COMMON STOCKS – 95.3%

Consumer Products – 11.9%

Apparel, Shoes and Accessories - 4.1%

Fossil ^a,b

Timberland Company (The) Cl. A ^b

Food/Beverage/Tobacco - 2.2%

Sanderson Farms

Health, Beauty and Nutrition - 1.7%

Nu Skin Enterprises Cl. A

Sports and Recreation - 3.9%

Thor Industries

Winnebago Industries

Total

Consumer Services – 2.4%

Retail Stores - 2.4%

Men’s Wearhouse (The)

Williams-Sonoma

Total

Financial Intermediaries – 6.1%

Banking - 1.1%

BB Holdings ^b

Insurance - 1.4%

American International Group ^a

Securities Brokers - 2.7%

Knight Capital Group Cl. A ^b

Other Financial Intermediaries - 0.9%

KKR Financial Holdings

Total

Financial Services – 4.3%

Investment Management - 4.3%

Endeavour Financial

U.S. Global Investors Cl. A

Total

Health – 4.3%

Drugs and Biotech - 3.6%

Endo Pharmaceuticals Holdings ^a,b

Lexicon Pharmaceuticals ^a,b

ULURU ^b

Medical Products and Devices - 0.7%

Caliper Life Sciences ^a,b

Total

Industrial Products – 20.6%

Building Systems and Components - 2.6%

Simpson Manufacturing

Machinery - 3.7%

Lincoln Electric Holdings

Woodward Governor

Metal Fabrication and Distribution - 9.8%

Kennametal

Reliance Steel & Aluminum

Schnitzer Steel Industries Cl. A

Sims Group ADR

Miscellaneous Manufacturing - 1.2%

Rational

Pumps, Valves and Bearings - 3.3%

Gardner Denver ^b

Pfeiffer Vacuum Technology

Total

Industrial Services – 7.3%

Commercial Services - 3.5%

CRA International ^b

Korn/Ferry International ^b

Universal Technical Institute ^b

Food, Tobacco and Agriculture - 1.8%

Industrias Bachoco ADR

Transportation and Logistics - 2.0%

Arkansas Best

Total

Natural Resources – 26.5%

Ensign Energy Services

Major Drilling Group International

Pason Systems

Tesco Corporation ^a,b

Trican Well Service

Unit Corporation ^b

Precious Metals and Mining - 12.2%

Alamos Gold ^b

Allied Nevada Gold ^b

Fronteer Development Group ^b

Gammon Gold ^b

Ivanhoe Mines ^b

Pan American Silver ^b

Silver Standard Resources ^a,b

Total

Technology – 11.9%

Aerospace and Defense - 2.7%

Ceradyne ^a,b

Components and Systems - 2.7%

MKS Instruments ^a,b

Semiconductors and Equipment - 4.7%

Lam Research ^a,b

Sigma Designs ^b

Telecommunications - 1.8%

ADTRAN

Total

TOTAL COMMON STOCKS

(Cost $126,970,638)

PREFERRED STOCK – 6.2%

Kennedy-Wilson Conv. ^c,d

(Cost $9,000,000)

GOVERNMENT BOND – 6.0%

(Principal Amount shown in local currency)

Australia 7.50%

due 9/15/09

(Cost $8,401,180)

REPURCHASE AGREEMENT – 11.1%

State Street Bank & Trust Company,
0.20% dated 9/30/08, due 10/1/08,
maturity value $14,819,082 (collateralized
by obligations of various U.S. Government
Agencies, valued at $15,194,256)

(Cost $14,819,000)

COLLATERAL RECEIVED FOR SECURITIES LOANED – 7.7%

Money Market Funds
State Street Navigator Securities
Lending Prime Portfolio (7 day yield- 2.7654%)

(Cost $10,330,034)

TOTAL INVESTMENTS – 126.3%

(Cost $169,520,852)

LIABILITIES LESS CASH AND OTHER ASSETS – (7.7)%

PREFERRED STOCK – (18.6)%

NET ASSETS APPLICABLE TO COMMON

STOCKHOLDERS – 100.0%

All or a portion of these securities were on loan at September 30, 2008. Total market of loaned securities at September 30, 2008 was $10,391,815.

^c

A security for which market quotations are not readily available represents 6.2% of net assets. This security has been valued at its fair value under procedures established by the Fund’s Board of Directors.

This security, and the common stock into which the security is convertible, are not and will not be registered under the Securities Act of 1933 and related rules (“restricted security”). Accordingly, such securities may not be offered, sold, transferred or delivered, directly or indirectly, unless (i) such shares are registered under the Securities Act and any other applicable state securities laws, or (ii) an exemption from registration under the Securities Act and any other applicable state securities laws is available.

TAX INFORMATION: The cost of total investments for Federal income tax purposes was $169,562,516. At September 30, 2008, net unrealized depreciation for all securities was $(35,585), consisting of aggregate gross unrealized appreciation of $19,082,673 and aggregate gross unrealized depreciation of $19,118,258. 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. Securities for which market quotations are not readily available are valued at their fair value under procedures established by the 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. Bonds and other fixed income securities may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. Investments in money market funds are valued at net asset value per share.

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)

Level 3 – significant observable inputs (including the Fund’s own assumptions in determining the fair value of investments)

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.

The Fund loans securities to qualified institutional investors for the purpose of realizing additional income. Collateral on all securities loaned for the Fund is accepted in cash and cash equivalents and invested temporarily by the custodian. The collateral is equal to 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.

Other information regarding the Fund is available in the Fund’s most recent Prospectus and 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).