N-CSRS/A 1 rmc_63462n-csrsa.txt 06-30-2003 AMENDED SEMIANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED AMENDED REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-08030 Name of Registrant: Royce Micro-Cap Trust, Inc. Address of Registrant: 1414 Avenue of the Americas New York, NY 10019 Name and address of agent for service: John E. Denneen, Esquire 1414 Avenue of the Americas New York, NY 10019 Registrant's telephone number, including area code: (212) 486-1445 Date of fiscal year end: December 31 Date of reporting period: January 1, 2003 - June 30, 2003 ITEM 1: REPORTS TO SHAREHOLDERS ROYCE MICRO-CAP TRUST, INC. -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS JUNE 30, 2003 (UNAUDITED) -------------------------------------------------------------------------------- COMMON STOCKS - 92.8% SHARES VALUE ------ ----- CONSUMER PRODUCTS - 9.0% Apparel and Shoes - 3.0% Ashworth (a) 43,000 $ 304,870 DELTA APPAREL 146,500 2,380,625 Kleinert's (a,d) 14,200 0 Marisa Christina (a) 51,600 73,788 Nautica Enterprises (a) 107,600 1,380,508 Oshkosh B'Gosh Cl. A 37,000 999,000 WEYCO GROUP 40,000 1,840,400 --------------- 6,979,191 --------------- Collectibles - 1.0% The Boyds Collection (a,c) 227,700 1,072,467 Enesco Group (a) 52,400 387,760 Topps Company (The) (a) 101,000 867,590 --------------- 2,327,817 --------------- Food/Beverage/Tobacco - 1.3% 800 JR CIGAR (a,d) 193,000 2,509,000 +Green Mountain Coffee Roasters (a,c) 15,000 285,000 Monterey Pasta Company (a,c) 69,000 341,550 --------------- 3,135,550 --------------- Home Furnishing/Appliances - 0.8% Bassett Furniture Industries 26,300 349,264 Falcon Products (a) 150,000 634,500 Lifetime Hoan (c) 109,854 837,088 Stanley Furniture Company 2,500 68,525 --------------- 1,889,377 --------------- Publishing - 0.3% Information Holdings (a) 40,000 730,000 Sports and Recreation - 0.8% Johnson Outdoors Cl. A (a) 31,600 431,340 Monaco Coach (a,c) 85,900 1,316,847 National R.V. Holdings (a) 31,800 164,724 --------------- 1,912,911 --------------- Other Consumer Products - 1.8% Concord Camera (a) 30,000 212,700 Cross (A. T.) & Company Cl. A (a) 100,000 594,000 JAKKS Pacific (a) 35,000 465,150 Lazare Kaplan International (a) 151,700 879,860 Matthews International Cl. A 76,000 1,881,760 Pillowtex Corporation (a) 20,000 4,400 Water Pik Technologies (a,c) 41,500 322,455 --------------- 4,360,325 --------------- TOTAL (Cost $15,141,248) 21,335,171 =============== Consumer Services - 4.5% Direct Marketing - 0.1% ValueVision Media Cl. A (a) 5,000 68,150 --------------- Leisure/Entertainment - 0.2% ACTV (a) 55,000 53,900 IMAX Corporation (a,c) 25,000 225,000 TiVo (a,c) 20,000 247,000 --------------- 525,900 --------------- Restaurants/Lodgings - 0.2% Angelo and Maxie's (a) 3,333 9,832 Benihana Cl. A (a) 29,770 392,964 IHOP Corporation (c) 3,900 123,123 --------------- 525,919 --------------- Retail Stores - 3.6% Brookstone (a) 23,000 465,750 Buckle (The) (a) 36,500 701,895 Cato Cl. A 58,000 1,222,640 +Charming Shoppes (a,c) 50,000 248,500 Dress Barn (The) (a) 53,660 679,872 +FTD Cl. A (a,c) 10,000 201,800 Gadzooks (a,c) 63,000 357,840 InterTAN (a) 49,800 408,360 La Senza Corporation 99,900 722,124 STEIN MART (a) 285,200 1,708,348 United Retail Group (a) 60,600 119,382 WET SEAL (THE) CL. A (a) 157,000 1,676,760 --------------- 8,513,271 --------------- Other Consumer Services - 0.4% Ambassadors Group (a) 7,500 104,775 Ambassadors International (a) 6,100 73,261 E-LOAN (a,c) 80,500 469,315 First Cash Financial Services (a) 20,500 291,305 --------------- 938,656 --------------- TOTAL (Cost $7,950,925) 10,571,896 =============== DIVERSIFIED INVESTMENT COMPANIES - 0.2% Closed-End Mutual Funds - 0.2% Central Fund of Canada Cl. A (c) 140,000 600,600 --------------- TOTAL (Cost $554,082) 600,600 =============== FINANCIAL INTERMEDIARIES - 5.0% Banking - 0.4% First Midwest Financial 1,000 18,585 Queen City Investments (a) 948 466,416 Sterling Bancorp 14,520 404,963 --------------- 889,964 =============== Insurance - 4.6% Arch Capital Group (a) 25,700 892,561 Argonaut Group (a) 30,900 380,997 Ceres Group (a) 50,300 144,864 Independence Holding 18,630 393,279 NYMAGIC 67,900 1,375,654 Navigators Group (a) 47,200 1,407,504 PICO Holdings (a) 91,600 1,190,800 PMA Capital Cl. A 80,000 1,005,600 PXRE Group 73,164 1,448,647 ProAssurance Corporation (a) 57,500 1,551,925 Wellington Underwriting (a) 444,712 754,544 Zenith National Insurance (c) 19,100 544,350 --------------- 11,090,725 --------------- TOTAL (Cost $7,574,357) 11,980,689 =============== FINANCIAL SERVICES - 1.6% Information and Processing - 0.3% Fidelity National Information Solutions (a) 20,668 539,021 InterCept (a) 32,000 267,520 --------------- 806,541 --------------- Insurance Brokers - 0.4% Clark (a) 20,900 249,755 CorVel (a) 18,750 675,000 --------------- 924,755 --------------- 32 | THE ROYCE FUNDS SEMIANNUAL REPORT 2003 ROYCE MICRO-CAP TRUST, INC. -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS JUNE 30, 2003 (UNAUDITED) -------------------------------------------------------------------------------- SHARES VALUE ------ ----- FINANCIAL SERVICES (CONTINUED) Investment Management - 0.2% BKF Capital Group (a) 27,700 $ 604,691 Other Financial Services - 0.7% MicroFinancial (a) 10,000 18,400 New Century Financial 5,000 218,250 PRG-Schultz International (a,c) 225,000 1,327,500 --------------- 1,564,150 --------------- TOTAL (Cost $2,775,622) 3,900,137 =============== HEALTH - 11.1% Commercial Services - 3.1% BioReliance Corporation (a) 58,300 1,235,960 Bruker Daltonics (a,c) 200,300 1,067,599 ICON ADR (a,b) 800 25,456 PAREXEL International (a) 134,400 1,874,880 The TriZetto Group (a) 181,500 1,096,260 Young Innovations (a) 73,850 2,104,725 --------------- 7,404,880 --------------- Drugs and Biotech - 2.5% Antigenics (a,c) 60,800 700,416 Arena Pharmaceuticals (a) 14,000 92,960 BioSource International (a) 177,900 1,227,510 Emisphere Technologies (a) 187,200 673,920 Geron Corporation (a,c) 6,000 44,160 Lexicon Genetics (a) 192,100 1,288,991 Martek Biosciences (a) 12,800 549,632 Myriad Genetics (a) 5,000 68,050 Nabi Biopharmaceuticals (a) 40,000 274,400 Sangamo BioSciences (a) 10,000 28,500 ViroPharma (a,c) 18,800 48,880 VIVUS (a,c) 167,200 859,408 --------------- 5,856,827 --------------- Health Services - 2.2% ATC Healthcare Cl. A (a) 35,000 22,050 aaiPharma (a,c) 31,600 628,208 Covalent Group (a) 25,000 56,250 First Consulting Group (a) 146,700 685,089 Gene Logic (a) 210,000 1,253,700 MIM Corporation (a,c) 38,100 248,793 MedCath Corporation (a,c) 18,000 105,300 On Assignment (a,c) 132,000 528,000 Quovadx (a) 45,000 134,550 RehabCare Group (a) 25,000 366,250 SFBC International (a,c) 23,000 416,300 Sierra Health Services (a,c) 40,000 800,000 Superior Consultant Holdings (a) 10,000 30,000 --------------- 5,274,490 --------------- Personal Care - 0.8% Helen of Troy (a) 20,000 303,200 Inter Parfums 46,200 341,880 Ocular Sciences (a,c) 60,800 1,206,880 --------------- 1,851,960 --------------- Surgical Products and Devices - 2.5% Aksys (a,c) 85,000 1,100,750 Allied Healthcare Products (a) 258,400 922,488 Cantel Medical (a) 21,000 281,820 Colorado MEDtech (a) 5,400 25,380 CONMED Corporation (a,c) 3,900 71,214 Cyberonics (a,c) 5,000 107,550 Exactech (a) 50,000 720,000 Interpore International (a) 17,600 224,048 Molecular Devices (a) 10,000 159,100 NMT Medical (a) 44,000 174,680 Orthofix International (a) 29,500 965,830 Osteotech (a) 22,100 300,339 PLC Systems (a) 105,200 68,380 Theragenics Corporation (a) 15,000 64,500 Utah Medical Products (a) 42,300 848,115 --------------- 6,034,194 --------------- TOTAL (Cost $21,482,648) 26,422,351 =============== INDUSTRIAL PRODUCTS - 13.7% Building Systems and Components - 2.0% Drew Industries (a) 15,000 273,000 Juno Lighting (a) 108,600 1,453,068 LSI Industries 43,850 486,735 SIMPSON MANUFACTURING (a) 44,200 1,617,720 Skyline Corporation 32,100 963,000 --------------- 4,793,523 --------------- Construction Materials - 1.8% Ash Grove Cement Company 8,000 944,000 Eagle Building Technologies (a,c) 15,000 21,000 Encore Wire (a) 10,000 95,000 Florida Rock Industries 35,000 1,444,800 Monarch Cement 50,410 879,655 Synalloy Corporation (a) 171,000 928,530 Universal Stainless & Alloy Products (a) 7,700 50,589 --------------- 4,363,574 --------------- Industrial Components - 2.2% Aaon (a) 37,500 694,500 Bel Fuse Cl. A 52,600 1,078,300 Cable Design Technologies (a) 30,000 214,500 Penn Engineering & Manufacturing 56,600 772,590 Penn Engineering & Manufacturing Cl. A 30,800 373,912 Powell Industries (a) 85,800 1,256,112 Scientific Technologies (a) 10,700 51,895 Tech/Ops Sevcon 76,200 400,050 II-VI (a) 10,000 230,800 Woodhead Industries 10,000 125,200 --------------- 5,197,859 --------------- Machinery - 1.6% Astec Industries (a) 40,200 350,544 Hurco Companies (a) 16,100 37,835 LeCroy Corporation (a) 34,000 328,440 Lindsay Manufacturing 10,000 232,200 MTS Systems 10,000 147,400 Mueller (Paul) 16,650 674,325 T-3 Energy Services (a) 198,610 1,306,854 Woodward Governor 15,300 657,900 --------------- 3,735,498 --------------- Pumps, Valves and Bearings - 2.0% DENISON INTERNATIONAL ADR (a,b) 123,500 2,377,375 NN 80,500 1,019,130 Sun Hydraulics 152,550 1,229,553 --------------- 4,626,058 --------------- THE ROYCE FUNDS SEMIANNUAL REPORT 2003 | 33 ROYCE MICRO-CAP TRUST, INC. -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS JUNE 30, 2003 (UNAUDITED) -------------------------------------------------------------------------------- SHARES VALUE ------ ----- INDUSTRIAL PRODUCTS (CONTINUED) Specialty Chemicals and Materials - 2.0% Aceto 87,631 $ 1,616,792 American Pacific (a) 15,000 112,200 Balchem Corporation 10,000 235,200 CFC International (a) 144,700 781,380 Eastern Company (The) 20,000 292,000 Hawkins 122,667 1,229,123 NuCo2 (a,c) 20,000 188,200 Park Electrochemical 10,000 199,500 --------------- 4,654,395 --------------- Textiles - 0.3% Fab Industries (a) 76,400 702,880 Other Industrial Products - 1.8% Astronics Corporation (a) 26,400 85,668 BHA GROUP HOLDINGS 96,915 1,919,886 Maxwell Technologies (a) 15,300 88,128 Myers Industries 29,342 278,749 Peerless Mfg. (a) 43,200 477,360 Quixote Corporation 12,500 319,125 Spartan Motors (c) 26,200 216,674 Wescast Industries Cl. A 37,900 942,952 --------------- 4,328,542 --------------- TOTAL (Cost $23,162,094) 32,402,329 =============== INDUSTRIAL SERVICES - 12.2% Advertising/Publishing - 0.3% Digital Generation Systems (a) 6,700 12,864 +FindWhat.com (a,c) 10,000 188,100 Modem Media Cl. A (a) 141,200 561,976 --------------- 762,940 --------------- Commercial Services - 5.0% American Bank Note Holographics (a) 267,200 325,984 Butler International (a) 38,500 30,800 Carlisle Holdings (a) 400,000 1,320,000 Core Laboratories (a) 24,000 259,200 Edgewater Technology (a) 18,339 88,027 Exponent (a) 63,200 979,600 +Heidrick & Struggles International (a,c) 10,000 126,200 iGATE Corporation (a) 324,700 1,126,709 Innodata Corporation (a) 245,100 330,885 Kforce (a) 55,000 265,650 Manufacturers Services (a) 95,000 460,750 NCO Group (a) 20,000 358,200 NIC (a) 26,800 78,256 New Horizons Worldwide (a,c) 282,000 1,206,960 Pegasystems (a) 75,000 552,750 RemedyTemp Cl. A (a) 71,700 661,791 TRC Companies (a,c) 25,000 369,000 Tyler Technologies (a) 65,000 276,250 Volt Information Sciences (a) 36,600 499,590 Wackenhut Corrections (a) 94,800 1,299,708 Watson Wyatt & Company Holdings Cl. A (a) 15,000 347,700 Westaff (a) 362,500 808,375 --------------- 11,772,385 --------------- Engineering and Construction - 0.6% Insituform Technologies Cl. A (a) 70,000 1,237,600 Keith Companies (a) 10,000 99,900 --------------- 1,337,500 --------------- Food/Tobacco Processors - 1.5% Galaxy Nutritional Foods (a) 113,500 $ 320,070 MGP Ingredients 96,122 839,626 ML Macadamia Orchards LP Cl. A 120,200 420,700 SENECA FOODS CL. A (a) 58,500 1,024,920 SENECA FOODS CL. B (a) 47,200 854,792 --------------- 3,460,108 --------------- Industrial Distribution - 0.9% Central Steel & Wire 1,200 450,000 Elamex (a) 70,200 239,031 Lawson Products 12,200 335,976 Strategic Distribution (a) 68,490 1,113,716 --------------- 2,138,723 --------------- Printing - 1.6% Bowne & Co. 90,000 1,172,700 Ennis Business Forms 11,200 162,960 Moore Wallace (a) 39,600 581,328 New England Business Service 52,900 1,587,000 Schawk Cl. A 16,300 170,824 --------------- 3,674,812 --------------- Transportation and Logistics - 2.2% AirNet Systems (a) 196,000 793,800 Atlas Air Worldwide Holdings (a,c) 120,000 176,400 EGL (a) 42,100 639,920 Forward Air (a) 43,800 1,111,206 Frozen Food Express Industries (a) 227,500 718,900 Hawaiian Holdings (a) 75,000 63,750 Hub Group Cl. A (a) 6,500 57,070 Knight Transportation (a) 38,925 969,233 Patriot Transportation Holding (a) 28,400 800,596 --------------- 5,330,875 --------------- Other Industrial Services - 0.1% Team (a) 44,100 352,800 --------------- TOTAL (Cost $24,350,375) 28,830,143 =============== NATURAL RESOURCES - 8.6% Energy Services - 2.7% Carbo Ceramics 33,600 1,251,600 Dril-Quip (a) 42,700 777,140 GulfMark Offshore (a) 69,200 1,168,096 Input/Output (a) 193,500 1,041,030 Lufkin Industries 25,000 608,750 MarkWest Hydrocarbon (a) 15,200 115,672 NATCO Group Cl. A (a) 100,400 685,732 Valley National Gases (a) 30,100 179,095 Willbros Group (a) 55,900 580,801 --------------- 6,407,916 --------------- Oil and Gas - 3.3% BONAVISTA PETROLEUM (a) 71,000 2,010,990 Contango Oil & Gas Company (a) 50,000 204,500 Denbury Resources (a) 87,000 1,168,410 Evergreen Resources (a,c) 20,000 1,086,200 PETROCORP (a) 171,200 1,908,880 Prima Energy (a) 21,000 438,480 Toreador Resources (a) 2,300 6,923 Veritas DGC (a,c) 79,400 913,100 --------------- 7,737,483 --------------- 34 | THE ROYCE FUNDS SEMIANNUAL REPORT 2003 ROYCE MICRO-CAP TRUST, INC. -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS JUNE 30, 2003 (UNAUDITED) -------------------------------------------------------------------------------- SHARES VALUE ------ ----- NATURAL RESOURCES (CONTINUED) Precious Metals and Mining - 0.7% Apex Silver Mines (a) 79,600 $ 1,174,100 Brush Engineered Materials (a) 15,500 129,425 MK Gold (a) 603,700 458,812 --------------- 1,762,337 --------------- Real Estate - 1.9% HOMEFED CORPORATION (a) 898,521 2,470,933 LIBERTE INVESTORS (a) 346,800 1,883,124 Stratus Properties (a) 11,000 102,905 --------------- 4,456,962 --------------- TOTAL (Cost $10,827,234) 20,364,698 =============== TECHNOLOGY - 24.0% Aerospace/Defense - 2.1% Ducommun (a) 99,500 1,402,950 HEICO Corporation (c) 66,600 812,520 Herley Industries (a) 76,000 1,290,480 Integral Systems (a) 58,300 1,159,004 Mesaba Holdings (a) 51,600 318,372 SIFCO Industries (a) 45,800 92,058 --------------- 5,075,384 --------------- Components and Systems - 5.0% Advanced Photonix Cl. A (a) 455,200 409,680 CSP (a) 117,581 378,611 Concurrent Computer (a) 102,500 299,300 Del Global Technologies (a) 468,279 1,077,042 EXCEL TECHNOLOGY (a,c) 97,900 2,235,057 Intrusion (a) 75,000 56,250 Kronos (a) 20,750 1,054,308 Lantronix (a) 224,500 166,130 +Mobility Electronics (a,c) 90,000 364,500 MOCON 22,600 163,850 Newport Corporation (a) 45,000 666,000 OSI Systems (a) 20,000 321,200 Pemstar (a,c) 71,500 299,585 Performance Technologies (a) 24,750 180,675 Printronix (a) 45,300 507,360 Rainbow Technologies (a) 181,500 1,526,415 Read-Rite (a) 1,000 65 REMEC (a,c) 182,500 1,270,200 Spectrum Control (a) 12,500 70,250 TransAct Technologies (a) 68,200 827,266 --------------- 11,873,744 --------------- Distribution - 1.8% Bell Industries (a) 85,700 185,969 Daisytek International (a) 40,300 2,821 Jaco Electronics (a) 38,000 183,882 Nu Horizons Electronics (a) 40,000 240,000 PC Connection (a) 5,000 34,000 Pioneer-Standard Electronics 90,000 763,200 Plexus Corporation (a) 83,000 956,990 Pomeroy IT Solutions (a) 31,100 343,966 RICHARDSON ELECTRONICS 206,600 1,673,460 --------------- 4,384,288 --------------- Internet Software and Services - 1.5% Convera Corporation (a,c) 33,200 132,136 CyberSource Corporation (a) 86,000 235,640 Digitas (a) 50,500 250,480 Lionbridge Technologies (a,c) 37,500 190,875 Overstock.com (a,c) 37,000 536,870 RealNetworks (a,c) 65,700 445,446 Register.com (a) 84,000 492,240 Stamps.com (a) 170,000 816,000 United Online (a,c) 15,000 380,100 --------------- 3,479,787 --------------- IT Services - 4.6% CACI International Cl. A (a) 10,000 343,000 CIBER (a) 220,000 1,544,400 Computer Task Group (a) 341,100 968,724 Covansys Corporation (a) 242,500 744,475 DiamondCluster International Cl. A (a) 280,000 1,038,800 DynTek Cl. A (a) 224,000 179,200 FORRESTER RESEARCH (a) 105,500 1,725,980 SAPIENT CORPORATION (a) 995,000 2,756,150 Syntel (a) 81,000 1,274,130 Technology Solutions (a) 50,000 50,000 Tier Technologies Cl. B (a) 40,500 313,875 --------------- 10,938,734 --------------- Semiconductors and Equipment - 2.0% August Technology (a) 72,000 457,200 California Micro Devices (a) 25,000 53,750 Exar Corporation (a,c) 68,500 1,084,355 FSI International (a) 34,500 134,550 GlobespanVirata (a) 14,000 115,500 Helix Technology 9,500 125,685 Inficon Holding ADR (a,b) 10,000 64,500 Intevac (a) 114,050 766,416 Oak Technology (a,c) 20,000 124,200 PDF Solutions (a) 25,000 288,750 Photronics (a) 29,750 519,138 +Pixelworks (a,c) 36,000 213,840 Semitool (a) 50,500 248,965 Teradyne (a) 13,604 235,485 Xicor (a) 35,000 219,450 --------------- 4,651,784 --------------- Software - 3.8% ANSYS (a) 15,400 478,940 Aladdin Knowledge Systems (a) 27,300 103,494 Applix (a,c) 20,000 32,000 +AsiaInfo Holdings (a,c) 67,000 549,400 Aspen Technology (a,c) 22,000 105,600 Chordiant Software (a) 160,000 297,600 ILOG ADR (a,b,c) 35,000 292,950 Indus International (a) 144,800 290,903 JDA Software Group (a) 110,500 1,236,495 Lightspan (a) 480,000 325,440 MSC.Software (a,c) 63,700 429,338 PLATO Learning (a) 70,000 402,500 Retek (a) 25,000 160,000 SCB Computer Technology (a) 50,000 80,000 SPSS (a) 91,900 1,538,406 Transaction Systems Architects Cl. A (a) 155,100 1,389,696 Verity (a) 95,000 1,202,700 --------------- 8,915,462 --------------- THE ROYCE FUNDS SEMIANNUAL REPORT 2003 | 35 ROYCE MICRO-CAP TRUST, INC. -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS JUNE 30, 2003 (UNAUDITED) -------------------------------------------------------------------------------- SHARES VALUE ------ ----- TECHNOLOGY (CONTINUED) Telecommunication - 3.2% ADC Telecommunications (a,c) 100,000 $ 232,800 Allegiance Telecom (a,c) 790,000 43,450 Anaren (a,c) 123,000 1,152,510 Brooktrout (a) 28,400 220,441 C-COR.net (a,c) 5,000 24,500 Captaris (a) 30,000 102,600 Centillium Communications (a) 24,000 237,840 Computer Access Technology a 48,000 156,000 Computer Network Technology a,c 20,000 162,000 Giga-tronics a 3,200 5,536 ITXC Corporation a 36,000 93,960 Interland a 25,000 24,500 Level 3 Communications a,c 84,300 559,752 Liberty Satellite & Technology Cl. A a 118,200 307,320 MetaSolv a,c 44,100 86,436 Optical Communication Products Cl. A a 220,300 396,540 PC-Tel a 31,100 368,846 Radyne ComStream a 65,000 132,600 Somera Communications a,c 132,900 194,034 SpectraLink Corporation a 132,000 1,304,160 Tollgrade Communications a,c 20,000 373,000 ViaSat a 98,200 1,408,188 -------------- 7,587,013 -------------- TOTAL (Cost $51,202,632) 56,906,196 ============== MISCELLANEOUS - 2.9% TOTAL (Cost $5,766,793) 6,896,550 ============== TOTAL COMMON STOCKS (Cost $170,788,010) 220,210,760 ============== PREFERRED STOCKS - 0.5% Angelo and Maxie's 10.00% Conv. 6,991 $ 16,079 SENECA FOODS CONV. a 75,409 1,025,562 -------------- TOTAL PREFERRED STOCKS (Cost $957,998) 1,041,641 ============== PRINCIPAL AMOUNT --------- U.S. TREASURY OBLIGATIONS - 2.1% U.S Treasury Notes +1.875%, due 9/30/04 $5,000,000 5,049,220 -------------- TOTAL U.S. TREASURY OBLIGATIONS (Cost $5,010,808) 5,049,220 ============== REPURCHASE AGREEMENT - 4.6% State Street Bank & Trust Company, 0.30% dated 6/30/03, due 7/1/03, maturity value $10,850,090 (collateralized by U.S. Treasury Bonds, 8.50% due 2/15/20, valued at $11,063,754) (Cost $10,850,000) 10,850,000 ============== TOTAL INVESTMENTS - 100.0% (Cost $187,606,816) 237,151,621 LIABILITIES LESS CASH AND OTHER ASSETS (427,603) PREFERRED STOCK (40,000,000) --------------- NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS $196,724,018 ============== -------------------------------------------------------------------------------- a Non-income producing. b American Depository Receipt. c A portion of these securities were on loan at June 30, 2003. Total market value of loaned securities at June 30, 2003 was $7,992,197. d Securities for which market quotations are no longer readily available represent 1.06% of net assets. These securities have been valued at their fair value under procedures established by the Fund's Board of Directors. + New additions in 2003. BOLD INDICATES THE FUND'S LARGEST 20 EQUITY HOLDINGS IN TERMS OF JUNE 30, 2003 MARKET VALUE. INCOME TAX INFORMATION: The cost of total investments for Federal income tax purposes was $188,619,900. At June 30, 2003, net unrealized appreciation for all securities was $48,531,721, consisting of aggregate gross unrealized appreciation of $65,691,964 and aggregate gross unrealized depreciation of $17,160,243. The primary differences in book and tax basis cost is the timing of the recognition of losses on securities sold and amortization of discount for book and tax purposes. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 36 | THE ROYCE FUNDS SEMIANNUAL REPORT 2003 ROYCE MICRO-CAP TRUST, INC. -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2003 (UNAUDITED) -------------------------------------------------------------------------------- ASSETS: Investments at value (identified cost $176,756,816) $226,301,621 Repurchase agreement (at cost and value) 10,850,000 Cash 624 Collateral from brokers on securities loaned 8,369,427 Receivable for investments sold 126,725 Receivable for dividends and interest 70,652 Prepaid expenses 9,686 -------------------------------------------------------------------------------- Total Assets 245,728,735 -------------------------------------------------------------------------------- LIABILITIES: Payable for collateral on securities loaned 8,369,427 Payable for investments purchased 194,112 Payable for investment advisory fee 278,115 Preferred dividends accrued but not yet declared 68,887 Accrued expenses 94,176 -------------------------------------------------------------------------------- Total Liabilities 9,004,717 -------------------------------------------------------------------------------- PREFERRED STOCK: 7.75% Cumulative Preferred Stock -- $0.001 par value, $25 liquidation value per share; 1,600,000 shares outstanding 40,000,000 -------------------------------------------------------------------------------- Total Preferred Stock 40,000,000 ================================================================================ NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS $196,724,018 ================================================================================ ANALYSIS OF NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS: Par value of Common Stock -- $0.001 per share; 18,540,334 shares outstanding (150,000,000 shares authorized) $ 18,540 Additional paid-in capital 142,059,397 Accumulated net investment loss (1,199,081) Accumulated net realized gain on investments 16,392,806 Net unrealized appreciation on investments 49,544,805 Quarterly and accrued distributions (10,092,449) -------------------------------------------------------------------------------- Net Assets applicable to Common Stockholders (net asset value per share -- $10.61) $196,724,018 ================================================================================ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. THE ROYCE FUNDS SEMIANNUAL REPORT 2003 | 37 ROYCE MICRO-CAP TRUST, INC. -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED) -------------------------------------------------------------------------------- INVESTMENT INCOME: Income: Dividends $ 402,854 Interest 72,794 -------------------------------------------------------------------------------- Total income 475,648 -------------------------------------------------------------------------------- Expenses: Investment advisory fees 1,658,923 Custody and transfer agent fees 61,256 Stockholder reports 48,061 Professional fees 30,077 Directors' fees 26,132 Administrative and office facilities expenses 16,672 Other expenses 33,608 -------------------------------------------------------------------------------- Total expenses 1,874,729 Fees waived by investment advisor (200,000) -------------------------------------------------------------------------------- Net expenses 1,674,729 -------------------------------------------------------------------------------- Net investment loss (1,199,081) -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on investments 12,706,206 Net change in unrealized appreciation on investments 21,690,144 -------------------------------------------------------------------------------- Net realized and unrealized gain on investments 34,396,350 -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM INVESTMENT OPERATIONS 33,197,269 ================================================================================ DISTRIBUTIONS TO PREFERRED STOCKHOLDERS (1,550,000) ================================================================================ NET INCREASE IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS RESULTING FROM INVESTMENT OPERATIONS $ 31,647,269 ================================================================================ STATEMENTS OF CHANGES IN NET ASSETS Six months ended Year ended June 30, 2003 December 31, (unaudited) 2002 ---------------- ------------- INVESTMENT OPERATIONS: Net investment loss $ (1,199,081) $ (2,363,582) Net realized gain on investments 12,706,206 16,747,557 Net change in unrealized appreciation on investments 21,690,144 (38,936,315) -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from investment operations 33,197,269 (24,552,340) -------------------------------------------------------------------------------- DISTRIBUTIONS TO PREFERRED STOCKHOLDERS: Net investment income - - Net realized gain on investments - (3,100,000) Quarterly distributions* (1,550,000) - -------------------------------------------------------------------------------- Total distributions to Preferred Stockholders (1,550,000) (3,100,000) -------------------------------------------------------------------------------- NET INCREASE (DECREASED) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS RESULTING FROM INVESTMENT OPERATIONS 31,647,269 (27,652,340) ================================================================================ DISTRIBUTIONS TO COMMON STOCKHOLDERS: Net investment income - - Net realized gain on investments - (13,769,198) Quarterly distributions* (8,473,560) - -------------------------------------------------------------------------------- Total distributions to Common Stockholders (8,473,560) (13,769,198) -------------------------------------------------------------------------------- CAPITAL STOCK TRANSACTIONS: Reinvestment of distributions to Common Stockholders 5,979,130 8,549,592 -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS: 29,152,839 (32,871,946) NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS: Beginning of period 167,571,179 200,443,125 -------------------------------------------------------------------------------- End of period (including accumulated net investment loss of $1,199,081 in 2003) $196,724,018 $167,571,179 ================================================================================ *To be allocated to net investment income and capital gains at year-end. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 38 | THE ROYCE FUNDS SEMIANNUAL REPORT 2003 ROYCE MICRO-CAP TRUST, INC. -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- This table is presented to show selected data for a share of Common Stock outstanding throughout each period, and to assist stockholders in evaluating the Fund's performance for the periods presented.
Years ended December 31, Six months ended -------------------------------------------------------- June 30, 2003 (unaudited) 2002 2001 2000 1999 1998 ------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $9.39 $11.83 $10.14 $11.00 $10.06 $10.84 ------------------------------------------------------------------------------------------------------------- INVESTMENT OPERATIONS: Net investment income (loss) (0.06) (0.13) (0.05) 0.09 0.12 0.13 Net realized and unrealized gain (loss) on investments 1.87 (1.29) 2.57 1.23 1.35 (0.36) ------------------------------------------------------------------------------------------------------------- Total investment operations 1.81 (1.42) 2.52 1.32 1.47 (0.23) ------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO PREFERRED STOCKHOLDERS: Net investment income - - - (0.01) (0.05) (0.06) Net realized gain on investments - (0.18) (0.19) (0.22) (0.18) (0.18) Quarterly distributions* (0.09) - - - - - ------------------------------------------------------------------------------------------------------------- Total distributions to Preferred Stockholders (0.09) (0.18) (0.19) (0.23) (0.23) (0.24) ------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS RESULTING FROM INVESTMENT OPERATIONS 1.72 (1.60) 2.33 1.09 1.24 (0.47) ------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO COMMON STOCKHOLDERS: Net investment income - - - (0.09) (0.06) (0.07) Net realized gain on investments - (0.80) (0.57) (1.63) (0.21) (0.22) Quarterly distributions* (0.47) - - -- - - - ------------------------------------------------------------------------------------------------------------- Total distributions to Common Stockholders (0.47) (0.80) (0.57) (1.72) (0.27) (0.29) ------------------------------------------------------------------------------------------------------------- CAPITAL STOCK TRANSACTIONS: Effect of reinvestment of distributions by Common Stockholders (0.03) (0.04) (0.07) (0.23) (0.03) (0.02) ------------------------------------------------------------------------------------------------------------- Total capital stock transactions (0.03) (0.04) (0.07) (0.23) (0.03) (0.02) ------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $10.61 $9.39 $11.83 $10.14 $11.00 $10.06 ============================================================================================================= MARKET VALUE, END OF PERIOD $9.77 $8.44 $10.50 $8.625 $9.00 $8.875 ============================================================================================================= TOTAL RETURN (a): Market Value 22.2%*** (12.7)% 28.8% 15.3% 4.5% (9.4)% Net Asset Value 19.3%*** (13.8)% 23.4% 10.9% 12.7% (4.1)% RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS: Total expenses (b,c) 1.98%** 1.96% 1.78% 1.32% 1.27% 1.18% Management fee expense 1.72%** 1.59% 1.57% 1.08% 0.91% 0.80% Other operating expenses 0.26%** 0.37% 0.21% 0.24% 0.36% 0.38% Net investment income (loss) (1.42)%** (1.23)% (0.43)% 0.74% 1.20% 1.21% SUPPLEMENTAL DATA: Net Assets Applicable to Common Stockholders, End of Period (in thousands) $196,724 $167,571 $200,443 $163,820 $151,269 $135,495 Liquidation Value of Preferred Stock, End of Period (in thousands) $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 Portfolio Turnover Rate 11% 39% 27% 49% 49% 44% PREFERRED STOCK: Total shares outstanding 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 Asset coverage per share $147.95 $129.73 $150.28 $127.39 $119.54 $109.68 Liquidation preference per share $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 Average market value per share (d) $25.90 $25.91 $25.30 $23.08 $24.67 $25.40 ============================================================================================================= (a) The Market Value Total Return is calculated assuming a purchase of Common Stock on the opening of the first business day and a sale on the closing of the last business day of each period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund's Distribution Reinvestment and Cash Purchase Plan. Net Asset Value Total Return is calculated on the same basis, except that the Fund's net asset value is used on the purchase and sale dates instead of market value. (b) Expense ratios based on total average net assets including liquidation value of Preferred Stock were 1.60%, 1.62%, 1.46%, 1.06%, 0.98% and 0.92% for the periods ended June 30, 2003 and December 31, 2002, 2001, 2000, 1999 and 1998, respectively. (c) Expense ratios based on average net assets applicable to Common Stockholders before waiver of fees by the investment adviser would have been 2.21%, 2.04%, 1.81%, 1.44% and 1.24% for the periods ended June 30, 2003 and December 31, 2002, 2001, 1999 and 1998, respectively. (d) The average of month-end market values during the period. * To be allocated to net investment income and capital gains at year-end. ** Annualized. *** Not annualized.
THE ROYCE FUNDS SEMIANNUAL REPORT 2003 | 39 ROYCE MICRO-CAP TRUST, INC. -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -------------------------------------------------------------------------------- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Royce Micro-Cap Trust, Inc. (the "Fund") was incorporated under the laws of the State of Maryland on September 9, 1993 as a diversified closed-end investment company. The Fund commenced operations on December 14, 1993. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. VALUATION OF INVESTMENTS: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4:00 p.m. Eastern Time) on the valuation date. Securities listed on an exchange or the Nasdaq National Market System (NMS) are valued at their last reported sales price or official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their bid price for exchange-listed securities and at the average of their bid and asked prices for Nasdaq NMS securities. Other over-the-counter securities for which market quotations are readily available are valued at their bid price. Securities for which market quotations are not readily available are valued at their fair value under procedures established by the Fund's Board of Directors. Bonds and other fixed income securities may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME: Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date and any non-cash dividend income is recorded at the fair market value of the securities received. Interest income is recorded on the accrual basis. Realized gains and losses from investment transactions are determined on the basis of identified cost for book and tax purposes. EXPENSES: The Fund incurs direct and indirect expenses. Expenses directly attributable to the Fund are charged to the Fund's operations, while expenses applicable to more than one of the Royce Funds are allocated in an equitable manner. Allocated personnel and occupancy costs related to The Royce Funds are included in administrative and office facilities expenses. The Fund has adopted a deferred fee agreement that allows the Fund's Directors to defer the receipt of all or a portion of Directors' Fees otherwise payable. The deferred fees are invested in certain Royce Funds until distributed in accordance with the agreement. TAXES: As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the Fund is not subject to income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. The Schedule of Investments includes information regarding income taxes under the caption "Income Tax Information". DISTRIBUTIONS: The Fund currently has a policy of paying quarterly distributions on the Fund's Common Stock. Distributions are currently being made at the annual rate of 9% of the rolling average of the prior four calendar quarter-end NAVs of the Fund's Common Stock, with the fourth quarter distribution being the greater of 2.25% of the rolling average or the distribution required by IRS regulations. Distributions to Preferred Stockholders are recorded on an accrual basis and paid quarterly. Distributions are determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United States of America. Permanent book and tax basis differences relating to stockholder distributions will result in reclassifications within the capital accounts. Undistributed net investment income may include temporary book and tax basis differences, which will reverse in a subsequent period. Any taxable income or gain remaining undistributed at fiscal year end is distributed in the following year. REPURCHASE AGREEMENTS: The Fund enters into repurchase agreements with respect to its portfolio securities solely with State Street Bank and Trust Company ("SSB&T"), the custodian of its assets. The Fund restricts repurchase agreements to maturities of no more than seven days. Securities pledged as collateral for repurchase agreements, which are held by SSB&T 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 SSB&T, including possible delays or restrictions upon the ability of the Fund to dispose of the underlying securities. SECURITIES LENDING: The Fund loans securities to qualified institutional investors for the purpose of realizing additional income. This income is included in interest income. Collateral on all securities loaned for the Fund is accepted in cash and is invested temporarily, typically, and specifically at June 30, 2003, in a registered money market fund, by the custodian. The collateral is equal to at least 100% of the current market value of the loaned securities. 40 | THE ROYCE FUNDS SEMIANNUAL REPORT 2003 ROYCE MICRO-CAP TRUST, INC. -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) -------------------------------------------------------------------------------- CAPITAL STOCK: The Fund currently has 1,600,000 shares of 7.75% Cumulative Preferred Stock outstanding. The stock has a liquidation preference of $25.00 per share. Under the Investment Company Act of 1940, the Fund is required to maintain an asset coverage of at least 200% for the Preferred Stock. In addition, pursuant to the Rating Agency Guidelines established by Moody's, the Fund is required to maintain a certain discounted asset coverage. The Fund has met these requirements since issuing the Preferred Stock. The Fund is required to allocate long-term capital gain distributions and other types of income proportionately to distributions made to holders of shares of Common Stock and Preferred Stock. To the extent that distributions are not paid from long-term capital gains, net investment income or net short-term capital gains, they will represent a return of capital. The Fund issued 698,276 and 896,290 shares of Common Stock as reinvestment of distributions by Common Stockholders for the periods ended June 30, 2003 and December 31, 2002, respectively. INVESTMENT ADVISORY AGREEMENT: As compensation for its services under the Investment Advisory Agreement, Royce & Associates, LLC ("Royce") receives a fee comprised of a Basic Fee ("Basic Fee") and an adjustment to the Basic Fee based on the investment performance of the Fund in relation to the investment record of the Russell 2000. The Basic Fee is a monthly fee equal to 1/12 of 1% (1% on an annualized basis) of the average of the Fund's month-end net assets applicable to Common Stockholders plus the liquidation value of Preferred Stock for the rolling 36-month period ending with such month. The Basic Fee for each month is increased or decreased at the rate of 1/12 of .05% for each percentage point that the investment performance of the Fund exceeds, or is exceeded by, the percentage change in the investment record of the Russell 2000 for the performance period by more than two percentage points. The performance period for each such month is a rolling 36-month period ending with such month. The maximum increase or decrease in the Basic Fee for any month may not exceed 1/12 of .5%. Accordingly, for each month, the maximum monthly fee rate as adjusted for performance is 1/12 of 1.5% and is payable if the investment performance of the Fund exceeds the percentage change in the investment record of the Russell 2000 by 12 or more percentage points for the performance period, and the minimum monthly fee rate as adjusted for performance is 1/12 of .5% and is payable if the percentage change in the investment record of the Russell 2000 exceeds the investment performance of the Fund by 12 or more percentage points for the performance period. Royce has voluntarily committed to waive the portion of its investment advisory fee attributable to the Fund's Preferred Stock for any month in which the Fund's average annual NAV total return since issuance of the Preferred Stock fails to exceed the Preferred Stock's dividend rate. For the six months ended June 30, 2003, the Fund accrued and paid Royce advisory fees totaling $1,458,923, which is net of $200,000 voluntarily waived by Royce. PURCHASES AND SALES OF INVESTMENT SECURITIES: For the six months ended June 30, 2003, the cost of purchases and proceeds from sales of investment securities, other than short-term securities, amounted to $22,799,895 and $34,025,558, respectively. TRANSACTIONS IN SHARES OF AFFILIATED COMPANIES: An "Affiliated Company", as defined in the Investment Company Act of 1940, is a company in which a Fund owns 5% or more of the company's outstanding voting securities. The Fund effected the following transactions in shares of such companies during the six months ended June 30, 2003:
================================================================================================================== Purchases Sales ------------- --------------- Affiliated Company Shares Cost Shares Cost Realized Gain (Loss) Dividend Income ------------------ ------ ---- ------ ---- -------------------- --------------- Technical Communications -- -- 96,700 $108,304 $(61,331) -- ==================================================================================================================
PREFERRED STOCK PRESENTATION: To reflect recent accounting guidance from the Securities and Exchange Commission, the Statement of Assets and Liabilities has been modified to present the liquidation value of Preferred Stock below Liabilities and above Net Assets Applicable to Common Stockholders. As revised, Preferred Stock is no longer included as a component of net assets of the Fund. Likewise, the Statement of Operations, the Statement of Changes in Net Assets, and the Financial Highlights have been revised to show distributions to Preferred Stockholders as a component of the net increase/decrease in net assets applicable to Common Stockholders resulting from investment operations. These modifications do not change the amount of net assets applicable to Common Stockholders, the net asset value per share of Common Stock, or the total return per share of Common Stock. THE ROYCE FUNDS SEMIANNUAL REPORT 2003 | 41 ITEM 2: CODE(S) OF ETHICS - NOT APPLICABLE TO THIS AMENDED SEMI-ANNUAL REPORT. ITEM 3: AUDIT COMMITTEE FINANCIAL EXPERT - NOT APPLICABLE TO THIS AMENDED SEMI-ANNUAL REPORT. ITEM 4: PRINCIPAL ACCOUNTANT FEES AND SERVICES - NOT APPLICABLE TO THIS AMENDED SEMI-ANNUAL REPORT. ITEM 5: AUDIT COMMITTEE OF LISTED REGISTRANTS. NOT APPLICABLE TO THIS AMENDED SEMI-ANNUAL REPORT. ITEM 6: RESERVED. ITEM 7: DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES - In June 2003, in response to rules adopted by the Commission, Royce adopted written proxy voting policies and procedures (the "Proxy Voting Procedures") for itself, the Fund, and all The Royce Funds and clients accounts for which Royce is responsible for voting proxies. The Board of Directors of the Fund has delegated all proxy voting decisions to Royce. 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. Royce personnel are responsible for monitoring receipt of all proxies and ensuring that proxies are received for all securities for which Royce has proxy voting responsibility. 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. Regularly recurring matters are usually voted as recommended by the issuer's board of directors or management. Non-regularly recurring matters are brought to the attention of portfolio manager(s) for the applicable account(s) and, after giving consideration to advisories provided by an independent third party research firm, the portfolio manager(s) directs that such matters be voted in a way that he believes should better protect or enhance the value of the investment. If the portfolio manager determines that information relating to a proxy requires additional analysis, is missing, or is incomplete, the portfolio manager will give the proxy to an analyst or another portfolio manager for review and analysis. Under certain circumstances, Royce may 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. 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. In furtherance of Royce's goal to vote proxies in the best interests of its clients, 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. ITEM 8: RESERVED. ITEM 9: 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 amended report. (b) Internal Controls. There were no significant changes in Registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 10: EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS) Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ROYCE MICRO-CAP TRUST, INC. BY: /s/ Charles M. Royce CHARLES M. ROYCE PRESIDENT Date: October 7, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this amended report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. ROYCE MICRO-CAP TRUST, INC. BY: /s/ Charles M. Royce CHARLES M. ROYCE PRESIDENT Date: October 7, 2003 ROYCE MICRO-CAP TRUST, INC. BY: /s/ John D. Diederich JOHN D. DIEDERICH CHIEF FINANCIAL OFFICER Date: October 7, 2003