N-CSR 1 e45905_rmt.htm
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM N-CSR
 
CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
 
Investment Company Act File Number: 811-04875
 
Name of Registrant: Royce Micro-Cap Trust, Inc.
 
Address of Registrant: 745 Fifth Avenue
New York, NY 10151

Name and address of agent for service:   John E. Denneen, Esquire
    745 Fifth Avenue
    New York, NY 10151
     
Registrant’s telephone number, including area code: (212) 508-4500
Date of fiscal year end: December 31
Date of reporting period: January 1, 2016 – December 31, 2016
     

Item 1. Reports to Shareholders.

       
     
    DECEMBER 31, 2016
     
     
     
    2016 Annual
    Review and Report to Stockholders
     
     
     
     
     
     
     
    Royce Global Value Trust
       
    Royce Micro-Cap Trust
       
    Royce Value Trust
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
    roycefunds.com
       
       
       

A Few Words on Closed-End Funds

Royce & Associates, LP manages three closed-end funds: Royce Global Value Trust, which invests primarily in companies with headquarters outside of the United States, Royce Micro-Cap Trust, which invests primarily in micro-cap securities; and Royce Value Trust, which invests primarily in small-cap securities. A closed-end fund is an investment company whose shares are listed and traded on a stock exchange. Like all investment companies, including open-end mutual funds, the assets of a closed-end fund are professionally managed in accordance with the investment objectives and policies approved by the fund’s Board of Directors. A closed-end fund raises cash for investment by issuing a fixed number of shares through initial and other public offerings that may include shelf offerings and periodic rights offerings. Proceeds from the offerings are invested in an actively managed portfolio of securities. Investors wanting to buy or sell shares of a publicly traded closed-end fund after the offerings must do so on a stock exchange, as with any publicly traded stock. Shares of closed-end funds frequently trade at a discount to their net asset value. This is in contrast to 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 pages 12 and 13. For additional information on the Funds’ Distribution Reinvestment and Cash Purchase Options and the benefits for stockholders, please see page 14 or visit our website at www.roycefunds.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 2016 Annual Report to Stockholders

       

Table of Contents      
       
       
Annual Review      
       
Letter to Our Stockholders   2  
       
Performance   5  
       
       
Annual Report to Stockholders      
       
Managers’ Discussions of Fund Performance      
       

Royce Global Value Trust

  6  
       

Royce Micro-Cap Trust

  8  
       

Royce Value Trust

  10  
       
History Since Inception   12  
       
Distribution Reinvestment and Cash Purchase Options   14  
       
Schedules of Investments and Other Financial Statements      
       

Royce Global Value Trust

  15  
       

Royce Micro-Cap Trust

  29  
       

Royce Value Trust

  44  
       
Directors and Officers   60  
       
Notes to Performance and Other Important Information   61  
       
Results of Stockholders Meetings   62  




This page is not part of the 2016 Annual Report to Stockholders

       

Letter to Our Stockholders

A MOST WONDERFUL YEAR FOR SMALL-CAPS,
VALUE, AND CYCLICALS
By any measure, 2016 was a terrific year for domestic small-cap stocks, one that featured a double-digit positive return for the Russell 2000 Index, which advanced 21.3%, and a solid advantage over their large-cap counterparts. It was an even better year for small-cap value stocks and a highly rewarding one for cyclical sectors. These last two factors were critical in boosting results for certain active management approaches within the asset class, including a number of our own. Arguably even more important was what these developments may be telling us about the subsequent direction of small-cap equity returns. We flesh out the details later in this letter, but these three reversals—positive results for small-caps, leadership for value over growth, and outperformance for cyclicals—should be key in setting the tone for the direction of small-caps going forward. They coalesced around the central, normalizing force of rising interest rates.

     The major impact of these reversals was both highly welcome and long overdue. We saw 2015—a year in which large-cap beat small-cap, the Russell 2000 had a negative return, and market leadership was extremely narrow—as a hinge year. It marked the transition out of the period that began in 2011, when an unprecedented amount of monetary intervention into the global economy had the unintended effect of stoking an intense appetite for yield and safety at one extreme of the U.S. equity markets and a hunger for high risk at the other. The bottom of a commodity super cycle, with the attendant slowdowns in the world’s largest developing markets, only exacerbated the challenges then faced by value stocks and active management approaches.
    As has usually been the case historically, the longer market trends last, the more regularly they are mistaken for permanent realignments. In this most recent instance, the consensus lined up around the perpetuation of near-zero rates, growth stock dominance, and the futility of active management. Whether in good times or bad for our own approaches, however, we have always stayed mindful of the fact that trends do not last forever—they persist, then, more often than not, they reverse. This investment truism should serve as a corrective for those who would take the example of a highly anomalous period for the markets and economy to validate an implacable bias against active management.

THE POWER OF RATES AND THE IMPACT
OF THE PARADIGM SHIFT

Even as small-cap specialists, we recognize that few forces act as powerfully on the value of investments as interest rates. The effects can be as obvious as they are subtle. We think three conditions matter most: the level of rates, the spread between short- and long-term rates, and the disparity in borrowing rates between better-run companies and worse ones. Capitalism tends to best foster economic growth when short rates hover a bit above inflation; when long rates are high enough to encourage lenders but not so high as to discourage borrowers; and when there is a premium for fiscal prudence and a commensurate penalty for profligate debtors. During the era of zero (or near-zero) rates—roughly 2011-2015—these historically “normal” conditions were largely absent. Yet we believe they began to manifest themselves again in 2016, marking a paradigm shift to a period of higher rates and a consequent reassessment of the relative values of financial assets. More normalized rates have historically been better for stocks than


2 | This page is not part of the 2016 Annual Report to Stockholders

       

LETTER TO OUR STOCKHOLDERS

bonds. More important for our purposes, they have also supported small-caps over large, value over growth stocks, and cyclicals over defensive areas. In many ways, 2016’s results exemplified exactly this shift—and we think it is just the beginning of what could be a steady, though not linear, multi-year run.

     With 2016’s stellar results fresh in the mind, it may be difficult to recall just how poorly the year started and how fatalistic the expectations were for equities. Small-cap stocks plunged from the first peal of 2016’s opening bell. The downdraft exacerbated a trend that had begun the previous summer following the small-cap peak on June 23, 2015. By the time it was all over with the small-cap bottom on February 11, 2016, the Russell 2000 had fallen 25.7%. The last leg of the downdraft included many of the signs of a classic bottoming-out process—panic selling in a number of sectors (most notably within the biopharma complex), small-caps losing more than large-caps, and more resilience from value stocks—to us, the most significant development in the down phase. As unpleasant as any bear market is, we noted that the leadership shift, because it was nearly concomitant with the rate hike, was likely to last.

     Moreover, these signs also gave us some assurance that this was a historically conventional decline, making us confident that the small-cap market was undergoing its own important and familiar shift. The depths plumbed by this bear market were comparable to previous downturns—and that encouraged our belief that the worst was over just before the Russell 2000 rebounded sharply from its February low through the end of the year. These small-cap bear and bull markets received so little comment beyond our own and that of fellow small-cap specialists that we refer to them as “stealth” markets. They also reinforced our contention that this small-cap rally has room to run. Despite its strong showing in 2016, the Russell 2000 finished the year only 7.2% above its June 2015 peak. For additional context, it is worth noting that small-cap upswings usually extend well beyond the

 
Equity Indexes as of December 31, 2016 (%)                    
    1-YR   3-YR   5-YR   10-YR
 
Russell 2000     21.31       6.74       14.46       7.07  
 
Russell 2000 Value     31.74       8.31       15.07       6.26  
 
Russell 2000 Growth     11.32       5.05       13.74       7.76  
 
S&P 500     11.96       8.87       14.66       6.95  
 
Russell 1000     12.05       8.59       14.69       7.08  
 
Nasdaq Composite     7.50       8.83       15.62       8.34  
 
Russell Midcap     13.80       7.92       14.72       7.86  
 
Russell Microcap     20.37       5.77       15.59       5.47  
 
Russell Global ex-U.S. Small Cap     5.04       0.57       7.22       2.65  
 
Russell Global ex-U.S. Large Cap     4.30       -1.51       5.35       1.24  
 
For details on The Royce Funds’ performance in the period, please turn to the Managers’ Discussions that begin on page 8.
47.4% advance the small-cap index made from its February bottom through the end of 2016. There have been 12 declines of 15% or more for the Russell 2000 since its 1979 inception. The median return for the subsequent recovery period was 98.8%. So both history and the currently hospitable economic environment suggest to us that there may well be plenty of life left in the small-cap rally.

VALUE’S TURN?
The recent extended run of small-cap growth leadership makes it worth recalling that it is actually small-cap value stocks that own the pronounced long-term historical edge in relative performance. Of course, it makes sense that many investors were not conscious of this history at the beginning of the year. Prior to resuming leadership, the Russell 2000 Value Index trailed the Russell 2000 Growth Index in six out of seven years between 2009 and 2015. Based on their long-term performance and leadership history, this was an inordinately lengthy span. Is it now value’s turn, then? We think so. Prolonged periods of leadership for small-cap growth have historically been followed by long tenures at the helm for value. Multi-year trends typically do not have brief reversals before reappearing. Based on this pattern, we think the current leadership status of small-cap value is likely to last. Further, value stocks have historically outpaced growth issues when the economy is expanding—growth companies generally being most highly valued when growth is scarce in the economy. Rising interest rates have also historically provided a relative headwind for growth stocks because their valuations typically have a long-duration bond aspect to them that is highly sensitive to changes in rates.

     We saw the post-election rally and the sudden shift in investor perspective that came with it as more symptom than cause of an overall improved environment for both the economy and stocks. After all, some had forecast the pickup in GDP growth prior to any votes being cast just as many investors realized that the era of “lower forever” interest rates had reached its conclusion before the Fed officially announced the hike in December. There were also encouraging pickups in employment and incremental growth in wages. Along with the added certainty that comes after nearly every election, especially a contentious one, all of this stoked bullishness. So while the election was undoubtedly an accelerant, it seemed to us that many investors—and management teams—simply needed the experience of a tangible event before they felt comfortable enough to embrace the good news that had been accumulating prior to November.


This page is not part of the 2016 Annual Report to Stockholders | 3

       

LETTER TO OUR STOCKHOLDERS    

     The aftermath of the election has set the stage for changes that could benefit small-cap companies, beginning with a lower corporate tax rate. With the bulk of their money coming from domestic sources, many small-cap businesses would receive a disproportionate benefit from any rate reduction. Also encouraging are the prospects for repatriation. It was not surprising, then, that the postelection period also witnessed a dramatic rotation away from safety—bonds and defensive stocks most notably. Investors are bullish on the potential for accelerated economic growth and the policy shift from monetary to fiscal—chiefly in the form of tax cuts and projected spending increases on infrastructure and defense. The critical question going forward is, how much of this has already been priced in?

TURN THE PAGE
All of this has convinced us that we have turned the page on that 2011-2015 period in which financial markets behaved in such odd and unprecedented ways. We firmly believe that we are back on the road to a more historically normal market environment. We expect a multi-year run for the current environment of increased return dispersion, declining correlation, and a steepening yield curve, such as we saw in 2016, and think this will also lead to more historically normal relative return patterns for equity asset classes.

     Only time will tell, of course. However, we do not think a significant correction—that is, a decline of 15% or more—is in the offing. We see no signs of a recession or financial crisis. Still, a downdraft of anywhere from 8-10% would not be at all unexpected, and arguably healthy, given the strength of small-cap’s 2016 run. When one does occur, we are prepared to act opportunistically by trying to turn any volatility to our investors’ long-term advantage. In any event, we see ongoing leadership not only for small-cap value but for many cyclical sectors as well. Cyclicals lagged for so long that, as with value stocks (with which there is substantial overlap), we were anticipating a shift, which is precisely what we are seeing in the current cycle. Financials are benefiting from the steepening yield curve, which should help to lift bank profits, while the
potential for accelerated economic growth is boosting Industrials and many Materials stocks. The latter are also benefiting from rebounding commodity prices that ignited energy stocks as well. In addition, the U.S. consumer continues to spend. We see all of these as potentially ongoing trends. And although the global outlook is admittedly less certain, any rebound in worldwide industrial activity would be an additional, and significant, positive.

A NEW DAY FOR ACTIVE MANAGEMENT
Ongoing leadership for value and the related strength of cyclicals could produce distinct advantages for small-cap active management. As rates continue to rise and access to capital begins to contract more consistently, the number of bankruptcies should escalate, restoring the healthy, Darwinian force that generally ensures survival for the best-run, most prudently managed enterprises while putting others at potentially greater risk. It creates challenges for more debt-dependent, long-duration growth while offering potential benefits for companies that are conservatively capitalized. If we are correct in our argument that a multi-year period of value leadership is just beginning, then we also expect it to be a strong period for thoughtful and disciplined small-cap active management.

     To be sure, this was the case for domestic small-caps in 2016. Royce Micro-Cap Trust and Royce Value Trust increased more than 20% (and bested their respective benchmarks in the process). These performances were largely rooted in our dogged commitment to disciplined approaches to small-cap stock investing. They support the confidence we have going forward, which is also bolstered by the fact that our analysis of the dynamics in our asset class was sound. We felt validated not only by the high returns for our two domestically oriented portfolios but also that performance took place against the backdrop of a gradually growing economy. Historically, value-led periods have been good for many Royce Funds, and we remain committed to the effort of delivering strong results for our investors in the years to come.

     You have our great thanks and deep appreciation for the commitment you have shown to us and our approaches over the years.


Sincerely,

   
Charles M. Royce   Christopher D. Clark        Francis D. Gannon
Chairman,   Chief Executive Officer and        Co-Chief Investment Officer,
Royce & Associates, LP   Co-Chief Investment Officer,
Royce & Associates, LP
       Royce & Associates, LP
         
January 31, 2017        

4 | This page is not part of the 2016 Annual Report to Stockholders

 

Performance

 
 
NAV Average Annual Total Returns
As of December 31, 2016 (%)
                     
                                           
      1-YR   3-YR   5-YR   10-YR   15-YR   20-YR   25-YR   30-YR   SINCE
INCEPTION
  INCEPTION
DATE
 
Royce Global Value Trust   11.12   0.20   N/A   N/A   N/A   N/A   N/A   N/A   1.05   10/17/13
 
Royce Micro-Cap Trust   21.98   3.70   13.59   6.07   9.22   10.26   N/A   N/A   10.81   12/14/93
 
Royce Value Trust   26.79   5.50   12.70   5.81   8.26   9.81   10.73   10.58   10.55   11/26/86
 

INDEX
                                       
 
Russell 2000 Index   21.31   6.74   14.46   7.07   8.49   8.25   9.69   9.62   N/A   N/A
 
Russell Microcap Index   20.37   5.77   15.59   5.47   8.16   N/A   N/A   N/A   N/A   N/A
 
Russell Global Small Cap Index   11.50   2.98   9.92   4.17   8.87   6.82   N/A   N/A   N/A   N/A
 
1 Not Annualized

Important Performance and Risk Information

All performance information in this Review and Report reflects past performance, is presented on a total return basis, net of the Fund’s investment advisory fee, and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when sold. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.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. Certain immaterial adjustments were made to the net assets of Royce Micro-Cap Trust at 12/31/12, as well as 12/31/14 and of Royce Value Trust at 12/31/16, 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. All indexes referenced are unmanaged and capitalization-weighted. Each index’s returns include net reinvested dividends and/or interest income. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. The Russell 2000 Index is an index of domestic small-cap stocks 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 Russell Global 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, Inc (“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 2016 Annual Report to Stockholders | 5


 
MANAGER’S DISCUSSION
Royce Global Value Trust (RGT)

Chuck Royce
 
FUND PERFORMANCE
Royce Global Value Trust advanced 11.1% on a net asset value (“NAV”) basis and 9.8% on a market price basis compared to a gain of 11.5% for its unleveraged benchmark, the Russell Global Small Cap Index, for the same period. This was a solid absolute result, though it disappointed on a relative basis. U.S. small-caps were very strong in 2016, in contrast to their international cousins. The Fund’s lower exposure to U.S. companies than the index, therefore, was a factor in its slight relative disadvantage for the calendar year. Investors in non-U.S. small-caps generally showed more favor to commodity-based international small-cap companies—oil & gas as well as metals & mining were among the top performers—than they did to the kind of businesses that we seek: small- and mid-cap stocks (those with market caps up to $10 billion) with high returns on invested capital or those with strong fundamentals and/or prospects trading at what Royce believes are attractive valuations.

     During the first half of 2016, the Fund was up 3.9% on an NAV basis and 2.0% based on market price versus a 1.4% gain for the global small-cap index. Both the Fund and its benchmark showed even more life in the third quarter as many stocks bounced back or stabilized following Brexit-bred volatility. RGT was up 6.3% in the third quarter (while increasing 6.9% based on its market price) compared to a gain of 8.3% for the Russell Global Small Cap Index. During the fourth quarter, however, many international small-caps declined, which had a larger impact on RGT. The Fund increased 0.6% based on its NAV (and 0.7% based on market price) in the year’s final quarter compared to a 1.5% advance for the benchmark. A portion of RGT’s second-half lag can be traced to currency effects. The rising U.S. dollar was particularly strong against the British pound, which declined significantly in the wake of the Brexit vote, making things difficult for the Fund’s sizable investments in the U.K.

WHAT WORKED... AND WHAT DIDN’T
Eight of the portfolio’s 10 equity sectors finished 2016 in the black. The most significant contributions came from Materials, Financials, Information Technology, and Industrials, which made a much larger impact than the remaining four contributing sectors. Health Care detracted—it was the only sector in the Russell Global Small Cap with a negative return in 2016—while Telecommunication Services was basically flat. Four industries had a substantial positive impact in 2016: metals & mining (Materials), electronic equipment, instruments & components (Information Technology), capital markets (Financials), and machinery (Industrials). The effect of detracting industries was comparatively modest. Pharmaceuticals (Health Care) detracted most by a sizable margin, followed by technology hardware, storage & peripherals (Information Technology), and oil, gas & consumable fuels (Energy).

     The Fund’s top contributor at the position level was Genworth MI Canada, one of that country’s leading residential mortgage insurance providers. Its stock first began to rebound with consecutive quarters of improved operating results. The recovery of energy prices also helped as about 20% of Genworth’s policies are written in resource-rich Alberta. The company then announced solid results for its fiscal third quarter in November. We reduced our position in 2016. Pan American Silver was part of a group of both precious and industrial metals companies that came back strong in 2016 as commodity prices rose.
 
     The portfolio’s top detractor at the position level was Virbac, a French firm that makes vaccines, antibiotics, and other veterinary medications. Its shares suffered mostly from the negative results of a 2014 FDA investigation of its U.S. plant in St. Louis that were released earlier this year. In December 2016, however, the FDA rescinded the warning letter, leaving the status of Virbac’s U.S. operations where they were at the beginning of the year, which allowed its shares to begin to recover. It was a top-40 holding in the Fund at the end of 2016. Value Partners Group is a Hong Kong-based asset manager that emphasizes value approaches. Subpar short-term performance, net outflows, and a CEO resignation all contributed to investors’ concerns. Because we remain confident in its long-term prospects, particularly in China, as well as in its Chairman, who has assumed CEO responsibilities, we were comfortable holding our stake.

     Relative to the Russell Global Small Cap, the Fund was hurt most by ineffective stock picking in the Industrials sector, most meaningfully in the machinery and commercial services & supplies industries. Stock selection was also an issue in Financials. Conversely, both our overweight and savvy stock picking gave us a relative edge in Materials while stock selection also helped in Information Technology.

         
  Top Contributors to Performance
For 2016 (%)1
     
         
  Genworth MI Canada   0.65  
     
  Pan American Silver   0.63  
     
  CETIP - Mercados Organizados   0.50  
     
  Quaker Chemical   0.46  
     
  Nanometrics   0.44  
     
  1 Includes dividends      
         

         
  Top Detractors from Performance
For 2016 (%)2
     
         
  Virbac   -0.54  
     
  Value Partners Group   -0.46  
     
  Santen Pharmaceutical   -0.40  
     
  Consort Medical   -0.35  
     
  Clarkson   -0.31  
     
  2 Net of dividends      
         

CURRENT POSITIONING AND OUTLOOK
At the end of 2016, the Fund’s largest country weights were the U.S., the U.K., Japan, and Canada. We think the global markets continue to offer terrific potential in a number of sectors and regions to find the kind of underappreciated, fundamentally solid companies that have long been our focus here at Royce. In our view cyclicals both in and outside the U.S. look well-positioned for ongoing leadership. In addition to our usual cyclical tilt, we are looking in some defensive areas such as healthcare. It is very much on a stock-by-stock basis, with a focus on individual companies that combine attractive valuations with strong fundamentals.

6 | 2016 Annual Report to Stockholders

 

PERFORMANCE AND PORTFOLIO REVIEW   SYMBOLS  MARKET PRICE RGT NAV XRGTX

 
Performance
Average Annual Total Return (%) Through 12/31/16
    JUL-DEC 20161   1-YR   3-YR   SINCE INCEPTION (10/17/13)
 
RGT (NAV)   6.99   11.12   0.20   1.05
 
1 Not Annualized                


Market Price Performance History Since Inception (10/17/13)
Cumulative Performance of Investment1

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 and, prior to 12/1/03, on the Nasdaq.


The Morningstar Style Map is the Morningstar Style Box with the center 75% of fund holdings plotted as the Morningstar Ownership Zone. The Morningstar Style Box is designed to reveal a fund’s investment strategy. The Morningstar Ownership Zone provides detail about a portfolio’s investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. Over time, the shape and location of a fund’s ownership zone may vary. See page 61 for additional information.


Top 10 Positions    
% of Net Assets    
     
Kirby Corporation   2.2
 
SEI Investments   2.0
 
SEACOR Holdings   1.4
 
Meitec Corporation   1.4
 
Lazard Cl. A   1.3
 
VZ Holding   1.3
 
Raven Industries   1.3
 
KBR   1.2
 
Virtu Financial Cl. A   1.2
 
Nanometrics   1.1
 


Portfolio Sector Breakdown    
% of Net Assets    
     
Industrials   28.8
 
Financials   18.1
 
Information Technology   17.3
 
Materials   11.4
 
Health Care   10.0
 
Consumer Discretionary   7.2
 
Energy   3.4
 
Consumer Staples   2.8
 
Real Estate   2.5
 
Telecommunication Services   0.2
 
Outstanding Line of Credit, Net of Cash and Cash Equivalents   -1.7
 


Calendar Year Total Returns (%)    
     
YEAR   RGT
 
2016   11.1
 
2015   -3.4
 
2014   -6.2
 


Portfolio Country Breakdown 1,2
% of Net Assets
   
     
 
United States   32.7
 
United Kingdom   13.0
 
Japan   9.7
 
Canada   8.4
 
Germany   4.6
 
France   4.3
 
Switzerland   4.3
 
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   $100 million
 
Number of Holdings   274
 
Turnover Rate   59%
 
Net Asset Value   $9.62
 
Market Price   $8.04
 
Net Leverage1   1.7%
 
Average Market Capitalization2   $1,558 million
 
Weighted Average P/E Ratio3, 4   20.5x
 
Weighted Average P/B Ratio3   2.6x
 
Active Share5   97%
 
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 (10% of portfolio holdings as of 12/31/16).
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, and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the most recent month-end may be obtained at www.roycefunds.com. The market price of the Fund’s shares will fluctuate, so that shares may be worth more or less than their original cost when sold. The Fund invests primarily in securities of small- and mid-cap companies, which may involve considerably more risk than investments in securities of larger-cap companies. The Fund’s broadly diversified portfolio does not ensure a profit or guarantee against loss. From time to time, the Fund may invest a significant portion of its net assets in foreign securities, which may involve political, economic, currency and other risks not encountered in U.S. investments. Regarding the “Top Contributors” and “Top Detractors” tables shown on page 6, 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 2016.

2016 Annual Report to Stockholders | 7

 

    MANAGER’S DISCUSSION
Royce Micro-Cap Trust (RMT)    

Chuck Royce

FUND PERFORMANCE
Royce Micro-Cap Trust (“RMT”) advanced 22.0% on a net asset value (“NAV”) basis and 22.3% on a market price basis in 2016, ahead of both of its unleveraged benchmarks: the small-cap Russell 2000 Index was up 21.3% while the Russell Microcap Index increased 20.4% for the same period. We were very pleased with the Fund’s results on both an absolute and relative basis, particularly in a year in which small-cap stocks held a slight edge over their micro-cap siblings. RMT’s multi-strategy core approach was well-positioned for a market that rewarded factors such as low valuation, liquidity, low volatility, and quality, all of which outperformed within the Russell 2000 and provided some validation for our approach.

      The two halves of 2016 were mirror images of one another. The first was stronger on a relative basis while the second was better on an absolute scale. During the first half of 2016, the Fund was up 5.4% on an NAV basis (and 5.8% on a relative basis) versus a gain of 2.2% for the Russell 2000 and a decline of 1.7% for the Russell Microcap for the same period. In the second half, RMT increased 15.7% on an NAV basis and 15.6% based on market price basis. This compared to respective gains of 18.7% and 22.4% for the small-cap and micro-cap indexes. On an NAV basis, RMT outpaced the Russell Microcap for the one-, 10-, and 15-year periods ended December 31, 2016 while also beating the Russell 2000 for the one-, 15-, 20-year, and since inception (12/14/93) periods. (Returns for the Russell Microcap Index only go back to 2000.) RMT’s average annual NAV total return for the since inception period ended December 31, 2016 was 10.8%.
 
WHAT WORKED... AND WHAT DIDN’T
Each of the portfolio’s 11 equity sectors made a contribution to calendar-year results. The largest positive impact by far came from Information Technology and Industrials, RMT’s two largest sectors, followed by noteworthy net gains from Materials and Financials. Some of the smallest contributions came from those sectors with the smallest weightings: Real Estate, Consumer Staples, Telecommunication Services, and Utilities. At the industry level, the top-contributors by a sizable margin were electronic equipment, instruments & components (Information Technology), metals & mining (Materials), and machinery (Industrials). Detractors made a very modest negative impact, led by software (Information Technology), distributors (Consumer Discretionary), and IT services (Information Technology).

      RMT’s top-contributing position was IES Holdings, which provides electrical contracting and maintenance services to the commercial, industrial, residential, and power line markets. The firm also engages in data communication services, including the installation of fiber optic telecommunications systems. Very healthy earnings and a strong outlook, both of which were boosted by five acquisitions the firm made between mid-2015 and the end of 2016, attracted investors. Top-five position Major Drilling Group International performs contract drilling for companies involved in mining and mineral exploration. In a challenging environment for miners early in 2016, the company was able to increase revenues and margins. Revenue growth continued throughout the year as business conditions, while remaining competitive, began to improve. Newport Corporation is a photonics technology specialist whose shares climbed in February after the company agreed to be acquired by MKS Instruments.
 
As for those holdings that detracted from performance, we held the bulk of our position in ZAIS Group Holdings, an investment manager focused on specialized credit strategies—an asset management segment with what we think is ample long-term potential. Its shares fell with a quarterly loss reported in March and were mostly down through the end of June. A falling stock price in the first half and our confidence in its long-term prospects led us to add shares of Fenix Parts, which recycles and resells original equipment manufacturer automotive parts and products. Consecutive quarterly losses drove investors away before its shares rallied a bit only to fall again when accounting and regulatory issues surfaced. However, we like its core business and were hopeful that the company could resolve these issues in 2017.
 
Relative to the Russell 2000, the Fund derived the bulk of its advantage from savvy stock selection in Health Care, the only sector in the Russell 2000 with a negative return in 2016. Stock picking offered a more modest advantage in Information Technology. Conversely, our underweight in banks and ineffective stock picks caused Financials to lag, as did poor stock selection in Consumer Discretionary.

  Top Contributors to Performance
For 2016 (%)1
     
     
IES Holdings   0.88
 
Major Drilling Group International   0.68
 
Newport Corporation   0.57
 
Era Group   0.47
 
Surmodics   0.47
 
1 Includes dividends    

  Top Detractors from Performance
For 2016 (%)2
     
     
ZAIS Group Holdings Cl. A   -0.71
 
Fenix Parts   -0.52
 
SeaChange International   -0.43
 
Sangamo BioSciences   -0.39
 
Zealand Pharma   -0.37
 
2 Net of dividends    

CURRENT POSITIONING AND OUTLOOK
We are grateful to have been able to deliver such strong absolute and relative results for our investors and firmly believe that we have turned the page on the anomalous 2011-2015 period, in which extraordinary monetary accommodations caused financial markets to behave in odd and unprecedented ways. In our view, we are on the road back to a more historically normal market environment. We think this bodes well for micro-cap and small-cap stocks. In our view cyclicals look well-positioned for ongoing leadership. In addition to our usual cyclical tilt, we are looking in some defensive areas such as healthcare. It is very much on a stock-by-stock basis, with a focus on individual companies that combine attractive valuations with strong fundamentals.

8  |  2016 Annual Report to Stockholders  

 

PERFORMANCE AND PORTFOLIO REVIEW SYMBOLS MARKET PRICE RMT NAV XOTCX


Performance                                
Average Annual Total Return (%) Through 12/31/16                        
    JUL-DEC 20161   1-YR   3-YR   5-YR   10-YR   15-YR   20-YR   SINCE INCEPTION (12/14/93)
RMT (NAV)   15.74   21.98   3.70   13.59   6.07   9.22   10.26   10.81
 
1 Not Annualized                                


Market Price Performance History Since Inception (12/14/93)
Cumulative Performance of Investment1                


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.
   
 

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 61 for additional information.


Top 10 Positions    
% of Net Assets    
     
Era Group   1.4
 
IES Holdings   1.2
 
Seneca Foods   1.1
 
Heritage-Crystal Clean   1.0
 
Major Drilling Group International   1.0
 
Atrion Corporation   1.0
 
Sun Hydraulics   1.0
 
Orbotech   0.9
 
Kadant   0.9
 
Quaker Chemical   0.9
 


Portfolio Sector Breakdown    
% of Net Assets    
     
Information Technology   19.0
 
Industrials   18.4
 
Consumer Discretionary   14.2
 
Health Care   13.4
 
Financials   11.9
 
Materials   6.2
 
Energy   5.7
 
Real Estate   3.7
 
Consumer Staples   2.7
 
Telecommunication Services   0.1
 
Utilities   0.1
 
Miscellaneous   4.7
 
Preferred Stock   0.3
 
Outstanding Line of Credit, Net of Cash and Cash Equivalents   -0.4
 


Calendar Year Total Returns (%)  
     
YEAR   RMT
 
2016   22.0
 
2015   -11.7
 
2014   3.5
 
2013   44.5
 
2012   17.3
 
2011   -7.7
 
2010   28.5
 
2009   46.5
 
2008   -45.5
 
2007   0.6
 
2006   22.5
 
2005   6.8
 
2004   18.7
 
2003   55.5
 
2002   -13.8
 


Portfolio Diagnostics    
     
Fund Net Assets   $364 million
 
Number of Holdings   338
 
Turnover Rate   26%
 
Net Asset Value   $9.63
 
Market Price   $8.16
 
Net Leverage1   0.4%
 
Average Market Capitalization2   $384 million
 
Weighted Average P/B Ratio3   1.7x
 
Active Share4   95%
 
U.S. Investments (% of Net Assets)   81.2%
 
Non-U.S. Investments (% of Net Assets)   19.2%
 
 
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 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, and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the most recent month-end may be obtained at www.roycefunds.com. Certain immaterial adjustments were made to the net assets of Royce Micro-Cap Trust at 12/31/12 and 12/31/14 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 on page 8, 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 2016.

    2016 Annual Report to Stockholders |  9

 

    MANAGER’S DISCUSSION
Royce Value Trust (RVT)    

Chuck Royce

FUND PERFORMANCE
Royce Value Trust Fund advanced 26.8% on a net asset value (“NAV”) basis and 23.5% on a market price basis in 2016, compared to respective increases of 21.3% and 26.5% for its unleveraged small-cap benchmarks, the Russell 2000 and S&P SmallCap 600 Indexes, for the same period. In such a strong year for small-cap stocks, we were pleased with the Fund’s terrific absolute and relative NAV showing. RVT’s multi-themed core approach served investors well during a year in which factors such as low valuation, liquidity, low volatility, and quality all outperformed within the Russell 2000. Calendar-year performance was even more gratifying in light of the questions both active management and value-oriented approaches were facing between 2011 and 2015, which made the year feel very much like a validation for our approach.

     The Fund outperformed during the first half of 2016, gaining 8.2% on an NAV basis and 4.4% based on market price versus respective gains of 2.2% and 6.2% for the Russell 2000 and S&P SmallCap 600. The second half was stronger on an absolute basis but less so on a relative scale. During this period, RVT rose 17.3% based on NAV and 18.3% based on its market price compared to 18.7% for the Russell 2000 and 19.1% for the S&P SmallCap 600. Looking at longer-term periods, we were pleased that RVT outpaced the Russell 2000 for the one-, 20-, 25-, 30-year, and since inception (11/26/86) periods ended December 31, 2016. The Fund’s average annual NAV total return since inception was 10.6%, all under the management of Chuck Royce.
 
WHAT WORKED... AND WHAT DIDN’T
All of the portfolio’s 11 equity sectors finished 2016 with net gains. Industrials led by a considerable margin, followed by a strong contribution from Information Technology that was considerably higher than the meaningfully positive impact of Materials, the Fund’s third-highest contributor. Notable net gains also came from the Consumer Discretionary and Financials sectors. This widespread cyclical strength was consistent with trends in the overall small-cap market. Within Industrials, the best-performing industries were machinery (our largest industry weighting in the sector), commercial services & supplies, and construction & engineering. The portfolio’s top-performing industry, however, came from the Information Technology sector—electronic equipment, instruments & components. Coherent, which manufactures laser diodes and equipment, owned the top spot by position. Its shares skyrocketed in 2016, lifted by a combination of strong profits, a record backlog, and a robust order pipeline. Cognex Corporation is the market leader in machine vision technology that captures and analyzes visual information to automate tasks that previously relied on human eyesight. This technology is a major driver of industrial and process automation. Sales to the auto industry accelerated, its consumer electronics segment proved better than expected, and it gained share among logistics services providers. All of these factors produced an impressive performance for the stock.

      Even in a good year there are a few disappointments. ZAIS Group Holdings is an investment manager focused primarily on structured credits. Recent credit market turmoil has caused investment performance to fall below various “high-water” marks, meaningfully dampening profitability and future growth opportunities. We chose to hold our shares in 2016 in light of its highly discounted valuation. We also chose to hold our position in The Advisory Board. Its shares fell most precipitously during the fall as this specialist in performance improvement software and solutions to the health care and higher education industries reported disappointing fiscal third-quarter revenues. We like its niche business and think its long-term prospects remain promising. We also held on to most of our shares of Zealand Pharma, a Danish firm whose share price decline was mostly driven by the sell-off in its industry. We remain optimistic about its long-term growth potential.
 
Relative results in 2016 were driven by our underweight in the lagging Health Care sector, as well as positive stock selection in the sector. Also aiding relative performance was savvy stock selection in Information Technology. The two largest relative detractors had a similar theme—our underweight in banks caused the Fund to lag in Financials and our underweighting in REITs led to underperformance in the Real Estate sector. The Fund is typically underweight in these interest rate sensitive areas.

  Top Contributors to Performance
For 2016 (%)1
     
     
Coherent   0.95
 
Cognex Corporation   0.60
 
Thor Industries   0.53
 
Quaker Chemical   0.53
 
Newport Corporation   0.50
 
1 Includes dividends    

  Top Detractors from Performance
For 2016 (%)2
     
     
ZAIS Group Holdings Cl. A   -0.42
 
Advisory Board (The)   -0.32
 
Zealand Pharma   -0.29
 
Value Partners Group   -0.22
 
Citadel Capital   -0.18
 
2 Net of dividends    

CURRENT POSITIONING AND OUTLOOK
We are grateful to have been able to deliver such strong absolute and relative NAV results for our investors and firmly believe that we have turned the page on the anomalous 2011-2015 period, in which extraordinary monetary accommodations caused financial markets to behave in odd and unprecedented ways. In our view, we are on the road back to a more historically normal market environment. We think this bodes well for small-cap stocks. In our view cyclicals look well-positioned for ongoing leadership. In addition to our usual cyclical tilt, we are looking in some defensive areas such as healthcare. It is very much on a stock-by-stock basis, with a focus on individual companies that combine attractive valuations with strong fundamentals.

10  |  2016 Annual Report to Stockholders  

 

PERFORMANCE AND PORTFOLIO REVIEW SYMBOLS MARKET PRICE RVT NAV XRVTX


Performance                                  
Average Annual Total Return (%) Through 12/31/16                  
    JUL-DEC 20161   1-YR   3-YR   5-YR   10-YR   15-YR   20-YR   25-YR   30-YR   SINCE INCEPTION (11/26/86)
RVT (NAV)   17.21   26.79   5.50   12.70   5.81   8.26   9.81   10.73   10.58   10.55
 
1 Not Annualized                              


Market Price Performance History Since Inception (11/26/86)
Cumulative Performance of Investment through 12/31/161                


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.
   
 


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 61 for additional information.


Top 10 Positions    
% of Net Assets    
     
HEICO Corporation   1.3
 
Coherent   1.2
 
Quaker Chemical   1.1
 
Cognex Corporation   1.0
 
Ash Grove Cement Cl. B   1.0
 
Copart   0.9
 
E-L Financial   0.9
 
RBC Bearings   0.9
 
FLIR Systems   0.9
 
Sun Hydraulics   0.9
 


Portfolio Sector Breakdown    
% of Net Assets    
     
Industrials   29.2
 
Information Technology   16.8
 
Financials   14.9
 
Consumer Discretionary   10.3
 
Materials   7.3
 
Energy   5.2
 
Health Care   4.2
 
Real Estate   2.8
 
Consumer Staples   2.2
 
Telecommunication Services   0.5
 
Utilities   0.1
 
Miscellaneous   4.3
 
Cash and Cash Equivalents, Net of Outstanding Line of Credit   2.2
 


Calendar Year Total Returns (%)  
     
YEAR   RVT
 
2016   26.8
 
2015   -8.1
 
2014   0.8
 
2013   34.1
 
2012   15.4
 
2011   -10.1
 
2010   30.3
 
2009   44.6
 
2008   -45.6
 
2007   5.0
 
2006   19.5
 
2005   8.4
 
2004   21.4
 
2003   40.8
 
2002   -15.6
 


Portfolio Diagnostics    
     
Fund Net Assets   $1,296 million
 
Number of Holdings   424
 
Turnover Rate   28%
 
Net Asset Value   $15.84
 
Market Price   $13.39
 
Average Market Capitalization1   $1,477 million
 
Weighted Average P/E Ratio2,3   20.3x
 
Weighted Average P/B Ratio2   2.1x
 
Active Share4   89%
 
U.S. Investments (% of Net Assets)   82.6%
 
Non-U.S. Investments (% of Net Assets)   15.2%
 
 
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 12/31/16).
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 Risk Information

All performance information reflects past performance, is presented on a total return basis, net of the Fund’s investment advisory fee, and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the most recent month-end may be obtained at www.roycefunds.com. Certain immaterial adjustments were made to the net assets of Royce Value Trust at 12/31/16 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. Regarding the “Top Contributors” and “Top Detractors” tables shown on page 10, 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 2015.

    2016 Annual Report to Stockholders |  11

History Since Inception

The following table details the share accumulations by an initial investor in the Funds who reinvested all distributions and participated fully in primary subscriptions for each of the rights offerings. Full participation in distribution reinvestments and rights offerings can maximize the returns available to a long-term investor. This table should be read in conjunction with the Performance and Portfolio Reviews of the Funds.

HISTORY         AMOUNT INVESTED     PURCHASE PRICE1       SHARES       NAV VALUE2       MARKET VALUE2
 
Royce 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                
 
12/31/16       $ 8,975             1,051     $ 10,111     $ 8,446
 
                                         
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                
 
12/31/16       $ 8,900             9,625     $ 92,689     $ 78,540
 
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.

12 | 2016 Annual Report to Stockholders


HISTORY           AMOUNT INVESTED       PURCHASE PRICE1       SHARES       NAV VALUE2       MARKET VALUE2
 
Royce Value Trust                                      
11/26/86     Initial Purchase   $ 10,000     $ 10.000       1,000     $ 9,280     $ 10,000
 
10/15/87     Distribution $0.30             7.000       42                
 
12/31/87     Distribution $0.22             7.125       32       8,578       7,250
 
12/27/88     Distribution $0.51             8.625       63       10,529       9,238
 
9/22/89     Rights Offering     405       9.000       45                
 
12/29/89     Distribution $0.52             9.125       67       12,942       11,866
 
9/24/90     Rights Offering     457       7.375       62                
 
12/31/90     Distribution $0.32             8.000       52       11,713       11,074
 
9/23/91     Rights Offering     638       9.375       68                
 
12/31/91     Distribution $0.61             10.625       82       17,919       15,697
 
9/25/92     Rights Offering     825       11.000       75                
 
12/31/92     Distribution $0.90             12.500       114       21,999       20,874
 
9/27/93     Rights Offering     1,469       13.000       113                
 
12/31/93     Distribution $1.15             13.000       160       26,603       25,428
 
10/28/94     Rights Offering     1,103       11.250       98                
 
12/19/94     Distribution $1.05             11.375       191       27,939       24,905
 
11/3/95     Rights Offering     1,425       12.500       114                
 
12/7/95     Distribution $1.29             12.125       253       35,676       31,243
 
12/6/96     Distribution $1.15             12.250       247       41,213       36,335
 
1997     Annual distribution total $1.21             15.374       230       52,556       46,814
 
1998     Annual distribution total $1.54             14.311       347       54,313       47,506
 
1999     Annual distribution total $1.37             12.616       391       60,653       50,239
 
2000     Annual distribution total $1.48             13.972       424       70,711       61,648
 
2001     Annual distribution total $1.49             15.072       437       81,478       73,994
 
2002     Annual distribution total $1.51             14.903       494       68,770       68,927
 
1/28/03     Rights Offering     5,600       10.770       520                
 
2003     Annual distribution total $1.30             14.582       516       106,216       107,339
 
2004     Annual distribution total $1.55             17.604       568       128,955       139,094
 
2005     Annual distribution total $1.61             18.739       604       139,808       148,773
 
2006     Annual distribution total $1.78             19.696       693       167,063       179,945
 
2007     Annual distribution total $1.85             19.687       787       175,469       165,158
 
2008     Annual distribution total $1.723             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                
 
12/31/16         $ 21,922               18,533     $ 293,880     $ 248,425
 

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.

2016 Annual Report to Stockholders | 13


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, 2016.
 
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, 2016. 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.).

14 | 2016 Annual Report to Stockholders

Royce Global Value Trust   December 31, 2016

 
Schedule of Investments
Common Stocks – 101.7%
             
    SHARES       VALUE
 
 
AUSTRALIA 2.2%            

ALS

  88,176     $ 383,315

Austal

  95,500       119,804

Cochlear

  5,000       441,394

Imdex 1

  130,600       54,101

IPH

  140,000       516,390

NetComm Wireless 1

  26,700       41,279

Seeing Machines 1

  1,676,800       87,782

Spotless Group Holdings

  500,000       356,515

TFS Corporation

  137,045       164,100
 
Total (Cost $2,157,377)           2,164,680
 
 
AUSTRIA 0.9%            

Mayr-Melnhof Karton

  8,000       847,939

UBM Development

  1,800       58,731
 
Total (Cost $994,664)           906,670
 
 
BELGIUM 0.1%            

Barco

  1,100       92,599
 
Total (Cost $91,797)           92,599
 
 
BERMUDA 1.3%            

Lazard Cl. A

  32,600       1,339,534
 
Total (Cost $1,010,334)           1,339,534
 
 
BRAZIL 1.8%            

Brasil Brokers Participacoes 1

  205,000       100,087

CETIP - Mercados Organizados

  35,000       478,665

Minerva 1

  52,500       195,952

OdontoPrev

  200,000       774,704

T4F Entretenimento

  61,100       105,090

TOTVS

  23,000       169,042
 
Total (Cost $1,884,557)           1,823,540
 
 
CANADA 8.4%            

Agnico Eagle Mines 2

  5,000       210,000

AGT Food and Ingredients

  5,200       141,904

Altus Group

  5,900       136,047

Cameco Corporation 2

  24,500       256,515

Canaccord Genuity Group 1

  92,000       326,846

Canfor Corporation 1

  18,900       214,950

Computer Modelling Group

  108,000       732,790

Dream Global Real Estate Investment Trust

  14,700       103,463

Dundee Corporation Cl. A 1

  80,000       354,523

E-L Financial

  1,200       652,441

Exco Technologies

  23,500       188,679

FirstService Corporation

  10,300       489,044

Franco-Nevada Corporation 2,3

  10,200       609,552

Genworth MI Canada

  13,000       325,908

Gluskin Sheff + Associates

  23,000       298,752

Magellan Aerospace

  19,400       259,794

Major Drilling Group International 1

  110,500       577,746

Morneau Shepell

  35,000       500,242

Pan American Silver 2

  31,800       479,226

Questor Technology 1

  90,600       47,910

RDM Corporation

  30,400       108,681

Sandstorm Gold 1

  29,400       114,660

Solium Capital 1

  24,800       155,895

Sprott

  280,600       524,564

Western Forest Products

  123,100       173,283

Winpak

  13,500       456,686
 
Total (Cost $10,238,840)           8,440,101
 
 
CHINA 0.9%            

China Communications Services

  134,500       85,598

Haichang Ocean Park Holdings 1

  321,000       75,586

TravelSky Technology

  310,000       649,062

Xtep International Holdings

  191,600       80,093
 
Total (Cost $655,485)           890,339
 
 
CYPRUS 0.3%            

Globaltrans Investment GDR

  42,000       265,818
 
Total (Cost $212,014)           265,818
 
 
DENMARK 2.0%            

Chr. Hansen Holding

  9,000       497,840

Coloplast Cl. B

  7,000       471,046

SimCorp

  14,000       681,612

Zealand Pharma 1

  24,000       361,360
 
Total (Cost $1,846,468)           2,011,858
 
 
FINLAND 0.1%            

BasWare 1

  1,600       61,114
 
Total (Cost $80,466)           61,114
 
 
FRANCE 4.3%            

Chargeurs

  4,400       73,894

Groupe Crit

  700       50,095

HighCo

  16,200       109,621

Interparfums

  15,000       432,539

Manutan International

  900       66,025

Neurones

  22,250       524,266

Rothschild & Co

  33,000       892,439

Thermador Groupe

  10,500       922,863

Vetoquinol

  10,000       479,013

Virbac 1

  4,500       790,977
 
Total (Cost $3,996,446)           4,341,732
 
 
GEORGIA 0.1%            

BGEO Group

  2,200       81,052
 
Total (Cost $63,649)           81,052
 
 
GERMANY 4.6%            

ADLER Real Estate 1

  9,400       143,323

Allgeier

  3,700       67,090

Bertrandt

  2,500       254,107

CANCOM

  3,700       174,573

Carl Zeiss Meditec

  17,500       644,746

CompuGroup Medical

  12,500       512,412

Fielmann

  10,000       659,347

HolidayCheck Group 1

  25,100       62,009

KWS Saat

  2,500       741,903

MorphoSys 1

  6,000       307,301

msg life 1

  22,100       67,409

mutares

  5,000       60,074

PNE Wind

  56,600       129,909

STRATEC Biomedical

  15,000       722,193

VIB Vermoegen

  4,900       101,329
 
Total (Cost $4,609,813)           4,647,725
 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS   2016 Annual Report to Stockholders | 15

Royce Global Value Trust

 
Schedule of Investments (continued)
               
      SHARES       VALUE
 
               
GREECE 0.2%              

Aegean Marine Petroleum Network

    5,000     $ 50,750

Hellenic Exchanges - Athens Stock Exchange

    28,000       144,119
 
Total (Cost $184,327)             194,869
 
 
HONG KONG 2.1%              

Anxin-China Holdings 1,4

    2,500,000       9,349

China Metal International Holdings

    430,000       135,545

First Pacific

    180,000       125,721

HKBN

    126,000       137,857

I.T

    365,800       145,323

Oriental Watch Holdings

    465,900       89,778

Pico Far East Holdings

    470,500       144,244

Television Broadcasts

    54,000       177,557

Value Partners Group

    1,325,000       1,054,025

VST Holdings

    232,400       81,231
 
Total (Cost $2,646,499)             2,100,630
 
 
INDIA 1.6%              

Bajaj Finance

    77,500       963,017

IIFL Holdings

    18,500       70,558

Kewal Kiran Clothing

    6,500       170,393

Quess Corporation 1

    7,200       69,481

SH Kelkar & Company

    72,000       326,883
 
Total (Cost $1,290,842)             1,600,332
 
 
INDONESIA 0.6%              

Selamat Sempurna

    8,000,000       580,455
 
Total (Cost $716,411)             580,455
 
 
IRELAND 0.7%              

Ardmore Shipping 2

    12,300       91,020

Irish Continental Group

    43,700       206,824

Irish Residential Properties REIT

    148,481       182,800

Keywords Studios

    37,500       244,408
 
Total (Cost $629,762)             725,052
 
 
ISRAEL 0.3%              

Nova Measuring Instruments 1,2

    12,400       162,936

Sapiens International

    5,300       76,002

Sarine Technologies

    86,800       107,821
 
Total (Cost $304,789)             346,759
 
 
ITALY 0.8%              

Banca Sistema

    72,800       168,493

DiaSorin

    11,000       651,183
 
Total (Cost $697,808)             819,676
 
 
JAPAN 9.7%              

Ai Holdings

    27,500       546,017

BML

    2,600       61,867

C. Uyemura & Co.

    1,300       56,632

EM Systems

    4,500       61,855

en-japan

    3,100       55,247

GCA

    8,900       62,487

G-Tekt

    3,100       59,979

Horiba

    16,000       738,921

Inabata & Co.

    6,500       71,471

Itochu Techno-Solutions

    2,300       59,738

Kakaku.com

    3,200       52,907

Kenedix

    16,900       59,954

Kenko Mayonnaise

    2,300       64,891

Kintetsu World Express

    4,000       55,339

Leopalace21

    10,600       58,496

Mandom Corporation

    1,600       68,892

Maruwa Unyu Kikan

    1,900       46,949

Meitec Corporation

    36,600       1,398,814

Miraca Holdings

    1,400       62,703

MISUMI Group

    50,800       833,715

Nabtesco

    2,400       55,717

Nifco

    1,300       68,427

Nihon Kohden

    27,500       606,863

NS Solutions

    3,800       68,173

Obara Group

    1,300       57,888

Open House

    2,900       68,882

Outsourcing

    2,200       68,404

Pressance

    3,700       45,881

Relo Group

    5,900       842,512

Ryobi

    16,100       63,085

Sangetsu

    3,600       62,299

Santen Pharmaceutical

    80,000       976,999

Shimano

    3,500       547,831

SPARX Group

    55,100       106,752

Sugi Holdings

    6,000       284,313

Sun Frontier Fudousan

    7,300       64,216

Takara Leben

    9,400       54,679

Tokai Corporation

    1,800       61,251

Tokai Tokyo Financial Holdings

    11,000       58,355

Trancom

    1,200       58,641

USS

    62,500       993,607
 
Total (Cost $8,526,307)             9,691,649
 
 
MEXICO 0.4%              

Bolsa Mexicana de Valores

    250,000       328,756

Rassini

    23,400       88,037
 
Total (Cost $559,325)             416,793
 
 
NETHERLANDS 0.1%              

Constellium Cl. A 1

    15,600       92,040
 
Total (Cost $77,927)             92,040
 
 
NEW ZEALAND 0.7%              

Fisher & Paykel Healthcare

    100,891       595,472

New Zealand Refining

    43,100       77,809
 
Total (Cost $643,367)             673,281
 
 
NORWAY 1.1%              

Nordic Semiconductor 1

    28,300       115,044

NRC Group 1

    8,800       69,307

TGS-NOPEC Geophysical

    42,200       935,894
 
Total (Cost $968,480)             1,120,245
 
 
PHILIPPINES 0.2%              

Integrated Micro-Electronics

    756,900       92,331

Universal Robina

    22,500       73,884
 
Total (Cost $155,675)             166,215
 
 
POLAND 0.3%              

Warsaw Stock Exchange

    33,000       314,873
 
Total (Cost $459,764)             314,873
 

16 | 2016 Annual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2016

 
Schedule of Investments (continued)            
             
    SHARES       VALUE
 
             
SINGAPORE 1.3%            

ARA Asset Management

  600,000     $ 705,639

CSE Global

  379,000       119,085

XP Power

  25,000       535,298
 
Total (Cost $1,166,436)           1,360,022
 
 
SOUTH AFRICA 0.7%            

Coronation Fund Managers

  59,000       301,383

JSE

  15,000       179,366

Net 1 UEPS Technologies 1

  10,500       120,540

Raubex Group

  49,000       87,671
 
Total (Cost $799,668)           688,960
 
 
SOUTH KOREA 0.5%            

Handsome 1

  4,400       126,996

Koh Young Technology

  4,200       156,970

KT Skylife

  6,800       96,910

Modetour Network 1

  6,300       150,919
 
Total (Cost $558,478)           531,795
 
 
SPAIN 0.1%            

Atento 1,2

  16,400       124,640
 
Total (Cost $181,133)           124,640
 
 
SWEDEN 2.1%            

AcadeMedia 1

  18,200       99,657

Addtech Cl. B

  53,960       843,812

Bravida Holding

  100,000       605,362

Byggmax Group

  16,600       114,630

Dustin Group

  27,500       192,951

Hoist Finance

  8,000       74,317

Knowit

  6,200       61,069

Proact IT Group

  7,600       121,784
 
Total (Cost $2,060,081)           2,113,582
 
 
SWITZERLAND 4.3%            

Burckhardt Compression Holding

  4,000       1,051,796

dormakaba Holding

  800       594,793

LEM Holding

  700       654,463

Partners Group Holding

  1,600       748,809

VZ Holding

  4,300       1,290,092
 
Total (Cost $3,696,122)           4,339,953
 
 
TAIWAN 1.1%            

Chipbond Technology

  50,700       71,996

Egis Technology 1

  11,600       94,978

Flytech Technology

  32,780       95,483

Gourmet Master

  8,500       64,445

Posiflex Technology

  12,804       70,133

Realtek Semiconductor

  28,800       90,559

Shih Her Technologies

  85,600       79,131

Sitronix Technology

  32,100       101,724

Sporton International

  26,997       142,744

Taiwan Paiho

  38,700       113,931

TCI

  26,800       136,103
 

Total (Cost $1,162,767)

          1,061,227
 
             
TURKEY 0.1%            

Tat Gida Sanayi

  74,700       121,245
 
Total (Cost $148,678)           121,245
 
 
UNITED KINGDOM 13.0%            

Abcam

  30,000       283,379

Ashmore Group

  274,000       956,076

AVEVA Group

  17,500       403,291

Avon Rubber

  8,700       111,454

Berendsen

  50,000       534,116

BrainJuicer Group

  9,400       63,686

Character Group

  11,400       71,657

Clarkson

  41,300       1,105,920

Computacenter

  15,600       152,921

Connect Group

  68,500       128,828

Consort Medical

  64,800       845,439

Conviviality

  75,500       200,051

Diploma

  30,000       384,035

dotdigital group

  206,200       146,117

Elementis

  175,000       596,748

Epwin Group

  47,500       59,794

Equiniti Group

  200,000       481,047

Exova Group

  175,000       410,624

FDM Group Holdings

  30,000       208,818

Ferroglobe

  41,100       445,113

Ferroglobe (Warranty Insurance Trust) 1,4

  41,100       0

Finsbury Food Group

  76,000       112,377

Hilton Food Group

  24,800       189,943

Inspired Energy

  515,300       87,341

ITE Group

  325,000       616,567

Jupiter Fund Management

  36,000       196,172

Micro Focus International

  6,100       163,644

Norcros

  64,360       142,304

Pendragon

  258,000       99,053

Polypipe Group

  60,000       239,163

Rank Group

  31,500       75,673

Real Estate Investors

  99,300       68,005

Rotork

  160,000       473,134

Spirax-Sarco Engineering

  18,000       924,418

Stallergenes Greer 1

  10,800       351,022

Trifast

  29,000       73,303

Vertu Motors

  164,300       88,059

Victrex

  40,000       948,070

Xaar

  115,000       564,789
 
Total (Cost $15,103,056)           13,002,151
 
 
UNITED STATES 32.7%            

Air Lease Cl. A

  30,700       1,053,931

Brooks Automation 2

  18,100       308,967

Century Casinos 1

  21,400       176,122

CIRCOR International

  12,800       830,464

Cognex Corporation

  17,100       1,087,902

Coherent 1

  5,000       686,925

Commercial Metals

  42,000       914,760

Copart 1

  18,600       1,030,626

Diebold Nixdorf 2

  28,800       724,320

Diodes 1

  20,500       526,235

DST Systems

  5,800       621,470

EnerSys 2,3

  11,000       859,100

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS   2016 Annual Report to Stockholders | 17

Royce Global Value Trust   December 31, 2016

 
Schedule of Investments (continued)              
               
    SHARES       VALUE  
 
               
UNITED STATES (continued)              

Expeditors International of Washington 2

  13,300     $ 704,368  

FLIR Systems 2

  14,100       510,279  

Greif Cl. A 2

  8,700       446,397  

Innospec 2,3

  12,457       853,304  

Kadant

  7,800       477,360  

KBR 2,3

  73,400       1,225,046  

Kirby Corporation 1,2,3

  32,900       2,187,850  

Lindsay Corporation

  13,700       1,022,157  

Littelfuse

  5,000       758,850  

ManpowerGroup

  11,000       977,570  

MBIA 1

  80,300       859,210  

Nanometrics 1,2,3

  44,500       1,115,170  

National Instruments 2

  19,000       585,580  

Oaktree Capital Group LLC Cl. A

  10,400       390,000  

Popular

  13,100       574,042  

Quaker Chemical 2

  8,400       1,074,696  

Raven Industries

  50,000       1,260,000  

Rogers Corporation 1,2

  6,000       460,860  

Schnitzer Steel Industries Cl. A 2

  19,100       490,870  

SEACOR Holdings 1

  20,200       1,439,856  

SEI Investments 2

  40,600       2,004,016  

Sensient Technologies 2,3

  9,500       746,510  

Standard Motor Products

  11,200       596,064  

Sun Hydraulics 2

  15,139       605,106  

Tennant Company 2

  11,600       825,920  

Virtu Financial Cl. A

  74,300       1,185,085  

World Fuel Services

  12,000       550,920  
 
Total (Cost $27,774,093)           32,747,908  
 
 
TOTAL COMMON STOCKS              
 
(Cost $98,353,705)           102,001,114  
 
 
REPURCHASE AGREEMENT 6.8%              
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value $6,790,023 (collateralized by obligations of various U.S. Government Agencies, 2.25% due 11/15/24, valued at $6,927,235)
 
(Cost $6,790,000)           6,790,000  
 
 
TOTAL INVESTMENTS 108.5%              
 
(Cost $105,143,705)           108,791,114  
 
               
LIABILITIES LESS CASH AND OTHER ASSETS (8.5)%           (8,563,327 )
             
               
 
NET ASSETS 100.0%         $ 100,227,787  
 
               

 
New additions in 2016.
1 Non-income producing.
2
All or a portion of these securities were pledged as collateral in connection with the revolving credit agreement at December 31, 2016. Total market value of pledged securities at December 31, 2016, was $13,345,249.
3
At December 31, 2016, a portion of these securities were rehypothecated in connection with the Fund’s revolving credit agreement in the aggregate amount of $5,535,180.
4
Securities for which market quotations are not readily available represent 0.0% of net assets. These securities have been valued at their fair value under procedures approved by the Fund’s Board of Directors. These securities are defined as Level 3 securities due to the use of significant unobservable inputs in the determination of fair value. See Notes to Financial Statements.
   
 
Securities of Global/International Funds are categorized by the country of their headquarters, with the exception of exchange-traded funds.
   
 
Bold indicates the Fund’s 20 largest equity holdings in terms of December 31, 2016, market value.
   
 
TAX INFORMATION: The cost of total investments for Federal income tax purposes was $105,661,885. At December 31, 2016, net unrealized appreciation for all securities was $3,129,229, consisting of aggregate gross unrealized appreciation of $12,156,709 and aggregate gross unrealized depreciation of $9,027,480. The primary causes of the differences between book and tax basis cost are the timing of the recognition of losses on securities sold, investments in publicly traded partnerships and mark-to-market of Passive Foreign Investment Companies.
 

18 | 2016 Annual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

Royce Global Value Trust   December 31, 2016
     
 
Statement of Assets and Liabilities

ASSETS:          
Investments at value     $ 102,001,114  
 
Repurchase agreements (at cost and value)       6,790,000  
 
Cash and foreign currency       199,158  
 
Receivable for investments sold       191,757  
 
Receivable for dividends and interest       182,620  
 
Prepaid expenses and other assets       32,564  
 
Total Assets       109,397,213  
 
LIABILITIES:          
Revolving credit agreement       8,000,000  
 
Payable for investments purchased       920,079  
 
Payable for investment advisory fee       105,686  
 
Payable for directors’ fees       7,170  
 
Payable for interest expense       1,299  
 
Accrued expenses       65,575  
 
Deferred capital gains tax       69,617  
 
Total Liabilities       9,169,426  
 
Net Assets     $ 100,227,787  
 
ANALYSIS OF NET ASSETS:          
Paid-in capital - $0.001 par value per share; 10,415,421 shares outstanding (150,000,000 shares authorized)     $ 117,477,118  
 
Undistributed net investment income (loss)       (672,740 )
 
Accumulated net realized gain (loss) on investments and foreign currency       (20,145,698 )
 
Net unrealized appreciation (depreciation) on investments and foreign currency       3,569,107  
 
Net Assets (net asset value per share - $9.62)     $ 100,227,787  
 
Investments at identified cost     $ 98,353,705  
 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS   2016 Annual Report to Stockholders | 19

Royce Global Value Trust
 
 
Statement of Changes in Net Assets

      YEAR ENDED 12/31/16     YEAR ENDED 12/31/15
 
                     
INVESTMENT OPERATIONS:                    
Net investment income (loss)     $ 651,129       $ 985,324  
 
Net realized gain (loss) on investments and foreign currency       (1,449,508 )       (11,820,601 )
 
Net change in unrealized appreciation (depreciation) on investments and foreign currency       10,740,946         7,399,963  
 
Net increase (decrease) in net assets from investment operations       9,942,567         (3,435,314 )
 
DISTRIBUTIONS:                    
Net investment income       (1,435,789 )       (1,029,597 )
 
Net realized gain on investments and foreign currency                
 
Return of capital       (12,497 )        
 
Total distributions       (1,448,286 )       (1,029,597 )
 
CAPITAL STOCK TRANSACTIONS:                    
Reinvestment of distributions       559,946         353,733  
 
Total capital stock transactions       559,946         353,733  
 
Net Increase (Decrease) In Net Assets       9,054,227         (4,111,178 )
 
NET ASSETS:                    
 
Beginning of year       91,173,560         95,284,738  
 
End of year (including undistributed net investment income (loss) of $(672,740) at 12/31/16 and $(224,615) at 12/31/15)     $ 100,227,787       $ 91,173,560  
 

20 | 2016 Annual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

Royce Global Value Trust   Year Ended December 31, 2016
     
 
Statement of Operations
     

INVESTMENT INCOME:          
INCOME:          
Dividends     $ 2,444,670  
 
Foreign withholding tax       (180,561 )
 
Interest       1,406  
 
Rehypothecation income       2,462  
 
Total income       2,267,977  
 
EXPENSES:          
 
Investment advisory fees       1,180,559  
 
Interest expense       137,802  
 
Custody and transfer agent fees       101,314  
 
Stockholder reports       68,472  
 
Professional fees       37,193  
 
Directors’ fees       27,769  
 
Administrative and office facilities       23,307  
 
Other expenses       40,473  
 
Total expenses       1,616,889  
 
Compensating balance credits       (41 )
 
Net expenses       1,616,848  
 
Net investment income (loss)       651,129  
 
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:          
NET REALIZED GAIN (LOSS):          
 
Investments       (1,409,168 )
 
Foreign currency transactions       (40,340 )
 
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION):          
 
Investments and foreign currency translations       10,791,065  
 
Other assets and liabilities denominated in foreign currency       (50,119 )
 
Net realized and unrealized gain (loss) on investments and foreign currency       9,291,438  
 
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS     $ 9,942,567  
 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS   2016 Annual Report to Stockholders | 21

Royce Global Value Trust   Year Ended December 31, 2016
     
 
Statement of Cash Flows

CASH FLOWS FROM OPERATING ACTIVITIES:          
Net increase (decrease) in net assets from investment operations     $ 9,942,567  
 
Adjustments to reconcile net increase (decrease) in net assets from investment operations to net cash provided by operating activities:          
 

Purchases of long-term investments

      (57,799,439 )
 

Proceeds from sales and maturities of long-term investments

      63,325,760  
 

Net purchases, sales and maturities of short-term investments

      (5,087,000 )
 

Net (increase) decrease in dividends and interest receivable and other assets

      (11,777 )
 

Net increase (decrease) in interest expense payable, accrued expenses and other liabilities

      54,782  
 

Net change in unrealized appreciation (depreciation) on investments

      (10,791,065 )
 

Net realized gain (loss) on investments and foreign currency

      1,449,508  
 
Net cash provided by operating activities       1,083,336  
 
CASH FLOWS FROM FINANCING ACTIVITIES:          
Net increase (decrease) in revolving credit agreement       -  
 
Distributions       (1,448,286 )
 
Reinvestment of distributions       559,946  
 
Net cash used for financing activities       (888,340 )
 
INCREASE (DECREASE) IN CASH:       194,996  
 
Cash and foreign currency at beginning of year       4,162  
 
Cash and foreign currency at end of year     $ 199,158  
 

22 | 2016 Annual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

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

  YEARS ENDED     PERIOD ENDED
             
    12/31/16     12/31/15     12/31/14     12/31/131
 
Net Asset Value, Beginning of Period   $ 8.81       $ 9.25       $ 10.05       $ 9.78  
 
INVESTMENT OPERATIONS:                                      
Net investment income (loss)     0.06         0.10         0.13         (0.00 )
 
Net realized and unrealized gain (loss) on investments and foreign currency     0.90         (0.43 )       (0.77 )       0.27  
 
Net increase (decrease) in net assets from investment operations     0.96         (0.33 )       (0.64 )       0.27  
 
DISTRIBUTIONS:                                      
Net investment income     (0.14 )       (0.10 )       (0.15 )        
 
Net realized gain on investments and foreign currency                              
 
Total distributions     (0.14 )       (0.10 )       (0.15 )        
 
CAPITAL STOCK TRANSACTIONS:                                      
Effect of reinvestment of distributions by Common Stockholders     (0.01 )       (0.01 )       (0.01 )        
 
Total capital stock transactions     (0.01 )       (0.01 )       (0.01 )        
 
Net Asset Value, End of Period   $ 9.62       $ 8.81       $ 9.25       $ 10.05  
 
Market Value, End of Period   $ 8.04       $ 7.45       $ 8.04       $ 8.89  
 
TOTAL RETURN:2                                      
Net Asset Value     11.12 %       (3.44 )%       (6.23 )%       2.76 %3
Market Value     9.77 %       (6.06 )%       (7.86 )%       (0.95 )%3
 
RATIOS BASED ON AVERAGE NET ASSETS:                                      
Investment advisory fee expense     1.25 %       1.25 %       1.25 %       1.25 %4
 
Other operating expenses     0.46 %       0.43 %       0.24 %       0.37 %4
 
Total expenses (net)     1.71 %       1.68 %       1.49 %       1.62 %4
 
Expenses excluding interest expense     1.57 %       1.58 %       1.49 %       1.62 %4
 
Expenses prior to balance credits     1.71 %       1.68 %       1.49 %       1.62 %4
 
Net investment income (loss)     0.69 %       1.03 %       1.30 %       (0.13 )%4
 
SUPPLEMENTAL DATA:                                      
Net Assets End of Period (in thousands)   $ 100,228       $ 91,174       $ 95,285       $ 102,684  
 
Portfolio Turnover Rate     59 %       65 %       43 %       7 %
 
REVOLVING CREDIT AGREEMENT:                                      
Asset coverage     1353 %       1240 %                    
 
Asset coverage per $1,000     13,528         12,397                      
 
1 The Fund commenced operations on October 18, 2013.
2
The Market Value Total Return is calculated assuming a purchase of Common Stock on the opening of the first business day and a sale on the closing of the last business day of each period. Dividends and distributions are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund’s Distribution Reinvestment and Cash Purchase Plan. Net Asset Value Total Return is calculated on the same basis, except that the Fund’s net asset value is used on the purchase and sale dates instead of market value.
3 Not annualized
4 Annualized

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS   2016 Annual Report to Stockholders | 23

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”.


VALUATION OF INVESTMENTS:

Securities are valued as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq’s Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their highest bid price. Other over-the-counter securities for which market quotations are readily available are valued at their highest bid price, except in the case of some bonds and other fixed income securities which may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. The Fund values its non-U.S. dollar denominated securities in U.S. dollars daily at the prevailing foreign currency exchange rates as quoted by a major bank. Securities for which market quotations are not readily available are valued at their fair value in accordance with the provisions of the 1940 Act, under procedures approved by the Fund’s Board of Directors, and are reported as Level 3 securities. As a general principle, the fair value of a security is the amount which the Fund might reasonably expect to receive for the security upon its current sale. However, in light of the judgment involved in fair valuations, there can be no assurance that a fair value assigned to a particular security will be the amount which the Fund might be able to receive upon its current sale. In addition, if, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. The Fund uses an independent pricing service to provide fair value estimates for relevant non-U.S. equity securities on days when the U.S. market volatility exceeds a certain threshold. This pricing service uses proprietary correlations it has developed between the movement of prices of non-U.S. equity securities and indices of U.S.-traded securities, futures contracts and other indications to estimate the fair value of relevant non-U.S. securities. When fair value pricing is employed, the prices of securities used by the Fund may differ from quoted or published prices for the same security. Investments in money market funds are valued at net asset value per share.

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

    Level 1 quoted prices in active markets for identical securities.
    Level 2
other significant observable inputs (including quoted prices for similar securities, foreign securities that may be fair valued and repurchase agreements). The table below includes all Level 2 securities. Any Level 2 securities with values based on quoted prices for similar securities would be noted in the Schedule of Investments.
    Level 3
significant unobservable inputs (including last trade price before trading was suspended, or at a discount thereto for lack of marketability or otherwise, market price information regarding other securities, information received from the company and/or published documents, including SEC filings and financial statements, or other publicly available information).

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used to value the Fund’s investments as of December 31, 2016. 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   $ 44,107,378     $ 57,884,387     $ 9,349     $ 102,001,114
 
Cash Equivalents           6,790,000             6,790,000
 

Level 3 Reconciliation:                                
                        REALIZED AND UNREALIZED        
        BALANCE AS OF 12/31/15       PURCHASES       GAIN (LOSS)1       BALANCE AS OF 12/31/16
 
Common Stocks       $18,710       $0       $(9,361)       $9,349
 
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.

24 | 2016 Annual Report to Stockholders

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, 2016 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, including investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.


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 is subject to a tax imposed on short-term capital gains on securities of issuers domiciled in certain countries. The Fund records an estimated deferred tax liability for 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, and accounted for as a reduction in the market value of the security.


INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME:

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


EXPENSES:

The Fund incurs direct and indirect expenses. Expenses directly attributable to the Fund are charged to the Fund’s operations, while expenses applicable to more than one of the Royce Funds are allocated equitably. Certain personnel, occupancy costs and other administrative expenses related to the Funds are allocated by Royce & Associates (“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 70,522 and 48,927 shares of Common Stock as reinvestment of distributions for the years ended December 31, 2016 and December 31, 2015, respectively.


2016 Annual Report to Stockholders | 25

Royce Global Value Trust
 
Notes to Financial Statements (continued)

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 credit agreement. The credit agreement has a 360-day rolling term that resets daily; however, if the Fund exceeds certain net asset value triggers, the credit agreement may convert to a 60-day rolling term that resets daily. The Fund is required to pledge portfolio securities as collateral in an amount up to two times the loan balance outstanding or as otherwise required by applicable regulatory standards and has granted a security interest in the securities pledged to, and in favor of, BNPPI as security for the loan balance outstanding. If the Fund fails to meet certain requirements, or maintain other financial covenants required under 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. 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.

As of December 31, 2016, the Fund has outstanding borrowings of $8,000,000. During the year ended December 31, 2016, the Fund borrowed an average daily balance of $8,000,000 at a weighted average borrowing cost of 1.69%. The maximum amount outstanding during the year ended December 31, 2016 was $8,000,000. As of December 31, 2016, the aggregate value of rehypothecated securities was $5,535,180. During the year ended December 31, 2016, the Fund earned $2,462 in fees from rehypothecated securities.


Investment Advisory Agreement:

The Investment Advisory Agreement between Royce and the Fund provides for fees to be paid at an annual rate of 1.25% of the Fund’s average daily net assets. For the year ended December 31, 2016, the Fund expensed Royce investment advisory fees totaling $1,180,559.


Purchases and Sales of Investment Securities:

For the year ended December 31, 2016, the costs of purchases and proceeds from sales of investment securities, other than short-term securities, amounted to $57,964,353 and $62,888,734, 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. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7. Cross trades for the year ended December 31, 2016, were as follows:


COST OF PURCHASES     PROCEEDS FROM SALES     REALIZED GAIN (LOSS)
 
$5,938,615     $314,870     $131,420
 

Tax Information:

Distributions during the years ended December 31, 2016 and 2015, were characterized as follows for tax purposes:


ORDINARY INCOME   LONG-TERM CAPITAL GAINS   RETURN OF CAPITAL
 
2016 2015   2016 2015   2016 2015
 
$1,435,789 $1,029,597   $ – $ –   $12,497 $ –
 

The tax basis components of distributable earnings at December 31, 2016, were as follows:


                                     
                    QUALIFIED LATE YEAR                
UNDISTRIBUTED     UNDISTRIBUTED LONG-TERM       NET UNREALIZED     ORDINARY AND       TOTAL       CAPITAL LOSS
ORDINARY     CAPITAL GAINS OR       APPRECIATION     POST-OCTOBER LOSS       DISTRIBUTABLE       CARRYFORWARD
INCOME     (CAPITAL LOSS CARRYFORWARD)       (DEPRECIATION)1     DEFERRALS2       EARNINGS       UTILIZED
 
$ –     $(19,718,673)       $3,050,927     $(581,585)       $(17,249,331)       $941,067
 
1
Includes timing differences on foreign currency, investments in publicly traded parternships, 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.

26 | 2016 Annual Report to Stockholders

Royce Global Value Trust
 
Notes to Financial Statements (continued)

Tax Information (continued):
 

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, 2016, the Fund recorded the following permanent reclassifications, which relate primarily to current investments in publicly traded partnerships, foreign currency transactions, foreign capital gains tax and gains from the sale of Passive Foreign Investment Companies. Results of operations and net assets were not affected by these reclassifications.


UNDISTRIBUTED NET     ACCUMULATED NET      
INVESTMENT INCOME     REALIZED GAIN (LOSS)     PAID-IN CAPITAL
 
$336,535     $(336,535)     $ –
 

Management has analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years (2013-2016) and has concluded that as of December 31, 2016, no provision for income tax is required in the Fund’s financial statements.


2016 Annual Report to Stockholders | 27

Royce Global Value Trust
 
Report of Independent Registered Public Accounting Firm

To the Board of Directors and the Stockholders of Royce Global Value Trust, Inc.:
 
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statement of operations, of changes in net assets and of cash flows and the financial highlights present fairly, in all material respects, the financial position of Royce Global Value Trust, Inc. (the “Fund”) as of December 31, 2016, the results of its operations, the changes in its net assets, its cash flows and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of December 31, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights for each of the periods presented in the period ended December 31, 2014 were audited by other independent accountants whose report dated February 23, 2015 expressed an unqualified opinion on those statements.



PricewaterhouseCoopers LLP
Baltimore, Maryland
February 22, 2017

28 | 2016 Annual Report to Stockholders

Royce Micro-Cap Trust   December 31, 2016

   
Schedule of Investments            
Common Stocks – 100.1%            
             
    SHARES     VALUE  
   
             
CONSUMER DISCRETIONARY 14.2%            
AUTO COMPONENTS - 2.6%            

Fox Factory Holding 1

  5,300   $ 147,075  

LCI Industries 2, 3

  17,700     1,907,175  

Motorcar Parts of America 1

  88,700     2,387,804  

Sebang Global Battery

  50,500     1,563,010  

Standard Motor Products

  60,160     3,201,715  

Unique Fabricating

  6,800     99,280  
           
          9,306,059  
           
DISTRIBUTORS - 0.8%            

Fenix Parts 1

  422,300     1,190,886  

Weyco Group

  56,600     1,771,580  
           
          2,962,466  
           
DIVERSIFIED CONSUMER SERVICES - 1.9%            

American Public Education 1

  73,200     1,797,060  

Collectors Universe

  116,100     2,464,803  

Liberty Tax Cl. A

  148,900     1,995,260  

Universal Technical Institute

  270,000     785,700  
           
          7,042,823  
           
HOTELS, RESTAURANTS & LEISURE - 1.1%            

Century Casinos 1

  222,500     1,831,175  

Lindblad Expeditions Holdings 1

  234,000     2,211,300  
           
          4,042,475  
           
HOUSEHOLD DURABLES - 2.6%            

Cavco Industries 1, 2, 3

  19,291     1,926,206  

Ethan Allen Interiors 2

  45,200     1,665,620  

Flexsteel Industries 2

  14,400     888,048  

iRobot Corporation 1, 2

  15,000     876,750  

Lifetime Brands 2, 3

  124,294     2,206,219  

Stanley Furniture

  193,468     174,160  

Universal Electronics 1

  15,100     974,705  

ZAGG 1

  119,700     849,870  
           
          9,561,578  
           
INTERNET & DIRECT MARKETING RETAIL - 0.7%            

FTD Companies 1

  67,200     1,602,048  

Gaia Cl. A 1, 2

  100,000     865,000  
           
          2,467,048  
           
LEISURE PRODUCTS - 1.0%            

American Outdoor Brands 2

  22,400     472,192  

Black Diamond 1

  194,926     1,042,854  

Nautilus 1

  111,200     2,057,200  
           
          3,572,246  
           
MEDIA - 0.5%            

McClatchy Company (The) Cl. A 1

  69,313     913,545  

New Media Investment Group

  66,200     1,058,538  
           
          1,972,083  
           
SPECIALTY RETAIL - 1.6%            

AutoCanada

  115,200     1,983,707  

Destination Maternity

  212,000     1,096,040  

Haverty Furniture

  30,000     711,000  

Kirkland’s 1

  11,000     170,610  

MarineMax 1

  7,600     147,060  

Shoe Carnival 2

  21,028     567,335  

Stage Stores 2

  15,000     65,550  

TravelCenters of America LLC 1

  5,400     38,340  

West Marine 1

  86,000     900,420  
           
          5,680,062  
           
TEXTILES, APPAREL & LUXURY GOODS - 1.4%            

Crown Crafts

  104,059     806,457  

Culp

  32,900     1,222,235  

J.G. Boswell Company 4

  2,490     1,523,880  

YGM Trading

  1,482,000     1,398,790  
           
          4,951,362  
   
Total (Cost $48,324,100)         51,558,202  
   
 
CONSUMER STAPLES 2.7%            
BEVERAGES - 0.2%            

Crimson Wine Group 1, 4

  58,124     543,460  
           
FOOD PRODUCTS - 2.5%            

Farmer Bros. 1, 2

  61,000     2,238,700  

John B. Sanfilippo & Son 2

  17,800     1,252,942  

Landec Corporation 1

  75,610     1,043,418  

Seneca Foods Cl. A 1

  29,701     1,189,525  

Seneca Foods Cl. B 1

  40,400     1,696,800  

SunOpta 1

  207,981     1,466,266  

Waterloo Investment Holdings 1, 5

  806,207     241,862  
           
          9,129,513  
   
Total (Cost $5,670,338)         9,672,973  
   
 
ENERGY 5.7%            
ENERGY EQUIPMENT & SERVICES - 2.7%            

Aspen Aerogels 1

  94,985     392,288  

Canadian Energy Services & Technology

  25,000     142,629  

CARBO Ceramics 1

  34,000     355,640  

Dawson Geophysical 1

  73,654     592,178  

Era Group 1

  307,409     5,216,731  

Geospace Technologies 1, 2

  9,500     193,420  

Matrix Service 1, 2

  53,700     1,218,990  

Newpark Resources 1

  11,200     84,000  

North American Energy Partners

  50,000     192,500  

Pioneer Energy Services 1, 2

  57,500     393,875  

TerraVest Capital

  84,000     556,809  

Tesco Corporation 1, 2, 3

  58,000     478,500  
           
          9,817,560  
           
OIL, GAS & CONSUMABLE FUELS - 3.0%            

Ardmore Shipping

  182,700     1,351,980  

Cross Timbers Royalty Trust

  67,631     1,215,329  

Dorchester Minerals L.P.

  106,127     1,862,529  

Dorian LPG 1

  50,000     410,500  

Hugoton Royalty Trust

  287,574     611,095  

Panhandle Oil and Gas Cl. A

  5,500     129,525  

Permian Basin Royalty Trust

  176,333     1,359,528  

Sabine Royalty Trust

  59,548     2,093,112  

San Juan Basin Royalty Trust

  143,407     949,354  

StealthGas 1

  229,664     776,264  
           
          10,759,216  
   
Total (Cost $20,040,644)         20,576,776  
   
 
FINANCIALS 11.9%            
BANKS - 2.2%            

Bank of N.T. Butterfield & Son

  43,810     1,377,387  

Blue Hills Bancorp

  50,000     937,500  

Bryn Mawr Bank

  25,000     1,053,750  

Caribbean Investment Holdings 1

  735,647     86,128  

Chemung Financial

  31,000     1,126,850  

Fauquier Bankshares

  133,200     2,151,180  

Live Oak Bancshares

  30,900     571,650  

Peapack-Gladstone Financial

  20,606     636,313  
           
          7,940,758  
           

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS   2016 Annual Report to Stockholders | 29

Royce Micro-Cap Trust
 
 
Schedule of Investments (continued)

    SHARES     VALUE  
 
             
FINANCIALS (continued)            
CAPITAL MARKETS - 7.6%            

ASA Gold and Precious Metals

  171,150   $ 1,889,496  

Cowen Group 1

  25,000     387,500  

Diamond Hill Investment Group 2

  4,479     942,292  

Dundee Corporation Cl. A 1

  413,200     1,831,110  

EQT Holdings

  43,150     544,826  

Fiera Capital Cl. A

  78,000     742,442  

GAIN Capital Holdings

  25,000     164,500  

INTL FCStone 1, 2

  41,727     1,652,389  

JZ Capital Partners

  209,999     1,311,854  

Manning & Napier Cl. A

  136,600     1,031,330  

Medley Management Cl. A

  153,400     1,518,660  

MVC Capital 2

  360,300     3,091,374  

OHA Investment

  154,620     267,493  

Queen City Investments 4

  948     1,232,400  

Silvercrest Asset Management Group Cl. A

  203,300     2,673,395  

Sprott

  1,414,533     2,644,381  

U.S. Global Investors Cl. A

  646,254     878,905  

Urbana Corporation

  237,600     504,346  

Value Line

  144,774     2,823,093  

Warsaw Stock Exchange

  52,900     504,752  

Westwood Holdings Group 2

  12,400     743,876  

ZAIS Group Holdings Cl. A 1, 2

  262,960     386,551  
           
          27,766,965  
           
CONSUMER FINANCE - 0.6%            

EZCORP Cl. A 1, 2, 3

  201,000     2,140,650  

J.G. Wentworth Company Cl. A 1, 4

  135,000     49,950  
           
          2,190,600  
           
DIVERSIFIED FINANCIAL SERVICES - 0.7%            

Banca Finnat Euramerica

  568,000     222,196  

PICO Holdings 1, 2, 3

  147,100     2,228,565  
           
          2,450,761  
           
INSURANCE - 0.8%            

Hallmark Financial Services 1, 2

  114,000     1,325,820  

State Auto Financial

  59,264     1,588,868  
           
          2,914,688  
   
Total (Cost $47,276,681)         43,263,772  
   
 
HEALTH CARE 13.4%            
BIOTECHNOLOGY - 4.1%            

Abeona Therapeutics 1

  312,221     1,514,272  

Aquinox Pharmaceuticals 1, 2

  159,497     2,633,295  

ARIAD Pharmaceuticals 1, 2

  25,802     320,977  

BioCryst Pharmaceuticals 1

  144,000     911,520  

Invitae Corporation 1

  156,412     1,241,911  

Keryx Biopharmaceuticals 1

  117,725     689,868  

Kindred Biosciences 1

  148,000     629,000  

Knight Therapeutics 1

  187,000     1,495,833  

Progenics Pharmaceuticals 1

  6,500     56,160  

Sangamo BioSciences 1

  281,785     859,444  

Zafgen 1

  504,075     1,602,959  

Zealand Pharma 1

  199,700     3,006,813  
           
          14,962,052  
           
HEALTH CARE EQUIPMENT & SUPPLIES - 4.9%            

Analogic Corporation

  18,200     1,509,690  

Atrion Corporation 2, 3

  6,914     3,506,781  

Cerus Corporation 1, 2, 3

  140,000     609,000  

Derma Sciences 1

  177,100     920,920  

Exactech 1, 2, 3

  112,300     3,065,790  

Inogen 1

  5,400     362,718  

Invacare Corporation 2

  44,300     578,115  

STRATEC Biomedical

  14,000     674,047  

Surmodics 1

  130,492     3,314,497  

Syneron Medical 1

  69,200     581,280  

TearLab Corporation 1

  85,000     43,358  

Trinity Biotech ADR Cl. A 1

  6,200     42,904  

Utah Medical Products

  36,200     2,633,550  
           
          17,842,650  
           
HEALTH CARE PROVIDERS & SERVICES - 2.8%            

Aceto Corporation

  79,600     1,748,812  

BioTelemetry 1

  49,700     1,110,795  

Cross Country Healthcare 1

  157,100     2,452,331  

Landauer

  30,400     1,462,240  

National Research Cl. A

  40,033     760,627  

PharMerica Corporation 1

  40,000     1,006,000  

Psychemedics Corporation

  37,500     925,500  

U.S. Physical Therapy

  10,000     702,000  
           
          10,168,305  
           
HEALTH CARE TECHNOLOGY - 0.2%            

Connecture 1

  20,000     33,600  

Vocera Communications 1

  33,100     612,019  
           
          645,619  
           
PHARMACEUTICALS - 1.4%            

Agile Therapeutics 1, 2

  80,000     456,000  

Alcobra 1

  645,055     1,354,615  

Lipocine 1

  355,404     1,307,887  

Theravance Biopharma 1

  66,009     2,104,367  
           
          5,222,869  
   
Total (Cost $36,000,489)         48,841,495  
   
 
INDUSTRIALS 18.4%            
AEROSPACE & DEFENSE - 0.6%            

Astronics Corporation 1

  4,400     148,896  

Astronics Corporation Cl. B 1, 4

  660     22,209  

CPI Aerostructures 1

  9,500     87,875  

FLYHT Aerospace Solutions 1

  1,916,800     321,216  

Innovative Solutions and Support 1

  142,828     475,617  

Mercury Systems 1

  29,700     897,534  

SIFCO Industries 1

  45,800     350,370  
           
          2,303,717  
           
BUILDING PRODUCTS - 1.4%            

Burnham Holdings Cl. A 4

  117,000     1,842,750  

DIRTT Environmental Solutions 1

  171,000     798,548  

Insteel Industries

  44,200     1,575,288  

Patrick Industries 1

  11,500     877,450  
           
          5,094,036  
           
COMMERCIAL SERVICES & SUPPLIES - 2.2%            

Atento 1

  246,001     1,869,607  

CompX International Cl. A

  107,500     1,730,750  

Heritage-Crystal Clean 1, 2, 3

  241,677     3,794,329  

Team 1, 2

  17,500     686,875  
           
          8,081,561  
           
CONSTRUCTION & ENGINEERING - 2.3%            

Ameresco Cl. A 1

  261,900     1,440,450  

IES Holdings 1

  234,000     4,481,100  

Layne Christensen 1, 2

  50,000     543,500  

Northwest Pipe 1

  58,400     1,005,648  

30 | 2016 Annual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2016

 
Schedule of Investments (continued)

    SHARES       VALUE
 
             
INDUSTRIALS (continued)            
CONSTRUCTION & ENGINEERING (continued)

NV5 Global 1

  27,400     $ 915,160
           
            8,385,858
           
ELECTRICAL EQUIPMENT - 1.1%            

Encore Wire 2

  4,100       177,735

LSI Industries

  144,212       1,404,625

Orion Energy Systems 1

  170,000       368,900

Powell Industries

  21,400       834,600

Power Solutions International 1, 2

  7,100       53,250

Preformed Line Products

  20,743       1,205,583
           
            4,044,693
           
INDUSTRIAL CONGLOMERATES - 0.8%            

Raven Industries 2

  117,159       2,952,407
           
MACHINERY - 6.8%            

Chart Industries 1

  1,100       39,622

CIRCOR International 2

  26,100       1,693,368

Columbus McKinnon

  1,500       40,560

Eastern Company (The)

  39,750       830,775

Foster (L.B.) Company 2

  99,300       1,350,480

FreightCar America

  81,000       1,209,330

Graham Corporation 2, 3

  78,050       1,728,807

Hurco Companies

  36,866       1,220,264

Kadant

  54,600       3,341,520

Lindsay Corporation

  29,400       2,193,534

Luxfer Holdings ADR

  59,712       650,264

Lydall 1

  1,800       111,330

NN

  50,300       958,215

Pfeiffer Vacuum Technology

  6,000       560,622

Sun Hydraulics

  86,900       3,473,393

Tennant Company

  36,600       2,605,920

Titan International

  237,600       2,663,496

Twin Disc 1

  5,300       77,380
           
            24,748,880
           
MARINE - 0.6%            

Clarkson

  74,500       1,994,940
           
PROFESSIONAL SERVICES - 1.5%            

Acacia Research 1, 2

  190,000       1,235,000

CBIZ 1

  47,000       643,900

Franklin Covey 1

  40,100       808,015

GP Strategies 1

  7,600       217,360

Heidrick & Struggles International

  46,300       1,118,145

Kforce 2

  4,700       108,570

Resources Connection

  8,800       169,400

RPX Corporation 1

  100,000       1,080,000
           
            5,380,390
           
ROAD & RAIL - 0.6%            

Marten Transport

  3,300       76,890

Patriot Transportation Holding 1, 2

  29,460       686,418

Universal Logistics Holdings 2

  77,600       1,268,760
           
            2,032,068
           
TRADING COMPANIES & DISTRIBUTORS - 0.5%            

Central Steel & Wire 4

  788       346,523

Houston Wire & Cable

  249,918       1,624,467
           
            1,970,990
 
Total (Cost $53,738,212)           66,989,540
 
             
INFORMATION TECHNOLOGY 19.0%
COMMUNICATIONS EQUIPMENT - 1.6%            

ADTRAN

  23,300       520,755

Applied Optoelectronics 1, 2

  7,000       164,080

Bel Fuse Cl. A

  67,705       1,713,614

CalAmp Corporation 1

  3,100       44,950

Clearfield 1

  61,300       1,268,910

Harmonic 1

  147,000       735,000

Oclaro 1

  123,600       1,106,220

PCTEL

  34,100       183,458

Sandvine Corporation

  35,200       73,669
           
            5,810,656
           
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 5.4%

Agilysys 1

  170,587       1,767,281

ePlus 1

  2,100       241,920

Fabrinet 1

  2,200       88,660

FARO Technologies 1, 2, 3

  81,700       2,941,200

HollySys Automation Technologies

  62,900       1,152,328

Inficon Holding

  3,420       1,232,788

LRAD Corporation

  853,456       1,459,410

Mesa Laboratories 2, 3

  22,700       2,786,425

Netlist 1

  63,600       64,872

Novanta 1

  37,600       789,600

Orbotech 1, 2, 3

  102,800       3,434,548

PC Connection

  43,716       1,227,983

Perceptron 1

  8,500       56,440

Richardson Electronics

  316,900       1,996,470

Rogers Corporation 1, 2

  600       46,086

Vishay Precision Group 1

  10,000       189,000
           
            19,475,011
           
INTERNET SOFTWARE & SERVICES - 3.3%

Actua Corporation 1

  46,876       656,264

Care.com 1, 2, 3

  207,587       1,779,020

comScore 1

  81,905       2,586,560

IZEA 1

  81,770       368,783

QuinStreet 1

  525,550       1,976,068

RealNetworks 1

  135,362       657,859

Reis

  25,000       556,250

Solium Capital 1

  215,400       1,354,021

Stamps.com 1

  14,500       1,662,425

Support.com 1

  316,800       272,448
           
            11,869,698
           
IT SERVICES - 1.1%            

Computer Task Group 2

  140,838       592,928

Hackett Group (The)

  55,500       980,130

Innodata 1

  437,275       1,071,324

MoneyGram International 1

  102,003       1,204,655

Virtusa Corporation 1

  8,100       203,472
           
            4,052,509
           
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 4.2%

Amtech Systems 1, 2

  160,284       681,207

Brooks Automation

  129,100       2,203,737

CyberOptics Corporation 1

  16,200       422,820

Daqo New Energy ADR 1

  20,000       386,000

FormFactor 1

  22,869       256,133

Intermolecular 1

  240,000       227,520

IXYS Corporation

  18,800       223,720

Kopin Corporation 1

  242,200       687,848

Kulicke & Soffa Industries 1

  88,000       1,403,600

MoSys 1, 2

  684,275       157,452

Nanometrics 1

  67,300       1,686,538

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS   2016 Annual Report to Stockholders | 31

Royce Micro-Cap Trust

 
Schedule of Investments (continued)

    SHARES       VALUE  
 
               
INFORMATION TECHNOLOGY (continued)              
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (continued)

Nova Measuring Instruments 1

  128,400     $ 1,687,176  

PDF Solutions 1

  25,000       563,750  

Photronics 1

  189,700       2,143,610  

Sigma Designs 1

  89,000       534,000  

Silicon Motion Technology ADR

  34,100       1,448,568  

Ultra Clean Holdings 1

  49,900       484,030  

Xcerra Corporation 1

  20,900       159,676  
             
            15,357,385  
             
SOFTWARE - 2.1%              

American Software Cl. A

  120,352       1,243,236  

BSQUARE Corporation 1

  83,675       489,499  

Computer Modelling Group

  337,700       2,291,325  

Model N 1

  166,693       1,475,233  

Monotype Imaging Holdings

  15,000       297,750  

PSI

  34,000       436,258  

Rubicon Project 1

  92,200       684,124  

SeaChange International 1

  284,200       653,660  
             
            7,571,085  
             
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 1.3%

Intevac 1

  379,300       3,243,015  

Kortek

  135,007       1,555,879  
             
            4,798,894  
 
Total (Cost $62,002,414)           68,935,238  
 
               
MATERIALS 6.2%              
CHEMICALS - 1.8%              

Balchem Corporation

  11,775       988,158  

FutureFuel Corporation

  85,262       1,185,142  

Quaker Chemical 2

  26,000       3,326,440  

Trecora Resources 1

  89,600       1,240,960  
             
            6,740,700  
             
CONSTRUCTION MATERIALS - 0.8%              

Ash Grove Cement 4

  7,900       2,054,000  

Monarch Cement 4

  16,303       745,862  

U.S. Concrete 1

  3,400       222,700  
             
            3,022,562  
             
CONTAINERS & PACKAGING - 0.3%              

UFP Technologies 1

  36,445       927,525  
             
METALS & MINING - 3.3%              

Alamos Gold Cl. A

  186,044       1,283,110  

Ampco-Pittsburgh

  79,002       1,323,283  

Comstock Mining 1

  1,875,000       493,125  

Exeter Resource 1

  1,195,400       895,235  

Haynes International 2

  25,000       1,074,750  

Imdex 1

  525,666       217,758  

MAG Silver 1

  74,050       816,772  

Major Drilling Group International 1

  706,757       3,695,255  

Olympic Steel

  35,000       848,050  

Pretium Resources 1

  80,000       662,570  

Universal Stainless & Alloy Products 1

  11,600       156,716  

Victoria Gold 1

  890,000       371,206  
             
            11,837,830  
 
Total (Cost $16,417,272)           22,528,617  
 
               
REAL ESTATE 3.7%              
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITS) - 0.5%

BRT Realty Trust 1

  230,331       1,886,411  
             
REAL ESTATE MANAGEMENT & DEVELOPMENT - 3.2%

AV Homes 1

  82,000       1,295,600  

Forestar Group 1, 2

  53,000       704,900  

FRP Holdings 1, 2, 3

  58,300       2,197,910  

Griffin Industrial Realty

  43,384       1,376,574  

Hopefluent Group Holdings

  1,400,000       387,169  

Marcus & Millichap 1

  49,567       1,324,430  

RMR Group Cl. A

  37,100       1,465,450  

Tejon Ranch 1, 2, 3

  115,162       2,928,570  
             
            11,680,603  
 
Total (Cost $11,153,885)           13,567,014  
 
               
TELECOMMUNICATION SERVICES 0.1%              
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.1%              

ORBCOMM 1

  67,100       554,917  
 
Total (Cost $570,215)           554,917  
 
               
UTILITIES 0.1%              
GAS UTILITIES - 0.1%              

Shizuoka Gas

  40,000       281,180  
             
INDEPENDENT POWER & RENEWABLE ELECTRICITY PRODUCER - 0.0%

Alterra Power

  45,000       174,617  
 
Total (Cost $467,214)           455,797  
 
               
MISCELLANEOUS 6 4.7%              
 
Total (Cost $15,686,815)           17,027,717  
 
               
TOTAL COMMON STOCKS              
 
(Cost $317,348,279)           363,972,058  
 
               
PREFERRED STOCK 0.3%              

Seneca Foods Conv. 1, 4

  45,409       1,089,816  
 
(Cost $578,719)           1,089,816  
 
               
REPURCHASE AGREEMENT 11.9%              
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value
$43,472,145 (collateralized by obligations of various U.S. Government Agencies, 2.25%
due 11/15/24, valued at $44,344,237)
 
(Cost $43,472,000)           43,472,000  
 
               
TOTAL INVESTMENTS 112.3%              
 
(Cost $361,398,998)           408,533,874  
 
               
LIABILITIES LESS CASH AND OTHER ASSETS – (12.3)%       (44,833,121 )
             
               
 
NET ASSETS 100.0%         $ 363,700,753  
 

32 | 2016 Annual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2016

 
New additions in 2016.
1 Non-income producing.
2
All or a portion of these securities were pledged as collateral in connection with the revolving credit agreement at December 31, 2016. Total market value of pledged securities at December 31, 2016, was $71,014,926.
3
At December 31, 2016, a portion of these securities were rehypothecated in connection with the Fund’s revolving credit agreement in the aggregate amount of $39,021,909.
4
These securities are defined as Level 2 securities due to fair value being based on quoted prices for similar securities. See Notes to Financial Statements.
5
A security for which market quotations are not readily available represents 0.1% of net assets. This security has been valued at its fair value under procedures approved by the Fund’s Board of Directors. This security is defined as a Level 3 security due to the use of significant unobservable inputs in the determination of fair value. See Notes to Financial Statements.
6 Includes securities first acquired in 2016 and less than 1% of net assets.
 

Bold indicates the Fund’s 20 largest equity holdings in terms of December 31, 2016, market value.
 

TAX INFORMATION: The cost of total investments for Federal income tax purposes was $364,689,765. At December 31, 2016, net unrealized appreciation for all securities was $43,844,109, consisting of aggregate gross unrealized appreciation of $90,607,363 and aggregate gross unrealized depreciation of $46,763,254. The primary causes of the differences between book and tax basis cost are the timing of the recognition of losses on securities sold, investments in publicly traded partnerships and Trusts and mark-to-market of Passive Foreign Investment Companies.
 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS   2016 Annual Report to Stockholders | 33

Royce Micro-Cap Trust   December 31, 2016

 
Statement of Assets and Liabilities

ASSETS:        
Investments at value   $ 365,061,874  
 
Repurchase agreements (at cost and value)     43,472,000  
 
Cash and foreign currency     639  
 
Receivable for investments sold     177,818  
 
Receivable for dividends and interest     519,587  
 
Prepaid expenses and other assets     22,771  
 
Total Assets     409,254,689  
 
LIABILITIES:        
Revolving credit agreement     45,000,000  
 
Payable for investments purchased     274,464  
 
Payable for investment advisory fee     152,896  
 
Payable for directors’ fees     23,341  
 
Payable for interest expense     7,305  
 
Accrued expenses     95,930  
 
Total Liabilities     45,553,936  
 
Net Assets   $ 363,700,753  
 
ANALYSIS OF NET ASSETS:        
Paid-in capital -$0.001 par value per share; 37,780,330 shares outstanding (150,000,000 shares authorized)   $ 317,416,636  
 
Undistributed net investment income (loss)     (1,987,430 )
 
Accumulated net realized gain (loss) on investments and foreign currency     1,138,148  
 
Net unrealized appreciation (depreciation) on investments and foreign currency     47,133,399  
 
Net Assets (net asset value per share - $9.63)   $ 363,700,753  
 
Investments at identified cost   $ 317,926,998  
 
         

34 | 2016 Annual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

Royce Micro-Cap Trust

 
Statement of Changes in Net Assets

    YEAR ENDED 12/31/16     YEAR ENDED 12/31/15  
 
                 
INVESTMENT OPERATIONS:                
Net investment income (loss)   $ 1,040,381     $ 917,928  
 
Net realized gain (loss) on investments and foreign currency     17,298,523       21,372,239  
 
Net change in unrealized appreciation (depreciation) on investments and foreign currency     46,017,634       (71,062,194 )
 
Net increase (decrease) in net assets from investment operations     64,356,538       (48,772,027 )
 
DISTRIBUTIONS:                
Net investment income     (2,974,373 )     (399,672 )
 
Net realized gain on investments and foreign currency     (20,650,513 )     (43,520,307 )
 
Total distributions     (23,624,886 )     (43,919,979 )
 
CAPITAL STOCK TRANSACTIONS:                
Reinvestment of distributions     10,562,009       17,611,123  
 
Total capital stock transactions     10,562,009       17,611,123  
 
Net Increase (Decrease) In Net Assets     51,293,661       (75,080,883 )
 
NET ASSETS:                
 
Beginning of year     312,407,092       387,487,975  
 

End of year (including undistributed net investment income (loss) of $(1,987,430) at 12/31/16 and $(116,177) at 12/31/15)

  $ 363,700,753     $ 312,407,092  
 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS   2016 Annual Report to Stockholders | 35

Royce Micro-Cap Trust   Year Ended December 31, 2016

 
Statement of Operations

INVESTMENT INCOME:        
INCOME:        
Dividends   $ 5,148,607  
 
Foreign withholding tax     (90,286 )
 
Interest     9,197  
 
Rehypothecation income     52,529  
 
Total income     5,120,047  
 
EXPENSES:        
 
Investment advisory fees     2,811,209  
 
Interest expense     775,138  
 
Stockholder reports     125,590  
 
Directors’ fees     87,305  
 
Administrative and office facilities     78,686  
 
Custody and transfer agent fees     78,184  
 
Professional fees     56,507  
 
Other expenses     67,125  
 
Total expenses     4,079,744  
 
Compensating balance credits     (78 )
 
Net expenses     4,079,666  
 
Net investment income (loss)     1,040,381  
 
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:        
NET REALIZED GAIN (LOSS):        
 
Investments     17,310,170  
 
Foreign currency transactions     (11,647 )
 
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION):        
 
Investments and foreign currency translations     46,016,376  
 
Other assets and liabilities denominated in foreign currency     1,258  
 
Net realized and unrealized gain (loss) on investments and foreign currency     63,316,157  
 
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS   $ 64,356,538  
 

36 | 2016 Annual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

Royce Micro-Cap Trust   Year Ended December 31, 2016

 
Statement of Cash Flows

CASH FLOWS FROM OPERATING ACTIVITIES:        
Net increase (decrease) in net assets from investment operations   $ 64,356,538  
 
Adjustments to reconcile net increase (decrease) in net assets from investment operations to net cash provided by operating activities:        
 

Purchases of long-term investments

    (89,262,035 )
 

Proceeds from sales and maturities of long-term investments

    130,287,242  
 

Net purchases, sales and maturities of short-term investments

    (29,054,000 )
 

Net (increase) decrease in dividends and interest receivable and other assets

    55,414  
 

Net increase (decrease) in interest expense payable, accrued expenses and other liabilities

    (54,868 )
 

Net change in unrealized appreciation (depreciation) on investments

    (46,016,376 )
 

Net realized gain (loss) on investments and foreign currency

    (17,298,523 )
 
Net cash provided by operating activities     13,013,392  
 
CASH FLOWS FROM FINANCING ACTIVITIES:        
Net increase (decrease) in revolving credit agreement      
 
Distributions     (23,624,886 )
 
Reinvestment of distributions     10,562,009  
 
Net cash used for financing activities     (13,062,877 )
 
INCREASE (DECREASE) IN CASH:     (49,485 )
 
Cash and foreign currency at beginning of year     50,124  
 
Cash and foreign currency at end of year   $ 639  
 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS   2016 Annual Report to Stockholders | 37

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
     
      12/31/16     12/31/15     12/31/14     12/31/13     12/31/12  
 
Net Asset Value, Beginning of Period     $ 8.59     $ 11.33     $ 14.12     $ 10.93     $ 9.86  
 
INVESTMENT OPERATIONS:                                          
Net investment income (loss)       0.03       0.03       (0.01 )     0.01       0.15  
 

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

      1.70       (1.42 )     0.25       4.64       1.58  
 
Total investment operations       1.73       (1.39 )     0.24       4.65       1.73  
 
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:                                          
Net investment income                               (0.02 )
 
Net realized gain on investments and foreign currency                               (0.09 )
 
Total distributions to Preferred Stockholders                               (0.11 )
 

Net Increase (Decrease) in Net Assets Applicable to Common Stockholders from Investment Operations

      1.73       (1.39 )     0.24       4.65       1.62  
 
DISTRIBUTIONS TO COMMON STOCKHOLDERS:                                          
Net investment income       (0.08 )     (0.01 )     (0.04 )     (0.03 )     (0.08 )
 
Net realized gain on investments and foreign currency       (0.56 )     (1.25 )     (2.86 )     (1.35 )     (0.43 )
 
Total distributions to Common Stockholders       (0.64 )     (1.26 )     (2.90 )     (1.38 )     (0.51 )
 
CAPITAL STOCK TRANSACTIONS:                                          
Effect of reinvestment of distributions by Common Stockholders       (0.05 )     (0.09 )     (0.13 )     (0.08 )     (0.04 )
 
Total capital stock transactions       (0.05 )     (0.09 )     (0.13 )     (0.08 )     (0.04 )
 
Net Asset Value, End of Period     $ 9.63     $ 8.59     $ 11.33     $ 14.12     $ 10.93  
 
Market Value, End of Period     $ 8.16     $ 7.26     $ 10.08     $ 12.61     $ 9.45  
 
TOTAL RETURN:1                                          
Net Asset Value       21.98 %     (11.64 )%     3.46 %     44.66 %     17.23 %
Market Value       22.30 %     (16.06 )%     3.06 %     49.42 %     13.95 %
 

RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:

                                         
Investment advisory fee expense2       0.87 %     0.93 %     0.93 %     0.82 %     1.12 %
 
Other operating expenses       0.39 %     0.35 %     0.25 %     0.29 %     0.18 %
 
Total expenses (net)3       1.26 %     1.28 %     1.18 %     1.11 %     1.30 %
 
Expenses net of fee waivers and excluding interest expense       1.02 %     1.08 %     1.05 %     0.96 %     1.27 %
 
Expenses prior to fee waivers and balance credits       1.26 %     1.28 %     1.18 %     1.11 %     1.32 %
 
Expenses prior to fee waivers       1.26 %     1.28 %     1.18 %     1.11 %     1.32 %
 
Net investment income (loss)       0.32 %     0.26 %     (0.09 )%     0.08 %     1.46 %
 
SUPPLEMENTAL DATA:                                          

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

    $ 363,701     $ 312,407     $ 387,488     $ 433,121     $ 318,545  
 
Portfolio Turnover Rate       26 %     39 %     41 %     29 %     28 %
 
REVOLVING CREDIT AGREEMENT:                                          
Asset coverage       908 %     794 %     746 %     1062 %     808 %
 
Asset coverage per $1,000     $ 9,082     $ 7,942     $ 7,458     $ 10,625     $ 8,079  
 

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 and sale dates instead of market value.
2
The investment advisory fee is calculated based on average net assets over a rolling 36-month basis, while the above ratios of investment advisory fee expenses are based on the average net assets applicable to Common Stockholders over a 12-month basis.
3
Expense ratio based on total average net assets including liquidation value of Preferred Stock was 1.10% for the year ended December 31, 2012.

38 | 2016 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”.

 
VALUATION OF INVESTMENTS:

Securities are valued as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq’s Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their highest bid price. Other over-the-counter securities for which market quotations are readily available are valued at their highest bid price, except in the case of some bonds and other fixed income securities which may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. The Fund values its non-U.S. dollar denominated securities in U.S. dollars daily at the prevailing foreign currency exchange rates as quoted by a major bank. Securities for which market quotations are not readily available are valued at their fair value in accordance with the provisions of the 1940 Act, under procedures approved by the Fund’s Board of Directors, and are reported as Level 3 securities. As a general principle, the fair value of a security is the amount which the Fund might reasonably expect to receive for the security upon its current sale. However, in light of the judgment involved in fair valuations, there can be no assurance that a fair value assigned to a particular security will be the amount which the Fund might be able to receive upon its current sale. In addition, if, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. The Fund uses an independent pricing service to provide fair value estimates for relevant non-U.S. equity securities on days when the U.S. market volatility exceeds a certain threshold. This pricing service uses proprietary correlations it has developed between the movement of prices of non-U.S. equity securities and indices of U.S.-traded securities, futures contracts and other indications to estimate the fair value of relevant non-U.S. securities. When fair value pricing is employed, the prices of securities used by the Fund may differ from quoted or published prices for the same security. Investments in money market funds are valued at net asset value per share.

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

    Level 1
quoted prices in active markets for identical securities.
    Level 2
other significant observable inputs (including quoted prices for similar securities, foreign securities that may be fair valued and repurchase agreements). The table below includes all Level 2 securities. Level 2 securities with values based on quoted prices for similar securities are noted in the Schedule of Investments.
    Level 3
significant unobservable inputs (including last trade price before trading was suspended, or at a discount thereto for lack of marketability or otherwise, market price information regarding other securities, information received from the company and/or published documents, including SEC filings and financial statements, or other publicly available information).

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used to value the Fund’s investments as of December 31, 2016. 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     $339,476,282       $24,253,914       $241,862       $363,972,058  
 
Preferred Stocks           1,089,816             1,089,816  
 
Cash Equivalents           43,472,000             43,472,000  
 

Certain securities have transferred in and out of Level 1 and Level 2 measurements during the reporting period. The Fund recognizes transfers between levels as of the end of the reporting period. For the year ended December 31, 2016, securities valued at $594,776 were transferred from Level 1 to Level 2 within the fair value hierarchy.

2016 Annual Report to Stockholders | 39


Royce Micro-Cap Trust

Notes to Financial Statements (continued)

VALUATION OF INVESTMENTS (continued):

Level 3 Reconciliation:
                   
            REALIZED AND UNREALIZED      
      BALANCE AS OF 12/31/15     GAIN (LOSS)1     BALANCE AS OF 12/31/16
 
Common Stocks     $225,738     $16,124     $241,862
 
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.

The following table summarizes the valuation techniques used and unobservable inputs approved by the Valuation Committee to determine the fair value of certain, material Level 3 investments. The table does not include Level 3 investments with values derived utilizing prices from prior transactions or third party pricing information with adjustments (e.g. broker quotes, pricing services, net asset values).

      FAIR VALUE AT                       IMPACT TO VALUATION FROM
      12/31/16     VALUATION TECHNIQUE(S)     UNOBSERVABLE INPUT(S)     RANGE AVERAGE     AN INCREASE IN INPUT1
 
Common Stocks     $241,862     Discounted Present Value
Balance Sheet Analysis
    Liquidity Discount     30%-40%     Decrease
 
1
This column represents the directional change in the fair value of the Level 3 investments that would result in an increase from the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect. Significant increases and decreases in these unobservable inputs in isolation could result in significantly higher or lower fair value measurements.

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, 2016 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, including investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.

 
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. Prior to November 15, 2012, distributions to Preferred Stockholders were accrued daily and paid quarterly. Distributions to Common Stockholders are recorded on ex-dividend date. Distributable capital gains and/or net investment income were first allocated to Preferred Stockholder distributions, with any excess allocable to Common Stockholders. If capital gains and/or net investment income were allocated to both Preferred and Common Stockholders, the tax character of such allocations was proportional. To the extent that distributions are not paid from long-term capital gains, net investment income or net short-term capital gains, they will represent a return of capital. Distributions are determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United States of America. Permanent book and tax differences relating to stockholder distributions will result in reclassifications within the capital accounts. Undistributed net investment income may include temporary book and tax basis differences, which will reverse in a subsequent period. Any taxable income or gain remaining undistributed at fiscal year end is distributed in the following year.

40 | 2016 Annual Report to Stockholders


Royce Micro-Cap Trust

Notes to Financial Statements (continued)

INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME:

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

 
EXPENSES:

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

 
COMPENSATING BALANCE CREDITS:

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

 
Capital Stock:

The Fund issued 1,405,544 and 2,189,322 shares of Common Stock as reinvestment of distributions for the years ended December 31, 2016 and December 31, 2015, 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 credit agreement. The credit agreement has a 360-day rolling term that resets daily; however, if the Fund exceeds certain net asset value triggers, the credit agreement may convert to a 60-day rolling term that resets daily. The Fund is required to pledge portfolio securities as collateral in an amount up to two times the loan balance outstanding or as otherwise required by applicable regulatory standards and has granted a security interest in the securities pledged to, and in favor of, BNPPI as security for the loan balance outstanding. If the Fund fails to meet certain requirements, or maintain other financial covenants required under 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. 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.

As of December 31, 2016, the Fund has outstanding borrowings of $45,000,000. During the year ended December 31, 2016, the Fund borrowed an average daily balance of $45,000,000 at a weighted average borrowing cost of 1.69%. The maximum amount outstanding during the year ended December 31, 2016 was $45,000,000. As of December 31, 2016, the aggregate value of rehypothecated securities was $39,021,909. During the year ended December 31, 2016, the Fund earned $52,529 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.

2016 Annual Report to Stockholders | 41


Royce Micro-Cap Trust

Notes to Financial Statements (continued)

Investment Advisory Agreement (continued):

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 outstanding Preferred Stock through October 31, 2015, 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.

For the twelve rolling 36-month periods in 2016, the Fund’s investment performance ranged from 2% to 14% below the investment performance of the Russell 2000. Accordingly, the net investment advisory fee consisted of a Basic Fee of $3,761,473 and a net downward adjustment of $950,264 for the performance of the Fund relative to that of the Russell 2000. For the year ended December 31, 2016, the Fund expensed Royce investment advisory fees totaling $2,811,209.

 
Purchases and Sales of Investment Securities:

For the year ended December 31, 2016, the costs of purchases and proceeds from sales of investment securities, other than short-term securities, amounted to $87,234,808 and $125,680,183, 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. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7. Cross trades for the year ended December 31, 2016, were as follows:


COST OF PURCHASES     PROCEEDS FROM SALES     REALIZED GAIN (LOSS)
 
$6,527,654     $1,716,500     $683,950
 

Tax Information:

Distributions during the years ended December 31, 2016 and 2015, were characterized as follows for tax purposes:


ORDINARY INCOME       LONG-TERM CAPITAL GAINS
 
2016     2015       2016     2015
 
$5,291,974     $7,501,533       $18,332,912     $36,418,446
 

The tax basis components of distributable earnings at December 31, 2016, were as follows:

                  QUALIFIED LATE YEAR      
UNDISTRIBUTED     UNDISTRIBUTED LONG-TERM     NET UNREALIZED     ORDINARY AND     TOTAL
ORDINARY     CAPITAL GAINS OR     APPRECIATION     POST-OCTOBER LOSS     DISTRIBUTABLE
INCOME     (CAPITAL LOSS CARRYFORWARD)     (DEPRECIATION) 1     DEFERRALS 2     EARNINGS
 
$2,106,421     $981,595     $43,842,633     $(646,532)     $46,284,117
 
1
Includes timing differences on foreign currency, 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.
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, 2016, the Fund recorded the following permanent reclassifications, which relate primarily to current investments in publicly traded partnerships and Trusts, foreign currency transactions, investments in Real Estate Investment Trusts and gains from the sale of Passive Foreign Investment Companies. Results of operations and net assets were not affected by these reclassifications.

UNDISTRIBUTED NET     ACCUMULATED NET      
INVESTMENT INCOME     REALIZED GAIN (LOSS)     PAID-IN CAPITAL
 
$62,740     $(62,740)     $–
 

Management has analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years (2013-2016) and has concluded that as of December 31, 2016, no provision for income tax is required in the Fund’s financial statements.

42 | 2016 Annual Report to Stockholders


Royce Micro-Cap Trust

Report of Independent Registered Public Accounting Firm

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

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statement of operations, of changes in net assets and of cash flows and the financial highlights present fairly, in all material respects, the financial position of Royce Micro-Cap Trust, Inc. (the “Fund”) as of December 31, 2016, the results of its operations, the changes in its net assets, its cash flows and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of December 31, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights for each of the periods presented in the period ended December 31, 2014 were audited by other independent accountants whose report dated February 23, 2015 expressed an unqualified opinion on those statements.

PricewaterhouseCoopers LLP
Baltimore, Maryland
February 22, 2017

2016 Annual Report to Stockholders | 43


Royce Value Trust

 
Schedule of Investments
Common Stocks – 97.8%            
    SHARES       VALUE
 
             
CONSUMER DISCRETIONARY 10.3%            
AUTO COMPONENTS - 1.5%            

Cooper Tire & Rubber

  64,500     $ 2,505,825

Gentex Corporation

  290,470       5,719,354

LCI Industries

  61,616       6,639,124

Motorcar Parts of America 1

  27,100       729,532

Sebang Global Battery

  28,500       882,095

Standard Motor Products

  50,391       2,681,809
           
            19,157,739
           
AUTOMOBILES - 0.8%            

Thor Industries 2

  106,410       10,646,320
           
DISTRIBUTORS - 1.1%            

Core-Mark Holding Company

  245,400       10,569,378

Fenix Parts 1

  255,000       719,100

Weyco Group

  97,992       3,067,150
           
            14,355,628
           
DIVERSIFIED CONSUMER SERVICES - 0.6%            

American Public Education 1

  42,400       1,040,920

Collectors Universe

  50,000       1,061,500

DeVry Education Group

  52,054       1,624,085

H&R Block

  8,000       183,920

Liberty Tax Cl. A

  141,573       1,897,078

Lincoln Educational Services 1

  430,600       826,752

Universal Technical Institute

  504,032       1,466,733
           
            8,100,988
           
HOTELS, RESTAURANTS & LEISURE - 0.3%            

Century Casinos 1

  222,360       1,830,023

Lindblad Expeditions Holdings 1

  178,300       1,684,935
           
            3,514,958
           
HOUSEHOLD DURABLES - 1.6%            

Cavco Industries 1

  14,700       1,467,795

Ethan Allen Interiors

  231,000       8,512,350

Flexsteel Industries

  12,400       764,708

Mohawk Industries 1, 2

  22,400       4,472,832

Natuzzi ADR 1

  2,096,300       4,737,638

Samson Holding

  2,500,000       180,527

Stanley Furniture 3

  912,235       821,194
           
            20,957,044
           
LEISURE PRODUCTS - 0.7%            

Nautilus 1

  488,700       9,040,950
           
MEDIA - 0.5%            

E.W. Scripps Company Cl. A 1

  67,660       1,307,868

Global Eagle Entertainment 1

  7,700       49,742

New Media Investment Group

  60,100       960,999

Pico Far East Holdings

  3,484,400       1,068,233

T4F Entretenimento

  200,000       343,995

Technicolor

  120,000       649,107

Wiley (John) & Sons Cl. A

  46,500       2,534,250
           
            6,914,194
           
MULTILINE RETAIL - 0.0%            

New World Department Store China 1

  1,447,500       186,343
           
SPECIALTY RETAIL - 1.9%            

Barnes & Noble

  26,000       289,900

Buckle (The) 2

  122,415       2,791,062

Byggmax Group

  70,000       483,381

Caleres

  107,800       3,537,996

Container Store Group (The) 1

  158,200       1,004,570

Destination Maternity

  557,967       2,884,689

Genesco 1

  26,155       1,624,226

Haverty Furniture

  23,700       561,690

I.T

  827,000       328,545

Monro Muffler Brake

  161,500       9,237,800

Oriental Watch Holdings

  967,900       186,513

TravelCenters of America LLC 1

  62,500       443,750

West Marine 1

  131,100       1,372,617
           
            24,746,739
           
TEXTILES, APPAREL & LUXURY GOODS - 1.3%            

Crown Crafts

  94,441       731,918

Culp

  29,400       1,092,210

Deckers Outdoor 1

  20,820       1,153,220

J.G. Boswell Company 4

  3,940       2,411,280

Movado Group

  74,061       2,129,254

Wolverine World Wide

  360,200       7,906,390

YGM Trading

  1,082,600       1,021,814
           
            16,446,086
 
Total (Cost $114,690,819)           134,066,989
 
             
CONSUMER STAPLES 2.2%            
BEVERAGES - 0.2%            

Compania Cervecerias Unidas ADR

  134,000       2,811,320
           
FOOD PRODUCTS - 1.9%            

Cal-Maine Foods

  56,016       2,474,507

Farmer Bros. 1

  52,300       1,919,410

Industrias Bachoco ADR

  59,095       2,896,837

John B. Sanfilippo & Son

  17,200       1,210,708

Sanderson Farms

  15,400       1,451,296

Seneca Foods Cl. A 1

  152,325       6,100,616

Seneca Foods Cl. B 1

  13,840       581,280

SunOpta 1

  187,459       1,321,586

Tootsie Roll Industries 2

  135,847       5,399,918

Waterloo Investment Holdings 1, 5

  2,973,544       892,063
           
            24,248,221
           
PERSONAL PRODUCTS - 0.1%            

Inter Parfums

  43,530       1,425,608
 
Total (Cost $21,361,098)           28,485,149
 
             
ENERGY 5.2%            
ENERGY EQUIPMENT & SERVICES - 4.3%            

CARBO Ceramics 1, 2

  48,000       502,080

Diamond Offshore Drilling 1

  189,000       3,345,300

Era Group 1

  559,771       9,499,314

Forum Energy Technologies 1

  129,654       2,852,388

Frank’s International

  108,600       1,336,866

Helmerich & Payne

  99,930       7,734,582

ION Geophysical 1

  71,880       431,280

Oil States International 1

  46,833       1,826,487

Pason Systems

  532,180       7,784,616

SEACOR Holdings 1

  150,469       10,725,430

TGS-NOPEC Geophysical

  309,170       6,856,643

Trican Well Service 1

  897,300       3,074,204
           
            55,969,190
           
OIL, GAS & CONSUMABLE FUELS - 0.9%            

Dorchester Minerals L.P.

  177,172       3,109,369

Dorian LPG 1

  184,034       1,510,919

Hargreaves Services

  57,683       193,339

San Juan Basin Royalty Trust

  320,352       2,120,730

World Fuel Services

  66,600       3,057,606

44 | 2016 Annual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2016

 
Schedule of Investments (continued)
    SHARES       VALUE
 
             
ENERGY (continued)            
OIL, GAS & CONSUMABLE FUELS (continued)            

WPX Energy 1

  110,000     $ 1,602,700
           
            11,594,663
 
Total (Cost $66,444,110)           67,563,853
 
             
FINANCIALS 14.9%            
BANKS - 2.3%            

Bank of N.T. Butterfield & Son

  178,416       5,609,399

Blue Hills Bancorp

  82,680       1,550,250

Canadian Western Bank

  279,500       6,315,890

Farmers & Merchants Bank of Long Beach 4

  1,080       7,344,000

Fauquier Bankshares

  160,800       2,596,920

First Citizens BancShares Cl. A

  17,026       6,044,230
           
            29,460,689
           
CAPITAL MARKETS - 7.9%            

Ares Management L.P.

  375,900       7,217,280

Artisan Partners Asset Management Cl. A

  246,600       7,336,350

ASA Gold and Precious Metals

  199,821       2,206,024

Ashmore Group

  1,354,000       4,724,550

Associated Capital Group Cl. A

  20,200       663,570

Citadel Capital 1

  8,549,921       476,306

Cowen Group 1

  62,706       971,943

Dundee Corporation Cl. A 1

  1,079,900       4,785,614

Edmond de Rothschild (Suisse)

  153       2,102,675

Federated Investors Cl. B

  162,840       4,605,115

Jupiter Fund Management

  230,000       1,253,319

KKR & Co. L.P.

  24,100       370,899

Lazard Cl. A

  117,335       4,821,295

Manning & Napier Cl. A

  395,692       2,987,475

MarketAxess Holdings

  70,800       10,401,936

Medley Management Cl. A

  109,500       1,084,050

Morningstar

  84,600       6,223,176

mutares

  39,266       471,775

MVC Capital

  324,200       2,781,636

Oaktree Capital Group LLC Cl. A

  101,100       3,791,250

Rothschild & Co

  216,893       5,865,566

SEI Investments

  185,600       9,161,216

Sprott

  1,590,000       2,972,405

TMX Group

  46,600       2,482,279

U.S. Global Investors Cl. A

  520,551       707,949

Value Partners Group

  5,453,000       4,337,809

Virtus Investment Partners

  32,330       3,816,557

Westwood Holdings Group

  49,073       2,943,889

ZAIS Group Holdings Cl. A 1, 2

  492,300       723,681
           
            102,287,589
           
CONSUMER FINANCE - 0.1%            

Bajaj Finance

  55,000       683,431
           
DIVERSIFIED FINANCIAL SERVICES - 0.5%            

First Pacific

  1,020,000       712,419

PICO Holdings 1

  409,400       6,202,410
           
            6,914,829
           
INSURANCE - 2.7%            

Alleghany Corporation 1

  2,109       1,282,525

Atlas Financial Holdings 1

  30,000       541,500

eHealth 1

  65,000       692,250

E-L Financial

  21,500       11,689,569

Erie Indemnity Cl. A

  25,000       2,811,250

Independence Holding Company

  314,523       6,148,925

MBIA 1

  942,400       10,083,680

ProAssurance Corporation

  17,139       963,212

WMIH 1

  77,742       120,500
           
            34,333,411
           
INVESTMENT COMPANIES - 0.2%            

RIT Capital Partners

  130,500       3,025,860
           
THRIFTS & MORTGAGE FINANCE - 1.2%            

Genworth MI Canada

  258,195       6,472,903

Timberland Bancorp 3

  444,200       9,177,172

Vestin Realty Mortgage II 1

  53,557       125,324
           
            15,775,399
 
Total (Cost $174,396,958)           192,481,208
 
             
HEALTH CARE 4.2%            
BIOTECHNOLOGY - 0.7%            

ARIAD Pharmaceuticals 1, 2

  29,700       369,468

Keryx Biopharmaceuticals 1

  139,000       814,540

Sangamo BioSciences 1

  469,315       1,431,411

Zealand Pharma 1

  464,707       6,996,930
           
            9,612,349
           
HEALTH CARE EQUIPMENT & SUPPLIES - 1.3%            

Analogic Corporation

  53,735       4,457,318

Atrion Corporation 2,6

  15,750       7,988,400

Cerus Corporation 1

  108,000       469,800

Invacare Corporation

  38,900       507,645

Masimo Corporation 1

  50,000       3,370,000

Neogen Corporation 1

  6,800       448,800
           
            17,241,963
           
HEALTH CARE PROVIDERS & SERVICES - 0.7%            

Aceto Corporation

  76,655       1,684,111

AMN Healthcare Services 1

  15,900       611,355

Community Health Systems 1

  790,000       4,416,100

Landauer

  50,000       2,405,000
           
            9,116,566
           
HEALTH CARE TECHNOLOGY - 0.2%            

Cegedim 1

  10,000       276,057

Medidata Solutions 1

  40,000       1,986,800
           
            2,262,857
           
LIFE SCIENCES TOOLS & SERVICES - 1.2%            

Bio-Rad Laboratories Cl. A 1

  33,498       6,106,015

Bio-Techne

  50,343       5,176,771

PAREXEL International 1

  56,600       3,719,752
           
            15,002,538
           
PHARMACEUTICALS - 0.1%            

Theravance Biopharma 1

  37,291       1,188,837
 
Total (Cost $38,859,309)           54,425,110
 
             
INDUSTRIALS 29.2%            
AEROSPACE & DEFENSE - 2.7%            

Austal

  688,670       863,930

Ducommun 1

  117,200       2,995,632

HEICO Corporation

  140,338       10,827,077

HEICO Corporation Cl. A

  80,808       5,486,863

Magellan Aerospace

  182,779       2,447,672

Mercury Systems 1

  25,400       767,588

Teledyne Technologies 1

  20,600       2,533,800

Wesco Aircraft Holdings 1

  588,000       8,790,600
           
            34,713,162
           

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS   2016 Annual Report to Stockholders | 45

Royce Value Trust

 
Schedule of Investments (continued)
    SHARES       VALUE
 
             
INDUSTRIALS (continued)            
AIR FREIGHT & LOGISTICS - 1.8%            

Expeditors International of Washington

  158,900     $ 8,415,344

Forward Air

  179,750       8,516,555

Hub Group Cl. A 1, 2, 6

  149,400       6,536,250
           
            23,468,149
           
BUILDING PRODUCTS - 0.5%            

Apogee Enterprises

  68,900       3,690,284

Burnham Holdings Cl. B 4

  36,000       567,000

Insteel Industries

  55,780       1,987,999

Patrick Industries 1

  9,850       751,555
           
            6,996,838
           
COMMERCIAL SERVICES & SUPPLIES - 2.4%            

Atento 1

  234,500       1,782,200

CECO Environmental

  99,028       1,381,440

CompX International Cl. A

  211,100       3,398,710

Copart 1

  219,960       12,187,984

Heritage-Crystal Clean 1

  152,527       2,394,674

Kimball International Cl. B

  286,180       5,025,321

Ritchie Bros. Auctioneers

  17,510       595,340

Steelcase Cl. A

  219,560       3,930,124

UniFirst Corporation

  6,470       929,415
           
            31,625,208
           
CONSTRUCTION & ENGINEERING - 3.5%            

EMCOR Group 2, 6

  121,300       8,583,188

IES Holdings 1

  539,482       10,331,080

Jacobs Engineering Group 1

  164,900       9,399,300

KBR

  325,300       5,429,257

Northwest Pipe 1

  20,000       344,400

NV5 Global 1

  23,500       784,900

Sterling Construction 1

  122,300       1,034,658

Valmont Industries 2

  62,845       8,854,861
           
            44,761,644
           
ELECTRICAL EQUIPMENT - 0.9%            

Global Power Equipment Group 1, 4

  631,820       2,988,508

Powell Industries

  94,500       3,685,500

Preformed Line Products

  91,600       5,323,792
           
            11,997,800
           
INDUSTRIAL CONGLOMERATES - 0.5%            

A. Soriano

  2,791,000       336,770

Raven Industries

  251,725       6,343,470
           
            6,680,240
           
MACHINERY - 10.6%            

Chen Hsong Holdings

  1,159,000       289,620

China Metal International Holdings

  554,524       174,797

CIRCOR International

  85,384       5,539,714

CLARCOR

  74,000       6,102,780

Colfax Corporation 1

  77,242       2,775,305

Columbus McKinnon

  20,975       567,164

Deutz

  115,000       646,157

Donaldson Company

  193,559       8,144,963

Exco Technologies

  216,600       1,739,059

Federal Signal

  56,280       878,531

Franklin Electric

  104,600       4,068,940

Graco

  89,276       7,417,943

Greenbrier Companies (The)

  47,800       1,986,090

Hurco Companies

  25,952       859,011

Hyster-Yale Materials Handling Cl. A

  10,000       637,700

IDEX Corporation

  67,400       6,070,044

John Bean Technologies

  70,326       6,044,520

Kadant

  42,200       2,582,640

Kennametal

  160,100       5,004,726

Lincoln Electric Holdings

  61,360       4,704,471

Lindsay Corporation 2

  80,000       5,968,800

Luxfer Holdings ADR

  28,100       306,009

Lydall 1

  30,580       1,891,373

NN

  308,700       5,880,735

Nordson Corporation

  24,296       2,722,367

RBC Bearings 1

  125,000       11,601,250

Sarine Technologies

  327,500       406,813

Sun Hydraulics

  286,318       11,444,131

Tennant Company

  111,900       7,967,280

Watts Water Technologies Cl. A

  61,000       3,977,200

Westinghouse Air Brake Technologies

  91,070       7,560,631

Westport Fuel Systems 1

  327,100       369,623

Woodward

  154,600       10,675,130
           
            137,005,517
           
MARINE - 1.4%            

Clarkson

  291,000       7,792,316

Kirby Corporation 1

  144,500       9,609,250
           
            17,401,566
           
PROFESSIONAL SERVICES - 2.7%            

Advisory Board (The) 1

  190,277       6,326,710

Franklin Covey 1

  40,800       822,120

Heidrick & Struggles International

  66,480       1,605,492

ICF International 1

  20,836       1,150,147

ManpowerGroup

  112,858       10,029,691

On Assignment 1, 2, 6

  179,295       7,917,667

Robert Half International

  75,532       3,684,451

TrueBlue 1

  128,920       3,177,878

Volt Information Sciences 1

  65,000       445,250
           
            35,159,406
           
ROAD & RAIL - 1.7%            

Genesee & Wyoming Cl. A 1

  15,000       1,041,150

Knight Transportation

  122,400       4,045,320

Landstar System

  123,260       10,514,078

Patriot Transportation Holding 1

  63,900       1,488,870

Saia 1, 2

  64,130       2,831,339

Trancom

  4,932       241,015

Universal Logistics Holdings

  78,916       1,290,277
           
            21,452,049
           
TRADING COMPANIES & DISTRIBUTORS - 0.5%            

Central Steel & Wire 4

  4,862       2,138,064

Houston Wire & Cable

  509,200       3,309,800

MSC Industrial Direct Cl. A 2

  11,963       1,105,262
           
            6,553,126
           
TRANSPORTATION INFRASTRUCTURE - 0.0%            

Hopewell Highway Infrastructure

  1,012,000       529,453
 
Total (Cost $224,439,887)           378,344,158
 
             
INFORMATION TECHNOLOGY 16.8%            
COMMUNICATIONS EQUIPMENT - 0.8%            

ADTRAN 2

  234,973       5,251,647

Bel Fuse Cl. B

  30,238       934,354

Clearfield 1

  55,600       1,150,920

NetScout Systems 1

  58,500       1,842,750

Oclaro 1

  87,500       783,125
           
            9,962,796
           

46 | 2016 Annual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

December 31, 2016

 
Schedule of Investments (continued)
    SHARES       VALUE
 
             
INFORMATION TECHNOLOGY (continued)            
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 7.8%            

Anixter International 1, 2, 6

  70,895     $ 5,746,040

Broadway Industrial Group 1

  2,000,000       261,197

Cognex Corporation 2,6

  210,970       13,421,911

Coherent 1

  111,734       15,350,576

Dolby Laboratories Cl. A

  21,250       960,287

FARO Technologies 1

  157,067       5,654,412

FLIR Systems

  317,000       11,472,230

HollySys Automation Technologies

  53,882       987,118

Horiba

  12,000       554,191

IPG Photonics 1, 2, 6

  72,070       7,114,030

LRAD Corporation

  776,544       1,327,890

Methode Electronics

  54,030       2,234,141

National Instruments

  261,850       8,070,217

Orbotech 1

  61,600       2,058,056

Perceptron 1

  357,700       2,375,128

Plexus Corporation 1

  150,600       8,138,424

Richardson Electronics

  573,732       3,614,512

Rogers Corporation 1

  57,066       4,383,239

Systemax

  58,520       513,220

TTM Technologies 1, 2

  496,400       6,765,932

VST Holdings

  979,000       342,190
           
            101,344,941
           
INTERNET SOFTWARE & SERVICES - 2.1%            

Actua Corporation 1

  83,815       1,173,410

Care.com 1

  235,900       2,021,663

comScore 1

  227,236       7,176,113

HolidayCheck Group 1

  44,900       110,924

IZEA 1

  70,106       316,178

j2 Global

  85,120       6,962,816

MiX Telematics ADR

  2,641       16,348

QuinStreet 1

  526,082       1,978,068

RealNetworks 1

  224,670       1,091,896

Solium Capital 1

  167,700       1,054,175

Spark Networks 1, 2

  263,000       220,894

Stamps.com 1

  37,500       4,299,375

Support.com 1

  650,300       559,258
           
            26,981,118
           
IT SERVICES - 1.1%            

Acxiom Corporation 1

  48,000       1,286,400

Convergys Corporation 2

  121,000       2,971,760

DST Systems 2

  10,000       1,071,500

Hackett Group (The)

  417,266       7,368,918

Innodata 1

  274,314       672,069

MoneyGram International 1

  59,400       701,514

Unisys Corporation 1

  40,000       598,000
           
            14,670,161
           
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.7%            

Amtech Systems 1

  141,471       601,252

Brooks Automation

  140,700       2,401,749

Cabot Microelectronics

  15,300       966,501

CyberOptics Corporation 1

  13,800       360,180

Daqo New Energy ADR 1

  17,200       331,960

Diodes 1

  270,850       6,952,719

Exar Corporation 1

  157,576       1,698,669

Intermolecular 1

  40,000       37,920

Kulicke & Soffa Industries 1

  77,400       1,234,530

MKS Instruments

  27,010       1,604,394

Nanometrics 1

  109,400       2,741,564

Nova Measuring Instruments 1

  82,300       1,081,422

Photronics 1

  159,900       1,806,870

Sigma Designs 1

  78,900       473,400

Silicon Motion Technology ADR

  51,900       2,204,712

Teradyne

  130,000       3,302,000

Tessera Holding Corporation

  153,530       6,786,026

Ultra Clean Holdings 1

  42,800       415,160

Veeco Instruments 1

  17,500       510,125
           
            35,511,153
           
SOFTWARE - 1.6%            

American Software Cl. A

  108,690       1,122,768

ANSYS 1, 2, 6

  95,000       8,786,550

Computer Modelling Group

  316,300       2,146,124

Mentor Graphics

  89,523       3,302,503

Model N 1

  300,387       2,658,425

Monotype Imaging Holdings

  117,700       2,336,345

PSI

  18,194       233,449

SeaChange International 1

  247,069       568,259
           
            21,154,423
           
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 0.7%            

Diebold Nixdorf

  266,600       6,704,990

Intevac 1

  214,500       1,833,975
           
            8,538,965
 
Total (Cost $156,696,296)           218,163,557
 
             
MATERIALS 7.3%            
CHEMICALS - 2.3%            

Dyadic International 1, 4

  75,000       123,000

FutureFuel Corporation

  48,500       674,150

Hawkins

  86,178       4,649,303

Innospec

  36,883       2,526,486

Minerals Technologies

  91,893       7,098,734

Quaker Chemical

  109,669       14,031,052
           
            29,102,725
           
CONSTRUCTION MATERIALS - 1.0%            

Ash Grove Cement Cl. B 4

  50,518       13,134,680
           
CONTAINERS & PACKAGING - 0.3%            

Mayr-Melnhof Karton

  34,000       3,603,744
           
METALS & MINING - 3.7%            

Alamos Gold Cl. A

  263,300       1,815,930

Ampco-Pittsburgh

  36,966       619,180

Constellium Cl. A 1

  90,000       531,000

Exeter Resource 1

  240,000       179,736

Ferroglobe (Warranty Insurance Trust) 1, 5

  49,300       0

Franco-Nevada Corporation

  127,300       7,607,448

Gold Fields ADR

  370,000       1,113,700

Haynes International

  113,900       4,896,561

Hecla Mining

  321,300       1,683,612

Imdex 1

  350,000       144,988

Lundin Mining 1

  640,000       3,050,683

Major Drilling Group International 1

  739,243       3,865,107

Pretium Resources 1

  165,000       1,366,551

Reliance Steel & Aluminum

  139,940       11,130,828

Royal Gold

  16,600       1,051,610

Synalloy Corporation 1

  178,800       1,957,860

Worthington Industries

  148,000       7,021,120
           
            48,035,914
           

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS   2016 Annual Report to Stockholders | 47

Royce Value Trust   December 31, 2016

 
Schedule of Investments (continued)
    SHARES       VALUE  
 
               
MATERIALS (continued)              
PAPER & FOREST PRODUCTS - 0.0%              

TFS Corporation

  453,967     $ 543,587  
 
Total (Cost $57,328,240)           94,420,650  
 
               
REAL ESTATE 2.8%              
REAL ESTATE MANAGEMENT & DEVELOPMENT - 2.8%              

AV Homes 1

  66,100       1,044,380  

FirstService Corporation

  135,100       6,414,548  

Forestar Group 1

  102,000       1,356,600  

FRP Holdings 1

  173,558       6,543,137  

Kennedy-Wilson Holdings

  101,300       2,076,650  

Marcus & Millichap 1

  246,113       6,576,139  

St. Joe Company (The) 1

  177,000       3,363,000  

Tejon Ranch 1

  360,035       9,155,690  
 
Total (Cost $28,248,857)           36,530,144  
 
               
TELECOMMUNICATION SERVICES 0.5%              
WIRELESS TELECOMMUNICATION SERVICES - 0.5%              

Telephone and Data Systems

  208,270       6,012,755  
 
Total (Cost $5,433,816)           6,012,755  
 
 
               
UTILITIES 0.1%              
GAS UTILITIES - 0.1%              

Shizuoka Gas

  110,000       773,244  

Toho Gas

  60,000       487,291  
             
            1,260,535  
             
MULTI-UTILITIES - 0.0%              

Just Energy Group 2

  18,520       101,119  
 
Total (Cost $1,218,976)           1,361,654  
 
               
               
MISCELLANEOUS 7 4.3%              
 
Total (Cost $53,213,601)           56,034,275  
 
               
TOTAL COMMON STOCKS              
 
(Cost $942,331,967)           1,267,889,502  
 
 
REPURCHASE AGREEMENT 6.3%              
Fixed Income Clearing Corporation, 0.03% dated 12/30/16, due 1/3/17, maturity value
$80,912,270 (collateralized by obligations of various U.S. Government Agencies, 2.50%-
3.375% due 8/15/23-5/15/44, valued at $82,531,094)
 
(Cost $80,912,000)           80,912,000  
 
               
TOTAL INVESTMENTS 104.1%              
 
(Cost $1,023,243,967)           1,348,801,502  
 
               
LIABILITIES LESS CASH AND OTHER ASSETS (4.1)%           (52,789,790 )
             
               
 
NET ASSETS 100.0%         $ 1,296,011,712  
 

 
New additions in 2016.
1 Non-income producing.
2
All or a portion of these securities were pledged as collateral in connection with the revolving credit agreement at December 31, 2016. Total market value of pledged securities at December 31, 2016, was $110,266,950.
3
At December 31, 2016, the Fund owned 5% or more of the Company’s outstanding voting securities thereby making the Company an Affiliated Company as that term is defined in the Investment Company Act of 1940. See Notes to Financial Statements.
4
These securities are defined as Level 2 securities due to fair value being based on quoted prices for similar securities. See Notes to Financial Statements.
5
Securities for which market quotations are not readily available represent 0.1% of net assets. These securities have been valued at their fair value under procedures approved by the Fund’s Board of Directors. These securities are defined as Level 3 securities due to the use of significant unobservable inputs in the determination of fair value. See Notes to Financial Statements.
6
At December 31, 2016, a portion of these securities were rehypothecated in connection with the Fund’s revolving credit agreement in the aggregate amount of $64,652,459.
7
Includes securities first acquired in 2016 and less than 1% of net assets.
   
 
Bold indicates the Fund’s 20 largest equity holdings in terms of December 31, 2016, market value.
   
 
TAX INFORMATION: The cost of total investments for Federal income tax purposes was $1,025,881,370. At December 31, 2016, net unrealized appreciation for all securities was $322,920,132 consisting of aggregate gross unrealized appreciation of $405,405,905 and aggregate gross unrealized depreciation of $82,485,773. The primary causes of the differences between book and tax basis cost are the timing of the recognition of losses on securities sold, investments in publicly traded partnerships and Trusts and mark-to-market of Passive Foreign Investment Companies.
 

48 | 2016 Annual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

Royce Value Trust   December 31, 2016

 
Statement of Assets and Liabilities

ASSETS:        
Investments at value        
 

Non-Affiliated Companies

  $ 1,257,891,136  
 

Affiliated Companies

    9,998,366  
 
Repurchase agreements (at cost and value)     80,912,000  
 
Cash and foreign currency     65,248  
 
Receivable for investments sold     18,100,968  
 
Receivable for dividends and interest     1,351,828  
 
Prepaid expenses and other assets     527,870  
 
Total Assets     1,368,847,416  
 
LIABILITIES:        
Revolving credit agreement     70,000,000  
 
Payable for investments purchased     1,973,762  
 
Payable for investment advisory fee     489,564  
 
Payable for directors’ fees     44,757  
 
Payable for interest expense     11,363  
 
Accrued expenses     242,350  
 
Deferred capital gains tax     73,908  
 
Total Liabilities     72,835,704  
 
Net Assets   $ 1,296,011,712  
 
ANALYSIS OF NET ASSETS:        
Paid-in capital - $0.001 par value per share; 81,791,924 shares outstanding (150,000,000 shares authorized)   $ 962,812,872  
 
Undistributed net investment income (loss)     (1,959,371 )
 
Accumulated net realized gain (loss) on investments and foreign currency     9,653,806  
 
Net unrealized appreciation (depreciation) on investments and foreign currency     325,504,405  
 
Net Assets (net asset value per share - $15.85)   $ 1,296,011,712  
 
Investments at identified cost   $ 942,331,967  
 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS   2016 Annual Report to Stockholders | 49

Royce Value Trust

 
Statement of Changes in Net Assets

    YEAR ENDED 12/31/16       YEAR ENDED 12/31/15  
 
                   
INVESTMENT OPERATIONS:                  
Net investment income (loss)   $ 9,680,260       $ 9,193,108  
 
Net realized gain (loss) on investments and foreign currency     75,719,009         43,117,817  
 
Net change in unrealized appreciation (depreciation) on investments and foreign currency     186,502,762         (157,435,228 )
 
Net increase (decrease) in net assets from investment operations     271,902,031         (105,124,303 )
 
DISTRIBUTIONS:                  
Net investment income     (10,786,801 )       (12,151,910 )
 
Net realized gain on investments and foreign currency     (70,931,388 )       (83,306,926 )
 
Total distributions     (81,718,189 )       (95,458,836 )
 
CAPITAL STOCK TRANSACTIONS:                  
Reinvestment of distributions     33,793,124         40,663,247  
 
Total capital stock transactions     33,793,124         40,663,247  
 
Net Increase (Decrease) In Net Assets     223,976,966         (159,919,892 )
 
NET ASSETS:                  
 
Beginning of year     1,072,034,746         1,231,954,638  
 
End of year (including undistributed net investment income (loss) of $(1,959,371) at 12/31/16 and $(1,047,919) at 12/31/15)   $ 1,296,011,712       $ 1,072,034,746  
 

50 | 2016 Annual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

Royce Value Trust   Year Ended December 31, 2016

 
Statement of Operations

INVESTMENT INCOME:        
         
INCOME:        
Dividends        
 

Non-Affiliated Companies

  $ 16,827,595  
 

Affiliated Companies

    1,519,381  
 
Foreign withholding tax     (433,390 )
 
Interest     50,925  
 
Rehypothecation income     60,170  
 
Total income     18,024,681  
 
EXPENSES:        
 
Investment advisory fees     5,849,115  
 
Interest expense     1,205,769  
 
Stockholder reports     404,144  
 
Administrative and office facilities     276,617  
 
Custody and transfer agent fees     194,234  
 
Directors’ fees     171,715  
 
Professional fees     95,084  
 
Other expenses     147,845  
 
Total expenses     8,344,523  
 
Compensating balance credits     (102 )
 
Net expenses     8,344,421  
 
Net investment income (loss)     9,680,260  
 
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:        
NET REALIZED GAIN (LOSS):        
 
Investments in Non-Affiliated Companies     75,894,203  
 
Investments in Affiliated Companies     10,000  
 
Foreign currency transactions     (185,194 )
 
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION):        
 
Investments and foreign currency translations     186,470,163  
 
Other assets and liabilities denominated in foreign currency     32,599  
 
Net realized and unrealized gain (loss) on investments and foreign currency     262,221,771  
 
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS   $ 271,902,031  
 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS   2016 Annual Report to Stockholders | 51

Royce Value Trust   Year Ended December 31, 2016

 
Statement of Cash Flows

CASH FLOWS FROM OPERATING ACTIVITIES:        
Net increase (decrease) in net assets from investment operations   $ 271,902,031  
 
Adjustments to reconcile net increase (decrease) in net assets from investment operations to net cash provided by operating activities:        
 

Purchases of long-term investments

    (326,628,705 )
 

Proceeds from sales and maturities of long-term investments

    434,894,498  
 

Net purchases, sales and maturities of short-term investments

    (70,185,000 )
 

Net (increase) decrease in dividends and interest receivable and other assets

    (19,414 )
 

Net increase (decrease) in interest expense payable, accrued expenses and other liabilities

    1,808  
 

Net change in unrealized appreciation (depreciation) on investments

    (186,470,163 )
 

Net realized gain (loss) on investments and foreign currency

    (75,719,009 )
 
Net cash provided by operating activities     47,776,046  
 
CASH FLOWS FROM FINANCING ACTIVITIES:        
Net increase (decrease) in revolving credit agreement      
 
Distributions     (81,718,189 )
 
Reinvestment of distributions     33,793,124  
 
Net cash used for financing activities     (47,925,065 )
 
INCREASE (DECREASE) IN CASH:     (149,019 )
 
Cash and foreign currency at beginning of year     214,267  
 
Cash and foreign currency at end of year   $ 65,248  
 

52 | 2016 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
     
    12/31/16     12/31/15     12/31/14     12/31/13     12/31/12  
 
Net Asset Value, Beginning of Period   $ 13.56     $ 16.24     $ 18.17     $ 15.40     $ 14.18  
 
INVESTMENT OPERATIONS:                                        
Net investment income (loss)     0.12       0.12       0.12       0.12       0.23  
 
Net realized and unrealized gain (loss) on investments and foreign currency     3.27       (1.48 )     (0.13 )     4.89       2.02  
 
Total investment operations     3.39       (1.36 )     (0.01 )     5.01       2.25  
 
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:                                        
Net investment income                             (0.04 )
 
Net realized gain on investments and foreign currency                             (0.13 )
 
Total distributions to Preferred Stockholders                             (0.17 )
 

Net Increase (Decrease) in Net Assets Applicable to Common Stockholders from Investment Operations

    3.39       (1.36 )     (0.01 )     5.01       2.08  
 
DISTRIBUTIONS TO COMMON STOCKHOLDERS:                                        
Net investment income     (0.13 )     (0.16 )     (0.14 )     (0.11 )     (0.17 )
 
Net realized gain on investments and foreign currency     (0.89 )     (1.08 )     (1.68 )     (2.08 )     (0.63 )
 
Total distributions to Common Stockholders     (1.02 )     (1.24 )     (1.82 )     (2.19 )     (0.80 )
 
CAPITAL STOCK TRANSACTIONS:                                        
Effect of reinvestment of distributions by Common Stockholders     (0.08 )     (0.08 )     (0.10 )     (0.05 )     (0.06 )
 
Total capital stock transactions     (0.08 )     (0.08 )     (0.10 )     (0.05 )     (0.06 )
 
Net Asset Value, End of Period   $ 15.85     $ 13.56     $ 16.24     $ 18.17     $ 15.40  
 
Market Value, End of Period   $ 13.39     $ 11.77     $ 14.33     $ 16.01     $ 13.42  
 
TOTAL RETURN:1                                        
Net Asset Value     26.87 %     (8.09 )%     0.78 %     34.14 %     15.41 %
 
Market Value     23.48 %     (9.59 )%     0.93 %     35.63 %     16.22 %
 

RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO
COMMON STOCKHOLDERS:

                                       
Investment advisory fee expense2     0.51 %     0.50 %     0.46 %     0.54 %     0.56 %
 
Other operating expenses     0.22 %     0.18 %     0.15 %     0.25 %     0.15 %
 
Total expenses (net)3     0.73 %     0.68 %     0.61 %     0.79 %     0.71 %
 
Expenses net of fee waivers and excluding interest expense     0.62 %     0.61 %     0.55 %     0.65 %     0.68 %
 
Expenses prior to fee waivers and balance credits     0.73 %     0.68 %     0.61 %     0.79 %     0.71 %
 
Expenses prior to fee waivers     0.73 %     0.68 %     0.61 %     0.79 %     0.71 %
 
Net investment income (loss)     0.85 %     0.78 %     0.72 %     0.70 %     1.57 %
 
SUPPLEMENTAL DATA:                                        

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

  $ 1,296,012     $ 1,072,035     $ 1,231,955     $ 1,307,829     $ 1,082,426  
 
Portfolio Turnover Rate     28 %     35 %     40 %     33 %     25 %
 
REVOLVING CREDIT AGREEMENT:                                        
Asset coverage     1951 %     1631 %     1860 %     1289 %     822 %
 
Asset coverage per $1,000   $ 19,514     $ 16,315     $ 18,599     $ 12,889     $ 8,216  
 

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 and sale dates instead of market value.
2
The investment advisory fee is calculated based on average net assets over a rolling 60-month basis, while the above ratios of investment advisory fee expenses are based on the average net assets applicable to Common Stockholders over a 12-month basis.
3
Expense ratio based on total average net assets including liquidation value of Preferred Stock was 0.60% for the year ended December 31, 2012.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS   2016 Annual Report to Stockholders | 53

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”.
 
VALUATION OF INVESTMENTS:
Securities are valued as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq’s Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their highest bid price. Other over-the-counter securities for which market quotations are readily available are valued at their highest bid price, except in the case of some bonds and other fixed income securities which may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. The Fund values its non-U.S. dollar denominated securities in U.S. dollars daily at the prevailing foreign currency exchange rates as quoted by a major bank. Securities for which market quotations are not readily available are valued at their fair value in accordance with the provisions of the 1940 Act, under procedures approved by the Fund’s Board of Directors, and are reported as Level 3 securities. As a general principle, the fair value of a security is the amount which the Fund might reasonably expect to receive for the security upon its current sale. However, in light of the judgment involved in fair valuations, there can be no assurance that a fair value assigned to a particular security will be the amount which the Fund might be able to receive upon its current sale. In addition, if, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. The Fund uses an independent pricing service to provide fair value estimates for relevant non-U.S. equity securities on days when the U.S. market volatility exceeds a certain threshold. This pricing service uses proprietary correlations it has developed between the movement of prices of non-U.S. equity securities and indices of U.S.-traded securities, futures contracts and other indications to estimate the fair value of relevant non-U.S. securities. When fair value pricing is employed, the prices of securities used by the Fund may differ from quoted or published prices for the same security. Investments in money market funds are valued at net asset value per share.
Various inputs are used in determining the value of the Fund’s investments, as noted above. These inputs are summarized in the three broad levels below:
    Level 1
quoted prices in active markets for identical securities.
    Level 2
other significant observable inputs (including quoted prices for similar securities, foreign securities that may be fair valued and repurchase agreements). The table below includes all Level 2 securities. Level 2 securities with values based on quoted prices for similar securities are noted in the Schedule of Investments.
    Level 3
significant unobservable inputs (including last trade price before trading was suspended, or at a discount thereto for lack of marketability or otherwise, market price information regarding other securities, information received from the company and/or published documents, including SEC filings and financial statements, or other publicly available information).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used to value the Fund’s investments as of December 31, 2016. 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   $1,165,257,510   $101,739,929   $892,063   $1,267,889,502
 
Cash Equivalents     80,912,000     80,912,000
 

Certain securities have transferred in and out of Level 1 and Level 2 measurements during the reporting period. The Fund recognizes transfers between levels as of the end of the reporting period. For the year ended December 31, 2016, securities valued at $5,380,804 were transferred from Level 1 to Level 2 within the fair value hierarchy.

54 | 2016 Annual Report to Stockholders


Royce Value Trust

Notes to Financial Statements (continued)

VALUATION OF INVESTMENTS (continued):

Level 3 Reconciliation:

            REALIZED AND UNREALIZED    
    BALANCE AS OF 12/31/15   PURCHASES   GAIN (LOSS)1   BALANCE AS OF 12/31/16
 
Common Stocks   $167,629   $1,187,434   $(463,000)   $892,063
 
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, 2016 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, including investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.
 
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”.
 
CAPITAL GAINS TAXES:
The Fund is subject to a tax imposed on short-term capital gains on securities of issuers domiciled in certain countries. The Fund records an estimated deferred tax liability for 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, and accounted for as a reduction in the market value of the security.
 
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. Prior to November 15, 2012, distributions to Preferred Stockholders were accrued daily and paid quarterly. Distributions to Common Stockholders are recorded on ex-dividend date. Distributable capital gains and/or net investment income were first allocated to Preferred Stockholder distributions, with any excess allocable to Common Stockholders. If capital gains and/or net investment income were allocated to both Preferred and Common Stockholders, the tax character of such allocations was proportional. To the extent that distributions are not paid from long-term capital gains, net investment income or net short-term capital gains, they will represent a return of capital. Distributions are determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United States of America. Permanent book and tax differences relating to stockholder distributions will result in reclassifications within the capital accounts. Undistributed net investment income may include temporary book and tax basis differences, which will reverse in a subsequent period. Any taxable income or gain remaining undistributed at fiscal year end is distributed in the following year.
 
INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME:
Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date. Non-cash dividend income is recorded at the fair market value of the securities received. Interest income is recorded on an accrual basis. 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.

2016 Annual Report to Stockholders | 55


Royce Value Trust

Notes to Financial Statements (continued)

EXPENSES:
The Fund incurs direct and indirect expenses. Expenses directly attributable to the Fund are charged to the Fund’s operations, while expenses applicable to more than one of the Royce Funds are allocated equitably. Certain personnel, occupancy costs and other administrative expenses related to the Funds are allocated by Royce & Associates (“Royce”) under an administration agreement and are included in administrative and office facilities and professional fees. The Fund has adopted a deferred fee agreement that allows the Directors to defer the receipt of all or a portion of directors’ fees otherwise payable. The deferred fees are invested in certain Royce Funds until distributed in accordance with the agreement.
 
COMPENSATING BALANCE CREDITS:
The Fund has an arrangement with its custodian bank, whereby a portion of the custodian’s fee is paid indirectly by credits earned on the Fund’s cash on deposit with the bank. This deposit arrangement is an alternative to purchasing overnight investments. Conversely, the Fund pays interest to the custodian on any cash overdrafts, to the extent they are not offset by credits earned on positive cash balances.
 
Capital Stock:
The Fund issued 2,740,162 and 3,183,214 shares of Common Stock as reinvestment of distributions for the years ended December 31, 2016 and December 31, 2015, 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 credit agreement. The credit agreement has a 360-day rolling term that resets daily; however, if the Fund exceeds certain net asset value triggers, the credit agreement may convert to a 60-day rolling term that resets daily. The Fund is required to pledge portfolio securities as collateral in an amount up to two times the loan balance outstanding or as otherwise required by applicable regulatory standards and has granted a security interest in the securities pledged to, and in favor of, BNPPI as security for the loan balance outstanding. If the Fund fails to meet certain requirements, or maintain other financial covenants required under 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. 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.
As of December 31, 2016, the Fund has outstanding borrowings of $70,000,000. During the year ended December 31, 2016, the Fund borrowed an average daily balance of $70,000,000 at a weighted average borrowing cost of 1.69%. The maximum amount outstanding during the year ended December 31, 2016 was $70,000,000. As of December 31, 2016, the aggregate value of rehypothecated securities was $64,652,459. During the year ended December 31, 2016, the Fund earned $60,170 in fees from rehypothecated securities.
 
Investment Advisory Agreement:
As compensation for its services under the Investment Advisory Agreement, Royce receives a fee comprised of a Basic Fee (“Basic Fee”) and an adjustment to the Basic Fee based on the investment performance of the Fund in relation to the investment record of the S&P SmallCap 600 Index (“S&P 600”).
The Basic Fee is a monthly fee equal to 1/12 of 1% (1% on an annualized basis) of the average of the Fund’s month-end net assets applicable to Common Stockholders, plus the liquidation value of outstanding Preferred Stock, for the rolling 60-month period ending with such month (the “performance period“). The Basic Fee for each month is increased or decreased at the rate of 1/12 of .05% for each percentage point that the investment performance of the Fund exceeds, or is exceeded by, the percentage change in the investment record of the S&P 600 for the performance period by more than two percentage points. The performance period for each such month is a rolling 60-month period ending with such month. The maximum increase or decrease in the Basic Fee for any month may not exceed 1/12 of .5%. Accordingly, for each month, the maximum monthly fee rate as adjusted for performance is 1/12 of 1.5% and is payable if the investment performance of the Fund exceeds the percentage change in the investment record of the S&P 600 by 12 or more percentage points for the performance period, and the minimum monthly fee rate as adjusted for performance is 1/12 of .5% and is payable if the

56 | 2016 Annual Report to Stockholders


Royce Value Trust

Notes to Financial Statements (continued)
 
Investment Advisory Agreement (continued):
percentage change in the investment record of the S&P 600 exceeds the investment performance of the Fund by 12 or more percentage points for the performance period.
Notwithstanding the foregoing, Royce is not entitled to receive any fee for any month when the investment performance of the Fund for the rolling 36-month period ending with such month is negative. In the event that the Fund’s investment performance for such a performance period is less than zero, Royce will not be required to refund to the Fund any fee earned in respect of any prior performance period.
For the twelve rolling 60-month periods in 2016, the Fund’s investment performance ranged from 36% to 46% below the investment performance of the S&P 600. Accordingly, the net investment advisory fee consisted of a Basic Fee of $11,698,230 and a net downward adjustment of $5,849,115 for the performance of the Fund relative to that of the S&P 600. For the year ended December 31, 2016, the Fund expensed Royce investment advisory fees totaling $5,849,115.
 
Purchases and Sales of Investment Securities:
For the year ended December 31, 2016, the costs of purchases and proceeds from sales of investment securities, other than short-term securities, amounted to $328,040,160 and $448,878,574, 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. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7. Cross trades for the year ended December 31, 2016, were as follows:

COST OF PURCHASES   PROCEEDS FROM SALES   REALIZED GAIN (LOSS)
 
$56,862,131   $10,176,642   $(3,646,946)
 

Tax Information:
Distributions during the years ended December 31, 2016 and 2015, were characterized as follows for tax purposes:

ORDINARY INCOME   LONG-TERM CAPITAL GAINS
 
2016   2015   2016   2015
 
$12,241,385   $16,352,099   $69,476,804   $79,106,737
 

The tax basis components of distributable earnings at December 31, 2016, were as follows:

            QUALIFIED LATE YEAR    
UNDISTRIBUTED   UNDISTRIBUTED LONG-TERM   NET UNREALIZED   ORDINARY AND   TOTAL
ORDINARY   CAPITAL GAINS OR   APPRECIATION   POST-OCTOBER LOSS   DISTRIBUTABLE
INCOME   (CAPITAL LOSS CARRYFORWARD)   (DEPRECIATION)1   DEFERRALS2   EARNINGS
 
$3,266,059   $8,454,032   $322,867,003   $(1,388,254)   $333,198,840
 
1
Includes timing differences on foreign currency, recognition of losses on securities sold, 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.

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, 2016, the Fund recorded the following permanent reclassifications, which relate primarily to current investments in Real Estate Investment Trusts, publicly traded partnerships and Trusts, foreign currency transactions, foreign capital gains tax, dividend redesignations and gains from the sale of Passive Foreign Investment Companies. Results of operations and net assets were not affected by these reclassifications.

UNDISTRIBUTED NET   ACCUMULATED NET    
INVESTMENT INCOME   REALIZED GAIN (LOSS)   PAID-IN CAPITAL
 
$195,089   $(178,002)   $(17,087)
 

Management has analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years (2013-2016) and has concluded that as of December 31, 2016, no provision for income tax is required in the Fund’s financial statements.

2016 Annual Report to Stockholders | 57


Royce Value Trust

Notes to Financial Statements (continued)

Transactions in Affiliated Companies:
An “Affiliated Company” as defined in the Investment Company Act of 1940, is a company in which a fund owns 5% or more of the company’s outstanding voting securities at any time during the period. The Fund effected the following transactions in shares of such companies for the year ended December 31, 2016:

    SHARES MARKET VALUE COST OF PROCEEDS REALIZED DIVIDEND SHARES MARKET VALUE
AFFILIATED COMPANY   12/31/15 12/31/15 PURCHASES FROM SALES GAIN (LOSS) INCOME 12/31/16 12/31/16
 
Stanley Furniture   1,012,235   $2,824,136     $275,000   $10,000   $1,368,353   912,235   $   821,194  
 
Timberland Bancorp   444,200   5,512,522         151,028   444,200   9,177,172  
 
        $8,336,658           $10,000   $1,519,381       $9,998,366  
 

58 | 2016 Annual Report to Stockholders


Royce Value Trust

Report of Independent Registered Public Accounting Firm

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

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statement of operations, of changes in net assets and of cash flows and the financial highlights present fairly, in all material respects, the financial position of Royce Value Trust, Inc. (the “Fund”) as of December 31, 2016, the results of its operations, the changes in its net assets, its cash flows and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of December 31, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights for each of the periods presented in the period ended December 31, 2014 were audited by other independent accountants whose report dated February 23, 2015 expressed an unqualified opinion on those statements.

PricewaterhouseCoopers LLP
Baltimore, Maryland
February 22, 2017

2016 Annual Report to Stockholders | 59


Directors and Officers

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

Charles M. Royce, Trustee1
Age: 77 | Number of Funds Overseen: 23 | Tenure: Since 1982
Non-Royce Directorships: Director of TICC Capital Corp.
Principal Occupation(s) During Past Five Years: Chairman of the Board of Managers of Royce & Associates (“Royce”), the Trust’s investment adviser; Chief Executive Officer (1972–June 2016), President (1972-July 2014) of Royce.

Christopher D. Clark, Trustee1, President
Age: 51 | Number of Funds Overseen: 23 | 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 and, since June 2015, a Member of the Board of Managers of Royce, having been employed by Royce since May 2007.


Patricia W. Chadwick, Trustee
Age: 68 | Number of Funds Overseen: 23 | Tenure: Since 2009
Non-Royce Directorships: Trustee of ING Mutual Funds and Director of Wisconsin Energy Corp.
Principal Occupation(s) During Past 5 Years: Consultant and President of Ravengate Partners LLC (since 2000).

Stephen L. Isaacs, Trustee
Age: 77 | Number of Funds Overseen: 23 | Tenure: Since 1989
Non-Royce Directorships: None
Principal Occupation(s) During Past Five Years: Attorney and President of Health Policy Associates, Inc., consultants. Mr. Isaacs’s prior business experience includes having served as President of the Center for Health and Social Policy (from 1996 to 2012); Director of Columbia University Development Law and Policy Program and Professor at Columbia University (until August 1996).

Arthur S. Mehlman, Trustee
Age: 74 | Number of Funds Overseen: 43 | Tenure: Since 2004
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 18 Legg Mason Funds.
Principal Occupation(s) During Past Five Years: Director of The League for People with Disabilities, Inc.; Director of University of Maryland Foundation (non-profits). Formerly: Director of Municipal Mortgage & Equity, LLC (from October 2004 to April 1, 2011); Director of University of Maryland College Park Foundation (non-profit) (from 1998 to 2005); Partner, KPMG LLP (international accounting firm) (from 1972 to 2002); Director of Maryland Business Roundtable for Education (from July 1984 to June 2002).

David L. Meister, Trustee
Age: 77 | Number of Funds Overseen: 23 | Tenure: Since 1982
Non-Royce Directorships: None
Principal Occupation(s) During Past Five Years: Consultant. Chairman and Chief Executive Officer of The Tennis Channel (from June 2000 to March 2005). Mr. Meister’s prior business experience includes having served as Chief Executive Officer of Seniorlife.com, a consultant to the communications industry, President of Financial News Network, Senior Vice President of HBO, President of Time-Life Films, and Head of Broadcasting for Major League Baseball.

G. Peter O’Brien, Trustee
Age: 71 | Number of Funds Overseen: 43 | Tenure: Since 2001
Non-Royce Directorships: Director/Trustee of registered investment companies constituting the 18 Legg Mason Funds; Director of TICC Capital Corp.
Principal Occupation(s) During Past Five Years: Trustee Emeritus of Colgate University (since 2005); Board Member of Hill House, Inc. (since 1999); Formerly: Trustee of Colgate University (from 1996 to 2005), President of Hill House, Inc. (from 2001 to 2005) and Managing Director/Equity Capital Markets Group of Merrill Lynch & Co. (from 1971 to 1999).

Michael K. Shields, Trustee
Age: 58 | Number of Funds Overseen: 23 | Tenure: Since 2015
Principal Occupation(s) During Past Five Years: President and Chief Executive Officer of Piedmont Trust Company, a private North Carolina trust company (since May 2012). Mr. Shields’s prior business experience includes owning Shields Advisors, an investment consulting firm (from April 2010 to June 2012).


Francis D. Gannon, Vice President
Age: 49 | 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: 54 | 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: 50 | 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: 49 | 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: 57 | 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.
    Director will hold office until their successors have been duly elected and qualified or until their earlier resignation or removal.

60 | 2016 Annual Report to Stockholders


Notes to Performance and Other Important Information

The thoughts expressed in this Review and Report concerning recent market movements and future prospects for small company stocks are solely the opinion of Royce at December 31, 2016, 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, 2016 and are subject to change at any time without notice. There can be no assurance that securities mentioned in this Review and Report will be included in any Royce-managed portfolio in the future. Investments in securities of micro-cap, small-cap and/or mid-cap companies may involve considerably more risk than investments in securities of larger-cap companies. All publicly released material information is always disclosed by the Funds on the website at www.roycefunds.com.

Sector weightings are determined using the Global Industry Classification Standard (“GICS”). GICS was developed by, and is the exclusive property of, Standard & Poor’s Financial Services LLC (“S&P”) and MSCI Inc. (“MSCI”). GICS is the trademark of S&P and MSCI. “Global Industry Classification Standard (GICS)” and “GICS Direct” are service marks of S&P and MSCI.

All indexes referred to are unmanaged and capitalization weighted. Each index’s returns include net reinvested dividends and/or interest income. Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. The Russell 2000 Index is an index of domestic small-cap stocks. It measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 Index. The Russell 2000 Value and Growth Indexes consist of the respective value and growth stocks within the Russell 2000 as determined by Russell Investments. The Russell Microcap Index includes 1,000 of the smallest securities in the Russell 2000 Index 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. The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe. It includes approximately 800 of the smallest securities in the Russell 1000 Index. The Russell Global Small Cap Index is an unmanaged, capitalization-weighted index of global small-cap stocks. The Russell Global ex-U.S. Large Cap Index is an index of global large-cap stocks, excluding the United States. The Russell Global ex-U.S. Small Cap Index is an index of global small-cap stocks, excluding the United States. The S&P 500 and SmallCap 600 are indexes of U.S. large- and small-cap stocks, respectively, selected by Standard & Poor’s based on market size, liquidity, and industry grouping, among other factors. The Nasdaq Composite is an index of the more than 3,000 common equities listed on the Nasdaq stock exchange. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index. Returns for the market indexes used in this report were based on information supplied to Royce by Russell Investments.

The 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. 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%. The Royce Funds is a service mark of The Royce Funds. Distributor: Royce Fund Services, Inc.

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, 2017. 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.

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, 2016, filed with the Securities and Exchange Commission.

Proxy Voting
A copy of the policies and procedures that The Royce Funds use to determine how to vote proxies relating to portfolio securities and information regarding how each of The Royce Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available, without charge, on The Royce Funds’ website at www. roycefunds.com, by calling (800) 221-4268 (toll-free) and on the website of the Securities and Exchange Commission (“SEC”), at www.sec.gov.

Form N-Q Filing
The Funds file their complete schedules of investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at www.sec.gov. The Royce Funds’ holdings are also on the Funds’ website approximately 15 to 20 days after each calendar quarter end and remain available until the next quarter’s holdings are posted. The Funds’ Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. To find out more about this public service, call the SEC at (800) 732-0330. The Funds’ complete schedules of investments are updated quarterly, and are available at www.roycefunds.com.

2016 Annual Report to Stockholders | 61


Results of Stockholders Meetings

Royce Value Trust, Inc.

At the 2016 Annual Meeting of Stockholders held on September 19, 2016, the Fund’s stockholders elected three Directors, consisting of:

    VOTES FOR   VOTES WITHHELD
 
Patricia W. Chadwick   65,092,387   1,661,512
 
Arthur S. Mehlman   65,433,776   1,320,123
 
Michael K. Shields   65,333,268   1,420,631
 

Royce Micro-Cap Trust, Inc.

At the 2016 Annual Meeting of Stockholders held on September 19, 2016, the Fund’s stockholders elected three Directors, consisting of

    VOTES FOR   VOTES WITHHELD
 
Patricia W. Chadwick   31,664,949   618,088
 
Arthur S. Mehlman   31,852,719   430,318
 
Michael K. Shields   31,716,628   566,409
 

Royce Global Value Trust, Inc.

At the 2016 Annual Meeting of Stockholders held on September 19, 2016, the Fund’s stockholders elected three Directors, consisting of:

    VOTES FOR   VOTES WITHHELD
 
Patricia W. Chadwick   8,891,002   230,341
 
Arthur S. Mehlman   8,891,058   230,284
 
Michael K. Shields   8,875,042   246,301
 

62 | 2016 Annual Report to Stockholders


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  About The Royce Funds     Contact Us  
           
           
 
Unparalleled Knowledge + Experience
Pioneers in small-cap investing, with 40+ 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.
    GENERAL INFORMATION
General Royce Funds information including an overview of our firm and Funds
(800) 221-4268
 
           
 
Specialized Approaches
Strategies that use value, core, or growth investment approaches to select micro-cap, small-cap, and mid-cap companies.

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Transfer Agent and Registrar
Speak with a representative about:
• Your account, transactions, and forms
(800) 426-5523
 
  Unwavering Commitment        
 
Our team of 16 portfolio managers have significant personal investments in the strategies they manage.
    FINANCIAL ADVISORS AND BROKER-DEALERS
Speak with your regional Royce contact regarding:
• Information about our firm, strategies, and Funds
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(800) 337-6923
 
 
           
           
           
     
           
           

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

Item 3. Audit Committee Financial Expert.

(a)(1)   The Board of Directors of the Registrant has determined that it has an audit committee financial expert.
     
(a)(2)  
Arthur S. Mehlman 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 under Item 3 of Form N-CSR.

Item 4. Principal Accountant Fees and Services.

(a)   Audit Fees:
    Year ended December 31, 2016 - $34,340
    Year ended December 31, 2015 - $34,000
     
(b)   Audit-Related Fees:
    Year ended December 31, 2016 - $0
    Year ended December 31, 2015 - $0
     
(c)   Tax Fees:
    Year ended December 31, 2016 - $9,360 - Preparation of tax returns
    Year ended December 31, 2015 - $7,200 - Preparation of tax returns
     
(d)   All Other Fees:
    Year ended December 31, 2016 - $0
    Year ended December 31, 2015 - $0
     

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

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

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


coordinate with the appropriate member(s) of the Committee. The independent auditor may not commence the engagement under consideration until the Registrant’s Chief Financial Officer has informed the auditor in writing that pre-approval has been obtained from the Audit Committee or an individual member who is an independent Board member. The member of the Audit Committee who pre-approves any engagements in between regularly scheduled Audit Committee meetings is to report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next regularly scheduled meeting.

(e)(2)   Not Applicable
     
(f)   Not Applicable
     
(g)   Year ended December 31, 2016 - $9,360
    Year ended December 31, 2015 - $7,200
     
(h)   No such services were rendered during 2016 or 2015.


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. Patricia W. Chadwick, Richard M. Galkin, Stephen L. Isaacs, Arthur S. Mehlman, David L. Meister and G. Peter O’Brien 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. 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.

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. 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. A portfolio manager of Royce


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.

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, 2016)

Name Title Length of Service Principal Occupation(s) During Past 5 Years
Charles M. Royce Portfolio Manager and Member of the Board of Directors of the Registrant Since 1993 Chairman of the Board of Managers of Royce & Associates, LP (“Royce”), investment adviser to the Registrant, Member of the boards of directors/trustees of the Registrant, Royce Value Trust, Inc. (“RVT”), Royce Global Value Trust, Inc. (“RGT”),The Royce Fund (“TRF”) and Royce Capital Fund (“RCF”) (collectively, "The Royce Funds").
Chris E. Flynn Assistant Portfolio Manager* Since April 1, 2007 Assistant Portfolio Manager of the Registrant (since April 1, 2007); and Principal, Portfolio Manager and Senior Analyst at Royce (since 1993).
James J. Harvey Assistant Portfolio Manager* Since April 1, 2007 Assistant Portfolio Manager of the Registrant (since April 1, 2007); and Portfolio Manager and Analyst at Royce (since 1999).
  * Assistant Portfolio Managers may have investment discretion over a portion of the Registrant’s portfolio subject to the supervision of Registrant’s Portfolio Manager.

(a)(2) Other Accounts Managed by Portfolio Manager and Potential Conflicts of Interest (information as of December 31, 2016)

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 9,566,952,204 2 1,659,712,465
  Private pooled investment vehicles 1 13,281,378 1 13,281,378
  Other accounts* 12 50,618,847 - -
           
Chris E. Flynn          
  Registered investment companies 5 4,650,584,448 2 1,659,712,465
  Private pooled investment vehicles - - - -
  Other accounts* - - - -
           
James J. Harvey          
  Registered investment companies 3 377,016,924 1 363,700,753
  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. Royce may under certain circumstances allocate securities in a manner other than pro-rata if it determines that the allocation is fair and equitable under the circumstances and does not discriminate against any account.

As described below, there is a revenue-based component of 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 receives 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 as Portfolio Manager of two registered investment company accounts (the Registrant and RMT) is based, in part, on performance-based fee revenues. The Registrant and RMT pay Royce a fulcrum fee that is adjusted up or down depending on the performance of 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, 2016)

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:

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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.
     
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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 Charles M. Royce that relates to each of RMT and RVT 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.

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FIRM-RELATED VARIABLE COMPENSATION. Portfolio Managers receive quarterly variable compensation based on Royce’s net revenues.
     
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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. From time to time, on a purely discretionary basis, Portfolio Managers may also receive options to acquire stock in Royce’s parent company, Legg Mason, Inc. Those options typically represent a relatively small portion of a Portfolio Manager’s overall compensation.

(a)(4) Dollar Range of Equity Securities in Registrant Beneficially Owned by Portfolio Manager (information as of December 31, 2016)

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
   Chris E. Flynn $100,001 to $500,000
   James J. Harvey $1 - $10,000

(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. Exhibits. Attached hereto.

(a)(1) The Registrant’s code of ethics pursuant to Item 2 of Form N-CSR.

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

(a)(3) Not Applicable

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

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

ROYCE MICRO-CAP TRUST, INC.
   
BY: /s/ Christopher D. Clark
  Christopher D. Clark
  President
   
Date: March 3, 2017

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

ROYCE MICRO-CAP TRUST, INC.   ROYCE MICRO-CAP TRUST, INC.
         
BY: /s/ Christopher D. Clark   BY: /s/ Peter K. Hoglund
  Christopher D. Clark     Peter K. Hoglund
  President     Treasurer
         
Date: March 3, 2017   Date: March 3, 2017