N-CSRS 1 e78507_rvt-ncsr.htm

 

 

 

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, Esq.
  745 Fifth Avenue
  New York, NY 10151

 

 

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

Date of fiscal year end: December 31, 2021

Date of reporting period: January 1, 2021– June 30, 2021

 

Item 1. Reports to Shareholders.

 

 

 

 
 

 

 

Royce Closed-End Funds 2021 Semiannual

Review and Report to Stockholders

June 30, 2021

Royce Global Value Trust

Royce Micro-Cap Trust

Royce Value Trust

 

 

 

 

       
  A Few Words on Closed-End Funds  
       
  Royce Investment Partners manages three closed-end funds: Royce Global Value Trust, which invests primarily in companies with headquarters outside of the United States; Royce Micro-Cap Trust, which invests primarily in micro-cap securities; and Royce Value Trust, which invests primarily in small-cap securities. 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. Shares of closed-end funds frequently trade at a discount to their net asset value. This is in contrast to openend mutual funds, which sell and redeem their shares at net asset value on a continuous basis.  
       
  A Closed-End Fund Can Offer Several Distinct Advantages  
  • A closed-end fund does not issue redeemable securities or offer its securities on a continuous basis, so it does not need to liquidate securities or hold uninvested assets to meet investor demands for cash redemptions.  
  • In a closed-end fund, not having to meet investor redemption requests or invest at inopportune times can be effective 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 in less liquid portfolio securities because it is not subject to potential stockholder redemption demands. This is potentially beneficial for Royce-managed closed-end funds, with significant investments in small- and micro-cap securities.  
  • The fixed capital structure allows permanent leverage to be employed as a means to enhance capital appreciation potential.  
  • Royce Micro-Cap Trust and Royce Value Trust distribute capital gains, if any, on a quarterly basis. Each of these Funds has adopted a quarterly distribution policy for its common stock.  
       
  We believe that the closed-end fund structure can be an appropriate investment for a long-term investor who understands the benefits of a more 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 56 and 57. For additional information on the Funds’ Distribution Reinvestment and Cash Purchase Options and the benefits for stockholders, please see page 58 or visit our website at www.royceinvest.com.  
       
  Managed Distribution Policy  
  The Board of Directors of each of Royce Micro-Cap Trust and Royce Value Trust has authorized a managed distribution policy (“MDP”). Under the MDP, Royce Micro-Cap Trust and Royce Value Trust pay quarterly distributions at an annual rate of 7% of the average of the prior four quarter-end net asset values, with the fourth quarter being the greater of these annualized rates or the distribution required by IRS regulations. With each distribution, the Fund will issue a notice to its stockholders and an accompanying press release that provides detailed information regarding the amount and composition of the distribution (including whether any portion of the distribution represents a return of capital) and other information required by a Fund’s MDP. You should not draw any conclusions about a Fund’s investment performance from the amount of distributions or from the terms of a Fund’s MDP. A Fund’s Board of Directors may amend or terminate the MDP at any time without prior notice to stockholders; however, at this time there are no reasonably foreseeable circumstances that might cause the termination of any of the MDPs.  
       
  This page is not part of the 2021 Semiannual Report to Stockholders  
       

 

 

 

 

 

Table of Contents

 

   
   
Semiannual Review  
   
Letter to Our Stockholders 2
   
Performance 7
   
   
Semiannual Report to Stockholders  
   
Royce Global Value Trust  
   
Manager’s Discussion of Fund Performance 8
   
Schedule of Investments 10
   
Other Financial Statements 12
   
Royce Micro-Cap Trust  
   
Managers’ Discussion of Fund Performance 22
   
Schedule of Investments 24
   
Other Financial Statements 28
   
Royce Value Trust
   
Managers’ Discussion of Fund Performance 38
   
Schedule of Investments 40
   
Other Financial Statements 47
   
History Since Inception 56
   
Distribution Reinvestment and Cash Purchase Options 58
   
Directors and Officers 59
   
Notes to Performance and Other Important Information 60

 

 

This page is not part of the 2021 Semiannual Report to Stockholders

 

 

 

 

 

 

Letter to Our Stockholders

 

 

WHY TWO MAXIMS ARE ESPECIALLY RELEVANT NOW

The first six months of 2021 offered an important reminder that the economy and the equity markets—small cap stocks included—advance at their own speeds. The first quarter of 2021 saw economic acceleration in the form of U.S. real GDP growth of 6.3%, a considerable increase from 4Q20’s also strong 4.3% mark. This growth continued into 2Q21, when real GDP came in at 6.5%, both quarters in line with current consensus estimates of 6-7% annual growth. Over the same period, small cap returns, as measured by the Russell 2000 Index, moved at the opposite pace, from 31.4% in 4Q20 to 12.7% in 1Q21, and finally to 4.3% for 2Q21.

 

 

Decelerating Market, Accelerating Economy

Russell 2000 Index Quarterly Returns vs. U.S. Real GDP Growth (annualized, quarter over quarter)

Source: Bloomberg

 

These seemingly disconnected results are actually more closely connected than they appear. They also provide us with the

opportunity to remind investors of an important investment maxim: that it often makes sense to discount the relevance of current economic news when thinking about how to invest. The stock market has a well-founded reputation as a forward-looking force, often traveling six to 12 months ahead of economic results. This dynamic highlights why the best returns often come when current economic news seems dire or pedestrian. March 2020 provided just the latest example of this long-running phenomenon. And—as the direction of small-cap’s last three quarterly returns makes clear—the other side of this relationship is also frequently accurate: prospective equity returns can be far more subdued when the economy is most robust. (There is a silver lining for active managers to this market-economy dynamic, but more on that later.) Seen from this perspective, the first half’s simultaneous economic acceleration and small-cap deceleration was, in a period that continues to provide plenty of atypical behavior, reassuringly conventional.

 

The first half of the year also came to a close with nearly every trend established within the equity markets from the March 2020 troughs still firmly in place. To wit: small cap finished ahead of large cap for the year-to-date period ended 6/30/21, as measured by the Russell 2000 (+17.5%) and Russell 1000 (+15.0%) indexes, thus extending the leadership



 

2 | This page is not part of the 2021 Semiannual Report to Stockholders Past performance is no guarantee of future results.

 

 

 

 

 

 

LETTER TO OUR STOCKHOLDERS

 

Our research delves into equity returns during previous periods of strong nominal GDP growth, current valuation levels, and historical small cap returns patterns, all of which have given us what we admit is an arguably paradoxical point of view: a strong sense of guarded optimism.

 

shift that began more than 15 months ago. Similarly, the Russell 2000 Value Index, which advanced 26.7%, solidified its nascent market cycle advantage over the Russell 2000 Growth Index—which rose 9.0%—following nearly a decade of underperformance—an unprecedented length of time for growth to outpace value since the inception of the style indexes. Also within small cap, cyclical sectors maintained a convincing lead over their defensive counterparts.

 

Will these trends continue? We think they will. What we flesh out in this letter, then, is our case for extended small-cap leadership and, within the asset class, ongoing outperformance for value. Our research delves into equity returns during previous periods of strong nominal GDP growth, current valuation levels, and historical small cap returns patterns, all of which have given us what we admit is an arguably paradoxical point of view: a strong sense of guarded optimism.

 

BE AWARE OF RECENCY BIAS

Some readers may think we are on shaky ground in arguing that small cap’s first-half leadership looks built to last. And there are reasons that might appear to support the notion that leadership has moved back to large caps. After its historic one-year rally through the end of March 2021—which included three consecutive quarters outperforming large caps—small cap’s advance moderated. The Russell 2000 also fell behind its large-cap sibling during the second quarter of 2021, up 4.3% versus 8.5% for the Russell 1000. And while the Russell 2000 established its latest all-time peak on March 15th, the Russell 1000 reached its latest peak as recently as July 26th, after making previous new highs several times toward the end of the second quarter. In this context, we suspect a certain amount of recency bias may be preventing small-cap skeptics from seeing just how strong

first-half performance was—and not just for small cap, but for cyclicals, small-cap value, and micro-cap stocks (which rose 29.0%, as measured by the Russell Microcap Index). For example, the Russell 2000’s 17.5% gain was well above the index’s rolling monthly average six-month return of 6.7% since its inception (12/31/78). History also shows that intra-cycle leadership shifts occur with some regularity during market cycles, as do changes in the tempo of performance. For example, after small caps experienced a very strong absolute and relative recovery in 2009, a digestion period followed in which returns were negative over the next six months before the asset class resumed a positive pace and held on to market leadership.

 

In addition, it’s worth noting that first-half returns being highest for the smallest capitalization asset classes (as well as being significantly in value’s favor) lines up exactly as we would expect during a period of widespread economic recovery. Equally important, we see little on the horizon in the economy, the market itself, or—and this is always most relevant to us—in our analysis of companies and conversations with management teams—to suggest that small cap’s leadership phase has run its course.

 

HAS SMALL-CAP’S RUN ONLY JUST BEGUN?

The growing economy underpins an important part of our optimism for small cap’s continued leadership over large cap. Notwithstanding ever-present sources of concern, our bottom-up view of the economy, which we glean from analyzing a wide swath of companies, shows that the U.S. in particular continues to skew heavily toward expansion. The U.S. consumer, whose spending comprises roughly 70% of our economy, is financially flush. With notably strong consumer balance sheets and low mortgage rates, the housing market remains healthy while



 

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LETTER TO OUR STOCKHOLDERS

 

also boasting favorable long-term demographic trends. Retail and restaurant sales are increasing steadily, passenger air travel remains on the rise, and roads and highways are busy. We would also add lower unemployment, and the potential boost—after the requisite political wrangling—of additional fiscal stimulus, much of it in the form of long needed infrastructure spending, to this list of positives.

 

And while past performance is no guarantee of future results, history is admirably clear about the pattern of U.S. equity leadership when the economy expanded. During prior periods of robust economic growth, small caps have enjoyed a decided performance edge over their large cap siblings. When nominal U.S. GDP growth exceeded 5% in year-over-year periods, the Russell 2000 beat the Russell 1000 65% of the time with an average annual return of 22.1% versus 17.0%. This is especially relevant to the current environment because consensus projections call for nominal GDP growth in the 8-10% range for 2021 and 5-7% for 2022.

 

 

Small Caps Have Tended to Outpace Large Caps in Periods of High Economic Growth

Russell 2000 vs Russell 1000 Regimes from 6/30/01 to 6/30/21

Batting average refers to the percentage of 1-year periods in which the Russell 2000 outperformed the Russell 1000.

 

The state of valuations between small and large caps is also relevant. With more and more market observers expressing concern about share prices in the U.S. market being unsustainably elevated, we looked at the situation by dividing the market by capitalization. To gauge valuations, we used one of our preferred metrics, enterprise value divided by the last 12 months’ earnings before interest & taxes (“LTM EV/EBIT”), excluding companies with negative EBIT. Although small cap delivered a significant outperformance over large cap over the past year (+62.0% vs. +43.1%), small-cap stocks are still

relatively undervalued versus large caps when compared against their valuation range over the past 20 years.

 

 

Relative Valuations for Small Caps Are Near Their Lowest in 20 Years

Russell 2000 vs. Russell 1000 Median LTM EV/EBIT1 (ex. Negative EBIT Companies) from 6/30/01 to 6/30/21

1 Earnings before interest and taxes. Source: FactSet

 

We think that the combination of the asset class’s strong history in growing economies and its more attractive relative valuations make a powerful case for small cap’s ongoing leadership in the U.S. equity market.

 

SMALL-CAP VALUE’S ADVANTAGE

In addition to looking for small caps to continue posting attractive relative and solid absolute results, we also expect small-cap value to maintain leadership within small cap—and for the same two reasons as small cap’s relative advantage over large caps: 1) Small-cap value has enjoyed a pronounced tendency to outperform small-cap growth when nominal economic growth has been above average and 2) small-cap value’s relative valuation compared with its historic range also looks attractive. The rationale for small-cap value outperforming in periods of high nominal economic growth is rooted in the idea that small-cap value is both more cyclically sensitive than its growth sibling and a greater beneficiary of inflation for relative earnings growth and valuation.

 

Our research confirmed this relationship as we looked back over the past 20 years and found that in one-year periods with at least 5% nominal GDP growth, the Russell 2000 Pure Value Index outperformed the Russell 2000 Pure Growth Index 68% of the time by an average of 420 basis points. In contrast, when nominal GDP growth fell between 3-5%, the small-cap value



 

4 | This page is not part of the 2021 Semiannual Report to Stockholders Past performance is no guarantee of future results.

 

 

 

 

 

 

LETTER TO OUR STOCKHOLDERS

 

index outperformed only 32% of the time and lagged small-cap growth by an average of 100 basis points. As noted earlier, with consensus projections for nominal GDP growth for 2021 and 2022 both in excess of 5%, the future environment seems well suited to continued outperformance for value.

 

 

Strong Economic Expansion Has Favored Value

Rolling 1-Year Returns for the Russell 2000 Pure Value vs Russell 2000 Pure Growth Indexes from 6/30/01 to 6/30/21

Batting average refers to the percentage of 1-year periods in which the Russell Pure Value outperformed the Russell Pure Growth Index. Source: Russell Investments

 

Despite these favorable conditions, some readers, in noting that small cap value has already beaten small-cap growth by a sizable margin over the last year (+73.3% versus +51.4%), may be wondering how much more outperformance value has left. We’d suggest that extending the time periods from the last one year to include the last three and five years reveals a starkly different picture. The Russell 2000 Value lagged its growth counterpart by more than 500 basis points for both the three-and five-year annualized periods ended 6/30/21. Given the depth of value’s underperformance over much of the past five years, then, the idea that value’s run might also be over seems ill founded to us.

 

 

Despite Leading from One Year, Value Trails by a Large Margin for Three- and Five-Year Periods

Russell 2000 Value vs Russell 2000 Growth Average Annual Total Returns as of 6/30/21

Current valuations add one final piece of the puzzle: just as small cap valuations finished June looking more attractive than those of large cap, small-cap value wound down 2021’s first half looking far more attractively valued than its growth counterpart—based on the same LTM EV/EBIT metric we used above. Indeed, even after accounting for its recent performance dominance, small-cap value stocks are as inexpensive compared to their small-cap growth cousins than at any time in the last 20 years. At the end of June 2021, the Russell 2000 Value Index had a relative valuation of 22% of the Russell 2000 Growth Index compared to a 20-year average of 85% This most recent relative valuation shows how much cheaper small-cap value stocks are compared with their historic relationship with valuations for small-cap growth stocks.

 

THE SECOND MAXIM

With all of the ups and downs the market has experienced since June 30, 2016, many investors may not realize that small caps have more than doubled over that five-year span. A multi-year period of moderately lower returns is to be expected after that high level of performance.

 

Which brings us to the aforementioned silver lining. The second investment maxim that is especially relevant to the current environment is that, perhaps paradoxically, active small-cap managers have actually added their greatest share of excess return when the Russell 2000 has delivered lower returns—single-digit results over five-year periods to be precise.

 

 

Monthly Rolling 5-Year U.S. Small Blend1 Average Excess Returns During Russell 2000 Return Ranges from 12/31/78 through 6/30/21

Russell 2000 Five-Year Return Range (12/31/78 through 6/30/21)

1There were 514 US Fund Small Blend Funds tracked by Morningstar with at least five years of performance history as of 6/30/21. The excess return for a Morningstar category would be the category’s return for the period minus the Index return. Source: Morningstar


 

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LETTER TO OUR STOCKHOLDERS

 

THE AGE OF ALPHA?

For most of the last decade, simply buying the market worked very well. The conditions were close to ideal for a market cap weighted, index-based approach. Large cap beat small cap, and mega caps beat large caps. The economy grew very slowly and with a good deal of volatility, while 10-year Treasury yields ended the period at less than half of the 3.2% at which they started it. This significant decline in yield fused with the scarcity of economic growth to drive outperformance for duration-sensitive mega-cap growth stocks. The behemoths in turn drove index returns. We would describe this roughly 10-year period as “the era of beta” because overall market returns were so much higher than economic and profit growth, making it difficult for active strategies to stand out. Yet we believe that what we’re calling the “age of alpha” is in front of us—alpha being the term that describes an investment approach’s ability to beat the market.

 

As we have outlined, there’s good reason to anticipate a period of above-average economic and profit growth that’s accompanied by more subdued market returns. We believe this kind of environment gives disciplined active managers, especially those with a quality bias, an excellent opportunity

 

to excel. A market in which there will be considerable differentiation is apt to reward the very fundamentals we focus on most. So while we anticipate lower overall U.S. equity returns than what the markets have given investors over the last 12-15 months, we also anticipate positive results—for small caps as an asset class and, more specifically, for small-cap value and select cyclicals.

 

There are always challenges, of course—and surprises, such as the Dow’s 500-point swoon on July 20th. It’s also true that small cap will almost definitely be contending with two countervailing forces over at least the next year or more: their fall through most of June and July notwithstanding, slowly rising rates seem likely to push down on valuations just as many companies are likely to be reporting healthy and growing earnings through at least the end of next year. These forces, however, will not affect all small-cap stocks equally. We believe that we offer our investors the requisite experience, discipline, and expertise to select those companies best positioned to benefit from the more challenging environment we see ahead—one that looks like a promising period for active small-cap management.


Sincerely,    
     
     

Charles M. Royce

Chairman,

Royce Investment Partners

Christopher D. Clark

Chief Executive Officer, and

Co-Chief Investment Officer,

Royce Investment Partners

Francis D. Gannon

Co-Chief Investment Officer,

Royce Investment Partners

July 30, 2021    

 

6 | This page is not part of the 2021 Semiannual Report to Stockholders Past performance is no guarantee of future results.

 

 

 

 

 

 

Performance

 

 

NAV Average Annual Total Returns                
As of June 30, 2021 (%)                
                    SINCE INCEPTION
  YTD¹ 1-YR 3-YR 5-YR 10-YR 15-YR 20-YR 25-YR 30-YR INCEPTION DATE
Royce Global Value Trust  9.50 40.77 13.32 15.13 N/A N/A N/A N/A N/A  9.09 10/17/13
Royce Micro-Cap Trust 21.12 72.54 17.54 18.99 13.31 9.82 10.86 11.52 N/A 11.87 12/14/93
Royce Value Trust 16.77 56.22 15.61 17.32 11.39 8.99  9.57 10.92 11.60 11.16 11/26/86
INDEX                      
MSCI ACWI Small Cap Index 15.43 54.07 12.20 14.13  9.90 8.64 9.96  8.43 N/A N/A N/A
Russell Microcap Index 29.02 75.77 14.47 18.13 13.06 8.73 9.26 N/A N/A N/A N/A
Russell 2000 Index 17.54 62.03 13.52 16.47 12.34 9.51 9.26  9.33 10.65 N/A N/A
1 Not annualized.                      

 

Important Performance and Risk Information

All performance information in this Review and Report reflects past performance, is presented on a total return basis, net of the Fund’s investment advisory fee, 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.royceinvest.com. The Funds are closed-end registered investment companies whose respective shares of common stock may trade at a discount to the net asset value. Shares of each Fund’s common stock are also subject to the market risk of investing in the underlying portfolio securities held by each Fund. Each Fund is subject to market risk-the possibility that common stock prices will decline, sometimes sharply and unpredictably, over short or extended periods of time. Such declines may be caused by various factors, including market, financial, and economic conditions, governmental or central bank actions, and other factors, such as the recent COVID-19 pandemic, that may not be directly related to the issuer of a security held by a Fund. This pandemic could adversely affect global market, financial, and economic conditions in ways that cannot necessarily be foreseen. All indexes referenced are unmanaged and capitalization-weighted. Each index’s returns include net reinvested dividends and/or interest income. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indexes or any securities or financial products. This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. 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 that measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 Index. The Russell Microcap Index includes 1,000 of the smallest securities in the small-cap Russell 2000 Index, along with the next smallest eligible securities as determined by Russell. The MSCI ACWI Small Cap Index is an unmanaged, capitalization-weighted index of global small-cap stocks. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index. Index returns include net reinvested dividends and/or interest income. Royce Value, Micro-Cap, and Global Value Trust shares of common stock trade on the NYSE. Royce Fund Services, LLC (“RFS”) is a member of FINRA and files certain material with FINRA on behalf of each Fund. RFS is not an underwriter or distributor of any of the Funds.

 

This page is not part of the 2021 Semiannual Report to Stockholders | 7

 

 

 

 

 

 

MANAGER’S DISCUSSION (UNAUDITED)

 

Royce Global Value Trust (RGT)

 

 

 

Chuck Royce

 

FUND PERFORMANCE

Royce Global Value Trust advanced 9.5% on an NAV (net asset value) basis and 12.1% on a market price basis for the year-to-date period ended 6/30/21, posting strong absolute results that nonetheless trailed the 15.4% gain for its benchmark, the MSCI ACWI Small Cap Index, for the same period. The Fund’s relative results were stronger over longer-term periods as it beat its global small-cap benchmark on both an NAV and market price basis for the three- and five-year periods ended 6/30/21.

 

WHAT WORKED… AND WHAT DIDN’T

Five of the 10 equity sectors in which the Fund held investments made a positive contribution to performance in 2021’s first half. Industrials led by a wide margin, followed by Financials and Information Technology. Of the four sectors that detracted—Health Care was essentially flat—Materials, Communication Services, and Consumer Staples made the largest negative impact. At the industry level, two areas from Industrials made significant positive contributions—professional services and trading companies & distributors—while insurance (Financials) was also notably strong. The three industries that detracted most were internet & direct marketing retail (Consumer Discretionary), metals & mining (Materials), and interactive media & services (Communication Services).

The Fund’s top contributor at the position level was Marlowe, a firm based in and focused on the United Kingdom. Marlowe provides a range of commercial services and software products grouped into four areas: Health and Safety, Fire Safety, Water Safety, and Air Quality. We like the company’s position in essential, critical, and/or mandated services in growing markets, each with a highly fragmented customer base. Marlowe is also an acquisition-led consolidator of its large and fragmented markets, which enables it to re-deploy its cash flows into M&A and breeds cross-selling opportunities and scale advantages. The second quarter saw a steady flow of positive news, including M&A announcements and the release of final results at the end of June that showed improved revenue and earnings. Next came AutoCanada, a North American automobile business that sells multiple brands and operates 50 franchised dealerships in Canada, as well as a group in Illinois. In early May, the company reported record-setting revenue and earnings along with a ninth consecutive quarter of outracing the Canadian new vehicle retail market, though AutoCanada’s used vehicle and F&I (Finance & Insurance) segments were the key drivers behind 1Q21’s improved earnings.

RGT’s top detracting position was CDON, a Swedish e-commerce company that operates a website which sells music, books, t-shirts, and other merchandise—it is phasing out a legacy brick-and-mortar retail business. As an established e-commerce name in Nordic countries, CDON is expected to grow rapidly in the region, where online shopping habits trail those in much of the developed world but are expected to catch up in the coming years. The company hit a speed bump earlier in the year when a new technical platform proved both more expensive and harder to bring to optimal functionality than anticipated. Thinking that the company can overcome these obstacles, we held our shares at the end of June. The next biggest detractor was Haemonetics Corporation, which designs and manufactures automated systems for the collection, processing, and surgical salvage of donor and patient blood while also offering related information services and data management software. Its shares suffered a significant decline in April with the departure of a large customer in plasma distribution. Confident in the company’s expertise in its niche, we maintained our stake at the end of June.

Relative to the MSCI ACWI Small Cap in the first half of 2021, both stock selection and sector allocation hurt, with the former making a much larger negative impact. On a sector basis, ineffective stock picks in Materials and an equal combination of our lower weighting and poor stock picking in the resurgent Energy sector detracted most, along with the negative effect of the Fund’s cash holdings. On the other hand, our higher weighting in Industrials was additive versus the benchmark. Also helping relative performance were our lower weighting and savvy stock picks in Real Estate and our lack of exposure to Utilities, two sectors that lagged within the benchmark.

 

             
  Top Contributors to Performance     Top Detractors from Performance    
  Year-to-Date Through 6/30/21 (%)1     Year-to-Date Through 6/30/21 (%)2    
             
  Marlowe 0.63   CDON -0.45  
  AutoCanada 0.52   Haemonetics Corporation -0.43  
  Transcat 0.51   Cartrack Holdings -0.26  
  ProAssurance Corporation 0.51   a2 Milk -0.25  
  SThree 0.48   TKC Corporation -0.22  
  1 Includes dividends     2Net of dividends    
             

 

CURRENT POSITIONING AND OUTLOOK

Our outlook has not changed in any significant way since the end of 2020. In spite of considerable near-term uncertainty, we believe that the global economic recovery will continue, albeit with more fits and starts—as well as market volatility—than many were anticipating as recently as May. In July, however, worrisome signs of a slowdown came from China, and the globe faces a major challenge in containing the Delta COVID variant. We are cautiously optimistic, however, that the global economy will continue to expand, benefiting more economically sensitive sectors of the world’s economies, particularly as supply chains are reestablished and pent-up demand—which remains robust through most of the developed world—is released. As always, we are prepared to act when market volatility gives us the opportunity to build existing holdings at more attractive prices.

 

8 | 2021 Semiannual Report to Stockholders

 

 

 

 

     

 

PERFORMANCE AND PORTFOLIO REVIEW (UNAUDITED) SYMBOLS  MARKET PRICE RGT   NAV XRGTX

 

 

 

Performance

Average Annual Total Return (%) Through 6/30/21

 

  JAN-JUN 20211 1-YR 3-YR 5-YR SINCE INCEPTION (10/17/13)
RGT (NAV) 9.50 40.77 13.32 15.13 9.09

1 Not Annualized

 

 

 

Market Price Performance History Since Inception (10/17/13)

Cumulative Performance of Investment 1

 

  1-YR 5-YR 10-YR 15-YR 20-YR SINCE INCEPTION (10/17/13)
RGT 41.0% 122.8% N/A N/A N/A 94.9%

 

 

 

¹Reflects the cumulative performance experience of a continuous common stockholder who purchased one share at inception ($8.975 IPO) and reinvested all distributions.
²Reflects the actual month-end market price movement of one share as it has traded on NYSE.

 

 

 

Morningstar Style Map™ As of 6/30/21

 

 

 

The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 60 for additional information.

 

 

 

Top 10 Positions    
% of Net Assets    
     
ProAssurance Corporation   2.1 
Descartes Systems Group (The)   2.1 
James River Group Holdings   1.9 
SEI Investments   1.8 
Marlowe   1.8 
IPH   1.6 
Morningstar   1.6 
Transcat   1.5 
CMC Materials   1.5 
Sprott   1.5 

 

 

 

Portfolio Sector Breakdown    
% of Net Assets    
     
Industrials   29.0 
Information Technology   20.3 
Financials   18.0 
Health Care   7.5 
Materials   5.5 
Consumer Discretionary   3.4 
Communication Services   3.2 
Real Estate   1.5 
Consumer Staples   1.5 
Energy   0.6 
Cash and Cash Equivalents, Net of Outstanding Line of Credit   9.5 

 

 

 

Calendar Year Total Returns (%)    
     
YEAR  RGT 
2020   19.7 
2019   31.2 
2018   -16.1 
2017   31.1 
2016   11.1 
2015   -3.4 
2014   -6.2 

 

 

 

Portfolio Country Breakdown1,2    
% of Net Assets    
     
United States   30.7 
United Kingdom   12.9 
Canada   10.8 
Sweden   4.8 
South Africa   3.0 

¹ Represents countries that are 3% or more of net assets.

² Securities are categorized by the country of their headquarters.

 

 

 

Portfolio Diagnostics   
    
Fund Net Assets  $92 million
Number of Holdings   119
Turnover Rate   33%
Net Asset Value  $16.37
Market Price  $14.98
Average Market Capitalization1   $2,112 million
Weighted Average P/E Ratio2,3   29.1x
Weighted Average P/B Ratio2   3.2x
Active Share4   98%

 

1Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (20% of portfolio holdings as of 6/30/21).
4Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

 

Important Performance and Risk Information

All performance information reflects past performance, is presented on a total return basis, net of the Fund’s investment advisory fee, 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.royceinvest.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 mid-cap companies, which may involve considerably more risk than investments in securities of larger-cap companies. The Fund’s broadly diversified portfolio does not ensure a profit or guarantee against loss. From time to time, the Fund may invest a significant portion of its net assets in foreign securities, which may involve political, economic, currency and other risks not encountered in U.S. investments. Regarding the “Top Contributors” and “Top Detractors” 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 2021.

 

2021 Semiannual Report to Stockholders | 9

 

 

 

 

     

 

Royce Global Value Trust

 

 

Schedule of Investments

Common Stocks – 90.5%

 

   SHARES   VALUE 
         
AUSTRALIA – 2.9%          
Cochlear   4,000   $754,960 
IPH   249,720    1,460,765 
Steadfast Group   53,300    175,878 
Technology One   40,400    282,074 
Total (Cost $1,443,715)        2,673,677 
           
BERMUDA – 2.4%          
Assured Guaranty 1   10,800    512,784 
†James River Group Holdings   45,900    1,722,168 
Total (Cost $1,954,639)        2,234,952 
           
BRAZIL – 1.7%          
OdontoPrev   312,000    817,355 
TOTVS   97,885    740,957 
Total (Cost $1,178,333)        1,558,312 
           
CANADA – 10.8%          
Alamos Gold Cl. A   132,200    1,009,950 
Altus Group   10,700    495,898 
AutoCanada 2   20,400    821,859 
Centerra Gold   39,000    296,055 
Descartes Systems Group (The) 1,2   27,400    1,894,984 
FirstService   1,400    239,764 
LifeWorks   36,500    984,051 
Major Drilling Group International 2   168,000    1,161,472 
†Onex Corporation   6,000    435,673 
Pan American Silver 1   22,300    637,111 
Sprott   34,360    1,352,391 
Stella-Jones   16,000    576,057 
Total (Cost $6,144,315)        9,905,265 
           
DENMARK – 0.2%          
Chr. Hansen Holding   1,800    162,456 
Total (Cost $155,783)        162,456 
           
FRANCE – 0.8%          
Esker   1,800    525,050 
Interparfums   3,102    201,565 
Total (Cost $210,145)        726,615 
           
GERMANY – 2.7%          
Carl Zeiss Meditec   3,400    656,941 
CompuGroup Medical   3,300    258,452 
New Work   3,600    1,131,206 
STRATEC   3,300    460,948 
Total (Cost $1,639,224)        2,507,547 
           
GREECE – 0.7%          
Sarantis   64,500    680,680 
Total (Cost $554,222)        680,680 
           
ICELAND – 0.8%          
Ossur 2   101,500    748,555 
Total (Cost $657,869)        748,555 
           
INDIA – 2.0%          
AIA Engineering 2   35,100    1,014,443 
WNS Holdings ADR 1,2,3   10,500    838,635 
Total (Cost $1,463,783)        1,853,078 
           
ISRAEL – 1.8%          
Nova Measuring Instruments 1,2   5,700    586,473 
Tel Aviv Stock Exchange   164,600   1,016,838 
Total (Cost $591,484)        1,603,311 
           
ITALY – 1.1%          
Carel Industries   35,800    859,609 
Gruppo MutuiOnline   2,900    138,235 
Total (Cost $489,921)        997,844 
           
JAPAN – 2.6%          
As One   2,800    365,705 
Benefit One   13,700    430,996 
Fukui Computer Holdings   10,800    408,299 
NSD   12,200    203,818 
TechnoPro Holdings   7,200    170,319 
TKC Corporation   25,500    772,380 
Total (Cost $1,288,537)        2,351,517 
           
MEXICO – 0.5%          
Becle   63,000    166,491 
Bolsa Mexicana de Valores   120,600    266,199 
Total (Cost $400,551)        432,690 
           
NETHERLANDS – 1.0%          
IMCD   5,500    874,550 
Total (Cost $387,492)        874,550 
           
NEW ZEALAND – 2.0%          
†a2 Milk 2   60,000    269,982 
Fisher & Paykel Healthcare   17,000    369,799 
†NZX   330,300    461,759 
†Pushpay Holdings 2   583,000    733,531 
Total (Cost $1,776,018)        1,835,071 
           
NORWAY – 1.7%          
Protector Forsikring   70,000    672,346 
TGS   45,600    581,244 
†Tomra Systems   6,000    331,005 
Total (Cost $1,247,085)        1,584,595 
           
POLAND – 0.4%          
Warsaw Stock Exchange   29,100    363,578 
Total (Cost $351,627)        363,578 
           
SINGAPORE – 1.8%          
†Karooooo 2   11,409    423,531 
Midas Holdings 2,4   400,000    0 
XP Power   16,300    1,258,167 
Total (Cost $1,061,256)        1,681,698 
           
SOUTH AFRICA – 3.0%          
JSE   53,000    394,531 
PSG Group   114,900    640,399 
†Stadio Holdings 2   3,541,372    766,305 
Transaction Capital   344,100    911,335 
Total (Cost $2,003,626)        2,712,570 
           
SWEDEN – 4.8%          
Biotage   42,100    996,654 
Bravida Holding   68,900    996,696 
†CDON 2   7,300    300,424 
Dometic Group   15,500    263,975 
Karnov Group   161,481    992,498 

 

10 | 2021 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

 

 

 

 

     

 

June 30, 2021 (unaudited)

 

 

Schedule of Investments (continued)

 

   SHARES   VALUE 
         
SWEDEN (continued)          
OEM International Cl. B   59,425   $890,184 
Total (Cost $3,335,230)        4,440,431 
           
SWITZERLAND – 1.2%          
Kardex Holding   2,400    555,093 
LEM Holding   150    314,510 
VZ Holding   2,900    245,728 
Total (Cost $482,877)        1,115,331 
           
UNITED KINGDOM – 12.9%          
Ashmore Group   101,000    537,896 
CentralNic Group 2   136,073    158,113 
†Countryside Properties 2   100,000    653,747 
Diploma   8,200    329,402 
DiscoverIE Group   60,800    796,471 
Eckoh   103,927    92,727 
FDM Group Holdings   46,800    660,332 
Ferroglobe (Warranty Insurance Trust) 2,4   41,100    0 
Genuit Group   68,300    578,214 
Halma   18,700    696,359 
Intertek Group   9,300    711,417 
Keystone Law Group   95,940    902,454 
Learning Technologies Group   342,800    891,961 
Marlowe 2   132,500    1,612,928 
Mortgage Advice Bureau Holdings   36,100    589,258 
Restore 2   180,700    974,853 
RWS Holdings   45,100    351,550 
SThree   146,600    935,884 
YouGov   18,600    303,607 
Total (Cost $7,620,728)        11,777,173 
           
UNITED STATES – 30.7%          
Air Lease Cl. A 1   20,123    839,934 
APi Group 1,2   50,700    1,059,123 
BOK Financial 1   6,350    549,910 
CIRCOR International 1,2   28,300    922,580 
CMC Materials 1   9,150    1,379,271 
Cognex Corporation 1   4,837    406,550 
Colfax 1,2   21,400    980,334 
Diodes 1,2   7,000    558,390 
ESCO Technologies 1   5,500    515,955 
FARO Technologies 1,2   7,250    563,832 
†FormFactor 2   10,000    364,600 
GCM Grosvenor Cl. A   109,626    1,142,303 
†Haemonetics Corporation 2   6,600    439,824 
Helios Technologies 1   7,506    585,843 
Innospec 1   6,228    564,319 
Kadant 1   3,700    651,533 
KBR 1   34,800    1,327,620 
Kennedy-Wilson Holdings   30,000    596,100 
Lindblad Expeditions Holdings 2   21,500    344,215 
Lindsay Corporation 1   3,910    646,245 
Mesa Laboratories 1   3,660    992,482 
Momentive Global 2   60,000    1,264,200 
Morningstar 1   5,640    1,450,100 
National Instruments 1   19,420    821,078 
†New York Times Cl. A   12,100    526,955 
PAR Technology 1,2   12,341    863,130 
ProAssurance Corporation 1   83,900    1,908,725 
Quaker Chemical 1   2,710    642,785 
SEI Investments 1   26,750    1,657,698 
Transcat 2   24,577    1,388,846 
Upland Software 1,2   19,900    819,283 
†Vontier Corporation   41,300    1,345,554 
Total (Cost $19,753,954)        28,119,317 
           
TOTAL COMMON STOCKS          
(Cost $56,192,414)        82,940,813 
           
REPURCHASE AGREEMENT– 13.8%          

Fixed Income Clearing Corporation, 0.00% dated 6/30/21, due 7/1/21, maturity value  

$12,652,210 (collateralized by obligations of various U.S. Government Agencies, 1.25%

due 6/30/28, valued at $12,905,261)

          
(Cost $12,652,210)        12,652,210 
           
TOTAL INVESTMENTS – 104.3%          
(Cost $68,844,624)        95,593,023 
           
LIABILITIES LESS CASH AND OTHER ASSETS – (4.3)%      (3,917,001)
           
NET ASSETS – 100.0%       $91,676,022 

 

ADR – American Depository Receipt

†New additions in 2021.
1All or a portion of these securities were pledged as collateral in connection with the Fund’s revolving credit agreement at June 30, 2021. Total market value of pledged securities at June 30, 2021, was $10,566,649.
2Non-income producing.
3At June 30, 2021, a portion of these securities were rehypothecated in connection with the Fund’s revolving credit agreement in the aggregate amount of $830,648.
4Securities for which market quotations are not readily available represent 0.0% 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.

 

Securities of Global/International Funds are categorized by the country of their headquarters.

 

Bold indicates the Fund’s 20 largest equity holdings in terms of June 30, 2021, market value.

 

TAX INFORMATION: The cost of total investments for Federal income tax purposes was $68,875,155. At June 30, 2021, net unrealized appreciation for all securities was $26,717,868 consisting of aggregate gross unrealized appreciation of $28,591,699 and aggregate gross unrealized depreciation of $1,873,831. The primary cause of the 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 2021 Semiannual Report to Stockholders | 11

 

 

 

 

 

 

Royce Global Value Trust June 30, 2021 (unaudited)

 

 

 

Statement of Assets and Liabilities

 

ASSETS:    
Investments at value $ 82,940,813
Repurchase agreements (at cost and value)   12,652,210
Receivable for dividends   203,271
Prepaid expenses and other assets   17,613
Total Assets   95,813,907
LIABILITIES:    
Revolving credit agreement   4,000,000
Payable for investment advisory fee   75,579
Payable for directors’ fees   5,838
Payable for interest expense   3,609
Accrued expenses   52,859
Total Liabilities   4,137,885
Net Assets $ 91,676,022
ANALYSIS OF NET ASSETS:    
Paid-in capital - $0.001 par value per share; 5,600,791 shares outstanding (150,000,000 shares authorized) $ 47,249,348
Total distributable earnings (loss)   44,426,674
Net Assets (net asset value per share - $16.37) $ 91,676,022
Investments at identified cost $ 56,192,414

 

12 | 2021 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

 
 

 

 

Royce Global Value Trust Six Months Ended June 30, 2021 (unaudited)

 

 

 

Statement of Operations

 

INVESTMENT INCOME:    
INCOME:    
Dividends $ 757,592
Foreign withholding tax   (63,412)
Total income   694,180
EXPENSES:    
Investment advisory fees   437,913
Custody and transfer agent fees   32,556
Administrative and office facilities   28,706
Stockholder reports   28,111
Interest expense   23,369
Professional fees   21,699
Directors’ fees   13,518
Other expenses   15,879
Total expenses   601,751
Compensating balance credits   (2)
Net expenses   601,749
Net investment income (loss)   92,431
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:    
NET REALIZED GAIN (LOSS):    
Investments   10,343,291
Foreign currency transactions   36,704
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION):    
Investments   (2,559,531)
Other assets and liabilities denominated in foreign currency   11,128
Net realized and unrealized gain (loss) on investments and foreign currency   7,831,592
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS $ 7,924,023

 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS 2021 Semiannual Report to Stockholders | 13

 

 
 

 

 

Royce Global Value Trust

 

 

 

Statement of Changes in Net Assets

 

    SIX MONTHS ENDED    
    6/30/21    
    (UNAUDITED)   YEAR ENDED 12/31/20
         
INVESTMENT OPERATIONS:        
Net investment income (loss) $ 92,431 $ (209,532)
Net realized gain (loss) on investments and foreign currency   10,379,995   25,222,265
Net change in unrealized appreciation (depreciation) on investments and foreign currency   (2,548,403)   (473,615)
Net increase (decrease) in net assets from investment operations   7,924,023   24,539,118
DISTRIBUTIONS:        
Total distributable earnings   –   (12,499,130)
Total distributions   –   (12,499,130)
CAPITAL STOCK TRANSACTIONS:        
Reinvestment of distributions   –   4,684,326
Value of shares tendered   –   (75,782,536)
Total capital stock transactions   –   (71,098,210)
Net Increase (Decrease) In Net Assets   7,924,023   (59,058,222)
NET ASSETS:        
         
Beginning of period   83,751,999   142,810,221
End of period $ 91,676,022 $ 83,751,999

 

14 | 2021 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

 

 
 

 

 

Royce Global Value Trust Six Months Ended June 30, 2021 (unaudited)

 

 

Statement of Cash Flows

 

CASH FLOWS FROM OPERATING ACTIVITIES:    
Net increase (decrease) in net assets from investment operations $ 7,924,023
Adjustments to reconcile net increase (decrease) in net assets from investment operations to net cash provided by operating activities:    
Purchases of long-term investments   (28,180,092)
Proceeds from sales and maturities of long-term investments   33,498,170
Net purchases, sales and maturities of short-term investments   (1,392,318)
Net (increase) decrease in dividends receivable and other assets   (14,184)
Net increase (decrease) in interest expense payable, accrued expenses and other liabilities   (64,328)
Net change in unrealized appreciation (depreciation) on investments   2,559,531
Net realized gain (loss) on investments   (10,343,291)
Net cash provided by operating activities   3,987,511
CASH FLOWS FROM FINANCING ACTIVITIES:    
Decrease in revolving credit agreement   (4,000,000)
Distributions   –
Reinvestment of distributions   –
Net cash used for financing activities   (4,000,000)
INCREASE (DECREASE) IN CASH:   (12,489)
Cash and foreign currency at beginning of period   12,489
Cash and foreign currency at end of period $ –

 

Supplemental disclosure of cash flow information: 

For the six months ended June 30, 2021, the Fund paid $73,410 in interest expense.

 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS 2021 Semiannual Report to Stockholders | 15

 

 
 

 

 

Royce Global Value Trust

 

 

Financial Highlights

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

 

   SIX MONTHS  YEARS ENDED
   ENDED 6/30/21               
   (UNAUDITED)  12/31/20  12/31/19  12/31/18  12/31/17  12/31/16
Net Asset Value, Beginning of Period  $14.95   $13.60   $10.42   $12.48   $9.62   $8.81 
INVESTMENT OPERATIONS:                              
Net investment income (loss)   0.02    (0.05)   0.06    0.04    0.02    0.06 
Net realized and unrealized gain (loss) on investments and foreign currency   1.40    2.63    3.18    (2.06)   2.96    0.90 
Net increase (decrease) in net assets from investment operations   1.42    2.58    3.24    (2.02)   2.98    0.96 
DISTRIBUTIONS:                              
Net investment income   –    –    (0.06)   (0.04)   (0.11)   (0.14)
Net realized gain on investments and foreign currency   –    (1.19)   –    –    –    – 
Total distributions   –    (1.19)   (0.06)   (0.04)   (0.11)   (0.14)
CAPITAL STOCK TRANSACTIONS:                              
Effect of reinvestment of distributions by Common Stockholders   –    (0.04)   (0.00)   (0.00)   (0.01)   (0.01)
Total capital stock transactions   –    (0.04)   (0.00)   (0.00)   (0.01)   (0.01)
Net Asset Value, End of Period  $16.37   $14.95   $13.60   $10.42   $12.48   $9.62 
Market Value, End of Period  $14.98   $13.36   $11.69   $8.88   $10.81   $8.04 
TOTAL RETURN:1                              
Net Asset Value   9.50%2   19.67%   31.20%   (16.11)%   31.07%   11.12%
Market Value   12.13%2   24.42%   32.33%   (17.50)%   35.96%   9.77%
RATIOS BASED ON AVERAGE NET ASSETS:                              
Investment advisory fee expense   1.00%3   1.00%   1.00%   1.25%   1.25%   1.25%
Other operating expenses   

0.37

%3    0.34%   0.50%   0.49%   0.42%   0.46%
Total expenses (net)   1.37%3   1.34%   1.50%   1.74%   1.67%   1.71%
Expenses excluding interest expense   1.32%3   1.24%   1.29%   1.53%   1.52%   1.57%
Expenses prior to balance credits   1.37%3   1.34%   1.50%   1.74%   1.67%   1.71%
Net investment income (loss)   0.21%3   (0.15)%   0.46%   0.30%   0.21%   0.69%
SUPPLEMENTAL DATA:                              
Net Assets, End of Period (in thousands)  $91,676   $83,752   $142,810   $109,254   $130,526   $100,228 
Portfolio Turnover Rate   33%   54%   48%   57%   34%   59%
REVOLVING CREDIT AGREEMENT:                              
Asset coverage   2392%   1147%   1885%   1466%   1732%   1353%
Asset coverage per $1,000  $23,919   $11,469   $18,851   $14,657   $17,316   $13,528 

 

1The 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. 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, sale and dividend reinvestment dates instead of market value.

2Not annualized

3Annualized

 

16 | 2021 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
 
 

 

 

 

Royce Global Value Trust

 

Notes to Financial Statements (unaudited)

 

Summary of Significant Accounting Policies

Royce Global Value Trust, Inc. (the “Fund”), is a diversified closed-end investment company that was incorporated under the laws of the State of Maryland on February 14, 2011. The Fund commenced operations on October 18, 2013.

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.

The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 “Financial Services-Investment Companies.”

Royce & Associates, LP, the Fund’s investment adviser, is a majority-owned subsidiary of Franklin Resources, Inc. and primarily conducts business using the name Royce Investment Partners (“Royce”).

 

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 highest 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 in accordance with the provisions of the 1940 Act, under procedures approved by the Fund’s Board of Directors, and are reported as Level 3 securities. As a general principle, the fair value of a security is the amount which the Fund might reasonably expect to receive for the security upon its current sale. However, in light of the judgment involved in fair valuations, there can be no assurance that a fair value assigned to a particular security will be the amount which the Fund might be able to receive upon its current sale. 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 last trade price before trading was suspended, or at a discount thereto for lack of marketability or otherwise, market price information regarding other securities, information received from the company and/or published documents, including SEC filings and financial statements, or other publicly available information).

 

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, 2021. For a detailed breakout of common stocks by country, please refer to the Schedule of Investments.

   LEVEL 1   LEVEL 2   LEVEL 3   TOTAL 
Common Stocks  $82,940,813   $                 –   $0   $82,940,813 
Repurchase Agreement   –    12,652,210    –    12,652,210 

 

Level 3 Reconciliation:

  BALANCE AS OF 12/31/20 PURCHASES SALES REALIZED GAIN (LOSS) UNREALIZED GAIN (LOSS) 1 BALANCE AS OF 6/30/21
Common Stocks $0 $– $– $– $– $0

 

1The 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.

 

2021 Semiannual Report to Stockholders  17

 

 

 

 

 

Royce Global 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. The remaining contractual maturity of the repurchase agreement held by the Fund at June 30, 2021 is overnight and continuous.

 

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, other than investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.

The Fund does not isolate that portion of the results of operations resulting from fluctuations in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.

 

DISTRIBUTIONS AND 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.”

The Fund pays any dividends and capital gain distributions annually in December. Because federal income tax regulations differ from generally accepted accounting principles, income and capital gain distributions determined in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Accordingly, the character of distributions and composition of net assets for tax purposes differ from those reflected in the accompanying financial statements.

 

CAPITAL GAINS TAXES:

The Fund may be subject to a tax imposed on capital gains on securities of issuers domiciled in certain countries. The Fund records an estimated deferred tax liability for gains in these securities that have been held for less than one year. This amount, if any, is reported as deferred capital gains tax in the accompanying Statement of Assets and Liabilities, assuming those positions were disposed of at the end of the period.

 

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. Premiums 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 Funds are allocated by Royce under an administration agreement and are included in administrative and office facilities and professional fees.

 

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 349,058 shares of Common Stock as reinvestment of distributions for the year ended December 31, 2020.

 

18 2021 Semiannual Report to Stockholders

 

 

 

 

 

Royce Global Value Trust

 

Notes to Financial Statements (unaudited) (continued)

 

Capital Stock (continued):

On October 28, 2020, the Fund announced the commencement of a conditional cash tender offer for up to 40% of the Fund’s issued and outstanding shares of common stock as of October 12, 2020 (i.e., 4,201,388 shares) at a price per share equal to 100% of the Fund’s net asset value per share as of the close of regular trading on the New York Stock Exchange (the “NYSE”) on the trading day immediately following the expiration date for the offer. The tender offer was set to expire at 11:59 p.m. Eastern Time on December 16, 2020, unless extended. The closing of the tender offer was contingent on the Fund’s stockholders approving a new investment advisory agreement between the Fund and Royce in accordance with the requirements of the Investment Company Act of 1940.

On December 7, 2020, the Fund announced its Board of Directors had approved amended terms for its previously announced conditional cash tender offer. The Fund offered to purchase up to 50% of its issued and outstanding shares of common stock as of October 12, 2020 (i.e., 5,251,735 shares) at a price per share equal to 100% of the Fund’s net asset value per share as of the close of regular trading on the NYSE on the trading day immediately following the expiration date for the offer. The expiration date for the tender offer was extended until 11:59 P.M. on December 21, 2020. The closing of the tender offer, however, remained contingent on stockholder approval of a new investment advisory agreement between the Fund and Royce.

The Fund’s stockholders approved a new investment advisory agreement between the Fund and Royce at a special meeting of stockholders held on December 17, 2020. In accordance with the terms and conditions of the tender offer, because the number of shares tendered by stockholders exceeded the number of shares offered to be purchased by the Fund, the Fund purchased the full amount of 5,251,735 shares from tendering stockholders on a pro-rata basis (disregarding fractional shares). The purchase price of the properly tendered shares was equal to $14.43 per share (the Fund’s net asset value per share as of the close of regular trading on the NYSE on December 22, 2020) for an aggregate purchase price of $75,782,536. The direct expenses associated with the conduct of the tender offer and the preparation of the tender offer materials, including legal fees, information agent fees, depositary fees, and the costs of printing and mailing the tender offer materials, were borne by Franklin Resources, Inc., Royce’s ultimate corporate parent, and not by the Fund.

 

Borrowings:

The Fund is party to a revolving credit agreement (the credit agreement) with BNP Paribas Prime Brokerage International, Limited (BNPPI). The Fund pays a commitment fee of 0.50% per annum on the unused portion of the then-current maximum amount that may be borrowed by the Fund under the credit agreement. The credit agreement has a 179-day rolling term that resets daily. The Fund is required to pledge portfolio securities as collateral in an amount up to two times the loan balance outstanding, or as otherwise required by applicable regulatory standards, and has granted a security interest in the securities pledged to, and in favor of, BNPPI as security for the loan balance outstanding. If the Fund fails to meet certain requirements, or comply with other financial covenants set forth in the credit agreement, the Fund may be required to repay immediately, in part or in full, the loan balance outstanding under the credit agreement, which may necessitate the sale of portfolio securities at potentially inopportune times. BNPPI may terminate the credit agreement upon certain ratings downgrades of its corporate parent, which would result in the Fund’s entire loan balance becoming immediately due and payable. The occurrence of such ratings downgrades may necessitate the sale of portfolio securities at potentially inopportune times. BNPPI may also terminate the credit agreement upon sixty (60) calendar days’ prior written notice to the Fund in the event the Fund’s net asset value per share as of the close of business on the last business day of any calendar month declines by thirty-five percent (35%) or more from the Fund’s net asset value per share as of the close of business on the last business day of the immediately preceding calendar month.

The credit agreement also permits, subject to certain conditions, BNPPI to rehypothecate portfolio securities pledged by the Fund up to the amount of the loan balance outstanding. The Fund continues to receive payments in lieu of dividends and interest on rehypothecated securities. The Fund also has the right under the credit agreement to recall the rehypothecated securities from BNPPI on demand. If BNPPI fails to deliver the recalled security in a timely manner, the Fund is compensated by BNPPI for any fees or losses related to the failed delivery or, in the event a recalled security is not returned by BNPPI, the Fund, upon notice to BNPPI, may reduce the loan balance outstanding by the value of the recalled security failed to be returned. The Fund receives a portion of the fees earned by BNPPI in connection with the rehypothecation of portfolio securities.

The maximum amount the Fund could borrow under the credit agreement during the year ended December 31, 2020 was $8,000,000. Such maximum borrowing amount was subsequently reduced from $8,000,000 to $4,000,000 through an amendment to the credit agreement dated as of January 6, 2021. The Fund has the right to further reduce the maximum amount it can borrow under the credit agreement upon one (1) business day’s prior written notice to BNPPI. In addition, the Fund and BNPPI may agree to increase the maximum amount the Fund can borrow under the credit agreement, which amount may not exceed $15,000,000.

As of June 30, 2021, the Fund has outstanding borrowings of $4,000,000. During the six months ended June 30, 2021, the Fund borrowed an average daily balance of $4,110,497 at a weighted average borrowing cost of 1.13%. The maximum amount outstanding during the six months ended June 30, 2021, was $8,000,000. As of June 30, 2021, the aggregate value of rehypothecated securities was $830,648.

 

2021 Semiannual Report to Stockholders  19

 

 

 

 

 

Royce Global Value Trust

 

Notes to Financial Statements (unaudited) (continued)

 

Investment Advisory Agreement:

The investment advisory agreement between Royce and the Fund provides for fees to be paid at an annual rate of 1.00% of the Fund’s average daily net assets. For the six months ended June 30, 2021, the Fund expensed Royce investment advisory fees totaling $437,913.

 

Purchases and Sales of Investment Securities:

For the six months ended June 30, 2021, the costs of purchases and proceeds from sales of investment securities, other than short-term securities, amounted to $27,609,980 and $33,095,184, respectively.

Cross trades were executed by the Fund pursuant to Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds to which Royce serves as investment adviser. The Fund’s Chief Compliance Officer reviews such transactions each quarter for compliance with the requirements and restrictions set forth by Rule 17a-7, and reports the results of her review to the Board of Directors. Cross trades for the six months ended June 30, 2021, were as follows:

 

COSTS OF PURCHASES PROCEEDS FROM SALES REALIZED GAIN (LOSS)
$505,600 $– $–

 

Subsequent Events:

Subsequent events have been evaluated through the date the financial statements were issued.

 

20 2021 Semiannual Report to Stockholders

 

 

 

 

 

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2021 Semiannual Report to Stockholders  21

 

 

 

 

 

MANAGERS’ DISCUSSION (UNAUDITED)

Royce Micro-Cap Trust (RMT)

 

  

Chuck Royce, Jim Stoeffel,
Brendan Hartmann

 

FUND PERFORMANCE

For the year-to-date period ended 6/30/21, Royce Micro-Cap Trust (RMT) rose 21.1% on a net asset value (NAV) basis and 26.2% based on market price versus respective gains of 17.5% and 29.0% for its unleveraged benchmarks, the Russell 2000 and Russell Microcap Indexes, for the same period. The Fund’s longer-term relative advantages were substantial. RMT beat the Russell 2000 on an NAV basis for the one-, three-, five-, 10-, 15-, 20-, 25-year, and since inception (12/14/93) periods ended 6/30/21—and missed only for the 15-year period based on market price. The Fund also outperformed the micro-cap index for the three-, five-, 10-, 15-, and 20-year periods ended 6/30/21 on both an NAV and market price basis—while also beating the Russell Microcap for the one-year period based on market price. (Data for the Russell Microcap only goes back to 2000.)

 

WHAT WORKED… AND WHAT DIDN’T

For the year-to-date period ended 6/30/21, all 11 equity sectors in which the Fund held investments finished in the black. The biggest positive contributions came from Information Technology, Industrials, and Consumer Discretionary, while Utilities, Real Estate, and Consumer Staples had the smallest positive effect. At the industry level, the top contributors were semiconductors & semiconductor equipment (Information Technology), specialty retail (Consumer Discretionary), and health care providers & services (Health Care). The three biggest detracting industries, on the other hand, were biotechnology (Health Care), insurance (Financials), and interactive media & services (Communication Services).

RMT’s top contributor at the position level was AutoCanada, a North American automobile business that sells multiple brands and operates 50 franchised dealerships in Canada, as well as a group in Illinois. In early May, the company reported record-setting revenue and earnings along with a ninth consecutive quarter of outracing the Canadian new vehicle retail market, though AutoCanada’s used vehicle and F&I (Finance & Insurance) segments were the key drivers behind 1Q21’s improved earnings. Next came Chicken Soup for the Soul Entertainment, a media company that produces, develops, and distributes television series, video content, reality shows, and other programming via online and mobile channels. The company has already established a significant presence in the growing AVOD—Advertising-Based Video on Demand—market, in which consumers access free content that’s supported by revenues from various ads, such as sponsored content. Investors were attracted to its promising early growth as well as its position as the only free service with original long-form programming and first-run movies.

The top detractor at the position level was CIRCOR International, which manufactures and distributes valves and fluid control products and services designed to optimize the efficiency and ensure the safety of fluid-control systems across a range of applications in several different end markets. Its shares began to slump in March after the company reported lackluster results for fiscal 4Q20, driven by declines in the commercial industries it serves and some sizable defense program orders being pushed further into 2021. Confident in its longer-term prospects, especially in light of its critical role in enhancing efficiency in a very specific niche, we added a modest number of shares in the first half, making CIRCOR a top-10 position at the end of June. Biopharmaceutical software provider Simulations Plus came next as its shares felt the negative effects of delays and cancellations in its consulting business. While consulting and services represent less revenue than its higher margin software business, we would expect any fundamental shortfall in a higher-multiple stock to meet some selling pressure. So while its decline was a short-term disappointment, we added to our position as we expect its services business to ultimately rebound while remaining constructive on the ongoing strength of the company’s software sales.

Relative to the Russell 2000 for the year-to-date period, both savvy stock selection and sector allocation decisions were additive. Helping most at the sector level was a combination of superior stock picking and lower exposure to the index’s lagging Health Care sector. Stock selection also lifted relative results in Information Technology and Industrials. Conversely, stock picking miscues hurt in Financials and Materials, as did our lower weighting in the rebounding Consumer Discretionary sector.

 

         
  Top Contributors to Performance
Year-to-Date Through 6/30/21 (%)1		   Top Detractors from Performance
Year-to-Date Through 6/30/21 (%)2		  
         
  AutoCanada 1.74   CIRCOR International -0.23  
  Chicken Soup For The Soul Entertainment Cl. A 1.01   Simulations Plus -0.20  
  Joint Corp. (The) 0.94   Zealand Pharma -0.19  
  Onto Innovation 0.62   GCM Grosvenor Cl. A -0.18  
  Transcat 0.61   Mesa Laboratories -0.15  
  1 Includes dividends    

2 Net of dividends

    
             

 

CURRENT POSITIONING AND OUTLOOK

Many cyclical sectors began to lag the Russell 2000 in mid-May as the yield curve flattened with the decline in the 10-year Treasury yield. These short-term shifts have not altered our constructive stance on the Fund’s economically sensitive micro-cap holdings, however. We remain confident that these cyclical micro caps are poised for a strong run in the coming years, a confidence underscored by current expectations for strong nominal GDP growth in the U.S. this year and next coupled with an accommodative Fed and attractive relative valuations. Equally important, we remain excited about the opportunities in the micro-cap space, which remains a somewhat under-the-radar asset class with a large number of fundamentally strong companies in evolving industries.

 

22 2021 Semiannual Report to Stockholders

 

 

 

 

 

PERFORMANCE AND PORTFOLIO REVIEW (UNAUDITED) SYMBOLS   MARKET PRICE RMT NAV XOTCX

 

 

 

Performance

Average Annual Total Return (%) Through 6/30/21

 

  JAN-JUN 20211 1-YR 3-YR 5-YR 10-YR 15-YR 20-YR 25-YR SINCE INCEPTION (12/14/93)
RMT (NAV) 21.12 72.54 17.54 18.99 13.31 9.82 10.86 11.52 11.87

1 Not Annualized

 

 

 

Market Price Performance History Since Inception (12/14/93)

Cumulative Performance of Investment 1

 

  1-YR 5-YR 10-YR 15-YR 20-YR SINCE INCEPTION (12/14/93)
RMT 83.4% 151.3% 260.2% 259.1% 730.8% 1806.0%

 

 

 

¹Reflects the cumulative performance experience of a continuous common stockholder who purchased one share at inception ($7.50 IPO), reinvested all distributions and fully participated in the primary subscription of the Fund’s 1994 rights offering.
²Reflects the actual month-end market price movement of one share as it has traded on NYSE and, prior to 12/1/03, on the Nasdaq.

 

 

 

 

 

The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 60 for additional information.

 

 

 

Top 10 Positions  
% of Net Assets  
   
PAR Technology 3.1
AutoCanada 2.9
Mesa Laboratories 2.3
nLIGHT 1.8
Onto Innovation 1.5
Transcat 1.5
Chicken Soup For The Soul Entertainment Cl. A 1.5
Major Drilling Group International 1.4
Joint Corp. (The) 1.2
CIRCOR International 1.2

 

 

 

Portfolio Sector Breakdown  
% of Net Assets  
   
Information Technology 23.3
Industrials 18.7
Health Care 15.1
Financials 12.1
Consumer Discretionary 10.2
Energy 5.8
Materials 5.2
Communication Services 5.0
Real Estate 2.5
Consumer Staples 1.7
Utilities 0.3
Cash and Cash Equivalents, Net of Outstanding Line of Credit 0.1

 

 

 

Calendar Year Total Returns (%)  
   
YEAR RMT 
2020 33.6
2019 22.4
2018 -11.6
2017 17.7
2016 22.0
2015 -11.7
2014 3.5
2013 44.5
2012 17.3
2011 -7.7
2010 28.5
2009 46.5
2008 -45.5
2007 0.6
2006 22.5

 

 

 

Portfolio Diagnostics  
Fund Net Assets $615 million
Number of Holdings 281
Turnover Rate 8%
Net Asset Value $13.87
Market Price $12.40
Average Market Capitalization1 $811 million
Weighted Average P/B Ratio 2 2.8x
Active Share 3 95%
U.S. Investments (% of Net Assets) 78.2%
Non-U.S. Investments (% of Net Assets) 21.7%
   
1Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.
2Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.
3Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

 

Important Performance and Risk Information

All performance information reflects past performance, is presented on a total return basis, net of the Fund’s investment advisory fee, 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.royceinvest.com. Certain immaterial adjustments were made to the net assets of Royce Micro-Cap Trust at 6/30/19 for financial reporting purposes, and as a result the net asset value originally calculated on that date and the total return based on that net asset value differs from the adjusted net asset value and total return reported in the Financial Highlights. 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 investments in securities of larger-cap companies. The Fund’s broadly diversified portfolio does not ensure a profit or guarantee against loss. From time to time, the Fund may invest a significant portion of its net assets in foreign securities, which may involve political, economic, currency and other risks not encountered in U.S. investments. Regarding the “Top Contributors” and “Top Detractors” 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 2021.

 

2021 Semiannual Report to Stockholders  |  23

 

 

 

 

     

 

Royce Micro-Cap Trust

 

 

Schedule of Investments

Common Stocks – 99.9%

 

   SHARES    VALUE  
       
COMMUNICATION SERVICES – 5.0%          
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.5%          
Ooma 1   57,000   $1,075,020 
ORBCOMM 1   65,000    730,600 
†Radius Global Infrastructure Cl. A 1   79,192    1,148,284 
         2,953,904 
ENTERTAINMENT - 2.3%          
Chicken Soup For The Soul Entertainment Cl. A 1   219,130    9,071,982 
Gaia Cl. A 1,2,3   100,000    1,099,000 
IMAX Corporation 1   186,600    4,011,900 
†Motorsport Games Cl. A 1   4,700    65,800 
         14,248,682 
INTERACTIVE MEDIA & SERVICES - 0.6%          
QuinStreet 1   198,600    3,689,988 
MEDIA - 1.6%          
comScore 1   297,195    1,485,975 
Magnite 1   206,900    7,001,496 
†Taboola.com 1   112,000    1,159,200 
         9,646,671 
Total (Cost $15,884,545)        30,539,245 
           
CONSUMER DISCRETIONARY – 10.2%          
AUTO COMPONENTS - 1.7%          
Motorcar Parts of America 1   54,800    1,229,712 
Patrick Industries   17,250    1,259,250 
Sebang Global Battery   50,500    4,349,776 
Standard Motor Products   47,460    2,057,391 
Stoneridge 1,2   57,600    1,699,200 
         10,595,329 
DISTRIBUTORS - 0.1%          
Uni-Select 1   40,000    529,526 
DIVERSIFIED CONSUMER SERVICES - 0.8%          
Aspen Group 1   141,520    922,710 
Park Lawn   50,000    1,344,789 
Universal Technical Institute 1   445,000    2,888,050 
         5,155,549 
HOTELS, RESTAURANTS & LEISURE - 1.7%          
Century Casinos 1   303,300    4,073,319 
GAN 1   44,700    734,868 
Inspired Entertainment 1   50,000    637,500 
Lindblad Expeditions Holdings 1   320,968    5,138,698 
         10,584,385 
HOUSEHOLD DURABLES - 1.0%          
Cavco Industries 1,2   8,600    1,910,834 
Legacy Housing 1   144,900    2,450,259 
Lifetime Brands 2   119,294    1,785,831 
         6,146,924 
INTERNET & DIRECT MARKETING RETAIL - 0.2%          
CarParts.com 1   50,000    1,018,000 
LEISURE PRODUCTS - 0.7%          
Clarus Corporation   140,603    3,613,497 
MasterCraft Boat Holdings 1   14,800    389,092 
         4,002,589 
SPECIALTY RETAIL - 3.6%          
AutoCanada 1   440,000    17,726,363 
Barnes & Noble Education 1   80,000    576,800 
Lazydays Holdings 1   30,000    660,000 
OneWater Marine Cl. A   27,845    1,170,325 
Shoe Carnival 2   18,216    1,304,084 

Stage Stores 1,4   15,000   0 
†Tile Shop Holdings 1   76,700    617,435 
         22,055,007 
TEXTILES, APPAREL & LUXURY GOODS - 0.4%          
J G Boswell Company 5   2,490    2,016,402 
YGM Trading 1   2,564,600    677,128 
         2,693,530 
Total (Cost $37,049,734)        62,780,839 
           
CONSUMER STAPLES – 1.7%          
BEVERAGES - 0.3%          
MGP Ingredients   20,000    1,352,800 
Primo Water   26,791    448,213 
         1,801,013 
FOOD PRODUCTS - 1.4%          
†CubicFarm Systems 1   400,000    458,212 
John B. Sanfilippo & Son 2,3   7,900    699,703 
Landec Corporation 1,2   75,610    850,613 
Seneca Foods Cl. A 1   81,087    4,141,924 
Seneca Foods Cl. B 1   40,400    2,115,950 
SunOpta 1   50,000    612,000 
         8,878,402 
Total (Cost $4,536,826)        10,679,415 
           
ENERGY – 5.8%          
ENERGY EQUIPMENT & SERVICES - 3.1%          
Aspen Aerogels 1   175,885    5,262,479 
Bristow Group 1,2   177,900    4,556,019 
Computer Modelling Group   594,875    2,452,252 
North American Construction Group   50,000    759,000 
Pason Systems   202,500    1,458,797 
SEACOR Marine Holdings 1,2   216,957    956,780 
TerraVest Industries   237,800    3,725,457 
         19,170,784 
OIL, GAS & CONSUMABLE FUELS - 2.7%          
Ardmore Shipping 1   90,500    381,910 
Brigham Minerals Cl. A   220,000    4,683,800 
Dorchester Minerals L.P.   153,963    2,594,276 
Dorian LPG 1   163,138    2,303,509 
GeoPark   69,218    875,608 
Navigator Holdings 1   175,000    1,916,250 
Sabine Royalty Trust 2   82,648    3,332,367 
StealthGas 1   229,664    649,949 
         16,737,669 
Total (Cost $32,703,487)        35,908,453 
           
FINANCIALS – 12.1%          
BANKS - 1.9%          
Bryn Mawr Bank   25,000    1,054,750 
Caribbean Investment Holdings 1   475,635    213,832 
Chemung Financial   31,000    1,373,610 
CNB Financial   20,600    470,092 
†HarborOne Bancorp   35,100    503,334 
HBT Financial   46,300    806,083 
Live Oak Bancshares 2   30,900    1,823,100 
Midway Investments 1,4   735,647    0 
†Shore Bancshares   29,100    487,425 
†Southern First Bancshares 1   9,300    475,788 
TriState Capital Holdings 1   42,800    872,692 

 

24 | 2021 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

 

 

 

 

 

 

June 30, 2021 (unaudited)

 

 

Schedule of Investments (continued)          

 

   SHARES    VALUE  
       
FINANCIALS (continued)          
BANKS (continued)          
†Virginia National Bankshares   89,910   $3,496,600 
         11,577,306 
CAPITAL MARKETS - 7.3%          
ASA Gold and Precious Metals   171,150    3,691,706 
B. Riley Financial   24,700    1,864,850 
Barings BDC   215,300    2,273,568 
Bolsa Mexicana de Valores   1,068,000    2,357,380 
Canaccord Genuity Group   203,300    2,227,181 
Donnelley Financial Solutions 1   50,000    1,650,000 
Fiera Capital Cl. A   78,000    684,608 
GCM Grosvenor Cl. A   380,800    3,967,936 
Manning & Napier Cl. A 1   136,600    1,075,042 
Silvercrest Asset Management Group Cl. A   224,100    3,370,464 
Sprott   176,453    6,945,097 
StoneX Group 1,2,3   69,327    4,206,069 
Tel Aviv Stock Exchange   343,000    2,118,927 
U.S. Global Investors Cl. A 2   439,454    2,720,220 
Urbana Corporation   237,600    651,694 
Value Line 2,3   74,574    2,311,794 
VNV Global 1   100,000    1,114,149 
Warsaw Stock Exchange   52,900    660,938 
Westaim Corporation (The) 1   500,000    1,076,960 
         44,968,583 
CONSUMER FINANCE - 0.2%          
EZCORP Cl. A 1,2,3   201,000    1,212,030 
DIVERSIFIED FINANCIAL SERVICES - 0.7%          
ECN Capital   556,000    4,171,345 
Waterloo Investment Holdings 1,4   806,000    201,500 
         4,372,845 
INSURANCE - 1.1%          
Hallmark Financial Services 1,2   114,000    507,300 
†Trean Insurance Group 1   43,300    652,964 
Trupanion 1,2   50,070    5,763,057 
         6,923,321 
INVESTMENT COMPANIES - 0.8%          
†ACE Convergence Acquisition Cl. A 1   157,800    1,570,899 
†Cerberus Telecom Acquisition Cl. A 1   166,800    1,656,324 
†LiveVox Holdings Cl. A 1   113,929    951,307 
†Spartan Acquisition Corp. II Cl. A 1   80,754    806,733 
         4,985,263 
THRIFTS & MORTGAGE FINANCE - 0.1%          
†OP Bancorp   45,700    459,742 
Total (Cost $52,105,610)        74,499,090 
           
HEALTH CARE – 15.1%          
BIOTECHNOLOGY - 2.3%          
Arcturus Therapeutics Holdings 1,2   79,836    2,701,650 
CareDx 1   18,900    1,729,728 
†Catalyst Pharmaceuticals 1   297,100    1,708,325 
Larimar Therapeutics 1,2   28,064    275,589 
MeiraGTx Holdings 1   114,400    1,773,200 
Neoleukin Therapeutics 1,2   145,397    1,342,014 
Zealand Pharma 1   153,015    4,518,777 
         14,049,283 
HEALTH CARE EQUIPMENT & SUPPLIES - 6.6%          
Apyx Medical 1   35,800    369,098 
AtriCure 1,2   15,000    1,189,950 
Atrion Corporation 2   4,689    2,911,541 

BioLife Solutions 1   33,700   1,499,987 
Chembio Diagnostics 1   135,800    403,326 
†ClearPoint Neuro 1   90,900    1,735,281 
CryoLife 1   15,200    431,680 
Cutera 1   62,700    3,074,181 
Mesa Laboratories 2   52,000    14,100,840 
Misonix 1   95,500    2,118,190 
OraSure Technologies 1,2   50,000    507,000 
OrthoPediatrics Corp. 1   6,500    410,670 
Profound Medical 1   85,800    1,397,468 
Repro Med Systems 1   193,300    894,979 
Semler Scientific 1,5   22,400    2,504,096 
Surmodics 1,2,3   85,300    4,627,525 
Utah Medical Products   31,350    2,666,004 
         40,841,816 
HEALTH CARE PROVIDERS & SERVICES - 2.8%          
Cross Country Healthcare 1   130,800    2,159,508 
Great Elm Group 1   566,700    1,269,408 
†Hims & Hers Health Cl. A 1,2,3   200,000    2,178,000 
Joint Corp. (The) 1   88,384    7,417,185 
National Research 2   46,668    2,142,061 
PetIQ Cl. A 1,2   25,000    965,000 
Sharps Compliance 1   124,700    1,284,410 
         17,415,572 
HEALTH CARE TECHNOLOGY - 1.6%          
OptimizeRx Corporation 1   25,200    1,559,880 
Simulations Plus 2   85,570    4,698,649 
Tabula Rasa HealthCare 1,2   38,400    1,920,000 
Vocera Communications 1   33,100    1,319,035 
         9,497,564 
LIFE SCIENCES TOOLS & SERVICES - 1.5%          
Harvard Bioscience 1   333,400    2,777,222 
Quanterix Corporation 1   111,700    6,552,322 
         9,329,544 
PHARMACEUTICALS - 0.3%          
Knight Therapeutics 1   187,000    791,989 
Theravance Biopharma 1,2   59,009    856,811 
         1,648,800 
Total (Cost $48,762,565)        92,782,579 
           
INDUSTRIALS – 18.7%          
AEROSPACE & DEFENSE - 1.1%          
Astronics Corporation 1   26,129    457,519 
CPI Aerostructures 1   189,700    673,435 
Innovative Solutions and Support   78,828    494,251 
SIFCO Industries 1   45,800    461,206 
Virgin Galactic Holdings 1,2   102,850    4,731,100 
         6,817,511 
AIR FREIGHT & LOGISTICS - 0.2%          
Atlas Air Worldwide Holdings 1   10,000    681,100 
Echo Global Logistics 1   20,000    614,800 
         1,295,900 
BUILDING PRODUCTS - 0.9%          
Burnham Holdings Cl. A 5   117,000    1,616,940 
CSW Industrials 2   20,000    2,369,200 
Insteel Industries 2,3   44,200    1,421,030 
Quanex Building Products   9,900    245,916 
         5,653,086 

 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS 2021 Semiannual Report to Stockholders | 25

 

 

 

 

 

 

Royce Micro-Cap Trust

 

 

Schedule of Investments (continued)            

 

   SHARES    VALUE  
       
INDUSTRIALS (continued)          
COMMERCIAL SERVICES & SUPPLIES - 1.3%          
Acme United   25,000   $1,114,000 
Atento 1   21,742    557,465 
Civeo Corporation 1   37,499    667,482 
Heritage-Crystal Clean 1,2,3   123,001    3,650,670 
Team 1,2   93,300    625,110 
Vidler Water Resouces 1,2   121,200    1,611,960 
         8,226,687 
CONSTRUCTION & ENGINEERING - 3.5%          
Ameresco Cl. A 1   94,400    5,920,768 
Construction Partners Cl. A 1   84,900    2,665,860 
Granite Construction   13,500    560,655 
IES Holdings 1,2   109,100    5,603,376 
Infrastructure and Energy Alternatives 1   275,100    3,537,786 
Matrix Service 1,2   8,200    86,100 
Northwest Pipe 1,2   59,400    1,678,050 
NV5 Global 1   13,400    1,266,434 
         21,319,029 
ELECTRICAL EQUIPMENT - 1.0%          
American Superconductor 1   104,225    1,812,473 
Encore Wire 2   3,307    250,638 
LSI Industries   415,740    3,330,077 
Powell Industries 2   21,400    662,330 
Power Solutions International 1,2,5   21,100    128,710 
         6,184,228 
MACHINERY - 4.2%          
CIRCOR International 1,2,3   220,421    7,185,724 
Graham Corporation 2   149,850    2,061,936 
†H2O Innovation 1   437,300    797,272 
Hurco Companies 2   36,866    1,290,310 
L. B. Foster Company 1,2   95,300    1,776,392 
Lindsay Corporation 2   41,600    6,875,648 
Luxfer Holdings 2   12,900    287,025 
NN 1   90,600    665,910 
Shyft Group (The)   17,200    643,452 
Titan International 1   212,200    1,799,456 
Wabash National   6,400    102,400 
Westport Fuel Systems 1   412,500    2,190,375 
         25,675,900 
MARINE - 1.4%          
Algoma Central   40,000    529,203 
Clarkson   98,900    4,364,187 
Eagle Bulk Shipping 1,2   81,428    3,853,173 
         8,746,563 
PROFESSIONAL SERVICES - 1.1%          
Acacia Research 1,2   190,000    1,284,400 
Barrett Business Services   2,600    188,786 
Forrester Research 1   45,900    2,102,220 
Franklin Covey 1,2   40,100    1,297,235 
GP Strategies 1   43,700    686,964 
Resources Connection   59,300    851,548 
         6,411,153 
ROAD & RAIL - 0.9%          
Covenant Logistics Group Cl. A 1   55,900    1,156,012 
HyreCar 1   108,000    2,259,360 
Patriot Transportation Holding 2   55,764    627,903 
Universal Logistics Holdings 2   75,200    1,752,160 
         5,795,435 

TRADING COMPANIES & DISTRIBUTORS - 3.1%          
†BlueLinx Holdings 1   28,000   1,407,840 
EVI Industries 1,2   217,709    6,182,936 
Lawson Products 1   36,500    1,953,115 
Transcat 1   162,207    9,166,317 
         18,710,208 
Total (Cost $74,197,776)        114,835,700 
           
INFORMATION TECHNOLOGY – 23.3%          
COMMUNICATIONS EQUIPMENT - 1.0%          
Clearfield 1   85,200    3,190,740 
Digi International 1   71,600    1,439,876 
Genasys 1   38,300    209,884 
Ituran Location and Control   50,000    1,362,000 
         6,202,500 
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 8.0%          
Bel Fuse Cl. A   67,705    969,536 
Fabrinet 1   2,200    210,914 
FARO Technologies 1,2   65,200    5,070,604 
HollySys Automation Technologies   51,900    773,310 
Luna Innovations 1   491,478    5,322,707 
nLIGHT 1,2,3   306,100    11,105,308 
Novanta 1   3,400    458,184 
PAR Technology 1,2   268,924    18,808,544 
PC Connection 2   14,000    647,780 
PowerFleet 1   230,500    1,659,600 
Richardson Electronics   316,900    2,633,439 
Vishay Precision Group 1   41,800    1,422,872 
         49,082,798 
IT SERVICES - 0.5%          
Cantaloupe 1,2   90,500    1,073,330 
Computer Task Group 1   84,800    820,016 
Hackett Group (The) 2   27,700    499,154 
International Money Express 1   20,000    297,000 
†Liberated Syndication 1,5   98,000    382,200 
         3,071,700 
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 7.9%          
Alpha & Omega Semiconductor 1   17,900    543,981 
Amtech Systems 1,2,3   92,184    888,654 
Axcelis Technologies 1   5,400    218,268 
AXT 1   100,000    1,098,000 
Brooks Automation 2   37,800    3,601,584 
Camtek 1   101,700    3,835,107 
Cohu 1   38,990    1,434,442 
CyberOptics Corporation 1   64,900    2,658,304 
FormFactor 1   22,869    833,804 
Ichor Holdings 1   25,700    1,382,660 
Kulicke & Soffa Industries 2   77,200    4,724,640 
Nova Measuring Instruments 1,2   59,500    6,121,955 
NVE Corporation   14,400    1,066,320 
Onto Innovation 1,2,3   127,550    9,316,252 
PDF Solutions 1   189,500    3,445,110 
Photronics 1   240,800    3,180,968 
†Sequans Communications ADR 1   31,800    191,436 
Silicon Motion Technology ADR   4,700    301,270 
Ultra Clean Holdings 1,2   72,200    3,878,584 
         48,721,339 
SOFTWARE - 4.5%          
Agilysys 1,2   96,100    5,465,207 

 

26 | 2021 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

 

 

 

 

 

  

June 30, 2021 (unaudited)

 

 

Schedule of Investments (continued)

 

   SHARES   VALUE 
         
INFORMATION TECHNOLOGY (continued)          
SOFTWARE (continued)          
American Software Cl. A 2   80,252   $1,762,334 
AudioEye 1   50,000    839,500 
Digital Turbine 1   89,700    6,819,891 
E2open Parent Holdings Cl. A 1   112,200    1,281,324 
†Mitek Systems 1   64,000    1,232,640 
Model N 1   25,000    856,750 
OneSpan 1   5,600    143,024 
Optiva 1   28,000    607,615 
QAD Cl. A   4,662    405,687 
RealNetworks 1   100,171    233,399 
SharpSpring 1   104,700    1,768,383 
Upland Software 1   148,200    6,101,394 
         27,517,148 
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 1.4%          
AstroNova 1   114,600    1,595,232 
Avid Technology 1   63,500    2,486,025 
Intevac 1   539,400    3,635,556 
TransAct Technologies 1   40,900    561,557 
         8,278,370 
Total (Cost $68,609,882)        142,873,855 
           
MATERIALS – 5.2%          
CHEMICALS - 0.2%          
LSB Industries 1   135,800    821,590 
Rayonier Advanced Materials 1   50,000    334,500 
         1,156,090 
CONSTRUCTION MATERIALS - 0.2%          
Monarch Cement 5   8,150    912,800 
CONTAINERS & PACKAGING - 0.3%          
UFP Technologies 1,2   36,445    2,092,672 
METALS & MINING - 4.5%          
Alamos Gold Cl. A   261,044    1,994,262 
Altius Minerals   113,000    1,552,428 
Ampco-Pittsburgh 1   79,002    479,542 
Haynes International 2   84,400    2,986,072 
Imdex   569,466    871,225 
MAG Silver 1   154,050    3,222,726 
Major Drilling Group International 1   1,204,084    8,324,460 
Olympic Steel   35,000    1,028,650 
Pretium Resources 1   80,000    765,408 
Sandstorm Gold 1   810,000    6,390,900 
Universal Stainless & Alloy Products 1,2   33,620    338,553 
         27,954,226 
Total (Cost $23,272,337)        32,115,788 
         
REAL ESTATE – 2.5%          
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITS) - 0.3%          
Postal Realty Trust Cl. A   114,000    2,079,360 
REAL ESTATE MANAGEMENT & DEVELOPMENT - 2.2%          
Altus Group   87,000    4,032,067 
Dundee Corporation Cl. A 1   413,200    523,333 
Marcus & Millichap 1,2   4,900    190,463 
Real Matters 1   229,500    3,310,310 
RMR Group (The) Cl. A 2   75,400    2,913,456 
Tejon Ranch 1,2   154,994    2,357,459 
         13,327,088 
Total (Cost $14,607,101)        15,406,448 
           
UTILITIES – 0.3%          
WATER UTILITIES - 0.3%          
Global Water Resources   106,000    1,810,480 
Total (Cost $678,400)        1,810,480 
           
TOTAL COMMON STOCKS          
(Cost $372,408,263)        614,231,892 
           
REPURCHASE AGREEMENT– 3.4%          

Fixed Income Clearing Corporation, 0.00% dated 6/30/21, due 7/1/21, maturity value

$20,747,953 (collateralized by obligations of various U.S. Government Agencies, 1.25%

due 6/30/28, valued at $21,162,919)

 
(Cost $20,747,953)        20,747,953 
           
TOTAL INVESTMENTS – 103.3%          
(Cost $393,156,216)        634,979,845 
           
LIABILITIES LESS CASH AND OTHER ASSETS – (3.3)%        (20,344,642)
           
NET ASSETS – 100.0%       $614,635,203 

 

ADR – American Depository Receipt

†New additions in 2021.
1Non-income producing.
2All or a portion of these securities were pledged as collateral in connection with the Fund’s revolving credit agreement at June 30, 2021. Total market value of pledged securities at June 30, 2021, was $71,834,492.
3At June 30, 2021, a portion of these securities were rehypothecated in connection with the Fund’s revolving credit agreement in the aggregate amount of $19,442,145.
4Securities for which market quotations are not readily available represent 0.0% 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.
5These securities are defined as Level 2 securities due to fair value being based on quoted prices for similar securities. See Notes to Financial Statements.

 

Bold indicates the Fund’s 20 largest equity holdings in terms of June 30, 2021, market value.

 

TAX INFORMATION: The cost of total investments for Federal income tax purposes was $393,483,166. At June 30, 2021, net unrealized appreciation for all securities was $241,496,679 consisting of aggregate gross unrealized appreciation of $276,411,266 and aggregate gross unrealized depreciation of $34,914,587. The primary cause of the 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 2021 Semiannual Report to Stockholders  |  27

 

 

 

 

 

  

Royce Micro-Cap Trust June 30, 2021 (unaudited)

 

 

Statement of Assets and Liabilities

 

ASSETS:    
Investments at value  $614,231,892 
Repurchase agreements (at cost and value)   20,747,953 
Cash   7,607 
Foreign currency (cost $21,900)   21,893 
Receivable for investments sold   2,250,287 
Receivable for dividends   155,409 
Prepaid expenses and other assets   36,034 
Total Assets   637,451,075 
LIABILITIES:     
Revolving credit agreement   22,000,000 
Payable for investments purchased   152,536 
Payable for investment advisory fee   530,670 
Payable for directors’ fees   19,125 
Payable for interest expense   19,847 
Accrued expenses   93,694 
Total Liabilities   22,815,872 
Net Assets  $614,635,203 
ANALYSIS OF NET ASSETS:     
Paid-in capital - $0.001 par value per share; 44,326,402 shares outstanding (150,000,000 shares authorized)  $372,893,880 
Total distributable earnings (loss)   257,108,560 
Quarterly distributions   (15,367,237)
Net Assets (net asset value per share - $13.87)  $614,635,203 
Investments at identified cost  $372,408,263 

 

28  |  2021 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

 

 

 

 

 

  

Royce Micro-Cap Trust Six Months Ended June 30, 2021 (unaudited)

 

 

Statement of Operations

 

INVESTMENT INCOME:    
INCOME:    
Dividends  $2,263,553 
Foreign withholding tax   (80,777)
Rehypothecation income   26,491 
Total income   2,209,267 
EXPENSES:     
Investment advisory fees   2,871,313 
Interest expense   124,902 
Administrative and office facilities   103,411 
Stockholder reports   51,934 
Directors’ fees   42,474 
Custody and transfer agent fees   40,411 
Professional fees   37,595 
Other expenses   31,596 
Total expenses   3,303,636 
Compensating balance credits   (22)
Net expenses   3,303,614 
Net investment income (loss)   (1,094,347)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:     
NET REALIZED GAIN (LOSS):     
Investments   20,710,284 
Foreign currency transactions   29,742 
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION):     
Investments   87,754,101 
Other assets and liabilities denominated in foreign currency   (1,684)
Net realized and unrealized gain (loss) on investments and foreign currency   108,492,443 
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS  $107,398,096 

 

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Royce Micro-Cap Trust

 

 

Statement of Changes in Net Assets

 

   SIX MONTHS ENDED
6/30/21
(UNAUDITED)		   YEAR ENDED 12/31/20 
         
INVESTMENT OPERATIONS:          
Net investment income (loss)  $(1,094,347)  $(1,313,986)
Net realized gain (loss) on investments and foreign currency   20,740,026    27,280,534 
Net change in unrealized appreciation (depreciation) on investments and foreign currency   87,752,417    99,194,387 
Net increase (decrease) in net assets from investment operations   107,398,096    125,160,935 
DISTRIBUTIONS:          
Quarterly distributions   (15,367,237)   (26,108,860)
Total distributions   (15,367,237)   (26,108,860)
CAPITAL STOCK TRANSACTIONS:          
Reinvestment of distributions   6,688,412    12,056,861 
Total capital stock transactions   6,688,412    12,056,861 
Net Increase (Decrease) In Net Assets   98,719,271    111,108,936 
NET ASSETS:          
Beginning of period   515,915,932    404,806,996 
End of period  $614,635,203   $515,915,932 

 

30  |  2021 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

 

 

 

 

 

  

Royce Micro-Cap Trust Six Months Ended June 30, 2021 (unaudited)

 

 

Statement of Cash Flows

 

CASH FLOWS FROM OPERATING ACTIVITIES:    
Net increase (decrease) in net assets from investment operations  $107,398,096 
Adjustments to reconcile net increase (decrease) in net assets from investment operations to net cash provided by operating activities:     
Purchases of long-term investments   (52,079,030)
Proceeds from sales and maturities of long-term investments   75,490,316 
Net purchases, sales and maturities of short-term investments   (13,771,797)
Net (increase) decrease in dividends receivable and other assets   17,084 
Net increase (decrease) in interest expense payable, accrued expenses and other liabilities   108,379 
Net change in unrealized appreciation (depreciation) on investments   (87,754,101)
Net realized gain (loss) on investments   (20,710,284)
Net cash provided by operating activities   8,698,663 
CASH FLOWS FROM FINANCING ACTIVITIES:     
Distributions   (15,367,237)
Reinvestment of distributions   6,688,412 
Net cash used for financing activities   (8,678,825)
INCREASE (DECREASE) IN CASH:   19,838 
Cash and foreign currency at beginning of period   9,662 
Cash and foreign currency at end of period  $29,500 

 

Supplemental disclosure of cash flow information: 

For the six months ended June 30, 2021, the Fund paid $127,458 in interest expense.

 

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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  YEARS ENDED
   ENDED 6/30/21
(UNAUDITED)		  12/31/20   12/31/19   12/31/18   12/31/17   12/31/16
Net Asset Value, Beginning of Period  $11.79   $9.63   $8.53   $10.48   $9.63   $8.59 
INVESTMENT OPERATIONS:                              
Net investment income (loss)   (0.02)   (0.03)   0.01    0.01    0.06    0.03 
Net realized and unrealized gain (loss) on investments and foreign currency   2.47    2.86    1.81    (1.18)   1.52    1.70 
Net increase (decrease) in net assets from investment operations   2.45    2.83    1.82    (1.17)   1.58    1.73 
DISTRIBUTIONS:                              
Net investment income   – 1   (0.08)   (0.03)   (0.00)   (0.06)   (0.08)
Net realized gain on investments and foreign currency   (0.21)1   (0.53)   (0.65)   (0.75)   (0.63)   (0.56)
Return of capital   (0.14)1   –    –    –    –    – 
Total distributions   (0.35)   (0.61)   (0.68)   (0.75)   (0.69)   (0.64)
CAPITAL STOCK TRANSACTIONS:                              
Effect of reinvestment of distributions by Common Stockholders   (0.02)   (0.06)   (0.04)   (0.03)   (0.04)   (0.05)
Total capital stock transactions   (0.02)   (0.06)   (0.04)   (0.03)   (0.04)   (0.05)
Net Asset Value, End of Period  $13.87   $11.79   $9.63   $8.53   $10.48   $9.63 
Market Value, End of Period  $12.40   $10.12   $8.54   $7.42   $9.44   $8.16 
TOTAL RETURN:2                              
Net Asset Value   21.12%3   33.60%   22.44%   (11.62)%   17.67%   21.98%
Market Value   26.16%3   29.32%   24.82%   (14.65)%   25.09%   22.30%
RATIOS BASED ON AVERAGE NET ASSETS:                              
Investment advisory fee expense4   0.98%5   1.19%   0.85%   0.92%6   0.49%   0.87%
Other operating expenses   0.15%5   0.24%   0.35%   0.43%   0.40%   0.39%
Total expenses (net)   1.13%5   1.43%   1.20%   1.35%   0.89%   1.26%
Expenses excluding interest expense   1.09%5   1.34%   1.01%   1.05%   0.62%   1.02%
Expenses prior to balance credits   1.13%5   1.43%   1.20%   1.35%   0.89%   1.26%
Net investment income (loss)   (0.38)%5   (0.34)%   0.10%   0.10%   0.56%   0.32%
SUPPLEMENTAL DATA:                              
Net Assets, End of Period (in thousands)  $614,635   $515,916   $404,807   $345,499   $409,905   $363,701 
Portfolio Turnover Rate   8%   17%   15%   21%   15%   26%
REVOLVING CREDIT AGREEMENT:                              
Asset coverage   2894%   2445%   1940%   1670%   1011%   908%
Asset coverage per $1,000  $28,938   $24,451   $19,400   $16,705   $10,109   $9,082 

 

1Amounts are subject to change and recharacterization at year end.
2The 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. 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, sale and dividend reinvestment dates instead of market value.
3Not annualized
4The 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 over a 6-month basis for the six months ended 6/30/21, and a 12-month basis for the years shown.
5Annualized
6Includes the impact of the adjustment of prior period’s performance fees of 0.06%.

 

32  |  2021 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

 

 

 

 

 

  

Royce Micro-Cap Trust

 

Notes to Financial Statements (unaudited)

 

Summary of Significant Accounting Policies

Royce Micro-Cap Trust, Inc. (the “Fund”), is a diversified closed-end investment company that was incorporated under the laws of the State of Maryland on September 9, 1993. 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.

The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 “Financial Services-Investment Companies.”

Royce & Associates, LP, the Fund’s investment adviser, is a majority-owned subsidiary of Franklin Resources, Inc. and primarily conducts business using the name Royce Investment Partners (“Royce”).

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 highest 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 in accordance with the provisions of the 1940 Act, under procedures approved by the Fund’s Board of Directors, and are reported as Level 3 securities. As a general principle, the fair value of a security is the amount which the Fund might reasonably expect to receive for the security upon its current sale. However, in light of the judgment involved in fair valuations, there can be no assurance that a fair value assigned to a particular security will be the amount which the Fund might be able to receive upon its current sale. 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. Level 2 securities with values based on quoted prices for similar securities are noted in the Schedule of Investments.
 Level 3 – significant unobservable inputs (including last trade price before trading was suspended, or at a discount thereto for lack of marketability or otherwise, market price information regarding other securities, information received from the company and/or published documents, including SEC filings and financial statements, or other publicly available information).

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, 2021. 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 $606,469,244 $ 7,561,148 $201,500 $614,231,892
Repurchase Agreement – 20,747,953 – 20,747,953
         

 

2021 Semiannual Report to Stockholders | 33

 
 

 

 

  

Royce Micro-Cap Trust

 

Notes to Financial Statements (unaudited) (continued)

 

VALUATION OF INVESTMENTS (continued):

 

Level 3 Reconciliation: 

 

  BALANCE AS OF 12/31/20 SALES CORPORATE ACTIONS REALIZED GAIN (LOSS) UNREALIZED GAIN (LOSS)1 BALANCE AS OF 6/30/21
Common Stocks $201,500 $0 $ – $(704,378) $704,378 $201,500
Warrants     5,000  –    0              –       (5,000)              –

   
1The 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.

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. The remaining contractual maturity of the repurchase agreement held by the Fund at June 30, 2021 is overnight and continuous.

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, other than investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.

The Fund does not isolate that portion of the results of operations resulting from fluctuations in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.

TAXES:

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

DISTRIBUTIONS:

The Fund pays quarterly distributions on the Fund’s Common Stock at the annual rate of 7% 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 1.75% of the rolling average or the distribution required by IRS regulations. Distributions to Common Stockholders are recorded on ex-dividend date. To the extent that distributions in any year 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. Premiums 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 Funds are allocated by Royce under an administration agreement and are included in administrative and office facilities and professional fees.

 

34 | 2021 Semiannual Report to Stockholders

 
 

 

 

  

Royce Micro-Cap Trust

 

Notes to Financial Statements (unaudited) (continued)

 

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 561,614 and 1,745,537 shares of Common Stock as reinvestment of distributions for the six months ended June 30, 2021 and the year ended December 31, 2020, respectively.

Borrowings:

The Fund is party to a revolving credit agreement (the credit agreement) with BNP Paribas Prime Brokerage International, Limited (BNPPI). The Fund pays a commitment fee of 0.50% per annum on the unused portion of the then-current maximum amount that may be borrowed by the Fund under the credit agreement. The credit agreement has a 179-day rolling term that resets daily. The Fund is required to pledge portfolio securities as collateral in an amount up to two times the loan balance outstanding, or as otherwise required by applicable regulatory standards, and has granted a security interest in the securities pledged to, and in favor of, BNPPI as security for the loan balance outstanding. If the Fund fails to meet certain requirements, or comply with other financial covenants set forth in the credit agreement, the Fund may be required to repay immediately, in part or in full, the loan balance outstanding under the credit agreement, which may necessitate the sale of portfolio securities at potentially inopportune times. BNPPI may terminate the credit agreement upon certain ratings downgrades of its corporate parent, which would result in the Fund’s entire loan balance becoming immediately due and payable. The occurrence of such ratings downgrades may necessitate the sale of portfolio securities at potentially inopportune times. BNPPI may also terminate the credit agreement upon sixty (60) calendar days’ prior written notice to the Fund in the event the Fund’s net asset value per share as of the close of business on the last business day of any calendar month declines by thirty-five percent (35%) or more from the Fund’s net asset value per share as of the close of business on the last business day of the immediately preceding calendar month.

The credit agreement also permits, subject to certain conditions, BNPPI to rehypothecate portfolio securities pledged by the Fund up to the amount of the loan balance outstanding. The Fund continues to receive payments in lieu of dividends and interest on rehypothecated securities. The Fund also has the right under the credit agreement to recall the rehypothecated securities from BNPPI on demand. If BNPPI fails to deliver the recalled security in a timely manner, the Fund is compensated by BNPPI for any fees or losses related to the failed delivery or, in the event a recalled security is not returned by BNPPI, the Fund, upon notice to BNPPI, may reduce the loan balance outstanding by the value of the recalled security failed to be returned. The Fund receives a portion of the fees earned by BNPPI in connection with the rehypothecation of portfolio securities.

The current maximum amount the Fund may borrow under the credit agreement is $22,000,000. The Fund has the right to reduce the maximum amount it can borrow under the credit agreement upon one (1) business day’s prior written notice to BNPPI. In addition, the Fund and BNPPI may agree to increase the maximum amount the Fund can borrow under the credit agreement, which amount may not exceed $60,000,000.

As of June 30, 2021, the Fund has outstanding borrowings of $22,000,000. During the six months ended June 30, 2021, the Fund borrowed an average daily balance of $22,000,000 at a weighted average borrowing cost of 1.13%. The maximum amount outstanding during the six months ended June 30, 2021, was $22,000,000. As of June 30, 2021, the aggregate value of rehypothecated securities was $19,442,145. During the six months ended June 30, 2021, the Fund earned $26,491 in fees from rehypothecated securities.

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 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.

 

2021 Semiannual Report to Stockholders | 35

 
 

 

 

  

Royce Micro-Cap Trust

 

Notes to Financial Statements (unaudited) (continued)

 

Investment Advisory Agreement (continued):

For the six rolling 36-month periods ended June 2021, the Fund’s investment performance ranged from 6% above to 14% above the investment performance of the Russell 2000. Accordingly, the net investment advisory fee consisted of a Basic Fee of $2,061,045 and a net upward adjustment of $810,268 for the performance of the Fund relative to that of the Russell 2000. For the six months ended June 30, 2021, the Fund expensed Royce investment advisory fees totaling $2,871,313.

Purchases and Sales of Investment Securities:

For the six months ended June 30, 2021, the costs of purchases and proceeds from sales of investment securities, other than short-term securities, amounted to $48,956,650 and $69,784,241, respectively.

Cross trades may be executed by the Fund pursuant to Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds to which Royce serves as investment adviser. The Fund’s Chief Compliance Officer reviews such transactions each quarter for compliance with the requirements and restrictions set forth by Rule 17a-7, and reports the results of her review to the Board of Directors. The Fund had no cross trades for the six months ended June 30, 2021.

Subsequent Events:

Subsequent events have been evaluated through the date the financial statements were issued.

 

36 | 2021 Semiannual Report to Stockholders

 
 

 

 

  

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2021 Semiannual Report to Stockholders | 37

 
 

 

     

 

MANAGERS’ DISCUSSION (UNAUDITED)

 

Royce Value Trust (RVT)

 

 

 

Chuck Royce, Lauren Romeo, CFA®

Steven McBoyle, Andrew Palen

 

FUND PERFORMANCE

For the year-to-date period ended 6/30/21, Royce Value Trust (RVT) rose 16.8% on a net asset value (NAV) basis and 21.2% based on market price versus respective gains of 17.5% and 23.6% for its unleveraged small-cap benchmarks, the Russell 2000 and S&P SmallCap 600 Indexes, for the same period. While not the relative NAV result we were hoping for, we were nonetheless pleased with first-half results on an absolute scale. We were also pleased that RVT beat the Russell 2000 on an NAV and market price basis for the three-, five-, 20-, 25-, 30-year, and since inception (11/26/86) periods ended 6/30/21, all under the management of Chuck Royce.

 

WHAT WORKED… AND WHAT DIDN’T

For the year-to-date period ended 6/30/21, nine of the 11 equity sectors in which the Fund held investments made positive contributions to performance, with the largest coming from Industrials, Consumer Discretionary, and Information Technology. Health Care made a modest negative impact, Utilities was essentially flat, and Communication Services had the smallest positive impact. At the industry level, the top contributors were specialty retail (Consumer Discretionary) and two groups from Information Technology: semiconductors & semiconductor equipment stocks and electronic equipment, instruments & components companies. Each of the three biggest detracting industries came from the lagging Health Care sector: health care equipment & supplies, biotechnology, and health care technology.

RVT’s top contributor at the position level was AutoCanada, a North American automobile business that sells multiple brands and operates 50 franchised dealerships in Canada, as well as a group in Illinois. In early May, the company reported record-setting revenue and earnings along with a ninth consecutive quarter of outracing the Canadian new vehicle retail market, though AutoCanada’s used vehicle and F&I (Finance & Insurance) segments were the key drivers behind 1Q21’s improved earnings. The second top contributor in 2021’s first half was Scientific Games, which develops, manufactures, and distributes a host of gaming, lottery, sports betting, and other information-based products and services. It beat earnings expectations for its fiscal first quarter of 2021 and has seen improvement for its newer product launches. We also like that it’s paid down debt and has products and services that we think could potentially be profitably spun off.

The top detractor at the position level was SmileDirectClub, which designs and manufactures dental equipment such as invisible aligners and braces that straighten teeth. The company has had success expanding beyond the U.S. while profitably growing its domestic business. However, SmileDirectClub also suffered a cybersecurity-driven manufacturing interruption shortly after reporting results, which depressed its previously sunny near-term outlook. Liking its long-term prospects, we chose to build our position while others were selling. GCM Grosvenor is an investment management company focused on private equity, infrastructure investments, real estate, credit finance, and absolute return. Its shares fell after the company reported fiscal first-quarter results in mid-May that showed better-than-expected revenues but earnings that seemed to fall short of other investors’ expectations. We added shares through most of the first half.

Relative to the Russell 2000 for the year-to-date period, underperformance came entirely from stock selection as sector allocation decisions had a solid positive effect, though not large enough to give RVT a relative edge. Hurting relative results most at the sector level was ineffective stock selection in both Energy and Materials—the positive effects of our overweights in each of these resurgent sectors somewhat mitigated the negative effect. Stock picks also hurt in Communication Services where, we should note, meme stocks dominated small-cap results in 2021’s first half. Conversely, our significantly lower weighting in Health Care, along with stock selection in Industrials and an almost total lack of exposure to lagging Utilities, helped relative results.

 

         
  Top Contributors to Performance   Top Detractors from Performance  
  Year-to-Date Through 6/30/21 (%)1   Year-to-Date Through 6/30/21 (%)2  
         
  AutoCanada 1.16   SmileDirectClub Cl. A -0.24  
  Scientific Games 0.49   GCM Grosvenor Cl. A -0.17  
  MKS Instruments 0.42   Haemonetics Corporation -0.17  
  FLIR Systems 0.40   Upland Software -0.14  
  Upwork 0.36   CIRCOR International -0.14  
  1 Includes dividends     2 Net of dividends    
             

 

CURRENT POSITIONING AND OUTLOOK

Many cyclical sectors began to lag the Russell 2000 in mid-May as the yield curve flattened with the decline in the 10-year Treasury yield. These short-term shifts have not altered our constructive stance on the Fund’s economically sensitive holdings, however. We remain confident that cyclical small caps are poised for a strong run in the coming years, a confidence underscored by current expectations for strong nominal GDP growth in the U.S. this year and next coupled with an accommodative Fed and attractive relative valuations. Equally important, we remain excited about the opportunities in small caps, an asset class with a large number of diverse and interesting companies and evolving industries. We have recently been most focused on identifying those businesses that were able to use the difficulties wrought by the pandemic and ensuing recession to get stronger. We’ve been finding these kinds of businesses selling at what we think are attractive valuations largely in Industrials, Information Technology, and Financials. We believe that we are embarking on the leg of the cycle when company results, rather than valuation expansion, typically begin to drive most of the stock price movement—an environment that we believe suits our skill sets well.

 

38 | 2021 Semiannual Report to Stockholders

 

 

 

 

     

 

PERFORMANCE AND PORTFOLIO REVIEW (UNAUDITED) SYMBOLS MARKET PRICE RVT NAV XRVTX

 

 

 

Performance 

Average Annual Total Return (%) Through 6/30/21

 

  JAN-JUN 20211 1-YR 3-YR 5-YR 10-YR 15-YR 20-YR 25-YR 30-YR SINCE INCEPTION (11/26/86)
RVT (NAV) 16.77 56.22 15.61 17.32 11.39 8.99 9.57 10.92 11.60 11.16

1 Not Annualized

 

 

 

Market Price Performance History Since Inception (11/26/86) 

Cumulative Performance of Investment through 6/30/211

 

  1-YR 5-YR 10-YR 15-YR 20-YR SINCE INCEPTION (11/26/86)
RVT 61.4% 140.2% 206.9% 236.9% 537.1% 3214.5%

 

 

 

1Reflects the cumulative performance of an investment made by a stockholder who purchased one share at inception ($10.00 IPO), reinvested all distributions and fully participated in primary subscriptions of the Fund’s rights offerings.
2Reflects the actual month-end market price movement of one share as it has traded on the NYSE.

 

 

 

Morningstar Style Map™ As of 6/30/21

 

 

  

The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 60 for additional information.

 

 

 

Top 10 Positions    
% of Net Assets    
     
MKS Instruments   2.3 
AutoCanada   1.8 
Upland Software   1.5 
Quaker Chemical   1.3 
Bandwidth Cl. A   1.1 
Cirrus Logic   1.1 
KBR   1.1 
Kadant   1.0 
IES Holdings   1.0 
FirstService   1.0 

 

 

 

Portfolio Sector Breakdown    
% of Net Assets    
     
Industrials   24.4 
Information Technology   23.7 
Financials   13.7 
Consumer Discretionary   10.6 
Materials   10.1 
Health Care   6.1 
Real Estate   3.9 
Energy   3.9 
Communication Services   2.3 
Consumer Staples   1.2 
Utilities   0.0 
Diversified Investment Companies   0.0 
Cash and Cash Equivalents, Net of Outstanding Line of Credit   0.1 

 

 

 

Calendar Year Total Returns (%)     
      
YEAR   RVT 
2020   21.9 
2019   30.5 
2018   -14.4 
2017   19.4 
2016   26.8 
2015   -8.1 
2014   0.8 
2013   34.1 
2012   15.4 
2011   -10.1 
2010   30.3 
2009   44.6 
2008   -45.6 
2007   5.0 
2006   19.5 

 

 

 

Portfolio Diagnostics   
    
Fund Net Assets  $2,167 million
Number of Holdings   561
Turnover Rate   25%
Net Asset Value  $20.98
Market Price  $18.97
Average Market Capitalization1   $2,624 million
Weighted Average P/E Ratio 2,3   21.1x
Weighted Average P/B Ratio 2   2.7x
Active Share 4   85%
U.S. Investments (% of Net Assets)   82.7%
Non-U.S. Investments (% of Net Assets)   17.2%

   
1Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.

2Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.

3The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (25% of portfolio holdings as of 6/30/21).

4Active Share is the sum of the absolute values of the different weightings of each holding in the Fund versus each holding in the benchmark, divided by two.

 

Important Performance and Risk Information

All performance information reflects past performance, is presented on a total return basis, net of the Fund’s investment advisory fee, 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.royceinvest.com. Certain immaterial adjustments were made to the net assets of Royce Value Trust at 12/31/16 and 6/30/18 for financial reporting purposes, and as a result the net asset value originally calculated on that date and the total return based on that net asset value differs from the adjusted net asset value and total return reported in the Financial Highlights. 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 larger-cap companies. The Fund’s broadly diversified portfolio does not ensure a profit or guarantee against loss. From time to time, the Fund may invest a significant portion of its net assets in foreign securities, which may involve political, economic, currency and other risks not encountered in U.S. investments. Regarding the “Top Contributors” and “Top Detractors” 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 2021.

 

2021 Semiannual Report to Stockholders | 39

 

 

 

 

     

 

Royce Value Trust

 

 

Schedule of Investments

Common Stocks – 99.8%

 

   SHARES   VALUE 
         
COMMUNICATION SERVICES – 2.3%          
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.4%          
Bandwidth Cl. A 1   173,450   $23,922,224 
Cogent Communications Holdings 2   9,552    734,453 
Liberty Latin America Cl. C 1,2,3   319,528    4,505,345 
         29,162,022 
ENTERTAINMENT - 0.4%          
IMAX Corporation 1   350,000    7,525,000 
Marcus Corporation (The) 1   6,051    128,342 
†World Wrestling Entertainment Cl. A   3,476    201,225 
         7,854,567 
INTERACTIVE MEDIA & SERVICES - 0.2%          
†Enthusiast Gaming Holdings 1   191,750    1,138,496 
QuinStreet 1,2,3   203,654    3,783,892 
         4,922,388 
MEDIA - 0.3%          
†AMC Networks Cl. A 1   12,520    836,336 
comScore 1,2   404,910    2,024,550 
E.W. Scripps Company (The) Cl. A   6,825    139,162 
Gannett Company 1   98,113    538,640 
†Magnite 1   23,400    791,856 
Meredith Corporation 1   57,683    2,505,750 
         6,836,294 
WIRELESS TELECOMMUNICATION SERVICES - 0.0%          
†Shenandoah Telecommunications   8,445    409,667 
Spok Holdings   8,822    84,867 
         494,534 
Total (Cost $43,374,755)        49,269,805 
           
CONSUMER DISCRETIONARY – 10.6%          
AUTO COMPONENTS - 1.6%          
Dorman Products 1,2   49,000    5,079,830 
Gentex Corporation 2   183,030    6,056,463 
†Goodyear Tire & Rubber 1   10,701    183,522 
LCI Industries 2   115,595    15,191,495 
Motorcar Parts of America 1   14,947    335,411 
Patrick Industries 2   85,740    6,259,020 
Standard Motor Products 2   17,100    741,285 
Superior Industries International 1   16,122    138,972 
†XPEL 1   3,111    260,919 
         34,246,917 
AUTOMOBILES - 0.0%          
Winnebago Industries   1,500    101,940 
DISTRIBUTORS - 0.2%          
Core-Mark Holding Company 2   5,057    227,615 
LKQ Corporation 1,2   101,400    4,990,908 
         5,218,523 
DIVERSIFIED CONSUMER SERVICES - 0.3%          
American Public Education 1   21,918    621,156 
Perdoceo Education 1   45,346    556,395 
Regis 1   49,910    467,158 
Universal Technical Institute 1   639,032    4,147,318 
         5,792,027 
HOTELS, RESTAURANTS & LEISURE - 1.8%          
Century Casinos 1   81,964    1,100,776 
†Denny’s Corporation 1   70,000    1,154,300 
†Hilton Grand Vacations 1   295,700    12,239,023 
†Hyatt Hotels Cl. A 1   2,729    211,880 
Lindblad Expeditions Holdings 1,2   373,700    5,982,937 
Ruth’s Hospitality Group 1   16,398    377,646 
Scientific Games 1   234,668    18,172,690 
         39,239,252 
HOUSEHOLD DURABLES - 0.8%          
Cavco Industries 1,2,3   14,700    3,266,193 
†Century Communities   9,625    640,448 
Ethan Allen Interiors 2   24,239    668,996 
La-Z-Boy   28,964    1,072,827 
Meritage Homes 1   17,288    1,626,455 
Skyline Champion 1   11,810    629,473 
TopBuild Corp. 1   45,200    8,939,656 
Tupperware Brands 1   6,079    144,376 
         16,988,424 
INTERNET & DIRECT MARKETING RETAIL - 0.5%          
†1-800-FLOWERS.COM Cl. A 1   51,190    1,631,425 
PetMed Express   2,420    77,077 
Shutterstock   13,456    1,320,976 
Stamps.com 1   37,766    7,564,152 
         10,593,630 
LEISURE PRODUCTS - 0.4%          
Brunswick Corporation   69,050    6,878,761 
Johnson Outdoors Cl. A   1,260    152,460 
MasterCraft Boat Holdings 1   41,988    1,103,864 
Sturm, Ruger & Company   1,148    103,297 
†YETI Holdings 1   4,772    438,165 
         8,676,547 
MULTILINE RETAIL - 0.0%          
Big Lots   11,018    727,298 
SPECIALTY RETAIL - 3.6%          
†Aaron’s Company (The)   4,363    139,572 
America’s Car-Mart 1,2   97,500    13,817,700 
Asbury Automotive Group 1   22,153    3,796,360 
AutoCanada 1   952,600    38,377,577 
Barnes & Noble Education 1   14,332    103,334 
Buckle (The)   31,285    1,556,429 
Caleres   1,844    50,323 
Camping World Holdings Cl. A 2   279,113    11,440,842 
CarMax 1   2,100    271,215 
Cato Corporation (The) Cl. A   34,210    577,123 
Chico’s FAS 1   746    4,909 
Children’s Place (The) 1   1,559    145,080 
Genesco 1   4,412    280,956 
Haverty Furniture   17,053    729,186 
Hibbett 1   11,420    1,023,574 
MarineMax 1   11,804    575,327 
†ODP Corporation (The) 1   14,423    692,448 
Rent-A-Center   27,544    1,461,760 
Shoe Carnival 2   12,423    889,362 
Signet Jewelers 1   2,994    241,885 
Sleep Number 1   9,885    1,086,856 
Zumiez 1   24,536    1,202,019 
         78,463,837 
TEXTILES, APPAREL & LUXURY GOODS - 1.4%          
Canada Goose Holdings 1   208,800    9,132,912 
G-III Apparel Group 1   24,253    796,954 
J G Boswell Company 4   3,940    3,190,612 
Kontoor Brands   7,130    402,203 
†Levi Strauss & Co. Cl. A   21,004    582,231 
Movado Group   10,898    342,960 

 

40 | 2021 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

 

 

 

 

     

 

June 30, 2021 (unaudited)

 

 

Schedule of Investments (continued)

 

   SHARES   VALUE 
         
CONSUMER DISCRETIONARY (continued)          
TEXTILES, APPAREL & LUXURY GOODS (continued)          
Ralph Lauren Cl. A   96,992   $11,426,627 
Steven Madden   19,810    866,886 
Vera Bradley 1   41,657    516,130 
Wolverine World Wide 2   93,662    3,150,790 
         30,408,305 
Total (Cost $139,150,620)        230,456,700 
           
CONSUMER STAPLES – 1.2%          
BEVERAGES - 0.0%          
†Coca-Cola Consolidated   448    180,154 
FOOD & STAPLES RETAILING - 0.0%          
SpartanNash Company   37,072    715,860 
FOOD PRODUCTS - 0.7%          
†CubicFarm Systems 1   950,000    1,088,254 
John B. Sanfilippo & Son   4,094    362,606 
Nomad Foods 1,2   143,600    4,059,572 
Seneca Foods Cl. A 1   197,413    10,083,856 
         15,594,288 
HOUSEHOLD PRODUCTS - 0.1%          
Central Garden & Pet 1   22,294    1,180,021 
Spectrum Brands Holdings   6,768    575,551 
WD-40 Company   248    63,560 
         1,819,132 
PERSONAL PRODUCTS - 0.3%          
Inter Parfums 2   78,715    5,667,480 
USANA Health Sciences 1   2,336    239,277 
         5,906,757 
TOBACCO - 0.1%          
Universal Corporation   7,421    422,774 
Vector Group   32,605    461,035 
         883,809 
Total (Cost $13,306,260)        25,100,000 
           
DIVERSIFIED INVESTMENT COMPANIES – 0.0%          
CLOSED-END FUNDS - 0.0%          
Eagle Point Credit   42,054    569,832 
Eagle Point Income   44    712 
Total (Cost $371,754)        570,544 
           
ENERGY – 3.9%          
ENERGY EQUIPMENT & SERVICES - 1.9%          
†Aspen Aerogels 1   38,200    1,142,944 
Bristow Group 1   237,099    6,072,105 
Computer Modelling Group   1,333,624    5,497,595 
DMC Global 1   1,983    111,464 
Helmerich & Payne 2   126,339    4,122,442 
KLX Energy Services Holdings 1   1,594    15,223 
Newpark Resources 1   67,354    233,045 
Oil States International 1   34,989    274,664 
Pason Systems   1,822,364    13,128,195 
ProPetro Holding Corp. 1   37,697    345,304 
RPC 1   115,746    572,943 
TGS   673,039    8,578,948 
         40,094,872 
OIL, GAS & CONSUMABLE FUELS - 2.0%          
Bonanza Creek Energy   35,551    1,673,385 
Callon Petroleum 1   941    54,286 
Cimarex Energy   173,500    12,570,075 
CONSOL Energy 1   83,000    1,533,010 
Diamondback Energy   5,775    542,215 
Dorchester Minerals L.P. 2   279,148    4,703,644 
Dorian LPG 1   394,936    5,576,496 
EQT Corporation 1   587,900    13,086,654 
†PDC Energy   3,557    162,875 
Renewable Energy Group 1   8,555    533,319 
REX American Resources 1   1,877    169,268 
Talos Energy 1   13,626    213,111 
World Fuel Services 2   100,913    3,201,969 
         44,020,307 
Total (Cost $95,084,219)        84,115,179 
           
FINANCIALS – 13.7%          
BANKS - 3.2%          
Ameris Bancorp   16,944    857,875 
Bank of N.T. Butterfield & Son 2   258,416    9,160,847 
†BankUnited   13,322    568,716 
Boston Private Financial Holdings   36,235    534,466 
Cadence Bancorporation Cl. A   15,397    321,489 
Canadian Western Bank   279,500    7,846,563 
Central Pacific Financial   2,878    75,001 
CIT Group   22,000    1,134,980 
Customers Bancorp 1   25,950    1,011,791 
Eagle Bancorp   25,371    1,422,806 
Farmers & Merchants Bank of Long Beach 4   416    3,411,200 
First BanCorp.   75,018    894,215 
†First Bancshares (The)   19,164    717,309 
First Citizens BancShares Cl. A   17,864    14,876,067 
First Commonwealth Financial   4,194    59,010 
First Financial Bancorp   54,380    1,284,999 
First Hawaiian   18,617    527,606 
First Midwest Bancorp   22,741    450,954 
†German American Bancorp   11,559    429,995 
†Glacier Bancorp   3,709    204,292 
Great Western Bancorp   18,777    615,698 
Hanmi Financial   32,756    624,329 
HarborOne Bancorp   63,400    909,156 
HBT Financial   40,400    703,364 
Hilltop Holdings   4,393    159,905 
†Home BancShares   22,327    551,030 
HomeTrust Bancshares   23,700    661,230 
†Independent Bank Group   8,401    621,506 
†National Bank Holdings Cl. A   13,351    503,867 
†Old National Bancorp   9,850    173,459 
†Origin Bancorp   14,464    614,141 
Pacific Premier Bancorp   14,212    601,025 
Preferred Bank   18,670    1,181,251 
Prosperity Bancshares   734    52,701 
†Signature Bank   2,054    504,565 
Simmons First National Cl. A   3,466    101,692 
Triumph Bancorp 1   35,601    2,643,374 
United Community Banks   2,863    91,645 
†Virginia National Bankshares   108,540    4,221,121 
Webster Financial 2   134,200    7,158,228 
Wintrust Financial   11,000    831,930 
         69,315,398 
CAPITAL MARKETS - 6.2%          
Ares Management Cl. A 2   187,200    11,904,048 

 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS 2021 Semiannual Report to Stockholders | 41

 

 

 

 

     

 

Royce Value Trust

 

Schedule of Investments (continued)        
   SHARES   VALUE 
         
FINANCIALS (continued)          
CAPITAL MARKETS (continued)          
Artisan Partners Asset Management Cl. A 2,3   66,200   $3,364,284 
ASA Gold and Precious Metals   199,821    4,310,139 
Ashmore Group   548,400    2,920,616 
Barings BDC   191,594    2,023,233 
Blucora 1   5,600    96,936 
Bolsa Mexicana de Valores   1,723,106    3,803,384 
BrightSphere Investment Group   27,998    655,993 
†Donnelley Financial Solutions 1   17,267    569,811 
Fiera Capital Cl. A   33,600    294,908 
Focus Financial Partners Cl. A 1,2   50,000    2,425,000 
GCM Grosvenor Cl. A   1,502,457    15,655,602 
Golub Capital BDC   2,354    36,299 
Houlihan Lokey Cl. A 2   73,480    6,009,929 
Lazard Cl. A 2   105,585    4,777,721 
Moelis & Company Cl. A   21,000    1,194,690 
Morningstar 2   58,700    15,092,357 
†Oaktree Specialty Lending   5,526    36,969 
Onex Corporation   9,200    668,032 
Open Lending 1   384,500    16,568,105 
Portman Ridge Finance   32,829    78,133 
Rothschild & Co   50,293    1,953,044 
SEI Investments 2,3   315,600    19,557,732 
Silvercrest Asset Management Group Cl. A   21,168    318,367 
Sprott   256,480    10,094,917 
Tel Aviv Stock Exchange   332,179    2,052,079 
TMX Group   68,400    7,225,150 
         133,687,478 
CONSUMER FINANCE - 0.1%          
Enova International 1   47,081    1,610,641 
DIVERSIFIED FINANCIAL SERVICES - 0.6%          
Banco Latinoamericano de Comercio Exterior Cl. E   73,446    1,128,865 
†Compass Diversified Holdings   28,065    715,657 
ECN Capital   1,023,900    7,681,728 
Equitable Holdings   65,000    1,979,250 
Waterloo Investment Holdings 1,5   2,972,000    743,000 
         12,248,500 
INSURANCE - 2.5%          
Alleghany Corporation 1   350    233,475 
Ambac Financial Group 1   53,000    829,980 
American Equity Investment          
Life Holding Company   30,494    985,566 
†AMERISAFE   13,723    819,126 
Assured Guaranty   88,429    4,198,609 
†Axis Capital Holdings   10,101    495,050 
E-L Financial   21,650    16,395,561 
Employers Holdings   10,973    469,644 
Erie Indemnity Cl. A   28,200    5,452,470 
Fidelity National Financial   446    19,383 
First American Financial   38,888    2,424,667 
Independence Holding Company 2   170,023    7,875,465 
†James River Group Holdings   8,667    325,186 
ProAssurance Corporation 2   254,503    5,789,943 
RenaissanceRe Holdings   1,974    293,771 
RLI Corp. 2   43,850    4,586,272 
†Safety Insurance Group   7,473    584,986 
SiriusPoint 1   23,314    234,772 
Stewart Information Services   22,534    1,277,452 

†Trean Insurance Group 1   107,828   1,626,046 
Universal Insurance Holdings   16,779    232,893 
         55,150,317 
INVESTMENT COMPANIES - 0.3%          
†ACE Convergence Acquisition Cl. A 1   641,010    6,381,255 
†Landcadia Holdings III Cl. A 1   50,000    620,000 
         7,001,255 
THRIFTS & MORTGAGE FINANCE - 0.8%          
Axos Financial 1,2   33,576    1,557,591 
Essent Group   10,000    449,500 
Flagstar Bancorp   38,373    1,622,027 
HomeStreet   2,416    98,428 
Meridian Bancorp 2   82,500    1,687,950 
Meta Financial Group   1,848    93,564 
Mr. Cooper Group 1   3,189    105,428 
NMI Holdings Cl. A 1   78,330    1,760,858 
Provident Bancorp   63,200    1,030,792 
Provident Financial Services   4,035    92,361 
Territorial Bancorp   9,300    241,521 
Timberland Bancorp 2   274,457    7,717,731 
†TrustCo Bank Corp NY   14,121    485,480 
Walker & Dunlop   3,578    373,472 
         17,316,703 
Total (Cost $207,700,695)        296,330,292 
           
HEALTH CARE – 6.0%          
BIOTECHNOLOGY - 1.1%          
Acorda Therapeutics 1   2,148    10,246 
Anika Therapeutics 1   8,068    349,264 
†CareDx 1   8,000    732,160 
Catalyst Pharmaceuticals 1   73,450    422,337 
Coherus BioSciences 1   17,487    241,845 
Eagle Pharmaceuticals 1   14,575    623,810 
Enanta Pharmaceuticals 1   5,340    235,013 
†MaxCyte 1   359,300    4,463,237 
†PureTech Health 1   120,100    566,518 
United Therapeutics 1   31,260    5,608,357 
Vanda Pharmaceuticals 1   40,214    865,003 
Zealand Pharma 1   326,857    9,652,608 
         23,770,398 
HEALTH CARE EQUIPMENT & SUPPLIES - 3.0%          
Atrion Corporation   8,296    5,151,235 
BioLife Solutions 1   6,080    270,621 
†Cutera 1   22,050    1,081,112 
Haemonetics Corporation 1   77,330    5,153,271 
Inogen 1   7,569    493,272 
Integer Holdings 1,2   42,400    3,994,080 
Meridian Bioscience 1   282,334    6,262,168 
Mesa Laboratories 2   69,210    18,767,676 
Natus Medical 1   11,680    303,446 
Neogen Corporation 1,2   2,162    99,538 
OraSure Technologies 1   11,733    118,973 
Orthofix Medical 1   6,097    244,551 
†SmileDirectClub Cl. A 1   1,524,378    13,231,601 
STAAR Surgical 1   6,350    968,375 
Surmodics 1,2   161,000    8,734,250 
         64,874,169 

 

42     2021 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
 
 

 

     

 

June 30, 2021 (unaudited)

 

Schedule of Investments (continued)        
   SHARES   VALUE 
         
HEALTH CARE (continued)          
HEALTH CARE PROVIDERS & SERVICES - 1.1%          
†Cano Health Cl. A 1   150,000   $1,815,000 
Community Health Systems 1   790,000    12,197,600 
CorVel Corporation 1   1,393    187,080 
Ensign Group (The)   5,810    503,553 
†Hims & Hers Health Cl. A 1,2,3   640,000    6,969,600 
Magellan Health 1   8,265    778,563 
†MEDNAX 1   18,067    544,720 
ModivCare 1   3,412    580,279 
Pennant Group 1   17,000    695,300 
RadNet 1   4,582    154,368 
†Sharps Compliance 1   54,300    559,290 
Tivity Health 1   3,934    103,503 
U.S. Physical Therapy   5,470    633,809 
         25,722,665 
HEALTH CARE TECHNOLOGY - 0.3%          
Computer Programs and Systems 1   11,931    396,467 
†Doximity Cl. A 1   7,950    462,690 
HealthStream 1   17,188    480,233 
NextGen Healthcare 1   25,229    418,549 
†Schrodinger 1   6,250    472,562 
Simulations Plus   77,538    4,257,612 
         6,488,113 
LIFE SCIENCES TOOLS & SERVICES - 0.3%          
Bio-Techne 2,3   11,053    4,976,724 
†Harvard Bioscience 1   105,150    875,899 
Medpace Holdings 1   568    100,326 
         5,952,949 
PHARMACEUTICALS - 0.2%          
†Aerie Pharmaceuticals 1   22,300    357,023 
Assertio Holdings 1   6,806    10,617 
†Collegium Pharmaceutical 1   3,754    88,745 
Corcept Therapeutics 1   49,450    1,087,900 
†Harmony Biosciences Holdings 1   14,950    422,039 
Innoviva 1   79,827    1,070,480 
Lannett Company 1   41,135    192,100 
Supernus Pharmaceuticals 1   32,284    994,024 
         4,222,928 
Total (Cost $101,865,892)        131,031,222 
           
INDUSTRIALS – 24.4%          
AEROSPACE & DEFENSE - 1.7%          
Aerojet Rocketdyne Holdings   10,315    498,111 
AeroVironment 1   5,650    565,848 
Ducommun 1,2   79,100    4,315,696 
HEICO Corporation 2   51,030    7,114,603 
HEICO Corporation Cl. A 2   68,333    8,485,592 
Magellan Aerospace   893,092    7,528,889 
National Presto Industries   4,693    477,043 
Park Aerospace   38,115    567,914 
Vectrus 1   21,910    1,042,697 
Virgin Galactic Holdings 1,2   161,918    7,448,228 
         38,044,621 
AIR FREIGHT & LOGISTICS - 0.3%          
Atlas Air Worldwide Holdings 1   10,416    709,434 
Echo Global Logistics 1   19,329    594,173 
Forward Air 2   64,222    5,763,925 
Hub Group Cl. A 1   2,184    144,100 
         7,211,632 

AIRLINES - 0.6%          
†Sun Country Airlines Holdings 1   375,511   13,897,662 
BUILDING PRODUCTS - 0.9%          
American Woodmark 1   2,006    163,870 
Apogee Enterprises   19,883    809,835 
†Builders FirstSource 1   60,175    2,567,066 
CSW Industrials   40,000    4,738,400 
Gibraltar Industries 1   15,710    1,198,830 
Insteel Industries   17,023    547,289 
PGT Innovations 1   7,469    173,505 
Quanex Building Products   42,987    1,067,797 
Simpson Manufacturing 2   28,562    3,154,387 
UFP Industries   77,083    5,730,350 
         20,151,329 
COMMERCIAL SERVICES & SUPPLIES - 1.6%          
ABM Industries   18,795    833,558 
Brady Corporation Cl. A   2,677    150,019 
Brink’s Company (The)   5,735    440,678 
CompX International Cl. A 2   211,100    4,384,547 
Deluxe Corporation   8,527    407,335 
Healthcare Services Group   6,751    213,129 
Heritage-Crystal Clean 1,2   100,106    2,971,146 
†Herman Miller   181,600    8,560,624 
†HNI Corporation   3,732    164,096 
Kimball International Cl. B 2   167,388    2,201,152 
Pitney Bowes   16,938    148,546 
Ritchie Bros. Auctioneers 2   35,200    2,086,656 
Tetra Tech   761    92,873 
UniFirst Corporation   27,972    6,563,350 
US Ecology 1   713    26,752 
Vidler Water Resouces 1,2   406,960    5,412,568 
         34,657,029 
CONSTRUCTION & ENGINEERING - 3.2%          
APi Group 1   353,500    7,384,615 
Arcosa 2   159,759    9,384,244 
Comfort Systems USA 2,3   24,603    1,938,470 
EMCOR Group   35,500    4,373,245 
†Great Lakes Dredge & Dock 1   32,930    481,107 
IES Holdings 1,2,3   441,399    22,670,253 
Infrastructure and Energy Alternatives 1   600,000    7,716,000 
Matrix Service 1   26,053    273,556 
MYR Group 1   7,898    718,086 
Northwest Pipe 1   15,671    442,706 
Valmont Industries 2   63,161    14,909,154 
         70,291,436 
ELECTRICAL EQUIPMENT - 1.1%          
AZZ   26,773    1,386,306 
Encore Wire   23,174    1,756,357 
GrafTech International   28,794    334,586 
LSI Industries   814,857    6,527,005 
Powell Industries 2   105,037    3,250,895 
Preformed Line Products 2   73,300    5,438,860 
†TPI Composites 1   103,900    5,030,838 
         23,724,847 
INDUSTRIAL CONGLOMERATES - 0.1%          
Carlisle Companies   7,719    1,477,262 
MACHINERY - 8.5%          
†Alamo Group   757    115,579 
Albany International Cl. A   2,370    211,546 

 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS 2021 Semiannual Report to Stockholders     43
 
 

 

     

 

Royce Value Trust

 

Schedule of Investments (continued)        
   SHARES   VALUE 
         
INDUSTRIALS (continued)          
MACHINERY (continued)          
Astec Industries   705   $44,373 
†ATS Automation Tooling Systems 1   23,150    664,470 
Barnes Group   1,345    68,931 
CIRCOR International 1   414,652    13,517,655 
Colfax 1,2   457,712    20,967,787 
Crane Company   4,799    443,284 
ESCO Technologies 2   62,620    5,874,382 
Franklin Electric 2   75,561    6,091,728 
Greenbrier Companies (The)   14,478    630,951 
Helios Technologies 2   173,214    13,519,353 
Hillenbrand   17,805    784,844 
Hurco Companies   27,900    976,500 
John Bean Technologies 2   133,451    19,032,781 
Kadant 2   128,819    22,683,738 
Lincoln Electric Holdings 2   52,600    6,927,946 
Lindsay Corporation 2   112,000    18,511,360 
Lydall 1   17,784    1,076,288 
Meritor 1   52,290    1,224,632 
Middleby Corporation (The) 1   89,950    15,584,737 
Miller Industries   26,260    1,035,694 
Mueller Industries   38,448    1,665,183 
NN 1   308,700    2,268,945 
Nordson Corporation 2   15,796    3,467,380 
†Rexnord Corporation   91,200    4,563,648 
Tennant Company 2   80,500    6,427,925 
Wabash National   67,613    1,081,808 
Watts Water Technologies Cl. A 2   55,000    8,025,050 
Woodward 2   48,500    5,959,680 
         183,448,178 
MARINE - 0.8%          
Clarkson   371,400    16,388,868 
PROFESSIONAL SERVICES - 3.3%          
Exponent 2,3   86,400    7,707,744 
Forrester Research 1,2,3   139,337    6,381,635 
Heidrick & Struggles International   53,336    2,376,119 
Jacobs Engineering Group 2   33,500    4,469,570 
KBR 2   615,000    23,462,250 
Kelly Services Cl. A 1   7,419    177,833 
Korn Ferry 2   67,191    4,874,707 
LifeWorks   18,400    496,070 
ManpowerGroup 2   9,800    1,165,318 
ManTech International Cl. A   3,384    292,851 
Resources Connection   55,312    794,280 
TrueBlue 1,2   50,846    1,429,281 
Upwork 1   300,000    17,487,000 
         71,114,658 
ROAD & RAIL - 1.4%          
ArcBest   22,049    1,283,031 
Landstar System 2   113,882    17,995,634 
Saia 1,2   48,484    10,156,913 
         29,435,578 
TRADING COMPANIES & DISTRIBUTORS - 0.9%          
Air Lease Cl. A 2   95,170    3,972,396 
Applied Industrial Technologies   14,033    1,277,845 
Boise Cascade   27,385    1,597,915 
†DXP Enterprises 1   11,411    379,986 
EVI Industries 1,2,3   69,873    1,984,393 
GMS 1   25,183    1,212,310 

Lawson Products 1   16,250   869,537 
MSC Industrial Direct Cl. A   7,160    642,467 
SiteOne Landscape Supply 1,2   25,000    4,231,500 
Transcat 1   46,050    2,602,286 
         18,770,635 
Total (Cost $301,118,254)        528,613,735 
           
INFORMATION TECHNOLOGY – 23.7%          
COMMUNICATIONS EQUIPMENT - 0.3%          
ADTRAN 2,3   214,973    4,439,192 
CalAmp Corporation 1   3,116    39,636 
Comtech Telecommunications   17,814    430,386 
†Digi International 1   27,801    559,078 
NETGEAR 1   11,612    444,972 
         5,913,264 
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 7.0%          
Advanced Energy Industries 2   3,096    348,950 
Avnet   7,647    306,492 
Badger Meter   2,169    212,822 
Bel Fuse Cl. B   20,334    292,810 
Belden   3,136    158,588 
Benchmark Electronics   17,733    504,681 
Cognex Corporation 2   206,600    17,364,730 
Daktronics 1   22,653    149,283 
Fabrinet 1,2,3   166,375    15,950,371 
FARO Technologies 1,2   268,347    20,869,346 
Insight Enterprises 1,2,3   28,086    2,808,881 
IPG Photonics 1   51,100    10,770,347 
Kimball Electronics 1   33,337    724,746 
Littelfuse 2,3   17,400    4,433,346 
†Luna Innovations 1   102,650    1,111,700 
Methode Electronics   15,679    771,564 
National Instruments 2   301,450    12,745,306 
nLIGHT 1,2   172,340    6,252,495 
OSI Systems 1   5,872    596,830 
PAR Technology 1,2,3   290,239    20,299,316 
PC Connection   1,077    49,833 
Plexus Corporation 1   6,196    566,376 
Richardson Electronics 6   711,475    5,912,357 
Rogers Corporation 1   38,540    7,738,832 
Sanmina Corporation 1   34,889    1,359,275 
ScanSource 1   5,991    168,527 
TTM Technologies 1,2,3   577,971    8,264,985 
Vishay Intertechnology   36,690    827,360 
Vishay Precision Group 1   18,130    617,145 
Vontier Corporation   302,160    9,844,373 
         152,021,667 
IT SERVICES - 2.7%          
†BM Technologies Cl. A 1,5   1,776    19,188 
Cass Information Systems   10,920    444,990 
Computer Services 4   103,525    5,823,281 
Computer Task Group 1   51,597    498,943 
CSG Systems International   21,898    1,033,148 
EVERTEC   19,138    835,374 
ExlService Holdings 1   1,297    137,819 
Hackett Group (The) 2   285,266    5,140,493 
MAXIMUS   4,370    384,429 
Repay Holdings Cl. A 1   656,934    15,792,693 

 

44     2021 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
 
 

 

     

 

June 30, 2021 (unaudited)

 

Schedule of Investments (continued)        
   SHARES   VALUE 
         
INFORMATION TECHNOLOGY (continued)          
IT SERVICES (continued)          
Shift4 Payments Cl. A 1   195,290   $18,302,579 
Unisys Corporation 1,2   393,250    9,953,158 
         58,366,095 
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 9.4%          
†Ambarella 1   4,800    511,824 
Axcelis Technologies 1   23,400    945,828 
Brooks Automation 2,3   219,100    20,875,848 
†Camtek 1   416,850    15,719,414 
Cirrus Logic 1,2   278,200    23,680,384 
CMC Materials 2   75,018    11,308,213 
Cohu 1   113,720    4,183,759 
CyberOptics Corporation 1   17,200    704,512 
Diodes 1,2,3   165,666    13,215,177 
Entegris 2,3   22,700    2,791,419 
FormFactor 1   477,000    17,391,420 
Ichor Holdings 1   1,448    77,902 
Kulicke & Soffa Industries 2   311,850    19,085,220 
Lattice Semiconductor 1   7,800    438,204 
†MagnaChip Semiconductor 1   35,200    839,872 
MKS Instruments   274,739    48,889,805 
Nova Measuring Instruments 1,2,3   44,790    4,608,443 
NVE Corporation   9,300    688,665 
Onto Innovation 1,2   12,448    909,202 
Photronics 1   219,321    2,897,230 
Power Integrations   2,378    195,139 
Rambus 1   36,981    876,820 
†SiTime 1   82,202    10,405,951 
SMART Global Holdings 1   14,374    685,352 
Ultra Clean Holdings 1   23,388    1,256,403 
         203,182,006 
SOFTWARE - 3.6%          
Agilysys 1   11,250    639,787 
Aspen Technology 1   15,100    2,076,854 
Blackbaud 1   34,200    2,618,694 
ChannelAdvisor Corporation 1   21,470    526,230 
Descartes Systems Group (The) 1,2   40,000    2,766,400 
Dolby Laboratories Cl. A   9,520    935,721 
E2open Parent Holdings Cl. A 1   100,000    1,142,000 
Ebix   5,389    182,687 
Everbridge 1   60,000    8,164,800 
j2 Global 1,2   28,685    3,945,622 
Manhattan Associates 1,2   95,300    13,803,252 
MicroStrategy Cl. A 1   207    137,552 
Momentive Global 1,2   383,830    8,087,298 
Progress Software   1,337    61,836 
Upland Software 1,2   780,470    32,131,950 
Xperi Holding Corporation 2   6,868    152,744 
         77,373,427 
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 0.7%          
Avid Technology 1   425,965    16,676,530 
Total (Cost $313,311,734)        513,532,989 
           
MATERIALS – 10.1%          
CHEMICALS - 5.6%          
American Vanguard   4,797    83,996 
†Atotech 1   133,888    3,418,161 
Chase Corporation 2,3   79,059    8,112,244 
Element Solutions 2   807,051    18,868,852 

FutureFuel Corporation   579,859   5,566,646 
Hawkins 2   154,940    5,074,285 
Huntsman Corporation   39,347    1,043,482 
Innospec 2   112,969    10,236,121 
Minerals Technologies 2   209,314    16,466,732 
Mosaic Company (The)   612,660    19,549,981 
NewMarket Corporation   8,000    2,575,840 
Quaker Chemical   116,949    27,739,133 
Stepan Company   2,794    336,034 
Tredegar Corporation   39,337    541,671 
Trinseo   21,838    1,306,786 
         120,919,964 
CONSTRUCTION MATERIALS - 0.4%          
Eagle Materials   23,700    3,368,007 
Imerys   90,000    4,204,670 
U.S. Concrete 1   7,682    566,932 
         8,139,609 
CONTAINERS & PACKAGING - 0.1%          
†Graphic Packaging Holding Company   29,539    535,838 
Myers Industries   22,914    481,194 
†Silgan Holdings   11,148    462,642 
UFP Technologies 1   7,020    403,088 
         1,882,762 
METALS & MINING - 3.7%          
Alamos Gold Cl. A   2,195,500    16,772,656 
Ferroglobe (Warranty Insurance Trust) 1,5   49,300    0 
Gold Fields ADR   370,000    3,293,000 
Haynes International 2   117,053    4,141,335 
Hecla Mining   321,300    2,390,472 
IAMGOLD Corporation 1   600,000    1,770,000 
Kaiser Aluminum   833    102,867 
Lundin Mining   640,000    5,772,185 
MAG Silver 1   198,900    4,160,988 
Major Drilling Group International 1   2,217,291    15,329,287 
Materion Corporation   2,294    172,853 
Pan American Silver   140,027    4,000,571 
Pretium Resources 1   101,000    966,328 
Reliance Steel & Aluminum 2   47,500    7,167,750 
Royal Gold 2   16,600    1,894,060 
SunCoke Energy   138,120    986,177 
VanEck Vectors Junior Gold Miners ETF   155,500    7,269,625 
Warrior Met Coal   36,139    621,591 
Worthington Industries 2   64,300    3,933,874 
         80,745,619 
PAPER & FOREST PRODUCTS - 0.3%          
†Clearwater Paper 1   11,602    336,110 
Glatfelter   33,201    463,818 
Mercer International   41,629    530,770 
Neenah   8,143    408,534 
Schweitzer-Mauduit International   31,774    1,283,034 
Stella-Jones   127,806    4,601,470 
         7,623,736 
Total (Cost $144,459,651)        219,311,690 
           
REAL ESTATE – 3.9%          
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITS) - 0.0%          
†Equity Commonwealth   12,000    314,400 

 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS 2021 Semiannual Report to Stockholders     45
 
 

 

     

 

Royce Value Trust June 30, 2021 (unaudited)

 

Schedule of Investments (continued)        
   SHARES   VALUE 
         
REAL ESTATE (continued)          
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITS) (continued)          
New York REIT 1,5   15,000   $176,550 
         490,950 
REAL ESTATE MANAGEMENT & DEVELOPMENT - 3.9%          
Colliers International Group   172,208    19,283,852 
FirstService   125,405    21,476,860 
FRP Holdings 1,2   76,558    4,262,749 
Jones Lang LaSalle 1   8,078    1,578,926 
Kennedy-Wilson Holdings 2   609,604    12,112,831 
Marcus & Millichap 1,2   256,334    9,963,703 
RMR Group (The) Cl. A 2,3   80,100    3,095,064 
St. Joe Company (The) 2,3   78,800    3,515,268 
Tejon Ranch 1,2   557,136    8,474,039 
         83,763,292 
Total (Cost $58,991,844)        84,254,242 
           
UTILITIES – 0.0%          
WATER UTILITIES - 0.0%          
American States Water   13,168    1,047,646 
Total (Cost $1,074,231)        1,047,646 
           
TOTAL COMMON STOCKS          
(Cost $1,419,809,909)        2,163,634,044 
           
WARRANTS – 0.1%          
           
HEALTH CARE – 0.1%          
HEALTH CARE PROVIDERS & SERVICES - 0.1%          
†Cano Health (Warrants) 1   49,999    184,421 
†Hims & Hers Health (Warrants) 1   266,666    893,331 
Total (Cost $883,349)        1,077,752 
           
TOTAL WARRANTS          
(Cost $883,349)        1,077,752 

 

REPURCHASE AGREEMENT– 3.4%     

Fixed Income Clearing Corporation, 0.00% dated 6/30/21, due 7/1/21, maturity value

$74,000,559 (collateralized by obligations of various U.S. Government Agencies, 1.25%

due 6/30/28, valued at $75,480,646)

     
(Cost $74,000,559)  $74,000,559 
      
TOTAL INVESTMENTS – 103.3%     
(Cost $1,494,693,817)   2,238,712,355 
      
      
LIABILITIES LESS CASH AND OTHER ASSETS – (3.3)%   (71,890,733)
      
NET ASSETS – 100.0%  $2,166,821,622 

 

ADR – American Depository Receipt

†New additions in 2021.

1Non-income producing.

2All or a portion of these securities were pledged as collateral in connection with the Fund’s revolving credit agreement at June 30, 2021. Total market value of pledged securities at June 30, 2021, was $206,998,311.

3At June 30, 2021, a portion of these securities were rehypothecated in connection with the Fund’s revolving credit agreement in the aggregate amount of $61,968,812.

4These securities are defined as Level 2 securities due to fair value being based on quoted prices for similar securities. See Notes to Financial Statements.

5Securities for which market quotations are not readily available represent 0.0% 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.

6At June 30, 2021, 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.

 

Bold indicates the Fund’s 20 largest equity holdings in terms of June 30, 2021, market value.

 

TAX INFORMATION: The cost of total investments for Federal income tax purposes was $1,495,617,251. At June 30, 2021, net unrealized appreciation for all securities was $743,095,104 consisting of aggregate gross unrealized appreciation of $810,658,838 and aggregate gross unrealized depreciation of $67,563,734. The primary cause of the difference between book and tax basis cost is the timing of the recognition of losses on securities sold.

 

46     2021 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
 
 

 

 

 

Royce Value Trust June 30, 2021 (unaudited)

 

 

Statement of Assets and Liabilities

 

ASSETS:   
Investments at value   
Non-Affiliated Companies  $2,158,799,439 
Affiliated Companies   5,912,357 
Repurchase agreements (at cost and value)   74,000,559 
Cash   718 
Foreign currency (cost $85,373)   85,365 
Receivable for investments sold   7,384,637 
Receivable for dividends   857,073 
Prepaid expenses and other assets   828,857 
Total Assets   2,247,869,005 
LIABILITIES:     
Revolving credit agreement   70,000,000 
Payable for investments purchased   8,938,917 
Payable for investment advisory fee   1,770,410 
Payable for directors’ fees   38,852 
Payable for interest expense   63,149 
Accrued expenses   236,055 
Total Liabilities   81,047,383 
Net Assets  $2,166,821,622 
ANALYSIS OF NET ASSETS:     
Paid-in capital - $0.001 par value per share; 103,297,527 shares outstanding (150,000,000 shares authorized)  $1,275,740,569 
Total distributable earnings (loss)   948,377,122 
Quarterly distributions   (57,296,069)
Net Assets (net asset value per share - $20.98)  $2,166,821,622 
Investments at identified cost  $1,420,693,258 

 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS 2021 Semiannual Report to Stockholders | 47

 

 

 

   
   
Royce Value Trust Six Months Ended June 30, 2021 (unaudited)

 

 

Statement of Operations

 

INVESTMENT INCOME:   
INCOME:   
Dividends   
Non-Affiliated Companies  $10,912,383 
Affiliated Companies   85,377 
Foreign withholding tax   (296,636)
Interest   71,230 
Rehypothecation income   48,142 
Total income   10,820,496 
EXPENSES:     
Investment advisory fees   10,622,859 
Interest expense   397,414 
Administrative and office facilities   367,476 
Stockholder reports   161,214 
Custody and transfer agent fees   99,191 
Directors’ fees   84,681 
Professional fees   78,422 
Other expenses   86,098 
Total expenses   11,897,355 
Compensating balance credits   (7)
Net expenses   11,897,348 
Net investment income (loss)   (1,076,852)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:     
NET REALIZED GAIN (LOSS):     
Investments in Non-Affiliated Companies   184,883,247 
Investments in Affiliated Companies   (100,026)
Foreign currency transactions   (9,147)
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION):     
Investments in Non-Affiliated Companies   122,706,048 
Investments in Affiliated Companies   4,863,517 
Other assets and liabilities denominated in foreign currency   (3,605)
Net realized and unrealized gain (loss) on investments and foreign currency   312,340,034 
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS  $311,263,182 

 

48 | 2021 Semiannual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

 

 

 

 

 

Royce Value Trust

 

 

Statement of Changes in Net Assets

 

   SIX MONTHS ENDED
6/30/21
(UNAUDITED)		  YEAR ENDED 12/31/20
       
INVESTMENT OPERATIONS:          
Net investment income (loss)  $(1,076,852)  $2,482,634 
Net realized gain (loss) on investments and foreign currency   184,774,074    121,548,570 
Net change in unrealized appreciation (depreciation) on investments and foreign currency   127,565,960    195,875,492 
Net increase (decrease) in net assets from investment operations   311,263,182    319,906,696 
DISTRIBUTIONS:          
Quarterly distributions   (57,296,069)   (103,833,503)
Total distributions   (57,296,069)   (103,833,503)
CAPITAL STOCK TRANSACTIONS:          
Reinvestment of distributions   24,248,313    44,493,510 
Total capital stock transactions   24,248,313    44,493,510 
Net Increase (Decrease) In Net Assets   278,215,426    260,566,703 
NET ASSETS:          
Beginning of period   1,888,606,196    1,628,039,493 
End of period  $2,166,821,622   $1,888,606,196 

 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS 2021 Semiannual Report to Stockholders | 49

 

 

 

   
   
Royce Value Trust Six Months Ended June 30, 2021 (unaudited)

 

 

Statement of Cash Flows

 

CASH FLOWS FROM OPERATING ACTIVITIES:   
Net increase (decrease) in net assets from investment operations  $311,263,182 
Adjustments to reconcile net increase (decrease) in net assets from investment operations to net cash provided by operating activities:     
Purchases of long-term investments   (519,160,734)
Proceeds from sales and maturities of long-term investments   604,044,436 
Net purchases, sales and maturities of short-term investments   (50,632,664)
Net (increase) decrease in dividends receivable and other assets   (116,575)
Net increase (decrease) in interest expense payable, accrued expenses and other liabilities   19,675 
Net change in unrealized appreciation (depreciation) on investments   (127,569,565)
Net realized gain (loss) on investments   (184,783,221)
Net cash provided by operating activities   33,064,534 
CASH FLOWS FROM FINANCING ACTIVITIES:     
Distributions   (57,296,069)
Reinvestment of distributions   24,248,313 
Net cash used for financing activities   (33,047,756)
INCREASE (DECREASE) IN CASH:   16,778 
Cash and foreign currency at beginning of period   69,305 
Cash and foreign currency at end of period  $86,083 

 

Supplemental disclosure of cash flow information: 

For the six months ended June 30, 2021, the Fund paid $405,549 in interest expense.

 

50 | 2021 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  YEARS ENDED 
   ENDED 6/30/21                    
   (UNAUDITED)  12/31/20   12/31/19   12/31/18   12/31/17   12/31/16 
Net Asset Value, Beginning of Period  $18.52   $16.58   $13.73   $17.50   $15.85   $13.56 
INVESTMENT OPERATIONS:                              
Net investment income (loss)   (0.01)   0.03    0.11    0.18    0.13    0.12 
Net realized and unrealized gain (loss) on investments and foreign currency   3.06    3.02    3.90    (2.46)   2.74    3.27 
Net increase (decrease) in net assets from investment operations   3.05    3.05    4.01    (2.28)   2.87    3.39 
DISTRIBUTIONS:                              
Net investment income   –1   (0.09)   (0.11)   (0.19)   (0.13)   (0.13)
Net realized gain on investments and foreign currency   (0.56)1   (0.95)   (0.99)   (1.07)   (1.03)   (0.89)
Total distributions   (0.56)   (1.04)   (1.10)   (1.26)   (1.16)   (1.02)
CAPITAL STOCK TRANSACTIONS:                              
Effect of reinvestment of distributions by Common Stockholders   (0.03)   (0.07)   (0.06)   (0.06)   (0.06)   (0.08)
Effect of rights offering                  (0.17)          
Total capital stock transactions   (0.03)   (0.07)   (0.06)   (0.23)   (0.06)   (0.08)
Net Asset Value, End of Period  $20.98   $18.52   $16.58   $13.73   $17.50   $15.85 
Market Value, End of Period  $18.97   $16.14   $14.77   $11.80   $16.17   $13.39 
TOTAL RETURN:2                              
Net Asset Value   16.77%3   21.85%   30.46%   (14.45)%   19.31%   26.87%
Market Value   21.16%3   19.20%   35.23%   (20.43)%   30.49%   23.48%
RATIOS BASED ON AVERAGE NET ASSETS:                              
Investment advisory fee expense4   1.02%5   1.15%   0.49%   0.42%   0.43%   0.51%
Other operating expenses   0.12%5   0.19%   0.27%   0.21%   0.22%   0.22%
Total expenses (net)   1.14%5   1.34%   0.76%   0.63%   0.65%   0.73%
Expenses excluding interest expense   1.10%5   1.26%   0.61%   0.52%   0.54%   0.62%
Expenses prior to balance credits   1.14%5   1.34%   0.76%   0.63%   0.65%   0.73%
Net investment income (loss)   (0.10)%5   0.16%   0.69%   1.06%   0.80%   0.85%
SUPPLEMENTAL DATA:                              
Net Assets, End of Period (in thousands)  $2,166,822   $1,888,606   $1,628,039   $1,304,107   $1,480,449   $1,296,012 
Portfolio Turnover Rate   25%   36%   30%   28%   19%   28%
REVOLVING CREDIT AGREEMENT:                              
Asset coverage   3195%   2798%   2426%   2998%   2215%   1951%
Asset coverage per $1,000  $31,955   $27,980   $24,258   $29,980   $22,149   $19,514 

 

1Amounts are subject to change and recharacterization at year end.

2The 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. 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, sale and dividend reinvestment dates instead of market value.
3Not annualized
4The 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 over a 6- month basis for the six months ended 6/30/21, and a 12-month basis for the years shown.

5Annualized

 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS 2021 Semiannual Report to Stockholders | 51

 

 

 

 

 

Royce Value Trust

 

Notes to Financial Statements (unaudited)

 

Summary of Significant Accounting Policies:  

Royce Value Trust, Inc. (the “Fund”), is a diversified closed-end investment company that was incorporated under the laws of the State of Maryland on July 1, 1986. 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.

The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 “Financial Services-Investment Companies.”

Royce & Associates, LP, the Fund’s investment adviser, is a majority-owned subsidiary of Franklin Resources, Inc. and primarily conducts business using the name Royce Investment Partners (“Royce”).

 

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 highest 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 in accordance with the provisions of the 1940 Act, under procedures approved by the Fund’s Board of Directors, and are reported as Level 3 securities. As a general principle, the fair value of a security is the amount which the Fund might reasonably expect to receive for the security upon its current sale. However, in light of the judgment involved in fair valuations, there can be no assurance that a fair value assigned to a particular security will be the amount which the Fund might be able to receive upon its current sale. 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. Level 2 securities with values based on quoted prices for similar securities are noted in the Schedule of Investments.
Level 3 – significant unobservable inputs (including last trade price before trading was suspended, or at a discount thereto for lack of marketability or otherwise, market price information regarding other securities, information received from the company and/or published documents, including SEC filings and financial statements, or other publicly available information).

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, 2021. 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  $2,150,270,213   $12,425,093   $938,738   $2,163,634,044 
Warrants   1,077,752    –    –    1,077,752 
Repurchase Agreement   –    74,000,559    –    74,000,559 

 

52  |  2021 Semiannual Report to Stockholders

 

 

 

 

 

Royce Value Trust

 

Notes to Financial Statements (unaudited) (continued)

 

VALUATION OF INVESTMENTS (continued):

 

Level 3 Reconciliation:

 

   BALANCE AS OF 12/31/20  CORPORATE ACTIONS  REALIZED GAIN (LOSS)  UNREALIZED GAIN (LOSS)1  BALANCE AS OF 6/30/21
Common Stocks  $926,000   $15,750   $–   $(3,012)  $938,738 
Warrants   5,000    0    –    (5,000)   – 
   
1The 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.

 

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. The remaining contractual maturity of the repurchase agreement held by the Fund at June 30, 2021 is overnight and continuous.

 

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, other than investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.

The Fund does not isolate that portion of the results of operations resulting from fluctuations in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.

 

TAXES: 

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

 

DISTRIBUTIONS: 

The Fund pays quarterly distributions on the Fund’s Common Stock at the annual rate of 7% 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 1.75% of the rolling average or the distribution required by IRS regulations. Distributions to Common Stockholders are recorded on ex-dividend date. To the extent that distributions in any year 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. Premiums 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 Funds are allocated by Royce under an administration agreement and are included in administrative and office facilities and professional fees.

 

2021 Semiannual Report to Stockholders  |  53

 

 

 

 

 

Royce Value Trust

 

Notes to Financial Statements (unaudited) (continued)

 

COMPENSATING BALANCE CREDITS: 

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

 

Capital Stock: 

The Fund issued 1,324,830 and 3,754,864 shares of Common Stock as reinvestment of distributions for the six months ended June 30, 2021 and the year ended December 31, 2020, respectively. 

 

Borrowings:  

The Fund is party to a revolving credit agreement (the credit agreement) with BNP Paribas Prime Brokerage International, Limited (BNPPI). The Fund pays a commitment fee of 0.50% per annum on the unused portion of the then-current maximum amount that may be borrowed by the Fund under the credit agreement. The credit agreement has a 179-day rolling term that resets daily. The Fund is required to pledge portfolio securities as collateral in an amount up to two times the loan balance outstanding, or as otherwise required by applicable regulatory standards, and has granted a security interest in the securities pledged to, and in favor of, BNPPI as security for the loan balance outstanding. If the Fund fails to meet certain requirements, or comply with other financial covenants set forth in the credit agreement, the Fund may be required to repay immediately, in part or in full, the loan balance outstanding under the credit agreement, which may necessitate the sale of portfolio securities at potentially inopportune times. BNPPI may terminate the credit agreement upon certain ratings downgrades of its corporate parent, which would result in the Fund’s entire loan balance becoming immediately due and payable. The occurrence of such ratings downgrades may necessitate the sale of portfolio securities at potentially inopportune times. BNPPI may also terminate the credit agreement upon sixty (60) calendar days’ prior written notice to the Fund in the event the Fund’s net asset value per share as of the close of business on the last business day of any calendar month declines by thirty-five percent (35%) or more from the Fund’s net asset value per share as of the close of business on the last business day of the immediately preceding calendar month.

The credit agreement also permits, subject to certain conditions, BNPPI to rehypothecate portfolio securities pledged by the Fund up to the amount of the loan balance outstanding. The Fund continues to receive payments in lieu of dividends and interest on rehypothecated securities. The Fund also has the right under the credit agreement to recall the rehypothecated securities from BNPPI on demand. If BNPPI fails to deliver the recalled security in a timely manner, the Fund is compensated by BNPPI for any fees or losses related to the failed delivery or, in the event a recalled security is not returned by BNPPI, the Fund, upon notice to BNPPI, may reduce the loan balance outstanding by the value of the recalled security failed to be returned. The Fund receives a portion of the fees earned by BNPPI in connection with the rehypothecation of portfolio securities.

The current maximum amount the Fund may borrow under the credit agreement is $70,000,000. The Fund has the right to reduce the maximum amount it can borrow under the credit agreement upon one (1) business day’s prior written notice to BNPPI. In addition, the Fund and BNPPI may agree to increase the maximum amount the Fund can borrow under the credit agreement, which amount may not exceed $150,000,000.

As of June 30, 2021, the Fund has outstanding borrowings of $70,000,000. During the six months ended June 30, 2021, the Fund borrowed an average daily balance of $70,000,000 at a weighted average borrowing cost of 1.13%. The maximum amount outstanding during the six months ended June 30, 2021, was $70,000,000. As of June 30, 2021, the aggregate value of rehypothecated securities was $61,968,812. During the six months ended June 30, 2021, the Fund earned $48,142 in fees from rehypothecated securities.

 

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 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.

 

54  |  2021 Semiannual Report to Stockholders

 

 

 

 

 

Royce Value Trust

 

Notes to Financial Statements (unaudited) (continued)

 

Investment Advisory Agreement (continued):  

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.

For the six rolling 60-month periods ended June 2021, the Fund’s investment performance ranged from 9% above to 17% above the investment performance of the S&P 600. Accordingly, the net investment advisory fee consisted of a Basic Fee of $7,371,663 and a net upward adjustment of $3,251,196 for the performance of the Fund relative to that of the S&P 600. For the six months ended June 30, 2021, the Fund expensed Royce investment advisory fees totaling $10,622,859.

 

Purchases and Sales of Investment Securities: 

For the six months ended June 30, 2021, the costs of purchases and proceeds from sales of investment securities, other than short-term securities, amounted to $518,116,324 and $595,143,560, respectively.

Cross trades were executed by the Fund pursuant to Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds to which Royce serves as investment adviser. The Fund’s Chief Compliance Officer reviews such transactions each quarter for compliance with the requirements and restrictions set forth by Rule 17a-7, and reports the results of her review to the Board of Directors. Cross trades for the six months ended June 30, 2021, were as follows:

 

COSTS OF PURCHASES PROCEEDS FROM SALES REALIZED GAIN (LOSS)
$2,306,554 $1,056,873 $(107,642)

 

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 following transactions were effected in shares of such companies for the six months ended June 30, 2021:

 

AFFILIATED COMPANY 1  SHARES
12/31/20		   MARKET VALUE
12/31/20		   COSTS OF
PURCHASES		   PROCEEDS
FROM SALES		   REALIZED
GAIN (LOSS)		   CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)		   DIVIDEND
INCOME		   SHARES
6/30/21		   MARKET VALUE
6/30/21		 
INDUSTRIALS - 0.0%                                    
TRADING COMPANIES & DISTRIBUTORS - 0.0%                                             
Houston Wire & Cable 2,3   877,363   $2,447,843    –   $4,650,024   $(100,026)  $2,302,207   $–           
         2,447,843              (100,026)   2,302,207    –           
INFORMATION TECHNOLOGY - 0.3%                                             
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 0.3%                                             
Richardson Electronics 4   711,475    3,351,047    –    –    –    2,561,310    85,377    711,475   $5,912,357 
         3,351,047              –    2,561,310    85,377         5,912,357 
        $5,798,890             $(100,026)  $4,863,517   $85,377        $5,912,357 

 

1Percentages represent the percentages of the investments in the Affiliated Companies of the Fund’s net assets.
2Not an Affiliated Company at June 30, 2021.
3Non-income producing.
4At June 30, 2021, 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.

 

Subsequent Events:  

Subsequent events have been evaluated through the date the financial statements were issued.

 

2021 Semiannual Report to Stockholders  |  55

 

 

 

 

 

 

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 PRICE 1   SHARES   NAV VALUE 2   MARKET VALUE 2 
Royce Global Value Trust                          
10/17/13   Initial Purchase  $8,975    $8.975    1,000   $9,780   $8,975 
12/11/14   Distribution $0.15        7.970    19    9,426    8,193 
12/10/15   Distribution $0.10        7.230    14    9,101    7,696 
12/9/16   Distribution $0.14        7.940    18    10,111    8,446 
12/12/17   Distribution $0.11        10.610    11    13,254    11,484 
12/12/18   Distribution $0.04        8.500    5    11,118    9,475 
12/11/19   Distribution $0.06        10.670    6    14,593    12,543 
12/17/20   Distribution $1.19        13.441    95    17,462    15,604 
6/30/21      $8,975         1,168   $19,120   $17,497 
                              
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 $1.193        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   Annual distribution total $0.533        8.773    289    49,014    43,596 
2012   Annual distribution total $0.51        9.084    285    57,501    49,669 
2013   Annual distribution total $1.38        11.864    630    83,110    74,222 
2014   Annual distribution total $2.90        10.513    1,704    86,071    76,507 
2015   Annual distribution total $1.26        7.974    1,256    75,987    64,222 
2016   Annual distribution total $0.64        7.513    779    92,689    78,540 
2017   Annual distribution total $0.69        8.746    783    109,076    98,254 
2018   Annual distribution total $0.75        8.993    893    96,398    83,853 
2019   Annual distribution total $0.68        8.297    955    118,025    104,666 
2020   Annual distribution total $0.61        6.944    1,120    128,811    135,365 
2021   Year-to-Date distribution total $0.35        11.910    396           
6/30/21      $8,900         13,772   $191,018   $170,773 

 

1The purchase price used for annual distribution totals is a weighted average of the distribution reinvestment prices for the year.
2Values are stated as of December 31 of the year indicated, after reinvestment of distributions, other than for initial purchase.
3Includes a return of capital.

 

56  |  2021 Semiannual Report to Stockholders

 

 

 

 

 

History Since Inception (continued)

 

HISTORY      AMOUNT INVESTED   PURCHASE PRICE 1   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 $1.723        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   Annual distribution total $0.783        13.043    656    161,638    139,866 
2012   Annual distribution total $0.80        13.063    714    186,540    162,556 
2013   Annual distribution total $2.194        16.647    1,658    250,219    220,474 
2014   Annual distribution total $1.82        14.840    1,757    252,175    222,516 
2015   Annual distribution total $1.24        12.725    1,565    231,781    201,185 
2016   Annual distribution total $1.02        12.334    1,460    293,880    248,425 
2017   Annual distribution total $1.16        14.841    1,495    350,840    324,176 
2018   Distribution through 6/30/18 $0.59        15.962    748           
2018   Rights Offering   31,289    15.330    2,041           
2018   Distribution after 6/30/18 $0.67        12.706    1,168    329,589    283,259 
2019   Annual distribution total $1.10        14.100    1,929    429,986    383,045 
2020   Annual distribution total $1.04        11.888    2,357    523,949    456,617 
2021   Year-to-Date distribution total $0.56        18.308    872           
6/30/21      $53,211         29,163   $611,840   $553,222 

 

1The purchase price used for annual distribution totals is a weighted average of the distribution reinvestment prices for the year.
2Values are stated as of December 31 of the year indicated, after reinvestment of distributions, other than for initial purchase.
3Includes a return of capital.
4Includes Royce Global Value Trust spin-off of $1.40 per share.

 

2021 Semiannual Report to Stockholders  |  57

 

 

 

 

 

 

Distribution Reinvestment and Cash Purchase Options

 

Why should I reinvest my distributions?

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

 

How does the reinvestment of distributions from the Royce closed-end funds work?

The Funds automatically issue shares in payment of distributions unless you indicate otherwise. The shares are generally issued at the lower of the market price or net asset value on the valuation date.

 

How does this apply to registered stockholders?

If your shares are registered directly with a Fund, your distributions are automatically reinvested unless you have otherwise instructed the Funds’ transfer agent, Computershare, in writing, in which case you will receive your distribution in cash. A registered stockholder also may have the option to receive the distribution in the form of a stock certificate.

 

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 RVT and RMT shares with Computershare for safekeeping. (RGT does not issue shares in certificated form). Plan participants are subject to a $0.75 service fee for each voluntary cash purchase under the Plans. The Funds’ investment adviser absorbed all commissions on optional cash purchases under the Plans through June 30, 2021.

 

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 stock certificates for RVT and RMT held by them to Computershare to be held in non-certificated form. RGT does not issue shares in 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 service fee from the sale transaction. The Funds’ investment adviser absorbed all commissions on optional sales under the Plans through June 30, 2021. 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 43078, Providence, RI 02940-3078, telephone (800) 426-5523 (from 9:00 A.M. to 5:00 P.M.).

 

58 | 2021 Semiannual Report to Stockholders

 

 

 

 

 

Directors and Officers

 

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

 

Christopher D. Clark, Director 1, President

Age: 56 | Number of Funds Overseen: 16 | Tenure: Since 2014

Principal Occupation(s) During Past Five Years: Chief Executive Officer (since July 2016), President (since July 2014), Co-Chief Investment Officer (since January 2014), Managing Director of Royce, a Member of the Board of Managers of Royce, having been employed by Royce since May 2007.

 

Patricia W. Chadwick, Director

Age: 72 | Number of Funds Overseen: 16 | Tenure: Since 2009

Non-Royce Directorships: Trustee of Voya Mutual Funds and Director of Wisconsin Energy Corp.

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

 

Christopher C. Grisanti, Director

Age: 59 | Number of Funds Overseen: 16 | Tenure: Since 2017

Non-Royce Directorships: None

Principal Occupation(s) During Past Five Years: Chief Equity Strategist and Senior Portfolio Manager at MAI Capital Management LLC, an investment advisory firm (since May 2020). Previously, Mr. Grisanti was Co-Founder and Chief Executive Officer of Grisanti Capital Management LLC, an investment advisory firm (from 1999 to 2020). Mr. Grisanti’s prior business experience also includes serving as Director of Research and Portfolio Manager at Spears Benzak, Salomon & Farrell (from 1994 to 1999) and a senior associate at the law firm of Simpson, Thacher & Bartlett (from 1988 to 1994).

 

Cecile B. Harper, Director

Age: 58 | Number of Funds Overseen: 16 | Tenure: Since 2020

Non-Royce Directorships: None

Principal Occupation(s) During Past Five Years: Board Member of Pyramid Peak Foundation (since January 2012); and Chief Operating Officer at the College Foundation at the University of Virginia (since October 2019). Ms. Harper’s prior business experience includes serving as Principal of Southeastern Asset Management (from December 1993 to September 2019); and a Board Member of Regional One Health Foundation (from June 2013 to September 2019).

 

Arthur S. Mehlman, Director

Age: 79 | Number of Funds Overseen: 362 | Tenure: Since 2004

Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 20 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).

 

G. Peter O’Brien, Director

Age: 75 | Number of Funds Overseen: 362 | Tenure: Since 2001

Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 20 Legg Mason Funds.

Principal Occupation(s) During Past Five Years: Trustee Emeritus of Colgate University (since 2005); Board Member of Hill House, Inc. (since 1999); Formerly Director of TICC Capital Corp (from 2003-2017): 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).

 

Michael K. Shields, Director

Age: 63 | Number of Funds Overseen: 16 | Tenure: Since 2015

Principal Occupation(s) During Past Five Years: President and Chief Executive Officer of Piedmont Trust Company, a privately-owned North Carolina trust company and wealth management firm (since May 2012). Mr. Shields’s prior business experience includes managing institutional and mutual fund equity portfolios in New York at Scudder, Stevens & Clark where he was a Principal in the Global Equity Group (1992 – 1997) and US Trust where he was President & CIO of a wholly-owned investment firm subsidiary (1997 – 2002).

 

Francis D. Gannon, Vice President

Age: 53 | Tenure: Since 2014

Principal Occupation(s) During Past Five Years: Co-Chief Investment Officer (since January 2014) and Managing Director of Royce, having been employed by Royce since September 2006.

 

Daniel A. O’Byrne, Vice President

Age: 59 | Tenure: Since 1994

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

 

Peter K. Hoglund, Treasurer

Age: 55 | Tenure: Since 2015

Principal Occupation(s) During Past Five Years: Chief Financial Officer, Chief Administrative Officer, and Managing Director of Royce, having been employed by Royce since December 2014. Prior to joining Royce, Mr. Hoglund spent more than 20 years with Munder Capital Management in Birmingham, MI, serving as Managing Director and Chief Financial Officer and overseeing all financial aspects of the firm. He began his career at Munder as a portfolio manager.

 

John E. Denneen, Secretary and Chief Legal Officer

Age: 54 | Tenure: 1996-2001 and Since 2002

Principal Occupation(s) During Past Five Years: General Counsel, Managing Director, and, since June 2015, a Member of the Board of Managers of Royce. Chief Legal and Compliance Officer and Secretary of Royce.

 

Lisa Curcio, Chief Compliance Officer

Age: 61 | 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 Director.

2 As of July 1, 2021, Messrs. Mehlman and O’Brien oversee 75 Funds.

Directors 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 directors and officers, is available and can be obtained without charge at www.royceinvest.com or by calling (800) 221-4268.

 

2021 Semiannual Report to Stockholders | 59

 

 

 

 

 

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, 2021, 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, 2021 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.royceinvest.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. Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication. 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 2000 Pure Value Index is an unmanaged index composed of securities with strong value characteristics selected from the Russell 2000 Index. Securities are weighted based on their style score. The Russell 2000 Pure Growth Index is an unmanaged index composed of securities with strong growth characteristics selected from the Russell 2000 Index. The Russell Microcap Index includes 1,000 of the smallest securities in the Russell 2000 Index along with the next smallest eligible securities as determined by Russell. The Russell 1000 Index is an index of domestic large-cap stocks. It measures the performance of the 1,000 largest publicly traded companies in the Russell 3000 Index. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indexes or any securities or financial products. This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. The MSCI ACWI Small Cap Index is an unmanaged, capitalization-weighted index of global small-cap stocks. Index returns include net reinvested dividends and/ or interest income. The S&P SmallCap 600 Index is an index of U.S. small-cap stocks selected by Standard & Poor’s based on market size, liquidity, and industry grouping, among other factors. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index. Returns for the market indexes used in this report were based on information supplied to Royce by Russell Investments. The ISM Manufacturing Index (ISM) monitors employment, production, inventories, new orders and supplier deliveries.

 

The Price-Earnings, or P/E, Ratio is calculated by dividing a company’s share price by its trailing 12-month earnings-per-share (EPS). The Price-to-Book, or P/B, Ratio is calculated by dividing a company’s share price by its book value per share. Beta is a measure of the volatility or risk of an investment compared to the market as a whole. Alpha describes an investment strategy’s ability to beat the market. The Morningstar Style Map uses proprietary scores of a stock’s value and growth characteristics to determine its placement in one of the five categories listed on the horizontal axis. These characteristics are then compared to those of other stocks within the same market capitalization band. Each is scored from zero to 100 for both value and growth attributes. The value score is subtracted from the growth score to determine the overall style score. For the vertical, market cap axis, Morningstar subdivides into size groups. Giant-cap stocks are defined as those that account for the top 40% of the capitalization of each style zone; large-cap stocks represent the next 30%; mid-cap stocks the next 20%; small-cap stocks the next 7%; micro-cap stocks the smallest 3%. For the Morningstar Small Blend Category: © 2021 Morningstar. All Rights Reserved. The information regarding the category in this piece is: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Cyclical and Defensive are defined as follows: Cyclical: Communication Services, Consumer Discretionary, Energy, Financials, Industrials, Information Technology, and Materials. Defensive: Consumer Staples, Health Care, Real Estate, and Utilities. The Royce Funds is a service mark of The Royce Funds. Distributor: Royce Fund Services, LLC.

 

Royce Micro-Cap Trust, Inc. normally invests at least 80% of its assets in the equity securities of micro-cap companies while Royce Value Trust, Inc. normally invests at least 65% of its assets in the equity securities of small- and micro-cap companies. In 2020, these Funds updated their definitions of micro-cap and small-cap companies for these purposes. Accordingly, micro-cap companies are now those that have a market capitalization not greater than that of the largest company in the Russell Microcap® Index at the time of its most recent reconstitution and small-cap companies are now those that have a market capitalization not greater than that of the largest company in the Russell 2000® Index at the time of its most recent reconstitution.

 

Royce Global Value Trust enacted a change to one of its non-fundamental investment policies effective as of May 1, 2021. The Fund must, effective as of such date, invest at least 40% of its net assets in the equity securities of companies headquartered in at least three countries outside the United States. Prior to May 1, 2021, the Fund was required to invest at least 65% of its net assets in the equity securities of companies headquartered in at least three countries outside the United States.

 

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.

 

60 | 2021 Semiannual Report to Stockholders

 

 

 

 

 

Notes to Performance and Other Important Information (continued)

 

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 Global Value Trust, Royce Micro-Cap Trust, and Royce Value Trust may each repurchase up to 5% of the issued and outstanding shares of its respective common stock during the year ending December 31, 2021. 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.

 

Royce Global Value Trust, Royce Micro-Cap Trust, and Royce Value 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.

 

Royce Global Value Trust completed a tender offer for 50% of its issued and outstanding shares of common stock as of October 12, 2020 (i.e., 5,251,735 shares) at a price per share equal to 100% of the Fund’s net asset value per share as of the close of regular trading on the NYSE on December 22, 2020 (i.e., $14.43 per share). Please see “Capital Stock” in the Notes to Financial Statements (Unaudited) of Royce Global Value Trust for more information about the tender offer.

 

Annual Certifications

As required, the Funds have submitted to the New York Stock Exchange (“NYSE”) for the annual certification of the Funds’ Chief Executive Officer that he is not aware of any violation of the NYSE’s 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, 2020, 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.royceinvest.com, by calling (800) 221-4268 (toll-free) and on the website of the Securities and Exchange Commission (“SEC”), at www.sec.gov.

 

Disclosure of Portfolio Holdings

The Funds’ complete portfolio holdings are also available on Exhibit F to Form N-PORT, which filings are made with the SEC within 60 days of the end of the first and third fiscal quarters. The Funds’ Form N-PORT filings are available on the SEC’s website at http://www.sec.gov.

 

2021 Semiannual Report to Stockholders | 61

 

 

 

 

 

 

         
         
         
         
         
         
         
         
         
         
         
         
         
         
     
         
         
         
         
         
         
  About Royce Investment Partners   Contact Us  
         
  Unparalleled Knowledge + Experience   GENERAL INFORMATION  
  Pioneers in small-cap investing, with 45+ years   General Royce Funds information including an  
  of experience, depth of knowledge, and focus.   overview of our firm and Funds  
      (800) 221-4268  
  Independent Thinking      
  The confidence to go against consensus, the insight      
  to uncover opportunities others might miss, and the   COMPUTERSHARE  
  tenacity to stay the course through market cycles.   Transfer Agent and Registrar  
      Speak with a representative about:  
  Specialized Approaches   ● Your account, transactions, and forms  
  U.S., international, and global investment strategies   (800) 426-5523  
  that pursue approaches with different risk profiles.      
         
  Unwavering Commitment   FINANCIAL ADVISORS AND BROKER-DEALERS  
  Our team of 16 portfolio managers has significant   Speak with your regional Royce contact regarding:  
  personal investments in the strategies they manage.   ● Information about our firm, strategies, and Funds  
      ● Fund Materials  
      (800) 337-6923  
         
         
         
         
         
         
         
         
         
      CE-REP-0621  
         
         
         
         
         

 

 
 

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 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/ Christopher D. Clark

     Christopher D. Clark

     President

 

Date: August 26, 2021

 

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/ Christopher D. Clark BY:  /s/ Peter K. Hoglund
       Christopher D. Clark        Peter K. Hoglund
       President        Chief Financial Officer
   
Date: August 26, 2021 Date: August 26, 2021