Royce Value Trust (RVT) N-CSR Certified annual shareholder report (management investment company)

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, 2005 – December 31, 2005

Item 1: Reports to Shareholders

			A N N U A L  R E V I E W
Royce Value Trust		A N D
		R E P O R T  T O  S T O C K H O L D E R S
Royce Micro-Cap Trust
			2005
	Royce Focus Trust www.roycefunds.com
		TheRoyceFund
		VALUE INVESTING IN SMALL COMPANIES FOR MORE THAN 30 YEARS

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 on a stock exchange or are traded in the over-the-counter market. 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 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 or the Nasdaq market, 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

•	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.
•	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.
•	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.
•	The fixed capital structure allows permanent leverage to be employed as a means to enhance capital appreciation potential.
•	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.
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.

TABLE OF CONTENTS
Annual Review
Performance Table	2
Letter to Our Stockholders	3
Online Update	10
Annual Report to Stockholders	11
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.

	PERFORMANCE TABLE
Charles M. Royce, President		AVERAGE ANNUAL NAV TOTAL RETURNS Through December 31, 2005
			Royce Value Trust		Royce Micro-Cap Trust		Royce Focus Trust		Russell 2000
		Fourth Quarter 2005*	2.68	%	-0.31	%	5.98	%	1.13	%
		July - December 2005*	10.66		8.26		20.91		5.88
		One-Year	8.41		6.75		13.31		4.55
Here at The Royce Funds, we talk a lot about earnings, the profits a company has after expenses, taxes and other costs have been deducted from revenues. As the principal source of long-term shareholder returns, earnings are a critical element in gauging the success of a business. To get a sense of their significance, even a value-oriented portfolio manager such as our own Buzz Zaino likes to joke, “We’re all growth investors, because ultimately we’re all looking for earnings growth.” Of course, one may contrast Buzz’s remark with the in-house example of Charlie Dreifus, who is more than happy to find companies with steady, but not necessarily growing (and certainly not fast- growing) earnings, yet there is no denying that earnings are arguably the most critical sign of a company’s well - -being. Continued on Page 4...
		Three-Year	22.83		25.38		31.22		22.13
		Five-Year	12.50		15.96		16.82		8.22
		10-Year	13.57		14.06		n/a		9.26
		Since Inception	12.62		13.94		14.12
		Inception Date	11/26/86		12/14/93		11/1/96**
	* Not annualized. ** Date Royce & Associates, LLC assumed investment management responsibility for the Fund. Royce Value Trust’s average annual NAV total return for the 15-year period ended 12/31/05 was 15.22%.
	IMPORTANT PERFORMANCE AND RISK INFORMATION
	All performance information in this Review 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 December 31, 2005, 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, 2005 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.
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LETTER TO OUR STOCKHOLDERS

It’s Not Unusual. . . But It’s Not Quite Normal, Either
There is an old curse, said to be of Chinese or Scottish origin, which states, “May you live in interesting times.” Anyone who has been an equity investor over the last 10 years has more than qualified for the curse of living through a decade of noteworthy days. It began uneventfully enough, with a move to large-cap stocks in the mid-’90s. Internet stock mania then took hold. This feverish activity was attended by an insistence that the stock market was in a new era, one appropriate for the imminent arrival of a new millennium, in which all of the old rules about valuation and how to measure the success of a business were being quickly and thoroughly recast. Value investors were among those whose relatively ordinary returns between 1996 and 1999 consigned them to the trash heap of the market’s new order, the investment equivalent of dinosaurs destined for extinction. Yet the ’90s ended, and the new era began, with a stubborn assertion of one of the oldest rules of equity investing known to human kind, namely that markets are cyclical. The Internet bubble burst in 2000, which led to arguably the most interesting six years of the last 10 for the U.S. stock market.
     Along with Y2K hysteria, the collapse of Internet stock prices heralded a series of events that helped keep equity returns underwater—or just barely above the surface—through the end of 2005. In fact, the period that spans 2000 through 2005 may be best thought of as a testament to the remarkable resilience of the stock market. Consider the following list of events that run the gamut from calamitous to criminal: The terrorist attacks of September 2001; accounting scandals and revelations of fraud that brought down more than a couple of corporate Goliaths; mutual fund trading scandals; war with Iraq; subsequent terrorist strikes in Israel, Indonesia, Madrid and London; record trade and budget deficits; natural disasters

Last year was the first time since we began to prognosticate low returns in 2003 that both small- and large-cap performance, regardless of style, ended the year in the low single digits.

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	However, our portfolio managers occasionally buy shares of small- and micro-cap companies that have been enduring earnings disappointments or have ceased to post any earnings at all. An investor may well ask why we would make such purchases: If earnings are so important, why would we risk buying shares of a company whose earnings are depressed or nonexistent? How can a company satisfy our exacting security selection criteria if it’s missing such a crucial element? The apparent contradiction is resolved in part by another in our endless series of reminders that we always invest with a long-term perspective. Most of our security analyses begin with the balance sheet. We carefully scrutinize a company’s underlying assets, which are the ultimate source of earnings, while also looking cl osely at its liabilities, the claims parties other than the shareholders have on assets. If the assets are in healthy proportion to the liabilities, that gives us confidence that future earnings can be produced, even if there are no current earnings. Continued on Page 6...	LETTER TO OUR STOCKHOLDERS in Asia, Louisiana, Mississippi and Texas; skyrocketing energy prices; and ongoing political controversies. Far from capitulating to each new, dispiriting development, the market managed to move forward. Returns across styles and asset classes were generally unspectacular (though in certain cases, such as small-cap value’s, they were strong on an absolute and relative basis), but in general they avoided outright disaster, even in the more difficult, negative-return years of 2000 and 2002.      We continue to believe that the downturn earlier in 2005 marked the end of the market working through these various difficulties that took place during the last several years. Indeed, 2005 may ultimately be remarkable for its unremarkable nature, for its relatively low, but positive, returns. It will also go down as the year in which a six-year period of small-cap outperformance came to an end, though to what degree that will matter in the future remains to be seen. In a year in which little seemed to take investors by surprise, the most unexpected element may have been that one of our overall market predictions (finally) proved to be accurate. Since 2003, we have been unswerving in our conviction that the market had entered a low-return mode, but the success of our own and similar small-cap investment approaches made our predictive remarks inaccurate. Last year was the first time since we began to prognosticate low returns that both small- and large-cap performance, regardless of style, ended the year in the low single digits. We suspect that this means that the stock market has returned to more historically typical, if not normal, behavior after a decade of tumult. However, our reasons have nothing to do with the low returns themselves or the anomalous accuracy of our forecast. Looming Large When the subject is the perennially unpredictable stock market, we are fully aware of the danger of words such as “typical” or “normal,” terms that are difficult to define with precision in any context. Another danger is that “normal” markets often represent a transitional stage between bull and bear extremes. In addition, the farther out one looks from the 10-year period ended 12/31/05, long-term average annual returns for both small- and large-cap stocks reach into the low-to-mid teens, not the single-digit positive returns of 2005. Having issued these caveats, we think that the market has returned to more historically typical behavior, and the reason has to do with the narrowing of the gap between large- and small-cap results in the past year.      For the first calendar year since 1998, large-cap stocks, as measured by the S&P 500, outperformed small-cap, as measured by the Russell 2000, but the advantage was slight. The S&P 500 was up 4.9% in 2005 versus 4.6% for the Russell 2000 (and 1.4% for the Tech-heavy Nasdaq Composite). The last time that small-cap enjoyed more than five consecutive years of outperformance was between 1975 and 1983. The recently concluded phase of small-cap
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outperformance followed the period in which the Russell 2000 underperformed the S&P 500 in five out of six years. Perhaps unsurprisingly, small-caps (as measured by the CRSP 6-10) also underperformed the S&P 500 for four of the five years prior to the 1975-1983 reversal.
     Small-cap significantly outpaced large-cap from the 2005 market low on April 28, with the Russell 2000 up 18.1% versus 10.6% for the S&P 500. The Russell 2000 also led in months of positive returns (February, May, June, July, September and November). Equally compelling from our perspective was the stronger performance for large-caps during the negative or flat performance months of January, March, April, August, October and December, a development that we felt revealed nascent large-cap leadership. We have long believed that where investors turn when stock prices are falling is a very telling sign, so large-cap’s advantage during 2005’s downdrafts indicated to us that investors were more confident in larger stocks. We expect that large-cap will continue to lead in the short and possibly intermediate terms, though we see no reason for small-cap investors to fret. Over long-term time periods, we anticipate that small-cap will continue to perform well, though probably without the substantial outperformance spreads that we have seen over the last six years.

Over long-term time periods, we anticipate that small-cap will continue to perform well, though probably without the substantial outperformance spreads that we have seen over the last six years.

Long-Term Values
Another instance of narrowing spreads could be seen within small-cap in the one- and three-year average annual total returns ended 12/31/05 for the Russell 2000 Value and Growth indices. In each period the Russell 2000 Value index beat its growth counterpart, but the results were close. For the one-year period ended 12/31/05, both indices posted low returns: value was up 4.7% versus 4.2% for growth. For the three-year period, the Russell 2000 Value index gained 23.2% versus 20.9% for the Russell 2000 Growth index. However, the longer-term edge fell more dramatically in small-cap value’s favor. The upshot was that small-cap value owned a performance edge over small-cap growth for the one-, three-, five-, 10-, 15-, 20-and 25-year periods ended 12/31/05, an impressive run of outperformance that was bolstered by the Russell 2000 Value index outflanking the Russell 2000 Growth index in five of the last six calendar years (trailing slightly during 2003’s surging small-cap rally) (see table below). This long-term advantage came primarily from small-cap value’s formidable edge in the current decade to date (+131.9% versus -13.2%), which has seen both up and down markets.

RUSSELL 2000 VALUE VERSUS RUSSELL 2000 GROWTH
Calendar-Year Returns: 2000-2005
	Russell		Russell			Russell		Russell
	2000 Value		2000 Growth			2000 Value		2000 Growth
2000	22.8	%	-22.4	%	2003	46.0	%	48.5	%
2001	14.0		-9.2		2004	22.3		14.3
2002	-11.4		-30.3		2005	4.7		4.2

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	Our objective when looking at a company’s earnings picture is to understand “normalized earnings” over long-term time periods. Industries usually move in very particular, though not always consistently predictable, business cycles. By focusing on normalized earnings, we are trying to filter out the effects of short-term earnings surprises, whether they are negative or positive. Our long-term investment horizon and thorough research process peer beyond the ebb and flow of near-term events in an attempt to discover long-term opportunities. In general, we seek businesses that have a solid-to-strong earnings history. A record of profitability is critical when trying to assess both the current financial health and the long-term prospects for a business that has fallen on hard times. In fact, it may be one of the more telling indications that a company’s woes are likely to be temporary. We are willing to endure the short-term difficulties of what we believe is a high-quality company struggling with stalled profits, provided that Continued on Page 8...	LETTER TO OUR STOCKHOLDERS      Looking back at 2005’s second half and forward to 2006, one might expect growth to continue to lead during updrafts, or at least during up quarters. In fact, we would not be surprised to see small-cap growth assume a leadership role in the coming months, but we suspect that its advantage will be small and its reign relatively short. The Russell 2000 Growth index led the Russell 2000 Value index in the third and fourth quarters of 2005 as well as from the 2005 market low on April 28, so one could argue that small-cap growth’s leadership phase is already underway. In any event, we think that small-cap value is likely to retain its long-term performance edge over small-cap growth, though we do not expect the former to dominate the way that it did over the last six years. We also do not anticipate a return to the late ‘90s, when the Russell 2000 Growth index led in most short- and even some long-term periods. As with small- and large-cap stocks, we think that small-cap value and growth should be subject to frequent leadership rotation and low, but positive returns. This Round to Royce Energy stocks were the dominant market sector in 2005 across all asset classes and investment styles. The industry’s preeminent performance status helped each of our closed-end Funds to post strong absolute and relative returns in the calendar year. We began looking more closely at the industry in 2003, when forecasts of lower oil and gas commodity prices caused the stock prices of many energy companies to fall. While energy was clearly the most dynamic area, our closed-end portfolios also saw impressive gains in the Industrial and/or Financial sectors, as well as in Technology stocks, some of which enjoyed a resurgence in 2005’s second half. As we first noted in July of last year, 2005 was unlike 2003, a year in which micro-caps dominated, and 2004, a year that saw stronger small-cap results. Both small- and micro-cap oriented portfolios enjoyed success in 2005, and individual gains and losses were more the result of stock (and sector) selection as opposed to capitalization.      On both a net asset value (NAV) and market price basis, all three closed-end Funds outperformed the Russell 2000 for the one-year period ended 12/31/05. The year’s second half saw each Fund make an impressive comeback after subpar first-half performances in 2005. The results were just as encouraging for the three-year and five-year periods ended 12/31/05, in which Royce Value Trust, Micro-Cap Trust and Focus Trust each outpaced the Russell 2000 with double-digit average annual NAV and market price total returns. When looking at the 10-year period ended 12/31/05, the same advantage held for Royce Value Trust and Micro-Cap Trust, our two closed-end Funds with more than 10 years of history. All three Funds outperformed the Russell 2000 from the small-cap market peak on 3/9/00 through 12/31/05. They also were ahead of the small-cap index from the small-cap market trough on 10/9/02 through 12/31/05, three impressive instances of mostly bull-market
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outperformance. While we would love for each of our Funds to continue to outpace the small-cap benchmark in most short- and long-term performance periods, we realize that such a feat is impossible, and are happy to hold a greater advantage over long-term and market cycle performance periods, which we believe offer a sterner test of a portfolio’s merits.

While we would love for each of our Funds to continue to outpace the small-cap benchmark in most short- and long-term performance periods, we realize that such a feat is impossible, and are happy to hold a greater advantage over long-term and market cycle performance periods, which we believe offer a sterner test of a portfolio’s merits.

Lake Wobegone, Not Lake Placid
Although most equity indices enjoyed positive returns in 2005, few made new highs, two exceptions being the Russell 2000 Value index, which made its new high in August, and the Russell 2000 index, which reached a new peak in December. The past few years saw undeniable improvement in overall equity results, yet several major market indices remained substantially shy of the peaks that they established in March 2000: the Russell 2000 Growth index (-33.5%), S&P 500 (-10.4%) and Nasdaq Composite (-56.3%) all failed to surpass their March 2000 highs. Of course, these figures may indicate nothing more than the timeliness of the likely shift in overall market leadership from small- to large-cap, and an analogous change within small-cap from value to growth. It’s also worth pointing out that, despite the relatively paltry returns of 2005, the three-year average annual total returns for both the S&P 500 and Russell 2000 were rather impressive on both an absolute and a relative basis, especially compared to the five-year returns for the periods ended 12/31/05 (see table at left). It occurs to us that the last three years felt remarkably different from the beginning of the current decade, a time in which low or negative large-cap returns were a source

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		LETTER TO OUR STOCKHOLDERS
	our estimate of the company’s long-term prospects is positive. This is especially true with cyclical businesses that regularly go through the ups and downs of their industry. The “downs” are often synonymous with earnings trouble. The company’s actions at such times are critical: Is management buying back stock? Does the firm have sufficient cash reserves to successfully deal with adversity? If so, our confidence is bolstered. If not, we generally look elsewhere. In addition, few events make investors more emotional than earnings trouble. An earnings disappointment can create a wave of selling that drives a stock price down to levels that meet our value criteria. In many cases over the years, we have waited patiently for a particular company’s stock price to fall so that we could begin to build a position. Our years of experience have brought home again and again the lesson that even the best businesses have occasional trouble. When they do, we try to use other investors’ reactions to our advantage by purchasing shares at prices that we find attractive.	of constant frustration for many investors. The picture becomes even more interesting on viewing the 10-year average annual total returns for the S&P 500 and Russell 2000. After the whirlwind of the last 10 years, we’re not sure if investors will find it surprising or predictable that these results for the 10-year period ended 12/31/05 were nearly identical: 9.3% for the Russell 2000 and 9.1% for the S&P 500. We may look back on 2005 as the year in which everything changed. However, we want to emphasize again that the most significant changes may not be the shifts in leadership to large-cap in general and to small-cap growth within our investment universe (though they are certainly important). The critical move from our perspective has been the narrowing of the performance spread between asset classes and styles. We simply do not think it’s likely any time soon that any asset class or investment approach will dominate the way that small-cap value did between 2000 and 2005 or that large-cap did between 1995 and 1999. Low returns, however, do not equate to a lack of volatility. The Russell 2000’s positive return in 2005 was not achieved in a straight line, as volatility was quite apparent throughout most of last year. The Russell 2000 posted eight directional high-to-low and/or low-to-high moves of at least 5% in the last 12 months, resulting in two significant declines that were each followed by strong rallies.
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Navigating the Narrows
With our expectation that leadership rotation between asset categories and styles should be the order of the day and that performance advantages should remain slim, we do not see particularly hard times ahead for small-cap and/or small-cap value. Regardless of what the future brings, it’s important to mention that our approach is not heavily invested in how the rest of the world defines value. In the past five years of terrific small-cap value performance, we continued to scrutinize those areas that were not enjoying the benefits of value’s good fortune, such as Health and Technology. This may seem counterintuitive, even contradictory, but the essence of value investing remains finding what we regard as high-quality companies whose stocks are trading at discounts to our estimate of their worth as businesses. This entails searching in areas that others are ignoring. Markets are always changing, but this aspect of our approach remains the same.
     We appreciate your continued support.

Sincerely,
Charles M. Royce	W. Whitney George	Jack E. Fockler, Jr.
President	Vice President	Vice President
January 31, 2006

The critical move from our perspective has been the narrowing of the performance spread between asset classes and styles. We simply do not think it’s likely that any asset class or investment approach will dominate the way that small-cap value did between 2000 and 2005 or that large-cap did between 1995 and 1999.

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ONLINE UPDATE

Visit the New RoyceFunds.com

Here are just a few of our new features:

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TABLE OF CONTENTS
Annual Report to Stockholders
Managers’ Discussion of Fund Performance
Royce Value Trust	12
Royce Micro-Cap Fund	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 Fund	35
Royce Focus Trust	49
Directors and Officers	58
Other Important Information	59
Stockholder Meeting Results	60

THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  11

ROYCE VALUE TRUST

AVERAGE ANNUAL NAV TOTAL RETURNS Through 12/31/05						Manager’s Discussion After struggling in the difficult first half, Royce Value Trust (RVT) came back strong in the second half of 2005, which gave a much-needed boost to its calendar-year results. RVT was up 8.4% on a net asset value (NAV) basis and 7.0% on a market price basis in 2005, versus gains of 4.6% for the Russell 2000 and 7.7% for the S&P 600. The Fund thus outperformed each of its small-cap benchmarks on an NAV basis during 2005 and trailed the S&P 600 by only a narrow margin on a market price basis. Although both small-cap indices were ahead of the Fund in the early stages of the dynamic rally that began with the interim small-cap market low on 4/28/05, RVT more than made up for its late start. The Fund gained 7.8% on an NAV basis and 7.5% on a market price basis in the third quarter, ahead of both the Russell 2000 (+4.7%) and the S&P 600 (+5.4%). In the fourth quarter, RVT’s NAV (+2.7%) and market price (+3.2%) returns were also ahead of the Russell 2000 (+1.1%) and the S&P 600 (+0.4%).       Strong second-half NAV results helped RVT not only to achieve a performance edge over market cycle and other long-term periods, but to also provide terrific NAV returns on an absolute basis. From the small-cap market peak on 3/9/00 through 12/31/05, RVT gained 93.7% versus 19.7% for the Russell 2000 and 65.0% for the S&P 600. In the mostly upmarket phase running from the small-cap market trough on 10/9/02 through 12/31/05, RVT was up 120.5%, versus 114.2% for the Russell 2000 and 111.6% for the S&P 600. The Fund also beat its small-cap benchmarks on an NAV basis for the one-, three-, five-, 10-, 15-year and since inception (11/26/86) periods ended 12/31/05, while on a market price basis, the Fund outperformed for each of those periods with the exception of the one-year interval. RVT’s average annual NAV total return since inception was 12.6%.       Of the Fund’s 11 equity sectors, nine showed net gains in 2005. The bulk of the losses were confined to the Consumer Products sector. That area held the Fund’s top loser, The Boyd’s Collection, a collectibles company whose shares we sold in October on news that the firm was filing for reorganization under Chapter 11, ending a mostly dismal five-year experience with the stock. Another significant loser on a dollar basis was Willbros Group, a private contractor that provides construction, engineering and specialty services primarily to the oil and gas industry. While the company’s business mostly grew in 2005, the results of an internal investigation (itself the result of a previous shake-up in upper management) led the company to restate earnings for 2002, 2003, 2004 and the first two fiscal quarters of 2005. We sold some shares during 2005, but we held a position at the end of the year because by November the company seemed to have put a good deal of its difficulties behind it.       Elsewhere in the Natural Resources sector, the news was mostly very positive. As the sector that holds the portfolio’s energy stocks, the dominant industry in the market for the 18-month period ended 12/31/05, this was hardly a surprise. It was the Fund’s top net-gaining sector in 2005, followed by Industrial Services, Industrial Products and Technology. In contrast to Natural Resources, the latter sector’s net gains for the year were somewhat unexpected, the result of a strong fourth-quarter comeback. We have owned shares of contract oil and gas well
Fourth Quarter 2005*				2.68	%
July - December 2005*				10.66	%
One-Year				8.41
Three-Year				22.83
Five-Year				12.50
10-Year				13.57
15-Year				15.22
Since Inception (11/26/86)				12.62
*Not annualized.
CALENDAR YEAR NAV TOTAL RETURNS
Year	RVT		Year	RVT
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
1997	27.5		1988	22.7
TOP 10 POSITIONS % of Net Assets Applicable to Common Stockholders
Alliance Capital Management Holding L.P.				1.9	%
Ritchie Bros. Auctioneers				1.3
SEACOR Holdings				1.0
Apollo Investment				1.0
Simpson Manufacturing				0.9
Ash Grove Cement Company Cl.B				0.9
Cimarex Energy				0.9
Sotheby's Holdings Cl. A				0.9
Newport Corporation				0.8
Forward Air				0.8		All performance information in this 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 Funds’ P/E ratio calculations exclude companies with zero or negative earnings.
PORTFOLIO SECTOR BREAKDOWN % of Net Assets Applicable to Common Stockholders
Technology				22.5	%
Industrial Products				17.1
Industrial Services				13.3
Financial Services				9.8
Natural Resources				9.4
Financial Intermediaries				8.8
Health				8.0
Consumer Services				5.8
Consumer Products				5.0
Utilities				0.2
Diversified Investment Companies				0.1
Miscellaneous				4.9
Bonds & Preferred Stocks				0.3
Cash and Cash Equivalents				16.1

12  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS

Performance and Portfolio Review

					PORTFOLIO DIAGNOSTICS
	GOOD IDEAS THAT WORKED		driller Helmerich & Payne since 1998, though our experience with the firm goes all the way back to RVT’s inception. In 2005, the firm benefited from rising oil and gas prices, its own growing business and minimal damage in the aftermath of Katrina and Rita to its rigs located in the Gulf of Mexico. We reduced our position at rising share prices between February and October. Pharmaceutical company Elan Corporation ran into difficulties with a multiple sclerosis drug, Tysabri, that it produces with another firm, Biogen. Prospects for the drug’s eventual use began to improve during the fall, especially in the aftermath of an announcement in December that an FDA advisory panel would review the drug in March 2006. Its share price received a healthy shot based on		Average Market Capitalization	$1,049 million
	2005 Net Realized and Unrealized Gain
	Helmerich & Payne	$4,642,059			Weighted Average P/E Ratio	19.9x*
	Alliance Capital				Weighted Average P/B Ratio	2.2x
	Management Holding L.P.	4,376,806
					Weighted Average Yield	0.9%
	Energy Conversion Devices	3,305,802
					Fund Net Assets	$1,032 million
	Plexus Corporation	3,267,758
					Turnover Rate	31%
	Elan Corporation	3,196,564
					Net Leverage†	5%
this news. In Technology, Energy Conversion Devices saw its growing business and approach toward profitability interest investors. A newer position in the portfolio, we were drawn to its conservative balance sheet and interesting niche business of developing alternative energy products and technology. Plexus Corporation provides a variety of technological services, including product development, material procurement and distribution, for several industries.
					Symbol   Market Price   NAV	RVT XRVTX
			Its stock price rose in 2005 primarily because of improved earnings, but our overall experience with the company, which goes back to 2001, was still not profitable as of 12/31/05.	*	Excludes 15% of portfolio holdings with zero or negative earnings as of 12/31/05.
	GOOD IDEAS AT THE TIME			†	Net leverage is the percentage, in excess of 100%, of the total value of equity type investments, divided by net assets, applicable to Common Stockholders.
	2005 Net Realized and Unrealized Loss
	Boyd’s Collection (The)	$2,259,734
					CAPITAL STRUCTURE
	Willbros Group	2,248,754			Publicly Traded Securities Outstanding at
					12/31/05 at NAV or Liquidation Value
	PXRE Group	2,040,250			54.7 million shares
					of Common Stock	$1,032 million
	PRG-Schultz International	1,975,935
					5.90% Cumulative
	MacDermid	1,967,852			Preferred Stock	$220 million

		RISK/RETURN COMPARISON Three-Year Period Ended 12/31/05
			Average Annual Total Return	Standard Deviation	Return Efficiency*
		RVT (NAV)	22.8%	14.8	1.54
		S&P 600	22.4	14.0	1.60
		Russell 2000	22.1	15.3	1.44
	*	Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period.
1 Reflects the cumulative total return of an investment made by a stockholder who purchased one share at inception ($10.00 IPO) and then reinvested all annual distributions as indicated, and fully participated in primary subscriptions of the Fund’s rights offerings. 2 Reflects the actual market price of one share as it has traded on the NYSE.

THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  13

ROYCE MICRO-CAP TRUST

AVERAGE ANNUAL NAV TOTAL RETURNS Through 12/31/05						Manager’s Discussion Royce Micro-Cap Trust (RMT) gained 6.8% on a net asset value (NAV) basis and 8.9% on a market price basis in 2005, in each case ahead of its small-cap benchmark, the Russell 2000, which was up 4.6% for the same period. When the stock market began to turn around following the interim small-cap market trough on 4/28/05, the Fund arrived a little late to the dance, but soon began to tear up the floor. RMT was up 8.6% on an NAV basis during the third quarter (+5.1% on a market price basis), outpacing the Russell 2000’s 4.7% return. NAV results cooled off in the fourth quarter. The Fund was down 0.3%, though its market price result was strong, up 8.8% versus 1.1% for the Russell 2000. The performance spread between RMT’s NAV and market price returns during the fourth quarter was the largest in eight years and third largest since the Fund’s inception in December 1993.      While short-term outperformance is always welcome, we place much greater importance on long-term and market cycle NAV returns on an absolute and relative basis. Therefore, we were very pleased that the Fund beat the small-cap index from the small-cap market peak on 3/9/00 through 12/31/05, gaining 101.9% versus 19.7% for the Russell 2000. Arguably more impressive (though not any more significant) was RMT outperforming its small-cap benchmark from the small-cap market trough on 10/9/02 through 12/31/05 with a return of 133.7% versus a gain of 114.2% for the Russell 2000. In addition, the Fund was ahead of the small-cap index on both an NAV and market price basis for the one-, three-, five-, 10-year and since inception (12/14/93) periods ended 12/31/05. RMT’s average annual NAV total return since inception was 13.9%.      Seven of the Fund’s 10 equity sectors posted net gains in 2005, with Natural Resources (home to RMT’s holdings in energy) and Industrial Products leading the way on a dollar basis. Energy stocks topped all other areas of the stock market for the year, so terrific performance for portfolio holdings in that industry was no surprise. We first built a position in domestic oil and gas company Gulfport Energy between March and August 2004, before its price began a significant climb. Rising oil and gas prices and increased production led to record earnings for the fiscal year 2004 and a surging share price in 2005. We sold off our remaining position in September after beginning to take gains at rising stock prices in May. Top-ten position Dril-Quip makes offshore drilling and production equipment. Its conservative balance sheet and solid earnings first attracted our interest in 1998. Rising oil and gas prices helped its earnings to improve, which in turn played a role in the company’s mostly soaring share price in 2005. We trimmed our position in January, August and September. The Fund’s top gainer in 2005 came from Industrial Products. Sun Hydraulics manufactures high-performance industrial valves and manifolds. Strong earnings seemed to attract investors. We were just as pleased by the firm’s decision to use profits to remove debt from an already strong balance sheet. We took some gains in February and July.      The Fund’s largest sector, Technology, was a net loser in 2005. TransAct Technologies makes specialized parts and printers used to produce ATM receipts, lottery tickets and other items. A
Fourth Quarter 2005*				-0.31	%
July - December 2005*				8.26
One-Year				6.75
Three-Year				25.38
Five-Year				15.96
10-Year				14.06
Since Inception (12/14/93)				13.94
*Not annualized.
CALENDAR YEAR NAV TOTAL RETURNS
Year	RMT		Year	RMT
2005	6.8	%	1999	12.7	%
2004	18.7		1998	-4.1
2003	55.6		1997	27.1
2002	-13.8		1996	16.6
2001	23.4		1995	22.9
2000	10.9		1994	5.0
TOP 10 POSITIONS % of Net Assets Applicable to Common Stockholders
ASA Bermuda				1.5	%
Transaction Systems Architects Cl. A				1.4
HomeFed Corporation				1.3
Universal Truckload Services				1.2
Abigail Adams National Bancorp				1.2
Seneca Foods				1.2
TriZetto Group (The)				1.1
Covansys Corporation				1.1
Pason Systems				1.0
Dril-Quip				1.0		All performance information in this 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 Funds’ P/E ratio calculations exclude companies with zero or negative earnings.
PORTFOLIO SECTOR BREAKDOWN % of Net Assets Applicable to Common Stockholders
Technology				25.4	%
Industrial Products				16.0
Industrial Services				13.7
Health				14.7
Natural Resources				9.5
Financial Intermediaries				7.0
Consumer Products				5.7
Consumer Services				5.5
Financial Services				3.0
Diversified Investment Companies				2.1
Miscellaneous				4.8
Preferred Stock				0.5
Cash and Cash Equivalents				12.5

14  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS

Performance and Portfolio Review

					PORTFOLIO DIAGNOSTICS
	GOOD IDEAS THAT WORKED		decline in domestic gambling early in 2005 hurt sales and sent its share price on a downward slope, which only grew steeper when the firm became embroiled in a patent dispute shortly afterward. We held a small position at the end of the year, mainly because the firm remains conservatively capitalized. We chose to hold a good-sized position in IT business consultant Sapient Corporation at the end of the year, in spite of difficult times for its stock price. Our view at year-end was that the firm possesses a strong balance sheet and an attractive core business. It also remained profitable in 2005, though its growth was slower than many investors seemed to expect. Two gainers in Technology were also top-ten holdings: The TriZetto		Average Market Capitalization	$275 million
	2005 Net Realized and Unrealized Gain
	Sun Hydraulics	$2,185,808			Weighted Average P/E Ratio	19.2x*
	Gulfport Energy	1,595,152			Weighted Average P/B Ratio	1.9x
	Dril-Quip	1,473,127			Weighted Average Yield	0.8%
	TriZetto Group (The)	1,388,940			Fund Net Assets	$294 million
	PICO Holdings	1,360,942			Turnover Rate	46%
					Net Leverage†	8%
TriZetto Group, which creates specialized software and Internet portals to help healthcare firms improve their business procedures, benefited from strong earnings. Transaction processing software manufacturer Transaction Systems Architects made an acquisition of a similar business, restructured its business units for greater in-house efficiency and enjoyed steadily improving earnings. Outside the Technology sector, Aceto Corporation, a specialty chemical maker
					Symbol   Market Price   NAV	RMT XOTCX
			and distributor, was plagued by declining growth rates, shrinking margins and plummeting pricing. We took some losses during 2005, but at December 31 still thought that a turnaround could eventually materialize.	*	Excludes 17% of portfolio holdings with zero or negative earnings as of 12/31/05.
	GOOD IDEAS AT THE TIME			†	Net leverage is the percentage, in excess of 100%, of the total value of equity type investments, divided by net assets, applicable to Common Stockholders.
	2005 Net Realized and Unrealized Loss
	Aceto Corporation	$1,625,478
					CAPITAL STRUCTURE
	Sapient Corporation	1,110,000			Publicly Traded Securities Outstanding at
					12/31/05 at NAV or Liquidation Value
	TransAct Technologies	1,057,956			21.9 million shares
					of Common Stock	$294 million
	DiamondCluster International	1,011,354
					6.00% Cumulative
	PRG-Schultz International	808,741			Preferred Stock	$60 million

		RISK/RETURN COMPARISON Three-Year Period Ended 12/31/05
			Average Annual Total Return	Standard Deviation	Return Efficiency*
		RMT (NAV)	25.4%	15.3	1.66
		Russell 2000	22.1	15.3	1.44
	*	Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period.
1 Reflects the cumulative total return of an investment made by a stockholder who purchased one share at inception ($7.50 IPO) and then reinvested distributions as indicated, and fully participated in the primary subscription of the 1994 rights offering. 2 Reflects the actual market price of one share as it traded on the Nasdaq, and, beginning on 12/1/03, on the NYSE.

THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  15

ROYCE FOCUS TRUST

AVERAGE ANNUAL NAV TOTAL RETURNS Through 12/31/05						Manager’s Discussion Although each of our closed-end funds enjoyed impressive second-half rebounds during 2005, the award for “2005’s Comeback Fund of the Year” would have to go to Royce Focus Trust (FUND). The Fund was up 13.3% on a net asset value (NAV) basis and 3.0% on a market price basis during 2005. FUND’s small-cap benchmark, the Russell 2000, was up 4.6% for the same period, giving the Fund the performance edge on an NAV basis, but trailing the small-cap benchmark on a market price basis. Although one would never know it by looking at the Fund’s negative second-quarter returns, the market began to rally following the interim small-cap market trough on 4/28/05. Still, FUND was able to overcome its tardy participation in the burgeoning rally with terrific third- and fourth-quarter returns on both an NAV and market price basis. The Fund gained 14.1% on an NAV basis and 16.3% on a market price basis compared to a 4.7% gain for the Russell 2000 during the third quarter. Although returns for stocks as a whole were generally lower in the fourth quarter, FUND gained 6.0% on an NAV basis and 5.7% on a market price basis, while the Russell 2000 was up 1.1%.      While the Fund’s NAV performance in 2005 was warmly welcomed, our attention is more focused on market cycle and other long-term time periods, where we seek strong returns on both an absolute and relative basis. From the small-cap market peak on 3/9/00 through 12/31/05, FUND trounced the Russell 2000, up 158.3% versus 19.7% for the benchmark. The Fund also handily outpaced the small-cap index from the small-cap market trough on 10/9/02 through 12/31/05, up 171.6% versus 114.2%. Our value approach admittedly makes outperformance from market peaks somewhat unsurprising, but it’s understandable if a performance edge during a generally more bullish period raises an eyebrow or two. For our part, we were very pleased with the results for both periods. The Fund also outperformed the Russell 2000 on an NAV basis for the one-, three-, five-year and since inception of our management (11/1/96) periods ended 12/31/05, and beat the benchmark on a market price basis for each of these intervals except the one-year period. FUND’s average annual NAV total return since inception was 14.1%.      Short-term performance is not something that we typically give much attention, but we were struck by how thoroughly the Fund’s results turned around in 2005’s second half. In the year’s first six months, eight of nine equity sectors showed net losses; for the 12-month period ended 12/31/05, only two were in the red. Of the six sectors that went from net losses to net gains, Natural Resources led, thanks to the ongoing dominance of energy stocks in the market as a whole, a move fueled by rising oil and natural gas prices. Canadian energy services company Trican Well Service manufactures piping and drilling equipment and provides oil well completion, maintenance and repair services. The firm posted record revenues and job activity in 2005’s fiscal third quarter, boosted by strong business in Canada and overseas. Even after taking gains at various times between March and December, it was a top-ten holding at December 31. We made similar trims beginning in April to another top-ten position, Ensign Energy Services, which provides contract well drilling and other services for the oil and natural
Fourth Quarter 2005*				5.98	%
July - December 2005*				20.91
One-Year				13.31
Three-Year				31.22
Five-Year				16.82
Since Inception (11/1/96)†				14.12
* Not annualized.
† Royce & Associates assumed investment management    responsibility for the Fund on 11/1/96.
CALENDAR YEAR NAV TOTAL RETURNS
Year	RFT		Year	RFT
2005	13.3	%	2000	20.9	%
2004	29.2		1999	8.7
2003	54.3		1998	-6.8
2002	-12.5		1997	20.5
2001	10.0
TOP 10 POSITIONS % of Net Assets Applicable to Common Stockholders
New Zealand Government 6.50% Bond				4.8	%
Athena Neurosciences Finance 7.25% Bond				4.1
IPSCO				3.8
Canadian Government 3.00% Bond				3.7
Endo Pharmaceuticals Holdings				3.2
Simpson Manufacturing				3.0
Glamis Gold				2.9
Ensign Energy Services				2.8
Thor Industries				2.8
Trican Well Service				2.7		All performance information in this 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 Funds’ P/E ratio calculations exclude companies with zero or negative earnings.
PORTFOLIO SECTOR BREAKDOWN % of Net Assets Applicable to Common Stockholders
Industrial Products				21.8	%
Natural Resources				19.8
Technology				11.9
Health				9.5
Consumer Products				6.3
Industrial Services				5.5
Financial Services				3.7
Financial Intermediaries				3.3
Consumer Services				3.3
Bonds				13.5
Treasuries, Cash and Cash Equivalents				18.9

16  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS

Performance and Portfolio Review

					PORTFOLIO DIAGNOSTICS
	GOOD IDEAS THAT WORKED		gas industry, primarily in western Canada and the Rocky Mountain U.S. Its expanding business in South America contributed to its record third-quarter revenues in fiscal 2005.      The bull market for energy stocks helped two holdings in the Industrial Products sector. Canadian steel producing and fabricating company IPSCO makes pipes for oil and gas drilling companies, which helped its share price to climb in 2005. We were drawn to its pristine balance sheet and steady earnings at a time during the summer of 2004 when steel prices were recovering. It was the Fund’s largest equity holding at the end of 2005. Pason Systems creates specialized software and other drilling instrumentation products for the oil and gas		Average Market Capitalization	$1,600 million
	2005 Net Realized and Unrealized Gain
	Trican Well Service	$3,945,382			Weighted Average P/E Ratio	16.7x
	IPSCO	2,759,583			Weighted Average P/B Ratio	2.9x
	Elan Corporation	2,405,404			Weighted Average Yield	1.4%
	Ensign Energy Services	2,346,857			Fund Net Assets	$143 million
	U.S. Global Investors Cl. A	2,025,460			Turnover Rate	42%
					Net Leverage*	0%
industry. Its energy-related business, two-for-one stock split, positive cash flow, growing earnings and record fiscal third-quarter revenues all played a role in its soaring stock price during 2005.      Net losses on the sector level came from Consumer Services and Industrial Services. In terms of individual positions, Lexicon Genetics posted the most significant dollar-based loss. The firm specializes in proprietary gene
					Symbol   Market Price   NAV	FUND XFUNX
			knockout technology used in the treatment of diseases. Our high regard for the company’s business and its conservative capitalization led us to add to our stake in 2005, even as its growing revenues did little to attract other investors. With Hecla Mining Company, we chose to take our losses and move on. A rare loser among precious metals and mining companies in 2005, its business was hampered by exposure to a politically uncertain situation in Venezuela and rising mining costs.	*	Net leverage is the percentage, in excess of 100%, of the total value of equity type investments, divided by net assets applicable to Common Stockholders.
	GOOD IDEAS AT THE TIME
	2005 Net Realized and Unrealized Loss
	Lexicon Genetics	$1,311,698
					CAPITAL STRUCTURE
	Hecla Mining Company	1,183,369			Publicly Traded Securities Outstanding at
					12/31/05 at NAV or Liquidation Value
	Nu Skin Enterprises Cl. A	977,903			14.7 million shares
					of Common Stock	$143 million
	Pier 1 Imports	899,300
					6.00% Cumulative
	Orchid Cellmark	585,052			Preferred Stock	$25 million

		RISK/RETURN COMPARISON Three-Year Period Ended 12/31/05
			Average Annual Total Return	Standard Deviation	Return Efficiency*
		FUND (NAV)	31.2%	16.2	1.93
		Russell 2000	22.1	15.3	1.44
	*	Return Efficiency is the average annual total return divided by the annualized standard deviation over a designated time period.
1 Royce & Associates assumed investment management responsibility for the Fund on 11/1/96. 2 Reflects 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. 3 Reflects the actual market price of one share as it has traded on the Nasdaq.

THE ROYCE FUNDS 2005 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
12/31/05			$	21,922			7,409	$	139,808	$	148,773
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
12/31/05			$	8,900			3,125	$	41,969	$	45,500
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
12/31/05			$	7,044			2,173	$	21,208	$	20,709

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

18  |  THE ROYCE FUNDS 2005 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, 2006.

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 2005 REPORT TO STOCKHOLDERS  |  19

ROYCE VALUE TRUST

Schedule of Investments

	SHARES		VALUE		SHARES		VALUE
COMMON STOCKS – 104.9%				Restaurants and Lodgings - 0.9%
				Benihana Cl. Aa	6,600	$	152,064
Consumer Products – 5.0%				CEC Entertainmenta,c	121,400		4,132,456
Apparel and Shoes - 2.1%				IHOP Corporation	93,400		4,381,394
Brown Shoe Company	15,000	$	636,450	Jack in the Boxa	2,000		69,860
Columbia Sportswear Companya,c	34,600		1,651,458	Ryan’s Restaurant Groupa,c	7,200		86,832
Jones Apparel Group	81,500		2,503,680	Steak n Shake Company (The)a	70,000		1,186,500
K-Swiss Cl. A	105,000		3,406,200
Oakley	94,900		1,394,081				10,009,106
Polo Ralph Lauren Cl. A	68,200		3,828,748
Tandy Brands Accessories	16,900		202,800	Retail Stores - 2.6%
Timberland Company Cl. Aa	60,000		1,953,000	BJ’s Wholesale Cluba,c	30,100		889,756
Tommy Hilfigera	50,000		812,000	Big Lotsa	255,300		3,066,153
Weyco Group	307,992		5,882,647	CarMax a,c	103,000		2,851,040
				Children’s Place Retail Storesa	13,000		642,460
			22,271,064	Claire’s Stores	189,800		5,545,956
				†Cost Plusa,c	83,700		1,435,455
Collectibles - 0.1%				†DSW Cl. Aa,c	10,000		262,200
Enesco Groupa	174,800		321,632	GameStop Corporation Cl. Aa,c	52,300		1,664,186
				†Gander Mountain Companya,c	53,300		315,536
Food/Beverage/Tobacco - 0.3%				Hot Topica	86,400		1,231,200
Hain Celestial Groupa,c	37,800		799,848	Krispy Kreme Doughnutsa,c	102,000		585,480
Hershey Creamery Company	709		1,418,000	†99 Cents Only Storesa,c	95,000		993,700
Lancaster Colony	16,900		626,145	Payless ShoeSourcea	109,600		2,750,960
				Stein Mart	142,800		2,591,820
			2,843,993	Urban Outfittersa	47,000		1,189,570
				†West Marinea,c	31,100		434,778
Home Furnishing and Appliances - 0.2%				Wet Seal (The) Cl. Aa,c	162,000		719,280
Ethan Allen Interiors	35,800		1,307,774
La-Z-Boy	68,200		924,792				27,169,530
			2,232,566	Other Consumer Services - 1.9%
				Coinstar a	39,000		890,370
Publishing - 0.3%				Corinthian Collegesa,c	130,800		1,540,824
Scholastic Corporationa	130,000		3,706,300	ITT Educational Servicesa	106,000		6,265,660
				MoneyGram International	74,900		1,953,392
Sports and Recreation - 0.4%				Sotheby’s Holdings Cl. Aa	485,200		8,908,272
Coachmen Industries	47,700		563,337
Monaco Coach	161,050		2,141,965				19,558,518
Nautilus	2,000		37,320
Thor Industries	26,100		1,045,827	Total (Cost $44,149,071)			59,566,141
			3,788,449	Diversified Investment Companies – 0.1%
				Closed-End Mutual Funds - 0.1%
Other Consumer Products - 1.6%				Central Fund of Canada Cl. A	191,500		1,304,115
Blyth	14,700		307,965
Burnham Holdings Cl. B	36,000		770,400	Total (Cost $1,039,679)			1,304,115
Dorel Industries Cl. Ba,c	22,000		523,600
Fossil a,c	82,800		1,781,028	Financial Intermediaries – 8.8%
Lazare Kaplan Internationala	103,600		815,332	Banking - 3.0%
Leapfrog Enterprisesa,c	175,000		2,038,750	BOK Financial	129,327		5,875,326
Matthews International Cl. A	166,000		6,044,060	†CFS Bancorp	260,000		3,718,000
RC2 Corporationa	132,600		4,709,952	Citizens Bancorp	3,500		73,675
				Exchange National Bancshares	50,400		1,486,800
			16,991,087	Farmers & Merchants Bank of Long Beach	1,266		7,241,520
				Heritage Financial	12,915		315,384
Total (Cost $32,481,446)			52,155,091	HopFed Bancorp	25,000		396,250
				Jefferson Bancshares	25,000		341,250
Consumer Services – 5.8%				Mechanics Bank	200		3,700,000
Direct Marketing - 0.1%				Mercantile Bankshares	20,000		1,128,800
†FTD Groupa	50,000		519,500	NBC Capital	30,300		720,837
				NetBank	70,000		502,600
Leisure and Entertainment - 0.2%				Old Point Financial	20,000		590,000
Gemstar-TV Guide Internationala	201,100		524,871	Partners Trust Financial Group	100,000		1,205,000
Hasbro	50,000		1,009,000	Sun Bancorpa	42,000		829,500
Shuffle Mastera,c	15,000		377,100	Tompkins Trustco	15,950		714,560
Steiner Leisurea	2,100		74,676
			1,985,647
Media and Broadcasting - 0.1%
Cox Radio Cl. Aa	23,000		323,840

20  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

DECEMBER 31, 2005

	SHARES		VALUE		SHARES		VALUE
Financial Intermediaries (continued)				Apollo Investment	567,109	$	10,168,264
Banking (continued)				BKF Capital Group	7,500		142,125
Whitney Holding	40,500	$	1,116,180	Eaton Vance	140,400		3,841,344
Wilber Corporation	31,700		343,945	Federated Investors Cl. B	121,900		4,515,176
Wilmington Trust	31,000		1,206,210	GAMCO Investors Cl. A	168,600		7,339,158
Yadkin Valley Bank & Trust Company	3,800		55,860	MCG Capital	138,000		2,013,420
				MVC Capital	353,900		3,772,574
			31,561,697	National Financial Partners	22,000		1,156,100
				Nuveen Investments Cl. A	138,600		5,907,132
Insurance - 4.7%
Alleghany Corporationa	10,880		3,089,920				58,801,912
Argonaut Groupa,c	99,600		3,263,892
Aspen Insurance Holdings	68,000		1,609,560	Other Financial Services - 0.8%
Commerce Group	44,500		2,548,960	CharterMac	59,600		1,262,328
Erie Indemnity Company Cl. A	139,900		7,442,680	Credit Acceptancea,c	60,000		966,000
IPC Holdings	27,000		739,260	†International Securities Exchange Cl. Aa,c	75,000		2,064,000
Leucadia National	43,221		2,051,269	†MarketAxess Holdingsa	67,000		765,810
Markel Corporationa,c	4,200		1,331,610	Municipal Mortgage & Equity	40,300		1,040,949
Montpelier Re Holdingsa	66,000		1,247,400	†Nasdaq Stock Marketa,c	25,000		879,500
NYMAGIC	85,200		2,112,108	PRG-Schultz Internationala	247,000		150,670
Navigators Groupa	83,200		3,628,352	Van der Moolen Holding ADR	21,000		149,940
Ohio Casualty	107,000		3,030,240	World Acceptancea	21,700		618,450
Phoenix Companies (The)	81,900		1,117,116
ProAssurance Corporationa	38,070		1,851,725				7,897,647
PXRE Group	166,551		2,158,501
RLI	99,724		4,973,236	Total (Cost $71,306,125)			101,182,165
21st Century Insurance Group	62,000		1,003,160
U.S.I. Holdingsa	40,000		550,800	Health – 8.0%
Wesco Financial	7,740		2,979,900	Commercial Services - 0.9%
Zenith National Insurance	38,550		1,777,926	First Consulting Groupa	560,900		3,292,483
				PAREXEL Internationala	313,700		6,355,562
			48,507,615
							9,648,045
Real Estate Investment Trusts - 0.1%
Gladstone Commercial	30,000		494,700	Drugs and Biotech - 2.7%
				Affymetrix a,c	49,100		2,344,525
Securities Brokers - 0.9%				Andrx Corporationa,c	34,900		574,803
E*TRADE Financiala	152,400		3,179,064	Antigenics a,c	99,300		472,668
First Albany	350,100		2,433,195	Cephalon a,c	4,900		317,226
Investment Technology Groupa	30,400		1,077,376	Cerus Corporationa	21,700		220,255
Knight Capital Group Cl. Aa,c	229,700		2,271,733	†Connetics Corporationa,c	14,300		206,635
				DUSA Pharmaceuticalsa,c	79,700		858,369
			8,961,368	Elan Corporation ADRa,c	292,100		4,068,953
				Endo Pharmaceuticals Holdingsa,c	256,200		7,752,612
Other Financial Intermediaries - 0.1%				Gene Logica	365,000		1,222,750
Archipelago Holdingsa,c	17,400		865,998	Hi-Tech Pharmacala	1,100		48,719
				†Hollis-Eden Pharmaceuticalsa,c	44,000		212,960
Total (Cost $55,982,131)			90,391,378	Human Genome Sciencesa,c	90,000		770,400
				†K-V Pharmaceutical Company Cl. Aa	47,000		968,200
Financial Services – 9.8%				†Medicines Company (The)a,c	20,000		349,000
Information and Processing - 2.2%				Millennium Pharmaceuticalsa,c	100,000		970,000
Advent Softwarea	116,800		3,376,688	†Myriad Geneticsa,c	50,000		1,040,000
eFunds Corporationa,c	126,875		2,973,950	Perrigo Company	186,750		2,784,442
FactSet Research Systems	35,350		1,455,006	†QLTa,c	1,000		6,360
Global Payments	137,000		6,385,570	†SFBC Internationala,c	10,000		160,100
Interactive Data	134,300		3,049,953	Shire ADR	20,853		808,888
SEI Investments Company	141,200		5,224,400	†Telika,c	73,000		1,240,270
				†VIVUSa	163,300		483,368
			22,465,567
							27,881,503
Insurance Brokers - 1.1%
Crawford & Company Cl. A	289,200		1,677,360	Health Services - 1.2%
Crawford & Company Cl. B	162,300		934,848	Albany Molecular Researcha	85,000		1,032,750
Gallagher (Arthur J.) & Company	111,200		3,433,856	Covance a,c	52,700		2,558,585
Hilb Rogal & Hobbs Company	155,050		5,970,975	†Cross Country Healthcarea	30,000		533,400
				Eclipsys Corporationa,c	20,000		378,600
			12,017,039	Gentiva Health Servicesa	30,150		444,411
Investment Management - 5.7%
Alliance Capital Management Holding L.P.	353,100		19,946,619

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS   |  21

ROYCE VALUE TRUST

      Schedule of Investments

	SHARES		VALUE		SHARES		VALUE
Health (continued)				C & D Technologies	345,700	$	2,634,234
Health Services (continued)				Donaldson Company	92,800		2,951,040
HMS Holdingsa	50,000	$	382,500	†GrafTech Internationala,c	155,000		964,100
Lincare Holdingsa,c	34,600		1,450,086	Intermagnetics Generala,c	4,350		138,765
MedQuista	73,893		897,800	PerkinElmer	135,000		3,180,600
National Home Health Care	20,000		195,200	Powell Industriesa,c	92,400		1,659,504
On Assignmenta	425,400		4,641,114	Woodhead Industries	45,400		629,698
Quovadxa	3,000		7,230
							16,454,881
			12,521,676
				Machinery - 5.5%
Medical Products and Devices - 2.9%				Baldor Electric	62,900		1,613,385
Allied Healthcare Productsa	197,700		1,134,798	Coherenta,c	238,500		7,078,680
Arrow International	195,728		5,674,155	Federal Signal	58,600		879,586
ArthroCare Corporationa,c	10,000		421,400	Franklin Electric	84,200		3,329,268
Bruker BioSciencesa	380,200		1,847,772	Graco	96,825		3,532,176
CONMED Corporationa	81,500		1,928,290	Hardinge	309,300		5,335,425
Datascope	12,000		396,600	IDEX Corporation	36,000		1,479,960
Diagnostic Products	25,000		1,213,750	Lincoln Electric Holdings	203,680		8,077,949
IDEXX Laboratoriesa,c	79,000		5,686,420	National Instruments	56,400		1,807,620
Invacare Corporation	88,000		2,771,120	Nordson Corporation	172,200		6,975,822
Novoste Corporationa	16,625		37,074	PAXAR Corporationa,c	273,100		5,360,953
STERIS Corporation	98,600		2,466,972	†Rofin-Sinar Technologiesa	128,000		5,564,160
Thoratec Corporationa	2,000		41,380	T-3 Energy Servicesa	128,110		1,243,436
Varian Medical Systemsa	61,600		3,100,944	UNOVAa,c	3,000		101,400
Young Innovations	62,550		2,131,704	Woodward Governor Company	51,600		4,438,116
Zoll Medicala	20,200		508,838
							56,817,936
			29,361,217
				Metal Fabrication and Distribution - 2.1%
Personal Care - 0.3%				Commercial Metals Company	36,000		1,351,440
Helen of Troya,c	86,600		1,395,126	CompX International Cl. A	292,300		4,682,646
Inter Parfums	500		8,980	IPSCO	14,500		1,203,210
Nutraceutical Internationala	22,800		308,940	Kaydon Corporation	208,700		6,707,618
†USANA Health Sciencesa,c	39,000		1,496,040	NN	127,100		1,347,260
				†Novamerican Steela	10,800		425,099
			3,209,086	Oregon Steel Millsa,c	158,100		4,651,302
				Schnitzer Steel Industries Cl. A	34,000		1,040,060
Total (Cost $55,353,224)			82,621,527
							21,408,635
Industrial Products – 17.1%
Automotive - 0.8%				Paper and Packaging - 0.1%
CLARCOR	83,500		2,480,785	Peak Internationala	408,400		1,082,260
LKQ Corporationa	128,000		4,431,360
Quantam Fuel Systems Technologies				Pumps, Valves and Bearings - 0.2%
Worldwidea,c	15,500		41,540	Conbraco Industriesa	7,630		2,151,660
Superior Industries International	52,000		1,157,520
				Specialty Chemicals and Materials - 1.8%
			8,111,205	Aceto Corporation	1,050		6,909
				Bairnco Corporation	43,000		374,960
Building Systems and Components - 1.3%				Balchem Corporation	7,500		223,575
Decker Manufacturing	6,022		216,792	CFC Internationala	99,000		1,390,059
Preformed Line Products Company	91,600		3,919,564	Cabot Corporation	56,500		2,022,700
Simpson Manufacturing	250,800		9,116,580	Hawkins	206,878		2,894,223
				Lydalla	35,500		289,325
			13,252,936	MacDermid	259,831		7,249,285
				Schulman (A.)	183,100		3,940,312
Construction Materials - 1.6%				Sensient Technologies	22,000		393,800
Ash Grove Cement Company Cl. B	50,518		9,093,240
ElkCorp	48,000		1,615,680				18,785,148
Florida Rock Industries	25,475		1,249,803
Heywood Williams Groupa	958,837		1,670,301	Textiles - 0.1%
Synalloy Corporationa,b	345,000		3,610,080	Unifia	165,100		501,904
			17,239,104	Other Industrial Products - 2.0%
				Brady Corporation Cl. A	228,800		8,277,984
Industrial Components - 1.6%				Diebold	85,000		3,230,000
AMETEK	86,000		3,658,440	Kimball International Cl. B	437,380		4,649,349
Barnes Group	2,000		66,000
Bel Fuse Cl. A	22,900		572,500

22  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

DECEMBER 31, 2005

	SHARES		VALUE		SHARES		VALUE
Industrial Products (continued)				Printing - 0.1%
Other Industrial Products (continued)				Bowne & Co.	68,100	$	1,010,604
Maxwell Technologiesa	21,500	$	304,655
Myers Industries	30,499		444,675	Transportation and Logistics - 3.8%
Peerless Manufacturinga,b	158,600		2,775,500	Alexander & Baldwin	60,000		3,254,400
Steelcase Cl. A	50,000		791,500	Atlas Air Worldwide Holdingsa	29,000		1,290,500
				C. H. Robinson Worldwide	80,000		2,962,400
			20,473,663	Continental Airlines Cl. Ba,c	100,000		2,130,000
				EGLa,c	123,125		4,625,806
Total (Cost $105,116,347)			176,279,332	Forward Air	234,750		8,603,587
				Frozen Food Express Industriesa,c	286,635		3,161,584
Industrial Services – 13.3%				Hub Group Cl. Aa	87,200		3,082,520
Advertising and Publishing - 0.7%				Landstar System	11,200		467,488
Interpublic Group of Companiesa	510,000		4,921,500	Patriot Transportation Holdinga	96,300		6,247,944
†Lamar Advertising Company Cl. Aa	24,000		1,107,360	UTI Worldwide	35,000		3,249,400
ValueClicka,c	45,000		814,950
							39,075,629
			6,843,810
				Other Industrial Services - 0.5%
Commercial Services - 4.7%				Landauer	117,900		5,434,011
ABM Industries	134,800		2,635,340
Aaron Rents	4,500		94,860	Total (Cost $78,612,248)			137,016,560
Allied Waste Industriesa	188,800		1,650,112
BB Holdings	194,900		1,319,473	Natural Resources – 9.4%
Central Parking	18,300		251,076	Energy Services - 3.1%
Convergys Corporationa	121,000		1,917,850	Atwood Oceanicsa,c	14,700		1,147,041
Coparta,c	158,100		3,645,786	Carbo Ceramics	148,400		8,387,568
†First Advantage Cl. Aa,c	5,000		133,550	Core Laboratoriesa,c	10,000		373,600
Hewitt Associates Cl. Aa,c	104,000		2,913,040	ENSCO International	6,443		285,747
Iron Mountaina,c	181,175		7,649,209	Global Industriesa	54,500		618,575
†Laureate Educationa,c	75,000		3,938,250	Hanover Compressor Companya,c	160,000		2,257,600
Learning Tree Internationala,c	53,400		685,122	Helmerich & Payne	62,300		3,856,993
MPS Groupa	564,600		7,718,082	Input/Outputa	669,100		4,703,773
Manpower	105,800		4,919,700	Key Energy Servicesa	10,000		134,700
Monster Worldwidea	64,000		2,612,480	TETRA Technologiesa,c	43,000		1,312,360
New Horizons Worldwidea	228,600		157,734	Tidewater	14,000		622,440
RemedyTemp Cl. Aa	160,700		1,486,475	Universal Compression Holdingsa,c	105,000		4,317,600
Renaissance Learning	15,000		283,650	Veritas DGCa	5,000		177,450
Reynolds & Reynolds Company Cl. A	27,000		757,890	W-H Energy Servicesa	33,800		1,118,104
Rollins	130,500		2,572,155	Willbros Groupa,c	207,600		2,997,744
Spherion Corporationa	53,000		530,530
TRC Companiesa	3,600		39,420				32,311,295
Viad Corporation	9,025		264,703
†Wright Expressa,c	30,000		660,000	Oil and Gas - 3.2%
				†Bill Barretta,c	50,000		1,930,500
			48,836,487	Cimarex Energya	208,990		8,988,660
				Houston Exploration Company (The)a,c	50,000		2,640,000
Engineering and Construction - 1.4%				Penn Virginia	23,300		1,337,420
Dycom Industriesa,c	66,000		1,452,000	Pioneer Drilling Companya,c	65,800		1,179,794
Fleetwood Enterprisesa	234,300		2,893,605	Plains Exploration & Production Companya,c	76,500		3,039,345
†Foster Wheelera	21,000		772,380	Pogo Producing Company	1,700		84,677
Insituform Technologies Cl. Aa,c	174,300		3,376,191	Remington Oil & Gasa	78,500		2,865,250
Jacobs Engineering Groupa	10,000		678,700	SEACOR Holdingsa,c	153,500		10,453,350
Washington Group Internationalc	100,000		5,297,000	Stone Energya	18,500		842,305
			14,469,876				33,361,301
Food and Tobacco Processors - 0.4%				Precious Metals and Mining - 2.2%
MGP Ingredients	216,400		2,553,520	Agnico-Eagle Mines	66,500		1,314,040
Seneca Foods Cl. Aa	59,400		1,143,450	†Apex Silver Minesa	38,500		612,150
Seneca Foods Cl. Ba	10,900		198,925	Bema Golda	300,000		873,000
				Etruscan Resourcesa	675,900		930,311
			3,895,895	Gammon Lake Resourcesa	206,300		2,454,970
				Glamis Golda	237,000		6,512,760
Industrial Distribution - 1.7%				Golden Star Resourcesa	135,000		356,400
Central Steel & Wire	5,634		3,222,648	Hecla Mining Companya	598,000		2,427,880
Ritchie Bros. Auctioneers	310,400		13,114,400	IAMGOLD Corporation	220,000		1,720,400
Strategic Distributiona	115,000		1,113,200
			17,450,248

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  23

ROYCE VALUE TRUST

      Schedule of Investments

	SHARES		VALUE		SHARES		VALUE
Natural Resources (continued)				Vishay Intertechnologya,c	186,000	$	2,559,360
Precious Metals and Mining (continued)				Western Digitala,c	5,000		93,050
†Ivanhoe Minesa,c	140,000	$	1,006,600	Zebra Technologies Cl. Aa	76,525		3,279,096
Meridian Golda,c	128,500		2,810,295
Miramar Mininga	245,000		612,500				71,794,622
†Pan American Silvera,c	46,000		866,180
Stillwater Mining Companya,c	10,780		124,725	Distribution - 1.9%
				Agilysys	165,125		3,008,578
			22,622,211	Anixter International	78,900		3,086,568
				Benchmark Electronicsa	138,800		4,667,844
Real Estate - 0.7%				Brightpointa,c	33,500		928,955
Alico	27,000		1,220,130	†Solectron Coporationa	1,140,000		4,172,400
CB Richard Ellis Group Cl. Aa	70,000		4,119,500	Tech Dataa,c	86,500		3,432,320
Consolidated-Tomoka Land	13,564		961,688
Trammell Crow Companya,c	46,500		1,192,725				19,296,665
			7,494,043	Internet Software and Services - 1.1%
				†Arbinet-thexchangea,c	87,200		611,272
Other Natural Resources - 0.2%				CNET Networksa,c	155,400		2,282,826
PICO Holdingsa	55,200		1,780,752	CryptoLogic	137,000		2,683,830
				CyberSource Corporationa,c	10,000		66,000
Total (Cost $57,309,057)			97,569,602	†eResearch Technologya,c	72,000		1,087,200
				†Internet Security Systemsa	40,000		838,000
Technology – 22.5%				Lionbridge Technologiesa	37,500		263,250
Aerospace and Defense - 0.8%				†RSA Securitya,c	14,000		157,220
Allied Defense Group (The)a	45,700		1,040,589	RealNetworksa,c	245,400		1,904,304
Armor Holdingsa,c	33,000		1,407,450	S1 Corporationa,c	20,000		87,000
Astronics Corporationa	52,400		555,440	Satyam Computer Services ADR	20,000		731,800
Ducommuna	117,200		2,503,392	†SupportSofta	170,000		717,400
Herley Industriesa	2,000		33,020
Hexcel Corporationa,c	72,800		1,314,040				11,430,102
Integral Systems	49,800		939,228
				IT Services - 4.0%
			7,793,159	answerthinka	655,000		2,783,750
				BearingPointa,c	649,000		5,101,140
Components and Systems - 7.0%				Black Box	47,000		2,226,860
Adapteca,c	167,000		971,940	CACI International Cl. Aa	10,000		573,800
American Power Conversion	151,200		3,326,400	CGI Group Cl. Aa	136,700		1,101,802
Analogic Corporation	40,900		1,957,065	CIBERa,c	10,000		66,000
Belden CDT	57,800		1,412,054	†Cogent Communications Groupa,c	55,000		301,950
Checkpoint Systemsa	52,000		1,281,800	Computer Task Groupa	101,100		399,345
Dionex Corporationa	81,000		3,975,480	Covansys Corporationa	238,900		3,251,429
†Electronics for Imaginga,c	25,000		665,250	DiamondCluster Internationala	80,400		638,376
†Energy Conversion Devicesa,c	146,300		5,961,725	Forrester Researcha	40,300		755,625
Excel Technologya,c	168,500		4,006,930	Gartner Cl. Aa	126,000		1,625,400
Hutchinson Technologya,c	42,800		1,217,660	Keanea	443,000		4,877,430
Imation Corporation	15,700		723,299	MAXIMUS	127,900		4,692,651
InFocus Corporationa	245,800		985,658	Perot Systems Cl. Aa	165,100		2,334,514
KEMET Corporationa	95,600		675,892	Sapient Corporationa,c	731,602		4,162,815
Kronosa	38,775		1,623,121	Syntel	152,679		3,180,304
Methode Electronics	50,000		498,500	TriZetto Group (The)a,c	215,200		3,656,248
Metrologic Instrumentsa,c	15,000		288,900
Newport Corporationa,c	642,200		8,695,388				41,729,439
†On Track Innovationsa,c	40,000		547,200
Perceptrona	397,400		2,813,592	Semiconductors and Equipment - 2.3%
Plexus Corporationa,c	325,700		7,406,418	BE Semiconductor Industriesa,c	58,000		269,700
Power-Onea	10,000		60,200	Brooks Automationa	53,000		664,090
REMECa	143,387		182,101	Cabot Microelectronicsa	131,200		3,848,096
Radiant Systemsa	32,500		395,200	CEVAa	31,666		198,229
Richardson Electronics	201,000		1,457,250	Cognex Corporation	55,300		1,663,977
SafeNeta,c	36,240		1,167,653	Conexant Systemsa,c	11,980		27,075
Symbol Technologies	99,389		1,274,167	Credence Systemsa,c	53,600		373,056
TTM Technologiesa	221,400		2,081,160	Cymera,c	14,500		514,895
Technitrol	322,400		5,513,040	DSP Groupa	115,000		2,881,900
Tektronix	159,680		4,504,573	DTSa	64,100		948,680
†UQM Technologiesa,c	50,000		193,500	Exar Corporationa	181,976		2,278,340

24  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

DECEMBER 31, 2005

	SHARES		VALUE		SHARES		VALUE
Technology (continued)				Utilities – 0.2%
Semiconductors and Equipment (continued)				CH Energy Group	44,500	$	2,042,550
Fairchild Semiconductor				Southern Uniona	11,576		273,541
International Cl. Aa,c	51,200	$	865,792
†International Rectifiera,c	20,000		638,000	Total (Cost $2,127,413)			2,316,091
Intevaca,c	57,450		758,340
Kulicke & Soffa Industriesa,c	105,800		935,272	Miscellaneous (e) – 4.9%
MEMC Electronic Materialsa,c	36,000		798,120	Total (Cost $47,892,514)			50,516,897
Novellus Systemsa,c	53,800		1,297,656
OmniVision Technologiesa	38,800		774,448	TOTAL COMMON STOCKS
†Sanmina-SCI Corporationa	100,000		426,000	(Cost $722,347,336)			1,082,864,290
Semitoola	50,000		544,000
Silicon Storage Technologya	88,900		448,945	PREFERRED STOCKS – 0.2%
Staktek Holdingsa	184,700		1,374,168	Aristotle Corporation 11.00% Conv.	4,800		37,440
Veeco Instrumentsa	65,000		1,126,450	†Seneca Foods Conv.a	100		1,900
				†Seneca Foods Conv.a,d	85,000		1,472,625
			23,655,229
				TOTAL PREFERRED STOCKS
Software - 2.8%				(Cost $1,311,958)			1,511,965
Adobe Systems	71,207		2,631,811
ANSYSa,c	20,000		853,800		PRINCIPAL
Aspen Technologya	27,100		212,735		AMOUNT
Business Objects ADRa	20,500		828,405	CORPORATE BONDS – 0.1%
†Dendrite Internationala,c	35,000		504,350	†Athena Neurosciences Finance 7.25%
iPassa,c	268,400		1,760,704	Senior Note due 2/21/08	$1,000,000		976,250
JDA Software Groupa	99,900		1,699,299	Dixie Group 7.00%
MRO Softwarea,c	46,000		645,840	Conv. Sub. Deb. due 5/15/12	445,000		427,200
ManTech International Cl. Aa,c	119,400		3,326,484
Manugistics Groupa,c	49,200		86,100	TOTAL CORPORATE BONDS
Novella	20,000		176,600	(Cost $1,213,707)			1,403,450
PLATO Learninga	149,642		1,188,157
Progress Softwarea	30,500		865,590	REPURCHASE AGREEMENTS – 16.2%
SPSSa	179,600		5,555,028	State Street Bank & Trust Company,
Sybasea,c	82,600		1,805,636	4.10% dated 12/30/05, due 1/3/06,
Transaction Systems Architects Cl. Aa	203,150		5,848,689	maturity value $82,000,339 (collateralized
†Verint Systemsa,c	40,000		1,378,800	by obligations of various U.S. Government
				Agencies, valued at $84,015,178)
			29,368,028	(Cost $81,963,000)			81,963,000
Telecommunications - 2.6%				Lehman Brothers (Tri-Party),
ADTRAN	65,000		1,933,100	4.05% dated 12/30/05, due 1/3/06,
Broadwing Corporationa	1,000		6,050	maturity value $85,038,250 (collateralized
Catapult Communicationsa,c	75,100		1,110,729	by obligations of various U.S. Government
†China Techfaith Wireless Communication				Agencies, valued at $86,742,959)
Technology ADRa,c	100,000		1,349,990	(Cost $85,000,000)			85,000,000
Covad Communications Groupa,c	35,000		34,300
Foundry Networksa,c	373,400		5,156,654	TOTAL REPURCHASE AGREEMENTS
Globecomm Systemsa,c	233,700		1,441,929	(Cost $166,963,000)			166,963,000
IDT Corporationa	25,000		289,000
IDT Corporation Cl. Ba,c	65,000		760,500	COLLATERAL RECEIVED FOR SECURITIES LOANED – 7.1%
Level 3 Communicationsa,c	200,000		574,000	U.S. Treasury Bonds
PECO IIa,c	93,600		167,544	5.25%-8.125% due 8/15/19-5/15/30			286,945
Polycoma,c	95,000		1,453,500	Money Market Funds
Scientific-Atlanta	117,300		5,052,111	State Street Navigator Securities Lending
Time Warner Telecom Cl. Aa,c	179,000		1,763,150	Prime Portfolio			73,215,181
Tollgrade Communicationsa	20,000		218,600
†USA Mobilityc	84,500		2,342,340	TOTAL COLLATERAL RECEIVED FOR
West Corporationa	75,000		3,161,250	SECURITIES LOANED
†Yak Communicationsa,c	20,000		63,400	(Cost $73,502,126)			73,502,126
			26,878,147
Total (Cost $170,978,081)			231,945,391

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  25

ROYCE VALUE TRUST	DECEMBER 31, 2005
Schedule of Investments

		VALUE
TOTAL INVESTMENTS – 128.5%
(Cost $965,338,127)	$	1,326,244,831
LIABILITIES LESS CASH
AND OTHER ASSETS – (7.2)%		(74,124,745	)
PREFERRED STOCK – (21.3)%		(220,000,000	)
NET ASSETS APPLICABLE TO
COMMON STOCKHOLDERS – 100.0%	$	1,032,120,086

a	Non-income producing.
b	At December 31, 2005, 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	A portion of these securities were on loan at December 31, 2005. Total market value of loaned securities at December 31, 2005 was $71,476,901.
d	A security for which market quotations are no longer readily available represents 0.1% of net assets. This security has been valued at its fair value under procedures established by the Fund’s Board of Directors.
e	Includes securities first acquired in 2005 and less than 1% of net assets applicable to Common Stockholders.
†	New additions in 2005.
	Bold indicates the Fund’s largest 20 equity holdings in terms of December 31, 2005 market value.

INCOME TAX INFORMATION: The cost of total investments for Federal income tax purposes was $967,562,248. At December 31, 2005, net unrealized appreciation for all securities was $358,682,583, consisting of aggregate gross unrealized appreciation of $390,700,568 and aggregate gross unrealized depreciation of $32,017,985. The primary differences in book and tax basis cost is the timing of the recognition of losses on securities sold and unrealized gains on investments in Passive Foreign Investment Companies.

26  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

ROYCE VALUE TRUST	DECEMBER 31, 2005
Statement of Assets and Liabilities

ASSETS:
Investments at value (including collateral on loaned securities)*
Non-Affiliates (Cost $795,757,459)	$	1,152,896,251
Affiliated Companies (Cost $2,617,668)		6,385,580
Total investments at value		1,159,281,831
Repurchase agreements (at cost and value)		166,963,000
Cash		1,137,297
Receivable for investments sold		4,883,179
Receivable for dividends and interest		782,662
Prepaid expenses		29,550
Total Assets		1,333,077,519
LIABILITIES:
Payable for collateral on loaned securities		73,502,126
Payable for investments purchased		5,583,642
Payable for investment advisory fee		1,204,581
Preferred dividends accrued but not yet declared		288,452
Accrued expenses		378,632
Total Liabilities		80,957,433
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	$	1,032,120,086
ANALYSIS OF NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:
Common Stock paid-in capital – $0.001 par value per share; 54,710,798 shares outstanding (150,000,000 shares authorized)	$	664,322,777
Undistributed net investment income (loss)		321,412
Accumulated net realized gain (loss) on investments		6,857,642
Net unrealized appreciation (depreciation) on investments		360,906,704
Preferred dividends accrued but not yet declared		(288,449	)
Net Assets applicable to Common Stockholders (net asset value per share – $18.87)	$	1,032,120,086
*Investments at identified cost (including $73,502,126 of collateral on loaned securities)	$	798,375,127

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  27

ROYCE VALUE TRUST YEAR ENDED DECEMBER 31, 2005

Statement of Operations

INVESTMENT INCOME:
Income:
Dividends
Non-Affiliates	$	11,526,693
Interest		2,999,575
Securities lending		297,885
Total income		14,824,153
Expenses:
Investment advisory fees		13,360,367
Stockholder reports		478,219
Custody and transfer agent fees		275,453
Directors’ fees		114,805
Administrative and office facilities expenses		99,404
Professional fees		54,394
Other expenses		120,099
Total expenses		14,502,741
Net investment income (loss)		321,412
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments
Non-Affiliates		104,573,195
Affiliated Companies		(5,394,384	)
Net change in unrealized appreciation (depreciation) on investments		(4,983,024	)
Net realized and unrealized gain (loss) on investments		94,195,787
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM INVESTMENT OPERATIONS		94,517,199
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS		(12,980,000	)
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS RESULTING FROM INVESTMENT OPERATIONS	$	81,537,199

28   |   THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

ROYCE VALUE TRUST

Statement of Changes in Net Assets

		Year ended			Year ended
		12/31/05			12/31/04
INVESTMENT OPERATIONS:
Net investment income (loss)	$	321,412		$	(4,450,007	)
Net realized gain (loss) on investments		99,178,811			108,080,947
Net change in unrealized appreciation (depreciation) on investments		(4,983,024	)		87,658,900
Net increase (decrease) in net assets resulting from investment operations		94,517,199			191,289,840
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:
Net realized gain on investments		(12,980,000	)		(12,980,000	)
Total distributions to Preferred Stockholders		(12,980,000	)		(12,980,000	)
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS RESULTING FROM INVESTMENT OPERATIONS		81,537,199			178,309,840
DISTRIBUTIONS TO COMMON STOCKHOLDERS:
Net realized gain on investments		(85,780,292	)		(78,920,089	)
Total distributions to Common Stockholders		(85,780,292	)		(78,920,089	)
CAPITAL STOCK TRANSACTIONS:
Reinvestment of distributions to Common Stockholders		43,058,750			43,141,563
Total capital stock transactions		43,058,750			43,141,563
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS		38,815,657			142,531,314
NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:
Beginning of year		993,304,429			850,773,115
End of year (including undistributed net investment income of $321,412 at 12/31/05)	$	1,032,120,086		$	993,304,429

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. THE ROYCE FUNDS 2005 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.

	Years ended December 31,
		2005		2004		2003		2002		2001
NET ASSET VALUE, BEGINNING OF PERIOD		$18.95		$17.03		$13.22		$17.31		$16.56
INVESTMENT OPERATIONS:
Net investment income (loss)		0.01		(0.08	)	(0.05	)	(0.02	)	0.05
Net realized and unrealized gain (loss) on investments		1.75		3.81		5.64		(2.25	)	2.58
Total investment operations		1.76		3.73		5.59		(2.27	)	2.63
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:
Net investment income		–		–		–		(0.01	)	(0.01	)
Net realized gain on investments		(0.24	)	(0.26	)	(0.26	)	(0.28	)	(0.30	)
Total distributions to Preferred Stockholders		(0.24	)	(0.26	)	(0.26	)	(0.29	)	(0.31	)
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS RESULTING FROM INVESTMENT OPERATIONS		1.52		3.47		5.33		(2.56	)	2.32
DISTRIBUTIONS TO COMMON STOCKHOLDERS:
Net investment income		–		–		–		(0.07	)	(0.05	)
Net realized gain on investments		(1.61	)	(1.55	)	(1.30	)	(1.44	)	(1.44	)
Total distributions to Common Stockholders		(1.61	)	(1.55	)	(1.30	)	(1.51	)	(1.49	)
CAPITAL STOCK TRANSACTIONS:
Effect of reinvestment of distributions by Common Stockholders		0.01		0.00		(0.00	)	(0.02	)	(0.08	)
Effect of rights offering and Preferred Stock offering		–		–		(0.22	)	–		–
Total capital stock transactions		0.01		0.00		(0.22	)	(0.02	)	(0.08	)
NET ASSET VALUE, END OF PERIOD		$18.87		$18.95		$17.03		$13.22		$17.31
MARKET VALUE, END OF PERIOD		$20.08		$20.44		$17.21		$13.25		$15.72
TOTAL RETURN (a):
Market Value		6.95	%	29.60	%	41.96	%	(6.87	)%	20.03	%
Net Asset Value		8.41	%	21.42	%	40.80	%	(15.61	)%	15.23	%
RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:
Total expenses (b,c)		1.49	%	1.51	%	1.49	%	1.72	%	1.61	%
Management fee expense		1.37	%	1.39	%	1.34	%	1.56	%	1.45	%
Other operating expenses		0.12	%	0.12	%	0.15	%	0.16	%	0.16	%
Net investment income (loss)		0.03	%	(0.50	)%	(0.36	)%	(0.09	)%	0.35	%
SUPPLEMENTAL DATA:
Net Assets Applicable to Common Stockholders,
End of Period (in thousands)		$1,032,120		$993,304		$850,773		$560,776		$689,141
Liquidation Value of Preferred Stock,
End of Period (in thousands)		$220,000		$220,000		$220,000		$160,000		$160,000
Portfolio Turnover Rate		31	%	30	%	23	%	35	%	30	%
PREFERRED STOCK:
Total shares outstanding		8,800,000		8,800,000		8,800,000		6,400,000		6,400,000
Asset coverage per share		$142.29		$137.88		$121.68		$112.62		$132.68
Liquidation preference per share		$25.00		$25.00		$25.00		$25.00		$25.00
Average market value per share (d):
5.90% Cumulative		$24.75		$24.50		$25.04		–		–
7.80% Cumulative		–		–		$25.87		$26.37		$25.70
7.30% Tax-Advantaged Cumulative		–		–		$25.53		$25.82		$25.37

(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 1.22%, 1.21%, 1.19%, 1.38% and 1.30% for the periods ended December 31, 2005, 2004, 2003, 2002 and 2001, 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%, 1.82% and 1.65% for the periods ended December 31, 2003, 2002 and 2001, respectively.
(d)	The average of month-end market values during the period that the Preferred Stock was outstanding.

30   |   THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS

ROYCE VALUE TRUST DECEMBER 31, 2005

Notes to Financial Statements

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 (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange or Nasdaq 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 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. 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.

Investment Transactions and Related Investment Income:
      Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date and any non-cash dividend income is recorded at the fair market value of the securities received. Interest income is recorded on an accrual basis. 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.

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 quarterend 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 recorded on an accrual basis and paid quarterly. 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 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.

Capital Stock:
      The Fund issued 2,294,908 and 2,459,541 shares of Common Stock as reinvestment of distributions by Common Stockholders for the years ended December 31, 2005 and 2004, respectively.

THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  31

ROYCE VALUE TRUST

Notes to Financial Statements (continued)

      At December 31, 2005, 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 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 12 rolling 60-month periods ending in 2005, the investment performance of the Fund exceeded the investment performance of the S&P 600 by 7% to 23%. Accordingly, the investment advisory fee consisted of a Basic Fee of $9,219,099 and an upward adjustment of $4,141,268 for performance of the Fund above that of the S&P 600. For the year ended December 31, 2005, the Fund accrued and paid Royce advisory fees totaling $13,360,367.
      The Fund paid Legg Mason Wood Walker, Incorporated, (“Legg Mason”), an affiliate of Royce, $4,408 in brokerage commissions for security transactions during the year ended December 31, 2005.

32  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS

DECEMBER 31, 2005

Distributions to Stockholders:

    The tax character of distributions paid to stockholders during 2005 and 2004 was as follows:

Distributions paid from:		2005		2004
Ordinary income	$	11,811,731	$	—
Long-term capital gain		86,948,561		91,900,089
	$	98,760,292	$	91,900,089

    As of December 31, 2005, the tax basis components of distributable earnings included in stockholders’ equity were as follows:

Undistributed net investment income	$	1,599,418
Undistributed long-term capital gain		7,803,757
Unrealized appreciation		358,682,583
Accrued preferred distributions		(288,449	)
	$	367,797,309

    The difference between book basis and tax basis unrealized appreciation is attributable primarily to the tax deferral on wash sales and the unrealized gains on investments in Passive Foreign Investment Companies.

    For financial reporting purposes, capital accounts and distributions to stockholders are adjusted to reflect the tax character of permanent book / tax differences. For the year ended December 31, 2005, the Fund recorded the following permanent reclassifications, which relate primarily to the current net operating losses. Results of operations and net assets were not affected by these reclassifications.

Undistributed		Accumulated
Net Investment		Net Realized			Paid-in
Income		Gain (Loss)			Capital
$	—	$	(178,960	)	$	178,960

Purchases and Sales of Investment Securities:

    For the year ended December 31, 2005, the cost of purchases and proceeds from sales of investment securities, other than short-term securities and collateral received for securities loaned, amounted to $350,628,407 and $495,640,973, 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. The Fund effected the following transactions in shares of such companies during the year ended December 31, 2005:

	Shares		Market Value		Cost of		Cost of		Realized			Dividend		Shares		Market Value
Affiliated Company	12/31/04		12/31/04		Purchases		Sales		Gain (Loss)			Income		12/31/05		12/31/05
Falcon Products*		941,600	$	197,736		–	$	5,418,871	$	(5,394,384	)		–
Peerless Manufacturing		158,600		2,299,700		–		–		–			–		158,600	$	2,775,500
Synalloy Corporation		345,000		3,415,500		–		–					–		345,000		3,610,080
			$	5,912,936					$	(5,394,384	)		–			$	6,385,580
* Not an Affiliated Company at December 31, 2005.

THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  33

ROYCE VALUE TRUST

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Royce Value Trust, Inc.

     We have audited the accompanying statement of assets and liabilities of Royce Value Trust, Inc. (“Fund”), including the schedule of investments, as of December 31, 2005, and the related statement of operations for the year then ended, and the statement of changes in net assets for the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (U.S.). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2005, by correspondence with the custodian and brokers or by other appropriate audit procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above and audited by us present fairly, in all material respects, the financial position of Royce Value Trust, Inc. at December 31, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

TAIT, WELLER & BAKER LLP

Philadelphia, PA
January 20, 2006

34  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS

ROYCE MICRO-CAP TRUST DECEMBER 31, 2005

Schedule of Investments

	SHARES		VALUE		SHARES		VALUE
COMMON STOCKS – 107.4%				Restaurants and Lodgings - 0.1%
				Benihana Cl. Aa	800	$	18,432
Consumer Products – 5.7%				California Pizza Kitchena,b	2,100		67,137
Apparel and Shoes - 2.4%
†Cherokee	42,300	$	1,454,697				85,569
Delta Apparel	146,400		2,276,520
†Hartmarx Corporationa,b	50,000		390,500	Retail Stores - 4.3%
Kleinert’sa,d	14,200		0	†A.C. Moore Arts & Craftsa,b	7,600		110,580
Steven Madden	14,500		423,835	America’s Car-Marta,b	113,000		1,866,760
Marisa Christinaa,b	76,600		46,726	Buckle (The)	35,500		1,144,520
Skechers U.S.A. Cl. Aa	10,000		153,200	Cachea	3,200		55,424
Stride Rite	10,000		135,600	Casual Male Retail Groupa	2,000		12,260
Weyco Group	120,000		2,292,000	Cato Corporation Cl. A	71,850		1,541,182
				Charlotte Russe Holdinga,b	1,700		35,411
			7,173,078	†Cost Plusa,b	31,477		539,831
				Deb Shops	19,900		591,627
Collectibles - 0.4%				La Senza Corporation	99,900		1,632,844
Topps Company (The)	148,500		1,103,355	Shoe Carnivala	11,000		241,120
				Stein Mart	148,900		2,702,535
Food/Beverage/Tobacco - 0.4%				United Retail Groupa	60,600		796,890
Green Mountain Coffee Roastersa,b	26,600		1,079,960	†West Marinea,b	74,000		1,034,520
Nutrition 21a	40,000		25,680	†Wild Oats Marketsa,b	32,000		386,560
			1,105,640				12,692,064
Home Furnishing and Appliances - 0.4%				Other Consumer Services - 0.4%
Lifetime Brands	52,554		1,086,291	Ambassadors Group	15,000		343,350
Stanley Furniture Company	5,000		115,900	Ambassadors International	6,100		94,550
				Autobytela,b	20,000		98,800
			1,202,191	†Escala Groupa,b	26,000		527,280
Publishing - 0.1%							1,063,980
Educational Development	10,600		85,860
				Total (Cost $9,486,837)			16,107,698
Sports and Recreation - 0.6%
Monaco Coach	73,900		982,870	Diversified Investment Companies – 2.1%
National R.V. Holdingsa	31,800		200,022	Closed-End Mutual Funds - 2.1%
†Orange 21a,b	7,400		28,120	ASA Bermuda	81,500		4,483,315
†Sturm, Ruger & Company	95,000		665,950	Central Fund of Canada Cl. A	237,000		1,613,970
			1,876,962	Total (Cost $4,055,600)			6,097,285
Other Consumer Products - 1.4%				Financial Intermediaries – 7.0%
Burnham Holdings Cl. A	79,500		1,701,300	Banking - 3.0%
Cobra Electronicsa	10,000		133,700	Abigail Adams National Bancorpc	244,400		3,421,624
Cross (A. T.) Company Cl. Aa	100,000		405,000	Arrow Financial	14,322		374,520
JAKKS Pacifica	30,000		628,200	Bancorp (The)a,b	51,380		873,460
Lazare Kaplan Internationala	151,700		1,193,879	†Eurobancsharesa,b	32,000		453,440
†Sonic Solutionsa,b	6,000		90,660	First National Lincoln	40,200		706,837
				FirstBank NW	4,930		156,873
			4,152,739	Lakeland Financial	22,500		908,550
				Meta Financial Group	44,800		907,200
Total (Cost $11,686,794)			16,699,825	Queen City Investmentsa	948		801,060
				Sterling Bancorp	22,869		451,205
Consumer Services – 5.5%
Direct Marketing - 0.1%							9,054,769
Sportsman’s Guide (The)a	6,000		143,100
ValueVision Media Cl. Aa,b	5,000		63,000	Insurance - 3.1%
				American Safety Insurance Holdingsa	20,000		334,600
			206,100	Argonaut Groupa	30,900		1,012,593
				First Acceptancea	258,405		2,658,987
Leisure and Entertainment - 0.1%				Independence Holding	33,534		655,590
IMAX Corporationa,b	25,000		176,500	NYMAGIC	65,400		1,621,266
†Mikohn Gaminga,b	9,500		93,765	Navigators Groupa	37,200		1,622,292
Multimedia Gamesa,b	5,000		46,250	†Quanta Capital Holdingsa	100,000		510,000
Singing Machine Company (The)a,b	5,000		1,850	Wellington Underwriting	444,712		742,174
TiVoa,b	20,000		102,400
							9,157,502
			420,765
Media and Broadcasting - 0.5%
†Nelson (Thomas)	28,300		697,595
Outdoor Channel Holdingsa,b	69,750		941,625
			1,639,220

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS   |   35

ROYCE MICRO-CAP TRUST

Schedule of Investments

	SHARES		VALUE		SHARES		VALUE
Financial Intermediaries (continued)				†Monogram Biosciencesa,b	55,000	$	102,850
Real Estate Investment Trusts - 0.3%				Myriad Geneticsa,b	26,500		551,200
†Bimini Mortgage Management Cl. A	99,000	$	895,950	Nabi Biopharmaceuticalsa,b	5,000		16,900
				†Nastech Pharmaceutical Companya,b	3,700		54,464
Securities Brokers - 0.5%				†Neurogen Corporationa,b	30,000		197,700
First Albany	45,000		312,750	Nuveloa	52,000		421,720
Sanders Morris Harris Group	21,000		344,190	Oncolytics Biotecha,b	41,000		191,060
Stifel Financiala,b	21,233		798,148	Orchid Cellmarka,b	78,000		592,800
				†Pharmacopeia Drug Discoverya,b	25,000		89,000
			1,455,088	†Pharmacyclicsa	138,000		489,900
				SFBC Internationala,b	25,000		400,250
Other Financial Intermediaries - 0.1%				Sangamo BioSciencesa	10,000		40,300
Electronic Clearing Housea	20,000		199,400	†Senesco Technologiesa,b	25,000		35,500
				†Tercicaa,b	61,900		443,823
Total (Cost $14,925,618)			20,762,709	Theragenics Corporationa	145,800		440,316
				†Trimerisa,b	30,000		344,700
Financial Services – 3.0%
Investment Management - 2.4%							14,212,815
†ADDENDA Capital	48,000		1,298,636
Epoch Holdinga	218,300		1,287,970	Health Services - 2.0%
†International Assets Holdinga	169,000		1,537,900	ATC Healthcare Cl. Aa	35,000		11,550
MVC Capital	211,200		2,251,392	Albany Molecular Researcha,b	40,000		486,000
†NGP Capital Resources Company	50,000		656,500	Bio-Imaging Technologiesa,b	42,400		135,680
				Covalent Groupa	25,000		54,500
			7,032,398	Gentiva Health Servicesa	23,000		339,020
				HMS Holdingsa	71,900		550,035
Other Financial Services - 0.6%				Horizon Healtha	50,000		1,131,500
Clark	20,900		276,925	MedCath Corporationa,b	18,000		333,900
†MarketAxess Holdingsa	123,700		1,413,891	†Mediware Information Systemsa	70,000		842,800
MicroFinancial	10,000		39,400	National Home Health Care	18,078		176,441
				On Assignmenta	80,100		873,891
			1,730,216	Quovadxa	5,000		12,050
				RehabCare Groupa	22,000		444,400
Total (Cost $7,377,970)			8,762,614	Sun Healthcare Groupa	51,000		337,110
				U.S. Physical Therapya	10,000		184,700
Health – 14.7%
Commercial Services -1.4%							5,913,577
Discovery Partners Internationala	35,000		92,750
First Consulting Groupa	274,700		1,612,489	Medical Products and Devices - 5.8%
ICON ADRa	800		32,912	Adeza Biomedicala,b	20,000		421,000
PAREXEL Internationala,b	121,400		2,459,564	Allied Healthcare Productsa	253,500		1,455,090
				†AngioDynamicsa,b	14,000		357,420
			4,197,715	Anika Therapeuticsa	24,000		280,560
				Bruker BioSciencesa,b	187,200		909,792
Drugs and Biotech - 4.9%				Caliper Life Sciencesa	52,100		306,348
Allos Therapeuticsa,b	233,600		502,240	†Cardiac Sciencea	29,947		271,020
†Alnylam Pharmaceuticalsa,b	3,800		50,768	CONMED Corporationa,b	3,900		92,274
†Anormeda	280,600		1,164,490	Del Global Technologiesa	168,279		546,907
Antigenicsa,b	70,000		333,200	EPIX Pharmaceuticalsa,b	49,000		197,960
†Axonyxa	50,000		41,500	Endologixa	7,500		51,750
†Barrier Therapeuticsa,b	14,300		117,260	Exactecha,b	113,200		1,295,008
CancerVax Corporationa,b	43,000		59,340	†Kensey Nasha,b	28,000		616,840
†Caraco Pharmaceutical Laboratoriesa	125,450		1,126,541	Medical Action Industriesa	83,500		1,706,740
Cardiome Pharmaa	56,000		565,600	†Merit Medical Systemsa,b	5,700		69,198
Cell Genesysa,b	58,000		343,940	Molecular Devicesa,b	25,500		737,715
Cerus Corporationa	84,600		858,690	NMT Medicala	19,500		312,000
†CollaGenex Pharmaceuticalsa,b	25,000		301,750	Neurometrixa,b	21,500		586,520
†Dendreon Corporationa,b	10,000		54,200	Orthofix Internationala	28,000		1,116,920
Durect Corporationa	44,100		223,587	OrthoLogic Corporationa	85,000		416,500
DUSA Pharmaceuticalsa	26,400		284,328	PLC Systemsa	105,200		52,600
Emisphere Technologiesa	163,200		708,288	Possis Medicala,b	29,900		297,505
Gene Logica	241,579		809,290	Schick Technologiesa	25,000		823,975
Genitope Corporationa,b	3,000		23,850
Geron Corporationa,b	6,000		51,660
ImmunoGena,b	44,000		225,720
†Mannkind Corporationa,b	42,000		472,920
Maxygena,b	5,000		37,550
Momenta Pharmaceuticalsa,b	65,500		1,443,620

36   |   THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

DECEMBER 31, 2005

	SHARES		VALUE		SHARES		VALUE
Health (continued)				Lindsay Manufacturing	10,000	$	192,300
Medical Products and Devices (continued)				MTS Systems	10,000		346,400
Synovis Life Technologiesa,b	23,000	$	230,690	Mueller (Paul) Company	9,650		272,613
Urologixa,b	127,000		490,220	Pason Systems	121,200		3,013,188
Utah Medical Products	42,300		1,355,292	Sun Hydraulics	38,950		752,903
Young Innovations	61,450		2,094,216	†Tennant Company	44,100		2,293,200
			17,092,060				13,916,826
Personal Care - 0.6%				Metal Fabrication and Distribution - 1.9%
CCA Industries	51,040		472,120	Aleris Internationala,b	4,075		131,378
Helen of Troya,b	20,000		322,200	Encore Wirea,b	15,000		341,400
Lifeline Systemsa,b	20,050		733,028	†Harris Steel Group	50,000		1,122,629
Nutraceutical Internationala	15,000		203,250	Haynes Internationala	23,800		559,300
				Insteel Industries	56,000		927,360
			1,730,598	NN	176,900		1,875,140
				†Novamerican Steela	2,500		98,403
Total (Cost $32,672,334)			43,146,765	Oregon Steel Millsa	3,300		97,086
				Universal Stainless & Alloy Productsa	36,100		541,500
Industrial Products – 16.0%
Automotive - 0.7%							5,694,196
†IMPCO Technologiesa,b	30,500		156,465
LKQ Corporationa	5,700		197,334	Paper and Packaging - 0.1%
Spartan Motors	2,800		28,812	Mod-Pac Corporationa,b	23,200		260,768
Strattec Securitya	28,300		1,143,886
Wescast Industries Cl. A	37,900		572,844	Pumps, Valves and Bearings - 0.2%
				CIRCOR International	28,000		718,480
			2,099,341
				Specialty Chemicals and Materials - 2.0%
Building Systems and Components - 1.4%				Aceto Corporation	334,419		2,200,477
Aaona	58,100		1,041,152	Balchem Corporation	15,000		447,150
†AZZa	45,600		822,624	CFC Internationala,b	40,600		570,065
†Craftmade International	30,000		600,300	Hawkins	122,667		1,716,111
†Flanders Corporationa,b	46,000		559,360	NuCo2a,b	20,000		557,600
LSI Industries	63,812		999,296	Park Electrochemical	10,000		259,800
Modtech Holdingsa	3,800		35,492
							5,751,203
			4,058,224
				Textiles - 0.1%
Construction Materials - 1.5%				Fab Industriesd	56,400		177,660
Ash Grove Cement Company	8,000		1,440,000
Monarch Cement	50,410		1,166,992	Other Industrial Products - 1.9%
Synalloy Corporationa	171,000		1,789,344	Color Kineticsa,b	50,000		719,500
				Eastern Company (The)	26,500		517,015
			4,396,336	Maxwell Technologiesa	15,300		216,801
				Myers Industries	32,276		470,584
Industrial Components - 1.5%				Peerless Manufacturinga	42,200		738,500
American Superconductera,b	67,000		527,290	Quixote Corporation	35,500		702,900
Bel Fuse Cl. A	55,200		1,380,000	Raven Industries	73,000		2,106,050
C & D Technologies	53,000		403,860
Ladish Companya	10,000		223,500				5,471,350
Plug Powera,b	1,370		7,028
Powell Industriesa,b	50,300		903,388	Total (Cost $33,903,554)			46,946,543
Scientific Technologiesa	10,700		45,703
Tech/Ops Sevcon	76,200		415,290	Industrial Services – 13.7%
II-VIa	20,000		357,400	Advertising and Publishing - 0.2%
Woodhead Industries	10,000		138,700	†Greenfield Onlinea,b	20,000		117,200
				NetRatingsa	50,000		616,500
			4,402,159
							733,700
Machinery - 4.7%
Alamo Group	38,600		791,300	Commercial Services - 5.4%
Ampco-Pittsburgh	96,900		1,406,019	Administaff	10,000		420,500
Astec Industriesa	40,200		1,312,932	American Bank Note Holographicsa	242,200		1,501,640
†Global Power Equipment Groupa,b	55,100		249,052	BB Holdings	390,000		2,640,300
Gorman-Rupp Company	3,375		74,621	†CBIZa,b	87,000		523,740
Hardinge	117,000		2,018,250	Collectors Universea	11,700		188,604
Hurco Companiesa,b	31,400		967,748	CorVel Corporationa,b	28,450		540,266
Keithley Instruments	14,000		195,720	Exponenta	68,300		1,938,354
LeCroy Corporationa	2,000		30,580	Geo Group (The)a	51,200		1,174,016
				iGATE Corporationa,b	273,400		1,328,724

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS   |   37

ROYCE MICRO-CAP TRUST

Schedule of Investments

	SHARES	VALUE			SHARES	VALUE
Industrial Services (continued)				Other Industrial Services - 0.3%
Commercial Services (continued)				Landauer	21,300	$	981,717
Kforcea,b	55,000	$	613,800	Teama	2,200		46,442
NCO Groupa,b	20,000		338,400
†PDIa	15,200		205,200				1,028,159
RCM Technologiesa	85,100		434,010
†Renaissance Learning	2,365		44,722	Total (Cost $23,380,147)			40,222,186
SM&Aa,b	31,300		257,599
†Senomyxa,b	47,000		569,640	Natural Resources – 9.5%
†Stanteca	2,819		96,128	Energy Services - 3.4%
TRC Companiesa,b	5,600		61,320	Calfrac Well Services	1,000		34,668
Volt Information Sciencesa,b	64,100		1,219,182	Carbo Ceramics	18,750		1,059,750
Westaffa	362,500		1,794,375	Conrad Industriesa	154,000		261,800
				Dawson Geophysicala	3,400		104,788
			15,890,520	Dril-Quipa,b	62,500		2,950,000
				Enerflex Systems	5,000		115,446
Engineering and Construction - 1.0%				Gulf Island Fabrication	45,400		1,103,674
Devcon Internationala,b	21,700		224,378	GulfMark Offshorea,b	65,200		1,931,224
Insituform Technologies Cl. Aa,b	80,300		1,555,411	Input/Outputa,b	118,500		833,055
Skyline Corporation	32,100		1,168,440	Valley National Gases	30,100		589,960
				Willbros Groupa,b	77,500		1,119,100
			2,948,229
							10,103,465
Food and Tobacco Processors - 1.2%
Galaxy Nutritional Foodsa	159,450		199,313	Oil and Gas - 2.5%
ML Macadamia Orchards L.P.	120,200		688,746	ATP Oil & Gasa	6,300		233,163
Omega Proteina	9,600		64,416	Bonavista Energy Trust	88,000		2,884,253
Seneca Foods Cl. Aa,b	62,500		1,203,125	†CE Franklina	52,100		723,669
Seneca Foods Cl. Ba	42,500		775,625	†Cano Petroleuma	115,200		887,040
Sunoptaa	90,000		473,400	Contango Oil & Gas Companya	10,000		114,400
				Edge Petroleuma	3,500		87,185
			3,404,625	Nuvista Energya	121,000		1,878,833
				Pioneer Drilling Companya	9,200		164,956
Industrial Distribution - 1.0%				Savanna Energy Servicesa	2,500		61,508
Central Steel & Wire	2,437		1,393,964	VAALCO Energya	61,500		260,760
Elamexa	60,200		90,300
Lawson Products	19,500		735,930				7,295,767
Strategic Distributiona	59,690		577,799
				Precious Metals and Mining - 1.3%
			2,797,993	Apex Silver Minesa	76,100		1,209,990
				Aurizon Minesa	237,000		357,870
Printing - 1.0%				Brush Engineered Materialsa,b	15,500		246,450
Bowne & Co.	66,500		986,860	Gammon Lake Resourcesa	23,000		273,700
Champion Industries	23,500		103,400	Metallica Resourcesa	281,300		523,218
Courier Corporation	22,950		788,103	†Minefinders Corporationa	116,000		596,240
Ennis	9,700		176,249	Nevsun Resourcesa	5,000		10,450
Schawk	38,900		807,175	Northern Orion Resourcesa	53,400		176,754
				NovaGold Resourcesa,b	13,400		121,940
			2,861,787	Spur Venturesa	30,000		33,292
				Western Silvera	11,800		132,868
Transportation and Logistics - 3.6%
AirNet Systemsa	180,000		613,800				3,682,772
Atlas Air Worldwide Holdingsa	11,500		511,750
Forward Air	65,700		2,407,905	Real Estate 1.3%
Frozen Food Express Industriesa	92,000		1,014,760	HomeFed Corporationa	54,852		3,675,084
Hub Group Cl. Aa	11,000		388,850	Kennedy-Wilsona	21,500		290,250
Knight Transportation	31,500		652,995
MAIR Holdingsa,b	8,600		40,506				3,965,334
Marten Transporta,b	4,050		73,791
Pacific CMAa,b	200,000		130,000	Other Natural Resources - 1.0%
Patriot Transportation Holdinga	15,700		1,018,616	PICO Holdingsa	55,700		1,796,882
†Universal Truckload Servicesa	154,200		3,546,600	Pope Resources L.P.	33,000		1,023,660
Vitran Corporation Cl. Aa	8,000		157,600
							2,820,542
			10,557,173
				Total (Cost $10,819,994)			27,867,880

38  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

DECEMBER 31, 2005

	SHARES	VALUE			SHARES	VALUE
Technology – 25.4%				†Provide Commercea	5,000	$	165,550
Aerospace and Defense - 2.6%				RealNetworksa,b	65,700		509,832
Allied Defense Group (The)a	60,900	$	1,386,693	Stamps.coma	21,200		486,752
Astronics Corporationa	26,400		279,840	Stellenta,b	15,000		148,950
†Axsys Technologiesa,b	4,700		84,365	Varsity Groupa,b	89,400		379,950
Ducommuna	84,500		1,804,920
HEICO Corporation	41,600		1,076,608				3,983,998
HEICO Corporation Cl. A	24,160		495,763
Herley Industriesa,b	81,000		1,337,310	IT Services - 5.4%
Integral Systems	58,500		1,103,310	CIBERa,b	182,662		1,205,569
SIFCO Industriesa	45,800		178,620	Computer Task Groupa	381,100		1,505,345
				Covansys Corporationa	227,500		3,096,275
			7,747,429	DiamondCluster Internationala	138,100		1,096,514
				Forrester Researcha	105,500		1,978,125
Components and Systems - 5.1%				Rainmaker Systemsa	2,000		5,660
Advanced Photonix Cl. Aa,b	147,900		408,204	Sapient Corporationa,b	500,000		2,845,000
Belden CDT	15,000		366,450	Syntel	54,300		1,131,069
CSPa	122,581		849,486	Tier Technologies Cl. Ba	6,800		49,912
Dot Hill Systemsa,b	2,000		13,860	TriZetto Group (The)a,b	182,300		3,097,277
Excel Technologya	92,900		2,209,162
Giga-tronicsa	3,200		7,968				16,010,746
†Hypercom Corporationa,b	50,000		319,500
International DisplayWorksa,b	108,500		644,490	Semiconductors and Equipment - 2.2%
Kronosa,b	17,375		727,318	ADE Corporationa	23,000		553,380
Lowrance Electronics	91,000		2,385,110	Advanced Energy Industriesa,b	48,800		577,304
Merix Corporationa	7,000		50,610	California Micro Devicesa	16,700		108,717
Metrologic Instrumentsa,b	2,900		55,854	Cascade Microtecha	5,000		63,000
Mobility Electronicsa,b	1,000		9,660	†Catalyst Semiconductora	139,700		677,545
MOCON	15,600		145,392	CyberOptics Corporationa,b	39,800		536,504
Neoware Systemsa,b	2,600		60,580	ESS Technologya,b	25,000		85,750
Performance Technologiesa,b	117,250		960,277	Electroglasa,b	281,700		816,930
Plexus Corporationa	26,500		602,610	Exar Corporationa	41,208		515,924
Richardson Electronics	202,100		1,465,225	Integrated Silicon Solutiona	15,000		96,600
†Rimage Corporationa,b	20,000		579,600	Intevaca,b	40,550		535,260
SafeNeta	11,781		379,584	†MIPS Technologiesa,b	10,000		56,800
SimpleTecha	225,700		850,889	PDF Solutionsa,b	29,000		471,250
TTM Technologiesa	125,000		1,175,000	Photronicsa,b	29,750		448,035
TransAct Technologiesa	78,600		620,940	QuickLogic Corporationa	20,000		79,000
Zomaxa	20,000		41,600	†Rudolph Technologiesa,b	38,000		489,440
				Semitoola,b	25,500		277,440
			14,929,369	†Virage Logica,b	4,000		39,520
				White Electronic Designsa	10,000		51,100
Distribution - 0.8%
Agilysys	90,000		1,639,800				6,479,499
Bell Industriesa	85,700		223,677
Jaco Electronicsa	30,900		105,369	Software - 4.9%
Nu Horizons Electronicsa	40,000		404,000	Aladdin Knowledge Systemsa	43,300		745,626
PC Malla,b	6,000		33,960	ANSYSa,b	30,800		1,314,852
Pomeroy IT Solutionsa	6,900		57,615	Applixa	20,000		146,000
				ILOG ADRa,b	35,000		604,800
			2,464,421	Indus Internationala,b	19,200		60,288
				InterVideoa	24,500		258,475
Internet Software and Services - 1.4%				iPassa	190,000		1,246,400
†Answers Corporationa,b	4,100		47,015	JDA Software Groupa,b	59,500		1,012,095
CryptoLogic	24,900		487,791	MSC.Softwarea	12,700		215,900
Digitasa,b	98,840		1,237,477	†Majesco Entertainment Companya	2,500		2,925
†eCOST.coma,b	7,242		8,401	MapInfoa,b	5,000		63,050
EDGAR Onlinea,b	83,600		152,152	†McDATA Corporation Cl. Aa,b	18,199		69,156
Inforte Corporationa	11,400		45,030	MetaSolva	5,800		16,820
LookSmarta	4,000		15,040	MIND C.T.I.	20,000		52,400
MIVAa	10,000		49,500	Pegasystemsa	320,200		2,340,662
NICa	26,800		165,088	†Phase Forwarda,b	43,000		419,250
Packeteera,b	11,000		85,470

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  39

ROYCE MICRO-CAP TRUST DECEMBER 31, 2005

Schedule of Investments

	SHARES	VALUE			SHARES	VALUE
Technology (continued)				TOTAL COMMON STOCKS
Software (continued)				(Cost $208,992,798)		$	315,599,914
SPSSa	41,800	$	1,292,874
SeaChange Internationala,b	5,000		39,500	PREFERRED STOCK – 0.5%
†TeleCommunication Systems Cl. Aa,b	158,600		348,920	Seneca Foods Conv.a	75,409		1,432,771
Transaction Systems Architects Cl. Aa	140,100		4,033,479
†Unica Corporationa,b	7,500		90,375	TOTAL PREFERRED STOCK
				(Cost $943,607)			1,432,771
			14,373,847
				REPURCHASE AGREEMENT – 12.2%
Telecommunications - 3.0%				State Street Bank & Trust Company,
Anarena	24,300		379,809	4.10% dated 12/30/05, due 1/3/06,
C-COR.neta	5,000		24,300	maturity value $35,802,303 (collateralized
Captarisa	67,800		250,182	by obligations of various U.S. Government
†Catapult Communicationsa,b	5,000		73,950	Agencies, valued at $36,685,000)
Centillium Communicationsa	11,000		38,500	(Cost $35,786,000)			35,786,000
†Channell Commerciala	71,100		352,940
Communications Systems	87,200		1,070,816	COLLATERAL RECEIVED FOR SECURITIES LOANED – 9.2%
†Ditech Communicationsa,b	20,000		167,000	Money Market Funds
Globecomm Systemsa	6,300		38,871	State Street Navigator Securities Lending
†Intervoicea,b	58,000		461,680	Prime Portfolio
North Pittsburgh Systems	15,700		296,259	(Cost $26,979,986)			26,979,986
†Novatel Wirelessa,b	29,000		351,190
PC-Tela	47,100		412,596	TOTAL INVESTMENTS – 129.3%
†Powerwave Technologiesa,b	20,315		255,360	(Cost $272,702,391)			379,798,671
Radyne ComStreama	47,000		684,790
SpectraLink Corporation	57,000		676,590	LIABILITIES LESS CASH
†Symmetricoma,b	87,482		740,973	AND OTHER ASSETS – (8.9)%			(26,079,474	)
ViaSata,b	91,812		2,454,135
				PREFERRED STOCK – (20.4)%			(60,000,000	)
			8,729,941
				NET ASSETS APPLICABLE TO
Total (Cost $47,669,006)			74,719,250	COMMON STOCKHOLDERS – 100.0%		$	293,719,197
Miscellaneous(e) – 4.8%
Total (Cost $13,014,944)			14,267,159

a	Non-income producing.
b	A portion of these securities were on loan at December 31, 2005. Total market value of loaned securities at December 31, 2005 was $25,935,486.
c	At December 31, 2005, 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.
d	Securities for which market quotations are no longer readily available represent 0.06% 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 2005 and less than 1% of net assets applicable to Common Stockholders.
†	New additions in 2005.
	Bold indicates the Fund’s largest 20 equity holdings in terms of December 31, 2005 market value.
INCOME TAX INFORMATION: The cost of total investments for Federal income tax purposes was $275,046,548. At December 31, 2005, net unrealized appreciation for all securities was $104,752,123, consisting of aggregate gross unrealized appreciation of $113,333,505 and aggregate gross unrealized depreciation of $8,581,382. The primary differences in book and tax basis cost is the timing of the recognition of losses on securities sold and unrealized gains on investments in Passive Foreign Investment Companies for book and tax purposes.

40  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

ROYCE MICRO-CAP TRUST DECEMBER 31, 2005

Statement of Assets and Liabilities

ASSETS:
Investments at value (including collateral on loaned securities)*
Non-Affiliates (cost $233,005,991)	$	340,591,047
Affiliated Companies (cost $3,910,400)		3,421,624
Total investments at value		344,012,671
Repurchase agreement (at cost and value)		35,786,000
Cash		2,450,888
Receivable for investments sold		529,724
Receivable for dividends and interest		277,573
Prepaid expenses		8,651
Total Assets		383,065,507
LIABILITIES:
Payable for collateral on loaned securities		26,979,986
Payable for investments purchased		1,743,648
Payable for investment advisory fee		384,864
Preferred dividends accrued but not yet declared		80,000
Accrued expenses		157,812
Total Liabilities		29,346,310
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	$	293,719,197
ANALYSIS OF NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:
Common Stock paid-in capital – $0.001 par value per share; 21,869,051 shares outstanding (150,000,000 shares authorized)	$	184,445,927
Undistributed net investment income (loss)		(1,104	)
Accumulated net realized gain (loss) on investments		2,258,094
Net unrealized appreciation (depreciation) on investments		107,096,280
Preferred dividends accrued but not yet declared		(80,000	)
Net Assets applicable to Common Stockholders (net asset value per share – $13.43)	$	293,719,197
*Investments at identified cost (including $26,979,986 of collateral on loaned securites)	$	236,916,391

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  41

ROYCE MICRO-CAP TRUST YEAR ENDED DECEMBER 31, 2005

Statement of Operations

INVESTMENT INCOME:
Income:
Dividends
Non-Affiliates	$	2,419,616
Affiliated Companies		30,550
Interest		1,325,185
Securities lending		140,630
Total income		3,915,981
Expenses:
Investment advisory fees		4,114,659
Custody and transfer agent fees		158,865
Stockholder reports		146,709
Directors’ fees		55,365
Professional fees		35,924
Administrative and office facilities expenses		29,054
Other expenses		138,614
Total expenses		4,679,190
Net investment income (loss)		(763,209	)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments
Non-Affiliates		37,754,245
Net change in unrealized appreciation (depreciation) on investments		(14,066,144	)
Net realized and unrealized gain (loss) on investments		23,688,101
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM INVESTMENT OPERATIONS		22,924,892
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS		(3,600,000	)
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS
RESULTING FROM INVESTMENT OPERATIONS	$	19,324,892

42  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

ROYCE MICRO-CAP TRUST

Statement of Changes in Net Assets

	Year ended			Year ended
	12/31/05			12/31/04
INVESTMENT OPERATIONS:
Net investment income (loss)	$	(763,209	)	$	(1,486,082	)
Net realized gain (loss) on investments		37,754,245			25,396,860
Net change in unrealized appreciation (depreciation) on investments		(14,066,144	)		26,164,677
Net increase (decrease) in net assets resulting from investment operations		22,924,892			50,075,455
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:
Net realized gain on investments		(3,600,000	)		(3,600,000	)
Total distributions to Preferred Stockholders		(3,600,000	)		(3,600,000	)
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS
RESULTING FROM INVESTMENT OPERATIONS		19,324,892			46,475,455
DISTRIBUTIONS TO COMMON STOCKHOLDERS:
Net realized gain on investments		(38,452,900	)		(25,919,005	)
Total distributions to Common Stockholders		(38,452,900	)		(25,919,005	)
CAPITAL STOCK TRANSACTIONS:
Reinvestment of distributions to Common Stockholders		22,483,567			16,382,136
Total capital stock transactions		22,483,567			16,382,136
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS		3,355,559			36,938,586
NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:
Beginning of year		290,363,638			253,425,052
End of year (including undistributed net investment income (loss) of $(1,104) at 12/31/05)	$	293,719,197		$	290,363,638

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  43

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.
	Years ended December 31,
	2005			2004			2003			2002			2001
NET ASSET VALUE, BEGINNING OF PERIOD		$14.34			$13.33			$9.39			$11.83			$10.14
INVESTMENT OPERATIONS:
Net investment income (loss)		(0.03	)		(0.08	)		(0.09	)		(0.13	)		(0.05	)
Net realized and unrealized gain (loss) on investments		1.14			2.62			5.28			(1.29	)		2.57
Total investment operations		1.11			2.54			5.19			(1.42	)		2.52
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:
Net investment income		–			–			–			–			–
Net realized gain on investments		(0.17	)		(0.19	)		(0.18	)		(0.18	)		(0.19	)
Total distributions to Preferred Stockholders		(0.17	)		(0.19	)		(0.18	)		(0.18	)		(0.19	)
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON
STOCKHOLDERS RESULTING FROM INVESTMENT OPERATIONS		0.94			2.35		��	5.01			(1.60	)		2.33
DISTRIBUTIONS TO COMMON STOCKHOLDERS:
Net investment income		–			–			–			–			–
Net realized gain on investments		(1.85	)		(1.33	)		(0.92	)		(0.80	)		(0.57	)
Total distributions to Common Stockholders		(1.85	)		(1.33	)		(0.92	)		(0.80	)		(0.57	)
CAPITAL STOCK TRANSACTIONS:
Effect of reinvestment of distributions by Common Stockholders		0.00			(0.01	)		(0.04	)		(0.04	)		(0.07	)
Effect of Preferred Stock offering		–			–			(0.11	)		–			–
Total capital stock transactions		0.00			(0.01	)		(0.15	)		(0.04	)		(0.07	)
NET ASSET VALUE, END OF PERIOD		$13.43			$14.34			$13.33			$9.39			$11.83
MARKET VALUE, END OF PERIOD		$14.56			$15.24			$12.60			$8.44			$10.50
TOTAL RETURN (a):
Market Value		8.90	%		33.44	%		63.58	%		(12.70	)%		28.76	%
Net Asset Value		6.75	%		18.69	%		55.55	%		(13.80	)%		23.40	%
RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO
COMMON STOCKHOLDERS:
Total expenses (b,c)		1.63	%		1.62	%		1.82	%		1.96	%		1.78	%
Management fee expense		1.43	%		1.43	%		1.59	%		1.59	%		1.57	%
Other operating expenses		0.20	%		0.19	%		0.23	%		0.37	%		0.21	%
Net investment income (loss)		(0.27	)%		(0.56	)%		(0.82	)%		(1.23	)%		(0.43	)%
SUPPLEMENTAL DATA:
Net Assets Applicable to Common Stockholders,
End of Period (in thousands)		$293,719			$290,364			$253,425			$167,571			$200,443
Liquidation Value of Preferred Stock,
End of Period (in thousands)		$60,000			$60,000			$60,000			$40,000			$40,000
Portfolio Turnover Rate		46	%		32	%		26	%		39	%		27	%
PREFERRED STOCK:
Total shares outstanding		2,400,000			2,400,000			2,400,000			1,600,000	��		1,600,000
Asset coverage per share		$147.38			$145.98			$130.59			$129.73			$150.28
Liquidation preference per share		$25.00			$25.00			$25.00			$25.00			$25.00
Average market value per share (d):
6.00% Cumulative		$24.97			$24.66			$25.37			–			–
7.75% Cumulative		–			–			$25.70			$25.91			$25.30

(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 1.35%, 1.32%, 1.49%, 1.62% and 1.46% for the periods ended December 31, 2005, 2004, 2003, 2002 and 2001, 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%, 2.04% and 1.81% for the periods ended December 31, 2003, 2002 and 2001, respectively.
(d)	The average of month-end market values during the period that the Preferred Stock was outstanding.

44  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS

ROYCE MICRO-CAP TRUST DECEMBER 31, 2005

Notes to Financial Statements

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 (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange or Nasdaq 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 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. 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.

Investment Transactions and Related Investment Income:
     Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date and any non-cash dividend income is recorded at the fair market value of the securities received. Interest income is recorded on an accrual basis. 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.

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 recorded on an accrual basis and paid quarterly. 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 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.

Capital Stock:
     The Fund issued 1,625,665 and 1,228,046 shares of Common Stock as reinvestment of distributions by Common Stockholders for the years ended December 31, 2005 and 2004, respectively.

THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  45

ROYCE MICRO-CAP TRUST

Notes to Financial Statements (continued)

     At December 31, 2005, 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 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 12 rolling 36-month periods ending in 2005, the investment performance of the Fund exceeded the investment performance of the Russell 2000 by 5% to 23%. Accordingly, the investment advisory fee consisted of a Basic Fee of $2,876,281 and an upward adjustment of $1,238,378 for performance of the Fund above that of the Russell 2000. For the year ended December 31, 2005, the Fund accrued and paid Royce advisory fees totaling $4,114,659.

46  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS

DECEMBER 31, 2005

Distributions to Stockholders:

     The tax character of distributions paid to stockholders during 2005 and 2004 was as follows:

Distributions paid from:	2005		2004
Ordinary income	$	4,022,315	$	3,410,255
Long-term capital gain		38,030,585		26,108,750
	$	42,052,900	$	29,519,005

      As of December 31, 2005, the tax basis components of distributable earnings included in stockholders’ equity were as follows:

Undistributed net investment income	$	1,714,386
Undistributed long-term capital gain		2,887,865
Unrealized appreciation		104,752,123
Post October currency loss		(1,104	)
Accrued preferred distributions		(80,000	)
	$	109,273,270

     The difference between book basis and tax basis unrealized appreciation is attributable primarily to the tax deferral on wash sales and the unrealized gains on investments in Passive Foreign Investment Companies.

     For financial reporting purposes, capital accounts and distributions to stockholders are adjusted to reflect the tax character of permanent book / tax differences. For the year ended December 31, 2005, the Fund recorded the following permanent reclassifications, which relate primarily to the current net operating losses. Results of operations and net assets were not affected by these reclassifications.

Undistributed		Accumulated
Net Investment		Net Realized			Paid-in
Income		Gain (Loss)			Capital
$	762,105	$	(633,134	)	$	(128,971	)

Purchases and Sales of Investment Securities:

     For the year ended December 31, 2005, the cost of purchases and proceeds from sales of investment securities, other than short-term securities and collateral received for securities loaned, amounted to $138,845,430 and $143,624,350, 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. The Fund effected the following transactions in shares of such companies during the year ended December 31, 2005:

	Shares	Market Value	Cost of		Cost of	Realized	Dividend		Shares	Market Value
Affiliated Company	12/31/04	12/31/04	Purchases		Sales	Gain (Loss)	Income		12/31/05	12/31/05
Abagail Adams National Bancorp	–	–	$	3,910,400	–	–	$	30,550	244,400	$	3,421,624
		–				–	$	30,550		$	3,421,624

THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  47

ROYCE MICRO-CAP TRUST

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Royce Micro-Cap Trust, Inc.

     We have audited the accompanying statement of assets and liabilities of Royce Micro-Cap Trust, Inc. (“Fund”), including the schedule of investments, as of December 31, 2005, and the related statement of operations for the year then ended, and the statement of changes in net assets for the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (U.S.). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2005, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
     In our opinion, the financial statements and financial highlights referred to above and audited by us present fairly, in all material respects, the financial position of Royce Micro-Cap Trust, Inc. at December 31, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

TAIT, WELLER, & BAKER LLP

Philadelphia, PA
January 20, 2006

48  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS

ROYCE FOCUS TRUST DECEMBER 31, 2005

      Schedule of Investments

	SHARES	VALUE			SHARES	VALUE
COMMON STOCKS – 85.1%				Pason Systems	100,000	$	2,486,128
				Woodward Governor Company	15,000		1,290,150
Consumer Products – 6.3%
Apparel and Shoes - 1.2%							6,750,778
†Timberland Company Cl. Aa,b	50,000	$	1,627,500
				Metal Fabrication and Distribution - 12.8%
Sports and Recreation - 5.1%				†Harris Steel Group	150,000		3,367,887
Thor Industries	100,000		4,007,000	IPSCO	65,000		5,393,700
Winnebago Industries	100,000		3,328,000	Metal Management	150,000		3,489,000
				†Reliance Steel & Aluminum	50,000		3,056,000
			7,335,000	Schnitzer Steel Industries Cl. A	100,000		3,059,000
Total (Cost $6,695,553)			8,962,500				18,365,587
Consumer Services – 3.3%				Total (Cost $16,295,295)			31,195,465
Direct Marketing - 2.5%
Nu Skin Enterprises Cl. A	200,000		3,516,000	Industrial Services – 5.5%
				Commercial Services - 1.2%
Other Consumer Services - 0.8%				BB Holdings	250,000		1,692,500
†Corinthian Collegesa	100,000		1,178,000
				Engineering and Construction - 1.9%
Total (Cost $3,889,690)			4,694,000	Dycom Industriesa,b	120,000		2,640,000
Financial Intermediaries – 3.3%				Transportation and Logistics - 2.4%
Insurance - 2.3%				†Arkansas Best	80,000		3,494,400
Alleghany Corporationa	7,500		2,130,000
ProAssurance Corporationa,b	25,000		1,216,000	Total (Cost $5,486,466)			7,826,900
			3,346,000	Natural Resources – 19.8%
				Energy Services - 8.8%
Other Financial Intermediaries - 1.0%				Ensign Energy Services	100,000		4,036,303
TSX Group	35,000		1,409,996	Input/Output a,b	250,000		1,757,500
				Tesco Corporationa	160,000		2,960,000
Total (Cost $2,038,496)			4,755,996	Trican Well Servicea	80,000		3,853,929
Financial Services – 3.7%							12,607,732
Information and Processing - 2.4%
eFunds Corporationa,b	150,000		3,516,000	Precious Metals and Mining - 11.0%
				†Gammon Lake Resourcesa	100,000		1,190,000
Investment Management - 1.3%				Glamis Golda	150,000		4,122,000
GAMCO Investors Cl. A	41,500		1,806,495	†Ivanhoe Minesa,b	400,000		2,876,000
				Meridian Golda,b	120,000		2,624,400
Total (Cost $3,678,413)			5,322,495	†Pan American Silvera,b	120,000		2,259,600
				†Silver Standard Resourcesa,b	180,000		2,755,800
Health – 9.5%
Drugs and Biotech - 8.0%							15,827,800
†Elan Corporation ADRa,b	200,000		2,786,000
Endo Pharmaceuticals Holdingsa,b	150,000		4,539,000	Total (Cost $15,532,480)			28,435,532
Lexicon Geneticsa,b	400,000		1,460,000
Myriad Geneticsa,b	75,000		1,560,000	Technology – 11.9%
Orchid Cellmarka,b	150,000		1,140,000	Components and Systems - 1.8%
				Lowrance Electronics	100,000		2,621,000
			11,485,000
				Internet Software and Services - 1.9%
Medical Products and Devices - 1.5%				†RealNetworksa,b	350,000		2,716,000
†Caliper Life Sciencesa,b	200,000		1,176,000
†Possis Medicala,b	100,000		995,000	IT Services - 0.9%
				Syntel	60,000		1,249,800
			2,171,000
				Software - 4.9%
Total (Cost $10,286,605)			13,656,000	ManTech International Cl. Aa,b	100,000		2,786,000
				PLATO Learninga,b	160,000		1,270,400
Industrial Products – 21.8%				Transaction Systems Architects Cl. Aa	100,100		2,881,879
Building Systems and Components - 3.1%
Simpson Manufacturing	120,000		4,362,000				6,938,279
Construction Materials - 1.2%				Telecommunications - 2.4%
Florida Rock Industries	35,000		1,717,100	†Foundry Networksa,b	250,000		3,452,500
Machinery - 4.7%				Total (Cost $12,073,536)			16,977,579
Lincoln Electric Holdings	75,000		2,974,500
				TOTAL COMMON STOCKS
				(Cost $75,976,534)		$	121,826,467

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  49

ROYCE FOCUS TRUST DECEMBER 31, 2005

      Schedule of Investments

		PRINCIPAL
		AMOUNT	VALUE			VALUE
CORPORATE BONDS – 5.1%					REPURCHASE AGREEMENT – 11.7%
†Athena Neurosciences Finance 7.25%					State Street Bank & Trust Company,
Senior Note due 2/21/08	$	6,000,000	$	5,857,500	4.10% dated 12/30/05, due 1/3/06,
E*TRADE Financial 6.00%					maturity value $16,757,631 (collateralized
Conv. Sub. Note due 2/1/07		1,500,000		1,515,000	by obligations of various U.S. Government
					Agencies, valued at $17,172,625)
TOTAL CORPORATE BONDS					(Cost $16,750,000)	$	16,750,000
(Cost $6,890,957)				7,372,500
					COLLATERAL RECEIVED FOR SECURITIES LOANED – 13.5%
GOVERNMENT BONDS – 8.4%					Money Market Funds
(Principal Amount shown					State Street Navigator Securities Lending
in local currency.)					Prime Portfolio		19,262,846
Canadian Government Bond
3.00% due 6/1/07		6,150,000		5,230,132	(Cost $19,262,846)		19,262,846
New Zealand Government Bond
6.50% due 2/15/06		10,000,000		6,824,030	TOTAL INVESTMENTS – 130.7%
					(Cost $140,080,099)		187,210,115
TOTAL GOVERNMENT BONDS
(Cost $10,785,668)				12,054,162	LIABILITIES LESS CASH
					AND OTHER ASSETS – (13.2)%		(18,966,373	)
U.S. TREASURY OBLIGATIONS – 6.9%
U.S Treasury Notes					PREFERRED STOCK – (17.5)%		(25,000,000	)
Treasury Inflation Index Protection
Security 2.00% due 7/15/14		10,000,000		9,944,140	NET ASSETS APPLICABLE TO
					COMMON STOCKHOLDERS – 100.0%	$	143,243,742
TOTAL U.S TREASURY OBLIGATIONS
(Cost $10,414,094)				9,944,140

a	Non-income producing.
b	A portion of these securities were on loan at December 31, 2005. Total market value of loaned securities at December 31, 2005 was $18,626,250.
†	New additions in 2005.
	Bold indicates the Fund’s largest 20 equity holdings in terms of December 31, 2005, market value.
INCOME TAX INFORMATION: The cost of total investments for Federal income tax purposes was $140,968,473. At December 31, 2005, net unrealized appreciation for all securities was $46,241,642, consisting of aggregate gross unrealized appreciation of $47,933,493 and aggregate gross unrealized depreciation of $1,691,851. The primary differences in book and tax basis cost is the timing of the recognition of losses on securities sold and unrealized gains on investments in Passive Foreign Investment Companies for book and tax purposes.

50  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

ROYCE FOCUS TRUST DECEMBER 31, 2005

Statement of Assets and Liabilities

ASSETS:
Investments at value (including collateral on loaned securities)*	$	170,460,115
Repurchase agreement (at cost and value)		16,750,000
Cash		320
Receivable for investments sold		3,224
Receivable for dividends and interest		547,724
Prepaid expenses		3,389
Total Assets		187,764,772
LIABILITIES:
Payable for collateral on loaned securities		19,262,846
Payable for investment advisory fee		142,998
Preferred dividends accrued but not yet declared		33,333
Accrued expenses		81,853
Total Liabilities		19,521,030
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	$	143,243,742
ANALYSIS OF NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:
Common Stock paid-in capital – $0.001 par value per share; 14,674,667 shares outstanding (100,000,000 shares authorized)	$	92,368,072
Undistributed net investment income (loss)		(55,839	)
Accumulated net realized gain (loss) on investments		3,834,826
Net unrealized appreciation (depreciation) on investments		47,130,016
Preferred dividends accrued but not yet declared		(33,333	)
Net Assets applicable to Common Stockholders (net asset value per share – $9.76)	$	143,243,742
*Investments at identified cost (including $19,262,846 of collateral on loaned securities)	$	123,330,099

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  51

ROYCE FOCUS TRUST YEAR ENDED DECEMBER 31, 2005

Statement of Operations

INVESTMENT INCOME:
Income:
Interest	$	1,819,666
Dividends		653,713
Securities lending		20,780
Total income		2,494,159
Expenses:
Investment advisory fees		1,436,054
Custody and transfer agent fees		88,136
Stockholder reports		69,804
Professional fees		28,333
Directors’ fees		20,347
Administrative and office facilities expenses		11,067
Other expenses		96,836
Total expenses		1,750,577
Net investment income (loss)		743,582
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments		19,164,839
Net change in unrealized appreciation (depreciation) on investments		1,922,287
Net realized and unrealized gain (loss) on investments		21,087,126
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM INVESTMENT OPERATIONS		21,830,708
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS		(1,500,000	)
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS
RESULTING FROM INVESTMENT OPERATIONS	$	20,330,708

52  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

ROYCE FOCUS TRUST

Statement of Changes in Net Assets

		Year ended			Year ended
		12/31/05			12/31/04
INVESTMENT OPERATIONS:
Net investment income (loss)	$	743,582		$	225,575
Net realized gain (loss) on investments		19,164,839			16,972,445
Net change in unrealized appreciation (depreciation) on investments		1,922,287			9,319,147
Net increase (decrease) in net assets resulting from investment operations		21,830,708			26,517,167
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:
Net investment income		(80,100	)		(21,150	)
Net realized gain on investments		(1,419,900	)		(1,478,850	)
Total distributions to Preferred Stockholders		(1,500,000	)		(1,500,000	)
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS
RESULTING FROM INVESTMENT OPERATIONS		20,330,708			25,017,167
DISTRIBUTIONS TO COMMON STOCKHOLDERS:
Net investment income		(853,787	)		(242,185	)
Net realized gain on investments		(15,134,720	)		(16,948,411	)
Total distributions to Common Stockholders		(15,988,507	)		(17,190,596	)
CAPITAL STOCK TRANSACTIONS:
Reinvestment of distributions to Common Stockholders		11,288,577			11,013,943
Net proceeds from rights offering		21,760,372			–
Total capital stock transactions		33,048,949			11,013,943
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS		37,391,150			18,840,514
NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:
Beginning of year		105,852,592			87,012,078
End of year (including undistributed net investment income (loss) of $(55,839) at 12/31/05
and $(15,000) at 12/31/04)	$	143,243,742		$	105,852,592

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  53

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.

	Years ended December 31,
		2005		2004		2003		2002		2001
NET ASSET VALUE, BEGINNING OF PERIOD		$9.75		$9.00		$6.27		$7.28		$6.77
INVESTMENT OPERATIONS:
Net investment income (loss)		0.06		0.02		0.08		(0.01	)	0.05
Net realized and unrealized gain (loss) on investments		1.44		2.63		3.57		(0.74	)	0.79
Total investment operations		1.50		2.65		3.65		(0.75	)	0.84
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:
Net investment income		(0.01	)	(0.00	)	(0.02	)	(0.03	)	(0.04	)
Net realized gain on investments		(0.11	)	(0.15	)	(0.14	)	(0.13	)	(0.13	)
Total distributions to Preferred Stockholders		(0.12	)	(0.15	)	(0.16	)	(0.16	)	(0.17	)
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON
STOCKHOLDERS RESULTING FROM INVESTMENT OPERATIONS		1.38		2.50		3.49		(0.91	)	0.67
DISTRIBUTIONS TO COMMON STOCKHOLDERS:
Net investment income		(0.06	)	(0.02	)	(0.06	)	(0.02	)	(0.03	)
Net realized gain on investments		(1.15	)	(1.72	)	(0.56	)	(0.07	)	(0.11	)
Total distributions to Common Stockholders		(1.21	)	(1.74	)	(0.62	)	(0.09	)	(0.14	)
CAPITAL STOCK TRANSACTIONS:
Effect of reinvestment of distributions by Common Stockholders		(0.03	)	(0.01	)	(0.03	)	(0.01	)	(0.02	)
Effect of rights offering and Preferred Stock offering		(0.13	)	–		(0.11	)	–		–
Total capital stock transactions		(0.16	)	(0.01	)	(0.14	)	(0.01	)	(0.02	)
NET ASSET VALUE, END OF PERIOD		$9.76		$9.75		$9.00		$6.27		$7.28
MARKET VALUE, END OF PERIOD		$9.53		$10.47		$8.48		$5.56		$6.65
TOTAL RETURN (a):
Market Value		3.03	%	47.26	%	63.98	%	(15.06	)%	19.65	%
Net Asset Value		13.31	%	29.21	%	54.33	%	(12.50	)%	10.04	%
RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO
COMMON STOCKHOLDERS:
Total expenses (b,c)		1.48	%	1.53	%	1.57	%	1.88	%	1.47	%
Management fee expense		1.21	%	1.27	%	1.14	%	1.13	%	1.11	%
Other operating expenses		0.27	%	0.26	%	0.43	%	0.75	%	0.36	%
Net investment income (loss)		0.63	%	0.24	%	1.07	%	(0.16	)%	0.70	%
SUPPLEMENTAL DATA:
Net Assets Applicable to Common Stockholders,
End of Period (in thousands)		$143,244		$105,853		$87,012		$57,956		$66,654
Liquidation Value of Preferred Stock,
End of Period (in thousands)		$25,000		$25,000		$25,000		$20,000		$20,000
Portfolio Turnover Rate		42	%	52	%	49	%	61	%	54	%
PREFERRED STOCK:
Total shares outstanding		1,000,000		1,000,000		1,000,000		800,000		800,000
Asset coverage per share		$168.24		$130.85		$112.01		$97.44		$108.32
Liquidation preference per share		$25.00		$25.00		$25.00		$25.00		$25.00
Average market value per share (d):
6.00% Cumulative		$25.38		$24.83		$25.45		–		–
7.45% Cumulative		–		–		$25.53		$25.64		$25.09

(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 1.22%, 1.21%, 1.20%, 1.43% and 1.11% for the periods ended December 31, 2005, 2004, 2003, 2002 and 2001, 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%, 2.06% and 1.69% for the periods ended December 31, 2003, 2002 and 2001, respectively.
(d)	The average of month-end market values during the period that the preferred stock was outstanding.

54  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS

ROYCE FOCUS TRUST DECEMBER 31, 2005

Notes to Financial Statements

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 (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange or Nasdaq 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 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. 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.

Investment Transactions and Related Investment Income:
      Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date and any non-cash dividend income is recorded at the fair market value of the securities received. Interest income is recorded on an accrual basis. 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.

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 recorded on an accrual basis and paid quarterly. 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 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.

Capital Stock:
      The Fund issued 1,191,399 and 1,182,493 shares of Common Stock as reinvestment of distributions by Common Stockholders for the years ended December 31, 2005 and 2004, respectively.

THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  55

ROYCE FOCUS TRUST DECEMBER 31, 2005

Notes to Financial Statements (continued)

      On June 10, 2005, the Fund completed a rights offering of Common Stock to its stockholders at the rate of one common share for each 5 rights held by stockholders of record on May 6, 2005. The rights offering was fully subscribed, resulting in the issuance of 2,627,397 common shares at a price of $8.34, and proceeds of $21,912,491 to the Fund prior to the deduction of expenses of $152,119. The net asset value per share of the Fund’s Common Stock was reduced by approximately $0.13 per share as a result of the issuance.
      At December 31, 2005, 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 year ended December 31, 2005, the Fund accrued and paid Royce advisory fees totaling $1,436,054.

Distributions to Stockholders:

    The tax character of distributions paid to stockholders during 2005 and 2004 was as follows:

Distributions paid from:		2005		2004
Ordinary income	$	1,682,395	$	263,335
Long-term capital gain		15,806,112		18,427,261
	$	17,488,507	$	18,690,596

    As of December 31, 2005, the tax basis components of distributable earnings included in stockholders’ equity were as follows:

Undistributed net investment income	$	536,514
Undistributed long-term capital gain		4,130,847
Unrealized appreciation		46,241,642
Accrued preferred distributions		(33,333	)
	$	50,875,670

    The difference between book basis and tax basis unrealized appreciation is attributable primarily to the tax deferral on wash sales and the unrealized gains on investments in Passive Foreign Investment Companies.

    For financial reporting purposes, capital accounts and distributions to stockholders are adjusted to reflect the tax character of permanent book / tax differences. For the year ended December 31, 2005, the Fund recorded the following permanent reclassifications, which relate primarily to the current net operating losses. Results of operations and net assets were not affected by these reclassifications.

Undistributed		Accumulated
Net Investment		Net Realized			Paid-in
Income		Gain (Loss)			Capital
$	149,466	$	(149,466	)	$	–

Purchases and Sales of Investment Securities:

    For the year ended December 31, 2005, the cost of purchases and proceeds from sales of investment securities, other than short-term securities and collateral received for securities loaned, amounted to $55,157,207 and $54,393,314, respectively.

56  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS

ROYCE FOCUS TRUST

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Royce Focus Trust, Inc.

     We have audited the accompanying statement of assets and liabilities of Royce Focus Trust, Inc. (“Fund”), including the schedule of investments, as of December 31, 2005, and the related statement of operations for the year then ended, and the statement of changes in net assets for the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (U.S.). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2005, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above and audited by us present fairly, in all material respects, the financial position of Royce Focus Trust, Inc. at December 31, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

TAIT, WELLER, & BAKER LLP

Philadelphia, PA

January 20, 2006

THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  57

DIRECTORS AND OFFICERS

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

NAME AND POSITION: Charles M. Royce (66), Director* and President
Term Expires: 2006                            Tenure: Since 1986 (RVT), 1993 (RMT), 1996 (FUND) Number of Funds Overseen: 23         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”) (since October 2001), the Trust’s investment adviser.
NAME AND POSITION: Mark R. Fetting (51), Director*
Term Expires: 2007        Tenure: Since 2001                     Number of Funds Overseen: 46**      Non-Royce Directorships: None **Director/Trustee of all Royce Funds consisting of 23 portfolios; Director/Trustee of the Legg Mason Family of Funds consisting of 23 portfolios.
Principal Occupation(s) During Past Five Years: Executive Vice President of Legg Mason, Inc.; Member of Board of Managers of Royce (since October 2001); Division President and Senior Officer, Prudential Financial Group, Inc. and related companies, including Fund Boards and consulting services to subsidiary companies (from 1991 to 2000). Mr. Fetting’s prior business experience includes having served as Partner, Greenwich Associates and Vice President, T. Rowe Price Group, Inc.

NAME AND POSITION: Donald R. Dwight (74), Director
Term Expires: 2008                            Tenure: Since 1998 Number of Funds Overseen: 23         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 Trustee of the registered investment companies constituting the Eaton Vance Funds.
NAME AND POSITION: Richard M. Galkin (67), Director
Term Expires: 2007                             Tenure: Since 1986 (RVT), 1993 (RMT), 1996 (FUND) Number of Funds Overseen: 23         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).
NAME AND POSITION: Stephen L. Isaacs (66), Director
Term Expires: 2008 (RVT), 2008        Tenure: Since 1986 (RVT), 1993 (RMT), 2006 (FUND)                            (RMT), 1996 (FUND) Number of Funds Overseen: 23         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).
NAME AND POSITION: William L. Koke (71), Director
Term Expires: 2006 (RVT), 2006        Tenure: Since 2001 (RVT), 2001 (RMT), 2008 (FUND)                             (RMT), 1997 (FUND) Number of Funds Overseen: 23         Non-Royce Directorships: None
Principal Occupation(s) During Past Five Years: Private Investor. Mr. Koke’s prior business experience includes having served as Director of Financial Relations of SONAT, Inc., Treasurer of Ward Foods, Inc. and President of CFC, Inc. NAME AND POSITION: Arthur S. Mehlman (64), Director
Term Expires: 2007                            Tenure: Since 2004 Number of Funds Overseen: 46**      Non-Royce Directorships: Director of Municipal Mortgage & Equity, LLC. **Director/Trustee of all Royce Funds consisting of 23 portfolios; Director/Trustee of the Legg Mason Family of Funds consisting of 23 portfolios.

Principal Occupation(s) During Past Five Years: Director of The League for People with Disabilities, Inc.; Director of University of Maryland Foundation and University of Maryland College Park Foundation (nonprofits). Formerly Partner, KPMG LLP (international accounting firm) (1972-2002). Director of Maryland Business Roundtable for Education (July 1984–June 2002).
NAME AND POSITION: David L. Meister (66), Director
Term Expires: 2006                            Tenure: Since 1986 (RVT), 1993
(RMT), 1996 (FUND) Number of Funds Overseen: 23         Non-Royce Directorships: None
Principal Occupation(s) During Past Five Years: Private Investor. Chairman and Chief Executive Officer of The Tennis Channel (June 2000–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.
NAME AND POSITION: G. Peter O’Brien (60), Director
Term Expires: 2006                            Tenure: Since 2001 Number of Funds Overseen: 46**      Non-Royce Directorships: Director of Technology Investment Capital Corp. **Director/Trustee of all Royce Funds consisting of 23 portfolios; Director/ Trustee of the Legg Mason Fmaily of Funds consisting of 23 portfolios.

Principal Occupation(s) During Past Five Years: Trustee Emeritus of Colgate University; Board Member of Hill House, Inc. (since 1999); Formerly Trustee of Colgate University (from 1996–2005), President of Hill House, Inc. (from 2001–2005) and Managing Director/Equity Capital Markets Group of Merrill Lynch & Co. (from 1971 to 1999).

NAME AND POSITION: John D. Diederich (54), Vice President and Treasurer
Tenure: Since 1997
Principal Occupation(s) During Past Five Years: Managing Director, Chief Operating Officer and Member of Board of Managers of Royce (since October 2001); Director of Administration of the Funds since April 1993.
NAME AND POSITION: Jack E. Fockler, Jr. (47), Vice President
Tenure: Since 1995 (RVT), 1995 (RMT), 1996 (FUND)
Principal Occupation(s) During Past Five Years: Managing Director and Vice President of Royce, having been employed by Royce since October 1989.
NAME AND POSITION: W. Whitney George (47), Vice President
Tenure: Since 1995 (RVT), 1995 (RMT), 1996 (FUND)
Principal Occupation(s) During Past Five Years: Managing Director and Vice President of Royce, having been employed by Royce since October 1991.
NAME AND POSITION: Daniel A. O’Byrne (43), Vice President and Assistant Secretary
Tenure: Since 1994 (RVT), 1994 (RMT), 1996 (FUND)
Principal Occupation(s) During Past Five Years: Vice President of Royce, having been employed by Royce since October 1986.
NAME AND POSITION: John E. Denneen (38), Secretary
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 (1996-2001 and since April 2002); Principal of Credit Suisse First Boston Private Equity (2001-2002).

* Interested Director.

58  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS

NOTES TO PERFORMANCE AND OTHER IMPORTANT INFORMATION

     The thoughts expressed in this Report concerning recent market movements and future prospects for small company stocks are solely the opinion of Royce at December 31, 2005, 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, 2005 and are subject to change at any time without notice. There can be no assurance that securities mentioned in this 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 Funds’ P/E ratio calculations exclude companies with zero or negative earnings.

     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. CRSP (Center for Research in Security Pricing) equally divides the companies listed on the NYSE into 10 deciles based on market capitalization. Deciles 1-5 represent the largest domestic equity companies and deciles 6-10 represent the smallest. CRSP then sorts all listed domestic equity companies based on these market cap ranges. By way of comparison, the CRSP 1-5 would have similar capitalization parameters to the S&P 500 and the CRSP 6-10 would approximately match those of the Russell 2000. Returns for the market indices used in this 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 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 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, 2006. 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.

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.

THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS  |  59

NOTES TO PERFORMANCE AND OTHER IMPORTANT INFORMATION (CONTINUED)

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.

Annual Certifications

     As required, the Funds have submitted to the New York Stock Exchange (“NYSE”) for Royce Value Trust and Royce Micro-Cap Trust and to Nasdaq for Royce Focus Trust, respectively, the annual certification of the Funds’ Chief Executive Officer that he is not aware of any violation of the NYSE’s or Nasdaq’s Corporate Governance listing standards. The Funds also have included the certification of the Funds’ Chief Executive Officer and Chief Financial Officer required by section 302 of the Sarbanes-Oxley Act of 2002 as exhibits to the Funds’ Form N-CSR for the period ended December 31, 2005, filed with the Securities and Exchange Commission.

Royce Value Trust, Inc.

     At the 2005 Annual Meeting of Stockholders held on September 29, 2005, the Fund’s stockholders elected four Directors, consisting of:

		Votes For		Votes Abstained
*	Donald R. Dwight		55,341,521	524,245
*	Stephen L. Isaacs		55,442,757	423,009
**	William L. Koke		7,494,598	67,784
**	David L. Meister		7,482,620	79,762

*	Common Stock and Preferred Stock Voting Together as a Single Class
**	Preferred Stock Voting as a Separate Class

Royce Micro-Cap Trust, Inc.

At the 2005 Annual Meeting of Stockholders held on September 29, 2005, the Fund’s stockholders elected four Directors, consisting of:

		Votes For		Votes Abstained
*	Donald R. Dwight		21,354,815		181,227
*	Stephen L. Isaacs		21,362,901		173,141
**	William L. Koke		1,951,681		18,351
**	David L. Meister		1,952,481		17,551

*	Common Stock and Preferred Stock Voting Together as a Single Class
**	Preferred Stock Voting as a Separate Class

Royce Focus Trust, Inc.

At the 2005 Annual Meeting of Stockholders held on September 29, 2005, the Fund’s stockholders elected four Directors, consisting of:

		Votes For		Votes Abstained
*	Donald R. Dwight		12,467,299		123,891
**	Stephen L. Isaacs		920,921		4,780
*	William L. Koke		12,723,349		118,841
**	David L. Meister		920,521		5,180

*	Common Stock and Preferred Stock Voting Together as a Single Class
**	Preferred Stock Voting as a Separate Class

60  |  THE ROYCE FUNDS 2005 REPORT TO STOCKHOLDERS

POSTSCRIPT

Our Favorite Things

By the time that stockholders and other interested parties are reading this Annual Review and Report to Stockholders, the presents have all been opened, the tree has been taken down and the decorations have been stored away until next year’s holiday season. However, each year we begin preparing the Report and reflecting on the year long before, right in the midst of the holiday season. As December winds to a close, and we look back on the year that will soon be over, our thoughts are invariably mixed with the spirit of the holiday season. This is how the following verses came to be written in December 2005. They are a combination of holiday spirit and another enjoyable year doing the things that we love–helping you to build wealth with our time-tested, disciplined approach to small-cap investing. So, we humbly present our version of a holiday treat, with sincerest apologies to Rodgers and Hammerstein, Julie Andrews and John Coltrane.

Royce’s Holiday Tune (Sung to the Tune of “My Favorite Things”)

Well-run small companies selling for peanuts,
Balance sheets so pure they don’t need much clean-up,
Cash flow, good management, lots of earnings—
These are a few of our favorite things.

Micro-cap businesses Wall Street’s not heard of,
Research ‘til midnight until we feel sure of
A firm that is debt-free and high-returning—
These are a few of our favorite things.

People who sell at the first sign of trouble,
Bargain-priced stocks from the burst of a bubble,
Prices dropped so low they make our hearts sing—
These are a few of our favorite things

Financial statements that tell a good story,
Transparent accounting that won’t make us sorry,
Prices that bottom out from missed earnings—
These are a few of our favorite things

When the price stalls
As the bell rings,
When returns are bad,
We simply remember our favorite things,
And then we don’t feel so sad.

THIS PAGE IS NOT PART OF THE 2005 REPORT TO STOCKHOLDERS

The RoyceFunds Wealth Of Experience With approximately $22.4 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 six other Portfolio Managers, as well as eight 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 $108 million invested in The Royce Funds.
General Information Additional Report Copies and Fund Inquiries (800) 221-4268 Computershare Transfer Agent and Registrar (800) 426-5523	Broker/Dealer Services For Fund Materials and Performance Updates, (800) 59-ROYCE (597-6923) Advisor Services For Fund Materials, Performance Updates or Account Inquiries (800) 33-ROYCE (337-6923)
www.roycefunds.com
CE-REP-1205

Item 2: Code(s) of Ethics – As of the end of the period covered by this report, the Registrant had adopted a code of ethics, as defined in Item 2 of Form N-CSR, applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of this code of ethics is filed as an exhibit to this Form N-CSR. No substantive amendments were approved or waivers were granted to this code of ethics during the period covered by this report.

Item 3: Audit Committee Financial Expert –
(a)(1)	The Board of Directors of the Registrant has determined that it has an audit committee financial expert.
(a)(2)	Arthur S. Mehlman was designated by the Board of Directors as the Registrant’s Audit Committee Financial Expert, effective April 15, 2004. Mr. Mehlman is “independent” as defined under Item 3 of Form N-CSR.

Item 4: Principal Accountant Fees and Services.
(a)	Audit Fees:
	Year ended December 31, 2005 - $33,000
	Year ended December 31, 2004 - $31,000
(b)	Audit-Related Fees:
	Year ended December 31, 2005 - $1,500 – Preparation of reports to rating agency for Preferred Stock
	Year ended December 31, 2004 - $1,500 – Preparation of reports to rating agency for Preferred Stock
(c)	Tax Fees:
	Year ended December 31, 2005 - $2,500 - Preparation of tax returns
	Year ended December 31, 2004 - $2,500 - Preparation of tax returns
(d)	All Other Fees:
	Year ended December 31, 2005 - $2,500 – Agreed upon procedures report relating to investment advisory fee calculation
	Year ended December 31, 2004 - $0

(e)(1)    Annual Pre-Approval: On an annual basis, the Registrant’s independent auditor submits to the Audit Committee a schedule of proposed audit, audit-related, tax and other non-audit services to be rendered to the Registrant and/or investment adviser(s) for the following year that require pre-approval by the Audit Committee. This schedule provides a description of each type of service that is expected to require pre-approval and the maximum fees that can be paid for each such service without further Audit Committee approval. The Audit Committee then reviews and determines whether to approve the types of scheduled services and the projected fees for them. Any subsequent revision to already pre-approved services or fees (including fee increases) are presented for consideration at the next regularly scheduled Audit Committee meeting, as needed.

If subsequent to the annual pre-approval of services and fees by the Audit Committee, the Registrant or one of its affiliates determines that it would like to engage the Registrant’s independent auditor to perform a service not already pre-approved, the request is to be submitted to the Registrant’s Chief Financial Officer, and if he or she determines that the service fits within the independence guidelines (e.g., it is not a prohibited service), he or she will then arrange for a discussion of the proposed service and fee to be included on the agenda for the next regularly scheduled Audit Committee meeting so that pre-approval can be considered.

Interim Pre-Approval: If, in the judgment of the Registrant’s Chief Financial Officer, a proposed engagement needs to commence before the next regularly scheduled Audit Committee meeting, he or she shall submit a written summary of the proposed engagement to all members of the Audit Committee, outlining the services, the estimated maximum cost, the category of the services (e.g., audit, audit-related, tax or other) and the rationale for engaging the Registrant’s independent auditor to perform the services. To the extent the proposed engagement involves audit, audit-related or tax services, any individual member of the Audit Committee who is an

independent Board member is authorized to pre-approve the engagement. To the extent the proposed engagement involves non-audit services other than audit-related or tax, the Chairman of the Audit Committee is authorized to pre-approve the engagement. The Registrant’s Chief Financial Officer will arrange for this interim review and coordinate with the appropriate member(s) of the Committee. The independent auditor may not commence the engagement under consideration until the Registrant’s Chief Financial Officer has informed the auditor in writing that pre-approval has been obtained from the Audit Committee or an individual member who is an independent Board member. The member of the Audit Committee who pre-approves any engagements in between regularly scheduled Audit Committee meetings is to report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next regularly scheduled meeting.

(e)(2)	Not Applicable
(f)	Not Applicable
(g)	Year ended December 31, 2005 - $11,500
	Year ended December 31, 2004 - $4,000
(h)	No such services were rendered during 2005 or 2004.

Item 5: The Registrant has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. Donald R. Dwight, Richard M. Galkin, Stephen L. Isaacs, William L. Koke, Arthur S. Mehlman, David L. Meister and G. Peter O’Brien are members of the Registrant’s audit committee.

Item 6: Not Applicable.

Item 7:

June 5, 2003
As amended on April 14, 2005

Royce & Associates Proxy Voting Guidelines and Procedures

These procedures apply to Royce & Associates, LLC (“Royce”) and all funds and other client accounts for which it is responsible for voting proxies, including all open and closed-end registered investment companies (“The Royce Funds”), limited partnerships, limited liability companies, separate accounts, other accounts for which it acts as investment adviser and any accounts for which it acts as sub-adviser that have directly or indirectly delegated proxy voting authority to Royce. The Boards of Trustees/Directors of The Royce Funds have delegated all proxy voting decisions to Royce, and in the case of Royce Technology Value Fund, to JHC Capital Management subject to these policies and procedures.

Receipt of Proxy Material.    Under the continuous oversight of the Head of Administration, an Administrative Assistant designated by him is responsible for monitoring receipt of all proxies and ensuring that proxies are received for all securities for which Royce has proxy voting responsibility. All proxy materials are logged in upon receipt by Royce’s Librarian.

Voting of Proxies.    Once proxy material has been logged in by Royce’s Librarian, it is then promptly reviewed by the designated Administrative Assistant to evaluate the issues presented. Regularly recurring matters are usually voted as recommended by the issuer’s board of directors or “management.” The Head of Administration, in consultation with the Chief Investment Officer, develops and updates a list of matters Royce treats as “regularly recurring” and is responsible for ensuring that the designated Administrative Assistant has an up-to-date list of these matters at all times, including instructions from Royce’s Chief Investment Officer on how to vote on those matters on behalf of Royce clients. Examples of “regularly recurring” matters include non-contested elections of directors and non-contested approval of independent auditors. Non-“regularly recurring” matters are brought to the attention of the portfolio manager(s) for the account(s) involved by the designated Administrative Assistant, and, after giving some consideration to advisories from “Proxy Master” (a service provided by Institutional Shareholder Services),

the portfolio manager directs that such matters be voted in a way that he or she believes should better protect or enhance the value of the investment. If the portfolio manager determines that information concerning any proxy requires analysis, is missing or incomplete, he or she then gives the proxy to an analyst or another portfolio manager for review and analysis.

a.	From time to time, it is possible that one Royce portfolio manager will decide (i) to vote shares held in client accounts he or she manages differently from the vote of another Royce portfolio manager whose client accounts hold the same security or (ii) to abstain from voting on behalf of client accounts he or she manages when another Royce portfolio manager is casting votes on behalf of other Royce client accounts.
	The designated Administrative Assistant reviews all proxy votes collected from Royce’s portfolio managers prior to such votes being cast. If any difference exists among the voting instructions given by Royce’s portfolio managers, as described above, the designated Administrative Assistant then presents these proposed votes to the Head of Administration and the Chief Investment Officer. The Chief Investment Officer, after consulting with the relevant portfolio managers, either reconciles the votes or authorizes the casting of differing votes by different portfolio managers. The Head of Administration maintains a log of all votes for which different portfolio managers have cast differing votes, that describes the rationale for allowing such differing votes and contains the initials of both the Chief Investment Officer and Head of Administration allowing such differing votes. The Head of Administration performs a weekly review of all votes cast by Royce to confirm that any conflicting votes were properly handled in accordance with the above-described procedures.
b.	There are many circumstances that might cause Royce to vote against an issuer’s board of directors or “management” proposal. These would include, among others, excessive compensation, unusual management stock options, preferential voting, poison pills, etc. The portfolio managers decide these issues on a case-by-case basis as described above.
c.	A portfolio manager may, on occasion, determine to abstain from voting a proxy or a specific proxy item when he or she concludes that the potential benefit of voting is outweighed by the cost, when it is not in the client account’s best interest to vote.
d.	When a client has authorized Royce to vote proxies on its behalf, Royce will generally not accept instructions from the clients regarding how to vote proxies.
e.	If a security is on loan under The Royce Funds’ Securities Lending Program with State Street Bank and Trust Company (“Loaned Securities”), the Head of Administration or the designated Administrative Assistant will recall the Loaned Securities and request that they be delivered within the customary settlement period after the notice, to permit the exercise of their voting rights if the number of shares of the security on loan would have a material effect on The Royce Funds’ voting power at the up-coming stockholder meeting. A material effect is defined as any case where the Loaned Securities are 1% or more of a class of a company’s outstanding equity securities.

Custodian banks are authorized to release all shares held for Royce client account portfolios to Automated Data Processing Corporation (“ADP”) for voting, utilizing ADP’s “Proxy Edge” software system. Substantially all portfolio companies utilize ADP to collect their proxy votes. However, for the limited number of portfolio companies that do not utilize ADP, Royce attempts to register at least a portion of its clients holdings as a physical shareholder in order to ensure its receipt of a physical proxy.

Under the continuous oversight of the Head of Administration, the designated Administrative Assistant is responsible for voting all proxies in a timely manner. Votes are returned to ADP using Proxy Edge as ballots are received, generally two weeks before the scheduled meeting date. The issuer can thus see that the shares were voted, but the actual vote cast is not released to the company until 4pm on the day before the meeting. If proxies must be mailed, they go out at least ten business days before the meeting date.

Conflicts of Interest.    The designated Administrative Assistant reviews reports generated by Royce’s portfolio management system (“Quest PMS”) that set forth by record date, any security held in a Royce client account which is issued by a (i) public company that is, or a known affiliate of which is, a separate account client of Royce

(including sub-advisory relationships), (ii) public company, or a known affiliate of a public company, that has invested in a privately-offered pooled vehicle managed by Royce or (iii) public company, or a known affiliate of a public company, by which the spouse of a Royce employee or an immediate family member of a Royce employee living in the household of such employee is employed, for the purpose of identifying any potential proxy votes that could present a conflict of interest for Royce. The Head of Administration develops and updates the list of such public companies or their known affiliates which is used by Quest PMS to generate these daily reports. This list also contains information regarding the source of any potential conflict relating to such companies. Potential conflicts identified on the “conflicts reports” are brought to the attention of the Head of Administration by the designated Administrative Assistant, who then reviews them to determine if business or personal relationships exist between Royce, its officers, managers or employees and the company that could present a material conflict of interest. Any such identified material conflicts are voted by Royce in accordance with the recommendation given by an independent third party research firm (Institutional Shareholder Services). The Head of Administration maintains a log of all such conflicts identified, the analysis of the conflict and the vote ultimately cast. Each entry in this log is signed by the Chief Investment Officer before the relevant votes are cast.

Recordkeeping.    A record of the issues and how they are voted is stored in the Proxy Edge system. Copies of all physically executed proxy cards, all proxy statements and any other documents created or reviewed that are material to making a decision on how to vote proxies are retained in the Company File maintained by Royce’s Librarian.

Item 8: (a)(1) Portfolio Managers of Closed-End Management Investment Companies (information as of March 8, 2006)

Name	Title	Length of Service	Principal Occupation(s) During Past 5 Years
Charles M. Royce	President, Chief    Investment Officer and    member of the Board of    Managers of Royce &    Associates, LLC and its    predecessor, Royce &    Associates, Inc.     (collectively, “Royce”)	Since 1972	President, Chief Investment Officer and member of the Board of Managers of Royce, the Registrant’s investment adviser; Director and President of the Registrant, Royce Micro-Cap Trust, Inc. (“RMT”) and Royce Focus Trust, Inc. (“RFT”), closed-end diversified management investment companies of which Royce is the investment adviser; Trustee and President of The Royce Fund (“TRF”) and Royce Capital Fund (“RCF”), open-end diversified management investment companies of which Royce is the investment adviser (the Registrant, RMT, RFT, TRF, and RCF collectively, “The Royce Funds”); Secretary and sole director of Royce Fund Services, Inc., a wholly-owned subsidiary of Royce and the distributor of the TRF’s shares; and managing general partner of Royce Management Company, the general partner of various private investment limited partnerships until October 2001.

(a)(2) Other Accounts Managed by Portfolio Manager and Potential Conflicts of Interest (information as of December 31, 2005)

Other Accounts

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
Registered investment companies	11	$14,108,049,219	4	$1,632,203,240
Private pooled investment vehicles	5	$122,237,742	3	$54,129,612
Other accounts*	14	$76,418,164	-	-

*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 the 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 the same Portfolio Manager 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 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 the Portfolio Manager’s Performance Bonus and the Portfolio Manager also receives a Firm Bonus based on revenues (adjusted for certain imputed expenses) generated by Royce. In addition, the Portfolio Manager receives a bonus based on Royce’s retained pre-tax profits from operations. As a result, the Portfolio Manager 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 Manager generally manages 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 performancebased 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. The Performance Bonus paid to the Portfolio Manager for 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 the Portfolio Manager, Royce Select Fund I and Royce Select Fund II, each pay Royce a performance-based fee.

Finally, conflicts of interest may arise when the 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 December 31, 2005)

Royce seeks to maintain a compensation program that is competitively positioned to attract and retain high-caliber investment professionals. The Portfolio Manager receives from Royce a base salary, a Performance Bonus and a benefits package. The Portfolio Manager’s 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. The Portfolio Manager’s compensation consists of the following elements:

- BASE SALARY.   The 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.  The 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 managed by him. The revenue used to determine the quarterly performance bonus received by the Portfolio Manager that relates to each of the Registrant and RMT are performance-based fee revenues. 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, 2005 there were 390 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 the Portfolio Manager, and to Royce Select Fund I and Royce Select Fund II, 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.

- FIRM BONUS.   The Portfolio Manager receives a quarterly bonus based on Royce’s net revenues.

- BENEFIT PACKAGE.   The 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, the Portfolio Manager 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.

The Portfolio Manager, 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 the Portfolio Manager’s compensation. A portion of the above-described compensation payable to the Portfolio Manager 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, 2005)

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

Dollar Range of Registrant’s Shares Beneficially Owned
Over $1,000,000

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: March 8, 2006

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: March 8, 2006

ROYCE VALUE TRUST, INC.

BY:	/s/John D. Diederich
	John D. Diederich
	Chief Financial Officer

Date: March 8, 2006