TAX INFORMATION: The cost of total investments for Federal income tax purposes was $298,129,108. At March 31, 2011, net unrealized appreciation for all securities was $98,572,302, consisting of aggregate gross unrealized appreciation of $122,624,353 and aggregate gross unrealized depreciation of $24,052,051. The primary difference between book and tax basis cost is the timing of the recognition of losses on securities sold.

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

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


Level 1	–	quoted prices in active markets for identical securities.
Level 2	–	other significant observable inputs (including quoted prices for similar securities, foreign securities that may be fair valued and repurchase agreements). The table below includes all Level 2 securities. Level 2 securities with values based on quoted prices for similar securities are noted in the Schedule of Investments.
Level 3	–	significant unobservable inputs (including the 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.

The following is a summary of the inputs used to value the Fund’s investments as of March 31, 2011. For a detailed breakout of common stocks by sector classification, please refer to the Schedule of Investments.


	Level 1	Level 2	Level 3	Total
Common stocks	$293,908,664	$36,265,050	$456,589	$330,630,303
Preferred stocks	–	1,350,464	–	1,350,464
Cash equivalents	7,070,643	57,650,000	–	64,720,643

Level 3 Reconciliation:

Balance as of 12/31/10

Purchases

Transfers Out

Sales

Realized and Unrealized Gain (Loss)

Balance as of 3/31/11

Common stocks

$36,229

$459,067

$–

$(38,707)

$456,589

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

Securities Lending:
The Fund loans securities to qualified institutional investors for the purpose of realizing additional income. Collateral for the Fund on all securities loaned is accepted in cash and cash equivalents and invested temporarily by the custodian. The collateral maintained is at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund retains 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.

Other information regarding the Fund is available in the Fund’s most recent Report to Stockholders. This information is available through The Royce Funds (www.roycefunds.com) and on the Securities and Exchange Commission’s website (www.sec.gov).


^a	All or a portion of these securities were on loan at March 31, 2011. Total market value of loaned securities at March 31, 2011 was $6,869,352.
^b	Non-income producing.
^c	Securities for which market quotations are not readily available represent 0.1% of net assets. These securities have been valued at their fair value under procedures approved by the Fund’s Board of Directors. These securities are defined as Level 3 securities due to the use of significant unobservable inputs in the determination of fair value.
^d	These securities are defined as Level 2 securities due to fair value being based on quoted prices for similar securities.
^e	Includes securities first acquired in 2011 and less than 1% of net assets applicable to Common Stockholders.


	SHARES		VALUE
COMMON STOCKS – 100.3%

Consumer Discretionary – 12.4%
Auto Components - 1.5%
China XD Plastics ^a,b	65,500	$	341,255
Drew Industries	122,000		2,724,260
Fuel Systems Solutions ^a,b	10,000		301,800
Norstar Founders Group ^b,c	771,500		36,202
SORL Auto Parts ^b	55,113		333,985
Williams Controls	125,000		1,382,500

			5,120,002

Distributors - 0.3%
Weyco Group	48,000		1,174,080

Diversified Consumer Services - 0.3%
ChinaCast Education ^a,b	105,100		661,079
Lincoln Educational Services	11,200		177,968
Spectrum Group International ^a,b,d	6,925		19,390

			858,437

Household Durables - 2.8%
Cavco Industries ^b	3,091		139,590
CSS Industries	20,243		381,580
Ethan Allen Interiors	81,600		1,787,040
Flexsteel Industries	172,500		2,613,375
Hanssem	33,400		421,706
Koss Corporation	73,400		547,564
Natuzzi ADR ^b	409,800		1,893,276
Universal Electronics ^b	47,200		1,395,232

			9,179,363

Internet & Catalog Retail - 1.2%
Geeknet ^a,b	87,500		2,327,500
NutriSystem	19,100		276,759
US Auto Parts Network ^b	140,900		1,225,830

			3,830,089

Leisure Equipment & Products - 0.4%
Leapfrog Enterprises Cl. A ^b	106,200		458,784
Sturm, Ruger & Co.	32,000		735,040

			1,193,824

Media - 0.6%
Global Sources ^b	29,605		344,306
Rentrak Corporation ^b	45,000		1,211,400
Value Line	32,487		480,808

			2,036,514

Specialty Retail - 3.9%
America’s Car-Mart ^b	92,800		2,392,384
Charming Shoppes ^b	709,200		3,021,192
Dickson Concepts (International)	812,800		603,966
Kirkland’s ^b	43,900		677,816
Le Chateau Cl. A	44,000		508,757
Lewis Group	57,000		627,716
Shoe Carnival ^b	12,752		357,694
Stein Mart	178,900		1,808,679
Systemax ^b	102,000		1,379,040
West Marine ^b	86,000		896,980
Wet Seal (The) Cl. A ^b	154,679		662,026

			12,936,250

Textiles, Apparel & Luxury Goods - 1.4%
J.G. Boswell Company ^d	2,490		2,016,900
K-Swiss Cl. A ^b	72,400		815,948
Movado Group ^b	77,633		1,139,652
True Religion Apparel ^b	15,000		352,050
Yamato International	40,000		183,217

			4,507,767

Total			40,836,326


Consumer Staples – 3.5%
Beverages - 0.4%
Heckmann Corporation ^a,b	200,000		1,310,000

Food & Staples Retailing - 0.1%
Winn-Dixie Stores ^b	50,000		357,000

Food Products - 2.7%
Asian Citrus Holdings	1,060,000		1,171,941
Binggrae	13,400		791,577
BW Plantation	1,281,600		172,205
Farmer Bros.	51,400		622,968
Griffin Land & Nurseries	40,271		1,295,921
Origin Agritech ^a,b	121,488		935,457
Seneca Foods Cl. A ^b	51,400		1,535,318
Seneca Foods Cl. B ^b	42,500		1,261,825
Westway Group ^b	220,000		979,000
Yuhe International ^b	39,422		262,550

			9,028,762

Household Products - 0.1%
Oil-Dri Corporation of America	10,000		213,000

Personal Products - 0.2%
China-Biotics ^a,b	14,500		116,435
Schiff Nutrition International Cl. A	72,928		664,374

			780,809

Total			11,689,571


Energy – 5.0%
Energy Equipment & Services - 3.8%
CE Franklin ^b	55,450		548,955
Dawson Geophysical ^b	53,213		2,334,986
Global Geophysical Services ^b	35,000		506,100
Gulf Island Fabrication	29,116		936,662
Lamprell	202,400		1,144,532
North American Energy Partners ^b	50,000		616,500
OYO Geospace ^b	7,130		702,875
Pason Systems	139,200		2,261,372
Pioneer Drilling ^b	57,500		793,500
Tesco Corporation ^b	50,000		1,097,500
Willbros Group ^b	131,100		1,431,612

			12,374,594

Oil, Gas & Consumable Fuels - 1.2%
Approach Resources ^b	12,000		403,200
BPZ Resources ^a,b	164,000		870,840
Credo Petroleum ^a,b	98,000		1,253,420
GeoMet ^a,b	75,000		123,000
GeoResources ^b	17,900		559,733
Uranerz Energy ^a,b	29,000		92,510
VAALCO Energy ^b	88,200		684,432

			3,987,135

Total			16,361,729


Financials – 16.9%
Capital Markets - 7.2%
ASA Gold and Precious Metals	30,000		951,000
BKF Capital Group ^b,d	130,200		139,314
Cohen & Steers	27,900		828,072
Cowen Group Cl. A ^b	402,834		1,615,364
Diamond Hill Investment Group	34,479		2,758,320
Duff & Phelps Cl. A	50,000		799,000
Epoch Holding Corporation	196,500		3,100,770
FBR Capital Markets ^b	326,600		1,169,228
Fiera Sceptre	78,000		661,331
INTL FCStone ^b	26,310		668,800
JZ Capital Partners	293,999		1,877,099
MVC Capital	126,200		1,731,464
NGP Capital Resources	98,649		950,976
Queen City Investments ^d	948		948,010
Sanders Morris Harris Group	209,000		1,674,090
U.S. Global Investors Cl. A	91,500		742,065
Urbana Corporation ^b	237,600		345,555
Virtus Investment Partners ^b	45,000		2,651,400

			23,611,858

Commercial Banks - 1.9%
BCB Holdings ^b	806,207		989,387
Chemung Financial	40,000		938,000
Commercial National Financial	20,000		377,200
Fauquier Bankshares	135,800		1,880,830
Financial Institutions	36,000		630,000
First Bancorp	40,200		613,050
LCNB Corporation	30,000		351,000
Mechanics Bank	5		59,625
Orrstown Financial Services	12,700		355,600

			6,194,692

Consumer Finance - 0.1%
World Acceptance ^b	7,900		515,080

Diversified Financial Services - 0.9%
Banca Finnat Euramerica	910,000		612,585
Bolsa Mexicana de Valores	300,000		631,555
PICO Holdings ^b	45,700		1,373,742
World Energy Solutions ^a,b	72,920		302,618

			2,920,500

Insurance - 1.3%
Hilltop Holdings ^b	101,400		1,018,056
Independence Holding	95,800		764,484
Presidential Life	188,100		1,792,593
SeaBright Holdings	74,000		758,500

			4,333,633

Real Estate Investment Trusts (REITs) - 1.2%
Colony Financial	139,717		2,630,871
PennyMac Mortgage Investment Trust	64,200		1,180,638
Vestin Realty Mortgage II ^b	214,230		332,057

			4,143,566

Real Estate Management & Development - 3.4%
Avatar Holdings ^b	18,104		358,278
Consolidated-Tomoka Land	56,750		1,838,700
IFM Investments ADR ^b	58,885		209,042
Kennedy-Wilson Holdings ^b	465,358		5,053,788
Tejon Ranch ^b	101,749		3,738,258
ZipRealty ^b	25,000		72,500

			11,270,566

Thrifts & Mortgage Finance - 0.9%
Alliance Bancorp, Inc. of Pennsylvania	41,344		444,861
BofI Holding ^a,b	93,400		1,449,568
CFS Bancorp	75,000		421,500
HopFed Bancorp	56,100		516,120

			2,832,049

Total			55,821,944


Health Care – 7.3%
Biotechnology - 0.3%
Sinovac Biotech ^b	51,900		235,107
3SBio ADR ^b	26,280		454,381
Vical ^b	120,000		355,200

			1,044,688

Health Care Equipment & Supplies - 3.9%
Allied Healthcare Products ^b	226,798		988,839
Atrion Corporation	6,500		1,134,055
CryoLife ^b	50,573		308,495
DynaVox Cl. A ^b	20,000		110,400
Exactech ^b	121,000		2,123,550
Hansen Medical ^a,b	320,000		707,200
Kensey Nash ^b	27,078		674,513
Medical Action Industries ^b	165,950		1,393,980
NMT Medical ^b,d	198,500		32,753
STRATEC Biomedical Systems	14,000		559,510
Syneron Medical ^b	69,200		902,368
Theragenics Corporation ^b	306,900		644,490
Utah Medical Products	42,300		1,224,162
Young Innovations	61,450		1,929,530

			12,733,845

Health Care Providers & Services - 1.1%
Bangkok Chain Hospital	1,350,000		316,912
Continucare Corporation ^b	126,200		675,170
Gentiva Health Services ^b	23,000		644,690
LHC Group ^b	14,800		444,000
PDI ^b	65,383		530,256
PharMerica Corporation ^b	40,000		457,600
Psychemedics Corporation	37,500		414,375
U.S. Physical Therapy	10,000		223,400

			3,706,403

Health Care Technology - 0.2%
Transcend Services ^b	18,900		453,600

Life Sciences Tools & Services - 0.6%
EPS	410		959,690
Furiex Pharmaceuticals ^b	23,758		401,035
PAREXEL International ^b	28,800		717,120

			2,077,845

Pharmaceuticals - 1.2%
Adolor Corporation ^b	460,500		649,305
Bukwang Pharmaceutical	44,700		525,667
Daewoong Pharmaceutical	11,904		482,910
Hi-Tech Pharmacal ^a,b	19,000		382,470
Obagi Medical Products ^b	82,200		1,039,008
XenoPort ^b	145,000		859,850

			3,939,210

Total			23,955,591


Industrials – 26.5%
Aerospace & Defense - 1.8%
Ducommun	72,100		1,723,190
HEICO Corporation	42,000		2,625,840
Innovative Solutions and Support ^b	100,000		585,000
SIFCO Industries	45,800		814,324

			5,748,354

Air Freight & Logistics - 0.5%
Forward Air	50,700		1,552,941
Pacer International ^b	35,000		184,100

			1,737,041

Building Products - 3.7%
AAON	73,000		2,401,700
American Woodmark	72,000		1,503,360
Apogee Enterprises	57,900		763,701
Burnham Holdings Cl. A ^d	113,000		1,695,000
Griffon Corporation ^b	89,500		1,175,135
NCI Building Systems ^b	8,400		106,428
Sung Kwang Bend	28,000		421,168
Trex Company ^b	90,000		2,935,800
WaterFurnace Renewable Energy	48,400		1,216,115

			12,218,407

Commercial Services & Supplies - 2.7%
CompX International Cl. A	107,500		1,694,200
Courier Corporation	30,450		425,082
Ennis	12,600		214,578
Heritage-Crystal Clean ^b	166,401		2,371,214
Interface Cl. A	27,000		499,230
Team ^b	71,140		1,868,137
US Ecology	104,300		1,817,949

			8,890,390

Construction & Engineering - 1.2%
Baker (Michael) ^b	19,000		552,330
Comfort Systems USA	32,896		462,847
Integrated Electrical Services ^b	277,300		953,912
Layne Christensen ^b	7,400		255,300
MYR Group ^b	28,500		681,720
Pike Electric ^b	61,600		586,432
Sterling Construction ^b	25,000		422,000

			3,914,541

Electrical Equipment - 2.7%
AZZ	18,247		832,063
Deswell Industries	564,371		1,681,826
Encore Wire	15,000		365,100
Fushi Copperweld ^a,b	152,363		1,221,951
Jinpan International	143,624		1,683,273
LSI Industries	79,812		577,839
Powell Industries ^b	39,800		1,569,712
Preformed Line Products	16,000		1,106,720

			9,038,484

Industrial Conglomerates - 1.1%
Raven Industries	58,400		3,586,928

Machinery - 6.5%
Armstrong Industrial	2,082,300		660,785
CIRCOR International	14,000		658,280
Columbus McKinnon ^b	26,050		480,883
Eastern Company (The)	39,750		760,020
FAG Bearings India	23,700		444,823
Force Protection ^b	88,700		434,630
Foster (L.B.) Company Cl. A	20,900		900,999
FreightCar America ^b	53,300		1,732,783
Graham Corporation	65,100		1,558,494
Hurco Companies ^b	49,866		1,520,913
NN ^b	114,300		2,087,118
PMFG ^b	143,800		3,068,692
Semperit AG Holding	12,500		727,112
Sun Hydraulics	58,925		2,539,668
Tennant Company	92,300		3,880,292

			21,455,492

Professional Services - 3.7%
Acacia Research-Acacia Technologies ^b	23,500		804,170
Advisory Board (The) ^b	41,400		2,132,100
CBIZ ^b	47,000		338,870
Exponent ^b	58,400		2,605,224
Heidrick & Struggles International	20,000		556,600
JobStreet Corporation	50,000		43,417
Kforce ^b	60,000		1,098,000
On Assignment ^b	41,100		388,806
SFN Group ^b	300,000		4,227,000

			12,194,187

Road & Rail - 1.8%
Frozen Food Express Industries ^b	157,000		543,220
Patriot Transportation Holding ^b	111,681		2,987,467
Universal Truckload Services ^b	134,200		2,314,950

			5,845,637

Trading Companies & Distributors - 0.8%
Aceto Corporation	72,219		575,585
Houston Wire & Cable	67,375		985,023
Lawson Products	50,269		1,158,198

			2,718,806

Total			87,348,267


Information Technology – 17.6%
Communications Equipment - 1.1%
Anaren ^b	8,000		160,800
Bel Fuse Cl. A	67,705		1,624,243
Cogo Group ^b	113,575		916,550
PC-Tel ^b	44,100		338,247
Zhone Technologies ^b	266,320		612,536

			3,652,376

Computers & Peripherals - 1.5%
Imation Corporation ^b	112,312		1,251,156
Novatel Wireless ^b	34,900		190,554
Rimage Corporation	79,200		1,279,080
Super Micro Computer ^b	71,254		1,142,914
TransAct Technologies ^b	78,600		939,270

			4,802,974

Electronic Equipment, Instruments & Components - 6.1%
Agilysys ^b	90,000		516,600
Diguang International Development ^b	230,000		34,500
Diploma	50,000		256,672
Domino Printing Sciences	80,000		809,158
Frequency Electronics ^b	175,000		1,795,500
Hana Microelectronics	500,000		396,760
Hollysys Automation Technologies ^a,b	107,100		1,424,430
Inficon Holding	3,600		754,491
Mercury Computer Systems ^b	20,900		442,244
Mesa Laboratories	48,267		1,378,988
Methode Electronics	28,400		343,072
Newport Corporation ^b	80,900		1,442,447
Park Electrochemical	15,400		496,650
Pulse Electronics	150,000		907,500
Research Frontiers ^a,b	30,150		205,623
Richardson Electronics	250,900		3,306,862
Rogers Corporation ^b	58,400		2,631,504
SMART Modular Technologies (WWH) ^b	128,600		999,222
TTM Technologies ^b	114,400		2,077,504

			20,219,727

Internet Software & Services - 1.0%
CryptoLogic ^a,b	88,300		145,695
iPass	354,147		552,469
Marchex Cl. B	95,000		747,650
Support.com ^b	215,000		1,115,850
WebMediaBrands ^b	525,000		735,000

			3,296,664

IT Services - 4.6%
Cass Information Systems	15,000		589,350
Computer Task Group ^b	236,100		3,137,769
Forrester Research	54,900		2,102,121
iGATE Corporation	81,200		1,524,124
Innodata Isogen ^b	593,832		1,437,074
Integral Systems ^b	123,000		1,496,910
Sapient Corporation ^b	350,000		4,007,500
Virtusa Corporation ^b	6,475		121,277
Yucheng Technologies ^b	144,944		581,225

			14,997,350

Semiconductors & Semiconductor Equipment - 1.2%
Advanced Analogic Technologies ^b	80,000		302,400
Exar Corporation ^b	261,208		1,572,472
Himax Technologies ADR	159,468		377,939
Integrated Silicon Solution ^b	116,400		1,079,028
PLX Technology ^b	80,000		292,000
Rudolph Technologies ^b	28,900		316,166

			3,940,005

Software - 2.1%
ACI Worldwide ^b	69,600		2,282,880
Actuate Corporation ^b	207,500		1,079,000
American Software Cl. A	78,400		578,592
Fundtech ^b	51,000		887,400
Pegasystems	49,000		1,859,060
S1 Corporation ^b	60,000		400,800

			7,087,732

Total			57,996,828


Materials – 8.3%
Chemicals - 2.1%
Balchem Corporation	63,375		2,377,830
Hawkins	44,866		1,843,095
Landec Corporation ^b	60,300		391,950
Quaker Chemical	53,700		2,157,129

			6,770,004


Construction Materials - 0.8%
Ash Grove Cement ^d	8,000		1,344,000
Monarch Cement	52,303		1,320,651

			2,664,651

Metals & Mining - 4.6%
Aurizon Mines ^b	47,000		330,410
Central Steel & Wire ^d	1,088		701,760
Chesapeake Gold ^b	20,000		251,676
Endeavour Mining ^a,b	618,200		1,657,886
Endeavour Mining (Warrants) ^b	50,000		46,416
Exeter Resource ^b	140,000		747,600
Extorre Gold Mines ^b	140,000		840,000
Gammon Gold ^b	74,636		779,946
Haynes International	14,100		781,845
Horsehead Holding Corporation ^b	65,000		1,108,250
MAG Silver ^b	74,750		891,767
Materion Corporation ^b	27,000		1,101,600
Midway Gold ^b	345,000		621,000
Minefinders Corporation ^b	36,000		474,120
Northgate Minerals ^b	270,000		729,000
Olympic Steel	22,000		721,820
Ossen Innovation ADR ^b	90,000		314,100
RTI International Metals ^b	25,000		778,750
Seabridge Gold ^b	16,700		531,394
Sprott Resource ^b	104,400		578,265
Synalloy Corporation	58,200		749,034
Victoria Gold ^b	200,000		169,159
Vista Gold ^a,b	50,000		200,000

			15,105,798

Paper & Forest Products - 0.8%
Pope Resources L.P.	51,205		2,393,834
QX Paper ^c	1,500,000		420,387

			2,814,221

Total			27,354,674


Telecommunication Services – 0.6%
Diversified Telecommunication Services - 0.6%
Atlantic Tele-Network	7,500		278,925
Neutral Tandem ^b	123,500		1,821,625

Total			2,100,550


Utilities – 0.2%
Independent Power Producers & Energy Traders - 0.2%
China Hydroelectric ADS ^a,b	83,100		603,306

Total			603,306


Miscellaneous^e – 2.0%
Total			6,561,517


TOTAL COMMON STOCKS
(Cost $232,415,274)			330,630,303


PREFERRED STOCK – 0.4%
Seneca Foods Conv.^b,d
(Cost $578,719)	45,409		1,350,464


REPURCHASE AGREEMENT – 17.5%
State Street Bank & Trust Company, 0.04% dated 3/31/11, due 4/1/11, maturity value $57,650,064 (collateralized by obligations of various U.S. Government Agencies, 0.58%-0.70% due 5/27/11-6/1/11, valued at $59,094,800) (Cost $57,650,000)			57,650,000


COLLATERAL RECEIVED FOR SECURITIES LOANED – 2.2%
Money Market Funds Federated Government Obligations Fund (7 day yield-0.009864%) (Cost $7,070,643)			7,070,643


TOTAL INVESTMENTS – 120.4%
(Cost $297,714,636)			396,701,410

LIABILITIES LESS CASH AND OTHER ASSETS – (2.2)%			(7,205,966	)

PREFERRED STOCK – (18.2)%			(60,000,000	)


NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS – 100.0%		$	329,495,444