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 – December 31, 2007

Item 1: Reports to Shareholders






   
 



Royce Value Trust


Royce Micro-Cap Trust


Royce Focus Trust






















 
ANNUAL
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  

   
Annual Review  

   
Performance Table 2
   
Letter to Our Stockholders 3
   

   
Annual 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 December 31, 2007
                         
    Royce   Royce   Royce      
    Value Trust   Micro-Cap Trust   Focus Trust   Russell 2000

Fourth Quarter 2007*   -2.62 %   -4.47 %   -3.64 %   -4.58 %

July–December 2007*   -4.36     -7.86     -3.21     -7.53  

One-Year   5.04     0.64     12.22     -1.57  

Three-Year   10.81     9.58     13.90     6.80  

Five-Year   18.40     19.42     24.15     16.25  

10-Year   11.77     11.97     13.28     7.08  

15-Year   13.17     n/a     n/a     10.10  

20-Year   13.78     n/a     n/a     11.34  

Since Inception   12.60     13.53     14.15      

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



Important Performance and Risk Information
All performance information in this Review and Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when sold. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. The Royce Funds invest primarily in securities of small-cap and/or micro-cap companies, which may involve considerably more risk than investments in securities of larger-cap companies.
 
The thoughts expressed in this Review and Report to Stockholders concerning recent market movements and future prospects for small-company stocks are solely the opinion of Royce at December 31, 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 December 31, 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      

     
     
Are We Bear Yet?      
       
When the subprime mortgage implosion first became headline news in July 2007, the event was treated in some quarters as the locomotive leading a potentially long train of financial calamities. Seemingly overnight, a rash of stories broke about imminent recession, possible inflation, recurrent stagflation, contracting credit, devalued currency and declining equities. We were somewhat nonplussed by the high anxiety, not out of any sense that the subprime mess was not serious, but more because our experience in the asset management business has seen us through a variety of markets (and economies) that tested our patience, commitment and discipline. It seemed clear that the subprime crisis was all too real even before the share prices of many financial companies began to tumble in the spring and summer months. However, the market as a whole did not follow suit in earnest until November, and the substantial small-cap market correction—that is, a fall-off for the Russell 2000 of 15% or more from a previous market high—had to wait until January 4, 2008 to become a reality. What we did see in the second half of 2007 was considerable volatility. During the third quarter, the Russell 2000 saw 24 out of 63 trading days in which it moved 2.0% or more intra-day, that is, 38% of the time; in the fourth quarter there were 28 out of 64 such trading days, or 44% of the time. Even as all signs pointed toward an end to the small-cap rally that began in October 2002, the second half of 2007 was more of a wildly volatile period, not a seriously bearish one.
  Long ago we accepted that we are powerless
over when or if a bear market comes. We
can only resolve to maintain our discipline
and keep scouring the small-cap market for
potential opportunity... We have always
believed that uncovering opportunity in
poor market conditions is one of the most
effective ways to build strong absolute
long-term performance.
 
     Still, the idea that stocks were headed for a bear market was remarkably persistent in the second half of 2007. And although equity returns through the end of December remained well shy of the bear necessity—a decline of 20% or more from the market’s previous peak—
     
       

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For most of our portfolio managers,
the security selection process begins
with an examination of a company’s
balance sheet. As our analysis
proceeds, other important measures
quickly follow, such as a company’s
earnings history (particularly if the
firm is not posting positive earnings
at the time of our review) and its
ability to generate free cash flow
.
Additional factors come into play as
well, with each of our portfolio
managers and analysts emphasizing
different metrics as they evaluate
businesses. Of course, regardless of
where the emphasis on particular
metrics falls, our managers are
looking for indicators of strong
absolute value
.

One company’s financial profile may
look terrific relative to its industry
peers or to other companies in the
stock market, but that does not
necessarily make it a compelling
value. Similarly, its stock price may
be attractively low when compared
to others in the same or a similar
business or to other stocks in the
market as a whole, but that alone
will not make the stock a potential
purchase candidate. In our security
analysis process, a company must
stand or fall on its own merits
.


Continued on page 6...
    Letter to Our Stockholders

the fatalism was more than understandable. As the market crept toward the end of the year, it seemed to be just a matter of time before reality caught up with the bearish perceptions. We were not surprised, therefore, by the 15% correction from the small-cap peak on 7/13/07 that occurred on January 4th and were not too panicked by the official arrival of the small-cap bear on January 17th. In fact, few of the concerns about the market or the economy look groundless to us, even if our collective stoicism leads us to exchange worry for more work on finding attractively valued smaller companies. Long ago we accepted that we are powerless over when or if a bear market comes. We can only resolve to maintain our discipline and keep scouring the small-cap market for potential opportunity.
     In this context of pessimism, then, we find ourselves in the contrarian position of feeling fairly sanguine about the state of equities, particularly over the long term, and also confident—however guardedly—about the next three to five years. In that spirit, we would like to advance the idea that the worst of the market’s decline is behind us as of this writing. Our optimism about the next few years is based in part on the speed with which information moves. Because bad news travels so quickly, the effects hit stocks hard and fast. We believe that the market has thus worked through the bulk of the distress caused by subprime woes, the credit crunch and the prospect of recession. While we are always focused on downside risk, we are just as excited about promising long-term opportunities that we see in certain smaller stocks in the current market. We understand that no investor enjoys these periods in which so many companies seem to be struggling and returns are falling further into negative territory. At the same time, declines, corrections and even the occasional bear market are part of the price of doing business in the stock market, especially if one is in it for the long haul, as we are. And it is precisely at such risky moments that we seek opportunity as so many others are avoiding it. As the saying goes, “Pain is inevitable, but misery is optional.” We have always believed that uncovering opportunity in poor market conditions is one of the most effective ways to build strong absolute long-term performance.

Does Papa Bear Look Small?

The market leadership issue needs no reality check, being clear to all who take time to look. Large-cap stocks, as measured by the S&P 500, outperformed their small-cap counterparts, as measured by the Russell 2000, for the calendar year. The large-cap index posted a gain of 5.5% versus a loss of 1.6% for the small-cap index in 2007. The S&P 500 built its lead with three consecutive quarters of relatively higher returns between the end of March and the end of December, including the difficult second half of 2007, during which the S&P 500 fell only 1.4% while the Russell 2000 lost 7.5%. Meanwhile, the Nasdaq Composite fared best of all three indices for the calendar year, gaining 9.9%, a noteworthy absolute and relative showing. However, the Nasdaq Composite also remained 47.5% shy of its March 2000 high as of 12/31/07, while the Russell 2000 and S&P 500 both finished 2007 ahead of their respective March 2000 highs. The Russell 2000 also held an edge over the S&P 500 for


       

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the five- and 10-year periods ended 12/31/07, while the large-cap index outperformed for the corresponding one- and three-year periods.
     That the U.S. economy is struggling, regardless of whether one uses the ‘r-word’ to describe the struggle, helps to explain the recent relative strength of larger and more growth-oriented companies in the stock market. As volatility and economic uncertainty became more and more familiar features of the financial landscape, investors began to favor some combination of size, stability and the potential to grow quickly. In the beginning of 2006, before the current difficulties of the domestic economy, we called for a stint of large-cap leadership. At that time, our conviction was based on the less dramatic factors of cyclicality and reversion to the mean—it simply seemed to us that the small-cap rally would soon run its course and that large-cap would regain a market leadership role in an overall low-return environment for equities. As it happens, the subprime implosion was the catalyst for the reversion.
     We suspect that large-cap stocks will hang on to market leadership for a while. After a nearly five-year rally in which small-cap, especially small-cap value, dominated returns, this seems uncontroversial. However, we understand that for small-cap mutual fund investors, it may sound a bit odd for us to flatly assert that we don’t see our chosen asset class in the lead any time soon as we enter 2008. Investors can take some comfort in the following: Our longer-term outlook for smaller stocks is positive; we continue to see the likelihood of frequent leadership rotation and narrow performance spreads in the intermediate term; and we believe that active small-cap management focused on quality should do fine in a market in which we expect that trait to be rewarded across capitalization ranges.

  Our longer-term outlook for smaller stocks is positive; we continue to see the likelihood of frequent leadership rotation and narrow performance spreads in the intermediate term; and we believe that active small-cap management focused on quality should do fine in a market in which we expect that trait to be rewarded across capitalization ranges.
     
Polar Opposites    
     
For anyone focused on the performance of the Russell 2000 Value index in 2007, it must have felt as if it was just a matter of time before the bear emerged from hibernation and grabbed hold of the market as a whole. Small-cap growth investors, on the other hand, may have reached a different conclusion about the state of the stock market. After a long period of outperforming its small-cap growth sibling—often dramatically—the small-cap value index fell behind in 2007. It was subtle at first, with the Russell 2000 Value index narrowly underperforming the Russell 2000 Growth index in the first quarter (+1.5% versus +2.5%), before falling further behind in the second (+2.3% versus +6.7%). Things grew stranger in the third quarter, when small-cap value fell 6.3% while small-cap growth eked out a marginal gain. (Historically, the Russell 2000 Value index has outperformed in most down market periods.) Finally, during the similarly volatile fourth quarter, the Russell 2000 Value index was down 7.3% versus a loss of 2.1% for the Russell 2000 Growth index, completing its clean quarterly sweep for the calendar year, while also notching another short-term outperformance in a period of falling share prices.
   
     

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We have always believed that the
best way to pick stocks is to act as if
we were buying a business
.

Another important metric in
determining a company’s absolute
value is capitalization rate, or cap
rate. Most commonly used in real
estate asset analysis, cap rate
measures the ratio between the cash
flow an asset yields and that asset’s
purchase price. Our managers
calculate cap rate in a couple of
different ways: One looks at a
company’s EBIT (earnings before
interest and taxes) divided by the
business’s enterprise value; another
uses operating income (a close
cousin of EBIT) divided by the
enterprise value. In both cases
,
enterprise value is derived by taking
a company’s current market value
,
subtracting cash and adding in debt.

Our use of operating income is based
on the belief that it is the purest
way of understanding normalized
income. It is similar to cash flow, but
also includes amortization and
depreciation, which is critical to us
as long-term investors. When
calculating cap rate, we have to
decide how best to compute operating
income. It is closely related to a
firm’s earnings, which helps to
explain why cap rate for us is
synonymous with earnings yield
.

When a company is posting positive
earnings or is in a traditionally
cyclical business, we look back
historically in an attempt to put
together a pattern of normalized
operating income. If a business is


Continued on page 8...

 
 


                           
                           
Letter to Our Stockholders

     When one adjusts one’s perspective to reach beyond 2007, the picture begins to make sense. Although small-cap stocks as a whole began an impressive rally following the small-cap market trough on 10/9/02, the roots of strong performance for the Russell 2000 Value index actually reach back to the Russell 2000’s peak on 3/9/00. Although most equity indices large and small suffered dramatic declines from their respective March 2000 peaks through 10/9/02, the Russell 2000 Value index managed a cumulative gain of 2.0% during the same period. Once the wider small-cap rally
kicked off, the small-cap value index held its performance edge through the new small-cap high on 7/13/07 (see table).
     Our belief in cyclicality and reversion to the mean permeates the way that we view all market categories, so the Russell 2000 Value index’s underperformance in 2007 was hardly a shock, especially since we had seen a fair amount of promising opportunities in small-cap growth stocks in the years prior to 2007. Current anxieties seem to have led as many investors into growth stocks—ample liquidity and the potential for growth in a depressed economy are a seductive combination—as they have into large-cap stocks. However, the Russell 2000 Value index held on to its long-term advantage, beating the Russell 2000 Growth index for the 10-, 15-, 20- and 25-year periods ended 12/31/07.
    INDEX PERFORMANCE IN POST-BUBBLE PERIOD
Cumulative Total Returns During Small-Cap Decline and Subsequent Rally
 

        3/9/00-10/9/02     10/9/02-7/13/07  
                         
  Russell 2000     -44.1 %       177.1 %  
 
  Russell 2000 Value     2.0         183.9    
 
  Russell 2000 Growth     -68.4         169.7    
 
  S&P 500     -42.6         117.9    
 
  Nasdaq Composite     -77.9         143.0    
 
 

Bear with Us

We were very pleased that on a net asset value basis (NAV) each of our three closed end funds outperformed the Russell 2000 in 2007 (see the bar chart on page 7), and that Royce Value Trust also outpaced its other small-cap benchmark, the S&P SmallCap 600 for the same period. We were also struck by the wide disparity between the Fund’s calendar-year NAV and market price performances. Only Royce Focus Trust stayed ahead of the Russell 2000 on a market price basis, while Royce Value Trust and Royce Micro-Cap Trust lost considerably more on a market price basis than did the small-cap index. This was to some degree unsurprising in that the Fund’s were trading at healthy premiums at the end of 2006 that had become discounts by the end of 2007. Each portfolio’s market price results for the calendar year are perhaps best seen as a major shift in sentiment against smaller company stocks. All the more reason, in our view, to see the Fund’s respective NAV returns in a positive light. We were even more pleased with their longer-term performances. Each of our closed-end Funds

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outperformed the Russell 2000 on an NAV basis for the one-, three-, five- and 10-year periods ended 12/31/07.
 
 

     Two thousand seven was a difficult year, at least in its second half. Owing to our belief that down market performance is a key indicator of a portfolio’s strength, we were generally satisfied with the year’s results. Our confidence as we look forward is also high, as we are now seeing plentiful opportunities in both the domestic and international markets. We’ve been involved in overseas investing to one degree or another for many years. American companies with substantial global business have also been included in several portfolios for just as long, so a more global outlook is not really new for us. The most important lesson we learned from buying non-U.S. companies over the years is that a good business looks the same in Italy or England as it does here in the States. The business models and metrics are similar, and today nearly all publicly traded companies publish their relevant information in English. As large as the domestic smaller stock market is, it is dwarfed by the size of the international small-cap marketplace. To us, this really represents the best of two worlds—a domestic universe that we still feel great about and an international arena that we think is a source of enormous potential.

Bearing Down


Having said that, we understand that the issues facing small-cap investors in the current market are difficult. Economic uncertainty is pervasive. People continue to hold their breath, nervously waiting to see if the Federal Reserve Board’s moves might stave off a recession, or if a slowdown is already a forgone conclusion, as some economists are suggesting. More pertinently, many investors fear that small-caps will continue to lag if and when recession becomes a reality.

 





















As large as the domestic smaller stock market is, it is dwarfed by the size of the international small-cap marketplace. To us, this really represents the best of two worlds—a domestic universe that we still feel great about and an international arena that we think is a source of enormous potential.

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experiencing earnings trouble, we
look back in an effort to project
what its normalized operating
income may be over the next year
.
The result of these efforts allows us
to come up with a figure that
reflects a longer-term measure than
the operating income line that is
found on a company’s income
statement. This in turn provides us
with a cap rate estimate that’s also
in line with our long-term investment
horizon of two to five years
.

Generally, the higher the cap rate,
the lower the valuation risk, which is
why we seek cap rates beginning in
the double digits. Conversely, cap
rates in the mid-single digits or
lower mean that we generally will
look elsewhere. They represent little
more return potential than owning
risk-free U.S. treasuries, and we
expect more compensation for taking
the risk of equity ownership. A high
cap rate is ultimately important
because it offers us more potential
upside, i.e., a more attractive risk-reward
scenario, and that is critical in
our search for strong absolute value
.

  Letter to Our Stockholders

     Our view is that both the severity and span of a recession are likely to be fairly benign. More importantly, the reasoning behind our confidence in the long-term prospects for stocks, particularly smaller companies, has to do with the extremity of the sell-off that began in 2007’s second half and picked up steam in January 2008, which showed many equity investors behaving as if the recession were already well under way. Still, with the likelihood of recession strong (regardless of how bad one thinks it may be), we thought it would be useful to look at the performance of smaller companies in recent periods of economic slowdown. Looking at the four recessions that have occurred since the Russell 2000’s inception in 1979 shows two interesting trends: First, the performance records for small- and large-cap stocks are mixed, most likely because shifts in equity returns began prior to the official recognition of each recession’s start. Second, the recessions have in general been short-lived (see the table below).

       SMALL-CAP VERSUS LARGE-CAP PERFORMANCE DURING RECESSIONS
       Cumulative Total Returns During Small-Cap Decline and Subsequent Rally
   

    Recession Begin Date   Recession End Date   Length in Months   S&P 500   Russell 2000
     
    1/31/80   7/31/80   6   9.6 %   7.5 %
   

    7/31/81   11/30/82   16   14.2     14.8  
   

    7/31/90   3/31/91   8   8.0     7.7  
   

    3/31/01   11/30/01   8   -0.9     3.2  
   




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“Exit, Pursued by a Bear”

What, then, does all of this portend for small-cap investors? Within our selection universe, it seems reasonable to expect growth to provide near-term outperformance. However, over longer-term periods, we believe that value will eventually resume its historical dominance. The Russell 2000 Value index outperformed the Russell 2000 Growth index more than 93% of the time when viewed over five-year time horizons through 12/31/07. In any case, we populate our portfolios with what we deem to be attractively priced companies drawn from the entire asset class—regardless of whether they are classified as value or growth. Of greater significance to us—since we do not attach ‘value’ or ‘growth’ labels to the stocks that we own—is the idea that smaller companies retain two unique features: historical outperformance during normal- and low-return periods for equities and a more broad-based acceptance by all types of investors, something that was not the case at the beginning of this decade.
     Down markets and recessions are each as inevitable as they are unpleasant. They are also finite. We think that the fourth quarter of 2007 and the events of January 2008 represented an overreaction to a slowdown in consumer spending and the economy as a whole. The market, in other words, has in many ways already responded to the recession—and in our view has overestimated its severity—which is why we suspect that equity returns should improve before the economy does. In the meantime, we are looking ahead and seeing opportunities that look very promising to us. Several discrete areas of our marketplace look attractively oversold in our eyes, so we are working to capture what we see as compelling values today in the hopes of a profitable long-term experience in the years to come.
  Of great significance to us is the idea that
that smaller companies retain two unique
features: historical outperformance during
normal- and low-return periods for equities
and a more broad-based acceptance by all
types of investors, something that was not
the case at the beginning of this decade.

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

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Table of Contents    


Annual 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   36
     
Royce Focus Trust   51
     
Notes to Performance and Other Important Information   62
     
Stockholder Meeting Results   63
     
 

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Directors and Officers

 
All Directors and Officers may be reached c/o The Royce Funds, 1414 Avenue of the Americas, New York, NY 10019

Charles M. Royce, Director*, President  
Age: 68  |  Number of Funds Overseen:  27  |  Tenure:  Since 1986  
Non-Royce Directorships:  Director of Technology Investment Capital Corp.  
   
Principal Occupation(s) During Past Five Years:  President, Chief Investment Officer and Member of Board of Managers of Royce & Associates, LLC (“Royce”), the Trust’s investment adviser.
 
   
Mark R. Fetting, Director*  
Age:  53   |  Number of Funds Overseen:  41  |   Tenure:  Since 2001  
Non-Royce Directorships:  Director/Trustee of registered investment companies constituting the 14 Legg Mason Funds.
 
   
Principal Occupation(s) During Past Five Years: President and Chief Executive Officer of Legg Mason, Inc.; Member of Board of Managers of Royce. Mr. Fetting’s prior business experience includes having served as Senior Executive Vice President of Legg Mason, Inc.; Division President and Senior Officer, Prudential Financial Group, Inc. and related companies; Partner, Greenwich Associates and Vice President, T. Rowe Price Group, Inc.
 

 
Donald R. Dwight, Director  
Age:  76   |   Number of Funds Overseen:  27  |   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:  27  |   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: 68   |  Number of Funds Overseen:  27  |  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: 73  |  Number of Funds Overseen: 27  |  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 14 Legg Mason Funds and Director of Municipal Mortgage & Equity, LLC.
 
   
Principal Occupation(s) During Past Five Years: Director of The League for People with Disabilities, Inc.; Director of University of Maryland Foundation (non-profits). Formerly: Director of University of Maryland College Park Foundation (non-profit) (from 1998 to 2005); Partner, KPMG LLP (international accounting firm) (from 1972 to 2002); Director of Maryland Business Roundtable for Education (from July 1984 to June 2002).
 
David L. Meister, Director
Age:  68   |  Number of Funds Overseen:  27  |  Tenure:  Since 1986
Non-Royce Directorships:  None
 
Principal Occupation(s) During Past Five Years: Consultant. Chairman and Chief Executive Officer of The Tennis Channel (from June 2000 to March 2005). Mr. Meister’s prior business experience includes having served as Chief Executive Officer of Seniorlife.com, a consultant to the communications industry, President of Financial News Network, Senior Vice President of HBO, President of Time-Life Films and Head of Broadcasting for Major League Baseball.
 
G. Peter O’Brien, Director
Age:  62  |  Number of Funds Overseen:  41  |  Tenure:  Since 2001
Non-Royce Directorships:  Director/Trustee of registered investment companies constituting the 14 Legg Mason Funds; Director of Technology Investment Capital Corp.
 
Principal Occupation(s) During Past Five Years: Trustee Emeritus of Colgate University (since 2005); Board Member of Hill House, Inc. (since 1999); Formerly: Trustee of Colgate University (from 1996 to 2005), President of Hill House, Inc. (from 2001 to 2005) and Managing Director/Equity Capital Markets Group of Merrill Lynch & Co. (from 1971 to 1999).

John D. Diederich, Vice President and Treasurer
Age:  56  |    Tenure:  Since 2001
 
Principal Occupation(s) During Past Five Years: Chief Operating Officer, Managing Director and member of the Board of Managers of Royce; Chief Financial Officer of Royce; Director of Administration of the Trust; and President of RFS, having been employed by Royce since April 1993.
 
Jack E. Fockler, Jr., Vice President
Age:  49  |   Tenure:  Since 1995
 
Principal Occupation(s) During Past Five Years: Managing Director and Vice President of Royce, and Vice President of RFS, having been employed by Royce since October 1989.
 
W. Whitney George, Vice President
Age:  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:  48  |  Tenure:  Since 2004
 
Principal Occupation(s) During Past Five Years: Chief Compliance Officer of The Royce Funds (since October 2004); Compliance Officer of Royce (since June 2004); Vice President, The Bank of New York (from February 2001 to June 2004).
 


* Interested Director.
 
 

2007 Annual Report to Stockholders   |  11





 
 

 

AVERAGE ANNUAL NAV TOTAL RETURNS
Through 12/31/07


Fourth Quarter 2007*

  -2.62 %

July–December 2007*

  -4.36  

One-Year

              5.04  

Three-Year

              10.81  

Five-Year

              18.40  

10-Year

              11.77  

15-Year

              13.17  

20-Year

              13.78  

Since Inception (11/26/86)

    12.60  

* Not annualized.
     

CALENDAR YEAR NAV TOTAL RETURNS


Year

  RVT     Year     RVT  

2007

  5.0 %   1998     3.3 %

2006

  19.5     1997     27.5  

2005

  8.4     1996     15.5  

2004

  21.4     1995     21.6  

2003

  40.8     1994     0.1  

2002

  -15.6     1993     17.3  

2001

  15.2     1992     19.3  

2000

  16.6     1991     38.4  

1999

  11.7     1990     -13.8  

                   

TOP 10 POSITIONS
% of Net Assets Applicable
to Common Stockholders


AllianceBernstein Holding L.P.

  2.1 %

Ritchie Bros. Auctioneers

  2.0  

PAREXEL International

  1.3  

Sotheby’s

  1.2  

SEACOR Holdings

  1.2  

Lincoln Electric Holdings

  1.1  

Advent Software

  1.1  

Exterran Holdings

  1.1  

Ash Grove Cement Cl. B

  1.1  

Rofin-Sinar Technologies

  1.0  

                   
                   

PORTFOLIO SECTOR BREAKDOWN
% of Net Assets Applicable
to Common Stockholders


Technology

  23.3 %

Industrial Products

  19.3  

Industrial Services

  15.2  

Financial Services

  13.7  

Financial Intermediaries

  11.7  

Natural Resources

  9.9  

Health

  7.6  

Consumer Products

  4.9  

Consumer Services

  3.7  

Diversified Investment Companies

  0.2  

Utilities

  0.2  

Miscellaneous

  3.7  

Bond and Preferred Stock

  0.3  

Cash and Cash Equivalents

  4.9  

 
 
 
 
 
 





Royce Value Trust

Manager’s Discussion
Royce Value Trust’s (RVT) diversified portfolio of small- and micro-cap stocks posted solid results during 2007, though many investors seemed not to notice. For the calendar year, the Fund was up 5.0% on a net asset value (NAV) basis and down 8.2% on a market price basis versus a 1.6% loss for the Russell 2000 and a 0.2% loss for the S&P SmallCap 600. We were very pleased with RVT’s calendar-year NAV result, though we were obviously disappointed by its market price showing. Much of the disparity between the Fund’s NAV and market price results in 2007 can be traced back to the sizeable premium at which the Fund traded at the end of 2006 versus the discount at which its shares traded at the end of 2007. Certainly market sentiment began to turn against smaller stocks as 2007 wore on, even as our efforts in RVT’s portfolio told a different story.
        On an NAV basis, the Fund was ahead of both of its small-cap benchmarks in the first half, although its market price return trailed. Down 1.8% on an NAV basis in the third quarter, RVT bested the Russell 2000, which lost 3.1%, and tied the S&P 600, while its market price loss of 7.6% trailed. The year’s final quarter saw a reversal of this performance pattern. RVT lost 2.6% on an NAV basis, but only 1.3% on a market price basis, both results better than the Russell 2000’s 4.6% loss and the S&P 600’s decline of 6.5%. We place considerable emphasis on down-market performance, so the Fund’s relative edge on an NAV basis in the second half was especially gratifying to us, as was its relative strength from the small-cap peak on 7/13/07 through 12/31/07, a period in which RVT was down 7.0% versus losses of 9.9% for the Russell 2000 and 10.8% for the S&P 600. (The Fund was down 10.4% on a market price basis during this same period.)
      RVT again provided strong absolute and relative results over market-cycle and other long-term periods. From the previous small-cap market peak on 3/9/00 through 12/31/07, the Fund was up 143.1% on an NAV basis, versus 39.5% for the Russell 2000 and 89.6% for the S&P 600. During the mostly bullish phase from the small-cap market trough on 10/9/02 through 12/31/07, the Fund gained 176.8% compared to a gain of 149.5% for the Russell 2000 and 143.1% for the S&P 600. In addition, on an NAV basis RVT held a performance advantage over each of its benchmarks for the one-, three-, five-, 10-, 15-, 20-year and since inception (11/26/86) periods ended 12/31/07. In all but the one- and three-year periods,
     
   

GOOD IDEAS THAT WORKED
2007 Net Realized and Unrealized Investment Return*

   
    Ritchie Bros. Auctioneers   $9,318,969
   
    Peerless Manufacturing   8,449,137
   
    PAREXEL International   6,063,821
   
    Exterran Holdings   5,862,255
   
    GAMCO Investors Cl. A   5,052,996
   
    *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 invests primarily in securities of small- and micro-cap companies that may involve considerably more risk than investing in a more diversified portfolio of larger-cap companies. Standard deviation is a statistical measure within which a fund’s total returns have varied over time. The greater the standard deviation, the greater a fund’s volatility.

12  |   2007 Annual Report to Stockholders



 
 
 
Performance and Portfolio Review



the Fund’s market price returns also outpaced those of its benchmarks. RVT’s NAV average annual total return since inception was 12.6%.
     The Industrial Products sector led the Fund in dollar-based net gains that nearly doubled those of Industrial Services, the Fund’s next best-performing sector on a dollar basis. The worldwide boom in large-scale infrastructure construction, particularly in China, continued to give many industrial companies a boost. We enjoyed success with industrial auctioneer Ritchie Bros. Auctioneers, which we have owned in the Fund’s portfolio since 1998. Its growing business had many investors bidding for shares, so we reduced our stake in December. Peerless Manufacturing makes filtration and air pollution abatement products. Growing earnings in a more environmentally conscious world seemed to draw investors to the stock. We trimmed our position in November.
     Impressive net gains also came from holdings in other sectors. PAREXEL International is a bio-pharmaceutical services company that 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 for most of 2007, including the volatile second half. GAMCO Investors was another strong second-half performer. The firm offers an array of asset management services to a variety of clients. We think that it’s a well-managed firm, and also like its steady, positive earnings and dividend payout.
     
      Bimini Capital Management is a real estate investment trust (REIT) that invests primarily in residential mortgage-related securities. Its stock price predictably fell during the subprime crisis. We sold our shares in October. Newport Corporation, which makes laser-based and photonic products, saw its price slide throughout the year amidst lower-than-expected profits in its fiscal first, second and third quarters in 2007. The departure of some veteran executives did little to help.

GOOD IDEAS AT THE TIME
2007 Net Realized and Unrealized Investment Loss*

 
 

 
  Bimini Capital Management Cl. A $6,168,275     

 
  Newport Corporation 4,832,352     

 
  Jazz Technologies (Units) 3,658,750     

 
  BearingPoint 3,526,363     

 
  Adaptec 3,307,648     

 
  *Net of dividends  
   

1Reflects the cumulative total return of an investment made by a stockholder who purchased one share at inception ($10.00 IPO), reinvested all annual distributions as indicated and fully participated in primary subscriptions of the Fund’s rights offerings.

2Reflects the actual market price of one share as it traded on the NYSE.
 
 
   
   
    FUND INFORMATION AND
  PORTFOLIO DIAGNOSTICS
 
    Fund Net Assets 1,185 million   
 
    Symbol  
      Market Price RVT   
      NAV XRVTX   
 
    Net Leverage 14%   
 
    Turnover Rate 26%   
 
 

Average Market Capitalization*

$1,184 million   
 
    Weighted Average P/E Ratio** 18.1x   
 
    Weighted Average P/B Ratio 2.2x   
 
    Weighted Average Portfolio Yield 1.2%   
 
 
  Net leverage is the percentage, in excess of 100%, of the total    value of equity type investments, divided by net assets, excluding preferred stock.
   *Geometrically calculated
 

**The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (9% of portfolio holdings as of 12/31/07).

   
   
    CAPITAL STRUCTURE
  Publicly Traded Securities Outstanding
  at 12/31/07 at NAV or Liquidation Value
 
    60.0 million shares
  of Common Stock
$1,185 million  
 
    5.90% Cumulative
  Preferred Stock
$220 million  
 
   
    RISK/RETURN COMPARISON
  Five-Year Period Ended 12/31/07
 
    Average Annual
Total Return
Standard Deviation Return
Efficiency*
 
    RTV (NAV) 18.40% 13.58 1.35
 
    Russell 2000 16.25     14.44 1.13
 
 
*Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period.
   
 
   
   
   
   
   
 

 

2007 Annual Report to Stockholders   |   13



 
 

 

AVERAGE ANNUAL NAV TOTAL RETURNS
Through 12/31/07


Fourth Quarter 2007*

  -4.47 %

July-December 2007*

  -7.86  

One-Year

              0.64  

Three-Year

              9.58  

Five-Year

              19.42  

10-Year

              11.97  

Since Inception (12/14/93)

    13.53  

* Not annualized.
     

CALENDAR YEAR NAV TOTAL RETURNS


Year

  RMT     Year     RMT  

2007

  0.6 %   2000     10.9 %

2006

  22.5     1999     12.7  

2005

  6.8     1998     -4.1  

2004

  18.7     1997     27.1  

2003

  55.5     1996     16.6  

2002

  -13.8     1995     22.9  

2001

  23.4     1994     5.0  

                   

TOP 10 POSITIONS
% of Net Assets Applicable
to Common Stockholders


Sapient Corporation

  1.3 %

Seneca Foods Cl. B

  1.3  

Pegasystems

  1.2  

PAREXEL International

  1.2  

Tennant Company

  1.2  

ASA

  1.1  

MVC Capital

  1.1  

Exponent

  1.1  

Peerless Manufacturing

  1.1  

Weyco Group

  1.0  

                   
                   

PORTFOLIO SECTOR BREAKDOWN
% of Net Assets Applicable
to Common Stockholders


Technology

  23.2 %

Industrial Products

  16.2  

Health

  14.9  

Industrial Services

  14.7  

Natural Resources

  10.6  

Financial Intermediaries

  9.1  

Financial Services

  6.7  

Consumer Products

  5.5  

Consumer Services

  4.3  

Diversified Investment Companies

  1.8  

Miscellaneous

  4.9  

Preferred Stock

  0.5  

Cash and Cash Equivalents

  5.7  

 
 
 
 
 
 





Royce Micro-Cap Trust

Manager’s Discussion
The miserable 2007 that most micro-cap stocks endured could be seen in the year’s market price performance of Royce Micro-Cap Trust (RMT). However, little of this misery could be seen in the Fund’s calendar-year net asset value (NAV) performance. RMT more than held its own on a net asset value (NAV) basis, up 0.6% versus a decline of 1.6% for its small-cap benchmark, the Russell 2000. Although we were certainly disappointed that the Fund was down 20.1% on a market basis for the same period, we were pleased with the Fund’s NAV results during 2007. It’s worth noting that at the end of 2006, RMT was trading at a good-sized premium that became a discount before the end of 2007. Market sentiment turned against smaller stocks, especially micro-caps, as 2007 turned more bearish, even as our work in RMT’s portfolio showed that not all micro-caps capitulated to the bear during latter half of the year. A strong first half—up 9.2% on an NAV basis, though down 2.9% on a market basis—certainly helped the Fund to establish ground versus the Russell 2000 for the calendar year.
        The Fund’s showings over market cycle and other long-term performance periods remained strong. From the previous small-cap market peak on 3/9/00 through 12/31/07, RMC gained 148.8% on an NAV basis, and 164.3% on a market price basis versus a gain of 39.5% for the Russell 2000. During the generally more positive period from the small-cap market trough on 10/9/02 through 12/31/07, RMT was up an impressive 188.0%, on an NAV basis and 180.9% on a market price basis, while the Russell 2000 gained 149.5%. RMT outpaced the Russell 2000 on an NAV basis for the one-, three-, five-, 10-year and since inception (12/14/93) periods, and on a market price basis for the 5-, 10-year, and since-inception periods ended 12/31/07. The Fund’s NAV average annual total return since inception was 13.5%.
     During the first half of 2007, we noted a performance disparity within the micro-cap sector, which helped the Fund’s performance. In general, higher returns came from larger, more established micro-cap companies. As the credit crunch reared its head in the second half, those micro-caps with better creditworthiness drew favor from investors. This development also benefited calendar-year results. It seemed clear to us by the end of 2007
     
   

GOOD IDEAS THAT WORKED
2007 Net Realized and Unrealized Investment Return*

   
    OneSource Services   $2,806,923
   
    Peerless Manufacturing   2,434,940
   
    PAREXEL International   2,046,123
   
    Green Mountain Coffee Roasters   1,865,472
   
    Sapient Corporation   1,660,000
   
    *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.

14  |   2007 Annual Report to Stockholders



 
 
 
Performance and Portfolio Review



that our preference for conservatively capitalized, quality micro-cap businesses was a sound strategy, both in an absolute sense and in the context of a market that bestowed little favor on micro-cap stocks.
      We also benefited by having little exposure to financial and real estate companies and only modest exposure to consumer businesses that suffered most during 2007, although that modest exposure could not prevent Consumer Services from posting the most significant net dollar-based losses in the portfolio during 2007. The bulk of sector’s declines came from retail stores. Stein Mart’s stores offer fashion merchandise in the United States. Weak sales and disappointing earnings were the story throughout 2007, particularly in the second half when we added to our position. Financial Intermediaries also disappointed. First Acceptance Corporation is a regional automobile insurer specializing in policies for drivers with poor payment and/or driving histories. Higher-than-anticipated accident rates led to a loss in the firm’s fiscal fourth quarter, which caused its share price to crash in September. Bimini Capital Management is a real estate investment trust (REIT) that invests primarily in residential mortgage-related securities. Its stock price predictably fell during the subprime crisis. We sold our shares in October.
     
      The Fund’s best-performing sectors on a dollar basis were areas that we have long believed house quality micro-cap companies, and that belief was validated in 2007—Industrial Products, Natural Resources and Industrial Services. Cleaning and maintenance company OneSource Services drew the attention of a larger company that acquired it at an attractive premium in November. Peerless Manufacturing manufactures filtration and air pollution abatement products. Growing earnings in a more environmentally conscious world seemed to draw investors to the stock. We trimmed our position between July and December.

GOOD IDEAS AT THE TIME
2007 Net Realized and Unrealized Investment Loss*

 
 

 
  First Acceptance $1,679,633     

 
  Jupitermedia Corporation 1,458,780     

 
  Bimini Capital Management Cl. A 1,425,007     

 
  Stein Mart 1,359,206     

 
  InPhonic 1,342,542     

 
  *Net of dividends  
   
1Reflects the cumulative total return of an investment made by a stockholder who purchased one share at inception ($7.50 IPO), reinvested distributions as indicated and fully participated in the primary subscription of the 1994 rights offering.
2Reflects the actual market price of one share as it traded on Nasdaq and, beginning 12/1/03, on the NYSE.
 
 
   
   
    FUND INFORMATION AND
  PORTFOLIO DIAGNOSTICS
 
    Fund Net Assets $331 million   
 
    Symbol  
      Market Price RMT   
      NAV XOTCX   
 
    Net Leverage 12%   
 
    Turnover Rate 41%   
 
 

Average Market Capitalization*

$293 million   
 
    Weighted Average P/E Ratio** 17.4x   
 
    Weighted Average P/B Ratio 1.7x   
 
    Weighted Average Portfolio Yield 0.9%   
 
 
  Net leverage is the percentage, in excess of 100%, of the total    value of equity type investments, divided by net assets,    excluding preferred stock.
   *Geometrically calculated
 

**The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (3% of portfolio holdings as of 12/31/07).

   
   
    CAPITAL STRUCTURE
  Publicly Traded Securities Outstanding
  at 12/31/07 at NAV or Liquidation Value
 
    24.6 million shares
  of Common Stock
$331 million  
 
    6.00% Cumulative
  Preferred Stock
$60 million  
 
   
    RISK/RETURN COMPARISON
  Five-Year Period Ended 12/31/07
 
    Average Annual
Total Return
Standard Deviation Return
Efficiency*
 
    RMT (NAV) 19.42% 14.37 1.35
 
    Russell 2000 16.25     14.44 1.13
 
 
*Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period.
   
 
   
   
   
   
   
 

 

2007 Annual Report to Stockholders   |   15



 
 

 

AVERAGE ANNUAL NAV TOTAL RETURNS
Through 12/31/07


Fourth Quarter 2007*

  -3.64 %

July–December 2007*

  -3.21  

One-Year

              12.22  

Three-Year

              13.90  

Five-Year

              24.15  

10-Year

              13.28  

Since Inception (11/1/96)

    14.15  

* Not annualized.
 Royce & Associates assumed investment management    responsibility for the Fund on 11/1/96.
     

CALENDAR YEAR NAV TOTAL RETURNS


Year

  FUND     Year     FUND  

2007

  12.2 %   2001     10.0 %

2006

  16.3     2000     20.9  

2005

  13.3     1999     8.7  

2004

  29.2     1998     -6.8  

2003

  54.3     1997     20.5  

2002

  -12.5              

                   

TOP 10 POSITIONS
% of Net Assets Applicable
to Common Stockholders


Australian Government 7.5% Bond

  5.4 %

New Zealand Government 6.00% Bond

  4.6  

South Africa Government 10.00% Bond

  3.5  

Unit Corporation

  3.4  

Metal Management

  3.3  

Trican Well Service

  3.3  

Reliance Steel & Aluminum

  3.3  

Thor Industries

  3.2  

Schnitzer Steel Industries Cl. A

  3.1  

Lincoln Electric Holdings

  3.0  

                   
                   

PORTFOLIO SECTOR BREAKDOWN
% of Net Assets Applicable
to Common Stockholders


Natural Resources

  26.7 %

Industrial Products

  21.6  

Consumer Products

  13.1  

Industrial Services

  9.7  

Technology

  6.2  

Financial Intermediaries

  4.7  

Health

  4.7  

Financial Services

  1.5  

Bonds

  13.5  

Cash and Cash Equivalents

  13.4  

 
 
 
 
 
 





Royce Focus Trust

Manager’s Discussion
A dynamic first half and relatively stable second half added up to a very successful year for Royce Focus Trust (FUND) on both an absolute and relative basis. For the calendar year, FUND gained 12.2% on a net asset value (NAV) basis and 3.0% on a market price basis, both results well ahead of its small-cap benchmark, the Russell 2000, which lost 1.6% in 2007. After posting impressive first-half returns—up 15.9% on a net asset value (NAV) basis and 8.6% on a market price basis, versus the Russell 2000’s gain of 6.5%, for the same period—the Fund managed well amid the third quarter’s volatility. FUND was up 0.4% on an NAV basis and down 5.3% on a market price basis while its benchmark declined 3.1%.
         The fourth quarter saw more widespread losses in the market as a whole, though small-cap stocks continued to be among the hardest hit. The Russell 2000 lost 4.6% between October and December, while the Fund was down 3.6% on an NAV basis and up 0.1% on a market price basis. The portfolio’s down-market strength can best be seen in its performance from the small-cap peak on 7/13/07 through 12/31/07, when it lost 7.4% on an NAV basis and 7.8% on a market price basis while the Russell 2000 fell 9.9%.
     From the previous small-cap market peak on 3/9/00 through 12/31/07, FUND returned 237.2% on an NAV basis and 305.2% on a market price basis, versus a 39.5% result for the small-cap index. The Fund also handily outpaced the Russell 2000 during the bullish phase from the small-cap market trough on 10/9/02 through 12/31/07, gaining 254.5% on an NAV basis and 277.9% on a market price basis, while the Russell 2000 was up 149.5% for the same period. These strong market cycle results played a major role 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 beat the index for the one-, three-, five-, 10- year and since-inception of our management (11/1/96) periods ended 12/31/07. FUND’s NAV average annual total return since the inception of our management was 14.2%.
     Although five sectors posted net losses, declines on a dollar basis were small. At the individual holding level, KKR Financial disappointed. The firm is run by experienced investment bankers whose business plan appealed to our contrarian nature when we first heard it in spring 2007. KKR Financial was ready for the calamitous collapse of the subprime
     
   

GOOD IDEAS THAT WORKED
2007 Net Realized and Unrealized Investment Return*

   
    Schnitzer Steel Industries Cl. A   $3,691,814
   
    IPSCO   3,396,454
   
    Florida Rock Industries   2,290,728
   
    Chaparral Steel   2,085,186
   
    Woodward Governor   2,075,208
   
    *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 primarily in small-cap companies, which may involve considerably more risk than investing in a more diversified portfolio of larger-cap companies. Standard deviation is a statistical measure within which a fund’s total returns have varied over time. The greater the standard deviation, the greater a fund’s volatility.

16  |   2007 Annual Report to Stockholders



 
 
 
Performance and Portfolio Review



market and related credit crunch. They held ample highest-grade mortgage paper with which to weather the predicted storm. What the firm—and we—failed to account for was how difficult life would be even for parties holding high-quality debt in the current environment. Their mortgage holdings were suddenly devalued and the company’s levered positions only exacerbated its difficulties. In the otherwise-profitable precious metals and mining industry within the Natural Resources sector, Gammon Gold also showed net losses for the year. Lower-than-expected production at this early stage producer seemed to keep investors away in 2007. We sold some shares in October before purchasing more shares in November, mostly content to wait for operational improvements.
      The Fund’s strongest dollar-based net gains came from the Industrial Products sector, which more than tripled the net gain of the next best-performing sector, Natural Resources. Each of the Fund’s top five performers—and seven of its top ten—were Industrial Products holdings. After posting stronger-than-expected fiscal third-quarter earnings in July, the share price of recycling and scrap metal business Schnitzer Steel Industries began to soar, though it moved a little
     
closer to earth in the fourth quarter. We trimmed our position from September through December. 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. 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 company was acquired by a larger competitor at a substantial premium. We finished selling our stake in April.

GOOD IDEAS AT THE TIME
2007 Net Realized and Unrealized Investment Loss*

 
 

 
  KKR Financial $2,108,348     

 
  Gammon Gold 1,823,204     

 
  Knight Capital Group Cl. A 1,346,523     

 
  Arkansas Best 1,137,072     

 
  Winnebago Industries 1,098,220     

 
  *Net of dividends  
   
1Royce & Associates assumed investment management responsibility for the Fund on 11/1/96.
2Reflects the cumulative total return experience of a continuous common stockholder who reinvested all distributions
  as indicated and fully participated in the primary subscription of the 2005 rights offering.
3Reflects the actual market price of one share as it traded on Nasdaq.
 
 
   
   
    FUND INFORMATION AND
  PORTFOLIO DIAGNOSTICS
 
    Fund Net Assets $166 million   
 
    Symbol  
      Market Price FUND   
      NAV XFUNX   
 
    Net Leverage 2%   
 
    Turnover Rate 62%   
 
 

Average Market Capitalization*

$1,290 million   
 
    Weighted Average P/E Ratio** 12.4x   
 
    Weighted Average P/B Ratio 2.4x   
 
    Weighted Average Portfolio Yield 4.0%   
 
 
  Net leverage is the percentage, in excess of 100%, of the total    value of equity type investments, divided by net assets,    excluding preferred stock.
   *Geometrically calculated
 

**The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (10% of portfolio holdings as of 12/31/07).

   
   
    CAPITAL STRUCTURE
  Publicly Traded Securities Outstanding
  at 12/31/07 at NAV or Liquidation Value
 
    18.6 million shares
  of Common Stock
$166 million  
 
    6.00% Cumulative
  Preferred Stock
$25 million  
 
   
    RISK/RETURN COMPARISON
  Five-Year Period Ended 12/31/07
 
    Average Annual
Total Return
Standard Deviation Return
Efficiency*
 
    FUND (NAV) 24.15% 15.56 1.55
 
    Russell 2000 16.25     14.44 1.13
 
 
*Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period.
   
 
   
   
   
   
   
 

 

2007 Annual Report to Stockholders   |   17



History Since Inception


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

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

12/31/07       $ 21,922           8,889   $ 175,469   $ 165,158  

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

12/31/07       $ 8,900           3,836   $ 51,709   $ 45,802  

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

12/31/07       $ 7,044           3,103   $ 27,679   $ 27,834  

*   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, values are stated as of December 31 of the year indicated, after reinvestment of distributions.

18  |   2007 Annual Report to Stockholders



Distribution Reinvestment and Cash Purchase Options


Why should I reinvest my distributions?
By reinvesting distributions, a stockholder can maintain an undiluted investment in the Fund. The regular reinvestment of distributions has a significant impact on stockholder returns. In contrast, the stockholder who takes distributions in cash is penalized when shares are issued below net asset value to other stockholders.
 
How does the reinvestment of distributions from the Royce closed-end funds work?
The Funds automatically issue shares in payment of distributions unless you indicate otherwise. The shares are generally issued at the lower of the market price or net asset value on the valuation date.
 
How does this apply to registered stockholders?
If your shares are registered directly with a Fund, your distributions are automatically reinvested unless you have otherwise instructed the Funds’ transfer agent, Computershare, in writing. A registered stockholder also has the option to receive the distribution in the form of a stock certificate or in cash if Computershare is properly notified.
 
What if my shares are held by a brokerage firm or a bank?
If your shares are held by a brokerage firm, bank, or other intermediary as the stockholder of record, you should contact your brokerage firm or bank to be certain that it is automatically reinvesting distributions on your behalf. If they are unable to reinvest distributions on your behalf, you should have your shares registered in your name in order to participate.
 
What other features are available for registered stockholders?
The Distribution Reinvestment and Cash Purchase Plans also allow registered stockholders to make optional cash purchases of shares of a Fund’s common stock directly through Computershare on a monthly basis, and to deposit certificates representing your Fund shares with Computershare for safekeeping. The Funds’ investment adviser is absorbing all commissions on optional cash purchases under the Plans through December 31, 2008.
How do the Plans work for registered stockholders?
Computershare maintains the accounts for registered stockholders in the Plans and sends written confirmation of all transactions in the account. Shares in the account of each participant will be held by Computershare in non-certificated form in the name of the participant, and each participant will be able to vote those shares at a stockholder meeting or by proxy. A participant may also send other stock certificates held by them to Computershare to be held in non-certificated form. There is no service fee charged to participants for reinvesting distributions. If a participant elects to sell shares from a Plan account, Computershare will deduct a $2.50 fee plus brokerage commissions from the sale transaction. If a nominee is the registered owner of your shares, the nominee will maintain the accounts on your behalf.
 
How can I get more information on the Plans?
You can call an Investor Services Representative at (800) 221-4268 or you can request a copy of the Plan for your Fund from Computershare. All correspondence (including notifications) should be directed to: [Name of Fund] Distribution Reinvestment and Cash Purchase Plan, c/o Computershare, PO Box 43010, Providence, RI 02940-3010, telephone (800) 426-5523.

2007 Annual Report to Stockholders   |  19



Royce Value Trust



 
Schedule of Investments
 

    SHARES   VALUE  
COMMON STOCKS – 113.4%            
             
Consumer Products – 4.9%            
Apparel, Shoes and Accessories - 1.8%            

Brown Shoe Company

  15,600   $ 236,652  

Kenneth Cole Productions Cl. A

  35,000     612,150  

Columbia Sportswear

  34,600     1,525,514  

Delta Apparel b

  580,760     4,152,434  

Jos. A. Bank Clothiers a,c

  5,800     165,010  

K-Swiss Cl. A

  110,000     1,991,000  

Lazare Kaplan International a

  103,600     842,268  

Polo Ralph Lauren Cl. A

  12,500     772,375  

Quiksilver a,c

  19,000     163,020  

Skechers U.S.A. Cl. A a,c

  5,500     107,305  

Tandy Brands Accessories

  13,200     128,700  

Timberland Company Cl. A a,c

  5,000     90,400  

Tod’s

  30,000     2,091,909  

Warnaco Group (The) a,c

  4,900     170,520  

Weyco Group

  307,992     8,469,780  
       
          21,519,037  
       
Collectibles - 0.6%            

Leapfrog Enterprises Cl. A a,c

  175,000     1,177,750  

RC2 Corporation a

  132,600     3,722,082  

Russ Berrie & Company a

  124,300     2,033,548  
       
          6,933,380  
       
Food/Beverage/Tobacco - 0.2%            

Hain Celestial Group a,c

  37,800     1,209,600  

Hershey Creamery

  709     1,471,175  
       
          2,680,775  
       
Health, Beauty and Nutrition - 0.1%            

NutriSystem a,c

  5,000     134,900  

Sally Beauty Holdings a,c

  194,600     1,761,130  
       
          1,896,030  
       
Home Furnishing and Appliances - 1.5%            

Aaron Rents

  4,500     86,580  

DTS a,c

  64,100     1,639,037  

Ekornes

  110,000     1,933,701  

Ethan Allen Interiors

  50,800     1,447,800  

Hunter Douglas

  23,300     1,718,519  

Kimball International Cl. B

  286,180     3,920,666  

La-Z-Boy c

  68,200     540,826  

Lewis Group

  425,000     2,849,445  

Rational

  14,900     3,048,318  

Universal Electronics a,c

  10,000     334,400  
       
          17,519,292  
       
Household Products/Wares - 0.1%            

Blyth

  14,700     322,518  
       
Sports and Recreation - 0.6%            

Beneteau

  100,000     2,547,785  

Coachmen Industries c

  47,700     283,815  

Monaco Coach

  166,650     1,479,852  

Sturm, Ruger & Company a

  272,900     2,259,612  

Thor Industries

  26,100     992,061  
       
          7,563,125  
       
Total (Cost $49,543,275)         58,434,157  
       
Consumer Services – 3.7%            
Direct Marketing - 0.1%            

Takkt

  115,000     1,998,743  
       
    SHARES   VALUE  
Leisure and Entertainment - 0.1%            

Shuffle Master a,c

  15,000   $ 179,850  
       
Media and Broadcasting - 0.1%            

Cox Radio Cl. A a,c

  23,000     279,450  

Discovery Holding Company Cl. B a,c

  36,600     931,470  
       
          1,210,920  
       
Online Commerce - 0.1%            

FTD Group

  55,000     708,400  
       
Restaurants and Lodgings - 0.9%            

Benihana Cl. A a,c

  6,600     84,150  

CEC Entertainment a,c

  184,300     4,784,428  

Jamba a,c

  18,600     68,820  

Krispy Kreme Doughnuts a,c

  26,400     83,424  

Morgans Hotel Group a,c

  90,000     1,735,200  

Steak n Shake a

  198,000     2,158,200  

Tim Hortons

  65,000     2,400,450  
       
          11,314,672  
       
Retail Stores - 2.3%            

America’s Car-Mart a,c

  95,400     1,197,270  

BJ’s Wholesale Club a,c

  4,300     145,469  

Blockbuster Cl. A a,c

  27,000     105,300  

Build-A-Bear Workshop a,c

  10,000     139,500  

Bulgari

  300,000     4,174,010  

CarMax a,c

  50,000     987,500  

Charlotte Russe Holding a

  8,100     130,815  

Children’s Place Retail Stores a

  13,670     354,463  

DSW Cl. A a,c

  8,700     163,212  

Dress Barn (The) a,c

  287,280     3,593,873  

Fielmann

  27,533     1,808,645  

Fred’s Cl. A

  50,000     481,500  

Gander Mountain a,c

  53,300     262,769  

Gymboree Corporation a,c

  5,300     161,438  

Hot Topic a,c

  29,000     168,780  

99 Cents Only Stores a,c

  95,000     756,200  

Pier 1 Imports a,c

  1,000,000     5,230,000  

Stein Mart

  182,800     866,472  

Tiffany & Co.

  125,000     5,753,750  

Urban Outfitters a,c

  27,000     736,020  

West Marine a

  131,100     1,177,278  

Wet Seal (The) Cl. A a,c

  162,000     377,460  
       
          28,771,724  
       
Other Consumer Services - 0.1%            

Knot (The) a,c

  15,000     239,100  
       
Total (Cost $44,883,463)         44,423,409  
       
Diversified Investment Companies – 0.2%            
Closed-End Funds - 0.2%            

Central Fund of Canada Cl. A

  181,500     1,967,460  
       
Total (Cost $1,297,400)         1,967,460  
       
Financial Intermediaries – 11.7%            
Banking - 4.4%            

Ameriana Bancorp

  40,000     343,200  

BB Holdings a

  289,400     1,382,312  

BOK Financial

  164,227     8,490,536  

Banca Finnat Euramerica

  210,630     268,762  

Bank of N.T. Butterfield & Son

  371,250     6,775,313  

Bank Sarasin & Cie Cl. B

  125     589,217  

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



December 31, 2007



 
 
 

    SHARES   VALUE  
Financial Intermediaries (continued)            
Banking (continued)            

Banque Privee Edmond de Rothschild

  17   $ 653,364  

CFS Bancorp

  265,000     3,879,600  

Cadence Financial

  40,300     587,977  

Commercial National Financial

  54,900     1,033,218  

Farmers & Merchants Bank of Long Beach

  1,266     8,355,600  

Hawthorn Bancshares

  44,400     1,110,000  

Heritage Financial

  12,915     257,008  

HopFed Bancorp

  112,500     1,658,250  

Jefferson Bancshares

  32,226     325,483  

Mechanics Bank

  200     3,610,000  

Nexity Financial a,c

  147,599     980,057  

Old Point Financial

  25,000     508,750  

Timberland Bancorp b

  469,200     5,714,856  

Tompkins Financial

  17,545     680,746  

Vontobel Holding

  12,000     581,341  

W Holding Company

  935,400     1,131,834  

Whitney Holding

  40,500     1,059,075  

Wilber Corporation

  103,900     909,125  

Wilmington Trust

  31,000     1,091,200  

Yadkin Valley Financial

  3,800     58,026  
       
          52,034,850  
       
Insurance - 3.8%            

Alleghany Corporation a

  15,318     6,157,836  

Aspen Insurance Holdings

  64,000     1,845,760  

Erie Indemnity Cl. A

  139,900     7,259,411  

Greenlight Capital Re Cl. A a,c

  80,500     1,673,595  

IPC Holdings

  27,000     779,490  

Leucadia National

  44,940     2,116,674  

MBIA

  69,200     1,289,196  

Markel Corporation a

  7,200     3,535,920  

Montpelier Re Holdings

  66,000     1,122,660  

NYMAGIC

  85,200     1,970,676  

ProAssurance Corporation a,c

  38,070     2,090,804  

RLI

  99,724     5,663,326  

Security Capital Assurance

  30,000     116,700  

Stewart Information Services

  103,800     2,708,142  

Wesco Financial

  4,750     1,933,250  

White Mountains Insurance Group

  9,000     4,626,450  

Zenith National Insurance

  2,000     89,460  
       
          44,979,350  
       
Real Estate Investment Trusts - 0.1%            

Gladstone Commercial

  34,700     608,638  
       
Securities Brokers - 2.2%            

Broadpoint Securities Group a,c

  200,100     236,118  

Cowen Group a,c

  32,000     304,320  

Duff & Phelps Cl. A a,c

  5,000     98,400  

DundeeWealth

  33,300     606,988  

E*TRADE Financial a,c

  75,000     266,250  

FBR Capital Markets a,c

  290,600     2,783,948  

HQ AB

  24,000     638,989  

Interactive Brokers Group Cl. A a,c

  79,400     2,566,208  

Investment Technology Group a,c

  30,400     1,446,736  

KBW a,c

  50,000     1,279,500  

Knight Capital Group Cl. A a,c

  229,700     3,307,680  

LaBranche & Co a

  137,000     690,480  

Lazard Cl. A

  176,700     7,188,156  
    SHARES   VALUE  

optionsXpress Holdings

  53,000   $ 1,792,460  

Phatra Securities

  575,000     583,832  

Piper Jaffray a,c

  10,000     463,200  

Shinko Securities

  464,300     1,924,747  
       
          26,178,012  
       
Other Financial Intermediaries - 1.2%            

AP Alternative Assets L.P.

  298,600     4,463,068  

KKR Financial

  401,404     5,639,726  

KKR Private Equity Investors LLP

  105,000     1,910,503  

Kohlberg Capital

  179,900     2,158,800  
       
          14,172,097  
       
Total (Cost $111,770,228)         137,972,947  
       
Financial Services – 13.7%            
Diversified Financial Services - 1.3%            

AmeriCredit Corporation a,c

  18,870     241,347  

Centerline Holding Company

  59,600     454,152  

Close Brothers Group

  15,000     281,921  

CompuCredit Corporation a,c

  12,200     121,756  

Encore Capital Group a

  30,000     290,400  

FCStone Group a

  950     43,728  

MarketAxess Holdings a

  67,000     859,610  

MoneyGram International

  387,300     5,952,801  

Municipal Mortgage & Equity

  40,300     598,052  

Ocwen Financial a,c

  173,600     961,744  

Portfolio Recovery Associates

  69,100     2,741,197  

World Acceptance a,c

  121,700     3,283,466  
       
          15,830,174  
       
Information and Processing - 1.8%            

Deluxe Corporation

  3,500     115,115  

FactSet Research Systems

  35,350     1,968,995  

Global Payments

  68,500     3,186,620  

Interactive Data

  134,300     4,433,243  

MSCI Cl. A a,c

  55,000     2,112,000  

PRG-Schultz International a,c

  14,420     123,579  

SEI Investments

  282,400     9,084,808  
       
          21,024,360  
       
Insurance Brokers - 1.3%            

Brown & Brown

  115,000     2,702,500  

Crawford & Company Cl. A a

  289,200     1,012,200  

Crawford & Company Cl. B a

  162,300     673,545  

eHealth a

  25,000     802,750  

Enstar Group a,c

  7,000     856,940  

Gallagher (Arthur J.) & Co.

  111,200     2,689,928  

Hilb Rogal & Hobbs

  155,050     6,290,379  

National Financial Partners

  22,000     1,003,420  
       
          16,031,662  
       
Investment Management - 8.7%            

Aberdeen Asset Management

  855,000     2,850,593  

ADDENDA Capital

  150,900     3,440,144  

Affiliated Managers Group a,c

  15,600     1,832,376  

AllianceBernstein Holding L.P.

  333,100     25,065,775  

Anima

  700,000     2,172,692  

Ashmore Group

  80,000     424,532  

Australian Wealth Management

  231,000     508,802  

Azimut Holding

  40,000     512,870  

BKF Capital Group a,c

  227,050     504,051  

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



Royce Value Trust



 
Schedule of Investments
 
    SHARES   VALUE  
Financial Services (continued)            
Investment Management (continued)            

Calamos Asset Management Cl. A

  45,000   $ 1,340,100  

Candover Investments

  21,000     744,702  

CapMan Cl. B

  550,000     2,607,310  

Coronation Fund Managers

  250,000     297,436  

Deutsche Beteiligungs

  90,000     2,815,084  

Eaton Vance

  150,200     6,820,582  

Equity Trustees

  19,392     536,693  

Evercore Partners Cl. A

  283,100     6,100,805  

F&C Asset Management

  150,000     571,697  

Federated Investors Cl. B

  161,900     6,663,804  

Fiducian Portfolio Services

  150,000     363,039  

GAMCO Investors Cl. A

  158,600     10,975,120  

GP Investments BDR

  85,000     3,824,908  

Gimv

  12,200     829,317  

Highbury Financial a,c

  333,350     1,500,075  

JAFCO

  37,300     1,221,810  

MVC Capital

  473,200     7,637,448  

New Star Asset Management Group

  93,000     327,155  

Onex Corporation

  50,000     1,772,633  

Perpetual

  10,000     582,339  

RHJ International a

  177,500     2,899,795  

Rathbone Brothers

  24,500     510,301  

SPARX Group

  6,900     3,281,794  

Schroders

  21,000     540,357  

Trust Company

  55,000     564,806  
       
          102,640,945  
       
Specialty Finance - 0.6%            

Credit Acceptance a,c

  216,601     4,477,143  

MCG Capital

  138,000     1,599,420  

NGP Capital Resources

  50,000     781,500  
       
          6,858,063  
       
Total (Cost $131,055,254)         162,385,204  
       
Health – 7.6%            
Commercial Services - 1.3%            

PAREXEL International a,c

  313,700     15,151,710  
       
Drugs and Biotech - 2.0%            

Adolor Corporation a,c

  172,000     791,200  

Affymetrix a,c

  10,000     231,400  

Biovail Corporation

  41,200     554,552  

Endo Pharmaceuticals Holdings a,c

  155,000     4,133,850  

Gene Logic a,c

  589,900     483,718  

Genitope Corporation a,c

  150,000     111,000  

Human Genome Sciences a,c

  90,000     939,600  

K-V Pharmaceutical Cl. A a,c

  51,500     1,469,810  

Medicines Company (The) a,c

  20,000     383,200  

Millennium Pharmaceuticals a,c

  100,000     1,498,000  

Mylan Laboratories c

  52,200     733,932  

Myriad Genetics a,c

  50,000     2,321,000  

Origin Agritech a

  28,600     189,046  

Perrigo Company

  191,950     6,720,170  

Pharmacyclics a,c

  383,000     555,350  

Pharmanet Development Group a,c

  10,000     392,100  

QLT a

  114,070     504,189  

Sinovac Biotech a,c

  27,200     139,264  

Sunesis Pharmaceuticals a,c

  582,000     1,146,540  

VIVUS a,c

  163,300     845,894  
       
          24,143,815  
       
    SHARES   VALUE  
Health Services - 1.1%            

Albany Molecular Research a

  85,000   $ 1,222,300  

Cross Country Healthcare a

  30,000     427,200  

Eclipsys Corporation a,c

  20,000     506,200  

Gentiva Health Services a

  30,150     574,056  

HMS Holdings a,c

  50,000     1,660,500  

Lincare Holdings a

  52,562     1,848,080  

MedQuist a

  73,893     694,594  

On Assignment a,c

  375,400     2,631,554  

Paramount Acquisition (Units) a

  280,000     2,142,000  

Res-Care a,c

  65,460     1,646,974  
       
          13,353,458  
       
Medical Products and Devices - 3.0%            

Allied Healthcare Products a,c

  201,112     1,458,062  

ArthroCare Corporation a,c

  10,000     480,500  

Atrion Corporation

  15,750     2,008,125  

Bruker BioSciences a

  370,200     4,923,660  

Coloplast Cl. B

  17,000     1,459,196  

CONMED Corporation a,c

  81,500     1,883,465  

Golden Meditech

  113,600     50,339  

IDEXX Laboratories a

  158,000     9,263,540  

Invacare Corporation

  103,100     2,598,120  

STERIS Corporation

  98,600     2,843,624  

Urologix a,c

  445,500     516,780  

Waters Corporation a

  75,990     6,008,529  

Young Innovations

  62,550     1,495,571  

Zoll Medical a,c

  40,400     1,079,488  
       
          36,068,999  
       
Personal Care - 0.2%            

Nutraceutical International a

  22,800     302,100  

USANA Health Sciences a,c

  38,900     1,442,412  
       
          1,744,512  
       
Total (Cost $54,659,716)         90,462,494  
       
             
Industrial Products – 19.3%            

Automotive - 1.6%

           

Copart a,c

  158,100     6,727,155  

ElringKlinger

  20,000     2,485,463  

Fuel Systems Solutions a,c

  22,500     321,525  

International Textile Group a

  85,000     255,000  

LKQ Corporation a,c

  375,000     7,882,500  

Quantam Fuel Systems

           

Technologies Worldwide a,c

  15,500     7,440  

SORL Auto Parts a,c

  26,700     195,444  

Superior Industries International

  52,000     944,840  
       
          18,819,367  
       
Building Systems and Components - 1.3%            

Armstrong World Industries a,c

  4,100     164,451  

Decker Manufacturing

  6,022     207,759  

Heywood Williams Group a

  958,837     873,550  

NCI Building Systems a

  10,000     287,900  

Preformed Line Products

  91,600     5,450,200  

Simpson Manufacturing

  250,800     6,668,772  

Somfy

  6,000     1,756,197  
       
          15,408,829  
       
Construction Materials - 1.5%            

Ash Grove Cement Cl. B

  50,518     12,680,018  

Duratex

  61,000     1,476,542  

Nice

  200,000     1,066,144  

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



December 31, 2007



 
 
 

    SHARES   VALUE  
Industrial Products (continued)            
Construction Materials (continued)            

Pretoria Portland Cement Company

  300,000   $ 1,916,049  

USG Corporation a,c

  25,000     894,750  
       
          18,033,503  
       
Industrial Components - 1.4%            

Barnes Group

  20,000     667,800  

CLARCOR

  83,500     3,170,495  

Donaldson Company

  92,800     4,304,064  

GrafTech International a,c

  64,790     1,150,022  

PerkinElmer

  135,000     3,512,700  

Powell Industries a

  92,400     4,072,068  

II-VI a

  13,500     412,425  
       
          17,289,574  
       
Machinery - 6.8%            

Astec Industries a

  3,900     145,041  

Baldor Electric

  62,900     2,117,214  

Bell Equipment

  160,000     1,236,260  

Burnham Holdings Cl. B

  36,000     520,200  

Coherent a,c

  243,500     6,104,545  

Diebold

  73,600     2,132,928  

Exco Technologies

  91,000     363,281  

Federal Signal

  58,600     657,492  

Franklin Electric

  104,800     4,010,696  

Graco

  106,825     3,980,299  

Hardinge

  26,193     439,519  

Haulotte Group

  20,000     593,769  

IDEX Corporation

  54,000     1,951,020  

Intermec a,c

  23,000     467,130  

Lincoln Electric Holdings

  188,680     13,430,242  

Manitou BF

  65,000     2,972,798  

Mueller Water Products Cl. A

  72,500     690,200  

Nordson Corporation

  172,200     9,980,712  

OSG Corporation

  20,000     218,780  

Pfeiffer Vacuum Technology

  49,000     3,925,300  

Rofin-Sinar Technologies a,c

  256,000     12,316,160  

Takatori Corporation

  40,000     188,640  

Vacon

  50,000     2,026,232  

Williams Controls a,c

  37,499     641,608  

Woodward Governor

  144,800     9,839,160  
       
          80,949,226  
       
Metal Fabrication and Distribution - 1.7%            

Commercial Metals

  36,600     1,077,870  

CompX International Cl. A

  292,300     4,273,426  

Gerdau Ameristeel

  61,100     868,842  

Kaydon Corporation

  150,800     8,224,632  

Metal Management

  3,500     159,355  

NN

  197,100     1,856,682  

RBC Bearings a,c

  45,000     1,955,700  

Reliance Steel & Aluminum

  25,920     1,404,864  

Sims Group

  860     20,155  
       
          19,841,526  
       
Miscellaneous Manufacturing - 3.0%            

Brady Corporation Cl. A

  228,400     8,014,556  

Matthews International Cl. A

  100,000     4,687,000  

Mettler-Toledo International a,c

  28,700     3,266,060  

Myers Industries

  30,499     441,321  

Peerless Manufacturing a

  252,600     10,404,594  
    SHARES   VALUE  

Raven Industries

  86,200   $ 3,309,218  

Semperit AG Holding

  46,275     1,688,800  

Solar Integrated Technologies a

  75,000     149,279  

Synalloy Corporation

  198,800     3,417,372  
       
          35,378,200  
       
Paper and Packaging - 0.5%            

Guala Closures

  300,000     1,811,654  

Mayr-Melnhof Karton

  36,000     3,892,304  

Peak International a

  408,400     906,648  
       
          6,610,606  
       
Specialty Chemicals and Materials - 1.3%            

Aceto Corporation

  119,710     957,680  

American Vanguard

  26,666     462,655  

Cabot Corporation

  207,500     6,918,050  

Calgon Carbon a,c

  6,400     101,696  

Fuel Tech a,c

  10,000     226,500  

Hawkins

  206,878     3,103,170  

Lydall a

  35,500     373,460  

Schulman (A.)

  143,100     3,083,805  

Sensient Technologies

  22,000     622,160  

Spartech Corporation

  5,000     70,500  
       
          15,919,676  
       
Textiles - 0.1%            

Unifi a

  145,100     351,142  
       
Other Industrial Products - 0.1%            

Distributed Energy Systems a

  32,000     12,800  
       
Total (Cost $118,482,732)         228,614,449  
       
Industrial Services – 15.2%            
Advertising and Publishing - 1.5%            

Focus Media Holding ADR a,c

  71,900     4,084,639  

Interpublic Group of Companies a,c

  510,000     4,136,100  

Lamar Advertising Cl. A

  38,000     1,826,660  

MDC Partners Cl. A a,c

  60,000     584,400  

Scholastic Corporation a,c

  130,000     4,535,700  

ValueClick a,c

  45,000     985,500  

Voyager Learning a,c

  150,000     1,050,000  
       
          17,202,999  
       
Commercial Services - 5.7%            

Allied Waste Industries a

  188,800     2,080,576  

Anacomp Cl. A a

  24,000     56,400  

Animal Health International a,c

  30,000     369,000  

Canadian Solar a,c

  50,000     1,407,500  

ChinaCast Education a,c

  5,000     34,200  

Convergys Corporation a,c

  121,000     1,991,660  

Corinthian Colleges a,c

  106,500     1,640,100  

Diamond Management &

           

Technology Consultants

  80,400     584,508  

First Advantage Cl. A a,c

  5,000     82,350  

Forrester Research a

  40,300     1,129,206  

Headwaters a,c

  13,100     153,794  

Hewitt Associates Cl. A a

  208,720     7,991,889  

ITT Educational Services a

  72,000     6,139,440  

Iron Mountain a,c

  234,262     8,672,379  

Landauer

  117,900     6,113,115  

Learning Tree International a

  53,400     1,226,064  

MPS Group a

  564,600     6,176,724  

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



Royce Value Trust


 
Schedule of Investments
 

    SHARES   VALUE  
Industrial Services (continued)            
Commercial Services (continued)            

MAXIMUS

  127,900   $ 4,938,219  

Monster Worldwide a

  24,800     803,520  

New Horizons Worldwide a

  228,600     365,760  

Sotheby’s

  367,200     13,990,320  

Spherion Corporation a,c

  53,000     385,840  

Steiner Leisure a,c

  2,100     92,736  

TRC Companies a

  3,600     28,800  

TeleTech Holdings a,c

  8,200     174,414  

Travelcenters of America a,c

  2,500     31,250  

Viad Corporation

  9,025     285,010  

Wright Express a,c

  30,000     1,064,700  
       
          68,009,474  
       
Engineering and Construction - 1.6%            

Boskalis Westminster

  40,000     2,429,948  

Comstock Homebuilding Cl. A a,c

  15,000     9,900  

Desarrolladora Homex SAB de CV a,c

  9,800     484,610  

Dycom Industries a,c

  35,500     946,075  

EMCOR Group a,c

  6,500     153,595  

Fleetwood Enterprises a

  234,300     1,401,114  

Insituform Technologies Cl. A a,c

  137,000     2,027,600  

Integrated Electrical Services a,c

  340,400     6,396,116  

KBR a

  140,000     5,432,000  
       
          19,280,958  
       
Food and Tobacco Processors - 0.4%            

Astral Foods

  10,000     222,251  

MGP Ingredients

  127,400     1,200,108  

Performance Food Group a,c

  10,000     268,700  

Seneca Foods Cl. A a,c

  80,000     1,900,000  

Seneca Foods Cl. B a,c

  13,251     293,642  
       
          3,884,701  
       
Industrial Distribution - 2.6%            

Central Steel & Wire

  6,062     3,788,750  

MSC Industrial Direct Cl. A

  74,300     3,006,921  

Manutan International

  6,445     546,249  

Ritchie Bros. Auctioneers

  286,400     23,685,280  
       
          31,027,200  
       
Printing - 0.1%            

Bowne & Co.

  68,100     1,198,560  
       
Transportation and Logistics - 3.3%            

Alexander & Baldwin

  60,000     3,099,600  

American Commercial Lines a,c

  9,900     160,776  

Atlas Air Worldwide Holdings a,c

  20,100     1,089,822  

C. H. Robinson Worldwide

  80,000     4,329,600  

Forward Air

  269,750     8,408,107  

Frozen Food Express Industries

  286,635     1,691,146  

Global Oceanic Carriers a

  10,000     22,582  

Hub Group Cl. A a,c

  174,400     4,635,552  

Landstar System

  96,200     4,054,830  

Patriot Transportation Holding a

  80,300     7,406,069  

UTI Worldwide

  112,900     2,212,840  

Universal Truckload Services a

  115,100     2,205,316  
       
          39,316,240  
       
Total (Cost $103,117,245)         179,920,132  
       
    SHARES   VALUE  
Natural Resources – 9.9%            
Energy Services - 5.1%            

Atwood Oceanics a,c

  29,400   $ 2,947,056  

Cal Dive International a,c

  50,000     662,000  

Carbo Ceramics

  155,200     5,773,440  

Core Laboratories a,c

  10,000     1,247,200  

Ensign Energy Services

  126,300     1,951,543  

Environmental Power a,c

  326,000     1,489,820  

Exterran Holdings a,c

  157,500     12,883,500  

Global Industries a

  54,500     1,167,390  

Helix Energy Solutions Group a,c

  34,226     1,420,379  

Helmerich & Payne

  80,600     3,229,642  

ION Geophysical a,c

  464,500     7,329,810  

National Fuel Gas

  32,500     1,517,100  

Particle Drilling Technologies a

  61,500     158,670  

Pioneer Drilling a

  6,000     71,280  

SEACOR Holdings a,c

  147,000     13,632,780  

Superior Offshore International a,c

  10,000     50,200  

TETRA Technologies a,c

  68,000     1,058,760  

Trico Marine Services a,c

  3,600     133,272  

Willbros Group a,c

  103,800     3,974,502  
       
          60,698,344  
       
Oil and Gas - 1.1%            

Bill Barrett a

  50,000     2,093,500  

Carrizo Oil & Gas a,c

  41,700     2,283,075  

Cimarex Energy

  145,490     6,187,690  

Falcon Oil & Gas a

  360,000     125,842  

Penn Virginia

  32,880     1,434,554  

PetroCorp a,d

  61,400     0  

PetroQuest Energy a,c

  5,000     71,500  

Storm Cat Energy a,c

  330,800     241,484  

W&T Offshore

  25,000     749,000  
       
          13,186,645  
       
Precious Metals and Mining - 2.5%            

Agnico-Eagle Mines

  34,000     1,857,420  

Centerra Gold a

  30,000     382,086  

Etruscan Resources a

  745,900     1,677,793  

Gammon Gold a,c

  198,300     1,588,383  

Golden Star Resources a,c

  175,000     553,000  

Hecla Mining a

  490,500     4,586,175  

IAMGOLD Corporation

  335,620     2,718,522  

International Coal Group a,c

  189,000     1,013,040  

Ivanhoe Mines a,c

  140,000     1,502,200  

Kinross Gold a,c

  110,286     2,029,262  

Metorex a

  650,000     2,065,541  

Northam Platinum

  500,000     2,928,081  

Northgate Minerals a

  100,000     303,000  

NovaGold Resources a

  40,000     326,400  

Pan American Silver a,c

  41,000     1,432,130  

Randgold Resources ADR

  53,000     1,967,890  

Royal Gold

  34,400     1,049,888  

Yamana Gold

  171,635     2,220,957  
       
          30,201,768  
       
Real Estate - 1.2%            

Alico

  27,000     985,500  

Consolidated-Tomoka Land

  13,564     850,192  

PICO Holdings a,c

  75,200     2,528,224  

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



December 31, 2007



 
 
 

    SHARES   VALUE  
Natural Resources (continued)            
Real Estate (continued)            

The St. Joe Company c

  180,100   $ 6,395,351  

Tejon Ranch Company a,c

  70,000     2,859,500  
       
          13,618,767  
       
Total (Cost $68,303,929)         117,705,524  
       
             
Technology – 23.3%            
Aerospace and Defense - 0.9%            

AerCap Holdings a,c

  45,000     939,150  

Aerovironment a

  2,400     58,080  

Astronics Corporation a

  52,400     2,227,000  

Axsys Technologies a,c

  10,000     366,500  

Ducommun a

  117,200     4,453,600  

Hexcel Corporation a,c

  47,500     1,153,300  

Integral Systems

  39,876     927,516  
       
          10,125,146  
       
Components and Systems - 5.8%            

Analogic Corporation

  40,135     2,717,942  

Belden

  57,800     2,572,100  

Benchmark Electronics a,c

  208,200     3,691,386  

Checkpoint Systems a

  56,060     1,456,439  

China Security & Surveillance Technology a,c

  2,000     43,680  

Dionex Corporation a

  81,000     6,711,660  

Electronics for Imaging a,c

  25,000     562,000  

Energy Conversion Devices a,c

  105,500     3,550,075  

Excel Technology a,c

  168,500     4,566,350  

Hutchinson Technology a,c

  47,500     1,250,200  

Imation Corporation

  15,700     329,700  

InFocus Corporation a

  228,100     415,142  

KEMET Corporation a

  95,600     633,828  

Methode Electronics

  50,000     822,000  

Nam Tai Electronics

  16,500     185,955  

Newport Corporation a,c

  592,200     7,574,238  

On Track Innovations a,c

  40,000     144,000  

Perceptron a,c

  397,400     4,200,518  

Plexus Corporation a

  325,700     8,552,882  

Radiant Systems a,c

  32,500     559,975  

Richardson Electronics

  116,700     818,067  

Smart Modular Technologies (WWH) a,c

  13,200     134,376  

TTM Technologies a,c

  221,400     2,581,524  

Technitrol

  311,200     8,894,096  

Teradata Corporation a,c

  35,000     959,350  

Vishay Intertechnology a,c

  186,000     2,122,260  

Zebra Technologies Cl. A a

  76,525     2,655,418  
       
          68,705,161  
       
Distribution - 0.8%            

Agilysys

  165,125     2,496,690  

Anixter International a

  61,795     3,847,975  

Tech Data a,c

  86,500     3,262,780  
       
          9,607,445  
       
Internet Software and Services - 1.3%            

Arbinet-thexchange a,c

  87,200     527,560  

CDC Corporation Cl. A a,c

  12,000     58,440  

CMGI a,c

  173,500     2,271,115  

CNET Networks a,c

  155,400     1,420,356  

CryptoLogic

  68,500     1,202,175  
    SHARES   VALUE  

CyberSource Corporation a,c

  10,000   $ 177,700  

EarthLink a,c

  55,200     390,264  

Internap Network Services a,c

  144,890     1,206,934  

iPass a,c

  268,400     1,089,704  

j2 Global Communications a,c

  43,420     919,201  

Jupitermedia Corporation a,c

  525,000     2,005,500  

Kongzhong Corporation ADR a,c

  8,300     50,547  

Lionbridge Technologies a

  37,500     133,125  

Perficient a,c

  10,000     157,400  

RealNetworks a,c

  256,900     1,564,521  

SkyTerra Communications a

  62,200     422,960  

Stamps.com a

  12,400     151,032  

SupportSoft a

  220,000     979,000  

VeriSign a,c

  24,800     932,728  
       
          15,660,262  
       
IT Services - 3.2%            

Alten a

  64,000     2,444,611  

answerthink a

  655,000     3,170,200  

BearingPoint a,c

  529,100     1,497,353  

Black Box

  47,000     1,699,990  

CACI International Cl. A a,c

  10,000     447,700  

CIBER a

  10,000     61,100  

Cogent Communications Group a,c

  204,200     4,841,582  

Computer Task Group a,c

  101,100     559,083  

Gartner a

  213,000     3,740,280  

Metavante Technologies a,c

  20,000     466,400  

Perot Systems Cl. A a,c

  165,100     2,228,850  

Sapient Corporation a,c

  806,602     7,106,164  

Syntel

  152,679     5,881,195  

TriZetto Group (The) a,c

  219,800     3,817,926  

Yucheng Technologies a,c

  25,900     336,441  
       
          38,298,875  
       
Semiconductors and Equipment - 4.6%            

Actions Semiconductor ADR a,c

  42,200     172,176  

Advanced Energy Industries a

  19,500     255,060  

Applied Micro Circuits a,c

  8,975     78,441  

Axcelis Technologies a

  135,000     621,000  

BE Semiconductor Industries a,c

  58,000     313,200  

Brooks Automation a

  15,152     200,158  

CEVA a

  31,666     385,375  

Cabot Microelectronics a

  131,200     4,711,392  

Cognex Corporation

  236,200     4,759,430  

DSP Group a,c

  115,000     1,403,000  

Diodes a

  297,450     8,944,321  

Dolby Laboratories Cl. A a

  173,900     8,646,308  

Exar Corporation a,c

  232,576     1,853,631  

Fairchild Semiconductor International a

  51,200     738,816  

Himax Technologies ADR

  121,000     516,670  

Image Sensing Systems a,c

  8,310     144,428  

Integrated Device Technology a,c

  23,900     270,309  

International Rectifier a,c

  120,000     4,076,400  

Intevac a,c

  57,450     835,323  

Jazz Technologies (Units) a

  805,000     1,408,750  

Kulicke & Soffa Industries a

  105,800     725,788  

Maxwell Technologies a

  21,500     177,805  

Micrel

  7,600     64,220  

Novellus Systems a,c

  12,000     330,840  

ON Semiconducter a,c

  19,200     170,496  

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



Royce Value Trust


 
Schedule of Investments
 

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

Pericom Semiconductor a,c

  58,000   $ 1,084,600  

Power Integrations a,c

  49,000     1,687,070  

Sanmina-SCI Corporation a,c

  200,000     364,000  

Semitool a

  50,000     434,000  

Staktek Holdings a

  184,700     356,471  

Tessera Technologies a,c

  7,900     328,640  

Trident Microsystems a,c

  17,300     113,488  

TriQuint Semiconductor a,c

  27,900     184,977  

Vaisala Cl. A

  90,000     4,676,314  

Veeco Instruments a,c

  65,000     1,085,500  

Vimicro International ADR a,c

  270,000     1,015,200  

Virage Logic a

  100,000     835,000  
       
          53,968,597  
       
Software - 4.2%            

ACI Worldwide a

  233,150     4,439,176  

ANSYS a,c

  100,000     4,146,000  

Advent Software a,c

  244,300     13,216,630  

Aspen Technology a

  27,100     439,562  

Avid Technology a,c

  71,000     2,012,140  

BEA Systems a,c

  65,610     1,035,326  

Borland Software a,c

  280,000     842,800  

Datasul

  150,000     1,586,811  

Epicor Software a,c

  79,900     941,222  

JDA Software Group a,c

  99,900     2,043,954  

MSC.Software a,c

  50,000     649,500  

ManTech International Cl. A a,c

  119,400     5,232,108  

Net 1 UEPS Technologies a,c

  50,000     1,468,000  

Pegasystems

  25,000     298,250  

PLATO Learning a

  149,642     594,079  

Progress Software a,c

  30,500     1,027,240  

Renaissance Learning

  15,000     210,000  

SPSS a

  179,600     6,449,436  

Sybase a,c

  82,600     2,155,034  

THQ a,c

  25,800     727,302  

Verint Systems a,c

  40,000     782,000  
       
          50,296,570  
       
Telecommunications - 2.5%            

ADTRAN

  65,000     1,389,700  

Adaptec a,c

  2,584,100     8,734,258  

Arris Group a,c

  27,600     275,448  

Catapult Communications a

  87,100     657,605  

China GrenTech ADR a,c

  3,700     32,708  

Comtech Group a,c

  3,500     56,385  

Covad Communications Group a,c

  35,000     30,100  

Foundry Networks a,c

  298,600     5,231,472  

Globalstar a,c

  50,000     400,000  

Globecomm Systems a

  233,700     2,734,290  

Golden Telecom a,c

  40,000     4,038,000  

IDT Corporation

  108,400     856,360  

IDT Corporation Cl. B

  95,000     802,750  

Level 3 Communications a,c

  401,341     1,220,077  

NMS Communications a,c

  380,000     615,600  

Novatel Wireless a,c

  4,300     69,660  

Oplink Communications a,c

  3,500     53,725  

Sycamore Networks a,c

  191,000     733,440  

Tekelec a,c

  8,200     102,500  
    SHARES   VALUE  

Tollgrade Communications a,c

  20,000   $ 160,400  

UTStarcom a,c

  50,000     137,500  

Zhone Technologies a,c

  850,000     994,500  
       
          29,326,478  
       
Total (Cost $215,679,104)         275,988,534  
       
             
Utilities – 0.2%            

CH Energy Group

  44,500     1,982,030  

Southern Union

  11,576     339,871  
       
Total (Cost $2,127,413)         2,321,901  
       
             
Miscellaneous e – 3.7%            
Total (Cost $45,763,150)   5,071,856     43,453,014  
       
             
TOTAL COMMON STOCKS            

(Cost $946,682,909)

        1,343,649,225  
       
             
PREFERRED STOCKS – 0.2%            

Duratex

  45,300     992,274  

Seneca Foods Conv. a,d

  85,000     1,816,875  
       
TOTAL PREFERRED STOCKS            

(Cost $2,098,530)

        2,809,149  
       
             
    PRINCIPAL        
    AMOUNT        
CORPORATE BOND – 0.1%            

Dixie Group 7.00%

           

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

$ 352,000     330,880  
       

(Cost $298,162)

        330,880  
       
             
REPURCHASE AGREEMENTS – 8.0%            
State Street Bank & Trust Company,            

4.00% dated 12/31/07, due 1/2/08,

           

maturity value $24,842,519 (collateralized

           

by obligations of various U.S. Government

           

Agencies, valued at $27,965,000)

           

(Cost $24,837,000)

        24,837,000  
       
             
Lehman Brothers (Tri-Party),            

4.125% dated 12/31/07, due 1/2/08,

           

maturity value $70,016,042 (collateralized

           

by obligations of various U.S. Government

           

Agencies, valued at $71,420,955)

           

(Cost $70,000,000)

        70,000,000  
       
             
TOTAL REPURCHASE AGREEMENTS            

(Cost $94,837,000)

        94,837,000  
       
             
             
COLLATERAL RECEIVED FOR SECURITIES            

LOANED – 13.2%

           
Fannie Mae-Notes 5.20%            

due 9/18/12

  2,317     2,352  
Federal National Mortgage Association-Bonds            

3.75%-5.50%

           

due 7/25/08-2/16/12

  84,536     85,955  
Freddie Mac-Notes 6.01%            

due 4/11/17

  141,291     143,199  

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



December 31, 2007



 
 
 

      PRINCIPAL        
      AMOUNT   VALUE  
COLLATERAL RECEIVED FOR SECURITIES                

LOANED (continued)

               
U.S. Treasury Bonds 2.00%-12.00%                

due 8/15/13-4/15/29

    $ 47,496   $ 47,938  
U.S. Treasury Notes 0.875%-3.625%                

due 11/15/08-1/15/17

      361,382     364,001  
U.S. Treasury Strip-Principal                

due 11/15/18-11/15/21

      7,082     7,082  
Money Market Funds                

State Street Navigator Securities Lending

               

Prime Portfolio (7 day yield-4.884%)

            156,104,190  

(Cost $156,754,717)

         
              156,754,717  
           
                 
TOTAL INVESTMENTS – 134.9%                

(Cost $1,200,671,318)

            1,598,380,971  
                 
LIABILITIES LESS CASH                

AND OTHER ASSETS – (16.3)%

            (193,711,646 )
                 
PREFERRED STOCK – (18.6)%             (220,000,000 )
           
                 
NET ASSETS APPLICABLE TO                

COMMON STOCKHOLDERS – 100.0%

          $ 1,184,669,325  
           


a   Non-income producing.
b  

At December 31, 2007, the Fund owned 5% or more of the Company’s outstanding voting securities thereby making the Company an Affiliated Company as that term is defined in the Investment Company Act of 1940. See notes to financial statements.

c  

All or a portion of these securities were on loan at December 31, 2007. Total market value of loaned securities at December 31, 2007 was $151,159,025.

d  

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.

e  

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 December 31, 2007 market value.

     

INCOME TAX INFORMATION: The cost of total investments for Federal income tax purposes was $1,204,669,842. At December 31, 2007, net unrealized appreciation for all securities was $393,711,129, consisting of aggregate gross unrealized appreciation of $482,509,950 and aggregate gross unrealized depreciation of $88,798,821. The primary differences in book and tax basis cost are the timing of the recognition of losses on securities sold and mark-to-market of Passive Foreign Investment Companies.



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



Royce Value Trust December 31, 2007


Statement of Assets and Liabilities

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

Non-Affiliated Companies (cost $1,095,966,865)

  $ 1,493,676,681  

Affiliated Companies (cost $9,867,453)

    9,867,290  

Total investments at value     1,503,543,971  
Repurchase agreements (at cost and value)     94,837,000  
Cash and foreign currency     65,126  
Receivable for investments sold     4,525,804  
Receivable for dividends and interest     1,159,259  
Prepaid expenses and other assets     219,267  

Total Assets

    1,604,350,427  

LIABILITIES:        
Payable for collateral on loaned securities     156,754,717  
Payable for investments purchased     40,867,310  
Payable for investment advisory fee     1,501,323  
Preferred dividends accrued but not yet declared     288,445  
Accrued expenses     269,307  

Total Liabilities

    199,681,102  

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   $ 1,184,669,325  

ANALYSIS OF NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:        
Common Stock paid-in capital - $0.001 par value per share; 60,008,412 shares outstanding (150,000,000 shares authorized)   $ 770,137,285  
Undistributed net investment income (loss)     (156,056 )
Accumulated net realized gain (loss) on investments and foreign currency     17,254,738  
Net unrealized appreciation (depreciation) on investments and foreign currency     397,721,807  
Preferred dividends accrued but not yet declared     (288,449 )

Net Assets applicable to Common Stockholders (net asset value per share - $19.74)

  $ 1,184,669,325  

*Investments at identified cost (including $156,754,717 of collateral on loaned securities)   $ 1,105,834,318  
 Market value of loaned securities     151,159,025  

28  |  2007 Annual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



Royce Value Trust Year Ended December 31, 2007


Statement of Operations

INVESTMENT INCOME:        
Income:        

Dividends*

       

Non-Affiliated Companies

  $ 12,758,425  

Affiliated Companies

    51,750  

Interest

    8,760,817  

Securities lending

    652,471  

Total income     22,223,463  

Expenses:        

Investment advisory fees

    15,881,749  

Stockholder reports

    381,343  

Custody and transfer agent fees

    220,021  

Directors’ fees

    119,574  

Professional fees

    110,879  

Administrative and office facilities expenses

    103,714  

Other expenses

    172,860  

Total expenses     16,990,140  
Compensating balance credits     (64,195 )

Net expenses     16,925,945  

Net investment income (loss)     5,297,518  

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

Non-Affiliated Companies

    116,339,798  

Affiliated Companies

    5,343,533  
Net change in unrealized appreciation (depreciation) on investments and foreign currency     (56,217,996 )

Net realized and unrealized gain (loss) on investments and foreign currency     65,465,335  

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM INVESTMENT OPERATIONS     70,762,853  

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS     (12,980,000 )

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

RESULTING FROM INVESTMENT OPERATIONS

  $ 57,782,853  
         
* Net of foreign withholding tax of $266,251.        

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



Royce Value Trust


 
Statement of Changes in Net Assets
 
                 
      Year ended       Year ended  
      12/31/07       12/31/06  
                 
INVESTMENT OPERATIONS:                
Net investment income (loss)   $ 5,297,518     $ 6,996,692  
Net realized gain (loss) on investments and foreign currency     121,683,331       110,169,442  
Net change in unrealized appreciation (depreciation) on investments and foreign currency     (56,217,996 )     93,033,099  

Net increase (decrease) in net assets resulting from investment operations     70,762,853       210,199,233  

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:                
Net investment income     (613,954 )     (1,020,228 )
Net realized gain on investments and foreign currency     (12,366,046 )     (11,959,772 )

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

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

RESULTING FROM INVESTMENT OPERATIONS

    57,782,853       197,219,233  

DISTRIBUTIONS TO COMMON STOCKHOLDERS:                
Net investment income     (5,095,420 )     (7,788,658 )
Net realized gain on investments and foreign currency     (102,630,144 )     (91,303,684 )

Total distributions to Common Stockholders     (107,725,564 )     (99,092,342 )

CAPITAL STOCK TRANSACTIONS:                
Reinvestment of distributions to Common Stockholders     54,184,473       50,180,586  

Total capital stock transactions     54,184,473       50,180,586  

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS     4,241,762       148,307,477  

NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:                

Beginning of year

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

End of year (including undistributed net investment income (loss) of $(156,056) at 12/31/07 and                

$(1,605,284) at 12/31/06)

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

30  |  2007 Annual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



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.

  Years ended December 31,
   
    2007       2006       2005       2004       2003  

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

INVESTMENT OPERATIONS:                                      

Net investment income (loss)

  0.09       0.13       0.01       (0.08 )     (0.05 )

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

  1.13       3.63       1.75       3.81       5.64  

Total investment operations

  1.22       3.76       1.76       3.73       5.59  

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:                                      

Net investment income

  (0.01 )     (0.02 )                  

Net realized gain on investments and foreign currency

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

Total distributions to Preferred Stockholders

  (0.22 )     (0.23 )     (0.24 )     (0.26 )     (0.26 )

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON                                      

STOCKHOLDERS RESULTING FROM INVESTMENT OPERATIONS

  1.00       3.53       1.52       3.47       5.33  

DISTRIBUTIONS TO COMMON STOCKHOLDERS:                                      

Net investment income

  (0.09 )     (0.14 )                  

Net realized gain on investments and foreign currency

  (1.76 )     (1.64 )     (1.61 )     (1.55 )     (1.30 )

Total distributions to Common Stockholders

  (1.85 )     (1.78 )     (1.61 )     (1.55 )     (1.30 )

CAPITAL STOCK TRANSACTIONS:                                      

Effect of reinvestment of distributions by Common Stockholders

  (0.03 )     (0.00 )     0.01       0.00       (0.00 )

Effect of rights offering and Preferred Stock offering

                          (0.22 )

Total capital stock transactions

  (0.03 )     (0.00 )     0.01       0.00       (0.22 )

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

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

TOTAL RETURN (a):