UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
     
FORM N-CSR
     
CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
     
Investment Company Act file number: 811-04875
     
Name of Registrant: Royce Value Trust, Inc.
     
Address of Registrant: 1414 Avenue of the Americas
New York, NY 10019
     
Name and address of agent for service:   John E. Denneen, Esquire
    1414 Avenue of the Americas
    New York, NY 10019
     
Registrant’s telephone number, including area code: (212) 486-1445
Date of fiscal year end: December 31
Date of reporting period: January 1, 2008 – June 30, 2008
     
     
Item 1. Reports to Stockholders    








   
  Royce Value Trust


Royce Micro-Cap Trust


Royce Focus Trust






































 
SEMIANNUAL
REVIEW AND REPORT

TO STOCKHOLDERS
 
 
 
 


www.roycefunds.com




     



A Few Words on Closed-End Funds


     
     
 
Royce & Associates, LLC manages three closed-end funds: Royce Value Trust, the first small-cap value closed-end fund offering; Royce Micro-Cap Trust, the only micro-cap closed-end fund; and Royce Focus Trust, a closed-end fund that invests in a limited number of primarily small-cap companies.
 
     
 
A closed-end fund is an investment company whose shares are listed and traded on a stock exchange. Like all investment companies, including open-end mutual funds, the assets of a closed-end fund are professionally managed in accordance with the investment objectives and policies approved by the fund’s Board of Directors. A closed-end fund raises cash for investment by issuing a fixed number of shares through initial and other public offerings that may include shelf offerings and periodic rights offerings. Proceeds from the offerings are invested in an actively managed portfolio of securities. Investors wanting to buy or sell shares of a publicly traded closed-end fund after the offerings must do so on a stock exchange, as with any publicly traded stock. This is in contrast to open-end mutual funds, in which the fund sells and redeems its shares on a continuous basis.
 
     
     



A Closed-End Fund Offers Several Distinct Advantages Not Available From An Open-End Fund Structure
           
n
Since a closed-end fund does not issue redeemable securities or offer its securities on a continuous basis, it does not need to liquidate securities or hold uninvested assets to meet investor demands for cash redemptions, as an open-end fund must.
    n
The fixed capital structure allows permanent leverage to be employed as a means to enhance capital appreciation potential.
           
n
In a closed-end fund, not having to meet investor redemption requests or invest at inopportune times is ideal for value managers who attempt to buy stocks when prices are depressed and sell securities when prices are high.
    n
Unlike Royce’s open-end funds, our closed-end funds are able to distribute capital gains on a quarterly basis. Each of the Funds has adopted a quarterly distribution policy for its common stock.
           
n
A closed-end fund may invest more freely in less liquid portfolio securities because it is not subject to potential stockholder redemption demands. This is particularly beneficial for Royce-managed closed-end funds, which invest in small- and micro-cap securities.
   
We believe that the closed-end fund structure is very suitable for the long-term investor who understands the benefits of a stable pool of capital.



 
Why Dividend Reinvestment Is Important
 
 

A very important component of an investor’s total return comes from the reinvestment of distributions. By reinvesting distributions, our investors can maintain an undiluted investment in a Fund. To get a fair idea of the impact of reinvested distributions, please see the charts on pages 13, 15 and 17. For additional information on the Funds’ Distribution Reinvestment and Cash Purchase Options and the benefits for stockholders, please see page 19 or visit our website at www.roycefunds.com.
 
     
     
 
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Table of Contents


Semiannual Review    

Performance Table   2
 
Letter to Our Stockholders   3
 
Small-Cap Market Cycle Performance   10
 
Postscript: Freeway Jam   Inside Back Cover

Semiannual Report to Stockholders   11
 

For more than 30 years, we have used a value approach to invest in smaller-cap securities. We focus primarily on the quality of a company’s balance sheet, its ability to generate free cash flow and other measures of profitability or sound financial condition. At times, we may also look at other factors, such as a company’s unrecognized asset values, its future growth prospects or its turnaround potential following an earnings disappointment or other business difficulties. We then use these factors to assess the company’s current worth, basing the assessment on either what we believe a knowledgeable buyer might pay to acquire the entire company, or what we think the value of the company should be in the stock market.

















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Performance Table    

 
NAV Average Annual Total Returns   Through June 30, 2008

            Royce   Royce   Royce  
            Value Trust   Micro-Cap Trust   Focus Trust Russell 2000

  Second Quarter 2008*         -1.12 %   -1.21 %       8.03 % 0.58 %

  Year-to-Date 2008*         -11.67     -11.70         2.28   -9.37  

  One-Year         -15.53     -18.64         -1.01   -16.19  

  Three-Year         7.05     5.62         17.18   3.79  

  Five-Year         12.55     12.44         20.52   10.29  

  10-Year         9.49     9.70         12.83   5.53  

  15-Year         11.68     n/a         n/a   8.92  

  20-Year         12.06     n/a         n/a   9.48  

  Since Inception         11.65     12.08         13.73   —     

  Inception Date                11/26/86                12/14/93              11/1/96** —     



Important Performance and Risk Information

All performance information in this Review and Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when sold. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. The Royce Funds invest primarily in securities of small-cap and/or micro-cap companies, which may involve considerably more risk than investments in securities of larger-cap companies.

The thoughts expressed in this Review and Report to Stockholders concerning recent market movements and future prospects for small-company stocks are solely the opinion of Royce at June 30, 2008, 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, 2008 and are subject to change at any time without notice. There can be no assurance that securities mentioned in this Review and Report to Stockholders will be included in any Royce-managed portfolio in the future.


  *Not annualized.
**Date Royce & Associates, LLC assumed investment management responsibility for the Fund.
 
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Letter to Our Stockholders      

     
     
Ballad of a Thin Market      
The first six months of 2008 gave even the most serene investor cause for anxiety, if not outright panic. First, a long list of worries ushered in the new year: the credit crisis, housing bubble, subprime implosion, falling dollar, stumbling equity prices, and an economy in either a full-blown recession or “merely” stalled. By the end of June, one could add to this list rapidly rising oil prices and associated energy costs. And we would be remiss if we did not also mention that smaller-company stock prices, after rallying from mid- March through early June, spent most of that latter month swooning. Indeed, share price declines throughout the market were so severe that on July 1 several media outlets were trotting out comparisons to the 1930s, since June saw the worst respective one-month losses for both the Dow Jones Industrial Average and the S&P 500 since the Great Depression.
  Both domestically and internationally, we
have seen a large number of what we believe
are superb values emerge in our asset class.
As is often the case with value investing,
patience and discipline will be critical as we
wait for the markets to rebound.
 
     Each of the formidable problems besetting the economy and financial markets remained unsolved as the year crept nervously to its midpoint, with little in the way of solutions on the immediate horizon. For anyone expecting good news soon about these matters, we can offer only sympathy. It will probably take some time before genuine improvement begins. We do not mean to imply that we like being where we are, only that a measured look at the current landscape suggests that most equities will need
     
       

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We are contrarians. To us, the term
has always been synonymous with
value investor. Our research screens
include searches for well-run
businesses whose stock prices have
fallen, which typically leads us to
companies, and often entire
industries, that others have recently
fled or are otherwise happy to ignore
.

Searching among the neglected and
broken in the smaller-company world
for new investment ideas not only
helps us to find potential hidden
gems, it also helps to lower
portfolio risk. Companies whose stock
prices have been beaten up by
mass sell-offs often carry very low
expectations (and price risk)
,
especially once the smoke has cleared
and former stockholders have moved
on. Although there’s always the risk
of additional stock price erosion if a
company’s fortunes worsen or an
industry’s prospects grow dimmer
,
we try to use falling stock prices to
our advantage; it is common for us
to add to positions at such times
(provided, of course, that our
long-term outlook for the company
remains positive)
.

While our hope is that any subsequent
drops in share prices are temporary
,
it is also why we look for companies


Continued on page 6...
    Letter to Our Stockholders

to log a few more miles of volatility and poor short-term performance prior to a sustained recovery. The fact that this is not surprising does not make the news any easier to bear. What it does mean for smaller-company bargain-hunters such as ourselves is opportunity. Both domestically and internationally, we have seen a large number of what we believe are superb values emerge in our asset class. As is often the case with value investing, patience and discipline will be critical as we wait for the markets to rebound.
    While we wait, it is worth noting that many observers, including some for whom we have enormous respect, are arguing that the events of the past year—particularly the housing crisis, the credit crunch and the slowing economy—signal the end of the era of low interest rates and low-to-moderate inflation that began following the 1982 recession and ran, with some notable interruptions, through the stock market peaks in 2007. We agree in large part with this assessment. It seems plain to us that we have entered a period that will be characterized by higher inflation and rising interest rates. However, there is little agreement as to how pronounced an effect these changes will have on the U.S. economy and stock markets. So these recent travails put all of us in the position of Dylan’s Mr. Jones: there is something happening here, but we don’t know what it is. Our take is that the short term will be challenging at best, but that solid recoveries for both the economy and equities will come in the next three to five years. As is our habit, we first look at history for future direction. In a Royce Fund 1989 Annual Report, we recalled a “full-blown recession” that led to a robust economic expansion, “an epic crash in 1987 and mini-crash in 1989,” and a market that saw “speculative binges in oil, precious metals and real estate as well as stocks.” In other words, it seems to us that nothing about the ’90s or the current decade is unprecedented.

Subterranean Small-Cap Blues
As might be expected in such a tumultuous period, the current market leadership question also looks unsettled. Domestic small-caps, as measured by the Russell 2000 index, finished the year-to-date period ended 6/30/08 with a loss of 9.4%, which was better than the large-cap S&P 500 index (-11.9%), the more tech-laden Nasdaq Composite (-13.6%) and the global MSCI EAFE (Europe, Australasia and Far East) index (-11.0%). Small-cap’s performance advantage over large-cap stocks thus far in 2008 was primarily attributable to its advantage in the second quarter, in particular its strong relative showing in May, when the Russell 2000 gained 4.6% versus 1.3% for the S&P 500. (Smaller stocks finished the second quarter just barely in positive territory, up 0.6% versus -2.7% for their large-cap peers.) The strong rally from the current small-cap trough on 3/10/08 was followed by an almost equally strong decline in June that collapsed share prices across the globe. During the month, the Russell 2000 lost 7.7%, the S&P 500 fell 8.4%, the Nasdaq Composite was down 9.1% and the MSCI EAFE declined 8.2%.
      The relative resilience of smaller companies during June was a welcome development. Although it did not decisively shift market leadership back to our chosen asset class, it certainly helped the Russell 2000 lose less during the highly volatile first half of 2008.
     

   
       

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However, the S&P 500 was slightly ahead of its small-cap counterpart in the first quarter of 2008 (-9.5% versus -9.9%) and decidedly better in the second half of 2007. These outperformance periods allowed the S&P 500 to stay ahead of the Russell 2000 for both the one-year (-13.1% versus -16.2%) and three-year (+4.4% versus +3.8%) periods ended 6/30/08, while over longer-term periods, smaller stocks held serve; the Russell 2000 beat the S&P 500 for the five-, 10- and 15-year periods ended 6/30/08.
    While large-cap stocks had to wait until early July to officially enter a bear market (traditionally defined as a price decline of 20% or more from a previous peak), the seeming inevitability of its arrival put the phrase ‘bear market’ on the lips of most investors before the end of June. The Dow Jones Industrial Average finished the second quarter with a price 19.9% below its 10/9/07 all-time peak. After making a cyclical high in May, the S&P 500 fell more than 10% to close the quarter within a single percentage point of its cycle low on 3/10/08. The Russell 2000 rallied to a new cyclical high in early June before it fell 9.5% by the end of the quarter. However, the small-cap index also managed to retain more of its gain, staying 7.6% above its current cycle low on 3/10/08.
    We expect more volatility and lower, possibly negative returns for much of the market in the coming months. Although we once believed that large-cap would have an advantage, we now believe that quality-oriented companies, regardless of market cap, should outperform and that smaller companies may provide an edge during short-term market upswings. We also suspect that smaller stocks should lead when share prices eventually show some sustained recovery. This, however, is likely to take some time before materializing. Putting aside for a moment the challenges that must be worked through in the economy as well as in the credit and housing markets, the Russell 2000 also enjoyed a mostly uninterrupted run from its trough on 10/9/02 through its most recent peak on 7/13/07. Nearly five years of primarily rising stock prices does not correct itself quickly or, unfortunately, without pain. (For more on recent small-cap market cycles, see page 10).

  Although we once believed that large-cap
would have an advantage, we now believe
that quality-oriented companies, regardless
of market cap, should outperform and that
smaller companies may provide an edge
during short-term market upswings. We also
suspect that smaller stocks should lead
when share prices eventually show some
sustained recovery.
     
Tangled up in Value
Small-cap value stocks, as measured by the Russell 2000 Value index, have felt more than their share of pain recently after dominating the Russell 2000 Growth index during the first seven years of the current decade. During the last full small-cap market cycle, which lasted from 3/9/00 until 7/13/07, the Russell 2000 Value index substantially outperformed the Russell 2000 Growth index (+189.5% versus -14.8%). The small-cap value index also outpaced the small-cap growth index from the small-cap market trough on 10/9/02 through 7/13/07, up 183.9% versus 169.7%. However, the small-cap growth index began to chip away at this lead during 2007, when it beat small-cap value in each of that year’s four quarters.
    Small-cap growth hung on to its advantage through the year-to-date period ended 6/30/08 (-8.9% versus -9.8% for the small-cap value index), as well as from the recent small-cap peak on 7/13/07. Results for both small-cap style indices were close from
   
     

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that have the financial strength to survive difficult times for their industry or sector. This remains a cornerstone of our approach because, despite our best intelligence, trouble sometimes lasts longer than we anticipate. Just as we attempt to be opportunistic from a purchase-price standpoint, we like companies that view opportunity through a similar prism. Businesses with strong balance sheets will at times act in a similar fashion, using their financial position to acquire lesser competitors.

Our practice of purchasing low-expectation companies often involves going against the grain of Wall Street. Five years ago, for example, oil was trading at a then-high of $30 per barrel. The Wall Street consensus was that the price of oil had reached a peak and would soon begin to decline. We began to look closely at energy services companies as well as oil and gas businesses because expectations were driving investors away to the point that share prices began to look more and more attractive to us. This, combined with many years of industry consolidation, gave us the conviction to start building positions within the sector.

We were not making a call on the prospects for oil prices or thinking that we knew better than the analysts who devote their careers to the study of energy—we simply saw an industry in which we had enjoyed success in the past once again looking attractively undervalued to us.



Continued on page 8...

 
 

Letter to Our Stockholders

 
7/13/07 through the new small-cap trough on 3/10/08, a period in which the Russell 2000 Value index fell 25.4% and its small-cap growth sibling lost 23.0%, reversing small-cap value’s usual edge during downturns. From the small-cap market peak on 7/13/07 through 6/30/08, the small-cap growth index enjoyed a larger performance edge, falling 13.8% versus a loss of 23.1% for the small-cap value index.
       While neither index has been exempt from the market’s troubles over the past year, investors may be wondering what became of small-cap value’s typical performance edge in down-market periods. We think that the current reversal is not entirely a surprise when one considers just how thoroughly the Russell 2000 Value index prevailed over the Russell 2000 Growth index both from the previous small-cap market peak on 3/9/00 and from the small-cap market trough on 10/9/02 through the end of the last full market cycle in July 2007. That small-cap value has been struggling of late is therefore not unexpected, both in the context of reversion to the mean and in the context of an indiscriminate bear market. Of course, just as we spent much of the first several years of the decade looking for high-quality bargains in areas usually populated by smaller-company growth managers, we have spent much of the last year scrutinizing those places where value managers are thought to roam.

Our Back Pages
Performance during the first half of 2008 for our three closed-end portfolios was decidedly mixed on both an absolute and relative basis, with a particularly wide margin separating the terrific NAV (net asset value) results of Royce Focus Trust and the less inspiring showings for both Royce Value Trust and Royce Micro-Cap Trust (see the chart below). Each Fund looks at a slightly different area of the smaller-company universe: Royce Focus Trust typically holds fewer positions, most of which are selected from the upper tier of the smaller-company world, where market capitalizations run from $500 million to $2.5 billion. Royce Value Trust and Royce Micro-Cap Trust are more diversified and make most of their respective selections



from the micro- and small-cap area (market caps up to $2.5 billion) and micro-cap area (market caps up to $500 million). Thus, we view a certain divergence as a healthy
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development. Still, we were very disappointed in our two portfolios that struggled on a relative and absolute basis during both the six-month and one-year periods ended 6/30/08.
     Much of the strength of Royce Focus Trust’s first-half performance came from its greater exposure to both energy and steel companies. These areas did well in all three portfolios, but both Royce Value Trust and Royce Micro-Cap Trust were comparatively underweight in their respective exposure and thus paid the price. They also suffered from having relatively larger exposures to sectors that struggled, such as consumer, technology and financial stocks. Indeed, financials continued to be a drag across the entire equity market. On average, the financial components of the Dow declined 26.6% in the second quarter, versus a 7.4% decline for the index. Within the S&P 500, banking and related industries declined 24.9% on average, versus a 2.7% decline for the index. The Financial Services sector of the Russell 2000 was that index’s worst performer, losing 13.4%, while the index gained 0.6%.

     
The Times They Are A-Changin’    

As much as the current bearish period has convinced us that major changes are working their way through the market, it seems to us that there is a significant element to the story that has not received as much attention, namely, the shift in the status of the U.S. in the global economy. The U.S. has gone from being by far the most dominant force, perhaps the only truly dominant force, to being first among a small group of leading players, which includes the European Union, China, Japan and India. The first sign of this change can be traced back to late 2000, when the U.S. dollar first began to decline versus the Euro, a decline that has lasted more than seven years and counting. Other factors also contributed—the bursting Internet bubble, the events of 9/11, a war that has made the U.S. unpopular abroad, the surging economies of China and India, and our own recent struggles with housing, credit and an overall stalled economy. Each is a piece of a larger puzzle that shows the global economy undergoing major changes, and we believe that the shifting role of the U.S. within this system is the critical event.
     We have sought to meet the challenges these changes present by exporting our investment approach over the past decade. Our initial forays into international smaller companies generally involved those with a strong domestic presence, while more recently we have been expanding our scope to include companies whose activities are more international or centered in a particular overseas region such as Western Europe. Our evolution to international investing is rooted in the Royce tradition of attempting to capitalize on market inefficiencies to generate strong absolute returns, while always keeping a close eye on managing risk. We are focusing primarily on developed economies, where we see ample inefficiencies that could translate into opportunities to find attractively priced securities. Interestingly, the degree of inefficiency that we are seeing today in many international smaller companies reminds us of the small-cap market in the United States 15 to 20 years ago. It is possible that we may be in the early phases of a long-term outperformance cycle for smaller companies on a global

 






Interestingly, the degree of inefficiency that we are seeing today in many international smaller companies reminds us of the small-cap market in the United States 15 to 20 years ago.
     

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Our thinking was that the industry was both significant and robust enough to eventually recover, though we set no specific time table as to when.

More recently, certain industries in the consumer sectors appear to us to have been suffering from a similar dearth of positive expectations. The slowing economy, the credit crunch, the housing bubble and, somewhat ironically, rising energy costs have all convinced many observers that the American consumer is too financially challenged for consumer stocks to do anything more than languish at best. As was the case with energy earlier in the decade, we see a traditionally cyclical area at what looks to us like a potential low point in its business cycle.

Our practice in the past several months has been to root around various consumer industries looking for smaller-cap businesses that boast sterling financial characteristics in the form of strong balance sheets, established records of earnings and the ability to generate free cash flow.

The contrarian habit of scouring beaten-down industries that others are avoiding or ignoring is a hallmark of our time-tested value approach. By closely examining industries for which expectations are at a minimum, we stay true to our goal of trying to lower risk, which is a critical part of building strong, long-term returns for The Royce Funds.

  Letter to Our Stockholders

scale, as international smaller companies follow their U.S. peers and potentially evolve into a professional asset class.
     The number of opportunities in international investing is vast. There are more companies from which to choose and greater total market capitalization. Our research indicates that there are three times as many micro-cap companies—those with market capitalizations up to $500 million—in the developed international universe, with roughly twice the total market capitalization of the U.S. micro-cap universe. Similarly, in the upper tier of the international small-cap world—market caps of $500 million to $2.5 billion—there are more total companies (2,091 versus 1,119) and greater total market capitalization ($2.4 trillion versus $1.3 trillion domestically). However, average market caps tend to be smaller in the international market. For example, according to Reuters the international micro-cap market has a weighted average market cap of $219, compared to $257 domestically. Liquidity issues, therefore, tend to increase as we move down the market-cap scale, which contributes to greater pricing inefficiencies. Independent research is difficult to come by (when it is available at all). We believe that these differences give us the opportunity to find quality businesses that are not properly priced. In addition, a counter-weight to the liquidity challenges is a marketplace with generally higher yields. As of 6/30/08, the

     
       DEVELOPED UNIVERSE BY MARKET CAPITALIZATION (EXCLUDING USA) June 30, 2008
   

    Market Cap Range
(Millions)
  Number
of Companies
  Total Market Cap
(Billions)
  Percent of
Companies
  Percent of
Total Market Cap
     
        $0 - $500  
14,148
 
1,235
  81 %   6 %
   

        $500 - $1,000  
1,106
 
798
  6     4  
   

        $1,000 - $2,000  
753
 
1,078
  4     5  
   

        $2,000 - $2,500  
232
 
518
  1     2  
   

        $2,500 - $5,000  
507
 
1,810
  3     8  
   

        $5,000 and over  
755
 
16,844
  4     76  
   

        Total  
17,501
 
22,283
  100     100  
   

        Source: Reuters                    
     

   

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weighted average yield of the international small-cap universe was more than a percentage point higher than its domestic equivalent, 3.5% versus 2.1%.
     Most importantly, we have found that quality is a truly international concept, an idea that recognizes no borders. The same attributes that attract us to domestic companies—strong balance sheets, an established record of earnings, the ability to generate free cash flow and excellent growth prospects—are readily found in international businesses. It really is a small world after all.

Bringing It all Back Home
However promising the future for global opportunities in smaller companies, we think that far too much uncertainty currently exists here at home for the equity markets to settle down and establish a consistent, forward-looking direction. Although there have been plenty of pleasant surprises, we do not think the profit picture is strong enough to outweigh the anxiety that so many investors are feeling, especially about inflation. We see the next year or so being a very volatile period as the market continues to sort out the effects of the housing and credit bubbles and adjusts to a more inflationary environment.
     It seems plain to us that investors will therefore be looking for lower risk in the form of company quality, especially if the bond markets begin to struggle, as many seem to expect. We see the next year or two as a time to prepare and position our portfolios for a market and economic rebound that looks at least a year or two away. We think that three to five years from now, investors will be mostly pleased with returns because we expect the economy to recover and think that the market will see it coming first. So while smaller companies should be all right in the short term, we suspect that the real action lies further ahead. In any case, we keep doing what we have always done—buying what we think are high-quality smaller companies trading at attractive prices. A volatile stock market has historically been a boon to value investors, and the current period will hopefully be no exception. Certain areas continue to offer what look to us like compelling bargains, both here and abroad. In addition, some industries have been doing very well, so we have been taking gains in some cases, holding in others and even building positions in companies that are managing their growth most effectively. Wide divergence in sector performance is something that we anticipate will be with us for a while, so we see ample opportunity out there on a global scale.
 











We see the next year or two as a time to prepare and position our portfolios for a market and economic rebound that looks at least a year or two away. We think that three to five years from now, investors will be mostly pleased with returns because we expect the economy to recover and think that the market will see it coming first.
     

Sincerely,
             
               
         
Charles M. Royce   W. Whitney George   Jack E. Fockler, Jr.      
President   Vice President   Vice President      
               
               
July 31, 2008              

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Small-Cap Market Cycle Performance

We believe strongly in the idea that a long-term investment perspective is crucial for determining the success of a particular investment approach. Flourishing in an up market is wonderful. Surviving a bear market by losing less (or not at all) is at least as good. However, the true test of a portfolio’s mettle is performance over full market cycle periods, which include both up and down market periods. We believe that providing full market cycle results is more appropriate even than showing three- to five-year standardized returns because the latter periods may not include the up and down phases that constitute a full market cycle.

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


Peak-to-Peak
For the full cycle, value provided a sizeable margin over growth, which finished the period with a loss. Each of our closed-end funds held a sizeable performance advantage over the Russell 2000 on both an NAV (net asset value) and market price basis. On an NAV basis, Royce Focus Trust (+264.2%) was our best performer by a wide margin, followed by Royce Micro-Cap Trust (+175.9%) and Royce Value Trust (+161.3%).

Peak-to-Trough
In the new cycle’s somewhat brief peak-to-trough period, growth was ahead of value, though its advantage was slight and neither style index managed to provide positive performance during the downdraft. All of our closed-end funds outperformed the Russell 2000 in this period, with Royce Focus Trust again providing the best (albeit negative) performance for the period, followed by Royce Value Trust.

Trough-to-Current
We would caution against reading too much into a period that has lasted only slightly longer than a calendar quarter, but it is still worth noting that growth’s return more than tripled that of the value index. Only Royce Focus Trust outpaced the Russell 2000 during this period, with Royce Value Trust and Royce Micro-Cap Trust both underperforming.

Peak-to-Current
During this nearly year-long period, both value and growth posted negative returns, though growth lost less by a comfortable margin. Once again, Royce Focus Trust distinguished itself. Both it and Royce Value Trust outperformed the Russell 2000, while Royce Micro-Cap Trust lagged the small-cap index.
 
   ROYCE FUNDS NAV TOTAL RETURNS VS. RUSSELL 2000 INDEX:
   MARKET CYCLE RESULTS

    Peak-to-
Peak

3/9/00-
7/13/07
  Peak-to-
Trough

7/13/07-
3/10/08
  Trough-to-
Current

3/10/08-
6/30/08
  Peak-to-  
Current  

7/13/07-  
6/30/08  
 
    Russell 2000   54.9 %   -24.1 %   7.6 %   -18.4 %

    Russell 2000 Value   189.5     -25.4     3.0     -23.1  

    Russell 2000 Growth   -14.8     -23.0     11.9     -13.8  

    Royce Value Trust   161.3     -20.9     3.9     -17.8  

    Royce Micro-Cap Trust   175.9     -22.6     2.8     -20.4  

    Royce Focus Trust   264.2     -15.3     11.8     -5.3  


The thoughts concerning recent market movements and future prospects for smaller-company stocks are solely those of Royce & Associates and, of course, there can be no assurance with regard to future market movements. Smaller-company stocks may involve considerably more risk than larger-cap stocks. Past performance is no guarantee of future results. See page 2 for important performance information for all of the above funds.

10  |  This page is not part of the 2008 Semiannual Report to Stockholders



Table of Contents


Semiannual Report to Stockholders  

   
Managers’ Discussions of Fund Performance  
   
Royce Value Trust 12
   
Royce Micro-Cap Trust 14
   
Royce Focus Trust 16
   
History Since Inception 18
   
Distribution Reinvestment and Cash Purchase Options 19
   
Schedules of Investments and Other Financial Statements  
   
Royce Value Trust 21
   
Royce Micro-Cap Trust 36
   
Royce Focus Trust 51
   
Notes to Performance and Other Important Information 60
   
Directors and Officers 61
   
Board Approval of Investment Advisory Agreements 62
   


2008 Semiannual Report to Stockholders  |  11



 
                   
                   
  AVERAGE ANNUAL NAV TOTAL RETURNS
Through 6/30/08
 
 
 
  Second Quarter 2008*   -1.12 %  
 
 
  Year-to-Date 2008*   -11.67    
 
 
  One-Year   -15.53    
 
 
  Three-Year   7.05    
 
 
  Five-Year   12.55    
 
 
  10-Year   9.49    
 
 
  15-Year   11.68    
 
 
  20-Year   12.06    
 
 
  Since Inception (11/26/86)   11.65    
 
 
  * Not annualized        
                   
  CALENDAR YEAR NAV TOTAL RETURNS  
 
 
  Year RVT   Year   RVT  
 
 
  2007 5.0 %   1998   3.3 %  
 
 
  2006 19.5     1997   27.5    
 
 
  2005 8.4     1996   15.5    
 
 
  2004 21.4     1995   21.6    
 
 
  2003 40.8     1994   0.1    
 
 
  2002 -15.6     1993   17.3    
 
 
  2001 15.2     1992   19.3    
 
 
  2000 16.6     1991   38.4    
 
 
  1999 11.7     1990   -13.8    
 
 
                   
  TOP 10 POSITIONS
% of Net Assets Applicable
to Common Stockholders
 
 
 
  AllianceBernstein Holding L.P.   1.8 %  
 
 
  Ritchie Bros. Auctioneers   1.5    
 
 
  Lincoln Electric Holdings   1.4    
 
 
  Ash Grove Cement Cl. B   1.2    
 
 
  Nordson Corporation   1.2    
 
 
  SEACOR Holdings   1.1    
 
 
  PAREXEL International   1.0    
 
 
  Sotheby’s   1.0    
 
 
  Woodward Governor   1.0    
 
 
  Forward Air   0.9    
 
 
                   
  PORTFOLIO SECTOR BREAKDOWN
% of Net Assets Applicable
to Common Stockholders
 
 
 
  Technology   21.3 %  
 
 
  Industrial Products   21.0    
 
 
  Industrial Services   16.3    
 
 
  Financial Intermediaries   13.1    
 
 
  Financial Services   12.3    
 
 
  Natural Resources   10.7    
 
 
  Health   6.2    
 
 
  Consumer Products   5.8    
 
 
  Consumer Services   3.9    
 
 
  Diversified Investment Companies   0.5    
 
 
  Utilities   0.2    
 
 
  Miscellaneous   2.6    
 
 
  Bond and Preferred Stocks   0.4    
 
 
  Cash and Cash Equivalents   7.3    
 
 
     
     
 

 
 
Royce Value Trust

 
Manager’s Discussion
During the first half of 2008, Royce Value Trust (RVT) lagged each of its small-cap benchmarks in a bear market environment. The Fund declined 11.7% on a net asset value (NAV) basis, and 10.7% on a market price basis, for the year-to-date period ended 6/30/08, compared with losses of 9.4% for the Russell 2000 and 7.1% for the S&P SmallCap 600 for the same period. In the first quarter downturn, RVT was down 10.7% on an NAV basis while its market price fell 13.0%, versus a decline of 9.9% for the Russell 2000 and 7.5% for the S&P 600. The second quarter was equally frustrating. After establishing a market trough on 3/10/08, smaller companies enjoyed a strong short-term rally that lasted into early June, when stock prices again dropped throughout most of the market. In the thus-volatile second quarter, RVT again underperformed its benchmarks on an NAV basis, declining 1.1% versus respective gains of 0.6% and 0.4% for the Russell 2000 and for the S&P 600, while outgaining each index on a market price basis, up 2.7%.
      During the short-term period from the recent small-cap market trough on 3/10/08 through 6/30/08—a span nearly coterminus with the second quarter—RVT’s market price performance was strong on a relative basis, but the Fund underperformed on an NAV basis. From 3/10/08 through 6/30/08, RVT gained 3.9% on an NAV basis and was up 9.7% on a market price basis, compared with a 7.6% gain for the Russell 2000 and a 6.3% gain for the S&P 600. The Fund’s performance pattern since the beginning of the new small-cap market cycle on 7/13/07 has been disappointing so far in that
we would expect the Fund to better hold its value during a down-market period. From the July 2007 peak through 6/30/08, RVT was down 17.8% on an NAV basis, and 20.0% on a market price basis, compared to the Russell 2000’s 18.4% loss and the S&P 600’s decline of 17.1% during the same period.
         
 
GOOD IDEAS THAT WORKED
Net Realized and Unrealized Investment Return*
Year-to-Date Through 6/30/08

Energy Conversion Devices     $4,292,218

Cimarex Energy     3,448,987

CARBO Ceramics     3,312,445

Nordson Corporation     2,604,509

Helmerich & Payne     2,586,241

  *Includes dividends      
 
     Over full market cycle and other longer-term periods, positive performances were more common, as was strong absolute and relative performance. RVT held a large advantage over both the Russell 2000 and the S&P 600 from the previous small-cap market peak on 3/9/00 through 6/30/08, gaining 114.7% on an NAV basis and 148.2% on a market price basis, while the Russell was up 26.4%, and the S&P 600 was up 76.2%. The Fund outperformed each of its benchmarks on an NAV basis for the three-, five-, 10-, 15-, 20-year and since inception (11/26/86) periods ended 6/30/08 and on a market price basis for each period except the three- and five-year intervals. RVT’s NAV average annual total return since inception was 11.7%.
 
Important Performance and Risk Information
All performance information reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the recent month-end may be obtained at www.roycefunds.com. The market price of the Fund’s shares will fluctuate, so that shares may be worth more or less than their original cost when sold. The Fund invests primarily in securities of small- and micro-cap companies, which may involve considerably more risk than investing in a more diversified portfolio of larger-cap companies. 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.

12  |  2008 Semiannual Report to Stockholders



 
 
Performance and Portfolio Review

 
     Natural Resources was not only the Fund’s best-performing sector on a dollar basis in the first half, it was the only notable positive contributor to performance. The oil and gas industry and energy services group were the sector’s strongest areas, home to three of the Fund’s best-performing stocks. Cimarex Energy is an oil and gas exploration and production company that tapped a benefit from the record-shattering price of oil and a recovery in natural gas prices. CARBO Ceramics manufactures ceramic proppants used in hydraulic fracturing of natural gas and oil wells. We have long admired its strong niche, clean balance sheet and history of profitability. We were happy to see other investors catch on in the first half. We classify the Fund’s top gainer, Energy Conversion Devices, as a Technology holding, but, as its name suggests, it does much of its business supplying products and processes for alternative energy generation and storage. The firm’s new CEO concentrated efforts on its solar-energy production segments, which helped the firm generate positive earnings.
     The Financial Services sector was home to the two holdings with the largest negative impact on first-half performance. AllianceBernstein Holding remains a healthy dividend payer and, in our view, a very well-run business. Its stock disappointed after the firm revised its earnings guidance for fiscal 2007 early in 2008. It was the Fund’s largest holding at the end of June. The share price of MoneyGram International was beaten down in 2007 as the result of exposure to subprime mortgages in its investment portfolio.
 
GOOD IDEAS AT THE TIME
Net Realized and Unrealized Investment Loss*
Year-to-Date Through 6/30/08
 
Matters grew worse in January 2008 when the company announced, after re-valuing the portfolio, that it had experienced additional losses due to the subprime contagion. Its already-plummeting share price fell precipitously through June. We increased our stake in January and February because we think that the firm’s various money transfer businesses are strong enough to help it eventually overcome its formidable problems. We were also somewhat encouraged by a large infusion of cash that the company received in March from Thomas Lee Partners and Goldman Sachs.

AllianceBernstein Holding L.P.     $6,222,308

MoneyGram International     5,798,413

Rofin-Sinar Technologies     4,349,521

Sotheby’s     4,189,440

Advent Software     3,950,988

*Net of dividends      
 
 
 
 
  FUND INFORMATION AND  
  PORTFOLIO DIAGNOSTICS  
 
 
  Average Market Capitalization* $1,063 million  
 
 
  Weighted Average P/E Ratio**   15.2x  
 
 
  Weighted Average P/B Ratio   1.7x  
 
 
  Weighted Average Portfolio Yield   1.5%  
 
 
  Fund Net Assets $1,238 million  
 
 
  Net Leverage   14%  
 
 
  Turnover Rate   14%  
 
 
  Symbol      
 

Market Price

  RVT  
 

NAV

  XRVTX  
 
 
 
* Geometrically calculated

 
 
**The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (11% of portfolio holdings as of 6/30/08).

 
 
Net leverage is the percentage, in excess of 100%, of the total value of equity type investments, divided by net assets, excluding preferred stock.
 
     
  CAPITAL STRUCTURE
Publicly Traded Securities Outstanding
at 6/30/08 at NAV or Liquidation Value
 
 
 
  61.8 million shares
of Common Stock
  $1,018 million  
 
 
  5.90% Cumulative
Preferred Stock
  $220 million  
 
 
     
  RISK/RETURN COMPARISON
Five-Year Period Ended 6/30/08
 
 
 
      Average Annual   Standard   Return  
      Total Return   Deviation   Efficiency*  
 
 
  RVT (NAV)     12.55 %     14.05       0.89    
 
 
  Russell 2000     10.29       14.38       0.72    
 
 
 
*Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period.
 
     
     
 

2008 Semiannual Report to Stockholders  |  13




 
                   
                   
  AVERAGE ANNUAL NAV TOTAL RETURNS
Through 6/30/08
 
 
 
  Second Quarter 2008*   -1.21 %  
 
 
  Year-to-Date 2008*   -11.70    
 
 
  One-Year   -18.64    
 
 
  Three-Year   5.62    
 
 
  Five-Year   12.44    
 
 
  10-Year   9.70    
 
 
  Since Inception (12/14/93)   12.08    
 
 
  *Not annualized        
                   
  CALENDAR YEAR NAV TOTAL RETURNS  
 
 
  Year RMT   Year   RMT  
 
 
  2007 0.6 %   2000   10.9 %  
 
 
  2006 22.5     1999   12.7    
 
 
  2005 6.8     1998   -4.1    
 
 
  2004 18.7     1997   27.1    
 
 
  2003 55.5     1996   16.6    
 
 
  2002 -13.8     1995   22.9    
 
 
  2001 23.4     1994   5.0    
 
 
                   
  TOP 10 POSITIONS
% of Net Assets Applicable
to Common Stockholders
 
 
 
  Pegasystems   1.7 %  
 
 
  ASA   1.5    
 
 
  Peerless Manufacturing   1.4    
 
 
  Seneca Foods Cl. B   1.3    
 
 
  Exponent   1.3    
 
 
  Dril-Quip   1.2    
 
 
  Pason Systems   1.2    
 
 
  GulfMark Offshore   1.1    
 
 
  Sapient Corporation   1.1    
 
 
  Weyco Group   1.1    
 
 
                   
  PORTFOLIO SECTOR BREAKDOWN
% of Net Assets Applicable
to Common Stockholders
 
 
 
  Technology   22.6 %  
 
 
  Industrial Products   17.4    
 
 
  Industrial Services   15.0    
 
 
  Health   14.5    
 
 
  Natural Resources   13.9    
 
 
  Financial Intermediaries   11.0    
 
 
  Consumer Products   7.6    
 
 
  Financial Services   6.4    
 
 
  Consumer Services   5.8    
 
 
  Diversified Investment Companies   2.4    
 
 
  Miscellaneous   2.6    
 
 
  Preferred Stock   0.5    
 
 
  Cash and Cash Equivalents   1.3    
 
 
     
     

 
 
Royce Micro-Cap Trust

 
Manager’s Discussion
During the first half of 2008, Royce Micro-Cap Trust (RMT) disappointed on both an absolute and relative basis. For the year-to-date period ended 6/30/08, the Fund was down 11.7% on a net asset value (NAV) basis and lost 7.9% on a market price basis, compared with a decline of 9.4% for its small-cap benchmark, the Russell 2000. RMT did outperform the Russell Microcap index, which was down 15.5% during the first half. In the first quarter downturn, RMT fell 10.6% on an NAV basis and 8.6% on a market price basis versus a decline of 9.9% for the small-cap index and 12.4% for the Russell Microcap index. After the recent small-cap trough on 3/10/08, share prices roared back throughout the market, then swooned again in the last several weeks of June. Although the Fund enjoyed strong performance on a market price basis during this mini-rally, it could not keep pace on an NAV basis. The Fund then proceeded to endure a miserable June on both an NAV and market price basis, while also underperforming the small-cap index. The upshot was a volatile second quarter in which RMT again underperformed its benchmark on an NAV basis, declining 1.2% versus a 0.6% gain for the Russell 2000 and 3.5% decline for the Russell Microcap index. Meanwhile, the Fund was up 0.7% on a market price basis in the second quarter.
 
      The Fund’s performance from the beginning of the new small-cap market cycle on 7/13/07 was also disappointing. From the July 2007 peak through 6/30/08, RMT fell 20.4% on an NAV basis and 25.5% based on market price, in both cases lagging its benchmark’s 18.4% loss for the same period, while beating the Russell Microcap index’s 26.8% decline. In addition, RMT trailed its benchmark from the recent small-cap trough on 3/10/08, up 2.8% on an NAV basis and 5.6% on a market value basis, compared with a 7.6% gain for the Russell 2000 and a 2.3% gain for the Russell Microcap index.
 
GOOD IDEAS THAT WORKED
Net Realized and Unrealized Investment Return*
Year-to-Date Through 6/30/08

America’s Car-Mart     $995,191

eResearch Technology     984,316

PharMerica Corporation     871,000

Trex Company     805,000

Pason Systems     755,100

*Includes dividends      

     Positive performances were more common over previous market cycle and other long-term periods. RMT held a large advantage over the Russell 2000 from the previous small-cap market peak on 3/9/00 through 6/30/08, gaining 119.7% on an NAV basis and 143.3% based on its market price, while its benchmark was up 26.4%. (Data for the Russell Microcap index only goes back to 2002.) While its recent performance was disappointing, we were pleased with the Fund’s longer-term record. On an NAV basis, RMT outperformed the Russell 2000 for the three-, five-, 10-year and since inception (12/14/93) periods ended 6/30/08 and beat the small-cap index in each of those time spans save the three-year period on a market price basis. The Fund’s NAV average annual total return since inception was 12.1%.
 
Important Performance and Risk Information
All performance information reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the recent month-end may be obtained at www.roycefunds.com. The market price of the Fund’s shares will fluctuate, so that shares may be worth more or less than their original cost when sold. The Fund normally invests in micro-cap companies, which may involve considerably more risk than investing in a more diversified portfolio of larger-cap companies. 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.

14  |  2008 Semiannual Report to Stockholders




   
 
Performance and Portfolio Review

 
     Natural Resources was by far the Fund’s best performing sector on a dollar basis during the first half, led by the energy services group and the oil and gas industry. Pason Systems benefited from increased demand for its specialized oilfield drilling instrumentation systems for use on land-based drilling rigs. The Diversified Investment Companies sector also made a positive dollar-based contribution, primarily the result of strong results from holdings in closed-end funds. In the otherwise dismal Consumer Services sector, automotive retailer America’s Car-Mart was the Fund’s best performer on a dollar basis in the first half. Specializing in low-end cars drove its success in a distressed auto market especially sensitive to gas-price increases. Its earnings tripled in the second quarter, putting its stock price in the fast lane. We took gains in May and June, but still held a good-sized position at the end of June.
     Making the largest dollar-based negative impact on first-half performance was TravelCenters of America, which primarily operates truck stops, gas stations and restaurants along U.S. interstates. We first purchased shares in RMT’s portfolio in February 2008. The company acquired its chief rival in May 2007, and its stock price mostly fell from around that time through the end of June 2008. Ongoing losses over the last several quarters, as well as reduced highway traffic—the result of soaring gas prices—probably also had an effect on its stalled share price during the first half of 2008. We liked the strong balance sheet and positive earnings history of Medical Action Industries, which manufactures disposable medical products primarily in the U.S.

GOOD IDEAS AT THE TIME
Net Realized and Unrealized Investment Loss*
Year-to-Date Through 6/30/08
 
Although still posting positive earnings, it endured manufacturing inefficiencies that the firm expected to continue through 2008, as well as the increased cost of resin (necessary in the manufacture of plastic products), and increased shipping costs for its products made in China. The Technology sector posted significant net losses on a dollar basis from the telecommunications group and the aerospace and defense industry. Sapient Corporation, which offers brand and marketing strategies, as well as business and IT services, was among the biggest disappointments for the period. In January, lower-than-expected earnings helped its stock price to plunge.

TravelCenters of America   $ 1,400,112

Medical Action Industries     1,312,620

Epoch Holding Corporation     1,235,160

Tennant Company     1,231,272

Sapient Corporation     1,195,000

*Net of dividends      
 
 
                             
                             
  FUND INFORMATION AND  
  PORTFOLIO DIAGNOSTICS  
 
 
  Average Market Capitalization*   $283 million  
 
 
  Weighted Average P/E Ratio**   16.2x  
 
 
  Weighted Average P/B Ratio   1.4x  
 
 
  Weighted Average Portfolio Yield   1.0%  
 
 
  Fund Net Assets   $345 million  
 
 
  Net Leverage   20%  
 
 
  Turnover Rate   41%  
 
 
  Symbol      
 

Market Price

  RMT  
 

NAV

  XOTCX  
 
 
 
*Geometrically calculated

 
 
**The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (21% of portfolio holdings as of 6/30/08).

 
 
Net leverage is the percentage, in excess of 100%, of the total value of equity type investments, divided by net assets, excluding preferred stock.
 
     
  CAPITAL STRUCTURE
Publicly Traded Securities Outstanding
at 6/30/08 at NAV or Liquidation Value
 
 
 
  25.4 million shares
of Common Stock
      $285 million    
 
 
  6.00% Cumulative
Preferred Stock
      $60 million    
 
 
     
  RISK/RETURN COMPARISON
Five-Year Period Ended 6/30/08
 
 
 
      Average Annual   Standard   Return  
      Total Return   Deviation   Efficiency*  
 
 
  RMT (NAV)     12.44 %     14.16       0.88    
 
 
  Russell 2000     10.29       14.38       0.72    
 
 
 
*Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period.
 
     
     
 

2008 Semiannual Report to Stockholders  |  15




 
                   
                   
  AVERAGE ANNUAL NAV TOTAL RETURNS
Through 6/30/08
 
 
 
  Second Quarter 2008*   8.03 %  
 
 
  Year-to-Date 2008*   2.28    
 
 
  One-Year   -1.01    
 
 
  Three-Year   17.18    
 
 
  Five-Year   20.52    
 
 
  10-Year   12.83    
 
 
  Since Inception (11/1/96)   13.73    
 
 
  * Not annualized        
 
Royce & Associates assumed investment management responsibility for the Fund on 11/1/96.
                   
  CALENDAR YEAR NAV TOTAL RETURNS  
 
 
  Year   FUND Year   FUND  
 
 
  2007   12.2 % 2001   10.0 %  
 
 
  2006   16.3   2000   20.9    
 
 
  2005   13.3   1999   8.7    
 
 
  2004   29.2   1998   -6.8    
 
 
  2003   54.3   1997   20.5    
 
 
  2002   -12.5            
 
 
                   
  TOP 10 POSITIONS  
  % of Net Assets Applicable  
  to Common Stockholders  
 
 
  Australian Government 7.50% Bond   5.8 %  
 
 
  Kennedy-Wilson Conv.   5.5    
 
 
  Reliance Steel & Aluminum   4.6    
 
 
  Unit Corporation 4.5    
 
 
  Sims Group ADR   3.6    
 
 
  Ensign Energy Services   3.3    
 
 
  Knight Capital Group Cl. A   3.2    
 
 
  Trican Well Service   3.0    
 
 
  Gammon Gold   2.9    
 
 
  Lincoln Electric Holdings   2.8    
 
 
                   
  PORTFOLIO SECTOR BREAKDOWN
% of Net Assets Applicable
to Common Stockholders
 
 
 
  Natural Resources   29.2 %  
 
 
  Industrial Products   24.3    
 
 
  Technology   11.5    
 
 
  Consumer Products   10.0    
 
 
  Industrial Services   8.5    
 
 
  Financial Intermediaries   6.2    
 
 
  Health   3.4    
 
 
  Financial Services   2.3    
 
 
  Bond and Preferred Stock   11.1    
 
 
  Cash and Cash Equivalents   6.3    
 
 
     
     
 

 
 
Royce Focus Trust

 
Manager’s Discussion
The first half of 2008 was a good time for the contrarian approach we use in Royce Focus Trust (FUND). For the year-to-date period ended 6/30/08, the Fund was up 2.3% on a net asset value (NAV) basis and 1.4% on a market price basis, in both cases ahead of the 9.4% loss for its small-cap benchmark, the Russell 2000, during the same period. While the Russell 2000 fell 9.9% in the difficult first quarter, the Fund held up well, down 5.3% on an NAV basis and 8.4% on a market price basis. Following the small-cap market trough on 3/10/08, equities rallied through the beginning of June. After losing less in the first quarter, FUND was also able to build on its advantage during April and May. When share prices tumbled again in June, the Fund followed suit, though its NAV performance was better than that of its benchmark (-5.0% versus -7.7%). The end result for the volatile second quarter was both significant relative outperformance and strong absolute performance—FUND gained 8.0% on an NAV basis and 10.6% on a market price basis during the second quarter, compared to a gain of 0.6% for the Russell 2000.
Smaller stocks established a new peak on 7/13/07. With this new peak, the previous small-cap cycle that began with the peak on 3/9/00 came to a close and a new cycle, which has been marked by high volatility and mostly negative returns, got under way. From 7/13/07 through 6/30/08, the Fund was down 5.3% on
an NAV basis and fell 6.5% on a market price basis versus a loss of 18.4% for its small-cap benchmark. In the short-term period from the recent small-cap market trough on 3/10/08 through 6/30/08, FUND gained 11.8% on an NAV basis and 14.0% on a market price basis versus a 7.6% gain for the Russell 2000. We were very pleased with the Fund’s recent results, especially in the more volatile, downward-trending market that began with the new small-cap market cycle in July 2007 when the portfolio held its value well.
 
GOOD IDEAS THAT WORKED
Net Realized and Unrealized Investment Return*
Year-to-Date Through 6/30/08

Unit Corporation     $4,128,841

Sims Group ADR     3,298,213

Reliance Steel & Aluminum     2,309,000

Schnitzer Steel Industries Cl. A     2,241,024

Ensign Energy Services     1,633,792

*Includes dividends      
       
These results were consistent with FUND’s performance over longer-term periods, which offer a more meaningful gauge of its merits. From the previous small-cap market peak on 3/9/00 through 6/30/08, the Fund significantly outpaced its benchmark on both an NAV and market price basis. During this period, FUND gained 244.9% on an NAV basis and 310.8% on a market price basis compared to the Russell 2000’s 26.4% gain. This was a critical factor in the Fund’s outperformance of the small-cap index for the one-, three-, five, 10-year and since inception of our management (11/1/96) periods ended 6/30/08. FUND’s NAV average annual total return since inception was 13.7%.

     The most significant dollar-based net losses during the first half came from the Consumer Products sector, home to RV (recreational vehicle) makers Thor Industries and Winnebago
 
Important Performance and Risk Information
All performance information reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the recent month-end may be obtained at www.roycefunds.com. The market price of the Fund’s shares will fluctuate, so that shares may be worth more or less than their original cost when sold. The Fund normally invests primarily in small-cap companies, which may involve considerably more risk than investing in a more diversified portfolio of larger-cap companies. 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.

16  |  2008 Semiannual Report to Stockholders




 
 
Performance and Portfolio Review

 
Industries. (Thor also makes small- and mid-sized buses, while Winnebago focuses solely on motor homes.) Although energy stocks were terrific performers in FUND’s portfolio, rising energy prices also contributed to each company’s dismal performance. Both have struggled in an inhospitable environment for their industry. We increased our stake in Thor Industries a bit in January and chose to hold on to Winnebago. At the end of June, we thought that both were capable of an eventual rebound. Elsewhere in the portfolio, Fronteer Development Group posted a sizeable net loss. The firm is a gold mining company with what we believe are several promising projects. Investors opted for a different point of view in the form of a mass exodus from its stock in February. At issue was the ownership of a uranium mine in which the firm holds an equity stake. We built our position in January and March before trimming it in June. At the end of the first half, we remained confident in the firm’s long-term prospects.
Unit Corporation is primarily a contract drilling company, but also runs its own oil and natural gas exploration business. The record-shattering price of oil and its own growing businesses helped its share price to climb during the first half. Although we took some gains in May, Unit was the Fund’s fourth-largest position at the end of June. Steel companies from the Industrial Products sector, such as Australian firm Sims Group, Reliance Steel & Aluminum and Schnitzer Steel Industries, continued to benefit from the weak U.S. dollar, which has made domestic steel and scrap metal attractively priced to BRIC (Brazil, Russia, India and China) and other developing countries.

GOOD IDEAS AT THE TIME
Net Realized and Unrealized Investment Loss*
Year-to-Date Through 6/30/08
 
After Metal Management merged with Australian scrap-metal business Sims Group in March 2008, the price of the latter moved up appreciably, no doubt reaping a benefit from its global presence in an increasingly international market. Reliance Steel & Aluminum provides metals processing services and distributor of metal products. Following a volatile 2007, the company’s stock price rose more or less steadily through the first six months of 2008 as investors took notice of its improved earnings. As with Sims, the firm’s global footprint seemed to boost its business.

Thor Industries     $2,436,777

Winnebago Industries     2,053,700

Fronteer Development Group     1,440,298

LECG Corporation     1,247,400

Dynamic Materials     1,166,833

*Net of dividends      
 
 
                             
                             
  FUND INFORMATION AND  
  PORTFOLIO DIAGNOSTICS  
 
 
  Average Market Capitalization*   $1,386 million  
 
 
  Weighted Average P/E Ratio**   13.0x  
 
 
  Weighted Average P/B Ratio   2.2x  
 
 
  Weighted Average Portfolio Yield   1.4%  
 
 
  Fund Net Assets   $193 million  
 
 
  Net Leverage   9%  
 
 
  Turnover Rate   62%  
 
 
  Symbol      
 

Market Price

  FUND  
 

NAV

  XFUNX  
 
 
 
*Geometrically calculated

 
 
** The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (10% of portfolio holdings as of 6/30/08).

 
 
Net leverage is the percentage, in excess of 100%, of the total value of equity type investments, divided by net assets, excluding preferred stock.
 
     
  CAPITAL STRUCTURE
Publicly Traded Securities Outstanding
at 6/30/08 at NAV or Liquidation Value
 
 
 
  18.9 million shares of Common Stock   $168 million  
 
 
  6.00% Cumulative Preferred Stock   $25 million  
 
 
     
  RISK/RETURN COMPARISON
Five-Year Period Ended 6/30/08
 
 
 
      Average Annual   Standard   Return  
      Total Return   Deviation   Efficiency*  
 
 
  FUND (NAV)     20.52 %     15.16       1.35    
 
 
  Russell 2000     10.29       14.38       0.72    
 
 
 
*Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period.
 
     
 

2008 Semiannual Report to Stockholders  |  17




History Since Inception


The following table details the share accumulations by an initial investor in the Funds who reinvested all distributions (including fractional shares) and participated fully in primary subscriptions for each of the rights offerings. Full participation in distribution reinvestments and rights offerings can maximize the returns available to a long-term investor. This table should be read in conjunction with the Performance and Portfolio Reviews of the Funds.

          Amount     Purchase         NAV     Market  
  History     Invested     Price*   Shares     Value**     Value**  
Royce Value Trust                                      
11/26/86   Initial Purchase     $ 10,000     $ 10.000   1,000     $ 9,280     $ 10,000  
10/15/87   Distribution $0.30               7.000   42                  
12/31/87   Distribution $0.22               7.125   32       8,578       7,250  
12/27/88   Distribution $0.51               8.625   63       10,529       9,238  
9/22/89   Rights Offering       405       9.000   45                  
12/29/89   Distribution $0.52               9.125   67       12,942       11,866  
9/24/90   Rights Offering       457       7.375   62                  
12/31/90   Distribution $0.32               8.000   52       11,713       11,074  
9/23/91   Rights Offering       638       9.375   68                  
12/31/91   Distribution $0.61               10.625   82       17,919       15,697  
9/25/92   Rights Offering       825       11.000   75                  
12/31/92   Distribution $0.90               12.500   114       21,999       20,874  
9/27/93   Rights Offering       1,469       13.000   113                  
12/31/93   Distribution $1.15               13.000   160       26,603       25,428  
10/28/94   Rights Offering       1,103       11.250   98                  
12/19/94   Distribution $1.05               11.375   191       27,939       24,905  
11/3/95   Rights Offering       1,425       12.500   114                  
12/7/95   Distribution $1.29               12.125   253       35,676       31,243  
12/6/96   Distribution $1.15               12.250   247       41,213       36,335  
1997   Annual distribution total $1.21               15.374   230       52,556       46,814  
1998   Annual distribution total $1.54               14.311   347       54,313       47,506  
1999   Annual distribution total $1.37               12.616   391       60,653       50,239  
2000   Annual distribution total $1.48               13.972   424       70,711       61,648  
2001   Annual distribution total $1.49               15.072   437       81,478       73,994  
2002   Annual distribution total $1.51               14.903   494       68,770       68,927  
1/28/03   Rights Offering       5,600       10.770   520                  
2003   Annual distribution total $1.30               14.582   516       106,216       107,339  
2004   Annual distribution total $1.55               17.604   568       128,955       139,094  
2005   Annual distribution total $1.61               18.739   604       139,808       148,773  
2006   Annual distribution total $1.78               19.696   693       167,063       179,945  
2007   Annual distribution total $1.85               19.687   787       175,469       165,158  
2008   Year-to-date distribution total $0.92               16.116   515                  

6/30/08         $ 21,922           9,404     $ 154,978     $ 147,455  

Royce Micro-Cap Trust
12/14/93   Initial Purchase     $ 7,500     $ 7.500   1,000     $ 7,250     $ 7,500  
10/28/94   Rights Offering       1,400       7.000   200                  
12/19/94   Distribution $0.05               6.750   9       9,163       8,462  
12/7/95   Distribution $0.36               7.500   58       11,264       10,136  
12/6/96   Distribution $0.80               7.625   133       13,132       11,550  
12/5/97   Distribution $1.00               10.000   140       16,694       15,593  
12/7/98   Distribution $0.29               8.625   52       16,016       14,129  
12/6/99   Distribution $0.27               8.781   49       18,051       14,769  
12/6/00   Distribution $1.72               8.469   333       20,016       17,026  
12/6/01   Distribution $0.57               9.880   114       24,701       21,924  
2002   Annual distribution total $0.80               9.518   180       21,297       19,142  
2003   Annual distribution total $0.92               10.004   217       33,125       31,311  
2004   Annual distribution total $1.33               13.350   257       39,320       41,788  
2005   Annual distribution total $1.85               13.848   383       41,969       45,500  
2006   Annual distribution total $1.55               14.246   354       51,385       57,647  
2007   Annual distribution total $1.35               13.584   357       51,709       45,802  
2008   Year-to-date distribution total $0.64               10.837   230                  

6/30/08         $ 8,900           4,066     $ 45,661     $ 42,164  

Royce Focus Trust
10/31/96   Initial Purchase     $ 4,375     $ 4.375   1,000     $ 5,280     $ 4,375  
12/31/96                               5,520       4,594  
12/5/97   Distribution $0.53               5.250   101       6,650       5,574  
12/31/98                               6,199       5,367  
12/6/99   Distribution $0.145               4.750   34       6,742       5,356  
12/6/00   Distribution $0.34               5.563   69       8,151       6,848  
12/6/01   Distribution $0.14               6.010   28       8,969       8,193  
12/6/02   Distribution $0.09               5.640   19       7,844       6,956  
12/8/03   Distribution $0.62               8.250   94       12,105       11,406  
2004   Annual distribution total $1.74               9.325   259       15,639       16,794  
5/6/05   Rights offering       2,669       8.340   320                  
2005   Annual distribution total $1.21               9.470   249       21,208       20,709  
2006   Annual distribution total $1.57               9.860   357       24,668       27,020  
2007   Annual distribution total $2.01               9.159   573       27,679       27,834  
2008   Year-to-date distribution total $0.25               8.497   92                  

6/30/08         $ 7,044           3,195     $ 28,308     $ 28,212  

  *  
Beginning with the 1997 (RVT), 2002 (RMT) and 2004 (FUND) distributions, the purchase price of distributions is a weighted average of the distribution reinvestment prices for the year.
**  
Other than for initial purchase and June 30, 2008, values are stated as of December 31 of the year indicated, after reinvestment of distributions.
     
18 | 2008 Semiannual Report to Stockholders



Distribution Reinvestment and Cash Purchase Options



Why should I reinvest my distributions?
By reinvesting distributions, a stockholder can maintain an undiluted investment in the Fund. The regular reinvestment of distributions has a significant impact on stockholder returns. In contrast, the stockholder who takes distributions in cash is penalized when shares are issued below net asset value to other stockholders.

How does the reinvestment of distributions from the Royce closed-end funds work?
The Funds automatically issue shares in payment of distributions unless you indicate otherwise. The shares are generally issued at the lower of the market price or net asset value on the valuation date.

How does this apply to registered stockholders?
If your shares are registered directly with a Fund, your distributions are automatically reinvested unless you have otherwise instructed the Funds’ transfer agent, Computershare, in writing. A registered stockholder also has the option to receive the distribution in the form of a stock certificate or in cash if Computershare is properly notified.

What if my shares are held by a brokerage firm or a bank?
If your shares are held by a brokerage firm, bank, or other intermediary as the stockholder of record, you should contact your brokerage firm or bank to be certain that it is automatically reinvesting distributions on your behalf. If they are unable to reinvest distributions on your behalf, you should have your shares registered in your name in order to participate.

What other features are available for registered stockholders?
The Distribution Reinvestment and Cash Purchase Plans also allow registered stockholders to make optional cash purchases of shares of a Fund’s common stock directly through Computershare on a monthly basis, and to deposit certificates representing your Fund shares with Computershare for safekeeping. The Funds’ investment adviser is absorbing all commissions on optional cash purchases under the Plans through December 31, 2008.

 

How do the Plans work for registered stockholders?
Computershare maintains the accounts for registered stockholders in the Plans and sends written confirmation of all transactions in the account. Shares in the account of each participant will be held by Computershare in non-certificated form in the name of the participant, and each participant will be able to vote those shares at a stockholder meeting or by proxy. A participant may also send other stock certificates held by them to Computershare to be held in non-certificated form. There is no service fee charged to participants for reinvesting distributions. If a participant elects to sell shares from a Plan account, Computershare will deduct a $2.50 fee plus brokerage commissions from the sale transaction. If a nominee is the registered owner of your shares, the nominee will maintain the accounts on your behalf.

How can I get more information on the Plans?
You can call an Investor Services Representative at (800) 221-4268 or you can request a copy of the Plan for your Fund from Computershare. All correspondence (including notifications) should be directed to: [Name of Fund] Distribution Reinvestment and Cash Purchase Plan, c/o Computershare, PO Box 43010, Providence, RI 02940-3010, telephone (800) 426-5523.


  2008 Semiannual Report to Stockholders  |  19

















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Royce Value Trust   June 30, 2008 (unaudited)


Schedule of Investments

    SHARES     VALUE
COMMON STOCKS – 113.9%          
           
Consumer Products – 5.8%          
Apparel, Shoes and Accessories - 1.8%          

Columbia Sportswear

  34,600   $ 1,271,550

Delta Apparel a,b,c

  605,560     2,228,461

K-Swiss Cl. A

  160,000     2,352,000

Lazare Kaplan International c

  103,600     922,040

Polo Ralph Lauren

  17,500     1,098,650

Timberland Company (The) Cl. A b,c

  17,500     286,125

Tod’s

  35,000     1,922,641

Weyco Group

  307,992     8,171,027
       
          18,252,494
       
Collectibles - 0.5%          

Leapfrog Enterprises Cl. A b,c

  175,000     1,456,000

Russ Berrie & Company c

  417,000     3,323,490
       
          4,779,490
       
Consumer Electronics - 0.8%          

Dolby Laboratories Cl. A c

  153,900     6,202,170

DTS b,c

  64,100     2,007,612
       
          8,209,782
       
Food/Beverage/Tobacco - 0.6%          

B&G Foods (Units)

  120,100     2,041,700

B&G Foods Cl. A

  51,300     479,142

Hershey Creamery

  709     1,488,900

Seneca Foods Cl. A b,c

  80,000     1,668,000

Seneca Foods Cl. B b,c

  13,251     283,174
       
          5,960,916
       
Health, Beauty and Nutrition - 0.0%          

Nutraceutical International c

  22,800     273,600
       
Home Furnishing and Appliances - 1.1%          

Aaron Rents

  4,500     100,485

American Woodmark

  123,335     2,606,069

Ekornes

  110,000     1,619,807

Ethan Allen Interiors

  65,800     1,618,680

Kimball International Cl. B

  286,180     2,369,570

La-Z-Boy

  68,200     521,730

Mohawk Industries b,c

  25,000     1,602,500

Nice

  215,000     953,743

Universal Electronics b,c

  10,000     209,000
       
          11,601,584
       
Sports and Recreation - 1.0%          

Beneteau

  81,000     1,773,950

Coachmen Industries b,c

  47,700     101,124

RC2 Corporation c

  132,600     2,461,056

Sturm, Ruger & Company c

  272,900     1,926,674

Thor Industries

  110,900     2,357,734

Winnebago Industries

  97,500     993,525
       
          9,614,063
       
Total (Cost $57,925,364)         58,691,929
       
           
Consumer Services – 3.9%          
Direct Marketing - 0.3%          

Manutan International

  8,945     647,839
    SHARES     VALUE
Consumer Services (continued)          
Direct Marketing (continued)          

Takkt

  130,000   $ 2,290,354
       
          2,938,193
       
Leisure and Entertainment - 0.0%          

Shuffle Master b,c

  15,000     74,100
       
Media and Broadcasting - 0.1%          

Cox Radio Cl. A b,c

  23,000     271,400

Discovery Holding Company Cl. B b,c

  36,600     827,526
       
          1,098,926
       
Online Commerce - 0.1%          

CryptoLogic

  200     2,872

FTD Group b

  55,000     733,150
       
          736,022
       
Restaurants and Lodgings - 0.6%          

Benihana b,c

  3,300     20,658

CEC Entertainment b,c

  116,000     3,249,160

Steak n Shake c

  198,000     1,253,340

Tim Hortons

  65,000     1,864,850
       
          6,388,008
       
Retail Stores - 2.8%          

America’s Car-Mart b,c

  65,400     1,171,968

AnnTaylor Stores c

  50,000     1,198,000

Bulgari

  322,000     3,252,233

CarMax b,c

  120,000     1,702,800

Charming Shoppes b,c

  22,800     104,652

Children’s Place Retail Stores c

  13,670     493,487

Dress Barn (The) b,c

  287,280     3,843,806

Fielmann

  22,000     1,607,893

Gander Mountain c

  53,300     196,677

Lewis Group

  518,000     2,183,142

Pier 1 Imports c

  626,200     2,154,128

Stein Mart b,c

  182,800     824,428

Tiffany & Co.

  158,700     6,467,025

Tractor Supply b,c

  21,200     615,648

Urban Outfitters b,c

  27,000     842,130

West Marine c

  131,100     537,510

Wet Seal (The) Cl. A c

  162,000     772,740
       
          27,968,267
       
Total (Cost $44,701,966)         39,203,516
       
           
Diversified Investment Companies – 0.5%          
Closed-End Funds - 0.5%          

Central Fund of Canada Cl. A

  211,500     2,738,925

Kohlberg Capital

  209,884     2,098,840
       
Total (Cost $4,642,086)         4,837,765
       
           
Financial Intermediaries – 13.1%          
Banking - 5.5%          

Abigail Adams National Bancorp

  160,500     1,500,675

Ameriana Bancorp

  40,000     380,000

Banca Finnat Euramerica

  500,000     577,036

Bank of N.T. Butterfield & Son

  446,875     6,613,750

Bank Sarasin & Cie Cl. B

  15,000     674,710

Banque Privee Edmond de Rothschild

  17     632,372

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2008 Semiannual Report to Stockholders  | 21




Royce Value Trust


Schedule of Investments

    SHARES     VALUE
Financial Intermediaries (continued)          
Banking (continued)          

BB Holdings c

  289,400   $ 1,311,404

BOK Financial

  164,227     8,777,933

Boston Private Financial Holdings

  203,000     1,151,010

Cadence Financial

  40,300     436,449

Center Bancorp

  66,811     584,596

Centrue Financial

  82,200     895,980

CFS Bancorp

  265,000     3,124,350

CNB Financial

  11,116     157,180

Commercial National Financial

  54,900     818,010

Farmers & Merchants Bank of Long

         

Beach

  1,200     5,760,000

Fauquier Bankshares

  160,800     2,588,880

Hawthorn Bancshares

  44,400     1,121,988

Heritage Financial

  20,615     326,748

HopFed Bancorp

  112,500     1,549,125

Jefferson Bancshares

  32,226     295,835

Kearny Financial

  60,862     669,482

Mechanics Bank (The)

  200     3,410,000

Nexity Financial c

  109,999     511,495

Old Point Financial

  25,000     445,000

Peapack-Gladstone Financial

  10,000     219,700

Peoples Community Bancorp c

  179,310     408,827

Timberland Bancorp a

  469,200     3,762,984

Tompkins Financial

  17,545     652,674

Vontobel Holding

  15,600     532,955

W Holding Company

  935,400     795,090

Whitney Holding

  41,500     759,450

Wilber Corporation (The)

  103,900     880,033

Wilmington Trust

  131,000     3,463,640

Yadkin Valley Financial

  3,800     45,410
       
          55,834,771
       
Insurance - 4.5%          

Alleghany Corporation c

  16,644     5,526,640

Argo Group International Holdings b,c

  64,751     2,173,043

Aspen Insurance Holdings

  64,000     1,514,880

CNA Surety b,c

  130,600     1,650,784

Enstar Group b,c

  7,000     612,500

Erie Indemnity Cl. A

  91,500     4,222,725

First American

  20,000     528,000

Greenlight Capital Re Cl. A b,c

  87,200     1,993,392

Hilltop Holdings b,c

  230,000     2,371,300

Independence Holding

  317,658     3,103,519

IPC Holdings

  27,000     716,850

LandAmerica Financial Group

  10,000     221,900

Leucadia National

  34,940     1,640,084

Markel Corporation c

  11,100     4,073,700

Montpelier Re Holdings

  66,000     973,500

NYMAGIC

  232,200     4,448,952

Old Republic International

  20,000     236,800

ProAssurance Corporation c

  33,070     1,590,998

RLI

  99,724     4,933,346

Stewart Information Services

  100,000     1,934,000

Wesco Financial

  4,750     1,814,500
       
          46,281,413
       
    SHARES     VALUE
Financial Intermediaries (continued)          
Real Estate Investment Trusts - 0.1%          

Gladstone Commercial

  34,700   $ 601,351
       
Securities Brokers - 2.4%          

Broadpoint Securities Group b,c

  200,100     400,200

Close Brothers Group

  33,000     363,493

Cowen Group b,c

  32,000     247,040

DundeeWealth

  33,300     425,516

E*TRADE Financial b,c

  75,000     235,500

Egyptian Financial Group-Hermes Holding

         

GDR

  28,000     504,000

Evercore Partners Cl. A

  308,500     2,930,750

HQ

  26,000     429,559

Investcorp Bank GDR c

  22,000     561,000

Investment Technology Group b,c

  30,400     1,017,184

KBW b,c

  70,058     1,441,794

LaBranche & Co b,c

  137,000     969,960

Lazard Cl. A

  176,700     6,034,305

MF Global b,c

  145,500     918,105

Oppenheimer Holdings Cl. A

  30,000     847,800

optionsXpress Holdings

  53,000     1,184,020

Penson Worldwide b,c

  50,000     597,500

Phatra Securities

  575,000     524,525

Piper Jaffray b,c

  105,700     3,100,181

Shinko Securities

  464,300     1,368,611
       
          24,101,043
       
Securities Exchanges - 0.0%          

MarketAxess Holdings c

  67,000     506,520
       
Other Financial Intermediaries - 0.6%          

KKR Financial Holdings

  481,404     5,054,742

KKR Private Equity Investors L.P.

  105,000     1,338,750
       
          6,393,492
       
Total (Cost $140,006,502)         133,718,590
       
           
Financial Services – 12.3%          
Diversified Financial Services - 0.6%          

AmeriCredit Corporation b,c

  18,870     162,660

Centerline Holding Company

  59,600     99,532

Discover Financial Services

  10,000     131,700

Encore Capital Group b,c

  88,000     777,040

Municipal Mortgage & Equityb

  40,300     118,885

Ocwen Financial b,c

  173,600     807,240

World Acceptance b,c

  133,700     4,501,679
       
          6,598,736
       
Information and Processing - 1.7%          

Broadridge Financial Solutions

  30,000     631,500

Global Payments

  68,500     3,192,100

Interactive Data

  134,300     3,374,959

MoneyGram International c

  428,500     386,507

MSCI Cl. A b,c

  30,000     1,088,700

Paychex

  30,000     938,400

PRG-Schultz International b,c

  14,420     135,692

SEI Investments

  306,800     7,215,936
       
          16,963,794
       
Insurance Brokers - 0.9%          

Brown & Brown

  206,800     3,596,252

22 |  2008 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.




June 30, 2008 (unaudited)


 

    SHARES     VALUE
Financial Services (continued)          
Insurance Brokers (continued)          

Crawford & Company Cl. A c

  289,200   $ 1,807,500

Crawford & Company Cl. B b,c

  162,300     1,296,777

Gallagher (Arthur J.) & Co.

  111,200     2,679,920
       
          9,380,449
       
Investment Management - 7.8%          

A.F.P. Provida ADR

  16,100     411,033

Affiliated Managers Group b,c

  28,500     2,566,710

AllianceBernstein Holding L.P.

  333,100     18,213,908

Anima

  736,402     1,669,578

AP Alternative Assets L.P.

  315,600     3,471,600

Ashmore Group

  80,000     344,988

Australian Wealth Management

  291,000     361,262

Azimut Holding

  53,000     466,880

BKF Capital Group b,c

  227,050     467,723

Calamos Asset Management Cl. A

  45,000     766,350

Candover Investments

  10,500     412,432

CapMan Cl. B

  632,000     2,487,633

Cockleshell c

  337,644     366,532

Coronation Fund Managers

  496,000     288,225

Deutsche Beteiligungs

  95,000     2,402,140

Eaton Vance

  172,800     6,870,528

Equity Trustees

  23,477     490,636

F&C Asset Management

  210,000     615,930

Federated Investors Cl. B

  145,700     5,014,994

Fiducian Portfolio Services

  227,000     500,511

GAMCO Investors Cl. A

  133,600     6,629,232

GIMV

  20,000     1,319,390

GP Investments BDR c

  15,000     181,898

JAFCO

  37,300     1,275,124

MVC Capital

  484,200     6,628,698

New Star Asset Management Group

  126,500     255,748

Onex Corporation

  50,000     1,472,492

Perpetual

  11,100     455,116

Pzena Investment Management Cl. A

  238,700     3,045,812

Rathbone Brothers

  28,000     517,283

RHJ International c

  177,500     2,235,720

Schroders

  150,000     2,730,825

SHUAA Capital

  320,000     659,506

SPARX Group

  7,020     2,426,275

Tasmanian Perpetual Trustees

  115,000     551,224

Trust Company

  65,500     533,728

Value Partners Group

  520,000     446,824
       
          79,554,488
       
Special Purpose Acquisition Corporation - 0.4%          

Alternative Asset Management

         

Acquisition (Units) c

  250,000     2,425,000

Prospect Acquisition (Units) c

  150,000     1,434,000
       
          3,859,000
       
Specialty Finance - 0.9%          

Credit Acceptance b,c

  214,601     5,485,201

MCG Capital

  157,715     627,706

NGP Capital Resources

  50,000     770,500
    SHARES     VALUE
Financial Services (continued)          
Specialty Finance (continued)          

Portfolio Recovery Associates c

  62,100   $ 2,328,750
       
          9,212,157
       
Total (Cost $130,560,196)         125,568,624
       
           
Health – 6.2%          
Commercial Services - 1.0%          

PAREXEL International b,c

  384,400     10,113,564
       
Drugs and Biotech - 1.6%          

Affymetrix b,c

  10,000     102,900

Biovail Corporation

  41,200     397,580

Endo Pharmaceuticals Holdings b,c

  155,000     3,749,450

Genitope Corporation b,c

  150,000     6,660

Human Genome Sciences b,c

  90,000     468,900

K-V Pharmaceutical Cl. A b,c

  51,500     995,495

Medicines Company (The) b,c

  20,000     396,400

Mylan b,c

  52,200     630,054

Myriad Genetics b,c

  50,000     2,276,000

Ore Pharmaceuticals b,c

  117,980     155,734

Perrigo Company

  162,950     5,176,921

Pharmacyclics b,c

  383,000     677,910

QLT c

  114,070     391,260

Sinovac Biotech b,c

  37,400     121,550

Sunesis Pharmaceuticals b,c

  582,000     838,080
       
          16,384,894
       
Health Services - 1.1%          

Albany Molecular Research c

  85,000     1,127,950

Chem Rx (Units) c

  280,000     1,416,800

Cross Country Healthcare c

  30,000     432,300

Gentiva Health Services c

  30,150     574,357

HMS Holdings b,c

  50,000     1,073,500

Lincare Holdings b,c

  52,562     1,492,761

MedQuist c

  73,893     580,060

On Assignment b,c

  375,400     3,010,708

PharmaNet Development Group b,c

  10,000     157,700

Res-Care b,c

  65,460     1,163,879

WellCare Health Plans b,c

  5,000     180,750
       
          11,210,765
       
Medical Products and Devices - 2.5%          

Allied Healthcare Products c

  180,612     1,228,161

ArthroCare Corporation b,c

  10,000     408,100

Atrion Corporation

  15,750     1,509,165

Bruker Corporation c

  370,200     4,757,070

Coloplast Cl. B

  17,000     1,482,287

CONMED Corporation b,c

  81,500     2,163,825

Golden Meditech c

  200,000     67,460

IDEXX Laboratories c

  158,000     7,700,920

STERIS Corporation

  98,600     2,835,736

Straumann Holding

  1,000     239,636

Urologix b,c

  445,500     815,265

Young Innovations

  62,550     1,302,291

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2008 Semiannual Report to Stockholders  | 23




Royce Value Trust


Schedule of Investments

    SHARES     VALUE
Health (continued)          
Medical Products and Devices (continued)          

Zoll Medical b,c

  40,400   $ 1,360,268
       
          25,870,184
       
Total (Cost $41,943,864)         63,579,407
       
           
Industrial Products – 21.0%          
Automotive - 2.2%          

Copart c

  153,100     6,555,742

ElringKlinger

  15,000     1,421,493

Fuel Systems Solutions b,c

  22,500     866,250

International Textile Group c

  85,000     29,750

LKQ Corporation b,c

  375,000     6,776,250

SORL Auto Parts b,c

  54,600     292,656

Superior Industries International

  98,400     1,660,992

WABCO Holdings

  98,800     4,590,248

Wonder Auto Technology b,c

  13,400     94,202
       
          22,287,583
       
Building Systems and Components - 1.1%          

Decker Manufacturing

  6,022     216,792

Heywood Williams Group c

  958,837     272,155

NCI Building Systems b,c

  13,900     510,547

Preformed Line Products

  91,600     3,692,396

Simpson Manufacturing

  293,400     6,965,316
       
          11,657,206
       
Construction Materials - 2.1%          

Ash Grove Cement Cl. B

  50,518     12,073,802

Duratex

  45,300     834,451

Owens Corning b,c

  25,000     568,750

Pretoria Portland Cement

  375,000     1,374,042

United Rentals b,c

  232,500     4,559,325

USG Corporation b,c

  50,000     1,478,500
       
          20,888,870
       
Industrial Components - 1.9%          

CLARCOR

  113,500     3,983,850

Donaldson Company

  92,800     4,142,592

GrafTech International b,c

  64,790     1,738,316

II-VI c

  13,500     471,420

Mueller Water Products Cl. A

  72,500     585,075

PerkinElmer

  135,800     3,782,030

Powell Industries c

  92,400     4,657,884
       
          19,361,167
       
Machinery - 5.5%          

Astec Industries b,c

  20,000     642,800

Baldor Electric

  62,900     2,200,242

Bell Equipment

  200,000     910,600

Burnham Holdings Cl. A

  117,964     1,557,125

Burnham Holdings Cl. B

  36,000     475,200

Franklin Electric

  104,800     4,064,144

Hardinge

  26,193     344,962

Intermec b,c

  23,000     484,840

Lincoln Electric Holdings

  177,980     14,007,026

Manitou BF

  65,000     1,947,517

Nordson Corporation

  162,200     11,822,758

OSG Corporation

  20,000     226,021
    SHARES     VALUE
Industrial Products (continued)          
Machinery (continued)          

Rofin-Sinar Technologies c

  236,000   $ 7,127,200

Takatori Corporation

  40,000     192,118

Williams Controls b,c

  37,499     475,112

Woodward Governor

  274,600     9,792,236
       
          56,269,901
       
Metal Fabrication and Distribution - 1.4%          

Central Steel & Wire

  6,062     4,000,920

Commercial Metals

  36,600     1,379,820

CompX International

  292,300     1,695,340

Gerdau Ameristeel

  61,100     1,179,230

NN

  197,100     2,747,574

RBC Bearings b,c

  45,000     1,499,400

Reliance Steel & Aluminum

  25,920     1,998,173
       
          14,500,457
       
Miscellaneous Manufacturing - 3.5%          

Barnes Group

  20,000     461,800

Brady Corporation Cl. A

  188,400     6,505,452

Matthews International Cl. A

  100,000     4,526,000

Mettler-Toledo International b,c

  28,700     2,722,482

Peerless Manufacturing c

  191,600     8,980,292

Rational

  15,200     3,065,645

Raven Industries

  86,200     2,825,636

Semperit AG Holding

  50,000     1,957,043

Somfy

  5,000     1,254,444

Synalloy Corporation

  198,800     3,065,496
       
          35,364,290
       
Paper and Packaging - 0.4%          

Mayr-Melnhof Karton

  38,000     3,589,150
       
Pumps, Valves and Bearings - 1.5%          

Graco

  143,625     5,467,804

IDEX Corporation

  54,000     1,989,360

Kaydon Corporation

  76,900     3,953,429

Pfeiffer Vacuum Technology

  35,000     3,630,369
       
          15,040,962
       
Specialty Chemicals and Materials - 1.2%          

Aceto Corporation

  119,710     914,584

American Vanguard

  26,666     327,992

Cabot Corporation

  181,000     4,400,110

Hawkins

  206,878     3,094,895

Migao Corporation c

  12,700     105,117

New Oriental Energy & Chemical b,c

  1,000     5,270

Schulman (A.)

  150,100     3,456,803
       
          12,304,771
       
Textiles - 0.0%          

Unific

  145,100     365,652
       
Other Industrial Products - 0.2%          

Vacon

  45,000     1,824,395
       
Total (Cost $117,039,891)         213,454,404
       
           
Industrial Services – 16.3%          
Advertising and Publishing - 0.5%          

Focus Media Holding ADR b,c

  71,900     1,993,068

Lamar Advertising Cl. A c

  45,000     1,621,350

24 |  2008 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.




June 30, 2008 (unaudited)


 

    SHARES     VALUE
Industrial Services (continued)          
Advertising and Publishing (continued)          

MDC Partners Cl. A b,c

  60,000   $ 430,800

Sun-Times Media Group Cl. A b,c

  180,000     88,200

ValueClick b,c

  45,000     681,750

Voyager Learning b,c

  150,000     757,500
       
          5,572,668
       
Commercial Services - 9.2%          

Animal Health International b,c

  30,000     186,900

Canadian Solar b,c

  50,000     2,009,500

ChinaCast Education b,c

  35,700     149,583

Convergys Corporation b,c

  121,000     1,798,060

Corinthian Colleges b,c

  106,500     1,236,465

CRA International b,c

  79,287     2,866,225

Diamond Management & Technology Consultants

  80,400     418,884

Forrester Research c

  40,300     1,244,464

Gartner c

  213,000     4,413,360

Global Sources b,c

  3,900     59,202

Hackett Group b,c

  655,000     3,759,700

Hewitt Associates Cl. A b,c

  205,720     7,885,248

Iron Mountain b,c

  210,862     5,598,386

ITT Educational Services c

  95,000     7,849,850

Landauer

  117,900     6,630,696

Learning Tree International b,c

  53,400     913,140

Manpower

  3,100     180,544

ManTech International Cl. A b,c

  119,400     5,745,528

MAXIMUS

  127,900     4,453,478

Michael Page International

  397,000     1,848,411

Monster Worldwide b,c

  24,800     511,128

MPS Group c

  564,600     6,001,698

New Horizons Worldwide b,c

  228,600     354,330

Ritchie Bros. Auctioneers

  550,200     14,926,926

Robert Half International

  65,500     1,570,035

Sotheby’s

  371,600     9,799,092

Spherion Corporation b,c

  53,000     244,860

TRC Companies c

  3,600     14,472

Wright Express b,c

  30,000     744,000
       
          93,414,165
       
Engineering and Construction - 1.2%          

Desarrolladora Homex ADR b,c

  9,800     574,084

Fleetwood Enterprises c

  234,300     613,866

HLS Systems International b,c

  109,120     571,789

Integrated Electrical Services b,c

  355,400     6,112,880

KBR

  140,000     4,887,400
       
          12,760,019
       
Food, Tobacco and Agriculture - 0.4%          

Agria Corporation ADR b,c

  21,900     93,732

Alico

  27,000     935,820

Astral Foods

  80,000     929,758

HQ Sustainable Maritime Industries b,c

  17,000     225,250

MGP Ingredients

  127,400     738,920

Origin Agritech b,c

  105,100     628,498

Zhongpin c

  9,400     117,500
       
          3,669,478
       
    SHARES     VALUE
Industrial Services (continued)          
Industrial Distribution - 0.7%          

Lawson Products

  161,431   $ 4,000,260

MSC Industrial Direct Cl. A

  74,300     3,277,373
       
          7,277,633
       
Printing - 0.1%          

Bowne & Co.

  68,100     868,275
       
Transportation and Logistics - 4.2%          

Alexander & Baldwin

  60,000     2,733,000

Atlas Air Worldwide Holdings b,c

  17,000     840,820

C.H. Robinson Worldwide

  80,000     4,387,200

Forward Air

  269,750     9,333,350

Frozen Food Express Industries

  286,635     1,934,786

Hub Group Cl. A b,c

  174,400     5,952,272

Landstar System

  96,200     5,312,164

Patriot Transportation Holding c

  72,300     5,784,000

Universal Truckload Services c

  115,100     2,534,502

UTI Worldwide

  175,000     3,491,250
       
          42,303,344
       
Total (Cost $102,643,264)         165,865,582
       
           
Natural Resources – 10.7%          
Energy Services - 5.3%          

Cal Dive International c

  50,000     714,500

CARBO Ceramics

  135,200     7,888,920

Core Laboratories b,c

  10,000     1,423,500

Ensign Energy Services

  126,300     2,752,168

Exterran Holdings b,c

  103,600     7,406,364

Global Industries b,c

  54,500     977,185

Helix Energy Solutions Group b,c

  34,226     1,425,171

Helmerich & Payne

  53,700     3,867,474

ION Geophysical b,c

  464,500     8,105,525

RPC

  25,000     420,000

SEACOR Holdings b,c

  127,300     11,394,623

TETRA Technologies b,c

  68,000     1,612,280

Willbros Group c

  103,800     4,547,478

World Fuel Services

  60,000     1,316,400
       
          53,851,588
       
Oil and Gas - 2.0%          

Bill Barrett c

  50,000     2,970,500

Carrizo Oil & Gas b,c

  41,700     2,839,353

Cimarex Energy

  115,490     8,046,188

Edge Petroleum b,c

  326,900     1,761,991

Penn Virginia

  32,880     2,479,810

PetroCorp c,d

  61,400     0

Storm Cat Energy b,c

  330,800     383,728

W&T Offshore

  25,000     1,462,750
       
          19,944,320
       
Precious Metals and Mining - 2.3%          

Centerra Gold c

  30,000     140,335

Endeavour Mining Capital

  150,000     1,088,555

Etruscan Resources c

  745,900     1,206,958

Gammon Gold c

  198,300     2,151,555

Golden Star Resources b,c

  350,000     941,500

Harry Winston Diamond

  10,000     287,900

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2008 Semiannual Report to Stockholders  | 25




Royce Value Trust


Schedule of Investments

    SHARES     VALUE
Natural Resources (continued)          
Precious Metals and Mining (continued)          

Hecla Mining c

  490,500   $ 4,542,030

IAMGOLD Corporation

  335,620     2,030,501

Kimber Resources b,c

  560,000     890,400

Kinross Gold

  40,286     951,153

Metorex c

  800,000     2,360,153

Northam Platinum

  225,000     1,942,529

Northgate Minerals c

  90,000     247,500

NovaGold Resources b,c

  45,000     335,250

Pan American Silver b,c

  41,000     1,417,780

Royal Gold

  34,400     1,078,784

Yamana Gold

  113,525     1,877,704
       
          23,490,587
       
Real Estate - 1.1%          

Consolidated-Tomoka Land

  13,564     570,502

PICO Holdings b,c

  75,200     3,267,440

SARE Holding Cl. B c

  730,000     956,288

St. Joe Company (The) b,c

  132,100     4,533,672

Tejon Ranch b,c

  65,000     2,343,900
       
          11,671,802
       
Total (Cost $58,192,473)         108,958,297
       
           
Technology – 21.3%          
Aerospace and Defense - 1.0%          

AerCap Holdings b,c

  45,000     568,350

Astronics Corporation c

  52,400     728,884

Ceradyne b,c

  1,000     34,300

Ducommun c

  117,200     2,690,912

HEICO Corporation

  129,000     4,197,660

Hexcel Corporation b,c

  47,500     916,750

Integral Systems c

  39,876     1,543,201
       
          10,680,057
       
Components and Systems - 6.2%          

Analogic Corporation

  40,135     2,531,314

Belden

  57,800     1,958,264

Benchmark Electronics c

  208,200     3,401,988

Checkpoint Systems c

  56,060     1,170,533

China Security & Surveillance

         

Technology b,c

  6,000     80,880

Diebold

  73,600     2,618,688

Dionex Corporation c

  81,000     5,375,970

Electronics for Imaging b,c

  25,000     365,000

Energy Conversion Devices b,c

  84,500     6,222,580

Excel Technology c

  168,500     3,760,920

Hutchinson Technology b,c

  97,500     1,310,400

KEMET Corporation c

  95,600     309,744

Lexmark International Cl. A b,c

  4,000     133,720

Methode Electronics

  50,000     522,500

Nam Tai Electronics

  23,400     306,072

Newport Corporation b,c

  592,200     6,745,158

Perceptron c

  357,700     3,129,875

Plexus Corporation c

  300,700     8,323,376

Richardson Electronics

  520,712     3,087,822

Technitrol

  261,200     4,437,788

Vaisala Cl. A

  84,205     3,488,092
    SHARES     VALUE
Technology (continued)          
Components and Systems (continued)          

Vishay Intertechnology b,c

  186,000   $ 1,649,820

Zebra Technologies Cl. A c

  76,525     2,497,776
       
          63,428,280
       
Distribution - 0.9%          

Agilysys

  165,125     1,872,517

Anixter International c

  61,795     3,676,185

China 3C Group c

  157,300     202,917

Tech Data b,c

  86,500     2,931,485
       
          8,683,104
       
Internet Software and Services - 0.8%          

Arbinet-thexchange

  21,700     84,413

CMGI b,c

  173,500     1,839,100

CyberSource Corporation b,c

  10,000     167,300

EarthLink b,c

  55,200     477,480

j2 Global Communications b,c

  43,420     998,660

Jupitermedia Corporation b,c

  525,000     735,000

KongZhong Corporation ADR b,c

  8,300     30,959

Lionbridge Technologies c

  37,500     96,750

Perficient b,c

  10,000     96,600

RealNetworks b,c

  245,400     1,619,640

SkyTerra Communications c

  62,200     419,850

SupportSoft c

  220,000     715,000

VeriSign b,c

  24,800     937,440
       
          8,218,192
       
IT Services - 2.3%          

Alten c

  44,000     1,607,199

BearingPoint b,c

  529,100     428,571

Black Box

  67,300     1,829,887

Computer Task Group c

  101,100     517,632

DST Systems b,c

  5,000     275,250

Metavante Technologies b,c

  20,000     452,400

Sapient Corporation b,c

  806,602     5,178,385

SRA International Cl. A b,c

  213,300     4,790,718

Syntel

  152,679     5,148,336

Total System Services

  25,000     555,500

TriZetto Group (The) c

  107,600     2,300,488

Yucheng Technologies b,c

  13,500     151,065
       
          23,235,431
       
Semiconductors and Equipment - 3.8%          

Actions Semiconductor ADR b,c

  46,600     160,770

BE Semiconductor Industries b,c

  58,000     281,300

Brooks Automation c

  5,152     42,607

CEVA c

  31,666     252,378

Cognex Corporation

  236,200     5,444,410

Coherent c

  243,500     7,278,215

Diodes c

  297,450     8,221,518

DSP Group b,c

  164,500     1,151,500

Exar Corporation b,c

  232,576     1,753,623

Fairchild Semiconductor International c

  51,200     600,576

Himax Technologies ADR

  100,000     512,000

Image Sensing Systems b,c

  8,310     106,950

International Rectifier b,c

  120,000     2,304,000

Intevac b,c

  57,450     648,036

Jazz Technologies (Units) c

  805,000     966,000

26 |  2008 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.




June 30, 2008 (unaudited)


 

    SHARES     VALUE
Technology (continued)          
Semiconductors and Equipment (continued)          

Jinpan International

  3,700   $ 136,900

Kulicke & Soffa Industries c

  105,800     771,282

Novellus Systems b,c

  12,000     254,280

Power Integrations b,c

  49,000     1,548,890

Sanmina-SCI Corporation b,c

  200,000     256,000

Semitool c

  50,000     375,500

TTM Technologies b,c

  221,400     2,924,694

Varian b,c

  2,000     102,120

Veeco Instruments b,c

  65,000     1,045,200

Vimicro International ADR b,c

  270,000     766,800

Virage Logic b,c

  120,000     859,200
       
          38,764,749
       
Software - 3.9%          

ACI Worldwide c

  233,150     4,101,109

Advent Software b,c

  187,900     6,779,432

ANSYS b,c

  100,000     4,712,000

Aspen Technology c

  42,100     589,400

Avid Technology b,c

  96,000     1,631,040

Borland Software b,c

  280,000     380,800

China Fire & Security Group c

  16,300     131,215

Datasul

  150,000     2,138,045

Epicor Software b,c

  79,900     552,109

JDA Software Group b,c

  99,900     1,808,190

MSC.Software c

  50,000     549,000

National Instruments

  72,900     2,068,173

Net 1 UEPS Technologies b,c

  50,000     1,215,000

Pegasystems

  44,200     594,932

PLATO Learning c

  149,642     396,551

Radiant Systems b,c

  32,500     348,725

Renaissance Learning

  15,000     168,150

SPSS c

  179,600     6,532,052

Sybase b,c

  82,600     2,430,092

Teradata Corporation c

  35,000     809,900

THQ b,c

  20,000     405,200

Verint Systems b,c

  40,000     920,800
       
          39,261,915
       
Telecommunications - 2.4%          

Adaptec b,c

  2,584,100     8,269,120

ADTRAN

  65,000     1,549,600

Catapult Communications c

  87,100     620,152

China GrenTech ADR b,c

  8,700     39,672

China Mobile Media Technology c

  160,200     3,204

Cogent Communications Group b,c

  204,200     2,736,280

Cogo Group b,c

  7,900     71,969

Foundry Networks c

  298,600     3,529,452

Globalstar b,c

  50,000     141,500

Globecomm Systems c

  233,700     1,930,362

IDT Corporation c

  108,400     163,684

IDT Corporation Cl. B c

  245,000     416,500

Level 3 Communications b,c

  401,341     1,183,956

NMS Communications b,c

  380,000     421,800

Sycamore Networks b,c

  191,000     615,020

Tandberg

  90,000     1,475,497

Tollgrade Communications c

  20,000     89,800
      SHARES     VALUE
Technology (continued)            
Telecommunications (continued)            

UTStarcom c

    31,400   $ 171,758

Zhone Technologies c

    1,090,000     850,200
         
            24,279,526
         
Total (Cost $206,076,638)           216,551,254
         
             
Utilities – 0.2%            

CH Energy Group

    44,500     1,582,865

Southern Union

    11,576     312,784
         
Total (Cost $2,127,413)           1,895,649
         
             
Miscellaneouse – 2.6%            
Total (Cost $29,778,681)           26,716,887
         
             
TOTAL COMMON STOCKS            

(Cost $935,638,338)

          1,159,041,904
         
             
PREFERRED STOCKS – 0.4%            

Duratex

    130,000     2,757,158

Seneca Foods Conv. c,d

    85,000     1,595,025
         
TOTAL PREFERRED STOCKS            

(Cost $4,182,756)

          4,352,183
         
             
      PRINCIPAL      
      AMOUNT      
CORPORATE BOND – 0.0%            

Dixie Group 7.00%

           

Conv. Sub. Deb. due 5/15/12

           

(Cost $264,314)

  $ 307,000     286,661
         
             
REPURCHASE AGREEMENT – 6.6%            
State Street Bank & Trust Company,            

2.05% dated 6/30/08, due 7/1/08,

           

maturity value $67,473,842 (collateralized

           

by obligations of various U.S. Government

           

Agencies, valued at $69,159,350)

           

(Cost $67,470,000)

          67,470,000
         
             
COLLATERAL RECEIVED FOR SECURITIES            

LOANED – 11.6%

           
U.S. Treasury Bills            

due 11/13/08-11/20/08

    37,368     37,368
U.S. Treasury Bonds            

5.50%-8.875%

           

due 5/15/17-8/15/28

    1,275,121     1,302,986
U.S. Treasury Notes            

4.50%-5.00%

           

due 4/30/09-8/15/11

    146,659     149,229
U.S. Treasury Notes-TIPS            

1.875%-2.00%

           

due 7/15/14-7/15/15

    82,587     83,209

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2008 Semiannual Report to Stockholders  | 27




Royce Value Trust   June 30, 2008 (unaudited)


Schedule of Investments

          VALUE  
COLLATERAL RECEIVED FOR SECURITIES            

LOANED (continued)

           
Money Market Funds            

State Street Navigator Securities Lending

           

Prime Portfolio (7 day yield-2.6748%)

      $ 116,161,736  
       
 
             
TOTAL COLLATERAL RECEIVED FOR            

SECURITIES LOANED

           

(Cost $117,734,528)

        117,734,528  
       
 
             
TOTAL INVESTMENTS – 132.5%            

(Cost $1,125,289,936)

        1,348,885,276  
             
LIABILITIES LESS CASH            

AND OTHER ASSETS – (10.9)%

        (110,717,436 )
             
PREFERRED STOCK – (21.6)%         (220,000,000 )
       
 
             
NET ASSETS APPLICABLE TO COMMON            

STOCKHOLDERS – 100.0%

      $ 1,018,167,840  
       
 




  New additions in 2008.
     
a  
At June 30, 2008, 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.
     
b   All or a portion of these securities were on loan at June 30, 2008. Total market value of loaned securities at June 30, 2008 was $112,828,640.
     
c   Non-income producing.
     
d   Securities for which market quotations are not readily available represent 0.2% of net assets. These securities have been valued at their fair value under procedures established by the Fund’s Board of Directors.
     
e   Includes securities first acquired in 2008 and less than 1% of net assets applicable to Common Stockholders.
     
    Bold indicates the Fund’s 20 largest equity holdings in terms of June 30, 2008 market value.
     
TAX INFORMATION: The cost of total investments for Federal income tax purposes was $1,126,378,186. At June 30, 2008, net unrealized appreciation for all securities was $222,507,090, consisting of aggregate gross unrealized appreciation of $376,486,271 and aggregate gross unrealized depreciation of $153,979,181. The primary difference in book and tax basis cost is the timing of the recognition of losses on securities sold.


28 |  2008 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.




Royce Value Trust   June 30, 2008 (unaudited)


Statement of Assets and Liabilities

ASSETS:        
Investments at value (including collateral on loaned securities)*        

Non-Affiliated Companies (cost $1,047,784,334)

  $ 1,275,423,831  

Affiliated Companies (cost $10,035,602)

    5,991,445  

Total investments at value     1,281,415,276  
Repurchase agreements (at cost and value)     67,470,000  
Cash and foreign currency     48,083  
Receivable for investments sold     14,465,352  
Receivable for dividends and interest     1,087,014  
Prepaid expenses and other assets     220,593  

Total Assets

    1,364,706,318  

LIABILITIES:        
Payable for collateral on loaned securities     117,734,528  
Payable for investments purchased     6,876,866  
Payable for investment advisory fee     1,356,971  
Preferred dividends accrued but not yet declared     288,446  
Accrued expenses     281,667  

Total Liabilities

    126,538,478  

PREFERRED STOCK:        
5.90% Cumulative Preferred Stock - $0.001 par value, $25 liquidation value per share; 8,800,000 shares outstanding     220,000,000  

     Total Preferred Stock     220,000,000  

NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS   $ 1,018,167,840  

ANALYSIS OF NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:        
Common Stock paid-in capital - $0.001 par value per share; 61,776,913 shares outstanding (150,000,000 shares authorized)   $ 798,626,791  
Undistributed net investment income (loss)     1,438,972  
Accumulated net realized gain (loss) on investments and foreign currency     56,907,336  
Net unrealized appreciation (depreciation) on investments and foreign currency     223,598,013  
Quarterly and accrued distributions     (62,403,272 )

Net Assets applicable to Common Stockholders (net asset value per share - $16.48)

  $ 1,018,167,840  

*Investments at identified cost (including $117,734,528 of collateral on loaned securities)   $ 1,057,819,936  
 Market value of loaned securities     112,828,640  

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2008 Semiannual Report to Stockholders  | 29




Royce Value Trust   Six Months Ended June 30, 2008 (unaudited)


Statement of Operations

INVESTMENT INCOME:        
Income:        

Dividends*

       

Non-Affiliated Companies

  $ 8,931,086  

Affiliated Companies

    103,224  

Interest

    1,286,403  

Securities lending

    798,937  

Total income     11,119,650  

Expenses:        

Investment advisory fees

    8,935,138  

Stockholder reports

    244,964  

Custody and transfer agent fees

    130,097  

Directors’ fees

    63,720  

Administrative and office facilities expenses

    56,362  

Professional fees

    28,628  

Other expenses

    69,227  

Total expenses     9,528,136  
 
Compensating balance credits     (3,514 )

Net expenses     9,524,622  

Net investment income (loss)     1,595,028  

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:        
Net realized gain (loss) on investments and foreign currency        

Non-Affiliated Companies

    39,652,598  

Affiliated Companies

     
Net change in unrealized appreciation (depreciation) on investments and foreign currency     (174,123,794 )

Net realized and unrealized gain (loss) on investments and foreign currency     (134,471,196 )

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM INVESTMENT OPERATIONS     (132,876,168 )

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS     (6,490,000 )

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS        

RESULTING FROM INVESTMENT OPERATIONS

  $ (139,366,168 )
         
* Net of foreign withholding tax of $447,399.        

30 |  2008 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.




Royce Value Trust


Statement of Changes in Net Assets

    Six months ended        
    6/30/08   Year ended
    (unaudited)   12/31/07
INVESTMENT OPERATIONS:                
Net investment income (loss)   $ 1,595,028     $ 5,297,518  
Net realized gain (loss) on investments and foreign currency     39,652,598       121,683,331  
Net change in unrealized appreciation (depreciation) on investments and foreign currency     (174,123,794 )     (56,217,996 )

Net increase (decrease) in net assets resulting from investment operations     (132,876,168 )     70,762,853  

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:                
Net investment income           (613,954 )
Net realized gain on investments and foreign currency           (12,366,046 )
Quarterly distributions *     (6,490,000 )      

Total distributions to Preferred Stockholders     (6,490,000 )     (12,980,000 )

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS

               

RESULTING FROM INVESTMENT OPERATIONS

    (139,366,168 )     57,782,853  

DISTRIBUTIONS TO COMMON STOCKHOLDERS:                
Net investment income           (5,095,420 )
Net realized gain on investments and foreign currency           (102,630,144 )
Quarterly distributions *     (55,624,823 )      

Total distributions to Common Stockholders     (55,624,823 )     (107,725,564 )

CAPITAL SHARE TRANSACTIONS:                
Reinvestment of distributions to Common Stockholders     28,489,506       54,184,473  

Total capital stock transactions     28,489,506       54,184,473  

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS     (166,501,485 )     4,241,762  

NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:                

Beginning of period

    1,184,669,325       1,180,427,563  

End of period (including undistributed net investment income (loss) of $1,438,972 at 6/30/08 and

               

$(156,056) at 12/31/07)

  $ 1,018,167,840     $ 1,184,669,325  



* To be allocated to net investment income and capital gains at year end.


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2008 Semiannual Report to Stockholders  | 31




Royce Value Trust


Financial Highlights

This table is presented to show selected data for a share of Common Stock outstanding throughout each period, and to assist stockholders in evaluating the Fund’s performance for the periods presented.

    Six months   Years ended December 31,
    ended  
    June 30, 2008                                        
    (unaudited)     2007       2006       2005       2004       2003  

NET ASSET VALUE, BEGINNING OF PERIOD   $ 19.74     $ 20.62     $ 18.87     $ 18.95     $ 17.03     $ 13.22  

INVESTMENT OPERATIONS:                                                
Net investment income (loss)
    0.03       0.09       0.13       0.01       (0.08 )     (0.05 )
Net realized and unrealized gain (loss) on investments and
                                               
foreign currency
    (2.22 )     1.13       3.63       1.75       3.81       5.64  

Total investment operations
    (2.19 )     1.22       3.76       1.76       3.73       5.59  

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:                                                
Net investment income
    –           (0.01 )     (0.02 )     –           –           –      
Net realized gain on investments and foreign currency
    –           (0.21 )     (0.21 )     (0.24 )     (0.26 )     (0.26 )
Quarterly distributions *
    (0.11 )     –           –           –           –           –      

Total distributions to Preferred Stockholders
    (0.11 )     (0.22 )     (0.23 )     (0.24 )     (0.26 )     (0.26 )

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON

                                               
STOCKHOLDERS RESULTING FROM INVESTMENT OPERATIONS
    (2.30 )     1.00       3.53       1.52       3.47       5.33  

DISTRIBUTIONS TO COMMON STOCKHOLDERS:                                                
Net investment income
    –           (0.09 )     (0.14 )     –           –           –      
Net realized gain on investments and foreign currency
    –           (1.76 )     (1.64 )     (1.61 )     (1.55 )     1.30  
Quarterly distributions *
    (0.92 )     –           –           –           –           –      

Total distributions to Common Stockholders
    (0.92 )     (1.85 )     (1.78 )     (1.61 )     (1.55 )     (1.30 )

CAPITAL STOCK TRANSACTIONS:                                                
Effect of reinvestment of distributions by Common Stockholders
    (0.04 )     (0.03 )     (0.00 )     0.01       0.00       (0.00 )
Effect of rights offering and Preferred Stock offering
    –           –           –           –           –           (0.22 )

Total capital stock transactions
    (0.04 )     (0.03 )     (0.00 )     0.01       0.00       (0.22 )

NET ASSET VALUE, END OF PERIOD   $ 16.48     $ 19.74     $ 20.62     $ 18.87     $ 18.95     $ 17.03  

MARKET VALUE, END OF PERIOD   $ 15.68     $ 18.58     $ 22.21     $ 20.08     $ 20.44     $ 17.21  

TOTAL RETURN (a):                                                
Market Value     (10.72 )%***     (8.21 )%     20.96 %     6.95 %     29.60 %     41.96 %
Net Asset Value     (11.67 )%***     5.04 %     19.50 %     8.41 %     21.42 %     40.80 %
RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:                                              
Total expenses (b,c)     1.79 %**     1.38 %     1.29 %     1.49 %     1.51 %     1.49 %
Management fee expense (d)
    1.68 %**     1.29 %     1.20 %     1.37 %     1.39 %     1.34 %
Other operating expenses
    0.11 %**     0.09 %     0.09 %     0.12 %     0.12 %     0.15 %
Net investment income (loss)     0.30 %**     0.43 %     0.62 %     0.03 %     (0.50 )%     (0.36 )%
SUPPLEMENTAL DATA:                                                
Net Assets Applicable to Common Stockholders,                                                
End of Period (in thousands)
  $ 1,018,168     $ 1,184,669     $ 1,180,428     $ 1,032,120     $ 993,304     $ 850,773  
Liquidation Value of Preferred Stock, End of Period (in thousands)     $220,000       $220,000       $220,000       $220,000       $220,000       $220,000  
Portfolio Turnover Rate     14 %     26 %     21 %     31 %     30 %     23 %
PREFERRED STOCK:                                                
Total shares outstanding     8,800,000       8,800,000       8,800,000       8,800,000       8,800,000       8,800,000  
Asset coverage per share   $ 140.70     $ 159.62     $ 159.14     $ 142.29     $ 137.88     $ 121.68  
Liquidation preference per share   $ 25.00     $ 25.00     $ 25.00     $ 25.00     $ 25.00     $ 25.00  
Average market value per share (e):                                                
5.90% Cumulative
  $ 23.35     $ 23.68     $ 23.95     $ 24.75     $ 24.50     $ 25.04  
7.80% Cumulative
    –           –           –           –           –         $ 25.87  
7.30% Tax-Advantaged Cumulative
    –           –           –           –           –         $ 25.53  

(a)
The Market Value Total Return is calculated assuming a purchase of Common Stock on the opening of the first business day and a sale on the closing of the last business day of each period reported. Dividends and distributions are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund’s Distribution Reinvestment and Cash Purchase Plan. Net Asset Value Total Return is calculated on the same basis, except that the Fund’s net asset value is used on the purchase and sale dates instead of market value.
(b)
Expense ratios based on total average net assets including liquidation value of Preferred Stock were 1.48%, 1.17%, 1.08%, 1.22%, 1.21% and 1.19% for the periods ended June 30, 2008 and December 31, 2007, 2006, 2005, 2004 and 2003, respectively.
(c)
Expense ratios based on average net assets applicable to Common Stockholders before waiver of fees by the investment adviser would have been 1.62% for the year ended December 31, 2003; before waiver of fees and earnings credits would have been 1.79%, 1.38%, 1.29%, 1.49%, 1.51% and 1.62% for the periods ended June 30, 2008 and December 31, 2007, 2006, 2005, 2004 and 2003, respectively.
(d)
The management fee is calculated based on average net assets over a rolling 60-month basis, while the above ratios of management fee expenses are based on the average net assets applicable to Common Stockholders over a 12-month basis.
(e) The average of month-end market values during the period that the Preferred Stock was outstanding.
         * To be allocated to net investment income and capital gains at year end.
        ** Annualized.                                                                                                     *** Not annualized.

32 |  2008 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.




Royce Value Trust


Notes to Financial Statements (unaudited)

Summary of Significant Accounting Policies:

Royce Value Trust, Inc. (the “Fund”), was incorporated under the laws of the State of Maryland on July 1, 1986 as a diversified closed-end investment company. The Fund commenced operations on November 26, 1986.
     The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

Valuation of Investments:

Securities are valued as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq’s Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their 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 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 price 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.
      Various inputs are used in determining the value of the Fund’s investments. 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)
          Level 3 – significant observable 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 June 30, 2008:

Level 1   Level 2       Level 3   Total

$1,018,972,228   $328,318,023       $1,595,025   $1,348,885,276

Level 3 Reconciliation:                
    Change in unrealized appreciation    
Balance as of 12/31/07       (depreciation)       Balance as of 6/30/08

$1,816,875       $(221,850)       $1,595,025


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.


Foreign Currency:

The Fund values its non-U.S. securities in U.S. dollars daily at the prevailing foreign currency exchange rates as quoted by a major bank. The effects of changes in foreign exchange rates on investments and other assets and liabilities are included with net realized and unrealized gains and losses on investments.
     Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, expiration of currency forward contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, including investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.

2008 Semiannual Report to Stockholders  |  33



Royce Value Trust


Notes to Financial Statements (unaudited) (continued)

Securities Lending:

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.


Taxes:

As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the Fund is not subject to income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. The Schedule of Investments includes information regarding income taxes under the caption “Income Tax Information ”.


Distributions:

The Fund currently has a policy of paying quarterly distributions on the Fund’s Common Stock. Distributions are currently being made at the annual rate of 9% of the rolling average of the prior four calendar quarter-end NAVs of the Fund’s Common Stock, with the fourth quarter distribution being the greater of 2.25% of the rolling average or the distribution required by IRS regulations. Distributions to Preferred Stockholders are accrued daily and paid quarterly and distributions to Common Stockholders are recorded on ex-dividend date. The Fund is required to allocate long-term capital gain distributions and other types of income proportionately to distributions made to holders of shares of Common Stock and Preferred Stock. To the extent that distributions are not paid from long-term capital gains, net investment income or net short-term capital gains, they will represent a return of capital. Distributions are determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United States of America. Permanent book and tax differences relating to stockholder distributions will result in reclassifications within the capital accounts. Undistributed net investment income may include temporary book and tax basis differences, which will reverse in a subsequent period. Any taxable income or gain remaining undistributed at fiscal year end is distributed in the following year.


Investment Transactions and Related Investment Income:

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


Expenses:

The Fund incurs direct and indirect expenses. Expenses directly attributable to the Fund are charged to the Fund’s operations, while expenses applicable to more than one of the Royce Funds are allocated equitably. Allocated personnel and occupancy costs related to The Royce Funds are included in administrative and office facilities expenses. The Fund has adopted a deferred fee agreement that allows the Directors to defer the receipt of all or a portion of Directors’ Fees otherwise payable. The deferred fees are invested in certain Royce Funds until distributed in accordance with the agreement.


Compensating Balance Credits:

The Fund has an arrangement with its custodian bank, whereby a portion of the custodian’s fee is paid indirectly by credits earned on the Fund’s cash on deposit with the bank. This deposit arrangement is an alternative to purchasing overnight investments. Conversely, the Fund pays interest to the custodian on any cash overdrafts, to the extent they are not offset by credits earned on positive cash balances.


Capital Stock:

The Fund issued 1,768,501 and 2,749,591 shares of Common Stock as reinvestment of distributions by Common Stockholders for the six months ended June 30, 2008 and the year ended December 31, 2007, respectively.
     At June 30, 2008, 8,800,000 shares of 5.90% Cumulative Preferred Stock were outstanding. Commencing October 9, 2008 and thereafter, the Fund, at its option, may redeem the Cumulative Preferred Stock, in whole or in part, at the redemption price. The Cumulative Preferred Stock is classified outside of permanent equity (net assets applicable to Common Stockholders) in the accompanying financial statements in accordance with Emerging Issues Task Force (EITF) Topic D-98, Classification and Measurement of Redeemable Securities, that requires preferred securities that are redeemable for cash or other assets to be classified outside of permanent equity to the extent that the redemption is at a fixed or determinable price and at the option of the holder or upon the occurrence of an event that is not solely within the control of the issuer.
     The Fund is required to meet certain asset coverage tests with respect to the Cumulative Preferred Stock as required by the 1940 Act. In addition, pursuant to the Rating Agency Guidelines established by Moody’s, the Fund is required to maintain a certain discounted asset coverage. If the Fund fails to meet these requirements and does not correct such failure, the Fund may be required to redeem, in part or in full, the Cumulative Preferred Stock at a redemption price of $25.00 per share, plus an amount equal to the accumulated and unpaid dividends, whether or not declared on such shares, in order to meet these requirements. Additionally, failure to meet the foregoing asset coverage requirements could restrict the Fund’s ability to pay dividends to Common Stockholders and could lead to sales of portfolio securities at inopportune times. The Fund has met these requirements since issuing the Cumulative Preferred Stock.


34 | 2008 Semiannual Report to Stockholders




Royce Value Trust


Notes to Financial Statements (unaudited) (continued)

Investment Advisory Agreement:

As compensation for its services under the Investment Advisory Agreement, Royce & Associates, LLC (“Royce”) receives a fee comprised of a Basic Fee (“Basic Fee”) and an adjustment to the Basic Fee based on the investment performance of the Fund in relation to the investment record of the S&P SmallCap 600 Index (“S&P 600”).
      The Basic Fee is a monthly fee equal to 1/12 of 1% (1% on an annualized basis) of the average of the Fund’s month-end net assets applicable to Common Stockholders, plus the liquidation value of Preferred Stock, for the rolling 60-month period ending with such month (the “performance period”). The Basic Fee for each month is increased or decreased at the rate of 1/12 of .05% for each percentage point that the investment performance of the Fund exceeds, or is exceeded by, the percentage change in the investment record of the S&P 600 for the performance period by more than two percentage points. The performance period for each such month is a rolling 60-month period ending with such month. The maximum increase or decrease in the Basic Fee for any month may not exceed 1/12 of .5%. Accordingly, for each month, the maximum monthly fee rate as adjusted for performance is 1/12 of 1.5% and is payable if the investment performance of the Fund exceeds the percentage change in the investment record of the S&P 600 by 12 or more percentage points for the performance period, and the minimum monthly fee rate as adjusted for performance is 1/12 of .5% and is payable if the percentage change in the investment record of the S&P 600 exceeds the investment performance of the Fund by 12 or more percentage points for the performance period.
      Notwithstanding the foregoing, Royce is not entitled to receive any fee for any month when the investment performance of the Fund for the rolling 36-month period ending with such month is negative. In the event that the Fund’s investment performance for such a performance period is less than zero, Royce will not be required to refund to the Fund any fee earned in respect of any prior performance period.
      Royce has voluntarily committed to waive the portion of its investment advisory fee attributable to an issue of the Fund’s Preferred Stock for any month in which the Fund’s average annual NAV total return since issuance of the Preferred Stock fails to exceed the applicable Preferred Stock’s dividend rate.
      For the six rolling 60-month periods ended June 2008, the investment performance of the Fund exceeded the investment performance of the S&P 600 by 8% to 18%. Accordingly, the investment advisory fee consisted of a Basic Fee of $6,165,173 and an upward adjustment of $2,769,965 for performance of the Fund above that of the S&P 600. For the six months ended June 30, 2008, the Fund accrued and paid Royce advisory fees totaling $8,935,138.


Purchases and Sales of Investment Securities:

For the six months ended June 30, 2008, the cost of purchases and proceeds from sales of investment securities, other than short-term securities and collateral received for securities loaned, amounted to $166,070,505 and $214,722,026, respectively.


Transactions in Shares of Affiliated Companies:

An “Affiliated Company” as defined in the Investment Company Act of 1940, is a company in which a Fund owns 5% or more of the company’s outstanding voting securities at any time during the period. The Fund effected the following transactions in shares of such companies for the six months ended June 30, 2008:


                                               
    Shares   Market Value   Cost of   Cost of   Realized   Dividend   Shares   Market Value
Affiliated Company   12/31/07   12/31/07   Purchases   Sales   Gain (Loss)   Income   6/30/08   6/30/08
Delta Apparel   580,760   $4,152,434       $168,149     -   -     -     605,560     $2,228,461  
Timberland Bancorp   469,200   5,714,856       -             -   -     $103,224     469,200     3,762,984  
        $9,867,290                 -     $103,224           $5,991,445  

2008 Semiannual Report to Stockholders  |  35



Royce Micro-Cap Trust


Schedule of Investments

    SHARES     VALUE
COMMON STOCKS – 119.2%          
           
Consumer Products – 7.6%          
Apparel, Shoes and Accessories - 2.2%          

Cherokee

  18,500   $ 372,775

Frederick’s of Hollywood Group a

  121,804     182,706

Hartmarx Corporation a

  70,000     151,900

Kleinert’s a,b

  14,200     0

Lazare Kaplan International a

  151,700     1,350,130

 Perry Ellis Internationala,c

  3,800     80,636

Steven Madden a

  23,332     428,842

True Religion Apparel a,c

  5,200     138,580

 Tween Brands a,c

  13,700     225,502

Weyco Group

  120,000     3,183,600

Yamato International

  40,000     204,549
       
          6,319,220
       
Collectibles - 0.0%          

 Leapfrog Enterprises Cl. A a,c

  13,000     108,160
       
Consumer Electronics - 0.1%          

DTS a,c

  7,000     219,240

TiVo a,c

  20,000     123,400
       
          342,640
       
Food/Beverage/Tobacco - 1.9%          

Green Mountain Coffee Roasters a,c

  76,800     2,885,376

 Lifeway Foods a,c

  20,000     237,800

Seneca Foods Cl. A a

  62,500     1,303,125

Seneca Foods Cl. B a,c

  42,500     908,225
       
          5,334,526
       
Health, Beauty and Nutrition - 0.2%          

Nutraceutical International a

  15,000     180,000

 NutriSystem

  24,400     345,016
       
          525,016
       
Home Furnishing and Appliances - 2.3%          

American Woodmark

  100,000     2,113,000

Cobra Electronics

  10,000     27,300

Flexsteel Industries

  213,500     2,401,875

Helen of Troy a,c

  20,000     322,400

Lifetime Brands

  42,054     342,740

Natuzzi ADR a

  387,800     1,237,082

Universal Electronics a,c

  5,600     117,040
       
          6,561,437
       
Household Products/Wares - 0.3%          

A.T. Cross Company Cl. A a,c

  100,000     833,000
       
Sports and Recreation - 0.6%          

Cybex International a

  61,700     210,397

Monaco Coach

  314,950     957,448

Steinway Musical Instruments a

  10,000     264,000

Sturm, Ruger & Company a

  45,000     317,700
       
          1,749,545
       
Total (Cost $18,158,712)         21,773,544
       
           
Consumer Services – 5.8%          
Leisure and Entertainment - 0.4%          

Ambassadors Group a

  22,000     328,240

Ambassadors International a,c

  6,100     26,718
    SHARES     VALUE
Consumer Services (continued)          
Leisure and Entertainment (continued)          

FortuNet a,c

  5,000   $ 31,300

GameTech International a

  17,500     83,125

IMAX Corporation a,c

  25,000     171,000

Premier Exhibitions a,c

  82,800     375,912
       
          1,016,295
       
Media and Broadcasting - 0.1%          

Ballantyne of Omaha a,c

  100,000     445,000
       
Online Commerce - 1.3%          

Alloy a

  65,702     475,026

CryptoLogic

  97,200     1,395,792

FTD Group c

  55,000     733,150

Knot (The) a,c

  25,200     246,456

PC Connection a,c

  17,100     159,201

PC Mall a,c

  26,000     352,560

Stamps.com a

  34,100     425,568
       
          3,787,753
       
Restaurants and Lodgings - 0.2%          

Benihana Cl. A a,c

  39,700     251,698

Cosi a

  43,800     109,938

Jamba a

  67,000     123,950

Noble Roman’s a

  60,200     72,240
       
          557,826
       
Retail Stores - 3.6%          

A.C. Moore Arts & Crafts a,c

  59,000     415,950

America’s Car-Mart a

  170,000     3,046,400

Buckle (The)

  23,500     1,074,655

Build-A-Bear Workshop a,c

  131,900     958,913

Cache a

  19,200     205,440

Casual Male Retail Group a

  2,000     6,100

Cato Corporation (The) Cl. A

  68,100     969,744

Cost Plus a

  51,100     127,750

dELiA*s a,c

  67,300     135,273

Dover Saddlery a,c

  20,228     79,901

EZCORP Cl. A a,c

  13,900     177,225

Fred’s Cl. A

  26,000     292,240

 Hibbett Sports a,c

  400     8,440

New York & Company a

  29,600     270,248

Stein Mart a,c

  223,291     1,007,042

West Marine a,c

  274,000     1,123,400

Wet Seal (The) Cl. A a

  57,065     272,200
       
          10,170,921
       
Other Consumer Services - 0.2%          

Collectors Universe

  33,200     269,252

First Cash Financial Services a,c

  9,200     137,908

 Shutterfly a,c

  13,000     158,730
       
          565,890
       
Total (Cost $18,050,920)         16,543,685
       
           
Diversified Investment Companies – 2.4%          
Closed-End Funds - 2.4%          

ASA

  48,900     4,139,385

36 |  2008 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.




    June 30, 2008 (unaudited)


 

    SHARES     VALUE
Diversified Investment Companies (continued)          
Closed-End Funds (continued)          
Central Fund of Canada Cl. A   207,000   $ 2,680,650
       
Total (Cost $2,675,077)         6,820,035
       
           
Financial Intermediaries – 11.0%          
Banking - 5.8%          

Alliance Bancorp, Inc. of Pennsylvania

  50,420     453,276

B of I Holding a,c

  100,000     739,000

Bancorp (The) a

  50,000     381,000

BB Holdings a

  390,000     1,767,268

CFS Bancorp

  60,000     707,400

Chemung Financial

  40,000     1,030,000

CNB Financial

  30,000     424,200

Commercial National Financial

  20,000     298,000

Fauquier Bankshares

  160,800     2,588,880

Financial Institutions

  50,000     803,000

First Bancorp

  40,200     548,730

Franklin Bank a,c

  45,500     27,755

HopFed Bancorp

  49,000     674,730

Lakeland Financial

  45,000     858,600

LCNB Corporation

  30,000     285,000

Meta Financial Group

  44,800     1,186,304

Nexity Financial a

  29,000     134,850

Peapack-Gladstone Financial

  29,000     637,130

Queen City Investments a

  948     1,185,000

Quest Capital

  30,000     52,074

Sterling Bancorp

  32,869     392,785

W Holding Company

  300,000     255,000

Wilber Corporation(The)

  103,150     873,680

WSB Financial Group a,c

  114,200     188,430
       
          16,492,092
       
Insurance - 1.8%          

American Physicians Service Group

  10,000     220,400

American Safety Insurance Holdings a

  20,000     287,600

CRM Holdings a,c

  124,000     416,640

First Acceptance a

  258,405     826,896

Independence Holding

  95,800     935,966

Navigators Group a

  15,200     821,560

NYMAGIC

  85,400     1,636,264
       
          5,145,326
       
Real Estate Investment Trusts - 0.1%          

Vestin Realty Mortgage II

  74,230     223,432
       
Securities Brokers - 3.0%          

Broadpoint Securities Group a,c

  95,000     190,000

CowenGroup a,c

  123,600     954,192

Diamond Hill Investment Group a,c

  5,000     417,500

Evercore Partners Cl. A

  50,900     483,550

 FBR Capital Markets a,c

  350,600     1,763,518

International Assets Holding a

  6,400     192,384

Sanders Morris Harris Group

  199,000     1,349,220

Stifel Financial a,c

  53,899     1,853,587

Thomas Weisel Partners Group a,c

  187,000     1,022,890

TradeStation Group a,c

  30,000     304,500
       
          8,531,341
       
    SHARES     VALUE
Financial Intermediaries (continued)          
Securities Exchanges - 0.3%          

MarketAxess Holdings a,c

  123,700   $ 935,172
       
Total (Cost $33,761,587)         31,327,363
       
           
Financial Services – 6.4%          
Diversified Financial Services - 1.0%          

Advanta Corporation Cl. B

  37,500     235,875

 Encore Capital Group a

  98,000     865,340

World Acceptance a,c

  47,951     1,614,510
       
          2,715,725
       
Insurance Brokers - 0.3%          

Crawford & Company Cl. A a,c

  50,000     312,500

Health Benefits Direct a

  103,215     51,608

Western Financial Group

  148,000     510,895
       
          875,003
       
Investment Management - 3.1%          

BKF Capital Group a

  387,000     797,220

Cockleshell a

  465,300     505,110

Epoch Holding Corporation

  211,500     1,926,765

Hennessy Advisors

  24,750     136,125

JZ Equity Partners b

  70,000     154,766

MVC Capital

  226,200     3,096,678

Sceptre Investment Counsel

  78,000     611,945

UTEK Corporation a

  20,100     201,000

Westwood Holdings Group

  38,280     1,523,544
       
          8,953,153
       
Special Purpose Acquisition Corporation - 1.5%          

Alternative Asset Management

         

Acquisition (Units) a

  250,000     2,425,000

Prospect Acquisition (Units) a

  50,000     478,000

Shellshock a

  47,200     61,580

Shermen WSC Acquisition a

  220,000     1,262,800
       
          4,227,380
       
Specialty Finance - 0.5%          

ASTA Funding

  24,100     218,346

MRU Holdings a

  106,100     238,725

NGP Capital Resources

  68,080     1,049,113
       
          1,506,184
       
Total (Cost $15,692,368)         18,277,445
       
           
Health – 14.5%          
Commercial Services - 1.3%          

Medifast a,c

  25,700     135,182

PAREXEL International a,c

  116,500     3,065,115

PDI a

  66,800     581,828
       
          3,782,125
       
Drugs and Biotech - 2.8%          

Acadia Pharmaceuticals a,c

  33,500     123,615

Allos Therapeutics a,c

  53,600     370,376

Anadys Pharmaceuticals a,c

  420,000     945,000

BioCryst Pharmaceuticals a,c

  200,000     560,000

Cambrex Corporation a

  16,000     93,920

Caraco Pharmaceutical Laboratories a

  14,650     193,380

Cardiome Pharma a

  21,000     184,800

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2008 Semiannual Report to Stockholders  | 37




Royce Micro-Cap Trust


Schedule of Investments

    SHARES     VALUE
Health (continued)          
Drugs and Biotech (continued)          

Cell Genesys a,c

  78,000   $ 202,800

Durect Corporation a,c

  44,100     161,847

DUSA Pharmaceuticals a,c

  92,600     186,126

Dyax Corporation a

  47,300     146,630

Emisphere Technologies a,c

  163,200     437,376

Favrille a,c

  401,000     25,303

Genitope Corporation a,c

  196,700     8,734

Genoptix a,c

  10,000     315,500

GenVec a,c

  140,000     201,600

Hi-Tech Pharmacal a

  19,430     194,300

ImmunoGen a,c

  24,000     73,440

Lexicon Pharmaceuticals a,c

  80,000     128,000

MannKind Corporation a,c

  10,000     30,000

Momenta Pharmaceuticals a,c

  62,500     768,750

Neuralstem a

  40,000     58,000

Oncolytics Biotech a,c

  36,000     69,480

Orchid Cellmark a,c

  78,000     202,800

RTI Biologics a,c

  24,400     213,500

Sangamo BioSciences a,c

  10,000     99,500

Seattle Genetics a,c

  57,000     482,220

Senomyx a,c

  57,000     281,010

Sinovac Biotech a,c

  70,000     227,500

Strategic Diagnostics a

  56,200     204,568

Tapestry Pharmaceuticals a,c,d

  863,000     9,493

Theragenics Corporation a,c

  145,800     529,254

Trimeris

  81,000     382,320
       
          8,111,142
       
Health Services - 4.4%          

Air Methods a,c

  13,300     332,500

Albany Molecular Research a

  30,000     398,100

Alliance Imaging a,c

  35,200     305,184

Bio-Imaging Technologies a

  19,100     141,340

BML

  30,000     569,289

Computer Programs and Systems

  13,900     240,887

CorVel Corporation a

  40,125     1,359,034

eResearch Technology a

  165,000     2,877,600

Gentiva Health Services a

  23,000     438,150

HMS Holdings a,c

  28,900     620,483

Hooper Holmes a,c

  67,600     68,952

MedCath Corporation a,c

  18,000     323,640

Mediware Information Systems a,c

  30,200     176,670

On Assignment a,c

  73,700     591,074

PharmaNet Development Group a,c

  25,000     394,250

PharMerica Corporation a,c

  100,000     2,259,000

RehabCare Group a,c

  40,500     649,215

Sun Healthcare Group a,c

  41,000     548,990

U.S. Physical Therapy a

  10,000     164,100
       
          12,458,458
       
Medical Products and Devices - 6.0%          

ABIOMED a,c

  15,000     266,250

Allied Healthcare Products a

  246,998     1,679,586

Angio Dynamics a,c

  14,000     190,680

Anika Therapeutics a

  17,000     146,030

Atrion Corporation

  4,000     383,280
    SHARES     VALUE
Health (continued)          
Medical Products and Devices (continued)          

Caliper Life Sciences a

  50,000   $ 129,500

Cardiac Science a,c

  26,243     215,193

CAS Medical Systems a,c

  60,230     191,531

 Celsion Corporation a,c

  20,212     77,816

Cerus Corporation a

  109,600     448,264

CONMED Corporation a

  3,900     103,545

Cutera a,c

  42,800     386,484

 Cynosure Cl. A a,c

  15,000     297,300

Del Global Technologies a

  461,301     691,952

EPIX Pharmaceuticals a,c

  24,666     42,672

Exactech a

  110,000     2,828,100

HealthTronics a,c

  61,700     201,759

Kensey Nash a

  26,650     854,132

Medical Action Industries a,c

  125,250     1,298,843

Merit Medical Systems a

  8,700     127,890

Neurometrix a,c

  21,500     30,100

NMT Medical a,c

  17,000     79,390

Orthofix International a,c

  28,000     810,600

OrthoLogic Corporation a,c

  65,000     65,000

 Palomar Medical Technologies a,c

  28,000     279,440

PLC Systems a

  105,200     37,872

SenoRx a

  40,100     309,572

Shamir Optical Industry

  17,500     121,625

Syneron Medical a

  80,400     1,321,776

Synovis Life Technologies a,c

  20,000     376,600

Thermage a

  145,400     415,844

Utah Medical Products

  42,300     1,209,357

Vital Images a,c

  16,300     202,772

Young Innovations

  61,450     1,279,389
       
          17,100,144
       
Total (Cost $37,857,161)         41,451,869
       
           
Industrial Products – 17.4%          
Automotive - 1.1%          

 ATC Technology a,c

  8,800     204,864

Commerical Vehicle Group a,c

  24,000     224,400

LKQ Corporation a,c

  22,800     411,996

SORL Auto Parts a,c

  50,600     271,216

Spartan Motors

  6,300     47,061

Strattec Security

  28,300     996,726

 US Auto Parts Network a,c

  225,900     817,758

Wescast Industries Cl. A a

  12,900     85,519
       
          3,059,540
       
Building Systems and Components - 1.1%          

AAON

  109,500     2,108,970

Bunka Shutter

  90,000     361,068

LSI Industries

  90,563     735,372
       
          3,205,410
       
Construction Materials - 2.2%          

Ash Grove Cement

  8,000     1,912,000

Monarch Cement

  50,410     1,504,738

Trex Company a,c

  250,000     2,932,500
       
          6,349,238
       

38 |  2008 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.




    June 30, 2008 (unaudited)


 

    SHARES     VALUE
Industrial Products (continued)          
Industrial Components - 2.0%          

C&D Technologies a,c

  53,000   $ 448,380

Deswell Industries

  105,300     595,998

Gerber Scientific a,c

  103,600     1,178,968

 Orion Energy Systems a,c

  17,436     174,360

Planar Systems a

  142,000     369,200

Powell Industries a

  26,800     1,350,988

Tech/Ops Sevcon

  76,200     560,070

Zygo Corporation a,c

  97,500     958,425
       
          5,636,389
       
Machinery - 3.6%          

Active Power a,c

  187,500     219,375

Alamo Group

  38,600     794,774

Astec Industries a

  200     6,428

Burnham Holdings Cl. A

  95,000     1,254,000

 Columbus McKinnon a,c

  4,900     117,992

 DXP Enterprises a,c

  4,500     187,380

Eastern Company (The)

  39,750     604,200

FreightCar America

  6,300     223,650

Gehl Company a

  20,000     295,800

Gorman-Rupp Company

  5,272     210,036

Hurco Companies a,c

  20,500     633,245

Kadant a,c

  16,600     375,160

K-Tron International a

  1,500     194,400

Mueller (Paul) Company

  9,650     443,900

StockerYale a

  305,700     180,363

Sun Hydraulics

  58,425     1,885,375

Tennant Company

  88,200     2,652,174
       
          10,278,252
       
Metal Fabrication and Distribution - 1.4%          

Central Steel & Wire

  1,088     718,080

Dynamic Materials

  4,300     141,685

Encore Wire

  15,000     317,850

Insteel Industries

  400     7,324

Ladish Company a

  10,000     205,900

NN

  114,300     1,593,342

Olympic Steel

  9,700     736,424

Universal Stainless & Alloy Products a

  7,700     285,208
       
          4,005,813
       
Miscellaneous Manufacturing - 3.2%          

Peerless Manufacturing a

  84,400     3,955,828

Quixote Corporation

  245,400     2,019,642

Raven Industries

  73,000     2,392,940

Synalloy Corporation

  58,200     897,444
       
          9,265,854
       
Paper and Packaging - 0.1%          

MOD-PAC Corporation a,c

  23,200     92,800

Wausau Paper

  41,000     316,110
       
          408,910
       
Pumps, Valves and Bearings - 0.5%          

CIRCOR International

  28,000     1,371,720
       
Specialty Chemicals and Materials - 2.1%          

Aceto Corporation

  284,419     2,172,961

American Vanguard

  19,333     237,796

Balchem Corporation

  33,750     780,638
    SHARES     VALUE
Industrial Products (continued)          
Specialty Chemicals and Materials (continued)          

Hawkins

  118,167   $ 1,767,778

Metabolix a,c

  6,000     58,800

Park Electrochemical

  25,900     629,629

Symyx Technologies a

  29,000     202,420
       
          5,850,022
       
Textiles - 0.1%          

Unifi a

  100,000     252,000
       
Total (Cost $35,299,492)         49,683,148
       
           
Industrial Services – 15.0%          
Advertising and Publishing - 0.3%          

DG FastChannel a,c

  8,200     141,450

Voyager Learning a

  125,000     631,250
       
          772,700
       
Commercial Services - 6.7%          

Acacia Research-Acacia Technologies a,c

  84,450     378,336

Animal Health International a,c

  50,000     311,500

Canadian Solar a,c

  25,000     1,004,750

CBIZ a,c

  87,000     691,650

CDI Corporation

  9,000     228,960

ClearPoint Business Resources a

  120,000     57,600

Diamond Management & Technology Consultants

  188,100     980,001

eTelecare Global Solutions ADR a

  78,500     419,190

Exponent a

  117,600     3,693,816

Forrester Research a

  101,500     3,134,320

General Finance a

  28,100     154,550

Geo Group (The) a,c

  68,300     1,536,750

Hudson Highland Group a

  29,400     307,818

Impellam Group a

  188,800     302,729

Kforce a

  55,000     466,950

Landauer

  21,300     1,197,912

Lincoln Educational Services a

  33,100     384,953

PeopleSupport a

  43,300     368,050

RCM Technologies a

  179,500     773,645

 Rentrak Corporation a,c

  13,300     187,264

SM&A a

  31,300     149,301

StarTek a,c

  21,800     204,920

Team a

  4,400     151,008

 TravelCenters of America a,c

  125,000     283,750

Volt Information Sciences a,c

  74,600     888,486

Waste Services a,c

  34,350     241,824

Westaff a

  362,500     409,625

Willdan Group a

  40,100     192,881
       
          19,102,539
       
Engineering and Construction - 2.2%          

Cavco Industries a

  9,400     307,662

Hanfeng Evergreen a

  17,900     229,960

Hill International a,c

  20,000     328,800

HLS Systems International a

  165,377     866,575

Insituform Technologies Cl. A a,c

  56,400     858,972

Integrated Electrical Services a,c

  132,000     2,270,400

Nobility Homes

  13,800     220,110

Skyline Corporation

  32,100     754,350

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2008 Semiannual Report to Stockholders  | 39




Royce Micro-Cap Trust


Schedule of Investments

    SHARES     VALUE
Industrial Services (continued)          
Engineering and Construction (continued)          

Sterling Construction a

  28,300   $ 562,038
       
          6,398,867
       
Food, Tobacco and Agriculture - 1.5%          

Cal-Maine Foods

  45,000     1,484,550

Farmer Bros.

  42,400     896,760

Galaxy Nutritional Foods a

  4,700     705

Imperial Sugar

  20,120     312,464

ML Macadamia Orchards L.P. a

  120,200     411,084

Origin Agritech a,c

  185,788     1,111,012
       
          4,216,575
       
Industrial Distribution - 0.9%          

Houston Wire & Cable

  40,375     803,463

Lawson Products

  61,000     1,511,580

Toshin Group

  20,000     312,850
       
          2,627,893
       
Printing - 1.1%          

Bowne & Co.

  66,500     847,875

Champion Industries

  23,500     108,805

Courier Corporation

  30,450     611,436

Ennis

  7,200     112,680

Multi-Color Corporation

  27,900     585,621

Schawk

  60,900     730,191
       
          2,996,608
       
Transportation and Logistics - 2.3%          

Air Transport Services Group a,c

  100,000     100,000

Euroseas

  38,000     492,860

Forward Air

  50,700     1,754,220

Frozen Food Express Industries

  92,000     621,000

MAIR Holdings a,c

  8,600     34,830

Marten Transport a

  21,450     342,556

Patriot Transportation Holding a

  3,000     240,000

Universal Truckload Services a

  134,200     2,955,084
       
          6,540,550
       
Other Industrial Services - 0.0%          

Allen-Vanguard Corporation a

  7,700     19,256
       
Total (Cost $35,966,432)         42,674,988
       
           
Natural Resources – 13.9%          
Energy Services - 5.8%          

Boots & Coots International Well Control a

  200,000     476,000

Bronco Drilling a

  25,200     463,176

CE Franklin a,c

  31,450     315,443

Dril-Quip a,c

  55,000     3,465,000

Environmental Power a,c

  115,000     479,550

Foraco International

  40,000     117,682

Gulf Island Fabrication

  3,416     167,145

GulfMark Offshore a,c

  55,400     3,223,172

ION Geophysical a,c

  43,500     759,075

Particle Drilling Technologies a,c

  44,410     111,025

Pason Systems

  209,200     3,385,113

Pioneer Drilling a

  7,500     141,075

T-3 Energy Services a,c

  600     47,682
    SHARES     VALUE
Natural Resources (continued)          
Energy Services (continued)          

Willbros Group a

  54,100   $ 2,370,121

World Energy Solutions a

  875,300     1,115,907
       
          16,637,166
       
Oil and Gas - 2.3%          

Approach Resources a

  12,000     321,480

Bonavista Energy Trust

  40,100     1,472,732

Cano Petroleum a,c

  26,000     206,440

GeoMet a,c

  75,000     711,000

Gran Tierra Energy a,c

  80,200     639,194

 Harvest Natural Resources a,c

  45,000     497,700

 Kodiak Oil & Gas a,c

  80,000     364,800

Nuvista Energy a

  121,000     2,078,965

PetroCorp a,b

  104,200     0

Storm Cat Energy a,c

  102,500     118,900
       
          6,411,211
       
Precious Metals and Mining - 4.0%          

Allied Nevada Gold a

  136,050     801,335

Aquiline Resources a

  33,900     257,317

Aurizon Mines a,c

  197,000     967,270

Brush Engineered Materials a,c

  15,500     378,510

Central African Gold a

  89,790     33,534

Chesapeake Gold a

  20,000     147,102

Duluth Metals a

  87,500     218,814

Endeavour Mining Capital

  337,000     2,445,621

Endeavour Silver a

  50,000     156,000

Entree Gold a

  177,900     345,126

Etruscan Resources a

  20,000     32,363

Gammon Gold a

  83,836     909,621

Gateway Gold a

  400,000     92,184

Golden Star Resources a,c

  168,100     452,189

Great Basin Gold a

  13,500     45,940

Greystar Resources a

  11,900     45,163

Liberty Mines a

  182,900     121,969

Mercator Minerals a

  9,400     112,188

Metallica Resources a,c

  50,000     334,500

Midway Gold a

  347,500     681,573

Minefinders Corporation a

  36,000     374,400

New Gold a,c

  141,200     1,083,004

Northgate Minerals a

  270,000     742,500

Quaterra Resources a

  40,000     127,488

Uranium Resources a,c

  18,565     68,505

US Silver a

  79,700     35,172

Vista Gold a,c

  50,000     182,500

Yamana Gold

  8,145     134,718
       
          11,326,606
       
Real Estate - 1.7%          

 Avatar Holdings a,c

  13,204     399,949

HomeFed Corporation a

  11,352     532,977

Kennedy-Wilson a,c

  21,500     919,125

PICO Holdings a

  45,700     1,985,665

Pope Resources L.P.

  33,000     1,065,900
       
          4,903,616
       

40 |  2008 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.




    June 30, 2008 (unaudited)


 

    SHARES     VALUE
Natural Resources (continued)          
Other Natural Resources - 0.1%          

Neo Material Technologies a

  61,500   $ 265,372
       
Total (Cost $19,993,198)         39,543,971
       
           
Technology – 22.6%          
Aerospace and Defense - 2.3%          

Aerovironment a

  11,100     301,698

American Science & Engineering

  2,400     123,672

Astronics Corporation a

  26,400     367,224

Ducommun a

  72,100     1,655,416

HEICO Corporation

  41,600     1,353,664

HEICO Corporation Cl. A

  24,160     642,173

Integral Systems a

  40,510     1,567,737

SIFCO Industries a,c

  45,800     462,580
       
          6,474,164
       
Components and Systems - 3.3%          

Aladdin Knowledge Systems a

  40,500     546,750

CSP a,c

  122,581     729,357

Evans & Sutherland Computer a

  96,272     97,235

Excel Technology a

  106,900     2,386,008

Giga-tronics a,c

  3,200     4,032

InFocus Corporation a

  318,100     477,150

Keithley Instruments

  14,000     133,000

Maxwell Technologies a

  28,600     303,732

Measurement Specialties a,c

  20,000     351,800

MOCON

  15,600     169,884

MTS Systems

  10,000     358,800

OPTEX Company

  35,000     474,313

Richardson Electronics

  305,000     1,808,650

Rimage Corporation a,c

  20,000     247,800

SCM Microsystems a,c

  34,000     102,000

 SMART Modular Technologies (WWH) a,c

  44,400     170,052

Spectrum Control a,c

  41,400     339,480

TransAct Technologies a

  78,600     650,808
       
          9,350,851
       
Distribution - 0.5%          

Agilysys

  90,000     1,020,600

Alliance Distributors Holding a

  578,400     138,816

China 3C Group a

  181,300     233,877

Nu Horizons Electronics a,c

  40,000     194,400
       
          1,587,693
       
Internet Software and Services - 0.6%          

Descartes Systems Group (The) a,c

  49,200     165,312

iPass a,c

  190,000     393,300

Jupitermedia Corporation a,c

  355,800     498,120

NIC

  26,800     183,044

Website Pros a,c

  43,650     363,604
       
          1,603,380
       
IT Services - 4.4%          

CIBER a,c

  182,662     1,134,331

Computer Task Group a

  481,100     2,463,232

iGATE Corporation a,c

  273,400     2,222,742

Rainmaker Systems a,c

  2,000     5,860

Sapient Corporation a,c

  500,000     3,210,000
    SHARES     VALUE
Technology (continued)          
IT Services (continued)          

Syntel

  54,300   $ 1,830,996

TriZetto Group (The) a

  72,600     1,552,188

Yucheng Technologies a,c

  4,500     50,355
       
          12,469,704
       
Semiconductors and Equipment - 4.2%          

Actions Semiconductor ADR a

  44,450     153,353

Cascade Microtech a

  55,037     362,143

Catalyst Semiconductor a

  269,800     1,170,932

CEVA a

  47,534     378,846

Cohu

  17,900     262,772

Eagle Test Systems a,c

  17,500     196,000

Electroglas a,c

  281,700     535,230

Exar Corporation a,c

  121,208     913,908

GSI Technology a

  41,300     160,244

Ikanos Communications a

  98,700     332,619

Intevac a,c

  40,550     457,404

 JDS Uniphase a,c

  54,283     616,655

LeCroy Corporation a,c

  2,000     17,840

 Mattson Technology a,c

  36,000     171,360

Melco Holdings

  30,000     589,066

Nanometrics a

  37,000     215,340

PDF Solutions a,c

  85,000     505,750

Photronics a

  29,750     209,440

Rudolph Technologies a,c

  24,500     188,650

Semitool a

  25,500     191,505

 SiRF Technology Holdings a,c

  20,600     88,992

Trident Microsystems a

  82,400     300,760

TTM Technologies a

  159,500     2,106,995

 Ultra Clean Holdings a,c

  38,000     302,480

Virage Logic a

  180,000     1,288,800

Zarlink Semiconductor a

  188,700     166,075
       
          11,883,159
       
Software - 4.6%          

ACI Worldwide a

  97,600     1,716,784

American Software Cl. A

  56,100     316,404

Bottomline Technologies a

  20,000     194,600

Convera Corporation Cl. A a,c

  170,000     241,400

DivX a

  23,200     170,288

Fundtech a

  51,000     733,890

ILOG ADR a,c

  35,000     346,500

JDA Software Group a,c

  59,500     1,076,950

OpenTV Cl. A a,c

  239,600     313,876

Pegasystems

  353,500     4,758,110

Phase Forward a,c

  43,000     772,710

PLATO Learning a

  160,000     424,000

Renaissance Learning

  2,365     26,512

SeaChange International a,c

  20,000     143,200

SPSS a,c

  41,800     1,520,266

TeleCommunication Systems Cl. A a

  10,000     46,300

Trintech Group ADR a,c

  82,700     191,037

Unica Corporation a,c

  35,000     281,400
       
          13,274,227
       
Telecommunications - 2.7%          

Anaren a

  50,900     538,013

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2008 Semiannual Report to Stockholders  | 41




Royce Micro-Cap Trust


Schedule of Investments

      SHARES     VALUE
Technology (continued)            
Telecommunications (continued)            

Atlantic Tele-Network

    4,100   $ 112,791

Captaris a

    43,300     175,365

Cogent Communications Group a,c

    24,800     332,320

Communications Systems

    10,700     115,025

Diguang International Development a

    300,000     300,000

 GeoEye a,c

    9,400     166,474

Global Telecom & Technology a,c

    68,500     35,620

Globecomm Systems a

    40,130     331,474

NMS Communications a

    630,000     699,300

Novatel Wireless a

    60,900     677,817

NumereX Corporation Cl. A a,c

    28,700     207,501

Oplink Communications a,c

    15,900     152,640

PC-Tel

    44,100     422,919

Performance Technologies a

    41,250     208,725

Radyne Corporation a

    2,000     22,860

REMEC

    143,387     172,064

 Sierra Wireless a,c

    19,900     290,540

Symmetricom a,c

    81,982     314,811

Tollgrade Communications a,c

    23,800     106,862

ViaSat a,c

    76,812     1,552,371

Zhone Technologies a

    931,600     726,648
         
            7,662,140
         
Total (Cost $51,756,471)           64,305,318
         
             
Miscellaneouse – 2.6%            
Total (Cost $7,814,836)           7,454,226
         
             
TOTAL COMMON STOCKS            

(Cost $277,026,254)

          339,855,592
         
             
PREFERRED STOCK – 0.5%            

Seneca Foods Conv. a

           

(Cost $943,607)

    75,409     1,511,950
         
             
             
REPURCHASE AGREEMENT – 2.0%            
State Street Bank & Trust Company,            

2.05% dated 6/30/08, due 7/1/08,

           

maturity value $5,551,316 (collateralized

           

by obligations of various U.S. Government

           

Agencies, valued at $5,692,938)

           

(Cost $5,551,000)

          5,551,000
         
             
      PRINCIPAL      
      AMOUNT      
COLLATERAL RECEIVED FOR SECURITIES            

LOANED – 12.0%

           
Fannie Mae-Notes            

3.20%-5.38%

           

due 5/6/10-10/30/14

  $ 155     158
Federal Home Loan Bank-Bonds            

5.125%

           

due 8/8/08

    669     682
      PRINCIPAL
AMOUNT
    VALUE  
Federal Home Loan Bank-Discount Notes              

due 8/1/08

  $ 153   $ 153  
Freddie Mac-Bonds              

5.00%

             

due 12/14/18

    202     203  
Freddie Mac-Notes              

3.30%

             

due 3/5/10

    23,680     23,935  
U.S. Treasury Bonds              

2.00%-7.50%

             

due 11/15/16-2/15/31

    6,715     6,758  
U.S. Treasury Notes              

3.50%-5.75%

             

due 7/15/09-6/30/12

    38,526     39,201  
U.S. Treasury Notes-TIPS              

3.00%

             

due 7/15/12

    3     3  
Money Market Funds              

State Street Navigator Securities Lending

             

Prime Portfolio (7 day yield-2.6748%)

          34,282,421  
         
 
               
TOTAL COLLATERAL RECEIVED FOR              

SECURITIES LOANED

             

(Cost $34,353,514)

          34,353,514  
         
 
               
TOTAL INVESTMENTS – 133.7%              

(Cost $317,874,375)

          381,272,056  
               
LIABILITIES LESS CASH              

AND OTHER ASSETS – (12.7)%

          (36,026,961 )
               
PREFERRED STOCK – (21.0)%           (60,000,000 )
         
 
               
NET ASSETS APPLICABLE TO COMMON              

STOCKHOLDERS – 100.0%

        $ 285,245,095  
         
 

42 |  2008 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.




    June 30, 2008 (unaudited)


 


  New additions in 2008.
     
a   Non-income producing.
     
b  
Securities for which market quotations are not readily available represent 0.05% of net assets. These securities have been valued at their fair value under procedures established by the Fund’s Board of Directors.
     
c   All or a portion of these securities were on loan at June 30, 2008. Total market value of loaned securities at June 30, 2008 was $32,319,901.
     
d   At June 30, 2008, 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.
     
e   Includes securities first acquired in 2008 and less than 1% of net assets applicable to Common Stockholders.
     
    Bold indicates the Fund’s 20 largest equity holdings in terms of June 30, 2008 market value.
     
TAX INFORMATION: The cost of total investments for Federal income tax purposes was $318,579,309. At June 30, 2008, net unrealized appreciation for all securities was $62,692,747, consisting of aggregate gross unrealized appreciation of $113,566,281 and aggregate gross unrealized depreciation of $50,873,534. The primary difference in book and tax basis cost is the timing of the recognition of losses on securities sold.


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2008 Semiannual Report to Stockholders  | 43




Royce Micro-Cap Trust   June 30, 2008 (unaudited)


   Statement of Assets and Liabilities

           
ASSETS:          
Investments at value (including collateral on loaned securities)*          

Non-Affiliated Companies (cost $311,209,826)

    $ 375,711,563  

Affiliated Companies (cost $1,113,549)

      9,493  

Total investments at value       375,721,056  
Repurchase agreements (at cost and value)       5,551,000  
Cash and foreign currency       34,866  
Receivable for investments sold       658,262  
Receivable for dividends and interest       341,838  
Prepaid expenses and other assets       10,198  

Total Assets

      382,317,220  

LIABILITIES:          
Payable for collateral on loaned securities       34,353,514  
Payable for investments purchased       2,159,947  
Payable for investment advisory fee       371,046  
Preferred dividends accrued but not yet declared       80,000  
Accrued expenses       107,618  

Total Liabilities

      37,072,125  

PREFERRED STOCK:          
6.00% Cumulative Preferred Stock - $0.001 par value, $25 liquidation value per share; 2,400,000 shares outstanding       60,000,000  

Total Preferred Stock

      60,000,000  

NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS     $ 285,245,095  

ANALYSIS OF NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:          
Common Stock paid-in capital - $0.001 par value per share; 25,397,380 shares outstanding (150,000,000 shares authorized)     $ 230,792,944  
Undistributed net investment income (loss)       (1,628,009 )
Accumulated net realized gain (loss) on investments and foreign currency       10,433,395  
Net unrealized appreciation (depreciation) on investments and foreign currency       63,397,503  
Quarterly and accrued distributions       (17,750,738 )

Net Assets applicable to Common Stockholders (net asset value per share - $11.23)

    $ 285,245,095  

*Investments at identified cost (including $34,353,514 of collateral on loaned securities)     $ 312,323,375  
 Market value of loaned securities       32,319,901  

44  |  2008 Semiannual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



Royce Micro-Cap Trust   Six Months Ended June 30, 2008 (unaudited)


   Statement of Operations

INVESTMENT INCOME:          
Income:          

Dividends*

         

Non-Affiliated Companies

    $ 1,755,968  

Affiliated Companies

       

Interest

      206,016  

Securities lending

      253,438  

Total income       2,215,422  

Expenses:          

Investment advisory fees

      2,201,608  

Stockholder reports

      69,948  

Custody and transfer agent fees

      38,740  

Directors’ fees

      29,643  

Professional fees

      19,262  

Administrative and office facilities expenses

      15,972  

Other expenses

      32,750  

Total expenses       2,407,923  

Net investment income (loss)       (192,501 )

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:          
Net realized gain (loss)on investments and foreign currency          

Non-Affiliated Companies

      7,279,461  

Affiliated Companies

      (32,865 )
Net change in unrealized appreciation (depreciation) on investments and foreign currency       (44,354,044 )

Net realized and unrealized gain (loss) on investments and foreign currency       (37,107,448 )

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM INVESTMENT OPERATIONS       (37,299,949 )

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS       (1,800,000 )

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS RESULTING FROM INVESTMENT OPERATIONS     $ (39,099,949 )

* Net of foreign withholding tax of $29,874.
         

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.   2008 Semiannual Report to Stockholders  |  45



Royce Micro-Cap Trust    


   Statement of Changes in Net Assets

    Six months ended        
    6/30/08   Year ended
    (unaudited)   12/31/07
INVESTMENT OPERATIONS:                
Net investment income (loss)   $ (192,501 )   $ (234,430 )
Net realized gain (loss) on investments and foreign currency     7,246,596       32,803,797  
Net change in unrealized appreciation (depreciation) on investments and foreign currency     (44,354,044 )     (27,184,286 )

Net increase (decrease) in net assets resulting from investment operations     (37,299,949 )     5,385,081  

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:                
Net investment income           (224,280 )
Net realized gain on investments and foreign currency           (3,375,720 )
Quarterly distributions*     (1,800,000 )      

Total distributions to Preferred Stockholders     (1,800,000 )     (3,600,000 )

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS
RESULTING FROM INVESTMENT OPERATIONS

    (39,099,949 )     1,785,081  

DISTRIBUTIONS TO COMMON STOCKHOLDERS:                
Net investment income           (1,991,543 )
Net realized gain on investments and foreign currency           (29,975,444 )
Quarterly distributions*     (15,870,738 )      

Total distributions to Common Stockholders     (15,870,738 )     (31,966,987 )

CAPITAL SHARE TRANSACTIONS:                
Reinvestment of distributions to Common Stockholders     8,740,266       17,975,152  

Total capital stock transactions     8,740,266       17,975,152  

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS     (46,230,421 )     (12,206,754 )

NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:                

Beginning of period

    331,475,516       343,682,270  

End of period (including undistributed net investment income (loss) of $(1,628,009) at 6/30/08 and $(1,435,509) at 12/31/07)

  $ 285,245,095     $ 331,475,516  


* To be allocated to net investment income and capital gains at year end.

46  |  2008 Semiannual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



Royce Micro-Cap Trust    


   Financial Highlights

This table is presented to show selected data for a share of Common Stock outstanding throughout each period, and to assist stockholders in evaluating the Fund’s performance for the periods presented.
             
    Six months   Years ended December 31,
    ended  
    June 30, 2008                                        
    (unaudited)     2007       2006       2005       2004       2003  

NET ASSET VALUE, BEGINNING OF PERIOD   $ 13.48     $ 14.77     $ 13.43     $ 14.34     $ 13.33     $ 9.39  

INVESTMENT OPERATIONS:                                                

Net investment income (loss)

    (0.01 )     (0.00 )     0.01       (0.03 )     (0.08 )     (0.09 )

Net realized and unrealized gain (loss) on investments and

                                               

foreign currency

    (1.50 )     0.24       3.04       1.14       2.62       5.28  

Total investment operations

    (1.51 )     0.24       3.05       1.11       2.54       5.19  

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:                                                

Net investment income

    –           (0.01 )     (0.02 )     –           –           –      

Net realized gain on investments and foreign currency

    –           (0.14 )     (0.14 )     (0.17 )     (0.19 )     (0.18 )

Quarterly distributions*

    (0.07 )     –           –           –           –           –      

Total distributions to Preferred Stockholders

    (0.07 )     (0.15 )     (0.16 )     (0.17 )     (0.19 )     (0.18 )

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON                                                

STOCKHOLDERS RESULTING FROM INVESTMENT OPERATIONS

    (1.58 )     0.09       2.89       0.94       2.35       5.01  

DISTRIBUTIONS TO COMMON STOCKHOLDERS:                                                

Net investment income

    –           (0.08 )     (0.20 )     –           –           –      

Net realized gain on investments and foreign currency

    –           (1.27 )     (1.35 )     (1.85 )     (1.33 )     (0.92 )

Quarterly distributions*

    (0.64 )     –           –           –           –           –      

Total distributions to Common Stockholders

    (0.64 )     (1.35 )     (1.55 )     (1.85 )     (1.33 )     (0.92 )

CAPITAL STOCK TRANSACTIONS:                                                

Effect of reinvestment of distributions by Common Stockholders

    (0.03 )     (0.03 )     (0.00 )     0.00       (0.01 )     (0.04 )

Effect of Preferred Stock offering

    –           –           –           –           –           (0.11 )

Total capital stock transactions

    (0.03 )     (0.03 )     (0.00 )     0.00       (0.01 )     (0.15 )

NET ASSET VALUE, END OF PERIOD   $ 11.23     $ 13.48     $ 14.77     $ 13.43     $ 14.34     $ 13.33  

MARKET VALUE, END OF PERIOD   $ 10.37     $ 11.94     $ 16.57     $ 14.56     $ 15.24     $ 12.60  

TOTAL RETURN (a):                                                
Market Value     (7.94 )%***     (20.54 )%     26.72 %     8.90 %     33.44 %     63.58 %
Net Asset Value     (11.70 )%***     0.64 %     22.46 %     6.75 %     18.69 %     55.55 %
RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:                                                
Total expenses (b,c)     1.61 %**     1.56 %     1.64 %     1.63 %     1.62 %     1.82 %

Management fee expense (d)

    1.47 %**     1.44 %     1.49 %     1.43 %     1.43 %     1.59 %

Other operating expenses

    0.14 %**     0.12 %     0.15 %     0.20 %     0.19 %     0.23 %
Net investment income (loss)     (0.13 )%**     (0.07 )%     0.05 %     (0.27 )%     (0.56 )%     (0.82 )%
SUPPLEMENTAL DATA:                                                
Net Assets Applicable to Common Stockholders,                                                

End of Period (in thousands)

    $285,245       $331,476       $343,682       $293,719       $290,364       $253,425  
Liquidation Value of Preferred Stock, End of Period (in thousands)     $60,000       $60,000       $60,000       $60,000       $60,000       $60,000  
Portfolio Turnover Rate     17 %     41 %     34 %     46 %     32 %     26 %
PREFERRED STOCK:                                                
Total shares outstanding     2,400,000       2,400,000       2,400,000       2,400,000       2,400,000       2,400,000  
Asset coverage per share   $ 143.85     $ 163.11     $ 168.20     $ 147.38     $ 145.98     $ 130.59  
Liquidation preference per share   $ 25.00     $ 25.00     $ 25.00     $ 25.00     $ 25.00     $ 25.00  
Average market value per share (e):                                                

6.00% Cumulative

  $ 24.17     $ 24.06     $ 24.15     $ 24.97     $ 24.66     $ 25.37  

7.75% Cumulative

    –           –           –           –           –         $ 25.70  

(a)  

The Market Value Total Return is calculated assuming a purchase of Common Stock on the opening of the first business day and a sale on the closing of the last business day of each period reported. Dividends and distributions are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund’s Distribution Reinvestment and Cash Purchase Plan. Net Asset Value Total Return is calculated on the same basis, except that the Fund’s net asset value is used on the purchase and sale dates instead of market value.

(b)  

Expense ratios based on total average net assets including liquidation value of Preferred Stock were 1.34%, 1.33%, 1.38%, 1.35%, 1.32% and 1.49% for the periods ended June 30, 2008 and December 31, 2007, 2006, 2005, 2004 and 2003, respectively.

(c)  

Expense ratios based on average net assets applicable to Common Stockholders before waiver of fees by the investment adviser would have been 1.92% for the year ended December 31, 2003; before waiver of fees and earnings credits would have been 1.61%, 1.56%, 1.64%, 1.63%, 1.62% and 1.92% for the periods ended June 30, 2008 and December 31, 2007, 2006, 2005, 2004 and 2003, respectively.

(d)  

The management fee is calculated based on average net assets over a rolling 36-month basis, while the above ratios of management fee expenses are based on the average net assets applicable to Common Stockholders over a 12-month basis.

(e)  

The average of month-end market values during the period that the Preferred Stock was outstanding.

   *  To be allocated to net investment income and capital gains at year end.
  **  Annualized.
 ***   Not annualized.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.   2008 Semiannual Report to Stockholders  |  47



Royce Micro-Cap Trust    


   Notes to Financial Statements (unaudited)

Summary of Significant Accounting Policies:
    Royce Micro-Cap Trust, Inc. (the “Fund”), was incorporated under the laws of the State of Maryland on September 9, 1993 as a diversified closed-end investment company. The Fund commenced operations on December 14, 1993.
    The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

Valuation of Investments:
    Securities are valued as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq’s Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their 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 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 price 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.
  Various inputs are used in determining the value of the Fund’s investments. 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)
    Level 3 – significant observable 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 June 30, 2008:
  Level 1   Level 2   Level 3   Total
 

  $310,781,325   $70,335,964   $154,767   $381,272,056
 

  Level 3 Reconciliation:            
    Change in unrealized appreciation      
  Balance as of 12/31/07   (depreciation)   Purchases   Balance as of 6/30/08
 

  $0   $(2,568)   $157,335   $154,767
 

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.

Foreign Currency:
    The Fund values its non-U.S. securities in U.S. dollars daily at the prevailing foreign currency exchange rates as quoted by a major bank. The effects of changes in foreign exchange rates on investments and other assets and liabilities are included with net realized and unrealized gains and losses on investments.
    Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, expiration of currency forward contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, including investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.


48  |  2008 Semiannual Report to Stockholders    



Royce Micro-Cap Trust    


   Notes to Financial Statements (unaudited) (continued)

Securities Lending:
    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.

Taxes:
    As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the Fund is not subject to income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. The Schedule of Investments includes information regarding income taxes under the caption “Income Tax Information”.

Distributions:
    The Fund currently has a policy of paying quarterly distributions on the Fund’s Common Stock. Distributions are currently being made at the annual rate of 9% of the rolling average of the prior four calendar quarter-end NAVs of the Fund’s Common Stock, with the fourth quarter distribution being the greater of 2.25% of the rolling average or the distribution required by IRS regulations. Distributions to Preferred Stockholders are accrued daily and paid quarterly and distributions to Common Stockholders are recorded on ex-dividend date. The Fund is required to allocate long-term capital gain distributions and other types of income proportionately to distributions made to holders of shares of Common Stock and Preferred Stock. To the extent that distributions are not paid from long-term capital gains, net investment income or net short-term capital gains, they will represent a return of capital. Distributions are determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United States of America. Permanent book and tax differences relating to stockholder distributions will result in reclassifications within the capital accounts. Undistributed net investment income may include temporary book and tax basis differences, which will reverse in a subsequent period. Any taxable income or gain remaining undistributed at fiscal year end is distributed in the following year.

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

Expenses:
    The Fund incurs direct and indirect expenses. Expenses directly attributable to the Fund are charged to the Fund’s operations, while expenses applicable to more than one of the Royce Funds are allocated equitably. Allocated personnel and occupancy costs related to The Royce Funds are included in administrative and office facilities expenses. The Fund has adopted a deferred fee agreement that allows the Directors to defer the receipt of all or a portion of Directors’ Fees otherwise payable. The deferred fees are invested in certain Royce Funds until distributed in accordance with the agreement.

Compensating Balance Credits:
    The Fund has an arrangement with its custodian bank, whereby a portion of the custodian’s fee is paid indirectly by credits earned on the Fund’s cash on deposit with the bank. This deposit arrangement is an alternative to purchasing overnight investments. Conversely, the Fund pays interest to the custodian on any cash overdrafts, to the extent they are not offset by credits earned on positive cash balances.

Capital Stock:
    The Fund issued 806,280 and 1,320,682 shares of Common Stock as reinvestment of distributions by Common Stockholders for the six months ended June 30, 2008 and the year ended December 31, 2007, respectively.
    At June 30, 2008, 2,400,000 shares of 6.00% Cumulative Preferred Stock were outstanding. Commencing October 16, 2008 and thereafter, the Fund, at its option, may redeem the Cumulative Preferred Stock, in whole or in part, at the redemption price. The Cumulative Preferred Stock is classified outside of permanent equity (net assets applicable to Common Stockholders) in the accompanying financial statements in accordance with Emerging Issues Task Force (EITF) Topic D-98, Classification and Measurement of Redeemable Securities, that requires preferred securities that are redeemable for cash or other assets to be classified outside of permanent equity to the extent that the redemption is at a fixed or determinable price and at the option of the holder or upon the occurrence of an event that is not solely within the control of the issuer.
    The Fund is required to meet certain asset coverage tests with respect to the Cumulative Preferred Stock as required by the 1940 Act. In addition, pursuant to the Rating Agency Guidelines established by Moody’s, the Fund is required to maintain a certain discounted asset coverage. If the Fund fails to meet these requirements and does not correct such failure, the Fund may be required to redeem, in part or in full, the Cumulative Preferred Stock at a redemption price of $25.00 per share, plus an amount equal to the accumulated and unpaid dividends, whether or not declared on such shares, in order to meet these requirements. Additionally, failure to meet the foregoing asset coverage requirements could restrict the Fund’s ability to pay dividends to Common Stockholders and could lead to sales of portfolio securities at inopportune times. The Fund has met these requirements since issuing the Cumulative Preferred Stock.


    2008 Semiannual Report to Stockholders  |  49



Royce Micro-Cap Trust    


   Notes to Financial Statements (unaudited) (continued)

Investment Advisory Agreement:
    As compensation for its services under the Investment Advisory Agreement, Royce & Associates, LLC (“Royce”) receives a fee comprised of a Basic Fee (“Basic Fee”) and an adjustment to the Basic Fee based on the investment performance of the Fund in relation to the investment record of the Russell 2000.
    The Basic Fee is a monthly fee equal to 1/12 of 1% (1% on an annualized basis) of the average of the Fund’s month-end net assets applicable to Common Stockholders, plus the liquidation value of Preferred Stock, for the rolling 36-month period ending with such month (the “performance period”). The Basic Fee for each month is increased or decreased at the rate of 1/12 of .05% for each percentage point that the investment performance of the Fund exceeds, or is exceeded by, the percentage change in the investment record of the Russell 2000 for the performance period by more than two percentage points. The performance period for each such month is a rolling 36-month period ending with such month. The maximum increase or decrease in the Basic Fee for any month may not exceed 1/12 of .5%. Accordingly, for each month, the maximum monthly fee rate as adjusted for performance is 1/12 of 1.5% and is payable if the investment performance of the Fund exceeds the percentage change in the investment record of the Russell 2000 by 12 or more percentage points for the performance period, and the minimum monthly fee rate as adjusted for performance is 1/12 of .5% and is payable if the percentage change in the investment record of the Russell 2000 exceeds the investment performance of the Fund by 12 or more percentage points for the performance period.
    Royce has voluntarily committed to waive the portion of its investment advisory fee attributable to an issue of the Fund’s Preferred Stock for any month in which the Fund’s average annual NAV total return since issuance of the Preferred Stock fails to exceed the applicable Preferred Stock’s dividend rate.
    For the six rolling 36-month periods ended June 2008, the investment performance of the Fund exceeded the investment performance of the Russell 2000 by 3% to 8%. Accordingly, the investment advisory fee consisted of a Basic Fee of $1,928,494 and an upward adjustment of $273,114 for performance of the Fund above that of the Russell 2000. For the six months ended June 30, 2008, the Fund accrued and paid Royce advisory fees totaling $2,201,608.

Purchases and Sales of Investment Securities:
    For the six months ended June 30, 2008, the cost of purchases and proceeds from sales of investment securities, other than short-term securities and collateral received for securities loaned, amounted to $66,394,531 and $60,554,146, respectively.

Transactions in Shares of Affiliated Companies:
    An “Affiliated Company” as defined in the Investment Company Act of 1940, is a company in which a Fund owns 5% or more of the company’s outstanding voting securities at any time during the period. The Fund effected the following transactions in shares of such companies for the six months ended June 30, 2008:

                                     
    Shares   Market Value   Cost of   Cost of   Realized   Dividend   Shares   Market Value  
Affiliated Company   12/31/07   12/31/07   Purchases   Sales   Gain (Loss)   Income   6/30/08   6/30/08  
BKF Capital Group*   406,500   $ 902,430   -   $73,854   $(32,865)   -          
Tapestry Pharmaceuticals   815,600     244,680   $13,272   -   -   -   863,000   $9,493  
        $ 1,147,110           $(32,865)   -       $9,493  
*Not an Affiliated Company at June 30, 2008.

50  |  2008 Semiannual Report to Stockholders    



Royce Focus Trust   June 30, 2008 (unaudited)


   Schedule of Investments

    SHARES   VALUE
COMMON STOCKS – 97.5%            
             
Consumer Products – 10.0%            
Apparel, Shoes and Accessories - 3.5%            

Fossil a,b

  120,000   $ 3,488,400  

Timberland Company (The) Cl. A b

  150,000     2,452,500  
       
          5,940,900  
       
Food/Beverage/Tobacco - 1.7%            

Sanderson Farms

  80,000     2,761,600  
       
Health, Beauty and Nutrition - 1.8%            

Nu Skin Enterprises Cl. A

  200,000     2,984,000  
       
Sports and Recreation - 3.0%            

Thor Industries

  150,000     3,189,000  

Winnebago Industries

  180,000     1,834,200  
       
          5,023,200  
       
Total (Cost $20,993,363)         16,709,700  
       
Consumer Services – 2.1%            
Retail Stores - 2.1%            

AnnTaylor Stores b

  40,100     960,796  

Men’s Wearhouse (The)

  100,000     1,629,000  

Williams-Sonoma

  50,000     992,000  
       
Total (Cost $3,832,878)         3,581,796  
       
             
Financial Intermediaries – 6.2%            
Banking - 1.1%            

BB Holdings b

  400,000     1,812,583  
       
Securities Brokers - 3.2%            

Knight Capital Group Cl. A a,b

  300,000     5,394,000  
       
Other Financial Intermediaries - 1.9%            

KKR Financial Holdings

  300,000     3,150,000  
       
Total (Cost $9,674,832)         10,356,583  
       
Financial Services – 2.3%            
Investment Management - 2.3%            

U.S. Global Investors Cl. A

  226,000     3,785,500  
       
Total (Cost $3,590,422)         3,785,500  
       
Health – 3.4%            
Drugs and Biotech - 2.8%            

Endo Pharmaceuticals Holdings a,b

  120,000     2,902,800  

Lexicon Pharmaceuticals a,b

  500,000     800,000  

ULURU a,b

  1,200,000     1,020,000  
       
          4,722,800  
       
Medical Products and Devices - 0.6%            

Caliper Life Sciences a,b

  352,300     912,457  
       
Total (Cost $8,570,584)         5,635,257  
       
Industrial Products – 24.3%            
Building Systems and Components - 1.8%            

Simpson Manufacturing

  130,000     3,086,200  
       
Machinery - 4.3%            

Lincoln Electric Holdings

  60,000     4,722,000  
    SHARES   VALUE
Industrial Products (continued)            
Machinery (continued)            

Woodward Governor

  70,000   $ 2,496,200  
       
          7,218,200  
       
Metal Fabrication and Distribution - 13.1%            

Dynamic Materials

  30,000     988,500  

Kennametal

  118,600     3,860,430  

Reliance Steel & Aluminum

  100,000     7,709,000  

Schnitzer Steel Industries Cl. A

  30,000     3,438,000  

Sims Group ADR

  150,000     5,985,000  
       
          21,980,930  
       
Miscellaneous Manufacturing - 1.2%            

Rational

  10,000     2,016,872  
       
Pumps, Valves and Bearings - 3.9%            

Gardner Denver a,b

  60,000     3,408,000  

Pfeiffer Vacuum Technology

  30,000     3,111,745  
       
          6,519,745  
       
Total (Cost $18,348,521)         40,821,947  
       
Industrial Services – 8.5%            
Commercial Services - 5.0%            

Corinthian Colleges a,b

  149,900     1,740,339  

CRA International b

  40,000     1,446,000  

Korn/Ferry International a,b

  180,000     2,831,400  

ManTech International Cl. A a,b

  30,000     1,443,600  

Universal Technical Institute b

  80,100     998,046  
       
          8,459,385  
       
Food, Tobacco and Agriculture - 1.8%            

Industrias Bachoco ADR

  100,000     2,960,000  
       
Transportation and Logistics - 1.7%            

Arkansas Best

  80,000     2,931,200  
       
Total (Cost $13,897,624)         14,350,585  
       
Natural Resources – 29.2%            
Energy Services - 14.7%            

Ensign Energy Services

  250,000     5,447,681  

Pason Systems

  180,000     2,912,621  

Tesco Corporation a,b

  120,000     3,834,000  

Trican Well Service

  200,000     4,972,051  

Unit Corporation b

  90,000     7,467,300  
       
          24,633,653  
       
Precious Metals and Mining - 14.5%            

Allied Nevada Gold b

  350,000     2,061,500  

Endeavour Mining Capital

  550,000     3,991,370  

Fronteer Development Group b

  300,000     1,506,000  

Gammon Gold b

  450,000     4,882,500  

Ivanhoe Mines b

  320,000     3,491,200  

Pan American Silver a,b

  120,000     4,149,600  

Silver Standard Resources a,b

  150,000     4,297,500  
       
          24,379,670  
       
Total (Cost $29,799,872)         49,013,323  
       

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.   2008 Semiannual Report to Stockholders  |  51



Royce Focus Trust   June 30, 2008 (unaudited)


   Schedule of Investments

    SHARES   VALUE
Technology – 11.5%            
Aerospace and Defense - 1.4%            

Ceradyne a,b

  70,000   $ 2,401,000  
       
Components and Systems - 2.6%            

MKS Instruments a,b

  200,000     4,380,000  
       
Semiconductors and Equipment - 3.2%            

LamResearch a,b

  80,100     2,895,615  

SigmaDesigns b

  180,200     2,502,978  
       
          5,398,593  
       
Telecommunications - 4.3%            

ADTRAN

  150,000     3,576,000  

Foundry Networks b

  300,000     3,546,000  
       
          7,122,000  
       
Total (Cost $19,291,390)         19,301,593  
       
TOTAL COMMON STOCKS            

(Cost $127,999,486)

        163,556,284  
       
             
PREFERRED STOCK – 5.4%            

Kennedy-Wilson Conv. c,d

           

(Cost $9,000,000)

  9,000     9,160,740  
       
    PRINCIPAL        
    AMOUNT        
GOVERNMENT BOND – 5.7%            
(Principal Amount shown in local currency)            

Australia Government Bond 7.50%

           

due 9/15/09

           

(Cost $8,424,285)

  10,000,000     9,648,463  
       
    VALUE
REPURCHASE AGREEMENT – 6.2%        
State Street Bank & Trust Company,        

2.05% dated 6/30/08, due 7/1/08,

       

maturity value $10,372,591 (collateralized

       

by obligations of various U.S. Government

       

Agencies, valued at $10,633,838)

       

(Cost $10,372,000)

  $ 10,372,000  
   
COLLATERAL RECEIVED FOR SECURITIES        

LOANED – 11.0%

       
Money Market Funds        

State Street Navigator Securities

       

Lending Prime Portfolio (7 day yield-2.6748%)

       

(Cost $18,418,888)

    18,418,888  
   
TOTAL INVESTMENTS – 125.8%        

(Cost $174,214,659)

    211,156,375  

LIABILITIES LESS CASH
       

AND OTHER ASSETS – (10.9)%

    (18,353,594 )
         
PREFERRED STOCK – (14.9)%     (25,000,000 )
   
NET ASSETS APPLICABLE TO COMMON        

STOCKHOLDERS – 100.0%

  $ 167,802,781  
   

  New additions in 2008.
     
a   All or a portion of these securities were on loan at June 30, 2008. Total market value of loaned securities at June 30, 2008 was $17,395,506.
     
b   Non-income producing.
     
c   A security for which market quotations are not readily available represents 5.4% of net assets. This security has been valued at its fair value under procedures established by the Fund’s Board of Directors.
     
d   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.

Bold indicates the Fund’s 20 largest equity holdings in terms of June 30, 2008 market value.
     
TAX INFORMATION: The cost of total investments for Federal income tax purposes was $174,220,565. At June 30, 2008, net unrealized appreciation for all securities was $36,935,810, consisting of aggregate gross unrealized appreciation of $50,438,009 and aggregate gross unrealized depreciation of $13,502,199. The primary difference in book and tax basis cost is the timing of the recognition of losses on securities sold.


52  |  2008 Semiannual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



Royce Focus Trust   June 30, 2008 (unaudited)


   Statement of Assets and Liabilities

ASSETS:        
Investments at value (including collateral on loaned securities)*   $ 200,784,375  
Repurchase agreements (at cost and value)     10,372,000  
Cash and foreign currency     8,843  
Receivable for dividends and interest     306,351  
Prepaid expenses and other assets     20,353  

Total Assets

    211,491,922  

LIABILITIES:        
Payable for collateral on loaned securities     18,418,888  
Payable for investment advisory fee     161,726  
Preferred dividends accrued but not yet declared     33,331  
Accrued expenses     75,196  

Total Liabilities

    18,689,141  

PREFERRED STOCK:        
6.00% Cumulative Preferred Stock - $0.001 par value, $25 liquidation value per share; 1,000,000 shares outstanding     25,000,000  

Total Preferred Stock

    25,000,000  

NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS   $ 167,802,781  

ANALYSIS OF NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:        
Common Stock paid-in capital - $0.001 par value per share; 18,937,817 shares outstanding (150,000,000 shares authorized)   $ 132,308,692  
Undistributed net investment income (loss)     (4,195,058 )
Accumulated net realized gain (loss) on investments and foreign currency     8,197,858  
Net unrealized appreciation (depreciation) on investments and foreign currency     36,946,562  
Quarterly and accrued distributions     (5,455,273 )

Net Assets applicable to Common Stockholders (net asset value per share - $8.86)

  $ 167,802,781  

*Investments at identified cost (including $18,418,888 of collateral on loaned securities)

  $ 163,842,659  
 Market value of loaned securities     17,395,306  

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.   2008 Semiannual Report to Stockholders  |  53



Royce Focus Trust   Six Months Ended June 30, 2008 (unaudited)


   Statement of Operations

INVESTMENT INCOME:        
Income:        

Dividends*

  $ 969,069  

Interest**

    669,024  

Securities lending

    38,767  

Total income     1,676,860  

Expenses:        

Investment advisory fees

    932,944  

Stockholder reports

    57,573  

Custody and transfer agent fees

    30,405  

Professional fees

    17,054  

Directors’ fees

    14,804  

Administrative and office facilities expenses

    7,958  

Other expenses

    31,116  

Total expenses     1,091,854  
Compensating balance credits     (2,778 )

Net expenses     1,089,076  

Net investment income (loss)     587,784  

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:        
Net realized gain (loss) on investments and foreign currency     5,544,654  
Net change in unrealized appreciation (depreciation) on investments and foreign currency     (1,612,223 )

Net realized and unrealized gain (loss) on investments and foreign currency     3,932,431  

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM INVESTMENT OPERATIONS     4,520,215  

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS     (750,000 )

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS
RESULTING FROM INVESTMENT OPERATIONS

  $ 3,770,215  

*  Net of foreign withholding tax of $47,764.
       
**Net of foreign withholding tax of $34,458.        

54  |  2008 Semiannual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



Royce Focus Trust    


   Statement of Changes in Net Assets

      Six months ended        
      6/30/08   Year ended
      (unaudited)   12/31/07
INVESTMENT OPERATIONS:                  
Net investment income (loss)     $ 587,784     $ 1,988,494  
Net realized gain (loss) on investments and foreign currency       5,544,654       29,154,418  
Net change in unrealized appreciation (depreciation) on investments and foreign currency       (1,612,223 )     (10,391,522 )

Net increase (decrease) in net assets resulting from investment operations

      4,520,215       20,751,390  

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:                  
Net investment income       –           (331,350 )
Net realized gain on investments and foreign currency       –           (1,168,650 )
Quarterly distributions*       (750,000 )     –      

Total distributions to Preferred Stockholders       (750,000 )     (1,500,000 )

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS
RESULTING FROM INVESTMENT OPERATIONS

      3,770,215       19,251,390  

DISTRIBUTIONS TO COMMON STOCKHOLDERS:                  
Net investment income       –           (7,385,265 )
Net realized gain on investments and foreign currency       –           (26,047,361 )
Quarterly distributions*       (4,671,940 )     –      

Total distributions to Common Stockholders       (4,671,940 )     (33,432,626 )

CAPITAL SHARE TRANSACTIONS:                  
Reinvestment of distributions to Common Stockholders       2,897,098       21,421,393  

Total capital stock transactions       2,897,098       21,421,393  

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS       1,995,373       7,240,157  

NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:                  

Beginning of period

      165,807,408       158,567,251  

End of period (including undistributed net investment income (loss) of $(4,195,058) at 6/30/08 and $(4,782,842) at 12/31/07)

    $ 167,802,781     $ 165,807,408  

* To be allocated to net investment income and capital gains at year end.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.   2008 Semiannual Report to Stockholders  |  55



Royce Focus Trust    


   Financial Highlights

This table is presented to show selected data for a share of Common Stock outstanding throughout each period, and to assist stockholders in evaluating the Fund’s performance for the periods presented.
    Six months   Years ended December 31,
    ended  
    June 30, 2008                                        
    (unaudited)     2007       2006       2005       2004       2003  

NET ASSET VALUE, BEGINNING OF PERIOD   $ 8.92     $ 9.75     $ 9.76     $ 9.75     $ 9.00     $ 6.27  

INVESTMENT OPERATIONS:                                                

Net investment income (loss)

    0.04       0.15       0.16       0.06       0.02       0.08  

Net realized and unrealized gain (loss) on investments and

                                               

foreign currency

    0.19       1.12       1.50       1.44       2.63       3.57  

Total investment operations

    0.23       1.27       1.66       1.50       2.65       3.65  

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:                                                

Net investment income

    –           (0.02 )     (0.01 )     (0.01 )     (0.00 )     (0.02 )

Net realized gain on investments and foreign currency

    –           (0.07 )     (0.09 )     (0.11 )     (0.15 )     (0.14 )

Quarterly distributions*

    (0.04 )     –           –           –           –           –      

Total distributions to Preferred Stockholders

    (0.04 )     (0.09 )     (0.10 )     (0.12 )     (0.15 )     (0.16 )

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON                                                

STOCKHOLDERS RESULTING FROM INVESTMENT OPERATIONS

    0.19       1.18       1.56       1.38       2.50       3.49  

DISTRIBUTIONS TO COMMON STOCKHOLDERS:                                                

Net investment income

    –           (0.44 )     (0.20 )     (0.06 )     (0.02 )     (0.06 )

Net realized gain on investments and foreign currency

    –           (1.57 )     (1.37 )     (1.15 )     (1.72 )     (0.56 )

Quarterly distributions*

    (0.25 )     –           –           –           –           –      

Total distributions to Common Stockholders

    (0.25 )     (2.01 )     (1.57 )     (1.21 )     (1.74 )     (0.62 )

CAPITAL STOCK TRANSACTIONS:                                                

Effect of reinvestment of distributions by Common Stockholders

    (0.00 )     (0.00 )     (0.00 )     (0.03 )     (0.01 )     (0.03 )

Effect of rights offering and Preferred Stock offering

    –           –           –           (0.13 )     –           (0.11 )

Total capital stock transactions

    (0.00 )     (0.00 )     (0.00 )     (0.16 )     (0.01 )     (0.14 )

NET ASSET VALUE, END OF PERIOD   $ 8.86     $ 8.92     $ 9.75     $ 9.76     $ 9.75     $ 9.00  

MARKET VALUE, END OF PERIOD   $ 8.83     $ 8.97     $ 10.68     $ 9.53     $ 10.47     $ 8.48  

TOTAL RETURN (a):                                                
Market Value     1.37 %***     3.02 %     30.50 %     3.03 %     47.26 %     63.98 %
Net Asset Value     2.28 %***     12.22 %     16.33 %     13.31 %     29.21 %     54.33 %

RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

                                               
Total expenses (b,c)     1.35 %**     1.31 %     1.36 %     1.48 %     1.53 %     1.57 %

Management fee expense

    1.16 %**     1.14 %     1.16 %     1.21 %     1.27 %     1.14 %

Other operating expenses

    0.19 %**     0.17 %     0.20 %     0.27 %     0.26 %     0.43 %
Net investment income (loss)     0.73 %**     1.13 %     1.54 %     0.63 %     0.24 %     1.07 %
SUPPLEMENTAL DATA:                                                
Net Assets Applicable to Common Stockholders,                                                

End of Period (in thousands)

    $167,803       $165,807       $158,567       $143,244       $105,853       $87,012  
Liquidation Value of Preferred Stock, End of Period (in thousands)     $25,000       $25,000       $25,000       $25,000       $25,000       $25,000  
Portfolio Turnover Rate     23 %     62 %     30 %     42 %     52 %     49 %
PREFERRED STOCK:                                                
Total shares outstanding     1,000,000       1,000,000       1,000,000       1,000,000       1,000,000       1,000,000  
Asset coverage per share   $ 192.80     $ 190.81     $ 183.57     $ 168.24     $ 130.85     $ 112.01  
Liquidation preference per share   $ 25.00     $ 25.00     $ 25.00     $ 25.00     $ 25.00     $ 25.00  
Average market value per share (d):                                                

6.00% Cumulative

  $ 24.03     $ 24.37     $ 24.98     $ 25.38     $ 24.83     $ 25.45  

7.45% Cumulative

    –           –           –           –           –         $ 25.53  

(a)  

The Market Value Total Return is calculated assuming a purchase of Common Stock on the opening of the first business day and a sale on the closing of the last business day of each period reported. Dividends and distributions are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund’s Distribution Reinvestment and Cash Purchase Plan. Net Asset Value Total Return is calculated on the same basis, except that the Fund’s net asset value is used on the purchase and sale dates instead of market value.

(b)  

Expense ratios based on total average net assets including liquidation value of Preferred Stock were 1.17%, 1.15% 1.17%, 1.22%, 1.21% and 1.20% for the periods ended June 30, 2008 and December 31, 2007, 2006, 2005, 2004 and 2003, respectively.

(c)  

Expense ratios based on average net assets applicable to Common Stockholders before waiver of fees by the investment adviser would have been 1.73% for the year ended December 31, 2003; before waiver of fees and earnings credits would have been 1.35%, 1.32%, 1.36%, 1.48%, 1.53% and 1.73% for the periods ended June 30, 2008 and December 31, 2007, 2006, 2005, 2004 and 2003, respectively.

(d)   The average of month-end market values during the period that the Preferred Stock was outstanding.
   *   To be allocated to net investment income and capital gains at year end.
  **   Annualized.
***   Not annualized.

56  |  2008 Semiannual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



Royce Focus Trust    


   Notes to Financial Statements (unaudited)


Summary of Significant Accounting Policies:
    Royce Focus Trust, Inc. (the “Fund”), is a diversified closed-end investment company incorporated under the laws of the State of Maryland. The Fund commenced operations on March 2, 1988 and Royce & Associates, LLC (“Royce”) assumed investment management responsibility for the Fund on November 1, 1996.
    The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

Valuation of Investments:
    Securities are valued as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq’s Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their 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 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 price 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.
  Various inputs are used in determining the value of the Fund’s investments. 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)
    Level 3 – significant observable 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 June 30, 2008:
  Level 1   Level 2   Level 3   Total

  $139,291,361   $62,704,274   $9,160,740   $211,156,375

Level 3 Reconciliation:            
    Change in unrealized appreciation      
  Balance as of 12/31/07   (depreciation)   Purchases   Balance as of 6/30/2008

  $0   $160,740   $9,000,000   $9,160,740

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.

Foreign Currency:
    The Fund values its non-U.S. securities in U.S. dollars daily at the prevailing foreign currency exchange rates as quoted by a major bank. The effects of changes in foreign exchange rates on investments and other assets and liabilities are included with net realized and unrealized gains and losses on investments.
    Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, expiration of currency forward contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, including investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.

    2008 Semiannual Report to Stockholders  |  57



Royce Focus Trust    


   Notes to Financial Statements (unaudited) (continued)

Securities Lending:
    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.

Taxes:
    As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the Fund is not subject to income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. The Schedule of Investments includes information regarding income taxes under the caption “Income Tax Information”.

Distributions:
    The Fund currently has a policy of paying quarterly distributions on the Fund’s Common Stock. Distributions are currently being made at the annual rate of 5% of the rolling average of the prior four calendar quarter-end NAVs of the Fund’s Common Stock, with the fourth quarter distribution being the greater of 1.25% of the rolling average or the distribution required by IRS regulations. Distributions to Preferred Stockholders are accrued daily and paid quarterly and distributions to Common Stockholders are recorded on ex-dividend date. The Fund is required to allocate long-term capital gain distributions and other types of income proportionately to distributions made to holders of shares of Common Stock and Preferred Stock. To the extent that distributions are not paid from long-term capital gains, net investment income or net short-term capital gains, they will represent a return of capital. Distributions are determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United States of America. Permanent book and tax differences relating to stockholder distributions will result in reclassifications within the capital accounts. Undistributed net investment income may include temporary book and tax basis differences, which will reverse in a subsequent period. Any taxable income or gain remaining undistributed at fiscal year end is distributed in the following year.

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

Expenses:
    The Fund incurs direct and indirect expenses. Expenses directly attributable to the Fund are charged to the Fund’s operations, while expenses applicable to more than one of the Royce Funds are allocated equitably. Allocated personnel and occupancy costs related to The Royce Funds are included in administrative and office facilities expenses. The Fund has adopted a deferred fee agreement that allows the Directors to defer the receipt of all or a portion of Directors’ Fees otherwise payable. The deferred fees are invested in certain Royce Funds until distributed in accordance with the agreement.

Compensating Balance Credits:
    The Fund has an arrangement with its custodian bank, whereby a portion of the custodian’s fee is paid indirectly by credits earned on the Fund’s cash on deposit with the bank. This deposit arrangement is an alternative to purchasing overnight investments. Conversely, the Fund pays interest to the custodian on any cash overdrafts, to the extent they are not offset by credits earned on positive cash balances.

Capital Stock:
    The Fund issued 342,497 and 2,332,768 shares of Common Stock as reinvestment of distributions by Common Stockholders for the six months ended June 30, 2008 and the year ended December 31, 2007, respectively.
    At June 30, 2008, 1,000,000 shares of 6.00% Cumulative Preferred Stock were outstanding. Commencing October 17, 2008 and thereafter, the Fund, at its option, may redeem the Cumulative Preferred Stock, in whole or in part, at the redemption price. The Cumulative Preferred Stock is classified outside of permanent equity (net assets applicable to Common Stockholders) in the accompanying financial statements in accordance with Emerging Issues Task Force (EITF) Topic D-98, Classification and Measurement of Redeemable Securities, that requires preferred securities that are redeemable for cash or other assets to be classified outside of permanent equity to the extent that the redemption is at a fixed or determinable price and at the option of the holder or upon the occurrence of an event that is not solely within the control of the issuer.
    The Fund is required to meet certain asset coverage tests with respect to the Cumulative Preferred Stock as required by the 1940 Act. In addition, pursuant to the Rating Agency Guidelines established by Moody’s, the Fund is required to maintain a certain discounted asset coverage. If the Fund fails to meet these requirements and does not correct such failure, the Fund may be required to redeem, in part or in full, the Cumulative Preferred Stock at a redemption price of $25.00 per share, plus an amount equal to the accumulated and unpaid dividends, whether or not declared on such shares, in order to meet these requirements. Additionally, failure to meet the foregoing asset coverage requirements could restrict the Fund’s ability to pay dividends to Common Stockholders and could lead to sales of portfolio securities at inopportune times. The Fund has met these requirements since issuing the Cumulative Preferred Stock.


58  |  2008 Semiannual Report to Stockholders    



Royce Focus Trust    


   Notes to Financial Statements (unaudited) (continued)

Investment Advisory Agreement:
    The Investment Advisory Agreement between Royce and the Fund provides for fees to be paid at an annual rate of 1.0% of the Fund’s average daily net assets applicable to Common Stockholders plus the liquidation value of Preferred Stock. Royce has voluntarily committed to waive the portion of its investment advisory fee attributable to an issue of the Fund’s Preferred Stock for any month in which the Fund’s average annual NAV total return since issuance of the Preferred Stock fails to exceed the applicable Preferred Stock’s dividend rate. For the six months ended June 30, 2008, the Fund accrued and paid Royce advisory fees totaling $932,944.

Purchases and Sales of Investment Securities:
    For the six months ended June 30, 2008, the cost of purchases and proceeds from sales of investment securities, other than short-term securities and collateral received for securities loaned, amounted to $48,394,774 and $38,523,359, respectively.


    2008 Semiannual Report to Stockholders  |  59



Notes to Performance and Other Important Information    


The thoughts expressed in this Review and Report concerning recent market movements and future prospects for small company stocks are solely the opinion of Royce at June 30, 2008, 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, 2008 and are subject to change at any time without notice. There can be no assurance that securities mentioned in this Review and Report will be included in any Royce-managed portfolio in the future. The Funds invest primarily in securities of micro-, small- and mid-cap companies, that may involve considerably more risk than investments of larger-cap companies. All publicly released material information is always disclosed by the Funds on the website at www.roycefunds.com.

    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 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 measures the performance of the 1,000 smallest publicly traded U.S. companies in the Russell 2000 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. and Canada. Returns for the market indices used in this Review and Report were based on information supplied to Royce by Russell Investments and Morningstar. Royce has not independently verified the above described information. The Royce Funds is a service mark of The Royce Funds.

 
 
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 uses words such as “anticipates,” “believes,” “expects,” “future,” “intends,” and similar expressions to identify forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements for any reason.
    The Royce Funds have based the forward-looking statements included in this Review and Report on information available to us on the date of the report, and we assume no obligation to update any such forward-looking statements. Although The Royce Funds undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make through future stockholder communications or reports.

 
Authorized Share Transactions

Royce Value Trust, Royce Micro-Cap Trust and Royce Focus Trust may each repurchase up to 5% of the issued and outstanding shares of its respective common stock and up to 10% of the issued and outstanding shares of its respective preferred stock during the year ending December 31, 2008. Any such repurchases would take place at then prevailing prices in the open market or in other transactions. Common stock repurchases would be effected at a price per share that is less than the share’s then current net asset value, and preferred stock repurchases would be effected at a price per share that is less than the share’s liquidation value.
    Royce Value Trust, Royce Micro-Cap Trust and Royce Focus Trust are also authorized to offer their common stockholders an opportunity to subscribe for additional shares of their common stock through rights offerings at a price per share that may be less than the share’s then current net asset value. The timing and terms of any such offerings are within each Board’s discretion.

     
  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 Royce Funds’ website at www.roycefunds.com and on the SEC’s website at www.sec.gov. 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 1-800-732-0330. The Funds’ complete schedules of investments are updated quarterly, and are available at www.roycefunds.com.

 
     

60  |  2008 Semiannual Report to Stockholders    



Directors and Officers

 
All Directors and Officers may be reached c/o The Royce Funds, 1414 Avenue of the Americas, New York, NY 10019
 
Charles M. Royce, Director*, President
Age: 68 | Number of Funds Overseen: 28 | Tenure: Since 1986
Non-Royce Directorships: Director of Technology Investment Capital Corp.
 
Principal Occupation(s) During Past Five Years: President, Chief Investment Officer and Member of Board of Managers of Royce & Associates, LLC (“Royce”), the Trust’s investment adviser.
 
Mark R. Fetting, Director*
Age: 53 | Number of Funds Overseen: 42 | Tenure: Since 2001
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 14 Legg Mason Funds.
 
Principal Occupation(s) During Past Five Years: President and Chief Executive Officer of Legg Mason, Inc.; Member of Board of Managers of Royce. Mr. Fetting’s prior business experience includes having served as Senior Executive Vice President of Legg Mason, Inc.; Division President and Senior Officer, Prudential Financial Group, Inc. and related companies; Partner, Greenwich Associates and Vice President, T. Rowe Price Group, Inc.

Donald R. Dwight, Director
Age: 77 | Number of Funds Overseen: 28 | Tenure: Since 1998
Non-Royce Directorships: None
 
Principal Occupation(s) During Past Five Years: President of Dwight Partners, Inc., corporate communications consultant; Chairman (from 1982 to March 1998) and Chairman Emeritus (since March 1998) of Newspapers of New England, Inc. Mr. Dwight’s prior experience includes having served as Lieutenant Governor of the Commonwealth of Massachusetts, as President and Publisher of Minneapolis Star and Tribune Company and as a Trustee of the registered investment companies constituting the Eaton Vance Funds.
 
Richard M. Galkin, Director
Age: 70 | Number of Funds Overseen: 28 | Tenure: Since 1986
Non-Royce Directorships: None
 
Principal Occupation(s) During Past Five Years: Private investor. Mr. Galkin’s prior business experience includes having served as President of Richard M. Galkin Associates, Inc., telecommunications consultants, President of Manhattan Cable Television (a subsidiary of Time, Inc.), President of Haverhills Inc. (another Time, Inc. subsidiary), President of Rhode Island Cable Television and Senior Vice President of Satellite Television Corp. (a subsidiary of Comsat).
 
Stephen L. Isaacs, Director
Age: 69 | Number of Funds Overseen: 28 | 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); Attorney and President of Health Policy Associates, Inc., consultants. Mr. 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).
 
William L. Koke, Director
Age: 74 | Number of Funds Overseen: 28 | Tenure: Since 1996
Non-Royce Directorships: None
 
Principal Occupation(s) During Past Five Years: Private investor. Mr. Koke’s prior business experience includes having served as President of Shoreline Financial Consultants, Director of Financial Relations of SONAT, Inc., Treasurer of Ward Foods, Inc. and President of CFC, Inc.
 
Arthur S. Mehlman, Director
Age: 66 | Number of Funds Overseen: 42 | Tenure: Since 2004
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 14 Legg Mason Funds and Director of Municipal Mortgage & Equity, LLC.
 
Principal Occupation(s) During Past Five Years: Director of The League for People with Disabilities, Inc.; Director of University of Maryland Foundation (non-profits). Formerly: Director of University of Maryland College Park Foundation (non-profit) (from 1998 to 2005); Partner, KPMG LLP (international accounting firm) (from 1972 to 2002); Director of Maryland Business Roundtable for Education (from July 1984 to June 2002).
David L. Meister, Director
Age: 68 | Number of Funds Overseen: 28 | Tenure: Since 1986
Non-Royce Directorships: None
 
Principal Occupation(s) During Past Five Years: Consultant. Chairman and Chief Executive Officer of The Tennis Channel (from June 2000 to March 2005). Mr. Meister’s prior business experience includes having served as Chief Executive Officer of Seniorlife.com, a consultant to the communications industry, President of Financial News Network, Senior Vice President of HBO, President of Time-Life Films and Head of Broadcasting for Major League Baseball.
 
G. Peter O’Brien, Director
Age: 62 | Number of Funds Overseen: 42 | Tenure: Since 2001
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 14 Legg Mason Funds; Director of Technology Investment Capital Corp.
 
Principal Occupation(s) During Past Five Years: Trustee Emeritus of Colgate University (since 2005); Board Member of Hill House, Inc. (since 1999); Formerly: Trustee of Colgate University (from 1996 to 2005), President of Hill House, Inc. (from 2001 to 2005) and Managing Director/Equity Capital Markets Group of Merrill Lynch & Co. (from 1971 to 1999).

John D. Diederich, Vice President and Treasurer
Age: 57 | Tenure: Since 2001
 
Principal Occupation(s) During Past Five Years: Chief Operating Officer, Managing Director and member of the Board of Managers of Royce; Chief Financial Officer of Royce; Director of Administration of the Trust; and President of RFS, having been employed by Royce since April 1993.
 
Jack E. Fockler, Jr., Vice President
Age: 49 | Tenure: Since 1995
 
Principal Occupation(s) During Past Five Years: Managing Director and Vice President of Royce, and Vice President of RFS, having been employed by Royce since October 1989.
 
W. Whitney George, Vice President
Age: 50 | Tenure: Since 1995
 
Principal Occupation(s) During Past Five Years: Managing Director and Vice President of Royce, having been employed by Royce since October 1991.
 
Daniel A. O’Byrne, Vice President and Assistant Secretary
Age: 46 | Tenure: Since 1994
 
Principal Occupation(s) During Past Five Years: Principal and Vice President of Royce, having been employed by Royce since October 1986.
 
John E. Denneen, Secretary and Chief Legal Officer
Age: 41| Tenure: 1996-2001 and Since April 2002
 
Principal Occupation(s) During Past Five Years: General Counsel, Principal, Chief Legal and Compliance Officer and Secretary of Royce; Secretary and Chief Legal Officer of The Royce Funds.
 
Lisa Curcio, Chief Compliance Officer
Age: 48 | Tenure: Since 2004
 
Principal Occupation(s) During Past Five Years: Chief Compliance Officer of The Royce Funds (since October 2004); Compliance Officer of Royce (since June 2004); Vice President, The Bank of New York (from February 2001 to June 2004).
 

*   Interested Director.

2008 Semiannual Report to Stockholders  |  61



Board Approval of Investment Advisory Agreements    


At meetings held on June 4 – 5, 2008, each of the Funds’ respective Boards of Directors, including all of the non-interested directors, approved the continuance of the Investment Advisory Agreements between Royce & Associates, LLC (“R&A”) and each of Royce Value Trust, Royce Micro-Cap Trust and Royce Focus Trust (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 the Funds with other funds in their “peer group”, 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 directors. R&A also provided the directors 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, regulatory compliance, brokerage commissions and research, brokerage and execution products and services provided to the Funds. The Board also considered other matters they deemed important to the approval process such as payments made to R&A or its affiliates relating to allocation of Fund brokerage commissions, and other direct and indirect benefits to R&A and its affiliates, from their relationship with the Funds. The directors also met throughout the year with investment advisory personnel from R&A. The Board, in its deliberations, recognized that, for many of the Funds’ stockholders, 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 stockholders between R&A and each Fund. In considering factors relating to the approval of the continuance of the Investment Advisory Agreements, the non-interested directors 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 Board dealt with each agreement separately. Among other factors, the directors considered the following:
    The nature, extent and quality of services provided by R&A: The Board 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 30 years of small-cap value investing experience and track record; (ii) the history of long-tenured R&A portfolio managers managing the Funds; (iii) R&A’s sole focus on mid-cap, small-cap and micro-cap value investing; (iv) the consistency of R&A’s approach to managing both the Funds and open-end mutual funds over more than 30 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 management talent and (viii) R&A’s focus on stockholder interests as exemplified by its voluntary fee waiver policy on preferred stock assets in certain circumstances where the Funds’ total return performance from the issuance of the preferred may not exceed the coupon rate on the preferred, and expansive stockholder reporting and communications. The Board 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 during 2008 R&A provided certain administrative services to the Funds at cost pursuant to the Administration Agreement between the Funds and R&A which went into effect on January 1, 2008. The Board 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 Board noted R&A’s ability to attract quality and experienced personnel. The directors concluded that the 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 risk-averse approach to investing, the Board believes that risk-adjusted performance continues to be an appropriate measure of each Fund’s investment performance. One measure of risk-adjusted performance the Board has 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, five and ten years. Morningstar compared each of the Funds’ risk-adjusted performance to that of its applicable open-end fund category. Royce Value Trust’s Sharpe Ratio placed in the 1st quartile within the small blend category assigned by Morningstar for the three- and five-year periods and the 2nd quartile for the ten-year period ended December 31, 2007. Similarly, Royce Micro-Cap Trust’s Sharpe Ratio placed in the 2nd quartile within the small blend, growth or value category assigned by Morningstar for the three-year period and in the 1st quartile for the five- and ten-year periods ended December 31, 2007. Finally, Royce Focus Trust’s Sharpe Ratio placed in the 1st quartile within the small growth category assigned by Morningstar for the three-, five- and ten-year periods ended December 31, 2007.
    The Board 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 Board 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 small-cap and micro-cap securities to manage the Funds. The directors determined that R&A continued to be an appropriate investment adviser for the Funds and concluded that each Fund’s 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 Board 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 Board concluded that R&A’s profits were reasonable in relation to the nature and quality of services provided.


62  |  2008 Semiannual Report to Stockholders    



Board Approval of Investment Advisory Agreements (continued)    


    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 Board 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 Board 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 Board 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 Board 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 Board noted that, in the case of Royce Value Trust, the 1.00% basic fee that is subject to adjustment up or down (up to 0.50% in either direction) based on the Fund’s performance versus the S&P 600 SmallCap Index over rolling periods of 60 months. The fee is charged on average net assets over those rolling periods. As a result, in a rising market, the fee will be smaller than a fee calculated on the current year’s average net assets, and visa versa. The Board determined that the performance adjustment feature continued to serve as an appropriate incentive to R&A to manage the Fund for the benefit of its long-term common stockholders. The Board noted that R&A had also agreed to waive its management fee on Fund assets in an amount equal to the liquidation preference of the Fund’s outstanding preferred stock if the Fund’s total return from issuance of the preferred on such amount is less than the preferred’s coupon rate. The Board also noted that the fee arrangement, which also includes a provision for no fee in periods where the Fund’s trailing three-year performance is negative, requires R&A to measure the Fund’s performance monthly against the S&P 600, an unmanaged index. Instead of receiving a set fee regardless of its performance, R&A is penalized for poor performance. The Board noted that if the Fund’s expense ratio were based on total average net assets including net assets applicable to Preferred Stock, it would place in the 2nd quartile of its Morningstar-assigned open-end peer group.
    In the case of Royce Micro-Cap Trust, the directors noted that the Fund has a 1.00% basic fee subject to adjustment up or down based on the Fund’s performance versus the Russell 2000 Index over rolling 36-month periods. The fee is charged on average net assets over those rolling periods. As a result, in a rising market, the fee will be smaller than a fee calculated on the current year’s average net assets, and visa versa. The Board determined that the performance adjustment feature continued to serve as an incentive to R&A to manage the Fund for the benefit of its long-term stockholders. The Board also noted R&A’s voluntarily waiver of its fee on the liquidation value of the outstanding preferred stock in circumstances where the Fund’s total return performance from the issuance of the preferred is less than the coupon rate on the preferred for each month during the year. The Board noted that if the Fund’s expense ratio were based on total average net assets including net assets applicable to Preferred Stock, it would fall effectively at the median when compared to its Morningstar-assigned open-end peer group.
    Finally, in the case of Royce Focus Trust, the Board noted that R&A had agreed to waive its management fee on the liquidation value of outstanding preferred stock if the Fund’s total return from issuance of the preferred is less than the preferred’s coupon rate. The Board noted that if the Fund’s expense ratio were based on total average net assets including net assets applicable to Preferred Stock, it would place in the 2nd quartile of its Morningstar-assigned open-end peer group.
    The Board also considered fees charged by R&A to institutional and other clients and noted that the Funds’ base advisory fees compared favorably to those other accounts.
    The entire Board, including all the non-interested directors, approved the renewal of the existing Investment Advisory Agreements, concluding that a contract renewal on the existing terms was in the best interest of the stockholders of each Fund and that each investment advisory fee rate was reasonable in relation to the services provided.


    2008 Semiannual Report to Stockholders  |  63

















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Postscript: Freeway Jam


Everyone can probably think of one example—that neighborhood restaurant only you and a few friends seem aware of; an uncrowded, out-of-the-way vacation spot that you stumbled on accidentally and have returned to each year since; maybe a band, a book or a film that you love but that escaped most other people’s notice. Back in the ‘70s, and lasting through much of the ‘80s, small-cap value investing was much like discovering, and regularly returning to, a favorite place or thing that few others seemed to know about.
        There were not a lot of professional money managers devoting their attention to smaller stocks in those days. Most of those who did were looking for fast-growing, usually short-term opportunities. Being a value investor with a long-term

 

Over time, things began to change. Little by little, the road began to fill with others looking for the same sort of bargain-priced, high-quality smaller companies that we loved. Simply knowing about the existence of all these wonderful, out-of-the-way businesses was no longer an advantage in itself. By the ‘90s, we wondered whether or not our waning edge in obtaining information would be a problem. If more and more people had access to all of this information, how would we continue to find what we deemed high-quality companies in our increasingly crowded marketplace? In the era of the cell phone, GPS, PDA, satellite radio and multiple all-news stations with regular updates of traffic and weather, the kind of person-to-person communication that a CB provided is a relic from a simpler time. How would our approach avoid a similar fate?

investment horizon in the small-cap world was definitely a rarity, but we were more than content to follow our own path. Aside from a few other kindred spirits, we were mostly alone in choosing a long-term route to small-cap value, and we were happy to operate on nearly empty roads.
        It was the ‘70s, after all, which perhaps explains why there were times when we felt a little bit like drivers using CB radios as we searched for undervalued smaller companies. Our work was not nearly as trendy—we never had a hit record—but we did share with CB enthusiasts access to information that others lacked, or perhaps did not want in the first place. A CB radio gave truckers and other drivers traffic and safety news, warnings about lurking ‘smokies’ on the highways and advice about where you could find a good cup of joe nearly anywhere in the continental U.S. at any hour of the day. Our intense scrutiny of smaller

   

        One key element was the wealth of knowledge that we had built (and continue to build) about thousands of smaller companies. Our years of investment experience give us an advantage that few in our industry can match. As the ‘90s gave way to the current decade, we began to see that access to information, while vital to any investment enterprise, would not be enough. It is one thing to have information, it is something else entirely to know how to best put it to use. This, it seems to us, remains one of our major competitive advantages. As experienced smaller-company investors, we feel confident about our knowledge of the marketplace and how to select securities within it.

companies gave us similar advantages. Many of the companies that drew our attention received little, if any, coverage from Wall Street analysts. For some, there was very little public information available. This meant that when we saw an interesting business along the small-cap road, there were few others pulling over to take a close look.

 

It is one thing to have information, it is something else entirely to know how to best put it to use. This, it seems to us, remains one of our major competitive advantages.

 

        In the last four decades, we have seen the smaller-company universe go from being the province of a few professional managers to a widely accepted domestic asset class in which many investment managers traffic. We have continued to enjoy long-term success because throughout this time we never strayed from our commitment to our approach or our chosen asset class. Today, as smaller-companies face the challenge of becoming an asset class with global acceptance, we are even more committed to the principles that have guided us thus far. And that’s a big 10-4, buddy.


This page is not part of the 2008 Semiannual Report to Stockholders



 
 
   
   
   
   
   
   
   
 


Wealth Of Experience
With approximately $29 billion in open- and closed-end fund assets under management, Royce & Associates is committed to the same smaller-company investing principles that have served us well for more than 35 years. Charles M. Royce, our Chief Investment Officer, enjoys one of the longest tenures of any active mutual fund manager. Royce’s investment staff includes 12 Portfolio Managers, as well as nine assistant portfolio managers and analysts, and eight traders.


Multiple Funds, Common Focus
Our goal is to offer both individual and institutional investors the best available smaller-cap value portfolios. Unlike a lot of fund groups with broad product offerings, we have chosen to concentrate on smaller-company value investing by providing investors with a range of funds that take full advantage of this large and diverse sector.


Consistent Discipline
Our approach emphasizes paying close attention to risk and maintaining the same discipline, regardless of market movements and trends. The price we pay for a security must be significantly below our appraisal of its current worth. This requires a thorough analysis of the financial and business dynamics of an enterprise, as though we were purchasing the entire company.


Co-Ownership Of Funds
It is important that our employees and shareholders share a common financial goal; our officers, employees and their families currently have approximately $117 million invested in The Royce Funds.
   
           
   
  General Information Advisor Services      
  Additional Report Copies For Fund Materials, Performance Updates,      
  and Fund Inquiries Account Inquiries      
  (800) 221-4268 (800) 33-ROYCE (337-6923)      
           
  Computershare Broker/Dealer Services      
  Transfer Agent and Registrar For Fund Materials and Performance Updates      
  (800) 426-5523 (800) 59-ROYCE (597-6923)      
           
 
www.roycefunds.com
   
           
 
 

 
         
         
         
   
   






 
   
   
   
   
TheRoyceFunds
CE-REP-0608  
   
   
   
   



Item 2. Code(s) of Ethics – Not applicable to this semi-annual report.

Item 3. Audit Committee Financial Expert – Not applicable to this semi-annual report.

Item 4. Principal Accountant Fees and Services – Not applicable to this semi-annual report.

Item 5. Audit Committee of Listed Registrants – Not applicable to this semi-annual report.

Item 6. Schedule of Investments

(a) See Item 1.

(b) Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not applicable to this semi-annual report.

Item 8. Portfolio Managers of Closed-End Management Investment Companies – Not applicable to this semi-annual report.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders – None.

Item 11. Controls and Procedures.

(a) Disclosure Controls and Procedures. The Principal Executive and Financial Officers concluded that the Registrant’s Disclosure Controls and Procedures are effective based on their evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.

(b) Internal Control over Financial Reporting. There were no significant changes in Registrant’s internal control over financial reporting or in other factors that could significantly affect this control subsequent to the date of the evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses during the second fiscal quarter of the period covered by this report.

Item 12. Exhibits attached hereto.

(a)(1) Not applicable.

(a)(2) Separate certifications by the Registrant’s Principal Executive Officer and Principal Financial Officer as required by Rule 30a-2(a) under the Investment Company Act of 1940.

(a)(3) Not Applicable

(b) Separate certifications by the Registrant’s Principal Executive Officer and Principal Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ROYCE VALUE TRUST, INC.

BY: /s/Charles M. Royce
       Charles M. Royce
       President
Date: August 27, 2008



Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

ROYCE VALUE TRUST, INC.

BY: /s/Charles M. Royce
       Charles M. Royce
       President

Date: August 27, 2008

ROYCE VALUE TRUST, INC.

BY: /s/John D. Diederich
       John D. Diederich
       Chief Financial Officer

Date: August 27, 2008