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: 745 Fifth Avenue
New York, NY 10151

Name and address of agent for service:   John E. Denneen, Esquire
    745 Fifth Avenue
    New York, NY 10151

Registrant’s telephone number, including area code: (212) 508-4500
Date of fiscal year end: December 31
Date of reporting period: January 1, 2009 – June 30, 2009




Item 1. Reports to Shareholders.






   
 



Royce Value Trust



Royce Micro-Cap Trust



Royce Focus Trust
































 
SEMIANNUAL
REVIEW AND REPORT

TO STOCKHOLDERS
 
 
 
 


www.roycefunds.com




     



A Few Words on Closed-End Funds  




Royce & Associates, LLC manages three closed-end funds: Royce Value Trust, the first small-cap value closed-end fund offering; Royce Micro-Cap Trust, the only micro-cap closed-end fund; and Royce Focus Trust, a closed-end fund that invests in a limited number of primarily small-cap companies.


A closed-end fund is an investment company whose shares are listed and traded on a stock exchange. Like all investment companies, including open-end mutual funds, the assets of a closed-end fund are professionally managed in accordance with the investment objectives and policies approved by the fund’s Board of Directors. A closed-end fund raises cash for investment by issuing a fixed number of shares through initial and other public offerings that may include shelf offerings and periodic rights offerings. Proceeds from the offerings are invested in an actively managed portfolio of securities. Investors wanting to buy or sell shares of a publicly traded closed-end fund after the offerings must do so on a stock exchange, as with any publicly traded stock. This is in contrast to open-end mutual funds, in which the fund sells and redeems its shares on a continuous basis.




A Closed-End Fund Offers Several Distinct Advantages Not Available From An Open-End Fund Structure

n  
Since a closed-end fund does not issue redeemable securities or offer its securities on a continuous basis, it does not need to liquidate securities or hold uninvested assets to meet investor demands for cash redemptions, as an open-end fund must.
  n  
The fixed capital structure allows permanent leverage to be employed as a means to enhance capital appreciation potential.
 
               
n  
In a closed-end fund, not having to meet investor redemption requests or invest at inopportune times is ideal for value managers who attempt to buy stocks when prices are depressed and sell securities when prices are high.
  n  
Unlike Royce’s open-end funds, our closed-end funds are able to distribute capital gains on a quarterly basis. The Funds’ quarterly distribution policies for their common stock were suspended in May, 2009.
 
               
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.



This page is not part of the 2009 Semiannual Report to Stockholders



Table of Contents    

Semiannual Review    

Performance Table   2
     
Letter to Our Stockholders   3
     
Small-Cap Market Cycle Performance   10
     

     
Semiannual Report to Stockholders   11
     


For more than 35 years, we have used a value approach to invest in smaller-cap securities. We focus primarily on the quality of a company’s balance sheet, its ability to generate free cash flow and other measures of profitability or sound financial condition. At times, we may also look at other factors, such as a company’s unrecognized asset values, its future growth prospects or its turnaround potential following an earnings disappointment or other business difficulties. We then use these factors to assess the company’s current worth, basing the assessment on either what we believe a knowledgeable buyer might pay to acquire the entire company, or what we think the value of the company should be in the stock market.

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Performance Table  


NAV Average Annual Total Returns Through June 30, 2009

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

 
Second Quarter 2009*
  29.22 %   34.51 %   26.91 %   20.69 %

  Year-to-Date 2009*   11.79     18.66     17.62     2.64  

  One-Year   -31.17     -26.70     -34.12     -25.01  

  Three-Year   -11.38     -10.58     -6.77     -9.89  

  Five-Year   -1.73     -1.38     3.09     -1.71  

  10-Year   5.49     7.40     8.61     2.38  

  15-Year   8.49     9.31     n.a.     6.55  

  20-Year   9.06     n.a.     n.a.     7.27  

  Since Inception   9.28     9.05     8.93     —    

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


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

The thoughts expressed in this Review and Report to Stockholders concerning recent market movements and future prospects for small-company stocks are solely the opinion of Royce at June 30, 2009, and, of course, historical market trends are not necessarily indicative of future market movements. Statements regarding the future prospects for particular securities held in the Funds’ portfolios and Royce’s investment intentions with respect to those securities reflect Royce’s opinions as of June 30, 2009 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      

     
     
Simple Twist of Fate      
It was one year ago that, taking a cue from a Bob Dylan song, we wrote that something significant was happening in the markets, but the nature and degree of the event had not yet become clear. The intervening 12 months have certainly clarified things, in about as painful and destructive a fashion as possible from an investment standpoint. Back in March 2008, the fall of Bear Stearns was initially hoped to be, with fingers crossed in one hand and the other knocking on wood, an isolated, anomalous event. It took a few months, but the ongoing implosion of the subprime mortgage market sent shock waves throughout the global financial system. A significant correction in housing prices probably would have created some thorny economic problems in and of itself, but as fate would have it, many of these ill-awarded mortgages were securitized, packaged, ‘tranched’ and traded in a dizzying array of complicated arrangements that may never be completely understood. And once September rolled around, the once-slow pace of decline picked up so quickly that matters barely had time to escalate from bad to disastrous.

 
Lacking the fatalism that has characterized many observers’ forecasts for the economy and the stock market, we believe in the cyclicality of markets and the resourcefulness of our economy, both of which should be factors in the next year as we make our way by fits and starts to better days.
       

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What do people do when they buy
stocks? What are their motives and
expectations? These may seem like odd,
or at least very simple, questions, but
we think that they are worth asking in
pursuit of a larger, more important
point. After all, myriad factors can
lead a company’s stock price to higher
levels—increased demand for the
company’s existing products and/or
services, a rapidly expanding business,
a higher public profile, an innovative
new product, etc. But none of these
events ensures that the share-price
gains will last. To us, the critical
question is, what kind of companies are
most likely to experience a sustainable
increase in their business value, and
thus an increase in share price?

As long-term investors with a
disciplined value approach, we are
therefore less concerned with what
may or may not make a stock price
climb, particularly in the short run.
Short-term gains for our portfolio
holdings are always welcome, but our
focus is on identifying companies
capable of long-term success as both
businesses and stocks. There are
several methods that we use to try to
determine this. The first critical step
entails a close examination of a
company’s financial profile and




Continued on page 6...
   
Letter to Our Stockholders

     The subprime fallout hit the markets with its most devastating blows less than one year ago, though it seems much further away in time, perhaps because so much trouble arrived so quickly and perhaps because so many other significant events—a deep recession, an ensuing credit crisis, a presidential election, the bankruptcy of two of the three major American automakers, two ongoing wars, and unrest and agitation in Iran—were occurring as the financial crisis was unfolding. As of this writing, we have seen the small-cap stock market go from a stumble to a near-collapse to a short-term (and hopefully more lasting) recovery in the space of a little less than two years, with the most eventful action coming between September 2008 and the present.
     The pertinent questions are: How long can the nascent bull market last? Has the economy stabilized to the point that a sustainable recovery is just a matter of time? Will economic improvement arrive in time to prevent the recurrence of a stock market swoon? Will the federal government’s stimulus package have a tangibly positive effect on growth? For each question, the answer, unfortunately, is not ‘blowin’ in the wind’, or anywhere else for that matter. One need only look at the intensity of the debates over economic ‘green shoots’ and the question of whether they presage genuine resurgence or are simply anomalous occurrences in a still contracting economy. Our own take, about which we have more to say later in this letter, is guardedly optimistic. However, before moving on we wish to point out that our long-term perspective allows us some measure of distance from the heat of these debates. Lacking the fatalism that has characterized many observers’ forecasts for the economy and the stock market, we believe in the cyclicality of markets and the resourcefulness of our economy, both of which should be factors in the next year as we make our way by fits and starts to better days.

Modern Times
As for those days most recently passed, they were definitely better, as the market spent much of the period from March through June rallying from the worrisome depths it had tested in the fall and winter months. The better days began after the most recent market trough on March 9 and continued mostly unimpeded through the end of June, though there were notable sell-offs, particularly late in June and early in July. However, even the most fatalistic observer was likely cheered by the year-to-date results for the major equity indices: The small-cap Russell 2000 was up 2.6% through June 30, 2009, while the large-cap S&P 500 gained 3.2%, the more tech-laden Nasdaq Composite shot up 16.4% and the global MSCI EAFE (Europe, Australasia and Far East) rose 8.0%.
     As the date of the recent market bottom indicates, the first half of 2009 offered the worst of the recent bear market and the sparkling hope of a new, more bullish era, all within a compact six months. During the first quarter, the Russell 2000 was down 15.0%, the S&P
       


 
       

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500 fell 11.0%, the Nasdaq Composite slipped “only” 3.1% and the MSCI EAFE sagged 13.9%. It should be remembered that these results included the beginning of the recent rally, more than three weeks’ worth of mostly rising stock prices that closed out the quarter and saw each index posting positive double-digit returns from March 9 through March 31, 2009. That the rally then took up almost the entire second quarter was thus a more than welcome development, especially as results for the four indices referenced above represented the largest respective quarterly advances since the second quarter of 2003. Yet we are still a long way from celebration. For the periods ended June 30, 2009, one-year and three-year average annual returns for all four indices remained negative, and only the MSCI EAFE managed a positive performance for the five-year period.
  In such a volatile environment, the question of where market leadership will next reside remains an open one, as does the question of how long any such leadership period is likely to last.
      Market leadership remains unclear. Consider the following: The Russell 2000 trailed the S&P 500 in the first quarter, outperformed in the second quarter, but remained behind its large-cap counterpart for the year-to-date period ended June 30, 2009. The small-cap index led its large-cap sibling for the one-year period through the end of June, trailed in the three-year period, and led in the five- and 10-year periods. Small-cap stocks also significantly outperformed large-caps for the decade-to-date period, with the Russell 2000 gaining 14.0% versus the S&P 500’s decline of 25.9% from December 31, 1999 through June 30, 2009. With dramatic and well-defined bear and bull periods over the last two years, none of us needs a reminder that market volatility has been very much the norm. However, we think that another important example of its omnipresence can be seen in the near-regular rotation of small- and large-cap leadership over recent shorter-term calendar-based periods. In such an environment, the question of where market leadership will next reside remains an open one, as does the question of how long any such leadership period is likely to last.

   
It Takes Growth to Laugh, It Takes Value to Cry    
Within the small-cap universe, the current leadership issue is more than settled. Small-cap growth, as measured by the Russell 2000 Growth index, remained in the top spot over small-cap value, as measured by the Russell 2000 Value index. For the year-to-date period ended June 30, 2009, the Russell 2000 Growth index gained 11.4%, while the Russell 2000 Value index fell 5.2%. Both small-cap indices enjoyed robust results in the second quarter, but the Russell 2000 Value index’s 18.0% gain trailed its growth counterpart’s 23.4% return, so the turn in the tide of stock prices did little to help the small-cap value index to narrow the performance gap. Small-cap growth first gained its advantage in 2009 by outperforming in the bearish first quarter, down 9.7% compared to a decline of 19.6% for small-cap value, which marked the third consecutive quarter in which small-cap growth fared better than small-cap value in a negative return period. (However, at the end
   

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history. We search for evidence of
our definition of quality—a strong
balance sheet, a history of solid
earnings, the ability to generate
positive cash flow and high returns on
invested capital. While it’s true that a
company possessing each of these
qualities is hardly guaranteed positive
stock performance (as returns for our
Funds in 2008 made painfully clear),
we think that businesses with these
characteristics are most likely to be
solid, if not strong, performers over
long-term time horizons.

Another route is of particular
significance to us, though it may at
first seem counterintuitive: A company
can achieve an attractive long-term
record by losing less during economic
or market downturns. Our years of
research bear out that those attributes
that we value so highly can help a firm
to weather these storms—profitable
companies with low debt and plentiful
cash have historically been stalwarts
in poor markets and/or economies (the
recent bear market notwithstanding).

In other words, we are seeking great
companies, not just great stocks.
At first, this may appear to be a
distinction without a difference, but
the difference is very real to us
because we see ourselves as business
buyers. We have always taken very
seriously the simple truth that when
one buys even one share of stock,
one becomes a stakeholder in a
business. This is why our approach
generally requires developing a deep
understanding of what a company
does and how it operates. In addition


Continued on page 8...

 
 


                           
                           

Letter to Our Stockholders

of 2008, small-cap value held a slender lead over growth from the small-cap peak on July 13, 2007, the official start of the small-cap bear market.) In a curious twist of fate, then, the small-cap growth index has solidified its leadership position in large part by defying its historical norm of trailing small-cap value in down markets.
     The Russell 2000 Growth index also beat its small-cap value counterpart for the one-, three- and five-year periods ended June 30, 2009. Over longer-term periods, small-cap value held sway, thanks to an earlier period of long-term leadership. The end of 2006 marked the end of an extended span of small-cap value outperformance. In each of the first seven years of the current decade, small-cap value underperformed small-cap growth only once, in 2003, and by a slight margin. These years of often-decisive performance advantages helped the Russell 2000 Value index to outpace the small-cap growth index for the 10-, 15-, 20- and 25-year periods ended June 30, 2009.
     As longstanding believers in reversion to the mean, we thought it likely that this long period of outperformance for small-cap value was likely to be succeeded by a strong turn for small-cap growth when the small-cap market cycle that began in March 9, 2000 came to an end, which happened in July 2007. For the periods ended June 30, 2009, the Russell 2000 Growth index outpaced its value sibling from the small-cap peak on July 13, 2007 (-35.2% versus -42.5%) and from the small-cap market low on March 9, 2009 (+49.9% versus +47.9%). We were not surprised to see small-cap growth hold an advantage throughout the recent bear market or thus far in the rally. As much as outperformance in both an up and a down market, even over a short-term period, is a convincing measure of leadership, the current volatile condition of the market makes small-cap growth’s ongoing dominance an uncertain proposition at best.

Don’t Think Twice, It’s All Right
We were more than happy to see each of our closed-end funds bounce back with solid to very strong performances during the first six months of 2009, particularly after they endured the worst returns in their respective histories in 2008. The fact that all three portfolios turned in strong absolute performances, which is most meaningful to us, and also outperformed their respective benchmarks made 2009’s first-half results that much sweeter. Even more pleasing was the fact that our closed-end funds’ year-to-date returns were a combination of strong relative performance in the downturn between January and the small-cap low on March 9, followed by equally strong results in the rally that lasted into early June, though second-quarter market price results may have been adversely affected by the suspension of each Fund’s quarterly distribution. Losing less in poor markets has often been a historical hallmark of our management, and we welcomed its return, even in a short-term time frame.

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     The rally benefitted stocks across all asset and style categories, though it gave the strongest boost to non-dividend paying companies, those without earnings and low-priced stocks. The latter group was especially compelling because companies whose share prices had hit single digits needed very little to score large percentage-point gains. We do a lot of work in the low-priced area in our three closed-end portfolios, though our search is for quality smaller companies that have fallen on hard times. During the recent rally, however, many other investors seemed to be more focused on momentum. For the portfolios taken as a whole, net gains could be found in several industry groups, even some of those in the beleaguered consumer and financial sectors. The most significant net gains for the three portfolios as a group, however, were in the Technology sector, with Financial Services in RVT, Industrial Products and Natural Resources in RMT, and Natural Resources, Industrial Products and Consumer Products in FUND also enjoying encouraging rebounds.
   
     
Things Have Changed
The significant question, of course, is what happens next? Late June and early July saw just enough selling for many observers to be convinced that the rally might have breathed its last, at least until more compelling evidence of a growing economy surfaces. Our own take is that the first phase of the bull market is probably complete. The rally that began in March was characterized by dynamic, double-digit returns, and stocks of all sizes in nearly all sectors and industries benefiting greatly. Around the middle of June, the market fell into a corrective period, almost as if it were catching its breath after the wild run-up of stock prices. This period could last for another few months or could be over by the time this Semiannual Review and Report is being read. We would expect an overall modest decline in the range of 10%-15%, regardless of the time frame. We also expect
 
We were more than happy to see each of our closed-end funds collectively bounce back with solid to very strong performances during the first six months of 2009... Losing less in poor markets has often been a historical hallmark of our management, and we welcomed its return, even in a short-term time frame.

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to our discussions with a company’s
management, we often speak to
suppliers, customers and competitors
in order to expand our knowledge of
the company.

To be sure, we buy stocks to make
money, but the means to that sought-after
end are very specific. We are
looking for the happy marriage of
a strong financial profile with a
wonderful business that we think we
know well. This necessitates a
commitment to a disciplined process,
one that demands we know as much
about these businesses as we possibly
can. It involves making an investment
in a business as if we were purchasing
the entire company, as if we were
owners, because, after all, that is
what we become when we buy stocks.

 
Letter to Our Stockholders


the next phase in the current cycle to be different—still bullish, but with returns that will not be as lofty. It seems to us we will see more historically typical performance patterns, frequent sector and industry rotation and greater discrimination on the part of investors for quality companies. We also feel confident that stocks of higher quality companies—those with solid earnings, high returns on invested capital and/or that pay dividends—should take the lead in the next bull phase.
       Our reasoning is that enough investors should begin to focus on company quality now that the period of momentum-driven results appears to be behind us and a recovering economy in front of us, though no one knows how far ahead it lies. Recent selling has been driven more by fundamentals than liquidity, which is a good sign for the stability of equities as a whole. Without the sense of panic that was so prevalent in the last four months of 2008, investors would be free to think more about factors such as risk, long-term performance and sustainable growth. In such a setting, we think that quality stocks would do well across virtually all asset classes and in all industries where they can be found. So we may see, for example, small-cap leadership for a short time, then a period of large-cap outperformance, etc. However, quality is likely to be a lingering presence—a constant in a solid bull market that should otherwise see regular rotations in leadership.

Beyond Here Lies...
The economy is the elephant in the room. The recent rally was fueled in large part by investors’ expectations of an economic recovery that, perhaps needless to say, has thus far not materialized. We suspect that some investors may have confused economic



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stabilization with economic recovery, something that surely helped the prices of certain stocks to run ahead of what their fundamentals might suggest, which in part explains why the rally lost steam in June. From an equity investor’s standpoint, economic recovery is necessary for the market’s bullish moves to be sustained. Rancorous debate about where the economy is and where it is going will continue. There will be plenty of disappointment and cynicism, as well as an ample supply of naysayers braying along the road to economic recovery, which we think will proceed slowly, at times at a pace of two steps forward one step back, to the point that within a year a recovery should be well under way. We do not think that it will be as driven by consumer spending, but instead will be led by revived industrial activity, natural resources and perhaps even financial services. Consumer activity will still play an important role, but we expect consumer spending to account for far less of GDP than it did prior to the recession, which will be a positive development.
       We look forward to the next several months and even more so to the next three to five years. Our own confidence about the economy and the equity markets is tempered by the fact that ‘less bad’ does not equate to ‘good.’ We suspect that the next round of concerns will center on the pace of improvement rather than the question of its existence, which seems to dominate economic discussions as of this writing. Yet the current mood, part of which we have just described and which seems to shift from optimism to pessimism and back again, often in the space of a single day, is infinitely preferable to the panic and capitulation that made last fall and winter so chilling. This is the kind of incremental, at times imperceptible, progress that we expect the economy to make. The market’s moves, far easier to track, will be less subtle, but both should be moving, however slowly, to a far better place.
  Quality is likely to be a lingering presence—a constant in a solid bull market that should otherwise see regular rotations in leadership.
     

Sincerely,
             
               
                
Charles M. Royce   W. Whitney George   Jack E. Fockler, Jr.      
President   Vice President   Vice President      
               
               
July 31, 2009              

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Small-Cap Market Cycle Performance

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

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

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

Peak-to-Current
During the difficult, volatile period ended 6/30/09, both value and growth posted similarly negative returns. Events in the financial markets immediately preceding the end of 2008’s third quarter caused the Russell 2000 to decline significantly. After a brief rally at the end of 2008, the index continued its fall, dropping it to a cyclical low on 3/9/09. Since then the index recovered significantly, gaining 48.9% from 3/9/09 through 6/30/09.

Royce Focus Trust managed to slightly outperform the index during the decline, while all three of our closed-end funds outperformed during the short rally from 3/9/09 through 6/30/09.
 
   ROYCE FUNDS NAV TOTAL RETURNS VS. RUSSELL 2000 INDEX:
   MARKET CYCLE RESULTS

  Peak-to-Peak
3/9/00-7/13/07
  Peak-to-Trough
7/13/07-3/9/09
  Trough-to-Current
3/9/09-6/30/09
 
Russell 2000   54.9 %       -58.9 %       48.9 %

Russell 2000 Value   189.5       -61.1       47.9  

Russell 2000 Growth   -14.8       -56.8       49.9  

Royce Value Trust   161.3       -65.6       64.2  

Royce Micro-Cap Trust   175.9       -66.3       73.3  

Royce Focus Trust   264.2       -58.3       49.5  


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

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Table of Contents


Semiannual Report to Stockholders  

   
Managers’ Discussions of Fund Performance  
   
Royce Value Trust 12
   
Royce Micro-Cap Trust 14
   
Royce Focus Trust 16
   
History Since Inception 18
   
Distribution Reinvestment and Cash Purchase Options 19
   
Schedules of Investments and Other Financial Statements  
   
Royce Value Trust 20
   
Royce Micro-Cap Trust 34
   
Royce Focus Trust 46
   
Notes to Performance and Other Important Information 55
   
Board Approval and Investment Advisory Agreements 56





2009 Semiannual Report to Stockholders   |  11



     
   
 

   

 
  AVERAGE ANNUAL NAV TOTAL RETURNS
Through 6/30/09
 
 
 
  Second Quarter 2009*   29.22 %  
 
 
  Year-to-Date 2009*   11.79    
 
 
  One-Year         -31.17    
 
 
  Three-Year         -11.38    
 
 
  Five-Year         -1.73    
 
 
  10-Year         5.49    
 
 
  15-Year         8.49    
 
 
  20-Year         9.06    
 
 
  Since Inception (11/26/86)         9.28    
 
 
  * Not annualized  
         
  CALENDAR YEAR NAV TOTAL RETURNS  
 

 
  Year   RVT     Year     RVT    
 
 
  2008   -45.6 %   1999     11.7 %  
 
 
  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    
 
 
                     
  TOP 10 POSITIONS
% of Net Assets Applicable
to Common Stockholders
 
 
 
  Ash Grove Cement Cl. B   1.4 %  
 
 
  Ritchie Bros. Auctioneers   1.3    
 
 
  SEACOR Holdings   1.2    
 
 
  Simpson Manufacturing   1.0    
 
 
  AllianceBernstein Holding L.P.   1.0    
 
 
  Alleghany Corporation   1.0    
 
 
  SPSS   0.9    
 
 
  GAMCO Investors Cl. A   0.9    
 
 
  Forward Air   0.9    
 
 
  HEICO Corporation   0.9    
 
 
                     
  PORTFOLIO SECTOR BREAKDOWN
% of Net Assets Applicable
to Common Stockholders
 
 
 
  Technology   21.1 %  
 
 
  Industrial Products   20.1    
 
 
  Industrial Services   16.8    
 
 
  Financial Services   14.4    
 
 
  Financial Intermediaries   12.7    
 
 
  Natural Resources   8.4    
 
 
  Consumer Products   7.0    
 
 
  Health   6.2    
 
 
  Consumer Services   4.3    
 
 
  Diversified Investment Companies   0.5    
 
 
  Miscellaneous   4.7    
 
 
  Preferred Stock   0.7    
 
 
  Cash and Cash Equivalents   16.6    
 
 
     





Royce Value Trust

Manager’s Discussion
Following a discouraging 2008, the rally in the first half of 2009 lifted stock prices and spirits, including those of us who manage Royce Value Trust (RVT). The Fund’s portfolio of small-cap and micro-cap stocks did well in the first half on both relative and absolute basis. Its results were strong on both a net asset value (NAV) and market price basis. For the year-to-date period ended 6/30/09, the Fund gained 11.8% on an NAV basis, and 5.5% based on market price, outpacing both of its unleveraged benchmarks, the Russell 2000, which was up 2.6%, and the S&P Small-Cap 600, which was up 0.7%, for the same period. After managing both to post a dismal absolute performance and to lag its benchmarks in 2008, we were very pleased to see such a strong rebound in 2009’s first half, particularly with the suspension of the Fund’s quarterly distribution policy negatively impacting its market price returns. RVT’s solid relative showing in the bearish first quarter was especially gratifying. During this period, the Fund was down 13.5% and 11.4% on an NAV and market price basis, respectively, while the Russell 2000 fell 15.0%, and the S&P 600 declined 16.8%. During the second quarter, when stock prices rose precipitously, RVT held its advantage with impressive gains of 29.2% (NAV) and 19.1% (market price), compared to the Russell 2000’s increase of 20.7%, and the S&P 600’s of 21.1%.
     The recent rally began on 3/9/09, just before the end of the first quarter. From that small-cap low through 6/30/09, RVT outpaced the Russell 2000, up 64.2% on an NAV basis and 70.2% on a market price basis versus 48.9% for the Russell 2000 and 48.4% for the S&P 600. This short-term outperformance would have been less encouraging had it not helped the Fund to narrow the performance gap on its benchmarks in the current severe bear market cycle. From the small-cap market peak on 7/13/07 through 6/30/09, RVT was down 43.5% on an NAV basis and 51.1% based on market price, compared to declines of 38.8% and 38.1% for the Russell 2000 and the S&P 600, respectively.
     RVT trailed its two benchmarks for the one-year period ended 6/30/09 on both an NAV and market price basis. The performance picture was better on an NAV basis over longer-term periods. From the previous small-cap market peak on 3/9/00 through 6/30/09, RVT gained 47.8% and 51.8% on an NAV and market price basis, versus a decline of 5.2% for the Russell 2000 and a gain of 31.6% for the S&P 600. The Fund also outperformed the Russell 2000 for the 10-, 15-, 20-year, and since inception (11/26/86) periods ended 6/30/09 on an NAV basis, and the S&P 600 for the 10-, 20-, and 25-year periods. RVT’s NAV average annual total return since inception was 9.3%.

         
       GOOD IDEAS THAT WORKED
   Top Contributors to Performance*
   Year-to-Date Through 6/30/09
   

    Diodes   0.43%
   
    GAMCO Investors Cl. A   0.42   
   
    Evercore Partners Cl. A   0.36   
   
    Advent Software   0.33   
   
    Waddell & Reed Financial Cl. A   0.31   
   
    *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, which may involve considerably more risk than investing in a more diversified portfolio of larger-cap companies.

             12  |  2009 Semiannual Report to Stockholders




 
 
 
Performance and Portfolio Review



     The Technology and Financial Services sectors made the most significant positive impact on performance through the end of June. Technology holdings were particularly strong as a group, as tech stocks in general enjoyed both a relatively better first quarter—that is, they tended to lose less than the market as a whole—and a stronger second quarter. Net gains were spread fairly evenly through the sector’s industry groups, with software companies, the semiconductors and equipment group, and components and systems businesses leading in terms of net gains. Diodes, which makes semiconductors used in a variety of industries, was RVT’s top performer in the first half, in part benefiting from better-than-expected earnings earlier in the year. Advent Software, a provider of financial management, accounting and trading software to asset managers, was also a strong contributor. The gradual recovery of investment management companies—themselves a key area of strength for RVT’s portfolio—combined with solid earnings that exceeded estimates helped its stock price to climb.
     Four of the Fund’s top seven performers were investment management businesses: GAMCO Investors, which spun off an advisory unit in February, Evercore Partners, Waddell & Reed Financial and Federated Investors. Investment management is an area that we think we know well and in which we see strong potential going forward. It was an industry largely battered in the downturn, and stocks began to recover earlier in 2009. We were happy to hold good-sized positions in each at the end of June, though we sold some shares in each stock as share prices climbed.
     
      We held our shares of Bermuda-based Bank of N.T. Butterfield & Son mostly owing to its strong core business, which has suffered amid the ongoing struggles of banking stocks. Our thought was that its shares could rebound when its industry comes back. Woodward Governor makes energy control systems for commercial and military aircraft. Its stock price plunged as the company announced a large acquisition around the same time it revised downward its outlook for the year due to continuing softening conditions in aircraft manufacturing. We reduced our stake as the acquisition caused enough balance sheet dilution to revise our view of its prospects.

GOOD IDEAS AT THE TIME
Top Detractors from Performance*
Year-to-Date Through 6/30/09

 
 

 
Bank of N.T. Butterfield & Son -0.37%  

 
Woodward Governor -0.32     

 
Lawson Products -0.27     

 
Ash Grove Cement Cl. B -0.25     

 
Adaptec -0.25     

 
*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
 
 
 
  Average Market Capitalization* $866 million     
 
 
  Weighted Average P/E Ratio** 14.4x    
 
 
  Weighted Average P/B Ratio 1.5x     
 
 
  Weighted Average Portfolio Yield 1.4%     
 
 
  Fund Total Net Assets $877 million     
 
 
  Net Leverage 17%     
 
 
  Turnover Rate 11%     
 
 
  Symbol    
      Market Price RVT     
      NAV XRVTX     
 
 
   * Geometrically calculated  
     
 

**The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (22% of portfolio holdings as of 6/30/09).

 
     
 

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

 
     
  CAPITAL STRUCTURE
Publicly Traded Securities Outstanding
at 6/30/09 at NAV or Liquidation Value
 
 
 
  66.0 million shares
of Common Stock
$657 million    
 
 
  5.90% Cumulative
Preferred Stock
$220 million    
 
 
     
  DOWN MARKET PERFORMANCE COMPARISON
All Down Periods of 7.5% or Greater
Over the Last 10 Years, in Percentages(%)
 
     
   
     


2009 Semiannual Report to Stockholders  |  13                  




     
   
 

   

 
  AVERAGE ANNUAL NAV TOTAL RETURNS
Through 6/30/09
 
 
 
  Second Quarter 2009*   34.51 %  
 
 
  Year-to-Date 2009*   18.66    
 
 
  One-Year         -26.70    
 
 
  Three-Year         -10.58    
 
 
  Five-Year         -1.38    
 
 
  10-Year         7.40    
 
 
  15-Year         9.31    
 
 
  Since Inception (12/14/93)         9.05    
 
 
  * Not annualized  
         
  CALENDAR YEAR NAV TOTAL RETURNS  
 

 
  Year   RMT     Year     RMT    
 
 
  2008   -45.5 %   2000     10.9 %  
 
 
  2007   0.6     1999     12.7    
 
 
  2006   22.5     1998     -4.1    
 
 
  2005   6.8     1997     27.1    
 
 
  2004   18.7     1996     16.6    
 
 
  2003   55.5     1995     22.9    
 
 
  2002   -13.8     1994     5.0    
 
 
  2001   23.4                
 
 
                       
  TOP 10 POSITIONS
% of Net Assets Applicable
to Common Stockholders
 
 
 
  Seneca Foods   2.2 %  
 
 
  Sapient Corporation   1.6    
 
 
  Pegasystems   1.1    
 
 
  Universal Truckload Services   1.1    
 
 
  Willbros Group   1.0    
 
 
  Deswell Industries   1.0    
 
 
  America’s Car-Mart   1.0    
 
 
  Computer Task Group   1.0    
 
 
  Movado Group   1.0    
 
 
  Hawkins   0.9    
 
 
                       
  PORTFOLIO SECTOR BREAKDOWN
% of Net Assets Applicable
to Common Stockholders
 
 
 
  Technology   20.2 %  
 
 
  Industrial Products   19.6    
 
 
  Industrial Services   13.0    
 
 
  Natural Resources   11.0    
 
 
  Financial Intermediaries   9.9    
 
 
  Health   9.1    
 
 
  Consumer Products   7.2    
 
 
  Financial Services   6.3    
 
 
  Consumer Services   4.3    
 
 
  Diversified Investment Companies   0.9    
 
 
  Miscellaneous   4.9    
 
 
  Preferred Stock   1.1    
 
 
  Cash and Cash Equivalents   23.0    
 
 
     





Royce Micro-Cap Trust

Manager’s Discussion
Performance for Royce Micro-Cap Trust (RMT) was solid during the first half of 2008, but the stubborn and unfortunate reality of the bear market must still be kept in mind. As things stand, we will settle for describing RMT’s strong first half as ‘encouraging.’ The Fund gained 18.7% for the year-to-date period ended 6/30/09 on a net asset value basis (NAV) and 12.5% based on market price, well ahead of its unleveraged small-cap benchmark, the Russell 2000, which was up 2.6%, and the Russell Microcap index, which rose 6.0%, for the same period. The Fund’s first-half outperformance was a near-ideal combination of a strong relative showing in the first-quarter downturn and a terrific absolute and relative result in the second-quarter upswing. RMT lost 11.8% on an NAV basis, and 5.9% based on market price, in the opening quarter of 2009, compared to respective declines of 15.0% and 15.2% for the Russell 2000 and Russell Microcap indices. When stock prices rose in the second quarter, the Fund was up 34.5% on an NAV basis and 19.5% on a market price basis as RMT’s market price return suffered from the suspension of the Fund’s quarterly distribution. For the same period, the Russell 2000 was up 20.7%, and the Russell Microcap rose 25.0%.
     The Fund also showed much-improved relative returns on an NAV basis in the recent market cycle. First, in the rally that began following the small-cap low on 3/9/09 through 6/30/09, RMT was up 73.3% versus a gain of 48.9% for the Russell 2000 and 54.6% for the Russell Microcap index. For the market cycle period that began with the most recent small-cap peak on 7/13/07 (and thus marked the beginning of the current bear market) through 6/30/09, RMT trailed its benchmark, down 41.6% on an NAV basis versus a loss of 38.8% for the Russell 2000. However, the Fund did outpace the microcap index, which declined 44.7% for the same period.
     The Fund’s market cycle returns were a critical factor in beating its benchmark on an NAV basis for the five-, 10-, 15-year and since inception (12/14/93) periods ended 6/30/09. On a market price basis, the news was less encouraging, as RMT was ahead of the Russell 2000 for the 10-year, 15-year and since inception periods. RMT’s NAV average annual total return since inception was 9.1%.
     Technology and Industrial Products, the Fund’s two largest sectors at the end of June, also made the most significant positive contributions to performance in the first half. Tech stocks made a long-sought comeback, and the strongest net gains in the portfolio came from software companies, the semiconductors and equipment group and IT Services. RMT has held Pegasystems, which makes business process management software, since 2001. We liked

       GOOD IDEAS THAT WORKED
   Top Contributors to Performance*
   Year-to-Date Through 6/30/09
   

    Pegasystems   1.39%
   
    Spherion Corporation   0.73   
   
    Stein Mart   0.68   
   
    Deswell Industries   0.60   
   
    Sapient Corporation   0.52   
   
    *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.

             14  |  2009 Semiannual Report to Stockholders




   
 
Performance and Portfolio Review

 
the company’s attractive niche almost as much as its strong balance sheet. With little analyst coverage, its stock price soared in April after better-than-expected first-quarter earnings results were announced. We continued to reduce our position as its stock price rose. Another key contributor and long-time favorite was Sapient Corporation, which provides business, marketing, and technology consulting services worldwide. Sapient benefitted from the general revival of tech stocks, and reported a positive earnings surprise, which helped to bring investors back to the stock.
     Elsewhere in the portfolio, staffing and placement services company Spherion Corporation saw its share price begin to recover as it fought its way back from a dismal 2008. Deswell Industries, in the Industrial Products sector, was another top contributor. This manufacturer of injection-molded plastic parts and components experienced a revival in earnings and solid, if unspectacular, growth during the period, though it was enough to attract investors during the recent rally. The Industrial Products sector, however, was also home to some of RMT’s significant detractors during the period—Quixote Corporation and Trex Company. Trex manufactures and distributes wood/plastic composite products used in residential and commercial construction. The slowdown in each market has hurt its business. Our hope was that the company’s fortunes could revive with a pickup in its market, especially as the company has reduced operating costs. The ongoing recession also slowed the business of Quixote Corporation, which
   
manufactures highway and transportation safety products. Recent earnings were not only negative—a discouraging enough development—but also slightly worse than expected, which, along with its spotty profits, left us unsure about its long-term prospects. As a result, we trimmed our position in February and March. Pason Systems, which provides rental oilfield instrumentation and data acquisition systems, also disappointed, a result of the tough times for natural gas drilling and exploration. We still like its market share in what we think is a highly attractive industry niche.
GOOD IDEAS AT THE TIME
Top Detractors from Performance*
Year-to-Date Through 6/30/09

Quixote Corporation   -0.68 %

Pason Systems   -0.43  

Trex Company   -0.30  

NYMAGIC   -0.29  

Integral Systems   -0.27  

*Net of dividends      
 

 MARKET PRICE PERFORMANCE HISTORY SINCE INCEPTION (12/14/93) through 6/30/09
 
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.
2 Reflects the actual market price of one share as it traded on the NYSE and, prior to 12/1/03, on Nasdaq.
         
         
         
  FUND INFORMATION AND
PORTFOLIO DIAGNOSTICS
 
 
 
  Average Market Capitalization*   $228 million  
 
 
  Weighted Average P/B Ratio   1.2x  
 
 
  Weighted Average Portfolio Yield   1.1%  
 
 
  Fund Total Net Assets   $257 million  
 
 
  Net Leverage   8%  
 
 
  Turnover Rate   16%  
 
 
  Symbol      
 

Market Price

  RMT  
 

NAV

  XOTCX  
 
 
 
  *Geometrically calculated
 
 
  Net leverage is the percentage, in excess of 100%, of the total value of equity type investments, divided by net assets, excluding preferred stock.
 
     
  CAPITAL STRUCTURE
Publicly Traded Securities Outstanding
at 6/30/09 at NAV or Liquidation Value
 
 
 
  27.3 million shares of Common Stock $197 million  
 
 
  6.00% Cumulative Preferred Stock $60 million  
 
 
 
 
     
  DOWN MARKET PERFORMANCE COMPARISON
All Down Periods of 7.5% or Greater Over the
Last 10 Years, in Percentages(%)
 
 
 
     
   
     


2009 Semiannual Report to Stockholders   |  15   




                   
                   
                   
  AVERAGE ANNUAL NAV TOTAL RETURNS
Through 6/30/09
 
 
 
  Second Quarter 2009*   26.91 %  
 
 
  Year-to-Date 2009*   17.62    
 
 
  One-Year   -34.12    
 
 
  Three-Year   -6.77    
 
 
  Five-Year   3.09    
 
 
  10-Year   8.61    
 
 
  Since Inception (11/1/96)   8.93    
 
 
  * Not annualized        
 

 Royce & Associates assumed investment management responsibility for the Fund on
  11/1/96.
 
                   
  CALENDAR YEAR NAV TOTAL RETURNS  
 
 
  Year      FUND        Year        FUND  
 
 
  2008 -42.7 %   2002   -12.5 %  
 
 
  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    
 
 
                   
  TOP 10 POSITIONS
% of Net Assets Applicable
to Common Stockholders
 
 
 
  Kennedy-Wilson Conv.   6.7 %  
 
 
  Reliance Steel & Aluminum   3.6    
 
 
  Sims Metal Management ADR   3.1    
 
 
  Knight Capital Group Cl. A   2.8    
 
 
  Ensign Energy Services   2.7    
 
 
  Silver Standard Resources   2.6    
 
 
  Unit Corporation   2.6    
 
 
  Microsoft Corporation   2.2    
 
 
  GrafTech International   2.1    
 
 
  Sanderson Farms   2.1    
 
 
                   
  PORTFOLIO SECTOR BREAKDOWN
% of Net Assets Applicable
to Common Stockholders
 
 
 
  Natural Resources   29.2 %  
 
 
  Industrial Products   24.9    
 
 
  Consumer Products   11.3    
 
 
  Technology   8.1    
 
 
  Financial Services   7.3    
 
 
  Industrial Services   4.5    
 
 
  Financial Intermediaries   3.8    
 
 
  Health   3.0    
 
 
  Diversified Investment Companies   1.9    
 
 
  Consumer Services   1.3    
 
 
  Miscellaneous   0.7    
 
 
  Preferred Stock   6.7    
 
 
  Cash and Cash Equivalents   20.4    
 
 
     
     


 
 
Royce Focus Trust

 
Manager’s Discussion
After taking it on the chin in 2008, at least in the year’s second half, we were very pleased to see Royce Focus Trust (FUND) get off the mat and battle back in the first half of 2009. For the year-to-date period ended 6/30/09, FUND gained 17.6% on a net asset value (NAV) basis and 15.7% on a market price basis, in both cases substantially ahead of the 2.6% return during the same period for its unleveraged small-cap benchmark, the Russell 2000. Particularly gratifying was the Fund’s strong relative performance when stock prices were falling, though we were also cheered by its full participation in the rally that began early in March. During the bearish first quarter, the Fund lost 7.3% on an NAV basis and only 1.7% on a market price basis, while the Russell 2000 fell 15.0%. When the second quarter began, share prices had already begun to recover. FUND gained 26.9% on an NAV basis and 17.7% on a market price basis during this more bullish quarter compared to a gain of 20.7% for the small-cap index (the Fund’s market price return having been dampened somewhat by the suspension of the Fund’s quarterly distribution).
     The Fund’s NAV performance has been better than its market price results through the current quite bearish market cycle, though both showed improvement at the end of the first half. From the small-cap peak on 7/13/07 through 6/30/09, FUND fell 37.6% on an NAV basis and was down 41.3% on a market price basis versus a decline of 38.8% for the Russell 2000. The recent rally—as well as strong relative results in the first quarter—was a factor. From the recent small-cap low on 3/9/09 through 6/30/09, FUND rose 49.5% on an NAV basis and 52.5% based on market price, while the Russell 2000 gained 48.9%.
     Longer-term and calendar-based results were solid as well, though the severity of the bear market means that returns look better the further out in time one goes. From the previous small-cap market peak on 3/9/00 through 6/30/09, FUND gained 127.2% on an NAV basis and was up 158.1% on a market price basis while the Russell 2000 was down 5.2% for the same period. The Fund was also ahead of its benchmark on both an NAV and market price basis for the three-, five-, 10-year and since inception of our management (11/1/96) periods ended 6/30/09. FUND’s NAV average annual total return since inception was 8.9%.
   
   GOOD IDEAS THAT WORKED
   Top Contributors to Performance*
   Year-to-Date Through 6/30/09

Reliance Steel & Aluminum   1.96 %

Sims Metal Management ADR   1.63  

Ivanhoe Mines   1.17  

Sigma Designs   1.01  

CF Industries Holdings   1.00  

*Includes dividends      
     All but two of the Fund’s sectors finished the first half in the black, with Natural Resources, Industrial Products and Consumer Products making the largest positive contributions to performance. The first of these three areas saw strong gains from holdings in the precious metals and mining group. These holdings profited from stable or rising commodity prices
 
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.

   16   |   2009 Semiannual Report to Stockholders



 
 
Performance and Portfolio Review

 
and a decline in mining costs. Improved commodity prices also had the apparent effect of making financing easier to obtain, which in turn seemed to help stock prices. Ivanhoe Mines was the leader in this group, followed by solid results from Gammon Gold, Allied Nevada Gold and Silver Standard Resources.
     The portfolio’s leading industry was the metal fabrication and distribution group in the Industrial Products sector. Two of the Fund’s top-ten holdings dominated this group’s performance. Reliance Steel & Aluminum, a processor and distributor of metal products, had falling profits, but its earnings remained positive, which was sufficient to attract investors. The core business of Sims Metal Management, the world’s largest scrap metal recycler, gradually started to stabilize after an uptick in prices materialized from a stimulus-driven increase in demand from China, other Asian countries and Turkey. Sims also began to see a modest pick-up in orders from U.S. mills as destocking ran its course. Each stock’s success was mostly attributable to investors looking to metals-related stocks in anticipation of an industrial recovery in the second half of 2009. While these two companies experienced no significant improvement in fundamentals, modest growth or even “not getting worse” translated into “good” for many investors during the rally.
     Sigma Designs makes semiconductors for use in various media, including specialized chips used in video image compression that creates high definition. Its earnings have remained positive and more recently were growing, and its other fundamentals remain strong. We reduced
   
our stake in February and March. During January and February, we sold some shares of Endo Pharmaceuticals Holdings. We were not quite certain about how it will handle the transition away from its core pain management products into new areas. The strong but suffering business of welding and cutting products maker (and long-time holding) Lincoln Electric Holdings inspired more confidence for the long run. We think that its stock could flourish in an economic recovery that would include a resumption in global infrastructure construction.
GOOD IDEAS AT THE TIME
Top Detractors from Performance*
Year-to-Date Through 6/30/09

Endo Pharmaceuticals Holdings   -1.00 %

Lincoln Electric Holdings   -0.77  

Pason Systems   -0.74  

Simpson Manufacturing   -0.63  

Kennedy-Wilson Conv.   -0.59  

*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
 
 
 
  Average Market Capitalization*   $1,492 million  
 
 
  Weighted Average P/E Ratio**   11.5x  
 
 
  Weighted Average P/B Ratio   1.7x  
 
 
  Weighted Average Portfolio Yield   1.6%  
 
 
  Fund Total Net Assets   $133 million  
 
 
  Net Leverage   3%  
 
 
  Turnover Rate   24%  
 
 
  Symbol      
 

Market Price

  FUND  
 

NAV

  XFUNX  
 
 
 
  *Geometrically calculated
 
 
**The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (22% of portfolio holdings as of 6/30/09).
 
 
  Net leverage is the percentage, in excess of 100%, of the total value of equity type investments, divided by net assets, excluding preferred stock.
 
     
  CAPITAL STRUCTURE
Publicly Traded Securities Outstanding
at 6/30/09 at NAV or Liquidation Value
 
 
 
  19.8 million shares of Common Stock $108 million  
 
 
  6.00% Cumulative Preferred Stock  $25 million  
 
 
     
  DOWN MARKET PERFORMANCE COMPARISON
All Down Periods of 7.5%
or Greater, in Percentages(%)
 
 
 
 
     


2009 Semiannual Report to Stockholders  |   17   




History Since Inception


The following table details the share accumulations by an initial investor in the Funds who reinvested all distributions (including fractional shares) and participated fully in primary subscriptions for each of the rights offerings. Full participation in distribution reinvestments and rights offerings can maximize the returns available to a long-term investor. This table should be read in conjunction with the Performance and Portfolio Reviews of the Funds.
          Amount     Purchase         NAV     Market  
  History     Invested     Price*   Shares     Value**     Value**  
Royce Value Trust                              
11/26/86   Initial Purchase   $ 10,000   $ 10.000   1,000   $ 9,280   $ 10,000  
10/15/87   Distribution $0.30           7.000   42              
12/31/87   Distribution $0.22           7.125   32     8,578     7,250  
12/27/88   Distribution $0.51           8.625   63     10,529     9,238  
9/22/89   Rights Offering     405     9.000   45              
12/29/89   Distribution $0.52           9.125   67     12,942     11,866  
9/24/90   Rights Offering     457     7.375   62              
12/31/90   Distribution $0.32           8.000   52     11,713     11,074  
9/23/91   Rights Offering     638     9.375   68              
12/31/91   Distribution $0.61           10.625   82     17,919     15,697  
9/25/92   Rights Offering     825     11.000   75              
12/31/92   Distribution $0.90           12.500   114     21,999     20,874  
9/27/93   Rights Offering     1,469     13.000   113              
12/31/93   Distribution $1.15           13.000   160     26,603     25,428  
10/28/94   Rights Offering     1,103     11.250   98              
12/19/94   Distribution $1.05           11.375   191     27,939     24,905  
11/3/95   Rights Offering     1,425     12.500   114              
12/7/95   Distribution $1.29           12.125   253     35,676     31,243  
12/6/96   Distribution $1.15           12.250   247     41,213     36,335  
1997   Annual distribution total $1.21           15.374   230     52,556     46,814  
1998   Annual distribution total $1.54           14.311   347     54,313     47,506  
1999   Annual distribution total $1.37           12.616   391     60,653     50,239  
2000   Annual distribution total $1.48           13.972   424     70,711     61,648  
2001   Annual distribution total $1.49           15.072   437     81,478     73,994  
2002   Annual distribution total $1.51           14.903   494     68,770     68,927  
1/28/03   Rights Offering     5,600     10.770   520              
2003   Annual distribution total $1.30           14.582   516     106,216     107,339  
2004   Annual distribution total $1.55           17.604   568     128,955     139,094  
2005   Annual distribution total $1.61           18.739   604     139,808     148,773  
2006   Annual distribution total $1.78           19.696   693     167,063     179,945  
2007   Annual distribution total $1.85           19.687   787     175,469     165,158  
2008   Annual distribution total $1.72           12.307   1,294     95,415     85,435  
2009   Year-to-date distribution total $0.32           6.070   537              

6/30/09       $ 21,922         10,720   $ 106,664   $ 90,155  

Royce Micro-Cap Trust                              
12/14/93   Initial Purchase   $ 7,500   $ 7.500   1,000   $ 7,250   $ 7,500  
10/28/94   Rights Offering     1,400     7.000   200              
12/19/94   Distribution $0.05           6.750   9     9,163     8,462  
12/7/95   Distribution $0.36           7.500   58     11,264     10,136  
12/6/96   Distribution $0.80           7.625   133     13,132     11,550  
12/5/97   Distribution $1.00           10.000   140     16,694     15,593  
12/7/98   Distribution $0.29           8.625   52     16,016     14,129  
12/6/99   Distribution $0.27           8.781   49     18,051     14,769  
12/6/00   Distribution $1.72           8.469   333     20,016     17,026  
12/6/01   Distribution $0.57           9.880   114     24,701     21,924  
2002   Annual distribution total $0.80           9.518   180     21,297     19,142  
2003   Annual distribution total $0.92           10.004   217     33,125     31,311  
2004   Annual distribution total $1.33           13.350   257     39,320     41,788  
2005   Annual distribution total $1.85           13.848   383     41,969     45,500  
2006   Annual distribution total $1.55           14.246   354     51,385     57,647  
2007   Annual distribution total $1.35           13.584   357     51,709     45,802  
2008   Annual distribution total $1.19           8.237   578     28,205     24,807  
2009   Year-to-date distribution total $0.22           4.260   228              

6/30/09       $ 8,900         4,642   $ 33,469   $ 27,898  

Royce Focus Trust                              
10/31/96   Initial Purchase   $ 4,375   $ 4.375   1,000   $ 5,280   $ 4,375  
12/31/96                         5,520     4,594  
12/5/97   Distribution $0.53           5.250   101     6,650     5,574  
12/31/98                         6,199     5,367  
12/6/99   Distribution $0.145           4.750   34     6,742     5,356  
12/6/00   Distribution $0.34           5.563   69     8,151     6,848  
12/6/01   Distribution $0.14           6.010   28     8,969     8,193  
12/6/02   Distribution $0.09           5.640   19     7,844     6,956  
12/8/03   Distribution $0.62           8.250   94     12,105     11,406  
2004   Annual distribution total $1.74           9.325   259     15,639     16,794  
5/6/05   Rights offering     2,669     8.340   320              
2005   Annual distribution total $1.21           9.470   249     21,208     20,709  
2006   Annual distribution total $1.57           9.860   357     24,668     27,020  
2007   Annual distribution total $2.01           9.159   573     27,679     27,834  
2008   Annual distribution total $0.47           6.535   228     15,856     15,323  
2009   Year-to-date distribution total $0.09           3.830   78              

6/30/09       $ 7,044         3,409   $ 18,647   $ 17,727  


*   Beginning with the 1997 (RVT), 2002 (RMT) and 2004 (FUND) distributions, the purchase price of distributions is a weighted average of the distribution reinvestment prices for the year.
**   Other than for initial purchase and June 30, 2009, values are stated as of December 31 of the year indicated, after reinvestment of distributions.

18  |  2009 Semiannual Report to Stockholders




Distribution Reinvestment and Cash Purchase Options


Why should I reinvest my distributions?
By reinvesting distributions, a stockholder can maintain an undiluted investment in the Fund. The regular reinvestment of distributions has a significant impact on stockholder returns. In contrast, the stockholder who takes distributions in cash is penalized when shares are issued below net asset value to other stockholders.
 
How does the reinvestment of distributions from the Royce closed-end funds work?
The Funds automatically issue shares in payment of distributions unless you indicate otherwise. The shares are generally issued at the lower of the market price or net asset value on the valuation date.
 
How does this apply to registered stockholders?
If your shares are registered directly with a Fund, your distributions are automatically reinvested unless you have otherwise instructed the Funds’ transfer agent, Computershare, in writing. A registered stockholder also has the option to receive the distribution in the form of a stock certificate or in cash if Computershare is properly notified.
 
What if my shares are held by a brokerage firm or a bank?
If your shares are held by a brokerage firm, bank, or other intermediary as the stockholder of record, you should contact your brokerage firm or bank to be certain that it is automatically reinvesting distributions on your behalf. If they are unable to reinvest distributions on your behalf, you should have your shares registered in your name in order to participate.
 
What other features are available for registered stockholders?
The Distribution Reinvestment and Cash Purchase Plans also allow registered stockholders to make optional cash purchases of shares of a Fund’s common stock directly through Computershare on a monthly basis, and to deposit certificates representing your Fund shares with Computershare for safekeeping. The Funds’ investment adviser is absorbing all commissions on optional cash purchases under the Plans through December 31, 2009.
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.

2009 Semiannual Report to Stockholders   |  19




Royce Value Trust



Schedule of Investments


    SHARES   VALUE  
             
COMMON STOCKS – 116.2%            
             
Consumer Products – 7.0%            
Apparel, Shoes and Accessories - 1.8%            

Anta Sports Products

  230,000   $ 284,486  

Burberry Group

  350,000     2,443,088  

Columbia Sportswear

  42,600     1,317,192  

Daphne International Holdings

  433,800     226,391  

K-Swiss Cl. A a

  160,000     1,360,000  

Lazare Kaplan International a

  95,437     244,319  

Polo Ralph Lauren

  4,000     214,160  

Stella International Holdings

  152,700     246,145  

Timberland Company (The) Cl. A a

  17,500     232,225  

Van De Velde

  28,000     1,022,965  

Volcom a,b

  87,800     1,097,500  

Warnaco Group (The) a

  28,500     923,400  

Weyco Group

  97,992     2,262,635  

Xinyu Hengdeli Holdings

  155,000     45,713  

Yue Yuen Industrial Holdings

  17,000     38,089  
       
 
          11,958,308  
       
 
Collectibles - 0.1%            

Russ Berrie & Company a

  96,600     377,706  
       
 
Consumer Electronics - 0.7%            

Dolby Laboratories Cl. A a

  80,000     2,982,400  

DTS a,b

  64,100     1,735,187  
       
 
          4,717,587  
       
 
Food/Beverage/Tobacco - 0.9%            

Asian Citrus Holdings

  29,200     99,735  

B&G Foods (Units)

  21,000     304,710  

B&G Foods Cl. A

  5,000     42,050  

Hershey Creamery

  709     1,205,300  

Seneca Foods Cl. A a,b

  80,000     2,673,600  

Seneca Foods Cl. B a

  13,251     443,246  

Tootsie Roll Industries

  52,000     1,179,880  
       
 
          5,948,521  
       
 
Health, Beauty and Nutrition - 0.0%            

Natural Beauty Bio-Technology

  325,000     53,974  
       
 
Home Furnishing and Appliances - 1.9%            

American Woodmark

  123,335     2,953,873  

Ekornes

  100,000     1,332,290  

Ethan Allen Interiors

  85,800     888,888  

Hunter Douglas

  36,000     1,471,439  

Kimball International Cl. B

  286,180     1,785,763  

Mohawk Industries a,b

  102,200     3,646,496  

Samson Holding

  500,000     78,318  

Universal Electronics a

  10,000     201,700  
       
 
          12,358,767  
       
 
Sports and Recreation - 1.6%            

Beneteau

  125,000     1,360,741  

Coachmen Industries a,b

  47,700     62,487  

RC2 Corporation a

  132,600     1,754,298  

Sturm, Ruger & Company

  272,900     3,394,876  

Thor Industries

  110,900     2,037,233  
    SHARES   VALUE  
             
Consumer Products (continued)            
Sports and Recreation (continued)            

Winnebago Industries a

  247,500   $ 1,838,925  
       
 
          10,448,560  
       
 
Total (Cost $46,842,349)         45,863,423  
       
 
Consumer Services – 4.3%            

Direct Marketing - 0.5%

           

Manutan International

  20,500     1,021,225  

School Specialty a,b

  11,000     222,310  

Takkt

  153,000     1,631,097  
       
 
          2,874,632  
       
 
Media and Broadcasting - 0.1%            

Discovery Communications Cl. B a,b

  18,300     370,941  

Discovery Communications Cl. C a,b

  18,300     375,699  
       
 
          746,640  
       
 
Restaurants and Lodgings - 0.5%            

Benihana a,b

  3,300     22,473  

Cafe de Coral Holdings

  6,000     11,958  

CEC Entertainment a,b

  64,100     1,889,668  

Steak n Shake a

  82,000     716,680  

Tim Hortons

  20,000     490,800  
       
 
          3,131,579  
       
 
Retail Stores - 3.2%            

Bed Bath & Beyond a,b

  7,200     221,400  

Buckle (The)

  3,500     111,195  

Bulgari

  100,000     539,018  

CarMax a,b

  160,000     2,352,000  

Charming Shoppes a

  762,800     2,837,616  

China Nepstar Chain Drugstore ADR

  20,000     114,000  

Dress Barn (The) a

  248,280     3,550,404  

Lewis Group

  260,000     1,629,234  

Men’s Wearhouse (The)

  51,700     991,606  

Pier 1 Imports a

  626,200     1,246,138  

Stein Mart a,b

  182,800     1,619,608  

Tiffany & Co.

  208,700     5,292,632  

West Marine a

  131,100     722,361  
       
 
          21,227,212  
       
 
Other Consumer Services - 0.0%            

Universal Travel Group a,b

  1,100     12,309  
       
 
Total  (Cost $32,482,782)         27,992,372  
       
 
Diversified Investment Companies – 0.5%            
Closed-End Funds - 0.5%            

Central Fund of Canada Cl. A

  211,500     2,483,010  

KKR Private Equity Investors L.P. a

  105,000     634,527  
       
 
Total (Cost $4,094,944)         3,117,537  
       
 
Financial Intermediaries – 12.7%            
Banking - 4.1%            

Ameriana Bancorp

  40,000     169,600  

Banca Finnat Euramerica

  720,000     526,403  

Banca Generali

  86,000     718,065  

Bank of N.T. Butterfield & Son

  456,676     2,374,715  

Bank Sarasin & Cie Cl. B a

  34,860     1,084,492  

20  |  2009 Semiannual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



June 30, 2009 (unaudited)



 


    SHARES   VALUE  
             
Financial Intermediaries (continued)            
Banking (continued)            

Banque Privee Edmond de Rothschild

  23   $ 646,078  

BCB Holdings a

  598,676     1,231,527  

Cadence Financial

  40,300     89,869  

Center Bancorp

  40,000     326,000  

Centrue Financial

  82,200     364,146  

CFS Bancorp

  75,000     317,250  

Chuo Mitsui Trust Holdings

  118,000     447,810  

CNB Financial

  11,116     157,514  

Commercial National Financial

  54,900     811,422  

Farmers & Merchants Bank of Long Beach

  1,200     4,260,000  

Fauquier Bankshares

  160,800     2,092,008  

Hawthorn Bancshares

  46,176     457,142  

HopFed Bancorp

  104,500     1,016,785  

Jefferson Bancshares

  32,226     175,632  

Kearny Financial

  50,862     581,861  

Mauritius Commercial Bank

  40,000     156,765  

Mechanics Bank

  200     2,220,000  

Old Point Financial

  25,000     462,500  

Peapack-Gladstone Financial

  10,000     192,900  

State Bank of Mauritius

  46,000     100,156  

Timberland Bancorp c

  469,200     1,923,720  

Vontobel Holding

  20,400     546,402  

Whitney Holding

  41,500     380,140  

Wilber Corporation (The)

  113,743     1,262,547  

Wilmington Trust

  143,500     1,960,210  
       
 
          27,053,659  
       
 
Insurance - 6.0%            

Alleghany Corporation a

  23,096     6,259,016  

Argo Group International Holdings a,b

  64,751     1,827,273  

Aspen Insurance Holdings

  64,000     1,429,760  

CNA Financial a,b

  40,000     618,800  

CNA Surety a

  100,600     1,357,094  

E-L Financial

  4,000     1,279,285  

Enstar Group a

  26,000     1,530,100  

Erie Indemnity Cl. A

  114,500     4,094,520  

First American

  20,000     518,200  

Hilltop Holdings a

  415,400     4,930,798  

Independence Holding

  317,658     2,020,305  

IPC Holdings

  7,000     191,380  

Leucadia National a

  44,940     947,785  

Markel Corporation a,b

  6,200     1,746,540  

Ming An Holdings a

  300,000     57,807  

Montpelier Re Holdings

  62,000     823,980  

NYMAGIC

  202,200     2,806,536  

Old Republic International

  20,000     197,000  

ProAssurance Corporation a

  12,000     554,520  

RLI

  90,724     4,064,435  

Zenith National Insurance

  97,000     2,108,780  
       
 
          39,363,914  
       
 
Real Estate Investment Trusts - 0.1%            

Gladstone Commercial

  30,000     388,800  
       
 
Securities Brokers - 2.3%            

Broadpoint Gleacher Securities a,b

  93,000     518,940  
    SHARES   VALUE  
             
Financial Intermediaries (continued)            
Securities Brokers (continued)            

Close Brothers Group

  43,000   $ 466,429  

D. Carnegie & Co. a,d

  14,000     0  

Daewoo Securities

  5,000     74,066  

DundeeWealth

  33,300     246,211  

Egyptian Financial Group-Hermes Holding GDR

  57,900     457,410  

FBR Capital Markets a,b

  145,800     685,260  

HQ

  40,000     539,268  

Investcorp Bank GDR

  27,000     135,000  

KBW a,b

  70,058     2,014,868  

Kim Eng Holdings

  220,000     281,605  

Lazard Cl. A

  143,300     3,857,636  

Mirae Asset Securities

  38,850     2,104,490  

Mizuho Securities

  492,300     1,530,379  

Oppenheimer Holdings Cl. A

  30,000     635,100  

optionsXpress Holdings b

  53,000     823,090  

Phatra Securities

  775,000     378,003  

UOB-Kay Hian Holdings

  190,000     174,991  

Woori Investment & Securities

  11,000     128,654  
       
 
          15,051,400  
       
 
Securities Exchanges - 0.0%            

Hellenic Exchanges

  5,500     61,336  

Singapore Exchange

  27,000     131,909  
       
 
          193,245  
       
 
Other Financial Intermediaries - 0.2%            

KKR Financial Holdings a

  481,404     447,706  

NASDAQ OMX Group a

  30,000     639,300  
       
 
          1,087,006  
       
 
Total (Cost $113,390,197)         83,138,024  
       
 
Financial Services – 14.4%            
Diversified Financial Services - 0.9%            

Encore Capital Group a,b

  88,000     1,166,000  

Franco-Nevada Corporation

  10,000     240,382  

Ocwen Financial a,b

  123,600     1,603,092  

Osaka Securities Exchange

  19     90,537  

World Acceptance a,b

  133,700     2,661,967  
       
 
          5,761,978  
       
 
Information and Processing - 2.4%            

Broadridge Financial Solutions

  35,000     580,300  

Interactive Data

  112,300     2,598,622  

MoneyGram International a

  558,500     994,130  

Morningstar a

  119,800     4,939,354  

MSCI Cl. A a,b

  57,100     1,395,524  

SEI Investments

  304,300     5,489,572  
       
 
          15,997,502  
       
 
Insurance Brokers - 1.2%            

Brown & Brown

  224,900     4,482,257  

Crawford & Company Cl. A a

  109,200     398,580  

Crawford & Company Cl. B a,b

  162,300     779,040  

Gallagher (Arthur J.) & Co.

  111,200     2,373,008  
       
 
          8,032,885  
       
 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.   2009 Semiannual Report to Stockholders  |  21



Royce Value Trust



Schedule of Investments


    SHARES   VALUE  
             
Financial Services (continued)            
Investment Management - 8.8%            

A.F.P. Provida ADR a

  22,100   $ 571,948  

ABG Sundal Collier Holding

  115,000     125,426  

Affiliated Managers Group a

  42,800     2,490,532  

AllianceBernstein Holding L.P.

  325,600     6,541,304  

AP Alternative Assets L.P. a

  233,200     569,834  

Ashmore Group

  170,000     529,350  

Azimut Holding

  76,700     727,158  

BKF Capital Group

  130,000     123,500  

BT Investment Management

  207,000     348,648  

CapMan Cl. B a

  21,900     30,834  

Coronation Fund Managers

  526,000     416,893  

Deutsche Beteiligungs

  103,605     1,773,201  

Eaton Vance

  125,300     3,351,775  

Endeavour Financial b

  150,000     180,544  

Equity Trustees

  33,202     381,247  

Evercore Partners Cl. A

  244,600     4,803,944  

F&C Asset Management

  60,000     68,999  

Federated Investors Cl. B

  195,000     4,697,550  

Fiducian Portfolio Services

  227,000     233,940  

GAMCO Investors Cl. A

  122,875     5,959,437  

GIMV

  27,000     1,347,724  

GP Investments BDR a

  15,000     59,633  

Investec

  124,700     673,020  

JAFCO

  37,300     1,243,649  

Janus Capital Group

  40,000     456,000  

MVC Capital

  424,200     3,588,732  

Onex Corporation

  50,000     859,734  

Partners Group Holding

  19,400     1,885,171  

Perpetual

  12,700     290,810  

Platinum Asset Management

  168,000     548,081  

RAB Capital

  426,000     161,442  

Rathbone Brothers

  35,400     477,729  

RHJ International a

  177,500     1,135,033  

Schroders

  168,890     2,286,181  

SHUAA Capital a

  485,000     226,573  

SPARX Group a

  7,220     1,480,912  

Sprott

  269,600     706,942  

Tasmanian Perpetual Trustees

  152,000     330,700  

Teton Advisors a,d

  1,867     4,238  

Treasury Group

  51,500     169,650  

Trust Company

  97,283     410,800  

Value Partners Group a

  953,100     415,948  

VZ Holding

  13,500     624,694  

Waddell & Reed Financial Cl. A

  168,500     4,443,345  
       
 
          57,752,805  
       
 
Special Purpose Acquisition Corporation - 0.6%            

Alternative Asset Management Acquisition (Units) a

  250,000     2,450,000  

Prospect Acquisition (Units) a

  150,000     1,459,500  
       
 
          3,909,500  
       
 
Specialty Finance - 0.5%            

Credit Acceptance a,b

  144,601     3,159,532  
       
 
Total (Cost $122,385,128)         94,614,202  
       
 
    SHARES   VALUE  
             
Health – 6.2%            
Commercial Services - 0.7%            

PAREXEL International a

  332,400   $ 4,779,912  
       
 
Drugs and Biotech - 0.8%            

American Oriental Bioengineering a,b

  15,700     83,053  

China Shineway Pharmaceutical Group

  45,000     45,801  

Endo Pharmaceuticals Holdings a

  158,300     2,836,736  

Pharmacyclics a

  383,000     513,220  

Simcere Pharmaceutical Group ADR a

  20,700     180,297  

Sinovac Biotech a

  33,000     130,350  

Sunesis Pharmaceuticals a

  552,000     216,881  

Virbac

  14,000     1,128,632  

WuXi PharmaTech Cayman ADR a,b

  14,800     139,712  
       
 
          5,274,682  
       
 
Health Services - 1.8%            

Advisory Board (The) a,b

  120,000     3,084,000  

Albany Molecular Research a

  85,000     713,150  

Bangkok Chain Hospital

  20,000     4,748  

Chem Rx (Units) a

  280,000     28,000  

Cross Country Healthcare a

  30,000     206,100  

eResearch Technology a

  117,624     730,445  

HMS Holdings a,b

  50,000     2,036,000  

ICON ADR a

  105,400     2,274,532  

On Assignment a,b

  375,400     1,467,814  

Res-Care a

  65,460     936,078  

WellCare Health Plans a,b

  5,000     92,450  
       
 
          11,573,317  
       
 
Medical Products and Devices - 2.9%            

Affymetrix a

  10,000     59,300  

Allied Healthcare Products a

  180,512     776,202  

Atrion Corporation

  15,750     2,111,917  

Carl Zeiss Meditec

  110,000     1,543,058  

CONMED Corporation a

  81,500     1,264,880  

Edwards Lifesciences a

  2,200     149,666  

Fielmann

  25,000     1,652,890  

Golden Meditech a

  200,000     35,399  

IDEXX Laboratories a,b

  119,600     5,525,520  

STERIS Corporation

  98,600     2,571,488  

Straumann Holding

  6,700     1,222,565  

Urologix a,b

  445,500     552,420  

Young Innovations

  62,550     1,362,965  

Zoll Medical a

  400     7,736  
       
 
          18,836,006  
       
 
Personal Care - 0.0%            

Chattem a,b

  3,000     204,300  
       
 
Total (Cost $33,501,982)         40,668,217  
       
 
Industrial Products – 20.1%            
Automotive - 1.6%            

Dongfeng Motor Group

  90,000     76,148  

Gentex Corporation

  47,500     551,000  

Great Wall Motor

  136,000     107,643  

LKQ Corporation a

  310,000     5,099,500  

Minth Group

  186,600     154,869  

Nokian Renkaat

  82,000     1,546,090  

Norstar Founders Group a,d

  524,000     24,679  

22  |  2009 Semiannual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



June 30, 2009 (unaudited)



 


    SHARES   VALUE  
             
Industrial Products (continued)            
Automotive (continued)            

SORL Auto Parts a,b

  26,423   $ 100,936  

Superior Industries International

  40,000     564,000  

WABCO Holdings

  103,800     1,837,260  

Wonder Auto Technology a,b

  9,600     97,248  

Xinyi Glass Holdings

  260,000     223,682  
       
 
          10,383,055  
       
 
Building Systems and Components - 1.9%            

Armstrong World Industries a

  81,000     1,335,690  

Decker Manufacturing

  6,022     78,888  

NCI Building Systems a,b

  13,900     36,696  

Preformed Line Products

  91,600     4,035,896  

Simpson Manufacturing

  306,900     6,635,178  

Somfy

  3,000     524,319  
       
 
          12,646,667  
       
 
Construction Materials - 1.7%            

Ash Grove Cement Cl. B

  50,518     9,345,830  

Owens Corning a,b

  25,000     319,500  

Pretoria Portland Cement

  287,240     1,082,340  

USG Corporation a,b

  50,000     503,500  
       
 
          11,251,170  
       
 
Industrial Components - 2.5%            

BYD Company a

  7,000     28,313  

CLARCOR

  92,500     2,700,075  

Donaldson Company

  92,800     3,214,592  

GrafTech International a

  273,490     3,093,172  

II-VI a

  13,500     299,295  

Mueller Water Products Cl. A

  72,500     271,150  

PerkinElmer

  185,800     3,232,920  

Powell Industries a

  92,400     3,425,268  
       
 
          16,264,785  
       
 
Machinery - 4.0%            

Astec Industries a

  52,300     1,552,787  

Baldor Electric

  62,900     1,496,391  

Burckhardt Compression Holding

  12,000     1,554,827  

Burnham Holdings Cl. B

  36,000     316,800  

Columbus McKinnon a

  75,500     955,075  

Franklin Electric

  104,600     2,711,232  

Hardinge

  26,193     111,320  

HLS Systems International a

  51,755     300,179  

Jinpan International

  10,515     301,150  

Lincoln Electric Holdings

  104,180     3,754,647  

Lonking Holdings

  60,000     29,527  

Manitou BF a

  102,200     1,219,646  

Nordson Corporation

  137,200     5,304,152  

Shanghai Prime Machinery

  450,000     82,497  

Spirax-Sarco Engineering

  121,000     1,684,342  

Takatori Corporation a

  40,000     107,693  

Wasion Group Holdings

  50,000     37,347  

Williams Controls a

  37,499     234,744  

Woodward Governor

  231,600     4,585,680  
       
 
          26,340,036  
       
 
Metal Fabrication and Distribution - 2.8%            

Central Steel & Wire

  6,062     3,940,300  
    SHARES   VALUE  
             
Industrial Products (continued)            
Metal Fabrication and Distribution (continued)            

Commercial Metals

  36,600   $ 586,698  

CompX International Cl. A

  185,300     1,150,713  

Fushi Copperweld a,b

  12,645     104,574  

NN a

  197,100     331,128  

RBC Bearings a

  55,000     1,124,750  

Reliance Steel & Aluminum

  74,820     2,872,340  

Schnitzer Steel Industries Cl. A

  100,000     5,286,000  

Sims Metal Management ADR

  155,075     3,197,646  
       
 
          18,594,149  
       
 
Miscellaneous Manufacturing - 2.7%            

Barnes Group

  20,000     237,800  

Brady Corporation Cl. A

  138,400     3,476,608  

China Automation Group

  480,500     186,101  

Matthews International Cl. A

  37,000     1,151,440  

Mettler-Toledo International a

  33,500     2,584,525  

PMFG a

  383,200     3,375,992  

Rational

  14,000     1,615,006  

Raven Industries

  86,200     2,206,720  

Semperit AG Holding

  44,500     1,189,925  

Synalloy Corporation

  198,800     1,650,040  
       
 
          17,674,157  
       
 
Paper and Packaging - 0.3%            

Greif Cl. A

  3,600     159,192  

Mayr-Melnhof Karton

  23,000     1,940,050  
       
 
          2,099,242  
       
 
Pumps, Valves and Bearings - 1.1%            

Graco

  119,625     2,634,143  

IDEX Corporation

  86,500     2,125,305  

Pfeiffer Vacuum Technology

  34,595     2,538,195  
       
 
          7,297,643  
       
 
Specialty Chemicals and Materials - 1.2%            

Cabot Corporation

  121,000     1,522,180  

China Sky Chemical Fibre a

  255,000     27,823  

Hawkins

  206,878     4,671,305  

Kingboard Chemical Holdings

  72,900     181,958  

Migao Corporation a

  6,600     43,691  

Victrex

  147,000     1,367,133  
       
 
          7,814,090  
       
 
Textiles - 0.1%            

Pacific Textile Holdings

  720,000     199,132  

Unifi a

  121,000     171,820  
       
 
          370,952  
       
 
Other Industrial Products - 0.2%            

China Fire & Security Group a,b

  6,300     76,671  

Harbin Electric a,b

  9,000     140,760  

Vacon

  33,500     1,116,594  
       
 
          1,334,025  
       
 
Total (Cost $98,785,756)         132,069,971  
       
 
Industrial Services – 16.8%            
Advertising and Publishing - 0.4%            

Airmedia Group ADR a

  16,700     107,548  

Lamar Advertising Cl. A a

  51,000     778,770  

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.   2009 Semiannual Report to Stockholders  |  23



Royce Value Trust



Schedule of Investments


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

SinoMedia Holding

  350,000   $ 81,622  

Sun-Times Media Group Cl. A a,b

  180,000     1,080  

ValueClick a

  145,000     1,525,400  

Voyager Learning a

  150,000     517,500  
       
 
          3,011,920  
       
 
Commercial Services - 9.2%            

Animal Health International a,b

  19,000     29,450  

ChinaCast Education a,b

  11,900     84,728  

Convergys Corporation a,b

  121,000     1,122,880  

Copart a

  131,100     4,545,237  

Corinthian Colleges a,b

  189,400     3,206,542  

CRA International a

  54,587     1,515,335  

Diamond Management & Technology Consultants

  80,400     337,680  

Epure International

  50,000     15,421  

Forrester Research a

  40,300     989,365  

Gartner a

  213,000     3,250,380  

Global Sources a,b

  12,536     90,385  

Hackett Group a,b

  655,000     1,526,150  

Hewitt Associates Cl. A a

  140,720     4,190,642  

ITT Educational Services a

  21,000     2,113,860  

Landauer

  83,900     5,146,426  

Manpower

  62,600     2,650,484  

ManTech International Cl. A a

  35,400     1,523,616  

MAXIMUS

  124,900     5,152,125  

Michael Page International

  365,000     1,439,735  

Monster Worldwide a,b

  47,800     564,518  

MPS Group a

  564,600     4,313,544  

Ritchie Bros. Auctioneers

  375,200     8,798,440  

Robert Half International

  70,000     1,653,400  

Sotheby’s

  371,600     5,243,276  

Spherion Corporation a,b

  62,800     258,736  

TeleTech Holdings a

  10,000     151,500  

Watson Wyatt Worldwide Cl. A

  20,500     769,365  
       
 
          60,683,220  
       
 
Engineering and Construction - 1.4%            

Desarrolladora Homex ADR a,b

  14,100     393,249  

Integrated Electrical Services a,b

  355,400     2,775,674  

KBR

  180,000     3,319,200  

NVR a,b

  5,000     2,511,950  
       
 
          9,000,073  
       
 
Food, Tobacco and Agriculture - 0.6%            

Agria Corporation ADR a,b

  25,000     52,250  

Alico

  27,000     810,540  

Chaoda Modern Agriculture

  235,872     139,755  

China Green (Holdings)

  289,700     303,990  

China Milk Products Group

  105,000     28,946  

Genting Plantations

  50,000     78,065  

Hanfeng Evergreen a

  13,500     68,594  

Intrepid Potash a

  57,427     1,612,550  

MGP Ingredients a

  127,400     364,364  

Nutreco Holding

  58     2,263  

Origin Agritech a,b

  97,500     452,400  

Want Want China Holdings

  60,000     33,578  
    SHARES   VALUE  
             
Industrial Services (continued)            
Food, Tobacco and Agriculture (continued)            

Zhongpin a,b

  4,800   $ 49,728  
       
 
          3,997,023  
       
 
Industrial Distribution - 0.8%            

Lawson Products

  161,431     2,293,934  

MSC Industrial Direct Cl. A

  80,600     2,859,688  
       
 
          5,153,622  
       
 
Transportation and Logistics - 4.4%            

Alexander & Baldwin

  60,000     1,406,400  

C. H. Robinson Worldwide

  56,000     2,920,400  

Expeditors International of Washington

  6,000     200,040  

Forward Air

  269,750     5,751,070  

Frozen Food Express Industries

  286,635     911,499  

Hub Group Cl. A a

  174,400     3,599,616  

Landstar System

  133,200     4,783,212  

Pacific Basin Shipping a

  10,000     6,308  

Patriot Transportation Holding a

  70,986     5,177,009  

Universal Truckload Services

  120,100     1,879,565  

UTI Worldwide a

  175,000     1,995,000  
       
 
          28,630,119  
       
 
Total (Cost $93,168,736)         110,475,977  
       
 
Natural Resources – 8.4%            
Energy Services - 4.3%            

Cal Dive International a

  50,000     431,500  

CARBO Ceramics

  109,700     3,751,740  

Core Laboratories

  10,000     871,500  

Ensign Energy Services

  225,100     3,289,946  

Exterran Holdings a

  103,600     1,661,744  

Helmerich & Payne

  66,200     2,043,594  

ION Geophysical a,b

  464,500     1,193,765  

Jutal Offshore Oil Services a

  120,000     12,787  

Major Drilling Group International

  121,200     1,902,688  

Pason Systems

  163,000     1,313,081  

RPC

  25,000     208,750  

SEACOR Holdings a

  101,300     7,621,812  

TETRA Technologies a,b

  68,000     541,280  

Trican Well Service

  99,900     860,592  

Unit Corporation a

  50,000     1,378,500  

Willbros Group a,b

  103,800     1,298,538  

Yingli Green Energy Holding ADR a,b

  800     10,840  
       
 
          28,392,657  
       
 
Oil and Gas - 0.7%            

Bill Barrett a

  50,000     1,373,000  

Cimarex Energy

  95,490     2,706,187  

CNPC Hong Kong

  110,000     92,130  

Penn Virginia

  22,880     374,546  

PetroCorp a,d

  61,400     0  
       
 
          4,545,863  
       
 
Precious Metals and Mining - 1.9%            

Etruscan Resources a

  745,900     128,255  

Gammon Gold a

  198,300     1,322,661  

Golden Star Resources a,b

  350,000     717,500  

Harry Winston Diamond

  10,000     59,600  

24  |  2009 Semiannual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



June 30, 2009 (unaudited)



 


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

Hecla Mining a,b

  528,600   $ 1,416,648  

IAMGOLD Corporation

  235,620     2,384,474  

Kimber Resources a,b

  560,000     274,400  

New Gold a,b

  640,000     1,708,800  

Northam Platinum

  463,000     1,805,285  

Northgate Minerals a

  140,000     299,600  

NovaGold Resources a,b

  70,000     299,600  

Pan American Silver a

  41,000     751,530  

Royal Gold

  34,400     1,434,480  

Yanzhou Coal Mining ADR

  8,000     110,080  

Zhaojin Mining Industry

  15,000     24,281  
       
 
          12,737,194  
       
 
Real Estate - 1.5%            

Consolidated-Tomoka Land

  13,564     475,825  

PICO Holdings a

  75,200     2,158,240  

St. Joe Company (The) a,b

  174,100     4,611,909  

Tejon Ranch a,b

  89,000     2,357,610  
       
 
          9,603,584  
       
 
Other Natural Resources - 0.0%            

Hidili Industry International

           

Development a

  200,000     158,205  

Jiangxi Copper

  47,000     76,479  
       
 
          234,684  
       
 
Total (Cost $55,187,192)         55,513,982  
       
 
Technology – 21.1%            
Aerospace and Defense - 1.3%            

AerCap Holdings a

  45,000     324,900  

Ducommun

  117,200     2,202,188  

HEICO Corporation

  119,700     4,340,322  

HEICO Corporation Cl. A

  48,200     1,410,332  

Hexcel Corporation a

  47,500     452,675  
       
 
          8,730,417  
       
 
Components and Systems - 5.6%            

AAC Acoustic Technologies Holdings

  180,700     143,406  

Analogic Corporation

  40,135     1,482,988  

Belden

  57,800     965,260  

Benchmark Electronics a

  165,200     2,378,880  

Checkpoint Systems a

  56,060     879,582  

China Digital TV Holding Company ADR

  5,000     43,700  

China Security & Surveillance Technology a,b

  6,000     45,240  

Diebold

  73,600     1,940,096  

Dionex Corporation a

  81,000     4,943,430  

Electronics for Imaging a,b

  25,000     266,500  

Energy Conversion Devices a,b

  84,500     1,195,675  

Intermec a

  23,000     296,700  

Newport Corporation a

  537,200     3,110,388  

Perceptron a

  357,700     1,230,488  

Plexus Corporation a

  264,700     5,415,762  

Richardson Electronics

  520,712     1,702,728  

Technitrol

  261,200     1,689,964  

Teradata Corporation a

  82,500     1,932,975  

Vaisala Cl. A

  96,000     3,394,146  
    SHARES   VALUE  
             
Technology (continued)            
Components and Systems (continued)            

Vishay Intertechnology a

  186,000   $ 1,262,940  

VTech Holdings

  42,500     291,308  

Zebra Technologies Cl. A a

  83,025     1,964,372  
       
 
          36,576,528  
       
 
Distribution - 0.9%            

Agilysys

  165,125     772,785  

Anixter International a

  61,795     2,322,874  

China 3C Group a

  6,600     4,884  

Tech Data a

  86,500     2,829,415  
       
 
          5,929,958  
       
 
Internet Software and Services - 0.2%            

DealerTrack Holdings a,b

  45,000     765,000  

NetEase.com ADR a,b

  3,500     123,130  

NHN Corporation a

  300     41,452  

Perficient a

  10,000     69,900  

RealNetworks a

  245,400     733,746  
       
 
          1,733,228  
       
 
IT Services - 2.8%            

Alten a

  70,000     1,171,700  

AsiaInfo Holdings a

  11,680     201,013  

Black Box

  42,300     1,415,781  

DST Systems a,b

  5,000     184,750  

Metavante Technologies a,b

  20,000     517,200  

Sapient Corporation a

  806,602     5,073,527  

SRA International Cl. A a

  190,800     3,350,448  

Syntel

  152,679     4,800,228  

Total System Services

  106,000     1,419,340  

Yucheng Technologies a,b

  15,400     131,362  
       
 
          18,265,349  
       
 
Semiconductors and Equipment - 4.0%            

Analog Devices

  30,000     743,400  

ASM Pacific Technology

  21,400     110,111  

BE Semiconductor Industries a,b

  58,000     162,400  

Brooks Automation a

  5,152     23,081  

Cognex Corporation

  236,200     3,337,506  

Coherent a,b

  215,500     4,456,540  

Diodes a,b

  252,450     3,948,318  

Exar Corporation a

  157,576     1,132,971  

Himax Technologies ADR

  80,500     301,875  

Image Sensing Systems a

  8,310     77,283  

International Rectifier a

  120,000     1,777,200  

Intevac a

  57,450     500,390  

Power Integrations

  49,000     1,165,710  

Rofin-Sinar Technologies a

  274,700     5,496,747  

Semitool a

  50,000     231,000  

TTM Technologies a

  221,400     1,762,344  

Varian a

  2,000     78,860  

Vimicro International ADR a

  270,000     540,000  

Virage Logic a,b

  120,000     540,000  
       
 
          26,385,736  
       
 
Software - 4.6%            

ACI Worldwide a

  201,150     2,808,054  

Advent Software a,b

  162,900     5,341,491  

ANSYS a,b

  100,000     3,116,000  

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.   2009 Semiannual Report to Stockholders  |  25



Royce Value Trust

June 30, 2009 (unaudited)



Schedule of Investments


    SHARES   VALUE  
             
Technology (continued)            
Software (continued)            

Aspen Technology a

  42,100   $ 358,692  

Avid Technology a

  186,000     2,494,260  

Blackbaud

  36,890     573,640  

Epicor Software a

  79,900     423,470  

Fair Isaac

  59,500     919,870  

JDA Software Group a

  99,900     1,494,504  

Majesco Entertainment a

  36,255     70,697  

MSC.Software a

  146,900     978,354  

National Instruments

  82,900     1,870,224  

Net 1 UEPS Technologies a,b

  50,000     679,500  

Pegasystems

  16,200     427,356  

PLATO Learning a

  149,642     598,568  

Rosetta Stone a,b

  5,000     137,200  

SPSS a

  179,600     5,993,252  

Sybase a

  57,600     1,805,184  

THQ a

  20,000     143,200  
       
 
          30,233,516  
       
 
Telecommunications - 1.7%            

Adaptec a

  1,743,100     4,619,215  

ADTRAN

  65,000     1,395,550  

Globecomm Systems a

  233,700     1,680,303  

LiveWire Mobile a

  380,000     62,700  

Sonus Networks a,b

  454,000     730,940  

Sycamore Networks a

  221,000     691,730  

Tandberg

  92,500     1,561,586  

Zhone Technologies a

  1,120,000     358,400  
       
 
          11,100,424  
       
 
Total (Cost $156,430,021)         138,955,156  
       
 
Miscellaneouse – 4.7%            
Total (Cost $26,802,244)         30,903,094  
       
 
TOTAL COMMON STOCKS            

(Cost $783,071,331)

 

      763,311,955  
       
 
    SHARES   VALUE  
             
PREFERRED STOCKS – 0.7%            

Duratex

  182,400   $ 2,020,875  

Seneca Foods Conv. a,d

  85,000     2,556,630  
       
 
TOTAL PREFERRED STOCKS            

(Cost $4,237,076)

        4,577,505  
       
 
REPURCHASE AGREEMENT – 16.6%            

State Street Bank & Trust Company, 0.01% dated 6/30/09, due 7/1/09, maturity value $108,658,030 (collateralized by obligations of various U.S. Government Agencies, 4.375% due 3/17/10-3/31/10, valued at $111,379,100)
(Cost $108,658,000)

        108,658,000  
       
 
COLLATERAL RECEIVED FOR SECURITIES LOANED – 5.3%            

Money Market Funds Federated Government Obligations Fund
(7 day yield-0.1864%)
(Cost $34,913,256)

        34,913,256  
       
 
TOTAL INVESTMENTS – 138.8%            

(Cost $930,879,663)

        911,460,716  
             
LIABILITIES LESS CASH AND OTHER ASSETS – (5.3)%         (34,784,694 )
             
PREFERRED STOCK – (33.5)%         (220,000,000 )
       
 
             
NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS – 100.0%   $ 656,676,022  
       
 

  New additions in 2009.
a   Non-income producing.
b   All or a portion of these securities were on loan at June 30, 2009. Total market value of loaned securities at June 30, 2009 was $33,354,410.
c   At June 30, 2009, 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.
d   Securities for which market quotations are not readily available represent 0.4% 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 2009 and less than 1% of net assets applicable to Common Stockholders.
    Bold indicates the Fund’s 20 largest equity holdings in terms of June 30, 2009 market value.
     
TAX INFORMATION: The cost of total investments for Federal income tax purposes was $932,691,425. At June 30, 2009, net unrealized depreciation for all securities was $(21,230,709), consisting of aggregate gross unrealized appreciation of $181,148,105 and aggregate gross unrealized depreciation of $202,378,814. The primary difference between book and tax basis cost is the timing of the recognition of losses on securities sold.


26  |  2009 Semiannual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



Royce Value Trust

June 30, 2009 (unaudited)


Statement of Assets and Liabilities


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

Non-Affiliated Companies (cost $816,483,347)

  $ 800,878,996  

Affiliated Companies (cost $5,738,316)

    1,923,720  

Total investments at value     802,802,716  
Repurchase agreements (at cost and value)     108,658,000  
Cash and foreign currency     52,458  
Receivable for investments sold     1,439,059  
Receivable for dividends and interest     778,929  
Prepaid expenses and other assets     222,914  

Total Assets

    913,954,076  

LIABILITIES:        
Payable for collateral on loaned securities     34,913,256  
Payable for investments purchased     1,831,288  
Preferred dividends accrued but not yet declared     288,447  
Accrued expenses     245,063  

Total Liabilities

    37,278,054  

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   $ 656,676,022  

ANALYSIS OF NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:        
Common Stock paid-in capital - $0.001 par value per share; 66,023,310 shares outstanding (150,000,000 shares authorized)   $ 804,410,997  
Undistributed net investment income (loss)     8,762,588  
Accumulated net realized gain (loss) on investments and foreign currency     (109,698,453 )
Net unrealized appreciation (depreciation) on investments and foreign currency     (19,420,227 )
Unallocated and accrued distributions     (27,378,883 )

Net Assets applicable to Common Stockholders (net asset value per share - $9.95)

  $ 656,676,022  

*Investments at identified cost (including $34,913,256 of collateral on loaned securities)   $ 822,221,663  
 Market value of loaned securities     33,354,410  

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.   2009 Semiannual Report to Stockholders  |  27



Royce Value Trust

Six Months Ended June 30, 2009 (unaudited)



Statement of Operations


INVESTMENT INCOME:        
Income:        

Dividends*

       

Non-Affiliated Companies

  $ 5,620,120  

Affiliated Companies

    103,224  

Interest

    61,026  

Securities lending

    192,610  

Total income     5,976,980  

Expenses:        

Stockholder reports

    219,520  

Custody and transfer agent fees

    90,611  

Administrative and office facilities expenses

    64,148  

Directors’ fees

    52,547  

Professional fees

    42,915  

Other expenses

    75,879  

Total expenses     545,620  

Net investment income (loss)     5,431,360  

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:        
Net realized gain (loss):        

Investments in Non-Affiliated Companies

    (83,000,452 )

Investments in Affiliated Companies

    (2,488,607 )

Foreign currency transactions

    (4,955 )
Net change in unrealized appreciation (depreciation):        

Investments and foreign currency translations

    150,595,974  

Other assets and liabilities denominated in foreign currency

    2,304  

Net realized and unrealized gain (loss) on investments and foreign currency     65,104,264  

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM INVESTMENT OPERATIONS     70,535,624  

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS     (6,490,000 )

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS RESULTING FROM INVESTMENT OPERATIONS   $ 64,045,624  
* Net of foreign withholding tax of $268,250.        

28  |  2009 Semiannual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



Royce Value Trust


Statement of Changes in Net Assets


    Six months ended        
    6/30/09   Year ended
    (unaudited)   12/31/08
INVESTMENT OPERATIONS:                
Net investment income (loss)   $ 5,431,360     $ 8,857,568  
Net realized gain (loss) on investments and foreign currency     (85,494,014 )     41,802,074  
Net change in unrealized appreciation (depreciation) on investments and foreign currency     150,598,278       (567,740,312 )

Net increase (decrease) in net assets resulting from investment operations     70,535,624       (517,080,670 )

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:                
Net investment income           (621,668 )
Net realized gain on investments and foreign currency           (12,358,332 )
Unallocated distributions*     (6,490,000 )      

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

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS RESULTING FROM INVESTMENT OPERATIONS     64,045,624       (530,060,670 )

DISTRIBUTIONS TO COMMON STOCKHOLDERS:                
Net investment income           (3,638,680 )
Net realized gain on investments and foreign currency           (72,334,389 )
Return of capital           (29,418,267 )
Unallocated distributions*     (20,600,434 )      

Total distributions to Common Stockholders     (20,600,434 )     (105,391,336 )

CAPITAL SHARE TRANSACTIONS:                
Reinvestment of distributions to Common Stockholders     9,996,770       54,016,743  

Total capital stock transactions     9,996,770       54,016,743  

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS     53,441,960       (581,435,263 )

NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:                

Beginning of period

    603,234,062       1,184,669,325  

End of period (including undistributed net investment income (loss) of $8,762,588 at 6/30/09 and $3,331,228 at 12/31/08)

  $ 656,676,022     $ 603,234,062  

* To be allocated to net investment income, net realized gains and/or return of capital at year end.

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




Royce Value Trust


Financial Highlights

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

    Six months   Years ended December 31,
    ended  
    June 30, 2009                                        
    (unaudited)     2008       2007       2006       2005       2004  

NET ASSET VALUE, BEGINNING OF PERIOD   $ 9.37     $ 19.74     $ 20.62     $ 18.87     $ 18.95     $ 17.03  

INVESTMENT OPERATIONS:                                                

Net investment income (loss)

    0.08       0.14       0.09       0.13       0.01       (0.08 )

Net realized and unrealized gain (loss) on investments and

                                               

foreign currency

    0.94       (8.50 )     1.13       3.63       1.75       3.81  

Total investment operations

    1.02       (8.36 )     1.22       3.76       1.76       3.73  

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:                                                

Net investment income

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

Net realized gain on investments and foreign currency

    –            (0.20 )     (0.21 )     (0.21 )     (0.24 )     (0.26 )

Unallocated distributions*

    (0.10 )     –            –            –            –            –       

Total distributions to Preferred Stockholders

    (0.10 )     (0.21 )     (0.22 )     (0.23 )     (0.24 )     (0.26 )

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON                                                

STOCKHOLDERS RESULTING FROM INVESTMENT OPERATIONS

    0.92       (8.57 )     1.00       3.53       1.52       3.47  

DISTRIBUTIONS TO COMMON STOCKHOLDERS:                                                

Net investment income

    –            (0.06 )     (0.09 )     (0.14 )     –            –       

Net realized gain on investments and foreign currency

    –            (1.18 )     (1.76 )     (1.64 )     (1.61 )     (1.55 )

Return of capital

    –            (0.48 )     –            –            –            –       

Unallocated distributions*

    (0.32 )     –            –            –            –            –       

Total distributions to Common Stockholders

    (0.32 )     (1.72 )     (1.85 )     (1.78 )     (1.61 )     (1.55 )

CAPITAL STOCK TRANSACTIONS:                                                

Effect of reinvestment of distributions by Common Stockholders

    (0.02 )     (0.08 )     (0.03 )     (0.00 )     0.01       0.00  

Total capital stock transactions

    (0.02 )     (0.08 )     (0.03 )     (0.00 )     0.01       0.00  

NET ASSET VALUE, END OF PERIOD   $ 9.95     $ 9.37     $ 19.74     $ 20.62     $ 18.87     $ 18.95  

MARKET VALUE, END OF PERIOD   $ 8.41     $ 8.39     $ 18.58     $ 22.21     $ 20.08     $ 20.44  

TOTAL RETURN (a):                                                
Market Value     5.52 %***     (48.27 )%     (8.21 )%     20.96 %     6.95 %     29.60 %
Net Asset Value     11.79 %***     (45.62 )%     5.04 %     19.50 %     8.41 %     21.42 %
RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO                                                

COMMON STOCKHOLDERS:

                                               
Total expenses (b,c)     0.19 %**     1.39 %     1.38 %     1.29 %     1.49 %     1.51 %

Management fee expense (d)

    0.00 %**     1.27 %     1.29 %     1.20 %     1.37 %     1.39 %

Other operating expenses

    0.19 %**     0.12 %     0.09 %     0.09 %     0.12 %     0.12 %

Net investment income (loss)

    1.92 %**     0.94 %     0.43 %     0.62 %     0.03 %     (0.50 )%
SUPPLEMENTAL DATA:                                                
Net Assets Applicable to Common Stockholders,                                                

End of Period (in thousands)

  $ 656,676     $ 603,234     $ 1,184,669     $ 1,180,428     $ 1,032,120     $ 993,304  
Liquidation Value of Preferred Stock,                                                

End of Period (in thousands)

  $ 220,000     $ 220,000     $ 220,000     $ 220,000     $ 220,000     $ 220,000  
Portfolio Turnover Rate     11 %     25 %     26 %     21 %     31 %     30 %
PREFERRED STOCK:                                                
Total shares outstanding     8,800,000       8,800,000       8,800,000       8,800,000       8,800,000       8,800,000  
Asset coverage per share   $ 99.62     $ 93.55     $ 159.62     $ 159.14     $ 142.29     $ 137.88  
Liquidation preference per share   $ 25.00     $ 25.00     $ 25.00     $ 25.00     $ 25.00     $ 25.00  
Average market value per share (e):   $ 22.37     $ 22.51     $ 23.68     $ 23.95     $ 24.75     $ 24.50  

(a)   The Market Value Total Return is calculated assuming a purchase of Common Stock on the opening of the first business day and a sale on the closing of the last business day of each period reported. Dividends and distributions are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund’s Distribution Reinvestment and Cash Purchase Plan. Net Asset Value Total Return is calculated on the same basis, except that the Fund’s net asset value is used on the purchase and sale dates instead of market value.
(b)   Expense ratios based on total average net assets including liquidation value of Preferred Stock were 0.14%, 1.13%, 1.17%, 1.08%, 1.22% and 1.21% for the periods ended June 30, 2009 and December 31, 2008, 2007, 2006, 2005 and 2004, respectively.
(c)   Expense ratios based on average net assets applicable to Common Stockholders before waiver of fees and after earnings credits would have been 0.19%, 1.39%, 1.38%, 1.29%, 1.49% and 1.51% for the periods ended June 30, 2009 and December 31, 2008, 2007, 2006, 2005 and 2004, respectively.
(d)   The management fee is calculated based on average net assets over a rolling 60-month basis, while the above ratios of management fee expenses are based on the average net assets applicable to Common Stockholders over a 12-month basis.
(e)   The average of month-end market values during the period that the 5.90% Preferred Stock was outstanding.
*   To be allocated to net investment income, net realized gains and/or return of capital at year end.
**   Annualized.
***   Not Annualized.

30  |  2009 Semiannual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



Royce Value Trust


Notes to Financial Statements (unaudited)


Summary of Significant Accounting Policies:
     Royce Value Trust, Inc. (the “Fund”), was incorporated under the laws of the State of Maryland on July 1, 1986 as a diversified closed-end investment company. The Fund commenced operations on November 26, 1986.
     The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the evaluation of subsequent events through August 13, 2009, the issuance date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
 
Valuation of Investments:
     Securities are valued as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq’s Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their bid price. Other over-the-counter securities for which market quotations are readily available are valued at their highest bid price, except in the case of some bonds and other fixed income securities which may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. The Fund values its non-U.S. dollar denominated securities in U.S. dollars daily at the prevailing foreign currency exchange rates as quoted by a major bank. Securities for which market quotations are not readily available are valued at their fair value under procedures established by the Fund’s Board of Directors. In addition, if, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. The Fund uses an independent pricing service to provide fair value estimates for relevant non-U.S. equity securities on days when the U.S. market volatility exceeds a certain threshold. This pricing service uses proprietary correlations it has developed between the movement of prices of non-U.S. equity securities and indices of U.S.-traded securities, futures contracts and other indications to estimate the fair value of relevant non-U.S. securities. When fair value pricing is employed, the prices of securities used by the Fund may differ from quoted or published prices for the same security. Investments in money market funds are valued at net asset value per share.
     Various inputs are used in determining the value of the Fund’s investments, as noted above. These inputs are summarized in the three broad levels below:
       Level 1 – quoted prices in active markets for identical securities
       Level 2 – other significant observable inputs (including quoted prices for similar securities, foreign securities that may be fair valued and repurchase agreements)
       Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)
     The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
 
     The following is a summary of the inputs used to value the Fund’s investments as of June 30, 2009:

    Level 1     Level 2     Level 3     Total

      Equities   $644,476,958     $120,826,955     $2,585,547     $767,889,460
      Cash Equivalents   -     143,571,256     -     143,571,256

Level 3 Reconciliation:

          Change in                              
          unrealized                              
    Balance as of     appreciation                       Realized Gain     Balance as of
    12/31/08     (depreciation)     Purchases     Transfers In     Sales     (Loss)     6/30/09

      Equities   $1,639,582     $1,888,478     $2,098     $62,339     $52,424     $(954,526)     $2,585,547

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

Foreign Currency:
    Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, expiration of currency forward contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the


2009 Semiannual Report to Stockholders  |  31



Royce Value Trust


Notes to Financial Statements (unaudited) (continued)


amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, including investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.

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

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

Distributions:
    Effective May 18, 2009, the Fund pays any dividends and capital gain distributions annually in December on the Fund’s Common Stock. Prior to that date, the Fund paid quarterly distributions on the Fund’s Common Stock at the annual rate of 9% of the rolling average of the prior four calendar quarter-end NAVs of the Fund’s Common Stock, with the fourth quarter distribution being the greater of 2.25% of the rolling average or the distribution required by IRS regulations. Distributions to Preferred Stockholders are accrued daily and paid quarterly and distributions to Common Stockholders are recorded on ex-dividend date. Distributable capital gains and/or net investment income are first allocated to Preferred Stockholder distributions, with any excess allocable to Common Stockholders. If capital gains and/or net investment income are allocated to both Preferred and Common Stockholders, the tax character of such allocations is proportional. To the extent that distributions are not paid from long-term capital gains, net investment income or net short-term capital gains, they will represent a return of capital. Distributions are determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United States of America. Permanent book and tax differences relating to stockholder distributions will result in reclassifications within the capital accounts. Undistributed net investment income may include temporary book and tax basis differences, which will reverse in a subsequent period. Any taxable income or gain remaining undistributed at fiscal year end is distributed in the following year.

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

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

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

Capital Stock:
    The Fund issued 1,646,914 and 4,367,983 shares of Common Stock as reinvestment of distributions by Common Stockholders for the six months ended June 30, 2009 and the year ended December 31, 2008, respectively.
    At June 30, 2009, 8,800,000 shares of 5.90% Cumulative Preferred Stock were outstanding. The Fund, at its option, may redeem the Cumulative Preferred Stock, in whole or in part, at the redemption price. The Cumulative Preferred Stock is classified outside of permanent equity (net assets applicable to Common Stockholders) in the accompanying financial statements in accordance with Emerging Issues Task Force (EITF) Topic D-98, Classification and Measurement of Redeemable Securities, that requires preferred securities that are redeemable for cash or other assets to be classified outside of permanent equity to the extent that the redemption is at a fixed or determinable price and at the option of the holder or upon the occurrence of an event that is not solely within the control of the issuer.
    The Fund is required to meet certain asset coverage tests with respect to the Cumulative Preferred Stock as required by the 1940 Act. In addition,


32  |  2009 Semiannual Report to Stockholders



Royce Value Trust


Notes to Financial Statements (unaudited) (continued)

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