UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-04875

Name of Registrant: Royce Value Trust, Inc.

Address of Registrant: 1414 Avenue of the Americas
New York, NY 10019

Name and address of agent for service: John E. Denneen, Esquire
  1414 Avenue of the Americas
  New York, NY 10019

Registrant’s telephone number, including area code: (212) 486-1445
Date of fiscal year end: December 31
Date of reporting period: January 1, 2007 – June 30, 2007

Item 1. Reports to Shareholders

 
     
 
Royce Value Trust


Royce Micro-Cap Trust


Royce Focus Trust


























 		 

SEMIANNUAL
REVIEW AND REPORT
 TO STOCKHOLDERS
   


 


    
   


 


    
   


 		    
     
 





www.roycefunds.com		  


A Few Words on Closed-End Funds

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

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

 
Why Dividend Reinvestment Is Important		  
 

A very important component of an investor’s total return comes from the reinvestment of distributions. By reinvesting distributions, our investors can maintain an undiluted investment in a Fund. To get a fair idea of the impact of reinvested distributions, please see the charts on pages 13, 15 and 17. For additional information on the Funds’ Distribution Reinvestment and Cash Purchase Options and the benefits for stockholders, please see page 19 or visit our website at www.roycefunds.com.
  
     
     
 
This page is not part of the 2007 Semiannual Report to Stockholders    


Table of Contents

Semiannual Review    
Performance Table   2
 
Letter to Our Stockholders   3
Semiannual Report to Stockholders   10

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



 
This page is not part of the 2007 Semiannual Report to Stockholders  |  1


Performance Table    
 
Average Annual NAV Total Returns   Through June 30, 2007

            Royce   Royce   Royce  
            Value Trust   Micro-Cap Trust   Focus Trust Russell 2000
  Second Quarter 2007*         6.30 %   4.39 %       8.24 % 4.41 %
  Year-to-Date 2007*         9.83     9.23         15.94   6.45  
  One-Year         19.70     19.87         24.26   16.43  
  Three-Year         16.39     16.08         21.31   13.45  
  Five-Year         15.46     16.54         21.57   13.88  
  10-Year         13.63     14.34         14.16   9.06  
  15-Year         14.45     n/a         n/a   11.92  
  20-Year         13.01     n/a         n/a   10.10  
  Since Inception         13.17     14.76         15.22   —     
  Inception Date         11/26/86     12/14/93         11/1/96 ** —     

Important Performance and Risk Information

All performance information in this Review and Report reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Performance information does not reflect the deduction of taxes that a stockholder would pay on distributions or on the sale of Fund shares. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when sold. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. The Royce Funds invest primarily in securities of small-cap and/or micro-cap companies, which may involve considerably more risk than investments in securities of larger-cap companies.

The thoughts expressed in this Review and Report to Stockholders concerning recent market movements and future prospects for small company stocks are solely the opinion of Royce at June 30, 2007, and, of course, historical market trends are not necessarily indicative of future market movements. Statements regarding the future prospects for particular securities held in the Funds’ portfolios and Royce’s investment intentions with respect to those securities reflect Royce’s opinions as of June 30, 2007 and are subject to change at any time without notice. There can be no assurance that securities mentioned in this Review and Report to Stockholders will be included in any Royce-managed portfolio in the future.
*Not annualized.
**Date Royce & Associates, LLC assumed investment management responsibility for the Fund.
 
2 | This page is not part of the 2007 Semiannual Report to Stockholders


Letter to Our Stockholders
Rolling Stone Blues
 

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

One of the advantages of employing an all-weather strategy to select smaller company stocks is that we continue to do what we have always done regardless of the market’s behavior. When smaller company stock prices were on the rise, it was more challenging to find the compelling values that have always been our stock in trade, but the search goes on whether the overall small-cap market is moving up or down.
 
 
 
This page is not part of the 2007 Semiannual Report to Stockholders | 3


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

As the Standard & Poor’s 500
index recently celebrated its 50th
anniversary, we thought that it might
be helpful to delve into the particulars
of the more prominent small-cap
indices, and how we at The Royce
Funds view them. Two of the most
prominent are the Russell 2000 and
the S&P SmallCap 600, both widely
accepted benchmarks for small-cap
equities. Yet each is different in
composition, attribution and
construction methodology.
   
     As active small-cap managers with large stakes throughout the small-cap universe, perhaps we should be more consistently happy with a market that before July had been gathering no moss and few, if any bears. Maybe we should try a little harder to relax and simply enjoy the good times. Make no mistake, we are mostly very pleased—and more than happy to reap the benefits of the robust returns that smaller stocks have been providing since the most recent small-cap market trough in October 2002. However, as the small-cap bull stampeded its way toward a fifth full year, we were also in the midst of our own 19th Nervous Breakdown (and at least as many bear market predictions) as we awaited what seemed to us an inevitable small-cap downturn. Even as the market was swaying to higher and higher levels, we could not escape the nagging and persistent reality that historically strong bull markets often give way to serious corrections, and the longer the good times last, the more likely it seems that the bear’s bite will be
  
 
  The Russell 2000 index is the oldest—
dating back to 1979—and broadest of
the two small-cap indices. It measures
the performance of the 2,000 smallest
companies in the Russell 3000 Index
(which represents 99% of the U.S.

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

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

   4 | This page is not part of the 2007 Semiannual Report to Stockholders		    


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

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

This page is not part of the 2007 Semiannual Report to Stockholders  |   5


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

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


 Continued on page 8...

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

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

   6 | This page is not part of the 2007 Semiannual Report to Stockholders		    


         
 
   
 


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

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

This page is not part of the 2007 Semiannual Report to Stockholders  |   7


           
 
Technology at 17.1%, and Financial
Services at 15.8% at the end of
June 2007.
   
Letter to Our Stockholders
     
 
  
  Another important difference between
the two indices is the respective
construction methodology. The S&P
SmallCap 600 is designed to be an
“efficient portfolio of companies that
meet specific inclusion criteria to
ensure that they are investable and
financially viable.” Inclusion in the
index is determined subjectively by
the S&P Index Committee, which adds
new stocks to the index based not
only on size, but also on financial
viability, liquidity, adequate float
size and other trading requirements.

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

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

    

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

  
               
           

   8 | This page is not part of the 2007 Semiannual Report to Stockholders		    


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

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


Sincerely,
  

Charles M. Royce
President
W. Whitney George
Vice President
Jack E. Fockler, Jr.
Vice President		    

            July 31, 2007

This page is not part of the 2007 Semiannual Report to Stockholders  |   9


Table of Contents
   
Semiannual Report to Stockholders
 
 
Directors and Officers 11
   
Managers’ Discussions of Fund Performance  
   
Royce Value Trust 12
   
Royce Micro-Cap Trust 14
   
Royce Focus Trust 16
   
History Since Inception 18
   
Distribution Reinvestment and Cash Purchase Options 19
   
Schedules of Investments and Other Financial Statements  
   
Royce Value Trust 20
   
Royce Micro-Cap Trust 34
   
Royce Focus Trust 47
   
Board Approval of Investment Advisory Agreements 55
   
Notes to Performance and Other Important Information Inside Back Cover
   

10  |  The Royce Funds 2007 Semiannual Report to Stockholders


Directors and Officers
 
All Directors and Officers may be reached c/o The Royce Funds, 1414 Avenue of the Americas, New York, NY 10019
 
Charles M. Royce, Director*, President
Age: 67 | Number of Funds Overseen: 25 | Tenure: Since 1986
Non-Royce Directorships: Director of Technology Investment Capital Corp.
 
Principal Occupation(s) During Past Five Years: President, Chief Investment Officer and Member of Board of Managers of Royce & Associates, LLC (“Royce”), the Trust’s investment adviser.
 
Mark R. Fetting, Director*
Age: 52 | Number of Funds Overseen: 41 | Tenure: Since 2001
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 16 Legg Mason Funds.
 
Principal Occupation(s) During Past Five Years: Senior Executive Vice President of Legg Mason, Inc.; Member of Board of Managers of Royce. Mr. Fetting’s prior business experience includes having served as Division President and Senior Officer, Prudential Financial Group, Inc. and related companies; Partner, Greenwich Associates and Vice President, T. Rowe Price Group, Inc.
Donald R. Dwight, Director
Age: 76 | Number of Funds Overseen: 25 | Tenure: Since 1998
Non-Royce Directorships: None
 
Principal Occupation(s) During Past Five Years: President of Dwight Partners, Inc., corporate communications consultant; Chairman (from 1982 to March 1998) and Chairman Emeritus (since March 1998) of Newspapers of New England, Inc. Mr. Dwight’s prior experience includes having served as Lieutenant Governor of the Commonwealth of Massachusetts, as President and Publisher of Minneapolis Star and Tribune Company and as a Trustee of the registered investment companies constituting the Eaton Vance Funds.
 
Richard M. Galkin, Director
Age: 69 | Number of Funds Overseen: 25 | Tenure: Since 1986
Non-Royce Directorships: None
 
Principal Occupation(s) During Past Five Years: Private investor. Mr. Galkin’s prior business experience includes having served as President of Richard M. Galkin Associates, Inc., telecommunications consultants, President of Manhattan Cable Television (a subsidiary of Time, Inc.), President of Haverhills Inc. (another Time, Inc. subsidiary), President of Rhode Island Cable Television and Senior Vice President of Satellite Television Corp. (a subsidiary of Comsat).
 
Stephen L. Isaacs, Director
Age: 67 | Number of Funds Overseen: 25 | Tenure: Since 1989
Non-Royce Directorships: None
 
Principal Occupation(s) During Past Five Years: President of The Center for Health and Social Policy (since September 1996); Attorney and President of Health Policy Associates, Inc., consultants. Mr. Isaacs’s prior business experience includes having served as Director of Columbia University Development Law and Policy Program and Professor at Columbia University (until August 1996).
 
William L. Koke, Director
Age: 72 | Number of Funds Overseen: 25 | Tenure: Since 1996
Non-Royce Directorships: None
 
Principal Occupation(s) During Past Five Years: Private investor. Mr. Koke’s prior business experience includes having served as President of Shoreline Financial Consultants, Director of Financial Relations of SONAT, Inc., Treasurer of Ward Foods, Inc. and President of CFC, Inc.
 
Arthur S. Mehlman, Director
Age: 65 | Number of Funds Overseen: 41 | Tenure: Since 2004
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 16 Legg Mason Funds and Director of Municipal Mortgage & Equity, LLC.
 
Principal Occupation(s) During Past Five Years: Director of The League for People with Disabilities, Inc.; Director of University of Maryland Foundation (non-profits). Formerly: Director of University of Maryland College Park Foundation (non-profit) (from 1998 to 2005); Partner, KPMG LLP (international accounting firm) (from 1972 to 2002); Director of Maryland Business Roundtable for Education (from July 1984 to June 2002).
David L. Meister, Director
Age: 67 | Number of Funds Overseen: 25 | Tenure: Since 1986
Non-Royce Directorships: None
 
Principal Occupation(s) During Past Five Years: Consultant. Chairman and Chief Executive Officer of The Tennis Channel (from June 2000 to March 2005). Chief Executive officer of Seniorlife.com (from December 1999 to May 2000). Mr. Meister’s prior business experience includes having served as a consultant to the communications industry, President of Financial News Network, Senior Vice President of HBO, President of Time-Life Films and Head of Broadcasting for Major League Baseball.
 
G. Peter O’Brien, Director
Age: 61 | Number of Funds Overseen: 41 | Tenure: Since 2001
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 16 Legg Mason Funds; Director of Technology Investment Capital Corp.
 
Principal Occupation(s) During Past Five Years: Trustee Emeritus of Colgate University (since 2005); Board Member of Hill House, Inc. (since 1999); Formerly: Trustee of Colgate University (from 1996 to 2005), President of Hill House, Inc. (from 2001 to 2005) and Managing Director/Equity Capital Markets Group of Merrill Lynch & Co. (from 1971 to 1999).
John D. Diederich, Vice President and Treasurer
Age: 55 | Tenure: Since 2001
 
Principal Occupation(s) During Past Five Years: Chief Operating Officer, Managing Director and member of the Board of Managers of Royce; Chief Financial Officer of Royce; Director of Administration of the Trust; and President of RFS, having been employed by Royce since April 1993.
 
Jack E. Fockler, Jr., Vice President
Age: 48 | Tenure: Since 1995
 
Principal Occupation(s) During Past Five Years: Managing Director and Vice President of Royce, and Vice President of RFS, having been employed by Royce since October 1989.
 
W. Whitney George, Vice President
Age: 49 | Tenure: Since 1995
 
Principal Occupation(s) During Past Five Years: Managing Director and Vice President of Royce, having been employed by Royce since October 1991.
 
Daniel A. O’Byrne, Vice President and Assistant Secretary
Age: 45 | Tenure: Since 1994
 
Principal Occupation(s) During Past Five Years: Principal and Vice President of Royce, having been employed by Royce since October 1986.
 
John E. Denneen, Secretary and Chief Legal Officer
Age: 40 | Tenure: 1996-2001 and Since April 2002
 
Principal Occupation(s) During Past Five Years: General Counsel (Deputy General Counsel prior to 2003), Principal, Chief Legal and Compliance Officer and Secretary of Royce; Secretary and Chief Legal Officer of The Royce Funds.
 
Lisa Curcio, Chief Compliance Officer
Age: 47 | Tenure: Since 2004
 
Principal Occupation(s) During Past Five Years: Chief Compliance Officer of The Royce Funds (since October 2004); Compliance Officer of Royce (since June 2004); Vice President, The Bank of New York (from February 2001 to June 2004).
 
*   Interested Director.
 
 

The Royce Funds 2007 Semiannual Report to Stockholders  |  11


                   
                   
  AVERAGE ANNUAL NAV TOTAL RETURNS
Through 6/30/07		  
 
 
  Second Quarter 2007*   6.30 %  
 
 
  Jan - June 2007*   9.83    
 
 
  One-Year   19.70    
 
 
  Three-Year   16.39    
 
 
  Five-Year   15.46    
 
 
  10-Year   13.63    
 
 
  15-Year   14.45    
 
 
  20-Year   13.01    
 
 
  Since Inception (11/26/86)   13.17    
 
 
  * Not annualized.        
                   
  CALENDAR YEAR NAV TOTAL RETURNS  
 
 
  Year RVT   Year   RVT  
 
 
  2006 19.5 %   1997   27.5 %  
 
 
  2005 8.4     1996   15.5    
 
 
  2004 21.4     1995   21.1    
 
 
  2003 40.8     1994   0.1    
 
 
  2002 -15.6     1993   17.3    
 
 
  2001 15.2     1992   19.3    
 
 
  2000 16.6     1991   38.4    
 
 
  1999 11.7     1990   -13.8    
 
 
  1998 3.3     1989   18.3    
 
 
                   
  TOP 10 POSITIONS
% of Net Assets Applicable
to Common Stockholders		  
 
 
  AllianceBernstein Holding L.P.   2.3 %  
 
 
  Ritchie Bros. Auctioneers   1.5    
 
 
  Sotheby’s Cl. A   1.4    
 
 
  Universal Compression Holdings   1.3    
 
 
  Lincoln Electric Holdings   1.1    
 
 
  SEACOR Holdings   1.1    
 
 
  PAREXEL International   1.0    
 
 
  Ash Grove Cement Cl. B   1.0    
 
 
  Brady Corporation Cl. A   0.9    
 
 
  Adaptec   0.8    
 
 
                   
  PORTFOLIO SECTOR BREAKDOWN
% of Net Assets Applicable
to Common Stockholders		  
 
 
  Technology   23.4 %  
 
 
  Industrial Products   16.6    
 
 
  Industrial Services   11.0    
 
 
  Financial Intermediaries   10.8    
 
 
  Natural Resources   9.6    
 
 
  Financial Services   8.5    
 
 
  Health   6.8    
 
 
  Consumer Services   5.6    
 
 
  Consumer Products   4.8    
 
 
  Utilities   0.2    
 
 
  Diversified Investment Companies   0.1    
 
 
  Miscellaneous   2.2    
 
 
  Bonds and Preferred Stocks   0.2    
 
 
  Cash and Cash Equivalents   17.5    
 
 
     
     

 
 
Royce Value Trust
 
Manager’s Discussion
Royce Value Trust’s (RVT) diversified portfolio of small- and micro-cap stocks posted solid results during the first half of 2007. For the year-to-date period ended 6/30/07, the Fund was up 9.8% on a net asset value (NAV) basis and 0.6% on a market price basis versus a 6.5% return for the Russell 2000 and 8.6% for the S&P 600. For the first quarter, the Fund returned 3.3% on an NAV basis, and 1.5% on a market price basis compared with 2.0% and 3.2% for the Russell 2000 and S&P 600, respectively. The Fund’s NAV results were also strong in the second quarter, with RVT posting a 6.3% gain compared with 4.4% and 5.3% for the Russell 2000 and S&P 600, while on a market price basis, the Fund disappointed, losing 0.8%.
      RVT demonstrated strong absolute and relative results over market-cycle and other long-term periods. From the small-cap market peak on 3/9/00 through 6/30/07, RVT gained 154.2% on an NAV basis, versus 50.8% for the Russell 2000 and 106.4% for the S&P 600. During the mostly bullish phase from the small-cap market trough on 10/9/02 through 6/30/07, the Fund was up 189.4% compared to a gain of 169.9% for the Russell 2000 and 164.7% for the S&P 600. Fortunately, market-price performance difficulties during the first half did little to hurt performance over more extended periods. On both an NAV and market price basis, RVT held a performance advantage over both benchmarks for the one-, three-, five-, 10-, 15-, 20-year, and since inception (11/26/86) periods ended 6/30/07. RVT’s average annual NAV total return since inception was 13.2%.
     Positive performances could be found throughout RVT’s portfolio, with the Industrial Products sector leading the way in dollar-based net gains. The worldwide boom in large-scale infrastructure construction, particularly in China, seems to be changing the business cycle. Many traditionally cyclical industries are morphing into high-growth areas with rapidly increasing demand for their shares. It’s a situation that we will continue to watch, as industrial companies have historically been well-represented in the portfolio. The Fund’s second-best performer in the first half of 2007, Synalloy, hails from
 
GOOD IDEAS THAT WORKED
Net Realized and Unrealized Investment Return*
Year-to-Date Through 6/30/07
Sotheby’s Cl. A   $ 6,976,529
Synalloy Corporation     6,707,090
PAREXEL International     4,106,333
ITT Educational Services     4,080,800
AllianceBernstein Holding L.P.     3,024,548
*Includes dividends      
 
the Industrial Products sector in the top-performing construction materials industry. This conservatively capitalized pipe and piping systems maker saw its share price climb (before cooling off a bit toward the end of June) owing to ongoing earnings strength. We began to reduce our position in May.
 
Important Performance and Risk Information
All performance information reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the recent month-end may be obtained at www.roycefunds.com. The market price of the Fund’s shares will fluctuate, so that shares may be worth more or less than their original cost when sold. The Fund invests primarily in securities of small-cap and micro-cap companies, which may involve considerably more risk than investing in a more diversified portfolio of larger-cap companies. Standard deviation is a statistical measure within which a fund’s total returns have varied over time. The greater the standard deviation, the greater a fund’s volatility. The Russell 2000 is an unmanaged index of domestic small-cap common stocks.

12  |  The Royce Funds 2007 Semiannual Report to Stockholders


 
 
Performance and Portfolio Review
 
Other strong gainers in the sector included Lincoln Electric Holdings, Peerless Manufacturing Company, Kaydon Corporation and Florida Rock Industries, a takeover target that we have owned in the portfolio since 1986.
     There were also notable successes outside of Industrial Products. We have held a position in Sotheby’s, the Fund’s top performing holding in the first half, since 1990. First and second quarter earnings strength helped the share price for this leading auction house to climb, and we trimmed our position in February and April. Impressive net gains also came from PAREXEL International, a company we have owned since 1998. This bio-pharmaceutical services company provides contract research, medical marketing, consulting, informatics, and advanced technology products and services to the pharmaceutical, biotechnology, and medical device industries worldwide. Its growing business and strong earnings helped its stock price stay healthy in the first half. Having recently celebrated its 25th anniversary in business, its standing as a long-term success in a volatile industry may also have helped.
GOOD IDEAS AT THE TIME
Net Realized and Unrealized Investment Loss*
Year-to-Date Through 6/30/07
  
     Although every sector posted net gains, even the best performing periods have their blemishes. The slumping housing market and the related implosion of the subprime mortgage industry spelled trouble for real estate investment trusts such as Opteum. The departure of some of its veteran executives did little to help. Newport Corporation, which makes laser-based and photonic products, saw its price slide throughout the first half. The firm reported lower-than-expected first-quarter profits that were especially acute in its laser division. Kimball International, which manufactures wood furniture, cabinets and electronic assembly products, is a company that we have owned in RVT’s portfolio since 1986. We have long liked its low debt
Opteum Cl. A   $ 4,334,925
Newport Corporation     3,239,334
Kimball International Cl. B     2,893,948
First Consulting Group     2,389,434
Adaptec     2,196,485
*Includes dividends      
 
and consistent dividend. Although the firm was among the Fund’s top performers in 2006, its stock price slipped in the first half. We reduced our position in February.
 
                             
                             
  PORTFOLIO DIAGNOSTICS  
 
 
  Average Market Capitalization   $1,254 million  
 
 
  Weighted Average P/E Ratio   21.0x  
 
 
  Weighted Average P/B Ratio   2.5x  
 
 
  Weighted Average Yield   0.9%  
 
 
  Fund Net Assets   $1,270 million  
 
 
  Turnover Rate   5%  
 
 
  Net Leverage*   0%  
 
 
  Symbol      
 

Market Price

   RVT  
 

NAV

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

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

The Royce Funds 2007 Semiannual Report to Stockholders  |  13
                   
                   
  AVERAGE ANNUAL NAV TOTAL RETURNS
Through 6/30/07		  
 
 
  Second Quarter 2007*   4.39 %  
 
 
  Jan-June 2007*   9.23    
 
 
  One-Year   19.87    
 
 
  Three-Year   16.08    
 
 
  Five-Year   16.54    
 
 
  10-Year   14.34    
 
 
  Since Inception (12/14/93)   14.76    
 
 
  *Not annualized.        
                   
  CALENDAR YEAR NAV TOTAL RETURNS  
 
 
  Year RMT   Year   RMT  
 
 
  2006 22.5 %   1999   12.7 %  
 
 
  2005 6.8     1998   -4.1    
 
 
  2004 18.7     1997   27.1    
 
 
  2003 55.6     1996   16.6    
 
 
  2002 -13.8     1995   22.9    
 
 
  2001 23.4     1994   5.0    
 
 
  2000 10.9              
 
 
                   
  TOP 10 POSITIONS
% of Net Assets Applicable
to Common Stockholders		  
 
 
  Seneca Foods   1.3 %  
 
 
  Highbury Financial   1.2    
 
 
  MVC Capital   1.1    
 
 
  Sapient Corporation   1.1    
 
 
  Edge Petroleum   1.0    
 
 
  Pegasystems   1.0    
 
 
  PAREXEL International   0.9    
 
 
  Transaction Systems Architects Cl. A   0.9    
 
 
  Pason Systems   0.9    
 
 
  Weyco Group   0.9    
 
 
                   
  PORTFOLIO SECTOR BREAKDOWN
% of Net Assets Applicable
to Common Stockholders		  
 
 
  Technology   23.4 %  
 
 
  Health   14.2    
 
 
  Industrial Products   14.2    
 
 
  Industrial Services   12.9    
 
 
  Financial Intermediaries   10.7    
 
 
  Natural Resources   10.4    
 
 
  Consumer Products   5.0    
 
 
  Consumer Services   4.6    
 
 
  Financial Services   4.2    
 
 
  Diversified Investment Companies   1.4    
 
 
  Miscellaneous   2.7    
 
 
  Preferred Stocks   1.5    
 
 
  Cash and Cash Equivalents   11.1    
 
 
     
     

 
 
Royce Micro-Cap Trust
 
Manager’s Discussion
Royce Micro-Cap Trust’s diversified portfolio of diminutive companies fared well in the first half on both an absolute and relative basis. For the year-to-date period ended 6/30/07, the Fund gained 9.2% on a net asset value (NAV) basis, though on a market price basis it lost 2.9%, versus a return of 6.5% for its small-cap benchmark, the Russell 2000. The Fund’s strong absolute and relative NAV showing was consistent during the first half of 2007. RMT gained 4.6% in the first quarter versus 2.0% for the Russell 2000, while the Fund was down 0.7% on a market price basis. On an NAV basis, the Fund matched the gain of its benchmark in the second quarter, each up 4.4%, though its market price result was again disappointing, down 2.2%.
     The Fund’s market price struggles during the first half represented a cooling off after a terrific performance in 2006. Its poor first half fortunately did little harm to its long-term returns. From the previous small-cap market peak on 3/9/00 through 6/30/07, RMT was up 170.0% on a net asset value basis, and 223.0% on a market price basis, compared to the Russell 2000’s 50.8% gain. During the more dynamic upswing from the small-cap market trough on 10/9/02 through 6/30/07, RMT gained 212.6% on an NAV basis and 243.3% on a market price basis, versus 169.9% for the small-cap benchmark. The Fund’s returns during these market cycle periods were equally impressive on an absolute basis, something of greater importance to us, as much as we like to beat our benchmark. On both an NAV and market price basis, RMT outperformed the Russell 2000 for the one-, three-, five-, 10-year and since inception (12/14/93) periods ended 6/30/07. The Fund’s average annual NAV total return since inception was 14.8%.
     One interesting development that we saw over the last several months has been a performance disparity within the micro-cap sector. Roughly coinciding with the move to higher quality that we have observed in the upper tier of the small-cap world has been better performance from larger, more established micro-cap companies. This benefited the Fund in the first half of 2007, as RMT’s average market capitalization of $290 million at the end of June leaned toward the higher range of the micro-cap world. Of course, we always seek quality in our portfolio selections even as we’re aware that the micro-cap segment is only gradually finding acceptance as an area in which quality can be reliably found.
  
GOOD IDEAS THAT WORKED
Net Realized and Unrealized Investment Return*
Year-to-Date Through 6/30/07
Synalloy Corporation   $ 2,353,845
The Geo Group     1,560,339
PAREXEL International     1,541,307
Covansys Corporation     1,474,748
CMG Information Services     1,457,136
*Includes dividends      
 
 
Important Performance and Risk Information
All performance information reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the recent month-end may be obtained at www.roycefunds.com. The market price of the Fund’s shares will fluctuate, so that shares may be worth more or less than their original cost when sold. The Fund normally invests in micro-cap companies, which may involve considerably more risk than investing in a more diversified portfolio of larger-cap companies. Standard deviation is a statistical measure within which a fund’s total returns have varied over time. The greater the standard deviation, the greater a fund’s volatility. The Russell 2000 is an unmanaged index of domestic small-cap common stocks.

14  |  The Royce Funds 2007 Semiannual Report to Stockholders



   
 
Performance and Portfolio Review
 
     The Industrial Products sector led the way during the first half in terms of dollar-based net gains. The ongoing worldwide boom in large-scale infrastructure construction, particularly in China, has made industrial companies, historically well-represented in the portfolio, highly desirable. The Fund’s top performer came from the sector. Synalloy is a conservatively capitalized pipe and piping services business that saw its share price increase driven by ongoing earnings strength before it cooled off a bit toward the end of June. We reduced our position in February and June. Holdings in machinery and other industrial products also posted strong first-half gains.
     We have owned shares of privatized correctional and detention management company Geo Group, since January 2000. Its business grew during the first half–allowing the company to reduce its debt–and its stock split early in June, which helped its share price to break out while leading us to reduce our position later that same month. We have owned bio-pharmaceutical services company PAREXEL International in RMT’s portfolio since 1999. Growing business and strong earnings helped its stock price to climb. Its standing as a long-term success in an otherwise volatile industry may also have helped. We reduced our position in June.
GOOD IDEAS AT THE TIME
Net Realized and Unrealized Investment Loss*
Year-to-Date Through 6/30/07
  
     Even during positive performance periods, there are a few disappointments. Healthcare consultant First Consulting Group lost a customer that brought in about 10% of the firm’s business. After others had sold on this news, we increased our position based on the strength of the firm’s balance sheet, improving returns on capital and a series of promising acquisitions. Real estate investment trusts suffered from the slumping housing market and the subprime mortgage industry crisis during the first half of 2007. Opteum, which we have owned since 2005, was no exception, and the firm’s problems were exacerbated by the departure of some veteran executives. Its share price
First Consulting Group   $ 1,159,112
Opteum Cl. A     943,260
CorVel Corporation     859,879
Volt Information Sciences     793,760
Allied Defense Group     744,541
*Includes dividends      
 
dropped dramatically, and while that did not deliver positive results in the short run, we saw enough promise in the company to justify adding to our position.
 
                             
                             
  PORTFOLIO DIAGNOSTICS  
 
 
  Average Market Capitalization   $290 million  
 
 
  Weighted Average P/E Ratio   20.6x*  
 
 
  Weighted Average P/B Ratio   2.1x  
 
 
  Weighted Average Yield   0.7%  
 
 
  Fund Net Assets   $369 million  
 
 
  Turnover Rate   19%  
 
 
  Net Leverage†   5%  
 
 
  Symbol      
 

Market Price

   RMT  
 

NAV

   XOTCX  
 
 
 
*Excludes 22% of portfolio holdings with zero or negative earnings as of 6/30/07.
  
     
 
†Net leverage is the percentage, in excess of 100%, of the total value of equity type investments, divided by net assets, excluding preferred stock.
  
     
  CAPITAL STRUCTURE
Publicly Traded Securities Outstanding
at 6/30/07 at NAV or Liquidation Value		  
 
 
  23.8 million shares
of Common Stock		       $369 million    
 
 
  6.00% Cumulative
Preferred Stock		       $60 million    
 
 
     
  RISK/RETURN COMPARISON
Five-Year Period Ended 6/30/07		  
 
 
      Average Annual   Standard   Return  
      Total Return   Deviation   Efficiency*  
 
 
  RMT (NAV)     16.54 %     17.02       0.97    
 
 
  Russell 2000     13.88       16.47       0.84    
 
 
 
*Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period.
  
     
     

The Royce Funds 2007 Semiannual Report to Stockholders  |  15
                   
                   
  AVERAGE ANNUAL NAV TOTAL RETURNS
Through 6/30/07		  
 
 
  Second Quarter 2007*   8.24 %  
 
 
  Jan-June 2007*   15.94    
 
 
  One-Year   24.26    
 
 
  Three-Year   21.31    
 
 
  Five-Year   21.57    
 
 
  10-Year   14.16    
 
 
  Since Inception (11/1/96)†   15.22    
 
 
  * Not annualized.        
 
† Royce & Associates assumed investment management responsibility for the Fund on 11/1/96.
                   
  CALENDAR YEAR NAV TOTAL RETURNS  
 
 
  Year   FUND Year   FUND  
 
 
  2006   15.9 % 2001   10.0 %  
 
 
  2005   13.3   2000   20.9    
 
 
  2004   29.2   1999   8.7    
 
 
  2003   54.3   1998   -6.8    
 
 
  2002   -12.5   1997   20.5    
 
 
                   
  TOP 10 POSITIONS  
  % of Net Assets Applicable  
  to Common Stockholders  
 
 
  Australia Government 7.50% Bond   4.7 %  
 
 
  New Zealand Government        
  6.00% Bond   4.2    
 
 
  Ivanhoe Mines 3.5    
 
 
  Unit Corporation   3.5    
 
 
  Schnitzer Steel Industries Cl. A   3.3    
 
 
  Reliance Steel & Aluminum   3.1    
 
 
  Thor Industries   3.0    
 
 
  Knight Capital Group Cl. A   2.9    
 
 
  Lincoln Electric Holdings   2.9    
 
 
  KKR Financial Holdings   2.7    
 
 
                   
  PORTFOLIO SECTOR BREAKDOWN
% of Net Assets Applicable
to Common Stockholders		  
 
 
  Natural Resources   24.7 %  
 
 
  Industrial Products   21.8    
 
 
  Technology   6.6    
 
 
  Consumer Products   6.6    
 
 
  Industrial Services   6.3    
 
 
  Financial Intermediaries   5.6    
 
 
  Health   5.1    
 
 
  Consumer Services   4.2    
 
 
  Financial Services   1.2    
 
 
  Bonds   8.9    
 
 
  Cash and Cash Equivalents   22.8    
 
 
     
     

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

The Fund also beat the Russell 2000 during the mostly bullish phase from 10/9/02 through 6/30/07, gaining 266.3% on an NAV basis and 298.4% on a market price basis, while the Russell 2000 gained 169.9% for the same period. These strong market cycle results were a key factor in FUND’s outperformance of the benchmark over calendar-based periods. On both an NAV and market price basis, the Fund’s limited portfolio of primarily small-cap stocks outpaced the index for the one-, three-, five-, 10-year and since-inception of our management periods ended 6/30/07. FUND’s average annual NAV total return since the inception of our management (11/1/96) was 15.2%.
  
GOOD IDEAS THAT WORKED
Net Realized and Unrealized Investment Return*
Year-to-Date Through 6/30/07
IPSCO     $3,396,454
Florida Rock Industries     2,290,728
Tesco Corporation     1,996,506
Ivanhoe Mines     1,984,500
Reliance Steel & Aluminum     1,704,000
*Includes dividends      
Although there were plenty of positive performances in the portfolio during the first half, the strongest dollar-based net gains came from the Industrial Products and Natural Resources sectors. The Fund’s top two performers, IPSCO and Florida Rock Industries, were Industrial Products holdings. We first began to buy shares of construction aggregates company Florida Rock Industries in other Royce-managed portfolios more than 20 years ago and have had a position in FUND’s portfolio since 1998. In February 2007, the
 
Important Performance and Risk Information
All performance information reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the recent month-end may be obtained at www.roycefunds.com. The market price of the Fund’s shares will fluctuate, so that shares may be worth more or less than their original cost when sold. The Fund normally invests primarily in small-cap companies, which may involve considerably more risk than investing in a more diversified portfolio of larger-cap companies. Standard deviation is a statistical measure within which a fund’s total returns have varied over time. The greater the standard deviation, the greater a fund’s volatility. The Russell 2000 is an unmanaged index of domestic small-cap common stocks.

16  |  The Royce Funds 2007 Semiannual Report to Stockholders



 
 
Performance and Portfolio Review
 
company was acquired by a larger competitor at a substantial premium. We finished selling our stake in April. The firm was consistently attractive to us as a conservatively capitalized, well-run business in a cyclical industry that has historically garnered attention from value investors. Canadian steel production and fabrication company IPSCO first attracted our attention in 2004 with its pristine balance sheet, strong history of earnings and high returns on capital. It was also the target of the urge to merge. Earlier this year, several larger firms began looking at the firm as a potential acquisition, with Swedish business SSAB finally closing the deal in May. We sold our shares between April and May.
Within Natural Resources, Tesco Corporation, which designs and manufactures oilfield products such as drilling and hydraulic systems, reported record first-quarter earnings. This helped its already rising stock price to keep climbing. We reduced our position at increasing prices between January and May. Ivanhoe Mines is a conservatively capitalized business with extensive operations in Mongolia. It recently won permission from that nation’s government to develop what could be the world’s largest undeveloped copper and gold deposits in tandem with another firm, news that gave a healthy sheen to Ivanhoe’s stock price. Unit Corporation reaped the rewards of running a strong, well-managed business in a mostly positive market for energy stocks. We added to our stake in January and June.
GOOD IDEAS AT THE TIME
Net Realized and Unrealized Investment Loss*
Year-to-Date Through 6/30/07
  
Even the best performing periods have their blemishes. In the otherwise-profitable precious metals and mining industry within the Natural Resources sector, Gammon Gold disappointed. In a difficult market for gold and silver commodity prices, the firm went through a change in management (that we liked) and had some issues with its Mexican mining operations. We substantially increased our stake in institutional trading and asset management company Knight Capital Group. Its stock price began to slip in January as the firm experienced slumping profits from increased compensation costs. In the second quarter, earnings were hampered by a decline in its hedge fund fees.
Gammon Gold     $792,108
Knight Capital Group     579,621
The Timberland Company     516,700
KKR Financial Holdings     376,960
Nu Skin Enterprises Cl. A     304,000
*Includes dividends      
 
                             
                             
  PORTFOLIO DIAGNOSTICS  
 
 
  Average Market Capitalization   $1,560 million  
 
 
  Weighted Average P/E Ratio   16.2x  
 
 
  Weighted Average P/B Ratio   2.7x  
 
 
  Weighted Average Yield   1.5%  
 
 
  Fund Net Assets   $182 million  
 
 
  Turnover Rate   36%  
 
 
  Net Leverage†   0%  
 
 
  Symbol      
 

Mareket Price

   FUND  
 

NAV

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

The Royce Funds 2007 Semiannual Report to Stockholders  |  17



History Since Inception

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

          Amount     Purchase         NAV     Market  
  History     Invested     Price*   Shares     Value**     Value**  
Royce Value Trust                                      
11/26/86   Initial Purchase     $ 10,000     $ 10.000   1,000     $ 9,280     $ 10,000  
10/15/87   Distribution $0.30               7.000   42                  
12/31/87   Distribution $0.22               7.125   32       8,578       7,250  
12/27/88   Distribution $0.51               8.625   63       10,529       9,238  
9/22/89   Rights Offering       405       9.000   45                  
12/29/89   Distribution $0.52               9.125   67       12,942       11,866  
9/24/90   Rights Offering       457       7.375   62                  
12/31/90   Distribution $0.32               8.000   52       11,713       11,074  
9/23/91   Rights Offering       638       9.375   68                  
12/31/91   Distribution $0.61               10.625   82       17,919       15,697  
9/25/92   Rights Offering       825       11.000   75                  
12/31/92   Distribution $0.90               12.500   114       21,999       20,874  
9/27/93   Rights Offering       1,469       13.000   113                  
12/31/93   Distribution $1.15               13.000   160       26,603       25,428  
10/28/94   Rights Offering       1,103       11.250   98                  
12/19/94   Distribution $1.05               11.375   191       27,939       24,905  
11/3/95   Rights Offering       1,425       12.500   114                  
12/7/95   Distribution $1.29               12.125   253       35,676       31,243  
12/6/96   Distribution $1.15               12.250   247       41,213       36,335  
1997   Annual distribution total $1.21               15.374   230       52,556       46,814  
1998   Annual distribution total $1.54               14.311   347       54,313       47,506  
1999   Annual distribution total $1.37               12.616   391       60,653       50,239  
2000   Annual distribution total $1.48               13.972   424       70,711       61,648  
2001   Annual distribution total $1.49               15.072   437       81,478       73,994  
2002   Annual distribution total $1.51               14.903   494       68,770       68,927  
1/28/03   Rights Offering       5,600       10.770   520                  
2003   Annual distribution total $1.30               14.582   516       106,216       107,339  
2004   Annual distribution total $1.55               17.604   568       128,955       139,094  
2005   Annual distribution total $1.61               18.739   604       139,808       148,773  
2006   Annual distribution total $1.78               19.696   693       167,063       179,945  
2007   Year-to-date distribution total $0.91               21.352   349                  
6/30/07         $ 21,922           8,451     $ 183,471     $ 181,020  
Royce Micro-Cap Trust                                      
12/14/93   Initial Purchase     $ 7,500     $ 7.500   1,000     $ 7,250     $ 7,500  
10/28/94   Rights Offering       1,400       7.000   200                  
12/19/94   Distribution $0.05               6.750   9       9,163       8,462  
12/7/95   Distribution $0.36               7.500   58       11,264       10,136  
12/6/96   Distribution $0.80               7.625   133       13,132       11,550  
12/5/97   Distribution $1.00               10.000   140       16,694       15,593  
12/7/98   Distribution $0.29               8.625   52       16,016       14,129  
12/6/99   Distribution $0.27               8.781   49       18,051       14,769  
12/6/00   Distribution $1.72               8.469   333       20,016       17,026  
12/6/01   Distribution $0.57               9.880   114       24,701       21,924  
2002   Annual distribution total $0.80               9.518   180       21,297       19,142  
2003   Annual distribution total $0.92               10.004   217       33,125       31,311  
2004   Annual distribution total $1.33               13.350   257       39,320       41,788  
2005   Annual distribution total $1.85               13.848   383       41,969       45,500  
2006   Annual distribution total $1.55               14.246   354       51,385       57,647  
2007   Year-to-date distribution total $0.66               15.075   154                  
6/30/07         $ 8,900           3,633     $ 56,130     $ 55,985  
Royce Focus Trust                                      
10/31/96   Initial Purchase     $ 4,375     $ 4.375   1,000     $ 5,280     $ 4,375  
12/31/96                               5,520       4,594  
12/5/97   Distribution $0.53               5.250   101       6,650       5,574  
12/31/98                               6,199       5,367  
12/6/99   Distribution $0.145               4.750   34       6,742       5,356  
12/6/00   Distribution $0.34               5.563   69       8,151       6,848  
12/6/01   Distribution $0.14               6.010   28       8,969       8,193  
12/6/02   Distribution $0.09               5.640   19       7,844       6,956  
12/8/03   Distribution $0.62               8.250   94       12,105       11,406  
2004   Annual distribution total $1.74               9.325   259       15,639       16,794  
5/6/05   Rights offering       2,669       8.340   320                  
2005   Annual distribution total $1.21               9.470   249       21,208       20,709  
2006   Annual distribution total $1.57               9.860   357       24,668       27,020  
2007   Year-to-date distribution total $0.26               10.509   63                  
6/30/07         $ 7,044           2,593     $ 28,601     $ 29,353  
*  
Beginning with the 1997 (RVT), 2002 (RMT) and 2004 (FUND) distributions, the purchase price of distributions is a weighted average of the distribution reinvestment prices for the year.
**  
Other than for initial purchase and June 30, 2007, values are stated as of December 31 of the year indicated, after reinvestment of distributions.
     
18 | The Royce Funds 2007 Semiannual Report to Stockholders


Distribution Reinvestment and Cash Purchase Options

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

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

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

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

What other features are available for registered stockholders?
The Distribution Reinvestment and Cash Purchase Plans also allow registered stockholders to make optional cash purchases of shares of a Fund’s common stock directly through Computershare on a monthly basis, and to deposit certificates representing your Fund shares with Computershare for safekeeping. The Funds’ investment adviser is absorbing all commissions on optional cash purchases under the Plans through December 31, 2007.

  

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

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

  The Royce Funds 2007 Semiannual Report to Stockholders  |  19


Royce Value Trust    
 
   Schedule of Investments

    SHARES     VALUE

COMMON STOCKS – 99.6%

          
           

Consumer Products – 4.8%

          

Apparel and Shoes - 1.5%

          

Kenneth Cole Productions Cl. A

   35,000   $ 864,500

Columbia Sportswear

   34,600     2,376,328

Hugo Boss

   19,200     1,260,072

K-Swiss Cl. A

   110,000     3,116,300

Polo Ralph Lauren Cl. A

   6,200     608,282

Tandy Brands Accessories

   16,900     213,954

Van De Velde

   40,000     2,072,943

Weyco Group

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

Collectibles - 0.2%

          

Russ Berrie & Company a

   150,000     2,794,500
       

Food/Beverage/Tobacco - 0.2%

          

Hain Celestial Group a,b

   37,800     1,025,892

Hershey Creamery

   709     1,559,800
       
          2,585,692
       

Home Furnishing and Appliances - 0.5%

          

Aaron Rents

   4,500     131,400

Ekornes

   80,000     1,824,672

Ethan Allen Interiors

   45,800     1,568,650

La-Z-Boy b

   68,200     781,572

Rational

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

Publishing - 0.5%

          

†Proquest Company a,b

   180,000     1,701,000

Scholastic Corporation a,b

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

Sports and Recreation - 0.7%

          

Beneteau

   12,000     1,634,534

Coachmen Industries

   47,700     460,782

Monaco Coach

   166,650     2,391,427

Sturm, Ruger & Company a,b

   272,900     4,235,408

Thor Industries

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

Other Consumer Products - 1.2%

          

Blyth

   14,700     390,726

Burnham Holdings Cl. B

   36,000     585,000

Lazare Kaplan International a

   103,600     820,512

Leapfrog Enterprises a,b

   175,000     1,793,750

Matthews International Cl. A

   100,000     4,361,000

RC2 Corporation a

   132,600     5,305,326

Sally Beauty Holdings a,b

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

Total (Cost $36,850,760)

         61,597,547
       

Consumer Services – 5.6%

          

Direct Marketing - 0.2%

          

FTD Group

   55,000     1,012,550

Takkt

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

Leisure and Entertainment - 0.1%

          

Shuffle Master a,b

   15,000     249,000

Steiner Leisure a,b

   2,100     103,152
       
          352,152
       
    SHARES     VALUE

Media and Broadcasting - 0.1%

          

Cox Radio Cl. A a,b

   23,000   $ 327,520

Discovery Holding Company Cl. B a

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

Restaurants and Lodgings - 0.9%

          

Benihana Cl. A a,b

   6,600     132,000

CEC Entertainment a

   121,400     4,273,280

Morgans Hotel Group a,b

   90,000     2,194,200

Steak n Shake a

   183,000     3,054,270

Tim Hortons

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

Retail Stores - 1.7%

          

America’s Car-Mart a,b

   90,400     1,228,536

Bulgari

   200,000     3,223,916

CarMax a,b

   82,000     2,091,000

Children’s Place Retail Stores a

   13,670     705,919

Cost Plus a,b

   80,500     682,640

Fred’s Cl. A

   50,000     669,000

Fielmann

   20,000     1,266,828

Gander Mountain a,b

   53,300     604,955

Hot Topic a,b

   29,000     315,230

Krispy Kreme Doughnuts a

   85,000     787,100

99 Cents Only Stores a,b

   95,000     1,245,450

Stein Mart

   142,800     1,750,728

Tiffany & Co.

   75,000     3,979,500

Urban Outfitters a,b

   27,000     648,810

West Marine a

   131,100     1,803,936

Wet Seal (The) Cl. A a,b

   162,000     973,620
       
          21,977,168
       

Other Consumer Services - 2.6%

          

Corinthian Colleges a,b

   106,500     1,734,885

ITT Educational Services a

   80,000     9,390,400

Laureate Education a

   37,500     2,312,250

MoneyGram International

   74,900     2,093,455

Renaissance Learning

   15,000     197,250

Sotheby’s Cl. A

   382,200     17,588,844

†Travelcenters of America a,b

   2,500     101,125
       
          33,418,209
       

Total (Cost $41,745,500)

         71,267,894
       

Diversified Investment Companies – 0.1%

          

Closed-End Funds - 0.1%

          

Central Fund of Canada Cl. A

   111,500     1,013,535
       

Total (Cost $589,526)

         1,013,535
       

Financial Intermediaries – 10.8%

          

Banking - 3.2%

          

Ameriana Bancorp

   20,000     199,000

BOK Financial

   129,327     6,908,648

Bank of N.T. Butterfield & Son

   118,750     7,125,000

CFS Bancorp

   260,000     3,775,200

Cadence Financial

   30,300     590,244

Commercial National Financial

   52,575     986,307

Farmers & Merchants Bank of Long Beach

   1,266     8,418,900

Hawthorn Bancshares

   44,400     1,443,000

Heritage Financial

   12,915     308,023

HopFed Bancorp

   25,000     402,250


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


    June 30, 2007 (unaudited)
 
   

    SHARES     VALUE

Financial Intermediaries (continued)

          

Banking (continued)

          

Jefferson Bancshares

   32,226   $ 380,589

Mechanics Bank

   200     3,900,000

Old Point Financial

   20,000     510,600

Partners Trust Financial Group

   100,000     1,050,000

Sun Bancorp a,b

   46,305     781,165

Tompkins Financial

   17,545     656,183

W Holding Company

   44,700     118,008

Whitney Holding

   40,500     1,219,050

Wilber Corporation

   31,700     293,225

Wilmington Trust

   31,000     1,286,810

Yadkin Valley Financial

   3,800     69,730
       
          40,421,932
       

Insurance - 3.9%

          

ACA Capital Holdings a,b

   50,000     595,000

Alleghany Corporation a

   11,318     4,600,767

Aspen Insurance Holdings

   64,000     1,796,480

Commerce Group

   89,000     3,090,080

Erie Indemnity Cl. A

   139,900     7,560,196

IPC Holdings

   27,000     871,830

Leucadia National

   84,940     2,994,135

Markel Corporation a,b

   7,200     3,488,832

Montpelier Re Holdings

   66,000     1,223,640

NYMAGIC

   85,200     3,425,040

Ohio Casualty

   68,502     2,966,822

PXRE Group a

   166,551     772,797

ProAssurance Corporation a,b

   38,070     2,119,357

RLI

   99,724     5,579,558

Security Capital Assurance

   30,000     926,100

Wesco Financial

   4,750     1,828,750

White Mountains Insurance Group

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

Real Estate Investment Trusts - 0.4%

          

Capstead Mortgage

   181,100     1,756,670

Gladstone Commercial

   34,700     680,120

Opteum Cl. A

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

Securities Brokers - 1.0%

          

Cowen Group a

   32,000     573,120

Dundee Wealth Management

   100,000     1,541,422

Evercore Partners Cl. A

   19,400     577,538

First Albany Companies a,b

   350,100     584,667

Investment Technology Group a,b

   30,400     1,317,232

Knight Capital Group Cl. A a,b

   229,700     3,813,020

Lazard Cl. A

   31,000     1,395,930

optionsXpress Holdings

   53,000     1,359,980

Shinko Securities

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

Other Financial Intermediaries - 2.3%

          

AP Alternative Assets L.P.

   234,600     4,281,450

JAFCO

   37,300     1,720,723

KKR Financial

   171,200     4,264,592

KKR Private Equity Investors LLP

   105,000     2,362,500

†Kohlberg Capital

   81,800     1,517,390

MCG Capital

   138,000     2,210,760

MVC Capital

   397,200     7,471,332

MarketAxess Holdings a

   67,000     1,205,330
    SHARES     VALUE
           

NGP Capital Resources

   50,000   $ 836,000

RHJ International a

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

Total (Cost $100,428,652)

         137,539,811
       

Financial Services – 8.5%

          

Information and Processing - 1.7%

          

eFunds Corporation a,b

   126,875     4,477,419

FactSet Research Systems

   35,350     2,416,172

Global Payments

   68,500     2,716,025

Interactive Data

   134,300     3,596,554

PRG-Schultz International a,b

   14,420     229,278

SEI Investments

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

Insurance Brokers - 1.2%

          

Crawford & Company Cl. A a

   289,200     1,821,960

Crawford & Company Cl. B a

   162,300     1,097,148

†eHealth a,b

   25,000     477,250

Enstar Group a,b

   7,000     844,970

Gallagher (Arthur J.) & Co.

   111,200     3,100,256

Hilb Rogal & Hobbs

   155,050     6,645,443

National Financial Partners

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

Investment Management - 5.1%

          

ADDENDA Capital

   150,900     3,208,529

AllianceBernstein Holding L.P.

   333,100     29,009,679

BKF Capital Group a

   227,050     522,215

Calamos Asset Management Cl. A

   45,000     1,149,750

Eaton Vance

   140,400     6,202,872

Federated Investors Cl. B

   161,900     6,205,627

GAMCO Investors Cl. A

   158,600     8,889,530

Nuveen Investments Cl. A

   138,600     8,613,990

SPARX Group

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

Other Financial Services - 0.5%

          

AmeriCredit Corporation a,b

   18,870     500,998

Centerline Holding Company

   59,600     1,072,800

Credit Acceptance a,b

   86,601     2,323,505

Municipal Mortgage & Equity

   40,300     982,514

Ocwen Financial a,b

   50,000     666,500

World Acceptance a,b

   21,700     927,241
       
          6,473,558
       

Total (Cost $61,728,918)

         108,627,180
       

Health – 6.8%

          

Commercial Services - 1.4%

          

First Consulting Group a,b

   560,900     5,328,550

PAREXEL International a,b

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

Drugs and Biotech - 1.6%

          

Affymetrix a,b

   10,000     248,900

Antigenics a,b

   99,300     283,998

Biovail Corporation

   41,200     1,047,304

Endo Pharmaceuticals Holdings a

   155,000     5,305,650

Gene Logic a

   365,000     503,700

†Genitope Corporation a,b

   100,000     386,000

Human Genome Sciences a,b

   90,000     802,800

K-V Pharmaceutical Cl. A a,b

   51,500     1,402,860

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


Royce Value Trust    
 
   Schedule of Investments

    SHARES     VALUE

Health (continued)

          

Drugs and Biotech (continued)

          

Medicines Company (The) a,b

   20,000   $ 352,400

Millennium Pharmaceuticals a,b

   100,000     1,057,000

Mylan Laboratories

   52,200     949,518

Myriad Genetics a,b

   50,000     1,859,500

Origin Agritech a

   3,500     28,875

Perrigo Company

   191,950     3,758,381

Pharmanet Development Group a

   10,000     318,800

QLT a

   114,070     844,118

VIVUS a,b

   163,300     854,059
       
          20,003,863
       

Health Services - 1.4%

          

Albany Molecular Research a

   85,000     1,262,250

Cross Country Healthcare a

   30,000     500,400

Eclipsys Corporation a,b

   20,000     396,000

Gentiva Health Services a

   30,150     604,809

HMS Holdings a,b

   50,000     957,000

HealthSouth Corporation a,b

   200,000     3,622,000

Lincare Holdings a,b

   52,562     2,094,596

MedQuist a

   73,893     673,165

National Home Health Care

   20,000     252,000

On Assignment a,b

   375,400     4,024,288

Paramount Acquisition (Units) a

   280,000     1,976,800

Res-Care a,b

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

Medical Products and Devices - 2.2%

          

Allied Healthcare Products a

   210,612     1,377,402

Arrow International

   61,028     2,336,152

ArthroCare Corporation a,b

   10,000     439,100

Atrion Corporation

   15,750     1,543,500

Bruker BioSciences a

   370,200     3,335,502

Coloplast Cl. B

   17,000     1,383,584

CONMED Corporation a,b

   81,500     2,386,320

IDEXX Laboratories a,b

   79,000     7,475,770

Invacare Corporation

   103,100     1,889,823

STERIS Corporation

   98,600     3,017,160

Young Innovations

   62,550     1,825,209

Zoll Medical a,b

   40,400     901,324
       
          27,910,846
       

Personal Care - 0.2%

          

Nutraceutical International a

   22,800     377,796

USANA Health Sciences a,b

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

Total (Cost $57,167,473)

         86,302,795
       

Industrial Products – 16.6%

          

Automotive - 0.6%

          

ElringKlinger

   16,900     1,545,091

Fuel Systems Solutions a,b

   22,500     373,050

LKQ Corporation a,b

   200,000     4,932,000

Quantam Fuel Systems Technologies Worldwide a,b

   15,500     24,180

Superior Industries International

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

Building Systems and Components - 1.0%

          

Decker Manufacturing

   6,022     218,900

Preformed Line Products

   91,600     4,397,716
    SHARES     VALUE
           

Simpson Manufacturing

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

Construction Materials - 1.8%

          

Ash Grove Cement Cl. B

   50,518     12,124,320

Heywood Williams Group a

   958,837     1,906,187

Synalloy Corporation

   198,800     6,938,120

USG Corporation a,b

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

Industrial Components - 1.3%

          

Barnes Group

   20,000     633,600

C & D Technologies a

   345,700     1,935,920

CLARCOR

   83,500     3,125,405

Donaldson Company

   92,800     3,299,040

GrafTech International a,b

   64,790     1,091,064

PerkinElmer

   135,000     3,518,100

Powell Industries a,b

   92,400     2,934,624

II-VI a

   13,500     366,795
       
          16,904,548
       

Machinery - 5.2%

          

†A.S.V. a,b

   14,800     255,744

Baldor Electric

   62,900     3,099,712

Coherent a,b

   243,500     7,429,185

Exco Technologies

   91,000     394,668

Federal Signal

   58,600     929,396

Franklin Electric

   84,200     3,972,556

Graco

   101,825     4,101,511

Hardinge

   26,193     891,348

IDEX Corporation

   54,000     2,081,160

Intermec a,b

   23,000     582,130

Lincoln Electric Holdings

   188,680     14,007,603

Mueller Water Products Cl. A

   50,000     853,000

Nordson Corporation

   172,200     8,637,552

Pfeiffer Vacuum Technology

   18,500     1,784,015

Rofin-Sinar Technologies a,b

   128,000     8,832,000

Williams Controls a

   37,499     655,858

Woodward Governor

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

Metal Fabrication and Distribution - 1.8%

          

Commercial Metals

   36,600     1,235,982

CompX International Cl. A

   292,300     5,407,550

Gerdau Ameristeel

   61,100     893,893

Kaydon Corporation

   177,400     9,246,088

NN

   197,100     2,325,780

Novamerican Steel a

   10,800     575,964

RBC Bearings a

   30,000     1,237,500

Reliance Steel & Aluminum

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

Paper and Packaging - 0.2%

          

Mayr-Melnhof Karton

   8,100     1,843,747

Peak International a

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

Specialty Chemicals and Materials - 1.4%

          

Aceto Corporation

   78,410     726,861

American Vanguard

   26,666     381,857

Balchem Corporation

   16,875     306,619

Cabot Corporation

   163,500     7,795,680

Fuel Tech a,b

   10,000     342,500

Hawkins

   206,878     3,196,265


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


    June 30, 2007 (unaudited)
 
   

    SHARES     VALUE

Industrial Products (continued)

          

Specialty Chemicals and Materials (continued)

          

Lydall a,b

   35,500   $ 518,655

Schulman (A.)

   143,100     3,481,623

Sensient Technologies

   22,000     558,580
       
          17,308,640
       

Textiles - 0.1%

          

Unifi a,b

   145,100     380,162
       

Other Industrial Products - 3.2%

          

Brady Corporation Cl. A

   293,400     10,896,876

Diebold

   86,700     4,525,740

Distributed Energy Systems a

   32,000     41,600

Kimball International Cl. B

   286,180     4,009,382

Maxwell Technologies a,b

   21,500     305,730

Mettler-Toledo International a

   28,700     2,741,137

Munters

   100,000     1,571,821

Myers Industries

   30,499     674,333

Peerless Manufacturing a

   297,200     6,131,236

Raven Industries

   86,200     3,078,202

Solar Integrated Technologies a

   75,000     168,680

Somfy

   7,000     2,285,164

Waters Corporation a

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

Total (Cost $103,760,088)

         210,472,482
       

Industrial Services – 11.0%

          

Advertising and Publishing - 1.0%

          

Focus Media Holding ADR a,b

   70,000     3,535,000

Interpublic Group of Companies a,b

   510,000     5,814,000

Lamar Advertising Cl. A

   26,000     1,631,760

MDC Partners Cl. A a

   60,000     525,000

ValueClick a,b

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

Commercial Services - 3.2%

          

Allied Waste Industries a

   188,800     2,541,248

Anacomp Cl. A a

   26,000     191,100

BB Holdings a

   289,400     1,525,504

†Canadian Solar a,b

   50,000     470,000

Convergys Corporation a

   121,000     2,933,040

Copart a,b

   158,100     4,836,279

eResearch Technology a,b

   181,000     1,721,310

First Advantage Cl. A a,b

   5,000     115,050

Hewitt Associates Cl. A a,b

   208,720     6,679,040

Iron Mountain a,b

   234,262     6,121,266

Learning Tree International a,b

   53,400     699,540

MPS Group a

   564,600     7,548,702

Michael Page International

   140,000     1,477,360

New Horizons Worldwide a

   228,600     205,740

OneSource Services a

   25,437     328,189

Onex Corporation

   50,000     1,727,294

Spherion Corporation a,b

   53,000     497,670

TRC Companies a

   3,600     53,388

Viad Corporation

   9,025     380,584

Wright Express a,b

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

Engineering and Construction - 0.9%

          

Boskalis Westminster

   40,200     1,605,599

Dycom Industries a,b

   35,500     1,064,290
    SHARES     VALUE
           

Fleetwood Enterprises a

   234,300   $ 2,120,415

Insituform Technologies Cl. A a,b

   137,000     2,987,970

KBR a

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

Food and Tobacco Processors - 0.4%

          

MGP Ingredients

   127,400     2,153,060

Performance Food Group a,b

   10,000     324,900

Seneca Foods Cl. A a

   80,000     2,081,600

Seneca Foods Cl. B a

   13,251     353,802
       
          4,913,362
       

Industrial Distribution - 1.9%

          

Central Steel & Wire

   6,062     3,867,556

MSC Industrial Direct Cl. A

   20,000     1,100,000

Ritchie Bros. Auctioneers

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

Printing - 0.1%

          

Bowne & Co.

   68,100     1,328,631
       

Transportation and Logistics - 3.0%

          

Alexander & Baldwin

   60,000     3,186,600

Atlas Air Worldwide Holdings a,b

   17,000     1,001,980

C. H. Robinson Worldwide

   80,000     4,201,600

Forward Air

   244,750     8,343,527

Frozen Food Express Industries

   286,635     2,906,479

Hub Group Cl. A a,b

   174,400     6,131,904

Landstar System

   11,200     540,400

Patriot Transportation Holding a

   80,300     6,962,010

UTI Worldwide

   105,000     2,812,950

Universal Truckload Services a

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

Other Industrial Services - 0.5%

          

Landauer

   117,900     5,806,575
       

Total (Cost $73,843,574)

         139,534,447
       

Natural Resources – 9.6%

          

Energy Services - 4.3%

          

Atwood Oceanics a,b

   29,400     2,017,428

†Cal Dive International a,b

   35,000     582,050

Carbo Ceramics

   158,400     6,939,504

Core Laboratories a,b

   10,000     1,016,900

Ensign Energy Services

   126,300     2,252,711

Environmental Power a,b

   326,000     2,917,700

Global Industries a

   54,500     1,461,690

Hanover Compressor a,b

   208,000     4,960,800

Helmerich & Payne

   80,600     2,854,852

Input/Output a

   434,500     6,782,545

National Fuel Gas

   47,500     2,057,225

TETRA Technologies a,b

   68,000     1,917,600

Universal Compression Holdings a,b

   221,300     16,037,611

Willbros Group a,b

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

Oil and Gas - 2.3%

          

Bill Barrett a,b

   50,000     1,841,500

Carrizo Oil & Gas a,b

   41,700     1,729,299

Cimarex Energy

   193,990     7,645,146

Falcon Oil & Gas a

   360,000     479,887

Helix Energy Solutions Group a,b

   34,226     1,365,960

Particle Drilling Technologies a

   61,500     135,300

Penn Virginia

   32,880     1,321,776

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


Royce Value Trust    
 
   Schedule of Investments

    SHARES     VALUE

Natural Resources (continued)

          

Oil and Gas (continued)

          

PetroCorp a,c

   61,400   $ 0

SEACOR Holdings a,b

   147,000     13,723,920

Storm Cat Energy a,b

   330,800     377,112

W &T Offshore

   25,000     699,750
       
          29,319,650
       

Precious Metals and Mining - 2.2%

          

Agnico-Eagle Mines

   34,000     1,241,000

Centerra Gold a

   30,000     297,113

Constellation Copper a

   186,900     252,651

Etruscan Resources a

   675,900     1,966,947

Gammon Gold a

   178,300     2,250,146

Golden Star Resources a,b

   175,000     649,250

Hecla Mining a,b

   598,000     5,106,920

IAMGOLD Corporation

   315,620     2,417,649

International Coal Group a,b

   189,000     1,130,220

Ivanhoe Mines a,b

   140,000     1,993,600

†Kinross Gold a,b

   110,286     1,288,140

Meridian Gold a,b

   111,000     3,061,380

Miramar Mining a

   445,000     1,909,050

Northgate Minerals a

   100,000     290,000

Pan American Silver a,b

   41,000     1,079,530

Randgold Resources ADR

   53,000     1,176,070

Royal Gold

   34,400     817,688

Yamana Gold

   80,000     889,600
       
          27,816,954
       

Real Estate - 0.6%

          

Alico

   27,000     1,646,730

Consolidated-Tomoka Land

   13,564     939,850

The St. Joe Company

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

Other Natural Resources - 0.2%

          

PICO Holdings a

   50,200     2,171,652
       

Total (Cost $67,078,639)

         121,357,262
       

Technology – 23.4%

          

Aerospace and Defense - 0.6%

          

Allied Defense Group (The) a,b

   45,700     351,433

Astronics Corporation a

   52,400     1,670,512

Axsys Technologies a

   10,000     213,900

Ducommun a

   117,200     3,015,556

Hexcel Corporation a,b

   47,500     1,000,825

Integral Systems

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

Components and Systems - 5.6%

          

Analogic Corporation

   40,135     2,950,324

Belden CDT

   57,800     3,199,230

Checkpoint Systems a

   56,060     1,415,515

Dionex Corporation a

   81,000     5,750,190

Electronics for Imaging a

   25,000     705,500

Energy Conversion Devices a,b

   105,500     3,251,510

Excel Technology a

   168,500     4,707,890

Hutchinson Technology a,b

   47,500     893,475

Imation Corporation

   15,700     578,702

InFocus Corporation a

   228,100     508,663

KEMET Corporation a

   95,600     673,980

Methode Electronics

   50,000     782,500
    SHARES     VALUE
           

Newport Corporation a,b

   592,200   $ 9,167,256

On Track Innovations a,b

   40,000     252,000

Perceptron a,b

   397,400     3,930,286

Plexus Corporation a,b

   325,700     7,487,843

Radiant Systems a,b

   32,500     430,300

Richardson Electronics

   116,700     1,079,475

TTM Technologies a,b

   221,400     2,878,200

Technitrol

   311,200     8,922,104

Tektronix

   159,680     5,387,603

Vishay Intertechnology a,b

   186,000     2,942,520

Zebra Technologies Cl. A a,b

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

Distribution - 1.6%

          

Agilysys

   165,125     3,715,313

Anixter International a

   61,795     4,647,602

Benchmark Electronics a

   208,200     4,709,484

Solectron Corporation a

   1,070,100     3,937,968

Tech Data a,b

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

Internet Software and Services - 1.4%

          

Arbinet-thexchange a

   87,200     525,816

CMGI a,b

   1,535,000     2,993,250

CNET Networks a,b

   155,400     1,272,726

CryptoLogic

   68,500     1,671,400

CyberSource Corporation a,b

   10,000     120,600

EarthLink a,b

   55,200     412,344

Internap Network Services a,b

   144,890     2,089,314

j2 Global Communications a,b

   43,420     1,515,358

Jupitermedia Corporation a,b

   500,000     3,640,000

Lionbridge Technologies a

   37,500     220,875

RealNetworks a,b

   245,400     2,004,918

SupportSoft a

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

IT Services - 4.3%

          

Alten a

   52,000     2,049,447

answerthink a

   655,000     2,371,100

BearingPoint a,b

   788,800     5,766,128

Black Box

   47,000     1,944,860

CACI International Cl. A a,b

   10,000     488,500

CIBER a,b

   10,000     81,800

Cogent Communications Group a,b

   204,200     6,099,454

Computer Task Group a

   101,100     451,917

Covansys Corporation a,b

   188,900     6,409,377

Diamond Management & Technology Consultants

   80,400     1,061,280

Forrester Research a

   40,300     1,133,639

Gartner a

   126,000     3,098,340

MAXIMUS

   127,900     5,548,302

Perot Systems Cl. A a,b

   165,100     2,813,304

Sapient Corporation a,b

   806,602     6,235,033

Syntel

   152,679     4,639,915

TriZetto Group (The) a,b

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

Semiconductors and Equipment - 3.7%

          

Axcelis Technologies a,b

   135,000     876,150

BE Semiconductor Industries a,b

   58,000     377,000

Brooks Automation a,b

   28,500     517,275

Cabot Microelectronics a

   131,200     4,656,288


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


    June 30, 2007 (unaudited)
 
   

    SHARES     VALUE

Technology (continued)

          

Semiconductors and Equipment (continued)

          

CEVA a

   31,666   $ 269,161

Cognex Corporation

   197,700     4,450,227

DSP Group a,b

   115,000     2,354,050

DTS a,b

   64,100     1,395,457

Diodes a,b

   167,900     7,013,183

Dolby Laboratories Cl. A a

   148,900     5,272,549

Exar Corporation a,b

   231,976     3,108,478

Fairchild Semiconductor International a,b

   51,200     989,184

Himax Technologies ADR a

   100,000     577,000

International Rectifier a,b

   120,000     4,471,200

Intevac a,b

   57,450     1,221,387

Jazz Technologies (Units) a

   600,000     2,760,000

Kulicke & Soffa Industries a,b

   105,800     1,107,726

Novellus Systems a,b

   12,000     340,440

Pericom Semiconductor a,b

   58,000     647,280

Power Integrations a

   49,000     1,274,000

Sanmina-SCI Corporation a,b

   200,000     626,000

Semitool a,b

   50,000     480,500

Staktek Holdings a

   184,700     725,871

Veeco Instruments a,b

   65,000     1,348,100

†Vimicro International ADR a,b

   160,000     928,000
       
          47,786,506
       

Software - 3.6%

          

Advent Software a,b

   116,800     3,801,840

ANSYS a,b

   100,000     2,650,000

Aspen Technology a

   27,100     379,400

Avid Technology a,b

   50,000     1,767,500

BEA Systems a

   65,610     898,201

Borland Software a,b

   280,000     1,663,200

Epicor Software a,b

   79,900     1,188,113

iPass a,b

   268,400     1,454,728

JDA Software Group a,b

   99,900     1,961,037

MSC.Software a

   70,000     947,800

ManTech International Cl. A a,b

   119,400     3,681,102

NAVTEQ Corporation a,b

   70,000     2,963,800

Net 1 UEPS Technologies a,b

   50,000     1,207,500

PLATO Learning a

   149,642     688,353

Progress Software a,b

   30,500     969,595

SPSS a

   179,600     7,927,544

Sybase a

   82,600     1,973,314

THQ a,b

   20,000     610,400

Transaction Systems Architects Cl. A a

   228,150     7,679,529

Verint Systems a,b

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

Telecommunications - 2.6%

          

Adaptec a,b

   2,584,100     9,845,421

ADTRAN

   65,000     1,688,050

Catapult Communications a,b

   87,100     864,032

Covad Communications Group a,b

   35,000     31,500

Foundry Networks a

   373,400     6,220,844

Globalstar a,b

   50,000     517,500

Globecomm Systems a

   233,700     3,416,694

Golden Telecom a

   40,000     2,200,400

IDT Corporation

   108,400     1,089,420

IDT Corporation Cl. B b

   65,000     670,800

Level 3 Communications a,b

   401,341     2,347,845
    SHARES       VALUE
           

†NMS Communications a,b

   300,000     $ 516,000

†Orbcomm a,b

   30,000       492,300

Sycamore Networks a,b

   171,000       687,420

Tandberg

   70,500       1,587,070

Tollgrade Communications a

   20,000       211,000

USA Mobility

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

Total (Cost $206,468,593)

           297,499,392
         

Utilities – 0.2%

            

CH Energy Group

   44,500       2,001,165

Southern Union

   11,576       377,262
         

Total (Cost $2,127,413)

           2,378,427
         

Miscellaneous d – 2.2%

            

Total (Cost $26,852,585)

           27,740,047
         

TOTAL COMMON STOCKS

            

(Cost $778,641,721)

           1,265,330,819
         

PREFERRED STOCKS – 0.1%

            

Aristotle Corporation 11.00% Conv.

   4,800       40,080

Seneca Foods Conv. a,c

   85,000       1,990,530
         

TOTAL PREFERRED STOCKS

            

(Cost $1,310,255)

           2,030,610
         
  PRINCIPAL      
  AMOUNT      

CORPORATE BONDS – 0.1%

            

Dixie Group 7.00%

            

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

   $352,000       337,920
         

TOTAL CORPORATE BONDS

            

(Cost $293,507)

           337,920
         

REPURCHASE AGREEMENTS – 17.0%

            
State Street Bank & Trust Company,            

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

            

maturity value $71,123,215 (collateralized

            

by obligations of various U.S. Government

            

Agencies, valued at $72,870,420)

            

(Cost $71,093,000)

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

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

            

maturity value $145,061,021 (collateralized

            

by obligations of various U.S. Government

            

Agencies, valued at $147,966,873)

            

(Cost $145,000,000)

           145,000,000
         

TOTAL REPURCHASE AGREEMENTS

            

(Cost $216,093,000)

           216,093,000
         

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


Royce Value Trust   June 30, 2007 (unaudited)
 
   Schedule of Investments

            VALUE  

COLLATERAL RECEIVED FOR SECURITIES LOANED – 9.6%

              
Money Market Funds              

State Street Navigator Securities Lending

              

Prime Portfolio (7 day yield-5.27%)

         $ 122,173,543  
         
 

(Cost $122,173,543)

           122,173,543  
         
 

TOTAL INVESTMENTS – 126.4%

              

(Cost $1,118,512,026)

           1,605,965,892  
               

LIABILITIES LESS CASH

              

AND OTHER ASSETS – (9.1)%

           (116,029,775 )
               

PREFERRED STOCK – (17.3)%

           (220,000,000 )
         
 

NET ASSETS APPLICABLE TO

              

COMMON STOCKHOLDERS – 100.0%

         $ 1,269,936,117  
         
 

a   Non-income producing.
b   All or a portion of these securities were on loan at June 30, 2007. Total market value of loaned securities at June 30, 2007 was $118,693,269.
c   Securities for which market quotations are no longer readily available represent 0.2% of net assets. These securities have been valued at their fair value under procedures established by the Fund’s Board of Directors.
d   Includes securities first acquired in 2007 and less than 1% of net assets applicable to Common Stockholders.
†   New additions in 2007.
   
Bold indicates the Fund’s largest 20 equity holdings in terms of June 30, 2007 market value.
     
INCOME TAX INFORMATION: The cost of total investments for Federal income tax purposes was $1,119,700,514. At June 30, 2007, net unrealized appreciation for all securities was $486,265,378, consisting of aggregate gross unrealized appreciation of $527,222,556 and aggregate gross unrealized depreciation of $40,957,178. The primary difference in book and tax basis cost is the timing of the recognition of losses on securities sold.


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


Royce Value Trust

June 30, 2007 (unaudited)

 
Statement of Assets and Liabilities
 

ASSETS:

        

Investments at value (including collateral on loaned securities)*

   $ 1,389,872,892  

Repurchase agreements (at cost and value)

     216,093,000  

Receivable for investments sold

     9,790,553  

Receivable for dividends and interest

     768,978  

Prepaid expenses and other assets

     185,210  

Total Assets

     1,616,710,633  

LIABILITIES:

        

Payable for collateral on loaned securities

     122,173,543  

Payable to custodian for cash overdrawn and foreign currency

     369,622  

Payable for investments purchased

     2,209,377  

Payable for investment advisory fee

     1,412,077  

Preferred dividends accrued but not yet declared

     288,454  

Accrued expenses

     321,443  

Total Liabilities

     126,774,516  

PREFERRED STOCK:

        

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

     220,000,000  

Total Preferred Stock

     220,000,000  

NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS

   $ 1,269,936,117  

ANALYSIS OF NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

        

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

   $ 741,443,771  

Undistributed net investment income (loss)

     1,839,388  

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

     98,366,907  

Net unrealized appreciation (depreciation) on investments and foreign currency

     487,454,293  

Preferred dividends accrued but not yet declared

     (59,168,242 )

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

   $ 1,269,936,117  

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

   $ 902,419,026  

Market value of loaned securities

     118,693,269  

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


Royce Value Trust

Six Months Ended June 30, 2007 (unaudited)

 
Statement of Operations
 

INVESTMENT INCOME:

        

Income:

        

Dividends*

        

Non-Affiliates

   $ 6,154,391  

Affiliated Companies

     51,750  

Interest

     4,614,393  

Securities lending

     229,921  

Total income

     11,050,455  

Expenses:

        

Investment advisory fees

     7,095,425  

Stockholder reports

     200,162  

Custody and transfer agent fees

     98,289  

Directors’ fees

     65,041  

Administrative and office facilities expenses

     57,037  

Professional fees

     27,189  

Other expenses

     121,067  

Total expenses

     7,664,210  

Compensating balance credits

     (58,427 )

Net expenses

     7,605,783  

Net investment income (loss)

     3,444,672  

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

        

Net realized gain (loss) on investments and foreign currency

        

Non-Affiliates

     79,703,578  

Affiliated Companies

     5,317,318  

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

     33,514,490  

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

     118,535,386  

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

     121,980,058  

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS

     (6,490,000 )

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

        

RESULTING FROM INVESTMENT OPERATIONS

   $ 115,490,058  

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


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


Royce Value Trust

 

 
Statement of Changes in Net Assets
 

    Six months ended        
    6/30/07   Year ended
    (unaudited)   12/31/06

INVESTMENT OPERATIONS:

                

Net investment income (loss)

   $ 3,444,672     $ 6,996,692  

Net realized gain (loss) on investments and foreign currency

     85,020,896       110,169,442  

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

     33,514,490       93,033,099  

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

     121,980,058       210,199,233  

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:

                

Net investment income

     –       (1,020,228 )

Net realized gain on investments and foreign currency

     –       (11,959,772 )

Quarterly distributions*

     (6,490,000 )     –  

Total distributions to Preferred Stockholders

     (6,490,000 )     (12,980,000 )

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

                

RESULTING FROM INVESTMENT OPERATIONS

     115,490,058       197,219,233  

DISTRIBUTIONS TO COMMON STOCKHOLDERS:

                

Net investment income

     –       (7,788,658 )

Net realized gain on investments and foreign currency

     –       (91,303,684 )

Quarterly distributions*

     (52,389,793 )     –  

Total distributions to Common Stockholders

     (52,389,793 )     (99,092,342 )

CAPITAL STOCK TRANSACTIONS:

                

Reinvestment of distributions to Common Stockholders

     26,408,289       50,180,586  

Total capital stock transactions

     26,408,289       50,180,586  

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

     89,508,554       148,307,477  

NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

                

Beginning of period

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

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

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

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


Royce Value Trust

 

 
Financial Highlights
 

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

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

NET ASSET VALUE, BEGINNING OF PERIOD

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

INVESTMENT OPERATIONS:

                                                

Net investment income (loss)

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

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

     2.04       3.63       1.75       3.81       5.64       (2.25 )

Total investment operations

     2.10       3.76       1.76       3.73       5.59       (2.27 )

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:

                                                

Net investment income

     –       (0.02 )     –       –       –       (0.01 )

Net realized gain on investments and foreign currency

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

Quarterly distributions*

     (0.11 )     –       –       –       –       –  

Total distributions to Preferred Stockholders

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

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

     1.99       3.53       1.52       3.47       5.33       (2.56 )

DISTRIBUTIONS TO COMMON STOCKHOLDERS:

                                                

Net investment income

     –       (0.14 )     –       –       –       (0.07 )

Net realized gain on investments and foreign currency

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

Quarterly distributions*

     (0.91 )     –       –       –       –       –  

Total distributions to Common Stockholders

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

CAPITAL STOCK TRANSACTIONS:

                                                

Effect of reinvestment of distributions by Common Stockholders

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

Effect of rights offering and Preferred Stock offering

     –       –       –       –       (0.22 )     –  

Total capital stock transactions

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

NET ASSET VALUE, END OF PERIOD

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

MARKET VALUE, END OF PERIOD

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

TOTAL RETURN (a):

                                                

Market Value

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

Net Asset Value

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

RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

                                                

Total expenses (b,c)

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

Management fee expense (d)

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

Other operating expenses

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

Net investment income (loss)

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

SUPPLEMENTAL DATA:

                                                

Net Assets Applicable to Common Stockholders,

                                                

End of Period (in thousands)

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

Liquidation Value of Preferred Stock,

                                                

End of Period (in thousands)

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

Portfolio Turnover Rate

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

PREFERRED STOCK:

                                                

Total shares outstanding

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

Asset coverage per share

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

Liquidation preference per share

     $25.00       $25.00       $25.00       $25.00       $25.00       $25.00  

Average market value per share (e):

                                                

5.90% Cumulative

     $24.35       $23.95       $24.75       $24.50       $25.04       –  

7.80% Cumulative

     –       –       –       –       $25.87       $26.37  

7.30% Tax-Advantaged Cumulative

     –       –       –       –       $25.53       $25.82  

(a)   The Market Value Total Return is calculated assuming a purchase of Common Stock on the opening of the first business day and a sale on the closing of the last business day of each period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund’s Distribution Reinvestment and Cash Purchase Plan. Net Asset Value Total Return is calculated on the same basis, except that the Fund’s net asset value is used on the purchase and sale dates instead of market value.
(b)   Expense ratios based on total average net assets including liquidation value of Preferred Stock were 1.06% 1.08%, 1.22%, 1.21%, 1.19% and 1.38% for the periods ended June 30, 2007 and December 31, 2006, 2005, 2004, 2003 and 2002, respectively.
(c)   Expense ratios based on average net assets applicable to Common Stockholders before waiver of fees by the investment adviser would have been 1.62% and 1.82% for the periods ended December 31, 2003 and 2002, respectively.
(d)   The management fee is calculated based on average net assets over a rolling 60-month basis, while the above ratios of management fee expenses are based on the average net assets applicable to Common Stockholders over a 12-month basis.
(e)   The average of month-end market values during the period that the Preferred Stock was outstanding.
*   To be allocated to net investment income and capital gains at year end.
**   Annualized.
***   Not annualized.


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


Royce Value Trust

   Notes to Financial Statements (unaudited)

Summary of Significant Accounting Policies:
Royce Value Trust, Inc. (“the Fund”) was incorporated under the laws of the State of Maryland on July 1, 1986 as a diversified closed-end investment company. The Fund commenced operations on November 26, 1986.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
 
Valuation of Investments:
Securities are valued as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq’s Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their bid price. Other over-the-counter securities for which market quotations are readily available are valued at their highest bid price. Securities for which market quotations are not readily available are valued at their fair value under procedures established by the Fund’s Board of Directors. In addition, if between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. The Fund uses an independent pricing service to provide fair value estimates for relevant non-U.S. equity securities on days when the U.S. market volatility exceeds a certain threshold. This pricing service uses proprietary correlations it has developed between the movement of prices of non-U.S. equity securities and indices of U.S.-traded securities, futures contracts and other indications to estimate the fair value of relevant non-U.S. securities. Bonds and other fixed income securities may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. Investments in money market funds are valued at net asset value per share.
 
Foreign Currency:
The Fund values its non-U.S. securities in U.S. dollars on the basis of foreign currency exchange rates provided to the Fund by its custodian, State Street Bank and Trust Company. The effects of changes in foreign exchange rates on investments and other assets and liabilities are included with net realized and unrealized gains and losses on investments.
Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, expiration of currency forward contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities,
including investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.
 
Investment Transactions and Related Investment Income:
Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date. Non-cash dividend income is recorded at the fair market value of the securities received. Interest income is recorded on an accrual basis. Premium and discounts on debt securities are amortized using the effective yield to maturity method. Realized gains and losses from investment transactions are determined on the basis of identified cost for book and tax purposes.
 
Expenses:
The Fund incurs direct and indirect expenses. Expenses directly attributable to the Fund are charged to the Fund’s operations, while expenses applicable to more than one of the Royce Funds are allocated in an equitable manner. Allocated personnel and occupancy costs related to The Royce Funds are included in administrative and office facilities expenses. The Fund has adopted a deferred fee agreement that allows the Fund’s Directors to defer the receipt of all or a portion of Directors’ Fees otherwise payable. The deferred fees are invested in certain Royce Funds until distributed in accordance with the agreement.
 
Compensating Balance Credits:
The Fund has an arrangement with its custodian bank, whereby a portion of the custodian’s fee is paid indirectly by credits earned on the Fund’s cash on deposit with the bank. This deposit arrangement is an alternative to purchasing overnight investments.
 
Taxes:
As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the Fund is not subject to income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. The Schedule of Investments includes information regarding income taxes under the caption “Income Tax Information”.
 
Distributions:
The Fund currently has a policy of paying quarterly distributions on the Fund’s Common Stock. Distributions are currently being made at the annual rate of 9% of the rolling average of the prior four calendar quarter-end NAVs of the Fund’s Common Stock, with the fourth quarter distribution being the greater of 2.25% of the rolling average or the distribution required by IRS regulations. Distributions to Preferred Stockholders are accrued daily and paid quarterly and distributions to Common Stockholders are recorded on ex-dividend date. The Fund is required to allocate long-term capital gain distributions and other types of income proportionately to distributions made to holders of shares of Common Stock and Preferred Stock. To the extent that distributions are not paid from long-term capital gains, net investment income or net short-term capital gains, they will represent a return of capital. Distributions are determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United States of America. Permanent book and tax basis differences relating to stockholder distributions will result in reclassifications within the capital accounts. Undistributed net investment income may include

  2007 Semiannual Report to Stockholders  |  31


Royce Value Trust

   Notes to Financial Statements (unaudited) (continued)

temporary book and tax basis differences, which will reverse in a subsequent period. Any taxable income or gain remaining undistributed at fiscal year end is distributed in the following year.
 
Repurchase Agreements:
The Fund may enter into repurchase agreements with institutions that the Fund’s investment adviser has determined are creditworthy. The Fund restricts repurchase agreements to maturities of no more than seven days. Securities pledged as collateral for repurchase agreements, which are held until maturity of the repurchase agreements, are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). Repurchase agreements could involve certain risks in the event of default or insolvency of the counter-party, including possible delays or restrictions upon the ability of the Fund to dispose of the underlying securities.
 
Securities Lending:
The Fund loans securities to qualified institutional investors for the purpose of realizing additional income. Collateral on all securities loaned for the Fund is accepted in cash and cash equivalents and invested temporarily by the custodian. The collateral is equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day.
 
Recent Accounting Pronouncements:
Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”) provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. FIN 48 was adopted for the Fund on June 29, 2007. There was no material impact to the financial statements or disclosures thereto as a result of the adoption of this pronouncement.
FASB Statement of Financial Accounting Standard No. 157, “Fair Value Measurement” (“FAS 157”), provides enhanced guidance for using fair value to measure assets and liabilities. The standard requires companies to provide expanded information about the assets and liabilities measured at fair value and the potential effect of these fair valuations on an entity’s financial performance. The standard does not expand the use of fair value in any new circumstances, but provides clarification on acceptable fair valuation methods and applications. Adoption of FAS 157 is required for fiscal years beginning after November 15, 2007. The standard is not expected to materially impact the Fund’s financial statements.
Capital Stock:
The Fund issued 1,238,869 and 2,548,023 shares of Common Stock as reinvestment of distributions by Common Stockholders for the six months ended June 30, 2007 and the year ended December 31, 2006, respectively.
At June 30, 2007, 8,800,000 shares of 5.90% Cumulative Preferred Stock were outstanding. Commencing October 9, 2008 and thereafter, the Fund, at its option, may redeem the Cumulative Preferred Stock, in whole or in part, at the redemption price. The Cumulative Preferred Stock is classified outside of permanent equity (net assets applicable to Common Stockholders) in the accompanying financial statements in accordance with Emerging Issues Task Force (EITF) Topic D-98, Classification and Measurement of Redeemable Securities, that requires preferred securities that are redeemable for cash or other assets to be classified outside of permanent equity to the extent that the redemption is at a fixed or determinable price and at the option of the holder or upon the occurrence of an event that is not solely within the control of the issuer.
The Fund is required to meet certain asset coverage tests with respect to the Cumulative Preferred Stock as required by the 1940 Act. In addition, pursuant to the Rating Agency Guidelines established by Moody’s, the Fund is required to maintain a certain discounted asset coverage. If the Fund fails to meet these requirements and does not correct such failure, the Fund may be required to redeem, in part or in full, the Cumulative Preferred Stock at a redemption price of $25.00 per share, plus an amount equal to the accumulated and unpaid dividends, whether or not declared on such shares, in order to meet these requirements. Additionally, failure to meet the foregoing asset coverage requirements could restrict the Fund’s ability to pay dividends to Common Stockholders and could lead to sales of portfolio securities at inopportune times. The Fund has met these requirements since issuing the Cumulative Preferred Stock.
 
Investment Advisory Agreement:
As compensation for its services under the Investment Advisory Agreement, Royce & Associates, LLC (“Royce”) receives a fee comprised of a Basic Fee (“Basic Fee”) and an adjustment to the Basic Fee based on the investment performance of the Fund in relation to the investment record of the S&P SmallCap 600 Index (“S&P 600”).
The Basic Fee is a monthly fee equal to 1/12 of 1% (1% on an annualized basis) of the average of the Fund’s month-end net assets applicable to Common Stockholders, plus the liquidation value of Preferred Stock, for the rolling 60-month period ending with such month (the “performance period”). The Basic Fee for each month is increased or decreased at the rate of 1/12 of .05% for each percentage point that the investment performance of the Fund exceeds, or is exceeded by, the percentage change in the investment record of the S&P 600 for the performance period by more than two percentage points. The performance period for each such month is a rolling 60-month period ending with such month. The maximum increase or decrease in the Basic Fee for any month may not exceed 1/12 of .5%. Accordingly, for each


32  |  2007 Semiannual Report to Stockholders		  


Royce Value Trust

   Notes to Financial Statements (unaudited) (continued)

month, the maximum monthly fee rate as adjusted for performance is 1/12 of 1.5% and is payable if the investment performance of the Fund exceeds the percentage change in the investment record of the S&P 600 by 12 or more percentage points for the performance period, and the minimum monthly fee rate as adjusted for performance is 1/12 of .5% and is payable if the percentage change in the investment record of the S&P 600 exceeds the investment performance of the Fund by 12 or more percentage points for the performance period.
     Notwithstanding the foregoing, Royce is not entitled to receive any fee for any month when the investment performance of the Fund for the rolling 36-month period ending with such month is negative. In the event that the Fund’s investment performance for such a performance period is less than zero, Royce will not be required to refund to the Fund any fee earned in respect of any prior performance period.
     Royce has voluntarily committed to waive the portion of its investment advisory fee attributable to an issue of the Fund’s Preferred Stock for any month in which the Fund’s average annual NAV total return since issuance of the Preferred Stock fails to exceed the applicable Preferred Stock’s dividend rate.
  
     For the six rolling 60-month periods ended June 2007, the investment performance of the Fund exceeded the investment performance of the S&P 600 by 4% to 12%. Accordingly, the investment advisory fee consisted of a Basic Fee of $5,523,766 and an upward adjustment of $1,571,659 for performance of the Fund above that of the S&P 600. For the six months ended June 30, 2007, the Fund accrued and paid Royce advisory fees totaling $7,095,425.

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

Transactions in Shares of Affiliated Companies:
An “Affiliated Company,” as defined in the Investment Company Act of 1940, is a company in which a Fund owns 5% or more of the company’s outstanding voting securities at any time during the period. The Fund effected the following transactions in shares of such companies during the six months ended June 30, 2007:
    Shares     Market Value   Cost of     Cost of     Realized     Dividend   Shares   Market Value
   Affiliated Company   12/31/06     12/31/06   Purchases     Sales     Gain (Loss)     Income   6/30/07   6/30/07
                                         
Synalloy Corporation*   345,000     $6,361,800   –     $761,702     $5,317,318     $51,750        
          $6,361,800               $5,317,318     $51,750        
                                         
* Not an Affiliated Company at June 30, 2007.
  2007 Semiannual Report to Stockholders  |  33


Royce Micro-Cap Trust    
 
   Schedule of Investments

    SHARES     VALUE

COMMON STOCKS – 103.7%

          
           

Consumer Products – 5.0%

          

Apparel and Shoes - 1.4%

          

†dELiA*s a,c

   33,600   $ 256,368

Hartmarx Corporation a

   70,000     557,900

Kleinert’s a,d

   14,200     0

Steven Madden

   21,750     712,530

True Religion Apparel a

   24,900     506,217

Weyco Group

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

Collectibles - 0.2%

          

Topps Company (The)

   74,200     779,842
       

Food/Beverage/Tobacco - 0.6%

          

Green Mountain Coffee Roasters a,c

   25,600     2,015,744

Nutrition 21 a,c

   20,000     33,000
       
          2,048,744
       

Home Furnishing and Appliances - 0.3%

          

Lifetime Brands

   42,054     860,004

†U.S. Home Systems a,c

   10,000     99,500
       
          959,504
       

Publishing - 0.3%

          

Educational Development

   7,000     54,740

†Proquest Company a,c

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

Sports and Recreation - 1.0%

          

†Cybex International a

   70,000     490,000

Monaco Coach

   142,400     2,043,440

Orange 21 a

   10,300     67,465

Sturm, Ruger & Company a

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

Other Consumer Products - 1.2%

          

A.T. Cross Company Cl. A a

   100,000     1,170,000

Burnham Holdings Cl. A

   84,000     1,365,000

Cobra Electronics

   10,000     96,400

Lazare Kaplan International a

   151,700     1,201,464

NexCen Brands a

   62,500     696,250
       
          4,529,114
       

Total (Cost $11,637,247)

         18,488,214
       

Consumer Services – 4.6%

          

Direct Marketing - 0.3%

          

Dover Saddlery a

   9,500     67,830

FTD Group

   55,000     1,012,550
       
          1,080,380
       

Leisure and Entertainment - 0.1%

          

FortuNet a,c

   5,000     50,450

IMAX Corporation a,c

   25,000     105,500

TiVo a,c

   20,000     115,800
       
          271,750
       

Media and Broadcasting - 0.2%

          

Outdoor Channel Holdings a,c

   69,750     786,083
       

Restaurants and Lodgings - 0.2%

          

Benihana Cl. A a,c

   800     16,000

Champps Entertainment a

   13,800     65,550

†Cosi a,c

   85,800     391,248

Famous Dave’s of America a

   18,270     407,056
       
          879,854
       
    SHARES     VALUE

Retail Stores - 3.4%

          

A.C. Moore Arts & Crafts a

   40,000   $ 784,400

America’s Car-Mart a,c

   200,000     2,718,000

†Eddie Bauer Holdings a,c

   27,600     354,660

Buckle (The)

   35,250     1,388,850

Cache a,c

   9,200     122,084

Casual Male Retail Group a

   25,800     260,580

Cato Corporation Cl. A

   68,100     1,494,114

Cost Plus a,c

   45,077     382,253

Deb Shops

   19,900     550,235

Stein Mart

   148,900     1,825,514

United Retail Group a

   60,600     704,778

West Marine a,c

   142,000     1,953,920
       
          12,539,388
       

Other Consumer Services - 0.4%

          

Ambassadors Group

   15,000     532,950

Ambassadors International

   6,100     202,886

Collectors Universe

   23,200     354,728

Premier Exhibitions a,c

   21,900     345,144

Renaissance Learning

   2,365     31,100
       
          1,466,808
       

Total (Cost $12,692,615)

         17,024,263
       

Diversified Investment Companies – 1.4%

          

Closed-End Funds - 1.4%

          

ASA

   48,900     3,156,984

Central Fund of Canada Cl. A

   207,000     1,881,630
       

Total (Cost $2,675,077)

         5,038,614
       
           

Financial Intermediaries – 10.7%

          

Banking - 3.1%

          

Abigail Adams National Bancorp

   160,500     2,214,900

B of I Holding a

   100,000     721,000

Bancorp (The) a,c

   51,180     1,144,385

First National Lincoln

   40,200     683,400

Lakeland Financial

   45,000     957,150

Meta Financial Group

   44,800     1,692,992

Nexity Financial a

   141,699     1,456,666

Peapack-Gladstone Financial

   27,600     747,132

Queen City Investments a

   948     867,420

Quest Capital

   30,000     85,614

Sterling Bancorp

   32,869     526,890

Sterling Financial

   7,779     225,124
       
          11,322,673
       

Insurance - 2.2%

          

AmCOMP a

   5,600     54,600

American Safety Insurance Holdings a

   20,000     476,600

CRM Holdings a

   99,000     757,350

First Acceptance a

   258,405     2,625,395

Independence Holding

   33,534     685,100

NYMAGIC

   65,400     2,629,080

Navigators Group a

   15,200     819,280
       
          8,047,405
       

Real Estate Investment Trusts - 0.6%

          

Capstead Mortgage

   154,900     1,502,530

Opteum Cl. A

   249,000     677,280
       
          2,179,810
       


34  |  2007 Semiannual Report to Stockholders		 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


    June 30, 2007 (unaudited)
 
   

    SHARES     VALUE

Financial Intermediaries (continued)

          

Securities Brokers - 2.3%

          

Cowen Group a

   63,800   $ 1,142,658

First Albany Companies a

   95,000     158,650

International Assets Holding a,c

   129,400     3,008,550

Sanders Morris Harris Group

   136,000     1,583,040

Stifel Financial a,c

   38,733     2,280,986

Thomas Weisel Partners Group a,c

   6,500     108,225

Tradestation Group a

   30,000     349,500
       
          8,631,609
       

Other Financial Intermediaries - 2.5%

          

Kohlberg Capital

   98,100     1,819,755

MVC Capital

   216,200     4,066,722

MarketAxess Holdings a,c

   123,700     2,225,363

NGP Capital Resources

   68,079     1,138,283
       
          9,250,123
       

Total (Cost $27,404,232)

         39,431,620
       

Financial Services – 4.2%

          

Insurance Brokers - 0.2%

          

Crawford & Company Cl. A a

   50,000     315,000

Health Benefits Direct a,c

   211,100     496,085
       
          811,085
       

Investment Management - 3.6%

          

ADDENDA Capital

   131,700     2,800,286

BKF Capital Group a,b

   406,500     934,950

Epoch Holding Corporation a

   211,500     2,831,985

Hennessy Advisors

   24,750     321,750

Highbury Financial a,b,c

   580,400     3,569,460

Highbury Financial (Warrants) a

   533,900     822,206

Sceptre Investment Counsel

   78,000     785,675

Westwood Holdings Group

   31,900     1,089,704
       
          13,156,016
       

Other Financial Services - 0.4%

          

Chardan North China Acquisition a,c

   149,000     1,099,620

Chardan North China Acquisition (Warrants) a

   191,900     502,778
       
          1,602,398
       

Total (Cost $12,924,084)

         15,569,499
       

Health – 14.2%

          

Commercial Services - 1.7%

          

First Consulting Group a

   289,800     2,753,100

Medifast a,c

   10,000     89,500

PAREXEL International a,c

   80,900     3,402,654
       
          6,245,254
       

Drugs and Biotech - 5.6%

          

Adolor Corporation a,c

   172,000     638,120

Allos Therapeutics a,c

   123,600     546,312

Barrier Therapeutics a,c

   11,300     73,450

Cambrex Corporation

   16,000     212,320

Caraco Pharmaceutical Laboratories a

   29,850     453,123

Cardiome Pharma a,c

   21,000     193,410

Cell Genesys a

   58,000     194,300

Cerus Corporation a,c

   166,700     1,126,892

†Coley Pharmaceutical Group a,c

   210,000     760,200

CollaGenex Pharmaceuticals a,c

   25,000     310,000

Durect Corporation a,c

   44,100     169,785
    SHARES     VALUE
           

DUSA Pharmaceuticals a

   37,200   $ 114,576

Dyax Corporation a,c

   44,800     187,712

Emisphere Technologies a,c

   163,200     789,888

Favrille a,c

   271,000     999,990

Gene Logic a

   224,900     310,362

Genitope Corporation a,c

   294,700     1,137,542

Halozyme Therapeutics a,c

   9,300     85,839

Hi-Tech Pharmacal a

   50,030     597,358

Idenix Pharmaceuticals a

   7,700     45,430

ImmunoGen a,c

   24,000     133,200

Infinity Pharmaceuticals a,c

   8,750     95,200

Luminex Corporation a,c

   20,475     252,047

Mannkind Corporation a,c

   42,000     517,860

Maxygen a

   5,000     42,850

Momenta Pharmaceuticals a,c

   69,500     700,560

Myriad Genetics a,c

   25,000     929,750

Nastech Pharmaceutical a,c

   2,700     29,457

Neurogen Corporation a,c

   40,000     265,600

Nuvelo a,c

   214,000     582,080

Oncolytics Biotech a,c

   36,000     74,880

Orchid Cellmark a

   78,000     361,920

Origin Agritech a,c

   221,688     1,828,926

Pharmacyclics a

   228,000     620,160

Pharmanet Development Group a,c

   25,000     797,000

Sangamo BioSciences a,c

   21,000     170,520

Seattle Genetics a,c

   72,000     706,320

Senesco Technologies a,c

   24,800     28,520

Senomyx a,c

   47,000     634,500

Sinovac Biotech a,c

   125,000     325,000

Strategic Diagnostics a,c

   123,600     558,672

Tapestry Pharmaceuticals a,c

   483,000     903,210

Theragenics Corporation a

   145,800     607,986

Trimeris a,c

   90,000     615,600
       
          20,728,427
       

Health Services - 1.8%

          

†Air Methods a,c

   11,900     436,373

Albany Molecular Research a

   40,000     594,000

†Alliance Imaging a,c

   94,800     890,172

Bio-Imaging Technologies a

   32,177     219,769

Gentiva Health Services a

   23,000     461,380

HMS Holdings a,c

   11,900     227,766

Hooper Holmes a

   88,600     296,810

MedCath Corporation a,c

   18,000     572,400

Mediware Information Systems a,c

   52,600     378,720

Odyssey Healthcare a

   10,000     118,600

On Assignment a

   41,100     440,592

RehabCare Group a

   22,000     313,280

Res-Care a,c

   45,500     961,870

Sun Healthcare Group a,c

   41,000     594,090

U.S. Physical Therapy a

   10,000     134,700
       
          6,640,522
       

Medical Products and Devices - 4.9%

          

Allied Healthcare Products a

   273,500     1,788,690

AngioDynamics a,c

   14,000     252,140

Anika Therapeutics a,c

   17,000     258,230

Atrion Corporation

   4,000     392,000

†CAS Medical Systems a,c

   91,200     644,784

Caliper Life Sciences a

   50,000     234,500

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
2007 Semiannual Report to Stockholders  |  35


Royce Micro-Cap Trust    
 
   Schedule of Investments

    SHARES     VALUE

Health (continued)

          

Medical Products and Devices (continued)

          

Cardiac Science a,c

   29,947   $ 328,219

CONMED Corporation a,c

   3,900     114,192

Cutera a,c

   15,400     383,768

Del Global Technologies a

   461,301     1,176,318

EPIX Pharmaceuticals a

   32,666     183,256

Endologix a,c

   10,500     46,935

Exactech a,c

   113,100     1,818,648

Golden Meditech Company a

   24,100     13,870

IRIDEX Corporation a

   30,700     160,868

Kensey Nash a,c

   26,650     714,487

Medical Action Industries a,c

   125,250     2,262,015

Merit Medical Systems a

   8,700     104,052

NMT Medical a

   13,101     155,640

Neurometrix a,c

   21,500     208,765

Orthofix International a

   28,000     1,259,160

OrthoLogic Corporation a

   65,000     92,300

PLC Systems a

   105,200     63,120

Possis Medical a,c

   28,900     314,432

Shamir Optical Industry a

   7,500     73,800

Synovis Life Technologies a

   20,000     288,000

Thermage a

   51,100     427,196

Urologix a,c

   405,500     904,265

Utah Medical Products

   42,300     1,342,602

Young Innovations

   66,050     1,927,339
       
          17,933,591
       

Personal Care - 0.2%

          

Helen of Troy a,c

   20,000     540,000

Nutraceutical International a

   15,000     248,550
       
          788,550
       

Total (Cost $41,405,552)

         52,336,344
       

Industrial Products – 14.2%

          

Automotive - 1.0%

          

International Textile Group a

   85,000     595,000

LKQ Corporation a,c

   11,400     281,124

Noble International

   30,900     631,596

SORL Auto Parts a,c

   67,500     486,000

Spartan Motors

   6,300     107,226

Strattec Security a

   28,300     1,330,100

Wescast Industries Cl. A

   12,900     193,757
       
          3,624,803
       

Building Systems and Components - 1.1%

          

AAON

   63,000     2,006,550

LSI Industries

   65,112     1,165,505

Modtech Holdings a,c

   51,400     138,780

†Napco Security Systems a,c

   111,200     700,560
       
          4,011,395
       

Construction Materials - 1.5%

          

Ash Grove Cement

   8,000     1,920,000

Monarch Cement

   50,410     1,572,792

Synalloy Corporation

   58,200     2,031,180
       
          5,523,972
       

Industrial Components - 1.9%

          

American Superconducter a,c

   32,000     617,920

C & D Technologies a

   53,000     296,800

Deswell Industries

   105,300     1,149,876

Gerber Scientific a,c

   50,500     586,810
    SHARES     VALUE
           

Ladish Company a

   10,000   $ 430,000

Planar Systems a,c

   142,000     1,063,580

Powell Industries a

   46,800     1,486,368

Tech/Ops Sevcon

   76,200     723,900

II-VI a

   20,000     543,400
       
          6,898,654
       

Machinery - 3.2%

          

Alamo Group

   38,600     972,720

Astec Industries a,c

   40,200     1,697,244

Capstone Turbine a,c

   200,000     216,000

†Eagle Test Systems a,c

   13,000     208,780

†Flow International a,c

   26,800     337,680

Gorman-Rupp Company

   4,218     134,385

Hurco Companies a

   17,000     849,660

K-Tron International a

   9,600     973,152

Keithley Instruments

   14,000     175,700

LeCroy Corporation a

   2,000     19,440

MTS Systems

   10,000     446,700

Mueller (Paul) Company

   9,650     605,538

Sun Hydraulics

   38,950     1,918,288

T-3 Energy Services a

   4,912     164,306

Tennant Company

   88,200     3,219,300
       
          11,938,893
       

Metal Fabrication and Distribution - 1.0%

          

Encore Wire

   15,000     441,600

Haynes International a,c

   8,020     677,129

Insteel Industries

   35,300     635,400

NN

   114,300     1,348,740

Novamerican Steel a,c

   1,900     101,327

Olympic Steel

   4,600     131,836

Samuel Manu-Tech

   2,500     29,031

Universal Stainless & Alloy Products a,c

   7,700     271,271
       
          3,636,334
       

Paper and Packaging - 0.1%

          

Mod-Pac Corporation a

   23,200     237,800
       

Pumps, Valves and Bearings - 0.3%

          

CIRCOR International

   28,000     1,132,040
       

Specialty Chemicals and Materials - 1.8%

          

Aceto Corporation

   329,219     3,051,860

American Vanguard

   8,233     117,897

Balchem Corporation

   33,750     613,237

Foamex International a

   28,744     326,526

Hawkins

   121,967     1,884,390

NuCo2 a,c

   20,000     513,400

Park Electrochemical

   10,000     281,800
       
          6,789,110
       

Textiles - 0.1%

          

Unifi a

   100,000     262,000
       

Other Industrial Products - 2.2%

          

Basin Water a,c

   11,500     100,050

Color Kinetics a,c

   50,000     1,670,500

Eastern Company (The)

   39,750     1,155,135

Maxwell Technologies a,c

   15,300     217,566

Peerless Manufacturing a

   84,400     1,741,172

Quixote Corporation

   33,300     622,710

Raven Industries

   73,000     2,606,830
       
          8,113,963
       

Total (Cost $28,547,253)

         52,168,964
       


36  |  2007 Semiannual Report to Stockholders		 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


    June 30, 2007 (unaudited)
 
   

    SHARES     VALUE

Industrial Services – 12.9%

          

Advertising and Publishing - 0.5%

          

Greenfield Online a,c

   20,000   $ 318,200

Journal Register

   80,200     359,296

MDC Partners Cl. A a

   18,400     161,000

Traffix

   84,700     465,850

†YP Corporation a,c

   482,000     361,500
       
          1,665,846
       

Commercial Services - 5.0%

          

†Access Integrated Technologies Cl. A a,c

   46,400     375,376

ADDvantage Technologies Group a

   80,300     409,530

BB Holdings a

   390,000     2,055,793

CBIZ a,c

   87,000     639,450

†Canadian Solar a,c

   25,000     235,000

Carlisle Group a

   188,800     506,138

†ClearPoint Business Resources a,c

   216,000     1,075,680

CorVel Corporation a,c

   40,125     1,048,867

eResearch Technology a,c

   185,000     1,759,350

GP Strategies a

   35,000     380,800

Geo Group (The) a,c

   102,400     2,979,840

Global Sources a,c

   11,220     254,694

Intersections a

   35,300     353,000

Kforce a

   55,000     878,900

Metalico a,c

   74,800     594,660

OneSource Services a

   36,175     466,732

PDI a

   29,708     304,804

PeopleSupport a,c

   43,300     491,455

SM&A a

   31,300     219,413

SYS a,c

   480,000     945,600

Volt Information Sciences a,c

   52,800     973,632

Westaff a

   362,500     1,573,250

Willdan Group a

   9,100     89,180
       
          18,611,144
       

Engineering and Construction - 1.6%

          

Cavco Industries a,c

   4,400     165,088

Exponent a

   130,600     2,921,522

Hanfeng Evergreen a

   43,700     492,279

Insituform Technologies Cl. A a,c

   56,400     1,230,084

Nobility Homes

   5,800     121,974

Skyline Corporation

   32,100     963,321

Sterling Construction a,c

   6,300     133,245
       
          6,027,513
       

Food and Tobacco Processors - 1.6%

          

Cal-Maine Foods

   50,000     819,000

Farmer Bros.

   42,400     959,512

Galaxy Nutritional Foods a

   432,600     233,604

ML Macadamia Orchards L.P.

   120,200     615,424

Seneca Foods Cl. A a

   62,500     1,626,250

Seneca Foods Cl. B a

   42,500     1,134,750

Sunopta a

   39,280     437,972
       
          5,826,512
       

Industrial Distribution - 0.4%

          

Central Steel & Wire

   1,088     694,144

Elamex a

   57,700     37,505

Lawson Products

   19,500     754,650
       
          1,486,299
       

Printing - 1.2%

          

American Bank Note Holographics a

   242,200     898,562

Bowne & Co.

   66,500     1,297,415
    SHARES     VALUE
           

Champion Industries

   23,500   $ 169,200

Courier Corporation

   22,950     918,000

Ennis

   9,700     228,144

Schawk

   38,900     778,778
       
          4,290,099
       

Transportation and Logistics - 2.3%

          

ABX Air a

   164,900     1,329,094

Dynamex a,c

   8,300     211,899

†ExpressJet Holdings a,c

   100,000     598,000

Forward Air

   50,700     1,728,363

Frozen Food Express Industries

   92,000     932,880

MAIR Holdings a

   8,600     56,760

Marten Transport a,c

   6,450     116,165

Midwest Air Group a,c

   25,700     386,014

Patriot Transportation Holding a

   3,000     260,100

Universal Truckload Services a

   134,200     2,666,554

†Velocity Express a,c

   234,816     201,942
       
          8,487,771
       

Other Industrial Services - 0.3%

          

Landauer

   21,300     1,049,025

Team a

   2,200     98,934
       
          1,147,959
       

Total (Cost $28,378,497)

         47,543,143
       

Natural Resources – 10.4%

          

Energy Services - 4.2%

          

Dril-Quip a,c

   55,000     2,472,250

Environmental Power a

   90,000     805,500

†Flotek Industries a,c

   2,600     155,870

†Green Plains Renewable Energy a,c

   21,600     379,512

Gulf Island Fabrication

   35,400     1,228,380

GulfMark Offshore a,c

   55,400     2,837,588

Input/Output a

   43,500     679,035

Pason Systems

   209,200     3,275,716

Willbros Group a,c

   77,900     2,312,072

World Energy Solutions a

   829,600     1,207,116
       
          15,353,039
       

Oil and Gas - 1.6%

          

Bonavista Energy Trust

   44,600     1,281,164

†Bronco Drilling a

   28,200     462,762

CE Franklin a

   32,050     373,382

†FX Energy a,c

   99,300     908,595

Houston American Energy a,c

   82,400     444,960

Nuvista Energy a

   121,000     1,647,031

Particle Drilling Technologies a,c

   40,000     88,000

PetroCorp a,d

   104,200     0

Pioneer Drilling a

   7,500     111,825

Savanna Energy Services a

   2,500     46,937

Storm Cat Energy a,c

   291,200     331,968

TXCO Resources a,c

   5,500     56,540
       
          5,753,164
       

Precious Metals and Mining - 3.2%

          

†Allied Nevada Gold a,c

   59,700     257,307

Aurizon Mines a

   197,000     650,100

Brush Engineered Materials a,c

   15,500     650,845

Central African Gold a

   65,800     72,012

Central African Gold (Warrants) a

   119,950     24,087

Chesapeake Gold a,c

   20,000     129,547

Duluth Metals a

   57,600     162,215

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
2007 Semiannual Report to Stockholders  |  37


Royce Micro-Cap Trust    
 
   Schedule of Investments

    SHARES     VALUE

Natural Resources (continued)

          

Precious Metals and Mining (continued)

          

Endeavour Mining Capital

   337,000   $ 3,030,706

Endeavour Silver a

   50,000     225,500

Entree Gold a

   177,900     435,855

Gammon Gold a,c

   83,836     1,058,010

Golden Star Resources a

   168,100     623,651

Kimber Resources a

   540,000     691,200

Metallica Resources a

   186,300     838,350

Midway Gold a

   227,500     587,303

Minefinders Corporation a

   36,000     413,640

†New Gold a,c

   141,200     917,800

Northern Orion Resources a

   39,200     223,048

Northgate Minerals a

   270,000     783,000

Vista Gold a,c

   50,000     215,000
       
          11,989,176
       

Real Estate - 0.4%

          

HomeFed Corporation a

   11,352     715,176

Kennedy-Wilson a

   21,500     811,625
       
          1,526,801
       

Other Natural Resources - 1.0%

          

PICO Holdings a

   45,700     1,976,982

Pope Resources L.P.

   33,000     1,605,780
       
          3,582,762
       

Total (Cost $19,149,143)

         38,204,942
       

Technology – 23.4%

          

Aerospace and Defense - 2.5%

          

Allied Defense Group (The) a

   42,400     326,056

Astronics Corporation a

   26,400     841,632

Ducommun a

   72,100     1,855,133

HEICO Corporation

   41,600     1,750,528

HEICO Corporation Cl. A

   24,160     849,224

Integral Systems

   99,922     2,429,104

LMI Aerospace a,c

   6,100     148,169

SIFCO Industries a,c

   45,800     857,376

TVI Corporation a

   156,790     90,938
       
          9,148,160
       

Components and Systems - 3.5%

          

Acacia Research-Acacia Technologies a

   94,450     1,526,312

CSP a

   122,581     1,097,100

DDi Corporation a

   54,047     431,836

Excel Technology a

   91,900     2,567,686

Giga-tronics a

   3,200     5,184

MOCON

   15,600     179,400

Neoware a,c

   103,200     1,397,328

Performance Technologies a

   41,250     186,450

REMEC

   143,387     217,948

Richardson Electronics

   155,050     1,434,213

Rimage Corporation a

   20,000     631,800

†SCM Microsystems a,c

   70,300     210,900

Spectrum Control a

   46,100     778,168

TTM Technologies a

   123,700     1,608,100

TransAct Technologies a

   78,600     470,814
       
          12,743,239
       

Distribution - 0.8%

          

Agilysys

   90,000     2,025,000

Bell Industries a

   39,400     143,810
    SHARES     VALUE
           

Nu Horizons Electronics a,c

   40,000   $ 532,400

PC Mall a,c

   26,000     317,980
       
          3,019,190
       

Internet Software and Services - 2.1%

          

Art Technology Group a,c

   304,400     809,704

Convera Corporation Cl. A a,c

   190,000     828,400

EDGAR Online a,c

   27,700     74,790

iGATE Corporation a

   273,400     2,192,668

Jupitermedia Corporation a,c

   355,800     2,590,224

Lionbridge Technologies a,c

   39,900     235,011

NIC

   26,800     183,312

SkyTerra Communications a

   62,200     541,140

Stamps.com a

   33,200     457,496
       
          7,912,745
       

IT Services - 4.8%

          

CIBER a,c

   182,662     1,494,175

Cogent Communications Group a,c

   24,800     740,776

Computer Task Group a

   431,100     1,927,017

Diamond Management & Technology

          

Consultants

   138,100     1,822,920

Forrester Research a,c

   101,500     2,855,195

Rainmaker Systems a

   52,000     369,720

Sapient Corporation a,c

   500,000     3,865,000

Syntel

   54,300     1,650,177

TriZetto Group (The) a

   145,200     2,811,072

†Yucheng Technologies a,c

   20,000     154,600
       
          17,690,652
       

Semiconductors and Equipment - 2.6%

          

†Actions Semiconductor ADR a,c

   50,000     307,500

Cascade Microtech a,c

   50,037     599,944

CEVA a

   9,800     83,300

Cohu

   17,800     396,050

†DTS a,c

   7,000     152,390

Electroglas a

   281,700     605,655

Exar Corporation a,c

   121,208     1,624,187

Ikanos Communications a,c

   8,200     62,402

Intevac a,c

   40,550     862,093

Jazz Technologies (Units) a

   205,000     943,000

Jinpan International

   25,250     484,800

Nanometrics a,c

   34,000     233,240

NetList a

   37,200     130,200

Nextest Systems a,c

   13,000     177,710

PDF Solutions a,c

   25,000     295,750

Photronics a,c

   29,750     442,680

QuickLogic Corporation a

   20,000     53,400

†Saifun Semiconductors a,c

   25,000     297,000

Semitool a,c

   25,500     245,055

Vimicro International ADR a,c

   110,000     638,000

Virage Logic a,c

   100,000     734,000

†Zarlink Semiconductor a,c

   208,700     375,660
       
          9,744,016
       

Software - 4.5%

          

Aladdin Knowledge Systems a

   27,300     566,202

Applix a

   20,000     329,000

†Borland Software a,c

   49,700     295,218

†Bottomline Technologies a,c

   32,400     400,140

Descartes Systems Group (The) a

   55,200     227,424

Evans & Sutherland Computer a

   83,500     189,545


38  |  2007 Semiannual Report to Stockholders		 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


    June 30, 2007 (unaudited)
 
   

    SHARES     VALUE

Technology (continued)

          

Software (continued)

          

Fundtech a

   51,000   $ 738,990

ILOG ADR a,c

   35,000     423,500

iPass a,c

   190,000     1,029,800

JDA Software Group a,c

   59,500     1,167,985

OpenTV Cl. A a,c

   373,700     792,244

Pegasystems

   320,200     3,499,786

Phase Forward a,c

   43,000     723,690

PLATO Learning a

   100,000     460,000

SPSS a,c

   41,800     1,845,052

SeaChange International a,c

   10,000     77,600

TeleCommunication Systems Cl. A a,c

   10,000     50,800

Transaction Systems Architects Cl. A a

   97,600     3,285,216

Trintech Group ADR a,c

   91,252     415,197

uWink a

   23,000     27,370
       
          16,544,759
       

Telecommunications - 2.6%

          

Anaren a

   30,900     544,149

Atlantic Tele-Network

   5,000     143,200

C-COR.net a

   5,000     70,300

Captaris a

   43,300     221,696

Communications Systems

   10,700     118,877

Hurray! Holding Company ADR a

   4,400     19,800

InPhonic a,c

   133,600     622,576

NMS Communications a,c

   600,000     1,032,000

North Pittsburgh Systems

   23,200     493,000

PC-Tel a

   49,600     434,000

Radyne a

   52,820     563,589

Sunrise Telecom a

   122,350     386,626

Symmetricom a,c

   24,782     208,169

UCN a,c

   181,100     778,730

ViaSat a,c

   76,812     2,465,665

WJ Communications a

   209,300     366,275

Zhone Technologies a,c

   791,600     1,135,946
       
          9,604,598
       

Total (Cost $54,632,678)

         86,407,359
       

Miscellaneous e – 2.7%

          

Total (Cost $10,009,923)

         10,118,939
       

TOTAL COMMON STOCKS

          

(Cost $249,456,301)

         382,331,901
       
    SHARES     VALUE  

PREFERRED STOCKS – 1.5%

            

†Edge Petroleum 5.75% Ser. A Conv.

   69,000   $ 3,712,200  

Seneca Foods Conv. a

   75,409     1,900,307  
       
 

TOTAL PREFERRED STOCKS

            

(Cost $4,393,607)

         5,612,507  
       
 

REPURCHASE AGREEMENT – 9.0%

            
State Street Bank & Trust Company,            

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

            

maturity value $32,960,002 (collateralized

            

by obligations of various U.S. Government

            

Agencies, valued at $33,773,750)

            

(Cost $32,946,000)

         32,946,000  
       
 
  PRINCIPAL          
  AMOUNT          

COLLATERAL RECEIVED FOR SECURITIES LOANED – 13.4%

            
U.S. Treasury Bonds            

3.625%-6.25% due 8/15/23-4/15/28

   $319,267     320,876  
U.S. Treasury Notes            

3.00% due 7/15/12

   9     9  
U.S. Treasury Strip-Principal            

due 11/15/09

   53,321     53,321  
U.S. Treasury Strip-Interest            

due 8/15/23

   66     66  
Money Market Funds            

State Street Navigator Securities Lending

            

Prime Portfolio (7 day yield-5.27%)

         48,773,219  
       
 

TOTAL COLLATERAL RECEIVED FOR SECURITIES LOANED

            

(Cost $49,147,491)

         49,147,491  
       
 

TOTAL INVESTMENTS – 127.6%

            

(Cost $335,943,399)

         470,037,899  
             

LIABILITIES LESS CASH

            

AND OTHER ASSETS – (11.3)%

         (41,526,812 )
             

PREFERRED STOCK – (16.3)%

         (60,000,000 )
       
 

NET ASSETS APPLICABLE TO

            

COMMON STOCKHOLDERS – 100.0%

       $ 368,511,087  
       
 
a   Non-income producing.
b   At June 30, 2007, the Fund owned 5% or more of the Company’s outstanding voting securities thereby making the Company an Affiliated Company as that term is defined in the Investment Company Act of 1940.
c   All or a portion of these securities were on loan at June 30, 2007. Total market value of loaned securities at June 30, 2007 was $47,404,281.
d   Securities for which market quotations are no longer readily available represent 0.0% of net assets. These securities have been valued at their fair value under procedures established by the Fund’s Board of Directors.
e   Includes securities first acquired in 2007 and less than 1% of net assets applicable to Common Stockholders.
†   New additions in 2007.
     
    Bold indicates the Fund’s largest 20 equity holdings in terms of June 30, 2007 market value.
     
INCOME TAX INFORMATION: The cost of total investments for Federal income tax purposes was $336,635,362. At June 30, 2007, net unrealized appreciation for all securities was $133,402,537, consisting of aggregate gross unrealized appreciation of $152,644,845 and aggregate gross unrealized depreciation of $19,242,308. The primary difference in book and tax basis cost is the timing of the recognition of losses on securities sold.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
2007 Semiannual Report to Stockholders  |  39


Royce Micro-Cap Trust   June 30, 2007 (unaudited)
 
   Statement of Assets and Liabilities

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

Non-Affiliates (cost $298,071,953)

   $ 432,587,489  

Affiliated Companies (cost $4,925,446)

     4,504,410  
Total investments at value     437,091,899  
Repurchase agreement (at cost and value)     32,946,000  
Cash     19,350  
Receivable for investments sold     10,592,300  
Receivable for dividends and interest     301,806  
Prepaid expenses     10,422  

Total Assets

     480,961,777  
LIABILITIES:        
Payable for collateral on loaned securities     49,147,491  
Payable for investments purchased     2,659,400  
Payable for investment advisory fee     432,306  
Preferred dividends accrued but not yet declared     79,999  
Accrued expenses     131,494  

Total Liabilities

     52,450,690  
PREFERRED STOCK:        
6.00% Cumulative Preferred Stock - $0.001 par value, $25 liquidation value per share; 2,400,000 shares outstanding     60,000,000  

Total Preferred Stock

     60,000,000  
NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS   $ 368,511,087  
ANALYSIS OF NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:        
Common Stock paid-in capital - $0.001 par value per share; 23,848,795 shares outstanding (150,000,000 shares authorized)   $ 213,015,351  
Undistributed net investment income (loss)     (2,729,655 )
Accumulated net realized gain (loss) on investments and foreign currency     41,467,814  
Net unrealized appreciation (depreciation) on investments and foreign currency     134,094,838  
Preferred dividends accrued but not yet declared     (17,337,261 )

Net Assets applicable to Common Stockholders (net asset value per share - $15.45)

   $ 368,511,087  
*Investments at identified cost (including $49,147,491 of collateral on loaned securities)   $ 302,997,399  
 Market value of loaned securities     47,404,281  


40  |  2007 Semiannual Report to Stockholders		 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


Royce Micro-Cap Trust   Six Months Ended June 30, 2007 (unaudited)
 
   Statement of Operations
         
INVESTMENT INCOME:        
Income:        

Dividends*

        

Non-Affiliates

   $ 1,794,854  

Affiliated Companies

     –  

Interest

     633,282  

Securities lending

     222,031  
Total income     2,650,167  
Expenses:        

Investment advisory fees

     2,454,966  

Stockholder reports

     72,551  

Custody and transfer agent fees

     37,917  

Directors’ fees

     30,348  

Professional fees

     18,247  

Administrative and office facilities expenses

     16,359  

Other expenses

     28,535  
Total expenses     2,658,923  
Compensating balance credits     (4,995 )
Net expenses     2,653,928  
Net investment income (loss)     (3,761 )
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:        
Net realized gain (loss) on investments and foreign currency        

Non-Affiliates

     34,201,606  

Affiliated Companies

     –  
Net change in unrealized appreciation (depreciation) on investments and foreign currency     (840,996 )
Net realized and unrealized gain (loss) on investments and foreign currency     33,360,610  
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM INVESTMENT OPERATIONS     33,356,849  
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS     (1,800,000 )
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS        

RESULTING FROM INVESTMENT OPERATIONS

   $ 31,556,849  
*Net of foreign withholding tax of $32,263.        

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2007 Semiannual Report to Stockholders  |  41


Royce Micro-Cap Trust  
 
   Statement of Changes in Net Assets
                   
                   
    Six months ended          
    6/30/07   Year ended  
    (unaudited)   12/31/06  
                   
INVESTMENT OPERATIONS:                  
Net investment income (loss)   $ (3,761 )   $ 167,273    
Net realized gain (loss) on investments and foreign currency     34,201,606       40,340,273    
Net change in unrealized appreciation (depreciation) on investments and foreign currency     (840,996 )     27,839,554    
Net increase (decrease) in net assets resulting from investment operations     33,356,849       68,347,100    
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:                  
Net investment income     –       (475,560 )  
Net realized gain on investments and foreign currency     –       (3,124,440 )  
Quarterly distributions*     (1,800,000 )     –    
Total distributions to Preferred Stockholders     (1,800,000 )     (3,600,000 )  
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS                  

RESULTING FROM INVESTMENT OPERATIONS

     31,556,849       64,747,100    
DISTRIBUTIONS TO COMMON STOCKHOLDERS:                  
Net investment income     –       (4,585,208 )  
Net realized gain on investments and foreign currency     –       (30,124,923 )  
Quarterly distributions*     (15,457,261 )     –    
Total distributions to Common Stockholders     (15,457,261 )     (34,710,131 )  
CAPITAL STOCK TRANSACTIONS:                  
Reinvestment of distributions to Common Stockholders     8,729,229       19,926,104    
Total capital stock transactions     8,729,229       19,926,104    
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS     24,828,817       49,963,073    
NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:                  

Beginning of period

     343,682,270       293,719,197    

End of period (including undistributed net investment income (loss) of $(2,729,655) at 6/30/07 and

                  

$(2,725,894) at 12/31/06)

   $ 368,511,087     $ 343,682,270    
                   
*To be allocated to net investment income and capital gains at year end.                  


42  |  2007 Semiannual Report to Stockholders		 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


Royce Micro-Cap Trust

 

 
Financial Highlights
 

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

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

NET ASSET VALUE, BEGINNING OF PERIOD

     $14.77       $13.43       $14.34       $13.33       $9.39       $11.83  

INVESTMENT OPERATIONS:

                                                

Net investment income (loss)

     0.00       0.01       (0.03 )     (0.08 )     (0.09 )     (0.13 )

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

     1.41       3.04       1.14       2.62       5.28       (1.29 )

Total investment operations

     1.41       3.05       1.11       2.54       5.19       (1.42 )

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:

                                                

Net investment income

     –       (0.02 )     –       –       –       –  

Net realized gain on investments and foreign currency

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

Quarterly distributions*

     (0.08 )     –       –       –       –       –  

Total distributions to Preferred Stockholders

     (0.08 )     (0.16 )     (0.17 )     (0.19 )     (0.18 )     (0.18 )

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

     1.33       2.89       0.94       2.35       5.01       (1.60 )

DISTRIBUTIONS TO COMMON STOCKHOLDERS:

                                                

Net investment income

     –       (0.20 )     –       –       –       –  

Net realized gain on investments and foreign currency

     –       (1.35 )     (1.85 )     (1.33 )     (0.92 )     (0.80 )

Quarterly distributions*

     (0.66 )     –       –       –       –       –  

Total distributions to Common Stockholders

     (0.66 )     (1.55 )     (1.85 )     (1.33 )     (0.92 )     (0.80 )

CAPITAL STOCK TRANSACTIONS:

                                                

Effect of reinvestment of distributions by Common Stockholders

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

Effect of Preferred Stock offering

     –       –       –       –       (0.11 )     –  

Total capital stock transactions

     0.01       (0.00 )     0.00       (0.01 )     (0.15 )     (0.04 )

NET ASSET VALUE, END OF PERIOD

     $15.45       $14.77       $13.43       $14.34       $13.33       $9.39  

MARKET VALUE, END OF PERIOD

     $15.41       $16.57       $14.56       $15.24       $12.60       $8.44  

TOTAL RETURN (a):

                                                

Market Value

     (2.89) %***     26.72 %     8.90 %     33.44 %     63.58 %     (12.70 )%

Net Asset Value

     9.23 %***     22.46 %     6.75 %     18.69 %     55.55 %     (13.80 )%

RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

                                                

Total expenses (b,c)

     1.49 %**     1.64 %     1.63 %     1.62 %     1.82 %     1.96 %

Management fee expense (d)

     1.38 %**     1.49 %     1.43 %     1.43 %     1.59 %     1.59 %

Other operating expenses

     0.11 %**     0.15 %     0.20 %     0.19 %     0.23 %     0.37 %

Net investment income (loss)

     (0.00 )%**     0.05 %     (0.27 )%     (0.56 )%     (0.82 )%     (1.23 )%

SUPPLEMENTAL DATA:

                                                

Net Assets Applicable to Common Stockholders,

                                                

End of Period (in thousands)

     $368,511       $343,682       $293,719       $290,364       $253,425       $167,571  

Liquidation Value of Preferred Stock,

                                                

End of Period (in thousands)

     $60,000       $60,000       $60,000       $60,000       $60,000       $40,000  

Portfolio Turnover Rate

     19 %     34 %     46 %     32 %     26 %     39 %

PREFERRED STOCK:

                                                

Total shares outstanding

     2,400,000       2,400,000       2,400,000       2,400,000       2,400,000       1,600,000  

Asset coverage per share

     $178.55       $168.20       $147.38       $145.98       $130.59       $129.73  

Liquidation preference per share

     $25.00       $25.00       $25.00       $25.00       $25.00       $25.00  

Average market value per share (e):

                                                

6.00% Cumulative

     $24.67       $24.15       $24.97       $24.66       $25.37       –  

7.75% Cumulative

     –       –       –       –       $25.70       $25.91  

(a)   The Market Value Total Return is calculated assuming a purchase of Common Stock on the opening of the first business day and a sale on the closing of the last business day of each period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund’s Distribution Reinvestment and Cash Purchase Plan. Net Asset Value Total Return is calculated on the same basis, except that the Fund’s net asset value is used on the purchase and sale dates instead of market value.
(b)   Expense ratios based on total average net assets including liquidation value of Preferred Stock were 1.28%, 1.38%, 1.35%, 1.32%, 1.49% and 1.62% for the periods ended June 30, 2007 and December 31, 2006, 2005, 2004, 2003 and 2002, respectively.
(c)   Expense ratios based on average net assets applicable to Common Stockholders before waiver of fees by the investment adviser would have been 1.92% and 2.04% for the periods ended December 31, 2003 and 2002, respectively.
(d)   The management fee is calculated based on average net assets over a rolling 36-month basis, while the above ratios of management fee expenses are based on average net assets applicable to Common Stockholders over a 12-month basis.
(e)   The average of month-end market values during the period that the Preferred Stock was outstanding.
*   To be allocated to net investment income and capital gains at year end.
**   Annualized.
***   Not annualized.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2007 Semiannual Report to Stockholders  |  43


Royce Micro-Cap Trust

 

 
Notes to Financial Statements (unaudited)
 

Summary of Significant Accounting Policies:

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

Valuation of Investments:
Securities are valued as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq’s Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their bid price. Other over-the-counter securities for which market quotations are readily available are valued at their highest bid price. Securities for which market quotations are not readily available are valued at their fair value under procedures established by the Fund’s Board of Directors. In addition, if between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. The Fund uses an independent pricing service to provide fair value estimates for relevant non-U.S. equity securities on days when the U.S. market volatility exceeds a certain threshold. This pricing service uses proprietary correlations it has developed between the movement of prices of non-U.S. equity securities and indices of U.S.- traded securities, futures contracts and other indications to estimate the fair value of relevant non-U.S. securities. Bonds and other fixed income securities may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. Investments in money market funds are valued at net asset value per share.

Foreign Currency:
The Fund values its non-U.S. securities in U.S. dollars on the basis of foreign currency exchange rates provided to the Fund by its custodian, State Street Bank and Trust Company. The effects of changes in foreign exchange rates on investments and other assets and liabilities are included with net realized and unrealized gains and losses on investments.
Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, expiration of currency forward contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of

 

assets and liabilities, including investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.

Investment Transactions and Related Investment Income:

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

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

Compensating Balance Credits:
The Fund has an arrangement with its custodian bank, whereby a portion of the custodian’s fee is paid indirectly by credits earned on the Fund’s cash on deposit with the bank. This deposit arrangement is an alternative to purchasing overnight investments.

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

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

44  |  2007 Semiannual Report to Stockholders		  


Royce Micro-Cap Trust

 

 
Notes to Financial Statements (unaudited) (continued)
 

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.

Repurchase Agreements:

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

Securities Lending:
The Fund loans securities to qualified institutional investors for the purpose of realizing additional income. Collateral on all securities loaned for the Fund is accepted in cash and cash equivalents and invested temporarily by the custodian. The collateral is equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day.

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

  

Capital Stock:

The Fund issued 578,377 and 1,401,367 shares of Common Stock as reinvestment of distributions by Common Stockholders for the six months ended June 30, 2007 and the year ended December 31, 2006, respectively.
      At June 30, 2007, 2,400,000 shares of 6.00% Cumulative Preferred Stock were outstanding. Commencing October 16, 2008 and thereafter, the Fund, at its option, may redeem the Cumulative Preferred Stock, in whole or in part, at the redemption price. The Cumulative Preferred Stock is classified outside of permanent equity (net assets applicable to Common Stockholders) in the accompanying financial statements in accordance with Emerging Issues Task Force (EITF) Topic D-98, Classification and Measurement of Redeemable Securities, that requires preferred securities that are redeemable for cash or other assets to be classified outside of permanent equity to the extent that the redemption is at a fixed or determinable price and at the option of the holder or upon the occurrence of an event that is not solely within the control of the issuer.
The Fund is required to meet certain asset coverage tests with respect to the Cumulative Preferred Stock as required by the 1940 Act. In addition, pursuant to the Rating Agency Guidelines established by Moody’s, the Fund is required to maintain a certain discounted asset coverage. If the Fund fails to meet these requirements and does not correct such failure, the Fund may be required to redeem, in part or in full, the Cumulative Preferred Stock at a redemption price of $25.00 per share, plus an amount equal to the accumulated and unpaid dividends, whether or not declared on such shares, in order to meet these requirements. Additionally, failure to meet the foregoing asset coverage requirements could restrict the Fund’s ability to pay dividends to Common Stockholders and could lead to sales of portfolio securities at inopportune times. The Fund has met these requirements since issuing the Cumulative Preferred Stock.

Investment Advisory Agreement:
As compensation for its services under the Investment Advisory Agreement, Royce & Associates, LLC (“Royce”) receives a fee comprised of a Basic Fee (“Basic Fee”) and an adjustment to the Basic Fee based on the investment performance of the Fund in relation to the investment record of the Russell 2000.
The Basic Fee is a monthly fee equal to 1/12 of 1% (1% on an annualized basis) of the average of the Fund’s month-end net assets applicable to Common Stockholders, plus the liquidation value of Preferred Stock, for the rolling 36-month period ending with such month (the “performance period”). The Basic Fee for each month is increased or decreased at the rate of 1/12 of .05% for each percentage point that the investment performance of the Fund exceeds, or is exceeded by, the percentage change in the investment record of the Russell 2000 for the performance period by more than two percentage points. The performance period for each such month is a rolling 36-month period ending with such month. The maximum increase or decrease in the Basic Fee for any month may not exceed 1/12 of .5%. Accordingly, for each month, the maximum monthly fee rate as adjusted for performance is 1/12 of 1.5% and is payable if the investment performance of the Fund exceeds the percentage change in the investment record of the Russell 2000 by 12 or more
  2007 Semiannual Report to Stockholders  |  45


Royce Micro-Cap Trust

 

 
Notes to Financial Statements (unaudited) (continued)
 

percentage points for the performance period, and the minimum monthly fee rate as adjusted for performance is 1/12 of .5% and is payable if the percentage change in the investment record of the Russell 2000 exceeds the investment performance of the Fund by 12 or more percentage points for the performance period.

Royce has voluntarily committed to waive the portion of its investment advisory fee attributable to an issue of the Fund’s Preferred Stock for any month in which the Fund’s average annual NAV total return since issuance of the Preferred Stock fails to exceed the applicable Preferred Stock’s dividend rate.
For the six rolling 36-month periods ending June 2007, the investment performance of the Fund exceeded the investment performance of the

  

Russell 2000 by 8% to 10%. Accordingly, the investment advisory fee consisted of a Basic Fee of $1,818,265 and an upward adjustment of $636,701 for performance of the Fund above that of the Russell 2000. For the six months ended June 30, 2007, the Fund accrued and paid Royce advisory fees totaling $2,454,966.

Purchases and Sales of Investment Securities:

For the six months ended June 30, 2007, the cost of purchases and proceeds from sales of investment securities, other than short-term securities and collateral received for securities loaned, amounted to $74,142,714 and $99,563,308, respectively.

Transactions in Shares of Affiliated Companies:

An “Affiliated Company,” as defined in the Investment Company Act of 1940, is a company in which a Fund owns 5% or more of the company’s outstanding voting securities at any time during the period. The Fund effected the following transactions in shares of such companies during the six months ended June 30, 2007:

    Shares   Market Value   Cost of   Cost of   Realized   Dividend   Shares   Market Value

Affiliated Company

   12/31/06   12/31/06   Purchases   Sales   Gain (Loss)   Income   6/30/07   6/30/07

BKF Capital Group

   406,500   $1,361,775   –   –   –   –   406,500   $ 934,950

Highbury Financial

   580,400     3,383,732   –   –   –   –   580,400     3,569,460
        $4,745,507           –   –       $ 4,504,410


46  |  2007 Semiannual Report to Stockholders		  


Royce Focus Trust   June 30, 2007 (unaudited)
 
   Schedule of Investments

    SHARES     VALUE

COMMON STOCKS – 82.1%

          
           

Consumer Products – 6.5%

          

Apparel and Shoes - 1.4%

          

Timberland Company Cl. A a

   100,000   $ 2,519,000
       

Sports and Recreation - 4.2%

          

Thor Industries

   120,000     5,416,800

Winnebago Industries

   75,000     2,214,000
       
          7,630,800
       

Other Consumer Products - 0.9%

          

†Fossil a

   60,000     1,769,400
       

Total (Cost $9,971,420)

         11,919,200
       

Consumer Services – 4.2%

          

Direct Marketing - 1.8%

          

Nu Skin Enterprises Cl. A

   200,000     3,300,000
       

Other Consumer Services - 2.4%

          

Corinthian Colleges a

   140,000     2,280,600

Universal Technical Institute a

   80,100     2,033,739
       
          4,314,339
       

Total (Cost $5,874,584)

         7,614,339
       

Financial Intermediaries – 5.6%

          

Securities Brokers - 2.9%

          

Knight Capital Group Cl. A a

   320,000     5,312,000
       

Other Financial Intermediaries - 2.7%

          

†KKR Financial

   200,000     4,982,000
       

Total (Cost $10,661,560)

         10,294,000
       

Financial Services – 1.2%

          

Information and Processing - 1.2%

          

eFunds Corporation a

   60,000     2,117,400
       

Total (Cost $652,985)

         2,117,400
       

Health – 5.1%

          

Drugs and Biotech - 3.9%

          

†Alpharma Cl. A a

   50,000     1,300,500

Endo Pharmaceuticals Holdings a

   90,000     3,080,700

Lexicon Pharmaceuticals a

   499,400     1,603,074

ViroPharma a

   81,900     1,130,220
       
          7,114,494
       

Medical Products and Devices - 1.2%

          

Caliper Life Sciences a

   252,300     1,183,287

Possis Medical a

   100,000     1,088,000
       
          2,271,287
       

Total (Cost $8,582,110)

         9,385,781
       

Industrial Products – 21.8%

          

Building Systems and Components - 2.2%

          

Simpson Manufacturing

   120,000     4,048,800
       

Machinery - 6.9%

          

†Kennametal

   40,000     3,281,200

Lincoln Electric Holdings

   70,000     5,196,800

Woodward Governor

   75,000     4,025,250
       
          12,503,250
       
    SHARES     VALUE

Metal Fabrication and Distribution - 12.7%

          

†Chaparral Steel

   60,100   $ 4,319,387

†Dynamic Materials

   75,000     2,812,500

Metal Management

   100,000     4,407,000

Reliance Steel & Aluminum

   100,000     5,626,000

Schnitzer Steel Industries Cl. A

   125,000     5,992,500
       
          23,157,387
       

Total (Cost $19,997,442)

         39,709,437
       

Industrial Services – 6.3%

          

Commercial Services - 3.7%

          

BB Holdings a

   400,000     2,108,506

†CRA International a

   40,000     1,928,000

LECG Corporation a

   180,000     2,719,800
       
          6,756,306
       

Transportation and Logistics - 2.6%

          

Arkansas Best

   120,000     4,676,400
       

Total (Cost $10,286,023)

         11,432,706
       

Natural Resources – 24.8%

          

Energy Services - 8.3%

          

Ensign Energy Services

   240,000     4,280,685

Pason Systems

   180,000     2,818,493

Tesco Corporation a

   100,000     3,155,000

Trican Well Service

   240,000     4,886,740
       
          15,140,918
       

Oil and Gas - 3.5%

          

Unit Corporation a

   100,000     6,291,000
       

Precious Metals and Mining - 13.0%

          

Endeavour Mining Capital

   400,000     3,597,278

Gammon Gold a

   250,000     3,155,000

Ivanhoe Mines a

   450,000     6,408,000

Meridian Gold a

   100,000     2,758,000

Pan American Silver a

   140,000     3,686,200

Silver Standard Resources a,b

   120,000     4,124,400
       
          23,728,878
       

Total (Cost $24,962,174)

         45,160,796
       

Technology – 6.6%

          

Semiconductors and Equipment - 1.2%

          

†MKS Instruments a

   80,000     2,216,000
       

Software - 2.1%

          

†DivX a

   150,000     2,250,000

ManTech International Cl. A a

   50,000     1,541,500
       
          3,791,500
       

Telecommunications - 3.3%

          

ADTRAN

   75,000     1,947,750

Foundry Networks a

   250,100     4,166,666
       
          6,114,416
       

Total (Cost $9,272,651)

         12,121,916
       

TOTAL COMMON STOCKS

          

(Cost $100,260,949)

         149,755,575
       

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
2007 Semiannual Report to Stockholders  |  47


Royce Focus Trust   June 30, 2007 (unaudited)
 
   Schedule of Investments

  PRINCIPAL    
  AMOUNT   VALUE

GOVERNMENT BONDS – 8.9%

          
(Principal Amount shown in local currency)          

Australia Government Bond

          

7.50% due 9/15/09

   10,000,000   $ 8,656,703

New Zealand Government Bond

          

6.00% due 7/15/08

   10,000,000     7,596,441
       

TOTAL GOVERNMENT BONDS

          

(Cost $14,865,423)

         16,253,144
       

REPURCHASE AGREEMENTS – 23.4%

          
State Street Bank & Trust Company,          

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

          

maturity value $17,827,574 (collateralized

          

by obligations of various U.S. Government

          

Agencies, valued at $18,268,469)

          

(Cost $17,820,000)

         17,820,000
       
Lehman Brothers (Tri-Party),          

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

          

maturity value $25,010,521 (collateralized

          

by obligations of various U.S. Government

          

Agencies, valued at $25,513,364)

          

(Cost $25,000,000)

         25,000,000
       

TOTAL REPURCHASE AGREEMENTS

          

(Cost $42,820,000)

         42,820,000
       
          VALUE  

COLLATERAL RECEIVED FOR SECURITIES LOANED – 0.1%

            
Money Market Funds            

State Street Navigator Securities Lending

            

Prime Portfolio (7 day yield-5.27%)

            

(Cost $62,550)

       $ 62,550  
       
 

TOTAL INVESTMENTS – 114.5%

            

(Cost $158,008,922)

         208,891,269  
             

LIABILITIES LESS CASH

            

AND OTHER ASSETS – (0.8)%

         (1,424,233 )
             

PREFERRED STOCK – (13.7)%

         (25,000,000 )
       
 

NET ASSETS APPLICABLE TO

            

COMMON STOCKHOLDERS – 100.0%

       $ 182,467,036  
       
 
a   Non-income producing.
b   All or a portion of these securities were on loan at June 30, 2007. Total market value of loaned securities at June 30, 2007 was $61,866.
†   New additions in 2007.
   
Bold indicates the Fund’s largest 20 equity holdings in terms of June 30, 2007 market value.
     
INCOME TAX INFORMATION: The cost of total investments for Federal income tax purposes was $158,298,979. At June 30, 2007, net unrealized appreciation for all securities was $50,592,290, consisting of aggregate gross unrealized appreciation of $52,807,570 and aggregate gross unrealized depreciation of $2,215,280. The primary difference in book and tax basis cost is the timing of the recognition of losses on securities sold.


48  |  2007 Semiannual Report to Stockholders		 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


Royce Focus Trust   June 30, 2007 (unaudited)

   Statement of Assets and Liabilities

ASSETS:        
Investments at value (including collateral on loaned securities)*   $ 166,071,269  
Repurchase agreements (at cost and value)     42,820,000  
Cash     19,042  
Receivable for investments sold     319,806  
Receivable for dividends and interest     477,531  
Prepaid expenses     21,231  

Total Assets

     209,728,879  
LIABILITIES:        
Payable for collateral on loaned securities     62,550  
Payable for investments purchased     1,919,762  
Payable for investment advisory fee     172,683  
Preferred dividends accrued but not yet declared     33,325  
Accrued expenses     73,523  

Total Liabilities

     2,261,843  
PREFERRED STOCK:        
6.00% Cumulative Preferred Stock - $0.001 par value, $25 liquidation value per share; 1,000,000 shares outstanding     25,000,000  

Total Preferred Stock

     25,000,000  
NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS   $ 182,467,036  
ANALYSIS OF NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:        
Common Stock paid-in capital - $0.001 par value per share; 16,548,095 shares outstanding (100,000,000 shares authorized)   $ 111,013,537  
Undistributed net investment income (loss)     362,109  
Accumulated net realized gain (loss) on investments and foreign currency     25,225,153  
Net unrealized appreciation (depreciation) on investments and foreign currency     50,899,017  
Preferred dividends accrued but not yet declared     (5,032,780 )

Net Assets applicable to Common Stockholders (net asset value per share - $11.03)

   $ 182,467,036  
*Investments at identified cost (including $62,550 of collateral on loaned securities)   $ 115,188,922  
 Market value of loaned securities     61,866  

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.   2007 Semiannual Report to Stockholders  |  49


Royce Focus Trust   Six Months Ended June 30, 2007 (unaudited)

   Statement of Operations

INVESTMENT INCOME:        
Income:        

Interest*

   $ 1,574,197  

Dividends**

     409,849  

Securities lending

     1,173  
Total income     1,985,219  
Expenses:        

Investment advisory fees

     979,702  

Stockholder reports

     32,000  

Custody and transfer agent fees

     25,750  

Professional fees

     15,972  

Directors’ fees

     14,952  

Administrative and office facilities expenses

     7,620  

Other expenses

     31,035  
Total expenses     1,107,031  
Compensating balance credits     (1,276 )
Net expenses     1,105,755  
Net investment income (loss)     879,464  
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:        
Net realized gain (loss) on investments and foreign currency     23,082,886  
Net change in unrealized appreciation (depreciation) on investments and foreign currency     1,948,710  
Net realized and unrealized gain (loss) on investments and foreign currency     25,031,596  
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM INVESTMENT OPERATIONS     25,911,060  
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS     (750,000 )
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS        

RESULTING FROM INVESTMENT OPERATIONS

   $ 25,161,060  
* Net of foreign withholding tax of $18,380.        
**Net of foreign withholding tax of $22,247.        

50  |  2007 Semiannual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


Royce Focus Trust    

   Statement of Changes in Net Assets

    Six months ended        
    6/30/07   Year ended
    (unaudited)   12/31/06
INVESTMENT OPERATIONS:                
Net investment income (loss)   $ 879,464     $ 2,368,567  
Net realized gain (loss) on investments     23,082,886       20,546,074  
Net change in unrealized appreciation (depreciation) on investments and foreign currency     1,948,710       1,820,291  
Net increase (decrease) in net assets resulting from investment operations     25,911,060       24,734,932  
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:                
Net investment income     –       (187,800 )
Net realized gain on investments and foreign currency     –       (1,312,200 )
Quarterly distributions*     (750,000 )     –  
Total distributions to Preferred Stockholders     (750,000 )     (1,500,000 )
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS                

RESULTING FROM INVESTMENT OPERATIONS

     25,161,060       23,234,932  
DISTRIBUTIONS TO COMMON STOCKHOLDERS:                
Net investment income     –       (2,950,803 )
Net realized gain on investments and foreign currency     –       (20,617,913 )
Quarterly distributions*     (4,249,447 )     –  
Total distributions to Common Stockholders     (4,249,447 )     (23,568,716 )
CAPITAL STOCK TRANSACTIONS:                
Reinvestment of distributions to Common Stockholders     2,988,172       15,657,293  
Total capital stock transactions     2,988,172       15,657,293  
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS     23,899,785       15,323,509  
NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:                

Beginning of period

     158,567,251       143,243,742  

End of period (including undistributed net investment income (loss) of $362,109 at 06/30/07 and $(517,355) at 12/31/06)

   $ 182,467,036     $ 158,567,251  

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

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.   2007 Semiannual Report to Stockholders  |  51


Royce Focus Trust    

   Financial Highlights

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

    Six months ended   Years ended December 31,
    June 30, 2007  
    (unaudited)     2006       2005       2004       2003       2002  
NET ASSET VALUE, BEGINNING OF PERIOD     $9.75       $9.76       $9.75       $9.00       $6.27       $7.28  
INVESTMENT OPERATIONS:                                                

Net investment income (loss)

     0.05       0.16       0.06       0.02       0.08       (0.01 )

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

     1.54       1.50       1.44       2.63       3.57       (0.74 )

Total investment operations

     1.59       1.66       1.50       2.65       3.65       (0.75 )

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:

                                                

Net investment income

     –       (0.01 )     (0.01 )     (0.00 )     (0.02 )     (0.03 )

Net realized gain on investments and foreign currency

     –       (0.09 )     (0.11 )     (0.15 )     (0.14 )     (0.13 )

Quarterly distributions*

     (0.05 )     –       –       –       –       –  

Total distributions to Preferred Stockholders

     (0.05 )     (0.10 )     (0.12 )     (0.15 )     (0.16 )     (0.16 )

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

     1.54       1.56       1.38       2.50       3.49       (0.91 )

DISTRIBUTIONS TO COMMON STOCKHOLDERS:

                                                

Net investment income

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

Net realized gain on investments and foreign currency

     –       (1.37 )     (1.15 )     (1.72 )     (0.56 )     (0.07 )

Quarterly distributions*

     (0.26 )     –       –       –       –       –  

Total distributions to Common Stockholders

     (0.26 )     (1.57 )     (1.21 )     (1.74 )     (0.62 )     (0.09 )
CAPITAL STOCK TRANSACTIONS:                                                

Effect of reinvestment of distributions by Common Stockholders

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

Effect of rights offering and Preferred Stock offering

     –       –       (0.13 )     –       (0.11 )     –  

Total capital stock transactions

     0.00       (0.00 )     (0.16 )     (0.01 )     (0.14 )     (0.01 )
NET ASSET VALUE, END OF PERIOD     $11.03       $9.75       $9.76       $9.75       $9.00       $6.27  
MARKET VALUE, END OF PERIOD     $11.32       $10.68       $9.53       $10.47       $8.48       $5.56  
TOTAL RETURN (a):                                                
Market Value     8.63 %***     30.50 %     3.03 %     47.26 %     63.98 %     (15.06 )%
Net Asset Value     15.94 %***     16.33 %     13.31 %     29.21 %     54.33 %     (12.50 )%

RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

                                                
Total expenses (b,c)     1.29 %**     1.36 %     1.48 %     1.53 %     1.57 %     1.88 %

Management fee expense

     1.14 %**     1.16 %     1.21 %     1.27 %     1.14 %     1.13 %

Other operating expenses

     0.15 %**     0.20 %     0.27 %     0.26 %     0.43 %     0.75 %
Net investment income (loss)     1.03 %**     1.54 %     0.63 %     0.24 %     1.07 %     (0.16 )%
SUPPLEMENTAL DATA:                                                

Net Assets Applicable to Common Stockholders, End of Period (in thousands)

     $182,467       $158,567       $143,244       $105,853       $87,012       $57,956  

Liquidation Value of Preferred Stock, End of Period (in thousands)

     $25,000       $25,000       $25,000       $25,000       $25,000       $20,000  
Portfolio Turnover Rate     31 %     30 %     42 %     52 %     49 %     61 %
PREFERRED STOCK:                                                
Total shares outstanding     1,000,000       1,000,000       1,000,000       1,000,000       1,000,000       800,000  
Asset coverage per share     $207.47       $183.57       $168.24       $130.85       $112.01       $97.44  
Liquidation preference per share     $25.00       $25.00       $25.00       $25.00       $25.00       $25.00  
Average market value per share (d):                                                

6.00% Cumulative

     $25.10       $24.98       $25.38       $24.83       $25.45       –  

7.45% Cumulative

     –       –       –       –       $25.53       $25.64  

(a)   The Market Value Total Return is calculated assuming a purchase of Common Stock on the opening of the first business day and a sale on the closing of the last business day of each period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund’s Distribution Reinvestment and Cash Purchase Plan. Net Asset Value Total Return is calculated on the same basis, except that the Fund’s net asset value is used on the purchase and sale dates instead of market value.
(b)   Expense ratios based on total average net assets including liquidation value of Preferred Stock were 1.13%, 1.17%, 1.22%, 1.21%, 1.20% and 1.43% for the periods ended June 30, 2007 and December 31, 2006, 2005, 2004, 2003 and 2002, respectively.
(c)   Expense ratios based on average net assets applicable to Common Stockholders before waiver of fees by the investment adviser would have been 1.73% and 2.06% for the periods ended December 31, 2003 and 2002, respectively.
(d)   The average of month-end market values during the period that the Preferred Stock was outstanding.
*   To be allocated to net investment income and capital gains at year end.
**   Annualized.
***   Not annualized.

52  |  2007 Semiannual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


Royce Focus Trust    

   Notes to Financial Statements (unaudited)

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

Valuation of Investments:
     Securities are valued as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq’s Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their bid price. Other over-the-counter securities for which market quotations are readily available are valued at their highest bid price. Securities for which market quotations are not readily available are valued at their fair value under procedures established by the Fund’s Board of Directors. In addition, if between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. The Fund uses an independent pricing service to provide fair value estimates for relevant non-U.S. equity securities on days when the U.S. market volatility exceeds a certain threshold. This pricing service uses proprietary correlations it has developed between the movement of prices of non-U.S. equity securities and indices of U.S.- traded securities, futures contracts and other indications to estimate the fair value of relevant non-U.S. securities. Bonds and other fixed income securities may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. Investments in money market funds are valued at net asset value per share.

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

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

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

Compensating Balance Credits:
     The Fund has an arrangement with its custodian bank, whereby a portion of the custodian’s fee is paid indirectly by credits earned on the Fund’s cash on deposit with the bank. This deposit arrangement is an alternative to purchasing overnight investments.

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

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

2007 Semiannual Report to Stockholders  |  53


Royce Focus Trust    

   Notes to Financial Statements (unaudited) (continued)

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.

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

Securities Lending:
     The Fund loans securities to qualified institutional investors for the purpose of realizing additional income. Collateral on all securities loaned for the Fund is accepted in cash and cash equivalents and invested temporarily by the custodian. The collateral is equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day.

Recent Accounting Pronouncements:
     Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”) provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. FIN 48 was adopted for the Fund on June 29, 2007. There was no material impact to the financial statements or disclosures thereto as a result of the adoption of this pronouncement.
     FASB Statement of Financial Accounting Standard No. 157, “Fair Value Measurement” (“FAS 157”), provides enhanced guidance for using fair value to measure assets and liabilities. The standard requires companies to provide expanded information about the assets and liabilities measured at fair value and the potential effect of these fair valuations on an entity’s financial performance. The standard does not expand the use of fair value in any new circumstances, but provides clarification on acceptable fair valuation methods and applications. Adoption of FAS 157 is required for fiscal years beginning after November 15, 2007. The standard is not expected to materially impact the Fund’s financial statements.
  
Capital Stock:
     The Fund issued 285,543 and 1,587,885 shares of Common Stock as reinvestment of distributions by Common Stockholders for the six months ended June 30, 2007 and the year ended December 31, 2006, respectively.
     At June 30, 2007, 1,000,000 shares of 6.00% Cumulative Preferred Stock were outstanding. Commencing October 17, 2008 and thereafter, the Fund, at its option, may redeem the Cumulative Preferred Stock, in whole or in part, at the redemption price. The Cumulative Preferred Stock is classified outside of permanent equity (net assets applicable to Common Stockholders) in the accompanying financial statements in accordance with Emerging Issues Task Force (EITF) Topic D-98, Classification and Measurement of Redeemable Securities, that requires preferred securities that are redeemable for cash or other assets to be classified outside of permanent equity to the extent that the redemption is at a fixed or determinable price and at the option of the holder or upon the occurrence of an event that is not solely within the control of the issuer.
     The Fund is required to meet certain asset coverage tests with respect to the Cumulative Preferred Stock as required by the 1940 Act. In addition, pursuant to the Rating Agency Guidelines established by Moody’s, the Fund is required to maintain a certain discounted asset coverage. If the Fund fails to meet these requirements and does not correct such failure, the Fund may be required to redeem, in part or in full, the Cumulative Preferred Stock at a redemption price of $25.00 per share, plus an amount equal to the accumulated and unpaid dividends, whether or not declared on such shares, in order to meet these requirements. Additionally, failure to meet the foregoing asset coverage requirements could restrict the Fund’s ability to pay dividends to Common Stockholders and could lead to sales of portfolio securities at inopportune times. The Fund has met these requirements since issuing the Cumulative Preferred Stock.

Investment Advisory Agreement:
     The Investment Advisory Agreement between Royce and the Fund provides for fees to be paid at an annual rate of 1.0% of the Fund’s average daily net assets applicable to Common Stockholders plus the liquidation value of Preferred Stock. Royce has voluntarily committed to waive the portion of its investment advisory fee attributable to an issue of the Fund’s Preferred Stock for any month in which the Fund’s average annual NAV total return since issuance of the Preferred Stock fails to exceed the applicable Preferred Stock’s dividend rate. For the six months ended June 30, 2007, the Fund accrued and paid Royce advisory fees totaling $979,702.

Purchases and Sales of Investment Securities:
     For the six months ended June 30, 2007, the cost of purchases and proceeds from sales of investment securities, other than short-term securities and collateral received for securities loaned, amounted to $47,667,421 and $56,178,829, respectively.

54  |  2007 Semiannual Report to Stockholders


Board Approval of Investment Advisory Agreements

     At meetings held on June 6-7, 2007, each of the Funds’ respective Board of Directors, including all of the non-interested directors, approved the continuance of the Investment Advisory Agreements between Royce & Associates, LLC (“R&A”) and each of Royce Value Trust, Royce Micro-Cap Trust and Royce Focus Trust (the “Funds”). In reaching these decisions, the Board reviewed the materials provided by R&A, which included, among other things, information prepared internally by R&A and independently by Morningstar Associates, LLC (“Morningstar”) containing detailed expense ratio and investment performance comparisons for the Funds with other funds in their “peer group,” information regarding the past performance of Funds managed by R&A and a memorandum outlining the legal duties of the Board prepared by independent counsel to the non-interested directors. R&A also provided the directors with an analysis of its profitability with respect to providing investment advisory services to each of the Funds. In addition, the Board took into account information furnished throughout the year at regular Board meetings, including reports on investment performance, shareholder services, regulatory compliance, brokerage commissions and research, brokerage and execution products and services provided to the Funds. The Board also considered other matters they deemed important to the approval process such as payments made to R&A or its affiliates relating to allocation of Fund brokerage commissions, and other direct and indirect benefits to R&A and its affiliates, from their relationship with the Funds. The directors also met throughout the year with investment advisory personnel from R&A. The Board, in its deliberations, recognized that, for many of the Funds’ shareholders, the decision to purchase Fund shares included a decision to select R&A as the investment adviser and that there was a strong association in the minds of Fund shareholders between R&A and each Fund. In considering factors relating to the approval of the continuance of the Investment Advisory Agreements, the non-interested directors received assistance and advice from, and met separately with, their independent counsel. While the Investment Advisory Agreements for the Funds were considered at the same Board meetings, the directors dealt with each agreement separately. Among other factors, the directors considered the following:
     The nature, extent and quality of services provided by R&A: The directors considered the following factors to be of fundamental importance to their consideration of whether to approve the continuance of the Funds’ Investment Advisory Agreements: (i) R&A’s more than 30 years of small-cap value investing experience and track record; (ii) the history of long-tenured R&A portfolio managers managing the Funds; (iii) R&A’s sole focus on mid-cap, small-cap and micro-cap value investing; (iv) the consistency of R&A’s approach to managing both the Funds and open-end mutual funds over more than 30 years; (v) the integrity and high ethical standards adhered to at R&A; (vi) R&A’s specialized experience in the area of trading small- and micro-cap securities; (vii) R&A’s historical ability to attract and retain portfolio management talent and (viii) R&A’s focus on shareholder interests as exemplified by its voluntary fee waiver policy on preferred stock assets in certain circumstances where the Funds’ total return performance from the issuance of the preferred may not exceed the coupon rate on the preferred, and expansive shareholder reporting and communications. The directors reviewed the services that R&A provides to the Funds, including, but not limited to, managing each Fund’s investments in accordance with the stated policies of each Fund. The directors determined that the services to be provided to each Fund by R&A would be the same as those it previously provided to the Funds. They also took into consideration the histories, reputations and backgrounds of R&A’s portfolio managers for the Funds, finding that these would likely have an impact on the continued success of the Funds. Lastly, the directors noted R&A’s ability to attract quality and experienced personnel. The directors concluded that the services provided by R&A to each Fund compared favorably to services provided by R&A to other R&A client accounts, including other funds, in both nature and quality, and that the scope of services provided by R&A would continue to be suitable for each Fund.
     Investment performance of the Funds and R&A: In light of R&A’s risk-averse approach to investing, the directors believe that risk-adjusted performance continues to be an appropriate measure of each Fund’s investment performance. One measure of risk-adjusted performance the directors have historically used in their review of the Funds’ performance is the Sharpe Ratio. The Sharpe Ratio is a risk-adjusted measure of performance developed by Nobel Laureate William Sharpe. It is calculated by dividing a fund’s annualized excess returns by its annualized standard deviation to determine reward per unit of risk. The higher the Sharpe Ratio, the better a fund’s historical risk-adjusted performance. The Board attaches primary importance to risk-adjusted performance over relatively long periods of time, typically three to five years. Using Morningstar data, Royce Value Trust’s Sharpe Ratio placed in the 2nd quartile for all funds within the small blend category assigned by Morningstar for the three-, five- and ten-year periods ended December 31, 2006. Similarly, Royce Micro-Cap Trust’s Sharpe ratio placed it in the 2nd quartile among funds within the small blend category assigned by Morningstar for the three-, five- and ten-year periods. Finally, Royce Focus Trust’s Sharpe ratio placed it in the 1st quartile among all funds within the small growth category assigned by Morningstar for the three-year and ten-year periods ended December 31, 2006, and effectively at the median (53rd percentile) for the five-year period ended December 31, 2006.
     The directors noted that R&A manages a number of funds that invest in small-cap and micro-cap issuers, many of which were outperforming the Russell 2000 Index and their competitors. Although the directors recognized that past performance is not necessarily an indicator of future results, they found that R&A had the necessary qualifications, experience and track record in managing small-cap and micro-cap securities to manage the Funds. The directors determined that R&A continued to be an appropriate investment adviser for the Funds and concluded that each Fund’s performance supported the renewal of its Investment Advisory Agreement.
     Cost of the services provided and profits realized by R&A from its relationship with each Fund: The directors considered the cost of the services provided by R&A and profits realized by R&A from its relationship with each Fund. As part of the analysis, the Board discussed with R&A its methodology in allocating its costs to each Fund and concluded that its allocations were reasonable. The directors concluded that R&A’s profits were reasonable in relation to the nature and quality of services provided.
     The extent to which economies of scale would be realized as the Funds grow and whether fee levels would reflect such economies of scale: The directors considered whether there have been economies of scale in respect of the management of the Funds, whether the Funds have appropriately benefited from any economies of scale and whether there is potential for realization of any further economies of scale. The directors noted the time and effort involved in managing portfolios of small- and micro-cap stocks and that they did not involve the same efficiencies as do portfolios of large-cap stocks. The directors concluded that the current fee structure for each Fund was reasonable, and that no changes were currently necessary.

2007 Semiannual Report to Stockholders  |  55


Board Approval of Investment Advisory Agreements (continued)

     Comparison of services to be rendered and fees to be paid to those under other investment advisory contracts, such as contracts of the same and other investment advisers or other clients: The directors reviewed the investment advisory fee paid by each Fund and compared both the services to be rendered and the fees to be paid under the Investment Advisory Agreements to other contracts of R&A and to contracts of other investment advisers to registered investment companies investing in small- and micro-cap stocks, as provided by Morningstar. The directors noted that, in the case of Royce Value Trust, the 1.00% basic fee subject to adjustment up or down (up to 0.50% in either direction) based on the Fund’s performance versus the S&P 600 SmallCap Index over a rolling period of sixty months. The fee is charged on average month-end net assets over that rolling period. As a result, in a rising market, the fee will be smaller than a fee calculated on the current year’s average net assets, and visa versa. The directors determined that the performance adjustment feature continued to serve as an appropriate incentive to R&A to manage the Fund for the benefit of its long-term common stockholders. The directors noted that R&A had also agreed to waive its management fee on Fund assets in an amount equal to the liquidation preference of the Fund’s outstanding preferred stock if the Fund’s total return from issuance of the preferred on such amount is less than the preferred’s coupon rate. The directors also noted that the fee arrangement, which also includes a provision for no fee in periods where the Fund’s trailing three-year performance is negative, requires R&A to measure the Fund’s performance monthly against the S&P 600, an unmanaged index. Instead of receiving a set fee regardless of its performance, R&A is penalized for poor performance. The directors noted that if the Fund’s expense ratio was based on total average net assets including net assets applicable to Preferred Stock, it would place in the 1st quartile of its Morningstar peer group.
     In the case of Royce Micro-Cap Trust, the directors noted that the Fund had a 1.00% basic fee subject to adjustment up or down based on the Fund’s performance versus the Russell 2000 Index over a rolling 36-month period. The fee is charged on average net assets over that rolling period. As a result, in a rising market, the fee will be smaller than a fee calculated on the current year’s average net assets, and visa versa. The directors determined that the performance adjustment feature continued to serve as an incentive to R&A to manage the Fund for the benefit of its long-term stockholders. The directors also noted R&A’s voluntarily waiver of its fee on the liquidation value of the outstanding preferred stock in circumstances where the Fund’s total return performance from the issuance of the preferred is less than the coupon rate on the preferred for each month during the year. The directors noted that if the Fund’s expense ratio were based on total average net assets including net assets applicable to Preferred Stock, it would place in the 2nd quartile of its Morningstar peer group.
     Finally, in the case of Royce Focus Trust, the directors noted that R&A had agreed to waive its management fee on the liquidation value of outstanding preferred stock if the Fund’s total return from issuance of the preferred is less than the preferred’s coupon rate. The directors noted that if the Fund’s expense ratio were based on total average net assets including net assets applicable to Preferred Stock, it would place in the 2ndquartile of its Morningstar peer group.
     The directors also considered fees charged by R&A to institutional and other clients and noted that the Funds’ base advisory fees compared favorably to those other accounts.
     After the non-interested directors deliberated in executive session, the entire Board, including all the non-interested directors, approved the renewal of the existing Investment Advisory Agreements, concluding that a contract renewal on the existing terms was in the best interest of the shareholders of each Fund and that each investment advisory fee rate was reasonable in relation to the services provided.

56  |  2007 Semiannual Report to Stockholders


Notes to Performance and Other Important Information

The thoughts expressed in this Review and Report concerning recent market movements and future prospects for small company stocks are solely the opinion of Royce at June 30, 2007, and, of course, historical market trends are not necessarily indicative of future market movements. Statements regarding the future prospects for particular securities held in the Funds’ portfolios and Royce’s investment intentions with respect to those securities reflect Royce’s opinions as of June 30, 2007 and are subject to change at any time without notice. There can be no assurance that securities mentioned in this Review and Report will be included in any Royce-managed portfolio in the future. The Funds invest primarily in securities of mid-, small- and micro-cap companies, that may involve considerably more risk than investments of larger-cap companies. All publicly released material information is always disclosed by the Funds on the website at www.roycefunds.com.
    Standard deviation is a statistical measure within which a fund’s total returns have varied over time. The greater the standard deviation, the greater a fund’s volatility.
    The Russell 2000, Russell 2000 Value, Russell 2000 Growth, Nasdaq Composite, S&P 500 and S&P 600 are unmanaged indices of domestic common stocks. Returns for the market indices used in this Review and Report were based on information supplied to Royce by Frank Russell and Morningstar. Royce has not independently verified the above described information. The Royce Funds is a service mark of The Royce Funds.

Forward-Looking Statements
This material contains forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve risks and uncertainties, including, among others, statements as to:
•    the Funds’ future operating results
•    the prospects of the Funds’ portfolio companies,
•    the impact of investments that the Funds have made or may make
•    the dependence of the Funds’ future success on the general economy and its impact on the companies and industries in which the Funds invest, and

 
•    the ability of the Funds’ portfolio companies to achieve their objectives.

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

Authorized Share Transactions
Royce Value Trust, Royce Micro-Cap Trust and Royce Focus Trust may each repurchase up to 300,000 shares of its respective common stock and up to 10% of the issued and outstanding shares of its respective preferred stock during the year ending December 31, 2007. Any such repurchases would take place at then prevailing prices in the open market or in other transactions. Common stock repurchases would be effected at a price per share that is less than the share’s then current net asset value, and preferred stock repurchases would be effected at a price per share that is less than the share’s liquidation value.
    Royce Value Trust, Royce Micro-Cap Trust and Royce Focus Trust are also authorized to offer their common stockholders an opportunity to subscribe for additional shares of their common stock through rights offerings at a price per share that may be less than the share’s then current net asset value. The timing and terms of any such offerings are within each Board’s discretion.

Change to Funds’ Investment Restrictions
At the June 6-7, 2007 regular meetings of the Boards of Directors of Royce Value Trust and Royce Micro-Cap Trust, the Boards approved a change in each Fund’s investment restrictions to allow Royce Value Trust and Royce Micro-Cap Trust to each invest up to 25% (increased from 10%) of its assets in the securities of foreign issuers.

     
  Proxy Voting
A copy of the policies and procedures that The Royce Funds use to determine how to vote proxies relating to portfolio securities and information regarding how each of The Royce Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available, without charge, on the Royce Funds’ website at www.roycefunds.com, by calling 1-800-221-4268 (toll-free) and on the website of the Securities and Exchange Commission (“SEC”), at www.sec.gov.
  
     
  Form N-Q Filing
The Funds file their complete schedules of investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on The Royce Funds’ website at www.roycefunds.com and on the SEC’s website at www.sec.gov. The Funds’ Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. To find out more about this public service, call the SEC at 1-800-732-0330. The Funds’ complete schedules of investments are updated quarterly, and are available at www.roycefunds.com.
  
     
     

The Royce Funds 2007 Semiannual Report to Stockholders


 
 
   
   
   
   
   
   
   
 


Wealth Of Experience
With approximately $32.7 billion in open- and closed-end fund assets under management, Royce & Associates is committed to the same small-company investing principles that have served us well for more than 30 years. Charles M. Royce, our Chief Investment Officer, enjoys one of the longest tenures of any active mutual fund manager. Royce’s investment staff includes eight Portfolio Managers, as well as 11 assistant portfolio managers and analysts, and six traders.


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


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


Co-Ownership Of Funds
It is important that our employees and shareholders share a common financial goal; our officers, employees and their families currently have approximately $122 million invested in The Royce Funds.
   
           
   
  General Information   Advisor Services    
  Additional Report Copies   For Fund Materials, Performance Updates,    
  and Fund Inquiries   Account Inquiries    
  (800) 221-4268   (800) 33-ROYCE (337-6923)    
           
           
  Computershare   Broker/Dealer Services    
  Transfer Agent and Registrar   For Fund Materials and Performance Updates    
  (800) 426-5523   (800) 59-ROYCE (597-6923)    
           
 
www.roycefunds.com 		   
   
   
   
   
 
   
   
   
   
  TheRoyceFunds
 CE-REP-0607    
   
   
   
   

Item 2.   Code(s) of Ethics – Not applicable to this semi-annual report.
 
Item 3.   Audit Committee Financial Expert – Not applicable to this semi-annual report.
 
Item 4.   Principal Accountant Fees and Services-Not applicable to this semi-annual report.
 
Item 5.   Audit Committee of Listed Registrants – Not applicable to this semi-annual report.
 
Item 6.   Schedule of Investments – See Item 1.
 
Item 7.   Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment
Companies – Not applicable to this semi-annual report.
 
Item 8.  (a)(1) Portfolio Managers of Closed-End Management Investment Companies (information as of August 29, 2007)

Name Title Length of Service Principal Occupation(s) During Past 5 Years
Charles M. Royce President and member
of the Board of
Directors of the
Registrant		 Since 1986 President, Chief Investment Officer and member of the Board of Managers of Royce & Associates, LLC (“Royce”), investment adviser to the Registrant, Royce Focus Trust, Inc., Royce Micro-Cap Trust, Inc. (“RMT”), The Royce Fund and Royce Capital Fund (collectively, “The Royce Funds”).
Chris Flynn Assistant Portfolio Manager* Since April 1, 2007 Assistant Portfolio Manager of the Registrant (since April 1, 2007); and Principal, Assistant Portfolio Manager and Senior Analyst at Royce (since 1993).
Michael Hveem Assistant Portfolio Manager* Since April 1, 2007 Assistant Portfolio Manager of the Registrant (since April 1, 2007); Assistant Portfolio Manager at Royce (since April 1, 2007); and Senior Analyst at Royce (since 1999).
David Nadel Assistant Portfolio Manager* Since April 1, 2007 Assistant Portfolio Manager of the Registrant (since April 1, 2007); Portfolio Manager and Senior Analyst at Royce (since 2006); Senior Portfolio Manager at Neuberger Berman Inc. (2004-2006); and Senior Analyst at Pequot Capital Management, Inc. (2001-2003).

* Assistant Portfolio Managers may have investment discretion over a portion of the Registrant’s portfolio subject to the supervision of Registrant’s Portfolio Manager.


(a)(2) Other Accounts Managed by Portfolio Manager and Potential Conflicts of Interest (information as of December 31, 2006 for Charles M. Royce and as of June 30, 2007 for Chris Flynn, Michael Hveem and David Nadel)

Other Accounts

Name of
Portfolio
Manager		 Type of Account Number
of
Accounts
Managed		 Total
Assets
Managed		 Number of
Accounts
Managed for which
Advisory Fee is
Performance-Based		 Value of
Managed
Accounts for
which
Advisory Fee is
Performance
Based
Charles M. Royce          
  Registered investment companies 11 $17,209,849,932 4 $1,829,129,329
  Private pooled investment vehicles 5 $175,251,754 3 $64,256,984
  Other accounts* 13 $72,476,035 - -
           
Chris Flynn          
  Registered investment companies 4 $8,271,338,779 2 $1,919,186,512
  Private pooled investment vehicles 0 - - -
  Other accounts* 0 - - -
           
Michael Hveem          
  Registered investment companies 1 $1,490,514,905 1 1,490,514,905
  Private pooled investment vehicles 0 - - -
  Other accounts* 0 - - -
           
David Nadel          
  Registered investment companies 5 $2,514,914,578 2 $1,494,948,096
  Private pooled investment vehicles 0 - - -
  Other accounts* 0 - - -
  *Other accounts include all other accounts managed by the Portfolio Manager in either a professional or personal capacity except for personal accounts subject to pre-approval and reporting requirements under the Registrant’s Rule 17j-1 Code of Ethics.

Conflicts of Interest

              The fact that a Portfolio Manager has day-to-day management responsibility for more than one client account may create actual, potential or only apparent conflicts of interest. For example, the Portfolio Manager may have an opportunity to purchase securities of limited availability. In this circumstance, the Portfolio Manager is expected to review each account’s investment guidelines, restrictions, tax considerations, cash balances, liquidity needs and other factors to determine the suitability of the investment for each account and to ensure that his managed accounts are treated equitably. The Portfolio Manager may also decide to purchase or sell the same security for multiple managed accounts at approximately the same time. To address any conflicts that this situation may create, the Portfolio Manager will generally combine managed account orders (i.e., enter a "bunched" order) in an effort to obtain best execution or a more favorable commission rate. In addition, if orders to buy or sell a security for multiple accounts managed by common Portfolio Managers on the same day are executed at different prices or commission rates, the transactions will generally


be allocated by Royce to each of such managed accounts at the weighted average execution price and commission. In circumstances where a pre-allocated bunched order is not completely filled, each account will normally receive a pro-rated portion of the securities based upon the account’s level of participation in the order. Royce may under certain circumstances allocate securities in a manner other than pro-rata if it determines that the allocation is fair and equitable under the circumstances and does not discriminate against any account.

              As described below, there is a revenue-based component of each Portfolio Manager’s Performance Bonus and the Portfolio Managers also receive a “Partners Pool” participation or a Firm Bonus based on revenues (adjusted for certain imputed expenses) generated by Royce. In addition, Charles M. Royce receives a bonus based on Royce’s retained pre-tax profits from operations. As a result, the Portfolio Managers may receive a greater relative benefit from activities that increase the value to Royce of The Royce Funds and/or other Royce client accounts, including, but not limited to, increases in sales of the Registrant’s shares and assets under management.

              Also, as described above, the Portfolio Managers generally manage more than one client account, including, among others, registered investment company accounts, separate accounts and private pooled accounts managed on behalf of institutions (e.g., pension funds, endowments and foundations) and for high-net-worth individuals. The appearance of a conflict of interest may arise where Royce has an incentive, such as a performance-based management fee (or any other variation in the level of fees payable by The Royce Funds or other Royce client accounts to Royce), which relates to the management of one or more of The Royce Funds or accounts with respect to which the Portfolio Manager has day-to-day management responsibilities. Except as described below, no Portfolio Manager’s compensation is tied to performance fees earned by Royce for the management of any one client account. Although bonuses and other compensation derived from Royce revenues and profits are impacted to some extent, the impact is relatively minor given the small percentage or Royce firm assets under management for which Royce received performance-measured compensation. Notwithstanding the above, the Performance Bonus paid to Charles M. Royce as Portfolio Manager of two registered investment company accounts (the Registrant and RMT) is based, in part, on performance-based fee revenues. The Registrant and RMT pay Royce a fulcrum fee that is adjusted up or down depending on the performance of that Fund relative to its benchmark index. In addition, two other registered investment company accounts managed by Mr. Royce, Royce Select Fund I and Royce Select Fund II, each pay Royce a performance-based fee.

              Finally, conflicts of interest may arise when a Portfolio Manager personally buys, holds or sells securities held or to be purchased or sold for the Registrant or other Royce client account or personally buys, holds or sells the shares of one or more of The Royce Funds. To address this, Royce has adopted a written Code of Ethics designed to prevent and detect personal trading activities that may interfere or conflict with client interests (including Registrant shareholders’ interests). Royce generally does not permit its Portfolio Managers to purchase small- or micro-cap securities in their personal investment portfolios.

              Royce and The Royce Funds have adopted certain compliance procedures which are designed to address the above-described types of conflicts. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.


(a)(3) Description of Portfolio Manager Compensation Structure (information as of August 29, 2007)

              Royce seeks to maintain a compensation program that is competitively positioned to attract and retain high-caliber investment professionals. All Portfolio Managers receive from Royce a base salary, a Performance Bonus (generally the largest element of each Portfolio Manager’s compensation, with the exception of Charles M. Royce), a “Partners Pool” participation based primarily on registered investment company and other client account revenues generated by Royce and a benefits package. Portfolio Manager compensation is reviewed and may be modified from time to time as appropriate to reflect changes in the market, as well as to adjust the factors used to determine bonuses. Except as described below, each Portfolio Manager’s compensation consists of the following elements:

-
BASE SALARY. Each Portfolio Manager is paid a base salary. In setting the base salary, Royce seeks to be competitive in light of the Portfolio Manager’s experience and responsibilities.
   
-
PERFORMANCE BONUS. Each Portfolio Manager receives a quarterly Performance Bonus that is either asset-based, or revenue based and therefore in part based on the value of the accounts’ net assets, determined with reference to each of the registered investment company and other client accounts they are managing. The revenue used to determine the quarterly performance bonus received by Charles M. Royce that relates to each of the Registrant and RMT are performance-based fee revenues. For all Portfolio Managers, except as described below, the Performance Bonus applicable to the registered investment company accounts managed by the Portfolio Manager is subject to upward or downward adjustment or elimination based on a combination of 3-year and 5-year risk-adjusted pre-tax returns of such accounts relative to all small-cap objective funds with three years of history tracked by Morningstar (as of December 31, 2006 there were 373 such Funds tracked by Morningstar) and the 5-year absolute returns of such accounts relative to 5-year U.S. Treasury Notes. The Performance Bonus applicable to non-registered investment company accounts managed by a Portfolio Manager, and to Royce Select Fund I and Royce Select Fund II for Mr. Royce, is not subject to a performance-related adjustment.

     Payment of the Performance Bonus may be deferred as described below, and any amounts deferred are forfeitable, if the Portfolio Manager is terminated by Royce with or without cause or resigns. The amount of the deferred Performance Bonus will appreciate or depreciate during the deferral period, based on the total return performance of one or more Royce-managed registered investment company accounts selected by the Portfolio Manager at the beginning of the deferral period. The amount deferred will depend on the Portfolio Manager’s total direct, indirect beneficial and deferred unvested bonus investments in the Royce registered investment company account for which he or she is receiving portfolio management compensation.

-
ROYCE “PARTNERS POOL”. Each Portfolio Manager, other than Charles M. Royce, as well as other senior firm employees, participates in a quarterly pool relating to Royce’s net operating revenues adjusted for some imputed expenses. A portion of this participation may be deferred for three years. The deferred portion is also forfeitable if the Portfolio Manager is terminated with or without cause or resigns and appreciates or depreciates during the deferral period based on the total return of a basket of registered investment company accounts managed by Royce.
   
- FIRM BONUS. Charles M. Royce receives a quarterly bonus based on Royce’s net revenues.
   
-
BENEFIT PACKAGE. Each Portfolio Manager also receives benefits standard for all Royce employees, including health care and other insurance benefits, and participation in Royce’s 401(k) Plan and Money Purchase Pension Plan. From time to time, on a purely discretionary basis, Portfolio Managers may also receive options to acquire stock in Royce’s parent company, Legg Mason, Inc. Those options typically represent a relatively small portion of a Portfolio Manager’s overall compensation.

               Charles M. Royce, in addition to the above-described compensation, also receives a bonus based on Royce’s retained pre-tax operating profit. This bonus, along with the Performance Bonus and Firm Bonus, generally represents the most significant element of Mr. Royce’s compensation. A portion of the above-described compensation payable to Mr. Royce relates to his responsibilities as Royce’s Chief Executive Officer, Chief Investment Officer and President of The Royce Funds.

(a)(4) Dollar Range of Equity Securities in Registrant Beneficially Owned by Portfolio Manager (information as of December 31, 2006 for Charles M. Royce and as of June 30, 2007 for Chris Flynn, Michael Hveem and David Nadel)


               The following table shows the dollar range of the Registrant’s shares owned beneficially and of record by the Portfolio Managers, including investments by his immediate family members sharing the same household and amounts invested through retirement and deferred compensation plans.

Portfolio Manager Dollar Range of Registrant’s Shares Beneficially Owned
Charles M. Royce Over $1,000,000
Chris Flynn None
Michael Hveem None
David Nadel None

Item 9: Not Applicable.
 
Item 10: Not Applicable.
 
Item 11: Controls and Procedures.

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

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

Item 12: Exhibits attached hereto.
(a)(1)  The Registrant’s code of ethics pursuant to Item 2 of Form N-CSR.

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

(a)(3)  Not Applicable

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

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

ROYCE VALUE TRUST, INC.

BY:   /s/Charles M. Royce    
    Charles M. Royce    
    President    
         
Date: August 29, 2007


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

ROYCE VALUE TRUST, INC.

BY:   /s/Charles M. Royce    
    Charles M. Royce    
    President    
         
Date: August 29, 2007

ROYCE VALUE TRUST, INC.

BY:   /s/John D. Diederich    
    John D. Diederich    
    Chief Financial Officer    
         
Date: August 29, 2007


Item 12(a)(2):

CERTIFICATIONS

I, Charles M. Royce, certify that:

1. I have reviewed this report on Form N-CSR of Royce Value Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

     
Date: August 29, 2007   /s/ Charles M. Royce
          Charles M. Royce
          President


Item 12(a)(2):

CERTIFICATIONS

I, John D. Diederich, certify that:

1. I have reviewed this report on Form N-CSR of Royce Value Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

     
Date: August 29, 2007   /s/John D. Diederich
         John D. Diederich
         Chief Financial Officer


Item 12(b):

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Name of Issuer: ROYCE VALUE TRUST, INC.

In connection with the Report on Form N-CSR of the above-named issuer that is accompanied by this certification, the undersigned hereby certifies, to his knowledge, that:

1. The Report fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all materials respects, the financial condition and results of operations of the issuer.

     
Date: August 29, 2007   /s/ Charles M. Royce
          Charles M. Royce
          President


Item 12(b):

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Name of Issuer: ROYCE VALUE TRUST, INC.

In connection with the Report on Form N-CSR of the above-named issuer that is accompanied by this certification, the undersigned hereby certifies, to his knowledge, that:

1. The Report fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all materials respects, the financial condition and results of operations of the issuer.

     
Date: August 29, 2007   /s/ John D. Diederich
          John D. Diederich
          Chief Financial Officer