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: 811-05379

Name of Registrant: Royce Focus 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, 2007 – June 30, 2007

Item 1.    Reports to Shareholders

 
     
 
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

Semiannual Report to Stockholders   10


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    

 
Average Annual NAV Total Returns   Through June 30, 2007

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

  Second Quarter 2007*         6.30 %   4.39 %       8.24 % 4.41 %

  Year-to-Date 2007*         9.83     9.23         15.94   6.45  

  One-Year         19.70     19.87         24.26   16.43  

  Three-Year         16.39     16.08         21.31   13.45  

  Five-Year         15.46     16.54         21.57   13.88  

  10-Year         13.63     14.34         14.16   9.06  

  15-Year         14.45     n/a         n/a   11.92  

  20-Year         13.01     n/a         n/a   10.10  

  Since Inception         13.17     14.76         15.22   —     

  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. Performance information does not reflect the deduction of taxes that a stockholder would pay on distributions or on the sale of Fund shares. 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, 2007, 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, 2007 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

Rolling Stone Blues
 

At first blush, the mid-point of 2007 looked very similar to the end of 2006. The economy’s condition was mostly positive, interest rates remained low and global liquidity levels remained flush following some vexing signs of contraction earlier in the year. The stock market kept moving mostly upwards, and the long bull market for small-caps in particular showed few signs of slowing down prior to July of this year. What’s new for 2007 is that larger companies have emerged in the short run as market leaders, though the margin of outperformance versus small-cap both year-to-date and for the one-year period ended June 30 was not enormous. Within small-cap, there has been a move toward larger, arguably higher-quality companies that’s distinct from the generally better returns achieved by more speculative issues in 2006. The overall direction remained positive for smaller companies, as it did for stocks as a whole. Equity investors continued to benefit from a remarkable run that included more of the overall market than is usually thought, small-cap having long since stolen the headlines from its larger peers as “The Only Asset Class Worth Owning” in some quarters.
  Like the Rolling Stones, the bull market just kept going and going and going, almost automatic in its overall upward movement, its success seemingly taken for granted, with so many investors sure that the big hits would not fade away. As value investors, prone to a cautious, if not pessimistic, temperament, this blissful confidence on the part of certain observers was the object of our skepticism. Our view for the past few years has been that the bull market is nearly out of time. Although the market has so far seen fit to prove us wrong (though July’s correction could be a sign of things to come), we remain convinced




One of the advantages of employing an all-weather strategy to select smaller company stocks is that we continue to do what we have always done regardless of the market’s behavior. When smaller company stock prices were on the rise, it was more challenging to find the compelling values that have always been our stock in trade, but the search goes on whether the overall small-cap market is moving up or down.


 
 
 
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Letter to Our Stockholders

     
that a more historically typical correction of 15% or better is in the near future for smaller companies. The positive-performance phase that began in the fall of 2002 was interrupted by only two corrections in the 10%-14% range—one in 2004-5 and another in 2006—and a handful of others that were shy of double digits. To paraphrase the poet, the course of true market cycles never did run smooth. At least not as smooth as this current cycle. And to us, this was a warning. As we saw in July, when stock prices fell harder then they did during any other month this year, things can change very quickly. Along with our belief in regression to the mean, our conviction that markets are inherently cyclical is too firm to counter any temptation to abandon the lessons of history.
 
  Over the past decade or so the
growth in the number and variety of
equity market indices has been
explosive. Russell, Standard & Poor’s
(“S&P”), Wilshire, and Barra have all
become accepted names in the equity
world with stables of various
indices. Considering the burgeoning
number and scope of equity market
indices, it is critical that investors
better understand the composition,
attribution and construction
methodology among similar equity
market indices.

As the Standard & Poor’s 500
index recently celebrated its 50th
anniversary, we thought that it might
be helpful to delve into the particulars
of the more prominent small-cap
indices, and how we at The Royce
Funds view them. Two of the most
prominent are the Russell 2000 and
the S&P SmallCap 600, both widely
accepted benchmarks for small-cap
equities. Yet each is different in
composition, attribution and
construction methodology.

   
     As active small-cap managers with large stakes throughout the small-cap universe, perhaps we should be more consistently happy with a market that before July had been gathering no moss and few, if any bears. Maybe we should try a little harder to relax and simply enjoy the good times. Make no mistake, we are mostly very pleased—and more than happy to reap the benefits of the robust returns that smaller stocks have been providing since the most recent small-cap market trough in October 2002. However, as the small-cap bull stampeded its way toward a fifth full year, we were also in the midst of our own 19th Nervous Breakdown (and at least as many bear market predictions) as we awaited what seemed to us an inevitable small-cap downturn. Even as the market was swaying to higher and higher levels, we could not escape the nagging and persistent reality that historically strong bull markets often give way to serious corrections, and the longer the good times last, the more likely it seems that the bear’s bite will be
 
 
  The Russell 2000 index is the oldest—
dating back to 1979—and broadest of
the two small-cap indices. It measures
the performance of the 2,000 smallest
companies in the Russell 3000 Index
(which represents 99% of the U.S.


Continued on page 6...
 
   
deep. Of course, one of the advantages of employing an all-weather strategy to select smaller company stocks is that we continue to do what we have always done regardless of the market’s behavior. When smaller company stock prices were on the rise, it was more challenging to find the compelling values that have always been our stock in trade, but the search goes on whether the overall small-cap market is moving up or down.

It’s All Over Now
If our call for overall lower returns has not yet panned out, and our prediction of a small-cap correction has thus far proved at best premature, we can take a small measure of comfort for
 


           

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our forecasting acumen in the emergence of large-cap as a market leader, a development we thought first looked likely by the beginning of 2006. As usually happens, the case for large-cap leadership took on a certain inevitability only with the gift of hindsight. In 2005, the large-cap S&P 500 and the small-cap Russell 2000 finished the year with near-identical
 
 
results—the S&P 500 was up 4.9% while the Russell 2000 gained 4.6%. The large-cap index relinquished the performance crown in 2006 (+15.8% versus 18.4%), but small-cap regained its edge mostly through the courtesy of a torrid first quarter and a strong fourth quarter. In both 2006’s bearish second quarter and flat-to-down third quarter, the S&P 500 beat the Russell 2000, events we regarded as especially telling of a shift to large-cap leadership. That third-quarter outperformance (+5.7% versus +0.4%) was the key to giving the large-cap index an edge for the second half of 2006; it also contributed to large-cap outgaining small-cap for the one-year period ended 6/30/07, up 20.6% versus 16.4%.
 
We have been less focused on the leadership issue within small-cap than we are in the wider worlds of small- and large-cap in part because we do not limit ourselves in the broad small-cap universe by attaching labels to stocks such as “value” or “growth.”
 
       Two thousand seven has been different in terms of its first-half performance patterns, yet the end result through the end of June showed the S&P 500 ahead of its small-cap counterpart. During this year’s first quarter, a period that was positive for almost every segment of the stock market save certain small-cap growth companies and many micro-cap stocks, the S&P 500 gained a paltry 0.6% versus 2.0% for the Russell 2000. (The Nasdaq Composite, meanwhile, managed a 0.3% gain.) The second quarter saw higher returns spread more consistently throughout the market. Large-cap led small-cap, with the S&P 500 up 6.3% versus 4.4% for its small-cap sibling, while the Nasdaq Composite led both indices with a gain of 7.5%. For the year-to-date period ended 6/30/07, the Nasdaq Composite actually led, its 7.8% gain ahead of the S&P 500’s 7.0% return and the Russell 2000’s 6.5% showing.
        These first-half results, as well as the large- and small-cap indices’ one-year returns, were consistent with our thought that when large-cap stocks did finally assume a leadership role, the margin of outperformance would be slight. We remain committed to the idea that large-cap’s stay at the top should be brief, as frequent leadership rotation seems likely to roll on. Considering the recent status of large-cap’s leadership, it should come as no surprise that the long-term performance edge remained with smaller companies. The Russell 2000 outpaced the S&P 500 for the three-, five-, 10- and 15-year periods ended 6/30/07. In addition, the small-cap index outgained its large-cap counterpart in two-thirds of the S&P 500’s positive quarters in each three-, five- and 10-year period ended 6/30/07.

Not Fade Away
During the first half, a similar shift in leadership arrived via a different route between value and growth within small-cap. The Russell 2000 Value index had maintained a near-
 

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  equity market) and accounts for
approximately 8% of the total
market capitalization of the larger
Russell index. As of the end of June
2007, the median market cap of the
Russell 2000 was $695 million. The
largest company by market cap in the
index was $3.3 billion and the smallest
was $125 million. Companies with
market capitalizations in excess of
$2.5 billion represented 6% of the
index, while micro-caps, which Royce
defines as companies with market
capitalizations less than $500
million, comprised roughly 13% of
the index. In terms of attribution,
Financial Services represented the
largest sector weight in the index at
the end of June 2007, at 22.6%.
Industrials (autos and transportation,
materials and processing and producer
durable) and Consumer Discretionary
followed, with weightings of 21.5%
and 19.2%, respectively.

Introduced in 1994, the S&P SmallCap
600 is more concentrated than the
Russell 2000, consisting of 600 names
that cover approximately 3% of the
domestic equity market. The median
market cap of the S&P SmallCap 600
was $820 million as of the end of
June 2007. The largest company by
market cap in the index was $5.0
billion and the smallest was $70
million. Companies with more than
$2.5 billion in market cap comprised
approximately 7%, while micro-caps
represented 20% of the overall index.
Industrials (materials and processing
and producer durable) represented the
largest sector weighting in the index
at 19.1%, followed by Information


Continued on page 8...

   
Letter to Our Stockholders
     
stranglehold on small-cap leadership until the first quarter of 2007, when it slipped under the thumb of its small-cap growth sibling. During both the first quarter (+1.5% versus +2.5%) and second quarter (+2.3% versus +6.7%), the Russell 2000 Value index lost ground to the Russell 2000 Growth index. Interestingly for us, value also underperformed growth from the interim small-cap peak on 2/22/07 through 6/30/07, down 0.8% compared to a gain of 2.9%. This consistent underperformance, even during the year’s more volatile periods, not only put small-cap value in second place for the year-to-date period ended 6/30/07 (+3.8% versus +9.3%), it also cost small-cap value the performance edge for the most recent 12-month period. For the one-year period ended 6/30/07, the Russell 2000 Value index was up 16.1% versus 16.8% for the Russell 2000 Growth index.
     Paralleling the performance patterns of small-cap versus large-cap, the Russell 2000 Value index maintained its lead over the Russell 2000 Growth index for longer-term periods. It bested small-cap growth for the three-, five-, 10-,15-, 20- and 25-year periods ended 6/30/07. A critical element in this performance edge came from small-cap value’s better performance during the nearly five-year bull-market period following the small-cap market trough in October 2002, and from its superior results from the previous small-cap market peak on 3/9/00 through 6/30/07. What gives us some pause about the current period is the relative strength of small-cap growth in the more volatile period from that February 2007 interim peak. This is in stark contrast to 2006, a period in which small-cap value beat small-cap growth in up, down and more mixed quarters. However, we have been less focused on the leadership issue within small-cap than we are in the wider worlds of small- and large-cap in part because we do not limit ourselves in the broad small-cap universe by attaching labels to stocks such as “value” or “growth.”


Cool, Calm & Collected
Another reason for our bemusement is rooted in our own Funds’ recent results. While the Russell 2000 Value index was dominating small-cap performance in 2006, our closed-end portfolios were underperforming the small-cap value index. Yet during the first half of 2007, these same portfolios each outperformed the Russel 2000 Value Index on a net asset value (NAV) basis. So it would seem that the distinctions between small-cap value and growth stocks being drawn by the wider world may no longer be as significant as they were also even a few years ago. All three portfolios were also ahead of their small-cap benchmark, the Russell 2000, for the year-to-date period ended 6/30/07 on an NAV basis, and each outpaced the small-cap index on both and NAV and market price basis for the 12 months ended 6/30/07. When we turn to the long view, the news becomes even better. Each of our closed-end Funds outperformed the Russell 2000 from the previous small-cap market peak on 3/9/00 through 6/30/07 and from the small-cap market
 


           

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trough on 10/9/02 through 6/30/07. In addition, each closed-end Royce Fund outgained the Russell 2000 for the three-, five- and 10-year periods ended 6/30/07 on both an NAV and market price basis.
 
 
       First-half strength came from holdings in several sectors, but the leader in each portfolio was the Industrial Products sector. It prevailed in part owing to the success of certain holdings. Synalloy Corporation was a top performer on a dollar basis in Royce Value Trust and Royce Micro-Cap Trust, while Florida Rock Industries and IPSCO dominated dollar-based gains in Royce Focus Trust. Holdings in Natural Resources and Technology were generally solid as well. Although micro-cap stocks finished the first half trailing their larger small-cap peers, any ill effects scarcely registered in the Funds’ first-half returns. We were therefore generally pleased with the Funds’ first-half returns, especially in a market climate that has made it more and more challenging to find the sort of attractive values that we like.
 
The popularity of ETFs and other index-based investments has played an important role in helping small-cap to be taken more seriously as an asset class. We also think that the related success of small-cap value approaches has been a factor in this growing esteem because a large number of investors saw that you could invest in small-cap stocks or indices with attractively low volatility scores.
 

You Can’t Always Get What You Want

Indeed, the reality of small-cap’s status as a permanent, professional asset class—something that we are happy to report does not seem likely to change, even in the event of a correction more severe than what we think is probable—cuts both ways for us. The popularity of ETFs and other index-based investments has played an important role in helping small-cap to be taken more seriously as an asset class. We also think that the related success of small-cap value approaches has been a factor in this growing esteem because a large number of investors saw that you could invest in small-cap stocks or indices with attractively low volatility scores. However, this has also created new tests for our purchase habits, in which we seek high-quality companies selling for bargain prices.
 

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Technology at 17.1%, and Financial
Services at 15.8% at the end of
June 2007.

   
Letter to Our Stockholders

     
 
 
  Another important difference between
the two indices is the respective
construction methodology. The S&P
SmallCap 600 is designed to be an
“efficient portfolio of companies that
meet specific inclusion criteria to
ensure that they are investable and
financially viable.” Inclusion in the
index is determined subjectively by
the S&P Index Committee, which adds
new stocks to the index based not
only on size, but also on financial
viability, liquidity, adequate float
size and other trading requirements.

In contrast, the Russell 2000 is
more objective in nature; it has no
committee to determine membership
and stresses the need to accurately
represent the market as it is. Kelly
Haughton, strategic director for
the Russell Indices, believes that
“the market should decide which
stocks belong in an index, especially
if the index is to provide an
unbiased benchmark for measuring
the results of money managers’
investment decisions.”

With differing composition, attribution
and construction, performance can
also vary dramatically. In fact,
examining the annual performance of
the two indices over the past 10
years shows that the spread has been
as wide as 1400 basis points in a
single calendar year. Still, we think
that the Russell 2000 and the
Standard & Poor’s SmallCap 600
Index are reasonable proxies of the
small capitalization world.

   

     Unquestionably, in our view, the major player in the extension of the small-cap bull market has been the vast amount of global liquidity. The world has been awash with capital looking for a profitable home, and that’s been an enormous factor in keeping stock prices afloat. Many of the investment vehicles that have become increasingly better known—not just ETFs, but hedge funds, as well as merger and acquisition (M&A) and private equity activity—have been fueled to some degree by the large amounts of cash circling the globe. Global liquidity has worked to make M&As, leveraged buyouts and privatizations increasingly commonplace in the financial marketplace. The United States is in the midst of a mega-merger wave, with the number and size of the transactions exploding. During the first half of 2007, 15 companies in the S&P 500 announced takeovers, while 111 companies in the Russell 2000

 
               


           

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had deals pending. Equally important, the trend has shown no signs of slowing down within the small-cap world.
       However mindful of the significance of these figures, we still do not believe that the extraordinary amount of global liquidity changes the rules of the road in the U.S. equity market, at least over the long run.
Cyclicality remains the norm. Today’s small-cap market is no different than large-cap was during the ’90s. Global liquidity has extended
 
 
a wonderful bull market, but it cannot save the market from history, which means that sooner or later, the good times will end. Smaller companies have been, and will continue to be, the target of private equity funds and larger companies flush with cash. Although it’s clear that M&A activity is not the primary driver of long-term performance, it has already had a hand in the extended run for a small-cap bull market. Yet once the bull market for acquisitions ends, the softening in demand could precipitate a more widespread correction in the very market whose bullish phase it helped to extend in the first place.
 
We have never allowed our thoughts on the short- or intermediate-term forecasts for the market to cloud our stock selection process. Regardless of where we think the market may be headed next, the search for great values in smaller stocks goes on...
 

Time Is On Our Side

As we look forward, we almost find ourselves wishing for a serious, though short-lived, correction for smaller stocks. We are still buying mostly on short-term dips, which typically do not yield the sort of absolute value that we would ideally prefer. Our goal is to be fully invested, but with purchase decisions becoming harder and harder, it has not been easy. Yet that is the reality of the current market (at least as of this writing), so we make our adjustments and deal with what we have on a daily basis. And even as we remain highly concerned about a correction for smaller companies, we are also confident about the long-term prospects for our chosen asset class. Whether or not a decidedly bearish July marked the beginning of a correction, we are still managing our portfolios with a long-term outlook and an absolute return bias. We have never allowed our thoughts on the short- or intermediate-term forecasts for the market to cloud our stock selection process. Regardless of where we think the market may be headed next, the search for great values in smaller stocks goes on, with the thought that our Funds can provide the kind of terrific long-term absolute returns that help our shareholders to build wealth.


Sincerely,
 

Charles M. Royce
President

W. Whitney George
Vice President

Jack E. Fockler, Jr.
Vice President
   

            July 31, 2007

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Table of Contents

   
Semiannual Report to Stockholders

 
 
Directors and Officers 11
   
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 20
   
Royce Micro-Cap Trust 34
   
Royce Focus Trust 47
   
Board Approval of Investment Advisory Agreements 55
   
Notes to Performance and Other Important Information Inside Back Cover
   


10  |  The Royce Funds 2007 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: 67 | Number of Funds Overseen: 25 | 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: 52 | Number of Funds Overseen: 41 | Tenure: Since 2001
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 16 Legg Mason Funds.
 
Principal Occupation(s) During Past Five Years: Senior Executive Vice President of Legg Mason, Inc.; Member of Board of Managers of Royce. Mr. Fetting’s prior business experience includes having served as 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: 76 | Number of Funds Overseen: 25 | 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: 69 | Number of Funds Overseen: 25 | 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: 67 | Number of Funds Overseen: 25 | 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: 72 | Number of Funds Overseen: 25 | 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: 65 | Number of Funds Overseen: 41 | Tenure: Since 2004
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 16 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: 67 | Number of Funds Overseen: 25 | 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). Chief Executive officer of Seniorlife.com (from December 1999 to May 2000). Mr. Meister’s prior business experience includes having served as 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: 61 | Number of Funds Overseen: 41 | Tenure: Since 2001
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 16 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: 55 | 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: 48 | 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: 49 | 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: 45 | 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: 40 | Tenure: 1996-2001 and Since April 2002
 
Principal Occupation(s) During Past Five Years: General Counsel (Deputy General Counsel prior to 2003), 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: 47 | 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.
 
 

The Royce Funds 2007 Semiannual Report to Stockholders  |  11




                   
                   
  AVERAGE ANNUAL NAV TOTAL RETURNS
Through 6/30/07
 
 
 
  Second Quarter 2007*   6.30 %  
 
 
  Jan - June 2007*   9.83    
 
 
  One-Year   19.70    
 
 
  Three-Year   16.39    
 
 
  Five-Year   15.46    
 
 
  10-Year   13.63    
 
 
  15-Year   14.45    
 
 
  20-Year   13.01    
 
 
  Since Inception (11/26/86)   13.17    
 
 
  * Not annualized.        
                   
  CALENDAR YEAR NAV TOTAL RETURNS  
 
 
  Year RVT   Year   RVT  
 
 
  2006 19.5 %   1997   27.5 %  
 
 
  2005 8.4     1996   15.5    
 
 
  2004 21.4     1995   21.1    
 
 
  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    
 
 
  1998 3.3     1989   18.3    
 
 
                   
  TOP 10 POSITIONS
% of Net Assets Applicable
to Common Stockholders
 
 
 
  AllianceBernstein Holding L.P.   2.3 %  
 
 
  Ritchie Bros. Auctioneers   1.5    
 
 
  Sotheby’s Cl. A   1.4    
 
 
  Universal Compression Holdings   1.3    
 
 
  Lincoln Electric Holdings   1.1    
 
 
  SEACOR Holdings   1.1    
 
 
  PAREXEL International   1.0    
 
 
  Ash Grove Cement Cl. B   1.0    
 
 
  Brady Corporation Cl. A   0.9    
 
 
  Adaptec   0.8    
 
 
                   
  PORTFOLIO SECTOR BREAKDOWN
% of Net Assets Applicable
to Common Stockholders
 
 
 
  Technology   23.4 %  
 
 
  Industrial Products   16.6    
 
 
  Industrial Services   11.0    
 
 
  Financial Intermediaries   10.8    
 
 
  Natural Resources   9.6    
 
 
  Financial Services   8.5    
 
 
  Health   6.8    
 
 
  Consumer Services   5.6    
 
 
  Consumer Products   4.8    
 
 
  Utilities   0.2    
 
 
  Diversified Investment Companies   0.1    
 
 
  Miscellaneous   2.2    
 
 
  Bonds and Preferred Stocks   0.2    
 
 
  Cash and Cash Equivalents   17.5    
 
 
     
     


 
 
Royce Value Trust

 
Manager’s Discussion
Royce Value Trust’s (RVT) diversified portfolio of small- and micro-cap stocks posted solid results during the first half of 2007. For the year-to-date period ended 6/30/07, the Fund was up 9.8% on a net asset value (NAV) basis and 0.6% on a market price basis versus a 6.5% return for the Russell 2000 and 8.6% for the S&P 600. For the first quarter, the Fund returned 3.3% on an NAV basis, and 1.5% on a market price basis compared with 2.0% and 3.2% for the Russell 2000 and S&P 600, respectively. The Fund’s NAV results were also strong in the second quarter, with RVT posting a 6.3% gain compared with 4.4% and 5.3% for the Russell 2000 and S&P 600, while on a market price basis, the Fund disappointed, losing 0.8%.
      RVT demonstrated strong absolute and relative results over market-cycle and other long-term periods. From the small-cap market peak on 3/9/00 through 6/30/07, RVT gained 154.2% on an NAV basis, versus 50.8% for the Russell 2000 and 106.4% for the S&P 600. During the mostly bullish phase from the small-cap market trough on 10/9/02 through 6/30/07, the Fund was up 189.4% compared to a gain of 169.9% for the Russell 2000 and 164.7% for the S&P 600. Fortunately, market-price performance difficulties during the first half did little to hurt performance over more extended periods. On both an NAV and market price basis, RVT held a performance advantage over both benchmarks for the one-, three-, five-, 10-, 15-, 20-year, and since inception (11/26/86) periods ended 6/30/07. RVT’s average annual NAV total return since inception was 13.2%.

     Positive performances could be found throughout RVT’s portfolio, with the Industrial Products sector leading the way in dollar-based net gains. The worldwide boom in large-scale infrastructure construction, particularly in China, seems to be changing the business cycle. Many traditionally cyclical industries are morphing into high-growth areas with rapidly increasing demand for their shares. It’s a situation that we will continue to watch, as industrial companies have historically been well-represented in the portfolio. The Fund’s second-best performer in the first half of 2007, Synalloy, hails from
 
GOOD IDEAS THAT WORKED
Net Realized and Unrealized Investment Return*
Year-to-Date Through 6/30/07

Sotheby’s Cl. A   $ 6,976,529

Synalloy Corporation     6,707,090

PAREXEL International     4,106,333

ITT Educational Services     4,080,800

AllianceBernstein Holding L.P.     3,024,548

*Includes dividends      
 
the Industrial Products sector in the top-performing construction materials industry. This conservatively capitalized pipe and piping systems maker saw its share price climb (before cooling off a bit toward the end of June) owing to ongoing earnings strength. We began to reduce our position in May.
 
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-cap 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. The Russell 2000 is an unmanaged index of domestic small-cap common stocks.

12  |  The Royce Funds 2007 Semiannual Report to Stockholders



 
 
Performance and Portfolio Review

 
Other strong gainers in the sector included Lincoln Electric Holdings, Peerless Manufacturing Company, Kaydon Corporation and Florida Rock Industries, a takeover target that we have owned in the portfolio since 1986.
     There were also notable successes outside of Industrial Products. We have held a position in Sotheby’s, the Fund’s top performing holding in the first half, since 1990. First and second quarter earnings strength helped the share price for this leading auction house to climb, and we trimmed our position in February and April. Impressive net gains also came from PAREXEL International, a company we have owned since 1998. This bio-pharmaceutical services company provides contract research, medical marketing, consulting, informatics, and advanced technology products and services to the pharmaceutical, biotechnology, and medical device industries worldwide. Its growing business and strong earnings helped its stock price stay healthy in the first half. Having recently celebrated its 25th anniversary in business, its standing as a long-term success in a volatile industry may also have helped.

GOOD IDEAS AT THE TIME
Net Realized and Unrealized Investment Loss*
Year-to-Date Through 6/30/07
 
     Although every sector posted net gains, even the best performing periods have their blemishes. The slumping housing market and the related implosion of the subprime mortgage industry spelled trouble for real estate investment trusts such as Opteum. The departure of some of its veteran executives did little to help. Newport Corporation, which makes laser-based and photonic products, saw its price slide throughout the first half. The firm reported lower-than-expected first-quarter profits that were especially acute in its laser division. Kimball International, which manufactures wood furniture, cabinets and electronic assembly products, is a company that we have owned in RVT’s portfolio since 1986. We have long liked its low debt

Opteum Cl. A   $ 4,334,925

Newport Corporation     3,239,334

Kimball International Cl. B     2,893,948

First Consulting Group     2,389,434

Adaptec     2,196,485

*Includes dividends      
 
and consistent dividend. Although the firm was among the Fund’s top performers in 2006, its stock price slipped in the first half. We reduced our position in February.
 

                             
                             
  PORTFOLIO DIAGNOSTICS  
 
 
  Average Market Capitalization   $1,254 million  
 
 
  Weighted Average P/E Ratio   21.0x  
 
 
  Weighted Average P/B Ratio   2.5x  
 
 
  Weighted Average Yield   0.9%  
 
 
  Fund Net Assets   $1,270 million  
 
 
  Turnover Rate   5%  
 
 
  Net Leverage*   0%  
 
 
  Symbol      
 

Market Price

  RVT  
 

NAV

  XRVTX  
 
 
 
*Net leverage is the percentage, in excess of 100%, of the total value of equity type investments, divided by net assets, excluding preferred stock.

 
 
The Funds’ P/E ratio calculations exclude companies with zero or negative earnings.
 
     
  CAPITAL STRUCTURE
Publicly Traded Securities Outstanding
at 6/30/07 at NAV or Liquidation Value
 
 
 
  58.5 million shares
of Common Stock
              $1,270 million  
 
 
  5.90% Cumulative
Preferred Stock
              $220 million  
 
 
     
  RISK/RETURN COMPARISON
Five-Year Period Ended 6/30/07
 
 
 
      Average Annual   Standard   Return  
      Total Return   Deviation   Efficiency*  
 
 
  RVT (NAV)     15.46 %     16.12       0.96    
 
 
  S&P 600     14.38       14.85       0.97    
 
 
  Russell 2000     13.88       16.47       0.84    
 
 
 
*Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period.
 
     
     


The Royce Funds 2007 Semiannual Report to Stockholders  |  13





                   
                   
  AVERAGE ANNUAL NAV TOTAL RETURNS
Through 6/30/07
 
 
 
  Second Quarter 2007*   4.39 %  
 
 
  Jan-June 2007*   9.23    
 
 
  One-Year   19.87    
 
 
  Three-Year   16.08    
 
 
  Five-Year   16.54    
 
 
  10-Year   14.34    
 
 
  Since Inception (12/14/93)   14.76    
 
 
  *Not annualized.        
                   
  CALENDAR YEAR NAV TOTAL RETURNS  
 
 
  Year RMT   Year   RMT  
 
 
  2006 22.5 %   1999   12.7 %  
 
 
  2005 6.8     1998   -4.1    
 
 
  2004 18.7     1997   27.1    
 
 
  2003 55.6     1996   16.6    
 
 
  2002 -13.8     1995   22.9    
 
 
  2001 23.4     1994   5.0    
 
 
  2000 10.9              
 
 
                   
  TOP 10 POSITIONS
% of Net Assets Applicable
to Common Stockholders
 
 
 
  Seneca Foods   1.3 %  
 
 
  Highbury Financial   1.2    
 
 
  MVC Capital   1.1    
 
 
  Sapient Corporation   1.1    
 
 
  Edge Petroleum   1.0    
 
 
  Pegasystems   1.0    
 
 
  PAREXEL International   0.9    
 
 
  Transaction Systems Architects Cl. A   0.9    
 
 
  Pason Systems   0.9    
 
 
  Weyco Group   0.9    
 
 
                   
  PORTFOLIO SECTOR BREAKDOWN
% of Net Assets Applicable
to Common Stockholders
 
 
 
  Technology   23.4 %  
 
 
  Health   14.2    
 
 
  Industrial Products   14.2    
 
 
  Industrial Services   12.9    
 
 
  Financial Intermediaries   10.7    
 
 
  Natural Resources   10.4    
 
 
  Consumer Products   5.0    
 
 
  Consumer Services   4.6    
 
 
  Financial Services   4.2    
 
 
  Diversified Investment Companies   1.4    
 
 
  Miscellaneous   2.7    
 
 
  Preferred Stocks   1.5    
 
 
  Cash and Cash Equivalents   11.1    
 
 
     
     


 
 
Royce Micro-Cap Trust

 
Manager’s Discussion
Royce Micro-Cap Trust’s diversified portfolio of diminutive companies fared well in the first half on both an absolute and relative basis. For the year-to-date period ended 6/30/07, the Fund gained 9.2% on a net asset value (NAV) basis, though on a market price basis it lost 2.9%, versus a return of 6.5% for its small-cap benchmark, the Russell 2000. The Fund’s strong absolute and relative NAV showing was consistent during the first half of 2007. RMT gained 4.6% in the first quarter versus 2.0% for the Russell 2000, while the Fund was down 0.7% on a market price basis. On an NAV basis, the Fund matched the gain of its benchmark in the second quarter, each up 4.4%, though its market price result was again disappointing, down 2.2%.
     The Fund’s market price struggles during the first half represented a cooling off after a terrific performance in 2006. Its poor first half fortunately did little harm to its long-term returns. From the previous small-cap market peak on 3/9/00 through 6/30/07, RMT was up 170.0% on a net asset value basis, and 223.0% on a market price basis, compared to the Russell 2000’s 50.8% gain. During the more dynamic upswing from the small-cap market trough on 10/9/02 through 6/30/07, RMT gained 212.6% on an NAV basis and 243.3% on a market price basis, versus 169.9% for the small-cap benchmark. The Fund’s returns during these market cycle periods were equally impressive on an absolute basis, something of greater importance to us, as much as we like to beat our benchmark. On both an NAV and market price basis, RMT outperformed the Russell 2000 for the one-, three-, five-, 10-year and since inception (12/14/93) periods ended 6/30/07. The Fund’s average annual NAV total return since inception was 14.8%.

     One interesting development that we saw over the last several months has been a performance disparity within the micro-cap sector. Roughly coinciding with the move to higher quality that we have observed in the upper tier of the small-cap world has been better performance from larger, more established micro-cap companies. This benefited the Fund in the first half of 2007, as RMT’s average market capitalization of $290 million at the end of June leaned toward the higher range of the micro-cap world. Of course, we always seek quality in our portfolio selections even as we’re aware that the micro-cap segment is only gradually finding acceptance as an area in which quality can be reliably found.
 
GOOD IDEAS THAT WORKED
Net Realized and Unrealized Investment Return*
Year-to-Date Through 6/30/07

Synalloy Corporation   $ 2,353,845

The Geo Group     1,560,339

PAREXEL International     1,541,307

Covansys Corporation     1,474,748

CMG Information Services     1,457,136

*Includes dividends      
 
 
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. The Russell 2000 is an unmanaged index of domestic small-cap common stocks.

14  |  The Royce Funds 2007 Semiannual Report to Stockholders




   
 
Performance and Portfolio Review

 
     The Industrial Products sector led the way during the first half in terms of dollar-based net gains. The ongoing worldwide boom in large-scale infrastructure construction, particularly in China, has made industrial companies, historically well-represented in the portfolio, highly desirable. The Fund’s top performer came from the sector. Synalloy is a conservatively capitalized pipe and piping services business that saw its share price increase driven by ongoing earnings strength before it cooled off a bit toward the end of June. We reduced our position in February and June. Holdings in machinery and other industrial products also posted strong first-half gains.
     We have owned shares of privatized correctional and detention management company Geo Group, since January 2000. Its business grew during the first half–allowing the company to reduce its debt–and its stock split early in June, which helped its share price to break out while leading us to reduce our position later that same month. We have owned bio-pharmaceutical services company PAREXEL International in RMT’s portfolio since 1999. Growing business and strong earnings helped its stock price to climb. Its standing as a long-term success in an otherwise volatile industry may also have helped. We reduced our position in June.

GOOD IDEAS AT THE TIME
Net Realized and Unrealized Investment Loss*
Year-to-Date Through 6/30/07
 
     Even during positive performance periods, there are a few disappointments. Healthcare consultant First Consulting Group lost a customer that brought in about 10% of the firm’s business. After others had sold on this news, we increased our position based on the strength of the firm’s balance sheet, improving returns on capital and a series of promising acquisitions. Real estate investment trusts suffered from the slumping housing market and the subprime mortgage industry crisis during the first half of 2007. Opteum, which we have owned since 2005, was no exception, and the firm’s problems were exacerbated by the departure of some veteran executives. Its share price

First Consulting Group   $ 1,159,112

Opteum Cl. A     943,260

CorVel Corporation     859,879

Volt Information Sciences     793,760

Allied Defense Group     744,541

*Includes dividends      
 
dropped dramatically, and while that did not deliver positive results in the short run, we saw enough promise in the company to justify adding to our position.
 

                             
                             
  PORTFOLIO DIAGNOSTICS  
 
 
  Average Market Capitalization   $290 million  
 
 
  Weighted Average P/E Ratio   20.6x*  
 
 
  Weighted Average P/B Ratio   2.1x  
 
 
  Weighted Average Yield   0.7%  
 
 
  Fund Net Assets   $369 million  
 
 
  Turnover Rate   19%  
 
 
  Net Leverage   5%  
 
 
  Symbol      
 

Market Price

  RMT  
 

NAV

  XOTCX  
 
 
 
*Excludes 22% of portfolio holdings with zero or negative earnings as of 6/30/07.
 
     
 
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 6/30/07 at NAV or Liquidation Value
 
 
 
  23.8 million shares
of Common Stock
      $369 million    
 
 
  6.00% Cumulative
Preferred Stock
      $60 million    
 
 
     
  RISK/RETURN COMPARISON
Five-Year Period Ended 6/30/07
 
 
 
      Average Annual   Standard   Return  
      Total Return   Deviation   Efficiency*  
 
 
  RMT (NAV)     16.54 %     17.02       0.97    
 
 
  Russell 2000     13.88       16.47       0.84    
 
 
 
*Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period.
 
     
     


The Royce Funds 2007 Semiannual Report to Stockholders  |  15





                   
                   
  AVERAGE ANNUAL NAV TOTAL RETURNS
Through 6/30/07
 
 
 
  Second Quarter 2007*   8.24 %  
 
 
  Jan-June 2007*   15.94    
 
 
  One-Year   24.26    
 
 
  Three-Year   21.31    
 
 
  Five-Year   21.57    
 
 
  10-Year   14.16    
 
 
  Since Inception (11/1/96)   15.22    
 
 
  * Not annualized.        
 
Royce & Associates assumed investment management responsibility for the Fund on 11/1/96.
                   
  CALENDAR YEAR NAV TOTAL RETURNS  
 
 
  Year   FUND Year   FUND  
 
 
  2006   15.9 % 2001   10.0 %  
 
 
  2005   13.3   2000   20.9    
 
 
  2004   29.2   1999   8.7    
 
 
  2003   54.3   1998   -6.8    
 
 
  2002   -12.5   1997   20.5    
 
 
                   
  TOP 10 POSITIONS  
  % of Net Assets Applicable  
  to Common Stockholders  
 
 
  Australia Government 7.50% Bond   4.7 %  
 
 
  New Zealand Government        
  6.00% Bond   4.2    
 
 
  Ivanhoe Mines 3.5    
 
 
  Unit Corporation   3.5    
 
 
  Schnitzer Steel Industries Cl. A   3.3    
 
 
  Reliance Steel & Aluminum   3.1    
 
 
  Thor Industries   3.0    
 
 
  Knight Capital Group Cl. A   2.9    
 
 
  Lincoln Electric Holdings   2.9    
 
 
  KKR Financial Holdings   2.7    
 
 
                   
  PORTFOLIO SECTOR BREAKDOWN
% of Net Assets Applicable
to Common Stockholders
 
 
 
  Natural Resources   24.7 %  
 
 
  Industrial Products   21.8    
 
 
  Technology   6.6    
 
 
  Consumer Products   6.6    
 
 
  Industrial Services   6.3    
 
 
  Financial Intermediaries   5.6    
 
 
  Health   5.1    
 
 
  Consumer Services   4.2    
 
 
  Financial Services   1.2    
 
 
  Bonds   8.9    
 
 
  Cash and Cash Equivalents   22.8    
 
 
     
     


 
 
Royce Focus Trust

 
Manager’s Discussion
Royce Focus Trust (FUND) made its way successfully through the pleasantly buoyant waters of 2007’s first half, with notable results on both an absolute and relative basis. The Fund posted dynamic year-to-date returns, up 15.9% on a net asset value (NAV) basis and 8.6% on a market price basis, in both instances ahead of FUND’s small-cap benchmark, the Russell 2000, which was up 6.5% for the same period. Results were positive throughout the year’s first six months. In the first quarter, the Fund was up 7.1% on a net asset value (NAV) basis, and 7.4% on a market price basis, both results well out in front of the small-cap index, which was up 2.0%. During the second quarter, the Fund again outpaced the benchmark on an NAV basis, up 8.2% versus 4.4%, while its return on a market price basis was 1.2%.
As gratifying as recent short-term outperformance was, it remains the case that the Fund’s market cycle and other long-term periods offer what we believe is the best gauge of its strength. We were very pleased, then, that FUND maintained its longstanding record of strong absolute performances over these time periods. From the previous small-cap market peak on 3/9/00 through 6/30/07, FUND was up 248.4% and 327.3% on NAV and market price bases, respectively, versus a 50.8% result for the small-cap index.

The Fund also beat the Russell 2000 during the mostly bullish phase from 10/9/02 through 6/30/07, gaining 266.3% on an NAV basis and 298.4% on a market price basis, while the Russell 2000 gained 169.9% for the same period. These strong market cycle results were a key factor in FUND’s outperformance of the benchmark over calendar-based periods. On both an NAV and market price basis, the Fund’s limited portfolio of primarily small-cap stocks outpaced the index for the one-, three-, five-, 10-year and since-inception of our management periods ended 6/30/07. FUND’s average annual NAV total return since the inception of our management (11/1/96) was 15.2%.
 
GOOD IDEAS THAT WORKED
Net Realized and Unrealized Investment Return*
Year-to-Date Through 6/30/07

IPSCO     $3,396,454

Florida Rock Industries     2,290,728

Tesco Corporation     1,996,506

Ivanhoe Mines     1,984,500

Reliance Steel & Aluminum     1,704,000

*Includes dividends      
Although there were plenty of positive performances in the portfolio during the first half, the strongest dollar-based net gains came from the Industrial Products and Natural Resources sectors. The Fund’s top two performers, IPSCO and Florida Rock Industries, were Industrial Products holdings. We first began to buy shares of construction aggregates company Florida Rock Industries in other Royce-managed portfolios more than 20 years ago and have had a position in FUND’s portfolio since 1998. In February 2007, the
 
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. The Russell 2000 is an unmanaged index of domestic small-cap common stocks.

16  |  The Royce Funds 2007 Semiannual Report to Stockholders




 
 
Performance and Portfolio Review

 
company was acquired by a larger competitor at a substantial premium. We finished selling our stake in April. The firm was consistently attractive to us as a conservatively capitalized, well-run business in a cyclical industry that has historically garnered attention from value investors. Canadian steel production and fabrication company IPSCO first attracted our attention in 2004 with its pristine balance sheet, strong history of earnings and high returns on capital. It was also the target of the urge to merge. Earlier this year, several larger firms began looking at the firm as a potential acquisition, with Swedish business SSAB finally closing the deal in May. We sold our shares between April and May.
Within Natural Resources, Tesco Corporation, which designs and manufactures oilfield products such as drilling and hydraulic systems, reported record first-quarter earnings. This helped its already rising stock price to keep climbing. We reduced our position at increasing prices between January and May. Ivanhoe Mines is a conservatively capitalized business with extensive operations in Mongolia. It recently won permission from that nation’s government to develop what could be the world’s largest undeveloped copper and gold deposits in tandem with another firm, news that gave a healthy sheen to Ivanhoe’s stock price. Unit Corporation reaped the rewards of running a strong, well-managed business in a mostly positive market for energy stocks. We added to our stake in January and June.
GOOD IDEAS AT THE TIME
Net Realized and Unrealized Investment Loss*
Year-to-Date Through 6/30/07
 
Even the best performing periods have their blemishes. In the otherwise-profitable precious metals and mining industry within the Natural Resources sector, Gammon Gold disappointed. In a difficult market for gold and silver commodity prices, the firm went through a change in management (that we liked) and had some issues with its Mexican mining operations. We substantially increased our stake in institutional trading and asset management company Knight Capital Group. Its stock price began to slip in January as the firm experienced slumping profits from increased compensation costs. In the second quarter, earnings were hampered by a decline in its hedge fund fees.

Gammon Gold     $792,108

Knight Capital Group     579,621

The Timberland Company     516,700

KKR Financial Holdings     376,960

Nu Skin Enterprises Cl. A     304,000

*Includes dividends      
 

                             
                             
  PORTFOLIO DIAGNOSTICS  
 
 
  Average Market Capitalization   $1,560 million  
 
 
  Weighted Average P/E Ratio   16.2x  
 
 
  Weighted Average P/B Ratio   2.7x  
 
 
  Weighted Average Yield   1.5%  
 
 
  Fund Net Assets   $182 million  
 
 
  Turnover Rate   36%  
 
 
  Net Leverage   0%  
 
 
  Symbol      
 

Mareket Price

  FUND  
 

NAV

  XFUNX  
 
 
 
Net leverage is the percentage, in excess of 100%, of the total value of equity type investments, divided by net assets, excluding preferred stock.
 
 
The Funds’ P/E ratio calculations exclude companies with zero or negative earnings.
 
     
  CAPITAL STRUCTURE
Publicly Traded Securities Outstanding
at 6/30/07 at NAV or Liquidation Value
 
 
 
  16.5 million shares of Common Stock   $182 million  
 
 
  6.00% Cumulative Preferred Stock   $25 million  
 
 
     
  RISK/RETURN COMPARISON
Five-Year Period Ended 6/30/07
 
 
 
      Average Annual   Standard   Return  
      Total Return   Deviation   Efficiency*  
 
 
  FUND (NAV)     21.57 %     17.04       1.27    
 
 
  Russell 2000     13.88       13.88       0.84    
 
 
 
*Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period.
 
     


The Royce Funds 2007 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   Year-to-date distribution total $0.91               21.352   349                  

6/30/07         $ 21,922           8,451     $ 183,471     $ 181,020  

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   Year-to-date distribution total $0.66               15.075   154                  

6/30/07         $ 8,900           3,633     $ 56,130     $ 55,985  

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   Year-to-date distribution total $0.26               10.509   63                  

6/30/07         $ 7,044           2,593     $ 28,601     $ 29,353  

*  
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, 2007, values are stated as of December 31 of the year indicated, after reinvestment of distributions.
     
18 | The Royce Funds 2007 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, 2007.

 

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.


  The Royce Funds 2007 Semiannual Report to Stockholders  |  19



Royce Value Trust    

 
   Schedule of Investments

    SHARES     VALUE

COMMON STOCKS – 99.6%

         
           

Consumer Products – 4.8%

         

Apparel and Shoes - 1.5%

         

Kenneth Cole Productions Cl. A

  35,000   $ 864,500

Columbia Sportswear

  34,600     2,376,328

Hugo Boss

  19,200     1,260,072

K-Swiss Cl. A

  110,000     3,116,300

Polo Ralph Lauren Cl. A

  6,200     608,282

Tandy Brands Accessories

  16,900     213,954

Van De Velde

  40,000     2,072,943

Weyco Group

  307,992     8,294,225
       
          18,806,604
       

Collectibles - 0.2%

         

Russ Berrie & Company a

  150,000     2,794,500
       

Food/Beverage/Tobacco - 0.2%

         

Hain Celestial Group a,b

  37,800     1,025,892

Hershey Creamery

  709     1,559,800
       
          2,585,692
       

Home Furnishing and Appliances - 0.5%

         

Aaron Rents

  4,500     131,400

Ekornes

  80,000     1,824,672

Ethan Allen Interiors

  45,800     1,568,650

La-Z-Boy b

  68,200     781,572

Rational

  9,300     1,823,238
       
          6,129,532
       

Publishing - 0.5%

         

Proquest Company a,b

  180,000     1,701,000

Scholastic Corporation a,b

  130,000     4,672,200
       
          6,373,200
       

Sports and Recreation - 0.7%

         

Beneteau

  12,000     1,634,534

Coachmen Industries

  47,700     460,782

Monaco Coach

  166,650     2,391,427

Sturm, Ruger & Company a,b

  272,900     4,235,408

Thor Industries

  26,100     1,178,154
       
          9,900,305
       

Other Consumer Products - 1.2%

         

Blyth

  14,700     390,726

Burnham Holdings Cl. B

  36,000     585,000

Lazare Kaplan International a

  103,600     820,512

Leapfrog Enterprises a,b

  175,000     1,793,750

Matthews International Cl. A

  100,000     4,361,000

RC2 Corporation a

  132,600     5,305,326

Sally Beauty Holdings a,b

  194,600     1,751,400
       
          15,007,714
       

Total (Cost $36,850,760)

        61,597,547
       

Consumer Services – 5.6%

         

Direct Marketing - 0.2%

         

FTD Group

  55,000     1,012,550

Takkt

  95,000     1,695,940
       
          2,708,490
       

Leisure and Entertainment - 0.1%

         

Shuffle Master a,b

  15,000     249,000

Steiner Leisure a,b

  2,100     103,152
       
          352,152
       
    SHARES     VALUE

Media and Broadcasting - 0.1%

         

Cox Radio Cl. A a,b

  23,000   $ 327,520

Discovery Holding Company Cl. B a

  56,100     1,293,105
       
          1,620,625
       

Restaurants and Lodgings - 0.9%

         

Benihana Cl. A a,b

  6,600     132,000

CEC Entertainment a

  121,400     4,273,280

Morgans Hotel Group a,b

  90,000     2,194,200

Steak n Shake a

  183,000     3,054,270

Tim Hortons

  50,000     1,537,500
       
          11,191,250
       

Retail Stores - 1.7%

         

America’s Car-Mart a,b

  90,400     1,228,536

Bulgari

  200,000     3,223,916

CarMax a,b

  82,000     2,091,000

Children’s Place Retail Stores a

  13,670     705,919

Cost Plus a,b

  80,500     682,640

Fred’s Cl. A

  50,000     669,000

Fielmann

  20,000     1,266,828

Gander Mountain a,b

  53,300     604,955

Hot Topic a,b

  29,000     315,230

Krispy Kreme Doughnuts a

  85,000     787,100

99 Cents Only Stores a,b

  95,000     1,245,450

Stein Mart

  142,800     1,750,728

Tiffany & Co.

  75,000     3,979,500

Urban Outfitters a,b

  27,000     648,810

West Marine a

  131,100     1,803,936

Wet Seal (The) Cl. A a,b

  162,000     973,620
       
          21,977,168
       

Other Consumer Services - 2.6%

         

Corinthian Colleges a,b

  106,500     1,734,885

ITT Educational Services a

  80,000     9,390,400

Laureate Education a

  37,500     2,312,250

MoneyGram International

  74,900     2,093,455

Renaissance Learning

  15,000     197,250

Sotheby’s Cl. A

  382,200     17,588,844

Travelcenters of America a,b

  2,500     101,125
       
          33,418,209
       

Total (Cost $41,745,500)

        71,267,894
       

Diversified Investment Companies – 0.1%

         

Closed-End Funds - 0.1%

         

Central Fund of Canada Cl. A

  111,500     1,013,535
       

Total (Cost $589,526)

        1,013,535
       

Financial Intermediaries – 10.8%

         

Banking - 3.2%

         

Ameriana Bancorp

  20,000     199,000

BOK Financial

  129,327     6,908,648

Bank of N.T. Butterfield & Son

  118,750     7,125,000

CFS Bancorp

  260,000     3,775,200

Cadence Financial

  30,300     590,244

Commercial National Financial

  52,575     986,307

Farmers & Merchants Bank of Long Beach

  1,266     8,418,900

Hawthorn Bancshares

  44,400     1,443,000

Heritage Financial

  12,915     308,023

HopFed Bancorp

  25,000     402,250


20  |  2007 Semiannual Report to Stockholders
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



    June 30, 2007 (unaudited)

 
   

    SHARES     VALUE

Financial Intermediaries (continued)

         

Banking (continued)

         

Jefferson Bancshares

  32,226   $ 380,589

Mechanics Bank

  200     3,900,000

Old Point Financial

  20,000     510,600

Partners Trust Financial Group

  100,000     1,050,000

Sun Bancorp a,b

  46,305     781,165

Tompkins Financial

  17,545     656,183

W Holding Company

  44,700     118,008

Whitney Holding

  40,500     1,219,050

Wilber Corporation

  31,700     293,225

Wilmington Trust

  31,000     1,286,810

Yadkin Valley Financial

  3,800     69,730
       
          40,421,932
       

Insurance - 3.9%

         

ACA Capital Holdings a,b

  50,000     595,000

Alleghany Corporation a

  11,318     4,600,767

Aspen Insurance Holdings

  64,000     1,796,480

Commerce Group

  89,000     3,090,080

Erie Indemnity Cl. A

  139,900     7,560,196

IPC Holdings

  27,000     871,830

Leucadia National

  84,940     2,994,135

Markel Corporation a,b

  7,200     3,488,832

Montpelier Re Holdings

  66,000     1,223,640

NYMAGIC

  85,200     3,425,040

Ohio Casualty

  68,502     2,966,822

PXRE Group a

  166,551     772,797

ProAssurance Corporation a,b

  38,070     2,119,357

RLI

  99,724     5,579,558

Security Capital Assurance

  30,000     926,100

Wesco Financial

  4,750     1,828,750

White Mountains Insurance Group

  9,000     5,454,180
       
          49,293,564
       

Real Estate Investment Trusts - 0.4%

         

Capstead Mortgage

  181,100     1,756,670

Gladstone Commercial

  34,700     680,120

Opteum Cl. A

  897,500     2,441,200
       
          4,877,990
       

Securities Brokers - 1.0%

         

Cowen Group a

  32,000     573,120

Dundee Wealth Management

  100,000     1,541,422

Evercore Partners Cl. A

  19,400     577,538

First Albany Companies a,b

  350,100     584,667

Investment Technology Group a,b

  30,400     1,317,232

Knight Capital Group Cl. A a,b

  229,700     3,813,020

Lazard Cl. A

  31,000     1,395,930

optionsXpress Holdings

  53,000     1,359,980

Shinko Securities

  464,300     2,405,875
       
          13,568,784
       

Other Financial Intermediaries - 2.3%

         

AP Alternative Assets L.P.

  234,600     4,281,450

JAFCO

  37,300     1,720,723

KKR Financial

  171,200     4,264,592

KKR Private Equity Investors LLP

  105,000     2,362,500

Kohlberg Capital

  81,800     1,517,390

MCG Capital

  138,000     2,210,760

MVC Capital

  397,200     7,471,332

MarketAxess Holdings a

  67,000     1,205,330
    SHARES     VALUE
           

NGP Capital Resources

  50,000   $ 836,000

RHJ International a

  177,500     3,507,464
       
          29,377,541
       

Total (Cost $100,428,652)

        137,539,811
       

Financial Services – 8.5%

         

Information and Processing - 1.7%

         

eFunds Corporation a,b

  126,875     4,477,419

FactSet Research Systems

  35,350     2,416,172

Global Payments

  68,500     2,716,025

Interactive Data

  134,300     3,596,554

PRG-Schultz International a,b

  14,420     229,278

SEI Investments

  282,400     8,200,896
       
          21,636,344
       

Insurance Brokers - 1.2%

         

Crawford & Company Cl. A a

  289,200     1,821,960

Crawford & Company Cl. B a

  162,300     1,097,148

eHealth a,b

  25,000     477,250

Enstar Group a,b

  7,000     844,970

Gallagher (Arthur J.) & Co.

  111,200     3,100,256

Hilb Rogal & Hobbs

  155,050     6,645,443

National Financial Partners

  22,000     1,018,820
       
          15,005,847
       

Investment Management - 5.1%

         

ADDENDA Capital

  150,900     3,208,529

AllianceBernstein Holding L.P.

  333,100     29,009,679

BKF Capital Group a

  227,050     522,215

Calamos Asset Management Cl. A

  45,000     1,149,750

Eaton Vance

  140,400     6,202,872

Federated Investors Cl. B

  161,900     6,205,627

GAMCO Investors Cl. A

  158,600     8,889,530

Nuveen Investments Cl. A

  138,600     8,613,990

SPARX Group

  2,300     1,709,239
       
          65,511,431
       

Other Financial Services - 0.5%

         

AmeriCredit Corporation a,b

  18,870     500,998

Centerline Holding Company

  59,600     1,072,800

Credit Acceptance a,b

  86,601     2,323,505

Municipal Mortgage & Equity

  40,300     982,514

Ocwen Financial a,b

  50,000     666,500

World Acceptance a,b

  21,700     927,241
       
          6,473,558
       

Total (Cost $61,728,918)

        108,627,180
       

Health – 6.8%

         

Commercial Services - 1.4%

         

First Consulting Group a,b

  560,900     5,328,550

PAREXEL International a,b

  313,700     13,194,222
       
          18,522,772
       

Drugs and Biotech - 1.6%

         

Affymetrix a,b

  10,000     248,900

Antigenics a,b

  99,300     283,998

Biovail Corporation

  41,200     1,047,304

Endo Pharmaceuticals Holdings a

  155,000     5,305,650

Gene Logic a

  365,000     503,700

Genitope Corporation a,b

  100,000     386,000

Human Genome Sciences a,b

  90,000     802,800

K-V Pharmaceutical Cl. A a,b

  51,500     1,402,860

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
2007 Semiannual Report to Stockholders  |  21



Royce Value Trust    

 
   Schedule of Investments

    SHARES     VALUE

Health (continued)

         

Drugs and Biotech (continued)

         

Medicines Company (The) a,b

  20,000   $ 352,400

Millennium Pharmaceuticals a,b

  100,000     1,057,000

Mylan Laboratories

  52,200     949,518

Myriad Genetics a,b

  50,000     1,859,500

Origin Agritech a

  3,500     28,875

Perrigo Company

  191,950     3,758,381

Pharmanet Development Group a

  10,000     318,800

QLT a

  114,070     844,118

VIVUS a,b

  163,300     854,059
       
          20,003,863
       

Health Services - 1.4%

         

Albany Molecular Research a

  85,000     1,262,250

Cross Country Healthcare a

  30,000     500,400

Eclipsys Corporation a,b

  20,000     396,000

Gentiva Health Services a

  30,150     604,809

HMS Holdings a,b

  50,000     957,000

HealthSouth Corporation a,b

  200,000     3,622,000

Lincare Holdings a,b

  52,562     2,094,596

MedQuist a

  73,893     673,165

National Home Health Care

  20,000     252,000

On Assignment a,b

  375,400     4,024,288

Paramount Acquisition (Units) a

  280,000     1,976,800

Res-Care a,b

  65,460     1,383,824
       
          17,747,132
       

Medical Products and Devices - 2.2%

         

Allied Healthcare Products a

  210,612     1,377,402

Arrow International

  61,028     2,336,152

ArthroCare Corporation a,b

  10,000     439,100

Atrion Corporation

  15,750     1,543,500

Bruker BioSciences a

  370,200     3,335,502

Coloplast Cl. B

  17,000     1,383,584

CONMED Corporation a,b

  81,500     2,386,320

IDEXX Laboratories a,b

  79,000     7,475,770

Invacare Corporation

  103,100     1,889,823

STERIS Corporation

  98,600     3,017,160

Young Innovations

  62,550     1,825,209

Zoll Medical a,b

  40,400     901,324
       
          27,910,846
       

Personal Care - 0.2%

         

Nutraceutical International a

  22,800     377,796

USANA Health Sciences a,b

  38,900     1,740,386
       
          2,118,182
       

Total (Cost $57,167,473)

        86,302,795
       

Industrial Products – 16.6%

         

Automotive - 0.6%

         

ElringKlinger

  16,900     1,545,091

Fuel Systems Solutions a,b

  22,500     373,050

LKQ Corporation a,b

  200,000     4,932,000

Quantam Fuel Systems Technologies Worldwide a,b

  15,500     24,180

Superior Industries International

  52,000     1,131,520
       
          8,005,841
       

Building Systems and Components - 1.0%

         

Decker Manufacturing

  6,022     218,900

Preformed Line Products

  91,600     4,397,716
    SHARES     VALUE
           

Simpson Manufacturing

  250,800   $ 8,461,992
       
          13,078,608
       

Construction Materials - 1.8%

         

Ash Grove Cement Cl. B

  50,518     12,124,320

Heywood Williams Group a

  958,837     1,906,187

Synalloy Corporation

  198,800     6,938,120

USG Corporation a,b

  25,000     1,226,000
       
          22,194,627
       

Industrial Components - 1.3%

         

Barnes Group

  20,000     633,600

C & D Technologies a

  345,700     1,935,920

CLARCOR

  83,500     3,125,405

Donaldson Company

  92,800     3,299,040

GrafTech International a,b

  64,790     1,091,064

PerkinElmer

  135,000     3,518,100

Powell Industries a,b

  92,400     2,934,624

II-VI a

  13,500     366,795
       
          16,904,548
       

Machinery - 5.2%

         

A.S.V. a,b

  14,800     255,744

Baldor Electric

  62,900     3,099,712

Coherent a,b

  243,500     7,429,185

Exco Technologies

  91,000     394,668

Federal Signal

  58,600     929,396

Franklin Electric

  84,200     3,972,556

Graco

  101,825     4,101,511

Hardinge

  26,193     891,348

IDEX Corporation

  54,000     2,081,160

Intermec a,b

  23,000     582,130

Lincoln Electric Holdings

  188,680     14,007,603

Mueller Water Products Cl. A

  50,000     853,000

Nordson Corporation

  172,200     8,637,552

Pfeiffer Vacuum Technology

  18,500     1,784,015

Rofin-Sinar Technologies a,b

  128,000     8,832,000

Williams Controls a

  37,499     655,858

Woodward Governor

  144,800     7,771,416
       
          66,278,854
       

Metal Fabrication and Distribution - 1.8%

         

Commercial Metals

  36,600     1,235,982

CompX International Cl. A

  292,300     5,407,550

Gerdau Ameristeel

  61,100     893,893

Kaydon Corporation

  177,400     9,246,088

NN

  197,100     2,325,780

Novamerican Steel a

  10,800     575,964

RBC Bearings a

  30,000     1,237,500

Reliance Steel & Aluminum

  25,920     1,458,259
       
          22,381,016
       

Paper and Packaging - 0.2%

         

Mayr-Melnhof Karton

  8,100     1,843,747

Peak International a

  408,400     1,155,772
       
          2,999,519
       

Specialty Chemicals and Materials - 1.4%

         

Aceto Corporation

  78,410     726,861

American Vanguard

  26,666     381,857

Balchem Corporation

  16,875     306,619

Cabot Corporation

  163,500     7,795,680

Fuel Tech a,b

  10,000     342,500

Hawkins

  206,878     3,196,265


22  |  2007 Semiannual Report to Stockholders
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



    June 30, 2007 (unaudited)

 
   

    SHARES     VALUE

Industrial Products (continued)

         

Specialty Chemicals and Materials (continued)

         

Lydall a,b

  35,500   $ 518,655

Schulman (A.)

  143,100     3,481,623

Sensient Technologies

  22,000     558,580
       
          17,308,640
       

Textiles - 0.1%

         

Unifi a,b

  145,100     380,162
       

Other Industrial Products - 3.2%

         

Brady Corporation Cl. A

  293,400     10,896,876

Diebold

  86,700     4,525,740

Distributed Energy Systems a

  32,000     41,600

Kimball International Cl. B

  286,180     4,009,382

Maxwell Technologies a,b

  21,500     305,730

Mettler-Toledo International a

  28,700     2,741,137

Munters

  100,000     1,571,821

Myers Industries

  30,499     674,333

Peerless Manufacturing a

  297,200     6,131,236

Raven Industries

  86,200     3,078,202

Solar Integrated Technologies a

  75,000     168,680

Somfy

  7,000     2,285,164

Waters Corporation a

  75,990     4,510,766
       
          40,940,667
       

Total (Cost $103,760,088)

        210,472,482
       

Industrial Services – 11.0%

         

Advertising and Publishing - 1.0%

         

Focus Media Holding ADR a,b

  70,000     3,535,000

Interpublic Group of Companies a,b

  510,000     5,814,000

Lamar Advertising Cl. A

  26,000     1,631,760

MDC Partners Cl. A a

  60,000     525,000

ValueClick a,b

  45,000     1,325,700
       
          12,831,460
       

Commercial Services - 3.2%

         

Allied Waste Industries a

  188,800     2,541,248

Anacomp Cl. A a

  26,000     191,100

BB Holdings a

  289,400     1,525,504

Canadian Solar a,b

  50,000     470,000

Convergys Corporation a

  121,000     2,933,040

Copart a,b

  158,100     4,836,279

eResearch Technology a,b

  181,000     1,721,310

First Advantage Cl. A a,b

  5,000     115,050

Hewitt Associates Cl. A a,b

  208,720     6,679,040

Iron Mountain a,b

  234,262     6,121,266

Learning Tree International a,b

  53,400     699,540

MPS Group a

  564,600     7,548,702

Michael Page International

  140,000     1,477,360

New Horizons Worldwide a

  228,600     205,740

OneSource Services a

  25,437     328,189

Onex Corporation

  50,000     1,727,294

Spherion Corporation a,b

  53,000     497,670

TRC Companies a

  3,600     53,388

Viad Corporation

  9,025     380,584

Wright Express a,b

  30,000     1,028,100
       
          41,080,404
       

Engineering and Construction - 0.9%

         

Boskalis Westminster

  40,200     1,605,599

Dycom Industries a,b

  35,500     1,064,290
    SHARES     VALUE
           

Fleetwood Enterprises a

  234,300   $ 2,120,415

Insituform Technologies Cl. A a,b

  137,000     2,987,970

KBR a

  115,000     3,016,450
       
          10,794,724
       

Food and Tobacco Processors - 0.4%

         

MGP Ingredients

  127,400     2,153,060

Performance Food Group a,b

  10,000     324,900

Seneca Foods Cl. A a

  80,000     2,081,600

Seneca Foods Cl. B a

  13,251     353,802
       
          4,913,362
       

Industrial Distribution - 1.9%

         

Central Steel & Wire

  6,062     3,867,556

MSC Industrial Direct Cl. A

  20,000     1,100,000

Ritchie Bros. Auctioneers

  310,400     19,437,248
       
          24,404,804
       

Printing - 0.1%

         

Bowne & Co.

  68,100     1,328,631
       

Transportation and Logistics - 3.0%

         

Alexander & Baldwin

  60,000     3,186,600

Atlas Air Worldwide Holdings a,b

  17,000     1,001,980

C. H. Robinson Worldwide

  80,000     4,201,600

Forward Air

  244,750     8,343,527

Frozen Food Express Industries

  286,635     2,906,479

Hub Group Cl. A a,b

  174,400     6,131,904

Landstar System

  11,200     540,400

Patriot Transportation Holding a

  80,300     6,962,010

UTI Worldwide

  105,000     2,812,950

Universal Truckload Services a

  115,100     2,287,037
       
          38,374,487
       

Other Industrial Services - 0.5%

         

Landauer

  117,900     5,806,575
       

Total (Cost $73,843,574)

        139,534,447
       

Natural Resources – 9.6%

         

Energy Services - 4.3%

         

Atwood Oceanics a,b

  29,400     2,017,428

Cal Dive International a,b

  35,000     582,050

Carbo Ceramics

  158,400     6,939,504

Core Laboratories a,b

  10,000     1,016,900

Ensign Energy Services

  126,300     2,252,711

Environmental Power a,b

  326,000     2,917,700

Global Industries a

  54,500     1,461,690

Hanover Compressor a,b

  208,000     4,960,800

Helmerich & Payne

  80,600     2,854,852

Input/Output a

  434,500     6,782,545

National Fuel Gas

  47,500     2,057,225

TETRA Technologies a,b

  68,000     1,917,600

Universal Compression Holdings a,b

  221,300     16,037,611

Willbros Group a,b

  103,800     3,080,784
       
          54,879,400
       

Oil and Gas - 2.3%

         

Bill Barrett a,b

  50,000     1,841,500

Carrizo Oil & Gas a,b

  41,700     1,729,299

Cimarex Energy

  193,990     7,645,146

Falcon Oil & Gas a

  360,000     479,887

Helix Energy Solutions Group a,b

  34,226     1,365,960

Particle Drilling Technologies a

  61,500     135,300

Penn Virginia

  32,880     1,321,776

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
2007 Semiannual Report to Stockholders  |  23



Royce Value Trust    

 
   Schedule of Investments

    SHARES     VALUE

Natural Resources (continued)

         

Oil and Gas (continued)

         

PetroCorp a,c

  61,400   $ 0

SEACOR Holdings a,b

  147,000     13,723,920

Storm Cat Energy a,b

  330,800     377,112

W &T Offshore

  25,000     699,750
       
          29,319,650
       

Precious Metals and Mining - 2.2%

         

Agnico-Eagle Mines

  34,000     1,241,000

Centerra Gold a

  30,000     297,113

Constellation Copper a

  186,900     252,651

Etruscan Resources a

  675,900     1,966,947

Gammon Gold a

  178,300     2,250,146

Golden Star Resources a,b

  175,000     649,250

Hecla Mining a,b

  598,000     5,106,920

IAMGOLD Corporation

  315,620     2,417,649

International Coal Group a,b

  189,000     1,130,220

Ivanhoe Mines a,b

  140,000     1,993,600

Kinross Gold a,b

  110,286     1,288,140

Meridian Gold a,b

  111,000     3,061,380

Miramar Mining a

  445,000     1,909,050

Northgate Minerals a

  100,000     290,000

Pan American Silver a,b

  41,000     1,079,530

Randgold Resources ADR

  53,000     1,176,070

Royal Gold

  34,400     817,688

Yamana Gold

  80,000     889,600
       
          27,816,954
       

Real Estate - 0.6%

         

Alico

  27,000     1,646,730

Consolidated-Tomoka Land

  13,564     939,850

The St. Joe Company

  98,900     4,583,026
       
          7,169,606
       

Other Natural Resources - 0.2%

         

PICO Holdings a

  50,200     2,171,652
       

Total (Cost $67,078,639)

        121,357,262
       

Technology – 23.4%

         

Aerospace and Defense - 0.6%

         

Allied Defense Group (The) a,b

  45,700     351,433

Astronics Corporation a

  52,400     1,670,512

Axsys Technologies a

  10,000     213,900

Ducommun a

  117,200     3,015,556

Hexcel Corporation a,b

  47,500     1,000,825

Integral Systems

  49,800     1,210,638
       
          7,462,864
       

Components and Systems - 5.6%

         

Analogic Corporation

  40,135     2,950,324

Belden CDT

  57,800     3,199,230

Checkpoint Systems a

  56,060     1,415,515

Dionex Corporation a

  81,000     5,750,190

Electronics for Imaging a

  25,000     705,500

Energy Conversion Devices a,b

  105,500     3,251,510

Excel Technology a

  168,500     4,707,890

Hutchinson Technology a,b

  47,500     893,475

Imation Corporation

  15,700     578,702

InFocus Corporation a

  228,100     508,663

KEMET Corporation a

  95,600     673,980

Methode Electronics

  50,000     782,500
    SHARES     VALUE
           

Newport Corporation a,b

  592,200   $ 9,167,256

On Track Innovations a,b

  40,000     252,000

Perceptron a,b

  397,400     3,930,286

Plexus Corporation a,b

  325,700     7,487,843

Radiant Systems a,b

  32,500     430,300

Richardson Electronics

  116,700     1,079,475

TTM Technologies a,b

  221,400     2,878,200

Technitrol

  311,200     8,922,104

Tektronix

  159,680     5,387,603

Vishay Intertechnology a,b

  186,000     2,942,520

Zebra Technologies Cl. A a,b

  76,525     2,964,578
       
          70,859,644
       

Distribution - 1.6%

         

Agilysys

  165,125     3,715,313

Anixter International a

  61,795     4,647,602

Benchmark Electronics a

  208,200     4,709,484

Solectron Corporation a

  1,070,100     3,937,968

Tech Data a,b

  86,500     3,326,790
       
          20,337,157
       

Internet Software and Services - 1.4%

         

Arbinet-thexchange a

  87,200     525,816

CMGI a,b

  1,535,000     2,993,250

CNET Networks a,b

  155,400     1,272,726

CryptoLogic

  68,500     1,671,400

CyberSource Corporation a,b

  10,000     120,600

EarthLink a,b

  55,200     412,344

Internap Network Services a,b

  144,890     2,089,314

j2 Global Communications a,b

  43,420     1,515,358

Jupitermedia Corporation a,b

  500,000     3,640,000

Lionbridge Technologies a

  37,500     220,875

RealNetworks a,b

  245,400     2,004,918

SupportSoft a

  220,000     1,201,200
       
          17,667,801
       

IT Services - 4.3%

         

Alten a

  52,000     2,049,447

answerthink a

  655,000     2,371,100

BearingPoint a,b

  788,800     5,766,128

Black Box

  47,000     1,944,860

CACI International Cl. A a,b

  10,000     488,500

CIBER a,b

  10,000     81,800

Cogent Communications Group a,b

  204,200     6,099,454

Computer Task Group a

  101,100     451,917

Covansys Corporation a,b

  188,900     6,409,377

Diamond Management & Technology Consultants

  80,400     1,061,280

Forrester Research a

  40,300     1,133,639

Gartner a

  126,000     3,098,340

MAXIMUS

  127,900     5,548,302

Perot Systems Cl. A a,b

  165,100     2,813,304

Sapient Corporation a,b

  806,602     6,235,033

Syntel

  152,679     4,639,915

TriZetto Group (The) a,b

  215,200     4,166,272
       
          54,358,668
       

Semiconductors and Equipment - 3.7%

         

Axcelis Technologies a,b

  135,000     876,150

BE Semiconductor Industries a,b

  58,000     377,000

Brooks Automation a,b

  28,500     517,275

Cabot Microelectronics a

  131,200     4,656,288


24  |  2007 Semiannual Report to Stockholders
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



    June 30, 2007 (unaudited)

 
   

    SHARES     VALUE

Technology (continued)

         

Semiconductors and Equipment (continued)

         

CEVA a

  31,666   $ 269,161

Cognex Corporation

  197,700     4,450,227

DSP Group a,b

  115,000     2,354,050

DTS a,b

  64,100     1,395,457

Diodes a,b

  167,900     7,013,183

Dolby Laboratories Cl. A a

  148,900     5,272,549

Exar Corporation a,b

  231,976     3,108,478

Fairchild Semiconductor International a,b

  51,200     989,184

Himax Technologies ADR a

  100,000     577,000

International Rectifier a,b

  120,000     4,471,200

Intevac a,b

  57,450     1,221,387

Jazz Technologies (Units) a

  600,000     2,760,000

Kulicke & Soffa Industries a,b

  105,800     1,107,726

Novellus Systems a,b

  12,000     340,440

Pericom Semiconductor a,b

  58,000     647,280

Power Integrations a

  49,000     1,274,000

Sanmina-SCI Corporation a,b

  200,000     626,000

Semitool a,b

  50,000     480,500

Staktek Holdings a

  184,700     725,871

Veeco Instruments a,b

  65,000     1,348,100

Vimicro International ADR a,b

  160,000     928,000
       
          47,786,506
       

Software - 3.6%

         

Advent Software a,b

  116,800     3,801,840

ANSYS a,b

  100,000     2,650,000

Aspen Technology a

  27,100     379,400

Avid Technology a,b

  50,000     1,767,500

BEA Systems a

  65,610     898,201

Borland Software a,b

  280,000     1,663,200

Epicor Software a,b

  79,900     1,188,113

iPass a,b

  268,400     1,454,728

JDA Software Group a,b

  99,900     1,961,037

MSC.Software a

  70,000     947,800

ManTech International Cl. A a,b

  119,400     3,681,102

NAVTEQ Corporation a,b

  70,000     2,963,800

Net 1 UEPS Technologies a,b

  50,000     1,207,500

PLATO Learning a

  149,642     688,353

Progress Software a,b

  30,500     969,595

SPSS a

  179,600     7,927,544

Sybase a

  82,600     1,973,314

THQ a,b

  20,000     610,400

Transaction Systems Architects Cl. A a

  228,150     7,679,529

Verint Systems a,b

  40,000     1,224,000
       
          45,636,956
       

Telecommunications - 2.6%

         

Adaptec a,b

  2,584,100     9,845,421

ADTRAN

  65,000     1,688,050

Catapult Communications a,b

  87,100     864,032

Covad Communications Group a,b

  35,000     31,500

Foundry Networks a

  373,400     6,220,844

Globalstar a,b

  50,000     517,500

Globecomm Systems a

  233,700     3,416,694

Golden Telecom a

  40,000     2,200,400

IDT Corporation

  108,400     1,089,420

IDT Corporation Cl. B b

  65,000     670,800

Level 3 Communications a,b

  401,341     2,347,845
    SHARES       VALUE
           

NMS Communications a,b

  300,000     $ 516,000

Orbcomm a,b

  30,000       492,300

Sycamore Networks a,b

  171,000       687,420

Tandberg

  70,500       1,587,070

Tollgrade Communications a

  20,000       211,000

USA Mobility

  37,500       1,003,500
         
            33,389,796
         

Total (Cost $206,468,593)

          297,499,392
         

Utilities – 0.2%

           

CH Energy Group

  44,500       2,001,165

Southern Union

  11,576       377,262
         

Total (Cost $2,127,413)

          2,378,427
         

Miscellaneous d – 2.2%

           

Total (Cost $26,852,585)

          27,740,047
         

TOTAL COMMON STOCKS

           

(Cost $778,641,721)

          1,265,330,819
         

PREFERRED STOCKS – 0.1%

           

Aristotle Corporation 11.00% Conv.

  4,800       40,080

Seneca Foods Conv. a,c

  85,000       1,990,530
         

TOTAL PREFERRED STOCKS

           

(Cost $1,310,255)

          2,030,610
         
  PRINCIPAL      
  AMOUNT      

CORPORATE BONDS – 0.1%

           

Dixie Group 7.00%

           

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

  $352,000       337,920
         

TOTAL CORPORATE BONDS

           

(Cost $293,507)

          337,920
         

REPURCHASE AGREEMENTS – 17.0%

           
State Street Bank & Trust Company,            

5.10% dated 6/29/07, due 7/2/07,

           

maturity value $71,123,215 (collateralized

           

by obligations of various U.S. Government

           

Agencies, valued at $72,870,420)

           

(Cost $71,093,000)

          71,093,000
         
Lehman Brothers (Tri-Party),            

5.05% dated 6/29/07, due 7/2/07,

           

maturity value $145,061,021 (collateralized

           

by obligations of various U.S. Government

           

Agencies, valued at $147,966,873)

           

(Cost $145,000,000)

          145,000,000
         

TOTAL REPURCHASE AGREEMENTS

           

(Cost $216,093,000)

          216,093,000
         

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
2007 Semiannual Report to Stockholders  |  25



Royce Value Trust   June 30, 2007 (unaudited)

 
   Schedule of Investments

            VALUE  

COLLATERAL RECEIVED FOR SECURITIES LOANED – 9.6%

             
Money Market Funds              

State Street Navigator Securities Lending

             

Prime Portfolio (7 day yield-5.27%)

        $ 122,173,543  
         
 

(Cost $122,173,543)

          122,173,543  
         
 

TOTAL INVESTMENTS – 126.4%

             

(Cost $1,118,512,026)

          1,605,965,892  
               

LIABILITIES LESS CASH

             

AND OTHER ASSETS – (9.1)%

          (116,029,775 )
               

PREFERRED STOCK – (17.3)%

          (220,000,000 )
         
 

NET ASSETS APPLICABLE TO

             

COMMON STOCKHOLDERS – 100.0%

        $ 1,269,936,117  
         
 


a   Non-income producing.
b   All or a portion of these securities were on loan at June 30, 2007. Total market value of loaned securities at June 30, 2007 was $118,693,269.
c   Securities for which market quotations are no longer 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.
d   Includes securities first acquired in 2007 and less than 1% of net assets applicable to Common Stockholders.
  New additions in 2007.
   
Bold indicates the Fund’s largest 20 equity holdings in terms of June 30, 2007 market value.
     
INCOME TAX INFORMATION: The cost of total investments for Federal income tax purposes was $1,119,700,514. At June 30, 2007, net unrealized appreciation for all securities was $486,265,378, consisting of aggregate gross unrealized appreciation of $527,222,556 and aggregate gross unrealized depreciation of $40,957,178. The primary difference in book and tax basis cost is the timing of the recognition of losses on securities sold.



26  |  2007 Semiannual Report to Stockholders
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



Royce Value Trust

June 30, 2007 (unaudited)



 
Statement of Assets and Liabilities
 

ASSETS:

       

Investments at value (including collateral on loaned securities)*

  $ 1,389,872,892  

Repurchase agreements (at cost and value)

    216,093,000  

Receivable for investments sold

    9,790,553  

Receivable for dividends and interest

    768,978  

Prepaid expenses and other assets

    185,210  

Total Assets

    1,616,710,633  

LIABILITIES:

       

Payable for collateral on loaned securities

    122,173,543  

Payable to custodian for cash overdrawn and foreign currency

    369,622  

Payable for investments purchased

    2,209,377  

Payable for investment advisory fee

    1,412,077  

Preferred dividends accrued but not yet declared

    288,454  

Accrued expenses

    321,443  

Total Liabilities

    126,774,516  

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

  $ 1,269,936,117  

ANALYSIS OF NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

       

Common Stock paid-in capital - $0.001 par value per share; 58,497,690 shares outstanding (150,000,000 shares authorized)

  $ 741,443,771  

Undistributed net investment income (loss)

    1,839,388  

Accumulated net realized gain (loss) on investments and foreign currency

    98,366,907  

Net unrealized appreciation (depreciation) on investments and foreign currency

    487,454,293  

Preferred dividends accrued but not yet declared

    (59,168,242 )

Net Assets applicable to Common Stockholders (net asset value per share - $21.71)

  $ 1,269,936,117  

* Investments at identified cost (including $122,173,543 of collateral on loaned securities)

  $ 902,419,026  

Market value of loaned securities

    118,693,269  

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2007 Semiannual Report to Stockholders  |  27



Royce Value Trust

Six Months Ended June 30, 2007 (unaudited)



 
Statement of Operations
 

INVESTMENT INCOME:

       

Income:

       

Dividends*

       

Non-Affiliates

  $ 6,154,391  

Affiliated Companies

    51,750  

Interest

    4,614,393  

Securities lending

    229,921  

Total income

    11,050,455  

Expenses:

       

Investment advisory fees

    7,095,425  

Stockholder reports

    200,162  

Custody and transfer agent fees

    98,289  

Directors’ fees

    65,041  

Administrative and office facilities expenses

    57,037  

Professional fees

    27,189  

Other expenses

    121,067  

Total expenses

    7,664,210  

Compensating balance credits

    (58,427 )

Net expenses

    7,605,783  

Net investment income (loss)

    3,444,672  

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:

       

Net realized gain (loss) on investments and foreign currency

       

Non-Affiliates

    79,703,578  

Affiliated Companies

    5,317,318  

Net change in unrealized appreciation (depreciation) on investments and foreign currency

    33,514,490  

Net realized and unrealized gain (loss) on investments and foreign currency

    118,535,386  

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM INVESTMENT OPERATIONS

    121,980,058  

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS

    (6,490,000 )

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

       

RESULTING FROM INVESTMENT OPERATIONS

  $ 115,490,058  

* Net of foreign withholding tax of $187,777.



28  |  2007 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        
    6/30/07   Year ended
    (unaudited)   12/31/06

INVESTMENT OPERATIONS:

               

Net investment income (loss)

  $ 3,444,672     $ 6,996,692  

Net realized gain (loss) on investments and foreign currency

    85,020,896       110,169,442  

Net change in unrealized appreciation (depreciation) on investments and foreign currency

    33,514,490       93,033,099  

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

    121,980,058       210,199,233  

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:

               

Net investment income

          (1,020,228 )

Net realized gain on investments and foreign currency

          (11,959,772 )

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

    115,490,058       197,219,233  

DISTRIBUTIONS TO COMMON STOCKHOLDERS:

               

Net investment income

          (7,788,658 )

Net realized gain on investments and foreign currency

          (91,303,684 )

Quarterly distributions*

    (52,389,793 )      

Total distributions to Common Stockholders

    (52,389,793 )     (99,092,342 )

CAPITAL STOCK TRANSACTIONS:

               

Reinvestment of distributions to Common Stockholders

    26,408,289       50,180,586  

Total capital stock transactions

    26,408,289       50,180,586  

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

    89,508,554       148,307,477  

NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

               

Beginning of period

    1,180,427,563       1,032,120,086  

End of period (including undistributed net investment income (loss) of $1,839,388 at 6/30/07 and $(1,605,284) at 12/31/06)

  $ 1,269,936,117     $ 1,180,427,563  
                 
*To be allocated to net investment income and capital gains at year end.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2007 Semiannual Report to Stockholders  |  29



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 ended   Years ended December 31,
    June 30, 2007  
    (unaudited)   2006     2005     2004     2003     2002  

NET ASSET VALUE, BEGINNING OF PERIOD

    $20.62       $18.87       $18.95       $17.03       $13.22       $17.31  

INVESTMENT OPERATIONS:

                                               

Net investment income (loss)

    0.06       0.13       0.01       (0.08 )     (0.05 )     (0.02 )

Net realized and unrealized gain (loss) on investments and foreign currency

    2.04       3.63       1.75       3.81       5.64       (2.25 )

Total investment operations

    2.10       3.76       1.76       3.73       5.59       (2.27 )

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:

                                               

Net investment income

          (0.02 )                       (0.01 )

Net realized gain on investments and foreign currency

          (0.21 )     (0.24 )     (0.26 )     (0.26 )     (0.28 )

Quarterly distributions*

    (0.11 )                              

Total distributions to Preferred Stockholders

    (0.11 )     (0.23 )     (0.24 )     (0.26 )     (0.26 )     (0.29 )

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

    1.99       3.53       1.52       3.47       5.33       (2.56 )

DISTRIBUTIONS TO COMMON STOCKHOLDERS:

                                               

Net investment income

          (0.14 )                       (0.07 )

Net realized gain on investments and foreign currency

          (1.64 )     (1.61 )     (1.55 )     (1.30 )     (1.44 )

Quarterly distributions*

    (0.91 )                              

Total distributions to Common Stockholders

    (0.91 )     (1.78 )     (1.61 )     (1.55 )     (1.30 )     (1.51 )

CAPITAL STOCK TRANSACTIONS:

                                               

Effect of reinvestment of distributions by Common Stockholders

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

Effect of rights offering and Preferred Stock offering

                            (0.22 )      

Total capital stock transactions

    0.01       (0.00 )     0.01       0.00       (0.22 )     (0.02 )

NET ASSET VALUE, END OF PERIOD

    $21.71       $20.62       $18.87       $18.95       $17.03       $13.22  

MARKET VALUE, END OF PERIOD

    $21.42       $22.21       $20.08       $20.44       $17.21       $13.25  

TOTAL RETURN (a):

                                               

Market Value

    0.60 %***     20.96 %     6.95 %     29.60 %     41.96 %     (6.87 )%

Net Asset Value

    9.83 %***     19.50 %     8.41 %     21.42 %     40.80 %     (15.61 )%

RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

                                               

Total expenses (b,c)

    1.25 %**     1.29 %     1.49 %     1.51 %     1.49 %     1.72 %

Management fee expense (d)

    1.17 %**     1.20 %     1.37 %     1.39 %     1.34 %     1.56 %

Other operating expenses

    0.08 %**     0.09 %     0.12 %     0.12 %     0.15 %     0.16 %

Net investment income (loss)

    0.57 %**     0.62 %     0.03 %     (0.50 )%     (0.36 )%     (0.09 )%

SUPPLEMENTAL DATA:

                                               

Net Assets Applicable to Common Stockholders,

                                               

End of Period (in thousands)

    $1,269,936       $1,180,428       $1,032,120       $993,304       $850,773       $560,776  

Liquidation Value of Preferred Stock,

                                               

End of Period (in thousands)

    $220,000       $220,000       $220,000       $220,000       $220,000       $160,000  

Portfolio Turnover Rate

    5 %     21 %     31 %     30 %     23 %     35 %

PREFERRED STOCK:

                                               

Total shares outstanding

    8,800,000       8,800,000       8,800,000       8,800,000       8,800,000       6,400,000  

Asset coverage per share

    $169.31       $159.14       $142.29       $137.88       $121.68       $112.62  

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

    $24.35       $23.95       $24.75       $24.50       $25.04        

7.80% Cumulative

                            $25.87       $26.37  

7.30% Tax-Advantaged Cumulative

                            $25.53       $25.82  

(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, if any, 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 1.06% 1.08%, 1.22%, 1.21%, 1.19% and 1.38% for the periods ended June 30, 2007 and December 31, 2006, 2005, 2004, 2003 and 2002, 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% and 1.82% for the periods ended December 31, 2003 and 2002, 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.


30  |  2007 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. 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.
 
Foreign Currency:
The Fund values its non-U.S. securities in U.S. dollars on the basis of foreign currency exchange rates provided to the Fund by its custodian, State Street Bank and Trust Company. 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, 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.
 
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 in an equitable manner. 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 Fund’s 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.
 
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 basis differences relating to stockholder distributions will result in reclassifications within the capital accounts. Undistributed net investment income may include

  2007 Semiannual Report to Stockholders  |  31



Royce Value Trust


   Notes to Financial Statements (unaudited) (continued)

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.
 
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 the underlying securities.
 
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.
 
Recent Accounting Pronouncements:
Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”) provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. FIN 48 was adopted for the Fund on June 29, 2007. There was no material impact to the financial statements or disclosures thereto as a result of the adoption of this pronouncement.
FASB Statement of Financial Accounting Standard No. 157, “Fair Value Measurement” (“FAS 157”), provides enhanced guidance for using fair value to measure assets and liabilities. The standard requires companies to provide expanded information about the assets and liabilities measured at fair value and the potential effect of these fair valuations on an entity’s financial performance. The standard does not expand the use of fair value in any new circumstances, but provides clarification on acceptable fair valuation methods and applications. Adoption of FAS 157 is required for fiscal years beginning after November 15, 2007. The standard is not expected to materially impact the Fund’s financial statements.

Capital Stock:
The Fund issued 1,238,869 and 2,548,023 shares of Common Stock as reinvestment of distributions by Common Stockholders for the six months ended June 30, 2007 and the year ended December 31, 2006, respectively.
At June 30, 2007, 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.
 
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


32  |  2007 Semiannual Report to Stockholders
 



Royce Value Trust


   Notes to Financial Statements (unaudited) (continued)

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 2007, the investment performance of the Fund exceeded the investment performance of the S&P 600 by 4% to 12%. Accordingly, the investment advisory fee consisted of a Basic Fee of $5,523,766 and an upward adjustment of $1,571,659 for performance of the Fund above that of the S&P 600. For the six months ended June 30, 2007, the Fund accrued and paid Royce advisory fees totaling $7,095,425.

Purchases and Sales of Investment Securities:
     For the six months ended June 30, 2007, the cost of purchases and proceeds from sales of investment securities, other than short-term securities and collateral received for securities loaned, amounted to $68,057,069 and $194,640,593, 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 during the six months ended June 30, 2007:

    Shares     Market Value   Cost of     Cost of     Realized     Dividend   Shares   Market Value
   Affiliated Company   12/31/06     12/31/06   Purchases     Sales     Gain (Loss)     Income   6/30/07   6/30/07
                                         
Synalloy Corporation*   345,000     $6,361,800       $761,702     $5,317,318     $51,750        
          $6,361,800               $5,317,318     $51,750        
                                         
* Not an Affiliated Company at June 30, 2007.
  2007 Semiannual Report to Stockholders  |  33



Royce Micro-Cap Trust    

 
   Schedule of Investments

    SHARES     VALUE

COMMON STOCKS – 103.7%

         
           

Consumer Products – 5.0%

         

Apparel and Shoes - 1.4%

         

dELiA*s a,c

  33,600   $ 256,368

Hartmarx Corporation a

  70,000     557,900

Kleinert’s a,d

  14,200     0

Steven Madden

  21,750     712,530

True Religion Apparel a

  24,900     506,217

Weyco Group

  120,000     3,231,600
       
          5,264,615
       

Collectibles - 0.2%

         

Topps Company (The)

  74,200     779,842
       

Food/Beverage/Tobacco - 0.6%

         

Green Mountain Coffee Roasters a,c

  25,600     2,015,744

Nutrition 21 a,c

  20,000     33,000
       
          2,048,744
       

Home Furnishing and Appliances - 0.3%

         

Lifetime Brands

  42,054     860,004

U.S. Home Systems a,c

  10,000     99,500
       
          959,504
       

Publishing - 0.3%

         

Educational Development

  7,000     54,740

Proquest Company a,c

  115,000     1,086,750
       
          1,141,490
       

Sports and Recreation - 1.0%

         

Cybex International a

  70,000     490,000

Monaco Coach

  142,400     2,043,440

Orange 21 a

  10,300     67,465

Sturm, Ruger & Company a

  75,000     1,164,000
       
          3,764,905
       

Other Consumer Products - 1.2%

         

A.T. Cross Company Cl. A a

  100,000     1,170,000

Burnham Holdings Cl. A

  84,000     1,365,000</