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 of agent for service: John E. Denneen, Esquire
Address of agent for service: 745 Fifth Avenue
New York, NY 10151
Registrant's telephone number, including area code: (212) 508-4500
Date of fiscal year end: December 31
Date of reporting period: January 1, 2021 – December 31, 2021
| Item 1. | Reports to Shareholders. |
Royce Closed-End Funds 2021 Annual
Review and Report to Stockholders
December 31, 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 in both U.S. and non-U.S. companies with market capitalization below $10 billion; 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 open-end 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 page 58 and page 59. For additional information on the Funds’ Distribution Reinvestment and Cash Purchase Options and the benefits for stockholders, please see page 60 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 Annual Report to Stockholders
Table of Contents
| Annual Review | |
| Letter to Our Stockholders | 2 |
| Performance | 7 |
| Annual 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 | 58 |
| Distribution Reinvestment and Cash Purchase Options | 60 |
| Directors and Officers | 61 |
| Notes to Performance and Other Important Information | 62 |
| This page is not part of the 2021 Annual Report to Stockholders | 1 |
THE BEAR IS BACK—NOW WHAT?
2021 was a year of decelerating optimism for many small-cap investors as performance momentum slowed as the weeks passed by between April and December. With the benefit of a late January vantage point, we can now see that decreasing market momentum, increasing concerns about inflation throughout the last nine months of 2021, and a significant Fed pivot all foreshadowed a sharp small-cap decline to start 2022. So while the Russell 2000 Index enjoyed a strong year on an absolute basis, rising 14.8%, nearly all of the year’s gain came in the first quarter, when the Russell 2000 climbed 12.7%. Following this strong and promising start, the small-cap index gained only 1.9% from the second through the fourth quarter of 2021. Having so little to show for the last nine months was even more frustrating in light of the generally strong earnings growth from small-cap companies, many of which also raised guidance or offered optimistic outlooks in the second half of 2021.
Bigger Was Better After 2021’s First Quarter
1Q21 Returns and 2Q21-4Q21 for the Russell 2000 and Russell 1000 Indexes
In addition to the disappointment felt by making little progress after a strong start, small-cap investors also saw the asset class progressively cede its wide first-quarter lead over large-caps, with the Russell 2000 finishing the year substantially behind the large-cap Russell 1000 Index’s 26.5% advance in 2021. We suspect that many investors turned to mega-cap stocks during the year in a ‘flight to safety’ as concerns about the Omicron variant and the pace of economic growth emerged, especially when interest rates were still so low. As the early results in 2022 have indicated, we expect these same mega-cap stocks to struggle going forward because their valuations are particularly vulnerable to higher inflation, rising interest rates, and constrained liquidity.
Regardless of the more recent struggles for equities of all capitalization sizes, we recognize that it may seem odd to characterize small-cap investors as feeling let down after a year that provided a healthy 14.8% return—while also marking a third consecutive year of double-digit positive performance for the Russell 2000. Yet we are cognizant that 2021 might feel like a year of unfulfilled promise for many of these investors. After all, 2021 did begin with an ample dose of confidence in both the absolute and relative returns for the Russell 2000—which was rewarded in the first quarter. However, a closer look at small-cap returns in 2021 suggests that one’s perspective on the year probably differs considerably depending on how heavily an investor leaned towards small-cap value or small-cap growth.
| 2 | This page is not part of the 2021 Annual Report to Stockholders | Past performance is no guarantee of future results. |
LETTER TO OUR SHAREHOLDERS
VALUE: SMALL-CAP’S HAPPY EXCEPTION
The best news for small-cap investors in 2021 arguably came from value stocks. The Russell 2000 Value Index had a wonderful year—advancing 28.3% (thus beating the Russell 1000). The small-cap value index also walloped the Russell 2000 Growth Index, which was up a paltry 2.8% for the year. 2021 marked the first calendar-year outperformance for the Russell 2000 Value over its small-cap growth sibling since 2016. We think small-cap value is just starting to flex its relative performance muscles, as it were, and we see three reasons to be optimistic about small-cap value’s prospects. First, in spite of the strength it’s shown since the fourth quarter of 2020, the Russell 2000 Value’s annualized three- and five-year returns still trailed those for its growth sibling at the end of 2021—by a significant amount on the five-year number. Equally important, this result stands in stark contrast to the average return spread for all five-year periods since 1979, which is about 300 basis points in favor of small-cap value. Based on history, then, it appears that the Russell 2000 Value has further to go before fully reverting to its historical outperformance of the Russell 2000 Growth over multi-year periods. This also suggests that the difficult times for small-cap growth investors may persist longer than its adherents would like.
Small-Cap Growth’s Recent 5-Year Outperformance Contrasts with Historical Pattern
As of 12/31/21
ADVANTAGE VALUE?
A second reason underscoring our confidence in the ongoing leadership for small-cap value is that significant differences exist in economic exposures among value and growth portfolios, which are mirrored by the meaningful divergences in composition between the two small-cap styles indexes. Looking into each index’s composition reveals certain factors that help explain why returns often have varied so much between the two style indexes over the last 40-plus years. The two industry groups where
the Russell 2000 Value is most overweight compared with the Russell 2000 Growth are banks and real estate, both traditional beneficiaries of inflation and cyclical activity. These industry groups, banks in particular, often have high exposures in active small-cap value portfolios. Conversely, the three industry groups where the Russell 2000 Value is most underweight—software & services; pharmaceuticals, biotechnology & life sciences; and health care equipment & services—are areas that have historically struggled in inflationary environments and tend not to participate in cyclical expansions. Notably, these three areas also have a large percentage of non-earning companies, and we expect that the forthcoming market environment of reduced liquidity will be much less supportive of non-earners than most of the past 10 years have been. We’ve also observed that these three areas are often lower weighted in active small-cap value portfolios. This compositional analysis corroborates our expectation that an economic environment of above-average growth and higher-than-average inflation is likely to favor the overweighted areas within small-cap value and create headwinds for those groups with greater exposure within small-cap growth.
Russell 2000 Value vs Russell 2000 Growth Top Three Underweights and Overweights by Industry Group
As of 12/31/21
Finally, as we have noted elsewhere, despite its significant outperformance, small-cap value is still priced near the bottom of its 20-year valuation range compared with small-cap growth, as measured by one of our preferred valuation metrics, the median last 12 months’ enterprise value over earnings before interest & taxes (LTM EV/EBIT), excluding companies with negative EBIT. For all these reasons, we think small-cap value may have many years left in its current outperformance trend.
| Past performance is no guarantee of future results. | This page is not part of the 2021 Annual Report to Stockholders | 3 |
LETTER TO OUR SHAREHOLDERS
IN THE SHADOW OF THE BEAR
As of this writing, of course, most investors are wondering—and worrying—about the correction that pushed small-caps into bear territory (a decline of 20% or more). The Russell 2000 fell 20.7% from its most recent peak on 11/8/21 through 1/27/22, as share price weakness broadened and deepened considerably in January. The speed of this descent—just 49 days between the 52-week high in early November and its initial 52-week low in January—was the fourth fastest such move in the Russell 2000’s history. A genuinely startling fall, though steep, sharp declines have been more common than not since the Financial Crisis.
As we seek to understand the market’s latest movements, we think it’s important to note that bond market signals have yet to move in the direction they often took in prior equity declines—bond yields commonly fall, and high-yield spreads widen when there are heightened concerns about future economic growth. We have seen neither so far in 2022. The contrast between the dramatic volatility of stocks and the nonplussed reaction of the bond market leads us to view this decline as a resetting of equity valuations rather than an increased concern about, or signal of, recession. Even more important, this latter view is corroborated by our recent conversations with company managements, where their largest challenges remain supply channel issues and the shortage of skilled workers to keep pace with the demand these companies are seeing.
Still, in our view, it’s significant that the Federal Reserve is making such a consequential pivot—from extraordinary monetary accommodation to mitigate the effects of COVID to more aggressive, and opposite, actions in an attempt to tame inflation. Liquidity and inflation are therefore now center stage. They have pushed Omicron and the pace of GDP growth toward the wings, though it is fair to say that all these developments (along with lingering supply chain issues) are interrelated. Indeed, periods like the present offer a reminder, however sobering, that, while equity markets are connected to the economy, the Fed functions in large part as the connective
tissue between the two because it’s the gatekeeper of liquidity. The consequence of this interrelationship is that any major move from the Fed will spur volatility. The central bank’s newest policies constitute two significant reversals—the shift from keeping a lid on rates to raising them and the move away from keeping the capital markets awash in liquidity to limiting it. After being in place for most of the last decade, these related Fed policy reversals happened in comparably short order, and thus it’s not surprising that the market has been reacting in an extreme fashion. From our perspective as experienced small-cap investors, this downturn is not about company fundamentals—it’s about valuations and liquidity. The days of generous monetary policy driving multiple expansion are over. It made sense to us, then, that more speculative assets—cryptocurrencies and growth stocks, for instance—experienced some of the most negative reactions to the Fed’s policy shift.
Importantly, if we are correct in suggesting that we are experiencing a valuation reset due to concerns about higher inflation, it’s worth recalling that, based on the CRSP (The Center for Research in Security Prices) data, small-caps are the only major asset class to have outpaced inflation in every decade since the 1970’s.
Small-Caps Have Beaten Inflation in Every Decade
Average
Annual Consumer Price Index (CPI) versus Average Annual CRSP 6-10 Index
12/31/1930- 12/31/2020 (%)
Sources: Bureau of Labor Statistics (CPI) and CRSP
Additionally, since 2003, small-caps have on average delivered attractive returns when inflation expectations were
The best news for small-cap investors in 2021 arguably came from value stocks. The Russell 2000 Value Index had a wonderful year—advancing 28.3% (thus beating the Russell 1000). The small-cap value index also walloped the Russell 2000 Growth Index, which was up a paltry 2.8% for the year.
| 4 | This page is not part of the 2021 Annual Report to Stockholders | Past performance is no guarantee of future results. |
LETTER TO OUR SHAREHOLDERS
From our perspective as experienced small-cap investors, this downturn is not about company fundamentals—it’s about valuations and liquidity. The days of generous monetary policy driving multiple expansion are over.
rising. Finally, if all equity assets are undergoing a valuation reset, then it may be comforting to know that small-caps are at the low end of their relative valuation range over the past 20 years versus large-caps, which may limit their downside exposure relative to their larger siblings.
We hasten to add that we live in a complex world where it’s critical for us to practice humility about attributing causes and effects. As of this writing, there is also heightened geopolitical tension, and the possibility of an armed conflict on a scale not seen in decades. It’s difficult for us to imagine that these events are not exerting downward pressure of their own on equity valuations.
THE VALUE IN SMALL-CAP
What, then, are small-cap investors to do? We have already outlined why we think small-cap value stocks look poised to endure the current spate of higher volatility and lower returns in better shape than their growth counterparts. Even amid a challenging and uncertain climate for equities, much about the small-cap earnings picture remains constructive—particularly in the more cyclical precincts where we are most active currently. As we noted above, the probability of a U.S. recession looks low for at least this year and perhaps longer. U.S. and global GDP growth continue to trend in a positive, if bumpy, fashion. While our portfolio teams pursue distinct investment strategies and tend to focus on different types of small-cap stocks, they have found some common ground in identifying opportunities in the Industrial and Financial sectors, as well as in the lower valuation areas of Information Technology. Four areas that appear attractive are the semiconductor and housing ecosystems, select capital goods companies, and regional banks.
Given our confidence in the prospects for ongoing small-cap value leadership, we think it’s also useful for investors to know that a robust historical trend exists connecting value-led markets to success for active small-cap management. In 81% of value-led markets, active small-cap management outperformed the Russell 2000, a far more frequent record of success than in growth-led
markets, when active management outperformed the small-cap index in only 14% of the five-year periods ended 12/31/21.
Active Small Blend Management: Better in Value-Led Markets
%
of Outperformance Periods for Morningstar Small Blend Category Average¹ vs. the Russell 2000
12/31/78- 12/31/21
Small Blend outperformed in 68% of 10-year periods (270/397) with an average of 10.8% vs Russell 2000 average 10.0%. 1There were 523 US Fund Small Blend Funds tracked by Morningstar with at least five years of performance history as of 12/31/21. 25-Year Monthly Rolling Returns From 12/31/78 to 12/31/21 (457 Periods). Source: Morningstar
FACING THE GREAT UNKNOWN
How these various macroeconomic uncertainties play out is beyond our circle of competence. Our own expertise and focus lie in identifying attractively valued stocks. If pressed to offer a market outlook beyond our long-term confidence in small-cap value, we would be hard pressed to offer an expectation, starting from late January’s low levels, of other than an intermediate-term return similar to the Russell 2000’s historical average of about 10%. The favorable and unfavorable factors seem roughly in balance. For the latter, economic growth, though likely above average this year, will also likely slow next year; high-yield spreads, whose decline is often an accelerant for small-cap returns, remain at low levels; valuations, while not concerning, are also not so low that they offer much potential for expanding multiples, and a Federal Reserve that is removing monetary accommodation is rarely coincident with above-average equity returns. Still, on the positive side, we begin (as we often do) with the long term: Since 1945, based on data from CRSP, small-cap stocks have posted positive annualized three-year returns 88% of the time on a rolling monthly basis, with an average return in the low
| Past performance is no guarantee of future results. | This page is not part of the 2021 Annual Report to Stockholders | 5 |
LETTER TO OUR SHAREHOLDERS
Subsequent 1-Year Performance of Russell 2000 after a 20% Decline
As of 1/31/22
First Day of 20% Decline
double digits. Moreover, there is the impressive record of small-cap rebounds from declines of 20% or more from a previous peak. The recent January 2022 low marked the twelfth such decline since the 1979 launch of the Russell 2000. The average subsequent one-year return from the first day of the eleven previous declines was 19.6%. In addition, the small-cap index produced positive returns over the subsequent year in all eleven periods, save one—which occurred in the Great Financial Crisis.
Even with the myriad challenges currently facing the world, we think it’s fair to say that current conditions do not resemble those of the Great Financial Crisis. However, another historical instance may be worth noting. The last time the Fed aggressively removed monetary accommodation with the move not triggering a recession occurred in 1994, when the Russell 2000 was down 1.8% for the year. But that reset year was followed by
a glorious period for small-caps, with the annualized return for 1995-97 totaling 22.3% for the Russell 2000.
We also remain convinced that earnings ultimately drive individual company stock returns, and (as we mentioned above) the earnings prospects for many small-cap companies remain promising, specifically those with sound fundamentals, including low-debt balance sheets, positive cash flows, and the ability to pass on higher costs in this inflationary period. We have always believed that focusing on what we know and not worrying about what we cannot control are paramount to effective and successful active management. Our commitment to a disciplined process across each of our small-cap strategies is the best way to give our shareholders the greatest opportunities to build wealth over the long run. This remains true even in the most challenging times.
| 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 |
| January 31, 2022 |
| 6 | This page is not part of the 2021 Annual Report to Stockholders | Past performance is no guarantee of future results. |
NAV Average Annual Total Returns
As of December 31, 2021 (%)
| 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | 25-YR | 30-YR | SINCE INCEPTION |
INCEPTION DATE | |
| Royce Global Value Trust | 16.34 | 22.24 | 14.97 | N/A | N/A | N/A | N/A | N/A | 9.31 | 10/17/13 |
| Royce Micro-Cap Trust | 19.17 | 24.92 | 15.18 | 14.38 | 9.03 | 10.68 | 11.23 | N/A | 11.58 | 12/14/93 |
| Royce Value Trust | 19.97 | 24.01 | 14.26 | 13.48 | 8.56 | 9.73 | 10.69 | 11.31 | 11.07 | 11/26/86 |
| INDEX | ||||||||||
| MSCI ACWI Small Cap Index | 16.10 | 18.96 | 12.28 | 11.78 | 7.82 | 10.31 | 8.56 | N/A | N/A | N/A |
| Russell Microcap Index | 19.34 | 20.90 | 11.69 | 13.62 | 7.51 | 9.04 | N/A | N/A | N/A | N/A |
| Russell 2000 Index | 14.82 | 20.02 | 12.02 | 13.23 | 8.69 | 9.36 | 8.99 | 10.07 | N/A | N/A |
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, reflects the reinvestment of distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the sale of fund shares. 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 Annual Report to Stockholders | 7 |
MANAGER’S DISCUSSION (UNAUDITED)
Royce Global Value Trust (RGT)
Chuck Royce
FUND PERFORMANCE
Royce Global Value Trust (RGT) rose 16.3% on an NAV (net asset value) basis and 19.8% on a market price basis in 2021 versus a gain of 16.1% for its unleveraged benchmark, the MSCI ACWI Small Cap Index, for the same period. On both an NAV and market price basis, RGT also beat the MSCI ACWI Small Cap for the 3- and 5-year periods ended 12/31/21.
WHAT WORKED… AND WHAT DIDN’T
Five of the portfolio’s 10 equity sectors made a positive impact on calendar-year performance. Industrials led all sectors by a wide margin and was followed by Financials and Information Technology. The biggest negative impacts came from Materials, Energy, and Communication Services. At the industry level, three areas in Industrials contributed most in 2021: trading companies & distributors, professional services, and commercial services & supplies. The largest detractors were metals & mining (Materials), internet & direct marketing retail (Consumer Discretionary), and interactive media & services (Communication Services).
At the position level, the Fund’s top contributor was Transcat, a Rochester, New York-based company that distributes test and measurement instruments and provides accredited calibration services for use across a diverse range of industries. Its shares rose more or less steadily during 2021, thanks to rising revenues and earnings in both its Distribution and Services segments. The former rebounded nicely in 2021. We see a number of attractive attributes in the company, including its niche, its conservatively capitalized balance sheet, what we think are sustainable gross margins in its Service segment, and its active M&A pipeline. The next top contributor 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. It has a strong position in essential, critical, and/or mandated services in growing markets, each with a highly fragmented customer base. Already positive trends in revenue and earnings growth continued through the second half of calendar 2021. The firm released fiscal first-half of 2022 results in December that showed extended reach in each of its markets driven by strong organic growth and the completion of twelve acquisitions. Marlowe also expects to continue benefiting from increasingly stringent regulations and more ESG requirements on businesses.
| Top Contributors to Performance | Top Detractors from Performance | |||||
| For 2021 (%)1 | For 2021 (%)2 | |||||
| Transcat | 1.45 | CDON | -0.50 | |||
| Marlowe | 0.89 | New Work | -0.50 | |||
| ProAssurance Corporation | 0.77 | Haemonetics Corporation | -0.43 | |||
| Descartes Systems Group (The) | 0.73 | MaxCyte | -0.38 | |||
| KBR | 0.72 | CIRCOR International | -0.36 | |||
| 1 Includes dividends | 2 Net of dividends | |||||
RGT’s top detracting position was CDON, a Swedish e-commerce company that operates a website which sells music, books, and other merchandise. As an established e-commerce name in Nordic countries, CDON has a chance 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. However, 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. Unsure about its long-term growth trajectory, we chose to exit our position in October. RGT’s second top detractor was New Work, which operates the largest career networking and recruiting platform in the ‘DACH’ region of Germany, Austria, and Switzerland via XING, the leading online business network in German-speaking countries, and kununu, a leading employer review platform in Europe. Its business—and consequently its stock price—were adversely affected by extended COVID restrictions in Germany and the related impact on hiring sentiment—which, at least for now, has created a more muted growth profile for the firm. Seeing what we thought were better opportunities elsewhere, we opted to sell our stake in RGT’s portfolio.
The Fund’s narrow advantage over the MSCI ACWI Small Cap came from sector allocation decisions in 2021. Both savvy stock selection and our significant sector overweight were positives in Industrials while our underweight and successful stock picks gave us an advantage in Health Care. Our greater exposure to Financials was also additive. Conversely, stock picking detracted from relative results in Materials. The portfolio’s cash holdings and a combination of our substantially lower weighting and ineffective stock picks in Energy also hurt relative results.
CURRENT POSITIONING AND OUTLOOK
Our outlook is very positive for small-cap value but more nuanced for small-cap as a whole. A less accommodative Fed, likely followed by similar policies from other central banks in the developed world, leads us to believe that performance for small-cap stocks will be more muted across much of the globe in 2022. Still, history indicates that small-cap value and cyclicals do well, particularly on a relative basis, during periods of improving economic growth. This is consistent with the encouraging signs we’ve been seeing on a company-by-company basis. We also are optimistic about the relative performance outlook for high quality stocks—which we primarily define as companies with high returns on invested capital and stable returns on assets. We think the Fund’s combined focus on high-quality and value should be supportive for attractive returns, particularly relative to its benchmark.
| 8 | 2021 Annual Report to Stockholders |
| PERFORMANCE AND PORTFOLIO REVIEW (UNAUDITED) | SYMBOLS MARKET PRICE RGT NAV XRGTX |
| Performance |
| Average Annual Total Return (%) Through 12/31/21 |
| JUL-DEC 20211 | 1-YR | 3-YR | 5-YR | SINCE INCEPTION (10/17/13) | |
| RGT (NAV) | 6.24 | 16.34 | 22.24 | 14.97 | 9.31 |
| 1 Not Annualized |
| Market Price Performance History Since Inception (10/17/13) |
| Cumulative Performance of Investment1 |
| 1-YR | 5-YR | 10-YR | 15-YR | 20-YR | SINCE INCEPTION (10/17/13) | |
| RGT | 19.8% | 121.2% | N/A | N/A | N/A | 108.2% |
| ¹ | Reflects the cumulative performance experience of a continuous common stockholder who purchased one share at inception ($8.975 IPO) and reinvested all distributions. |
| ² | Reflects the actual month-end market price movement of one share as it has traded on NYSE. |
| Morningstar Style Map™ As of 12/31/21 |
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 62 for additional information.
| Top 10 Positions | |||
| % of Net Assets | |||
| Transcat | 2.5 | ||
| ProAssurance Corporation | 2.4 | ||
| Morningstar | 2.2 | ||
| Descartes Systems Group (The) | 2.2 | ||
| Marlowe | 2.0 | ||
| KBR | 1.9 | ||
| APi Group | 1.8 | ||
| SEI Investments | 1.8 | ||
| IPH | 1.8 | ||
| Sprott | 1.7 |
| Portfolio Sector Breakdown | |||
| % of Net Assets | |||
| Industrials | 37.8 | ||
| Information Technology | 19.7 | ||
| Financials | 19.3 | ||
| Health Care | 6.7 | ||
| Materials | 5.3 | ||
| Communication Services | 4.6 | ||
| Consumer Discretionary | 4.2 | ||
| Real Estate | 2.2 | ||
| Energy | 1.4 | ||
| Consumer Staples | 1.2 | ||
| Outstanding Line of Credit, Net of Cash | |||
| and Cash Equivalents | -2.4 |
| Calendar Year Total Returns (%) | |||
| YEAR | RGT | ||
| 2021 | 16.3 | ||
| 2020 | 19.7 | ||
| 2019 | 31.2 | ||
| 2018 | -16.1 | ||
| 2017 | 31.1 | ||
| 2016 | 11.1 | ||
| 2015 | -3.4 | ||
| 2014 | -6.2 |
| Portfolio Country Breakdown 1,2 | |||
| % of Net Assets | |||
| United States | 41.1 | ||
| United Kingdom | 13.9 | ||
| Canada | 12.0 | ||
| Sweden | 5.4 | ||
| Australia | 3.2 | ||
| Japan | 3.1 |
| 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 | $89 million | ||
| Number of Holdings | 120 | ||
| Turnover Rate | 52% | ||
| Net Asset Value | $14.26 | ||
| Market Price | $13.12 | ||
| Net Leverage1 | 2.4% | ||
| Average Market Capitalization2 | $2,261 million | ||
| Weighted Average P/E Ratio3,4 | 24.9x | ||
| Weighted Average P/B Ratio3 | 3.1x | ||
| Active Share5 | 98% |
| 1 | Net leverage is the percentage, in excess of 100%, of the total value of equity type investments, divided by net assets. |
| 2 | Geometric 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. |
| 3 | Harmonic 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. |
| 4 | The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (17% of portfolio holdings as of 12/31/21). |
| 5 | Active 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, reflects the reinvestment of distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the sale of fund shares. 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. The Fund generally invests 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 Annual Report to Stockholders | 9 |
Schedule of Investments
Common Stocks – 102.4%
| SHARES | VALUE | |||||||
| AUSTRALIA – 3.2% | ||||||||
| Cochlear | 4,000 | $ | 628,952 | |||||
| IPH | 253,881 | 1,621,764 | ||||||
| Steadfast Group | 53,300 | 203,587 | ||||||
| Technology One | 40,400 | 376,524 | ||||||
| Total (Cost $1,471,791) | 2,830,827 | |||||||
| BERMUDA – 2.2% | ||||||||
| Assured Guaranty 1 | 10,800 | 542,160 | ||||||
| Bank of N.T. Butterfield & Son | 15,000 | 571,650 | ||||||
| †James River Group Holdings | 30,600 | 881,586 | ||||||
| Total (Cost $1,983,009) | 1,995,396 | |||||||
| BRAZIL – 1.0% | ||||||||
| Odontoprev | 156,000 | 352,891 | ||||||
| TOTVS | 97,885 | 503,308 | ||||||
| Total (Cost $750,794) | 856,199 | |||||||
| CANADA – 12.0% | ||||||||
| Alamos Gold Cl. A | 66,100 | 508,441 | ||||||
| Altus Group | 16,400 | 920,122 | ||||||
| AutoCanada 2 | 20,400 | 688,628 | ||||||
| Centerra Gold | 39,000 | 300,605 | ||||||
| Computer Modelling Group | 91,500 | 308,147 | ||||||
| Descartes Systems Group (The) 1,2,3 | 23,300 | 1,926,444 | ||||||
| FirstService Corporation | 1,400 | 275,058 | ||||||
| †IMAX Corporation 2 | 42,100 | 751,064 | ||||||
| LifeWorks | 36,500 | 736,665 | ||||||
| Major Drilling Group International 2 | 168,000 | 1,097,024 | ||||||
| †Onex Corporation | 6,000 | 470,912 | ||||||
| Pan American Silver 1 | 12,700 | 317,119 | ||||||
| Pason Systems | 79,200 | 722,533 | ||||||
| Sprott | 34,360 | 1,550,471 | ||||||
| Stella-Jones | 6,300 | 199,267 | ||||||
| Total (Cost $6,595,900) | 10,772,500 | |||||||
| CHINA – 0.4% | ||||||||
| TravelSky Technology | 201,000 | 338,199 | ||||||
| Total (Cost $361,442) | 338,199 | |||||||
| DENMARK – 0.2% | ||||||||
| Chr. Hansen Holding | 1,800 | 142,026 | ||||||
| Total (Cost $155,783) | 142,026 | |||||||
| FRANCE – 1.1% | ||||||||
| Esker | 1,800 | 740,822 | ||||||
| Interparfums | 3,102 | 259,574 | ||||||
| Total (Cost $210,145) | 1,000,396 | |||||||
| GERMANY – 1.7% | ||||||||
| Carl Zeiss Meditec | 3,400 | 715,536 | ||||||
| CompuGroup Medical | 3,300 | 267,314 | ||||||
| STRATEC | 3,300 | 517,721 | ||||||
| Total (Cost $626,695) | 1,500,571 | |||||||
| GREECE – 0.7% | ||||||||
| Sarantis | 64,500 | 653,556 | ||||||
| Total (Cost $554,222) | 653,556 | |||||||
| ICELAND – 0.4% | ||||||||
| Ossur 2 | 51,000 | 330,264 | ||||||
| Total (Cost $321,244) | 330,264 | |||||||
| INDIA – 2.7% | ||||||||
| AIA Engineering | 35,100 | 887,184 | ||||||
| †Dish TV India 2 | 2,577,000 | 650,008 | ||||||
| WNS Holdings ADR 1,2,3 | 10,500 | 926,310 | ||||||
| Total (Cost $2,003,951) | 2,463,502 | |||||||
| ISRAEL – 1.9% | ||||||||
| Nova 1,2 | 5,700 | 835,050 | ||||||
| Tel Aviv Stock Exchange | 164,600 | 888,928 | ||||||
| Total (Cost $591,484) | 1,723,978 | |||||||
| ITALY – 1.4% | ||||||||
| Carel Industries | 35,800 | 1,084,170 | ||||||
| Gruppo MutuiOnline | 2,900 | 146,263 | ||||||
| Total (Cost $489,921) | 1,230,433 | |||||||
| JAPAN – 3.1% | ||||||||
| As One | 5,600 | 375,346 | ||||||
| Benefit One | 13,700 | 587,755 | ||||||
| Fukui Computer Holdings | 10,800 | 323,915 | ||||||
| NSD | 12,200 | 221,664 | ||||||
| †Sansan 2 | 13,200 | 287,685 | ||||||
| TechnoPro Holdings | 7,200 | 218,447 | ||||||
| TKC Corporation | 25,500 | 765,909 | ||||||
| Total (Cost $1,647,261) | 2,780,721 | |||||||
| MEXICO – 0.2% | ||||||||
| Becle | 63,000 | 158,458 | ||||||
| Total (Cost $100,233) | 158,458 | |||||||
| NETHERLANDS – 1.4% | ||||||||
| IMCD | 5,500 | 1,219,162 | ||||||
| Total (Cost $387,493) | 1,219,162 | |||||||
| NEW ZEALAND – 1.0% | ||||||||
| Fisher & Paykel Healthcare | 17,000 | 381,434 | ||||||
| †Pushpay Holdings 2 | 583,000 | 527,072 | ||||||
| Total (Cost $773,636) | 908,506 | |||||||
| NORWAY – 1.7% | ||||||||
| Protector Forsikring | 70,000 | 861,632 | ||||||
| TGS | 22,800 | 218,976 | ||||||
| †Tomra Systems | 6,000 | 429,907 | ||||||
| Total (Cost $1,012,815) | 1,510,515 | |||||||
| SINGAPORE – 1.3% | ||||||||
| Midas Holdings 2,4 | 400,000 | 0 | ||||||
| XP Power | 16,359 | 1,129,279 | ||||||
| Total (Cost $457,039) | 1,129,279 | |||||||
| SOUTH AFRICA – 2.7% | ||||||||
| PSG Group 2 | 114,900 | 643,469 | ||||||
| †Stadio Holdings 2 | 3,541,372 | 833,395 | ||||||
| Transaction Capital | 344,100 | 972,376 | ||||||
| Total (Cost $1,578,263) | 2,449,240 | |||||||
| SWEDEN – 5.4% | ||||||||
| Biotage | 42,100 | 1,220,668 | ||||||
| Bravida Holding | 68,900 | 968,361 | ||||||
| Dometic Group | 15,500 | 204,038 | ||||||
| Karnov Group | 161,481 | 1,197,320 | ||||||
| OEM International Cl. B | 59,425 | 1,219,251 | ||||||
| Total (Cost $2,585,713) | 4,809,638 | |||||||
| 10 | 2021 Annual Report to Stockholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2021
Schedule of Investments (continued)
| SHARES | VALUE | |||||||
| SWITZERLAND – 1.7% | ||||||||
| Kardex Holding | 2,400 | $ | 790,167 | |||||
| LEM Holding | 150 | 418,130 | ||||||
| VZ Holding | 2,900 | 311,260 | ||||||
| Total (Cost $482,877) | 1,519,557 | |||||||
| UNITED KINGDOM – 13.9% | ||||||||
| Ashmore Group | 50,500 | 198,911 | ||||||
| CentralNic Group 2 | 136,073 | 257,854 | ||||||
| †Countryside Properties 2 | 200,000 | 1,218,195 | ||||||
| Diploma | 8,200 | 374,484 | ||||||
| DiscoverIE Group | 60,800 | 844,355 | ||||||
| FDM Group Holdings | 46,800 | 805,763 | ||||||
| Ferroglobe (Warranty Insurance Trust) 2,4 | 41,100 | 0 | ||||||
| Genuit Group | 68,300 | 541,742 | ||||||
| Halma | 18,700 | 809,964 | ||||||
| Keystone Law Group | 95,940 | 1,077,835 | ||||||
| Learning Technologies Group | 342,800 | 824,987 | ||||||
| Marlowe 2 | 132,500 | 1,829,323 | ||||||
| Mortgage Advice Bureau Holdings | 36,100 | 708,516 | ||||||
| Restore | 181,596 | 1,204,416 | ||||||
| RWS Holdings | 45,100 | 396,793 | ||||||
| SThree | 146,600 | 920,717 | ||||||
| YouGov | 18,600 | 402,816 | ||||||
| Total (Cost $7,295,769) | 12,416,671 | |||||||
| UNITED STATES – 41.1% | ||||||||
| Air Lease Cl. A 1 | 27,623 | 1,221,765 | ||||||
| APi Group 1,2 | 63,900 | 1,646,703 | ||||||
| †Arcosa | 27,500 | 1,449,250 | ||||||
| BOK Financial 1 | 6,350 | 669,861 | ||||||
| CIRCOR International 1,2 | 28,300 | 769,194 | ||||||
| CMC Materials 1 | 4,550 | 872,189 | ||||||
| Cognex Corporation 1 | 4,837 | 376,125 | ||||||
| Colfax Corporation 1,2 | 21,400 | 983,758 | ||||||
| Diodes 1,2 | 7,000 | 768,670 | ||||||
| †Element Solutions | 41,600 | 1,010,048 | ||||||
| FARO Technologies 1,2 | 7,250 | 507,645 | ||||||
| †FormFactor 2 | 10,000 | 457,200 | ||||||
| †Forrester Research 2 | 10,000 | 587,300 | ||||||
| †Franchise Group Cl. A | 10,000 | 521,600 | ||||||
| GCM Grosvenor Cl. A | 109,626 | 1,151,073 | ||||||
| †Griffon Corporation | 50,000 | 1,424,000 | ||||||
| Helios Technologies 1 | 7,506 | 789,406 | ||||||
| Innospec 1 | 6,228 | 562,638 | ||||||
| Kadant 1 | 3,700 | 852,776 | ||||||
| KBR 1 | 34,800 | 1,657,176 | ||||||
| Kennedy-Wilson Holdings | 30,000 | 716,400 | ||||||
| †Lawson Products 2 | 15,400 | 843,150 | ||||||
| Lindblad Expeditions Holdings 2 | 19,300 | 301,080 | ||||||
| Lindsay Corporation 1 | 3,910 | 594,320 | ||||||
| †MarketWise Cl. A 2 | 98,100 | 739,674 | ||||||
| Mesa Laboratories 1 | 3,660 | 1,200,809 | ||||||
| Momentive Global 2 | 60,000 | 1,269,000 | ||||||
| Morningstar 1 | 5,640 | 1,928,824 | ||||||
| †Newtek Business Services | 25,200 | 696,276 | ||||||
| PAR Technology 1,2 | 22,241 | 1,173,658 | ||||||
| ProAssurance Corporation 1 | 83,900 | 2,122,670 | ||||||
| Quaker Chemical 1 | 2,710 | 625,414 | ||||||
| SEI Investments 1 | 26,750 | 1,630,145 | ||||||
| Transcat 2 | 24,577 | 2,271,652 | ||||||
| †Vontier Corporation | 41,300 | 1,269,149 | ||||||
| †Ziff Davis 2 | 10,000 | 1,108,600 | ||||||
| Total (Cost $24,538,168) | 36,769,198 | |||||||
| TOTAL COMMON STOCKS | ||||||||
| (Cost $56,975,648) | 91,508,792 | |||||||
| REPURCHASE AGREEMENT– 3.3% | ||||||||
Fixed Income Clearing Corporation, 0.00% dated 12/31/21, due 1/3/22, maturity value $2,949,758 (collateralized by obligations of various U.S. Government Agencies, 2.50% due 1/15/29, valued at $3,008,823) | ||||||||
| (Cost $2,949,758) | 2,949,758 | |||||||
| TOTAL INVESTMENTS – 105.7% | ||||||||
| (Cost $59,925,406) | 94,458,550 | |||||||
| LIABILITIES LESS CASH AND OTHER ASSETS – (5.7)% | (5,064,507 | ) | ||||||
| NET ASSETS – 100.0% | $ | 89,394,043 | ||||||
ADR – American Depository Receipt
| † | New additions in 2021. |
| 2 | Non-income producing. |
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 December 31, 2021, market value.
TAX INFORMATION: The cost of total investments for Federal income tax purposes was $60,324,905. At December 31, 2021, net unrealized appreciation for all securities was $34,133,645 consisting of aggregate gross unrealized appreciation of $35,103,412 and aggregate gross unrealized depreciation of $969,767. The primary causes of the difference between book and tax basis cost are the timing of the recognition of losses on securities sold and mark-to-market of Passive Foreign Investment Companies.
| THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | 2021 Annual Report to Stockholders | 11 |
| Royce Global Value Trust | December 31, 2021 |
| Statement of Assets and Liabilities | |
| ASSETS: | ||||
| Investments at value | $ | 91,508,792 | ||
| Repurchase agreements (at cost and value) | 2,949,758 | |||
| Foreign currency (cost $3,204) | 3,220 | |||
| Receivable for dividends | 198,620 | |||
| Prepaid expenses and other assets | 20,204 | |||
| Total Assets | 94,680,594 | |||
| LIABILITIES: | ||||
| Revolving credit agreement | 4,000,000 | |||
| Payable for investments purchased | 1,125,325 | |||
| Payable for investment advisory fee | 74,339 | |||
| Payable for directors’ fees | 6,355 | |||
| Payable for interest expense | 3,981 | |||
| Accrued expenses | 69,865 | |||
| Deferred capital gains tax | 6,686 | |||
| Total Liabilities | 5,286,551 | |||
| Net Assets | $ | 89,394,043 | ||
| ANALYSIS OF NET ASSETS: | ||||
| Paid-in capital - $0.001 par value per share; 6,266,942 shares outstanding (150,000,000 shares authorized) | $ | 55,393,204 | ||
| Total distributable earnings (loss) | 34,000,839 | |||
| Net Assets (net asset value per share - $14.26) | $ | 89,394,043 | ||
| Investments at identified cost | $ | 56,975,648 | ||
| 12 | 2021 Annual Report to Stockholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
| Royce Global Value Trust | Year Ended December 31, 2021 |
| Statement of Operations |
| INVESTMENT INCOME: | ||||
| INCOME: | ||||
| Dividends | $ | 1,236,477 | ||
| Foreign withholding tax | (92,098 | ) | ||
| Rehypothecation income | 13 | |||
| Total income | 1,144,392 | |||
| EXPENSES: | ||||
| Investment advisory fees | 908,248 | |||
| Custody and transfer agent fees | 79,480 | |||
| Stockholder reports | 71,495 | |||
| Administrative and office facilities | 49,979 | |||
| Interest expense | 45,756 | |||
| Professional fees | 43,264 | |||
| Directors’ fees | 28,756 | |||
| Other expenses | 30,980 | |||
| Total expenses | 1,257,958 | |||
| Net investment income (loss) | (113,566 | ) | ||
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | ||||
| NET REALIZED GAIN (LOSS): | ||||
| Investments | 7,557,806 | |||
| Foreign currency transactions | 32,953 | |||
| NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION): | ||||
| Investments | 5,225,235 | |||
| Other assets and liabilities denominated in foreign currency | 1,591 | |||
| Net realized and unrealized gain (loss) on investments and foreign currency | 12,817,585 | |||
| NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS | $ | 12,704,019 | ||
| THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | 2021 Annual Report to Stockholders | 13 |
| Royce Global Value Trust |
| Statement of Changes in Net Assets |
| YEAR ENDED 12/31/21 | YEAR ENDED 12/31/20 | |||||||
| INVESTMENT OPERATIONS: | ||||||||
| Net investment income (loss) | $ | (113,566 | ) | $ | (209,532 | ) | ||
| Net realized gain (loss) on investments and foreign currency | 7,590,759 | 25,222,265 | ||||||
| Net change in unrealized appreciation (depreciation) on investments and foreign currency | 5,226,826 | (473,615 | ) | |||||
| Net increase (decrease) in net assets from investment operations | 12,704,019 | 24,539,118 | ||||||
| DISTRIBUTIONS: | ||||||||
| Total distributable earnings | (15,402,178 | ) | (12,499,130 | ) | ||||
| Total distributions | (15,402,178 | ) | (12,499,130 | ) | ||||
| CAPITAL STOCK TRANSACTIONS: | ||||||||
| Reinvestment of distributions | 8,340,203 | 4,684,326 | ||||||
| Value of shares tendered | – | (75,782,536 | ) | |||||
| Total capital stock transactions | 8,340,203 | (71,098,210 | ) | |||||
| Net Increase (Decrease) In Net Assets | 5,642,044 | (59,058,222 | ) | |||||
| NET ASSETS: | ||||||||
| Beginning of year | 83,751,999 | 142,810,221 | ||||||
| End of year | $ | 89,394,043 | $ | 83,751,999 | ||||
| 14 | 2021 Annual Report to Stockholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
| Royce Global Value Trust | Year Ended December 31, 2021 |
| Statement of Cash Flows |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
| Net increase (decrease) in net assets from investment operations | $ | 12,704,019 | ||
| Adjustments to reconcile net increase (decrease) in net assets from investment operations to net cash provided by operating activities: | ||||
| Purchases of long-term investments | (44,646,444 | ) | ||
| Proceeds from sales and maturities of long-term investments | 47,521,149 | |||
| Net purchases, sales and maturities of short-term investments | 8,310,134 | |||
| Net (increase) decrease in dividends receivable and other assets | (12,124 | ) | ||
| Net increase (decrease) in interest expense payable, accrued expenses and other liabilities | (40,987 | ) | ||
| Net change in unrealized appreciation (depreciation) on investments | (5,225,235 | ) | ||
| Net realized gain (loss) on investments | (7,557,806 | ) | ||
| Net cash provided by operating activities | 11,052,706 | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
| Decrease in revolving credit agreement | (4,000,000 | ) | ||
| Distributions net of reinvestment (reinvestment $8,340,203) | (7,061,975 | ) | ||
| Net cash used for financing activities | (11,061,975 | ) | ||
| INCREASE (DECREASE) IN CASH: | (9,269 | ) | ||
| Cash and foreign currency at beginning of year | 12,489 | |||
| Cash and foreign currency at end of year | $ | 3,220 | ||
Supplemental disclosure of cash flow information:
For the year ended December 31, 2021, the Fund paid $49,922 in interest expense.
| THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | 2021 Annual Report to Stockholders | 15 |
| Royce Global Value Trust |
| Financial Highlights |
This table is presented to show selected data for a share of Common Stock outstanding throughout each period, and to assist stockholders in evaluating the Fund's performance for the periods presented.
| YEARS ENDED | ||||||||||||||||||||
| 12/31/21 | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | ||||||||||||||||
| Net Asset Value, Beginning of Period | $ | 14.95 | $ | 13.60 | $ | 10.42 | $ | 12.48 | $ | 9.62 | ||||||||||
| INVESTMENT OPERATIONS: | ||||||||||||||||||||
| Net investment income (loss) | (0.01 | ) | (0.05 | ) | 0.06 | 0.04 | 0.02 | |||||||||||||
| Net realized and unrealized gain (loss) on investments and foreign currency | 2.19 | 2.63 | 3.18 | (2.06 | ) | 2.96 | ||||||||||||||
| Net increase (decrease) in net assets from investment operations | 2.18 | 2.58 | 3.24 | (2.02 | ) | 2.98 | ||||||||||||||
| DISTRIBUTIONS: | ||||||||||||||||||||
| Net investment income | (0.09 | ) | – | (0.06 | ) | (0.04 | ) | (0.11 | ) | |||||||||||
| Net realized gain on investments and foreign currency | (2.66 | ) | (1.19 | ) | – | – | – | |||||||||||||
| Total distributions | (2.75 | ) | (1.19 | ) | (0.06 | ) | (0.04 | ) | (0.11 | ) | ||||||||||
| CAPITAL STOCK TRANSACTIONS: | ||||||||||||||||||||
| Effect of reinvestment of distributions by Common Stockholders | (0.12 | ) | (0.04 | ) | (0.00 | ) | (0.00 | ) | (0.01 | ) | ||||||||||
| Total capital stock transactions | (0.12 | ) | (0.04 | ) | (0.00 | ) | (0.00 | ) | (0.01 | ) | ||||||||||
| Net Asset Value, End of Period | $ | 14.26 | $ | 14.95 | $ | 13.60 | $ | 10.42 | $ | 12.48 | ||||||||||
| Market Value, End of Period | $ | 13.12 | $ | 13.36 | $ | 11.69 | $ | 8.88 | $ | 10.81 | ||||||||||
| TOTAL RETURN:1 | ||||||||||||||||||||
| Net Asset Value | 16.34 | % | 19.67 | % | 31.20 | % | (16.11 | )% | 31.07 | % | ||||||||||
| Market Value | 19.77 | % | 24.42 | % | 32.33 | % | (17.50 | )% | 35.96 | % | ||||||||||
| RATIOS BASED ON AVERAGE NET ASSETS: | ||||||||||||||||||||
| Investment advisory fee expense | 1.00 | % | 1.00 | % | 1.00 | % | 1.25 | % | 1.25 | % | ||||||||||
| Other operating expenses | 0.39 | % | 0.34 | % | 0.50 | % | 0.49 | % | 0.42 | % | ||||||||||
| Total expenses (net) | 1.39 | % | 1.34 | % | 1.50 | % | 1.74 | % | 1.67 | % | ||||||||||
| Expenses excluding interest expense | 1.33 | % | 1.24 | % | 1.29 | % | 1.53 | % | 1.52 | % | ||||||||||
| Expenses prior to balance credits | 1.39 | % | 1.34 | % | 1.50 | % | 1.74 | % | 1.67 | % | ||||||||||
| Net investment income (loss) | (0.13 | )% | (0.15 | )% | 0.46 | % | 0.30 | % | 0.21 | % | ||||||||||
| SUPPLEMENTAL DATA: | ||||||||||||||||||||
| Net Assets, End of Period (in thousands) | $ | 89,394 | $ | 83,752 | $ | 142,810 | $ | 109,254 | $ | 130,526 | ||||||||||
| Portfolio Turnover Rate | 52 | % | 54 | % | 48 | % | 57 | % | 34 | % | ||||||||||
| REVOLVING CREDIT AGREEMENT: | ||||||||||||||||||||
| Asset coverage | 2335 | % | 1147 | % | 1885 | % | 1466 | % | 1732 | % | ||||||||||
| Asset coverage per $1,000 | $ | 23,349 | $ | 11,469 | $ | 18,851 | $ | 14,657 | $ | 17,316 | ||||||||||
1 The Market Value Total Return is calculated assuming a purchase of Common Stock on the opening of the first business day and a sale on the closing of the last business day of each period. 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.
| 16 | 2021 Annual Report to Stockholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Royce Global Value Trust
Notes to Financial Statements
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”). At December 31, 2021, officers and employees of Royce, Fund directors, the Royce retirement plans and other affiliates owned more than 19% of the Fund.
VALUATION OF INVESTMENTS:
Securities are valued as of the close of trading on the New York Stock Exchange (“NYSE”) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq's Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their 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 Investment Company Act of 1940 (“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 December 31, 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 | $91,508,792 | $ – | $0 | $91,508,792 |
| Repurchase Agreement | – | 2,949,758 | – | 2,949,758 |
Level 3 Reconciliation:
| BALANCE AS OF 12/31/20 | PURCHASES | SALES | REALIZED GAIN (LOSS) 1 | UNREALIZED GAIN (LOSS) 1 | BALANCE AS OF 12/31/21 | |
| Common Stocks | $0 | $ – | $ – | $ – | $ – | $0 |
| 1 | The net change in unrealized appreciation (depreciation) is included in the accompanying Statement of Operations. Change in unrealized appreciation (depreciation) includes net unrealized appreciation (depreciation) resulting from changes in investment values during the reporting period and the reversal of previously recorded unrealized appreciation (depreciation) when gains or losses are realized. Net realized gain (loss) from investments and foreign currency transactions is included in the accompanying Statement of Operations. |
2021 Annual Report to Stockholders |
17
Royce Global Value Trust
Notes to Financial Statements (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 December 31, 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 all of the Royce 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 666,151 and 349,058 shares of Common Stock as reinvestment of distributions for the years ended December 31, 2021 and December 31, 2020, respectively.
18 | 2021 Annual Report to Stockholders
Royce Global Value Trust
Notes to Financial Statements (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 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 1940 Act.
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 in accordance with the credit agreement, 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, 2021 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 December 31, 2021, the Fund has outstanding borrowings of $4,000,000. During the year ended December 31, 2021, the Fund borrowed an average daily balance of $4,054,795 at a weighted average borrowing cost of 1.11%. The maximum amount outstanding during the year ended December 31, 2021, was $8,000,000. As of December 31, 2021, the aggregate value of rehypothecated securities was $1,463,176. During the year ended December 31, 2021, the Fund earned $13 in fees from reypothecated securities.
2021 Annual Report to Stockholders | 19
Royce Global Value Trust
Notes to Financial Statements (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, computed daily and payable monthly. For the year ended December 31, 2021, the Fund expensed Royce investment advisory fees totaling $908,248.
Purchases and Sales of Investment Securities:
For the year ended December 31, 2021, the costs of purchases and proceeds from sales of investment securities, other than short-term securities, amounted to $45,201,677 and $47,114,410, 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 that review to the Board of Directors. Cross trades for the year ended December 31, 2021, were as follows:
| COSTS OF PURCHASES | PROCEEDS FROM SALES | REALIZED GAIN (LOSS) |
| $1,488,222 | $324,002 | $(71,508) |
Tax Information:
Distributions during the years ended December 31, 2021 and 2020, were characterized as follows for tax purposes:
| ORDINARY INCOME | LONG-TERM CAPITAL GAINS | ||
| 2021 | 2020 | 2021 | 2020 |
| $2,437,990 | $ – | $12,964,188 | $12,499,130 |
The tax basis components of distributable earnings at December 31, 2021, were as follows:
| UNDISTRIBUTED ORDINARY INCOME |
UNDISTRIBUTED
LONG-TERM CAPITAL GAINS |
NET
UNREALIZED APPRECIATION (DEPRECIATION)1 |
QUALIFIED
LATE YEAR ORDINARY AND POST-OCTOBER LOSS DEFERRALS2 |
TOTAL DISTRIBUTABLE EARNINGS |
| $– | $– | $34,132,326 | $(131,487) | $34,000,839 |
| 1 | Includes timing differences on foreign currency, recognition of losses on securities sold and mark-to-market of Passive Foreign Investment Companies. |
| 2 | Under the current tax law, capital losses and qualified late year ordinary losses incurred after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. |
For financial reporting purposes, capital accounts and distributions to stockholders are adjusted to reflect the tax character of permanent book/tax differences. For the year ended December 31, 2021, the Fund recorded the following permanent reclassifications, which relate primarily to net operating losses, foreign currency transactions and gains from the sale of Passive Foreign Investment Companies.
| TOTAL DISTRIBUTABLE EARNINGS (LOSS) | PAID-IN CAPITAL |
| $196,347 | $(196,347) |
Management has analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years (2018-2021) and has concluded that as of December 31, 2021, no provision for income tax is required in the Fund’s financial statements.
Subsequent Events:
Subsequent events have been evaluated through the date the financial statements were issued and it has been determined that no events have occurred that require disclosure.
20 | 2021 Annual Report to Stockholders
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Royce Global Value Trust, Inc.:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Royce Global Value Trust, Inc. (the "Fund") as of December 31, 2021, the related statements of operations and cash flows for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2021, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2021 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
New York, New York
February 22, 2022
We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.
2021 Annual Report to Stockholders | 21
MANAGERS’ DISCUSSION (UNAUDITED)
Royce Micro-Cap Trust (RMT)
Chuck Royce, Jim Stoeffel, Brendan Hartmann
FUND PERFORMANCE
Royce Micro-Cap Trust (RMT) rose 19.2% on an NAV (net asset value) basis and 22.8% on a market price basis in 2021 versus respective gains of 14.8% and 19.3% for its unleveraged small-cap benchmarks, the Russell 2000 and the Russell Microcap Indexes, for the same period. On an NAV basis, RMT beat both the Russell 2000 and the Russell Microcap for the 3-, 5-, 10-, 15-, and 20-year periods while also beating the Russell 2000 for the 25-year and since inception (12/14/93) periods ended 12/31/21. In addition, the Fund beat both benchmarks based on market price for all of these applicable periods, save the 15-year span. The Fund’s average annual NAV total return for the since inception period ended 12/31/21 was 11.6%.
WHAT WORKED… AND WHAT DIDN’T
Ten of the portfolio’s 11 equity sectors made a positive impact on calendar-year performance, led by Industrials, Information Technology, and Consumer Discretionary. The only negative impact came from Communication Services while Utilities and Real Estate—two of RMT’s lowest weightings—made the smallest contributions. At the industry level, semiconductors & semiconductor equipment (Information Technology), trading companies & distributors (Industrials), and energy equipment & services (Energy) contributed most in 2021 while two areas in Information Technology—electronic equipment, instruments & components and software—as well as biotechnology (Health Care) were the three largest detractors.
At the position level, the Fund’s top contributor was Transcat, which distributes test and measurement instruments and provides accredited calibration services for use across a diverse range of industries. Its shares rose more or less steadily during 2021, thanks to rising revenues and earnings in both its Distribution and Services segments. The former rebounded nicely in 2021. We see a number of attractive attributes in the company, including its niche, its conservatively capitalized balance sheet, its active M&A pipeline, and what we think are sustainable gross margins in its Service segment. The next top contributor was AutoCanada, a North American automobile business that sells multiple brands and operates 50 franchised dealerships in Canada and 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. In November, AutoCanada announced record third-quarter revenue driven by strong performance in its used vehicle, Finance & Insurance, and U.S. operations, along with an improved outlook for ongoing demand.
| Top Contributors to Performance | Top Detractors from Performance | |||||||
| For 2021 (%)1 | For 2021 (%)2 | |||||||
| Transcat | 1.47 | Upland Software | -0.67 | |||||
| AutoCanada | 1.35 | nLIGHT | -0.46 | |||||
| Onto Innovation | 1.18 | CIRCOR International | -0.43 | |||||
| Aspen Aerogels | 0.89 | PAR Technology | -0.40 | |||||
| Clearfield | 0.85 | Zealand Pharma | -0.34 | |||||
| 1 Includes dividends | 2 Net of dividends | |||||||
The Fund’s biggest detractor was Upland Software, which provides cloud-based enterprise work management software. Its shares fell on mixed revenue performance following outsized presidential election-related growth in 2020 and disappointing execution of the transition of its go-to-market strategy. Profit margins contracted as the company sustained elevated investments in advance of an improvement in revenue productivity. Although we still appreciate much about its strategic allocation of capital, these factors led us to substantially reduce our position in the fourth quarter. The next biggest detractor was nLIGHT, which designs and manufactures semiconductor laser products. While revenues have been strong and the company carries little debt, declines in net income as well as some exposure to both China and the recovering aerospace & defense industry appeared to keep investors selling through most of 2021. We trimmed our stake earlier in the year.
The portfolio’s advantage over the Russell 2000 came almost equally from stock selection and sector allocation decisions in 2021. RMT’s underweight in Health Care, along with savvy stock picking, helped most on the sector level as this sector was the biggest detractor within the Russell 2000. We also benefited from effective stock selection in Information Technology and our overweight in Energy, the latter one of the strongest sectors within small-cap in 2021. Conversely, stock picking and our lower weighting in both Real Estate and Financials detracted from relative results in 2021, as did stock picking in Communication Services.
CURRENT POSITIONING AND OUTLOOK
Our outlook is very positive for small- and micro-cap value but is more nuanced for each asset class taken as a whole. The Russell 2000 enjoyed a third consecutive year of double-digit positive returns in 2021, which is rare for any equity index. It’s happened only twice before since the inception of the Russell 2000 in 1979—from 1991-1993 and 1995-1997. In each instance, a fourth year of double-digit positive performance failed to materialize. We always place a lot of weight on history, and this pattern, along with a less accommodative Fed, makes us think that performance for the Russell 2000 will be more muted in 2022. History also tells us, however, that small- and micro-cap value and cyclical stocks do well, particularly on a relative basis, during periods of improving economic growth—which is consistent with the encouraging signs we’ve been seeing on a company-by-company basis. Micro-cap stocks began the year with very strong returns before struggling through the second half of 2021—which has created opportunities in many sectors. We are particularly optimistic about long-term opportunities in technology, where supply chain consolidation has allowed certain names to secure greater market share in a growing, high-demand sector.
| 22 | 2021 Annual Report to Stockholders |
|
| PERFORMANCE AND PORTFOLIO REVIEW (UNAUDITED) | SYMBOLS MARKET PRICE RMT NAV XOTCX |
Performance Average Annual Total Return (%) Through 12/31/21 |
| JUL-DEC 20211 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | 25-YR | SINCE
INCEPTION (12/14/93) | |
| RMT (NAV) | -1.61 | 19.17 | 24.92 | 15.18 | 14.38 | 9.03 | 10.68 | 11.23 | 11.58 |
| 1 Not Annualized | |||||||||
Market Price Performance History Since Inception (12/14/93) Cumulative Performance of Investment1 |
| 1-YR | 5-YR | 10-YR | 15-YR | 20-YR | SINCE INCEPTION (12/14/93) | |
| RMT | 22.8% | 111.6% | 281.2% | 188.2% | 657.9% | 1755.0% |
| 1 | Reflects 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. |
| 2 | Reflects 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. |
Morningstar Style Map™ As of 12/31/21
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 62 for additional information.
| Top
10 Positions % of Net Assets | |
| Mesa Laboratories | 3.0 |
| PAR Technology | 2.5 |
| Onto Innovation | 2.2 |
| Transcat | 2.1 |
| AutoCanada | 1.9 |
| Sprott | 1.5 |
| Major Drilling Group International | 1.4 |
| Aspen Aerogels | 1.3 |
| nLIGHT | 1.2 |
| PDF Solutions | 1.2 |
Portfolio Sector Breakdown % of Net Assets
Information Technology |
22.7 |
| Industrials | 18.2 |
| Health Care | 14.9 |
| Financials | 12.2 |
| Consumer Discretionary | 9.7 |
| Energy | 7.3 |
| Materials | 5.5 |
| Communication Services | 3.2 |
| Real Estate | 2.6 |
| Consumer Staples | 2.3 |
| Utilities | 0.3 |
| Preferred Stock | 0.0 |
| Cash and Cash Equivalents, Net of Outstanding Line of Credit | 1.1 |
Calendar Year Total Returns (%)
YEAR |
RMT |
| 2021 | 19.2 |
| 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 |
Portfolio Diagnostics
Fund Net Assets |
$590 million |
| Number of Holdings | 281 |
| Turnover Rate | 15% |
| Net Asset Value | $13.06 |
| Market Price | $11.55 |
| Average Market Capitalization 1 | $843 million |
| Weighted Average P/B Ratio2 | 2.5x |
| Active Share3 | 95% |
| U.S. Investments (% of Net Assets) | 78.4% |
| Non-U.S. Investments (% of Net Assets) | 20.5% |
| 1 | Geometric 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. |
| 2 | Harmonic 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. |
| 3 | Active 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, reflects the reinvestment of distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the sale of fund shares. 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 Annual Report to Stockholders | 23
|
Schedule of Investments
Common Stocks - 98.9%
| SHARES | VALUE | |||||||
| COMMUNICATION SERVICES - 3.2% | ||||||||
| DIVERSIFIED TELECOMMUNICATION SERVICES - 0.4% | ||||||||
| †Radius Global Infrastructure Cl. A 1 | 133,792 | $ | 2,154,051 | |||||
| ENTERTAINMENT - 1.3% | ||||||||
| Chicken Soup For The Soul Entertainment Cl. A 1 | 210,930 | 2,919,272 | ||||||
| Cinedigm Cl. A 1 | 200,000 | 232,000 | ||||||
| Gaia Cl. A 1,2 | 100,000 | 857,000 | ||||||
| IMAX Corporation 1 | 222,600 | 3,971,184 | ||||||
| †Motorsport Games Cl. A 1 | 12,003 | 40,810 | ||||||
| 8,020,266 | ||||||||
| INTERACTIVE MEDIA & SERVICES - 0.7% | ||||||||
| Eventbrite Cl. A 1 | 41,154 | 717,726 | ||||||
| QuinStreet 1 | 200,900 | 3,654,371 | ||||||
| 4,372,097 | ||||||||
| MEDIA - 0.8% | ||||||||
| comScore 1 | 297,195 | 992,631 | ||||||
| Magnite 1 | 206,900 | 3,620,750 | ||||||
| 4,613,381 | ||||||||
| Total (Cost $15,950,075) | 19,159,795 | |||||||
| CONSUMER DISCRETIONARY – 9.7% | ||||||||
| AUTO COMPONENTS - 1.6% | ||||||||
| Motorcar Parts of America 1 | 54,800 | 935,436 | ||||||
| Patrick Industries | 17,250 | 1,391,903 | ||||||
| Sebang Global Battery | 50,500 | 3,224,353 | ||||||
| Standard Motor Products | 47,460 | 2,486,429 | ||||||
| Stoneridge 1,2 | 57,600 | 1,137,024 | ||||||
| 9,175,145 | ||||||||
| DISTRIBUTORS - 0.2% | ||||||||
| Uni-Select 1 | 40,000 | 813,945 | ||||||
| DIVERSIFIED CONSUMER SERVICES - 0.9% | ||||||||
| Aspen Group 1 | 141,520 | 333,987 | ||||||
| Park Lawn | 50,000 | 1,640,381 | ||||||
| Universal Technical Institute 1 | 445,000 | 3,479,900 | ||||||
| 5,454,268 | ||||||||
| HOTELS, RESTAURANTS & LEISURE - 1.7% | ||||||||
| Century Casinos 1 | 330,300 | 4,023,054 | ||||||
| GAN 1 | 44,700 | 410,793 | ||||||
| Inspired Entertainment 1 | 50,000 | 648,000 | ||||||
| Lindblad Expeditions Holdings 1 | 320,968 | 5,007,101 | ||||||
| 10,088,948 | ||||||||
| HOUSEHOLD DURABLES - 1.4% | ||||||||
| Cavco Industries 1,2 | 8,600 | 2,731,790 | ||||||
| Legacy Housing 1 | 144,900 | 3,835,503 | ||||||
| Lifetime Brands 2 | 119,294 | 1,905,125 | ||||||
| 8,472,418 | ||||||||
| INTERNET & DIRECT MARKETING RETAIL - 0.4% | ||||||||
| CarParts.com 1 | 50,000 | 560,000 | ||||||
| 1-800-FLOWERS.COM Cl. A 1 | 22,700 | 530,499 | ||||||
| †1stdibs.com 1 | 76,200 | 953,262 | ||||||
| †Porch Group 1 | 16,400 | 255,676 | ||||||
| 2,299,437 | ||||||||
| LEISURE PRODUCTS - 0.9% | ||||||||
| Clarus Corporation | 140,603 | 3,897,515 | ||||||
| MasterCraft Boat Holdings 1 | 55,700 | 1,577,981 | ||||||
| 5,475,496 | ||||||||
| SPECIALTY RETAIL - 2.5% | ||||||||
| †ARKO 1 | 137,600 | 1,206,752 | ||||||
| AutoCanada 1 | 330,000 | 11,139,571 | ||||||
| Barnes & Noble Education 1 | 80,000 | 544,800 | ||||||
| Lazydays Holdings 1 | 30,000 | 646,200 | ||||||
| Shoe Carnival 2 | 36,432 | 1,423,762 | ||||||
| 14,961,085 | ||||||||
| TEXTILES, APPAREL & LUXURY GOODS - 0.1% | ||||||||
| YGM Trading | 2,564,600 | 657,797 | ||||||
| Total (Cost $37,281,169) | 57,398,539 | |||||||
| CONSUMER STAPLES - 2.3% | ||||||||
| BEVERAGES - 0.4% | ||||||||
| MGP Ingredients | 20,000 | 1,699,800 | ||||||
| Primo Water | 26,791 | 472,325 | ||||||
| 2,172,125 | ||||||||
| FOOD PRODUCTS - 1.8% | ||||||||
| †CubicFarm Systems 1 | 400,000 | 369,975 | ||||||
| J G Boswell Company 3 | 2,490 | 2,490,000 | ||||||
| John B. Sanfilippo & Son 2 | 7,900 | 712,264 | ||||||
| Landec Corporation 1,2 | 75,610 | 839,271 | ||||||
| Seneca Foods Cl. A 1 | 81,087 | 3,888,122 | ||||||
| Seneca Foods Cl. B 1 | 40,400 | 1,900,416 | ||||||
| SunOpta 1 | 50,000 | 347,500 | ||||||
| 10,547,548 | ||||||||
| TOBACCO - 0.1% | ||||||||
| †Turning Point Brands | 20,700 | 782,046 | ||||||
| Total (Cost $6,536,588) | 13,501,719 | |||||||
| ENERGY - 7.3% | ||||||||
| ENERGY EQUIPMENT & SERVICES - 4.4% | ||||||||
| Aspen Aerogels 1 | 153,485 | 7,642,018 | ||||||
| Bristow Group 1,2,4 | 177,900 | 5,634,093 | ||||||
| Computer Modelling Group | 594,875 | 2,003,374 | ||||||
| North American Construction Group | 50,000 | 755,000 | ||||||
| Pason Systems | 433,600 | 3,955,685 | ||||||
| SEACOR Marine Holdings 1,2 | 216,957 | 737,654 | ||||||
| TerraVest Industries | 237,800 | 5,166,010 | ||||||
| 25,893,834 | ||||||||
| OIL, GAS & CONSUMABLE FUELS - 2.9% | ||||||||
| Ardmore Shipping 1 | 90,500 | 305,890 | ||||||
| Brigham Minerals Cl. A | 220,000 | 4,639,800 | ||||||
| Dorchester Minerals L.P. | 153,963 | 3,046,928 | ||||||
| Dorian LPG | 163,138 | 2,070,221 | ||||||
| GeoPark | 69,218 | 792,546 | ||||||
| †Imperial Petroleum 1 | 28,708 | 55,693 | ||||||
| Navigator Holdings 1 | 175,000 | 1,552,250 | ||||||
| †Northern Oil and Gas | 34,200 | 703,836 | ||||||
| Sabine Royalty Trust 2 | 82,648 | 3,444,769 | ||||||
| StealthGas | 229,664 | 484,591 | ||||||
| 17,096,524 | ||||||||
| Total (Cost $34,959,604) | 42,990,358 | |||||||
| FINANCIALS - 12.2% | ||||||||
| BANKS - 1.7% | ||||||||
| Bryn Mawr Bank | 25,000 | 1,125,250 | ||||||
| Chemung Financial | 31,000 | 1,419,180 | ||||||
| HBT Financial | 46,300 | 867,199 | ||||||
| Live Oak Bancshares 2 | 30,900 | 2,697,261 | ||||||
| Midway Investments 1,5 | 735,647 | 0 | ||||||
| †OceanFirst Financial | 19,600 | 435,120 | ||||||
| †Virginia National Bankshares | 89,910 | 3,326,670 | ||||||
| 9,870,680 | ||||||||
| 24 | 2021 Annual Report to Stockholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
|
December 31, 2021
Schedule of Investments (continued)
| SHARES | VALUE | |||||||
| FINANCIALS (continued) | ||||||||
| CAPITAL MARKETS - 8.1% | ||||||||
| ASA Gold and Precious Metals | 171,150 | $ | 3,609,553 | |||||
| B. Riley Financial | 23,200 | 2,061,552 | ||||||
| Barings BDC | 215,300 | 2,372,606 | ||||||
| Bolsa Mexicana de Valores | 1,068,000 | 2,019,110 | ||||||
| Canaccord Genuity Group | 203,300 | 2,423,625 | ||||||
| Donnelley Financial Solutions 1 | 50,000 | 2,357,000 | ||||||
| Fiera Capital Cl. A | 78,000 | 646,840 | ||||||
| GCM Grosvenor Cl. A | 380,800 | 3,998,400 | ||||||
| Manning & Napier Cl. A | 136,600 | 1,135,146 | ||||||
| Silvercrest Asset Management Group Cl. A | 224,100 | 3,847,797 | ||||||
| Sprott | 191,453 | 8,639,185 | ||||||
| StoneX Group 1,2 | 71,227 | 4,362,654 | ||||||
| Tel Aviv Stock Exchange | 343,000 | 1,852,384 | ||||||
| U.S. Global Investors Cl. A 2 | 439,454 | 1,933,598 | ||||||
| Urbana Corporation | 237,600 | 664,931 | ||||||
| Value Line 2 | 74,574 | 3,491,555 | ||||||
| VNV Global 1 | 100,000 | 1,158,673 | ||||||
| Warsaw Stock Exchange | 52,900 | 543,816 | ||||||
| Westaim Corporation (The) 1 | 500,000 | 988,181 | ||||||
| 48,106,606 | ||||||||
| CONSUMER FINANCE - 0.3% | ||||||||
| EZCORP Cl. A 1,2,4 | 201,000 | 1,481,370 | ||||||
| LendingTree 1 | 5,050 | 619,130 | ||||||
| 2,100,500 | ||||||||
| DIVERSIFIED FINANCIAL SERVICES - 0.4% | ||||||||
| ECN Capital | 556,000 | 2,347,160 | ||||||
| Waterloo Investment Holdings 1,5 | 806,000 | 0 | ||||||
| 2,347,160 | ||||||||
| INSURANCE - 1.7% | ||||||||
| Hallmark Financial Services 1,2 | 114,000 | 495,900 | ||||||
| †Trean Insurance Group 1 | 379,065 | 3,377,469 | ||||||
| Trupanion 1,2 | 45,070 | 5,950,592 | ||||||
| 9,823,961 | ||||||||
| Total (Cost $48,039,063) | 72,248,907 | |||||||
| HEALTH CARE - 14.9% | ||||||||
| BIOTECHNOLOGY - 2.6% | ||||||||
| Arcturus Therapeutics Holdings 1,2,4 | 79,836 | 2,954,730 | ||||||
| Avid Bioservices 1 | 34,700 | 1,012,546 | ||||||
| †C4 Therapeutics 1 | 5,900 | 189,980 | ||||||
| CareDx 1 | 18,900 | 859,572 | ||||||
| †Caribou Biosciences 1 | 12,900 | 194,661 | ||||||
| †Catalyst Pharmaceuticals 1 | 304,400 | 2,060,788 | ||||||
| †Century Therapeutics 1 | 12,900 | 204,594 | ||||||
| DermTech 1 | 9,000 | 142,200 | ||||||
| †4D Molecular Therapeutics 1 | 9,300 | 204,042 | ||||||
| Larimar Therapeutics 1,2 | 28,064 | 302,811 | ||||||
| MeiraGTx Holdings 1 | 126,200 | 2,995,988 | ||||||
| Neoleukin Therapeutics 1,2 | 145,397 | 700,813 | ||||||
| Zealand Pharma 1 | 153,015 | 3,399,006 | ||||||
| 15,221,731 | ||||||||
| HEALTH CARE EQUIPMENT & SUPPLIES - 7.1% | ||||||||
| Apyx Medical 1 | 35,800 | 458,956 | ||||||
| AtriCure 1,2 | 15,000 | 1,042,950 | ||||||
| Atrion Corporation 2 | 4,689 | 3,305,276 | ||||||
| BioLife Solutions 1 | 42,100 | 1,569,067 | ||||||
| †Bioventus Cl. A 1 | 213,755 | 3,097,310 | ||||||
| Chembio Diagnostics 1 | 135,800 | 154,812 | ||||||
| †ClearPoint Neuro 1 | 17,700 | 198,594 | ||||||
| CryoLife 1 | 15,200 | 309,320 | ||||||
| Cutera 1 | 58,300 | 2,408,956 | ||||||
| Mesa Laboratories 2 | 54,630 | 17,923,557 | ||||||
| OraSure Technologies 1,2 | 50,000 | 434,500 | ||||||
| OrthoPediatrics Corp. 1 | 6,500 | 389,090 | ||||||
| Profound Medical 1 | 85,800 | 967,238 | ||||||
| Repro Med Systems 1 | 64,400 | 193,200 | ||||||
| Semler Scientific 1 | 22,400 | 2,052,960 | ||||||
| Surmodics 1,2 | 85,300 | 4,107,195 | ||||||
| Utah Medical Products | 31,350 | 3,135,000 | ||||||
| 41,747,981 | ||||||||
| HEALTH CARE PROVIDERS & SERVICES - 2.4% | ||||||||
| Cross Country Healthcare 1 | 130,800 | 3,631,008 | ||||||
| Great Elm Group 1 | 682,245 | 1,425,892 | ||||||
| †Hims & Hers Health Cl. A 1,2,4 | 200,000 | 1,310,000 | ||||||
| Joint Corp. (The) 1 | 65,484 | 4,301,644 | ||||||
| National Research 2 | 46,668 | 1,937,655 | ||||||
| PetIQ Cl. A 1,2 | 25,000 | 567,750 | ||||||
| Sharps Compliance 1 | 153,500 | 1,094,455 | ||||||
| 14,268,404 | ||||||||
| HEALTH CARE TECHNOLOGY - 1.2% | ||||||||
| Simulations Plus 2 | 85,570 | 4,047,461 | ||||||
| Tabula Rasa HealthCare 1,2 | 38,400 | 576,000 | ||||||
| Vocera Communications 1 | 33,100 | 2,146,204 | ||||||
| 6,769,665 | ||||||||
| LIFE SCIENCES TOOLS & SERVICES - 1.4% | ||||||||
| Harvard Bioscience 1 | 317,400 | 2,237,670 | ||||||
| †MaxCyte 1 | 141,900 | 1,445,961 | ||||||
| Quanterix Corporation 1 | 111,700 | 4,736,080 | ||||||
| 8,419,711 | ||||||||
| PHARMACEUTICALS - 0.2% | ||||||||
| Knight Therapeutics 1 | 187,000 | 783,509 | ||||||
| Theravance Biopharma 1,2 | 59,009 | 652,050 | ||||||
| 1,435,559 | ||||||||
| Total (Cost $52,417,307) | 87,863,051 | |||||||
| INDUSTRIALS - 18.2% | ||||||||
| AEROSPACE & DEFENSE - 0.8% | ||||||||
| Astronics Corporation 1 | 56,929 | 683,148 | ||||||
| †Cadre Holdings | 40,000 | 1,016,800 | ||||||
| CPI Aerostructures 1 | 189,700 | 517,881 | ||||||
| Innovative Solutions and Support 1 | 78,828 | 517,112 | ||||||
| Park Aerospace | 25,000 | 330,000 | ||||||
| SIFCO Industries 1 | 45,800 | 297,700 | ||||||
| †Triumph Group 1 | 10,000 | 185,300 | ||||||
| Virgin Galactic Holdings 1,2,4 | 102,850 | 1,376,133 | ||||||
| 4,924,074 | ||||||||
| AIR FREIGHT & LOGISTICS - 0.2% | ||||||||
| Atlas Air Worldwide Holdings 1 | 10,000 | 941,200 | ||||||
| BUILDING PRODUCTS - 1.0% | ||||||||
| Burnham Holdings Cl. A 3 | 117,000 | 1,619,280 | ||||||
| CSW Industrials 2 | 20,000 | 2,417,200 | ||||||
| Insteel Industries 2 | 44,200 | 1,759,602 | ||||||
| Quanex Building Products | 9,900 | 245,322 | ||||||
| 6,041,404 | ||||||||
| COMMERCIAL SERVICES & SUPPLIES - 1.3% | ||||||||
| Acme United | 25,000 | 842,500 | ||||||
| THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | 2021 Annual Report to Stockholders | 25 |
|
Royce Micro-Cap Trust
Schedule of Investments (continued)
| SHARES | VALUE | |||||||
| INDUSTRIALS (continued) | ||||||||
| COMMERCIAL SERVICES & SUPPLIES (continued) | ||||||||
| Atento 1 | 21,742 | $ | 555,073 | |||||
| Civeo Corporation 1 | 37,499 | 718,856 | ||||||
| Harsco Corporation 1 | 19,600 | 327,516 | ||||||
| Heritage-Crystal Clean 1,2,4 | 123,001 | 3,938,492 | ||||||
| Team 1,2 | 93,300 | 101,697 | ||||||
| Vidler Water Resouces 1,2,4 | 121,200 | 1,464,096 | ||||||
| 7,948,230 | ||||||||
| CONSTRUCTION & ENGINEERING - 3.2% | ||||||||
| Ameresco Cl. A 1 | 59,500 | 4,845,680 | ||||||
| Construction Partners Cl. A 1 | 84,900 | 2,496,909 | ||||||
| Granite Construction | 13,500 | 522,450 | ||||||
| IES Holdings 1,2 | 87,300 | 4,420,872 | ||||||
| Infrastructure and Energy Alternatives 1 | 275,100 | 2,530,920 | ||||||
| Matrix Service 1,2 | 8,200 | 61,664 | ||||||
| Northwest Pipe 1,2 | 65,100 | 2,070,180 | ||||||
| NV5 Global 1 | 13,400 | 1,850,808 | ||||||
| 18,799,483 | ||||||||
| ELECTRICAL EQUIPMENT - 0.9% | ||||||||
| American Superconductor 1 | 104,225 | 1,133,968 | ||||||
| Encore Wire 2 | 3,307 | 473,232 | ||||||
| LSI Industries | 415,740 | 2,851,976 | ||||||
| Powell Industries 2 | 21,400 | 631,086 | ||||||
| Power Solutions International 1,2,3 | 21,100 | 54,860 | ||||||
| 5,145,122 | ||||||||
| MACHINERY - 3.9% | ||||||||
| CIRCOR International 1,2,4 | 220,421 | 5,991,043 | ||||||
| Graham Corporation 2 | 149,850 | 1,864,134 | ||||||
| †H2O Innovation 1 | 437,300 | 902,291 | ||||||
| Hurco Companies 2 | 36,866 | 1,094,920 | ||||||
| L. B. Foster Company 1,2 | 95,300 | 1,310,375 | ||||||
| Lindsay Corporation 2 | 41,600 | 6,323,200 | ||||||
| Luxfer Holdings 2 | 31,700 | 612,127 | ||||||
| NN 1 | 90,600 | 371,460 | ||||||
| Shyft Group (The) | 17,200 | 845,036 | ||||||
| Titan International 1 | 212,200 | 2,325,712 | ||||||
| Wabash National | 6,400 | 124,928 | ||||||
| Westport Fuel Systems 1 | 412,500 | 977,625 | ||||||
| 22,742,851 | ||||||||
| MARINE - 1.6% | ||||||||
| Algoma Central | 40,000 | 538,519 | ||||||
| Clarkson | 102,700 | 5,393,572 | ||||||
| Eagle Bulk Shipping 2 | 81,428 | 3,704,974 | ||||||
| 9,637,065 | ||||||||
| PROFESSIONAL SERVICES - 1.3% | ||||||||
| Acacia Research 1,2,4 | 190,000 | 974,700 | ||||||
| Barrett Business Services | 2,600 | 179,556 | ||||||
| Forrester Research 1 | 62,300 | 3,658,879 | ||||||
| Franklin Covey 1,2 | 40,100 | 1,859,036 | ||||||
| Resources Connection | 59,300 | 1,057,912 | ||||||
| 7,730,083 | ||||||||
| ROAD & RAIL - 0.3% | ||||||||
| Patriot Transportation Holding 2 | 55,764 | 450,015 | ||||||
| Universal Logistics Holdings 2 | 75,200 | 1,418,272 | ||||||
| 1,868,287 | ||||||||
| TRADING COMPANIES & DISTRIBUTORS - 3.7% | ||||||||
| †BlueLinx Holdings 1 | 16,000 | 1,532,160 | ||||||
| EVI Industries 1,2 | 185,909 | 5,805,938 | ||||||
| Lawson Products 1 | 36,500 | 1,998,375 | ||||||
| Transcat 1 | 131,981 | 12,199,004 | ||||||
| 21,535,477 | ||||||||
| Total (Cost $72,061,916) | 107,313,276 | |||||||
INFORMATION TECHNOLOGY - 22.7% COMMUNICATIONS EQUIPMENT - 1.5% | ||||||||
| Clearfield 1 | 65,500 | 5,529,510 | ||||||
| Digi International 1 | 71,600 | 1,759,212 | ||||||
| Genasys 1 | 86,392 | 343,840 | ||||||
| Ituran Location and Control | 50,000 | 1,333,500 | ||||||
| 8,966,062 | ||||||||
| ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 6.9% | ||||||||
| Bel Fuse Cl. A | 67,705 | 978,337 | ||||||
| Fabrinet 1 | 2,200 | 260,634 | ||||||
| FARO Technologies 1,2 | 65,200 | 4,565,304 | ||||||
| HollySys Automation Technologies 1 | 51,900 | 730,752 | ||||||
| Luna Innovations 1 | 426,378 | 3,598,630 | ||||||
| nLIGHT 1,2,4 | 306,100 | 7,331,095 | ||||||
| Novanta 1 | 3,400 | 599,522 | ||||||
| PAR Technology 1,2 | 281,774 | 14,869,214 | ||||||
| PC Connection 2 | 14,000 | 603,820 | ||||||
| PowerFleet 1 | 230,500 | 1,092,570 | ||||||
| Richardson Electronics | 316,900 | 4,284,488 | ||||||
| Vishay Precision Group 1 | 41,800 | 1,551,616 | ||||||
| 40,465,982 | ||||||||
| IT SERVICES - 0.6% | ||||||||
| Cantaloupe 1,2 | 90,500 | 803,640 | ||||||
| Computer Task Group 1 | 84,800 | 845,456 | ||||||
| Hackett Group (The) 2 | 27,700 | 568,681 | ||||||
| International Money Express 1 | 20,000 | 319,200 | ||||||
| †Liberated Syndication 1,5 | 98,000 | 313,992 | ||||||
| Paya Holdings 1 | 74,000 | 469,160 | ||||||
| 3,320,129 | ||||||||
| SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 9.7% | ||||||||
| Alpha & Omega Semiconductor 1 | 17,900 | 1,084,024 | ||||||
| Amtech Systems 1,2 | 92,184 | 910,778 | ||||||
| Axcelis Technologies 1 | 5,400 | 402,624 | ||||||
| AXT 1 | 100,000 | 881,000 | ||||||
| Azenta 2 | 34,000 | 3,505,740 | ||||||
| Camtek 1 | 50,300 | 2,315,812 | ||||||
| Cohu 1 | 38,990 | 1,485,129 | ||||||
| CyberOptics Corporation 1 | 64,900 | 3,017,850 | ||||||
| FormFactor 1 | 22,869 | 1,045,571 | ||||||
| Ichor Holdings 1 | 25,700 | 1,182,971 | ||||||
| Kulicke & Soffa Industries 2 | 77,200 | 4,673,688 | ||||||
| Nova 1,2 | 45,300 | 6,636,450 | ||||||
| NVE Corporation | 14,400 | 983,520 | ||||||
| Onto Innovation 1,2,4 | 127,550 | 12,911,886 | ||||||
| PDF Solutions 1 | 218,400 | 6,942,936 | ||||||
| Photronics 1 | 235,800 | 4,444,830 | ||||||
| †Sequans Communications ADR 1 | 31,800 | 150,732 | ||||||
| Ultra Clean Holdings 1,2,4 | 72,200 | 4,141,392 | ||||||
| Veeco Instruments 1 | 26,300 | 748,761 | ||||||
| 57,465,694 | ||||||||
| SOFTWARE - 2.9% | ||||||||
| Agilysys 1,2 | 110,800 | 4,926,168 | ||||||
| American Software Cl. A 2 | 80,252 | 2,100,195 | ||||||
| AudioEye 1 | 50,000 | 351,000 | ||||||
| 26 | 2021 Annual Report to Stockholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
|
December 31, 2021
Schedule of Investments (continued)
| SHARES | VALUE | |||||||
| INFORMATION TECHNOLOGY (continued) | ||||||||
| SOFTWARE (continued) | ||||||||
| Digital Turbine 1 | 62,800 | $ | 3,830,172 | |||||
| †LiveVox Holdings Cl. A 1 | 201,729 | 1,038,904 | ||||||
| †Mitek Systems 1 | 74,600 | 1,324,150 | ||||||
| Model N 1 | 25,000 | 750,750 | ||||||
| †ON24 1 | 35,400 | 614,190 | ||||||
| OneSpan 1 | 5,600 | 94,808 | ||||||
| Optiva 1 | 28,000 | 605,621 | ||||||
| RealNetworks 1 | 100,171 | 98,168 | ||||||
| Upland Software 1 | 94,100 | 1,688,154 | ||||||
| 17,422,280 | ||||||||
| TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 1.1% | ||||||||
| AstroNova 1 | 114,600 | 1,547,100 | ||||||
| Avid Technology 1 | 64,500 | 2,100,765 | ||||||
| Intevac 1 | 539,400 | 2,540,574 | ||||||
| TransAct Technologies 1 | 40,900 | 445,810 | ||||||
| 6,634,249 | ||||||||
| Total (Cost $69,174,404) | 134,274,396 | |||||||
| MATERIALS - 5.5% | ||||||||
| CHEMICALS - 0.4% | ||||||||
| LSB Industries 1 | 176,540 | 1,950,767 | ||||||
| Rayonier Advanced Materials 1 | 50,000 | 285,500 | ||||||
| 2,236,267 | ||||||||
| CONSTRUCTION MATERIALS - 0.2% | ||||||||
| Monarch Cement 3 | 8,150 | 855,750 | ||||||
| CONTAINERS & PACKAGING - 0.4% | ||||||||
| UFP Technologies 1,2,4 | 36,445 | 2,560,626 | ||||||
| METALS & MINING - 4.5% | ||||||||
| Alamos Gold Cl. A | 261,044 | 2,007,951 | ||||||
| Altius Minerals | 113,000 | 1,555,263 | ||||||
| Ampco-Pittsburgh 1 | 79,002 | 395,010 | ||||||
| Haynes International 2 | 84,400 | 3,403,852 | ||||||
| Imdex | 569,466 | 1,222,229 | ||||||
| MAG Silver 1 | 154,050 | 2,413,964 | ||||||
| Major Drilling Group International 1 | 1,274,784 | 8,324,215 | ||||||
| Olympic Steel | 35,000 | 822,500 | ||||||
| Pretium Resources 1 | 80,000 | 1,127,001 | ||||||
| Sandstorm Gold 1 | 810,000 | 5,022,000 | ||||||
| Universal Stainless & Alloy Products 1,2 | 33,620 | 265,262 | ||||||
| 26,559,247 | ||||||||
| Total (Cost $23,732,534) | 32,211,890 | |||||||
| REAL ESTATE – 2.6% | ||||||||
| EQUITY REAL ESTATE INVESTMENT TRUSTS (REITS) - 0.4% | ||||||||
| Postal Realty Trust Cl. A | 114,000 | 2,257,200 | ||||||
| REAL ESTATE MANAGEMENT & DEVELOPMENT - 2.2% | ||||||||
| Altus Group | 87,000 | 4,881,134 | ||||||
| Dundee Corporation Cl. A 1 | 413,200 | 463,848 | ||||||
| Marcus & Millichap 1,2 | 4,900 | 252,154 | ||||||
| Real Matters 1 | 229,500 | 1,505,870 | ||||||
| RMR Group (The) Cl. A 2 | 88,200 | 3,058,776 | ||||||
| Tejon Ranch 1,2 | 154,994 | 2,957,285 | ||||||
| 13,119,067 | ||||||||
| Total (Cost $15,037,265) | 15,376,267 | |||||||
| UTILITIES - 0.3% | ||||||||
| WATER UTILITIES - 0.3% | ||||||||
| Global Water Resources | 106,000 | 1,812,600 | ||||||
| Total (Cost $678,400) | 1,812,600 | |||||||
| TOTAL COMMON STOCKS | ||||||||
| (Cost $375,868,325) | 584,150,798 | |||||||
| PREFERRED STOCK - 0.0% | ||||||||
| ENERGY - 0.0% | ||||||||
| OIL, GAS & CONSUMABLE FUELS - 0.0% | ||||||||
| †Imperial Petroleum 8.75% Ser. A | 4,784 | 84,438 | ||||||
| (Cost $71,808) | 84,438 | |||||||
| REPURCHASE AGREEMENT- 4.9% | ||||||||
Fixed Income Clearing Corporation, 0.00% dated 12/31/21, due 1/3/22, maturity value $28,723,143 (collateralized by obligations of various U.S. Government Agencies, 1.375% due 12/31/28, valued at $29,297,608) | ||||||||
| (Cost $28,723,143) | 28,723,143 | |||||||
| TOTAL INVESTMENTS - 103.8% | ||||||||
| (Cost $404,663,276) | 612,958,379 | |||||||
| LIABILITIES LESS CASH AND OTHER ASSETS - (3.8)% | (22,645,002 | ) | ||||||
| NET ASSETS - 100.0% | $ | 590,313,377 | ||||||
ADR - American Depository Receipt
| † | New additions in 2021. |
| 1 | Non-income producing. |
| 3 | These securities are defined as Level 2 securities due to fair value being based on quoted prices for similar securities. See Notes to Financial Statements. |
Bold indicates the Fund’s 20 largest equity holdings in terms of December 31, 2021, market value.
TAX INFORMATION: The cost of total investments for Federal income tax purposes was $408,970,641. At December 31, 2021, net unrealized appreciation for all securities was $203,987,738 consisting of aggregate gross unrealized appreciation of $251,985,745 and aggregate gross unrealized depreciation of $47,998,007. The primary causes of the difference between book and tax basis cost are the timing of the recognition of losses on securities sold, investments in publicly traded partnerships and Trusts, investments in Real Estate Investment Trusts and mark-to-market of Passive Foreign Investment Companies.
| THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | 2021 Annual Report to Stockholders | 27 |
| Royce Micro-Cap Trust | December 31, 2021 |
| Statement of Assets and Liabilities |
| ASSETS: | ||||
| Investments at value | $ | 584,235,236 | ||
| Repurchase agreements (at cost and value) | 28,723,143 | |||
| Foreign currency (cost $14,457) | 14,568 | |||
| Receivable for investments sold | 632,477 | |||
| Receivable for dividends | 132,893 | |||
| Prepaid expenses and other assets | 39,359 | |||
| Total Assets | 613,777,676 | |||
| LIABILITIES: | ||||
| Revolving credit agreement | 22,000,000 | |||
| Payable for investments purchased | 728,179 | |||
| Payable for investment advisory fee | 568,917 | |||
| Payable for directors' fees | 20,799 | |||
| Payable for interest expense | 21,897 | |||
| Accrued expenses | 124,507 | |||
| Total Liabilities | 23,464,299 | |||
| Net Assets | $ | 590,313,377 | ||
| ANALYSIS OF NET ASSETS: | ||||
| Paid-in capital - $0.001 par value per share; 45,199,948 shares outstanding (150,000,000 shares authorized) | $ | 382,528,418 | ||
| Total distributable earnings (loss) | 207,784,959 | |||
| Net Assets (net asset value per share - $13.06) | $ | 590,313,377 | ||
| Investments at identified cost | $ | 375,940,133 | ||
| 28 | 2021 Annual Report to Stockholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
| Royce Micro-Cap Trust | Year Ended December 31, 2021 |
| Statement of Operations |
| INVESTMENT INCOME: | ||||
| INCOME: | ||||
| Dividends | $ | 9,180,725 | ||
| Foreign withholding tax | (359,497 | ) | ||
| Rehypothecation income | 31,643 | |||
| Total income | 8,852,871 | |||
| EXPENSES: | ||||
| Investment advisory fees | 6,178,975 | |||
| Interest expense | 248,028 | |||
| Administrative and office facilities | 228,308 | |||
| Stockholder reports | 112,080 | |||
| Custody and transfer agent fees | 101,529 | |||
| Directors' fees | 92,237 | |||
| Professional fees | 79,376 | |||
| Other expenses | 64,399 | |||
| Total expenses | 7,104,932 | |||
| Compensating balance credits | (20 | ) | ||
| Net expenses | 7,104,912 | |||
| Net investment income (loss) | 1,747,959 | |||
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | ||||
| NET REALIZED GAIN (LOSS): | ||||
| Investments | 39,265,323 | |||
| Foreign currency transactions | 22,772 | |||
| NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION): | ||||
| Investments | 54,225,692 | |||
| Other assets and liabilities denominated in foreign currency | (1,467 | ) | ||
| Net realized and unrealized gain (loss) on investments and foreign currency | 93,512,320 | |||
| NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS | $ | 95,260,279 | ||
| THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | 2021 Annual Report to Stockholders | 29 |
| Royce Micro-Cap Trust |
| Statement of Changes in Net Assets |
| YEAR ENDED 12/31/21 | YEAR ENDED 12/31/20 | |||||||
| INVESTMENT OPERATIONS: | ||||||||
| Net investment income (loss) | $ | 1,747,959 | $ | (1,313,986 | ) | |||
| Net realized gain (loss) on investments and foreign currency | 39,288,095 | 27,280,534 | ||||||
| Net change in unrealized appreciation (depreciation) on investments and foreign currency | 54,224,225 | 99,194,387 | ||||||
| Net increase (decrease) in net assets from investment operations | 95,260,279 | 125,160,935 | ||||||
| DISTRIBUTIONS: | ||||||||
| Total distributable earnings | (37,185,784 | ) | (26,108,860 | ) | ||||
| Total distributions | (37,185,784 | ) | (26,108,860 | ) | ||||
| CAPITAL STOCK TRANSACTIONS: | ||||||||
| Reinvestment of distributions | 16,322,950 | 12,056,861 | ||||||
| Total capital stock transactions | 16,322,950 | 12,056,861 | ||||||
| Net Increase (Decrease) In Net Assets | 74,397,445 | 111,108,936 | ||||||
| NET ASSETS: | ||||||||
| Beginning of year | 515,915,932 | 404,806,996 | ||||||
| End of year | $ | 590,313,377 | $ | 515,915,932 | ||||
| 30 | 2021 Annual Report to Stockholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
| Royce Micro-Cap Trust | Year Ended December 31, 2021 |
| Statement of Cash Flows |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
| Net increase (decrease) in net assets from investment operations | $ | 95,260,279 | ||
| Adjustments to reconcile net increase (decrease) in net assets from investment operations to net cash provided by operating activities: | ||||
| Purchases of long-term investments | (91,778,405 | ) | ||
| Proceeds from sales and maturities of long-term investments | 132,406,430 | |||
| Net purchases, sales and maturities of short-term investments | (21,746,987 | ) | ||
| Net (increase) decrease in dividends receivable and other assets | 36,275 | |||
| Net increase (decrease) in interest expense payable, accrued expenses and other liabilities | 181,163 | |||
| Net change in unrealized appreciation (depreciation) on investments | (54,225,692 | ) | ||
| Net realized gain (loss) on investments | (39,265,323 | ) | ||
| Net cash provided by operating activities | 20,867,740 | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
| Distributions net of reinvestment (reinvestment $16,322,950) | (20,862,834 | ) | ||
| Net cash used for financing activities | (20,862,834 | ) | ||
| INCREASE (DECREASE) IN CASH: | 4,906 | |||
| Cash and foreign currency at beginning of year | 9,662 | |||
| Cash and foreign currency at end of year | $ | 14,568 | ||
Supplemental disclosure of cash flow information:
For the year ended December 31, 2021, the Fund paid $248,534 in interest expense.
| THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | 2021 Annual Report to Stockholders | 31 |
| Royce Micro-Cap Trust |
| Financial Highlights |
This table is presented to show selected data for a share of Common Stock outstanding throughout each period, and to assist stockholders in evaluating the Fund's performance for the periods presented.
| YEARS ENDED | ||||||||||||||||||||
| 12/31/21 | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | ||||||||||||||||
| Net Asset Value, Beginning of Period | $ | 11.79 | $ | 9.63 | $ | 8.53 | $ | 10.48 | $ | 9.63 | ||||||||||
| INVESTMENT OPERATIONS: | ||||||||||||||||||||
| Net investment income (loss) | 0.04 | 1 | (0.03 | ) | 0.01 | 0.01 | 0.06 | |||||||||||||
| Net realized and unrealized gain (loss) on investments and foreign currency | 2.12 | 2.86 | 1.81 | (1.18 | ) | 1.52 | ||||||||||||||
| Net increase (decrease) in net assets from investment operations | 2.16 | 2.83 | 1.82 | (1.17 | ) | 1.58 | ||||||||||||||
| DISTRIBUTIONS: | ||||||||||||||||||||
| Net investment income | - | (0.08 | ) | (0.03 | ) | (0.00 | ) | (0.06 | ) | |||||||||||
| Net realized gain on investments and foreign currency | (0.84 | ) | (0.53 | ) | (0.65 | ) | (0.75 | ) | (0.63 | ) | ||||||||||
| Total distributions | (0.84 | ) | (0.61 | ) | (0.68 | ) | (0.75 | ) | (0.69 | ) | ||||||||||
| CAPITAL STOCK TRANSACTIONS: | ||||||||||||||||||||
| Effect of reinvestment of distributions by Common Stockholders | (0.05 | ) | (0.06 | ) | (0.04 | ) | (0.03 | ) | (0.04 | ) | ||||||||||
| Total capital stock transactions | (0.05 | ) | (0.06 | ) | (0.04 | ) | (0.03 | ) | (0.04 | ) | ||||||||||
| Net Asset Value, End of Period | $ | 13.06 | $ | 11.79 | $ | 9.63 | $ | 8.53 | $ | 10.48 | ||||||||||
| Market Value, End of Period | $ | 11.55 | $ | 10.12 | $ | 8.54 | $ | 7.42 | $ | 9.44 | ||||||||||
| TOTAL RETURN:2 | ||||||||||||||||||||
| Net Asset Value | 19.17 | % | 33.60 | % | 22.44 | % | (11.62 | )% | 17.67 | % | ||||||||||
| Market Value | 22.78 | % | 29.32 | % | 24.82 | % | (14.65 | )% | 25.09 | % | ||||||||||
| RATIOS BASED ON AVERAGE NET ASSETS: | ||||||||||||||||||||
| Investment advisory fee expense3 | 1.04 | % | 1.19 | % | 0.85 | % | 0.92 | %4 | 0.49 | % | ||||||||||
| Other operating expenses | 0.16 | % | 0.24 | % | 0.35 | % | 0.43 | % | 0.40 | % | ||||||||||
| Total expenses (net) | 1.20 | % | 1.43 | % | 1.20 | % | 1.35 | % | 0.89 | % | ||||||||||
| Expenses excluding interest expense | 1.16 | % | 1.34 | % | 1.01 | % | 1.05 | % | 0.62 | % | ||||||||||
| Expenses prior to balance credits | 1.20 | % | 1.43 | % | 1.20 | % | 1.35 | % | 0.89 | % | ||||||||||
| Net investment income (loss) | 0.30 | %1 | (0.34 | )% | 0.10 | % | 0.10 | % | 0.56 | % | ||||||||||
| SUPPLEMENTAL DATA: | ||||||||||||||||||||
| Net Assets, End of Period (in thousands) | $ | 590,313 | $ | 515,916 | $ | 404,807 | $ | 345,499 | $ | 409,905 | ||||||||||
| Portfolio Turnover Rate | 15 | % | 17 | % | 15 | % | 21 | % | 15 | % | ||||||||||
| REVOLVING CREDIT AGREEMENT: | ||||||||||||||||||||
| Asset coverage | 2783 | % | 2445 | % | 1940 | % | 1670 | % | 1011 | % | ||||||||||
| Asset coverage per $1,000 | $ | 27,832 | $ | 24,451 | $ | 19,400 | $ | 16,705 | $ | 10,109 | ||||||||||
| 4 | Includes the impact of the adjustment of prior period’s performance fees of 0.06%. |
| 32 | 2021 Annual Report to Stockholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Royce Micro-Cap Trust
Notes to Financial Statements
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 Investment Company Act of 1940 (“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 December 31, 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 | $ | 578,816,916 | $ | 5,019,890 | $ | 313,992 | $ | 584,150,798 | ||||||||
| Preferred Stock | 84,438 | – | – | 84,438 | ||||||||||||
| Repurchase Agreement | – | 28,723,143 | – | 28,723,143 | ||||||||||||
2021 Annual Report to Stockholders | 33
Royce Micro-Cap Trust
Notes to Financial Statements (continued)
VALUATION OF INVESTMENTS (continued):
Level 3 Reconciliation:
| BALANCE AS OF 12/31/20 | PURCHASES | SALES | CORPORATE ACTIONS | REALIZED GAIN (LOSS) 1 | UNREALIZED GAIN (LOSS) 1 | BALANCE AS OF 12/31/21 | ||||||||||||||||||||||
| Common Stocks | $ | 201,500 | $ | 452,156 | $ | 1 | $ | – | $ | (1,017,324 | ) | $ | 677,661 | $ | 313,992 | |||||||||||||
| Warrants | 5,000 | – | – | 0 | – | (5,000 | ) | – | ||||||||||||||||||||
| 1 | The net change in unrealized appreciation (depreciation) is included in the accompanying Statement of Operations. Change in unrealized appreciation (depreciation) includes net unrealized appreciation (depreciation) resulting from changes in investment values during the reporting period and the reversal of previously recorded unrealized appreciation (depreciation) when gains or losses are realized. Net realized gain (loss) from investments and foreign currency transactions is included in the accompanying Statement of Operations. |
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 December 31, 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 all of the Royce Funds are allocated by Royce under an administration agreement and are included in administrative and office facilities and professional fees.
34 | 2021 Annual Report to Stockholders
Royce Micro-Cap Trust
Notes to Financial Statements (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 1,435,160 and 1,745,537 shares of Common Stock as reinvestment of distributions for the years ended December 31, 2021 and 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 in accordance with the credit agreement, 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 December 31, 2021, the Fund has outstanding borrowings of $22,000,000. During the year ended December 31, 2021, the Fund borrowed an average daily balance of $22,000,000 at a weighted average borrowing cost of 1.11%. The maximum amount outstanding during the year ended December 31, 2021, was $22,000,000. As of December 31, 2021, the aggregate value of rehypothecated securities was $19,850,498. During the year ended December 31, 2021, the Fund earned $31,643 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 fee is payable monthly.
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 Annual Report to Stockholders | 35
Royce Micro-Cap Trust
Notes to Financial Statements (continued)
Investment Advisory Agreement (continued):
For the twelve rolling 36-month periods in 2021, the Fund’s investment performance ranged from 6% above to 18% above the investment performance of the Russell 2000. Accordingly, the net investment advisory fee consisted of a Basic Fee of $4,266,154 and a net upward adjustment of $1,912,821 for the performance of the Fund relative to that of the Russell 2000. For the year ended December 31, 2021, the Fund expensed Royce investment advisory fees totaling $6,178,975.
Purchases and Sales of Investment Securities:
For the year ended December 31, 2021, the costs of purchases and proceeds from sales of investment securities, other than short-term securities, amounted to $89,231,786 and $121,572,706, 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 that review to the Board of Directors. Cross trades for the year ended December 31, 2021, were as follows:
| COSTS OF PURCHASES | PROCEEDS FROM SALES | REALIZED GAIN (LOSS) |
| $2,280,840 | $ – | $ – |
Tax Information:
Distributions during the years ended December 31, 2021 and 2020, were characterized as follows for tax purposes:
| ORDINARY INCOME | LONG-TERM CAPITAL GAINS | ||
| 2021 | 2020 | 2021 | 2020 |
| $4,932,223 | $7,185,672 | $32,253,561 | $18,923,188 |
The tax basis components of distributable earnings at December 31, 2021, were as follows:
| UNDISTRIBUTED ORDINARY INCOME | UNDISTRIBUTED
LONG-TERM CAPITAL GAINS | NET
UNREALIZED APPRECIATION (DEPRECIATION)1 | QUALIFIED
LATE YEAR ORDINARY AND POST-OCTOBER LOSS DEFERRALS2 | TOTAL DISTRIBUTABLE EARNINGS | ||||||||||||||
| $3,293,471 | $3,271,441 | $203,988,907 | $(2,768,860) | $207,784,959 | ||||||||||||||
| 1 | Includes timing differences on foreign currency, recognition of losses on securities sold, investments in Real Estate Investment Trusts, investments in publicly traded partnerships and Trusts and mark-to-market of Passive Foreign Investment Companies. |
| 2 | Under the current tax law, capital losses and qualified late year ordinary losses incurred after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. This column also includes passive activity losses. |
For financial reporting purposes, capital accounts and distributions to stockholders are adjusted to reflect the tax character of permanent book/tax differences. For the year ended December 31, 2021, the Fund had no reclassifications.
Management has analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years (2018-2021) and has concluded that as of December 31, 2021, no provision for income tax is required in the Fund’s financial statements.
Subsequent Events:
Subsequent events have been evaluated through the date the financial statements were issued and it has been determined that no events have occurred that require disclosure.
36 | 2021 Annual Report to Stockholders
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Royce Micro-Cap Trust, Inc.:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Royce Micro-Cap Trust, Inc. (the "Fund") as of December 31, 2021, the related statements of operations and cash flows for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2021, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2021 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
New York, New York
February 22, 2022
We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.
2021 Annual Report to Stockholders | 37
MANAGERS’ DISCUSSION (UNAUDITED)
Chuck Royce, Lauren Romeo, CFA®
Steven McBoyle, Andrew Palen
FUND PERFORMANCE
Royce Value Trust (RVT) rose 20.0% on an NAV (net asset value) basis and 32.9% on a market price basis in 2021 versus respective gains of 14.8% and 26.7% for its unleveraged small-cap benchmarks, the Russell 2000 and the S&P SmallCap 600 Indexes, for the same period. On both an NAV and market price basis, RVT beat the Russell 2000 for the 3-, 5-, 10-, 20-, 25-, 30-, 35-year, and since inception (11/26/86) periods ended 12/31/21, all under the management of Chuck Royce. The Fund’s average annual NAV total return for the since inception period ended 12/31/21 was 11.1%.
WHAT WORKED… AND WHAT DIDN’T
Nine of the portfolio’s 11 equity sectors made a positive impact on calendar-year performance, led by Industrials, Information Technology, and Consumer Discretionary. The only negative impacts came from Health Care and Communication Services while Utilities, the portfolio’s smallest sector weighting, made the smallest contribution. At the industry level, semiconductors & semiconductor equipment (Information Technology), machinery (Industrials), and specialty retail (Consumer Discretionary) contributed most in 2021 while health care equipment & supplies (Health Care), software (Information Technology), and diversified telecommunication services (Communication Services) were the largest detractors.
At the position level, the Fund’s top contributor was AutoCanada, a North American automobile business that sells multiple brands and operates 50 franchised dealerships in Canada and 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. In November, AutoCanada announced record third-quarter revenue driven by strong performance in its used vehicle, F&I (Finance & Insurance), and U.S. operations, along with an improved outlook for ongoing demand. The next top contributor was SiTime Corporation, which supplies timing semiconductors. The company saw accelerating growth and expanding margins on new product launches in 2021 while it also doubled its addressable market over the past two years. SiTime’s all-silicon MEMs (Microelectromechanical systems) timing solutions continue to replace legacy quartz-based timing solutions in new market verticals and are in the early stages of market penetration.
| Top Contributors to Performance | Top Detractors from Performance | |||||
| For 2021 (%)1 | For 2021 (%)2 | |||||
| AutoCanada | 0.95 | Bandwidth Cl. A | -0.59 | |||
| SiTime Corporation | 0.77 | Upland Software | -0.53 | |||
| Kadant | 0.55 | SmileDirectClub Cl. A | -0.51 | |||
| KBR | 0.52 | Repay Holdings Cl. A | -0.25 | |||
| Mosaic Company (The) | 0.52 | CIRCOR International | -0.23 | |||
| 1 Includes dividends | 2 Net of dividends | |||||
Bandwidth, a cloud-based voice and text communications solutions provider, was RVT’s top-detracting position. The company’s valuation multiples contracted even as it sustained strong, though decelerating, revenue growth that followed outsized pandemic-related growth. Bandwidth has also been integrating the acquisition of global competitor Voxbone, which should expand its addressable market and improve both its customer value proposition and competitive positioning. In September, Bandwidth experienced a DDoS (distributed denial of service) malware attack that disrupted operations and affected customer relationships. Its shares were most pressured, however, by concerns about the sustainability of its growth and how it would respond to new forms of competition. The Fund’s second-biggest detractor was Upland Software, which provides cloud-based enterprise work management software. Its shares fell on mixed revenue performance following outsized presidential election-related growth in 2020 and disappointing execution of the transition of its go-to-market strategy. Profit margins contracted as the company sustained elevated investments in advance of an improvement in revenue productivity. Although we still appreciate much about its strategic allocation of capital, these factors led us to substantially reduce our position in the fourth quarter.
The portfolio’s advantage over the Russell 2000 resulted from sector allocation in 2021, with our significant underweight in Health Care helping most on the sector level as it was the biggest detractor within the Russell 2000. We also benefited from effective stock selection in Consumer Discretionary as well as a combination of our higher exposure and savvy stock selection in Industrials. Conversely, stock picking detracted from relative results in Energy—which was strong within the Russell 2000— as well as in Materials and Financials in 2021.
CURRENT POSITIONING AND OUTLOOK
Our outlook is very positive for small-cap value but more nuanced for small-cap as a whole. The Russell 2000 enjoyed a third consecutive year of double-digit positive returns in 2021, which is rare for any equity index. It’s happened only twice before since the inception of the Russell 2000 in 1979—from 1991-1993 and 1995-1997. In each instance, a fourth year of double-digit positive performance failed to materialize. We always place a lot of weight on history, and this pattern, along with a less accommodative Fed, makes us think that performance for the Russell 2000 will be more muted in 2022. History also tells us, however, that small-cap value and cyclicals do well, particularly on a relative basis, during periods of improving economic growth—which is consistent with the encouraging signs we’ve been seeing on a company-by-company basis. We also are optimistic about the relative performance outlook for high quality stocks—which we primarily define as companies with high returns on invested capital and stable returns on assets. We think the Fund’s combined focus on high-quality and value should be supportive for attractive returns, particularly relative to its benchmark.
38 | 2021 Annual Report to Shareholders
|
| PERFORMANCE AND PORTFOLIO REVIEW (UNAUDITED) | SYMBOLS MARKET PRICE RVT NAV XRVTX |
Performance
Average Annual Total Return (%) Through 12/31/21
| JUL-DEC 20211 | 1-YR | 3-YR | 5-YR | 10-YR | 15-YR | 20-YR | 25-YR | 30-YR | SINCE INCEPTION (11/26/86) | |
| RVT (NAV) | 2.74 | 19.97 | 24.01 | 14.26 | 13.48 | 8.56 | 9.73 | 10.69 | 11.31 | 11.07 |
1 Not annualized
Market Price Performance History Since Inception (11/26/86)
Cumulative Performance of Investment through 12/31/211
| 1-YR | 5-YR | 10-YR | 15-YR | 20-YR | SINCE INCEPTION (11/26/86) | |
| RVT | 32.9% | 122.8% | 295.7% | 207.6% | 584.6% | 3536.2% |
| 1 | Reflects 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. |
| 2 | Reflects the actual month-end market price movement of one share as it has traded on the NYSE. |
Morningstar Style Map™ As of 12/31/21
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 62 for additional information.
Top 10 Positions
% of Net Assets
| MKS Instruments | 2.4 |
| AutoCanada | 1.5 |
| KBR | 1.4 |
| Mosaic Company (The) | 1.3 |
| Kadant | 1.3 |
| FormFactor | 1.3 |
| Quaker Chemical | 1.2 |
| FirstService Corporation | 1.2 |
| Cirrus Logic | 1.2 |
| Mesa Laboratories | 1.2 |
Portfolio Sector Breakdown
% of Net Assets
| Industrials | 25.1 |
| Information Technology | 24.4 |
| Financials | 13.8 |
| Materials | 10.8 |
| Consumer Discretionary | 10.3 |
| Health Care | 5.4 |
| Real Estate | 3.8 |
| Energy | 2.0 |
| Consumer Staples | 1.4 |
| Communication Services | 1.2 |
| Utilities | 0.1 |
| Diversified Investment Companies | 0.0 |
| Cash and Cash Equivalents, Net of Outstanding Line of Credit | 1.7 |
Calendar Year Total Returns (%)
| YEAR | RVT |
| 2021 | 20.0 |
| 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 |
Portfolio Diagnostics
| Fund Net Assets | $2,150 million |
| Number of Holdings | 507 |
| Turnover Rate | 44% |
| Net Asset Value | $20.29 |
| Market Price | $19.59 |
| Average Market Capitalization1 | $2,942 million |
| Weighted Average P/E Ratio 2,3 | 18.0x |
| Weighted Average P/B Ratio 2 | 2.7x |
| Active Share 4 | 84% |
| U.S. Investments (% of Net Assets) | 82.9% |
| Non-U.S. Investments (% of Net Assets) | 15.4% |
| 1 | Geometric 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. |
| 2 | Harmonic 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. |
| 3 | The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (17% of portfolio holdings as of 12/31/21). |
| 4 | Active 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 Expense Information
All performance information reflects past performance, is presented on a total return basis, net of the Fund’s investment advisory fee, reflects the reinvestment of distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the sale of fund shares. 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 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 Annual Report to Shareholders | 39
| Schedule of Investments | |||||||
| Common Stocks – 98.3% | |||||||
| SHARES | VALUE | ||||||
| COMMUNICATION SERVICES – 1.2% | |||||||
| DIVERSIFIED TELECOMMUNICATION SERVICES - 0.2% | |||||||
| Bandwidth Cl. A 1 | 40,000 | $ | 2,870,400 | ||||
| Cogent Communications Holdings 2 | 9,003 | 658,840 | |||||
| Liberty Latin America Cl. C 1,2,3 | 73,228 | 834,799 | |||||
| 4,364,039 | |||||||
| ENTERTAINMENT - 0.3% | |||||||
| IMAX Corporation 1 | 367,950 | 6,564,228 | |||||
| †World Wrestling Entertainment Cl. A | 6,945 | 342,666 | |||||
| 6,906,894 | |||||||
| INTERACTIVE MEDIA & SERVICES - 0.5% | |||||||
| QuinStreet 1,2 | 204,154 | 3,713,561 | |||||
| Ziff Davis 1,2 | 51,735 | 5,735,342 | |||||
| 9,448,903 | |||||||
| MEDIA - 0.2% | |||||||
| †AMC Networks Cl. A 1 | 33,190 | 1,143,064 | |||||
| †Magnite 1 | 31,550 | 552,125 | |||||
| †Thryv Holdings 1 | 50,000 | 2,056,500 | |||||
| 3,751,689 | |||||||
| WIRELESS TELECOMMUNICATION SERVICES - 0.0% | |||||||
| †Shenandoah Telecommunications | 7,317 | 186,584 | |||||
| Spok Holdings | 39,777 | 371,119 | |||||
| 557,703 | |||||||
| Total (Cost $20,113,710) | 25,029,228 | ||||||
| CONSUMER DISCRETIONARY – 10.3% | |||||||
| AUTO COMPONENTS - 1.9% | |||||||
| †American Axle & Manufacturing Holdings 1 | 62,357 | 581,791 | |||||
| Dorman Products 1,2 | 60,390 | 6,824,674 | |||||
| Gentex Corporation 2 | 189,840 | 6,615,924 | |||||
| †Goodyear Tire & Rubber 1 | 8,038 | 171,370 | |||||
| LCI Industries 2 | 107,146 | 16,700,847 | |||||
| Motorcar Parts of America 1 | 13,337 | 227,662 | |||||
| Patrick Industries 2 | 91,956 | 7,419,930 | |||||
| Standard Motor Products 2 | 16,900 | 885,391 | |||||
| †XPEL 1 | 7,951 | 542,894 | |||||
| 39,970,483 | |||||||
| DISTRIBUTORS - 0.2% | |||||||
| LKQ Corporation 2 | 84,300 | 5,060,529 | |||||
| DIVERSIFIED CONSUMER SERVICES - 0.3% | |||||||
| Adtalem Global Education 1 | 14,873 | 439,646 | |||||
| American Public Education 1 | 33,228 | 739,323 | |||||
| H&R Block | 18,200 | 428,792 | |||||
| Perdoceo Education 1 | 62,502 | 735,024 | |||||
| Universal Technical Institute 1 | 639,032 | 4,997,230 | |||||
| 7,340,015 | |||||||
| HOTELS, RESTAURANTS & LEISURE - 1.5% | |||||||
| †Bloomin' Brands 1 | 27,761 | 582,426 | |||||
| Century Casinos 1 | 91,061 | 1,109,123 | |||||
| †Denny's Corporation 1 | 100,000 | 1,600,000 | |||||
| †Hyatt Hotels Cl. A 1 | 2,098 | 201,198 | |||||
| Lindblad Expeditions Holdings 1,2 | 373,700 | 5,829,720 | |||||
| Scientific Games 1 | 353,968 | 23,655,681 | |||||
| 32,978,148 | |||||||
| HOUSEHOLD DURABLES - 0.8% | |||||||
| Cavco Industries 1,2,3 | 14,700 | 4,669,455 | |||||
| †Century Communities | 22,838 | 1,867,920 | |||||
| †Countryside Properties 1 | 100,000 | 609,097 | |||||
| Ethan Allen Interiors 2 | 19,826 | 521,226 | |||||
| La-Z-Boy | 40,817 | 1,482,065 | |||||
| M/I Homes 1 | 9,358 | 581,880 | |||||
| Meritage Homes 1 | 11,598 | 1,415,652 | |||||
| Skyline Champion 1 | 50,410 | 3,981,382 | |||||
| TopBuild Corp. 1 | 8,850 | 2,441,804 | |||||
| Tupperware Brands 1 | 34,663 | 529,997 | |||||
| 18,100,478 | |||||||
| INTERNET & DIRECT MARKETING RETAIL - 0.2% | |||||||
| †Liquidity Services 1 | 8,706 | 192,228 | |||||
| †1-800-FLOWERS.COM Cl. A 1 | 152,300 | 3,559,251 | |||||
| 3,751,479 | |||||||
| LEISURE PRODUCTS - 0.4% | |||||||
| Brunswick Corporation | 78,810 | 7,938,531 | |||||
| MasterCraft Boat Holdings 1 | 41,588 | 1,178,188 | |||||
| †YETI Holdings 1 | 4,139 | 342,834 | |||||
| 9,459,553 | |||||||
| MULTILINE RETAIL - 0.1% | |||||||
| Big Lots | 8,153 | 367,293 | |||||
| Franchise Group Cl. A | 39,975 | 2,085,096 | |||||
| †Ollie's Bargain Outlet Holdings 1 | 5,600 | 286,664 | |||||
| 2,739,053 | |||||||
| SPECIALTY RETAIL - 3.2% | |||||||
| †Aaron's Company (The) | 4,363 | 107,548 | |||||
| America's Car-Mart 1,2 | 97,500 | 9,984,000 | |||||
| Asbury Automotive Group 1 | 24,813 | 4,285,950 | |||||
| AutoCanada 1 | 952,600 | 32,156,228 | |||||
| Camping World Holdings Cl. A 2 | 279,113 | 11,276,165 | |||||
| CarMax 1 | 4,600 | 599,058 | |||||
| Cato Corporation (The) Cl. A | 26,183 | 449,300 | |||||
| Chico's FAS 1 | 746 | 4,013 | |||||
| †Conn's 1 | 15,480 | 364,090 | |||||
| Genesco 1 | 14,045 | 901,268 | |||||
| †Group 1 Automotive | 3,546 | 692,250 | |||||
| Haverty Furniture | 19,249 | 588,442 | |||||
| Hibbett | 4,651 | 334,546 | |||||
| MarineMax 1 | 25,803 | 1,523,409 | |||||
| †ODP Corporation (The) 1 | 11,832 | 464,761 | |||||
| Rent-A-Center | 10,375 | 498,415 | |||||
| Shoe Carnival 2 | 9,587 | 374,660 | |||||
| Signet Jewelers | 19,243 | 1,674,718 | |||||
| Zumiez 1 | 26,903 | 1,291,075 | |||||
| 67,569,896 | |||||||
| TEXTILES, APPAREL & LUXURY GOODS - 1.7% | |||||||
| Canada Goose Holdings 1 | 369,120 | 13,679,587 | |||||
| G-III Apparel Group 1 | 46,135 | 1,275,171 | |||||
| Kontoor Brands | 20,602 | 1,055,853 | |||||
| †Levi Strauss & Co. Cl. A | 15,480 | 387,464 | |||||
| Movado Group | 29,737 | 1,243,899 | |||||
| Ralph Lauren Cl. A | 110,425 | 13,125,116 | |||||
| Vera Bradley 1 | 90,686 | 771,738 | |||||
| Wolverine World Wide 2 | 142,146 | 4,095,226 | |||||
| 35,634,054 | |||||||
| Total (Cost $151,038,147) | 222,603,688 | ||||||
| CONSUMER STAPLES – 1.4% | |||||||
| BEVERAGES - 0.0% | |||||||
| †Coca-Cola Consolidated | 448 | 277,397 | |||||
| FOOD & STAPLES RETAILING - 0.0% | |||||||
| SpartanNash Company | 33,299 | 857,782 | |||||
| 40 | 2021 Annual Report to Stockholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
|
December 31, 2021
Schedule of Investments (continued)
| SHARES | VALUE | |||||||
| CONSUMER STAPLES (continued) | ||||||||
| FOOD PRODUCTS - 0.9% | ||||||||
| †CubicFarm Systems 1 | 950,000 | $ | 878,691 | |||||
| †Freshpet 1 | 5,000 | 476,350 | ||||||
| J G Boswell Company 4 | 3,940 | 3,940,000 | ||||||
| John B. Sanfilippo & Son | 6,642 | 598,843 | ||||||
| Nomad Foods 1,2 | 143,600 | 3,646,004 | ||||||
| Seneca Foods Cl. A 1 | 198,231 | 9,505,176 | ||||||
| 19,045,064 | ||||||||
| HOUSEHOLD PRODUCTS - 0.1% | ||||||||
| Central Garden & Pet 1 | 18,551 | 976,339 | ||||||
| Spectrum Brands Holdings | 3,317 | 337,405 | ||||||
| 1,313,744 | ||||||||
| PERSONAL PRODUCTS - 0.4% | ||||||||
| Inter Parfums 2 | 69,755 | 7,456,810 | ||||||
| TOBACCO - 0.0% | ||||||||
| Universal Corporation | 2,872 | 157,730 | ||||||
| Vector Group | 14,216 | 163,200 | ||||||
| 320,930 | ||||||||
| Total (Cost $14,874,368) | 29,271,727 | |||||||
| DIVERSIFIED INVESTMENT COMPANIES – 0.0% | ||||||||
| CLOSED-END FUNDS - 0.0% | ||||||||
| Eagle Point Credit | 42,054 | 588,756 | ||||||
| Total (Cost $370,947) | 588,756 | |||||||
| ENERGY – 2.0% | ||||||||
| ENERGY EQUIPMENT & SERVICES - 0.6% | ||||||||
| †Aspen Aerogels 1 | 36,450 | 1,814,846 | ||||||
| Bristow Group 1 | 168,564 | 5,338,422 | ||||||
| Helix Energy Solutions Group 1 | 86,319 | 269,315 | ||||||
| Helmerich & Payne 2 | 23,130 | 548,181 | ||||||
| Oil States International 1 | 16,236 | 80,693 | ||||||
| Pason Systems | 386,224 | 3,523,479 | ||||||
| RPC 1 | 81,095 | 368,171 | ||||||
| 11,943,107 | ||||||||
| OIL, GAS & CONSUMABLE FUELS - 1.4% | ||||||||
| †Antero Resources 1 | 411,200 | 7,196,000 | ||||||
| Civitas Resources | 19,702 | 964,807 | ||||||
| CONSOL Energy 1 | 32,328 | 734,169 | ||||||
| Diamondback Energy | 4,643 | 500,747 | ||||||
| Dorchester Minerals L.P. 2 | 279,148 | 5,524,339 | ||||||
| Dorian LPG | 394,936 | 5,011,738 | ||||||
| †PDC Energy | 166,582 | 8,125,870 | ||||||
| Renewable Energy Group 1 | 6,893 | 292,539 | ||||||
| REX American Resources 1 | 3,866 | 371,136 | ||||||
| World Fuel Services 2 | 79,680 | 2,109,130 | ||||||
| 30,830,475 | ||||||||
| Total (Cost $37,895,498) | 42,773,582 | |||||||
| FINANCIALS – 13.8% | ||||||||
| BANKS - 3.5% | ||||||||
| Ameris Bancorp | 33,030 | 1,640,930 | ||||||
| Bank of N.T. Butterfield & Son 2 | 179,528 | 6,841,812 | ||||||
| †BankUnited | 12,176 | 515,167 | ||||||
| †Cadence Bank | 5,597 | 166,735 | ||||||
| Canadian Western Bank | 279,500 | 8,020,752 | ||||||
| CIT Group | 11,000 | 564,740 | ||||||
| Customers Bancorp 1 | 32,365 | 2,115,700 | ||||||
| Eagle Bancorp | 16,876 | 984,546 | ||||||
| Farmers & Merchants Bank of Long Beach 4 | 416 | 3,328,000 | ||||||
| †First Bancshares (The) | 17,856 | 689,599 | ||||||
| First Citizens BancShares Cl. A | 17,652 | 14,648,336 | ||||||
| First Financial Bancorp | 21,352 | 520,562 | ||||||
| First Hawaiian | 15,603 | 426,430 | ||||||
| †German American Bancorp | 6,285 | 244,989 | ||||||
| Hanmi Financial | 62,246 | 1,473,985 | ||||||
| HarborOne Bancorp | 63,400 | 940,856 | ||||||
| HBT Financial | 40,400 | 756,692 | ||||||
| Heritage Financial | 20,810 | 508,596 | ||||||
| Hilltop Holdings | 35,634 | 1,252,179 | ||||||
| †Home BancShares | 23,719 | 577,558 | ||||||
| HomeStreet | 18,785 | 976,820 | ||||||
| †Independent Bank Group | 8,521 | 614,790 | ||||||
| †National Bank Holdings Cl. A | 21,915 | 962,945 | ||||||
| †NBT Bancorp | 12,562 | 483,888 | ||||||
| †Old National Bancorp | 83,779 | 1,518,075 | ||||||
| †Origin Bancorp | 12,224 | 524,654 | ||||||
| Preferred Bank | 7,381 | 529,882 | ||||||
| †Signature Bank | 191 | 61,783 | ||||||
| †Silvergate Capital Cl. A 1 | 51,000 | 7,558,200 | ||||||
| †Southside Bancshares | 11,311 | 473,026 | ||||||
| †TowneBank | 11,058 | 349,322 | ||||||
| Triumph Bancorp 1 | 24,519 | 2,919,722 | ||||||
| †Trustmark Corporation | 19,512 | 633,360 | ||||||
| †Virginia National Bankshares | 108,540 | 4,015,980 | ||||||
| Webster Financial 2 | 134,200 | 7,493,728 | ||||||
| Wintrust Financial | 11,000 | 999,020 | ||||||
| 76,333,359 | ||||||||
| CAPITAL MARKETS - 6.1% | ||||||||
| Ares Management Cl. A 2 | 187,200 | 15,213,744 | ||||||
| Artisan Partners Asset Management Cl. A 2,3 | 74,900 | 3,568,236 | ||||||
| ASA Gold and Precious Metals | 95,220 | 2,008,190 | ||||||
| Ashmore Group | 548,400 | 2,160,055 | ||||||
| B. Riley Financial | 7,669 | 681,467 | ||||||
| Barings BDC | 191,594 | 2,111,366 | ||||||
| Bolsa Mexicana de Valores | 1,723,106 | 3,257,622 | ||||||
| BrightSphere Investment Group | 54,261 | 1,389,082 | ||||||
| †Donnelley Financial Solutions 1 | 33,398 | 1,574,382 | ||||||
| Focus Financial Partners Cl. A 1,2,3 | 50,000 | 2,986,000 | ||||||
| GCM Grosvenor Cl. A | 1,699,255 | 17,842,177 | ||||||
| Houlihan Lokey Cl. A 2 | 27,480 | 2,844,730 | ||||||
| Lazard Cl. A 2 | 87,975 | 3,838,349 | ||||||
| †MarketWise Cl. A 1 | 500,000 | 3,770,000 | ||||||
| Moelis & Company Cl. A | 21,000 | 1,312,710 | ||||||
| Morningstar 2 | 58,700 | 20,074,813 | ||||||
| Newtek Business Services | 87,385 | 2,414,447 | ||||||
| Onex Corporation | 9,200 | 722,065 | ||||||
| †P10 Cl. A 1 | 20,000 | 279,600 | ||||||
| Rothschild & Co | 50,293 | 2,310,383 | ||||||
| SEI Investments 2 | 316,330 | 19,277,150 | ||||||
| Silvercrest Asset Management Group Cl. A | 19,956 | 342,644 | ||||||
| Sprott | 256,480 | 11,573,484 | ||||||
| Tel Aviv Stock Exchange | 332,179 | 1,793,945 | ||||||
| TMX Group | 68,400 | 6,934,899 | ||||||
| 130,281,540 | ||||||||
| CONSUMER FINANCE - 0.1% | ||||||||
| Encore Capital Group 1 | 17,933 | 1,113,819 | ||||||
| Enova International 1 | 19,768 | 809,697 |
| THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | 2021 Annual Report to Stockholders | 41 |
|
Royce Value Trust
Schedule of Investments (continued)
| SHARES | VALUE | |||||||
| FINANCIALS (continued) | ||||||||
| CONSUMER FINANCE (continued) | ||||||||
| †Green Dot Cl. A 1 | 11,732 | $ | 425,168 | |||||
| LendingTree 1 | 4,000 | 490,400 | ||||||
| 2,839,084 | ||||||||
| DIVERSIFIED FINANCIAL SERVICES - 0.4% | ||||||||
| Banco Latinoamericano de Comercio Exterior Cl. E | 73,446 | 1,219,203 | ||||||
| †Compass Diversified Holdings | 19,419 | 593,833 | ||||||
| ECN Capital | 1,023,900 | 4,322,405 | ||||||
| Equitable Holdings | 65,000 | 2,131,350 | ||||||
| Waterloo Investment Holdings 1,5 | 2,972,000 | 0 | ||||||
| 8,266,791 | ||||||||
| INSURANCE - 2.8% | ||||||||
| Ambac Financial Group 1 | 53,000 | 850,650 | ||||||
| American Equity Investment Life Holding Company | 74,098 | 2,883,894 | ||||||
| †AMERISAFE | 12,639 | 680,357 | ||||||
| Assured Guaranty | 49,363 | 2,478,023 | ||||||
| †Axis Capital Holdings | 11,812 | 643,400 | ||||||
| †BRP Group Cl. A 1 | 33,300 | 1,202,463 | ||||||
| E-L Financial | 21,650 | 15,536,414 | ||||||
| Employers Holdings | 9,783 | 404,820 | ||||||
| Erie Indemnity Cl. A | 28,200 | 5,433,012 | ||||||
| First American Financial | 24,503 | 1,916,870 | ||||||
| †Genworth Financial Cl. A 1 | 210,828 | 853,853 | ||||||
| Independence Holding Company 2 | 170,023 | 9,636,904 | ||||||
| †International General Insurance Holdings | 20,609 | 166,933 | ||||||
| †James River Group Holdings | 33,688 | 970,551 | ||||||
| Old Republic International | 38,000 | 934,040 | ||||||
| ProAssurance Corporation 2 | 19,585 | 495,500 | ||||||
| RenaissanceRe Holdings | 3,632 | 615,007 | ||||||
| RLI Corp. 2 | 54,650 | 6,126,265 | ||||||
| †Safety Insurance Group | 19,858 | 1,688,526 | ||||||
| SiriusPoint 1 | 12,838 | 104,373 | ||||||
| Stewart Information Services | 31,064 | 2,476,733 | ||||||
| †Trean Insurance Group 1 | 251,966 | 2,245,017 | ||||||
| White Mountains Insurance Group | 950 | 963,205 | ||||||
| 59,306,810 | ||||||||
| INVESTMENT COMPANIES - 0.2% | ||||||||
| †Hagerty Cl. A 1 | 300,000 | 4,254,000 | ||||||
| THRIFTS & MORTGAGE FINANCE - 0.7% | ||||||||
| Axos Financial 1,2 | 10,948 | 612,103 | ||||||
| Flagstar Bancorp | 50,484 | 2,420,203 | ||||||
| NMI Holdings Cl. A 1 | 95,341 | 2,083,201 | ||||||
| †Northwest Bancshares | 48,051 | 680,402 | ||||||
| Provident Bancorp | 63,200 | 1,175,520 | ||||||
| Territorial Bancorp | 9,300 | 234,825 | ||||||
| Timberland Bancorp 2 | 274,457 | 7,602,459 | ||||||
| †TrustCo Bank Corp NY | 12,672 | 422,104 | ||||||
| †WSFS Financial | 10,827 | 542,649 | ||||||
| 15,773,466 | ||||||||
| Total (Cost $194,093,239) | 297,055,050 | |||||||
| HEALTH CARE – 5.4% | ||||||||
| BIOTECHNOLOGY - 0.6% | ||||||||
| †CareDx 1 | 12,650 | 575,322 | ||||||
| Catalyst Pharmaceuticals 1 | 69,350 | 469,500 | ||||||
| Coherus BioSciences 1 | 48,629 | 776,119 | ||||||
| Eagle Pharmaceuticals 1 | 17,503 | 891,253 | ||||||
| †PureTech Health 1 | 120,100 | 474,679 | ||||||
| United Therapeutics 1 | 10,000 | 2,160,800 | ||||||
| Vanda Pharmaceuticals 1 | 39,654 | 622,171 | ||||||
| Zealand Pharma 1 | 326,857 | 7,260,653 | ||||||
| 13,230,497 | ||||||||
| HEALTH CARE EQUIPMENT & SUPPLIES - 2.9% | ||||||||
| Atrion Corporation | 8,296 | 5,847,850 | ||||||
| BioLife Solutions 1 | 15,200 | 566,504 | ||||||
| †Bioventus Cl. A 1 | 50,000 | 724,500 | ||||||
| †Cutera 1 | 21,750 | 898,710 | ||||||
| †FIGS Cl. A 1 | 289,900 | 7,989,644 | ||||||
| Haemonetics Corporation 1 | 66,900 | 3,548,376 | ||||||
| Integer Holdings 1,2 | 42,400 | 3,629,016 | ||||||
| Meridian Bioscience 1 | 227,528 | 4,641,571 | ||||||
| Mesa Laboratories 2,3 | 75,712 | 24,840,350 | ||||||
| Natus Medical 1 | 33,557 | 796,308 | ||||||
| Orthofix Medical 1 | 5,296 | 164,653 | ||||||
| STAAR Surgical 1 | 5,250 | 479,325 | ||||||
| Surmodics 1,2 | 161,000 | 7,752,150 | ||||||
| 61,878,957 | ||||||||
| HEALTH CARE PROVIDERS & SERVICES - 0.8% | ||||||||
| Community Health Systems 1 | 790,000 | 10,514,900 | ||||||
| Ensign Group (The) | 4,276 | 359,013 | ||||||
| †Fulgent Genetics 1 | 8,854 | 890,624 | ||||||
| †MEDNAX 1 | 29,042 | 790,233 | ||||||
| ModivCare 1 | 7,744 | 1,148,358 | ||||||
| Pennant Group 1 | 28,000 | 646,240 | ||||||
| †Select Medical Holdings | 21,140 | 621,516 | ||||||
| †Sharps Compliance 1 | 75,850 | 540,810 | ||||||
| Tivity Health 1 | 15,969 | 422,220 | ||||||
| U.S. Physical Therapy | 5,176 | 494,567 | ||||||
| 16,428,481 | ||||||||
| HEALTH CARE TECHNOLOGY - 0.3% | ||||||||
| Computer Programs and Systems 1 | 28,897 | 846,682 | ||||||
| †Doximity Cl. A 1 | 15,120 | 757,966 | ||||||
| HealthStream 1 | 11,139 | 293,624 | ||||||
| NextGen Healthcare 1 | 47,914 | 852,390 | ||||||
| Simulations Plus | 72,338 | 3,421,587 | ||||||
| 6,172,249 | ||||||||
| LIFE SCIENCES TOOLS & SERVICES - 0.6% | ||||||||
| Bio-Techne 2,3 | 9,553 | 4,942,149 | ||||||
| †Harvard Bioscience 1 | 102,050 | 719,452 | ||||||
| †MaxCyte 1 | 661,603 | 6,741,735 | ||||||
| 12,403,336 | ||||||||
| PHARMACEUTICALS - 0.2% | ||||||||
| †Aerie Pharmaceuticals 1 | 22,300 | 156,546 | ||||||
| †Amphastar Pharmaceuticals 1 | 17,306 | 403,057 | ||||||
| †Cara Therapeutics 1 | 13,222 | 161,044 | ||||||
| †Collegium Pharmaceutical 1 | 33,239 | 620,904 | ||||||
| Corcept Therapeutics 1 | 49,213 | 974,417 | ||||||
| †Harmony Biosciences Holdings 1 | 15,720 | 670,301 | ||||||
| Innoviva 1 | 86,290 | 1,488,502 | ||||||
| †Prestige Consumer Healthcare 1 | 6,984 | 423,580 | ||||||
| Supernus Pharmaceuticals 1 | 26,606 | 775,831 | ||||||
| 5,674,182 | ||||||||
| Total (Cost $88,879,898) | 115,787,702 |
| 42 | 2021 Annual Report to Stockholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
|
December 31, 2021
Schedule of Investments (continued)
| SHARES | VALUE | |||||||
| INDUSTRIALS – 25.1% | ||||||||
| AEROSPACE & DEFENSE - 1.5% | ||||||||
| Aerojet Rocketdyne Holdings | 3,353 | $ | 156,786 | |||||
| AeroVironment 1 | 7,650 | 474,530 | ||||||
| Ducommun 1,2 | 79,100 | 3,699,507 | ||||||
| HEICO Corporation 2 | 51,030 | 7,359,547 | ||||||
| HEICO Corporation Cl. A 2 | 68,333 | 8,782,157 | ||||||
| Magellan Aerospace | 893,092 | 7,032,054 | ||||||
| Park Aerospace | 86,961 | 1,147,885 | ||||||
| Vectrus 1 | 18,760 | 858,645 | ||||||
| Virgin Galactic Holdings 1,2,3 | 161,918 | 2,166,463 | ||||||
| 31,677,574 | ||||||||
| AIR FREIGHT & LOGISTICS - 0.7% | ||||||||
| Atlas Air Worldwide Holdings 1 | 16,125 | 1,517,685 | ||||||
| Forward Air 2 | 120,430 | 14,582,869 | ||||||
| 16,100,554 | ||||||||
| AIRLINES - 0.6% | ||||||||
| †Sun Country Airlines Holdings 1 | 483,101 | 13,164,502 | ||||||
| BUILDING PRODUCTS - 1.6% | ||||||||
| Apogee Enterprises | 32,742 | 1,576,527 | ||||||
| †AZEK Company (The) Cl. A 1 | 65,100 | 3,010,224 | ||||||
| †Builders FirstSource 1 | 88,335 | 7,571,193 | ||||||
| Carlisle Companies | 5,840 | 1,449,021 | ||||||
| CSW Industrials | 40,000 | 4,834,400 | ||||||
| Gibraltar Industries 1 | 15,890 | 1,059,545 | ||||||
| Insteel Industries | 27,990 | 1,114,282 | ||||||
| Quanex Building Products | 46,032 | 1,140,673 | ||||||
| Simpson Manufacturing 2 | 23,100 | 3,212,517 | ||||||
| UFP Industries | 93,009 | 8,557,758 | ||||||
| 33,526,140 | ||||||||
| COMMERCIAL SERVICES & SUPPLIES - 1.0% | ||||||||
| ABM Industries | 42,552 | 1,738,249 | ||||||
| Brady Corporation Cl. A | 22,550 | 1,215,445 | ||||||
| CompX International Cl. A 2 | 211,100 | 4,743,417 | ||||||
| Deluxe Corporation | 10,418 | 334,522 | ||||||
| Healthcare Services Group | 8,265 | 147,034 | ||||||
| Heritage-Crystal Clean 1,2 | 100,106 | 3,205,394 | ||||||
| †HNI Corporation | 31,126 | 1,308,848 | ||||||
| Kimball International Cl. B 2 | 74,600 | 763,158 | ||||||
| Ritchie Bros. Auctioneers 2 | 35,200 | 2,154,592 | ||||||
| UniFirst Corporation | 14,861 | 3,126,755 | ||||||
| Vidler Water Resouces 1,2 | 213,260 | 2,576,181 | ||||||
| †VSE Corporation | 21,500 | 1,310,210 | ||||||
| 22,623,805 | ||||||||
| CONSTRUCTION & ENGINEERING - 3.4% | ||||||||
| APi Group 1 | 425,300 | 10,959,981 | ||||||
| Arcosa 2 | 164,406 | 8,664,196 | ||||||
| Comfort Systems USA 2 | 19,780 | 1,957,033 | ||||||
| EMCOR Group | 35,500 | 4,522,345 | ||||||
| †Great Lakes Dredge & Dock 1 | 47,267 | 743,037 | ||||||
| IES Holdings 1,2 | 441,399 | 22,352,445 | ||||||
| Infrastructure and Energy Alternatives 1 | 600,000 | 5,520,000 | ||||||
| MYR Group 1 | 13,961 | 1,543,389 | ||||||
| Northwest Pipe 1 | 11,571 | 367,958 | ||||||
| Valmont Industries 2 | 67,011 | 16,786,256 | ||||||
| 73,416,640 | ||||||||
| ELECTRICAL EQUIPMENT - 0.7% | ||||||||
| AZZ | 20,000 | 1,105,800 | ||||||
| Encore Wire | 15,473 | 2,214,186 | ||||||
| GrafTech International | 57,768 | 683,395 | ||||||
| LSI Industries | 551,857 | 3,785,739 | ||||||
| Powell Industries 2 | 73,352 | 2,163,151 | ||||||
| Preformed Line Products 2 | 73,300 | 4,742,510 | ||||||
| 14,694,781 | ||||||||
| MACHINERY - 8.7% | ||||||||
| †Alamo Group | 3,871 | 569,734 | ||||||
| Astec Industries | 5,798 | 401,627 | ||||||
| †ATS Automation Tooling Systems 1 | 29,150 | 1,157,750 | ||||||
| CIRCOR International 1 | 294,801 | 8,012,691 | ||||||
| Colfax Corporation 1,2 | 391,102 | 17,978,959 | ||||||
| Crane Co. | 4,320 | 439,474 | ||||||
| ESCO Technologies 2 | 63,200 | 5,687,368 | ||||||
| Franklin Electric 2 | 74,800 | 7,073,088 | ||||||
| Greenbrier Companies (The) | 23,090 | 1,059,600 | ||||||
| Helios Technologies 2 | 173,214 | 18,216,916 | ||||||
| Hillenbrand | 25,726 | 1,337,495 | ||||||
| †Hillman Solutions 1 | 50,000 | 537,500 | ||||||
| Hurco Companies | 16,200 | 481,140 | ||||||
| John Bean Technologies 2 | 129,551 | 19,893,852 | ||||||
| Kadant 2 | 117,209 | 27,014,330 | ||||||
| Lincoln Electric Holdings 2 | 49,700 | 6,931,659 | ||||||
| Lindsay Corporation 2 | 112,000 | 17,024,000 | ||||||
| Meritor 1 | 48,580 | 1,203,812 | ||||||
| Middleby Corporation (The) 1 | 115,380 | 22,702,169 | ||||||
| Miller Industries | 32,130 | 1,073,142 | ||||||
| Mueller Industries | 34,499 | 2,047,861 | ||||||
| Nordson Corporation 2 | 15,796 | 4,032,245 | ||||||
| Tennant Company 2 | 80,500 | 6,523,720 | ||||||
| Wabash National | 19,795 | 386,398 | ||||||
| Watts Water Technologies Cl. A 2 | 55,000 | 10,679,350 | ||||||
| Woodward 2 | 48,500 | 5,308,810 | ||||||
| 187,774,690 | ||||||||
| MARINE - 0.9% | ||||||||
| Clarkson | 371,400 | 19,505,088 | ||||||
| PROFESSIONAL SERVICES - 3.9% | ||||||||
| Exponent 2 | 90,864 | 10,606,555 | ||||||
| Forrester Research 1,2,3 | 144,450 | 8,483,548 | ||||||
| Heidrick & Struggles International | 39,308 | 1,718,939 | ||||||
| Jacobs Engineering Group 2 | 33,500 | 4,664,205 | ||||||
| KBR 2 | 615,000 | 29,286,300 | ||||||
| Korn Ferry 2,3 | 66,415 | 5,029,608 | ||||||
| LifeWorks | 18,400 | 371,360 | ||||||
| ManpowerGroup 2 | 5,300 | 515,849 | ||||||
| Resources Connection | 54,226 | 967,392 | ||||||
| TrueBlue 1,2 | 20,594 | 569,836 | ||||||
| Upwork 1 | 603,600 | 20,618,976 | ||||||
| 82,832,568 | ||||||||
| ROAD & RAIL - 1.1% | ||||||||
| ArcBest | 5,665 | 678,950 | ||||||
| †Hertz Global Holdings 1 | 5,000 | 124,950 | ||||||
| Landstar System 2 | 118,822 | 21,271,515 | ||||||
| Saia 1,2 | 1,680 | 566,210 | ||||||
| 22,641,625 | ||||||||
| TRADING COMPANIES & DISTRIBUTORS - 1.0% | ||||||||
| Air Lease Cl. A 2 | 98,720 | 4,366,386 | ||||||
| Applied Industrial Technologies | 6,177 | 634,378 | ||||||
| Boise Cascade | 32,431 | 2,309,087 | ||||||
| †DXP Enterprises 1 | 9,625 | 247,074 |
| THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | 2021 Annual Report to Stockholders | 43 |
|
Royce Value Trust
Schedule of Investments (continued)
| SHARES | VALUE | |||||||
| INDUSTRIALS (continued) | ||||||||
| TRADING COMPANIES & DISTRIBUTORS (continued) | ||||||||
| EVI Industries 1,2 | 69,873 | $ | 2,182,134 | |||||
| GMS 1 | 3,132 | 188,265 | ||||||
| Lawson Products 1 | 16,250 | 889,687 | ||||||
| MSC Industrial Direct Cl. A | 5,625 | 472,837 | ||||||
| †NOW 1 | 56,575 | 483,150 | ||||||
| SiteOne Landscape Supply 1,2,3 | 25,000 | 6,057,000 | ||||||
| Transcat 1 | 36,950 | 3,415,289 | ||||||
| 21,245,287 | ||||||||
| Total (Cost $286,223,387) | 539,203,254 | |||||||
| INFORMATION TECHNOLOGY – 24.4% | ||||||||
| COMMUNICATIONS EQUIPMENT - 0.8% | ||||||||
| †Calix 1 | 181,454 | 14,510,876 | ||||||
| †Digi International 1 | 71,258 | 1,750,809 | ||||||
| Extreme Networks 1 | 32,705 | 513,469 | ||||||
| NETGEAR 1 | 32,315 | 943,921 | ||||||
| 17,719,075 | ||||||||
| ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 6.9% | ||||||||
| Bel Fuse Cl. B | 37,001 | 478,423 | ||||||
| Belden | 4,670 | 306,959 | ||||||
| Benchmark Electronics | 37,758 | 1,023,242 | ||||||
| Cognex Corporation 2 | 206,600 | 16,065,216 | ||||||
| CTS Corporation | 11,453 | 420,554 | ||||||
| Daktronics 1 | 14,510 | 73,276 | ||||||
| ePlus 1 | 6,542 | 352,483 | ||||||
| Fabrinet 1,2 | 147,668 | 17,494,228 | ||||||
| FARO Technologies 1,2 | 271,437 | 19,006,019 | ||||||
| Insight Enterprises 1,2,3 | 14,429 | 1,538,131 | ||||||
| IPG Photonics 1 | 51,100 | 8,796,354 | ||||||
| Kimball Electronics 1 | 38,245 | 832,211 | ||||||
| Littelfuse 2,3 | 18,300 | 5,758,644 | ||||||
| †Luna Innovations 1 | 150,510 | 1,270,304 | ||||||
| Methode Electronics | 30,596 | 1,504,405 | ||||||
| National Instruments 2 | 296,050 | 12,928,504 | ||||||
| nLIGHT 1,2 | 176,450 | 4,225,978 | ||||||
| OSI Systems 1 | 3,124 | 291,157 | ||||||
| PAR Technology 1,2,3 | 290,239 | 15,315,912 | ||||||
| Plexus Corporation 1 | 14,572 | 1,397,309 | ||||||
| Richardson Electronics 6 | 711,475 | 9,619,142 | ||||||
| Rogers Corporation 1 | 24,700 | 6,743,100 | ||||||
| Sanmina Corporation 1 | 46,997 | 1,948,496 | ||||||
| ScanSource 1 | 13,181 | 462,389 | ||||||
| TTM Technologies 1,2,3 | 561,387 | 8,364,666 | ||||||
| Vishay Intertechnology | 47,380 | 1,036,201 | ||||||
| Vishay Precision Group 1 | 15,320 | 568,678 | ||||||
| Vontier Corporation | 336,734 | 10,347,836 | ||||||
| 148,169,817 | ||||||||
| IT SERVICES - 3.0% | ||||||||
| Computer Services 4 | 135,225 | 7,061,449 | ||||||
| Computer Task Group 1 | 70,810 | 705,976 | ||||||
| CSG Systems International | 28,944 | 1,667,753 | ||||||
| EVERTEC | 13,380 | 668,732 | ||||||
| Hackett Group (The) 2 | 285,266 | 5,856,511 | ||||||
| Repay Holdings Cl. A 1 | 1,085,359 | 19,829,509 | ||||||
| Shift4 Payments Cl. A 1 | 346,820 | 20,091,283 | ||||||
| Unisys Corporation 1,2 | 402,250 | 8,274,283 | ||||||
| 64,155,496 | ||||||||
| SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 10.7% | ||||||||
| †Ambarella 1 | 3,500 | 710,115 | ||||||
| Axcelis Technologies 1 | 8,400 | 626,304 | ||||||
| †AXT 1 | 88,100 | 776,161 | ||||||
| Azenta 2 | 219,100 | 22,591,401 | ||||||
| †BE Semiconductor Industries | 40,098 | 3,424,780 | ||||||
| †Camtek 1 | 469,300 | 21,606,572 | ||||||
| Cirrus Logic 1,2 | 271,000 | 24,937,420 | ||||||
| CMC Materials 2 | 48,738 | 9,342,587 | ||||||
| Cohu 1 | 39,100 | 1,489,319 | ||||||
| CyberOptics Corporation 1 | 17,200 | 799,800 | ||||||
| Diodes 1,2,3 | 154,750 | 16,993,097 | ||||||
| Entegris 2,3 | 20,100 | 2,785,458 | ||||||
| FormFactor 1 | 587,840 | 26,876,045 | ||||||
| †Impinj 1 | 14,945 | 1,325,622 | ||||||
| Kulicke & Soffa Industries 2 | 223,416 | 13,525,605 | ||||||
| Lattice Semiconductor 1 | 7,800 | 601,068 | ||||||
| †Magnachip Semiconductor 1 | 35,200 | 738,144 | ||||||
| MKS Instruments | 294,049 | 51,214,514 | ||||||
| Nova 1,2,3 | 41,540 | 6,085,610 | ||||||
| NVE Corporation | 9,900 | 676,170 | ||||||
| Onto Innovation 1,2,3 | 13,848 | 1,401,833 | ||||||
| Photronics 1 | 212,415 | 4,004,023 | ||||||
| †SiTime Corporation 1 | 59,052 | 17,275,072 | ||||||
| Ultra Clean Holdings 1 | 13,400 | 768,624 | ||||||
| 230,575,344 | ||||||||
| SOFTWARE - 2.3% | ||||||||
| Agilysys 1 | 16,600 | 738,036 | ||||||
| †CDK Global | 10,292 | 429,588 | ||||||
| ChannelAdvisor Corporation 1 | 31,170 | 769,275 | ||||||
| †Consensus Cloud Solutions 1 | 24,155 | 1,397,850 | ||||||
| Descartes Systems Group (The) 1,2 | 40,000 | 3,307,200 | ||||||
| †Digital Turbine 1 | 8,000 | 487,920 | ||||||
| Dolby Laboratories Cl. A | 14,340 | 1,365,455 | ||||||
| E2open Parent Holdings Cl. A 1 | 100,000 | 1,126,000 | ||||||
| Everbridge 1 | 66,500 | 4,477,445 | ||||||
| Fair Isaac 1 | 11,180 | 4,848,431 | ||||||
| †InterDigital | 6,052 | 433,505 | ||||||
| Manhattan Associates 1,2 | 11,400 | 1,772,586 | ||||||
| †Matterport Cl. A 1 | 45,000 | 928,800 | ||||||
| Momentive Global 1,2 | 135,000 | 2,855,250 | ||||||
| †PagerDuty 1 | 302,100 | 10,497,975 | ||||||
| Progress Software | 100 | 4,827 | ||||||
| †Semrush Holdings Cl. A 1 | 449,290 | 9,367,696 | ||||||
| Teradata Corporation 1 | 62,138 | 2,639,001 | ||||||
| Upland Software 1 | 100,000 | 1,794,000 | ||||||
| Xperi Holding Corporation 2 | 60,886 | 1,151,354 | ||||||
| 50,392,194 | ||||||||
| TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 0.7% | ||||||||
| Avid Technology 1 | 443,525 | 14,445,609 | ||||||
| Total (Cost $329,152,880) | 525,457,535 | |||||||
| MATERIALS – 10.8% | ||||||||
| CHEMICALS - 5.9% | ||||||||
| †AdvanSix | 9,127 | 431,251 | ||||||
| American Vanguard | 43,555 | 713,867 | ||||||
| Chase Corporation 2 | 49,829 | 4,960,975 | ||||||
| Element Solutions 2 | 971,523 | 23,588,579 | ||||||
| FutureFuel Corporation | 18,296 | 139,781 |
| 44 | 2021 Annual Report to Stockholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
December 31, 2021
Schedule of Investments (continued)
| SHARES | VALUE | ||||||
| MATERIALS (continued) | |||||||
| CHEMICALS (continued) | |||||||
| Hawkins 2 | 154,940 | $ | 6,112,383 | ||||
| Huntsman Corporation | 48,197 | 1,681,111 | |||||
| Innospec 2 | 167,179 | 15,102,951 | |||||
| Minerals Technologies 2,3 | 207,710 | 15,193,987 | |||||
| Mosaic Company (The) | 693,390 | 27,243,293 | |||||
| NewMarket Corporation | 8,000 | 2,741,760 | |||||
| Quaker Chemical | 115,399 | 26,631,781 | |||||
| †Rayonier Advanced Materials 1 | 73,141 | 417,635 | |||||
| Stepan Company | 1,129 | 140,323 | |||||
| Tredegar Corporation | 82,117 | 970,623 | |||||
| Trinseo | 9,396 | 492,914 | |||||
| 126,563,214 | |||||||
| CONSTRUCTION MATERIALS - 0.8% | |||||||
| Eagle Materials | 81,199 | 13,516,385 | |||||
| Imerys | 90,000 | 3,744,070 | |||||
| 17,260,455 | |||||||
| CONTAINERS & PACKAGING - 0.1% | |||||||
| †Graphic Packaging Holding Company | 23,587 | 459,947 | |||||
| Intertape Polymer Group | 14,003 | 291,362 | |||||
| †Silgan Holdings | 9,947 | 426,130 | |||||
| UFP Technologies 1 | 5,120 | 359,731 | |||||
| 1,537,170 | |||||||
| METALS & MINING - 3.4% | |||||||
| Alamos Gold Cl. A | 2,195,500 | 16,887,794 | |||||
| Ferroglobe (Warranty Insurance Trust) 1,5 | 49,300 | 0 | |||||
| Gold Fields ADR | 320,000 | 3,516,800 | |||||
| Haynes International 2 | 134,840 | 5,438,097 | |||||
| Hecla Mining | 321,300 | 1,677,186 | |||||
| IAMGOLD Corporation 1 | 500,000 | 1,565,000 | |||||
| Lundin Mining | 640,000 | 4,998,774 | |||||
| MAG Silver 1 | 198,900 | 3,116,763 | |||||
| Major Drilling Group International 1 | 2,217,291 | 14,478,694 | |||||
| Pan American Silver | 50,027 | 1,249,174 | |||||
| Pretium Resources 1 | 101,000 | 1,422,839 | |||||
| Reliance Steel & Aluminum 2 | 47,500 | 7,705,450 | |||||
| SunCoke Energy | 192,593 | 1,269,188 | |||||
| VanEck Junior Gold Miners ETF | 155,500 | 6,520,115 | |||||
| Worthington Industries 2 | 64,300 | 3,514,638 | |||||
| 73,360,512 | |||||||
| PAPER & FOREST PRODUCTS - 0.6% | |||||||
| †Clearwater Paper 1 | 31,821 | 1,166,876 | |||||
| Glatfelter Corporation | 81,458 | 1,401,078 | |||||
| †Louisiana-Pacific | 61,100 | 4,787,185 | |||||
| Neenah | 13,826 | 639,867 | |||||
| Schweitzer-Mauduit International | 24,274 | 725,793 | |||||
| Stella-Jones | 125,816 | 3,979,523 | |||||
| 12,700,322 | |||||||
| Total (Cost $153,771,299) | 231,421,673 |
| REAL ESTATE – 3.8% | |||||||
| EQUITY REAL ESTATE INVESTMENT TRUSTS (REITS) - 0.0% | |||||||
| †Equity Commonwealth 1 | 12,000 | 310,800 | |||||
| New York REIT 1,5 | 15,000 | 171,750 | |||||
| 482,550 | |||||||
| REAL ESTATE MANAGEMENT & DEVELOPMENT - 3.8% | |||||||
| Altus Group | 39,000 | 2,188,094 | |||||
| Colliers International Group | 81,780 | 12,156,597 | |||||
| †Cushman & Wakefield 1 | 36,665 | 815,430 | |||||
| †Douglas Elliman 1 | 7,108 | 81,742 | |||||
| FirstService Corporation | 127,385 | 25,027,331 | |||||
| FRP Holdings 1,2,3 | 76,558 | 4,425,052 | |||||
| Jones Lang LaSalle 1 | 1,620 | 436,331 | |||||
| Kennedy-Wilson Holdings 2 | 652,248 | 15,575,682 | |||||
| Marcus & Millichap 1,2 | 209,512 | 10,781,488 | |||||
| Realogy Holdings 1 | 41,609 | 699,447 | |||||
| St. Joe Company (The) 2,3 | 78,800 | 4,101,540 | |||||
| Tejon Ranch 1,2 | 313,818 | 5,987,648 | |||||
| 82,276,382 | |||||||
| Total (Cost $41,489,113) | 82,758,932 | ||||||
| UTILITIES – 0.1% | |||||||
| GAS UTILITIES - 0.0% | |||||||
| †Chesapeake Utilities | 3,786 | 552,037 | |||||
| WATER UTILITIES - 0.1% | |||||||
| American States Water | 10,621 | 1,098,636 | |||||
| Total (Cost $1,333,795) | 1,650,673 | ||||||
| TOTAL COMMON STOCKS | |||||||
| (Cost $1,319,236,281) | 2,113,601,800 | ||||||
| WARRANTS – 0.0% | |||||||
| HEALTH CARE – 0.0% | |||||||
| HEALTH CARE PROVIDERS & SERVICES - 0.0% | |||||||
| †Cano Health (Warrants) 1 | 49,999 | 119,498 | |||||
| (Cost $237,495) | 119,498 |
| THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | 2021 Annual Report to Stockholders | 45 |
| Royce Value Trust | December 31, 2021 |
| Schedule of Investments (continued) |
| VALUE | ||||
REPURCHASE AGREEMENT– 5.0% Fixed Income Clearing Corporation, 0.00% dated 12/31/21, due 1/3/22, maturity value $106,577,568 (collateralized by obligations of various U.S. Government Agencies, 0.25% due 7/15/29, valued at $108,709,168) |
||||
| (Cost $106,577,568) | $ | 106,577,568 | ||
| TOTAL INVESTMENTS – 103.3% | ||||
| (Cost $1,426,051,344) | 2,220,298,866 | |||
| LIABILITIES LESS CASH AND OTHER ASSETS – (3.3)% | (70,428,595 | ) | ||
| NET ASSETS – 100.0% | $ | 2,149,870,271 | ||
ADR – American Depository Receipt
| † | New additions in 2021. |
| 1 | Non-income producing. |
| 4 | These securities are defined as Level 2 securities due to fair value being based on quoted prices for similar securities. See Notes to Financial Statements. |
Bold indicates the Fund’s 20 largest equity holdings in terms of December 31, 2021, market value.
TAX INFORMATION: The cost of total investments for Federal income tax purposes was $1,428,599,816. At December 31, 2021, net unrealized appreciation for all securities was $791,699,050 consisting of aggregate gross unrealized appreciation of $838,055,741 and aggregate gross unrealized depreciation of $46,356,691. The primary causes of the difference between book and tax basis cost are the timing of the recognition of losses on securities sold, investments in publicly traded partnerships, investments in Real Estate Investment Trusts and mark-to-market of Passive Foreign Investment Companies.
| 46 | 2021 Annual Report to Stockholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
| Royce Value Trust | December 31, 2021 |
| Statement of Assets and Liabilities |
| ASSETS: | ||||
| Investments at value | ||||
| Non-Affiliated Companies | $ | 2,104,102,156 | ||
| Affiliated Companies | 9,619,142 | |||
| Repurchase agreements (at cost and value) | 106,577,568 | |||
| Foreign currency (cost $76,292) | 76,877 | |||
| Receivable for investments sold | 3,760,822 | |||
| Receivable for dividends | 1,116,610 | |||
| Prepaid expenses and other assets | 831,190 | |||
| Total Assets | 2,226,084,365 | |||
| LIABILITIES: | ||||
| Revolving credit agreement | 70,000,000 | |||
| Payable for investments purchased | 3,847,675 | |||
| Payable for investment advisory fee | 1,944,488 | |||
| Payable for directors' fees | 41,533 | |||
| Payable for interest expense | 69,671 | |||
| Accrued expenses | 310,727 | |||
| Total Liabilities | 76,214,094 | |||
| Net Assets | $ | 2,149,870,271 | ||
| ANALYSIS OF NET ASSETS: | ||||
| Paid-in capital - $0.001 par value per share; 105,948,788 shares outstanding (150,000,000 shares authorized) | $ | 1,323,570,631 | ||
| Total distributable earnings (loss) | 826,299,640 | |||
| Net Assets (net asset value per share - $20.29) | $ | 2,149,870,271 | ||
| Investments at identified cost – Non-Affiliated Companies | $ | 1,314,076,041 | ||
| Investments at identified cost – Affiliated Companies | 5,397,735 |
| THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | 2021 Annual Report to Stockholders | 47 |
| Royce Value Trust | Year Ended December 31, 2021 |
| Statement of Operations |
| INVESTMENT INCOME: | ||||
| INCOME: | ||||
| Dividends | ||||
| Non-Affiliated Companies | $ | 29,827,930 | ||
| Affiliated Companies | 170,754 | |||
| Foreign withholding tax | (1,113,372 | ) | ||
| Interest | 71,230 | |||
| Rehypothecation income | 61,644 | |||
| Total income | 29,018,186 | |||
| EXPENSES: | ||||
| Investment advisory fees | 21,757,581 | |||
| Interest expense | 789,179 | |||
| Administrative and office facilities | 788,426 | |||
| Stockholder reports | 351,028 | |||
| Custody and transfer agent fees | 271,442 | |||
| Directors' fees | 189,012 | |||
| Professional fees | 171,020 | |||
| Other expenses | 173,797 | |||
| Total expenses | 24,491,485 | |||
| Compensating balance credits | (84 | ) | ||
| Net expenses | 24,491,401 | |||
| Net investment income (loss) | 4,526,785 | |||
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | ||||
| NET REALIZED GAIN (LOSS): | ||||
| Investments in Non-Affiliated Companies | 179,565,614 | |||
| Investments in Affiliated Companies | (100,026 | ) | ||
| Foreign currency transactions | (37,143 | ) | ||
| NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION): | ||||
| Investments in Non-Affiliated Companies | 169,228,840 | |||
| Investments in Affiliated Companies | 8,570,302 | |||
| Other assets and liabilities denominated in foreign currency | (2,958 | ) | ||
| Net realized and unrealized gain (loss) on investments and foreign currency | 357,224,629 | |||
| NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS | $ | 361,751,414 | ||
| 48 | 2021 Annual Report to Stockholders | THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
| Royce Value Trust |
| Statement of Changes in Net Assets |
| YEAR ENDED 12/31/21 | YEAR ENDED 12/31/20 | ||||||
| INVESTMENT OPERATIONS: | |||||||
| Net investment income (loss) | $ | 4,526,785 | $ | 2,482,634 | |||
| Net realized gain (loss) on investments and foreign currency | 179,428,445 | 121,548,570 | |||||
| Net change in unrealized appreciation (depreciation) on investments and foreign currency | 177,796,184 | 195,875,492 | |||||
| Net increase (decrease) in net assets from investment operations | 361,751,414 | 319,906,696 | |||||
| DISTRIBUTIONS: | |||||||
| Total distributable earnings | (172,565,714 | ) | (103,833,503 | ) | |||
| Total distributions | (172,565,714 | ) | (103,833,503 | ) | |||
| CAPITAL STOCK TRANSACTIONS: | |||||||
| Reinvestment of distributions | 72,078,375 | 44,493,510 | |||||
| Total capital stock transactions | 72,078,375 | 44,493,510 | |||||
| Net Increase (Decrease) In Net Assets | 261,264,075 | 260,566,703 | |||||
| NET ASSETS: | |||||||
| Beginning of year | 1,888,606,196 | 1,628,039,493 | |||||
| End of year | $ | 2,149,870,271 | $ | 1,888,606,196 | |||
| THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | 2021 Annual Report to Stockholders | 49 |
| Royce Value Trust | Year Ended December 31, 2021 |
Statement of Cash Flows |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
| Net increase (decrease) in net assets from investment operations | $ | 361,751,414 | ||
| Adjustments to reconcile net increase (decrease) in net assets from investment operations to net cash provided by operating activities: | ||||
| Purchases of long-term investments | (937,434,488 | ) | ||
| Proceeds from sales and maturities of long-term investments | 1,116,753,205 | |||
| Net purchases, sales and maturities of short-term investments | (83,209,673 | ) | ||
| Net (increase) decrease in dividends receivable and other assets | (378,445 | ) | ||
| Net increase (decrease) in interest expense payable, accrued expenses and other liabilities | 277,628 | |||
| Net change in unrealized appreciation (depreciation) on investments | (177,799,142 | ) | ||
| Net realized gain (loss) on investments | (179,465,588 | ) | ||
| Net cash provided by operating activities | 100,494,911 | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
| Distributions net of reinvestment (reinvestment $72,078,375) | (100,487,339 | ) | ||
| Net cash used for financing activities | (100,487,339 | ) | ||
| INCREASE (DECREASE) IN CASH: | 7,572 | |||
| Cash and foreign currency at beginning of year | 69,305 | |||
| Cash and foreign currency at end of year | $ | 76,877 | ||
Supplemental disclosure of cash flow information:
For the year ended December 31, 2021, the Fund paid $790,792 in interest expense.
| 50 | 2021 Annual 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.
| YEARS ENDED | ||||||||||||||||||||
| 12/31/21 | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | ||||||||||||||||
| Net Asset Value, Beginning of Period | $ | 18.52 | $ | 16.58 | $ | 13.73 | $ | 17.50 | $ | 15.85 | ||||||||||
INVESTMENT OPERATIONS: | ||||||||||||||||||||
| Net investment income (loss) | 0.04 | 1 | 0.03 | 0.11 | 0.18 | 0.13 | ||||||||||||||
| Net realized and unrealized gain (loss) on investments and foreign currency | 3.46 | 3.02 | 3.90 | (2.46 | ) | 2.74 | ||||||||||||||
| Net increase (decrease) in net assets from investment operations | 3.50 | 3.05 | 4.01 | (2.28 | ) | 2.87 | ||||||||||||||
DISTRIBUTIONS: | ||||||||||||||||||||
| Net investment income | (0.02 | ) | (0.09 | ) | (0.11 | ) | (0.19 | ) | (0.13 | ) | ||||||||||
| Net realized gain on investments and foreign currency | (1.65 | ) | (0.95 | ) | (0.99 | ) | (1.07 | ) | (1.03 | ) | ||||||||||
| Total distributions | (1.67 | ) | (1.04 | ) | (1.10 | ) | (1.26 | ) | (1.16 | ) | ||||||||||
CAPITAL STOCK TRANSACTIONS: | ||||||||||||||||||||
| Effect of reinvestment of distributions by Common Stockholders | (0.06 | ) | (0.07 | ) | (0.06 | ) | (0.06 | ) | (0.06 | ) | ||||||||||
| Effect of rights offering | (0.17 | ) | ||||||||||||||||||
| Total capital stock transactions | (0.06 | ) | (0.07 | ) | (0.06 | ) | (0.23 | ) | (0.06 | ) | ||||||||||
| Net Asset Value, End of Period | $ | 20.29 | $ | 18.52 | $ | 16.58 | $ | 13.73 | $ | 17.50 | ||||||||||
| Market Value, End of Period | $ | 19.59 | $ | 16.14 | $ | 14.77 | $ | 11.80 | $ | 16.17 | ||||||||||
| TOTAL
RETURN:2 Net Asset Value | 19.97 | % | 21.85 | % | 30.46 | % | (14.45 | )% | 19.31 | % | ||||||||||
| Market Value | 32.91 | % | 19.20 | % | 35.23 | % | (20.43 | )% | 30.49 | % | ||||||||||
RATIOS BASED ON AVERAGE NET ASSETS: | ||||||||||||||||||||
| Investment advisory fee expense3 | 1.02 | % | 1.15 | % | 0.49 | % | 0.42 | % | 0.43 | % | ||||||||||
| Other operating expenses | 0.13 | % | 0.19 | % | 0.27 | % | 0.21 | % | 0.22 | % | ||||||||||
| Total expenses (net) | 1.15 | % | 1.34 | % | 0.76 | % | 0.63 | % | 0.65 | % | ||||||||||
| Expenses excluding interest expense | 1.11 | % | 1.26 | % | 0.61 | % | 0.52 | % | 0.54 | % | ||||||||||
| Expenses prior to balance credits | 1.15 | % | 1.34 | % | 0.76 | % | 0.63 | % | 0.65 | % | ||||||||||
| Net investment income (loss) | 0.21 | %1 | 0.16 | % | 0.69 | % | 1.06 | % | 0.80 | % | ||||||||||
SUPPLEMENTAL DATA: | ||||||||||||||||||||
| Net Assets, End of Period (in thousands) | $ | 2,149,870 | $ | 1,888,606 | $ | 1,628,039 | $ | 1,304,107 | $ | 1,480,449 | ||||||||||
| Portfolio Turnover Rate | 44 | % | 36 | % | 30 | % | 28 | % | 19 | % | ||||||||||
| REVOLVING CREDIT AGREEMENT: | ||||||||||||||||||||
Asset coverage | 3171 | % | 2798 | % | 2426 | % | 2998 | % | 2215 | % | ||||||||||
| Asset coverage per $1,000 | $ | 31,712 | $ | 27,980 | $ | 24,258 | $ | 29,980 | $ | 22,149 | ||||||||||
| THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS | 2021 Annual Report to Stockholders | 51 |
Royce Value Trust
Notes to Financial Statements
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 Investment Company Act of 1940 (“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 December 31, 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 | $2,099,100,601 | $ 14,329,449 | $171,750 | $2,113,601,800 |
| Warrants | 119,498 | – | – | 119,498 |
| Repurchase Agreement | – | 106,577,568 | – | 106,577,568 |
52 | 2021 Annual Report to Stockholders
Royce Value Trust
Notes to Financial Statements (continued)
VALUATION OF INVESTMENTS (continued):
Level 3 Reconciliation:
| BALANCE AS OF 12/31/20 | PURCHASES | SALES | REALIZED GAIN (LOSS) 1 | UNREALIZED GAIN (LOSS) 1 | BALANCE AS OF 12/31/21 | |||||||
| Common Stocks | $926,000 | $ – | $11,250 | $ 0 | $(743,000) | $171,750 | ||||||
| Warrants | 5,000 | – | 0 | – | (5,000) | – | ||||||
| 1 | The net change in unrealized appreciation (depreciation) is included in the accompanying Statement of Operations. Change in unrealized appreciation (depreciation) includes net unrealized appreciation (depreciation) resulting from changes in investment values during the reporting period and the reversal of previously recorded unrealized appreciation (depreciation) when gains or losses are realized. Net realized gain (loss) from investments and foreign currency transactions is included in the accompanying Statement of Operations. |
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 December 31, 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 all of the Royce Funds are allocated by Royce under an administration agreement and are included in administrative and office facilities and professional fees.
| 2021 Annual Report to Stockholders | 53 |
Royce Value Trust
Notes to Financial Statements (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 3,976,091 and 3,754,864 shares of Common Stock as reinvestment of distributions for the years ended December 31, 2021 and 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 in accordance with the credit agreement, 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 December 31, 2021, the Fund has outstanding borrowings of $70,000,000. During the year ended December 31, 2021, the Fund borrowed an average daily balance of $70,000,000 at a weighted average borrowing cost of 1.11%. The maximum amount outstanding during the year ended December 31, 2021, was $70,000,000. As of December 31, 2021, the aggregate value of rehypothecated securities was $62,690,332. During the year ended December 31, 2021, the Fund earned $61,644 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 fee is payable monthly.
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 Annual Report to Stockholders |
Royce Value Trust
Notes to Financial Statements (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 twelve rolling 60-month periods in 2021, the Fund’s investment performance ranged from 8% above to 17% above the investment performance of the S&P 600. Accordingly, the net investment advisory fee consisted of a Basic Fee of $15,231,909 and a net upward adjustment of $6,525,672 for the performance of the Fund relative to that of the S&P 600. For the year ended December 31, 2021, the Fund expensed Royce investment advisory fees totaling $21,757,581.
Purchases and Sales of Investment Securities:
For the year ended December 31, 2021, the costs of purchases and proceeds from sales of investment securities, other than short-term securities, amounted to $930,625,137 and $1,090,929,745, 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 that review to the Board of Directors. Cross trades for the year ended December 31, 2021, were as follows:
| COSTS OF PURCHASES | PROCEEDS FROM SALES | REALIZED GAIN (LOSS) |
| $5,001,304 | $15,420,759 | $(9,426,690) |
Tax Information:
Distributions during the years ended December 31, 2021 and 2020, were characterized as follows for tax purposes:
| ORDINARY INCOME | LONG-TERM CAPITAL GAINS | ||
| 2021 | 2020 | 2021 | 2020 |
| $49,300,123 | $10,601,401 | $123,265,591 | $93,232,102 |
The tax basis components of distributable earnings at December 31, 2021, were as follows:
UNDISTRIBUTED ORDINARY INCOME |
UNDISTRIBUTED
LONG-TERM CAPITAL GAINS |
NET
UNREALIZED APPRECIATION (DEPRECIATION)1 |
QUALIFIED
LATE YEAR ORDINARY AND POST-OCTOBER LOSS DEFERRALS2 |
TOTAL
DISTRIBUTABLE EARNINGS |
| $19,479,928 | $15,115,790 | $791,708,279 | $(4,357) | $826,299,640 |
| 1 | Includes timing differences on foreign currency, recognition of losses on securities sold, investments in Real Estate Investment Trusts, investments in publicly traded partnerships and mark-to-market of Passive Foreign Investment Companies. |
| 2 | Under the current tax law, capital losses and qualified late year ordinary losses incurred after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. This column also includes passive activity losses. |
For financial reporting purposes, capital accounts and distributions to stockholders are adjusted to reflect the tax character of permanent book/tax differences. For the year ended December 31, 2021, the Fund had no reclassifications.
Management has analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years (2018-2021) and has concluded that as of December 31, 2021, no provision for income tax is required in the Fund’s financial statements.
| 2021 Annual Report to Stockholders | 55 |
Royce Value Trust
Transactions in Affiliated Companies:
An “Affiliated Company” as defined in the 1940 Act, 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 year ended December 31, 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 12/31/21 | MARKET VALUE 12/31/21 | |||||||||||||||||||||||||||
| 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 - 0.4% | ||||||||||||||||||||||||||||||||||||
| ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 0.4% | ||||||||||||||||||||||||||||||||||||
| Richardson Electronics 4 | 711,475 | 3,351,047 | — | — | — | 6,268,095 | 170,754 | 711,475 | $ | 9,619,142 | ||||||||||||||||||||||||||
| 3,351,047 | — | 6,268,095 | 170,754 | 9,619,142 | ||||||||||||||||||||||||||||||||
| $ | 5,798,890 | $ | (100,026 | ) | $ | 8,570,302 | $ | 170,754 | $ | 9,619,142 | ||||||||||||||||||||||||||
| 1 | Percentages represent the percentages of the investments in the Affiliated Companies of the Fund's net assets. |
| 2 | Not an Affiliated Company at December 31, 2021. |
| 3 | Non-income producing. |
| 4 | At December 31, 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 and it has been determined that no events have occurred that require disclosure.
| 56 | 2021 Annual Report to Stockholders |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Royce Value Trust, Inc.:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Royce Value Trust, Inc. (the "Fund") as of December 31, 2021, the related statements of operations and cash flows for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2021, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2021 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
New York, New York
February 22, 2022
We
have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.
| 2021 Annual Report to Stockholders | 57 |
History Since Inception (unaudited)
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 | ||||||||||||||||||
| 12/10/21 | Distribution $2.75 | 12.498 | 257 | ||||||||||||||||||||
| 12/31/21 | $ | 8,975 | 1,425 | $ | 20,321 | $ | 18,696 | ||||||||||||||||
| 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 | Annual distribution total $0.84 | 11.377 | 1,014 | ||||||||||||||||||||
| 12/31/21 | $ | 8,900 | 14,390 | $ | 187,933 | $ | 166,205 | ||||||||||||||||
1 The purchase price used for annual distribution totals is a weighted average of the distribution reinvestment prices for the year.
2 Values are stated as of December 31 of the year indicated, after reinvestment of distributions, other than for initial purchase.
3 Includes a return of capital.
| 58 | This page is not part of the 2021 Annual Audited Financial Statements |
History Since Inception (unaudited) (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 | Annual distribution total $1.67 | 18.124 | 2,690 | ||||||||||||||||||||
| 12/31/21 | $ | 53,211 | 30,981 | $ | 628,604 | $ | 609,918 | ||||||||||||||||
1 The purchase price used for annual distribution totals is a weighted average of the distribution reinvestment prices for the year.
2 Values are stated as of December 31 of the year indicated, after reinvestment of distributions, other than for initial purchase.
3 Includes a return of capital.
4 Includes Royce Global Value Trust spin-off of $1.40 per share.
| This page is not part of the 2021 Annual Audited Financial Statements | 59 |
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 December 31, 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 December 31, 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.).
60 | This page is not part of the 2021 Annual Audited Financial Statements
All Directors and Officers may be reached c/o The Royce Funds, 745 Fifth Avenue, New York, NY 10151
Christopher D. Clark, Director1, 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: 73 | 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: 60 | 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: 16 | Tenure: Since 2004
Principal Occupation(s) During Past Five Years: Principal Occupation(s) During Past Five Years: Director/Trustee of registered investment companies constituting the Legg Mason Funds until his retirement on June 30, 2021; 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: 76 | Number of Funds Overseen: 76 | Tenure: Since 2001
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 60 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: 54 | 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: 62 | 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. |
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.
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Notes to Performance and Other Important Information
Notes to Performance
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 December 31, 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 December 31, 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 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 (Center for Research in Security Prices) CRSP (Center for Research in Security Pricing) equally divides the companies listed on the NYSE into 10 deciles based on market capitalization. Deciles 1-5 represent the largest domestic equity companies and Deciles 6-10 represent the smallest. CRSP then sorts all listed domestic equity companies based on these market cap ranges. By way of comparison, the CRSP 1-5 would have similar capitalization parameters to the S&P 500 and the CRSP 6-10 would have similar capitalization parameters to those of the Russell 2000. The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. Average price data for select utility, automotive fuel, and food items are also available. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index. Index returns used in this Report were based on information supplied to Royce by Russell for the Russell market indexes and by MSCI for the MSCI market indexes. Royce has not independently verified the above described information.
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: © 2022 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.
Investment Objectives
The investment objectives of each Fund is long-term growth of capital.
Investment Policies
Royce Global Value Trust, Inc. (“RGT”). Under normal circumstances, RGT will invest at least 80% of its net assets in equity securities, such as common stock and preferred stock. RGT generally invests a significant portion of its assets U.S. and non-U.S. small/mid-cap stocks (generally market caps up to $10 billion). Under normal circumstances, at least 40% of RGT’s net assets will be invested in the equity securities of companies headquartered in at least three countries outside the United States. Prior to May 1, 2021, RGT 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 under normal circumstances. From time to time, a substantial portion of RGT’s assets may be invested in companies located in a single country. Although there are no geographic limits on RGT’s investments, no more than 35% of RGT’s net assets may be invested in the securities of companies headquartered in “developing countries,” also known as emerging markets. Generally, developing countries include every country in the world other than the United States, Canada, Japan, Australia, New Zealand, Hong Kong, Singapore, South Korea, Taiwan, Bermuda, and Western European countries (which include, Austria, Belgium, Denmark, France, Finland, Germany, Greece, Ireland, Italy, Luxembourg, the
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Notes to Performance and Other Important Information (continued)
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom).
Royce Micro-Cap Trust, Inc. (“RMT”). RMT normally invests at least 80% of its net assets in the equity securities of micro-cap companies. Micro-cap companies are 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. Royce employs a core approach that combines multiple investment themes and focuses on companies with strong fundamentals and/or prospects selling at prices that Royce believes do not fully reflect these attributes. RMT may invest up to 25% of its assets in securities of issuers headquartered outside the United States.
Royce Value Trust, Inc. (“RVT”). RVT normally invests at least 65% of its assets in the equity securities of small- and micro-cap companies. Such companies are 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 employs a core approach that combines multiple investment themes and focuses on companies with high returns on invested capital or those with strong fundamentals and/or prospects trading at what Royce believes are attractive valuations. RVT may invest up to 25% of its assets in securities of issuers headquartered outside the United States.
Primary Risks
As with any mutual fund that invests in common stocks, each Fund is subject to market risk—the possibility that common stock prices will decline over short or extended periods of time due to overall market, financial, and economic conditions and trends, governmental or central bank actions or interventions, changes in investor sentiment, 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 economies and markets and individual companies in ways that cannot necessarily be foreseen. As a result, the value of your investment in each Fund will fluctuate, sometimes sharply and unpredictably, and you could lose money over short or long periods of time.
Investors wanting to buy or sell shares of a Fund 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 open-end mutual funds, which sell and redeem their shares at net asset value on a continuous basis.
The prices of equity securities of the smaller companies in which the Funds invest are generally more volatile than those of larger-cap securities. In addition, because these securities tend to have significantly lower trading volumes than larger-cap securities, the Funds may have difficulty selling holdings or may only be able to sell holdings at prices substantially lower than what Royce believes they are worth. Therefore, each Fund may involve considerably more risk of loss and its returns may differ significantly from funds investing in larger-cap companies or other asset classes. No assurance can be given that there will be net investment income to distribute and/or that the Funds will achieve their investment goals.
Investment in foreign securities involves risks that may not be encountered in U.S. investments, including adverse political, social, economic, or other developments that are unique to a particular region or country. Prices of foreign securities in particular countries or regions may, at times, move in a different direction and/or be more volatile than those of U.S. securities. Each Fund’s investments are usually denominated in or tied to the currencies of the countries in which they are primarily traded. Because the Funds do not intend to hedge their foreign currency exposure, the U.S. dollar value of the Funds’ investments may be harmed by declines in the value of foreign currencies in relation to the U.S. dollar. This may occur even if the value of the investment in the currency’s home country has not declined. These risk factors may affect the prices of foreign securities issued by companies headquartered in developing countries more than those headquartered in developed countries. For example, many developing countries have in the past experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries, and there may be delays in settlement procedures. To the extent that a Fund’s investments in the securities of international companies consists of non-U.S. headquartered companies that trade on a U.S. exchange, some or all of the above-stated risks of investing in international companies may not apply.
To the extent a Fund overweights a single market sector or industry relative to its benchmark index, its performance may be tied more directly to the success or failure of a relatively smaller or less well-diversified group of portfolio holdings.
Royce’s estimate of a company’s current worth may prove to be inaccurate, or this estimate may not be recognized by other investors, which could lead to portfolio losses. Securities in the Funds’ portfolios may not increase as much as the market as a whole and some securities may continue to be undervalued for long periods of time or may never reach what Royce believes are their full market values.
Investments in a Fund are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Forward-Looking Statements
This material contains forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve risks and uncertainties, including, among others, statements as to:
• the Funds’ future operating results
• the prospects of the Funds’ portfolio companies
• the impact of investments that the Funds have made or may make
• the dependence of the Funds’ future success on the general economy and its impact on the companies and industries in which the Funds invest, and
• the ability of the Funds’ portfolio companies to achieve their objectives.
This Review and Report uses words such as “anticipates,” “believes,” “expects,” “future,” “intends,” and similar expressions to identify forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements for any reason.
The Royce Funds have based the forward-looking statements included in this Review and Report on information available to us on the date of the report, and we assume no obligation to update any such forward-looking statements. Although The Royce Funds undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make through future stockholder communications or reports.
Authorized Share Transactions
Royce 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, 2022. 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.
This page is not part of the 2021 Annual Audited Financial Statements | 63
Notes to Performance and Other Important Information (continued)
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, 2021, 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.
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About Royce Investment Partners
Unparalleled Knowledge + Experience
Pioneers in small-cap investing, with 45+ years
of experience, depth of knowledge, and focus.
Independent Thinking
The confidence to go against consensus, the insight
to uncover opportunities others might miss, and the
tenacity to stay the course through market cycles.
Specialized Approaches
U.S., international, and global investment strategies
that pursue approaches with different risk profiles.
Unwavering Commitment
Our team of 16 portfolio managers has significant
personal investments in the strategies they manage.
Contact Us
GENERAL INFORMATION
General
Royce Funds information including an
overview
of our firm and Funds
(800) 221-4268
COMPUTERSHARE
Transfer Agent and Registrar
Speak
with a representative about:
•
Your account, transactions, and forms
(800) 426-5523
FINANCIAL ADVISORS AND BROKER-DEALERS
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with your regional Royce contact regarding:
•
Information about our firm, strategies, and Funds
•
Fund Materials
(800) 337-6923
CE-REP-1221
| Item 2. | Code(s) of Ethics. As of the end of the period covered by this report, the Registrant had adopted a code of ethics, as defined in Item 2 of Form N-CSR, applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of this code of ethics is filed as an exhibit to this Form N-CSR. During the period covered by this report, the Registrant did not: (i) amend any provision of its code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions or (ii) grant any waiver, including an implicit waiver, from a provision of such code of ethics to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. |
| Item 3. | Audit Committee Financial Expert. |
| (a)(1) | The Board of Directors of the Registrant has determined that it has an audit committee financial expert serving on its audit committee. |
| (a)(2) | Arthur S. Mehlman and Patricia W. Chadwick were designated by the Board of Directors as the Registrant’s Audit Committee Financial Experts, effective April 15, 2004, and April 8, 2010, respectively. Mr. Mehlman and Ms. Chadwick are “independent” as defined in Section 2(a)(19) of the Investment Company Act of 1940 (the “1940 Act”). |
| Item 4. | Principal Accountant Fees and Services. |
| (a) | Audit Fees: |
Year ended December 31, 2021 - $48,508
Year ended December 31, 2020 - $47,557
| (b) | Audit-Related Fees: |
Year ended December 31, 2021 - $0
Year ended December 31, 2020 - $0
| (c) | Tax Fees: |
Year ended December 31, 2021 - $10,334 - Preparation of tax returns
Year ended December 31, 2020 - $10,131 - Preparation of tax returns
| (d) | All Other Fees: |
Year ended December 31, 2021 - $0
Year ended December 31, 2020 - $0
| (e)(1) | Annual Pre-Approval: On an annual basis, the Registrant’s independent auditor submits to the Audit Committee a schedule of proposed audit, audit-related, tax and other non-audit services to be rendered to the Registrant and/or its investment adviser and its affiliates for the following year that require pre-approval by the Audit Committee. This schedule provides a description of each type of service that is expected to require pre-approval and the maximum fees that can be paid for each such service without further Audit Committee approval. The Audit Committee then reviews and determines whether to approve the types of scheduled services and the projected fees associated with them. Any subsequent revision to already pre-approved services or fees are presented for consideration at the next regularly scheduled Audit Committee meeting, as needed. |
If subsequent to the annual pre-approval of services and fees by the Audit Committee, the Registrant and/or its investment adviser and its affiliates determines that it would like to engage the Registrant’s independent auditor to perform a service not already pre-approved, the request is to be submitted to the Registrant’s Chief Financial Officer, and if he or she determines that the service fits within the independence guidelines (i.e., it is not a prohibited service), he or she will then arrange for a discussion of the proposed service and fee to be included on the agenda for the next regularly scheduled Audit Committee meeting so that pre-approval can be considered.
Interim Pre-Approval: If, in the judgment of the Registrant's Chief Financial Officer, a proposed engagement needs to commence before the next regularly scheduled Audit Committee meeting, he or she shall submit a written summary of the proposed engagement to all members of the Audit Committee, outlining the services, the estimated maximum cost, the category of the services (e.g., audit, audit-related, tax or other) and the rationale for engaging the Registrant’s independent auditor to perform the services. To the extent the proposed engagement involves audit, audit-related or tax services, any individual member of the Audit Committee who is an independent Board member is authorized to pre-approve the engagement. To the extent the proposed engagement involves non-audit services other than audit-related or tax, only the Chairman of the Audit Committee is authorized to pre-approve the engagement. The Registrant’s Chief Financial Officer will arrange for this interim review and coordinate with the appropriate member(s) of the Audit Committee. The Registrant’s independent auditor may not commence the engagement under consideration until the Registrant’s Chief Financial Officer has informed the auditor in writing that the required pre-approval has been obtained from an individual member of the Audit Committee who is an independent Board member or the Chairman of the Audit Committee, as applicable. Each member of the Audit Committee who pre-approves any engagements in between regularly scheduled Audit Committee meetings is to report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next regularly scheduled meeting.
(e)(2) Not Applicable
(f) Not Applicable
(g) Year ended December 31, 2021 - $10,334
Year ended December 31, 2020 - $10,131
| (h) | No such services were rendered during 2021 or 2020. |
Item 5. Audit Committee of Listed Registrants. The Registrant has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (the “Exchange Act”). Patricia W. Chadwick, Christopher C. Grisanti, Cecile B. Harper, Arthur S. Mehlman, G. Peter O’Brien, and Michael K. Shields are members of the Registrant’s audit committee.
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.
Royce & Associates, LP (“Royce”) has adopted written proxy voting policies and procedures (the “Proxy Voting Procedures”) for itself and client accounts for which Royce is responsible for voting proxies, including the Registrant. Royce is generally granted proxy voting authority at the inception of its management of each client account. Proxy voting authority is generally either (i) specifically authorized in the applicable investment management agreement or other instrument; or (ii) where not specifically authorized, is granted to Royce where general investment discretion is given to Royce in the applicable investment management agreement. In voting proxies, Royce is guided by general fiduciary principles. Royce’s goal is to act prudently, solely in the best interest of the beneficial owners of the accounts it manages. Royce attempts to consider all factors of its vote that could affect the value of the investment and will vote proxies in the manner it believes will be consistent with efforts to enhance and/or protect stockholder value. When a client has authorized Royce to vote proxies on its behalf, Royce will generally not accept instructions from the client regarding how to vote proxies.
Royce’s personnel are responsible for monitoring receipt of all proxies and seeking to ensure that proxies are received for all securities for which Royce has proxy voting authority. Royce is not responsible for voting proxies it does not receive. Royce divides proxies into "regularly recurring" and "non-regularly recurring" matters. Examples of regularly recurring matters include non-contested elections of directors and non-contested approvals of independent auditors.
Royce’s personnel are responsible for developing and maintaining a list of matters Royce treats as “regularly recurring” and for ensuring that instructions from a Royce Co-Chief Investment Officer are followed when voting those matters on behalf of Royce clients. Non-regularly recurring matters are all other proxy matters and are brought to the attention of the relevant portfolio manager(s) for the applicable account(s). After giving consideration to advisories provided by an independent third-party research firm with respect to such non-regularly recurring matters, the portfolio manager(s) directs that such matters be voted in a way that he or she believes should better protect or enhance the value of the investment. Certain Royce portfolio managers may provide instructions that they do not want regularly recurring matters to be voted in accordance with the standing instructions for their accounts and individual voting instructions on all matters, both regularly recurring and non-regularly recurring, will be obtained from such portfolio managers.
Notwithstanding the above, all matters identified by an independent third-party research firm as being “ESG” proposals are brought to the attention of the portfolio manager(s) for the account(s) involved by Royce personnel. After giving consideration to the recommendation from the independent third-party research firm, the portfolio manager will direct that such matters be voted in a way he or she believes appropriately takes into account environmental and social issues alongside traditional financial measures to provide a more comprehensive view of the value, risk, and return potential of an investment. When Royce portfolio managers cast votes on “ESG” proposals, they take into account the risk that companies may face significant financial, legal, and reputational risks resulting from poor environmental and social practices, or negligent oversight of environmental or social issues.
Under certain circumstances, Royce may also vote against a proposal from the issuer's board of directors or management. Royce's portfolio managers decide these issues on a case-by-case basis. These would include, among others, excessive compensation, unusual management stock options, preferential voting, and poison pills. Royce's portfolio managers decide these issues on a case-by-case basis. In addition, a Royce portfolio manager may, on occasion, decide to abstain from voting a proxy or a specific proxy item when such person concludes that the potential benefit of voting is outweighed by the cost or when it is not in the client's best interest to vote. From time to time, it is also possible that one Royce portfolio manager will decide: (i) to vote shares held in client accounts he or she manages differently from the vote of another Royce portfolio manager whose client accounts hold the same security or (ii) to abstain from voting on behalf of client accounts he or she manages when another Royce portfolio manager is casting votes on behalf of other Royce client accounts.
There may be circumstances where Royce may not be able to vote proxies in a timely manner, including, but not limited to, (i) when certain securities are out on loan at the time of a record date; (ii) when administrative or operational constraints impede Royce’s ability to cast a timely vote, such as late receipt of proxy voting information; and/or (iii) when systems, administrative or processing errors occur (including errors by Royce or third-party vendors).
To further Royce's goal to vote proxies in the best interests of its client, Royce follows specific procedures outlined in the Proxy Voting Procedures to identify, assess and address material conflicts that may arise between Royce's interests and those of its clients before voting proxies on behalf of such clients. In the event such a material conflict of interest is identified, the proxy will be voted by Royce in accordance with the recommendation given by an independent third-party research firm.
You may obtain a copy of the Proxy Voting Procedures at www.roycefunds.com or by calling 212-508-4500. Additionally, you can obtain information on how your securities were voted by calling 212-508-4500.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
(a)(1) Portfolio Managers of Closed-End Management Investment Companies (information as of December 31, 2021)
|
Name |
Title |
Length of Service |
Principal Occupation(s) During Past 5 Years |
| Charles M. Royce | Lead Portfolio Manager | Since 1986 | Chairman of the Board of Managers of Royce, Member of the boards of directors/trustees of the Registrant, Royce Micro-Cap Trust, Inc. (“RMT”), Royce Global Value Trust, Inc., The Royce Fund, and Royce Capital Fund (collectively, “The Royce Funds”). |
| Lauren A. Romeo | Portfolio Manager | Since May 1, 2009 | Portfolio Manager of the Registrant (since May 1, 2021); Assistant Portfolio of the Registrant (May 1, 2009 – April 30, 2021); and Portfolio Manager and Analyst at Royce (since 2004). |
| Steven G. McBoyle | Portfolio Manager | Since September 1, 2018 | Portfolio Manager of the Registrant (since May 1, 2021); Assistant Portfolio Manager of the Registrant (September 1, 2018 – April 30, 2021); and Portfolio Manager at Royce (since 2007). |
| Andrew S. Palen | Portfolio Manager | Since September 1, 2018 | Portfolio Manager of the Registrant (since May 1, 2021); Assistant Portfolio Manager of the Registrant (September 1, 2018 – April 30, 2021); Portfolio Manager and Analyst at Royce (since 2015); Senior Analyst at Armistice Capital (2013-2015); Summer Associate at UBS Global Management (2012); and Associate at Comvest Partners (2008-2011). |
(a)(2) Other Accounts Managed by Portfolio Manager and Potential Conflicts of Interest (information as of December 31, 2021)
Other Accounts
|
Name of Portfolio Manager |
Type of Account |
Number of Accounts Managed |
Total Assets Managed |
Number of Accounts Managed for which Advisory Fee is Performance-Based |
Value of Managed Accounts for which Advisory Fee is Performance Based |
|
Charles M. Royce |
|||||
| Registered investment companies | 8 | $8,344,766,145 | 2 | $2,740,183,648 | |
|
Private pooled investment vehicles |
4 | $145,662,719 | -- | -- | |
| Other accounts* | 12 | $72,321,033 | -- | -- | |
|
Lauren A. Romeo |
|||||
| Registered investment companies | 3 | $6,034,686,983 | 1 | $2,149,870,271 | |
|
Private pooled investment vehicles |
9 | $835,360,901 | -- | -- | |
| Other accounts* | -- | -- | -- | -- | |
|
Steven G. McBoyle |
|||||
| Registered investment companies | 4 | $7,111,640,702 | 1 | $2,149,870,271 | |
|
Private pooled investment vehicles |
10 | $633,972,834 | -- | -- | |
| Other accounts* | -- | -- | -- | -- | |
|
Andrew S. Palen |
|||||
| Registered investment companies | 2 | $4,298,690,364 | 1 | $2,149,870,271 | |
|
Private pooled investment vehicles |
-- | -- | -- | -- | |
| Other accounts* | -- | -- | -- | -- |
*Other accounts include all other accounts managed by the Portfolio Manager in either a professional or personal capacity except for personal accounts subject to pre-approval and reporting requirements under the Registrant’s Rule 17j-1 Code of Ethics.
Conflicts of Interest
The fact that a Portfolio Manager has day-to-day management responsibility for more than one client account may create actual, potential or only apparent conflicts of interest. For example, the Portfolio Manager may have an opportunity to purchase securities of limited availability. In this circumstance, the Portfolio Manager is expected to review each account's investment guidelines, restrictions, tax considerations, cash balances, liquidity needs and other factors to determine the suitability of the investment for each account and to ensure that his or her managed accounts are treated equitably.
The Portfolio Manager may also decide to purchase or sell the same security for multiple managed accounts at approximately the same time. To address any conflicts that this situation may create, the Portfolio Manager will generally combine managed account orders (i.e., enter a “bunched” order) in an effort to obtain best execution or a more favorable commission rate. In addition, if orders to buy or sell a security for multiple accounts managed by common Portfolio Managers on the same day are executed at different prices or commission rates, the transactions will generally be allocated by Royce to each of such managed accounts at the weighted average execution price and commission. In circumstances where a pre-allocated bunched order is not completely filled, each account will normally receive a pro-rated portion of the securities based upon the account's level of participation in the order, subject to Royce’s minimum ticket size requirements. Royce may, under certain circumstances, allocate securities in a manner other than pro-rata if it determines that the allocation is fair and equitable under the circumstances and does not discriminate against any account. In addition, on a limited, infrequent basis, and in accordance with written procedures, Royce may change initial allocations from one Royce client account to another Royce client account prior to the booking of the trade on the day after trade date when: (i) it is determined that a security is unsuitable or inappropriate for a particular Royce client account in the original allocation; (ii) there is insufficient cash in a Royce client account to which a security is initially allocated; (iii) there is a client-imposed restriction on the purchase of the security being allocated; or (iv) the Portfolio Manager has decided to change the initial allocation for some other reason.
As described below, there is a revenue-based component of each Portfolio Manager's Performance-Related Variable Compensation, and the Portfolio Managers also receive Firm-Related Variable Compensation based on revenues (adjusted for certain imputed expenses) generated by Royce. In addition, Charles M. Royce and Lauren A. Romeo receive variable compensation based on Royce's retained pre-tax profits from operations. As a result, the Portfolio Managers may receive a greater relative benefit from activities that increase the value to Royce of The Royce Funds and/or other Royce client accounts, including, but not limited to, increases in sales of Registrant’s shares and assets under management.
Also, as described above, the Portfolio Managers generally manage more than one client account, including, among others, registered investment company accounts, separate accounts and private pooled accounts managed on behalf of institutions (e.g., pension funds, endowments and foundations) and for high-net-worth individuals. The appearance of a conflict of interest may arise where Royce has an incentive, such as a performance-based management fee (or any other variation in the level of fees payable by the Registrant or other Royce client accounts to Royce), which relates to the management of one or more of The Royce Funds or accounts with respect to which the same Portfolio Manager has day-to-day management responsibilities. Except as described below, no Royce Portfolio Manager's compensation is tied to performance fees earned by Royce for the management of any one client account. Although variable and other compensation derived from Royce revenues or profits is impacted to some extent, the impact is relatively minor given the small percentage of Royce firm assets under management for which Royce receives performance-measured revenue. Notwithstanding the above, the Performance-Related Variable Compensation paid to Charles M. Royce, Lauren A. Romeo, Steven G. McBoyle, and Andrew S. Palen, as Portfolio Managers of the Registrant, is based, in part, on performance-based fee revenues. The Registrant pays Royce a fulcrum fee that is adjusted up or down depending on the performance of the Fund relative to its benchmark index.
Finally, conflicts of interest may arise when a Portfolio Manager personally buys, holds or sells securities held or to be purchased or sold for the Registrant or other Royce client account or personally buys, holds or sells the shares of one or more of The Royce Funds. To address this, Royce has adopted a written Code of Ethics designed to prevent and detect personal trading activities that may interfere or conflict with client interests (including Registrant’s stockholders’ interests). Royce generally does not permit its Portfolio Managers to purchase small- or micro-cap securities for their personal investment portfolios.
Royce and The Royce Funds have adopted certain compliance procedures which are designed to address the above-described types of conflicts. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.
(a)(3) Description of Portfolio Manager Compensation Structure (information as of December 31, 2021)
Royce seeks to maintain a compensation program that is competitively positioned to attract and retain high-caliber investment professionals. All Portfolio Managers receive from Royce a base salary, Portfolio-Related Variable Compensation (generally the largest element of each Portfolio Manager’s compensation with the exception of Charles M. Royce), Firm-Related Variable Compensation based primarily on registered investment company and other client account revenues generated by Royce and a benefits package. Portfolio Manager compensation is reviewed and may be modified from time to time as appropriate to reflect changes in the market, as well as to adjust the factors used to determine variable compensation. Except as described below, each Portfolio Manager’s compensation consists of the following elements:
| - | BASE SALARY. Each Portfolio Manager is paid a base salary. In setting the base salary, Royce seeks to be competitive in light of the particular Portfolio Manager’s experience and responsibilities. |
| - | PORTFOLIO-RELATED VARIABLE COMPENSATION. Each Portfolio Manager receives quarterly Portfolio-Related Variable Compensation that is either asset-based, or revenue-based and therefore in part based on the value of the net assets of the account for which he or she is being compensated, determined with reference to each of the registered investment company and other client accounts they are managing. The revenue used to determine the quarterly Portfolio-Related Variable Compensation received by the Portfolio Managers that relates to the Registrant is performance-based fee revenue. |
Payment of the Portfolio-Related Variable Compensation may be deferred, and any amounts deferred are forfeitable, if the Portfolio Manager is terminated by Royce with or without cause or resigns. The amount of the deferred Portfolio-Related Variable Compensation will appreciate or depreciate during the deferral period, based on the total return performance of one or more Royce-managed registered investment company accounts selected by the Portfolio Manager at the beginning of the deferral period. The amount deferred will depend on the Portfolio Manager’s total direct, indirect beneficial and deferred unvested investments in the Royce registered investment company accounts for which he or she is receiving portfolio management compensation.
| - | FIRM-RELATED VARIABLE COMPENSATION. Portfolio Managers receive quarterly variable compensation based on Royce’s net revenues. |
| - | BENEFIT PACKAGE. Portfolio Managers also receive benefits standard for all Royce employees, including health care and other insurance benefits, and participation in Royce’s 401(k) Plan and Money Purchase Pension Plan. Each Royce employee, including each Portfolio Manager, is also eligible to purchase shares of Franklin Resources, Inc. at a 15% discount to its closing price on certain dates in accordance with the terms and conditions of the Franklin Templeton Employee Stock Investment Plan. |
(a)(4) Dollar Range of Equity Securities in Registrant Beneficially Owned by Portfolio Manager (information as of December 31, 2021).
The following table shows the dollar range of the Registrant’s shares owned beneficially and of record by the Portfolio Managers, including investments by his immediate family members sharing the same household and amounts invested through retirement and deferred compensation plans.
| Portfolio Manager | Dollar Range of Registrant’s Shares Beneficially Owned |
| Charles M. Royce | Over $1,000,000 |
| Lauren A. Romeo | $100,001-$500,000 |
| Steven G. McBoyle | $0 |
| Andrew S. Palen | $0 |
(b) Not Applicable
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not Applicable
Item 10. Submission of Matters to a Vote of Security Holders. Not Applicable.
Item 11. Controls and Procedures.
(a) Disclosure Controls and Procedures. The Principal Executive and Financial Officers concluded that the Registrant's Disclosure Controls and Procedures are effective based on their evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.
(b) Internal Control over Financial Reporting. There were no significant changes in Registrant's internal control over financial reporting or in other factors that could significantly affect this control subsequent to the date of the evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses during the second fiscal quarter of the period covered by this report.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies. The Fund is party to a revolving credit agreement (the “Credit Agreement”) with BNP Paribas Prime Brokerage International Limited (“BNPPI”). The Credit Agreement 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 receives a portion of the fees earned by BNPPI in connection with the rehypothecation of portfolio securities. For more information, see “Borrowings” in the Notes to the Fund’s Financial Statements.
Item 13. Exhibits. Attached hereto.
(a)(1) The Registrant’s code of ethics pursuant to Item 2 of Form N-CSR.
(a)(2) Separate certifications by the Registrant’s Principal Executive Officer and Principal Financial Officer as required by Rule 30a-2(a) under the 1940 Act.
(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 1940 Act.
[Signature page to follow.]
Pursuant to the requirements of the Exchange Act and the 1940 Act, 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: February 28, 2022
Pursuant to the requirements of the Exchange Act and the 1940 Act, 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.
Christopher D. Clark President Date: February 28, 2022 |
ROYCE
VALUE TRUST, INC.
Peter K. Hoglund Treasurer Date: February 28, 2022 |