Royce Value Trust Royce Micro-Cap Trust Royce Focus Trust			ANNUAL REVIEW AND REPORT TO STOCKHOLDERS
	www.roycefunds.com

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

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.

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

The thoughts expressed in this Review and Report to Stockholders concerning recent market movements and future prospects for small-company stocks are solely the opinion of Royce at December 31, 2008, and, of course, historical market trends are not necessarily indicative of future market movements. Statements regarding the future prospects for particular securities held in the Funds’ portfolios and Royce’s investment intentions with respect to those securities reflect Royce’s opinions as of December 31, 2008 and are subject to change at any time without notice. There can be no assurance that securities mentioned in this Review and Report to Stockholders will be included in any Royce-managed portfolio in the future.

Letter to Our Stockholders
A Series Of Unfortunate Events
Each crisis...has its unique individual features—the nature of the shock, the object of speculation, the form of credit expansion, the ingenuity of the swindlers, and the nature of the incident that touches off revulsion. But if one may borrow a French phrase, the more something changes, the more it remains the same. Details proliferate; structure abides. –Charles P. Kindelberger, Manias, Panics and Crashes: A History of Financial Crises
In our 2008 Semiannual Review and Report we observed, “The first six months of 2008 gave even the most serene investor cause for anxiety, if not panic.” We wrote those words in July, two months before the word “bailout” had entered our collective lexicon. It was a time when Lehman Brothers was a major investment bank, AIG was a highly respected insurance business and only a few people were concerned about the prospects for the U.S. auto industry. Bear Stearns was at that point the only significant corporate casualty. Ah, the good old days. However, there was a whiff of dread in the air, with most of the fear coalescing around the impact of a rapidly contracting credit market and a declining real estate market, both exacerbated by the ominous effects of record defaults in subprime		So while we took ample advantage of what we thought were excellent opportunities in 2008—particularly in the fourth quarter—we remain profoundly disappointed in our showing during this most disconcertingly memorable year.

Ultimately, asset management is a numbers game, and the numbers that matter most are performance numbers. Success or failure is measured in returns, which are analogous to the final score in a sporting event. So while investing and sports are dominated by performance, the study of how successful performance is achieved, and how it may best be maintained have also become increasingly critical topics, particularly among management teams in either field concerned with creating long-term winners. With the stock market enduring—at the most generous estimate—the equivalent of a disastrous, injury- riddled season, we thought that it was worth looking at some of the related numbers that help to tell the story of what has been happening over the last 18 months in our smaller- company universe, especially now that the playing field has grown significantly larger. As the market approached its 2008 lows, for example, a story first reported by Reuters on November 19th revealed some interesting numbers within the S&P 500 index. One hundred and one companies in the large-cap index at that time were Continued on page 6...			Letter to Our Stockholders mortgages and troubles with the wildly complicated securities that housed them. There were also concerns about the sluggish economy and the stumbling stock market.      All of this, of course, began to worsen quickly and radically in mid-September with a succession of collapses, near-collapses and restructurings that began with the sale of Merrill Lynch to Bank of America, the bankruptcy of Lehman Brothers and the narrow escape of AIG from a similar fate, courtesy of a government-sponsored financial rescue plan. Other financial institutions quickly lobbied for the same privilege, as worries about the global financial system seizing up led to the enactment of the Troubled Assets Relief Program (TARP) in early October, which provided up to $700 billion for firms at risk. The stock market, in a dramatic swoon, initially took its cues from the still-contracted credit market, paying little heed to the federal government’s efforts to stabilize the system and reduce the pain. An interim low for equities was not reached until November 20, more than a month after the passage of the Emergency Economic Stabilization Act of 2008 (of which TARP is a part). And, in spite of a short-term rally from that November low through the end of December, the year lurched toward its end with plenty of volatile days when the major indices closed in the red.      So much has changed, yet we find ourselves going about our business in much the same manner as always. We are humbled by the fact that we saw so little of it coming. Some kind of correction for smaller companies looked inevitable to us as early as 2006, but crisis did not seem like a sure thing as late as Labor Day of 2008. We have certainly been chastened by our inability to find enough companies capable of withstanding this historically severe bear market. One of our chief sources of collective pride over the years was our portfolios’ generally strong records in down markets. With a few notable exceptions, that was simply not the case in 2008. So while we took ample advantage of what we thought were excellent opportunities—particularly in the fourth quarter—we remain profoundly disappointed in our showing during this most disconcertingly memorable year. A Journal Of The Plague Year Of course, we were not alone in posting uninspiring results. The ongoing horserace between small- and large-cap stocks, as measured by the Russell 2000 and S&P 500, respectively, offered no real winner in 2008, only varying levels of painful negative returns. That said, the Russell 2000 received 2008’s dubious distinction award. The small-cap index’s -33.8% calendar-year return—its worst ever—outpaced the S&P 500’s -37.0% result, as well as the more tech-heavy Nasdaq Composite’s -40.5% performance, the global MSCI EAFE’s (Europe, Australasia and Far East) -43.4% mark and the MSCI World Small Core’s -41.9% showing. Little else in any investment category provided positive returns in 2008, with the exception of a few municipal-bond indices. Losses were considerable across several asset groups. Domestic and international equities of every size, commodities and real estate all endured declines in excess of 30% in 2008.

The relative advantage for smaller domestic stocks was built in the year’s second and third quarters, especially the latter, a period in which the Russell 2000 fell 1.1% while the S&P 500 declined 8.4%. During the fourth quarter’s decline, the Russell 2000 gave back a portion of its edge, falling 26.1% versus a loss of 21.9% for its large-cap counterpart. It was the worst quarterly showing for either index since the fourth quarter of 1987. Recent market cycle results were also discouraging. From the Russell 2000’s recent peak on 7/13/07 through the trough on 11/20/08, the small-cap index lost 54.1%. The S&P 500 declined 50.7% from its 2007 performance peak on 10/9/07 through 11/20/08. The longer-term picture was equally dispiriting. Three-and five-year returns ended 12/31/08 were negative for both the Russell 2000 and S&P 500. Ten-year returns for the S&P 500 were also negative, and among the worst in the long history of the large-cap index. These longer-term returns offer particularly compelling evidence of just how devastating the current bear market has been.			None of us can see around corners, and no one can say with any assurance what will happen next, which is why the most informed, seemingly insightful forecasts can soon look short-sighted.
	In the context of such poor results, it makes sense that few people commented on, or even noticed, the otherwise dynamic rally that followed the trough on 11/20/08 through the year’s end, a period that saw the Russell 2000 gain 30.0% versus a gain of 20.5% for the S&P 500. Always a bit skeptical about short-term rallies, we were actually more encouraged by the fact that a system was put in place, both here and in other developed nations, to aid financial firms in trouble. While we may not have seen the last of financial institutions failing, there was a growing steadiness to the market’s behavior as the fourth quarter came to a close. We really cannot expect any long-term recovery until we achieve systemic stability. The credit market has not yet recovered, but it did show some signs of life, with the LIBOR spread contracting as the year ended. One other key component, though not technically a sign of stability, is the unpredictable nature of markets and economies. None of us can see around corners, and no one can say with any assurance what will happen next, which is why the most informed, seemingly insightful forecasts can soon look short-sighted.
The Waste Land
In 2007 and through the first six months of 2008, small-cap value stocks, as measured by the Russell 2000 Value index, underperformed small-cap growth stocks, as measured by the Russell 2000 Growth index. This followed a seven-year period of performance dominance

This page is not part of the 2008 Annual Report to Stockholders   |  5

fact, there was little disparity among calendar-year results as a whole, though the story grew more varied at the company, industry or sector level. Each Fund’s use of leverage also magnified net losses in 2008. However, we were pleased that all three closed-end Royce funds outperformed the Russell 2000 for the 10-year period ended 12/31/08. (Discussion of each Fund’s performance begins on page 12.)
Been Down So Long It Looks Like Up To Me What, exactly, happened? How did a group of mostly veteran portfolio managers at a firm that has taken great pride in the historical down market performance of its portfolios fare so poorly in a bear market? In large part, it has been the nature of this particular bear, which has clawed deeply at every area in nearly every stock market covering the globe. And its savagery has been deep and wide, owing to the near-catastrophic economic circumstances that have been its compatriots. From the first stirrings of the housing crisis in 2006 through our first look at a large-scale economic stimulus plan in January 2009, the news has been unremittingly bad, including a global financial system that barely avoided a massive failure to function between mid-September and mid-November. This last crisis took place in the midst of a deepening recession. In such an uncertain environment, it was simply not possible for stock markets to perform their historically typical role of confidently looking forward and gauging the prospects of success for businesses.      We had also been wondering for some time if the correction which followed the bursting Internet bubble in 2000 was less severe than such a heady and irrational bull market quite deserved. While we were perfectly content to enjoy strong absolute and relative returns for our funds from 2000 to 2007 (especially since we were relatively unscathed by much of the Internet mania), we also— somewhat nervously—believed that many valuations throughout the market remained too high. It seemed to us that the decline which stretched from early 2000 through October 2002 for both small- and large-cap stocks, while undoubtedly unpleasant, was		We have always taken our responsibility as risk managers very seriously. To therefore see so much panic-driven, indiscriminate selling has been very painful for us. To watch those stocks suffer as much as all the rest really tested our commitment to our approach.

Steven DeSanctis of Merrill Lynch pointed out in a November report that "all small cap sectors have fallen more than their previous bear market averages, with three now down over 60%." All of this suggests a wider and wider pool of potential opportunities for bargain-conscious small-cap value investors like ourselves. If one is cautiously optimistic about the long-term prospects for stocks—as we are— then this must be good news, yes? The answer is complicated. Having more choices is not always a good thing. More importantly, our portfolio managers have learned over the years that most stocks are cheap for very good reasons. The current bear market will scarcely alter that truth by having punished nearly all companies with nearly equal force. With the expanded number of both smaller companies and cheap stocks, it becomes even more critical for us to exercise strict discipline in building our portfolios. As we are always more interested in long-term success, we have become even more exacting in our selection process. We see that as the best way to lay the foundation for recovery from this historically difficult market.		Letter to Our Stockholders relatively benign considering the excesses that history has previously demanded be wrung out of stock prices following a bubble. Yet we saw no serious downturn in the equity markets until 2008, when it was accompanied by far-reaching crises on several other fronts. In retrospect, it is no longer so shocking that investors panicked as they did, selling anything and everything without regard to company quality, valuation, or long-term outlook.        When we select securities for our portfolios, we look for quality, for attributes that we believe will help a given company survive when times are bad and flourish when they are good. Characteristics such as a strong balance sheet and the ability to generate free cash flow indicate a business that is equipped with the necessary resources to withstand a downturn in its industry and/or a more widespread economic slowdown. Carrying little or no debt and having ample cash generally give a company the necessary resilience to make it through tough times. Our preference for cash-rich, low-leverage companies comes from years of ongoing research into which kinds of businesses endure and which ones wither. However, when investors began to flee equities in September, these tools of cautious risk management offered no bulwark against the stampede of liquidation that grew frighteningly intense in the first two weeks of October and lasted into November. The Audacity Of Hope Witnessing the punishment that was inflicted on the stock prices of what we regard as well-run, high-quality businesses has been one of the worst parts of the downturn, particularly as much of the sell-off was driven by the deleveraging activities of hedge funds and other financial institutions covering shorts and dealing with fallout from the

mortgage crisis. We have always taken our responsibility as risk managers very seriously. To therefore see so much panic-driven, indiscriminate selling has been very painful for us. To watch those stocks suffer as much as all the rest really tested our commitment to our approach.        Each bear market is different—for example, the current situation is more global in scope than the crisis in 1973-4, which was itself distinguished by stagflation, the oil embargo and the creation of the misery index. Common ground exists in that each period has been marked by controversial wars, the departure of an unpopular president and uncertainty about the future of the U.S. economy. What is perhaps most interesting is how our country’s eventual recovery from both the Great Depression and the recession of the Seventies may be fueling some tempered optimism about our current period. While there is definitely a lot of pessimism in the media and elsewhere about the economy, we also think there is a sense that, however difficult our challenges are in the months and years ahead, we are capable as a nation of meeting them and ultimately succeeding.        We think that we may be approaching the worst phase of this very painful recession. Not anticipating same-store sales declines in the 20% range next year at this time, we believe that late in 2009 we may be seeing scattered signs of an economic comeback, one of which may be a stock market showing signs of a recovery. The current valuation picture lends some support to this idea. Overall valuations for smaller companies finished 2008 at levels not seen in nearly two decades. While shorter-term returns may continue to be lackluster, we believe that historical performance patterns for stocks should return to the market. This will be good news for two reasons: The first would be the very fact of positive movement in the markets again (and post-bear-market results have historically been robust); the second would be the stock market playing its traditional role of looking forward and seeing signs of an economy on the mend. Or at least that is our audacious hope.							We believe that late in 2009 we may be seeing scattered signs of an economic comeback, one of which may be a stock market showing signs of a recovery. The current valuation picture lends some support to this idea. Overall valuations for smaller companies finished 2008 at levels not seen in nearly two decades.
Sincerely,
Charles M. Royce		W. Whitney George		Jack E. Fockler, Jr.
President		Vice President		Vice President
January 31, 2008

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

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

Peak-to-Peak For the full cycle, value provided a sizeable margin over growth, which finished the period with a loss. Each of our closed-end funds held a sizeable performance advantage over the Russell 2000 on both an NAV (net asset value) and market price basis. On an NAV basis, Royce Focus Trust (+264.2%) was our best performer by a wide margin, followed by Royce Micro-Cap Trust (+175.9%) and Royce Value Trust (+161.3%). Peak-to-Current During the difficult, volatile period ended 12/31/08, both value and growth posted similarly negative returns. (While the Russell 2000 seemed to regain its footing after hitting a low in March, events in the financial markets preceding the September 30, 2008 quarter-end caused the index to decline significantly in the fourth quarter, dropping to a cyclical-year low on 11/20/08.) The index then recovered significantly, gaining 30.0% from 11/20/08 through 12/31/08. Each of our closed-end funds trailed the index during the decline, while both Royce Focus Trust and Royce Value Trust outperformed during the short rally from 11/20/08 through 12/31/08.

ROYCE FUNDS NAV TOTAL RETURNS VS. RUSSELL 2000 INDEX:    MARKET CYCLE RESULTS
	Peak-to-Peak 3/9/00-7/13/07				Peak-to-Trough 7/13/07-11/20/08				Trough-to-Current 11/20/08-12/31/08
Russell 2000		54.9	%			-54.1	%			30.0	%
Russell 2000 Value		189.5				-53.8				31.3
Russell 2000 Growth		-14.8				-54.8				28.6
Royce Value Trust		161.3				-62.8				35.9
Royce Micro-Cap Trust		175.9				-61.6				28.0
Royce Focus Trust		264.2				-62.7				42.3

	AVERAGE ANNUAL NAV TOTAL RETURNS Through 12/31/08
	Fourth Quarter 2008*								-32.89	%
	July-December 2008*								-38.43
	One-Year								-45.62
	Three-Year								-11.95
	Five-Year								-2.12
	10-Year								4.82
	15-Year								7.52
	20-Year								9.24
	Since Inception (11/26/86)								8.95
	* Not annualized
	CALENDAR YEAR NAV TOTAL RETURNS
	Year		RVT			Year			RVT
	2008		-45.6	%		1999			11.7	%
	2007		5.0			1998			3.3
	2006		19.5			1997			27.5
	2005		8.4			1996			15.5
	2004		21.4			1995			21.6
	2003		40.8			1994			0.1
	2002		-15.6			1993			17.3
	2001		15.2			1992			19.3
	2000		16.6			1991			38.4
	TOP 10 POSITIONS % of Net Assets Applicable to Common Stockholders
	Ritchie Bros. Auctioneers								2.0	%
	Ash Grove Cement Cl. B								1.8
	Weyco Group								1.7
	Landauer								1.4
	SEACOR Holdings								1.4
	Adaptec								1.4
	Simpson Manufacturing								1.3
	AllianceBernstein Holding L.P.								1.1
	Forward Air								1.1
	ManTech International Cl. A								1.1
	PORTFOLIO SECTOR BREAKDOWN % of Net Assets Applicable to Common Stockholders
	Industrial Products								23.2	%
	Technology								21.0
	Industrial Services								19.0
	Financial Intermediaries								17.6
	Financial Services								13.9
	Natural Resources								8.8
	Consumer Products								8.1
	Health								7.4
	Consumer Services								4.4
	Diversified Investment Companies								0.6
	Utilities								0.4
	Miscellaneous								4.8
	Preferred Stocks								0.5
	Cash and Cash Equivalents								6.8

Royce Value Trust Manager’s Discussion Royce Value Trust’s (RVT) diversified portfolio of small- and micro-cap stocks underperformed both of its benchmarks in 2008—a very discouraging year. The Fund declined 45.6% on a net asset value (NAV) basis, and 48.3% on a market price basis, compared with losses of 33.8% for the Russell 2000 and 31.1% for the S&P SmallCap 600 for the same period. During the first half, RVT declined 11.7% on an NAV basis and 10.7% based on its market price, compared with respective losses of 9.4% and 7.1% for the Russell 2000 and S&P 600.      RVT continued to underperform in the third quarter, down 8.3% on an NAV basis and down 12.6% based on market price, compared with declines of 1.1% for the Russell 2000 and 0.9% for the S&P 600. However, it was not until the fourth quarter that things turned truly awful: RVT’s NAV fell 32.9% and its market price dropped 33.7% for that period, compared with the Russell 2000 and S&P 600, which posted losses of 26.1% and 25.2%, respectively. As a result of its recent negative performance, the Fund paid no management fee for the last three months of 2008, as its rolling 36-month return for each month-ending period was negative.      The market cycle that began with the new small-cap peak in July 2007 has thus far been rough going. From 7/13/07 through 12/31/08, the Fund was down 49.4% on an NAV basis and fell 53.7% on a market price basis versus a loss of 40.4% for the Russell 2000 and 38.5% for the S&P 600. We did take a bit of consolation from the Fund’s performance in the dynamic, short-term rally that ended 2008. From the small-cap low on 11/20/08 through 12/31/08, the Russell 2000 climbed 30.0% and the S&P 600 rose 29.4% while RVT gained 35.9% on an NAV basis and 53.6% on a market price basis.
We have always believed that performance over longer-term periods is the most meaningful gauge of the portfolio’s merits. From the previous small-cap market peak on 3/9/00 through 12/31/08, the Fund outperformed its benchmarks. During this period, RVT gained 32.2% on an NAV basis and 43.8% on a market price basis compared to a gain of 30.7% for the S&P 600 and a loss of 7.7% for the Russell 2000. The Fund also outperformed both of its benchmarks on an NAV basis for the 10-, 15-, 20-year and since inception (11/26/86) periods ended 12/31/08 and on a market price basis for the 20-year, and since inception intervals.       All of the Fund’s equity sectors sustained sizeable net losses in 2008, with the most significant coming from Technology, Industrial Products, Financial Services and Financial Intermediaries. The Fund’s use of leverage also detracted from performance. Investors have been shying away from much of small-cap tech since before the word “subprime” became well known, a development that grew worse in the second half of 2008, as both the economy			GOOD IDEAS THAT WORKED    Top Contributors to 2008 Performance*
			Weyco Group		0.31%
			Landauer		0.27
			Schnitzer Steel Industries Cl. A		0.21
			Charming Shoppes		0.15
			Simpson Manufacturing		0.14
			*Includes dividends
Important Performance and Risk Information All performance information reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the recent month-end may be obtained at www.roycefunds.com. The market price of the Fund’s shares will fluctuate, so that shares may be worth more or less than their original cost when sold. The Fund invests primarily in securities of small- and micro-cap companies, which may involve considerably more risk than investing in a more diversified portfolio of larger-cap companies.

             12  |  2008 Annual Report to Stockholders

Performance and Portfolio Review and market worsened. Analog semiconductor maker Diodes struggled with a significant hit to earnings in the third quarter, a loss caused in large part by an acquisition. We continued to appreciate its conservative balance sheet and the potential for a rebound in its business, which at year end was mired in an epic slump.      In the Industrial Products sector, notable losses came from the machinery industry, though holdings in the miscellaneous manufacturing category were also substantial detractors. Laser-based welding and cutting products maker Rofin-Sinar Technologies continues to be profitable, conservatively capitalized and, in our view, very well managed. Investors were inclined to disagree, so we built our position modestly in November. In the Health sector, biopharmaceutical services company PAREXEL International saw its share price suffer after revising guidance in October. A grim outlook for pharmaceutical research companies prompted the revision. The industry is dependent on spending by drugmakers, spending which has contracted severely in the recession.
			Not surprisingly, Financial Services was also a significant detractor, especially in the investment management area and information and processing industry. The loss leader in the sector was asset manager AllianceBernstein Holding, a company with which we are very familiar. During the first half of 2008, its share price slipped after the company revised its earnings guidance for fiscal 2007 early in 2008. It then began to fall more precipitously in the wake of the cataclysmic developments of September, such as the Lehman Brothers’ bankruptcy. In our estimate, the firm remains very well-run—earnings are positive (albeit lower than many analysts were expecting), and it pays a dividend. We continue to have faith in the long-term prospects for this and other financial companies with long records of success. The year was troublesome for a long-time holding in the Industrial Services sector, Sotheby’s. We have long admired its preeminent position in the high-end auction market. However, recent earnings have been disappointing and, considering that purchases of fine art are discretionary and easily postponed in a difficult economy, we concluded 2008 pondering what our next move with the stock might be.
GOOD IDEAS AT THE TIME Top Detractors to 2008 Performance*
AllianceBernstein Holding L.P.	-1.13%
Sotheby’s	-0.70
PAREXEL International	-0.63
ION Geophysical	-0.56
Diodes	-0.53
*Net of dividends
1Reflects the cumulative total return of an investment made by a stockholder who purchased one share at inception ($10.00 IPO), reinvested all annual distributions as indicated and fully participated in primary subscriptions of the Fund’s rights offerings.
2Reflects the actual market price of one share as it traded on the NYSE.

	FUND INFORMATION AND PORTFOLIO DIAGNOSTICS
	Average Market Capitalization*		$727 million
	Weighted Average P/E Ratio**		11.4x
	Weighted Average P/B Ratio		0.7x
	Weighted Average Portfolio Yield		1.9%
	Fund Net Assets		$823 million
	Net Leverage†		30%
	Turnover Rate		25%
	Symbol
	Market Price		RVT
	NAV		XRVTX
	* Geometrically calculated
	**The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (13% of portfolio holdings as of 12/31/08).
	†Net leverage is the percentage, in excess of 100%, of the total value of equity type investments, divided by net assets, excluding preferred stock.
	CAPITAL STRUCTURE Publicly Traded Securities Outstanding at 12/31/08 at NAV or Liquidation Value
	64.4 million shares of Common Stock		$603 million
	5.90% Cumulative Preferred Stock		$220 million

2008 Annual Report to Stockholders  |  13                  

	AVERAGE ANNUAL NAV TOTAL RETURNS Through 12/31/08
	Fourth Quarter 2008*								-33.68	%
	July-December 2008*								-38.23
	One-Year								-45.45
	Three-Year								-12.40
	Five-Year								-3.16
	10-Year								5.83
	15-Year								8.14
	Since Inception (12/14/93)								8.13
	* Not annualized
	CALENDAR YEAR NAV TOTAL RETURNS
	Year		RMT			Year			RMT
	2008		-45.5	%		2000			10.9	%
	2007		0.6			1999			12.7
	2006		22.5			1998			-4.1
	2005		6.8			1997			27.1
	2004		18.7			1996			16.6
	2003		55.5			1995			22.9
	2002		-13.8			1994			5.0
	2001		23.4
	TOP 10 POSITIONS % of Net Assets Applicable to Common Stockholders
	Seneca Foods								2.2	%
	Pegasystems								1.9
	Pason Systems								1.4
	AAON								1.3
	Sapient Corporation								1.3
	Fauquier Bankshares								1.2
	eResearch Technology								1.2
	Green Mountain Coffee Roasters								1.2
	Exactech								1.1
	Universal Truckload Services								1.1
	PORTFOLIO SECTOR BREAKDOWN % of Net Assets Applicable to Common Stockholders
	Technology								21.3	%
	Industrial Products								20.1
	Industrial Services								15.2
	Financial Intermediaries								13.2
	Health								13.1
	Natural Resources								10.9
	Consumer Products								8.7
	Financial Services								7.2
	Consumer Services								5.0
	Diversified Investment Companies								0.9
	Miscellaneous								5.0
	Preferred Stock								0.8
	Cash and Cash Equivalents								13.9

Royce Micro-Cap Trust Manager’s Discussion The performance of Royce Micro-Cap Trust’s (RMT) diversified portfolio of micro-cap stocks was truly disappointing in 2008, especially as the Fund substantially underperformed its benchmark, the Russell 2000. RMT declined 45.5% on a net asset value (NAV) basis, and 45.8% on a market price basis in 2008, compared to a loss of 33.8% for the Russell 2000 and a loss of 39.8% for the Russell Microcap Index for the same period. During the first half, RMT’s results were negative, but in the same ballpark as its benchmark; the Fund fell 11.7% on an NAV basis and 7.9% based on its market price, compared with a loss of 9.4% for the Russell 2000 and a decline of 15.5% for the Russell Microcap index.      In the third quarter, RMT’s performance continued to underwhelm. The Fund was down 6.9% on an NAV basis and down 13.0% on a market price basis compared to respective losses of 1.1% and 0.8% for the benchmark and the micro-cap index. Still, it was not until the fourth quarter that results turned downright dreadful: RMT’s NAV fell 33.7% and its market price dropped 32.4% between September and December versus a 26.1% decline for the Russell 2000 and a 28.1% loss for the Russell Microcap index. Much of that price plummet came in October, when the Fund fell 24.1% and 22.3% based on NAV and market price, respectively.      The market cycle that began with the new small-cap peak in July 2007 has so far been rough going. From the recent small-cap peak on 7/13/07 through 12/31/08, the Fund was down 50.8% on an NAV basis and fell 56.2% on a market price basis versus a loss of 40.4% for the Russell 2000. During this same period, the micro-cap index fell 47.8%. From the small-cap low on 11/20/08 through 12/31/08, the Russell 2000 climbed 30.0% and the Russell Microcap index gained 24.9%, while RMT was up 28.0% on an NAV basis and 49.9% on a market price basis.
We have always believed that performance over longer-term periods is the most meaningful gauge of the portfolio’s merits. From the previous small-cap market peak on 3/9/00 through 12/31/08, the Fund outperformed its benchmark. During this period, RMT gained 35.7% on an NAV basis and 43.2% on a market price basis compared to a loss of 7.7% for the Russell 2000. (Data for the Russell Microcap index only goes back to 2002.) The Fund also outperformed its benchmark on both an NAV and market price basis for the 10-year, 15-year and since inception (12/14/93) periods ended 12/31/08.      All of the Fund’s equity sectors sustained net losses in 2008, with the most significant coming from Technology, followed by Industrial Products, Health, Natural Resources and			GOOD IDEAS THAT WORKED    Top Contributors to 2008 Performance*
			Charming Shoppes		0.32%
			Trex Company		0.27
			Weyco Group		0.26
			Aceto Corporation		0.18
			AAON		0.17
			*Includes dividends
Important Performance and Risk Information All performance information reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the recent month-end may be obtained at www.roycefunds.com. The market price of the Fund’s shares will fluctuate, so that shares may be worth more or less than their original cost when sold. The Fund normally invests in micro-cap companies, which may involve considerably more risk than investing in a more diversified portfolio of larger-cap companies.

             14  |  2008 Annual Report to Stockholders

Performance and Portfolio Review
Industrial Services. The portfolio’s use of leverage also exacerbated net losses.The Technology sector had been struggling prior to the market’s dramatic second-half fall, and the recession has only made matters worse as businesses begin cutting back or cancelling plans for spending. At the industry level within the sector, the most substantial net losses came from semiconductor and equipment companies. The recession has only lengthened what was already an uncommonly long and negative business cycle for this area of small- and micro-cap tech. The unhappy result has been ongoing negative sentiment that showed no signs of abating at the end of 2008. Similar recessionary woes plagued IT Services holdings, where Sapient Corporation and Computer Task Group turned in large net losses, as well as those in telecommunications and the components and systems industry.      Elsewhere at the industry level, substantial declines came from the medical products and devices, energy services, commercial services, banking, investment management, machinery, industrial components and miscellaneous manufacturing industries. Late in the year, we increased our stake in cleaning solutions and services business, Tennant Company. Its dynamic management, focus on environmentally friendly products and smart cost-cutting efforts all influenced our decision, as did its tumbling share price. The strong balance sheet and promising niche business of rubber and plastic goods maker Deswell Industries also led us to buy more shares as its stock price wilted. We chose to modestly build our position in Endeavour Financial. The firm was involved in two troubled industries in 2008—Endeavour is a financial advisory company that specializes in helping smaller natural resources businesses across the globe. At the end of the year, we liked its management and its potential to rebound. Monaco Coach Corporation, a recreational vehicle manufacturer, was another disappointment, though we continued to hold the position that we built during the first half. Its stock was hurt by rising gas prices in the first half, and beaten down in the second as more consumers set aside big-ticket discretionary purchases. Net losses posted in the calendar third quarter preceded steep declines in its share price.
GOOD IDEAS AT THE TIME Top Detractors to 2008 Performance*
Tennant Company		-0.77	%
Endeavour Financial		-0.73
Deswell Industries		-0.62
Sapient Corporation		-0.60
Computer Task Group		-0.54
*Net of dividends
1Reflects the cumulative total return of an investment made by a stockholder who purchased one share at inception ($7.50 IPO), reinvested distributions as indicated and fully participated in the primary subscription of the 1994 rights offering. 2Reflects the actual market price of one share as it traded on the NYSE and, prior to 12/1/03, on Nasdaq.

FUND INFORMATION AND PORTFOLIO DIAGNOSTICS

Average Market Capitalization*

$203 million

Weighted Average P/E Ratio**

10.6x

Weighted Average P/B Ratio

0.9x

Weighted Average Portfolio Yield

1.4%

Fund Net Assets

$230 million

Net Leverage†

21%

Turnover Rate

42%

Symbol

Market Price

RMT

NAV

XOTCX

*Geometrically calculated

**The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (23% of portfolio holdings as of 12/31/08).

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

CAPITAL STRUCTURE Publicly Traded Securities Outstanding at 12/31/08 at NAV or Liquidation Value

26.6 million shares of Common Stock

$170 million

6.00% Cumulative Preferred Stock

$60 million

2008 Annual Report to Stockholders   |  15   

	AVERAGE ANNUAL NAV TOTAL RETURNS Through 12/31/08
	Fourth Quarter 2008*						-30.46	%
	July-December 2008*						-43.99
	One-Year						-42.71
	Three-Year						-9.36
	Five-Year						1.83
	10-Year						7.90
	Since Inception (11/1/96)†						7.86
	* Not annualized
	†Royce & Associates assumed investment management responsibility for the Fund on 11/1/96.
	CALENDAR YEAR NAV TOTAL RETURNS
	Year	FUND			Year		FUND
	2008	-42.7	%		2002		-12.5	%
	2007	12.2			2001		10.0
	2006	16.3			2000		20.9
	2005	13.3			1999		8.7
	2004	29.2			1998		-6.8
	2003	54.3			1997		20.5
	TOP 10 POSITIONS % of Net Assets Applicable to Common Stockholders
	Kennedy-Wilson Conv.						7.9	%
	Endo Pharmaceuticals Holdings						3.9
	Pan American Silver						3.7
	Sims Group ADR						3.4
	Lincoln Electric Holdings						3.3
	Knight Capital Group Cl. A						3.1
	Alamos Gold						2.9
	Unit Corporation						2.9
	Ensign Energy Services						2.9
	Schnitzer Steel Industries Cl. A						2.8
	PORTFOLIO SECTOR BREAKDOWN % of Net Assets Applicable to Common Stockholders
	Natural Resources						26.9	%
	Industrial Products						25.0
	Consumer Products						10.8
	Technology						10.2
	Industrial Services						9.3
	Health						5.3
	Financial Intermediaries						4.6
	Financial Services						4.0
	Consumer Services						1.5
	Preferred Stock						7.9
	Cash and Cash Equivalents						21.5

Royce Focus Trust
Manager’s Discussion Although our contrarian bent served Royce Focus Trust (FUND) very well in the first half of 2008, it failed to produce much of value in the year’s more tumultuous second half. For the calendar year, the Fund lost 42.7% on a net asset value (NAV) basis and 44.9% on a market price basis, in both cases well behind the 33.8% loss for its small-cap benchmark, the Russell 2000, during the same period. After beating the Russell 2000 and posting positive returns on both an NAV and market price basis between January and June, the Fund struggled mightily from July through the end of the year, a collapse initially spurred by losses in the Natural Resources and, to a lesser degree, Industrial Products sectors, the same areas that contributed most to first-half gains.      FUND fell 19.5% on an NAV basis and 12.9% on a market price basis in the third quarter versus a loss of only 1.1% for its small-cap benchmark. As the bear market intensified in mid-September, the Fund continued to give way, losing 30.5% on an NAV basis and 37.7% on a market price basis in the fourth quarter, a period in which the Russell 2000 declined 26.1%. The Fund’s use of leverage also helped to detract from performance. Needless to say, the year was an enormous disappointment, especially as it followed five consecutive years of strong absolute calendar-year NAV returns.
The market cycle that began with the new small-cap peak in July 2007 has thus far not been kind. From 7/13/07 through 12/31/08, the Fund was down 47.0% on an NAV basis and fell 49.2% on a market price basis versus a loss of 40.4% for its small-cap benchmark. The only bright spot was the Fund’s commanding outperformance of the Russell 2000 in the dynamic, short-term rally that ended 2008. From the small-cap low on 11/20/08 through 12/31/08, the small-cap index climbed 30.0% while FUND gained 42.3% on an NAV basis and 38.8% on a market price basis.		GOOD IDEAS THAT WORKED    Top Contributors to 2008 Performance *
		Alamos Gold		0.85	%
		Knight Capital Group Cl. A		0.65
		Endo Pharmaceuticals Holdings		0.62
		Sprott		0.52
		Metal Management		0.44
		*Includes dividends
We have always believed that performance over longer-term periods provides a more meaningful gauge of the portfolio’s merits. From the previous small-cap market peak on 3/9/00 through 12/31/08, the Fund significantly bested its benchmark on both an NAV and market price basis. During this period, FUND gained 93.2% on an NAV basis and 123.1% on a market price basis compared to a loss of 7.7% for the Russell 2000. The Fund also outpaced its benchmark for the five-year, 10-year and since inception of our management (11/1/96) periods ended 12/31/08.      The Natural Resources sector was by far the most significant detractor to performance, with the energy services industry the loss leader. When oil prices began to tumble late in
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.

Performance and Portfolio Review
the summer, the deflation began to hurt the performance of many of the Fund’s holdings in energy companies. While an unwelcome development, we took the long view and acted to build or hold positions in those companies that enjoyed our highest regard, as we believe that energy prices should eventually recover. As the share prices of certain holdings plummeted to levels that we deemed attractive, we began to buy. Major Drilling Group International is an exploratory driller mostly for gold, copper and zinc. It has a strong balance sheet and solid management, both of which should help it to survive ongoing slowdowns in its business. We first purchased shares of Trican Well Service in 2004, attracted to this Canadian firm’s strong balance sheet and profitable businesses of pressure pump manufacture and oil well maintenance services. Our high opinion of its business has not changed. Tesco Corporation makes top drives and conventional casing devices for oil rigs and also owns a proprietary technology that allows rig operators to drill more quickly and efficiently. Its low debt, positive earnings and strong niche business made the decision to buy more a simple one. Unit Corporation, a contract drilling company with its own oil and natural gas exploration business, was one of the Fund’s top contributors during the first half as the company benefited earlier in the year from increased production in both its oil and natural gas business. Its stock price then plummeted with the rapid descent of oil prices. We modestly increased our stake in October. Elsewhere in the sector, we held preferred stock of real estate company Kennedy-Wilson, as we liked its coupon and the company’s aggressive buys of distressed real estate that we think could eventually increase in value.
GOOD IDEAS AT THE TIME Top Detractors to 2008 Performance*					We had a sterling long-term outlook for steel companies at the end of 2008, prompting us to build positions in steel companies that endured rough times in the second half of 2008, including Sims Group, Schnitzer Steel Industries and Kennametal. Other old favorites in which we increased our respective stakes included Endo Pharmaceuticals Holdings, Pan American Silver and Alamos Gold.
Endeavour Financial		-2.67	%
Major Drilling Group International		-2.07
Trican Well Service		-1.88
Tesco Corporation		-1.83
Kennedy-Wilson Conv.		-1.81
*Net of dividends
1Royce & Associates assumed investment management responsibility for the Fund on 11/1/96. 2Reflects the cumulative total return experience of a continuous common stockholder who reinvested all distributions as indicated and fully participated in the primary subscription of the 2005 rights offering. 3Reflects the actual market price of one share as it traded on Nasdaq.

FUND INFORMATION AND PORTFOLIO DIAGNOSTICS

Average Market Capitalization*

$794 million

Weighted Average P/E Ratio**

7.8x

Weighted Average P/B Ratio

1.3x

Weighted Average Portfolio Yield

1.9%

Fund Net Assets

$118 million

Net Leverage†

6%

Turnover Rate

51%

Symbol

Market Price

FUND

NAV

XFUNX

*Geometrically calculated

**The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (13% of portfolio holdings as of 12/31/08).

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

CAPITAL STRUCTURE Publicly Traded Securities Outstanding at 12/31/08 at NAV or Liquidation Value

19.5 million shares of Common Stock

$93 million

6.00% Cumulative Preferred Stock

$25 million

2008 Annual Report to Stockholders   |  17