-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HgrX72iZqSViC8fUWy4K26YNCGABlEOsaQpGDGZcYp1F0ceszeLoW7bGZ1tUUqXn UF2ohSTZIn7IjCbBHR3WlQ== 0000950117-96-000494.txt : 19960518 0000950117-96-000494.hdr.sgml : 19960518 ACCESSION NUMBER: 0000950117-96-000494 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960516 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROYCE VALUE TRUST INC CENTRAL INDEX KEY: 0000804116 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133356097 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30B-2 SEC ACT: 1940 Act SEC FILE NUMBER: 811-04875 FILM NUMBER: 96568417 BUSINESS ADDRESS: STREET 1: 1414 AVE OF THE AMERICAS 9TH FL CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2123557311 MAIL ADDRESS: STREET 1: 1414 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 N-30B-2 1 ROYCE VALUE TRUST THIRD QUARTER REPORT Royce Value Trust 1st QUARTER REPORT March 31, 1996 Dear Stockholder: It was a textbook case of supply and demand. Investors, euphoric over 1995's spectacular returns, continued to push mutual fund assets and stock market prices to unprecedented levels in 1996's first quarter. The demand side of the equation has been strong and the supply side has not kept pace. However, we are entering the prime selling season for IPOs (initial public offerings) and secondary offerings, and it will be interesting to see just how long investor demand can outstrip supply. The first quarter's surge in demand for equity mutual funds occurred despite a rise in long-term interest rates and a pickup in stock market volatility, two phenomena generally perceived as negatively impacting stock market returns. While the stock market was being driven to new highs in the first 90 days, bond indices were going in the opposite direction. With long-term interest rates up almost 100 basis points, total return for the long-term government bond was down almost 8% for the quarter, quite a contrast to the 1995 record return of 30.7%. Stock market volatility, which was virtually nonexistent in 1995, staged a comeback and was especially evident in the more liquid, large-cap zone. Often a change in volatility precedes a change in returns. One has to wonder if the increase in long-term interest rates combined with the increase in market volatility is presaging a shift in market direction. 1996's first quarter performance, like that of 1995, was led by the large-cap sector of the market. Performance was especially strong for the Dow Jones Industrial Average (+9.8%)* whose return was nearly double that of the broader based S&P 500 (+5.5%)*. This performance divergence within large-cap is reminiscent of the 'Nifty 50' in the early 1970s, when a handful of stocks dominated returns. Although small-cap stocks lagged when compared to their large company counterparts, returns for the sector were still attractive. The SmallCap S&P 600 index of small-cap issues finished the quarter up 5.7%. ROYCE VALUE TRUST, INC. ('RVT') provided a return that was below market, but decent nevertheless, up 2.9% on an NAV basis and 3.2% on a market basis. For the 1-year, 5-year and since inception (11/26/86) periods ended March 31, the Fund provided average annual NAV returns of 19.6%, 15.4% and 12.3%, respectively. As of March 31, RVT's market price was trading at a double digit discount to its NAV. We view this as an attractive investment opportunity for existing and potential investors. As we look out into the remainder of the year, we are reminded of historical performance patterns where rising interest rates and higher market volatility usually translate into lower market returns. Traditionally, value investing has provided an edge during these periods. We remain committed to an approach which emphasizes patience and value, one which is applied in a disciplined manner on a daily basis, regardless of market conditions or outlook. Comments or questions are always welcome and your continued confidence is appreciated. Yours faithfully, CHARLES M. ROYCE Charles M. Royce Jack E. Fockler, Jr. President W. Whitney George Vice Presidents April 4, 1996 * The Dow Jones Industrial Average, S&P 500 and S&P SmallCap 600 are unmanaged indices and include the reinvestment of dividends. FUND HIGHLIGHTS
March 31, 1996 ------------------ Net Asset Value Per Share.......................... $13.95 Market Price Per Share............................. $12.25
- -------------------------------------------------------------------------------- TOTAL RETURN PERFORMANCE
NAV Market Value Total Total S&P S&P Small- Russell Return(a) Return(b) 500`D' Cap 600`D' 2000`D' ------------- ------------- ------- ----------- -------- 3 months ended 3/31/96 2.9% 3.2% 5.5% 5.7% 5.1% Annual Returns (ended December 31) 1995 22.6% 20.5% 37.5% 30.0% 28.4% 1994 1.1 - 5.6 1.3 - 4.8 - 1.8 1993 17.9 14.8 10.0 18.8 18.9 1992 19.9 26.8 7.7 21.0 18.4 1991 39.5 35.3 30.5 48.5 46.1 Average Annual Total Returns (ended March 31, 1996) 1-Year 19.6% 20.2% 32.1% 31.2% 29.1% 3-Year 12.2 8.3 15.7 14.5 14.8 5-Year 15.4 12.6 14.7 17.1 16.0 Since Inception* 12.3 9.6 14.2 10.0 11.8
(a) Reflects the NAV experience of a continuous shareholder who reinvested all distributions and fully participated in primary rights offerings. (b) Reflects the market value experience of a continuous shareholder who reinvested all distributions and fully participated in primary rights offerings. * Inception date -- 11/26/86 `D' The indices are unmanaged and include the reinvestment of dividends. Source: Frank Russell Co. - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS
Three Months Ended March 31, 1996 Year Ended (unaudited) December 31, 1995 ------------------ ----------------- INVESTMENT ACTIVITIES: Net investment income................................................. $ 759,905 $ 1,030,325 Net realized gain on investments...................................... 7,602,015 32,580,075 Net change in unrealized appreciation on investments.................. 1,771,627 29,032,226 ------------------ ----------------- Total from investment activities.................................... 10,133,547 62,642,626 ------------------ ----------------- DIVIDENDS AND DISTRIBUTIONS FROM: Net investment income................................................. -- (693,347) Net realized gain..................................................... -- (29,124,623) ------------------ ----------------- Total from dividends and distributions.............................. -- (29,817,970) ------------------ ----------------- CAPITAL STOCK TRANSACTIONS: Increase in net assets from capital stock transactions................ -- 37,113,835 ------------------ ----------------- INCREASE IN NET ASSETS.................................................. 10,133,547 69,938,491 ------------------ ----------------- NET ASSETS: Beginning of period................................................... 338,970,351 269,031,860 ------------------ ----------------- End of period......................................................... $349,103,898 $ 338,970,351 ------------------ ----------------- ------------------ -----------------
- -------------------------------------------------------------------------------- PORTFOLIO COMPOSITION
% of March 31, 1996 Total Investments ------------------ ----------------- Common Stocks.......................................................... $370,260,596 95.0% Bonds and Preferred Stocks............................................. 4,421,275 1.1 Repurchase Agreement................................................... 15,000,000 3.9 ------------------ ------ TOTAL INVESTMENTS.................................................... $389,681,871 100.0% ------------------ ------ ------------------ ------
- -------------------------------------------------------------------------------- The results presented in this report represent past performance and should not be considered representative of the 'total return' from an investment in the Fund today. They are provided only to give an historical perspective of the Fund. The investment return and net asset and market values of Fund shares will fluctuate, so that the shares may be worth more or less than their original cost when sold. PORTFOLIO SUMMARY The following information is provided as a 'bird's eye' view of the RVT portfolio at March 31, 1996. - ---------------------------------------------------------- WEIGHTED AVERAGES Market Cap (Total Portfolio) $342 Million Median Market Cap (Total Portfolio) $178 Million P/E Ratio (100 Largest Positions) 13.9x P/B Ratio (100 Largest Positions) 1.6x Portfolio Yield (100 Largest Positions) 1.8%
- ---------------------------------------------------------- TOP TWENTY POSITIONS
Market Value ---------- 1. Ash Grove Cement Company.................. $6,735,498 2. Comdisco, Inc. ........................... 3,813,244 3. The Standard Register Company............. 3,688,375 4. Wesco Financial Corporation............... 3,655,000 5. Vallen Corporation........................ 3,639,406 6. Family Dollar Stores, Inc................. 3,435,275 7. Pennsylvania Manufacturers Corporation.... 3,408,600 8. The Dress Barn, Inc. ..................... 3,327,600 9. Stanhome Inc. ............................ 3,273,563 10. Ethan Allen Interiors Inc. ............... 3,265,500 11. Florida Rock Industries, Inc. ............ 3,239,600 12. Kimball International, Inc. Cl. B......... 3,237,600 13. Velcro Industries N.V. ................... 3,200,325 14. Farmer Bros. Co. ......................... 3,125,500 15. The Pioneer Group, Inc. .................. 3,108,800 16. Baldwin & Lyons, Inc. Cl. B............... 3,076,575 17. National Bancorp of Alaska, Inc. ......... 3,005,470 18. Marshall Industries....................... 2,967,650 19. Woodward Governor Company................. 2,949,500 20. Stein Mart, Inc........................... 2,917,325
ROYCE VALUE TRUST PHILOSOPHY RVT concentrates on buying the securities of small capitalization companies. RVT uses a strict fundamental approach which emphasizes the understanding of balance sheets, cash flows and internal rates of return. RVT concentrates on understanding the private worth or value of a business. RVT attempts to reduce the risks associated with small company ownership. Market risk is lowered by using non-mainstream securities and company risk by favoring excess cash flow and low-leverage firms. Valuation risk is lowered by using strict pricing standards and portfolio risk by achieving wide diversification. The source of performance is the consistent use of strict value disciplines applied to less well-known securities. The Fund will apply these principles from year-to-year and attempt to avoid the opportunistic and fashionable investment styles of the moment. We believe that our method, emphasizing patience and value, comes the closest to an all-weather strategy for delivering consistent, above average long-term returns. NOTE: The Board of Directors has given the Fund's management the discretionary authority to cause the Fund to repurchase up to 300,000 shares of its common stock in open market and other transactions through December 31, 1996. Such repurchases would be effected at a price per share which is less than the then current net asset value, but not in excess of the then prevailing market price. The Board of Directors of the Fund is authorized to offer stockholders an opportunity to subscribe for additional shares of common stock of the Fund through rights offerings at a price per share that may be less than the then current net asset value of the Fund's common stock. The timing and terms of any such offerings are left to the Board's discretion. Royce Value Trust, Inc. 1414 Avenue of the Americas New York, N.Y. 10019 800-221-4268 STATEMENT OF DIFFERENCES The dagger symbol shall be expressed as 'D' -----END PRIVACY-ENHANCED MESSAGE-----