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: 745 Fifth Avenue

New York, NY 10151


Name and address of agent for service:      John E. Denneen, Esquire

 745 Fifth Avenue

 New York, NY 10151


Registrant's telephone number, including area code: (212) 508-4500

Date of fiscal year end: December 31

Date of reporting period: January 1, 2011 – June 30, 2011


Item 1.  Reports to Shareholders.



             
             
             
             
       
             
             
  Royce Value Trust

Royce Micro-Cap Trust

Royce Focus Trust 		   

SEMIANNUAL

    
     

REVIEW AND REPORT

     

TO STOCKHOLDERS

    
             
             
           
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
     
             
             
             
 
 
    
             
             
             
             



A Few Words on Closed-End Funds

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

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

•
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. The Funds resumed the quarterly distribution policies for their common stock, at a 5% annual rate, in March 2011. Please see page 18-20 for more details.
   
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 20 or visit our website at www.roycefunds.com.
  
     

This page is not part of the 2011 Semiannual Report to Stockholders



 

 

Table of Contents

 
 

 

 

Semiannual Review

 
   

 

 

Performance Table

2

 

 

Letter to Our Stockholders

3

 

 

Postscript: Decisions, Decisions

9

 

 

Small-Cap Market Cycle Performance

10

 

 

2011: In Quotes

60
   

 

 

Semiannual Report to Stockholders

11

For more than 35 years, we have used a value approach to invest in small-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. 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.





(MESSAGE)

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Performance Table  

NAV Average Annual Total Returns   Through June 30, 2011

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

Year-to-Date1

    5.39 %     3.12 %     3.71 %     6.21 %

One-Year

     41.59       34.62       37.02       37.41  

Three-Year

    6.92       6.23       2.89       7.77  

Five-Year

    4.33       3.18       6.03       4.08  

10-Year

    7.78       8.46       11.02       6.27  

15-Year

    10.60       10.34       n.a.       7.37  

20-Year

    11.70       n.a.       n.a.       9.82  

Since Inception

     11.06       11.05       11.42             –  

Inception Date

  11/26/86   12/14/93   11/1/962           –  
 
 

1  Not annualized
2  Date Royce & Associates, LLC assumed investment management responsibility for the Fund.

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

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Letter to Our Stockholders
 
 
Déjà vu All Over Again?
Some have suggested that the first half of 2011 looked uncannily like that of 2010. We admit that there are some striking similarities. As 2010 began, the stock market briefly stumbled out of the gate before regaining its feet, and the highly charged rally that began early in March of 2009 resumed its brisk pace. However, the month of April brought a more serious correction that lingered into early July, precipitated by fears of sovereign debt crises in Europe, anxiety over the U.S. and Chinese economies and an environmental disaster. In 2011, a sluggish January quickly yielded to an extension of the dynamic market that had characterized 2010 as a whole. This segment of the bull run then quickly reversed direction in April—truly the cruelest month for equity investors over the last two years—as renewed concerns over European fiscal solvency, another round of hand-wringing over the rate of growth in the U.S. and China, and a series of catastrophic events in Japan combined to rouse the bear.
     However superficially close, the parallels between the first halves of 2010 and 2011 were never quite as neat as some observers suggested. Any resemblance began to break down decisively in the middle of June, when the market shook off its doldrums with a rally that lasted through most of July. Unlike the first six months of 2010, the market bore


























 
We still believe that stocks can generate positive returns over the next two or three years, though we are not anticipating a rally in the second half of 2011 like the very dynamic run that ushered out 2010.

 
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Charles M. Royce, President
 
We have spent a lot of time talking
about dividends lately, but they
have been important to us as an
investment theme since Chuck Royce
assumed full investment control of
Royce Pennsylvania Mutual Fund in
November 1972. However, our work
with dividend-paying small-cap stocks
became particularly focused in 1979,
when we agreed to create a portfolio
for an institutional client who
informed us at the last minute that
every stock in the portfolio had to pay
a dividend. That experience eventually
led us to introduce Royce Total
Return Fund in 1993, Royce Dividend
Value Fund in 2004 and Royce Global
Dividend Value Fund in 2011, all of
which seek both long-term growth and
current income.
 
Our long history of finding what we
think are undervalued, fundamentally
strong dividend payers in the small-cap
world makes us a bit bemused as to why
so many other investors ignore small-
cap dividend-paying companies; they
simply do not associate the small-cap
asset class with dividends. However, we
have long maintained that dividends can
be an integral part of a successful long-
term investment strategy in the small-
cap asset class. Our experience suggests
that including dividend-paying smaller
companies in an equity portfolio
 
Continued on page 6...



     
Letter to Our Stockholders
 
only slightly ill effects by the end of 2011’s first half, despite the relentless flow of negative news and pervasive feeling of economic anxiety that have distinguished both years. The stock market’s greater resilience thus far through 2011 can be seen by measuring each year’s respective spring-summer downturn. June 2010 ended in the midst of a correction that would ultimately drop small-cap stock prices by more than 20% by early July, while 2011’s first down period, which lasted from the interim small-cap high on April 29 to the next small-cap low on June 13, saw the small-cap Russell 2000 Index lose less than half that amount.
     All of this makes the question of what may happen next perplexing. What bemuses us as we look back on both periods is that the first half of 2011 was arguably, if not worse, then at least more uncertain, in terms of headline-making developments. For example, in addition to those events already mentioned, we have been through a series of natural disasters here in the States, brinkmanship in Washington over raising the debt ceiling, and ongoing debates about how to deal with deficits and jobs, the latter two made worse because the beckoning election year has been encouraging even larger doses of partisanship than usual. So while the correction was not at all surprising—bull market interruptions have been very common historically—we are concerned about what looks like an almost casual shrugging off of significant events by large numbers of investors, some of whom are likely the same people who sold at the first sign of trouble. On the one hand, then, our contrarian perspective makes us skeptical of the rally that closed out the first half. On the other hand, our long-term view of both the equity market and the economy remains reasonably bright. We still believe that stocks can generate positive returns over the next two or three years, though we are not anticipating a rally in the second half of 2011 like the very dynamic run that ushered out 2010. In all, we remain modestly bullish and cautiously optimistic about the years ahead.

Seen It All Before
Year-to-date results for the major stock indexes were positive, though they were muted by the second quarter’s higher volatility. From our perspective, the most notable development in the first half of 2011 was seeing small-cap’s seemingly unassailable market leadership contested. For the year-to-date period ended June 30, 2011, the small-cap Russell 2000 Index gained 6.2%, while the large-cap S&P 500 Index was up 6.0%, the Russell 1000 Index climbed 6.4%, and the more tech-oriented Nasdaq Composite returned 4.6%. These results were the combined effect of the year’s very different quarters. The first, while

 
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it saw numerous shifts in market leadership, was a pleasant, placid bull period compared to what followed. Small-cap companies edged out their larger counterparts between January and March, with the Russell 2000 up 7.9% compared to respective gains of 5.9% and 6.2% for the large-cap S&P 500 and Russell 1000, and 4.8% for the Nasdaq.

 


It should be kept in mind that growth in both the stock market and the economy seldom takes place in uninterrupted straight lines or in lock stepped tandem. The recent pauses in both are very much in the range of what we consider normal.

          The second quarter, while offering a distinctly mixed bag for equities, saw small-caps cede leadership to their large-cap siblings. The Russell 2000 fell 1.6% in the second quarter versus a slender gain of 0.1% for both the S&P 500 and Russell 1000, and a loss of 0.3% for the Nasdaq Composite. One-year returns remained very strong for all four domestic indexes, and were led by small-caps. The Russell 2000 climbed 37.4%, the S&P 500 rose 30.7%, the Russell 1000 was up 31.9%, and the Nasdaq Composite gained 31.5%. Small-caps also led over longer-term periods, as the Russell 2000 outperformed each of its large-cap counterparts, the S&P 500 and Russell 1000, for the trailing three-, five-, 10-, 15- and 20-year periods ended June 30, 2011.

 

          Year-to-date results for non-U.S. equity indexes were somewhat in line with their domestic cousins, with the Russell Global ex-U.S. Small Cap Index finishing further behind its large-cap counterpart, the Russell Global ex-U.S. Large Cap Index, up 0.8% versus a gain of 4.1%. The lower year-to-date results relative to U.S. indexes were attributable to significantly lower first-quarter returns, with the Russell Global ex-U.S. Large Cap gaining 3.6%, while its non-U.S. small-cap equivalent gained 1.0%. While non-U.S. indexes generally enjoyed slightly better performance than the domestic indexes in the second quarter, it was not enough to overcome the first quarter’s relative disadvantage. For the second quarter, the Russell Global ex-U.S. Large Cap was up 0.4%, while the Russell Global ex-U.S. Small Cap declined 0.2%.

 

 

          Arguably the market’s unsung heroes, domestic mid-cap stocks, as measured by the Russell Midcap Index, outpaced their small-cap and large-cap equivalents for the year-to-date period ended June 30, 2011, up 8.1%. Micro-caps, as measured by the Russell Microcap Index, were the worst performers along the market cap spectrum, up 3.1% for the six months ended June 30, 2011. Within small-cap, value, as measured by the Russell 2000 Value Index, fell behind growth, as measured by the Russell 2000 Growth Index for the year-to-date period (+3.8% versus +8.6%). In addition, small-cap growth led its value sibling in the trailing one-, three- and five-year periods, while trailing 10-, 15-, 20-, and 25-year returns belonged to small-cap value.

 

 

 

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potentially offers both an effective
cushion against market volatility
and a strong component of an
investment’s total return, especially
during lower-return periods.
 
We also believe that a company’s
practice of paying dividends is an
excellent measure of its underlying
quality and an intelligent form of
corporate governance. From our
perspective within the small-cap
world, where the words “dividend”
and “quality” are often considered
synonymous, adopting a dividend-
paying investment strategy could be a
key to long-term outperformance.
We believe that this is more than
usually relevant today, as we believe a
shift to higher quality companies may
be at hand.
 
Understanding a company’s capital
allocation decisions is a critical
element in our investment process.
This is especially important in a
market when corporate balance sheets
are generally in excellent condition
and, in many cases, flush with cash.
Dividends are by nature the byproduct
of healthy free cash flow generation.
Of the more than 4,140 domestic
small-cap companies (those with
market capitalizations up to $2.5
billion), 1,181 were dividend payers
as of the end of the first half of
2011; of these dividend-paying
companies, 757 had a dividend yield
of at least 2%.

Not surprisingly, the number of
dividend-paying companies located
outside of the United States is
even larger. In many foreign public
 
 
Continued on page 8...



    
Letter to Our Stockholders
 
  2011 YEAR-TO-DATE NAV TOTAL RETURNS FOR THE ROYCE FUNDS VS. RUSSELL 2000 as of 6/30/11
 
 
Seeing Things
While these mood swings were the top story in equities during the first half, the return of volatility was not a development that struck us as unusual, especially considering that the market had previously been on a very dynamic run from the interim small-cap low on July 6, 2010. Some retreat from its recent highs was therefore to be expected at some point. The correction has so far been fairly modest and mostly painless, particularly in the wider context of the bull market that began following the bottom on March 9, 2009. Our thought is that, for all the surface similarities to last year’s first half, there are cyclical forces at work that are as much a factor as investors’ unease with the U.S. or global economies. It is also worth remembering that, though growth has decelerated, the economy is still growing. In addition, it should be kept in mind that growth in both the stock market and the economy seldom takes place in uninterrupted straight lines or in lock-stepped tandem. The recent pauses in both are very much in the range of what we consider normal.
     In addition, as contrarian, bargain-hunting value investors, we see opportunity when the markets correct. Our discipline entails thinking about the present and about the years ahead when positioning our portfolios. So while we never look forward to corrections, we accept them as a fact of investment life, and then some. We see downturns as vital opportunities to re-evaluate and re-stock our portfolios. Even a brief reversal in the market can create ample chances to find what we see as well-managed, financially strong businesses with attractively low share prices.

 
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     The most recent downturn offers a typical example. Between the 2011 high on April 29 and the most recent small-cap low on June 13, the Russell 2000 Index fell 10.1%. During this span, 50% of the companies in the Russell 2000 were down more than 10%; 18% (360 companies) of the Index’s constituents were off more than 20%; and 5% (100 stocks) declined by more than 30%. Not all of these companies were worth buying. It usually takes at least a 30% discount to our estimate of a company’s worth for us to consider a purchase. However, even brief and not particularly dramatic downturns create chances for us to find what we think are great companies trading at alluringly reduced prices.

Sights Unseen
The issues of unemployment and housing continue to dominate the headlines, though we still maintain that there is far more good news about the economy on a company by company basis. In fact, from the standpoint of balance sheets, cash flows, revenues and profits, corporations have seldom been in better shape. However, as long as unemployment remains high and housing continues to correct, the focus will remain on those two. The latter is, we think, less of a problem. Real estate cycles tend to unwind very slowly, and this one shows no signs of being any different. It may actually take years because the run-up in housing prices was so extreme. Any expectation that a correction would be quick was entirely misplaced. Unemployment is a more significant issue, and we have no good answer as to why the much-discussed and hoped-for pick-up in employment has not yet materialized. Certainly any increase in jobs would be a huge benefit to the economy and society as a whole. Yet companies seem much more focused on continuing to improve revenues and profits than they are on hiring, at least here in the U.S., something that we do not necessarily see changing in the intermediate future.
     So the economy is by no means out of the woods yet. This observation can be balanced, however, by our contention that it is closer to recovery than it has been since the recession began in 2007. Clearly, it has been a long, unhappy ride for many. And there have been numerous instances in history when the market was either ahead of the economy or, as we think is currently the case, when headlines are fixated on bad news while many individual companies have been doing well. Ultimately, we are throwing our lot in with companies, and the message that we have been receiving lately in our meetings with management is far more optimistic than what we see in the headlines.
















As contrarian, bargain-hunting value investors, we see opportunity when the markets correct. Our discipline entails thinking about the present and about the years ahead when positioning our portfolios.

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markets, there is typically both a
stronger embrace of dividends by
shareholders and a higher incidence
of founding-family owners who
want dividends for income. Yields in
many foreign markets are also quite
generous, particularly for smaller
companies. Many high-quality small
companies earn more than they
need in terms of reinvestment in
the business. This excess profit, or
free cash flow, is a vital qualitative
component that we look for in
companies regardless of location,
along with a strong balance sheet and
an established record of earnings.
 
Despite an abundance of small-cap
companies that pay dividends, very
few fund managers focus on dividends
within the small-cap universe. Most
focus on capital appreciation instead
of total return, while in the large-cap
universe, total return or equity income
approaches are far more common.
 
This fact is further borne out by
Morningstar data. Of the 548 small-
cap objective funds identified by
Morningstar as of June 30, 2011, only
four funds have dividend, income or
total return in their respective names
(two of which are Royce Funds). Yet
dividends in the small-cap universe
perform the same role that they do in
the large-cap area—they may tend
to reduce a stock price’s downside
volatility and allow an investor to
start the year with a positive return
as a result of the dividend. To our
way of thinking, that’s an irresistible
combination for risk-conscious value
investors like ourselves.
 
 


   
Letter to Our Stockholders
 
 
     Still, we would not be surprised if the coming months brought another downturn. We did not become too excited by the rally that closed out June, which, though welcome, did little to convince us that the downturn was over. While we continue to believe that stocks can generate positive returns over the next two or three years, we are not anticipating a rally in the second half of 2011 such as the one we had in the final six months of 2010. As stated, our bullishness and optimism are real, but low key. We believe that the fortunes of quality companies in all asset classes will resemble the growth in the economy—slow and steady, not very dramatic, but in retrospect more than satisfying.

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


July 31, 2011

 
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Decisions, Decisions  

“Not to decide is to decide.” – Theologian Harvey Cox

 

 

 

 

 

 

 

 

Washington DC has mostly been in a state of gridlock since the mid-term elections of 2010. While there has been no deficit in the number of potential solutions, policy prescriptions and bold new ideas—each one sure to both jump start the slow-growing economy and to keep it rolling along at a steady pace in the years to come—this proliferation of ideas has produced few actual decisions.
     If nothing else, the current political stalemate makes us grateful to be in a line of work in which indecision is simply not an option. Each day our talented

 

market cap scale that are eager to move up or from larger players looking to consolidate their market share of a business.
     So before we even look at a company’s fundamentals, there are risk factors that come into play. Indeed, one reason why we focus our attention on companies with strong balance sheets, high returns on invested capital, the ability to generate free cash flow, capable management and other factors that indicate financial stability is that these traits have historically acted as a bulwark against the forces

investment staff must make decisions that not only concern individual companies, but industries and sectors as well. There is an ever-present need to make choices about how to best position the portfolios for long-term capital appreciation.
     Many of the most critical decisions revolve around risk and volatility. In our own area of the equity universe, there is ample risk even for the seemingly best-managed companies in robust industries that boast enviable financial strength. We have seldom purchased shares of a business for which one of our portfolio managers could not act as a legitimate devil’s advocate.

 


One reason why we focus our attention on companies with strong balance sheets, high returns on invested capital, the ability to generate free cash flow, capable management and other factors that indicate financial stability is that these traits have historically acted as a bulwark against the forces that can render small-cap stocks so vulnerable. Finding companies with these characteristics does not eliminate the risks mentioned above, but it is one of the primary methods that we use to manage volatility in our portfolios.

 

 

that can render small-cap stocks so vulnerable. Finding companies with these characteristics does not eliminate the risks mentioned above, but it is one of the primary methods that we use to manage volatility in our portfolios.
     Our decision-making follows a simple logic: the stronger the company, the more likely it will be to survive adversity, whether in its own industry or in the economy as a whole. This theory received its best test during the darkest days of the last correction. Between the fall of 2008 and late winter of 2009, most of our portfolio holdings were battered by the near-meltdown of the global financial system, but many held on to enjoy both revived business and resurgent stock prices.

Playing such a role, in fact, is a common step in our stock evaluation process. We think about risk all the time, about the possibility of what we refer to as ‘permanent capital impairment.’ It’s an important consideration when investing in small-cap stocks. In general, smaller companies are more fragile than their large-cap counterparts. They are more likely to be reliant on a single customer, usually involved in a single line of business and as such may be subject to a potentially fatal level of competition from insurgents beneath them on the

 

     Our business is obviously quite different from the process of legislating or policymaking. To state two of the most obvious reasons, our decisions are not nearly as momentous and their implementation is far less contentious. However, with all due respect to Harvey Cox, in our business, not deciding is never an option—there is really no such thing as not deciding when managing assets. Which suits us just fine.

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Small-Cap Market Cycle Performance

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

Since the Russell 2000 Index’s inception on 12/31/78, value—as measured by the Russell 2000 Value Index—outperformed growth—as measured by the Russell 2000 Growth Index—in six of the small-cap index’s eight full market cycles. The most recently concluded cycle, which ran from 3/9/00 through 7/13/07, was the longest in the index’s history, and represented what we believe was a return to more historically typical performance in that value provided a significant advantage during its downturn (3/9/00 – 10/9/02) and for the full cycle. In contrast, the new market cycle that began on 7/13/07 has so far favored growth over value, an unsurprising development when one considers how thoroughly value dominated growth in the previous full cycle.
 
Peak-to-Peak (3/9/00–7/13/07)     
For the full cycle, value provided a sizable margin over growth, which finished the period with a loss. Each of our closed-end funds held a large performance advantage over the Russell 2000 on both an NAV (net asset value) and market price basis. On an NAV basis, Royce Focus Trust (+264.2%) was our best performer by a wide margin, followed by Royce Micro-Cap Trust (+175.9%) and Royce Value Trust (+161.3%). The latter two funds in particular benefited from their use of leverage during this, as well as in subsequent, bullish periods.
 
Peak-to-Current (7/13/07–6/30/11)
During the difficult, volatile decline that ended 3/9/09, both value and growth posted similarly negative returns. Events in the financial markets immediately preceding the end of 2008’s third quarter caused the Russell 2000 to decline significantly. After a brief rally at the end of 2008, the index continued to
 
  SMALL-CAP MARKET CYCLE: RUSSELL 2000 INDEXES TOTAL RETURNS
 
 
  ROYCE FUNDS NAV TOTAL RETURNS VS. RUSSELL 2000 INDEX:
  MARKET CYCLE RESULTS
    Peak-to-   Peak-to-   Trough-to-   Peak-to-
    Peak   Trough   Current   Current
    3/9/00-   7/13/07-   3/9/09-   7/13/07-
    7/13/07   3/9/09   6/30/11   6/30/11
Russell 2000     54.8 %     -58.9 %     148.5 %     2.2 %
Russell 2000 Value     189.4       -61.1       143.0       -5.5  
Russell 2000 Growth     -14.8       -56.8       153.7       9.7  
Royce Value Trust     161.3       -65.6       191.6       0.4  
Royce Micro-Cap Trust     175.9       -66.3       183.5       -4.6  
Royce Focus Trust     264.2       -58.3       147.1       3.1  
 
fall, though it has since recovered significantly, gaining 148.5% from 3/9/09 through 6/30/11. Royce Focus Trust outperformed the index during the decline, while Royce Value Trust and Royce Micro-Cap Trust trailed. This pattern was reversed in the bullish phase from the bottom on 3/9/09 through 6/30/11. Royce Value Trust and Royce Micro-Cap Trust substantially outperformed the Russell 2000 in this period, while Royce Focus Trust narrowly trailed the benchmark.
 
Past performance is no guarantee of future results. See page 2 for important performance information for all of the above funds.

10  |  This page is not part of the 2011 Semiannual Report to Stockholders


Table of Contents    
     

Semiannual Report to Stockholders

    

Managers’ Discussions of Fund Performance

    
     
Royce Value Trust   12
     
Royce Micro-Cap Trust   14
     
Royce Focus Trust   16

History Since Inception

   18
     

Distribution Reinvestment and Cash Purchase Options

   20
     

Schedules of Investments and Other Financial Statements

    
     

Royce Value Trust

   21
     

Royce Micro-Cap Trust

   35
     

Royce Focus Trust

   47
     

Directors and Officers

   56
     

Notes to Performance and Other Important Information

   57
     

Board Approval of Investment Advisory Agreements

   58
     

The Royce Funds 2011 Semiannual Report to Stockholders  |  11


 
 
 
AVERAGE ANNUAL NAV TOTAL RETURNS
Through 6/30/11
Jan-June 20111   5.39 %
One-Year   41.59  
Three-Year   6.92  
Five-Year   4.33  
10-Year   7.78  
15-Year   10.60  
20-Year   11.70  
Since Inception (11/26/86)   11.06  
1Not annualized
                     
CALENDAR YEAR NAV TOTAL RETURNS
                     
Year   RVT     Year       RVT  
2010   30.3 %   2000       16.6 %
2009   44.6     1999       11.7  
2008   -45.6     1998       3.3  
2007   5.0     1997       27.5  
2006   19.5     1996       15.5  
2005   8.4     1995       21.6  
2004   21.4     1994       0.1  
2003   40.8     1993       17.3  
2002   -15.6     1992       19.3  
2001   15.2     1991       38.4  
                     
TOP 10 POSITIONS
% of Net Assets Applicable
to Common Stockholders
Coherent   1.1 %
Oil States International   1.1  
Sapient Corporation   1.0  
HEICO Corporation   1.0  
Nordson Corporation   1.0  
Rofin-Sinar Technologies   0.9  
Alleghany Corporation   0.8  
Newport Corporation   0.8  
Ritchie Bros. Auctioneers   0.8  
Reliance Steel & Aluminum   0.8  
                     
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets Applicable to Common Stockholders
Industrials   26.3 %
Information Technology   20.3  
Financials   19.8  
Consumer Discretionary   11.7  
Materials   10.2  
Health Care   7.8  
Energy   6.7  
Consumer Staples   2.2  
Diversified Investment Companies   0.4  
Miscellaneous   3.8  
Bond and Preferred Stocks   0.1  
Cash and Cash Equivalents   9.8  
                     
 

     
 
Royce Value Trust
 
Manager’s Discussion
Economic data for the first half of 2011 was uneven, with global growth being affected by stubbornly high commodity prices, including a spike in oil following civil unrest in major oil producing areas and the toll of natural disasters such as the floods in New Zealand and tsunami in Japan. Corporate earnings continued to be a bright spot as companies effectively managed costs while experiencing solid revenue growth, boosting margins. Royce Value Trust (RVT), with its broadly diversified portfolio of small- and micro-cap stocks, performed reasonably well in 2011’s volatile first half. Over the period, RVT gained 5.4% on an NAV basis, and 5.3% based on the market price of its shares, trailing its unleveraged small-cap benchmarks, the Russell 2000 Index, which added 6.2%, and the S&P SmallCap 600 Index, which rose 7.5%.
     The Fund’s relative performance in each of the first two quarters of 2011 was largely in line with its benchmarks as well. During the bullish first quarter, which garnered strength from continued solid corporate earnings reports, the Fund rose 8.2% and 7.1% on an NAV and market price basis, respectively, while the Russell 2000 gained 7.9%, and the S&P SmallCap 600 advanced 7.7%. During the volatile second quarter, when small-cap stock prices suffered a 10% correction following renewed concerns over Greek sovereign finances, only to be followed by a sharp rally as European policy makers sought to control the contagion, RVT generated an NAV decline of 2.6% and a market price loss of 1.8% compared to the Russell 2000’s drop of 1.6%, and the S&P SmallCap 600’s decline of 0.2%.
     Now more than two years removed from the market lows on March 9, 2009, there has been substantial progress in the healing of financial markets and the investor confidence that ultimately supports them. While risk managers first and foremost, we were quite pleased that RVT was able to maintain its impressive lead over its benchmarks in this volatile but bullish period. While not without periodic setbacks, RVT performed admirably, outpacing both of its benchmarks from the small-cap low on March 9, 2009 through June 30, 2011, with gains of 191.6% (NAV) and 210.5% (market price) compared to the Russell 2000 and the S&P 600, which advanced 148.6% and 151.4%, respectively. On an NAV basis, the Fund beat both its benchmarks for the one-year, 15-year, 20-year and since inception (11/26/86) periods ended June 30, 2011 and also added an advantage over the Russell 2000 for the five-year and 10-year periods. RVT’s NAV average annual total return since inception was 11.1%.
          
     GOOD IDEAS THAT WORKED
     Top Contributors to Performance
   Year-to-Date through 6/30/111
 
  CARBO Ceramics   0.24 %
 
  Oil States International   0.23  
 
  SRA International Cl. A   0.22  
 
  HEICO Corporation   0.22  
 
  Coherent   0.21  
 
  1 Includes dividends
         
         
         
     Investors seemed to grow more comfortable focusing on company specific fundamentals as opposed to the constant barrage of macroeconomic risks that had so consumed them in the period following the financial crisis. This trend was evident in the Fund’s sector results. Six of the Fund’s 11 equity sectors contributed positively to returns in the first half, two detracted from returns, and the remaining three were essentially flat. Industrials and Information Technology
           
Important Performance and Risk Information
All performance information reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the most recent month-end may be obtained at www.roycefunds.com. The market price of the Fund’s shares will fluctuate, so that shares may be worth more or less than their original cost when sold. The Fund invests primarily in securities of small- and micro-cap companies, which may involve considerably more risk than investing in a more diversified portfolio of larger-cap companies. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s year-to-date performance for 2011.

 
12  |  The Royce Funds 2011 Semiannual Report to Stockholders


               
           
           
           
Performance and Portfolio Review
           
were the top gainers followed by Energy and Health Care. Materials was the worst performer, joined by a modest loss in Consumer Staples. Performance in each demonstrated that even typically defensive areas of the market exhibited pockets of weakness. At the industry level, energy equipment & services, machinery, and electronic equipment, instruments & components, each from different sectors, contributed most. Metals & mining, automobiles, and diversified consumer services were the worst performing industries, as a sharp second-quarter drop in silver prices hurt mining companies, while a spike in oil prices dented an already bruised consumer.
     CARBO Ceramics, a long-time Royce holding, was the best performer in the period. This leading producer and supplier of ceramic proppants used in horizontal shale drilling activity has benefited from extremely strong pricing in this supply constrained commodity critical to the success of shale wells. Oil States International was another top performer for the Fund. This leading provider of specialty products and services to oil and gas drilling and exploration companies, saw a jump in its shares as a rising tide of increasing oil prices and subsequent high levels of demand for each of the company’s four primary business units—accommodations, offshore products, tubular services and well site services—led to high earnings and cash flow growth.
           
     On the negative side, one notable loser was also one of our longstanding favorites, Patriot Transportation Holding. Hailing from the Industrial sector, its unique combination of transportation and real estate businesses reported lackluster earnings that were uninspiring to investors. However, with strong balance sheet, gradual improvement in its various lines of business and our view that the market substantially undervalues its assets, we continue to maintain our positive stance on the company. E-House China Holdings, a Shanghai-based real estate services operation with strong national brand recognition, was adversely affected by Chinese tightening on interest rates and more specific measures instituted by the Chinese government (and municipal governments) to discourage real estate speculation. Like many small-cap and micro-cap U.S. listed companies that are based in China or derive a large portion of their business from China, E-House China Holdings was also pressured due to the accounting irregularities at another U.S. listed Chinese firm during the period.
   GOOD IDEAS AT THE TIME  
   Top Detractors from Performance
   Year-to-Date through 6/30/111		  
 
Patriot Transportation Holding   -0.16 %  
 
E-House China Holdings ADR   -0.13    
 
Winnebago Industries   -0.11    
 
Hawkins   -0.11    
 
Hecla Mining   -0.10    
 
1Net of dividends  
           

MARKET PRICE PERFORMANCE HISTORY SINCE INCEPTION (11/26/86) through 6/30/11
1
Reflects the cumulative total return of an investment made by a stockholder who purchased one share at inception ($10.00 IPO), reinvested all annual distributions and fully participated in primary subscriptions of the Fund’s rights offerings.
2
Reflects the actual market price of one share as it traded on the NYSE.

 
       
  FUND INFORMATION AND
  PORTFOLIO DIAGNOSTICS
 
  Average Market Capitalization1 $1,476 million  
 
  Weighted Average P/E Ratio2 16.3x  
 
  Weighted Average P/B Ratio 1.9x  
 
  U.S. Investments (% of Net Assets applicable to Common Stockholders) 81.3%  
 
  Non-U.S. Investments (% of Net Assets applicable to Common Stockholders) 28.0%  
 
  Fund Total Net Assets $1,371 million  
 
  Net Leverage3 9%  
 
  Turnover Rate 12%  
 
  Number of Holdings 581  
 
  Symbol        
 

Market Price

   RVT  
 

NAV

   XRVTX  
 
 

1 Geometrically calculated
 
2 The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (9% of portfolio holdings as of 6/30/11).
 
3 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.
                             
       
  CAPITAL STRUCTURE
  Publicly Traded Securities Outstanding at 6/30/11 at NAV or Liquidation Value
 
 

67.0 million shares
of Common Stock

   $1,151 million  
 
 

5.90% Cumulative
Preferred Stock

   $220 million  
 
                             
  DOWN MARKET PERFORMANCE COMPARISON
  All Down Periods of 7.5% or Greater
Over the Last 7 Years, in Percentages(%)
 
 
   
   
 


 
The Royce Funds 2011 Semiannual Report to Stockholders  |  13


 
 
 
AVERAGE ANNUAL NAV TOTAL RETURNS
Through 6/30/11
Jan-June 20111   3.12 %
One-Year   34.62  
Three-Year   6.23  
Five-Year   3.18  
10-Year   8.46  
15-Year   10.34  
Since Inception (12/14/93)   11.05  
1 Not annualized
                     
CALENDAR YEAR NAV TOTAL RETURNS
                     
Year   RMT     Year       RMT  
2010   28.5 %   2001       23.4 %
2009   46.5     2000       10.9  
2008   -45.5     1999       12.7  
2007   0.6     1998       -4.1  
2006   22.5     1997       27.1  
2005   6.8     1996       16.6  
2004   18.7     1995       22.9  
2003   55.5     1994       5.0  
2002   -13.8                
                     
TOP 10 POSITIONS
% of Net Assets Applicable to Common Stockholders
Kennedy-Wilson Holdings   1.8 %
Sapient Corporation   1.7  
Tennant Company   1.2  
Seneca Foods   1.1  
Epoch Holding Corporation   1.1  
Richardson Electronics   1.1  
Raven Industries   1.0  
Drew Industries   1.0  
America’s Car-Mart   1.0  
HEICO Corporation   0.9  
                     
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets Applicable to Common Stockholders
Industrials   25.9 %
Information Technology   18.8  
Financials   16.9  
Consumer Discretionary   12.6  
Materials   8.9  
Health Care   7.1  
Energy   4.4  
Consumer Staples   3.1  
Telecommunication Services   0.5  
Utilities   0.1  
Miscellaneous   4.0  
Preferred Stock   0.4  
Cash and Cash Equivalents   16.2  
                     
 

   
 
    
Royce Micro-Cap Trust
 
Manager’s Discussion
Following two stellar years for micro-cap stocks in 2009 and 2010, our mean reversion sensibilities anticipated some moderation in the pace of gains as we entered 2011. Interestingly, the first half of 2011 contained many of the same headlines—deteriorating European sovereign finances, Chinese inflation, developed markets’ currency debasement, U.S. economic slowdown—that had worried investors in 2010. Focused exclusively on the fortunes of individual companies, we continue to be pleased with the progress businesses are making in this less than ideal macroeconomic backdrop. While returns did moderate in the first half of 2011, earnings are growing at a healthy pace and the already strong financial position of many companies continues to build. Over the first six months of 2011, RMT gained 3.1% on an NAV (net asset value) basis, and 3.3% based on the market price of its shares, underperforming its unleveraged small-cap benchmark, the Russell 2000 Index, which advanced 6.2%, and performing in line with the Russell Microcap Index, which rose 3.1%, for the same period.
     During the more bullish first quarter, RMT gained a respectable 6.5% on an NAV basis and 5.8% based on market price, compared to respective advances of 7.9% and 6.8% for the Russell 2000 and Russell Microcap Indexes. When stock prices turned volatile in the second quarter, the Fund lost 3.2% on an NAV basis and 2.4% on a market price basis. For the same period, the Russell 2000 fell 1.6%, and the Russell Microcap retrenched 3.5%. So though it gave up a bit of ground from the market low on March 9, 2009 through June 30, 2011, RMT maintained its impressive lead, up 183.5% (NAV) and 200.3% (market price) compared to the Russell 2000, which was up 148.6%, and the Russell Microcap, which rose 147.1%. On an NAV basis, the Fund outpaced the Russell Microcap Index for the one-, five- and 10-year periods ended June 30, 2011. (Returns for the Russell Microcap Index only go back to 2000.) On both an NAV and market price basis, RMT was ahead of the Russell 2000 for the 10-year, 15-year and since inception (12/14/93) periods ended June 30, 2011. RMT’s NAV average annual total return since inception was 11.1%.
          
     GOOD IDEAS THAT WORKED
     Top Contributors to Performance
   Year-to-Date through 6/30/111
 
  Heritage-Crystal Clean   0.44 %
 
  Kennedy-Wilson Holdings   0.35  
 
  Sapient Corporation   0.32  
 
  Frequency Electronics   0.25  
 
  Tejon Ranch   0.24  
 
  1 Includes dividends
         
     For the first half of 2011, eight of the Fund’s ten equity sectors made positive contributions to performance, with Information Technology and Industrials leading the way. Consumer Staples and Utilities were the only detractors in the period. At the industry level, electronic equipment, instruments & components was the top performer. Two industries from the Industrials sector, commercial services & supplies and machinery, came next, both benefiting from the continued renaissance in U.S. manufacturing that has long been a theme at Royce. Food products from within the Consumer Staples sector put a notable drag on performance, as higher commodity costs dug into margins in this typically defensive area of the market. Cyclical companies broadly were under pressure, especially in the second quarter, as risk aversion resurfaced following uneven economic data and increased headline anxieties.
         
Important Performance and Risk Information
All performance information reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the most recent month-end may be obtained at www.roycefunds.com. The market price of the Fund’s shares will fluctuate, so that shares may be worth more or less than their original cost when sold. The Fund normally invests in micro-cap companies, which may involve considerably more risk than investing in a more diversified portfolio of larger-cap companies. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s year-to-date performance for 2011.

 
14  |  The Royce Funds 2011 Semiannual Report to Stockholders


               
           
           
           
Performance and Portfolio Review
           
     Correlation in the market continued to decline in the first half of 2011, which was a welcome reprieve from the highly correlated characteristics that defined much of the recovery period off the bear market lows in March 2009. This was a gratifying turn of events as our process is focused on the successes and failures of individual companies. Not surprisingly, we had some of each in the first half. On the positive side, Heritage-Crystal Clean, a leading provider of industrial and hazardous waste services, was RMT’s top gainer. Benefiting from continued positive trends in environmental services, broadly, the company also continued to expand its network of small- and mid-sized customers that generally have more limited resources to dedicate to waste remediation, and look to companies like Heritage-Crystal to fulfill this highly regulated area of their business. Kennedy-Wilson Holdings is a vertically integrated international real estate and investment services company that expanded its footprint to include Europe (along with existing business in the U.S. and Japan) through the acquisition of Bank of Ireland’s real estate investment management business. In the U.S., the company continued to source attractive deals through its extensive network of real estate partners.
           
     Patriot Transportation Holding detracted most from first-half returns. Hailing from the Industrials sector and possessed of a unique combination of transportation and real estate businesses, it reported lackluster earnings. A long-term holding in the portfolio, Patriot boasts a very strong balance sheet, is seeing gradual improvement in its various lines of business and continues to have what we believe are substantially undervalued assets. Another notable loser was Origin Agritech, a U.S. listed company headquartered in China that is engaged in the manufacture and distribution of hybrid and genetically modified crop seeds. The company reported earnings that missed analyst expectations mostly as a result of a drop in revenues due to changing planting schedules of farmers. R&D expenses were also higher than expected as the company continued to invest in developing their product portfolio. Its share price also suffered in the wake of accounting fraud revelations at another U.S. listed Chinese business. This development depressed the stocks of many U.S. listed Chinese companies in June, even those with no relation to the original firm.
   GOOD IDEAS AT THE TIME  
   Top Detractors from Performance
   Year-to-Date through 6/30/111		  
 
Patriot Transportation Holding   -0.28 %  
 
Origin Agritech   -0.26    
 
Fushi Copperweld   -0.19    
 
Rentrak Corporation   -0.18    
 
Flexsteel Industries   -0.17    
 
1 Net of dividends  
           
MARKET PRICE PERFORMANCE HISTORY SINCE INCEPTION (12/14/93) through 6/30/11
1
Reflects the cumulative total return of an investment made by a stockholder who purchased one share at inception ($7.50 IPO), reinvested distributions and fully participated in the primary subscription of the 1994 rights offering.
2
Reflects the actual market price of one share as it traded on the NYSE and, prior to 12/1/03, on Nasdaq.

 
       
  FUND INFORMATION AND
  PORTFOLIO DIAGNOSTICS
 
  Average Market Capitalization1 $341 million  
 
  Weighted Average P/B Ratio 1.6x  
 
  U.S. Investments (% of Net Assets applicable to Common Stockholders) 86.0%  
 
  Non-U.S. Investments (% of Net Assets applicable to Common Stockholders) 16.7%  
 
  Fund Total Net Assets $377 million  
 
  Net Leverage2 3%  
 
  Turnover Rate 13%  
 
  Number of Holdings 334  
 
  Symbol        
 

Market Price

   RMT  
 

NAV

   XOTCX  
 
  1 Geometrically calculated
 
2 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.
                             
  CAPITAL STRUCTURE
  Publicly Traded Securities Outstanding at 6/30/11 at NAV or Liquidation Value
 
  27.8 million shares
of Common Stock

   $317 million  
 
  6.00% Cumulative
Preferred Stock

   $60 million  
 
                             
  DOWN MARKET PERFORMANCE COMPARISON
  All Down Periods of 7.5% or Greater
Over the Last 7 Years, in Percentages(%)
 
 
   
 


 
The Royce Funds 2011 Semiannual Report to Stockholders  |  15


 
 
 
AVERAGE ANNUAL NAV TOTAL RETURNS
Through 6/30/11
Jan-June 20111   3.71 %
One-Year   37.02  
Three-Year   2.89  
Five-Year   6.03  
10-Year   11.02  
Since Inception (11/1/96)2   11.42  

1 Not annualized

2 Royce & Associates assumed investment management responsibility for the Fund on 11/1/96.

                     
CALENDAR YEAR NAV TOTAL RETURNS
                     
Year   FUND     Year       FUND  
2010   21.8 %   2003       54.3 %
2009   54.0     2002       -12.5  
2008   -42.7     2001       10.0  
2007   12.2     2000       20.9  
2006   16.3     1999       8.7  
2005   13.3     1998       -6.8  
2004   29.3     1997       20.5  
                     
TOP 10 POSITIONS
% of Net Assets Applicable to Common Stockholders
Franklin Resources   3.3 %
Western Digital   3.3  
Berkshire Hathaway Cl. B   3.3  
Allied Nevada Gold   3.2  
Analog Devices   3.1  
GameStop Corporation Cl. A   2.9  
Microsoft Corporation   2.9  
Trican Well Service   2.9  
Buckle (The)   2.9  
Seabridge Gold   2.5  
                     
PORTFOLIO SECTOR BREAKDOWN
% of Net Assets Applicable to Common Stockholders
Materials   25.9 %
Financials   20.8  
Information Technology   18.1  
Energy   13.4  
Industrials   9.0  
Consumer Discretionary   7.5  
Consumer Staples   5.6  
Health Care   0.9  
Cash and Cash Equivalents   12.9  
                     
 

   
 
Royce Focus Trust
 
Manager’s Discussion
A highly volatile market, particularly for many hard asset and industrial stocks, made for a disappointing first half for Royce Focus Trust (FUND). The Fund was up 3.7% on an NAV (net asset value) basis and 5.5% on a market price basis for the year-to-date period ended June 30, 2011, in each case behind the 6.2% gain of its unleveraged small-cap benchmark, the Russell 2000 Index, for the same period. The Fund began the year on a high note, with very strong absolute and relative results in the first quarter. Between January and March, it rose 8.5% on an NAV basis and 11.7% on a market price basis, in both instances ahead of the benchmark, which climbed 7.9% in the first quarter.
     The reversal arrived with the onset of higher volatility in late April. The Fund fell 10.9% on an NAV basis and 11.5% on a market price basis from the first half’s small-cap high on April 29 through its subsequent low on June 13, while the small-cap index declined 10.1%. Needless to say, we were hoping for a better result on both an absolute and relative basis. We were more discouraged by the portfolio’s failure to hold its value during the downdraft than we were in its relatively lackluster showing in the rally that closed out the first half. For the second quarter as a whole, FUND’s NAV return fell 4.4%, and its market price was off 5.6%, compared to a drop of 1.6% for the Russell 2000.
     This pattern mostly held in recent market cycle periods. Measuring from the small-cap peak on July 13, 2007 through the end of 2011’s first half, FUND gained 3.2% on an NAV basis, while it fell 9.8% on a market price basis. The Russell 2000 was up 2.2% for the same period. From the small-cap bottom on March 9, 2009 through June 30, 2011, the Fund rose 147.1% on an NAV basis and 134.2% on a market price basis compared to a gain of 148.6% for the small-cap index. Finally, from the interim small-cap low on July 6, 2010 though the end of June 2011, FUND gained 40.0% on an NAV basis and 42.6% on a market price basis versus a 41.9% return for the benchmark.
     On a market price basis, the Fund outperformed the Russell 2000 for the one-year, 10-year and since inception of our management (11/1/96) periods ended June 30, 2011. The Fund outpaced its benchmark on an NAV basis for the five-year, 10-year and since inception periods ended June 30, 2011. The Fund’s NAV average annual total return since the inception of our management was 11.4%.
          
     GOOD IDEAS THAT WORKED
     Top Contributors to Performance
   Year-to-Date through 6/30/111
 
  Varian Semiconductor Equipment Associates   1.79 %
 
  Timberland Company (The) Cl. A   0.82  
 
  Allied Nevada Gold   0.80  
 
  Unit Corporation   0.64  
 
  Helmerich & Payne   0.63  
 
  1 Includes dividends
         
     The Materials sector detracted most from first-half results, and within the sector the most substantial losses by far came from holdings in the metals & mining industry. Many of these stocks did very well in 2010, including the Fund’s largest detractor in 2011’s first half, Pan American Silver, a Canadian company with operating mines in Mexico, Argentina, Bolivia and Peru. Its stock was punished by both the sharp reversal in silver prices and the negative effect of the president-elect of Peru campaigning on threats to nationalize or highly tax the country’s
         
Important Performance and Risk Information
All performance information reflects past performance, is presented on a total return basis and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the most recent month-end may be obtained at www.roycefunds.com. The market price of the Fund’s shares will fluctuate, so that shares may be worth more or less than their original cost when sold. The Fund normally invests primarily in small-cap companies, which may involve considerably more risk than investing in a more diversified portfolio of larger-cap companies. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s year-to-date performance for 2011.

 
16  |  The Royce Funds 2011 Semiannual Report to Stockholders


               
           
           
           
Performance and Portfolio Review
           
mining industries, a position he considerably moderated once he was elected. We thought that the company was eminently capable of effectively managing its comparatively low Peruvian exposure and thus bought more shares in April. While the Arab Spring was a momentous event, unrest in Egypt had little effect on the gold mining business of Centamin Egypt. Its name alone, however, appeared to be enough to drive investors away. Seeing that operations at its primary mine in Egypt were continuing largely unaffected by political events, we added to our position in March.
     Also in the Materials sector, Allied Nevada Gold reflected the volatility of both the stock market and precious metals prices, though it ended the first half as the Fund’s third-largest positive contributor. A stock that we have held since 2007, we were drawn to its pristine balance sheet and skill at moving from exploration to production in several gold mines. We rebuilt our position in FUND’s portfolio during 2010’s fourth quarter. The first half’s top performer came from the IT sector, Varian Semiconductor Equipment Associates. We were impressed by its strong balance sheet and impressive market leadership in the semiconductor capital equipment business. Like many small-cap businesses of late, it was subject to M&A (mergers & acquisitions) activity—its acquisition at a substantial premium was announced in May, when we sold our shares as its price rose.
           
     In June, the acquisition of The Timberland Company by a large apparel company was announced. We had long loved the strong brand and balance sheet of the New Hampshire-based footwear and apparel business. The stock traded very cheaply over the last few years as a result of reduced consumer demand, some earnings disappointments, rising leather costs and import tax issues that hampered its business in Europe, so we were very pleased to see it acquired at a sizable premium, which prompted us to begin selling our position in earnest in June. Unit Corporation, which we have owned in the portfolio since 2006, is a hybrid company in the oil and natural gas industry that offers services to other exploration and production firms and that conducts its own activities in those areas. Its share price was quite volatile in the first half, but ended June on a high note. We took some gains during the first half.
   GOOD IDEAS AT THE TIME  
   Top Detractors from Performance
   Year-to-Date through 6/30/111		  
 
Pan American Silver   -0.66 %  
 
Centamin Egypt   -0.46    
 
Patriot Transportation Holding   -0.44    
 
Teradyne   -0.37    
 
Schnitzer Steel Industries Cl. A   -0.36    
 
1 Net of dividends  
           

MARKET PRICE PERFORMANCE HISTORY SINCE INCEPTION (11/1/96)3 through 6/30/11
1
Reflects the cumulative total return experience of a continuous common stockholder who reinvested all distributions and fully participated in the primary subscription of the 2005 rights offering.
2
Reflects the actual market price of one share as it traded on Nasdaq.
3
Royce & Associates assumed investment management responsibility for the Fund on 11/1/96.

 
       
  FUND INFORMATION AND
  PORTFOLIO DIAGNOSTICS
 
  Average Market Capitalization1 $4,107 million  
 
  Weighted Average P/E Ratio2 13.3x  
 
  Weighted Average P/B Ratio 2.0x  
 
  U.S. Investments (% of Net Assets applicable to Common Stockholders) 70.1%  
 
  Non-U.S. Investments (% of Net Assets applicable to Common Stockholders) 31.1%  
 
  Fund Total Net Assets $202 million  
 
  Net Leverage3 1%  
 
  Turnover Rate 22%  
 
  Number of Holdings 57  
 
  Symbol        
 

Market Price

   FUND  
 

NAV

   XFUNX  
 
 
1 Geometrically calculated
 
2 The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (2% of portfolio holdings as of 6/30/11).
 
3 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.
                             
  CAPITAL STRUCTURE
  Publicly Traded Securities Outstanding
at 6/30/11 at NAV or Liquidation Value
 
  20.1 million shares
of Common Stock

   $177 million  
 
  6.00% Cumulative
Preferred Stock

   $25 million  
 
                             
  DOWN MARKET PERFORMANCE COMPARISON
  All Down Periods of 7.5% or Greater
Over the Last 7 Years, in Percentages(%)
 
 
   
 


 
The Royce Funds 2011 Semiannual Report to Stockholders  |  17


 

History Since Inception
 

The following table details the share accumulations by an initial investor in the Funds who reinvested all distributions 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

History

 

Amount
Invested

 

Purchase
Price1

 

Shares

 

NAV
Value2

 

Market
Value2

 

Royce Value Trust

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11/26/86

 

Initial Purchase

 

$

10,000

 

$

10.000

 

 

1,000

 

$

9,280

 

$

10,000

 

10/15/87

 

Distribution $0.30

 

 

 

 

 

7.000

 

 

42

 

 

 

 

 

 

 

12/31/87

 

Distribution $0.22

 

 

 

 

 

7.125

 

 

32

 

 

8,578

 

 

7,250

 

12/27/88

 

Distribution $0.51

 

 

 

 

 

8.625

 

 

63

 

 

10,529

 

 

9,238

 

9/22/89

 

Rights Offering

 

 

405

 

 

9.000

 

 

45

 

 

 

 

 

 

 

12/29/89

 

Distribution $0.52

 

 

 

 

 

9.125

 

 

67

 

 

12,942

 

 

11,866

 

9/24/90

 

Rights Offering

 

 

457

 

 

7.375

 

 

62

 

 

 

 

 

 

 

12/31/90

 

Distribution $0.32

 

 

 

 

 

8.000

 

 

52

 

 

11,713

 

 

11,074

 

9/23/91

 

Rights Offering

 

 

638

 

 

9.375

 

 

68

 

 

 

 

 

 

 

12/31/91

 

Distribution $0.61

 

 

 

 

 

10.625

 

 

82

 

 

17,919

 

 

15,697

 

9/25/92

 

Rights Offering

 

 

825

 

 

11.000

 

 

75

 

 

 

 

 

 

 

12/31/92

 

Distribution $0.90

 

 

 

 

 

12.500

 

 

114

 

 

21,999

 

 

20,874

 

9/27/93

 

Rights Offering

 

 

1,469

 

 

13.000

 

 

113

 

 

 

 

 

 

 

12/31/93

 

Distribution $1.15

 

 

 

 

 

13.000

 

 

160

 

 

26,603

 

 

25,428

 

10/28/94

 

Rights Offering

 

 

1,103

 

 

11.250

 

 

98

 

 

 

 

 

 

 

12/19/94

 

Distribution $1.05

 

 

 

 

 

11.375

 

 

191

 

 

27,939

 

 

24,905

 

11/3/95

 

Rights Offering

 

 

1,425

 

 

12.500

 

 

114

 

 

 

 

 

 

 

12/7/95

 

Distribution $1.29

 

 

 

 

 

12.125

 

 

253

 

 

35,676

 

 

31,243

 

12/6/96

 

Distribution $1.15

 

 

 

 

 

12.250

 

 

247

 

 

41,213

 

 

36,335

 

1997

 

Annual distribution total $1.21

 

 

 

 

 

15.374

 

 

230

 

 

52,556

 

 

46,814

 

1998

 

Annual distribution total $1.54

 

 

 

 

 

14.311

 

 

347

 

 

54,313

 

 

47,506

 

1999

 

Annual distribution total $1.37

 

 

 

 

 

12.616

 

 

391

 

 

60,653

 

 

50,239

 

2000

 

Annual distribution total $1.48

 

 

 

 

 

13.972

 

 

424

 

 

70,711

 

 

61,648

 

2001

 

Annual distribution total $1.49

 

 

 

 

 

15.072

 

 

437

 

 

81,478

 

 

73,994

 

2002

 

Annual distribution total $1.51

 

 

 

 

 

14.903

 

 

494

 

 

68,770

 

 

68,927

 

1/28/03

 

Rights Offering

 

 

5,600

 

 

10.770

 

 

520

 

 

 

 

 

 

 

2003

 

Annual distribution total $1.30

 

 

 

 

 

14.582

 

 

516

 

 

106,216

 

 

107,339

 

2004

 

Annual distribution total $1.55

 

 

 

 

 

17.604

 

 

568

 

 

128,955

 

 

139,094

 

2005

 

Annual distribution total $1.61

 

 

 

 

 

18.739

 

 

604

 

 

139,808

 

 

148,773

 

2006

 

Annual distribution total $1.78

 

 

 

 

 

19.696

 

 

693

 

 

167,063

 

 

179,945

 

2007

 

Annual distribution total $1.85

 

 

 

 

 

19.687

 

 

787

 

 

175,469

 

 

165,158

 

2008

 

Annual distribution total $1.72

 

 

 

 

 

12.307

 

 

1,294

 

 

95,415

 

 

85,435

 

3/11/09

 

Distribution $0.323

 

 

 

 

 

6.071

 

 

537

 

 

137,966

 

 

115,669

 

12/2/10

 

Distribution $0.03

 

 

 

 

 

13.850

 

 

23

 

 

179,730

 

 

156,203

 

2011

 

Year-to-date distribution total $0.37

 

 

 

 

 

14.492

 

 

276

 

 

 

 

 

 

 
 

6/30/11

 

 

 

$

21,922

 

 

 

 

 

11,019

 

$

189,417

 

$

164,403

 
 

 

 

1

The purchase price used for annual distribution totals is a weighted average of the distribution reinvestment prices for the year.

2

Other than for initial purchase, values are stated as of December 31 of the year indicated, after reinvestment of distributions.

3

Includes a return of capital.

18  |  The Royce Funds 2011 Semiannual Report to Stockholders

 
 

 

The following table details the share accumulations by an initial investor in the Funds who reinvested all distributions 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

History

 

Amount
Invested

 

Purchase
Price1

 

Shares

 

NAV
Value2

 

Market
Value2

 

Royce Micro-Cap Trust

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/14/93

 

Initial Purchase

 

$

7,500

 

$

7.500

 

 

1,000

 

$

7,250

 

$

7,500

 

10/28/94

 

Rights Offering

 

 

1,400

 

 

7.000

 

 

200

 

 

 

 

 

 

 

12/19/94

 

Distribution $0.05

 

 

 

 

 

6.750

 

 

9

 

 

9,163

 

 

8,462

 

12/7/95

 

Distribution $0.36

 

 

 

 

 

7.500

 

 

58

 

 

11,264

 

 

10,136

 

12/6/96

 

Distribution $0.80

 

 

 

 

 

7.625

 

 

133

 

 

13,132

 

 

11,550

 

12/5/97

 

Distribution $1.00

 

 

 

 

 

10.000

 

 

140

 

 

16,694

 

 

15,593

 

12/7/98

 

Distribution $0.29

 

 

 

 

 

8.625

 

 

52

 

 

16,016

 

 

14,129

 

12/6/99

 

Distribution $0.27

 

 

 

 

 

8.781

 

 

49

 

 

18,051

 

 

14,769

 

12/6/00

 

Distribution $1.72

 

 

 

 

 

8.469

 

 

333

 

 

20,016

 

 

17,026

 

12/6/01

 

Distribution $0.57

 

 

 

 

 

9.880

 

 

114

 

 

24,701

 

 

21,924

 

2002

 

Annual distribution total $0.80

 

 

 

 

 

9.518

 

 

180

 

 

21,297

 

 

19,142

 

2003

 

Annual distribution total $0.92

 

 

 

 

 

10.004

 

 

217

 

 

33,125

 

 

31,311

 

2004

 

Annual distribution total $1.33

 

 

 

 

 

13.350

 

 

257

 

 

39,320

 

 

41,788

 

2005

 

Annual distribution total $1.85

 

 

 

 

 

13.848

 

 

383

 

 

41,969

 

 

45,500

 

2006

 

Annual distribution total $1.55

 

 

 

 

 

14.246

 

 

354

 

 

51,385

 

 

57,647

 

2007

 

Annual distribution total $1.35

 

 

 

 

 

13.584

 

 

357

 

 

51,709

 

 

45,802

 

2008

 

Annual distribution total $1.19

 

 

 

 

 

8.237

 

 

578

 

 

28,205

 

 

24,807

 

3/11/09

 

Distribution $0.223

 

 

 

 

 

4.260

 

 

228

 

 

41,314

 

 

34,212

 

12/2/10

 

Distribution $0.08

 

 

 

 

 

9.400

 

 

40

 

 

53,094

 

 

45,884

 

2011

 

Year-to-date distribution total $0.25

 

 

 

 

 

9.424

 

 

125

 

 

 

 

 

 

 
 

6/30/11

 

 

 

$

8,900

 

 

 

 

 

4,807

 

$

54,725

 

 

47,397

 
 

Royce Focus Trust

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10/31/96

 

Initial Purchase

 

$

4,375

 

$

4.375

 

 

1,000

 

$

5,280

 

$

4,375

 

12/31/96

 

 

 

 

 

 

 

 

 

 

 

 

 

5,520

 

 

4,594

 

12/5/97

 

Distribution $0.53

 

 

 

 

 

5.250

 

 

101

 

 

6,650

 

 

5,574

 

12/31/98

 

 

 

 

 

 

 

 

 

 

 

 

 

6,199

 

 

5,367

 

12/6/99

 

Distribution $0.145

 

 

 

 

 

4.750

 

 

34

 

 

6,742

 

 

5,356

 

12/6/00

 

Distribution $0.34

 

 

 

 

 

5.563

 

 

69

 

 

8,151

 

 

6,848

 

12/6/01

 

Distribution $0.14

 

 

 

 

 

6.010

 

 

28

 

 

8,969

 

 

8,193

 

12/6/02

 

Distribution $0.09

 

 

 

 

 

5.640

 

 

19

 

 

7,844

 

 

6,956

 

12/8/03

 

Distribution $0.62

 

 

 

 

 

8.250

 

 

94

 

 

12,105

 

 

11,406

 

2004

 

Annual distribution total $1.74

 

 

 

 

 

9.325

 

 

259

 

 

15,639

 

 

16,794

 

5/6/05

 

Rights offering

 

 

2,669

 

 

8.340

 

 

320

 

 

 

 

 

 

 

2005

 

Annual distribution total $1.21

 

 

 

 

 

9.470

 

 

249

 

 

21,208

 

 

20,709

 

2006

 

Annual distribution total $1.57

 

 

 

 

 

9.860

 

 

357

 

 

24,668

 

 

27,020

 

2007

 

Annual distribution total $2.01

 

 

 

 

 

9.159

 

 

573

 

 

27,679

 

 

27,834

 

2008

 

Annual distribution total $0.47

 

 

 

 

 

6.535

 

 

228

 

 

15,856

 

 

15,323

 

3/11/09

 

Distribution $0.093

 

 

 

 

 

3.830

 

 

78

 

 

24,408

 

 

21,579

 

2011

 

Year-to-date distribution total $0.19

 

 

 

 

 

7.491

 

 

87

 

 

 

 

 

 

 
 

6/30/11

 

 

 

$

7,044

 

 

 

 

 

3,496

 

$

30,835

 

$

27,234

 
 

 

 

1

The purchase price used for annual distribution totals is a weighted average of the distribution reinvestment prices for the year.

2

Other than for initial purchase, values are stated as of December 31 of the year indicated, after reinvestment of distributions.

3

Includes a return of capital.

The Royce Funds 2011 Semiannual Report to Stockholders  |  19

 

Distribution Reinvestment and Cash Purchase Options
 

Have the Funds resumed their managed distribution policies for common stockholders?
The Funds resumed their quarterly distribution policy for Common Stockholders in March 2011, at the annual rate of 5%.

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, 2011.

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.



20  |  The Royce Funds 2011 Semiannual Report to Stockholders

 

 

Royce Value Trust

June 30, 2011 (unaudited)
   

 

   Schedule of Investments

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

 

 

 

 

 

 

COMMON STOCKS – 109.2%

 

 

 

 

 

 

 

 

Consumer Discretionary – 11.7%

Auto Components - 0.6%

Autoliv

 

 

14,800

 

$

1,161,060

 

China XD Plastics 1,2

 

 

69,500

 

 

292,595

 

Gentex Corporation

 

 

50,000

 

 

1,511,500

 

Hirotako Holdings

 

 

286,000

 

 

187,720

 

Minth Group

 

 

1,136,000

 

 

1,843,476

 

Norstar Founders Group 2,3

 

 

524,000

 

 

24,578

 

SORL Auto Parts 1,2

 

 

81,592

 

 

367,164

 

Superior Industries International

 

 

40,000

 

 

884,400

 

Williams Controls

 

 

37,499

 

 

431,239

 

 

 

 

 

 

    

 

 

 

 

 

 

 

6,703,732

 

 

 

 

 

 

    

 

Automobiles - 0.3%

Thor Industries

 

 

50,000

 

 

1,442,000

 

Winnebago Industries 1,2

 

 

222,500

 

 

2,149,350

 

 

 

 

 

 

    

 

 

 

 

 

 

 

3,591,350

 

 

 

 

 

 

    

 

Distributors - 0.7%

LKQ Corporation 2

 

 

230,000

 

 

6,000,700

 

Weyco Group

 

 

97,992

 

 

2,410,603

 

 

 

 

 

 

    

 

 

 

 

 

 

 

8,411,303

 

 

 

 

 

 

    

 

Diversified Consumer Services - 1.7%

Anhanguera Educacional Participacoes

 

 

80,000

 

 

1,702,880

 

Benesse Holdings

 

 

32,000

 

 

1,377,125

 

ChinaCast Education 2

 

 

181,400

 

 

939,652

 

Corinthian Colleges 1,2

 

 

59,500

 

 

253,470

 

ITT Educational Services 2

 

 

9,000

 

 

704,160

 

MegaStudy

 

 

24,200

 

 

3,257,305

 

Regis Corporation

 

 

233,800

 

 

3,581,816

 

Sotheby's

 

 

157,500

 

 

6,851,250

 

Universal Technical Institute

 

 

43,600

 

 

861,972

 

 

 

 

 

 

    

 

 

 

 

 

 

 

19,529,630

 

 

 

 

 

 

    

 

Hotels, Restaurants & Leisure - 0.3%

Abu Dhabi National Hotels 3

 

 

130,000

 

 

88,837

 

Ajisen China Holdings

 

 

300,000

 

 

625,233

 

Benihana 2

 

 

3,300

 

 

34,386

 

CEC Entertainment

 

 

64,100

 

 

2,571,051

 

Fairwood Holdings

 

 

35,000

 

 

52,376

 

Kangwon Land

 

 

7,500

 

 

201,168

 

REXLot Holdings

 

 

4,176,800

 

 

403,948

 

 

 

 

 

 

    

 

 

 

 

 

 

 

3,976,999

 

 

 

 

 

 

    

 

Household Durables - 1.9%

Allan International Holdings

 

 

350,000

 

 

138,532

 

Desarrolladora Homex ADR 2

 

14,100

 

 

355,743

 

Ekornes

 

 

55,000

 

 

1,243,751

 

Ethan Allen Interiors

 

 

345,800

 

 

7,362,082

 

Hanssem

 

 

49,100

 

 

617,943

 

Harman International Industries

 

 

22,950

 

 

1,045,831

 

Hunter Douglas

 

 

10,000

 

 

489,577

 

Mohawk Industries 2

 

 

128,200

 

 

7,690,718

 

NVR 2

 

 

500

 

 

362,740

 

Universal Electronics 2

 

 

10,000

 

 

252,600

 

Woongjin Coway

 

 

59,400

 

 

2,118,675

 

 

 

 

 

 

    

 

 

 

 

 

 

 

21,678,192

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

 

 

 

 

 

 

 

 

Consumer Discretionary (continued)

Internet & Catalog Retail - 0.4%

Manutan International

 

 

27,500

 

$

2,121,783

 

Takkt

 

 

130,000

 

 

2,101,807

 

 

 

 

 

 

    

 

 

 

 

 

 

 

4,223,590

 

 

 

 

 

 

    

 

Leisure Equipment & Products - 0.5%

Beneteau

 

 

50,000

 

 

1,076,782

 

Sturm, Ruger & Co.

 

 

220,600

 

 

4,842,170

 

 

 

 

 

 

    

 

 

 

 

 

 

 

5,918,952

 

 

 

 

 

 

    

 

Media - 0.8%

Global Sources 2

 

 

27,621

 

 

253,837

 

Lamar Advertising Cl. A 2

 

 

51,000

 

 

1,395,870

 

Morningstar

 

 

109,800

 

 

6,673,644

 

Pico Far East Holdings

 

 

6,785,000

 

 

1,404,232

 

 

 

 

 

 

    

 

 

 

 

 

 

 

9,727,583

 

 

 

 

 

 

    

 

Multiline Retail - 0.1%

New World Department Store China

 

 

1,559,000

 

 

1,231,332

 

 

 

 

 

 

    

 

Specialty Retail - 1.7%

Aeropostale 1,2

 

 

48,700

 

 

852,250

 

Ascena Retail Group 2

 

 

68,280

 

 

2,324,934

 

CarMax 2

 

 

41,000

 

 

1,355,870

 

Charming Shoppes 2

 

 

475,900

 

 

1,979,744

 

Dickson Concepts (International)

 

 

711,600

 

 

557,025

 

Dover Saddlery 1,2

 

 

17,821

 

 

83,224

 

GameStop Corporation Cl. A 1,2

 

 

24,400

 

 

650,748

 

Genesco 2

 

 

8,100

 

 

422,010

 

Hengdeli Holdings

 

 

485,250

 

 

258,693

 

Jos. A. Bank Clothiers 2

 

 

31,000

 

 

1,550,310

 

Lewis Group

 

 

200,000

 

 

2,503,186

 

Luk Fook Holdings (International)

 

 

95,500

 

 

463,719

 

Stein Mart

 

 

167,800

 

 

1,617,592

 

Systemax 2

 

 

224,000

 

 

3,346,560

 

West Marine 2

 

 

131,100

 

 

1,359,507

 

 

 

 

 

 

    

 

 

 

 

 

 

 

19,325,372

 

 

 

 

 

 

    

 

Textiles, Apparel & Luxury Goods - 2.7%

Anta Sports Products

 

 

323,200

 

 

579,207

 

Burberry Group

 

 

50,000

 

 

1,162,500

 

Carter's 2

 

 

236,000

 

 

7,259,360

 

†China Xiniya Fashion ADR 1,2

 

 

45,700

 

 

133,444

 

Columbia Sportswear

 

 

19,122

 

 

1,212,335

 

Daphne International Holdings

 

 

2,115,800

 

 

1,889,803

 

Grendene

 

 

250,000

 

 

1,441,707

 

J.G. Boswell Company 4

 

 

2,292

 

 

1,719,000

 

K-Swiss Cl. A 2

 

 

163,600

 

 

1,739,068

 

Lazare Kaplan International 2,4

 

 

95,437

 

 

129,794

 

Pacific Textiles Holdings

 

 

2,420,000

 

 

1,616,881

 

Stella International Holdings

 

 

806,800

 

 

2,046,133

 

Texwinca Holdings

 

 

401,000

 

 

477,006

 

Unifi 2

 

 

40,333

 

 

556,596

 

Van De Velde

 

 

15,000

 

 

852,341

 

Warnaco Group (The) 2

 

 

73,200

 

 

3,824,700

 

Wolverine World Wide

 

 

100,000

 

 

4,175,000

 

 

 

 

 

 

    

 

 

 

 

 

 

 

30,814,875

 

 

 

    

 

    

 

Total (Cost $101,361,451)

 

 

 

 

 

135,132,910

 

 

 

    

 

    

 


 

 

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

2011 Semiannual Report to Stockholders | 21

 

Royce Value Trust
 

 

   Schedule of Investments

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

 

 

 

 

 

 

 

 

Consumer Staples – 2.2%

Beverages - 0.1%

 

 

 

 

 

 

 

† Heckmann Corporation 1,2

 

 

50,000

 

$

302,000

 

MGP Ingredients

 

 

127,400

 

 

1,109,654

 

 

 

 

 

 

    

 

 

 

 

 

 

 

1,411,654

 

 

 

 

 

 

    

 

Food & Staples Retailing - 0.4%

 

 

 

 

 

 

 

FamilyMart

 

 

125,900

 

 

4,627,815

 

 

 

 

 

 

    

 

Food Products - 1.7%

 

 

 

 

 

 

 

Alico

 

 

27,000

 

 

691,740

 

Asian Citrus Holdings

 

 

587,800

 

 

537,024

 

Binggrae

 

 

22,415

 

 

1,297,025

 

BW Plantation

 

 

875,100

 

 

121,507

 

Cal-Maine Foods

 

 

49,900

 

 

1,594,804

 

China Green (Holdings)

 

 

2,272,000

 

 

1,466,724

 

First Resources

 

 

1,506,700

 

 

1,705,134

 

Grupo Herdez

 

 

300,000

 

 

644,916

 

Hershey Creamery 4

 

 

709

 

 

1,240,750

 

Origin Agritech 1,2

 

 

76,800

 

 

305,664

 

Seneca Foods Cl. A 1,2

 

 

110,000

 

 

2,813,800

 

Seneca Foods Cl. B 2

 

 

13,251

 

 

330,745

 

Super Group

 

 

735,000

 

 

857,032

 

Tootsie Roll Industries

 

 

198,566

 

 

5,810,041

 

Westway Group 2

 

 

31,500

 

 

152,775

 

 

 

 

 

 

    

 

 

 

 

 

 

 

19,569,681

 

 

 

 

 

 

    

 

Total (Cost $22,330,427)

 

 

 

 

 

25,609,150

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Diversified Investment Companies – 0.4%

 

 

 

 

 

 

 

Closed-End Funds - 0.4%

 

 

 

 

 

 

 

Central Fund of Canada Cl. A

 

 

237,000

 

 

4,827,690

 

 

 

 

 

 

    

 

Total (Cost $2,076,233)

 

 

 

 

 

4,827,690

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Energy – 6.7%

 

 

 

 

 

 

 

Energy Equipment & Services - 5.9%

Atwood Oceanics 2

 

 

15,300

 

 

675,189

 

Cal Dive International 2

 

 

456,250

 

 

2,728,375

 

Calfrac Well Services

 

 

45,000

 

 

1,482,347

 

CARBO Ceramics

 

 

44,700

 

 

7,283,865

 

Ensco ADR

 

 

37,600

 

 

2,004,080

 

Ensign Energy Services

 

 

225,100

 

 

4,462,556

 

Exterran Holdings 1,2

 

 

103,600

 

 

2,054,388

 

Helmerich & Payne

 

 

100,900

 

 

6,671,508

 

ION Geophysical 2

 

 

361,500

 

 

3,419,790

 

Lufkin Industries

 

 

62,000

 

 

5,335,100

 

Oil States International 2

 

 

158,500

 

 

12,665,735

 

Pason Systems

 

 

101,800

 

 

1,534,732

 

SEACOR Holdings

 

 

23,760

 

 

2,375,049

 

ShawCor Cl. A

 

 

104,500

 

 

3,209,384

 

SinoTech Energy ADR 1,2

 

 

119,000

 

 

492,660

 

TETRA Technologies 2

 

 

68,000

 

 

865,640

 

TGS-NOPEC Geophysical

 

 

80,000

 

 

2,243,683

 

Tidewater

 

 

36,000

 

 

1,937,160

 

Trican Well Service

 

 

99,900

 

 

2,347,176

 

Unit Corporation 2

 

 

43,000

 

 

2,619,990

 

Willbros Group 2

 

 

103,800

 

 

886,452

 

 

 

 

 

 

    

 

 

 

 

 

 

 

67,294,859

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

 

 

 

 

 

 

 

 

Energy (continued)

Oil, Gas & Consumable Fuels - 0.8%

Bill Barrett 2

 

 

50,000

 

$

2,317,500

 

Cimarex Energy

 

 

50,000

 

 

4,496,000

 

†Continental Resources 1,2

 

 

4,600

 

 

298,586

 

HRT Participacoes em Petroleo 2

 

 

200

 

 

179,412

 

Resolute Energy 1,2

 

 

141,134

 

 

2,280,726

 

 

 

 

 

 

    

 

 

 

 

 

 

 

9,572,224

 

 

 

 

 

 

    

 

Total (Cost $36,445,183)

 

 

 

 

 

76,867,083

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Financials – 19.8%

 

 

 

 

 

 

 

Capital Markets - 10.3%

A.F.P. Provida ADR

 

 

22,100

 

 

1,579,045

 

ABG Sundal Collier Holding

 

 

115,000

 

 

125,589

 

Affiliated Managers Group 2

 

 

47,600

 

 

4,829,020

 

AllianceBernstein Holding L.P.

 

 

344,600

 

 

6,699,024

 

AP Alternative Assets L.P.

 

 

233,200

 

 

2,869,215

 

Artio Global Investors Cl. A

 

 

235,000

 

 

2,655,500

 

Ashmore Group

 

 

777,500

 

 

4,969,343

 

Azimut Holding

 

 

72,183

 

 

673,152

 

Banca Generali

 

 

86,000

 

 

1,191,832

 

Bank Sarasin & Co. Cl. B

 

 

33,120

 

 

1,311,599

 

Banque Privee Edmond de Rothschild

 

 

23

 

 

649,717

 

BKF Capital Group 2,4

 

 

130,000

 

 

165,100

 

BT Investment Management

 

 

207,000

 

 

555,194

 

Close Brothers Group

 

 

43,000

 

 

532,804

 

Coronation Fund Managers

 

 

526,000

 

 

1,502,209

 

Cowen Group Cl. A 1,2

 

 

708,600

 

 

2,664,336

 

Daewoo Securities

 

 

5,000

 

 

84,155

 

Eaton Vance

 

 

85,300

 

 

2,578,619

 

Egyptian Financial Group-Hermes Holding 2

 

 

774,500

 

 

2,607,791

 

Epoch Holding Corporation

 

 

25,000

 

 

446,250

 

Equity Trustees

 

 

36,709

 

 

547,169

 

F&C Asset Management

 

 

60,000

 

 

72,189

 

FBR & Company 2

 

 

249,600

 

 

848,640

 

Federated Investors Cl. B

 

 

307,700

 

 

7,335,568

 

Fiducian Portfolio Services

 

 

227,000

 

 

324,516

 

GAMCO Investors Cl. A

 

 

90,575

 

 

4,192,717

 

GFI Group

 

 

166,247

 

 

763,074

 

GIMV

 

 

22,500

 

 

1,432,774

 

Gleacher & Company 2

 

 

293,000

 

 

597,720

 

GP Investments BDR 2

 

 

15,604

 

 

60,290

 

HQ 2

 

 

40,000

 

 

43,638

 

Investec

 

 

118,000

 

 

955,500

 

IOOF Holdings

 

 

123,592

 

 

878,614

 

KKR & Co. L.P.

 

 

415,000

 

 

6,772,800

 

Lazard Cl. A

 

 

109,300

 

 

4,055,030

 

MF Global Holdings 2

 

 

749,000

 

 

5,797,260

 

Mizuho Securities 2

 

 

492,300

 

 

1,186,316

 

MVC Capital

 

 

214,200

 

 

2,833,866

 

Oppenheimer Holdings Cl. A

 

 

75,000

 

 

2,115,750

 

Paris Orleans et Cie

 

 

183,785

 

 

5,199,691

 

Partners Group Holding

 

 

11,300

 

 

1,999,965

 

Perpetual

 

 

13,541

 

 

362,222

 

Phatra Capital

 

 

775,000

 

 

732,084

 


 

 

22 | 2011 Semiannual Report to Stockholders

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

 

 June 30, 2011 (unaudited)
 

 

 

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

 

 

 

 

 

 

 

 

Financials (continued)

Capital Markets (continued)

Platinum Asset Management

 

 

149,000

 

$

658,660

 

Rathbone Brothers

 

 

35,400

 

 

642,597

 

Reinet Investments 2

 

 

133,127

 

 

2,414,411

 

Schroders

 

 

41,100

 

 

1,020,497

 

SEI Investments

 

 

352,900

 

 

7,943,779

 

SHUAA Capital 2

 

 

485,000

 

 

125,565

 

SPARX Group 2

 

 

1,320

 

 

131,957

 

Sprott

 

 

269,600

 

 

2,065,782

 

Teton Advisors Cl. A 4

 

 

723

 

 

12,219

 

Treasury Group

 

 

51,500

 

 

219,162

 

Trust Company (The)

 

 

97,283

 

 

576,035

 

UOB-Kay Hian Holdings

 

 

190,000

 

 

250,777

 

Value Partners Group

 

 

7,407,800

 

 

6,366,914

 

Vontobel Holding

 

 

20,400

 

 

691,314

 

VZ Holding

 

 

8,500

 

 

1,434,321

 

Waddell & Reed Financial Cl. A

 

 

139,300

 

 

5,063,555

 

Westwood Holdings Group

 

 

23,460

 

 

893,826

 

Woori Investment & Securities

 

 

11,000

 

 

177,954

 

 

 

 

 

 

    

 

 

 

 

 

 

 

118,486,212

 

 

 

 

 

 

    

 

Commercial Banks - 1.4%

Ameriana Bancorp

 

 

40,000

 

 

200,000

 

Bank of N.T. Butterfield & Son 2,3

 

 

942,504

 

 

1,319,505

 

BCB Holdings 2

 

 

598,676

 

 

518,857

 

Center Bancorp

 

 

44,868

 

 

468,422

 

CNB Financial

 

 

11,116

 

 

154,401

 

Commercial National Financial

 

 

54,900

 

 

1,056,825

 

Farmers & Merchants Bank of Long

 

 

 

 

 

 

 

Beach

 

 

1,200

 

 

5,088,000

 

Fauquier Bankshares

 

 

160,800

 

 

1,960,152

 

Hawthorn Bancshares

 

 

49,944

 

 

382,570

 

M&T Bank

 

 

20,027

 

 

1,761,375

 

Mauritius Commercial Bank

 

 

40,000

 

 

266,195

 

Mechanics Bank

 

 

200

 

 

2,320,000

 

Old Point Financial

 

 

25,000

 

 

293,250

 

Peapack-Gladstone Financial

 

 

10,500

 

 

123,690

 

Sumitomo Mitsui Trust Holdings

 

 

118,000

 

 

411,658

 

 

 

 

 

 

    

 

 

 

 

 

 

 

16,324,900

 

 

 

 

 

 

    

 

Consumer Finance - 0.3%

World Acceptance 1,2

 

 

42,000

 

 

2,753,940

 

 

 

 

 

 

    

 

Diversified Financial Services - 1.0%

Banca Finnat Euramerica

 

 

870,000

 

 

549,165

 

Hellenic Exchanges

 

 

169,613

 

 

1,209,863

 

Interactive Brokers Group Cl. A

 

 

100,000

 

 

1,565,000

 

KKR Financial Holdings LLC

 

 

381,404

 

 

3,741,573

 

PICO Holdings 2

 

 

106,100

 

 

3,076,900

 

RHJ International 2

 

 

102,500

 

 

738,875

 

State Bank of Mauritius

 

 

46,000

 

 

156,318

 

 

 

 

 

 

    

 

 

 

 

 

 

 

11,037,694

 

 

 

 

 

 

    

 

Insurance - 5.1%

Alleghany Corporation 2

 

 

29,230

 

 

9,736,805

 

Argo Group International Holdings

 

 

64,751

 

 

1,924,400

 

Aspen Insurance Holdings

 

 

47,000

 

 

1,209,310

 

Brown & Brown

 

 

300,100

 

 

7,700,566

 

Crawford & Company Cl. B

 

 

1,160

 

 

8,201

 

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

 

 

 

 

 

 

 

 

Financials (continued)

Insurance (continued)

Discovery Holdings

 

 

255,000

 

$

1,454,869

 

eHealth 1,2

 

 

32,000

 

 

427,520

 

E-L Financial

 

 

17,900

 

 

8,166,313

 

Enstar Group 2

 

 

20,217

 

 

2,112,474

 

Erie Indemnity Cl. A

 

 

50,000

 

 

3,536,000

 

First American Financial

 

 

44,000

 

 

688,600

 

Gallagher (Arthur J.) & Co.

 

 

111,200

 

 

3,173,648

 

Hilltop Holdings 2

 

 

290,400

 

 

2,567,136

 

Independence Holding

 

 

317,658

 

 

3,316,350

 

Markel Corporation 2

 

 

4,200

 

 

1,666,602

 

Montpelier Re Holdings

 

 

32,000

 

 

576,000

 

Platinum Underwriters Holdings

 

 

94,000

 

 

3,124,560

 

ProAssurance Corporation 2

 

 

22,000

 

 

1,540,000

 

RLI

 

 

80,724

 

 

4,998,430

 

Validus Holdings

 

 

16,300

 

 

504,485

 

White Mountains Insurance Group

 

 

1,050

 

 

441,168

 

 

 

 

 

 

    

 

 

 

 

 

 

 

58,873,437

 

 

 

 

 

 

    

 

Real Estate Management & Development - 1.1%

Altisource Portfolio Solutions 2

 

 

41,199

 

 

1,516,123

 

Consolidated-Tomoka Land

 

 

13,564

 

 

387,930

 

E-House China Holdings ADR

 

 

346,100

 

 

3,395,241

 

Forestar Group 2

 

 

108,000

 

 

1,774,440

 

IFM Investments ADR 1,2

 

 

90,452

 

 

132,965

 

Kennedy-Wilson Holdings

 

 

150,000

 

 

1,837,500

 

Midland Holdings

 

 

927,800

 

 

543,489

 

Soho China

 

 

750,000

 

 

673,666

 

Tejon Ranch 2

 

 

80,996

 

 

2,761,964

 

 

 

 

 

 

    

 

 

 

 

 

 

 

13,023,318

 

 

 

 

 

 

    

 

Thrifts & Mortgage Finance - 0.6%

CFS Bancorp

 

 

75,000

 

 

402,750

 

HopFed Bancorp

 

 

106,590

 

 

843,127

 

Kearny Financial

 

 

70,862

 

 

645,553

 

MyState

 

 

152,000

 

 

572,565

 

Ocwen Financial 2

 

 

123,600

 

 

1,577,136

 

Timberland Bancorp 2,5

 

 

469,200

 

 

2,772,972

 

 

 

 

 

 

    

 

 

 

 

 

 

 

6,814,103

 

 

 

 

 

 

    

 

Total (Cost $225,543,590)

 

 

 

 

 

227,313,604

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Health Care – 7.8%

Biotechnology - 0.2%

Pharmacyclics 1,2

 

 

158,746

 

 

1,657,308

 

Sunesis Pharmaceuticals 1,2

 

 

35,249

 

 

73,671

 

3SBio ADR 1,2

 

 

22,500

 

 

392,175

 

 

 

 

 

 

    

 

 

 

 

 

 

 

2,123,154

 

 

 

 

 

 

    

 

Health Care Equipment & Supplies - 2.1%

Allied Healthcare Products 1,2

 

 

180,512

 

 

714,827

 

Analogic Corporation

 

 

40,135

 

 

2,110,700

 

Atrion Corporation

 

 

15,750

 

 

3,115,350

 

bioMerieux

 

 

8,800

 

 

1,021,699

 

Carl Zeiss Meditec

 

 

163,700

 

 

3,646,237

 

Cochlear

 

 

7,500

 

 

578,932

 

CONMED Corporation 2

 

 

81,500

 

 

2,321,120

 

DiaSorin

 

 

20,000

 

 

960,038

 


 

 

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

2011 Semiannual Report to Stockholders | 23

 

Royce Value Trust
 

 

   Schedule of Investments

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

 

 

 

 

 

 

 

 

Health Care (continued)

Health Care Equipment & Supplies (continued)

DynaVox Cl. A 2

 

 

55,000

 

$

418,000

 

IDEXX Laboratories 2

 

 

40,201

 

 

3,117,990

 

Kinetic Concepts 1,2

 

 

6,300

 

 

363,069

 

Kossan Rubber Industries

 

 

200,600

 

 

207,470

 

Nihon Kohden

 

 

43,100

 

 

1,068,052

 

Straumann Holding

 

 

6,500

 

 

1,568,838

 

Top Glove

 

 

260,000

 

 

452,165

 

Urologix 1,2

 

 

445,500

 

 

423,225

 

Young Innovations

 

 

62,550

 

 

1,783,926

 

Zoll Medical 2

 

 

400

 

 

22,664

 

 

 

 

 

 

    

 

 

 

 

 

 

 

23,894,302

 

 

 

 

 

 

    

 

Health Care Providers & Services - 0.6%

Cross Country Healthcare 2

 

 

30,000

 

 

228,000

 

Landauer

 

 

75,500

 

 

4,650,045

 

MWI Veterinary Supply 2

 

 

10,000

 

 

807,700

 

VCA Antech 2

 

 

74,500

 

 

1,579,400

 

 

 

 

 

 

    

 

 

 

 

 

 

 

7,265,145

 

 

 

 

 

 

    

 

Life Sciences Tools & Services - 3.1%

Affymetrix 1,2

 

 

10,000

 

 

79,300

 

Albany Molecular Research 2

 

 

85,000

 

 

408,850

 

EPS

 

 

683

 

 

1,608,101

 

Furiex Pharmaceuticals 2

 

 

8,333

 

 

148,244

 

ICON ADR 2

 

 

262,350

 

 

6,180,966

 

Luminex Corporation 1,2

 

 

20,000

 

 

418,000

 

Mettler-Toledo International 2

 

 

33,500

 

 

5,650,445

 

PAREXEL International 2

 

 

312,400

 

 

7,360,144

 

PerkinElmer

 

 

185,800

 

 

4,999,878

 

Pharmaceutical Product Development

 

 

100,000

 

 

2,684,000

 

Techne Corporation

 

 

71,000

 

 

5,919,270

 

 

 

 

 

 

    

 

 

 

 

 

 

 

35,457,198

 

 

 

 

 

 

    

 

Pharmaceuticals - 1.8%

Adcock Ingram Holdings

 

 

180,000

 

 

1,581,545

 

Almirall

 

 

100,000

 

 

1,074,703

 

Boiron

 

 

50,000

 

 

2,234,717

 

Bukwang Pharmaceutical

 

 

55,300

 

 

613,422

 

China Animal Healthcare

 

 

2,140,000

 

 

481,473

 

Daewoong Pharmaceutical

 

 

17,070

 

 

613,747

 

Endo Pharmaceuticals Holdings 2

 

 

144,400

 

 

5,800,548

 

Green Cross

 

 

4,500

 

 

680,283

 

Hikma Pharmaceuticals

 

 

60,000

 

 

731,883

 

Kalbe Farma

 

 

500,000

 

 

196,924

 

Questcor Pharmaceuticals 2

 

 

51,300

 

 

1,236,330

 

Recordati

 

 

190,000

 

 

2,089,946

 

Santen Pharmaceutical

 

 

57,000

 

 

2,317,080

 

Virbac

 

 

9,000

 

 

1,538,098

 

 

 

 

 

 

    

 

 

 

 

 

 

 

21,190,699

 

 

 

 

 

 

    

 

Total (Cost $55,643,169)

 

 

 

 

 

89,930,498

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Industrials – 26.3%

Aerospace & Defense - 1.6%

AerCap Holdings 2

 

 

45,000

 

 

585,450

 

Ducommun

 

 

117,200

 

 

2,410,804

 

HEICO Corporation

 

 

168,281

 

 

9,211,702

 

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

Industrials (continued)

Aerospace & Defense (continued)

HEICO Corporation Cl. A

 

 

51,718

 

$

2,056,307

 

Hexcel Corporation 2

 

 

47,500

 

 

1,039,775

 

Moog Cl. A 2

 

 

25,000

 

 

1,088,000

 

Teledyne Technologies 2

 

 

31,630

 

 

1,592,887

 

 

 

 

 

 

    

 

 

 

 

 

 

 

17,984,925

 

 

 

 

 

 

    

 

Air Freight & Logistics - 1.8%

C. H. Robinson Worldwide

 

 

50,000

 

 

3,942,000

 

Forward Air

 

 

209,750

 

 

7,087,453

 

Hub Group Cl. A 2

 

 

164,400

 

 

6,191,304

 

UTi Worldwide

 

 

175,000

 

 

3,445,750

 

 

 

 

 

 

    

 

 

 

 

 

 

 

20,666,507

 

 

 

 

 

 

    

 

Airlines - 0.0%

 

 

 

 

 

 

 

†Spirit Airlines 1,2

 

 

11,200

 

 

134,288

 

 

 

 

 

 

    

 

Building Products - 1.2%

American Woodmark

 

 

123,335

 

 

2,136,162

 

Burnham Holdings Cl. B 4

 

 

36,000

 

 

513,000

 

NCI Building Systems 2

 

 

2,780

 

 

31,664

 

Simpson Manufacturing

 

 

258,400

 

 

7,718,408

 

Sung Kwang Bend

 

 

125,700

 

 

2,595,768

 

USG Corporation 1,2

 

 

50,000

 

 

717,000

 

 

 

 

 

 

    

 

 

 

 

 

 

 

13,712,002

 

 

 

 

 

 

    

 

Commercial Services & Supplies - 2.8%

Brink's Company (The)

 

 

206,320

 

 

6,154,526

 

Cintas Corporation

 

 

79,300

 

 

2,619,279

 

CompX International Cl. A

 

 

185,300

 

 

2,442,254

 

Copart 2

 

 

110,386

 

 

5,143,987

 

Kimball International Cl. B

 

 

286,180

 

 

1,840,137

 

Moshi Moshi Hotline

 

 

118,450

 

 

1,922,877

 

Ritchie Bros. Auctioneers

 

 

337,700

 

 

9,283,373

 

Societe BIC

 

 

9,000

 

 

869,775

 

US Ecology

 

 

101,000

 

 

1,727,100

 

 

 

 

 

 

    

 

 

 

 

 

 

 

32,003,308

 

 

 

 

 

 

    

 

Construction & Engineering - 1.6%

 

 

 

 

 

 

 

EMCOR Group 2

 

 

199,400

 

 

5,844,414

 

Integrated Electrical Services 1,2

 

 

355,400

 

 

1,115,956

 

Jacobs Engineering Group 2

 

 

81,400

 

 

3,520,550

 

KBR

 

 

175,000

 

 

6,595,750

 

Raubex Group

 

 

525,000

 

 

1,252,050

 

 

 

 

 

 

    

 

 

 

 

 

 

 

18,328,720

 

 

 

 

 

 

    

 

Electrical Equipment - 4.3%

 

 

 

 

 

 

 

AZZ

 

 

57,500

 

 

2,633,500

 

Belden

 

 

57,800

 

 

2,014,908

 

Brady Corporation Cl. A

 

 

94,600

 

 

3,032,876

 

Franklin Electric

 

 

104,600

 

 

4,910,970

 

Fushi Copperweld 2

 

 

244,445

 

 

1,400,670

 

GrafTech International 2

 

 

388,190

 

 

7,868,611

 

Jinpan International

 

 

169,684

 

 

1,897,067

 

Powell Industries 2

 

 

92,400

 

 

3,372,600

 

Preformed Line Products

 

 

91,600

 

 

6,520,088

 

Regal-Beloit

 

 

121,000

 

 

8,079,170

 

Woodward

 

 

231,600

 

 

8,073,576

 

 

 

 

 

 

    

 

 

 

 

 

 

 

49,804,036

 

 

 

 

 

 

    

 


 

 

24 | 2011 Semiannual Report to Stockholders

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

 

 June 30, 2011 (unaudited)
 

 

 

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

 

 

 

 

 

 

 

 

Industrials (continued)

Industrial Conglomerates - 0.5%

Raven Industries

 

 

96,200

 

$

5,359,302

 

 

 

 

 

 

    

 

Machinery - 8.2%

Armstrong Industrial

 

 

2,533,200

 

 

715,083

 

Burckhardt Compression Holding

 

 

12,000

 

 

3,661,747

 

China Automation Group

 

 

494,800

 

 

347,434

 

CLARCOR

 

 

92,500

 

 

4,373,400

 

Columbus McKinnon 1,2

 

 

101,500

 

 

1,822,940

 

Decker Manufacturing 4

 

 

6,022

 

 

206,253

 

Donaldson Company

 

 

92,800

 

 

5,631,104

 

FAG Bearings India

 

 

28,000

 

 

746,140

 

Gardner Denver

 

 

25,900

 

 

2,176,895

 

Graco

 

 

116,376

 

 

5,895,608

 

Hardinge

 

 

26,193

 

 

285,766

 

IDEX Corporation

 

 

67,400

 

 

3,090,290

 

Industrea

 

 

437,400

 

 

633,734

 

Kennametal

 

 

155,000

 

 

6,542,550

 

Lincoln Electric Holdings

 

 

188,360

 

 

6,752,706

 

Mueller Water Products Cl. A

 

 

72,500

 

 

288,550

 

NN 2

 

 

197,100

 

 

2,948,616

 

Nordson Corporation

 

 

204,200

 

 

11,200,370

 

Pfeiffer Vacuum Technology

 

 

24,300

 

 

3,047,015

 

PMFG 1,2

 

 

314,900

 

 

6,250,765

 

Rational

 

 

6,000

 

 

1,581,296

 

RBC Bearings 2

 

 

47,000

 

 

1,774,720

 

Rotork

 

 

25,000

 

 

676,523

 

Semperit AG Holding

 

 

60,000

 

 

2,992,798

 

Spirax-Sarco Engineering

 

 

40,000

 

 

1,284,664

 

Valmont Industries

 

 

47,500

 

 

4,578,525

 

WABCO Holdings 2

 

 

103,800

 

 

7,168,428

 

Wabtec Corporation

 

 

112,825

 

 

7,414,859

 

 

 

 

 

 

    

 

 

 

 

 

 

 

94,088,779

 

 

 

 

 

 

    

 

Marine - 0.5%

Kirby Corporation 2

 

 

111,000

 

 

6,290,370

 

 

 

 

 

 

    

 

Professional Services - 2.0%

Advisory Board (The) 2

 

 

128,500

 

 

7,437,580

 

CRA International 2

 

 

57,187

 

 

1,549,196

 

FTI Consulting 1,2

 

 

7,850

 

 

297,829

 

JobStreet Corporation

 

 

50,000

 

 

48,518

 

ManpowerGroup

 

 

78,600

 

 

4,216,890

 

Michael Page International

 

 

125,000

 

 

1,073,367

 

On Assignment 2

 

 

375,400

 

 

3,690,182

 

Robert Half International

 

 

139,600

 

 

3,773,388

 

SFN Group 2

 

 

162,800

 

 

1,479,852

 

 

 

 

 

 

    

 

 

 

 

 

 

 

23,566,802

 

 

 

 

 

 

    

 

Road & Rail - 1.2%

Frozen Food Express Industries 2

 

 

286,635

 

 

1,023,287

 

Landstar System

 

 

129,900

 

 

6,037,752

 

Patriot Transportation Holding 2

 

 

212,958

 

 

4,763,870

 

Universal Truckload Services 2

 

 

129,476

 

 

2,217,924

 

 

 

 

 

 

    

 

 

 

 

 

 

 

14,042,833

 

 

 

 

 

 

    

 

Trading Companies & Distributors - 0.6%

Lawson Products

 

 

161,431

 

 

3,175,348

 

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

 

 

 

 

 

 

 

 

Industrials (continued)

Trading Companies & Distributors
(continued)

MSC Industrial Direct Cl. A

 

 

58,448

 

$

3,875,687

 

 

 

 

 

 

    

 

 

 

 

 

 

 

7,051,035

 

 

 

 

 

 

    

 

Total (Cost $176,001,478)

 

 

 

 

303,032,907

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Information Technology – 20.3%

Communications Equipment - 2.0%

AAC Acoustic Technologies Holdings

 

 

224,700

 

 

529,806

 

ADTRAN

 

 

65,000

 

 

2,516,150

 

Arris Group 2

 

 

140,350

 

 

1,629,464

 

Bel Fuse Cl. A

 

 

36,672

 

 

850,790

 

Black Box

 

 

43,798

 

 

1,369,563

 

Cogo Group 1,2

 

 

173,615

 

 

927,104

 

Comba Telecom Systems Holdings

 

 

487,928

 

 

515,138

 

Comtech Telecommunications

 

 

30,000

 

 

841,200

 

Emulex Corporation 1,2

 

 

415,000

 

 

3,569,000

 

EVS Broadcast Equipment

 

 

27,500

 

 

1,861,537

 

Globecomm Systems 2

 

 

233,700

 

 

3,636,372

 

Sonus Networks 1,2

 

 

704,000

 

 

2,280,960

 

Sycamore Networks

 

 

48,100

 

 

1,069,744

 

VTech Holdings

 

 

49,050

 

 

585,388

 

Zhone Technologies 2

 

 

324,000

 

 

767,880

 

 

 

 

 

 

    

 

 

 

 

 

 

 

22,950,096

 

 

 

 

 

 

    

 

Computers & Peripherals - 1.0%

ADPT Corporation 2,4

 

 

1,568,800

 

 

4,706,400

 

Avid Technology 2

 

 

66,000

 

 

1,243,440

 

China Digital TV Holding Co. ADR

 

 

5,000

 

 

25,500

 

Diebold

 

 

151,600

 

 

4,701,116

 

Electronics for Imaging 1,2

 

 

8,517

 

 

146,663

 

Intermec 2

 

 

23,000

 

 

253,920

 

Intevac 2

 

 

57,450

 

 

586,564

 

SMART Technologies Cl. A 2

 

 

75,000

 

 

427,500

 

 

 

 

 

 

    

 

 

 

 

 

 

 

12,091,103

 

 

 

 

 

 

    

 

Electronic Equipment, Instruments & Components - 8.7%

Agilysys 2

 

 

165,125

 

 

1,377,142

 

Anixter International

 

 

61,795

 

 

4,037,685

 

Benchmark Electronics 2

 

 

165,200

 

 

2,725,800

 

China 3C Group 2

 

 

6,600

 

 

792

 

China High Precision Automation Group

 

 

1,685,700

 

 

1,321,788

 

Chroma Ate

 

 

139,406

 

 

444,143

 

Cognex Corporation

 

 

236,200

 

 

8,368,566

 

Coherent 2

 

 

235,500

 

 

13,016,085

 

Dolby Laboratories Cl. A 2

 

 

30,700

 

 

1,303,522

 

FLIR Systems

 

 

105,000

 

 

3,539,550

 

Hana Microelectronics

 

 

685,000

 

 

520,362

 

Hollysys Automation Technologies 2

 

 

73,727

 

 

687,136

 

Image Sensing Systems 2

 

 

8,310

 

 

93,903

 

IPG Photonics 1,2

 

 

5,000

 

 

363,550

 

Kingboard Chemical Holdings

 

 

66,900

 

 

311,886

 

Mercury Computer Systems 2

 

 

40,500

 

 

756,540

 

Molex

 

 

72,600

 

 

1,870,902

 

National Instruments

 

 

251,850

 

 

7,477,427

 

Newport Corporation 2

 

 

523,500

 

 

9,511,995

 

Perceptron 2

 

 

357,700

 

 

2,274,972

 

Plexus Corporation 1,2

 

 

195,700

 

 

6,812,317

 


 

 

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

2011 Semiannual Report to Stockholders | 25

 

Royce Value Trust
 

 

   Schedule of Investments

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

 

 

 

 

 

 

 

 

Information Technology (continued)

Electronic Equipment, Instruments & Components (continued)

Pulse Electronics

 

 

286,200

 

$

1,265,004

 

Richardson Electronics

 

 

495,712

 

 

6,736,726

 

Rofin-Sinar Technologies 2

 

 

293,500

 

 

10,023,025

 

Tech Data 2

 

 

136,500

 

 

6,673,485

 

TTM Technologies 2

 

 

211,400

 

 

3,386,628

 

Vaisala Cl. A

 

 

176,000

 

 

5,701,478

 

 

 

 

 

 

    

 

 

 

 

 

 

 

100,602,409

 

 

 

 

 

 

    

 

Internet Software & Services - 0.5%

Monster Worldwide 2

 

 

36,800

 

 

539,488

 

NetEase.com ADR 2

 

 

14,300

 

 

644,787

 

Perficient 2

 

 

10,000

 

 

102,600

 

RealNetworks 2

 

 

245,400

 

 

834,360

 

Sohu.com 2

 

 

10,500

 

 

758,835

 

ValueClick 2

 

 

145,000

 

 

2,407,000

 

 

 

 

 

 

    

 

 

 

 

 

 

 

5,287,070

 

 

 

 

 

 

    

 

IT Services - 4.3%

†Camelot Information Systems ADS 1,2

 

 

25,000

 

 

373,750

 

Convergys Corporation 2

 

 

121,000

 

 

1,650,440

 

CoreLogic 2

 

 

284,000

 

 

4,745,640

 

Forrester Research

 

 

40,300

 

 

1,328,288

 

Gartner 2

 

 

121,000

 

 

4,875,090

 

Hackett Group 2

 

 

655,000

 

 

3,333,950

 

ManTech International Cl. A

 

 

35,400

 

 

1,572,468

 

MAXIMUS

 

 

103,600

 

 

8,570,828

 

MoneyGram International 2

 

 

646,900

 

 

2,147,708

 

NeuStar Cl. A 1,2

 

 

119,000

 

 

3,117,800

 

Sapient Corporation 2

 

 

756,602

 

 

11,371,728

 

SRA International Cl. A 2

 

 

67,100

 

 

2,074,732

 

Total System Services

 

 

171,500

 

 

3,186,470

 

† Unisys Corporation 1,2

 

 

11,800

 

 

303,260

 

Yucheng Technologies 2

 

 

175,646

 

 

574,362

 

 

 

 

 

 

    

 

 

 

 

 

 

 

49,226,514

 

 

 

 

 

 

    

 

Semiconductors & Semiconductor Equipment - 2.1%

Aixtron ADR

 

 

34,000

 

 

1,160,080

 

Analog Devices

 

 

16,004

 

 

626,397

 

ASM Pacific Technology

 

 

100,000

 

 

1,382,511

 

BE Semiconductor Industries 4

 

 

58,000

 

 

493,580

 

Cymer 2

 

 

113,000

 

 

5,594,630

 

Diodes 2

 

 

252,450

 

 

6,588,945

 

Energy Conversion Devices 1,2

 

 

562,700

 

 

663,986

 

Exar Corporation 2

 

 

157,576

 

 

997,456

 

Himax Technologies ADR

 

 

221,900

 

 

488,180

 

International Rectifier 2

 

 

120,000

 

 

3,356,400

 

Power Integrations

 

 

49,000

 

 

1,883,070

 

Vimicro International ADR 2

 

 

240,000

 

 

568,800

 

 

 

 

 

 

    

 

 

 

 

 

 

 

23,804,035

 

 

 

 

 

 

    

 

Software - 1.7%

ACI Worldwide 2

 

 

181,150

 

 

6,117,435

 

Advent Software 2

 

 

68,500

 

 

1,929,645

 

ANSYS 2

 

 

95,600

 

 

5,226,452

 

Aspen Technology 2

 

 

42,100

 

 

723,278

 

Aveva Group

 

 

20,000

 

 

549,878

 

Blackbaud

 

 

41,890

 

 

1,161,191

 

JDA Software Group 2

 

 

49,900

 

 

1,541,411

 

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

 

 

 

 

 

 

 

 

Information Technology (continued)

Software (continued)

LiveWire Mobile 2,4

 

 

38,000

 

$

83,600

 

Majesco Entertainment 1,2

 

 

36,255

 

 

109,490

 

Net 1 UEPS Technologies 2

 

 

50,000

 

 

434,000

 

SimCorp

 

 

8,000

 

 

1,578,198

 

THQ 2

 

 

20,000

 

 

72,400

 

 

 

 

 

 

    

 

 

 

 

 

 

 

19,526,978

 

 

 

 

 

 

    

 

Total (Cost $173,472,382)

 

 

 

 

 

233,488,205

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Materials – 10.2%

 

 

 

 

 

 

 

Chemicals - 1.7%

 

 

 

 

 

 

 

Agrium

 

 

5,600

 

 

491,456

 

Cabot Corporation

 

 

58,000

 

 

2,312,460

 

CF Industries Holdings

 

 

4,500

 

 

637,515

 

Fufeng Group

 

 

2,456,400

 

 

1,596,683

 

Hanfeng Evergreen 2

 

 

7,700

 

 

36,007

 

Hawkins

 

 

156,178

 

 

5,656,767

 

Huchems Fine Chemical

 

 

30,056

 

 

727,437

 

Intrepid Potash 2

 

 

85,227

 

 

2,769,878

 

OM Group 2

 

 

90,000

 

 

3,657,600

 

Victrex

 

 

45,000

 

 

1,083,359

 

 

 

 

 

 

    

 

 

 

 

 

 

 

18,969,162

 

 

 

 

 

 

    

 

Construction Materials - 0.8%

 

 

 

 

 

 

 

Ash Grove Cement Cl. B 4

 

 

50,518

 

 

8,082,880

 

Mardin Cimento Sanayii

 

 

325,000

 

 

1,397,646

 

 

 

 

 

 

    

 

 

 

 

 

 

 

9,480,526

 

 

 

 

 

 

    

 

Containers & Packaging - 0.8%

 

 

 

 

 

 

 

Broadway Industrial Group

 

 

1,558,300

 

 

526,517

 

Greif Cl. A

 

 

93,944

 

 

6,109,178

 

Mayr-Melnhof Karton

 

 

22,600

 

 

2,666,532

 

 

 

 

 

 

    

 

 

 

 

 

 

 

9,302,227

 

 

 

 

 

 

    

 

Metals & Mining - 6.7%

 

 

 

 

 

 

 

Allegheny Technologies

 

 

3,500

 

 

222,145

 

Aquarius Platinum

 

 

350,000

 

 

1,786,476

 

AuRico Gold 2

 

 

218,300

 

 

2,399,117

 

Centamin Egypt 2

 

 

700,000

 

 

1,408,056

 

Central Steel & Wire 4

 

 

6,062

 

 

3,849,370

 

Cliffs Natural Resources

 

 

29,500

 

 

2,727,275

 

Commercial Metals

 

 

36,600

 

 

525,210

 

Endeavour Mining 1,2

 

 

300,000

 

 

718,544

 

Endeavour Mining (Warrants) 2

 

 

75,000

 

 

46,659

 

Franco-Nevada Corporation

 

 

10,000

 

 

373,270

 

Fresnillo

 

 

105,000

 

 

2,366,636

 

Haynes International

 

 

14,500

 

 

897,985

 

Hecla Mining 2

 

 

300,000

 

 

2,307,000

 

Hidili Industry International

 

 

 

 

 

 

 

Development

 

 

60,000

 

 

52,079

 

Hochschild Mining

 

 

375,500

 

 

2,773,408

 

IAMGOLD Corporation

 

 

95,620

 

 

1,793,831

 

Kimber Resources 1,2

 

 

560,000

 

 

924,000

 

Maharashtra Seamless

 

 

265,000

 

 

2,233,034

 

Major Drilling Group International

 

 

384,100

 

 

4,998,139

 

Medusa Mining

 

 

600,000

 

 

4,258,875

 

New Gold 1,2

 

 

135,000

 

 

1,389,150

 

Northam Platinum

 

 

345,000

 

 

2,171,259

 


 

 

26 | 2011 Semiannual Report to Stockholders

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

 

 June 30, 2011 (unaudited)
 

 

 

 

 

 

 

 

 

 

  

 

 

SHARES

 

VALUE

 

Materials (continued)

 

 

 

 

 

 

 

Metals & Mining (continued)

 

 

 

 

 

 

 

Northgate Minerals 2

 

 

160,000

 

$

416,000

 

Nucor Corporation

 

 

156,050

 

 

6,432,381

 

Orbit Garant Drilling 2

 

 

36,100

 

 

207,740

 

Pan American Silver

 

 

10,000

 

 

308,900

 

Reliance Steel & Aluminum

 

 

176,920

 

 

8,784,078

 

Royal Gold

 

 

34,400

 

 

2,014,808

 

Schnitzer Steel Industries Cl. A

 

 

100,000

 

 

5,760,000

 

Sims Metal Management ADR

 

 

295,475

 

 

5,611,070

 

Synalloy Corporation 2

 

 

198,800

 

 

2,697,716

 

Worthington Industries

 

 

185,000

 

 

4,273,500

 

 

 

 

 

 

    

 

 

 

 

 

 

 

76,727,711

 

 

 

 

 

 

    

 

Paper & Forest Products - 0.2%

China Forestry Holdings 2,3

 

 

3,563,800

 

 

675,509

 

Duratex

 

 

160,000

 

 

1,354,307

 

†QX Paper 3

 

 

3,296,000

 

 

436,265

 

 

 

 

 

 

    

 

 

 

 

 

 

 

2,466,081

 

 

 

 

 

 

    

 

Total (Cost $78,517,605)

 

 

 

 

 

116,945,707

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Miscellaneous6 – 3.8%

 

 

 

 

 

 

 

Total (Cost $43,668,565)

 

 

 

 

 

44,182,885

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

TOTAL COMMON STOCKS

(Cost $915,060,083)

 

 

 

 

 

1,257,330,639

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

PREFERRED STOCKS – 0.1%

Bank of N.T. Butterfield & Son 0.00% Conv.3

 

 

39,800

 

 

41,445

 

Seneca Foods Conv.2,3

 

 

55,000

 

 

1,247,895

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

TOTAL PREFERRED STOCKS

(Cost $844,625)

 

 

1,289,340

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

PRINCIPAL
AMOUNT

 

VALUE

 

 

 

 

 

 

 

 

 

CORPORATE BOND – 0.0%

GAMCO Investors (Debentures) 0.00%
due 12/31/15

(Cost $289,840)

 

$

289,800

 

$

193,578

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

REPURCHASE AGREEMENT – 10.3%

Fixed Income Clearing Corp.,
0.01% dated 6/30/11, due 7/1/11,
maturity value $118,464,033 (collateralized
by obligations of various U.S. Government
Agencies, 0.33%-1.00% due 7/1/11-7/16/12, valued
at $121,427,294)
(Cost $118,464,000)

 

 

118,464,000

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

COLLATERAL RECEIVED FOR SECURITIES

LOANED – 1.5%

 

 

 

 

 

 

 

Money Market Funds
Federated Government Obligations Fund
(7 day yield-0.009864%)
(Cost $17,036,797)

 

 

 

 

 

17,036,797

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

TOTAL INVESTMENTS – 121.1%

(Cost $1,051,695,345)

 

 

 

 

 

1,394,314,354

 

 

 

 

 

 

 

 

 

LIABILITIES LESS CASH

AND OTHER ASSETS – (2.0)%

 

 

(22,952,208

)

 

 

 

 

 

 

 

 

PREFERRED STOCK – (19.1)%

 

 

(220,000,000

)

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

NET ASSETS APPLICABLE TO COMMON

STOCKHOLDERS – 100.0%

 

$

1,151,362,146

 

 

 

    

 

    

 


 

 
   

† 

New additions in 2011.

1

All or a portion of these securities were on loan at June 30, 2011. Total market value of loaned securities at June 30, 2011, was $16,556,866.

2

Non-income producing.

3

Securities for which market quotations are not readily available represent 0.3% of net assets. These securities have been valued at their fair value under procedures approved by the Fund's Board of Directors. These securities are defined as Level 3 securities due to the use of significant unobservable inputs in the determination of fair value. See Notes to Financial Statements.

4

These securities are defined as Level 2 securities due to fair value being based on quoted prices for similar securities. See Notes to Financial Statements.

5

At June 30, 2011, the Fund owned 5% or more of the Company's outstanding voting securities thereby making the Company an Affiliated Company as that term is defined in the Investment Company Act of 1940. See Notes to Financial Statements.

6

Includes securities first acquired in 2011 and less than 1% of net assets applicable to Common Stockholders.

 

 

 

Bold indicates the Fund's 20 largest equity holdings in terms of June 30, 2011, market value.

 

 

 

TAX INFORMATION: The cost of total investments for Federal income tax purposes was $1,052,688,720. At June 30, 2011, net unrealized appreciation for all securities was $341,625,634, consisting of aggregate gross unrealized appreciation of $438,680,593 and aggregate gross unrealized depreciation of $97,054,959. The primary difference between book and tax basis cost is the timing of the recognition of losses on securities sold.
   

 

 

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

2011 Semiannual Report to Stockholders | 27

 

 

Royce Value Trust

June 30, 2011 (unaudited)
 

 

 

   Statement of Assets and Liabilities

 

 

 

 

 

 

ASSETS:

 

 

 

 

Investments at value (including collateral on loaned securities)

 

 

 

 

Non-Affiliated Companies (cost $927,493,029)

 

$

1,273,077,382

 

Affiliated Companies (cost $5,738,316)

 

 

2,772,972

 
 

Total investments at value

 

 

1,275,850,354

 

Repurchase agreements (at cost and value)

 

 

118,464,000

 

Cash and foreign currency

 

 

58,863

 

Receivable for investments sold

 

 

891,280

 

Receivable for dividends and interest

 

 

906,035

 

Prepaid expenses and other assets

 

 

410,325

 
 

Total Assets

 

 

1,396,580,857

 
 

LIABILITIES:

 

 

 

 

Payable for collateral on loaned securities

 

 

17,036,797

 

Payable for investments purchased

 

 

6,670,703

 

Payable for investment advisory fee

 

 

952,563

 

Preferred dividends accrued but not yet declared

 

 

288,451

 

Accrued expenses

 

 

270,197

 
 

Total Liabilities

 

 

25,218,711

 
 

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

 

$

1,151,362,146

 
 

ANALYSIS OF NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

 

 

 

 

Common Stock paid-in capital - $0.001 par value per share; 66,967,780 shares outstanding (150,000,000 shares authorized)

 

$

797,746,402

 

Undistributed net investment income (loss)

 

 

4,400,832

 

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

 

 

37,902,431

 

Net unrealized appreciation (depreciation) on investments and foreign currency

 

 

342,625,152

 

Unallocated and accrued distributions

 

 

(31,312,671

)
 

Net Assets applicable to Common Stockholders (net asset value per share - $17.19)

 

$

1,151,362,146

 
 

Investments at identified cost (including $17,036,797 of collateral on loaned securities)

 

$

933,231,345

 

Market value of loaned securities

 

 

16,556,866

 

 

 

28 | 2011 Semiannual Report to Stockholders

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

 

 

Royce Value Trust

Six Months Ended June 30, 2011 (unaudited)
 

 

 

   Statement of Operations

 

 

 

 

 

 

INVESTMENT INCOME:

 

 

 

 

Income:

 

 

 

 

Dividends1

 

$

8,413,744

 

Interest

 

 

64,577

 

Securities lending

 

 

98,619

 
 

Total income

 

 

8,576,940

 
 

Expenses:

 

 

 

 

Investment advisory fees

 

 

5,906,512

 

Custody and transfer agent fees

 

 

191,950

 

Stockholder reports

 

 

184,290

 

Administrative and office facilities

 

 

64,012

 

Directors’ fees

 

 

61,661

 

Professional fees

 

 

52,645

 

Other expenses

 

 

62,949

 
 

Total expenses

 

 

6,524,019

 

Compensating balance credits

 

 

(5

)
 

Net expenses

 

 

6,524,014

 
 

Net investment income (loss)

 

 

2,052,926

 
 

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

 

 

 

 

Net realized gain (loss):

 

 

 

 

Investments

 

 

32,841,930

 

Foreign currency transactions

 

 

(40,379

)

Net change in unrealized appreciation (depreciation):

 

 

 

 

Investments and foreign currency translations

 

 

28,994,852

 

Other assets and liabilities denominated in foreign currency

 

 

14,664

 
 

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

 

 

61,811,067

 
 

NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS

 

 

63,863,993

 
 

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS

 

 

(6,490,000

)
 

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

 

$

57,373,993

 

1 Net of foreign withholding tax of $442,142.

 

 

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

2011 Semiannual Report to Stockholders | 29

 

Royce Value Trust
 

 

   Statement of Changes in Net Assets Applicable to Common Stockholders

 

 

 

 

 

 

 

 

 

 

Six months ended
6/30/11
(unaudited)

 

Year ended
12/31/10

 

INVESTMENT OPERATIONS:

 

 

 

 

 

 

 

Net investment income (loss)

 

$

2,052,926

 

$

15,554,527

 

Net realized gain (loss) on investments and foreign currency

 

 

32,801,551

 

 

111,092,900

 

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

 

 

29,009,516

 

 

143,429,334

 
 

Net increase (decrease) in net assets from investment operations

 

 

63,863,993

 

 

270,076,761

 
 

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:

 

 

 

 

 

 

 

Net investment income

 

 

–

 

 

(12,980,000

)

Net realized gain on investments and foreign currency

 

 

–

 

 

–

 

Unallocated distributions1

 

 

(6,490,000

)

 

–

 
 

Total distributions to Preferred Stockholders

 

 

(6,490,000

)

 

(12,980,000

)
 

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

 

 

57,373,993

 

 

257,096,761

 
 

DISTRIBUTIONS TO COMMON STOCKHOLDERS:

 

 

 

 

 

 

 

Net investment income

 

 

–

 

 

(1,980,699

)

Net realized gain on investments and foreign currency

 

 

–

 

 

–

 

Unallocated distributions1

 

 

(24,534,221

)

 

–

 
 

Total distributions to Common Stockholders

 

 

(24,534,221

)

 

(1,980,699

)
 

CAPITAL STOCK TRANSACTIONS:

 

 

 

 

 

 

 

Reinvestment of distributions to Common Stockholders

 

 

12,643,237

 

 

986,327

 
 

Total capital stock transactions

 

 

12,643,237

 

 

986,327

 
 

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

 

 

45,483,009

 

 

256,102,389

 
 

NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

 

 

 

 

 

 

 

Beginning of period

 

 

1,105,879,137

 

 

849,776,748

 
 

End of period (including undistributed net investment income (loss) of $4,400,832 at 6/30/11 and $2,347,906 at 12/31/10)

 

$

1,151,362,146

 

$

1,105,879,137

 

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

 

 

30 | 2011 Semiannual Report to Stockholders

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

 

Royce Value Trust
 

 

   Financial Highlights

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended

 

Years ended December 31,

 

 

 

June 30, 2011

 

  

 

 

(unaudited)

 

2010

 

2009

 

2008

 

2007

 

2006

 
 

NET ASSET VALUE, BEGINNING OF PERIOD

 

$

16.73

 

$

12.87

 

$

9.37

 

$

19.74

 

$

20.62

 

$

18.87

 
 

INVESTMENT OPERATIONS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income (loss)

 

 

0.03

 

 

0.24

 

 

0.17

 

 

0.14

 

 

0.09

 

 

0.13

 

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

 

 

0.93

 

 

3.85

 

 

3.87

 

 

(8.50

)

 

1.13

 

 

3.63

 
 

Total investment operations

 

 

0.96

 

 

4.09

 

 

4.04

 

 

(8.36

)

 

1.22

 

 

3.76

 
 

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

–     

 

 

(0.20

)

 

(0.18

)

 

(0.01

)

 

(0.01

)

 

(0.02

)

Net realized gain on investments and foreign currency

 

 

–     

 

 

–     

 

 

–     

 

 

(0.20

)

 

(0.21

)

 

(0.21

)

Return of capital

 

 

–     

 

 

–     

 

 

(0.02

)

 

–     

 

 

–     

 

 

–     

 

Unallocated distributions1

 

 

(0.10

)

 

–     

 

 

–     

 

 

–     

 

 

–     

 

 

–     

 
 

Total distributions to Preferred Stockholders

 

 

(0.10

)

 

(0.20

)

 

(0.20

)

 

(0.21

)

 

(0.22

)

 

(0.23

)
 

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

 

 

0.86

 

 

3.89

 

 

3.84

 

 

(8.57

)

 

1.00

 

 

3.53

 
 

DISTRIBUTIONS TO COMMON STOCKHOLDERS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

–     

 

 

(0.03

)

 

–     

 

 

(0.06

)

 

(0.09

)

 

(0.14

)

Net realized gain on investments and foreign currency

 

 

–     

 

 

–     

 

 

–     

 

 

(1.18

)

 

(1.76

)

 

(1.64

)

Return of capital

 

 

–     

 

 

–     

 

 

(0.32

)

 

(0.48

)

 

–     

 

 

–     

 

Unallocated distributions1

 

 

(0.37

)

 

–     

 

 

–     

 

 

–     

 

 

–     

 

 

–     

 
 

Total distributions to Common Stockholders

 

 

(0.37

)

 

(0.03

)

 

(0.32

)

 

(1.72

)

 

(1.85

)

 

(1.78

)
 

CAPITAL STOCK TRANSACTIONS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of reinvestment of distributions by Common Stockholders

 

 

(0.03

)

 

(0.00

)

 

(0.02

)

 

(0.08

)

 

(0.03

)

 

(0.00

)
 

Total capital stock transactions

 

 

(0.03

)

 

(0.00

)

 

(0.02

)

 

(0.08

)

 

(0.03

)

 

(0.00

)
 

NET ASSET VALUE, END OF PERIOD

 

$

17.19

 

$

16.73

 

$

12.87

 

$

9.37

 

$

19.74

 

$

20.62

 
 

MARKET VALUE, END OF PERIOD

 

$

14.92

 

$

14.54

 

$

10.79

 

$

8.39

 

$

18.58

 

$

22.21

 
 

TOTAL RETURN:2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Value

 

 

5.25

%3

 

35.05

%

 

35.39

%

 

(48.27

)%

 

(8.21

)%

 

20.96

%

Net Asset Value

 

 

5.39

%3

 

30.27

%

 

44.59

%

 

(45.62

)%

 

5.04

%

 

19.50

%

RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total expenses4,5

 

 

1.14

%6

 

0.23

%

 

0.16

%

 

1.39

%

 

1.38

%

 

1.29

%

Investment advisory fee expense7

 

 

1.03

%6

 

0.11

%

 

0.00

%

 

1.27

%

 

1.29

%

 

1.20

%

Other operating expenses

 

 

0.11

%6

 

0.12

%

 

0.16

%

 

0.12

%

 

0.09

%

 

0.09

%

Net investment income (loss)

 

 

0.36

%6

 

1.69

%

 

1.66

%

 

0.94

%

 

0.43

%

 

0.62

%

SUPPLEMENTAL DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Assets Applicable to Common Stockholders,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

End of Period (in thousands)

 

$

1,151,362

 

$

1,105,879

 

$

849,777

 

$

603,234

 

$

1,184,669

 

$

1,180,428

 

Liquidation Value of Preferred Stock,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

End of Period (in thousands)

 

$

220,000

 

$

220,000

 

$

220,000

 

$

220,000

 

$

220,000

 

$

220,000

 

Portfolio Turnover Rate

 

 

12

%

 

30

%

 

31

%

 

25

%

 

26

%

 

21

%

PREFERRED STOCK:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shares outstanding

 

 

8,800,000

 

 

8,800,000

 

 

8,800,000

 

 

8,800,000

 

 

8,800,000

 

 

8,800,000

 

Asset coverage per share

 

$

155.84

 

$

150 .67

 

$

121.57

 

$

93.55

 

$

159 .62

 

$

159.14

 

Liquidation preference per share

 

$

25.00

 

$

25.00

 

$

25.00

 

$

25.00

 

$

25.00

 

$

25.00

 

Average month-end market value per share

 

$

25.18

 

$

25.06

 

$

23.18

 

$

22.51

 

$

23.68

 

$

23.95

 
 

 

 

1 

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

2

The Market Value Total Return is calculated assuming a purchase of Common Stock on the opening of the first business day and a sale on the closing of the last business day of each period reported. Dividends and distributions are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund’s Distribution Reinvestment and Cash Purchase Plan. Net Asset Value Total Return is calculated on the same basis, except that the Fund’s net asset value is used on the purchase and sale dates instead of market value.

3

Not annualized

4

Expense ratios based on total average net assets including liquidation value of Preferred Stock were 0.96%, 0.18%, 0.12%, 1.13%, 1.17% and 1.08% for the periods ended June 30, 2011, and December 31, 2010, 2009, 2008, 2007 and 2006, respectively.

5

Expense ratios based on average net assets applicable to Common Stockholders before waiver of fees and after earnings credits would have been 1.14%, 0.23%, 0.16%, 1.39%, 1.38% and 1.29% for the periods ended June 30, 2011, and December 31, 2010, 2009, 2008, 2007 and 2006, respectively.

6

Annualized

7

The investment advisory fee is calculated based on average net assets over a rolling 60-month basis, while the above ratios of investment advisory fee expenses are based on the average net assets applicable to Common Stockholders over a 12-month basis.


 

 

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

2011 Semiannual Report to Stockholders | 31

 

Royce Value Trust
 

 

   Notes to Financial Statements (unaudited)

Summary of Significant Accounting Policies:
          Royce Value Trust, Inc. (the “Fund”), was incorporated under the laws of the State of Maryland on July 1, 1986, as a diversified closed-end investment company. The Fund commenced operations on November 26, 1986.
          The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
          Under the Fund’s organizational documents, the officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote.

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

      Various inputs are used in determining the value of the Fund’s investments, as noted above. These inputs are summarized in the three broad levels below:

 

Level 

1 – quoted prices in active markets for identical securities.

 

Level

2 – other significant observable inputs (including quoted prices for similar securities, foreign securities that may be fair valued and repurchase agreements). The table below includes all Level 2 securities. Any Level 2 securities with values based on quoted prices for similar securities would be noted in the Schedule of Investments.

 

Level

3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).

     The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
     The following is a summary of the inputs used to value the Fund’s investments as of June 30, 2011. For a detailed breakout of common stocks by sector classification, please refer to the Schedule of Investments.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 
 

Common stocks

 

$

996,828,494

 

$

257,957,451

 

$

2,544,694

 

$

1,257,330,639

 

Preferred stocks

 

 

–

 

 

–

 

 

1,289,340

 

 

1,289,340

 

Corporate bonds

 

 

–

 

 

193,578

 

 

–

 

 

193,578

 

Cash equivalents

 

 

17,036,797

 

 

118,464,000

 

 

–

 

 

135,500,797

 
 

Level 3 Reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of
12/31/10

 

Purchases

 

Transfers In

 

Transfers Out

 

Sales

 

Realized and
Unrealized
Gain (Loss)1

 

Balance as of
6/30/11

 
 

Common stocks

 

$

1,925,934

 

$

1,777,190

 

$

1,741,414

 

$

1,251,677

 

$

66,625

 

$

(1,581,542

)

$

2,544,694

 

Preferred stocks

 

 

1,372,514

 

 

–

 

 

–

 

 

–

 

 

–

 

 

(83,174

)

 

1,289,340

 

Corporate bonds

 

 

197,064

 

 

–

 

 

–

 

 

197,064

 

 

–

 

 

–

 

 

–

 
 

 

 

1 

The net change in unrealized appreciation (depreciation) is included in the accompanying Statement of Operations. Change in unrealized appreciation (depreciation) includes net unrealized appreciation (depreciation) resulting from changes in investment values during the reporting period and the reversal of previously recorded unrealized appreciation (depreciation) when gains or losses are realized. Net realized gain (loss) from investments and foreign currency transactions is included in the accompanying Statement of Operations.

 

32 | 2011 Semiannual Report to Stockholders

 

Royce Value Trust
 

 

   Notes to Financial Statements (unaudited) (continued)

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

Foreign Currency:
     Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, expiration of currency forward contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, including investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.

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

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

Distributions:
     Commencing March 2011, the Fund pays quarterly distributions on the Fund’s Common Stock at the annual rate of 5% of the rolling average of the prior four calendar quarter-end NAVs of the Fund’s Common Stock, with the fourth quarter distribution being the greater of 1.25% of the rolling average or the distribution required by IRS regulations. Distributions to Preferred Stockholders are accrued daily and paid quarterly and distributions to Common Stockholders are recorded on ex-dividend date. Distributable capital gains and/or net investment income are first allocated to Preferred Stockholder distributions, with any excess allocable to Common Stockholders. If capital gains and/or net investment income are allocated to both Preferred and Common Stockholders, the tax character of such allocations is proportional. To the extent that distributions are not paid from long-term capital gains, net investment income or net short-term capital gains, they will represent a return of capital. Distributions are determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United States of America. Permanent book and tax differences relating to stockholder distributions will result in reclassifications within the capital accounts. Undistributed net investment income may include temporary book and tax basis differences, which will reverse in a subsequent period. Any taxable income or gain remaining undistributed at fiscal year end is distributed in the following year.

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

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

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

2011 Semiannual Report to Stockholders | 33


 

Royce Value Trust
 

 

   Notes to Financial Statements (unaudited) (continued)

Capital Stock:
     The Fund issued 873,255 and 71,215 shares of Common Stock as reinvestment of distributions by Common Stockholders for the six months ended June 30, 2011, and the year ended December 31, 2010, respectively.
     At June 30, 2011, 8,800,000 shares of 5.90% Cumulative Preferred Stock were outstanding. The Fund, at its option, may redeem the Cumulative Preferred Stock, in whole or in part, at the redemption price. The Cumulative Preferred Stock is classified outside of permanent equity (net assets applicable to Common Stockholders) in the accompanying financial statements in accordance with accounting for redeemable equity instruments, 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 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 six rolling 60-month periods ended June 2011, the Fund’s investment performance ranged from 1% above to 3% below the investment performance of the S&P 600. Accordingly, the net investment advisory fee consisted of a Basic Fee of $6,006,751 and a net downward adjustment of $100,239 for the performance of the Fund relative to that of the S&P 600. For the six months ended June 30, 2011, the Fund accrued and paid Royce investment advisory fees totaling $5,906,512.

Purchases and Sales of Investment Securities:
     For the six months ended June 30, 2011, the costs of purchases and proceeds from sales of investment securities, other than short-term securities and collateral received for securities loaned, amounted to $152,513,320 and $147,515,548, respectively.

Transactions in Affiliated Companies:
     An “Affiliated Company” as defined in the Investment Company Act of 1940, is a company in which a fund owns 5% or more of the company’s outstanding voting securities at any time during the period. The Fund effected the following transactions in shares of such companies for the six months ended June 30, 2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliated Company

 

Shares
12/31/10

 

Market Value
12/31/10

 

Cost of
Purchases

 

Cost of
Sales

 

Realized
Gain (Loss)

 

Dividend
Income

 

Shares
6/30/11

 

Market Value
6/30/11

 

Timberland Bancorp

 

 

469,200

 

$

1,731,348

 

 

–    

 

 

–    

 

 

–    

 

 

–    

 

 

469,200

 

$

2,772,972

 

 

 

 

 

 

$

1,731,348

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2,772,972

 

34 | 2011 Semiannual Report to Stockholders



 

 

Royce Micro-Cap Trust

June 30, 2011 (unaudited)
 

 

   Schedule of Investments

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

 

 

 

 

 

 

 

 

COMMON STOCKS – 102.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Discretionary – 12.6%

 

 

 

 

 

 

 

Auto Components - 1.6%

 

 

 

 

 

 

 

China XD Plastics 1,2

 

 

21,500

 

$

90,515

 

Drew Industries

 

 

127,000

 

 

3,139,440

 

Norstar Founders Group 2,3

 

 

771,500

 

 

36,187

 

SORL Auto Parts 1,2

 

 

58,913

 

 

265,109

 

Williams Controls

 

 

125,000

 

 

1,437,500

 

 

 

 

 

 

    

 

 

 

 

 

 

 

4,968,751

 

 

 

 

 

 

    

 

Distributors - 0.4%

 

 

 

 

 

 

 

Weyco Group

 

 

48,000

 

 

1,180,800

 

 

 

 

 

 

    

 

Diversified Consumer Services - 0.3%

 

 

 

 

 

 

 

ChinaCast Education 2

 

 

134,500

 

 

696,710

 

Lincoln Educational Services

 

 

21,300

 

 

365,295

 

Spectrum Group International 1,2,4

 

 

6,925

 

 

19,390

 

 

 

 

 

 

    

 

 

 

 

 

 

 

1,081,395

 

 

 

 

 

 

    

 

Hotels, Restaurants & Leisure - 0.2%

 

 

 

 

 

 

 

Benihana Cl. A 1,2

 

 

57,200

 

 

600,028

 

 

 

 

 

 

    

 

Household Durables - 2.6%

 

 

 

 

 

 

 

Cavco Industries 2

 

 

3,091

 

 

139,095

 

CSS Industries

 

 

20,243

 

 

423,686

 

Ethan Allen Interiors

 

 

81,600

 

 

1,737,264

 

Flexsteel Industries

 

 

172,500

 

 

2,509,875

 

Hanssem

 

 

33,400

 

 

420,352

 

Koss Corporation

 

 

73,400

 

 

455,080

 

Natuzzi ADR 2

 

 

409,800

 

 

1,442,496

 

Universal Electronics 2

 

 

47,200

 

 

1,192,272

 

 

 

 

 

 

    

 

 

 

 

 

 

 

8,320,120

 

 

 

 

 

 

    

 

Internet & Catalog Retail - 1.2%

 

 

 

 

 

 

 

Geeknet 1,2

 

 

87,500

 

 

2,338,000

 

NutriSystem

 

 

21,800

 

 

306,508

 

US Auto Parts Network 2

 

 

140,900

 

 

1,079,294

 

 

 

 

 

 

    

 

 

 

 

 

 

 

3,723,802

 

 

 

 

 

 

    

 

Leisure Equipment & Products - 0.4%

 

 

 

 

 

 

 

Leapfrog Enterprises Cl. A 2

 

 

123,200

 

 

519,904

 

Sturm, Ruger & Co.

 

 

32,000

 

 

702,400

 

 

 

 

 

 

    

 

 

 

 

 

 

 

1,222,304

 

 

 

 

 

 

    

 

Media - 0.4%

 

 

 

 

 

 

 

Global Sources 2

 

 

23,411

 

 

215,147

 

Rentrak Corporation 2

 

 

45,000

 

 

798,300

 

Value Line

 

 

32,487

 

 

435,651

 

 

 

 

 

 

    

 

 

 

 

 

 

 

1,449,098

 

 

 

 

 

 

    

 

Specialty Retail - 4.1%

 

 

 

 

 

 

 

America's Car-Mart 2

 

 

92,800

 

 

3,062,400

 

Charming Shoppes 2

 

 

667,200

 

 

2,775,552

 

Dickson Concepts (International)

 

 

604,700

 

 

473,346

 

Kirkland's 2

 

 

25,500

 

 

306,510

 

Le Chateau Cl. A

 

 

72,800

 

 

641,609

 

Lewis Group

 

 

57,000

 

 

713,408

 

Shoe Carnival 2

 

 

12,752

 

 

384,473

 

Stein Mart

 

 

178,900

 

 

1,724,596

 

Systemax 2

 

 

102,000

 

 

1,523,880

 

West Marine 2

 

 

86,000

 

 

891,820

 

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

 

 

 

 

 

 

 

 

Consumer Discretionary (continued)

 

 

 

 

 

 

 

Specialty Retail (continued)

 

 

 

 

 

 

 

Wet Seal (The) Cl. A 2

 

 

87,579

 

$

391,478

 

 

 

 

 

 

    

 

 

 

 

 

 

 

12,889,072

 

 

 

 

 

 

    

 

Textiles, Apparel & Luxury Goods - 1.4%

 

 

 

 

 

 

 

†China Xiniya Fashion ADR 1,2

 

 

40,000

 

 

116,800

 

J.G. Boswell Company 4

 

 

2,490

 

 

1,867,500

 

K-Swiss Cl. A 2

 

 

72,400

 

 

769,612

 

Movado Group

 

 

77,633

 

 

1,328,300

 

True Religion Apparel 2

 

 

15,000

 

 

436,200

 

 

 

 

 

 

    

 

 

 

 

 

 

 

4,518,412

 

 

 

 

 

 

    

 

Total (Cost $29,213,765)

 

 

 

 

 

39,953,782

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Consumer Staples – 3.1%

 

 

 

 

 

 

 

Beverages - 0.4%

 

 

 

 

 

 

 

Heckmann Corporation 1,2

 

 

200,000

 

 

1,208,000

 

 

 

 

 

 

    

 

Food & Staples Retailing - 0.1%

 

 

 

 

 

 

 

Winn-Dixie Stores 2

 

 

50,000

 

 

422,500

 

 

 

 

 

 

    

 

Food Products - 2.4%

 

 

 

 

 

 

 

Asian Citrus Holdings

 

 

1,060,000

 

 

968,434

 

Binggrae

 

 

9,700

 

 

561,282

 

BW Plantation

 

 

744,900

 

 

103,429

 

Farmer Bros. 1

 

 

51,400

 

 

521,196

 

Griffin Land & Nurseries

 

 

46,473

 

 

1,509,908

 

Origin Agritech 2

 

 

121,488

 

 

483,522

 

Seneca Foods Cl. A 2

 

 

51,400

 

 

1,314,812

 

Seneca Foods Cl. B 2

 

 

42,500

 

 

1,060,800

 

Westway Group 2

 

 

220,000

 

 

1,067,000

 

 

 

 

 

 

    

 

 

 

 

 

 

 

7,590,383

 

 

 

 

 

 

    

 

Household Products - 0.1%

 

 

 

 

 

 

 

Oil-Dri Corporation of America

 

 

10,000

 

 

214,200

 

 

 

 

 

 

    

 

Personal Products - 0.1%

 

 

 

 

 

 

 

Schiff Nutrition International Cl. A

 

 

27,803

 

 

311,116

 

 

 

 

 

 

    

 

Total (Cost $7,945,225)

 

 

 

 

 

9,746,199

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Energy – 4.4%

 

 

 

 

 

 

 

Energy Equipment & Services - 3.6%

 

 

 

 

 

 

 

CE Franklin 2

 

 

37,750

 

 

362,778

 

Dawson Geophysical 2

 

 

53,213

 

 

1,817,224

 

Global Geophysical Services 2

 

 

35,000

 

 

623,000

 

Gulf Island Fabrication

 

 

29,116

 

 

939,864

 

Lamprell

 

 

202,400

 

 

1,226,056

 

North American Energy Partners 2

 

 

50,000

 

 

383,000

 

OYO Geospace 2

 

 

7,130

 

 

713,000

 

Pason Systems

 

 

139,200

 

 

2,098,572

 

Pioneer Drilling 2

 

 

57,500

 

 

876,300

 

†SinoTech Energy ADR 1,2

 

 

103,200

 

 

427,248

 

Tesco Corporation 2

 

 

50,000

 

 

970,500

 

Willbros Group 2

 

 

131,100

 

 

1,119,594

 

 

 

 

 

 

    

 

 

 

 

 

 

 

11,557,136

 

 

 

 

 

 

    

 

Oil, Gas & Consumable Fuels - 0.8%

 

 

 

 

 

 

 

Approach Resources 2

 

 

12,000

 

 

272,040

 

BPZ Resources 1,2

 

 

164,000

 

 

537,920

 

Credo Petroleum 1,2

 

 

98,000

 

 

918,260

 

GeoMet 1,2

 

 

75,000

 

 

88,500

 


 

 

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

2011 Semiannual Report to Stockholders | 35

 

Royce Micro-Cap Trust
 

 

   Schedule of Investments

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

Energy (continued)

 

 

 

 

 

 

 

Oil, Gas & Consumable Fuels (continued)

 

 

 

 

 

 

 

† Uranerz Energy 1,2

 

 

29,000

 

$

87,580

 

VAALCO Energy 2

 

 

98,900

 

 

595,378

 

 

 

 

 

 

    

 

 

 

 

 

 

 

2,499,678

 

 

 

 

 

 

    

 

Total (Cost $8,727,847)

 

 

 

 

 

14,056,814

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Financials – 16.9%

 

 

 

 

 

 

 

Capital Markets - 7.4%

 

 

 

 

 

 

 

ASA Gold and Precious Metals

 

 

30,000

 

 

858,000

 

BKF Capital Group 2,4

 

 

130,200

 

 

165,354

 

Cohen & Steers

 

 

27,900

 

 

924,885

 

Cowen Group Cl. A 1,2

 

 

367,834

 

 

1,383,056

 

Diamond Hill Investment Group

 

 

34,479

 

 

2,802,798

 

Duff & Phelps Cl. A

 

 

50,000

 

 

641,500

 

Edelman Financial Group (The)

 

 

209,000

 

 

1,649,010

 

Epoch Holding Corporation

 

 

196,500

 

 

3,507,525

 

FBR & Company 2

 

 

326,600

 

 

1,110,440

 

Fiera Sceptre

 

 

78,000

 

 

586,345

 

INTL FCStone 1,2

 

 

24,910

 

 

603,071

 

JZ Capital Partners

 

 

343,999

 

 

2,186,750

 

MVC Capital

 

 

126,200

 

 

1,669,626

 

NGP Capital Resources

 

 

99,225

 

 

813,645

 

Queen City Investments 4

 

 

948

 

 

933,780

 

U.S. Global Investors Cl. A

 

 

91,500

 

 

658,800

 

Urbana Corporation 2

 

 

237,600

 

 

305,484

 

Virtus Investment Partners 2

 

 

45,000

 

 

2,731,500

 

 

 

 

 

 

    

 

 

 

 

 

 

 

23,531,569

 

 

 

 

 

 

    

 

Commercial Banks - 2.0%

 

 

 

 

 

 

 

BCB Holdings 2

 

 

806,207

 

 

698,718

 

Chemung Financial

 

 

40,000

 

 

916,000

 

Commercial National Financial

 

 

20,000

 

 

385,000

 

Fauquier Bankshares

 

 

135,800

 

 

1,655,402

 

Financial Institutions

 

 

36,000

 

 

591,120

 

First Bancorp

 

 

40,200

 

 

597,372

 

LCNB Corporation

 

 

30,000

 

 

357,600

 

Mechanics Bank

 

 

5

 

 

58,000

 

Orrstown Financial Services

 

 

12,700

 

 

334,137

 

Peapack-Gladstone Financial

 

 

64,316

 

 

757,643

 

 

 

 

 

 

    

 

 

 

 

 

 

 

6,350,992

 

 

 

 

 

 

    

 

Consumer Finance - 0.1%

 

 

 

 

 

 

 

World Acceptance 2

 

 

6,900

 

 

452,433

 

 

 

 

 

 

    

 

Diversified Financial Services - 0.9%

 

 

 

 

 

 

 

Banca Finnat Euramerica

 

 

1,010,118

 

 

637,611

 

Bolsa Mexicana de Valores

 

 

300,000

 

 

602,639

 

†Gain Capital Holdings 1,2

 

 

25,000

 

 

170,250

 

PICO Holdings 2

 

 

45,700

 

 

1,325,300

 

 

 

 

 

 

    

 

 

 

 

 

 

 

2,735,800

 

 

 

 

 

 

    

 

Insurance - 1.5%

 

 

 

 

 

 

 

Hilltop Holdings 2

 

 

101,400

 

 

896,376

 

Independence Holding

 

 

95,800

 

 

1,000,152

 

Presidential Life

 

 

188,100

 

 

1,963,764

 

SeaBright Holdings

 

 

102,000

 

 

1,009,800

 

 

 

 

 

 

    

 

 

 

 

 

 

 

4,870,092

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

 

 

 

 

 

 

 

 

Financials (continued)

 

 

 

 

 

 

 

Real Estate Investment Trusts (REITs) - 1.3%

 

 

 

 

 

 

 

Colony Financial

 

 

139,717

 

$

2,524,686

 

PennyMac Mortgage Investment Trust

 

 

80,000

 

 

1,325,600

 

Vestin Realty Mortgage II 2

 

 

214,230

 

 

297,780

 

 

 

 

 

 

    

 

 

 

 

 

 

 

4,148,066

 

 

 

 

 

 

    

 

Real Estate Management & Development - 2.9%

Consolidated-Tomoka Land

 

 

57,506

 

 

1,644,672

 

IFM Investments ADR 2

 

 

58,885

 

 

86,561

 

Kennedy-Wilson Holdings

 

 

465,358

 

 

5,700,635

 

Tejon Ranch 2

 

 

44,985

 

 

1,533,988

 

ZipRealty 2

 

 

25,000

 

 

57,500

 

 

 

 

 

 

    

 

 

 

 

 

 

 

9,023,356

 

 

 

 

 

 

    

 

Thrifts & Mortgage Finance - 0.8%

 

 

 

 

 

 

 

Alliance Bancorp, Inc. of Pennsylvania

 

 

41,344

 

 

453,957

 

BofI Holding 1,2

 

 

88,362

 

 

1,273,296

 

CFS Bancorp

 

 

75,000

 

 

402,750

 

HopFed Bancorp

 

 

56,100

 

 

443,751

 

 

 

 

 

 

    

 

 

 

 

 

 

 

2,573,754

 

 

 

 

 

 

    

 

Total (Cost $49,830,059)

 

 

 

 

 

53,686,062

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Health Care – 7.1%

 

 

 

 

 

 

 

Biotechnology - 0.3%

 

 

 

 

 

 

 

3SBio ADR 2

 

 

26,280

 

 

458,060

 

Vical 1,2

 

 

120,000

 

 

494,400

 

 

 

 

 

 

    

 

 

 

 

 

 

 

952,460

 

 

 

 

 

 

    

 

Health Care Equipment & Supplies - 4.0%

 

 

 

 

 

 

 

Allied Healthcare Products 2

 

 

226,798

 

 

898,120

 

Atrion Corporation

 

 

6,500

 

 

1,285,700

 

CryoLife 2

 

 

50,573

 

 

283,209

 

DynaVox Cl. A 2

 

 

20,000

 

 

152,000

 

Exactech 2

 

 

121,000

 

 

2,179,210

 

Hansen Medical 1,2

 

 

320,000

 

 

1,091,200

 

Kensey Nash 1,2

 

 

42,078

 

 

1,061,628

 

Medical Action Industries 2

 

 

125,250

 

 

1,020,787

 

NMT Medical 2,4

 

 

118,500

 

 

972

 

STRATEC Biomedical Systems

 

 

14,000

 

 

622,036

 

Syneron Medical 1,2

 

 

69,200

 

 

839,396

 

Theragenics Corporation 2

 

 

306,900

 

 

540,144

 

Utah Medical Products

 

 

42,300

 

 

1,110,798

 

Young Innovations

 

 

61,450

 

 

1,752,554

 

 

 

 

 

 

    

 

 

 

 

 

 

 

12,837,754

 

 

 

 

 

 

    

 

Health Care Providers & Services - 0.8%

 

 

 

 

 

 

 

Gentiva Health Services 2

 

 

23,000

 

 

479,090

 

LHC Group 2

 

 

14,800

 

 

341,288

 

PDI 1,2

 

 

65,383

 

 

463,566

 

PharMerica Corporation 2

 

 

40,000

 

 

510,400

 

Psychemedics Corporation

 

 

37,500

 

 

356,625

 

U.S. Physical Therapy

 

 

10,000

 

 

247,300

 

 

 

 

 

 

    

 

 

 

 

 

 

 

2,398,269

 

 

 

 

 

 

    

 

Health Care Technology - 0.3%

 

 

 

 

 

 

 

Transcend Services 2

 

 

37,200

 

 

1,093,308

 

 

 

 

 

 

    

 

Life Sciences Tools & Services - 0.9%

 

 

 

 

 

 

 

EPS

 

 

710

 

 

1,671,671

 

Furiex Pharmaceuticals 2

 

 

23,758

 

 

422,655

 


 

 

36 | 2011 Semiannual Report to Stockholders

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

 

 June 30, 2011 (unaudited)
 

 

 

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

Health Care (continued)

 

 

 

 

 

 

 

Life Sciences Tools & Services (continued)

 

 

 

 

 

 

 

PAREXEL International 2

 

 

28,800

 

$

678,528

 

 

 

 

 

 

    

 

 

 

 

 

 

 

2,772,854

 

 

 

 

 

 

    

 

Pharmaceuticals - 0.8%

 

 

 

 

 

 

 

Adolor Corporation 2

 

 

460,500

 

 

916,395

 

Bukwang Pharmaceutical

 

 

44,700

 

 

495,840

 

Daewoong Pharmaceutical

 

 

11,904

 

 

428,005

 

Hi-Tech Pharmacal 1,2

 

 

21,700

 

 

627,781

 

 

 

 

 

 

    

 

 

 

 

 

 

 

2,468,021

 

 

 

 

 

 

    

 

Total (Cost $17,782,065)

 

 

 

 

 

22,522,666

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Industrials – 25.9%

 

 

 

 

 

 

 

Aerospace & Defense - 1.8%

 

 

 

 

 

 

 

Ducommun

 

 

72,100

 

 

1,483,097

 

HEICO Corporation

 

 

52,500

 

 

2,873,850

 

Innovative Solutions and Support 2

 

 

100,000

 

 

547,000

 

SIFCO Industries

 

 

45,800

 

 

748,830

 

 

 

 

 

 

    

 

 

 

 

 

 

 

5,652,777

 

 

 

 

 

 

    

 

Air Freight & Logistics - 0.6%

 

 

 

 

 

 

 

Forward Air

 

 

50,700

 

 

1,713,153

 

Pacer International 2

 

 

35,000

 

 

165,200

 

 

 

 

 

 

    

 

 

 

 

 

 

 

1,878,353

 

 

 

 

 

 

    

 

Building Products - 3.4%

 

 

 

 

 

 

 

AAON

 

 

109,500

 

 

2,391,480

 

American Woodmark

 

 

72,000

 

 

1,247,040

 

Apogee Enterprises

 

 

57,900

 

 

741,699

 

Burnham Holdings Cl. A 4

 

 

113,000

 

 

1,610,250

 

Griffon Corporation 2

 

 

89,500

 

 

902,160

 

NCI Building Systems 2

 

 

8,400

 

 

95,676

 

Sung Kwang Bend

 

 

28,000

 

 

578,214

 

Trex Company 1,2

 

 

90,000

 

 

2,203,200

 

WaterFurnace Renewable Energy

 

 

48,400

 

 

1,114,086

 

 

 

 

 

 

    

 

 

 

 

 

 

 

10,883,805

 

 

 

 

 

 

    

 

Commercial Services & Supplies - 2.7%

 

 

 

 

 

 

 

CompX International Cl. A

 

 

107,500

 

 

1,416,850

 

Courier Corporation

 

 

30,450

 

 

336,473

 

Heritage-Crystal Clean 2

 

 

113,301

 

 

2,173,113

 

Interface Cl. A

 

 

27,000

 

 

522,990

 

Team 2

 

 

107,040

 

 

2,582,875

 

US Ecology

 

 

82,000

 

 

1,402,200

 

 

 

 

 

 

    

 

 

 

 

 

 

 

8,434,501

 

 

 

 

 

 

    

 

Construction & Engineering - 0.9%

 

 

 

 

 

 

 

Comfort Systems USA

 

 

27,096

 

 

287,488

 

Integrated Electrical Services 2

 

 

305,090

 

 

957,983

 

MYR Group 2

 

 

28,500

 

 

666,900

 

Pike Electric 2

 

 

73,900

 

 

653,276

 

Sterling Construction 2

 

 

25,000

 

 

344,250

 

 

 

 

 

 

    

 

 

 

 

 

 

 

2,909,897

 

 

 

 

 

 

    

 

Electrical Equipment - 2.7%

 

 

 

 

 

 

 

AZZ

 

 

18,247

 

 

835,713

 

Deswell Industries

 

 

564,371

 

 

1,636,676

 

Encore Wire

 

 

15,000

 

 

363,300

 

Fushi Copperweld 2

 

 

204,063

 

 

1,169,281

 

Jinpan International

 

 

124,124

 

 

1,387,706

 

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

 

 

 

 

 

 

 

 

Industrials (continued)

 

 

 

 

 

 

 

Electrical Equipment (continued)

 

 

 

 

 

 

 

LSI Industries

 

 

79,812

 

$

633,707

 

Powell Industries 2

 

 

40,600

 

 

1,481,900

 

Preformed Line Products

 

 

16,000

 

 

1,138,880

 

 

 

 

 

 

    

 

 

 

 

 

 

 

8,647,163

 

 

 

 

 

 

    

 

Industrial Conglomerates - 1.0%

 

 

 

 

 

 

 

Raven Industries

 

 

58,400

 

 

3,253,464

 

 

 

 

 

 

    

 

Machinery - 6.8%

 

 

 

 

 

 

 

Armstrong Industrial

 

 

2,166,800

 

 

611,654

 

Cascade Corporation

 

 

8,600

 

 

409,102

 

CIRCOR International

 

 

14,000

 

 

599,620

 

Columbus McKinnon 2

 

 

26,050

 

 

467,858

 

Eastern Company (The)

 

 

39,750

 

 

637,987

 

FAG Bearings India

 

 

23,700

 

 

631,554

 

Force Protection 2

 

 

126,700

 

 

629,066

 

Foster (L.B.) Company Cl. A

 

 

69,700

 

 

2,293,827

 

FreightCar America 2

 

 

42,900

 

 

1,087,086

 

Graham Corporation

 

 

46,100

 

 

940,440

 

Hurco Companies 2

 

 

45,966

 

 

1,480,565

 

NN 2

 

 

114,300

 

 

1,709,928

 

PMFG 2

 

 

143,800

 

 

2,854,430

 

Semperit AG Holding

 

 

12,500

 

 

623,499

 

Sun Hydraulics

 

 

58,925

 

 

2,816,615

 

Tennant Company

 

 

92,300

 

 

3,685,539

 

 

 

 

 

 

    

 

 

 

 

 

 

 

21,478,770

 

 

 

 

 

 

    

 

Professional Services - 3.5%

 

 

 

 

 

 

 

Acacia Research-Acacia Technologies 2

 

 

23,500

 

 

862,215

 

Advisory Board (The) 2

 

 

41,400

 

 

2,396,232

 

CBIZ 2

 

 

47,000

 

 

345,920

 

Exponent 2

 

 

58,400

 

 

2,540,984

 

GP Strategies 2

 

 

41,385

 

 

565,319

 

Heidrick & Struggles International

 

 

20,000

 

 

452,800

 

JobStreet Corporation

 

 

50,000

 

 

48,518

 

Kforce 2

 

 

60,000

 

 

784,800

 

On Assignment 2

 

 

41,100

 

 

404,013

 

SFN Group 2

 

 

300,000

 

 

2,727,000

 

 

 

 

 

 

    

 

 

 

 

 

 

 

11,127,801

 

 

 

 

 

 

    

 

Road & Rail - 1.7%

 

 

 

 

 

 

 

Frozen Food Express Industries 2

 

 

157,000

 

 

560,490

 

Patriot Transportation Holding 2

 

 

111,681

 

 

2,498,304

 

Universal Truckload Services 2

 

 

134,200

 

 

2,298,846

 

 

 

 

 

 

    

 

 

 

 

 

 

 

5,357,640

 

 

 

 

 

 

    

 

Trading Companies & Distributors - 0.8%

 

 

 

 

 

 

 

Aceto Corporation

 

 

72,219

 

 

484,590

 

Houston Wire & Cable

 

 

67,375

 

 

1,047,681

 

Lawson Products

 

 

50,269

 

 

988,791

 

 

 

 

 

 

    

 

 

 

 

 

 

 

2,521,062

 

 

 

 

 

 

    

 

Total (Cost $54,212,842)

 

 

 

 

 

82,145,233

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Information Technology – 18.8%

 

 

 

 

 

 

 

Communications Equipment - 1.1%

 

 

 

 

 

 

 

Anaren 2

 

 

8,000

 

 

170,000

 

Bel Fuse Cl. A

 

 

67,705

 

 

1,570,756

 

Cogo Group 2

 

 

104,275

 

 

556,829

 


 

 

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

2011 Semiannual Report to Stockholders | 37

 

Royce Micro-Cap Trust
 

 

   Schedule of Investments

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

Information Technology (continued)

 

 

 

 

 

 

 

Communications Equipment (continued)

 

 

 

 

 

 

 

PC-Tel 2

 

 

44,100

 

$

285,768

 

Zhone Technologies 2

 

 

316,320

 

 

749,678

 

 

 

 

 

 

    

 

 

 

 

 

 

 

3,333,031

 

 

 

 

 

 

    

 

Computers & Peripherals - 1.5%

 

 

 

 

 

 

 

Imation Corporation 2

 

 

112,312

 

 

1,060,225

 

Intevac 2

 

 

31,400

 

 

320,594

 

Rimage Corporation

 

 

79,200

 

 

1,063,656

 

Super Micro Computer 2

 

 

55,754

 

 

897,082

 

TransAct Technologies 2

 

 

78,600

 

 

919,620

 

Xyratex 2

 

 

31,500

 

 

323,190

 

 

 

 

 

 

    

 

 

 

 

 

 

 

4,584,367

 

 

 

 

 

 

    

 

Electronic Equipment, Instruments & Components - 6.1%

Agilysys 2

 

 

90,000

 

 

750,600

 

Diguang International Development 2

 

 

230,000

 

 

4,600

 

Diploma

 

 

50,000

 

 

301,105

 

Domino Printing Sciences

 

 

80,000

 

 

875,685

 

Frequency Electronics 2

 

 

115,000

 

 

1,092,500

 

Hana Microelectronics

 

 

500,000

 

 

379,826

 

Hollysys Automation Technologies 2

 

 

252,100

 

 

2,349,572

 

Inficon Holding

 

 

3,600

 

 

751,942

 

Mercury Computer Systems 2

 

 

20,900

 

 

390,412

 

Mesa Laboratories

 

 

48,267

 

 

1,528,133

 

Methode Electronics

 

 

28,400

 

 

329,724

 

Newport Corporation 2

 

 

80,900

 

 

1,469,953

 

Park Electrochemical

 

 

15,400

 

 

430,430

 

Pulse Electronics

 

 

150,000

 

 

663,000

 

Research Frontiers 1,2

 

 

30,150

 

 

137,786

 

Richardson Electronics

 

 

250,900

 

 

3,409,731

 

Rogers Corporation 2

 

 

58,400

 

 

2,698,080

 

TTM Technologies 2

 

 

114,400

 

 

1,832,688

 

 

 

 

 

 

    

 

 

 

 

 

 

 

19,395,767

 

 

 

 

 

 

    

 

Internet Software & Services - 1.1%

 

 

 

 

 

 

 

†Bitauto Holdings ADR 1,2

 

 

50,000

 

 

390,000

 

CryptoLogic 1,2

 

 

88,300

 

 

131,567

 

Marchex Cl. B

 

 

95,000

 

 

843,600

 

Support.com 2

 

 

215,000

 

 

1,032,000

 

WebMediaBrands 2

 

 

525,000

 

 

703,500

 

World Energy Solutions 1,2

 

 

72,920

 

 

306,264

 

 

 

 

 

 

    

 

 

 

 

 

 

 

3,406,931

 

 

 

 

 

 

    

 

IT Services - 4.9%

 

 

 

 

 

 

 

Cass Information Systems

 

 

15,000

 

 

566,400

 

Computer Task Group 2

 

 

161,100

 

 

2,121,687

 

Forrester Research

 

 

54,900

 

 

1,809,504

 

iGATE Corporation 1,2

 

 

81,200

 

 

1,325,184

 

Innodata Isogen 2

 

 

593,832

 

 

1,573,655

 

Integral Systems 2

 

 

123,000

 

 

1,496,910

 

Sapient Corporation 2

 

 

350,000

 

 

5,260,500

 

Tier Technologies 1,2

 

 

181,980

 

 

909,900

 

Yucheng Technologies 2

 

 

138,244

 

 

452,058

 

 

 

 

 

 

    

 

 

 

 

 

 

 

15,515,798

 

 

 

 

 

 

    

 

Semiconductors & Semiconductor Equipment - 1.5%

Advanced Analogic Technologies 2

 

 

80,000

 

 

484,400

 

† Amtech Systems 1,2

 

 

12,200

 

 

251,808

 

 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

 

 

 

 

 

 

 

 

Information Technology (continued)

 

 

 

 

 

 

 

Semiconductors & Semiconductor Equipment (continued)

 

Exar Corporation 2

 

 

311,208

 

$

1,969,947

 

Himax Technologies ADR

 

 

118,968

 

 

261,729

 

Integrated Silicon Solution 2

 

 

93,000

 

 

899,310

 

PLX Technology 2

 

 

110,000

 

 

381,700

 

Rudolph Technologies 2

 

 

58,900

 

 

630,819

 

 

 

 

 

 

    

 

 

 

 

 

 

 

4,879,713

 

 

 

 

 

 

    

 

Software - 2.6%

 

 

 

 

 

 

 

ACI Worldwide 2

 

 

69,600

 

 

2,350,392

 

Actuate Corporation 2

 

 

210,800

 

 

1,233,180

 

American Software Cl. A

 

 

67,200

 

 

558,432

 

Fundtech

 

 

73,500

 

 

1,467,060

 

Pegasystems

 

 

49,000

 

 

2,280,950

 

S1 Corporation 2

 

 

60,000

 

 

448,800

 

 

 

 

 

 

    

 

 

 

 

 

 

 

8,338,814

 

 

 

 

 

 

    

 

Total (Cost $38,345,174)

 

 

 

 

 

59,454,421

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Materials – 8.9%

 

 

 

 

 

 

 

Chemicals - 2.4%

 

 

 

 

 

 

 

Balchem Corporation

 

 

63,375

 

 

2,774,558

 

Hawkins

 

 

54,697

 

 

1,981,125

 

Landec Corporation 2

 

 

60,300

 

 

397,980

 

Quaker Chemical

 

 

53,700

 

 

2,309,637

 

 

 

 

 

 

    

 

 

 

 

 

 

 

7,463,300

 

 

 

 

 

 

    

 

Construction Materials - 0.8%

 

 

 

 

 

 

 

Ash Grove Cement 4

 

 

8,000

 

 

1,280,000

 

Monarch Cement

 

 

52,303

 

 

1,297,114

 

 

 

 

 

 

    

 

 

 

 

 

 

 

2,577,114

 

 

 

 

 

 

    

 

Metals & Mining - 4.9%

 

 

 

 

 

 

 

AuRico Gold 2

 

 

74,636

 

 

820,250

 

Aurizon Mines 2

 

 

47,000

 

 

262,730

 

Central Steel & Wire 4

 

 

1,088

 

 

690,880

 

Chesapeake Gold 2

 

 

20,000

 

 

226,865

 

Endeavour Mining 1,2

 

 

618,200

 

 

1,480,680

 

Endeavour Mining (Warrants) 2

 

 

50,000

 

 

31,106

 

Exeter Resource 2

 

 

140,000

 

 

585,200

 

Extorre Gold Mines 2

 

 

140,000

 

 

1,790,600

 

Haynes International

 

 

11,400

 

 

706,002

 

Horsehead Holding Corporation 2

 

 

43,700

 

 

582,084

 

MAG Silver 2

 

 

74,750

 

 

746,005

 

Materion Corporation 2

 

 

27,000

 

 

998,190

 

Midway Gold 1,2

 

 

345,000

 

 

676,200

 

Minefinders Corporation 1,2

 

 

36,000

 

 

468,360

 

Northgate Minerals 2

 

 

270,000

 

 

702,000

 

RTI International Metals 2

 

 

25,000

 

 

959,250

 

Seabridge Gold 2

 

 

16,700

 

 

471,107

 

Sprott Resource 2

 

 

104,400

 

 

496,860

 

Synalloy Corporation 2

 

 

58,200

 

 

789,774

 

Universal Stainless & Alloy Products 1,2

 

 

36,299

 

 

1,697,341

 

Victoria Gold 2

 

 

200,000

 

 

124,423

 

Vista Gold 1,2

 

 

50,000

 

 

141,500

 

 

 

 

 

 

    

 

 

 

 

 

 

 

15,447,407

 

 

 

 

 

 

    

 

Paper & Forest Products - 0.8%

 

 

 

 

 

 

 

Pope Resources L.P.

 

 

51,205

 

 

2,330,339

 


 

 

38 | 2011 Semiannual Report to Stockholders

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


 

 June 30, 2011 (unaudited)
 

 

 


 

 

 

 

 

 

 

 

 

 

SHARES

 

VALUE

 

Materials (continued)

 

 

 

 

 

 

 

Paper & Forest Products (continued)

 

 

 

 

 

 

 

† QX Paper 3

 

 

1,500,000

 

$

198,543

 

 

 

 

 

 

    

 

 

 

 

 

 

 

2,528,882

 

 

 

 

 

 

    

 

Total (Cost $16,655,110)

 

 

 

 

 

28,016,703

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Telecommunication Services – 0.5%

 

 

 

 

 

 

 

Diversified Telecommunication Services - 0.5%

 

Neutral Tandem 2

 

 

90,000

 

 

1,567,800

 

 

 

 

 

 

    

 

Total (Cost $1,163,871)

 

 

 

 

 

1,567,800

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Utilities – 0.1%

 

 

 

 

 

 

 

Independent Power Producers & Energy Traders - 0.1%

China Hydroelectric ADS 1,2

 

 

83,100

 

 

339,048

 

 

 

 

 

 

    

 

Total (Cost $664,490)

 

 

 

 

 

339,048

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Miscellaneous5 – 4.0%

 

 

 

 

 

 

 

Total (Cost $13,021,512)

 

 

 

 

 

12,781,197

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

TOTAL COMMON STOCKS

 

 

 

 

 

 

 

(Cost $237,561,960)

 

 

 

 

 

324,269,925

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

PREFERRED STOCK – 0.4%

 

 

 

 

 

 

 

Seneca Foods Conv.2,4

 

 

 

 

 

 

 

(Cost $578,719)

 

 

45,409

 

 

1,156,113

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

VALUE

 

 

 

 

 

 

REPURCHASE AGREEMENT – 16.6%

 

 

 

 

Fixed Income Clearing Corp.,
0.01% dated 6/30/11, due 7/1/11,
maturity value $52,666,015 (collateralized
by obligations of various U.S. Government
Agencies, 1.00% due 4/30/12, valued at
$53,984,275)
(Cost $52,666,000)

 

$

52,666,000

 

 

 

    

 

 

 

 

 

 

COLLATERAL RECEIVED FOR SECURITIES LOANED – 3.4%

 

 

 

 

Money Market Funds

 

 

 

 

Federated Government Obligations Fund

 

 

 

 

(7 day yield-0.009864%)

 

 

 

 

(Cost $10,869,503)

 

 

10,869,503

 

 

 

    

 

 

 

 

 

 

TOTAL INVESTMENTS – 122.7%

 

 

 

 

(Cost $301,676,182)

 

 

388,961,541

 

 

 

 

 

 

LIABILITIES LESS CASH

 

 

 

 

AND OTHER ASSETS – (3.8)%

 

 

(12,013,716

)

 

 

 

 

 

PREFERRED STOCK – (18.9)%

 

 

(60,000,000

)

 

 

    

 

 

 

 

 

 

NET ASSETS APPLICABLE TO COMMON

 

 

 

 

STOCKHOLDERS – 100.0%

 

$

316,947,825

 

 

 

    

 


 

 
 

† 

New additions in 2011.

1

All or a portion of these securities were on loan at June 30, 2011. Total market value of loaned securities at June 30, 2011, was $10,560,798.

2

Non-income producing.

3

Securities for which market quotations are not readily available represent 0.1% of net assets. These securities have been valued at their fair value under procedures approved by the Fund's Board of Directors. These securities are defined as Level 3 securities due to the use of significant unobservable inputs in the determination of fair value. See Notes to Financial Statements.

4

These securities are defined as Level 2 securities due to fair value being based on quoted prices for similar securities. See Notes to Financial Statements.

5

Includes securities first acquired in 2011 and less than 1% of net assets applicable to Common Stockholders.

 

 

 

Bold indicates the Fund's 20 largest equity holdings in terms of June 30, 2011, market value.

 

 

 

TAX INFORMATION: The cost of total investments for Federal income tax purposes was $302,239,388. At June 30, 2011, net unrealized appreciation for all securities was $86,722,153, consisting of aggregate gross unrealized appreciation of $114,347,581 and aggregate gross unrealized depreciation of $27,625,428. The primary difference between book and tax basis cost is the timing of the recognition of losses on securities sold.
 

 

 

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

2011 Semiannual Report to Stockholders | 39










 

 

Royce Micro-Cap Trust

June 30, 2011 (unaudited)
 

 

 

   Statement of Assets and Liabilities

 

 

 

 

 

 

ASSETS:

 

 

 

 

Total investments at value (including collateral on loaned securities)

 

$

336,295,541

 

Repurchase agreements (at cost and value)

 

 

52,666,000

 

Cash and foreign currency

 

 

3,777

 

Receivable for investments sold

 

 

143,405

 

Receivable for dividends and interest

 

 

306,749

 

Prepaid expenses and other assets

 

 

24,538

 
 

Total Assets

 

 

389,440,010

 
 

LIABILITIES:

 

 

 

 

Payable for collateral on loaned securities

 

 

10,869,503

 

Payable for investments purchased

 

 

1,219,389

 

Payable for investment advisory fee

 

 

203,522

 

Preferred dividends accrued but not yet declared

 

 

80,000

 

Accrued expenses

 

 

119,771

 
 

Total Liabilities

 

 

12,492,185

 
 

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

 

$

316,947,825

 
 

ANALYSIS OF NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

 

 

 

 

Common Stock paid-in capital - $0.001 par value per share; 27,823,031 shares outstanding (150,000,000 shares authorized)

 

$

229,856,846

 

Undistributed net investment income (loss)

 

 

(1,328,983

)

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

 

 

9,911,219

 

Net unrealized appreciation (depreciation) on investments and foreign currency

 

 

87,273,829

 

Unallocated and accrued distributions

 

 

(8,765,086

)
 

Net Assets applicable to Common Stockholders (net asset value per share - $11.39)

 

$

316,947,825

 
 

Investments at identified cost (including $10,869,503 of collateral on loaned securities)

 

$

249,010,182

 

Market value of loaned securities

 

 

10,560,798

 

 

 

40 | 2011 Semiannual Report to Stockholders

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

 

 

Royce Micro-Cap Trust

Six Months Ended June 30, 2011 (unaudited)
 

 

 

   Statement of Operations

 

 

 

 

 

 

INVESTMENT INCOME:

 

 

 

 

Income:

 

 

 

 

Dividends1

 

$

1,649,476

 

Interest

 

 

8,812

 

Securities lending

 

 

50,572

 
 

Total income

 

 

1,708,860

 
 

Expenses:

 

 

 

 

Investment advisory fees

 

 

1,125,541

 

Stockholder reports

 

 

58,241

 

Custody and transfer agent fees

 

 

55,303

 

Professional fees

 

 

33,042

 

Directors' fees

 

 

31,872

 

Administrative and office facilities

 

 

17,870

 

Other expenses

 

 

30,163

 
 

Total expenses

 

 

1,352,032

 

Compensating balance credits

 

 

(11

)
 

Net expenses

 

 

1,352,021

 
 

Net investment income (loss)

 

 

356,839

 
 

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

 

 

 

 

Net realized gain (loss):

 

 

 

 

Investments

 

 

7,050,577

 

Foreign currency transactions

 

 

(9,291

)

Net change in unrealized appreciation (depreciation):

 

 

 

 

Investments and foreign currency translations

 

 

3,412,535

 

Other assets and liabilities denominated in foreign currency

 

 

35,868

 
 

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

 

 

10,489,689

 
 

NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS

 

 

10,846,528

 
 

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS

 

 

(1,800,000

)
 

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

 

$

9,046,528

 

1 Net of foreign withholding tax of $32,922.

 

 

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

2011 Semiannual Report to Stockholders | 41

 

Royce Micro-Cap Trust
 

 

   Statement of Changes in Net Assets Applicable to Common Stockholders

 

 

 

 

 

 

 

 

 

 

Six months ended
6/30/11
(unaudited)

 

Year ended
12/31/10

 

INVESTMENT OPERATIONS:

 

 

 

 

 

 

 

Net investment income (loss)

 

$

356,839

 

$

2,194,992

 

Net realized gain (loss) on investments and foreign currency

 

 

7,041,286

 

 

43,946,229

 

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

 

 

3,448,403

 

 

26,663,923

 
 

Net increase (decrease) in net assets from investment operations

 

 

10,846,528

 

 

72,805,144

 
 

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:

 

 

 

 

 

 

 

Net investment income

 

 

–

 

 

(2,832,980

)

Net realized gain on investments and foreign currency

 

 

–

 

 

(767,020

)

Unallocated distributions1

 

 

(1,800,000

)

 

–

 
 

Total distributions to Preferred Stockholders

 

 

(1,800,000

)

 

(3,600,000

)
 

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

 

 

 

 

 

 

 

   FROM INVESTMENT OPERATIONS

 

 

9,046,528

 

 

69,205,144

 
 

DISTRIBUTIONS TO COMMON STOCKHOLDERS:

 

 

 

 

 

 

 

Net investment income

 

 

–

 

 

(1,720,810

)

Net realized gain on investments and foreign currency

 

 

–

 

 

(465,903

)

Unallocated distributions1

 

 

(6,885,086

)

 

–

 
 

Total distributions to Common Stockholders

 

 

(6,885,086

)

 

(2,186,713

)
 

CAPITAL STOCK TRANSACTIONS:

 

 

 

 

 

 

 

Reinvestment of distributions to Common Stockholders

 

 

3,507,568

 

 

1,104,264

 
 

Total capital stock transactions

 

 

3,507,568

 

 

1,104,264

 
 

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

 

 

5,669,010

 

 

68,122,695

 
 

NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

 

 

 

 

 

 

 

Beginning of period

 

 

311,278,815

 

 

243,156,120

 
 

End of period (including undistributed net investment income (loss) of $(1,328,983) at 6/30/11 and $(1,685,821) at 12/31/10)

 

$

316,947,825

 

$

311,278,815

 

 

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

 

 

42 | 2011 Semiannual Report to Stockholders

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

 

Royce Micro-Cap Trust
 

 

   Financial Highlights

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended
June 30, 2011
(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Years ended December 31,

 

 

 

 

  

 

 

 

2010

 

2009

 

2008

 

2007

 

2006

 
 

NET ASSET VALUE, BEGINNING OF PERIOD

 

$

11.34

 

$

8.90

 

$

6.39

 

$

13.48

 

$

14.77

 

$

13.43

 
 

INVESTMENT OPERATIONS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income (loss)

 

 

0.01

 

 

0.08

 

 

0.00

 

 

0.02

 

 

(0.00

)

 

0.01

 

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

 

 

0.38

 

 

2.58

 

 

2.88

 

 

(5.70

)

 

0.24

 

 

3.04

 
 

Total investment operations

 

 

0.39

 

 

2.66

 

 

2.88

 

 

(5.68

)

 

0.24

 

 

3.05

 
 

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

–     

 

 

(0.10

)

 

(0.04

)

 

(0.01

)

 

(0.01

)

 

(0.02

)

Net realized gain on investments and foreign currency

 

 

–     

 

 

(0.03

)

 

–     

 

 

(0.13

)

 

(0.14

)

 

(0.14

)

Return of capital

 

 

–     

 

 

–     

 

 

(0.09

)

 

–     

 

 

–     

 

 

–     

 

Unallocated distributions1

 

 

(0.07

)

 

–     

 

 

–     

 

 

–     

 

 

–     

 

 

–     

 
 

Total distributions to Preferred Stockholders

 

 

(0.07

)

 

(0.13

)

 

(0.13

)

 

(0.14

)

 

(0.15

)

 

(0.16

)
 

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

 

 

0.32

 

 

2.53

 

 

2.75

 

 

(5.82

)

 

0.09

 

 

2.89

 
 

DISTRIBUTIONS TO COMMON STOCKHOLDERS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

–     

 

 

(0.06

)

 

–     

 

 

(0.09

)

 

(0.08

)

 

(0.20

)

Net realized gain on investments and foreign currency

 

 

–     

 

 

(0.02

)

 

–     

 

 

(0.83

)

 

(1.27

)

 

(1.35

)

Return of capital

 

 

–     

 

 

–     

 

 

(0.22

)

 

(0.27

)

 

–     

 

 

–     

 

Unallocated distributions1

 

 

(0.25

)

 

–     

 

 

–     

 

 

–     

 

 

–     

 

 

–     

 
 

Total distributions to Common Stockholders

 

 

(0.25

)

 

(0.08

)

 

(0.22

)

 

(1.19

)

 

(1.35

)

 

(1.55

)
 

CAPITAL STOCK TRANSACTIONS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of reinvestment of distributions by Common Stockholders

 

 

(0.02

)

 

(0.01

)

 

(0.02

)

 

(0.08

)

 

(0.03

)

 

(0.00

)
 

Total capital stock transactions

 

 

(0.02

)

 

(0.01

)

 

(0.02

)

 

(0.08

)

 

(0.03

)

 

(0.00

)
 

NET ASSET VALUE, END OF PERIOD

 

$

11.39

 

$

11.34

 

$

8.90

 

$

6.39

 

$

13.48

 

$

14.77

 
 

MARKET VALUE, END OF PERIOD

 

$

9.86

 

$

9.80

 

$

7.37

 

$

5.62

 

$

11.94

 

$

16.57

 
 

TOTAL RETURN:2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Value

 

 

3.29

%3

 

34.10

%

 

37.91

%

 

(45.84

)%

 

(20.54

)%

 

26.72

%

Net Asset Value

 

 

3.12

%3

 

28.50

%

 

46.47

%

 

(45.45

)%

 

0.64

%

 

22.46

%

RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total expenses4,5

 

 

0.86

%6

 

1.12

%

 

1.59

%

 

1.55

%

 

1.56

%

 

1.64

%

Investment advisory fee expense7

 

 

0.72

%6

 

0.97

%

 

1.38

%

 

1.39

%

 

1.44

%

 

1.49

%

Other operating expenses

 

 

0.14

%6

 

0.15

%

 

0.21

%

 

0.16

%

 

0.12

%

 

0.15

%

Net investment income (loss)

 

 

0.23

%6

 

0.84

%

 

0.02

%

 

0.15

%

 

(0.07

)%

 

0.05

%

SUPPLEMENTAL DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

316,948

 

$

311,279

 

$

243,156

 

$

169,854

 

$

331,476

 

$

343,682

 

Liquidation Value of Preferred Stock,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

End of Period (in thousands)

 

$

60,000

 

$

60,000

 

$

60,000

 

$

60,000

 

$

60,000

 

$

60,000

 

Portfolio Turnover Rate

 

 

13

%

 

27

%

 

30

%

 

42

%

 

41

%

 

34

%

PREFERRED STOCK:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shares outstanding

 

 

2,400,000

 

 

2,400,000

 

 

2,400,000

 

 

2,400,000

 

 

2,400,000

 

 

2,400,000

 

Asset coverage per share

 

$

157.06

 

$

154.70

 

$

126.32

 

$

95.77

 

$

163.11

 

$

168.20

 

Liquidation preference per share

 

$

25.00

 

$

25.00

 

$

25.00

 

$

25.00

 

$

25.00

 

$

25.00

 

Average month-end market value per share

 

$

25.21

 

$

25.11

 

$

23.47

 

$

23.08

 

$

24.06

 

$

24.15

 
 

 

 

1 

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

2

The Market Value Total Return is calculated assuming a purchase of Common Stock on the opening of the first business day and a sale on the closing of the last business day of each period reported. Dividends and distributions are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund's Distribution Reinvestment and Cash Purchase Plan. Net Asset Value Total Return is calculated on the same basis, except that the Fund's net asset value is used on the purchase and sale dates instead of market value.

3

Not annualized

4

Expense ratios based on total average net assets including liquidation value of Preferred Stock were 0.72%, 0.91%, 1.21%, 1.26%, 1.33% and 1.38% for the periods ended June 30, 2011, and December 31, 2010, 2009, 2008, 2007 and 2006, respectively.

5

Expense ratios based on average net assets applicable to Common Stockholders before waiver of fees by the investment adviser would have been 1.17%, 1.74% and 1.58% for the years ended December 31, 2010, 2009 and 2008, respectively; before waiver of fees and after earnings credits would have been 0.86%, 1.17%, 1.74%, 1.58%, 1.56% and 1.64% for the periods ended June 30, 2011, and December 31, 2010, 2009, 2008, 2007 and 2006, respectively.

6

Annualized

7

The investment advisory fee is calculated based on average net assets over a rolling 36-month basis, while the above ratios of investment advisory fee expenses are based on the average net assets applicable to Common Stockholders over a 12-month basis.


 

 

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

2011 Semiannual Report to Stockholders | 43


 

Royce Micro-Cap Trust
 

 

   Notes to Financial Statements (unaudited)


Summary of Significant Accounting Policies:
     Royce Micro-Cap Trust, Inc. (the “Fund”), was incorporated under the laws of the State of Maryland on September 9, 1993, as a diversified closed-end investment company. The Fund commenced operations on December 14, 1993.
     The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
     Under the Fund’s organizational documents, the officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote.

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

      Various inputs are used in determining the value of the Fund’s investments, as noted above. These inputs are summarized in the three broad levels below:

 

Level 

1 – quoted prices in active markets for identical securities.

 

Level

2 – other significant observable inputs (including quoted prices for similar securities, foreign securities that may be fair valued and repurchase agreements). The table below includes all Level 2 securities. Any Level 2 securities with values based on quoted prices for similar securities would be noted in the Schedule of Investments.

 

Level

3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).

     The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
     The following is a summary of the inputs used to value the Fund’s investments as of June 30, 2011. For a detailed breakout of common stocks by sector classification, please refer to the Schedule of Investments.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 
 

Common stocks

 

$

286,239,391

 

$

37,795,804

 

$

234,730

 

$

324,269,925

 

Preferred stocks

 

 

–

 

 

1,156,113

 

 

–

 

 

1,156,113

 

Cash equivalents

 

 

10,869,503

 

 

52,666,000

 

 

–

 

 

63,535,503

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 3 Reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Realized and
Unrealized
Gain (Loss)1

 

 

 

 

 

 

Balance as of
12/31/10

 

Purchases

 

Transfers Out

 

 

 

 

 

Balance as of
6/30/11

 

 

 

 

 

 

Sales

 

 

 
 

Common stocks

 

$

36,229

 

$

459,067

 

$

–

 

$

–

 

$

(260,566

)

$

234,730

 
 


 

 

1 

The net change in unrealized appreciation (depreciation) is included in the accompanying Statement of Operations. Change in unrealized appreciation (depreciation) includes net unrealized appreciation (depreciation) resulting from changes in investment values during the reporting period and the reversal of previously recorded unrealized appreciation (depreciation) when gains or losses are realized. Net realized gain (loss) from investments and foreign currency transactions is included in the accompanying Statement of Operations.

44 | 2011 Semiannual Report to Stockholders

 

Royce Micro-Cap Trust
 

 

   Notes to Financial Statements (unaudited) (continued)


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

Foreign Currency:
     Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, expiration of currency forward contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, including investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.

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

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

Distributions:
     Commencing March 2011, the Fund pays quarterly distributions on the Fund’s Common Stock at the annual rate of 5% of the rolling average of the prior four calendar quarter-end NAVs of the Fund’s Common Stock, with the fourth quarter distribution being the greater of 1.25% of the rolling average or the distribution required by IRS regulations. Distributions to Preferred Stockholders are accrued daily and paid quarterly and distributions to Common Stockholders are recorded on ex-dividend date. Distributable capital gains and/or net investment income are first allocated to Preferred Stockholder distributions, with any excess allocable to Common Stockholders. If capital gains and/or net investment income are allocated to both Preferred and Common Stockholders, the tax character of such allocations is proportional. To the extent that distributions are not paid from long- term capital gains, net investment income or net short-term capital gains, they will represent a return of capital. Distributions are determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United States of America. Permanent book and tax differences relating to stockholder distributions will result in reclassifications within the capital accounts. Undistributed net investment income may include temporary book and tax basis differences, which will reverse in a subsequent period. Any taxable income or gain remaining undistributed at fiscal year end is distributed in the following year.

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

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

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

2011 Semiannual Report to Stockholders | 45

 

Royce Micro-Cap Trust
 

 

   Notes to Financial Statements (unaudited) (continued)

Capital Stock:
     The Fund issued 371,641 and 117,475 shares of Common Stock as reinvestment of distributions by Common Stockholders for the six months ended June 30, 2011, and the year ended December 31, 2010, respectively.
     At June 30, 2011, 2,400,000 shares of 6.00% Cumulative Preferred Stock were outstanding. The Fund, at its option, may redeem the Cumulative Preferred Stock, in whole or in part, at the redemption price. The Cumulative Preferred Stock is classified outside of permanent equity (net assets applicable to Common Stockholders) in the accompanying financial statements in accordance with accounting for redeemable equity instruments, 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 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 six rolling 36-month periods ended June 2011, the Fund’s investment performance ranged from 5% to 10% below the investment performance of the Russell 2000. Accordingly, the net investment advisory fee consisted of a Basic Fee of $1,517,526 and a net downward adjustment of $391,985 for the performance of the Fund relative to that of the Russell 2000. For the six months ended June 30, 2011, the Fund accrued and paid Royce investment advisory fees totaling $1,125,541.

Purchases and Sales of Investment Securities:
     For the six months ended June 30, 2011, the costs of purchases and proceeds from sales of investment securities, other than short-term securities and collateral received for securities loaned, amounted to $40,508,082 and $40,927,150, respectively.

46 | 2011 Semiannual Report to Stockholders


 

 

Royce Focus Trust

June 30, 2011 (unaudited)
 

 

 

   Schedule of Investments

 

 

 

 

 

 

 

 

 

 

 

 

SHARES

 

 

VALUE

 

COMMON STOCKS – 101.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Discretionary – 7.5%

 

 

 

 

 

 

 

Automobiles - 1.6%

 

 

 

 

 

 

 

Thor Industries

 

 

100,000

 

$

2,884,000

 

 

 

 

 

 

    

 

Specialty Retail - 5.9%

 

 

 

 

 

 

 

Buckle (The)

 

 

120,000

 

 

5,124,000

 

GameStop Corporation Cl. A 1

 

 

195,000

 

 

5,200,650

 

 

 

 

 

 

    

 

 

 

 

 

 

 

10,324,650

 

 

 

 

 

 

    

 

Total (Cost $11,319,256)

 

 

 

 

 

13,208,650

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Consumer Staples – 5.6%

 

 

 

 

 

 

 

Food Products - 4.3%

 

 

 

 

 

 

 

Cal-Maine Foods

 

 

75,000

 

 

2,397,000

 

Industrias Bachoco ADR

 

 

90,000

 

 

2,169,000

 

Sanderson Farms

 

 

65,000

 

 

3,105,700

 

 

 

 

 

 

    

 

 

 

 

 

 

 

7,671,700

 

 

 

 

 

 

    

 

Personal Products - 1.3%

 

 

 

 

 

 

 

Nu Skin Enterprises Cl. A

 

 

60,000

 

 

2,253,000

 

 

 

 

 

 

    

 

Total (Cost $7,619,440)

 

 

 

 

 

9,924,700

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Energy – 13.4%

 

 

 

 

 

 

 

Energy Equipment & Services - 11.1%

 

 

 

 

 

 

 

Ensco ADR

 

 

75,000

 

 

3,997,500

 

Helmerich & Payne

 

 

50,000

 

 

3,306,000

 

Pason Systems

 

 

150,000

 

 

2,261,393

 

Tesco Corporation 1

 

 

100,000

 

 

1,941,000

 

Trican Well Service

 

 

220,000

 

 

5,168,956

 

Unit Corporation 1

 

 

50,000

 

 

3,046,500

 

 

 

 

 

 

    

 

 

 

 

 

 

 

19,721,349

 

 

 

 

 

 

    

 

Oil, Gas & Consumable Fuels - 2.3%

 

 

 

 

 

 

 

Exxon Mobil

 

 

50,000

 

 

4,069,000

 

 

 

 

 

 

    

 

Total (Cost $15,043,210)

 

 

 

 

 

23,790,349

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Financials – 20.8%

 

 

 

 

 

 

 

Capital Markets - 14.3%

 

 

 

 

 

 

 

†Affiliated Managers Group 1

 

 

20,000

 

 

2,029,000

 

Ashmore Group

 

 

650,000

 

 

4,154,435

 

Franklin Resources

 

 

45,000

 

 

5,908,050

 

INTL FCStone 1

 

 

65,000

 

 

1,573,650

 

Knight Capital Group Cl. A 1

 

 

175,000

 

 

1,928,500

 

Partners Group Holding

 

 

10,000

 

 

1,769,880

 

Sprott

 

 

350,000

 

 

2,681,839

 

U.S. Global Investors Cl. A

 

 

147,849

 

 

1,064,513

 

Value Partners Group

 

 

4,800,000

 

 

4,125,542

 

 

 

 

 

 

    

 

 

 

 

 

 

 

25,235,409

 

 

 

 

 

 

    

 

Diversified Financial Services - 0.8%

 

 

 

 

 

 

 

PICO Holdings 1

 

 

50,000

 

 

1,450,000

 

 

 

 

 

 

    

 

Insurance - 3.3%

 

 

 

 

 

 

 

Berkshire Hathaway Cl. B 1

 

 

75,000

 

 

5,804,250

 

 

 

 

 

 

    

 

Real Estate Management & Development - 2.4%

 

 

 

 

 

 

 

Kennedy-Wilson Holdings

 

 

349,170

 

 

4,277,333

 

 

 

 

 

 

    

 

Total (Cost $30,888,381)

 

 

 

 

 

36,766,992

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

SHARES

 

 

VALUE

 

Health Care – 0.9%

 

 

 

 

 

 

 

Biotechnology - 0.9%

 

 

 

 

 

 

 

Myriad Genetics 1

 

 

70,000

 

$

1,589,700

 

 

 

 

 

 

    

 

Total (Cost $1,757,953)

 

 

 

 

 

1,589,700

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Industrials – 9.0%

 

 

 

 

 

 

 

Building Products - 1.8%

 

 

 

 

 

 

 

Simpson Manufacturing

 

 

50,000

 

 

1,493,500

 

WaterFurnace Renewable Energy

 

 

70,000

 

 

1,611,281

 

 

 

 

 

 

    

 

 

 

 

 

 

 

3,104,781

 

 

 

 

 

 

    

 

Construction & Engineering - 1.2%

 

 

 

 

 

 

 

Jacobs Engineering Group 1

 

 

50,000

 

 

2,162,500

 

 

 

 

 

 

    

 

Electrical Equipment - 1.1%

 

 

 

 

 

 

 

GrafTech International 1

 

 

100,000

 

 

2,027,000

 

 

 

 

 

 

    

 

Machinery - 3.8%

 

 

 

 

 

 

 

Lincoln Electric Holdings

 

 

50,000

 

 

1,792,500

 

Pfeiffer Vacuum Technology

 

 

15,000

 

 

1,880,873

 

Semperit AG Holding

 

 

60,000

 

 

2,992,798

 

 

 

 

 

 

    

 

 

 

 

 

 

 

6,666,171

 

 

 

 

 

 

    

 

Road & Rail - 1.1%

 

 

 

 

 

 

 

Patriot Transportation Holding 1

 

 

90,000

 

 

2,013,300

 

 

 

 

 

 

    

 

Total (Cost $11,294,092)

 

 

 

 

 

15,973,752

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Information Technology – 18.1%

 

 

 

 

 

 

 

Computers & Peripherals - 4.7%

 

 

 

 

 

 

 

†SanDisk Corporation 1

 

 

60,000

 

 

2,490,000

 

Western Digital 1

 

 

160,000

 

 

5,820,800

 

 

 

 

 

 

    

 

 

 

 

 

 

 

8,310,800

 

 

 

 

 

 

    

 

Semiconductors & Semiconductor Equipment - 10.5%

 

 

 

 

 

 

 

Aixtron ADR 2

 

 

65,000

 

 

2,217,800

 

Analog Devices

 

 

142,000

 

 

5,557,880

 

MKS Instruments

 

 

160,000

 

 

4,227,200

 

†Teradyne 1

 

 

280,000

 

 

4,144,000

 

† Veeco Instruments 1,2

 

 

50,000

 

 

2,420,500

 

 

 

 

 

 

    

 

 

 

 

 

 

 

18,567,380

 

 

 

 

 

 

    

 

Software - 2.9%

 

 

 

 

 

 

 

Microsoft Corporation

 

 

200,000

 

 

5,200,000

 

 

 

 

 

 

    

 

Total (Cost $30,368,842)

 

 

 

 

 

32,078,180

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Materials – 25.9%

 

 

 

 

 

 

 

Chemicals - 4.0%

 

 

 

 

 

 

 

Mosaic Company (The)

 

 

60,000

 

 

4,063,800

 

†Westlake Chemical

 

 

60,000

 

 

3,114,000

 

 

 

 

 

 

    

 

 

 

 

 

 

 

7,177,800

 

 

 

 

 

 

    

 

Metals & Mining - 21.9%

 

 

 

 

 

 

 

Alamos Gold

 

 

120,000

 

 

1,987,039

 

Allied Nevada Gold 1

 

 

160,000

 

 

5,659,200

 

Centamin Egypt 1

 

 

1,200,000

 

 

2,413,811

 

Endeavour Mining 1

 

 

1,100,000

 

 

2,634,662

 

Fresnillo

 

 

75,000

 

 

1,690,454

 

Major Drilling Group International

 

 

220,000

 

 

2,862,772

 

†Newmont Mining

 

 

60,000

 

 

3,238,200

 

Nucor Corporation

 

 

50,000

 

 

2,061,000

 

Pan American Silver

 

 

118,500

 

 

3,660,465

 


 

 

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

2011 Semiannual Report to Stockholders | 47

 

 

Royce Focus Trust

June 30, 2011 (unaudited)
 

 

 

   Schedule of Investments

 

 

 

 

 

 

 

 

 

 

 

 

SHARES

 

 

VALUE

 

Materials (continued)

 

 

 

 

 

 

 

Metals & Mining (continued)

 

 

 

 

 

 

 

Reliance Steel & Aluminum

 

 

75,000

 

$

3,723,750

 

Schnitzer Steel Industries Cl. A

 

 

75,000

 

 

4,320,000

 

Seabridge Gold 1

 

 

160,000

 

 

4,513,600

 

 

 

 

 

 

    

 

 

 

 

 

 

 

38,764,953

 

 

 

 

 

 

    

 

Total (Cost $35,842,053)

 

 

 

 

 

45,942,753

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

TOTAL COMMON STOCKS

 

 

 

 

 

 

 

(Cost $144,133,227)

 

 

 

 

 

179,275,076

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

REPURCHASE AGREEMENT – 13.6%

 

 

 

 

 

 

 

Fixed Income Clearing Corp.,
0.01% dated 6/30/11, due 7/1/11,
maturity value $24,148,007 (collateralized
by obligations of various U.S. Government
Agencies, 0.45% due 7/1/11, valued at $24,751,725)
(Cost $24,148,000)

 

 

 

 

 

24,148,000

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

COLLATERAL RECEIVED FOR SECURITIES LOANED – 1.0%

 

 

 

 

 

 

 

Money Market Funds

 

 

 

 

 

 

 

Federated Government Obligations Fund
(7 day yield-0.009864%)
(Cost $1,689,546)

 

 

 

 

 

1,689,546

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

TOTAL INVESTMENTS – 115.8%

 

 

 

 

 

 

 

(Cost $169,970,773)

 

 

 

 

 

205,112,622

 

 

 

 

 

 

 

 

 

LIABILITIES LESS CASH

 

 

 

 

 

 

 

AND OTHER ASSETS – (1.7)%

 

 

 

 

 

(3,050,367

)

 

 

 

 

 

 

 

 

PREFERRED STOCK – (14.1)%

 

 

 

 

 

(25,000,000

)

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS – 100.0%

 

 

 

 

$

177,062,255

 

 

 

 

 

 

    

 


 

 
 

† 

New additions in 2011.

1

Non-income producing.

2

All or a portion of these securities were on loan at June 30, 2011. Total market value of loaned securities at June 30, 2011, was $1,678,953.

 

 

 

Bold indicates the Fund's 20 largest equity holdings in terms of June 30, 2011, market value.

 

 

 

TAX INFORMATION: The cost of total investments for Federal income tax purposes was $169,970,773. At June 30, 2011, net unrealized appreciation for all securities was $35,141,849, consisting of aggregate gross unrealized appreciation of $42,826,537 and aggregate gross unrealized depreciation of $7,684,688.
 

 

 

48 | 2011 Semiannual Report to Stockholders

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

 

 

Royce Focus Trust

June 30, 2011 (unaudited)
 

 

 

   Statement of Assets and Liabilities

 

 

 

 

 

 

ASSETS:

 

 

 

 

Total investments at value (including collateral on loaned securities)

 

$

180,964,622

 

Repurchase agreements (at cost and value)

 

 

24,148,000

 

Cash and foreign currency

 

 

36

 

Receivable for investments sold

 

 

1,788,452

 

Receivable for dividends and interest

 

 

138,684

 

Prepaid expenses and other assets

 

 

27,960

 
 

Total Assets

 

 

207,067,754

 
 

LIABILITIES:

 

 

 

 

Payable for collateral on loaned securities

 

 

1,689,546

 

Payable for investments purchased

 

 

3,053,033

 

Payable for investment advisory fee

 

 

161,674

 

Preferred dividends accrued but not yet declared

 

 

33,324

 

Accrued expenses

 

 

67,922

 
 

Total Liabilities

 

 

5,005,499

 
 

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

 

$

177,062,255

 
 

ANALYSIS OF NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

 

 

 

 

Common Stock paid-in capital - $0.001 par value per share; 20,073,105 shares outstanding (150,000,000 shares authorized)

 

$

131,248,399

 

Undistributed net investment income (loss)

 

 

(1,108,707

)

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

 

 

16,327,378

 

Net unrealized appreciation (depreciation) on investments and foreign currency

 

 

35,146,908

 

Unallocated and accrued distributions

 

 

(4,551,723

)
 

Net Assets applicable to Common Stockholders (net asset value per share - $8.82)

 

$

177,062,255

 
 

Investments at identified cost (including $1,689,546 of collateral on loaned securities)

 

$

145,822,773

 

Market value of loaned securities

 

 

1,678,953

 

 

 

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

2011 Semiannual Report to Stockholders | 49

 

 

Royce Focus Trust

Six Months Ended June 30, 2011 (unaudited)
 

 

 

   Statement of Operations

 

 

 

 

 

 

INVESTMENT INCOME:

 

 

 

 

Income:

 

 

 

 

Dividends1

 

$

1,294,819

 

Interest

 

 

3,702

 

Securities lending

 

 

73,795

 
 

Total income

 

 

1,372,316

 
 

Expenses:

 

 

 

 

Investment advisory fees

 

 

1,011,068

 

Stockholder reports

 

 

36,057

 

Custody and transfer agent fees

 

 

32,143

 

Professional fees

 

 

20,424

 

Directors' fees

 

 

19,103

 

Administrative and office facilities

 

 

9,472

 

Other expenses

 

 

34,208

 
 

Total expenses

 

 

1,162,475

 

Compensating balance credits

 

 

(3

)
 

Net expenses

 

 

1,162,472

 
 

Net investment income (loss)

 

 

209,844

 
 

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

 

 

 

 

Net realized gain (loss):

 

 

 

 

Investments

 

 

15,532,593

 

Foreign currency transactions

 

 

(19,712

)

Net change in unrealized appreciation (depreciation):

 

 

 

 

Investments and foreign currency translations

 

 

(8,805,394

)

Other assets and liabilities denominated in foreign currency

 

 

2,408

 
 

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

 

 

6,709,895

 
 

NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS

 

 

6,919,739

 
 

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS

 

 

(750,000

)
 

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

 

$

6,169,739

 

 

 

1 Net of foreign withholding tax of $103,150.

 

 

 

50 | 2011 Semiannual Report to Stockholders

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

 

Royce Focus Trust
 

 

   Statement of Changes in Net Assets Applicable to Common Stockholders

 

 

 

 

 

 

 

 

 

 

Six months ended
6/30/11
(unaudited)

 

Year ended
12/31/10

 

INVESTMENT OPERATIONS:

 

 

 

 

 

 

 

Net investment income (loss)

 

$

209,844

 

$

(214,447

)

Net realized gain (loss) on investments and foreign currency

 

 

15,512,881

 

 

13,893,721

 

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

 

 

(8,802,986

)

 

18,614,471

 
 

Net increase (decrease) in net assets from investment operations

 

 

6,919,739

 

 

32,293,745

 
 

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:

 

 

 

 

 

 

 

Net investment income

 

 

–

 

 

(941,621

)

Net realized gain on investments and foreign currency

 

 

–

 

 

(558,379

)

Unallocated distributions1

 

 

(750,000

)

 

–

 
 

Total distributions to Preferred Stockholders

 

 

(750,000

)

 

(1,500,000

)
 

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

 

 

6,169,739

 

 

30,793,745

 
 

DISTRIBUTIONS TO COMMON STOCKHOLDERS:

 

 

 

 

 

 

 

Net investment income

 

 

–

 

 

–

 

Net realized gain on investments and foreign currency

 

 

–

 

 

–

 

Unallocated distributions1

 

 

(3,768,391

)

 

–

 
 

Total distributions to Common Stockholders

 

 

(3,768,391

)

 

–

 
 

CAPITAL STOCK TRANSACTIONS:

 

 

 

 

 

 

 

Reinvestment of distributions to Common Stockholders

 

 

2,370,134

 

 

–

 
 

Total capital stock transactions

 

 

2,370,134

 

 

–

 
 

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

 

 

4,771,482

 

 

30,793,745

 
 

NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

 

 

 

 

 

 

 

Beginning of period

 

 

172,290,773

 

 

141,497,028

 
 

End of period (including undistributed net investment income (loss) of $(1,108,707) at 6/30/11 and $(1,318,551) at 12/31/10)

 

$

177,062,255

 

$

172,290,773

 

 

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

 

 

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

2011 Semiannual Report to Stockholders | 51

 

Royce Focus Trust
 

 

   Financial Highlights

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended
June 30, 2011

 

 

Years ended December 31,

 

 

 

 

 

  

 

 

(unaudited)

 

2010

 

2009

 

2008

 

2007

 

2006

 
 

NET ASSET VALUE, BEGINNING OF PERIOD

 

$

8.72

 

$

7.16

 

$

4.76

 

$

8.92

 

$

9.75

 

$

9.76

 
 

INVESTMENT OPERATIONS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income (loss)

 

 

0.01

 

 

(0.01

)

 

0.03

 

 

0.07

 

 

0.15

 

 

0.16

 

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

 

 

0.34

 

 

1.65

 

 

2.54

 

 

(3.67

)

 

1.12

 

 

1.50

 
 

Total investment operations

 

 

0.35

 

 

1.64

 

 

2.57

 

 

(3.60

)

 

1.27

 

 

1.66

 
 

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

–     

 

 

(0.05

)

 

(0.08

)

 

(0.01

)

 

(0.02

)

 

(0.01

)

Net realized gain on investments and foreign currency

 

 

–     

 

 

(0.03

)

 

–     

 

 

(0.07

)

 

(0.07

)

 

(0.09

)

Unallocated distributions1

 

 

(0.04

)

 

–     

 

 

–     

 

 

–     

 

 

–     

 

 

–     

 
 

Total distributions to Preferred Stockholders

 

 

(0.04

)

 

(0.08

)

 

(0.08

)

 

(0.08

)

 

(0.09

)

 

(0.10

)
 

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

 

 

0.31

 

 

1.56

 

 

2.49

 

 

(3.68

)

 

1.18

 

 

1.56

 
 

DISTRIBUTIONS TO COMMON STOCKHOLDERS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

–     

 

 

–     

 

 

(0.00

)

 

(0.07

)

 

(0.44

)

 

(0.20

)

Net realized gain on investments and foreign currency

 

 

–     

 

 

–     

 

 

–     

 

 

(0.37

)

 

(1.57

)

 

(1.37

)

Return of capital

 

 

–     

 

 

–     

 

 

(0.09

)

 

(0.03

)

 

–     

 

 

–     

 

Unallocated distributions1

 

 

(0.19

)

 

–     

 

 

–     

 

 

–     

 

 

–     

 

 

–     

 
 

Total distributions to Common Stockholders

 

 

(0.19

)

 

–     

 

 

(0.09

)

 

(0.47

)

 

(2.01

)

 

(1.57

)
 

CAPITAL STOCK TRANSACTIONS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of reinvestment of distributions by Common Stockholders

 

 

(0.02

)

 

–     

 

 

(0.00

)

 

(0.01

)

 

(0.00

)

 

(0.00

)
 

Total capital stock transactions

 

 

(0.02

)

 

–     

 

 

(0.00

)

 

(0.01

)

 

(0.00

)

 

(0.00

)
 

NET ASSET VALUE, END OF PERIOD

 

$

8.82

 

$

8.72

 

$

7.16

 

$

4.76

 

$

8.92

 

$

9.75

 
 

MARKET VALUE, END OF PERIOD

 

$

7.79

 

$

7.57

 

$

6.33

 

$

4.60

 

$

8.97

 

$

10.68

 
 

TOTAL RETURN:2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Value

 

 

5.51

%3

 

19.59

%

 

40.84

%

 

(44.94

)%

 

3.02

%

 

30.50

%

Net Asset Value

 

 

3.71

%3

 

21.79

%

 

53.95

%

 

(42.71

)%

 

12.22

%

 

16.33

%

RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total expenses4,5

 

 

1.31

%6

 

1.37

%

 

1.42

%

 

1.34

%

 

1.32

%

 

1.36

%

Investment advisory fee expense

 

 

1.14

%6

 

1.17

%

 

1.16

%

 

1.13

%

 

1.14

%

 

1.16

%

Other operating expenses

 

 

0.17

%6

 

0.20

%

 

0.26

%

 

0.21

%

 

0.18

%

 

0.20

%

Net investment income (loss)

 

 

0.24

%6

 

(0.15

)%

 

0.49

%

 

0.72

%

 

1.13

%

 

1.54

%

SUPPLEMENTAL DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

177,062

 

$

172,291

 

$

141,497

 

$

92,550

 

$

165,807

 

$

158,567

 

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

 

$

25,000

 

$

25,000

 

$

25,000

 

$

25,000

 

$

25,000

 

$

25,000

 

Portfolio Turnover Rate

 

 

22

%

 

36

%

 

46

%

 

51

%

 

62

%

 

30

%

PREFERRED STOCK:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shares outstanding

 

 

1,000,000

 

 

1,000,000

 

 

1,000,000

 

 

1,000,000

 

 

1,000,000

 

 

1,000,000

 

Asset coverage per share

 

$

202.06

 

$

197.29

 

$

166.48

 

$

117.55

 

$

190.81

 

$

183.57

 

Liquidation preference per share

 

$

25.00

 

$

25.00

 

$

25.00

 

$

25.00

 

$

25.00

 

$

25.00

 

Average month-end market value per share

 

$

25.42

 

$

25.38

 

$

23.56

 

$

22.89

 

$

24.37

 

$

24.98

 
 

 

 

1 

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

2

The Market Value Total Return is calculated assuming a purchase of Common Stock on the opening of the first business day and a sale on the closing of the last business day of each period reported. Dividends and distributions are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund's Distribution Reinvestment and Cash Purchase Plan. Net Asset Value Total Return is calculated on the same basis, except that the Fund's net asset value is used on the purchase and sale dates instead of market value.

3

Not annualized

4

Expense ratios based on total average net assets including liquidation value of Preferred Stock were 1.15% 1.17%, 1.16%, 1.14%, 1.15% and 1.17% for the periods ended June 30, 2011, and December 31, 2010, 2009, 2008, 2007 and 2006, respectively.

5

Expense ratios based on average net assets applicable to Common Stockholders before waiver of fees by the investment adviser would have been 1.48% and 1.39% for the years ended December 31, 2009 and 2008, respectively; before waiver of fees and after earnings credits would have been 1.31%, 1.37%, 1.48%, 1.39%, 1.31% and 1.36% for the periods ended June 30, 2011, and December 31, 2010, 2009, 2008, 2007 and 2006, respectively.

6

Annualized

 

 

52 | 2011 Semiannual Report to Stockholders

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

 

Royce Focus Trust
 

 

   Notes to Financial Statements (unaudited)

Summary of Significant Accounting Policies:
     Royce Focus Trust, Inc. (the “Fund”), is a diversified closed-end investment company incorporated under the laws of the State of Maryland. 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.
     Under the Fund’s organizational documents, the officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote.
     At June 30, 2011, officers, employees of Royce, Fund directors, the Royce retirement plans and other affiliates owned 24% of the Fund.

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

      Various inputs are used in determining the value of the Fund’s investments, as noted above. These inputs are summarized in the three broad levels below:

 

Level 

1 – quoted prices in active markets for identical securities.

 

Level

2 – other significant observable inputs (including quoted prices for similar securities, foreign securities that may be fair valued and repurchase agreements). The table below includes all Level 2 securities. Any Level 2 securities with values based on quoted prices for similar securities would be noted in the Schedule of Investments.

 

Level

3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).

     The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
     The following is a summary of the inputs used to value the Fund’s investments as of June 30, 2011. For a detailed breakout of common stocks by sector classification, please refer to the Schedule of Investments.

 

 

 

 

 

 

Level 1

Level 2

Level 3

Total

Common stocks

$141,039,341

$38,235,735

–

$179,275,076

Cash equivalents

     1,689,546

  24,148,000

–

    25,837,546

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

Foreign Currency:
     Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, expiration of currency forward contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, including investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.

2011 Semiannual Report to Stockholders | 53


 

Royce Focus Trust

 

   Notes to Financial Statements (unaudited) (continued)

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

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

Distributions:
     Commencing March 2011, the Fund pays quarterly distributions on the Fund’s Common Stock at the annual rate of 5% of the rolling average of the prior four calendar quarter-end NAVs of the Fund’s Common Stock, with the fourth quarter distribution being the greater of 1.25% of the rolling average or the distribution required by IRS regulations. Distributions to Preferred Stockholders are accrued daily and paid quarterly and distributions to Common Stockholders are recorded on ex-dividend date. Distributable capital gains and/or net investment income are first allocated to Preferred Stockholder distributions, with any excess allocable to Common Stockholders. If capital gains and/or net investment income are allocated to both Preferred and Common Stockholders, the tax character of such allocations is proportional. To the extent that distributions are not paid from long-term capital gains, net investment income or net short-term capital gains, they will represent a return of capital. Distributions are determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United States of America. Permanent book and tax differences relating to stockholder distributions will result in reclassifications within the capital accounts. Undistributed net investment income may include temporary book and tax basis differences, which will reverse in a subsequent period. Any taxable income or gain remaining undistributed at fiscal year end is distributed in the following year.

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

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

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

Capital Stock:
     The Fund issued 314,042 shares of Common Stock as reinvestment of distributions by Common Stockholders for the six months ended June 30, 2011.
     At June 30, 2011, 1,000,000 shares of 6.00% Cumulative Preferred Stock were outstanding. The Fund, at its option, may redeem the Cumulative Preferred Stock, in whole or in part, at the redemption price. The Cumulative Preferred Stock is classified outside of permanent equity (net assets applicable to Common Stockholders) in the accompanying financial statements in accordance with accounting for redeemable equity instruments, 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

54 | 2011 Semiannual Report to Stockholders


 

Royce Focus Trust
 

 

   Notes to Financial Statements (unaudited) (continued)

Capital Stock (continued):
Stock at a redemption price of $25.00 per share, plus an amount equal to the accumulated and unpaid dividends, whether or not declared on such shares, in order to meet these requirements. Additionally, failure to meet the foregoing asset coverage requirements could restrict the Fund’s ability to pay dividends to Common Stockholders and could lead to sales of portfolio securities at inopportune times. The Fund has met these requirements since issuing the Cumulative Preferred Stock.

Investment Advisory Agreement:
     The Investment Advisory Agreement between Royce and the Fund provides for fees to be paid at an annual rate of 1.0% of the Fund’s average daily net assets applicable to Common Stockholders plus the liquidation value of Preferred Stock. Royce has voluntarily committed to waive the portion of its investment advisory fee attributable to an issue of the Fund’s Preferred Stock for any month in which the Fund’s average annual NAV total return since issuance of the Preferred Stock fails to exceed the applicable Preferred Stock’s dividend rate. For the six months ended June 30, 2011, the Fund accrued and paid Royce investment advisory fees totaling $1,011,068.

Purchases and Sales of Investment Securities:
     For the six months ended June 30, 2011, the costs of purchases and proceeds from sales of investment securities, other than short-term securities and collateral received for securities loaned, amounted to $39,357,009 and $42,403,191, respectively.

2011 Semiannual Report to Stockholders | 55


 

Directors and Officers
 

All Directors and Officers may be reached c/o The Royce Funds, 745 Fifth Avenue, New York, NY 10151

Charles M. Royce, Trustee1, President
Age: 71  |  Number of Funds Overseen: 35  |  Tenure: Since 1982
Non-Royce Directorships: Director of TICC Capital Corp.

Principal Occupation(s) During Past Five Years: President,
Co-Chief Investment Officer and Member of Board of Managers of Royce & Associates, LLC (“Royce”), the Trust’s investment adviser.

Mark R. Fetting, Trustee1
Age: 56  |  Number of Funds Overseen: 51  |  Tenure: Since 2001
Non-Royce Directorships: Director of Legg Mason, Inc. and Director/Trustee of registered investment companies constituting the 16 Legg Mason Funds.

Principal Occupation(s) During Past 5 Years: President, CEO, Chairman and Director of Legg Mason, Inc. and Chairman of Legg Mason Funds. Mr. Fetting’s prior business experience includes having served as a member of the Board of Managers of Royce; President of all Legg Mason Funds; Senior Executive Vice President of Legg Mason, Inc.; Director and/or officer of various Legg Mason, Inc. affiliates; Division President and Senior Officer of Prudential Financial Group, Inc. and related companies.

Patricia W. Chadwick, Trustee
Age: 62  |  Number of Funds Overseen: 35  |  Tenure: Since 2009
Non-Royce Directorships: Trustee of ING Mutual Funds and Director of Wisconsin Energy Corp.

Principal Occupation(s) During Past 5 Years: Consultant and President of Ravengate Partners LLC (since 2000).

Richard M. Galkin, Trustee
Age: 73  |  Number of Funds Overseen: 35  |  Tenure: Since 1982
Non-Royce Directorships: None

Principal Occupation(s) During Past Five Years: Private investor. Mr. Galkin’s prior business experience includes having served as President of Richard M. Galkin Associates, Inc., telecommunications consultants, President of Manhattan Cable Television (a subsidiary of Time, Inc.), President of Haverhills Inc. (another Time, Inc. subsidiary), President of Rhode Island Cable Television and Senior Vice President of Satellite Television Corp. (a subsidiary of Comsat).

Stephen L. Isaacs, Trustee
Age: 71  |  Number of Funds Overseen: 35  |  Tenure: Since 1989
Non-Royce Directorships: None

Principal Occupation(s) During Past Five Years: President of The Center for Health and Social Policy (since September 1996); Attorney and President of Health Policy Associates, Inc., consultants. Mr. Isaacs’s prior business experience includes having served as Director of Columbia University Development Law and Policy Program and Professor at Columbia University (until August 1996).

Arthur S. Mehlman, Trustee
Age: 69  |  Number of Funds Overseen: 51  |  Tenure: Since 2004
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 16 Legg Mason Funds.

Principal Occupation(s) During Past Five Years: Director of The League for People with Disabilities, Inc.; Director of University of Maryland Foundation (non-profits). Formerly: Director of Municipal Mortgage & Equity, LLC (from October 2004 to April 1, 2011); Director of University of Maryland College Park Foundation (non-profit) (from 1998 to 2005); Partner, KPMG LLP (international accounting firm) (from 1972 to 2002); Director of Maryland Business Roundtable for Education (from July 1984 to June 2002).

David L. Meister, Trustee
Age: 71  |  Number of Funds Overseen: 35  |  Tenure: Since 1982
Non-Royce Directorships: None

Principal Occupation(s) During Past Five Years: Consultant. Chairman and Chief Executive Officer of The Tennis Channel (from June 2000 to March 2005). Mr. Meister’s prior business experience includes having served as Chief Executive Officer of Seniorlife.com, a consultant to the communications industry, President of Financial News Network, Senior Vice President of HBO, President of Time-Life Films and Head of Broadcasting for Major League Baseball.

G. Peter O’Brien, Trustee
Age: 65  |  Number of Funds Overseen: 51  |  Tenure: Since 2001
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 16 Legg Mason Funds; Director of TICC Capital Corp.

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

John D. Diederich, Vice President and Treasurer
Age: 59  |  Tenure: Since 2001

Principal Occupation(s) During Past Five Years: Chief Operating Officer, Managing Director and member of the Board of Managers of Royce; Chief Financial Officer of Royce; Director of Administration of the Trust; and President of RFS, having been employed by Royce since April 1993.

Jack E. Fockler, Jr., Vice President
Age: 52  |  Tenure: Since 1995

Principal Occupation(s) During Past Five Years: Managing Director and Vice President of Royce, and Vice President of RFS, having been employed by Royce since October 1989.

W. Whitney George, Vice President
Age: 53  |  Tenure: Since 1995

Principal Occupation(s) During Past Five Years: Co-Chief Investment Officer, Managing Director and Vice President of Royce, having been employed by Royce since October 1991.

Daniel A. O’Byrne, Vice President and Assistant Secretary
Age: 49  |  Tenure: Since 1994

Principal Occupation(s) During Past Five Years: Principal and Vice President of Royce, having been employed by Royce since October 1986.

John E. Denneen, Secretary and Chief Legal Officer
Age: 44  |  Tenure: 1996-2001 and Since April 2002

Principal Occupation(s) During Past Five Years: General Counsel, Principal, Chief Legal and Compliance Officer and Secretary of Royce; Secretary and Chief Legal Officer of The Royce Funds.

Lisa Curcio, Chief Compliance Officer
Age: 51  |  Tenure: Since 2004

Principal Occupation(s) During Past Five Years: Chief Compliance Officer of The Royce Funds (since October 2004) and Compliance Officer of Royce (since June 2004).

1 Interested Trustee.

Trustees will hold office until their successors have been duly elected and qualified or until their earlier resignation or removal. The Statement of Additional Information, which contains additional information about the Trust’s trustees and officers, is available and can be obtained without charge at www.roycefunds.com or by calling (800) 221-4268.



 

56  |  The Royce Funds 2011 Semiannual Report to Stockholders

 

Notes to Performance and Other Important Information
 

The thoughts expressed in this Review and Report concerning recent market movements and future prospects for small company stocks are solely the opinion of Royce at June 30, 2011, and, of course, historical market trends are not necessarily indicative of future market movements. Statements regarding the future prospects for particular securities held in the Funds’ portfolios and Royce’s investment intentions with respect to those securities reflect Royce’s opinions as of June 30, 2011 and are subject to change at any time without notice. There can be no assurance that securities mentioned in this Review and Report will be included in any Royce-managed portfolio in the future. Investments in securities of micro-cap, small-cap and/or mid-cap companies may involve considerably more risk than investments in securities of larger-cap companies. All publicly released material information is always disclosed by the Funds on the website at www.roycefunds.com.
     Sector weightings are determined using the Global Industry Classification Standard (“GICS”). GICS was developed by, and is the exclusive property of, Standard & Poor’s Financial Services LLC (“S&P”) and MSCI Inc. (“MSCI”). GICS is the trademark of S&P and MSCI. “Global Industry Classification Standard (GICS)” and “GICS Direct” are service marks of S&P and MSCI.
     All indexes referred to are unmanaged and capitalization weighted. Each index’s returns include net reinvested dividends and/or interest income. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. The Russell 2000 Index is an index of domestic small-cap stocks. It measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 Index. The Russell 2000 Value and Growth Indexes consist of the respective value and growth stocks within the Russell 2000 as determined by Russell Investments. The Russell Microcap Index includes 1,000 of the smallest securities in the Russell 2000 Index. The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe. It includes approximately 800 of the smallest securities in the Russell 1000 Index. The Russell Global ex-U.S. Large Cap Index is an index of global large-cap stocks, excluding the United States. The Russell Global ex-U.S. Small Cap Index is an index of global small-cap stocks, excluding the United States. The S&P 500 and SmallCap 600 are indexes of U.S. large- and small-cap stocks, respectively, selected by Standard & Poor’s based on market size, liquidity and industry grouping, among other factors. The Nasdaq Composite is an index of the more than 3,000 common equities listed on the Nasdaq stock exchange. Returns for the market indexes used in this report were based on information supplied to Royce by Russell Investments. Royce has not independently verified the above described information.

Forward-Looking Statements
This material contains forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve risks and uncertainties, including, among others, statements as to:

 

 

•

the Funds’ future operating results

•

the prospects of the Funds’ portfolio companies

•

the impact of investments that the Funds have made or may make

•

the dependence of the Funds’ future success on the general economy and its impact on the companies and industries in which the Funds invest, and

•

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

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

Authorized Share Transactions
Royce Value Trust, Royce Micro-Cap Trust and Royce Focus Trust may each repurchase up to 5% of the issued and outstanding 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, 2011. 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.

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, 2010, filed with the Securities and Exchange Commission.



 

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 (800) 221-4268 (toll-free) and on the website of the Securities and Exchange Commission (“SEC”), at www.sec.gov.

Form N-Q Filing
The Funds file their complete schedules of investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at www.sec.gov. The Royce Funds’ holdings are also on the Funds’ website approximately 15 to 20 days after each calendar quarter end and remain available until the next quarter’s holdings are posted. 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 (800) 732-0330. The Funds’ complete schedules of investments are updated quarterly, and are available at www.roycefunds.com.

 

The Royce Funds 2011 Semiannual Report to Stockholders  |  57

 

Board Approval of Investment Advisory Agreements
 

At meetings held on June 1-2, 2011, each of the Funds’ respective Boards of Directors, including all of the non-interested directors, approved the continuance of the Investment Advisory Agreements between Royce & Associates, LLC (“R&A”) and each of Royce Value Trust, Royce Micro-Cap Trust and Royce Focus Trust (the “Funds”). In reaching these decisions, the Board reviewed the materials provided by R&A, which included, among other things, information prepared internally by R&A and independently by Morningstar Associates, LLC (“Morningstar”) containing detailed expense ratio and investment performance comparisons for the Funds with other funds in their “peer group,” information regarding the past performance of Funds managed by R&A and a memorandum outlining the legal duties of the Board prepared by independent counsel to the non-interested directors. R&A also provided the directors with an analysis of its profitability with respect to providing investment advisory services to each of the Funds. In addition, the Board took into account information furnished throughout the year at regular Board meetings, including reports on investment performance, stockholder services, regulatory compliance, brokerage commissions and research, and brokerage and execution products and services provided to the Funds. The Board also considered other matters they deemed important to the approval process such as allocation of Fund brokerage commissions and other direct and indirect benefits to R&A and its affiliates, from their relationship with the Funds. The directors also met throughout the year with investment advisory personnel from R&A. The Board, in its deliberations, recognized that, for many of the Funds’ stockholders, the decision to purchase Fund shares included a decision to select R&A as the investment adviser and that there was a strong association in the minds of Fund stockholders between R&A and each Fund. In considering factors relating to the approval of the continuance of the Investment Advisory Agreements, the non-interested directors received assistance and advice from, and met separately with, their independent counsel. While the Investment Advisory Agreements were considered at the same Board meetings, the Board dealt with each agreement separately. Among other factors, the directors considered the following:
     The nature, extent and quality of services provided by R&A: The Board considered the following factors to be of fundamental importance to their consideration of whether to approve the continuance of the Funds’ Investment Advisory Agreements: (i) R&A’s more than 35 years of value investing experience and track record; (ii) the history of long-tenured R&A portfolio managers managing the Funds; (iii) R&A’s focus on mid-cap, small-cap and micro-cap value investing; (iv) the consistency of R&A’s approach to managing both the Funds and open-end mutual funds over more than 35 years; (v) the integrity and high ethical standards adhered to at R&A; (vi) R&A’s specialized experience in the area of trading small- and micro-cap securities; (vii) R&A’s historical ability to attract and retain portfolio management talent and (viii) R&A’s focus on stockholder interests as exemplified by its voluntary fee waiver policy on preferred stock assets in certain circumstances where the Funds’ total return performance from the issuance of the preferred does not exceed the coupon rate on the preferred, and expansive stockholder reporting and communications. The Board reviewed the services that R&A provides to the Funds, including, but not limited to, managing each Fund’s investments in accordance with the stated policies of each Fund. The Board considered the fact that R&A provided certain administrative services to the Funds at cost pursuant to the Administration Agreement between the Funds and R&A which went into effect on January 1, 2008. The Board determined that the services to be provided to each Fund by R&A would be the same as those it previously provided to the Funds. They also took into consideration the histories, reputations and backgrounds of R&A’s portfolio managers for the Funds, finding that these would likely have an impact on the continued success of the

Funds. Lastly, the Board noted R&A’s ability to attract and retain quality and experienced personnel. The directors concluded that the investment advisory services provided by R&A to each Fund compared favorably to services provided by R&A to other R&A client accounts, including other funds, in both nature and quality, and that the scope of services provided by R&A would continue to be suitable for the Funds.
     Investment performance of the Funds and R&A: In light of R&A’s risk-averse approach to investing, the Board believes that risk-adjusted performance continues to be an appropriate measure of each Fund’s investment performance. One measure of risk-adjusted performance the Board has historically used in its review of the Funds’ performance is the Sharpe Ratio. The Sharpe Ratio is a risk-adjusted measure of performance developed by Nobel Laureate William Sharpe. It is calculated by dividing a fund’s annualized excess returns by its annualized standard deviation to determine reward per unit of risk. The higher the Sharpe Ratio, the better a fund’s historical risk-adjusted performance. The Board attaches primary importance to risk-adjusted performance over relatively long periods of time, typically three to ten years. Using Morningstar data, Royce Value Trust’s Sharpe Ratio placed in the middle quintile within the Small Blend category assigned by Morningstar for the three-year period and in the second quartile for the five-year and ten-year periods ended December 31, 2010. As measured against its open-end peers, Royce Micro-Cap Trust’s Sharpe Ratio placed in the middle quintile for the three-year period and the second quartile within the Small Blend, Growth or Value category assigned by Morningstar for the five-year and ten-year periods ended December 31, 2010. Finally, Royce Focus Trust’s Sharpe Ratio placed in the top quartile within the Small Growth category assigned by Morningstar for the three-year, five-year and ten-year periods ended December 31, 2010.
     The Board noted that R&A manages a number of funds that invest in small-cap and micro-cap issuers, many of which were outperforming the Russell 2000 Index and their competitors. Although the Board recognized that past performance is not necessarily an indicator of future results, they found that R&A had the necessary qualifications, experience and track record in managing small-cap and micro-cap securities to manage the Funds. The directors determined that R&A continued to be an appropriate investment adviser for the Funds and concluded that each Fund’s performance supported the renewal of its Investment Advisory Agreement.
     Cost of the services provided and profits realized by R&A from its relationship with the Funds: The Board considered the cost of the services provided by R&A and profits realized by R&A from its relationship with each Fund. As part of the analysis, the Board discussed with R&A its methodology in allocating its costs to each Fund and concluded that its allocations were reasonable. The Board concluded that R&A’s profits were reasonable in relation to the nature and quality of services provided.
     The extent to which economies of scale would be realized as the Funds grow and whether fee levels would reflect such economies of scale: The Board considered whether there have been economies of scale in respect of the management of the Funds, whether the Funds have appropriately benefited from any economies of scale and whether there is potential for realization of any further economies of scale. The Board noted the time and effort involved in managing portfolios of small- and micro-cap stocks and that they did not involve the same efficiencies as do portfolios of large cap stocks. The Board concluded that the current fee structure for each Fund was reasonable, and that no changes were currently necessary.
     Comparison of services to be rendered and fees to be paid to those under other investment advisory contracts, such as contracts of the same and other investment advisers or other clients: The Board reviewed the investment



 

58  |  The Royce Funds 2011 Semiannual Report to Stockholders

 
 

advisory fee paid by each Fund and compared both the services to be rendered and the fees to be paid under the Investment Advisory Agreements to other contracts of R&A and to contracts of other investment advisers to registered investment companies investing in small- and micro-cap stocks, as provided by Morningstar. The Board noted that, in the case of Royce Value Trust, the Fund had a 1.00% basic fee that is subject to adjustment up or down (up to 0.50% in either direction) based on the Fund’s performance versus the S&P 600 SmallCap Index over a rolling period of sixty months. The fee is charged on average net assets over that rolling period. As a result, in a rising market, the fee will be smaller than a fee calculated on the current year’s average net assets, and vice versa. The Board determined that the performance adjustment feature continued to serve as an appropriate incentive to R&A to manage the Fund for the benefit of its long-term common stockholders. The Board noted that R&A had also agreed to waive its management fee on that portion of the Fund’s assets equal to the liquidation preference of the Fund’s outstanding preferred stock if the Fund’s total return from issuance of the preferred on such amount is less than the preferred’s fixed dividend rate. The Board also noted that the fee arrangement, which also includes a provision for no fee in periods where the Fund’s trailing three-year performance is negative, requires R&A to measure the Fund’s performance monthly against the S&P 600, an unmanaged index. Instead of receiving a set fee regardless of its performance, R&A is penalized for poor performance. The Board noted that the Fund’s performance earned R&A no fee during the period January 1, 2010 through November 30, 2010.
     In the case of Royce Micro-Cap Trust, the directors noted that the Fund had a 1.00% basic fee subject to adjustment up or down based on the Fund’s performance versus the Russell 2000 Index over a rolling 36 month period. The fee is charged on average net assets over that rolling period. As a result,

in a rising market, the fee will be smaller than a fee calculated on the current year’s average net assets, and visa versa. The Board determined that the performance adjustment feature continued to serve as an incentive to R&A to manage the Fund for the benefit of its long-term stockholders. The Board also noted R&A’s voluntary waiver of its fee on the liquidation value of the outstanding preferred stock in circumstances where the Fund’s total return performance from the issuance of the preferred is less than the fixed dividend rate on the preferred for each month during the year. The Board noted that if the Fund’s expense ratio were based on total average net assets including net assets applicable to Preferred Stock, it would rank in the second quartile when compared against its Morningstar-assigned open-end peer group.
     Finally, in the case of Royce Focus Trust, the Board noted that R&A had agreed to waive its management fee on the liquidation value of outstanding preferred stock if the Fund’s total return from issuance of the preferred is less than the preferred’s fixed dividend rate. The Board noted that if the Fund’s expense ratio were based on total average net assets including net assets applicable to Preferred Stock, it would place within the median of its Morningstar-assigned open-end peer group.
     The Board also considered fees charged by R&A to institutional and other clients and noted that, given the greater levels of services that R&A provides to registered investment companies such as the Funds as compared to other accounts, the Funds’ base advisory fees compared favorably to the advisory fees charged to those other accounts.
     The entire Board, including all the non-interested directors, approved the renewal of the existing Investment Advisory Agreements, concluding that a contract renewal on the existing terms was in the best interest of the stockholders of each Fund and that each investment advisory fee rate was reasonable in relation to the services provided.



 

The Royce Funds 2011 Semiannual Report to Stockholders  |  59

 

2011: In Quotes
 

 

 

Between 2000 and 2010 China’s demand for oil doubled on a per day basis from 4.5 million barrels a day to nine million barrels per day. Over the same period of time, the U.S. is basically unchanged at about 19 million barrels per day. In the past year and a half, Asia has surpassed North America in demand of oil per day; a fundamental structural change.

 

– Robert Rodriguez, First Pacific Advisors, No-Load Fund Analyst, June 2011

 

 

 

 

 

 

Points To Ponder
Since 1928, the average bull market has lasted 57 months providing a 164% gain. Our current “baby” bull has furnished investors with a 91% price return in a mere 23 months. The data are similarly as compelling if one looks at the duration of economic expansions. Our current recovery has been underway for 20 months while the average duration has been 45 months over the last 110 years.

– Jason Trennert, Investment Strategy Viewpoint, February 4, 2011

Usually the first third of a bull market is led by stocks bouncing back from getting crushed in the prior bear. But the last two-thirds of bulls are usually led by high-quality stocks, and particularly ones that weren’t perceived to be high quality early on.

– Ken Fisher, Forbes, May 9, 2011

Statisticians deal with things that repeat themselves. This housing boom and bust is so historic and unprecedented, you can’t forecast the future because you have no comparison.

– Robert Shiller, Yale University, Bloomberg, June 9, 2011

The central irony of financial crisis is that while it is caused by too much confidence, borrowing and lending, and spending, it is resolved only by increases in confidence, borrowing and lending, and spending.

– Larry Summers, CNN Money, June 13, 2011

 

In Absolute Agreement
The saving grace is that, although value is a weak force in any single year, it becomes a monster over several years. Like gravity, it slowly wears down the opposition.

– Jeremy Grantham, GMO Quarterly Letter, January 2011

During the dot-com bubble, you met lots of people with tech stocks. Taxi drivers told you what dot-coms they owned. During the housing bubble you met normal, ordinary people who were trading up to expensive homes using adjustable-rate mortgages, buying new condos off plan to flip, and cashing out their fictional “equity” through a refinance mortgage. But who actually owns gold? I keep hearing about the gold bubble, but every time I ask people if they own any themselves, they say, “no, no, of course not, it’s a bubble.”

– Brett Arends, MarketWatch.com, May 4, 2011

The genius of investing is recognizing the direction of a trend—not catching highs and lows.

– Anonymous

As long as inflation doesn’t ramp up to the double-digit levels of the 1970s and early 1980s—a scenario I consider extremely unlikely—stocks will act as an excellent hedge. The reason is simple: Stocks are claims on real assets, such as land and plant and equipment, which appreciate in value as overall prices increase.

– Jeremy J. Siegel, Kiplinger’s Personal Finance, June 2011

 

To the extent that some managers are trying to replace active security selection with active allocation across sectors, that is another name for market timing. History suggests that is rarely a durable strategy.

– Edward Bernard, T. Rowe Price Vice Chairman, Bloomberg, June 9, 2011

Cocktail Conversation
Turn on the television or surf the Web and you’re inundated with information about the market. But that access to information hasn’t made people better investors.

– Norm Rothery, The Globe and Mail,
January 1, 2011

We have to realize that the world is a different place and that the number of consumers in the world is in the process of doubling. That means that resources are going to be scarce. That means energy is going to be scarce, and the prices of energy in general and commodities in particular are going to be high.

– Dennis Stattman, Barron’s, May 28, 2011

Timeless Tidbits

Nothing in the world can take the place of persistence. Talent will not; nothing is more common than successful men with talent.

– Calvin Coolidge

Talent hits a target no one else can hit; genius hits a target no one else can see.

– Arthur Schopenhauer

 

The thoughts expressed above represent solely the opinions of the persons quoted and, of course, there can be no assurance of future market trends or performance.

 

60  |  This page is not part of the 2011 Semiannual Report to Stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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About The Royce Funds

 

 

 

 

 

 

 

 

 

 

 

Wealth Of Experience

 

Consistent Discipline

 

 

 

With approximately $41 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 35 years. Charles M. Royce, our President and Co-Chief Investment Officer, enjoys one of the longest tenures of any active mutual fund manager. Royce’s investment staff also includes Co-Chief Investment Officer W. Whitney George, 18 Portfolio Managers, five assistant portfolio managers and analysts, and nine traders.

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

 

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 $153 million invested in The Royce Funds.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 









 

  

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contact Us

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General Information

RIA Services

 

Broker/Dealer Services

Computershare

 

 

 

Additional Report Copies
and Prospectus Inquiries
(800) 221-4268

Fund Materials and
Performance Updates
(800) 33-ROYCE (337-6923)

 

Fund Materials and
Performance Updates
(800) 59-ROYCE (597-6923)      

Transfer Agent
and Registrar
(800) 426-5523

CE-REP-0611

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Item 2.  Code(s) of Ethics.   Not applicable to this semi-annual report.  


Item 3.  Audit Committee Financial Expert.  Not applicable to this semi-annual report.


Item 4.  Principal Accountant Fees and Services.  Not applicable to this semi-annual report.


Item 5.  Audit Committee of Listed Registrants. Not applicable to this semi-annual report.


Item 6. Investments.

(a) See Item 1.


(b) Not applicable.


Item 7.  Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.   Not applicable to this semi-annual report.


Item 8.   Portfolio Managers of Closed-End Management Investment Companies. Not applicable to this semi-annual report.


Item 9.  Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not Applicable


Item 10.  Submission of Matters to a Vote of Security Holders.  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)  Not applicable to this semi-annual report.


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


(a)(3) Not Applicable


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



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


ROYCE VALUE TRUST, INC.


BY: /s/Charles M. Royce

       Charles M. Royce

       President


Date: August 22, 2011


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.

ROYCE VALUE TRUST, INC.


BY: /s/Charles M. Royce

BY:  /s/John D. Diederich

       Charles M. Royce

        John D. Diederich

       President

        Chief Financial Officer


Date: August 22, 2011

Date: August 22, 2011