cl. A	26,000		892,060
Applied Industrial Technologies	908,493		41,418,196
MSC Industrial Direct Cl. A	354,630		28,813,687
			81,576,833

40 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Pennsylvania Mutual Fund (continued)
	SHARES		VALUE
INDUSTRIALS (continued)
TRANSPORTATION INFRASTRUCTURE - 0.3%
Wesco Aircraft Holdings 1	1,191,187	$	16,652,794
Total (Cost $838,325,473)			1,460,022,576
INFORMATION TECHNOLOGY – 21.9%
COMMUNICATIONS EQUIPMENT - 2.2%
ADTRAN	1,304,995		28,448,891
Brocade Communications Systems	2,148,519		25,438,465
CalAmp Corporation 1,3	77,000		1,409,100
Digi International 1	388,644		3,610,503
Finisar Corporation 1,3	74,000		1,436,340
NETGEAR 1	1,129,918		40,202,482
Plantronics	306,802		16,266,642
Polycom 1	165,000		2,227,500
TESSCO Technologies	248,981		7,220,449
			126,260,372
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 10.8%
Anixter International 1	203,000		17,957,380
Avnet	8,300		357,066
AVX Corporation	1,448,321		20,276,494
Badger Meter	273,514		16,233,056
Benchmark Electronics 1	1,239,795		31,540,385
Cognex Corporation 1	611,790		25,285,281
Coherent 1	659,630		40,052,733
Dolby Laboratories Cl. A	494,446		21,320,511
DTS 1,2	1,007,929		30,993,817
Fabrinet 1,2	1,790,355		31,760,898
FARO Technologies 1	378,900		23,749,452
FLIR Systems	954,000		30,823,740
Hollysys Automation Technologies 1	389,600		9,517,928
II-VI 1	5,300		72,345
IPG Photonics 1	411,115		30,800,736
Key Tronic 1,2	681,935		5,414,564
Methode Electronics	469,350		17,135,968
MTS Systems	528,874		39,681,416
National Instruments	1,266,700		39,381,703
Newport Corporation 1	1,727,922		33,020,589
PC Connection	1,065,447		26,156,724
Plexus Corporation 1	576,200		23,745,202
Richardson Electronics	157,551		1,575,510
Rofin-Sinar Technologies 1	1,216,211		34,990,390
Rogers Corporation 1	387,981		31,597,173
ScanSource 1	182,887		7,344,742
Vishay Intertechnology	2,125,545		30,076,462
			620,862,265
INTERNET SOFTWARE & SERVICES - 0.5%
Envestnet 1	322,401		15,842,785
j2 Global	146,750		9,098,500
†Textura Corporation 1,3	199,600		5,682,612
			30,623,897
IT SERVICES - 1.6%
Computer Task Group	399,372		3,806,015
Convergys Corporation	810,193		16,503,631
CoreLogic 1	319,000		10,077,210
Fiserv 1	2,100		149,037
Forrester Research	298,200		11,737,152
ManTech International Cl. A	651,970		19,709,053
MAXIMUS	325,700		17,861,388
MoneyGram International 1	552,339		5,020,762
ServiceSource International 1,3	815,761		3,817,762
Sykes Enterprises 1	212,002		4,975,687
Teradata Corporation 1	8,600		375,648
			94,033,345
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.5%
Advanced Energy Industries 1	704,714		16,701,722
Brooks Automation	353,200		4,503,300
Cabot Microelectronics 1	454,580		21,510,726
Cascade Microtech 1	43,800		639,918
Diodes 1	1,317,700		36,328,989
Exar Corporation 1	824,441		8,409,298
Fairchild Semiconductor International 1	1,151,800		19,442,384
Integrated Silicon Solution	305,773		5,066,659
IXYS Corporation	434,105		5,469,723
Kulicke & Soffa Industries 1	123,900		1,791,594
Lam Research	1,800		142,812
Micrel	1,080,800		15,682,408
MKS Instruments	786,330		28,779,678
Nanometrics 1	284,971		4,793,212
Photronics 1	274,960		2,284,918
Rudolph Technologies 1	101,722		1,040,616
Synaptics 1	17,800		1,225,352
Teradyne	612,251		12,116,447
Tessera Technologies	61,290		2,191,730
Veeco Instruments 1	332,200		11,587,136
			199,708,622
SOFTWARE - 2.5%
ACI Worldwide 1	1,401,900		28,276,323
Advent Software	28,900		885,496
ANSYS 1	4,600		377,200
Blackbaud	595,391		25,756,615
Computer Modelling Group	74,000		760,509
Ellie Mae 1	177,700		7,164,864
ePlus 1	235,028		17,789,269
Fair Isaac	240,800		17,409,840
Manhattan Associates 1	219,396		8,933,805
Mentor Graphics	79,290		1,738,037
Monotype Imaging Holdings	708,951		20,439,057
Rovi Corporation 1	537,884		12,150,800
			141,681,815
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 0.8%
†Avid Technology 1	74,200		1,054,382
Diebold	895,832		31,031,621
Silicon Graphics International 1,3	421,551		4,797,250
Stratasys 1,3	89,100		7,405,101
Western Digital	3,500		387,450
			44,675,804
Total (Cost $878,391,382)			1,257,846,120
MATERIALS – 10.2%
CHEMICALS - 3.4%
Balchem Corporation	626,000		41,716,640
Cabot Corporation	145,100		6,364,086
FutureFuel Corporation	824,656		10,737,021
Hawkins	29,617		1,283,305
Innophos Holdings	13,387		782,470
Innospec	828,570		35,379,939
Minerals Technologies	321,937		22,358,525

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 41

Schedules of Investments

Royce Pennsylvania Mutual Fund (continued)
	SHARES		VALUE
MATERIALS (continued)
CHEMICALS (continued)
OM Group	78,015	$	2,324,847
Quaker Chemical	392,288		36,106,187
Schulman (A.)	269,690		10,930,536
Sensient Technologies	15,200		917,168
Stepan Company	265,814		10,653,825
Westlake Chemical	279,900		17,099,091
			196,653,640
CONSTRUCTION MATERIALS - 0.2%
Ash Grove Cement 4	50,018		10,078,627
CONTAINERS & PACKAGING - 0.9%
AptarGroup	493,000		32,952,120
Greif Cl. A	437,468		20,661,614
			53,613,734
METALS & MINING - 4.8%
Allegheny Technologies	513,046		17,838,609
Carpenter Technology	797		39,252
Commercial Metals	1,103,700		17,979,273
Compass Minerals International	174,426		15,145,410
Franco-Nevada Corporation	50,200		2,469,338
Globe Specialty Metals	1,354,503		23,338,087
Gold Fields ADR	520,000		2,355,600
Haynes International	583,795		28,314,057
Hecla Mining	228,300		636,957
Horsehead Holding Corporation 1,3	510,400		8,079,632
Major Drilling Group International	2,339,730		11,499,275
Pan American Silver	1,083,100		9,964,520
Pretium Resources 1	1,913,787		11,053,117
Reliance Steel & Aluminum	952,460		58,357,224
RTI International Metals 1	249,792		6,309,746
Schnitzer Steel Industries Cl. A	500,410		11,289,250
Seabridge Gold 1	1,448,404		10,935,450
Sims Metal Management	1,707,445		16,648,070
Steel Dynamics	383,521		7,570,705
Worthington Industries	523,733		15,759,126
			275,582,698
PAPER & FOREST PRODUCTS - 0.9%
Glatfelter	13,200		337,524
Schweitzer-Mauduit International	383,019		16,201,704
Stella-Jones	1,180,300		33,261,337
			49,800,565
Total (Cost $461,547,147)			585,729,264
TELECOMMUNICATION SERVICES – 0.2%
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.1%
Premiere Global Services 1	601,500		6,387,930
WIRELESS TELECOMMUNICATION SERVICES - 0.1%
Telephone and Data Systems	162,000		4,090,500
Total (Cost $9,335,115)			10,478,430
UTILITIES – 0.0%
GAS UTILITIES - 0.0%
UGI Corporation	22,750		864,045
Total (Cost $762,206)			864,045
MISCELLANEOUS5 – 1.5%
Total (Cost $83,179,075)			86,430,386
TOTAL COMMON STOCKS
(Cost $3,874,338,907)			5,666,305,005
REPURCHASE AGREEMENT – 1.9%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $109,019,000 (collateralized by obligations of various U.S. Government Agencies, 1.06% due 10/12/17, valued at $111,201,200)
(Cost $109,019,000)		$	109,019,000
COLLATERAL RECEIVED FOR SECURITIES LOANED – 1.1%
Money Market Funds
Federated Government Obligations Fund (7 day yield-0.0099%)
(Cost $62,985,137)			62,985,137
TOTAL INVESTMENTS – 101.9%
(Cost $4,046,343,044)			5,838,309,142
LIABILITIES LESS CASH AND OTHER ASSETS – (1.9)%			(108,989,400)
NET ASSETS – 100.0%		$	5,729,319,742

42 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Micro-Cap Fund

Common Stocks – 96.1%

	SHARES		VALUE
CONSUMER DISCRETIONARY – 15.3%
AUTO COMPONENTS - 1.0%
Drew Industries 1	105,778	$	5,402,082
DIVERSIFIED CONSUMER SERVICES - 3.7%
American Public Education 1	186,930		6,892,109
Capella Education	74,151		5,706,661
Liberty Tax 1	120,376		4,302,238
Lincoln Educational Services	961,143		2,710,424
			19,611,432
HOTELS, RESTAURANTS & LEISURE - 0.2%
†Zoe’s Kitchen 1,3	26,900		804,579
HOUSEHOLD DURABLES - 0.9%
Cavco Industries 1	61,310		4,860,044
LEISURE PRODUCTS - 1.4%
Black Diamond 1	123,919		1,084,291
LeapFrog Enterprises Cl. A 1,3	397,200		1,874,784
Smith & Wesson Holding Corporation 1,3	457,465		4,332,194
			7,291,269
SPECIALTY RETAIL - 7.4%
Buckle (The)	76,575		4,021,719
Cato Corporation (The) Cl. A	80,750		3,406,035
Citi Trends 1	135,924		3,432,081
Destination Maternity	197,094		3,143,649
Kirkland’s 1	263,340		6,225,358
Shoe Carnival	328,714		8,444,663
Stein Mart	529,084		7,735,208
Zumiez 1	71,800		2,773,634
			39,182,347
TEXTILES, APPAREL & LUXURY GOODS - 0.7%
Culp	164,874		3,574,468
Total (Cost $59,377,530)			80,726,221
CONSUMER STAPLES – 1.2%
BEVERAGES - 0.2%
Truett-Hurst Cl. A 1,2	191,900		758,005
FOOD PRODUCTS - 1.0%
†Limoneira Company	107,530		2,686,099
Sipef	30,748		1,774,010
Waterloo Investment Holdings 1,6	2,760,860		1,049,127
			5,509,236
Total (Cost $5,500,235)			6,267,241
ENERGY – 6.8%
ENERGY EQUIPMENT & SERVICES - 5.1%
Canadian Energy Services & Technology	184,800		1,010,053
Dawson Geophysical	121,233		1,482,680
Geospace Technologies 1	115,216		3,053,224
Gulf Island Fabrication	345,089		6,691,276
Natural Gas Services Group 1	185,187		4,266,709
†Profire Energy 1,3	358,412		817,179
Tesco Corporation	259,500		3,326,790
TGC Industries 1	635,893		1,373,529
Total Energy Services	437,800		4,891,241
			26,912,681
OIL, GAS & CONSUMABLE FUELS - 1.7%
Ardmore Shipping	139,675		1,671,910
Ring Energy 1,3	83,900		880,950
Sprott Resource 1	1,474,500		2,386,004
Synergy Resources 1	191,600		2,402,664
Triangle Petroleum 1,3	344,163		1,645,099
			8,986,627
Total (Cost $32,924,366)			35,899,308
FINANCIALS – 9.0%
BANKS - 1.2%
BCB Holdings 1	2,215,060		414,287
John Marshall Bank 1,4	62,700		1,109,790
Pacific Continental	187,797		2,662,961
TriState Capital Holdings 1	229,157		2,346,568
			6,533,606
CAPITAL MARKETS - 4.2%
FBR & Co. 1	136,242		3,350,191
Gluskin Sheff + Associates	65,100		1,551,574
GMP Capital	391,400		2,139,258
INTL FCStone 1	215,155		4,425,738
JMP Group	303,549		2,313,044
Silvercrest Asset Management Group Cl. A	225,600		3,530,640
U.S. Global Investors Cl. A	236,749		733,922
Westwood Holdings Group	66,272		4,096,935
			22,141,302
DIVERSIFIED FINANCIAL SERVICES - 0.2%
PICO Holdings 1	64,123		1,208,719
INSURANCE - 1.2%
Blue Capital Reinsurance Holdings	103,800		1,842,450
eHealth 1	42,400		1,056,608
†Heritage Insurance Holdings 1	79,000		1,534,970
Navigators Group 1	21,464		1,574,170
			6,008,198
REAL ESTATE MANAGEMENT & DEVELOPMENT - 2.2%
AV Homes 1	161,700		2,355,969
Kennedy-Wilson Holdings	268,885		6,802,790
Midland Holdings 1	5,263,200		2,659,219
			11,817,978
Total (Cost $36,054,105)			47,709,803
HEALTH CARE – 9.9%
BIOTECHNOLOGY - 0.5%
BioSpecifics Technologies 1	22,300		861,226
Dyax Corporation 1	90,419		1,271,291
Lexicon Pharmaceuticals 1,3	659,471		600,053
			2,732,570
HEALTH CARE EQUIPMENT & SUPPLIES - 5.5%
Cerus Corporation 1,3	573,761		3,580,268
CryoLife	182,455		2,067,215
Cynosure Cl. A 1	114,669		3,144,224
Exactech 1	96,240		2,268,377
Merit Medical Systems 1	167,320		2,899,655
Novadaq Technologies 1,3	39,321		653,515
Orthofix International 1	28,600		859,716
RTI Surgical 1	398,100		2,070,120
SurModics 1	189,322		4,184,016
Synergetics USA 1	440,562		1,916,445
Syneron Medical 1	415,490		3,876,522
Trinity Biotech ADR Cl. A	89,276		1,563,223
			29,083,296
HEALTH CARE PROVIDERS & SERVICES - 2.2%
Bio-Reference Laboratories 1,3	81,600		2,621,808

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 43

Schedules of Investments

Royce Micro-Cap Fund (continued)

	SHARES		VALUE
HEALTH CARE (continued)
HEALTH CARE PROVIDERS & SERVICES (continued)
CorVel Corporation 1	95,365	$	3,549,485
U.S. Physical Therapy	125,540		5,267,659
			11,438,952
LIFE SCIENCES TOOLS & SERVICES - 0.5%
Harvard Bioscience 1	417,679		2,368,240
PHARMACEUTICALS - 1.2%
†Agile Therapeutics 1,3	190,882		1,172,015
†Theravance Biopharma 1,3	185,000		2,760,200
Unichem Laboratories	66,918		254,880
Vetoquinol	54,269		2,357,338
			6,544,433
Total (Cost $31,280,284)			52,167,491
INDUSTRIALS – 24.1%
AEROSPACE & DEFENSE - 1.0%
AeroVironment 1	68,944		1,878,724
American Science and Engineering	32,118		1,666,924
CPI Aerostructures 1	156,818		1,645,021
			5,190,669
BUILDING PRODUCTS - 1.5%
AAON	152,999		3,425,648
Quanex Building Products	251,500		4,723,170
			8,148,818
COMMERCIAL SERVICES & SUPPLIES - 2.4%
Courier Corporation	190,382		2,840,500
Ennis	319,451		4,303,005
Heritage-Crystal Clean 1	99,674		1,228,980
Hudson Technologies 1	430,904		1,624,508
Team 1	33,600		1,359,456
US Ecology	31,600		1,267,792
			12,624,241
CONSTRUCTION & ENGINEERING - 2.0%
MYR Group 1	195,200		5,348,480
Severfield 1	3,566,858		3,779,713
Sterling Construction 1	272,275		1,739,837
			10,868,030
ELECTRICAL EQUIPMENT - 2.9%
Global Power Equipment Group	350,612		4,841,952
Graphite India	1,819,291		2,619,990
LSI Industries	694,236		4,713,862
Powell Industries	60,400		2,963,828
			15,139,632
MACHINERY - 5.9%
CIRCOR International	21,759		1,311,632
Foster (L.B.) Company	85,756		4,165,169
FreightCar America	116,209		3,057,459
Gorman-Rupp Company (The)	58,313		1,873,013
Graham Corporation	171,088		4,922,202
Kadant	116,816		4,986,875
Key Technology 1,2,3	339,814		4,349,619
RBC Bearings	44,669		2,882,491
Semperit AG Holding	75,578		3,657,226
			31,205,686
MARINE - 0.3%
Clarkson	56,600		1,670,697
PROFESSIONAL SERVICES - 4.6%
CRA International 1	179,583		5,444,957
Exponent	36,735		3,030,637
GP Strategies 1	78,818		2,674,295
Kforce	160,158		3,864,612
Resources Connection	568,818		9,357,056
			24,371,557
ROAD & RAIL - 3.0%
FRP Holdings 1	239,189		9,378,601
Marten Transport	287,633		6,287,657
			15,666,258
TRADING COMPANIES & DISTRIBUTORS - 0.5%
Houston Wire & Cable	235,100		2,809,445
Total (Cost $91,248,283)			127,695,033
INFORMATION TECHNOLOGY – 17.0%
COMMUNICATIONS EQUIPMENT - 2.3%
†CalAmp Corporation 1	139,500		2,552,850
COM DEV International	423,800		1,455,467
Digi International 1	351,034		3,261,106
KVH Industries 1	310,800		3,931,620
Numerex Corporation Cl. A 1	99,032		1,095,294
			12,296,337
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 3.6%
CUI Global 1	321,038		2,391,733
Electro Rent	159,500		2,239,380
Fabrinet 1	252,845		4,485,470
GSI Group 1	311,700		4,588,224
Neonode 1,3	601,496		2,033,056
Pure Technologies	58,100		369,564
Vishay Precision Group 1	157,700		2,706,132
			18,813,559
INTERNET SOFTWARE & SERVICES - 1.0%
†Care.com 1,3	63,500		525,780
QuinStreet 1	362,600		2,200,982
RealNetworks 1	134,100		944,064
Zix Corporation 1	435,600		1,568,160
			5,238,986
IT SERVICES - 0.5%
†Computer Task Group	260,610		2,483,613
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 5.3%
Advanced Energy Industries 1	181,474		4,300,934
Brooks Automation	460,100		5,866,275
Cascade Microtech 1	67,284		983,019
GSI Technology 1,3	586,182		2,925,048
Integrated Silicon Solution	237,500		3,935,375
Photronics 1	279,700		2,324,307
Rudolph Technologies 1	196,751		2,012,763
Ultra Clean Holdings 1	211,500		1,962,720
Xcerra Corporation 1	437,961		4,011,723
			28,322,164
SOFTWARE - 3.2%
ePlus 1	84,767		6,416,014
Monotype Imaging Holdings	151,187		4,358,721
†Rubicon Project 1,3	125,500		2,025,570
†SeaChange International 1	361,307		2,305,139
TeleNav 1	277,700		1,852,259
			16,957,703
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 1.1%
Avid Technology 1	152,043		2,160,531

44 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Micro-Cap Fund (continued)

	SHARES		VALUE
INFORMATION TECHNOLOGY (continued)
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS (continued)
Super Micro Computer 1	103,846	$	3,622,149
			5,782,680
Total (Cost $72,600,244)			89,895,042
MATERIALS – 7.5%
CHEMICALS - 1.8%
BioAmber 1,3	99,712		836,584
FutureFuel Corporation	279,200		3,635,184
Quaker Chemical	39,560		3,641,102
Societe Internationale de Plantations d’Heveas	34,037		1,356,898
			9,469,768
METALS & MINING - 5.7%
Alamos Gold	170,100		1,215,209
Argonaut Gold 1	378,300		595,876
Endeavour Silver 1,3	546,800		1,181,088
Geodrill 1	1,614,300		805,900
Gold Standard Ventures 1,3	1,035,100		486,497
Goldgroup Mining 1	1,296,300		150,629
Haynes International	90,330		4,381,005
Horsehead Holding Corporation 1	259,271		4,104,260
Imdex 1	2,194,065		850,648
McEwen Mining 1,3	1,207,004		1,339,774
Olympic Steel	240,473		4,275,610
Pilot Gold 1	2,155,400		1,651,150
Synalloy Corporation	153,142		2,696,831
Universal Stainless & Alloy Products 1	224,752		5,652,513
Western Copper and Gold 1	1,084,400		628,952
			30,015,942
Total (Cost $44,041,565)			39,485,710
TELECOMMUNICATION SERVICES – 0.5%
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.5%
†ORBCOMM 1	452,700		2,960,658
Total (Cost $2,895,587)			2,960,658
MISCELLANEOUS5 – 4.8%
Total (Cost $25,207,828)			25,327,631
TOTAL COMMON STOCKS
(Cost $401,130,027)			508,134,138
REPURCHASE AGREEMENT – 3.8%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $20,212,000 (collateralized by obligations of various U.S. Government Agencies, 0.75% due 10/31/17, valued at $20,619,478)
(Cost $20,212,000)			20,212,000
COLLATERAL RECEIVED FOR SECURITIES LOANED – 4.2%
Money Market Funds
Federated Government Obligations Fund (7 day yield-0.0099%)
(Cost $22,089,668)			22,089,668
TOTAL INVESTMENTS – 104.1%
(Cost $443,431,695)			550,435,806
LIABILITIES LESS CASH AND OTHER ASSETS – (4.1)%			(21,802,574)
NET ASSETS – 100.0%		$	528,633,232
Royce Premier Fund
Common Stocks – 97.9%
	SHARES		VALUE
CONSUMER DISCRETIONARY – 12.9%
AUTO COMPONENTS - 0.5%
Dorman Products 1	628,200	$	30,323,214
AUTOMOBILES - 3.9%
Thor Industries 2	3,761,457		210,152,602
DISTRIBUTORS - 1.4%
Pool Corporation	1,200,700		76,172,408
DIVERSIFIED CONSUMER SERVICES - 1.4%
Sotheby’s	1,734,667		74,902,921
MEDIA - 1.4%
Morningstar	1,147,500		74,254,725
SPECIALTY RETAIL - 1.7%
Buckle (The)	1,721,536		90,415,071
TEXTILES, APPAREL & LUXURY GOODS - 2.6%
Columbia Sportswear	1,902,872		84,753,919
Wolverine World Wide	1,857,974		54,754,494
			139,508,413
Total (Cost $369,728,599)			695,729,354
CONSUMER STAPLES – 3.9%
FOOD PRODUCTS - 2.9%
Cal-Maine Foods	2,308,718		90,109,263
Sanderson Farms	809,785		68,042,185
			158,151,448
PERSONAL PRODUCTS - 1.0%
Nu Skin Enterprises Cl. A	1,175,894		51,386,568
Total (Cost $71,304,878)			209,538,016
ENERGY – 6.3%
ENERGY EQUIPMENT & SERVICES - 6.3%
Ensign Energy Services	6,982,000		61,298,330
Pason Systems	3,981,100		75,009,708
SEACOR Holdings 1,2	982,527		72,520,318
Trican Well Service 2	8,450,100		40,512,186
Unit Corporation 1,2	2,586,073		88,185,089
Total (Cost $327,869,743)			337,525,631
FINANCIALS – 12.3%
CAPITAL MARKETS - 5.0%
Artisan Partners Asset Management Cl. A	1,172,746		59,258,855
Federated Investors Cl. B	3,643,300		119,973,869
†Sprott	6,957,200		14,611,438
Stifel Financial 1	1,515,454		77,318,463
			271,162,625
INSURANCE - 3.0%
Alleghany Corporation 1	355,725		164,878,537
REAL ESTATE MANAGEMENT & DEVELOPMENT - 4.3%
Jones Lang LaSalle	639,185		95,833,007
Kennedy-Wilson Holdings 2	5,318,014		134,545,754
			230,378,761
Total (Cost $419,145,785)			666,419,923
HEALTH CARE – 6.7%
BIOTECHNOLOGY - 1.8%
Myriad Genetics 1,3	2,900,350		98,785,921
HEALTH CARE EQUIPMENT & SUPPLIES - 1.7%
IDEXX Laboratories 1	626,700		92,920,809
LIFE SCIENCES TOOLS & SERVICES - 1.6%
PerkinElmer	1,942,600		84,949,898

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 45

Schedules of Investments

Royce Premier Fund (continued)

		SHARES		VALUE
HEALTH CARE (continued)
PHARMACEUTICALS - 1.6%
Medicines Company (The) 1		3,079,888	$	85,220,501
Total (Cost $201,425,570)				361,877,129
INDUSTRIALS – 26.4%
AIR FREIGHT & LOGISTICS - 1.2%
Forward Air		1,360,228		68,514,684
BUILDING PRODUCTS - 1.7%
Simpson Manufacturing 2		2,630,933		91,030,282
COMMERCIAL SERVICES & SUPPLIES - 4.8%
Copart 1		3,093,500		112,881,815
Ritchie Bros. Auctioneers 2		5,442,714		146,354,580
				259,236,395
CONSTRUCTION & ENGINEERING - 1.8%
EMCOR Group		2,195,500		97,677,795
MACHINERY - 10.1%
Kennametal		1,531,500		54,812,385
Lincoln Electric Holdings		2,344,070		161,951,796
Semperit AG Holding 2		1,927,361		93,265,167
Valmont Industries		684,600		86,944,200
Woodward		2,999,324		147,656,721
				544,630,269
PROFESSIONAL SERVICES - 2.5%
Acacia Research 2		3,075,472		52,098,496
Towers Watson & Co. Cl. A		726,421		82,209,064
				134,307,560
ROAD & RAIL - 2.2%
Landstar System		1,641,000		119,021,730
TRADING COMPANIES & DISTRIBUTORS - 2.1%
Air Lease Cl. A		1,180,160		40,491,290
MSC Industrial Direct Cl. A		886,184		72,002,450
				112,493,740
Total (Cost $732,104,841)				1,426,912,455
INFORMATION TECHNOLOGY – 18.9%
COMMUNICATIONS EQUIPMENT - 1.0%
ADTRAN		2,516,834		54,866,981
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 8.3%
Anixter International 1		1,061,835		93,929,924
Benchmark Electronics 1,2		2,702,100		68,741,424
Cognex Corporation 1		2,671,114		110,397,142
National Instruments		4,079,501		126,831,686
Zebra Technologies Cl. A 1		648,394		50,192,179
				450,092,355
IT SERVICES - 2.3%
Gartner 1		735,200		61,911,192
Jack Henry & Associates		995,440		61,856,642
				123,767,834
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 5.5%
Cabot Microelectronics 1,2		1,321,074		62,513,222
Cirrus Logic 1		1,315,688		31,010,766
Fairchild Semiconductor International 1		3,501,112		59,098,771
MKS Instruments 2		3,028,910		110,858,106
Veeco Instruments 1		961,815		33,548,107
				297,028,972
SOFTWARE - 1.8%
Fair Isaac		1,324,800		95,783,040
Total (Cost $570,233,315)				1,021,539,182
MATERIALS – 7.5%
CHEMICALS - 2.5%
Cabot Corporation		1,299,000		56,974,140
Westlake Chemical		1,264,810		77,267,243
				134,241,383
METALS & MINING - 4.1%
Globe Specialty Metals 2		5,094,972		87,786,367
Reliance Steel & Aluminum		1,503,500		92,119,445
Schnitzer Steel Industries Cl. A 2		1,795,805		40,513,361
				220,419,173
PAPER & FOREST PRODUCTS - 0.9%
Stella-Jones		1,828,712		51,533,854
Total (Cost $269,696,119)				406,194,410
MISCELLANEOUS5 – 3.0%
Total (Cost $162,234,604)				161,629,226
TOTAL COMMON STOCKS
(Cost $3,123,743,454)				5,287,365,326
REPURCHASE AGREEMENT – 3.4%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $185,743,000 (collateralized by obligations of various U.S. Government Agencies, 1.06% due 10/12/17, valued at $189,457,950)
(Cost $185,743,000)				185,743,000
		PRINCIPAL
		AMOUNT
COLLATERAL RECEIVED FOR SECURITIES LOANED – 1.6%
U.S. Treasury Bills
due 1/15/15-8/20/15	$	3,532,930		3,533,097
U.S. Treasury Bonds
0.75%-8.125%
due 11/15/16-5/15/44		7,763,152		7,819,341
U.S. Treasury Notes
0.125%-4.75%
due 12/31/14-8/15/24		12,392,417		12,409,086
Money Market Funds
Federated Government Obligations Fund (7 day yield-0.0099%)				60,262,488
TOTAL COLLATERAL RECEIVED FOR SECURITIES LOANED
(Cost $84,024,012)				84,024,012
TOTAL INVESTMENTS – 102.9%
(Cost $3,393,510,466)				5,557,132,338
LIABILITIES LESS CASH AND OTHER ASSETS – (2.9)%				(154,973,345)
NET ASSETS – 100.0%			$	5,402,158,993

46 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Low-Priced Stock Fund

Common Stocks – 94.3%

	SHARES		VALUE
CONSUMER DISCRETIONARY – 11.5%
AUTOMOBILES - 1.0%
Thor Industries	118,003	$	6,592,828
DIVERSIFIED CONSUMER SERVICES - 1.0%
Universal Technical Institute	682,651		6,717,286
HOTELS, RESTAURANTS & LEISURE - 0.7%
†Belmond Cl. A 1	329,200		4,072,204
Ruby Tuesday 1	100,000		684,000
			4,756,204
HOUSEHOLD DURABLES - 0.6%
†TRI Pointe Homes 1	283,700		4,326,425
LEISURE PRODUCTS - 0.6%
†Smith & Wesson Holding Corporation 1,3	402,000		3,806,940
MEDIA - 0.8%
Pico Far East Holdings	24,976,900		5,723,414
SPECIALTY RETAIL - 6.8%
American Eagle Outfitters	259,200		3,597,696
Ascena Retail Group 1	113,000		1,419,280
Buckle (The)	160,075		8,407,139
Cato Corporation (The) Cl. A	158,250		6,674,985
Chico’s FAS	496,500		8,048,265
Finish Line (The) Cl. A	208,200		5,061,342
GameStop Corporation Cl. A	179,900		6,080,620
†TravelCenters of America LLC 1	341,900		4,314,778
West Marine 1	203,300		2,626,636
			46,230,741
Total (Cost $59,301,429)			78,153,838
CONSUMER STAPLES – 1.8%
FOOD PRODUCTS - 0.8%
Industrias Bachoco ADR 1	113,906		5,681,631
PERSONAL PRODUCTS - 1.0%
Nu Skin Enterprises Cl. A	154,529		6,752,918
Total (Cost $3,857,141)			12,434,549
ENERGY – 8.9%
ENERGY EQUIPMENT & SERVICES - 7.4%
C&J Energy Services 1	251,346		3,320,281
Calfrac Well Services	472,600		4,071,894
†Newpark Resources 1	915,175		8,730,769
Pason Systems	304,650		5,740,049
Tesco Corporation	579,816		7,433,241
TGS-NOPEC Geophysical	252,700		5,467,503
Total Energy Services	496,100		5,542,587
Trican Well Service	831,300		3,985,489
Unit Corporation 1	175,000		5,967,500
			50,259,313
OIL, GAS & CONSUMABLE FUELS - 1.5%
†Approach Resources 1,3	389,400		2,488,266
Sprott Resource 1	1,368,800		2,214,963
†Synergy Resources 1	439,600		5,512,584
			10,215,813
Total (Cost $49,967,315)			60,475,126
FINANCIALS – 7.7%
CAPITAL MARKETS - 5.6%
Ashmore Group	1,806,363		7,831,467
Federated Investors Cl. B	185,400		6,105,222
INTL FCStone 1	134,900		2,774,893
Jupiter Fund Management	1,043,849		5,860,378
Sprott	3,613,800		7,589,664
Value Partners Group	9,312,500		7,777,577
			37,939,201
INSURANCE - 0.6%
†MBIA 1	397,400		3,791,196
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.5%
Gladstone Land	239,500		2,562,650
Kennedy-Wilson Holdings	296,830		7,509,799
			10,072,449
Total (Cost $42,115,199)			51,802,846
HEALTH CARE – 3.1%
BIOTECHNOLOGY - 1.5%
Myriad Genetics 1	181,569		6,184,240
†Progenics Pharmaceuticals 1,3	500,850		3,786,426
			9,970,666
PHARMACEUTICALS - 1.6%
†Avanir Pharmaceuticals 1	241,100		4,086,645
Medicines Company (The) 1	244,932		6,777,269
			10,863,914
Total (Cost $10,776,590)			20,834,580
INDUSTRIALS – 16.3%
AEROSPACE & DEFENSE - 1.7%
Kratos Defense & Security Solutions 1	715,200		3,590,304
Orbital Sciences 1,3	298,523		8,027,284
			11,617,588
BUILDING PRODUCTS - 0.6%
†Ply Gem Holdings 1	301,200		4,210,776
COMMERCIAL SERVICES & SUPPLIES - 0.3%
Ennis	153,162		2,063,092
CONSTRUCTION & ENGINEERING - 0.4%
Raubex Group	1,587,837		3,013,053
ELECTRICAL EQUIPMENT - 1.8%
†General Cable	253,400		3,775,660
†Global Power Equipment Group	275,900		3,810,179
GrafTech International 1	837,130		4,235,878
			11,821,717
MACHINERY - 1.1%
†Mueller Water Products Cl. A	387,100		3,963,904
†Tecumseh Products1,2,3	1,207,365		3,730,758
			7,694,662
MARINE - 0.8%
Clarkson	187,331		5,529,563
PROFESSIONAL SERVICES - 8.3%
Acacia Research	421,805		7,145,377
Heidrick & Struggles International	285,092		6,571,371
Kforce	353,274		8,524,502
Korn/Ferry International 1	226,040		6,500,910
Navigant Consulting 1	514,523		7,908,218
Resources Connection	403,800		6,642,510
RPX Corporation 1	609,200		8,394,776
TrueBlue 1	196,794		4,378,666
			56,066,330
ROAD & RAIL - 0.8%
Heartland Express	56,545		1,527,280
†Roadrunner Transportation Systems 1	160,600		3,750,010
			5,277,290

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 47

Schedules of Investments

Royce Low-Priced Stock Fund (continued)
	SHARES		VALUE
INDUSTRIALS (continued)
TRADING COMPANIES & DISTRIBUTORS - 0.5%
Houston Wire & Cable	264,000	$	3,154,800
Total (Cost $94,133,173)			110,448,871
INFORMATION TECHNOLOGY – 33.4%
COMMUNICATIONS EQUIPMENT - 6.2%
ADTRAN	375,263		8,180,733
Brocade Communications Systems	698,500		8,270,240
Harmonic 1	150,000		1,051,500
Infinera Corporation 1	400,000		5,888,000
KVH Industries 1	539,615		6,826,130
NETGEAR 1	222,500		7,916,550
†Ruckus Wireless 1	322,300		3,874,046
			42,007,199
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 4.0%
AVX Corporation	577,178		8,080,492
†II-VI 1	312,200		4,261,530
TTM Technologies 1	723,358		5,446,886
Vishay Intertechnology	628,750		8,896,812
			26,685,720
INTERNET SOFTWARE & SERVICES - 2.7%
†Amber Road 1,3	335,600		3,429,832
EarthLink Holdings	200,000		878,000
†Intralinks Holdings 1	340,200		4,048,380
†QuinStreet 1	1,062,400		6,448,768
RealNetworks 1	518,000		3,646,720
			18,451,700
IT SERVICES - 4.0%
Convergys Corporation	421,611		8,588,216
†Datalink Corporation 1	295,200		3,808,080
Neurones	407,633		6,835,330
TeleTech Holdings 1	321,501		7,613,144
			26,844,770
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 13.5%
Advanced Energy Industries 1	343,383		8,138,177
Brooks Automation	627,682		8,002,946
†Cascade Microtech 1	272,300		3,978,303
Cirrus Logic 1	338,100		7,969,017
Exar Corporation 1	387,000		3,947,400
Fairchild Semiconductor International 1	462,739		7,811,034
†Inphi Corporation 1	231,900		4,285,512
Integrated Silicon Solution	192,782		3,194,398
†IXYS Corporation	315,000		3,969,000
Lam Research	78,800		6,251,992
MKS Instruments	204,427		7,482,028
†Nanometrics 1	221,100		3,718,902
Photronics 1	454,500		3,776,895
†Rudolph Technologies 1	389,900		3,988,677
†Silicon Image 1	1,222,400		6,747,648
Teradyne	411,775		8,149,027
			91,410,956
SOFTWARE - 1.5%
†Rubicon Project 1	300,400		4,848,456
†SeaChange International 1	840,100		5,359,838
			10,208,294
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 1.5%
Avid Technology 1	35,000		497,350
†Silicon Graphics International1,3	382,800		4,356,264
†Super Micro Computer 1	154,200		5,378,496
			10,232,110
Total (Cost $169,971,765)			225,840,749
MATERIALS – 6.7%
CHEMICALS - 1.0%
†BioAmber 1,3	372,000		3,121,080
†Landec Corporation 1	276,000		3,811,560
			6,932,640
METALS & MINING - 5.7%
Alamos Gold	668,700		4,777,251
Globe Specialty Metals	519,463		8,950,348
Hochschild Mining 1	1,098,648		1,503,306
Horsehead Holding Corporation 1,3	264,535		4,187,589
Major Drilling Group International	927,300		4,557,482
Pan American Silver	325,476		2,994,379
Pretium Resources 1	552,400		3,190,398
Schnitzer Steel Industries Cl. A	164,900		3,720,144
Seabridge Gold 1	573,470		4,329,699
			38,210,596
Total (Cost $41,217,669)			45,143,236
MISCELLANEOUS5 – 4.9%
Total (Cost $32,213,338)			33,268,394
TOTAL COMMON STOCKS
(Cost $503,553,619)			638,402,189
REPURCHASE AGREEMENT – 5.3%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $35,516,000 (collateralized by obligations of various U.S. Government Agencies, 0.75%-1.06% due 10/12/17-10/31/17, valued at $36,228,563)
(Cost $35,516,000)			35,516,000
	PRINCIPAL
	AMOUNT
COLLATERAL RECEIVED FOR SECURITIES LOANED – 3.0%
U.S. Treasury Bonds
3.125%-4.75%
due 2/15/40-5/15/44	$13,938		14,073
U.S. Treasury Notes
0.125%-2.375%
due 1/15/17-8/15/24	15,450		15,519
Money Market Funds
Federated Government Obligations Fund (7 day yield-
0.0099%)			20,316,730
TOTAL COLLATERAL RECEIVED FOR SECURITIES LOANED
(Cost $20,346,322)			20,346,322
TOTAL INVESTMENTS – 102.6%
(Cost $559,415,941)			694,264,511
LIABILITIES LESS CASH AND OTHER ASSETS – (2.6)%			(17,612,086)
NET ASSETS – 100.0%		$	676,652,425

48 |  The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Total Return Fund
Common Stocks – 97.1%
	SHARES		VALUE
CONSUMER DISCRETIONARY – 12.4%
AUTO COMPONENTS - 1.1%
Gentex Corporation	1,189,382	$	42,972,371
Standard Motor Products	94,406		3,598,757
STRATTEC SECURITY	69,205		5,714,949
			52,286,077
AUTOMOBILES - 0.7%
Thor Industries	561,174		31,352,791
DISTRIBUTORS - 0.2%
Weyco Group	282,000		8,366,940
DIVERSIFIED CONSUMER SERVICES - 0.3%
DeVry Education Group	39,200		1,860,824
Regis Corporation 1	837,200		14,031,472
			15,892,296
HOTELS, RESTAURANTS & LEISURE - 0.7%
Abu Dhabi National Hotels	1,200,000		1,306,816
Bob Evans Farms	430,473		22,031,608
Cheesecake Factory	33,900		1,705,509
DineEquity	51,630		5,350,933
Ruth’s Hospitality Group	52,600		789,000
			31,183,866
HOUSEHOLD DURABLES - 0.9%
De’Longhi	45,000		814,992
Ekornes	60,000		764,849
Ethan Allen Interiors	1,181,550		36,592,603
La-Z-Boy	75,920		2,037,693
			40,210,137
INTERNET & CATALOG RETAIL - 0.1%
Manutan International	1,381		68,473
Nutrisystem	25,660		501,653
PetMed Express	351,500		5,051,055
			5,621,181
LEISURE PRODUCTS - 0.2%
Arctic Cat	107,565		3,818,558
Callaway Golf	962,900		7,414,330
			11,232,888
MEDIA - 0.8%
Harte-Hanks	618,563		4,787,677
Meredith Corporation	194,494		10,564,914
Morningstar	34,801		2,251,973
Saga Communications Cl. A	190,758		8,294,158
Television Broadcasts	90,000		522,421
Wiley (John) & Sons Cl. A	180,739		10,706,978
			37,128,121
MULTILINE RETAIL - 0.0%
New World Department Store China	1,993,300		637,237
SPECIALTY RETAIL - 6.1%
American Eagle Outfitters	1,730,294		24,016,481
Ascena Retail Group 1	1,872,158		23,514,304
Buckle (The)	625,024		32,826,260
Cato Corporation (The) Cl. A	859,933		36,271,974
Chico’s FAS	61,500		996,915
DSW Cl. A	701,776		26,176,245
GameStop Corporation Cl. A	785,025		26,533,845
Genesco 1	375,546		28,774,335
Guess?	47,934		1,010,449
Haverty Furniture	1,800		39,618
Men’s Wearhouse (The)	176,539		7,794,197
Monro Muffler Brake	430,000		24,854,000
Rent-A-Center	361,529		13,130,733
Shoe Carnival	676,696		17,384,320
Stein Mart	1,063,666		15,550,797
Systemax 1	255,676		3,451,626
			282,326,099
TEXTILES, APPAREL & LUXURY GOODS - 1.3%
Columbia Sportswear	159,764		7,115,889
G-III Apparel Group 1	120,780		12,199,988
Movado Group	317,303		9,001,886
Pacific Textiles Holdings	750,000		992,052
Stella International Holdings	100,000		262,401
Steven Madden 1	824,664		26,249,055
Vera Bradley 1	291,209		5,934,839
Wolverine World Wide	27,075		797,900
			62,554,010
Total (Cost $401,886,191)			578,791,643
CONSUMER STAPLES – 3.0%
BEVERAGES - 0.0%
Crimson Wine Group 1,4	43,380		407,772
FOOD & STAPLES RETAILING - 0.4%
Village Super Market Cl. A	685,437		18,760,411
FOOD PRODUCTS - 1.8%
Cal-Maine Foods	104,596		4,082,382
Farmer Bros. 1	366,000		10,778,700
Flowers Foods	1,058,900		20,320,291
Fresh Del Monte Produce	241,700		8,109,035
Hershey Creamery 4	882		2,412,270
J&J Snack Foods	3,500		380,695
Lancaster Colony	120,300		11,264,892
Sanderson Farms	48,900		4,108,822
Tootsie Roll Industries	701,291		21,494,569
			82,951,656
HOUSEHOLD PRODUCTS - 0.0%
WD-40 Company	10,211		868,752
PERSONAL PRODUCTS - 0.8%
Nu Skin Enterprises Cl. A	804,976		35,177,451
Total (Cost $125,617,877)			138,166,042
ENERGY – 4.1%
ENERGY EQUIPMENT & SERVICES - 3.3%
CARBO Ceramics	300,646		12,040,872
Ensign Energy Services	226,800		1,991,186
Era Group 1	176,980		3,743,127
Exterran Partners L.P.	819,700		17,721,914
Helmerich & Payne	232,142		15,651,014
Oil States International 1	190,205		9,301,025
Pason Systems	1,125,700		21,209,824
Patterson-UTI Energy	28,665		475,552
Precision Drilling	568,250		3,443,595
RPC	78,620		1,025,205
SEACOR Holdings 1	460,690		34,003,529
Tidewater	864,313		28,012,384
Total Energy Services	207,223		2,315,161
Trican Well Service	200,000		958,857
			151,893,245
OIL, GAS & CONSUMABLE FUELS - 0.8%
Cimarex Energy	156,790		16,619,740
Hugoton Royalty Trust	558,500		4,724,910

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 49

Schedules of Investments

Royce Total Return Fund (continued)
	SHARES		VALUE
ENERGY (continued)
OIL, GAS & CONSUMABLE FUELS (continued)
NuStar GP Holdings LLC	369,200	$	12,707,864
Penn Virginia 1,3	633,760		4,233,517
Penn West Petroleum 3	32,100		66,768
			38,352,799
Total (Cost $176,942,448)			190,246,044
FINANCIALS – 26.4%
BANKS - 4.2%
Ames National	423,068		10,974,384
Associated Banc-Corp	493,700		9,197,631
Bank of Hawaii	732,001		43,414,979
BLOM Bank GDR	684,500		7,016,125
BOK Financial	458,968		27,556,439
Camden National	194,540		7,750,474
Canadian Western Bank	933,200		26,305,991
City Holding Company	444,266		20,671,697
Farmers & Merchants Bank of Long Beach 4	479		2,881,664
First Citizens BancShares Cl. A	97,026		24,527,202
First National Bank Alaska 4	3,110		4,920,020
Peapack-Gladstone Financial	604,692		11,223,083
			196,439,689
CAPITAL MARKETS - 6.8%
AGF Management Cl. B	715,600		5,229,337
AllianceBernstein Holding L.P.	1,700,400		43,921,332
Apollo Global Management LLC Cl. A	595,600		14,044,248
Apollo Investment	1,161,400		8,617,588
ASA Gold and Precious Metals	578,892		5,852,598
Ashmore Group	1,704,000		7,387,673
Banca Generali	86,000		2,387,202
Cohen & Steers	285,337		12,006,981
Coronation Fund Managers	1,315,000		12,974,961
Edmond de Rothschild (Suisse)	205		3,149,643
Egyptian Financial Group-Hermes Holding Company 1	1,032,032		2,224,266
Federated Investors Cl. B	800,423		26,357,929
Fortress Investment Group LLC Cl. A	237,530		1,904,991
GAMCO Investors Cl. A	278,300		24,752,002
Janus Capital Group	87,509		1,411,520
KKR & Co. L.P.	1,265,600		29,374,576
Lazard Cl. A	102,090		5,107,563
Monroe Capital	20,991		303,530
MVC Capital	475,000		4,669,250
Oppenheimer Holdings Cl. A	221,512		5,150,154
Paris Orleans	581,675		12,516,558
Raymond James Financial	418,525		23,977,297
Schroders	111,100		4,604,591
SEI Investments	554,670		22,208,987
Teton Advisors Cl. A 4	1,297		67,444
Value Partners Group	12,112,900		10,116,404
Vontobel Holding	150,400		5,662,862
Waddell & Reed Financial Cl. A	365,400		18,204,228
Westwood Holdings Group	45,895		2,837,229
			317,022,944
CONSUMER FINANCE - 0.1%
Cash America International	66,300		1,499,706
Nelnet Cl. A	36,416		1,687,153
			3,186,859
DIVERSIFIED FINANCIAL SERVICES - 0.9%
Leucadia National	141,659		3,175,995
Sofina	279,572		29,385,941
TMX Group	184,000		8,013,772
			40,575,708
INSURANCE - 10.8%
Alleghany Corporation 1	99,522		46,128,447
Allied World Assurance Company Holdings	521,914		19,790,979
American Financial Group	127,886		7,765,238
American National Insurance	159,593		18,235,096
AmTrust Financial Services	37,438		2,105,887
Argo Group International Holdings	16,600		920,802
Aspen Insurance Holdings	266,318		11,656,739
Assurant	37,512		2,566,946
Assured Guaranty	427,392		11,107,918
Baldwin & Lyons Cl. B	318,343		8,206,883
Berkley (W.R.)	34,347		1,760,627
Cincinnati Financial	280,000		14,512,400
E-L Financial	80,488		47,317,356
EMC Insurance Group	46,755		1,657,932
Employers Holdings	106,821		2,511,362
Erie Indemnity Cl. A	571,900		51,911,363
Everest Re Group	13,900		2,367,170
First American Financial	105,161		3,564,958
FNF Group	987,903		34,033,258
Gallagher (Arthur J.) & Co.	673,500		31,708,380
HCI Group	30,300		1,310,172
Infinity Property & Casualty	128,043		9,892,602
Lancashire Holdings	100,000		866,740
Markel Corporation 1	67,900		46,364,836
Mercury General	177,300		10,047,591
National Western Life Insurance Cl. A	4,700		1,265,475
Old Republic International	799,820		11,701,367
PartnerRe	241,201		27,528,270
Platinum Underwriters Holdings	27,006		1,982,781
ProAssurance Corporation	182,000		8,217,300
Reinsurance Group of America	337,456		29,567,895
RenaissanceRe Holdings	22,209		2,159,159
RLI Corp.	182,070		8,994,258
State Auto Financial	392,000		8,710,240
Symetra Financial	175,800		4,052,190
Torchmark Corporation	53,200		2,881,844
United Fire Group	101,191		3,008,408
White Mountains Insurance Group	5,134		3,234,985
			501,615,854
INVESTMENT COMPANIES - 0.1%
British Empire Securities and General Trust	601,182		4,800,316
RIT Capital Partners	100,000		2,177,231
			6,977,547
REAL ESTATE INVESTMENT TRUSTS (REITS) - 1.7%
Colony Financial	411,049		9,791,187
Cousins Properties	421,710		4,815,929
DCT Industrial Trust	280,400		9,999,064
Lexington Realty Trust	707,006		7,762,926
MFA Financial	692,000		5,529,080
National Health Investors	159,570		11,163,517
National Retail Properties	600,000		23,622,000
Rayonier	315,000		8,801,100
			81,484,803

50 |  The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Total Return Fund (continued)
	SHARES		VALUE
FINANCIALS (continued)
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.6%
Alexander & Baldwin	657,100	$	25,797,746
Midland Holdings 1	1,500,000		757,871
			26,555,617
THRIFTS & MORTGAGE FINANCE - 1.2%
Genworth MI Canada	869,570		27,678,343
TrustCo Bank Corp. NY	3,691,044		26,796,979
			54,475,322
Total (Cost $799,745,467)			1,228,334,343
HEALTH CARE – 6.1%
HEALTH CARE EQUIPMENT & SUPPLIES - 3.1%
Analogic Corporation	243,300		20,585,613
Atrion Corporation	3,983		1,354,260
Cantel Medical	40,313		1,743,940
DiaSorin	30,000		1,209,823
Hill-Rom Holdings	534,570		24,387,083
IDEXX Laboratories 1	141,400		20,965,378
Meridian Bioscience	26,800		441,128
STERIS Corporation	610,241		39,574,129
Teleflex	309,700		35,559,754
			145,821,108
HEALTH CARE PROVIDERS & SERVICES - 2.2%
Chemed Corporation	163,157		17,240,800
Landauer 2	553,400		18,893,076
MEDNAX 1	166,436		11,003,084
Omnicare	51,199		3,733,943
Owens & Minor	1,135,750		39,876,183
U.S. Physical Therapy	243,364		10,211,553
			100,958,639
HEALTH CARE TECHNOLOGY - 0.0%
Computer Programs and Systems	16,600		1,008,450
LIFE SCIENCES TOOLS & SERVICES - 0.7%
PerkinElmer	712,600		31,161,998
PHARMACEUTICALS - 0.1%
Recordati	110,000		1,710,180
Santen Pharmaceutical	15,000		802,739
Vetoquinol	26,811		1,164,617
Virbac	3,500		734,337
			4,411,873
Total (Cost $140,136,628)			283,362,068
INDUSTRIALS – 18.8%
AEROSPACE & DEFENSE - 1.1%
AAR Corporation	43,200		1,200,096
American Science and Engineering	207,834		10,786,585
Cubic Corporation	29,299		1,542,299
HEICO Corporation	232,443		14,039,557
HEICO Corporation Cl. A	488,666		23,143,222
National Presto Industries	48,326		2,804,841
			53,516,600
AIR FREIGHT & LOGISTICS - 1.0%
C. H. Robinson Worldwide	256,000		19,171,840
Expeditors International of Washington	515,200		22,983,072
UTi Worldwide 1	492,600		5,945,682
			48,100,594
BUILDING PRODUCTS - 0.6%
A. O. Smith Corporation	465,188		26,241,255
AAON	54,055		1,210,291
			27,451,546
COMMERCIAL SERVICES & SUPPLIES - 3.7%
ABM Industries	641,300		18,373,245
Brady Corporation Cl. A	1,443,235		39,458,045
Ennis	377,444		5,084,171
Healthcare Services Group	184,164		5,696,192
HNI Corporation	454,073		23,184,967
Kimball International Cl. B	724,600		6,608,352
McGrath RentCorp	291,300		10,446,018
Ritchie Bros. Auctioneers	1,384,820		37,237,810
UniFirst Corporation	158,204		19,213,876
US Ecology	40,305		1,617,037
Viad Corporation	208,906		5,569,434
			172,489,147
CONSTRUCTION & ENGINEERING - 0.5%
Comfort Systems USA	200,031		3,424,531
EMCOR Group	66,839		2,973,667
Granite Construction	182,175		6,926,294
KBR	523,572		8,874,545
			22,199,037
ELECTRICAL EQUIPMENT - 1.8%
Acuity Brands	11,668		1,634,337
EnerSys	19,800		1,222,056
Franklin Electric	733,800		27,539,514
Hubbell Cl. B	301,421		32,200,806
LSI Industries	1,047,551		7,112,871
Preformed Line Products	249,324		13,620,570
			83,330,154
INDUSTRIAL CONGLOMERATES - 0.2%
Raven Industries	283,502		7,087,550
MACHINERY - 6.9%
Actuant Corporation Cl. A	35,800		975,192
Alamo Group	352,652		17,082,463
American Railcar Industries	234,309		12,066,913
Briggs & Stratton	655,340		13,382,043
CIRCOR International	25,700		1,549,196
CLARCOR	246,100		16,400,104
Donaldson Company	52,502		2,028,152
Federal Signal	258,869		3,996,937
Foster (L.B.) Company	25,000		1,214,250
Gorman-Rupp Company (The)	720,791		23,151,807
Hillenbrand	243,625		8,405,063
Joy Global	37,100		1,725,892
Kadant	15,700		670,233
Kennametal	156,075		5,585,924
Lincoln Electric Holdings	193,899		13,396,482
Lindsay Corporation	231,282		19,830,119
Miller Industries	384,649		7,996,853
Mueller (Paul) Company 1,2,4	116,700		5,391,540
Mueller Industries	383,624		13,096,923
Nordson Corporation	276,900		21,587,124
Oshkosh Corporation	21,974		1,069,035
Semperit AG Holding	13,000		629,071
Standex International	49,531		3,826,765
Starrett (L.S.) Company (The) Cl. A 2	529,400		10,550,942
Sun Hydraulics	19,349		761,964
Tennant Company	584,096		42,154,208

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 51

Schedules of Investments

Royce Total Return Fund (continued)
	SHARES		VALUE
INDUSTRIALS (continued)
MACHINERY (continued)
Timken Company (The)	13,632	$	581,814
Toro Company (The)	248,964		15,886,393
Trinity Industries	858,574		24,048,658
Valmont Industries	12,600		1,600,200
Woodward	609,200		29,990,916
			320,633,176
PROFESSIONAL SERVICES - 1.7%
Corporate Executive Board	236,000		17,117,080
Exponent	33,696		2,779,920
Heidrick & Struggles International	116,298		2,680,669
Kelly Services Cl. A	634,200		10,794,084
ManpowerGroup	433,252		29,534,789
Michael Page International	200,000		1,269,873
Nihon M&A Center	6,100		185,070
Resources Connection	81,633		1,342,863
Towers Watson & Co. Cl. A	107,800		12,199,726
			77,904,074
ROAD & RAIL - 0.2%
ArcBest Corporation	224,081		10,390,636
TRADING COMPANIES & DISTRIBUTORS - 1.1%
Aceto Corporation	438,099		9,506,748
Applied Industrial Technologies	523,661		23,873,705
Houston Wire & Cable 2	1,378,225		16,469,789
MISUMI Group	20,500		673,371
Watsco	9,702		1,038,114
			51,561,727
Total (Cost $459,320,177)			874,664,241
INFORMATION TECHNOLOGY – 8.2%
COMMUNICATIONS EQUIPMENT - 2.0%
ADTRAN	402,429		8,772,952
Bel Fuse Cl. A	22,350		541,764
Bel Fuse Cl. B	74,000		2,023,160
Black Box	440,602		10,530,388
Comtech Telecommunications	40,684		1,282,360
InterDigital	21,400		1,132,060
NETGEAR 1	812,056		28,892,952
Plantronics	519,376		27,537,316
TESSCO Technologies	333,659		9,676,111
			90,389,063
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 2.5%
AVX Corporation	1,715,510		24,017,140
Cognex Corporation 1	355,500		14,692,815
CTS Corporation	4,400		78,452
Daktronics	96,827		1,211,306
Domino Printing Sciences	110,000		1,124,335
Electro Rent	348,647		4,895,004
FEI Company	23,200		2,096,120
FLIR Systems	218,775		7,068,620
Littelfuse	49,323		4,768,054
Methode Electronics	534,096		19,499,845
MTS Systems	34,341		2,576,605
Nam Tai Property	580,500		2,757,375
Park Electrochemical	56,128		1,399,271
Vishay Intertechnology	2,266,638		32,072,928
			118,257,870
INTERNET SOFTWARE & SERVICES - 0.0%
j2 Global	21,800		1,351,600
IT SERVICES - 2.0%
Amdocs	53,500		2,496,043
Broadridge Financial Solutions	621,800		28,714,724
Calian Technologies	274,004		4,162,653
Convergys Corporation	1,216,027		24,770,470
Forrester Research	42,804		1,684,765
ManTech International Cl. A	769,398		23,258,902
MAXIMUS	100,520		5,512,517
Total System Services	68,895		2,339,674
			92,939,748
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.7%
Brooks Automation	84,581		1,078,408
MKS Instruments	751,919		27,520,236
Power Integrations	16,518		854,641
Teradyne	248,146		4,910,809
			34,364,094
SOFTWARE - 0.4%
Ebix	153,445		2,607,031
Fair Isaac	170,757		12,345,731
Pegasystems	132,508		2,752,191
			17,704,953
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 0.6%
Diebold	842,018		29,167,503
Total (Cost $304,220,672)			384,174,831
MATERIALS – 11.0%
CHEMICALS - 5.1%
Albemarle Corporation	471,500		28,351,295
Balchem Corporation	641,549		42,752,826
Cabot Corporation	781,000		34,254,660
Chase Corporation 2	773,974		27,855,324
FutureFuel Corporation	182,459		2,375,616
Innophos Holdings	6,985		408,273
Innospec	580,199		24,774,497
International Flavors & Fragrances	127,600		12,933,536
Methanex Corporation	310,710		14,239,839
Minerals Technologies	49,993		3,472,014
NewMarket Corporation	10,026		4,045,792
Olin Corporation	56,400		1,284,228
Quaker Chemical	433,029		39,855,989
Victrex	70,000		2,260,448
Westlake Chemical	21,399		1,307,265
			240,171,602
CONSTRUCTION MATERIALS - 0.2%
Ash Grove Cement 4	39,610		7,981,415
CONTAINERS & PACKAGING - 1.7%
AptarGroup	120,400		8,047,536
Bemis Company	489,800		22,143,858
Greif Cl. A	611,801		28,895,361
Mayr-Melnhof Karton	36,800		3,818,928
Sonoco Products	351,778		15,372,699
			78,278,382
METALS & MINING - 2.9%
Agnico Eagle Mines	787,000		19,588,430
Ampco-Pittsburgh	180,306		3,470,890
Carpenter Technology	315,675		15,546,994
Commercial Metals	85,000		1,384,650
Franco-Nevada Corporation	161,000		7,919,590
Gold Fields ADR	3,102,643		14,054,973

52 |  The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Total Return Fund (continued)
	SHARES		VALUE
MATERIALS (continued)
METALS & MINING (continued)
IAMGOLD Corporation 1,3	1,056,620	$	2,852,874
Pan American Silver	1,643,000		15,115,600
Reliance Steel & Aluminum	503,807		30,868,255
†Sims Metal Management	1,000,000		9,750,282
Worthington Industries	437,800		13,173,402
			133,725,940
PAPER & FOREST PRODUCTS - 1.1%
Deltic Timber	172,000		11,764,800
Domtar Corporation	526,100		21,159,742
Schweitzer-Mauduit International	466,754		19,743,694
			52,668,236
Total (Cost $346,269,483)			512,825,575
TELECOMMUNICATION SERVICES – 0.9%
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.4%
Atlantic Tele-Network	275,703		18,634,766
WIRELESS TELECOMMUNICATION SERVICES - 0.5%
Spok Holdings	91,666		1,591,322
Telephone and Data Systems	842,190		21,265,297
			22,856,619
Total (Cost $28,697,400)			41,491,385
UTILITIES – 2.8%
ELECTRIC UTILITIES - 1.1%
ALLETE	175,747		9,690,690
ITC Holdings	750,000		30,322,500
PNM Resources	319,400		9,463,822
			49,477,012
GAS UTILITIES - 0.8%
AGL Resources	312,558		17,037,536
National Fuel Gas	16,826		1,169,912
Piedmont Natural Gas	539,500		21,261,695
			39,469,143
WATER UTILITIES - 0.9%
Aqua America	1,024,707		27,359,677
SJW	400,400		12,860,848
			40,220,525
Total (Cost $66,094,953)			129,166,680
MISCELLANEOUS5 – 3.4%
Total (Cost $156,789,873)			160,720,148
TOTAL COMMON STOCKS
(Cost $3,005,721,169)			4,521,943,000
REPURCHASE AGREEMENT – 2.3%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $109,237,000 (collateralized by obligations of various U.S. Government Agencies, 1.06% due 10/12/17, valued at $111,425,075)
(Cost $109,237,000)			109,237,000
COLLATERAL RECEIVED FOR SECURITIES LOANED – 0.1%
Money Market Funds
Federated Government Obligations Fund (7 day yield-0.0099%)
(Cost $5,893,087)			5,893,087
TOTAL INVESTMENTS – 99.5%
(Cost $3,120,851,256)		$	4,637,073,087
CASH AND OTHER ASSETS LESS LIABILITIES – 0.5%			21,685,466
NET ASSETS – 100.0%		$	4,658,758,553

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 53

Schedules of Investments

Royce Heritage Fund
Common Stocks – 96.7%
	SHARES		VALUE
CONSUMER DISCRETIONARY – 11.6%
AUTO COMPONENTS - 2.1%
BorgWarner	11,600	$	637,420
Drew Industries 1	54,900		2,803,743
Gentex Corporation	16,000		578,080
Nokian Renkaat	28,000		685,825
Selamat Sempurna	4,253,800		1,622,445
Standard Motor Products	31,183		1,188,696
			7,516,209
AUTOMOBILES - 0.6%
Thor Industries	39,450		2,204,072
DISTRIBUTORS - 1.0%
Core-Mark Holding Company	57,100		3,536,203
DIVERSIFIED CONSUMER SERVICES - 0.2%
Chegg 1,3	91,700		633,647
HOUSEHOLD DURABLES - 2.4%
Ethan Allen Interiors	55,900		1,731,223
Forbo Holding	1,000		1,000,226
Garmin	25,500		1,347,165
Mohawk Industries 1	17,900		2,780,944
NVR 1	1,425		1,817,345
			8,676,903
INTERNET & CATALOG RETAIL - 0.3%
Trade Me	340,600		950,653
MULTILINE RETAIL - 0.6%
Dollar Tree 1	22,300		1,569,474
New World Department Store China	2,405,000		768,853
			2,338,327
SPECIALTY RETAIL - 3.6%
Advance Auto Parts	10,161		1,618,444
Barnes & Noble 1	15,000		348,300
Bed Bath & Beyond 1	60,200		4,585,434
Destination Maternity	42,100		671,495
Luk Fook Holdings (International)	250,000		936,211
Matas	54,400		1,240,790
Monro Muffler Brake	37,100		2,144,380
USS	86,300		1,328,070
			12,873,124
TEXTILES, APPAREL & LUXURY GOODS - 0.8%
Forus	113,800		473,804
Wolverine World Wide	80,200		2,363,494
			2,837,298
Total (Cost $31,415,561)			41,566,436
CONSUMER STAPLES – 0.6%
FOOD & STAPLES RETAILING - 0.1%
FamilyMart	6,900		257,588
FOOD PRODUCTS - 0.5%
Darling Ingredients 1	95,500		1,734,280
Total (Cost $1,463,374)			1,991,868
ENERGY – 4.2%
ENERGY EQUIPMENT & SERVICES - 3.6%
Core Laboratories	8,200		986,788
Ensign Energy Services	24,800		217,731
Helmerich & Payne	33,300		2,245,086
Pason Systems	133,000		2,505,913
TGS-NOPEC Geophysical	68,000		1,471,271
Tidewater	30,600		991,746
Transocean	86,300		1,581,879
Trican Well Service	187,600		899,408
Unit Corporation 1	64,600		2,202,860
			13,102,682
OIL, GAS & CONSUMABLE FUELS - 0.6%
World Fuel Services	43,500		2,041,455
Total (Cost $19,986,020)			15,144,137
FINANCIALS – 17.1%
CAPITAL MARKETS - 13.6%
AllianceBernstein Holding L.P.	139,641		3,606,927
ARA Asset Management	955,000		1,223,200
Artisan Partners Asset Management Cl. A	51,860		2,620,486
Ashmore Group	475,300		2,060,658
Blackstone Group L.P.	60,000		2,029,800
CETIP - Mercados Organizados	82,400		997,953
Charles Schwab	75,700		2,285,383
Coronation Fund Managers	200,000		1,973,378
Egyptian Financial Group-Hermes Holding
Company 1	298,500		643,336
Federated Investors Cl. B	89,000		2,930,770
Invesco	32,400		1,280,448
Jupiter Fund Management	455,600		2,557,830
KKR & Co. L.P.	211,000		4,897,310
Lazard Cl. A	39,500		1,976,185
†Medley Management Cl. A	202,700		2,979,690
Partners Group Holding	3,500		1,015,026
SEI Investments	94,900		3,799,796
Sprott	508,500		1,067,946
State Street	45,900		3,603,150
TD Ameritrade Holding Corporation	50,600		1,810,468
Value Partners Group	3,165,000		2,643,332
WisdomTree Investments	41,500		650,513
			48,653,585
CONSUMER FINANCE - 0.4%
Shriram Transport Finance	92,000		1,606,347
DIVERSIFIED FINANCIAL SERVICES - 1.4%
Bolsa Mexicana de Valores	1,646,000		2,981,013
JSE	74,000		772,929
Warsaw Stock Exchange	114,000		1,468,924
			5,222,866
INSURANCE - 0.9%
Marsh & McLennan	53,900		3,085,236
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.8%
Brasil Brokers Participacoes	605,000		575,363
Jones Lang LaSalle	2,800		419,804
Kennedy-Wilson Holdings	56,400		1,426,920
LPS Brasil Consultoria de Imoveis	121,000		292,471
			2,714,558
Total (Cost $46,271,081)			61,282,592
HEALTH CARE – 5.6%
HEALTH CARE EQUIPMENT & SUPPLIES - 3.3%
Analogic Corporation	16,660		1,409,603
Atrion Corporation	4,900		1,666,049
DENTSPLY International	101,500		5,406,905
STERIS Corporation	29,000		1,880,650
Vascular Solutions 1	52,000		1,412,320
			11,775,527

54 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Heritage Fund (continued)
	SHARES		VALUE
HEALTH CARE (continued)
HEALTH CARE PROVIDERS & SERVICES - 0.1%
Raffles Medical Group	158,000	$	463,575
LIFE SCIENCES TOOLS & SERVICES - 1.8%
Bio-Rad Laboratories Cl. A 1	6,400		771,584
Bio-Techne	20,200		1,866,480
Mettler-Toledo International 1	8,200		2,480,172
Waters Corporation 1	13,250		1,493,540
			6,611,776
PHARMACEUTICALS - 0.4%
Recordati	86,000		1,337,050
Total (Cost $15,691,278)			20,187,928
INDUSTRIALS – 25.5%
AEROSPACE & DEFENSE - 0.7%
Curtiss-Wright	8,500		600,015
HEICO Corporation	34,178		2,064,351
			2,664,366
AIR FREIGHT & LOGISTICS - 2.8%
Expeditors International of Washington	115,600		5,156,916
Forward Air	66,200		3,334,494
UTi Worldwide 1	136,600		1,648,762
			10,140,172
COMMERCIAL SERVICES & SUPPLIES - 5.0%
Cintas Corporation	22,600		1,772,744
Copart 1	175,380		6,399,616
Healthcare Services Group	31,700		980,481
Heritage-Crystal Clean 1	144,327		1,779,552
Kaba Holding	2,400		1,210,160
Ritchie Bros. Auctioneers	208,508		5,606,780
			17,749,333
CONSTRUCTION & ENGINEERING - 1.9%
Fluor Corporation	17,100		1,036,773
Jacobs Engineering Group 1	61,500		2,748,435
KBR	174,900		2,964,555
			6,749,763
ELECTRICAL EQUIPMENT - 0.2%
EnerSys	7,700		475,244
Powell Industries	2,700		132,489
			607,733
INDUSTRIAL CONGLOMERATES - 0.9%
Carlisle Companies	22,600		2,039,424
Raven Industries	50,400		1,260,000
			3,299,424
MACHINERY - 7.1%
AGCO Corporation	10,300		465,560
Burckhardt Compression Holding	2,000		765,745
CIRCOR International	21,000		1,265,880
Donaldson Company	82,400		3,183,112
Foster (L.B.) Company	33,700		1,636,809
Graco	30,400		2,437,472
Kennametal	62,600		2,240,454
Mueller Industries	32,500		1,109,550
Pfeiffer Vacuum Technology	12,000		996,096
RBC Bearings	65,700		4,239,621
Rotork	20,000		719,705
Semperit AG Holding	17,350		839,568
Sun Hydraulics	62,885		2,476,411
Valmont Industries	22,870		2,904,490
voxeljet ADR 1,3	16,600		134,792
			25,415,265
MARINE - 0.5%
Clarkson	57,100		1,685,455
PROFESSIONAL SERVICES - 4.1%
Advisory Board (The) 1	34,200		1,675,116
Equifax	24,150		1,953,011
Exponent	5,700		470,250
Franklin Covey 1	31,000		600,160
ManpowerGroup	52,891		3,605,579
RPX Corporation 1	46,500		640,770
Towers Watson & Co. Cl. A	32,500		3,678,025
Verisk Analytics Cl. A 1	30,800		1,972,740
			14,595,651
ROAD & RAIL - 1.7%
FRP Holdings 1	79,512		3,117,666
Landstar System	42,000		3,046,260
			6,163,926
TRADING COMPANIES & DISTRIBUTORS - 0.6%
Applied Industrial Technologies	33,062		1,507,297
MSC Industrial Direct Cl. A	9,070		736,937
			2,244,234
Total (Cost $75,141,671)			91,315,322
INFORMATION TECHNOLOGY – 18.5%
COMMUNICATIONS EQUIPMENT - 0.5%
ADTRAN	28,650		624,570
Plantronics	22,100		1,171,742
			1,796,312
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 8.4%
Anixter International 1	48,800		4,316,848
AVX Corporation	211,963		2,967,482
Coherent 1	59,500		3,612,840
E2V Technologies	362,000		973,917
FEI Company	31,100		2,809,885
FLIR Systems	92,800		2,998,368
IPG Photonics 1	26,214		1,963,953
LPKF Laser & Electronics 3	72,000		943,341
National Instruments	127,800		3,973,302
Rogers Corporation 1	66,532		5,418,366
			29,978,302
INTERNET SOFTWARE & SERVICES - 0.4%
Envestnet 1	30,200		1,484,028
IT SERVICES - 2.6%
Computer Task Group	15,400		146,762
eClerx Services	72,000		1,488,646
Fiserv 1	39,760		2,821,767
MAXIMUS	52,200		2,862,648
Metrofile Holdings	3,211,000		1,386,929
Teradata Corporation 1	14,100		615,888
			9,322,640
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.6%
Diodes 1	179,700		4,954,329
Lam Research	19,500		1,547,130
Silicon Image 1	65,500		361,560
Teradyne	83,600		1,654,444
Veeco Instruments 1	27,400		955,712
			9,473,175

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 55

Schedules of Investments

Royce Heritage Fund (continued)
	SHARES		VALUE
INFORMATION TECHNOLOGY (continued)
SOFTWARE - 2.4%
Advent Software	12,700	$	389,128
†ePlus 1	37,400		2,830,806
Mentor Graphics	77,600		1,700,992
Rovi Corporation 1	75,000		1,694,250
Silverlake Axis	984,600		931,451
Totvs	73,900		972,351
			8,518,978
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 1.6%
†Diebold	97,450		3,375,668
Western Digital	23,265		2,575,436
			5,951,104
Total (Cost $50,411,775)			66,524,539
MATERIALS – 8.6%
CHEMICALS - 3.1%
Airgas	9,200		1,059,656
Cabot Corporation	48,700		2,135,982
Innospec	53,465		2,282,956
Minerals Technologies	19,100		1,326,495
Quaker Chemical	7,500		690,300
Victrex	45,700		1,475,749
Westlake Chemical	35,190		2,149,757
			11,120,895
CONTAINERS & PACKAGING - 0.8%
Greif Cl. A	57,800		2,729,894
METALS & MINING - 3.3%
Compass Minerals International	29,600		2,570,168
Fresnillo	48,000		569,606
Major Drilling Group International	203,900		1,002,125
Randgold Resources ADR	31,600		2,130,156
Reliance Steel & Aluminum	71,880		4,404,088
†Sims Metal Management	131,800		1,285,087
			11,961,230
PAPER & FOREST PRODUCTS - 1.4%
Glatfelter	87,858		2,246,529
Stella-Jones	98,500		2,775,770
			5,022,299
Total (Cost $28,940,846)			30,834,318
UTILITIES – 0.5%
GAS UTILITIES - 0.5%
UGI Corporation	44,400		1,686,312
Total (Cost $1,314,777)			1,686,312
MISCELLANEOUS5 – 4.5%
Total (Cost $16,946,532)			16,327,660
TOTAL COMMON STOCKS
(Cost $287,582,915)			346,861,112

REPURCHASE AGREEMENT – 3.4%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $12,085,000 (collateralized by obligations of various U.S. Government Agencies, 1.06% due 10/12/17, valued at $12,328,050)
(Cost $12,085,000)	$	12,085,000
COLLATERAL RECEIVED FOR SECURITIES LOANED – 0.3%
Money Market Funds
Federated Government Obligations Fund (7 day yield-0.0099%)
(Cost $964,385)		964,385
TOTAL INVESTMENTS – 100.4%
(Cost $300,632,300)		359,910,497
LIABILITIES LESS CASH AND OTHER ASSETS – (0.4)%		(1,392,379)
NET ASSETS – 100.0%	$	358,518,118

56 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Opportunity Fund
Common Stocks – 93.0%
	SHARES		VALUE
CONSUMER DISCRETIONARY – 12.5%
AUTO COMPONENTS - 1.9%
Cooper Tire & Rubber	274,600	$	9,514,890
Dana Holding Corporation	710,836		15,453,575
Fuel Systems Solutions 1	566,700		6,199,698
Spartan Motors	809,117		4,255,955
Tower International 1	318,154		8,128,835
			43,552,953
AUTOMOBILES - 0.1%
Winnebago Industries	149,000		3,242,240
DISTRIBUTORS - 0.2%
VOXX International Cl. A 1	489,413		4,287,258
HOTELS, RESTAURANTS & LEISURE - 1.6%
Belmond Cl. A 1	909,419		11,249,513
Carrols Restaurant Group 1	1,119,405		8,541,060
Krispy Kreme Doughnuts 1	411,061		8,114,344
Ruby Tuesday 1	1,146,500		7,842,060
			35,746,977
HOUSEHOLD DURABLES - 2.7%
Dixie Group 1,2	845,735		7,755,390
Ethan Allen Interiors	186,500		5,775,905
†Installed Building Products1,3	472,200		8,414,604
M.D.C. Holdings	385,950		10,216,096
M/I Homes 1	378,500		8,690,360
Standard Pacific 1	1,133,800		8,265,402
TRI Pointe Homes 1	454,872		6,936,798
ZAGG 1	748,381		5,081,507
			61,136,062
INTERNET & CATALOG RETAIL - 0.6%
EVINE Live 1	1,265,406		8,339,026
Gaiam Cl. A 1	853,962		6,088,749
			14,427,775
LEISURE PRODUCTS - 0.2%
Black Diamond 1,3	519,239		4,543,341
MEDIA - 1.7%
Ballantyne Strong 1	642,446		2,640,453
Cinedigm Cl. A 1	894,686		1,449,391
Entravision Communications Cl. A	1,139,000		7,380,720
Martha Stewart Living Omnimedia Cl. A 1	1,758,079		7,577,321
McClatchy Company (The) Cl. A 1	2,360,769		7,837,753
Media General 1,3	380,700		6,369,111
New York Times Cl. A	513,399		6,787,135
			40,041,884
MULTILINE RETAIL - 0.6%
Bon-Ton Stores (The)	241,765		1,791,479
Hudson’s Bay	212,200		4,485,825
J.C. Penney Company 1,3	1,242,531		8,051,601
			14,328,905
SPECIALTY RETAIL - 2.3%
Ascena Retail Group 1	410,560		5,156,634
bebe stores	1,440,284		3,154,222
†Cache 1,3	1,196,180		239,236
Chico’s FAS	415,600		6,736,876
Destination Maternity	250,037		3,988,090
New York & Company 1	1,160,617		3,064,029
Pacific Sunwear of California 1,3	923,701		2,013,668
Rent-A-Center	283,206		10,286,042
Sears Hometown and Outlet Stores 1,3	315,245		4,145,472
West Marine 1	1,070,924		13,836,338
Wet Seal (The) Cl. A 1,3	683,636		44,368
			52,664,975
TEXTILES, APPAREL & LUXURY GOODS - 0.6%
Quiksilver 1,3	1,006,782		2,224,988
Unifi 1	418,067		12,429,132
			14,654,120
Total (Cost $257,901,830)			288,626,490
CONSUMER STAPLES – 1.2%
FOOD & STAPLES RETAILING - 0.4%
SUPERVALU 1	943,900		9,155,830
HOUSEHOLD PRODUCTS - 0.3%
Central Garden & Pet 1	902,664		7,925,390
PERSONAL PRODUCTS - 0.5%
Elizabeth Arden 1,3	511,020		10,930,718
Total (Cost $25,164,765)			28,011,938
ENERGY – 2.1%
ENERGY EQUIPMENT & SERVICES - 1.0%
Basic Energy Services 1	197,395		1,383,739
Hercules Offshore 1,3	476,300		476,300
Key Energy Services 1	1,075,500		1,796,085
Matrix Service 1	216,128		4,823,977
Newpark Resources 1	791,331		7,549,298
Parker Drilling 1	532,000		1,633,240
Willbros Group 1	800,200		5,017,254
			22,679,893
OIL, GAS & CONSUMABLE FUELS - 1.1%
†Approach Resources 1,3	240,200		1,534,878
Matador Resources 1	71,036		1,437,058
Pengrowth Energy	1,765,200		5,489,772
Scorpio Tankers	900,526		7,825,571
Solazyme 1,3	173,218		446,902
StealthGas 1	949,617		5,992,083
Swift Energy 1,3	671,951		2,721,402
			25,447,666
Total (Cost $75,080,917)			48,127,559
FINANCIALS – 10.3%
BANKS - 4.8%
BancorpSouth	252,600		5,686,026
BankUnited	301,298		8,728,603
Boston Private Financial Holdings	917,446		12,357,998
Capital Bank Financial Cl. A 1	277,800		7,445,040
CenterState Banks	341,541		4,067,753
Columbia Banking System	117,800		3,252,458
Fidelity Southern	217,140		3,498,125
First Bancorp	172,408		3,184,376
First Internet Bancorp	110,100		1,843,074
Guaranty Bancorp	232,258		3,353,806
Hilltop Holdings 1	427,676		8,532,136
Independent Bank Group	64,600		2,523,276
South State	111,926		7,507,996
Southern National Bancorp of Virginia	218,015		2,463,569
State Bank Financial	383,959		7,671,501
Trustmark Corporation	389,900		9,568,146
Umpqua Holdings	568,800		9,675,288
United Bankshares	251,939		9,435,116
			110,794,287

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 57

Schedules of Investments

Royce Opportunity Fund (continued)
	SHARES		VALUE
FINANCIALS (continued)
CAPITAL MARKETS - 0.0%
Harris & Harris Group 1	441,996	$	1,303,888
CONSUMER FINANCE - 0.5%
Cash America International	135,300		3,060,486
†EZCORP Cl. A 1,3	697,992		8,201,406
			11,261,892
INSURANCE - 1.8%
Ambac Financial Group 1	296,546		7,265,377
Assured Guaranty	614,800		15,978,652
MBIA 1	1,203,676		11,483,069
Old Republic International	488,238		7,142,922
			41,870,020
REAL ESTATE INVESTMENT TRUSTS (REITS) - 1.4%
BRT Realty Trust 1	98,309		686,197
LaSalle Hotel Properties	199,600		8,077,812
Mack-Cali Realty	536,550		10,226,643
RAIT Financial Trust	274,000		2,101,580
Rouse Properties	630,933		11,684,879
			32,777,111
THRIFTS & MORTGAGE FINANCE - 1.8%
Berkshire Hills Bancorp	200,400		5,342,664
Brookline Bancorp	338,700		3,397,161
MGIC Investment 1	619,485		5,773,600
Radian Group	704,000		11,770,880
Walker & Dunlop 1	367,912		6,453,177
Washington Federal	392,400		8,691,660
			41,429,142
Total (Cost $184,397,582)			239,436,340
HEALTH CARE – 4.0%
HEALTH CARE EQUIPMENT & SUPPLIES - 2.3%
Accuray 1,3	872,900		6,590,395
Alere 1	143,000		5,434,000
AngioDynamics 1	478,840		9,102,748
Exactech 1	294,283		6,936,250
Invacare Corporation	741,585		12,428,965
Merit Medical Systems 1	537,028		9,306,695
RTI Surgical 1	608,948		3,166,530
			52,965,583
HEALTH CARE PROVIDERS & SERVICES - 0.5%
Kindred Healthcare	125,400		2,279,772
Owens & Minor	192,100		6,744,631
Select Medical Holdings	182,414		2,626,762
			11,651,165
HEALTH CARE TECHNOLOGY - 0.4%
Allscripts Healthcare Solutions 1	830,636		10,607,222
LIFE SCIENCES TOOLS & SERVICES - 0.8%
Albany Molecular Research 1,3	775,510		12,625,303
Cambrex Corporation 1	257,567		5,568,598
			18,193,901
Total (Cost $62,988,564)			93,417,871
INDUSTRIALS – 20.1%
AEROSPACE & DEFENSE - 0.7%
Kratos Defense & Security Solutions 1	1,228,852		6,168,837
LMI Aerospace 1,2,3	702,037		9,898,722
			16,067,559
AIR FREIGHT & LOGISTICS - 1.4%
Atlas Air Worldwide Holdings 1	347,462		17,129,876
XPO Logistics 1,3	366,700		14,990,696
			32,120,572
AIRLINES - 0.7%
†Hawaiian Holdings 1,3	267,432		6,966,603
JetBlue Airways 1,3	375,000		5,947,500
Republic Airways Holdings 1	304,181		4,438,001
			17,352,104
BUILDING PRODUCTS - 3.5%
Apogee Enterprises	127,002		5,381,075
Builders FirstSource 1	745,156		5,119,222
Gibraltar Industries 1	403,887		6,567,202
Griffon Corporation	626,200		8,328,460
Insteel Industries	434,427		10,243,788
NCI Building Systems 1	917,000		16,982,840
PGT 1	729,108		7,021,310
†Ply Gem Holdings 1	460,916		6,443,606
Quanex Building Products	790,586		14,847,205
			80,934,708
COMMERCIAL SERVICES & SUPPLIES - 1.5%
ABM Industries	355,700		10,190,805
Interface	836,416		13,775,772
TRC Companies 1,2	1,740,430		11,034,326
			35,000,903
CONSTRUCTION & ENGINEERING - 1.8%
Aegion Corporation 1	679,289		12,641,568
Ameresco Cl. A 1	159,569		1,116,983
Furmanite Corporation 1	1,080,068		8,446,132
Layne Christensen 1,3	705,117		6,726,816
Northwest Pipe 1	386,556		11,643,067
			40,574,566
ELECTRICAL EQUIPMENT - 1.6%
†Encore Wire	342,540		12,787,018
†Enphase Energy 1,3	410,680		5,868,617
General Cable	833,943		12,425,751
Magnetek 1,3	169,863		6,904,931
			37,986,317
MACHINERY - 6.4%
Accuride Corporation 1	787,400		3,417,316
Albany International Cl. A	344,350		13,081,857
Astec Industries	388,928		15,288,760
Barnes Group	120,849		4,472,622
Commercial Vehicle Group 1	1,246,240		8,299,958
Dynamic Materials	486,639		7,795,957
Federal Signal	1,074,132		16,584,598
Hardinge	597,497		7,122,164
Hurco Companies	206,791		7,049,505
Lydall 1	142,297		4,670,188
Meritor 1	742,621		11,250,708
Mueller Industries	552,121		18,849,411
Mueller Water Products Cl. A	1,789,076		18,320,138
NN	593,183		12,195,842
			148,399,024
MARINE - 0.6%
Baltic Trading	1,257,037		3,155,163
Diana Shipping 1	959,600		6,438,916
Navios Maritime Holdings	1,154,749		4,746,018
			14,340,097

58 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Opportunity Fund (continued)
	SHARES		VALUE
INDUSTRIALS (continued)
PROFESSIONAL SERVICES - 0.5%
CTPartners Executive Search 1	216,725	$	3,292,053
Hill International 1	538,407		2,067,483
Hudson Global 1	382,822		1,186,748
Kelly Services Cl. A	266,300		4,532,426
			11,078,710
ROAD & RAIL - 0.6%
Swift Transportation Cl. A 1	480,574		13,758,834
TRADING COMPANIES & DISTRIBUTORS - 0.5%
Kaman Corporation	261,331		10,476,760
TRANSPORTATION INFRASTRUCTURE - 0.3%
Wesco Aircraft Holdings 1	556,800		7,784,064
Total (Cost $352,114,066)			465,874,218
INFORMATION TECHNOLOGY – 29.6%
COMMUNICATIONS EQUIPMENT - 2.6%
ARRIS Group 1	337,100		10,177,049
Aviat Networks 1,3	2,331,308		3,496,962
Ciena Corporation 1,3	479,500		9,307,095
ClearOne 3	324,334		3,133,066
Comtech Telecommunications	197,100		6,212,592
EMCORE Corporation 1	833,200		4,415,960
Emulex Corporation 1	774,625		4,392,124
Extreme Networks 1	1,884,576		6,652,553
Harmonic 1	742,277		5,203,362
Interphase Corporation 1	401,003		910,277
Oclaro 1,3	1,283,277		2,284,233
UTStarcom Holdings 1	1,172,528		3,318,254
Westell Technologies Cl. A 1	309,057		463,586
			59,967,113
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 8.9%
Benchmark Electronics 1	580,700		14,773,008
CTS Corporation	428,180		7,634,449
Daktronics	651,125		8,145,574
Echelon Corporation 1,3	1,324,586		2,251,796
Frequency Electronics 1	228,863		2,615,904
GSI Group 1	518,825		7,637,104
Identiv 1,3	526,268		7,309,863
II-VI 1	869,514		11,868,866
Ingram Micro Cl. A 1	623,800		17,241,832
KEMET Corporation 1	2,006,907		8,429,009
†Knowles Corporation 1,3	333,000		7,842,150
Maxwell Technologies 1	857,060		7,816,387
Mercury Systems 1	854,678		11,897,118
Newport Corporation 1	782,984		14,962,824
Park Electrochemical	351,234		8,756,264
PCM 1	424,592		4,042,116
Perceptron	276,713		2,753,294
Planar Systems 1,3	1,079,499		9,035,407
RadiSys Corporation 1,3	1,400,113		3,276,264
Sanmina Corporation 1	827,323		19,466,910
SigmaTron International 1,2,3	345,772		2,309,757
TTM Technologies 1	906,925		6,829,145
Vishay Intertechnology	1,078,823		15,265,346
Vishay Precision Group 1	191,542		3,286,861
			205,447,248
INTERNET SOFTWARE & SERVICES - 1.7%
Bankrate 1	361,708		4,496,030
Blucora 1	384,730		5,328,510
EarthLink Holdings	2,010,158		8,824,594
Monster Worldwide 1	1,427,000		6,592,740
Perficient 1	233,183		4,344,199
QuinStreet 1	1,261,439		7,656,935
Support.com 1	1,180,397		2,490,638
			39,733,646
IT SERVICES - 1.5%
CIBER 1	1,741,873		6,183,649
Computer Task Group	710,314		6,769,293
Datalink Corporation 1	751,309		9,691,886
Unisys Corporation 1	410,300		12,095,644
			34,740,472
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 11.2%
Advanced Energy Industries 1	784,451		18,591,489
Alpha & Omega Semiconductor 1	1,071,271		9,480,748
Amtech Systems 1	252,710		2,565,006
ANADIGICS 1,3	2,752,645		2,064,484
Axcelis Technologies 1	1,345,794		3,445,233
AXT 1	560,637		1,569,784
Brooks Automation	1,329,200		16,947,300
BTU International 1,2	806,549		2,653,546
Cohu	571,026		6,795,209
Cree 1,3	200,700		6,466,554
Exar Corporation 1	1,174,794		11,982,899
Fairchild Semiconductor International 1	753,620		12,721,106
FormFactor 1	902,761		7,763,745
Integrated Silicon Solution	263,275		4,362,467
Intersil Corporation Cl. A	868,899		12,572,968
Kulicke & Soffa Industries 1	689,200		9,965,832
Mattson Technology 1	795,800		2,705,720
Microsemi Corporation 1	722,654		20,508,920
Nanometrics 1	675,139		11,355,838
NeoPhotonics Corporation 1,3	983,558		3,324,426
OmniVision Technologies 1	172,311		4,480,086
Pericom Semiconductor  1,2	1,221,199		16,535,034
RF Micro Devices 1,3	822,300		13,641,957
Rubicon Technology 1,3	800,506		3,658,312
Rudolph Technologies 1	720,911		7,374,919
SemiLEDs Corporation 1,3	956,840		1,052,524
Spire Corporation 1,2,4	675,600		172,278
SunEdison 1,3	537,478		10,486,196
†SunEdison Semiconductor 1,3	463,051		8,598,857
SunPower Corporation 1,3	97,453		2,517,211
Ultra Clean Holdings 1	665,238		6,173,409
Vitesse Semiconductor 1	906,078		3,424,975
Xcerra Corporation 1	1,300,705		11,914,458
			257,873,490
SOFTWARE - 0.8%
†A10 Networks 1,3	619,735		2,702,045
Mentor Graphics	519,719		11,392,240
SeaChange International 1	560,700		3,577,266
Smith Micro Software 1,3	1,314,603		1,275,165
			18,946,716
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 2.9%
Avid Technology 1	1,078,780		15,329,464
Cray 1	470,467		16,221,702
Dot Hill Systems 1	1,501,671		6,637,386
Intevac 1	744,247		5,782,799

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 59

Schedules of Investments

Royce Opportunity Fund (continued)
	SHARES		VALUE
INFORMATION TECHNOLOGY (continued)
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS (continued)
QLogic Corporation 1	797,900	$	10,628,028
†Silicon Graphics International 1,3	1,150,473		13,092,383
			67,691,762
Total (Cost $574,993,145)			684,400,447
MATERIALS – 7.8%
CHEMICALS - 1.9%
Ferro Corporation 1	738,911		9,576,287
Kraton Performance Polymers 1	641,200		13,330,548
OM Group	335,328		9,992,774
Schulman (A.)	247,819		10,044,104
			42,943,713
CONSTRUCTION MATERIALS - 0.2%
U.S. Concrete 1	144,500		4,111,025
METALS & MINING - 5.3%
†A. M. Castle & Co. 1,3	626,832		5,002,119
AK Steel Holding Corporation 1,3	1,278,300		7,593,102
Carpenter Technology	200,836		9,891,173
Century Aluminum 1	470,904		11,490,058
Commercial Metals	1,137,061		18,522,724
Haynes International	274,687		13,322,319
Kaiser Aluminum	240,500		17,178,915
Molycorp 1,3	422,211		371,799
Noranda Aluminum Holding Corporation	1,897,883		6,680,548
Pan American Silver	894,500		8,229,400
RTI International Metals 1	728,269		18,396,075
Synalloy Corporation	324,567		5,715,625
			122,393,857
PAPER & FOREST PRODUCTS - 0.4%
Louisiana-Pacific Corporation 1	628,400		10,406,304
Total (Cost $144,807,919)			179,854,899
TELECOMMUNICATION SERVICES – 0.6%
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.6%
Iridium Communications 1,3	1,512,306		14,744,983
Total (Cost $11,426,670)			14,744,983
MISCELLANEOUS5 – 4.8%
Total (Cost $114,636,503)			109,808,078
TOTAL COMMON STOCKS
(Cost $1,803,511,961)			2,152,302,823
REPURCHASE AGREEMENT – 7.1%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $164,768,000 (collateralized by obligations of various U.S. Government Agencies, 1.10%- 2.625% due 12/18/17-1/31/18, valued at $168,065,400)
(Cost $164,768,000)			164,768,000

		PRINCIPAL
		AMOUNT		VALUE
COLLATERAL RECEIVED FOR SECURITIES LOANED – 7.1%
U.S. Treasury Bills
due 1/8/15-11/12/15	$	676		676
U.S. Treasury Bonds
0.75%-6.00%
due 1/15/25-5/15/44		9,826		9,923
U.S. Treasury Notes
0.125%-4.25%
due 2/28/15-8/15/24		760,390		764,795
U.S. Treasury Strips-Interest
due 8/15/18-11/15/25		2,221		2,218
Money Market Funds
Federated Government Obligations Fund (7 day yield-
0.0099%)				163,812,382
TOTAL COLLATERAL RECEIVED FOR SECURITIES LOANED
(Cost $164,589,994)				164,589,994
TOTAL INVESTMENTS – 107.2%
(Cost $2,132,869,955)				2,481,660,817
LIABILITIES LESS CASH AND OTHER ASSETS – (7.2)%				(166,291,527)
NET ASSETS – 100.0%			$	2,315,369,290

60 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Special Equity Fund
Common Stocks – 94.6%
	SHARES		VALUE
CONSUMER DISCRETIONARY – 32.8%
AUTO COMPONENTS - 4.7%
†Dana Holding Corporation	2,300,000	$	50,002,000
Standard Motor Products 2	2,268,000		86,456,160
			136,458,160
HOTELS, RESTAURANTS & LEISURE - 0.7%
Bowl America Cl. A 2	343,048		4,912,447
Frisch’s Restaurants 2	505,100		13,536,680
			18,449,127
HOUSEHOLD DURABLES - 0.9%
CSS Industries 2	972,385		26,876,721
MEDIA - 7.9%
Meredith Corporation 2	2,375,000		129,010,000
Scholastic Corporation 2	2,725,000		99,244,500
			228,254,500
SPECIALTY RETAIL - 18.6%
Bed Bath & Beyond 1	2,440,000		185,854,800
Buckle (The)	1,713,100		89,972,012
Children’s Place 2	2,170,000		123,690,000
Finish Line (The) Cl. A 2	4,775,000		116,080,250
†Haverty Furniture	985,163		21,683,438
			537,280,500
Total (Cost $736,006,208)			947,319,008
CONSUMER STAPLES – 6.6%
FOOD & STAPLES RETAILING - 2.4%
Weis Markets 2	1,486,100		71,065,302
FOOD PRODUCTS - 1.3%
Lancaster Colony	390,000		36,519,600
TOBACCO - 2.9%
Universal Corporation 2	1,900,000		83,562,000
Total (Cost $169,115,322)			191,146,902
ENERGY – 1.2%
ENERGY EQUIPMENT & SERVICES - 1.2%
RPC	2,668,100		34,792,024
Total (Cost $38,231,766)			34,792,024
FINANCIALS – 0.3%
CAPITAL MARKETS - 0.3%
†Waddell & Reed Financial Cl. A	194,286		9,679,328
Total (Cost $9,618,291)			9,679,328
HEALTH CARE – 2.5%
HEALTH CARE EQUIPMENT & SUPPLIES - 1.3%
Atrion Corporation 2	115,000		39,101,150
LIFE SCIENCES TOOLS & SERVICES - 1.2%
Bio-Rad Laboratories Cl. A 1	280,000		33,756,800
Total (Cost $23,339,995)			72,857,950
INDUSTRIALS – 23.2%
AEROSPACE & DEFENSE - 1.3%
National Presto Industries 2	656,500		38,103,260
COMMERCIAL SERVICES & SUPPLIES - 6.5%
UniFirst Corporation 2	1,542,278		187,309,663
ELECTRICAL EQUIPMENT - 6.3%
EnerSys	1,175,000		72,521,000
Hubbell Cl. B	675,000		72,110,250
Regal Beloit	503,000		37,825,600
			182,456,850
INDUSTRIAL CONGLOMERATES - 1.5%
Carlisle Companies	490,000		44,217,600
MACHINERY - 4.4%
Foster (L.B.) Company 2	1,000,000		48,570,000
Hurco Companies 2	479,319		16,339,985
Valmont Industries	480,300		60,998,100
			125,908,085
TRADING COMPANIES & DISTRIBUTORS - 3.2%
Applied Industrial Technologies	2,003,600		91,344,124
Total (Cost $425,739,154)			669,339,582
INFORMATION TECHNOLOGY – 16.4%
COMMUNICATIONS EQUIPMENT - 3.1%
Plantronics	1,675,000		88,808,500
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 10.5%
†Anixter International 1	347,929		30,777,800
AVX Corporation 2	9,900,000		138,600,000
Park Electrochemical 2	1,458,382		36,357,463
ScanSource 1,2	2,400,000		96,384,000
			302,119,263
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.8%
Teradyne	4,115,100		81,437,829
Total (Cost $380,963,033)			472,365,592
MATERIALS – 11.6%
CHEMICALS - 5.4%
Hawkins 2	955,432		41,398,869
Minerals Technologies	1,640,000		113,898,000
			155,296,869
METALS & MINING - 0.2%
Central Steel & Wire 4	6,100		4,558,225
PAPER & FOREST PRODUCTS - 6.0%
†Neenah Paper 2	1,272,808		76,712,138
Schweitzer-Mauduit International 2	2,300,000		97,290,000
			174,002,138
Total (Cost $242,357,912)			333,857,232
TOTAL COMMON STOCKS
(Cost $2,025,371,681)			2,731,357,618
REPURCHASE AGREEMENT – 5.9%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $169,503,000 (collateralized by obligations of various U.S. Government Agencies, 0.75%- 2.125% due 10/31/17-6/30/21, valued at $172,897,723)
(Cost $169,503,000)			169,503,000
TOTAL INVESTMENTS – 100.5%
(Cost $2,194,874,681)			2,900,860,618
LIABILITIES LESS CASH AND OTHER ASSETS – (0.5)%			(13,154,222)
NET ASSETS – 100.0%		$	2,887,706,396

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 61

Schedules of Investments

Royce Value Fund
Common Stocks – 98.6%
	SHARES		VALUE
CONSUMER DISCRETIONARY – 28.2%
AUTO COMPONENTS - 3.5%
Dorman Products 1	107,913	$	5,208,960
Gentex Corporation	546,053		19,728,895
†STRATTEC SECURITY	75,500		6,234,790
			31,172,645
AUTOMOBILES - 2.0%
Thor Industries	321,260		17,948,796
HOUSEHOLD DURABLES - 1.5%
NVR 1	10,078		12,852,776
MEDIA - 0.1%
Saga Communications Cl. A	22,479		977,387
SPECIALTY RETAIL - 15.7%
American Eagle Outfitters	1,311,986		18,210,366
Ascena Retail Group 1	1,549,264		19,458,756
Buckle (The)	529,347		27,801,304
†DSW Cl. A	553,855		20,658,791
GameStop Corporation Cl. A	629,107		21,263,817
Genesco 1	339,514		26,013,563
Stein Mart	354,887		5,188,448
			138,595,045
TEXTILES, APPAREL & LUXURY GOODS - 5.4%
G-III Apparel Group 1	125,002		12,626,452
†Movado Group	285,000		8,085,450
Steven Madden 1	751,805		23,929,953
Vera Bradley 1	136,253		2,776,836
			47,418,691
Total (Cost $179,940,659)			248,965,340
CONSUMER STAPLES – 2.8%
FOOD & STAPLES RETAILING - 0.1%
Village Super Market Cl. A	14,871		407,019
PERSONAL PRODUCTS - 2.7%
Nu Skin Enterprises Cl. A	551,107		24,083,376
Total (Cost $34,545,897)			24,490,395
ENERGY – 8.6%
ENERGY EQUIPMENT & SERVICES - 8.0%
Atwood Oceanics 1	603,228		17,113,578
Helmerich & Payne	214,599		14,468,265
†Matrix Service 1	436,369		9,739,756
Oil States International 1	252,347		12,339,768
Unit Corporation 1	503,326		17,163,417
			70,824,784
OIL, GAS & CONSUMABLE FUELS - 0.6%
Cimarex Energy	49,692		5,267,352
Total (Cost $79,560,729)			76,092,136
FINANCIALS – 12.0%
BANKS - 1.0%
†City Holding Company	194,848		9,066,278
CAPITAL MARKETS - 0.6%
Federated Investors Cl. B	170,226		5,605,542
INSURANCE - 7.6%
Allied World Assurance Company Holdings	383,523		14,543,192
Aspen Insurance Holdings	52,767		2,309,611
PartnerRe	200,974		22,937,163
Reinsurance Group of America	305,942		26,806,638
			66,596,604
THRIFTS & MORTGAGE FINANCE - 2.8%
Genworth MI Canada	773,000		24,604,528
Total (Cost $68,586,902)			105,872,952
HEALTH CARE – 1.9%
HEALTH CARE PROVIDERS & SERVICES - 1.9%
Chemed Corporation	68,879		7,278,444
MEDNAX 1	143,028		9,455,581
Total (Cost $6,506,533)			16,734,025
INDUSTRIALS – 8.1%
COMMERCIAL SERVICES & SUPPLIES - 1.6%
UniFirst Corporation	119,394		14,500,401
CONSTRUCTION & ENGINEERING - 1.6%
†MYR Group 1	514,909		14,108,507
MACHINERY - 0.7%
Kennametal	160,193		5,733,307
ROAD & RAIL - 0.9%
Knight Transportation	232,062		7,811,207
TRADING COMPANIES & DISTRIBUTORS - 3.3%
†Aceto Corporation	324,233		7,035,856
Applied Industrial Technologies	478,198		21,801,047
			28,836,903
Total (Cost $55,818,134)			70,990,325
INFORMATION TECHNOLOGY – 26.1%
COMMUNICATIONS EQUIPMENT - 8.1%
†Brocade Communications Systems	2,257,811		26,732,482
NETGEAR 1	734,154		26,121,199
Plantronics	353,743		18,755,454
			71,609,135
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 9.3%
†Benchmark Electronics 1	381,025		9,693,276
†Fabrinet 1	1,117,227		19,819,607
†PC Connection	550,241		13,508,417
Rofin-Sinar Technologies 1	160,800		4,626,216
†ScanSource 1	180,610		7,253,298
Vishay Intertechnology	1,892,943		26,785,143
			81,685,957
IT SERVICES - 5.0%
Convergys Corporation	1,097,605		22,358,214
ManTech International Cl. A	719,168		21,740,448
			44,098,662
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.7%
MKS Instruments	578,823		21,184,922
Synaptics 1	32,932		2,267,039
Teradyne	477,561		9,450,932
			32,902,893
Total (Cost $198,131,212)			230,296,647
MATERIALS – 9.1%
CHEMICALS - 4.9%
Innophos Holdings	55,888		3,266,654
Innospec	567,519		24,233,061
Westlake Chemical	249,226		15,225,216
			42,724,931
METALS & MINING - 2.6%
Reliance Steel & Aluminum	375,343		22,997,266

62 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Value Fund (continued)
		SHARES		VALUE
MATERIALS (continued)
PAPER & FOREST PRODUCTS - 1.6%
Schweitzer-Mauduit International	$	340,100	$	14,386,230
Total (Cost $65,472,628)				80,108,427
MISCELLANEOUS5 – 1.8%
Total (Cost $14,471,294)				15,815,523
TOTAL COMMON STOCKS
(Cost $703,033,988)				869,365,770
REPURCHASE AGREEMENT – 1.8%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $16,293,000 (collateralized by obligations of various U.S. Government Agencies, 0.625% due 9/30/17, valued at $16,622,100)
(Cost $16,293,000)				16,293,000
TOTAL INVESTMENTS – 100.4%
(Cost $719,326,988)				885,658,770
LIABILITIES LESS CASH AND OTHER ASSETS – (0.4)%				(3,831,799	)
NET ASSETS – 100.0%			$	881,826,971

Royce Value Plus Fund
Common Stocks – 98.1%
	SHARES		VALUE
CONSUMER DISCRETIONARY – 17.5%
AUTO COMPONENTS - 1.5%
†Gentherm1	372,900	$	13,655,598
HOTELS, RESTAURANTS & LEISURE - 1.3%
Buffalo Wild Wings1	66,900		12,067,422
HOUSEHOLD DURABLES - 1.6%
iRobot Corporation1,3	264,000		9,166,080
UCP Cl. A1	580,000		6,090,000
			15,256,080
MEDIA - 1.8%
†IMAX Corporation1,3	307,000		9,486,300
†Rentrak Corporation1	102,345		7,452,763
			16,939,063
SPECIALTY RETAIL - 6.7%
†Boot Barn Holdings1,3	371,000		6,752,200
Container Store Group (The)1,3	721,077		13,794,203
Monro Muffler Brake	117,000		6,762,600
Tractor Supply	161,000		12,690,020
Zumiez1	572,800		22,127,264
			62,126,287
TEXTILES, APPAREL & LUXURY GOODS - 4.6%
Carter’s	221,300		19,321,703
†Columbia Sportswear	238,000		10,600,520
Gildan Activewear	217,833		12,318,456
			42,240,679
Total (Cost $116,840,399)			162,285,129
CONSUMER STAPLES – 3.6%
FOOD & STAPLES RETAILING - 1.0%
United Natural Foods1	118,617		9,172,059
FOOD PRODUCTS - 2.4%
Snyder’s-Lance	300,000		9,165,000
SunOpta1	1,056,000		12,513,600
			21,678,600
PERSONAL PRODUCTS - 0.2%
Female Health3	506,000		1,983,520
Total (Cost $24,644,432)			32,834,179
ENERGY – 4.0%
ENERGY EQUIPMENT & SERVICES - 2.4%
Canadian Energy Services & Technology	1,031,000		5,635,092
Helmerich & Payne	44,000		2,966,480
Pason Systems	474,000		8,930,849
Trican Well Service	279,200		1,338,564
Unit Corporation1	93,200		3,178,120
			22,049,105
OIL, GAS & CONSUMABLE FUELS - 1.6%
†Navigator Holdings1	356,000		7,497,360
Sprott Resource1	1,475,000		2,386,814
†Triangle Petroleum1,3	1,108,600		5,299,108
			15,183,282
Total (Cost $51,019,518)			37,232,387
FINANCIALS – 9.8%
BANKS - 3.9%
Associated Banc-Corp	521,900		9,722,997
Columbia Banking System	287,500		7,937,875
Enterprise Financial Services	441,500		8,710,795
Umpqua Holdings	582,800		9,913,428
			36,285,095

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 63

Schedules of Investments

Royce Value Plus Fund (continued)
	SHARES		VALUE
FINANCIALS (continued)
CAPITAL MARKETS - 3.1%
†Financial Engines	311,800	$	11,396,290
Northern Trust	167,000		11,255,800
Oaktree Capital Group LLC Cl. A	112,800		5,846,424
			28,498,514
DIVERSIFIED FINANCIAL SERVICES - 1.3%
PICO Holdings1	636,222		11,992,785
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.5%
Jones Lang LaSalle	91,000		13,643,630
Total (Cost $76,851,148)			90,420,024
HEALTH CARE – 15.2%
BIOTECHNOLOGY - 6.6%
Actelion	144,800		16,658,832
†Anacor Pharmaceuticals1,3	340,500		10,981,125
Myriad Genetics1,3	650,993		22,172,821
†Progenics Pharmaceuticals1,3	1,182,000		8,935,920
†PTC Therapeutics1,3	50,000		2,588,500
			61,337,198
HEALTH CARE EQUIPMENT & SUPPLIES - 2.7%
Cerus Corporation1,3	1,939,500		12,102,480
†Inogen1	401,755		12,603,054
			24,705,534
HEALTH CARE PROVIDERS & SERVICES - 0.3%
†AAC Holdings1,3	94,808		2,931,464
LIFE SCIENCES TOOLS & SERVICES - 1.2%
†Cambrex Corporation1	499,500		10,799,190
PHARMACEUTICALS - 4.4%
†Aerie Pharmaceuticals1,3	143,000		4,174,170
†Avanir Pharmaceuticals1	164,000		2,779,800
†Intersect ENT1,3	325,000		6,028,750
Medicines Company (The)1	183,100		5,066,377
†Relypsa1,3	221,000		6,806,800
UCB	215,000		16,316,396
			41,172,293
Total (Cost $100,473,471)			140,945,679
INDUSTRIALS – 15.3%
BUILDING PRODUCTS - 1.0%
Apogee Enterprises	213,398		9,041,673
COMMERCIAL SERVICES & SUPPLIES - 2.1%
Mobile Mini	432,500		17,520,575
Ritchie Bros. Auctioneers	74,000		1,989,860
			19,510,435
ELECTRICAL EQUIPMENT - 3.6%
Acuity Brands	91,095		12,759,677
Capstone Turbine1,3	3,485,000		2,576,460
EnerSys	232,800		14,368,416
†Hydrogenics Corporation1,3	302,295		4,017,501
			33,722,054
MACHINERY - 5.5%
†KUKA	151,900		10,777,560
†Middleby Corporation1	89,000		8,819,900
Tennant Company	216,937		15,656,344
Wabtec Corporation	181,464		15,767,407
			51,021,211
PROFESSIONAL SERVICES - 2.4%
†Paylocity Holding Corporation1,3	846,786		22,109,582
ROAD & RAIL - 0.7%
Celadon Group	279,600		6,344,124
Total (Cost $107,458,130)			141,749,079
INFORMATION TECHNOLOGY – 22.9%
COMMUNICATIONS EQUIPMENT - 5.0%
EXFO1	2,247,234		7,752,957
Infinera Corporation1	928,233		13,663,590
Numerex Corporation Cl. A1	909,300		10,056,858
Sierra Wireless1,3	319,500		15,141,105
			46,614,510
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 10.0%
FLIR Systems	417,600		13,492,656
IPG Photonics1	317,132		23,759,529
Littelfuse	132,744		12,832,363
Mercury Systems1	1,196,749		16,658,746
Rogers Corporation1	313,893		25,563,446
			92,306,740
INTERNET SOFTWARE & SERVICES - 2.4%
HomeAway1	392,500		11,688,650
†SPS Commerce1	178,600		10,114,118
			21,802,768
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.7%
†Cavium1	259,000		16,011,380
SOFTWARE - 2.9%
Absolute Software	1,444,200		10,093,737
Manhattan Associates1	292,000		11,890,240
†Mobileye1,3	4,000		162,240
PTC1	127,000		4,654,550
			26,800,767
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 0.9%
Immersion Corporation1	880,595		8,339,235
Total (Cost $135,541,186)			211,875,400
MATERIALS – 4.7%
CONSTRUCTION MATERIALS - 0.9%
Eagle Materials	107,500		8,173,225
METALS & MINING - 3.8%
Horsehead Holding Corporation1,3	839,853		13,294,873
Reliance Steel & Aluminum	116,700		7,150,209
Worthington Industries	480,166		14,448,195
			34,893,277
Total (Cost $25,749,655)			43,066,502
TELECOMMUNICATION SERVICES – 1.0%
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.0%
ORBCOMM1	1,474,000		9,639,960
Total (Cost $9,503,993)			9,639,960
MISCELLANEOUS 5 – 4.1%
Total (Cost $33,024,223)			38,013,784
TOTAL COMMON STOCKS
(Cost $681,106,155)			908,062,123

64 |  The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Value Plus Fund (continued)
			VALUE
REPURCHASE AGREEMENT – 2.4%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $22,541,000 (collateralized by obligations of various U.S. Government Agencies, 1.00% due 9/27/17, valued at $22,995,000)
(Cost $22,541,000)		$	22,541,000
COLLATERAL RECEIVED FOR SECURITIES LOANED – 11.3%
Money Market Funds
Federated Government Obligations Fund (7 day yield-0.0099%)
(Cost $104,586,929)			104,586,929
TOTAL INVESTMENTS – 111.8%
(Cost $808,234,084)			1,035,190,052
LIABILITIES LESS CASH AND OTHER ASSETS – (11.8)%			(109,146,038	)
NET ASSETS – 100.0%		$	926,044,014
Royce 100 Fund
Common Stocks – 95.2%
	SHARES		VALUE
CONSUMER DISCRETIONARY – 10.9%
AUTO COMPONENTS - 1.6%
Drew Industries 1	40,786	$	2,082,941
Gentex Corporation	38,702		1,398,303
			3,481,244
DIVERSIFIED CONSUMER SERVICES - 1.4%
†Liberty Tax 1	90,629		3,239,081
HOUSEHOLD DURABLES - 1.4%
Ethan Allen Interiors	101,640		3,147,791
INTERNET & CATALOG RETAIL - 0.3%
FTD Companies 1	18,910		658,446
MEDIA - 1.1%
Morningstar	17,712		1,146,144
Wiley (John) & Sons Cl. A	20,800		1,232,192
			2,378,336
SPECIALTY RETAIL - 4.0%
Buckle (The)	97,210		5,105,469
Destination Maternity	77,100		1,229,745
†Genesco 1	33,360		2,556,043
			8,891,257
TEXTILES, APPAREL & LUXURY GOODS - 1.1%
†Movado Group	84,560		2,398,967
Total (Cost $19,659,191)			24,195,122
CONSUMER STAPLES – 1.1%
FOOD PRODUCTS - 1.1%
Darling Ingredients 1	63,390		1,151,162
Sanderson Farms	13,840		1,162,906
Total (Cost $1,172,770)			2,314,068
ENERGY – 8.3%
ENERGY EQUIPMENT & SERVICES - 8.3%
Helmerich & Payne	28,655		1,931,920
Oil States International 1	62,710		3,066,519
Pason Systems	199,780		3,764,146
SEACOR Holdings 1	42,500		3,136,925
†TGS-NOPEC Geophysical	133,550		2,889,533
Unit Corporation  1	104,500		3,563,450
Total (Cost $15,686,160)			18,352,493
FINANCIALS – 8.4%
CAPITAL MARKETS - 7.4%
AllianceBernstein Holding L.P.	45,469		1,174,464
†Artisan Partners Asset Management CI. A	49,230		2,487,592
Federated Investors Cl. B	91,740		3,020,998
Lazard Cl. A	43,300		2,166,299
SEI Investments	71,000		2,842,840
Silvercrest Asset Management Group Cl. A	150,000		2,347,500
Westwood Holdings Group	38,900		2,404,798
			16,444,491
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.0%
†Marcus & Millichap 1	63,290		2,104,393
Total (Cost $12,993,768)			18,548,884
HEALTH CARE – 5.7%
HEALTH CARE EQUIPMENT & SUPPLIES - 1.3%
Atrion Corporation	8,400		2,856,084
LIFE SCIENCES TOOLS & SERVICES - 3.6%
Bio-Rad Laboratories Cl. A 1	20,000		2,411,200
Bio-Techne	39,000		3,603,600

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 65

Schedules of Investments

Royce 100 Fund (continued)
	SHARES			VALUE
HEALTH CARE (continued)
LIFE SCIENCES TOOLS & SERVICES (continued)
PerkinElmer	43,400		$	1,897,882
				7,912,682
PHARMACEUTICALS - 0.8%
†Lannett Company1	43,620			1,870,426
Total (Cost $10,033,717)				12,639,192
INDUSTRIALS – 24.8%
AEROSPACE & DEFENSE - 0.6%
HEICO Corporation Cl. A	27,010			1,279,194
AIR FREIGHT & LOGISTICS - 0.8%
Expeditors International of Washington	40,020			1,785,292
BUILDING PRODUCTS - 1.2%
Simpson Manufacturing	77,960			2,697,416
COMMERCIAL SERVICES & SUPPLIES - 1.7%
Heritage-Crystal Clean1	140,918			1,737,519
Ritchie Bros. Auctioneers	71,294			1,917,096
				3,654,615
CONSTRUCTION & ENGINEERING - 1.1%
Jacobs Engineering Group1	55,300			2,471,357
ELECTRICAL EQUIPMENT - 0.8%
Global Power Equipment Group	127,483			1,760,540
MACHINERY - 10.2%
CIRCOR International	63,178			3,808,370
Hyster-Yale Materials Handling Cl. A	22,300			1,632,360
John Bean Technologies	95,300			3,131,558
Kadant	45,800			1,955,202
Kennametal	66,360			2,375,024
Sun Hydraulics	77,500			3,051,950
Tennant Company	19,600			1,414,532
Valmont Industries	29,780			3,782,060
Wabtec Corporation	16,300			1,416,307
				22,567,363
PROFESSIONAL SERVICES - 5.8%
ICF International1	67,100			2,749,758
ManpowerGroup	68,266			4,653,693
Robert Half International	27,000			1,576,260
†RPX Corporation1	133,600			1,841,008
Towers Watson & Co. Cl. A	18,400			2,082,328
				12,903,047
TRADING COMPANIES & DISTRIBUTORS - 2.6%
Applied Industrial Technologies	79,110			3,606,625
MSC Industrial Direct Cl. A	25,800			2,096,250
				5,702,875
Total (Cost $41,929,114)				54,821,699
INFORMATION TECHNOLOGY – 23.2%
COMMUNICATIONS EQUIPMENT - 1.0%
ADTRAN	102,690			2,238,642
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 11.7%
Coherent1	48,690			2,956,457
FARO Technologies1	17,627			1,104,860
FLIR Systems	57,300			1,851,363
IPG Photonics1	32,400			2,427,408
Littelfuse	19,400			1,875,398
MTS Systems	22,100			1,658,163
National Instruments	93,570			2,909,091
Orbotech1	203,400			3,010,320
Plexus Corporation1	74,800			3,082,508
Rofin-Sinar Technologies1	122,388			3,521,103
Rogers Corporation1	17,760			1,446,375
				25,843,046
INTERNET SOFTWARE & SERVICES - 1.5%
Envestnet1	34,500			1,695,330
† j2 Global	27,600			1,711,200
	27,600			3,406,530
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 6.4%
†Brooks Automation	215,890			2,752,597
Cabot Microelectronics1	25,820			1,221,802
Diodes1	52,900			1,458,453
MKS Instruments	108,200			3,960,120
Nanometrics  1	182,430			3,068,473
Veeco Instruments1	49,800			1,737,024
				14,198,469
SOFTWARE - 2.6%
ANSYS1	15,500			1,271,000
†ePlus  1	58,457			4,424,610
				5,695,610
Total (Cost $35,450,502)				51,382,297
MATERIALS – 8.2%
CHEMICALS - 2.1%
Innospec	51,950			2,218,265
†Quaker Chemical	27,160			2,499,806
				4,718,071
CONTAINERS & PACKAGING - 1.4%
Greif Cl. A	66,800			3,154,964
METALS & MINING - 4.7%
Compass Minerals International	24,500			2,127,335
Globe Specialty Metals	105,310			1,814,491
Haynes International	33,033			1,602,101
Major Drilling Group International	136,450			670,623
Reliance Steel & Aluminum	66,200			4,056,074
				10,270,624
Total (Cost $14,515,618)				18,143,659
MISCELLANEOUS 5 – 4.6%
Total (Cost $9,388,957)				10,232,893
TOTAL COMMON STOCKS
(Cost $160,829,797)				210,630,307
REPURCHASE AGREEMENT – 4.2%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $9,261,000 (collateralized by obligations of various U.S. Government Agencies, 0.625%-1.06% due 9/30/17-10/12/17, valued at $9,446,775)
(Cost $9,261,000)				9,261,000
TOTAL INVESTMENTS – 99.4%
(Cost $170,090,797)				219,891,307
CASH AND OTHER ASSETS LESS LIABILITIES – 0.6%				1,397,407
NET ASSETS – 100.0%		$		221,288,714

66 |  The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Dividend Value Fund
Common Stocks – 99.9%
	SHARES		VALUE
CONSUMER DISCRETIONARY – 10.5%
AUTO COMPONENTS - 1.4%
Autoliv	33,300	$	3,533,796
Gentex Corporation	96,148		3,473,827
Selamat Sempurna	911,800		347,770
			7,355,393
AUTOMOBILES - 0.2%
Thor Industries	16,740		935,264
DIVERSIFIED CONSUMER SERVICES - 0.1%
Weight Watchers International1,3	23,500		583,740
HOTELS, RESTAURANTS & LEISURE - 0.1%
Abu Dhabi National Hotels	642,000		699,147
HOUSEHOLD DURABLES - 0.3%
Forbo Holding	150		150,034
Harman International Industries	3,000		320,130
Hunter Douglas	27,600		1,152,478
			1,622,642
INTERNET & CATALOG RETAIL - 0.0%
Trade Me	29,100		81,221
MEDIA - 0.3%
Global Mediacom	650,000		74,841
Media Chinese International	322,600		69,187
Media Prima	155,000		77,481
Pico Far East Holdings	1,014,100		232,379
Saga Communications Cl. A	21,966		955,082
Television Broadcasts	26,600		154,404
			1,563,374
MULTILINE RETAIL - 0.1%
New World Department Store China	667,000		213,233
SPECIALTY RETAIL - 6.6%
American Eagle Outfitters	251,600		3,492,208
Ascena Retail Group1	270,284		3,394,767
Buckle (The)	114,579		6,017,689
Cato Corporation (The) Cl. A	43,810		1,847,906
Fielmann	6,400		437,781
GameStop Corporation Cl. A	127,430		4,307,134
Genesco1	76,749		5,880,508
Lewis Group	196,000		1,254,136
Luk Fook Holdings (International)	472,200		1,768,316
Shoe Carnival	58,228		1,495,877
Stein Mart	181,196		2,649,085
USS	70,000		1,077,229
			33,622,636
TEXTILES, APPAREL & LUXURY GOODS - 1.4%
Pandora	17,000		1,378,914
Stella International Holdings	604,000		1,584,899
Steven Madden1	133,608		4,252,743
Vera Bradley1,3	7,220		147,143
			7,363,699
Total (Cost $47,028,333)			54,040,349
CONSUMER STAPLES – 2.3%
FOOD & STAPLES RETAILING - 0.4%
FamilyMart	11,750		438,646
Village Super Market Cl. A	55,167		1,509,921
			1,948,567
FOOD PRODUCTS - 1.1%
First Resources	142,400		200,793
Hormel Foods	70,300		3,662,630
Industrias Bachoco ADR1	6,100		304,268
J&J Snack Foods	10,300		1,120,331
Lancaster Colony	3,000		280,920
McLeod Russel India	37,200		138,929
			5,707,871
PERSONAL PRODUCTS - 0.8%
Nu Skin Enterprises Cl. A	89,445		3,908,746
Total (Cost $10,646,663)			11,565,184
ENERGY – 3.8%
ENERGY EQUIPMENT & SERVICES - 3.6%
Ensco Cl. A	66,600		1,994,670
Ensign Energy Services	25,300		222,121
Helmerich & Payne	83,954		5,660,178
Oil States International1	39,393		1,926,318
TGS-NOPEC Geophysical	100,900		2,183,107
Tidewater	76,500		2,479,365
Total Energy Services	20,379		227,681
Transocean	209,400		3,838,302
			18,531,742
OIL, GAS & CONSUMABLE FUELS - 0.2%
Cimarex Energy	4,100		434,600
Natural Resource Partners L.P.	37,500		346,875
			781,475
Total (Cost $27,610,440)			19,313,217
FINANCIALS – 27.3%
BANKS - 1.4%
Ames National	32,739		849,250
BLOM Bank GDR	63,000		645,750
BOK Financial	22,114		1,327,725
Camden National	15,422		614,412
City Holding Company	22,101		1,028,359
First Republic Bank	48,100		2,506,972
			6,972,468
CAPITAL MARKETS - 15.5%
Alaris Royalty	33,000		1,004,373
AllianceBernstein Holding L.P.	155,100		4,006,233
Apollo Global Management LLC Cl. A	172,900		4,076,982
ARA Asset Management	1,388,200		1,778,058
Artisan Partners Asset Management Cl. A	87,200		4,406,216
Ashmore Group	504,250		2,186,170
Aurelius	6,400		243,671
CETIP - Mercados Organizados	12,000		145,333
Close Brothers Group	18,000		415,118
Coronation Fund Managers	415,000		4,094,760
Diamond Hill Investment Group	32,500		4,486,300
Egyptian Financial Group-Hermes Holding Company1	159,000		342,682
Federated Investors Cl. B	144,700		4,764,971
Gluskin Sheff + Associates	51,700		1,232,203
GMP Capital	296,000		1,617,834
Invesco	39,800		1,572,896
Investec	108,500		906,383
Jupiter Fund Management	550,000		3,087,811
KKR & Co. L.P.	251,558		5,838,661
Lazard Cl. A	67,700		3,387,031
Oaktree Capital Group LLC Cl. A	32,900		1,705,207

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 67

Schedules of Investments

Royce Dividend Value Fund (continued)
	SHARES		VALUE
FINANCIALS (continued)
CAPITAL MARKETS (continued)
Och-Ziff Capital Management Group LLC Cl. A	108,100	$	1,262,608
SEI Investments	146,600		5,869,864
Sprott	735,700		1,545,109
State Street	70,200		5,510,700
T. Rowe Price Group	9,100		781,326
Value Partners Group	4,597,000		3,839,304
VZ Holding	8,300		1,483,456
Waddell & Reed Financial Cl. A	65,605		3,268,441
Westwood Holdings Group	78,473		4,851,201
			79,710,902
CONSUMER FINANCE - 0.1%
†Ally Financial 1	15,100		356,662
DIVERSIFIED FINANCIAL SERVICES - 1.2%
Bolsa Mexicana de Valores	1,443,000		2,613,367
Hellenic Exchanges - Athens Stock Exchange	158,000		888,116
Inversiones La Construccion	7,500		91,136
Singapore Exchange	140,000		823,156
Warsaw Stock Exchange	135,400		1,744,669
			6,160,444
INSURANCE - 6.6%
Allied World Assurance Company Holdings	34,894		1,323,181
Brasil Insurance Participacoes e Administracao	19,200		24,320
Cincinnati Financial	46,700		2,420,461
E-L Financial	5,500		3,233,345
Erie Indemnity Cl. A	24,200		2,196,634
Marsh & McLennan	85,900		4,916,916
PartnerRe	31,371		3,580,372
Reinsurance Group of America	67,955		5,954,217
Symetra Financial	181,100		4,174,355
Willis Group Holdings	139,400		6,246,514
			34,070,315
REAL ESTATE INVESTMENT TRUSTS (REITS) - 0.8%
DCT Industrial Trust	24,600		877,236
Essex Property Trust	8,000		1,652,800
National Health Investors	19,300		1,350,228
			3,880,264
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.3%
Brasil Brokers Participacoes	69,200		65,810
Midland Holdings 1	3,100,900		1,566,722
Relo Holdings	2,300		163,299
			1,795,831
THRIFTS & MORTGAGE FINANCE - 1.4%
Genworth MI Canada	155,148		4,938,348
TrustCo Bank Corp. NY	305,660		2,219,092
			7,157,440
Total (Cost $101,466,697)			140,104,326
HEALTH CARE – 3.7%
HEALTH CARE EQUIPMENT & SUPPLIES - 1.8%
Atrion Corporation	13,200		4,488,132
DENTSPLY International	92,500		4,927,475
			9,415,607
HEALTH CARE PROVIDERS & SERVICES - 1.4%
Chemed Corporation	9,508		1,004,710
MEDNAX 1	13,700		905,707
Owens & Minor	150,800		5,294,588
			7,205,005
PHARMACEUTICALS - 0.5%
Recordati	82,300		1,279,526
Santen Pharmaceutical	20,800		1,113,131
Unichem Laboratories	35,000		133,309
			2,525,966
Total (Cost $14,011,596)			19,146,578
INDUSTRIALS – 19.2%
AEROSPACE & DEFENSE - 0.8%
American Science and Engineering	49,545		2,571,385
HEICO Corporation Cl. A	36,132		1,711,212
			4,282,597
AIR FREIGHT & LOGISTICS - 2.0%
†C. H. Robinson Worldwide	40,000		2,995,600
Expeditors International of Washington	156,600		6,985,926
			9,981,526
BUILDING PRODUCTS - 1.3%
AAON	138,787		3,107,441
Geberit	1,000		339,833
Simpson Manufacturing	57,600		1,992,960
TOTO	74,000		860,712
Zehnder Group	3,600		149,539
			6,450,485
COMMERCIAL SERVICES & SUPPLIES - 2.0%
Brink’s Company (The)	100		2,441
Cintas Corporation	51,700		4,055,348
Collection House	61,254		103,527
Kaba Holding	2,100		1,058,890
Ritchie Bros. Auctioneers	90,092		2,422,574
Societe BIC	6,600		875,914
UniFirst Corporation	12,655		1,536,950
			10,055,644
CONSTRUCTION & ENGINEERING - 0.3%
KBR	100,000		1,695,000
ELECTRICAL EQUIPMENT - 2.1%
AZZ	64,100		3,007,572
Hubbell Cl. B	45,700		4,882,131
Regal Beloit	36,000		2,707,200
			10,596,903
MACHINERY - 7.2%
Alamo Group	9,202		445,745
CB Industrial Product Holding	258,200		148,275
China Metal International Holdings	352,000		121,612
CLARCOR	75,200		5,011,328
Donaldson Company	111,000		4,287,930
Flowserve Corporation	20,100		1,202,583
Freund Corporation	11,700		101,468
Graco	65,400		5,243,772
IDEX Corporation	44,500		3,463,880
John Bean Technologies	97,356		3,199,118
Kennametal	32,314		1,156,518
Lincoln Electric Holdings	30,050		2,076,154
Lindsay Corporation	32,800		2,812,272
Luxfer Holdings ADR	6,000		89,580
Miller Industries	36,414		757,047
Pfeiffer Vacuum Technology	13,500		1,120,607
Spirax-Sarco Engineering	35,148		1,561,996
Tennant Company	18,400		1,327,928
Valmont Industries	20,600		2,616,200

68 |  The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Dividend Value Fund (continued)

	SHARES		VALUE
INDUSTRIALS (continued)
MACHINERY (continued)
Zuiko Corporation	6,300	$	272,681
			37,016,694
MARINE - 0.3%
Clarkson	54,600		1,611,661
PROFESSIONAL SERVICES - 1.5%
ManpowerGroup	52,300		3,565,291
Towers Watson & Co. Cl. A	36,400		4,119,388
			7,684,679
ROAD & RAIL - 0.9%
Globaltrans Investment GDR	10,400		52,807
Landstar System	65,000		4,714,450
			4,767,257
TRADING COMPANIES & DISTRIBUTORS - 0.8%
Applied Industrial Technologies	92,425		4,213,656
Total (Cost $67,896,853)			98,356,102
INFORMATION TECHNOLOGY – 12.8%
COMMUNICATIONS EQUIPMENT - 0.8%
Ellies Holdings 1	171,900		19,266
Plantronics	58,708		3,112,698
TESSCO Technologies	27,949		810,521
			3,942,485
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 6.6%
Amphenol Corporation Cl. A	62,800		3,379,268
AVX Corporation	142,300		1,992,200
Cognex Corporation 1	20,000		826,600
Domino Printing Sciences	32,600		333,212
FLIR Systems	255,100		8,242,281
Littelfuse	32,063		3,099,530
MTS Systems	50,293		3,773,484
National Instruments	155,100		4,822,059
Vaisala Cl. A	48,000		1,273,027
Vishay Intertechnology	424,688		6,009,335
			33,750,996
IT SERVICES - 3.6%
Broadridge Financial Solutions	99,100		4,576,438
Calian Technologies	23,296		353,911
Convergys Corporation	192,215		3,915,420
eClerx Services	116,700		2,412,847
ManTech International Cl. A	40,836		1,234,472
Metrofile Holdings	1,517,000		655,239
Western Union	300,900		5,389,119
			18,537,446
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.3%
Eugene Technology	11,664		170,953
MKS Instruments	30,700		1,123,620
Teradyne	20,000		395,800
			1,690,373
SOFTWARE - 0.7%
Computer Modelling Group	140,000		1,438,802
Cyient	12,400		101,263
Silverlake Axis	87,800		83,061
Totvs	150,000		1,973,648
			3,596,774
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 0.8%
Diebold	118,000		4,087,520
Total (Cost $52,138,326)			65,605,594
MATERIALS – 14.2%
CHEMICALS - 3.3%
Balchem Corporation	25,050	$	1,669,332
Cabot Corporation	6,500		285,090
Innospec	98,400		4,201,680
International Flavors & Fragrances	27,100		2,746,856
Quaker Chemical	28,800		2,650,752
†Rockwood Holdings	29,400		2,316,720
Stepan Company	60,600		2,428,848
Victrex	7,500		242,191
Westlake Chemical	5,700		348,213
			16,889,682
CONTAINERS & PACKAGING - 2.2%
AptarGroup	86,200		5,761,608
Greif Cl. A	115,400		5,450,342
Nampak	30,000		112,881
			11,324,831
METALS & MINING - 8.4%
Agnico Eagle Mines	97,500		2,426,775
Allegheny Technologies	134,200		4,666,134
Carpenter Technology	116,100		5,717,925
Commercial Metals	18,700		304,623
Compass Minerals International	47,900		4,159,157
Franco-Nevada Corporation	2,400		118,056
Fresnillo	254,000		3,014,163
Hecla Mining	135,000		376,650
Hi-Crush Partners L.P.	20,000		620,600
Imdex 1	169,600		65,755
Major Drilling Group International	409,400		2,012,114
Pan American Silver	284,000		2,612,800
Randgold Resources ADR	50,000		3,370,500
Reliance Steel & Aluminum	133,806		8,198,294
Royal Gold	2,200		137,940
†Sims Metal Management	172,000		1,677,048
Steel Dynamics	21,000		414,540
Worthington Industries	103,800		3,123,342
			43,016,416
PAPER & FOREST PRODUCTS - 0.3%
Schweitzer-Mauduit International	43,900		1,856,970
Total (Cost $72,823,925)			73,087,899
TELECOMMUNICATION SERVICES – 1.0%
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.5%
Inmarsat	210,000		2,602,415
WIRELESS TELECOMMUNICATION SERVICES - 0.5%
Telephone and Data Systems	109,200		2,757,300
Total (Cost $4,838,539)			5,359,715
UTILITIES – 0.6%
WATER UTILITIES - 0.6%
Aqua America	125,000		3,337,500
Total (Cost $3,005,880)			3,337,500
MISCELLANEOUS5 – 4.5%
Total (Cost $22,770,111)			23,198,330
TOTAL COMMON STOCKS
(Cost $424,237,363)			513,114,794

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 69

Schedules of Investments

Royce Dividend Value Fund (continued)

		VALUE
REPURCHASE AGREEMENT – 0.3%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value
$1,561,000 (collateralized by obligations of various U.S. Government Agencies, 1.06%
due 10/12/17, valued at $1,596,975)
(Cost $1,561,000)	$	1,561,000
COLLATERAL RECEIVED FOR SECURITIES LOANED – 0.2%
Money Market Funds
Federated Government Obligations Fund (7 day yield-0.0099%)
(Cost $753,190)		753,190
TOTAL INVESTMENTS – 100.4%
(Cost $426,551,553)		515,428,984
LIABILITIES LESS CASH AND OTHER ASSETS – (0.4)%		(2,012,919	)
NET ASSETS – 100.0%	$	513,416,065

Royce Global Value Fund

Common Stocks – 92.7%
	SHARES		VALUE
AUSTRALIA – 0.5%
†TFS Corporation	395,400	$	496,363
Total (Cost $475,256)			496,363
AUSTRIA – 3.8%
Mayr-Melnhof Karton	18,700		1,940,597
Semperit AG Holding	25,597		1,238,641
†Zumtobel Group	22,900		515,794
Total (Cost $4,184,266)			3,695,032
BRAZIL – 3.5%
CETIP - Mercados Organizados	117,500		1,423,053
†MAHLE Metal Leve	100,000		788,313
Totvs	85,100		1,119,716
Total (Cost $3,262,008)			3,331,082
CANADA – 3.6%
†Magellan Aerospace	117,700		1,369,688
†MTY Food Group	12,100		351,085
†Richelieu Hardware	9,800		480,806
†Ritchie Bros. Auctioneers	19,900		535,111
†Total Energy Services	28,700		320,646
†Western Forest Products	177,600		412,739
Total (Cost $3,564,190)			3,470,075
CHILE – 1.4%
Inversiones La Construccion	81,000		984,275
†Sonda	155,400		368,439
Total (Cost $1,531,787)			1,352,714
CHINA – 1.9%
E-House (China) Holdings ADR	141,600		1,025,184
†Haitian International Holdings	167,000		351,025
†Leju Holdings ADR1	7,080		76,181
†Xtep International Holdings	864,400		348,181
Total (Cost $2,427,211)			1,800,571
CYPRUS – 0.7%
†Globaltrans Investment GDR	140,000		710,863
Total (Cost $948,791)			710,863
FINLAND – 1.0%
Nokian Renkaat	37,800		925,864
Total (Cost $1,031,521)			925,864
FRANCE – 2.7%
Alten	42,150		1,802,413
†Lectra	26,500		293,114
Societe Internationale de Plantations d’Heveas	11,805		470,611
Total (Cost $2,854,431)			2,566,138
GERMANY – 2.5%
†Aurelius	8,561		325,948
Carl Zeiss Meditec	35,000		893,608
†CompuGroup Medical	19,700		474,351
†Nemetschek	3,500		355,335
†Schaltbau Holding	7,200		366,418
Total (Cost $2,518,568)			2,415,660
HONG KONG – 8.3%
†I.T	1,329,100		383,110
Luk Fook Holdings (International)	220,000		823,866
New World Department Store China	7,090,000		2,266,598

70 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

Royce Global Value Fund (continued)
	SHARES		VALUE
HONG KONG (continued)
†Pacific Textiles Holdings	233,000	$	308,197
†Pico Far East Holdings	2,520,600		577,591
Television Broadcasts	330,000		1,915,543
Value Partners Group	2,040,000		1,703,759
Total (Cost $9,487,852)			7,978,664
INDIA – 2.1%
†Apollo Tyres	100,000		352,641
†Bajaj Holdings & Investment	46,000		1,018,995
†eClerx Services	12,500		258,446
†Grasim Industries	7,574		405,193
Total (Cost $2,054,278)			2,035,275
INDONESIA – 0.3%
†Selamat Sempurna	710,000		270,802
Total (Cost $261,648)			270,802
JAPAN – 13.2%
C. Uyemura & Co.	18,900		884,130
EPS Corporation	95,500		1,131,210
FamilyMart	30,000		1,119,947
†GCA Savvian	50,000		475,429
†Itoki Corporation	52,700		269,971
†Leopalace21 Corporation 1	82,400		519,639
Miraial	44,000		616,840
MISUMI Group	32,300		1,060,970
†Namura Shipbuilding	35,300		378,342
†Nishikawa Rubber	17,000		289,515
†Obara Group	37,500		1,664,897
†SPARX Group	226,300		380,858
†Sun Frontier Fudousan	44,400		407,331
†Tokai Tokyo Financial Holdings	56,400		385,898
†TOTO	22,700		264,029
†Trancom	6,600		265,863
USS	71,300		1,097,235
Zuiko Corporation	34,000		1,471,610
Total (Cost $12,541,438)			12,683,714
LUXEMBOURG – 0.3%
†Atento 1	32,600		340,670
Total (Cost $333,527)			340,670
MALAYSIA – 0.2%
†CB Industrial Product Holding	400,000		229,705
Total (Cost $269,837)			229,705
MEXICO – 1.3%
†Grupo Comercial Chedraui1	105,600		311,137
Industrias Bachoco ADR 1	18,100		902,828
Total (Cost $663,334)			1,213,965
NORWAY – 1.8%
†Borregaard	40,000		297,320
TGS-NOPEC Geophysical	47,300		1,023,399
†Tomra Systems	54,000		415,765
Total (Cost $1,886,738)			1,736,484
SINGAPORE – 1.6%
†First Resources	310,500		437,824
†Parkson Retail Asia	304,400		183,837
Silverlake Axis	950,000	$	898,719
Total (Cost $1,259,458)			1,520,380
SOUTH AFRICA – 1.3%
Lewis Group	152,000		972,595
†Nampak	70,000		263,389
Total (Cost $1,428,726)			1,235,984
SOUTH KOREA – 0.9%
†Huvis Corporation 1	45,400		459,797
†Suprema 1	16,500		378,235
Total (Cost $892,558)			838,032
SWEDEN – 0.5%
†Bufab Holding 1	67,300		505,626
Total (Cost $512,976)			505,626
SWITZERLAND – 2.1%
Garmin	17,700		935,091
†VZ Holding	6,000		1,072,378
Total (Cost $2,025,250)			2,007,469
TAIWAN – 1.3%
†Kinik Company	112,800		231,731
†Makalot Industrial	50,200		268,175
†Taiwan Paiho	382,300		515,115
†UDE Corporation	96,300		237,729
Total (Cost $1,240,581)			1,252,750
UNITED ARAB EMIRATES – 0.3%
†Al Noor Hospitals Group	16,000		245,709
Total (Cost $251,562)			245,709
UNITED KINGDOM – 8.3%
†Abcam	128,500		930,555
Ashmore Group	345,000		1,495,744
AVEVA Group	43,000		880,227
†Brammer	63,000		333,713
Clarkson	50,500		1,490,639
†HellermannTyton Group	180,000		880,102
†Rotork	30,000		1,079,558
†Synthomer	245,000		895,706
Total (Cost $8,803,478)			7,986,244
UNITED STATES – 27.3%
†Advance Auto Parts	3,600		573,408
†AGCO Corporation	24,100		1,089,320
†Anixter International 1	11,700		1,034,982
†Artisan Partners Asset Management CI. A	20,500		1,035,865
†Bed Bath & Beyond 1	17,500		1,332,975
†Carlisle Companies	9,800		884,352
†Core-Mark Holding Company	3,900		241,527
†DENTSPLY International	16,600		884,282
†Diodes 1	22,000		606,540
†Dollar Tree 1	12,800		900,864
†Dorman Products 1	8,000		386,160
†Drew Industries 1	11,000		561,770
†Finish Line (The) Cl. A	41,100		999,141
†Globe Specialty Metals	15,200		261,896
Helmerich & Payne	14,300		964,106
Kennedy-Wilson Holdings	49,200		1,244,760

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 71

Schedules of Investments

Royce Global Value Fund (continued)

	SHARES		VALUE
UNITED STATES (continued)
†ManpowerGroup	18,400	$	1,254,328
†Mentor Graphics	35,400		775,968
†Minerals Technologies	3,500		243,075
†Mohawk Industries 1	6,000		932,160
†Monro Muffler Brake	2,300		132,940
Myriad Genetics 1	15,100		514,306
†Oceaneering International	3,800		223,478
†Quaker Chemical	5,600		515,424
†RBC Bearings	5,800		374,274
†Rogers Corporation 1	7,200		586,368
†SEI Investments	6,700		268,268
†Standard Motor Products	11,963		456,030
†Sun Hydraulics	3,100		122,078
†Teradata Corporation 1	8,600		375,648
†Thor Industries	26,000		1,452,620
Unit Corporation 1	11,400		388,740
Valmont Industries	9,600		1,219,200
Western Digital	11,300		1,250,910
†Westlake Chemical	9,000		549,810
†Wolverine World Wide	31,900		940,093
†World Fuel Services	14,500		680,485
Total (Cost $24,957,682)			26,258,151
TOTAL COMMON STOCKS
(Cost $91,668,952)			89,103,986
REPURCHASE AGREEMENT – 8.7%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value
$8,407,000 (collateralized by obligations of various U.S. Government Agencies, 1.06%
due 10/12/17, valued at $8,576,900)
(Cost $8,407,000)			8,407,000
TOTAL INVESTMENTS – 101.4%
(Cost $100,075,952)			97,510,986
LIABILITIES LESS CASH AND OTHER ASSETS – (1.4)%			(1,341,567	)
NET ASSETS – 100.0%		$	96,169,419

Royce International Smaller-Companies Fund

Common Stocks – 98.4%
	SHARES		VALUE
AUSTRALIA – 0.8%
†Programmed Maintenance Services	122,600	$	256,283
Total (Cost $314,805)			256,283
AUSTRIA – 3.2%
Mayr-Melnhof Karton	4,700		487,744
Semperit AG Holding	12,000		580,681
Total (Cost $1,002,595)			1,068,425
BRAZIL – 6.9%
Brasil Brokers Participacoes	210,000		199,713
CETIP - Mercados Organizados	41,000		496,554
Eternit	245,300		299,965
Grendene	63,600		365,802
†Guararapes Confeccoes	5,500		170,794
†Kepler Weber	18,600		350,239
†MAHLE Metal Leve	50,000		394,157
Total (Cost $2,946,126)			2,277,224
CANADA – 2.1%
†Magellan Aerospace	40,000		465,484
†MTY Food Group	8,200		237,926
Total (Cost $551,463)			703,410
CHILE – 1.2%
Inversiones La Construccion	34,000		413,153
Total (Cost $442,009)			413,153
CHINA – 2.1%
†Leju Holdings ADR 1	2,500		26,900
Pacific Online	840,300		391,526
Xtep International Holdings	726,800		292,755
Total (Cost $781,420)			711,181
CYPRUS – 0.8%
Globaltrans Investment GDR	52,500		266,574
Total (Cost $643,022)			266,574
FRANCE – 8.8%
Audika Groupe	18,200		248,159
Gaztransport Et Technigaz	6,200		366,164
Manutan International	9,100		451,200
†Nexity	10,000		378,309
†Robertet	1,200		232,303
Societe Internationale de Plantations d’Heveas	8,658		345,155
Stallergenes	6,400		383,017
Vetoquinol	11,441		496,974
Total (Cost $3,154,371)			2,901,281
GERMANY – 3.6%
Bertrandt	3,100		431,378
KWS Saat	1,400		455,320
LPKF Laser & Electronics	22,500		294,794
Total (Cost $1,185,982)			1,181,492
HONG KONG – 8.7%
I.T	953,900		274,960
Luk Fook Holdings (International)	108,100		404,818
Midland Holdings 1	635,900		321,287
New World Department Store China	1,362,700		435,640
Pico Far East Holdings	2,315,200		530,524
Television Broadcasts	72,700		422,000

72 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce International Smaller-Companies Fund (continued)

	SHARES		VALUE
HONG KONG (continued)
Value Partners Group	570,000	$	476,050
Total (Cost $2,902,529)			2,865,279
INDIA – 8.5%
AIA Engineering	18,200		312,440
†Apollo Tyres	118,100		416,469
†Bajaj Holdings & Investment	10,000		221,521
Graphite India	125,000		180,014
†Grasim Industries	2,324		124,329
Ipca Laboratories	35,900		414,674
†KPIT Technologies	134,000		430,129
Shriram Transport Finance	25,500		445,237
Thomas Cook (India)	104,500		265,816
Total (Cost $2,148,768)			2,810,629
INDONESIA – 1.5%
†Ramayana Lestari Sentosa	3,000,000		191,528
Selamat Sempurna	817,600		311,841
Total (Cost $417,453)			503,369
ITALY – 1.4%
DiaSorin	11,400		459,733
Total (Cost $371,861)			459,733
JAPAN – 17.5%
Benesse Holdings	14,000		415,879
BML	10,000		265,258
C. Uyemura & Co.	8,700		406,980
EPS Corporation	38,300		453,669
FamilyMart	14,700		548,774
Milbon	11,000		299,446
Miraial	22,690		318,093
Moshi Moshi Hotline	47,000		428,685
†Nishikawa Rubber	23,600		401,914
†Obara Group	9,500		421,774
†Relo Holdings	4,400		312,398
Santen Pharmaceutical	6,000		321,095
†Trancom	9,100		366,569
USS	25,200		387,803
Zuiko Corporation	10,000		432,826
Total (Cost $5,712,810)			5,781,163
JERSEY – 0.5%
Randgold Resources ADR	2,700		182,007
Total (Cost $175,688)			182,007
MALAYSIA – 2.5%
CB Industrial Product Holding	599,600		344,328
Media Prima	400,000		199,949
Padini Holdings	726,800		302,394
Total (Cost $904,214)			846,671
MEXICO – 1.4%
Grupo SIMEC Ser. B 1	72,700		249,827
Industrias Bachoco ADR 1	4,500		224,460
Total (Cost $344,071)			474,287
NETHERLANDS – 0.6%
†Brunel International	12,000		196,664
Total (Cost $278,685)			196,664
NORWAY – 2.4%
†Eltek	200,000	$	310,643
†Kongsberg Gruppen	3,200		52,751
TGS-NOPEC Geophysical	19,500		421,909
Total (Cost $809,494)			785,303
SINGAPORE – 2.4%
ARA Asset Management	299,800		383,995
Biosensors International Group 1	908,500		400,989
Total (Cost $954,045)			784,984
SLOVENIA – 1.3%
†Krka d.d., Novo mesto	5,900		425,669
Total (Cost $538,437)			425,669
SOUTH AFRICA – 2.2%
Blue Label Telecoms	454,200		345,357
Lewis Group	30,000		191,959
Raubex Group	99,900		189,569
Total (Cost $732,955)			726,885
SWEDEN – 2.7%
†Industrivarden Cl. C	22,700		394,268
Lundin Petroleum  1	34,500		493,320
Total (Cost $1,059,308)			887,588
SWITZERLAND – 4.1%
Kaba Holding	800		403,387
VZ Holding	2,800		500,443
Zehnder Group	10,900		452,771
Total (Cost $1,138,989)			1,356,601
TURKEY – 0.6%
Mardin Cimento Sanayii	99,900		203,142
Total (Cost $197,809)			203,142
UNITED ARAB EMIRATES – 0.7%
†Aramex	268,585		225,512
Total (Cost $221,066)			225,512
UNITED KINGDOM – 9.9%
Ashmore Group	100,000		433,549
Consort Medical	31,800		427,927
Domino Printing Sciences	27,300		279,040
E2V Technologies	178,698		480,765
Elementis	74,900		303,118
EnQuest 1	173,100		94,576
†Fenner	50,000		166,825
†Kennedy Wilson Europe Real Estate	29,470		484,118
†Polypipe Group	50,000		191,609
Spirent Communications	345,200		406,014
Total (Cost $3,707,701)			3,267,541
TOTAL COMMON STOCKS
(Cost $33,637,676)			32,562,050

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 73

Schedules of Investments

Royce International Smaller-Companies Fund (continued)

		VALUE
REPURCHASE AGREEMENT – 5.6%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value
$1,860,000 (collateralized by obligations of various U.S. Government Agencies, 0.625%
due 9/30/17, valued at $1,900,800)
(Cost $1,860,000)	$	1,860,000
TOTAL INVESTMENTS – 104.0%
(Cost $35,497,676)		34,422,050
LIABILITIES LESS CASH AND OTHER ASSETS – (4.0)%		(1,339,703	)
NET ASSETS – 100.0%	$	33,082,347

Royce Special Equity Multi-Cap Fund

Common Stocks – 91.4%
	SHARES		VALUE
CONSUMER DISCRETIONARY – 30.8%
AUTO COMPONENTS - 5.2%
Lear Corporation	160,000	$	15,692,800
DISTRIBUTORS - 3.2%
Genuine Parts	90,300		9,623,271
MEDIA - 6.2%
Scripps Networks Interactive Cl. A	123,000		9,258,210
†Viacom Cl. B	128,000		9,632,000
			18,890,210
MULTILINE RETAIL - 5.5%
Nordstrom	212,000		16,830,680
SPECIALTY RETAIL - 10.7%
Bed Bath & Beyond  1	242,600		18,478,842
Gap (The)	333,000		14,022,630
			32,501,472
Total (Cost $76,142,497)			93,538,433
ENERGY – 8.0%
ENERGY EQUIPMENT & SERVICES - 4.1%
Helmerich & Payne	187,000		12,607,540
OIL, GAS & CONSUMABLE FUELS - 3.9%
Occidental Petroleum	145,300		11,712,633
Total (Cost $27,601,564)			24,320,173
FINANCIALS – 8.6%
CAPITAL MARKETS - 8.6%
Franklin Resources	252,000		13,953,240
†T. Rowe Price Group	139,400		11,968,884
Total (Cost $24,171,020)			25,922,124
HEALTH CARE – 4.8%
HEALTH CARE PROVIDERS & SERVICES - 4.8%
Quest Diagnostics	218,800		14,672,728
Total (Cost $12,905,317)			14,672,728
INDUSTRIALS – 19.6%
AEROSPACE & DEFENSE - 1.7%
Raytheon Company	49,300		5,332,781
ELECTRICAL EQUIPMENT - 5.1%
Emerson Electric	249,000		15,370,770
INDUSTRIAL CONGLOMERATES - 1.2%
3M	21,700		3,565,744
MACHINERY - 7.9%
Dover Corporation	99,000		7,100,280
Illinois Tool Works	69,800		6,610,060
Parker Hannifin	81,000		10,444,950
			24,155,290
PROFESSIONAL SERVICES - 3.7%
†ManpowerGroup	163,000		11,111,710
Total (Cost $49,686,974)			59,536,295
INFORMATION TECHNOLOGY – 19.6%
COMMUNICATIONS EQUIPMENT - 4.7%
Cisco Systems	510,000		14,185,650
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 1.0%
Avnet	67,000		2,882,340
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.3%
Intel Corporation	194,200		7,047,518
SOFTWARE - 8.6%
Microsoft Corporation	292,600		13,591,270

74 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Special Equity Multi-Cap Fund (continued)

	SHARES		VALUE
INFORMATION TECHNOLOGY (continued)
SOFTWARE (continued)
†Symantec Corporation	490,000	$	12,570,950
			26,162,220
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 3.0%
†Apple	83,500		9,216,730
Total (Cost $46,728,928)			59,494,458
TOTAL COMMON STOCKS
(Cost $237,236,300)			277,484,211
REPURCHASE AGREEMENT – 9.4%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value
$28,523,000 (collateralized by obligations of various U.S. Government Agencies, 0.625%
due 9/30/17, valued at $29,096,100)
(Cost $28,523,000)			28,523,000
TOTAL INVESTMENTS – 100.8%
(Cost $265,759,300)			306,007,211
LIABILITIES LESS CASH AND OTHER ASSETS – (0.8)%			(2,419,959	)
NET ASSETS – 100.0%		$	303,587,252

†	New additions in 2014.
1	Non-income producing.
2	At December 31, 2014, 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.
3	All or a portion of these securities were on loan at December 31, 2014.
4	These securities are defined as Level 2 securities due to fair value being based on quoted prices for similar securities. See Notes to Financial Statements.
5	Includes securities first acquired in 2014 and less than 1% of net assets.
6	A security for which market quotations are not readily available represents 0.2% of net assets for Royce Micro-Cap Fund. This security has been valued at its fair value under procedures approved by the Fund’s Board of Trustees. This security is defined as a Level 3 security due to the use of significant unobservable inputs in the determination of fair value. See Notes to Financial Statements.
	Securities of Global/International Funds are categorized by the country of their headquarters, with the exception of exchange-traded funds.
	Bold indicates a Fund’s 20 largest equity holdings in terms of December 31, 2014, market value.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 75

Statements of Assets and Liabilities

		Royce
		Pennsylvania			Royce Micro-Cap			Royce Premier		Royce Low-Priced
		Mutual Fund			Fund			Fund		Stock Fund
ASSETS:
Investments at value (including collateral on loaned securities)
Non-Affiliated Companies	$	5,550,946,465		$	525,116,182		$	4,072,312,384	$	655,017,753
Affiliated Companies		178,343,677			5,107,624			1,299,076,954		3,730,758
Repurchase agreements (at cost and value)		109,019,000			20,212,000			185,743,000		35,516,000
Cash and foreign currency		880,144			15,061			883		923
Receivable for investments sold		65,302,267			4,075,898			43,549,486		17,614,625
Receivable for capital shares sold		77,564,885			781,370			4,890,378		427,182
Receivable for dividends and interest		3,921,057			439,699			5,538,011		669,838
Prepaid expenses and other assets		2,154,245			2,106			20,732		2,522
Total Assets		5,988,131,740			555,749,940			5,611,131,828		712,979,601
LIABILITIES:
Payable for collateral on loaned securities		62,985,137			22,089,668			84,024,012		20,346,322
Payable for investments purchased		12,259,480			1,352,743			1,502,901		5,326,402
Payable for capital shares redeemed		175,405,024			2,451,056			114,657,002		8,089,584
Payable for investment advisory fees		3,774,109			602,466			4,549,583		637,879
Payable for trustees’ fees		84,172			9,191			83,171		12,771
Accrued expenses		4,304,076			611,584			4,156,166		1,914,218
Total Liabilities		258,811,998			27,116,708			208,972,835		36,327,176
Net Assets	$	5,729,319,742		$	528,633,232		$	5,402,158,993	$	676,652,425
ANALYSIS OF NET ASSETS:
Paid-in capital	$	3,718,548,891		$	403,474,107		$	3,222,867,307	$	548,779,912
Undistributed net investment income (loss)		(5,697,006	)		(149,122	)		655,864		(205,502	)
Accumulated net realized gain (loss) on investments and foreign currency		224,504,362			18,320,809			15,143,216		(6,771,313	)
Net unrealized appreciation (depreciation) on investments and foreign currency		1,791,963,495			106,987,438			2,163,492,606		134,849,328
Net Assets	$	5,729,319,742		$	528,633,232		$	5,402,158,993	$	676,652,425
Investment Class	$	3,869,578,713		$	414,119,794		$	4,097,960,698	$	50,370,878
Service Class		333,548,022			38,645,551			172,810,100		520,905,355
Consultant Class		676,346,647			75,867,887			56,884,480
Institutional Class		802,516,796						594,462,532		101,473,343
W Class								446,379,746
R Class		36,622,257						27,355,266		1,891,461
K Class		10,707,307						6,306,171		2,011,388
SHARES OUTSTANDING (unlimited number of $.001 par value):
Investment Class		297,755,941			28,622,186			207,808,832		5,324,782
Service Class		25,734,254			2,709,313			8,938,648		55,083,468
Consultant Class		60,624,974			6,205,342			3,327,572
Institutional Class		61,647,628						29,851,094		10,729,444
W Class								22,585,871
R Class		2,930,060						1,453,633		208,270
K Class		947,897						1,093,930		681,104
NET ASSET VALUES (Net Assets ÷ Shares Outstanding):
Investment Class1		$13.00			$14.47			$19.72		$9.46
Service Class1		12.96			14.26			19.33		9.46
Consultant Class2		11.16			12.23			17.09
Institutional Class3		13.02						19.91		9.46
W Class3								19.76
R Class3		12.50						18.82		9.08
K Class3		11.30						5.76		2.95
Investments at identified cost	$	3,937,324,044		$	423,219,695		$	3,207,767,466	$	523,899,941
Market value of loaned securities		59,406,301			21,158,018			80,170,632		19,485,033

1	Offering and redemption price per share; shares held less than 180 days may be subject to a 1% redemption fee, payable to the Fund.
2	Offering and redemption price per share; shares held less than 365 days may be subject to a 1% contingent deferred sales charge, payable to Royce Fund Services, Inc.
3	Offering and redemption price per share.

76 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

		Royce Total Return			Royce Heritage		Royce Opportunity			Royce Special
		Fund			Fund		Fund			Equity Fund
ASSETS:
Investments at value (including collateral on loaned securities)
Non-Affiliated Companies	$	4,448,675,416		$	347,825,497	$	2,266,533,764		$	1,160,757,030
Affiliated Companies		79,160,671			–		50,359,053			1,570,600,588
Repurchase agreements (at cost and value)		109,237,000			12,085,000		164,768,000			169,503,000
Cash and foreign currency		67,149			534		816			646
Receivable for investments sold		36,154,558			–		15,277,154			457,140
Receivable for capital shares sold		10,396,423			128,749		1,307,519			3,561,192
Receivable for dividends and interest		6,463,502			276,181		1,209,382			916,398
Prepaid expenses and other assets		16,390			1,234		8,421			13,677
Total Assets		4,690,171,109			360,317,195		2,499,464,109			2,905,809,671
LIABILITIES:
Payable for collateral on loaned securities		5,893,087			964,385		164,589,994			–
Payable for investments purchased		1,988,211			–		4,276,411			1,780,764
Payable for capital shares redeemed		16,203,750			295,300		12,171,496			12,178,946
Payable for investment advisory fees		3,824,141			304,305		1,932,401			2,437,228
Payable for trustees’ fees		64,892			4,560		31,231			41,012
Accrued expenses		3,438,475			230,527		1,093,286			1,665,325
Total Liabilities		31,412,556			1,799,077		184,094,819			18,103,275
Net Assets	$	4,658,758,553		$	358,518,118	$	2,315,369,290		$	2,887,706,396
ANALYSIS OF NET ASSETS:
Paid-in capital	$	2,999,491,782		$	297,151,138	$	1,960,873,836		$	2,131,035,141
Undistributed net investment income (loss)		(2,595,297	)		902,677		(21,843	)		405,823
Accumulated net realized gain (loss) on investments and foreign currency		145,649,070			1,189,636		5,726,495			50,279,495
Net unrealized appreciation (depreciation) on investments and foreign currency		1,516,212,998			59,274,667		348,790,802			705,985,937
Net Assets	$	4,658,758,553		$	358,518,118	$	2,315,369,290		$	2,887,706,396
Investment Class	$	3,077,950,904		$	160,557,972	$	1,284,044,082		$	1,950,210,523
Service Class		232,813,500			175,432,802		155,085,055			233,791,413
Consultant Class		356,731,299			13,338,424		20,517,623			63,981,363
Institutional Class		572,662,436					799,131,076			639,723,097
W Class		261,828,594
R Class		65,500,847			3,726,885		33,698,862
K Class		91,270,973			5,462,035		22,892,592
SHARES OUTSTANDING (unlimited number of $.001 par value):
Investment Class		208,786,644			10,559,070		95,370,961			85,325,716
Service Class		15,539,869			11,566,979		12,119,764			10,249,892
Consultant Class		23,696,624			1,162,934		1,739,601			3,007,384
Institutional Class		39,201,610					58,568,995			28,170,775
W Class		17,788,404
R Class		4,345,543			351,596		2,682,572
K Class		8,519,686			510,469		1,979,435
NET ASSET VALUES (Net Assets ÷ Shares Outstanding):
Investment Class1		$14.74			$15.21		$13.46			$22.86
Service Class1		14.98			15.17		12.80			22.81
Consultant Class2		15.05			11.47		11.79			21.27
Institutional Class3		14.61					13.64			22.71
W Class3		14.72
R Class3		15.07			10.60		12.56
K Class3		10.71			10.70		11.57
Investments at identified cost	$	3,011,614,256		$	288,547,300	$	1,968,101,955		$	2,025,371,681
Market value of loaned securities		5,965,208			922,167		157,890,407			–

1	Offering and redemption price per share; shares held less than 180 days may be subject to a 1% redemption fee, payable to the Fund.
2	Offering and redemption price per share; shares held less than 365 days may be subject to a 1% contingent deferred sales charge, payable to Royce Fund Services, Inc.
3	Offering and redemption price per share.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 77

Statements of Assets and Liabilities

				Royce Value Plus					Royce Dividend
		Royce Value Fund		Fund		Royce 100 Fund			Value Fund
ASSETS:
Investments at value (including collateral on loaned securities)
Non-Affiliated Companies	$	869,365,770	$	1,012,649,052	$	210,630,307		$	513,867,984
Repurchase agreements (at cost and value)		16,293,000		22,541,000		9,261,000			1,561,000
Cash and foreign currency		811		247		553			11,965
Receivable for investments sold		1,836,972		–		7,228,211			726,676
Receivable for capital shares sold		539,932		708,848		216,320			930,372
Receivable for dividends and interest		394,396		271,940		100,711			548,239
Prepaid expenses and other assets		3,046		2,966		818			3,545
Total Assets		888,433,927		1,036,174,053		227,437,920			517,649,781
LIABILITIES:
Payable for collateral on loaned securities		–		104,586,929		–			753,190
Payable for investments purchased		581,528		26,787		4,940,493			171,327
Payable for capital shares redeemed		4,408,071		3,572,354		705,971			2,415,080
Payable for investment advisory fees		756,836		793,871		191,833			417,999
Payable for trustees’ fees		13,177		13,937		3,467			7,606
Accrued expenses		847,344		1,136,161		307,442			468,514
Total Liabilities		6,606,956		110,130,039		6,149,206			4,233,716
Net Assets	$	881,826,971	$	926,044,014	$	221,288,714		$	513,416,065
ANALYSIS OF NET ASSETS:
Paid-in capital	$	693,715,879	$	663,727,536	$	163,508,467		$	415,144,568
Undistributed net investment income (loss)		302,597		–		(9,879	)		2,098,387
Accumulated net realized gain (loss) on investments and foreign currency		21,476,712		35,360,433		7,990,375			7,299,201
Net unrealized appreciation (depreciation) on investments and foreign currency		166,331,783		226,956,045		49,799,751			88,873,909
Net Assets	$	881,826,971	$	926,044,014	$	221,288,714		$	513,416,065
Investment Class	$	140,162,552	$	295,412,242	$	68,898,103		$	176,002,080
Service Class		477,999,102		572,898,885		149,735,759			295,559,808
Consultant Class		26,715,810		17,157,650					911,950
Institutional Class		196,543,463		38,717,799					40,942,227
R Class		31,043,090		1,360,322		1,982,776
K Class		9,362,954		497,116		672,076
SHARES OUTSTANDING (unlimited number of $.001 par value):
Investment Class		11,869,989		20,574,694		7,881,365			21,679,163
Service Class		40,657,752		40,261,613		17,314,820			35,946,387
Consultant Class		2,458,873		1,307,958					98,861
Institutional Class		16,638,860		2,676,939					5,060,987
R Class		2,715,293		99,727		177,966
K Class		1,051,455		54,940		59,279
NET ASSET VALUES (Net Assets ÷ Shares Outstanding):
Investment Class1		$11.81		$14.36		$8.74			$8.12
Service Class1		11.76		14.23		8.65			8.22
Consultant Class2		10.87		13.12					9.22
Institutional Class3		11.81		14.46					8.09
R Class3		11.43		13.64		11.14
K Class3		8.90		9.05		11.34
Investments at identified cost	$	703,033,988	$	785,693,084	$	160,829,797		$	424,990,553
Market value of loaned securities		–		100,732,000		–			723,558

1	Offering and redemption price per share; shares held less than 180 days may be subject to a 1% redemption fee, payable to the Fund.
2	Offering and redemption price per share; shares held less than 365 days may be subject to a 1% contingent deferred sales charge, payable to Royce Fund Services, Inc.
3	Offering and redemption price per share.

78 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

				Royce International			Royce Special
	Royce Global			Smaller-Companies			Equity Multi-Cap
	Value Fund			Fund			Fund
ASSETS:
Investments at value
Non-Affiliated Companies	$	89,103,986		$	32,562,050		$	277,484,211
Repurchase agreements (at cost and value)		8,407,000			1,860,000			28,523,000
Cash and foreign currency		336,573			5,495			535
Receivable for investments sold		527,536			34,943			–
Receivable for capital shares sold		74,120			244,253			237,812
Receivable for dividends and interest		275,550			54,431			390,984
Prepaid expenses and other assets		582			245			1,520
Total Assets		98,725,347			34,761,417			306,638,062
LIABILITIES:
Payable for investments purchased		1,558,666			959,325			2,504,837
Payable for capital shares redeemed		630,555			569,563			190,258
Payable for investment advisory fees		141,036			–			213,277
Payable for trustees’ fees		2,646			626			2,791
Accrued expenses		220,206			74,827			139,647
Deferred capital gains tax		2,819			74,729			–
Total Liabilities		2,555,928			1,679,070			3,050,810
Net Assets	$	96,169,419		$	33,082,347		$	303,587,252
ANALYSIS OF NET ASSETS:
Paid-in capital	$	172,223,436		$	37,172,401		$	254,935,120
Undistributed net investment income (loss)		58,999			(32,823	)		104,459
Accumulated net realized gain (loss) on investments and foreign currency		(73,527,399	)		(2,903,366	)		8,299,762
Net unrealized appreciation (depreciation) on investments and foreign currency		(2,585,617	)		(1,153,865	)		40,247,911
Net Assets	$	96,169,419		$	33,082,347		$	303,587,252
Investment Class	$	45,698,569		$	1,118,777		$	123,544,781
Service Class		29,625,041			29,610,726			94,878,231
Consultant Class		20,706,953						9,223,608
Institutional Class					2,352,844			75,940,632
R Class		116,240
K Class		22,616
SHARES OUTSTANDING (unlimited number of $.001 par value):
Investment Class		3,633,168			141,479			7,943,221
Service Class		2,341,115			3,022,335			6,081,737
Consultant Class		1,654,081						860,575
Institutional Class					289,867			4,879,325
R Class		12,503
K Class		2,431
NET ASSET VALUES (Net Assets ÷ Shares Outstanding):
Investment Class1,		$12.58			$7.91			$15.55
Service Class1		12.65			9.80			15.60
Consultant Class2		12.52						10.72
Institutional Class3					8.12			15.56
R Class3		9.30
K Class3		9.30
Investments at identified cost	$	91,668,952		$	33,637,676		$	237,236,300

1	Offering and redemption price per share; shares held less than 180 days may be subject to a 2% redemption fee, or a 1% redemption fee (Royce Special Equity Multi-Cap Fund), payable to the Fund.
2	Offering and redemption price per share; shares held less than 365 days may be subject to a 1% contingent deferred sales charge, payable to Royce Fund Services, Inc.
3	Offering and redemption price per share

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 79

Statements of Changes in Net Assets

	Royce Pennsylvania Mutual Fund								Royce Micro-Cap Fund								Royce Premier Fund
	Year Ended 12/31/14			Year Ended 12/31/13				Year Ended 12/31/14				Year Ended 12/31/13				Year Ended 12/31/14				Year Ended 12/31/13
INVESTMENT OPERATIONS:
Net investment income (loss)	$	15,158,466			$	7,661,265			$	(4,483,168	)		$	(5,870,665	)		$	21,471,509			$	(452,026	)
Net realized gain (loss) on investments and foreign
currency		850,882,031				471,075,967				67,181,821				80,848,944				509,484,795				873,083,934
Net change in unrealized appreciation (depreciation)
on investments and foreign currency		(941,232,232	)			1,515,290,678				(98,379,469	)			90,069,276				(571,494,932	)			820,330,897
Net increase (decrease) in net assets from
investment operations		(75,191,735	)			1,994,027,910				(35,680,816	)			165,047,555				(40,538,628	)			1,692,962,805
DISTRIBUTIONS:
Net investment income
Investment Class		(12,703,277	)			(431,367	)			–				(699,816	)			(15,697,641	)			–
Service Class		–				–				–				–				–				–
Consultant Class		–				–				–				–				–				–
Institutional Class		(3,678,635	)			(937,016	)											(3,363,878	)			–
W Class																		(1,812,923	)			–
R Class		–				–												–				–
K Class		–				–												(36,229	)			–
Net realized gain on investments and foreign
currency
Investment Class		(417,000,811	)			(260,021,200	)			(39,701,168	)			(45,125,296	)			(398,730,083	)			(488,208,024	)
Service Class		(49,712,548	)			(31,628,047	)			(3,907,041	)			(5,609,190	)			(17,256,962	)			(46,637,769	)
Consultant Class		(82,823,610	)			(45,624,009	)			(8,779,199	)			(9,087,282	)			(6,231,891	)			(6,977,329	)
Institutional Class		(86,408,552	)			(41,396,200	)											(65,714,517	)			(90,956,054	)
W Class																		(44,052,112	)			(52,811,951	)
R Class		(4,018,570	)			(2,317,940	)											(2,717,731	)			(3,194,633	)
K Class		(1,293,456	)			(689,970	)											(1,653,995	)			(1,877,675	)
Total distributions		(657,639,459	)			(383,045,749	)			(52,387,408	)			(60,521,584	)			(557,267,962	)			(690,663,435	)
CAPITAL SHARE TRANSACTIONS:
Net capital share transactions
Investment Class		(689,872,693	)			(353,912,164	)			(170,862,529	)			(172,590,098	)			(547,373,395	)			(240,379,249	)
Service Class		(199,343,245	)			(15,357,868	)			(33,847,817	)			(39,264,005	)			(129,533,114	)			(309,788,929	)
Consultant Class		(14,396,432	)			(29,907,854	)			(26,840,854	)			(15,225,756	)			(2,535,012	)			(1,639,240	)
Institutional Class		81,146,529				181,494,950												(326,676,517	)			(11,316,540	)
W Class																		(56,736,703	)			(61,008,076	)
R Class		(2,792,539	)			1,818,243												(2,140,060	)			(437,535	)
K Class		439,120				482,011												(526,085	)			(1,286,771	)
Shareholder redemption fees
Investment Class		66,223				75,224				6,501				35,746				68,382				190,877
Service Class		44,289				52,548				45,360				27,157				3,900				8,112
Net increase (decrease) in net assets from capital
share transactions		(824,708,748	)			(215,254,910	)			(231,499,339	)			(227,016,956	)			(1,065,448,604	)			(625,657,351	)
Net Increase (Decrease) In Net Assets		(1,557,539,942	)			1,395,727,251				(319,567,563	)			(122,490,985	)			(1,663,255,194	)			376,642,019
NET ASSETS:
Beginning of year		7,286,859,684				5,891,132,433				848,200,795				970,691,780				7,065,414,187				6,688,772,168
End of year	$	5,729,319,742			$	7,286,859,684			$	528,633,232			$	848,200,795			$	5,402,158,993			$	7,065,414,187
Undistributed Net Investment Income (Loss) at End
of Year	$	(5,697,006	)		$	(1,998,921	)		$	(149,122	)		$	(3,027,856	)		$	655,864			$	(2	)

80 | The Royce Funds  2014 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 12/31/14			Year Ended 12/31/13			Year Ended 12/31/14			Year Ended 12/31/13			Year Ended 12/31/14			Year Ended 12/31/13
INVESTMENT OPERATIONS:
Net investment income (loss)	$	2,857,398		$	1,768,327		$	43,476,286		$	46,503,739		$	1,470,971		$	107,612
Net realized gain (loss) on investments and foreign
currency		178,888,358			338,510,647			599,509,277			516,234,642			16,802,002			42,713,139
Net change in unrealized appreciation (depreciation)
on investments and foreign currency		(201,991,166	)		(105,343,208	)		(593,275,861	)		895,364,319			(21,766,741	)		28,856,933
Net increase (decrease) in net assets from
investment operations		(20,245,410	)		234,935,766			49,709,702			1,458,102,700			(3,493,768	)		71,677,684
DISTRIBUTIONS:
Net investment income
Investment Class		(39,705	)		(323,323	)		(56,476,197	)		(30,314,036	)		(508,210	)		(349,578	)
Service Class		–			(379,805	)		(2,393,470	)		(2,207,261	)		–			(47,427	)
Consultant Class								(759,635	)		–			–			–
Institutional Class		(298,806	)		(1,777,124	)		(11,453,242	)		(6,005,663	)
W Class								(4,594,582	)		(1,936,210	)
R Class		–			–			(488,326	)		(134,138	)		–			–
K Class		–			(6,881	)		(1,252,049	)		(751,220	)		–			–
Net realized gain on investments and foreign
currency
Investment Class		(14,919,772	)		(12,723,954	)		(307,872,630	)		(295,570,600	)		(8,225,023	)		(12,211,788	)
Service Class		(167,025,408	)		(131,337,387	)		(22,938,230	)		(42,384,314	)		(9,172,987	)		(23,990,047	)
Consultant Class								(34,858,344	)		(31,920,900	)		(903,116	)		(2,187,387	)
Institutional Class		(27,925,196	)		(63,367,740	)		(56,439,291	)		(47,200,579	)
W Class								(25,890,733	)		(19,766,304	)
R Class		(532,869	)		(414,282	)		(6,318,710	)		(5,693,320	)		(284,436	)		(994,363	)
K Class		(1,092,324	)		(832,746	)		(11,933,090	)		(20,859,671	)		(396,761	)		(1,055,146	)
Total distributions		(211,834,080	)		(211,163,242	)		(543,668,529	)		(504,744,216	)		(19,490,533	)		(40,835,736	)
CAPITAL SHARE TRANSACTIONS:
Net capital share transactions
Investment Class		(21,276,371	)		(170,583,797	)		(252,019,403	)		(16,146,326	)		52,478,285			73,588,985
Service Class		(299,833,853	)		(804,469,884	)		(234,371,808	)		147,512,588			(36,442,055	)		(4,880,969	)
Consultant Class								(13,001,945	)		4,827,235			(1,382,087	)		899,381
Institutional Class		(218,563,474	)		(631,338,844	)		10,261,846			118,224,237
W Class								39,625,519			38,979,851
R Class		(638,616	)		(2,714,812	)		(821,115	)		12,568,863			(2,676,572	)		1,571,248
K Class		(694,975	)		(2,166,084	)		(91,917,398	)		2,762,456			(483,726	)		(1,331,961	)
Shareholder redemption fees
Investment Class		2,035			17,171			62,578			75,527			411			669
Service Class		7,803			48,913			19,546			45,568			2,709			11,734
Net increase (decrease) in net assets from capital
share transactions		(540,997,451	)		(1,611,207,337	)		(542,162,180	)		308,849,999			11,496,965			69,859,087
Net Increase (Decrease) In Net Assets		(773,076,941	)		(1,587,434,813	)		(1,036,121,007	)		1,262,208,483			(11,487,336	)		100,701,035
NET ASSETS:
Beginning of year		1,449,729,366			3,037,164,179			5,694,879,560			4,432,671,077			370,005,454			269,304,419
End of year	$	676,652,425		$	1,449,729,366		$	4,658,758,553		$	5,694,879,560		$	358,518,118		$	370,005,454
Undistributed Net Investment Income (Loss) at End
of Year	$	(205,502	)	$	(3,745,157	)	$	(2,595,297	)	$	(5,494,463	)	$	902,677		$	45,409

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds  2014 Annual Report to Shareholders | 81

Statements of Changes in Net Assets

	Royce Opportunity Fund						Royce Special Equity Fund						Royce Value Fund
	Year Ended 12/31/14			Year Ended 12/31/13			Year Ended 12/31/14			Year Ended 12/31/13			Year Ended 12/31/14			Year Ended 12/31/13
INVESTMENT OPERATIONS:
Net investment income (loss)	$	(7,726,211	)	$	(8,323,304	)	$	14,181,577		$	3,797,163		$	1,379,609		$	(1,046,544	)
Net realized gain (loss) on investments and foreign
currency		270,749,921			324,683,300			282,154,386			366,833,496			127,638,267			104,447,215
Net change in unrealized appreciation (depreciation)
on investments and foreign currency		(282,435,370	)		492,429,616			(285,557,513	)		485,484,439			(130,516,990	)		192,266,104
Net increase (decrease) in net assets from
investment operations		(19,411,660	)		808,789,612			10,778,450			856,115,098			(1,499,114	)		295,666,775
DISTRIBUTIONS:
Net investment income
Investment Class		–			–			(9,502,532	)		(2,784,704	)		(331,391	)		(430,335	)
Service Class		–			–			(460,707	)		–			–			–
Consultant Class		–			–			–			–			–			–
Institutional Class		–			(506,976	)		(3,812,516	)		(1,484,535	)		(739,829	)		(801,517	)
R Class		–			–									–			–
K Class		–			–									–			–
Net realized gain on investments and foreign
currency
Investment Class		(163,669,872	)		(115,737,752	)		(179,944,282	)		(205,169,213	)		(18,283,548	)		(13,405,198	)
Service Class		(20,590,649	)		(33,239,063	)		(22,106,099	)		(27,558,217	)		(60,973,556	)		(47,070,978	)
Consultant Class		(2,830,608	)		(1,843,343	)		(6,200,641	)		(6,115,330	)		(3,553,425	)		(2,278,341	)
Institutional Class		(101,200,321	)		(77,841,147	)		(58,145,358	)		(57,360,331	)		(24,265,825	)		(14,980,670	)
R Class		(4,511,800	)		(2,051,002	)								(4,166,100	)		(2,587,581	)
K Class		(3,319,400	)		(1,712,998	)								(1,486,852	)		(1,401,823	)
Total distributions		(296,122,650	)		(232,932,281	)		(280,172,135	)		(300,472,330	)		(113,800,526	)		(82,956,443	)
CAPITAL SHARE TRANSACTIONS:
Net capital share transactions
Investment Class		31,743,029			214,071,968			(376,370,344	)		74,313,256			(37,927,661	)		(42,051,102	)
Service Class		(31,618,193	)		(59,230,398	)		(78,674,569	)		36,500,115			(140,511,862	)		(280,452,969	)
Consultant Class		4,875,799			3,337,411			(949,433	)		3,787,713			(1,050,038	)		(6,913,766	)
Institutional Class		53,771,758			(49,903,561	)		(4,835,990	)		19,319,756			1,519,448			(19,355,348	)
R Class		15,752,508			13,341,482									(2,055,524	)		(6,762,442	)
K Class		8,646,557			6,241,844									(5,355,597	)		(4,715,820	)
Shareholder redemption fees
Investment Class		44,101			33,487			89,514			98,785			3,778			5,728
Service Class		51,186			21,097			9,825			20,039			11,345			28,188
Net increase (decrease) in net assets from capital
share transactions		83,266,745			127,913,330			(460,730,997	)		134,039,664			(185,366,111	)		(360,217,531	)
Net Increase (Decrease) In Net Assets		(232,267,565	)		703,770,661			(730,124,682	)		689,682,432			(300,665,751	)		(147,507,199	)
NET ASSETS:
Beginning of year		2,547,636,855			1,843,866,194			3,617,831,078			2,928,148,646			1,182,492,722			1,329,999,921
End of year	$	2,315,369,290		$	2,547,636,855		$	2,887,706,396		$	3,617,831,078		$	881,826,971		$	1,182,492,722
Undistributed Net Investment Income (Loss) at End
of Year	$	(21,843	)	$	25,570		$	405,823		$	–		$	302,597		$	(5,366	)

82 | The Royce Funds  2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

	Royce Value Plus Fund						Royce 100 Fund						Royce Dividend Value Fund
	Year Ended 12/31/14			Year Ended 12/31/13			Year Ended 12/31/14			Year Ended 12/31/13			Year Ended 12/31/14			Year Ended 12/31/13
INVESTMENT OPERATIONS:
Net investment income (loss)	$	(5,084,731	)	$	(8,792,263	)	$	(807,160	)	$	(899,035	)	$	6,568,248		$	5,283,336
Net realized gain (loss) on investments and foreign
currency		185,659,073			236,175,134			34,836,525			42,762,789			31,074,320			37,699,702
Net change in unrealized appreciation (depreciation)
on investments and foreign currency		(144,652,002	)		163,082,996			(43,017,230	)		37,488,379			(51,255,088	)		100,268,425
Net increase (decrease) in net assets from
investment operations		35,922,340			390,465,867			(8,987,865	)		79,352,133			(13,612,520	)		143,251,463
DISTRIBUTIONS:
Net investment income
Investment Class		–			(47,920	)		–			(171,769	)		(2,211,322	)		(2,101,030	)
Service Class		–			–			–			(134,400	)		(2,404,931	)		(2,644,407	)
Consultant Class		–			–									(2,223	)
Institutional Class		–			(426,647	)								(561,238	)		(395,915	)
R Class		–			–			–			–
K Class		–			(525	)		–			–
Net realized gain on investments and foreign
currency
Investment Class		(56,823,564	)		(18,415,039	)		(7,631,746	)		(7,553,032	)		(10,463,314	)		(12,036,485	)
Service Class		(111,290,311	)		(67,233,777	)		(16,718,190	)		(29,276,357	)		(17,175,104	)		(23,009,857	)
Consultant Class		(3,522,779	)		(1,776,890	)								(47,672	)
Institutional Class		(7,260,689	)		(11,711,029	)								(2,354,384	)		(1,765,841	)
R Class		(271,992	)		(124,722	)		(168,762	)		(287,743	)
K Class		(242,326	)		(102,394	)		(64,553	)		(232,789	)
Total distributions		(179,411,661	)		(99,838,943	)		(24,583,251	)		(37,656,090	)		(35,220,188	)		(41,953,535	)
CAPITAL SHARE TRANSACTIONS:
Net capital share transactions
Investment Class		97,261,344			(32,018,470	)		18,982,373			(17,441,016	)		(18,740,722	)		60,601,532
Service Class		(172,358,399	)		(327,083,427	)		(59,224,113	)		(20,217,752	)		(83,630,839	)		91,250,464
Consultant Class		(2,449,406	)		(921,317	)								984,157
Institutional Class		(100,411,469	)		(116,016,594	)								13,199,508			2,508,270
R Class		(21,676	)		101,478			(558,911	)		(129,512	)
K Class		(256,776	)		376,308			(1,510,299	)		(1,936,637	)
Shareholder redemption fees
Investment Class		2,387			18,252			1,028			3,349			2,284			9,399
Service Class		9,262			27,203			7,417			10,454			10,514			33,408
Net increase (decrease) in net assets from capital
share transactions		(178,224,733	)		(475,516,567	)		(42,302,505	)		(39,711,114	)		(88,175,098	)		154,403,073
Net Increase (Decrease) In Net Assets		(321,714,054	)		(184,889,643	)		(75,873,621	)		1,984,929			(137,007,806	)		255,701,001
NET ASSETS:
Beginning of year		1,247,758,068			1,432,647,711			297,162,335			295,177,406			650,423,871			394,722,870
End of year	$	926,044,014		$	1,247,758,068		$	221,288,714		$	297,162,335		$	513,416,065		$	650,423,871
Undistributed Net Investment Income (Loss) at End
of Year	$	–		$	(1,324,204	)	$	(9,879	)	$	(10,102	)	$	2,098,387		$	1,341,761

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 83

Statements of Changes in Net Assets

	Royce Global Value Fund						Royce International Smaller- Companies Fund						Royce Special Equity Multi-Cap Fund
	Year Ended 12/31/14			Year Ended 12/31/13			Year Ended 12/31/14			Year Ended 12/31/13			Year Ended 12/31/14			Year Ended 12/31/13
INVESTMENT OPERATIONS:
Net investment income (loss)	$	2,023,823		$	2,504,441		$	600,768		$	358,526		$	1,918,432		$	1,342,234
Net realized gain (loss) on investments and foreign currency		(18,859,829	)		(6,776,633	)		271,690			2,832,920			17,012,232			12,335,278
Net change in unrealized appreciation (depreciation) on investments and foreign currency		6,433,800			18,965,587			(4,257,707	)		847,718			3,829,046			32,879,863
Net increase (decrease) in net assets from investment operations		(10,402,206	)		14,693,395			(3,385,249	)		4,039,164			22,759,710			46,557,375
DISTRIBUTIONS:
Net investment income
Investment Class		(2,001,782	)		(1,815,601	)		(18,814	)					(802,271	)		(479,420	)
Service Class		(561,587	)		(410,885	)		(574,443	)		(426,886	)		(404,109	)		(469,302	)
Consultant Class		(264,812	)		(89,199	)								(44,315	)
Institutional Class								(61,462	)					(566,069	)		(408,331	)
R Class		(2,886	)		(1,123	)
K Class		(601	)		(603	)
Net realized gain on investments and foreign currency
Investment Class		–			–			(79,823	)					(4,729,740	)		(3,236,281	)
Service Class		–			–			(2,909,304	)		(1,677,475	)		(3,852,466	)		(4,025,428	)
Consultant Class		–			–									(504,045	)
Institutional Class								(260,563	)					(3,159,353	)		(2,507,671	)
R Class		–			–
K Class		–			–
Total distributions		(2,831,668	)		(2,317,411	)		(3,904,409	)		(2,104,361	)		(14,062,368	)		(11,126,433	)
CAPITAL SHARE TRANSACTIONS:
Net capital share transactions
Investment Class		(104,088,063	)		(27,207,321	)		1,265,297						59,033,956			16,706,332
Service Class		(16,686,150	)		(53,137,199	)		(1,737,936	)		9,745,965			12,637,616			21,021,702
Consultant Class		(3,254,422	)		1,094,999									9,200,567
Institutional Class								2,778,811						25,321,547			6,547,957
R Class		28,386			17,056
K Class		(19,399	)		603
Shareholder redemption fees
Investment Class		1,878			162,054			723						2,402			1,051
Service Class		3,732			14,010			5,977			7,479			10,760			5,239
Net increase (decrease) in net assets from capital share transactions		(124,014,038	)		(79,055,798	)		2,312,872			9,753,444			106,206,848			44,282,281
Net Increase (Decrease) In Net Assets		(137,247,912	)		(66,679,814	)		(4,976,786	)		11,688,247			114,904,190			79,713,223
NET ASSETS:
Beginning of year		233,417,331			300,097,145			38,059,133			26,370,886			188,683,062			108,969,839
End of year	$	96,169,419		$	233,417,331		$	33,082,347		$	38,059,133		$	303,587,252		$	188,683,062
Undistributed Net Investment Income (Loss) at End of Year	$	58,999		$	176,389		$	(32,823	)	$	(19,501	)	$	104,459		$	2,791

84 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

Statements of Operations Year Ended December 31, 2014

	Royce Pennsylvania Mutual Fund			Royce Micro-Cap Fund			Royce Premier Fund			Royce Low-Priced Stock Fund				Royce Total Return Fund
INVESTMENT INCOME:
INCOME:
Dividends
Non-Affiliated Companies	$	80,697,918		$	6,778,028		$	53,655,695		$	16,809,532		$	103,665,848
Affiliated Companies		1,923,347			208,410			32,297,761			1,061,451			3,278,676
Foreign withholding tax		(1,280,737	)		(165,665	)		(2,875,416	)		(854,063	)		(1,607,902	)
Interest		169,686			–			–			–			32,500
Securities lending		1,911,901			400,122			9,917,872			1,015,339			326,739
Total income		83,422,115			7,220,895			92,995,912			18,032,259			105,695,861
EXPENSES:
Investment advisory fees		49,733,575			9,122,354			61,049,392			11,580,352			48,817,291
Distribution fees		8,821,224			1,167,963			1,436,558			2,058,557			5,288,387
Shareholder servicing		6,397,722			897,312			5,716,295			1,255,358			5,325,210
Shareholder reports		1,148,711			228,695			1,256,507			224,901			984,190
Administrative and office facilities		807,362			90,851			787,722			146,887			620,195
Custody		573,957			113,599			524,804			202,814			518,205
Trustees’ fees		312,369			34,360			304,291			51,180			239,437
Registration		117,950			44,434			108,521			61,545			133,562
Audit		93,257			43,394			91,712			39,723			98,347
Legal		68,508			7,016			60,414			11,703			47,380
Other expenses		190,304			24,375			189,371			47,254			148,448
Total expenses		68,264,939			11,774,353			71,525,587			15,680,274			62,220,652
Compensating balance credits		(1,290	)		(352	)		(1,184	)		(280	)		(1,077	)
Fees waived by distributor		–			–			–			(81,610	)		–
Expenses reimbursed by investment adviser		–			(69,938	)		–			(423,523	)		–
Net expenses		68,263,649			11,704,063			71,524,403			15,174,861			62,219,575
Net investment income (loss)		15,158,466			(4,483,168	)		21,471,509			2,857,398			43,476,286
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
NET REALIZED GAIN (LOSS):
Investments in Non-Affiliated Companies		863,002,630			70,757,678			530,395,966			185,546,524			591,545,106
Investments in Affiliated Companies		(12,079,904	)		(3,520,765	)		(21,006,198	)		(6,424,497	)		8,029,453
Foreign currency transactions		(40,695	)		(55,092	)		95,027			(233,669	)		(65,282	)
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION):
Investments and foreign currency translations		(941,232,417	)		(98,355,468	)		(571,310,947	)		(201,994,537	)		(593,262,145	)
Other assets and liabilities denominated in foreign currency		185			(24,001	)		(183,985	)		3,371			(13,716	)
Net realized and unrealized gain (loss) on investments and foreign currency		(90,350,201	)		(31,197,648	)		(62,010,137	)		(23,102,808	)		6,233,416
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS	$	(75,191,735	)	$	(35,680,816	)	$	(40,538,628	)	$	(20,245,410	)	$	49,709,702

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 85

Statements of Operations

	Royce Heritage Fund			Royce Opportunity Fund			Royce Special Equity Fund			Royce Value Fund			Royce Value Plus Fund
INVESTMENT INCOME:
INCOME:
Dividends
Non-Affiliated Companies	$	6,395,892		$	18,389,192		$	13,187,561		$	15,358,733		$	7,068,525
Affiliated Companies		–			50,500			37,645,002			–			–
Foreign withholding tax		(218,873	)		(179,069	)		–			(153,302	)		(204,438	)
Securities lending		102,611			2,339,652			47,875			74,938			2,965,599
Total income		6,279,630			20,600,275			50,880,438			15,280,369			9,829,686
EXPENSES:
Investment advisory fees		3,626,249			24,483,790			31,513,578			10,195,490			10,730,642
Distribution fees		679,138			848,565			1,371,372			1,936,667			1,961,661
Shareholder servicing		242,979			1,809,083			2,399,493			1,144,455			1,583,139
Shareholder reports		72,734			308,344			496,896			198,284			354,803
Administrative and office facilities		41,971			295,500			394,094			126,845			135,957
Custody		98,414			236,290			247,005			102,283			110,800
Trustees’ fees		16,476			115,283			152,015			48,274			51,192
Registration		53,544			93,046			84,577			73,222			73,018
Audit		40,792			44,077			54,856			31,547			31,614
Legal		3,186			24,617			30,125			9,775			10,511
Other expenses		12,137			68,385			92,565			34,321			37,285
Total expenses		4,887,620			28,326,980			36,836,576			13,901,163			15,080,622
Compensating balance credits		(224	)		(494	)		(768	)		(403	)		(295	)
Fees waived by distributor		(59,007	)		–			–			–			(140,052	)
Expenses reimbursed by investment adviser		(19,730	)		–			(136,947	)		–			(25,858	)
Net expenses		4,808,659			28,326,486			36,698,861			13,900,760			14,914,417
Net investment income (loss)		1,470,971			(7,726,211	)		14,181,577			1,379,609			(5,084,731	)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
NET REALIZED GAIN (LOSS):
Investments in Non-Affiliated Companies		16,841,565			275,173,693			175,403,964			127,638,693			185,739,662
Investments in Affiliated Companies		–			(4,414,614	)		106,750,422			–			(56,616	)
Foreign currency transactions		(39,563	)		(9,158	)		–			(426	)		(23,973	)
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION):
Investments and foreign currency translations		(21,802,458	)		(282,435,142	)		(285,557,513	)		(130,514,397	)		(144,649,021	)
Other assets and liabilities denominated in foreign currency		35,717			(228	)		–			(2,593	)		(2,981	)
Net realized and unrealized gain (loss) on investments and foreign currency		(4,964,739	)		(11,685,449	)		(3,403,127	)		(2,878,723	)		41,007,071
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS	$	(3,493,768	)	$	(19,411,660	)	$	10,778,450		$	(1,499,114	)	$	35,922,340

86 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

Year Ended December 31, 2014

										Royce International			Royce Special
				Royce Dividend			Royce Global Value			Smaller-Companies			Equity Multi-Cap
	Royce 100 Fund			Value Fund			Fund			Fund			Fund
INVESTMENT INCOME:
INCOME:
Dividends	$	3,076,978		$	14,796,215		$	5,272,810		$	1,528,390		$	4,401,190
Foreign withholding tax		(38,266	)		(337,799	)		(379,044	)		(102,589	)		–
Securities lending		3,799			82,987			353,394			–			–
Total income		3,042,511			14,541,403			5,247,160			1,425,801			4,401,190
EXPENSES:
Investment advisory fees		2,686,076			5,977,690			2,422,039			614,951			1,964,886
Distribution fees		502,711			912,936			354,881			114,949			272,194
Shareholder servicing		369,704			674,111			213,741			80,080			158,455
Shareholder reports		155,793			189,675			64,605			10,014			47,526
Administrative and office facilities		33,185			72,214			24,237			5,542			23,147
Custody		31,186			134,983			103,769			79,567			29,100
Trustees’ fees		12,739			28,125			9,207			2,234			9,421
Registration		47,576			70,077			68,438			58,729			73,298
Audit		30,841			52,208			39,354			48,172			33,271
Legal		2,551			5,482			1,898			1,501			8,476
Other expenses		43,867			18,365			11,048			4,071			6,902
Total expenses		3,916,229			8,135,866			3,313,217			1,019,810			2,626,676
Compensating balance credits		(112	)		(516	)		(73	)		(14	)		(22	)
Fees waived by investment adviser and distributor		(38,989	)		(122,201	)		–			(84,408	)		(34,436	)
Expenses reimbursed by investment adviser		(27,457	)		(39,994	)		(89,807	)		(110,355	)		(109,460	)
Net expenses		3,849,671			7,973,155			3,223,337			825,033			2,482,758
Net investment income (loss)		(807,160	)		6,568,248			2,023,823			600,768			1,918,432
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
NET REALIZED GAIN (LOSS):
Investments		34,830,828			31,218,530			(18,672,619	)		429,710			17,012,232
Foreign currency transactions		5,697			(144,210	)		(187,210	)		(158,020	)		–
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION):
Investments and foreign currency translations		(43,016,114	)		(51,287,450	)		6,463,431			(4,187,168	)		3,829,046
Other assets and liabilities denominated in foreign currency		(1,116	)		32,362			(29,631	)		(70,539	)		–
Net realized and unrealized gain (loss) on investments and foreign currency		(8,180,705	)		(20,180,768	)		(12,426,029	)		(3,986,017	)		20,841,278
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS	$	(8,987,865	)	$	(13,612,520	)	$	(10,402,206	)	$	(3,385,249	)	$	22,759,710

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 87

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 Realized and																										Ratio of Expenses to Average Net Assets						Ratio of Net
	Net Asset Value, Beginning of Period		Net Investment Income (Loss)			Unrealized Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			Distributions from Net Investment Income			Distributions from Net Realized Gain on Investments and Foreign Currency			Distributions from Return of Capital		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		Investment Income (Loss) to Average Net Assets		Portfolio Turnover Rate
Royce Pennsylvania Mutual Fund–Investment Class
2014	$	14.73	$	0.06		$	(0.21	)	$	(0.15	)	$	(0.04	)	$	(1.54	)	$	–	$	(1.58	)	$	–	$	13.00		(0.70	)%	$	3,869,579	0.91	%	0.91	%	0.91	%	0.35	%	21	%
2013		11.50		0.03			3.99			4.02			(0.00	)		(0.79	)		–		(0.79	)		–		14.73		35.25			5,033,318	0.92		0.92		0.92		0.24		26
2012		10.76		0.15			1.39			1.54			(0.15	)		(0.65	)		–		(0.80	)		–		11.50		14.58			4,232,988	0.89		0.89		0.89		1.19		22
2011		11.65		0.01			(0.50	)		(0.49	)		(0.02	)		(0.38	)		–		(0.40	)		–		10.76		(4.17	)		4,266,754	0.90		0.90		0.90		0.11		20
2010		9.45		0.06			2.19			2.25			(0.05	)		–			–		(0.05	)		–		11.65		23.86			4,735,403	0.90		0.90		0.90		0.63		25
Royce Pennsylvania Mutual Fund–Service Class
2014	$	14.69	$	0.00		$	(0.19	)	$	(0.19	)	$	–		$	(1.54	)	$	–	$	(1.54	)	$	–	$	12.96		(1.04	)%	$	333,548	1.23	%	1.23	%	1.23	%	0.03	%	21	%
2013		11.51		(0.01	)		3.98			3.97			–			(0.79	)		–		(0.79	)		–		14.69		34.77			591,534	1.25		1.25		1.25		(0.08	)	26
2012		10.75		0.10			1.40			1.50			(0.09	)		(0.65	)		–		(0.74	)		–		11.51		14.15			473,624	1.24		1.24		1.24		0.90		22
2011		11.65		(0.02	)		(0.50	)		(0.52	)		–			(0.38	)		–		(0.38	)		–		10.75		(4.42	)		406,052	1.19		1.19		1.19		(0.18	)	20
2010		9.41		0.02			2.20			2.22			–			–			–		–			0.02		11.65		23.80			448,784	1.27		1.27		1.25		0.18		25
Royce Pennsylvania Mutual Fund–Consultant Class
2014	$	12.96	$	(0.08	)	$	(0.18	)	$	(0.26	)	$	–		$	(1.54	)	$	–	$	(1.54	)	$	–	$	11.16		(1.72	)%	$	676,347	1.91	%	1.91	%	1.91	%	(0.64	)%	21	%
2013		10.29		(0.09	)		3.55			3.46			–			(0.79	)		–		(0.79	)		–		12.96		33.94			788,017	1.94		1.94		1.94		(0.78	)	26
2012		9.69		0.01			1.25			1.26			(0.01	)		(0.65	)		–		(0.66	)		–		10.29		13.27			654,642	1.97		1.97		1.97		0.12		22
2011		10.61		(0.09	)		(0.45	)		(0.54	)		–			(0.38	)		–		(0.38	)		–		9.69		(5.05	)		664,778	1.85		1.85		1.85		(0.85	)	20
2010		8.65		(0.03	)		1.99			1.96			–			–			–		–			–		10.61		22.66			841,525	1.87		1.87		1.87		(0.36	)	25
Royce Pennsylvania Mutual Fund–Institutional Classa
2014	$	14.75	$	0.07		$	(0.20	)	$	(0.13	)	$	(0.06	)	$	(1.54	)	$	–	$	(1.60	)	$	–	$	13.02		(0.58	)%	$	802,517	0.79	%	0.79	%	0.79	%	0.48	%	21	%
2013		11.52		0.05			3.99			4.04			(0.02	)		(0.79	)		–		(0.81	)		–		14.75		35.34			818,212	0.79		0.79		0.79		0.40		26
2012		10.79		0.13			1.43			1.56			(0.18	)		(0.65	)		–		(0.83	)		–		11.52		14.72			488,052	0.80		0.80		0.80		1.53		22
2011		12.19		0.03			(1.05	)		(1.02	)		–			(0.38	)		–		(0.38	)		–		10.79		(8.33	)1		241,951	0.78	2	0.78	2	0.782		0.46	2	20
Royce Pennsylvania Mutual Fund–R Class
2014	$	14.26	$	(0.03	)	$	(0.19	)	$	(0.22	)	$	–		$	(1.54	)	$	–	$	(1.54	)	$	–	$	12.50		(1.28	)%	$	36,622	1.48	%	1.48	%	1.48	%	(0.21	)%	21	%
2013		11.22		(0.05	)		3.88			3.83			–			(0.79	)		–		(0.79	)		–		14.26		34.42			44,094	1.56		1.56		1.56		(0.39	)	26
2012		10.50		0.07			1.35			1.42			(0.05	)		(0.65	)		–		(0.70	)		–		11.22		13.79			32,977	1.50		1.50		1.50		0.70		22
2011		11.43		(0.05	)		(0.50	)		(0.55	)		–			(0.38	)		–		(0.38	)		–		10.50		(4.77	)		22,542	1.51		1.51		1.51		(0.47	)	20
2010		9.28		0.01			2.14			2.15			(0.00	)		–			–		(0.00	)		–		11.43		23.21			17,868	1.51		1.51		1.51		0.06		25
Royce Pennsylvania Mutual Fund–K Class
2014	$	13.04	$	(0.02	)	$	(0.18	)	$	(0.20	)	$	–		$	(1.54	)	$	–	$	(1.54	)	$	–	$	11.30		(1.24	)%	$	10,707	1.42	%	1.42	%	1.42	%	(0.15	)%	21	%
2013		10.29		(0.02	)		3.56			3.54			–			(0.79	)		–		(0.79	)		–		13.04		34.72			11,685	1.37		1.37		1.37		(0.19	)	26
2012		9.68		0.09			1.24			1.33			(0.07	)		(0.65	)		–		(0.72	)		–		10.29		14.04			8,849	1.26		1.26		1.26		0.94		22
2011		10.57		(0.05	)		(0.46	)		(0.51	)		–			(0.38	)		–		(0.38	)		–		9.68		(4.78	)		5,800	1.55		1.55		1.55		(0.49	)	20
2010		8.59		0.00			1.98			1.98			(0.00	)		–			–		(0.00	)		–		10.57		23.11			3,760	1.61		1.61		1.59		0.01		25
88  |   The Royce Funds 2014 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 Realized and																										Ratio of Expenses to Average Net Assets						Ratio of Net
	Net Asset Value, Beginning of Period		Net Investment Income (Loss)			Unrealized Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			Distributions from Net Investment Income			Distributions from Net Realized Gain on Investments and Foreign Currency			Distributions from Return of Capital		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		Investment Income (Loss) to Average Net Assets		Portfolio Turnover Rate
Royce Micro–Cap Fund–Investment Class
2014	$	16.68	$	(0.08	)	$	(0.65	)	$	(0.73	)	$	–		$	(1.48	)	$	–	$	(1.48	)	$	–	$	14.47		(4.13	)%	$	414,120	1.52	%	1.52	%	1.52	%	(0.49	)%	18	%
2013		14.78		(0.08	)		3.19			3.11			(0.02	)		(1.19	)		–		(1.21	)		–		16.68		21.29			650,773	1.53		1.53		1.53		(0.52	)	22
2012		14.55		0.05			1.07			1.12			(0.01	)		(0.88	)		–		(0.89	)		–		14.78		7.93			740,364	1.47		1.47		1.47		0.29		15
2011		17.57		(0.07	)		(2.05	)		(2.12	)		(0.20	)		(0.70	)		–		(0.90	)		–		14.55		(12.04	)		904,168	1.50		1.50		1.50		(0.50	)	35
2010		13.71		(0.03	)		4.14			4.11			(0.25	)		–			–		(0.25	)		–		17.57		30.06			1,085,782	1.50		1.50		1.50		(0.27	)	36
Royce Micro–Cap Fund–Service Class
2014	$	16.48	$	(0.10	)	$	(0.65	)	$	(0.75	)	$	–		$	(1.48	)	$	–	$	(1.48	)	$	0.01	$	14.26		(4.24	)%	$	38,645	1.77	%	1.77	%	1.66	%	(0.63	)%	18	%
2013		14.61		(0.10	)		3.16			3.06			–			(1.19	)		–		(1.19	)		–		16.48		21.20			79,890	1.74		1.74		1.66		(0.66	)	22
2012		14.41		0.02			1.06			1.08			–			(0.88	)		–		(0.88	)		–		14.61		7.76			109,457	1.74		1.74		1.66		0.14		15
2011		17.43		(0.10	)		(2.04	)		(2.14	)		(0.18	)		(0.70	)		–		(0.88	)		–		14.41		(12.23	)		122,479	1.76		1.76		1.66		(0.65	)	35
2010		13.61		(0.08	)		4.14			4.06			(0.24	)		–			–		(0.24	)		–		17.43		29.85			139,911	1.78		1.78		1.66		(0.41	)	36
Royce Micro–Cap Fund–Consultant Class
2014	$	14.48	$	(0.20	)	$	(0.57	)	$	(0.77	)	$	–		$	(1.48	)	$	–	$	(1.48	)	$	–	$	12.23		(5.03	)%	$	75,868	2.48	%	2.48	%	2.48	%	(1.45	)%	18	%
2013		13.08		(0.21	)		2.80			2.59			–			(1.19	)		–		(1.19	)		–		14.48		20.08			117,538	2.52		2.52		2.52		(1.51	)	22
2012		13.11		(0.10	)		0.95			0.85			–			(0.88	)		–		(0.88	)		–		13.08		6.77			120,871	2.55		2.55		2.55		(0.77	)	15
2011		15.91		(0.21	)		(1.84	)		(2.05	)		(0.05	)		(0.70	)		–		(0.75	)		–		13.11		(12.86	)		134,752	2.42		2.42		2.42		(1.41	)	35
2010		12.45		(0.15	)		3.74			3.59			(0.13	)		–			–		(0.13	)		–		15.91		28.85			181,746	2.43		2.43		2.43		(1.20	)	36
Royce Premier Fund–Investment Class
2014	$	22.11	$	0.08		$	(0.32	)	$	(0.24	)	$	(0.08	)	$	(2.07	)	$	–	$	(2.15	)	$	–	$	19.72		(0.86	)%	$	4,097,961	1.10	%	1.10	%	1.10	%	0.34	%	9	%
2013		19.16		0.00			5.22			5.22			–			(2.27	)		–		(2.27	)		–		22.11		27.73			5,096,793	1.09		1.09		1.09		0.02		11
2012		18.52		0.24			1.85			2.09			(0.24	)		(1.21	)		–		(1.45	)		–		19.16		11.45			4,629,272	1.06		1.06		1.06		1.19		7
2011		20.35		(0.02	)		(0.17	)		(0.19	)		(0.05	)		(1.59	)		–		(1.64	)		–		18.52		(0.86	)		4,539,127	1.09		1.09		1.09		(0.11	)	18
2010		16.31		(0.01	)		4.32			4.31			–			(0.27	)		–		(0.27	)		–		20.35		26.46			4,961,891	1.12		1.12		1.12		(0.07	)	10
Royce Premier Fund–Service Class
2014	$	21.70	$	0.01		$	(0.31	)	$	(0.30	)	$	–		$	(2.07	)	$	–	$	(2.07	)	$	–	$	19.33		(1.16	)%	$	172,810	1.38	%	1.38	%	1.38	%	0.05	%	9	%
2013		18.89		(0.07	)		5.15			5.08			–			(2.27	)		–		(2.27	)		–		21.70		27.39			318,860	1.38		1.38		1.38		(0.33	)	11
2012		18.23		0.19			1.81			2.00			(0.13	)		(1.21	)		–		(1.34	)		–		18.89		11.14			560,553	1.33		1.33		1.32		0.92		7
2011		20.07		(0.07	)		(0.16	)		(0.23	)		(0.02	)		(1.59	)		–		(1.61	)		–		18.23		(1.07	)		628,824	1.34		1.34		1.32		(0.33	)	18
2010		16.12		(0.05	)		4.27			4.22			–			(0.27	)		–		(0.27	)		–		20.07		26.22			584,817	1.39		1.39		1.37		(0.30	)	10
Royce Premier Fund–Consultant Class
2014	$	19.58	$	(0.13	)	$	(0.29	)	$	(0.42	)	$	–		$	(2.07	)	$	–	$	(2.07	)	$	–	$	17.09		(1.92	)%	$	56,884	2.10	%	2.10	%	2.10	%	(0.66	)%	9	%
2013		17.35		(0.20	)		4.70			4.50			–			(2.27	)		–		(2.27	)		–		19.58		26.47			66,712	2.13		2.13		2.13		(1.02	)	11
2012		16.87		0.02			1.69			1.71			(0.02	)		(1.21	)		–		(1.23	)		–		17.35		10.24			60,568	2.12		2.12		2.12		0.13		7
2011		18.81		(0.21	)		(0.14	)		(0.35	)		–			(1.59	)		–		(1.59	)		–		16.87		(1.80	)		59,766	2.05		2.05		2.05		(1.07	)	18
2010		15.24		(0.17	)		4.01			3.84			–			(0.27	)		–		(0.27	)		–		18.81		25.24			71,686	2.08		2.08		2.08		(1.04	)	10
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS															The Royce Funds 2014 Annual Report to Shareholders  |  89

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 Realized and																										Ratio of Expenses to Average Net Assets						Ratio of Net
	Net Asset Value, Beginning of Period		Net Investment Income (Loss)			Unrealized Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			Distributions from Net Investment Income			Distributions from Net Realized Gain on Investments and Foreign Currency			Distributions from Return of Capital		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		Investment Income (Loss) to Average Net Assets		Portfolio Turnover Rate
Royce Premier Fund–Institutional Class
2014	$	22.31	$	0.12		$	(0.34	)	$	(0.22	)	$	(0.11	)	$	(2.07	)	$	–	$	(2.18	)	$	–	$	19.91		(0.79	)%	$	594,463	0.98	%	0.98	%	0.98	%	0.45	%	9	%
2013		19.30		0.03			5.25			5.28			–			(2.27	)		–		(2.27	)		–		22.31		27.85			989,100	0.98		0.98		0.98		0.13		11
2012		18.66		0.26			1.87			2.13			(0.28	)		(1.21	)		–		(1.49	)		–		19.30		11.57			866,277	0.98		0.98		0.98		1.30		7
2011		20.49		0.00			(0.16	)		(0.16	)		(0.08	)		(1.59	)		–		(1.67	)		–		18.66		(0.73	)		813,837	0.97		0.97		0.97		0.02		18
2010		16.40		0.01			4.35			4.36			–			(0.27	)		–		(0.27	)		–		20.49		26.62			706,870	0.99		0.99		0.99		0.07		10
Royce Premier Fund–W Class
2014	$	22.16	$	0.09		$	(0.33	)	$	(0.24	)	$	(0.09	)	$	(2.07	)	$	–	$	(2.16	)	$	–	$	19.76		(0.89	)%	$	446,380	1.07	%	1.07	%	1.07	%	0.36	%	9	%
2013		19.20		0.00			5.23			5.23			–			(2.27	)		–		(2.27	)		–		22.16		27.73			552,732	1.09		1.09		1.09		0.01		11
2012		18.57		0.25			1.85			2.10			(0.26	)		(1.21	)		–		(1.47	)		–		19.20		11.46			533,763	1.05		1.05		1.05		1.19		7
2011		20.40		(0.01	)		(0.15	)		(0.16	)		(0.08	)		(1.59	)		–		(1.67	)		–		18.57		(0.75	)		549,648	1.00		1.00		1.00		(0.01	)	18
2010		16.33		0.01			4.33			4.34			–			(0.27	)		–		(0.27	)		–		20.40		26.61			425,397	1.02		1.02		1.02		0.04		10
Royce Premier Fund–R Class
2014	$	21.25	$	(0.06	)	$	(0.30	)	$	(0.36	)	$	–		$	(2.07	)	$	–	$	(2.07	)	$	–	$	18.82		(1.48	)%	$	27,355	1.71	%	1.71	%	1.71	%	(0.28	)%	9	%
2013		18.61		(0.13	)		5.04			4.91			–			(2.27	)		–		(2.27	)		–		21.25		26.88			32,577	1.74		1.74		1.74		(0.63	)	11
2012		17.99		0.11			1.80			1.91			(0.08	)		(1.21	)		–		(1.29	)		–		18.61		10.75			28,632	1.68		1.68		1.68		0.57		7
2011		19.91		(0.14	)		(0.15	)		(0.29	)		(0.04	)		(1.59	)		–		(1.63	)		–		17.99		(1.38	)		23,653	1.66		1.66		1.66		(0.63	)	18
2010		16.07		(0.11	)		4.22			4.11			–			(0.27	)		–		(0.27	)		–		19.91		25.61			10,185	1.78		1.78		1.78		(0.64	)	10
Royce Premier Fund–K Class
2014	$	8.04	$	(0.01	)	$	(0.15	)	$	(0.16	)	$	(0.05	)	$	(2.07	)	$	–	$	(2.12	)	$	–	$	5.76		(1.50	)%	$	6,306	1.69	%	1.69	%	1.69	%	(0.25	)%	9	%
2013		8.19		(0.04	)		2.16			2.12			–			(2.27	)		–		(2.27	)		–		8.04		27.01			8,640	1.59		1.59		1.59		(0.50	)	11
2012		8.67		0.08			0.85			0.93			(0.20	)		(1.21	)		–		(1.41	)		–		8.19		11.00			9,707	1.47		1.47		1.47		0.79		7
2011		10.46		(0.05	)		(0.09	)		(0.14	)		(0.06	)		(1.59	)		–		(1.65	)		–		8.67		(1.20	)		8,776	1.49		1.49		1.49		(0.46	)	18
2010		8.53		(0.04	)		2.24			2.20			–			(0.27	)		–		(0.27	)		–		10.46		25.86			3,845	1.63		1.63		1.59		(0.47	)	10
Royce Low-Priced Stock Fund–Investment Class
2014	$	13.60	$	0.06		$	(0.58	)	$	(0.52	)	$	(0.01	)	$	(3.61	)	$	–	$	(3.62	)	$	–	$	9.46		(3.15	)%	$	50,371	1.25	%	1.25	%	1.24	%	0.46	%	29	%
2013		13.83		0.05			1.71			1.76			(0.05	)		(1.94	)		–		(1.99	)		–		13.60		13.17			88,568	1.37		1.37		1.24		0.18		16
2012		14.34		0.15			0.50			0.65			(0.25	)		(0.91	)		–		(1.16	)		–		13.83		4.79			255,335	1.26		1.26		1.24		0.86		8
2011		18.31		(0.06	)		(2.57	)		(2.63	)		(0.14	)		(1.20	)		–		(1.34	)		–		14.34		(14.37	)		276,247	1.26		1.26		1.24		(0.15	)	22
2010		14.08		(0.03	)		4.50			4.47			(0.10	)		(0.14	)		–		(0.24	)		–		18.31		31.77			148,144	1.26		1.26		1.24		(0.10	)	24
Royce Low-Priced Stock Fund–Service Class
2014	$	13.62	$	0.03		$	(0.58	)	$	(0.55	)	$	–		$	(3.61	)	$	–	$	(3.61	)	$	–	$	9.46		(3.37	)%	$	520,905	1.55	%	1.55	%	1.49	%	0.21	%	29	%
2013		13.84		(0.00	)		1.72			1.72			(0.00	)		(1.94	)		–		(1.94	)		–		13.62		12.91			1,008,207	1.65		1.65		1.49		(0.02	)	16
2012		14.31		0.11			0.49			0.60			(0.16	)		(0.91	)		–		(1.07	)		–		13.84		4.48			1,800,089	1.57		1.57		1.49		0.54		8
2011		18.26		(0.06	)		(2.60	)		(2.66	)		(0.09	)		(1.20	)		–		(1.29	)		–		14.31		(14.58	)		2,489,189	1.56		1.56		1.49		(0.39	)	22
2010		14.05		(0.05	)		4.47			4.42			(0.07	)		(0.14	)		–		(0.21	)		–		18.26		31.49			3,456,142	1.60		1.60		1.49		(0.37	)	24
90  |   The Royce Funds 2014 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 Realized and																								Ratio of Expenses to Average Net Assets						Ratio of Net
	Net Asset Value, Beginning of Period		Net Investment Income (Loss)				Unrealized Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			Distributions from Net Investment Income			Distributions from Net Realized Gain on Investments and Foreign Currency			Distributions from Return of Capital		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		Investment Income (Loss) to Average Net Assets		Portfolio Turnover Rate
Royce Low-Priced Stock Fund–Institutional Class
2014	$	13.61	$	0.08		$	(0.58	)	$	(0.50	)	$	(0.04	)	$	(3.61	)	$	–	$	(3.65	)	$	–	$	9.46	(3.01	)%	$	101,473	1.16	%	1.16	%	1.16	%	0.47	%	29	%
2013		13.84		0.05			1.71			1.76			(0.05	)		(1.94	)		–		(1.99	)		–		13.61	13.20			345,983	1.22		1.22		1.22		0.26		16
2012		14.36		0.16			0.49			0.65			(0.26	)		(0.91	)		–		(1.17	)		–		13.84	4.81			969,664	1.20		1.20		1.20		0.92		8
2011		18.33		(0.01	)		(2.61	)		(2.62	)		(0.15	)		(1.20	)		–		(1.35	)		–		14.36	(14.35	)		991,706	1.17		1.17		1.17		(0.07	)	22
2010		14.09		(0.02	)		4.50			4.48			(0.10	)		(0.14	)		–		(0.24	)		–		18.33	31.82			1,077,659	1.18		1.18		1.18		(0.04	)	24
Royce Low-Priced Stock Fund–R Class
2014	$	13.27	$	(0.02	)	$	(0.56	)	$	(0.58	)	$	–		$	(3.61	)	$	–	$	(3.61	)	$	–	$	9.08	(3.72	)%	$	1,892	2.21	%	2.21	%	1.84	%	(0.15	)%	29	%
2013		13.58		(0.05	)		1.68			1.63			–			(1.94	)		–		(1.94	)		–		13.27	12.44			3,130	2.21		2.21		1.84		(0.37	)	16
2012		14.05		0.04			0.50			0.54			(0.10	)		(0.91	)		–		(1.01	)		–		13.58	4.10			5,823	2.05		2.05		1.84		0.22		8
2011		18.05		(0.19	)		(2.49	)		(2.68	)		(0.12	)		(1.20	)		–		(1.32	)		–		14.05	(14.86	)		7,337	1.95		1.95		1.84		(0.72	)	22
2010		13.95		(0.12	)		4.44			4.32			(0.08	)		(0.14	)		–		(0.22	)		–		18.05	31.00			2,925	2.21		2.21		1.84		(0.67	)	24
Royce Low-Priced Stock Fund–K Class
2014	$	6.89	$	0.01		$	(0.34	)	$	(0.33	)	$	–		$	(3.61	)	$	–	$	(3.61	)	$	–	$	2.95	(3.55	)%	$	2,011	2.33	%	2.33	%	1.59	%	0.11	%	29	%
2013		7.90		(0.00	)		0.94			0.94			(0.01	)		(1.94	)		–		(1.95	)		–		6.89	12.74			3,841	1.92		1.92		1.59		(0.12	)	16
2012		8.65		0.07			0.27			0.34			(0.18	)		(0.91	)		–		(1.09	)		–		7.90	4.42			6,253	1.71		1.71		1.59		0.40		8
2011		11.70		(0.08	)		(1.63	)		(1.71	)		(0.14	)		(1.20	)		–		(1.34	)		–		8.65	(14.71	)		8,719	1.68		1.68		1.59		(0.48	)	22
2010		9.09		(0.08	)		2.93			2.85			(0.10	)		(0.14	)		–		(0.24	)		–		11.70	31.44			4,782	1.78		1.78		1.59		(0.40	)	24
Royce Total Return Fund–Investment Class
2014	$	16.47	$	0.17		$	0.00		$	0.17		$	(0.28	)	$	(1.62	)	$	–	$	(1.90	)	$	–	$	14.74	1.34	%	$	3,077,951	1.13	%	1.13	%	1.13	%	0.95	%	18	%
2013		13.63		0.16			4.24			4.40			(0.14	)		(1.42	)		–		(1.56	)		–		16.47	32.76			3,657,904	1.13		1.13		1.13		1.00		21
2012		12.68		0.26			1.54			1.80			(0.23	)		(0.62	)		–		(0.85	)		–		13.63	14.42			3,044,664	1.10		1.10		1.10		1.89		17
2011		13.17		0.15			(0.37	)		(0.22	)		(0.12	)		(0.15	)		–		(0.27	)		–		12.68	(1.68	)		3,106,208	1.12		1.12		1.12		1.10		21
2010		10.81		0.19			2.32			2.51			(0.15	)		–			–		(0.15	)		–		13.17	23.47			3,562,002	1.14		1.14		1.14		1.64		15
Royce Total Return Fund–Service Class
2014	$	16.61	$	0.12		$	0.01		$	0.13		$	(0.14	)	$	(1.62	)	$	–	$	(1.76	)	$	–	$	14.98	1.08	%	$	232,814	1.42	%	1.42	%	1.42	%	0.60	%	18	%
2013		13.72		0.11			4.27			4.38			(0.07	)		(1.42	)		–		(1.49	)		–		16.61	32.38			493,111	1.48		1.48		1.48		0.68		21
2012		12.71		0.22			1.55			1.77			(0.14	)		(0.62	)		–		(0.76	)		–		13.72	14.11			264,528	1.39		1.39		1.39		1.58		17
2011		13.19		0.11			(0.38	)		(0.27	)		(0.06	)		(0.15	)		–		(0.21	)		–		12.71	(2.01	)		282,704	1.41		1.41		1.41		0.82		21
2010		10.81		0.16			2.32			2.48			(0.10	)		–			–		(0.10	)		–		13.19	23.11			295,656	1.42		1.42		1.42		1.39		15
Royce Total Return Fund–Consultant Class
2014	$	16.68	$	(0.00	)	$	0.02		$	0.02		$	(0.03	)	$	(1.62	)	$	–	$	(1.65	)	$	–	$	15.05	0.37	%	$	356,731	2.12	%	2.12	%	2.12	%	(0.04	)%	18	%
2013		13.81		(0.00	)		4.29			4.29			–			(1.42	)		–		(1.42	)		–		16.68	31.38			404,498	2.15		2.15		2.15		(0.02	)	21
2012		12.77		0.11			1.56			1.67			(0.01	)		(0.62	)		–		(0.63	)		–		13.81	13.19			331,116	2.20		2.20		2.20		0.80		17
2011		13.27		0.02			(0.37	)		(0.35	)		–			(0.15	)		–		(0.15	)		–		12.77	(2.64	)		328,610	2.07		2.07		2.07		0.15		21
2010		10.90		0.08			2.33			2.41			(0.04	)		–			–		(0.04	)		–		13.27	22.18			391,886	2.09		2.09		2.09		0.68		15
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS																The Royce Funds 2014 Annual Report to Shareholders  |  91

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 Realized and																									Ratio of Expenses to Average Net Assets						Ratio of Net
	Net Asset Value, Beginning of Period		Net Investment Income (Loss)			Unrealized Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			Distributions from Net Investment Income			Distributions from Net Realized Gain on Investments and Foreign Currency			Distributions from Return of Capital		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		Investment Income (Loss) to Average Net Assets		Portfolio Turnover Rate
Royce Total Return Fund–Institutional Class
2014	$	16.35	$	0.18		$	0.02		$	0.20		$	(0.32	)	$	(1.62	)	$	–	$	(1.94	)	$	–	$	14.61	1.51	%	$	572,662	1.00	%	1.00	%	1.00	%	1.09	%	18	%
2013		13.55		0.18			4.21			4.39			(0.17	)		(1.42	)		–		(1.59	)		–		16.35	32.93			621,447	1.00		1.00		1.00		1.15		21
2012		12.64		0.27			1.54			1.81			(0.28	)		(0.62	)		–		(0.90	)		–		13.55	14.48			408,551	1.02		1.02		1.02		2.02		17
2011		13.14		0.16			(0.37	)		(0.21	)		(0.14	)		(0.15	)		–		(0.29	)		–		12.64	(1.55	)		390,277	1.00		1.00		1.00		1.26		21
2010		10.80		0.21			2.31			2.52			(0.18	)		–			–		(0.18	)		–		13.14	23.56			356,038	1.01		1.01		1.01		1.79		15
Royce Total Return Fund–W Class
2014	$	16.45	$	0.15		$	0.03		$	0.18		$	(0.29	)	$	(1.62	)	$	–	$	(1.91	)	$	–	$	14.72	1.35	%	$	261,829	1.13	%	1.13	%	1.13	%	0.97	%	18	%
2013		13.62		0.16			4.23			4.39			(0.14	)		(1.42	)		–		(1.56	)		–		16.45	32.71			249,035	1.15		1.15		1.15		0.99		21
2012		12.69		0.26			1.54			1.80			(0.25	)		(0.62	)		–		(0.87	)		–		13.62	14.41			171,603	1.12		1.12		1.12		1.97		17
2011		13.19		0.16			(0.37	)		(0.21	)		(0.14	)		(0.15	)		–		(0.29	)		–		12.69	(1.58	)		132,488	1.05		1.05		1.05		1.27		21
2010		10.83		0.20			2.32			2.52			(0.16	)		–			–		(0.16	)		–		13.19	23.44			75,063	1.09		1.09		1.09		1.74		15
Royce Total Return Fund–R Class
2014	$	16.73	$	0.07		$	0.01		$	0.08		$	(0.12	)	$	(1.62	)	$	–	$	(1.74	)	$	–	$	15.07	0.73	%	$	65,501	1.72	%	1.72	%	1.72	%	0.37	%	18	%
2013		13.82		0.06			4.30			4.36			(0.03	)		(1.42	)		–		(1.45	)		–		16.73	31.95			72,541	1.75		1.75		1.75		0.39		21
2012		12.79		0.18			1.55			1.73			(0.08	)		(0.62	)		–		(0.70	)		–		13.82	13.66			48,797	1.74		1.74		1.74		1.36		17
2011		13.28		0.08			(0.38	)		(0.30	)		(0.04	)		(0.15	)		–		(0.19	)		–		12.79	(2.23	)		34,695	1.68		1.68		1.68		0.62		21
2010		10.88		0.15			2.32			2.47			(0.07	)		–			–		(0.07	)		–		13.28	22.76			20,011	1.71		1.71		1.71		1.20		15
Royce Total Return Fund–K Class
2014	$	12.40	$	0.11		$	(0.03	)	$	0.08		$	(0.15	)	$	(1.62	)	$	–	$	(1.77	)	$	–	$	10.71	1.01	%	$	91,271	1.47	%	1.47	%	1.47	%	0.55	%	18	%
2013		10.53		0.07			3.27			3.34			(0.05	)		(1.42	)		–		(1.47	)		–		12.40	32.20			196,344	1.50		1.50		1.50		0.62		21
2012		9.90		0.17			1.21			1.38			(0.13	)		(0.62	)		–		(0.75	)		–		10.53	14.08			163,412	1.43		1.43		1.43		1.51		17
2011		10.31		0.09			(0.30	)		(0.21	)		(0.05	)		(0.15	)		–		(0.20	)		–		9.90	(1.97	)		177,812	1.44		1.44		1.44		0.90		21
2010		8.47		0.13			1.81			1.94			(0.10	)		–			–		(0.10	)		–		10.31	23.08			95,319	1.43		1.43		1.43		1.46		15
Royce Heritage Fund–Investment Class
2014	$	16.24	$	0.10		$	(0.25	)	$	(0.15	)	$	(0.05	)	$	(0.83	)	$	–	$	(0.88	)	$	–	$	15.21	(0.81	)%	$	160,558	1.09	%	1.09	%	1.09	%	0.66	%	35	%
2013		14.48		0.03			3.71			3.74			(0.05	)		(1.93	)		–		(1.98	)		–		16.24	26.37			117,306	1.13		1.13		1.13		0.36		79
2012		13.07		0.10			1.80			1.90			(0.13	)		(0.36	)		–		(0.49	)		–		14.48	14.70			40,374	1.20		1.20		1.20		0.94		39
2011		15.10		0.01			(1.41	)		(1.40	)		(0.05	)		(0.59	)		–		(0.64	)		0.01		13.07	(9.16	)		21,088	1.22		1.22		1.22		0.15		51
2010		12.12		0.04			3.31			3.35			(0.08	)		(0.29	)		–		(0.37	)		–		15.10	27.71			13,313	1.25		1.25		1.24		0.35		66
Royce Heritage Fund–Service Class
2014	$	16.20	$	0.05		$	(0.25	)	$	(0.20	)	$	–		$	(0.83	)	$	–	$	(0.83	)	$	–	$	15.17	(1.14	)%	$	175,433	1.43	%	1.43	%	1.40	%	0.32	%	35	%
2013		14.45		0.00			3.68			3.68			(0.00	)		(1.93	)		–		(1.93	)		–		16.20	25.99			223,533	1.45		1.45		1.42		0.02		79
2012		13.00		0.08			1.78			1.86			(0.05	)		(0.36	)		–		(0.41	)		–		14.45	14.39			203,112	1.46		1.46		1.45		0.56		39
2011		15.03		(0.01	)		(1.40	)		(1.41	)		(0.03	)		(0.59	)		–		(0.62	)		–		13.00	(9.39	)		218,770	1.47		1.47		1.44		(0.07	)	51
2010		12.07		0.03			3.28			3.31			(0.06	)		(0.29	)		–		(0.35	)		–		15.03	27.50			243,822	1.47		1.47		1.38		0.21		66
92  |   The Royce Funds 2014 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 Realized and																									Ratio of Expenses to Average Net Assets						Ratio of Net
	Net Asset Value, Beginning of Period		Net Investment Income (Loss)			Unrealized Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			Distributions from Net Investment Income				Distributions from Net Realized Gain on Investments and Foreign Currency			Distributions from Return of Capital		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		Investment Income (Loss) to Average Net Assets		Portfolio Turnover Rate
Royce Heritage Fund–Consultant Class
2014	$	12.57	$	(0.07	)	$	(0.20	)	$	(0.27	)	$	–		$	(0.83	)	$	–	$	(0.83	)	$	–	$	11.47	(2.02	)%	$	13,338	2.31	%	2.31	%	2.31	%	(0.59	)%	35	%
2013		11.68		(0.12	)		2.94			2.82			–			(1.93	)		–		(1.93	)		–		12.57	24.73			15,942	2.37		2.37		2.37		(0.93	)	79
2012		10.64		(0.04	)		1.44			1.40			–			(0.36	)		–		(0.36	)		–		11.68	13.30			13,909	2.41		2.41		2.41		(0.39	)	39
2011		12.50		(0.11	)		(1.16	)		(1.27	)		–			(0.59	)		–		(0.59	)		–		10.64	(10.14	)		13,850	2.28		2.28		2.28		(0.91	)	51
2010		10.14		(0.08	)		2.73			2.65			–			(0.29	)		–		(0.29	)		–		12.50	26.22			12,801	2.36		2.36		2.36		(0.77	)	66
Royce Heritage Fund–R Class
2014	$	11.63	$	(0.02	)	$	(0.18	)	$	(0.20	)	$	–		$	(0.83	)	$	–	$	(0.83	)	$	–	$	10.60	(1.59	)%	$	3,727	1.89	%	1.89	%	1.84	%	(0.14	)%	35	%
2013		10.86		(0.05	)		2.75			2.70			–			(1.93	)		–		(1.93	)		–		11.63	25.51			6,805	1.90		1.90		1.84		(0.39	)	79
2012		9.87		0.02			1.34			1.36			(0.01)			(0.36	)		–		(0.37	)		–		10.86	13.88			4,832	1.95		1.95		1.84		0.17		39
2011		11.63		(0.06	)		(1.07	)		(1.13	)		(0.04)			(0.59	)		–		(0.63	)		–		9.87	(9.73	)		4,081	1.90		1.90		1.84		(0.45	)	51
2010		9.43		(0.03	)		2.55			2.52			(0.03)			(0.29	)		–		(0.32	)		–		11.63	26.84			1,909	2.22		2.22		1.84		(0.25	)	66
Royce Heritage Fund–K Class
2014	$	11.70	$	0.02		$	(0.19	)	$	(0.17	)	$	–		$	(0.83	)	$	–	$	(0.83	)	$	–	$	10.70	(1.32	)%	$	5,462	1.87	%	1.87	%	1.59	%	0.14	%	35	%
2013		10.90		(0.02	)		2.75			2.73			–			(1.93	)		–		(1.93	)		–		11.70	25.69			6,419	1.70		1.70		1.59		(0.15	)	79
2012		9.93		0.04			1.36			1.40			(0.07	)		(0.36	)		–		(0.43	)		–		10.90	14.22			7,077	1.61		1.61		1.59		0.42		39
2011		11.68		(0.04	)		(1.08	)		(1.12	)		(0.04	)		(0.59	)		–		(0.63	)		–		9.93	(9.53	)		7,787	1.66		1.66		1.59		(0.24	)	51
2010		9.46		(0.03	)		2.60			2.57			(0.06	)		(0.29	)		–		(0.35	)		–		11.68	27.29			5,214	1.67		1.67		1.59		(0.00	)	66
Royce Opportunity Fund–Investment Class
2014	$	15.54	$	(0.05	)	$	(0.09	)	$	(0.14	)	$	–		$	(1.94	)	$	–	$	(1.94	)	$	–	$	13.46	(0.48	)%	$	1,284,044	1.14	%	1.14	%	1.14	%	(0.30	)%	36	%
2013		11.95		(0.05	)		5.18			5.13			–			(1.54	)		–		(1.54	)		–		15.54	43.50			1,426,214	1.16		1.16		1.16		(0.36	)	39
2012		10.32		0.00			2.30			2.30			–			(0.67	)		–		(0.67	)		–		11.95	22.59			921,473	1.13		1.13		1.13		0.02		34
2011		12.08		(0.04	)		(1.53	)		(1.57	)		–			(0.19	)		–		(0.19	)		–		10.32	(12.95	)		878,824	1.16		1.16		1.16		(0.38	)	35
2010		9.03		(0.04	)		3.09			3.05			–			–			–		–			–		12.08	33.78			1,170,607	1.17		1.17		1.17		(0.44	)	47
Royce Opportunity Fund–Service Class
2014	$	14.92	$	(0.09	)	$	(0.09	)	$	(0.18	)	$	–		$	(1.94	)	$	–	$	(1.94	)	$	–	$	12.80	(0.74	)%	$	155,085	1.47	%	1.47	%	1.47	%	(0.64	)%	36	%
2013		11.55		(0.09	)		5.00			4.91			–			(1.54	)		–		(1.54	)		–		14.92	43.10			208,237	1.47		1.47		1.47		(0.67	)	39
2012		10.03		(0.04	)		2.23			2.19			–			(0.67	)		–		(0.67	)		–		11.55	22.14			205,084	1.46		1.46		1.46		(0.32	)	34
2011		11.78		(0.08	)		(1.49	)		(1.57	)		–			(0.19	)		–		(0.19	)		0.01		10.03	(13.20	)		160,496	1.48		1.48		1.48		(0.73	)	35
2010		8.83		(0.08	)		3.03			2.95			–			–			–		–			–		11.78	33.41			312,728	1.46		1.46		1.46		(0.78	)	47
Royce Opportunity Fund–Consultant Class
2014	$	14.02	$	(0.19	)	$	(0.10	)	$	(0.29	)	$	–		$	(1.94	)	$	–	$	(1.94	)	$	–	$	11.79	(1.61	)%	$	20,518	2.24	%	2.24	%	2.24	%	(1.40	)%	36	%
2013		11.01		(0.20	)		4.75			4.55			–			(1.54	)		–		(1.54	)		–		14.02	41.93			18,643	2.31		2.31		2.31		(1.51	)	39
2012		9.67		(0.13	)		2.14			2.01			–			(0.67	)		–		(0.67	)		–		11.01	21.09			11,930	2.36		2.36		2.36		(1.22	)	34
2011		11.46		(0.15	)		(1.45	)		(1.60	)		–			(0.19	)		–		(0.19	)		–		9.67	(13.91	)		11,884	2.24		2.24		2.24		(1.44	)	35
2010		8.66		(0.15	)		2.95			2.80			–			–			–		–			–		11.46	32.33			13,126	2.29		2.29		2.29		(1.56	)	47
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS																The Royce Funds 2014 Annual Report to Shareholders  |  93

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 Realized and																										Ratio of Expenses to Average Net Assets						Ratio of Net
	Net Asset Value, Beginning of Period		Net Investment Income (Loss)			Unrealized Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			Distributions from Net Investment Income			Distributions from Net Realized Gain on Investments and Foreign Currency			Distributions from Return of Capital		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		Investment Income (Loss) to Average Net Assets		Portfolio Turnover Rate
Royce Opportunity Fund–Institutional Class
2014	$	15.71	$	(0.03	)	$	(0.10	)	$	(0.13	)	$	–		$	(1.94	)	$	–	$	(1.94	)	$	–	$	13.64		(0.41	)%	$	799,131	1.03	%	1.03	%	1.03	%	(0.20	)%	36	%
2013		12.06		(0.03	)		5.23			5.20			(0.01	)		(1.54	)		–		(1.55	)		–		15.71		43.69			853,886	1.03		1.03		1.03		(0.23	)	39
2012		10.40		0.01			2.32			2.33			–			(0.67	)		–		(0.67	)		–		12.06		22.70			689,939	1.04		1.04		1.04		0.11		34
2011		12.16		(0.03	)		(1.54	)		(1.57	)		–			(0.19	)		–		(0.19	)		–		10.40		(12.86	)		574,826	1.03		1.03		1.03		(0.24	)	35
2010		9.07		(0.03	)		3.12			3.09			–			–			–		–			–		12.16		34.07			702,220	1.04		1.04		1.04		(0.32	)	47
Royce Opportunity Fund–R Class
2014	$	14.73	$	(0.13	)	$	(0.10	)	$	(0.23	)	$	–		$	(1.94	)	$	–	$	(1.94	)	$	–	$	12.56		(1.12	)%	$	33,699	1.78	%	1.78	%	1.78	%	(0.93	)%	36	%
2013		11.46		(0.14	)		4.95			4.81			–			(1.54	)		–		(1.54	)		–		14.73		42.56			22,730	1.82		1.82		1.82		(1.02	)	39
2012		9.98		(0.07	)		2.22			2.15			–			(0.67	)		–		(0.67	)		–		11.46		21.85			6,612	2.01		2.01		1.84		(0.62	)	34
2011		11.78		(0.10	)		(1.51	)		(1.61	)		–			(0.19	)		–		(0.19	)		–		9.98		(13.62	)		3,088	2.03		2.03		1.84		(0.98	)	35
2010		8.86		(0.11	)		3.03			2.92			–			–			–		–			–		11.78		32.96			1,407	2.88		2.88		1.84		(1.06	)	47
Royce Opportunity Fund–K Class
2014	$	13.70	$	(0.10	)	$	(0.09	)	$	(0.19	)	$	–		$	(1.94	)	$	–	$	(1.94	)	$	–	$	11.57		(0.90	)%	$	22,892	1.59	%	1.59	%	1.59	%	(0.75	)%	36	%
2013		10.70		(0.08	)		4.62			4.54			–			(1.54	)		–		(1.54	)		–		13.70		43.07			17,927	1.46		1.46		1.46		(0.65	)	39
2012		9.33		(0.04	)		2.08			2.04			–			(0.67	)		–		(0.67	)		–		10.70		22.19			8,828	1.52		1.52		1.52		(0.36	)	34
2011		10.98		(0.07	)		(1.39	)		(1.46	)		–			(0.19	)		–		(0.19	)		–		9.33		(13.25	)		6,484	1.46		1.46		1.46		(0.68	)	35
2010		8.24		(0.07	)		2.81			2.74			–			–			–		–			–		10.98		33.25			6,657	1.63		1.63		1.59		(0.76	)	47
Royce Special Equity Fund–Investment Class
2014	$	25.02	$	0.13		$	0.09		$	0.22		$	(0.12	)	$	(2.26	)	$	–	$	(2.38	)	$	–	$	22.86		1.09	%	$	1,950,211	1.12	%	1.12	%	1.12	%	0.47	%	21	%
2013		21.13		0.03			6.09			6.12			(0.03	)		(2.20	)		–		(2.23	)		–		25.02		29.36			2,510,346	1.13		1.13		1.13		0.13		28
2012		19.70		0.46			2.53			2.99			(0.46	)		(1.10	)		–		(1.56	)		–		21.13		15.36			2,048,091	1.13		1.13		1.13		2.20		31
2011		20.87		0.05			(0.05	)		0.00			(0.09	)		(1.08	)		–		(1.17	)		–		19.70		0.08			1,677,393	1.15		1.15		1.15		0.23		23
2010		17.50		0.14			3.29			3.43			(0.06	)		–			–		(0.06	)		–		20.87		19.61			1,487,632	1.17		1.16		1.16		0.78		21
Royce Special Equity Fund–Service Class
2014	$	24.97	$	0.06		$	0.09		$	0.15		$	(0.05	)	$	(2.26	)	$	–	$	(2.31	)	$	–	$	22.81		0.80	%	$	233,791	1.44	%	1.44	%	1.39	%	0.20	%	21	%
2013		21.12		(0.03	)		6.08			6.05			–			(2.20	)		–		(2.20	)		–		24.97		29.04			335,952	1.45		1.45		1.39		(0.13	)	28
2012		19.66		0.42			2.52			2.94			(0.38	)		(1.10	)		–		(1.48	)		–		21.12		15.10			250,915	1.43		1.43		1.39		1.90		31
2011		20.83		0.00			(0.05	)		(0.05	)		(0.05	)		(1.08	)		–		(1.13	)		0.01		19.66		(0.12	)		216,143	1.45		1.45		1.39		0.00		23
2010		17.48		0.10			3.27			3.37			(0.03	)		–			–		(0.03	)		0.01		20.83		19.33			160,870	1.48		1.48		1.39		0.56		21
Royce Special Equity Fund–Consultant Class
2014	$	23.57	$	(0.13	)	$	0.09		$	(0.04	)	$	–		$	(2.26	)	$	–	$	(2.26	)	$	–	$	21.27		0.04	%	$	63,981	2.14	%	2.14	%	2.14	%	(0.56	)%	21	%
2013		20.20		(0.21	)		5.78			5.57			–			(2.20	)		–		(2.20	)		–		23.57		27.97			71,333	2.17		2.17		2.17		(0.90	)	28
2012		18.88		0.23			2.42			2.65			(0.23	)		(1.10	)		–		(1.33	)		–		20.20		14.20			57,755	2.18		2.18		2.18		1.13		31
2011		20.16		(0.15	)		(0.05	)		(0.20	)		–			(1.08	)		–		(1.08	)		–		18.88		(0.93	)		50,253	2.16		2.16		2.16		(0.77	)	23
2010		17.03		(0.04	)		3.17			3.13			–			–			–		–			–		20.16		18.38			38,497	2.17		2.17		2.17		(0.22	)	21
94  |   The Royce Funds 2014 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 Realized and																										Ratio of Expenses to Average Net Assets						Ratio of Net
	Net Asset Value, Beginning of Period		Net Investment Income (Loss)			Unrealized Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			Distributions from Net Investment Income			Distributions from Net Realized Gain on Investments and Foreign Currency			Distributions from Return of Capital		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		Investment Income (Loss) to Average Net Assets		Portfolio Turnover Rate
Royce Special Equity Fund–Institutional Class
2014	$	24.88	$	0.14		$	0.10		$	0.24		$	(0.15	)	$	(2.26	)	$	–	$	(2.41	)	$	–	$	22.71		1.17	%	$	639,723	1.02	%	1.02	%	1.02	%	0.56	%	21	%
2013		21.02		0.06			6.06			6.12			(0.06	)		(2.20	)		–		(2.26	)		–		24.88		29.51			700,200	1.01		1.01		1.01		0.26		28
2012		19.63		0.49			2.51			3.00			(0.51	)		(1.10	)		–		(1.61	)		–		21.02		15.46			571,388	1.02		1.02		1.02		2.28		31
2011		20.79		0.07			(0.03	)		0.04			(0.12	)		(1.08	)		–		(1.20	)		–		19.63		0.25			481,855	1.03		1.03		1.03		0.36		23
2010		17.44		0.16			3.27			3.43			(0.08	)		–			–		(0.08	)		–		20.79		19.69			445,168	1.04		1.04		1.04		0.91		21
Royce Value Fund–Investment Class
2014	$	13.52	$	0.04		$	(0.05	)	$	(0.01	)	$	(0.03	)	$	(1.67	)	$	–	$	(1.70	)	$	–	$	11.81		0.27	%	$	140,163	1.18	%	1.18	%	1.18	%	0.32	%	38	%
2013		11.37		0.02			3.13			3.15			(0.03	)		(0.97	)		–		(1.00	)		–		13.52		28.06			196,854	1.21		1.21		1.21		0.11		51
2012		10.97		0.15			0.92			1.07			(0.14	)		(0.53	)		–		(0.67	)		–		11.37		9.88			206,316	1.19		1.19		1.19		1.22		25
2011		12.70		0.00			(0.92	)		(0.92	)		(0.07	)		(0.75	)		–		(0.82	)		0.01		10.97		(7.17	)		218,126	1.17		1.17		1.17		0.09		35
2010		10.16		0.03			2.55			2.58			(0.04	)		–			–		(0.04	)		–		12.70		25.42			115,007	1.16		1.16		1.16		0.32		35
Royce Value Fund–Service Class
2014	$	13.48	$	0.01		$	(0.06	)	$	(0.05	)	$	–		$	(1.67	)	$	–	$	(1.67	)	$	–	$	11.76		(0.02	)%	$	477,999	1.45	%	1.45	%	1.45	%	0.04	%	38	%
2013		11.34		(0.02	)		3.13			3.11			–			(0.97	)		–		(0.97	)		–		13.48		27.76			680,674	1.48		1.48		1.48		(0.17	)	51
2012		10.94		0.12			0.91			1.03			(0.10	)		(0.53	)		–		(0.63	)		–		11.34		9.56			831,673	1.45		1.45		1.45		0.90		25
2011		12.65		(0.03	)		(0.92	)		(0.95	)		(0.02	)		(0.75	)		–		(0.77	)		0.01		10.94		(7.41	)		1,083,903	1.45		1.45		1.44		(0.23	)	35
2010		10.13		0.00			2.53			2.53			(0.01	)		–			–		(0.01	)		–		12.65		24.97			1,415,766	1.46		1.46		1.44		0.04		35
Royce Value Fund–Consultant Class
2014	$	12.68	$	(0.09	)	$	(0.05	)	$	(0.14	)	$	–		$	(1.67	)	$	–	$	(1.67	)	$	–	$	10.87		(0.74	)%	$	26,716	2.21	%	2.21	%	2.21	%	(0.71	)%	38	%
2013		10.81		(0.12	)		2.96			2.84			–			(0.97	)		–		(0.97	)		–		12.68		26.61			31,604	2.29		2.29		2.29		(0.97	)	51
2012		10.46		0.02			0.89			0.91			(0.03	)		(0.53	)		–		(0.56	)		–		10.81		8.77			33,480	2.26		2.26		2.26		0.15		25
2011		12.21		(0.11	)		(0.89	)		(1.00	)		–			(0.75	)		–		(0.75	)		–		10.46		(8.20	)		36,104	2.17		2.17		2.17		(0.94	)	35
2010		9.84		(0.07	)		2.44			2.37			–			–			–		–			–		12.21		24.09			35,167	2.18		2.18		2.18		(0.69	)	35
Royce Value Fund–Institutional Class
2014	$	13.53	$	0.06		$	(0.06	)	$	0.00		$	(0.05	)	$	(1.67	)	$	–	$	(1.72	)	$	–	$	11.81		0.35	%	$	196,543	1.05	%	1.05	%	1.05	%	0.46	%	38	%
2013		11.38		0.04			3.13			3.17			(0.05	)		(0.97	)		–		(1.02	)		–		13.53		28.22			219,667	1.05		1.05		1.05		0.27		51
2012		10.98		0.17			0.92			1.09			(0.16	)		(0.53	)		–		(0.69	)		–		11.38		10.04			202,643	1.05		1.05		1.05		1.41		25
2011		12.71		0.03			(0.94	)		(0.91	)		(0.07	)		(0.75	)		–		(0.82	)		–		10.98		(7.12	)		190,591	1.04		1.04		1.04		0.19		35
2010		10.17		0.05			2.54			2.59			(0.05	)		–			–		(0.05	)		–		12.71		25.52			219,111	1.04		1.04		1.04		0.45		35
Royce Value Fund–R Class
2014	$	13.19	$	(0.03	)	$	(0.06	)	$	(0.09	)	$	–		$	(1.67	)	$	–	$	(1.67	)	$	–	$	11.43		(0.34	)%	$	31,043	1.77	%	1.77	%	1.77	%	(0.26	)%	38	%
2013		11.16		(0.06	)		3.06			3.00			–			(0.97	)		–		(0.97	)		–		13.19		27.21			37,409	1.83		1.83		1.83		(0.52	)	51
2012		10.78		0.07			0.91			0.98			(0.07	)		(0.53	)		–		(0.60	)		–		11.16		9.18			37,679	1.85		1.85		1.85		0.59		25
2011		12.54		(0.06	)		(0.91	)		(0.97	)		(0.04	)		(0.75	)		–		(0.79	)		–		10.78		(7.75	)		34,151	1.68		1.68		1.68		(0.44	)	35
2010		10.05		(0.02	)		2.51			2.49			(0.00	)		–			–		(0.00	)		–		12.54		24.81			26,524	1.68		1.67		1.67		(0.16	)	35
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS															The Royce Funds 2014 Annual Report to Shareholders  |  95

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 Realized and																										Ratio of Expenses to Average Net Assets						Ratio of Net
	Net Asset Value, Beginning of Period		Net Investment Income (Loss)			Unrealized Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			Distributions from Net Investment Income			Distributions from Net Realized Gain on Investments and Foreign Currency			Distributions from Return of Capital		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		Investment Income (Loss) to Average Net Assets		Portfolio Turnover Rate
Royce Value Fund–K Class
2014	$	10.65	$	(0.02	)	$	(0.06	)	$	(0.08	)	$	–		$	(1.67	)	$	–	$	(1.67	)	$	–	$	8.90		(0.32	)%	$	9,363	1.67	%	1.67	%	1.67	%	(0.18	)%	38	%
2013		9.14		(0.03	)		2.51			2.48			–			(0.97	)		–		(0.97	)		–		10.65		27.55			16,285	1.62		1.62		1.62		(0.30	)	51
2012		8.95		0.09			0.75			0.84			(0.12	)		(0.53	)		–		(0.65	)		–		9.14		9.49			18,209	1.53		1.53		1.53		0.98		25
2011		10.54		(0.03	)		(0.77	)		(0.80	)		(0.04	)		(0.75	)		–		(0.79	)		–		8.95		(7.54	)		14,079	1.54		1.54		1.54		(0.33	)	35
2010		8.46		(0.00	)		2.10			2.10			(0.02	)		–			–		(0.02	)		–		10.54		24.82			13,195	1.50		1.50		1.50		0.01		35
Royce Value Plus Fund–Investment Class
2014	$	17.03	$	(0.07	)	$	0.68		$	0.61		$	–		$	(3.28	)	$	–	$	(3.28	)	$	–	$	14.36		4.04	%	$	295,412	1.33	%	1.33	%	1.33	%	(0.40	)%	52	%
2013		13.90		(0.09	)		4.57			4.48			(0.00	)		(1.35	)		–		(1.35	)		–		17.03		32.59			244,269	1.37		1.37		1.37		(0.59	)	45
2012		12.04		(0.02	)		1.88			1.86			–			–			–		–			–		13.90		15.45			228,016	1.27		1.27		1.27		(0.14	)	32
2011		13.52		(0.06	)		(1.27	)		(1.33	)		(0.15	)		–			–		(0.15	)		–		12.04		(9.79	)		298,073	1.13		1.13		1.13		(0.42	)	49
2010		11.31		(0.02	)		2.31			2.29			(0.08	)		–			–		(0.08	)		–		13.52		20.25			305,161	1.08		1.08		1.08		(0.14	)	48
Royce Value Plus Fund–Service Class
2014	$	16.93	$	(0.09	)	$	0.67		$	0.58		$	–		$	(3.28	)	$	–	$	(3.28	)	$	–	$	14.23		3.89	%	$	572,899	1.44	%	1.44	%	1.42	%	(0.51	)%	52	%
2013		13.83		(0.11	)		4.56			4.45			–			(1.35	)		–		(1.35	)		–		16.93		32.52			835,379	1.48		1.48		1.46		(0.69	)	45
2012		12.00		(0.04	)		1.87			1.83			–			–			–		–			–		13.83		15.25			966,735	1.45		1.45		1.44		(0.33	)	32
2011		13.42		(0.08	)		(1.26	)		(1.34)			(0.08	)		–			–		(0.08	)		–		12.00		(9.98	)		1,417,973	1.44		1.44		1.42		(0.74	)	49
2010		11.24		(0.06	)		2.27			2.21			(0.03	)		–			–		(0.03	)		–		13.42		19.70			2,454,325	1.44		1.44		1.42		(0.53	)	48
Royce Value Plus Fund–Consultant Class
2014	$	15.99	$	(0.22	)	$	0.63		$	0.41		$	–		$	(3.28	)	$	–	$	(3.28	)	$	–	$	13.12		3.05	%	$	17,158	2.29	%	2.29	%	2.29	%	(1.37	)%	52	%
2013		13.24		(0.24	)		4.34			4.10			–			(1.35	)		–		(1.35	)		–		15.99		31.31			22,614	2.36		2.36		2.36		(1.58	)	45
2012		11.60		(0.15	)		1.79			1.64			–			–			–		–			–		13.24		14.14			19,618	2.37		2.37		2.37		(1.21	)	32
2011		12.99		(0.19	)		(1.20	)		(1.39	)		–			–			–		–			–		11.60		(10.70	)		20,245	2.19		2.19		2.19		(1.50	)	49
2010		10.93		(0.14	)		2.20			2.06			–			–			–		–			–		12.99		18.85			30,279	2.16		2.16		2.16		(1.26	)	48
Royce Value Plus Fund–Institutional Class
2014	$	17.09	$	(0.03	)	$	0.68		$	0.65		$	–		$	(3.28	)	$	–	$	(3.28	)	$	–	$	14.46		4.26	%	$	38,718	1.06	%	1.06	%	1.06	%	(0.16	)%	52	%
2013		13.94		(0.03	)		4.57			4.54			(0.04	)		(1.35	)		–		(1.39	)		–		17.09		32.99			142,923	1.07		1.07		1.07		(0.30	)	45
2012		12.05		0.01			1.88			1.89			–			–			–		–			–		13.94		15.68			216,572	1.06		1.06		1.06		0.08		32
2011		13.52		(0.01	)		(1.30	)		(1.31	)		(0.16	)		–			–		(0.16	)		–		12.05		(9.70	)		261,425	1.05		1.05		1.05		(0.36	)	49
2010		11.31		(0.01	)		2.30			2.29			(0.08	)		–			–		(0.08	)		–		13.52		20.25			425,911	1.04		1.04		1.04		(0.12	)	48
Royce Value Plus Fund–R Class
2014	$	16.43	$	(0.15	)	$	0.64		$	0.49		$	–		$	(3.28	)	$	–	$	(3.28	)	$	–	$	13.64		3.45	%	$	1,360	2.35	%	2.35	%	1.84	%	(0.93	)%	52	%
2013		13.51		(0.16	)		4.43			4.27			–			(1.35	)		–		(1.35	)		–		16.43		31.95			1,605	2.41		2.41		1.84		(1.06	)	45
2012		11.77		(0.09	)		1.83			1.74			–			–			–		–			–		13.51		14.78			1,221	2.35		2.35		1.84		(0.66	)	32
2011		13.24		(0.15	)		(1.23	)		(1.38	)		(0.09	)		–			–		(0.09	)		–		11.77		(10.40	)		1,079	2.45		2.45		1.84		(1.12	)	49
2010		11.13		(0.11	)		2.26			2.15			(0.04	)		–			–		(0.04	)		–		13.24		19.34			942	2.75		2.75		1.84		(0.90	)	48
96  |   The Royce Funds 2014 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 Realized and																											Ratio of Expenses to Average Net Assets						Ratio of Net
	Net Asset Value, Beginning of Period		Net Investment Income (Loss)			Unrealized Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			Distributions from Net Investment Income			Distributions from Net Realized Gain on Investments and Foreign Currency			Distributions from Return of Capital		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		Investment Income (Loss) to Average Net Assets		Portfolio Turnover Rate
Royce Value Plus Fund–K Class
2014	$	11.96	$	(0.08	)	$	0.45		$	0.37		$	–		$	(3.28	)	$	–	$	(3.28	)	$	–		$	9.05		3.75	%	$	497	3.63	%	3.63	%	1.59	%	(0.67	)%	52	%
2013		10.10		(0.10	)		3.31			3.21			(0.00	)		(1.35	)		–		(1.35	)		–			11.96		32.31			968	2.62		2.62		1.59		(0.82	)	45
2012		8.78		(0.04	)		1.36			1.32			–			–			–		–			–			10.10		15.03			486	2.96		2.96		1.59		(0.45	)	32
2011		9.77		(0.08	)		(0.91	)		(0.99	)		–			–			–		–			–			8.78		(10.13	)		501	1.86		1.86		1.59		(0.86	)	49
2010		8.22		(0.06	)		1.67			1.61			(0.06	)		–			–		(0.06	)		–			9.77		19.55			1,851	1.88		1.88		1.59		(0.67	)	48
Royce 100 Fund–Investment Class
2014	$	10.11	$	(0.00	)	$	(0.32	)	$	(0.32	)	$	–		$	(1.05	)	$	–	$	(1.05	)	$	–		$	8.74		(2.95	)%	$	68,898	1.22	%	1.22	%	1.22	%	(0.03	)%	39	%
2013		8.85		(0.00	)		2.71			2.71			(0.03	)		(1.42	)		–		(1.45	)		–			10.11		31.24			60,156	1.20		1.20		1.20		(0.07	)	31
2012		8.74		0.12			0.88			1.00			(0.15	)		(0.74	)		–		(0.89	)		–			8.85		11.78			68,395	1.19		1.19		1.19		1.31		13
2011		9.82		(0.03	)		(0.60	)		(0.63	)		(0.00	)		(0.45	)		–		(0.45	)		–			8.74		(6.31	)		63,012	1.17		1.17		1.17		(0.27	)	27
2010		7.94		0.03			1.96			1.99			–			(0.11	)		–		(0.11	)		–			9.82		25.06			66,011	1.17		1.17		1.17		0.33		27
Royce 100 Fund–Service Class
2014	$	10.05	$	(0.04	)	$	(0.31	)	$	(0.35	)	$	–		$	(1.05	)	$	–	$	(1.05	)	$	–		$	8.65		(3.26	)%	$	149,736	1.52	%	1.52	%	1.50	%	(0.39	)%	39	%
2013		8.81		(0.04	)		2.70			2.66			(0.00	)		(1.42	)		–		(1.42	)		–			10.05		30.85			231,879	1.50		1.50		1.48		(0.36	)	31
2012		8.67		0.11			0.86			0.97			(0.09	)		(0.74	)		–		(0.83	)		–			8.81		11.52			220,674	1.46		1.46		1.42		1.03		13
2011		9.76		(0.05	)		(0.59	)		(0.64	)		–			(0.45	)		–		(0.45	)		–			8.67		(6.52	)		310,825	1.47		1.47		1.42		(0.53	)	27
2010		7.91		0.00			1.96			1.96			–			(0.11	)		–		(0.11	)		–			9.76		24.77			366,184	1.50		1.50		1.46		0.03		27
Royce 100 Fund–R Class
2014	$	12.67	$	(0.09	)	$	(0.39	)	$	(0.48	)	$	–		$	(1.05	)	$	–	$	(1.05	)	$	–		$	11.14		(3.61	)%	$	1,983	2.23	%	2.23	%	1.84	%	(0.73	)%	39	%
2013		10.84		(0.09	)		3.34			3.25			–			(1.42	)		–		(1.42	)		–			12.67		30.45			2,807	2.28		2.28		1.84		(0.72	)	31
2012		10.46		0.05			1.07			1.12			–			(0.74	)		–		(0.74	)		–			10.84		10.95			2,554	2.57		2.57		1.84		0.46		13
2011		11.72		(0.10	)		(0.71	)		(0.81	)		–			(0.45	)		–		(0.45	)		–			10.46		(6.88	)		3,469	2.70		2.69		1.84		(0.88	)	27
2010		9.52		(0.03	)		2.34			2.31			–			(0.11	)		–		(0.11	)		–			11.72		24.26			1,358	2.22		2.21		1.84		(0.29	)	27
Royce 100 Fund–K Class
2014	$	12.84	$	(0.07	)	$	(0.38	)	$	(0.45	)	$	–		$	(1.05	)	$	–	$	(1.05	)	$	–		$	11.34		(3.33	)%	$	672	2.98	%	2.98	%	1.59	%	(0.53	)%	39	%
2013		10.95		(0.06	)		3.37			3.31			–			(1.42	)		–		(1.42	)		–			12.84		30.69			2,320	1.78		1.78		1.59		(0.50	)	31
2012		10.56		0.11			1.06			1.17			(0.04	)		(0.74	)		–		(0.78	)		–			10.95		11.37			3,554	1.68		1.68		1.59		0.88		13
2011		11.81		(0.08	)		(0.72	)		(0.80	)		–			(0.45	)		–		(0.45	)		–			10.56		(6.75	)		4,447	1.66		1.66		1.59		(0.68	)	27
2010		9.57		0.02			2.33			2.35			–			(0.11	)		–		(0.11	)		–			11.81		24.55			2,915	1.89		1.89		1.59		0.20		27
Royce Dividend Value Fund–Investment Class
2014	$	8.90	$	0.11		$	(0.29	)	$	(0.18	)	$	(0.10	)	$	(0.50	)	$	–	$	(0.60	)	$	–		$	8.12		(1.90	)%	$	176,002	1.21	%	1.21	%	1.19	%	1.25	%	22	%
2013		7.29		0.09			2.15			2.24			(0.10	)		(0.53	)		–		(0.63	)		–			8.90		31.23			211,589	1.21		1.21		1.21		1.13		36
2012		6.34		0.14			0.95			1.09			(0.12	)		(0.02	)		–		(0.14	)		–			7.29		17.26			118,820	1.19		1.19		1.19		1.99		28
2011		6.80		0.07			(0.37	)		(0.30	)		(0.07	)		(0.09	)		–		(0.16	)		–			6.34		(4.46	)		85,188	1.20		1.20		1.20		1.14		14
2010		5.31		0.09			1.51			1.60			(0.08	)		(0.03	)		–		(0.11	)		–			6.80		30.46			35,626	1.38		1.38		1.24		1.56		21
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS															The Royce Funds 2014 Annual Report to Shareholders  |  97

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 Realized and																										Ratio of Expenses to Average Net Assets						Ratio of Net
	Net Asset Value, Beginning of Period		Net Investment Income (Loss)			Unrealized Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			Distributions from Net Investment Income			Distributions from Net Realized Gain on Investments and Foreign Currency			Distributions from Return of Capital		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		Investment Income (Loss) to Average Net Assets		Portfolio Turnover Rate
Royce Dividend Value Fund–Service Class
2014	$	8.98	$	0.09		$	(0.29	)	$	(0.20	)	$	(0.06	)	$	(0.50	)	$	–	$	(0.56	)	$	–	$	8.22	(2.14	)%		$	295,560	1.47	%	1.47	%	1.44	%	0.98	%	22	%
2013		7.35		0.07			2.16			2.23			(0.07	)		(0.53	)		–		(0.60	)		–		8.98	30.74				407,599	1.48		1.48		1.46		0.87		36
2012		6.38		0.12			0.95			1.07			(0.08	)		(0.02	)		–		(0.10	)		–		7.35	16.95				252,443	1.48		1.48		1.46		1.74		28
2011		6.82		0.05			(0.36	)		(0.31	)		(0.04	)		(0.09	)		–		(0.13	)		–		6.38	(4.55	)			201,634	1.48		1.48		1.46		0.84		14
2010		5.33		0.08			1.51			1.59			(0.07	)		(0.03	)		–		(0.10	)		–		6.82	30.11				117,304	1.56		1.56		1.49		1.32		21
Royce Dividend Value Fund–Consultant Classb
2014	$	10.00	$	0.01		$	(0.27	)	$	(0.26	)	$	(0.02	)	$	(0.50	)	$	–	$	(0.52	)	$	–	$	9.22	(2.43	)%	1	$	912	9.25	%2	9.25	%2	2.24	%2	0.45	%2	22	%
Royce Dividend Value Fund–Institutional Classc
2014	$	8.88	$	0.12		$	(0.29	)	$	(0.17	)	$	(0.12	)	$	(0.50	)	$	–	$	(0.62	)	$	–	$	8.09	(1.76	)%		$	40,942	1.10	%	1.10	%	1.04	%	1.42	%	22	%
2013		7.28		0.11			2.14			2.25			(0.12	)		(0.53	)		–		(0.65	)		–		8.88	31.46				31,236	1.11		1.11		1.04		1.29		36
2012		6.80		0.08			0.50			0.58			(0.08	)		(0.02	)		–		(0.10	)		–		7.28	8.51	1			23,460	1.33	2	1.33	2	1.04	2	3.48	2	28
Royce Global Value Fund–Investment Classd
2014	$	13.60	$	0.22		$	(0.97	)	$	(0.75	)	$	(0.27	)	$	–		$	–	$	(0.27	)	$	–	$	12.58	(5.49	)%		$	45,698	1.50	%	1.50	%	1.50	%	1.20	%	54	%
2013		12.91		0.16			0.68			0.84			(0.16	)		–			–		(0.16	)		0.01		13.60	6.59				159,366	1.49		1.49		1.49		1.08		41
2012		11.74		0.14			1.19			1.33			(0.16	)		–			–		(0.16	)		–		12.91	11.37				178,319	1.47		1.47		1.44		1.16		36
2011		14.54		0.13			(2.82	)		(2.69	)		(0.12	)		–			–		(0.12	)		0.01		11.74	(18.48	)			141,180	1.42		1.42		1.42		0.80		77
2010		11.02		(0.06	)		3.68			3.62			(0.10	)		–			–		(0.10	)		–		14.54	32.88	1			6,626	2.07	2	2.07	2	1.44	2	(0.58	)2	42
Royce Global Value Fund–Service Class
2014	$	13.68	$	0.19		$	(0.98	)	$	(0.79	)	$	(0.24	)	$	–		$	–	$	(0.24	)	$	–	$	12.65	(5.76	)%		$	29,625	1.80	%	1.80	%	1.69	%	1.03	%	54	%
2013		12.98		0.15			0.66			0.81			(0.11	)		–			–		(0.11	)		–		13.68	6.28				48,244	1.83		1.83		1.69		0.84		41
2012		11.77		0.12			1.18			1.30			(0.09	)		–			–		(0.09	)		–		12.98	11.03				98,274	1.80		1.80		1.69		0.88		36
2011		14.56		0.07			(2.80	)		(2.73	)		(0.07	)		–			–		(0.07	)		0.01		11.77	(18.69	)			122,574	1.77		1.77		1.69		0.41		77
2010		10.79		(0.03	)		3.87			3.84			(0.08	)		–			–		(0.08	)		0.01		14.56	35.69				141,992	1.84		1.84		1.69		0.01		42
Royce Global Value Fund–Consultant Classe
2014	$	13.54	$	0.04		$	(0.91	)	$	(0.87	)	$	(0.15	)	$	–		$	–	$	(0.15	)	$	–	$	12.52	(6.41	)%		$	20,707	2.51	%	2.51	%	2.44	%	0.29	%	54	%
2013		12.88		0.01			0.70			0.71			(0.05	)		–			–		(0.05	)		–		13.54	5.50				25,663	2.53		2.53		2.44		0.11		41
2012		11.71		0.02			1.17			1.19			(0.02	)		–			–		(0.02	)		–		12.88	10.13				23,383	2.55		2.55		2.44		0.16		36
2011		15.66		(0.09	)		(3.80	)		(3.89	)		(0.06	)		–			–		(0.06	)		–		11.71	(24.82	)1			18,585	2.642		2.64	2	2.44	2	(0.77	)2	77
Royce Global Value Fund–R Classf
2014	$	10.15	$	0.06		$	(0.67	)	$	(0.61	)	$	(0.24	)	$	–		$	–	$	(0.24	)	$	–	$	9.30	(6.01	)%		$	116	8.36	%	8.36	%	1.99	%	0.75	%	54	%
2013		9.69		0.05			0.53			0.58			(0.12	)		–			–		(0.12	)		–		10.15	5.98				100	9.50		9.50		1.99		0.48		41
2012		10.00		0.02			(0.21	)		(0.19	)		(0.12	)		–			–		(0.12	)		–		9.69	(1.90	)1			80	19.19	2	19.19	2	1.99	2	0.70	2	36
Royce Global Value Fund–K Classf
2014	$	10.15	$	0.10		$	(0.70	)	$	(0.60	)	$	(0.25	)	$	–		$	–	$	(0.25	)	$	–	$	9.30	(5.84	)%		$	23	76.41	%	76.41	%	1.74	%	0.88	%	54	%
2013		9.69		0.08			0.52			0.60			(0.14	)		–			–		(0.14	)		–		10.15	6.24				44	19.21		19.21		1.74		0.80		41
2012		10.00		0.09			(0.27	)		(0.18	)		(0.13	)		–			–		(0.13	)		–		9.69	(1.74	)1			41	29.99	2	29.98	2	1.74	2	1.20	2	36
98  |   The Royce Funds 2014 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 Realized and																													Ratio of Expenses to Average Net Assets						Ratio of Net
	Net Asset Value, Beginning of Period		Net Investment Income (Loss)			Unrealized Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			Distributions from Net Investment Income			Distributions from Net Realized Gain on Investments and Foreign Currency			Distributions from Return of Capital		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		Investment Income (Loss) to Average Net Assets		Portfolio Turnover Rate
Royce International Smaller-Companies Fund–Investment Classg
2014	$	10.00	$	0.14		$	(0.91	)	$	(0.77	)	$	(0.26	)	$	(1.07	)	$	–		$	(1.33	)		$	0.01		$	7.91		(7.31	)%1	$	1,119	5.53	%2	5.53	%2	1.44	%2	1.45	%2	78	%
Royce International Smaller-Companies Fund–Service Class
2014	$	11.99	$	0.21		$	(1.11	)	$	(0.90	)	$	(0.22	)	$	(1.07	)	$	–		$	(1.29	)		$	–		$	9.80		(7.29	)%	$	29,610	1.99	%	1.99	%	1.69	%	1.20	%	78	%
2013		11.28		0.12			1.30			1.42			(0.15	)		(0.56	)		–			(0.71	)			–			11.99		12.73			38,059	2.07		2.07		1.69		1.13		64
2012		9.58		0.14			1.70			1.84			(0.15	)		–			–			(0.15	)			0.01			11.28		19.39			26,371	2.13		2.13		1.69		1.29		44
2011		12.85		0.10			(2.51	)		(2.41	)		(0.08	)		(0.78	)		(0.01)			(0.87	)			0.01			9.58		(18.75	)		20,103	2.15		2.15		1.69		0.88		38
2010		10.49		0.03			2.72			2.75			(0.10	)		(0.30	)		–			(0.40	)			0.01			12.85		26.45			18,297	2.35		2.35		1.69		0.45		55
Royce International Smaller-Companies Fund–Institutional Classh
2014	$	10.00	$	0.17		$	(0.72	)	$	(0.55	)	$	(0.26	)	$	(1.07	)	$	–		$	(1.33	)		$	–		$	8.12		(5.22	)%1	$	2,353	2.63	%2	2.63	%2	1.44	%2	1.58	%2	78	%
Royce Special Equity Multi-Cap Fund–Investment Classi
2014	$	14.92	$	0.10		$	1.30		$	1.40		$	(0.11	)	$	(0.66	)	$	–		$	(0.77	)		$	–		$	15.55		9.53	%	$	123,545	0.97	%	0.97	%	0.96	%	0.95	%	39	%
2013		11.64		0.12			4.11			4.23			(0.12	)		(0.83	)		–			(0.95	)			–			14.92		36.62			62,387	1.16		1.16		1.15		0.93		44
2012		11.54		0.12			0.22			0.34			(0.14	)		(0.10	)		–			(0.24	)			–			11.64		3.00	1		34,375	1.19	2	1.19	2	1.16	2	1.55	2	14
Royce Special Equity Multi-Cap Fund–Service Classj
2014	$	14.96	$	0.10		$	1.27		$	1.37		$	(0.07	)	$	(0.66	)	$	–		$	(0.73	)		$	–		$	15.60		9.28	%	$	94,878	1.34	%	1.34	%	1.24	%	0.66	%	39	%
2013		11.68		0.09			4.12			4.21			(0.10	)		(0.83	)		–			(0.93	)			–			14.96		36.26			78,233	1.61		1.61		1.38		0.69		44
2012		10.64		0.13			1.10			1.23			(0.09	)		(0.10	)		–			(0.19	)			–			11.68		11.62			43,690	1.51		1.51		1.36		1.15		14
2011		10.00		0.06			0.65			0.71			(0.06	)		(0.02	)		–			(0.08	)			0.01			10.64		7.20	1		36,811	1.97	2	1.97	2	1.39	2	1.45	2	5
Royce Special Equity Multi-Cap Fund–Consultant Classh
2014	$	10.00	$	(0.04	)	$	1.48		$	1.44		$	(0.06	)	$	(0.66	)	$	–		$	(0.72	)		$	–		$	10.72		14.57	%1	$	9,223	2.54	%2	2.54	%2	1.99	%2	(0.05	)%2	39	%
Royce Special Equity Multi-Cap Fund–Institutional Classk
2014	$	14.92	$	0.12		$	1.30		$	1.42		$	(0.12	)	$	(0.66	)	$	–		$	(0.78	)		$	–		$	15.56		9.64	%	$	75,941	0.93	%	0.93	%	0.89	%	1.01	%	39	%
2013		11.64		0.15			4.10			4.25			(0.14	)		(0.83	)		–			(0.97	)			–			14.92		36.73			48,063	1.10		1.10		1.04		1.02		44
2012		11.83		0.10			(0.03	)		0.07			(0.16	)		(0.10	)		–			(0.26	)			–			11.64		0.61	1		30,905	1.21	2	1.21	2	1.04	2	1.76	2	14

1	Not annualized
2	Annualized
a	The Class commenced operations on June 6, 2011.
b	The Class commenced operations on March 21, 2014.
c	The Class commenced operations on September 4, 2012.
d	The Class commenced operations on September 1, 2010.
e	The Class commenced operations on May 2, 2011.
f	The Class commenced operations on March 21, 2012.
g	The Class commenced operations on January 22, 2014.
h	The Class commenced operations on January 27, 2014.
i	The Class commenced operations on March 1, 2012.
j	The Class commenced operations on January 3, 2011.
k	The Class commenced operations on April 18, 2012.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders  |  99

Notes to Financial Statements

Summary of Significant Accounting Policies:

Royce Pennsylvania Mutual Fund, Royce Micro-Cap Fund, Royce Premier Fund, Royce Low-Priced Stock Fund, Royce Total Return Fund, Royce Heritage Fund, Royce Opportunity Fund, Royce Special Equity Fund, Royce Value Fund, Royce Value Plus Fund, Royce 100 Fund, Royce Dividend Value Fund, Royce Global Value Fund, Royce International Smaller-Companies Fund and Royce Special Equity Multi-Cap Fund (the “Fund” or “Funds”), are fifteen series of The Royce Fund (the “Trust”), a diversified open-end management investment company organized as a Delaware statutory trust.

Classes of shares have equal rights as to earnings and assets, except that each class may bear different fees and expenses for distribution, shareholder servicing, registration and shareholder reports, and receive different compensating balance credits and expense reimbursements. Investment income, realized and unrealized capital gains or losses on investments and foreign currency, and expenses other than those attributable to a specific class are allocated to each class of shares based on its relative net assets.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

At December 31, 2014, officers, employees of Royce & Associates, LLC (“Royce”), Fund trustees, the Royce retirement plans and other affiliates owned more than 10% of the following Funds:

Royce International Smaller-Companies Fund 11%

VALUATION OF INVESTMENTS:

Securities are valued as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq’s Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their highest bid price. Other over-the-counter securities for which market quotations are readily available are valued at their highest bid price, except in the case of some bonds and other fixed income securities which may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. The Funds value their non-U.S. dollar denominated securities in U.S. dollars daily at the prevailing foreign currency exchange rates as quoted by a major bank. Securities for which market quotations are not readily available are valued at their fair value in accordance with the provisions of the 1940 Act, under procedures approved by the Fund’s Board of Trustees, and are reported as Level 3 securities. As a general principle, the fair value of a security is the amount which the Fund might reasonably expect to receive for the security upon its current sale. However, in light of the judgment involved in fair valuations, there can be no assurance that a fair value assigned to a particular security will be the amount which the Fund might be able to receive upon its current sale. In addition, if, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, a Fund may fair value the security. The Funds use an independent pricing service to provide fair value estimates for relevant non-U.S. equity securities on days when the U.S. market volatility exceeds a certain threshold. This pricing service uses proprietary correlations it has developed between the movement of prices of non-U.S. equity securities and indices of U.S.-traded securities, futures contracts and other indications to estimate the fair value of relevant non-U.S. securities. When fair value pricing is employed, the prices of securities used by a Fund may differ from quoted or published prices for the same security. Investments in money market funds are valued at net asset value per share.

Various inputs are used in determining the value of each Fund’s investments, as noted above. These inputs are summarized in the three broad levels below:

Level 1	–	quoted prices in active markets for identical securities.
Level 2	–	other significant observable inputs (including quoted prices for similar securities, foreign securities that may be fair valued and repurchase agreements). The table below includes all Level 2 securities. Level 2 securities with values based on quoted prices for similar securities are noted in the Schedules of Investments.
Level 3	–	significant unobservable inputs (including last trade price before trading was suspended, or at a discount thereto for lack of marketability or otherwise, market price information regarding other securities, information received from the company and/or published documents, including SEC filings and financial statements, or other publicly available information).

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used to value each Fund’s investments as of December 31, 2014. For a detailed breakout of common stocks by sector classification or country, please refer to the Schedules of Investments.

	LEVEL 1	LEVEL 2	LEVEL 3	TOTAL
Royce Pennsylvania Mutual Fund
Common Stocks	$5,557,087,646	$109,217,359	$–	$5,666,305,005
Cash Equivalents	62,985,137	109,019,000	–	172,004,137

100 | The Royce Funds 2014 Annual Report to Shareholders

VALUATION OF INVESTMENTS (continued):

		LEVEL 1		LEVEL 2	LEVEL 3		TOTAL
Royce Micro-Cap Fund
Common Stocks	$	484,994,602	$	22,090,409	$1,049,127	$	508,134,138
Cash Equivalents		22,089,668		20,212,000	–		42,301,668
Royce Premier Fund
Common Stocks		5,147,213,992		140,151,334	–		5,287,365,326
Cash Equivalents		84,024,012		185,743,000	–		269,767,012
Royce Low-Priced Stock Fund
Common Stocks		585,382,571		53,019,618	–		638,402,189
Cash Equivalents		20,346,322		35,516,000	–		55,862,322
Royce Total Return Fund
Common Stocks		4,337,588,529		184,354,471	–		4,521,943,000
Cash Equivalents		5,893,087		109,237,000	–		115,130,087
Royce Heritage Fund
Common Stocks		296,248,609		50,612,503	–		346,861,112
Cash Equivalents		964,385		12,085,000	–		13,049,385
Royce Opportunity Fund
Common Stocks		2,152,130,545		172,278	–		2,152,302,823
Cash Equivalents		164,589,994		164,768,000	–		329,357,994
Royce Special Equity Fund
Common Stocks		2,726,799,393		4,558,225	–		2,731,357,618
Cash Equivalents		–		169,503,000	–		169,503,000
Royce Value Fund
Common Stocks		869,365,770		–	–		869,365,770
Cash Equivalents		–		16,293,000	–		16,293,000
Royce Value Plus Fund
Common Stocks		856,108,736		51,953,387	–		908,062,123
Cash Equivalents		104,586,929		22,541,000	–		127,127,929
Royce 100 Fund
Common Stocks		207,740,774		2,889,533	–		210,630,307
Cash Equivalents		–		9,261,000	–		9,261,000
Royce Dividend Value Fund
Common Stocks		445,959,351		67,155,443	–		513,114,794
Cash Equivalents		753,190		1,561,000	–		2,314,190
Royce Global Value Fund
Common Stocks		33,503,153		55,600,833	–		89,103,986
Cash Equivalents		–		8,407,000	–		8,407,000
Royce International Smaller-Companies Fund
Common Stocks		1,386,605		31,175,445	–		32,562,050
Cash Equivalents		–		1,860,000	–		1,860,000
Royce Special Equity Multi-Cap Fund
Common Stocks		277,484,211		–	–		277,484,211
Cash Equivalents		–		28,523,000	–		28,523,000

For the year ended December 31, 2014, certain securities have transferred in and out of Level 1 and Level 2 measurements. The Funds recognize transfers between levels as of the end of the reporting period. At December 31, 2014, the following Funds had securities transfer from Level 1 to Level 2 within the fair value hierarchy:

	TRANSFERS FROM			TRANSFERS FROM
	LEVEL 1 TO LEVEL 2			LEVEL 1 TO LEVEL 2
Royce Pennsylvania Mutual Fund		$   74,235,654	Royce Heritage Fund		$ 43,471,233
Royce Micro-Cap Fund		20,980,619	Royce Value Plus Fund		32,975,227
Royce Premier Fund		93,265,167	Royce Dividend Value Fund		60,871,159
Royce Low-Priced Stock Fund		49,541,592	Royce Global Value Fund		28,726,001
Royce Total Return Fund		120,427,853	Royce International Smaller-Companies Fund		23,326,705

The Royce Funds 2014 Annual Report to Shareholders | 101

Notes to Financial Statements (continued)

VALUATION OF INVESTMENTS (continued):

Level 3 Reconciliation:

	BALANCE AS OF 12/31/13	UNREALIZED GAIN (LOSS)1	BALANCE AS OF 12/31/14
Royce Micro-Cap Fund
Common Stocks	$411,368	$637,759	$1,049,127

¹ The net change in unrealized appreciation (depreciation) is included in the accompanying Statement of Operations. Change in unrealized appreciation (depreciation) includes net unrealized appreciation (depreciation) resulting from changes in investment values during the reporting period and the reversal of previously recorded unrealized appreciation (depreciation) when gains or losses are realized.

The following table summarizes the valuation techniques used and unobservable inputs approved by the Valuation Committee to determine the fair value of certain, material Level 3 investments. The table does not include Level 3 investments with values derived utilizing prices from prior transactions or third party pricing information with adjustments (e.g. broker quotes, pricing services, net asset values).

	FAIR VALUE AT				IMPACT TO VALUATION FROM
	12/31/14	VALUATION TECHNIQUE(S)	UNOBSERVABLE INPUT(S)	RANGE AVERAGE	AN INCREASE IN INPUT1
Royce Micro-Cap Fund
Common Stocks	$1,049,127	Market Approach	Liquidity Discount	30%	Decrease

¹ This column represents the directional change in the fair value of the Level 3 investments that would result in an increase from the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect. Significant increases and decreases in these unobservable inputs in isolation could result in significantly higher or lower fair value measurements.

REPURCHASE AGREEMENTS:

The Funds may enter into repurchase agreements with institutions that the Funds’ investment adviser has determined are creditworthy. Each Fund restricts repurchase agreements to maturities of no more than seven days. Securities pledged as collateral for repurchase agreements, which are held until maturity of the repurchase agreements, are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). Repurchase agreements could involve certain risks in the event of default or insolvency of the counter-party, including possible delays or restrictions upon the ability of each Fund to dispose of its underlying securities.

FOREIGN CURRENCY:

Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, expiration of currency forward contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on each Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, including investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.

SECURITIES LENDING:

The Funds loan securities through a lending agent to qualified institutional investors for the purpose of realizing additional income. Collateral for the Funds on all securities loaned is accepted in cash and cash equivalents and invested temporarily by the custodian. The collateral maintained is at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. The Funds retain the risk of any loss on the securities on loan as well as incurring the potential loss on investments purchased with cash collateral received for securities lending. The Funds’ securities lending income consists of the income earned on investing cash collateral, plus any premium payments received for lending certain securities, less any rebates paid to borrowers and lending agent fees associated with the loan. The lending agent is not affiliated with Royce.

The following table presents by financial instrument, each Fund’s assets and liabilities net of related collateral held by each Fund at December 31, 2014:

	GROSS AMOUNT OF ASSETS AND
	LIABILITIES IN THE STATEMENTS OF
	ASSETS AND LIABILITIES1		COLLATERAL RECEIVED AND PLEDGED	NET AMOUNT
Royce Pennsylvania Mutual Fund
Securities on Loan/Collateral on Loaned Securities		$  62,985,137	$  (62,985,137)	$ –
Royce Micro-Cap Fund
Securities on Loan/Collateral on Loaned Securities		22,089,668	(22,089,668)	–
Royce Premier Fund
Securities on Loan/Collateral on Loaned Securities		84,024,012	(84,024,012)	–
Royce Low-Priced Stock Fund
Securities on Loan/Collateral on Loaned Securities		20,346,322	(20,346,322)	–

102 | The Royce Funds 2014 Annual Report to Shareholders

SECURITIES LENDING (continued):

	GROSS AMOUNT OF ASSETS AND
	LIABILITIES IN THE STATEMENTS OF
	ASSETS AND LIABILITIES1	COLLATERAL RECEIVED AND PLEDGED	NET AMOUNT
Royce Total Return Fund
Securities on Loan/Collateral on Loaned Securities	$     5,893,087	$    (5,893,087)	–
Royce Heritage Fund
Securities on Loan/Collateral on Loaned Securities	964,385	(964,385)	–
Royce Opportunity Fund
Securities on Loan/Collateral on Loaned Securities	164,589,994	(164,589,994)	–
Royce Value Plus Fund
Securities on Loan/Collateral on Loaned Securities	104,586,929	(104,586,929)	–
Royce Dividend Value Fund
Securities on Loan/Collateral on Loaned Securities	753,190	(753,190)	–
1Absent an event of default, assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities.

DISTRIBUTIONS AND TAXES:

As qualified regulated investment companies under Subchapter M of the Internal Revenue Code, the Funds are not subject to income taxes to the extent that each Fund distributes substantially all of its taxable income for its fiscal year.

Royce Total Return Fund and Royce Dividend Value Fund pay any dividends from net investment income quarterly and make any distributions from net realized gains annually in December. The other Funds pay any dividends and capital gain distributions annually in December. Dividends from net investment income are determined at a class level and distributions from capital gains are determined at a Fund level. Because federal income tax regulations differ from generally accepted accounting principles, income and capital gain distributions determined in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Accordingly, the character of distributions and composition of net assets for tax purposes differ from those reflected in the accompanying financial statements.

CAPITAL GAINS TAXES:

The Funds are subject to a tax imposed on short-term capital gains on securities of issuers domiciled in certain countries. The Funds record an estimated deferred tax liability for these securities that have been held for less than one year. This amount, if any, is reported as deferred capital gains tax in the accompanying Statements of Assets and Liabilities, assuming those positions were disposed of at the end of the period, and accounted for as a reduction in the market value of the security.

INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME:

Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date. Non-cash dividend income is recorded at the fair market value of the securities received. Interest income is recorded on an accrual basis. Premium and discounts on debt securities are amortized using the effective yield-to-maturity method. Realized gains and losses from investment transactions are determined on the basis of identified cost for book and tax purposes.

EXPENSES:

The Funds incur direct and indirect expenses. Expenses directly attributable to a Fund are charged to the Fund’s operations, while expenses applicable to more than one of the Royce Funds are allocated equitably. Certain personnel, occupancy costs and other administrative expenses related to the Funds are allocated by Royce under an administration agreement and are included in administrative and office facilities and legal expenses. The Trust has adopted a deferred fee agreement that allows the Trustees to defer the receipt of all or a portion of trustees’ fees otherwise payable. The deferred fees are invested in certain Royce Funds until distributed in accordance with the agreement.

COMPENSATING BALANCE CREDITS:

The Funds have arrangements with their custodian bank and transfer agent, whereby a portion of the custodian’s fee and transfer agent’s fee is paid indirectly by credits earned on a Fund’s cash on deposit with the bank and transfer agent. These deposit arrangements are an alternative to purchasing overnight investments. Conversely, a Fund pays interest to the custodian on any cash overdrafts, to the extent they are not offset by credits earned on positive cash balances.

LINE OF CREDIT:

The Funds, along with certain other Royce Funds, participate in a $75 million line of credit (“Credit Agreement”) to be used for temporary or emergency purposes. This 364-day revolving Credit Agreement expires on July 10, 2015. Pursuant to the Credit Agreement, each participating Fund is liable only for principal and interest payments related to borrowings made by that Fund. Borrowings under the Credit Agreement bear interest at a rate equal to the higher of the federal funds rate + 1.25% or overnight LIBOR + 1.25%. The Funds did not utilize the line of credit during the year ended December 31, 2014.

The Royce Funds 2014 Annual Report to Shareholders | 103

Notes to Financial Statements(continued)

Capital Share Transactions (in dollars):

					SHARES ISSUED FOR REINVESTMENT OF							NET INCREASE (DECREASE) FROM
		SHARES SOLD			DISTRIBUTIONS			SHARES REDEEMED				CAPITAL SHARE TRANSACTIONS
	Period ended		Period ended		Period ended		Period ended	Period ended		Period ended		Period ended		Period ended
	12/31/14		12/31/13		12/31/14		12/31/13	12/31/14		12/31/13		12/31/14		12/31/13
Royce Pennsylvania Mutual Fund
Investment Class		$506,526,617		$605,005,254		$370,880,440	$240,617,073	$(1,567,279,750	)	$(1,199,534,491	)	$(689,872,693	)	$(353,912,164	)
Service Class		99,828,552		158,543,673		28,968,181	31,528,901	(328,139,978	)	(205,430,442	)	(199,343,245	)	(15,357,868	)
Consultant Class		25,211,845		35,995,184		76,735,320	44,509,769	(116,343,597	)	(110,412,807	)	(14,396,432	)	(29,907,854	)
Institutional Class		343,125,813		227,429,558		89,605,015	42,182,078	(351,584,299	)	(88,116,686	)	81,146,529		181,494,950
R Class		8,053,228		12,175,418		4,003,806	2,317,814	(14,849,573	)	(12,674,989	)	(2,792,539	)	1,818,243
K Class		2,508,960		3,353,854		1,293,444	615,573	(3,363,284	)	(3,487,416	)	439,120		482,011
Royce Micro-Cap Fund
Investment Class		33,996,859		98,858,542		34,181,364	43,274,805	(239,040,752	)	(314,723,445	)	(170,862,529	)	(172,590,098	)
Service Class		11,050,878		24,900,898		3,280,443	5,561,270	(48,179,138	)	(69,726,173	)	(33,847,817	)	(39,264,005	)
Consultant Class		2,107,865		4,190,480		8,255,066	8,921,529	(37,203,785	)	(28,337,765	)	(26,840,854	)	(15,225,756	)
Royce Premier Fund
Investment Class		382,768,920		643,271,846		342,058,115	461,289,856	(1,272,200,430	)	(1,344,940,951	)	(547,373,395	)	(240,379,249	)
Service Class		37,616,729		91,471,655		16,483,596	46,476,184	(183,633,439	)	(447,736,768	)	(129,533,114	)	(309,788,929	)
Consultant Class		2,338,877		3,234,960		5,704,199	6,793,623	(10,578,088	)	(11,667,823	)	(2,535,012	)	(1,639,240	)
Institutional Class		111,264,468		171,612,186		67,113,888	88,971,062	(505,054,873	)	(271,899,788	)	(326,676,517	)	(11,316,540	)
W Class		48,647,645		67,696,518		33,267,513	41,113,353	(138,651,861	)	(169,817,947	)	(56,736,703	)	(61,008,076	)
R Class		4,881,491		7,171,068		2,707,987	3,194,633	(9,729,538	)	(10,803,236	)	(2,140,060	)	(437,535	)
K Class		1,286,179		1,843,765		1,673,519	1,872,975	(3,485,783	)	(5,003,511	)	(526,085	)	(1,286,771	)
Royce Low-Priced Stock Fund
Investment Class		26,094,517		25,018,884		13,502,147	11,573,545	(60,873,035	)	(207,176,226	)	(21,276,371	)	(170,583,797	)
Service Class		44,977,684		96,303,157		155,283,260	129,195,821	(500,094,797	)	(1,029,968,862	)	(299,833,853	)	(804,469,884	)
Institutional Class		17,984,583		52,909,521		28,211,899	65,125,731	(264,759,956	)	(749,374,096	)	(218,563,474	)	(631,338,844	)
R Class		345,884		710,708		532,842	412,286	(1,517,342	)	(3,837,806	)	(638,616	)	(2,714,812	)
K Class		311,506		1,531,364		1,081,444	838,644	(2,087,925	)	(4,536,092	)	(694,975	)	(2,166,084	)
Royce Total Return Fund
Investment Class		362,137,881		528,999,533		302,662,051	304,734,722	(916,819,335	)	(849,880,581	)	(252,019,403	)	(16,146,326	)
Service Class		64,225,061		269,258,191		22,994,953	44,274,371	(321,591,822	)	(166,019,974	)	(234,371,808	)	147,512,588
Consultant Class		17,101,346		28,057,748		32,433,723	30,943,470	(62,537,014	)	(54,173,983	)	(13,001,945	)	4,827,235
Institutional Class		140,092,526		215,408,392		63,750,942	52,099,575	(193,581,622	)	(149,283,730	)	10,261,846		118,224,237
W Class		64,397,705		74,148,184		26,931,314	21,587,603	(51,703,500	)	(56,755,936	)	39,625,519		38,979,851
R Class		13,541,789		21,893,247		6,802,388	5,827,458	(21,165,292	)	(15,151,842	)	(821,115	)	12,568,863
K Class		47,764,450		107,190,612		13,185,125	21,610,891	(152,866,973	)	(126,039,047	)	(91,917,398	)	2,762,456
Royce Heritage Fund
Investment Class		50,189,428		66,008,028		8,592,153	12,527,322	(6,303,296	)	(4,946,365	)	52,478,285		73,588,985
Service Class		9,893,864		14,757,297		8,633,861	23,773,697	(54,969,780	)	(43,411,963	)	(36,442,055	)	(4,880,969	)
Consultant Class		682,067		1,263,011		844,425	2,151,535	(2,908,579	)	(2,515,165	)	(1,382,087	)	899,381
R Class		627,816		1,847,167		218,815	992,495	(3,523,203	)	(1,268,414	)	(2,676,572	)	1,571,248
K Class		809,955		1,250,136		396,754	1,055,146	(1,690,435	)	(3,637,243	)	(483,726	)	(1,331,961	)
Royce Opportunity Fund
Investment Class		193,304,142		332,616,686		146,112,723	109,717,251	(307,673,836	)	(228,261,969	)	31,743,029		214,071,968
Service Class		44,181,047		143,463,729		19,076,365	33,163,722	(94,875,605	)	(235,857,849	)	(31,618,193	)	(59,230,398	)
Consultant Class		6,846,175		4,118,375		2,726,295	1,776,385	(4,696,671	)	(2,557,349	)	4,875,799		3,337,411
Institutional Class		141,310,734		166,839,476		95,518,937	73,390,855	(183,057,913	)	(290,133,892	)	53,771,758		(49,903,561	)
R Class		16,193,270		13,143,525		4,486,685	2,051,002	(4,927,447	)	(1,853,045	)	15,752,508		13,341,482
K Class		16,734,919		8,593,690		3,319,386	1,712,998	(11,407,748	)	(4,064,844	)	8,646,557		6,241,844
Royce Special Equity Fund
Investment Class		251,091,597		493,764,184		155,219,704	187,724,022	(782,681,645	)	(607,174,950	)	(376,370,344	)	74,313,256
Service Class		39,990,897		80,216,174		17,667,281	25,988,233	(136,332,747	)	(69,704,292	)	(78,674,569	)	36,500,115
Consultant Class		3,371,625		5,375,063		5,815,732	6,011,027	(10,136,790	)	(7,598,377	)	(949,433	)	3,787,713
Institutional Class		71,641,743		125,908,328		59,595,359	56,838,996	(136,073,092	)	(163,427,568	)	(4,835,990	)	19,319,756
Royce Value Fund
Investment Class		40,123,987		39,278,557		16,598,054	13,139,768	(94,649,702	)	(94,469,427	)	(37,927,661	)	(42,051,102	)
Service Class		32,791,478		57,608,008		54,561,485	46,173,865	(227,864,825	)	(384,234,842	)	(140,511,862	)	(280,452,969	)
Consultant Class		3,022,082		2,142,085		3,337,468	2,179,045	(7,409,588	)	(11,234,896	)	(1,050,038	)	(6,913,766	)
Institutional Class		18,404,265		25,750,530		24,538,922	15,708,560	(41,423,739	)	(60,814,438	)	1,519,448		(19,355,348	)
R Class		5,066,775		8,633,738		4,166,100	2,587,581	(11,288,399	)	(17,983,761	)	(2,055,524	)	(6,762,442	)
K Class		2,640,410		5,372,313		1,486,836	1,401,823	(9,482,843	)	(11,489,956	)	(5,355,597	)	(4,715,820	)

104 | The Royce Funds 2014 Annual Report to Shareholders

Capital Share Transactions (in dollars)(continued):

					SHARES ISSUED FOR REINVESTMENT OF							NET INCREASE (DECREASE) FROM
	SHARES SOLD				DISTRIBUTIONS			SHARES REDEEMED				CAPITAL SHARE TRANSACTIONS
	Period ended		Period ended		Period ended		Period ended	Period ended		Period ended			Period ended			Period ended
	12/31/14		12/31/13		12/31/14		12/31/13	12/31/14		12/31/13			12/31/14			12/31/13
Royce Value Plus Fund
Investment Class	$130,967,883	$	45,014,700	$	46,641,316	$	17,699,284	$(80,347,855	)	$(94,732,454	)	$	97,261,344		$	(32,018,470	)
Service Class	53,871,837		72,297,178		95,079,165		65,183,044	(321,309,401	)	(464,563,649	)		(172,358,399	)		(327,083,427	)
Consultant Class	591,354		1,097,991		3,226,909		1,733,762	(6,267,669	)	(3,753,070	)		(2,449,406	)		(921,317	)
Institutional Class	17,848,303		25,026,020		6,945,468		10,959,037	(125,205,240	)	(152,001,651	)		(100,411,469	)		(116,016,594	)
R Class	331,566		998,626		271,992		124,721	(625,234	)	(1,021,869	)		(21,676	)		101,478
K Class	157,920		453,654		238,115		102,901	(652,811	)	(180,247	)		(256,776	)		376,308
Royce 100 Fund
Investment Class	48,981,013		18,939,455		6,419,484		7,654,869	(36,418,124	)	(44,035,340	)		18,982,373			(17,441,016	)
Service Class	24,824,949		33,984,238		13,631,471		28,928,569	(97,680,533	)	(83,130,559	)		(59,224,113	)		(20,217,752	)
R Class	959,574		1,077,565		168,762		287,743	(1,687,247	)	(1,494,820	)		(558,911	)		(129,512	)
K Class	287,289		1,143,767		64,074		231,871	(1,861,662	)	(3,312,275	)		(1,510,299	)		(1,936,637	)
Royce Dividend Value Fund
Investment Class	53,534,161		95,594,378		10,979,129		13,847,962	(83,254,012	)	(48,840,808	)		(18,740,722	)		60,601,532
Service Class	44,423,724		133,082,533		16,719,515		23,778,109	(144,774,078	)	(65,610,178	)		(83,630,839	)		91,250,464
Consultant Class	965,582				47,956			(29,381	)				984,157
Institutional Class	12,840,709		2,037,602		2,915,622		2,161,756	(2,556,823	)	(1,691,088	)		13,199,508			2,508,270
Royce Global Value Fund
Investment Class	34,241,857		52,876,116		1,478,512		1,615,070	(139,808,432	)	(81,698,507	)		(104,088,063	)		(27,207,321	)
Service Class	4,434,044		11,030,665		463,969		397,892	(21,584,163	)	(64,565,756	)		(16,686,150	)		(53,137,199	)
Consultant Class	2,262,356		5,883,100		238,875		85,042	(5,755,653	)	(4,873,143	)		(3,254,422	)		1,094,999
R Class	25,500		48,059		2,886		1,123	–		(32,126	)		28,386			17,056
K Class	–		–		601		603	(20,000	)	–			(19,399	)		603
Royce International Smaller-Companies Fund
Investment Class	1,269,960				98,637			(103,300	)				1,265,297
Service Class	24,538,927		15,275,210		3,268,187		2,054,964	(29,545,050	)	(7,584,209	)		(1,737,936	)		9,745,965
Institutional Class	2,956,787				322,024			(500,000	)				2,778,811
Royce Special Equity Multi-Cap Fund
Investment Class	66,548,135		19,293,138		5,358,537		3,704,628	(12,872,716	)	(6,291,434	)		59,033,956			16,706,332
Service Class	27,303,035		27,040,616		3,891,504		4,412,868	(18,556,923	)	(10,431,782	)		12,637,616			21,021,702
Consultant Class	8,880,332				397,636			(77,401	)				9,200,567
Institutional Class	35,830,108		10,145,425		3,725,422		2,916,002	(14,233,983	)	(6,513,470	)		25,321,547			6,547,957

Capital Share Transactions (in shares):

					SHARES ISSUED FOR REINVESTMENT OF										NET INCREASE (DECREASE) IN SHARES
	SHARES SOLD				DISTRIBUTIONS				SHARES REDEEMED						OUTSTANDING
	Period ended		Period ended		Period ended		Period ended		Period ended			Period ended			Period ended			Period ended
	12/31/14		12/31/13		12/31/14		12/31/13		12/31/14			12/31/13			12/31/14			12/31/13
Royce Pennsylvania Mutual Fund
Investment Class		36,206,076		46,226,486		30,489,187		16,992,836		(110,659,655	)		(89,595,361	)		(43,964,392	)		(26,376,039	)
Service Class		6,949,807		12,154,062		2,824,174		2,231,345		(24,303,578	)		(15,280,852	)		(14,529,597	)		(895,445	)
Consultant Class		2,003,148		3,060,812		7,059,367		3,572,100		(9,263,663	)		(9,417,039	)		(201,148	)		(2,784,127	)
Institutional Class		23,994,962		16,645,215		7,066,642		2,974,759		(24,871,748	)		(6,539,897	)		6,189,856			13,080,077
R Class		574,241		954,600		330,114		168,937		(1,066,363	)		(969,814	)		(162,008	)		153,723
K Class		200,117		277,728		117,586		49,089		(266,187	)		(290,287	)		51,516			36,530
Royce Micro-Cap Fund
Investment Class		2,121,398		6,259,092		2,528,680		2,671,284		(15,045,118	)		(20,014,977	)		(10,395,040	)		(11,084,601	)
Service Class		700,023		1,576,795		242,995		347,362		(3,082,010	)		(4,567,474	)		(2,138,992	)		(2,643,317	)
Consultant Class		153,824		305,187		692,539		633,631		(2,758,901	)		(2,064,361	)		(1,912,538	)		(1,125,543	)
Royce Premier Fund
Investment Class		17,298,122		30,376,140		19,065,823		21,769,221		(59,032,600	)		(63,250,311	)		(22,668,655	)		(11,104,950	)
Service Class		1,730,643		4,393,188		893,882		2,235,507		(8,380,293	)		(21,601,163	)		(5,755,768	)		(14,972,468	)
Consultant Class		119,767		172,593		340,548		361,940		(540,506	)		(616,805	)		(80,191	)		(82,272	)
Institutional Class		4,948,769		8,056,109		3,442,603		4,163,363		(22,872,894	)		(12,779,832	)		(14,481,522	)		(560,360	)
W Class		2,184,841		3,209,870		1,723,220		1,936,569		(6,268,848	)		(8,004,577	)		(2,360,787	)		(2,858,138	)
R Class		229,555		355,469		147,382		156,830		(456,270	)		(518,060	)		(79,333	)		(5,761	)
K Class		160,529		207,939		296,199		242,928		(436,832	)		(562,131	)		19,896			(111,264	)

The Royce Funds 2014 Annual Report to Shareholders | 105

Notes to Financial Statements(continued)

Capital Share Transactions (in shares)(continued):

			SHARES ISSUED FOR REINVESTMENT OF						NET INCREASE (DECREASE) IN SHARES
	SHARES SOLD		DISTRIBUTIONS		SHARES REDEEMED				OUTSTANDING
	Period ended	Period ended	Period ended	Period ended	Period ended		Period ended		Period ended		Period ended
	12/31/14	12/31/13	12/31/14	12/31/13	12/31/14		12/31/13		12/31/14		12/31/13
Royce Low-Priced Stock Fund
Investment Class	1,823,350	1,774,622	1,499,869	879,449	(4,511,651	)	(14,606,981	)	(1,188,432	)	(11,952,910	)
Service Class	3,328,649	6,805,969	17,589,337	9,802,415	(39,870,593	)	(72,626,280	)	(18,952,607	)	(56,017,896	)
Institutional Class	1,320,098	3,751,445	3,059,858	4,945,006	(19,078,377	)	(53,328,942	)	(14,698,421	)	(44,632,491	)
R Class	26,112	51,145	60,140	32,085	(113,771	)	(276,221	)	(27,519	)	(192,991	)
K Class	46,361	185,404	378,649	125,734	(301,233	)	(545,525	)	123,777		(234,387	)
Royce Total Return Fund
Investment Class	22,372,344	34,008,791	22,430,864	19,177,169	(58,160,964	)	(54,422,666	)	(13,357,756	)	(1,236,706	)
Service Class	3,926,950	18,008,716	1,702,788	2,760,845	(19,785,781	)	(10,349,897	)	(14,156,043	)	10,419,664
Consultant Class	1,048,627	1,777,940	2,209,382	1,916,004	(3,805,888	)	(3,421,705	)	(547,879	)	272,239
Institutional Class	8,770,274	14,208,470	4,474,278	3,302,136	(12,053,533	)	(9,643,829	)	1,191,019		7,866,777
W Class	3,975,782	4,762,342	1,864,392	1,360,229	(3,193,929	)	(3,582,702	)	2,646,245		2,539,869
R Class	822,089	1,406,109	462,360	360,304	(1,275,828	)	(960,345	)	8,621		806,068
K Class	3,906,869	8,917,924	1,258,739	1,801,787	(12,482,664	)	(10,408,606	)	(7,317,056	)	311,105
Royce Heritage Fund
Investment Class	3,146,637	3,942,621	583,366	800,468	(395,548	)	(306,338	)	3,334,455		4,436,751
Service Class	617,610	922,749	605,064	1,522,989	(3,457,889	)	(2,701,430	)	(2,235,215	)	(255,692	)
Consultant Class	55,109	97,007	75,463	177,373	(235,654	)	(197,298	)	(105,082	)	77,082
R Class	55,045	157,302	27,482	88,537	(316,179	)	(105,420	)	(233,652	)	140,419
K Class	70,201	103,658	38,003	93,541	(146,342	)	(298,103	)	(38,138	)	(100,904	)
Royce Opportunity Fund
Investment Class	12,687,041	23,132,726	11,528,908	7,393,346	(20,605,360	)	(15,864,897	)	3,610,589		14,661,175
Service Class	3,006,071	10,451,801	1,657,147	2,327,279	(6,502,632	)	(16,570,321	)	(1,839,414	)	(3,791,241	)
Consultant Class	515,572	311,452	239,149	132,566	(344,991	)	(197,400	)	409,730		246,618
Institutional Class	8,987,079	11,676,520	7,247,263	4,892,724	(12,024,838	)	(19,424,495	)	4,209,504		(2,855,251	)
R Class	1,116,193	956,791	371,647	145,771	(348,481	)	(136,455	)	1,139,359		966,107
K Class	1,233,120	657,201	296,904	130,963	(859,545	)	(304,568	)	670,479		483,596
Royce Special Equity Fund
Investment Class	10,375,790	20,852,805	7,392,246	7,776,472	(32,780,612	)	(25,209,775	)	(15,012,576	)	3,419,502
Service Class	1,657,860	3,403,756	891,296	1,078,798	(5,755,208	)	(2,906,242	)	(3,206,052	)	1,576,312
Consultant Class	148,400	237,789	278,799	264,105	(445,924	)	(335,357	)	(18,725	)	166,537
Institutional Class	2,968,109	5,326,316	2,677,947	2,368,292	(5,620,871	)	(6,731,297	)	25,185		963,311
Royce Value Fund
Investment Class	2,962,049	3,135,123	1,489,706	1,007,651	(7,141,129	)	(7,726,784	)	(2,689,374	)	(3,584,010	)
Service Class	2,464,793	4,676,686	5,106,063	3,551,836	(17,413,782	)	(31,037,970	)	(9,842,926	)	(22,809,448	)
Consultant Class	245,055	183,439	316,348	178,027	(594,530	)	(967,471	)	(33,127	)	(606,005	)
Institutional Class	1,363,836	2,092,657	2,139,400	1,203,721	(3,098,649	)	(4,871,428	)	404,587		(1,575,050	)
R Class	390,274	708,108	375,324	203,266	(885,453	)	(1,452,191	)	(119,855	)	(540,817	)
K Class	250,607	541,528	172,087	136,497	(900,345	)	(1,140,643	)	(477,651	)	(462,618	)
Royce Value Plus Fund
Investment Class	7,656,782	2,851,911	3,404,492	1,079,225	(4,828,693	)	(5,994,135	)	6,232,581		(2,062,999	)
Service Class	3,129,248	4,643,803	7,488,175	3,998,960	(19,711,434	)	(29,187,654	)	(9,094,011	)	(20,544,891	)
Consultant Class	38,547	72,690	251,709	112,509	(396,344	)	(252,539	)	(106,088	)	(67,340	)
Institutional Class	1,030,329	1,576,410	491,639	666,203	(7,208,614	)	(9,418,226	)	(5,686,646	)	(7,175,613	)
R Class	20,086	66,892	20,404	7,884	(38,468	)	(67,496	)	2,022		7,280
K Class	12,887	39,389	26,936	8,932	(65,796	)	(15,469	)	(25,973	)	32,852
Royce 100 Fund
Investment Class	4,896,139	1,918,300	765,609	786,729	(3,728,666	)	(4,481,066	)	1,933,082		(1,776,037	)
Service Class	2,533,436	3,419,533	1,899,069	2,991,579	(10,198,107	)	(8,383,582	)	(5,765,602	)	(1,972,470	)
R Class	77,893	85,981	15,511	23,585	(137,046	)	(123,506	)	(43,642	)	(13,940	)
K Class	22,709	92,262	5,788	18,760	(149,939	)	(254,841	)	(121,442	)	(143,819	)
Royce Dividend Value Fund
Investment Class	6,107,891	11,682,957	1,432,854	1,624,572	(9,643,658	)	(5,819,566	)	(2,102,913	)	7,487,963
Service Class	5,033,545	15,995,933	2,128,903	2,758,492	(16,596,059	)	(7,734,636	)	(9,433,611	)	11,019,789
Consultant Class	96,722		5,327		(3,188	)			98,861
Institutional Class	1,472,932	245,393	365,097	254,395	(295,202	)	(202,230	)	1,542,827		297,558

106 | The Royce Funds 2014 Annual Report to Shareholders

Capital Share Transactions (in shares)(continued):

			SHARES ISSUED FOR REINVESTMENT OF						NET INCREASE (DECREASE) IN SHARES
	SHARES SOLD		DISTRIBUTIONS		SHARES REDEEMED				OUTSTANDING
	Period ended	Period ended	Period ended	Period ended	Period ended		Period ended		Period ended		Period ended
	12/31/14	12/31/13	12/31/14	12/31/13	12/31/14		12/31/13		12/31/14		12/31/13
Royce Global Value Fund
Investment Class	2,430,818	4,055,905	133,403	122,354	(10,653,392	)	(6,270,310	)	(8,089,171	)	(2,092,051	)
Service Class	314,008	840,469	40,116	29,962	(1,540,282	)	(4,915,611	)	(1,186,158	)	(4,045,180	)
Consultant Class	168,211	452,132	19,342	6,467	(428,708	)	(378,187	)	(241,155	)	80,412
R Class	2,359	4,926	315	114	–		(3,429	)	2,674		1,611
K Class	–	–	66	61	(1,992	)	–		(1,926	)	61
Royce International Smaller-Companies Fund
Investment Class	138,719		12,760		(10,000	)			141,479
Service Class	2,070,356	1,306,197	351,297	176,089	(2,572,623	)	(646,447	)	(150,970	)	835,839
Institutional Class	297,157		40,557		(47,847	)			289,867
Royce Special Equity Multi-Cap Fund
Investment Class	4,256,073	1,419,512	356,996	256,021	(852,315	)	(446,425	)	3,760,754		1,229,108
Service Class	1,800,024	1,938,884	267,339	303,917	(1,215,439	)	(754,027	)	851,924		1,488,774
Consultant Class	829,645		38,088		(7,158	)			860,575
Institutional Class	2,353,132	791,666	245,902	201,381	(941,028	)	(426,933	)	1,658,006		566,114

Investment Adviser and Distributor:
INVESTMENT ADVISER: Under the Trust’s investment advisory agreements with Royce, Royce is entitled to receive Investment Advisory fees that are computed daily and payable monthly. Royce’s commitment to waive its fees and reimburse class-specific expenses to the extent necessary to maintain certain Funds’ net annual operating expense ratios at specified levels through April 30, 2015, is shown below to the extent that it impacted net expenses for the year ended December 31, 2014. See the Prospectus for contractual waiver expiration dates.

ANNUAL CONTRACTUAL ADVISORY FEE AS A PERCENTAGE OF AVERAGE NET ASSETS1

COMMITTED NET ANNUAL OPERATING EXPENSE RATIO CAP

YEAR ENDED DECEMBER 31, 2014

Investment Class4

Service Class4

Consultant Class4

Institutional Class4

W Class4

R Class4

K Class4

Net advisory fees

Advisory fees waived

Royce Pennsylvania Mutual Fund

0.75%2

N/A

N/A

N/A

N/A

N/A

N/A

N/A

$

49,733,575

$

–

Royce Micro-Cap Fund

1.30%

N/A

1.66%

N/A

N/A

N/A

N/A

N/A

9,122,354

–

Royce Premier Fund

0.94%

N/A

N/A

N/A

N/A

N/A

N/A

N/A

61,049,392

–

Royce Low-Priced Stock Fund

1.08%3

1.24%

1.49%

N/A

N/A

N/A

1.84%

1.59%

11,580,352

–

Royce Total Return Fund

0.96%

N/A

N/A

N/A

N/A

N/A

N/A

N/A

48,817,291

–

Royce Heritage Fund

1.00%

N/A

N/A

N/A

N/A

N/A

1.84%

1.59%

3,626,249

–

Royce Opportunity Fund

0.99%

N/A

N/A

N/A

N/A

N/A

N/A

N/A

24,483,790

–

Royce Special Equity Fund

0.98%

N/A

1.39%

N/A

N/A

N/A

N/A

N/A

31,513,578

–

Royce Value Fund

1.00%

N/A

N/A

N/A

N/A

N/A

N/A

N/A

10,195,490

–

Royce Value Plus Fund

1.00%

N/A

N/A

N/A

N/A

N/A

1.84%

1.59%

10,730,642

–

Royce 100 Fund

1.00%

N/A

N/A

N/A

N/A

N/A

1.84%

1.59%

2,686,076

–

Royce Dividend Value Fund

1.00%

N/A

N/A

2.24%

1.04%

N/A

N/A

N/A

5,891,874

85,816

Royce Global Value Fund

1.25%

N/A

1.69%

2.44%

N/A

N/A

1.99%

1.74%

2,422,039

–

Royce International Smaller-Companies Fund

1.25%

1.44%

1.69%

N/A

1.44%

N/A

N/A

N/A

530,543

84,408

Royce Special Equity Multi-Cap Fund

0.85%

N/A

1.24%

1.99%

0.89%

N/A

N/A

N/A

1,948,296

16,590

1	From a base annual rate of 1.00% (1.30% for Royce Micro-Cap Fund, 1.25% for Royce Global Value Fund and Royce International Smaller-Companies Fund and 0.85% for Royce Special Equity Multi-Cap Fund), the annual rates of investment advisory fees payable by each of the Funds, other than Royce Pennsylvania Mutual Fund, are reduced by the indicated amount at the following breakpoints applicable to a Fund’s net assets in excess of $2 billion: more than $2 billion to $4 billion – .05% per annum; more than $4 billion to $6 billion – .10% per annum; over $6 billion – .15% per annum.
2	Royce Pennsylvania Mutual Fund’s fees are calculated at the annual rate of 1.00% of the first $50 million of the Fund’s average net assets, 0.875% of the next $50 million of average net assets and 0.75% of average net assets in excess of $100 million.
3	Prior to July 1, 2014, the base annual contractual advisory fee for Royce Low-Priced Stock Fund was 1.15%.
4	Committed net annual operating expense ratio cap excludes acquired fund fees and expenses.

DISTRIBUTOR: Royce Fund Services, Inc. (“RFS”), the distributor of the Trust’s shares, is a wholly owned subsidiary of Royce. RFS is entitled to receive distribution fees that are computed daily and payable monthly.

	ANNUAL CONTRACTUAL DISTRIBUTION FEE AS A	PERIOD ENDED DECEMBER 31, 2014
	PERCENTAGE OF AVERAGE NET ASSETS	Net distribution fees	Distribution fees waived
Royce Pennsylvania Mutual Fund – Service Class	0.25%	$  1,296,760	$  –
Royce Pennsylvania Mutual Fund – Consultant Class	1.00%	7,297,087	–
Royce Pennsylvania Mutual Fund – R Class	0.50%	200,653	–
Royce Pennsylvania Mutual Fund – K Class	0.25%	26,724	–

The Royce Funds 2014 Annual Report to Shareholders | 107

Notes to Financial Statements(continued)

DISTRIBUTOR (continued):

	ANNUAL CONTRACTUAL DISTRIBUTION FEE AS A	PERIOD ENDED DECEMBER 31, 2014
	PERCENTAGE OF AVERAGE NET ASSETS	Net distribution fees		Distribution fees waived
Royce Micro-Cap Fund – Service Class	0.25%	$	153,047	$	–
Royce Micro-Cap Fund – Consultant Class	1.00%		1,014,916		–
Royce Premier Fund – Service Class	0.25%		634,279		–
Royce Premier Fund – Consultant Class	1.00%		631,726		–
Royce Premier Fund – R Class	0.50%		152,285		–
Royce Premier Fund – K Class	0.25%		18,268		–
Royce Low-Priced Stock Fund – Service Class	0.25%		1,958,649		81,610
Royce Low-Priced Stock Fund – R Class	0.50%		11,733		–
Royce Low-Priced Stock Fund – K Class	0.25%		6,565		–
Royce Total Return Fund – Service Class	0.25%		808,222		–
Royce Total Return Fund – Consultant Class	1.00%		3,805,780		–
Royce Total Return Fund – R Class	0.50%		337,249		–
Royce Total Return Fund – K Class	0.25%		337,136		–
Royce Heritage Fund – Service Class	0.25%		432,720		59,007
Royce Heritage Fund – Consultant Class	1.00%		145,668		–
Royce Heritage Fund – R Class	0.50%		26,355		–
Royce Heritage Fund – K Class	0.25%		15,388		–
Royce Opportunity Fund – Service Class	0.25%		459,522		–
Royce Opportunity Fund – Consultant Class	1.00%		186,822		–
Royce Opportunity Fund – R Class	0.50%		146,084		–
Royce Opportunity Fund – K Class	0.25%		56,137		–
Royce Special Equity Fund – Service Class	0.25%		707,407		–
Royce Special Equity Fund – Consultant Class	1.00%		663,965		–
Royce Value Fund – Service Class	0.25%		1,440,679		–
Royce Value Fund – Consultant Class	1.00%		289,727		–
Royce Value Fund – R Class	0.50%		175,601		–
Royce Value Fund – K Class	0.25%		30,660		–
Royce Value Plus Fund – Service Class	0.25%		1,610,600		140,052
Royce Value Plus Fund – Consultant Class	1.00%		201,714		–
Royce Value Plus Fund – R Class	0.50%		6,997		–
Royce Value Plus Fund – K Class	0.25%		2,298		–
Royce 100 Fund – Service Class	0.25%		448,378		38,989
Royce 100 Fund – R Class	0.50%		12,103		–
Royce 100 Fund – K Class	0.25%		3,241		–
Royce Dividend Value Fund – Service Class	0.25%		873,246		36,385
Royce Dividend Value Fund – Consultant Class	1.00%		3,305		–
Royce Global Value Fund – Service Class	0.25%		102,079		–
Royce Global Value Fund – Consultant Class	1.00%		252,144		–
Royce Global Value Fund – R Class	0.50%		593		–
Royce Global Value Fund – K Class	0.25%		65		–
Royce International Smaller-Companies Fund – Service Class	0.25%		114,949		–
Royce Special Equity Multi-Cap Fund – Service Class	0.25%		205,229		17,846
Royce Special Equity Multi-Cap Fund – Consultant Class	1.00%		49,119		–

Purchases and Sales of Investment Securities:

For the year ended December 31, 2014, the costs of purchases and the proceeds from sales of investment securities, other than short-term securities and collateral received for securities loaned, were as follows:

	PURCHASES		SALES
Royce Pennsylvania Mutual Fund	$	1,352,437,652	$	2,702,348,724
Royce Micro-Cap Fund		122,535,915		396,180,960
Royce Premier Fund		578,308,648		2,051,983,365
Royce Low-Priced Stock Fund		298,542,865		1,070,511,968
Royce Total Return Fund		882,786,749		1,674,872,153
Royce Heritage Fund		143,313,015		117,480,267
Royce Opportunity Fund		832,620,400		1,027,080,994
Royce Special Equity Fund		592,678,869		1,032,364,015
Royce Value Fund		385,359,251		669,561,268
Royce Value Plus Fund		541,918,895		844,526,652

108 | The Royce Funds 2014 Annual Report to Shareholders

Purchases and Sales of Investment Securities (continued):

	PURCHASES		SALES
Royce 100 Fund	$	95,911,946	$	143,650,185
Royce Dividend Value Fund		126,115,389		189,821,401
Royce Global Value Fund		98,414,719		224,179,841
Royce International Smaller-Companies Fund		37,154,109		36,608,731
Royce Special Equity Multi-Cap Fund		161,312,367		83,218,290

Redemptions-In-Kind:

The Funds may make payment for Fund shares redeemed wholly or in part by distributing portfolio securities to shareholders. For the year ended December 31, 2014, Royce Premier Fund had redemptions-in-kind with total proceeds in the amount of $134,011,288. The net realized gain on these redemptions-in-kind amounted to $74,425,712, which will not be realized for tax purposes.

Class Specific Expenses:

Class specific expenses were as follows for the period ended December 31, 2014:

														CLASS LEVEL
														EXPENSES
														REIMBURSED BY
	NET DISTRIBUTION		SHAREHOLDER		SHAREHOLDER				TRANSFER AGENT					INVESTMENT
	FEES		SERVICING		REPORTS		REGISTRATION		BALANCE CREDITS			TOTAL		ADVISER
Royce Pennsylvania Mutual Fund – Investment Class	$	–	$	4,730,742	$	746,684	$	50,998	$	(989	)	$	5,527,435	$	–
Royce Pennsylvania Mutual Fund – Service Class		1,296,760		851,604		172,736		21,057		(28	)		2,342,129		–
Royce Pennsylvania Mutual Fund – Consultant Class		7,297,087		711,976		160,462		14,516		(233	)		8,183,808		–
Royce Pennsylvania Mutual Fund – Institutional Class		–		7,360		61,705		16,301		(3	)		85,363		–
Royce Pennsylvania Mutual Fund – R Class		200,653		69,878		5,087		1,700		(13	)		277,305		–
Royce Pennsylvania Mutual Fund – K Class		26,724		26,162		2,037		13,378		(2	)		68,299		–
		8,821,224		6,397,722		1,148,711		117,950		(1,268	)
Royce Micro-Cap Fund – Investment Class		–		715,586		181,086		21,630		(228	)		918,074		–
Royce Micro-Cap Fund – Service Class		153,047		76,929		23,745		10,422		(16	)		264,127		69,938
Royce Micro-Cap Fund – Consultant Class		1,014,916		104,797		23,864		12,382		(50	)		1,155,909		–
		1,167,963		897,312		228,695		44,434		(294	)				69,938
Royce Premier Fund – Investment Class		–		4,879,174		966,907		36,819		(796	)		5,882,104		–
Royce Premier Fund – Service Class		634,279		316,979		83,088		12,096		(65	)		1,046,377		–
Royce Premier Fund – Consultant Class		631,726		56,141		12,783		10,566		(27	)		711,189		–
Royce Premier Fund – Institutional Class		–		9,742		69,108		15,234		(6	)		94,078		–
Royce Premier Fund – W Class		–		367,934		118,213		18,713		(127	)		504,733		–
Royce Premier Fund – R Class		152,285		65,936		5,886		1,700		(5	)		225,802		–
Royce Premier Fund – K Class		18,268		20,389		522		13,393		(1	)		52,571		–
		1,436,558		5,716,295		1,256,507		108,521		(1,027	)
Royce Low-Priced Stock Fund – Investment Class		–		59,398		13,322		11,856		(6	)		84,570		6,713
Royce Low-Priced Stock Fund – Service Class		1,958,649		1,167,388		180,897		20,670		(260	)		3,327,344		388,545
Royce Low-Priced Stock Fund – Institutional Class		–		6,820		29,009		13,757		(1	)		49,585		–
Royce Low-Priced Stock Fund – R Class		11,733		10,989		948		1,700		(2	)		25,368		8,682
Royce Low-Priced Stock Fund – K Class		6,565		10,763		725		13,562		(1	)		31,614		19,583
		1,976,947		1,255,358		224,901		61,545		(270	)				423,523
Royce Total Return Fund – Investment Class		–		3,777,475		678,706		53,471		(752	)		4,508,900		–
Royce Total Return Fund – Service Class		808,222		477,039		94,205		18,062		(29	)		1,397,499		–
Royce Total Return Fund – Consultant Class		3,805,780		382,983		84,456		10,571		(133	)		4,283,657		–
Royce Total Return Fund – Institutional Class		–		10,187		25,547		13,901		(10	)		49,625		–
Royce Total Return Fund – W Class		–		252,375		82,269		21,768		(6	)		356,406		–
Royce Total Return Fund – R Class		337,249		141,847		9,168		1,701		(18	)		489,947		–
Royce Total Return Fund – K Class		337,136		283,304		9,839		14,088		(6	)		644,361		–
		5,288,387		5,325,210		984,190		133,562		(954	)

The Royce Funds 2014 Annual Report to Shareholders | 109

Notes to Financial Statements(continued)

Class Specific Expenses (continued):

															CLASS LEVEL
															EXPENSES
															REIMBURSED BY
	NET DISTRIBUTION		SHAREHOLDER		SHAREHOLDER					TRANSFER AGENT					INVESTMENT
	FEES		SERVICING		REPORTS			REGISTRATION		BALANCE CREDITS			TOTAL		ADVISER
Royce Heritage Fund – Investment Class	$	–	$	21,290	$	3,858		$	14,283	$	(5	)	$	39,426	$	–
Royce Heritage Fund – Service Class		432,720		165,970		58,635			16,207		(155	)		673,377		–
Royce Heritage Fund – Consultant Class		145,668		21,941		7,157			7,830		(15	)		182,581		–
Royce Heritage Fund – R Class		26,355		14,680		1,275			1,702		(3	)		44,009		2,702
Royce Heritage Fund – K Class		15,388		19,098		1,809			13,522		(2	)		49,815		17,028
		620,131		242,979		72,734			53,544		(180	)				19,730
Royce Opportunity Fund – Investment Class		–		1,369,190		192,401			34,826		(386	)		1,596,031		–
Royce Opportunity Fund – Service Class		459,522		286,848		61,524			11,866		(14	)		819,746		–
Royce Opportunity Fund – Consultant Class		186,822		24,303		5,913			10,838		(11	)		227,865		–
Royce Opportunity Fund – Institutional Class		–		7,676		41,685			19,599		(4	)		68,956		–
Royce Opportunity Fund – R Class		146,084		67,161		4,200			1,701		(7	)		219,139		–
Royce Opportunity Fund – K Class		56,137		53,905		2,621			14,216		(3	)		126,876		–
		848,565		1,809,083		308,344			93,046		(425	)
Royce Special Equity Fund – Investment Class		–		1,939,849		378,626			40,601		(363	)		2,358,713		–
Royce Special Equity Fund – Service Class		707,407		393,500		91,108			18,080		(233	)		1,209,862		136,947
Royce Special Equity Fund – Consultant Class		663,965		57,233		13,911			11,051		(24	)		746,136		–
Royce Special Equity Fund – Institutional Class		–		8,911		13,251			14,845		(4	)		37,003		–
		1,371,372		2,399,493		496,896			84,577		(624	)				136,947
Royce Value Fund – Investment Class		–		181,364		41,485			12,595		(96	)		235,348		–
Royce Value Fund – Service Class		1,440,679		815,404		138,752			18,169		(241	)		2,412,763		–
Royce Value Fund – Consultant Class		289,727		33,955		7,006			11,194		(9	)		341,873		–
Royce Value Fund – Institutional Class		–		6,633		4,284			16,053		(2	)		26,968		–
Royce Value Fund – R Class		175,601		76,536		2,869			1,703		(7	)		256,702		–
Royce Value Fund – K Class		30,660		30,563		3,888			13,508		(2	)		78,617		–
		1,936,667		1,144,455		198,284			73,222		(357	)
Royce Value Plus Fund – Investment Class		–		639,535		130,074			14,547		(12	)		784,144		–
Royce Value Plus Fund – Service Class		1,610,600		885,715		210,747			21,341		(242	)		2,728,161		–
Royce Value Plus Fund – Consultant Class		201,714		33,632		6,610			10,536		(8	)		252,484		–
Royce Value Plus Fund – Institutional Class		–		7,253		6,507			11,511		(2	)		25,269		–
Royce Value Plus Fund – R Class		6,997		9,033		636			1,700		(1	)		18,365		7,105
Royce Value Plus Fund – K Class		2,298		7,971		229			13,383		(1	)		23,880		18,753
		1,821,609		1,583,139		354,803			73,018		(266	)				25,858
Royce 100 Fund – Investment Class		–		85,295		8,989			12,900		(3	)		107,181		–
Royce 100 Fund – Service Class		448,378		264,046		144,302			19,411		(97	)		876,040		–
Royce 100 Fund – R Class		12,103		12,689		1,975			1,701		(10	)		28,458		9,464
Royce 100 Fund – K Class		3,241		7,674		527			13,564		(1	)		25,005		17,993
		463,722		369,704		155,793			47,576		(111	)				27,457
Royce Dividend Value Fund – Investment Class		–		225,346		52,831			17,618		(14	)		295,781		–
Royce Dividend Value Fund – Service Class		873,246		435,949		136,564			24,927		(497	)		1,470,189		–
Royce Dividend Value Fund – Consultant Class		3,305		6,809		140			16,810		–			27,064		23,126
Royce Dividend Value Fund – Institutional Class		–		6,007		140			10,722		–			16,869		16,868
		876,551		674,111		189,675			70,077		(511	)				39,994
Royce Global Value Fund – Investment Class		–		127,032		44,722			27,342		(5	)		199,091		–
Royce Global Value Fund – Service Class		102,079		52,297		14,502			13,657		(50	)		182,485		44,201
Royce Global Value Fund – Consultant Class		252,144		22,417		5,371			12,119		(18	)		292,033		18,478
Royce Global Value Fund – R Class		593		6,002		11			1,700		–			8,306		7,552
Royce Global Value Fund – K Class		65		5,993		(1	)		13,620		–			19,677		19,576
		354,881		213,741		64,605			68,438		(73	)				89,807

110 | The Royce Funds 2014 Annual Report to Shareholders

Class Specific Expenses (continued):

														CLASS LEVEL
														EXPENSES
														REIMBURSED BY
	NET DISTRIBUTION		SHAREHOLDER		SHAREHOLDER				TRANSFER AGENT					INVESTMENT
	FEES		SERVICING		REPORTS		REGISTRATION		BALANCE CREDITS			TOTAL		ADVISER
Royce International Smaller-Companies Fund – Investment Class	$	–	$	7,578	$	45	$	19,621	$	–		$	27,244	$	27,243
Royce International Smaller-Companies Fund – Service Class		114,949		65,007		9,942		19,225		(14	)		209,109		56,615
Royce International Smaller-Companies Fund – Institutional Class		–		7,495		27		19,883		–			27,405		26,497
		114,949		80,080		10,014		58,729		(14	)				110,355
Royce Special Equity Multi-Cap Fund – Investment Class		–		27,150		8,927		21,473		(4	)		57,546		–
Royce Special Equity Multi-Cap Fund – Service Class		205,229		116,515		37,216		17,554		(18	)		376,496		63,745
Royce Special Equity Multi-Cap Fund – Consultant Class		49,119		8,729		1,324		21,385		–			80,557		26,709
Royce Special Equity Multi-Cap Fund – Institutional Class		–		6,061		59		12,886		–			19,006		19,006
		254,348		158,455		47,526		73,298		(22	)				109,460

TAX INFORMATION:

     At December 31, 2014, net unrealized appreciation (depreciation) based on identified cost for tax purposes was as follows:

			NET UNREALIZED			GROSS UNREALIZED
	TAX BASIS COST		APPRECIATION (DEPRECIATION)			Appreciation		Depreciation
Royce Pennsylvania Mutual Fund	$	4,048,123,363	$	1,790,185,779		$	1,997,292,565	$	207,106,786
Royce Micro-Cap Fund		447,760,188		102,675,618			152,399,495		49,723,877
Royce Premier Fund		3,393,510,466		2,163,621,872			2,253,259,079		89,637,207
Royce Low-Priced Stock Fund		562,137,803		132,126,708			164,627,810		32,501,102
Royce Total Return Fund		3,097,471,367		1,539,601,720			1,716,198,884		176,597,164
Royce Heritage Fund		301,088,050		58,822,447			76,614,441		17,791,994
Royce Opportunity Fund		2,140,105,292		341,555,525			553,364,572		211,809,047
Royce Special Equity Fund		2,194,897,108		705,963,510			730,644,012		24,680,502
Royce Value Fund		719,813,899		165,844,871			210,097,529		44,252,658
Royce Value Plus Fund		808,767,788		226,422,264			274,575,557		48,153,293
Royce 100 Fund		170,075,798		49,815,509			53,331,373		3,515,864
Royce Dividend Value Fund		427,613,909		87,815,075			119,887,926		32,072,851
Royce Global Value Fund		100,634,048		(3,123,062	)		5,301,910		8,424,972
Royce International Smaller-Companies Fund		35,899,187		(1,477,137	)		2,438,224		3,915,361
Royce Special Equity Multi-Cap Fund		265,768,803		40,238,408			44,526,441		4,288,033

     The primary difference between book and tax basis cost is the timing of the recognition of losses on securities sold, investments in Real Estate Investment Trusts, investments in publicly traded partnerships and Trusts and mark-to-market of Passive Foreign Investment Companies.

     Distributions during the years ended December 31, 2014 and 2013, were characterized as follows for tax purposes:

	ORDINARY INCOME				LONG-TERM CAPITAL GAINS
		2014		2013		2014		2013
Royce Pennsylvania Mutual Fund	$	43,932,360	$	68,505,591	$	613,707,099	$	314,540,158
Royce Micro-Cap Fund		–		698,929		52,387,408		59,822,655
Royce Premier Fund		20,910,671		–		536,357,291		690,663,435
Royce Low-Priced Stock Fund		339,434		2,484,427		211,494,646		208,678,815
Royce Total Return Fund		90,578,976		86,549,887		453,089,553		418,194,329
Royce Heritage Fund		2,018,745		7,208,445		17,471,788		33,627,291
Royce Opportunity Fund		17,017,298		3,806,785		279,105,352		229,125,496
Royce Special Equity Fund		26,352,843		36,829,522		253,819,292		263,642,808
Royce Value Fund		28,228,550		45,747,747		85,571,976		37,208,696
Royce Value Plus Fund		15,742,439		474,414		163,669,222		99,364,529
Royce 100 Fund		316,884		1,704,252		24,266,367		35,951,838
Royce Dividend Value Fund		12,195,408		14,413,334		23,024,780		27,540,201

The Royce Funds 2014 Annual Report to Shareholders | 111

Notes to Financial Statements(continued)

TAX INFORMATION (continued):

	ORDINARY INCOME				LONG-TERM CAPITAL GAINS
	2014		2013		2014		2013
Royce Global Value Fund	$	2,831,668	$	2,317,411	$	–	$	–
Royce International Smaller-Companies Fund		2,170,556		673,503		1,733,853		1,430,858
Royce Special Equity Multi-Cap Fund		4,109,218		3,019,600		9,953,150		8,106,833

The tax basis components of distributable earnings at December 31, 2014, were as follows:

		UNDISTRIBUTED							QUALIFIED
		LONG-TERM							LATE YEAR
	UNDISTRIBUTED	CAPITAL GAINS OR		CAPITAL LOSS			NET UNREALIZED		ORDINARY AND			TOTAL		CAPITAL LOSS
	ORDINARY	(CAPITAL LOSS		CARRYFORWARD			APPRECIATION		POST-OCTOBER LOSS			DISTRIBUTABLE		CARRYFORWARD
	INCOME	CARRYFORWARD)		TO 12/31/171			(DEPRECIATION)2		DEFERRALS3			EARNINGS		UTILIZED
Royce Pennsylvania Mutual Fund	$6,703,294	$225,295,994		$	–		$1,779,213,598		$	(442,035	)	$2,010,770,851		$	–
Royce Micro-Cap Fund	–	24,143,596			–		102,658,941			(1,643,412	)	125,159,125			–
Royce Premier Fund	655,865	15,143,216			–		2,163,492,605			–		2,179,291,686			–
Royce Low-Priced Stock Fund	26,688	–			–		132,130,606			(4,284,781	)	127,872,513			–
Royce Total Return Fund	9,066,236	128,341,838			–		1,525,851,995			(3,993,298	)	1,659,266,771			–
Royce Heritage Fund	1,055,752	1,500,100			–		58,818,918			(7,790	)	61,366,980			–
Royce Opportunity Fund	–	21,206,723			–		341,555,467			(8,266,736	)	354,495,454			–
Royce Special Equity Fund	405,822	50,301,924			–		705,963,509			–		756,671,255			–
Royce Value Fund	3,513,483	18,760,576			–		165,844,873			(7,840	)	188,111,092			–
Royce Value Plus Fund	6,249,842	29,644,292			–		226,422,344			–		262,316,478			–
Royce 100 Fund	538,577	8,665,568			–		48,576,102			–		57,780,247			–
Royce Dividend Value Fund	2,708,160	7,749,024			–		87,828,842			(14,529	)	98,271,497			–
Royce Global Value Fund	164,121	(32,992,507	)		(7,981,106	)	(3,142,515	)		(32,102,010	)	(76,054,017	)		8,900,665
Royce International Smaller-Companies Fund	8,181	86			–		(1,555,310	)		(2,543,011	)	(4,490,054	)		–
Royce Special Equity Multi-Cap Fund	2,009,858	6,403,867			–		40,238,407			–		48,652,132			–

1	On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted. Under the Act, net capital losses may be carried forward indefinitely, and their character is retained as short term and/or long-term losses. Previously, net capital losses were carried forward for eight years and treated as short term losses. As a transition rule, the Act requires that postenactment net capital losses be used before pre-enactment net capital losses. As a result of this ordering rule, pre-enactment capital loss carryforwards may expire unused, whereas under the previous rules these losses may have been utilized. This change is effective for fiscal years beginning after the date of enactment.
2	Includes timing differences on foreign currency, recognition of losses on securities sold, investments in Real Estate Investment Trusts, investments in publicly traded partnerships and Trusts and mark-to-market of Passive Foreign Investment Companies.
3	Under the current tax law, capital losses and qualified late year ordinary losses incurred after October 31 may be deferred and treated as occurring on the first day of the following fiscal year.

For financial reporting purposes, capital accounts and distributions to shareholders are adjusted to reflect the tax character of permanent book/tax differences. For the year ended December 31, 2014, the Funds recorded the following permanent reclassifications, which relate primarily to current net operating losses, distribution reclassifications, Real Estate Investment Trusts, publicly traded partnerships and Trusts, foreign currency transactions, equalization, non-deductible excise taxes paid and gains from the sale of Passive Foreign Investment Companies. Results of operations and net assets were not affected by these reclassifications.

	UNDISTRIBUTED			ACCUMULATED
	NET INVESTMENT			NET REALIZED			PAID-IN
	INCOME (LOSS)			GAIN (LOSS)			CAPITAL
Royce Pennsylvania Mutual Fund	$	(2,474,638	)	$	(95,292,987	)	$	97,767,625
Royce Micro-Cap Fund		7,361,902			(4,795,535	)		(2,566,367	)
Royce Premier Fund		95,027			(121,229,609	)		121,134,582
Royce Low-Priced Stock Fund		1,020,767			9,276,749			(10,297,516	)
Royce Total Return Fund		36,840,380			(123,337,451	)		86,497,071
Royce Heritage Fund		(105,493	)		105,493			–
Royce Opportunity Fund		7,678,798			(33,251,307	)		25,572,509
Royce Special Equity Fund		–			(30,115,425	)		30,115,425
Royce Value Fund		(426	)		(10,027,484	)		10,027,910
Royce Value Plus Fund		6,408,934			(15,649,525	)		9,240,591
Royce 100 Fund		807,383			(5,663,489	)		4,856,106
Royce Dividend Value Fund		(631,907	)		631,986			(79	)
Royce Global Value Fund		690,454			(688,179	)		(2,275	)
Royce International Smaller-Companies Fund		40,629			(39,798	)		(831	)
Royce Special Equity Multi-Cap Fund		–			–			–

Management has analyzed the Funds’ tax positions taken on federal income tax returns for all open tax years (2011 - 2014) and has as concluded that as of December 31, 2014, no provision for income tax is required in the Funds’ financial statements.

112 | The Royce Funds 2014 Annual Report to Shareholders

Transactions in Affiliated Companies:

An “Affiliated Company,” as defined in the Investment Company Act of 1940, is a company in which a fund owns 5% or more of the company’s outstanding voting securities at any time during the period. The following transactions were effected in shares of such companies for the year ended December 31, 2014:

		MARKET						REALIZED							MARKET
	SHARES	VALUE		COST OF		COST OF		GAIN			DIVIDEND		SHARES		VALUE
AFFILIATED COMPANY	12/31/13	12/31/13		PURCHASES		SALES		(LOSS)			INCOME		12/31/14		12/31/14
Royce Pennsylvania Mutual Fund
America’s Car-Mart	711,516	$	30,047,321	$	–	$	8,609,535	$	1,142,294		$	–		500,900	$	26,738,042
DTS	1,044,829		25,054,999		1,651,960		3,333,760		339,259			–		1,007,929		30,993,817
Fabrinet	1,727,113		35,509,443		7,550,413		6,927,829		453,516			–		1,790,355		31,760,898
Key Tronic	697,735		7,689,040		1,117		190,546		(60,441	)		–		681,935		5,414,564
Landauer1	492,200		25,894,642		2,610,163		4,963,394		(1,625,394	)		1,106,930
PICO Holdings	1,056,784		24,422,278		6,427,984		–		–			–		1,319,011		24,863,357
Preformed Line Products	349,478		25,567,810		182,411		–		–			281,982		352,478		19,255,873
Stanley Furniture1	962,235		3,694,982		–		14,879,061		(12,329,138	)		–
STRATTEC SECURITY	150,000		6,700,500		8,613,062		–		–			91,560		263,950		21,796,991
Weyco Group	590,500		17,378,415		–		–		–			442,875		590,500		17,520,135
			201,959,430						(12,079,904	)		1,923,347				178,343,677
Royce Micro-Cap Fund
Key Technology	370,814		5,313,765		–		427,775		(31,755	)		–		339,814		4,349,619
Lincoln Educational Services1	1,295,222		6,450,206		–		4,747,645		(3,489,010	)		208,410
Truett-Hurst Cl. A	191,900		800,223		–		–		–			–		191,900		758,005
			12,564,194						(3,520,765	)		208,410				5,107,624
Royce Premier Fund
Acacia Research	3,152,289		45,834,282		9,171,957		16,101,906		(3,824,021	)		1,822,326		3,075,472		52,098,496
Benchmark Electronics	2,843,900		65,637,212		–		2,841,662		649,351			–		2,702,100		68,741,424
Cabot Microelectronics	1,720,272		78,616,431		–		11,750,935		5,073,978			–		1,321,074		62,513,222
Cal-Maine Foods1	1,721,686		103,697,148		–		16,761,349		30,747,611			2,757,458
Cirrus Logic1	4,420,181		90,304,298		29,305,907		90,995,298		10,737,246			–
Fair Isaac1	1,732,600		108,876,584		–		14,409,789		12,420,243			132,278
Fairchild Semiconductor International1	6,833,112		91,222,045		–		53,861,575		(2,890,574	)		–
Globe Specialty Metals	5,532,472		99,639,821		3,870,526		10,540,966		789,466			1,683,442		5,094,972		87,786,367
Kennedy-Wilson Holdings	3,073,344		68,381,904		55,729,986		2,015,600		855,970			1,867,802		5,318,014		134,545,754
Medicines Company (The)1	2,753,525		106,341,135		31,672,063		24,997,116		(4,522,381	)		–
MKS Instruments	3,071,910		91,972,985		9,053,800		9,113,747		2,965,211			2,128,421		3,028,910		110,858,106
Myriad Genetics1	6,343,965		133,096,386		–		88,377,860		27,692,524			–
Pan American Silver1	8,194,097		95,870,935		6,059,630		131,885,142		(51,530,159	)		4,253,424
Ritchie Bros. Auctioneers	4,697,750		107,719,408		20,009,769		309,208		2,272,702			2,797,107		5,442,714		146,354,580
Sanderson Farms1	1,329,008		96,127,148		–		19,480,266		26,267,793			1,533,639
Schnitzer Steel Industries Cl. A	2,008,038		65,602,602		–		11,955,932		(6,531,251	)		1,466,235		1,795,805		40,513,361
SEACOR Holdings	735,065		67,037,928		19,682,483		1,055,840		293,963			–		982,527		72,520,318
Semperit AG Holding	1,917,496		94,951,140		2,671,360		1,488,893		632,621			3,238,836		1,927,361		93,265,167
Silver Standard Resources1	4,115,069		28,640,880		–		90,485,519		(63,063,631	)		–
Simpson Manufacturing	2,705,933		99,388,919		–		926,432		1,561,206			1,082,603		2,630,933		91,030,282
Strayer Education1	1,018,485		35,107,178		–		130,161,939		(62,206,824	)		–
Thor Industries	4,216,757		232,891,489		–		14,683,128		10,440,049			4,072,795		3,761,457		210,152,602
Trican Well Service	8,077,100		98,696,878		6,725,525		768,458		1,786,808			2,300,003		8,450,100		40,512,186
Unit Corporation	2,810,073		145,055,968		–		9,710,900		4,871,679			–		2,586,073		88,185,089
Woodward1	3,806,024		173,592,755		–		7,082,562		33,504,222			1,161,392
			2,424,303,459						(21,006,198	)		32,297,761				1,299,076,954
Royce Low-Priced Stock Fund
Gladstone Land1	501,200		8,119,440		–		3,925,812		(1,385,277	)		177,313
Seabridge Gold1	2,476,592		18,079,122		–		20,652,230		(4,930,859	)		–
Tecumseh Products					3,651,516		–		–			–		1,207,365		3,730,758
Universal Technical Institute1	1,468,679		20,429,325		–		14,607,795		(5,770,996	)		476,888
WaterFurnace Renewable Energy1	814,500		18,394,780		–		18,639,052		5,662,635			407,250
			65,022,667						(6,424,497	)		1,061,451				3,730,758
Royce Total Return Fund
Barry (R.G.)1	1,045,808		20,184,094		–		11,439,507		8,450,294			104,581
Chase Corporation	773,974		27,321,282		–		–		–			464,384		773,974		27,855,324
Houston Wire & Cable	1,216,073		16,271,057		2,633,615		564,364		(76,892	)		637,638		1,378,225		16,469,789

The Royce Funds 2014 Annual Report to Shareholders | 113

Notes to Financial Statements(continued)

Transactions in Affiliated Companies (continued):

		MARKET						REALIZED							MARKET
	SHARES	VALUE		COST OF		COST OF		GAIN			DIVIDEND		SHARES		VALUE
AFFILIATED COMPANY	12/31/13	12/31/13		PURCHASES		SALES		(LOSS)			INCOME		12/31/14		12/31/14
Royce Total Return Fund (continued)
Landauer	427,671	$	22,499,771	$	4,840,603	$	232,090	$	(27,744	)	$	1,048,834		553,400	$	18,893,076
Mueller (Paul) Company	116,700		3,571,020		–		–		–			–		116,700		5,391,540
Peapack-Gladstone Financial1	604,692		11,549,617		–		–		–			120,938
Starrett (L.S.) Company (The) Cl. A	529,400		7,713,358		–		–		–			211,760		529,400		10,550,942
Village Super Market Cl. A1	732,024		22,700,064		16,337		1,582,441		(316,205	)		690,541
			131,810,263						8,029,453			3,278,676				79,160,671
Royce Opportunity Fund
BTU International	723,141		2,111,572		268,303		–		–			–		806,549		2,653,546
CTPartners Executive Search1	483,837		2,709,487		391,356		3,500,053		1,323,183			–
Dixie Group	802,653		10,595,020		829,794		720,637		45,387			–		845,735		7,755,390
Hardinge1	629,571		9,109,892		165,052		603,530		(90,730	)		50,500
Identiv1	1,684,292		969,647		3,491,987		36,976		753			–
Interphase Corporation1	384,001		1,488,004		154,213		44,383		(5,685	)		–
Kid Brands1	1,202,959		1,227,018		–		3,981,741		(3,784,318	)		–
LMI Aerospace	651,335		9,600,678		968,258		446,867		(169,187	)		–		702,037		9,898,722
Magnetek1	166,017		3,971,127		547,738		427,156		360,634			–
Pericom Semiconductor	1,380,517		12,231,381		665,380		2,600,984		309,060			–		1,221,199		16,535,034
Planar Systems1	1,625,599		4,129,021		–		5,458,938		(2,364,104	)		–
SigmaTron International	354,872		3,140,617		32,261		195,671		(34,313	)		–		345,772		2,309,757
Spire Corporation	660,120		316,924		12,659		12,156		(5,294	)		–		675,600		172,278
TRC Companies	1,712,926		12,230,292		151,744		–		–			–		1,740,430		11,034,326
			73,830,680						(4,414,614	)		50,500				50,359,053
Royce Special Equity Fund
Arden Group Cl. A1	243,000		30,741,930		–		17,835,615		12,903,784			–
Atrion Corporation	167,000		49,473,750		–		8,198,182		8,657,628			416,164		115,000		39,101,150
AVX Corporation	9,298,500		129,528,105		16,890,942		9,446,541		(745,386	)		3,968,949		9,900,000		138,600,000
Bowl America Cl. A	343,047		4,912,433		14		–		–			229,842		343,048		4,912,447
Children’s Place	2,100,000		119,637,000		3,703,448		–		–			1,148,775		2,170,000		123,690,000
CSS Industries	974,000		27,934,320		–		45,301		7,073			584,400		972,385		26,876,721
EnerSys1	2,391,000		167,585,190		570,479		47,447,150		34,187,454			1,001,268
Finish Line (The) Cl. A	4,958,000		139,666,860		–		4,296,864		1,161,056			1,578,720		4,775,000		116,080,250
Foster (L.B.) Company	1,000,000		47,290,000		–		–		–			130,000		1,000,000		48,570,000
Frisch’s Restaurants	505,100		12,945,713		–		–		–			383,876		505,100		13,536,680
Hawkins	989,000		36,780,910		6,127,630		7,865,488		(631,261	)		662,192		955,432		41,398,869
Hurco Companies	471,000		11,779,710		585,768		305,806		75,039			132,849		479,319		16,339,985
LeapFrog Enterprises Cl. A1	4,100,000		32,554,000		16,685,452		51,166,207		(18,156,841	)		–
Meredith Corporation	1,544,000		79,979,200		47,921,759		10,010,885		1,315,430			3,562,298		2,375,000		129,010,000
Minerals Technologies1	3,075,000		184,715,250		417,912		51,218,555		43,336,688			508,735
National Presto Industries	656,500		52,848,250		–		–		–			3,315,325		656,500		38,103,260
Neenah Paper					64,025,617		–		–			798,102		1,272,808		76,712,138
Park Electrochemical	2,011,000		57,755,920		243,858		17,139,117		(410,342	)		5,702,313		1,458,382		36,357,463
Plantronics1	2,215,000		102,886,750		3,182,875		23,446,562		8,641,371			1,220,000
ScanSource	930,000		39,459,900		58,723,468		3,378,875		(178,305	)		–		2,400,000		96,384,000
Scholastic Corporation	2,910,000		98,969,100		94,668		6,905,641		(361,873	)		1,746,450		2,725,000		99,244,500
Schulman (A.)1	1,487,000		52,431,620		–		30,694,230		25,394,028			590,945
Schweitzer-Mauduit International	2,638,557		135,806,529		2,118,151		22,152,135		(6,840,232	)		3,785,956		2,300,000		97,290,000
Standard Motor Products	2,250,000		82,800,000		625,137		–		–			1,177,020		2,268,000		86,456,160
UniFirst Corporation	1,481,570		158,527,990		5,827,556		–		–			229,271		1,542,278		187,309,663
Universal Corporation	1,296,000		70,761,600		36,785,603		6,869,208		(1,604,889	)		3,128,863		1,900,000		83,562,000
Weis Markets	1,144,500		60,154,920		15,704,763		–		–			1,642,689		1,486,100		71,065,302
			1,987,926,950						106,750,422			37,645,002				1,570,600,588
Royce Value Plus Fund
Numerex Corporation Cl. A1	1,030,200		13,341,090		–		1,440,299		(56,616	)		–
			13,341,090						(56,616	)		–

¹ Not an Affiliated Company at December 31, 2014.

114 | The Royce Funds 2014 Annual Report to Shareholders

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of The Royce Fund and the Shareholders of Royce Pennsylvania Mutual Fund, Royce Micro-Cap Fund, Royce Premier Fund, Royce Low-Priced Stock Fund, Royce Total Return Fund, Royce Heritage Fund, Royce Opportunity Fund, Royce Special Equity Fund, Royce Value Fund, Royce Value Plus Fund, Royce 100 Fund, Royce Dividend Value Fund, Royce Global Value Fund, Royce International Smaller-Companies Fund and Royce Special Equity Multi-Cap Fund.

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Royce Pennsylvania Mutual Fund, Royce Micro-Cap Fund, Royce Premier Fund, Royce Low-Priced Stock Fund, Royce Total Return Fund, Royce Heritage Fund, Royce Opportunity Fund, Royce Special Equity Fund, Royce Value Fund, Royce Value Plus Fund, Royce 100 Fund, Royce Dividend Value Fund, Royce Global Value Fund, Royce International Smaller-Companies Fund and Royce Special Equity Multi-Cap Fund (constituting The Royce Fund, hereafter referred to as the “Funds”) at December 31, 2014, the results of their operations for the year then ended, the changes in their net assets and their financial highlights for each of the fiscal periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2014, by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Baltimore, Maryland
February 19, 2015

The Royce Funds 2014 Annual Report to Shareholders | 115

Understanding Your Fund’s Expenses (unaudited)

As a shareholder of a mutual fund, you pay ongoing expenses, including management fees and other Fund expenses including, for some funds, distribution and/or service (12b-1) fees. Using the information below, you can estimate how these ongoing expenses (in dollars) affect your investment and compare them with the ongoing expenses of other funds. You may also incur one-time transaction expenses, including redemption fees, which are not shown in this section and would result in higher total costs. The example is based on an investment of $1,000 invested at July 1, 2014, and held for the entire six-month period ended December 31, 2014. Service, Consultant, R and K Class shares are generally available only through certain brokers or retirement plan administrators who receive distribution and/or service fees from the Fund for services that they perform. Institutional and W Class shares are generally available only to institutions or intermediaries with a minimum account size of $1 million.

Actual Expenses

The first part of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value at December 31, 2014, by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second part of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, this section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	ACTUAL						HYPOTHETICAL (5% PER YEAR RETURN BEFORE EXPENSES)
	Beginning Account Value		Ending Account Value		Expenses Paid During the		Beginning Account Value		Ending Account Value		Expenses Paid During the		Annualized Expense
	7/1/14		12/31/14		Period1		7/1/14		12/31/14		Period1		Ratio2
Investment Class Royce Pennsylvania Mutual Fund	$	1,000.00	$	973.17	$	4.53	$	1,000.00	$	1,020.62	$	4.63		0.91%
Royce Micro-Cap Fund		1,000.00		949.08		7.42		1,000.00		1,017.59		7.68		1.51%
Royce Premier Fund		1,000.00		923.68		5.43		1,000.00		1,019.56		5.70		1.12%
Royce Low-Priced Stock Fund		1,000.00		886.95		5.90		1,000.00		1,018.95		6.31		1.24%
Royce Total Return Fund		1,000.00		986.38		5.71		1,000.00		1,019.46		5.80		1.14%
Royce Heritage Fund3		1,000.00		962.26		5.39		1,000.00		1,019.71		5.55		1.09%
Royce Opportunity Fund		1,000.00		965.99		5.75		1,000.00		1,019.36		5.90		1.16%
Royce Special Equity Fund		1,000.00		1,009.31		5.62		1,000.00		1,019.61		5.65		1.11%
Royce Value Fund		1,000.00		968.33		5.76		1,000.00		1,019.36		5.90		1.16%
Royce Value Plus Fund		1,000.00		998.78		6.70		1,000.00		1,018.50		6.77		1.33%
Royce 100 Fund		1,000.00		942.54		6.12		1,000.00		1,018.90		6.36		1.25%
Royce Dividend Value Fund		1,000.00		948.86		5.89		1,000.00		1,019.16		6.11		1.20%
Royce Global Value Fund		1,000.00		850.62		7.00		1,000.00		1,017.64		7.63		1.50%
Royce International Smaller- Companies Fund		1,000.00		871.14		6.79		1,000.00		1,017.95		7.32		1.44%
Royce Special Equity Multi-Cap Fund		1,000.00		1,038.28		4.93		1,000.00		1,020.37		4.89		0.96%
Service Class Royce Pennsylvania Mutual Fund		1,000.00		971.76		6.21		1,000.00		1,018.90		6.36		1.25%
Royce Micro-Cap Fund		1,000.00		947.83		8.15		1,000.00		1,016.84		8.44		1.66%
Royce Premier Fund		1,000.00		922.88		6.30		1,000.00		1,018.65		6.61		1.30%
Royce Low-Priced Stock Fund		1,000.00		886.28		7.08		1,000.00		1,017.69		7.58		1.49%
Royce Total Return Fund		1,000.00		985.79		6.51		1,000.00		1,018.65		6.61		1.30%
Royce Heritage Fund3		1,000.00		960.77		6.87		1,000.00		1,018.20		7.07		1.39%
Royce Opportunity Fund		1,000.00		966.02		6.69		1,000.00		1,018.40		6.87		1.35%
Royce Special Equity Fund		1,000.00		1,007.95		7.03		1,000.00		1,018.20		7.07		1.39%
Royce Value Fund		1,000.00		966.81		7.04		1,000.00		1,018.05		7.22		1.42%
Royce Value Plus Fund		1,000.00		998.24		6.85		1,000.00		1,018.35		6.92		1.36%
Royce 100 Fund		1,000.00		941.15		7.63		1,000.00		1,017.34		7.93		1.56%
Royce Dividend Value Fund		1,000.00		946.90		7.12		1,000.00		1,017.90		7.38		1.45%
Royce Global Value Fund		1,000.00		848.68		7.87		1,000.00		1,016.69		8.59		1.69%

116 | The Royce Funds 2014 Annual Report to Shareholders

	ACTUAL						HYPOTHETICAL (5% PER YEAR RETURN BEFORE EXPENSES)
	Beginning Account Value		Ending Account Value		Expenses Paid During the		Beginning Account Value		Ending Account Value		Expenses Paid During the		Annualized Expense
	7/1/14		12/31/14		Period1		7/1/14		12/31/14		Period1		Ratio2
Service Class (continued) Royce International Smaller- Companies Fund	$	1,000.00	$	869.83	$	8.01	$	1,000.00	$	1,016.64	$	8.64		1.70%
Royce Special Equity Multi-Cap Fund		1,000.00		1,037.35		6.37		1,000.00		1,018.95		6.31		1.24%
Consultant Class Royce Pennsylvania Mutual Fund		1,000.00		968.61		9.48		1,000.00		1,015.58		9.70		1.91%
Royce Micro-Cap Fund		1,000.00		944.48		12.11		1,000.00		1,012.75		12.53		2.47%
Royce Premier Fund		1,000.00		918.89		10.16		1,000.00		1,014.62		10.66		2.10%
Royce Total Return Fund		1,000.00		981.37		10.59		1,000.00		1,014.52		10.76		2.12%
Royce Heritage Fund3		1,000.00		956.22		11.29		1,000.00		1,013.66		11.62		2.29%
Royce Opportunity Fund		1,000.00		960.64		11.12		1,000.00		1,013.86		11.42		2.25%
Royce Special Equity Fund		1,000.00		1,003.80		10.76		1,000.00		1,014.47		10.82		2.13%
Royce Value Fund		1,000.00		963.03		10.79		1,000.00		1,014.22		11.07		2.18%
Royce Value Plus Fund		1,000.00		993.84		11.41		1,000.00		1,013.76		11.52		2.27%
Royce Dividend Value Fund		1,000.00		943.14		10.97		1,000.00		1,013.91		11.37		2.24%
Royce Global Value Fund		1,000.00		845.90		11.35		1,000.00		1,012.91		12.38		2.44%
Royce Special Equity Multi-Cap Fund		1,000.00		1,033.09		10.20		1,000.00		1,015.17		10.11		1.99%
Institutional Class Royce Pennsylvania Mutual Fund		1,000.00		973.74		3.98		1,000.00		1,021.17		4.08		0.80%
Royce Premier Fund		1,000.00		924.15		4.80		1,000.00		1,020.21		5.04		0.99%
Royce Low-Priced Stock Fund		1,000.00		888.35		4.52		1,000.00		1,020.42		4.84		0.95%
Royce Total Return Fund		1,000.00		987.86		5.01		1,000.00		1,020.16		5.09		1.00%
Royce Opportunity Fund		1,000.00		967.01		5.16		1,000.00		1,019.96		5.30		1.04%
Royce Special Equity Fund		1,000.00		1,009.71		5.17		1,000.00		1,020.06		5.19		1.02%
Royce Value Fund		1,000.00		968.47		5.21		1,000.00		1,019.91		5.35		1.05%
Royce Value Plus Fund		1,000.00		999.30		5.09		1,000.00		1,020.11		5.14		1.01%
Royce Dividend Value Fund		1,000.00		949.09		5.11		1,000.00		1,019.96		5.30		1.04%
Royce International Smaller- Companies Fund		1,000.00		871.17		6.79		1,000.00		1,017.95		7.32		1.44%
Royce Special Equity Multi-Cap Fund		1,000.00		1,038.66		4.57		1,000.00		1,020.72		4.53		0.89%
W Class Royce Premier Fund		1,000.00		923.96		5.19		1,000.00		1,019.81		5.45		1.07%
Royce Total Return Fund		1,000.00		987.06		5.76		1,000.00		1,019.41		5.85		1.15%
R Class Royce Pennsylvania Mutual Fund		1,000.00		970.20		7.15		1,000.00		1,017.95		7.32		1.44%
Royce Premier Fund		1,000.00		921.05		8.28		1,000.00		1,016.59		8.69		1.71%
Royce Low-Priced Stock Fund		1,000.00		884.22		8.74		1,000.00		1,015.93		9.35		1.84%
Royce Total Return Fund		1,000.00		983.80		8.70		1,000.00		1,016.43		8.84		1.74%
Royce Heritage Fund		1,000.00		958.57		9.08		1,000.00		1,015.93		9.35		1.84%
Royce Opportunity Fund		1,000.00		962.69		9.20		1,000.00		1,015.83		9.45		1.86%
Royce Value Fund		1,000.00		965.18		8.62		1,000.00		1,016.43		8.84		1.74%
Royce Value Plus Fund		1,000.00		995.75		9.26		1,000.00		1,015.93		9.35		1.84%
Royce 100 Fund		1,000.00		940.13		9.00		1,000.00		1,015.93		9.35		1.84%
Royce Global Value Fund		1,000.00		848.01		9.22		1,000.00		1,015.22		10.06		1.98%
K Class Royce Pennsylvania Mutual Fund		1,000.00		970.47		7.65		1,000.00		1,017.44		7.83		1.54%
Royce Premier Fund		1,000.00		919.78		8.86		1,000.00		1,015.98		9.30		1.83%
Royce Low-Priced Stock Fund		1,000.00		884.83		7.55		1,000.00		1,017.19		8.08		1.59%
Royce Total Return Fund		1,000.00		985.40		7.11		1,000.00		1,018.05		7.22		1.42%
Royce Heritage Fund		1,000.00		959.76		7.85		1,000.00		1,017.19		8.08		1.59%
Royce Opportunity Fund		1,000.00		963.53		8.76		1,000.00		1,016.28		9.00		1.77%
Royce Value Fund		1,000.00		965.10		8.57		1,000.00		1,016.48		8.79		1.73%
Royce Value Plus Fund		1,000.00		997.51		8.01		1,000.00		1,017.19		8.08		1.59%
Royce 100 Fund		1,000.00		941.08		7.78		1,000.00		1,017.19		8.08		1.59%
Royce Global Value Fund		1,000.00		848.80		8.11		1,000.00		1,016.43		8.84		1.74%

1	Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value for the period, multiplied by 184 days in the most recent fiscal half-year divided by 365 days (to reflect the half-year period).
2	Annualized expense ratio used to derive figures in the table is based on the most recent fiscal half-year.
3	GiftShare accounts pay an annual $50 trustee fee to State Street Bank, NA, as trustee. If these fees were included above, your costs would be higher.

The Royce Funds 2014 Annual Report to Shareholders | 117

Federal Tax Information

In January 2015, taxable shareholders were mailed a Form 1099-DIV reporting the federal tax status of all distributions paid during the calendar year 2014.

2014 Supplemental Tax Information:

	%	% U.S. GOVT	% INCOME QUALIFYING	LONG-TERM CAPITAL GAIN DISTRIBUTION OR
FUND	QDI	INCOME	FOR DRD	MAXIMUM ALLOWABLE (000’S)
Royce Pennsylvania Mutual Fund	90.01%	N/A	100.00%	$711,475
Royce Micro-Cap Fund	0.00%	N/A	0.00%	52,387
Royce Premier Fund	100.00%	N/A	100.00%	582,811
Royce Low-Priced Stock Fund	100.00%	N/A	100.00%	211,495
Royce Total Return Fund	67.82%	N/A	80.36%	508,503
Royce Heritage Fund	63.07%	N/A	100.00%	17,472
Royce Opportunity Fund	100.00%	N/A	81.50%	304,678
Royce Special Equity Fund	72.89%	N/A	100.00%	283,935
Royce Value Fund	51.39%	N/A	44.53%	95,600
Royce Value Plus Fund	42.09%	N/A	31.48%	173,440
Royce 100 Fund	100.00%	N/A	100.00%	29,156
Royce Dividend Value Fund	79.15%	N/A	60.87%	23,025
Royce Global Value Fund	100.00%	N/A	4.93%	–
Royce International Smaller-Companies Fund	39.12%	N/A	0.00%	1,734
Royce Special Equity Multi-Cap Fund	54.48%	N/A	100.00%	9,953

DEFINITIONS:
%	QDI: Qualified Dividend Income; % of net investment income and/or short-term capital gains distributions that qualify for treatment at long-term capital gain rates.
%	U.S. Govt Income: % of investment income paid from U.S. Government obligations.
%	Income Qualifying for DRD: % of investment income eligible for the corporate dividend received deduction.

Foreign Tax Credit:

For the year ended December 31, 2014, the following funds had elected to pass through the credit for tax paid in foreign countries. The net foreign source income and foreign tax per share outstanding on the dividend distribution date are as follows:

FUND	NET FOREIGN SOURCE INCOME	NET FOREIGN SOURCE INCOME PER SHARE	FOREIGN TAX	FOREIGN TAX PER SHARE
Royce Global Value Fund	$2,344,727	$0.2023	$378,832	$0.0327
Royce International Smaller-Companies Fund	804,542	0.2661	101,186	0.0335

118 | The Royce Funds 2014 Annual Report to Shareholders

Trustees and Officers

All Trustees and Officers may be reached c/o The Royce Funds, 745 Fifth Avenue, New York, NY 10151

Charles M. Royce, Trustee¹, President

Age: 75 | Number of Funds Overseen: 33 | Tenure: Since 1982

Non-Royce Directorships: Director of TICC Capital Corp.

Principal Occupation(s) During Past Five Years: Chief Executive Officer and Chairman of Board of Managers of Royce & Associates, LLC (“Royce”), the Trust’s investment adviser.

Christopher D. Clark, Trustee¹, Vice President

Age: 49 | Number of Funds Overseen: 32 | Tenure: Since 2014

Principal Occupation(s) During Past Five Years: President (since July 2014), Co-Chief Investment Officer (Since January 2014) and Managing Director of Royce, having been employed by Royce since May 2007.

Patricia W. Chadwick, Trustee

Age: 66 | Number of Funds Overseen: 33 | Tenure: Since 2009

Non-Royce Directorships: Trustee of ING Mutual Funds and Director of Wisconsin Energy Corp.

Principal Occupation(s) During Past 5 Years: Consultant and President of Ravengate Partners LLC (since 2000).

Richard M. Galkin, Trustee

Age: 76 | Number of Funds Overseen: 33 | Tenure: Since 1982

Non-Royce Directorships: None

Principal Occupation(s) During Past Five Years: Private investor. Mr. Galkin’s prior business experience includes having served as President of Richard M. Galkin Associates, Inc., telecommunications consultants, President of Manhattan Cable Television (a subsidiary of Time, Inc.), President of Haverhills Inc. (another Time, Inc. subsidiary), President of Rhode Island Cable Television, and Senior Vice President of Satellite Television Corp. (a subsidiary of Comsat).

Stephen L. Isaacs, Trustee

Age: 75 | Number of Funds Overseen: 33 | Tenure: Since 1989

Non-Royce Directorships: None

Principal Occupation(s) During Past Five Years: Attorney and President of Health Policy Associates, Inc., consultants. Mr. Isaacs’s prior business experience includes having served as President of the Center for Health and Social Policy (from 1996 to 2012); Director of Columbia University Development Law and Policy Program and Professor at Columbia University (until August 1996).

Arthur S. Mehlman, Trustee

Age: 72 | Number of Funds Overseen: 51 | Tenure: Since 2004

Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 18 Legg Mason Funds.

Principal Occupation(s) During Past Five Years: Director of The League for People with Disabilities, Inc.; Director of University of Maryland Foundation (non-profits). Formerly: Director of Municipal Mortgage & Equity, LLC (from October 2004 to April 1, 2011); Director of University of Maryland College Park Foundation (non-profit) (from 1998 to 2005); Partner, KPMG LLP (international accounting firm) (from 1972 to 2002); Director of Maryland Business Roundtable for Education (from July 1984 to June 2002).

David L. Meister, Trustee

Age: 75 | Number of Funds Overseen: 33 | Tenure: Since 1982

Non-Royce Directorships: None

Principal Occupation(s) During Past Five Years: Consultant. Chairman and Chief Executive Officer of The Tennis Channel (from June 2000 to March 2005). Mr. Meister’s prior business experience includes having served as Chief Executive Officer of Seniorlife.com, a consultant to the communications industry, President of Financial News Network, Senior Vice President of HBO, President of Time-Life Films, and Head of Broadcasting for Major League Baseball.

G. Peter O’Brien, Trustee

Age: 69 | Number of Funds Overseen: 51 | Tenure: Since 2001

Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 18 Legg Mason Funds; Director of TICC Capital Corp.

Principal Occupation(s) During Past Five Years: Trustee Emeritus of Colgate University (since 2005); Board Member of Hill House, Inc. (since 1999); Formerly: Trustee of Colgate University (from 1996 to 2005), President of Hill House, Inc. (from 2001 to 2005) and Managing Director/Equity Capital Markets Group of Merrill Lynch & Co. (from 1971 to 1999).

John D. Diederich, Vice President and Treasurer

Age: 63 | Tenure: Since 2001

Principal Occupation(s) During Past Five Years: Chief Operating Officer, Managing Director and member of the Board of Managers of Royce; Chief Financial Officer of Royce; Director of Administration of the Trust; and President of RFS, having been employed by Royce since April 1993.

Jack E. Fockler, Jr., Vice President

Age: 56 | Tenure: Since 1995

Principal Occupation(s) During Past Five Years: Managing Director and Vice President of Royce, and Vice President of RFS, having been employed by Royce since October 1989.

Daniel A. O’Byrne, Vice President and Assistant Secretary

Age: 52 | Tenure: Since 1994

Principal Occupation(s) During Past Five Years: Principal and Vice President of Royce, having been employed by Royce since October 1986.

Francis D. Gannon, Vice President

Age: 47 | Tenure: Since 2014

Principal Occupation(s) During Past Five Years: Co-Chief Investment Officer (Since January 2014) and Managing Director of Royce, having been employed by Royce since September 2006.

John E. Denneen, Secretary and Chief Legal Officer

Age: 47 | Tenure: 1996-2001 and Since April 2002

Principal Occupation(s) During Past Five Years: General Counsel, Chief Legal and Compliance Officer, and Secretary of Royce; Secretary and Chief Legal Officer of The Royce Funds.

Lisa Curcio, Chief Compliance Officer

Age: 55 | Tenure: Since 2004

Principal Occupation(s) During Past Five Years: Chief Compliance Officer of The Royce Funds (since October 2004) and Compliance Officer of Royce (since June 2004).

1	Interested Trustee.
	Trustees will hold office until their successors have been duly elected and qualified or until their earlier resignation or removal. The Statement of Additional Information, which contains additional information about the Trust’s trustees and officers, is available and can be obtained without charge at www.roycefunds.com or by calling (800) 221-4268.

The Royce Funds 2014 Annual Report to Shareholders | 119

Notes to Performance and Other Important Information

The thoughts expressed in this report concerning recent market movements and future prospects for small company stocks are solely the opinion of Royce at December 31, 2014, and, of course, historical market trends are not necessarily indicative of future market movements. Statements regarding the future prospects for particular securities held in the Funds’ portfolios and Royce’s investment intentions with respect to those securities reflect Royce’s opinions as of December 31, 2014 and are subject to change at any time without notice. There can be no assurance that securities mentioned in this report will be included in any Royce-managed portfolio in the future.

Sector weightings are determined using the Global Industry Classification Standard (“GICS”). GICS was developed by, and is the exclusive property of, Standard & Poor’s Financial Services LLC (“S&P”) and MSCI Inc. (“MSCI”). GICS is the trademark of S&P and MSCI. “Global Industry Classification Standard (GICS)” and “GICS Direct” are service marks of S&P and MSCI.

All indexes referred to are unmanaged and capitalization weighted. Each index’s returns include net reinvested dividends and/or interest income. Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell^® is a trademark of Russell Investment Group. The Russell 2000 is an index of domestic small-cap stocks. It measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 Index. The Russell 1000 Index is an index of domestic large-cap stocks. It measures the performance of the 1,000 largest publicly traded U.S. companies in the Russell 3000 Index. The Russell Microcap Index includes 1,000 of the smallest securities in the Russell 2000 Index, along with the next smallest eligible securities as determined by Russell. The Russell Mid-cap Index measures the performance of the mid-cap segment of the U.S. equity universe. It includes approximately 800 of the smallest securities in the Russell 1000 Index. The Russell Global Small Cap Index is an index of global small-cap stocks. The Russell Global ex-U.S. Small Cap Index is an index of global small-cap stocks, excluding the United States. The Russell Global ex-U.S. Large Cap Index is an index of global large-cap stocks, excluding the United States. The S&P 500 is an index of U.S. large-cap stocks, selected by Standard & Poor’s based on market size, liquidity, and industry grouping, among other factors. The Nasdaq Composite is an index of the more than 3,000 common equities listed on the Nasdaq stock exchange. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index. Returns for the market indexes used in this report were based on information supplied to Royce by Russell Investments. Royce has not independently verified the above described information.

The Price-Earnings, or P/E, Ratio is calculated by dividing a company’s share price by its trailing 12-month earnings-per share (EPS). The Price-to-Book, or P/B, Ratio is calculated by dividing a company’s share price by its book value per share. Standard deviation is a statistical measure within which a fund’s total returns have varied over time. The greater the standard deviation, the greater a fund’s volatility. The Morningstar Style Map uses proprietary scores of a stock’s value and growth characteristics to determine its placement in one of the five categories listed on the horizontal axis. These characteristics are then compared to those of other stocks within the same market capitalization band. Each is scored from zero to 100 for both value and growth attributes. The value score is subtracted from the growth score to determine the overall style score. For the vertical, market cap axis, Morningstar subdivides into size groups. Giant-cap stocks are defined as those that account for the top 40% of the capitalization of each style zone; large-cap stocks represent the next 30%; mid-cap stocks the next 20%; small-cap stocks the next 7%; micro-cap stocks the smallest 3%. Investments in securities of micro-cap, small-cap, and/ or mid-cap companies may involve considerably more risk than investments in securities of larger-cap companies. (Please see “Primary Risks for Fund Investors” in the prospectus.) Investments in foreign securities, which generally may involve political, economic, currency, and other risks not encountered in U.S. investments. (Please see “Investing in Foreign Securities” in the prospectus.) A Fund that invests a significant portion of its assets in a limited number of stocks may be subject to considerably more risk than a more broadly diversified Fund because a decline in the value of any of these stocks would cause that Fund’s overall value to decline to a greater degree. A broadly diversified portfolio does not, however, ensure a profit for a Fund or guarantee against loss. Please read the prospectus carefully before investing or sending money. A copy of the Funds’ current prospectus and Statement of Additional Information may be obtained by calling (800) 221-4268 or by visiting www.roycefunds.com. All publicly released material Fund information is disclosed by the Funds on their website at www.roycefunds.com. The Royce Funds is a service mark of The Royce Funds. Distributor: Royce Fund Services, Inc.

Forward-Looking Statements

This material contains forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve risks and uncertainties, including, among others, statements as to:

• the Funds’ future operating results,

• the prospects of the Funds’ portfolio companies,

• the impact of investments that the Funds have made or may make, the dependence of the Funds’ future success on the general economy and its impact on the companies and industries in which the Funds invest, and

• the ability of the Funds’ portfolio companies to achieve their objectives.

This review and report use words such as “anticipates,” “believes,” “expects,” “future,” “intends,” and similar expressions to identify forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements for any reason.

The Royce Funds have based the forward-looking statements included in this review and report on information available to us on the date of the report, and we assume no obligation to update any such forward-looking statements. Although The Royce Funds undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise, you are advised to consult any additional disclosures that we may make through future shareholder communications or reports.

Proxy Voting

A copy of the policies and procedures that The Royce Funds use to determine how to vote proxies relating to portfolio securities and information regarding how each of The Royce Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available, without charge, on The Royce Funds’ website at www.roycefunds.com, by calling (800) 221-4268 (toll-free) and on the website of the Securities and Exchange Commission (“SEC”) at www.sec.gov.

Form N-Q Filing

The Funds file their complete schedules of investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at www. sec.gov. The Royce Funds’ holdings are also on the Funds’ website approximately 15 to 20 days after each calendar quarter end and remain available until the next quarter’s holdings are posted. The Funds’ Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. To find out more about this public service, call the SEC at (202) 942-8090. The Funds’ complete schedules of investments are updated quarterly and are available at www.roycefunds.com.

120 | The Royce Funds 2014 Annual Report to Shareholders

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This page is not part of the 2014 Annual Report to Shareholders

About The Royce Funds	Contact Us
Wealth of Experience With approximately $32 billion in total assets under management, Royce & Associates is committed to the same investment principles that have served us well for more than 40 years. Chuck Royce, our Chief Executive Officer, enjoys one of the longest tenures of any active mutual fund manager. Royce’s investment staff also includes 24 portfolio managers and analysts and nine traders.	GENERAL INFORMATION General Royce Funds information including: • How to open an account • An overview of our firm and Funds • Ordering literature including Prospectuses (800) 221-4268
Multiple Funds, Common Focus Our goal is to offer both individual and institutional investors the best available micro-cap, small-cap, and/or mid-cap portfolios. We have chosen to concentrate on smaller-company investing by providing investors with a range of funds that take full advantage of this large and diverse sector.	ACCOUNT INFORMATION Speak with a representative about: • Your account, transactions, and forms (800) 841-1180
Consistent Discipline Our approach emphasizes paying close attention to risk and maintaining the same discipline, regardless of market movements and trends. The price we pay for a security must be below our appraisal of its current worth. This requires a thorough analysis of the financial and business dynamics of an enterprise, as though we were purchasing the entire company.	FINANCIAL ADVISORS, CONSULTANTS, AND INSTITUTIONS Speak with your regional Royce contact regarding: • Scheduling a meeting or call • Information about our firm, strategies, and funds • Resources for financial professionals, such as portfolio attribution reports (800) 337-6923
Co-Ownership of Funds It is important that our employees and shareholders share a common financial goal. Our officers, employees, and their families currently have more than $185 million invested in The Royce Funds and are often among the largest individual shareholders.	AUTOMATED ACCOUNT INFORMATION 24-hour Automated Telephone Service (800) 878-6923
	roycefunds.com

DECEMBER 31, 2014

2014 Annual

Review and Report to Shareholders

Royce Select Fund I
Royce Select Fund II
Royce Enterprise Select Fund
Royce Opportunity Select Fund
Royce Micro-Cap Discovery Fund
Royce Financial Services Fund
Royce SMid-Cap Value Fund
Royce Partners Fund
Royce European
Smaller-Companies Fund
Royce Global Dividend Value Fund
Royce International Micro-Cap Fund
Royce International Premier Fund
roycefunds.com

Table of Contents
Annual Review
Letter to Our Shareholders	1
Performance and Expenses	5
Annual Report to Shareholders
Manager’s Discussions of Fund Performance
Royce Select Fund I	6
Royce Select Fund II	8
Royce Enterprise Select Fund	10
Royce Opportunity Select Fund	12
Royce Micro-Cap Discovery Fund	14
Royce Financial Services Fund	16
Royce SMid-Cap Value Fund	18
Royce Partners Fund	20
Royce European Smaller-Companies Fund	22
Royce Global Dividend Value Fund	24
Royce International Micro-Cap Fund	26
Royce International Premier Fund	28
Schedules of Investments and Financial Statements	30
Notes to Financial Statements	62
Report of Independent Registered Public Accounting Firm	70
Understanding Your Fund’s Expenses	71
Federal Tax Information	72
Trustees and Officers	73
Notes to Performance and Other Important Information	74

This page is not part of the 2014 Annual Report to Shareholders

LETTER TO OUR SHAREHOLDERS

Letter to Our Shareholders

A TALE OF TWO MARKETS

It wasn’t the best of times; it wasn’t the worst of times. As 2014 began, it all seemed just right, with small-caps easing into the year on a more mutedly bullish note following their extraordinary run in 2013. So relaxed was the pace of returns, and in such stark contrast to the eventful years of 2008-2013, that in our June 30 Semiannual Review we remarked on how agreeably peaceful and undramatic it all was. During the year’s first six months, inflation was nearly non-existent, most commodity prices were stable, and volatility, as measured by the VIX, reached the end of June at its lowest level since 2007. These factors, along with a sprightly M&A market, looked to us like clear signs of ongoing growth. The case appeared even stronger as the Federal Reserve moved further and further into the background of the U.S. economy. We were not alone in thinking that the anticipated end of QE (“quantitative easing”) and what looked like an inevitable rise in interest rates would set the stage for a more dynamic pace of economic expansion. We also thought an extension of the bull market that began off the March 9, 2009 bottom seemed likely, though we were expecting both lower returns and increased volatility.

As it happens, this call was somewhat accurate: the economy did pick up speed in the second half while the bull market rolled on for large-cap stocks. More turbulent, small-caps (along with most Energy stocks) could not keep up. Of course, equity markets simply do not stay undisturbed for long, so the increased volatility in the second half of 2014 was not a surprise. Yet its highly selective reach was puzzling, even allowing for the historically higher volatility exhibited by smaller companies. Shortly after the Russell 2000 Index established a year-to-date high on July 3 (a high that would last into late December), small-cap prices began to fall. They slid most precipitously in July and September and rallied to varying degrees in August, October, November, and December. The downdrafts were sharper than the upswings, however—it took a furious rally in the final two weeks of the year’s closing month to shore up a modest positive return for the Russell 2000 in the second half. Meanwhile, the S&P 500 and Russell 1000 Indexes lost comparatively little in those two bearish months and posted solid gains during the other four. The upshot was such a strong year for large-cap companies that 2014 was the ninth-largest calendar-year

This page is not part of the 2014 Annual Report to Shareholders  |  1

LETTER TO OUR SHAREHOLDERS

spread between the Russell 2000 and the S&P 500 in the 36-year history of the small-cap index. Non-U.S. markets endured a greater struggle. Many European stocks experienced second-quarter declines while the U.S. and many Asian markets remained positive. Nearly all non-U.S. markets declined in the third-quarter and did not enjoy the fourth-quarter recovery that benefited so many U.S. stocks.

What, then, to make of a year in which the Russell 2000 posted a relatively undistinguished single-digit gain of 4.9%, ceded leadership to its larger siblings, and still bested most actively managed small-cap portfolios? A few developments in particular stood out. First, the rotation in leadership from small-cap to large in 2014 looked very much like a classic case of reversion to the mean to us. The former led the market decisively from the bottom in March of 2009 through the end of 2013, a prolonged period of small-cap leadership that made a shift all but inevitable. The second trend was more worrisome. Within small-cap, more economically cyclical sectors continued to lag in spite of the growing economy. The same held true for what we define as quality companies—those with strong balance sheets and high returns on invested capital. Even with the economy accelerating, investors tended to ignore profitable companies with solid fundamentals while they continued to be drawn more to defensive and/or high-growth areas. This included utilities and REITs among the highly successful defensive areas of 2014, and social media, biotech, and pharmaceuticals among the speedy growth industries. In most instances, companies

in these sectors and industries do not satisfy our purchase criteria because they lack the combination of balance-sheet strength and a long-term history of profitability that we find most attractive.

Even with the economy accelerating, investors tended to ignore profitable companies with solid fundamentals while they continued to be drawn more to defensive and/or high-growth areas.

We were hopeful that the end of QE (along with rising rates) would help to reverse this trend. But the strengthening U.S. dollar and monetary stimulus efforts in Japan and Europe conspired to make the October conclusion of QE something of a non-event, while interest rates fell through most of the year. On the whole, then, 2014 was an often confounding period for us, especially its second half. Indeed, if there is a theme that best captures the year, it might be “A Tale of Two Markets.” And we should point out that Dickens’s rubric covers not just the very different halves of the year for small-cap stocks but also the disparity in results and volatility between domestic small-caps and their bigger siblings as well as that between U.S. equities and any of those outside the U.S. (More index returns can be found in the table below.)

VOLATILITY—OUR MUTUAL FRIEND
Yet the level of conviction in our value-oriented approaches remains high. Although it may seem counterintuitive (or worse), the current extended period of relative underperformance for many

Equity Indexes
As of December 31, 2014 (%)
•	The third quarter was the worst for the Russell 2000 since 9/30/11 and, relative to the S&P 500, was the index’s worst quarterly performance since 3/31/99. It also ended a streak of eight consecutive quarters of positive performance.
•	Small-caps rallied in October and December to outpace their large-cap counterparts in the fourth quarter.
•	2014 marked just the fifth time since its inception in 1979 that the Russell 2000 had a gain in the single digits (+4.9%). Small-caps trailed large-caps by the widest margin since 1998.
•	Within the Russell 2000, Health Care, Utilities, and REITs were the best-performing areas in 2014 while Energy was by far the largest detractor.

	3Q14	1	4Q14	1	1-YR	3-YR	5-YR	10-YR
Russell 2000	-7.36		9.73		4.89	19.21	15.55	7.77
S&P 500	1.13		4.93		13.69	20.41	15.45	7.67
Russell 1000	0.65		4.88		13.24	20.62	15.64	7.96
Nasdaq Composite	1.93		5.40		13.40	22.05	15.85	8.09
Russell Midcap	-1.66		5.94		13.22	21.40	17.19	9.56
Russell Microcap	-8.21		11.19		3.65	21.81	16.14	5.96
Russell Global ex-U.S. Small Cap	-6.21		-4.45		-3.63	10.31	6.40	6.65
Russell Global ex-U.S. Large Cap	-5.35		-3.72		-3.57	9.41	4.80	5.36
1 Not annualized
For details on The Royce Funds’ performance in the period, please turn to the Managers’ Discussions that begin on page 8.

2  |  This page is not part of the 2014 Annual Report to Shareholders

LETTER TO OUR SHAREHOLDERS

Royce-managed portfolios actually helps to fuel our confidence in the years to come. Let us explain why. First, we have always viewed volatility as an ally, agreeing with Warren Buffett’s statement: “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.” So while many investors think of volatility as being synonymous (or nearly so) with risk or even loss, we have never seen it that way. Instead, we try to take advantage of market movements—an essential skill for any successful active manager. Those times when the market cannot seem to make up its mind are exactly when securities tend to be most mispriced. And therein lies one of the keys to outperformance for active managers—the identification and purchase of mispriced securities.

While many investors think of volatility as being synonymous (or nearly so) with risk or even loss, we have never seen it that way.

We conducted research that looked at some of the market forces that have helped to shape the current U.S. cycle, in particular the years from 2011-2014 when many active approaches struggled on a relative basis. (The full results of this research are available on our website at www.roycefunds.com/4qresearch.) As we have previously argued, the Fed’s easy-money policies of QE and ZIRP (“zero-interest rates”) have had the unintentional effect of stoking appetites for high yield and creating too few (if any) consequences for companies carrying a lot of debt. This led many investors to relatively neglect businesses with more pristine balance sheets and/ or those with steady but smaller dividends. It also meant that from the beginning of 2011 through the end of 2014, the small-cap market was in a peculiar state, one characterized by a pile-up of anomalies—the combination of declining volatility with higher-than-average returns converging with contracting credit spreads.

Needless to say, our risk-conscious, balance-sheet-centric approaches have been challenged in this setting, at least on a relative basis. Low volatility has arguably created the highest hurdle. We have always felt most comfortable in markets with higher levels of volatility, which usually create the differentiation that lies at the core of our active management styles. We analyze, assess, and evaluate multiple aspects of a company before determining whether or not the current stock price reflects the

long-term prospects we see. Opportunities to purchase what we deem to be attractively undervalued companies tend to proliferate when stock prices are volatile rather than when markets are calm. Yet for most of the last four years, volatility has been falling, at least until the second half of 2014. This has made it far more difficult for our funds to outpace their respective benchmarks.

GREAT EXPECTATIONS
The questions are: How much longer is this going to last? More specifically, are interest rates going to remain at or near zero? Is the pace of economic growth likely to slacken? Are financial markets going to continue to behave atypically even as the economy continues to normalize? Will small-cap companies indefinitely gain an advantage by carrying more debt? Are three- and five-year average annual total returns for the Russell 2000 going to remain at levels higher than the index’s historical monthly rolling averages of 8.2% and 7.6%, respectively? For those who believe that most, or even some, of these things are likely to happen, then our approach would seem a bit at odds.

We confess that we have been anticipating some of these shifts for nearly two years. This has meant re-learning the hard lesson that change seldom occurs when we most want it to. Yet we are convinced that markets remain cyclical (recent events notwithstanding). In our view, reversion to the mean is as close to an iron law as the capital markets allow. Most trends reverse, though they may linger for longer than initially anticipated (or desired). Widening credit spreads, increasing volatility, and decreasing stock correlation should all help active management and allow stock pickers the chance to emerge as performance leaders.

We also expect equity returns to remain attractive, though we see a decrease from the high levels we have seen over the last three to five years. Cyclical companies across the globe appear due for a round of revenue acceleration, particularly those in the Consumer Discretionary and Industrials sectors, as do some industries in the Information Technology sector. The best-managed companies within these areas could also see solid margin expansion. Among other cyclical sectors, we also see a number of profitable, conservatively capitalized businesses that have either been ignored or whose returns have lagged. We expect this to change.

This page is not part of the 2014 Annual Report to Shareholders  |  3

LETTER TO OUR SHAREHOLDERS

On the valuation front, the picture looked admittedly tricky at the end of 2014. For example, an examination of trailing 12-month earnings for many U.S. companies suggests that small-cap share prices may be on the high side while there were a number of attractive opportunities in international small-caps at the end of 2014. If you believe, as we do, that the economy is going to keep growing, that credit spreads will continue to expand, and that a more robust CAPEX cycle is in the offing, then valuations seem pretty reasonable, if not attractive in certain areas, Energy in particular. Many U.S. stocks look fairly valued though not fully valued to us. So while we do not shrink from the sobering truth of relative underperformance through much of this now-long bullish cycle, we continue to see good times ahead for our risk-conscious, fundamentally based approach.

While we do not shrink from the sobering truth of relative underperformance through much of this now-long bullish cycle, we continue to see good times ahead for our risk-conscious, fundamentally based approach.

The argument that we have been making for more than four decades remains the same. Small-cap is an inefficient area of the market in which we search for qualitative advantages and valuation discrepancies. Our belief that fundamentally strong companies trading at discounts to their private worth can outperform over the long term, often with lower volatility, will not change. It is our core investment principle, and it has served us very, very well over most of the last 40+ years.

Sincerely,

Charles M. Royce	Christopher D. Clark	Francis D. Gannon
Chairman and Chief Executive Officer,	President and Co-Chief Investment Officer,	Co-Chief Investment Officer,
Royce & Associates, LLC	Royce & Associates, LLC	Royce & Associates, LLC
January 26, 2015

4  |  This page is not part of the 2014 Annual Report to Shareholders

Performance and Expenses

Performance and Expenses As of December 31, 2014
		AVERAGE ANNUAL TOTAL RETURNS (%)						ANNUAL OPERATING EXPENSES (%)
FUND		1-YR	3-YR	5-YR	10-YR	SINCE INCEPTION	INCEPTION DATE		GROSS	NET
	Royce Select Fund I	0.23	12.81	10.33	9.09	13.26	11/18/98		1.20	1.20
	Royce Select Fund II	-0.24	11.92	7.83	n.a.	7.34	6/30/05		3.30	1.62
	Royce Enterprise Select Fund	5.22	16.13	13.07	n.a.	7.62	9/28/07		3.08	1.24
	Royce Opportunity Select Fund	-4.97	22.92	n.a.	n.a.	17.33	8/31/10		1.78	1.29
	Royce Micro-Cap Discovery Fund	0.97	12.09	10.50	4.59	6.47	10/3/03		2.50	1.49
	Royce Financial Services Fund	3.45	21.04	13.26	7.82	8.46	12/31/03		1.97	1.57
	Royce SMid-Cap Value Fund	-1.68	11.74	9.22	n.a.	4.93	9/28/07		2.20	1.35
	Royce Partners Fund	-0.85	16.54	10.67	n.a.	12.16	4/27/09		3.97	1.26
	Royce European Smaller-Companies Fund	-14.86	8.40	6.53	n.a.	2.06	12/29/06		2.27	1.70
	Royce Global Dividend Value Fund	-6.84	9.74	n.a.	n.a.	2.84	12/31/10		2.99	1.70
	Royce International Micro-Cap Fund	-2.37	9.67	n.a.	n.a.	0.87	12/31/10		3.88	1.71
	Royce International Premier Fund	-8.22	10.25	n.a.	n.a.	2.77	12/31/10		2.82	1.69
INDEX
Russell 2000		4.89	19.21	15.55	7.77	n.a.	n.a.		n.a.	n.a.
Russell Microcap		3.65	21.81	16.14	5.96	n.a.	n.a.		n.a.	n.a.
Russell Global Small Cap		-0.28	13.57	9.56	6.87	n.a.	n.a.		n.a.	n.a.
Russell Global ex-U.S. Small Cap		-3.63	10.31	6.40	6.65	n.a.	n.a.		n.a.	n.a.
Russell 1000		13.24	20.62	15.64	7.96	n.a.	n.a.		n.a.	n.a.
Russell 2500		7.07	19.97	16.36	8.72	n.a.	n.a.		n.a.	n.a.
Russell Europe Small-Cap		-8.50	17.23	8.24	6.76	n.a.	n.a.		n.a.	n.a.

Important Performance, Expense, and Risk Information

All performance information in this Review and Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 days of purchase may be subject to a 1% redemption fee payable to the Fund (2% for Royce Select II, European Smaller-Companies, Global Dividend Value, International Micro-Cap, and International Premier Funds). 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. All performance and expense information reflects results of the Fund’s oldest share Class (Investment Class or Service Class, as the case may be). Price and total return information is based on net asset values calculated for shareholder transactions. Certain immaterial adjustments were made to the net assets of Royce International Premier Fund as of 6/30/14 for financial reporting purposes, and as a result the net asset values for shareholder transactions on that date and the total returns based on those net asset values differ from the adjusted net asset values and total returns reported in the financial highlights. Gross annual operating expenses reflect the Fund’s gross total annual operating expenses and include management fees, any 12b-1 distribution 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 (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) to the extent necessary to maintain net operating expenses at or below: 1.20% for Royce Partners Fund; 1.49% for Royce Micro-Cap Discovery and Financial Services Funds; 1.69% for Royce European Smaller-Companies, Global Dividend Value, International Micro-Cap, and International Premier Funds: 1.24% for Royce Enterprise Select and Opportunity Select Funds; and 1.49% for Royce Select Fund II through April 30, 2015 and at or below: 1.84% for Royce Partners Fund, and 1.99% for Royce Select Fund II, Enterprise Select, Opportunity Select, Micro-Cap Discovery, Partners, European Smaller-Companies, Global Dividend Value, International Micro-Cap, and International Premier Funds through April 30, 2024. Acquired fund fees and expenses reflect the estimated amount of fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Shares of the Funds’ Service Class bear an annual distribution expense that is not borne by the Funds’ Investment Class. Investments in securities of micro-cap, small-cap, and/or mid-cap companies may involve considerably more risk than investments in securities of larger-cap companies. (Please see “Primary Risks for Fund Investors” in the prospectus.) Royce Select I, Select II, Enterprise Select, and Opportunity Select Funds may sell securities short, which involves selling a security it does not own in anticipation that the security’s price will decline. Short sales present unlimited risk on an individual stock basis since the Fund may be required to buy a security sold short at a time when the security has appreciated in value. Royce Select Fund II, European Smaller-Companies, Global Dividend Value, International Micro-Cap, and International Premier Funds invest a significant portion of their respective assets in foreign companies that 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. (Please see “Investing in Foreign Securities” in the prospectus.) Therefore, the prices of securities of foreign companies in particular countries or regions may, at times, move in a different direction than those of securities of U.S. companies. (Please see “Primary Risk of Fund Investors” in the prospectus.) Please read the prospectus carefully before investing or sending money. Distributor: Royce Fund Services, Inc.

This page is not part of the 2014 Annual Report to Shareholders  |  5

	MANAGER’S DISCUSSION
	Royce Select Fund I

Lauren Romeo, CFA

FUND PERFORMANCE
Royce Select Fund I (“RS1”) was up 0.2% in 2014, behind its small-cap benchmark, the Russell 2000 Index, which gained 4.9% for the same period. The Fund easily outpaced the small-cap index in the year’s first half, advancing 6.6% compared to 3.2% for the Russell 2000. However, small-caps corrected soon after making a high on July 3, and while the Fund has historically held its value more effectively than its benchmark during downdrafts, the third quarter provided an ill-timed exception. For the quarter as a whole, the Fund lost 8.1% versus 7.4% for the small-cap index.

The Russell 2000 then rebounded in the fourth quarter. The Fund posted a comparably underwhelming 2.3% return for that period while the Russell 2000 rose 9.7%. We were pleased, however, with longer-term results. Although the Fund trailed the small-cap index for the three- and five-year periods ended December 31, 2014, it did so with strong absolute returns. It also merits mentioning that RS1’s average annual total return for the three-year period (+12.8%) was higher than both its own and its benchmark’s historical three-year monthly rolling average returns of 11.6% and 8.2%, respectively. The Fund’s average annual total return for the five-year period (+10.3%) was also better than the small-cap index’s five-year monthly rolling average return of 7.6%. Finally, RS1 outpaced the Russell 2000 for the 10-, 15-year, and since inception (11/18/98) periods ended December 31, 2014. The Fund’s average annual total return for the since inception period was 13.3%.

WHAT WORKED... AND WHAT DIDN’T
Energy was the Fund’s best-performing sector in the first half before oil prices abruptly plummeted—losing nearly 50%—and gave the portfolio its largest net losses for the calendar year. An overweight in Energy stocks—with all seven of our holdings in the equipment & services industry—did not help. The longstanding operational success of Unit Corporation did little to calm panicked investors fleeing energy stocks in the second half. Unit operates several businesses—it explores for oil and natural gas, acquires oil and gas properties, does contract drilling of onshore oil and natural gas wells, and gathers and processes natural gas. The company has shown expertise in all of them over the years, and its steady execution has made its hard-to-pigeonhole business a Royce favorite. We took the long view and held a sizable position at year end.

We built our position in Nu Skin Enterprises in 2014 after first buying shares in May. A maker and distributor of personal care products, Nu Skin endured a litany of challenges over the last 18 months, including the restructuring of its debt and trouble in its previously fast-growing—but more recently stagnating—Asian business. It has been handling its difficulties with success, and we think it can engineer a reversal when sales in China improve. We were less sanguine about three other detractors, exiting all of them in 2014. The ongoing struggles of tween girl retailer Justice and plus-size women’s retailer Lane Bryant were major factors in our decision to sell our stake in multiline fashion business Ascena Retail Group. GrafTech International makes synthetic and natural graphite and carbon-based products used in steel production. Ongoing earnings disappointments, most recently resulting from graphite electrode order push-outs and weakening international business, pushed the stock down more than 50% in the third quarter. Shares of The Medicines Company fell earlier in the year when a court ruling held that a competitor could produce a generic version of Angiomax, the firm’s anticoagulant drug. Later, the FDA requested more data rather than approve Cangrelor, a new antiplatelet drug for intravenous application.

On the positive side, we were pleased with the progress of molecular diagnostic company Myriad Genetics. A specialist in genetic testing for cancer, its share price fell rapidly in the second half of 2013 once the Supreme Court held that human genes cannot be patented. The stock then began to get healthy in the first six months of 2014. The first-half acquisition of Crescendo Bioscience diversified Myriad’s already promising pipeline, and its genetic panel test—MyRisk— looked promising. Its stock stumbled in the fourth quarter when the MyRisk adoption proved more expensive than expected, causing sales deferrals and higher operating costs. We took some gains in 2014, though we remained confident in Myriad’s long-term prospects.

Top Contributors to Performance For 2014 (%)1
Myriad Genetics	1.22
MKS Instruments	0.62
Integrated Silicon Solution	0.60
Gentex Corporation	0.45
NVR	0.42
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
Nu Skin Enterprises Cl. A	-0.95
Unit Corporation	-0.82
Ascena Retail Group	-0.78
Medicines Company (The)	-0.77
GrafTech International	-0.70
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
We are anticipating accelerated economic growth, with many holdings poised for margin expansion when revenue growth improves. While the near-term outlook for energy-related stocks is grim, we have confidence in the long-term prospects for our holdings. Rising capital spending and signs of an upturn in non-residential construction should help many holdings in Industrials, RS1’s second largest sector weighting at year end. We also believe that favorable secular spending trends in semiconductor capital equipment, factory automation, and telecom infrastructure should bode well for many tech-related positions. Finally, stocks in both consumer sectors should benefit, in our view, from the enhanced purchasing power lower energy prices are providing consumers.

6  |  The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS  RYSFX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	10-YR	15-YR	SINCE INCEPTION (11/18/98)
RS1	-5.99	0.23	12.81	10.33	9.09	11.46	13.26
Annual Operating Expenses: 1.20%
* Not Annualized

Relative Returns: Monthly Rolling Average Annual Return Periods
15 Years Through 12/31/14

On a monthly rolling basis, the Fund outperformed the Russell 2000 in 100% of all 10-year periods; 83% of all 5-year periods; 74% of all 3-year periods; and 62% of all 1-year periods.

	PERIODS BEATING THE INDEX		FUND AVG (%)*	INDEX AVG (%)*
10-year	61/61	100%	11.3	7.3
5-year	101/121	83%	11.4	7.6
3-year	108/145	74%	11.6	8.2
1-year	107/169	62%	13.2	9.6

*Average of monthly rolling average annual total returns over the specified periods.

Morningstar Style Map^TM    As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 74 for additional information.

Value of $10,000

Invested on 11/18/98 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Buckle (The)	2.4
Genesco	2.4
MKS Instruments	2.2
TGS-NOPEC Geophysical	2.1
John Bean Technologies	2.0
Bio-Techne	2.0
Reliance Steel & Aluminum	2.0
Integrated Silicon Solution	2.0
Sykes Enterprises	1.9
Valmont Industries	1.9

Portfolio Sector Breakdown
% of Net Assets
Information Technology	20.4
Industrials	19.4
Consumer Discretionary	13.5
Financials	11.2
Energy	9.9
Materials	6.7
Health Care	6.7
Consumer Staples	2.5
Miscellaneous	2.9
Cash and Cash Equivalents	6.8

Calendar Year Total Returns (%)
YEAR	RS1
2014	0.2
2013	26.0
2012	13.7
2011	-3.6
2010	18.2
2009	39.6
2008	-25.9
2007	10.7
2006	15.0
2005	10.9
2004	19.1
2003	48.7
2002	-15.8
2001	24.5
2000	15.0

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
10-Year	93	80
Fund‘s First Full Quarter
(12/31/98)	103	75

Portfolio Diagnostics
Fund Net Assets	$39 million
Number of Holdings	70
Turnover Rate	40%
Average Market Capitalization1	$2,080 million
Weighted Average P/E Ratio2,3	17.5x
Weighted Average P/B Ratio2	2.1x
Holdings ≥ 75% of Total Investments	41
Active Share4	97%
U.S. Investments (% of Net Assets)	83.0%
Non-U.S. Investments (% of Net Assets)	10.2%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (7% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in performance shown above. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the Fund’s most current prospectus and include management fees, and other expenses. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders  |  7

		MANAGER’S DISCUSSION
	Royce Select Fund II

Jim Harvey, CFA

FUND PERFORMANCE
Royce Select Fund II (“RS2”) was down 0.2% in 2014 compared to a 0.3% loss for the long only Russell Global Small Cap Index and a 4.9% gain for the long only, domestic small-cap Russell 2000 Index for the same period. During the less volatile, more straightforwardly bullish first half of the year, RS2 acquitted itself quite well. The Fund advanced 6.5% for the six-month period ended June 30, 2014, outpacing both the Russell Global Small Cap and the Russell 2000, which gained 5.7% and 3.2%, respectively, for the same period.

During the third quarter, small-cap stock prices grew more volatile and fell into a bear mode following a year-to-date high for the Russell 2000 on July 3, with the downdraft persisting into the middle of October. The Fund was again ahead of its domestic and global benchmarks, losing less in a challenging period. For the third quarter, RS2 fell 4.3% while the Russell Global Small Cap was down 6.7% and the Russell 2000 declined 7.4%. This relatively strong turn not only kept the Fund ahead of each benchmark for the nine-month period ended September 30, 2014, but also had it in positive territory, up 2.0% versus respective losses of 1.4% and 4.4% for the global and domestic small-cap indexes. Domestic small-caps then came back strong, particularly in October and December, while many non-U.S. issues continued to struggle or treaded water. For the fourth quarter, RS2 lost 2.1% while the Russell Global Small Cap was up 1.1% and the Russell 2000 climbed 9.7%. The largest net losses came from companies in the Industrials sector—led by top-20 holding Freund Corporation, top holding Zuiko Corporation, and Horizon North Logistics, which we sold in December. Impactful net losses in the fourth quarter also came from the Financials sector and the IT services industry. This made for a frustrating end to what had been shaping up to be a solid year. The Fund outperformed the Russell Global Small Cap for the one-year and since inception (6/30/05) periods ended December 31, 2014.

WHAT WORKED... AND WHAT DIDN’T
Five of RS2’s nine equity sectors finished the calendar year in the black. Industrials (a major disappointment in the fourth quarter) led by a considerable margin. Four of the Fund’s 10-best performing companies came from the Industrials sector. The leading industry groups were semiconductors & semiconductor equipment companies (Information Technology) and the professional services group (from Industrials). Nautilus is a conservatively capitalized business that makes consumer fitness products including Bowflex exercise machines and nutritional supplements. We like its niche in a business with global growth potential and the way the company has seen healthy revenues while keeping expenses under control. It also won a patent claim suit in June. We took gains as its share price got stronger. We also reduced our stake in Magellan Aerospace in 2014 (before building it again in January 2015). Based in Ontario, the company serves the civil aerospace and defense market. Magellan has benefited from a strong aerospace and defense capital spending cycle as well as weakness in the Canadian dollar, which has increased its competitiveness versus U.S. suppliers. In addition, a strong management team that is focused on margins has helped to drive earnings improvement and an increase in the overall backlog. Brazil’s CETIP-Mercados Organizados offers an electronic platform for conducting online transactions, such as auctions and government bond trading, corporate bonds, and fixed-income securities. CETIP also provides central securities depository, outsourcing, market data, and risk management services. Its shares rose on what we suspect was a flight to quality in Brazil’s bear market. We began to reduce our position in April as its stock rose and sold the last of our shares in August.

Financials, Consumer Discretionary, and Health Care posted net losses in 2014, though losses were modest in a third of these sectors. The Fund’s most significant detractor on a position level was Computer Task Group, which we sold between August and October. An IT services and staffing company, the firm saw its stock price decline steeply in early July after reporting lower-than expected earnings largely due to higher costs and lower revenues from its healthcare business. While the company claimed these higher expenses were likely anomalous, it also boosted its projected medical costs for the rest of 2014, thus revising guidance downward. Looming bankruptcy in early 2015 led us to sell our position in women’s apparel retailer Cache in January. Although we felt confident earlier in 2014 that the firm could eventually right itself, ongoing losses began to convince us otherwise. We chose to hold a reduced stake in SeaChange International at the end of 2014. The company specializes in cloud-based multiscreen video software products. Missed earnings and revised guidance seemed to turn investors off.

Top Contributors to Performance For 2014 (%) 1
Nautilus	0.75
Magellan Aerospace	0.73
CETIP-Mercados Organizados	0.69
Selamat Sempurna	0.65
Obara Group	0.59
1 Includes dividends

Top Detractors from Performance For 2014 (%) 2
Computer Task Group	-1.18
Cache	-0.96
SeaChange International	-0.90
Brasil Brokers Participacoes	-0.84
Turtle Beach	-0.77
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
RS2 was significantly overweight relative to its benchmarks in the Industrials, Information Technology, and Consumer Discretionary sectors at the end of 2014 while it was largely underweight both indexes in Financials, Health Care, and Energy. We are confident that economically sensitive sectors can rebound in 2015.

8  |  The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOL   RSFDX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	SINCE INCEPTION (6/30/05)
RS2	-6.35	-0.24	11.92	7.83	7.34
Annual Gross Operating Expenses: 3.30%   Annual Net Operating Expenses: 1.62%
*Not Annualized

Morningstar Style Map^TM As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 74 for additional information.

Value of $10,000
Invested on 6/30/05 as of 12/31/14 ($)

Top 10 Long Positions
% of Net Assets
Zuiko Corporation	2.1
Western Forest Products	2.0
Brooks Automation	2.0
QuinStreet	1.9
Acacia Research	1.8
Amtech Systems	1.6
Ashmore Group	1.6
Wabash National	1.6
Photronics	1.5
T4F Entretenimento	1.5

Short Positions
% of Net Assets
ProShares UltraShort Oil & Gas	-1.0
Douglas Dynamics	-0.5

Portfolio Sector Breakdown1
% of Net Assets
Industrials	30.1
Information Technology	23.0
Consumer Discretionary	17.3
Financials	9.7
Materials	6.1
Consumer Staples	3.8
Health Care	3.5
Energy	2.3
Miscellaneous	4.5
Other Net Liabilities	-0.3
1 Long positions only.

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
Fund’s First Full Quarter
(6/30/05)	88	88

Calendar Year Total Returns (%)
YEAR	RS2
2014	-0.2
2013	23.5
2012	13.8
2011	-14.0
2010	21.0
2009	66.6
2008	-33.4
2007	-5.5
2006	19.8

Portfolio Country Breakdown1,2
% of Net Assets
United States	33.6
Japan	14.8
United Kingdom	7.9
Canada	6.2
Germany	3.8
Taiwan	3.7
Australia	3.1
1 Represents countries that are 3% or more of net assets.
2 Securities are categorized by the country of their headquarters.

Portfolio Diagnostics
Fund Net Assets	$5 million
Number of Holdings	104
Turnover Rate	200%
Average Market Capitalization1	$402 million
Weighted Average P/E Ratio2,3	14.2x
Weighted Average P/B Ratio2	1.6x
Holdings ≥ 75% of Total Investments	62
Active Share4	100%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (20% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.
5	Long positions only.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Price and total return information is based on net asset values calculated for shareholder transactions. Certain immaterial adjustments were made to the net assets of Royce Select Fund II at 12/30/11 for financial reporting purposes, and as a result the net asset values for shareholder transactions on that date and the calendar-year total returns based on those net asset values differ from the adjusted net asset values and calendar-year total returns reported in the Financial Highlights. Gross operating expenses reflect the Fund’s total gross annual operating expenses and include management fees, other expenses, and acquired fund fees and expenses. Net operating expenses reflect contractual fee waivers and/or expense 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 expenses, (excluding dividend and interest expenses relating to short sale activities, brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.49% through April 30, 2015 and at or below 1.99% through April 30, 2024. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders | 9

		MANAGER’S DISCUSSION
	Royce Enterprise Select Fund

Steven McBoyle, CPA, CA

FUND PERFORMANCE
Royce Enterprise Select Fund (“RSS”) advanced 5.2% in 2014, trailing its small- and mid-cap benchmark, the Russell 2500 Index, which gained 7.1% for the same period. During the first half, RSS rose 5.8% compared to the 5.9% gain for its benchmark. Small-caps endured a bearish third quarter while mid-caps escaped with only minor bruises. For the quarter, the Fund was nearly even with the Russell 2500, which lost 5.3% while the Fund fell 5.4%. The fourth quarter then turned bullish for small-cap and mid-cap companies alike. RSS was up 5.1% in the year’s last quarter while the Russell 2500 rose 6.8%.

    The Fund continued to post strong absolute average annual total returns for the three-year (+16.1%) and five-year (+13.1%) periods ended December 31, 2014.

WHAT WORKED... AND WHAT DIDN’T
Six of the Fund’s nine equity sectors made a net contribution to calendar-year returns, with Consumer Discretionary leading by a wide margin and nearly doubling the net gains from the next-best performer, Information Technology. Financials, Utilities, Materials, and Health Care also ended the year in the black. The Fund was considerably underweight in three of these sectors (Materials being the exception). REITs were the benchmark’s top contributor in the Financials sector while RSS, on the other hand, had no exposure to them. Instead, the portfolio enjoyed success with holdings in the real estate management & development industry. Within Health Care, the Fund also had no exposure to top-performing biotech companies—they typically lack the sound fundamentals and earnings profiles we covet—but instead saw net gains from health care equipment & supplies companies.

    RSS’s best-performing position was Information Technology business Skyworks Solutions, a leading supplier of radio frequency (RF) chips to wireless smartphones. Its success has been driven by three industry tailwinds: continued smartphone adoption on a global basis, 4G network build outs in Europe and China, and increased RF chip content in 4G networks compared to 3G. We finished selling our shares in October. Advance Auto Parts, from Consumer Discretionary, is the largest automotive aftermarket parts provider in North America. Growth in revenues and earnings as well as improved year-over-year same store sales had its stock price revving for much of the year. Minerals Technologies is a resource- and technology-based business that develops and produces performance-enhancing minerals as well as synthetic mineral and mineral-based products. The company reported record third-quarter earnings in October, with each of its five business segments contributing double-digit operating income margins. Record earnings—this time for fiscal 2014—also boosted the share price of UGI Corporation. In the Utilities sector, UGI distributes and markets energy products and services. It also operates natural gas and electric utilities in Pennsylvania (via subsidiaries) and distributes propane. Rogers Corporation, RSS’s sixth-largest holding at the end of 2014, is a technology company that manufactures specialty materials and components, including printed circuit materials, high-performance foams, and power electronic solutions. Somewhat volatile into the third quarter, its stock price soared in October after it reported record quarterly revenues, which capped a seventh consecutive quarter of year-over-year revenue growth. We were pleased to see each of its three core businesses contributing to its growth.

    Industrials and Energy were the only sectors to detract from performance. Although net losses were comparatively modest, the Fund’s five largest detractors in 2014 all came from the Industrials sector. We built our position in ManpowerGroup as its shares slipped, making it the Fund’s third-largest holding at the end of 2014. The company provides temporary staffing services, contract services, and training and testing of temporary and permanent workers. Solid growth in revenues, better-than-expected earnings, a sunny outlook, and an improved employment picture here in the U.S. were somehow not enough to keep its shares from struggling, probably due to the firm’s exposure to the labor market in Europe, a locus of ongoing investor anxiety.

Top Contributors to Performance For 2014 (%)1
Skyworks Solutions	0.74
Advance Auto Parts	0.66
Minerals Technologies	0.64
UGI Corporation	0.63
Rogers Corporation	0.57
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
ManpowerGroup	-0.42
Kennametal	-0.29
EnerSys	-0.28
AGCO Corporation	-0.28
Semperit AG Holding	-0.24
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
At the end of 2014 RSS was substantially overweight in Consumer Discretionary based on our belief that the expanding economy, improved employment picture, and lower energy prices will all encourage consumption in 2015. Industrials—the Fund’s second-largest sector at year end and an overweight versus the Russell 2500—also remains an area of focus. As the year came to an end, we attempted to take advantage by buying shares of companies that saw their valuations disconnect from fundamentals due to concerns over European growth and more general deflation in basic materials. Finally, the Fund remains keenly focused on highly differentiated business models that exhibit sustainably improving returns due in part to some structural or secular change.

10 | The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOL RMISX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	SINCE INCEPTION (9/28/07)
RSS	-0.53	5.22	16.13	13.07	7.62
Annual Gross Operating Expenses: 3.08%   Annual Net Operating Expenses: 1.24%
*Not Annualized

Morningstar Style Map^TM As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 74 for additional information.

Value of $10,000
Invested on 9/28/07 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Thor Industries	2.8
Kennedy-Wilson Holdings	2.8
ManpowerGroup	2.5
Bed Bath & Beyond	2.2
Advance Auto Parts	2.0
Rogers Corporation	2.0
Dollar Tree	2.0
Copart	2.0
Carlisle Companies	1.9
Wolverine World Wide	1.9

Portfolio Sector Breakdown
% of Net Assets
Consumer Discretionary	21.6
Industrials	17.0
Information Technology	13.2
Materials	5.7
Financials	5.4
Energy	3.5
Utilities	1.8
Health Care	1.6
Miscellaneous	2.3
Government Bonds	1.4
Cash and Cash Equivalents	26.5

Calendar Year Total Returns (%)
YEAR	RSS
2014	5.2
2013	28.7
2012	15.7
2011	0.7
2010	17.2
2009	23.1
2008	-25.5

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
Fund’s First Full Quarter
(09/30/07)	81	75

Portfolio Diagnostics
Fund Net Assets	$3 million
Number of Holdings	74
Turnover Rate	81%
Average Market Capitalization1	$4,024 million
Weighted Average P/E Ratio2,3	19.5x
Weighted Average P/B Ratio2	2.7x
Holdings ≥ 75% of Total Investments	37
Active Share4	96%
U.S. Investments (% of Net Assets)	68.6%
Non-U.S. Investments (% of Net Assets)	4.9%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (6% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Gross operating expenses reflect the Fund’s total gross annual operating expenses and include management fees and other expenses. Net operating expenses reflect contractual fee waivers and/or expense 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 expenses, (excluding dividend and interest expenses relating to short sale activities, brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.24% through April 30, 2015 and at or below 1.99% through April 30, 2024. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell 2500). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders | 11

		MANAGER’S DISCUSSION
	Royce Opportunity Select Fund

Bill Hench

FUND PERFORMANCE
Royce Opportunity Select Fund (“ROS”) finished the year with a loss of 5.0% in 2014, underperforming its small-cap benchmark, the Russell 2000 Index, which increased 4.9% for the same period. After two consecutive calendar-year performances that were strong on both an absolute and relative basis, ROS finished much farther behind its benchmark than we would like. A year in the red is far from ideal, but we remain confident in the Fund’s distinctive opportunistic approach.

    For the first half, the Fund narrowly outpaced the Russell 2000, up 3.3% versus 3.2%. The bulk of ROS’s difficulties, on both a relative and absolute basis, thus began in the bearish third quarter when small-caps began to slide following a high on July 3. For the quarter, the Fund fell 10.7% compared to a loss of 7.4% for the small-cap index. While the Fund underperformed in the bullish fourth quarter, rising 3.0% while the Russell 2000 climbed 9.7%, the quarter included the end of the downturn, which bottomed out on October 13. From that date through the end of December, ROS did well on an absolute basis, advancing 12.3%. Longer-term results remained strong on an absolute basis though they were more mixed vis-à-vis the benchmark. The Fund outpaced the Russell 2000 for the three-year period ended December 31, 2014. ROS’s average annual total return since inception (8/31/10) was 17.3%.

WHAT WORKED... AND WHAT DIDN’T
The market hates uncertainty. So it was not surprising to see an exogenous event—in this case, the collapse of oil prices—sow the seeds of uncertainty and help to create both higher volatility and steep losses, at least among certain small-caps and most energy companies. ROS was overweight in Energy compared to the Russell 2000 at the end of June. Though otherwise modest, exposure was just large enough for the sector to register the largest net losses in 2014 (though net losses for Materials were nearly identical). Offshore drilling has higher costs, which usually means being hurt first and hardest in any decline for crude oil prices. This was bad news for Hercules Offshore, which provides shallow-water drilling and marine services to oil and natural gas companies. It also meant a rapidly plunging share price for Swift Energy, an onshore and offshore exploration & production (“E&P”) company. We sold our shares in each as part of the effort to significantly pare back the portfolio’s sector weighting, which stood at just 1.5% of the long portfolio at the end of December. We chose to hold a small position in Canadian E&P business Pengrowth Energy at year end, along with a handful of other Energy businesses.

    Extreme Networks provides switching solutions for local area networks (LAN). Disappointing earnings, based in part on lower-than-expected sales to government entities, and revised guidance drove investors away. We liked its acquisition of a complementary business, which we think can help the company to improve earnings, though this is admittedly taking longer than we anticipated. After building a position in the first half, we reduced it during the year’s last six months. We went the opposite way with Quiksilver, reducing our stake in the first half before adding shares in the second. An earnings miss in June sent its shares careening down more than 40%. The company makes and distributes youth-oriented branded apparel, footwear, and accessories. Its turnaround is also taking longer than we anticipated, but we like the management team that came on board in 2013 and the strong presence of its brands in high-profile spots such as Macy’s.

    In February 2014, RF Micro Devices and TriQuint Semiconductor agreed to merge, which seemed to help the shares of each semiconductor business to climb in 2014. Our attraction to RF Micro Devices, which makes radio frequency (or RF) chips primarily for wireless applications, was a play on the wireless flash segment in the mobile handset market. We sold the last of our shares of TriQuint in February while holding a large position in RF Micro Devices at year end. (In January 2015, the merged company became known as Qorvo.) Finally, the portfolio’s short positions had an aggregate negative effect on performance that was slightly larger than the net losses from the Information Technology sector, though well behind the net losses for Energy and Materials.

Top Contributors to Performance For 2014 (%)1
RF Micro Devices	1.92
Zumiez	0.71
Carbonite	0.58
OraSure Technologies	0.57
Tower International	0.54
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
Extreme Networks	-1.21
Hercules Offshore	-1.02
Swift Energy	-0.90
Quiksilver	-0.90
Pengrowth Energy	-0.82
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
In many ways a restocking year, 2014 saw us trimming or selling positions that had established momentum while looking to find or add to companies that will ideally furnish the next few years with strong performance. Looking ahead, we are constructive on several consumer and technology areas, as well as housing and non-residential construction. Lower energy prices and improved employment rates should help to keep the U.S. consumer active and confident. We anticipate that housing sales should gain momentum following the Super Bowl, as is often the case, and also expect non-residential construction and infrastructure activity to increase in 2015.

12 | The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS ROSFX ROSSX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	SINCE INCEPTION (8/31/10)
ROS	-8.00	-4.97	22.92	17.33
Annual Gross Operating Expenses: 1.78%   Annual Net Operating Expenses: 1.29%
*Not Annualized

Relative Returns: Monthly Rolling Average Annual Return Periods

Since Inception Through 12/31/14

On a monthly rolling basis, the Fund outperformed the Russell 2000 in 100% of all 3-year periods; and 63% of all 1-year periods.

	PERIODS BEATING THE INDEX		FUND AVG (%)*	INDEX AVG (%)*
3-year	17/17	100%	20.0	16.4
1-year	26/41	63%	18.2	15.0

*Average of monthly rolling average annual total returns over the specified periods.

Morningstar Style Map^TM As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 74 for additional information.

Value of $10,000
Invested on 8/31/10 as of 12/31/14 ($)

Top 10 Long Positions
% of Net Assets
MBIA	2.2
Exar Corporation	2.1
Logitech International	2.1
Zumiez	2.0
Owens & Minor	2.0
Mentor Graphics	2.0
RF Micro Devices	2.0
RTI International Metals	2.0
EarthLink Holdings	2.0
Carbonite	1.9

Top 10 Short Positions
% of Net Assets
Lumber Liquidators Holdings	-0.9
Michael Kors Holdings	-0.6
Dycom Industries	-0.5
Life Time Fitness	-0.4
Janus Capital Group	-0.4
Men’s Wearhouse (The)	-0.4
Trex Company	-0.3
Fresh Market (The)	-0.3
CIRCOR International	-0.3
Stifel Financial	-0.3

Calendar Year Total Returns (%)
YEAR	ROS
2014	-5.0
2013	44.6
2012	35.1
2011	-17.1

Portfolio Sector Breakdown1
% of Net Assets
Information Technology	34.0
Consumer Discretionary	16.7
Industrials	14.4
Materials	9.7
Health Care	8.8
Financials	7.4
Telecommunication Services	1.7
Energy	1.5
Miscellaneous	4.5
Cash and Cash Equivalents	1.3
1 Long positions only.

Portfolio Diagnostics
Fund Net Assets	$19 million
Number of Holdings	102
Turnover Rate	131%
Average Market Capitalization1	$757 million
Weighted Average P/B Ratio2	1.7x
Holdings ≥ 75% of Total Investments	49
Active Share3	102%
U.S. Investments (% of Net Assets)4	92.5%
Non-U.S. Investments (% of Net Assets)4	6.2%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.
4	Long positions only.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Gross operating expenses reflect the Fund’s total gross annual operating expenses and include management fees and other expenses. Net operating expenses reflect contractual fee waivers and/or expense reimbursements. All expense information is reported as of the Funds 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 expenses, (excluding dividend and interest expenses relating to short sale activities, brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.24% through April 30, 2015. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014.

The Royce Funds 2014 Annual Report to Shareholders | 13

		MANAGERS’ DISCUSSION
	Royce Micro-Cap Discovery Fund

George Necakov, CFA
Jim Harvey, CFA

FUND PERFORMANCE
Royce Micro-Cap Discovery Fund (“RDF”) rose 1.0% in 2014, lagging its benchmark, the Russell Microcap Index, which gained 3.6% for the same period. Micro-cap stocks have been among the equity market’s best-performing asset classes over the last several years. In addition, 2013 was the second-best calendar-year result for the Russell Microcap since its inception on June 30, 2000. A slackening of the pace of returns was therefore not unexpected, and this is what took place in 2014, beginning with the year’s first half in which the Fund was essentially flat and its benchmark was up 1.6%.

    The third quarter saw both an increase in volatility and a downdraft for small-cap and micro-cap stocks. RDF was down 7.9% for the quarter, losing less than the Russell Microcap, which declined 8.2% for the same period. We were pleased to see the portfolio hold its value a bit better than the index, though the Fund was still behind its benchmark for the nine-month period ended September 30, 2014. RDF then outpaced its benchmark in October and December but underperformed in November. The end result was that the Fund trailed the Russell Microcap in the fourth quarter, up 9.6% versus 11.2%. RDF underperformed its benchmark for the three-, five-, 10-year, and since inception (10/3/03) periods ended December 31, 2014, though the Fund’s average annual total returns for the three- and five-year periods were solid on an absolute basis.

WHAT WORKED... AND WHAT DIDN’T
The Consumer Discretionary and Energy sectors posted net losses in 2014 while seven of RDF’s nine equity sectors finished the year in the black. Industrials led by a wide margin, boosted by net gains in the machinery industry and, to a lesser degree, professional services companies. Two of the Fund’s top-five contributing stocks came from the machinery group. Two industries from the Information Technology sector also made strong net contributions. Software was the Fund’s top industry in 2014 while the semiconductors & semiconductor equipment group finished third behind it and machinery stocks. Two other industry groups within Information Technology, however, were RDF’s two biggest detractors in 2014—IT services and internet software & services. Net losses in the first of these groups were entirely attributable to Computer Task Group, an IT services and staffing company and the Fund’s largest-detracting position for the year. Its stock price began to decline steeply in early July after the firm reported lower-than-expected earnings largely due to higher costs and lower revenues from its healthcare business. While the company claimed these higher expenses were likely anomalous, it also boosted its projected medical costs for the rest of 2014, thus revising guidance downward. The Internet software & services industry was home to Liquidity Services, which runs online auction marketplaces for sellers and buyers of surplus, salvage, and scrap assets. Its stock endured its worst declines earlier in the year after the company missed earnings and revised guidance. We scrapped our position in the first half before reinitiating a position in July.

    VASCO Data Security International was RDF’s best-performing position in 2014. The company specializes in bank security and develops security systems to secure and manage access to user digital assets. Its stock made two significant upticks in the first half as earnings improved. Its stock climbed yet again in October after the company again beat estimates, this time for third-quarter revenue and earnings. We took gains as its shares moved up, selling the last of our stake in December.

Top Contributors to Performance For 2014 (%)1
VASCO Data Security International	1.65
John B. Sanfilippo & Son	0.95
Symmetry Medical	0.92
Lydall	0.61
Standex International	0.61
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
Computer Task Group	-1.40
Liquidity Services	-0.93
PhotoMedex	-0.76
Big 5 Sporting Goods	-0.52
Nam Tai Property	-0.51
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
To enhance the detection of potential portfolio candidates, RDF’s portfolio managers combine a proprietary quantitative screening model with traditional fundamental analysis to aid them in their effort to find companies that exhibit certain value-based characteristics. There are several key pieces to the Fund’s proprietary model: First, relative sector valuations are an important element in understanding outperformance patterns. The model’s output is sector adjusted so that companies are evaluated relative to their sector peers. Second, the model has historically been more effective in discriminating between over and undervalued companies as one moves down the market cap scale, which explains RDF’s emphasis on micro-cap stocks. Finally, the efficacy of each of these attributes can vary depending on what stage we are in within a particular economic cycle. While we believe the model is effective at generating a list of micro-cap investment candidates, fundamental scrutiny adds a level of refinement that does not exist in purely quantitative approaches.

    At the end of 2014 the Fund was substantially overweight the Industrials, Materials, and Consumer Staples sectors, the portfolio’s modest exposure to the last two sectors notwithstanding. RDF was also overweight Energy, Information Technology, and Consumer Discretionary while it was significantly underweight Financials and Health Care and had no exposure to Telecommunication Services at the end of 2014.

14 | The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOL RYDFX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	10-YR	SINCE INCEPTION (10/3/03)
RDF	0.97	0.97	12.09	10.50	4.59	6.47
Annual Gross Operating Expenses: 2.50%   Annual Net Operating Expenses: 1.49%
*Not Annualized

Morningstar Style Map^TM As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in portfolio within the proprietary Morningstar Style Box. Over time, shape and location of a fund’s ownership zone may vary. See page 74 additional information.

Value of $10,000

Invested on 6/30/00 (Russell Microcap Inception) as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Village Super Market Cl. A	2.2
Miller Industries	2.2
Utah Medical Products	2.2
National HealthCare	2.1
Invacare Corporation	2.1
United States Lime & Minerals	2.1
MYR Group	2.0
UFP Technologies	1.7
VSE Corporation	1.7
Exactech	1.6

Portfolio Sector Breakdown
% of Net Assets
Industrials	19.1
Information Technology	16.3
Health Care	14.5
Consumer Discretionary	11.9
Materials	10.0
Financials	8.0
Consumer Staples	5.4
Energy	4.0
Miscellaneous	4.7
Cash and Cash Equivalents	6.1

Calendar Year Total Returns (%)
YEAR	RDF
2014	1.0
2013	35.3
2012	3.1
2011	-2.2
2010	19.6
2009	25.9
2008	-35.1
2007	-7.4
2006	16.8
2005	7.6
2004	13.3

Portfolio Diagnostics
Fund Net Assets	$6 million
Number of Holdings	100
Turnover Rate	85%
Average Market Capitalization1	$397 million
Weighted Average P/E Ratio2,3	18.4x
Weighted Average P/B Ratio2	1.5x
Holdings ≥ 75% of Total Investments	58
Active Share4	94%
U.S. Investments (% of Net Assets)	89.0%
Non-U.S. Investments (% of Net Assets)	4.9%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (9% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Price and total return information is based on net asset values calculated for shareholder transactions. Certain immaterial adjustments were made to the net assets of Royce Micro-Cap Discovery Fund at 6/29/12 for financial reporting purposes, and as a result the net asset values for shareholder transactions on that date and calendar-year total returns based on those net asset values differ from the adjusted net asset values and calendar-year total returns reported in the Financial Highlights. Gross operating expenses reflect the Fund’s gross total annual operating expenses for the Service Class and include management fees, 12b-1 distribution and service fees, and other expenses. Net operating expenses reflect contractual fee waivers and/or expense reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the Service Class’s net annual operating expenses, (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.49% through April 30, 2015 and at or below 1.99% through April 30, 2024. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014.

The Royce Funds 2014 Annual Report to Shareholders | 15

		MANAGER’S DISCUSSION
	Royce Financial Services Fund

Chuck Royce

FUND PERFORMANCE
Royce Financial Services Fund (“RFS”) was up 3.5% in 2014, trailing both its small-cap benchmark, the Russell 2000 Index, which was up 4.9%, and the Russell 2500 Financial Services Index, which rose 11.2% for the same period. The market remained in a bull phase as 2014 began, though it moved at a much slower pace following the speedway clip of the previous year. Equity returns thus remained mostly positive amidst a lot of talk about whether or not valuations were unreasonably high. The Fund advanced 3.6% for the six-month period ended June 30, 2014 compared to respective gains of 3.2% and 5.8% for its benchmark and the Russell 2500 Financial Services Index.

    The next few months saw a temporary end to the bullish phase, though the downdraft was mostly confined to small-cap and, to a lesser extent, mid-cap stocks. After reaching a year-to-date high on July 3, and interrupted by an August rally, the Russell 2000 was mostly in decline into mid-October. This made for higher volatility as well as falling stock prices. For the third quarter, RFS was down 4.2%, holding its value better than its small-cap benchmark, which lost 7.4%, but losing some ground to the financial services component of the Russell 2500, which fell 3.9% for the same period. Share prices began to recover in October. For the fourth quarter the Fund gained 4.2% compared to respective gains of 9.7% and 9.5% for the small-cap index and the financial services companies in the Russell 2500. While 2014’s results were far from ideal, we were pleased with RFS’s longer-term results. The Fund outperformed the Russell 2000 for the three-year and 10-year periods ended December 31, 2014 and narrowly trailed the small-cap index for the since inception (12/31/03) period (+8.5% versus +8.7%). In addition, RFS was ahead of the Russell 2500 Financial Services Index for the three-year, 10-year, and since inception periods ended December 31, 2014.

WHAT WORKED... AND WHAT DIDN’T
The Fund’s largest-detracting position in 2014 was Ashmore Group, a London-based asset manager and global leader in emerging market investing. Its shares were challenged by worries about the debt cycle and bad news out of Russia and other emerging markets in 2014. Earnings have been adversely affected but revenues have remained fairly steady. We added shares early in 2014 (as well as in January 2015) and held a good-sized stake at year end. In June, we built our stake in Financial Engines, a large independent investment adviser specializing in retirement plan services. Earnings were a bit lower than expected, which seemed to be a factor in the descent of its stock price, as was the news in November that its founder-CEO would be retiring in 2015. We focused on the company’s ongoing financial and operating strength as well as its expertise in a niche that legions of retiring Baby Boomers should keep in high demand in the years ahead.

    Two industry groups—capital markets, which includes asset management businesses, and insurance companies—dominated calendar-year performance. Minneapolis-based asset manager Piper Jaffray led all of the portfolio’s net contributors. The firm enjoyed steady asset growth year-over-year in addition to revenue and earnings improvement, all of which seemed to draw investors to its stock. It was the Fund’s fourteenth-largest position at the end of 2014. CRISIL is an India-based global analytics company that provides ratings, research, and risk and policy advisory services. Its shares seemed to rise on the improved economic and market climate in India following the elections in May 2014, which helped to make it a top-20 holding at year end. Egyptian Financial Group-Hermes Holding Company is the leading investment bank in the Arab world. The company offers services such as asset management, securities brokerage, research, and private equity. Improved revenues seemed to draw more investors to its stock, especially in the first half of the year.

Top Contributors to Performance For 2014 (%)1
Piper Jaffray	0.58
CRISIL	0.44
Egyptian Financial Group-Hermes Holding Company	0.40
Monroe Capital	0.39
SS&C Technologies	0.38
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
Ashmore Group	-0.54
Financial Engines	-0.51
Dundee Corporation Cl. A	-0.35
Hellenic Exchanges - Athens Stock Exchange	-0.31
Xoom Corporation	-0.28
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
Throughout its history, RFS has at times been out of sync with the financial services companies in the Russell 2500 Index. (Being a sector fund, RFS has also frequently moved in a different direction than the Russell 2000.) We would expect this to continue, especially considering the portfolio’s comparatively low exposure to banks and REITs. The Banks were one of the larger, and REITS one of the better-performing, groups within the Russell 2500 Financial Services Index. Our preference is for conservatively capitalized, fundamentally strong financial services businesses that we think are both well managed and trading at attractively low valuations based on our estimate of the company’s intrinsic worth. This predisposition toward strong balance sheets and other metrics indicating financial health, such as high returns on invested capital, free cash flow generation, and a history of earnings, has led us historically to overweight asset management businesses and invest in an ample number of insurance companies and tech-related financial services businesses. This was the case at the end of 2014.

16 | The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOL   RYFSX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	10-YR	SINCE INCEPTION (12/31/03)
RFS	-0.16	3.45	21.04	13.26	7.82	8.46
Annual Gross Operating Expenses: 1.97%   Annual Net Operating Expenses: 1.57%
*Not Annualized

Morningstar Style Map^TM As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 74 for additional information.

Value of $10,000
Invested on 12/31/10 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Federated Investors Cl. B	2.2
WisdomTree Investments	2.1
Charles Schwab	2.0
Marsh & McLennan	1.9
RLI Corp.	1.9
Broadridge Financial Solutions	1.9
Northern Trust	1.9
Value Partners Group	1.8
Diamond Hill Investment Group	1.8
FirstService Corporation	1.7

Portfolio Industry Breakdown
% of Net Assets
Capital Markets	53.8
Insurance	10.8
Diversified Financial Services	9.9
Banks	3.9
Professional Services	2.7
Real Estate Management & Development	2.6
Software	2.5
IT Services	2.5
Internet Software & Services	1.8
Consumer Finance	1.7
Investment Companies	1.4
Media	0.5
Hotel, Restaurants & Leisure	0.1
Miscellaneous	2.8
Cash and Cash Equivalents	3.0

Calendar Year Total Returns (%)
YEAR	RFS
2014	3.5
2013	42.0
2012	20.7
2011	-11.3
2010	18.5
2009	32.1
2008	-35.4
2007	-4.7
2006	24.8
2005	12.2
2004	15.1

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
10-Year	91	86
Fund’s First Full Quarter (12/31/03)	89	84

Portfolio Diagnostics
Fund Net Assets	$54 million
Number of Holdings	92
Turnover Rate	41%
Average Market Capitalization1	$2,343 million
Weighted Average P/E Ratio2,3	18.8x
Weighted Average P/B Ratio2	2.1x
Holdings ≥ 75% of Total Investments	50
Active Share4	98%
U.S. Investments (% of Net Assets)	66.2%
Non-U.S. Investments (% of Net Assets)	30.8%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (12% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Gross operating expenses reflect the Fund’s gross total annual operating expenses for the Service Class and include management fees, 12b-1 distribution and service fees, other expenses, and acquired fund fees and expenses. Net operating expenses reflect contractual fee waivers and/or expense 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 to the extent necessary to maintain the Fund’s net annual operating expenses, (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.49% through April 30, 2015. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell 2000). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders | 17

		MANAGER’S DISCUSSION
	Royce SMid-Cap Value Fund

Steven McBoyle, CPA, CA

FUND PERFORMANCE
Royce SMid-Cap Value Fund (“RSV”) was down 1.7% in 2014, substantially behind its small- and mid-cap benchmark, the Russell 2500 Index, which increased 7.1% for the same period. The Fund enjoyed a terrific first-half performance, which helped to keep it ahead of its benchmark on a year-to-date basis into late October. The Fund advanced an impressive 13.7% for the six-month period ended June 30, 2014, more than doubling the return of the Russell 2500, which gained 5.9% for the same period.

    RSV then lost 9.3% in the third quarter, falling behind its benchmark, which declined 5.3%. Quarterly underperformance was largely the result of poor performance from companies in the Energy sector and those in the metals & mining and machinery industries. Unfortunately, the downward trend for the Fund persisted into the fourth quarter at the same time that many small- and mid-cap stocks (at least those outside the energy industry) were recovering. RSV lost 4.6% in the fourth quarter compared to a gain of 6.8% for the Russell 2500. While these results were discouraging, we are confident that the Fund’s returns can improve when the market enters a historically more typical performance cycle in which company fundamentals matter more. Three- and five-year results for the Fund were solid.

WHAT WORKED... AND WHAT DIDN’T
Three of the Fund’s eight equity sectors posted net gains in 2014. Information Technology—lifted by top-10 holding Western Digital and top-20 holding SanDisk Corporation—led by a sizable margin, followed by Health Care (where the Fund was significantly underweight versus the Russell 2500) and Consumer Discretionary, where RSV was nearly even with the index at the end of 2014. Myriad Genetics made the largest positive contribution of all the Fund’s positions. We were pleased with its progress over the last 18 months. A molecular diagnostic company with a specialty in genetic testing for cancer, its share price fell rapidly in the second half of 2013 once the Supreme Court held that human genes cannot be patented. The stock then began to get healthy in 2014. The first-half acquisition of Crescendo Bioscience diversified Myriad’s already promising pipeline, and its genetic panel test—MyRisk—looked promising. Its stock stumbled in the fourth quarter when the MyRisk adoption proved more expensive than expected, causing sales deferrals and higher operating costs. We took some gains in 2014, though we remained confident in Myriad’s long-term prospects. Those words also summed up our thoughts about Western Digital, which develops and manufactures digital storage solutions. Its share price was somewhat volatile in 2014, especially through the year’s first nine months. However, it began to move up more steadily in October when the company announced strong revenues, earnings, and cash flows for its fiscal second quarter that were driven by gains in its capacity enterprise hard drive and flash platform solutions businesses.

    The nearly 50% decline in crude oil prices was the motive force behind net losses in the Energy sector, which went from being the Fund’s top contributor in the first half to its leading detractor in both the second half and the full year. The portfolio also had a substantial overweight in the sector. We like the long-term prospects for Trican Well Service, a Canadian oilfield services company and that nation’s largest pressure pumping service provider. It was trading below book value at the end of 2014. The longstanding operational success of Unit Corporation seemed to offer little comfort to anxious investors fleeing energy stocks. Unit operates several businesses—it explores for oil and natural gas, acquires oil and gas properties, does contract drilling of onshore oil and natural gas wells, and gathers and processes natural gas. We took the long view and held positions in these and other energy companies at year end. All but one were in the energy equipment & services industry.

    Ashmore Group was the Fund’s largest-detracting position in 2014. A London-based asset manager and a global leader in emerging market investing, its shares were challenged by worries about the debt cycle and bad news out of Russia and other emerging markets in 2014. Earnings have taken a hit but revenues have remained fairly steady. It was the Fund’s eleventh-largest position at the end of the period. We chose to part ways with Nu Skin Enterprises by selling our shares in September. A manufacturer and distributor of skin and other personal care products, the company met several challenges over the last year, which included settling some issues with the Chinese government by paying fines and improving training, restructuring its debt covenants, and reversing a cash flow problem. While these were positive developments, we thought its turnaround would likely take longer than we were prepared to wait.

Top Contributors to Performance For 2014 (%)1
Myriad Genetics	2.02
Western Digital	1.00
SanDisk Corporation	0.88
Bed Bath & Beyond	0.60
Signet Jewelers	0.60
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
Ashmore Group	-1.15
Trican Well Service	-1.12
Unit Corporation	-0.95
TGS-NOPEC Geophysical	-0.85
Nu Skin Enterprises Cl. A	-0.78
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
Effective November 10, 2014, Steven G. McBoyle manages the Fund after previously co-managing it since its inception. Industrials—the Fund’s largest sector at year end and an overweight versus the Russell 2500—remains an area of focus. Throughout 2014 we added to the Consumer Discretionary sector based on our belief that the expanding economy, improved employment picture, and lower energy prices will all encourage consumption in 2015.

18 | The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOL   RMVSX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	SINCE INCEPTION (9/28/07)
RSV	-13.53	-1.68	11.74	9.22	4.93
Annual Gross Operating Expenses: 2.20%	Annual Net Operating Expenses: 1.35%
*Not Annualized

Morningstar Style Map^TM    As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 74 for additional information.

Value of $10,000

Invested on 9/28/07 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Thor Industries	4.3
Cirrus Logic	4.1
AGCO Corporation	4.0
Western Digital	3.9
Kennedy-Wilson Holdings	3.8
Globe Specialty Metals	3.8
Semperit AG Holding	3.6
Bed Bath & Beyond	3.4
ManpowerGroup	3.4
TGS-NOPEC Geophysical	3.3

Portfolio Sector Breakdown
% of Net Assets
Industrials	17.9
Materials	16.1
Financials	15.0
Consumer Discretionary	14.6
Energy	13.4
Information Technology	12.2
Health Care	5.2
Consumer Staples	2.5
Cash and Cash Equivalents	3.1

Calendar Year Total Returns (%)
YEAR	RSV
2014	-1.7
2013	22.9
2012	15.4
2011	-11.6
2010	26.0
2009	28.7
2008	-29.3

Portfolio Diagnostics
Fund Net Assets	$16 million
Number of Holdings	44
Turnover Rate	41%
Average Market Capitalization1	$3,345 million
Weighted Average P/E Ratio2,3	16.0x
Weighted Average P/B Ratio2	2.1x
Holdings ≥ 75% of Total Investments	24
Active Share4	99%
U.S. Investments (% of Net Assets)	70.9%
Non-U.S. Investments (% of Net Assets)	26.0%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (11% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Gross operating expenses reflect gross total annual operating expenses for the Service Class and include management fees, 12b-1 distribution and service fees, and other expenses. Net operating expenses reflect contractual fee waivers and/or expense reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the Service Class’s net annual operating expenses, (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.35% through April 30, 2015 and at or below 1.99% through April 30, 2021). Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014.

The Royce Funds 2014 Annual Report to Shareholders | 19

		MANAGER’S DISCUSSION
	Royce Partners Fund

Chuck Royce

FUND PERFORMANCE
Royce Partners Fund (“PTR”) was down 0.8% in 2014, significantly underperforming its small- and mid-cap benchmark, the Russell 2500 Index, which increased 7.1% for the same period. Results were frustrating for much of the year. The Fund gained 2.8% for the six-month period ended June 30, 2014 versus a 5.9% advance for the Russell 2500. These returns reflected the mildly bullish period that characterized most of the year’s first half. Both increased volatility and a bearish wave hit small-cap stocks in the third quarter. Mid-caps suffered fewer net losses as a group while U.S. large-cap stocks went largely unaffected. PTR lost fractionally less than its benchmark for the third quarter, losing 5.2% compared to a loss of 5.3% for the index. Small-cap share prices began to recover off a mid-October low, and a dynamic rally enlivened the last weeks of December. The Fund, unfortunately, could not keep pace. For the fourth quarter, PTR advanced 1.8% while the Russell 2500 rose 6.8%. The Fund’s three-year, five-year, and since inception (4/27/09) returns were solid on an absolute basis, though they fell short of both the benchmark and our own expectations. PTR’s average annual total return since inception was 12.2%.

WHAT WORKED... AND WHAT DIDN’T
Four of the Fund’s nine equity sectors posted net losses in 2014, with Energy having by far the largest negative impact. This was not a surprise. While PTR’s exposure to the sector was modest (and underweight versus the Russell 2500 at year end), a nearly 50% decline in crude prices in the second half was going to have a measurable drag on performance. Three of the Fund’s top five detractors from performance in 2014 were energy equipment & services companies. For the most part, we chose to hold our positions in the industry at the end of the year with the thought that fundamentally sound companies would be well positioned for a recovery. Many companies involved in offshore drilling were among the hardest and earliest hit when crude prices were first falling because of that activity’s inherently higher costs. Louisiana-based Tidewater provides marine service vessels to offshore energy companies. The short-term outlook for the industry was so poor that even the announcement in November of better-than-expected fiscal second-quarter earnings could not help its stock price. We held our shares in Tidewater as we did with London-based Ensco, an offshore contract driller. Like Tidewater, it has executed successfully and profitably and thus looked more than capable of rebounding. Sensing that Transocean’s recovery might take longer than we were willing to wait, we opted to sell our shares. A Swiss company, Transocean is the world’s largest offshore driller. Its stock price declined by nearly 60% in 2014 based on falling oil prices and an oversupplied ultra-deep water drilling market.

Outside of Energy, we chose to hold our position in emerging markets asset manager Ashmore Group, another London-based business. Its shares struggled amidst worries about global debt, the ongoing problems in Russia, and anxieties about the pace of growth in other emerging markets. A stronger British pound and lower performance fees also hurt its performance. Heritage-Crystal Clean provides parts cleaning, used oil re-refining, and hazardous and non-hazardous waste services to small- and mid-sized customers in the manufacturing and vehicle service industries. Its shares took a hit in December when the firm announced that it was issuing more stock to pay down debt incurred to make two recent acquisitions. We were cautiously optimistic about its turnaround potential at the end of 2014.

The Financials sector was the portfolio’s top contributor by a wide margin in 2014. It was followed by solid net gains for Information Technology and more modest contributions from Health Care, Consumer Staples, and Utilities. The Fund’s four top performers (and five of its top 10) came from the Financials sector. BBVA Banco Frances ADR is one of Argentina’s largest banks. Its strong revenue growth and terrific history of earnings per share growth helped to reassure investors otherwise anxious over the nation’s recent debt woes. It was a top-20 position at the end of 2014. Based in Chicago, Jones Lang LaSalle is a financial and professional services firm that specializes in commercial real estate services. The company saw its most impressive growth in fee revenues from the Americas, though it also experienced growth from EMEA (Europe, the Middle East, and Africa) and the Asia Pacific region. We like that the company increased the dividend that was paid in December. It was a top-10 holding at year end.

Top Contributors to Performance For 2014 (%)1
BBVA Banco Frances ADR	0.79
Jones Lang LaSalle	0.57
Monroe Capital	0.44
Coronation Fund Managers	0.43
Myriad Genetics	0.42
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
Tidewater	-0.67
Heritage-Crystal Clean	-0.66
Ashmore Group	-0.58
Transocean	-0.54
Ensco Cl. A	-0.48
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK
At the end of 2014, PTR had a substantial overweight in Financials. Most of the portfolio’s holdings in the sector were from the capital markets industry, which includes asset management businesses. The Fund was also overweight in Industrials and Materials, and had a sizable exposure to Information Technology. These weightings reflected our confidence in the growth potential for more economically cyclical sectors as well as our belief that we should see some recovery for commodity prices in the months ahead.

20 | The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOL  RPTRX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*		1-YR	3-YR	5-YR	SINCE INCEPTION (4/27/09)
PTR	-3.52		-0.85	16.54	10.67	12.16
Annual Gross Operating Expenses: 3.97%		Annual Net Operating Expenses: 1.26%
*Not Annualized

Morningstar Style Map^TM  As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 74 for additional information.

Value of $10,000
Invested on 12/15/93 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
E-L Financial	2.6
Value Partners Group	2.5
State Street	2.5
Atrion Corporation	2.5
MasterCard Cl. A	2.2
Bank of New York Mellon (The)	2.0
Moody’s Corporation	1.8
Charles Schwab	1.8
Monroe Capital	1.8
Jones Lang LaSalle	1.7

Portfolio Sector Breakdown
% of Net Assets
Financials	32.8
Industrials	19.5
Information Technology	11.9
Materials	8.3
Health Care	4.2
Energy	3.1
Consumer Discretionary	2.0
Consumer Staples	1.2
Miscellaneous	2.0
Cash and Cash Equivalents	15.0

Calendar Year Total Returns (%)
YEAR	PTR
2014	-0.8
2013	32.2
2012	20.7
2011	-11.7
2010	18.7

Portfolio Diagnostics
Fund Net Assets	$3 million
Number of Holdings	63
Turnover Rate	8%
Average Market Capitalization1	$3,410 million
Weighted Average P/E Ratio2,3	17.0x
Weighted Average P/B Ratio2	2.1x
Holdings ≥ 75% of Total Investments	40
Active Share4	98%
U.S. Investments (% of Net Assets)	58.2%
Non-U.S. Investments (% of Net Assets)	26.8%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (7% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and 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 waivers 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 expenses, (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.20% through April 30, 2015 and 1.84% through April 30, 2024. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014.

The Royce Funds 2014 Annual Report to Shareholders | 21

MANAGERS’ DISCUSSION

Royce European Smaller-Companies Fund

David Nadel
Mark Rayner, CA

FUND PERFORMANCE

Royce European Smaller-Companies Fund (“RES”) was down 14.9% in 2014, lagging its benchmark, the Russell Europe Small Cap Index, which fell 8.5% for the same period. The Fund’s relative and absolute challenges were largely due to a poor second half. After generally outperforming their domestic counterparts in the last six months of 2013, European equities continued to build momentum. By the end of 2014’s first quarter many European stocks remained ahead of their U.S. peers. European equity performance then began to slow in the second quarter, with returns falling into the red while other international and U.S. markets stayed in positive territory. Though we were pleased with the Fund’s relative performance in the second quarter (+0.6% versus -1.0% for the Russell Europe Small Cap), RES was shy of the benchmark’s returns in the first half of 2014. For the six-month period ended June 30, 2014, the Fund gained 4.6% compared to 5.5% for its benchmark.

    Losses continued to mount in July, when stocks across the globe corrected (with the exception of U.S. large-caps). European shares were among the most adversely affected, and RES was no exception. For the third quarter the Fund fell 11.2%, trailing the Russell Europe Small Cap, which declined 10.7%. Portfolio holdings headquartered in France, the U.K., Norway, and Germany hurt most. The fourth quarter was equally unkind. U.S. small-caps rallied off a mid-October low, but many non-U.S. companies continued to struggle. Holdings headquartered in the U.K. had an outsized negative effect, while those in Cyprus and Germany also suffered large net losses in the fourth quarter. However, we were somewhat encouraged that our investments headquartered in Denmark were able to bounce back in the year’s final three months, as was the case with third-quarter detractors Austria and Turkey. Still, RES’s fourth-quarter performance on both a relative and absolute basis was dispiriting. For the quarter, RES was down 8.3% versus the European benchmark’s 2.9% loss. The Fund outpaced the Russell Europe Small Cap for the since inception (12/29/06) period ended December 31, 2014.

WHAT WORKED... AND WHAT DIDN’T

All but one of the Fund’s nine equity sectors posted net losses in 2014, and the net gain for Health Care was decidedly modest. A collapse in oil prices helped to make Energy RES’s top detractor for the calendar year after it posted generous net gains for the Fund in the first half. Industrials and Information Technology were also major trouble spots at year end. Globaltrans Investment GDR is a leading private freight rail transportation group with operations in Russia, the CIS (the Commonwealth of Independent States, including Ukraine), and the Baltics. Affected by tensions in Ukraine and the weakening ruble, Globaltrans lost about 70% of its value by year end. With more than 85% of freight transported by rail in Russia, we believe the company can improve its competitive position in the next couple of years. We added shares throughout the year. The second-half collapse in energy prices and pressure on other commodities thus took an enormous toll on results for both the second half and full year. Being overweight in Energy versus the Russell Europe Small Cap also hampered relative results. We are well aware of the near-term stresses on energy prices, which include surging supply from U.S. shale plays and weaker European and emerging market economies (the latter having been a key source of incremental demand). However, we have also been pleased with the way that most of the portfolio’s energy names have been executing. We have mostly chosen to hold positions in the belief that lower energy prices will ultimately spur demand and thus eventually start the next up cycle in commodity prices. EnQuest is a London-based oil and gas development and production company, and Fred. Olsen Energy is an offshore driller with activities in the mid- and deep-water floating drilling segment based in Oslo, Norway. The share prices of both companies suffered badly in the second half. The strengthening U.S. dollar was also a factor in the performance of European holdings.

    Shares of London-based design and engineering consultancy firm Hyder Consulting jumped early in the second half after being the center of a bidding war between Tokyo-based Nippon Koei and Dutch firm Arcadis. Following the announcement in late July that Hyder had reached an agreement with Arcadis, we sold our stake. Eltek, a Norwegian business which makes power systems and solutions for telecommunications and datacenters, power utilities, and other industries, was also the target of a take-out. In mid-December the company announced that Netherlands-based Deltronics, a subsidiary of Taiwanese company Delta Electronics, would be acquiring all its shares through a voluntary cash offer. We sold our stake on the news.

Top Contributors to Performance For 2014 (%)1
Hyder Consulting	0.67
Eltek	0.51
Forbo Holding	0.33
Boiron	0.33
F-Secure	0.31
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
Globaltrans Investment GDR	-1.56
EnQuest	-1.44
Fred. Olsen Energy	-1.36
Nokian Renkaat	-1.07
LPKF Laser & Electronics	-1.00
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK

At year end, RES was overweight in economically sensitive cyclical sectors such as Information Technology, Materials, and Energy. The Fund was also overweight in Health Care. As bottom-up stock pickers who focus on fundamentals, we are finding attractive valuations in the U.K., France, and Germany and continue to seek companies that we believe can remain competitive in the challenging European market.

22 | The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS RISCX RESNX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	5-YR	SINCE INCEPTION (12/29/06)
RES	-18.60	-14.86	8.40	6.53	2.06
Annual Gross Operating Expenses: 2.27%  Annual Net Operating Expenses: 1.70%
*Not Annualized

Relative Returns: Monthly Rolling Average Annual Return Periods

Since Inception Through 12/31/14

On a monthly rolling basis, the Fund outperformed the Russell Euro SC in 73% of all 5-year periods; 67% of all 3-year periods; 52% of all 1-year periods;

	PERIODS BEATING THE INDEX		FUND AVG (%)*	INDEX AVG (%)*
5-year	27/37	73%	7.6	4.8
3-year	41/61	67%	7.7	4.9
1year	44/85	52%	7.9	6.9
*Average of monthly rolling average annual total returns over the specified periods.

Morningstar Style Map^TM  As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 74 for additional information.

Value of $10,000
Invested on 12/29/06 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Mayr-Melnhof Karton	2.8
Ashmore Group	2.8
Semperit AG Holding	2.6
Stallergenes	2.3
VZ Holding	2.3
Kennedy Wilson Europe Real Estate	2.2
LPKF Laser & Electronics	2.2
Nokian Renkaat	2.2
Consort Medical	2.2
Senior	2.1

Portfolio Sector Breakdown
% of Net Assets
Industrials	24.6
Information Technology	17.4
Health Care	17.2
Financials	13.5
Materials	9.3
Consumer Discretionary	8.0
Energy	7.1
Consumer Staples	1.3
Cash and Cash Equivalents	1.6

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
Fund’s First Full Quarter
(12/31/06)	89	85

Calendar Year Total Returns (%)
YEAR	RES
2014	-14.9
2013	20.8
2012	23.8
2011	-20.3
2010	35.2
2009	57.7
2008	-46.4
2007	1.4

Portfolio Country Breakdown1,2
% of Net Assets
United Kingdom	31.7
France	22.7
Germany	7.8
Italy	5.5
Austria	5.5
Norway	4.1
Switzerland	3.7

1	Represents countries that are 3% or more of net assets.
2	Securities are categorized by the country of their headquarters.

Portfolio Diagnostics
Fund Net Assets	$22 million
Number of Holdings	63
Turnover Rate	65%
Average Market Capitalization1	$889 million
Weighted Average P/E Ratio2,3	14.7x
Weighted Average P/B Ratio2	1.8x
Holdings ≥ 75% of Total Investments	40
Active Share4	96%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (9% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month end performance may be higher or lower than performance quoted and 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 waivers and/or expense 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 expenses, (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.69% through April 30, 2015 and at or below 1.99% through April 30, 2024. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell Europe Small Cap). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders | 23

		MANAGER’S DISCUSSION
	Royce Global Dividend Value Fund

Chuck Royce

FUND PERFORMANCE

Royce Global Dividend Value Fund (“RGD”) was down 6.8% in 2014, trailing its benchmark, the Russell Global Small Cap Index, which fell 0.3% for the same period. These results were disappointing on both a relative and absolute basis, especially considering the Fund’s competitiveness in the first half of the year when equities around the world—particularly those outside the U.S.—enjoyed positive returns. For the six-month period ended June 30, 2014, RGD gained 5.4%, narrowly behind the global small-cap benchmark’s 5.7% increase for the same period.

    In the third quarter, however, stocks across the globe corrected (with the exception of U.S. large-cap stocks). European shares, after exhibiting several months of strength, felt the brunt of the downturn. RGD fell 6.9% in the third quarter compared to the Russell Global Small Cap’s 6.7% decline. Portfolio holdings headquartered in Canada, the U.S., and the U.K. were the largest detractors from third-quarter performance while those headquartered in China and South Korea posted modest net gains. The performance spread between RGD and its benchmark would widen in the fourth quarter, a period in which U.S. small-caps rallied off a mid-October low while many non-U.S. companies saw additional losses or struggled to stay afloat. For the quarter, the Fund fell 5.0% compared to the Russell Global Small Cap’s 1.1% gain. Holdings headquartered in South Africa and, to a lesser degree, the U.S. made a positive impact on fourth-quarter results while those headquartered in Canada and the U.K. remained detractors, this time joined by holdings in Brazil and Malaysia. Long-term performance results were also disappointing, though we believe our disciplined value approach can eventually bear fruit.

WHAT WORKED... AND WHAT DIDN’T

Four of the Fund’s nine equity sectors posted net gains for the calendar year, with Information Technology leading the list. Consumer Staples, Utilities, and Health Care were also positive contributors, though net gains for the last two sectors were modest. Conversely, Consumer Discretionary was RGD’s worst-performing sector by a wide margin, followed by Energy and Industrials. (Financials and Materials posted modest net losses.) South Africa’s Coronation Fund Managers is a global asset management company that offers services to institutional and individual investors. The firm has seen robust growth in assets and revenues, with both its South African and international businesses growing. At the end of 2014 it was the twelfth-largest position in the portfolio. Shares of London-based design and engineering consultancy firm Hyder Consulting jumped early in the second half after being the center of a bidding war between Tokyo-based Nippon Koei and Dutch firm Arcadis. Following the announcement in late July that Hyder had reached an agreement with Arcadis, we sold our stake. Silverlake Axis is a Singapore-based company that provides customized software solutions to the banking and insurance industries. After reporting a more than 25% increase in year-over-year fiscal third-quarter revenues late in May, its stock took off. Late in August the stock jumped again when fiscal 2014 results were announced. The company reported robust profits and revenues driven in part by maintenance and enhancement services and software licensing. We trimmed our position in 2014.

    Globaltrans Investment GDR is a leading private freight rail transportation group with operations in Russia, the CIS (the Commonwealth of Independent States, including Ukraine), and the Baltics. Affected by tensions in Ukraine and the weakening ruble, Globaltrans lost about 70% of its value by year end. With more than 85% of freight transported by rail in Russia, we believe the company can improve its competitive position in the next couple of years. We added shares throughout the year. The second-half collapse in energy prices and pressure on other commodities in the second half hurt calendar-year results for Oslo-based Fred. Olsen Energy. The company, an offshore driller with activities in the mid- and deep-water floating drilling segment, predicted lower demand in the global rig market and reported lower-than-expected third-quarter profits in October. We reduced our position, though we think the company’s stock can eventually recover. Brazil’s weak economy, along with a slowdown in the real estate market and economic uncertainty over the re-election of President Dilma Rousseff, all hurt the share price of Brasil Brokers Participacoes, which remained a top detractor after a rough first half. We gradually trimmed our position in September and October. The strengthening U.S. dollar was also a factor in the performance of non-U.S. holdings.

Top Contributors to Performance For 2014 (%)1
Coronation Fund Managers	0.33
Hyder Consulting	0.28
Silverlake Axis	0.28
Hanssem	0.27
Regent Manner International
Holdings	0.26
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
Globaltrans Investment GDR	-0.68
Fred. Olsen Energy	-0.60
Brasil Brokers Participacoes	-0.54
Transocean	-0.47
Nokian Renkaat	-0.40
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK

At the end of 2014, RGD was overweight in cyclical sectors such as Consumer Discretionary and Industrials. We continue to position the portfolio for an eventual recovery in global economic growth, and still believe that—despite the market’s preference for high yields in 2014—consistent dividend-payers have long-term advantages.

24 | The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOL RGVDX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	SINCE INCEPTION (12/31/10)
RGD	-11.59	-6.84	9.74	2.84
Annual Gross Operating Expenses: 2.99%   Annual Net Operating Expenses: 1.70%
*Not Annualized

Morningstar Style Map^TM    As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 74 for additional information.

Value of $10,000
Invested on 12/31/10 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Value Partners Group	1.5
Television Broadcasts	1.3
Nexity	1.3
Xtep International Holdings	1.2
Afrimat	1.2
Pico Far East Holdings	1.1
Aramex	1.1
Selamat Sempurna	1.1
Kaba Holding	1.1
Forbo Holding	1.1

Portfolio Sector Breakdown
% of Net Assets
Consumer Discretionary	24.5
Industrials	19.1
Financials	18.8
Information Technology	13.9
Materials	6.2
Health Care	5.8
Consumer Staples	3.9
Energy	2.0
Cash and Cash Equivalents	5.8

Calendar Year Total Returns (%)
YEAR	RGD
2014	-6.8
2013	15.8
2012	22.5
2011	-15.4

Portfolio Country Breakdown1,2
% of Net Assets
Hong Kong	10.9
United Kingdom	10.0
South Africa	8.1
Canada	5.8
Switzerland	5.2
United States	5.0
Brazil	4.9
France	4.6
Germany	4.4
Japan	4.3
Singapore	3.2

1	Represents countries that are 3% or more of net assets.
2	Securities are categorized by the country of their headquarters.

Portfolio Diagnostics
Fund Net Assets	$7 million
Number of Holdings	154
Turnover Rate	33%
Average Market Capitalization1	$983 million
Weighted Average P/E Ratio2,3	15.8x
Weighted Average P/B Ratio2	2.0x
Holdings ≥ 75% of Total Investments	85
Active Share4	98%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (7% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and 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 waivers and/or expense 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 expenses, (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.69% through April 30, 2015 and at or below 1.99% through April 30, 2024. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014.

25 | The Royce Funds 2014 Annual Report to Shareholders

		MANAGERS’ DISCUSSION
	Royce International Micro-Cap Fund

Dilip Badlani, CFA
Jim Harvey, CFA

FUND PERFORMANCE

Royce International Micro-Cap Fund (“RMI”) was down 2.4% in 2014, losing less than its benchmark, the Russell Global ex-U.S. Small Cap Index, which lost 3.6% for the same period. For the six-month period ended June 30, 2014, RMI advanced 7.9% compared to the international small-cap index’s 7.5% gain.

    These first six months saw many smaller non-U.S. companies mount a comeback and outpace their domestic counterparts. This picture began to shift with the arrival of more volatility and mostly falling stock prices in the third quarter. The correction found stocks across the globe—with the exception of U.S. large-caps—mostly in the red. Among the most adversely affected were European equities, which had already begun to pull back slightly in the second quarter after a terrific first-quarter showing. During the third-quarter down phase, the Fund outperformed its benchmark’s 6.2% decline with a loss of 3.0%. RMI, however, was unable to add to this advantage in the last three months of the year. While U.S. small-caps rallied off a mid-October low, their non-U.S. counterparts mostly continued to struggle. In the fourth quarter RMI was down 6.6%, trailing its benchmark, which fell 4.5%. Although holdings in South Korea, Austria, and India contributed to fourth-quarter performance, holdings headquartered in Japan, Brazil, Hong Kong, Australia, and China were significant detractors. Longer-term results on an absolute and relative basis were also not in line with our expectations.

WHAT WORKED... AND WHAT DIDN’T

During the second half of 2014, we were pleased to see portfolio holdings headquartered in India build on first-half net gains while those in Canada, Germany, and South Korea suffered only minor slippage. Holdings in Brazil and Hong Kong remained top detractors through the end of the year while the portfolio’s holdings in Japan corrected sharply after posting solid net gains in the first half. Brazil-based T4F Entretenimento is the biggest live entertainment promoter in South America and one of the largest in the world. Brazil’s weak consumer sentiment drove reductions in discretionary spending on concerts which, coupled with the pressure the World Cup put on consumers’ wallets, negatively affected its stock price. We believe that the share price should react favorably as business conditions normalize and added to our position throughout the second half. Brazil’s weak economy, along with a slowdown in the real estate market and economic uncertainty over the re-election of President Dilma Rousseff , all hurt the share price of Brasil Brokers Participacoes, which remained a top detractor after a rough first half. The company is one of the country’s two leading real estate brokerages. We like its ability to generate cash, its generous dividend policy, and its large degree of insider ownership. Brasil Insurance Participacoes e Administracao—another top detractor from the semiannual period—is a collection of insurance brokers that have been acquired over the years. New management is working on implementing a turnaround, but in the process of deploying their plan, they had to make significant cuts to guidance to reposition the company for future growth, which hurt its stock price. We re-built our position in July, adding shares in August. The strength of the U.S. dollar also played a role in the performance of non-U.S. holdings.

    Three of RMI’s top contributors to performance in the first half remained so for the full year. Ontario-based Magellan Aerospace serves the civil aerospace and defense market. Magellan has benefited from a strong aerospace and defense capital spending cycle as well as weakness in the Canadian dollar, which has increased its competitiveness versus U.S. suppliers significantly. In addition, a strong management team that is focused on margins has helped drive improvement in earnings and an increase in the overall backlog. We think the stock has the potential for additional growth, so we bought shares in August and September (after reducing our position in the second quarter). Global automotive demand coupled with automation in the industrial supply chain has driven demand for Japanese manufacturer Obara Group’s products. A weakening yen has also helped its position versus foreign competitors. Australia-based TFS Corporation owns and manages sustainable sandalwood plantations. A long-tailed asset that is seeing the benefit of the work that has been put in over the past decade, the company’s plantations are in harvest mode, which should help it to start generating cash flow. An off-take agreement with pharmaceutical company Galderma also helped give proof of concept for the company’s sandalwood oil.

Top Contributors to Performance For 2014 (%)1
Magellan Aerospace	1.06
Obara Group	0.63
RIB Software	0.55
TFS Corporation	0.48
Comba Telecom Systems
Holdings	0.47
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
T4F Entretenimento	-0.71
Brasil Insurance Participacoes e Administracao	-0.71
Ellies Holdings	-0.61
Brasil Brokers Participacoes	-0.60
Freund Corporation	-0.54
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK

Anticipating an eventual turnaround in the global economy, we were substantially overweight economically cyclical sectors such as Industrials, Consumer Discretionary, and Information Technology at the end of December. We remain bullish on the prospects for a rebound in Japan and Hong Kong—and had significantly more exposure than the benchmark to the latter nation.

26 | The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOL ROIMX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	SINCE INCEPTION (12/31/10)
RMI	-9.49	-2.37	9.67	0.87
Annual Gross Operating Expenses: 3.88%  Annual Net Operating Expenses: 1.71%
*Not Annualized

Morningstar Style Map^TM     As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 74 for additional information.

Value of $10,000
Invested on 12/31/10 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Trancom	2.6
Zuiko Corporation	2.0
Magellan Aerospace	1.9
Collection House	1.5
eClerx Services	1.5
MTY Food Group	1.4
Pacific Online	1.4
I.T	1.3
Imdex	1.3
Nitto Kohki	1.3

Portfolio Sector Breakdown
% of Net Assets
Industrials	33.2
Consumer Discretionary	22.7
Information Technology	19.6
Materials	7.2
Financials	6.7
Health Care	3.3
Consumer Staples	2.9
Energy	2.1
Cash and Cash Equivalents	2.3

Calendar Year Total Returns (%)
YEAR	RMI
2014	-2.4
2013	18.9
2012	13.6
2011	-21.5

Portfolio Country Breakdown1,2
% of Net Assets
Japan	20.1
Hong Kong	8.3
Canada	8.1
United Kingdom	6.1
Australia	6.0
South Korea	5.6
Germany	5.1
Taiwan	4.4
China	3.6
France	3.6
India	3.3

1	Represents countries that are 3% or more of net assets.
2	Securities are categorized by the country of their headquarters.

Portfolio Diagnostics
Fund Net Assets	$6 million
Number of Holdings	123
Turnover Rate	91%
Average Market Capitalization1	$306 million
Weighted Average P/E Ratio2,3	13.4x
Weighted Average P/B Ratio2	1.4x
Holdings ≥ 75% of Total Investments	74
Active Share4	99%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (9% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and 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 waivers and/or expense 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 expenses, (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.69% through April 30, 2015 and at or below 1.99% though April 30, 2024. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014.

The Royce Funds 2014 Annual Report to Shareholders | 27

		MANAGER’S DISCUSSION
	Royce International Premier Fund

David Nadel

FUND PERFORMANCE

Royce International Premier Fund (“RIP”) was down 8.2% in 2014, behind its benchmark, the Russell Global ex-U.S. Small Cap Index, which fell 3.6% for the same period. Europe’s renewed strength in 2014’s first quarter, which mitigated corrections for many Asian markets, also helped to give international small-caps a brief run of leadership over their domestic peers. European small-cap performance in the second quarter, though, fell back into negative territory while certain key Asian markets mounted a recovery. Amid these shifts, RIP was in the black for the six-month period ended June 30, 2014, though its 3.3% gain trailed the benchmark’s 7.5% advance.

    Fortunes reversed again for many U.S. and non-U.S. small-caps in the third quarter, which was an especially tough time for smaller European companies. We were pleased with RIP’s relative performance during this period in which the Fund lost 5.8% versus a decline of 6.2% for the international small-cap index. Holdings in the U.K. had an outsized negative impact on third-quarter performance, while those headquartered in India and China helped to moderate net losses. Domestic small-caps then bounced back off a mid-October low, but many non-U.S. companies continued to decline. For the fourth quarter RIP was down 5.6% compared to a 4.5% drop for the Russell Global ex-U.S. Small Cap. Holdings in U.K.-based companies remained the Fund’s top detractors, followed closely by Brazil, while India continued to contribute. Longer-term results were also disappointing on both an absolute and relative basis, though RIP outpaced its benchmark index for the since inception (12/31/10) period ended December 31, 2014.

WHAT WORKED... AND WHAT DIDN’T

All eight of the Fund’s equity sectors were in the red at year end, though Materials, Energy, Health Care, Financials, and Consumer Staples had varying levels of modest net losses. Information Technology was the largest detractor by a significant margin, with a negative impact more than double that of Industrials, the Fund’s second-largest detracting sector. At the country level, holdings headquartered in the U.K., Brazil, and Finland were sore spots for the calendar year. Nokian Renkaat is a Finnish company that manufactures and sells tires. Russia accounts for half of the company’s sales. A thus-far mild winter, the devalued ruble, the crisis in Ukraine, and other geopolitical concerns all weakened its share price. We believe the company’s headwinds are temporary and added to our position in 2014. Late in 2013 we also built a position in Brazil’s leading real estate brokerage firm LPS Brasil Consultoria de Imoveis. Mired in a weak housing market, the company also struggled with low consumer confidence and the country’s stagnant economy.

    From the Industrials sector, Latchways is a U.K.-based protective equipment maker specializing in fall protection systems for people working from heights. A profit warning in October led to a precipitous drop in its shares as the slumping European economy led to delayed capital projects. The company also contended with de-stocking by a large North American customer. However, with its balance sheet and its U.K. business still strong, Latchways appeared more than capable of recovering when Europe’s economy does the same. We added to our position throughout the year, and it was RIP’s second-largest holding at year end. AVEVA Group is a British multinational IT company headquartered in Cambridge, U.K. The firm’s exposure to the energy industry—it provides technology to the marine, oil & gas, power, and process industries—combined with a profit warning (driven by contract delays) and a restructuring of its sales force combined to push its share price down. We like its mission-critical software and history of not running in sync with oil prices. Germany’s LPKF Laser & Electronics develops specialized mechanical engineering products for electronics production, the automotive industry, and in the manufacture of solar cells. A revised outlook for 2014 kept investors selling, but we believe the case for long-term growth remained intact. The strength of the U.S. dollar also played a role in the performance of many non-U.S. holdings.

    Holdings headquartered in India made the largest positive impact on performance in 2014. RIP’s top contributor to performance was Bajaj Finance, an Indian business offering an array of services including wealth management, commercial lending, and consumer finance. Improved profitability and earnings, as well as the more optimistic outlook for the Indian economy in the wake of May’s elections, seemed to draw attention to the stock. We reduced our position as its shares climbed.

Top Contributors to Performance For 2014 (%)1
Bajaj Finance	1.67
Motherson Sumi Systems	0.62
Signet Jewelers	0.61
Silverlake Axis	0.48
STRATEC Biomedical	0.44
1 Includes dividends

Top Detractors from Performance For 2014 (%)2
LPS Brasil Consultoria
de Imoveis	-1.38
Nokian Renkaat	-1.24
Latchways	-1.10
AVEVA Group	-0.95
LPKF Laser & Electronics	-0.79
2 Net of dividends

CURRENT POSITIONING AND OUTLOOK

At the end of 2014, the portfolio was overweight in cyclical sectors such as Industrials, Consumer Discretionary, and Information Technology. It also had a significant overweight in Health Care. At the country level, the Fund had greater exposure than the benchmark to companies headquartered in the U.K., Switzerland, India, Hong Kong, Brazil, and Germany.

28 | The Royce Funds 2014 Annual Report to Shareholders

PERFORMANCE AND PORTFOLIO REVIEW TICKER SYMBOLS RYIPX RIPNX

Performance and Expenses
Average Annual Total Return (%) Through 12/31/14
	JUL-DEC 2014*	1-YR	3-YR	SINCE INCEPTION (12/31/10)
RIP	-11.11	-8.22	10.25	2.77
Annual Gross Operating Expenses: 2.82%  Annual Net Operating Expenses: 1.69%
*Not Annualized

Relative Returns: Monthly Rolling Average Annual Return Periods

Since Inception Through 12/31/14

On a monthly rolling basis, the Fund outperformed the Russell Glo x US SC in 69% of all 3-year periods; and 68% of all 1-year periods.

	PERIODS BEATING THE INDEX		FUND AVG (%)*	INDEX AVG (%)*
3-year	9/13	69%	7.7	6.9
1-year	25/37	68%	7.7	7.1

*Average of monthly rolling average annual total returns over the specified periods.

Morningstar Style Map^TM  As of 12/31/14

The Morningstar Style Map is the Morningstar Style Box^TM with the center 75% of fund holdings plotted as the Morningstar Ownership Zone^TM. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 74 for additional information.

Value of $10,000
Invested on 12/31/10 as of 12/31/14 ($)

Top 10 Positions
% of Net Assets
Bajaj Finance	3.1
Latchways	2.9
Pico Far East Holdings	2.9
VZ Holding	2.7
Consort Medical	2.7
Clarkson	2.7
Totvs	2.6
Motherson Sumi Systems	2.6
Semperit AG Holding	2.5
Abcam	2.5

Portfolio Sector Breakdown
% of Net Assets
Industrials	20.1
Consumer Discretionary	20.1
Information Technology	17.6
Financials	15.9
Health Care	13.9
Materials	6.7
Consumer Staples	4.7
Energy	2.1
Cash and Cash Equivalents	-1.1

Upside/Downside Capture Ratios
Periods Ended 12/31/14 (%)
	UPSIDE	DOWNSIDE
Fund’s First Full Quarter
(12/31/10)	89	83

Calendar Year Total Returns (%)
YEAR	RIP
2014	-8.2
2013	18.3
2012	23.4
2011	-16.8

Portfolio Country Breakdown1,2
% of Net Assets
United Kingdom	30.6
Switzerland	16.7
India	7.5
Japan	7.0
Hong Kong	6.7
Brazil	6.3
Germany	6.1
Austria	5.0
Italy	4.0

1	Represents countries that are 3% or more of net assets.
2	Securities are categorized by the country of their headquarters.

Portfolio Diagnostics
Fund Net Assets	$8 million
Number of Holdings	46
Turnover Rate	62%
Average Market Capitalization1	$1,545 million
Weighted Average P/E Ratio2,3	18.6x
Weighted Average P/B Ratio2	2.9x
Holdings ≥ 75% of Total Investments	32
Active Share4	99%

1	Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2	Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3	The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (0% of portfolio holdings as of 12/31/14).
4	Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

Important Performance and Expense Information

All performance information in this Report reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 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 month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Price and total return information is based on net asset values for shareholder transactions. Certain immaterial adjustments were made to the net assets of Royce International Premier Fund at 6/30/14 for financial reporting purposes, and as a result the net asset values for shareholder transactions and the calendar year total returns based on those net assets values differ from the adjusted net values and calendar year total returns reported in the Financial Highlights. Gross operating expenses reflect total gross annual operating expenses and include management fees, 12b-1 distribution and service fees, and other expenses. Net operating expenses reflect contractual fee waivers and/or expense 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 expenses, (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business), at or below 1.69% through April 30, 2015 and at or below 1.99% through April 30, 2024. Regarding the “Top Contributors” and “Top Detractors” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2014. Upside Capture Ratio measures a manager’s performance in up markets relative to the Fund’s benchmark. It is calculated by measuring the Fund’s performance in quarters when the benchmark went up and dividing it by the benchmark’s return in those quarters. Downside Capture Ratio measures a Managers’ performance in down markets relative to the Fund’s benchmark (Russell Global ex-U.S. Small Cap). It is calculated by measuring the Fund’s performance in quarters when the benchmark goes down and dividing it by the benchmark’s return in those quarters.

The Royce Funds 2014 Annual Report to Shareholders | 29

Schedules of Investments

Royce Select Fund I
Common Stocks – 93.2%

	SHARES		VALUE
CONSUMER DISCRETIONARY – 13.5%
AUTO COMPONENTS - 2.6%
Drew Industries 1	6,286	$	321,026
Gentex Corporation	19,050		688,277
			1,009,303
AUTOMOBILES - 1.6%
Thor Industries	11,445		639,432
HOUSEHOLD DURABLES - 1.8%
NVR 1	570		726,938
MEDIA - 1.5%
E.W. Scripps Company Cl. A 1	15,170		339,050
Wiley (John) & Sons Cl. A	3,900		231,036
			570,086
SPECIALTY RETAIL - 4.8%
†Buckle (The)	18,185		955,076
Genesco 1	12,065		924,420
			1,879,496
TEXTILES, APPAREL & LUXURY GOODS - 1.2%
†Movado Group	16,276		461,750
Total (Cost $4,197,385)			5,287,005
CONSUMER STAPLES – 2.5%
FOOD PRODUCTS - 0.9%
Cal-Maine Foods	9,008		351,582
PERSONAL PRODUCTS - 1.6%
†Nu Skin Enterprises Cl. A	14,620		638,894
Total (Cost $1,159,229)			990,476
ENERGY – 9.9%
ENERGY EQUIPMENT & SERVICES - 9.9%
Helmerich & Payne	9,230		622,287
Oil States International 1	13,380		654,282
Pason Systems	37,870		713,526
SEACOR Holdings 1	5,319		392,595
TGS-NOPEC Geophysical	37,670		815,041
Unit Corporation 1	20,095		685,239
Total (Cost $3,774,198)			3,882,970
FINANCIALS – 11.2%
CAPITAL MARKETS - 6.1%
†Artisan Partners Asset Management Cl. A	9,460		478,014
Federated Investors Cl. B	21,690		714,252
Lazard Cl. A	13,040		652,391
SEI Investments	13,665		547,147
			2,391,804
INSURANCE - 3.4%
Alleghany Corporation 1	1,530		709,155
Validus Holdings	14,970		622,153
			1,331,308
THRIFTS & MORTGAGE FINANCE - 1.7%
†Genworth MI Canada	20,330		647,102
Total (Cost $3,074,176)			4,370,214
HEALTH CARE – 6.7%
BIOTECHNOLOGY - 1.8%
Myriad Genetics 1	20,615		702,147
LIFE SCIENCES TOOLS & SERVICES - 3.6%
Bio-Rad Laboratories Cl. A 1	5,035		607,019
Bio-Techne	8,514		786,694
			1,393,713
PHARMACEUTICALS - 1.3%
†Lannett Company 1	11,835		507,485
Total (Cost $1,994,163)			2,603,345
INDUSTRIALS – 19.4%
COMMERCIAL SERVICES & SUPPLIES - 0.9%
Ritchie Bros. Auctioneers	13,540		364,091
ELECTRICAL EQUIPMENT - 2.3%
EnerSys	9,415		581,094
Global Power Equipment Group	24,048		332,103
			913,197
INDUSTRIAL CONGLOMERATES - 1.2%
Carlisle Companies	4,990		450,297
MACHINERY - 9.6%
CIRCOR International	11,352		684,299
Columbus McKinnon	16,455		461,398
John Bean Technologies	23,959		787,293
Kennametal	10,500		375,795
Timken Company (The)	9,845		420,185
Valmont Industries	5,835		741,045
Wabtec Corporation	3,468		301,334
			3,771,349
PROFESSIONAL SERVICES - 3.5%
ICF International 1	17,273		707,847
Robert Half International	4,383		255,880
Towers Watson & Co. Cl. A	3,500		396,095
			1,359,822
TRADING COMPANIES & DISTRIBUTORS - 1.9%
†Aceto Corporation	17,800		386,260
MSC Industrial Direct Cl. A	4,567		371,069
			757,329
Total (Cost $5,903,816)			7,616,085
INFORMATION TECHNOLOGY – 20.4%
COMMUNICATIONS EQUIPMENT - 1.6%
ADTRAN	28,619		623,894
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 4.1%
Coherent 1	6,836		415,082
Dolby Laboratories Cl. A	4,545		195,980
IPG Photonics 1	5,480		410,562
Rofin-Sinar Technologies 1	20,992		603,940
			1,625,564
INTERNET SOFTWARE & SERVICES - 1.8%
†j2 Global	11,235		696,570
IT SERVICES - 1.9%
Sykes Enterprises 1	32,445		761,484
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 9.5%
Cabot Microelectronics 1	3,996		189,091
Integrated Silicon Solution	46,434		769,411
MKS Instruments	23,445		858,087
Nanometrics 1	41,928		705,229
Teradyne	27,750		549,172
Tessera Technologies	5,805		207,587
Veeco Instruments 1	12,500		436,000
			3,714,577
SOFTWARE - 0.5%
Mentor Graphics	8,840		193,773

30 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Select Fund I (continued)
	SHARES		VALUE
INFORMATION TECHNOLOGY (continued)
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 1.0%
Silicon Graphics International1	34,450	$	392,041
Total (Cost $5,992,108)			8,007,903
MATERIALS – 6.7%
CHEMICALS - 3.5%
Innospec	14,847		633,967
Minerals Technologies	10,436		724,780
			1,358,747
METALS & MINING - 2.4%
Major Drilling Group International	35,890		176,392
Reliance Steel & Aluminum	12,570		770,164
			946,556
PAPER & FOREST PRODUCTS - 0.8%
Schweitzer-Mauduit International	7,955		336,496
Total (Cost $2,019,476)			2,641,799
MISCELLANEOUS 3 – 2.9%
Total (Cost $1,041,103)			1,141,726
TOTAL COMMON STOCKS
(Cost $29,155,654)			36,541,523
REPURCHASE AGREEMENT – 2.6%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $1,020,000 (collateralized by obligations of various U.S. Government Agencies, 1.06% due 10/12/17, valued at $1,044,750)
(Cost $1,020,000)			1,020,000
TOTAL INVESTMENTS – 95.8%
(Cost $30,175,654)			37,561,523
CASH AND OTHER ASSETS LESS LIABILITIES – 4.2%			1,658,827
NET ASSETS – 100.0%		$	39,220,350

Royce Micro-Cap Discovery Fund
Common Stocks – 93.9%
	SHARES		VALUE
CONSUMER DISCRETIONARY – 11.9%
AUTO COMPONENTS - 1.9%
†Remy International	1,900	$	39,748
Standard Motor Products	1,800		68,616
			108,364
DISTRIBUTORS - 0.5%
VOXX International Cl. A1	3,100		27,156
DIVERSIFIED CONSUMER SERVICES - 1.6%
Steiner Leisure1	1,900		87,799
HOTELS, RESTAURANTS & LEISURE - 1.3%
Monarch Casino & Resort1	4,200		69,678
HOUSEHOLD DURABLES - 1.5%
†Flexsteel Industries	1,700		54,825
Hooker Furniture	1,800		30,906
			85,731
LEISURE PRODUCTS - 1.2%
Arctic Cat	1,843		65,427
MEDIA - 1.2%
Harte-Hanks	8,800		68,112
MULTILINE RETAIL - 0.8%
Fred’s Cl. A	2,500		43,525
TEXTILES, APPAREL & LUXURY GOODS - 1.9%
Culp	2,400		52,032
†Perry Ellis International1	2,100		54,453
			106,485
Total (Cost $615,627)			662,277
CONSUMER STAPLES – 5.4%
FOOD & STAPLES RETAILING - 2.2%
Village Super Market Cl. A	4,500		123,165
FOOD PRODUCTS - 2.0%
John B. Sanfilippo & Son	1,600		72,800
†SunOpta 1	3,300		39,105
			111,905
HOUSEHOLD PRODUCTS - 0.7%
†Central Garden & Pet1	4,700		41,266
PERSONAL PRODUCTS - 0.5%
†Medifast 1	800		26,840
Total (Cost $274,595)			303,176
ENERGY – 4.0%
ENERGY EQUIPMENT & SERVICES - 2.1%
†Gulf Island Fabrication	2,000		38,780
Matrix Service1	1,900		42,408
†Tesco Corporation	2,900		37,178
			118,366
OIL, GAS & CONSUMABLE FUELS - 1.9%
†Pacific Ethanol1	3,900		40,287
REX American Resources1	400		24,788
TransGlobe Energy	4,000		16,560
VAALCO Energy1	4,800		21,888
			103,523
Total (Cost $284,078)			221,889
FINANCIALS – 8.0%
CONSUMER FINANCE - 1.5%
†Regional Management1	3,400		53,754
World Acceptance1	400		31,780
			85,534

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders  |  31

Schedules of Investments

Royce Micro-Cap Discovery Fund (continued)
	SHARES		VALUE
FINANCIALS (continued)
INSURANCE - 6.5%
EMC Insurance Group	1,500	$	53,190
Employers Holdings	2,800		65,828
Hallmark Financial Services1	2,800		33,852
†Investors Title Company	800		57,888
Kansas City Life Insurance	500		24,015
Safety Insurance Group	700		44,807
United Fire Group	1,400		41,622
†Universal Insurance Holdings	2,000		40,900
			362,102
Total (Cost $378,354)			447,636
HEALTH CARE – 14.5%
HEALTH CARE EQUIPMENT & SUPPLIES - 10.9%
AngioDynamics 1	3,600		68,436
Atrion Corporation	200		68,002
CryoLife	5,200		58,916
Cynosure Cl. A1	1,000		27,420
Exactech1	3,800		89,566
Invacare Corporation	7,000		117,320
Meridian Bioscience	3,400		55,964
Utah Medical Products	2,000		120,100
			605,724
HEALTH CARE PROVIDERS & SERVICES - 2.1%
National HealthCare	1,900		119,396
LIFE SCIENCES TOOLS & SERVICES - 1.5%
†Affymetrix 1	4,000		39,480
Harvard Bioscience1	7,700		43,659
			83,139
Total (Cost $694,034)			808,259
INDUSTRIALS – 19.1%
AEROSPACE & DEFENSE - 0.6%
American Science and Engineering	700		36,330
BUILDING PRODUCTS - 1.1%
American Woodmark1	1,500		60,660
COMMERCIAL SERVICES & SUPPLIES - 1.6%
Courier Corporation	2,500		37,300
†Kimball International Cl. B	5,800		52,896
			90,196
CONSTRUCTION & ENGINEERING - 4.1%
Aegion Corporation1	2,200		40,942
Comfort Systems USA	4,489		76,851
MYR Group1	4,000		109,600
			227,393
ELECTRICAL EQUIPMENT - 1.8%
†Jinpan International	8,000		51,520
†SL Industries1	1,300		50,700
			102,220
MACHINERY - 4.1%
Alamo Group	1,100		53,284
Miller Industries	5,920		123,077
†Supreme Industries Cl. A	7,100		50,126
			226,487
PROFESSIONAL SERVICES - 4.7%
CDI Corporation	2,200		38,962
Heidrick & Struggles International	1,600		36,880
ICF International1	1,200		49,176
Resources Connection	2,800		46,060
VSE Corporation	1,400		92,260
			263,338
TRADING COMPANIES & DISTRIBUTORS - 1.1%
Willis Lease Finance1	2,800		61,320
Total (Cost $914,656)			1,067,944
INFORMATION TECHNOLOGY – 16.3%
COMMUNICATIONS EQUIPMENT - 4.7%
Comtech Telecommunications	2,600		81,952
Digi International1	3,700		34,373
†Harmonic 1	4,300		30,143
PCTEL	6,300		54,558
TESSCO Technologies	2,200		63,800
			264,826
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 5.0%
Daktronics	6,400		80,064
Fabrinet 1	2,900		51,446
PC Connection	3,400		83,470
†Vishay Precision Group1	3,600		61,776
			276,756
INTERNET SOFTWARE & SERVICES - 0.9%
Liquidity Services1	3,000		24,510
†Monster Worldwide1	6,200		28,644
			53,154
IT SERVICES - 3.3%
Computer Task Group	7,900		75,287
†Global Cash Access Holdings1	4,400		31,460
†Hackett Group (The)	4,300		37,797
Sykes Enterprises1	1,700		39,899
			184,443
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.7%
Pericom Semiconductor1	2,800		37,912
SOFTWARE - 1.7%
American Software Cl. A	5,342		48,666
Ebix	2,600		44,174
			92,840
Total (Cost $872,307)			909,931
MATERIALS – 10.0%
CHEMICALS - 2.9%
FutureFuel Corporation	4,900		63,798
KMG Chemicals	1,100		22,000
Trecora Resources1	5,300		77,910
			163,708
CONSTRUCTION MATERIALS - 2.1%
United States Lime & Minerals	1,600		116,576
CONTAINERS & PACKAGING - 1.8%
†UFP Technologies1	3,940		96,865
METALS & MINING - 3.2%
Ampco-Pittsburgh	2,600		50,050
Haynes International	1,400		67,900
Materion Corporation	1,100		38,753
Universal Stainless & Alloy Products1	900		22,635
			179,338
Total (Cost $485,818)			556,487

32  |  The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Micro-Cap Discovery Fund (continued)
	SHARES		VALUE
MISCELLANEOUS 3 – 4.7%
Total (Cost $274,350)		$	260,474
TOTAL COMMON STOCKS
(Cost $4,793,819)			5,238,073
REPURCHASE AGREEMENT – 6.5%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $361,000 (collateralized by obligations of various U.S. Government Agencies, 1.06% due 10/12/17, valued at $373,125)
(Cost $361,000)			361,000
TOTAL INVESTMENTS – 100.4%
(Cost $5,154,819)			5,599,073
LIABILITIES LESS CASH AND OTHER ASSETS – (0.4)%			(23,925	)
NET ASSETS – 100.0%		$	5,575,148

Royce Financial Services Fund
Common Stocks – 97.0%
	SHARES		VALUE
BANKS - 3.9%
BLOM Bank GDR	8,000	$	82,000
CIT Group	19,500		932,685
First Citizens BancShares Cl. A	1,900		480,301
First Republic Bank	11,600		604,592
Total (Cost $1,815,698)			2,099,578
CAPITAL MARKETS - 53.8%
AllianceBernstein Holding L.P.	16,500		426,195
Apollo Global Management LLC Cl. A	30,200		712,116
†ARA Asset Management	470,000		601,994
Artisan Partners Asset Management Cl. A	15,900		803,427
Ashmore Group	145,000		628,646
CETIP - Mercados Organizados	40,700		492,921
Charles Schwab	34,800		1,050,612
Coronation Fund Managers	62,000		611,747
Cowen Group1	117,600		564,480
Diamond Hill Investment Group	6,900		952,476
†Dundee Corporation Cl. A1	42,100		464,194
Edmond de Rothschild (Suisse)	20		307,282
Egyptian Financial Group-Hermes Holding
Company 1	255,000		549,584
Federated Investors Cl. B	35,600		1,172,308
Financial Engines	22,400		818,720
GMP Capital	108,000		590,291
Interactive Brokers Group Cl. A	12,800		373,248
Invesco	8,000		316,160
IOOF Holdings	11,528		83,140
Jupiter Fund Management	147,000		825,288
Manning & Napier Cl. A	15,800		218,356
†Medley Management Cl. A	52,200		767,340
Monroe Capital	58,050		839,403
MVC Capital	47,100		462,993
Northern Trust	14,900		1,004,260
Oaktree Capital Group LLC Cl. A	4,700		243,601
Och-Ziff Capital Management
Group LLC Cl. A	73,300		856,144
Oppenheimer Holdings Cl. A	10,000		232,500
Piper Jaffray1	15,300		888,777
Qalaa Holdings1	150,000		60,209
Raymond James Financial	14,600		836,434
Reinet Investments	5,500		117,786
RHJ International1	99,000		553,016
SEI Investments	14,200		568,568
SHUAA Capital1	580,000		102,250
Silvercrest Asset Management Group Cl. A	41,600		651,040
SPARX Group	220,000		370,255
Sprott	391,500		822,224
State Street	10,150		796,775
Stifel Financial1	17,873		911,881
TD Ameritrade Holding Corporation	19,300		690,554
Tokai Tokyo Financial Holdings	9,400		64,316
U.S. Global Investors Cl. A	225,200		698,120
UOB-Kay Hian Holdings	99,122		113,442
Value Partners Group	1,176,000		982,167
Vontobel Holding	16,500		621,258
Westwood Holdings Group	15,000		927,300

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders  |  33

Schedules of Investments

Royce Financial Services Fund (continued)
	SHARES		VALUE
CAPITAL MARKETS (continued)
WisdomTree Investments	72,800	$	1,141,140
Total (Cost $25,073,946)			28,886,938
CONSUMER FINANCE - 1.7%
†Ally Financial1	33,200		784,184
Credit Acceptance1	848		115,676
Total (Cost $817,548)			899,860
DIVERSIFIED FINANCIAL SERVICES - 9.9%
Bolsa Mexicana de Valores	248,000		449,144
Bolsas y Mercados Espanoles	15,500		597,478
Bursa Malaysia	160,000		369,377
CRISIL	28,000		842,122
Hellenic Exchanges - Athens Stock Exchange	36,000		202,355
JSE	61,000		637,144
Leucadia National	23,801		533,618
†MarketAxess Holdings	9,200		659,732
MSCI	8,700		412,728
Singapore Exchange	63,000		370,420
Warsaw Stock Exchange	19,000		244,821
Total (Cost $4,646,022)			5,318,939
HOTELS, RESTAURANTS & LEISURE - 0.1%
Thomas Cook (India)	30,600		77,837
Total (Cost $28,633)			77,837
INSURANCE - 10.8%
E-L Financial	800		470,305
First American Financial	5,000		169,500
Greenlight Capital Re Cl. A1	18,600		607,290
Infinity Property & Casualty	10,000		772,600
Jardine Lloyd Thompson Group	11,900		165,077
Marsh & McLennan	17,800		1,018,872
†ProAssurance Corporation	18,000		812,700
RLI Corp.	20,600		1,017,640
State Auto Financial	33,800		751,036
Total (Cost $4,919,617)			5,785,020
INTERNET SOFTWARE & SERVICES - 1.8%
†Envestnet1	15,200		746,928
Xoom Corporation1	11,900		208,369
Total (Cost $961,394)			955,297
INVESTMENT COMPANIES - 1.4%
RIT Capital Partners	33,500		729,372
Total (Cost $682,554)			729,372
IT SERVICES - 2.5%
Broadridge Financial Solutions	21,900		1,011,342
Vantiv Cl. A1	10,000		339,200
Total (Cost $859,980)			1,350,542
MEDIA - 0.5%
Morningstar	4,600		297,666
Total (Cost $181,190)			297,666
PROFESSIONAL SERVICES - 2.7%
Towers Watson & Co. Cl. A	5,500		622,435
Verisk Analytics Cl. A1	12,800		819,840
Total (Cost $1,006,145)			1,442,275
REAL ESTATE MANAGEMENT & DEVELOPMENT - 2.6%
†FirstService Corporation	18,400		935,824
Midland Holdings1	800,000		404,198
Novation Companies1,2	223,459		62,569
Total (Cost $1,361,248)			1,402,591
SOFTWARE - 2.5%
Fair Isaac	7,400		535,020
†SS&C Technologies Holdings	14,200		830,558
Total (Cost $783,892)			1,365,578
MISCELLANEOUS 3 - 2.8%
Total (Cost $1,419,161)			1,494,238
TOTAL COMMON STOCKS
(Cost $44,557,028)			52,105,731
REPURCHASE AGREEMENT – 3.3%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $1,739,000 (collateralized by obligations of various U.S. Government Agencies, 1.06% due 10/12/17, valued at $1,776,075)
(Cost $1,739,000)			1,739,000
TOTAL INVESTMENTS – 100.3%
(Cost $46,296,028)			53,844,731
LIABILITIES LESS CASH AND OTHER ASSETS – (0.3)%			(137,702	)
NET ASSETS – 100.0%		$	53,707,029

34  |  The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Select Fund II
Common Stocks – 100.3%
	SHARES		VALUE
CONSUMER DISCRETIONARY – 17.3%
AUTO COMPONENTS - 3.0%
†Nishikawa Rubber	3,400	$	57,903
Selamat Sempurna	118,900		45,350
Standard Motor Products	900		34,308
			137,561
DIVERSIFIED CONSUMER SERVICES - 1.2%
Lincoln Educational Services	19,300		54,426
HOUSEHOLD DURABLES - 0.7%
†Turtle Beach1	10,600		33,814
INTERNET & CATALOG RETAIL - 2.3%
†Blue Nile1	1,571		56,572
†Trade Me	17,200		48,007
			104,579
LEISURE PRODUCTS - 2.0%
†Arctic Cat	1,000		35,500
Nautilus 1	3,800		57,684
			93,184
MEDIA - 4.3%
†McClatchy Company (The) Cl. A 1	16,500		54,780
†Pico Far East Holdings	128,500		29,445
†Rentrak Corporation1	600		43,692
†T4F Entretenimento1	61,200		66,315
			194,232
MULTILINE RETAIL - 1.3%
New World Department Store China	100,400		32,097
†Parkson Retail Asia	42,200		25,486
			57,583
SPECIALTY RETAIL - 0.4%
Cache1	100,000		20,000
TEXTILES, APPAREL & LUXURY GOODS - 2.1%
Daphne International Holdings	1,500		544
†Taiwan Paiho	44,400		59,825
†Xtep International Holdings	88,000		35,446
			95,815
Total (Cost $788,903)			791,194
CONSUMER STAPLES – 3.8%
FOOD & STAPLES RETAILING - 0.8%
†Grupo Comercial Chedraui1	12,600		37,124
FOOD PRODUCTS - 3.0%
Farmer Bros.1,5	1,523		44,852
First Resources	39,200		55,275
SunOpta 1,5	3,181		37,695
			137,822
Total (Cost $158,200)			174,946
ENERGY – 2.3%
ENERGY EQUIPMENT & SERVICES - 2.3%
†Canyon Services Group	4,800		37,142
Matrix Service1	1,700		37,944
Total Energy Services	2,500		27,931
Total (Cost $111,008)			103,017
FINANCIALS – 9.7%
CAPITAL MARKETS - 8.6%
Ashmore Group	16,900		73,270
†Aurelius	700		26,651
†FXCM Cl. A	1,900		31,483
†Mattioli Woods	6,100		42,740
†Medley Management Cl. A	3,300		48,510
†Newtek Business Services1	3,300		48,708
†SPARX Group	33,500		56,380
†Tokai Tokyo Financial Holdings	9,500		65,000
			392,742
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.1%
†Sun Frontier Fudousan	5,600		51,375
Total (Cost $468,125)			444,117
HEALTH CARE – 3.5%
HEALTH CARE EQUIPMENT & SUPPLIES - 1.3%
†Meridian Bioscience	3,600		59,256
HEALTH CARE PROVIDERS & SERVICES - 1.4%
†Al Noor Hospitals Group	4,300		66,035
PHARMACEUTICALS - 0.8%
†Recipharm 1	2,000		34,345
Total (Cost $165,707)			159,636
INDUSTRIALS – 30.1%
AEROSPACE & DEFENSE - 2.0%
†FLYHT Aerospace Solutions1	129,800		41,337
†Magellan Aerospace	4,200		48,876
			90,213
AIR FREIGHT & LOGISTICS - 1.3%
Aramex	71,300		59,866
BUILDING PRODUCTS - 1.8%
†Norcros	141,700		39,690
†Patrick Industries1	1,000		43,980
			83,670
COMMERCIAL SERVICES & SUPPLIES - 4.4%
†Atento 1,5	5,200		54,340
†Collection House	11		18
†Programmed Maintenance Services	19,500		40,763
†Steelcase Cl. A	3,100		55,645
†Tomra Systems	6,400		49,276
			200,042
CONSTRUCTION & ENGINEERING - 0.8%
†Furmanite Corporation1	4,700		36,754
MACHINERY - 9.9%
CB Industrial Product Holding	55,800		32,044
Freund Corporation	6,800		58,973
†Kinik Company	16,000		32,870
†Mincon Group	35,900		28,256
Obara Group	1,000		44,397
†Tecumseh Products1	12,000		37,080
†Trifast	31,800		53,332
†Wabash National1	5,900		72,924
Zuiko Corporation	2,200		95,222
			455,098
MARINE - 1.2%
Clarkson	1,900		56,083
PROFESSIONAL SERVICES - 5.1%
Acacia Research5	4,850		82,159
†Franklin Covey1,5	2,310		44,722
Nihon M&A Center	1,800		54,611
†YAMADA Consulting Group	2,000		51,450
			232,942

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders  |  35

Schedules of Investments

Royce Select Fund II (continued)
	SHARES		VALUE
INDUSTRIALS (continued)
ROAD & RAIL - 1.4%
†Trancom	1,600	$	64,452
TRADING COMPANIES & DISTRIBUTORS - 2.2%
†Brammer	11,000		58,268
†Bufab Holding1	5,400		40,570
			98,838
Total (Cost $1,371,744)			1,377,958
INFORMATION TECHNOLOGY – 23.0%
COMMUNICATIONS EQUIPMENT - 1.6%
CalAmp Corporation1	2,600		47,580
Comba Telecom Systems Holdings	74,860		26,487
			74,067
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 3.4%
Hollysys Automation Technologies1,5	2,200		53,746
†Suprema 1	2,100		48,139
†UDE Corporation	20,800		51,348
			153,233
INTERNET SOFTWARE & SERVICES - 5.2%
†aufeminin 1	1,200		36,923
†Care.com 1	5,600		46,368
†QuinStreet1	14,000		84,980
†Tomorrow Focus	5,800		26,505
†XING	400		44,917
			239,693
IT SERVICES - 0.7%
Metrofile Holdings	74,300		32,092
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 8.6%
†Amtech Systems1	7,257		73,659
Brooks Automation5	7,065		90,079
Eugene Technology	4,025		58,992
Kulicke & Soffa Industries1	3,500		50,610
Photronics 1,5	8,440		70,136
†Suss MicroTec1	8,500		48,330
			391,806
SOFTWARE - 3.5%
†Cyient	2,900		23,683
†Globo 1	60,500		37,640
†KPIT Technologies	10,300		33,062
†Lectra	2,900		32,077
SeaChange International1	5,000		31,900
			158,362
Total (Cost $963,144)			1,049,253
MATERIALS – 6.1%
CHEMICALS - 0.7%	1,100		30,745
†Fujimori Kogyo
CONTAINERS & PACKAGING - 1.2%
†UFP Technologies1	2,239		55,046
METALS & MINING - 1.4%
Imdex 1	160,500		62,226
PAPER & FOREST PRODUCTS - 2.8%
†TFS Corporation	30,300		38,037
†Western Forest Products	39,900		92,727
			130,764
Total (Cost $283,118)			278,781
MISCELLANEOUS3– 4.5%
Total (Cost $248,679)			206,061
TOTAL COMMON STOCKS
(Cost $4,558,628)			4,584,963
REPURCHASE AGREEMENT – 3.7%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $169,000 (collateralized by obligations of various U.S. Government Agencies, 1.06% due 10/12/17, valued at $174,125)
(Cost $169,000)			169,000
TOTAL INVESTMENTS – 104.0%
(Cost $4,727,628)			4,753,963
LIABILITIES LESS CASH AND OTHER ASSETS - (4.0)%			(180,934	)
NET ASSETS – 100.0%		$	4,573,029
Securities Sold Short
Common Stocks – 1.6%
ENERGY – 1.1%
OIL, GAS & CONSUMABLE FUELS - 1.1%
ProShares UltraShort Oil & Gas	900	$	48,006
Total (Proceeds $55,503)			48,006
INDUSTRIALS – 0.5%
MACHINERY - 0.5%
Douglas Dynamics	1,100		23,573
Total (Proceeds $25,359)			23,573
TOTAL SECURITIES SOLD SHORT
(Proceeds $80,862)		$	71,579

36  |  The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce European Smaller-Companies Fund
Common Stocks – 98.4%
	SHARES		VALUE
AUSTRIA – 5.5%
Mayr-Melnhof Karton	6,000	$	622,651
Semperit AG Holding	12,000		580,681
Total (Cost $1,233,410)			1,203,332
BELGIUM – 2.4%
Sipef	5,000		288,476
Van de Velde	5,000		235,560
Total (Cost $655,807)			524,036
CHINA – 1.3%
†Joyou 1	20,000		281,014
Total (Cost $331,138)			281,014
CYPRUS – 1.7%
Globaltrans Investment GDR	75,000		380,819
Total (Cost $856,903)			380,819
DENMARK – 1.0%
†Zealand Pharma1	16,600		223,867
Total (Cost $219,936)			223,867
FINLAND – 2.2%
Nokian Renkaat	20,000		489,875
Total (Cost $811,245)			489,875
FRANCE – 22.7%
Altamir	35,000		436,910
Alten	8,550		365,614
Audika Groupe	25,000		340,877
Boiron	4,000		337,501
Gaztransport Et Technigaz	3,000		177,176
†Lectra	30,000		331,827
Manutan International	9,000		446,242
†Nexity	10,000		378,309
Parrot 1	12,000		307,651
†SEB	3,000		223,257
Societe Internationale de Plantations
d’Heveas	10,000		398,654
Stallergenes	8,500		508,695
Vetoquinol	8,500		369,223
Virbac	1,700		356,678
Total (Cost $5,308,265)			4,978,614
GERMANY – 7.8%
Aixtron1	17,500		198,377
Amadeus Fire	3,000		225,665
Bertrandt	2,300		320,054
LPKF Laser & Electronics	37,500		491,324
SNP Schneider-Neureither & Partner	17,500		295,491
Takkt	11,000		181,077
Total (Cost $2,026,876)			1,711,988
IRELAND – 1.1%
†Mincon Group	294,000		231,405
Total (Cost $389,318)			231,405
ITALY – 5.5%
Azimut Holding	15,000		323,599
De’Longhi	10,000		181,109
DiaSorin	11,500		463,765
Recordati	16,000		248,754
Total (Cost $888,941)			1,217,227
NETHERLANDS – 2.5%
†Brunel International	15,000		245,830
Fugro	15,000		309,399
Total (Cost $888,315)			555,229
NORWAY – 4.1%
†Borregaard	40,000		297,320
Fred. Olsen Energy	25,000		227,886
TGS-NOPEC Geophysical	17,500		378,636
Total (Cost $1,388,669)			903,842
POLAND – 1.7%
†Elektrobudowa	17,500		364,788
Total (Cost $478,047)			364,788
SLOVENIA – 2.0%
Krka d.d., Novo mesto	6,000		432,884
Total (Cost $512,898)			432,884
SWEDEN – 1.5%
Lundin Petroleum1	23,000		328,880
Total (Cost $480,174)			328,880
SWITZERLAND – 3.7%
†Carlo Gavazzi Holding	1,500		318,071
VZ Holding	2,800		500,443
Total (Cost $717,382)			818,514
UNITED KINGDOM – 31.7%
Ashmore Group	140,000		606,968
AVEVA Group	19,500		399,173
Clarkson	14,000		413,246
Consort Medical	36,000		484,446
Domino Printing Sciences	37,500		383,296
E2V Technologies	165,000		443,913
Elementis	100,000		404,697
EnQuest 1	264,500		144,515
Jupiter Fund Management	40,000		224,568
Keller Group	10,000		135,687
†Kennedy Wilson Europe Real Estate	29,970		492,331
Latchways	35,000		392,694
Polypipe Group	70,000		268,252
Rotork	6,300		226,707
†Senior	100,000		468,015
Severfield1	300,000		317,903
Spirax-Sarco Engineering	5,300		235,535
Spirent Communications	325,000		382,255
†Synthomer	85,000		310,755
†Xaar	37,500		225,205
Total (Cost $7,796,956)			6,960,161
TOTAL COMMON STOCKS
(Cost $24,984,280)			21,606,475

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders  |  37

Schedules of Investments

Royce European Smaller-Companies Fund (continued)
		VALUE
REPURCHASE AGREEMENT – 2.3%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $515,000 (collateralized by obligations of various U.S. Government Agencies, 1.06% due 10/12/17, valued at $527,350)
(Cost $515,000)	$	515,000
TOTAL INVESTMENTS – 100.7%
(Cost $25,499,280)		22,121,475
LIABILITIES LESS CASH AND OTHER ASSETS – (0.7)%		(148,899	)
NET ASSETS – 100.0%	$	21,972,576

Royce Enterprise Select Fund
Common Stocks – 72.1%
	SHARES		VALUE
CONSUMER DISCRETIONARY – 21.6%
AUTO COMPONENTS - 3.4%
BorgWarner	400	$	21,980
†Dorman Products1	460		22,204
†Drew Industries1	460		23,492
Standard Motor Products	740		28,209
			95,885
AUTOMOBILES - 2.8%
Thor Industries	1,400		78,218
DISTRIBUTORS - 0.2%
Core-Mark Holding Company	110		6,812
HOUSEHOLD DURABLES - 4.1%
Garmin	920		48,604
Mohawk Industries1	190		29,518
NVR 1	30		38,260
			116,382
MULTILINE RETAIL - 2.0%
Dollar Tree1	790		55,600
SPECIALTY RETAIL - 7.2%
Advance Auto Parts	360		57,341
†Bed Bath & Beyond1	800		60,936
Finish Line (The) Cl. A	2,040		49,592
Monro Muffler Brake	140		8,092
Ross Stores	260		24,508
			200,469
TEXTILES, APPAREL & LUXURY GOODS - 1.9%
Wolverine World Wide	1,780		52,457
Total (Cost $497,496)			605,823
ENERGY – 3.5%
ENERGY EQUIPMENT & SERVICES - 2.2%
Helmerich & Payne	690		46,520
Unit Corporation1	480		16,368
			62,888
OIL, GAS & CONSUMABLE FUELS - 1.3%
†World Fuel Services	770		36,136
Total (Cost $114,315)			99,024
FINANCIALS – 5.4%
CAPITAL MARKETS - 2.0%
Artisan Partners Asset Management Cl. A	440		22,233
†Ashmore Group	5,500		23,845
SEI Investments	240		9,610
			55,688
REAL ESTATE MANAGEMENT & DEVELOPMENT - 3.4%
Jones Lang LaSalle	120		17,992
Kennedy-Wilson Holdings	3,080		77,924
			95,916
Total (Cost $130,161)			151,604
HEALTH CARE – 1.6%
HEALTH CARE EQUIPMENT & SUPPLIES - 1.6%
DENTSPLY International	810		43,149
Total (Cost $35,226)			43,149
INDUSTRIALS – 17.0%
AEROSPACE & DEFENSE - 0.8%
Curtiss-Wright	310		21,883
COMMERCIAL SERVICES & SUPPLIES - 4.7%
Copart1	1,500		54,735
Ritchie Bros. Auctioneers	1,600		43,024

38  |  The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Enterprise Select Fund (continued)

	SHARES		VALUE
INDUSTRIALS (continued)
COMMERCIAL SERVICES & SUPPLIES (continued)
UniFirst Corporation		140	$	17,003
†Waste Connections		400		17,596
				132,358
ELECTRICAL EQUIPMENT - 0.8%
EnerSys		50		3,086
Powell Industries		70		3,435
†Sensata Technologies 1		300		15,723
				22,244
INDUSTRIAL CONGLOMERATES - 1.9%
Carlisle Companies		600		54,144
MACHINERY - 4.9%
AGCO Corporation		230		10,396
Donaldson Company		371		14,332
Kennametal		240		8,589
Mueller Industries		1,440		49,162
Mueller Water Products Cl. A		1,570		16,077
†RBC Bearings		280		18,068
†Semperit AG Holding		130		6,291
Valmont Industries		100		12,700
				135,615
PROFESSIONAL SERVICES - 2.5%
ManpowerGroup		1,040		70,897
TRADING COMPANIES & DISTRIBUTORS - 1.4%
†Applied Industrial Technologies		304		13,859
MSC Industrial Direct Cl. A		320		26,000
				39,859
Total (Cost $442,354)				477,000
INFORMATION TECHNOLOGY – 13.2%
COMMUNICATIONS EQUIPMENT - 0.0%
Plantronics		10		530
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 7.0%
Anixter International 1		500		44,230
Avnet		800		34,416
AVX Corporation		1,660		23,240
Coherent 1		640		38,861
Rogers Corporation 1		686		55,868
				196,615
IT SERVICES - 1.9%
Fiserv 1		200		14,194
Sykes Enterprises 1		660		15,490
†Teradata Corporation 1		500		21,840
				51,524
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.4%
Diodes 1		920		25,364
Lam Research		180		14,281
				39,645
SOFTWARE - 1.1%
Mentor Graphics		1,330		29,154
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 1.8%
Diebold		800		27,712
Western Digital		210		23,247
				50,959
Total (Cost $315,558)				368,427
MATERIALS – 5.7%
CHEMICALS - 4.1%
Cabot Corporation		591		25,921
Minerals Technologies		404		28,058
†Sensient Technologies		390		23,532
Westlake Chemical		610		37,265
				114,776
METALS & MINING - 0.4%
Reliance Steel & Aluminum		170		10,416
PAPER & FOREST PRODUCTS - 1.2%
Glatfelter		1,323		33,829
Total (Cost $152,361)				159,021
UTILITIES – 1.8%
GAS UTILITIES - 1.8%
UGI Corporation		1,350		51,273
Total (Cost $28,437)				51,273
MISCELLANEOUS 3- 2.3%
Total (Cost $66,284)				65,301
TOTAL COMMON STOCKS
(Cost $1,782,192)				2,020,622
FIXED INCOME -1.4%
GOVERNMENT BONDS – 1.4%
iShares 1-3 Year Treasury Bond ETF		470		39,691
TOTAL FIXED INCOME
(Cost $39,703)				39,691
REPURCHASE AGREEMENT – 27.1%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $758,000 (collateralized by obligations of various U.S. Government Agencies, 1.06% due 10/12/17, valued at $776,100)
(Cost $758,000)				758,000
TOTAL INVESTMENTS – 100.6%
(Cost $2,579,895)				2,818,313
LIABILITIES LESS CASH AND OTHER ASSETS – (0.6)%				(16,307	)
NET ASSETS – 100.0%			$	2,802,006

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 39

Schedules of Investments

Royce SMid-Cap Value Fund
Common Stocks – 96.9%
	SHARES		VALUE
CONSUMER DISCRETIONARY – 14.6%
AUTOMOBILES - 4.3%
Thor Industries		12,020	$	671,557
HOUSEHOLD DURABLES - 1.5%
Garmin		4,320		228,226
SPECIALTY RETAIL - 8.8%
†Bed Bath & Beyond1		7,040		536,237
Chico’s FAS		8,600		139,406
†Finish Line (The) Cl. A		17,400		422,994
GameStop Corporation Cl. A		8,320		281,216
				1,379,853
Total (Cost $2,077,076)				2,279,636
CONSUMER STAPLES – 2.5%
FOOD PRODUCTS - 2.5%
Cal-Maine Foods		3,480		135,824
Sanderson Farms		3,000		252,075
Total (Cost $314,237)				387,899
ENERGY – 13.4%
ENERGY EQUIPMENT & SERVICES - 10.9%
Helmerich & Payne		7,400		498,908
Pason Systems		13,420		252,852
†TGS-NOPEC Geophysical		24,120		521,869
Trican Well Service		29,700		142,390
Unit Corporation 1		8,360		285,076
				1,701,095
OIL, GAS & CONSUMABLE FUELS - 2.5%
HollyFrontier Corporation		10,580		396,539
Total (Cost $2,843,281)				2,097,634
FINANCIALS – 15.0%
CAPITAL MARKETS - 11.2%
Artisan Partners Asset Management Cl. A		8,560		432,537
Ashmore Group		119,740		519,131
Federated Investors Cl. B		6,000		197,580
Sprott		89,800		188,597
Value Partners Group		497,780		415,734
				1,753,579
REAL ESTATE MANAGEMENT & DEVELOPMENT - 3.8%
Kennedy-Wilson Holdings		23,680		599,104
Total (Cost $2,443,653)				2,352,683
HEALTH CARE – 5.2%
BIOTECHNOLOGY - 3.2%
Myriad Genetics 1		14,560		495,914
PHARMACEUTICALS - 2.0%
Medicines Company (The)1		11,360		314,331
Total (Cost $701,586)				810,245
INDUSTRIALS – 17.9%
CONSTRUCTION & ENGINEERING - 1.0%
Jacobs Engineering Group 1		3,620		161,778
MACHINERY - 12.8%
AGCO Corporation		13,920		629,184
Kennametal		3,200		114,528
Lincoln Electric Holdings		1,500		103,635
Lindsay Corporation		2,600		222,924
Semperit AG Holding		11,700		566,164
Valmont Industries		2,885		366,395
				2,002,830
MARINE - 0.8%
†Clarkson		4,000		118,070
PROFESSIONAL SERVICES - 3.3%
ManpowerGroup		7,700		524,909
Total (Cost $3,001,411)				2,807,587
INFORMATION TECHNOLOGY – 12.2%
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 5.8%
Cirrus Logic 1		27,120		639,219
Lam Research		1,100		87,274
Teradyne		8,990		177,912
				904,405
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 6.4%
SanDisk Corporation		4,140		405,637
Western Digital		5,480		606,636
				1,012,273
Total (Cost $1,156,239)				1,916,678
MATERIALS – 16.1%
CHEMICALS - 2.8%
Westlake Chemical		7,100		433,739
METALS & MINING - 12.2%
†Franco-Nevada Corporation		5,100		250,869
†Fresnillo		13,200		156,641
Globe Specialty Metals		34,660		597,192
Pan American Silver		34,000		312,800
Randgold Resources ADR		3,300		222,453
Reliance Steel & Aluminum		5,900		361,493
				1,901,448
PAPER & FOREST PRODUCTS - 1.1%
Stella-Jones		6,300		177,537
Total (Cost $2,556,393)				2,512,724
TOTAL COMMON STOCKS
(Cost $15,093,876)				15,165,086
REPURCHASE AGREEMENT – 3.4%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $539,000 (collateralized by obligations of various U.S. Government Agencies, 0.625% due 9/30/17, valued at $554,400)
(Cost $539,000)				539,000
TOTAL INVESTMENTS – 100.3%
(Cost $15,632,876)				15,704,086
LIABILITIES LESS CASH AND OTHER ASSETS – (0.3)%				(52,128	)
NET ASSETS – 100.0%			$	15,651,958

40 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Partners Fund
Common Stocks – 85.0%
	SHARES		VALUE
CONSUMER DISCRETIONARY – 2.0%
HOUSEHOLD DURABLES - 0.9%
Hunter Douglas		600	$	25,054
MEDIA - 1.1%
Morningstar		480		31,061
Total (Cost $38,308)				56,115
CONSUMER STAPLES – 1.2%
FOOD PRODUCTS - 1.2%
†Fresh Del Monte Produce		1,000		33,550
Total (Cost $25,212)				33,550
ENERGY – 3.1%
ENERGY EQUIPMENT & SERVICES - 2.3%
Ensco Cl. A		560		16,772
Schlumberger		288		24,598
Tidewater		720		23,335
				64,705
OIL, GAS & CONSUMABLE FUELS - 0.8%
†Cameco Corporation		1,300		21,333
Total (Cost $103,354)				86,038
FINANCIALS – 32.8%
BANKS - 1.7%
†BBVA Banco Frances ADR		3,300		45,507
CAPITAL MARKETS - 23.8%
ASA Gold and Precious Metals		2,700		27,297
Ashmore Group		8,000		34,684
Aurelius		900		34,266
Bank of New York Mellon (The)		1,360		55,175
Charles Schwab		1,656		49,995
Coronation Fund Managers		4,300		42,428
Jupiter Fund Management		7,300		40,984
KKR & Co. L.P.		1,040		24,138
Monroe Capital		3,390		49,019
Northern Trust		448		30,195
RHJ International 1		8,000		44,688
SEI Investments		1,152		46,126
Sprott		18,200		38,224
State Street		886		69,551
Value Partners Group		84,000		70,155
				656,925
DIVERSIFIED FINANCIAL SERVICES - 1.8%
Moody’s Corporation		525		50,300
INSURANCE - 2.6%
E-L Financial		120		70,546
REAL ESTATE MANAGEMENT & DEVELOPMENT - 2.9%
Jones Lang LaSalle		320		47,977
Midland Holdings 1		64,000		32,336
				80,313
Total (Cost $658,408)				903,591
HEALTH CARE – 4.2%
BIOTECHNOLOGY - 1.1%
Myriad Genetics 1		880		29,973
HEALTH CARE EQUIPMENT & SUPPLIES - 2.5%
Atrion Corporation		200		68,002
HEALTH CARE PROVIDERS & SERVICES - 0.6%
Landauer		500		17,070
Total (Cost $96,536)				115,045
INDUSTRIALS – 19.5%
AIR FREIGHT & LOGISTICS - 1.7%
Expeditors International of Washington		1,040		46,394
COMMERCIAL SERVICES & SUPPLIES - 1.1%
Heritage-Crystal Clean 1		2,400		29,592
CONSTRUCTION & ENGINEERING - 1.6%
†KBR		2,600		44,070
MACHINERY - 6.4%
Foster (L.B.) Company		640		31,085
Graco		576		46,183
RBC Bearings		560		36,137
Spirax-Sarco Engineering		770		34,219
Valmont Industries		240		30,480
				178,104
PROFESSIONAL SERVICES - 4.6%
ManpowerGroup		560		38,175
Towers Watson & Co. Cl. A		392		44,363
Verisk Analytics Cl. A 1		698		44,707
				127,245
ROAD & RAIL - 3.0%
FRP Holdings 1		960		37,642
Landstar System		640		46,419
				84,061
TRADING COMPANIES & DISTRIBUTORS - 1.1%
Applied Industrial Technologies		640		29,178
Total (Cost $358,909)				538,644
INFORMATION TECHNOLOGY – 11.9%
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 8.1%
Amphenol Corporation Cl. A		600		32,286
Anixter International 1		400		35,384
FARO Technologies 1		600		37,608
IPG Photonics 1		440		32,965
National Instruments		1,200		37,308
Orbotech 1		1,000		14,800
Sutron Corporation 1		6,700		33,500
				223,851
IT SERVICES - 2.2%
MasterCard Cl. A		710		61,173
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 1.6%
Western Digital		400		44,280
Total (Cost $189,365)				329,304
MATERIALS – 8.3%
CHEMICALS - 0.7%
Airgas		160		18,429
CONTAINERS & PACKAGING - 2.6%
Greif Cl. A		704		33,250
Mayr-Melnhof Karton		375		38,916
				72,166
METALS & MINING - 3.6%
Fresnillo		2,000		23,734
Pan American Silver		3,200		29,440
Reliance Steel & Aluminum		760		46,565
				99,739
PAPER & FOREST PRODUCTS - 1.4%
Stella-Jones		1,400		39,452
Total (Cost $232,747)				229,786

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 41

Schedules of Investments

Royce Partners Fund (continued)
	VALUE
MISCELLANEOUS3 – 2.0%
Total (Cost $56,069)	$	54,701
TOTAL COMMON STOCKS
(Cost $1,758,908)		2,346,774
REPURCHASE AGREEMENT – 15.7%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $433,000 (collateralized by obligations of various U.S. Government Agencies, 0.625% due 9/30/17, valued at $445,500)
(Cost $433,000)		433,000
TOTAL INVESTMENTS – 100.7%
(Cost $2,191,908)		2,779,774
LIABILITIES LESS CASH AND OTHER ASSETS – (0.7)%		(19,278	)
NET ASSETS – 100.0%	$	2,760,496

Royce Opportunity Select Fund
Common Stocks – 98.7%
	SHARES		VALUE
CONSUMER DISCRETIONARY – 16.7%
AUTO COMPONENTS - 1.2%
†Shiloh Industries 1		15,000		235,950
HOTELS, RESTAURANTS & LEISURE - 1.0%
Belmond Cl. A 1		16,000		197,920
HOUSEHOLD DURABLES - 5.4%
Dixie Group 1,5		25,500		233,835
†Installed Building 1 Products		17,000		302,940
M.D.C. Holdings		7,800		206,466
†New Home 1		20,000		289,600
				1,032,841
MEDIA - 1.8%
Ballantyne Strong 1,5		28,000		115,080
†McClatchy Company (The) Cl. A 1		68,000		225,760
				340,840
MULTILINE RETAIL - 0.5%
J.C. Penney Company 1		16,000		103,680
SPECIALTY RETAIL - 4.8%
†American Eagle Outfitters		26,500		367,820
bebe stores		40,000		87,600
Pacific Sunwear of California 1,5		35,000		76,300
Zumiez 1		10,000		386,300
				918,020
TEXTILES, APPAREL & LUXURY GOODS - 2.0%
Quiksilver 1		41,000		90,610
†Steven Madden 1,5		9,000		286,470
				377,080
Total (Cost $3,091,729)				3,206,331
ENERGY – 1.5%
OIL, GAS & CONSUMABLE FUELS - 1.5%
†Pengrowth Energy		25,000		77,750
Scorpio Tankers		25,000		217,250
Total (Cost $384,268)				295,000
FINANCIALS – 7.4%
BANKS - 1.6%
TriState Capital Holdings 1		15,000		153,600
Trustmark Corporation		6,500		159,510
				313,110
CONSUMER FINANCE - 1.0%
†Green Dot Cl. A 1,5		9,000		184,410
INSURANCE - 2.3%
MBIA 1		45,000		429,300
REAL ESTATE INVESTMENT TRUSTS (REITS) - 2.5%
†Gramercy Property Trust5		42,000		289,800
RAIT Financial Trust		25,000		191,750
				481,550
Total (Cost $1,471,116)				1,408,370
HEALTH CARE – 8.8%
HEALTH CARE EQUIPMENT & SUPPLIES - 4.4%
Accuray 1		40,000		302,000
OraSure Technologies 1		25,000		253,500
†Trinity Biotech ADR Cl. A		16,792		294,028
				849,528
HEALTH CARE PROVIDERS & SERVICES - 2.0%
†Owens & Minor		11,000		386,210
HEALTH CARE TECHNOLOGY - 1.5%
†Allscripts Healthcare Solutions 1		22,500		287,325

42 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Opportunity Select Fund (continued)
	SHARES		VALUE
HEALTH CARE (continued)
LIFE SCIENCES TOOLS & SERVICES - 0.9%
†Cambrex Corporation 1,5		7,500	$	162,150
Total (Cost $1,507,472)				1,685,213
INDUSTRIALS – 14.4%
AEROSPACE & DEFENSE - 1.0%
Kratos Defense & Security Solutions 1		37,500		188,250
AIR FREIGHT & LOGISTICS - 3.1%
Atlas Air Worldwide Holdings 1		7,000		345,100
XPO Logistics 1		6,200		253,456
				598,556
BUILDING PRODUCTS - 2.7%
Builders FirstSource 1		41,000		281,670
†Insteel Industries 5		3,000		70,740
Quanex Building Products		9,000		169,020
				521,430
CONSTRUCTION & ENGINEERING - 0.6%
Ameresco Cl. A 1		15,000		105,000
MACHINERY - 1.6%
Commercial Vehicle Group 1		8,000		53,280
Mueller Water Products Cl. A		24,000		245,760
				299,040
MARINE - 0.6%
Baltic Trading		48,000		120,480
ROAD & RAIL - 2.9%
ArcBest Corporation		1,800		83,466
Covenant Transport Group Cl. A 1		5,000		135,550
Swift Transportation Cl. A 1		12,000		343,560
				562,576
TRADING COMPANIES & DISTRIBUTORS - 1.9%
Air Lease Cl. A		10,500		360,255
Total (Cost $2,445,204)				2,755,587
INFORMATION TECHNOLOGY – 34.0%
COMMUNICATIONS EQUIPMENT - 1.4%
Extreme Networks 1		70,000		247,100
Interphase Corporation 1		6,500		14,755
				261,855
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 2.9%
II-VI 1		15,000		204,750
Newport Corporation 1		14,000		267,540
†RadiSys Corporation 1,5		36,300		84,942
				557,232
INTERNET SOFTWARE & SERVICES - 6.3%
†Amber Road 1		30,000		306,600
Carbonite 1		26,000		371,020
†EarthLink Holdings		85,500		375,345
Limelight Networks 1		56,000		155,120
				1,208,085
IT SERVICES - 1.0%
Datalink Corporation 1		15,000		193,500
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 15.9%
Alpha & Omega Semiconductor 1,5		18,000		159,300
Brooks Automation		9,503		121,163
Exar Corporation 1		40,000		408,000
Inphi Corporation 1		18,000		332,640
Integrated Silicon Solution		11,000		182,270
Intersil Corporation Cl. A		21,000		303,870
Mattson Technology 1		85,000		289,000
NeoPhotonics Corporation 1		24,666		83,371
OmniVision Technologies 1		6,500		169,000
†RF Micro Devices 1,5		23,000		381,570
Rubicon Technology 1		17,000		77,690
Rudolph Technologies 1,5		13,003		133,021
†Spire Corporation 1,2		36,000		9,180
SunEdison 1		8,000		156,080
†SunEdison Semiconductor 1		13,014		241,670
				3,047,825
SOFTWARE - 3.4%
†A10 Networks1		40,000		174,400
†Mentor Graphics		17,500		383,600
Smith Micro Software 1,5		84,000		81,480
				639,480
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 3.1%
Logitech International		30,200		405,586
QLogic Corporation 1		14,500		193,140
				598,726
Total (Cost $5,685,152)				6,506,703
MATERIALS – 9.7%
CHEMICALS - 2.4%
Kraton Performance Polymers 1		10,000		207,900
†Landec Corporation 1		18,000		248,580
				456,480
CONSTRUCTION MATERIALS - 1.8%
†U.S. Concrete 1		12,000		341,400
METALS & MINING - 5.5%
AK Steel Holding Corporation 1,5		34,000		201,960
Commercial Metals		20,000		325,800
†Noranda Aluminum Holding Corporation		45,000		158,400
RTI International Metals 1		15,000		378,900
				1,065,060
Total (Cost $1,854,213)				1,862,940
TELECOMMUNICATION SERVICES – 1.7%
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.7%
Iridium Communications 1		34,000		331,500
Total (Cost $333,643)				331,500
MISCELLANEOUS 3 – 4.5%
Total (Cost $833,390)				867,075
TOTAL COMMON STOCKS
(Cost $17,606,187)				18,918,719
REPURCHASE AGREEMENT – 2.8%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $536,000 (collateralized by obligations of various U.S. Government Agencies, 0.625% due 9/30/17, valued at $549,450)
(Cost $536,000)				536,000
TOTAL INVESTMENTS – 101.5%
(Cost $18,142,187)				19,454,719
LIABILITIES LESS CASH AND OTHER ASSETS – (1.5)%				(294,380	)
NET ASSETS – 100.0%			$	19,160,339

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 43

Schedules of Investments

Royce Opportunity Select Fund (continued)
Securities Sold Short
Common Stocks – 4.9%
	SHARES		VALUE
CONSUMER DISCRETIONARY – 2.5%
HOTELS, RESTAURANTS & LEISURE - 0.6%
Life Time Fitness		1,500	$	84,930
Popeyes Louisiana Kitchen		500		28,135
				113,065
SPECIALTY RETAIL - 1.3%
Lumber Liquidators Holdings		2,500		165,775
Men’s Wearhouse (The)		1,700		75,055
Vitamin Shoppe		500		24,290
				265,120
TEXTILES, APPAREL & LUXURY GOODS - 0.6%
Michael Kors Holdings		1,500		112,650
Total (Proceeds $499,921)				490,835
CONSUMER STAPLES – 0.3%
FOOD & STAPLES RETAILING - 0.3%
Fresh Market (The)		1,500		61,800
Total (Proceeds $57,821)				61,800
FINANCIALS – 0.7%
CAPITAL MARKETS - 0.7%
Janus Capital Group		5,000		80,650
Stifel Financial		1,000		51,020
Total (Proceeds $118,208)				131,670
INDUSTRIALS – 1.2%
BUILDING PRODUCTS - 0.3%
Trex Company		1,500		63,870
CONSTRUCTION & ENGINEERING - 0.5%
Dycom Industries		2,500		87,725
MACHINERY - 0.3%
CIRCOR International		1,000		60,280
TRADING COMPANIES & DISTRIBUTORS - 0.1%
Beacon Roofing Supply		500		13,900
Total (Proceeds $201,505)				225,775
INFORMATION TECHNOLOGY – 0.2%
INTERNET SOFTWARE & SERVICES - 0.2%
Zillow Cl. A		300		31,767
Total (Proceeds $34,368)				31,767
TOTAL SECURITIES SOLD SHORT
(Proceeds $911,823)			$	941,847

Royce Global Dividend Value Fund
Common Stocks – 94.2%
	SHARES		VALUE
AUSTRALIA – 0.9%
†ALS		10,200	$	44,136
Imdex 1		48,300		18,726
Total (Cost $103,348)				62,862
AUSTRIA – 1.0%
Mayr-Melnhof Karton		350		36,322
†Zumtobel Group		1,400		31,533
Total (Cost $68,952)				67,855
BRAZIL – 4.9%
Brasil Brokers Participacoes		45,150		42,938
†Brasil Insurance Participacoes e Administracao		4,700		5,953
CETIP - Mercados Organizados		4,800		58,133
Eternit		28,000		34,240
Grendene		9,000		51,765
Iguatemi Empresa de Shopping Centers		2,000		18,372
MAHLE Metal Leve		4,500		35,474
†Mills Estruturas e Servicos de Engenharia		2,300		8,259
†T4F Entretenimento 1		16,700		18,096
Totvs		4,500		59,210
Total (Cost $507,722)				332,440
CANADA – 5.8%
Aimia		3,000		37,726
Alaris Royalty		2,000		60,871
Canadian Energy Services & Technology		1,812		9,904
Computer Modelling Group		1,300		13,360
GMP Capital		7,500		40,993
†Holloway Lodging		7,100		38,440
KP Tissue		3,000		43,794
Major Drilling Group International		3,750		18,430
†MTY Food Group		1,200		34,818
Pan American Silver		1,350		12,420
Sprott		22,500		47,254
Trican Well Service		1,386		6,645
†Western Forest Products		13,800		32,071
Total (Cost $533,535)				396,726
CHILE – 2.3%
Forus		11,700		48,713
Inversiones La Construccion		5,000		60,758
Sonda		20,000		47,418
Total (Cost $189,240)				156,889
CHINA – 3.0%
Daphne International Holdings		118,300		42,915
E-House (China) Holdings ADR		1,900		13,756
†Leju Holdings ADR1		95		1,022
Pacific Online		132,400		61,690
Xtep International Holdings		205,000		82,574
Total (Cost $261,733)				201,957
CYPRUS – 0.7%
Globaltrans Investment GDR		9,500		48,237
Total (Cost $107,674)				48,237
DENMARK – 0.9%
Matas		2,600		59,302
Total (Cost $63,396)				59,302

44 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce Global Dividend Value Fund (continued)
	SHARES		VALUE
FINLAND – 2.0%
F-Secure	10,000	$	27,222
Nokian Renkaat	1,950		47,763
Tieto	2,500		65,056
Total (Cost $164,722)			140,041
FRANCE – 4.6%
Alten	1,300		55,590
bioMerieux	400		41,465
Gaztransport Et Technigaz	900		53,153
†Lectra	1,400		15,485
†Nexity	2,300		87,011
Vetoquinol	1,403		60,944
Total (Cost $311,901)			313,648
GERMANY – 4.4%
Amadeus Fire	750		56,416
Aurelius	1,900		72,340
†CompuGroup Medical	1,100		26,487
Fuchs Petrolub	400		15,264
†Hawesko Holding	300		15,067
Nemetschek	600		60,914
Pfeiffer Vacuum Technology	400		33,203
†XING	200		22,459
Total (Cost $258,583)			302,150
HONG KONG – 10.9%
Bonjour Holdings	118,250		12,939
Bosideng International Holdings	275,000		36,731
Dickson Concepts (International)	52,500		25,946
†Giordano International	20,000		8,867
Le Saunda Holdings	120,000		45,094
†Luen Thai Holdings	80,200		14,667
†Luk Fook Holdings (International)	6,400		23,967
Midland Holdings 1	92,500		46,735
New World Department Store China	189,300		60,517
Oriental Watch Holdings	103,500		19,985
Pacific Textiles Holdings	26,250		34,722
Pico Far East Holdings	343,100		78,621
Stella International Holdings	27,500		72,160
Television Broadcasts	15,000		87,070
Value Partners Group	120,000		100,221
VTech Holdings	3,000		43,003
Win Hanverky Holdings	276,000		31,500
Total (Cost $777,890)			742,745
INDIA – 0.6%
Graphite India	29,000		41,763
Total (Cost $36,199)			41,763
INDONESIA – 1.1%
Selamat Sempurna	200,000		76,282
Total (Cost $30,635)			76,282
ISRAEL – 1.0%
Hilan	10,000		71,429
Total (Cost $73,037)			71,429
ITALY – 1.2%
DiaSorin	1,350		54,442
Recordati	2,000		31,094
Total (Cost $74,032)			85,536
JAPAN – 4.3%
Dr.Ci:Labo	800		27,333
EPS Corporation	3,000		35,535
Hogy Medical	700		31,924
†Itoki Corporation	6,100		31,249
Moshi Moshi Hotline	3,700		33,747
†Obara Group	700		31,078
Santen Pharmaceutical	350		18,731
†Tokai Tokyo Financial Holdings	2,700		18,474
TOTO	4,000		46,525
USS	1,300		20,006
Total (Cost $269,159)			294,602
MALAYSIA – 2.7%
CB Industrial Product Holding	116,200		66,729
†CB Industrial Product Holding (Warrants) 1	6,866		933
Media Chinese International	178,600		38,304
Media Prima	102,500		51,237
Padini Holdings	62,500		26,004
Total (Cost $206,325)			183,207
MEXICO – 2.4%
Bolsa Mexicana de Valores	40,000		72,443
Fresnillo	3,400		40,347
Industrias Bachoco ADR1	1,000		49,880
Total (Cost $158,815)			162,670
NETHERLANDS – 0.8%
Exact Holding	1,500		57,501
Total (Cost $33,946)			57,501
NEW ZEALAND – 0.3%
†Trade Me	7,000		19,538
Total (Cost $23,652)			19,538
NORWAY – 2.6%
Ekornes	5,000		63,737
Fred. Olsen Energy	1,250		11,394
Oslo Bors VPS Holding	5,500		56,085
TGS-NOPEC Geophysical	1,250		27,046
†Tomra Systems	2,700		20,788
Total (Cost $196,440)			179,050
POLAND – 0.8%
Warsaw Stock Exchange	4,000		51,541
Total (Cost $57,360)			51,541
SINGAPORE – 3.2%
ARA Asset Management	39,050		50,017
ComfortDelGro Corporation	20,000		39,155
†First Resources	19,800		27,919
Pan-United Corporation	47,000		29,801
†Parkson Retail Asia	35,400		21,379
Silverlake Axis	53,800		50,896
Total (Cost $187,155)			219,167
SOUTH AFRICA – 8.1%
Afrimat	55,600		81,209

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 45

Schedules of Investments

Royce Global Dividend Value Fund (continued)
	SHARES		VALUE
SOUTH AFRICA (continued)
AVI	6,400	$	42,892
Blue Label Telecoms	50,000		38,018
Cashbuild	4,000		56,684
Coronation Fund Managers	7,400		73,015
Foschini Group (The)	6,000		68,751
Investec	2,500		20,884
JSE	5,800		60,581
Lewis Group	7,000		44,791
Raubex Group	36,000		68,313
Total (Cost $467,056)			555,138
SOUTH KOREA – 1.3%
†Eugene Technology	1,545		22,644
GS Home Shopping	167		33,634
Hanssem	300		30,963
Total (Cost $53,318)			87,241
SWITZERLAND – 5.2%
Belimo Holding	10		23,237
Forbo Holding	75		75,017
Kaba Holding	150		75,635
LEM Holding	40		29,668
Transocean	1,600		29,328
VZ Holding	335		59,874
Zehnder Group	1,500		62,308
Total (Cost $322,840)			355,067
TURKEY – 0.9%
Mardin Cimento Sanayii	30,000		61,004
Total (Cost $98,421)			61,004
UNITED ARAB EMIRATES – 1.3%
†Al Noor Hospitals Group	800		12,285
Aramex	92,000		77,246
Total (Cost $69,654)			89,531
UNITED KINGDOM – 10.0%
Ashmore Group	13,900		60,263
AVEVA Group	2,000		40,941
†Brammer	5,000		26,485
Clarkson	1,900		56,084
Close Brothers Group	1,200		27,675
Consort Medical	2,500		33,642
De La Rue	1,350		10,890
Diploma	2,500		27,598
E2V Technologies	10,750		28,922
Fidessa Group	1,800		66,598
Homeserve	14,000		73,201
Jupiter Fund Management	12,050		67,651
Latchways	3,600		40,391
†Mattioli Woods	1,900		13,312
Michael Page International	3,500		22,223
Spirax-Sarco Engineering	1,275		56,662
Victrex	1,000		32,292
Total (Cost $625,990)			684,830
UNITED STATES – 5.0%
†Diebold	1,300		45,032
Expeditors International of Washington	1,100		49,071
Fresh Del Monte Produce	1,840		61,732
Haynes International	900		43,650
KBR	2,200		37,290
National Instruments	2,000		62,180
†National Research Cl. B	1,280		45,862
Total (Cost $357,553)			344,817
TOTAL COMMON STOCKS
(Cost $6,690,283)			6,444,766
REPURCHASE AGREEMENT – 1.9%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $128,000 (collateralized by obligations of various U.S. Government Agencies, 0.625% due 9/30/17, valued at $133,650)
(Cost $128,000)			128,000
TOTAL INVESTMENTS –96.1%
(Cost $6,818,283)			6,572,766
CASH AND OTHER ASSETS LESS LIABILITIES – 3.9%			267,256
NET ASSETS – 100.0%		$	6,840,022

46 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce International Micro-Cap Fund
Common Stocks – 97.7%
	SHARES		VALUE
AUSTRALIA – 6.0%
Collection House	55,331	$	93,517
Imdex 1	220,900		85,644
Medusa Mining 1	37,500		19,955
Programmed Maintenance Services	33,550		70,133
TFS Corporation	64,651		81,159
†Webjet	14,650		34,394
Total (Cost $451,338)			384,802
AUSTRIA – 1.1%
†Zumtobel Group	3,100		69,824
Total (Cost $57,634)			69,824
BELGIUM – 1.3%
†Ion Beam Applications 1	3,650		63,320
Picanol Group 1	700		22,481
Total (Cost $79,265)			85,801
BERMUDA – 0.7%
†GP Investments BDR 1	21,500		46,673
Total (Cost $41,447)			46,673
BRAZIL – 2.1%
Brasil Brokers Participacoes	34,200		32,525
†Brasil Insurance Participacoes e Administracao	10,100		12,793
†Contax Participacoes	5,000		20,675
T4F Entretenimento 1	61,700		66,857
Total (Cost $272,337)			132,850
CANADA – 8.1%
AirBoss of America	4,750		49,961
†Canyon Services Group	5,000		38,690
†COM DEV International	12,550		43,101
†FLYHT Aerospace Solutions 1	61,150		19,474
HNZ Group	2,550		45,390
†Horizon North Logistics	19,200		43,629
Magellan Aerospace	10,200		118,698
MTY Food Group	3,050		88,497
Total Energy Services	2,400		26,814
†Western Forest Products	17,900		41,599
Total (Cost $523,267)			515,853
CHILE – 0.7%
†Forus	10,700		44,549
Total (Cost $46,223)			44,549
CHINA – 3.6%
Daphne International Holdings	141,300		51,259
†Daqo New Energy ADR 1	1,200		31,608
†Hopefluent Group Holdings	116,000		36,000
Pacific Online	188,500		87,829
Qunxing Paper Holdings 1, 4	41,000		529
Xtep International Holdings	60,000		24,168
Total (Cost $268,548)			231,393
DENMARK – 0.6%
†Zealand Pharma 1	2,750		37,086
Total (Cost $37,639)			37,086
FINLAND – 0.4%
†BasWare	500		24,835
Total (Cost $25,276)			24,835
FRANCE – 3.6%
aufeminin 1	1,400		43,076
†Lectra	5,100		56,411
Neurones	2,750		46,113
†Prodware 1	6,450		54,625
Tessi	250		27,710
Total (Cost $244,788)			227,935
GERMANY – 5.1%
Amadeus Fire	900		67,699
†GFT Technologies	2,950		43,966
†Hawesko Holding	700		35,156
†mutares	400		34,314
†Schaltbau Holding	600		30,535
†Tomorrow Focus	18,500		84,542
†XING	300		33,688
Total (Cost $323,251)			329,900
GREECE – 0.6%
†StealthGas 1	5,800		36,598
Total (Cost $63,721)			36,598
HONG KONG – 8.3%
China Metal International Holdings	221,000		76,353
†Comba Telecom Systems Holdings	154,170		54,548
I.T	297,400		85,725
Le Saunda Holdings	130,100		48,890
†Luen Thai Holdings	221,000		40,415
†New World Department Store China	139,700		44,661
Oriental Watch Holdings	360,800		69,667
Pico Far East Holdings	322,200		73,832
Tse Sui Luen Jewellery (International)	95,000		35,490
Total (Cost $634,815)			529,581
INDIA – 3.3%
Cyient	4,000		32,666
eClerx Services	4,500		93,040
†KPIT Technologies	15,650		50,235
McLeod Russel India	1,800		6,722
†Persistent Systems	1,100		28,867
Total (Cost $174,362)			211,530
INDONESIA – 1.0%
Selamat Sempurna	168,200		64,153
Total (Cost $62,459)			64,153
IRELAND – 0.4%
†Mincon Group	35,200		27,706
Total (Cost $44,376)			27,706
ISRAEL – 0.5%
†Fox Wizel	1,300		30,734
Total (Cost $29,365)			30,734
JAPAN – 20.1%
Freund Corporation	7,000		60,707
†Fujimori Kogyo	1,500		41,925
†GCA Savvian	3,700		35,182
G-Tekt Corporation	4,800		45,508
†Itoki Corporation	15,500		79,403
Mandom Corporation	900		29,561
Milbon	1,600		43,556

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 47

Schedules of Investments

Royce International Micro-Cap Fund (continued)
	SHARES		VALUE
JAPAN (continued)
†Namura Shipbuilding	4,400	$	47,159
Nishikawa Rubber	4,000		68,121
Nitto Kohki	4,700		84,855
Obara Group	1,766		78,406
Relo Holdings	700		49,700
Ryobi	16,200		43,896
†SPARX Group	40,900		68,834
†Sun Frontier Fudousan	3,500		32,109
†T Hasegawa	2,800		39,321
Tokai Corporation/Gifu	2,100		62,624
Trancom	4,100		165,157
†YAMADA Consulting Group	3,100		79,748
Zuiko Corporation	3,000		129,848
Total (Cost $1,411,987)			1,285,620
LUXEMBOURG – 0.8%
†Atento 1	4,700		49,115
Total (Cost $47,542)			49,115
MALAYSIA – 2.1%
Asia Brands	37,700		32,086
CB Industrial Product Holding	66,000		37,902
†CB Industrial Product Holding (Warrants) 1	11,000		1,495
†Media Prima	93,400		46,688
†NTPM Holdings	112,500		19,909
Total (Cost $154,953)			138,080
NORWAY – 1.6%
†Borregaard	7,350		54,633
†Oslo Bors VPS Holding	4,900		49,966
Total (Cost $103,909)			104,599
PHILIPPINES – 1.4%
†Asian Terminals	164,300		42,312
GMA Holdings PDR	328,000		49,141
Total (Cost $95,228)			91,453
SINGAPORE – 1.7%
Hour Glass (The)	60,000		28,940
†Parkson Retail Asia	127,700		77,122
Total (Cost $113,385)			106,062
SOUTH AFRICA – 1.0%
Metrofile Holdings	150,550		65,027
Total (Cost $72,611)			65,027
SOUTH KOREA – 5.6%
Eugene Technology	5,358		78,529
Handsome	1,600		47,417
†Hankuk Carbon	8,850		46,448
Huvis Corporation1	8,250		83,554
†Koh Young Technology	1,900		73,794
†Suprema 1	1,300		29,801
Total (Cost $346,480)			359,543
SRI LANKA – 0.7%
Distilleries Company of Sri Lanka	29,500		47,331
Total (Cost $38,877)			47,331
SWEDEN – 2.6%
†Bufab Holding 1	9,800		73,628
Nolato Cl. B	2,050		46,320
†Recipharm 1	2,700		46,366
Total (Cost $165,288)			166,314
SWITZERLAND – 0.9%
Zehnder Group	1,450		60,231
Total (Cost $63,186)			60,231
TAIWAN – 4.4%
†Kinik Company	22,000		45,196
†Lumax International	21,000		43,004
Makalot Industrial	8,160		43,592
†Shih Her Technologies	23,000		42,464
†Taiwan Paiho	43,000		57,939
†UDE Corporation	19,400		47,891
Total (Cost $263,291)			280,086
UNITED ARAB EMIRATES – 0.7%
Aramex	52,000		43,661
Total (Cost $25,530)			43,661
UNITED KINGDOM – 6.1%
†Brammer	6,300		33,371
Clarkson	2,000		59,035
†Globo 1	61,150		38,045
†Hargreaves Services	3,500		35,120
Luxfer Holdings ADR	2,200		32,846
†Mattioli Woods	4,800		33,631
†Norcros	230,700		64,618
†Pendragon	63,400		32,450
†Trifast	38,700		64,905
Total (Cost $413,458)			394,021
UNITED STATES – 0.6%
Century Casinos 1	7,500		37,875
Total (Cost $38,210)			37,875
TOTAL COMMON STOCKS
(Cost $6,734,046)			6,260,821
REPURCHASE AGREEMENT – 1.7%
Fixed Income Clearing Corporation, 0.00% dated 12/31/14, due 1/2/15, maturity value $111,000 (collateralized by obligations of various U.S. Government Agencies, 1.06% due 10/12/17, valued at $114,425)
(Cost $111,000)			111,000
TOTAL INVESTMENTS – 99.4%
(Cost $6,845,046)			6,371,821
CASH AND OTHER ASSETS LESS LIABILITIES – 0.6%			38,129
NET ASSETS – 100.0%		$	6,409,950

48 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

Royce International Premier Fund
Common Stocks – 101.1%
	SHARES		VALUE
AUSTRIA – 5.0%
Mayr-Melnhof Karton	1,800	$	186,796
Semperit AG Holding	3,900		188,721
Total (Cost $362,919)			375,517
BRAZIL – 6.3%
CETIP - Mercados Organizados	15,100		182,877
LPS Brasil Consultoria de Imoveis	40,000		96,685
Totvs	15,000		197,365
Total (Cost $590,996)			476,927
FINLAND – 2.4%
Nokian Renkaat	7,500		183,703
Total (Cost $324,155)			183,703
FRANCE – 2.1%
Virbac	750		157,358
Total (Cost $134,367)			157,358
GERMANY – 6.1%
Carl Zeiss Meditec	6,700		171,062
KWS Saat	500		162,615
LPKF Laser & Electronics	9,300		121,848
Total (Cost $524,187)			455,525
HONG KONG – 6.7%
†Pico Far East Holdings	940,100		215,422
Stella International Holdings	48,900		128,314
Television Broadcasts	27,000		156,726
Total (Cost $530,317)			500,462
INDIA – 7.5%
Bajaj Finance	4,200		234,584
†Kewal Kiran Clothing	4,480		137,402
†Motherson Sumi Systems	26,900		195,657
Total (Cost $368,158)			567,643
ITALY – 4.0%
DiaSorin	3,805		153,446
Recordati	9,300		144,588
Total (Cost $217,062)			298,034
JAPAN – 7.0%
FamilyMart	5,000		186,658
MISUMI Group	5,300		174,091
USS	11,000		169,279
Total (Cost $448,522)			530,028
MALAYSIA – 2.0%
Media Prima	300,000		149,962
Total (Cost $214,191)			149,962
NORWAY – 2.1%
†TGS-NOPEC Geophysical	7,300		157,945
Total (Cost $173,638)			157,945
SINGAPORE – 2.2%
Silverlake Axis	176,400		166,878
Total (Cost $116,959)			166,878
SWEDEN – 0.4%
†Elekta	3,000		30,618
Total (Cost $31,008)			30,618
SWITZERLAND – 16.7%
Belimo Holding	80		185,892
Forbo Holding	175		175,039
†Inficon Holding	574		177,964
Kaba Holding	350		176,482
LEM Holding	253		187,650
Partners Group Holding	500		145,004
VZ Holding	1,150		205,539
Total (Cost $1,012,612)			1,253,570
UNITED KINGDOM – 30.6%
Abcam	26,000		188,284
Ashmore Group	39,700		172,119
AVEVA Group	8,600		176,045
Clarkson	6,832		201,664
Consort Medical	15,000		201,852
Domino Printing Sciences	14,700		150,252
Elementis	42,800		173,210
Fidessa Group	4,000		147,996
†HellermannTyton Group	26,500		129,571
Lancashire Holdings	18,500		160,347
Latchways	19,500		218,787
Rotork	3,200		115,153
Spirax-Sarco Engineering	2,800		124,433
Victrex	4,400		142,085
Total (Cost $2,497,821)			2,301,798
TOTAL COMMON STOCKS
(Cost $7,546,912)			7,605,968
TOTAL INVESTMENTS – 101.1%
(Cost $7,546,912)			7,605,968
LIABILITIES LESS CASH AND OTHER ASSETS – (1.1)%			(79,505	)
NET ASSETS – 100.0%		$	7,526,463

†	New additions in 2014.
1	Non-income producing.
2	These securities are defined as Level 2 securities due to fair value being based on quoted prices for similar securities. See Notes to Financial Statements.
3	Includes securities first acquired in 2014 and less than 1% of net assets.
4	A security for which market quotations are not readily available represents 0.0% of net assets for Royce International Micro-Cap Fund. This security has been valued at its fair value under procedures approved by the Fund’s Board of Trustees. This security is defined as a Level 3 security due to the use of significant unobservable inputs in the determination of fair value. See Notes to Financial Statements.
5	All or a portion of these securities have been segregated as collateral for short sales.
	Securities of Global/International Funds are categorized by the country of their headquarters, with the exception of exchange-traded funds.
	Bold indicates a Fund’s 20 largest equity holdings in terms of December 31, 2014, market value.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 49

Statements of Assets and Liabilities

		Royce Select		Royce Micro-Cap		Royce Financial		Royce Select
		Fund I		Discovery Fund		Services Fund		Fund II
ASSETS:
Investments at value	$	36,541,523	$	5,238,073	$	52,105,731	$	4,584,963
Repurchase agreements (at cost and value)		1,020,000		361,000		1,739,000		169,000
Cash and foreign currency		632		583		4,764		873
Receivable for investments sold		1,897,406		–		4		44,253
Receivable for capital shares sold		47,610		502		109,739		–
Receivable for dividends and interest		11,919		3,283		121,543		3,505
Prepaid expenses and other assets		187		23		341		12
Total Assets		39,519,277		5,603,464		54,081,122		4,802,606
LIABILITIES:
Securities sold short, at fair value		–		–		–		71,579
Payable for investments purchased		217,942		–		–		20,131
Payable for capital shares redeemed		–		–		252,966		–
Payable for dividends and interest		–		–		–		500
Payable for investment advisory fees		35,687		1,309		14,432		–
Payable for trustees’ fees		577		69		730		18
Payable to brokers for securities sold short		–		–		–		121,621
Accrued expenses		44,721		26,938		105,965		13,307
Deferred capital gains tax		–		–		–		2,421
Total Liabilities		298,927		28,316		374,093		229,577
Net Assets	$	39,220,350	$	5,575,148	$	53,707,029	$	4,573,029
ANALYSIS OF NET ASSETS:
Paid-in capital	$	31,253,463	$	5,065,991	$	44,922,171	$	4,576,643
Undistributed net investment income (loss)		–		84		131,205		(25,157	)
Accumulated net realized gain (loss) on investments and foreign currency		581,019		64,819		1,106,223		(11,757	)
Net unrealized appreciation (depreciation) on investments and foreign currency		7,385,868		444,254		7,547,430		33,300
Net Assets	$	39,220,350	$	5,575,148	$	53,707,029	$	4,573,029
Investment Class	$	39,220,350					$	4,573,029
Service Class			$	5,575,148	$	53,707,029
SHARES OUTSTANDING (unlimited number of $.001 par value):
Investment Class		2,270,788						459,249
Service Class				927,030		5,784,542
NET ASSET VALUES (Net Assets ÷ Shares Outstanding):
Investment Class1		$17.27						$9.96
Service Class1				$6.01		$9.28
Investments at identified cost	$	29,155,654	$	4,793,819	$	44,557,028	$	4,558,628
Proceeds of short sales		–		–		–		80,862
Aggregate value of segregated securities		–		–		–		437,804

¹ Offering and redemption price per share; shares held less than 180 days may be subject to a 1% redemption fee, or a 2% redemption fee (Royce Select Fund II), payable to the Fund.

50 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

	Royce European Smaller-			Royce Enterprise			Royce SMid-Cap			Royce Partners
	Companies Fund			Select Fund			Value Fund			Fund
ASSETS:
Investments at value	$	21,606,475		$	2,060,313		$	15,165,086		$	2,346,774
Repurchase agreements (at cost and value)		515,000			758,000			539,000			433,000
Cash and foreign currency		489			567			965			127
Receivable for capital shares sold		2,133			–			141			32
Receivable for dividends and interest		33,815			1,768			16,177			2,851
Prepaid expenses and other assets		129			17			51			14
Total Assets		22,158,041			2,820,665			15,721,420			2,782,798
LIABILITIES:
Payable for capital shares redeemed		120,926			–			25,145			–
Payable for investment advisory fees		–			–			2,573			–
Payable for trustees’ fees		391			34			207			35
Accrued expenses		64,148			18,625			41,537			22,267
Total Liabilities		185,465			18,659			69,462			22,302
Net Assets	$	21,972,576		$	2,802,006		$	15,651,958		$	2,760,496
ANALYSIS OF NET ASSETS:
Paid-in capital	$	25,788,676		$	2,549,095		$	19,910,147		$	2,171,384
Undistributed net investment income (loss)		(27,179	)		(68	)		(1,401	)		2,750
Accumulated net realized gain (loss) on investments and foreign currency		(407,482	)		14,573			(4,327,625	)		(1,412	)
Net unrealized appreciation (depreciation) on investments and foreign currency		(3,381,439	)		238,406			70,837			587,774
Net Assets	$	21,972,576		$	2,802,006		$	15,651,958		$	2,760,496
Investment Class	$	1,937,881		$	2,802,006
Service Class		20,034,695					$	15,651,958		$	2,760,496
SHARES OUTSTANDING (unlimited number of $.001 par value):
Investment Class		237,569			241,717
Service Class		1,939,744						1,116,322			199,353
NET ASSET VALUES (Net Assets ÷ Shares Outstanding):
Investment Class1		$8.16			$11.59
Service Class1		10.33						$14.02			$13.85
Investments at identified cost	$	24,984,280		$	1,821,895		$	15,093,876		$	1,758,908

¹ Offering and redemption price per share; shares held less than 180 days may be subject to a 1% redemption fee, or a 2% redemption fee (Royce European Smaller-Companies Fund), payable to the Fund.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 51

Statements of Assets and Liabilities

				Royce Global			Royce			Royce
	Royce Opportunity			Dividend Value			International			International
	Select Fund			Fund			Micro-Cap Fund			Premier Fund
ASSETS:
Investments at value	$	18,918,719		$	6,444,766		$	6,260,821		$	7,605,968
Repurchase agreements (at cost and value)		536,000			128,000			111,000			–
Deposits with brokers for securities sold short		318,188			–			–			–
Cash and foreign currency		–			–			21,045			35,519
Receivable for investments sold		262,052			287,069			31,815			39,997
Receivable for capital shares sold		213,672			28			148			14,040
Receivable for dividends and interest		9,971			16,791			10,505			22,657
Prepaid expenses and other assets		115			48			20			82
Total Assets		20,258,717			6,876,702			6,435,354			7,718,263
LIABILITIES:
Securities sold short, at fair value		941,847			–			–			–
Payable for investments purchased		102,146			–			–			31,369
Payable for capital shares redeemed		10,327			–			–			112,792
Payable for investment advisory fees		12,210			–			–			–
Payable for trustees’ fees		262			119			71			165
Payable to custodian for overdrawn balance		8,749			5,764			–			–
Accrued expenses		22,837			30,797			20,752			26,620
Deferred capital gains tax		–			–			4,581			20,854
Total Liabilities		1,098,378			36,680			25,404			191,800
Net Assets	$	19,160,339		$	6,840,022		$	6,409,950		$	7,526,463
ANALYSIS OF NET ASSETS:
Paid-in capital	$	18,065,698		$	7,268,317		$	7,347,123		$	8,130,716
Undistributed net investment income (loss)		(46	)		(690	)		(33,864	)		(6,992	)
Accumulated net realized gain (loss) on investments and foreign currency		(187,820	)		(181,454	)		(425,837	)		(633,203	)
Net unrealized appreciation (depreciation) on investments and foreign currency		1,282,507			(246,151	)		(477,472	)		35,942
Net Assets	$	19,160,339		$	6,840,022		$	6,409,950		$	7,526,463
Investment Class	$	18,221,213								$	3,481,708
Service Class		939,126		$	6,840,022		$	6,409,950			4,044,755
SHARES OUTSTANDING (unlimited number of $.001 par value):
Investment Class		1,102,687									399,805
Service Class		112,253			689,486			663,391			393,346
NET ASSET VALUES (Net Assets ÷ Shares Outstanding):
Investment Class1		$16.52									$8.71
Service Class1		8.37			$9.92			$9.66			10.28
Investments at identified cost	$	17,606,187		$	6,690,283		$	6,734,046		$	7,546,912
Proceeds of short sales		911,823			–			–			–
Aggregate value of segregated securities		1,750,133			–			–			–

¹ Offering and redemption price per share; shares held less than 180 days may be subject to a 1% redemption fee (Royce Opportunity Select Fund), or a 2% redemption fee, payable to the Fund.

52 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Royce Select Fund I						Royce Micro-Cap Discovery Fund						Royce Financial Services Fund
	Year Ended 12/31/14			Year Ended 12/31/13			Year Ended 12/31/14			Year Ended 12/31/13			Year Ended 12/31/14			Year Ended 12/31/13
INVESTMENT OPERATIONS:
Net investment income (loss)	$	(66,508	)	$	(173,025	)	$	(2,759	)	$	(17,307	)	$	534,686		$	174,781
Net realized gain (loss) on investments and foreign currency		5,543,536			5,751,191			646,262			751,485			3,400,962			1,875,121
Net change in unrealized appreciation (depreciation) on investments and foreign currency		(5,445,016	)		5,364,056			(593,485	)		853,810			(1,908,778	)		7,876,724
Net increase (decrease) in net assets from investment operations		32,012			10,942,222			50,018			1,587,988			2,026,870			9,926,626
DISTRIBUTIONS:
Net investment income
Investment Class		–			(6,345	)
Service Class								–			–			(368,093	)		(82,981	)
Net realized gain on investments and foreign currency
Investment Class		(5,238,043	)		(4,865,772	)
Service Class								(725,446	)		(164,762	)		(3,550,372	)		–
Total distributions		(5,238,043	)		(4,872,117	)		(725,446	)		(164,762	)		(3,918,465	)		(82,981	)
CAPITAL SHARE TRANSACTIONS:
Net capital share transactions
Investment Class		(2,812,871	)		(8,691,735	)
Service Class								433,264			(75,668	)		7,978,123			20,843,034
Shareholder redemption fees
Investment Class		1,411			3,350
Service Class								1,114			414			27,684			17,751
Net increase (decrease) in net assets from capital share transactions		(2,811,460	)		(8,688,385	)		434,378			(75,254	)		8,005,807			20,860,785
Net Increase (Decrease) In Net Assets		(8,017,491	)		(2,618,280	)		(241,050	)		1,347,972			6,114,212			30,704,430
NET ASSETS:
Beginning of year		47,237,841			49,856,121			5,816,198			4,468,226			47,592,817			16,888,387
End of year	$	39,220,350		$	47,237,841		$	5,575,148		$	5,816,198		$	53,707,029		$	47,592,817
Undistributed Net Investment Income (Loss) at End of Year	$	–		$	(122	)	$	84		$	–		$	131,205		$	128,921

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 53

Statements of Changes in Net Assets

							Royce European Smaller-
	Royce Select Fund II						Companies Fund						Royce Enterprise Select Fund
	Year Ended 12/31/14			Year Ended 12/31/13			Year Ended 12/31/14			Year Ended 12/31/13			Year Ended 12/31/14			Year Ended 12/31/13
INVESTMENT OPERATIONS:
Net investment income (loss)	$	34,712		$	38,380		$	241,006		$	119,035		$	(8,948	)	$	(8,011	)
Net realized gain (loss) on investments and foreign currency		376,792			710,266			1,470,960			1,143,566			212,359			301,701
Net change in unrealized appreciation (depreciation) on investments and foreign currency		(429,515	)		163,490			(6,684,254	)		2,645,740			(64,251	)		192,389
Net increase (decrease) in net assets from investment operations		(18,011	)		912,136			(4,972,288	)		3,908,341			139,160			486,079
DISTRIBUTIONS:
Net investment income
Investment Class		(93,463	)		(85,215	)		(40,603	)					–			(2,071	)
Service Class								(248,801	)		(232,856	)
Net realized gain on investments and foreign currency
Investment Class		(611,541	)		(416,296	)		(27,878	)					(256,485	)		(228,780	)
Service Class								(220,072	)		–
Total distributions		(705,004	)		(501,511	)		(537,354	)		(232,856	)		(256,485	)		(230,851	)
CAPITAL SHARE TRANSACTIONS:
Net capital share transactions
Investment Class		413,997			850,978			2,436,957						289,352			1,075,981
Service Class								(3,017,743	)		8,500,963
Shareholder redemption fees
Investment Class		352			34			–						47			–
Service Class								17,034			15,318
Net increase (decrease) in net assets from capital share transactions		414,349			851,012			(563,752	)		8,516,281			289,399			1,075,981
Net Increase (Decrease) In Net Assets		(308,666	)		1,261,637			(6,073,394	)		12,191,766			172,074			1,331,209
NET ASSETS:
Beginning of year		4,881,695			3,620,058			28,045,970			15,854,204			2,629,932			1,298,723
End of year	$	4,573,029		$	4,881,695		$	21,972,576		$	28,045,970		$	2,802,006		$	2,629,932
Undistributed Net Investment Income (Loss) at End of Year	$	(25,157	)	$	(26,152	)	$	(27,179	)	$	(183,963	)	$	(68	)	$	(884	)

54 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2014

	Royce SMid-Cap Value Fund						Royce Partners Fund						Royce Opportunity Select Fund
	Year Ended 12/31/14			Year Ended 12/31/13			Year Ended 12/31/14			Year Ended 12/31/13			Year Ended 12/31/14			Year Ended 12/31/13
INVESTMENT OPERATIONS:
Net investment income (loss)	$	59,730		$	15,704		$	11,288		$	16,343		$	(126,420	)	$	(66,078	)
Net realized gain (loss) on investments and foreign currency		1,126,610			488,966			32,246			276,797			217,534			755,058
Net change in unrealized appreciation (depreciation) on investments and foreign currency		(1,954,626	)		1,788,073			(66,198	)		389,385			(1,518,331	)		2,394,936
Net increase (decrease) in net assets from investment operations		(768,286	)		2,292,743			(22,664	)		682,525			(1,427,217	)		3,083,916
DISTRIBUTIONS:
Net investment income
Investment Class														–			–
Service Class		(59,401	)		(16,014	)		(8,247	)		(20,237	)		–
Net realized gain on investments and foreign
currency
Investment Class														(557,908	)		(510,854	)
Service Class		–			–			(83,955	)		(225,475	)		(46,594	)
Total distributions		(59,401	)		(16,014	)		(92,202	)		(245,712	)		(604,502	)		(510,854	)
CAPITAL SHARE TRANSACTIONS:
Net capital share transactions
Investment Class														2,700,474			11,683,077
Service Class		4,921,123			(1,897,564	)		74,254			280,953			1,008,378
Shareholder redemption fees
Investment Class														20,852			6,573
Service Class		38,269			647			75			218			1,239
Net increase (decrease) in net assets from capital share transactions		4,959,392			(1,896,917	)		74,329			281,171			3,730,943			11,689,650
Net Increase (Decrease) In Net Assets		4,131,705			379,812			(40,537	)		717,984			1,699,224			14,262,712
NET ASSETS:
Beginning of year		11,520,253			11,140,441			2,801,033			2,083,049			17,461,115			3,198,403
End of year	$	15,651,958		$	11,520,253		$	2,760,496		$	2,801,033		$	19,160,339		$	17,461,115
Undistributed Net Investment Income (Loss) at End of Year	$	(1,401	)	$	–		$	2,750		$	235		$	(46	)	$	294

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 55

Statements of Changes in Net Assets

							Royce International
	Royce Global Dividend Value Fund						Micro-Cap Fund						Royce International Premier Fund
	Year Ended 12/31/14			Year Ended 12/31/13			Year Ended 12/31/14			Year Ended 12/31/13			Year Ended 12/31/14			Year Ended 12/31/13
INVESTMENT OPERATIONS:
Net investment income (loss)	$	171,242		$	144,174		$	47,007		$	56,707		$	156,675		$	81,523
Net realized gain (loss) on investments and foreign currency		118,429			319,945			406,568			186,907			(79,151	)		340,325
Net change in unrealized appreciation (depreciation) on investments and foreign currency		(915,746	)		726,373			(732,114	)		556,066			(1,127,130	)		852,808
Net increase (decrease) in net assets from investment operations		(626,075	)		1,190,492			(278,539	)		799,680			(1,049,606	)		1,274,656
DISTRIBUTIONS:
Net investment income
Investment Class														(64,490	)
Service Class		(183,211	)		(207,184	)		(91,072	)		(100,087	)		(80,804	)		(129,813	)
Net realized gain on investments and foreign
currency
Investment Class														(126,090	)
Service Class		(233,603	)		(182,756	)		–			–			(214,622	)		–
Total distributions		(416,814	)		(389,940	)		(91,072	)		(100,087	)		(486,006	)		(129,813	)
CAPITAL SHARE TRANSACTIONS:
Net capital share transactions
Investment Class														4,170,312
Service Class		(1,673,700	)		2,041,765			1,569,954			(98,141	)		(4,578,287	)		1,879,090
Shareholder redemption fees
Investment Class														103
Service Class		182			5,944			945			3,765			367			1,734
Net increase (decrease) in net assets from capital share transactions		(1,673,518	)		2,047,709			1,570,899			(94,376	)		(407,505	)		1,880,824
Net Increase (Decrease) In Net Assets		(2,716,407	)		2,848,261			1,201,288			605,217			(1,943,117	)		3,025,667
NET ASSETS:
Beginning of year		9,556,429			6,708,168			5,208,662			4,603,445			9,469,580			6,443,913
End of year	$	6,840,022		$	9,556,429		$	6,409,950		$	5,208,662		$	7,526,463		$	9,469,580
Undistributed Net Investment Income (Loss) at End of Year	$	(690	)	$	(58,505	)	$	(33,864	)	$	(33,960	)	$	(6,992	)	$	(75,124	)

56 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

Statements of Operations Year Ended December 31, 2014

													Royce European
	Royce Select			Royce Micro-Cap			Royce Financial			Royce Select			Smaller-Companies
	Fund I			Discovery Fund			Services Fund			Fund II			Fund
INVESTMENT INCOME:
INCOME:
Dividends	$	510,861		$	78,378		$	1,441,009		$	116,110		$	861,938
Foreign withholding tax		(18,120	)		(169	)		(34,626	)		(4,956	)		(107,234	)
Total income		492,741			78,209			1,406,383			111,154			754,704
EXPENSES:
Investment advisory fees		453,215			54,341			585,032			61,525			382,771
Distribution fees		–			13,585			146,258			–			71,959
Audit		30,241			16,006			27,170			22,630			33,099
Shareholder servicing		29,088			10,841			92,437			8,580			60,428
Registration		16,404			15,018			20,562			8,358			40,067
Custody		14,670			9,260			41,276			42,849			40,989
Shareholder reports		6,033			2,811			55,409			325			27,627
Administrative and office facilities		5,347			639			6,507			559			3,606
Trustees’ fees		2,077			249			2,634			178			1,434
Legal		410			49			486			43			814
Dividends on securities sold short		–			–			–			1,099			–
Interest expense		–			–			–			2,005			–
Other expenses		1,770			705			2,377			6,423			1,878
Total expenses		559,255			123,504			980,148			154,574			664,672
Compensating balance credits		(6	)		(9	)		(42	)		(1	)		(29	)
Fees waived by investment adviser and distributor		–			(42,527	)		(108,409	)		(61,525	)		(39,450	)
Expenses reimbursed by investment adviser		–			–			–			(16,606	)		(111,495	)
Net expenses		559,249			80,968			871,697			76,442			513,698
Net investment income (loss)		(66,508	)		(2,759	)		534,686			34,712			241,006
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
NET REALIZED GAIN (LOSS):
Investments		5,543,084			646,262			3,443,518			387,892			1,486,631
Foreign currency transactions		452			–			(42,556	)		(11,100	)		(15,671	)
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION):
Investments and foreign currency translations		(5,445,007	)		(593,485	)		(1,929,383	)		(427,191	)		(6,680,978	)
Other assets and liabilities denominated in foreign currency		(9	)		–			20,605			(2,324	)		(3,276	)
Net realized and unrealized gain (loss) on investments and foreign currency		98,520			52,777			1,492,184			(52,723	)		(5,213,294	)
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS	$	32,012		$	50,018		$	2,026,870		$	(18,011	)	$	(4,972,288	)

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 57

Statements of Operations

														Royce Global
	Royce Enterprise				Royce SMid-Cap			Royce Partners			Royce Opportunity			Dividend Value
	Select Fund				Value Fund			Fund			Select Fund			Fund
INVESTMENT INCOME:
INCOME:
Dividends		$	25,920		$	299,458		$	46,833		$	146,348		$	356,838
Foreign withholding tax			(782	)		(15,176	)		(1,955	)		(2,518	)		(27,336	)
Total income			25,138			284,282			44,878			143,830			329,502
EXPENSES:
Investment advisory fees			27,488			166,335			23,793			210,763			117,056
Distribution fees			–			41,584			6,998			817			23,411
Audit			16,003			16,016			19,169			28,848			22,515
Shareholder servicing			6,280			18,784			6,415			29,253			16,296
Registration			7,496			21,809			7,758			34,812			18,639
Custody			9,966			22,802			20,138			17,754			39,839
Shareholder reports			416			12,176			830			12,857			4,901
Administrative and office facilities			311			1,626			324			2,366			1,102
Trustees’ fees			123			671			127			950			434
Legal			23			123			24			183			84
Dividends on securities sold short			–			–			–			4,347			–
Interest expense			1			–			–			3,139			–
Other expenses			630			885			638			10,944			850
Total expenses			68,737			302,811			86,214			357,033			245,127
Compensating balance credits			(1	)		(7	)		(1	)		(12	)		(4	)
Fees waived by investment adviser and distributor			(27,488	)		(78,252	)		(23,793	)		(9,238	)		(86,863	)
Expenses reimbursed by investment adviser			(7,162	)		–			(28,830	)		(77,533	)		–
Net expenses			34,086			224,552			33,590			270,250			158,260
Net investment income (loss)			(8,948	)		59,730			11,288			(126,420	)		171,242
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
NET REALIZED GAIN (LOSS):
Investments			212,614			1,128,340			32,525			217,652			122,079
Foreign currency transactions			(255	)		(1,730	)		(279	)		(118	)		(3,650	)
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION):
Investments and foreign currency translations			(64,239	)		(1,954,105	)		(66,080	)		(1,518,330	)		(915,065	)
Other assets and liabilities denominated in foreign currency			(12	)		(521	)		(118	)		(1	)		(681	)
Net realized and unrealized gain (loss) on investments and foreign currency			148,108			(828,016	)		(33,952	)		(1,300,797	)		(797,317	)
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS		$	139,160		$	(768,286	)	$	(22,664	)	$	(1,427,217	)	$	(626,075	)

58 | The Royce Funds 2014 Annual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

Year Ended December 31, 2014

	Royce International			Royce International
	Micro-Cap Fund			Premier Fund
INVESTMENT INCOME:
INCOME:
Dividends	$	152,220		$	393,260
Foreign withholding tax		(8,252	)		(23,035	)
Total income		143,968			370,225
EXPENSES:
Investment advisory fees		74,585			162,869
Distribution fees		14,344			25,834
Audit		27,605			37,235
Shareholder servicing		11,946			27,543
Registration		18,689			38,217
Custody		49,143			36,979
Shareholder reports		3,056			5,816
Administrative and office facilities		610			1,503
Trustees’ fees		244			601
Legal		46			655
Other expenses		837			1,465
Total expenses		201,105			338,717
Compensating balance credits		(5	)		(5	)
Fees waived by investment adviser and distributor		(75,159	)		(72,039	)
Expenses reimbursed by investment adviser		(28,980	)		(53,123	)
Net expenses		96,961			213,550
Net investment income (loss)		47,007			156,675
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
NET REALIZED GAIN (LOSS):
Investments		420,111			(56,036	)
Foreign currency transactions		(13,543	)		(23,115	)
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION):
Investments and foreign currency translations		(730,940	)		(1,104,632	)
Other assets and liabilities denominated in foreign currency		(1,174	)		(22,498	)
Net realized and unrealized gain (loss) on investments and foreign currency		(325,546	)		(1,206,281	)
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS	$	(278,539	)	$	(1,049,606	)

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders | 59

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 Realized and																															Ratio of Expenses to Average Net Assets						Ratio of Net
	Net Asset Value, Beginning of Period		Net Investment Income (Loss)				Unrealized Gain (Loss) on Investments and Foreign Currency				Total from Investment Operations				Distributions from Net Investment Income				Distributions from Net Realized Gain on Investments and Foreign Currency				Distributions from Return of Capital			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		Investment Income (Loss) to Average Net Assets		Portfolio Turnover Rate
Royce Select Fund I–Investment Class
2014	$	19.66		$	(0.03	)		$	0.02			$	(0.01	)		$	–			$	(2.38	)		$	–	$	(2.38	)	$	–	$	17.27		0.23	%	$	39,220	1.23	%	1.23	%	1.23	%	(0.15	)%	40	%
2013		17.40			(0.07	)			4.48				4.41				(0.00	)			(2.15	)			–		(2.15	)		–		19.66		25.99			47,238	1.20		1.20		1.20		(0.36	)	56
2012		16.93			0.31				1.95				2.26				(0.30	)			(1.49	)			–		(1.79	)		–		17.40		13.68			49,856	0.00		0.00		0.00		1.68		54
2011		20.32			(0.16	)			(0.67	)			(0.83	)			–				(2.56	)			–		(2.56	)		–		16.93		(3.61	)		47,345	1.45		1.45		1.45		(0.78	)	63
2010		17.42			(0.23	)			3.39				3.16				–				(0.26	)			–		(0.26	)		–		20.32		18.15			58,788	2.37		2.37		2.37		(1.26	)	49
Royce Micro-Cap Discovery Fund–Service Class
2014	$	6.87		$	(0.00	)		$	0.04			$	0.04			$	–			$	(0.90	)		$	–	$	(0.90	)	$	–	$	6.01		0.97	%	$	5,575	2.27	%	2.27	%	1.49	%	(0.05	)%	85	%
2013		5.23			(0.02	)			1.86				1.84				–				(0.20	)			–		(0.20	)		–		6.87		35.29			5,816	2.50		2.50		1.49		(0.33	)	81
2012		5.12			0.04				0.12				0.16				(0.05	)			–				–		(0.05	)		–		5.23		3.10			4,468	2.94		2.94		1.49		0.85		87
2011		5.24			(0.04	)			(0.09	)			(0.13	)			(0.00	)			–				–		(0.00	)		0.01		5.12		(2.24	)		3,621	2.99		2.99		1.49		(0.71	)	72
2010		4.38			(0.01	)			0.87				0.86				–				–				–		–			–		5.24		19.63			3,637	3.04		3.04		1.49		(0.19	)	105
Royce Financial Services Fund–Service Class
2014	$	9.68		$	0.09			$	0.22			$	0.31			$	(0.06	)		$	(0.65	)		$	–	$	(0.71	)	$	–	$	9.28		3.45	%	$	53,707	1.68	%	1.68	%	1.49	%	0.91	%	41	%
2013		6.83			0.04				2.82				2.86				(0.02	)			–				–		(0.02	)		0.01		9.68		42.00			47,593	1.89		1.89		1.49		0.59		23
2012		5.71			0.10				1.08				1.18				(0.06	)			–				–		(0.06	)		–		6.83		20.72			16,888	1.87		1.87		1.49		1.53		26
2011		6.50			0.05				(0.78	)			(0.73	)			(0.06	)			–				–		(0.06	)		–		5.71		(11.29	)		14,096	1.84		1.84		1.49		0.73		23
2010		5.57			0.07				0.96				1.03				(0.10	)			–				–		(0.10	)		–		6.50		18.45			14,688	1.94		1.94		1.49		1.14		16
Royce Select Fund II–Investment Class
2014	$	11.79		$	0.09			$	(0.18	)		$	(0.09	)		$	(0.23	)		$	(1.51	)		$	–	$	(1.74	)	$	–	$	9.96		(0.24	)%	$	4,573	3.14	%	3.14	%	1.55	%	0.71	%	200	%
2013		10.68			0.10				2.35				2.45				(0.23	)			(1.11	)			–		(1.34	)		–		11.79		23.51			4,882	1.65		1.65		0.91		0.89		159
2012		9.95			0.20				1.19				1.39				(0.17	)			(0.49	)			–		(0.66	)		–		10.68		14.23			3,620	0.19		0.19		0.19		1.86		123
2011		13.90			(0.01	)			(2.04	)			(2.05	)			–				(1.90	)			–		(1.90	)		–		9.95		(14.35	)		3,420	1.29		1.29		1.29		(0.09	)	153
2010		11.62			(0.18	)			2.60				2.42				(0.00	)			(0.15	)			–		(0.15	)		0.01		13.90		20.96			5,141	2.77		2.77		2.77		(1.47	)	126
Royce European Smaller-Companies Fund–Investment Class a
2014	$	10.00		$	0.07			$	(1.63	)		$	(1.56	)		$	(0.17	)		$	(0.11	)		$	–	$	(0.28	)	$	–	$	8.16		(15.58	)%1	$	1,938	3.13	%2	3.13	%2	1.44	%2	1.17	%2	65	%
Royce European Smaller-Companies Fund–Service Class
2014	$	12.42		$	0.11			$	(1.97	)		$	(1.86	)		$	(0.13	)		$	(0.11	)		$	–	$	(0.24	)	$	0.01	$	10.33		(14.86	)%	$	20,035	2.11	%	2.11	%	1.69	%	0.76	%	65	%
2013		10.37			0.04				2.11				2.15				(0.11	)			–				–		(0.11	)		0.01		12.42		20.83			28,046	2.26		2.26		1.69		0.58		53
2012		8.50			0.14				1.88				2.02				(0.15	)			–				–		(0.15	)		–		10.37		23.83			15,854	2.13		2.13		1.69		1.29		22
2011		10.79			0.10				(2.31	)			(2.21	)			(0.10	)			–				–		(0.10	)		0.02		8.50		(20.32	)		15,918	2.09		2.09		1.69		0.95		36
2010		8.06			0.03				2.79				2.82				(0.10	)			–				–		(0.10	)		0.01		10.79		35.20			15,369	2.57		2.57		1.69		0.70		32
Royce Enterprise Select Fund–Investment Class
2014	$	12.12		$	(0.04	)		$	0.65			$	0.61			$	–			$	(1.14	)		$	–	$	(1.14	)	$	–	$	11.59		5.22	%	$	2,802	2.50	%	2.50	%	1.24	%	(0.33	)%	81	%
2013		10.36			(0.05	)			2.98				2.93				(0.01	)			(1.16	)			–		(1.17	)		–		12.12		28.68			2,630	3.08		3.08		1.24		(0.40	)	154
2012		9.88			0.02				1.51				1.53				(0.00	)			(1.05	)			–		(1.05	)		–		10.36		15.68			1,299	0.98	2	0.98	2	0.81	2	0.18	2	127
2011		10.43			(0.04	)			0.09				0.05				–				(0.60	)			–		(0.60	)		–		9.88		0.66			1,123	1.31		1.31		1.31		(0.42	)	136
2010		8.95			0.05				1.49				1.54				(0.06	)			–				–		(0.06	)		–		10.43		17.22			1,158	0.70		0.70		0.70		0.50		166
60  |  The Royce Funds 2014 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 Realized and																												Ratio of Expenses to Average Net Assets						Ratio of Net
	Net Asset Value, Beginning of Period		Net Investment Income (Loss)			Unrealized Gain (Loss) on Investments and Foreign Currency			Total from Investment Operations			Distributions from Net Investment Income			Distributions from Net Realized Gain on Investments and Foreign Currency			Distributions from Return of Capital			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		Investment Income (Loss) to Average Net Assets		Portfolio Turnover Rate
Royce SMid-Cap Value Fund–Service Class
2014	$	14.31	$	0.05		$	(0.32	)	$	(0.27	)	$	(0.05	)	$	–		$	–		$	(0.05	)	$	0.03		$	14.02		(1.68	)%	$	15,652	1.82	%	1.82	%	1.35	%	0.36	%	41	%
2013		11.66		0.02			2.65			2.67			(0.02	)		–			–			(0.02	)		–			14.31		22.91			11,520	2.20		2.20		1.35		0.14		31
2012		10.10		(0.00	)		1.55			1.55			–			–			–			–			0.01			11.66		15.45			11,140	1.90		1.90		1.35		(0.03	)	46
2011		11.44		(0.06	)		(1.27	)		(1.33	)		(0.02	)		–			–			(0.02	)		0.01			10.10		(11.57	)		10,327	1.95		1.95		1.49		(0.54	)	54
2010		9.08		(0.03	)		2.39			2.36			–			–			–			–			–			11.44		25.99			6,195	2.40		2.40		1.49		(0.26	)	126
Royce Partners Fund–Service Class
2014	$	14.46	$	0.06		$	(0.19	)	$	(0.13	)	$	(0.04	)	$	(0.44	)	$	–		$	(0.48	)	$	–		$	13.85		(0.85	)%	$	2,760	3.08	%	3.08	%	1.20	%	0.40	%	8	%
2013		12.04		0.09			3.73			3.82			(0.12	)		(1.28	)		–			(1.40	)		–			14.46		32.22			2,801	4.06		4.06		1.35		0.66		53
2012		10.37		0.04			2.10			2.14			(0.01	)		(0.46	)		–			(0.47	)		–			12.04		20.74			2,083	4.83		4.83		1.35		0.33		31
2011		13.15		(0.03	)		(1.52	)		(1.55	)		(0.05	)		(1.18	)		–			(1.23	)		–			10.37		(11.66	)		1,682	4.25		4.25		1.49		(0.25	)	44
2010		11.56		0.01			2.14			2.15			(0.16	)		(0.41	)		–			(0.57	)		0.01			13.15		18.74			1,771	3.72		3.72		1.49		0.10		38
Royce Opportunity Select Fund–Investment Class b
2014	$	17.93	$	(0.11	)	$	(0.81	)	$	(0.92	)	$	–		$	(0.51	)	$	–		$	(0.51	)	$	0.02		$	16.52		(4.97	)%	$	18,221	1.56	%	1.56	%	1.28	%	(0.60	)%	131	%
2013		12.81		(0.13	)		5.79			5.66			–			(0.55	)		–			(0.55	)		0.01			17.93		44.61			17,461	1.78		1.78		1.29		(0.80	)	129
2012		10.33		0.07			3.50			3.57			(0.13	)		(0.96	)		–			(1.09	)		–			12.81		35.14			3,198	0.29	2	0.29	2	0.25	2	0.64	2	196
2011		12.99		0.01			(2.26	)		(2.25	)		(0.02	)		(0.39	)		–			(0.41	)		–			10.33		(17.14	)		2,102	1.14		1.14		1.14		0.08		299
2010		10.00		(0.43	)		3.42			2.99			–			–			–			–			–			12.99		29.90	1		1,913	4.01	1	4.01	1	4.01	1	(3.79	)1	95
Royce Opportunity Select Fund–Service Class c
2014	$	10.00	$	(0.04	)	$	(1.11	)	$	(1.15	)	$	–		$	(0.51	)	$	–		$	(0.51	)	$	0.03		$	8.37		(11.11	)%1	$	939	10.50	%2	10.50	%2	1.53	%2	(0.65	)%2	131	%
Royce Global Dividend Value Fund–Service Class d
2014	$	11.19	$	0.21		$	(0.97	)	$	(0.76	)	$	(0.22	)	$	(0.29	)	$	–		$	(0.51	)	$	–		$	9.92		(6.84	)%	$	6,840	2.62	%	2.62	%	1.69	%	1.83	%	33	%
2013		10.10		0.18			1.38			1.56			(0.26	)		(0.22	)		–			(0.48	)		0.01			11.19		15.78			9,556	2.98		2.98		1.69		1.75		82
2012		8.39		0.17			1.71			1.88			(0.17	)		–			–			(0.17	)		–			10.10		22.52			6,708	2.86		2.86		1.69		1.72		36
2011		10.00		0.08			(1.62	)		(1.54	)		(0.07	)		(0.01	)		–			(0.08	)		0.01			8.39		(15.37	)1		6,135	3.47	2	3.47	2	1.69	2	1.10	2	20
Royce International Micro-Cap Fund–Service Class d
2014	$	10.04	$	0.06		$	(0.30	)	$	(0.24	)	$	(0.14	)	$	–		$	–		$	(0.14	)	$	–		$	9.66		(2.37	)%	$	6,410	3.51	%	3.51	%	1.69	%	0.82	%	91	%
2013		8.61		0.11			1.51			1.62			(0.20	)		–			–			(0.20	)		0.01			10.04		18.95			5,209	3.86		3.86		1.69		1.22		103
2012		7.72		0.13			0.92			1.05			(0.16	)		–			–			(0.16	)		–			8.61		13.59			4,603	3.90		3.90		1.69		1.63		62
2011		10.00		0.10			(2.26	)		(2.16	)		(0.12	)		–			(0.01	)		(0.13	)		0.01			7.72		(21.51	)1		3,572	3.92	2	3.92	2	1.69	2	1.08	2	71
Royce International Premier Fund–Investment Class a
2014	$	10.00	$	0.03		$	(0.85	)	$	(0.82	)	$	(0.16	)	$	(0.31	)	$	–		$	(0.47	)	$	–		$	8.71		(8.16	)%1	$	3,481	3.17	%2	3.17	%2	1.44	%2	1.00	%2	62	%
Royce International Premier Fund–Service Class e
2014	$	11.67	$	0.17		$	(1.13	)	$	(0.96	)	$	(0.12	)	$	(0.31	)	$	–		$	(0.43	)	$	–		$	10.28		(8.22	)%	$	4,045	2.45	%	2.45	%	1.69	%	1.26	%	62	%
2013		10.01		0.10			1.73			1.83			(0.17	)		–			–			(0.17	)		–			11.67		18.31			9,470	2.82		2.82		1.69		1.09		51
2012		8.26		0.12			1.81			1.93			(0.18	)		–			–			(0.18	)		–			10.01		23.40			6,444	3.54		3.54		1.69		1.18		103
2011		10.00		0.05			(1.73	)		(1.68	)		(0.06	)		(0.00	)		(0.01	)		(0.07	)		0.01			8.26		(16.75	)1		4,090	3.77	2	3.77	2	1.69	2	0.67	2	42

1	Not annualized
2	Annualized
a	The Class commenced operations on January 22, 2014.
b	The Class commenced operations on September 1, 2010.
c	The Class commenced operations on March 21, 2014.
d	The Fund commenced operations on January 3, 2011.
e	The Class commenced operations on January 3, 2011.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS The Royce Funds 2014 Annual Report to Shareholders  |  61

Notes to Financial Statements

Summary of Significant Accounting Policies:

     Royce Select Fund I, Royce Micro-Cap Discovery Fund, Royce Financial Services Fund, Royce Select Fund II, Royce European Smaller-Companies Fund, Royce Enterprise Select Fund, Royce SMid-Cap Value Fund, Royce Partners Fund, Royce Opportunity Select Fund, Royce Global Dividend Value Fund, Royce International Micro-Cap Fund and Royce International Premier Fund (the “Fund” or “Funds”), are twelve series of The Royce Fund (the “Trust”), a diversified open-end management investment company organized as a Delaware statutory trust.
     Classes of shares have equal rights as to earnings and assets, except that each class may bear different fees and expenses for distribution, shareholder servicing, registration and shareholder reports, and receive different compensating balance credits and expense reimbursements. Investment income, realized and unrealized capital gains or losses on investments and foreign currency, and expenses other than those attributable to a specific class are allocated to each class of shares based on its relative net assets.
     The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
     At December 31, 2014, officers, employees of Royce & Associates, LLC (“Royce”), Fund trustees, the Royce retirement plans and other affiliates owned more than 10% of the following Funds:

Royce Select Fund I	15	%	Royce Partners Fund	79	%
Royce Micro-Cap Discovery Fund	71	%	Royce Opportunity Select Fund	20	%
Royce Select Fund II	46	%	Royce Global Dividend Value Fund	18	%
Royce Enterprise Select Fund	51	%	Royce International Micro-Cap Fund	46	%
Royce SMid-Cap Value Fund	47	%	Royce International Premier Fund	13	%

VALUATION OF INVESTMENTS:

     Securities are valued as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq’s Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their highest bid price (in the case of long positions) or at the lowest ask price (in the case of short positions). Other over-the-counter securities for which market quotations are readily available are valued at their highest bid price, except in the case of some bonds and other fixed income securities which may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. The Funds value their non-U.S. dollar denominated securities in U.S. dollars daily at the prevailing foreign currency exchange rates as quoted by a major bank. Securities for which market quotations are not readily available are valued at their fair value in accordance with the provisions of the 1940 Act, under procedures approved by the Fund’s Board of Trustees, and are reported as Level 3 securities. As a general principle, the fair value of a security is the amount which the Fund might reasonably expect to receive for the security upon its current sale. However, in light of the judgment involved in fair valuations, there can be no assurance that a fair value assigned to a particular security will be the amount which the Fund might be able to receive upon its current sale. In addition, if, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, a Fund may fair value the security. The Funds use an independent pricing service to provide fair value estimates for relevant non-U.S. equity securities on days when the U.S. market volatility exceeds a certain threshold. This pricing service uses proprietary correlations it has developed between the movement of prices of non-U.S. equity securities and indices of U.S.-traded securities, futures contracts and other indications to estimate the fair value of relevant non-U.S. securities. When fair value pricing is employed, the prices of securities used by a Fund may differ from quoted or published prices for the same security. Investments in money market funds are valued at net asset value per share.
     Various inputs are used in determining the value of each Fund’s investments, as noted above. These inputs are summarized in the three broad levels below:

Level 1 –	quoted prices in active markets for identical securities.
Level 2 –	other significant observable inputs (including quoted prices for similar securities, foreign securities that may be fair valued and repurchase agreements). The table below includes all Level 2 securities. Level 2 securities with values based on quoted prices for similar securities are noted in the Schedules of Investments.
Level 3 –	significant unobservable inputs (including last trade price before trading was suspended, or at a discount thereto for lack of marketability or otherwise, market price information regarding other securities, information received from the company and/or published documents, including SEC filings and financial statements, or other publicly available information).

     The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

62  |  The Royce Funds 2014 Annual Report to Shareholders

VALUATION OF INVESTMENTS (continued):

The following is a summary of the inputs used to value each Fund’s investments as of December 31, 2014. For a detailed breakout of common stocks by sector classification or country, please refer to the Schedules of Investments.

	LEVEL 1			LEVEL 2		LEVEL 3		TOTAL
Royce Select Fund I
Common Stocks	$	35,726,482		$	815,041	$	–	$	36,541,523
Cash Equivalents		–			1,020,000		–		1,020,000
Royce Micro-Cap Discovery Fund
Common Stocks		5,238,073			–		–		5,238,073
Cash Equivalents		–			361,000		–		361,000
Royce Financial Services Fund
Common Stocks		40,624,942			11,480,789		–		52,105,731
Cash Equivalents		–			1,739,000		–		1,739,000
Royce Select Fund II
Common Stocks		2,090,206			2,494,757		–		4,584,963
Cash Equivalents		–			169,000		–		169,000
Royce European Smaller-Companies Fund
Common Stocks		231,406			21,375,069		–		21,606,475
Cash Equivalents		–			515,000		–		515,000
Royce Enterprise Select Fund
Common Stocks		1,990,486			30,136		–		2,020,622
Fixed Income		39,691			–		–		39,691
Cash Equivalents		–			758,000		–		758,000
Royce SMid-Cap Value Fund
Common Stocks		12,867,476			2,297,610		–		15,165,086
Cash Equivalents		–			539,000		–		539,000
Royce Partners Fund
Common Stocks		1,925,311			421,463		–		2,346,774
Cash Equivalents		–			433,000		–		433,000
Royce Opportunity Select Fund
Common Stocks		18,909,539			9,180		–		18,918,719
Cash Equivalents		–			536,000		–		536,000
Royce Global Dividend Value Fund
Common Stocks		985,436			5,459,330		–		6,444,766
Cash Equivalents		–			128,000		–		128,000
Royce International Micro-Cap Fund
Common Stocks		901,002			5,359,290		529		6,260,821
Cash Equivalents		–			111,000		–		111,000
Royce International Premier Fund
Common Stocks		–			7,605,968		–		7,605,968
Short positions:
	LEVEL 1			LEVEL 2		LEVEL 3		TOTAL
Royce Select Fund II
Common Stocks	$	(71,579	)	$	–	$	–	$	(71,579	)
Royce Opportunity Select Fund
Common Stocks		(941,847	)		–		–		(941,847	)

For the year ended December 31, 2014, certain securities have transferred in and out of Level 1 and Level 2 measurements. The Funds recognize transfers between levels as of the end of the reporting period. At December 31, 2014, the following Funds had securities transfer from Level 1 to Level 2 within the fair value hierarchy:

	TRANSFERS FROM				TRANSFERS FROM
	LEVEL 1 TO LEVEL 2				LEVEL 1 TO LEVEL 2
Royce Select Fund I		$	815,041	Royce Partners Fund		$	421,463
Royce Financial Services Fund			10,445,971	Royce Global Dividend Value Fund			4,780,483
Royce Select Fund II			728,945	Royce International Micro-Cap Fund			2,962,428
Royce European Smaller-Companies Fund			16,633,365	Royce International Premier Fund			6,561,389
Royce SMid-Cap Value Fund			1,501,029

The Royce Funds 2014 Annual Report to Shareholders | 63

Notes to Financial Statements (continued)

VALUATION OF INVESTMENTS (continued):

Level 3 Reconciliation:

						REALIZED AND UNREALIZED
	BALANCE AS OF 12/31/13			SALES		GAIN (LOSS)1			BALANCE AS OF 12/31/14
Royce Financial Services Fund
Common Stocks		$	0	$	0		$	0	$	–
Royce International Micro-Cap Fund
Common Stocks			529		–			–		529

¹ The net change in unrealized appreciation (depreciation) is included in the accompanying Statement of Operations. Change in unrealized appreciation (depreciation) includes net unrealized appreciation (depreciation) resulting from changes in investment values during the reporting period and the reversal of previously recorded unrealized appreciation (depreciation) when gains or losses are realized. Net realized gain (loss) from investments and foreign currency transactions is included in the accompanying Statement of Operations.

REPURCHASE AGREEMENTS:

The Funds may enter into repurchase agreements with institutions that the Funds’ investment adviser has determined are creditworthy. Each Fund restricts repurchase agreements to maturities of no more than seven days. Securities pledged as collateral for repurchase agreements, which are held until maturity of the repurchase agreements, are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). Repurchase agreements could involve certain risks in the event of default or insolvency of the counter-party, including possible delays or restrictions upon the ability of each Fund to dispose of its underlying securities.

FOREIGN CURRENCY:

Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, expiration of currency forward contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on each Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, including investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.

SHORT SALES:

The Funds may sell securities they do not own in anticipation of a decline in the fair value of that security. When a Fund sells a security short, it must borrow the security sold short and deliver it to the broker-dealer through which it made the short sale. A gain, limited to the price at which the Fund sold the security short, or a loss, unlimited in size, will be recognized upon the termination of a short sale. On ex-dividend date, dividends on short sales are recorded as an expense to the Fund.

DISTRIBUTIONS AND TAXES:

As qualified regulated investment companies under Subchapter M of the Internal Revenue Code, the Funds are not subject to income taxes to the extent that each Fund distributes substantially all of its taxable income for its fiscal year.

Royce Global Dividend Value Fund pays any dividends from net investment income quarterly and makes any distributions from net realized gains annually in December. The other Funds pay any dividends and capital gain distributions annually in December. Dividends from net investment income are determined at a class level and distributions from capital gains are determined at a Fund level. Because federal income tax regulations differ from generally accepted accounting principles, income and capital gain distributions determined in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Accordingly, the character of distributions and composition of net assets for tax purposes differ from those reflected in the accompanying financial statements.

CAPITAL GAINS TAXES:

The Funds are subject to a tax imposed on short-term capital gains on securities of issuers domiciled in certain countries. The Funds record an estimated deferred tax liability for these securities that have been held for less than one year. This amount, if any, is reported as deferred capital gains tax in the accompanying Statements of Assets and Liabilities, assuming those positions were disposed of at the end of the period, and accounted for as a reduction in the market value of the security.

INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME:

Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date. Non-cash dividend income is recorded at the fair market value of the securities received. Interest income is recorded on an accrual basis. Premium and discounts on debt securities are amortized using the effective yield-to-maturity method. Realized gains and losses from investment transactions are determined on the basis of identified cost for book and tax purposes.

64 | The Royce Funds 2014 Annual Report to Shareholders

EXPENSES:

The Funds incur direct and indirect expenses. Expenses directly attributable to a Fund are charged to the Fund’s operations, while expenses applicable to more than one of the Royce Funds are allocated equitably. Certain personnel, occupancy costs and other administrative expenses related to the Funds are allocated by Royce under an administration agreement and are included in administrative and office facilities and legal expenses. The Trust has adopted a deferred fee agreement that allows the Trustees to defer the receipt of all or a portion of trustees’ fees otherwise payable. The deferred fees are invested in certain Royce Funds until distributed in accordance with the agreement.

COMPENSATING BALANCE CREDITS:

The Funds have arrangements with their custodian bank and transfer agent, whereby a portion of the custodian’s fee and transfer agent’s fee is paid indirectly by credits earned on a Fund’s cash on deposit with the bank and transfer agent. These deposit arrangements are an alternative to purchasing overnight investments. Conversely, a Fund pays interest to the custodian on any cash overdrafts, to the extent they are not offset by credits earned on positive cash balances.

LINE OF CREDIT:

The Funds, along with certain other Royce Funds, participate in a $75 million line of credit (“Credit Agreement”) to be used for temporary or emergency purposes. This 364-day revolving Credit Agreement expires on July 10, 2015. Pursuant to the Credit Agreement, each participating Fund is liable only for principal and interest payments related to borrowings made by that Fund. Borrowings under the Credit Agreement bear interest at a rate equal to the higher of the federal funds rate + 1.25% or overnight LIBOR + 1.25%. The Funds did not utilize the line of credit during the year ended December 31, 2014.

Capital Share Transactions (in dollars):

					SHARES ISSUED FOR REINVESTMENT OF											NET INCREASE (DECREASE) FROM
	SHARES SOLD					DISTRIBUTIONS				SHARES REDEEMED						CAPITAL SHARE TRANSACTIONS
	Period ended		Period ended			Period ended		Period ended		Period ended			Period ended				Period ended			Period ended
		12/31/14		12/31/13		12/31/14		12/31/13		12/31/14			12/31/13				12/31/14			12/31/13
Royce Select Fund I
Investment Class		$3,917,901		$4,142,661			$3,322,753		$4,632,626		$(10,053,525	)		$(17,467,022	)		$	(2,812,871	)	$	(8,691,735	)
Royce Micro-Cap Discovery Fund
Service Class		140,729		1,631,092			690,513		158,366		(397,978	)		(1,865,126	)			433,264			(75,668	)
Royce Financial Services Fund
Service Class		27,931,624		26,878,008			3,487,173		81,782		(23,440,674	)		(6,116,756	)			7,978,123			20,843,034
Royce Select Fund II
Investment Class		55,611		962,146			691,073		484,786		(332,687	)		(595,954	)			413,997			850,978
Royce European Smaller-Companies Fund
Investment Class		2,976,525					23,074				(562,642	)						2,436,957
Service Class		10,432,098		12,749,215			418,765		225,822		(13,868,606	)		(4,474,074	)			(3,017,743	)		8,500,963
Royce Enterprise Select Fund
Investment Class		137,298		1,042,236			256,485		230,142		(104,431	)		(196,397	)			289,352			1,075,981
Royce SMid-Cap Value Fund
Service Class		13,031,077		918,483			56,994		15,362		(8,166,948	)		(2,831,409	)			4,921,123			(1,897,564	)
Royce Partners Fund
Service Class		110,784		159,415			90,755		243,024		(127,285	)		(121,486	)			74,254			280,953
Royce Opportunity Select Fund
Investment Class		9,262,133		12,259,644			511,788		502,868		(7,073,447	)		(1,079,435	)			2,700,474			11,683,077
Service Class		1,177,953					46,594				(216,169	)						1,008,378
Royce Global Dividend Value Fund
Service Class		1,124,982		3,160,309			391,000		387,794		(3,189,682	)		(1,506,338	)			(1,673,700	)		2,041,765
Royce International Micro-Cap Fund
Service Class		3,084,632		1,892,877			86,844		98,903		(1,601,522	)		(2,089,921	)			1,569,954			(98,141	)
Royce International Premier Fund
Investment Class		5,574,827					188,340				(1,592,855	)						4,170,312
Service Class		6,044,190		2,799,696			286,437		128,291		(10,908,914	)		(1,048,897	)			(4,578,287	)		1,879,090

The Royce Funds 2014 Annual Report to Shareholders | 65

Notes to Financial Statements (continued)

Capital Share Transactions (in shares):

					SHARES ISSUED FOR REINVESTMENT OF												NET INCREASE (DECREASE) IN SHARES
	SHARES SOLD				DISTRIBUTIONS					SHARES REDEEMED							OUTSTANDING
	Period ended		Period ended			Period ended		Period ended			Period ended			Period ended				Period ended			Period ended
	12/31/14		12/31/13			12/31/14		12/31/13			12/31/14			12/31/13				12/31/14			12/31/13
Royce Select Fund I
Investment Class		194,816		220,662			290,480		247,999			(616,828	)		(931,946	)			(131,532	)		(463,285	)
Royce Micro-Cap Discovery Fund
Service Class		21,073		272,296			119,500		23,995			(60,104	)		(304,432	)			80,469			(8,141	)
Royce Financial Services Fund
Service Class		2,899,740		3,162,045			417,602		8,765			(2,448,965	)		(728,338	)			868,377			2,442,472
Royce Select Fund II
Investment Class		4,635		82,539			71,912		42,863			(31,377	)		(50,269	)			45,170			75,133
Royce European Smaller-Companies Fund
Investment Class		297,124					2,880					(62,436	)						237,568
Service Class		826,782		1,112,607			43,605		18,850			(1,188,428	)		(403,204	)			(318,041	)		728,253
Royce Enterprise Select Fund
Investment Class		11,117		88,545			22,479		19,654			(8,844	)		(16,561	)			24,752			91,638
Royce SMid-Cap Value Fund
Service Class		846,746		69,873			4,176		1,118			(539,576	)		(221,303	)			311,346			(150,312	)
Royce Partners Fund
Service Class		7,707		11,894			6,678		17,559			(8,798	)		(8,706	)			5,587			20,747
Royce Opportunity Select Fund
Investment Class		512,765		763,033			33,180		30,076			(417,105	)		(68,900	)			128,840			724,209
Service Class		131,427					5,703					(24,877	)						112,253
Royce Global Dividend Value Fund
Service Class		100,739		294,486			39,248		35,717			(304,353	)		(140,394	)			(164,366	)		189,809
Royce International Micro-Cap Fund
Service Class		290,430		205,642			9,432		10,123			(155,454	)		(231,571	)			144,408			(15,806	)
Royce International Premier Fund
Investment Class		547,336					21,875					(169,405	)						399,806
Service Class		517,826		254,662			28,675		11,434			(964,831	)		(97,880	)			(418,330	)		168,216

Investment Adviser and Distributor:

INVESTMENT ADVISER: Under the Trust’s investment advisory agreements with Royce, Royce is entitled to receive Investment Advisory fees that are computed daily and payable monthly. Royce’s commitment to waive its fees and reimburse class-specific expenses to the extent necessary to maintain certain Funds’ net annual operating expense ratios at specified levels through April 30, 2015, is shown below to the extent that it impacted net expenses for the year ended December 31, 2014. See the Prospectus for contractual waiver expiration dates.

			COMMITTED NET ANNUAL				YEAR ENDED
	ANNUAL CONTRACTUAL		OPERATING EXPENSE RATIO CAP				DECEMBER 31, 2014
	ADVISORY FEE AS A PERCENTAGE		Investment		Service				Advisory fees
	OF AVERAGE NET ASSETS1		Class2		Class2		Net advisory fees		waived
Royce Select Fund I	1.00	%		N/A		N/A	$	453,215	$	–
Royce Micro-Cap Discovery Fund	1.00	%		N/A		1.49%		11,814		42,527
Royce Financial Services Fund	1.00	%		N/A		1.49%		488,324		96,708
Royce Select Fund II	1.25	%		1.49%		N/A		–		61,525
Royce European Smaller-Companies Fund	1.25	%		1.44%		1.69%		343,321		39,450
Royce Enterprise Select Fund	1.00	%		1.24%		N/A		–		27,488
Royce SMid-Cap Value Fund	1.00	%		N/A		1.35%		88,083		78,252
Royce Partners Fund	0.85	%		N/A		1.20%		–		23,793
Royce Opportunity Select Fund	1.00	%		1.24%		1.49%		201,525		9,238
Royce Global Dividend Value Fund	1.25	%		N/A		1.69%		30,193		86,863
Royce International Micro-Cap Fund	1.30	%		N/A		1.69%		–		74,585
Royce International Premier Fund	1.25	%		1.44%		1.69%		93,930		68,939

1

From a base annual rate of 1.00% (1.25% for Royce Select Fund II, Royce European Smaller-Companies Fund, Royce Global Dividend Value Fund and Royce International Premier Fund, 0.85% for Royce Partners Fund and 1.30% for Royce International Micro-Cap Fund), the annual rates of investment advisory fees payable by each of the Funds are reduced by the indicated amount at the following breakpoints applicable to a Fund’s net assets in excess of $2 billion: more than $2 billion to $4 billion - .05% per annum; more than $4 billion to $6 billion - .10% per annum; over $6 billion - .15% per annum.

2

Committed net annual operating expense ratio cap excludes acquired fund fees and expenses, dividends on securities sold short and other expenses related to short sales.

66 | The Royce Funds 2014 Annual Report to Shareholders

DISTRIBUTOR: Royce Fund Services, Inc. (“RFS”), the distributor of the Trust’s shares, is a wholly owned subsidiary of Royce. RFS is entitled to receive distribution fees that are computed daily and payable monthly.

	ANNUAL CONTRACTUAL DISTRIBUTION FEE AS A		PERIOD ENDED DECEMBER 31, 2014
	PERCENTAGE OF AVERAGE NET ASSETS		Net distribution fees		Distribution fees waived
Royce Micro-Cap Discovery Fund – Service Class	0.25	%	$	13,585	$	–
Royce Financial Services Fund – Service Class	0.25	%		134,557		11,701
Royce European Smaller-Companies Fund – Service Class	0.25	%		71,959		–
Royce SMid-Cap Value Fund – Service Class	0.25	%		41,584		–
Royce Partners Fund – Service Class	0.25	%		6,998		–
Royce Opportunity Select Fund – Service Class	0.25	%		817		–
Royce Global Dividend Value Fund – Service Class	0.25	%		23,411		–
Royce International Micro-Cap Fund – Service Class	0.25	%		13,770		574
Royce International Premier Fund – Service Class	0.25	%		22,734		3,100

Purchases and Sales of Investment Securities:

For the year ended December 31, 2014, the costs of purchases and the proceeds from sales of investment securities, other than short-term securities, were as follows:

							PURCHASES TO COVER
	PURCHASES		SALES		SHORT SALES		SHORT SALES
Royce Select Fund I	$	16,483,115	$	25,103,992	$	–	$	–
Royce Micro-Cap Discovery Fund		4,460,577		4,711,634		–		–
Royce Financial Services Fund		32,909,601		21,348,727		–		–
Royce Select Fund II		8,468,077		8,794,679		694,639		976,075
Royce European Smaller-Companies Fund		19,534,291		18,993,580		–		–
Royce Enterprise Select Fund		1,633,206		1,686,553		–		–
Royce SMid-Cap Value Fund		11,476,080		6,155,736		–		–
Royce Partners Fund		185,337		227,675		–		–
Royce Opportunity Select Fund		22,060,301		19,325,952		5,907,126		6,377,397
Royce Global Dividend Value Fund		2,888,781		3,931,530		–		–
Royce International Micro-Cap Fund		6,618,574		4,891,621		–		–
Royce International Premier Fund		7,508,323		7,645,627		–		–

Class Specific Expenses:

Class specific expenses, for Funds with multiple classes, were as follows for the period ended December 31, 2014:

														CLASS LEVEL
														EXPENSES
														REIMBURSED BY
	NET DISTRIBUTION		SHAREHOLDER		SHAREHOLDER				TRANSFER AGENT					INVESTMENT
	FEES		SERVICING		REPORTS		REGISTRATION		BALANCE CREDITS			TOTAL		ADVISER
Royce European Smaller-Companies Fund –
Investment Class	$	–	$	9,080	$	141	$	20,106	$	–		$	29,327	$	29,327
Royce European Smaller-Companies Fund –
Service Class		71,959		51,348		27,486		19,961		(16	)		170,738		82,168
		71,959		60,428		27,627		40,067		(16	)				111,495
Royce Opportunity Select Fund –
Investment Class		–		21,595		12,666		14,006		(6	)		48,261		48,261
Royce Opportunity Select Fund –
Service Class		817		7,658		191		20,806		–			29,472		29,272
		817		29,253		12,857		34,812		(6	)				77,533
Royce International Premier Fund –
Investment Class		–		10,102		79		20,406		–			30,587		30,587
Royce International Premier Fund –
Service Class		22,734		17,441		5,737		17,811		(3	)		63,720		22,536
		22,734		27,543		5,816		38,217		(3	)				53,123

The Royce Funds 2014 Annual Report to Shareholders | 67

Notes to Financial Statements (continued)

TAX INFORMATION:

At December 31, 2014, net unrealized appreciation (depreciation) based on identified cost for tax purposes was as follows:

			NET UNREALIZED			GROSS UNREALIZED
	TAX BASIS COST		APPRECIATION (DEPRECIATION)			Appreciation		Depreciation
Royce Select Fund I		$30,185,150	$	7,376,373		$	8,796,564	$	1,420,191
Royce Micro-Cap Discovery Fund		5,154,819		444,254			717,780		273,526
Royce Financial Services Fund		46,447,385		7,397,346			9,485,051		2,087,705
Royce Select Fund II		4,659,858		22,526			389,707		367,181
Royce European Smaller-Companies Fund		25,706,571		(3,585,096	)		1,255,700		4,840,796
Royce Enterprise Select Fund		2,579,895		238,418			298,016		59,598
Royce SMid-Cap Value Fund		15,646,308		57,778			2,106,361		2,048,583
Royce Partners Fund		2,193,163		586,611			680,851		94,240
Royce Opportunity Select Fund		17,244,038		1,268,834			2,518,770		1,249,936
Royce Global Dividend Value Fund		6,861,346		(288,580	)		807,430		1,096,010
Royce International Micro-Cap Fund		6,878,510		(506,689	)		368,426		875,115
Royce International Premier Fund		7,626,952		(20,984	)		852,419		873,403

The primary difference between book and tax basis cost is the timing of the recognition of losses on securities sold, investments in Real Estate Investment Trusts, investments in publicly traded partnerships and mark-to-market of Passive Foreign Investment Companies.

Distributions during the years ended December 31, 2014 and 2013, were characterized as follows for tax purposes:

	ORDINARY INCOME				LONG-TERM CAPITAL GAINS				RETURN OF CAPITAL
	2014		2013		2014		2013		2014		2013
Royce Select Fund I	$	1,056,669	$	817,571	$	4,181,374	$	4,054,546	$	–	$	–
Royce Micro-Cap Discovery Fund		195,733		–		529,713		164,762		–		–
Royce Financial Services Fund		859,068		82,981		3,059,397		–		–		–
Royce Select Fund II		236,887		291,068		467,557		210,443		560		–
Royce European Smaller-Companies Fund		289,517		232,856		247,837		–		–		–
Royce Enterprise Select Fund		155,352		155,551		101,133		75,300		–		–
Royce SMid-Cap Value Fund		59,401		16,014		–		–		–		–
Royce Partners Fund		40,340		58,459		51,862		187,253		–		–
Royce Opportunity Select Fund		163,809		186,736		440,693		324,118		–		–
Royce Global Dividend Value Fund		340,693		389,940		76,121		–		–		–
Royce International Micro-Cap Fund		91,072		100,087		–		–		–		–
Royce International Premier Fund		330,888		129,813		152,974		–		2,144		–

The tax basis components of distributable earnings at December 31, 2014, were as follows:

			UNDISTRIBUTED
			LONG-TERM								QUALIFIED
			CAPITAL GAINS OR								LATE YEAR
	UNDISTRIBUTED		(CAPITAL LOSSES		CAPITAL LOSS			NET UNREALIZED			ORDINARY AND			TOTAL			CAPITAL LOSS
	ORDINARY		NOT SUBJECT TO		CARRYFORWARD			APPRECIATION			POST-OCTOBER LOSS			DISTRIBUTABLE			CARRYFORWARD
	INCOME		EXPIRATION)		TO 12/31/171			(DEPRECIATION)2			DEFERRALS3			EARNINGS			UTILIZED
Royce Select Fund I	$	–	$	590,514	$	–		$	7,376,373		$	–		$	7,966,887		$	–
Royce Micro-Cap Discovery Fund		19,810		45,833		–			444,256			(742	)		509,157			–
Royce Financial Services Fund		435,624		1,117,430		–			7,255,238			(23,434	)		8,784,858			–
Royce Select Fund II		–		–		–			20,208			(23,822	)		(3,614	)		–
Royce European Smaller-Companies Fund		7,784		–		–			(3,588,731	)		(235,153	)		(3,816,100	)		1,361,060
Royce Enterprise Select Fund		4,188		10,384		–			238,407			(68	)		252,911			–
Royce SMid-Cap Value Fund		3,798		–		(4,319,392	)		57,405			–			(4,258,189	)		1,122,805
Royce Partners Fund		2,681		–		–			586,518			(87	)		589,112			–
Royce Opportunity Select Fund		–		595		–			1,268,835			(174,789	)		1,094,641			–
Royce Global Dividend Value Fund		11		–		–			(288,512	)		(139,794	)		(428,295	)		–

68 | The Royce Funds 2014 Annual Report to Shareholders

TAX INFORMATION (continued):
		UNDISTRIBUTED
		LONG-TERM					QUALIFIED
		CAPITAL GAINS OR					LATE YEAR
	UNDISTRIBUTED	(CAPITAL LOSSES		CAPITAL LOSS	NET UNREALIZED		ORDINARY AND		TOTAL		CAPITAL LOSS
	ORDINARY	NOT SUBJECT TO		CARRYFORWARD	APPRECIATION		POST-OCTOBER LOSS		DISTRIBUTABLE		CARRYFORWARD
	INCOME	EXPIRATION)		TO 12/31/171	(DEPRECIATION)2		DEFERRALS3		EARNINGS		UTILIZED
Royce International Micro-Cap Fund	$93	$(415,411	)	$ –	$(510,937	)	$ (10,918	)	$(937,173	)	$280,445
Royce International Premier Fund	–	–		–	(44,097	)	(560,156	)	(604,253	)	112,378

1	For Royce SMid-Cap Value Fund, this amount represents $449,274 expiring 12/31/16 and $3,870,118 expiring 12/31/17. On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted. Under the Act, net capital losses may be carried forward indefinitely, and their character is retained as short term and/or long-term losses. Previously, net capital losses were carried forward for eight years and treated as short term losses. As a transition rule, the Act requires that postenactment net capital losses be used before pre-enactment net capital losses. As a result of this ordering rule, pre-enactment capital loss carryforwards may expire unused, whereas under the previous rules these losses may have been utilized. This change is effective for fiscal years beginning after the date of enactment.
2	Includes timing differences on foreign currency, recognition of losses on securities sold, investments in Real Estate Investment Trusts, investments in publicly traded partnerships and mark-to-market of Passive Foreign Investment Companies.
3	Under the current tax law, capital losses and qualified late year ordinary losses incurred after October 31 may be deferred and treated as occurring on the first day of the following fiscal year.

For financial reporting purposes, capital accounts and distributions to shareholders are adjusted to reflect the tax character of permanent book/tax differences. For the year ended December 31, 2014, the Funds recorded the following permanent reclassifications, which relate primarily to current net operating losses, distribution reclassifications, Real Estate Investment Trusts, publicly traded partnerships, foreign currency transactions, non-deductible excise taxes paid, return of capital, dividend expense on short sales and gains from the sale of Passive Foreign Investment Companies. Results of operations and net assets were not affected by these reclassifications.

	UNDISTRIBUTED NET			ACCUMULATED NET			PAID–IN
	INVESTMENT INCOME (LOSS)			REALIZED GAIN (LOSS)			CAPITAL
Royce Select Fund I	$	66,630		$	(66,630	)	$	–
Royce Micro-Cap Discovery Fund		2,843			(2,843	)		–
Royce Financial Services Fund		(164,309	)		164,900			(591	)
Royce Select Fund II		59,745			(59,185	)		(560	)
Royce European Smaller-Companies Fund		205,183			(205,183	)		–
Royce Enterprise Select Fund		9,764			(9,764	)		–
Royce SMid-Cap Value Fund		(1,730	)		1,730			–
Royce Partners Fund		(525	)		1,758			(1,233	)
Royce Opportunity Select Fund		126,080			15,728			(141,808	)
Royce Global Dividend Value Fund		69,784			(69,738	)		(46	)
Royce International Micro-Cap Fund		44,162			(44,024	)		(138	)
Royce International Premier Fund		56,752			(54,608	)		(2,144	)

Management has analyzed the Funds’ tax positions taken on federal income tax returns for all open tax years (2011 – 2014) and has concluded that as of December 31, 2014, no provision for income tax is required in the Funds’ financial statements.

The Royce Funds 2014 Annual Report to Shareholders | 69

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of The Royce Fund and the Shareholders of
Royce Select Fund I, Royce Micro-Cap Discovery Fund, Royce Financial Services Fund, Royce Select Fund II, Royce European Smaller-Companies Fund, Royce Enterprise Select Fund, Royce SMid-Cap Value Fund, Royce Partners Fund, Royce Opportunity Select Fund, Royce Global Dividend Value Fund, Royce International Micro-Cap Fund and Royce International Premier Fund.

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Royce Select Fund I, Royce Micro-Cap Discovery Fund, Royce Financial Services Fund, Royce Select Fund II, Royce European Smaller-Companies Fund, Royce Enterprise Select Fund, Royce SMid-Cap Value Fund, Royce Partners Fund, Royce Opportunity Select Fund, Royce Global Dividend Value Fund, Royce International Micro-Cap Fund and Royce International Premier Fund (constituting The Royce Fund, hereafter referred to as the “Funds”) at December 31, 2014, the results of their operations for the year then ended, the changes in their net assets and their financial highlights for each of the fiscal periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2014, by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Baltimore, Maryland
February 24, 2015

70 | The Royce Funds 2014 Annual Report to Shareholders

Understanding Your Fund’s Expenses (unaudited)

As a shareholder of a mutual fund, you pay ongoing expenses, including management fees and other Fund expenses including, for some funds, distribution and/or service (12b-1) fees. Using the information below, you can estimate how these ongoing expenses (in dollars) affect your investment and compare them with the ongoing expenses of other funds. You may also incur one-time transaction expenses, including redemption fees, which are not shown in this section and would result in higher total costs. The example is based on an investment of $1,000 invested at July 1, 2014, and held for the entire six-month period ended December 31, 2014. Service Class shares are generally available only through certain brokers or retirement plan administrators who receive distribution and/or service fees from the Fund for services that they perform.

Actual Expenses

The first part of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value at December 31, 2014, by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second part of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
     Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, this section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	ACTUAL							HYPOTHETICAL (5% PER YEAR RETURN BEORE EXPENSES)
	Beginning Account		Ending Account Value		Expenses Paid During the		Beginning Account		Ending Account Value		Expenses Paid During		Annualized Expense
	Value 7/1/14		12/31/14		Period1		Value 7/1/14		12/31/14		the Period1		Ratio2
Investment Class
Royce Select Fund I	$	1,000.00	$	940.15	$	6.11	$	1,000.00	$	1,018.90	$	6.36		1.25	%
Royce Select Fund II		1,000.00		936.47		7.57		1,000.00		1,017.39		7.88		1.55	%
Royce European Smaller- Companies Fund		1,000.00		814.84		6.59		1,000.00		1,017.95		7.32		1.44	%
Royce Enterprise Select Fund		1,000.00		994.72		6.23		1,000.00		1,018.95		6.31		1.24	%
Royce Opportunity Select Fund		1,000.00		920.05		6.19		1,000.00		1,018.75		6.51		1.28	%
Royce International Premier Fund		1,000.00		890.74		6.86		1,000.00		1,017.95		7.32		1.44	%
Service Class
Royce Micro-Cap Discovery Fund		1,000.00		1,009.69		7.55		1,000.00		1,017.69		7.58		1.49	%
Royce Financial Services Fund		1,000.00		998.41		7.51		1,000.00		1,017.69		7.58		1.49	%
Royce European Smaller- Companies Fund		1,000.00		814.02		7.86		1,000.00		1,016.53		8.74		1.72	%
Royce SMid-Cap Value Fund		1,000.00		864.75		6.35		1,000.00		1,018.40		6.87		1.35	%
Royce Partners Fund		1,000.00		964.85		5.94		1,000.00		1,019.16		6.11		1.20	%
Royce Opportunity Select Fund		1,000.00		921.18		7.41		1,000.00		1,017.49		7.78		1.53	%
Royce Global Dividend Value Fund		1,000.00		884.05		8.03		1,000.00		1,016.69		8.59		1.69	%
Royce International Micro-Cap Fund		1,000.00		905.06		8.12		1,000.00		1,016.69		8.59		1.69	%
Royce International Premier Fund		1,000.00		887.40		10.47		1,000.00		1,014.12		11.17		2.20	%

1	Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value for the period, multiplied by 184 days in the most recent fiscal half-year divided by 365 days (to reflect the half-year period).
2	Annualized expense ratio used to derive figures in the table is based on the most recent fiscal half-year.

The Royce Funds 2014 Annual Report to Shareholders | 71

Federal Tax Information

     In January 2015, taxable shareholders were mailed a Form 1099-DIV reporting the federal tax status of all distributions paid during the calendar year 2014.

2014 Supplemental Tax Information:

				LONG-TERM CAPITAL
		% U.S.	% INCOME	GAIN DISTRIBUTION OR
FUND	% QDI	GOVT INCOME	QUALIFYING FOR DRD	MAXIMUM ALLOWABLE (OOO’S)
Royce Select Fund I	42.62%	N/A	32.60%	$4,181
Royce Micro-Cap Discovery Fund	39.28%	N/A	38.75%	530
Royce Financial Services Fund	100.00%	N/A	74.65%	3,059
Royce Select Fund II	27.96%	N/A	6.01%	468
Royce European Smaller-Companies Fund	100.00%	N/A	0.00%	248
Royce Enterprise Select Fund	16.48%	N/A	11.89%	101
Royce SMid-Cap Value Fund	100.00%	N/A	100.00%	–
Royce Partners Fund	42.99%	N/A	47.75%	52
Royce Opportunity Select Fund	0.01%	N/A	55.17%	441
Royce Global Dividend Value Fund	66.08%	N/A	3.63%	76
Royce International Micro-Cap Fund	71.34%	N/A	0.00%	–
Royce International Premier Fund	75.79%	N/A	0.00%	153

DEFINITIONS:
%	QDI: Qualified Dividend Income; % of net investment income and/or short-term capital gains distributions that qualify for treatment at long-term capital gain rates.
%	U.S. Govt Income: % of investment income paid from U.S. Government obligations.
%	Income Qualifying for DRD: % of investment income eligible for the corporate dividend received deduction.

FOREIGN TAX CREDIT:

For the year ended December 31, 2014, the following funds had elected to pass through the credit for tax paid in foreign countries. The net foreign source income and foreign tax per share outstanding on the dividend distribution date are as follows:

	NET FOREIGN	NET FOREIGN SOURCE
FUND	SOURCE INCOME	INCOME PER SHARE	FOREIGN TAX	FOREIGN TAX PER SHARE
Royce European Smaller-Companies Fund	$455,474	$0.2068	$107,233	$0.0487
Royce Global Dividend Value Fund	218,014	0.2695	27,272	0.0337
Royce International Micro-Cap Fund	63,421	0.0964	8,161	0.0124
Royce International Premier Fund	202,692	0.1842	22,980	0.0209

72 | The Royce Funds 2014 Annual Report to Shareholders

Trustees and Officers

All Trustees and Officers may be reached c/o The Royce Funds, 745 Fifth Avenue, New York, NY 10151

Charles M. Royce, Trustee¹, President

Age: 75 | Number of Funds Overseen: 33 | Tenure: Since 1982

Non-Royce Directorships: Director of TICC Capital Corp.

Principal Occupation(s) During Past Five Years: Chief Executive Officer and Chairman of Board of Managers of Royce & Associates, LLC (“Royce”), the Trust’s investment adviser.

Christopher D. Clark, Trustee¹, Vice President

Age: 49 | Number of Funds Overseen: 32 | Tenure: Since 2014

Principal Occupation(s) During Past Five Years: President (since July 2014), Co-Chief Investment Officer (Since January 2014) and Managing Director of Royce, having been employed by Royce since May 2007.

Patricia W. Chadwick, Trustee

Age: 66 | Number of Funds Overseen: 33 | Tenure: Since 2009

Non-Royce Directorships: Trustee of ING Mutual Funds and Director of Wisconsin Energy Corp.

Principal Occupation(s) During Past 5 Years: Consultant and President of Ravengate Partners LLC (since 2000).

Richard M. Galkin, Trustee

Age: 76 | Number of Funds Overseen: 33 | Tenure: Since 1982

Non-Royce Directorships: None

Principal Occupation(s) During Past Five Years: Private investor. Mr. Galkin’s prior business experience includes having served as President of Richard M. Galkin Associates, Inc., telecommunications consultants, President of Manhattan Cable Television (a subsidiary of Time, Inc.), President of Haverhills Inc. (another Time, Inc. subsidiary), President of Rhode Island Cable Television, and Senior Vice President of Satellite Television Corp. (a subsidiary of Comsat).

Stephen L. Isaacs, Trustee

Age: 75 | Number of Funds Overseen: 33 | Tenure: Since 1989

Non-Royce Directorships: None

Principal Occupation(s) During Past Five Years: Attorney and President of Health Policy Associates, Inc., consultants. Mr. Isaacs’s prior business experience includes having served as President of the Center for Health and Social Policy (from 1996 to 2012); Director of Columbia University Development Law and Policy Program and Professor at Columbia University (until August 1996).

Arthur S. Mehlman, Trustee

Age: 72 | Number of Funds Overseen: 51 | Tenure: Since 2004

Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 18 Legg Mason Funds.

Principal Occupation(s) During Past Five Years: Director of The League for People with Disabilities, Inc.; Director of University of Maryland Foundation (non-profits). Formerly: Director of Municipal Mortgage & Equity, LLC (from October 2004 to April 1, 2011); Director of University of Maryland College Park Foundation (non-profit) (from 1998 to 2005); Partner, KPMG LLP (international accounting firm) (from 1972 to 2002); Director of Maryland Business Roundtable for Education (from July 1984 to June 2002).

David L. Meister, Trustee

Age: 75 | Number of Funds Overseen: 33 | Tenure: Since 1982

Non-Royce Directorships: None

Principal Occupation(s) During Past Five Years: Consultant. Chairman and Chief Executive Officer of The Tennis Channel (from June 2000 to March 2005). Mr. Meister’s prior business experience includes having served as Chief Executive Officer of Seniorlife.com, a consultant to the communications industry, President of Financial News Network, Senior Vice President of HBO, President of Time-Life Films, and Head of Broadcasting for Major League Baseball.

G. Peter O’Brien, Trustee

Age: 69 | Number of Funds Overseen: 51 | Tenure: Since 2001

Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 18 Legg Mason Funds; Director of TICC Capital Corp.

Principal Occupation(s) During Past Five Years: Trustee Emeritus of Colgate University (since 2005); Board Member of Hill House, Inc. (since 1999); Formerly: Trustee of Colgate University (from 1996 to 2005), President of Hill House, Inc. (from 2001 to 2005) and Managing Director/Equity Capital Markets Group of Merrill Lynch & Co. (from 1971 to 1999).

John D. Diederich, Vice President and Treasurer

Age: 63 | Tenure: Since 2001

Principal Occupation(s) During Past Five Years: Chief Operating Officer, Managing Director and member of the Board of Managers of Royce; Chief Financial Officer of Royce; Director of Administration of the Trust; and President of RFS, having been employed by Royce since April 1993.

Jack E. Fockler, Jr., Vice President

Age: 56 | Tenure: Since 1995

Principal Occupation(s) During Past Five Years: Managing Director and Vice President of Royce, and Vice President of RFS, having been employed by Royce since October 1989.

Daniel A. O’Byrne, Vice President and Assistant Secretary

Age: 52 | Tenure: Since 1994

Principal Occupation(s) During Past Five Years: Principal and Vice President of Royce, having been employed by Royce since October 1986.

Francis D. Gannon, Vice President

Age: 47 | Tenure: Since 2014

Principal Occupation(s) During Past Five Years: Co-Chief Investment Officer (Since January 2014) and Managing Director of Royce, having been employed by Royce since September 2006.

John E. Denneen, Secretary and Chief Legal Officer

Age: 47 | Tenure: 1996-2001 and Since April 2002

Principal Occupation(s) During Past Five Years: General Counsel, Chief Legal and Compliance Officer, and Secretary of Royce; Secretary and Chief Legal Officer of The Royce Funds.

Lisa Curcio, Chief Compliance Officer

Age: 55 | Tenure: Since 2004

Principal Occupation(s) During Past Five Years: Chief Compliance Officer of The Royce Funds (since October 2004) and Compliance Officer of Royce (since June 2004).

1	Interested Trustee.
	Trustees will hold office until their successors have been duly elected and qualified or until their earlier resignation or removal. The Statement of Additional Information, which contains additional information about the Trust’s trustees and officers, is available and can be obtained without charge at www.roycefunds.com or by calling (800) 221-4268.

The Royce Funds 2014 Annual Report to Shareholders | 73

Notes to Performance and Other Important Information

The thoughts expressed in this report concerning recent market movements and future prospects for small company stocks are solely the opinion of Royce at December 31, 2014, and, of course, historical market trends are not necessarily indicative of future market movements. Statements regarding the future prospects for particular securities held in the Funds’ portfolios and Royce’s investment intentions with respect to those securities reflect Royce’s opinions as of December 31, 2014 and are subject to change at any time without notice. There can be no assurance that securities mentioned in this report will be included in any Royce-managed portfolio in the future.

Sector weightings are determined using the Global Industry Classification Standard (“GICS”). GICS was developed by, and is the exclusive property of, Standard & Poor’s Financial Services LLC (“S&P”) and MSCI Inc. (“MSCI”). GICS is the trademark of S&P and MSCI. “Global Industry Classification Standard (GICS)” and “GICS Direct” are service marks of S&P and MSCI.

All indexes referred to are unmanaged and capitalization weighted. Each index’s returns include net reinvested dividends and/or interest income. Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. The Russell 2000 is an index of domestic small-cap stocks. It measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 Index. The Russell 1000 Index is an index of domestic large-cap stocks. It measures the performance of the 1,000 largest publicly traded U.S. companies in the Russell 3000 Index. The Russell Microcap Index includes 1,000 of the smallest securities in the Russell 2000 Index, along with the next smallest eligible securities as determined by Russell. The Russell 2500 is an index of domestic small- to mid-cap stocks. It includes approximately 2,500 of the smallest securities in the Russell 3000 Index. The returns for the Russell 2500—Financial Services Sector represent those of the financial services companies within the Russell 2500 Index. The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe. It includes approximately 800 of the smallest securities in the Russell 1000 Index. The Russell Global Small Cap Index is an index of global small-cap stocks. The Russell Global ex-U.S. Large Cap Index is an index of global large-cap stocks, excluding the United States. The Russell Global ex-U.S. Small Cap Index is an index of global small-cap stocks, excluding the United States. The Russell Europe Small Cap Index is an index of European small-cap stocks. The S&P 500 is an index of U.S. large-cap stocks, selected by Standard & Poor’s based on market size, liquidity, and industry grouping, among other factors. The CBOE Volatility Index (VIX) measures market expectations of near-term volatility conveyed by S&P 500 Stock Index option prices. The Nasdaq Composite is an index of the more than 3,000 common equities listed on the Nasdaq stock exchange. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index. Returns for the market indexes used in this report were based on information supplied to Royce by Russell Investments. Royce has not independently verified the above described information.

The Price-Earnings, or P/E, Ratio is calculated by dividing a company’s share price by its trailing 12-month earnings-per share (EPS). The Price-to-Book, or P/B, Ratio is calculated by dividing a company’s share price by its book value per share. The Morningstar Style Map uses proprietary scores of a stock’s value and growth characteristics to determine its placement in one of the five categories listed on the horizontal axis. These characteristics are then compared to those of other stocks within the same market capitalization band. Each is scored from zero to 100 for both value and growth attributes. The value score is subtracted from the growth score to determine the overall style score. For the vertical, market cap axis, Morningstar subdivides into size groups. Giant-cap stocks are defined as those that account for the top 40% of the capitalization of each style zone; large-cap stocks represent the next 30%; mid-cap stocks the next 20%; small-cap stocks the next 7%; micro-cap stocks the smallest 3%.

Investments in securities of micro-cap, small-cap, and/or mid-cap companies may involve considerably more risk than investments in securities of larger-cap companies. (Please see “Primary Risks for Fund Investors” in the prospectus.) Certain Royce Funds may invest up to 25% (100% for Royce Select Fund II, European Smaller-Companies, Global Dividend Value, International Micro-Cap, and International Premier Fund, 35% of Partners, Financial Services and SMid-Cap Value Funds, and 10% of Select Fund I) of their respective assets in foreign securities, which generally may involve political, economic, currency and other risks not encountered in U.S. investments. (Please see “Investing in Foreign Securities” in the prospectus.) Royce Select I, Select II, Enterprise Select, and Opportunity Select Funds may sell securities short which involves selling a security it does not own in anticipation that the security’s price will decline. Short sales present unlimited risk on an individual stock basis since the Fund may be required to buy security sold short at a time when the security has appreciated in value. A Fund that invests a significant portion of its assets in a limited number of stocks may be subject to considerably more risk than a more broadly diversified Fund because a decline in the value of any of these stocks would cause that Fund’s overall value to decline to a greater degree. A broadly diversified portfolio does not, however, ensure a profit for a Fund or guarantee against loss. Please read the prospectus carefully before investing or sending money. A copy of the Funds’ current prospectus and Statement of Additional Information may be obtained by calling (800) 221-4268, or by visiting www.roycefunds.com. All publicly released material Fund information is disclosed by the Funds on their website at www.roycefunds.com. The Royce Funds is a service mark of The Royce Funds. Distributor: Royce Fund Services, Inc.

Forward-Looking Statements

This material contains forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve risks and uncertainties, including, among others, statements as to:

• the Funds’ future operating results,

• the prospects of the Funds’ portfolio companies,

• the impact of investments that the Funds have made or may make,

• the dependence of the Funds’ future success on the general economy and its impact on the companies and industries in which the Funds invest, and

• the ability of the Funds’ portfolio companies to achieve their objectives.

This review and report use words such as “anticipates,” “believes,” “expects,” “future,” “intends,” and similar expressions to identify forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements for any reason.

The Royce Funds have based the forward-looking statements included in this review and report on information available to us on the date of the report, and we assume no obligation to update any such forward-looking statements. Although The Royce Funds undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make through future shareholder communications or reports.

Proxy Voting

A copy of the policies and procedures that The Royce Funds use to determine how to vote proxies relating to portfolio securities and information regarding how each of The Royce Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available, without charge, on The Royce Funds’ website at www.roycefunds.com, by calling (800) 221-4268 (toll-free) and on the website of the Securities and Exchange Commission (“SEC”), at www.sec.gov.

Form N-Q Filing

The Funds file their complete schedules of investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at www.sec.gov. The Royce Funds’ holdings are also on the Funds’ website approximately 15 to 20 days after each calendar quarter end and remain available until the next quarter’s holdings are posted. The Funds’ Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. To find out more about this public service, call the SEC at (202) 942-8090. The Funds’ complete schedules of investments are updated quarterly, and are available at www.roycefunds.com.

74 | The Royce Funds 2014 Annual Report to Shareholders

About The Royce Funds	Contact Us
Wealth of Experience With approximately $32 billion in total assets under management, Royce & Associates is committed to the same investment principles that have served us well for more than 40 years. Chuck Royce, our Chief Executive Officer, enjoys one of the longest tenures of any active mutual fund manager. Royce’s investment staff also includes 24 portfolio managers and analysts and nine traders.	GENERAL INFORMATION General Royce Funds information including: • How to open an account • An overview of our firm and Funds • Ordering literature including Prospectuses (800) 221-4268
Multiple Funds, Common Focus Our goal is to offer both individual and institutional investors the best available micro-cap, small-cap, and/or mid-cap portfolios. We have chosen to concentrate on smaller-company investing by providing investors with a range of funds that take full advantage of this large and diverse sector.	ACCOUNT INFORMATION Speak with a representative about: • Your account, transactions, and forms (800) 841-1180
Consistent Discipline Our approach emphasizes paying close attention to risk and maintaining the same discipline, regardless of market movements and trends. The price we pay for a security must be below our appraisal of its current worth. This requires a thorough analysis of the financial and business dynamics of an enterprise, as though we were purchasing the entire company.	FINANCIAL ADVISORS, CONSULTANTS, AND INSTITUTIONS Speak with your regional Royce contact regarding: • Scheduling a meeting or call • Information about our firm, strategies, and funds • Resources for financial professionals, such as portfolio attribution reports (800) 337-6923
Co-Ownership of Funds It is important that our employees and shareholders share a common financial goal. Our officers, employees, and their families currently have more than $185 million invested in The Royce Funds and are often among the largest individual shareholders.	AUTOMATED ACCOUNT INFORMATION 24-hour Automated Telephone Service (800) 878-6923
	roycefunds.com

Item 2. Code(s) of Ethics.  As of the end of the period covered by this report, the Registrant had adopted a code of ethics, as defined in Item 2 of Form N-CSR, applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of this code of ethics is filed as an exhibit to this Form N-CSR. No substantive amendments were approved or waivers were granted to this code of ethics during the period covered by this report.

Item 3. Audit Committee Financial Expert.

(a)(1)	The Board of Trustees of the Registrant has determined that it has an audit committee financial expert.
(a)(2)	Arthur S. Mehlman and Patricia W. Chadwick were designated by the Board of Trustees as the Registrant’s Audit Committee Financial Experts, effective April 15, 2004 and April 8, 2010, respectively. Mr. Mehlman and Ms. Chadwick are “independent” as defined under Item 3 of Form N-CSR.

Item 4. Principal Accountant Fees and Services.

(a)	Audit Fees:
	Year ended December 31, 2014 - $580,234
	Year ended December 31, 2013 - $573,835
(b)	Audit-Related Fees:
	Year ended December 31, 2014 - $0
	Year ended December 31, 2013 - $0
(c)	Tax Fees:
	Year ended December 31, 2014 - $256,143 – Preparation of tax returns and excise tax review
	Year ended December 31, 2013 - $253,050 – Preparation of tax returns and excise tax review
(d)	All Other Fees:
	Year ended December 31, 2014 - $0
	Year ended December 31, 2013 - $0

(e)(1)    Annual Pre-Approval: On an annual basis, the Registrant’s independent auditor submits to the Audit Committee a schedule of proposed audit, audit-related, tax and other non-audit services to be rendered to the Registrant and/or investment adviser(s) for the following year that require pre-approval by the Audit Committee. This schedule provides a description of each type of service that is expected to require pre-approval and the maximum fees that can be paid for each such service without further Audit Committee approval. The Audit Committee then reviews and determines whether to approve the types of scheduled services and the projected fees for them. Any subsequent revision to already pre-approved services or fees (including fee increases) are presented for consideration at the next regularly scheduled Audit Committee meeting, as needed.

If subsequent to the annual pre-approval of services and fees by the Audit Committee, the Registrant or one of its affiliates determines that it would like to engage the Registrant’s independent auditor to perform a service not already pre-approved, the request is to be submitted to the Registrant’s Chief Financial Officer, and if he or she determines that the service fits within the independence guidelines (e.g., it is not a prohibited service), he or she will then arrange for a discussion of the proposed service and fee to be included on the agenda for the next regularly scheduled Audit Committee meeting so that pre-approval can be considered.

           Interim Pre-Approval: If, in the judgment of the Registrant’s Chief Financial Officer, a proposed engagement needs to commence before the next regularly scheduled Audit Committee meeting, he or she shall submit a written summary of the proposed engagement to all members of the Audit Committee, outlining the services, the estimated maximum cost, the category of the services (e.g., audit, audit-related, tax or other) and the rationale for engaging the Registrant’s independent auditor to perform the services. To the extent the proposed engagement involves audit, audit-related or tax services, any individual member of the Audit Committee who is an independent Board member is authorized to pre-approve the engagement. To the extent the proposed engagement involves non-audit services other than audit-related or tax, the Chairman of the Audit Committee is authorized to

pre-approve the engagement. The Registrant’s Chief Financial Officer will arrange for this interim review and coordinate with the appropriate member(s) of the Committee. The independent auditor may not commence the engagement under consideration until the Registrant’s Chief Financial Officer has informed the auditor in writing that pre-approval has been obtained from the Audit Committee or an individual member who is an independent Board member. The member of the Audit Committee who pre-approves any engagements in between regularly scheduled Audit Committee meetings is to report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next regularly scheduled meeting.

(e)(2)	Not Applicable
(f)	Not Applicable
(g)	Year ended December 31, 2014 - $256,143
	Year ended December 31, 2013 - $253,050
(h)	No such services were rendered during 2014 or 2013.

Item 5. Audit Committee of Listed Registrants. Not Applicable.

Item 6. Investments.
(a)  See Item 1.

(b)  Not Applicable

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not Applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not Applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not Applicable

Item 10. Submission of Matters to a Vote of Security Holders. Not Applicable.

Item 11. Controls and Procedures.

(a) Disclosure Controls and Procedures. The Principal Executive and Financial Officers concluded that the Registrant’s Disclosure Controls and Procedures are effective based on their evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.

(b) Internal Control over Financial Reporting. There were no significant changes in Registrant’s internal control over financial reporting or in other factors that could significantly affect this control subsequent to the date of the evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses during the second fiscal quarter of the period covered by this report.

Item 12. Exhibits.    Attached hereto.

(a)(1)  The Registrant’s code of ethics pursuant to Item 2 of Form N-CSR.

(a)(2)  Separate certifications by the Registrant’s Principal Executive Officer and Principal Financial Officer as required by Rule 30a-2(a) under the Investment Company Act of 1940.

(a)(3)  Not Applicable

(b)  Separate certifications by the Registrant’s Principal Executive Officer and Principal Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

THE ROYCE FUND

BY:	/s/ Charles M. Royce
	Charles M. Royce
	President
Date: March 6, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

THE ROYCE FUND		THE ROYCE FUND
BY:	/s/ Charles M. Royce	BY:	/s/ John D. Diederich
	Charles M. Royce		John D. Diederich
	President		Chief Financial Officer
Date: March 6, 2015		Date: March 6, 2015