CORE Royce Pennsylvania Mutual Fund Royce Heritage Fund

2010
JUNE 30, 2010

CORE + DIVIDENDS Royce Total Return Fund Royce Dividend Value Fund

SEMIANNUAL REVIEW AND REPORT
TO SHAREHOLDERS

QUALITY + FOCUSED Royce Premier Fund Royce Special Equity Fund Royce Value Fund Royce 100 Fund Royce SMid-Cap Value Fund Royce Focus Value Fund Royce Partners Fund Royce Mid-Cap Fund

MICRO-CAP/OPPORTUNISTIC Royce Micro-Cap Fund Royce Low-Priced Stock Fund Royce Opportunity Fund Royce Value Plus Fund Royce Discovery Fund

GLOBAL/INTERNATIONAL Royce European Smaller-Companies Fund Royce Global Value Fund Royce International Smaller-Companies Fund

Royce Financial Services Fund

www.roycefunds.com

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

The universe has evolved over the last 15 years into a recognized, professional asset class with a high level of institutional acceptance. Today, there are many small-cap and micro-cap indices, as well as style indices and sector groupings. This is why we believe the size and diversity of the universe make it ideally suited for multiple offerings. Small-cap and micro-cap securities also require their own particular approach. In addition, within each universe there are significant pockets of opportunity, such as dividend-paying companies, low-priced companies, high

quality companies, etc., that go beyond classification by market cap. So while our portfolio managers share a common investment approach—one that emphasizes paying attention to risk and buying what each thinks are strong companies at attractively discounted prices—our portfolios also possess important distinctions that make each one unique. Our Fund Guide is designed to help investors better understand both the different approaches and the common ground among our portfolios. Each Fund Category provides insight into how the respective portfolios are managed, while a closer look at our materials allows investors to see other important differences—capitalization range, volatility, other investment themes, portfolio diversification—within each category. We think that understanding these differences can be helpful in asset allocation decisions, especially when investors incorporate more than one Royce offering within their portfolios.

Investment Universe
Our universe consists of three markets: micro-cap, small-cap and mid-cap companies. The Funds may also invest in foreign securities to varying degrees.
U.S. Micro-Cap Market Caps up to $500 million U.S. Mid-Cap Market Caps between $2.5 billion and $15 billion

• More than 3,400 companies • More than $370 billion in total capitalization
This area offers many choices, but also features limited trading volumes and higher volatility.
U.S. Small-Cap Market Caps between $500 million and $2.5 billion

• More than 600 companies • More than $3.5 trillion in total capitalization
Mid-cap companies generally possess more established businesses that attract greater institutional interest and thus enjoy greater liquidity.
Foreign Securities

• More than 1,100 companies • More than $1.2 trillion in total capitalization
This segment is more efficient, offering greater trading volumes and narrower bid/ask spreads.

This market consists of more than 16,000 companies in developed countries, of which more than 7,500 are domiciled in Europe.
(Source: FactSet)

This page is not part of the 2010 Semiannual Report to Shareholders

We offer a number of Funds in the smaller company universe.
CORE Royce Pennsylvania Mutual Fund Royce Heritage Fund MICRO-CAP/OPPORTUNISTIC Royce Micro-Cap Fund Royce Low-Priced Stock Fund Royce Opportunity Fund Royce Value Plus Fund Royce Discovery Fund

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

CORE + DIVIDENDS Royce Total Return Fund Royce Dividend Value Fund

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

GLOBAL/INTERNATIONAL Royce European Smaller-Companies Fund Royce Global Value Fund Royce International Smaller-Companies Fund

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

QUALITY + FOCUSED Royce Premier Fund Royce Special Equity Fund Royce Value Fund Royce 100 Fund Royce SMid-Cap Value Fund Royce Focus Value Fund Royce Partners Fund Royce Mid-Cap Fund

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

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• Online Fund Guide www.roycefunds.com/guide • Compare Funds www.roycefunds.com/compare • Prices & Performance www.roycefunds.com/prices

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

The Royce Funds invest primarily in micro-cap, small-cap and/or mid-cap stocks, which may involve considerably more risk than investing in larger-cap stocks. (Please see “Primary Risks for Fund Investors” in the prospectus.) Each Fund may invest a portion of its net assets in foreign securities, which may involve political, economic, currency, and other risks not encountered in U.S. investments. (Please see “Investing in International Securities” in the prospectus.) Distributor: Royce Fund Services, Inc.
This page is not part of the 2010 Semiannual Report to Shareholders

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trade outside the U. Limited: A limited portfolio at Royce is one that either (i) generally invests in no more than 100 companies. and whose top positions generally exceed 2% of net assets. Each Royce Fund’s overall Risk Ratio is a weighted combination of its three-. and/or are issued by companies that are domiciled outside the U.a. included are all world stock funds tracked by Morningstar with at least three years of history (143 funds as of 6/30/10).a. Securities: Non-U. For Royce Financial Services Fund. Securities Portfolio Approach Diversified Diversified Diversified Diversified Limited Limited Limited Limited Limited Limited Limited Limited Diversified Diversified Diversified Diversified Diversified Limited Limited Diversified Moderate Volatility Moderate High Low Low Low Low High Moderate n. 2 | This page is not part of the 2010 Semiannual Report to Shareholders . For Royce Global Value Fund.5 billion and $15 billion Non-U.Current Portfolio Characteristics Portfolio Composition** CATEGORY Fund CORE Royce Pennsylvania Mutual Fund Royce Heritage Fund CORE + DIVIDENDS Royce Total Return Fund Royce Dividend Value Fund QUALITY + FOCUSED Royce Premier Fund Royce Special Equity Fund Royce Value Fund Royce 100 Fund Royce SMid-Cap Value Fund* Royce Focus Value Fund* Royce Partners Fund* Royce Mid-Cap Fund* MICRO-CAP/OPPORTUNISTIC Royce Micro-Cap Fund Royce Low-Priced Stock Fund Royce Opportunity Fund Royce Value Plus Fund Royce Discovery Fund GLOBAL/INTERNATIONAL Royce European Smaller-Companies Fund Royce Global Value Fund Royce International Smaller-Companies Fund* Royce Financial Services Fund Micro Micro Micro Micro Small Small Small Small Mid Mid Mid Mid 0% 0% 0% 0% 100% 100% 100% 50% Micro Micro Micro Micro Micro Small Small Small Small Small Mid Mid Mid Mid Mid 0% 0% 0% 0% 0% 25% 25% 25% 25% 25% Micro Micro Micro Micro Micro Micro Micro Micro Small Small Small Small Small Small Small Small Mid Mid Mid Mid Mid Mid Mid Mid 0% 0% 0% 0% 0% 0% 0% 0% 25% 25% 25% 25% 25% 25% 25% 25% Micro Micro Small Small Mid Mid 0% 0% 25% 25% Micro Micro Small Small Mid Mid 0% 0% 25% 25% As of June 30. Each Fund’s results reflect its score compared with all small-cap objective funds tracked by Morningstar with at least three years of history (341 funds as of 6/30/10). For Royce European Smaller-Companies Fund.S.and 10-year scores. and those in the bottom third to have high volatility. or (ii) invests primarily in a single sector. We consider funds whose results rank in the top third of the category to have relatively low volatility. included are all financial funds tracked by the Morningstar with at least three years of history (35 funds as of 6/30/10). if applicable. five. n. included are all European stock funds tracked by Morningstar with at least three years of history (30 funds as of 6/30/10).S.S. n.a. n.a.S.a.S. with an emphasis on downside performance. Moderate High High High Low High High n. ** Source: FactSet Indicates primary portfolio composition (based on Average Market Capitalization) Indicates secondary portfolio composition (based on exposure greater than 20%) Indicates little (less than 20%) or no exposure Investment Universe Micro-Cap: Market Caps up to $500 million Small-Cap: Market Caps between $500 million and $2. which measures variations in a fund’s monthly returns. Volatility Each Fund’s volatility is measured using Morningstar’s Risk Ratio. exchange. 2010 Micro Small Mid Non-U. Portfolio Approach Diversified: A diversified portfolio at Royce is one that generally holds more than 100 securities and whose top positions generally do not exceed 2% of net assets.5 billion Mid-Cap: Market Caps between $2. those in the middle third to have moderate volatility. Low * The Fund does not have three years of history required for calculating volatility score. securities are those securities that do not trade on a U.S.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Letter to Our Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 This page is not part of the 2010 Semiannual Report to Shareholders | 3 . . . . Against The Grain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Table of Contents Semiannual Review Performance and Expenses . . . . . . 12 Fund Focus: The Evolution Solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Away From The Crowd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Small-Cap Market Cycle Performance . . . . . . . . . . . . . . . . . . . . 13 Online Update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Postscript: How To Swim Upstream. Inside Back Cover Semiannual Report to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26. if they were.a.16 5.com.14 n.49 1.47 1. to no more than 1.70 21.75 -5.58 35. companies in the Russell 3000 index. Gross Annual Operating Expenses 0.Performance and Expenses1 CATEGORY Fund CORE Royce Pennsylvania Mutual Fund Royce Heritage Fund CORE + DIVIDENDS Royce Total Return Fund Royce Dividend Value Fund QUALITY + FOCUSED Royce Premier Fund Royce Special Equity Fund Royce Value Fund Royce 100 Fund Royce SMid-Cap Value Fund Royce Focus Value Fund Royce Partners Fund Royce Mid-Cap Fund MICRO-CAP/OPPORTUNISTIC Royce Micro-Cap Fund Royce Low-Priced Stock Fund Royce Opportunity Fund Royce Value Plus Fund Royce Discovery Fund GLOBAL/INTERNATIONAL Royce European Smaller-Companies Fund Royce Global Value Fund Royce International Smaller-Companies Fund Royce Financial Services Fund Russell 2000 Through June 30.50 5.29 1.19 1.a.78 1.75 1. n.50 5.32 25. is presented on a total return basis and reflects the reinvestment of distributions.a. private equity funds and other investment companies. Shares of the Fund’s Service.42 -6.a.a. (Please see “Primary Risks for Fund Investors” in the respective prospectus.12 2. other than acquired fund fees and expenses.68 20. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund (2% in the case of Royce European Smaller-Companies.) Please read the prospectus carefully before investing or sending money. n.60 1. so that shares may be worth more or less than their original cost when redeemed.63 24. R and K Classes bear an annual distribution expense that is not borne by the Fund’s Investment Class.06 25. n.25 18.30% 5.51 1. other expenses and any applicable acquired fund fees and expenses. n.49 4. Net annual operating expenses reflect contractual fee waivers and/or reimbursements.49% for the Service Class of Royce Focus Value and Partners Funds. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the net annual operating expenses at or below 1.000 smallest publicly traded U.a.a.50 1.47 1. Investment return and principal value of an investment will fluctuate.80 1. Current month-end performance may be obtained at www.37 8. 100.49% for the Service Class of Royce Dividend Value.a.49 1. n. n.98 14. The Russell 2000 is an unmanaged.a.22 1.88 12.86 7.61 11.81 8.16 20. any 12b-1 distribution and service fees.51 1.80 n.60 1. as the case may be).99% for the Service Class of Royce Dividend Value.a.a.55 2.33 2.62 1. other than acquired fund fees and expenses.a.a. n. 4 | This page is not part of the 2010 Semiannual Report to Shareholders . Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses through April 30.54 1. Consultant. Discovery. n. 10. 0.88 1. Expense and Risk Information All performance information in this Review and Report reflects past performance. 2010 1-Year 22. 2020 to the extent necessary to limit total net annual operating expenses.a. Net Annual Operating Expenses 0.49 1.19 2.56 3.40 8.69% for the Service Class of Royce European Smaller-Companies.95 27.a.a.roycefunds. 3.17 1.08 n.52 7.91 5.15 1.76 1. The Royce Funds invest primarily in securities of microcap.94 0.09 1.a.49 1. n.02 0.47 3.17 1. 2012 to the extent necessary to limit total net annual operating expenses.a.a. Discovery.11 17.00 n.47 1. SMid-Cap Value and Low-Priced Stock Funds and to no more than 1.22 1.98 5.17 9.50 1.a.28 2.a.S. 9.94 19. 1 Not annualized Important Performance. European Smaller-Companies and International Smaller-Companies Funds.92% 1.88 n. to no more than 1.10 n. performance would be lower.52 -1. Gross annual operating expenses reflect the Fund’s gross total annual operating expenses and include management fees.01 8.73 n.07 2.94 11.50 11. Current performance may be higher or lower than performance quoted.a.74% 22.31% 10.57 n. 2013 for Royce Mid-Cap Fund.68 12. Redemption fees are not reflected in the performance shown above. It measures the performance of the 2.50 5. n.81 27.40 21. Financial Services.a.49% through April 30.51 1. 13.54 2.55 5. n. Past performance is no guarantee of future results.301 12.a.70 n. n. All expense information is reported as of the Fund’s most current prospectus. capitalization-weighted index of domestic small-cap stocks. Royce Pennsylvania Mutual Fund’s average annual total return for the 35-year period ended 6/30/10 was 13.05 11.92% 1. 2011 to the extent necessary to limit total net annual operating expenses exclusive of any applicable acquired fund fee and expenses to no more than 1.18 n. n. All performance and expense information reflects results of the Fund’s oldest share Class (Investment Class or Service Class. The performance information in the table above does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Global Value and International Smaller-Companies Funds).01 5. hedge funds. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses through April 30. small-cap and/or mid-cap companies which may involve considerably more risk than investments in securities of larger-cap companies. n. n. 12/27/95 12/15/93 5/3/04 12/31/91 5/1/98 6/14/01 6/30/03 9/28/07 2/27/09 4/27/09 12/31/09 12/31/91 12/15/93 11/19/96 6/14/01 10/3/03 12/29/06 12/29/06 6/30/08 12/31/03 n.98 3. n.a.15 1.37 -3.07 3.89%.11 3.97 3.04 2.66 19. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses through April 30.a.a.51 1.48 Average Annual Total Returns Since Since 5-Year 10-Year Inception Inception Date 2.75% 7. Global Value and International Smaller-Companies Funds. Acquired fund fees and expenses reflect the estimated amount of fees and expenses incurred indirectly by the Fund through its investments in mutual funds.97 10. 6.

while also inspiring legions of sweaty beachgoers to stick to the safety of their towels. there was a dynamic market rebound that lasted—at least as of this writing—from the market low on March 9. This page is not part of the 2010 Semiannual Report to Shareholders | 5 . 2010. in roughly two years. – Sören Kierkegaard Thirty-five years ago this summer. 2009 through the interim small-cap market high on April 23. the film Jaws opened and quickly chomped its way into celluloid history. we have moved from a market collapse due in part to a widespread failure to heed Warren Buffett’s advice to “beware of geeks bearing formulas” to a market malaise driven by heightened fears about Greeks—to say nothing of Californians or any number of others—bearing debt. Investment decisions should not be approached with fear and trembling.Letter to Our Shareholders Fear and Trembling Life can only be understood backwards. an outlook that measures time in years. not months and quarters. Unfortunately. We find much to like on a stock-by-stock basis and believe that there is ample proof in the form of strong fundamentals for potentially better days. in our view. Yet it’s a paraphrase of the ad from the classic Spielberg film’s deservedly forgotten sequel—the subtly named Jaws 2—that provides the most apt description of investors’ attitudes here in the summer of 2010: “Just when you thought it was safe to go back in the market…” After all. but with conviction. but it must be lived forwards. equity investors seemed to regard this rally as an all-too-brief respite from a world of ever-declining stock prices and acute economic anxiety. In between the financial crisis of late 2008-early 2009 and the market’s current struggles (the latter arguably a sequel to the earlier calamity). confidence and.

but with conviction. For our part. We understand the trepidation. while inflows to bond funds remained brisk. To benchmark performance for our openend portfolios that invest primarily in non-U. owned a performance edge relative to their peers. of course.7% and the more tech-oriented Nasdaq Composite fell 7. recent results for the three major equity indexes were mostly uninspiring and did much to reinforce investors’ anxiety. at $118. Russell 2500 and Russell Midcap indexes are a better fit for those openend portfolios that. small-caps. confidence and. which have generally lasted from two to seven years. Like every mutual fund manager. outflows from domestic equity funds totaled $3. just as we sympathize with those investors who feel as though they have lately been presented with a dismal choice between low-risk. Continued on page 8… The Concept of Anxiety Regardless of the length of one’s outlook. which brings to two the number of historic market implosions that have occurred within the last 11 years. not months and quarters. Investment decisions should not be approached with fear and trembling. risk-averse types— make of these sobering figures? Not surprisingly. but to down market and full market cycle periods. long-term outlook leads us to see the potential for solid returns for stocks in the years ahead. 2010. we use the small-cap Russell 2000. respectively. provided that investors have the stomach for the bumpy road in front of stocks in the short run. then. indexes offer a very useful picture of the markets (or areas of the market) that they represent at specific moments in time. So what do equity managers such as ourselves—patient. volatile. as the small-cap index was down 1. President of the stock market. but also because they interrupted the much-needed 6 | This page is not part of the 2010 Semiannual Report to Shareholders . especially those results achieved over full market cycles. perhaps painfully. such as Standard Deviation and Return Efficiency. We do this because of our long-held conviction that how a portfolio performs in difficult market environments can have an enormous effect on long-term returns. an outlook that measures time in years. For the year-to-date period ended May 31. in our view. the markets endured the bursting of the Internet bubble. stocks or that invest globally. For the year-to-date period ended June 30. The Russell Microcap.S.9%. For the majority of The Royce Funds. 2010.8 billion while fixed income funds took in a record $375. a broad-based index of domestic smallcap stocks.8 billion. These were obviously disappointing results. not merely because of the negative performance. We also make use of our various benchmark indexes to compare volatility scores. For many people who first invested in the stock market at the end of 1999. Using mostly broad brush strokes. potentially profit-less instruments—bonds or money markets—and risky equities that may not only fail to grow or preserve capital but could also erode or even destroy it.Letter to Our Shareholders Looking further back to the beginning of this new century. Royce. focus more on micro-caps or that range more frequently into mid-cap stocks. the experience has been most likely unprofitable (depending. we also use indexes as benchmarks against which we compare our own Funds’ performances. we use several different MSCI (Morgan Stanley Capital International) indexes. while the large-cap S&P 500 lost 6. that so many equity investors are choosing to avoid what they regard as the shark-infested waters Charles M. disciplined. The Investment Company Institute (ICI) tracks mutual fund asset flows and reported that in 2009 domestic equity funds had net outflows of $8. as measured by the Russell 2000 index. small-cap and mid-cap securities all over the globe.5 billion. on where their money was invested) and highly. It is no wonder.1%. The evidence is compelling for investors’ recent dissatisfaction with low or negative returns from stocks and their related impatience with risk and volatility. our contrarian. Equally important. we are scrutinizing valuations for micro-cap. Comparisons are made not simply to calendar-based periods. we still believe in equities.7 billion. Strategas Research Partners recently published data from the ICI that showed the trend continuing. We find much to like on a stock-bystock basis and believe that there is ample proof in the form of strong fundamentals for potentially better days.

three. Dividend This page is not part of the 2010 Semiannual Report to Shareholders | 7 . 2010.2% versus a loss of 6.1% through June 30.2% for the Russell 2000 Growth index.7% for the Nasdaq Composite. putting an end to four consecutive quarters of positive performance for all three domestic indexes. So while returns from the U.S. and the Russell 2000 slipped 17.rally that began with the market low on March 9.9% versus -1. Within small-cap.. While the rally had seen other downturns.7% versus -7.6% versus a loss of 9. For the 10-year period. but outperformed for the six months ended June 30. 2010 for the three domestic and two non-U. outperforming the small-cap index in both the second quarter. and five-year and 10-year returns were mixed. 2009 through June 30. with each major index up more than 55%. 2010 remained strong. 2010 favored value. However. and year-to-date period. and 25-year results were decidedly won by the Russell 2000 Value index. in which the Russell Microcap index was down 8. Small-cap stock prices peaked on April 23. Only Royce Total Return. the Russell 2000 was down 9. when a few percentage points made the difference between positive or negative performance or outperformance versus a Fund’s respective benchmark index. growth and value indexes suffered second-quarter losses: the Russell 2000 Value index fell 10. 2010. and the Nasdaq Composite declined 12. The revived rally did not last long. 20-.S. 2010 (+1. Judge For Yourself! Year-to-date results for The Royce Funds covered in this Semiannual Review and Report reflected the high level of market volatility. each had fallen in the range of 9%-10%.3% for the MSCI World ex USA Small Core index for the six months ended June 30. but that small-cap. Looking forward.4%. 2010. Australasia and Far East) index was down 13. 10-.4% for the S&P 500 and 5. First-quarter results were positive for all three indexes—the Russell 2000 gained 8. when it rose 0. While the market’s gyrations always play a role in performance to some extent. making this latest decline easily the most severe for small-caps since the worst days of the financial crisis. both domestic and non-U.S.9% versus 5. indexes were negative.9%). Micro-cap companies provided better relative results. fared no better. which were negative across the board. year-to-date and one-year results ended June 30. as the Russell 2000 and MSCI World ex USA Small Core indexes were the top performers.and five-year results favored growth. The year opened with a less damaging correction that the market had shaken off by early February. it was particularly visible in the first half. the S&P 500 fell 11. The MSCI EAFE (Europe.0%. however. 15-. small-caps did best. market bottom on March 9. we believe that volatility will continue to be above average. trailing three-year returns ended June 30. Markets outside the U.9%. These losses lent more than a bearish tint to second-quarter returns.6% from that date through the end of June. can provide attractive returns over the next three to five years. For the second quarter.S.9%). Relative performance was not a strength for the portfolios taken as a group. 2009. Within the micro-cap index. value underperformed in the second quarter (-9.9%.

S.6% for the 12-month period ended May 31. the year-to-date returns of their relevant benchmarks lost their performance edge during the far more placid (and positive) first quarter.-domiciled companies with market capitalizations up to $2.20 -2.5 billion exceeded 4. Standard & Poor’s rebalances their indexes.85 -3. less frequently—doing so on an annual basis. as they call it. In general. For example. Russell Investments rebalances. Still. 8 | This page is not part of the 2010 Semiannual Report to Shareholders . Our own reaction was thus somewhat mixed. these Funds did not fall as far as their benchmarks from the interim high for domestic smallcaps on April 23. or at least to match. though generally to a lesser degree. more than twice the number included in the Russell 2000.9% from 2009 to $1. as of June 30.96 -6. European Smaller-Companies.19 -9.500 names.2 trillion. while still finishing the first half with poorer performance. as does MSCI.95 -1.76 -2. including the large-cap S&P 500 and the S&P SmallCap 600.87 -3. BENCHMARK INDICES as of 6/30/10 -14% Royce Pennsylvania Mutual Royce Heritage Royce Total Return Royce Dividend Value Royce Premier Royce Special Equity Royce Value Royce 100 Royce SMid-Cap Value Royce Focus Value Royce Partners Royce Mid-Cap Royce Micro-Cap Royce Low-Priced Stock Royce Opportunity Royce Value Plus Royce Discovery Royce European Smaller-Companies Royce Global Value Royce International Smaller-Companies Royce Financial Services Russell 2000 Russell 2500 Russell Midcap Russell Microcap MSCI Europe Small Core MSCI World Small Core MSCI World ex USA Small Core -6. which is why we do not limit ourselves to the stocks that comprise an index.66 -9. as returns ran the gamut from slightly positive to disappointingly negative. they play no role in our portfolio management practices. each of those Funds that failed to better.12 -4.97 -3. 2010 through the end of June. according to FactSet.73 -3. Based on data released from Russell Investments in June 2010.73 -0.30 -1. the investable universe of securities for our portfolios tends to be larger than the number of stocks that constitute an index at any given time.92 1.38 -12 -10 -8 -6 -4 -2. on a quarterly basis. important changes can occur. In addition. the number of U. Interestingly. indexes are fluid entities just as actively managed mutual fund portfolios are.31 -2.03 -1.As useful and important as benchmark indexes are. Their primary significance for us is in providing a measure of how our results stack up vis-à-vis a close approximation to the market in which a particular portfolio invests. 2010. Opportunity. Micro-Cap.54 -2 0 2 4 Value. Continued on page 10… Letter to Our Shareholders 2010 YEAR-TO-DATE TOTAL RETURNS FOR THE ROYCE FUNDS VS. Global Value and International Smaller-Companies Funds outperformed their particular benchmarks for the first half of 2010. We prefer the freedom of looking for what we think are attractively valued smaller companies wherever we may find them.16 -1.65 -3. we found some notable changes to the index between June 2009 and June 2010: The index gained an impressive 33.31 -10. However.72 -7.52 -4. even if it causes some discouragement in the short run.69 -2.48 -0. We would usually prefer that our Funds hold their value relative to the benchmark during a downturn to outshining during a short-term up-market period.97 -3. even in an annual reconstitution. which helped to increase the index’s overall market capitalization 37. or reconstitutes.28 -2.06 0. 2010.

We never expect the past to repeat itself. not backward. Financial and industrial companies tended to do relatively poorly.. we think that investors should be rewarded when the overall direction of the This page is not part of the 2010 Semiannual Report to Shareholders | 9 . both domestic and nonU. We have a more optimistic outlook. The disaster in the Gulf of Mexico did not deter many oil and gas companies in the Natural Resources sector from strong results.S. can provide attractive returns over the next three to five years. An Edifying Discourse What inspires our confidence in the long-term prospects for stocks? As is often the case. Looking forward. The current economic situation has already bred comments claiming that the economy and financial markets are not likely to bounce back soon. We continue to believe that we have entered a more normalized return environment for equities. while keeping in mind that investing must be done looking forward. we believe that volatility will continue to be above average. calling to mind Japan over the last 20 years or our own stagnating economy of 1974-1982. no single sector or industry stood out during the first half the way that the Natural Resources and Technology sectors did for the majority of Funds in 2009. though we do believe that historical patterns are relevant when it comes to the behavior of markets. By seeking to take advantage of this period of increased volatility. To us. the latter helping to narrow the gap after underperforming their small-cap nondividend paying peers last year. This would be close to an ideal environment for active managers with an absolute return orientation. mostly owing to an ongoing dearth in consumer spending and the staggering weight of deficits. and many Technology holdings took a step back after enjoying very strong results in 2009. a return to a more normalized environment may not bring the outsized gains of 2009. Any business that looks to be capable of swimming ahead of the pace of the economy as a whole is going to be in high demand. Neither whole sectors nor entire industries are “on sale” as they were in late 2008 and early 2009. However. high returns on invested capital and the ability to generate free cash flow. though that same sector’s energy services group struggled in many portfolios. the first half was a difficult period to make sense of. there were some notable patterns. and we can see that benefiting the kind of smallcaps that fit our selection criteria—those that boast strong balance sheets. Micro-caps in general did well. Altogether. but it could usher in a period of positive long-term returns for equities. with historically normal corrections along the way. These commentators predict a scenario in which we are headed for a double-dip recession and could be facing a decade of essentially flat economic growth (or worse).As might be expected during a period in which volatility was high and returns varied. but numerous opportunities have been available on a stock-by-stock basis. This has been creating what we regard as attractive short-term opportunities for long-term investors such as ourselves. but that small-cap. as did dividend-payers. We see reason for hope in the fact that many small-cap stocks are reacting positively and negatively to underlying fundamentals—not just market sentiment. we look to history for some instruction.

” The index’s composition is also reflective of the growing global nature of the equity world: “As a result of Russell’s new methodology rule determining country assignment. However. it is important to remember that a correction of 15% or more is quite typical.4% (10/5/79-10/23/79) to the more recent bear market decline of 58. “The median market capitalization for the index increased to $441. (Note: In order for a new peak to be established. and traded in the U. there have been 10 major corrections of at least 15% through the end of 2009. disciplined smallcap managers do and what an index does. While we always keep an eye on the market and economy as a whole. the Russell 2000 on average fell 31.S. we also see critical differences between the kind of work that we as active. It seems reasonable to us that the current decade will end up with annualized equity returns somewhere in the high single digits. all companies that are incorporated. critical toward building strong results for the decade. Letter to Our Shareholders market reverses. occurring roughly every three years on average for small-cap stocks. Since the Russell 2000 debuted on December 31. and. Of course. These declines disrupt markets. they shatter confidence. are eligible for the Russell U.9% (7/13/073/9/09). 10 | This page is not part of the 2010 Semiannual Report to Shareholders . The weighted average market capitalization also increased significantly.7% to $1. Either/Or Admittedly.S. Of the 10 major declines prior to 2010. they change their constituents in order not to change their market representation. We have recently been witnessing a stampede out of equities and into fixed income to such a degree that we would not be surprised to see a bubble in fixed income investments in the coming months. for us. headquartered.8%. over the next five-year and 10-year periods. as a bellwether to guide us as we strive to improve our skill as disciplined stock pickers. However. No more and no less than that. particularly inflation-adjusted returns. the current situation has not diminished our faith in the long-term prospects for stocks. We do not focus our efforts on creating representative small-cap portfolios (or micro-cap.Russell went on to report. recent declines have been painful. interestingly. a drop of 15% from the prior peak must first be recorded. a 45% increase over the median capitalization of $304 million in 2009.) These peak-to-trough periods have ranged from a decline of 15. Indexes… Ten of the new adds [of which there were a total of 321 in 2010] are due to the new country rule.7B in 2009. Taking advantage of current volatility is. 1978.3 million. We see indexes. our long-term perspective has been even less in style lately than usual. as well as other long-term periods.0B from $0.” Indexes change. we remain convinced that stocks should provide stronger returns. then. jumping 34. In other words. they change in an effort to better reflect the market they are meant to represent. Our task is to find what we judge to be high-quality companies trading at attractive discounts to our estimate of their worth as a business (or intrinsic value). (Even bond king Bill Gross is bullish on stocks!) For our part. We have high regard for indexes. mid-cap or global smaller-company portfolios). but they also set the stage for new bull markets. especially the efforts they make to remain truly representative of their markets.

We thought that Kierkegaard made an especially appropriate choice for the period under review. July 31. Short-term setbacks are a common occurrence in the journey to more lasting success. It is also important to remember that long-term growth is not a straight-line phenomenon. More than this letter’s epigraph comes from the pen of Danish philosopher. we think the economy is on the right track. and we can see that benefiting the kind of small-caps that fit our selection criteria—those that boast strong balance sheets. Sören Kierkegaard. though not too excited. Vice President P. Our expectation is that a slow-growth economy could lead investors to focus on two areas— high-quality companies and fast-growing companies (the latter not normally our cup of tea). bearing in mind that recent earnings look strong in relation to where companies were in 2008 and early 2009.S. which is being reflected in stronger earnings. Whitney George Vice President Jack E. but we are optimistic. While the perception seems to be that it is once again struggling. We are not wildly enthusiastic. we think that this is encouraging because it shows that many U. Short-term setbacks are a common occurrence in the journey to more lasting success. with a financial crisis.) Still. and in our view it is safe to go back in the water. We are ever-cautious. the necessity for self-examination and the need to live life looking forward. corporations did what needed to be done—they grew leaner and meaner and effectively dealt It is important to remember that long-term growth is not a straight-line phenomenon.S. the bar for earnings improvement was set awfully low. Part of our reasoning is that we see a slow-growth economy as a favorable backdrop for our disciplined style. high returns on invested capital and the ability to generate free cash flow.For example. with his emphasis on the absurdity of life. Sincerely. (In other words. by the recent earnings picture. when most were coming off an historically terrible period. Fockler. Charles M. We are ever-cautious. we believe that investors should be encouraged. and in our view it is safe to go back in the water. Jr. especially owing to its emphasis on company quality. Any business that looks to be capable of swimming ahead of the pace of the economy as a whole is going to be in high demand. as each of the headings uses the title from one of his books. 2010 This page is not part of the 2010 Semiannual Report to Shareholders | 11 . Royce President W.

8 207. was the longest in the index’s history.8 69.6% -28. Value Plus and Discovery Funds— outperformed the Russell 2000 in the peak-to-current period.9 -58. with the exception of Royce Financial Services and three of our Micro-Cap/Opportunistic offerings—Royce Opportunity.1%). -58.a.1 227.4 -28. followed by our flagship.2 -58.4 -21. each Royce Fund provided a significant edge over the Russell 2000 during the full market cycle.a.7 80.1 73. n.2 74. Although the rally was strong. SMALL-CAP MARKET CYCLE: RUSSELL 2000 INDICES’ TOTAL RETURNS $250 200 150 100 50 0 -50 -100 -150 99 00 01 02 03 04 05 06 07 Trough 3/9/09 Peak 3/9/00 Russell 2000 Russell 2000 Value Russell 2000 Growth Peak 7/13/07 Peak-to-Peak (3/9/00-7/13/07) For the full cycle.2 -55. Surviving a bear market by losing less (or not at all) is at least as good. Interestingly.7 -19.5 -28.7 -54. The most recently concluded cycle.8 n.7 12 | This page is not part of the 2010 Semiannual Report to Shareholders . there can be no assurance with regard to future market movements.3 -26.a. and represented what we believe was a return to more historically typical performance in that value provided a significant advantage during its downturn (3/9/00–10/9/02) and for the full cycle.5 90. EQUITY FUNDS VS.8% 189. RUSSELL 2000 INDEX: MARKET CYCLE RESULTS Peak-toPeak 3/9/007/13/07 Peak-toTrough 7/13/073/9/09 Trough-toCurrent 3/9/096/30/10 Peak-to Current 7/13/076/30/10 Russell 2000 Russell 2000 Value Russell 2000 Growth CORE Royce Pennsylvania Mutual Royce Heritage CORE + DIVIDENDS Royce Total Return Royce Dividend Value QUALITY + FOCUSED Royce Premier Royce Special Equity Royce Value Royce 100 Royce SMid-Cap Value Royce Focus Value MICRO-CAP/OPPORTUNISTIC Royce Micro-Cap Royce Low-Priced Stock Royce Opportunity Royce Value Plus Royce Discovery GLOBAL/INTERNATIONAL Royce European Smaller-Companies Royce Global Value Royce International Smaller-Companies Royce Financial Services 54. n. Since the Russell 2000’s inception on 12/31/78.a. 197.a. -61.a.7 -15. the total return experience from the previous peak to the current period remained negative. both value and growth posted negative returns.8 92. n.1 -12.6 -54.4 n.4 76. value—as measured by the Russell 2000 Value Index—outperformed growth—as measured by the Russell 2000 Growth Index—in six of the smallcap index’s eight full market cycles. -56.a.6 -21. The market cycle that began on 7/13/07 has so far favored small-cap growth style over small-cap value.Small-Cap Market Cycle Performance We believe strongly in the idea that a long-term investment perspective is crucial for determining the success of a particular investment approach.1 -10. n. Past performance is no guarantee of future results.a.1 n.a.3 96. volatile decline that ended 3/9/09.3 -11.a. -56.9 -69.5 59.9 97. -27. All of The Royce Funds then in existence.4 193. n.2 -53. the Russell 2000 failed to surpass its previous peak established on 7/13/07 and thus. the true test of a portfolio’s mettle is performance over full market cycle periods. However.a.8 82. n.4 86. Royce Pennsylvania Mutual Fund (+207.9% through 6/30/10.5 -11.a. n. Smallercompany stocks may involve considerably more risk than larger-cap stocks.3 -14. All Royce Funds then in existence held a performance advantage over the Russell 2000. The thoughts concerning recent market movements and future prospects for smaller-company stocks are solely those of Royce & Associates and. value provided a sizeable margin over growth.3 n.a. which finished the period with a loss. 198.8 73.0 -56.5 78.0 139.9% 85.7 -25. n.1 -23.a. -13.S.3 88.0 -42.1 150.8 -57. Flourishing in an up market is wonderful. Royce Special Equity Fund (+227.5 Peak-to-Current (7/13/07-6/30/10) During the difficult.1 66. our most conservatively managed offering.9 191.2 -53.1 -56. 08 09 ROYCE U.1 -49.4 -14.a. However.7 n.3 72. The rally that ensued saw the Russell 2000 rise 80. of course.4%) was our best performer.2 40. n.3 -25. n.6 92.9 n.a.0 76. which include both up and down market periods.9% -61.5 -8.4 198.1 -49. which ran from 3/9/00 through 7/13/07.4 n.a.

(We should note. high returns on invested capital and the ability to generate free cash flow. Admittedly. in the form of successful adaptation. In our view. is the key to a species’ survival. mostly in the $400-$500 million market cap range. we had seen certain small-caps ‘graduate’ to the mid-cap range ($2. it can invest across a wider market cap range than the portfolio that inspired it. Royce 100 Fund debuted as a variation on the Premier theme of a focused portfolio of quality small-caps. however.5 billion and $5 billion.5 billion. Similarly. We view the world of asset management in much the same way. The primary difference was an expansion of the capitalization range to include both micro-cap and mid-cap stocks. securities (see page 159 for more details). one that invests across the spectrum of smaller companies selected with our Each of our managers uses a value approach that seeks what they believe are quality small-cap stocks trading at a discount to their worth as a business. The criteria that we use to determine high quality and strong business fundamentals are mostly unchanged from when we first began to manage portfolios back in the ’70s. substantial parts of which are not quite as volatile. What has changed. tried and true criteria of balance sheet strength.5 billion to $15 billion by our definition) that still looked like highly attractive bargains to us.S. Here at Royce. we take great pride in our discipline. of comparable quality to their small-cap siblings. is the small-cap world itself. high returns on invested capital and cash flow characteristics. starting out in 1995 as a gifting and estate planning product that eventually grew into a portfolio in the same category as our flagship. which we currently define as having market caps between $500 million and $2. 2010 each portfolio had less than $350 million in total net assets. Royce Pennsylvania Mutual Fund. Those who fail to effectively adapt to time’s relentless flow run the risk of finding themselves swept away in its current. more established portfolios.Fund Focus The Evolution Solution As any naturalist can tell you. Each represents the next generation of two of our better-known. These Funds both utilize our core approach. The Fund differs from our flagship in two significant ways: Like Royce 100 Fund. For performance and portfolio details. this brings us to something of a paradox. It has also made more use of its ability to invest in non-U. How does this square with an equally strong belief in the need to evolve and adapt? In 2003. please see pages 18-19 for Royce Heritage Fund and pages 30-31 for Royce 100 Fund. we are steady and unyielding. both Funds are potentially attractive for investors looking for a disciplined value approach to small-caps. and we have changed to some degree along with it. in our portfolio managers’ ability to stick to their respective small-cap value approaches regardless of market movements and trends. We think that both Royce Heritage Fund and Royce 100 Fund show just some of the ways that Royce continues to adapt to an ever-changing investment universe while remaining true to our core investment principles. Most of them focus on small-cap companies with strong balance sheets. They show just some of the ways that we continue to adapt to an ever-changing investment universe while remaining true to our core investment principles.) Royce Heritage Fund evolved a bit more slowly. We believed that we could find a number of micro-cap companies (those with market caps up to $500 million). This is particularly true for the upper tier of the smallcap world. evolution. This page is not part of the 2010 Semiannual Report to Shareholders | 13 . In this regard. that Royce 100 Fund typically invests in mid-cap stocks with market caps between $2. illiquid or poorly understood as they were in decades past. The maturation of small-cap’s upper tier was a deciding factor in the development of Royce Premier Fund as a portfolio that culls a limited number (generally less than 100) of what we deem to be high-quality small-caps from this specific market cap range. Both Royce Heritage Fund and 100 Fund also ‘get small’ in another way that may be of interest to some investors—as of June 30.

monthly and quarterly performance information. subscribe to our RSS feed and sign up for our monthly eWord newsletter to receive updates on news. as well as the ability to track specific Royce Funds.com/news/global In the Spotlight: Crisis.roycefunds. financial reports. and experience a bit of the local culture. www.com and click Financial Professional Login for access 14 | This page is not part of the 2010 Semiannual Report to Shareholders . time and fund expenses. the high level of market volatility and the impact of current events on Royce.000 invested in Royce IRAs at the time the fee is charged.roycefunds.roycefunds. news. meet with the management teams of non-U. which gives you exclusive content and provides the most up-to-date information on The Royce Funds.roycefunds. and for new transfer and rollover accounts in their first year. Brazil is Evolving into an Economic Champion David Nadel: “Long derided for its public finances. insights and whitepapers.roycefunds. eDelivery saves paper. Login to our Financial Professional website to access a convenient Resource Center featuring our latest news and commentary.com/rss www. Trade and Growth in Turkey Turkey’s demographics make it one of the more important countries of the future: It is young and relatively unlevered. Opportunities and Royce's Next Generation Chuck Royce and Whitney George make the case for equities amid turmoil in Europe.roycefunds. special messages and commentary from Chuck Royce.* Sign up now to view statements. and RWord will be exempt from the $15 annual IRA maintenance fee. > www.com for daily. We offer a full array of services for financial professionals. Whitney George and other portfolio managers.com/edelivery * Any direct Royce Funds IRA investor who chooses eDelivery of prospectuses.roycefunds.Online Update Check out www.” Politics. (We will continue to also waive the fee for investors with more than $20.) Stay Informed Follow The Royce Funds on Twitter. literature and tools to help you better understand and compare our funds.roycefunds. eDelivery Saves! Sign Up Now. videos. businesses. commentary and other resources. > www. financial reports and tax forms online. Brazil is now establishing itself as a model of fiscal restraint and sound policy.com/twitter www. Watch Co-CIOs Chuck Royce and Whitney George discuss the European sovereign debt crisis. > www. prospectuses. research. and challenges at home.com/news/spotlight/2010/Q3 > Visit www.com/eword > Financial Professionals: View Our Financial Professional Website Exploring Global Small-Caps The Royce Funds’ global investment group shares their thoughts and ideas as they travel the globe.S. including our financial professional website.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 GLOBAL/INTERNATIONAL Royce European Smaller-Companies Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 Trustees and Officers . . . . . . . . 24 Royce Special Equity Fund . . . . . . . . . . . . . . . . . . . . . . . . 28 Royce 100 Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Table of Contents Semiannual Report to Shareholders Managers’ Discussions of Fund Performance CORE Royce Pennsylvania Mutual Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 QUALITY + FOCUSED Royce Premier Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Royce SMid-Cap Value Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 The Royce Funds 2010 Semiannual Report to Shareholders | 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Royce Heritage Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Royce Value Plus Fund . . . . . . . . . . . . . . 56 Schedules of Investments and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Royce International Smaller-Companies Fund . . . . . . . . 34 Royce Partners Fund . . . . . . . . . . 26 Royce Value Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 Understanding Your Fund’s Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 CORE + DIVIDENDS Royce Total Return Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Royce Dividend Value Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Royce Financial Services Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Royce Opportunity Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 MICRO-CAP/OPPORTUNISTIC Royce Micro-Cap Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 Notes to Performance and Other Important Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Royce Low-Priced Stock Fund . . . . . . . . . . 32 Royce Focus Value Fund . . . . . . . . . . . . . . . . . 46 Royce Discovery Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159 Board Approval of Investment Advisory Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Royce Global Value Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Royce Mid-Cap Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

lagging its small-cap benchmark.7 Important Performance and Expense Information All performance information in this Report reflects past performance. MAXIMUS Oil States International PORTFOLIO SECTOR BREAKDOWN % of Net Assets Industrial Products Technology Industrial Services Natural Resources Financial Intermediaries Consumer Products Financial Services Health Consumer Services Utilities Miscellaneous Cash and Cash Equivalents 16.9% for the Russell 2000.) PMF’s outperformance relative to its benchmark was also evident in longer-term periods tied more closely to the calendar.3% -34.5% versus a decline of 9. B Agnico-Eagle Mines Eldorado Gold Dress Barn (The) Unit Corporation AllianceBernstein Holding L.3% 14.4 6. five-.2 25.8 18.and 30-year periods ended June 30. 2010. The Fund lagged in what was a strong Chuck Royce opening quarter.6% versus 8. the Fund held its value and lost less during the tumultuous second quarter. we would usually prefer a scenario in which we underperform when share prices are rising and outperform when they are not.74 -6.14 nor any explosive growth stories in the Perrigo Company 0. Royce Pennsylvania Mutual Fund (PMF).5 20. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010. 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.5% for the year-to-date period ended June 30.1 7. (Please see page 12 for recent market cycle results. the Russell 2000 rose 80.59 13.5 8.54% 22. A 0.7 0.8% 0.5 8. Industrial Products and Financial Services sectors.0 12. is presented on a total return basis.9% for the same period. Consultant. 2010.1 8.and five-year results fell short of the kind of strong absolute returns that we seek to provide investors.8 14. 15-. the Russell 2000. Dolby Laboratories Cl. only *Includes dividends two of the Fund’s sectors—Health and Consumer Products—posted net gains year-to-date through June 30.7 0.5 14. the market’s recent pullback. As we would anticipate. Given the choice. analog and mixedsignal integrated circuits for a broad range of audio and energy applications. three-. so that shares may be worth more or less than their original cost when redeemed. Investment return and principal value of an investment will fluctuate.P. if it were.75 9. Current performance may be higher or lower than performance quoted.8 12. 10-. down 8.com. The Fund outpaced its benchmark for the one-. performance would be lower.82 2. had an understandably dampening effect on recent GOOD IDEAS THAT WORKED Top Contributors to Performance* results. Past performance is no guarantee of future results.2 0. fully reflected the considerable volatility of 2010’s first six months.9%.8 0.13 portfolio during the first half of 2010.9%. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund. A 0.9%.89 0. 16 | The Royce Funds 2010 Semiannual Report to Shareholders . which was down 1. While PMF’s three. American Italian Pasta Cl. a specialist in high-precision. From that date through the end of June 2010.15 While there were no significant calamities.3 -9. while three others were essentially flat.0 13. up 6. which is not reflected in the performance shown above.9% for the small-cap index. All performance and risk information reflects Investment Class results. 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.92% CALENDAR YEAR TOTAL RETURNS Year PMF Year PMF 2009 2008 2007 2006 2005 2004 2003 2002 36.7 0.4% 18. Cirrus Logic 0.8 0. areas that performed well throughout the stock market in 2009 and that proved especially sensitive to investors’ fears of a double-dip recession in the second quarter of 2010.8 1. 2009. The Fund’s average annual total Year-to-Date Through 6/30/10 return for the 35-year period ended June 30.16 makes us quite proud.8 2. 20-.7 -0.7 TOP 10 POSITIONS % of Net Assets SEI Investments GrafTech International Federated Investors Cl.roycefunds. 2010.7 0. while PMF climbed 82.95 10. R and K Classes bear an annual distribution expense that is not borne by the Investment Class.0 1.0 4. Shares of PMF’s Service. 25.1 0.7 0. PMF’s top performer was Cirrus Logic. The most significant detractions came from the Industrial Services. Current month-end performance may be obtained at www.30 8.9 6. The company is AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Three-Year Five-Year 10-Year 20-Year 25-Year 35-Year ANNUAL EXPENSE RATIO Operating Expenses * Not annualized -2.2 40.CORE Core Funds generally invest across a wide spectrum of smaller companies using a diversified approach. to say nothing of the severe bear market of late 2008–early 2009. The Fund lost 2.2 2001 2000 1999 1998 1997 1996 1995 1994 18. Royce Pennsylvania Mutual Fund Manager’s Discussion Performance for our flagship.8 0. Even amid much recent turmoil and trouble.21% 2010 was 13. a long-term record that Advisory Board (The) 0. the small-cap market—and the market as a whole—remained well above the market low on March 9.

Performance and Portfolio Review

PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio U.S. Investments (% of Net Assets) Non-U.S. Investments (% of Net Assets) Fund Net Assets Turnover Rate Number of Holdings Symbol Investment Class Service Class Consultant Class R Class K Class $1,369 million 16.0x 1.8x 94.7% 4.1% $5,038 million 11% 536 PENNX RYPFX RYPCX RPMRX RPMKX

a primary audio processor chip supplier for popular Apple products, such as the iPod, iPad and iPhone, which played a major role in Cirrus Logic’s ability to defy the odds with strong growth in its business and share price. Many tech businesses struggled through the second quarter, while Cirrus reported annual revenue growth of 27% for its fiscal 2010 in March, news that boosted it stock price. Our attention was initially drawn to its strong niche and lowdebt balance sheet. We held our shares through the first half. Decent-sized net gains also came from The Advisory Board Company, which provides best practices research, analysis, business intelligence software tools, and installation support services primarily to the healthcare industry. Its programs focus on business strategy, operations, and general management issues. Its stock price mostly rose between January and June on solid earnings in a difficult economy. We regarded it as a well-run business with an attractive niche. Two of the Fund’s largest detractors to performance came from the investment management industry, while a third was from the securities brokers group, which gives some idea of the difficulties for many financial companies in the first half. Federated Investors is a long-tenured, family-run money market specialist with an asset management business that we have admired for many years. The declining interest rate environment put a crimp in the profitability of its money market funds, but we like the firm’s roster of bond and equity portfolios and also anticipate that interest rates will rise in the next three to five years, both of which were factors in our decision to build our stake in the first half. A comparable level GOOD IDEAS AT THE TIME Top Detractors from Performance* of confidence led us to add to our position in Year-to-Date Through 6/30/10 asset manager Lazard between January and Charming Shoppes -0.16% June. The company also acts as an investment Federated Investors Cl. B -0.14 advisor and helps companies to do Lazard Cl. A -0.14 restructuring deals, businesses that we like, Armstrong World Industries -0.14 but that were slow through the latter part of Waddell & Reed Financial Cl. A -0.12 the first half. *Net of dividends We also added to our position in flooring products and ceiling systems manufacturer Armstrong World Industries before its share price headed for the basement in April. The company’s fortunes waned with the sluggish housing market, but we believed in its ability to participate in a rebound for housing and commercial real estate. We chose to hold our shares of women’s apparel retailer Charming Shoppes in the face of earnings declines and a tumbling stock price owing to our many years of affection for its management and strong brands, including Lane Bryant and Fashion Bug.

*Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (11% of portfolio holdings as of 6/30/10).

MORNINGSTAR STATISTICAL MEASURES*
PMF Category Best Quartile Median Breakpoint

Sharpe Ratio Standard Deviation

0.09 21.21

0.01 21.35

0.09 20.18

*Five years ended 6/30/10. Category Median and Best Quartile Breakpoint based on 315 small-cap objective funds (oldest class only) with at least five years of history.

RISK/RETURN COMPARISON Five-Year Period Ended 6/30/10
Average Annual Standard Return Total Return Deviation Efficiency*

PMF Russell 2000

2.30% 0.37

21.21 21.97

0.11 0.02

*Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period. Please read the prospectus for a more complete discussion of risk.

DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7.5% or Greater Over the Last 10 Years, in Percentages(%)
4/5/04- 12/28/04- 8/2/05- 5/5/068/12/04 4/28/05 10/12/05 7/21/06 2/22/07- 7/13/073/5/07 3/9/09

ROYCE PENNSYLVANIA MUTUAL FUND VS. RUSSELL 2000 Value of $10,000 Invested on 6/30/80
$500K
PMF Russell 2000

-9.7 -14.4

-6.5 -11.8

-5.4 -9.5 -14.3 -13.8

-6.8 -8.3

$358,218

400 300 200 100
$180,418
PMF Russell 2000
-57.0 -58.9

0

Dec 81 Dec 83 Dec 85 Dec 87 Dec 89 Dec 91 Dec 93 Dec 95 Dec 97 Dec 99 Dec 01 Dec 03 Dec 05 Dec 07 Dec 09

Includes reinvestment of distributions.
The Royce Funds 2010 Semiannual Report to Shareholders

| 17

CORE
Core Funds generally invest across a wide spectrum of smaller companies using a diversified approach.

Royce Heritage Fund
Managers’ Discussion
Royce Heritage Fund was down 3.7% for the year-to-date period ended June 30, 2010, compared to a loss of 1.9% for its benchmark, the small-cap Russell 2000, for the same period. This was a disappointing outcome for several Chuck Royce James Harvey reasons: negative returns are always dispiriting, as is underperformance versus the benchmark. Firsthalf results also somewhat spoiled the momentum RHF had established in a resurgent 2009. At the same time, we do our best not to be too carried away by the kind of short-term results that a six-month period represents, regardless of whether those results are good or bad. The rally that lasted through most of 2009 did not initially extend into 2010, as the market saw mostly falling stock prices through early February. The more robustly bullish pace then resumed and helped shares to rise through the latter part of April, when a more serious and lasting correction took hold. During 2010’s first quarter, the Fund underperformed the Russell 2000, gaining 5.1% versus 8.9% for the small-cap index. The bearish second quarter saw RHF lose less, as the Fund slipped 8.4%, and the benchmark declined 9.9%. As second-quarter returns might lead one to believe, the Fund also outperformed the Russell 2000 from the interim small-cap high on April 23, 2010 through June 30, 2010, down 14.9% versus a loss of 17.6% for its benchmark. RHF also continued to hold a sizable relative advantage from the GOOD IDEAS THAT WORKED Top Contributors to Performance* market low on March 9, 2009 through June 30, Year-to-Date Through 6/30/10 2010, gaining 97.3% compared to 80.9% for Primerica 0.20% the small-cap index. (Please see page 12 for Tennant Company 0.20 recent market cycle results.) Returns over other Seabridge Gold 0.17 longer-term time spans show additional Fresnillo 0.17 outperformance. RHF outpaced the Russell Reliance Steel & Aluminum 0.17 2000 for the one-, three-, five-, 10-year and *Includes dividends since inception (12/27/95) periods ended June 30, 2010. The Fund’s average annual total return since inception was 13.3%. Only three of the Fund’s nine equity sectors—Natural Resources, Health and Consumer Products—posted net gains in the first half. The most significant detractors to performance were Industrial Services, Financial Intermediaries, Technology and Financial Services. Investment management companies and the securities brokers group had the largest negative impact on performance, while precious metals and mining companies made the biggest positive contribution. However, at the sector, industry and individual position levels, net gains and losses were generally modest.
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 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. All performance and risk information reflects Service Class results. 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 the RHF’s Consultant and R Classes bear an annual distribution expense that is higher than that of the Service Class. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010.

AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Three-Year Five-Year 10-Year Since Inception (12/27/95) ANNUAL EXPENSE RATIO Operating Expenses
* Not annualized

-3.73% 22.70 -4.27 5.78 7.81 13.31

1.51%

CALENDAR YEAR TOTAL RETURNS
Year RHF Year RHF

2009 2008 2007 2006 2005 2004 2003

51.8% -36.2 1.2 22.6 8.7 20.4 38.1

2002 2001 2000 1999 1998 1997 1996

-18.9% 20.5 11.7 41.8 19.5 26.0 25.6

TOP 10 POSITIONS % of Net Assets TMX Group SRA International Cl. A Jupiter Fund Management SEI Investments Pan American Silver Greif Cl. A Seabridge Gold Oil States International EMCOR Group Raven Industries PORTFOLIO SECTOR BREAKDOWN % of Net Assets Industrial Products Natural Resources Industrial Services Technology Financial Services Financial Intermediaries Health Consumer Products Consumer Services Miscellaneous Cash and Cash Equivalents 18.0% 15.8 15.7 12.3 11.6 9.2 5.8 5.5 1.0 5.0 0.1 1.2% 1.2 1.2 1.2 1.2 1.2 1.1 1.0 1.0 1.0

18

| The Royce Funds 2010 Semiannual Report to Shareholders

Performance and Portfolio Review

PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio U.S. Investments (% of Net Assets) Non-U.S. Investments (% of Net Assets) Fund Net Assets Turnover Rate Number of Holdings Symbol Investment Class Service Class Consultant Class R Class K Class $1,375 million 17.4x 2.0x 76.6% 23.2% $209 million 33% 255 RHFHX RGFAX RYGCX RHFRX RHFKX

During the financial crisis that spanned late 2008 and early 2009, we began to purchase shares of many financial companies as prices in nearly every industry associated with finance were plummeting rapidly. We reasoned that businesses that had avoided subprime mortgage investments in any capacity stood the best chances of recovery. Even following the rally in 2009, we continued to see value in many financial stocks and continued to make investments in what we deemed were attractively undervalued companies in a variety of areas, including insurance, securities exchanges, and financial information and processing. The most significant work, however, was in investment management companies and securities brokers. With increased anxiety about global debt, overall investment risk and the state of the economy, we were not surprised to see these industries underperform in the first half. As our own timetable goes well beyond six-month periods, slumping stock prices gave us an opportunity to build existing positions or initiate new ones, such as the Fund’s top position at the end of June, TMX Group. A newer holding in RHF, the company operates stock exchanges in Canada. We first purchased shares of Artio Global Investors late in 2009 owing to our high regard for its status as a leader in managing international equities, a position that alienated investors with concerns about global debt in the second quarter. We made subsequent purchases in February, March and June. We also built our position in Cowen Group, a specialist in alternative investment management, investment banking and research, and more than doubled our stake in Lazard, which is involved in securities brokerage and GOOD IDEAS AT THE TIME Top Detractors from Performance* asset management. Lazard also runs a Year-to-Date Through 6/30/10 financial advisory arm that deals in a range of Artio Global Investors Cl. A -0.33% services, including mergers and acquisitions, FBR Capital Markets -0.32 corporate restructurings and capital structure Cowen Group Cl. A -0.24 consulting. One exception to our recent Lazard Cl. A -0.21 practice of building positions in financial China Hydroelectric ADS -0.17 stocks was FBR Capital Markets, in which we *Net of dividends reduced our stake because our confidence in its long-term prospects faded a bit. Outside of the financial realm, we also sold our position in China Hydroelectric when its share price quickly fell beneath a level we felt comfortable with. Primerica was the opposite case, a stock we bought on an IPO (initial public offering) that quickly exceeded our sell target, prompting us to sell our position between April and May. Tennant Company proved that green technology is not just trendy, but can be profitable as well. The firm manufactures floor maintenance and outdoor cleaning equipment, chemicalfree cleaners, specialty surface coatings, and other products. Its environmentally friendly wares and solid earnings helped its stock to rise.
ROYCE HERITAGE FUND VS. RUSSELL 2000 Value of $10,000 Invested on 12/27/95
$80K
RHF Russell 2000

*Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (14% of portfolio holdings as of 6/30/10).

MORNINGSTAR STATISTICAL MEASURES*
RHF Category Best Quartile Median Breakpoint

Sharpe Ratio Standard Deviation

0.25 23.05

0.01 21.35

0.09 20.18

*Five years ended 6/30/10. Category Median and Best QuartileDecile Breakpoint based on 315 small-cap objective funds (oldest class only) with at least five years of history.

RISK/RETURN COMPARISON Five-Year Period Ended 6/30/10
Average Annual Standard Return Total Return Deviation Efficiency*

RHF Russell 2000

5.78% 0.37

23.05 21.97

0.25 0.02

*Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period. Please read the prospectus for a more complete discussion of risk.

DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7.5% or Greater Over the Last 10 Years, in Percentages(%)
4/5/04- 12/28/04- 8/2/05- 5/5/068/12/04 4/28/05 10/12/05 7/21/06 2/22/07- 7/13/073/5/07 3/9/09

-9.7 -12.5 -11.8 -14.4

-4.4 -9.5 -13.1 -13.8

-6.6 -8.3

$61,281

60 40 20
$23,479
RHF Russell 2000

-56.6 -58.9

0

Dec 95

Dec 97

Dec 99

Dec 01

Dec 03

Dec 05

Dec 07

Dec 09

Includes reinvestment of distributions.
The Royce Funds 2010 Semiannual Report to Shareholders

| 19

2% -31. 2010. During 2010’s Family Dollar Stores 0.2% through the end of June 2010.06 -6.8 7.1 2. Current performance may be higher or lower than performance quoted. 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.7% 15.49 8. R and K Classes bear an annual distribution expense that is not borne by the Investment Class. AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Three-Year Five-Year 10-Year 15-Year Since Inception (12/15/93) ANNUAL EXPENSE RATIO Operating Expenses * Not annualized -0.2 7. private equity funds and other investment companies. while its benchmark declined 17.12 basis. Shares of RTR’s Service.CORE + DIVIDENDS Core + Dividends Funds generally invest in dividend-paying smaller companies using a diversified approach. After suffering through a period of almost 14 months when dividend-paying companies were out of favor at the expense of investments deemed more responsive to the budding economic recovery. After significantly lagging the small-cap market as a whole in 2009.7%.5 26. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010. Consultant. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund. After hitting a speed bump beginning in mid-January through early February.4%. hedge funds.9% for the Russell 2000. 2010.0 1.2% 1.12 April. dividends are not only an important contributor to the total return of equity markets. dividend-paying small-cap stocks have been on the road to recovery in 2010.2 1.19% CALENDAR YEAR TOTAL RETURNS Year RTR Year RTR 2009 2008 2007 2006 2005 2004 2003 2002 26.9 0.9 0.19 benchmark’s return of 8.com.4% versus 80. lagging its Zenith National Insurance 0.10 9.9% for the year-to-date period ended June 30. RTR gained 7. Current month-end performance may be obtained at www.1 TOP 10 POSITIONS % of Net Assets Family Dollar Stores Energen Corporation PartnerRe Reinsurance Group of America Federated Investors Cl.13 pleased with Fund’s return on an absolute Chemed Corporation 0.6 7. is presented on a total return basis.1 1. intelligent capital allocation.7 12. 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. other expenses and acquired fund fees and expenses.6 2001 2000 1999 1998 1997 1996 1995 1994 14.7% *Includes dividends compared to a decline of 9. though we were Cimarex Energy 0.0 4. Investment return and principal value of an investment will fluctuate. The market then began to correct in late Interactive Data 0. the Russell 2000.31% first quarter.92% 21.0 1.7 25. 2009 through June 30.2 2. slightly outpacing its small-cap benchmark.9 0. they are also a sign of the prospective sustainability of a business and more often than not.8 1.8 23.5 5. which declined 1.6 4. This could be seen to a small degree in RTR’s first-half performance.5 30.0 0. performance would be lower. Royce Total Return Fund Manager’s Discussion Royce Total Return Fund (RTR) enjoyed a relative advantage in the first half of 2010.9% for the same period.1% versus a drop of 3. The Fund was down 0.9%.1 4. up 72.9%.roycefunds. According to Bank of America/Merrill Lynch.16 1. RTR fell 7. Aspen Insurance Holdings Brown & Brown Allied World Assurance Company Holdings PORTFOLIO SECTOR BREAKDOWN % of Net Assets Financial Intermediaries Industrial Products Natural Resources Financial Services Industrial Services Consumer Services Consumer Products Technology Health Utilities Diversified Investment Companies Miscellaneous Bonds and Preferred Stocks Cash and Cash Equivalents 22. the Fund was down 13. if it were. From the interim small-cap high reached on April 23 through the end of June.1 8.0 -1. RTR’s down market strength helped to Important Performance and Expense Information All performance information in this Report reflects past performance. All performance and risk information reflects Investment Class results.9 5.2 17. which is not reflected in the performance shown above. falling just 0. B Chemed Corporation AllianceBernstein Holding L. dividend-paying stocks in the Russell 2000 outperformed those index members that pay no dividends.4 1.91 10.5 8.9 0. though we cast a much wider net in the small-cap space when looking for dividend-paying stocks than those companies included in the Russell 2000. As we have mentioned in the past.6%. Past performance is no guarantee of future results. risk aversion made a comeback.9 0. So while the Fund trailed its benchmark from the market low on March 9. so that shares may be worth more or less than their original cost when redeemed. the GOOD IDEAS THAT WORKED Top Contributors to Performance* market resumed the dynamic rally that Year-to-Date Through 6/30/10 characterized most of 2009.81 1.2 0.8 20 | The Royce Funds 2010 Semiannual Report to Shareholders . 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.4 14. For the second quarter. This kind of stronger relative down market performance has been an historical strength of the Fund and was an important factor in RTR’s record versus the Russell 2000 over long-term periods.P. leading investors back to Chuck Royce higher-quality and more conservatively capitalized businesses.8% 19.

B -0. RISK/RETURN COMPARISON Five-Year Period Ended 6/30/10 Average Annual Standard Return Total Return Deviation Efficiency* RTR Russell 2000 1. we added to our stake in January. On the losing side. 15-year and since inception (12/15/93) periods ended June 30. RTR’s average annual total return for the since inception period was 10.01 21. and Europe.S. 2010.2 -9.15 compensation insurance and reinsurance Ritchie Bros. Poor performance in the financial markets and concerns over the impact of (as of June 30. one finds a lack of any substantial contributors or detractors to performance.8/2/05.9 0 Dec 93 Dec 95 Dec 97 Dec 99 Dec 01 Dec 03 Dec 05 Dec 07 Dec 09 Includes reinvestment of distributions. MORNINGSTAR STATISTICAL MEASURES* RTR Category Median Best Decile Breakpoint Sharpe Ratio Standard Deviation 0.5% or Greater Over the Last 10 Years. This national discount chain offering a wide variety of value-based GOOD IDEAS AT THE TIME Top Detractors from Performance* merchandise benefited from solid industry Year-to-Date Through 6/30/10 trends as consumers bought cautiously.S. Federated Investors. a worker’s Total System Services -0.04 0.3 -13. particularly with respect to the U. asset flows continued to favor lower-fee asset classes.24% favoring lower-priced goods. in Percentages(%) 4/5/04. RUSSELL 2000 Value of $10. Less pleasing were recent results for American Eagle Outfitters. 2010) looming regulatory reform weighed heavily on holdings in the sector. American Eagle Outfitters -0.02 *Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period.09 *Five years ended 6/30/10.5 -10.04 21. DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7. and short-term yields declined to near-record lows. Thinking more about the company’s impressive long-term record.35 0.5x 91.2x 1. reducing the relative attractiveness of these products.49% 0. The Fund outpaced its benchmark for the three-. Not all was bad Federated Investors Cl. Family Dollar Stores led the pack. Please read the prospectus for a more complete discussion of risk.8 -11. ROYCE TOTAL RETURN FUND VS. Six of RTR’s 11 equity sectors were able to produce net gains for the Fund. fell back in the period along with other asset managers.2%. 10-. which speaks volumes not just about the highly correlated nature of the market in the first half.03 18.3 $49. Category Median and Best Decile Breakpoint based on 315 small-cap objective funds (oldest class only) with at least five years of history.08 0. In the category of ideas that worked. as chronicled by the Fund’s sector results.8% 3. a specialty retailer of men’s and women’s apparel and accessories that endured weak sales trends and increased promotional activity that hurt margins.4 -5. Investments (% of Net Assets) Non-U. Correlation once again ascended in the first half of 2010. May and June. a diversified investment management business and long-time Royce favorite.462 RTR Russell 2000 -54. We built our position through mid-June. Investments (% of Net Assets) Fund Net Assets Turnover Rate Number of Holdings Symbol Investment Class Service Class Consultant Class Institutional Class W Class R Class K Class $1.899 million 9% 454 RY TRX RY TFX RY TCX RTRIX RTRWX RTRRX RTRKX mitigate the advantage for this period.000 Invested on 12/15/93 $80K RTR Russell 2000 *Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (8% of portfolio holdings as of 6/30/10). the more economically sensitive sectors created the biggest drag on performance.18 in the Financial Intermediaries sector— Tidewater -0.97 0. Financial markets declined broadly.8 -5. Natural Resources and Health were the most productive sectors. Financial Services was the most challenging.5/5/068/12/04 4/28/05 10/12/05 7/21/06 2/22/07.12/28/04. Sifting through the performance of the individual investments in the Fund.Performance and Portfolio Review PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio U. albeit at a quite modest level.671 million 12.37 18. five-.S.2 -8. The Royce Funds 2010 Semiannual Report to Shareholders | 21 .2 -58. Differentiated performance was difficult to come by.3 -14.564 60 40 20 $30.4% $3. Auctioneers -0. Industrial Services and Industrial Products also fell in the year’s first half as investors took a very skeptical attitude toward the sustainability of the economic recovery.8 -6. was acquired by Fairfax Financial *Net of dividends in an all-cash takeover.15 company. but about our own commitment to portfolio diversity. driven by renewed fears around the viability of the economic recovery in the U.7/13/073/5/07 3/9/09 -6.19 19.17 Zenith National Insurance.S.

Our AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Three-Year Five-Year Since Inception (5/3/04) ANNUAL EXPENSE RATIOS Gross Operating Expenses Net Operating Expenses * Not annualized 1. 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. 22 | The Royce Funds 2010 Semiannual Report to Shareholders . RDV gained 8.4 5. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund. 12b-1 distribution and service fees.9% for the Russell 2000.9%. other expenses and acquired fund fees and expenses. 2010.1 1.0 1.2 1. down 0.6 13. the Russell 2000. 2010. which is not reflected in the performance shown above.1 1.8 9.3 TOP 10 POSITIONS % of Net Assets AllianceBernstein Holding L.5 0. which hampered second-quarter results.50 2. This kind of strong relative down market performance was an important GOOD IDEAS THAT WORKED Top Contributors to Performance* factor in RDV’s record versus the Russell Year-to-Date Through 6/30/10 2000 over long-term periods and certainly China Forestry Holdings 0.48% helped the Fund to beat its benchmark from Family Dollar Stores 0.3 1. Royce Dividend Value Fund Managers’ Discussion Royce Dividend Value Fund (RDV) enjoyed a relative advantage in the first half of 2010.61 4. is presented on a total return basis. Year-to-date through the end of June.com. outpacing its small-cap benchmark. RDV fell 6. Royce & Associates has contractually agreed to waive fees and/or reimburse expenses to the extent necessary to maintain Service Class’s net annual operating expense ratio. This could be seen to a small degree in RDV’s first-half performance.3 4.4% 1. was the worst performer in the first half.38% 25. According to Bank of America/Merrill Lynch. five-year and since inception (5/3/04) *Includes dividends periods ended June 30.3% 17. During 2010’s first quarter. though we were quite pleased with the Fund’s return on an absolute basis.7 5. Current performance may be higher or lower than performance quoted.8% versus 80. The Fund gained 1.2% through the end of June 2010.9%. 2010.3 0.8%.7% -31.25 June 30. if it were. led by the retail stores group and other natural resources companies. Natural Resources and Consumer Services were the best-performing sectors. so that shares may be worth more or less than their original cost when redeemed. Current month-end performance may be obtained at www. 2020.50 5. performance would be lower.0 1. though we cast a much wider net when looking for dividend-paying small-cap and micro-cap stocks than the companies included in the Russell 2000. slightly lagging its benchmark’s return of 8.09% 1. RDV AZZ 0. B Energen Corporation Greif Cl.7%.6%.54 CALENDAR YEAR TOTAL RETURNS Year RDV Year RDV 2009 2008 2007 37. the Fund was down 12.99% through April 30. All expense information is reported as of the Fund’s most current prospectus.49% through April 30.24 also outpaced the Russell 2000 for the one-.8% for the quarter. up 86.roycefunds.9% for the same period.9 Important Performance and Expense Information All performance information in this Report reflects past performance. at or below 1. The market began to correct in late April. After significantly lagging the small-cap market as a whole in 2009. Lexington Realty Trust Jupiter Fund Management Federated Investors Cl. Past performance is no guarantee of future results.25 -3. dividend-paying small-caps in the Russell 2000 outperformed those index members that pay no dividends.20 three-. while its benchmark declined 17.0 2006 2005 19. all but two of the Fund’s 10 equity sectors posted net gains.8 8.6 5. From the interim small-cap high reached on April 23 through the end of June. A Buckle (The) Kelly Services Cl.3 1. Financial Services. and include management fees. 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.1% versus a loss of 3. the Fund’s third-largest sector at the end of the period. Investment return and principal value of an investment will fluctuate.P. hedge funds.3 3. compared to a decline of 9.3 1. which declined Chuck Royce Jay Kaplan 1.6 7. Gross operating expenses reflect the Fund’s gross total annual operating expenses for the Service Class. dividend-paying smallcap stocks have been on the road to recovery in 2010.CORE + DIVIDENDS Core + Dividends Funds generally invest in dividend-paying smaller companies using a diversified approach. exclusive of acquired fund fees and expenses.0 0. MAXIMUS 0. A Tennant Company SEI Investments PORTFOLIO SECTOR BREAKDOWN % of Net Assets Financial Intermediaries Industrial Products Financial Services Industrial Services Natural Resources Consumer Services Consumer Products Technology Health Utilities Miscellaneous Cash and Cash Equivalents 18. private equity funds and other investment companies.43 the market low on March 9. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010. 2011 and at or below 1.9% 7.4% for the year-to-date period ended June 30. 2009 through Tennant Company 0. Net operating expenses reflect contractual fee waivers and/or reimbursements.

5% or Greater in Percentages(%) 12/28/044/28/05 8/2/0510/12/05 5/5/067/21/06 2/22/073/5/07 7/13/073/9/09 -6. which discouraged American Eagle Outfitters -0. We have long been attracted to its scale. ROYCE DIVIDEND VALUE FUND VS. was the Fund’s largest holding as of June 30. which now account for an equally large part of its GOOD IDEAS AT THE TIME Top Detractors from Performance* overall business. especially overseas.1% $54 million 14% 218 RDVIX RYDVX exposure to financials. We increased our stake in credit card and other electronic payment processor Total Systems Services due to our high regard for its profit margins and solid returns on invested capital. The company engages in the upstream management and sustainable development of forests. Its impressive net profits drew investors to the stock and prompted us to trim our position in March. These kinds of business have historically made up a sizeable portion of the portfolio.Performance and Portfolio Review PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio U. Still a dominant force in money market funds.20 rise in the next three to five years. to obtain scale.9% 16. It lowered full-year guidance in January and lost some customers. The Royce Funds 2010 Semiannual Report to Shareholders | 23 . It was RDV’s twelfth largest holding at the end of June. MORNINGSTAR STATISTICAL MEASURES* RDV Category Median Best Decile Breakpoint Sharpe Ratio Standard Deviation 0.9 $11. Alliance Bernstein Holding L.9x 1. We like the firm’s entire roster of Federated Investors Cl.18 which were factors in our decision to build our *Net of dividends stake in the first half. mostly because they generally boast above-average dividend yields.1 -58. was considerable. although we were concerned about its ability to grow in what we expect to be a brutally competitive climate for apparel retailers.19 19.4 -8.5 -8. diversification. retail and private clients.97 0. 2010.8 -5.49 21. RISK/RETURN COMPARISON Five-Year Period Ended 6/30/10 Average Annual Standard Return Total Return Deviation Efficiency* RDV Russell 2000 4. Slow sales and a challenging retail environment hurt the stock price of apparel and accessories retailer American Eagle Outfitters. global footprint advantages and distribution yield.2 -9.23 funds and also anticipate that interest rates will Lazard Cl. both services and intermediaries. China Forestry Holdings was the largest contributor to performance in the first half of 2010.683 Includes reinvestment of distributions.09 *Five years ended 6/30/10.24 0. It posted a modest net loss during the first half. DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7. The New York based firm provides investment management and related services to institutional. Please read the prospectus for a more complete discussion of risk. B -0. we built our stake during much of the first half. both of Tidewater -0.1 -13.26% its money market funds. Investments (% of Net Assets) Non-U.02 *Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period. Family Dollar Stores has reaped a benefit from the slow economy as bargain-hunting consumers have been helping its business to thrive. The declining interest rate Year-to-Date Through 6/30/10 environment put a crimp in the profitability of Total System Services -0.4 -11. A -0.23 investors. Liking the company’s low debt. We felt more sanguine about the long-term prospects for family-run asset manager Federated Investors.905 RDV Russell 2000 -53. Category Median and Best Decile Breakpoint based on 315 small-cap objective funds (oldest class only) with at least five years of history.326 million 11.7x 75.P. Our focus over the past several quarters has been on the investment management and insurance industries.19 18. RUSSELL 2000 Value of $10.35 0. but is working at expanding its business. while we remain underweight the banking industry.50% 0. Investments (% of Net Assets) Fund Net Assets Turnover Rate Number of Holdings Symbol Investment Class Service Class $1. We also liked the way the company has transitioned to a more professionally managed business that has improved its supply chain and offered more consumer staples and fewer discretionary items in response to the recessionary economy.8 -4. this top-10 holding also runs a number of bond and equity portfolios.S.S.01 21. as well as the sale of high-quality logs.3 RDV Russell 2000 $13.49 0.37 18.000 Invested on 5/3/04 $18K 16 14 12 10 8 6 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 *Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (12% of portfolio holdings as of 6/30/10).

The company has recently expanded market share with new prescription drugs and with other prescription-only Important Performance and Expense Information All performance information in this Report reflects past performance. performance would be lower.9%. though it lagged its benchmark’s 8. Consultant.roycefunds. Perrigo Company manufactures and distributes OTC (over-the-counter) and prescription pharmaceuticals and nutritional products.6% 14. Between April and June. RPR fell 8.9% for its small-cap benchmark.25 term time periods.94 10. the market had rebounded and first-quarter results were generally strong. 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.2 13. From the late April high through the end of June.29 from the Fund’s performances over longerADTRAN 0. 2010 Chuck Royce Whitney George versus a decline of 1. if it were. five-. The Fund gained a more-than-respectable 6.3 2.7% in 2010’s opening quarter.8 2001 2000 1999 1998 1997 1996 1995 1994 9.QUALITY + FOCUSED Quality + Focused Funds generally employ a more limited portfolio approach—typically holding no more than 100 positions that we believe possess high quality. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted.3 5.3% -28. 2010.3% versus a loss of 17.2 2. up 73.7 8.9% return.5% versus 80.) So GOOD IDEAS THAT WORKED Top Contributors to Performance* while recent shorter-term relative returns were Year-to-Date Through 6/30/10 less than stellar. Shares of RPR’s Service. and other expenses.3 TOP 10 POSITIONS % of Net Assets Lincoln Electric Holdings Pan American Silver Fossil Unit Corporation Perrigo Company Gardner Denver Gartner Sanderson Farms Alleghany Corporation Dionex Corporation PORTFOLIO SECTOR BREAKDOWN % of Net Assets Industrial Products Natural Resources Technology Consumer Products Industrial Services Financial Intermediaries Health Financial Services Consumer Services Miscellaneous Cash and Cash Equivalents 18. 2010.6 7. Investment return and principal value of an investment will fluctuate. the Fund also lost less than the small-cap index.5%.com. 15-year and since inception (12/31/91) periods ended June 30.1 2.7 18.2 10. RPR outpaced the Russell 2000 for the three-. as stocks in general seemed to need a breather after a robust comeback through most of 2009.6% for the Russell 2000.5 1. though it remained behind its benchmark from the small-cap low on March 9. for the same period. The good times did not last.1 22. The year kicked off on a down note. 2010.8 3.8 12. These periods matter most *Includes dividends to us when evaluating its performance because they usually include results from markets both good and bad.6% 17.98 9.4 2. however.8 17.1 17. is presented on a total return basis. 10-. which is not reflected in the performance shown above. AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Three-Year Five-Year 10-Year 15-Year Since Inception (12/31/91) ANNUAL EXPENSE RATIO Operating Expenses * Not annualized -2.5% 2.3 2.1 11. 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.52 1.1 11.3 2. Royce Premier Fund Managers’ Discussion The high level of volatility in the stock market took its toll on the limited portfolio of small-cap stocks that comprise Royce Premier Fund (RPR) during the first half of 2010.94 5. so that shares may be worth more or less than their original cost when redeemed. The result was mildly disappointing. The Fund’s average annual total return since inception was 11. Premier’s two top contributors were also top-10 positions at the end of June. The Fund fell 2.1 2. For many years. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund.35 We also took a measure of encouragement Sanderson Farms 0. even if mostly understandable in the context of a market struggling for direction and lacking consistently rising share prices.9% while the Russell 2000 lost 9.42 during short-term down market periods.98 -2. we were pleased that RPR Perrigo Company 0. which hurt second-quarter results.4 18.82 11. By February.0 2.0 2.15% CALENDAR YEAR TOTAL RETURNS Year RPR Year RPR 2009 2008 2007 2006 2005 2004 2003 2002 33. down 15. 2009 through June 30. the Russell 2000. All performance and risk information reflects Investment Class results.91% held its value better than the small-cap index Gartner 0.7 -7.76% 18.9%.9 24 | The Royce Funds 2010 Semiannual Report to Shareholders .0 1. we have held its business and fundamentals in high regard. Current month-end performance may be obtained at www.3 12.3 3. of course. One is a company that we have owned in the portfolio for close to 10 years while we first purchased shares of the other more than a decade ago. R and K Classes bear an annual distribution expense that is not borne by the Investment Class. (Please see page 12 for recent market cycle results. Interactive Data 0.5 6. Small-caps made an interim high on April 23.8 38. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010.8% for the year-to-date period ended June 30.

8/2/05.01 21.5 -13. Investments (% of Net Assets) Non-U.Performance and Portfolio Review PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio U.8 -6.5% or Greater Over the Last 10 Years.151 -14. This group was a key contributor to the Fund’s success in 2009.97 0. three of the portfolio’s top net gainers from last year shifted to the opposite list.29 were also slow after months of recovery.0 -58.41 a delayed 10-Q filing based on an auditor’s Westlake Chemical -0.33 review of its past accounting policies. Please read the prospectus for a more complete discussion of risk.and mid-sized bus Thor Industries -0.37 20. Silver Standard Resources -0. However. Gartner provides IT (information technology) research and other consulting services.09 20.000 Invested on 12/31/91 $100K RPR Russell 2000 *Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (10% of portfolio holdings as of 6/30/10). Its business remained sluggish in the face of a struggling housing market and increased competition from Middle Eastern companies expanding their polyethylene capacity. and thus contrarian investors. RUSSELL 2000 Value of $10.9 Includes reinvestment of distributions.5 -8. Sales Equipment Associates -0.S. Our plan is to remain patient. One of its primary revenue generators—a subscription model research product—grew by 14% in the first quarter. a move that.4 80 60 40 20 0 Dec 91 Dec 93 Dec 95 Dec 97 Dec 99 Dec 01 Dec 03 Dec 05 Dec 07 $41. RISK/RETURN COMPARISON Five-Year Period Ended 6/30/10 Average Annual Standard Return Total Return Deviation Efficiency* RPR Russell 2000 5. The Royce Funds 2010 Semiannual Report to Shareholders | 25 .3 -13. Westlake Chemical manufactures chemicals. The Industrial Products sector detracted most from performance through the end of June. Sims Metal Management. though *Net of dividends we think its dominant position in its industry will allow it to return to the fast lane over the long haul.0x 81.18 21. As long-term. MORNINGSTAR STATISTICAL MEASURES* RPR Category Best Quartile Median Breakpoint Sharpe Ratio Standard Deviation 0.3 $75. Long-time favorite Thor Industries also roared back in 2009 before stalling in this year’s GOOD IDEAS AT THE TIME Top Detractors from Performance* first half. but during 2010’s first half. so we held on to goodsized positions in all three. The stock of this RV (recreational Year-to-Date Through 6/30/10 vehicle) and small. Reliance Steel & Aluminum and Schnitzer Steel Industries were among the Fund’s top detractors as fear of a double-dip recession led investors to abandon many steel and scrap metal producers.30 0.0x 2.18 *Five years ended 6/30/10.7/13/073/5/07 3/9/09 -2. vinyls. Perrigo also recently closed the acquisition of a store-brand infant formula maker. with the metal fabrication and distribution industry posting the largest net loss. with the most precipitous share price drops for all three companies coming in the second quarter.5 -8.829 million 18.8 -9.98% 0. Investments (% of Net Assets) Fund Net Assets Turnover Rate Number of Holdings Symbol Investment Class Service Class Consultant Class Institutional Class W Class R Class K Class $1.6% 7.18 0. DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7.02 *Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period. polymers.26 20. ROYCE PREMIER FUND VS.415 Dec 09 RPR Russell 2000 -49.188 million 5% 70 RYPRX RPFFX RPRCX RPFIX RPRWX RPRRX RPRKX products shifting to OTC.S.55% manufacturer plummeted mostly as a result of Sims Metal Management ADR -0. in Percentages(%) 4/5/04. we saw more or less stable demand and the prospects for solid stock performance down the road.6 -11.35 0.5/5/068/12/04 4/28/05 10/12/05 7/21/06 2/22/07.0% $5. Category Median and Best Quartile Breakpoint based on 315 small-cap objective funds (lowest expense class only) with at least five years of history. and fabricated products.5 -6.12/28/04. otherwise looked like a savvy move that should give the company better leverage in negotiating shelf space. we were reexamining our commitment to Silver Standard Resources because the company was struggling both to bring its first mine into production and in general to transition from a strictly exploratory business into a silver producer as well. while raising concerns about the health of its historically conservative balance sheet. a primary factor in the stock’s solid run in 2010’s first half. At the end of June. It’s a non-capital intensive business that we have long admired for its ability to generate cash.29 the auditor signed off on the filing without Varian Semiconductor requiring any changes or restatements.

During that period. the Fund was down 3. Current performance may be higher or lower than performance quoted. which is not reflected in the performance shown above.68 -1. if it were.) However.3 -9. 2010.6% for the Russell 2000. unemployment. Fear made a comeback in the second quarter of 2010.3 30. 10-year and since inception (5/1/98) periods ended June 30. we do not generally regard such short-term performance periods as very representative. The pace of the upswing then slackened considerably through the end of June.7 14.9 2. etc. a period in which RSE rose 7. This absence of clarity has been causing inaction or extreme reactions to whatever statements are made. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund.9% for RSE’s small-cap benchmark. 2010. All performance and risk information reflects Investment Class results. (Please see page 12 for recent market cycle results. 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.roycefunds. its pace slowed as 2010 began before speeding up again in early February. the Fund outperformed its benchmark for the three-.8% while its benchmark rose 5.6 4.1 2.1 2. so that shares may be worth more or less than their original cost when redeemed. Shares of RSE’s Service and Consultant Classes bear an annual distribution expense that is not borne by the Investment Class. 2010.9% for the Russell 2000.0 -1.3 0.QUALITY + FOCUSED Quality + Focused Funds generally employ a more limited portfolio approach—typically holding no more than 100 positions that we believe possess high quality. for the same period.2 2.9% for its benchmark.2 2. the Russell 2000. The rally went on through late April.3 9. Interactive Data 0. 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. This helped most stocks to enjoy respectable results in the first quarter.com.4 2.0%.8% 15. Current month-end performance may be obtained at www.0 13.S.2 3.3 9.97% 14. Royce Special Equity Fund (RSE) was not immune to the effects of this widespread apprehension. Investment return and principal value of an investment will fluctuate.6 2. and other expenses. 2010 Year-to-Date Through 6/30/10 through June 30.3% 3.6 0. We think that our ability to Important Performance and Expense Information All performance information in this Report reflects past performance.7%.5% compared to a gain of 8.0% versus a loss of 1.30 low on March 9. These nearly identical results paint a slightly deceiving portrait.97 1.4 2. reflecting investors’ growing concerns about a host of issues. performance would be lower. market correlations are back near 2008 panic levels. 2009 through June 30. Deckers Outdoor 0.1% K-Tron International 0. While we were disappointed with the Fund’s negative result.8% in the second quarter versus a decline of 9.6% 15. Past performance is no guarantee of future results.38 This down market advantage did not help Dorman Products 0.0 26 | The Royce Funds 2010 Semiannual Report to Shareholders .43% versus a loss of 17. AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Three-Year Five-Year Ten-Year Since Inception (5/1/98) ANNUAL EXPENSE RATIO Operating Expenses * Not annualized -2.28 2010.9 16.0 8.91 11.4% versus 80. We offer the same words even when short-term returns are better. the Fund gained *Includes dividends 59. a month in which the Fund gained 2. Macro forces have dominated the market rather than company-specific items for most of the semiannual period. as we usually encourage investors to have a long-term investment horizon of three years or more. RSE fell 14. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010. economy’s recovery.6 TOP 10 POSITIONS % of Net Assets National Presto Industries Lubrizol Corporation (The) Lancaster Colony AVX Corporation Gymboree Corporation Bed Bath & Beyond Hubbell Cl. five. the viability of the U.9 2003 2002 2001 2000 1999 27.9% for the Russell 2000. while the market has become a realtime measure of economic anxiety. A Stepan Company Park Electrochemical PORTFOLIO SECTOR BREAKDOWN % of Net Assets Industrial Products Consumer Products Consumer Services Technology Health Industrial Services Financial Services Natural Resources Miscellaneous Cash and Cash Equivalents 26.4 11. Royce Special Equity Fund Manager’s Discussion The market struggled through the latter part of 2010’s first half. For the yearCharlie Dreifus to-date period ended June 30. Consider that from the GOOD IDEAS THAT WORKED Top Contributors to Performance* interim small-cap high on April 23.95 3. B Bio-Rad Laboratories Cl.8 16.4% -19.08 7.32 the Fund to close the gap from the market Carpenter Technology 0. The Fund was down 9. RSE’s average annual total return since inception was 8.17% CALENDAR YEAR TOTAL RETURNS Year RSE Year RSE 2009 2008 2007 2006 2005 2004 28.4 2. While the rally in 2009 seemed to do much to reignite investor confidence (to say nothing of stock prices). As a result. is presented on a total return basis. including global debt.

The ability to pay. quality businesses that generate free cash flow remain. and that are able to generate cash are likely to outperform. relatively better than other investment choices. The Eau Claire. small appliances. K-Tron International.S.8 -12. Free cash flow’s importance should also increase for this reason.5 -9.8 RSE Russell 2000 $25.24 0. One needs. Year-to-Date Through 6/30/10 National Presto Industries remained the Genoptix -0. shoes and accessories industry made the largest positive GOOD IDEAS AT THE TIME Top Detractors from Performance* contribution to performance.02 0. we believe that the “tangibility” of dividends from companies generating stable cash flow will become more important. Natural Resources.5% or Greater Over the Last 10 Years. RISK/RETURN COMPARISON Five-Year Period Ended 6/30/10 Average Annual Standard Return Total Return Deviation Efficiency* RSE Russell 2000 3.4 -7. California business provides specialized laboratory services that focus on personalized. and even to increase.564 million 11% 81 RYSEX RSEFX RSQCX RSEIX differentiate among stocks is crucial at this juncture.411 -42.3 -9.J. dividends also seems valuable to us.12/28/04.01 21. We believe that. and absorbent products.0 -8.15 16. and Health having the largest detrimental impact. Investments (% of Net Assets) Fund Net Assets Turnover Rate Number of Holdings Symbol Investment Class Service Class Consultant Class Institutional Class $1. that are conservatively financed.011 million 13.97 0.Performance and Portfolio Review PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio U. News of its acquisition by Hillenbrand broke in January.8 -14. Wisconsin Bed Bath & Beyond -0. Consumer Products.8/2/05.3x 1.0% $1. ROYCE SPECIAL EQUITY FUND VS.02 21. and the apparel. and Financial Services were the best-performing sectors during 2010’s first half. N. retail stores and health services were the Fund’s worst-performing industries. comprehensive diagnostics to cancer sufferers. At the industry level.35 0.7/13/073/5/07 3/9/09 -7.S. The Carlsbad.7 RSE Russell 2000 -58. It has been a long time since the continuing generation of free cash has been more valuable.8x 83. All but three of the Fund’s sectors were negative performers. whether the future brings inflation or deflation.45 the Fund’s top performer during 2009 before American Eagle Outfitters -0. in Percentages(%) 4/5/04. to find securities that could benefit from whatever comes of our tangled situation. It was Sykes Enterprises -0.77% largest holding within the portfolio. that have high returns on capital. MORNINGSTAR STATISTICAL MEASURES* RSE Category Median Best Decile Breakpoint Sharpe Ratio Standard Deviation 0. These suites of services are primarily sold to oncologists and hematologists. within the confines of strict adherence to discerning metrics. Genoptix was the greatest detractor to performance during the semiannual period. The Royce Funds 2010 Semiannual Report to Shareholders | 27 . RUSSELL 2000 Value of $10. Thus. regardless of the ultimate outcome.9 $14.8% 0.000 Invested on 5/1/98 $30K 25 20 15 10 5 0 Dec 99 Dec 01 Dec 03 Dec 05 Dec 07 *Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (4% of portfolio holdings as of 6/30/10).02 *Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period.37 company is a diversified manufacturing firm *Net of dividends that produces defense products.8 -13.43 posting a modest net loss during the first half Ampco-Pittsburgh -0. Companies that are inexpensively priced. Consumer Services. DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7. at a minimum. a Pitman.5/5/068/12/04 4/28/05 10/12/05 7/21/06 2/22/07.19 19.09 *Five years ended 6/30/10 Category Median and Best Decile Breakpoint based on 315 small-cap objective funds (oldest class only) with at least five years of history. with Technology. based designer and producer of material handling equipment.37 16.725 Dec 09 Includes reinvestment of distributions.5 -11.41 of 2010.3 -8. Investments (% of Net Assets) Non-U. inexpensive. was the top contributor to performance for the period. and we continue to believe they can provide solid absolute returns as well.91% 0. Please read the prospectus for a more complete discussion of risk. We expect the market to grow more discerning about stocks—quality and valuation should be increasingly important. while early May saw the announcement of the acquisition of financial data specialist Interactive Data.

9% for the small-cap index. though not enough to best its benchmark’s gain of 8. The performance disparity between the Fund and the Russell 2000 was established in the first quarter. so that shares may be worth more or less than their original cost when redeemed. during the same period. Shares of RVV’s Consultant and R Classes bear an annual distribution expense that is higher than that of the Service Class. 12b-1 distribution and service fees. even in short-term periods.7 4.2% 30. is presented on a total return basis. 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.9%.5 2. the Russell 2000. RVV again lost less than the Russell 2000.com. A Reliance Steel & Aluminum Dress Barn (The) Pan American Silver PORTFOLIO SECTOR BREAKDOWN % of Net Assets Natural Resources Financial Intermediaries Industrial Products Consumer Services Technology Consumer Products Industrial Services Financial Services Health Miscellaneous Cash and Cash Equivalents 24. falling 13.47% CALENDAR YEAR TOTAL RETURNS Year RVV Year RVV 2009 2008 2007 2006 44. The Seabridge Gold 0. a fine return on an absolute basis.48 (6/14/01) periods ended June 30. the Year-to-Date Through 6/30/10 Fund’s results were on firmer relative footing.51 three-year. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund. Current month-end performance may be obtained at www.28 inception was 10.4% 13. Current performance may be higher or lower than performance quoted. gaining 76.3 -23.9% for its small-cap benchmark. 2010.2 3.7% -34.2 2. Investment return and principal value of an investment will fluctuate.roycefunds. Although its stock took a hit in early July (mostly the result of a slow June).6 2.3 2.5 9.94 -5.9 4. the challenging market and ongoing anxiety about the economy made results through the year’s first six months not entirely surprising. if it were.7 5. We also liked the way the company has transitioned to a more professionally managed business that has improved its supply chain and offered more consumer staples and fewer discretionary items in response to the recessionary economy.5% (a more than respectable absolute return in our view) versus 80. Past performance is no guarantee of future results. the bull market that began in March 2009 continued its spirited run. 2010. 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.7% 2. the first half was a good one for casual apparel Important Performance and Expense Information All performance information in this Report reflects past performance.8 2005 2004 2003 2002 17.9 54. A 0. Family Dollar Stores has actually benefited from the slow economy. From the late April high through the end of June. five-year and since inception American Italian Pasta Cl.65% 20.28 Fund’s average annual total return since Buckle (The) 0.4 2. B Buckle (The) PartnerRe Unit Corporation Comtech Telecommunications Knight Capital Group Cl.6 2.4 2.2%. and other expenses. The Fund lost 8. when. While negative performance. which is not reflected in the performance shown above. RVV gained 4. *Includes dividends RVV’s two consumer sectors and the precious metals and mining industry in the Natural Resources sector offered an intriguing mix of performers through the first half.8%. (Please see page 12 for recent market GOOD IDEAS THAT WORKED Top Contributors to Performance* cycle results. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010.8 16.3 7.76% RVV outperformed the Russell 2000 for the Family Dollar Stores 0.17 1.9% compared to a loss of 17.8 3. 2009 through the end of June.5 TOP 10 POSITIONS % of Net Assets ManTech International Cl.9 3. providing as clear a lens as any to see just how volatile the stock market has been of late.01 10.2 12.6% for the benchmark. 2010 compared to a loss of 1.) Over longer-term periods.71 5. Royce Value Fund Managers’ Discussion Royce Value Fund fell 3.2 10.7% for the year-to-date period ended June 30. During 2010’s opening quarter. performance would be lower. The Fund also continued to trail the small-cap index from the market low on March 9. A Federated Investors Cl.1% between April and June.1 28 | The Royce Funds 2010 Semiannual Report to Shareholders . Red Back Mining 0. while the small-cap index declined 9. AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Three-Year Five-Year Since Inception (6/14/01) ANNUAL EXPENSE RATIO Operating Expenses * Not annualized -3.9%. All performance and risk information reflects Service Class results.4 2. The second quarter saw a wildly different market following the interim small-cap market high on April 23. is never Whitney George Jay Kaplan welcome. More bargain-conscious consumers have helped its business to thrive. after a brief respite through early February.QUALITY + FOCUSED Quality + Focused Funds generally employ a more limited portfolio approach—typically holding no more than 100 positions that we believe possess high quality.4 2.

Investments (% of Net Assets) Fund Net Assets Turnover Rate Number of Holdings Symbol Investment Class Service Class Consultant Class Institutional Class R Class K Class $2.S. After substantially increasing our stake during much of the first half.51 funds.52 crimp in the profitability of its money market Federated Investors Cl. Still a dominant force in money market funds.5% or Greater in Percentages(%) 4/5/04.124 million 11.18 *Five years ended 6/30/10. Our thought was that the company has two large military contracts that could soon expire and thus needs to diversify its business.436 million 18% 67 RVVHX RYVFX RVFCX RVFIX RVVRX RVFKX retailer The Buckle.22 0. We were more confident in the long-term prospects for family-run asset manager Federated Investors. The company over-promised and underachieved with two of its silver mines.09 20.9 Includes reinvestment of distributions. We like Comtech Telecommunications -0.5/5/068/12/04 4/28/05 10/12/05 7/21/06 2/22/07. Disappointments in precious metals and mining businesses included Gammon Gold.S.0 -11.0 -6. as did three of its 10 largest detractors.42 the firm’s entire roster of funds and also Total System Services -0.8 -15. Investments (% of Net Assets) Non-U.5 -13.01 21. MORNINGSTAR STATISTICAL MEASURES* RVV Category Best Quartile Median Breakpoint Sharpe Ratio Standard Deviation 0. RUSSELL 2000 Value of $10.35 0. which now Year-to-Date Through 6/30/10 account for a large part of its overall business.5x 1. Another top-10 holding.12/28/04. Although we like the company’s low debt. Category Median and Best Quartile Breakpoint based on 315 small-cap objective funds (oldest class only) with at least five years of history.6x 86.2 -9.02 *Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period.22 22. B -0.8 -8.8 -5.36 anticipate that interest rates will rise in the next *Net of dividends three to five years. The Royce Funds 2010 Semiannual Report to Shareholders | 29 . April and June.850 RVV Russell 2000 -54. ROYCE VALUE FUND VS. we believe that Comtech is worth the risk for now.004 $13.64 0. Gammon Gold -0. We also suspect that a renewal of even one of those contracts would be a step toward a turnaround in stock performance. endured a difficult first half of 2010 (and also suffered through a poor 2009).66% The declining interest rate environment put a American Eagle Outfitters -0.01% 0. Ultimately. then. Please read the prospectus for a more complete discussion of risk.8/2/05.3 RVV Russell 2000 $24. one of which experienced strikes while the other yielded lower-than expected results. the Fund’s third-largest position at the end of June.1% 9. Vancouver-based Red Back Mining has active gold mining operations in Ghana and Mauritania and thus benefited from the sharp increase in gold prices as well as from its own successful execution of both exploration and production. we were not as certain as we once were about its ability to remain a force in what we expect will be a highly competitive climate for apparel retailers. The share price of American Italian Pasta grew on news of its acquisition. mobile-data communications equipment maker Comtech Telecommunications. The company recently announced an acquisition. both of which were factors in our decision to build our stake in the first half.Performance and Portfolio Review PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio U.97 0. We reduced our position between early March and early June as its share price rose. Slow sales and an otherwise challenging retail environment hurt the stock price of apparel and accessories retailer American Eagle Outfitters. we sold shares in mid-June.4 -6. We trimmed our position in March.4% $1.37 22.000 Invested on 6/14/01 $30K 25 20 15 10 5 0 Dec 01 Dec 03 Dec 05 Dec 07 Dec 09 *Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (9% of portfolio holdings as of 6/30/10).4 -14. in part because of our lower confidence in the firm’s management and in part due to its recent struggles. which is involved in gold and silver exploration and production in Mexico. which left us as intrigued as it made other investors anxious.2 -58. which discouraged investors. Four of the Fund’s top-10 contributors came from the precious metals and mining group.7/13/073/5/07 3/9/09 -6. RISK/RETURN COMPARISON Five-Year Period Ended 6/30/10 Average Annual Standard Return Total Return Deviation Efficiency* RVV Russell 2000 5. the company also runs a number GOOD IDEAS AT THE TIME Top Detractors from Performance* of bond and equity portfolios.64 21. DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7.

5 SEI Investments 1. This can be seen more clearly measuring from the interim small-cap high on April 23. a period in which ROH rose 7. ROH’s average annual total Interactive Data 0.9%. Web and interactive development services and interactive marketing Important Performance and Expense Information All performance information in this Report reflects past performance. Royce 100 Fund (ROH) was down 3.2 12. Shares of ROH’s R Class bear an annual distribution expense that is higher than that of the Service Class. While it is always disappointing to have negative results—to Chuck Royce Lauren Romeo say nothing about underperforming the benchmark—we also do not typically place much emphasis on short-term performance periods.9% for ROH’s small-cap benchmark. 12b-1 distribution and service fees. During the second quarter. Share prices continued to mostly climb through late April. 2010. (Please see page 12 for recent market GOOD IDEAS THAT WORKED Top Contributors to Performance* cycle results.1% -29.66 -2.5%. which played a major role in its stock price’s rise in the first half.2 TOP 10 POSITIONS % of Net Assets Greif Cl. is presented on a total return basis.03% 19.3 Cliffs Natural Resources 1.9 1. and include management fees. while the small-cap benchmark declined 9.59 5. A subscription-model research product. Investment return and principal value of an investment will fluctuate.6 4.7% GrafTech International 1.22 Gartner.com. Sapient Corporation also does IT consulting in addition to offering risk management consulting. Sanderson Farms 0.9 27. 2010. We have liked its position as a non-capital intensive business for many years and have long admired its ability to generate cash.0% versus a loss of 1. for the same period.0 11.6% for the Russell 2000. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund.3 PORTFOLIO SECTOR BREAKDOWN % of Net Assets Industrial Services Industrial Products Natural Resources Financial Services Technology Consumer Products Financial Intermediaries Consumer Services Health Miscellaneous Cash and Cash Equivalents 22. if it were. the Fund’s top contributor to ADTRAN 0.7% 14.3 2006 2005 2004 13.30% since inception (6/30/03) periods ended Sapient Corporation 0. when the Fund was down 15.2 7.4 Sanderson Farms 1. one of Garner’s primary revenue sources.4 Mohawk Industries 1.8 30 | The Royce Funds 2010 Semiannual Report to Shareholders .49 CALENDAR YEAR TOTAL RETURNS Year ROH Year ROH 2009 2008 2007 38.8 1. 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. These similar results do not give as strong an impression of ROH’s advantage thus far through the correction. so that shares may be worth more or less than their original cost when redeemed. Net operating expenses reflect contractual fee waivers and/or reimbursements.37 1.5 2.24 June 30.QUALITY + FOCUSED Quality + Focused Funds generally employ a more limited portfolio approach—typically holding no more than 100 positions that we believe possess high quality. 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 at below 1. 2011. Current month-end performance may be obtained at www.5 5.roycefunds. Royce 100 Fund Managers’ Discussion For the year-to-date period ended June 30. 2010 through June 30.23 return since inception was 9. the Fund fell 9.4%.4 EMCOR Group 1. The rally that did so much to restore investor’s confidence in 2009 took a breather as 2010 got underway.3 Expeditors International of Washington 1. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010. Gross operating expenses reflect the Fund’s gross total annual operating expenses for the Service Class. is a global leader in IT *Includes dividends (information technology) research and other consulting services.4 6. All performance and risk information reflects Service Class results.54% 1. This resulted in solid performance for most stocks in the first quarter. preferring instead to measure the Fund’s record over longer time spans.5 AllianceBernstein Holding L. Current performance may be higher or lower than performance quoted. performance would be lower. All expense information is reported as of the Fund’s most current prospectus.21 performance. 2010.P.49% through April 30. This is the case regardless of the result. grew by 14% in the first quarter.) The Fund also outpaced its Year-to-Date Through 6/30/10 benchmark for the three-year.1% compared to a gain of 8.7% 18. and other expenses. A 1.9% for the Russell 2000. AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Three-Year Five-Year Since Inception (6/30/03) ANNUAL EXPENSE RATIOS Gross Operating Expenses Net Operating Expenses * Not annualized -3. the Russell 2000. Past performance is no guarantee of future results. We held a good-sized position at the end of June. five-year and Gartner 0.6 12.80 9. when a more severe correction began that as of this writing has shown few signs of slowing down. though by early February it had picked up steam again.3 Manpower 1.0% versus a loss of 17. 1. which is not reflected in the performance shown above.

As a result. balance sheet and proven ability to generate cash.000 Invested on 6/30/03 $25K ROH Russell 2000 *Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (10% of portfolio holdings as of 6/30/10).12/28/04. RUSSELL 2000 Value of $10. Holdings in the Industrial Products.3 -6.7 -58. which helped to make investment management companies the portfolio’s poorest performing industry group.8 -14.867 Includes reinvestment of distributions.39% long-term investors. ROYCE 100 FUND VS. which seemed to help its stock price to climb through the end of June.S. Intrepid Potash makes fertilizer products for the agricultural.4% 5. We like its management.5 -13. industrial and feed markets. Fears that the strengthening U.01 21.4 -8. Between February and June.2 -8.37 20. Financial Services and Industrial Services sectors made the largest negative impact on first-half performance. its stock price falling Year-to-Date Through 6/30/10 especially hard during the second quarter.0 -11. Much of the reason for these declines can be traced to the increased apprehension about the thus-far fragile economic recovery. As Artio Global Investors Cl. we increased our stake Intrepid Potash -0. Category Median and Best Quartile Breakpoint based on 315 small-cap objective funds (oldest class only) with at least five years of history.9% $315 million 10% 100 ROHHX RYOHX ROHRX ROHKX strategies. including consulting for mergers and acquisitions. which runs a securities brokerage and an asset management business.721 20 15 10 5 0 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 ROH Russell 2000 -49.25 declined disproportionately to any difficulties *Net of dividends faced by its business. Please read the prospectus for a more complete discussion of risk. RISK/RETURN COMPARISON Five-Year Period Ended 6/30/10 Average Annual Standard Return Total Return Deviation Efficiency* ROH Russell 2000 5.6 -9.5% or Greater in Percentages(%) 4/5/04.S. and financial consulting.S.8 -15. as well as other capital markets.97 0. Our high regard for its management and core business led us to increase our stake in the first half.Performance and Portfolio Review PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio U.682 million 19. corporate restructurings and capital structures. Investments (% of Net Assets) Non-U. Investments (% of Net Assets) Fund Net Assets Turnover Rate Number of Holdings Symbol Investment Class Service Class R Class K Class $1. CRA International saw the market for mergers and acquisition and work force litigation slow. It seemed to us that its shares CRA International -0.34 our confidence in the stock’s potential to Sims Metal Management ADR -0.37 0. A -0.18 *Five years ended 6/30/10. dollar would restrain the competitiveness of domestic companies fueled the sell-off in industrial stocks.3 $18.37 21.33 bounce back. The performance of many financial stocks was hurt by investors fleeing the stock market. As investors alienated its stock in the second quarter.2x 2. regulatory.9 $14.28 0.7/13/073/5/07 3/9/09 -3. as well as a financial advisory arm that offers a wide range of services. as did the stubborn perception that the economy was headed for a double-dip recession. one industrial company that posted sold net gains in 2009—global scrap-metal producer Sims Metal Management— wound up with a prominent place on the poor performers’ list for the year-to-date period GOOD IDEAS AT THE TIME Top Detractors from Performance* ended June 30. It was a top-20 position at the end of June. which had a dampening effect on the stock price of this specialist in litigation.4 -9.35 0.5/5/068/12/04 4/28/05 10/12/05 7/21/06 2/22/07. A -0. Pricing for fertilizer has still not recovered from lows reached in 2008. MORNINGSTAR STATISTICAL MEASURES* ROH Category Best Quartile Median Breakpoint Sharpe Ratio Standard Deviation 0. as farmers have sought to get by with lower amounts.02 *Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period. all of which were factors in our decision to build our position in the first half.09 20.25 20. we more than doubled our stake in Lazard.8/2/05.80% 0. We first purchased shares of Artio Global Investors late in 2009 owing to our high opinion of its position as a leading international equities manager. An acquisition made in 2009 helped the firm to build market share.0x 88. The Royce Funds 2010 Semiannual Report to Shareholders | 31 . 2010.38 throughout much of the first half owing to Lazard Cl. we built our position. DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7.

7 2. RSV’s average annual total return since inception was better than that of the Russell 2500. the Fund lost 1.and mid-cap benchmark. other expenses and acquired fund fees and expenses. Net operating expenses reflect contractual fee waivers and/or reimbursements.8 2. After underperforming its benchmark during the bullish first quarter (+7.99% through April 30. which in turn led to an environment of broadly undifferentiated returns.57 reflect on what clearly has been one of the most Seabridge Gold 0.8 2. if it were.6 6. private equity funds and other investment companies. 2010.8 2.7 1.com. is presented on a total return basis. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred directly by the Fund through its investments in mutual funds. Year-to-Date Through 6/30/10 As we approach the third anniversary of American Italian Pasta Cl. 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.7 2.3 3.8% 3. falling 13. Royce SMid-Cap Value Fund Managers’ Discussion The first half of 2010 was more than a little manic. performing in line with its small.9%. resulting in reasonable relative returns. Past performance is no guarantee of future results. 12b-1 distribution and service fees.1 3. Current performance may be higher or lower than performance quoted. All expense information is reported as of the Fund’s most current prospectus.6% compared to a decline of 16. which is not reflected in the performance shown above. A Centamin Egypt Pan American Silver GrafTech International Family Dollar Stores AVX Corporation PORTFOLIO SECTOR BREAKDOWN % of Net Assets Natural Resources Industrial Products Technology Financial Services Consumer Services Financial Intermediaries Consumer Products Industrial Services Health Cash and Cash Equivalents 17. 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. That said. so that shares may be worth more or less than their original cost when redeemed.1 8. From the interim small-cap peak on April 23. the Russell 2500. Gross operating expenses reflect gross total annual operating expenses for the Service Class and include management fees.7 3. we take some solace in the fact that through this period the Fund maintained its core discipline. the Fund’s defensive positioning and bias towards higherquality companies helped it to slightly outperform the index in the broadly negative second quarter (-8. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund. A 0.0 2. For the year-to-date period ended June 30. 2010. hedge funds. we were somewhat pleased to see that a transition began to take place that favored GOOD IDEAS THAT WORKED Top Contributors to Performance* higher-quality companies.2%).8% 17.roycefunds. A Greif Cl. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010. at or below 1.1 7. A Lubrizol Corporation (The) GameStop Corporation Cl.7 15. Investment return and principal value of an investment will fluctuate. The result was very high correlation of individual stock performance.1% versus +9. but that were uninspiring from our Whitney George Steven McBoyle favored absolute return standpoint. Important Performance and Expense Information All performance information in this Report reflects past performance.87% 19. Steadily increasing volatility and widening credit spreads led to increased risk aversion in the second quarter. which fell 1.04% 1. other than acquired fund fees and expenses.95 2. we were somewhat encouraged by the Fund’s relative results.87% RSV’s inception on September 28. dragging RSV down along with it. as RSV lost less than its benchmark.7 11. performance would be lower. With our preferred performance Pan American Silver 0.39 lifetime.8 10.35 measurement being absolute in nature. 2011 and at or below 1.7 32 | The Royce Funds 2010 Semiannual Report to Shareholders . Royce SMid-Cap Value Fund (RSV). we are *Includes dividends disappointed with the Fund’s results to date.50 TOP 10 POSITIONS % of Net Assets ENSCO ADR American Italian Pasta Cl. 2007. 2020.49 challenging periods for equity investing in our Olin Corporation 0.3% versus -10.0%). we SFN Group 0. Performance for the first half of 2010 was reasonably balanced from a sector standpoint.0 3. with six of the Fund’s 11 equity sectors recording positive performance and five posting net losses.7% for the same period. with its focus on the larger end of the smaller company universe. Current month-end performance may be obtained at www. Although the market reversed course after a strong start in the first half.49% through April 30. posted returns in line with its market segment. AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Since Inception (9/28/07) ANNUAL EXPENSE RATIOS Gross Operating Expenses Net Operating Expenses * Not annualized -1.40 -3.8% for the Russell 2500.QUALITY + FOCUSED Quality + Focused Funds generally employ a more limited portfolio approach—typically holding no more than 100 positions that we believe possess high quality.

S. *Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (14% of portfolio holdings as of 6/30/10).57 an activity we engage in happily. Constantly challenged by a range of potential competitors. Our success with SFN Group.Performance and Portfolio Review PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio U. Investments (% of Net Assets) Fund Net Assets Turnover Rate Number of Holdings Symbol Service Class $2.5x 1. came as the result of well-timed sales in February. as investors grew concerned about the sustainability of businesses investing in technology and projected the passing of the peak in technology capital investment for the current cycle. A -0.000 Invested on 9/28/07 $14K RSV Russell 2500 12 10 8 $8. Investments (% of Net Assets) Non-U.8x 75. Our thought was that the sector boasts some of the best balance sheets and cash positions in the small-cap market and should benefit from the many non-tech businesses that are flush with cash and should soon be in need of improvements and/or upgrades to their technology. One pleasant byproduct of this is that from time to time we see portfolio companies acquired either by a strategic or financial buyer. excellent customer service and very attractive valuation.03% Wading into what we deem our best ideas by Popular -0. a strategic workforce solutions company focused on the staffing industry. value investing will often put Year-to-Date Through 6/30/10 the investor at odds with consensus thinking. GOOD IDEAS AT THE TIME Top Detractors from Performance* By its nature. Holdings in the group.950 $7. even when Schnitzer Steel Industries Cl.341 million 12.45 the world’s largest specialty retailer of *Net of dividends electronic games and PC entertainment software may ultimately offer a classic example.3% 12.57 beginning to buy when the crowd is fleeing is Artio Global Investors Cl. We find fears of big-box competition or digital disintermediation overblown. ROYCE SMID-CAP VALUE FUND VS. which received a boost from precious metals and mining companies. Western Digital -0.8% $5 million 95% 52 RMVSX Leading the way was the Natural Resources sector. GameStop Corporation Cl. when we grew concerned about the challenges its management would have balancing revenue growth and margin expansion in the context of a very competitive and challenging industry environment.991 6 4 Sep 07 Dec 07 Mar 08 Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Includes reinvestment of distributions. the portfolio’s best-performing industry group. Technology was the worst-performing sector. benefited from sharply rising gold and silver prices. A -0. GameStop. The Royce Funds 2010 Semiannual Report to Shareholders | 33 .S. A -1. the demise of its business model is a constant topic of investors who once again helped its share price to stumble. American Italian Pasta was just such an example. and we continue to be enamored with the company’s defensible dominance of the used game market. such as Seabridge Gold and Pan American Silver. RUSSELL 2500 Value of $10.56 the early outcome is disappointing. Our investment process dictates that we think and invest along the same lines as business buyers. North America’s largest producer and seller of dry pasta to both private label and branded pasta markets agreed to be acquired by RalCorp Holdings at a very healthy premium to its stock price near the end of June.

which was borne out as stocks rallied again and share prices mostly rose until late in the fourth week of April. which helped to make investment management companies the portfolio’s poorest-performing industry group.9 2. This was a less surprising.4 2. U. small-cap and mid-cap benchmark. A Mosaic Company (The) Pan American Silver Centamin Egypt PORTFOLIO SECTOR BREAKDOWN % of Net Assets Natural Resources Industrial Products Financial Services Technology Financial Intermediaries Consumer Products Industrial Services Consumer Services Cash and Cash Equivalents 25.7%. Royce & Associates has contractually agreed to waive its fees and/or reimburse operating expenses to the extent necessary to maintain the Fund’s net annual operating expense ratio. Royce Focus Value Fund Managers’ Discussion Stocks of all asset sizes struggled in the first half of 2010—especially from late April through the end of June—and this could be seen all too easily in the performance of Royce Focus Value Fund (RFV).7% compared to a decline of Berkshire Hathaway Cl. private equity funds and other investment companies. Whitney George George Wyper the Fund was down 9. Current month-end performance may be obtained at www. B Seabridge Gold ENSCO ADR GrafTech International Patriot Transportation Holding Cal-Maine Foods Schnitzer Steel Industries Cl. For the year-to-date period ended June 30. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund. Investment return and principal value of an investment will fluctuate. 12b-1 distribution and service fees. though not much less disappointing. the performance of many financial stocks was hampered.0% for its benchmark. performance would be lower. 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. AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Since Inception (2/27/09) ANNUAL EXPENSE RATIO Gross Operating Expenses Net Operating Expenses * Not annualized -9.73 small-cap high on April 23.33 16.98% 1.8% 3. Gross operating expenses reflect total gross annual operating expenses. Stock prices fell into early February.2 34 | The Royce Funds 2010 Semiannual Report to Shareholders .5 4.2% versus a gain of 9. result than what GOOD IDEAS THAT WORKED Top Contributors to Performance* followed in the second quarter. investing primarily in the public Important Performance and Expense Information All performance information in this Report reflects past performance.7% over the same period. B 0. the Fund lost 14. All expense information is reported as of the Fund’s most current prospectus.QUALITY + FOCUSED Quality + Focused Funds generally employ a more limited portfolio approach—typically holding no more than 100 positions that we believe possess high quality. 2010.2% for the Russell 2500.50 TOP 10 POSITIONS % of Net Assets Berkshire Hathaway Cl.6 4. Past performance is no guarantee of future results. hedge funds.com. other than acquired fund fees and expenses. We first purchased shares of Artio Global Investors in January because of our high regard for its position as a leading international equities manager. the Russell 2500 index.5% versus a Fresnillo 0.83% 10. 2010 through Trican Well Service 0.11 27. Net operating expenses reflect contractual fee waives and/or reimbursements.8% loss for the Russell 2500. The rally that helped RFV to enjoy a vibrant first 10 months took a detour as 2010 began. as well as *Includes dividends other capital markets.3 2. 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.18 As investors fled the stock market.1 17.49% through April 30.roycefunds. We added to our stake in February and March. if it were. Global Investors manages equity and fixed income mutual funds. underperforming its micro-cap. 2012 and at or below 1.3 2.4 2. Current performance may be higher or lower than performance quoted. which fell 1.40 June 30.72% 8. During the first quarter.S.50 2. 2009 through the end of last year was diminished by its results thus far in 2010. Buckle (The) 0.0 7. so that shares may be worth more or less than their original cost when redeemed. we also believe that the Fund is more than capable of righting itself in the months to come.99% through April 30.6 3.7 8. at or below 1.4 9. up 1. and include management fees.3% 14. The Fund was substantially outpaced by its benchmark during the bullish first quarter and then lost slightly more than the Russell 2500 in the bearish second quarter. the Fund did not share in the good times to nearly the same degree as its benchmark. 2010. though it appeared to most observers that the rally had not breathed its last. From the interim Seabridge Gold 0.6 2. which is not reflected in the performance shown above. 2020.8 9.3 2. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010. is presented on a total return basis. other expenses and acquired fund fees and expenses.5 2. in which RFV Year-to-Date Through 6/30/10 was down 10. So while our enthusiasm about the Fund’s strong absolute showing from its inception on February 27.

62 with Warren Buffett.838 Includes reinvestment of distributions. A -0.S. in part because takeover rumors ran rampant through its industry. The sector’s largest detracting industry was the metal fabrication and distribution group. the auditor signed off on the filing without requiring any changes or restatements. its balance sheet and its high returns on invested capital. Long-time Royce favorite Thor Industries also roared back in 2009 before stalling in this year’s first half.9% $7 million 18% 50 RYFVX equity. We admire his expertise *Net of dividends as well and were pleased to see the stock climb during 2010’s first six months.Performance and Portfolio Review PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio U. which is involved in gold and silver exploration and production in Mexico.0x 1.S. Global Investors Cl. which was a key contributor to the Fund’s success in 2009. It was the Fund’s second-largest holding at the end of June.98% to return to the fast lane over the long haul. ROYCE FOCUS VALUE FUND VS. Gammon Gold.000 Invested on 2/27/09 $20K RFV Russell 2500 *Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (20% of portfolio holdings as of 6/30/10). We like its business. fixed income. It U. so we built our respective positions in both. in part because of our lower confidence in the firm’s management and in part due to its recent struggles. we saw more or less stable demand and the prospects for solid stock performance down the road. The Industrial Products sector detracted most from performance through the end of June. gold and natural resources markets across the globe.S. Top-10 position The Mosaic Company produces concentrated phosphate and potash crop nutrients for the agriculture industry. However.67 many investors as the company associated Gammon Gold -0. RUSSELL 2500 Value of $10. disappointed in the first half. A -0. We sold our position in February and April. Investments (% of Net Assets) Fund Net Assets Turnover Rate Number of Holdings Symbol Service Class $3.5% 12. Thor Industries -0. two of the portfolio’s more solid net gainers from last year—Schnitzer Steel Industries and Reliance Steel & Aluminum—shifted to the opposite list. during 2010’s first half.279 18 16 14 12 10 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 $13. We think its expertise in asset management is a key strength. The stock of this RV (recreational vehicle) and small.83 was a top-20 position at the end of June. May and June. Investments (% of Net Assets) Non-U.296 million 14. Sales were also slow GOOD IDEAS AT THE TIME Top Detractors from Performance* after months of recovery. though we think its Year-to-Date Through 6/30/10 dominant position in its industry will allow it Mosaic Company (The) -0.78 Berkshire Hathaway is a familiar name to Artio Global Investors Cl. so we increased our stake in January.and mid-sized bus manufacturer plummeted mostly as a result of a delayed 10-Q filing based on an auditor’s review of its past accounting policies.7x 69. which helped to drive up its stock price. However. so we added to our position in the first half. The company over-promised and underachieved with two of its mines. contrarian investors. when we initiated a position in RFV. The Royce Funds 2010 Semiannual Report to Shareholders | 35 . Its share price grew at a healthy rate in 2009. As long-term. one of which experienced strikes while the other yielded lower-than expected results. $16. Canadian gold mining business Seabridge Gold enjoyed success as reserves in a mine in British Columbia were verified and drilling commenced.

which is not reflected in the performance shown above. Royce & Associates has contractually agreed to waive its fees and/or reimburse operating expenses to the extent necessary to maintain the Fund’s net annual operating expense ratio.8 17. Alleghany Corporation 0. PTR. PTR did exhibit some of the defensive qualities we hope to build into all of our portfolios. 2012 and at or below 1.56% rigorous standards of balance sheet strength.8%). was still putting cash to work in 2010’s first quarter.51 TOP 10 POSITIONS % of Net Assets UltraShort 20+ Year Treasury ProShares Randgold Resources ADR Potash Corporation of Saskatchewan Fluor Corporation SEI Investments Diebold CARBO Ceramics Copart Western Union Nucor Corporation PORTFOLIO SECTOR BREAKDOWN % of Net Assets Financial Intermediaries Financial Services Industrial Services Industrial Products Natural Resources Technology Diversified Investment Companies Consumer Services Consumer Products Miscellaneous Cash and Cash Equivalents 21. All expense information is reported as of the Fund’s most current prospectus.5 2. up 2.2% versus 9.9 9. compared to a Chuck Royce loss of 1.42 5. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010. While the Fund’s inaugural performance results have been discouraging. for the same period.4 1. The Fund underperformed in the first quarter. other than acquired fund fees and expenses.29% 1. 2020. 2010.1 2. as the Fund slightly outperformed on a relative basis in what was a highly correlated downward move for the market.8% versus -16.18 to generate free cash flow that have defined VZ Holding 0.2 5.0 1.4 7. other expenses and acquired fund fees and expenses. The Fund was down 8.4% 3.0% for the Russell 2500.13 the Royce discipline for close to four decades. private equity funds and other investment companies. launched mid-year in 2009 amid one of the most powerful rallies in recent history. the Russell 2500. Current month-end performance may be obtained at www. Net operating expenses reflect contractual fee waives and/or reimbursements. Industrial Services.49% through April 30.QUALITY + FOCUSED Quality + Focused Funds generally employ a more limited portfolio approach—typically holding no more than 100 positions that we believe possess high quality. we apply the same Randgold Resources ADR 0. Between April and June. Royce Partners Fund Manager’s Discussion Royce Partners Fund (PTR) struggled to find its footing in the volatile first half for equities in 2010.5 2.12 So while a large portion of the portfolio will *Includes dividends continue to be sourced from our favored segment of small-cap companies. coupled with fears of a slowdown in the globally important Chinese economy. hedge funds.8 4.com.0% for the year-to-date period ended June 30. is presented on a total return basis.2 4. outperforming the Russell 2500 (-14. A 0.2 2.1 2.3 8. 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.1 2. Current performance may be higher or lower than performance quoted.7% for its micro-cap. Gross operating expenses reflect total gross annual operating expenses.4 2. not months or quarters. at or below 1. Importantly.2 2. and we believe that the portfolio is well-positioned for the next market cycle. PTR lost 9.2% for its benchmark. and include management fees.70 5. AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Since Inception (4/27/09) ANNUAL EXPENSE RATIO Gross Operating Expenses Net Operating Expenses * Not annualized -7. Difficulties in the financial sectors stemmed in large part from fears of a Greek default—as Important Performance and Expense Information All performance information in this Report reflects past performance.99% through April 30.9% versus a decline of 10. led to two corrections in the first half.roycefunds. 12b-1 distribution and service fees.9 36 | The Royce Funds 2010 Semiannual Report to Shareholders .4 1. we measure our investment horizon in years. From the interim small-cap peak on April 23. The second quarter was only somewhat less disappointing. 2010. the opportunity exists to take advantage of market dislocations and above-average volatility to apply our methodology to companies of all sizes. Erie Indemnity Cl. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund. small-cap and mid-cap benchmark. PTR has the flexibility to invest in the GOOD IDEAS THAT WORKED Top Contributors to Performance* entire universe of stocks regardless of market Year-to-Date Through 6/30/10 capitalization. so that shares may be worth more or less than their original cost when redeemed. Investment return and principal value of an investment will fluctuate. Financial Intermediaries and Diversified Investment Companies. The sovereign debt crisis in Europe. performance would be lower. only then to be caught more fully invested late in April as the market began its steepest correction since the recent cycle low of March 2009.5% 20. 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.96% 3. if it were. resulting in a performance drag. Past performance is no guarantee of future results. The largest net losses on a sector level during the first half came from Financial Services.20 high returns on invested capital and the ability Primerica 0.

a mid-sized property/casualty insurer.000 Invested on 4/27/09 $16K PTR Russell 2500 14 $13. ROYCE PARTNERS FUND VS. demonstrated improved underwriting results and policy growth that. A -0. Our view. Italy and Ireland—that caused turbulence for financial companies across the globe. unsurprisingly. Its stock sold off sharply as investors fled companies with exposure to the debt crisis.24% The top-performing company for the Lazard Cl. We see the opportunity for increased sovereign advisory work—the company continues to advise Greece—in distressed situations in both Europe and the U. Investments (% of Net Assets) Fund Net Assets Turnover Rate Number of Holdings Symbol Service Class $3. We built our position in May. is quite contrary. an ETF (exchange traded fund) that seeks twice (200%) the inverse (opposite) of the daily performance of the Barclays Capital 20+ Year U. as Transocean -0. specifically that of gold.S. recaptured investor enthusiasm and allowed the shares to perform handsomely.2% 11. provides services for oil and gas wells worldwide. as more than offsetting. The Royce Funds 2010 Semiannual Report to Shareholders | 37 . primarily in West and Central Africa. Transocean. Lazard is a Bermuda-based global financial advisory and services company with substantial business interests in Europe. Treasury Index. along with the pricing benefits of its unique corporate structure. including deepwater and harsh environment drilling.S. The Fund’s most significant detractor was our position in ProShares UltraShort 20+ Year Treasury.58 period came from the Natural Resource sector Popular -0. sold off amid fears of a delay in the sale of a subsidiary. We made an additional purchase of the stock in March. the world’s largest offshore drilling contractor.S. ounces of proven reserves. UltraShort 20+ Year Treasury ProShares -1.1x 80. We added to our position in February and May.S. The position reflects our contention that investors’ flight to the safety of Treasuries is rapidly approaching a bubble and that we are likely to see inflation and higher interest rates in the years ahead. Investments (% of Net Assets) Non-U.57 and was a direct beneficiary of rising precious Artio Global Investors Cl. We held a good-sized position at the end of June.Performance and Portfolio Review PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio U.55 metals prices.576 million 17.375 12 10 8 $10. a bank holding company that provides commercial banking operations primarily in Puerto Rico. Randgold Resources is engaged in exploration and mining. *Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (13% of portfolio holdings as of 6/30/10).5% $1 million 9% 62 RPTRX well as similar concerns about Spain.640 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Includes reinvestment of distributions. Popular. Its GOOD IDEAS AT THE TIME Top Detractors from Performance* involvement in the Gulf oil spill has led to an Year-to-Date Through 6/30/10 understandable decline in its stock price. RUSSELL 2500 Value of $10. A -0. We first purchased shares of Artio Global Investors in November 2009 (and added to our stake in March) owing to our high regard for its position as a leading international equities manager and confidence in its long-term prospects for success. and has more than 15mn. Long-time Royce favorite Erie Indemnity.6x 2. Portugal.45 investors continued to seek safe havens that *Net of dividends will protect their assets from the competitive devaluation of currencies occurring around the world.

2 11.7 6.7 8. and include management fees. as the prospect of sovereign defaults in Europe.0 3. All expense information is reported as of the Fund’s most current prospectus. if it were. down 10.87% quarter rally. the April interim peak and subsequent decline did usher in the beginning of a change in leadership that we had long been anticipating. we began to see a transition away from this low-quality outperformance as risk aversion began to resurface. Investment return and principal value of an investment will fluctuate.7%. Past performance is no guarantee of future results.5 5. defined as those with high internal rates of return. 38 | The Royce Funds 2010 Semiannual Report to Shareholders . 2010 is clearly not off to an auspicious start for either the Fund or the broader market.3 1. so that shares may be worth more or less than their original cost when redeemed. low leverage. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010.8% versus a loss of Advance Auto Parts 0.0% 3. other expenses. Royce & Associates has contractually agreed to waive its fees and/or reimburse operating expenses. RMM declined 6.9 3. Royce Mid-Cap Fund (RMM).9 10. precipitated by the sovereign debt crisis in Europe. 12b-1 distribution and service fees. 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.49 -6.30% -6.30 Important Performance and Expense Information All performance information in this Report reflects past performance. A Biogen Idec Dollar Tree Manpower Kinetic Concepts TD AMERITRADE Holding Corporation PORTFOLIO SECTOR BREAKDOWN % of Net Assets Industrial Products Natural Resources Industrial Services Technology Consumer Services Health Financial Intermediaries Financial Services Consumer Products Cash and Cash Equivalents 20. which GOOD IDEAS THAT WORKED Top Contributors to Performance* fell 2.4 3. is presented on a total return basis. 2013.8 3.QUALITY + FOCUSED Quality + Focused Funds generally employ a more limited portfolio approach—typically holding no more than 100 positions that we believe possess high quality. Royce Mid-Cap Fund Managers’ Discussion The market rally that began in March 2009 and continued well into April 2010 in general favored companies in the smallest market cap segments and businesses on the lower end of the quality spectrum as measured by balance sheet strength Carl Brown Brendan Hartman and internal rates of return. the Russell Midcap index.1 10.3%. Current performance may be higher or lower than performance quoted.com. Current month-end performance may be obtained at www. began to outperform those with lower-quality characteristics. Similarly.5 3.75% 1. dividends and prudent capital allocation. which focuses on mid-cap companies with market capitalizations James Stoeffel Whitney George ranging from $2. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund.roycefunds.3% compared to a loss of 15.8 3. from the interim small-cap *Includes dividends peak on April 23.1% for the same period. which is not reflected in the performance shown above.S. Higher-quality businesses. a slowing Chinese economy and an unimproved housing and unemployment picture in the U.9%. RMM fell 15. to the extent necessary to maintain the Fund’s net annual operating expense ratio at or below 1. 2010. performance would be lower. As CUMULATIVE TOTAL RETURNS Through 6/30/10 Jan-June 2010 Since Inception (12/31/09) ANNUAL EXPENSE RATIO Gross Operating Expenses Net Operating Expenses TOP 10 POSITIONS % of Net Assets ENSCO ADR Questar Corporation Flowserve Corporation Western Digital Greif Cl.9 6.6% 17. Halfway through. For the year-to-date period ended June 30.5 2. Gross operating expenses reflect total gross annual operating expenses.0% versus 8. signaled investors to once again flee equities. 2010.0 2. Net operating expenses reflect contractual fee waives and/or reimbursements. underperforming its benchmark.49% through April 30.41 second quarter.5 billion to $15 billion. Concurrent with the beginning of the decline in late April.30 9.57 slightly underperformed during the decline Hasbro 0. up 5. A new set of fears raised investor anxiety back to levels not seen since the fall of 2008. That said. struggled in the year’s first half as we first began to invest when stock prices were rising in the year’s opening quarter.41 that gripped markets during the challenging O’Reilly Automotive 0.7% for its benchmark. After failing to Year-to-Date Through 6/30/10 keep pace with its benchmark during the firstDollar Tree 0.5 2. the Fund Red Back Mining 0.9 3.

and we remain committed to the company over the long term. more defensive areas performed well. while the more cyclically and economically sensitive sectors performed worst as investors worried about the potential for a double-dip recession. a leading operator of discount variety retail stores offering everyday general merchandise at the $1 price point.370 Jun 10 Includes reinvestment of distributions. ROYCE MID-CAP FUND VS. A -0. RUSSELL MIDCAP Value of $10. The first half of 2010 also marked the first six months in which the Fund has been in operation.979 million 13. We took a more sanguine view of the company’s prospects and believe that the current valuation more than adequately reflects any risks on the macroeconomic landscape.8x 90. which helped Dollar Tree.52 its stock price declining as industry conditions American Eagle Outfitters -0. Flowserve’s business is highly cyclical. a manufacturer of flow control equipment—pumps.000 Invested on 12/31/09 $12K RMM Russell Midcap *Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (5% of portfolio holdings as of 6/30/10). Launched on December 31. The current episode of elevated volatility also allows some companies that have traditionally been the province of large-cap investors to be captured at a moment in the mid-cap space when they have fallen out of favor. Investments (% of Net Assets) Fund Net Assets Turnover Rate Number of Holdings Symbol Service Class $4.794 10 9 8 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 $9. Investments (% of Net Assets) Non-U. In the Flowserve Corporation -0. We believe that investors have overreacted. Industrial Products and Technology were the two weakest sectors by a wide margin as inventory restocking and business investment hit a soft patch. Merchandising flexibility and solid business GOOD IDEAS AT THE TIME Top Detractors from Performance* execution combined with prudent square Year-to-Date Through 6/30/10 footage growth and strong free cash flow Western Digital -1. Manpower -0. 11 $9. and the company *Net of dividends ceded some market share to defend pricing. are misunderstood or have disappointed their current slate of investors.74 Technology sector. precious metals and mining businesses were the top performers while Technology’s components and systems companies fared worst.2% $4 million 68% 51 RMIDX our area of focus and expertise is decidedly with the former.2% 3. The Royce Funds 2010 Semiannual Report to Shareholders | 39 . valves and motors—fell victim to negative perceptions of its end markets as investors focused on the company’s significant exposures to the Eurozone region and to drilling in the Gulf of Mexico. From an industry standpoint. RMM is an extension of our primary selection universe of smaller companies in that it allows us to continue to benefit from our deep institutional knowledge of smaller companies as they grow up in the world. 2009.S. we are confident in our positioning for the next market cycle.33% served to attract investors to the stock. led by Natural Resources.61 manufacturer Western Digital disappointed. hard disk drive GameStop Corporation Cl. Four of the Fund’s nine equity sectors generated positive performance for the period.Performance and Portfolio Review PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio U.S. with customer’s spending habits linked closely to the condition of the global economy. Flowserve Corporation.7x 1.51 became more challenging. Not surprisingly. Recent trends in consumer spending favored purchases offering some value.

3% for the year-to-date period ended June 30.0 1. When the rally began to lose serious steam following the interim small-cap high on April 23.7 15.3 24.2 3.56% page 12 for recent market cycle results. performance would be lower.1 8. Royce Micro-Cap Fund Manager’s Discussion Micro-cap stocks are often volatile and unpredictable. dominated by holdings in the precious metals and mining industry. 2010.1 1.6 -13.1 22. given the state of the market. Shares of RMC’s Service and Consultant Classes bear an annual distribution expense that is not borne by the Investment Class.4 2001 2000 1999 1998 1997 1996 1995 1994 23. Past performance is no guarantee of future results.22 12.7% 14.3% versus respective losses of 17. ahead of its small-cap benchmark. 2010.6 3.9%) and the micro-cap index (+9.1 1. RMC beat the Russell 2000 for each of the aforementioned periods and the 15-year and since inception (12/31/91) periods ended June 30.7%. is presented on a total return basis. 2010. Investment return and principal value of an investment will fluctuate.0 40 | The Royce Funds 2010 Semiannual Report to Shareholders .0 1. they are understandable in the context of the currently anxious and uncertain market.9%. Operating expenses reflect the Fund’s total annual operating expenses for the Investment Class as of the date of the Fund’s most current prospectus and include management fees.1% for the same period.8%. 2010.9% and the Russell Microcap index fell 8.9%). As was the case in 2009. RMC lost 12.2% 1.30 goes back to 2000—for the one-. Natural Resources—the Fund’s best-performing sector in 2009—was also its most significant contributor to net gains in the first half of 2010. This relative lag at a time when stock prices were mostly rising was not entirely a surprise following the Fund’s performance in 2009.1 1.9%. All performance and risk information reflects Investment Class results. The Fund’s average annual total return since inception was 12.5 19. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010.10 6.31% 26.60% CALENDAR YEAR TOTAL RETURNS Year RMC Year RMC 2009 2008 2007 2006 2005 2004 2003 2002 55. while the Russell 2000 declined 9.35 the Russell Microcap index—for which data Boots & Coots 0. so that shares may be worth more or less than their original cost when redeemed. We were also cheered somewhat by the fact that RMC held an advantage over both indexes from the market low on March 9.1 1. the Russell 2000.1% for the Russell 2000 and Russell Microcap indexes.2 1. Between April and June. which was strong on both an absolute and relative basis.MICRO-CAP/OPPORTUNISTIC Micro-Cap/Opportunistic Funds generally invest in micro-caps and/or those companies considered more opportunistic.0 1. but they were no more noticeably capricious than their larger peers in the first half of 2010.39 based.3 4.50 10. Jenifer Taylor which managed a slight gain of 0.44 outperformance was consistent with calendarFronteer Gold 0.3 11.2% for the micro-cap index.5 15. This stronger down market turn helped the Fund to also lose less during the second quarter.3 11.6 TOP 10 POSITIONS % of Net Assets US Gold Fronteer Gold Syneron Medical Volcom Silvercorp Metals Cavco Industries Patriot Transportation Holding Lamprell Atlantic Tele-Network Allied Nevada Gold PORTFOLIO SECTOR BREAKDOWN % of Net Assets Natural Resources Industrial Products Health Technology Industrial Services Consumer Products Financial Services Financial Intermediaries Consumer Services Miscellaneous Cash and Cash Equivalents 17. 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. gaining GOOD IDEAS THAT WORKED Top Contributors to Performance* 96. So while negative returns are never ideal.7% in 2010’s first quarter was more than respectable. Royce Micro-Cap Fund (RMC) was down 1. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund.32 -4. AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Three-Year Five-Year 10-Year 15-Year Since Inception (12/31/91) ANNUAL EXPENSE RATIO Operating Expenses * Not annualized -1. 2010.com. five*Includes dividends and 10-year periods ended June 30.1 3.9% for the Russell 2000 and Year-to-Date Through 6/30/10 86. 2009 through the end of June.7% -40. longer-term periods.9 7.6% and 18.8% versus 80.1% 16. Current performance may be higher or lower than performance quoted. hedge funds. which fell 1.01 11. Current month-end performance may be obtained at www. From that date through the end of June. this industry outpaced all of the Fund’s other sectors and industry groups.7 -3.6 4. this was Important Performance and Expense Information All performance information in this Report reflects past performance.roycefunds.9 1. three-.68 1. The Fund beat Allied Nevada Gold 0.7 7.8 52.7 13. Although RMC’s absolute return of 4. if it were. although. RMC was down 5. it lagged its benchmark (+8. the Fund more than held its own. which is not reflected in the performance shown above.) This Red Back Mining 0. Acquired fund fees and expenses reflect the estimated amount of fees and expenses incurred indirectly by the Fund through its investment in mutual funds. (Please see US Gold 0. other expenses and acquired fund fees and expenses.1 12.5 12. but behind the Russell Microcap index. private equity funds and other investment companies.

S. The firm produces zinc.3 RMC Russell 2000 $90. We liked its interesting niche.28 21.37 21. Its share price went against the market. comprehensive diagnostics to cancer sufferers.3 -12.8/2/05. Genoptix provides specialized laboratory services that focus on personalized. but we were drawn to Horsehead’s strong fundamentals and think that it deserves our patience.97 0. DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7. Its share price began to slip Genoptix -0.5% or Greater Over the Last 10 Years.000 Invested on 12/31/91 $120K 100 80 60 40 20 0 Dec 91 Dec 93 Dec 95 Dec 97 Dec 99 Dec 01 Dec 03 Dec 05 Dec 07 *Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (26% of portfolio holdings as of 6/30/10). while Allied Nevada Gold managed a similar transition from explorer to producer with a comparable level of success. rising most sharply during the second quarter. which provides wireless voice and data services to retail customers in Bermuda. RUSSELL 2000 Value of $10. MORNINGSTAR STATISTICAL MEASURES* RMC Category Best Quartile Median Breakpoint Sharpe Ratio Standard Deviation 0.9 $41.5 -11. (All small-cap objective funds with median market capitalizations below $500 million. when they were falling into the micro-cap capitalization range: Fronteer Gold reaped a golden harvest from recent discoveries in its home base of Nevada.5x 67.1% 25. These suites of services are primarily sold to oncologists and hematologists. its balance sheet and impressive margins.8 -9. The Royce Funds 2010 Semiannual Report to Shareholders | 41 . Steel businesses. but in retrospect we may have begun to buy too soon. Please read the prospectus for a more complete discussion of risk.34 before falling further when the firm revised Olympic Steel -0.070 million 19% 213 RYOTX RMCFX RYMCX admittedly a less daunting task in 2010’s first six months than it was in 2009.02 *Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period. but it remains in our view a very well-run business with a low-debt balance sheet and positive cash flow. We were somewhat mystified by the dismal performance of Atlantic Tele-Network. making large GOOD IDEAS AT THE TIME Top Detractors from Performance* buys in the summer of 2009 and spring of Year-to-Date Through 6/30/10 2010. We built two other positions near the end of 2008 and in the first quarter of 2009. Investments (% of Net Assets) Fund Net Assets Turnover Rate Number of Holdings Symbol Investment Class Service Class Consultant Class $322 million 12.Performance and Portfolio Review PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio U.00 *Five years ended 6/30/10. Guyana. in Percentages(%) 4/5/04. primarily by the low-cost method of recycling steel dust.5 -6. US Gold. Nevada-based exploration and production company.29 holding on in the expectation that the firm *Net of dividends can right itself. Its earnings were lower early in 2010. We are Sterling Construction -0.22 0.983 RMC Russell 2000 -56.4 -15.S.12/28/04. Red Back Mining successfully managed the growth of its mines in Ghana and Mauritania after evolving from a purely exploratory company into one that produced metals as well.7 -8. 2010. as well as wireless voice and data roaming services in the U. Investments (% of Net Assets) Non-U. as did many industrial companies.22 21.8 -14. such as Olympic Steel.4x 1. we were very pleased with the performance of these companies.415 Dec 09 Includes reinvestment of distributions.31 0. as the debt crisis in Europe and fiscal challenges on the home front drove investors to the perceived safety of gold. ROYCE MICRO-CAP FUND VS.S. Horsehead Holding offers a different kind of niche.0% $1.) RISK/RETURN COMPARISON Five-Year Period Ended 6/30/10 Average Annual Standard Return Total Return Deviation Efficiency* RMC Russell 2000 6.33 full-year revenue guidance in June. In contrast to these stocks. Rising gold prices were the primary spur to the increase in share prices.48% precipitously in late April on an earnings Horsehead Holding Corporation -0.21 21.50% 0. when investor anxiety was growing most acute.22 0. we began to build our stake a bit later in the Fund’s top performer.7/13/073/5/07 3/9/09 -0. We held a good-sized position in each company at the end of June.7 -9. which accounted for four of RMC’s five top gainers year-to-date through June 30.2 -58.9 -13. Category Median and Best Quartile Breakpoint based on 21 micro-cap objective funds (oldest class only) with at least five years of history. and Turks and Caicos.42 miss and unexpected spending increases Atlantic Tele-Network -0.00 22. had a rough first half.5/5/068/12/04 4/28/05 10/12/05 7/21/06 2/22/07. Still.

6% versus a decline of 17. to the extent necessary to maintain the Service Class’s net annual operating expense ratio at or below 1.40 5. the Russell 2000.0 -16.9% return of the Russell 2000.9 1.4 3. All performance and risk information reflects Service Class results. Royce Low-Priced Stock Fund Manager’s Discussion Royce Low-Priced Stock Fund (RLP) was down 4. Current performance may be higher or lower than performance quoted. 2009 through June 30.3 1. including management fees. and the very difficult market and economy through the first half of the year.28 periods ended June 30.0 2.6 44. .8 2.49% through April 30. other than acquired fund fees and expenses. Past performance is no guarantee of future results.62% 1.3 1.05 1. the Fund outpaced the Russell 2000 over longer-term time periods tied more closely to the calendar.4 19.51 CALENDAR YEAR TOTAL RETURNS Year RLP Year RLP 2009 2008 2007 2006 2005 2004 2003 2002 53. 10-. hedge funds. RLP outpaced the Alamos Gold 0. However. 2010. we were not terribly Whitney George surprised. on both an absolute and relative basis.0 TOP 10 POSITIONS % of Net Assets Alamos Gold Trican Well Service Pan American Silver GrafTech International Nu Skin Enterprises Cl.48% 25.0 9. 2010.29 15-year and since inception (12/15/93) KKR Financial Holdings 0. From the late April high through the end of June. Shares of RLP’s R Class bear an annual distribution expense that is higher than that of the Service Class.9 6. five-. is presented on a total return basis. in our estimation.MICRO-CAP/OPPORTUNISTIC Micro-Cap/Opportunistic Funds generally invest in micro-caps and/or those companies considered more opportunistic.2 4. one in which RLP fell 8. private equity funds and other investment companies.5 1.49 8. which is not reflected in the performance shown above.6% -36. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses. Net operating expenses reflect contractual fee waivers and/or reimbursements.com. we were disappointed with the Fund’s results—negative returns.5% during the first quarter. 2010 versus a decline of 1.91 12. 2011. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010.1% 24. All expense information is reported as of the Fund’s most current prospectus.5 1. performance would be lower. dollar were the primary culprits of the correction Important Performance and Expense Information AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Three-Year Five-Year 10-Year 15-Year Since Inception (12/15/93) ANNUAL EXPENSE RATIOS Gross Operating Expenses Net Operating Expenses * Not annualized -4.9 6. 2010. After posting solid net gains in 2009.3 2001 2000 1999 1998 1997 1996 1995 1994 25. Investment return and principal value of an investment will fluctuate.0 8. but behind the 8. Current month-end performance may be obtained at www. up 92. The result was a disheartening second quarter.86 11.6 5. RLP was up a solid 4. The bull soon slowed. Gross operating expenses reflect the Fund’s gross total annual operating expenses for the Service Class.S. three-.5 5. Following last year’s robust rally.6% while the Russell 2000 lost 9.5% for the year-todate period ended June 30.3 1. for the same period. losing 14.7 1.24 average annual total return since inception *Includes dividends was 12. (Please see page 12 for recent market cycle results.1%.9%.69% up and down markets. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred directly by the Fund through its investments in mutual funds.roycefunds.5 6.8 22. A ADTRAN Endo Pharmaceuticals Holdings Red Back Mining Silver Standard Resources Ivanhoe Mines PORTFOLIO SECTOR BREAKDOWN % of Net Assets Natural Resources Technology Industrial Products Industrial Services Consumer Products Financial Intermediaries Health Financial Services Consumer Services Miscellaneous Cash and Cash Equivalents 26. even in short-term periods. To some degree. Fears of a double-dip recession and a strengthening U.3 1. if it were. RLP also remained ahead of the small-cap index from the small-cap low on March 9. 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.6% for the Russell 2000.) In addition.3 19. so that shares may be worth more or less than their original cost when redeemed. some degree of give-back was understandable and these losses should be. The Fund’s ADTRAN 0.8 1.9% 1.7 10. Our long-term investment outlook leads us to weigh results GOOD IDEAS THAT WORKED Top Contributors to Performance* from these periods most heavily. Cirrus Logic 0.58 -4. relatively short-lived. the Fund held its value better than its benchmark. 12b-1 distribution and service fees.0 29. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund. before resuming their bull run early in February.5 3. are never desirable.43 Russell 2000 for the one-.3 42 | The Royce Funds 2010 Semiannual Report to Shareholders All performance information in this Report reflects past performance. other expenses and acquired fund fees and expenses. considering the Fund’s very strong performance in 2009.9% for its smallcap benchmark.9%. with an interim high for small-cap stocks reached on April 23.0% versus 80.0% 16.5 22. stock prices mostly fell in January. The Industrial Products and Industrial Services sectors posted the most significant net losses in the first half.7 13. especially Year-to-Date Through 6/30/10 because they usually include results from both Red Back Mining 0.

which were also top-10 positions at the end of June.37 23. after successful operations in Mexico. We also liked the long-term prospects for popular weight-loss company NutriSystem.48 part because of our diminished confidence in Sims Metal Management ADR -0. its stock price mostly rallied through the rest of the first half. The company also provides a low glycemic program for people with type 2 diabetes who need to lose weight. was otherwise a bright spot.8 -6.97 0.06 0.01 21.3 -11. which explores for and produces gold and silver in Mexico. Please read the prospectus for a more complete discussion of risk. *Net of dividends part of the Natural Resources sector. others flocked to a brighter source of safety.4 -11.6 -8. a fertilizer producer for the agricultural.32 the firm’s management and in part due to its NutriSystem -0. which helped both gold prices and the share prices of successful. Bottoming out in early March. RISK/RETURN COMPARISON Five-Year Period Ended 6/30/10 Average Annual Standard Return Total Return Deviation Efficiency* RLP Russell 2000 5. It was RLP’s 20th largest position at the end of June. its balance sheet and its business’s proven ability to generate cash. ROYCE LOW-PRICED STOCK FUND VS.49% 0. Red Back Mining and Alamos Gold. industrial and feed markets. MORNINGSTAR STATISTICAL MEASURES* RLP Category Best Quartile Median Breakpoint Sharpe Ratio Standard Deviation 0. money markets or the space between the mattress and box spring.5 -15.24 23. The Royce Funds 2010 Semiannual Report to Shareholders | 43 . which left investors hungry for other options in the first quarter.02 *Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period.68% some shares between February and June. though not enough to overcome the earlier decline.30 recent struggles. A deal struck in 2009 to sell the firm’s products in Wal-Mart stores failed to make sales as healthy as expected. well-run mining companies.5% or Greater Over the Last 10 Years. Although many anxious investors sought the safety of fixed income. whose products include pre-packaged foods. We sold Gammon Gold -0.30 The precious metals and mining industry.06 21.S.9 -58.2 -14. thanks in large part to the dreary mood of investors and farms scrimping on fertilizer levels.462 RLP Russell 2000 -55. diet programs. its core business and its fundamentals.24 0. led by RLP’s two top contributors.35 0.09 20. in Percentages(%) 4/5/04. one GOOD IDEAS AT THE TIME Top Detractors from Performance* of which experienced strikes while the other Year-to-Date Through 6/30/10 yielded lower-than-expected results.644 60 40 20 $30. The company over-promised and underachieved with two of its mines.5% 19.7/13/073/5/07 3/9/09 -4. DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7. We were far more disappointed in the recent performance of long-time holding Gammon Gold.8 -9. Alamos Gold has made a similar shift to production over the past few years and. RUSSELL 2000 Value of $10. Red Back effectively added production capabilities to its solid exploration business and saw positive results from mines in Ghana and Mauritania. is exploring promising opportunities in Turkey.3 $65. in Intrepid Potash -0.5 -13. as it seemed to us that it declined disproportionately to any difficulties faced by its business. we continue to have a high regard for its growing business.Performance and Portfolio Review PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio U. While we reduced our position in the first half.S. A -0. We trimmed our stake in global scrap metal recycler Sims Metal Management.9 0 Dec 93 Dec 95 Dec 97 Dec 99 Dec 01 Dec 03 Dec 05 Dec 07 Dec 09 Includes reinvestment of distributions. Investments (% of Net Assets) Fund Net Assets Turnover Rate Number of Holdings Symbol Investment Class Service Class Institutional Class R Class K Class $1. Artio Global Investors Cl.2x 1.1% $3.2 -14.12/28/04. Pricing for fertilizer has still not recovered from lows reached in 2008.029 million 14.000 Invested on 12/15/93 $80K RLP Russell 2000 *Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (21% of portfolio holdings as of 6/30/10). However.7x 74.338 million 11% 203 RLPHX RYLPX RLPI X RLPRX RLPKX for many industrial businesses. online tools and counseling. though our confidence in its stock price’s potential to bounce back remained strong. Lower share prices allowed us to build our stake in Intrepid Potash.18 *Five years ended 6/30/10 Category Median and Best Quartile Breakpoint based on 315 small-cap objective funds (oldest class only) with at least five years of history. we like its management.8/2/05. Investments (% of Net Assets) Non-U.5/5/068/12/04 4/28/05 10/12/05 7/21/06 2/22/07.

9 2002 2001 2000 1999 1998 1997 -17.6%. The first half of 2010 exhibited both a Buzz Zaino high level of correlation and volatility in terms of portfolio performance.6 5. 2010. 2010 *Includes dividends through June 30. which is not reflected in the performance shown above.7 0. However. 10-year and since inception (11/19/96) periods ended June 30.74 1. The Home Diagnostics 0. All performance and risk information reflects Investment Class results. is presented on a total return basis.0% while the Russell 2000 fell 9. for the same period. five-.9% Year-to-Date Through 6/30/10 versus a gain of 8.7% 0.) Other longer-term time spans revealed a similar relative advantage.1 4.5 0.7 0.28% second quarter reflected the growing presence Bell Microproducts 0.3 4.6 0.3 11.7 0.17 the interim small-cap high on April 23. this short-term down market underperformance did little to affect ROF’s substantial relative advantage from the market low on March 9.roycefunds.5 72.88 11.7 0. and the Fund felt its bite.7 0.3 3.9% for its benchmark. R and K Classes bear an annual distribution expense that is not borne by the Investment Class.8 17. The bull then seemed primed for another run as share prices began once more to climb to new cycle peaks only to be stymied by a more lasting correction that began near the end of April and lasted through the end of June. 0.7% for the yearto-date period ended June 30. 2010.9 20.9 32. compared to a loss of 1. Shares of ROF’s Service.7 0. although low.18 Fund also lost ground to its benchmark from PAREXEL International 0. up 12. 2010. (Please see page 12 for recent market cycle results.9% for its benchmark.22% CALENDAR YEAR TOTAL RETURNS Year ROF Year ROF 2009 2008 2007 2006 2005 2004 2003 62.7 0.3 8.11 -8. The Fund’s negative return. Concerns ranging from sovereign debt issues in Europe and slowing growth in China to stubbornly high unemployment and weak housing prices in the U. Investment return and principal value of an investment will fluctuate. Consultant. as ROF beat the Russell 2000 for the one-.6 0. The Fund’s average annual total return since inception was 11. Correlation is a different story. down 21. 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. we seldom get too excited about short-term results of any kind and found ourselves in the pleasant position of being able to use the sudden downturn to add to and revisit some portfolio favorites. so that shares may be worth more or less than their original cost when redeemed.8 TOP 10 POSITIONS % of Net Assets Haynes International Carpenter Technology Dillard’s Cl. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund.5 2. Royce Opportunity Fund was down 0.com.2% compared to 80. The dynamic. The Fund participated fully GOOD IDEAS THAT WORKED Top Contributors to Performance* during the positive first quarter. was still mildly disappointing given the very strong start to the year.7 0. Current performance may be higher or lower than performance quoted.3 4. as stock prices were sluggish-to-slipping into early February. 2010.6% for the small-cap index. all asserted (or reasserted) their grip on investors.66% 35. The Brown Shoe 0. if it were. AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Three-Year Five-Year 10-Year Since Inception (11/19/96) ANNUAL EXPENSE RATIO Operating Expenses * Not annualized -0.1% -45. Important Performance and Expense Information All performance information in this Report reflects past performance. losing Bowne & Co.7 -2.9% 22. a period in which the Fund gained 139.97 7.22 of the bear. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010. the small-cap Russell 2000. 2009 through June 30.9% versus a loss of 17. as the opportunity to differentiate oneself from the market becomes more challenging in a highly correlated environment. A Atlas Air Worldwide Holdings Timken Company (The) Loral Space & Communications Kaiser Aluminum Bottomline Technologies Park Electrochemical Ferro Corporation PORTFOLIO SECTOR BREAKDOWN % of Net Assets Technology Industrial Products Consumer Services Industrial Services Financial Intermediaries Natural Resources Consumer Products Health Financial Services Utilities Miscellaneous Cash and Cash Equivalents 28. we generally mean it at the level of opportunities that can develop for individual stocks.MICRO-CAP/OPPORTUNISTIC Micro-Cap/Opportunistic Funds generally invest in micro-caps and/or those companies considered more opportunistic.S.9% for its benchmark. performance would be lower. Royce Opportunity Fund Manager’s Discussion While we often describe volatility as a value investor’s friend.22 12. Past performance is no guarantee of future results.6 44 | The Royce Funds 2010 Semiannual Report to Shareholders . Fortunately. 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.9%. and other expenses.61 1.0 18. Current month-end performance may be obtained at www. highly welcome rally that lasted through much of 2009 was interrupted shortly after 2010 began.0 8.8 4.3 19.0% 17.

4 -13. It held the distinction of being the worstperforming stock in 2010’s first half.4 -12.S. Bell Microproducts. Brown Shoe has played an integral role in the footwear industry as both a retailer and wholesaler of footwear and accessories.18 *Five years ended 6/30/10 Category Median and Best Quartile Breakpoint based on 315 small-cap objective funds (oldest class only) with at least five years of history.19 end of March. MORNINGSTAR STATISTICAL MEASURES* ROF Category Best Quartile Median Breakpoint Sharpe Ratio Standard Deviation 0. agricultural and biotechnology products to the life sciences industry.8 -6.5 -11. Founded in 1878.S. the environment for stock picking in our favored areas of turnarounds.22 and other components.588 45 30 15 $20.8/2/05. In Century Aluminum -0. Located within the Consumer Services sector. and we are seeking to take advantage of the market’s volatility to invest in those companies that we believe will have the most to gain as things improve.12/28/04.35 0.7/13/073/5/07 3/9/09 -14.9 -69. Investments (% of Net Assets) Non-U. in Percentages(%) 4/5/04. That said.S.20 21. A sharply rising U.Performance and Portfolio Review PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/B Ratio U. Cambrex Corporation was another disappointment.22 in an all-cash transaction announced at the Bottomline Technologies -0. DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7. RISK/RETURN COMPARISON Five-Year Period Ended 6/30/10 Average Annual Standard Return Total Return Deviation Efficiency* ROF Russell 2000 1.23 value-added distributor of semiconductors Aviat Networks -0.8 -8. We built our position as its price fell. Due to the Fund’s commitment to substantial portfolio diversification and low concentration. generally speaking no individual position will have a large-scale material impact.97 0. was acquired by Avnet Goodrich Petroleum -0. we are awaiting a pick-up in their pharmaceutical end markets that should offset the recent trends in revenue declines and margin contraction. A smart move into the toning and fitness category through its Famous Footwear retailing division has been adding welcome growth and GOOD IDEAS AT THE TIME Top Detractors from Performance* inventory de-stocking appears to have run its Year-to-Date Through 6/30/10 course. either positively or negatively. Cambrex is a specialty chemical company supplying health. on the Fund’s results. producer of primary aluminum operating four smelter facilities. primarily due to a very strong first quarter in which consumers were selectively drawn back to stores and restaurants after an extended absence. fell victim to a sharp fall in metals prices. a Cambrex Corporation -0. and the uncertain state of the recovery. We are not surprised given the depth of the 2007-2009 bear market. Brown Shoe was the top contributor to first half performance. Natural Resources had the distinction of being the Fund’s worstperforming sector.980 ROF Russell 2000 -58.02 *Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period. The Royce Funds 2010 Semiannual Report to Shareholders | 45 . RUSSELL 2000 Value of $10.20 0.3 ROYCE OPPORTUNITY FUND VS.6 -15.5 -16.01 21. the stunning loss of jobs. dollar and a softening of the economic picture led to declines in several producers of industrial commodities and chemicals.97% 0.2 0 Dec 97 Dec 99 Dec 01 Dec 03 Dec 05 Dec 07 Dec 09 Includes reinvestment of distributions. Consumer Services led all of the Fund’s sectors in the first half.1x 94.715 million 24% 308 RYPNX RYOFX ROFCX ROFIX ROFRX ROFKX Skepticism has not yet been replaced with confidence in investors’ minds as macroeconomic issues have clearly been the focal point of concerns at the expense of what we see as improving company fundamentals.37 28.8 -7.33% the Technology sector.1 -9. *Net of dividends Century Aluminum. Falling in the turnaround bucket.0% $1.07 0. adding to the improved outlook. special situations and interrupted growth stories continues to be robust. Investments (% of Net Assets) Fund Net Assets Turnover Rate Number of Holdings Symbol Investment Class Service Class Consultant Class Institutional Class R Class K Class *Geometrically calculated $510 million 1. Please read the prospectus for a more complete discussion of risk.4% 0.S.5% or Greater Over the Last 10 Years.5/5/068/12/04 4/28/05 10/12/05 7/21/06 2/22/07. a U.000 Invested on 11/19/96 $60K ROF Russell 2000 $44.12 28.09 20.

4 2005 2004 2003 2002 13. Along with attractively low share prices. is presented on a total return basis. 2010. The Fund outpaced the Russell 2000 Year-to-Date Through 6/30/10 for the five-year and since inception American Italian Pasta Cl. RVP gained a very respectable 5.1% versus a gain of 80. Current performance may be higher or lower than performance quoted.6%. RVP was down 8. Still. Shares of RVP’s Consultant and R Classes bear an annual distribution expense that is higher than that of the Service Class. the Russell 2000. We liked the long-term prospects for FormFactor enough to substantially build our position between January and April. Its stock price was quite volatile in the first half.MICRO-CAP/OPPORTUNISTIC Micro-Cap/Opportunistic Funds generally invest in micro-caps and/or those companies considered more opportunistic.20% 17. the sector boasts innovative businesses with ample potential.9%. these factors made us eager to capitalize on what we thought were promising opportunities.3 Important Performance and Expense Information All performance information in this Report reflects past performance. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010. which is not reflected in the performance shown above.4 1.3 1. lagging its small-cap benchmark. The company manufactures AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Three-Year Five-Year Since Inception (6/14/01) ANNUAL EXPENSE RATIO Operating Expenses * Not annualized -3.32 inception was 11. RVP lost 3.55 1.0 4.8 15. as well as some of the most conservatively capitalized businesses in the stock market.47% CALENDAR YEAR TOTAL RETURNS Year RVP Year RVP 2009 2008 2007 2006 41. 46 | The Royce Funds 2010 Semiannual Report to Shareholders .6 4. For the year-to-date period ended June 30.2%. Allied Nevada Gold 0. A Knight Capital Group Cl. so that shares may be worth more or less than their original cost when redeemed. 2010.8 1.0% in the second quarter. Marshall & Ilsley 0. real or imagined. Past performance is no guarantee of future results.9% for the Russell GOOD IDEAS THAT WORKED Top Contributors to Performance* 2000. which was reflected in the performance of Royce Value Plus Fund.7 TOP 10 POSITIONS % of Net Assets Marshall & Ilsley SRA International Cl. RVP climbed 74.9% for the same period.9 -14. performance would be lower. the Fund lost 14. as did the fact that for us six months is very much a short-term period. 2009. Our thought was that after close to a decade-long bear market. While we were not thrilled Chip Skinner with the Fund’s results in the first half.2% 28.4 1.roycefunds.6 1. and share prices mostly fell between the interim smallcap high on April 23 and the end of June.52 11.4 5. Similarly. while the Russell 2000 fell 9. The latter part of April saw the turnaround in the market’s fortune.5% compared to a 17.com. before beginning to fall more consistently in April.0 9.4% 15. which fell 1. Investment return and principal value of an investment will fluctuate. before it continued with sufficient strength to make the first quarter a solid one for most stocks. and we reserve our most scrupulous judgment for time spans of at least a year. usually longer.9%.5 8. Royce Value Plus Fund Manager’s Discussion The first half of 2010 offered a markedly different kind of market from the heady days of 2009. 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. Current month-end performance may be obtained at www.6% decline for its benchmark. A 0. All performance and risk information reflects Service Class results. The rally that made most of 2009 so pleasant was at first derailed from January through early February.29 The Technology sector posted the most Alamos Gold 0. 12b-1 distribution and service fees. though it underperformed the Russell 2000.4% -41. A MSC Industrial Direct Cl. A Raymond James Financial International Rectifier PORTFOLIO SECTOR BREAKDOWN % of Net Assets Technology Natural Resources Financial Intermediaries Industrial Services Industrial Products Consumer Services Consumer Products Health Financial Services Miscellaneous Cash and Cash Equivalents 18. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund.27 significant net losses. 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. from the April high through the end of June.4 1. recent longer-term results were not as strong as we would prefer on either an absolute or relative basis.47% (6/14/01) periods ended June 30. which was up 8. if it were. A Littelfuse Valmont Industries Allied Nevada Gold GameStop Corporation Cl.4 11. and other expenses.9% 1.2% in the first quarter.5 1.33 RVP’s average annual total return since Fifth Third Bancorp 0.5 1. From the market low on March 9. the context of a highly volatile and challenging market for equities took some of the edge off our dissatisfaction.2 79.1 3.2 2.62 3.9 4.2 19. as nervous investors *Includes dividends seemed all too willing to shed shares at the first hint of slowdowns.88 -9.6 1.

Performance and Portfolio Review

PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio U.S. Investments (% of Net Assets) Non-U.S. Investments (% of Net Assets) Fund Net Assets Turnover Rate Number of Holdings Symbol Investment Class Service Class Consultant Class Institutional Class R Class K Class $1,269 million 17.8x 1.6x 88.5% 5.4% $2,914 million 30% 141 RVPHX RYVPX RVPCX RVPIX RVPRX RVPKX

semiconductor wafer probe cards that test logic and memory chips on the front end of the semiconductor manufacturing process. Higher expenses made its first-quarter recovery somewhat underwhelming, though we thought more recent results showed solid improvement. We also bought more shares of data storage equipment maker, Brocade Communications due to our high regard for its core business and management. Outside of Technology, we re-initiated a position in video game and entertainment software retailer GameStop Corporation as its stock price was plummeting in April. Its business struggled in 2009 and began to slip again in 2010’s second quarter because investors feared competition from another vendor and the growing popularity of downloadable games, which could hurt the firm’s sales. We, on the other hand, like its promising new products, its business model and the way the company is expanding internationally. We were a little less sanguine about recent results for Gammon Gold. The company explores for gold and silver in Mexico and has more recently been making the transition to precious metals production as well. The move has not been smooth. Two of the company’s larger mining projects encountered problems, one enduring logistical trouble that hampered results and thus disappointed investors, while another Mexican property endured labor trouble so unmanageable that the company shuttered the mine. Active in the stock, we ended the first half with a slightly larger position than we held at the end of 2009. When the prices of banking stocks were cratering in late 2008, we began to make GOOD IDEAS AT THE TIME Top Detractors from Performance* discrete purchases in commercial banks that Year-to-Date Through 6/30/10 we thought were capable of surviving the Gammon Gold -0.56% financial crisis, looking first at those small- to Form Factor -0.48 mid-sized banks, typically former Midwestern GameStop Corporation Cl. A -0.29 “super regionals,” that had little or no Comstock Resources -0.28 exposure to subprime mortgages. Our next DreamWorks Animation SKG Cl. A -0.27 criteria was that they have lower-than-average *Net of dividends involvement in commercial real estate. Finally, as the worst days of the crisis passed, we built positions in banks that were having success raising capital. The results of this work were large positions in top contributors Fifth Third Bank and Marshall & Ilsley, two stocks that helped the banking group earn a spot as the topgaining industry in the first half. Other first-half successes included American Italian Pasta, which was acquired at a very attractive premium. Recent success in mining operations (as well as rising gold prices) benefited the stock price of top-10 position Allied Nevada Gold and top-20 holding Alamos Gold.

*Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (28% of portfolio holdings as of 6/30/10).

MORNINGSTAR STATISTICAL MEASURES*
RVP Category Best Quartile Median Breakpoint

Sharpe Ratio Standard Deviation

0.15 22.17

0.01 21.35

0.09 20.18

*Five years ended 6/30/10. Category Median and Best Quartile Breakpoint based on 315 small-cap objective funds (oldest class only) with at least five years of history.

RISK/RETURN COMPARISON Five-Year Period Ended 6/30/10
Average Annual Standard Return Total Return Deviation Efficiency*

RVP Russell 2000

3.52% 0.37

22.17 21.97

0.16 0.02

*Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period. Please read the prospectus for a more complete discussion of risk.

DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7.5% or Greater in Percentages(%)
4/5/04- 12/28/04- 8/2/05- 5/5/068/12/04 4/28/05 10/12/05 7/21/06 2/22/07- 7/13/073/5/07 3/9/09

-1.1

ROYCE VALUE PLUS FUND VS. RUSSELL 2000 Value of $10,000 Invested on 6/14/01
$40K
RVP Russell 2000

-10.6 -10.7 -11.8 -14.4

-9.5 -14.5 -13.8

-6.7 -8.3

$26,865

30 20 10
$13,850
RVP Russell 2000
-58.9 -58.9

0

Dec 01

Dec 03

Dec 05

Dec 07

Dec 09

Includes reinvestment of distributions.
The Royce Funds 2010 Semiannual Report to Shareholders

| 47

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

Royce Discovery Fund
Manager’s Discussion
Royce Discovery Fund fell 2.3% for the year-to-date period ended June 30, 2010, underperforming its benchmark, the Russell Microcap index, which posted a modest gain of 0.1%, for the same period. The market struggled through the latter part of 2010’s first half, reflecting investors’ growing concerns about a host of issues, including global George Necakov debt, the viability of the U.S. economy’s recovery, unemployment, etc. To be sure, RDF was not immune to the effects of this widespread apprehension. While we were disappointed with the Fund’s negative result, we do not generally regard such short-term performance periods as very representative, as we usually encourage investors to have a long-term investment horizon of three years or more. We offer the same cautionary approach even when short-term returns are more to our liking. While the rally in 2009 seemed to do much to reignite investor confidence (to say nothing of stock prices), its pace slackened as 2010 began before speeding up again in early February. This helped most stocks to enjoy respectable results in the first quarter, a period in which RDF rose 5.3% compared to a gain of 9.9% for the Russell Microcap index. Shortly after the second quarter began, however, the rally stalled and a deeper, broader correction set in that sent share prices tumbling through the end of June. The Fund was down 7.2% in the second quarter versus a decline of 8.9% for its benchmark. From the interim small-cap high on April 23, 2010 through June 30, 2010, RDF fell 14.6% versus a loss of 18.1% for the Russell GOOD IDEAS THAT WORKED Top Contributors to Performance* Microcap index. This down market advantage, Year-to-Date Through 6/30/10 however did not help the Fund to close the Super Micro Computer 0.92% gap from the market low on March 9, 2009 TransGlobe Energy 0.85 through June 30, 2010. During that period, Metropolitan Health Networks 0.75 the Fund gained 73.3% versus 86.2% for the DDi Corporation 0.47 Russell Microcap index. (Please see page 12 HealthTronics 0.45 for recent market cycle results.) *Includes dividends Relative results over long-term periods were stronger. While the Fund underperformed its benchmark index for the one-year period, it outpaced the Russell Microcap index for the three-year, five-year and since inception (10/3/03) periods ended June 30, 2010. Effective August 9, 2010, there will be important changes to the Fund’s principal investment strategies, which were approved by the Fund’s Board of Trustees on June 10, 2010. With the changes, the Fund’s portfolio managers will evaluate the purchase and sale

AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Three-Year Five-Year Since Inception (10/3/03) ANNUAL EXPENSE RATIOS Gross Operating Expenses Net Operating Expenses
* Not annualized

-2.28% 12.63 -9.89 -1.18 2.75

3.56% 1.49

CALENDAR YEAR TOTAL RETURNS
Year RDF Year RDF

2009 2008 2007

25.9% -35.1 -7.4

2006 2005 2004

16.8% 7.6 13.4

TOP 10 POSITIONS % of Net Assets NutriSystem Continucare Corporation Caribou Coffee Sinovac Biotech Molina Healthcare Stepan Company Metropolitan Health Networks Meadowbrook Insurance Group VAALCO Energy TransGlobe Energy PORTFOLIO SECTOR BREAKDOWN % of Net Assets Technology Health Industrial Products Consumer Products Industrial Services Financial Intermediaries Natural Resources Consumer Services Miscellaneous Cash and Cash Equivalents 24.4% 18.3 17.5 9.1 7.3 5.8 4.9 3.5 4.5 4.7 1.4% 1.4 1.3 1.2 1.2 1.2 1.2 1.2 1.2 1.1

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 180 days of purchase may be subject to a 1% redemption fee payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. Gross operating expenses reflect the Fund’s gross total annual operating expenses, for the Service Class and include management fees, 12b-1 distribution and service fees, and other expenses. Net operating expenses reflect contractual fee waivers and/or reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the Service Class’s net annual operating expense ratio at or below 1.49% through April 30, 2011 and at or below 1.99% through April 30, 2020. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010.

48

| The Royce Funds 2010 Semiannual Report to Shareholders

Performance and Portfolio Review

PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio U.S. Investments (% of Net Assets) Non-U.S. Investments (% of Net Assets) Fund Net Assets Turnover Rate Number of Holdings Symbol Service Class $252 million 13.0x 1.2x 95.0% 0.0% $3 million 82% 111 RYDFX

recommendations of its proprietary model using both quantitative and qualitative portfolio analysis before investment decisions are implemented. Previously, the Fund’s investment decisions were implemented solely on the basis of the recommendations of Royce’s proprietary quantitative model. The model and the Fund’s portfolio managers will continue to use Royce’s value approach, which focuses on factors such as balance sheet quality, cash flow levels and various other measures of a company’s profitability. We believe that the integration of our portfolio managers’ analysis before implementation of the model’s investment recommendations should enhance the investment decision-making process for the Fund. Before making the change, the Board considered its impact, weighed its potential advantages and concluded that it was in the best interest of shareholders and will allow Royce to broaden the resources the Fund utilizes when making investment decisions in seeking to achieve the Fund’s investment goal of long-term growth of capital. Year-to-date through the end of June, five of the Fund’s equity sectors were negative performers, with Industrial Products and Industrial Services posting the largest net losses, followed by Technology. At the industry level, internet software and services made the largest negative impact, followed by engineering and construction companies, aerospace and defense stocks, and building systems and components companies. The disaster in the Gulf of Mexico made things generally difficult for energy services companies, which helps to explain the drop in share prices for Willbros Group. The company provides engineering, GOOD IDEAS AT THE TIME Top Detractors from Performance* procurement and construction services to the Year-to-Date Through 6/30/10 oil and gas and related industries mostly in Willbros Group -0.44% the U.S., Canada and Oman. We held shares Medical Action Industries -0.43 at the end of June, as we did in Medical Merit Medical Systems -0.37 Action Industries in spite of its recent losses. China Security & The company manufactures disposable Surveillance Technology -0.35 medical products. Innodata Isogen -0.33 On the positive side, Consumer Products *Net of dividends led by a wide margin, followed by Natural Resources and Financial Intermediaries. The Technology sector remained by far the largest sector within the Fund. Computer server specialist Super Micro Computer was the Fund’s top contributor for the semiannual period. We reduced our stake in March. TransGlobe Energy, which explores for and produces natural gas was another strong contributor to performance for the period. We reduced our stake in March and in May.

*Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (11% of portfolio holdings as of 6/30/10).

DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7.5% or Greater in Percentages(%)
4/5/04- 12/28/04- 8/2/05- 5/5/068/12/04 4/28/05 10/12/05 7/21/06 2/22/07- 7/13/073/5/07 3/9/09

-3.9 -14.4 -15.8 -7.7 -11.8 -9.5 -13.0 -13.8 -7.4 -8.3

RDF Russell 2000

-58.7 -58.9

ROYCE DISCOVERY FUND VS. RUSSELL MICROCAP Value of $10,000 Invested on 10/3/03
$25K
RDF Russell Microcap

20
$12,007

15 10
$10,757

5 0
Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09

Includes reinvestment of distributions.
The Royce Funds 2010 Semiannual Report to Shareholders

| 49

3 2.4% TOP 10 POSITIONS % of Net Assets Hochschild Mining Burckhardt Compression Holding Mayr-Melnhof Karton Pfeiffer Vacuum Technology Lamprell Jupiter Fund Management Semperit AG Holding Ashmore Group Centamin Egypt Fresnillo PORTFOLIO SECTOR BREAKDOWN % of Net Assets Industrial Products Natural Resources Consumer Products Financial Services Health Technology Financial Intermediaries Industrial Services Consumer Services Cash and Cash Equivalents 21.8 8.S. other than acquired fund fees and expenses. 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. so that shares may be worth more or less than their original cost when redeemed.1 6. 2010.32 seven months prior to the U. Royce European Smaller-Companies Fund Managers’ Discussion European equities found themselves caught at the epicenter of the market’s woes. Launched Sipef 0. While slightly disappointing from an absolute standpoint. The first half initially saw continued investor optimism about the fragile but improving global economy.7 2. Fresnillo 0. as sovereign debt concerns. From April 23.3% versus -14. other expenses and acquired fund fees and expenses.4 5. compared to a decline of 11.GLOBAL/INTERNATIONAL Global/International Funds generally focus on non-U. is presented on a total return basis.31 peak in July 2007. Investment return and principal value of an investment will fluctuate. RES lost 9. 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. Current performance may be higher or lower than performance quoted.9 8.6%) and the difficult second quarter (-6. hedge funds. diverted investor attention away from the Chuck Royce David Nadel nascent economic recovery in the U. Our commitment to applying the Royce GOOD IDEAS THAT WORKED Top Contributors to Performance* investment discipline. Royce & Associates has contractually agreed to waive its fees and/or reimburse operating expenses.99% through April 30. Past performance is no guarantee of future results.S.2% for the MSCI Europe Small Core index through June 30.92 -5. which has been honed Year-to-Date Through 6/30/10 over four decades of investing in the U.S. and include management fees. Current month-end performance may be obtained at www. if it were. Italy and Ireland. small-cap Randgold Resources 0. which is not reflected in the performance shown above.9% for the year-to-date period ended June 30. to the extent necessary to maintain the Fund’s net direct annual operating expense ratio at or below 1. That said. private equity funds and other investment companies. The defensive characteristics that the Fund exhibited were similarly showcased during the sharp downdraft from the interim smallcap market peak at the end of April. 2010.9 11.0%).4 2. Portugal. Royce European Smaller Companies Fund (RES) held up quite well on a relative basis in a very difficult first half for European smallcaps.76 CALENDAR YEAR TOTAL RETURNS Year RES Year RES 2009 2008 57. 2010.7% versus +3.7% -46. for the same period.1% for its benchmark.4 2007 1.4 2.4 2. and back to macroeconomic concerns.. Net operating expenses reflect contractual fee waives and/or reimbursements.S.4 7. RES fell 2.81 -8.com. performance would be lower. RES has not had the *Includes dividends luxury of any sustained market tailwind over its short lifespan.0 Important Performance and Expense Information All performance information in this Report reflects past performance. 50 | The Royce Funds 2010 Semiannual Report to Shareholders . We were pleased that the Fund was able to outperform both in the positive first quarter (+3.2 2.07 3. our primary interest in absolute returns leaves us disappointed with the Fund’s since-inception performance.8% 2. Shares redeemed within 180 days of purchase may be subject to a 2% redemption fee payable to the Fund.44 universe has if anything only been enhanced Q-Med 0.8 2.4 4. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010.32 by the market’s recent dislocations.85% 24. which then shifted to fears surrounding the mountains of debt that have accumulated across the globe.28% 1.8% 17.2% versus a drop of 17. based companies using our core approach to security selection.5 2. with RES losing 5. originating in Greece and spreading quickly to Spain.0% for the MSCI Europe Small Core index. Gross operating expenses reflect total gross annual operating expenses.5 7.4 2. AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Three-Year Since Inception (12/29/06) ANNUAL EXPENSE RATIO Gross Operating Expenses Net Operating Expenses * Not annualized -2.1% for the average annualized total return period since inception compared to a loss of 10.69% through April 30. 2020. 12b-1 distribution and service fees. All expense information is reported as of the Fund’s most current prospectus.roycefunds. 2011 and at or below 1.46% across the international smaller company Centamin Egypt 0. returns were more favorable. On a relative basis.

39 balance sheet and a healthy dividend yield.878 Jun 10 Includes reinvestment of distributions. The Fund’s top-two contributors each offer a case in point. the company has benefited from its cost position and the increasing price of gold. Centamin Egypt is an emerging gold producer currently operating a single mine in Egypt.8 4.4 2. H Lundbeck -0.8 1.4 1. Fresnillo.7x 2.7 6.8 2. advanced as silver prices rose due to a mixture of renewed industrial demand and the growing appreciation of silver as an inflation hedge.60% due to delivery problems in a new IT system. we *Net of dividends are more than comfortable being patient as we wait for this uniquely positioned firm to find success in a variety of important environmental and industrial measurement activities. *Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (6% of portfolio holdings as of 6/30/10).9 1.7 0.2 0.2 2.8 1.7% 10.9 1.6 4. We increased our position in the first half. The company has the attractive combination of a very high-quality asset base and low operational costs.51 initiatives that will take some time to develop. MSCI EUROPE SMALL CORE Value of $10. which could lead to additional growth beyond the Sukari mine. as well as the opportunity to pursue other mining concessions in the country.6 1. Hellenic Exchanges.43 this served to depress margins. as the positive operating dynamics of many of our holdings have the added advantage of being associated with materials that provide a hedge against the near-constant debasement of currencies that is currently taking place around the world.3x $7 million 23% 76 RISCX The two bright spots from a sector standpoint were Consumer Products and Natural Resources.000 Invested on 12/29/06 $14K RES MSCI Europe Small Core 12 10 8 6 4 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 $8.4 9. Vaisala is a Finnish technology business serving a global niche market in measurement GOOD IDEAS AT THE TIME Top Detractors from Performance* systems for a variety of environmental Year-to-Date Through 6/30/10 sciences. A -0.5 ROYCE EUROPEAN SMALLER-COMPANIES FUND VS. the operating entity for Greece’s primary national stock exchange and derivatives market. found itself in the eye of the financial tempest that defined the period.Performance and Portfolio Review PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio Fund Net Assets Turnover Rate Number of Holdings Symbol Service Class $1. We are watching closely to see what additional negative effects on business growth will stem from the crisis.0 1.5 3.57 Combined with investment in growth EVS Broadcast Equipment -0. We are quite fond of this area.E. and the resulting austerity measures hampered trading volumes. Precious metals and mining companies from the Natural Resources sector performed quite nicely in the period as underlying commodity prices—gold in particular—continued to advance.8 1. one of the world’s largest silver mining and exploration businesses with operations in Mexico.5 10. The company issued a profit warning Vaisala Cl.A.2 2.8 2. The Royce Funds 2010 Semiannual Report to Shareholders | 51 . With a strong Fred Olsen Energy -0. The stock declined as the condition of the Greek economy deteriorated. Hellenic Exchanges -0. which should allow for margins above its industry’s average for the foreseeable future. PORTFOLIO COUNTRY BREAKDOWN % of Net Assets United Kingdom Germany Switzerland France South Africa Austria Finland Belgium Peru United Arab Emirates (U.061 million 10.) Australia Netherlands Mexico Denmark Norway Egypt Jersey Turkey Hong Kong Italy Sweden Greece Ireland 15.333 $6. with both making positive contributions mostly because of their defensive and/or inflation hedge characteristics. Holding the status as the first modern gold producer in that nation.

5 2. Three of the Fund’s top-10 contributors came from this industry. which is not reflected in the performance shown above. though the Fund held up better than the narrow difference between its first-half return and its benchmark’s might lead one to suspect.7% for the same period. other than acquired fund fees and expenses. Current performance may be higher or lower than performance quoted.9%.2% 19. 2010. as RGV was up 3. was generally positive.8% 2. Shares redeemed within 180 days of purchase may be subject to a 2% redemption fee payable to the Fund. RGV outpaced Sino Biopharmaceutical 0. providing a microcosm of just how volatile the stock market has been of late. based companies using our core approach to security selection. The first quarter. 2010. then. the Fund lost 10. Gross operating expenses reflect gross total annual operating expenses for the Service Class.4 52 | The Royce Funds 2010 Semiannual Report to Shareholders . It was at this time that the Fund gave up ground to its benchmark. if it were.7% between April and June. 2011.3% TOP 10 POSITIONS % of Net Assets Santen Pharmaceutical Major Drilling Group International Mayr-Melnhof Karton Hochschild Mining Semperit AG Holding Sanderson Farms Value Partners Group Jupiter Fund Management GrafTech International Burckhardt Compression Holding PORTFOLIO SECTOR BREAKDOWN % of Net Assets Natural Resources Industrial Products Financial Services Consumer Products Health Technology Financial Intermediaries Industrial Services Consumer Services Cash and Cash Equivalents 28. Net operating expenses reflect contractual fee waivers and/or reimbursements.roycefunds. which gave a decidedly bearish feel to second-quarter results. RGV was down 6.9 2007 14. Similarly.0% from the April interim high through June 30.6% for the Red Back Mining 0.5 2. hedge funds. Current month-end performance may be obtained at www. Domestic small-cap stocks hit an interim peak on April 23. 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. private equity funds and other investment companies. Stock prices were mainly on the rise from that point until relatively late in April.3% versus a gain of 84. Important Performance and Expense Information All performance information in this Report reflects past performance.7 4.38 While the Fund debuted at an inauspicious *Includes dividends point—shortly before the domestic small-cap peak on July 13. 2010.0 4. Better down market performance was a factor in RGV’s ability to hold on to its relative advantage from the domestic market low on March 9. All expense information is reported as of the Fund’s most current prospectus.52% 27.4% versus a gain of 7.5 2. 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. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010. while its benchmark was down 15. Natural Resources was the Fund’s largest sector at the end of June.4 13.69% through April 30. compared to a 10.16 -2. so that shares may be worth more or less than their original cost when redeemed. as did four of its 10 largest detractors.49 the MSCI WORLD Small Core index for the Value Partners Group 0.4 2. Past performance is no guarantee of future results.6% for the global smallcap index. Royce Global Value Fund Managers’ Discussion Royce Global Value Fund (RGV) fell 3. AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Three-Year Since Inception (12/29/06) ANNUAL EXPENSE RATIO Gross Operating Expenses Net Operating Expenses * Not annualized -3.0 3.88 CALENDAR YEAR TOTAL RETURNS Year RGV Year RGV 2009 2008 61.4 2. three-year and since inception Sipef 0. Finally. when a more severe and lasting correction took hold. The sector’s precious metals and mining industry offered an intriguing mix of performers through the first half.02 2. the MSCI WORLD Small Core index declined 3. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses. a period in which the Fund Year-to-Date Through 6/30/10 rose 90.07% 1. 2009 through the end of GOOD IDEAS THAT WORKED Top Contributors to Performance* 2010’s first half. The recent downward trend in Whitney George David Nadel stock prices was a global phenomenon.40 (12/29/06) periods ended June 30. 2007—we have been satisfied with its performance thus far. performance would be lower. to the extent necessary to maintain the Fund’s net direct annual operating expense ratio at or below 1.53 2. 12b-1 distribution and service fees. other expenses and acquired fund fees and expenses. Investment return and principal value of an investment will fluctuate.5 2.6 2.68% global small-cap index.com.5% decline for the MSCI WORLD Small Core index.5 10.8 2. 2010.S.GLOBAL/INTERNATIONAL Global/International Funds generally focus on non-U.9% -39. is presented on a total return basis. and include management fees.1 5.43 one-year. The rally that enlivened many of the world’s stock markets in 2009 took a detour as 2010 got under way before resuming early in February.7 8.5% for the year-to-date period ended June 30. Luk Fook Holdings (International) 0.9 2. while its global small-cap benchmark.8 2.

especially since the company continues to gain share from rivals weakened by debt burdens. fixed income. Poultry U.8 0.55 led to somewhat disappointing fiscal fourthGammon Gold -0. The Carl Zeiss Meditec -0. The Royce Funds 2010 Semiannual Report to Shareholders | 53 . ROYCE GLOBAL VALUE FUND VS. We think its expertise in global asset management should be a key component for GOOD IDEAS AT THE TIME Top Detractors from Performance* long-term success. A -0. (We purchased additional shares in July. investing primarily in the public equity. The company manages equity and fixed income mutual funds.S.9 2. with the company offering an optimistic outlook.3 5.6% 14. The company over-promised and underachieved with two of its silver mines.Performance and Portfolio Review PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio Fund Net Assets Turnover Rate Number of Holdings Symbol Service Class $1. Although activity was picking up in 2010. MSCI WORLD SMALL CORE Value of $10.8 0. These developments.0 2. Global Investors with purchases in January and June.72 dragged down by weak chicken prices.S.724 12 10 8 $8.4 4. one of 2009’s stalwart portfolio performers.6 5. After re-initiating a position in November 2009.5 1. Elsewhere in the portfolio. The company.1x $51 million 33% 63 RIVFX Vancouver-based Red Back Mining has active gold mining operations in Ghana and Mauritania and thus reaped the benefits of the sharp increase in gold prices as well as from its own successful execution of both exploration and production. which showed healthy year-over-year revenue growth of 22%. gold and natural resources markets across the globe.7 0.1 3. one of which experienced strikes while the other yielded lower-thanexpected results.5 6.4 3. along with our diminished confidence in the firm’s management. the company reported first-quarter results. PORTFOLIO COUNTRY BREAKDOWN % of Net Assets United States Canada Hong Kong United Kingdom Switzerland South Africa Austria Germany Japan Belgium France Mexico China Peru United Arab Emirates (U. We had other reasons for selling our shares of Gammon Gold. which performs gold and silver exploration and production in Mexico.) The stock of Sino Biopharmaceutical had its profile raised during the first half when it received its first coverage from a global bulge-bracket broker in the form of a bullish report initiating coverage. so we sought to take Year-to-Date Through 6/30/10 advantage of its slumping share price.2 $10. we more than doubled our position in U.3 5.A. which provides specialized contract drilling services for metals miners. In late May. it was not enough to convince most investors.9 1.6 2.9 0. These declines made the stock even more attractively inexpensive to us. We continue to have a high opinion of the management and low-debt balance sheet of Major Drilling Group International.40 shares then dropped 10% in the final few days *Net of dividends of June.2 1.2 0.0 7.000 Invested on 12/29/06 $14K RGV MSCI World Small Core *Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (13% of portfolio holdings as of 6/30/10).7x 2.236 million 10.) Australia Egypt Denmark Brazil Indonesia South Korea Turkey Cayman Islands 14.9 5.E. The surge in its stock price led us to sell our position between March and May. possibly as a result of window-dressing trading exacerbated by the shares’ limited liquidity.43 quarter results reported in March 2010. Global Investors Cl. we trimmed our stake in May and June as its share price climbed. influenced our decision to part ways with the stock. which Industrias Bachoco ADR -0.79% producer Industrias Bachoco’s shares were Major Drilling Group International -0.127 6 4 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 Jun 10 Includes reinvestment of distributions. We added to our stake in February and May.3 4. suffered through reduced levels of activity from larger mining companies in the last months of 2009.

1 9.3 10.33% clouds began to gather on the horizon.55 0. held up reasonably well on a relative basis.8 10. the defensive characteristics of RIS’s investment style served it well by limiting the second-quarter decline to 7.roycefunds.3% for its international small-cap benchmark. All expense information is reported as of the Fund’s most current prospectus. Similarly. Year-to-Date Through 6/30/10 Launched on June 30.1% for the index. 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.3 8.69% through April 30. GOOD IDEAS THAT WORKED Top Contributors to Performance* correlation tends to be the order of the day. Current performance may be higher or lower than performance quoted. based companies using our core approach to security selection. rising 3. 12b-1 distribution and service fees. which is not reflected in the performance shown above. for the same period. Net operating expenses reflect contractual fee waives and/or reimbursements. AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Since Inception (6/30/08) ANNUAL EXPENSE RATIO Gross Operating Expenses Net Operating Expenses * Not annualized -4.0 1. and include management fees. Royce & Associates has contractually agreed to waive its fees and/or reimburse operating expenses.7% versus its benchmark’s gain of 5.6 0. 2010. the Fund held up better than its benchmark from the interim small-cap peak on April 23. Royce International Smaller-Companies Fund (RIS).1% for the MSCI World ex USA Small Core index. performance would be lower. the MSCI World ex USA Small Core index. Shares redeemed within 180 days of purchase may be subject to a 2% redemption fee payable to the Fund.8% versus a drop of 14. Important Performance and Expense Information All performance information in this Report reflects past performance. 2010.S.6% compared to a loss of 11. For the year-to-date period ended June 30.19% 20.3 1. the Fund struggled to keep pace.80 TOP 10 POSITIONS % of Net Assets Popular Hochschild Mining Burckhardt Compression Holding Partners Group Holding Mayr-Melnhof Karton Ashmore Group Santen Pharmaceutical Lamprell Semperit AG Holding Jupiter Fund Management PORTFOLIO SECTOR BREAKDOWN % of Net Assets Industrial Products Natural Resources Consumer Products Financial Intermediaries Financial Services Health Consumer Services Technology Industrial Services Diversified Investment Companies Cash and Cash Equivalents 14. Royce International Smaller-Companies Fund Manager’s Discussion Small-cap companies around the globe were caught in the vortex of the highly correlated downturn stemming from the European sovereign debt crisis and the potential slowdown in the world’s growth engine of the Chinese economy.5% 14. The first half.0 1.1 8. So while the strong absolute returns we seek were elusive. securities.8 6. a highly correlated market is typically not. to the extent necessary to maintain the Fund’s net annual operating expense ratio at or below 1. so that shares may be worth more or less than their original cost when redeemed. The consistent application of our disciplined investment approach across countries with varying economic models and growth rates should generally allow for a portfolio with uncorrelated returns. if it were.2 1.22 market environment over its short operating Luk Fook Holdings (International) 0.2 1. other expenses and acquired fund fees and expenses. is presented on a total return basis. the Fund nevertheless outpaced its benchmark for the one-year and sinceinception periods ended June 30. RIS fell 4. Past performance is no guarantee of future results. hedge funds.5% 1. 2011 and at or below 1.19 history. private equity funds and other investment companies. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010. However. 2020. and in that area the Fund performed admirably.1 1.1 6. other than acquired fund fees and expenses.S.33 3.com. that is what we received in Chuck Royce the first half of 2010.2 1. demonstrated that when sentiment is at an extreme. a period in which rolling bear markets ARA Asset Management 0. 2010 through the end of June.99% through April 30. however. Investment return and principal value of an investment will fluctuate.29 has had to navigate an extremely difficult Kingdee International Software Group 0. which invests primarily in non-U. 2008 as storm China Forestry Holdings 0. falling 10. As the market reversed course early in the second quarter. Building on a strong margin of balance sheet safety and an unwavering focus on high-quality businesses allowed the Fund to preserve capital during this highly challenging period.12% 1. RIS Value Partners Group 0. While volatility is generally our friend.4%.2% versus a decline of 6.3 1. Risk is always at the forefront of our minds. During the bullish first quarter. 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.3 1.0 54 | The Royce Funds 2010 Semiannual Report to Shareholders .15 consumed virtually all of the industrialized *Includes dividends world. Gross operating expenses reflect total gross annual operating expenses for the Service Class. Current month-end performance may be obtained at www.GLOBAL/INTERNATIONAL Global/International Funds generally focus on non-U.3 11.

results for which were reported in midYear-to-Date Through 6/30/10 March 2010.7 6. PORTFOLIO COUNTRY BREAKDOWN % of Net Assets Japan Canada United Kingdom Hong Kong Switzerland France South Korea China Germany South Africa Mexico Austria Brazil Australia Belgium Turkey Puerto Rico India Singapore Bermuda Finland Peru United Arab Emirates (U.6 2.000 Invested on 6/30/08 $14K RIS MSCI World ex USA Small Core 12 10 8 $10. a South Korean provider of online education services primarily for pre-university and primary school students.4 0. While the Chinese economy has hit some recent bumps as its government attempts to manage the enormous challenges of such a complex.0 0. The company disappointed shareholders with weaker growth in its important high school online sales. It was RIS’s twelfth largest position at the end of the first half.140 6 4 Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Includes reinvestment of distributions.4 1.A.29 power of this business. China continued to be an important area of focus for the Fund.6 0.22 Popular.9 1.4 1.4 0.7x 2. high-growth economy.4 1. and distinctly modest ones at that.0 1. It was a top-20 holding EVS Broadcast Equipment -0.4 7. Our belief in the long-term opportunity remains undaunted. Shares of MegaStudy. plants.3 0. an attractive valuation and excellent prospects to participate in the ongoing privatization of China’s timber industry.6 1.4 0. our long-term interest in the country remains high.6 6.8 3.142 million 12.7 3. Sung Kwang Bend -0. Only two sectors—Consumer Products and Health—managed to produce positive returns for the period.E. *Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (7% of portfolio holdings as of 6/30/10).) Italy Egypt Thailand Taiwan Denmark Cayman Islands Jersey Greece Netherlands United States Sweden Luxembourg British Virgin Islands 11.066 $8.5 0. Not surprisingly. Value Partners Group is a Hong Kong-based investment management group focusing on China and the Asia Pacific region.0 1. it has all the characteristics we find appealing in an investment.5 0.26 at the end of June.2 ROYCE INTERNATIONAL SMALLER-COMPANIES FUND VS. The Royce Funds 2010 Semiannual Report to Shareholders | 55 .3 2.55% their historical high watermarks. investors MegaStudy Company -0.9 3. China Forestry Holdings is one of the largest plantation forest operators in China.3 1.5 0.7 0.1 5. Vertically integrated in that the company owns. Financial Intermediaries detracted most from performance.2 3.5 4. harvests and then naturally regenerates its forests.0x $12 million 26% 195 RYGSX The challenging nature of the first half was clearly exhibited in the Fund’s sector results. both recovered in GOOD IDEAS AT THE TIME Top Detractors from Performance* 2009. As several of its funds approach Popular -0. After having survived a large hit to its assets under management in 2008 and having its performance fees wiped out. and we used the share price weakness to add to our position. the result of changes in government emphasis on certain test content. possessing a solid balance sheet.8 0. Its shares have mostly done well since Affiliated Managers took a 5% stake in the company towards the end of last year.4 0. as the banking and securities brokers industries fell out of favor once more with the heightened concerns about the potential stresses on asset positions due to the European crisis.6 1. was caught up in concerns over the interruption of a planned sale of a subsidiary.3 1. a commercial banking company *Net of dividends operating primarily in Puerto Rico.30 were gaining more comfort in the earnings Hellenic Exchanges -0. a solid dividend yield. also slumped.Performance and Portfolio Review PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio Fund Net Assets Turnover Rate Number of Holdings Symbol Service Class $1.4 1.1% 10. MSCI WORLD EX USA SMALL CORE Value of $10. The two top performers for the first half both came from this region.

14% 1. 2010. Between January and March. The sum of all contributions and detractions for all securities would approximate the Fund’s year-to-date performance for 2010.1 2. if it were. Current month-end performance may be obtained at www. A 0.4 -4. falling 12. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee payable to the Fund.7 2.8% 12. its impact only slightly lessened Chuck Royce by the fact that it occurred just after a stellar 2009 and during a shortterm period.0 2. Past performance is no guarantee of future results. as well as the financial services sector of the Russell 2500 index.40 -10.8% compared to losses 9. as the welcome rally of 2009 seemed to pause to catch its breath before restarting in early February. Kennedy-Wilson Holdings Cohen & Steers Ashmore Group Enstar Group VZ Holding Marsh & McLennan Interactive Brokers Group Cl.16% 5. This felt at times like a perilous enterprise.5% for the financial services sector in the Russell 2500 index.0 1.5 3.2% 2. which gained 0. From the interim small-cap high on April 23.7 1. the Russell 2000.0% for the Russell 2500 financial services companies. other than acquired fund fees and expenses. 2. Kennedy-Wilson Holdings 0. Longer GOOD IDEAS THAT WORKED Top Contributors to Performance* term.57 CALENDAR YEAR TOTAL RETURNS Year RFS Year RFS 2009 2008 2007 32.2 15. the kind in which it is not surprising for RFS to be out of sync both with its benchmark and the financial services sector of the Russell 2500 index.03 0. Gross operating expenses reflect the Fund’s gross total annual operating expenses for the Service Class. which is not reflected in the performance shown above. fiveInteractive Data 0. the Fund beat its benchmark for the Year-to-Date Through 6/30/10 five-year and since inception (12/31/03) Jones Lang LaSalle 0. finance. 2010.6 1. other expenses and acquired fund fees and expenses.AVERAGE ANNUAL TOTAL RETURNS Through 6/30/10 Jan-June 2010* One-Year Three-Year Five-Year Since Inception (12/31/03) ANNUAL EXPENSE RATIOS Gross Operating Expenses Net Operating Expenses * Not annualized Royce Financial Services Fund -9.8 2. or affiliated with. A Invesco Western Union PORTFOLIO INDUSTRY BREAKDOWN % of Net Assets Investment Management Securities Brokers Insurance Banking Information and Processing Insurance Brokers Securities Exchanges Other Financial Services Software Real Estate Specialty Finance Diversified Financial Services Other Financial Intermediaries Cash and Cash Equivalents 33. the Fund again underperformed.3% for the financial services companies in the Russell 2500 index.2 1.94 2.9 1. 12b-1 distribution and service fees. private equity funds and other investment companies. 2020.9 1. This was a disappointing result.5 0.com. relative results were basically in line with both benchmarks—the Fund was down 17.49% through April 30. Net operating expenses reflect contractual fee waivers and/or reimbursements. 2010.9% for the Russell 2000 and an impressive 11.3 12. we thought businesses that had Important Performance and Expense Information All performance information in this Report reflects past performance.30 outperformed the financial services sector of Investcorp Bank GDR 0. The year began on a somewhat bearish note.7 2006 2005 2004 24. Making first-half performance even more dispiriting was the fact that the Fund underperformed in both good times and bad. 2010 through June 30.26 the Russell 2500 index for the three-year.9 1. which was down 1.6% for its benchmark and 17.8% for the same period. 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. Current performance may be higher or lower than performance quoted. performance would be lower.1% versus gains of 8.73 Manager’s Discussion Royce Financial Services Fund (RFS) lost 9.3 9.5% versus declines of 17.9% for the Russell 2000 and 9. RFS also Erie Indemnity Cl.24 year and since-inception periods. exclusive of acquired fund fees and expenses.2 0. we were purchasing shares of many financial companies as prices were collapsing rapidly in nearly every industry closely involved in.24 In the midst of the crisis that began in *Includes dividends September 2008 and lasted into early March 2009. and include management fees. 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.roycefunds.7 2.9%. 2011 and at or below 1.35% periods ended June 30. This meant mostly positive first-quarter returns for equities. All expense information is reported as of the Fund’s most current prospectus.9 56 | The Royce Funds 2010 Semiannual Report to Shareholders .99% through April 30. underperforming its benchmark.9 1.9 1.2% for the year-to-date period ended June 30. so that shares may be worth more or less than their original cost when redeemed. is presented on a total return basis. During the distinctly bearish second quarter.1 7. Investment return and principal value of an investment will fluctuate.1 TOP 10 POSITIONS % of Net Assets AllianceBernstein Holding L. hedge funds. Still.P.1% 21.3 2. as there was no bottom in sight for many companies considering the panic-stricken nature of the selling. Royce & Associates has contractually agreed to waive fees and/or reimburse expenses. to the extent necessary to maintain the Fund’s net direct annual operating expense ratio at or below 1. RFS gained 4.1% -35.

corporate restructurings and capital structures. MORNINGSTAR STATISTICAL MEASURES* RFS Category Best Quartile Median Breakpoint Sharpe Ratio Standard Deviation 0.61 underwriting and placement of public and Invesco -0.3 -11. investing primarily in the public equity.92% capital raising services.94% 0.9 -14.8 -9. Invesco is another asset manager. we continued to see compelling value in many financial stocks. owing in part to recoveries in transactional revenues. and financial Popular -0. with a less global focus. Investments (% of Net Assets) Fund Net Assets Turnover Rate Number of Holdings Symbol Service Class $1. Of course.8 -5.42 -0. such as investment managers.5 -13.255 Dec 09 Includes reinvestment of distributions.S. DOWN MARKET PERFORMANCE COMPARISON All Down Periods of 7. Category Median and Best Quartile Breakpoint based on 33 financial services objective funds (oldest class only) with at least five years of history. such as merger and Lazard Cl.3 20 15 10 5 0 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 $11.59 private equity and debt. ROYCE FINANCIAL SERVICES FUND VS.4 -5. A -0.9 $10.3 -8.37 20.7 -4. Please read the prospectus for a more complete discussion of risk. Investors were still shying away from some industries and companies.49 21.5/5/068/12/04 4/28/05 10/12/05 7/21/06 2/22/07. What we anticipate will be a temporarily stagnant business climate for GOOD IDEAS AT THE TIME Top Detractors from Performance* capital markets hurt the share price of two Year-to-Date Through 6/30/10 holdings. U.6% $11 million 10% 98 RYFSX avoided subprime mortgage investments in any capacity stood the best chances of recovery. However. including FBR Capital Markets -0. Its shares climbed through late April but did not dip to the same degree as many peers.5 -4.910 $11. as well as offering a wide range of related services. This led us to concentrate most closely on areas we felt we knew best. We think its expertise in global asset management should be a key component for long-term success when global stock markets begin to recover.12/28/04.000 Invested on 12/31/03 $25K RFS Russell 2000 Russell 2500 Financial Services Sector *Geometrically calculated **The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (13% of portfolio holdings as of 6/30/10). As the rally in 2009 gathered steam. we were not surprised to see these industries slump in the first half.5x 1.6 -58.0% 30. fixed income. Global Investors Cl.6x 66. Global Investors manages equity and fixed income mutual funds.S. The Royce Funds 2010 Semiannual Report to Shareholders | 57 .02 20. A -0. increased anxiety about global debt. which lost its legendary CEO when Bruce Wasserstein passed away in October 2009.8/2/05.02 *Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period. overall investment risk and the state of the economy soon conspired to drive share prices down in a number of our most highly regarded companies. Given the inhospitable environment. runs a securities brokerage and an asset management business. including consulting for mergers and acquisitions. Jones Lang LaSalle provides real estate and investment management services. gold and natural resources markets across the globe. RISK/RETURN COMPARISON Five-Year Period Ended 6/30/10 Average Annual Standard Return Total Return Deviation Efficiency* RFS Russell 2000 0. FBR Capital Markets provides U.S. *Net of dividends Lazard. Investments (% of Net Assets) Non-U.5% or Greater in Percentages(%) 4/5/04.558 million 11. our own timetable goes well beyond six-month periods. RUSSELL INDICES Value of $10.57 advisory services. so we held certain positions while in other cases we sought to use slipping stock prices to our advantage by adding shares. We like both businesses.7/13/073/5/07 3/9/09 -1. so we continued to invest in what we regarded as the most attractively undervalued companies in the aforementioned areas.25 23.51 acquisition advisory. but in the latter case we have some concerns about how the company will adjust to losing an uncommonly effective leader.Performance and Portfolio Review PORTFOLIO DIAGNOSTICS Average Market Capitalization* Weighted Average P/E Ratio** Weighted Average P/B Ratio U.49 -0.901 RFS Russell 2000 -56.10 21.05 0.97 0. that we believe is a well-run business that can also thrive with a rebound for the financial markets.75 *Five years ended 6/30/10. securities brokers. securities exchanges. and restructuring.S. insurance companies and financial information and processing firms.

390 2.3% Inter Parfums a NBTY Nu Skin Enterprises Cl.424 11.133.2% a CEC Entertainment Retail Stores .938 13.1% American Eagle Outfitters a America's Car-Mart Buckle (The) a CarMax Cato Corporation (The) Cl.735 22.982.291 1.508.101 15.533 2.400 37.453.273.194.422 305.391.600 6.0.Schedules of Investments Royce Pennsylvania Mutual Fund SHARES COMMON STOCKS – 98.255 58 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.700 654.415. A Cal-Maine Foods a Hain Celestial Group Industrias Bachoco ADR J & J Snack Foods Lancaster Colony National Beverage Sanderson Farms Thai Beverage Health.c Nutraceutical International NutriSystem Home Furnishing and Appliances .8% a DreamWorks Animation SKG Cl.450 1.262 21.310 590.125.058 495.371.951.583 13.451.476.286 738.3% a American Italian Pasta Cl.469 1.220 9.040 1. Ruger & Company Thor Industries a Winnebago Industries Total (Cost $400. A Restaurants and Lodgings .741.138 21.400 41.600 398.500 29.000 508.915 11.258.394 557.781.800 451.468 6.000 54.727.810 116.900 111.186.300 6.000 31.027 7.b Volcom a Warnaco Group (The) c Weyco Group Wolverine World Wide Consumer Electronics .144 1.103 683.612 37.663.5.533) Financial Intermediaries – 8.660.400 359.400 907.500 182.600 727.842 2.200 250.815 10.093 188.930 699.700 1.000 16.400 389.666 427.500 84.432 9.334 64.0.866.5% Apparel.281.850.250 83.005 1.024 17.184.900 2.453.312 15.142 8.300 103.078 164.219.985.900 24.335 1. A International Speedway Cl.284 1.966 3.060 438.972 1.029.773.910.327.854.990. A World Wrestling Entertainment Cl.134 63. A Luk Fook Holdings (International) a Movado Group Stella International Holdings a Steven Madden a Timberland Company (The) Cl.289 30.300 465.125.400 891.2.249 399.450 2.474.801.773.100 645.5% American Woodmark c Ethan Allen Interiors a Furniture Brands International a La-Z-Boy a Mohawk Industries a Natuzzi ADR a.018.800 741.137 2.590 21.521.453.165.724.700 292.092 1. a Tuesday Morning a Urban Outfitters Total (Cost $268.0% Comerica Insurance . Beauty and Nutrition .670.040 598.880 43.192 2.559.442.851 144.612.450 $ 722.032.339 355.650.019.140 $ 11.680.241 13.862.464 540.996.063.923.400 249.300 689.347. A a True Religion Apparel a.200 2.878.975 1.496.200 1.349.161.708 23.692 12.5.1.022 13.700 587. A a.670 1.000 173.774 1.500 510.c Stanley Furniture a Universal Electronics VALUE Consumer Products (continued) Household Products/Wares .000 1.042.1% Leisure and Entertainment .042.0.373.924 65.104.899 13.455.824 6.300 592.133.001 5.875 35.8% a Dolby Laboratories Cl.431.674 16.721 22.0% Blyth Sports and Recreation .591.213.327 31.938.500 856.401) Consumer Services – 6.400 565.1.922 13.219 8.573.508.981 2.492 13.510.650 10.060 7.902 3.300 414. A.230.950 74.744 326.875 11.563 3.000 200. Shoes and Accessories .107 1.531.341.000 3.000 370.400 137.655 232.018 2.873.523.750 622.105.0.990 2.801.708 28.543 8.959 12.012.239 18.185.653 329.174 8.5% Banking .436.045.083 18.581.080.043.756 267.405 340.631.501 125.000 255.473 3.825 11.500 517.504 4.695 27.069 484.700 634.612 5.200 552.0.8% Consumer Products – 8.754.1.374.782. A Men's Wearhouse (The) a O'Reilly Automotive a Penske Automotive Group a Pier 1 Imports Regis Corporation Tiffany & Co. Bank Clothiers Le Chateau Cl.558.500 737.129 9.720 1.349 10. A a Charming Shoppes a Dress Barn (The) Family Dollar Stores a GameStop Corporation Cl. .000 64.421.910 1.000 28.096. A a DTS a Harman International Industries Food/Beverage/Tobacco .421.033 36.761 1.419.662.513 33.449 685.085 2.571.7% Callaway Golf Polaris Industries a RC2 Corporation Sturm.802 13.035.751.9% a Carter's Columbia Sportswear Daphne International Holdings a Fossil a Gildan Activewear Guess? Hengdeli Holdings a K-Swiss Cl.976.522.7% a Alleghany Corporation Allied World Assurance Company Holdings Alterra Capital Holdings a American Safety Insurance Holdings a Amerisafe SHARES VALUE 21. A a Gymboree Corporation a Jos.228.588 1.0.

June 30, 2010 (unaudited)

SHARES
Financial Intermediaries (continued) Insurance (continued) Aspen Insurance Holdings Baldwin & Lyons Cl. B Berkley (W.R.) a CNA Surety E-L Financial EMC Insurance Group Endurance Specialty Holdings a Enstar Group Erie Indemnity Cl. A Fidelity National Financial Cl. A a Greenlight Capital Re Cl. A Harleysville Group HCC Insurance Holdings a Leucadia National a Markel Corporation Meadowbrook Insurance Group Montpelier Re Holdings PartnerRe a ProAssurance Corporation Reinsurance Group of America RLI Stewart Information Services Validus Holdings Wesco Financial White Mountains Insurance Group Real Estate Investment Trusts - 0.3% c Colony Financial Securities Brokers - 2.0% a Cowen Group Cl. A Diamond Hill Investment Group DundeeWealth a FBR Capital Markets GFI Group a Interactive Brokers Group Cl. A International Assets Holding a,b Corporation Jefferies Group a Knight Capital Group Cl. A Lazard Cl. A Raymond James Financial Sanders Morris Harris Group a,b Stifel Financial Securities Exchanges - 0.5% a NASDAQ OMX Group (The) TMX Group Total (Cost $428,188,758) Financial Services – 8.1% Diversified Financial Services - 0.3% a,b CIT Group Discover Financial Services

VALUE
Financial Services (continued) Diversified Financial Services (continued) Duff & Phelps Cl. A Franco-Nevada Corporation Information and Processing - 2.7% Equifax FactSet Research Systems a Fiserv Interactive Data a,b MoneyGram International a,b Morningstar a MSCI Cl. A SEI Investments Total System Services Insurance Brokers - 0.9% Brown & Brown Gallagher (Arthur J.) & Co. Investment Management - 3.8% a Affiliated Managers Group AGF Management Cl. B AllianceBernstein Holding L.P. Artio Global Investors Cl. A CI Financial Cohen & Steers Eaton Vance Evercore Partners Cl. A Federated Investors Cl. B GAMCO Investors Cl. A JZ Capital Partners MVC Capital a Sprott Resource Value Partners Group Waddell & Reed Financial Cl. A Westwood Holdings Group

SHARES

VALUE

722,509 306,000 35,700 828,200 37,400 43,726 89,700 175,900 483,180 545,000 28,500 268,588 405,607 300,000 9,382 1,327,406 609,921 3,400 276,154 469,100 65,231 116,600 423,380 400 7,550

$

17,874,873 6,429,060 944,622 13,309,174 15,985,158 958,911 3,366,441 11,686,796 21,984,690 7,079,550 717,915 8,334,286 10,042,829 5,853,000 3,189,880 11,455,514 9,106,120 238,476 15,674,501 21,442,561 3,425,280 1,051,732 10,338,940 129,280 2,447,710 284,781,552 16,115,891 3,456,009 3,089,605 2,000,282 382,950 3,236,400 14,750,760 606,672 14,444,016 23,075,083 18,761,104 1,234,500 2,328,092 12,314,038 99,679,511 7,652,512 17,380,660 25,033,172 426,652,415

83,300 300,000

$

1,052,079 9,130,619 17,358,698 409,676 18,750,501 712,296 9,807,044 4,932,830 26,141,296 9,028,300 38,872,330 24,726,160 133,380,433

14,600 279,900 15,600 293,800 2,013,400 614,800 329,500 1,909,250 1,818,100

1,571,239 718,900

30,073,514 17,526,782 47,600,296 11,720,406 11,380,251 34,908,548 10,962,910 8,025,926 20,739,378 4,707,505 2,928,090 37,993,696 5,401,440 202,932 2,888,912 9,478,371 2,219,416 18,934,952 9,017,311 191,510,044 6,340,288 1,503,480 7,843,768 1,196,023 1,344,875 1,709,120 4,017,187 8,267,205 405,960,444

953,603 842,929 54,500 157,500 115,000 580,000 888,600 37,917 685,200 1,673,320 702,400 50,000 419,476 283,799

192,865 846,600 1,350,950 696,500 480,000 999,970 170,500 125,400 1,834,558 145,200 50,000 223,600 2,510,000 3,524,300 865,400 256,538

Special Purpose Acquisition Corporation - 0.2% a,c Harbinger Group 1,009,600 a 368,500 Westway Group Specialty Finance - 0.2% Cash America International a EZCORP Cl. A a First Cash Financial Services a,b World Acceptance Total (Cost $478,662,697) Health – 7.9% Commercial Services - 0.6% AmerisourceBergen Corporation Owens & Minor a PAREXEL International

430,400 665,800

34,900 72,500 78,400 104,860

150,000 150,000

5,079,000 2,097,000

8,500 604,000 270,000

269,875 17,141,520 5,853,600

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

The Royce Funds 2010 Semiannual Report to Shareholders | 59

Schedules of Investments
Royce Pennsylvania Mutual Fund (continued)
SHARES
Health (continued) Commercial Services (continued) a Schein (Henry) Drugs and Biotech - 1.3% a Celera Corporation a Emergent Biosolutions a Endo Pharmaceuticals Holdings † a,b Furiex Pharmaceuticals a Hi-Tech Pharmacal a,b Lannett Company a Lexicon Pharmaceuticals Pharmaceutical Product Development a Regeneron Pharmaceuticals † a,b 3SBio ADR Health Services - 3.5% a Advisory Board (The) a,c Almost Family Chemed Corporation a Covance a Cross Country Healthcare a eResearchTechnology a,b Genoptix Healthcare Services Group a HealthSouth Corporation a Hooper Holmes a ICON ADR a Lincare Holdings a MEDNAX a On Assignment a Res-Care a,c U.S. Physical Therapy a VCA Antech Medical Products and Devices - 2.5% C.R. Bard a IDEXX Laboratories a Kensey Nash a Medical Action Industries a Merit Medical Systems a,c Obagi Medical Products Patterson Companies STERIS Corporation a,b SurModics Techne Corporation Teleflex a Thoratec Corporation Young Innovations Total (Cost $342,179,875) Industrial Products – 16.3% Automotive - 0.9% a Dorman Products

VALUE
Industrial Products (continued) Automotive (continued) Gentex Corporation a,b Hertz Global Holdings a,b SORL Auto Parts a Strattec Security Superior Industries International a WABCO Holdings a,b Wonder Auto Technology Xinyi Glass Holdings Building Systems and Components - 2.0% AAON Apogee Enterprises a Armstrong World Industries a Drew Industries a NCI Building Systems c Preformed Line Products Quanex Building Products Simpson Manufacturing Construction Materials - 0.7% Ash Grove Cement a Owens Corning Industrial Components - 2.2% CLARCOR Donaldson Company a FARO Technologies a GrafTech International Graham Corporation PerkinElmer a Powell Industries a Thomas & Betts Machinery - 3.3% Briggs & Stratton Cascade Corporation a Chart Industries a Columbus McKinnon † a,b Duoyuan Global Water ADR † a,b Duoyuan Printing Franklin Electric FreightCar America Gorman-Rupp Company a,b Hollysys Automation Technologies a,b Hurco Companies Jinpan International Lincoln Electric Holdings Nordson Corporation a Rofin-Sinar Technologies Sun Hydraulics Tennant Company Wabtec Corporation

SHARES

VALUE

98,000

$

5,380,200 28,645,195 2,923,265 14,046,338 16,978,797 588,853 12,151,464 528,246 1,948,672 15,792,315 2,232,000 1,550,279 68,740,229 33,022,450 18,640,150 11,913,159 17,448,800 2,163,893 952,062 2,061,024 8,240,407 17,119,650 1,363,993 5,798,223 16,214,363 20,592,494 427,550 2,624,883 15,169,634 2,154,120 175,906,855

446,300 859,629 778,130 57,958 530,400 115,590 1,522,400 621,500 100,000 133,300

390,500 59,393 230,900 150,000 443,600 508,200 120,882 1,394,400

$

7,021,190 561,858 1,921,088 3,315,000 5,961,984 15,998,136 884,856 520,712 47,796,324 17,881,101 291,327 26,857,182 15,907,783 660,728 8,952,049 518,700 30,144,945 101,213,815

768,679 533,643 218,030 340,000 240,700 120,820 119,827 434,850 915,000 2,392,970 200,700 498,750 370,302 85,000 271,727 898,675 87,000

767,100 26,900 889,900 787,514 78,940 320,288 30,000 1,227,900

50,018 850,700

8,803,168 25,444,437 34,247,605

625,400 386,300 12,100 2,628,976 125,750 980,620 317,000 40,850

22,214,208 16,475,695 226,391 38,435,629 1,884,993 20,269,415 8,666,780 1,417,495 109,590,606 4,299,252 8,119,365 280,440 1,901,317 993,080 1,171,572 18,862,690 1,771,146 996,664 764,543 915,978 2,799,749 22,499,541 26,471,555 23,857,076 8,351,760 24,326,726 16,450,636 164,833,090

5,500 499,599 196,459 399,062 427,669 1,116,954 362,535 577,600 346,900 174,300 60,000 366,600 111,350

426,415 30,425,579 4,658,043 4,784,753 6,872,641 13,202,396 10,343,124 17,951,808 5,692,629 10,013,535 3,256,800 15,664,818 3,134,502 126,427,043 399,719,322

252,600 228,008 18,000 136,100 56,425 151,758 654,500 78,300 39,787 84,855 61,682 184,680 441,254 472,032 1,145,873 356,000 719,300 412,400

571,151

11,611,500

60 | The Royce Funds 2010 Semiannual Report to Shareholders

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

June 30, 2010 (unaudited)

SHARES
Industrial Products (continued) Metal Fabrication and Distribution - 3.0% Allegheny Technologies Carpenter Technology a Castle (A.M.) & Co. Commercial Metals Encore Wire a Foster (L.B.) Company Cl. A a,b Fushi Copperweld a Gibraltar Industries Haynes International a Horsehead Holding Corporation Insteel Industries Kennametal Olympic Steel a RBC Bearings Reliance Steel & Aluminum Schnitzer Steel Industries Cl. A Sims Metal Management ADR Steel Dynamics a Universal Stainless & Alloy Products Miscellaneous Manufacturing - 1.5% Acuity Brands AZZ Brady Corporation Cl. A Crane Company a Mettler-Toledo International Raven Industries Steelcase Cl. A Valmont Industries Paper and Packaging - 0.9% AptarGroup Greif Cl. A a Orchids Paper Products Pumps, Valves and Bearings - 1.1% Gardner Denver Graco IDEX Corporation Kaydon Corporation Robbins & Myers Specialty Chemicals and Materials - 0.6% Albemarle Corporation Balchem Corporation Cabot Corporation † a,b Gulf Resources Lubrizol Corporation (The) Olin Corporation a OM Group Park Electrochemical a Rogers Corporation Sensient Technologies

VALUE

SHARES
Industrial Products (continued) Specialty Chemicals and Materials (continued) Westlake Chemical 440,800 Other Industrial Products - 0.1% † a,b Harbin Electric MTS Systems Total (Cost $778,926,094) Industrial Services – 14.0% Advertising and Publishing - 0.3% Scholastic Corporation a ValueClick Commercial Services - 7.6% a ATC Technology Barrett Business Services Brink's Company (The) Cintas Corporation a Convergys Corporation a Copart a,b Corinthian Colleges Corporate Executive Board a CRA International Electro Rent a Exponent a Forrester Research a FTI Consulting a Gartner a Hewitt Associates Cl. A a Korn/Ferry International Landauer a LECG Corporation Manpower MAXIMUS a,b Monster Worldwide a Navigant Consulting a Rentrak Corporation Ritchie Bros. Auctioneers Robert Half International Sotheby's a Team Towers Watson & Company Cl. A a TrueBlue a Universal Technical Institute Viad Corporation Engineering and Construction - 2.1% a Baker (Michael) a Cavco Industries Comfort Systems USA a Desarrolladora Homex ADR a EMCOR Group a,b Integrated Electrical Services a Jacobs Engineering Group

VALUE

284,700 117,500 124,800 238,700 366,579 25,024 98,700 615,120 159,615 164,500 223,708 923,501 155,000 397,400 727,000 426,810 1,312,115 380,521 50,000

$

12,580,893 3,857,525 1,733,472 3,155,614 6,668,072 648,622 807,366 6,212,712 4,920,931 1,243,620 2,599,487 23,484,630 3,560,350 11,520,626 26,281,050 16,730,952 18,579,548 5,019,072 799,500 150,404,042 360,162 13,227,125 11,261,348 1,132,875 26,958,645 13,724,521 775,000 9,060,702 76,500,378 8,384,694 30,075,910 4,464,148 42,924,752 22,400,054 17,772,357 9,813,795 4,876,424 851,382 55,714,012 71,478 6,855,925 10,673,497 317,529 1,165,298 629,532 353,128 2,006,502 631,768 1,296,500

$

8,185,656 32,186,813 1,379,702 4,314,446 5,694,148 821,105,585

82,865 148,774

493,000 275,800

11,891,160 2,948,302 14,839,462 11,916,146 1,812,880 22,382,801 21,002,514 843,660 26,524,467 10,420,709 16,279,519 10,240,168 985,776 10,597,779 9,023,532 23,181,162 20,460,000 28,102,130 695,000 11,244,536 2,741,565 19,724,624 33,754,703 4,072,840 103,800 1,364,913 22,816,906 9,490,650 20,329,143 5,399,307 14,817,390 3,057,108 17,831,652 3,594,705 384,812,085 10,801,166 31,662 6,094,407 4,856,176 22,376,196 2,357,554 1,701,748

9,900 359,726 451,900 37,500 241,500 407,135 100,000 124,700

221,700 541,518 343,396

502,356 630,449 343,500 148,400 39,162

1,800 274,237 442,700 36,965 14,510 34,800 14,800 82,200 22,750 50,000

739,215 146,200 1,176,185 876,200 86,000 740,700 1,057,940 619,700 543,822 77,074 323,893 298,200 531,800 880,000 815,500 50,000 184,700 1,054,448 456,800 583,285 349,600 10,000 56,100 1,252,300 403,000 888,900 413,740 381,400 273,200 754,300 203,666

309,489 900 630,891 192,400 965,740 675,517 46,700

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

The Royce Funds 2010 Semiannual Report to Shareholders | 61

272.580 1.182.124 594. Joe Company (The) a.956 27.300 334.551 72.500 255.347 1.099.200 1.968 11.000 183.454.737 23.402.440 17.713.933.000 867.1% Energy Services .254 33.500 289.714.288 5.914.888 1.407 859.677.400 269.076.012 10.496 64.700 843.729.700 875.834.564 9.451 340.408.517 5.125.021.295 8.400 286.192.117 11.600 62 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.0% AAC Acoustic Technologies Holdings SHARES VALUE 1.525.464 4.000 313.420 36.078 3.000 189.817 768.730 7.444.143.400 147.700 267.811 44.033.034 3.875 7.4% a Ceradyne Cubic Corporation Curtiss-Wright a FLIR Systems HEICO Corporation HEICO Corporation Cl.620.865 10.600 10.367 20.545 818.000 689.167.4.461.000 408.620 754.017.454.275.321 547.536.560.400 496.303.000 419.275 97.200 254.000 428.243 1.215 23.300 792.600 1.521.Schedules of Investments Royce Pennsylvania Mutual Fund (continued) SHARES Industrial Services (continued) Engineering and Construction (continued) KBR a NVR a Quanta Services Skyline Corporation a Sterling Construction Food.690) Natural Resources – 13.0.168 9.477 417. A a Integral Systems Rockwell Collins a Teledyne Technologies Components and Systems .543 335.486.100 334.514 37.507.792.624 20.0.800 698.225.750 6.525 14.205 21.621 662.336 22.116 11.859.144 26.487.388.209.305.024 46. Tobacco and Agriculture .045 15.3% Cimarex Energy Energen Corporation † a.695 180.113.440 344.5% Aerospace and Defense .040 246.1.674 31.3.400 16.148.300 2.304.414.600 $ 8.829.1% Agnico-Eagle Mines Cliffs Natural Resources Eldorado Gold a. A a T-3 Energy Services Tidewater Trican Well Service a Unit Corporation a Willbros Group Oil and Gas .800 624.241 1.250 25.640 1.000 22.b Energy Partners † a.248.182.729.b Sino-Forest Corporation Total (Cost $497.855 2.740 5.100 12.348 19.836 71.114 23.951.400 331.300 44.400 267.367.851 704.253 38.071.501 334.952.539.905.1% Applied Industrial Technologies Houston Wire & Cable Mine Safety Appliances MSC Industrial Direct Cl.907.082 43.056 24.676.847 70.1.132 22.520.386 35.948 31.434 7.3% China Green (Holdings) a Hanfeng Evergreen a Intrepid Potash a.360 6.910.8% a Atwood Oceanics Calfrac Well Services CARBO Ceramics a CE Franklin ENSCO ADR Ensign Energy Services a Exterran Holdings a Frontier Oil Helmerich & Payne a ION Geophysical Lufkin Industries a Nabors Industries a Oil States International Pason Systems Patterson-UTI Energy a Rowan Companies RPC a SEACOR Holdings VALUE Natural Resources (continued) Energy Services (continued) ShawCor Cl.500 436.916 1.373.800 3.700 305. A Pool Corporation Transportation and Logistics .150.b Gran Tierra Energy SM Energy Precious Metals and Mining .b Zhongpin Industrial Distribution .800 338.423.826 13.811 1.702.836 2.945 1.975 21.b International Coal Group a Ivanhoe Mines Major Drilling Group International Pan American Silver Randgold Resources ADR a Red Back Mining a.2.904 8.459.525 750.505.900 623.565.142.1.675.957.346.109.768.061 6.040 84.956.663 107.457.000 569.757.142 130.6% Arkansas Best a Dynamex Forward Air a Hub Group Cl.804 5.096 31.325.100 714.300 472.100 19.000 661.423.582 252.504.561 2.424 26.197.700 937.250 212.901 156.124 69.500 2.564 816.200 539.900 25.054.277 2.150.642.726.b Gastar Exploration a. .888 53.978 1.908 489.905 6.919 14.958 2.650 209.000 445.688 13.139.140 7.961.935 12.978 406.533.671 $ 21.861.100 496.303 116.0.525. A a Kirby Corporation Landstar System a Pacer International a Patriot Transportation Holding a Universal Truckload Services UTi Worldwide Total (Cost $737.600) Technology – 14.844.602.298.b Tejon Ranch Other Natural Resources .800 1.109 2.401.391.800 199.546 294.000 183.559 2.800 631.642 5.000 509.6.b Seabridge Gold a Silver Standard Resources Real Estate .463.9% Jones Lang LaSalle a PICO Holdings a St.462 29.647 10.409 75.b Hecla Mining a.842.0% a.746.000 261.700 350.900 304.

468.966.967 9.527.625.501.400 14.740 8. The Royce Funds 2010 Semiannual Report to Shareholders | 63 .500 11.800 301.200 130.500 45.0.372 1.982 100.366 1.761.960.644 455.784.500 268.215.895 104.321 5.209 3.762 21.476.2.382.274.464 6.748.720.408 91.360.842.520 21.713.550 15.1% Black Box a ManTech International Cl. 0.505.660.925 14.500 1.3% ADTRAN Atlantic Tele-Network Citic 1616 Holdings a Comtech Telecommunications a Digi International a Harmonic a NETGEAR a Premiere Global Services a Tekelec Total (Cost $721.780 17.775.702) TOTAL COMMON STOCKS (Cost $4.080 6.5% a Anixter International a Arrow Electronics a.122.240 2.170.200 27.000 801.800 119.488.200 717.841.June 30.620 1.033.601 427.719 22.414 10.855.715 2.com IT Services .000 320.873 17.141.625 $ 7.976 1.3.396 11.214.3% EarthLink a Support.022.700 4.200 440.200 613.600 200.335 2.470.800 1.018.0.677.023.151.912 731.526 478.238.976.830 23.600 248.461.466 150.752.133.048.744 1.100 311.000) d SHARES VALUE 595.738.000 317.806.256 3.040 127. A a.391 798.119.086 2.000 349.000 1. maturity value $75.b Logitech International a Nam Tai Electronics a NCR Corporation a Newport Corporation a Plexus Corporation a.464.141.063.S.151.121 16.000 29.421.778 15.048.000 615.629.504 2.304 388.100 393.209.202.400 171.780 17.000 263.940 3.866.b Cogo Group a ScanSource a Tech Data Internet Software and Services .862.147) REPURCHASE AGREEMENT – 1.400 242. A Syntel a.000 14.441 1.502 747.4% a Cabot Microelectronics a Cirrus Logic Cognex Corporation a Coherent a Cymer a Diodes a Exar Corporation a Fairchild Semiconductor International a International Rectifier a IXYS Corporation a MEMC Electronic Materials Micrel a MKS Instruments a OmniVision Technologies VALUE Technology (continued) Semiconductors and Equipment (continued) a Supertex a TTM Technologies Varian Semiconductor Equipment a Associates a Virage Logic Software .268 6.005.045 462.440 1.470 8.000 71.819 5.989) Miscellaneous – 1.400 689.125% due 6/30/11.000 731.000 24.567 171.187 27.192.475 1.325.376 9.700 337.525 1.806.880.000 12.125 8.039 15.000 928.b Yucheng Technologies Semiconductors and Equipment .500 145.159.603 75.100 100.972.629 15.332.1.951.5% State Street Bank & Trust Company.811 19.475.383 24.530 622.236.744 7.500 1.314 209.223 14.000 300.850.956 7.294 13.300 827.589.515 49.100 645.c Rimage Corporation a.745. valued at $77.156.c Pervasive Software Telecommunications .448 28.950.808) Utilities – 0.260.104. 1.420 66.338 19.005% dated 6/30/10.381. due 7/1/10.381 491.000 2.264 7. A a ANSYS Blackbaud a.223 3.300 794.848 12.282.408 717.440 2.356.700 824. Government Agencies.8% Total (Cost $94.700 301.249.000 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.739.131 31.000 200.927 62.010 (collateralized by obligations of various U.450 266.0% UGI Corporation Total (Cost $714.158 900.991.b Energy Conversion Devices a Intermec a Lexmark International Cl.000 1.900 888.926.2.327 334.865 12.450) (Cost $75.598.493.000 607.000 401.000 2.750 23.265.013. A Distribution . 2010 (unaudited) SHARES Technology (continued) Components and Systems (continued) AVX Corporation a Benchmark Electronics a Celestica Diebold a Dionex Corporation a.5% a ACI Worldwide a Actuate Corporation American Software Cl.397 616.582.610 1.300 $ 8.082.977.782.932.768 2.291 335.000 651.b Stratasys c Technitrol a Teradata Corporation a Western Digital a Zebra Technologies Cl.500 53.151.211 1. A Sapient Corporation a SRA International Cl.505 501.835 655.976 1.193.190.b Blackboard Fair Isaac a Manhattan Associates National Instruments a.700 473.411 273.000 1.517.400 516.

150 3.365 6.303.8% Asian Citrus Holdings Binggrae Company Sipef Societe Internationale de Plantations d'Heveas Health.700.535 5.0.700 2.683) Financial Intermediaries – 3.4% a Nutraceutical International Home Furnishing and Appliances .045.776 (58.820 14.970.446 3.599 4.380.779.632. A.024 3.607.579 33.321.516.2% (Cost $4.699.567 2.Schedules of Investments Royce Pennsylvania Mutual Fund (continued) VALUE COLLATERAL RECEIVED FOR SECURITIES LOANED – 0.209. .426 4.500 379.275 243.081 1.610.2.296 11.8% a.000 108.000 4.1.721 161.853 20.c CryptoLogic GS Home Shopping a.669 4.388.954 29.446 34.282) Consumer Services – 3. A a Jos.819.9% Money Market Funds Federated Government Obligations Fund (7 day yield-0.632.0.902.0% COMMON STOCKS – 92.708 6.043.100 129.789.2% a Multimedia Games Online Commerce .b Lumber Liquidators Holdings Sports and Recreation .454.6% Banking .3% Direct Marketing .9% Buckle (The) Cato Corporation (The) Cl.831.933 92. Bank Clothiers Lewis Group Total (Cost $27.214 1.0409%) (Cost $44.b Volcom Food/Beverage/Tobacco .465 5.250 118.925.300 75.500 150.1% Consumer Products – 8.690 370.3% a Arctic Cat Piscines Desjoyaux a RC2 Corporation Other Consumer Products .840 $ 8.000 8.376.146 5.000 198.4% Manutan International Leisure and Entertainment .720 420.0% a Bancorp (The) 64 | The Royce Funds 2010 Semiannual Report to Shareholders Royce Micro-Cap Fund SHARES VALUE $ 44.796.228.212 87.465) TOTAL INVESTMENTS – 101.383 4.190.884 2.0.377 125.096.464.772 ) $ 5.693 3.107 4.327 8.3.637.932.409.388.885 8.4% CSS Industries Shamir Optical Industry Total (Cost $84.1.980 5.0.214.068 532.114. Beauty and Nutrition .037.030 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.482 5.1% c LaCrosse Footwear Luk Fook Holdings (International) a True Religion Apparel Van De Velde a.2)% NET ASSETS – 100.550 1.887.1.600 530.612) LIABILITIES LESS CASH AND OTHER ASSETS – (1.592 265.b Vitacost.665.575 60.018 751.356.0.828.273 4. Shoes and Accessories .0.6% Apparel.400 4.092.321.016 389.806 8.690.417.744.700 221.410.082 614.000 373.748 140.6% AS Creation Tapeten a.971 11.501.b.868.com Retail Stores .613 362.771.748 86.481 2.443.

000 5.915.004.658 2.0.390 1.2% Investment Management .070.300 1.457.108.900 Other Financial Services .639 239.993 1.220 4.601 9.503.000 2.072 44.b Duoyuan Printing FreightCar America Jinpan International a Kadant a.634 4.253.June 30.209.174.270 5.052.740 2.171 403.077 88.477 324.3% American Physicians Service Group a American Safety Insurance Holdings Argo Group International Holdings a Navigators Group United Fire & Casualty Securities Brokers .779 221.982.840 $ 2.387.213 5.1.700 166.040.453 4.3% Hellenic Exchanges Total (Cost $39.983 983.0.348.815.457.508.540 5.647.886.b SenoRx a.630.694 237.423 Total (Cost $46.226 231.1.334.b ArthroCare Corporation a.551.000 107.000 1.0% a FBR Capital Markets GMP Capital Sanders Morris Harris Group Securities Exchanges .952.700 2.469.b Fuel Systems Solutions † a.8% a.950 3.000 569.814 333.000 11.048 1.) Company Cl.935.6% a Anika Therapeutics Bukwang Pharmaceutical a CombiMatrix Corporation a Dyax Corporation a Lexicon Pharmaceuticals a Maxygen a Orchid Cellmark a Simcere Pharmaceutical Group ADR a Sinovac Biotech a 3SBio ADR Vetoquinol a.313.171.932.821 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.289 5.190 5.0.990 9.b Cerus Corporation a Cynosure Cl.428 4.511 134.0% a Kennedy-Wilson Holdings 1.000 134.524 3.754 1.379.000 501.684.700 447.054 298.815 10.088 38.674 190.092 2.600 8.430.M.2% c Graham Corporation Voltamp Transformers Machinery .989 41.8% CapMan Cl.162.591 215.424 4.b YM Biosciences 253.352.120.555 2.000 5.730 5.885 592.503.000 300.169.113.190 5.6% † a.2.743.900 279.193.120 4.073.405 53. A Westwood Holdings Group VALUE Health (continued) Health Services .769 491.674 443.760 6.329.000 14.641.3% a BioClinica a CorVel Corporation † EPS Company a Genoptix a U.462.897 $ 3.239.1.346 2. A † a Fushi Copperweld a Horsehead Holding Corporation Olympic Steel a RBC Bearings 175.400 149.550.640.800 1.732 124. a Foster (L.655 30.881 13.785.746.291 7.767 1.960 3. Physical Therapy Medical Products and Devices .121.128.546 48.871 7.2% a Castle (A.453 62.000 1.b Solta Medical STRATEC Biomedical Systems a.664.S.802 4.c PDI Drugs and Biotech .219 21.5.987.636.c Key Technology Metal Fabrication and Distribution .194 Industrial Products – 14.745.172 10. 2010 (unaudited) Royce Micro-Cap Fund SHARES Financial Intermediaries (continued) Banking (continued) a BCB Holdings Pacific Continental Insurance .287 3.426 379.630 2.000 103.134.300 3.b SurModics a.273.605 427.992 1.322.090 6.202.182.355 9.472 1.298 2.093.251 444.002. The Royce Funds 2010 Semiannual Report to Shareholders | 65 .749.748.837.684 3.710 4.700 862.b SORL Auto Parts Building Systems and Components .276 1. A a Exactech a Merit Medical Systems a Neogen Corporation a.842 8.193.400 254.428.000 336.947 1.531 547.8% a.706 6.826 671.000 243.913.900 100.374 2.326 1.105.459 25.841) SHARES VALUE 2.4% a Harbinger Group 634.314) Financial Services – 4.000 126.267 1.760.000 228.441.277 3.027.028.B.702.814.355 2.109 336.9% Burckhardt Compression Holding † a Duoyuan Global Water ADR † a.5% Commercial Services .500 308.461.531.273.177 5.S.024.936 42.300 327.536 10.015.063 3.280 6.826.0% AAON a Drew Industries LSI Industries WaterFurnace Renewable Energy Industrial Components .3.b Syneron Medical Young Innovations Total (Cost $143.048 439.627 3.726.333.337.910 Special Purpose Acquisition Corporation . B Deutsche Beteiligungs b Endeavour Financial Gluskin Sheff + Associates a Sandstorm Resources a Sprott Resource U.128 7.039.495.396.046.450.446 5.800 780.828 6.920.926.2.) & Co.209.605 75.136.000 99.100 971.409.796 1.1.000 352.790 2.212 6.2.254 6.1% Automotive .3.971.378 490.322 512.908 3.109 4.318.132 4.373 11.384 2.4.404 921.376.166 38.920 4.860 356.132.336 7.108.560 3.0. Global Investors Cl.046.b.254.266.000 360.428.360 6.000 4.798) Health – 12.

622 6.987 30.552 1.474 2.616 45.778.667 150.000 376.575.100 $ 6.982.787 1.631 7.568 189.603.000 2.486 2.300 552. A a Xyratex SHARES VALUE $ 1.300 7.092.404.570.2% a Cavco Industries a Layne Christensen a Sterling Construction Food.093 7.911 8.600 219.465.718 2.907 1.228 3.509 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.350.b Dawson Geophysical Gulf Island Fabrication Lamprell a OYO Geospace a Pioneer Drilling a T-3 Energy Services a Tesco Corporation a.594.532 7.252 10.509.989 8.919.900 847.243.0.545.500 458.777.479 3.721.901.1.720.0.992 2.1% a.546.800 1.850 2.449 9.000 1.202 1.643 478.120 9.993.624 101.330 7.675 17.381.192.200 1.100 190.661.057.200 243.920 3.083.816 1.b Victoria Gold a Western Copper Other Natural Resources .483 3.012.968.733 3.107 1.471.062 10.480 3.080) Technology – 12.969 4.511.114 5.1.822.496.033 2.859 11.c TGC Industries Total Energy Services a Union Drilling a World Energy Solutions Oil and Gas .000 1.281.072 4.959.183 3.574 366.007.5% Pfeiffer Vacuum Technology Specialty Chemicals and Materials .008 2.819 138.242 11.279 3.959.7% Ducommun a LaBarge Components and Systems .014.533 2.2.081.237.215.027.3% Aerospace and Defense .078 179.527 2.2.7% American Vanguard a Phoscan Chemical Victrex Total (Cost $148.209 72.700 68.454 4.0.166.761.488 8.c GP Strategies a.2% Saraiva SA Livreiros Editores Commercial Services .031.597.000 590.254.128.038 1.400 239.772.066.623 238. Tobacco and Agriculture .131.400 651.000 244.b Gran Tierra Energy a VAALCO Energy a.620 3.731 5.800 1.6.300 11.1.2% a ATC Technology Begbies Traynor a CRA International Electro Rent a Exponent a Forrester Research a.0.900 697.484 3.700 282.041.669 3.274 1. .424 4.8% † Canadian Energy Services & Technology 66 | The Royce Funds 2010 Semiannual Report to Shareholders VALUE Natural Resources (continued) Energy Services (continued) a.344.700 5.c Heritage-Crystal Clean Engineering and Construction .343.158.286 268.241 44.800 349.715.000 276.798.3% Houston Wire & Cable Printing .700 749.600 327.700 3.503.089 175.109.110.129.409 3.990.351 2.600 2.513.0.800 1.376.9.516.975.008.900 1.0% Semperit AG Holding Synalloy Corporation Pumps.874 6.756.154.674 619.862 8.1.324 23.648.889 10.5% Alamos Gold a Allied Nevada Gold a Bear Creek Mining Eldorado Gold a.000 4.459.264 1.139 11.722.031 428.200 277.000 2.300 512.7% Energy Services .101 12.832 4.000 206.952.2% Courier Corporation Domino Printing Sciences Ennis Transportation and Logistics .760 1.839.474 5.800 311.879.700 1.195.118.069 1.b Endeavour Silver a.013.090.064 4.0.971 114.384.500 546.283 261.483 9.409 119.305.0.391 6.312 324.401.600 Miscellaneous Manufacturing .c Uranium Resources a US Gold a.434.6% a SMART Modular Technologies (WWH) a Super Micro Computer Vaisala Cl.008) Natural Resources – 17.760 4.078.000 430.196.Schedules of Investments Royce Micro-Cap Fund (continued) SHARES Industrial Products (continued) Metal Fabrication and Distribution (continued) a Samuel Manu-Tech 367.974 2.551.487.303.8% † a Baltic Trading Euroseas a Marten Transport a Patriot Transportation Holding Total (Cost $125.004 12.949.b.2% a BioExx Specialty Proteins Industrial Distribution .762.646.701 3.752. Valves and Bearings .886 332.168 263.3% a Magma Energy Total (Cost $141.b Vantage Drilling Precious Metals and Mining .200 294.306 7.733 365.426.009.b Entree Gold a Fronteer Gold a Gammon Gold a Great Basin Gold a Keegan Resources a Lumina Copper a Quaterra Resources a Red Back Mining Silvercorp Metals a.608 78.381.600 700.859.005 570.404 4.085.670.695.707 2.872.691 1.361.039 5.1% Advertising and Publishing .389.918.600.906 11.818.864 916.324.850 12.861) Industrial Services – 11.4.344 3.650.197.330.000 1.391.239 7.400 300.

5% † a VASCO Data Security International IT Services .300 518.906.200 3.663 606.739 32.822 5.125% due 6/30/11.565.729 5.024.b Sigma Designs a Supertex Software .012.415 2.595.944.663 324.923 $ 7.726 291.820.373.988 42.961.362 263.772.221.0.914.290 4.820.S.764.322 5.309 5.012 (collateralized by obligations of various U.033 9.063 ) $ 1.578.170 463.319 469.516.782 131.532 717.4% a Fundtech a Phoenix Technologies a PROS Holdings a Smith Micro Software Telecommunications .3.800 657.786.939.037.319 50.222.105.308.272 7.552) Miscellaneous – 4.962 14.200 479.175 211.740. maturity value $84. 0.600 448.734.1.700 1.786.6% a Anaren Atlantic Tele-Network a Digi International a KVH Industries Total (Cost $116.0.786.142. The Royce Funds 2010 Semiannual Report to Shareholders | 67 .440 6.786.848 7. due 7/1/10.633 3.095.402 27.0% VALUE 2.980 568.7% Total (Cost $53.843.294.081. 2010 (unaudited) SHARES Technology (continued) Distribution .4% (Cost $1.252.069.506 $ 25.777.800 (26.319) LIABILITIES LESS CASH AND OTHER ASSETS – (2. valued at $86.198 3.460.4% Money Market Funds Federated Government Obligations Fund (7 day yield-0.266 4.950) (Cost $84.9% a Advanced Energy Industries a ATMI a CEVA a GSI Technology Inficon Holding a Rudolph Technologies a.874. Government Agencies.676) TOTAL COMMON STOCKS (Cost $927.7% Diploma Internet Software and Services .June 30.000) d VALUE COLLATERAL RECEIVED FOR SECURITIES LOANED – 2.102.578.231 3.502 84.467 4.043.000 804.288.224) TOTAL INVESTMENTS – 102.268 10. 1.000 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.555 985.095) REPURCHASE AGREEMENT – 7.100 7.024.108.014.9% State Street Bank & Trust Company.224 1.005% dated 6/30/10.050 428.2.237.323 4.0.9% iGATE Corporation Neurones Semiconductors and Equipment .4)% NET ASSETS – 100.903 4.800 557.0409%) (Cost $25.666 426.

294 741.306 291.389.686 2.815 50.519 30.762.6% Consumer Products – 12.531.0% a.480.700 83.5% a Endo Pharmaceuticals Holdings Perrigo Company VALUE Health (continued) Medical Products and Devices .635 1.387.157 2.343 275.449 101.296 48.8% a IDEXX Laboratories Total (Cost $104.b Corinthian Colleges a Gartner Ritchie Bros.1.c Fossil Polo Ralph Lauren Cl.593.931.100 83.1.299.1% Westlake Chemical Total (Cost $770.625 633.550 278.387 952.603.522 118.909.358.859.511.800.189.1.381 377.5.1.472.3.233.496 550.1.192 2.389 3.250 1.973.000 62.213 83.4% Ensign Energy Services 3.134.750) Financial Intermediaries – 7.134. B Partners Group Holding Total (Cost $174.000 3.360.385.716) Natural Resources – 14.499. Auctioneers Sotheby's Towers Watson & Company Cl.419.714 39.136 38. Beauty and Nutrition .497 1.155.100 3.160 329.5. Valves and Bearings .613 52.193.237 3.213.574 1.996.024 1.536 53.400 3.112.129.061.888 81.667.401.200 3.757 107.500 2.295 98.039.6% c Nu Skin Enterprises Cl.572.1% a GrafTech International PerkinElmer Machinery .756 58.841.115.536.0% Buckle (The) Total (Cost $45. A a.164.799.3% Knight Capital Group Cl.512.032.813.971.960.3% c Lincoln Electric Holdings Wabtec Corporation c Woodward Governor Metal Fabrication and Distribution .1.837 53. A Sims Metal Management ADR Miscellaneous Manufacturing .944 128.2% Apparel.204. A Industrial Distribution .805 87.500 4.331.075 71.500 $ 93.6.788.537.3% Insurance .017.5% Information and Processing .424.850 274.187 27.Schedules of Investments Royce Premier Fund SHARES COMMON STOCKS – 88.824 98.238.257 856.300 1.559 53.607.499) SHARES VALUE 1.648.840.395.714.6.725 64.232 68 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.282.045.920) Health – 5.163.307.6% Building Systems and Components .957.658.6% c Simpson Manufacturing Industrial Components .425.1% Gardner Denver Specialty Chemicals and Materials .038 4.2% a Kirby Corporation Landstar System UTi Worldwide Total (Cost $424.564 104.372.3.129 107.756 61.988.944.330 52.873 1.690 68.837 1.040 183.055.598.0% Retail Stores .001.595 48. A Sports and Recreation .8% a Alleghany Corporation a ProAssurance Corporation Securities Brokers .600 3.500 347.9% c Thor Industries Total (Cost $533.310.000 83.900.b Stifel Financial Securities Exchanges .449.2.3.904 130.600 68. A Pool Corporation Transportation and Logistics .072 181.1% c Cal-Maine Foods c Sanderson Farms Health. A Food/Beverage/Tobacco .2.996) Consumer Services – 1.2% TMX Group Total (Cost $313.600 316.566 194.900 1.475.144.200 1.759.408.279 $ 39.367.931.755.291 39.281. Shoes and Accessories .173.b Morningstar Investment Management . A † a.5% a Affiliated Managers Group Federated Investors Cl.500 3.770 82.277 352.951.008 4.148.500 2.707 33.465 965.6% Columbia Sportswear a.563.716.445.1.2.526) Financial Services – 3.580.174.147 22.1.488.068 120.601 80.c Timberland Company (The) Cl.4% Kennametal Reliance Steel & Aluminum c Schnitzer Steel Industries Cl.943.876 1.2.800 2.396.1.100 3.8% a Copart a.194 28.835 160.015.273.977.206 500.3% Drugs and Biotech .372.399 Industrial Products – 18.791 56.886 5.277.950.832 48.5.034) Industrial Services – 10.6% MSC Industrial Direct Cl.6% Commercial Services .753.335 112.688 56.491.633.663.407 7.790 1.011 1.190 110.048.0% Rational Pumps.454 92.810 116.284 1.1.539 45.103. .054.2.762.400 1.2% Energy Services .172.269.222 49.020 a 4.966 2.545.242.096.

000) COLLATERAL RECEIVED FOR SECURITIES LOANED – 0.399.c Silver Standard Resources Real Estate .756.956 2.975 (20.706.169.555 74.2% ADTRAN a Comtech Telecommunications Total (Cost $690.609.453.600 2.653.354 83.957.3. Joe Company (The) Total (Cost $611.135 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.c Unit Corporation Precious Metals and Mining .739.210 1.500 35.4.S.717 2.779.c Dionex Corporation a Zebra Technologies Cl.0% VALUE 3.477.905 179.683.070 43.698) d VALUE REPURCHASE AGREEMENT – 11.4% Fair Isaac National Instruments Telecommunications .116.2. valued at $606.847 51.900 4.2.756.151.873) Miscellaneous – 2.996.544) TOTAL COMMON STOCKS (Cost $3.731 34.108 60.4% Money Market Funds Federated Government Obligations Fund (7 day yield-0.072.590. maturity value $591.5% a Benchmark Electronics a.b St.191 2.234.841.677 ) $ 5.450.922.354.c Cabot Microelectronics c Cognex Corporation a.120.c MKS Instruments Varian Semiconductor Equipment a Associates Software .990 106.568 87.153.910 2.8% Components and Systems .630.519) LIABILITIES LESS CASH AND OTHER ASSETS – (0.449.293.500 1.208.4% (Cost $4.2% Pan American Silver a.856.125% due 7/12/10-2/28/17.205 73.0409%) (Cost $17.552.2.014.243 118.187.832. 0.c Seabridge Gold a.240.851.941.948 1.748.978.521 43.6% Jones Lang LaSalle a.005% dated 6/30/10.939 39.001.840) Technology – 13.630.082 $ 591.039 329.801 2.000 100.136.000 4. A IT Services .8% Jack Henry & Associates Semiconductors and Equipment .450 17.850 736.082 (collateralized by obligations of various U.504. 2010 (unaudited) SHARES Natural Resources (continued) Energy Services (continued) Pason Systems Trican Well Service a.4% State Street Bank & Trust Company.016 76.363 73.788.890.9% a.200.821) TOTAL INVESTMENTS – 100.627.841.089 75.945.516.948.June 30.279 1.665 55.606.503 717. The Royce Funds 2010 Semiannual Report to Shareholders | 69 .474 $ 40. Government Agencies. 0.b.250 79.5.598.920.539.500 6.300.742 137.772 114.813.648 4.808.441) (Cost $591.945.534.1% Total (Cost $120.100 2.4)% NET ASSETS – 100.542.778.399 119.000 1.349.756.722 269.932.677.640 2.987.143.700 2.116.244 2.789. due 7/1/10.75%-4.856 123.872 255.0.029 1.821 5.

328.049.808.650 481.b Gildan Activewear a K-Swiss Cl.430 23.951.259 75.1% a.0.030 19.425 35.2% Leisure and Entertainment .405 22.2% Duff & Phelps Cl. B Sprott a.2.978 409.692.597.080.357.S.4.0.500 1.274.000 1.000 1.344 101.461.985 470.030.500 521.363 2.339 9.0.077.047) Consumer Services – 3.000 1.399 9.1% Wilmington Trust Insurance .373 968.099.517 24.720 2.199.100 661.369.086 3.3.547.Schedules of Investments Royce Low-Priced Stock Fund SHARES COMMON STOCKS – 93.845.744 9.916 12.355 13.918.516.964 801.710 3.891.392.325.285.672.417.700 5.044.340.842.0% Buckle (The) Cato Corporation (The) Cl.800.305.100 2.966.390) Financial Services – 5.5% a Helen of Troy Sports and Recreation .300 790.000 225.414 106.066 600.100 70 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.9% Apparel.2% Nu Skin Enterprises Cl.949 1.0.b Cypress Bioscience a Emergent Biosolutions a Endo Pharmaceuticals Holdings a.996 1.583 17.228 10.747 1.682.024.924.118 30.0.0.722 216.709 4.690 2.205 4.200 4.567. A Montpelier Re Holdings Validus Holdings VALUE Financial Intermediaries (continued) Securities Brokers .816 559.879 2.763.275.608 2.200 2.6% a.768.840.444.447) Health – 5.000 23.995 2. Beauty and Nutrition .b Lexicon Pharmaceuticals a Maxygen Sino Biopharmaceutical † a.964.806 5.361 30.222 16.575 597.065.309.749.7% Consumer Products – 6. Global Investors Cl.701.000 424.319 80.969 51.b Eurand a.b Sprott Resource U.302 20.330.032 9.7% MarketAxess Holdings TMX Group Other Financial Intermediaries .0% a.129.324 8.454.8% Jefferies Group a Knight Capital Group Cl. A NutriSystem Home Furnishing and Appliances .681.960 2.2.134. A a Charming Shoppes Lewis Group Men's Wearhouse (The) a Pacific Sunwear of California a Tuesday Morning Williams-Sonoma Total (Cost $86.680.812 572.536 14.705 9.220 6.003 2.689 17. A a Timberland Company (The) Cl.339.700.668 5.505.9% Callaway Golf a RC2 Corporation a Winnebago Industries Total (Cost $195.675 888.666.134.3.0.993 12.b Thomas Weisel Partners Group a TradeStation Group Securities Exchanges .650.002 135.500 1.700 852.516 232.5% Brown & Brown Investment Management .039 98.062 1.994 700.132.2% a DreamWorks Animation SKG Cl.650 1.776.520.521.654.9% KKR Financial Holdings Total (Cost $180.500 1.b Sinovac Biotech a ViroPharma Health Services .787 18.843.970.100.900 2.241 490.0.855 11. A Food/Beverage/Tobacco .4% a Fossil a.840.350 2.200 14.000 2.543.816.155.200 939.688.155 15.337.1.1% † Artio Global Investors Cl.852 100.173.423.760.4% Diversified Financial Services .947.132. B Deutsche Beteiligungs † b Endeavour Financial Federated Investors Cl.000 1.800 58.829 17.465.500 13.899 8.368 24.672 12.782 7.641.288 4.474 24.960 27.321 13.751 19.701.000 7.000 1.826.600 $ 7.087.527 879.b Kennedy-Wilson Holdings Total (Cost $213.140 4.400 850. A a.006. A Ashmore Group Brait CapMan Cl.036.178) Financial Intermediaries – 6. A Insurance Brokers .5% a Myriad Genetics OdontoPrev Drugs and Biotech .680.1.120.087.619 429.780.0% Argo Group International Holdings Aspen Insurance Holdings a CNA Surety a Greenlight Capital Re Cl.328. A Value Partners Group Other Financial Services .939 29.000 1.929.051.282.758.897 703.153.594.568.800 573.286 43.0.000 7.751 8.944 4.094.382 $ 29.3. .400 2.276 704.c New Frontier Media Retail Stores .953 4.428 1.440 179.228.495 4. Shoes and Accessories .5% Banking .535 131.999 10.545 348.056 40.000 10.041.918.0.899.273.009.027.551.718 12.762.720 18.393 2.477.648 9.131.0.500 593.065.950.6% Commercial Services .629 711.c Cross Country Healthcare SHARES VALUE 844.171.700 14.070.855 6.866.267 20.9% Asian Citrus Holdings Industrias Bachoco ADR Health.269. A a.b.647 9.115.

1. Valves and Bearings .243.200 4.474 14.507.934.115 4.076 6.161 4.774 41.190 600.585.900 347.800.c Tesco Corporation c Total Energy Services Trican Well Service a Unit Corporation Oil and Gas .590.000 13.300 548.250.088 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.7% Calfrac Well Services Ensign Energy Services a Global Industries Lamprell a Oil States International Pason Systems RPC a.0.158.930.164 36.745 31.250 518.897.693.804.906 323.491 887.691.0.318.849.724.904 12.0.366 387.891 225.1.898.000 317.582 2.136 28.193.676.836.562.344 20.788.) Victrex Westlake Chemical Total (Cost $239.747 17.0% Automotive .699 39.591.650 1.1% a CBIZ a Copart a.9% Schulman (A.966.400 3.332 143.713.200 1.0.804 23.101 15. A Sims Metal Management ADR Pumps.400 $ 14.250 12.500 6.301.950 7.909.607.270.000 604.900 3.5.100 663.876.079.700 4.816 4.565.068.9% a GrafTech International a Powell Industries Machinery .786.372.799 42.837 20.800 28.689.041) Natural Resources – 26.490 246.800 314.500 394. Tobacco and Agriculture .084.835.101 29.102.0. a Horsehead Holding Corporation Kennametal Olympic Steel Reliance Steel & Aluminum Schnitzer Steel Industries Cl.600 17.385 191.0% a.928.b Caliper Life Sciences Carl Zeiss Meditec a CONMED Corporation a Medical Action Industries Total (Cost $190.600 311.725 12.985.115.254.b LECG Corporation MAXIMUS a Monster Worldwide a TeleTech Holdings a TrueBlue a Universal Technical Institute Engineering and Construction .966 62.4% Agnico-Eagle Mines Alamos Gold a Allied Nevada Gold a Centamin Egypt a.3% a.442 1.050 11.703.786.581.758 6.900 5.802) Industrial Products – 10.b Corinthian Colleges a Exponent VALUE Industrial Services (continued) Commercial Services (continued) a Forrester Research a Kforce a Korn/Ferry International a.8% Heartland Express a Universal Truckload Services Werner Enterprises Total (Cost $317.087.480 9.844.836.192 250.074 5.987.9% Advertising and Publishing .4% a ValueClick Commercial Services .824.004.420.736 11.433 8.978.264.183 694.035 1.377 10.233.740 2.405 22.287.192.786.000 963.760 20.322.013.026.165.875 13.223.300 3.096.100 2.821.578.320 32.9% Gardner Denver Specialty Chemicals and Materials .561 590.869 25.5% c Houston Wire & Cable Printing .135 11.2% a Dycom Industries Food.794 17.543 14.527.438 334.486.005 1. The Royce Funds 2010 Semiannual Report to Shareholders | 71 .189.1.548.792.204 2.762 9.429) Industrial Services – 8.672.046 9.582 1.4.893 47.014.877.704 40.491 8.600 597.029.520 15.592 170.672.444.771.848 56.555 6.0.400 1.0% Energy Services .June 30.225 25.995.748.784 188.075.237.943 6.940 41.944 65.570. 2010 (unaudited) SHARES Health (continued) Health Services (continued) a eResearchTechnology MedQuist Medical Products and Devices .430.597 22.379 20.478.250 200.794 3.0.b Denison Mines a Fronteer Gold a Gammon Gold a.231.250 799.718 3.594.100 1.798 3.320 1.380 448.302.564 3.500 3.335 1.b Hecla Mining Hochschild Mining a Ivanhoe Mines SHARES VALUE 1.129.900 3.946 756.540 11.398.984.0.000 149.684.116.733.725.667 377.033 296.009.722.600 688.15.800 $ 15.2% Gentex Corporation Building Systems and Components .500 1.727.9% AAON c WaterFurnace Renewable Energy Industrial Components .600 2.007.858.200 2.894.104.234 28.4% c Imperial Sugar a Intrepid Potash Industrial Distribution .M.133.175 30.077.400 11.700 6.376 64.667 1.500 510.828.465 4.520.0.400 31.849.774 1.c Castle (A.031.376 328.9% a IPG Photonics Lincoln Electric Holdings Woodward Governor Metal Fabrication and Distribution .0.107 7.621.009 25.328.800 180.584 27.9.180 29.222.936 38.700 920.950 645.) & Co.965.800 205.500 4.396 23.911.795 2.000 12.729 1.663 1.172.0.774 471.5% Ennis Transportation and Logistics .683.013.618 421.996.4% SM Energy Precious Metals and Mining .058 32.000.436 8.896.307 3.

400 13.700) TOTAL INVESTMENTS – 101.720.485.050.837) LIABILITIES LESS CASH AND OTHER ASSETS – (1.7.795.300 4.774.141 3.138 239.000 1.157.100 1.028 5.529.527.749.471.c Sigma Designs a Trident Microsystems a TTM Technologies VALUE Technology (continued) Semiconductors and Equipment (continued) Varian Semiconductor Equipment a Associates a Verigy Software .291.300.7% Aerospace and Defense .472.402 8.204 3.090 6.100.Schedules of Investments Royce Low-Priced Stock Fund (continued) SHARES Natural Resources (continued) Precious Metals and Mining (continued) Major Drilling Group International Northam Platinum Pan American Silver a.b FormFactor a International Rectifier a Lam Research a Microsemi Corporation a MKS Instruments a Novellus Systems a OmniVision Technologies a.325.270.998.501.0% Money Market Funds Federated Government Obligations Fund (7 day yield-0.111.552 13.765.717.902.401.1% a RealNetworks IT Services .137) d SHARES VALUE 860.650.b Seabridge Gold a Silver Standard Resources Silvercorp Metals a Thompson Creek Metals a.242.7% State Street Bank & Trust Company.263.0.4)% NET ASSETS – 100.738 461.543 462.191 2.600 650.441.695 72 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.799.c Ceradyne HEICO Corporation Cl.040.209 6.800 2.168.000 $ 17.000 5.386.472.2.932 1.1.000 1.737.400 1. 1.837.700 2. Government Agencies.2% a Advanced Energy Industries a Brooks Automation a CEVA a Cirrus Logic Cognex Corporation a Exar Corporation a Fairchild Semiconductor International a.4% (Cost $3.675.987 7.783.025.574.477.597.040 3.316.800.050.2% Jack Henry & Associates a SRA International Cl.143 1.664. valued at $232.460 42.532.967.358.419.552 15.000) (Cost $224.100 940.468.570 595.4.035 REPURCHASE AGREEMENT – 6.486.980) Technology – 16.204 15.650 13.954.413.095.500 515.915 40.581 18. A a.912.4% a.789 14.000 308.966 (48.225.784 13.019 399.425.310.980 258.110) TOTAL COMMON STOCKS (Cost $2.171.692.800 375.538.0.024 10.0.975 20.484 22.592 1.439.398.800 2.586.120.0.547.358.b Red Back Mining a.5% China Forestry Holdings a Magma Energy Total (Cost $633.126.199.335.295.266 991.085.000 23.467 79.000 1. due 7/1/10.000 2.900.846.b US Gold Other Natural Resources .0% 224.248.914.309.270.0409%) (Cost $35. maturity value $224.149.484.500 1.5% Total (Cost $163.500 23.325.431.555 1.967 1.761 867.673 9. 0.4% ADTRAN a Arris Group Citic 1616 Holdings a Harmonic a.822.c PC-Tel a Tekelec Total (Cost $544.485.057.229 60.984.292.271 ) $ 3.150.800 474.638 8.161.633 11.504 8.000) COLLATERAL RECEIVED FOR SECURITIES LOANED – 1.200 1.362.8% a Littelfuse Methode Electronics a Teradata Corporation Internet Software and Services .178.203 15.200 660.700 3.000 674.250 26.294 30.332 664.c Integral Systems Components and Systems .713) Miscellaneous – 4.338.156 2.280 17.375 6.000 146.630 5.835 149.949.228 5.00% due 7/31/11.634 3.900 1.409.400 13.100 247.500 1.769.962.764.500 178.382 9.757.953 1.911.053 1.000 20.000 35.700 1.291 28.527 556.100 1.c KVH Industries a NETGEAR a.485.000 1.031 (collateralized by obligations of various U.405 27.6% Aveva Group a Avid Technology a THQ Telecommunications .393.242.094.047.493.000 750.684 42.088.609.887 38.126.014 10.270.971 19.072 5.912 16.176 1.404.548.010 8.005% dated 6/30/10.633 8.185 5.182 631.015 8.165.361.400 477.000 48. .c Novatel Wireless a.286 978.200 $ 11.658 2. A Syntel Semiconductors and Equipment .500 34.748 26.783 2.077.240 9.000 343.S.

000 128.574.257 479.500 205.5% Banco Latinoamericano de Exportaciones Cl.152 3.633.951.423 1.431.0.340.909 210.950 2.248 2.207 6.212 1.382 783.183.550 4.300 33.466 231.380 16. A SHARES VALUE 144.600 955.950 $ 112. A Christopher & Banks a Dress Barn (The) Family Dollar Stores Finish Line (The) Cl.904 17.613 104.885 14.850 61.438 1.060 20.995. B National Presto Industries Household Products/Wares .967 349.2.087.494.839.2% Central Fund of Canada Cl.144.200 2.262 851.008.423 247.000 8.846.093 106.800 2.344.7% Banking .322 4.510 1.529 159.716.358.147 47.755 235.640.381 119.392.6% Leisure and Entertainment .431.316.221 16.384 573.869 3.0.439 94.981 13.000 414.553 1.393) 517.632 6.291 23.485 15.975 549.692.119.977.314 2.950 8.2% Consumer Products – 7.309.582 82.651 1.781.295 30.164 233.918.077.113.300.0% CSS Industries Total (Cost $287.510 21.915 324.346 17.6.001 1.634 29.653 454.5% Apparel.774 7.842 43.617 Diversified Investment Companies – 0.432 15.b Centrue Financial Credicorp Farmers & Merchants Bank of Long Beach First Citizens BancShares Cl.696 1.023 1.338.406.939.279.284 530.760 296.297.613.100 508.649.b Mannatech Sanderson Farms Tootsie Roll Industries Health.M.284 10.653) Consumer Services – 7.000 24 491.179.343.200 173.186 1.075 261.481.827 8.214 509.961. Ruger & Company Thor Industries Other Consumer Products .739 1.851 22.160 5.560 6.161.632.939. A Total (Cost $7.000 173 543.122.4% Cherokee Columbia Sportswear Guess? Jones Apparel Group a K-Swiss Cl.1% Ambassadors Group International Speedway Cl.0. A Foot Locker Men's Wearhouse (The) Pep Boys-Manny.257 117. Beauty and Nutrition .499 16.783 1.016. Butterfield & Son Bank Sarasin & Cie Cl.055.800 34.950 86.849. A 585.565.937 1.284.347.578. A VALUE Consumer Services (continued) Leisure and Entertainment (continued) Speedway Motorsports World Wrestling Entertainment Cl.933 431.938 209.411.2. A Weis Markets Total (Cost $271.730 724.719 7.461 56.775 39.620 2.048 30.600 100.1% Blyth Sports and Recreation .7% Cal-Maine Foods Flowers Foods Hershey Creamery Hormel Foods J & J Snack Foods J.050 19.917 61.168 113.018.320 510.007 5.345.014 16.139 742.921 243.786.862 1.0.June 30. Smucker Company (The) Lancaster Colony a.269 22.0.039 Online Commerce .991 34.8% Ethan Allen Interiors Hooker Furniture Kimball International Cl.653 2.2% Systemax Restaurants and Lodgings .681 458.2% Closed-End Funds .876.776.007.103.0.299 8.280 22.703.3. Moe & Jack (The) RadioShack Corporation Regis Corporation Ross Stores Tiffany & Co.031 11.595 163.927 162. B Banque Privee Edmond de Rothschild BOK Financial Canadian Western Bank a.b DineEquity Retail Stores .801.957 13.873 5.518 847.371 8.0.299.150 1.772.854 19.6% a. The Royce Funds 2010 Semiannual Report to Shareholders | 73 .130. Village Super Market Cl.182. E c Bancorp Rhode Island Bank of Hawaii a Bank of N.709 265.622 19.266.003 223.603 1.584 825.492 26.800 479 10. Shoes and Accessories .032 461.815.192 82.829 9.038 9.985 522.840 77.285.965.T. A NutriSystem Home Furnishing and Appliances .842.685.098 400.935.424 2.408 18.249 32.549 291.684 293. A a Movado Group Phillips-Van Heusen a Steven Madden Weyco Group Wolverine World Wide Food/Beverage/Tobacco .564 2.377 32.000 291.477.300 432.497.b Arctic Cat Callaway Golf Hasbro Sturm.300 205.0% Abercrombie & Fitch Cl.1.003 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.751 7.250.941.9% Inter Parfums a NBTY Nu Skin Enterprises Cl.887.400 288.013 $ 6.747 2.511.325.3% Bob Evans Farms Brinker International a.112.588 26.392 303.733) Financial Intermediaries – 22.528 21. A American Eagle Outfitters bebe Stores Brown Shoe Buckle (The) Cato Corporation (The) Cl. 2010 (unaudited) Royce Total Return Fund SHARES COMMON STOCKS – 94.030 90.344 431.025.815.282 9.0.521 10.073 426.183 347.

458.696 9.743.963.306 50.000 1. A Oppenheimer Holdings Cl.500 529.000 9.022 23.900 737.275 3.354 5.800 67.071. A Everest Re Group Fidelity National Financial Cl.300.421.1.817 131.241 149.673 937.897.222 31.537 514.428 80.062.430.945 190.316 30.540 74 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.832 304.918.904.100 3.174 1.719 10.800 13.077 33.6% a Alleghany Corporation Allied World Assurance Company Holdings Alterra Capital Holdings American Financial Group American National Insurance American Physicians Service Group a Arch Capital Group Argo Group International Holdings Aspen Insurance Holdings Assured Guaranty Baldwin & Lyons Cl.133 1.185.000 10.043.807.100 $ 1.434. Provida ADR AGF Management Cl.942.079.892.046 39.0.885 12.688 743.397.539.F.369 2.467.710 1.848.768 37.3.658.190.148 24. A E-L Financial EMC Insurance Group Employers Holdings Endurance Specialty Holdings Erie Indemnity Cl.188 157.925 5.442 10.439.350 145.469.457.119.277 8.754 511.820 10.930 23.162.418 15.700 815.655 11.400 400.796 1.889 136.4.035 462.737.2% Information and Processing .153.570 650.551 317.680.748.145 284.632 8.887 11.500 316.112.900 211.203 6.761 17.000 942.744.737 9.082.339.600 13.799.387.877.155 1.764 103.000 795.197 300.000 5.924 108.400 317.403 266.761.752.090) Financial Services – 8.9% Computer Services Global Payments Interactive Data SEI Investments Total System Services Insurance Brokers .494.959 53.602 30.828 719.600 269.000 1.034 32.0.436 84.000 272.180 340.587 566.700 55.030 884.14.449 1.170 1.422 2.000 1.907.753 5.398.946 612.086.206 29.296 1.094 14.0.624.773 711.069.081 4.6% TMX Group Other Financial Intermediaries .133.181 22.524 3.596.515.300 1.151.121.872 650.000 1.538 1.723 1.340 874.019 13.000 231.599.708 2.800 969. B Cincinnati Financial CoreLogic Donegal Group Cl.626.620 7.840 19.452.866 5.026 $ 10.829 569.100 463.748 23.588 225.492.700 5.000 4.P.964 4.915 424.482 1.000 168.536 12.000 15.516 57.900 243.878 3.9% Egyptian Financial Group-Hermes Holding a Investcorp Bank GDR a Knight Capital Group Cl.600 83.640 14.936.404 276.) & Co.093 13.831.418.421 73.097.814.740 76. .093 12. A First Mercury Financial Flagstone Reinsurance Holdings Harleysville Group HCC Insurance Holdings Infinity Property & Casualty a Leucadia National a Markel Corporation Meadowbrook Insurance Group Mercury General Montpelier Re Holdings Old Republic International OneBeacon Insurance Group Cl.674.b Sun Bancorp Trustmark Corporation Vontobel Holding Wilmington Trust Insurance .568 116.593.679 18.5% Brown & Brown Gallagher (Arthur J.172.403 62.6% A.754 703.670.1.110 124.095.025 76.086.937 19.939 7.609.165.297.424 10.046 144.684.393.460 30.716 22.Schedules of Investments Royce Total Return Fund (continued) SHARES Financial Intermediaries (continued) Banking (continued) First Financial Bancorp First National Bank Alaska HopFed Bancorp Julius Baer Group Kearny Financial National Bankshares Oriental Financial Group c Peapack-Gladstone Financial a.810 1.155 2. Investment Management . A PartnerRe Platinum Underwriters Holdings Presidential Life Reinsurance Group of America RenaissanceRe Holdings RLI VALUE Financial Intermediaries (continued) Insurance (continued) StanCorp Financial Group State Auto Financial Transatlantic Holdings United Fire & Casualty Validus Holdings Wesco Financial White Mountains Insurance Group Real Estate Investment Trusts .530 375.0% Annaly Capital Management c Colony Financial Cousins Properties DCT Industrial Trust Essex Property Trust Lexington Realty Trust MFA Financial National Health Investors National Retail Properties a PennyMac Mortgage Investment Trust PS Business Parks Rayonier Starhill Global REIT Suntec Real Estate Investment Trust Securities Brokers .200 311.022 40.290 22.504.957.155.495.200 23.304.880 6.510.000 509.069.500 80.624.828 559.000 3.479 110.752 32.519.900 1.669.762.336 12.000 50.900 1.1% KKR Financial Holdings Total (Cost $847.746. B SHARES VALUE 100.962 11.422.720 284.000 102.000 10.587 20.200 159.200 622.367 597.826 8.623 17.400 8.447.819 6. A Raymond James Financial Securities Exchanges .300 978.939 7.600 288.158.000 400.605 682.574 781.246 986.637.729 1.157 35.822.943.151 345.780.067.177.

925.840 285.755 14.574.465 5.600 $ 36.281 157.610 78. A Sun Hydraulics Tennant Company Toro Company (The) Woodward Governor Metal Fabrication and Distribution .863.721 7.963 10.749 4.400 76.3% Alberto-Culver Company Total (Cost $100.838 148.3% Biovail Corporation Medicis Pharmaceutical Cl.920 423.058 1.686 913.4% Ameron International Ash Grove Cement a Louisiana-Pacific Corporation Industrial Components .043.1% Chemed Corporation Computer Programs and Systems Healthcare Services Group Omnicare Universal Health Services Cl.476.548.5% Alamo Group Ampco-Pittsburgh Briggs & Stratton Bucyrus International Cascade Corporation Franklin Electric FreightCar America Gorman-Rupp Company Lincoln Electric Holdings Lindsay Corporation c Mueller (Paul) Company Nordson Corporation Regal-Beloit Roper Industries Snap-on c Starrett (L.136 465.000 1.038 595.966 36.530 364.395.559 1.826. A Machinery .) Company (The) Cl.683.972 15. The Royce Funds 2010 Semiannual Report to Shareholders | 75 .167.705 20.839 461.000 1.460.053 372.000 497.126 11.000 90.264 23.430 45.878 5.100 476.614 8.500 30.703.491.1% Commercial Services .188 92.934.010 2.800 4.814 16.557 509.350 134.779 2.176 44.360 521.259 14.000 113.2% a Credit Acceptance GATX Corporation a Portfolio Recovery Associates Total (Cost $318. A Pharmaceutical Product Development Health Services .0.349.651 22.699 49.310 16.0. A Specialty Finance .400 883.400 425.389 1.483.178.246.698.198 11.963 379.416.519.P.900 3.851. A Waddell & Reed Financial Cl.187 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.700 376.700 371.352 11.8% Atrion Corporation Hill-Rom Holdings a IDEXX Laboratories Invacare Corporation STERIS Corporation Teleflex Young Innovations Personal Care .133 34.003. AP Alternative Assets L.045.951.814 5.944 321.944.9% Carpenter Technology Encore Wire SHARES VALUE 1.057.489.182 15.810. B Mueller Water Products Cl.684 52.668 5.206.257 19.743.001.526 2.893 146.421.426 76.523 11.362.451 6.820 16. Rowe Price Group a Teton Advisors Cl. B a GAM Holding GAMCO Investors Cl.161.0.1.640 695.0.1.000 2.768 179.258.950 379.277.958 11.9% Apogee Enterprises Bunka Shutter LSI Industries McGrath RentCorp Preformed Line Products Simpson Manufacturing Construction Materials .818.265 577.057 291.600 33.665 10.537. A PerkinElmer Watts Water Technologies Cl. A Bel Fuse Cl.000 456.352.6% Owens & Minor Drugs and Biotech .912 5.039.179 366.972.997.805 59.021.141 7.713.0.882.246 9.0.900 81.600 2.604 10.088 81.740 18.480 811.736 67.433 16.0.475 20.195. B c Chase Corporation CLARCOR CTS Corporation Donaldson Company Hubbell Cl.499 35.120 165.434 12.519 745. Apollo Investment CI Financial Cohen & Steers Federated Investors Cl.124.218.216 309.100 10.220 70.846.3% Gentex Corporation Spartan Motors Superior Industries International Building Systems and Components .300 80.868 15.400 674.876 175.985 14.117.493 235.516 634.929 3.561) Health – 4.864 193.760 864.500 385.512 36.5% Bel Fuse Cl.835.522.050 48.800 1.966 1. 2010 (unaudited) SHARES Financial Services (continued) Investment Management (continued) AllianceBernstein Holding L.535 2.163 2.768.923 116.648 23.371 8.630 1.794 11.974 329.700 22.881.547 773.300 39.971.089 321.P.232.000 $ 10.111.June 30.198 6.098.867 3.000 1.410 592.469 158.983.540.500 4.294 529.221.152.958 6.700 328.552.810. A Gladstone Capital Janus Capital Group MVC Capital Schroders T.665 214.574.772.742 77.200 349.382 59.294.910 2.4.635.555.479 6.672 167.307 371.791 663.306) VALUE Industrial Products – 15.782.S.700 365.507 12.440 12.1.003 9.089 126.354 7. B Medical Products and Devices .164 109.013 10.275 609.277 3.000 278.623.602.168.256.862 14.266.297 253.420 175.003 214.909 6.619.000 135.196.1.300 204.210 1.500 702.7% Automotive .700 143.673 5.

199.000 35.000 64.825 31.245 55.945 1.734 5.300 991.760 23.2% Kaydon Corporation Robbins & Myers Specialty Chemicals and Materials . A Carlisle Companies Crane Company HNI Corporation Raven Industries Smith (A. Scripps Company Cl.0% a E.642.971.382 14.982.109.209.755.939.606 75.474 175.304.320 6.O.452 444.650 22.488 17.492.263. Tobacco and Agriculture .026 110.200 16. Holdings Food.592 28.3.941 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.549.783 301.894 4.703.800 53.312 18. Valves and Bearings .700 55.210 12.678 528.183.934 2.1.8% Advertising and Publishing .360 907.571 160.000 Sims Metal Management ADR 372.769 835.504.146 956.787.763 86.271.000 446.536 16.141 501.942 219.689 9.178 8.878.440 1.705.800 237.167.256.W.180 9. Seaboard Corporation Industrial Distribution .307 14.462.765.076.276 2.068 355.751.965 8.200 464.646 150.673 Other Industrial Products .Schedules of Investments Royce Total Return Fund (continued) SHARES Industrial Products (continued) Metal Fabrication and Distribution (continued) a Gibraltar Industries 7.586 7.295 932.405 9.7% Acuity Brands a American Railcar Industries Barnes Group Brady Corporation Cl.010 53.203 306.383.B.591.265 1.695 5.572.530 199.720 408.663 405.345 6.205. A Scholastic Corporation Commercial Services .1% AptarGroup Bemis Company Greif Cl.577 1.000 377.313 5.739 1.) Houston Wire & Cable Mine Safety Appliances Watsco Printing .370.810.591) Industrial Services – 7.143 526.512.556.364 456.6% CF Industries Holdings Corn Products International Farmer Bros.0.459.534 704.776 Insteel Industries 44.) Corporation Standex International Tredegar Corporation Valmont Industries Paper and Packaging .685 164.000 4.887 6.3% Comfort Systems USA Granite Construction KBR M.476 324.583 542.400 5.800 236.765.000 1.370 34.823 555.) Sensient Technologies 76 | The Royce Funds 2010 Semiannual Report to Shareholders VALUE SHARES Industrial Products (continued) Specialty Chemicals and Materials (continued) Stepan Company 33.0% Agrium Albemarle Corporation Ashland Balchem Corporation Cabot Corporation H.384 156.042 73.287 Miscellaneous Manufacturing .390.C.456 1.400 49.9% Applied Industrial Technologies Doshisha Company Grainger (W.700 33.644 106.567.291.093.468 17.800 10.168.541 329.168 1.522.100 85.308.847.642.446 1.315.037.284 10.701.500 345.243 115.798 1.750 455.967 36.682 11.894.600 13.298 246.500 18.332 Trinity Industries 491.319 8.0.242 5.0.446.286 22.775 142.002 99.538 520.739.783 1.425 223.714 3.613 942. A Landauer Manpower MAXIMUS Ritchie Bros.487.782 1.2% ABM Industries Corporate Executive Board Diamond Management & Technology Consultants Heidrick & Struggles International Hillenbrand a Kelly Services Cl.201 343.213 359.140.W.265.414 814.200 5.416 11.033 40.744 12.500 387.590 23.000 39.000 183. A UniFirst Corporation Viad Corporation Engineering and Construction .0.730.745.920 10.618.525.200 443.083 60.808.907 227.810 135.739.580 5. . A Sealed Air Sonoco Products Pumps.307 7.037 6.115 34.715 9.600 120.190 2.000 249.899.656 7.497 Reliance Steel & Aluminum 616.216 61.300 Mueller Industries 396.900 4.300 9.2% MTS Systems Total (Cost $475.101 1.500 770. Auctioneers Robert Half International Rollins Towers Watson & Company Cl.691 14.611 49.450 677.500 20.381 13.087 595.498. Fuller Company Innophos Holdings a Innospec International Flavors & Fragrances Lubrizol Corporation (The) Methanex Corporation Minerals Technologies NewMarket Corporation Park Electrochemical Quaker Chemical Schulman (A.062.833 Kennametal 142.959 3.313 Schnitzer Steel Industries Cl.872.548.778 200.619 1.279.966.581.656 254.D.500 20.0.606 24.560 6.812 6.548 4.801 8.3% Bowne & Co.710 528.644 626. A 252.0.275 Timken Company (The) 31.943.1.813 939.471 5.962 Olympic Steel 71.4.0.423.177 25.039 610.000 53.267 $ 2. Ennis VALUE $ 78.

568 210.4% Boardwalk Pipeline Partners L.756.784 263.P.047 231.1.P.947 $ 822.142.151 447.237 4.384 41.515 494. H.565.949 9.116.421 281.8% Agnico-Eagle Mines Alliance Holdings GP L.5% EarthLink United Online IT Services .280 7.931 14.700 91.971 3.999 16.990.047 538.200 7.600 4.977 359.590.861 705. Pioneer Southwest Energy Partners L.572.700 285.892 369.189.560.762 310.256.1.000 320.728 69.0.828 256.000 125.P. Real Estate .500 278.046.898.094.902.443.525.177 823.000 250.884.676 372.435.000 281.622 24.931 1.297.200 1.420 16.994.047 193.960 446.0.544 327.484 24.773.034) SHARES VALUE 11.000 325.644 472. a Frontier Oil Helmerich & Payne Lufkin Industries National Fuel Gas Nicor NuStar GP Holdings Ormat Technologies Patterson-UTI Energy a Precision Drilling a Rowan Companies a SEACOR Holdings Tidewater Trican Well Service World Fuel Services Oil and Gas .400 7.P.744.750 13.844.430 9.630 21. Robinson Worldwide Euroseas Expeditors International of Washington Overseas Shipholding Group TAL International Group UTi Worldwide Other Industrial Services .600 1.000 617.682.848 8.231 48.000 111.732.353.600 14.000 27.664 301.388 1.000 434.452.519 177.105.200 14.907.2% Cognex Corporation Maxim Integrated Products Software .939 1.000 260.166 5.994 7. San Juan Basin Royalty Trust SM Energy Sunoco Logistics Partners L. Alliance Resource Partners L. Carey & Co.583.800 14.062 1.913 9.836.632.700 101.400 $ 170. Plains All American Pipeline L.222.060 12.790 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. Ensign Energy Services Exterran Partners L.879.564 26. A Kaman Corporation Triumph Group Components and Systems .449 7.660 5.912 319.530 26.501.565.2% Fair Isaac 20.248.000 279.680 3.056 30.100 530.700 1.462 15.388 122.388 57.074 6.030 2.811.707.000 22.P.469.500 2.148. The Royce Funds 2010 Semiannual Report to Shareholders | 77 .811 649.1.690 93.June 30.992 172.0.183 20. Hugoton Royalty Trust Linn Energy Magellan Midstream Partners L.517 926.270.5% Cimarex Energy Delek US Holdings Energen Corporation Enterprise GP Holdings L.763 655. Gold Fields ADR IAMGOLD Corporation Lihir Gold ADR Major Drilling Group International Natural Resource Partners L.4% Black Box iGATE Corporation Jack Henry & Associates a ManTech International Cl.089.130 19.177 317.955.346 20.648.484.P.300 23.674 41.105 351.1.100 528.P. a Tesoro Corporation VALUE Natural Resources (continued) Oil and Gas (continued) W&T Offshore Precious Metals and Mining .126 11.000 291.742.028 5.680 10.102.600 423.382 418.1% Energy Services .000 712.075 12.615 15.816 30.601 12.P.0.8% American Science & Engineering Cubic Corporation HEICO Corporation HEICO Corporation Cl.714 602.548. Total (Cost $393.098.006 13.075) Natural Resources – 12.135.600 789.198 1.247.300 621.900 479.568.P. CARBO Ceramics Energy Transfer Equity L.500 285.960 6.781 304.0% US Ecology Total (Cost $229.258 18. A Semiconductors and Equipment .776 5.000 7.610.590 45.030.925 Technology – 5.701 633.592 198.071.736 70.600 7.700 27.5% Alexander & Baldwin Arkansas Best C.700 40.604 6.276 3.167.836 37.808.819.725 526.627 238.356.196 18.264.0.229 17.074.4.P.232 15.798. 2010 (unaudited) SHARES Industrial Services (continued) Printing (continued) Schawk Transportation and Logistics .207.632.182 32.0.232 54.750 8.000 30.384 288.030. Penn Virginia Penn Virginia GP Holdings L.022 12.1% Aerospace and Defense .687.036 564.500 17.346 458.745 13.142 86.200 492.P.5.114 13.582.742 231.189 3.000 225.750.209.300 36.4% a AMREP Corporation Deltic Timber W.225 15.890 5.930.884.1% Analogic Corporation AVX Corporation Diebold Methode Electronics a Nam Tai Electronics OPTEX Company Sato Corporation Internet Software and Services .154.819 7.170 682.760 525.900 250.984 142.036 19.P.242.593.571 311.995.P.650 897.435 141.400 1.840 20.281 6.785.632.

614 6.5% † Bank of N. .368) LIABILITIES LESS CASH AND OTHER ASSETS – (0.515 199.670.005% dated 6/30/10.000 15.600) (Cost $191.076 10. Senior Note due 5/1/14 Encore Capital Group 3.463 1.047.834.449.0.376 493.2)% NET ASSETS – 100.493.644 271.616.802 77.907. Butterfield & Son e 0% Conv.728.000.589.647.2% (Cost $3.75% Conv.250 5.153 34.403) d VALUE CORPORATE BONDS (continued) Mueller Industries 6.576 660.004. due 11/1/14 TOTAL CORPORATE BONDS (Cost $19.200. 1.333 85.500 638.875 5.b SureWest Communications USA Mobility Total (Cost $213.902 9. due 7/1/10.280) Utilities – 2.673.969.003.142. G TOTAL PREFERRED STOCKS (Cost $19.142.177 819.227.444.008 3.000.566 $1.500 78 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.565.766 117.625% Ser.027 (collateralized by obligations of various U.990 305.S.75% Ser.636.342 3.000 3. Senior Note due 4/15/14 $20.758 $ 7.000) COLLATERAL RECEIVED FOR SECURITIES LOANED – 0.9% ADTRAN Atlantic Tele-Network a Comtech Telecommunications Plantronics a.006.000.0% Total (Cost $41.676 4.522 250.420 120.115) Miscellaneous – 1.9% State Street Bank & Trust Company.008) TOTAL INVESTMENTS – 100.2% ALLETE Aqua America Consolidated Water ITC Holdings Otter Tail Piedmont Natural Gas PNM Resources SJW Southern Union UGI Corporation Total (Cost $83.271.318 12.301) TOTAL COMMON STOCKS (Cost $3. maturity value $191.825) PRINCIPAL AMOUNT VALUE 283.477.50% Ser.500 289.870 2.000 89.502.278.000 1.268.00% Sub. MF Global Holdings 9.75% Conv.385.227.900 400.565.000 15.Schedules of Investments Royce Total Return Fund (continued) SHARES Technology (continued) Telecommunications .250 3.000 30.000 2.958.337.000 474.457.375% Conv.219 1.066.834.0409%) (Cost $2. D Vornado Realty Trust 6.665 50.928 13.400 22. Reinsurance Group of America 5.125% Conv.535 390.261 14.751.546 REPURCHASE AGREEMENT – 4.000 1.095 38.295 PRINCIPAL AMOUNT CORPORATE BONDS – 0.705.75% due 11/15/11.000 80.834.303 232.T. 0.5% Charming Shoppes 1.485.500 714.400 383.000 280.361. Senior Note due 9/19/10 Leucadia National 3. F Vornado Realty Trust 6.753 ) $ 3.200 5.400 297.240 20.511 16.720.950 12.971.1% Money Market Funds Federated Government Obligations Fund (7 day yield-0. Urstadt Biddle Properties 7.000 $ 1.400 13.171 (8.900.088. valued at $200.206.132) PREFERRED STOCKS – 0.036.899.792.75% Conv.600 19.530.850 7.0% 191. Deb. Government Agencies.611.

140 17. Artio Global Investors Cl.915 2.853 512.188 552.557 40.6% Information and Processing .1.182.712 374.727.090 9.5% † KKR & Company (Guernsey) L.690 11.432 180.200 2.783. A a First Cash Financial Services SHARES VALUE 58.131 849.June 30. Total (Cost $23.450 388.193 178.0.335 998.150 290.994 742.180 303.000 38.8% Cash America International a EZCORP Cl.809 371.528 918.822 1.060.520.450 1.926 13.000 494.594 194.2% a DreamWorks Animation SKG Cl.726.586.240 1.4% Cal-Maine Foods Sanderson Farms Thai Beverage Health.900 62.600 25.055 325.239.000 $ 415.097.000 5.124.952 1.3.000 164.000 1.337 190.143 32.722 1.475 574.089 1.138.000 29.700 1.300 16.116.450 43.334.700 30.4% Ethan Allen Interiors Hunter Douglas a Mohawk Industries Sports and Recreation .117 882.700 67. A Real Estate Investment Trusts .1.977.920 9.058 2.821 184.208 12.R.1.000 265.6% Cousins Properties Securities Brokers .000 24.846 307.111.500 11.833 969.700 34.862 868.522 1.0.800 23.1.003.936 19.100 50.981.296. A Lewis Group a Rent-A-Center Total (Cost $2.500 17.000 58.560.522.P.100 119.263.200 414.600 5.000 14.193) Consumer Services – 1.904. B Invesco † a Jupiter Fund Management Partners Group Holding a Reinet Investments Sprott T.000 300.225 38.500 19.862 2.828. Beauty and Nutrition .345.5% Thor Industries Other Consumer Products . Shoes and Accessories .095 745.) E-L Financial Fidelity National Financial Cl.400 1.565 363.021.200 371.479 348.400 1.787) Financial Intermediaries – 9.672.0. A Mirae Asset Securities a Stifel Financial Securities Exchanges .7% Bulgari Daphne International Holdings Hengdeli Holdings Luk Fook Holdings (International) Marimekko a Movado Group Stella International Holdings a True Religion Apparel a Warnaco Group (The) Food/Beverage/Tobacco .500 98.346.0% Leisure and Entertainment .701.301 387.500 1.000 28. A Westwood Holdings Group Specialty Finance .100 19.845 1.700 62.0.873 157.200 7.000 86.300 804.277 1.627 468.0% a Cowen Group Cl. A a Greenlight Capital Re Cl.580 531. A Ashmore Group Cohen & Steers Evercore Partners Cl.342 26 40.482 1.8% American Eagle Outfitters a DSW Cl.893 3.798 503.250 91.5% a Affiliated Managers Group AllianceBernstein Holding L. A Retail Stores .344 2.462 6.016 868.8. A Federated Investors Cl.297 574.8% a NASDAQ OMX Group (The) TMX Group Other Financial Intermediaries .811.000 13.9% Bank Sarasin & Cie Cl.182 576.400 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.800 1.040 1.119.300 20.357) Financial Services – 11.652 854.005.909.0% a Morningstar SEI Investments Investment Management .000 341. A a GameStop Corporation Cl.446.806 421.024 1.500 100.500 591.600 24.000 15.505 47.0. 2010 (unaudited) Royce Total Return Fund (continued) Heritage Fund SHARES COMMON STOCKS – 99.666 349.0.000 135.200 30.000 29.290 174.512.760 1. Rowe Price Group Trust Company Value Partners Group VZ Holding Waddell & Reed Financial Cl.433.502 2.2.458 186.550 1.000 57.116.751.522.202.4% Berkley (W.910 1.285.344 1.900 7.424 4.522 276.0.1.000 3.200 6. The Royce Funds 2010 Semiannual Report to Shareholders | 79 .035 66.500 932.0.889 346.2% Banking .400 $ 1.906 1.9% Consumer Products – 5.300 25.700 5.5% Apparel.P. A Egyptian Financial Group-Hermes Holding a FBR Capital Markets Lazard Cl.779 690.090 360.734 1.406 2.110 685.250 2.0% CSS Industries Total (Cost $10.700 3.046.5% a NBTY NutriSystem Home Furnishing and Appliances .628 123. B Banque Privee Edmond de Rothschild Julius Baer Group † Marshall & Ilsley † a Popular VALUE Financial Intermediaries (continued) Insurance .554.1.

589 504.425 46.400 75.274.800 1.4.551 2.000 40.b Harbin Electric MTS Systems Total (Cost $33.700 $ 881.500 63.084 576.4.580.900 57. A a GrafTech International PerkinElmer Machinery .784 301.000 4.5% Amphenol Corporation Cl. .935 678.851.138 303.626.515) Health – 5.1.8.0% Brink's Company (The) a Copart a Forrester Research a Gartner a Global Sources SHARES VALUE 15.1% † a.245.600 11.824 886.100 72.792.200 14.840 968.800 43.686 205.138 878.900 23.924 1.000 32.000 $ 574.314 9.000 59.011 273.B.000 4.411) Industrial Services – 15.2% Gardner Denver Kaydon Corporation Specialty Chemicals and Materials .000 25. Valves and Bearings .141.339.391 9.) Company Cl.0% Automotive .b World Acceptance Other Financial Services .100 47.690 926.780 1.780 431.530 973.1.1.2.829.104 685.059 700.560 2.693 3.000 300 44.145 647.692 990.392 164.521.745 779.442 1.344 5.165.232 1.000 52.198 31.029.b Hollysys Automation Technologies a IPG Photonics Jinpan International Lincoln Electric Holdings a Rofin-Sinar Technologies Spirax-Sarco Engineering Tennant Company Metal Fabrication and Distribution .000 44.000 257.882 940.700 13.000 927.000 533.178.810 695. A Sims Metal Management ADR † Worthington Industries Miscellaneous Manufacturing .490 971.795.600 1.662 29.400 650.560 355.973 860.794 1.688 30.350 211.8% Commercial Services .0.2.400 60.344 645.5% China Automation Group Raven Industries † Valmont Industries Paper and Packaging .800 7.404.535 37.400 54.076.033.849 1.200 42.9% a Advisory Board (The) † EPS Company a ICON ADR a Res-Care Medical Products and Devices .2% AAON a Armstrong World Industries a Drew Industries Simpson Manufacturing Industrial Components .409 83.152 2.333 1.700 60.452.650 4.549 3.559.2% Atrion Corporation Carl Zeiss Meditec a Exactech Fielmann Pall Corporation Techne Corporation a Waters Corporation Total (Cost $10.4% a Endo Pharmaceuticals Holdings † Green Cross † Hikma Pharmaceuticals Pharmaceutical Product Development Health Services .200 27.049 697.546.1.1.3% a Kennedy-Wilson Holdings Total (Cost $23.499.342 1.000 40.528.3% † a PAREXEL International Drugs and Biotech .728.b Duoyuan Printing Franklin Electric a.e Norstar Founders Group a.2% Greif Cl.450 92.500 8.715 602.771 661.198 1.447.5% † a.900 26.900 26.439 397.900 118.414 2.1.b SORL Auto Parts Building Systems and Components .600 27.459 446.511.239 177.000 57.343 1.000 39.210 21.1% Gentex Corporation Minth Group Nokian Renkaat a.300 21.700 68.990 380.1.Schedules of Investments Royce Heritage Fund (continued) SHARES Financial Services (continued) Specialty Finance (continued) a.325 17.279.000 4.700 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.2% Allegheny Technologies China Metal Recycling Holdings Commercial Metals a Foster (L.783.249 12.545 59. A Pumps.580 897.735 25.619 1.750 5.719 808.0.0.5% a Astec Industries 80 | The Royce Funds 2010 Semiannual Report to Shareholders VALUE Industrial Products (continued) Machinery (continued) Burckhardt Compression Holding † a.900 63.363.238. A a Fushi Copperweld Kennametal Nucor Corporation Schnitzer Steel Industries Cl.7% Advertising and Publishing .650 1.000 12.000 25.900 14.753 121.149 429.0.028 763.600 719.396) Industrial Products – 18.200 43.100 10.200 305.500 48.772 3.400 565.782.2% a ValueClick Commercial Services .840 754.264.700 72.009 740.100 46.544 964.355 21.824 362.665 2.900 7.228 1.876 1.971.600 20.0.b Gulf Resources a OM Group Other Industrial Products .000 417.007 529.100 23.900 28.400 52.849 24.621.500 23.146 60.031.

000 766.300 65.260 4. 2010 (unaudited) SHARES Industrial Services (continued) Commercial Services (continued) Grupo Aeroportuario del Centro Norte ADR Grupo Aeroportuario del Pacifico ADR a Heritage-Crystal Clean a Hewitt Associates Cl.7% China Forestry Holdings a Magma Energy Total (Cost $28.140 704.550 842.9% a CE Franklin † ENSCO ADR Ensign Energy Services Helmerich & Payne Lamprell Lufkin Industries a Oil States International Pason Systems Patterson-UTI Energy a Rowan Companies a SEACOR Holdings Trican Well Service VALUE Natural Resources (continued) Energy Services (continued) a Unit Corporation a Willbros Group Oil and Gas .800 53.184.616 2.130 1.719 2.162.308 777.2.320 647.506.388 938. Tobacco and Agriculture .000 10.800 40.925 303.731.372 709.062.200.877) Natural Resources – 15.200 24.408 1.700 72.301 330.164 47.800 32.429 651.166.165.000 3.June 30.700 42.488 2.500 1.214.6% a Cavco Industries a EMCOR Group Fluor Corporation a Integrated Electrical Services KBR a NVR † Raubex Group Food.949 1.000 126.600 205.608 50.148 1.697.000 1.239.006 440.990 1. Auctioneers Sotheby's a Team a Universal Technical Institute a Verisk Analytics Cl.335.900 350.142 344.000 96.336 253.222.504 46.500 20.100 16.753 7.450 1.900 47.928.256 2.450 1.724 1.228.2% a Cogo Group IT Services .341.312 2.000 29.300 601.0.960 1.8.117 643.3% Aerospace and Defense .2.100 18.700 127.760 119.520 1.4% China Green (Holdings) † a Darling International a Hanfeng Evergreen a Intrepid Potash a.800 550.057.409.650.000 25.339 562.048 681.5.853 647. A Manpower MAXIMUS Michael Page International † Pico Far East Holdings Ritchie Bros.525 1.128.320.000 48.900 36.113.421.400 613.936 291.300 60.7% a Advanced Energy Industries Analog Devices Chroma ATE Cognex Corporation a Diodes SHARES VALUE 67.370 1.800 39.500 11.382 84.356 528.861.760 12.400 52.8% Energy Services .600 36.000 96.550 1.392.300 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.426.2.3.216 317.994 565.258.521 47.332.250 507.2.700 33.439.210 1.590.0.468 1.140 1.380 435.272 330.665.772 2.882 8.270 1.792 1.024 1.767.800 20.000 117.0.000 85.246.580 514.212.085.634 1.365.669 1.589.900 145.671.800 129.0.866 772. The Royce Funds 2010 Semiannual Report to Shareholders | 81 .100 8.860 615.500 120.285 24.339 649.600 23.300.280 1.559 32.539.500 71.5% Forward Air Landstar System a Patriot Transportation Holding a Universal Truckload Services UTi Worldwide Total (Cost $33.015.465 662.238 18.800 125.043 1.900 132.475 241.953 313.740 5.800 512. A Syntel Semiconductors and Equipment .500 450.400 $ 271.027.761. A Engineering and Construction .000 $ 847.600 277.138 284.000 39.397 638.600 6.127.048.400 66.590 879.616 1.000 28.620 1.212 18.549 32.608) Technology – 12.000 17.900 31.500 36.000 39.b Zhongpin Transportation and Logistics .000 389.000 864.000 109.853 371.917.302.720 5.800 20.600 2.902 1.000 65.5% AAC Acoustic Technologies Holdings a Benchmark Electronics a Dionex Corporation † a Fabrinet Technitrol a Teradata Corporation a Western Digital Distribution .000 49.894.000 91.800 19.969.008 1.097 1.800 304.468.457.852 1.200 27.6% Cimarex Energy a Gran Tierra Energy SM Energy Precious Metals and Mining .750 359.400 89.000 879.844 1.800 16.1% Sapient Corporation a SRA International Cl.410 14.400 34.1.000 34.500 1.4% HEICO Corporation Components and Systems .872 6.000 367.6% † a African Barrick Gold Agnico-Eagle Mines † Compass Minerals International Fresnillo † Gold Fields ADR † Hochschild Mining Major Drilling Group International Pan American Silver Randgold Resources ADR † a Red Back Mining a Seabridge Gold a Terra Nova Royalty Other Natural Resources .

238.197) Consumer Services – 11.061.b Joe's Jeans Jones Apparel Group a.000 110.680 925.588.743 480.005% dated 6/30/10.836 2. A Varian Semiconductor Equipment a Associates Software .0% a Bernard Chaus a. A † a.801 905.177 444.273.2% † a AOL Cinemark Holdings a Orient-Express Hotels Cl.0% ADTRAN a Comtech Telecommunications a Tekelec Total (Cost $23.2% a.400 1.898 1.744 660. due 7/1/10.625 ) 209.933.700 63.443.685 7.831.b Coldwater Creek a Collective Brands a.027.650 208.075.938.500 78.800 $ 135.070 461.000 30.610.125% due 6/30/11.945 1.225 126.197.181.397. A SHARES VALUE 65.640 8.192.789.916.475 362.313 931.334.185.382.058.283.026 2.902 4.258 703.700 135.895 6.0409%) (Cost $3.500 4.520 10.560 5.200 258.3.b Frederick's of Hollywood Group a Hanesbrands † a.148 7.471.672 11.b Krispy Kreme Doughnuts a Red Robin Gourmet Burgers a Ruby Tuesday Retail Stores . Government Agencies.7.377.071.382 1.676 645.5% Apparel.430 31.550 671.700 549.144.676.341.130 471.050 1.556.743) TOTAL INVESTMENTS – 101.8% (Cost $203.516.181 838.b Ballantyne Strong Online Commerce .549.294 9.6% Money Market Funds Federated Government Obligations Fund (7 day yield-0.900 212.c Cost Plus a.b Six Flags Entertainment Media and Broadcasting .000 (collateralized by obligations of various U.664.730.037. Shoes and Accessories .Schedules of Investments Royce Heritage Fund (continued) SHARES Technology (continued) Semiconductors and Equipment (continued) a International Rectifier Molex Cl.785 481.891) LIABILITIES LESS CASH AND OTHER ASSETS – (1. 1. valued at $755.1% a Smart Balance Home Furnishing and Appliances .0.700 605. 0.016.212 Consumer Products – 3.000 3.186 1.604 9. A Leisure and Entertainment .S.695 5.1% Gaiam Cl.092 2.475.295.937 360.545.054.2% bebe Stores Brown Shoe a.b Conn's a.548 350.373 6.964.960.b Convio National Instruments Pegasystems Telecommunications .006.472 390.219.418.767.133 1.952 9.900 1.0% Direct Marketing .b Blackboard † a.5% 33.080 291.000) COLLATERAL RECEIVED FOR SECURITIES LOANED – 1.924 1.619 1.482 5.845 527.228.8)% NET ASSETS – 100.143 60.181.100 (3.1.0% Total (Cost $11.000 61.052 9.400 34. A Restaurants and Lodgings .0.800 32.570.1.b Liz Claiborne a Quiksilver Food/Beverage/Tobacco .923.089.027 735.150 36.625) (Cost $735.4% a Actuate Corporation American Software Cl.800 875.2.055 82 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.784 553.245.390.550 928.1% a California Pizza Kitchen a Einstein Noah Restaurant Group a.123.COM Cl.400 616.891.482 883.760 33.000 3.351 990.016 4.932 4.080 20.893 5.1% American Woodmark a Furniture Brands International a La-Z-Boy Sports and Recreation .0.3% a Steinway Musical Instruments Total (Cost $83.271 1.700 10.263.1.347 1.0.0% $ d Royce Opportunity Fund VALUE COMMON STOCKS – 94.512.341.969) TOTAL COMMON STOCKS (Cost $199.3% State Street Bank & Trust Company.826 900.300 311.074 2.400 11.c dELiA*s Dillard's Cl. maturity value $735.700 28.490.132 3.104 5.886.327 6.038 2.920 246.094 19.b Jamba a. A a ANSYS a.308 4.067 2.731.568.785 5.2% a Autobytel a 1-800-FLOWERS.100 356.961 6.0.231 2.120.148) REPURCHASE AGREEMENT – 0. .856.2.413 2.494.578.035) Miscellaneous – 5.700 70.400 $ 614.020 6.772.600 1.821 25.b.060 3.

823.430 200.662 9.797.658.868.856 7.218.510) Financial Intermediaries – 8.284.857.410.400 5.600.553.483 188.440 4.740.987 3.614 22.000 1.6% Berkshire Hills Bancorp Boston Private Financial Holdings a.228.798.579 116.800 514.b Cascade Financial First Financial Holdings a.566 1.500 459.280 Medical Products and Devices .900 402.485 123.889.722.0.816 3.023 1.900 544.189 3.103.929 10.265.028.300 140.100 533.100 371.3.337.880 10.705.211.827 186.853 4.728.1% Albany Molecular Research a Brookdale Senior Living a Kindred Healthcare a PharMerica Corporation SHARES VALUE 72.897.009 1.380.1.433 270.900 $ 1.239 7.148 540.303 7.026 7.505 222.609 4.149 43.1% a RAIT Financial Trust Securities Brokers .7% Apogee Enterprises a.863.260 584.693 677.480 1.030 284.3% Automotive .850 140.857.900 228.250 4.2% a Louisiana-Pacific Corporation Texas Industries a Trex Company Industrial Components .300 1.653.503 139.236. A a.059.100 523.000 214.630.146 186.900 192.356 4.5% a Kendle International a PAREXEL International Drugs and Biotech .405 344.137. A a Harris & Harris Group Other Financial Services .051.129.150.345 18.409 9.787.6% Commercial Services .800 9.991 3.701 4.428 1.127.780 4.395 5.933 8.328.500 273.938.791 3.b Guaranty Bancorp Marshall & Ilsley Middleburg Financial Old National Bancorp a Pacific Mercantile Bancorp SPDR KBW Regional Banking ETF Sterling Bancorp a.700 829.456 625.477.360 24.950 448.236 10.528 292.668 772.551.b Group 1 Automotive Lithia Motors Cl.034.446.414.695 867.198.b Superior Bancorp a SVB Financial Group a Texas Capital Bancshares Umpqua Holdings Valley National Bancorp Washington Federal Insurance .100 531.0.495 6.112.500 119.035.3% a.491 265.140.890 4.000 635.382 313.601 5.806.719 253.683.853 3.006.4% a AngioDynamics a Del Global Technologies a Digirad Corporation Personal Care .523.600 495.4% Evercore Partners Cl.485.486 2.605 6.618. 2010 (unaudited) SHARES Consumer Services (continued) Retail Stores (continued) a Dress Barn (The) a Genesco a.722 4.721.060 3.871.600 $ 9.c REX American Resources a Saks a.262.700 3.100 783.June 30.248.340 627.400.204 6.924 6.6% Investment Management .1.000 922.657 2.545 4.960 52.788.b MarineMax a Pacific Sunwear of California a Penske Automotive Group a Pier 1 Imports a Rent-A-Center a.500 3.700 191.564 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.377 6.500 698.587.144 196.106.1.700 524.599 2. A Total (Cost $198.948.641.000.900 145.935 7.902 5.700 566.1% Banking .151.756) Financial Services – 0.b Talbots (The) a West Marine a Wet Seal (The) Cl.b NCI Building Systems a.700 777.862 4.106 3.618.800 7.b Penson Worldwide a Piper Jaffray VALUE Financial Intermediaries (continued) Securities Brokers (continued) † a Stifel Financial Total (Cost $158.486 62. The Royce Funds 2010 Semiannual Report to Shareholders | 83 .931.285.031.601.282 508.934) Health – 2.b PGT Construction Materials .3% a Elizabeth Arden Total (Cost $53.120 1.833 1.b MBIA Meadowbrook Insurance Group a Navigators Group NYMAGIC Radian Group Tower Group Unitrin Real Estate Investment Trusts .300 464.595 95.303.069 5.507 9.100 347.539.084 2.401.591 20.0.151 a 631.895.2% a Hilltop Holdings Total (Cost $10.939 4.663.800 366.800 244.400 120.939.393 2.0.632.380 362.390 1.360 2.899) Industrial Products – 22.763 6.352 7.5% CTS Corporation 371.715 823.0.312 7.168 8.947 6.0.900 306.926 3.0.691 338.111 241.275.301 644.815.227.081.028. A a.369 753.0.124.666 8.500 231.750 1.553.1% Argo Group International Holdings Fidelity National Financial Cl.911 7.3% a.953.500 153.4% a ArvinMeritor Cooper Tire & Rubber a Dana Holding Corporation Building Systems and Components .669.808.800 1.c Cambrex Corporation Health Services .192.1.1.3.001.863 11.

b.232 551.b Spire Corporation Paper and Packaging .756.677.039 8.1% Carpenter Technology Haynes International Insteel Industries † Kaiser Aluminum a Ladish Company a NN a Northwest Pipe a RTI International Metals Timken Company (The) Trinity Industries Miscellaneous Manufacturing .515.660.342 6.754 4.483.218.000 a 273.700 Engineering and Construction .795 692.1.132 3.300 Textiles . Valves and Bearings . A 1. A a Boise a.760.023) Industrial Services – 8.460.b.250 3.866.143.811.232 4.0.257 3.700 Media General Cl.985.141.000 817.c Thermadyne Holdings Metal Fabrication and Distribution .733 113.022.086 1.980 OM Group Park Electrochemical 459.382 3.241.528 4.571.086 4.548.846.4% a Astec Industries a Chart Industries Federal Signal a Flow International Hardinge a Hurco Companies a.626 7.899 543.280.116.254 4.888 $ 92.950 a 1.100 245.495.615.695.579.800 82.056.679 5.5.905.200 5.660 1.428.600 a Spartech Corporation 1.400 324.427 70.309 471.023 5.250 324.2.502.b 1.300 a 260. A a Unifi Total (Cost $361.172.719 a Martha Stewart Living Omnimedia Cl.600 1.722 71.530 42.507 382.279.508.755.371.394.764.374 782.171 9.234 5.000 512.160.554 5.143.0% CIRCOR International Gardner Denver Robbins & Myers Specialty Chemicals and Materials .941 7.078.378 84 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.B.617 10.160 10.250 6.c Comstock Homebuilding Cl.033 4.600 503.5% Albany International Cl.180 4.768 2.256 872.622.177 5.960.486 1.800 New York Times Cl.100 324.b 525.036 9.058.782 11.804 11.090 8.1.537.920.791 114.149 3.659.115 16.001.618 25.c Dixie Group Interface Cl.2.200 a 532.681.258.843.460 42.933 424.700 1.995.690 4.446 969.e GCB Jefferson Smurfit (Warrants) a Graphic Packaging Holding Company a. A 1.260.907 $ 6.975 1.100 1.5% a.779 171.265 a.000 512.386.3% Advertising and Publishing .713.093.332 4.197. A a.C. A Scholastic Corporation 360.612 25.500 a 712.400 M. Holdings 286.719.c 982.214.740 205.935.2.c Gerber Scientific a GrafTech International a.083.905.116.518.029 1.642.1% a Central Garden & Pet a.277 732.179 233.881 408.802 2.977 81.445.966.193 12.678 259.392.185 3.100 865.597 1.5% a Harris Interactive 2.480 4.303.174.056. A iShares Dow Jones US Home Construction Index Fund 308.000 363.c Lydall 874.872.500 1.909.161 † a.971 4.600 a.589.901 7.655 3.274 Rockwood Holdings a Solutia 813.725 5.418 241.732.984 Toll Brothers Transportation and Logistics .163 11.0.158 7.318 369.183 6.659 2.727 2.613 1.7% Aceto Corporation Cytec Industries a Ferro Corporation H.350 12.946.1.323.050 8.354.563 9.255 2.736 4.170 8.131.9% Barnes Group Crane Company a Flanders Corporation a Griffon Corporation † a.950 Material Sciences Minerals Technologies 108.771 1.903 5.c Planar Systems a Zygo Corporation Machinery .096.842 86.206.172 194.320 6.367.219.226.271 6.242 a PolyOne Corporation 1.800 3. A a JetBlue Airways 839.407 16.813.177.200 2.600 483.324. . Fuller Company VALUE SHARES Industrial Products (continued) Specialty Chemicals and Materials (continued) a.862.660 11.673.c TRC Companies a United Rentals a Volt Information Sciences VALUE 1.294.540 3.b Magnetek Mueller Water Products Cl.832 Hovnanian Enterprises Cl.697.D.840 392.210.e Stone & Webster (Warrants) Temple-Inland Pumps.b Cinedigm Digital Cinema Cl.6.065 374.b Zoltek Companies 575.735 433.900 McClatchy Company (The) Cl.911.450 Quaker Chemical 345.097 8.346 1.944 536.1.b.609.944 2. A a 940.391 ValueClick Commercial Services . A a.260 7.958.788.2% a AirTran Holdings a Atlas Air Worldwide Holdings Horizon Lines Cl.934 6.620 9.261. A a.449 23.243.585 11.248 7.787.9% a.916.000 438.647 876.383.996 26.629.489.056 7.658.134.300 524.283.b Furmanite Corporation a Hudson Highland Group a Rentrak Corporation a.163 244.326.699.000 1.945 897.134.500 399.304 36.488 1.181.978 16.900 4.354 451.029 9.041 2.Schedules of Investments Royce Opportunity Fund (continued) SHARES Industrial Products (continued) Industrial Components (continued) a.220 206.

500 252.178.795 8.774 5.047.460 8.561 1.500 1.5% a Actel Corporation a Advanced Energy Industries a ANADIGICS a.798 142.004 3.882.777 8.500 424.311.747 493.157 5.c Evans & Sutherland Computer a.524 6.350 715.835 558.756 8.339 558. A Components and Systems .c Interphase Corporation Keithley Instruments a KEMET Corporation a Maxwell Technologies Methode Electronics a.175.480 9.772 6.500 1.287.723 $ 3.0.730 1.400 1.840 6.445 10.760.246.779 2.042.605.198.115.110 4.227.881.543.941.514 1.794 1.669.030.420 4.148 8.800 218.550 401.238.515.231.415.b McMoRan Exploration SM Energy a Stone Energy a Swift Energy † a Tesoro Corporation Precious Metals and Mining .4% a GenCorp a Hexcel Corporation Kaman Corporation a Mercury Computer Systems a Moog Cl.009.856 3.413 41.250 2.750 528.153.203.404.511 2.236 322.b Ikanos Communications a International Rectifier a Intevac a Kulicke & Soffa Industries a.9% a.639.800 347.642 703.183.000 806.387.800 168.June 30.383 6.362 8.11.6% a Ingram Micro Cl.953.220 8.924 4.883.b AXT a Brooks Automation a.915.314.c LeCroy Corporation a.658.112 334.552 37.491.804.523.260.170.893) Technology – 28.9% Aerospace and Defense .216 987.372 583.702 567.317.157.389 89.602.077) Natural Resources – 4.486.821 286.128 862.625 23.211 674.923.c BTU International a Cascade Microtech a Cirrus Logic Cohu a Fairchild Semiconductor International a FEI Company a.b Identive Group a Intermec a.1.1.374.200 497.9% a. The Royce Funds 2010 Semiannual Report to Shareholders | 85 .067.691.010.178 7.362 9.071 8.655.713 7.800 2.c SigmaTron International VALUE Technology (continued) Components and Systems (continued) a SMART Modular Technologies (WWH) † a.455 345.174 4.104.308 6.b Hypercom Corporation a.472 1.584 7.324.116 4.253 5.544.743 5.279. A Internet Software and Services .124.461 7.047.121.171 5.530 9. 2010 (unaudited) SHARES Industrial Services (continued) Transportation and Logistics (continued) Overseas Shipholding Group Total (Cost $174.732 183.1.273.475.614 197.000 1.181 141.4% a Allis-Chalmers Energy a Matrix Service a Newpark Resources a Rowan Companies a StealthGas Oil and Gas .b James River Coal Total (Cost $80.116 10.870.800 $ 11.104.689 2.625.278 2.293 9.811 405.776 7.810 7.848 7.787 461.684.113 672.346 884.256.b Sanmina-SCI Corporation a Standard Microsystems a SunPower Corporation Cl.085.243.b Viasystems Group a Vishay Intertechnology Distribution .507 4.310.700 659.734 1.240 4.044.844.463 8.600 627.058.232 10.480 736.891.855 32.887 622.976 3.900 699.400 1.763 798.104.281 8.6% EarthLink a InfoSpace a S1 Corporation a Support.150 1.147.246.184 27.802 5.500 253.260 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.915.3% Energy Services .1.085 1.813 329.com a WebMediaBrands Semiconductors and Equipment .867.884 2.384 17.476 168.377 1.488 8.746.821.000 722.307.064 366.159. B a TriQuint Semiconductor a TTM Technologies a.645 3.2% Analogic Corporation a Benchmark Electronics a Cray a Data I/O Corporation a Dot Hill Systems a.849 514.889.032.b LTX-Credence Corporation a MEMC Electronic Materials a Mentor Graphics a Microsemi Corporation a Nanometrics a Novellus Systems a Pericom Semiconductor a PLX Technology a Rudolph Technologies a.900 1.932.948 3.011.483 5.556.400 321.960 3.600 287.213.082.802 851.5.732 766.400 196.b Goodrich Petroleum † a.377 506.335.516.181.800 1.898 407.556 1.872.375.321 734.360.186.697 9.187 382.283 871.217 1.500 851.933.442 599.268.730 4.160 73.214 4.377 9.634.345.580.800 105.805 873.800 886.434 2.600 726.814.866 548.900 222.683 8.246.970 11.254.368 877.228 3.490 1.371.362.100 2.1.313.b Aspen Technology a Avid Technology a Bottomline Technologies a Concurrent Computer a Epicor Software SHARES VALUE 298.400 330.730 1.088.145 8.761 330.900 183.645.790 1.b Network Engines a Newport Corporation a Perceptron a.2.414 7.924.0% a Century Aluminum a.536 1.361 8.500 293.586 9.982 1.411.572 719.580.287.794 1.b Ultra Clean Holdings Varian Semiconductor Equipment a Associates a Zoran Corporation Software .200 2.638 1.701 964.985 6.187.602 1.766.210 3.952.

107.868 1.006 251.301.279.316 1.005% dated 6/30/10.b Opnext a Optical Cable a.020. due 7/1/10.742.121 ) $ 1.0% ADC Telecommunications 3.5.173.527 97.440. Sub.784) d VALUE COLLATERAL RECEIVED FOR SECURITIES LOANED – 3.265 1.851.503 2. .705 584.712 11.089 649.780 496.715.5% Money Market Funds Federated Government Obligations Fund (7 day yield-0.984 1.804 374. A a Globecomm Systems a Harmonic a Loral Space & Communications a MasTec a.000) $351.715.676 33.065 97.519 951.466 4.c ClearOne Communications a General Communication Cl.271 8.061 4.212 4.014 (collateralized by obligations of various U.031 5.304.7% a ADC Telecommunications a Aviat Networks a. Note due 7/15/15 (Cost $229. 0.895.111.b Powerwave Technologies a Symmetricom a Tekelec a.093.325.851.806.900 5.963.309.602. maturity value $97.671 $ 59. valued at $99.150 1.156 7.0409%) (Cost $59.000 86 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.353.151.889.238 698.702) LIABILITIES LESS CASH AND OTHER ASSETS – (3.032.982.457 6.109 680.309.309.388 PRINCIPAL AMOUNT CORPORATE BOND – 0.078.125% due 6/30/11.049.300 265.796.b.275 2.265) TOTAL INVESTMENTS – 103.S.119.065.778.907.437 7.068.062 1.7% State Street Bank & Trust Company.189.232.159 1.787. 1.111.698 2.0% VALUE 215.c Tollgrade Communications a UTStarcom a Veraz Networks a Westell Technologies Cl.703.7% (Cost $1. A Total (Cost $552.800 $ 3.307.927.443.597 250.703.392.524 4.50% Conv.850 651.345 1.Schedules of Investments Royce Opportunity Fund (continued) SHARES Technology (continued) Software (continued) a NetScout Systems Telecommunications .621.014 4.6% Total (Cost $92.301 9.502 5.800) TOTAL COMMON STOCKS (Cost $1.053 1.235) Utilities – 0.718 (63.653) REPURCHASE AGREEMENT – 5.460) Miscellaneous – 4.851.460.714.988 2.3% Hawaiian Electric Industries Total (Cost $5.7)% NET ASSETS – 100.683 3.102 1.069.068. Government Agencies.769.134 3.460 716.324.940 6.c Network Equipment Technologies a Oplink Communications a.433.500) (Cost $97.818.100 1.502 78.000 286.

319.700 12.148.723 73.8% Pharmaceutical Product Development Health Services .824.619 339.9% Hubbell Cl.639.338 21.102.900 19.660 13.341.500 407.030.866 74.000 231.2% Carpenter Technology Central Steel & Wire a.228.560 11.500 401.057.017.200 749.000 7.500 1.766 4.957 83.270) Health – 9.157.096 9.6% a Deckers Outdoor a Movado Group a Volcom Wolverine World Wide Food/Beverage/Tobacco .288 5.959.418 141.892.225.500 999.415 12.719.023.470.623 $ 12.993.4.757.000 496.920 35.c Universal Electronics Sports and Recreation .4.010 28.625 331. Valves and Bearings .031 291.966 13.3% c Bowl America Cl.051.977 858.7% c Frisch's Restaurants Retail Stores .126 20.057 154.585 11.905.800 221.0.200 10.9.506 1.3.210.959 1.552 18.900 4.877 31.565.148 34.500 541.200 4.896 18.845 10.680 6.200 1.073.537.713.0.973.331.0. A Restaurants and Lodgings .101.520 13.077) Consumer Services – 11.179.8% Automotive .423.863.2% c Atrion Corporation a Bio-Rad Laboratories Cl.) Company Cl.130.511 17.386 13.9% Owens & Minor a Schein (Henry) VALUE Health (continued) Drugs and Biotech .500 778.400 118.957.162.232 16.5.230.320 9.0.0% Hawkins Lubrizol Corporation (The) c Park Electrochemical Schulman (A.900 606.202.8% Consumer Products – 15.004.468.500 8.000 310.532.505.376.606 2.100 8.600 724.989 161.432 45.800 Industrial Products – 26.962 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.333) SHARES VALUE 492.0.200 393.715.B.608 12.711 19.3.717.176 8.7% c Hooker Furniture c National Presto Industries a.6% Kaydon Corporation Specialty Chemicals and Materials .3% Information and Processing .) 1.9% Hasbro Other Consumer Products .1.944 1.793.990.8% c Ampco-Pittsburgh a.2.138 957.306 532.071.152 48.095.455.909.510 10. Shoes and Accessories . † Weis Markets Total (Cost $169.0% Commercial Services .3% American Eagle Outfitters Arden Group Cl. 2010 (unaudited) Royce Special Equity Fund SHARES COMMON STOCKS – 83.097.7% Carlisle Companies c Met-Pro Corporation Standex International Paper and Packaging .085 8.040 5.165 10.795 1.938.609.869 1.005 176.300 583.591.4% J & J Snack Foods Lancaster Colony National Beverage Home Furnishing and Appliances .660 37.130 82.200 240.4% Apparel.9% a Clearwater Paper Pumps.600 $ 22.713.980. A c Mesa Laboratories STERIS Corporation c Utah Medical Products Total (Cost $130. The Royce Funds 2010 Semiannual Report to Shareholders | 87 .977.500 436.700 324.6% a. A Insteel Industries Miscellaneous Manufacturing .172.718.260 33.412.450 76.336.600 239.398 19.1.1.902 59.694.876.c Foster (L.800 108.500 25.091 14.397.852.472.5.400 554.137.014.2.065 13.112.c Hurco Companies Nordson Corporation Regal-Beloit a Rofin-Sinar Technologies Wabtec Corporation Metal Fabrication and Distribution .604 818.730 28.798.1.000 870.034.8% c CSS Industries Total (Cost $190.082 483.189 52.673.003 36.June 30.730.500 800.500 813.111.800 762. A a Bed Bath & Beyond Buckle (The) a Gymboree Corporation PetSmart Tiffany & Co.000 348. B a Powell Industries a Thomas & Betts Machinery .668.420 42.000 712.518.415 688.516.000 283.392 57.042.132.100 507.1% † a Genoptix c Psychemedics Corporation Medical Products and Devices .283.774 423.1% Monarch Cement Industrial Components .261.2.500 1.10.620 13.073 19.011 875.700 21.744.111 928.3% c Computer Services Interactive Data † Total System Services Total (Cost $32.941 453.0.000 426.862 562.600 806.570 7.600 406.042.170 15.165 29.3% Leisure and Entertainment .c Dorman Products Construction Materials .700 217.200 14.0.448.595 37.414) Financial Services – 2.800 14.977 145.440 30.400 307.

A † UniFirst Corporation Engineering and Construction .841.061) TOTAL COMMON STOCKS (Cost $1.808.072 14.3.069 16.100 453.1)% NET ASSETS – 100. 1.109.154 3.4% Cintas Corporation Towers Watson & Company Cl.268.565.1.904 616.200 298.035 (collateralized by obligations of various U.602.004 144.563.450. .121.750 53.104.119.350 27. valued at $261.c Baker (Michael) Comfort Systems USA Industrial Distribution .600 251.537.190.886.797) Technology – 9.395 726.008.068.00% due 12/31/11-4/30/12.400 Total (Cost $376.779 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.605.1% Meredith Corporation Commercial Services .442 1.300 654.6% Energy Services .410.154 8. 0.678.005% dated 6/30/10.3.255 5.318 3.179 16.597 342.367.335.713 634.270.276 794.191.9% Applied Industrial Technologies Watsco Total (Cost $121.1% (Cost $1.3% AVX Corporation a Rimage Corporation a Zebra Technologies Cl.0.455) LIABILITIES LESS CASH AND OTHER ASSETS – (0.400.875 ) $ 1.809.459.757 17.956 51.0.100 487.1.4.800 40.7% † a Arris Group a NeuStar Cl.180.500.2% Advertising and Publishing . Government Agencies.310.600 8. A IT Services .890 781.757.241 10.935 21.033.764 1.000 588.400 868.942.500 21.033.100 14.550.779 (1.187. due 7/1/10.042.096.533.911 22.920 30.578) Miscellaneous – 0.013.439.S.744.2% a.154 $ 255.000 224.840 11. maturity value $255.264 73.444 418. A Plantronics a Tekelec Total (Cost $149.000) TOTAL INVESTMENTS – 100.9% Total (Cost $16.757.3% State Street Bank & Trust Company.719.455) 88 | The Royce Funds 2010 Semiannual Report to Shareholders d VALUE REPURCHASE AGREEMENT – 16.249 6.000 570.Schedules of Investments Royce Special Equity Fund (continued) SHARES Industrial Products (continued) Specialty Chemicals and Materials (continued) † Stepan Company 471.1.725.500 218.439.645) (Cost $255.0% VALUE $ 32.500 17.257.000 2.159.600 14.232) Natural Resources – 0.1% a Sykes Enterprises a Virtusa Corporation Software .693) Industrial Services – 8.614 622.989 16.911.880 23.6% Lufkin Industries Total (Cost $4.8% a.753.519.033.445.184 4.829 6.154.992 129.3% Components and Systems .1.795.c Versant Corporation Telecommunications .902 141.

1.013 557.1.309.701.8% Chemed Corporation VALUE Health (continued) Health Services (continued) † a LHC Group SHARES VALUE 788.055 35.9% Health Services .441.9% Hormel Foods Health.619 615.1. A Securities Exchanges .1% Ensign Energy Services Helmerich & Payne a Oil States International a Rowan Companies Tidewater Trican Well Service a Unit Corporation Oil and Gas .141.271.000 20.081.380 31.291 281.904) Natural Resources – 24.828.858 41.100 513.222.605.840 37.2% a FTI Consulting MAXIMUS 575.2% Federated Investors Cl.2.501 24.089 835.628 15.405 33.960 622.376.092 21.306.361.694.705.000 1.997.171 19.015.425.613 $ 21.600 1.231.936 425.425 2.706.2% Thor Industries Total (Cost $82.505 10. A Retail Stores .557 20.491 10.125 462.7% Lincoln Electric Holdings Metal Fabrication and Distribution .244 68.526 598.10.992 645.7% Cimarex Energy Energen Corporation Precious Metals and Mining .928.1% Reliance Steel & Aluminum Schnitzer Steel Industries Cl.191.8% Information and Processing .949 19.092.755.9% Gardner Denver Pfeiffer Vacuum Technology Total (Cost $195.381. Valves and Bearings .120 13.884.568 145.254 461.522 400.935 929.300.928 172.805.047 17.3% a Kirby Corporation Total (Cost $75.849.052.712 14.999 20.0.400 15.1.500. B Partners Group Holding Total (Cost $70.9.253.1.083. 2010 (unaudited) Royce Value Fund SHARES COMMON STOCKS – 95.084 1.10.533.471 140.411 68.178 27.675 13.601.267.7% a NBTY Sports and Recreation .494 Engineering and Construction .465.295 1.555.406 497.0.136.800 863.500 498.4% Energy Services .4% a Knight Capital Group Cl.799 84.178 474.488 492.2.615 37.081.640) Financial Services – 4.583 17.595 1.952 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.495 607.765.859 42.503.6% Total System Services Investment Management .321.676.817 26.709.824 324.510 24.987 19.069 1.1.198.990 22.782 17.017 45.946 1.5% Leisure and Entertainment .616 38.1.065 21.866.487 580.056.963 728.132.011 18.493.5.700 1.9% Agnico-Eagle Mines Fresnillo a Gammon Gold 527.699.3.670) Consumer Services – 10.480.700 658.606 22.1% Allied World Assurance Company Holdings Alterra Capital Holdings a Arch Capital Group Aspen Insurance Holdings PartnerRe Validus Holdings Securities Brokers . The Royce Funds 2010 Semiannual Report to Shareholders | 89 .729 656.1.638 12.2.939 16.431.448.509 27.900 1.718.172.324. A Sims Metal Management ADR Pumps.197.841.100 944.217.569.705.375) Industrial Services – 5.100 19.950 110.3.936 134.10.951 Medical Products and Devices .044.966 20.121.852 46.255 150.118.604 $ 21.271.767.718 23.627.1% International Speedway Cl.1% Patterson Companies Total (Cost $51.056 33.840 26.200 10.548 56.1.344 703.208 28.597.425 26.392 8.8% Simpson Manufacturing Industrial Components .263.490.695.781 1.2. Shoes and Accessories .614.9% Coach a Fossil Food/Beverage/Tobacco .971 189.135 837.095) Health – 3.568.7% Apparel.982.143.279 15.1.9% Commercial Services .074 73.589.185 787.824 175.118 10.500 676.083.7% † a GrafTech International Machinery . A Total (Cost $146.084.June 30.986 359.449) Financial Intermediaries – 13.2% Building Systems and Components .4% a Jacobs Engineering Group Transportation and Logistics . Beauty and Nutrition .6% Consumer Products – 7.805 23.941.517.987) Industrial Products – 12.678.005 789.2.4% American Eagle Outfitters Buckle (The) a Dress Barn (The) Family Dollar Stores a GameStop Corporation Cl.200 1.964.568.927 23.327.011 39.854 35.560.727 145.2% Insurance .7% TMX Group Total (Cost $189.

112 55.013) Technology – 9.652. Moore Arts & Crafts a. A † a Jos.015.6% (Cost $1. 0. valued at $74.549.9% Coach a Gildan Activewear Food/Beverage/Tobacco .200 777.1.778.832.9% a DreamWorks Animation SKG Cl.4% a Comtech Telecommunications Total (Cost $142.260.150.819.090.222 10.673.548 1.339.b.083.641 39.503.840 18.300 599.609 468.328.010 (collateralized by obligations of various U.005% dated 6/30/10.362.780 229.992 347.734 2.138.9% a Bancorp (The) c Berkshire Hills Bancorp Enterprise Financial Services Fifth Third Bancorp Marshall & Ilsley Northern Trust a SVB Financial Group Synovus Financial Umpqua Holdings † Zions Bancorporation SHARES VALUE 905.800 7.0% State Street Bank & Trust Company.204 31.404 ) $ 1.723 1.881 29.992) REPURCHASE AGREEMENT – 5.443 34.500 734.992) LIABILITIES LESS CASH AND OTHER ASSETS – (0.545 21. A Semiconductors and Equipment .162.501.2% 861.000) TOTAL INVESTMENTS – 100.125% due 6/30/11.476 34.728 156.392 90 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.0% d Royce Value Plus Fund VALUE COMMON STOCKS – 94.907 133.970. Shoes and Accessories .069 51.615 53.044.025 26.011 (8.304 1.072 34.714.000 10.626.Schedules of Investments Royce Value Fund (continued) SHARES Natural Resources (continued) Precious Metals and Mining (continued) a Ivanhoe Mines Major Drilling Group International Pan American Silver a Red Back Mining a Seabridge Gold a Silver Standard Resources Real Estate .3% IT Services .2% c Shamir Optical Industry Total (Cost $120.870 13.914) Miscellaneous – 3.126.800 2. Bank Clothiers Men's Wearhouse (The) Monro Muffler Brake a O'Reilly Automotive Tractor Supply Total (Cost $289.011 72.317 17.096.184 17.454.000 1.464 752.2.394 13. due 7/1/10.781 933.1.189.464.300 1.919 23. Government Agencies.088.782.910.243 350.961 4.671 1.245 178.040.572 764.317.1% a A.025 21.885 17.400 7.335.S.542 $ 33.175.300 9.2.051.809.041.540 24.131 38.000 452.450 20.102.129.121.692 14.088.837.0% Lance Sanderson Farms Health.607 1.551 1.151.846.530 Consumer Products – 4.900 1.400 7.308.725) Consumer Services – 8. .6.000 308.803.200 26.1.601 $ 11.c Liquidity Services a LoopNet Restaurants and Lodgings .308.975.714.870 20.283.046 42.9% Apparel.8% Inter Parfums NutriSystem Other Consumer Products .430 540.796 250.084 5.447 30.874 914.960.116.983.545 563.697.6% Leisure and Entertainment .628 54.200 701.436.860 13.951.4% Banking .698.002 10.794.266 142.024 298. A.343.000 1.313. 1.1.1% a.048 16.500 3.2% a Cabot Microelectronics a Lam Research a MKS Instruments a Novellus Systems Telecommunications .437.355 22.4.496 1. A Online Commerce .200.0.480 8.641 36.012.973 551.6)% NET ASSETS – 100.520 25.000 185.812 331.c Casual Male Retail Group c Christopher & Banks a GameStop Corporation Cl.826.900 2.253.607.470 13.059.780.639.815.C.191.230.373.451 4.308.441 21.352 893.000 410.900) Financial Intermediaries – 15.066.795 22.478.947.100 1.0.c Cosi Retail Stores .170 1.0.0. Beauty and Nutrition .483.682 60.411.000 552.5% a.445.209.200 808.386.900 850.406.538.403.372.141.591.000 438. maturity value $72.738) (Cost $72.205.7% Total (Cost $54.7.7% a ManTech International Cl.140.7% a PICO Holdings Total (Cost $331.653 9.945) TOTAL COMMON STOCKS (Cost $1.335.046.390.

549.123.160 7.264.188.237.633.975 24.197 3.304.0.619 1.500 103.047.556 19.895.843.467.705 122.5% a Horsehead Holding Corporation Kennametal Sims Metal Management Sims Metal Management ADR † Worthington Industries Miscellaneous Manufacturing .193.777.055.035.288 107.136.278 6.986.559.7% Cintas Corporation a Resources Connection Ritchie Bros.090.0.190.798.583) Industrial Products – 9.600 1.300 11.688 284.500 500.694 9.911 12.913.074.090 9.508.000 1.904 21.321.039 909.883.9% a Affymetrix a.600 778.9% Calfrac Well Services a.840.800 9.042 12.286 101.500 319.0.255.0% Commercial Services .1.205.5% Valmont Industries Total (Cost $306.731.2% Commercial Services .400 33.248.170 14.100 595.840.250 1.859 7.728.862 27.000 59.081.315.188 1.000 450.900 2.145.5% Industrial Components .b Genomic Health a Myriad Genetics Drugs and Biotech .344 20.519.394.180.553.000 109.890.854 3.300 509.341.504 15.100 593.707.918 1.4% Grainger (W.c FARO Technologies Machinery .491.460.200 386.000 8.965.428.000 1.261) Health – 4.333 39.028.1.648.000 6.8% a.662.894.161.000 $ 3.c TradeStation Group Securities Exchanges .020 21.200 27.8% Energy Services .100 3.600 1.800 96.0.300 987.5% a KBW a Knight Capital Group Cl.200 11.000 10.593.835. A Raymond James Financial a.3.841.3.511.842.040 1.300.500 2.873 795.600 247.300 511.475.1.800 $ 22.c Cerus Corporation Total (Cost $166.867.770 29.229 34.2% MarketAxess Holdings Total (Cost $462.322 1.912 99.915.614.899 953.447.782. Global Investors Cl.700 728.) MSC Industrial Direct Cl.979 Industrial Services – 11.774 18.178 18.814 2.435.020 39.300 303.900 1.884.0.960.740 894.820.602 428.554 1.632.482 944.939 12.602.3.046.000 757.743 319.469 1.610 26.000 900.243 15.951 30.073.3% Duff & Phelps Cl.416.165 10.600 1.862 727.579.4% † a.651.378.700 277.b Duoyuan Global Water ADR a IPG Photonics a Rofin-Sinar Technologies Tennant Company Metal Fabrication and Distribution .128 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.275.224.775.000 400.390 44.000 952.422.091.9% Brown & Brown Investment Management .292 2.040 93.c Celadon Group Heartland Express a Kirby Corporation Knight Transportation a Universal Truckload Services Werner Enterprises Total (Cost $309.098.738 14.224) 1.000 6.541. A Other Financial Services .0.685 9.195.047.601 1.000 43.905.1% U.366.4% SEI Investments Insurance Brokers .040 20.304.331.024 8.439 9.353 1.808 33.232.031 75.000 9.856.576) SHARES VALUE 220.June 30.440 98.479.1% CLARCOR VALUE Industrial Products (continued) Industrial Components (continued) a.000 27.915 20.617.199.7% a Intrepid Potash Industrial Distribution .2% a.115.678 29.693.125 2.3% a Kennedy-Wilson Holdings Total (Cost $78.616 39.650 56.304.068.400 950. A Information and Processing .867 30.0.299 1.892.432 30.000 20.700 1.742 19.700 1.253 31.438.238.0% Diversified Financial Services .000 2.700 1.W.801.536 Natural Resources – 15.426.0.5% a Cypress Bioscience a Dyax Corporation a Eurand a Exelixis a Rigel Pharmaceuticals a Theratechnologies Medical Products and Devices .000 300.204.464 1. A Watsco Transportation and Logistics .125.S.017 17.3. Auctioneers Robert Half International a TrueBlue UniFirst Corporation Food.100 500. Tobacco and Agriculture .484.1. The Royce Funds 2010 Semiannual Report to Shareholders | 91 .3.829) Financial Services – 2.088.000 2.500 448.3.8% a CNA Surety Hanover Insurance Group PartnerRe Validus Holdings White Mountains Insurance Group Securities Brokers .361.3.3.b Clean Energy Fuels Ensign Energy Services Pason Systems a Tesco Corporation Trican Well Service 507. 2010 (unaudited) SHARES Financial Intermediaries (continued) Insurance .200 3.040 23.249.597 24.c Caliper Life Sciences a.

477 669.4% Total (Cost $147.684 REPURCHASE AGREEMENT – 6.b.358) TOTAL INVESTMENTS – 101.8% a Bill Barrett † a.9% Money Market Funds Federated Government Obligations Fund (7 day yield-0.976.602.053 47.000.6% a SRA International Cl.744.042 (51.537.000 85.991.197.089.720 28.b BPZ Resources a Comstock Resources † a.861.400 $ 35.107.943.600 2.0.171.562.198.005 1.994.1.005% dated 6/30/10.137.633. 1.033.672 2.285.b Comverse Technology 92 | The Royce Funds 2010 Semiannual Report to Shareholders VALUE Technology (continued) Telecommunications (continued) a.750 28.092.763.485.695 1.100 526.624.c Digi International † a Polycom † a.054) LIABILITIES LESS CASH AND OTHER ASSETS – (1.358 36.841 31.914.500 3.515 244.658.100 981.106.265 23.259 35.000 29.562.165.c Avid Technology a.146 39.000 2. A Semiconductors and Equipment .257.647 13.300.965.9% ADTRAN a.381.552.750. 2.725 35.Schedules of Investments Royce Value Plus Fund (continued) SHARES Natural Resources (continued) Energy Services (continued) a Unit Corporation Oil and Gas .048 3.000 750. 0.696) d SHARES VALUE 875.789.485.099.500 5.747.756 2.887 535.876 1.464 1.2.4% a Electro Scientific Industries a Exar Corporation a FormFactor a.1.496 15.708) Miscellaneous – 4.326 36.8% (Cost $3.900 475.791.301 47.523 24.450 18.000 2.100 1.100 2. maturity value $195.034.000 $ 818.108 25.00% due 10/31/11.237.089.048.165.c Supertex Software .894 18.303 42.537.700 2.400 .027 (collateralized by obligations of various U.7% a PICO Holdings Total (Cost $450.9% a.171.825.232 18.965 6.216.488 20.662.000) COLLATERAL RECEIVED FOR SECURITIES LOANED – 0.565) Technology – 18.853.000 600.8.145.164.554 10.5% a.794.496 2.066 2.086 28.900 2.176.089.4% Aerospace and Defense .c Littelfuse a Trimble Navigation IT Services .489.418.100 2.342 26.4% † a African Barrick Gold Agnico-Eagle Mines Alamos Gold a Allied Nevada Gold a Fronteer Gold a Gammon Gold a Ivanhoe Mines a Seabridge Gold a Silver Standard Resources Real Estate .532.587.518.b.181.c GSI Group a International Rectifier † Micrel a MKS Instruments a.000 178.009 80.0.500 20.500 1.564 14.006. valued at $201.887.S.404.c Mercury Computer Systems Components and Systems .358 7.012.749 a 25.0409%) (Cost $26.089. Government Agencies.b TeleNav Total (Cost $611.288.222 22.245 20.000 703.048.800 12.662.8)% NET ASSETS – 100.500 2.200 1.607.533.716.6.000 737.538.1% Brocade Communications Systems a Checkpoint Systems a Infinera Corporation a Intermec a.000 3.746.325) TOTAL COMMON STOCKS (Cost $2.790.261.452.900 832.427 156.816 127.014 5.330 42.000) (Cost $195.240.0% 195.000 3.089.094.543 460.360 ) $ 2.2.335.c Symyx Technologies Telecommunications . due 7/1/10.739.953.486 113.435.773.389.682 2.036 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.230 10.c Energy Partners Precious Metals and Mining .5.394 2.969.826 16.000.200 23.981.350.103.610 562.7% State Street Bank & Trust Company.997.723 31.005.336 14.800 950.

000 110.11.321.800 74.8% a Morningstar a MSCI Cl.R.298 3.900 64.496.2.632) Industrial Products – 18.499 1.020 2.2% Columbia Sportswear † a Warnaco Group (The) Food/Beverage/Tobacco . Artio Global Investors Cl.609. Other Consumer Services .100 219.104 3.900 17.100 4.500 2.614.342.2. Valves and Bearings .441) Industrial Services – 22.100.7% Commercial Services .200 62.469.768 6.842 2.166.246 1.722 58.252 3.400 2.728.1% CLARCOR a FARO Technologies a GrafTech International PerkinElmer Machinery .651.489.975.027 3.551 2.4% a Cowen Group Cl.6% Apparel.338.705 1.2.P.0% AZZ † Valmont Industries Paper and Packaging .179 164.800 106.342. B Waddell & Reed Financial Cl.003.215 12.960 5.248 10.728.3% Cal-Maine Foods Sanderson Farms Home Furnishing and Appliances .772 63.373.023.440.884 22.000 $ 2.000 9.437.1% a Affiliated Managers Group AllianceBernstein Holding L.124.June 30.2.913.373 15.079.812.000 4.436 3.744 118.394.5% Berkley (W.130 48.580 188.632.884.340.511.625.3. A VALUE Financial Services (continued) Investment Management (continued) Westwood Holdings Group SHARES VALUE 80.710) Health – 1.829.9% Kennametal Reliance Steel & Aluminum Sims Metal Management ADR Steel Dynamics Miscellaneous Manufacturing .7% Greif Cl.9% a Rofin-Sinar Technologies Wabtec Corporation Metal Fabrication and Distribution .014 4.297.8% Retail Stores .455.295.800 2.467 3.452 4.260 3.800 114.770) Consumer Services – 1.426. A Pumps.800 162.1% Ethan Allen Interiors a Mohawk Industries Total (Cost $19.065 1.500 72. A a Knight Capital Group Cl.398 94.545.b Corinthian Colleges Corporate Executive Board a CRA International a Gartner 2.630.435 4.643.1.476.470.2% Consumer Products – 6.706.881.900 52.100 2.966.763) Financial Services – 12.1.600.936 Total (Cost $40.718.200.828.425 3.007 3.651 2.840.991.100 91.690 84.197 178.2.658 88.940 4.978 3.320.250 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.800.000 2.536 3.492 181.4.332 69.493 3.000 3.662.0% Information and Processing .700 3.760 12.527 20.371.800 110.) a Markel Corporation Securities Brokers .821.900 91.152 3.317 198.1.843.566 3.159 5.100 190.509 2.675.0.700 131.120 2.678 7.311 157.1.407 37.759 4.287.900 137.300 128. A Lazard Cl.2.659 2.900 92.200 191.656 100. The Royce Funds 2010 Semiannual Report to Shareholders | 93 .400 257.400 6.373.132.864 1.562.900 142. A SEI Investments Total System Services Insurance Brokers .1% Brown & Brown Investment Management .7.400 50. A Cohen & Steers Federated Investors Cl.032 144.825.1% Gardner Denver Kaydon Corporation Total (Cost $56. Shoes and Accessories .178 3.3. A a Interactive Brokers Group Cl.158) Financial Intermediaries – 4.676 2.619 396.172.837.387 321.500 209.163.638.115 150.478 2.1.900 56. A Total (Cost $16.148 3.800 2. 2010 (unaudited) Royce 100 Fund SHARES COMMON STOCKS – 94.3% a Dress Barn (The) Tiffany & Co.246 1.618.948 2.744.609 2.929.5% Health Services .470 6.602.008.5% a ITT Educational Services Total (Cost $4.438 2.552.900 110.949.762.6% Building Systems and Components .1.596 6.741 3.485 1.213 145.519.4% Brink's Company (The) Cintas Corporation a Copart a.500 35.481.395 $ 60.5% a Advisory Board (The) a ICON ADR Total (Cost $3.600 96.561 4.888.231.643.104 2.012 4.3.200 92.9% a Armstrong World Industries a Drew Industries Simpson Manufacturing Industrial Components .9% Insurance .779.500 5.833 13.700 352.676.744 2.900 169.593 126.

728 3.590.574.350) (Cost $22.625 3.791.650.256.586.963. A Semiconductors and Equipment .125 3. due 7/1/10.309 22.003 (collateralized by obligations of various U.564.397 103.610 9.8% Applied Industrial Technologies MSC Industrial Direct Cl.Schedules of Investments Royce 100 Fund (continued) SHARES Industrial Services (continued) Commercial Services (continued) a Hewitt Associates Cl.918.970.466.155 3.709.5.000 328.556.527.4% Aerospace and Defense .567 1.636.b Intrepid Potash Industrial Distribution .896.700 79.586. maturity value $22.099 3.156) TOTAL COMMON STOCKS (Cost $287.500 71.772) Natural Resources – 12.266 32.500 13.022 6.000 9.187.400 262.300 131.900 7.446 90.580.100 $ 4.100 120.622.898.375 2.0.2% State Street Bank & Trust Company.800 220.1.744 1.767. 0.676.297.478.561.152.800 112.000 34.178 107.4% Arkansas Best Expeditors International of Washington Forward Air a Kirby Corporation Landstar System a Patriot Transportation Holding UTi Worldwide Total (Cost $72. A VALUE Technology (continued) Components and Systems .785 38.551 1.706 3.010 3.669.221.136 2.471. A Engineering and Construction .0% d SHARES VALUE 116.500 101.467.073.8% ADTRAN a Comtech Telecommunications Total (Cost $31.4)% NET ASSETS – 100.359.144 4.546.9% HEICO Corporation Cl.800 70.039.800 100.931) TOTAL INVESTMENTS – 104.b Blackboard National Instruments Telecommunications .453.0409%) (Cost $9.971.311.4% Diebold a Dionex Corporation a Plexus Corporation IT Services .958.916 2.788 2.300 20.0% a.091.222.717 3.528.601.973.113.723.586 1.5% Total (Cost $7.080 1.832 3. valued at $23.1.178.240 296.931 88.237.2% Sapient Corporation a SRA International Cl.800 168.367 196.600 1.378 2.125% due 6/30/11.557.438.099.0% Blackbaud a.545 2.550 4.642 91.639.175 185.005% dated 6/30/10.2.768.610 5.0% Ensign Energy Services Helmerich & Payne a Oil States International Pason Systems a SEACOR Holdings ShawCor Cl.741) REPURCHASE AGREEMENT – 7.586. A Trican Well Service a Unit Corporation Precious Metals and Mining .100 5.400 $ 2.227 124. Tobacco and Agriculture .616 7.500 149.756 94 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.217.700 3.188 25.306 3.4.8.700 73.106 2.524 4.700 102.800 43.800 89.500 127.672) LIABILITIES LESS CASH AND OTHER ASSETS – (4.2.2% † Cliffs Natural Resources Fresnillo Major Drilling Group International Randgold Resources ADR Total (Cost $33.044 3.000 58.574 71.3.4% (Cost $319.488 2. .110.300.1.206 36.990 35.406.907 1.910 2.0% Money Market Funds Federated Government Obligations Fund (7 day yield-0. A Manpower MAXIMUS a Universal Technical Institute a Verisk Analytics Cl.083) Miscellaneous – 2.S.804 9.500 58.870.298 (13.095.000 121.113.221 347.300 58.011.947.005 2.821 3.808 3.120 ) $ 314.400 4.256) Technology – 11.401 2.426.000 3.200 2. Government Agencies.953.875 2.1% a EMCOR Group KBR a NVR a Quanta Services Food.100 90.716.400 95.406.136 3.893.500 79.3.900 174.2% Energy Services .293. 1.000) COLLATERAL RECEIVED FOR SECURITIES LOANED – 3.710 3.500 48.485.000 131.262 16.363.400 118.571.400 302.526 1. A Transportation and Logistics .540.1.1% a Coherent Software .

535 25.3% Commercial Services .044 30.700 1.718 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.800 900 1.114 1.2% Atrion Corporation a ICU Medical a Kensey Nash a Medical Action Industries a Quidel † a Symmetry Medical Utah Medical Products † a Winner Medical Group Total (Cost $545.416 28.5% Online Commerce .916 25.800 9.800 26.933 25.1.200 31.100 7.800 3. Ruger & Company Other Consumer Products .4.200 2.636 31.700 4.1% Apparel.600 900 1.300 2.4% a American Oriental Bioengineering † a China Sky One Medical a Harvard Bioscience a Hi-Tech Pharmacal a Sinovac Biotech VALUE Health (continued) Health Services .878 166.0.1% † Blyth Oil-Dri Corporation of America Sports and Recreation .1.267 2.964 26.432 18.300 $ 40.172 34.2.June 30.072 63.1. A Home Furnishing and Appliances .899 19.328 46.4.200 3.2.300 900 800 2.365 1.500 25.200 3.8% † a Continucare Corporation † a Cross Country Healthcare a Metropolitan Health Networks † a Molina Healthcare a Res-Care Medical Products and Devices .444 19.416 22.5% Automotive .700 28.041 26.663 29.647 23.G.7% † Apogee Enterprises † Preformed Line Products Industrial Components . A Miscellaneous Manufacturing .984) SHARES VALUE 2.724 29.800 1.010 23.6% † a QKL Stores Total (Cost $109.736 30.789 92.432 62.984 24.7% Hooker Furniture Household Products/Wares .581 26.1.600 2.4.620 20.215 136.300 18.358 28.8% a American Safety Insurance Holdings a Amerisafe First Mercury Financial a Hallmark Financial Services Meadowbrook Insurance Group SeaBright Holdings Total (Cost $194.900 1.6% Encore Wire a Foster (L.098 36.688 26.606 121.) Company Cl.505 20.734) Financial Intermediaries – 5.600 4. The Royce Funds 2010 Semiannual Report to Shareholders | 95 .2. Shoes and Accessories .100 2.835 60.498 12.162 200 800 1.899 2.622 503.100 21.700 1.010 25.600 1.553 19.364 19.276 21.856 34.750 526.0% a KapStone Paper and Packaging Specialty Chemicals and Materials .100 4.000 813 4.000 4. B CTS Corporation a Gerber Scientific Graham Corporation † a Powell Industries Metal Fabrication and Distribution .8% Aceto Corporation † Innophos Holdings a Landec Corporation † Schulman (A.3.0.0.9% † a AMN Healthcare Services Drugs and Biotech .) † Stepan Company Total (Cost $547.544 165.975 1.835 19.300 2.560 31.2.5.040 208.800 3.100 $ 29.828 23.1.2% Bel Fuse Cl.740) Industrial Products – 17.B.3% Consumer Products – 9.267 1.049 33.396 22.188 30.494 27.080 1.649 31.308) Consumer Services – 3. Beauty and Nutrition .201 34.060 101.200 2.999 1.523 1.950 47.100 500 29.5.292 22.545 22.0% AZZ Paper and Packaging .400 4.320 21.167 1.378 26.2% † a Caribou Coffee † a Papa John's International Retail Stores .9% CSS Industries Total (Cost $270.148 1.812 31.0% † Barry (R.2% a JAKKS Pacific † Sturm.802 3.700 1.2% † NutriSystem Schiff Nutrition International Cl.500 1.100 3.) Health.7% † Systemax Restaurants and Lodgings .400 7.100 1. 2010 (unaudited) Royce Discovery Fund SHARES COMMON STOCKS – 95.725 125.2% a Fuel Systems Solutions Miller Industries † Spartan Motors † Standard Motor Products Building Systems and Components .0.7.781 41.122 34.087 262.480 24.844 1.0.400 3.000 6.648 26.526 63.000 27.081) Health – 18.020 3.8% Insurance .

161 25.940 142.7% a CIBER † a Virtusa Corporation Semiconductors and Equipment .537 78.700 1.040 21.700 3.150) Natural Resources – 4.2.500 1.560 24.S.450 26.200 1.8% Ducommun a Dynamics Research † a Force Protection Kaman Corporation a LaBarge † VSE Corporation Components and Systems .732 29.100 4.400 2.200 3.072.544 23.8% † a L&L Energy Total (Cost $150.512 26.230 ) 2.600 117.460 2.0% (Cost $3. valued at $141.388 6.9% † China Security & Surveillance a Technology † a Imation Corporation † a Multi-Fineline Electronix a Nam Tai Electronics a RadiSys Corporation a Rimage Corporation a Super Micro Computer Internet Software and Services .253 18.9% Ennis Total (Cost $234.200 4.064 23.5.887 125.700 3.281 800 2.460 131.000 3.899) (Cost $137.4.128 28.3.420 32.398 3.517 209.746.885 28.184 27.000 4.722 50.365 5.708 25.125% due 4/30/17.400 3.731 20.0.323 10.1.299) LIABILITIES LESS CASH AND OTHER ASSETS – (0.000 26.100 1.839 703.100 $ 19.400 $ 18.5% Total (Cost $198.360 26.881.559 31.000) TOTAL INVESTMENTS – 100.400 3.5% a Image Sensing Systems † a Integrated Silicon Solution a TTM Technologies Software .193 1. 0.4.1.200 2.0.274 138.722 5.207 2.9% Oil and Gas .400 2.4.000 3.135 24.700 1.265) Technology – 24.840 28.4% Aerospace and Defense .300 2.215 2.950 168.883.200 2.000 19.200 3.952 18.100 700 23.900 24.200 4.963 1.940 33.700 15.0% $ 137.1% a Actuate Corporation a Pervasive Software Telecommunications .200 1.200 3.516 24.900 3.0% a ePlus † a GigaMedia † a InfoSpace † United Online a VASCO Data Security International VALUE Technology (continued) IT Services . A Communications Systems a Globecomm Systems † a Novatel Wireless † a Sierra Wireless † a Symmetricom Total (Cost $821.4% a Audiovox Corporation Cl.100 1.2. due 7/1/10.4. Government Agencies.193 (1.940 23.209.299) d SHARES VALUE 1.500 6.386 21.317 10.005% dated 6/30/10.520 1.422 REPURCHASE AGREEMENT – 4. maturity value $137.000 3.506 26.961 22.300 4.300 4.952 31.710 27.3% Commercial Services .600 8.595 116.120 29.920 23.7% State Street Bank & Trust Company.050 22.100 1.344 22.911 22.000 20.000 (collateralized by obligations of various U.785) TOTAL COMMON STOCKS (Cost $3.Schedules of Investments Royce Discovery Fund (continued) SHARES Industrial Services – 7. 3.500 96 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.7% a ATC Technology a GP Strategies a ICF International a Innodata Isogen Engineering and Construction .7% a Baker (Michael) † Comfort Systems USA † a Dycom Industries a Layne Christensen Printing .252) Miscellaneous – 4.537 3.500 72.763 25.0)% NET ASSETS – 100.945 21.697 105.1% † a China Integrated Energy a Energy Partners a TransGlobe Energy a VAALCO Energy Precious Metals and Mining . .800 1.

583 209.425 124.700 61.R.0. A Partners Group Holding a Reinet Investments a RHJ International a SHUAA Capital a SPARX Group Sprott T.400 14.286 92.676 52. The Royce Funds 2010 Semiannual Report to Shareholders | 97 . A Marsh & McLennan † a Primerica RLI Validus Holdings Total (Cost $1.900 1.300 $ 36.000 139.300 14.200 3.9.505 49.625.848 142.100 137.900 6.175 125. Rowe Price Group U.096 94.300 5.300 7. A Value Partners Group VZ Holding Waddell & Reed Financial Cl.21.974 122.102) Investment Management .170 183.715 169.000 400 43.372 96.608 136.187 36.800 9.652 120.900 4.295 3. A Ashmore Group Azimut Holding Cohen & Steers Investment Management (continued) Endeavour Financial Federated Investors Cl.425 8.080 2. A a Morningstar a MSCI Cl.400 3.592 117.2% Jones Lang LaSalle Total (Cost $80.200 3.488 237.7% Brown & Brown Gallagher (Arthur J.844 4.700 215. B Banque Privee Edmond de Rothschild BOK Financial Fauquier Bankshares Julius Baer Group Northern Trust Peapack-Gladstone Financial † a Popular Vontobel Holding Wilber Corporation (The) Wilmington Trust Total (Cost $1.113 57.820 191.100 7.900 5.473 51.700 52.182) Securities Brokers .600 5.207 5.2.700 23.929 201.896 165.747) Other Financial Intermediaries .728 78.) a CNA Surety E-L Financial a Enstar Group Erie Indemnity Cl.761 56.500 145.616 2.300 9.844 137.671 195.900 150 3.151 129.200 12.5% KKR & Company (Guernsey) L.3% a Alleghany Corporation Berkley (W.7% Banking .000 150.209.300 151.384 208.000 49.474 35.052 229. A a Investcorp Bank GDR Jefferies Group a KBW Kim Eng Holdings Lazard Cl.480 113.570 57.140) Insurance .256) Real Estate .12.000 87.300 20.500 51.028 281.740 853.085 3 1.870 118.33.900 3. Global Investors Cl.871 3.000 2.) & Co.632 150.333 3.000 2.600 5. A Egyptian Financial Group-Hermes Holding a FBR Capital Markets GFI Group a Gleacher & Co.200 22.528 57. Total (Cost $50.000 6.821) Diversified Financial Services . A Westwood Holdings Group Total (Cost $4.076 5.300 3.668 77.926 109.200 301.169 103.000 12. A a Gartmore Group Invesco Investec Janus Capital Group † a Jupiter Fund Management MVC Capital Och-Ziff Capital Management Group Cl.000 29.500 209.500 10.225) Information and Processing .100 2. Artio Global Investors Cl.500 11.000 1.1% a Affiliated Managers Group AGF Management Cl.186 11.036 140.000 6.218 74.675 10.354. B AllianceBernstein Holding L.437 210.770 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.942 2.000 7.835 68.000 10.760 32.000 30.874 88.000 6. Butterfield & Son Bank Sarasin & Cie Cl.599 66.900 3.S.T.1% a Bank of N.029 42.112 212.000 9. A 17.333 96.066 999. 2010 (unaudited) Royce Financial Services Fund SHARES COMMON STOCKS – 96.000 60.992 132. GMP Capital HQ a Interactive Brokers Group Cl.353 160.090 147.310 120.1.200 5.331.2.288 700 4.500 100.544 35.096 113.335 157.050 217.764 131.5% IOOF Holdings Total (Cost $46.600 20.092 186.000 10.400 3.June 30.288 57.600 4.P.0.876 VALUE SHARES VALUE 10.321 518 7.3% Bolsas y Mercados Espanoles a Cowen Group Cl.6% a Hilltop Holdings a Kennedy-Wilson Holdings Total (Cost $268.603 35. B a GAM Holding GAMCO Investors Cl.600 5.400 $ 15.P.7.400 4.295 82.400 10.321 51.8% MasterCard Cl.376 57.600 111.277.160 96.260 2.700 250.185) Insurance Brokers . Willis Group Holdings Total (Cost $287.132 79.481) Other Financial Services .219 123.100 33.600 9.496 36.000 5. A SEI Investments Western Union Total (Cost $756.813 64.091 209.400 19.166 1.

535) LIABILITIES LESS CASH AND OTHER ASSETS – (0. due 7/1/10.8% American Woodmark Ethan Allen Interiors Hunter Douglas Sports and Recreation .036 183.0.081 10.270 265.8% American Eagle Outfitters Buckle (The) Cato Corporation (The) Cl.035 380.600 9. .799 98 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A World Wrestling Entertainment Cl.333.919 70.737 244.640) Financial Intermediaries – 18.872 250.766.1% (Cost $12.792 49.2.747 ) 10.000 114.000 2.200 8.200 10.684 7.989 76.507 2.000 51.000 $ 91. Butterfield & Son 0% Conv.985 125.508 119.500 1.845 102.937 53.333 130.036 4.300 104.200 2.T.2.000 4.000 18.7% ASX Hellenic Exchanges Singapore Exchange Total (Cost $351.821 3.2% a Credit Acceptance a World Acceptance Total (Cost $79. A Retail Stores . Shoes and Accessories .900 $ 221.500 8.2.0. maturity value $366.9% International Speedway Cl.205 40.979) PREFERRED STOCK – 0.362 23.023 100.175 250.1)% NET ASSETS – 100.964 95.000 (collateralized by obligations of various U.776 (5.700 16.500 16.3% Banca Generali † Bank of Hawaii a Bank of N.000 1.884 419.298 9.T.263 63.996 1.600 9.3% Hormel Foods Industrias Bachoco ADR J & J Snack Foods Lancaster Colony Lindt & Spruengli Sanderson Farms Home Furnishing and Appliances . (Cost $556) Royce Dividend Value Fund VALUE COMMON STOCKS – 91.7% Leisure and Entertainment .687) TOTAL COMMON STOCKS (Cost $11.482 101.628 56.1.4.589 459 478 REPURCHASE AGREEMENT – 3.579.2% Thor Industries Other Consumer Products .500 13.338 Consumer Products – 5.750 17.067 430.000 11.205 137.498) Securities Exchanges . 0.800 28. 3.S.079.180 250.865 497.920 67.327 200.582 2.620 128.875 543. B † City Holding Company Fauquier Bankshares Peapack-Gladstone Financial 7.995.000 2.4% State Street Bank & Trust Company.248 249.948 9.288 3.544 37.968.0% $ 32.125% due 4/30/17.603 158.045.600 18.100 25.315 11.396) (Cost $366.100 366.005% dated 6/30/10.7% Fair Isaac Total (Cost $174.500 25.3% Banking .0.250 9.673 55.400 183.0% Guess? Marimekko † Stella International Holdings † Weyco Group Wolverine World Wide Food/Beverage/Tobacco .000 177.779 126.Schedules of Investments Royce Financial Services Fund (continued) SHARES Securities Brokers (continued) a MF Global Holdings Mirae Asset Securities Mizuho Securities Numis Corporation Oppenheimer Holdings Cl.751) Consumer Services – 5.678 1. A a Dress Barn (The) Family Dollar Stores Le Chateau Cl.824.700 19.2.300 5.609 10.413) Software . Butterfield & Son Bank Sarasin & Cie Cl. A Lewis Group Williams-Sonoma Total (Cost $2.100 249.400 95.700 2 5.273 16.1.815 300. A Raymond James Financial Samsung Securities Sanders Morris Harris Group a Stifel Financial a Thomas Weisel Partners Group Tokai Tokyo Securities UOB-Kay Hian Holdings Total (Cost $2.000) TOTAL INVESTMENTS – 100. Government Agencies.352 392.069 264.552 104.331 3.100 5.029 4.3% Societe BIC Total (Cost $2.105.100 1.6% Apparel.700 10.400 6.804 169.400 4.010 97.006 273.000 4.7% SHARES VALUE 16.973.678.019.126 299.607.066 2.000 10.222.360 47. valued at $378.900 8.000 5.810 90.800 4.201 3.0.388 381.516 500.0% † e Bank of N.400 2.242) Specialty Finance .100 12.

400 8.300 5.492 23.) Cincinnati Financial Erie Indemnity Cl.200 68.176 105.000 10.300 3.3% Commercial Services .8% † TMX Group Total (Cost $10. Global Investors Cl.800 25.1.000 9.500 17.036 148.006 5.268.000 91.289 9.400 3.598.654 253.600 9.500 100.1.2% Boiron Pharmaceutical Product Development Recordati Health Services .420 1.700 16.057 118. The Royce Funds 2010 Semiannual Report to Shareholders | 99 .100 10.100 6. A Raymond James Financial Sanders Morris Harris Group Securities Exchanges .872 509.9.4% AAON Preformed Line Products SHARES VALUE 100.240 235.028 115.768 62.000 10.319 26.600 1.236 119.000 9.298 3.617 415.251 243.408 340. B AllianceBernstein Holding L.858 179.640 309.741 294.784) Financial Services – 13.680 4.791 202.898.8% Information and Processing .9.164 637.699 60.092 155.0.000 466.438 354.8% Colony Financial Cousins Properties DCT Industrial Trust Gladstone Commercial a HRPT Properties Trust Lexington Realty Trust National Health Investors Securities Brokers .P.827 144.000 6.700 8.084 58.1.515 807.005 229.900 10.000 111.P.512 399.223 146.253.400 5.250 722.900 10.079.320 146.176 121.971 420.917 67.051.200 15.170 129.400 25.155 8.000 14.600 4.900 16.320 64.2.500 16.1% Xinyi Glass Holdings Building Systems and Components .267.2.500 3.206 9. 2010 (unaudited) SHARES Financial Intermediaries (continued) Banking (continued) † a Popular Insurance .550 129.3% a Fiserv Interactive Data SEI Investments Total System Services Value Line VALUE Financial Services (continued) Insurance Brokers .200 6.F. A Fidelity National Financial Cl.6% Automotive . A Westwood Holdings Group Other Financial Services .000 6.264 129.275 80.698) Health – 3.155.300 13.600 31.614. A † First American Financial Harleysville Group † HCC Insurance Holdings Marsh & McLennan Montpelier Re Holdings † NYMAGIC Old Republic International PartnerRe Reinsurance Group of America † StanCorp Financial Group † United Fire & Casualty Validus Holdings White Mountains Insurance Group Real Estate Investment Trusts .500 1.025 245.512) Industrial Products – 17.000 28.410 7. A VZ Holding Waddell & Reed Financial Cl. B Gluskin Sheff + Associates Invesco Investec † a Jupiter Fund Management Och-Ziff Capital Management Group Cl.589 368.318 448.5% A.014 237.8% Chemed Corporation Medical Products and Devices .600 254.000 34.100 15.295 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.092 130.0. Provida ADR † a Affiliated Managers Group AGF Management Cl.513 52. Apollo Investment † Artio Global Investors Cl.1.100 500 47.500 11.412 648.475.5% Brown & Brown Willis Group Holdings Investment Management .340 1.900 117.917 385.300 9.200 1.900 30.546 347.300 25.1% Allied World Assurance Company Holdings Alterra Capital Holdings Aspen Insurance Holdings Berkley (W.000 246.390 255.600 9.089 1.0.319 282.500 20.773.673 135.000 8.800 8.200 4.752 2.896 370.200 6.300 $ 497.796 3. A Ashmore Group Cohen & Steers † Epoch Holding Corporation Federated Investors Cl.0.000 120.922 385.800 39.000 11. A Partners Group Holding Sprott U.R.300 13.S.3% Egyptian Financial Group-Hermes Holding GMP Capital Lazard Cl.600 6.100 48.500 $ 269.000 7.109 393.5% a Kennedy-Wilson Holdings Total (Cost $7.100 2.682 22.1% Carl Zeiss Meditec Fielmann † Pall Corporation Total (Cost $1.957 56.153 609.567 688.232 413.900 7.700 4.892.337 400 376.800 104.800 72.675 140.480 54.292 7.924 403.778 444.2% OdontoPrev Drugs and Biotech .845 446.508 191.0.3.000 14.334 161.483 48.530 282.June 30.200 24.320 266.000 4.636 775.922 242.400 20.

497.500 12.132 587.0.172 39.3.3% Ensign Energy Services Exterran Partners L.5% Duratex Geberit Industrial Components .800 10.1.600 7. A Other Industrial Products . Helmerich & Payne Lamprell Lufkin Industries a Oil States International Tidewater Oil and Gas .700 191.000 3.300 257.153.4% Energy Services .700 3.755 247.500 15.600 6.000 4.857 971.741 1.677 10.706 3.3% Cimarex Energy SHARES VALUE 6. A Landauer † Manpower MAXIMUS Michael Page International † Pico Far East Holdings Engineering and Construction .100 400 10.500 54.000 3.325 248.400 9.100 144.176 572.960 1.5% AptarGroup Greif Cl.5% Burckhardt Compression Holding Franklin Electric Hardinge Lincoln Electric Holdings Nordson Corporation Regal-Beloit Spirax-Sarco Engineering Tennant Company Metal Fabrication and Distribution .238 7.700 2.0.500 $ 85.000 338.Schedules of Investments Royce Dividend Value Fund (continued) SHARES Industrial Products (continued) Building Systems and Components (continued) WaterFurnace Renewable Energy Construction Materials .690 479.062 829.100 14.031.400 12.000 317.433 190.108 2.500 36.900.224 40.240.073 279.040 1.1% Gardner Denver Graco Kaydon Corporation Specialty Chemicals and Materials .648 36.317 779.200 35.375 214.2.872 112.500 8.278.1.154 299.600 100 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.156 4. A Kennametal Reliance Steel & Aluminum Sims Metal Management ADR Steel Dynamics Miscellaneous Manufacturing .300 10.404 13.849 155.P.300 9.000 8.065 254.884 321.150 16.700 10.500 9. A a Kelly Services Cl.000 $ 150.652 192.200 11.780 111.000 7.200 71.000 167.400 9.600 4.500 16.136 431.500 7.600 10.100 7.300 361.900 10.000 10.900 1.8% Balchem Corporation Cabot Corporation Quaker Chemical Victrex VALUE Industrial Products (continued) Textiles . A Pumps.600 11. A CLARCOR Deswell Industries Donaldson Company Machinery .306 8.400 15.453 203.2.500 186.700 3.189 5.000 1.0.920 101.712 232.922 200.507 1.334 121.441 249.6.919 176.968 406.112 529.6% Commercial Services .5% Domino Printing Sciences Transportation and Logistics .2.920 141.723 186.000 5.541.560 1.400 6.600 16.700 7. .500 5.2% Interface Cl.951 288.648.801 102.328 220.3% † AZZ Rational Raven Industries † Valmont Industries Paper and Packaging .816 189.102) Industrial Services – 9.177 281.1.) Houston Wire & Cable † Mine Safety Appliances Printing .600 158.2% MTS Systems Total (Cost $9.900 14.460 42.400 243.0.0.204 211.366 492.454 435.8% Carpenter Technology † Commercial Metals CompX International Cl.8% Applied Industrial Technologies Grainger (W.2.900 1.3.2% Amphenol Corporation Cl.000 6.050 6.0.7% Brink's Company (The) Corporate Executive Board † Electro Rent Grupo Aeroportuario del Centro Norte ADR Grupo Aeroportuario del Pacifico ADR a Hewitt Associates Cl.000 11.000 7.104.W.445 55.1% Arkansas Best Landstar System a Pacer International UTi Worldwide Other Industrial Services .250 156.404 8.000 7.069 431.1.500 351.493 174.925 653.2% US Ecology Total (Cost $5.000 13.025 198.900 15.715 341.800 434.3% Skyline Corporation Industrial Distribution .964 86.000 5.0.931 124.372 286. Valves and Bearings .798.559) Natural Resources – 7.910 400.368 127.219.100 6.526 379.299 517.150 14.697 53.800 452.793 154.600 3.361 184.000 5.464 225.446 1.

S.005% dated 6/30/10.236 371.903 495.107 $ 54. 0.325) (Cost $3. (Cost $422) REPURCHASE AGREEMENT – 6.000 17.320) Technology – 5.518 260.447. valued at $3.600 3.020 1.132.168 49.100 $ 576.1% (Cost $52.8% Total (Cost $3.000 1. A Components and Systems .3% AVX Corporation Diebold Vaisala Cl.149.800 3.000 3.536.014.570 1. Precious Metals and Mining .000 13.916 195.1% Blackbaud National Instruments Telecommunications .0% Fresnillo Natural Resource Partners L.P. Randgold Resources ADR Other Natural Resources .1.860 249.057.966 720.0.0.000 53.000) TOTAL INVESTMENTS – 98.684.290 440.147.7% EarthLink IT Services .516 511.454 4.0.000 10.991 2.0.671 NET ASSETS – 100.1. Government Agencies.288 362. Butterfield & Son 0% Conv.June 30.125% due 6/30/11.468 50. A Internet Software and Services .447.000 1.000 3.017.4% Analog Devices Cognex Corporation Software .768 580.0% † e Bank of N.700 7.1.400 255. The Royce Funds 2010 Semiannual Report to Shareholders | 101 .397) TOTAL COMMON STOCKS (Cost $48.025 510.049 70.640 4.832) Utilities – 0.220 376.300 89.P.880 155.460.127 6.000 3.9% SHARES VALUE 13.305) CASH AND OTHER ASSETS LESS LIABILITIES – 1.050 74.348 2.628.020 52.000 104. due 7/1/10. maturity value $3.920 180.7% Ducommun HEICO Corporation Cl.900 15.100 2.994 437.900 3.8% China Forestry Holdings Total (Cost $3.0% 21. 2010 (unaudited) SHARES Natural Resources (continued) Oil and Gas (continued) Energen Corporation Pioneer Southwest Energy Partners L.000 (collateralized by obligations of various U.4% State Street Bank & Trust Company.760 84.0.3% Aerospace and Defense .732 256. 1.220.2% ADTRAN Total (Cost $2.P.699.447.9% † iGATE Corporation Jack Henry & Associates Semiconductors and Equipment .790.288) Miscellaneous – 4. Plains All American Pipeline L.3% Northeast Utilities UGI Corporation Total (Cost $142.883) d VALUE PREFERRED STOCK – 0.700 20.884.875 350 $ 364 18.0.740 247.148 269.250 112.800 1.T.550 64.600 9.300 46.656 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.267.

807) Hong Kong – 1.981 74.611 65.708 158.063 165.320 72.000 2.443) Norway – 1.8% Mayr-Melnhof Karton Semperit AG Holding Total (Cost $380.000 2.040 50.623 128.000 119.000 5.500 57.224) Greece – 0.000 800 70.913 2.981 41.000 8.000 13.236 4.2% Fugro Hunter Douglas Total (Cost $222.8% EVS Broadcast Equipment GIMV Sipef Total (Cost $357.9% Ekornes Fred Olsen Energy Total (Cost $187.990 2.000 1.848 91.028 5.472 1.6% a Bell Equipment Discovery Holdings Lewis Group a Net 1 UEPS Technologies Northam Platinum † Raubex Group Total (Cost $464.700 1.6% Asian Citrus Holdings Total (Cost $88.600 108.601 476.996 102.000 500 70.500 6.466 144.200 375 2.913 119.500 2.2% Australia – 2.227 325.413 70.498 84.082 31.855) France – 9.183 40.475 45.063 50.370 90.Schedules of Investments Royce European Smaller-Companies Fund SHARES COMMON STOCKS – 92.472 144.700 1.000 7.300 40.623 1.500 42.259) Finland – 4.669 102.411) Peru – 2.7% Hellenic Exchanges Total (Cost $103.700 1.522 101.4% Recordati Tod's Total (Cost $110.984 702.400 133.8% Hochschild Mining Total (Cost $179.958 349.386) Belgium – 3.305) Italy – 1.763) Netherlands – 2.000 $ 158.000 38.495 102.000 128.000 14.000 85.082 170.361 2.196) Jersey – 1.157 68.866 2.632 35.000 204.408 61.417 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.000 $ VALUE 61.480 55.273) Mexico – 2.378) SHARES 400 12.162 26.207 136.677 10.197 158.000 136.479 141.500 90.535 76.517 57.361 204.0% Fresnillo Total (Cost $76. . A Total (Cost $371.753 75.9% H Lundbeck Total (Cost $175.000 4.500 2.754 763.000 15.776 123.800 2.183 10.161 85.689) Austria – 4.183 176.200 3.853 277.7% a Beneteau Boiron Manutan International † Meetic Piscines Desjoyaux Societe BIC Societe Internationale de Plantations d'Heveas Vetoquinol Virbac Total (Cost $734.234) Germany – 10.400 72.376) South Africa – 6.109 4.819 48.604 25.2% a Centamin Egypt Total (Cost $90.500 500 2.5% Marimekko Nokian Renkaat Ponsse Vacon Vaisala Cl.000 4.820 79.207 10.5% AS Creation Tapeten Carl Zeiss Meditec Deutsche Beteiligungs Fuchs Petrolub † KWS Saat Pfeiffer Vacuum Technology 102 | The Royce Funds 2010 Semiannual Report to Shareholders VALUE Germany (continued) Rational Takkt Total (Cost $876.441) Ireland – 0.197 9.949 63.178) Egypt – 1.200 2.8% Randgold Resources Total (Cost $61.8% Egyptian Financial Group-Hermes Holding Total (Cost $151.109 133.762 109.500 1.000 144.000 178.307 104.785) Denmark – 1.5% Charter International Total (Cost $26.370 107.

361 31.500 2.800 65.000 6.000 25.277 56.100 600 1.672) Turkey – 1.612 174.318 108.066.033 10.000 175.7% State Street Bank & Trust Company.1% $ VALUE 7.221 87. 0.850 77.698 70.879 88.000 3.470) United Arab Emirates – 2.June 30.000 45.8% † Ford Otomotiv Sanayi † Mardin Cimento Sanayii Ve Ticaret Total (Cost $147. 2010 (unaudited) SHARES Sweden – 1.000 $ VALUE 87.0% 10.280 63.2% a Lundin Petroleum Total (Cost $127.375) CASH AND OTHER ASSETS LESS LIABILITIES – 2.000 14.000 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.142.100 900 55 700 98.000 (collateralized by obligations of various U. 1.493 1.4% Lamprell Total (Cost $99.005% dated 6/30/10.375) REPURCHASE AGREEMENT – 5.174 NET ASSETS – 100.500 14.125% due 6/30/11.601 97.847 53.000) 20.766) Switzerland – 10.272. B Banque Privee Edmond de Rothschild Burckhardt Compression Holding Inficon Holding Julius Baer Group Partners Group Holding † Sika VZ Holding Total (Cost $759.697.784 54.500 33.257) United Kingdom – 15.800 94.617 45.000 1.4% Bank Sarasin & Cie Cl.000 64.353 55.161 2.000 15.996 414.7% † a African Barrick Gold Ashmore Group Begbies Traynor Diploma Domino Printing Sciences † ENSCO ADR Hikma Pharmaceuticals † a Jupiter Fund Management Michael Page International Rotork Spirax-Sarco Engineering † Spirent Communications † Ted Baker Victrex Total (Cost $1.207) TOTAL COMMON STOCKS (Cost $6.9% (Cost $7.343 66. valued at $428. Government Agencies. maturity value $414.542 101.010 130.263.033 175.429 77.221 TOTAL INVESTMENTS – 97.858.468 4 1.188) (Cost $414.009 6.S.633 39.579 752.000 3.750 84.956 60.996 151.165 $ 7. due 7/1/10.111.382 193.204 56. The Royce Funds 2010 Semiannual Report to Shareholders | 103 .000 64.091 164.500 7.

000 28.932 612.724.817 395.620) Denmark – 1.439.000 469.831) Canada – 14.850 588.644) Egypt – 1.000 $ 395.914 1.2% Endeavour Financial Total (Cost $78.000 58.553) SHARES VALUE 15.000 38.311 588.000 68.000 2.000 602.068 55.015 746.000 175.000 45.424.115.590.000 14.378 1.000 395.639 1.017 982.777 205.1% † EVS Broadcast Equipment GIMV Sipef Total (Cost $2.570 37.655 1.000 358.000 37.282.364) Austria – 5.4% † Nomura Research Institute † Santen Pharmaceutical Total (Cost $2.500 1.000 125.248 789.236 849.119.000 350.006 15.000 2.000 $ 961.500 1.042 7.000 8.347.000 50.639 1.5% Egyptian Financial Group-Hermes Holding Total (Cost $820.131) Indonesia – 0.159 1.322 2.503.9% † a Centamin Egypt Total (Cost $880.305.500 1.420 2.000 40.937 712.318 810.783) Peru – 2.000.925 731.932 606.398 2.900) Germany – 5.702) Brazil – 0.644 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.127 957.743.685) China – 2.3% † Aixtron Carl Zeiss Meditec Pfeiffer Vacuum Technology Rational Total (Cost $2.4% Boiron † Meetic 104 | The Royce Funds 2010 Semiannual Report to Shareholders VALUE France (continued) Societe Internationale de Plantations d'Heveas Total (Cost $1.000.699.618 50.748 653.397 650.9% Amil Participacoes Total (Cost $316.909) Cayman Islands – 0.593 905.035 426.843 19.200 46.000 3.500 41.000 85.6% Aquarius Platinum Lewis Group Northam Platinum † Raubex Group Total (Cost $2.000 7.780 581.6% Hochschild Mining Total (Cost $1.663 287.015 Switzerland – 5.000 612.886 15.000 702.426.221.394) Japan – 4.000 80.852.463 861.770 3.400 877.347.500 1.000 11.392.515.716.000 30.017 961.261.143.2% H Lundbeck Total (Cost $854.000 782.800 70.0% Major Drilling Group International Pason Systems a Red Back Mining a Seabridge Gold a Silver Standard Resources Sprott a Tesco Corporation Trican Well Service Total (Cost $7.335 16.1% Australia – 1.000 725.855.973 655.809.625 734.848 974.220 1.094 527.706.500 15.002 125.5% Asian Citrus Holdings Citic 1616 Holdings Luk Fook Holdings (International) † a Sino-Forest Corporation Value Partners Group Total (Cost $3.570 430.923) Belgium – 4.748 470.749 430.235) Mexico – 3.188 2.9% Burckhardt Compression Holding Partners Group Holding 7.119 463.663 113.Schedules of Investments Royce Global Value Fund SHARES COMMON STOCKS – 95.000 70.500 1.305.124 2.9% China Forestry Holdings † E-House China Holdings ADR a 3SBio ADR Total (Cost $1.817 145.254) France – 3.820 1. .259.233.560 910.000 470.000 746.8% † PT Charoen Pokphand Indonesia Total (Cost $425.986) South Africa – 5.8% † MegaStudy Company Total (Cost $443.511 982.523.110.200 31.809) Hong Kong – 7.000 80.000 113.493 3.328 861.722 562.476.3% Mayr-Melnhof Karton Semperit AG Holding Total (Cost $2.556) South Korea – 0.942 881.0% Fresnillo Industrias Bachoco ADR Total (Cost $1.200.

B † Value Partners Group Total (Cost $464.294 3.375 1.2.6% Gardner Denver a GrafTech International a Jacobs Engineering Group a Knight Capital Group Cl.975 351.800 1.2% (Cost $50.000 20.646 95.688) United Arab Emirates – 2.567) TOTAL COMMON STOCKS (Cost $48. A U.566) Industrial Products – 17.725 24.005% dated 6/30/10.850 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.2% a American Italian Pasta Cl.996) United States – 14.000 47.8% Food/Beverage/Tobacco .861) 2.1% a Autoliv 2.619.029.4.000 13.7% Commercial Services .710 2.113. Government Agencies.452 a 2.845 71.926) Health – 1.608 135. valued at $2.969 1.590.766 67.000 (collateralized by obligations of various U.P.094.400 639.199 377.343 43.164 ) 50.1% Retail Stores .667 120.500 5.000 1.288 35.2% Lamprell Total (Cost $773.000 350. A a O'Reilly Automotive Total (Cost $397. A a Unit Corporation Total (Cost $8.000) TOTAL INVESTMENTS – 100.0% $ VALUE COMMON STOCKS – 88.7% a Endo Pharmaceuticals Holdings Total (Cost $74.345 103.216.2% PartnerRe Securities Exchanges .000 77.666 251.978 16. A † Sanderson Farms Sports and Recreation .1% Information and Processing .0% a Schein (Henry) Drugs and Biotech .022.2)% NET ASSETS – 100.199 Consumer Products – 6.036 86.000 377.000 188.000 101.584 827.200 98.315 3.1% American Eagle Outfitters a Dollar Tree a Dress Barn (The) Family Dollar Stores GameStop Corporation Cl.709.3% Ashmore Group Aveva Group † ENSCO ADR † a Jupiter Fund Management Total (Cost $2.2.250 305.654.159 801.196 57.S.505 7.650 1. 1.845 1.800 44.3% SEI Investments Investment Management .590.550 62.S.232) United Kingdom – 6.1% State Street Bank & Trust Company.258 234. The Royce Funds 2010 Semiannual Report to Shareholders | 105 .400 2.360 791.400 667.590.248.763) (Cost $2.884.600 60.183) Turkey – 0.431 343.7.000 1.6% Thor Industries Total (Cost $274.954 (112.936 12.730 76.186 45.8% AllianceBernstein Holding L. † Artio Global Investors Cl.000 51.1.945) REPURCHASE AGREEMENT – 5.702 453.125% due 6/30/11.450.793 Financial Intermediaries – 7.7% † Mardin Cimento Sanayii Ve Ticaret Total (Cost $411. maturity value $2.670 364. Global Investors Cl.2% Comerica † Huntington Bancshares † a Popular Insurance . 2010 (unaudited) Royce SMid-Cap Value Fund SHARES Switzerland (continued) † Sika Total (Cost $2.1. due 7/1/10.982.109 1.100 7.1.5.000 24.200 19.2% † TMX Group Total (Cost $399.200 7.500 557.500 115.3% $ 883.500 960.274 SHARES VALUE 500 80.200 750 31.242.700 495.700 600 700 3.050. A Lincoln Electric Holdings Sanderson Farms Schnitzer Steel Industries Cl.400 461.June 30. A † Ashmore Group Federated Investors Cl.7% Automotive .675 3.000 13.544 254.900 25.954 5.790 800 1.100 25.900 26.736 48.500 43.314) Consumer Services – 8.268.000 100.8.504. 0.616) Financial Services – 10.6% Banking .502 2.0.500 85.700 $ 148.312 1.600 915.500 15.113.920 32.945) LIABILITIES LESS CASH AND OTHER ASSETS – (0.1.

200) (Cost $548.300 2.400 1.867 77.094 803. .895 96.881 REPURCHASE AGREEMENT – 12.5)% NET ASSETS – 100.900 169.8% Energy Services .7% ENSCO ADR Pason Systems a Unit Corporation Precious Metals and Mining .739 794.508 29.000 95.395 ) 4.200 21.096) Technology – 15.605 74. A Paper and Packaging . maturity value $548.416 228.850) Industrial Services – 2.414 78.1.1% ADTRAN Citic 1616 Holdings Total (Cost $723.540 41.7% Engineering and Construction . valued at $564.Schedules of Investments Royce SMid-Cap Value Fund (continued) SHARES Industrial Products (continued) Industrial Components .2% a GrafTech International PerkinElmer a Thomas & Betts Metal Fabrication and Distribution .3% Kennametal Reliance Steel & Aluminum Schnitzer Steel Industries Cl. A Semiconductors and Equipment .854 222.000 3.2% State Street Bank & Trust Company.8% Rockwell Collins Components and Systems .2% CA Telecommunications .600 2.285 (21. A Specialty Chemicals and Materials .3.2.400 1.5.1.000 5.675 52.990 235.0% Greif Cl.200 1.0.300 4.3% a Arrow Electronics IT Services .1% † a Centamin Egypt † Hochschild Mining Pan American Silver a Seabridge Gold Total (Cost $811.5% (Cost $4.0.388 2.040 54.8% a Kirby Corporation Total (Cost $131.5.1.300 $ 104.10.297 99.500 11.456 34. 0.820 3. due 7/1/10.9% † a Jacobs Engineering Group Transportation and Logistics .534 120.S.400 108.978.732 10.118 97.692) SHARES VALUE 8.000 (collateralized by obligations of various U.668.425 121.338 58.692) LIABILITIES LESS CASH AND OTHER ASSETS – (0.125% due 6/30/11.0% $ 548.504.110 62.346 55.296 139. Government Agencies. 1.500 127.221 600 2.120.203 2.363) TOTAL COMMON STOCKS (Cost $4.642 106 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.325 457.1% AVX Corporation a Plexus Corporation † a Western Digital Distribution .622 2.700 1.100 2.480 238.379 650 9.000 4.310 9.740 133.400 1.005% dated 6/30/10.680 1.1% Lubrizol Corporation (The) Total (Cost $843.435 713.8% Aerospace and Defense .944 30.3.526.979 86.369 126.000) TOTAL INVESTMENTS – 100.4.9% † Aixtron ADR a International Rectifier VALUE Technology (continued) Semiconductors and Equipment (continued) † Micrel Software .100) Natural Resources – 17.396 58.4% a SRA International Cl.7.000 156.5.121 346.070 2.900 66.0.600 34.400 900 87.600 3.070 4.700 $ 121.

813) Belgium – 1.000 3.0% Duratex † Grendene † a Kroton Educacional Saraiva SA Livreiros Editores Total (Cost $224.476 45.517 113.959) Bermuda – 1.011 59.943) Egypt – 0.959 1.616) Cayman Islands – 0.300 5.961 41.778 35. A DundeeWealth Ensign Energy Services a Gildan Activewear Gluskin Sheff + Associates GMP Capital a Ivanhoe Mines a Magma Energy Major Drilling Group International Onex Corporation Pan American Silver Pason Systems a Red Back Mining Ritchie Bros.950 30.750 56.509 277.963 60.9% Ajisen China Holdings China Forestry Holdings a Duoyuan Global Water ADR E-House China Holdings ADR Golden Eagle Retail Group a Hollysys Automation Technologies Jinpan International Kingdee International Software Group a Simcere Pharmaceutical Group ADR a Sinovac Biotech a 3SBio ADR Tianneng Power International Total (Cost $441.545) France – 5.616 47.000 2.5% † H Lundbeck Total (Cost $84.469 235.630 484.391) British Virgin Islands – 0.864 37. A Total (Cost $183.500 2.500 225 1.950 11.000 40.360 66.500 2.June 30.100 2.500 53.4% AGF Management Cl.543 24.700 2.5% a Beneteau Boiron Bollore Manutan International † Meetic † Paris Orleans et Cie SHARES 1.809 25.275.800 1.816 41.000 5.800 $ 24.500 62. A Total (Cost $32.000 1.648 108.000 18.725 40.000 5.571) Canada – 10.594 42.278 63.104 68.000 8.400 3.381 166.117 21.000 49.769 56.506 29.453 99.770 3.733 38.300 6.700 3.000 10.975 2.900 4. A Total (Cost $164.3% Marimekko Nokian Renkaat Vacon Vaisala Cl.370 126.988 111.000 7.279) Denmark – 0.000 3.6% EVS Broadcast Equipment † GIMV Sipef Total (Cost $235.330 246.879 2.500 1.695 32.000 64.687 26.840 34.104 2.200 2.593 5.168 45.279 201.391 17.753 5.000 10.873 73.000 45.185 29.043 71.2% UTi Worldwide Total (Cost $39.000 38.754 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.472 1.600 1.412) Brazil – 2.346 5.047 4.9% Australia – 1.000 142.220.705 25.000 3.727) China – 3.500 1.318 49.000 68.100 99.434 163.400 $ VALUE 40. The Royce Funds 2010 Semiannual Report to Shareholders | 107 .960 35.000 119.050 96.500 3.400 1.300 2.442 58.204 60.3% Mayr-Melnhof Karton Semperit AG Holding Total (Cost $300.900 33.398 97.386 31.100 47.000 14.645 41. 2010 (unaudited) Royce International Smaller-Companies Fund SHARES COMMON STOCKS – 91.547 35.4% a Enstar Group † Golar LNG Lazard Cl.640 53.9% ASX † a Centamin Egypt IOOF Holdings Platinum Asset Management Trust Company Total (Cost $216.975 62.300 4.878 42.288 1.600 700 2.235 58.559 39.500 3. B † a Celestica a Dundee Corporation Cl.000 2. Auctioneers VALUE Canada (continued) a Seabridge Gold ShawCor Cl.429 85.000 4.100 4.688 19.305) Austria – 2.625 43. A † a SouthGobi Resources Sprott a Terra Nova Royalty TMX Group Trican Well Service a Urbana Corporation Total (Cost $1.000 1.500 5.500 76.700 12.266 1.229 91.633 63.904) Finland – 1.500 20.000 20.000 4.139 60.012 52.600 4.081 46.000 1.420 61.000 7.5% a Greenlight Capital Re Cl.660 37.175 8.144 47.700 151.8% Egyptian Financial Group-Hermes Holding † Lecico Egypt Total (Cost $95.500 30.

831 33.3% a Reinet Investments Total (Cost $33.000 5.000 1.742 12.142 41.1% † Benesse Holdings † Capcom Company † Celsys en-japan † EPS Company † FamilyMart Company † Hogy Medical Ito En Japan Logistics Fund kabu.Schedules of Investments Royce International Smaller-Companies Fund (continued) SHARES France (continued) † Piscines Desjoyaux Societe BIC Societe Internationale de Plantations d'Heveas Vetoquinol Virbac Total (Cost $708.198 49.653 91.104 43.500 7.000 40.000 275.8% Carl Zeiss Meditec Fuchs Petrolub † KHD Humboldt Wedag International † KWS Saat Pfeiffer Vacuum Technology Rational STRATEC Biomedical Systems Takkt Total (Cost $460.618 57.486) Greece – 0.850 437.000 380 1.949) Jersey – 0.500 4.000 37 91.000 52.744) SHARES 600 $ VALUE 37.000 37.919 54.100 28.000 270.000 160.000 45.000 70.000 2.665 21.000 69.116 23.011 66.291 45.712 100.176) Luxembourg – 0.364.500 1.291 32.411) Mexico – 3.313 10.190 462.511 95.300 2.280) Hong Kong – 6.836 33.893 65.000 1. .850 2.000 6.698 20.730 19.807 26.400 1.364 62.606 54.000 700 1.300 3.499 21.439 1.794 24.163 30.000 80.4% † Graphite India † Maharashtra Seamless † Nava Bharat Ventures Total (Cost $176.000 2.500 800 8 1.000 1.067 58.236) Japan – 11.067) India – 1.500 27 23 30 2.433 82.300 32.335 26.313 23.7% † Asia Satellite Telecommunications Holdings Asian Citrus Holdings China Everbright International China Green (Holdings) China High Speed Transmission Equipment Group Citic 1616 Holdings Digital China Holdings Huabao International Holdings Luk Fook Holdings (International) † Midland Holdings Minth Group Pico Far East Holdings Sa Sa International Holdings Sino Biopharmaceutical † a Sino-Forest Corporation † Stella International Holdings Value Partners Group Total (Cost $762.900 9.5% Randgold Resources ADR Total (Cost $26.625 85.700 3 5.500 30.068 63.100 400 1.000 11.363 Italy (continued) Tod's Total (Cost $117.000 38.882 83.686 22.882 72.000 84.874 38.715 31.4% Hellenic Exchanges Total (Cost $96.200 4.242 673.000 10.135 66.510 7.000 250 1.199 143.635 168.882 28.759 820.180 2.082 75.750 360 $ VALUE 53.133 73.200 1.6% † Alsea Bolsa Mexicana de Valores a Desarrolladora Homex ADR Fresnillo Grupo Aeroportuario del Centro Norte ADR Grupo Aeroportuario del Pacifico ADR Industrias Bachoco ADR Total (Cost $357.482 33.225 49.476) Italy – 1.647 38.500 5.125 49.540 73.360 24.957 57.0% Recordati 6.403 56.453 44.156 18.739 49.099 17.000 21.900 72.500 35.700 2.000 4.850 56.099 108 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.358.com Securities † Kao Mizuho Securities Mochida Pharmaceutical † Moshi Moshi Hotline Nihon Parkerizing Nomura Research Institute † Oriental Land Osaka Securities Exchange † Sankyo Company † Santen Pharmaceutical Shimano a SPARX Group Sundrug Sysmex Corporation THK Company † TOTO † Wacom Company Total (Cost $1.000 102.395 63.000 59.000 31.698 52.925 a 7.236 75.500 650 1.084 40.198 600 56.570 55.500 27.288 72.826 121.796 100.355) Germany – 3.610 49.300 27.500 10.133 30.000 42.200 5.940 42.400 425 1.791 45.

000 58.293.179 79.559 147.144 40.155 55.000 72.500 45.547 2.200 84.000 3. The Royce Funds 2010 Semiannual Report to Shareholders | 109 .362) Peru – 1.000 20.220 24.000 10.343 80.148 23.000 27.600 13.334 35.228 56.300 40 1. Shine Optical Total (Cost $57.685 12.700 38.106 11.868 70.000 38.900 40.843 70.296 127.482) Taiwan – 0.451) Switzerland – 6.391 90.533) Puerto Rico – 1.605 84.3% Hochschild Mining Total (Cost $157.128 21.693 67.665 22.500 102.895 50.460) TOTAL COMMON STOCKS (Cost $11.000 64.624) South Africa – 3.000 850 530 550 3.946) Singapore – 1.496 747.187 199.126) Turkey – 1.500 34.300 12.000 40.000 50.509 156.6% † a African Barrick Gold Ashmore Group Begbies Traynor Domino Printing Sciences † ENSCO ADR a Gartmore Group Hikma Pharmaceuticals † a Jupiter Fund Management Michael Page International † Rotork Spirax-Sarco Engineering † Spirent Communications Victrex Total (Cost $892.1% Bank Sarasin & Cie Cl.189.821 62.000 5.286 158.958 76.375 10.500 263.615 50.495 98.187 66.448 454.605 56.686) United Arab Emirates – 1.000 10.158 41.853 78.296 40 1.665 178.200 2.2% Amorepacific Corporation Binggrae Company Green Cross GS Home Shopping MegaStudy Company Mirae Asset Securities Samsung Securities † Sung Kwang Bend Woongjin Coway Total (Cost $577.385) United States – 0.0% Lamprell Total (Cost $79.750 700 1.135 66.106 50.000 7.866 935. 2010 (unaudited) SHARES Netherlands – 0.221 24.000 43.799 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.942 73.154 33.334 39.579 54.607 40.000 10.300 200.4% ARA Asset Management a Biosensors International Group Kim Eng Holdings a Raffles Education Total (Cost $172.000 2.560 38.005 79.611 50.214 52.000 158.240) Thailand – 0.947 158.220 2.134) South Korea – 4.508) United Kingdom – 7.400 $ VALUE 50.6% † Ford Otomotiv Sanayi † Mardin Cimento Sanayii Ve Ticaret † Vestel Beyaz Esya Sanayi Ve Ticaret Total (Cost $245.4% WaterFurnace Renewable Energy Total (Cost $44.204 56.000 3 1.544 30.214 60.June 30.465 112.100 3 900 2.4% † a Popular Total (Cost $198.400 8.500 1.4% Hunter Douglas Total (Cost $55.000 70.105 59.000 17. B Banque Privee Edmond de Rothschild Burckhardt Compression Holding Julius Baer Group Lindt & Spruengli Partners Group Holding † Sika Vontobel Holding 1.654 61.515 122.000 38.145 514.005) Sweden – 0.000 2.900 40.648 10.611 43.755 102.776 44.000 127.694 31.666 178.895 Switzerland (continued) VZ Holding Total (Cost $750.587) SHARES 600 $ VALUE 48.7% † Big C Supercenter † Thai Beverage Total (Cost $81.947 20.7% † Aquarius Platinum a Bell Equipment Brait Lewis Group a Net 1 UEPS Technologies Northam Platinum † Raubex Group Total (Cost $476.000 21.451 167.500 64.6% Chroma ATE St.000 2.4% a Lundin Petroleum Total (Cost $57.

840 144.000 75.0% $ Royce Focus Value Fund SHARES COMMON STOCKS – 82.7% a Berkshire Hathaway Cl.6% a GrafTech International Metal Fabrication and Distribution . Global Investors Cl.000 318.2% † TMX Group Total (Cost $490.467 111.800 655.1% Retail Stores .125% due 6/30/11.157) Industrial Products – 14. 1.1% WaterFurnace Renewable Energy Industrial Components . B Securities Brokers .467) Financial Services – 9.0.800 491.000 4.2% Cal-Maine Foods Industrias Bachoco ADR Sanderson Farms Sports and Recreation . Government Agencies.2.7.000 5.067.2% State Street Bank & Trust Company.440 78.5% Coach Food/Beverage/Tobacco .713) (Cost $878.000 10. A VALUE 1.4% † Artio Global Investors Cl.1.8% Information and Processing .000 3.283.760 137.5.740 210.S.158 175.948 129.650 85.980 118.5% Apparel.4% Consumer Products – 7.700 89.285 84.000 12.600 156.9% NET ASSETS – 100. A Other Financial Services .840 110 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.000 10.1.4% Building Systems and Components . A † Ashmore Group Franklin Resources Partners Group Holding U.1.000 81.8% † Thor Industries Total (Cost $501.2% a Kennedy-Wilson Holdings Total (Cost $688.000 2. maturity value $878.171.000 1.Schedules of Investments Royce International Smaller-Companies Fund (continued) VALUE REPURCHASE AGREEMENT – 7.000 $ 36.000 4.893) Consumer Services – 3.260 112.1. .315 534.1% (Cost $12.1.640 8.1% Buckle (The) † a GameStop Corporation Cl.000 5.861 12.2% † SEI Investments Investment Management .000 97.587) CASH AND OTHER ASSETS LESS LIABILITIES – 0.000 3. A Total (Cost $228.400 80.000 4.4% a Horsehead Holding Corporation Nucor Corporation Reliance Steel & Aluminum Schnitzer Steel Industries Cl.900 78.4.975 4.750 502.408 5.0% Insurance . valued at $901.000 3.477) Financial Intermediaries – 8.000 25.280 $ 878.000 12.7.480 346.005% dated 6/30/10.000 (collateralized by obligations of various U.1% a Knight Capital Group Cl.547 111.000 5.000) TOTAL INVESTMENTS – 99.000 3.000 6.850 101.550 159.S. due 7/1/10.3. A Securities Exchanges . Shoes and Accessories .500 700 20.440 75.600 114.2. 0.000 493.

600 119.000 6. 0.000 2.000 2.2.528.500 7.500 4.680 232.3% † ENSCO ADR † Noble Corporation Pason Systems a Tesco Corporation † Trican Well Service a Unit Corporation Oil and Gas .000 5.3.977 23.0% Gardner Denver Specialty Chemicals and Materials .1.194 125.985 64.475 626.540 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.400 138.701.500 3.760 161.560 56.600 162. Government Agencies.580 166.7% Components and Systems . Valves and Bearings .000 7.000 2. maturity value $247.6% Engineering and Construction .160 3.683) CASH AND OTHER ASSETS LESS LIABILITIES – 13.500 196.9% a PICO Holdings Total (Cost $1.130 101.929 3.405 83.400 92.000 5.494. valued at $254.005% dated 6/30/10.500 4.335.2.000 145.S.580 REPURCHASE AGREEMENT – 3.582.200 60.9.920 965.120 128.392 931.500 4.3% Mosaic Company (The) Total (Cost $930.243 4.2.000 (collateralized by obligations of various U.1.2.000 5.885 155.7% State Street Bank & Trust Company.574) Industrial Services – 4.000) TOTAL INVESTMENTS – 86.3% † a Centamin Egypt † Cliffs Natural Resources Fresnillo Major Drilling Group International Pan American Silver a Seabridge Gold a Silver Standard Resources Real Estate .730 58.2% a Jacobs Engineering Group Transportation and Logistics .500 6.940 1.8% Exxon Mobil Precious Metals and Mining .000 500 7.0% $ 247.0% † CA Microsoft Corporation Telecommunications .875 890.554 145.13.775.874 151.000 3.820 307.000 10.076 2.4% † a Western Digital † a Xyratex Semiconductors and Equipment .433 49. The Royce Funds 2010 Semiannual Report to Shareholders | 111 .241 5.525) Natural Resources – 25.125 133.460 3.392 4.0.129) TOTAL COMMON STOCKS (Cost $5.2.684 6.745) (Cost $247.3% Energy Services .000 $ 66. due 7/1/10.000 105.4% a Patriot Transportation Holding Total (Cost $315.683) SHARES VALUE 1.000 $ 64.036 101.745 5.1% (Cost $5.500 2. 2010 (unaudited) SHARES Industrial Products (continued) Pumps.9% NET ASSETS – 100.5% † Aixtron ADR † Analog Devices Software .060 202.1.8% ADTRAN VALUE Technology (continued) Telecommunications (continued) Corning Total (Cost $686.707.June 30. due 7/1/10.461) Technology – 9.000 59.000 54.140 650.580 101.000 83.

8% Information and Processing .900 19.350 22.333 13.100 800 400 1.540 28.686 18.6. Auctioneers Sotheby's Engineering and Construction .13.000 514 500 8.7.2% Consumer Products – 1.3.953 25.784 21.500 13. .4% Restaurants and Lodgings .835 800 400 300 500 500 200 34.4% UltraShort 20+ Year Treasury a ProShares Total (Cost $80.1.309) SHARES VALUE 400 $ 14.933 28.334) Financial Intermediaries – 21.513 20.1.2.5% MasterCard Cl.2.698 17.4% Amphenol Corporation Cl.035 40. A a Morningstar † SEI Investments Western Union VALUE Financial Services (continued) Investment Management .324) Financial Services – 20.1.500 19.100 1.700 60.2.5% Banking .1.9% Brink's Company (The) a Copart Manpower Ritchie Bros.1.500 1.888 18.9% Cousins Properties † Lexington Realty Trust Securities Brokers .7.272 23.3% † TMX Group Total (Cost $296.690 20. Valves and Bearings .714 11.034 288.5% Fluor Corporation Food.798 16.5% Bank of New York Mellon (The) Bank Sarasin & Cie Cl.710 39.145 7.496 16.750 24.512 30.316 1.P.1.248 17.575) Natural Resources – 8.296 108.100 7.5.0% † Toyota Motor ADR Industrial Components .575 184.130 81 500 1. A a GrafTech International Machinery . B Northern Trust † a Popular State Street Insurance .273 297.672 15.1% Home Furnishing and Appliances .1.855 3. Tobacco and Agriculture .649) Industrial Services – 17.9% Nucor Corporation Miscellaneous Manufacturing .100 2.243 21.200 1.182 69.2.0% C. A Marsh & McLennan † a Primerica Real Estate Investment Trusts .278 1.5% Potash Corporation of Saskatchewan Transportation and Logistics .788 100 600 1.1.714 800 700 300 600 16.2% Graco Total (Cost $117.4% Starbucks Corporation Total (Cost $11.876 112 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.796 21.823 12.3% Automotive .368 1.593 23.584 94.528 104.914 129.4.9% Egyptian Financial Group-Hermes Holding a FBR Capital Markets Lazard Cl.541 800 19.3% CARBO Ceramics 200 300 1.255 19.757 22.9% Commercial Services .740 16.648 17. Rowe Price Group VZ Holding Westwood Holdings Group Total (Cost $275.000 4.317 24.316 60.541 14. Robinson Worldwide Expeditors International of Washington Landstar System a Patriot Transportation Holding Total (Cost $253.4% Exchange Traded Funds .1% Hunter Douglas Total (Cost $10.333 400 24.334 400 28.500 1. A Securities Exchanges .3% † AllianceBernstein Holding L.896 Industrial Products – 9.7.300 800 20.992 26.329 104.2% Spirax-Sarco Engineering Metal Fabrication and Distribution .184) Diversified Investment Companies – 4.191 24.961 700 18.000 34.700 100 300 300 500 $ 20.2% Energy Services .440 19.495 16.194 26.494 23.630 246.805 23.847 1.067 13. Artio Global Investors Cl.000 5.440 800 1.494) Consumer Services – 1. H.400 1.000 2. A Ashmore Group Cohen & Steers Invesco † a Jupiter Fund Management Partners Group Holding T.2.6% † Valmont Industries Pumps.930 33.Schedules of Investments Royce Partners Fund SHARES COMMON STOCKS – 92.9% a Alleghany Corporation Erie Indemnity Cl.

1.144 77.850 162.945 (3.318) Consumer Services – 10.7% † Lincoln National † PartnerRe Securities Brokers .M.June 30.920 71.273) TOTAL COMMON STOCKS (Cost $1.8% a Magma Energy Total (Cost $85.5% Banking .100 800 500 29. Government Agencies.806 2.7% a Transocean Precious Metals and Mining .443) Health – 8.9% Information and Processing .250 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.602 45.363 200 500 9. due 7/1/10.550 112.936 1.386.125% due 6/30/11.6% † a Biogen Idec † a BioMarin Pharmaceutical Medical Products and Devices .2% Components and Systems .2. A † a O'Reilly Automotive Other Consumer Services .005% dated 6/30/10.244 113.700 2.880 56.3% † a TD AMERITRADE Holding Corporation Total (Cost $290.760 94.1% State Street Bank & Trust Company.975 17.1% † J.2.500 400 36.425 1. maturity value $112.3.338) 2.196 67.2% † Diebold Software .470 398.1% † Fair Isaac Microsoft Corporation Telecommunications .5% † Advance Auto Parts † American Eagle Outfitters † a Dollar Tree † a GameStop Corporation Cl.274.0.4% Total (Cost $38.4.2.597 ) 1.2% † a Apollo Group Cl.000 42.807 2.478 9.210) Financial Intermediaries – 6.945 1.505 28.383.3% (Cost $1.9.650 139.200 57.9% Corning Total (Cost $69.9% Drugs and Biotech . Rowe Price Group Total (Cost $159.284 34.500 $ 78.163) 1. A Total (Cost $415.900 36.160 1.600 2.907 144.432 11. Smucker Company (The) Sports and Recreation .000) TOTAL INVESTMENTS – 100.0.550 40.3% † a Kinetic Concepts † Teleflex Total (Cost $377.1.046 332.4.718 356.206 600 3.435 28.000 1. 2010 (unaudited) Royce Mid-Cap Fund SHARES Natural Resources (continued) Energy Services (continued) Schlumberger Oil and Gas .2.7% Food/Beverage/Tobacco .266 47.400 3.5% † Cullen/Frost Bankers † Marshall & Ilsley † a Popular Insurance .580 1.350.018) Technology – 5.2. The Royce Funds 2010 Semiannual Report to Shareholders | 113 .2.863) (Cost $112.5% SHARES VALUE 300 $ 16.4% Randgold Resources ADR Other Natural Resources . 0.286 61.331 112.056 64.5% † Partners Group Holding † T.238.491 5.832 800 6.036 92.3)% NET ASSETS – 100.707 93.840 27.1.700 30.000 Consumer Products – 3.1.4% † SEI Investments Investment Management .0.7% Retail Stores .680 242. 1.401 52. valued at $115.0% $ d VALUE COMMON STOCKS – 93.895 800 33.375 11.500 300 1.300 1.S.600 85.880 170.155) LIABILITIES LESS CASH AND OTHER ASSETS – (0.937 12.348 Financial Services – 3.000 113.000 (collateralized by obligations of various U.300 50.612 73.6% † Hasbro Total (Cost $130.800 12.155) REPURCHASE AGREEMENT – 8.995) Miscellaneous – 2.800 1.

202 195.736 1.1% † Precision Castparts Metal Fabrication and Distribution . Royce Opportunity Fund. Royce Financial Services Fund and Royce Dividend Value Fund. valued at $252.4% † Greif Cl.478 1.200 70.277) Natural Resources – 17.838 69. These securities have been valued at their fair value under procedures established by the Fund's Board of Trustees. .0%.028 306.000) TOTAL INVESTMENTS – 100. 2010 (unaudited) VALUE Natural Resources (continued) Precious Metals and Mining .2% † a LSI Corporation † a ON Semiconductor Software .000 (collateralized by obligations of various U.600 400 1. 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 1940.125% due 4/30/17. Non-income producing. 0.900 $ 76.996 67.3.200 6.899 68.363 141.916 52.900 800 245.2% † Agrium † FMC Corporation † Lubrizol Corporation (The) Other Industrial Products .800 66.560 41.208 3. Government Agencies.076 68.8.752 38.956) SHARES VALUE 1.5% State Street Bank & Trust Company.685 133.200 650 730 4.577 † a New additions in 2010.200 2.750 1. maturity value $245.122.007 409.950 3.4% † a African Barrick Gold † Agnico-Eagle Mines † IAMGOLD Corporation † Kinross Gold † a Red Back Mining Total (Cost $650. 0.580 70. 3.711 74.0)% NET ASSETS – 100.2.991 51.504 54. b All or a portion of these securities were on loan at June 30.700 2.1.0% of net assets for Royce Total Return Fund.264) (Cost $245.160 73.3. due 7/1/10.100 $ 31.5.6% † Activision Blizzard † CA Total (Cost $504. A Total (Cost $469.0%.8% † a Jacobs Engineering Group Industrial Distribution .1% Commercial Services .300 1. See notes to financial statements.602 TOTAL COMMON STOCKS (Cost $3.5.300 7.S.1.103 94.551 2.041 3.6% Automotive .744.Schedules of Investments Royce Mid-Cap Fund (continued) SHARES Industrial Products – 20.510 1.9% † Flowserve Corporation Specialty Chemicals and Materials .1.1% † MSC Industrial Direct Cl.0% † ENSCO ADR Oil and Gas .877.000 4. Royce Heritage Fund.200 5.200 186.3.084 240.688 53.744. c At June 30.1. 114 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.100 48.0% $ 3.8% † a Western Digital Semiconductors and Equipment .332) REPURCHASE AGREEMENT – 6. respectively.236 40.6. e Securities for which market quotations are not readily available represent 0.2.736 (159 ) 3.0% and 0.3.400 850 2.300 3.6% † Nucor Corporation † Reliance Steel & Aluminum Paper and Packaging .017 52.568 216.663 49.180 45.920 136.930 643.499.3% † Goodrich Corporation Components and Systems . 2010.0%.298 83. A Pumps. 0.9% Aerospace and Defense .2% Energy Services .700 1.0% (Cost $4. 2010.087 69.600 2.005% dated 6/30/10. 2010 market value.4% † Cooper Industries Total (Cost $880.399) Technology – 10.950 1.3.1.528 416.800 771.228) Industrial Services – 11.800 3.332) LIABILITIES LESS CASH AND OTHER ASSETS – (0.473 145.8% † EQT Corporation † Questar Corporation June 30.168 65. Valves and Bearings .700 8.0% † a Autoliv Industrial Components .761 127.2% † Cintas Corporation † a FTI Consulting † Manpower † a TeleTech Holdings Engineering and Construction . Bold indicates a Fund's 20 largest equity holdings in terms of June 30. 0.742 144. d Includes securities first acquired in 2010 and less than 1% of net assets.5.700 1.

666.343.244.127 2.700 16.807.050.987.081.451.682 $ $ 5.695 3.676.333.803 5.205.525 (12.251 3.434 258.176 1.769 $ 3.170.344.801.89 15.551.683 $ $ 3.46 13.284 312.262.992.023 1. .715 320.621. 2010 (unaudited) Royce Micro-Cap Fund Royce Premier Fund Royce Low-Priced Stock Fund $ 4.779.944.325.959 5.619.246 28.705 11.42 12.061 3.822 905.864.896.802 240.964.902.837 32.726.656 75.648.199 $ 956.732.229.481 $ $ (1) (2) Offering and redemption price per share.180.493 ) (91.821 518.531.068.113 1.187.412 151.987.23 9.786.821 5.283.069.891 28.376 1.75 15.338.148.582 35.669.663 1.332.296 5.759 655.Statements of Assets and Liabilities Royce Pennsylvania Mutual Fund ASSETS: Investments at value (including collateral on loaned securities)* Non-Affiliated Companies Affiliated Companies Repurchase agreements (at cost and value) Cash and foreign currency Receivable for investments sold Receivable for capital shares sold Receivable for dividends and interest Prepaid expenses and other assets Total Assets LIABILITIES: Payable for collateral on loaned securities Payable for investments purchased Payable for capital shares redeemed Payable for investment advisory fees Accrued expenses Total Liabilities Net Assets ANALYSIS OF NET ASSETS: Paid-in capital Undistributed net investment income (loss) Accumulated net realized gain (loss) on investments and foreign currency Net unrealized appreciation (depreciation) on investments and foreign currency $ $ June 30.255 92.011 507.916.020.327.53 13.744 31.395.348.400.878 6.30 8.271 $ 953.118 1.811.986.960.671 17.145.598 192.693.072 ) 228.057.037.400.612 42.545 19.373 5.21 9.188 398.388.037.813 591.561 8.811.259 704.011 74.098.151.793.962 411.324.974.317.435.759 59.756.028.35 4.418 (12.695 93.129 2.663 831.584.902.577 808.315 7.168 6.86 15.598 2.605 Net Assets $ Investment Class $ Service Class Consultant Class Institutional Class W Class R Class K Class SHARES OUTSTANDING (unlimited number of $.112.465 20.438.886 ) 361.379.39 $13.820.490 19.042.47 13.300.506 1.264.279 3.187.540.918 71.357 6.783 $ $ 12.859.447 84.57 8. shares redeemed within 180 days of purchase are subject to a 1% redemption fee.431. Offering and redemption price per share.089 5.824.883 1.485.549 1.130.930 3.96 15.745 33.01 8.68 2.469 (35.502.195.802 9.000 42.067.484.987 243.432 25.159 1.027 ) 57.969.930 $ $ 3.246.772.448.42 13.452.978 121.984 26.384 4.320 2.202.503 422.625 145.015.224 525.225.338.550.176.354. payable to the Fund.945.361.782 48.000 37.254.887 $ $ 1.990.104.069.219.662 5.753 ) 63.255.566 1.058 54.879.319 24.205 5.495.410 ) (44.164. The Royce Funds 2010 Semiannual Report to Shareholders | 115 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.481.681.120.756 2.345.669 44.774.964.992.559.971.164 224.869.648 5.471 61.103 $9.488 5.921.361.519 17.933 $15.718 4.523 652.997.093 $13.143 61.296 3.28 3.16 8.154.466 1.090 3.453 3.392 $ 2.797 591.628.146 536.078 (217.656 343.772.001 par value): Investment Class Service Class Consultant Class Institutional Class W Class R Class K Class NET ASSET VALUES (Net Assets ÷ Shares Outstanding): (1) Investment Class (1) Service Class (1) Consultant Class (2) Institutional Class (2) W Class (1) R Class (1) K Class * Investments at identified cost $ Market value of loaned securities $ $ 1.037.968.953.684.66 14.017.257.101.489 4.229 262.279 4.668 84.000 17.496.360.804.285.656.000 282 – 7.

679.000 160.716.233.828 5.675.368 2.971 3.430.Statements of Assets and Liabilities Royce Total Return Fund ASSETS: Investments at value (including collateral on loaned securities)* Non-Affiliated Companies Affiliated Companies Repurchase agreements (at cost and value) Cash and foreign currency Receivable for investments sold Receivable for capital shares sold Receivable for dividends and interest Prepaid expenses and other assets Total Assets LIABILITIES: Payable for collateral on loaned securities Payable for investments purchased Payable for capital shares redeemed Payable for investment advisory fees Accrued expenses Total Liabilities Net Assets ANALYSIS OF NET ASSETS: Paid-in capital Undistributed net investment income (loss) Accumulated net realized gain (loss) on investments and foreign currency Net unrealized appreciation (depreciation) on investments and foreign currency $ $ Royce Heritage Fund Royce Opportunity Fund Royce Special Equity Fund $ 3.893 229.543 $ $ 209.663 $ $ 1.910.651. 116 | The Royce Funds 2010 Semiannual Report to Shareholders .234.97 8.022 97.423 8.410.020.227.743 1.840.746.623.615 525.173.413 21. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.098 106.009 6.906 346.392 2.671 282.908.297 871 214.62 9.573.784.210.814 ) 405.077.065 283.982.70 8.217 65.63 10.505.77 8.934.264 274.219 ) (245.114.437.890.156.94 16.790.055 9.72 10.404.550 16.026.895 14.10 202.292.217 1.904 1.56 9.904 1.17 1.690.98 16.311.081.765 63.144.383 1.65 10. shares redeemed within 180 days of purchase are subject to a 1% redemption fee.055 201.601.753.872.753.276.149 5.628 1.341.518 1.455 (1) (2) Offering and redemption price per share.706 $8.573 1.899 2.207.44 16.889. Offering and redemption price per share.681 132.428.829.267.434.597 2.973.600 24.148.309.320 9.899.305.424.384 907.836.819 1.201.437.125 8.702 56.616 876.046.020 1.198 521.664 44.190.000 28.942 25.765 6.806 54.290 31.794.891 3.370 6.000.260 224.649.203.036 10.394 119.285 $ $ 1.408 $ $ 1.02 8.107 3.016.068 3.563.591.870.492 20.110.890.000 666 – 22.049.228.282 (250.76 8.565.727.033.687.06 9.114 7.092.453.983 ) $ $ 1.464.033.714.226.280 $ $ 1.216.470.322.126 225.165 1.666 44.342 3.232.604 182.108.556 108.198.325 Net Assets $ Investment Class $ Service Class Consultant Class Institutional Class W Class R Class K Class SHARES OUTSTANDING (unlimited number of $.33 3.284 649.363.152.059 27.119 59.151.089 $10.787 4.449.416 1.081.957 1.765 (2.175 341.877 57.050 3.656 191.834 9.973.267.923 3.290 2.360 2.846.648 (6.072.223.242.399 5.661.62 10.262.439 40.709 $11.008 20.127 278.448.535 79.447 – 14.265 14.160 $ 212.310.93 $ 9.63 10.849 ) (148.982.052 $ 1.663 405.71 $16.959.395. payable to the Fund.329 35.851.475.653 255.498 80.804.709.161 1.001 par value): Investment Class Service Class Consultant Class Institutional Class W Class R Class K Class NET ASSET VALUES (Net Assets ÷ Shares Outstanding): (1) Investment Class (1) Service Class (1) Consultant Class (2) Institutional Class (2) W Class (1) R Class (1) K Class * Investments at identified cost $ Market value of loaned securities $ $ 209.342 2.313.929.563.144.227.401 9.979 26.220 97.617.141 314.834.899.808.610 ) 9.000 418 12.451 5.68 11.277 187.588.016 347.493.344 24.517.522 $ 1.518.521.319.715 823.600 188.597 952.714.423.714 255.680 – 735.001 572.356.

504 ) 4.758 28.866.106 ) Net Assets $ Investment Class $ Service Class Consultant Class Institutional Class R Class K Class SHARES OUTSTANDING (unlimited number of $.411.June 30.805 ) (326.454.748 266.001 par value): Investment Class Service Class Consultant Class Institutional Class R Class K Class NET ASSET VALUES (Net Assets ÷ Shares Outstanding): (1) Investment Class (1) Service Class (1) Consultant Class (2) Institutional Class (1) R Class (1) K Class * Investments at identified cost $ Market value of loaned securities $ $ 2. .403 ) 33.781 $9.330 ) (320.687. Offering and redemption price per share.406.914.650.912 25.76 9.951.870 $ $ 314.179 2.356.443 532.813.319 743 331.767.742 9.126 65.881.389.102.503 26.97 10.347 6.914.28 $ $ 9.485.309.102.478 1.033.739 $ $ 2.470 2.708 174.141.372.970.891.396.737 1.331.230.833 $ $ 2.283. payable to the Fund.676 976.451.865 8.436.107 (445.384 28.821 $ 306.415 56.000 585 – 6.82 9.607 80.299 (1) (2) Offering and redemption price per share.774 209.254.654 123.298 – 22.584 2.471 1.963 1. The Royce Funds 2010 Semiannual Report to Shareholders | 117 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.337 2.15 1.761 (887 ) (604.70 7.843 7. 2010 (unaudited) Royce Value Fund ASSETS: Investments at value (including collateral on loaned securities)* Non-Affiliated Companies Affiliated Companies Repurchase agreements (at cost and value) Cash and foreign currency Receivable for investments sold Receivable for capital shares sold Receivable for dividends and interest Prepaid expenses and other assets Total Assets LIABILITIES: Payable for collateral on loaned securities Payable for investments purchased Payable for capital shares redeemed Payable for investment advisory fees Accrued expenses Total Liabilities Net Assets ANALYSIS OF NET ASSETS: Paid-in capital Undistributed net investment income (loss) Accumulated net realized gain (loss) on investments and foreign currency Net unrealized appreciation (depreciation) on investments and foreign currency $ $ Royce Value Plus Fund Royce 100 Fund Royce Discovery Fund $ 1.358 18.249.178 301.412 281.363 ) (134.000 214 – 1.306.255 8.000 163 942.193 – 137.675 9.996.466 $7.688 16.225 – 7.981.794.823 17.963 3.413 2.482.992 $ 2.97 10.137.235.128.291 202.000 1.711 $ 3.919.881.554.932 319.414.881.178 46.497 $ 2.963 2.436.26 296.865.81 9.682 281.054 25.818.344 986.88 10.76 7.986.269.663.089.918.715 11.011 – 72.283.039 195.452 34.481 1.970. shares redeemed within 180 days of purchase are subject to a 1% redemption fee.025.141.724 ) (199.682 3.308.484.504 106.990 1.672 8.586.809.562.333 1.95 2.310 17.607 1.102.756 2.67 $4.155 120.043 1.874 1.544.204.741.302.072.123.455.746.003 348.918.610.447.049.697.033 16.496 $10.966 269.421.034.127 18 2.384.430.761 7.560 $ $ 2.745.339.284.196.111.864.634.523 – – – – 9.128.095 2.033.977.678 673.885.941 115.538.579 186.690 ) $ $ 314.024 – 2.426 (16.21 9.54 10.399 705.343.560 9.68 8.851 (698.049.538.600 1.618 1.931 6.45 9.176 29.522 1.246.

111 17.968.149.776 366.575 ) 10.287 7. shares redeemed within 180 days of purchase are subject to a 1% redemption fee.34 5.790 2.83 6.127 53.089 23.029 10.000.790 50.36 48.252 – 9.504.168.001 par value): Investment Class Service Class NET ASSET VALUES (Net Assets ÷ Shares Outstanding): (1) Investment Class (1) Service Class * Investments at identified cost $ $ $ 54.756.607.508 1.235.599 31. 118 | The Royce Funds 2010 Semiannual Report to Shareholders .361 16.316 52.000 1.982.685.779 156.127 16.000 17.943 (159.661 3.803 44.260 245.06 11.052 69.232 – 913 8.677 4.263.138 155.224 6.476.416 ) (161.552.996 414.968.490 79 55.896 ) (1.700.646 2.020 3.161 7.447.156 82 10. shares redeemed within 180 days of purchase are subject to a 2% redemption fee.473.000 – 155.375 (2) $ $10.263.029.271.223 10.954 2.449 47.189 ) $ $ 50.913.679.528 (2. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.858.063 $ 48.263 – 5.006.071.982.968.609 – 40.414.413 ) 472.218 257 51.149.899.655 82.41 48.263.128 45.240. payable to the Fund.466 37.281.229 26.697.876.896 $5.790 62.109.029 $ 49.025 99.780 (11.708 30.755 884. For Royce European Smaller-Companies Fund and Royce Global Value Fund.161 $ $ 50.470 $ $ 54.999.355 32 7.281 87.982.238 65.000 21.305 $ $ 7.535 $ $ $7.919 927.945 (2) (1) (2) Offering and redemption price per share.596.633 – 8.238 $5.161 10.272 18.590. payable to the Fund.475 (1.628 $ 6.149.Statements of Assets and Liabilities Royce Financial Services Fund ASSETS: Investments at value* Non-Affiliated Companies Repurchase agreements (at cost and value) Cash and foreign currency Receivable for investments sold Receivable for capital shares sold Receivable for dividends and interest Prepaid expenses and other assets Total Assets LIABILITIES: Payable for investments purchased Payable for capital shares redeemed Payable to custodian for overdrawn balance Payable for investment advisory fees Accrued expenses Total Liabilities Net Assets ANALYSIS OF NET ASSETS: Paid-in capital Undistributed net investment income (loss) Accumulated net realized gain (loss) on investments and foreign currency Net unrealized appreciation (depreciation) on investments and foreign currency $ $ Royce Dividend Value Fund Royce European SmallerCompanies Fund Royce Global Value Fund $ 10.511 – 1.439 $ $ 7.029 13.034 493.081 25.571 ) 984.194 Net Assets $ Investment Class Service Class $ SHARES OUTSTANDING (unlimited number of $.605 15.

596 64 4.942 (22.283.595 10.050 $ $ 12.05 11.38 5.324 26.222.012 120. shares redeemed within 180 days of purchase are subject to a 1% redemption fee.593 91.707.335.120.440 4.126 77.340 102.283.653 ) 4.000 392 – 1.675 505.606 ) (142.000 14.763 20.306 10.675 10.189.683 $ $ $ (1) (2) Offering and redemption price per share.483 $ 5.691 $ $ 12.504. .891 42.528.001 par value): Service Class NET ASSET VALUES (Net Assets ÷ Shares Outstanding): (1) Service Class * Investments at identified cost $ $ Royce International SmallerCompanies Fund Royce Focus Value Fund $ 3.283.070 548.798.076 6.675 3.707. For Royce International Smaller-Companies Fund.656 53.293.940 18.367 52.408 11.061 55 14.504.729 4.504.299 $ $ 6.906.392 247.521 $10.91 4.707.692 $ 11.531.357.076 6.408 1.652 15 6.115 – 12.978.June 30. The Royce Funds 2010 Semiannual Report to Shareholders | 119 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.259.000 846 – 539 3.369.076 501.587 (2) $ $ 6. payable to the Fund.051 86. shares redeemed within 180 days of purchase are subject to a 2% redemption fee.148 192.549 $8.402 338.018. payable to the Fund.790.343 27 12.675 4. 2010 (unaudited) Royce SMid-Cap Value Fund ASSETS: Investments at value* Non-Affiliated Companies Repurchase agreements (at cost and value) Cash and foreign currency Receivable for investments sold Receivable for capital shares sold Receivable for dividends and interest Prepaid expenses and other assets Total Assets LIABILITIES: Payable for investments purchased Payable for capital shares redeemed Payable for investment advisory fees Accrued expenses Total Liabilities Net Assets $ ANALYSIS OF NET ASSETS: Paid-in capital $ Undistributed net investment income (loss) Accumulated net realized gain (loss) on investments and foreign currency Net unrealized appreciation (depreciation) on investments and foreign currency Net Assets Service Class SHARES OUTSTANDING (unlimited number of $.378 $13.862 – 2.547 878.408 12.705 ) 179.408 526 (6.

155 $ $ 3.055 21.348 1.771.268 26.348 1.945 112. 120 | The Royce Funds 2010 Semiannual Report to Shareholders .383.37 3.328 (2.Statements of Assets and Liabilities June 30.877. shares redeemed within 180 days of purchase are subject to a 1% redemption fee.856 – 3.744.744.274.466 ) (5.499.577 3.753 $ $ 3.460 $9.383.000 3.758 $ $ 1.467 5 1. payable to the Fund.696 ) (377.051 2.64 1.589 ) $ $ 1.000 592 20.130.644 1.392.736 245.896 36. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.348 130.956 – – 1.577 4.006 $10.332 $ $ (1) Offering and redemption price per share.744.490 4.001 par value): Service Class NET ASSET VALUES (Net Assets ÷ Shares Outstanding): (1) Service Class * Investments at identified cost $ 1.025 9.323.025 $ 3.100 3.238.373 – 9. 2010 (unaudited) Royce Partners Fund Royce Mid-Cap Fund ASSETS: Investments at value* Non-Affiliated Companies Repurchase agreements (at cost and value) Cash and foreign currency Receivable for investments sold Receivable for capital shares sold Receivable for dividends and interest Prepaid expenses and other assets Total Assets LIABILITIES: Payable for investments purchased Accrued expenses Total Liabilities Net Assets ANALYSIS OF NET ASSETS: Paid-in capital Undistributed net investment income (loss) Accumulated net realized gain (loss) on investments and foreign currency Net unrealized appreciation (depreciation) on investments and foreign currency Net Assets Service Class SHARES OUTSTANDING (unlimited number of $.335 22.383.577 399.

723.643.687.784 6 – 532.834 (9.418 ) $ 64.414.379 30.519 6.522.193.663 $ 1.912 ) – – – – – – – – – – – – – – – – 379.196 960.026.094 (1.592 $ 5.892 ) – – – – – (11.316 (4.333.562 $ (131.187 (2.094 Net change in unrealized appreciation (depreciation) on investments and (240.466 4.518 ) 1.288.929 ) 158.187.863 722.892 ) – (13.022.598.459 End of period $ 5.092 65.120.296 $ UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) AT END OF PERIOD $ 9.013.544 ) foreign currency Net increase (decrease) in net assets from investment operations (149.126.584.524.636 18.471 ) (160.657 3.846 (76.755 ) (17.817 1.460.992 1.338.083.071.371 (6.367.753 ) $ (5.561 1.310.763 ) 382.801.051.183 Consultant Class (32.142.890.749.592 586.132 824.998 – 358 – 161.335 ) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.749 ) 9.886 $ Net realized gain (loss) on investments and foreign currency 88.500 48.137.948 1.974 ) 2.426 5.504.029.690.448 38.403.645.187.135 8.279.846.891 29.676 335.256.982 7.694 ) (6.263 Net increase (decrease) in net assets from capital share transactions 252.026.078 $ 4.934.250 752.612.220.455 ) 130.054 1.069.477 Consultant Class 541 R Class 3 K Class 1.166 3.726.577.401 NET INCREASE (DECREASE) IN NET ASSETS 103.495.493 178.498.Statements of Changes in Net Assets Royce Pennsylvania Mutual Fund Six months ended 6/30/10 (unaudited) Year ended 12/31/09 Royce Micro-Cap Fund Six months ended 6/30/10 (unaudited) Year ended 12/31/09 Royce Premier Fund Six months ended 6/30/10 (unaudited) Year ended 12/31/09 INVESTMENT OPERATIONS: Net investment income (loss) $ 2.774 1.919.815 610 84.987.079.698 (218.564 ) DISTRIBUTIONS: Net investment income Investment Class – Service Class – Consultant Class – Institutional Class W Class R Class – K Class – Net realized gain on investments and foreign currency Investment Class – Service Class – Consultant Class – Institutional Class W Class R Class – K Class – Total distributions – CAPITAL SHARE TRANSACTIONS: Net capital share transactions Investment Class 217.943 ) (1.601 7.069.678 381.905.524 3.245 13 824 659.501.605 ) (1.500.271 3.772.268.279 $ 5.799 Service Class 64.109.266.220.641 K Class 319.187.442.988.353.148 ) 5.508.037.787.820.780 352.038.466.487.157.872 50.226.277.601 3.559.027.324 ) $ 36.364 ) – – – – – – – – – – – – – – – – – – – – – – – – – – – (2. The Royce Funds 2010 Semiannual Report to Shareholders | 121 .934.801.311.914 (3.809.031 ) (3.588 48.193.196.990.883.086 ) $ (12.447.459 1.343.572 38.687.114.753 Service Class 220.383 1.441.475 31.414.764 ) Institutional Class W Class R Class 3.410 ) $ (9.921.505 Shareholder redemption fees Investment Class 163.637 ) $ (31.851.029 347.523 (50.703.498 249.011.011 1.328 ) (183.291.360.012.380 492.067.524 2.902.079.459 $ 1.074 40.264.272.030 85.192 $ (12.083.837 NET ASSETS: Beginning of period 4.

647 ) (122.360.204 ) 12.209.010.015.258 12.278 15.349.399 ) (42.835.351.439.717.366 ) (172.888.796.358.879 831.607.455 ) (39.080.753 – 164 (122.227.140 19.539 (69.188 ) 15.786.856.343 ) – – – – – – – (29.522 275.050.776.899.992 112.336.378 ) – – – – – – – (47.343.103.644 ) (31 ) (2.763.973 198.195 ) – – – – – – – – – – – – – – – (5.344.298.410.457 $ (189.225.338.284 ) (8.037.361.295 ) (37.991 430.473 ) 22.135.057 549.188.550 $ 3.345.722 274.113 Service Class 39.421.564.515 192 43.348.180 1.161 ) (462.229.638.931 (59.160 ) 963.662.859 11.086 – 55 – 16.349 $ 122 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.275 56.447.146.010 $ 15.655 2.109 54 35.267.765 $ 650.509.439.756 (3.055 $ 525.234.419 4.142.640.Statements of Changes in Net Assets Royce Low-Priced Stock Fund Six months ended 6/30/10 (unaudited) Year ended 12/31/09 Royce Total Return Fund Six months ended 6/30/10 (unaudited) Year ended 12/31/09 Royce Heritage Fund Six months ended 6/30/10 (unaudited) Year ended 12/31/09 INVESTMENT OPERATIONS: Net investment income (loss) $ (8.972 Consultant Class Institutional Class 12.063.324 ) (1.466 1.508 (81.439.856.817.472.956 90.666 W Class R Class 577.742 ) 2.082 201.195 Net change in unrealized appreciation (depreciation) on investments and foreign currency (202.841 ) 327.965.755 2.633 ) 29.537.645 K Class 2.317 ) (2.894 1.731.495 (24.053.855 ) NET ASSETS: Beginning of period 3.860 201.332.296.798.990 ) Net increase (decrease) in net assets from (160.751 549.927 2.107 ) – – – – – – – – – – – – (5.121 (298.473 (20.188 Shareholder redemption fees Investment Class 2.076 ) 951.876 ) $ 54.213.670.494.412 ) investment operations DISTRIBUTIONS: Net investment income Investment Class – Service Class – Consultant Class Institutional Class – W Class R Class – K Class – Net realized gain on investments and foreign currency Investment Class – Service Class – Consultant Class Institutional Class – W Class R Class – K Class – Total distributions – CAPITAL SHARE TRANSACTIONS: Net capital share transactions Investment Class 3.834.507.005 ) (1.444.573.981.909 ) (2.488 52.021.891.144 (27.879 ) 3.660.021.961 ) 14.185 ) (91.817 7.194.550 End of period $ 3. .232 ) (857.591 299.345.527 $ (27.395.234.726.973 209.710 ) (23.198 – – (55.343.684 ) (2.019 3.589 1.007.454 ) (3.654 ) (361.283 ) $ (87.131 (67.467 ) (317.550 (105.850 ) (1.397.342 $ 4.488.536 Consultant Class R Class – K Class 41 Net increase (decrease) in net assets from capital share transactions 58.144.245 ) 1.598 ) 15.885.340 ) 783.331.396 Service Class 252.526 – – 55.204.279.634 145.695 $ UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) AT END OF PERIOD $ (35.735 ) 59.274 ) (3.762 ) (969.637.548.557 NET INCREASE (DECREASE) IN NET ASSETS (101.021.610 1.019.356.309.880 ) 660.617 ) $ Net realized gain (loss) on investments and foreign currency 50.210 ) (24.009 ) (103.685.113 88.311 $ 37.606 302 – (279.236.413.559.708.282 $ 53.766.824 57.493 ) $ (9.527 3.

731 UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) AT END OF PERIOD $ (6.729.105.254 Consultant Class 2.620.049 ) – – Service Class – – – (209.645.619 ) 405.449.830 1.604 4.432 ) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.645.100 67.640 157.940 R Class 259.216.484.621.216.146 1.158.561 1.584 (56.080.201 21.152 NET ASSETS: Beginning of period 1.753.594 Consultant Class – 161 – 1.105.316 347.451 585.070 $ (2.954 416.728 ) – – CAPITAL SHARE TRANSACTIONS: Net capital share transactions Investment Class 139.423.722 $ 1.036 $ 146.600.199 99.271 ) 138.019 54.846 K Class 1.204.161 (15.533.722 499.219 ) $ (696.952 $ 1.821.668.715 ) – – R Class – – – – K Class – – – – Net realized gain on investments and foreign currency Investment Class – – – – – – Service Class – – – – – – Consultant Class – – – – – – Institutional Class – – – – – – R Class – – – – K Class – – – – Total distributions – (869.868.455 36.647 (58.468 R Class – – – 429 Net increase (decrease) in net assets from capital share transactions 97.684 ) 511.713.472 1.823 501.407 (2.533 11.323.196 ) 645.749 ) – (4.727.305 41.795 – 9.014.532 (71.597 $ 1.685 14.912.673 257.395.867.507.080.873 17.448.900 231.588.513 Institutional Class 24.794 ) 19.006 ) 19.162.124 ) 596.879.495 191.417.433.153 (96.167 NET INCREASE (DECREASE) IN NET ASSETS 69.985 investment operations DISTRIBUTIONS: Net investment income Investment Class – (93.538 (7.273.572.394 205.972.731 855.487 2.033 5.964 ) – – Consultant Class – – – – – – Institutional Class – (776.863 ) $ 5.166 (83.729.598.775.404.606.385.182 716.078.995.373.587.467 ) 419.363 ) $ (1.697 ) foreign currency 33.451.406.391 ) Net realized gain (loss) on investments and (190.141.133.641 ) 220.758.112.469 (77.865.181.542 Service Class (71.410.207.294.463 ) – (1.995 (103.385.273 4.667.697 ) 79.830.358.330.180 327.260 Service Class 37.582 42.390 115.904 $ 1.305 3.181.563.607 $ 1.436.224 $ (698.793 10.768.073 Net increase (decrease) in net assets from (27.982.496.296.466 25.146 $ 1.743 6.228.157.571.533.656 2.047.194.940 ) 290.044 373.276.356 ) $ (5.754 7.813 $ 5.941 ) 212.846.579 End of period $ 1.411.451.827 ) $ 5.714. The Royce Funds 2010 Semiannual Report to Shareholders | 123 .790 ) 841.753.381.505 5.950 Net change in unrealized appreciation (depreciation) on investments and foreign currency (55.059.920.286 ) – (3.321 Shareholder redemption fees Investment Class 119.967 27.877.420 95.Royce Opportunity Fund Six months ended 6/30/10 (unaudited) Year ended 12/31/09 Royce Special Equity Fund Six months ended 6/30/10 (unaudited) Year ended 12/31/09 Royce Value Fund Six months ended 6/30/10 (unaudited) Year ended 12/31/09 INVESTMENT OPERATIONS: Net investment income (loss) $ (5.856.463.320.247.

773 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 74.654 28.172 ) 42.189.502 ) $ 595.Statements of Changes in Net Assets Royce Value Plus Fund Six months ended 6/30/10 (unaudited) Year ended 12/31/09 Royce 100 Fund Six months ended 6/30/10 (unaudited) Year ended 12/31/09 Royce Discovery Fund Six months ended 6/30/10 (unaudited) Year ended 12/31/09 INVESTMENT OPERATIONS: Net investment income (loss) $ (10.002 886.257 ) $ (267.736.144 42.839.700 233.185 (28.604 ) $ 13.443.156 Service Class (153.695 2.396 (887 ) $ (19.033.289 68.444 ) 578.979.001.707 1.877 – 96.902.605 ) (321.330 ) $ (4.769 K Class 176.246 ) 947.006.816.038 (56.743.921 2.318 (191.729.329 2.325.726 ) Consultant Class (1.178 $ (445.681.157.416.580 (4.910.144 Shareholder redemption fees Investment Class 7.414 14.746.061 ) 2.678 Net change in unrealized appreciation (depreciation) on investments and foreign currency (182.046.795.172 (40.575 314.575 $ 126.481 ) (15.603 233.252 81.128 ) R Class 90.255 Consultant Class – K Class – Net increase (decrease) in net assets from capital share transactions (157.720.963.447 618.816.240 ) 130.504 $ 49.206 4.358 3.914.864.285 118.229.307.664.156.792.214 (20.465 ) Net increase (decrease) in net assets from (86.801 13 130.259 877.782.084 ) NET INCREASE (DECREASE) IN NET ASSETS (243.116 58.024 2.238.150.513 ) investment operations DISTRIBUTIONS: Net investment income Investment Class – Service Class – Consultant Class – Institutional Class – R Class – K Class – Net realized gain on investments and foreign currency Investment Class – Service Class – Consultant Class – Institutional Class – R Class – K Class – Total distributions – CAPITAL SHARE TRANSACTIONS: Net capital share transactions Investment Class 28.068 Service Class 153.597 ) NET ASSETS: Beginning of period 3.009 ) $ 5.216.999.580.764 76.504 ) $ 166.845 2.239 196.377.729.873 ) (77.910.449.775 81. .573 2.157.710.123 49.837 173.875 59.794.455 ) 933.331.458.622 ) Institutional Class (30.148 434.279 End of period $ 2.788 ) (572.963 $ (887 ) $ (40.142 962.682 $ UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) AT END OF PERIOD $ (16.024 – 13 11 124 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.918.069 ) 1.376.487.726 ) $ Net realized gain (loss) on investments and foreign currency 106.508.454 – 278.253.782 11.396.486 ) (7.279 $ (5.253.881.

353.528 $ 445 907.161 18.362 $ 42.149.616 ) 4.263.200 376.365 (1.029 $ 99.968.039 ) – – – (107.594 ) 3.Royce Financial Services Fund Six months ended 6/30/10 (unaudited) Year ended 12/31/09 Royce Dividend Value Fund Six months ended 6/30/10 (unaudited) Year ended 12/31/09 Royce European SmallerCompanies Fund Six months ended 6/30/10 (unaudited) Year ended 12/31/09 INVESTMENT OPERATIONS: Net investment income (loss) $ Net realized gain (loss) on investments and foreign currency Net change in unrealized appreciation (depreciation) on investments and foreign currency Net increase (decrease) in net assets from investment operations DISTRIBUTIONS: Net investment income Investment Class Service Class Net realized gain on investments and foreign currency Investment Class Service Class Total distributions CAPITAL SHARE TRANSACTIONS: Net capital share transactions Investment Class Service Class Shareholder redemption fees Investment Class Service Class Net increase (decrease) in net assets from capital share transactions NET INCREASE (DECREASE) IN NET ASSETS NET ASSETS: Beginning of period End of period $ UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) AT END OF PERIOD $ 57.939 3.684.333 13.973 22.015 4.557.170.540 6.286 $ 234.960 906.704 4.161 $ 65.095 2.175 $ 595.645 $ 6.606 6.117 ) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.972.029 24.226 3.439 29.058 (1.672.331 ) (1.943 $ 9.883.553.240 598.370.314.110 ) (100.050 4.992 2.842 52.882 (315. The Royce Funds 2010 Semiannual Report to Shareholders | 125 .462.752.650 6.039 ) (1.525.221 22.886.450.338.386.517 29.587.036.555 7.682.932 ) – – – (101.249.298 $ 410.213.059.275 ) (143.392.362 10.065 829.437 ) (79.775 ) 811.843.429 105.330 4.443.171 6.959 – (107.717 ) (2.679 $ (1.346 ) (671.811 8.886.525.029 9.530 ) – – (179.189 $ 2.660.314.043.573 ) 86.081 ) (221.688 54.988 197.257 1.333 ) 13.834.688 $ 62.555 (21.447 ) (1.540 ) 368.106 (1.127 $ 52.302 25.125 $ (186.300 2.060 ) 4.093 ) (234.275 ) – – (377.822 ) – (101.874 3.475 $ 18.562.

888 17.982.037 36.970 ) 7.059.364.611 $ (5.245.144.859.511 2.945.846 ) (247.073.158.819 40.945.905.983 50.813.725 (8.390 ) $ (2.089 1.221.968 31.200 7.041 2.303 ) – (11.461 ) 2.461 ) – – – (252.315 3.983 $ (160.871.508 2.912.717 ) 7.208 7. .085 ) (2.470 ) 385 (2.511.694.013 (16.052 ) $ 643.070.080 ) 46.596 ) 126 | The Royce Funds 2010 Semiannual Report to Shareholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.871.985.790 $ 26.526 45.943 19.402 $ 4.153.412.780 $ 2.645 $ 5.190.156 824.772 (7.283.612.614 ) (660.722.807 50.804 (1.578 $ 5.945 ) (6.982 ) $ (2.040.582 5.504.612.208 (16.093 5.090 4.911.999 $ 295.760.914 ) (5.364.303 ) – – – (11.560 ) – (7.960.778 4.113.025.645 4.Statements of Changes in Net Assets Royce Global Value Fund Six months ended 6/30/10 (unaudited) Year ended 12/31/09 Royce SMid-Cap Value Fund Six months ended 6/30/10 (unaudited) Year ended 12/31/09 Royce International SmallerCompanies Fund Six months ended 6/30/10 (unaudited) Year ended 12/31/09 INVESTMENT OPERATIONS: Net investment income (loss) $ Net realized gain (loss) on investments and foreign currency Net change in unrealized appreciation (depreciation) on investments and foreign currency Net increase (decrease) in net assets from investment operations DISTRIBUTIONS: Net investment income Service Class Net realized gain on investments and foreign currency Service Class Total distributions CAPITAL SHARE TRANSACTIONS: Net capital share transactions Service Class Shareholder redemption fees Service Class Net increase (decrease) in net assets from capital share transactions NET INCREASE (DECREASE) IN NET ASSETS NET ASSETS: Beginning of period End of period $ UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) AT END OF PERIOD $ 187.444 ) 14.519.208 12.560 ) – – – (7.089 7.230 ) 22.675 $ 526 $ (7.885 ) 3.585 (885.761 $ 472.000 1.810 ) (2.359 (2.379.162.890 ) 1.015 50.205.902 40.368 – (252.408 $ 52.962 ) 68.

348 $ 1.501.490 $ 137.751 ) – – – (15.839.322 181.749 182.589 ) (136.501.696 ) (377.109 4.263 (117.795.130.608 – 4.468 4.343 ) – – – – – – – – – 2.318.055 $ 1.705 ) $ 3. 2010.744.608 $ (11.959 (2.383.518.686 1.624 ) $ 4.589 ) (385.707.255 ) (6.666 966.112 ) $ 7.340 – 1.608 6.076 $ (22. The Royce Funds 2010 Semiannual Report to Shareholders | 127 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.754 ) (152.081 ) $ 177.Royce Focus Value Fund Six months ended 6/30/10 (unaudited) Period ended * 12/31/09 Royce Partners Fund Six months ended 6/30/10 (unaudited) Period ended ** 12/31/09 Royce Mid-Cap Fund Period ended *** 6/30/10 (unaudited) INVESTMENT OPERATIONS: Net investment income (loss) $ Net realized gain (loss) on investments and foreign currency Net change in unrealized appreciation (depreciation) on investments and foreign currency Net increase (decrease) in net assets from investment operations DISTRIBUTIONS: Net investment income Service Class Net realized gain on investments and foreign currency Service Class Total distributions CAPITAL SHARE TRANSACTIONS: Net capital share transactions Service Class Shareholder redemption fees Service Class Net increase (decrease) in net assets from capital share transactions NET INCREASE (DECREASE) IN NET ASSETS NET ASSETS: Beginning of period End of period $ UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) AT END OF PERIOD $ (11.466 ) (5.365 ) 4.318.187 646 2.911.577 3.518.995 ) (607.501.795.686 (144.055 $ 20. 2009.340 $ – $ 4. .364 5.577 (2.744.466 ) * ** *** The Fund commenced operations on March 2.992 ) 1.795.381 1.842 1.964 4. The Fund commenced operations on April 28.108.833 1. 2009.996 ) (123.711 (773.124.041 68 3.839.552 711 5. The Fund commenced operations on January 4.340 1.213 168 1.328 3.

364 ) (12.210 327.788.636.758 Registration 104.130 $ 6.714 41.572 25.882.753 Compensating balance credits (2.294 49.886 (3.840 ) (27.946 (1.988 ) 1.324 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized gain (loss): Investments in Non-Affiliated Companies 85.795 ) (160.073.374 872.066 74.333.129 19.412 ) $ 37.346 ) (1.599 302.135.555.467 5.360 27.358 17.623 228.539.311 16.551 Total expenses 28.418 ) 20.362 1.601 17.Statements of Operations Six Months Ended June 30.313.980 206.196 ) INVESTMENT INCOME: Income: Dividends Non-Affiliated Companies $ 28.519 ) (759 ) 31.249.671.220.956 205.022 24.564 ) $ (17.713.944 673.190 2.744.801.157 $ 5.431.099 ) (8.965.607.115 420.163 Securities lending 884.988.210 137.673.948 40.355.176.142 ) (42.048 ) (55.535 36.356 ) 86.312 Shareholder reports 878.212.299.919 52.471 Total income 30.697.872 – 129.073 607.000 106.482.466.304.287 (55.464 29.631 476.154.429.798.833 1.654.342 ) Other assets and liabilities denominated in foreign currency (24.659.974 61.377 (2.511 82.088 11.451 235.433 61.265 ) – – 25.021 2.128 606.208.768 (5.418 ) (202.612.930 Audit 29.168 97.383 ) (3. .617 ) 20.196 ) (67.442.339 – 3.018.822 9.745 ) (8.788.044 40.283.384 ) (153.107 26.067 Legal 58.037 Administrative and office facilities 283.475 37.204.397 Trustees' fees 78.896 Other expenses 75.324 ) (3.240.719 ) (37.410.327.259 Custody 233.032 184.333 ) (4.396 99.071.177 10.944 21.990 3.740.572.792 36.426 $ 435.260.710.041 514.271 ) (152.270 235.725 (2.742 Shareholder servicing 2.072 Expenses: Investment advisory fees 19.112 29.719 75.979 2.843 199.396 Net investment income (loss) 2.024 ) – Expenses reimbursed by investment adviser (1.127 29.421 38.683 49.283 38.714 69.766.151 $ 661.341.203.010 4.270.450 ) (14.391 117.663 11.763 ) $ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.580.300 ) 25.867.687.557 $ Affiliated Companies 871.460.665 (6.616.063.330.029.707.708 6.479 ) (105.281 ) Foreign currency transactions 175.628.710 2.471 ) (37.086.220 1.684 31.794 (6.518 ) $ 51.070 15.114 295.927 27.780 62.790 ) – (21.693 450.799 (218 ) (100.186.830.920 880.559 52.100 ) (160.844 ) (218.651.563 197.412 9.991 1.696.410.093.110.423 1. 2010 (unaudited) 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 128 | The Royce Funds 2010 Semiannual Report to Shareholders 17.160 ) $ 15.335.916.661 55.087 ) (62.358.861 ) (43.439 ) NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS $ (149.247 26.636 ) (854 ) Fees waived by distributor (67.458.804 Distribution fees 4.922.340 92.608 184.518 $ – 1.095 3.578 7.552.657 105.735 ) $ 40.131 ) 1.616 29.531 737.881 Interest 506.176 (8.530 9.413 ) Net realized and unrealized gain (loss) on investments and foreign currency (151.200 (24.890.775 76.146 128.303 – (11.927.000 77.964 (453 ) – (5.028.355 Net change in unrealized appreciation (depreciation): Investments and foreign currency translations (239.000 19.386.503 ) Net expenses 28.214 17.804 (3.242 Investments in Affiliated Companies 3.168 4.739 884.402 ) (50.579 (21.346 3.500.503.375.721.743 ) 10.675 (853 ) (276.960 ) (9.703 247.

442 47.311 1.912.294 233.041 ) (4.298 150.054 (20.664 Legal 14.227.668.813 1.303 $ – 72 – 21.174 ) Net change in unrealized appreciation (depreciation): Investments and foreign currency translations (96.703.039 24.832 13.020 Audit 19.060 ) INVESTMENT INCOME: Income: Dividends Non-Affiliated Companies $ 7.651 3.929 37.716 21.708.039.887 ) Expenses reimbursed by investment adviser (35.163 ) (15.273 – (844 ) (1.695 10.747.017 587 329 11.481.665 $ 11.740.873 ) – (76.288 ) Net realized and unrealized gain (loss) on investments and foreign currency (77.006 $ – 10.419 68.003 – Interest 79.314 138.203 4.515 Shareholder servicing 549.233 – 1.463 Registration 102.275 83.329.316.276.023 – 457 – 650.170 43.197.837 7.970 (5 ) (14.292 2.328 15.888 ) (57.189.942 (14 ) (32.756.644 63.170.262 (887 ) 21.701.183 Net investment income (loss) 5.392 ) (121.000 Other expenses 17.009 ) 14.158.931 17.935 9.784 1.726 ) 151.314 8.619 ) $ The Royce Funds 2010 Semiannual Report to Shareholders | 129 .318 (916 ) (252.722 209.375 15. 2010 (unaudited) Royce Special Equity Fund Royce Value Fund Royce Value Plus Fund Royce 100 Fund Royce Discovery Fund Royce Financial Services Fund Royce Dividend Value Fund THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.779.860 14.736.219 10.513 ) $ 5.969 ) (75.957 Securities lending 139.999 Distribution fees 243.169 Investments in Affiliated Companies (8.522 562.449.826.107 180.358 ) (671.588 $ – 56 – 151.587 Shareholder reports 180.641 ) $ (56.630 315.313 311.457.999.517 (411 ) (37.098 1.172 ) $ (19.941 ) (83.316.027 1.486 ) – – (56.100 25.941 3.264 – 9.144 ) (187 ) (1.000 13.611 Total expenses 8.451.161 189.909 760 11.817 ) 2.719.977 Administrative and office facilities 71.832 45.480 201.239 1.972 Compensating balance credits (896 ) (902 ) Fees waived by investment adviser and distributor (9.741 10.606.031 4.799 – (4.570.251 ) 21.866 10.396 (15 ) (6.910 ) 1.510 885 126.902 ) (1.811 ) (1.565 22.170.300 (43.989 Trustees' fees 21.564 (1.616.980 88.502 639 45.734 ) (182.666.063.508 11.597.267 44.491.762 ) 22.510 (10.570 ) – 94.454 ) (57.787 ) (86.783 189 160 6.625.576 $ 1.028 2.613 ) – Foreign currency transactions – (39.760.878.854 3.070 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized gain (loss): Investments in Non-Affiliated Companies 28.350 15.732 7.060.558 1.373.446.358 57.105.504 ) (14.838 ) 282.154 17.248 (572.641 ) (5.047 20.068 923.246 ) $ 235.689 ) NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS $ (71.805 30.533.680.496 ) (16.616 ) $ 415.286 650.536.555.234 Total income 13.238.979.941 ) (8.291 25.253 Expenses: Investment advisory fees 7.396 ) Other assets and liabilities denominated in foreign currency – (7.462.000 47. 9.883 ) – Net expenses 8.147 Custody 68.917 31.977 ) (2.062 $ Affiliated Companies 6.847.735 8.361 ) (26.359 ) (77.537 44 35 6.964 72.Statements of Operations Six Months Ended June 30.694 838 168 2.783.584 11.182 368.136 37.

890 ) $ 177.969 161 95 6.964 ) (31 ) (596.400 Total expenses 99.551 $ Interest 170 1.627 ) – 41.059 1.100 317 282 4.478 1.255 ) $ (5.067 6.466 ) 643.961 67.156 7.870 2.865 109 20.872 12.913 ) – 92.645 187.974 15.247 464.185 Total income 147.475 Net change in unrealized appreciation (depreciation): Investments and foreign currency translations (314.304 Shareholder servicing 10.505 7.700 Registration 10.303 (11 ) (40.463 ) (729.067 ) – 38.833 ) (247.052 ) 68.909 Compensating balance credits (10 ) (33 ) Fees waived by investment adviser and distributor (38.841 (5.013 11.153.440 (2.586 $ 203 33.480 231 (773.648 $ 224 30.599 Shareholder reports 1.517 6.136 ) 11.019 ) 23 (124.870 (184 ) (145.418 640 398 5.365 ) $ 20.933 4.112 $ 86 12.665 ) (1.230 ) $ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.666 11.378 $ 30.786 42 105 3.500 Other expenses 681 2.024. .751 ) INVESTMENT INCOME: Income: Dividends $ 147.991 ) investments and foreign currency NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS $ (221.725 7.348 ) (8.344 Foreign currency transactions (3.290 500 23.239 ) (2.220 642.Statements of Operations Six Months Ended June 30.310 ) (123.594 ) $ (2.661 7.785 1.999 Trustees' fees 108 811 Legal 78 823 Audit 6.023 ) 23.612 6.228 ) (2.953 (11.889 ) (660.736 Expenses: Investment advisory fees 44.962 Custody 15.804 336.284 ) (607.999 28.928 27 87 4.683 4.285 ) (385.116 ) (580 ) (377.094 9.901 ) Expenses reimbursed by investment adviser – – Net expenses 60.628 (1 ) (9.130 (2 ) (19.357 26.063 7.417 29 18 6.055 20.342 ) Other assets and liabilities denominated in foreign (853 ) (3.504 800 61.081 ) 161.143 1.508 664 133.328 13.147 231 161.766 (753 ) (885.039 4.912 (4 ) (23.596 ) 7 (383.050 $ 641.799 ) (46.575 454.885 ) $ 293.414 6.520 Distribution fees 8.198 7.940 (1. 2010 (unaudited) Royce European SmallerCompanies Fund Royce Global Value Fund Royce SMid-Cap Value Fund Royce International SmallerCompanies Fund Royce Focus Value Fund Royce Partners Fund Royce Mid-Cap Fund 130 | The Royce Funds 2010 Semiannual Report to Shareholders 33.502 690 44.975 Net investment income (loss) 86.732 3.761 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized gain (loss): Investments 10.583 (3 ) (17.691 93 56 6.468 ) currency Net realized and unrealized gain (loss) on (308.340.789 26.800 ) (46 ) (242.379 68.405 ) 8.384 501.500 591 28.269 45 2.311 74 89 6.151 ) (1.829 37.810.291 Administrative and office facilities 387 2.500 624 59.

47 Royce Pennsylvania Mutual Fund – Consultant Class † 2010 $ 8 .11 1 .10) – $ – – (0 .90 10 .72 17 .00) $ (0 .89 0 .59% 1 .28) (0 .40 (0 .77) (0 .27) 2009 6 .265 11 .87 1 .05 0 .78) 2007 11 .77 (2 .89 12.63) (0 .39 8 .55) (3 .445 115.28 $ (0 .04) – $ – – – (0 . Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.25 2008 10 .09 (0 .154 1.56 14 .08 (35 .53% 1 .03 0 .89 (0 .53 0 .35 8 .45 0 .75 3.02 2 .72) ## Royce Pennsylvania Mutual Fund – Investment Class † 2010 $ 9 .526 2 .01) (1 .53 10 .59 ## 1 .00) 2 .077 693.31) (0 .63) $ – – – – – – $ 8 .23) $ (0 .05 (3 .51 1 .11 1 .41) 0 .06)% (0 .46) 2007 17 .88 0 .864.16 757.93 (0 . Investment Investments Total from from Net Shareholder Net Asset Investments Beginning of Income and Foreign Investment Investment and Foreign Total Redemption Value.89 1 .09 1 .92 0 .04 (3 .02 0 .555.25 2008 10 .49 # 4 .77) 2007 11 .78 $ 8 .50 # # # # $ – $ – – (0 .92 0 .34 (0 .57 ## 7 .16 ## 26 .01 – – $ – – – – – – $ – $ – – – (0 .95 1 .54 1 .58) (6 .71 $ (0 .06) (0 .09 10 .31 1 .03) ## (0 .71 (0 .01 9 .78 (0 .65 6 .05) 2 .90% 0 .11) (1 .859 455.562 12 .73 1.10) 1 .77) (0 .10) (0 .35 15 .10) (1 .77) (0 .69% 1 .01)% $ 704.808 5.226 36 .28 0 .41 2008 10 .90 1 .33) (2 .50% 1 .18) – (0 .54 1 .01 (3 .49 1 .45 $ 0 .77 (0 .12 ## ## ## ## 11 % 23 36 43 38 26 (0 .25) $ (0 .31 2006 10 .34) ## 0 .41 $ (0 .13 1 .14 1 .82) (3 .24) 2009 6 .12 (6 .94) 7 .07) $ – – – – $ 9 .49 # (35 .44 1 .23) $ (0 .77) (0 .41 2005 9 .16 ## 26 .49 2008 10 .86) (c) Royce Pennsylvania Mutual Fund – K Class † 2010 $ 8 .08) (0 .87 1 .50% 1 .88 1 .89 ## ## ## ## 11 % 23 36 43 38 26 (0 .32 904.06) (0 .28 6 .18) 2009 8 .42) 1 .513 497.14 0 .57 2005 10 .163.45 6 .46) (0 .51 1 .78 (2 .06) 3 .478 40.35 0 .29 0 .12 1 .74 1 .27% 0 .15 1 .79 ## 12 .89 1 .27 0 .25) $ (0 .52) 635.293.52) 1 .78 0 .88 1 .39)% (0 .435 9.Financial Highlights Ratio of Expenses to Average Net Assets This table is presented to show selected data for a share outstanding throughout each period.52 1 .07) 1 .136 13 .87 0 .431 609.56 1 .71)% (0 .81) (0 .40) (2 .507 (34 .96 2008 15 .63) (0 .78 2.95 1 .61 1 .54)% $ 3.52 2005 15 .50% 1 .867.35)% (0 .82) (3 .64) (0 .02) 2 .53 13 .38 (35 .79 ## 12 .06) 0 .25) $ (0 .57 10 .48 ## ## 11 % 23 36 (0 .22 1 .89 0 .25 (3 .77 (0 .25% 1 .02 – – – – $ 9 .53% 1 .34 $ 13 .01) (0 .52 2008 10 .57 ## 1 .01) (0 .44 0 .270 871 2.02 4 .79)% $ 35 .57 0 .27 # $ – – – – – – 652.43 1 . $ 11 % 23 36 43 38 26 (0 .90 1 .31)% $ 55 .09) (0 .00 0 .59 $ (0 .84 1 .25) 2009 6 .18) (0 .164.87 1 .00) 2 .94 0 . End of Currency Period (Loss) Operations Income Fees Period Currency Distributions Total Return Net Assets.93 15 .06) $ – – – $ – (0 .56) Royce Micro-Cap Fund – Investment Class † 2010 $ 13 .61) (0 .01 $ (0 .81) (3 .22 2006 15 .60 2005 10 .53% 1 .31 1 .63) $ – 0 .917 1 .88% 1 .89 0 .50 1.688 1 .07) (1 .25% 1 .71 (0 .80 The Royce Funds 2010 Semiannual Report to Shareholders | 131 19 % 34 43 49 42 31 .82 0 .41 0 .88% 1 .13) $ $ – $ – – – (0 .25) 2009 6 .23% 1 .01) (1 .157.90 (0 . End of Period (in thousands) Prior to Fee Waivers and Balance Prior to Fee Credits Waivers Ratio of Net Investment Income (Loss) Portfolio to Average Turnover Net of Fee Net Assets Rate Waivers $ – (0 .39 0 .86 1 .15) $ (0 .88 0 .160 (2 .06 1 .46 1 .45) (0 .48 1 .11 1 .05) 0 .88 1 .28) # (6 .49 ## $ 9 .10) (0 .89 1 .21 9 .03) $ (0 .46 2 .82 11 .879 844.72 0 .02) $ (0 .87 0 .75) (0 .00) (3 .07 22 .90% 0 .26) 2009 6 .90 $ – $ – – – (0 .734 (35 .91) (2 .46 1 .71 8 .21 2006 10 .78 11 .87 (0 .10) (0 .63) (0 .81) (0 .85) (1 .92 0 .81) 2007 12 .55) (0 .78 0 .959 55.06) 5 .33) (0 .10 1 .57) (3 .03) $ (0 .43)% (0 .24 0 .04 1 .481 # 0 .32 1 .90 (0 .30 2 .01) (0 .06 ## ## 0 .05) (0 .04) (3 .69% 1 .66)% $ 36 .90 0 .58 ## 7 .67 (40 . Distributions Net Realized from Net and Unrealized Realized Gain Net Asset Net Gain (Loss) on Distributions on Value.59 1 .04) 1 .88 0 .48) (1 .34 2006 10 .58 3 .61) $ 0 .22 1 .49 ## ## ## 11 % 23 36 43 (0 .50 2 .86 1 .05) 2 .65 $ (0 .11) (0 .02) $ (0 .89 (0 .87 10 .78) 2.01) (0 .25 (0 .49 2 .10) (1 .28 3. and to assist shareholders in evaluating a Fund’s performance for the periods presented.63) – $ – – – (0 .320 682.59) 2007 10 .88% 1 .920 694 831.40 10 .59 6 .88 1 .10) (0 .90 ## ## 0 .00 1 .90% 0 .43 1 .14 ## 1 .29 1 .049 104 1 .01) (1 .01) (1 .04) 1 .10) (0 .89 10 .04) – $ – – – – – – $ – – – (0 .11 (b) Royce Pennsylvania Mutual Fund – R Class † 2010 $ 9 .89 1 .05 1 .94 10 .27 2 .31 11 .53) (1 .93 0 .46 1 .50 ## ## ## ## THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.666.656 35 .41 6 .90 ## 0 .33 0 .61) (0 .54 1 .09 1 .27 (a) Royce Pennsylvania Mutual Fund – Service Class † 2010 $ 9 .742 14 .30 ## 1 .79) (2 .71 1.52 1 .91)% $ 35 .10) (1 .55 0 .16 9 .

24 (0 .04 2008 17 .15 1 .51 0 .70) (0 .13) (4 .15 1 .66 0 .37 1 .04) 11 .36 17 .26) (0 .44% 2 .45 $ (0 .49) 3 .89 Royce Micro-Cap Fund – Consultant Class † 2010 $ 12 .079 209.18 (0 .40) 2009 11 .51 16 .29) 2.41% 1 .411 173.84) $ – – 0 .92) 2 .78 (28 .25 (0 .55 16 .61) 145.Financial Highlights Ratio of Expenses to Average Net Assets This table is presented to show selected data for a share outstanding throughout each period.85 (0 .860 135.28 1 .12) – $ – $ – – (0 .13) $ – (0 .97 3 . Investment Investments Total from from Net Shareholder Net Asset Investments Beginning of Income and Foreign Investment Investment and Foreign Total Redemption Value.40) (2 .73 3.84) (0 .75 2 .50 2 .14 (41 .07 2 .55 (0 .46 2 .29 2 .41) 12 .01 – – – $ 15 .09 1 .44 2 .63 17 . End of Period (Loss) Currency Operations Income Fees Period Currency Distributions Total Return # ## ## Net Assets.75 15 .30) (2 .02) 4 .49 1 .13 1 .80 (0 .12) ## Royce Micro-Cap Fund – Service Class † 2010 $ 13 .43) (0 .12 $ (0 .49 ## 1 .98 (4 .12 12 .88 # # # $ – (0 .46 2 .01 2 .67) (1 .19) 4 .85 (1 .842 17 .37 2 .04) 2007 16 .038 203.14 1 .91) (1 .79) (2 .02) $ (0 .56 8 .83) (1 .48) (1 .50)% (0 .15) 3 .13) 2 .01 0 .05) (1 .38 1 .13) (0 .42 2 .27 (0 .43) 2009 12 .79 Royce Premier Fund – Investment Class † 2010 $ 16 .31 (0 . Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.69 (4 .23 2006 16 .12 (0 .47 1 .90 22 .69) 2007 16 .40) (2 .53) 0 .93 2 .17 ## ## ## 5% 14 11 21 13 20 (0 .09) – – $ – $ – – – (0 .77 1 .17 ## $ – 0 .40 (6 .77)% $ 54 .12 1 .09 2 .812 84.46 2 .37 ## ## ## ## 19 % 34 43 49 42 31 (0 .81 3.61 8 .12 (0 .03 1 .15) 2009 8 .78% 1 .74 15 .86 (2 .40)% $ 55 .31 12 .18) – (0 .31 $ – – – (0 .86 16 .63) (0 .09 1 .72 1 .58 Royce Premier Fund – Consultant Class † 2010 $ 15 .00 1 .224 7.58 (0 .17 ## ## 5% 14 11 21 13 20 (1 . End of Period (in thousands) Prior to Fee Waivers and Balance Prior to Fee Credits Waivers Ratio of Net Investment Income (Loss) Portfolio to Average Turnover Net of Fee Net Assets Rate Waivers 132 | The Royce Funds 2010 Semiannual Report to Shareholders $ (0 .33) (0 .09) 1 .07 (0 .06) (1 .25) (0 .86 (3 .91 (6 .84) $ – – – – – – $ 15 .10 10 .49 ## ## (0 .14 2 .771 28.04) – $ – $ – – – (0 .34 1 .75 1 .95 (29 .38 1 .11 2 .96 (0 .02 (1 .04) $ (0 .49 (40 .45 2 .241 28.09% 2 .77 1 .00 (6 .20) (0 .61 16 .44 1 .31 $ (0 .37 1 .91) 2007 17 .313 193.19 3 .990 58.77 $ 14 .37 # $ – $ – – (0 .58 $ (0 . 5% 14 11 21 13 20 .10) 5 .25) 1 .07 3.59 Royce Premier Fund – Service Class † 2010 $ 16 .29 1 .53 2008 14 .21) 3 .09% 2 .35 $ – – – (0 .24 11 .27 15 .78 1 .66 1 .12 2 .66 1 .57 (0 .859.09) $ (0 .66 16 .521 2.45 2 .78 $ (0 .977 51.20) (2 .67) (0 .11 2 .55)% (0 .47 2005 15 .44) 1 .24) 2 .83) (1 .76)% $ 3.13 1 .61 $ (0 . and to assist shareholders in evaluating a Fund’s performance for the periods presented.22)% (0 .16) 1 .09 2 .14 17 .18) 3 .63) (0 .41% 1 .017 2 .27) (0 .84) $ – – – – – – $ – – – (0 .21 14 .77 (0 .96 16 .04) $ (0 .84) (0 .23 12 .20) (2 .13 411.71 1 .20) (2 .45 2 .11 2 .13 ## ## ## ## 19 % 34 43 49 42 31 (1 .44 1 .79) (1 .11% 1 .66 16 .14) 1 .34)% (1 .17) 2 .45 8 .20)% (1 .63) (0 .38 1 .98 (0 .55) (0 .10 2 .49 1 .98 (1 .06) 0 .39) (0 .502 (28 .07 (6 .21) (0 .06) 4 .45 2 .20) (0 .454 103.043 8 .10 1 .01) (4 .18) (0 .46 2 .82) 2 .93 2 .45) 4 .01 – – – $ 13 .60 7 .14 2 .700 50.30) (2 .14 (0 .09) (0 .43 1 .66% 1 .38 1 .14 14 .63) (0 .082 149.15 0 .42) 2009 12 .28) (0 .84 2008 16 .52 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.11% 1 .044 221.00) 1 .29 1 .25 17 .24 $ (0 .24 1 .13) 2009 8 .36 0 .634.742 1 .54 $ (0 .01 21 .12 1 .086 (2 .46 2005 15 .07 (4 .04) 2 .28 2 .98) 6 .46) 6 .382.58) (0 .44% 2 .02 11 .84) (0 .628.22) 4 .245 27.35 2005 14 .92) 2 .85)% $ 32 .15 1 .42 13 .10 1 .45 2 .44% 2 .12 2 .09% 2 .33) (2 .50) (0 .72) 1 .68 (0 .57 16 .87 15 .46) 3 .39% 1 .30) 0 .29 0 .66 1 .09) – (0 .33) (0 .13) 4 .70) (0 .11 2 .04) 0 .33) (2 . Distributions Net Realized from Net and Unrealized Realized Gain Net Asset Net Gain (Loss) on Distributions on Value.30) (2 .56 16 .24 17 .87 (0 .33 2006 15 .862 47.25 3.13 2006 16 .14 2 .78% 1 .54 $ (0 .51) 2007 17 .39 92.30) (1 .66 1 .01) (0 .09) $ (0 .72) 2 .42 2005 14 .14 (0 .56 0 .247 33 .310 1 .92 (0 .94) 2007 17 .13 2006 14 .79 1 .48) $ – – – – – – $ 12 .22)% $ 31 .10 1 .01) 2 .86 0 .14) 1 .48) (1 .265 377.65 2005 15 .07) – $ – $ – – – (0 .045 12 .11) 1 .20) (0 .42 2 .647 246.927 59.45 2 .21 2006 16 .41) (0 .10 1 .09 2008 17 .63 0 .702.11% 1 .21 (0 .84) (0 .01 2008 15 .911.14) 0 .02 (4 .

20) (0 .18 1 .24 1 .27) (2 .18 1 .14 2 .63) 2009 9 .38) (0 .96) (4 .25 (0 .36 (0 .870.12) – $ – (0 .23 Royce Low-Priced Stock Fund – Service Class † 2010 $ 14 .36 (3 .584.22 0 .04 1 .04 (4 .19 ## ## 11 % 22 39 30 27 21 (0 .28 8 .09) – $ – – – (0 .20 ## 0 .53 6 .27 1 .07 $ (0 .42 2006 15 .60 (d) Royce Premier Fund – W Class † 2010 $ 16 .20) (2 .46 14 .53 1 .01) $ (0 .95 2008 14 .51) (c) Royce Premier Fund – K Class † 2010 $ 8 . End of Period (Loss) Currency Operations Income Fees Period Currency Distributions Total Return # ## ## Net Assets.618 332.488 18 .84% 1 .31 2006 16 .03 (5 .966 65.71) $ – $ – – (0 .59) $ (0 .337.05) (2 .05) 2 .17 14 .27) (0 .46 1 .946 9 .11)% (0 .05 $ (0 .00 (0 .37) (0 .38 (0 .04) – (0 .33 (28 .42 0 .16 (0 .23 ## ## ## ## 5% 14 11 21 13 20 (0 .88 17 .70) (0 .84) 5.19 ## ## ## 11 % 22 39 30 (0 .63) (0 .06 2 .83 15 .20) (2 .04 1 .01 2 .67 16 .66 3.972 319.51 1 . Investment Investments Total from from Net Shareholder Net Asset Investments Beginning of Income and Foreign Investment Investment and Foreign Total Redemption Value.84 ## 1 .75 0 .60) $ (0 .38) 1 .30) (2 .19% 1 .02 1 .59 2 .51 1 .75) 2 .551 35 93.02 1 .10 4 .86 8 .71 0 .56 1 .49 1 .82 # 23 .23) 12 .36 ## ## ## ## THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.846 553.33 (0 .06 1 .01% 1 .59 ## 1 .93)% $ 32 . Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.49% 1 .64% 2 .21) $ – – – $ – (0 .293 235.35) 2 .01) (5 .389 (4 .60) ## (0 .28) – $ – – (0 .47 1 .05 1 .Financial Highlights Ratio of Expenses to Average Net Assets This table is presented to show selected data for a share outstanding throughout each period.48)% $ 2.49 1 .86% 2 .042 608.18 (0 .26 (28 .30) (2 .04 1 .29) (0 .07 ## 1 .08 $ (0 .48) (0 .12 ## 0 .00) 4 .36 17 .05) 3 .992 516.91 0 .30) (2 .02) $ (0 .07 1 .68)% $ 33 .01) 4 .51 0 .59 1 .97 (35 .05 1 .344 2.04) $ (0 .27) (2 .00 1 .51) (4 .07 1 .25 17 .36) (e) Royce Low-Priced Stock Fund – Investment Class † 2010 $ 14 .19% 1 .67) (2 .86% 2 .29 ## 0 . and to assist shareholders in evaluating a Fund’s performance for the periods presented.84) – $ – – – (0 .84 (0 .87 0 .10 2008 17 .17 536. Distributions Net Realized from Net and Unrealized Realized Gain Net Asset Net Gain (Loss) on Distributions on Value.83 0 .09 4 .97) 1.634 396 97 2.00 1 .11)% $ 32 .01 1 .01 1 .15 17 .00% 1 .97 ## 14 .34) (5 .72) (0 .01% 1 .76 0 .01% 1 .82 (0 .20) (0 .09 2008 10 .40 0 .24 ## 2 .50 2005 14 .19) 12 .32) 2007 17 .91) 2007 17 .06 (2 .02) (3 .04 1 .97 ## 14 .01 3 .27) (2 .68) 1 .33 3 .09 9 .12)% (0 .016 2 .82 $ – $ – – – (0 .40 0 .42) $ (0 .96)% (0 .00 1 .02 ## Royce Premier Fund – Institutional Class † 2010 $ 16 .02) $ (0 .59% 1 .04) (0 .04 (35 .60) (0 .669.01) $ (0 .54) $ – – 0 .96 16 .40 12 .08) $ (0 .53) (1 .900 352.54 655.03 1 . $ 5% 14 11 21 13 20 (0 .59% 1 .33 12 .46 1 .75 $ 13 .120 234.39 ## 35 .52 2005 15 .59) (0 .02) – (0 .36 1 .92 2008 17 .24% 1 .35) 2007 16 .26% 1 .24 1 .60) $ (0 .84 1 .72 8 .02) (0 .31) 2007 16 .08) (4 .49) $ – (0 .01 1 .25) 2009 6 .26 3 .08 2008 17 .17 (0 .31 (28 .12 ## ## ## ## 5% 14 11 21 (0 .53) (1 .01) 4 .22) $ (0 .24 1 .28) (1 .67 0 .27)% (0 .12) 4 .70)% (0 .07) – $ – – – (0 .27 0 .18) 1 .54) ## (0 . End of Period (in thousands) Prior to Fee Waivers and Balance Prior to Fee Credits Waivers Ratio of Net Investment Income (Loss) Portfolio to Average Turnover Net of Fee Net Assets Rate Waivers $ – – – (0 .03 1 .76 16 .11 1 .01 1 .43) $ (0 .01) 2007 20 .235 (35 .51) $ – – – – $ 15 .53 (0 .01) 0 .03 1 .34) (3 .24 1 .27 1 .44 $ 13 .26% 1 .69)% $ 33 .94 # $ – – – – – – $ – – – – – – $ 15 .095 1 .18) $ $ – $ – – (0 .27) (0 .44) 2009 12 .05 1 .05) (2 .14) 0 .492 355.96 4 .36 0 .070 869.260 (4 .24 1 .24 ## 2 .07 1 .84) (0 .01) 4 .22 ## 1 .34 0 .720 299.40 $ (0 .26 3 .95 4 .15 # # # # $ – $ – – – (0 .74 1 .43) $ (0 .04 1 .07 12 .20 ## (2 .22)% (0 .04) – (0 .22 ## 1 .93) (5 .95 2008 14 .69 The Royce Funds 2010 Semiannual Report to Shareholders | 133 11 % 22 39 30 27 .95 2005 15 .42) (0 .03 (5 .04 3 .28 2006 16 .50) 2009 12 .30 17 .15 (0 .92) 2007 17 .77) # 1 .897 673.47 2006 15 .58 2.06) 0 .49 1 .05) (2 .18 1 .004 29.48 (f) Royce Low-Priced Stock Fund – Institutional Class † 2010 $ 14 .01 1 .909.00 2 .60 1 .40)% $ 53 .25 # $ 15 .25 2 .34 (b) Royce Premier Fund – R Class † 2010 $ 16 .804 450.04 (4 .255 53 .83) (0 .00% 1 .177 1.08 ## 1 .97 4.02) (0 .58 1 .44 1 .20) (2 .42 14 .81) # (2 .22 ## 1 .44 (0 .04 1 .61 # 16 .065.10) (0 .62) 2009 9 .64% 2 .27 0 .18) 2 .02 ## ## (0 .886 1 .91 2008 14 .44) 2009 12 .20) (0 .71 16 .00 1 .00% 1 .05 1 .07 2 .91 312.87 2 .02 0 .65) (1 .30 (0 .15) 0 .04) 4 .129 283.49 1 .04 ## 1 .05 9 .58 0 .03) $ (0 .57 16 .18 14 .08 9 .04) 0 .45 # (33 .09 $ (0 .60 1 .78 (0 .07 ## 1 .78 16 .04 1 .27) (0 .01 – $ – – – – – – $ – – – – – $ – $ – – – (0 .62) 2009 9 .15 0 .96 4 .10) 1 .19% 1 .16) (0 .53) (1 .30) (0 .87 (2 .21 2 .42 17 .53 1 .47) (1 .39 ## 35 .37 0 .20) $ – – – $ 8 .63) (0 .32 3.24 ## 1 .89 16 .23 0 .52)% (0 .55 1 .20) (0 .092 1 .40)% $ 54 .812 94.33 $ (0 .23 1 .34) (5 .16 14 .04) (0 .54 ## ## ## ## 5% 14 11 (0 .59% 1 .49) (0 .35) (5 .53 $ 13 .53 $ (0 .84) (0 .95) (4 .47 14 .

00) (0 .38 1 .06 2 .09) 2 .156 14 .15) 2009 8 .28 3 .09) 2009 8 .602 341. End of Period (Loss) Currency Operations Income Fees Period Currency Distributions Total Return # ## ## Net Assets.52) (0 .35 2006 12 .16 0 .21 2006 12 .23) (0 .05) (5 .031 2 .18) (0 .15 1 .61 0 .19 2008 12 .18) $ (0 .29 2 .562 371.17) 2 .34 1 .73 12 .44) ## (0 .10) (0 .13 1 .47) # $ 13 .17 1 .41% 1 .00 ## ## 9% 20 25 27 25 24 1 .09 2 .577.04) – $ (0 .16) (0 .89 Royce Total Return Fund – Institutional Class † 2010 $ 10 .93 13 .00) (1 .08 1 .44) (1 .14 0 .63) (0 . and to assist shareholders in evaluating a Fund’s performance for the periods presented.23 2008 12 .93 0 .14) (0 .99 0 .27) (2 .09 $ (0 .09 2 .02 10 .06 2 .15 0 .39 1 .01 Royce Total Return Fund – Service Class † 2010 $ 10 .39 4.55) (0 .26 0 .09 1 .Financial Highlights Ratio of Expenses to Average Net Assets This table is presented to show selected data for a share outstanding throughout each period.20 (4 .32 2006 12 .12 1 .29 1 .52) (0 .07) – (0 .87 0 .01% 1 .81 $ 0 .59) $ (0 .62 10 .11% 2 .10) (0 .59 ## ## 11 % 22 39 30 (0 .78 0 .03) $ (0 .07 2 .65 1 .81 8 .09 2 .16 2 .45 # (37 .27) – $ (0 .47) – $ – – (0 .55) (0 .02) (1 .04 1 .311 606.72 10 .36 2 .52 14 .12 (31 .10 ## ## ## ## 9% 20 25 27 25 24 1 .02 – – – $ 10 .73 0 .95 $ (0 .51)% $ 53 .17 (4 .19 0 .56% 0 .12 1 .066 282.00 1 .12 ## ## 1 .644 268.77) (3 .05) (0 .99 0 .46 (1 .00 (0 .69 1 .42 1 .09 1 .755 315.00) (1 .11 14 .11% 2 .964 8 .52) (0 .41 (31 .78 2005 12 .67) (0 .60 (0 .90 $ 0 .55) (0 .82 13 .30 13 .275 # $ – 0 .92)% $ 2.00) (0 .20 (4 .04) (0 .78) Royce Total Return Fund – Investment Class † 2010 $ 10 .20 14 .70 0 .17 0 .14 2 .08 1 .42) $ – (0 .69) $ – $ (0 .134 74 92 2 .98% 4 .34 1 .45 7 .70 12 .67% 1 .83 2008 14 .09) (0 .05) (0 .17 1 .17 0 .12 0 .70 0 .75 ## 40 .18) $ (0 .18) (4 .76 (0 .13 (36 .52) (0 .12 2 .34 1 .12 1 .099 (31 .687 215.11% 2 .23) (1 .68 9 .26) (0 .09) 2009 8 .54) (0 .82 1 .84 1 .69 (0 .16 (31 .22) # (7 .03) (0 .18) (1 .438.95 9 .16) (0 .10) 2007 13 .66)% $ 53 .19) ## $ 11 % 22 39 ## $ 1 .36 ## ## ## 1 .41) 2009 5 .63 $ – $ (0 .74 1 .18) $ (0 .14% 1 .19 1 .23 4.135 225. Investment Investments Total from from Net Shareholder Net Asset Investments Beginning of Income and Foreign Investment Investment and Foreign Total Redemption Value.99 1 .12 1 .41% 1 .61 12 .619 1.02) – $ (0 .31 1 .779 676 30 1 .34% 3 .88)% $ 26 .60 0 .94 ## 11 .17 0 .12 2 .58 $ 10 .09 2 .75 0 .84 ## 1 .30 0 .28) 1 .67 12 .74 ## ## (0 .02 10 .041 191.84 2005 12 . 9% 20 25 27 25 24 .17 2 .99) 2007 13 .95 (4 .96) 1.214.98% 4 .70) (0 .93 2 .82 2005 12 .01% 1 .24 0 .86)% (0 .05) (1 .87 1 .01 – – $ – – – $ 8 .10 1 .17) 2.17 1 .05 1 .62 8 .76 2.18) $ (0 .16) (3 .69 2005 12 .10) 3 .04 0 .55) (0 .07) (0 .939 155.12) $ (0 .17) (0 .18 2008 10 .63 10 .99) 2007 13 .618 274.08 2 .31 # # # $ – $ – – (0 .16 0 .99 1 .64) $ – 0 .86 0 .90 8 .00) 2007 13 .29 1 .03) (0 .76 0 .37 1 .98 Royce Total Return Fund – Consultant Class † 2010 $ 10 .41% 1 .49 1 .367 354.99 1 .384 648.19) (3 .12 0 .156 26 .01) (3 .37 2006 12 .05) (2 .12 2 .11) (0 . End of Period (in thousands) Prior to Fee Waivers and Balance Prior to Fee Credits Waivers Ratio of Net Investment Income (Loss) Portfolio to Average Turnover Net of Fee Net Assets Rate Waivers (b) 134 | The Royce Funds 2010 Semiannual Report to Shareholders $ – (0 .09 $ (0 .27) (0 .592 264.08 (4 .46) (c) Royce Low-Priced Stock Fund – K Class † 2010 $ 9 .05)% $ 26 .20) (4 .95 ## 11 .54% 1 .01% 1 .12 0 .99 0 .12 2 .14% 1 .00 0 .76) (0 .95 (0 .81 8 .07 2 .09) – (0 .014 257.11 (0 .59% 1 .00 ## (4 .26) (1 .09 5 .191 689.42 1 .83) 1 .46 0 .77 0 .01 0 .06) $ (0 .38) 2007 18 .87 1 .17 1 .95 13 .09 $ (0 .30 0 .95 0 .55) $ – – – – – – $ – – – – – – $ 10 .09) (0 .19) (0 .76 12 .38) $ (0 .80 8 .27% 1 .15) (0 .34% 3 .54 4.34 0 .11) 2009 8 .29 1 .00) (1 .70 12 .92 4 .11) (0 .07 $ (0 .35 13 .08 2 .63 0 .77 12 .27) (0 .17) (0 .19 1 .98 2 .18 (0 .91 0 .08 2 .14) (0 .49 1 .37 1 .33) (5 .26 2008 12 .258.82 0 .58 0 .09) – (0 .02 0 .14% 1 .07 2 .64 1 .63 1 .09) $ (0 .12 1 . Distributions Net Realized from Net and Unrealized Realized Gain Net Asset Net Gain (Loss) on Distributions on Value.03 $ (0 .67 0 .30 ## Royce Low-Priced Stock Fund – R Class † 2010 $ 13 .75 12 . Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.91 13 .00) (1 .65) 2009 9 .42 1 .19 1 .00 ## ## ## 9% 20 25 27 25 24 0 .07 2 .19) (0 .42) ## (0 .75 ## 40 .07 (1 .93 1 .295 214.04 0 .02 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.05) (0 .18 1 .03) – (0 .00) – (0 .00) (0 .25 2008 12 .84% 1 .99 0 .09 1 .42 1 .14) $ – $ (0 .20 0 .80 $ 0 .207 366.10 1 .86 1 .39 1 .63 10 .00) (0 .077.09 1 .22 3.71 0 .03) (0 .959.57)% (0 .11) (0 .59 ## 1 .00) (0 .81 $ 0 .08 1 .18) (0 .39)% $ 25 .64 1 .09) 4 .32 8 .04 0 .67) $ – – – – – – $ 10 .

507 1.10 2008 12 . Investment Investments Total from from Net Shareholder Net Asset Investments Beginning of Income and Foreign Investment Investment and Foreign Total Redemption Value.617 10. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.201 832 65 $ – – – – $ 10 .02 $ (0 .22 2006 12 .12% 1 .15 $ (0 .25) (1 .47% 1 .14) $ – – – $ 8 .39% 2 .14 (0 .06 1 .23 $ – – – – $ – $ – – – (0 .08) (0 .77 ## $ 10 .00) (0 .64) – $ (0 .77% 1 .20 3 .42 ## 1 .05) (0 .83 8 .09) 2 .71 12 .25% 1 .42) (1 .06) (0 .652 95.09) – (0 .450 2.25) (1 .76 ## ## ## 33 % 59 128 138 98 142 (0 .42) (1 .53 2005 12 .39) 2009 6 .68) $ – – – 0 .25) (1 .07 21 .14 6 .09 ## 1 .47 $ 9 .18) 2 .39 (4 .01 – – $ 11 .47 $ 0 .56) (3 .13) 2 .21) (1 .49 2 .97 0 .69 2 .61 3 .47% 1 .11 1 .93 0 .49 14 .06) (0 .08) 1 .89) $ (0 .18 2006 12 .17) 1 .24% 1 .63 2008 10 .84 ## ## 33 % 59 128 138 98 142 (0 .03) 2007 12 .42 1 .22) 1 .61 0 .879 2.92)% $ 51 .01) 0 .68 44.34 1 .26 (4 .64 (3 .27 1 .03 (0 .42) (1 .42) (1 .47 1 .517 7.88 14 .06) 1 .23 (0 .93 (1 .50 1 .14) (0 . and to assist shareholders in evaluating a Fund’s performance for the periods presented.70 10 .649 43.77% 1 .88 0 .58 2 .01) (3 .51) The Royce Funds 2010 Semiannual Report to Shareholders | 135 33 % 59 128 .18) 2009 8 .92)% $ 26 .07 $ 0 .25) (0 .47 0 .08) (0 .13 1 .39% 2 .85 2 .15 (4 .24 ## 1 .38 1 .07 7 .06 9 .03 ## 6 .609 6.14) 2009 6 .68) (1 .81) 0 .22 (36 .710 6.06 $ (0 .55 2 .87) (g) Royce Total Return Fund – K Class † 2010 $ 8 .01) $ (0 .45) 4 .83 $ 0 .33 8 .25) (0 .65 10 .97 0 .43 $ (0 .10 2 .00 (0 .22)% $ 25 .05 1 .10 (0 .13 1 .29 (0 .18 3 .02) (0 .74 0 .02) 0 .44) 2 .690 78.349 58.12 7 .49 1 .05) $ (0 .37% 1 .33 ## 1 .88 # $ (0 .24)% $ 50 .14) $ – $ (0 .68 12 .08 1 .15) # $ – – – – – – 9.43 (31 .06 ## ## 1 .21) (1 .56% 1 .89 (0 .27 $ (0 .84 ## 1 .21) (1 .08 7 .47 6 .37) 3 .11) 0 .54 # 10 .24) (1 .44) 4 .48 2008 11 .33 ## ## ## ## THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.75 (0 .02) 0 .49 1 .24 1 .905 8.03 (0 .82 2005 13 .07) $ (0 .13 2008 12 .52) $ – – – $ $ – – – – – – $ – $ – – – (0 .36) 2009 6 .16 2 . End of Period (in thousands) Prior to Fee Waivers and Balance Prior to Fee Credits Waivers Ratio of Net Investment Income (Loss) Portfolio to Average Turnover Net of Fee Net Assets Rate Waivers (d) $ (0 .01 0 .47) 2009 7 .98)% $ 25 .12) (1 .19 0 .71 10 .46 ## ## ## ## 9% 20 25 27 25 24 0 .47 11 .75 11 .58 ## ## ## ## 9% 20 25 0 .052 5.20 (3 .07) (e) Royce Heritage Fund – Investment Class † 2010 $ 12 .25 2008 10 .25% 4 .05) (0 .178 220.07) # 1 .95 12 .69)% (1 .96% 1 .46 1 .08 1 .09 $ (0 .66 1 .68) 0 .42) $ – – – – $ 11 .45% 0 .02 (3 .03 ## 19 .39 0 .94 $ (0 .65 2005 11 .728 3.95 0 .23) 2007 13 .20 2 .18 1 .06 1 .25% 1 .62 8 .02 ## 6 .82 (36 .064 9.62 12 .19 0 .12 (4 .522 8.47 (0 .21 2006 11 .33 1 .16) (0 .05) – (0 .44 ## 1 .00) 4 .42 1 .49 2 .43 2 .95 13 .37% 1 .99 2 .74 (4 .66) 0 .09) (0 .29 $ 9 .05) # # # # $ – $ (0 .49 2 . $ 9% 20 25 27 1 .05) 3 .31% 1 .15 1 .18) 2009 8 .78 1 .11 1 .10 2008 12 .83 1 .42 ## 1 .61 (0 .235 182.02 (4 .18) (0 .03 ## 19 .00) (1 .20 (4 .14) (0 .09 12 .06 1 .55) (0 .09 ## 1 .25% 4 .04 (4 .50) 1 .18) (0 .08) (4 .40% 2 .97 12 .43) 3 .06) – (0 .81 0 .506 1 .08) (0 .11 (4 .058 65.09) $ (0 .28 (31 . End of Period (Loss) Currency Operations Income Fees Period Currency Distributions Total Return # ## ## Net Assets.74 (3 .42 ## 1 .51 1 .12 $ 0 .11) (0 .78 1 .27) ## Royce Total Return Fund – W Class † 2010 $ 10 .25) (0 .23 (4 .08 1 .81 (0 .86) (1 .01 2 .70) 2007 14 .10 ## 1 .12 2008 12 .12)% (0 .884 187.00) (1 .85 2 .77% 1 .60 3 .02 4 .281 14.10 ## 0 .00 (0 .485 4.83 1 .14 $ (0 .89 # (30 .51 1 .09 (0 .05) (0 .14) 2 .10) (0 .67) # (6 .33% (0 .21 Royce Heritage Fund – Consultant Class † 2010 $ 10 .00) (0 .68) – $ – – – (0 .49 2 .88 0 .20 22 .12% 1 .76 0 .28 Royce Heritage Fund – Service Class † 2010 $ 12 .00 0 .68) (1 .226 48. Distributions Net Realized from Net and Unrealized Realized Gain Net Asset Net Gain (Loss) on Distributions on Value.36 # (35 .06 1 .34 1 .38 ## 3 .260 250.24) (0 .24 1 .07) 44.84% 1 .70) 2007 14 .526 103.73)% $ 51 .46 1 .68) (0 .37% 1 .06 1 .11) (1 .74 1 .224 1 .42 1 .81 1 .68 2 .07 (36 .70 (3 .71 0 .11 (c) Royce Heritage Fund – R Class † 2010 $ 9 .63)% $ 52 .88 $ 0 .39 ## 3 .95 (0 .716 144.76 12 .49 2 .00) 0 .14 ## 1 .Financial Highlights Ratio of Expenses to Average Net Assets This table is presented to show selected data for a share outstanding throughout each period.31 1 .88 8 .40 ## (0 .42) (1 .13 1 .21) (1 .03 $ (0 .09) 3 .32 1 .37 1 .25) $ – – 0 .56) ## (0 .47) 2009 7 .946 1.52) (0 .04 2 .48 1 .19) 2007 14 .06) 1 .33) (1 .01 – – $ – – – $ – – – – – – $ – $ – – – (0 .25) (0 .84 ## 1 .17) 0 .28 $ (0 .00) (0 .37% 1 .04) $ (0 .74 12 .10 12 .17 (b) Royce Total Return Fund – R Class † 2010 $ 10 .05 $ (0 .55 2 .99 ## ## ## ## 33 % 59 128 138 0 .12% 1 .06) (0 .43 6 .84 1 .

02) $ (0 .04 1 .51 4 .06) 2007 13 .92) # # # # $ – $ – – – (0 .60)% (0 .06 (5 . Investment Investments Total from from Net Shareholder Net Asset Investments Beginning of Income and Foreign Investment Investment and Foreign Total Redemption Value.12) 0 .59% 1 .13 (0 .06 (0 .45 2 .02) $ – – (0 .28 ## 14 .76) – $ – – – (0 .46 6 .02) 1 .50 11 .41 1 .08) $ (0 .82 ## 19 .14) 2007 14 .74) (1 .17 8 .02 1 .66) (0 .83 $ (0 .11 (1 .28) 1 .50 (0 .67) (1 .40) (3 .680 298.22) 18 .03) ## (1 .34) (0 .27 ## 14 .07) 0 .08) 2007 13 .268 (45 .09) 2009 5 .60 # (34 .05) (0 .77) (0 .500 4.607 293.438 62 .00 (0 .40 1 .63 0 .83 5 .25) (0 .34 $ 8 .24 1 .29 1 .48 2 .72 (45 .59 ## ## 0 . Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.12 1 .03) $ (0 .836 286 24 $ 8 .82 0 .76 1.65) (c) Royce Opportunity Fund – K Class † 2010 $ 8 .02 (0 .71 0 .00) (4 .04 1 .00) (0 .92) 1 .17 1 .25) – $ – – (0 .31% 2 .41 2 .03) $ (0 .43) 0 .08) (5 .55)% $ 62 .06) ## Royce Heritage Fund – K Class † 2010 $ 9 .17 1 .073 4 .34) (0 .67) (1 .02) 3 .02 0 .04 1 .89) 18 .37) $ (0 .29 (0 .70 0 .18% 1 .40 1 .85 4 .74) (1 .91 18 .02)% $ 61 .56) $ – – – – – $ 8 .78 12 .00) (3 .10 9 .47 1 .982 4.80 0 .74) (1 .14% 6 .911 167.59% 1 .03) $ (0 .56) (1 .31% 2 .04% 1 .92)% (0 .41) (1 .19) 2006 12 .97 9 .74) (1 .45 2 .04 12 .07) – – $ – – (0 .02) 3 .09 0 .09 13 .69) 0 .90 (0 .06) 3 .82 12 .74) (1 .05) 3 .32 2 .14) (0 .51) (4 .39 1 .07 5 .06 (0 .24 5 .07) 2009 5 .72% 5 .59 ## ## ## ## 24 % 44 52 50 47 (0 .84 ## 1 .24) (0 .00) (0 .39) (1 .21) 2006 12 .03 $ (0 .45% 1 .83) (1 .05) 0 .81) (1 .34) (0 .29 (0 .19 3 .66) (1 .46 $ 0 .05) (0 .07) (4 .13 2008 10 .04 1 .95) 2.04) $ (0 . and to assist shareholders in evaluating a Fund’s performance for the periods presented.43 (0 .38) (1 .00 (0 .26)% (1 .17 1 .09) – – $ – – (0 .00) 1.34) # 1 .04% 1 .811.18% 1 .56) (1 .42 (0 .23 (45 .56) (1 .04) $ (0 .95) (5 .23) 2006 12 .91 18 .31% 2 .47)% (0 .05) – – $ – – – – – $ – (0 .04 3 .369 9.84% 1 .24 2008 10 .22 1 .11 0 .41 1 .04 1 .47 2 .26) 0 .574 287 65 1 .999 # $ 9 .86 $ (0 .07) 3 .36 (0 .31 (0 .12) (5 .74 2 .01) (0 .25 # (44 .72% 5 .60 0 .27) (0 .02 $ 8 .46 10 .080 521.70 0 .48 ## 3 .67) – $ – – – (0 .78 (0 .57) (1 .31 2005 13 .04) (0 .60 (0 .90 (1 .34 (0 .10) 2009 5 .36 2008 11 .03) 2 .28 2 .34 0 .49 1 .22 1 .38) ## $ 24 % 44 52 50 47 42 ## $ 1 .49 3 .14 1 .25) (0 .03) $ (0 .04) $ $ – $ – – – (0 .56) (1 .66 # $ – – – $ – – – – – – 229.82 ## 19 .01 $ (0 .60 11 .56) (1 .66 5 .45% 1 .77 8 .80 12 .47 0 .53) 2 .90 9 .56) (1 .34) (1 . End of Period (in thousands) Prior to Fee Waivers and Balance Prior to Fee Credits Waivers Ratio of Net Investment Income (Loss) Portfolio to Average Turnover Net of Fee Net Assets Rate Waivers (c) 136 | The Royce Funds 2010 Semiannual Report to Shareholders $ – – – $ – (0 .40 0 .11) 3 .11 (0 .02 1 .24 (0 .223 7.39 ## (3 .07) (0 .67) (1 .02 13 .550.35 3 .47 1 .13) (5 .81)% $ 51 .42 3 .59 ## 1 .452 248.38) $ – $ – – (0 .22 2008 10 .045 18 . Distributions Net Realized from Net and Unrealized Realized Gain Net Asset Net Gain (Loss) on Distributions on Value.57 11 .11 1 .24 $ (0 .59 ## ## 24 % 44 52 50 (0 .05) (0 .50 3 .67) $ – – – – – – $ 8 .59 2 .74 ## ## ## (0 .74) (1 .33 2005 13 .48 2008 11 .67) $ – – – – – – $ – – – – $ – – – $ $ – $ – – – (0 .11 1 .02 (0 .300 310.00) (4 .65 Royce Opportunity Fund – Service Class † 2010 $ 8 .04% 1 .04) 0 .85)% $ 61 .22 1 .02 9 .25) (0 .10 1 .03) $ (0 .45 2 .490.08) (1 .14 836.29 (0 .84 1 .24) 1 .272 333.36) 2009 6 .14 1 .85 ## 44 .04 0 .34) (0 .46 2008 11 . 24 % 44 52 .50) # (11 .14% 6 .10 1 .42 10 .79)% $ 61 .03) $ (0 .410 162.53 1 .04) (0 .05) 2009 5 .99)% (0 .46 (0 .05 3 .51) (3 .11 1 .86) ## (0 .012 291.47 2 .17% (0 .29 1 .63 (h) Royce Opportunity Fund – Consultant Class † 2010 $ 8 .24 3 .74) (1 .710 199.04 1 .37 2008 10 .04) ## (0 .86 5 .03 1 . End of Period (Loss) Currency Operations Income Fees Period Currency Distributions Total Return # ## ## Net Assets.13 (0 .56 8 .05 (5 .707 7.74)% (1 .79) (1 .57 (0 .14 ## ## 33 % 59 128 (0 .29 2 .16 (0 .34 1 .26) ## (0 .03) 3 .860 (2 .39 1 .01) 2 .59 ## 1 .33 2 .43 3 .34) (0 .39 ## ## ## 24 % 44 52 50 47 42 (1 .76 1.46 ## 2 .66 $ (0 .66)% $ 952.29 0 .Financial Highlights Ratio of Expenses to Average Net Assets This table is presented to show selected data for a share outstanding throughout each period.02) 2007 12 .233 502.45% 1 .07) 2009 5 .67 (b) Royce Opportunity Fund – R Class † 2010 $ 8 .53 1 .17 (0 .47 1 .76) (2 .03 (0 .75 1 .51) Royce Opportunity Fund – Investment Class † 2010 $ 9 .09 (46 .38) (1 .01) (0 .02 1 .25 2005 13 .34) (0 .20) (0 .56) (1 .293 573 341 64 88 1.04 1 .17 Royce Opportunity Fund – Institutional Class † 2010 $ 9 .06) $ (0 .11 12 .38) 2006 14 .78 (46 .41 ## ## 1 .05 ## ## ## ## 24 % 44 52 50 47 42 (1 .76 8 .73) 581.16% 9 .15)% $ 59 .07 $ (0 .96) 2007 12 .16% 9 .03 5 .04 (5 .51) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.85 ## 44 .00 2 .02) $ (0 .06) 2009 5 .03 1 .14 (0 .46 ## 3 .06) (5 .18% 1 .

45 1 .76 2006 18 .72% 0 .52 1 .70 0 .28 ## ## 18 % 49 41 67 0 .32) (1 .07 3 .62) 2007 19 .05 1 .61 2008 17 .12 (0 .42) (0 .32) 0 .06) (0 .51) 2009 13 .58 0 .75) (0 .35 1 .80) (3 .21 (3 .04 1 .51 0 .62 $ 9 .081.45 1 .00 10 .89 1 .21 (0 .03) 0 .44 17 .200 7.11) (0 .39 2005 19 .39 1 . End of Period (in thousands) Prior to Fee Waivers and Balance Prior to Fee Credits Waivers Ratio of Net Investment Income (Loss) Portfolio to Average Turnover Net of Fee Net Assets Rate Waivers $ – (0 . Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.16 2008 10 .59) $ (0 .35 1 .88 2008 18 .32) (2 .26 1 .61 0 .66 $ 9 .840 157.41) (1 .05 1 .16 3 .19 2 .64) (0 .15 1 .44% 1 .47 1 .62) 316.26 2 .48 $ 0 .13 0 .518 72.28 0 .51) (1 .43 1 .11 3 .02 $ (0 .04% 1 .65)% $ 1. $ 11 % 10 27 29 16 22 (0 .11 (19 .23 2 .31) ## Royce Special Equity Fund – Investment Class † 2010 $ 17 .38 842.69) (0 .27 0 .06) ## 0 .69) 2007 19 .06 (0 .88 ## ## ## ## 11 % 10 27 29 16 22 0 .16) (0 .03 1 .30)% (0 .86 0 .15) 1 .20 2 .17% 1 .806 (34 .62 1 .45 0 .07) (0 .39% 0 . End of Period (Loss) Currency Operations Income Fees Period Currency Distributions Total Return # ## ## Net Assets.63 12 .80 3 .48 13 .09) – (0 .05 1 .72) (3 .86 0 .05 1 .52) 2009 13 .69 1 .04 1 .13 2008 10 .233 (3 .47 1 .41) (0 .17% 1 .11 (3 .778 17.43 0 .05 1 .19 2 .43 (0 .71 1.19% 2 .64 0 .05 1 .77 663.10) 0 .15 1 .961 1 .58 1 .249 18.911 28 .16) $ – – (0 .128.87 19 .44 13 .661 154.03 13 .51) (0 .52) 4 . Distributions Net Realized from Net and Unrealized Realized Gain Net Asset Net Gain (Loss) on Distributions on Value.58 2005 19 .11% (0 .69 18 .39) (0 .05 1 .39 (0 . and to assist shareholders in evaluating a Fund’s performance for the periods presented.152 20.28 19 .68 18 .03 0 .09) # 2 .64 (0 .51) (1 .59) $ (0 .66) 27.50) (0 .41) 0 .13 1 .99) 523.04 1 .81 10 .03 (3 .253 161.56 0 .47 (0 .19) (0 .55 (0 .06 9 .69 0 .17 1 .62 (0 .178.77 3 .00 (0 .81 1 .69 1 .94 1 .22) $ – (0 .62) 2007 11 .93 17 .74) $ – – – – – – $ 16 .66 0 .606 1 .517 346.59) 2009 13 .67 (0 .14 1 . Investment Investments Total from from Net Shareholder Net Asset Investments Beginning of Income and Foreign Investment Investment and Foreign Total Redemption Value.13) (0 .27 0 .23 2 .43 18 .09) (0 .51 2 .42 1 .01 $ (0 .42 17 .60 0 .59) 2007 19 .72 0 .55) 2009 13 .50) (0 .02) – $ $ – $ – – – – – (0 .17% 1 .37) $ (0 .46) (1 .39% 1 .13 1 .22 0 .12) 2 .Financial Highlights Ratio of Expenses to Average Net Assets This table is presented to show selected data for a share outstanding throughout each period.46% 0 .808 16 .16 ## 1 .08 1 .98 17 .17 1 .59) $ (0 .38) $ (0 .13 $ 0 .72) – $ – – (0 .11 2 .66 2005 19 .12) (0 .14 1 .66 (3 .02 0 .82 2 .34) (0 .73 0 .73 18 .04 1 .75) (0 .15 1 .28 Royce Value Fund – Service Class † 2010 $ 10 .61) (3 .05 1 .53 ## $ 16 .23) (0 .01 – – $ 16 .996 67.15) (0 .26 2 .558 4 .24) (0 .451 $ 0 .36 # # # # $ – $ – – (0 .18 (0 .01 0 .42 2006 9 .92)% $ 28 .32) (2 .16 ## 1 .22) (0 .61 2005 8 .27 19 .03) (0 .24) Royce Special Equity Fund – Consultant Class † 2010 $ 17 .50) $ – – – – – – $ 16 .04% 1 .94 17 .70 (1 .15 3 .195 80.53 2 .22 2 .891 11.16% 1 .69 (0 .16 ## 1 .58 13 .103 44 .14 1 .43 1 .46) 3 .50 $ 0 .50) (0 .16 $ 0 .00 438.43 1 .72 18 .05 1 .46% 1 .53 ## ## ## 11 % 10 27 29 16 22 0 .16) (2 .16) $ – – – – $ – – 0 .12 2 .50 13 .49% 1 .35) 2009 7 .48 ## 1 .22 2 .26 1 .48 2 .09) (0 .50) (0 .01) (3 .51) (0 .87 1 .03) $ (0 .31) (0 .46)% $ 26 .42 (0 .05 1 .05 1 .05 ## ## ## ## THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.01 0 .77) (3 .19% 2 .66) 2007 19 .51) (1 .48 2 .64 11 .04% 1 .231 17.51) (1 .75 (2 .01 – – – – 108.50) (0 .64 2005 19 .11 1 .35 1 .06) (0 .23 113.44 $ 0 .83) (3 .93) (3 .18) (e) Royce Value Fund – Investment Class † 2010 $ 10 .84 2008 18 .01) – – – $ – (0 .75) (0 .23 (0 .19) Royce Special Equity Fund – Service Class † 2010 $ 17 .01 0 .14 1 .44) (1 .35 2 .67 3 .65 0 .758 1.100 147.14 (34 .03 $ (0 .39) (0 .49% 1 .45 1 .21) (0 .07 $ (0 .678 (19 .173 280.21) 704.32) (2 .24 1 .98) (2 .19% 2 .65 18 .23) # $ – 0 .76) (2 .70 (2 .36 1 .56) $ (0 .07) (0 .87% 0 .42) Royce Special Equity Fund – Institutional Class † 2010 $ 17 .17 (0 .27 0 .13 7 .17% 1 .75) (0 .69) (0 .74 385.01 0 .62) (0 .97)% $ 1.54 2 .76 452.360 9.19) $ – – – (0 .22 (0 .864 14 .23 2 .993 13.90 (20 .427 (0 .31 1 .96) (2 .63 1 .45 1 .26 2 .00 0 .04 $ (0 .01 0 .22 19 .06 1 .406 3 .87 0 .92 0 .16 7 .55 (3 .14 1 .16% 1 .03) (3 .87 2008 18 .29 1 .42 (19 .17 1 .95 2006 18 .62) (3 .21 (3 .84 3 .57 0 .00 10 .08 $ (0 .69 18 .01 3 .65 2 .43 The Royce Funds 2010 Semiannual Report to Shareholders | 137 18 % 49 41 67 41 44 .88) – $ – – – – – (0 .08) (0 .52 0 .09)% $ 28 .26 ## ## ## ## 11 % 10 27 29 16 22 0 .11 1 .46% 1 .32) (2 .03) 1 .76 10 .13 1 .85) (0 .02) 1 .99 2006 18 .06) 3 .52 1 .10 2 .83 2 .03) 3 .14 ## ## 0 .549 2.12 1 .74) 4 .01 $ – $ – – (0 .65) 2007 11 .14) (0 .46 1 .67 $ – $ – – – (0 .460 15.23 2 .00) 3 .60) (0 .68 0 .383 17 .37) 2009 7 .24) $ – – – (0 .06 (0 .16) (0 .66 0 .32 0 .13 0 .44)% $ 45 .00 2006 18 .79 14 .94) (2 .

84 $ (0 .54) 2007 10 .35) – $ – – – (0 .33 2008 13 .23 2 .71 ## 16 .46 2 .513.54% 1 .915 14.36) 3 .02) 4 .97 0 .73% 1 .81 Royce Value Plus Fund – Service Class † 2010 $ 11 .90 ## ## ## 30 % 39 42 42 (0 .55 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.26) 16.17 $ 0 .39 1 .01 $ – – – – – $ 9 .04% 1 .06) (3 .63 ## ## ## ## $ 18 % 49 41 67 41 (0 .05 $ (0 .80 $ 10 .332 31.898 1 .18) (0 .39 ## ## ## ## 18 % 49 41 67 41 0 .07 ## 1 .13)% (0 .15) ## (0 .98 (0 .31 7 .18) (0 .374 4.154 26.18) (0 .41 1 .96)% $ 43 .29 2 .24 2.02 0 . End of Period (Loss) Currency Operations Income Fees Period Currency Distributions Total Return # ## ## Net Assets.45% 1 .69) (0 .00 (0 .01 $ – – – 0 .74 1 .49 ## ## 30 % 39 42 42 31 62 (1 .04 0 .06% 1 .36) $ 2009 6 .27) (0 .17 7 .73% 2 .47 1 .62) 2007 11 .07 ## 1 .38 2.31) 2 .04) 1 .63) 2007 14 .65 13 .91 ## (3 .01) (0 .61) 0 .04 1 .877 13.97 10 .043 66.01 0 .129 27.81 14 .27) (0 .18) (1 .35 2 .68) ## (0 .14 2008 10 .28 2 .03 $ (0 .29 0 .32) $ 2009 7 .26 1 .03 ## 1 .78 (0 .04) $ – – – (0 .07 ## 1 .43 1 .215 114.09) (0 .68)% $ 44 .45 0 .80 (0 .08 6 .43) # (1 .43 1 .04% 1 .17 2 .15) (0 .63)% (1 .Financial Highlights Ratio of Expenses to Average Net Assets This table is presented to show selected data for a share outstanding throughout each period.625 15.42 28.02 – $ 9 .62) 2007 14 .33 ## 2 .84 1 .29 (5 .102 6.18) (0 .09) – $ $ – – – (0 .97 (0 .54) 2 .01)% $ 41 .00 10 .24 1 .34 0 .06) 2 .06 1 .33 1 .24 $ (0 .424 2 .55 (4 .79) $ – – – 0 .41 1 .88) # 1 .07) 0 .09) 3 .35) 3 .357 4.08) (e) Royce Value Plus Fund – Investment Class † 2010 $ 11 .20 2 .09 12 .08 2008 10 .02) 3 .16 ## 2 .82 10 .68 10 .21 2 .626 13 .32 ## ## ## ## 18 % 49 41 67 0 .44 1 .58 2008 10 .16 2008 10 .34 1 .690.43 2006 10 .99 (3 .33 # # # $ – – – (0 .53) (0 .04 1 .35) 1 .91 (0 .30) (1 .01) $ (0 .01 3 .956 2 .17) (0 .95 (0 .03 $ 10 .54 10 .43) ## (0 .97 $ – – – $ – – – $ – – – $ – – – $ 8 .84 ## 1 .06 1 .00 # 7 .04 1 .06 1 .55) 2 .54% 1 .79 (0 . Investment Investments Total from from Net Shareholder Net Asset Investments Beginning of Income and Foreign Investment Investment and Foreign Total Redemption Value.10 0 .00) $ – – – (0 .017 (41 .98) (1 .20 (0 .856 (3 .65 # 2 .50)% (0 .90) (3 .16) 0 .09) (1 .14) (c) Royce Value Fund – K Class † 2010 $ 8 .67) (0 .85 (0 .906 122.79 13 .16) 0 .88) (0 .27) (0 .31 $ (0 .05 6 . and to assist shareholders in evaluating a Fund’s performance for the periods presented.20) 0 .01 0 .52% 0 .17 (3 .22) – $ – – – – – (0 .09) 3 .31) $ 2009 7 .35) (0 .61) ## Royce Value Fund – Consultant Class † 2010 $ 9 .54 2006 12 .05) ## (0 .61) 0 .409 12.17% 2 .40 # 2 .721 1.22) (0 .04 1 .35 1.283.33 28.37) (0 .09) (0 .15 # (40 . Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period. 30 % 39 42 42 31 .61 0 .32) $ 2009 7 .04 (3 .78 # $ – – – 0 .455 167.57)% $ 40 .20)% $ 2.25 (0 .20 2 .448 19 .18) ## (1 .47 1 .04 1 .01 0 .73 ## 9 .45% 1 .00 $ (0 .32 (i) Royce Value Fund – Institutional Class † 2010 $ 10 .01 3 .19% 2 .06% (0 .25) (0 .46 $ 0 .21 2 .06) (5 .98 174.03 ## 1 . Distributions Net Realized from Net and Unrealized Realized Gain Net Asset Net Gain (Loss) on Distributions on Value.75) (0 .75)% (0 .43 1 .53) 2007 13 .14 (5 .31 2008 13 .47 (h) Royce Value Plus Fund – Consultant Class † 2010 $ 10 .09 (0 .73% 2 .73 ## 9 .85 (0 .65 (0 .88 11 .93) 1 .95 13 .37) 3 .34 (5 .38 2005 10 .18) (0 .23 2 .31 (41 .19% 2 .03 0 .45 1 .65) 0 .03 (0 .24) 1 .68) (0 .00) – $ – $ – – – (0 .02) (5 .20 2 .43 (0 .69) (0 .050 261.505.27 1 .39) 3 .58) (0 .01 – $ – – – (0 .28 2 .46 5 .244 172.18) (0 .049 41 .24 7 .08 6 .54% 1 .63 (0 .93 7 .13 (0 .68) 0 .709.25 ## 0 .17% 2 .58) (0 .32 1 .04 1 .15 8 .31) $ 2009 5 .03) $ (0 .91 (3 .01) (4 .38 (0 .08) 0 .04) $ (0 .93 $ (0 .40 1 .68) (0 .23 2008 13 .64 (0 .65) 0 .76) 2 .45 2006 10 .65 (34 .63 (3 .63 1 .35 ## 4 .43% 1 .550 281.19) (0 .11) (3 .84 6 .38) $ 2009 7 .39) 2 .97 13 .07) 1.06% 1 .34) 3 .45) (0 .26) 1 .06) 3 .97 (0 .61 11 .44)% $ 45 .23 2 .50 (0 .33 1 .86) $ – – 0 .97 11 .17) $ – $ – – – – – (0 .91 (40 .29 (34 .68) 0 .38)% 0 .01 0 .18 ## 2 .45 9 .024 47.59 1 . End of Period (in thousands) Prior to Fee Waivers and Balance Prior to Fee Credits Waivers Ratio of Net Investment Income (Loss) Portfolio to Average Turnover Net of Fee Net Assets Rate Waivers (h) 138 | The Royce Funds 2010 Semiannual Report to Shareholders (0 .39) # $ – $ – – – – – (0 .21) $ – $ – – – (0 .764 3 .94 (0 .04 1 .888 (3 .06% 1 .04% 1 .15) (5 .40 1 .00 (3 .17% 2 .39 $ – – – (0 .19 (34 .35 # $ 9 .33 ## 4 .27) $ – – – 0 .02) $ (0 .03) 2 .54 2006 13 .21 2 .52 0 .42 ## ## ## ## 18 % 49 41 (0 .66)% $ 43 .78) (0 .27 ## 2 .58) (0 .08 (3 .61) 2007 11 .114 326 99 8.01 $ 10 .50 10 .85 10 .59 ## 1 .49 ## ## (0 .81 (0 .16 ## 2 .20 293.19% 2 .03 ## 1 .00 0 .77 (j) Royce Value Fund – R Class † 2010 $ 10 .22) (0 .69) (0 .36) $ 2009 6 .72 ## 16 .08) $ (0 .94 (0 .

17% 1 .04 1 .91 (0 .37 1 .57 1 .03) 1 .78) (3 .04) $ (0 .28)% $ 41 .44)% (0 .01 (2 .24) 2 .01) 2 .40) 0 .21 ## 0 .20 (0 .02) $ – – – (0 .37 # (29 .04) (3 .04 1 .84% 1 .57 6 .06 (c) Royce 100 Fund – R Class † 2010 $ 9 .49 1 .09) (0 .892 1.17% 1 .46% 1 .06) 3 .985 1 .77)% (0 .58) (0 .84 ## 1 .76 6 .02) $ (0 .01) 0 .31 $ (0 .57) (c) Royce Value Plus Fund – K Class † 2010 $ 8 .24 ## 1 .98) (0 .52 $ (0 .66 2008 10 .04 1 .22 1 .73 2 .26)% $ 37 .73) (0 .13) ## Royce Value Plus Fund – Institutional Class † 2010 $ 11 .80 14 . Distributions Net Realized from Net and Unrealized Realized Gain Net Asset Net Gain (Loss) on Distributions on Value.07 ## ## ## ## 30 % 39 42 (0 .17 1 .18) (0 .18 ## 1 .58 ## 18 .17% 1 .95 8 .08 (0 .56% 5 .59 ## 1 .28) $ 2009 6 .03)% $ 38 .01)% $ 41 .70) (0 .84 2 .22 $ (0 .94 5 .485 35.57 ## 18 .41) 2007 8 .734 143.05) # $ – – – – – 706 642 331 96 2 .03 0 .09) (0 .05) ## (0 .80 (3 .27) 2 .05) 2 .97 2 .04 ## ## (0 .40 (4 .882 28.39 ## 3 .06 1 .22 (5 .97 11 .64 2006 7 .22 5 .89 (3 .24)% $ 37 .52 (0 .54 1 .03) 2 .19) (0 .23 0 .18) $ – – – $ – $ – – – (0 .09) (0 . Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.44) 1 .49% 1 .09) (0 . $ 30 % 39 42 42 (0 . and to assist shareholders in evaluating a Fund’s performance for the periods presented.22 (0 .75) 1 .93 (0 .09) (5 .607 43.03 (0 .26 9 .58) (0 .62) 2007 15 .04) 0 .78 ## 17 .00 (0 .01 3 .748 7.54 (0 .91 13 .03) (0 .74 1 . Investment Investments Total from from Net Shareholder Net Asset Investments Beginning of Income and Foreign Investment Investment and Foreign Total Redemption Value.59)% (0 .04% 1 .16 (0 .54 1 .749 34.74 0 .97 13 .23 (3 .40) 2007 8 .45 ## 39 .59 ## ## 10 % 42 72 (0 .18) 1 .18 (2 .08 (0 .85 (0 .04 1 .90 # (29 .91) # $ – $ – – – (0 .10) (0 .64 2008 10 .02 1 .97 ## ## ## ## 10 % 42 72 85 (0 .13 $ (0 .84 ## 1 .02) $ (0 .00 2 .52 6 .08) (0 .52 $ 9 .04% 1 .71) (0 .13) # 6 .39 ## 3 .91 (40 .01) $ (0 .18) $ – – – $ 7 .28 2008 13 .89% 2 .67 7 .06 1 .22) $ 2009 5 .74 8 .09) (0 .49) 1 .32)% $ 40 .59 (2 .68) # # # # $ – – – (0 .04 2005 6 .76 6 .18) (0 .315 143.29) – $ – – – (0 .01) (2 .30) $ 2009 7 .483 1.31) # (4 .165 15.02)% $ 38 .24 # (39 .691 16.91 5 .70% 3 .36 ## ## ## ## 30 % 39 42 42 31 (1 .22 8 .94 $ (0 .01) (5 .88) 3 .23) (0 .70% 3 .84 1 .20 (2 .04 ## 1 .62 ## 16 .82 (3 .49 1 . End of Period (Loss) Currency Operations Income Fees Period Currency Distributions Total Return # ## ## Net Assets.57 $ (0 .31 1 .56 1 .33 2008 13 .46 ## 39 .82 (0 .56% 5 .Financial Highlights Ratio of Expenses to Average Net Assets This table is presented to show selected data for a share outstanding throughout each period.42 0 .56 1 .94 (0 .23) $ 2009 5 .00 0 .24) 2 .91 $ (0 .02) 1 .49 2 .09) $ – – – $ – – – $ – – – – – – $ – $ – – – (0 .73 (0 .03) 2 .84% 1 .27) (0 .16 319.62 ## 16 .48% 6 .23) (0 .137 296 70 986 186 95 $ – – – – $ 10 .19 2008 8 .01 – 0 .13 7 .31) 2 .01) (2 .96) (c) Royce 100 Fund – K Class † 2010 $ 9 .09) – $ – – – (0 .246 266.32 (0 .56) ## (0 .04% 1 .59% 1 .64) 2007 14 .17)% (0 .89% 2 .04 ## 1 .78 ## 17 .79) (0 .34 (5 .17 2 .04) $ (0 .65) 0 .00) (0 .20 2008 8 .08 (3 .22 1 .09) (0 .70 14 .94 $ – – – – $ – $ – – – (0 .73) $ – – – – $ 7 .21 9 .60) (0 .47 1 .23) $ 2009 5 .31) 2 .54 Royce 100 Fund – Service Class † 2010 $ 7 .06 1 .24 1 .32 7 .59 1 .32) $ 2009 7 .72 2 .31 7 .00 (0 .36 ## ## ## ## THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.18) (0 .76 11 .73) (0 .92) ## (0 .36 1 .80 (0 .05 ## 1 .13) (0 .70 7 .63 1 .310 197.49% 1 .97 0 .38) ## (0 .21) (0 .73) (0 .21 (j) Royce Value Plus Fund – R Class † 2010 $ 11 .68) 1 .18) (0 .26) (0 .73 8 .92)% (0 .41) 0 .18) (0 .36) $ – – 0 .52 # 1 .01 – $ 7 .43 2008 10 .05 (29 .96) The Royce Funds 2010 Semiannual Report to Shareholders | 139 10 % 42 72 .80 (0 .37)% 0 .34 13 .76) 1.48% 6 .63 (2 .03) $ (0 .34) 3 .68 2006 14 .312 30.37) 3 .18 1 .55 ## $ 10 .97) $ – – – $ $ – – – $ – $ – – – (0 .17) 7 .36) (0 .93 $ 9 .71 (41 .51 0 .27) $ 2009 6 .20 (3 .17 (0 .414 357.00 (0 . End of Period (in thousands) Prior to Fee Waivers and Balance Prior to Fee Credits Waivers Ratio of Net Investment Income (Loss) Portfolio to Average Turnover Net of Fee Net Assets Rate Waivers (k) (0 .17) 0 .02) (2 .07) $ (0 .33 (29 .07 2 .56 1 .96) (e) Royce 100 Fund – Investment Class † 2010 $ 7 .41) ## (0 .55 ## ## ## 10 % 42 72 85 45 60 (0 .59 ## 1 .363 31 46.14)% 0 .22 1 .59% 1 .

34 5 .03 2 .02) 0 .49 1 .03 2 .89 ## ## ## ## $ 10 % 34 48 36 14 9 1 .00) (0 .71 7 .13 (35 .10) $ – 2009 3 .85 1 .650 4.12) 2008 10 .69 2 .40 1 .90) (1 .10 0 .98 0 .43) (0 .38) 1 .07 (2 .11) 2006 5 .49) (0 .23 # $ 4 .91) (1 .03 0 .46 (0 .01) 2007 10 .70 2 .23) 2007 10 .23) $ – $ – – (0 .04 2 .04 ## ## ## ## 82 % 13 63 105 91 105 0 .01 – – 16.01 0 .82 ## THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.82 1 .92 0 .04 $ (0 .044 9. Distributions Net Realized from Net and Unrealized Realized Gain Net Asset Net Gain (Loss) on Distributions on Value.70 3 .02 (0 .39 (0 .82 0 .059 1.52) (0 .38 $ (0 .49 ## 1 .92 5 .54) $ (0 .87 1 .07) – 2007 6 .36 5 .49 1 .01 0 .03) 33 % 71 45 54 $ – 0 .28)% $ 25 .56 2 .04 0 .92 5 .92) # 14 .65% 2 .60 2.13 4 .89 2 .06 2 .05) – (0 .05) – (0 .74 ## 3 .04 $ $ – – – 0 .06) 2008 11 .06) (0 .75 2 .49 2 .07 1 .31 $ 0 .22 (31 .01 4 .881 1.04) 2008 6 .49 – Royce Financial Services Fund – Service Class † 2010 $ 5 .66 0 .49% 1 .01) 2 .83 ## 17 .69 1 .04 $ 0 .19)% (0 .02) (0 .77 12 .01 0 .33 1 .38% $ 37 .90% 0 .87 6 .843 37.040 19.06)% (0 .37 3 .53 1 .03) (0 .05 0 .72 ## 2 .40 ## 1 .05) 2009 3 .87 ## 1 .60 ## ## ## ## $ 14 % 43 61 126 1 .04 ## 16 .01 0 .02) 19 .80) (0 .02 (0 .37) (4 .09 (1 .505 7. and to assist shareholders in evaluating a Fund’s performance for the periods presented.90 ## 2 .49 1 .33) $ (0 .73 3 .75 3 .03 $ (0 .91 9 .09) (0 .24) (0 .35) (0 .887 4.12) (0 .33 $ 0 .20) 0 .72) 24 .69 (46 .21) (m) Royce SMid-Cap Value Fund – Service Class † 2010 $ 9 .90 0 .04 2 .37% 2 .69 ## ## $ 23 % 51 88 47 0 .44 0 . End of Period (in thousands) Prior to Fee Waivers and Balance Prior to Fee Credits Waivers Ratio of Net Investment Income (Loss) Portfolio to Average Turnover Net of Fee Net Assets Rate Waivers 140 | The Royce Funds 2010 Semiannual Report to Shareholders $ – $ – – – (0 .04 $ 0 .08 $ (0 .49% 1 .05 $ 0 .72 1 .37 6 .84 7 .21 2 .73 2 .01 (0 .51) $ – 2009 4 .19 10 .09) – $ (0 .03) 2005 5 .89 2 .48 5 .57 4 .00) (1 .73 (31 .08) – – – – $ – (0 .08 (0 .49 1 .38) # (1 .57 $ 0 .01) – (0 .75 (29 .45 1 .12) (1 .07 0 .41% 1 .49% 1 .06) (0 .00) (1 .761 2 .01 $ 0 .51) (0 .90 5 .876 $ 5 .71 0 .00 0 .05) (0 .968 13.07 1 .51) (0 .38 3 .16 # Royce Discovery Fund – Service Class † 2010 $ 4 .16)% $ 32 .02 (2 .02) 4.28 4 .08 1 .54 (0 .02) 1 .49% 1 .54 2 .86 (35 .04 1 .01) (2 .85 (0 .01) (0 .51) – 2006 6 .47) (0 .596 13. End of Period (Loss) Currency Operations Income Fees Period Currency Distributions Total Return # ## ## Net Assets.32) (0 .080 1.00 (0 .03 $ 0 .77 2 .39 (0 .75 3 .03) (0 .65) (4 .46 1 .469 50.06) (2 .44 (3 .882 2.77 2 .13 ## 2 .01) (0 .08) 2006 6 .08 1 .596 7.01) 2008 9 .49 1 .69 ## 1 .34 0 . 2 .49 1 .43) $ (0 .90 – 2008 5 .20 0 .52)% $ 61 .70 11 .47 (0 .69 2 .88 1 .72 2 .06 5 .91% 1 .83 6 .85)% $ 57 .38) # 1 .00) (0 .37) (0 .379 2 .16) $ (0 .79 $ 0 .11 1 .42% 1 .31 (2 .06 $ 0 .23) (0 .49 1 .23) $ – 2009 5 .24 1 .25 6 .14) 1 .34 2 .70 0 .612 3 .99 0 .37) (0 .00% 2 .70% 0 .17 ## (2 .38% 2 .01 0 .81) (0 .49 1 .95) (4 .94) (0 .03 2 .04 2 .28 # # # # $ – – – – – – $ – 0 .86% 1 .49 1 .00) (l) Royce Global Value Fund – Service Class † 2010 $ 10 .Financial Highlights Ratio of Expenses to Average Net Assets This table is presented to show selected data for a share outstanding throughout each period.02) Royce Dividend Value Fund – Service Class † 2010 $ 5 .55) – $ – – (0 .22 (4 .13) 0 .33 3 .08% 3 .01 0 .02) – $ (0 .06 9 .43 3 .14 0 .00% 2 .11) (0 .07) (7 .00) (0 .73) (0 .69 1 .39 1 .00) $ (0 .22) (0 .05) 2009 3 .24 ## 1 .553 4.06 2 .26 0 .24 1 .208 1.21 2 .91 ## 2 .14 $ 10 .30) (0 .99 (0 .00 0 .03) (0 .64 ## (0 .77% 3 .79 6 .92 0 .10) (0 .78% 1 .41% 1 .94 0 .91 0 .05 ## 16 .47% $ 38 .14 (4 .48 (0 .983 50.54 2 .00) $ – – 0 .02) (0 .56 2 .03) 2007 10 .41 (l) Royce European Smaller-Companies Fund – Service Class † 2010 $ 8 .08 1 .06 (0 .11 1 .332 3.30) (0 .08% 3 .01 – – $ 5 .06) 2008 5 .69% 1 .26 (9 .71) 1 .08) (0 .87)% $ 28 .10) $ (0 .06 – 2005 6 .87 (0 .24) (0 .365 14.01 0 .28 1 .38 3 .20 $ – – – – $ 5 .11 (1 .89 (39 .64 0 .00 ## ## ## $ 14 % 43 61 126 19 4 2 .04) (0 .910 2.25 0 .65% 2 .12) 2007 6 .525 9.49 1 .06 2 .01 0 .87 7 .88 1 .33 (0 .31 3 .14 (0 .27) # 0 .31 ## 0 .84 ## 17 .11) (0 .49 1 .33 10.22 ## 0 .65 0 .85 6 .97 1 .69 1 .46) (2 .99 (1 .819 3. Investment Investments Total from from Net Shareholder Net Asset Investments Beginning of Income and Foreign Investment Investment and Foreign Total Redemption Value.946 31.06 5 .90 1 .10) 2007 6 .553 16.11 2 .05) 2007 7 .14 (0 .19 0 .13 (0 .01 (0 .51) (0 .405 3.86% 1 .49 ## (0 .98 7 .35 (0 .69% 1 .49 1 .49 ## ## (0 .43) (0 .83 8 .23) ## $ – $ – – (0 .43 3 .03 1 .05) 2008 5 .52) (0 .06) (0 .96) (2 .01 1 .49 1 .03 2 .06) (0 .39) $ – 2009 6 .31 1 . Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.77% 3 .39) (0 .41 10 .07 1 .35 2 .872 3.15) (0 .835 6.263 6.44) 16 .35) (0 .83 1 .107 4.30) (0 .08 7 .08 $ (0 .93 2 .69 (j) Royce Dividend Value Fund – Investment Class † 2010 $ 5 .01) $ (0 .04 1 .02 – $ 8 .69 ## 1 .55) (0 .10) (1 .83 0 .37 0 .911 4.18 (0 .10 $ (0 .71 3 .08 $ (0 .01) 0 .51 0 .49 1 .05) 2005 5 .67 ## 95 % 216 397 17 .24% 1 .17) $ – 2009 7 .

39)% ## 0 . The Class commenced operations on May 21. 2010. 2008. 2007.27 # $ 10 .26% (0 .31 (0 .69 ## 1 .82 1.49% ## 1 . 2006. The Fund commenced operations on September 28.01 ## 6 .49 2 . .51) $ (0 . The Class commenced operations on May 15. 2005.49 $ 0 .41) $ (1 . The Class commenced operations on May 1. $ $ – – 3 .38 14 .44) $ – 2009 10 . 2010 (unaudited).31 # (30 .00 (0 .24 2 .30)% $ # $ – (0 . The Class commenced operations on June 1.707 4. The Fund commenced operations on April 28.02) – $ – – $ 0 .17 ## $ 18 % 21 ## THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2007.00 0 .18) ## (0 .796 2 . The Class commenced operations on January 3.81% ## ## 0 .871 1.01) $ (0 .60 # $ – 0 . 2009. End of Period (Loss) Currency Operations Income Fees Period Currency Distributions Total Return # ## ## Net Assets.14% ## (0 .94) $ (0 . The Class commenced operations on May 19. 2005.72)% $ # 53 .97 3 .43) 1 . 2008.12% ## 2 .00 $ (0 .03) $ (1 .05) (p) Royce Partners Fund – Service Class † 2010 $ 11 .02 $ 9 .82 $ (0 .27 2 .16) ## Royce International Smaller-Companies Fund – Service Class † 2010 $ 10 .27 ## ## 1 .01) – (o) Royce Focus Value Fund – Service Class † 2010 $ 14 .83% ## 5 . Distributions Net Realized from Net and Unrealized Realized Gain Net Asset Net Gain (Loss) on Distributions on Value.56 (7 .53 3 .51 (0 .37 (6 .283 7.07 $ (0 .96)% $ # 15 . Not annualized Annualized Period ended June 30. 2006.49 ## ## 26 % 38 1 (0 .49 ## ## 9% 14 (0 .99 6. The Fund commenced operations on January 4.49) – – – $ – $ 0 . The Class commenced operations on March 15.383 1.56 – (q) Royce Mid-Cap Fund – Service Class † 2010 $ 10 . The Class commenced operations on May 10.Financial Highlights Ratio of Expenses to Average Net Assets This table is presented to show selected data for a share outstanding throughout each period.01 ## 5 . 2007.64) $ (0 .97 1 .93) $ – 2009 10 .501 (9 .83% ## 5 . 2009.02) 3 .10) 12.02) (2 .81% ## (4 . Investment Investments Total from from Net Shareholder Net Asset Investments Beginning of Income and Foreign Investment Investment and Foreign Total Redemption Value. Per share amounts have been determined on the basis of the weighted average number of shares outstanding during the period.00 5 .960 2 . 2006.56 $ 0 .69 ## ## 1 . The Class commenced operations on September 14.19)% $ 50 .44% 3 .02) 2008 10 . 2008. The Fund commenced operations on December 29. 2007.71) 1 . 2006.98 2 .44% 3 .44) (0 .61 1 .01 – 3.05 10 .01 – $ 13 .44) $ – 2009 6 .00 (0 .69% 1 . The Fund commenced operations on March 2.05) 1 .65) $ – $ 68 % (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) (o) (p) (q) # ## The Royce Funds 2010 Semiannual Report to Shareholders | 141 † The Class commenced operations on November 8.49% ## 1 .49 6 .01 $ (0 .99 (0 . and to assist shareholders in evaluating a Fund’s performance for the periods presented. End of Period (in thousands) Prior to Fee Waivers and Balance Prior to Fee Credits Waivers Ratio of Net Investment Income (Loss) Portfolio to Average Turnover Net of Fee Net Assets Rate Waivers (n) $ – – – – $ – (0 .31 5 .12% ## 2 .99) (3 . The Fund commenced operations on July 1.745 $ 10 . The Class commenced operations on March 30.64 11 . 2006.

971 75. a Fund may fair value the security. Fund trustees. the officers and trustees are indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. 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.763.S. based on experience.308. Actual results could differ from those estimates. officers. The Funds use an independent pricing service to provide fair value estimates for relevant non-U.603 119.699.224 Level 2 $214. Royce Focus Value Fund. Royce Dividend Value Fund.608. Royce Global Value Fund. However. Other over-the-counter securities for which market quotations are readily available are valued at their highest bid price. Royce 100 Fund. Royce European Smaller-Companies Fund. employees of Royce & Associates.m. shareholder servicing. Royce SMid-Cap Value Fund. at their bid price. Additionally. in the normal course of business. 2010: Level 1 Royce Pennsylvania Mutual Fund Common stocks Cash equivalents Royce Micro-Cap Fund Common stocks Cash equivalents $4. LLC (“Royce”). Royce Financial Services Fund. market volatility exceeds a certain threshold. futures contracts and other indications to estimate the fair value of relevant nonU. as noted above. and expenses other than those attributable to a specific class are allocated to each class of shares based on its relative net assets. securities. When fair value pricing is employed. The following is a summary of the inputs used to value each Fund’s investments as of June 30. The Funds value their non-U.977.224 142 | The Royce Funds 2010 Semiannual Report to Shareholders . a diversified open-end management investment company organized as a Delaware statutory trust. if. the Royce retirement plans and other affiliates owned more than 10% of the following Funds: Royce Discovery Fund Royce Financial Services Fund Royce European Smaller-Companies Fund Royce SMid-Cap Value Fund 59% 13% 13% 32% Royce International Smaller-Companies Fund Royce Focus Value Fund Royce Partners Fund Royce Mid-Cap Fund 18% 74% 90% 45% Valuation of Investments: Securities are valued as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p. Royce Total Return Fund. Under the Fund’s organizational documents.-traded securities. if no sale is reported for such day. In addition.000 285. Royce Value Plus Fund.000 Level 3 $ – – – – Total $4. the Fund enters into contracts with service providers that contain general indemnification clauses.502 110. Royce Special Equity Fund. equity securities and indices of U. Royce Opportunity Fund.S. using established independent pricing services. Securities for which market quotations are not readily available are valued at their fair value under procedures established by the Board of Trustees. dollar denominated securities in U. 2010.539.606.465 985.926 84. Investments in money market funds are valued at net asset value per share. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.Notes to Financial Statements (unaudited) Summary of Significant Accounting Policies: Royce Pennsylvania Mutual Fund. Investment income. Royce Premier Fund. Eastern time) on the valuation date.576 25. realized and unrealized capital gains or losses on investments and foreign currency. interest rates and maturities. foreign securities that may be fair valued and °°°°°repurchase agreements) Level 3 – significant unobservable inputs (including each Fund’s own assumptions in determining the fair value of investments) The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.067. Various inputs are used in determining the value of each Fund’s investments. Royce Low-Priced Stock Fund. the Fund expects the risk of loss to be remote. events occur that are significant and may make the closing price unreliable.159. except that each class may bear different fees and expenses for distribution. and receive different compensating balance credits and expense reimbursements. registration and shareholder reports. Securities that trade on an exchange. and securities traded on Nasdaq’s Electronic Bulletin Board. Classes of shares have equal rights as to earnings and assets.786. are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or. Royce Heritage Fund. between the time trading ends on a particular security and the close of the customary trading session on the NYSE. Royce International Smaller-Companies Fund.632 44. dollars daily at the prevailing foreign currency exchange rates as quoted by a major bank. This pricing service uses proprietary correlations it has developed between the movement of prices of non-U.S.388.820. Royce Value Fund. 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.S.091. Royce Discovery Fund. Royce Partners Fund and Royce Mid-Cap Fund (the “Fund” or “Funds”). the prices of securities used by a Fund may differ from quoted or published prices for the same security. except in the case of some bonds and other fixed income securities which may be valued by reference to other securities with comparable ratings.465 699. are twenty-one series of The Royce Fund (the “Trust”). equity securities on days when the U. Royce Micro-Cap Fund.S.S.S.151. At June 30.

629.295 20.461 – Level 2 $362.856.896 414.556.646.999 3.064 5.011 72.990 194.441 – 1.193 137.621.618.006.992.000 2.547 878.000 1.380.293.978.507.744.712 195.008 208.000 35.372.697.743 1.894.000 48.309.000 11.625 – 3.000 3.250 20.406.135 609.296 72.746.682.337.697.054 – 1.617 17.209.266 259.358 296.016.802 19.875 – – 25.821 2.550.160.358 278.076.007 – 114.532.000 10.121 224.945 112.145 35.300.821 3.590.000 18.424.518 591.367 31.000 664.738 14.070 548.684.338 247.713.392 247.919.000 49.562.399.664.631.000 863.353 – 3.881 548.799.449 – 59.656 364 3.338 255.271.000 187.756.469 – – – – – – – – – – – – – 478 – – 364 – – – – – – – – – – – – – – – Total $4.000 1.310.274.461.673.000 9.065 157.325.746.502.902 – 366.000 159.875.779 255.937 4.447.851.320 112.443.000 2.743.000 141.000 3.651.528.971.275 245.972 26.447.000 47.700 3.394.235.303 – – 66.388 286.931 735.000 – 137.945.100 – 12.905.000 6.Level 1 Royce Premier Fund Common stocks Cash equivalents Royce Low-Priced Stock Fund Common stocks Cash equivalents Royce Total Return Fund Common stocks Preferred stocks Corporate bonds Cash equivalents Royce Heritage Fund Common stocks Cash equivalents Royce Opportunity Fund Common stocks Corporate bonds Cash equivalents Royce Special Equity Fund Common stocks Cash equivalents Royce Value Fund Common stocks Cash equivalents Royce Value Plus Fund Common stocks Cash equivalents Royce 100 Fund Common stocks Cash equivalents Royce Discovery Fund Common stocks Cash equivalents Royce Financial Services Fund Common stocks Preferred stocks Cash equivalents Royce Dividend Value Fund Common stocks Preferred stocks Cash equivalents Royce European Smaller-Companies Fund Common stocks Cash equivalents Royce Global Value Fund Common stocks Cash equivalents Royce SMid-Cap Value Fund Common stocks Cash equivalents Royce International Smaller-Companies Fund Common stocks Cash equivalents Royce Focus Value Fund Common stocks Cash equivalents Royce Partners Fund Common stocks Cash equivalents Royce Mid-Cap Fund Common stocks Cash equivalents $4.504.834.378.000 3.089.954 2.265 1.598.470 286.000 121.380 – 3.308.000 The Royce Funds 2010 Semiannual Report to Shareholders | 143 .000 16.444.341.255.000 5.888.493.396 – – 40.700 3.574 2.000 $ Level 3 – – – – – 80.214 878.115.308.298 478 366.905.810.293.000 8.996 414.333 – 4.931 2.189 – 1.000 134.170 – 2.000 6.033.135 22.121.341.665.265 1.590.586.065 97.990 191.607.589.237.715 – 2.931 2.398.701.743 1.794.126.716.485.212.565.033.499.232 9.008 161.684 221.444.193 – 7.736 245.000 579.006.

and foreign withholding taxes recorded on each Fund’s books and the U. Dividend income is recorded on the ex-dividend date.793. Because federal income tax regulations differ from generally accepted accounting principles. 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. including possible delays or restrictions upon the ability of each Fund to dispose of its underlying securities. Premium and discounts on debt securities are amortized using the effective yield-to-maturity method.799 (97.821 – – The net change in unrealized appreciation (depreciation) is included in the accompanying Statement of Operations. currency gains or losses realized between the trade and settlement dates on securities transactions.Notes to Financial Statements (unaudited) (continued) Level 3 Reconciliation: Balance as of 12/31/09 Royce Total Return Fund Preferred stocks Royce Heritage Fund Common stocks Royce Opportunity Fund Common stocks Royce Special Equity Fund Common stocks Royce Value Plus Fund Common stocks Royce Financial Services Fund Preferred stocks Royce Dividend Value Fund Preferred stocks (1) Purchases $ 93.100) (108) 114. Expenses directly attributable to a Fund are charged to the Fund’s operations.930 – – – Realized and Unrealized (1) Gain (Loss) $ (13. Realized gains and losses from investment transactions are determined on the basis of identified cost for book and tax purposes. 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. which are held until maturity of the repurchase agreements. Investment Transactions and Related Investment Income: Investment transactions are accounted for on the trade date. Securities Lending: The Funds loan securities to qualified institutional investors for the purpose of realizing additional income.975 – – – – 555 422 $ Sales – – – 1. Non-cash dividend income is recorded at the fair market value of the securities received. Interest income is recorded on an accrual basis. Securities pledged as collateral for repurchase agreements. Accordingly. Repurchase Agreements: The Funds may enter into repurchase agreements with institutions that the Funds’ investment adviser has determined are creditworthy. dollar equivalent of the amounts actually received or paid.875 25. occupancy costs and other administrative expenses related 144 | The Royce Funds 2010 Semiannual Report to Shareholders . Collateral for the Funds on all securities loaned is accepted in cash and cash equivalents and invested temporarily by the custodian. are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). 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. sales of foreign currencies.568. while expenses applicable to more than one series of the Trust are allocated equitably. Foreign Currency: Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities. Each Fund restricts repurchase agreements to maturities of no more than seven days. The collateral maintained is at least 100% of the current market value of the loaned securities. Repurchase agreements could involve certain risks in the event of default or insolvency of the counter-party.469 1. and the difference between the amounts of dividends.821) (77) (58) Balance as of 6/30/10 $ 80.115 – 225. Distributions and Taxes: As qualified regulated investment companies under Subchapter M of the Internal Revenue Code. 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. Expenses: The Funds incur direct and indirect expenses. The other Funds pay any dividends and capital gain distributions annually in December. 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.007 114. Net realized gain (loss) from investments and foreign currency transactions is included in the accompanying Statement of Operations. interest. as a result of changes in foreign currency exchange rates.S. 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. Dividends from net investment income are determined at a class level and distributions from capital gains are determined at a Fund level.469 – – 478 364 $ – 25. expiration of currency forward contracts.131 97. Certain personnel. the character of distributions and composition of net assets for tax purposes differ from those reflected in the accompanying financial statements. 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 deferred fees are invested in certain Royce Funds until distributed in accordance with the agreement.383 1.183 (32.916.703.328 ) 2.555.357) 31 (127.031) (154. Capital Share Transactions (in dollars): Shares sold Shares issued for reinvestment of distributions Shares redeemed Net increase (decrease) from capital share transactions Period ended 6/30/10 (unaudited) Period ended 12/31/09 Period ended 6/30/10 (unaudited) $ – – – – – – – – – – – – – – – – – – – – 21.451) (1.927 2.498 (5.796.180 430.974 ) 381.214) 2.450 67.196) – (4.120 (11.846.085. 2010.164) – (45.048 61.944.674 88.913) (38.336) (96.030 85.367.429 67.211.710 (446.055.883 54.717 19.013.725. The Funds did not utilize the line of credit during the period ended June 30.970.204.390 84.931 (59.449) (32.337 Consultant Class 37.655 2. 2010.195 Institutional Class 69.327 746. This 364-day revolving Credit Agreement expires on July 16.304 868.442) (452.033.949 963.144 (27.972 12.697 6.690.336.778 (24.381.410.685) – (394.495.064.097 22.524 3.456.188 ) 15.195 (18.250 752.636 912.126.444.287 R Class 5.085) (25.919.072) 267.961 ) 14.934 668.717) (4.422 (12.648 304.25%.844.437 145.940.113 39.792) – (50.094 (1.623 R Class 704. Compensating Balance Credits: The Funds have arrangements with their custodian bank and transfer agent.637.993 (9.302.844.907.858.977.536.742 ) 2.082 1.563 37.749 ) 9.406 $993.597.291 120.899 The Royce Funds 2010 Semiannual Report to Shareholders | 145 .857 (293.909 2.562 1.615) – (2.488 52.475 31.038.371 68.944.914 (3.984) (910.009 ) (103.588 48.834.235.336) 740.126.851. 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.256.773.187) (59.543) (96.426 42.229.254 Royce Total Return Fund Investment Class Service Class Consultant Class Institutional Class W Class R Class K Class Royce Heritage Fund Investment Class Service Class Consultant Class R Class K Class 304.397.390.449) (736.473 (20.211. along with certain other Royce Funds.330.991.340 ) 783.799 $ 64.594 2.708.455 – – – – – Period ended 12/31/09 Period ended 6/30/10 (unaudited) Period ended 12/31/09 Period ended 6/30/10 (unaudited) 217. These deposit arrangements are an alternative to purchasing overnight investments.097.668 $(365.572 38.957) (301.956 2.453.679) 10.435.014) (158.202) (114.657 3.353.207 3.806.638.605.503.421.954.458 8.057.289) – – – – – (522.580.866 136.109 Period ended 12/31/09 379.703) (581.881 38.067.142.687. The Fund has adopted a deferred fee agreement that allows the Trustees to defer the receipt of all or a portion of Trustees’ Fees otherwise payable.879 ) 3.522 1.030.278 15.780 352.385 467.049) 3.524 2.846 (76.063.756 (3.666 577. Conversely.077.579 K Class 632.272.706.462.903 1.355 Royce Micro-Cap Fund Investment Class Service Class Consultant Class Royce Premier Fund Investment Class Service Class Consultant Class Institutional Class W Class R Class K Class 149.348.821 K Class 2.099.863 722.043) – (523.988.505 (183.271 3.214.042) (42.25% or overnight LIBOR + 1.607.491) – (70.134.313) 462.759) Royce Low-Priced Stock Fund Investment Class 17. a Fund pays interest to the custodian on any cash overdrafts.179) – (250.063) (180.407) – (71.956 (81.598 ) 15.943.188.835.940) 3.109.605) 1.199.708.328.667.366 ) (172.688 127.597) (71.713 (56.656.140 (394.093 468.214) (143.717.596.348.509.536.454) $ – (135.763.670.258 (91.162 (1.288.101 294.270) (27.764 ) 3.439.196.186 4.784.408 609.689.987.550) (123.473 ) 22.782.176) (85.643 972.815 588.069.885.232) 1.299.584.274 $ 2.329) – (313.019.980.348. Borrowings under the Credit Agreement bear interest at a rate equal to the higher of the federal funds rate + 1.610 1.931 22.641 319.023 440.223) (676.531 4.846) (986.301.358.751 549.358 7.067 48.621. Pursuant to the Credit Agreement.356.634 145.408.180.054.676 130.848.755.332.636 18.718) 1.047.531.431 (14.010.066) (121.104.401.645 2.489.153.518.070) (84.935 274.529) (2.467 317.832 25.447.204 ) 12.266) 24.780) (195.570 27.702 20.820.455 ) 65.990 2.441.883) (15.893.101.130.027.102) (7.493 3.616 1.860) 35.253) 1.898.331.566 Service Class 199.276 10.384.156.080.057 549.406 51.968.528.282 22.562 Service Class 333.508.013.984.232 (38.528 (34.056.482.050. Line of Credit: The Funds.311.478.407.845 (149.723.491) (48.188 (67.731.093.348.537.515 Royce Pennsylvania Mutual Fund Investment Class $582.717.890.299 127.658. each participating Fund is liable only for principal and interest payments related to borrowings made by that Fund.Expenses (continued): to The Royce Funds are allocated by Royce under an administration agreement and are included in administrative and office facilities and legal expenses.144 2.110.509.182) (24.522) 2.790) (261.607) $(616.459 1.809.434 13.494.188. participate in a $75 million line of credit (“Credit Agreement”) to be used for temporary or emergency purposes.074 40.500 569.066.522) (52.447.459.077.264.266. to the extent they are not offset by credits earned on positive cash balances.991 650.

650 2.612.895.727.158) – (29.422.343 Royce European Smaller-Companies Fund Service Class 1.190) (629.128 ) 90.032 1.033) – (875.315 3.455.620.907.902 (7.647 $151.513 3.078.611) – – – – – 106.470 ) 5.229.722.022 1.795.711.179.616.561.956.435) (91.807) (8.957.459.336.935) (265.957.754) (1.753.645.381.472 67.912) – (172.111.839.507.940 ) 19.865.013.976.541) – (18.047.480.232.113) (8.274.186.271 ) 1.788.170 278.922) (5.325) – (80.157.080.604 14.092.313) (151.609.471 $(137.717 ) 4.960 2.845 (40.673 24.252 81.359 404.523 Royce Dividend Value Fund Investment Class 12.186 Royce International Smaller-Companies Fund Service Class 6.591) (28.538 5.305 10.392.789.519.406.285 118.846 2.560 Institutional Class 69.394 290.213 Royce Opportunity Fund Investment Class $277.981.205.333.414 11.963) (79.377.025 13.439 7.753.344.773 R Class 432.395.423) – (709.253 Royce Global Value Fund Service Class 12.845 9.811 8.204) (19.944 152.281 – (2.717) (577.133.795) (1.474) (312.908) (740.018.340) – (904.085.731) 3.900 1.230 288.945.188 3.298) (9.381 142.452.582 257.704) (1.273 373.620 4.413.043 146 | The Royce Funds 2010 Semiannual Report to Shareholders .499 2.435) (3.635 158.162 673.823.802.754 (2.280 6.150 84.475.782 933.721.467 6.132) (31.327.477 78.615 – – – – – – – Period ended 12/31/09 $ Period ended 6/30/10 (unaudited) Period ended 12/31/09 Period ended 6/30/10 (unaudited) 139.681.045.295.488) 203.442 (44.951.205.843 109.656 28.531) (597.156 (153.Notes to Financial Statements (unaudited) (continued) Capital Share Transactions (in dollars)(continued): Shares sold Shares issued for reinvestment of distributions Shares redeemed Net increase (decrease) from capital share transactions Period ended 6/30/10 (unaudited) Period ended 12/31/09 Period ended 6/30/10 (unaudited) – – – – – – – – – – – – – – – – – – – – – – – – – – – – 142.793 205.622 ) (30.672) – (223.179.681 100.158.185.479 116.534 $ Service Class 112.830.407 259.589) – (2.303.424) (166.300.054 33.418.455 ) 811.818 372.945) $ – (184.866.455 (7.973 22.187 4.621.114 10.788 97.134.113) (597.487.830) Royce Financial Services Fund Service Class 1.019 7.385.518.213.678) – (2.784.839.028.400.211) (126.153 Consultant Class 8.287 6.652) (68.112.065 87.722.133.085.272) (7.269 2.385.576 858.411.494) – (292.999.326.568) (30.817) – (181.467.589 Royce SMid-Cap Value Fund Service Class 1.243 399.685 36.548.995.342) (19.916 521.166.321 74.038.044 42.364 Period ended 12/31/09 (77.526 (2.144 13.792.327 186.755.083 4.972.463.912) (1.469 $ (71.100 17.027 9.225 117.185 50.598.254.254 4.428.172 (1.228.587) (1.178) $(228.157.627 138.349) (1.654 28.744) (2.258 4.824.699.070.275) (151.120 (20.330) (56.758.084.552 4.318.446 (131.004 Royce Special Equity Fund Investment Class 422.615 Consultant Class 2.325) (318.743.892) (604.247.580 (4.505 79.057.839.992 906.429 111.781.398) – (409.089.144.775 ) 3.140 Institutional Class 99.906 16.310.593.769 176.056) (42.029 Royce Focus Value Fund Service Class Royce Partners Fund Service Class Royce Mid-Cap Fund Service Class 2.940 5.508 2.123.039 32.581 174.928.027 244.370.176) – (10.664 4.183.874 9.188 4.680.873 54.884.086.452 508.234) – (1.041 1.085 202.213 1.220.622.161.573 49.635) (3.449.408.123 166.884) (71.240 ) 130.376.751.756 114.057 1.533.843 8.287 K Class 2.580.142 962.658) (34.542 138.567.448.684.358.660.488 99.814 1.184.072 211.006.463.022.325 14.216.539) (10.239 196.195.915 59.764 76.741 44.059.134) (5.361.680) (126.414.213) – (23.002 886.357 Service Class 54.126) (7.273.548 58.813 Service Class 24.028.050 595.294.920.063) (3.824) (2.232 Royce Value Fund Investment Class Service Class Consultant Class Institutional Class R Class K Class Royce Value Plus Fund Investment Class Service Class Consultant Class Institutional Class R Class K Class Royce 100 Fund Investment Class Service Class R Class K Class Royce Discovery Fund Service Class 27.667.716.430.387 950.806) 768.233.873 11.371.726 ) (1.697 ) 231.927 (11.630) (13.981) (129.033 4.316) 1.974) (145.212 256.596.366.422.762) (198.124.006 ) 2.

628 Consultant Class 4.072 2.488 (132.494.305 400.947 ) 211.353 Royce Micro-Cap Fund Investment Class Service Class Consultant Class Royce Premier Fund Investment Class Service Class Consultant Class Institutional Class W Class R Class K Class 10.656 792.140 80.675 54.223 (11.829 4.170) (4.509.785.970 144.581 84.253 296.844 (5.022 2.040 2.185 69.695 ) (46.028 ) 1.718 40.839 152.753) (623.517 Royce Special Equity Fund Investment Class 22.032 713.377.010.668.967.398) (15.486.079 Period ended 6/30/10 (unaudited) – – – – – – – – – – – – – – – – – – – – 1.112.035) (669.545 51.298 3.099.369 13.743.777 K Class 70.090 17.169.418 304.714 118.946 10.312 1.408 130.298 81.754 179.140 ) 169.445) (231.674 235.547) (197.916 Consultant Class 497.433 245.470 K Class 292.661 64.192.537 R Class 582.601 9.061 5.322 (1.702) (356.949 87.677) (25.408 3.690.499 Period ended 12/31/09 45.638.508.619) (8.496 11.643) (16.803 3.164) (2.691.178 9.692 81.709 4.655.709 2.397 (840.102) (243.479 3.849 Royce Value Fund Investment Class Service Class Consultant Class Institutional Class R Class K Class 2.473 ) (12.222) (848.885) (489.642.255.594.678 44.233) (2.858 Institutional Class 4.503 20.703 16.514 (6.480.148 10.337) (44.922) (2.582.052) (2.946.910 2.549 ) 4.400.215 3.932.070) (88.102 389.509) (81.489) (3.759 ) 3.892) (237.174.636) (41.366 34.341 613.684) (152.229.769 Period ended 12/31/09 128.228 38.046 – 65.919.120.744 Service Class 2.253 – – – – – – – – – – – – – – – – – – – – – Period ended 12/31/09 269.615 ) 2.752.443.111) (260.647 6.904.635) (33.183 223.500.641 – – – – – 10.531) (7.844) Period ended 12/31/09 (83.126.848 2.225) (21.220 – – 89.329) (58.487) (7.360 9.923 12.624 202.977 2.282 89.694) (3.026 2.709.620 5.828.792) Period ended 6/30/10 (unaudited) 21.151.614) (284.670) (72.319.626) (18.727.865) (10.782 246.019.284 138.672.768 (6.990.162) (97.755) (4.580) (2.463) (2.411) (35.558.223) (3.281.592 22.674) (7.786.604.811.215.264.179.701.620) (21.933.863) (9.222 (11.878 (137.057.896.797.361 (343.260.546 ) (14.956 4.249.551.010.528.444 ) 73.045) (34.098) (7.097 (3.496 150.678) (34.121) (9.785.406 35.715.725.470) (6.869.590.683 ) 973.058.654 (3.084.069 182. Shares sold Shares issued for reinvestment of distributions Shares redeemed Net increase (decrease) in shares outstanding Period ended 6/30/10 (unaudited) Royce Pennsylvania Mutual Fund Investment Class 59.193 396.368.483 4.233.704.162) (88.363.045.543.706 2.240 Institutional Class 5.781 43.928 – – – – 770.585 372.158 81.695.802) (241.621.091.997 ) 24.503.250 – – 184..030 15.644 234.354 226.542.369 844.207 549.415 385.422 2.926.Capital Share Transactions (in shares): .348 561.964 6.856 224.408 3.138.306) (17.720 913.118) (35.216 66.648 536.374.735) (14.665 6.488 311.365) (92.283 34.156.306.902.209 483.619.381) (9.063.438.436 3.385 27.203 15.463.499) (9.059 6.795.526.534.827 2.117.055.186 ) 1.616) (889.914 (11.709.816.787.566) (2.089.774 30.435 408.074.410.505.440 ) 687.041.299.198) (20.009 131.443 252.572 Service Class 20.016.608) (2.072.044.424.612.432.610.143.253.961) (13.167) (1.296.577.096.687.780 3.955) (28.279 88.287 Royce Low-Priced Stock Fund Investment Class 1.226 3.883 24.099 R Class 49.038.165 26.934 1.175.803 19.284) (1.394) (127.962.038.957 64.778) (930.901 48.886 Royce Total Return Fund Investment Class Service Class Consultant Class Institutional Class W Class R Class K Class Royce Heritage Fund Investment Class Service Class Consultant Class R Class K Class Royce Opportunity Fund Investment Class Service Class Consultant Class Institutional Class R Class K Class 26.586) (1.145) (3.405 69.903) (1.804 26.898.001) (13.212.862) (19.391 Service Class 23.119 5.257.224 496.129 1.840.503.625 252.781.838 48.043.870 (7.252) (24.256 (656.811) (981.871 34.850.591 (285.743.244.855.176 1.463.823 (2.016) (13.445) (4.811 190.283 11.090 2 310 4.653.935 – – – – – – – 19.369) (20.465 ) 26.315) (10.647 6.283 2.842 9.272) (5.330 ) 2.455 1.094 973.769 36.584 7.246.042) (31.836.008) (2.501 ) 314.823 136.172 ) 255.786 – – – – – – Period ended 6/30/10 (unaudited) (37.977) (17.360.957.317) (994.227 35.889.253 109.946 47.751 233.345 176.757) (4.313.665 3.992.606.791.343 The Royce Funds 2010 Semiannual Report to Shareholders | 147 .855.698.954.715 234.964 77.590.571 6.845.698 467.559.519) (87.965) (3.033 ) 289.935) (9.126.230.859) (13.842) (65.941 114.859 161.999 51.425) (18.769.453 1.504 10.818 1.303) (82.014 196.363) (606.008 25.305 271.255.574 ) 322.480.616 200.038 1.442.833 2.513.246 424.870) (22.953.037) (47.396 530.

326) (84.110.084 Period ended 12/31/09 12. Royce is entitled to receive Investment Advisory fees that are computed daily and payable monthly.401) Period ended 12/31/09 (4.793) (29.313 N/A – – – – – – – – – – – – 14.49% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 1.212.548.672.958 25.967) (2.878 20.186.377) (688) Period ended 6/30/10 (unaudited) 2.724 (258.298.656.852) (15.073.685. See the Prospectus for contractual waiver expiration dates.066) (2.614 21.916 23.295 53.459.597.965) (936. 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 30.014) (8.805) (66.941 148 | The Royce Funds 2010 Semiannual Report to Shareholders .465) (949.076 12.036.936 5.100) (3.170.441 1.537 9.409.84% N/A 1.589 129.940 46.804 1.609 16.84% 1.991 99.631 190.287 292.97% 1.362.999 1.474) (91.430.360) (494.00% 1.436 87.30% 0.708) (444.911) (1.719.008.323.129.838 160.582.84% N/A N/A 1.578 $ N/A 7.091 110. 2011.293 Royce Focus Value Fund Service Class Royce Partners Fund Service Class Royce Mid-Cap Fund Service Class 186.00% 1.043) (2.979 1.59% 20.59% 1.167) (14.387 Royce International Smaller-Companies Fund Service Class 595.126.778) (58.552.59% 1.116.697.024 (488.221 2.617) (35.602 ) (2.706.291.637 1.59% 26.380 2.595 38. 2010 advisory fee as a percentage of Investment Service Consultant Institutional Net advisory Advisory fees a average net assets Class Class Class Class W Class R Class K Class fees waived Royce Royce Royce Royce Royce Royce Royce Royce Royce Royce Royce Royce Pennsylvania Mutual Fund Micro-Cap Fund Premier Fund Low-Priced Stock Fund Total Return Fund Heritage Fund Opportunity Fund Special Equity Fund Value Fund Value Plus Fund 100 Fund Discovery Fund 0. Committed net annual Period ended Annual contractual c operating expense ratio cap June 30.867 107.796.13% 0.468 6.901.239 22.333 4.902) (124.374 1.59% 15.515 ) 471.779 (305.521.994 23.992 535.659) (280.908 179.555) (12.839) (15.855 ) 13.663 ) (163.045 1.694.145) (1.441 73.75% 1.462) (228.303 3.00% 1.482 (1.269 15.24% N/A N/A N/A N/A N/A N/A N/A 1.517 Investment Adviser and Distributor: Investment Adviser: Under the Trust’s investment advisory agreements with Royce.000 – – – – – – – Period ended 12/31/09 – – – – – – – – – – – 19.24% N/A 1.006. is shown below to the extent that it impacted net expenses for the period ended June 30.630.026) (37.114 1.028 92.243.267.00% 0.460 Period ended 12/31/09 7.318 ) 7.610 2.106 9.895) (6.955 457.008) (2.867.864) (269.778.106 ) 620.469) (7.637 13.847.103 19.037.874.98% 1.113.868 84.531) (247.679) (6.59% $ 19.761.901 75.00% 1.84% 1.449.738 86.789 177 399.487 139.221) (1.112.435 130.575 Period ended 6/30/10 (unaudited) – – – – – – – – – – – – 25.39% N/A N/A N/A 1.799 1.984.553 23.329.622 (13.854 1.646 (5.66% N/A 1.577 1.875 20.860) (1.346 ) 179.829 Royce Financial Services Fund Service Class 236.713 7.59% 9.605.115 Royce Dividend Value Fund Investment Class Service Class 2.873 Royce Global Value Fund Service Class Royce SMid-Cap Value Fund Service Class 1.84% 1.986 20.842) (122.00% b N/A N/A N/A 1.732 N/A 7.905.531 – Period ended 6/30/10 (unaudited) (2.693 N/A 7.292.395 ) 469.377 2.978 177.861 315.581 1.180.293 4.990 N/A 20.302 835 670 10.640 72.812 17.386.114 Royce European Smaller-Companies Fund Service Class 164.640) (352.84% N/A 1.649 9.489 460.Notes to Financial Statements (unaudited) (continued) Capital Share Transactions (in shares)(continued): Shares sold Shares issued for reinvestment of distributions Shares redeemed Net increase (decrease) in shares outstanding Period ended 6/30/10 (unaudited) Royce Value Plus Fund Investment Class Service Class Consultant Class Institutional Class R Class K Class Royce 100 Fund Investment Class Service Class R Class K Class Royce Discovery Fund Service Class 5.228. 2010.065) (25.920 323.972 78.728) (65.49% N/A N/A N/A 1.286.625) (351.813.95% 1.

917 6.913 10.50% 0.862 – 2.49% 1.346 3.082 – 150.30% for Royce Micro-Cap Fund. Distributor: Royce Fund Services. 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 .00% of the first $50 million of the Fund's average net assets.15% for Royce Low-Priced Stock Fund and 1.25% 1.367 252.758 $ 201.983 – 30.570 – 38. 2010 Net distribution Distribution fees fees waived $ 770.662 – 116.00% 0.49% 1.673 – 2.25% for Royce European Smaller-Companies Fund.25% 0.50% 0.69% 1.401.799 33.704 121.742 – 1.394 – 30.00% 0.25% 0.727 – 2.838.50% 0. is a wholly owned subsidiary of Royce.00% 0. b Royce Pennsylvania Mutual Fund's fees are calculated at the annual rate of 1.00% 0.732 – 1.568 – – 32.887 145.668 – 8.028 – 108. c Committed net annual operating expense ratio cap excludes acquired fund fees and expenses.383 38.159 – 1.25% 0.25% 1.69% 1.024 3.00% 0.462 43.732 From a base annual rate of 1.00% 0.961 – 763.758 – 403.836.905.25% 1.49% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A $ N/A N/A N/A N/A N/A N/A N/A N/A 30..020 – 289.00% 0. Inc.781 – 500.588 7.25% 1.424 – 2.49% 1.10% per annum. over $6 billion .25% 1.477 – 2. (“RFS”).69% 1.25% 1. RFS is entitled to receive distribution fees that are computed daily and payable monthly.25% 0..25% 1.875% of the next $50 million of average net assets and 0.845 – 22..00% 0.859 – 1.950 – 2.774 $ 67.50% 0.24% N/A N/A N/A N/A N/A N/A N/A 1.415 17.164 – 58.673 – 1.25% Period ended June 30.00% 1. 0. more than $4 billion to $6 billion .00% 1.535 – 3.25% 1.067 40.519 316.770 – 9.Investment Adviser (continued): Committed net annual Period ended Annual contractual c operating expense ratio cap June 30. the distributor of the Trust’s shares.573 100.000 27.05% per annum.50% 0.177.641 154.25% 0.005 303.331 – 1. Annual contractual distribution fee as a percentage of average net assets 0.50% 0.007 9.392 126.25% 0.00% 1.75% of average net assets in excess of $100 million.49% 1.00% 0.50% 0.982 276.313 – 44.00% 1. Royce Global Value Fund and Royce International Smaller-Companies Fund). the annual rates of investment advisory fees payable by each of the Funds. 1.49% 1.25% 1. other than Royce Pennsylvania Mutual Fund.25% 0.080 3.898 – Royce Pennsylvania Mutual Fund – Service Class Royce Pennsylvania Mutual Fund – Consultant Class Royce Pennsylvania Mutual Fund – R Class Royce Pennsylvania Mutual Fund – K Class Royce Micro-Cap Fund – Service Class Royce Micro-Cap Fund – Consultant Class Royce Premier Fund – Service Class Royce Premier Fund – Consultant Class Royce Premier Fund – R Class Royce Premier Fund – K Class Royce Low-Priced Stock Fund – Service Class Royce Low-Priced Stock Fund – R Class Royce Low-Priced Stock Fund – K Class Royce Total Return Fund – Service Class Royce Total Return Fund – Consultant Class Royce Total Return Fund – R Class Royce Total Return Fund – K Class Royce Heritage Fund – Service Class Royce Heritage Fund – Consultant Class Royce Heritage Fund – R Class Royce Heritage Fund – K Class Royce Opportunity Fund – Service Class Royce Opportunity Fund – Consultant Class Royce Opportunity Fund – R Class Royce Opportunity Fund – K Class Royce Special Equity Fund – Service Class Royce Special Equity Fund – Consultant Class Royce Value Fund – Service Class Royce Value Fund – Consultant Class Royce Value Fund – R Class Royce Value Fund – K Class Royce Value Plus Fund – Service Class Royce Value Plus Fund – Consultant Class Royce Value Plus Fund – R Class Royce Value Plus Fund – K Class The Royce Funds 2010 Semiannual Report to Shareholders | 149 . 2010 advisory fee as a percentage of Investment Service Consultant Institutional Net advisory Advisory fees a W Class R Class K Class average net assets Class Class Class Class fees waived Royce Financial Services Fund Royce Dividend Value Fund Royce European SmallerCompanies Fund Royce Global Value Fund Royce SMid-Cap Value Fund Royce International SmallerCompanies Fund Royce Focus Value Fund Royce Partners Fund Royce Mid-Cap Fund a 1.440 23.25% 1.50% 0.478 15.00% (1.25% 1.00% 1.25% 0.25% 1.00% N/A 1.15% per annum.

559.460 27.048 – 55.914 46.615 2.444 6.555 95.726 475.941 6.771 Royce Financial Services Fund Royce Dividend Value Fund Royce European SmallerCompanies Fund Royce Global Value Fund Royce SMid-Cap Value Fund Royce International SmallerCompanies Fund Royce Focus Value Fund Royce Partners Fund Royce Mid-Cap Fund Purchases $ 1.995.979 423.462 Royce Premier Fund – Consultant Class 316.637 6. 2010.703.397 228.25% 0.192.137 2.148 352.319.595 ) (169 ) (81 ) (4 ) (10 ) (3 ) (1 ) (1.984 239.25% 0.039 – 1.583 1.094.852.238.271 764 27 104.742 Royce Premier Fund – Investment Class – Royce Premier Fund – Service Class 500.526.322 837. the costs of purchases and the proceeds from sales of investment securities.977 514.640.110 4.770 5.294.535 829.289 133.214 258.288 9.883.905. were as follows for the six months ended June 30.477 Royce Pennsylvania Mutual Fund – K Class 2.832 – 25.563.774 Royce Pennsylvania Mutual Fund – Consultant Class 3.335.538 238.099 40.25% 0.987.229 Sales $ 2.319 Sales $ 557.179.949.633 $ 37.867.50% 0.150 235.624 7.735 – 15.306 902.095 $ 17.048 1.649.503 – – – – – 284 475 759 Net Distribution Fees Royce Pennsylvania Mutual Fund – Investment Class $ – Royce Pennsylvania Mutual Fund – Service Class 770.082 4.933 Royce 100 Fund – Service Class Royce 100 Fund – R Class Royce 100 Fund – K Class Royce Discovery Fund – Service Class Royce Financial Services Fund – Service Class Royce Dividend Value Fund – Service Class Royce European Smaller-Companies Fund – Service Class Royce Global Value Fund – Service Class Royce SMid-Cap Value Fund – Service Class Royce International Smaller-Companies Fund – Service Class Royce Focus Value Fund – Service Class Royce Partners Fund – Service Class Royce Mid-Cap Fund – Service Class Purchases and Sales of Investment Securities: For the period ended June 30.25% 0.785 150 | The Royce Funds 2010 Semiannual Report to Shareholders .995 4.357 482.983 Royce Pennsylvania Mutual Fund – R Class 30.221 20.376 125.574.397 65.371 69.955 1.878 70.094.191 Shareholder Servicing $ 1.236 184.025 16.231.557 12.25% 0.770 Royce Premier Fund – Institutional Class – Royce Premier Fund – W Class – Royce Premier Fund – R Class 9.863 ) Expenses Reimbursed by Investment Adviser $ – – – – 1.041 1.858 15.25% Period ended June 30.461 6.041 414.773 4.067 2.451 195.25% 0.860.362 13.25% 0.032.718 346.334 175.705 2.896 Royce Micro-Cap Fund – Investment Class – Royce Micro-Cap Fund – Service Class 116.442 68.254 399 117 884.037 729.517 – 13.590.940 403.833.666 – – 7.781 880.202. 2010 Net distribution Distribution fees fees waived $ 271.830.680 33.Notes to Financial Statements (unaudited) (continued) Distributor (continued): Annual contractual distribution fee as a percentage of average net assets 0.918 20.275 7.928 15.393 1.221 42.962.200 Class Specific Expenses: Class specific expenses.961 26.625 2.022.101 2.312 1.851 5.080.25% 0.721.775.001 9.420.260.503 – 55.573 353.270.912 2.840 707 67 105.926 6.606 ) $ (27 ) (689 ) (5 ) – (2.841 – 646 – 3.385.744.567 10.25% 0.474 2.893.739 Shareholder Reports Registration $ 480.843 13.978 65.514 2.735 5.987 839 93 878.196 6.961 – 53.503 862.645.319 7.054 343.694 659.25% 0.608 12. other than short-term securities and collateral received for securities loaned.175 202.840.135 168. 2010: Transfer Agent Balance Credits (1.745 294.662 4.820 444.961 Royce Micro-Cap Fund – Consultant Class 763.357 33.361 8.836.599 $ 74. for Funds with multiple classes.178 5.481 102. were as follows: 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 Discovery Fund Purchases $ 980.928.295.459 9.511 Total 2.775.25% 0.265 492.890.870 – 3.943.505.507 489.548 54.399 518.714 49.424 Royce Premier Fund – K Class 2.813 884.599 30.067.327 ) (658 ) (54 ) (142 ) (854 ) (1.

688 7.187 26.098 17.974 2.820 (8 ) 52.208 2.442 (619 ) Royce 100 Fund – Investment Class – 17.663 29.401.398 12.193 7.969 Royce Value Fund – Institutional Class – 3.677 26.314 8.936 5.731 184 1.726 (386 ) 681.883 – – 35.198 8.446 (4 ) 40.314 10.367 1.028 3.758 4.980 Royce Value Fund – K Class 8.082 27.346 119 219 (1 ) 6.838.028.360 Royce Total Return Fund – Institutional Class – 4.407 19.671 (612 ) 2.732 3.712 6.009 Royce Opportunity Fund – Service Class 403.602 $ 8.375 46.018.107 45.587 233.475 27 232 – 7.786 16.982 Royce Total Return Fund – K Class 58.964 15.154 Royce 100 Fund – R Class 1.243 (50 ) 205.253 Royce Heritage Fund – Consultant Class 38.725 32.903 (25 ) 146.208.084 565 (2 ) 52.144 393.017 (15 ) Expenses Reimbursed by Investment Adviser $ 12.145.944 150.668 8.972.989 (657 ) Royce Value Plus Fund – Investment Class – 40.085 (379 ) 530.904 2.204 (6 ) 79.163 26.336 Royce Special Equity Fund – Service Class 108.777 30.297 112 74 (1 ) 5.168 49.576 1.467 Royce Heritage Fund – K Class 2.086 8.522 562.524 234.270 74.778 2.927 (412 ) Royce Special Equity Fund – Investment Class – 468.586.238 43.735 25.630 450.582 Royce Low-Priced Stock Fund – R Class 3.950 5.207 1.490 (567 ) 5.727 2.170 (844 ) Royce Value Fund – Investment Class – 32.813 (14 ) 28.031 (394 ) Royce Dividend Value Fund – Investment Class – 10.660 64.266 3.322 $ (11 ) $ 49.898 4.177 1.155 (8 ) 678.515 26.015 (365 ) 2.433 (1.573.753 Royce 100 Fund – Service Class 271.Class Specific Expenses (continued): Transfer Net Agent Distribution Shareholder Shareholder Balance Fees Total Servicing Reports Registration Credits Royce Low-Priced Stock Fund – Investment Class $ – $ 34.624 6.159 8.449 5.042 8.274 (31 ) 167.492 195.742 150.448 49 105 – 4.988 – – – – 3.651 14.745 324 (83 ) (1 ) 86.295 4.927.056 (1 ) 8.123 Royce Dividend Value Fund – Service Class 25.007 65.155 29.120 189.667 Royce Total Return Fund – Service Class 289.531 737.130 5.287 Royce Value Fund – Consultant Class 145.217 ) 2.394 9.083 155.684 3.472 5.055 (14 ) 60.518 Royce Opportunity Fund – Institutional Class – 4.843 38.300 – – – – – – – 355 – – 2.239.555 (37 ) 179.135 7.177.571 (12 ) 57.982 1.419 68.444 19.253 (14 ) 51.950 Royce Special Equity Fund – Consultant Class 126.841 3.912 Royce Value Fund – R Class 30.712 809 1.277 5.675 2.640 3.609 33.693 (149 ) 303.673 3.194 7.380 515.981 9.185 1.582 (2 ) 15.031 1.020 4.376 494 1.508 2.862 8.905.347 Royce Value Plus Fund – Consultant Class 154.671 10.313 224.068 180.977 43.817 12.879 312 549 – 6.689 2.667 89.236 (1.368 (2 ) 9.631 476.628 923.183.300 (11 ) 65.298 – 3.792 36.361 213.665 Royce Opportunity Fund – K Class 1.164 10.859 4.426 3.166 549.836 (3 ) 15.845 92.784 Royce Opportunity Fund – Consultant Class 44.049 Royce Total Return Fund – Consultant Class 1.294 102.643 Royce Low-Priced Stock Fund – K Class 2.322 5.636 ) Royce Heritage Fund – Investment Class – 3.063.095 (165 ) Royce Opportunity Fund – Investment Class – 497.962 (1 ) 20.475 Royce Value Plus Fund – Service Class 2.956 205.388 Royce Low-Priced Stock Fund – Institutional Class – 3.703 3.138 6.100 Royce Low-Priced Stock Fund – Service Class 3.997 (1 ) 16.378 2.444 30.883 – – – – – – – – – – 2.792.838 The Royce Funds 2010 Semiannual Report to Shareholders | 151 .930 3.144 Royce Value Plus Fund – R Class 1.196 45 59 – 3.833 1.808 74.703 Royce Total Return Fund – W Class – 3.251 – – 2.851 Royce Value Plus Fund – K Class 1.666 (3 ) 28.633 165.670 1.187 $ 6.154.000 37.497 24.502.527 17.994 73.564 Royce Opportunity Fund – R Class 1.323 Royce 100 Fund – K Class 646 3.573 101.878.743 – 35.273 462.345 Royce Value Fund – Service Class 1.326 2.067 2.506 297 534 (3 ) 5.392 (1 ) 5.044 Royce Special Equity Fund – Institutional Class – 6.166 (45 ) 477.312 Royce Heritage Fund – Service Class 150.328 642 851 (3 ) 33.135.331 3.704 861.491 4.118 (633 ) 5.659 12.621 Royce Value Plus Fund – Institutional Class – 27.638.527 12.235 5.546 238 386 (1 ) 18.128 606.673 9.442 166 512 (1 ) 5.784 6.946 274.869 Royce Heritage Fund – R Class 2.027 (768 ) 696.008 117.919 (652 ) Royce Total Return Fund – Investment Class – 1.563 204 20 (1 ) 6.621 325 5.200 Royce Total Return Fund – R Class 22.

800 – 7.127 4.067 377.344 – – – – – – – 4 6.295 – – 654.535 (1.923 – 1.013.541 286.651 Royce Value Fund 1.700.716.800 708.668 32.584.810 1.810 1.710 – 13.924 1.146 8.559.330 Royce Total Return Fund 3.577.910 22.956 – – 39.919 4.001 1.587.669 740.721 – 330.715 890.445.228 Royce Dividend Value Fund 52. Transactions in Affiliated Companies: An “Affiliated Company.055 871.359.842.649 191.750.133 405.287 117.216 2.959.126.846 402.934.399.683.202.144 (153.931. net unrealized appreciation (depreciation) based on identified cost for tax purposes was as follows: Net Unrealized Appreciation Gross Unrealized Tax Basis Cost (Depreciation) Appreciation Depreciation Royce Pennsylvania Mutual Fund $ 4.716.215.790 138.747 4.941.802.164.026.581 1.258.725.241.273 Royce Partners Fund 1.982 406.640.582.060.947 4.715 16.028.223 15.615.287) – 2.997 140.747 – 9.913 197.396 7.900 547.818.541 1.874 8. Physical Therapy Weyco Group Royce Micro-Cap Fund Arctic Cat* Cache* CryptoLogic GP Strategies Graham Corporation Heritage-Crystal Clean Key Technology LaCrosse Footwear PDI TGC Industries ULURU* $ 11.167.935 495.524 45.616 6.778.167 391.040 8.007) – – 9.193 4.813 56.879.918.093 8.087.310.747.955 1.494.954 1.970.772.084 Royce Premier Fund 4.537.115.250.997 – – 92.845.903 Royce Discovery Fund 3.033 444.420 – 147.078 – 13.892.600 878.109.343 150.944 – – – – 19.380 Royce SMid-Cap Value Fund 4.314 522.275) 260.131.045.362 744. 2010: Shares 12/31/09 300.709 598.600 6.044.299.041 Royce Financial Services Fund 12.882.361 2.288 645.586 – – – Shares 6/30/10 Market Value 6/30/10 Affiliated Company Royce Pennsylvania Mutual Fund Almost Family Colony Financial Ethan Allen Interiors Harbinger Group Home Diagnostics* Nutraceutical International Obagi Medical Products Orchids Paper Products* Pervasive Software Preformed Line Products Rimage Corporation Stanley Furniture Technitrol U.575.765 7.862 320.157 2.500 Market Value 12/31/09 Cost of Purchases $ Cost of Sales – – 314.317 (201.797.109.461.997.560.794.039.” as defined in the Investment Company Act of 1940.461.394 1.288 1.982 898.443.984 Royce Global Value Fund 50.176.049 10.048.340. The following transactions were effected in shares of such companies for the six months ended June 30.326 9.981 13.550 3.305 928.500 320.526.412.902 6.960.964 11.469 2.028.Notes to Financial Statements (unaudited) (continued) Tax Information: At June 30.959 155.712 (160.675 590.725 Dividend Income $ – 324.116.999.230.549.739 905.999.213.204.759) 976.640.117 9.009.500 241.109 6.656 1.955.675 590.500 317. is a company in which a fund owns 5% or more of the company’s outstanding voting securities at any time during the period.999 13.211 4.002 – 183.392 – 5.339.590 151.573.862 152 | The Royce Funds 2010 Semiannual Report to Shareholders .249.071.169.239.765 – 7.002.500 11.244 365.617 8.173 477.276.926 462.665 956.639 847.134 Royce Mid-Cap Fund 4.017 – – 82.508.229 360.300) 751.838.943 (387.989.575 1.300 Royce Micro-Cap Fund 1.944 Royce Value Plus Fund 3.314 689.102 – 533.409.S.519 4.800 751.705 Royce Focus Value Fund 5.860 15.649.209.073 – – – – – – 113.312.405.880.049.523 2.694 1.024.023.067.391 7.603 16.409 273.104.057.699 5.801.100 Royce International Smaller-Companies Fund 12.209.961 6.680.350 3.679.648.938.505.568.472.960 1.300 2.393.317.386 $ 8.249 – $ Realized Gain (Loss) – – (73.363 967.106) 168.202 1.517.201 Royce Heritage Fund 203.900 406.286.054 2.451.389.026 375.085 648.869.669 1.288 737.073.304.924 102.207) 90.314 689.205 25.249 803.329.531 – 3.092 6.814 532.657 3.817 158.152 Royce Opportunity Fund 1.676 $ 214.647 1.300 72.563 25.900 531.001 808.130 119.503.430 – 10.334 (206.891 1.820 – – – – – – – (1) (5.934.939 – – – 612.582.056 902.924 2.634 13.392 $ 831.647 737.587 103.024 8.704 Royce European Smaller-Companies Fund 7.785.047.994) 205. 2010.019.684.450 400.363 5.423.155 36.279.074) 222.305.636.269) 726.732 – 7.009.249.200 2.004.108 17.083.541 21.753.238 Royce Special Equity Fund 1.722.128.143.265 (164.989 8.527.207 341.217.433 – – 33.952.333.321 2.350.100 1.201 Royce 100 Fund 319.907 Royce Low-Priced Stock Fund 3.683 192.082.082.575 1.643 $ 18.692 $ 616.299 (326.155.902.380 The primary difference between book and tax basis cost is the timing of the recognition of losses on securities sold.150 953.729 – 6.737 737.414.408 3.015.

700 3.500 2.100.645.855 58.548.116.832.172.490 1.049.974 286.001 8.136.971 4.339 52.785 (1.424.068 – 280.710.905 21.856.986 3.974 737.653 90.506 – 46.454 53.425.061.333) – – – – – – – (154.005 1.633 5.121.667 1.500 1.184 9.523.354.211.103.411 – – – 568.151 698.712.696.041) (18.101 54.830 12.381.846.306 118.234 The Royce Funds 2010 Semiannual Report to Shareholders | 153 .862.283 116.523.649) – – – – – (1.967 2.086.331 – – – – – (21.294 1.715 119.941. A Trican Well Service* Unit Corporation Woodward Governor Royce Low-Priced Stock Fund Castle (A.024 56.486.847 56.004 27.051 2. A Seabridge Gold Silver Standard Resources Simpson Manufacturing Thor Industries Timberland Company (The) Cl.872.664.886 4.964.700 713.601 98.281) Dividend Income $ – – 673.722 83.157.451.144 – – – – – 7.471 17.399 3.687 558.564 51.529.824.045.292.062 1.387.619 17.044 2.055.200 1.941 30.870.644 886.349 – – – 1.308.222.403 17.915 20.471 1.090 6.120.268.144 3.484 2.282.809 325.919.328.285.232.054.700 463.218) – 50.467 13.887.849.596.842 – 236.008 – – – – 3. A* Lincoln Electric Holdings MKS Instruments Nu Skin Enterprises Cl.840.708 699.071.892.612 71.591.672 2.035 700.740 1.069.145 98.669.605 78.103.683 – 3.754.000 516.831.039 98.505 (62.318.069.667 1.073.097 – – 1.300 773.900 4.874.455 1.045.055.361 – – – – – 332.145 529.292.300.996.790 2.352 622.890.038 2.774 8.264.799.840.500 3.667.096.101 15.406.125 – 599.279 6.786 22.926 1.558 3.784 20.400 1.016.811.351 23.875 30.012.762.447.667.916.585 2.703.838.686 2.592 2.399 3.656 1.074 8.949 1.745 240.441.465.710.106 16.568 – 274.500 – – – 1.) & Co.231 – – 2.835 82.966.920.282) – 105.598 9.839.944 3.358.928 57.100 2.550 – – – – – – – – 97.294 1.314 63.620 2.038 2.031.553.474 3.841.014 34.740 1.752 290.546 – – 67.679 4.542.635.368.625 48.732.841.496.106 – 113.) Company (The) Cl.377.796.044 6.862 – – – – – (23.584 698.957.414 – 1.670 18.563 – – – – – – 5.290 4.908 – – – – – – – – – 261.164.903.941.653 661.523 12.787 1.697.500 3.781 – 842.905 87.156 39.191 1.295.364) – 525.957.690 75.352 – 325.430.145 529.497 2.300 2.467.722.095 5.616 124.343 1.310.316.080.978.187 63.528 435.227.910 3.592 2.500 261.595.200 1.219.631.728.564 738.717 1. A Royce Opportunity Fund AXT* BTU International Cambrex Corporation ClearOne Communications Comstock Homebuilding Cl.411.387.538 27.126 68.509 3.583.665 100.700 2.243.029.474 3.148 1.514 4.164 6.791 2.246.624.512.948.271 1.846.957.998 – 839.418.364) 636 (604.136.597.455 1.643 7.699.112.400 – – 8.983.966.703.100 2.238 2.691.520 6.668 13.093 – – – – – – – 123.077.775 88.000 5.512.148.037.265 1.643.200 663.032.150.300 773.200 2.902 2.760.100 $ 1.282 1.633.315 459.354.334.321.745.090 51.784 732.706 6.089 25.273.796 5.555 83.668 12.188 1.990.849.M.651.567.100.333 662.120.750 10.497 2.176 1.453.025.942) – – – – 849.444 123.910 3.658 3.087.300.745 95.686 2.263 602.950 5.886) – (1.S.836 – – – – – 17.627 – – 670.717 1.322 – – – 1.880 134.721.783 – 1.214.625 11.729 116.176 1.131.100 1.331.519.185 – – 193.663 – – 580.295 104.700 463.531.853 51.860.589 8.862 911.971.471 39.546 82.366.190 – – – – – – – – – 2.475 5.807) (290.839 – 4.960.218.140.878 – 591.165 1.205 73.057.295.850 $ Market Value 6/30/10 1.923 6. Ceradyne Cross Country Healthcare Houston Wire & Cable Imperial Sugar Integral Systems KVH Industries LECG Corporation* New Frontier Media Novatel Wireless PC-Tel Sigma Designs Tesco Corporation Total Energy Services TTM Technologies* WaterFurnace Renewable Energy Royce Total Return Fund Bancorp Rhode Island Chase Corporation Colony Financial Mueller (Paul) Company Peapack-Gladstone Financial Starrett (L.024 73.440 2.797.061.391 1.900 4.906.014.590.646 88.116.279 2.980 – – – 262.000.283.966 20.606.488) – – (19.305 1.952.797 25.885.477.060 8.072.653 90.920.449 1.213 128.676.182 40.739 – 2.Transactions in Affiliated Companies (continued): Affiliated Company Royce Micro-Cap Fund (continued) Uranium Resources World Energy Solutions* Royce Premier Fund Arkansas Best* Cabot Microelectronics Cal-Maine Foods Cognex Corporation Dionex Corporation Fossil Knight Capital Group Cl.102.582.335 26.245 3.472.191 1. A Concurrent Computer* Cost Plus dELiA*s Dixie Group Shares 12/31/09 Market Value 12/31/09 Cost of Purchases $ 2.700 799.000 2.904.125.668 428.086 2.410.070 118.524 1.462 – 627.008 13.222 55.328.851 $ – Cost of Sales – $ – Realized Gain (Loss) – – (2. A ProAssurance Corporation* Sanderson Farms Schnitzer Steel Industries Cl.793 – 460.431.140.664.294.929.803 – 1.263 81.100 1.634 117.020 46.026 2.881 Shares 6/30/10 5.439.810.

068.363) (2.287 – 2.672 1.884.193) (578.253.Notes to Financial Statements (unaudited) (continued) Transactions in Affiliated Companies (continued): Affiliated Company Royce Opportunity Fund (continued) Evans & Sutherland Computer Gerber Scientific Interlink Electronics* Interphase Corporation LeCroy Corporation Lydall MarineMax* Material Sciences Merix Corporation* Network Equipment Technologies Planar Systems REX American Resources SigmaTron International Thermadyne Holdings Tollgrade Communications TRC Companies Royce Special Equity Fund Ampco-Pittsburgh Atrion Corporation Baker (Michael) Bowl America Cl.086 29.950 1.039 80.678 4.500 6.748.075 – – – – 355.317.131 10.485.267.950 124.911 506.714 1.887 1.209.679 6.522) – 8.614 331.200 329.532.719 2.457.971 623.080 20.798 7.753 – 8.196 – 1.797 1.341.372.200 616.800 1.167 1.875 261.448.300 2.146 22.662 2.000 7.000 1.449 4.706 4.003 – – – – 348.975.784.007.011 507.439.507 6.824 – 1.040 19.371.997.260 21.775 44.526.088.136 (2.673 6.530 926.000 646.285.800 1.539 12.649 1.261.994 5.800 2.522 – – – – – 93.100 749.176 21.460.510 14.797 5.992 11.980.174.997.718 1.635 6.375.839 350.500 4.035.830.600 2.084 12.614 3.784 577.092.607.556 (3.237.609.956 (2.570.893.727.700 231.883.685 13.925 205.722.386.901 5.299 – 13.718.287.320.958.570.585 9.251 20.059.680 536.520 225.000 145.620 5.389.423.200 25.956.729 – – – – – (6.884.157.560 5.790 4.419.810 11.012.959.464 1.596.189 5.641 Cost of Purchases $ Cost of Sales Realized Gain (Loss) Dividend Income – – – – – – – – – – – – – – – – – 207.506 21.220.108 1.350.536 874.179.875 404.633 670.309 (186.685.416 17.668.839) 183.893.649.435.210.756.000 11.600 2.538.549 – – 131.518.821 13.282 – 17.301 2.880) – (12.757 – 471.647 $ Market Value 12/31/09 76.584.700 855.866.820 6.144 – 688.600 2.107.511 12.230.500 4.013 4.154 – – – 2.189.995.012 1.800 2.069.600 3.684 158.537.970 267.558.122.866 818.500 2.040 7.787 – 3.800 2.564 21.093) 16.468 – – – – – – – – – – Shares 6/30/10 Market Value 6/30/10 – $ – $ – $ 90.732 134.800 1.131 35.288.572 692.555.100 499.524 – 7.700 970.600 1.428.500 800.990.283.246.584.514.145.630 10.504 9.541.655 8.216 310.388 1.900 450.756.100 2.944 496.032 3.190.779.672 556.086.560.155 17.730 1.042.711.376.630 – – – – 27.500 562.458) – (1.350.376) (310.200.073 4.613) (22.171. A Computer Services CSS Industries Dorman Products Foster (L.655 303.B.000 173.662.950 1.025 – 6.912.681.739.546 2.170 8.170 612.317 3.C.833.375 100.968 2.088.723 10.641 3.500 2.868 – 4.600 982.809 262.060.400.718 2.483.309 7.000 724.746.470 26.170.490.808 6.259.495 9.300 – 2.951.110.740.380.786 12.233 – 1.815.608 31.973.723 5.500 792.860 5.807) – – – – (11.122 16.723 – 44.188.572 713.536.542 – 479.314 29.556 – 6.491. A* Avid Technology Bancorp (The)* Berkshire Hills Bancorp Caliper Life Sciences Casual Male Retail Group Celadon Group Cerus Corporation Christopher & Banks Cosi Cosi (Rights)* Cypress Bioscience* Digi International Energy Partners Exar Corporation* FARO Technologies GSI Group HealthTronics* Liquidity Services Shares 12/31/09 766.732 7.581 4.004 9.843. A Frisch's Restaurants Hooker Furniture Hurco Companies Koss Corporation* Lawson Products* Mesa Laboratories Met-Pro Corporation National Presto Industries Park Electrochemical Psychemedics Corporation Universal Electronics Utah Medical Products Versant Corporation Royce Value Plus Fund A.880 283.877 – 1.202.521.204.930 4.500 2.957.286.190.478.720 109.804 63.734 1.623 762.640 334.536 874.089 1.856 15.810 – 350.800 886.800 329.730 $ 330.660 52.277 12.861.965.083 – – – 31.444.063 752.583 1.900.480 3.961.345 – – 173.828.771) – – – – – – – – (8.220 14.538.944 2.900 3.015.725 401.666.900 4.590.905 16.421 – – – 2.023.809.609.262 582.184.253.900 8.354 – 94.189.082 54.461 1.284.654.500 342.280 – 4.394 2.647.131) – 3.407 4.331.990 891.349.862 348.500 149.171.261.500 7.100 239.630 – 95.000 132.569 3.394 1.061.590.256 – – – – 270.942) (6.109 33.545.240 16.734 1.233) 144.) Company Cl.673.463 – – – – – – – – (7.872 – 14.450 154 | The Royce Funds 2010 Semiannual Report to Shareholders .991.252.519.647 622.700 2.666 11.420 25.404) 38.088.587 334.538.020 13.937) – (130.693 – – – – – – – – 516.070.433 – – 32.906 – 391.837 (2.781 – 1.103.926 22.975.655 6.152) – – (70.840.045 87.845 10.000 436.729) 766.168 207.219.500 1.385 27.283.939 – – – – 15.750 20.130 3.271 651.213.983.921.933 523.812 28.398.958 – 867.036.672 1.464 1.231.644 621.829 4.556.808.902) (1.083 – 368. Moore Arts & Crafts* American Italian Pasta Cl.115.092 3.698.530.415.892.634 – – 38.800 310.988 1.560 97.200 12.851.200 1.524 5.148.082 778.739.384.342.009 22.

477 7.432 $ 470.749 1.400 832.045.270 Cost of Purchases Cost of Sales Realized Gain (Loss) $ Dividend Income – – 580.533.760 – – 1.600 1.198.057.198.Transactions in Affiliated Companies (continued): Affiliated Company Royce Value Plus Fund (continued) Littelfuse Mercury Computer Systems NutriSystem* RADVision* Shamir Optical Industry Supertex Symyx Technologies Tennant Company* Theratechnologies* TradeStation Group Shares 12/31/09 1.896) – 17.326 893.731.000 3.257.020 (3.267 Shares 6/30/10 Market Value 6/30/10 $ 5.794.319.226 36.045.100 443.549.158.053 3.632 140.089.266 20.489 – – 1.606 – (10.122.911 (4.245. 2010.190.208.719 1.039 *Not an Affiliated Company at June 30.586.174 22.391.749 25.446.600 23.405.061.878.305.125 17.577 861.089 437.605 – – – 9.264 10.229.518.330 2.500 348.888) 1.874 1.549.288.190.619.200 782.868.279.570.899.824.000 14. The Royce Funds 2010 Semiannual Report to Shareholders | 155 .000.179 17.650.989 14.030 8.138.086) – 4.454.590 14.578.102 8.813.600 2.782.395 2.259 2.426 (3.695 $ 47.053 2.552) – – 257.120 7.245.805 $ 7.132.489.844 (488.427 14.737.407.049 24.676 (8.286) – – – (43.000 Market Value 12/31/09 $ 49.791.521) 1.402) 1.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs.000 .60 986 .019 .02 8 .000 .94 1. 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.00 1.00 1.00 1.41 1.41 1.000 .000 .018 .000 .69% 1 .51 7 .00 1.23% 1 . such as sales charges (loads).017 . an $8.63 6 .47 967 .49% 1 .00 1. To do so. Actual Ending Account Value 6/30/10 $ 974 .00 (3) Royce Heritage Fund 1.000 .29 1.000 .46 955 .000 .45 8 .000 .00 Royce Value Plus Fund 1.79 7 .31 5 .71 6 .00 Royce Micro-Cap Fund 1.30 7 .000 .00 Royce 100 Fund 1. You may use the information in this section.00 1.23 7 .60 1.000 .65 1.017 .000 .00 1.000 .91 5 .00 1.00 1.25 6 .49% 1 . or exchange fees.017 .45 7 .18 5 .75 971 .017 .90 1.00 1.00 1.00 1.000 .017 .000 .019 .016 .21 5 .017 . if these transactional costs were included.000 .000 .000 .65 1.17 908 .81 5 .00 1.33 1.017 .000 .05 6 .11 963 . 2010 by $1. Service.11% 1 .000 .00 1. 2010.00 1.24% 1 .000 .000 .99 1.45% 1 .65 1.18% 1 .018 .17 6 .00 1.017 .000 .39% 1 .41 1. and will not help you determine the relative total costs of owning different funds. You may use this information to compare the ongoing costs of investing in the Fund and other funds.00 Royce Opportunity Fund 1.28 6 .97 969 .00 1.96 6 .00 1.016 .000 . for some funds.39 5 . Actual Expenses The first part of the table below provides information about actual account values and actual expenses.05 7 .14% 1 .77 1.56 1.17% 1 .000 .017 .69% 1 .00 Expenses Paid During the (1) Period 4 .16 8 . distribution and/or service (12b-1) fees.00 1.00 1.600 account value divided by $1.32 1.000 .39% 1 .78 981 .87 972 .16% 1 .018 .000 .000 .66% 1 .19 973 .000 . redemption fees.97 990 .70 1. 2010 and held for the entire six-month period ended June 30.00 1.14 1.79 7 .41 6 .66 977 .000 .95 7 .018 . your costs would have been higher.70 1.000 . 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 also incur one-time transaction expenses. which are not shown in this section and would result in higher total costs.01 5 . 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.013 .000 .54 1.00 1.04 5 .50 962 .00 1.55 969 .017 .06% 1 .Understanding Your Fund’s Expenses (unaudited) As a shareholder of a mutual fund.43 986 .50% 1 .000 .00 1. together with the amount you invested.24% 1 .000 . 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.000 .43% 1 .41% 1 .000 .000 .00 1.000 (for example.00 1.018 . including management fees and other Fund expenses including.45 7 .00 1.00 Royce Special Equity Fund 1.000 .49% 156 | The Royce Funds 2010 Semiannual Report to Shareholders .000 .50 5 .00 1.71 6 .46 964 .00 $ 1.000 .000 .00 1.49% 1 .00 1.13 7 .018 .95 7 .86 6 .41 1.00 1.000 invested at January 1.014 .21 0 .80 1.000 .36 1.000 .83 5 .020 .49% 1 .44 1.017 .00 1.00 1.16 989 .44 8 .21 5 .017 .000 . Simply divide your account value at June 30.00 Service Class Royce Pennsylvania Mutual Fund Royce Micro-Cap Fund Royce Premier Fund Royce Low-Priced Stock Fund Royce Total Return Fund (3) Royce Heritage Fund Royce Opportunity Fund Royce Special Equity Fund Royce Value Fund Royce Value Plus Fund Royce 100 Fund Royce Discovery Fund Royce Financial Services Fund Royce Dividend Value Fund Royce European SmallerCompanies Fund Royce Global Value Fund Royce SMid-Cap Value Fund 1.00 1. to estimate the expenses that you paid over the period.30 6 .82 963 .22 6 .45 1 . compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.00 1. including redemption fees.017 . this section is useful in comparing ongoing costs only.000 .45 7 .73 $ Hypothetical (5% per year return before expenses) Beginning Ending Expenses Paid Annualized Account Value Account Value During the Expense (1) (2) 1/1/10 6/30/10 Period Ratio $ 1.000 .000 = 8.20 7 . Using the information below.17% 1 .36 970 .000 .37% 1 .00 1.6).70 993 .000 .30 7 .46% 1 .000 .000 .00 1.000 .000 . Institutional and W Class shares are generally available only to institutions or intermediaries with a minimum account size of $1 million.04 971 .45 7 .00 1.56 6 .00 1.90% 1 .018 .000 . which is not the Fund’s actual return.04 1.55 1. The example is based on an investment of $1. Therefore.16 6 .000 .000 .94 969 .00 1. you pay ongoing expenses.41 7 .00 1. you can estimate how these ongoing expenses (in dollars) affect your investment and compare them with the ongoing expenses of other funds.00 Royce Value Fund 1.00 1.67 5 .41 1. Consultant.70 5 .00 Royce Low-Priced Stock Fund 1.000 .000 .15 7 .86 5 .72 992 .000 .00 Royce Total Return Fund 1.44% 1 .26 8 .00 1.016 .019 .67 7 .90 1.65 $ 4 .41 955 .019 .43 6 .29 965 .01 6 . In addition.00 1.45 8 .00 Royce Dividend Value Fund 1.85 7 .98 7 .99 1.41 1.00 1.24% Beginning Account Value 1/1/10 Investment Class Royce Pennsylvania Mutual Fund $ 1.00 Royce Premier Fund 1.018 .07 969 .

Royce Mid-Cap Fund multiplied by 177 days).00 Actual Ending Account Value 6/30/10 Expenses Paid During the (1) Period Hypothetical (5% per year return before expenses) Beginning Ending Expenses Paid Annualized Account Value Account Value During the Expense (1) (2) 1/1/10 6/30/10 Period Ratio $ 1.00 1.69 954 .00 1.000 .85 986 .59% 1 .41 1.20 8 .90 990 .00 1.84% 1 .019 .000 .000 .95 1 .00 1.53 1.00 1.94 4 .000 .07 5 .44 7 .45 965 .02 1.18 966 .24 994 .36 960 .84 1.00 1.59% 1 .000 .000 .98 8 .85 7 .85 7 .013 .000 .95 6 .00 1.00 1.017 .64 1.95 991 .67 1.06 902 .00 1.00 1.000 .09% 2 .65 9 .11 957 .00 1.50 7 .016 .76 965 . The Royce Funds 2010 Semiannual Report to Shareholders | 157 .000 .016 .37 964 .93 1. If these fees were included above.59% 1 .00 1.00 1.44% 2 .54% 1 .48 8 .42 937 .84% 1 .94 5 .77 7 . as trustee.017 .019 .73% 1 .99 5 .000 .000 .00 1.019 .014 .000 . (2) Annualized expense ratio used to derive figures in the table is based on the most recent fiscal half-year.00 $ 8 .00 1.91 7 .000 .06 5 .000 .44 10 .00 1.73 7 .00 1.015 .91 968 .85 9 .91 1.42 8 .17 956 .49% 1 .39 11 .000 .18 10 .016 .000 .000 .93 1.08 5 .016 .00 1.22 1.00 1.014 .76 7 .54 11 .77 7 .016 .49% 1 .000 .95 7 .00 1.000 .00 1.000 .06 990 .000 .00 1.67 1.20 9 .00 1.82 960 .53 10 .000 .00 1.01 5 .017 .41 1.00 1.69% 1 .70 7 .00 1.000 .00 1.91 1.017 .00 1.000 .000 .00 1.012 .03 9 .01% 1 .000 .84 1 .97 8 .59 988 .99 10 .00 1.84% 1 .00 1.000 .32 9 .000 .59% 1 .21 1 .19% 2 .84% 972 .015 .76 967 .88% 2 .000 .84% 1 .00 1.57 1.06 5 .24 5 .83 920 .000 .49% 969 .20 7 .21 5 .000 .09 7 .000 .00 1.012 .67 10 .91 1.000 .03 7 .95 7 .019 .00 1.37% 1 .000 .64 10 .000 .00 1.017 .89 953 .00 1.95 9 .91 8 .000 .00 $ 1.000 .49 970 .72 8 .00 1.79 1.00 1.61 1 .14 5 .84 4 .00 $ 958 .00 1.019 .016 .00 1.04% 1 .015 .00 1.000 .000 .20 9 .39 10 .94 10 .000 .47 1.000 .000 .20 9 .019 .015 .21 1.015 .00 1.000 .59% 1 .12% 970 .31% 2 .84 963 .79 1.00 1.20 8 .00 1.21 5 .95 7 .96 5 .000 .15 967 .000 .06 970 .000 .00 1.11% 2 .20 10 .00 1.00 1.00 1.59% 1 .95 7 .64 5 .43 1.000 .16 1. NA.000 .04% 973 .76 989 .77 4 .67 1.19% 1 .000 .016 .000 .00 1.00 $ 1.91 1.67 7 .000 .22 961 .45 7 .39 12 .000 .000 .Beginning Account Value 1/1/10 Service Class (continued) Royce International SmallerCompanies Fund Royce Focus Value Fund Royce Partners Fund Royce Mid-Cap Fund Consultant Class Royce Pennsylvania Mutual Fund Royce Micro-Cap Fund Royce Premier Fund Royce Total Return Fund (3) Royce Heritage Fund Royce Opportunity Fund Royce Special Equity Fund Royce Value Fund Royce Value Plus Fund Institutional Class Royce Premier Fund Royce Low-Priced Stock Fund Royce Total Return Fund Royce Opportunity Fund Royce Special Equity Fund Royce Value Fund Royce Value Plus Fund W Class Royce Premier Fund Royce Total Return Fund R Class Royce Pennsylvania Mutual Fund Royce Premier Fund Royce Low-Priced Stock Fund Royce Total Return Fund Royce Heritage Fund Royce Opportunity Fund Royce Value Fund Royce Value Plus Fund Royce 100 Fund K Class Royce Pennsylvania Mutual Fund Royce Premier Fund Royce Low-Priced Stock Fund Royce Total Return Fund Royce Heritage Fund Royce Opportunity Fund Royce Value Fund Royce Value Plus Fund Royce 100 Fund 1.00 1.016 .17% 973 .00 1.93 11 .00 1.02 $ 8 .39% 2 .29 1 .000 .69 1.000 .67 1.013 .00 1.21 5 .000 .000 .98 1.00 1.013 .000 .60 11 .33 1.94 1.00 1.00 1.59% (1) Expenses are equal to the Fund's annualized expense ratio multiplied by the average account value for the period.20 1 .000 .000 .00 1.000 .33 967 .019 .00 1.015 .00 1.04% 1 .77% 1 .00 1.19% 2 .71 6 .00 1.53% 1 .000 .00 1.00 1.76 7 .00 1.00 1. your costs would be higher.018 .000 .014 .61 7 .00 1.18 11 .015 .00 1.00 1.000 .000 .36 967 .00 1.00 1.00 1.94 982 .95 7 .000 .016 .00 1. (3) Giftshare accounts pay an annual $50 trustee fee to State Street Bank. multiplied by 181 days in the most recent fiscal half-year divided by 365 days (to reflect the half-year period for all funds exisiting for the full half-year period.000 .019 .67 1.000 .08 8 .000 .00 1.04% 1 .59 969 .00 991 .01% 1 .65 9 .00 1.41 987 .00 1.41 1.94 10 .000 .64 1.000 .76 1.000 .45 7 .000 .00 1.89 5 .000 .89 1.00 1.34 1.00% 1 .000 .50 963 .64 1.00 1.08 1.018 .016 .91 1.000 .000 .000 .91 1.45 7 .000 .000 .84% 1 .

Isaacs’s prior business experience includes having served as Director of Columbia University Development Law and Policy Program and Professor at Columbia University (until August 1996). NY 10151 Charles M. Principal Occupation(s) During Past 5 Years: Consultant and President of Ravengate Partners LLC (since 2000). President of Time-Life Films and Head of Broadcasting for Major League Baseball. Inc. Inc. Director and/or officer of various Legg Mason.com or by calling (800) 221-4268. Trustee Age: 70 | Number of Funds Overseen: 31 | Tenure: Since 1989 Non-Royce Directorships: None Principal Occupation(s) During Past Five Years: President of The Center for Health and Social Policy (since September 1996). Inc. and related companies. Peter O’Brien. Attorney and President of Health Policy Associates. Vice President Patricia W. * Interested Trustee. and President of RFS. Chairman and Director of Legg Mason. Royce. President of Haverhills Inc. Meister. Arthur S. LLC. Vice President and Assistant Secretary Age: 48 | Tenure: Since 1994 Principal Occupation(s) During Past Five Years: Principal and Vice President of Royce. Mark R. Trustee* Age: 55 | Number of Funds Overseen: 44 | Tenure: Since 2001 Non-Royce Directorships: Director/Trusteeof registered investment companies constituting the 14 Legg Mason Funds. President of Financial News Network... Mr. President of Hill House.roycefunds. New York. a consultant to the communications industry. Principal. Daniel A. President of all Legg Mason Funds. Fetting. Principal Occupation(s) During Past Five Years: Trustee Emeritus of Colgate University (since 2005). Mr. Inc. Inc. Diederich. Trustees will hold office until their successors have been duly elected and qualified or until their earlier resignation or removal. and Chairman of Legg Mason Funds. Board Member of Hill House. Co-Chief Investment Officer and Member of Board of Managers of Royce & Associates. Chadwick. having been employed by Royce since October 1986. Trustee Age: 61 | Number of Funds Overseen: 31 | Tenure: Since 2009 Non-Royce Directorships: Trustee of ING Mutual Funds and Director of Wisconsin Energy Corp. Galkin Associates. Chief Legal and Compliance Officer and Secretary of Royce. Trustee Age: 64 | Number of Funds Overseen: 44 | Tenure: Since 2001 Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 14 Legg Mason Funds. Meister’s prior business experience includes having served as Chief Executive Officer of Seniorlife. Mr. Galkin’s prior business experience includes having served as President of Richard M. Senior Vice President of HBO. David L. affiliates. 158 | The Royce Funds 2010 Semiannual Report to Shareholders . Director of Technology Investment Capital Corp. Managing Director and Vice President of Royce. Division President and Senior Officer of Prudential Financial Group.. The Statement of Additional Information. Inc. Director of University of Maryland Foundation (non-profits). President of Manhattan Cable Television (a subsidiary of Time. Inc. G. (a subsidiary of Comsat). Fockler. is available and can be obtained without charge at www. Director of Maryland Business Roundtable for Education (from July 1984 to June 2002). Trustee Age: 72 | Number of Funds Overseen: 31 | Tenure: Since 1982 Non-Royce Directorships: None Principal Occupation(s) During Past Five Years: Private investor. Vice President and Treasurer Age: 58 | Tenure: Since 2001 Principal Occupation(s) During Past Five Years: Chief Operating Officer. consultants. Partner. Galkin. Secretary and Chief Legal Officer of The Royce Funds. Trustee Age: 70 | Number of Funds Overseen: 31 | Tenure: Since 1982 Non-Royce Directorships: None Principal Occupation(s) During Past Five Years: Consultant. Trustee Age: 68 | Number of Funds Overseen: 44 | Tenure: Since 2004 Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 14 Legg Mason Funds and Director of Municipal Mortgage & Equity. Inc. LLC (“Royce”). having been employed by Royce since October 1991. KPMG LLP (international accounting firm) (from 1972 to 2002). Secretary and Chief Legal Officer Age: 43 | Tenure: 1996-2001 and Since April 2002 Principal Occupation(s) During Past Five Years: General Counsel. Mr. Richard M. Principal Occupation(s) During Past 5 Years: President. Formerly: Director of University of Maryland College Park Foundation (non-profit) (from 1998 to 2005). Senior Executive Vice President of Legg Mason. Principal Occupation(s) During Past Five Years: President. Trustee* President . John E. Age: 51 | Tenure: Since 1995 Principal Occupation(s) During Past Five Years: Managing Director and Vice President of Royce. Chief Financial Officer of Royce. Lisa Curcio. John D.. and Vice President of RFS. Vice President Age: 52 | Tenure: Since 1995 Principal Occupation(s) During Past Five Years: Co-Chief Investment Officer. Director of Administration of the Trust.com. W. telecommunications consultants. Managing Director and member of the Board of Managers of Royce. President of Rhode Island Cable Television and Senior Vice President of Satellite Television Corp. (another Time. Inc. which contains additional information about the Trust’s trustees and officers. (since 1999). having been employed by Royce since April 1993.). Inc. Principal Occupation(s) During Past Five Years: Director of The League for People with Disabilities. (from 2001 to 2005) and Managing Director/Equity Capital Markets Group of Merrill Lynch & Co. Fetting’s prior business experience includes having served as a member of the Board of Managers of Royce. having been employed by Royce since October 1989. O’Byrne. Inc. Mehlman. Isaacs. (from 1971 to 1999).. Jack E. Chief Compliance Officer Age: 50 | 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). Formerly: Trustee of Colgate University (from 1996 to 2005). Age: 70 | Number of Funds Overseen: 31 | Tenure: Since 1982 Non-Royce Directorships: Director of Technology Investment Capital Corp. Jr. Stephen L. 745 Fifth Avenue. the Trust’s investment adviser. CEO. subsidiary). Denneen.Trustees and Officers All Trustees and Officers may be reached c/o The Royce Funds. Chairman and Chief Executive Officer of The Tennis Channel (from June 2000 to March 2005). Whitney George.

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 June 30, 2010, 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 June 30, 2010 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. 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 2000 Value and Growth indices consist of the respective value and growth stocks within the Russell 2000 as determined by Russell Investments. The Russell Microcap Index includes 1,000 of the smallest securities in the Russell 2000 Index. 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 Russell 2500 index represents the smallest 2,500 companies in the Russell 3000 index. The returns for the Russell 2500—Financial Sector represent those of the financial services companies within the Russell 2500 index. 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 S&P 500 and S&P SmallCap 600 are indices of U.S. large- and small-cap stocks, respectively, 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 MSCI EAFE Index (Europe, Australasia, Far East) is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada. The MSCI Europe Small Core Index represents the small-cap segment within the developed equity markets in Europe. The MSCI World Small Core Index represents the smallcap segment in the world’s developed equity markets. The MSCI World ex USA Small Core represents these markets excluding the United States. Returns for the market indices used in this report were based on information supplied to Royce by Russell Investments and MSCI. Royce has not independently verified the above described information. 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. 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 Royce Funds is a service mark of The Royce Funds. Distributor: Royce Fund Services, Inc. The Funds invest primarily in securities of micro-, small- and/or mid-cap companies, which may involve considerably more risk than investments in securities of larger-cap companies (see “Primary Risks for Fund Investors” in the respective prospectus). Royce European Smaller-Companies Fund invests primarily in European stocks. Royce Global Value Fund invests in companies in at least three countries, which may include the United States. Royce International Smaller-Companies Fund invests primarily in companies domiciled outside the United States. All other Royce Funds may invest up to 25% (35% of Royce Financial Services, Focus Value, Partners, 10% of Opportunity and 5% of Special Equity Funds) 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 International Securities” in the prospectus.) 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 1-800-221-4268, or by visiting www.roycefunds.com. All publicly released material Fund information is disclosed by the Funds on their website at www.roycefunds.com.

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 forwardlooking 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 1-800-221-4268 (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 1-202-942-8090. The Funds’ complete schedules of investments are updated quarterly, and are available at www.roycefunds.com.
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Board Approval of Investment Advisory Agreement
At meetings held on June 9-10, 2010, The Royce Fund’s Board of Trustees, including all of the non-interested trustees, approved the continuance of the Investment Advisory Agreements between Royce & Associates, LLC (“R&A”) and The Royce Fund relating to each 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 Discovery Fund, Royce Financial Services Fund, Royce Dividend Value Fund, Royce Global Value Fund, Royce European Smaller-Companies Fund, Royce SMid-Cap Value Fund, Royce International Smaller-Companies Fund, Royce Focus Value Fund and Royce Partners Fund (the “Funds”). In reaching these decisions, the Board reviewed the materials provided by R&A, which included, among other things, information prepared internally by R&A and independently by Morningstar Associates, LLC (“Morningstar”) containing detailed expense ratio and investment performance comparisons for each Fund with other mutual funds in their “peer group” and “category” [investment performance comparisons were not provided for Royce Focus Value Fund and Royce Partners Fund due to their limited operating histories (less than one year)], information regarding the past performance of Funds managed by R&A and a memorandum outlining the legal duties of the Board prepared by independent counsel to the non-interested trustees. R&A also provided the trustees with an analysis of its profitability with respect to providing investment advisory services to each of the Funds. In addition, the Board took into account information furnished throughout the year at regular Board meetings, including reports on investment performance, shareholder services, distribution fees and expenses, regulatory compliance, brokerage commissions and research, and brokerage and other execution products and services provided to the Funds. The Board also considered other matters they deemed important to the approval process such as allocation of brokerage commissions, payments made to R&A or its affiliates relating to distribution of Fund shares and other direct and indirect benefits to R&A and its affiliates from their relationship with the Funds. The trustees also met throughout the year with investment advisory personnel from R&A. The Board, in its deliberations, recognized that, for many of the Funds’ shareholders, the decision to purchase Fund shares included a decision to select R&A as the investment adviser and that there was a strong association in the minds of Fund shareholders between R&A and each of the Funds. In considering factors relating to the approval of the continuance of the Investment Advisory Agreements, the non-interested trustees received assistance and advice from, and met separately with, their independent counsel. While the Investment Advisory Agreements for the Funds were considered at the same Board meetings, the trustees dealt with each agreement separately. Among other factors, the trustees considered the following: The nature, extent and quality of services provided by R&A: The trustees considered the following factors to be of fundamental importance to their consideration of whether to approve the continuance of the Funds’ Investment Advisory Agreements: (i) R&A’s more than 35 years of value investing experience and track record; (ii) the history of long-tenured R&A portfolio managers managing many of the Funds; (iii) R&A’s focus on mid-cap, small-cap and micro-cap value investing; (iv) the consistency of R&A’s approach to managing the Funds over more than 35 years; (v) the integrity and high ethical standards adhered to at R&A; (vi) R&A’s specialized experience in the area of trading small- and micro-cap securities; (vii) R&A’s historical ability to attract and retain portfolio
160

management talent; and (viii) R&A’s focus on shareholder interests as exemplified by capping expenses on smaller funds, closing funds to new investors when R&A believed such closings were in the best interests of existing shareholders, establishing breakpoints for a number of funds and providing expansive shareholder reporting and communications. The trustees reviewed the services that R&A provides to the Funds, including, but not limited to, managing each Fund’s investments in accordance with the stated policies of each Fund. The Board considered the fact that R&A provided certain administrative services to the Fund at cost pursuant to the Administration Agreement between the Funds and R&A which went into effect on January 1, 2008. The trustees determined that the services to be provided to each Fund by R&A would be the same as those it previously provided to the Funds. They also took into consideration the histories, reputations and backgrounds of R&A’s portfolio managers for the Funds, finding that these would likely have an impact on the continued success of the Funds. Lastly, the trustees noted R&A’s ability to attract and retain quality and experienced personnel. The trustees concluded that the investment advisory services provided by R&A to each Fund compared favorably to services provided by R&A to other R&A client accounts, including other funds, in both nature and quality, and that the scope of services provided by R&A would continue to be suitable for each Fund. Investment performance of the Funds and R&A: In light of R&A’s riskaverse approach to investing, the trustees believe that risk-adjusted performance continues to be an appropriate measure of each Fund’s investment performance. One measure of risk-adjusted performance the trustees have historically used in their review of the Funds’ performance is the Sharpe Ratio. The Sharpe Ratio is a risk-adjusted measure of performance developed by Nobel Laureate William Sharpe. It is calculated by dividing a fund’s annualized excess returns by its annualized standard deviation to determine reward per unit of risk. The higher the Sharpe Ratio, the better a fund’s historical risk-adjusted performance. The Board attaches primary importance to risk-adjusted performance over relatively long periods of time, typically three to ten years. Except as described below, all of the Funds fell in the first or second quartiles within the smallcap universe for the three-year, five-year and ten-year periods ended December 31, 2009. Royce Total Return Fund and Royce Opportunity Fund placed in the middle quintile for the three- and ten-year periods ended December 31, 2009 within their respective category. The trustees also noted that Royce Discovery Fund (“DSC”) placed in the fourth quartile for the three- and five-year periods ended December 31, 2009. In addition to each Fund’s risk-adjusted performance the trustees also reviewed and considered each Fund’s absolute total returns, down-market performance and, for the Funds in existence for such periods, long-term performance records over periods of ten years or longer. Since Royce SMid-Cap Value Fund (“RSV”) and Royce International Smaller-Companies Fund (“RIS”) each have limited operating histories, the trustees placed less emphasis on their performance but noted that, with respect to risk-adjusted performance and absolute total return for the one-year period ended December 31, 2009, they fell in the fourth quartile and second quartile, respectively, within their Morningstar peer categories. The trustees noted that R&A manages a number of funds that invest in small-cap and micro-cap issuers, many of which were outperforming the Russell 2000 Index and their competitors. Although the trustees recognized that past performance is not necessarily an indicator of future results, they found that R&A had the necessary qualifications, experience and track record in managing mid-cap, small-cap and micro-cap securities

| The Royce Funds 2010 Semiannual Report to Shareholders

to manage the Funds. The trustees determined that R&A continued to be an appropriate investment adviser for the Funds and concluded that each of the Funds’ performance supported the renewal of its Investment Advisory Agreement. Cost of the services provided and profits realized by R&A from its relationship with each Fund: The trustees considered the cost of the services provided by R&A and profits realized by R&A from its relationship with each Fund. As part of the analysis, the Board discussed with R&A its methodology in allocating its costs to each Fund and concluded that its allocations were reasonable. The trustees noted that at times R&A had closed certain of the Funds to new investors because of the rate of growth in Fund assets. The trustees concluded that R&A’s profits were reasonable in relation to the nature and quality of services provided. The extent to which economies of scale would be realized as the Funds grow and whether fee levels would reflect such economies of scale: The trustees considered whether there have been economies of scale in respect of the management of the Funds, whether the Funds have appropriately benefited from any economies of scale and whether there is potential for realization of any further economies of scale. The trustees noted the time and effort involved in managing portfolios of small- and micro-cap stocks and that they did not involve the same efficiencies as do portfolios of large-cap stocks. The trustees noted that in 2004 breakpoints had been added to the investment advisory fees for all Funds except Royce Pennsylvania Mutual Fund (“PMF”), (PMF’s fee schedule already had breakpoints) and that the contractual investment advisory fee rate for Royce Micro-Cap Fund (“RMC”) and Royce Low-Priced Stock Fund (“RLP”) had each been reduced in recent years. The trustees concluded that the current fee structure for each Fund was reasonable, and that no changes were currently necessary. Comparison of services to be rendered and fees to be paid to those under other investment advisory contracts, such as contracts of the same and other investment advisers or other clients: The trustees reviewed the investment advisory fee paid by each Fund and compared both the services to be rendered and the fees to be paid under the Investment Advisory Agreements to other contracts of R&A and to contracts of other investment advisers with registered investment companies investing in small- and micro-cap stocks, as provided by Morningstar. The trustees noted the importance of the net expense ratio in measuring a fund’s efficiency, particularly in light of the variations in the mutual fund industry as to who is responsible for which expenses. The net expense ratios for PMF, Royce Dividend Value Fund, Royce Financial Services Fund and DSC ranked within the first and second quartile among their peers, as selected by Morningstar. Royce Heritage Fund, Royce 100 Fund, Royce Global Value Fund (“RGV”), Royce European Smaller-Companies Fund and RSV fell in the middle quintile among their peers. Royce Premier Fund’s net expense ratio was five basis points greater than its peers but well below the category median. RMC placed in the third quartile within its peer group. RMC’s net expense ratio compares favorably against the average net expense ratio for non-institutional domestic stock funds in the Morningstar database with market caps below $500 million and 12b-1 fees equal to or less than 0.25%. It was noted that RLP’s net expense ratio was in the fourth quartile of its Morningstar peer group, 13 basis points higher than its peer group median. RLP’s higher management fee, reflecting the Fund’s use of low-priced and micro-cap stocks, which are harder to research and trade, accounts for this difference. Royce Special Equity Fund fell in the third quartile within its peer group, higher than its peer group

median but in the 2nd quartile and below the median within its category. The trustees noted that Royce Value Fund (“RVV”) similarly can account for its higher relative expense ratio by its management fee being 26 basis points higher than its peer group median. Similarly Royce Value Plus Fund (“RVP”) placed in the fourth quartile, 22 basis points higher than its peer group median. The management fees for RVV and RVP are consistent with the other Royce open-end Funds and their fund net expense ratios are three basis points below the median for all small-cap objective funds (noninstitutional, non-index) with 12b-1 fees of 25 basis points. It was noted that most of RGV’s peers are in large-cap style boxes per the Morningstar data. The trustees took into consideration the level of work necessary to invest in small-cap international securities is significantly greater than that necessary to invest in larger-cap securities, noting that the 34 basis point differential in management fee from the category median was appropriate given RGV’s true small-cap orientation. Similarly, RIS’s peers are also in the larger-cap style boxes. It was noted that the 25 basis point differential in the management fee from the category median was also appropriate for RIS given its true small-cap orientation. The trustees noted that Royce Partners Fund and Royce Focus Value Fund, which each commenced operations in 2009, have management fees and expense caps consistent with other Royce funds. The trustees noted that R&A has waived advisory fees in order to maintain expense ratios at competitive levels and acknowledged R&A’s intention to continue this expense limitation practice. The trustees also considered fees charged by R&A to institutional and other clients and noted that, given the greater levels of services that R&A provides to registered investment companies such as the Funds as compared to other accounts, each of the Funds’ advisory fees compared favorably to these other accounts. The entire Board, including all the non-interested trustees, determined to approve the renewal of the existing Investment Advisory Agreements, concluding that a contract renewal on the existing terms was in the best interest of the shareholders of each Fund and that each investment advisory fee rate was reasonable in relation to the services provided.

The Board of Trustees of The Royce Fund (the “Trust”), including a majority of the Trustees who are not parties to Royce Mid-Cap Fund’s (the “Fund”) Investment Advisory Agreement, or interested persons of any such party (“Independent Trustees”), have responsibility under the Investment Company Act of 1940 to approve the Fund’s proposed Investment Advisory Agreement for its initial term and its continuation annually thereafter at meetings of the Board called for the purpose of voting on such approvals. The Investment Advisory Agreement for the Fund was discussed at a meeting held on December 2-3, 2009 and was unanimously approved at such meeting for its initial term by the Board of Trustees, including the Independent Trustees. In considering whether to approve the Fund’s Investment Advisory Agreement, the Board reviewed the materials provided by Royce & Associates, LLC (“R&A”), which included, among other things, fee information for funds with profiles similar to the Fund, prepared by R&A using data provided by Morningstar Associates, LLC (“Morningstar”), information regarding the past performance of funds managed by R&A and a memorandum outlining the legal duties of the Board prepared by

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They also took into consideration the favorable history. the Fund would pay R&A 1.85% per annum of the Fund’s average net assets in excess of $6 billion.95% per annum of the next $2 billion of the Fund’s average net assets. The Independent Trustees could not consider the profitability of the Fund to R&A since the Fund was recently formed and had no operating history. Carl Brown. Rather.00% per annum of the first $2 billion of the Fund’s average net assets. 0.90% per annum of the next $2 billion of the Fund’s average net assets and 0. including the Independent Trustees. No single factor was determinative to the decision of the Board. the Independent Trustees compared both the services to be rendered and the fees to be paid under the Investment Advisory Agreement to other contracts of R&A and to contracts of other investment advisers to registered investment companies investing in mid-cap securities. the Board considered the following: (i) The nature.Board Approval of Investment Advisory Agreement (continued) counsel to the Independent Trustees. the Fund’s operating expense ratio would be slightly below the average net operating expense ratio of similar funds in the Morningstar material. Brendan Hartman and James Stoeffel who will serve as members of the portfolio management team for the Fund. Under its proposed Investment Advisory Agreement. Lastly. Additionally. The Board also met with advisory personnel from R&A. but not limited to. the Board. and that including the expense cap agreed to by R&A. The Independent Trustees determined that the services proposed for the Fund by R&A would be similar to those being provided to the other Funds in the Trust. Royce the amount of time that R&A would dedicate to the Fund. The Board considered factors relating to both the selection of the investment adviser and the approval of the advisory fee when reviewing the Investment Advisory Agreement. after weighing all of the factors discussed above. the Independent Trustees considered the advisory fees of other similar funds. reputation and background of W. the Independent Trustees noted R&A’s ability to attract quality and experienced personnel. In reviewing the proposed investment advisory fee for the Fund. They did review R&A’s performance for other Funds in the Trust. extent and quality of services to be provided by R&A: The Independent Trustees reviewed the services that R&A would provide to the Fund. including. In particular. such as contracts of the same and other investment advisers or other clients: As discussed above in (i) and (iii). the Independent Trustees could not consider the investment performance of the Fund. 162 | The Royce Funds 2010 Semiannual Report to Shareholders . generally managing the Fund’s investments in accordance with the stated policies of the Fund. the Independent Trustees considered the services provided by R&A to the other Funds in the Trust. but found that R&A had the necessary expertise to manage the Fund. as provided by Morningstar. it was noted that breakpoints would be in place to capture economies of scale as its assets grow. (iv) The extent to which economies of scale would be realized as the Fund grows and whether fee levels would reflect such economies of scale: The Independent Trustees noted that R&A did not currently expect the Fund to grow to a size that would allow the Fund to experience significant economies of scale. It was further noted that R&A had agreed to cap the expenses of the Fund at 1. The Independent Trustees concluded that the proposed investment advisory services of R&A to the Fund compared favorably to services provided by R&A for other Funds in the Trust and other R&A client accounts in both nature and quality. 0. They determined that R&A would be an appropriate investment adviser for the Fund. It was further noted that providing investment advisory services to a fund that will invest significant portions of its portfolio in mid-cap securities is expected to be more labor intensive and time consuming than providing investment advisory services to funds that invest in larger-capitalization securities. (v) Comparison of services to be rendered and fees to be paid to those under other investment advisory contracts. finding that these would likely have an impact on the success of the Fund. unanimously approved the Fund’s Investment Advisory Agreement. The Independent Trustees noted that the proposed investment advisory fee was higher than the median of similar funds in the Morningstar materials. (iii) Cost of the services to be provided and profits to be realized by R&A from its relationship with the Fund: The Independent Trustees considered the anticipated cost of the services to be provided by R&A to the Fund.49% of its average net assets for the first three years of operation. The Independent Trustees recognized that past performance is not an indicator of future performance. The Independent Trustees discussed with officers of R&A and Charles M. (ii) Investment performance of the Fund and R&A: Because the Fund was just being formed. Whitney George. The Independent Trustees concluded that the scope of services to be provided by R&A would be suitable for the Fund. However.

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but for any stock price to be considered for them to bear fruit in the form of a company’s rising share attractively low typically means one of two things: that much of price. quality is likely to vary considerably from manager to manager.’ Every ’70s focuses on absolute. puts it this way: “More often than successful—all of this makes having a high level of conviction not. then. while beating a strategy that.” we also realize that the terms otherwise seems to be in sound “value” and “growth” now carry so many financial condition. contrarians because every investor who uses a capital and the ability to generate free cash flow—are also not value approach is looking for what they judge to be good universally sought on Wall Street. as in may not have a firm idea of when their fortunes may be buying securities that are unpopular at the time. we might be doing things that other smart people are the only asset manager. add to the position? These for some people they may not go to are questions a contrarian investor the heart of what characterizes our must be able to answer if he or she time-tested style of asset management. “One who takes a commitment to doing what we think what other investors may be buying or contrary view or action. Whitney George. It requires an about companies an absolute necessity. All value investors are.” To us. especially an works best. but “contrarian” Our own habit of being contrarian also nicely encapsulates the way in comes not out of a desire to flout which we conduct our daily Our own habit of being contrarian comes conventional wisdom for its own sake. Patience is a rare commodity matter of moving in the opposite direction of the market. but from our what we think works best. if applied with no core investment principles of benchmark is wonderful. but the company our approach as “value investing. seeks to successfully go against Wall We won’t be dispensing with the term Street’s consensus. so we have to believe strongly in what we this standard. do as the Greeks. Away From The Crowd There is also the important factor of one’s investment time horizon—how long is one willing to wait for other investors to recognize those allegedly sterling qualities that first attracted Here at Royce. ‘These are bad ideas. (Not to value in these qualities may not be as willing as we are to wait belabor the obvious. “value” anytime soon. investors to build wealth over long-term time periods. being a contrarian means standing alone. a in equity investing. being a contrarian involves far more calendar. it also leaves The qualities that we most commonly seek in small-cap important questions unanswered.” – Kenneth Burke This page is not part of the 2010 Semiannual Report to Shareholders . “When in Rome. not out of a desire to flout conventional but from our commitment to doing The American Heritage Dictionary wisdom for its own sake.) Another issue is that how one determines company Which is exactly how we like it. enormous amount of self-confidence to buy securities when The disciplined approach that we have been refining since the the rest of the world is telling us. to adhere to insisting are wrong. in them necessarily useful or sound—that some cases. regardless of what other selling. even in the small-cap space. Although we regularly (and affectionately) define level—if the stock price continues to decline. It’s not just a of the full market or business cycle. it is still far less important than helping one’s own. we occasionally describe ourselves as contrarian one’s money and interest? Closely related to this is conviction investors. would almost certainly lead to financial disaster. much of Wall Street operates on a much narrower are buying. Purchasing small-cap stocks investor who makes decisions that investors may be buying or selling.How To Swim Upstream.” In defining reversed. when it may take years—and several more stomachour own contrarian bent. as useful as the dictionary definition is. This results in a relatively small number of people who the market believes it is not a worthwhile investment or that the share our passion for quality businesses as well as the patience to majority of investors have failed to even notice the company’s stick with them. Royce’s Co-Chief Investment churning plummets in the stock price—for an idea to be Officer. when they are out of favor. investment practice. to companies—strong balance sheets. In fact. Many investors who see the companies selling at attractively low share prices. even as others are busy following the pack. when we contradict prevailing wisdom. While we are hardly day. long-term returns. high returns on invested some degree. as is the idea that. regardless of defines contrarian as. does an investor varying shades of meaning—not all of have the stomach to stick it out or. Against The Grain. one in which quarterly results matter more than those than a willingness to swim against the current. existence.

we have chosen to concentrate on smallercompany investing by providing investors with a range of funds that take full advantage of this large and diverse sector. This review and report must be accompanied or preceded by a current prospectus for the Funds.and closed-end fund assets under management. 745 Fifth Avenue | New York.com General Information Additional Report Copies and Prospectus Inquiries (800) 221-4268 RIA Services Fund Materials and Performance Updates (800) 33-ROYCE (337-6923) Broker/Dealer Services Fund Materials and Performance Updates (800) 59-ROYCE (597-6923) Shareholder Services Transactions and Account Inquiries (800) 841-1180 Royce InfoLine 24-Hour Automated Telephone Service (800) 78-ROYCE (787-6923) 2009 JUNE 30.roycefunds. enjoys one of the longest tenures of any active mutual fund manager. our officers. Charles M. 11 assistant portfolio managers and analysts.com www. Royce.com/edelivery.roycefunds. Common Focus Our goal is to offer both individual and institutional investors the best available smaller-cap portfolios. This requires a thorough analysis of the financial and business dynamics of an enterprise. Co-Ownership Of Funds It is important that our employees and shareholders share a common financial goal. regardless of market movements and trends. Whitney George. our President and Co-Chief Investment Officer. Royce SMid-Cap al Royce Internation Fund panies Smaller-Com Royce Focus Value Fund Fund Royce Partners funds. Royce’s investment staff also includes Co-Chief Investment Officer W. as though we were purchasing the entire company. Royce & Associates is committed to the same small-company investing principles that have served us well for more than 35 years. 15 Portfolio Managers. Please read the prospectus carefully before investing or sending money. Consistent Discipline Our approach emphasizes paying close attention to risk and maintaining the same discipline. NY 10151 | (800) 221-4268 | www. employees and their families currently have approximately $113 million invested in The Royce Funds.royce OE-REP-0610 Royce T NUAL SEMIAN AND REPOR REVIEW OLDERS REH TO SHA . 2009 Royce Pennsylvan ia Mutual Fund Fund Royce Micro-Cap Premier Fund Stock Fund Fund Royce Low-Priced Royce Total Return Heritage Fund y Fund Fund Royce Royce Opportunit Special Equity Royce Royce Value Fund Value Plus Fund Royce Royce 100 Fund Discovery Fund Services Fund Royce Royce Financial Royce Dividend Value Fund Fund Royce European mpanies Smaller-Co Royce Global Value Fund Value Fund Go Paperless. Unlike a lot of mutual fund groups with broad product offerings.Wealth Of Experience With approximately $29 billion in open. Multiple Funds. and eight traders. Sign up for eDelivery at www. The price we pay for a security must be significantly below our appraisal of its current worth.

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