-----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, QAOR0A/2gVWgo6ZMc4w7F3dyY13TdVO1wP9OLBKt4SqlllT06M1TPXjTuSzPnryM S+ljtxEiqrpIqgMLKLFbVg== 0000950117-97-000392.txt : 19970312 0000950117-97-000392.hdr.sgml : 19970312 ACCESSION NUMBER: 0000950117-97-000392 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970310 SROS: NONE 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-30D SEC ACT: 1940 Act SEC FILE NUMBER: 001-09313 FILM NUMBER: 97554130 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 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROYCE GLOBAL TRUST INC CENTRAL INDEX KEY: 0000825202 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 592876580 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05379 FILM NUMBER: 97554131 BUSINESS ADDRESS: STREET 1: 1414 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2125084578 MAIL ADDRESS: STREET 1: C/O QUEST ADVISORY CORP STREET 2: 1414 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: ALL SEASONS GLOBAL FUND INC DATE OF NAME CHANGE: 19950803 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAS ALL SEASON FUND INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROYCE OTC MICRO CAP FUND INC CENTRAL INDEX KEY: 0000912147 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133739778 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-08030 FILM NUMBER: 97554132 BUSINESS ADDRESS: STREET 1: C/O MITCHELL HUTCHINS ASSET MANAGEMENT STREET 2: 1414 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127138392 MAIL ADDRESS: STREET 1: ROYCE OTC MICRO -CAP FUND INC STREET 2: 1285 AVE OF THE AMERICAS 16TH FLR CITY: NEW YORK STATE: NY ZIP: 10019 N-30D 1 ROYCE FUNDS Royce Value Trust Royce Micro-Cap Trust Royce Global Trust Financial Statements December 31, 1996 ROYCE VALUE TRUST, INC. SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1996 - -------------------------------------------------------------------------------- COMMON STOCKS - 89.8%
Shares Value CONSUMER PRODUCTS - 14.3% `D'Allen Organ Company Cl. B......... 79,169 $ 3,146,968 Burnham Corporation Cl. A............ 24,300 716,850 Burnham Corporation Cl. B............ 18,000 531,000 Conso Products Co.*.................. 117,375 1,511,203 Ethan Allen Interiors Inc. .......... 67,500 2,598,750 Farmer Bros. Co. .................... 22,000 3,344,000 First Years Inc. .................... 123,872 2,012,920 Flexsteel Industries, Inc. .......... 91,400 1,188,200 Garan Incorporated................... 99,400 1,925,875 Golden Enterprises, Inc. ............ 30,000 232,500 Hershey Creamery Company............. 643 1,089,885 J & J Snack Foods Corp.*............. 52,200 704,700 Johnson Worldwide Associates, Inc. Cl. A.............................. 173,300 2,296,225 Juno Lighting, Inc. ................. 191,900 3,070,400 K-Swiss Inc. Cl. A................... 177,900 1,756,762 La-Z-Boy Inc. ....................... 9,400 277,300 Lazare Kaplan International, Inc.*... 116,100 1,988,213 Lifetime Hoan Corporation*........... 193,336 2,271,698 Marisa Christina, Incorporated*...... 124,200 1,024,650 Matthews International Corporation Cl. A.............................. 54,700 1,545,275 Midwest Grain Products, Inc.*........ 192,000 3,264,000 National Presto Industries, Inc. .... 52,800 1,973,400 Oshkosh B'Gosh, Inc. Cl. A........... 15,900 242,475 The Rival Company.................... 64,900 1,614,387 Russ Berrie and Company, Inc. ....... 30,700 552,600 Seaboard Corporation................. 4,050 1,077,300 SEATTLE FILMWORKS, Inc.*............. 84,525 1,722,197 Skyline Corporation.................. 115,700 2,863,575 The L. S. Starrett Company Cl. A..... 80,700 2,289,862 Steck-Vaughn Publishing Corporation*....................... 55,919 643,069 Sturm, Ruger & Company, Inc. ........ 117,800 2,282,375 Thomaston Mills, Inc. Cl. A.......... 160,400 1,804,500 Thor Industries, Inc. ............... 128,600 3,247,150 The Topps Company, Inc.*............. 353,100 1,412,400 Velcro Industries N.V. .............. 52,600 3,287,500 WLR Foods, Inc. ..................... 20,000 247,500 Weyco Group, Inc. ................... 30,200 1,215,550 ------------ 62,973,214 ------------ CONSUMER SERVICES - 2.4% Atlantic Southeast Airlines, Inc. ... 35,700 780,938 Bowl America Incorporated Cl. A...... 55,100 365,038 Comair Holdings, Inc. ............... 81,000 1,944,000 Jenny Craig, Inc.*................... 103,900 922,112 Grey Advertising Inc. ............... 13,417 3,394,501 Shares Value International Dairy Queen, Inc. Cl.A*.............................. 101,200 $ 2,024,000 MovieFone, Inc. Cl. A*............... 98,300 430,062 True North Communications Inc. ...... 42,000 918,750 ------------ 10,779,401 ------------ FINANCIAL INTERMEDIARIES - 14.0% Alleghany Corporation*............... 10,103 2,141,836 ALLIED Group, Inc. .................. 94,125 3,070,828 ALLIED Life Financial Corporation.... 94,000 1,645,000 BHI Corporation...................... 46,100 919,119 Baker, Fentress & Company............ 66,102 1,115,471 Baldwin & Lyons, Inc. Cl. B.......... 126,000 2,315,250 W. R. Berkley Corp. ................. 8,500 431,375 Capitol Transamerica Corporation..... 86,650 2,664,487 The Commerce Group, Inc. ............ 126,718 3,199,629 County Bank Corp. ................... 5,000 200,000 Fidelity National Financial, Inc. ... 48,400 732,050 The First National Bank of Anchorage.......................... 215 345,075 Fremont General Corporation.......... 67,750 2,100,250 Gryphon Holdings Inc.*............... 127,000 1,793,875 Independence Holding Company......... 56,664 435,605 Intercargo Corporation............... 131,100 1,122,544 Keystone Heritage Group, Inc. ....... 27,615 635,145 Lawyers Title Corporation............ 82,500 1,619,062 Leucadia National Corporation........ 104,900 2,806,075 MAIC Holdings, Inc.*................. 38,110 1,290,976 Markel Corporation*.................. 4,200 378,000 THE MECHANICS BANK................... 200 1,440,000 NYMAGIC, INC. ....................... 47,700 858,600 National Bancorp of Alaska, Inc. .... 39,270 2,689,995 Nobel Insurance Limited.............. 119,500 1,501,219 Oriental Bank and Trust.............. 54,720 1,142,280 Orion Capital Corporation............ 44,687 2,731,493 PXRE Corporation..................... 178,711 4,423,085 Pennsylvania Manufacturers Corporation Cl. A.................. 196,100 3,088,575 Piper Jaffray Companies Inc. ........ 74,400 1,162,500 RLI Corp. ........................... 19,250 642,469 Reliance Group Holdings, Inc. ....... 15,356 37,008 Titan Holdings, Inc. ................ 38,587 636,685 Trenwick Group Inc. ................. 58,500 2,705,625 Wesco Financial Corporation.......... 21,500 4,020,500 Zenith National Insurance Corp. ..... 139,200 3,810,600 ------------ 61,852,286 ------------
3 ROYCE VALUE TRUST, INC. SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1996 - --------------------------------------------------------------------------------
Shares Value FINANCIAL SERVICES - 6.1% E.W. Blanch Holdings, Inc. .......... 92,100 $ 1,853,513 Comdisco, Inc. ...................... 63,950 2,030,412 Crawford & Company Cl. A............. 100,100 2,164,662 Crawford & Company Cl. B............. 50,200 1,148,325 Eaton Vance Corp. ................... 65,100 3,100,387 Arthur J. Gallagher & Co. ........... 96,900 3,003,900 Hilb, Rogal & Hamilton Company....... 202,475 2,682,794 Investors Financial Services Corporation........................ 39,059 1,083,887 Investors Financial Services Corporation Cl. A.................. 8,989 249,445 The John Nuveen Company.............. 21,400 567,100 New England Investment Companies, L.P. .............................. 59,500 1,442,875 Phoenix Duff & Phelps Corporation.... 157,900 1,125,038 The Pioneer Group, Inc. ............. 107,200 2,546,000 Poe & Brown, Inc. ................... 12,712 336,868 U.S. Global Investors Inc. Cl. A*.... 249,205 591,862 Willis Corroon Group plc**........... 265,200 3,049,800 ------------ 26,976,868 ------------ HEALTH - 1.5% Diagnostic Products Corporation...... 25,200 652,050 Haemonetics Corporation*............. 180,700 3,410,713 Life Technologies, Inc. ............. 65,850 1,646,250 Spacelabs Medical, Inc.*............. 47,200 967,600 ------------ 6,676,613 ------------ INDUSTRIAL PRODUCTS - 21.2% American Filtrona Corporation........ 50,500 2,139,938 Ameron International Corporation..... 27,000 1,393,875 Art's-Way Manufacturing Co., Inc.*... 45,000 213,750 Ash Grove Cement Company Cl. B....... 77,518 4,399,147 BHA Group, Inc. ..................... 47,190 760,939 Baldor Electric Company.............. 16,500 406,313 Blessings Corporation................ 160,900 1,498,381 W. H. Brady Co. Cl. A................ 83,100 2,046,337 Cascade Corp. ....................... 47,000 757,875 Central Steel & Wire Company......... 3,081 1,771,575 Chemfab Corporation*................. 132,219 1,851,066 CLARCOR Inc. ........................ 19,700 435,862 ConBraCo Industries, Inc. ........... 2,300 1,000,500 Curtiss-Wright Corporation........... 56,300 2,836,112 Decker Manufacturing Corporation..... 6,022 246,902 Delta Woodside Industries, Inc. ..... 106,500 678,938 Fab Industries, Inc. ................ 98,000 2,695,000 Shares Value Federal Signal Corporation........... 9,000 $ 232,875 `D'General Builders Corporation*..... 73,645 46,028 P. H. Glatfelter Company............. 111,900 2,014,200 Gorman-Rupp Company.................. 24,800 337,900 Hawkins Chemical, Inc. .............. 124,969 890,404 Hirsch International Corp. Cl. A*.... 15,625 289,063 International Aluminum Corporation... 68,600 1,749,300 Kaman Corporation Cl. A.............. 11,700 152,100 Kaydon Corporation................... 70,700 3,331,738 Kimball International, Inc. Cl. B.... 85,900 3,554,112 Knape & Vogt Manufacturing Company... 79,750 1,315,875 LeaRonal, Inc. ...................... 49,650 1,141,950 Lilly Industries, Inc. Cl. A......... 203,483 3,713,565 The Lincoln Electric Company......... 21,990 722,921 The Lincoln Electric Company Cl. A... 63,900 1,932,975 Liqui-Box Corporation................ 52,878 1,718,535 MacDermid, Incorporated.............. 118,777 3,266,367 Mine Safety Appliances Company....... 29,700 1,581,525 Paul Mueller Company................. 53,200 1,995,000 Nordson Corporation.................. 26,700 1,702,125 Oil-Dri Corporation of America....... 37,600 564,000 Oregon Steel Mills, Inc. ............ 83,800 1,403,650 Oshkosh Truck Corporation Cl. B...... 121,600 1,292,000 Peerless Mfg. Co. ................... 57,800 722,500 Penn Engineering and Manufacturing Inc. .............................. 132,600 2,718,300 Penn Engineering and Manufacturing Corp. Cl. A........................ 32,300 670,225 Preformed Line Products Company...... 41,300 1,621,025 Puerto Rican Cement Company, Inc. ... 94,900 2,965,625 Quaker Chemical Corporation.......... 92,450 1,513,869 Robroy Industries, Inc. Cl. A........ 51,270 961,313 Shorewood Packaging Corporation*..... 77,600 1,513,200 Simpson Manufacturing Co., Inc.*..... 126,700 2,914,100 Sinter Metals, Inc. Cl. A*........... 49,500 1,472,625 The Standard Register Company........ 165,300 5,372,250 Tecumseh Products Company Cl. A...... 33,300 1,910,587 Thermal Industries, Inc. ............ 42,586 511,032 Unifi, Inc. ......................... 47,000 1,509,875 United Screw and Bolt Corporation.... 4,308 308,022 Versa Technologies, Inc. ............ 78,200 1,016,600 Wellman, Inc. ....................... 25,000 428,125 Woodward Governor Company............ 31,700 4,184,400
4 ROYCE VALUE TRUST, INC. SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1996 - --------------------------------------------------------------------------------
Shares Value INDUSTRIAL PRODUCTS - (continued) Zero Corporation..................... 70,800 $ 1,416,000 ------------ 93,810,391 ------------
INDUSTRIAL SERVICES - 9.6% Aceto Corporation.................... 33,340 464,676 Air Express International Corporation........................ 64,712 2,086,962 Arnold Industries, Inc. ............. 210,648 3,344,037 Guy F. Atkinson Company of California*........................ 97,200 1,020,600 Bowne & Co., Inc. ................... 43,600 1,073,650 Dames & Moore........................ 38,300 560,137 Devon Group, Inc.*................... 5,000 137,500 Ennis Business Forms, Inc. .......... 204,000 2,295,000 FCA International Ltd.*.............. 194,500 305,126 Fisher Companies Inc. ............... 7,368 722,064 Frozen Food Express Industries, Inc. .................. 239,935 2,159,415 Gulfmark International Inc.*......... 19,200 1,113,600 The Harper Group..................... 125,825 2,988,344 Insituform Technologies, Inc.*....... 64,600 476,425 JOULE Inc.*.......................... 70,350 255,019 Kenan Transport Company.............. 40,500 799,875 Lawson Products, Inc. ............... 40,300 881,563 Lufkin Industries, Inc. ............. 88,700 2,217,500 Merrill Corporation.................. 99,800 2,295,400 New England Business Service, Inc. ..................... 108,000 2,322,000 Nichols Research Corporation*........ 13,950 355,725 Perini Corporation*.................. 75,800 592,187 Plenum Publishing Corporation........ 77,600 2,716,000 Rykoff-Sexton, Inc. ................. 135,400 2,149,475 Stone & Webster, Inc. ............... 52,600 1,656,900 TBC Corporation*..................... 262,500 1,968,750 Treadco, Inc. ....................... 99,400 1,043,700 The Turner Corporation*.............. 59,800 612,950 The Union Corporation*............... 9,700 221,887 Vallen Corporation*.................. 199,329 3,313,845 ------------ 42,150,312 ------------ NATURAL RESOURCES - 4.8% Alico, Inc. ......................... 92,700 1,738,125 Avatar Holdings Inc.*................ 26,425 845,600 Belden & Blake Corporation*.......... 50,000 1,275,000 Tom Brown, Inc.*..................... 47,000 981,125 CalMat Co. .......................... 189,400 3,551,250 Consolidated-Tomoka Land Co. ........ 7,800 129,675 Devon Energy Corporation............. 31,400 1,091,150 FRP Properties, Inc.*................ 119,900 3,057,450 Florida Rock Industries, Inc. ....... 126,300 4,136,325 MK Gold Company*..................... 188,200 282,300
Shares Value The Newhall Land and Farming Company............................ 154,700 $ 2,610,562 Pegasus Gold Inc.*................... 10,000 75,625 Toreador Royalty Corporation*........ 97,100 242,750 Vornado Realty Trust................. 21,450 1,126,125 ------------ 21,143,062 ------------ RETAIL - 5.2% J. Baker, Inc. ...................... 13,000 69,063 Blair Corporation.................... 53,100 1,022,175 The Buckle, Inc.*.................... 22,300 557,500 Catherines Stores Corporation*....... 212,400 1,168,200 Cato Corporation Cl. A............... 133,700 668,500 Charming Shoppes, Inc.*.............. 198,100 1,002,881 Claire's Stores, Inc. ............... 30,900 401,700 Deb Shops Inc. ...................... 133,900 569,075 The Dress Barn, Inc.*................ 233,500 3,502,500 Family Dollar Stores, Inc. .......... 104,900 2,137,338 Frederick's of Hollywood, Inc. Cl. A.................................. 80,500 332,062 Frederick's of Hollywood, Inc. Cl. B.................................. 182,296 751,971 Little Switzerland, Inc.*............ 135,800 619,587 Mikasa, Inc.*........................ 97,600 1,000,400 Pier 1 Imports, Inc. ................ 154,405 2,721,388 Sotheby's Holdings, Inc. Cl. A....... 143,400 2,670,825 Stanhome Inc. ....................... 136,900 3,627,850 ------------ 22,823,015 ------------ TECHNOLOGY - 5.9% Bell Industries, Inc.*............... 17,723 378,829 Communications Systems, Inc. ........ 32,000 480,000 Digital Systems International, Inc.*.............................. 10,000 160,000 Dionex Corporation*.................. 32,400 1,134,000 Electroglas, Inc.*................... 139,200 2,244,600 Exar Corporation*.................... 124,650 1,932,075 Giga-tronics Incorporated*........... 57,100 478,212 Hach Company......................... 15,000 285,000 IFR Systems, Inc.*................... 16,089 253,402 ILC Technology, Inc.*................ 79,200 1,029,600 Integral Systems, Inc.*.............. 26,300 736,400 Landauer Inc. ....................... 117,100 2,868,950 MacNeal-Schwendler Corporation....... 9,400 74,025 Marshall Industries*................. 136,000 4,165,000 Modern Controls, Inc. ............... 7,300 76,650 National Computer Systems, Inc. ..... 126,200 3,218,100 Newport Corporation.................. 50,900 451,738 Phoenix Technologies Ltd.*........... 21,200 341,850 Richardson Electronics, Ltd. ........ 173,500 1,431,375 `D'Sage Laboratories, Inc. .......... 104,000 1,339,000 Scitex Corporation Limited........... 199,300 1,893,350
5 ROYCE VALUE TRUST, INC. SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1996 - --------------------------------------------------------------------------------
Shares Value TECHNOLOGY - (continued) Technical Communications Corporation*....................... 49,800 $ 659,850 Woodhead Industries, Inc. ........... 39,300 540,375 ------------ 26,172,381 ------------ MISCELLANEOUS - 4.8% 21,323,078 ------------ Total Common Stocks (Cost $298,047,915)................ 396,680,621 ------------ PREFERRED STOCK - 0.1% Bird Corp. $1.85 Conv. (Cost $371,659).......................... 23,750 374,063 ------------ CORPORATE BONDS - 1.7% Principal Amount Charming Shoppes, Inc. 7.50% Conv. Sub. Note due 7/15/06.............. $ 250,000 246,250 Dixie Yarns, Inc. 7.00% Conv. Sub. Deb. due 5/15/12................... 824,000 655,080 Principal Amount Value International Semi-Tech Corp. 0% Sr. Disc. Note due 8/15/03............. $5,758,000 $ 3,742,700 Reliance Group Holdings, Inc. 9.00% Sr. Note due 11/15/00.............. 314,000 323,420 Richardson Electronics, Ltd. 7.25% Conv. Sub. Deb. due 12/15/06....... 2,468,000 2,097,800 Shoney's, Inc. 0% Sub. Conv. Deb. due 4/11/04............................ 1,259,000 517,764 ------------ Total Corporate Bonds (Cost $6,852,481)............................. 7,583,014 ------------ REPURCHASE AGREEMENT - 16.9% State Street Bank and Trust Company, 4.90% due 01/02/97, collateralized by U.S. Treasury Notes, 10.375% due 11/15/09 valued at $76,198,432 (Cost $74,700,000)............................ 74,700,000 ------------ TOTAL INVESTMENTS - 108.5% (COST $379,972,055)................................. 479,337,698 LIABILITIES LESS CASH AND OTHER ASSETS - (8.5%)............................... (37,501,026) ------------ NET ASSETS - 100.0%............................. $441,836,672 ------------ ------------
- ------------------------ * Non-income producing. ** American Depository Receipt. `D' At December 31, 1996, the Fund owned 5% or more of the Company's outstanding shares thereby making the Company an affiliated person as that term is defined in the Investment Company Act of 1940. INCOME TAX INFORMATION - The cost of total investments for federal income tax purposes was $380,019,451. At December 31, 1996, net unrealized appreciation for all securities was $99,318,247, consisting of aggregate gross unrealized appreciation of $112,592,800 and aggregate gross unrealized depreciation of $13,274,553. The accompanying notes are an integral part of the financial statements. 6 ROYCE VALUE TRUST, INC. - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 1996 - -------------------------------------------------------------------------------- ASSETS: Investments at value (identified cost $305,272,055)............................................... $404,637,698 Repurchase agreement (at cost and value).......................................................... 74,700,000 Receivable for investments sold................................................................... 1,077,208 Receivable for dividends and interest............................................................. 758,195 Prepaid expenses and other assets................................................................. 67,035 ------------ Total Assets................................................................................. 481,240,136 ------------ LIABILITIES: Notes payable..................................................................................... 38,768,182 Payable for investments purchased................................................................. 377,923 Investment advisory fee payable................................................................... 132,882 Accrued expenses.................................................................................. 124,477 ------------ Total Liabilities............................................................................ 39,403,464 ------------ Net Assets................................................................................... $441,836,672 ------------ ------------ Assets applicable to Preferred Stock at a liquidation value of $25 per share...................... $ 60,000,000 ------------ ------------ Net Assets applicable to Common Stock at a net asset value per share which assumes conversion of Notes -- $14.32................................................................................. $381,836,672 ------------ ------------ SUMMARY OF SHAREHOLDERS' EQUITY: 8% Cumulative Preferred Stock -- par value $0.001 per share; 2,400,000 shares outstanding......... $ 2,400 Common Stock -- par value $0.001 per share; 26,348,378 shares outstanding......................... 26,348 Additional paid-in capital........................................................................ 330,836,574 Undistributed net investment income............................................................... 1,292,408 Accumulated net realized gain on investments...................................................... 10,313,299 Net unrealized appreciation on investments........................................................ 99,365,643 ------------ Net Assets................................................................................... $441,836,672 ------------ ------------
- -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Year ended Year ended December 31, 1996 December 31, 1995 ----------------- ----------------- FROM INVESTMENT OPERATIONS: Net investment income................................................................ $ 4,559,614 $ 1,030,325 Net realized gain on investments..................................................... 33,673,949 32,580,075 Net change in unrealized appreciation on investments................................. 18,650,893 29,032,226 ------------- ------------- Net increase in net assets from investment operations........................... 56,884,456 62,642,626 ------------- ------------- DISTRIBUTIONS TO PREFERRED STOCKHOLDERS: Net investment income................................................................ (218,400) --- Net realized gain.................................................................... (1,504,800) --- ------------- ------------- Total distributions to Preferred stockholders................................... (1,723,200) --- ------------- ------------- DISTRIBUTIONS TO COMMON STOCKHOLDERS: Net investment income................................................................ (3,626,059) (693,347) Net realized gain.................................................................... (24,935,360) (29,124,623) ------------- ------------- Total distributions to Common stockholders...................................... (28,561,419) (29,817,970) ------------- ------------- CAPITAL STOCK TRANSACTIONS: Net proceeds from rights offering.................................................... -- 16,244,838 Proceeds from shares issued for distributions reinvested by Common stockholders...................................................................... 18,526,484 20,868,997 Net proceeds from issuance of Preferred stock........................................ 57,740,000 --- ------------- ------------- Total capital stock transactions................................................ 76,266,484 37,113,835 ------------- ------------- INCREASE IN NET ASSETS.................................................................... 102,866,321 69,938,491 NET ASSETS: Beginning of year.................................................................... 338,970,351 269,031,860 ------------- ------------- End of year (including undistributed net investment income of $1,292,408 and $577,253, respectively)........................................................ $ 441,836,672 $ 338,970,351 ------------- ------------- ------------- -------------
The accompanying notes are an integral part of the financial statements. 7 ROYCE VALUE TRUST, INC. - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 - --------------------------------------------------------------------------------
INVESTMENT INCOME: Income: Dividends.................................................................................................. $ 7,006,077 Interest................................................................................................... 2,153,011 ----------- Total Income.......................................................................................... 9,159,088 ----------- EXPENSES: Interest expense........................................................................................... 2,300,000 Investment advisory fees................................................................................... 1,470,884 Administrative and office facilities expenses.............................................................. 204,974 Amortization of underwriting discount and offering costs................................................... 165,432 Custodian and transfer agent fees.......................................................................... 126,751 Professional fees.......................................................................................... 118,724 Directors' fees............................................................................................ 47,625 Other expenses............................................................................................. 251,324 ----------- Total Expenses........................................................................................ 4,685,714 Fees Waived by Investment Adviser..................................................................... (86,240) ------------ Net Expenses.......................................................................................... 4,599,474 ------------ Net Investment Income................................................................................. 4,559,614 ------------ REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on investments........................................................................... 33,673,949 Net change in unrealized appreciation on investments....................................................... 18,650,893 ----------- Net realized and unrealized gain on investments....................................................... 52,324,842 ----------- NET INCREASE IN NET ASSETS FROM INVESTMENT OPERATIONS........................................................... $56,884,456 ----------- -----------
- -------------------------------------------------------------------------------- STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1996 - -------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Investment income received..................................................................................... $ 9,060,260 Interest paid.................................................................................................. (3,450,000) Payment of operating expenses.................................................................................. (2,229,160) Purchases of investments....................................................................................... (208,813,635) Proceeds from sales and maturities of investments.............................................................. 159,451,224 ------------ Cash used for operating activities........................................................................ (45,981,311) ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of Preferred stock.................................................................. 57,740,000 Cash dividends and distributions paid (net of reinvestment).................................................... (11,758,689) ------------ Cash provided by financing activities..................................................................... 45,981,311 ------------ Increase in cash.......................................................................................... -- Cash at beginning of year................................................................................. -- ------------ Cash at end of year....................................................................................... $ -- ------------ ------------ RECONCILIATION OF NET INCREASE IN NET ASSETS FROM INVESTMENT OPERATIONS TO CASH USED FOR OPERATING ACTIVITIES: Net increase in net assets from investment operations.......................................................... 56,884,456 Net increase in investments.................................................................................... (80,360,109) Net increase in unrealized appreciation on investments......................................................... (18,650,893) Increase in dividends and interest receivable.................................................................. (98,828) Decrease in receivable for investments sold.................................................................... 1,468,455 Accretion of offering costs.................................................................................... 165,432 Decrease in payable for investments purchased.................................................................. (4,157,562) Decrease in interest payable................................................................................... (1,150,000) Decrease in accrued expenses and other assets.................................................................. (82,262) ------------ Cash used for operating activities........................................................................ ($45,981,311) ------------ ------------
The accompanying notes are an integral part of the financial statements. 8 ROYCE VALUE TRUST, INC. - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- This table is presented to show selected data for a share of Common Stock outstanding throughout each period, and to assist stockholders in evaluating the Fund's performance for the periods presented.
Years ended December 31, ----------------------------------------------------- 1996 1995 1994 1993 1992 -------- -------- -------- -------- ------ NET ASSET VALUE, BEGINNING OF YEAR......................................... $ 13.56 $ 12.34 $ 13.47 $ 12.50 $11.23 -------- -------- -------- -------- ------- INCOME FROM INVESTMENT OPERATIONS(A): Net investment income.................................................... 0.26 0.04 0.04 0.09 0.15 Net realized and unrealized gain on investments.......................... 2.48 2.70 0.09 2.12 2.12 -------- -------- -------- -------- ------- Total from investment operations....................................... 2.74 2.74 0.13 2.21 2.27 -------- -------- -------- -------- ------- DIVIDENDS AND DISTRIBUTIONS TO PREFERRED STOCKHOLDERS: Net investment income.................................................... (0.09) -- -- -- -- Net realized gain on investments......................................... (0.63) -- -- -- -- -------- -------- -------- -------- ------- Total dividends and distributions to Preferred Stockholders............ (0.72) -- -- -- -- -------- -------- -------- -------- ------- DIVIDENDS AND DISTRIBUTIONS TO COMMON STOCKHOLDERS: Net investment income.................................................... (0.15) (0.03) (0.01) (0.09) (0.15) Net realized gain on investments......................................... (1.00) (1.26) (1.04) (1.06) (0.75) -------- -------- -------- -------- ------- Total dividends and distributions to Common Stockholders............... (1.15) (1.29) (1.05) (1.15) (0.90) -------- -------- -------- -------- ------- CAPITAL STOCK TRANSACTIONS: Effect of rights offering................................................ -- (0.12) (0.14) (0.08) (0.06) Effect of reinvestment of distributions by Common Stockholders........... (0.11) (0.11) (0.07)* (0.01) (0.04) -------- -------- -------- -------- ------- Total capital stock transactions....................................... (0.11) (0.23) (0.21) (0.09) (0.10) -------- -------- -------- -------- ------- NET ASSET VALUE, END OF YEAR(A)............................................ $ 14.32 $ 13.56 $ 12.34 $ 13.47 $ 12.50 -------- -------- -------- -------- ------- -------- -------- -------- -------- ------- MARKET VALUE, END OF YEAR.................................................. $ 12.625 $ 11.875 $ 11.000 $ 12.875 $12.250 -------- -------- -------- -------- ------- -------- -------- -------- -------- ------- TOTAL RETURN(B): Net Asset Value(a)....................................................... 15.5% 22.6% 1.1% 17.9% 19.9% Market Value............................................................. 16.3% 20.5% -5.6% 14.8% 26.8% RATIOS BASED ON AVERAGE NET ASSETS: Total expenses(c).......................................................... 1.20% 2.01% 2.01% 1.33% 0.81% Management fee expense................................................... 0.36% 0.97% 1.21% 1.09% 0.53% Interest expense......................................................... 0.60% 0.75% 0.46% -- -- Other operating expenses................................................. 0.24% 0.29% 0.34% 0.24% 0.28% Net investment income...................................................... 1.19% 0.34% 0.31% 0.74% 1.31% SUPPLEMENTAL DATA: Net Assets, End of Year (in thousands)..................................... $441,837 $338,970 $269,032 $246,558 $202,483 Portfolio Turnover Rate.................................................... 34% 32% 35% 33% 40% Average Commission Rate Paid`D'............................................ $ 0.0574 -- -- -- -- NOTES: Total amount outstanding (in thousands).................................... $ 40,000 $ 40,000 $ 40,000 -- -- Asset coverage per note.................................................... 1,202% 944% 769% -- -- Average market value per bond(d)........................................... $ 100.68 $ 96.92 $ 95.62 -- -- PREFERRED STOCK: Total shares outstanding................................................... 2,400,000 -- -- -- -- Asset coverage per share................................................... 481% -- -- -- -- Liquidation preference per share........................................... $ 25.00 -- -- -- -- Average market value per share(d).......................................... $ 25.20 -- -- -- --
- ------------ (a) Commencing June 21, 1995, Net Asset Value per share, Net Asset Value Total Return and Income from Investment Operations are calculated assuming the Notes are fully converted except when the effect of doing so results in a higher Net Asset Value per share than was calculated without such assumption. If it were assumed the Notes had not been converted, the Net Asset Value per share would have been increased by $0.17 at December 31, 1996 and $0.09 at December 31, 1995. (b) The Net Asset Value and Market Value Total Return assume a continuous Common stockholder who reinvested all net investment income dividends and capital gain distributions and fully participated in primary rights offerings. (c) Expense ratios before waiver of fees by the investment advisor would have been 1.22%, 2.04% and 2.02% for the years ended December 31, 1996, 1995 and 1994, respectively. (d) The average of all month-end market values during the period. * Includes distributions paid January 31, 1994 and distributions paid December 30, 1994. `D' For fiscal years beginning after October 1, 1995, the Fund is required to disclose its average commission rate paid per share for purchases and sales of investments. The accompanying notes are an integral part of the financial statements. 9 ROYCE VALUE TRUST, INC. - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Royce Value Trust, Inc. (the 'Fund') was incorporated under the laws of the State of Maryland on July 1, 1986 as a diversified closed-end investment company. The Fund commenced operations on November 26, 1986. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Valuation of investments: Securities listed on an exchange or on the Nasdaq National Market System are valued on the basis of the last reported sale prior to the time the valuation is made or, if no sale is reported for such day, at their bid price for exchange-listed securities and at the average of their bid and asked prices for Nasdaq securities. Quotations are taken from the market where the security is primarily traded. Other over-the-counter securities for which market quotations are readily available are valued at their bid price. Securities for which market quotations are not readily available are valued at their fair value under procedures established and supervised by the Fund's Board of Directors. Bonds and other fixed income securities may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. Investment transactions and related investment income: Investment transactions are accounted for on the trade date and dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis. Realized gains and losses from investment transactions and unrealized appreciation and depreciation of investments are determined on the basis of identified cost for book and tax purposes. Taxes: As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the Fund is not subject to income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. The Schedule of Investments includes information regarding income taxes under the caption 'Income Tax Information'. Distributions: Dividend and capital gain distributions paid to Preferred Stockholders are recorded on an accrual basis and distributions paid to Common Stockholders are recorded on the ex-dividend date. These distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. Permanent book and tax basis differences relating to shareholder distributions will result in reclassification to paid-in capital and may affect net investment income per share. 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 at fiscal year end is distributed in the following year. Repurchase agreements: The Fund enters into repurchase agreements with respect to its portfolio securities solely with State Street Bank and Trust Company ('SSB&T'), the custodian of its assets. The Fund restricts repurchase agreements to maturities of no more than seven days. Securities pledged as collateral for repurchase agreements are held by SSB&T until maturity of the repurchase agreements. Repurchase agreements could involve certain risks in the event of default or insolvency of SSB&T, including possible delays or restrictions upon the ability of the Fund to dispose of the underlying securities. NOTE 2. INVESTMENT COMPANY CONVERTIBLE NOTES: The Fund issued $40,000,000 aggregate principal amount of Investment Company Convertible Notes (the 'Notes') on June 22, 1994. The Fund received proceeds of $38,350,000 after the deduction of the underwriting discount and offering costs incurred by the Fund in connection with the issuance of the Notes. The underwriting discount and the offering costs of $1,200,000 and $450,000, respectively, are being accreted on a straight line basis over the term of the Notes. The Notes, which are unsecured obligations of the Fund, mature on June 30, 2004 and bear interest payable on June 30 and December 31 of each year at the rate of 5 3/4% per annum. The Notes have Aaa rating from Moody's Investors Service, Inc. ('Moody's'). 10 ROYCE VALUE TRUST, INC. - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) - -------------------------------------------------------------------------------- The Notes are convertible into shares of Common Stock of the Fund at the option of the holder, at any time prior to maturity, except during the period from the second trading day prior to the ex-dividend date through the last day of each year unless an earlier date is selected by the Fund, and unless previously redeemed at the option of the Fund. The conversion price at December 31, 1996 is $13.19 per share. This conversion price is subject to an annual net adjustment involving an escalation of 6.75% and a reduction for the impact on net asset value per share of distributions to Common Stockholders. Under the Investment Company Act of 1940, the Fund is required to maintain an asset coverage of at least 300% for the Notes. In addition, the Indenture governing the Notes requires the Fund to maintain a certain discounted asset coverage for its portfolio that equals or exceeds the Basic Maintenance Amount under the guidelines established by Moody's. The Fund has met these requirements since the issuance of the Notes. Commencing July 1, 1997, and any time thereafter prior to maturity, the Fund may, at its option, redeem the Notes in whole or in part for cash at a price equal to 100% of their principal amount, together with accrued interest thereon. Prior to July 1, 1997, the Fund will have the option to redeem the Notes for cash at a price equal to 100% of their principal amount, together with accrued interest, only if a redemption is necessary for the Fund to maintain the required asset coverage for the Notes and/or continue to qualify as a regulated investment company. On July 1, 1999, if the average market price per $1,000 principal amount of Notes for the 45 trading days ending May 31, 1999 is less than $950, the Fund will either call all of the Notes for redemption or reset one or more of the terms of the Notes so that the market value of the Notes is at or as close as possible to par. NOTE 3. CAPITAL STOCK: On August 23, 1996, the Fund issued and sold 2,400,000 shares of its 8% Cumulative Preferred Stock. The stock has a liquidation preference of $25.00 per share plus an amount equal to accumulated and unpaid dividends to the date of distributions. Dividends on the Cumulative Preferred Stock are payable when, as and if declared by the Board of Directors of the Fund, out of funds legally available annually on December 23 in each year to the holders of record on the preceding December 6. The Fund is required to allocate long-term capital gain distributions and other types of income proportionately among holders of shares of Common Stock, Preferred Stock and Noteholders (to the extent they receive constructive distributions). To the extent that dividends on the shares of Preferred Stock are not paid from long-term capital gains, they will be paid from ordinary income or net short-term capital gains or will represent a return of capital. The Fund issued shares of Common Stock as reinvestment of dividends and distributions by common stockholders totaling 1,512,360 and 1,721,155 for years ended December 31, 1996 and 1995, respectively. The Fund also issued 1,308,387 additional shares upon the completion of a rights offering during the year ended December 31, 1995. NOTE 4. INVESTMENT ADVISORY AGREEMENT: ADVISORY FEE As compensation for its services under the Investment Advisory Agreement, Quest Advisory Corp. ('Quest') receives a fee comprised of a Basic Fee (the '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 600. Prior to July 1, 1996, the Fund's investment performance was measured against the record of the Standard & Poor's 500 Composite Stock Price Index over a rolling period of 36 months. The present Investment Advisory Agreement provides that, for the 18 month period from July 1, 1996 to December 31, 1997, the monthly fee payable to Quest will be the lower of the fee calculated under it or the fee that would have been payable to Quest for the month involved under the prior investment advisory agreement. Beginning with the month of July 1997 and for each succeeding month under the present Agreement, the Basic Fee will be a monthly fee equal to 1/12 of 1% (1% on an annualized basis) of the average of the net assets of the Fund at the end of each month included in the applicable performance period. The performance period for each such month will be from July 1, 1996 to the most recent month-end, until the Investment Advisory Agreement has been in effect for 60 full calendar months, when it will become a rolling 60 month period ending with the most recent calendar month. The Basic Fee for each such month will be increased or decreased at the rate of 1/12 of .05% per percentage point, depending on the extent, if any, by which the investment performance of the Fund exceeds by more 11 ROYCE VALUE TRUST, INC. - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) - -------------------------------------------------------------------------------- than two percentage points, or is exceeded by more than two percentage points by, the percentage change in the investment record of the S&P 600 for the performance period. The maximum increase or decrease in the Basic Fee for any month may not exceed 1/12 of .5%. Accordingly, for each month, commencing with the month of July 1997, the maximum monthly fee rate as adjusted for performance will be 1/12 of 1.5% and will be 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 will be 1/12 of .5% and will be payable if the percentage change in the investment record of the S&P 600 exceeds the investment performance of the Fund by 12 or more percentage points for the performance period. For the period from July 1, 1996 through June 30, 1997 under the present Agreement, the Basic Fee is calculated as a monthly fee equal to 1/12 of 1% of the net assets of the Fund at the end of each month in such period. The performance period relating to such period will be from July 1, 1996 through June 30, 1997. The Basic Fee for such period is also subject to increase or decrease as set forth in the preceding paragraph, with the rate of such increase or decrease being applied on an annualized basis. The maximum increase or decrease in the Basic Fee for such period may not exceed .5%. Any portion of the fee for such period, as adjusted as set forth above, in excess of .5% will be paid at the end of such period. Notwithstanding the foregoing, Quest will not be 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 on an absolute basis. In the event that the Fund's investment performance for such a performance period is less than zero, Quest will not be required to refund to the Fund any fee earned in respect of any prior performance period. For the year ended December 31, 1996, the Fund accrued and paid Quest advisory fees totalling $1,384,644, which is net of $86,240 voluntarily waived by Quest. NOTE 5. TRANSACTIONS IN SHARES OF AFFILIATED COMPANIES: An 'Affiliated Company', as defined in the Investment Company Act of 1940, is a company in which the Fund owns at least 5% of the company's outstanding voting securities. The Fund effected the following transactions in shares of such companies for the year ended December 31, 1996.
Purchases Sales Affiliated -------------------- ------------------ Realized Dividend Company Shares Cost Shares Cost Gain/Loss Income - ---------------- ------- ---------- ------- -------- --------- -------- Allen Organ Company Cl. B.............. 47,579 $1,793,703 -- -- -- -- General Builders Corp........... -- -- -- -- -- -- Sage Laboratories, Inc............ -- -- -- -- -- --
NOTE 6. PURCHASES AND SALES OF INVESTMENT SECURITIES: For the year ended December 31, 1996, the cost of purchases and proceeds from sales of investment securities, other than short-term securities, amounted to $129,980,638 and $136,234,769, respectively. 12 ROYCE VALUE TRUST, INC. REPORT OF INDEPENDENT AUDITORS - -------------------------------------------------------------------------------- TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF ROYCE VALUE TRUST, INC. We have audited the accompanying statement of assets and liabilities of Royce Value Trust, Inc., including the schedule of investments, as of December 31, 1996, and the related statements of operations and cash flows for the year then ended, the statement of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the three years in the period ended December 31, 1994, were audited by other auditors whose report dated February 13, 1995, expressed an unqualified opinion on those statements. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 1996, by correspondence with custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above and audited by us present fairly, in all material respects, the financial position of Royce Value Trust, Inc. at December 31, 1996, the results of its operations and its cash flows for the year then ended, the changes in its net assets and the financial highlights for each of the two years in the period then ended, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP New York, New York February 25, 1997 13 [THIS PAGE INTENTIONALLY LEFT BLANK] ROYCE MICRO-CAP TRUST, INC. SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1996 - -------------------------------------------------------------------------------- COMMON STOCKS - 90.6%
Shares Value CONSUMER PRODUCTS - 20.0% Aldila, Inc.*....................... 220,100 $ 1,066,109 Allen Organ Company Cl. B........... 21,625 859,594 Conso Products Co.*................. 58,300 750,613 Eskimo Pie Corporation.............. 20,000 222,500 Farmer Bros. Co. ................... 5,000 760,000 First Years Inc. ................... 32,700 531,375 Garan Incorporated.................. 53,200 1,030,750 Gibson Greetings, Inc.*............. 64,500 1,265,812 Golden Enterprises, Inc. ........... 80,600 624,650 Haggar Corp. ....................... 22,000 349,250 Johnson Worldwide Associates, Inc. Cl. A*............................ 67,000 887,750 Juno Lighting, Inc. ................ 74,000 1,184,000 Justin Industries, Inc. ............ 35,700 410,550 K-Swiss Inc. Cl. A.................. 22,800 225,150 Kit Manufacturing Co.*.............. 32,000 360,000 Kleinert's Inc.*.................... 11,600 205,900 Lifetime Hoan Corporation*.......... 109,140 1,282,395 Marisa Christina, Incorporated*..... 65,000 536,250 Matthews International Corporation Cl. A............................. 53,000 1,497,250 Midwest Grain Products, Inc.*....... 53,900 916,300 Mity-Lite, Inc.*.................... 57,700 721,250 Oshkosh B'Gosh, Inc. Cl. A.......... 41,400 631,350 The Rival Company................... 21,900 544,763 Skyline Corporation................. 31,100 769,725 The Smithfield Companies, Inc. ..... 40,400 444,400 Steck-Vaughn Publishing Corporation*...................... 42,881 493,132 Thor Industries, Inc. .............. 30,600 772,650 The Topps Company, Inc.*............ 226,800 907,200 Velcro Industries N.V. ............. 18,000 1,125,000 WLR Foods, Inc. .................... 20,000 247,500 Wellco Enterprises, Inc. ........... 10,000 350,000 Weyco Group, Inc. .................. 19,600 788,900 ------------ 22,762,068 ------------ CONSUMER SERVICES - 0.8% Jenny Craig, Inc.*.................. 71,200 631,900 IHOP Corp.*......................... 10,000 236,250 ------------ 868,150 ------------ FINANCIAL INTERMEDIARIES - 11.9% ALLIED Life Financial Corporation... 43,600 763,000 BHI Corporation..................... 29,400 586,163 Baldwin & Lyons, Inc. Cl. B......... 28,024 514,941 Capitol Transamerica Corporation.... 26,510 815,183 Shares Value Desert Community Bank............... 26,300 $ 391,212 Gryphon Holdings Inc.*.............. 38,200 539,575 Hanmi Bank*......................... 27,216 319,788 Independence Holding Company........ 35,800 275,213 Intercargo Corporation.............. 38,600 330,512 Iron and Glass Bancorp, Inc. ....... 22,000 992,750 Lawyers Title Corporation........... 22,900 449,413 MAIC Holdings, Inc.*................ 17,311 586,410 Nobel Insurance Limited............. 87,700 1,101,731 Oriental Bank and Trust............. 41,950 875,706 PXRE Corporation.................... 62,364 1,543,515 Pennsylvania Manufacturers Corporation Cl. A................. 56,609 891,592 Philadelphia Consolidated Holding Corp.*.................... 5,000 116,250 Piper Jaffray Companies Inc. ....... 33,600 525,000 Resurgence Properties Inc.*......... 95,500 799,813 Titan Holdings, Inc. ............... 16,835 277,778 Trenwick Group Inc. ................ 19,900 920,375 ------------ 13,615,920 ------------ FINANCIAL SERVICES - 4.7% E.W. Blanch Holdings, Inc. ......... 53,200 1,070,650 Duff & Phelps Credit Rating Co. .... 54,900 1,324,463 Eaton Vance Corp. .................. 18,600 885,825 Hilb, Rogal & Hamilton Company...... 50,300 666,475 Investors Financial Services Corporation....................... 11,045 306,499 Phoenix Duff & Phelps Corporation... 156,000 1,111,500 ------------ 5,365,412 ------------ HEALTH - 1.1% Hauser,Inc.*........................ 16,800 98,700 Nitinol Medical Technologies*....... 92,400 1,155,000 ------------ 1,253,700 ------------ INDUSTRIAL PRODUCTS - 16.9% AMERICAN BUILDINGS COMPANY*......... 20,400 487,050 American Filtrona Corporation....... 24,600 1,042,425 Art's-Way Manufacturing Co., Inc.*............................. 24,000 114,000 Ash Grove Cement Company............ 20,000 1,135,000 BHA Group, Inc...................... 46,310 746,749 Blessings Corporation............... 33,100 308,244 CFC International, Inc.*............ 49,500 556,875 Carbo Ceramics, Inc. ............... 20,000 420,000 Chemfab Corporation*................ 80,700 1,129,800
The accompanying notes are an integral part of the financial statements. 15 ROYCE MICRO-CAP TRUST, INC. SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1996 - --------------------------------------------------------------------------------
Shares Value INDUSTRIAL PRODUCTS - (continued) Curtiss-Wright Corporation.......... 17,300 $ 871,488 DeVlieg-Bullard, Inc.*.............. 62,500 173,828 Fab Industries, Inc. ............... 42,500 1,168,750 Hawkins Chemical, Inc. ............. 75,455 537,617 C. H. Heist Corp.*.................. 42,000 325,500 Hirsh International Corp. Cl. A*.... 20,387 377,160 International Aluminum Corporation....................... 19,300 492,150 Lilly Industries, Inc. Cl. A........ 63,700 1,162,525 MacDermid, Incorporated............. 13,577 373,367 Paul Mueller Company................ 8,900 333,750 Myers Industries, Inc. ............. 37,900 639,563 NN Ball and Roller, Inc. ........... 7,000 106,750 Oshkosh Truck Corporation Cl. B............................. 25,200 267,750 Peerless Mfg. Co. .................. 21,600 270,000 Penn Engineering and Manufacturing Inc. ............................. 54,700 1,121,350 Penn Engineering and Manufacturing Corp. Cl. A....................... 11,900 246,925 Pioneer Metals, Inc.*............... 570 122,550 Puerto Rican Cement Company, Inc. .................... 26,400 825,000 Simpson Manufacturing Co., Inc.*.... 56,500 1,299,500 Synalloy Corporation................ 29,500 464,625 Thermal Industries, Inc. ........... 93,100 1,117,200 Todd Shipyards Corporation*......... 11,800 76,700 UNC, Inc.*.......................... 17,900 214,800 Versa Technologies, Inc. ........... 37,900 492,700 Vertex Communications Corporation*...................... 10,000 181,250 ------------ 19,202,941 ------------ INDUSTRIAL SERVICES - 12.7% Aceto Corporation................... 34,250 477,359 Air Express International Corporation....................... 18,350 591,787 Guy F. Atkinson Company of California*....................... 67,500 708,750 Devcon International Corp.*......... 80,100 490,612 Devon Group, Inc.*.................. 7,500 206,250 Ennis Business Forms, Inc. ......... 58,100 653,625 FCA International Ltd.*............. 154,200 241,904 Frozen Food Express Industries, Inc. ............................. 136,300 1,226,700 The Harper Group.................... 18,500 439,375 Kenan Transport Company............. 11,600 229,100 Lufkin Industries, Inc. ............ 36,800 920,000 Merrill Corporation................. 25,400 584,200 New England Business Service, Inc. .................... 75,300 1,618,950 Shares Value Nichols Research Corporation*....... 12,700 $ 323,850 Plenum Publishing Corporation....... 27,100 948,500 REFAC Technology Development Corporation....................... 54,200 318,425 Rush Enterprises, Inc.*............. 33,500 402,000 Sevenson Environmental Services Inc. .................... 71,500 1,304,875 Standard Commercial Corporation*.... 60,800 1,231,200 Treadco, Inc. ...................... 17,700 185,850 Vallen Corporation*................. 50,500 839,562 Willbros Group Inc.*................ 60,000 585,000 ------------ 14,527,874 ------------ NATURAL RESOURCES - 3.5% Alamco, Inc.*....................... 40,100 451,125 Alico, Inc. ........................ 5,200 97,500 Belden & Blake Corporation*......... 10,000 255,000 Dreco Energy Services Ltd. Cl. A*............................ 17,000 622,625 FRP Properties, Inc.*............... 32,700 833,850 Florida Rock Industries, Inc. ...... 47,000 1,539,250 MK Gold Company*.................... 11,800 17,700 McFarland Energy, Inc.*............. 15,400 186,725 ------------ 4,003,775 ------------ RETAIL - 4.6% Brookstone, Inc.*................... 33,000 346,500 The Buckle, Inc.*................... 9,100 227,500 Catherines Stores Corporation*...... 147,400 810,700 Cato Corporation Cl. A.............. 103,000 515,000 Chico's FAS, Inc.*.................. 132,800 564,400 The Dress Barn, Inc.*............... 61,900 928,500 Ruby Tuesday Inc.*.................. 28,700 530,950 Sterling Electronics Corporation*... 32,000 428,000 Suzy Shier Ltd. .................... 156,800 909,566 ------------ 5,261,116 ------------ TECHNOLOGY - 9.3% BGS Systems, Inc. .................. 43,000 1,177,125 CEM Corporation*.................... 75,700 605,600 CSP Inc.*........................... 78,400 646,800 Control Devices, Inc.*.............. 50,000 650,000 Dionex Corporation*................. 16,600 581,000 Figgie International Inc. Cl. B*.... 21,300 228,975 Giga-tronics Incorporated*.......... 40,482 339,037 Hach Company........................ 18,750 356,250 Helix Technology Corporation........ 17,740 514,460 ILC Technology, Inc.*............... 78,200 1,016,600 Integral Systems, Inc.*............. 15,400 431,200 Landauer Inc........................ 47,000 1,151,500
The accompanying notes are an integral part of the financial statements. 16 ROYCE MICRO-CAP TRUST, INC. SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1996 - --------------------------------------------------------------------------------
Shares Value TECHNOLOGY - (continued) MDL Information Systems, Inc.*...... 12,000 $ 223,500 Newport Corporation................. 60,300 535,162 PCD Inc.*........................... 40,000 520,000 Richardson Electronics, Ltd. ....... 105,200 867,900 Sage Laboratories, Inc. ............ 14,500 186,688 Woodhead Industries, Inc. .......... 40,000 550,000 ------------ 10,581,797 ------------ UTILITIES - 0.3% Southwest Water Company............. 20,804 288,655 ------------ MISCELLANEOUS - 4.8%............................ 5,520,733 ------------ Total Common Stocks (Cost $81,979,579)............................ 103,252,141 ------------ Value REPURCHASE AGREEMENT - 9.0% State Street Bank and Trust Company, 4.90% due 1/02/97, collateralized by U.S. Treasury Notes, 7.25% due 8/15/04, valued at $10,407,375 (Cost $10,200,000)................ $10,200,000 ------------ TOTAL INVESTMENTS - 99.6% (COST $92,179,579)............................ 113,452,141 CASH AND OTHER ASSETS LESS LIABILITIES - 0.4%............................ 500,881 ------------ NET ASSETS - 100.0%............................. $113,953,022 ------------ ------------
- ------------------------ *Non-income producing. INCOME TAX INFORMATION -- The cost of total investments for federal income tax purposes was $92,225,353. At December 31, 1996, net unrealized appreciation for all securities was $21,226,788, consisting of aggregate gross unrealized appreciation of $22,681,793 and aggregate gross unrealized depreciation of $1,455,005. The accompanying notes are an integral part of the financial statements. 17 ROYCE MICRO-CAP TRUST, INC. - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 1996 - --------------------------------------------------------------------------------
ASSETS: Investments in securities, at value (identified cost $92,179,579)............................................... $ 113,452,141 Receivable for investments sold................................................................................. 392,397 Receivable for dividends and interest........................................................................... 173,280 Deferred organizational costs and other assets.................................................................. 97,960 ------------- Total Assets............................................................................................... 114,115,778 ------------- LIABILITIES: Payable for investments purchased............................................................................... 42,921 Payable for investment advisory fees............................................................................ 38,469 Payable for administration fees................................................................................. 8,776 Accrued expenses................................................................................................ 72,590 ------------- Total Liabilities.......................................................................................... 162,756 ------------- Net Assets................................................................................................. $ 113,953,022 ------------- ------------- ANALYSIS OF NET ASSETS: Dividends in excess of net investment income.................................................................... $ (152,608) Accumulated net realized gain on investments.................................................................... 4,709,893 Net unrealized appreciation on investments...................................................................... 21,272,562 Capital stock................................................................................................... 12,154 Additional paid-in capital...................................................................................... 88,111,021 ------------- Net Assets................................................................................................. $ 113,953,022 ------------- ------------- PRICING OF SHARES: Net asset value per share ($113,953,022[div]12,153,511 shares outstanding).............................................................. $9.38 ----- -----
- -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Year ended December 31, 1996 ----------------- INVESTMENT OPERATIONS: Net investment income.................................................................. $ 947,752 Net realized gain on investments....................................................... 12,128,883 Net change in unrealized appreciation on investments................................... 2,989,227 ------------- Net increase in net assets from investment operations............................. 16,065,862 ------------- DIVIDENDS AND DISTRIBUTIONS: Net investment income.................................................................. (1,125,801) Net realized gain on investments....................................................... (7,880,607) ------------- Total dividends and distributions................................................. (9,006,408) ------------- CAPITAL STOCK TRANSACTIONS: Dividend and distribution reinvestment................................................. 6,828,202 ------------- NET INCREASE IN NET ASSETS.................................................................. 13,887,656 NET ASSETS: Beginning of year...................................................................... 100,065,366 ------------- End of year (including distributions in excess of net investment income of $152,608 in 1996 and undistributed net investment income of $25,441 in 1995)...................... $ 113,953,022 ------------- ------------- Year ended December 31, 1995 ----------------- INVESTMENT OPERATIONS: Net investment income.................................................................. $ 243,167 Net realized gain on investments....................................................... 4,317,779 Net change in unrealized appreciation on investments................................... 14,101,960 ------------- Net increase in net assets from investment operations............................. 18,662,906 ------------- DIVIDENDS AND DISTRIBUTIONS: Net investment income.................................................................. (217,726) Net realized gain on investments....................................................... (3,701,343) ------------- Total dividends and distributions................................................. (3,919,069) ------------- CAPITAL STOCK TRANSACTIONS: Dividend and distribution reinvestment................................................. 2,787,701 ------------- NET INCREASE IN NET ASSETS.................................................................. 17,531,538 NET ASSETS: Beginning of year...................................................................... 82,533,828 ------------- End of year (including distributions in excess of net investment income of $152,608 in 1996 and undistributed net investment income of $25,441 in 1995)...................... $ 100,065,366 ------------- -------------
The accompanying notes are an integral part of the financial statements. 18 ROYCE MICRO-CAP TRUST, INC. - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 - -------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends...................................................................................................... $ 1,347,077 Interest....................................................................................................... 511,796 ---------- Total Income............................................................................................... 1,858,873 ---------- EXPENSES: Investment advisory fees....................................................................................... 499,869 Administration fees............................................................................................ 119,427 Custodian and transfer agent fees.............................................................................. 76,103 Professional fees.............................................................................................. 36,035 Administrative and office facilities expenses.................................................................. 65,968 Directors' fees................................................................................................ 25,633 Other expenses................................................................................................. 88,086 ----------- Total Expenses............................................................................................. 911,121 ----------- Net Investment Income...................................................................................... 947,752 ----------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on investments............................................................................... 12,128,883 Net change in unrealized appreciation on investments........................................................... 2,989,227 ----------- Net realized and unrealized gain on investments............................................................ 15,118,110 ----------- NET INCREASE IN NET ASSETS FROM INVESTMENT OPERATIONS.............................................................. $16,065,862 ----------- -----------
- -------------------------------------------------------------------------------- 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.
Year ended December 31, ------------------------------- 1996 1995 1994 -------- -------- ------- NET ASSET VALUE, BEGINNING OF PERIOD............................................... $ 8.89 $ 7.58 $ 7.27 -------- -------- ------- INVESTMENT OPERATIONS: Net investment income............................................................ 0.09 0.02 0.01 Net realized and unrealized gain on investments.................................. 1.32 1.69 0.41 -------- -------- ------- Total from investment operations............................................... 1.41 1.71 0.42 -------- -------- ------- DIVIDENDS AND DISTRIBUTIONS: Net investment income............................................................ (0.10) (0.02) (0.02) Net realized gain on investments................................................. (0.70) (0.34) (0.03) -------- -------- ------- Total dividends and distributions.............................................. (0.80) (0.36) (0.05) -------- -------- ------- CAPITAL STOCK TRANSACTIONS: Effect of rights offering........................................................ -- -- (0.06) Effect of reinvestment of distributions.......................................... (0.12) (0.04) -- -------- -------- ------- Total capital stock transactions............................................... (0.12) (0.04) (0.06) -------- -------- ------- NET ASSET VALUE, END OF PERIOD..................................................... $ 9.38 $ 8.89 $ 7.58 -------- -------- ------- -------- -------- ------- MARKET VALUE, END OF PERIOD........................................................ $ 8.25 $ 8.00 $ 7.00 -------- -------- ------- -------- -------- ------- TOTAL RETURN:(A) Net Asset Value.................................................................. 16.6% 22.9% 6.0% Market Value..................................................................... 13.9% 19.8% (5.1)% RATIOS BASED ON AVERAGE NET ASSETS: Total expenses..................................................................... 0.85% 1.36% 1.88% Management Fee Expense......................................................... 0.47% 0.77% 1.20% Other operating expenses....................................................... 0.38% 0.59% 0.68% Net investment income (loss)....................................................... 0.88% 0.26% 0.21% SUPPLEMENTAL DATA: Net Assets, End of Period (in thousands)........................................... $113,953 $100,065 $82,534 Portfolio Turnover Rate............................................................ 51% 51% 23% Average Commission Rate Paid`D'.................................................... $ 0.0485 -- -- For the Period December 14, 1993* through December 31, 1993 ------------------ NET ASSET VALUE, BEGINNING OF PERIOD............................................... $ 7.25 ------- INVESTMENT OPERATIONS: Net investment income............................................................ -- Net realized and unrealized gain on investments.................................. 0.02 ------- Total from investment operations............................................... 0.02 ------- DIVIDENDS AND DISTRIBUTIONS: Net investment income............................................................ -- Net realized gain on investments................................................. -- ------- Total dividends and distributions.............................................. -- ------- CAPITAL STOCK TRANSACTIONS: Effect of rights offering........................................................ -- Effect of reinvestment of distributions.......................................... -- ------- Total capital stock transactions............................................... -- ------- NET ASSET VALUE, END OF PERIOD..................................................... $ 7.27 ------- ------- MARKET VALUE, END OF PERIOD........................................................ $ 7.50 ------- ------- TOTAL RETURN:(A) Net Asset Value.................................................................. 0.3% Market Value..................................................................... 0.0% RATIOS BASED ON AVERAGE NET ASSETS: Total expenses..................................................................... 1.92%(b)** Management Fee Expense......................................................... 0.00% Other operating expenses....................................................... 1.92% Net investment income (loss)....................................................... (0.06)%(b)** SUPPLEMENTAL DATA: Net Assets, End of Period (in thousands)........................................... $ 71,126 Portfolio Turnover Rate............................................................ 0% Average Commission Rate Paid`D'.................................................... --
- ------------ * Commencement of operations. ** Annualized. (a) The Net Asset Value and Market Value Total Returns assume a continuous stockholder who reinvested all net investment income dividends and capital gain distributions and fully participated in the primary rights offering. (b) Presented after waiver by the Investment Adviser and Administrator. For the period ended December 31, 1993, the ratios of expenses and net investment loss to average net assets would have been 2.12% and (.26)%, respectively, absent such waivers. `D' For fiscal years beginning after October 1, 1995, the Fund is required to disclose its average commission rate paid per share for purchases and sales of investments. The accompanying notes are an integral part of the financial statements. 19 ROYCE MICRO-CAP TRUST, INC. - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Royce Micro-Cap Trust, Inc. (the 'Fund'), is a closed-end, diversified management investment company registered under the Investment Company Act of 1940 and 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 accordance with generally accepted accounting principles requires Fund management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Valuation of Investments: Securities listed on an exchange or on the Nasdaq National Market System are valued on the basis of the last reported sale prior to the time the valuation is made or, if no sale is reported for such day, at their bid price for exchange-listed securities and at the average of their bid and asked prices for Nasdaq securities. Quotations are taken from the market where the security is primarily traded. Other over-the-counter securities for which market quotations are readily available are valued at their bid price. Securities for which market quotations are not readily available are valued at their fair value under procedures established and supervised by the Fund's Board of Directors. Bonds and other fixed income securities may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. Investment Transactions and Related Investment Income: Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Realized gains and losses from investment transactions and unrealized appreciation and depreciation of investments are determined on the basis of identified cost for both book and tax purposes. Taxes: As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the Fund is not subject to income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. The Schedule of Investments includes information regarding income taxes under the caption 'Income Tax Information'. Dividends and Distributions: Dividends and capital gains distributions are recorded on the ex-dividend date and paid annually in December. These distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to additional paid-in capital and may affect net investment income per share. 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 at fiscal year end will be distributed in the following year. Repurchase Agreements: The Fund enters into repurchase agreements with respect to its portfolio securities solely with State Street Bank and Trust Company ('SSB&T'), the custodian of its assets. The Fund restricts repurchase agreements to maturities of no more than seven days. Securities pledged as collateral for repurchase agreements are held by SSB&T until maturity of the repurchase agreement. Repurchase agreements could involve certain risks in the event of default or insolvency of SSB&T, including possible delays or restrictions upon the ability of the Fund to dispose of the underlying securities. Organizational Expenses: Costs of $70,000 incurred by the Fund in connection with its organization have been deferred and are being amortized on a straight line basis over a five year period from the date the Fund commenced operations. NOTE 2. INVESTMENT ADVISORY AGREEMENT: Under the Investment Advisory Agreement between Quest Advisory Corp. ('Quest') and the Fund, the Basic Fee is a monthly fee equal to 1/12 of 1% (1% on an annualized basis) of the average of the net assets of the Fund at the end of each month included in the applicable performance period, which is a rolling period of up to 36 months, beginning January 1, 1994 and ending with the most recent calendar month. The Basic Fee for such monthly period may be increased or decreased, depending on the extent, if any, by which the investment performance of the Fund exceeds by more than 2 percentage points, or is exceeded by more than 2 percentage points, by the percentage change in the investment record of the Nasdaq Composite Index (the 'Index') for the performance period. 20 ROYCE MICRO-CAP TRUST, INC. - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) - -------------------------------------------------------------------------------- The maximum increase or decrease in the Basic Fee for any month may not exceed 1/12 of 0.5%. Accordingly, for each month, the maximum fee rate as adjusted for performance is 1/12 of 1.5% and would be payable if the investment performance of the Fund exceeds the percentage change in the investment record of the Index by 12 or more percentage points for the performance period. The minimum fee rate as adjusted for performance is 1/12 of 0.5% and would be payable if the percentage change in the investment record of the Index exceeds the investment performance of the Fund by 12 or more percentage points for the performance period. For the year ended December 31, 1996, the Fund paid Quest advisory fees totaling $499,869. Effective January 1, 1997, the Fund entered into a new investment advisory agreement with Quest which changed the benchmark index to the Russell 2000. NOTE 3. ADMINISTRATION AGREEMENT: Effective March 1, 1996, Mitchell Hutchins Asset Management Inc. (the 'Administrator') entered into an amended Administration Agreement with the Fund. In accordance with the Administration Agreement, the Administrator performs or assists in certain aspects of the Fund's operations. As compensation for its services, the Administrator is paid an annual fee, payable monthly, of $50,000 plus 0.05% on the first $125 million of the Fund's average daily net assets, and 0.03% of average daily net assets exceeding $125 million. NOTE 4. CAPITAL STOCK: At December 31, 1996, there were 150,000,000 shares of common stock, $0.001 par value, authorized. Capital stock transactions were as follows:
Year ended Year ended December 31, 1996 December 31, 1995 --------------------- --------------------- Shares Amount Shares Amount ------- ---------- ------- ---------- Dividend and distribution reinvestment...... 895,501 $6,828,202 371,693 $2,787,701
NOTE 5. PURCHASES AND SALES OF SECURITIES: For the year ended December 31, 1996, the cost of purchases and the proceeds from sales of investment securities, excluding short-term securities, amounted to $49,154,327 and $56,149,457, respectively. 21 ROYCE MICRO-CAP TRUST, INC. REPORT OF INDEPENDENT AUDITORS - -------------------------------------------------------------------------------- TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF ROYCE MICRO-CAP TRUST, INC. We have audited the accompanying statement of assets and liabilities of Royce Micro-Cap Trust, Inc. including the schedule of investments, as of December 31, 1996, and the related statement of operations for the year then ended, the statement of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The financial highlights for the year ended December 31, 1994 and the period ended December 31, 1993, were audited by other auditors whose report dated February 13, 1995, expressed an unqualified opinion on those statements. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 1996, by correspondence with custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above and audited by us present fairly, in all material respects, the financial position of Royce Micro-Cap Trust, Inc. at December 31, 1996, the results of its operations for the year then ended, the changes in its net assets and the financial highlights for each of the two years in the period then ended, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP New York, New York February 25, 1997 22 ROYCE GLOBAL TRUST, INC. SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1996 - -------------------------------------------------------------------------------- COMMON STOCKS - 69.4%
Shares Value CONSUMER PRODUCTS - 10.4% A.T. Cross Company Cl. A................. 34,400 $ 399,900 Johnson Worldwide Associates, Inc. Cl. A*..................................... 23,700 314,025 K - Swiss Inc. Cl. A..................... 25,000 246,875 Lazare Kaplan International, Inc.*....... 50,000 856,250 Kao Corp. ............................... 40,000 465,237 Semi - Tech Corp.*....................... 177,500 654,531 Universal Corporation.................... 20,000 642,500 Velcro Industries N.V. .................. 16,200 1,012,500 ----------- 4,591,818 ----------- CONSUMER SERVICES - 2.4% Groupe AB SA *`D'........................ 25,000 359,375 International Dairy Queen, Inc. Cl. A*... 35,000 700,000 ----------- 1,059,375 ----------- FINANCIAL INTERMEDIARIES - 7.8% BHI Corporation.......................... 31,400 626,037 Barclays plc............................. 2,000 137,500 Leucadia National Corporation............ 29,200 781,100 PXRE Corporation......................... 36,000 893,250 PartnerRe Holdings Ltd. ................. 10,000 340,000 Trenwick Group Inc. ..................... 14,100 652,125 ----------- 3,430,012 ----------- FINANCIAL SERVICES - 10.2% Alexander & Alexander Services Inc. ..... 39,000 677,625 E.W. Blanch Holdings, Inc. .............. 24,000 483,000 Duff & Phelps Credit Rating Co. ......... 10,000 241,250 Arthur J. Gallagher & Co. ............... 5,000 155,000 INVESCO PLC.............................. 5,000 221,875 LaSalle Re Holdings Limited.............. 5,000 146,250 Lexington Global Asset Managers, Inc.*... 11,300 70,625 MacKenzie Financial Corporation.......... 45,700 605,525 Phoenix Duff & Phelps Corporation........ 29,600 210,900 The Pioneer Group, Inc. ................. 29,500 700,625 Willis Corroon Group plc `D'............. 86,300 992,450 ----------- 4,505,125 ----------- HEALTH - 1.0% Haemonetics Corporation*................. 23,800 449,225 ----------- INDUSTRIAL PRODUCTS - 14.3% Blessings Corporation.................... 48,500 451,656 CIA VALE DO RIO DOCE`D'.................. 25,000 481,250 Grupo Imsa, S.A. de C.V.*................ 15,000 285,000 Imation Corp.*........................... 1,500 42,187 Shares Value Kaydon Corporation....................... 14,500 $ 683,313 The Lincoln Electric Company............. 18,000 591,750 The Lincoln Electric Company Cl. A....... 10,000 302,500 Nordson Corporation...................... 5,000 318,750 Penn Engineering and Manufacturing Corp. Cl. A.................................. 26,800 556,100 Puerto Rican Cement Company, Inc. ....... 20,000 625,000 Simpson Manufacturing Co., Inc.*......... 11,000 253,000 Tecumseh Products Company................ 10,400 591,500 Unifi, Inc. ............................. 18,500 594,313 Woodward Governor Company................ 4,000 528,000 ----------- 6,304,319 ----------- INDUSTRIAL SERVICES - 7.7% APT Satellite Holdings Limited*.......... 12,500 175,000 Air Express International Corporation.... 7,000 225,750 Cordiant, Inc. plc *`D'.................. 10,700 53,500 DIMON Incorporated....................... 30,500 705,313 The Harper Group......................... 10,600 251,750 Morrison Knudsen Corporation*............ 10,000 90,000 THE OLSTEN CORPORATION................... 45,000 680,625 Pittston Burlington Group................ 5,800 116,000 Standard Commercial Corporation*......... 43,380 878,445 Willbros Group Inc.*..................... 21,600 210,600 ----------- 3,386,983 ----------- NATURAL RESOURCES - 0.6% MK Gold Company*......................... 188,000 282,000 ----------- RETAIL - 9.8% Amway Japan Limited...................... 14,500 241,063 Claire's Stores, Inc. ................... 50,000 650,000 InterTAN Inc.*........................... 61,800 301,275 Royal Co. Ltd. .......................... 35,000 648,316 Sotheby's Holdings, Inc. Cl. A........... 24,000 447,000 Stanhome Inc. ........................... 30,200 800,300 Suzy Shier Ltd. ......................... 127,800 741,288 The Talbots, Inc. ....................... 17,500 500,938 ----------- 4,330,180 ----------- TECHNOLOGY - 5.2% CEM Corporation*......................... 51,400 411,200 Marshall Industries*..................... 19,300 591,062 National Computer Systems, Inc. ......... 23,000 586,500 Scitex Corporation Limited............... 75,800 720,100 ----------- 2,308,862 ----------- Total Common Stocks (Cost $ 29,444,370).................... 30,647,899 -----------
23 ROYCE GLOBAL TRUST, INC. SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1996 - --------------------------------------------------------------------------------
Value U.S. TREASURY OBLIGATION - 13.6% U.S. Treasury Notes, principal amount $6,000,000, 6.00% due 11/30/97 (Cost $5,952,831)............ $ 6,014,819 ----------- TOTAL INVESTMENTS - 83.0% (COST $35,397,201)...... 36,662,718 CASH AND OTHER ASSETS LESS LIABILITIES - 17.0%.... 7,491,580 ----------- NET ASSETS - 100.0%............................... $44,154,298 ----------- -----------
- ------------------------ * Non-income producing. `D' American Depository Receipt. INCOME TAX INFORMATION - The cost of total investments for federal income tax purposes was $35,397,201. At December 31, 1996, net unrealized appreciation for all securities amounted to $1,265,517, consisting of aggregate gross unrealized appreciation of $1,680,575 and aggregate gross unrealized depreciation of $415,058. The accompanying notes are an integral part of the financial statements. 24 ROYCE GLOBAL TRUST, INC. - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 1996 - -------------------------------------------------------------------------------- ASSETS: Investments in securities, at value (identified cost $35,397,201).................................................... $36,662,718 Cash................................................................................................................. 10,512,473 Receivable for investments sold...................................................................................... 59,650 Receivable for dividends and interest................................................................................ 150,807 ----------- Total Assets.................................................................................................... 47,385,648 ----------- LIABILITIES: Payable for investments purchased.................................................................................... 3,179,107 Accrued expenses..................................................................................................... 52,243 ----------- Total Liabilities............................................................................................... 3,231,350 ----------- Net Assets...................................................................................................... $44,154,298 ----------- ----------- ANALYSIS OF NET ASSETS: Undistributed net investment income.................................................................................. $ 833,775 Accumulated net realized gain on investments......................................................................... 2,062,530 Net unrealized appreciation on investments and foreign currency...................................................... 1,264,431 Capital Stock........................................................................................................ 79,984 Additional paid-in capital........................................................................................... 39,913,578 ----------- Net Assets...................................................................................................... $44,154,298 ----------- ----------- PRICING OF SHARES: Net asset value per share ($44,154,298[div]7,998,419 shares outstanding)............................................. $5.52 ----- -----
- -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Years ended December 31, ---------------------------- 1996 1995 ------------ ------------ INVESTMENT OPERATIONS: Net investment income.......................................................................... $ 760,943 $ 1,157,628 Net realized gain (loss) on investments and foreign currency................................... 3,733,788 (687,847) Net change in unrealized appreciation on investments and foreign currency...................... (1,218,086) 3,707,341 ------------ ------------ Net increase in net assets from investment operations.......................................... 3,276,645 4,177,122 ------------ ------------ DIVIDENDS AND DISTRIBUTIONS: Net investment income.......................................................................... -- (1,334,993) Net realized gain on investments and foreign currency.......................................... -- (60,617) ------------ ------------ Total dividends and distributions.............................................................. -- (1,395,610) ------------ ------------ CAPITAL STOCK TRANSACTIONS: Common Stock repurchased....................................................................... (507,185) (2,502,956) ------------ ------------ NET INCREASE IN NET ASSETS.......................................................................... 2,769,460 278,556 NET ASSETS: Beginning of year.............................................................................. 41,384,838 41,106,282 ------------ ------------ End of year (including undistributed net investment income of $833,775 in 1996 and $277,458 in 1995)......................................................................................... $ 44,154,298 $ 41,384,838 ------------ ------------ ------------ ------------
The accompanying notes are an integral part of the financial statements. 25 ROYCE GLOBAL TRUST, INC. - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 - -------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends.......................................................................................................... $ 362,714 Interest........................................................................................................... 1,204,782 ----------- Total Income................................................................................................... 1,567,496 ----------- EXPENSES: Investment advisory fees........................................................................................... 423,497 Custodian and transfer agent fees.................................................................................. 99,627 Professional fees.................................................................................................. 131,792 Directors' fees.................................................................................................... 51,952 Other expenses..................................................................................................... 173,457 ----------- Total Expenses................................................................................................. 880,325 Fees Waived by Investment Advisor.............................................................................. (73,772) ----------- Net Expenses................................................................................................... 806,553 ----------- Net Investment Income.......................................................................................... 760,943 ----------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY: Net realized gain on investments and foreign currency.............................................................. 3,733,788 Net change in unrealized appreciation on investments and foreign currency.......................................... (1,218,086) ----------- Net realized and unrealized gain on investments and foreign currency........................................... 2,515,702 ----------- NET INCREASE IN NET ASSETS FROM INVESTMENT OPERATIONS.................................................................. $ 3,276,645 ----------- -----------
- -------------------------------------------------------------------------------- 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 December 31, ---------------------------------------- 1996 1995 1994 1993 ------- ------- ------- ------- NET ASSET VALUE, BEGINNING OF YEAR................................................... $ 5.09 $ 4.70 $ 5.24 $ 4.99 INCOME FROM INVESTMENT OPERATIONS: Net investment income.............................................................. 0.06 0.13 0.19 0.04 Net realized and unrealized gain on investments and foreign currency............... 0.35 0.36 (0.62) 0.46 ------- ------- ------- ------- Total from investment operations................................................. 0.41 0.49 (0.43) 0.50 ------- ------- ------- ------- DIVIDENDS AND DISTRIBUTIONS: Net investment income.............................................................. -- (0.16) (0.11) (0.03) Net realized gain on investments and foreign currency.............................. -- (0.01) -- (0.22) Other sources...................................................................... -- -- -- -- ------- ------- ------- ------- Total dividends and distributions................................................ -- (0.17) (0.11) (0.25) ------- ------- ------- ------- CAPITAL STOCK TRANSACTIONS........................................................... 0.02 0.07 -- -- ------- ------- ------- ------- NET ASSET VALUE, END OF YEAR......................................................... $ 5.52 $ 5.09 $ 4.70 $ 5.24 ------- ------- ------- ------- ------- ------- ------- ------- MARKET VALUE, END OF YEAR............................................................ $ 4.59 $ 4.19 $ 3.56 $ 4.31 ------- ------- ------- ------- ------- ------- ------- ------- TOTAL RETURN:(A) Market Value....................................................................... 9.6% 22.3% (17.4)% 9.3% RATIOS BASED ON AVERAGE NET ASSETS: Total expenses(b).................................................................. 1.91% 2.14% 2.27% 2.43% Net investment income.............................................................. 1.80% 2.80% 3.81% 0.74% SUPPLEMENTAL DATA: Net Assets, End of Year (in thousands)............................................... $44,154 $41,385 $41,106 $45,839 Portfolio Turnover Rate.............................................................. 159% 76% 483% 445% Average Commission Rate Paid`D'...................................................... $0.0396 -- -- -- 1992 ------- NET ASSET VALUE, BEGINNING OF YEAR................................................... $ 6.01 INCOME FROM INVESTMENT OPERATIONS: Net investment income.............................................................. 0.04 Net realized and unrealized gain on investments and foreign currency............... (0.64) ------- Total from investment operations................................................. (0.60) ------- DIVIDENDS AND DISTRIBUTIONS: Net investment income.............................................................. (0.02) Net realized gain on investments and foreign currency.............................. (0.05) Other sources...................................................................... (0.35) ------- Total dividends and distributions................................................ (0.42) ------- CAPITAL STOCK TRANSACTIONS........................................................... -- ------- NET ASSET VALUE, END OF YEAR......................................................... $ 4.99 ------- ------- MARKET VALUE, END OF YEAR............................................................ $ 4.06 ------- ------- TOTAL RETURN:(A) Market Value....................................................................... (3.3)% RATIOS BASED ON AVERAGE NET ASSETS: Total expenses(b).................................................................. 2.21% Net investment income.............................................................. 0.67% SUPPLEMENTAL DATA: Net Assets, End of Year (in thousands)............................................... $43,615 Portfolio Turnover Rate.............................................................. 267% Average Commission Rate Paid`D'...................................................... --
- ------------ (a) Market Value Total Return is based on the change in market price per share during the year and assumes reinvestment of distributions at actual prices pursuant to the Fund's dividend reinvestment plan. (b) Expense ratios are shown after fee waivers by the investment advisor. For the year ended December 31, 1996, the expense ratio before the waiver would have been 2.08%. `D' For fiscal years beginning after October 1, 1995, the Fund is required to disclose its average commission rate paid per share for purchases and sales of investments. The accompanying notes are an integral part of the financial statements. 26 ROYCE GLOBAL TRUST, INC. - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Royce Global Trust, Inc. (the 'Fund'), formerly known as All Seasons Global Fund, Inc., is a closed-end, diversified management investment company registered under the Investment Company Act of 1940. The Fund commenced operations on March 2, 1988. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Valuation of investments: Securities listed on an exchange or on the Nasdaq National Market System are valued on the basis of the last reported sale prior to the time the valuation is made or, if no sale is reported for such day, at their bid price for exchange-listed securities and at the average of their bid and asked prices for Nasdaq securities. Quotations are taken from the market where the security is primarily traded. Other over-the-counter securities for which market quotations are readily available are valued at their bid price. Securities for which market quotations are not readily available are valued at their fair value under procedures established and supervised by the Fund's Board of Directors. Bonds and other fixed income securities may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. Foreign Currency The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with net realized and unrealized gains and losses on investments. 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, 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 fiscal year end, resulting in the exchange rate. Investment transactions and related investment income: Investment transactions are accounted for on the trade date and dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis. Realized gains and losses from investment transactions and unrealized appreciation and depreciation of investments are determined on the basis of identified cost for book and tax purposes. Taxes: As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the Fund is not subject to income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. The Schedule of Investments includes information regarding income taxes under the caption 'Income Tax Information'. Dividends and Distributions: Dividend and capital gains distributions if any, are recorded on the ex-dividend date and paid annually in December. These distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. Permanent book and tax basis differences relating to shareholder distributions will result in reclassification to paid-in capital and may affect net investment income per share. 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 at fiscal year end will be distributed in the following year. 27 ROYCE GLOBAL TRUST, INC. - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) - -------------------------------------------------------------------------------- NOTE 2. INVESTMENT ADVISORY AGREEMENT: The current Investment Advisory Agreement between Quest Advisory Corp. ('Quest') and the Fund provides for fees equal to 1% per annum of the average net assets of the Fund. For the period from November 1, 1996 through December 31, 1996, Quest waived the total advisory fee of $73,772. Prior to November 1, 1996, the Fund was party to a management agreement with Veitia and Associates, Inc. to conduct the management and investment activity of the Fund. That agreement provided for managment fees, computed daily and payable monthly, at an annualized rate of 1.0% of the Fund's average daily net assets up to the first $100 million of assets; 0.85% of 1% of average daily net assets in excess of $100 million but not in excess of $250 million; and 0.70% of 1% of average daily net assets in excess of $250 million. For the period January 1, 1996 through October 31, 1996, the Fund accrued and paid management fees totaling $349,725. NOTE 3. CAPITAL STOCK: For the year ended December 31, 1996, the Fund repurchased 125,038 of common stock at an average market price per share of $4.02 and a weighted average discount from net asset value of 22.5% per share. The cost of the repurchased shares was $507,185. NOTE 4. PURCHASES AND SALES OF INVESTMENT SECURITIES: For the year ended December 31, 1996, the cost of purchases and proceeds from sales of investment securities, excluding short-term securities, amounted to $58,192,278 and $66,015,109, respectively. 28 ROYCE GLOBAL TRUST, INC. REPORT OF INDEPENDENT AUDITORS - -------------------------------------------------------------------------------- TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF ROYCE GLOBAL TRUST, INC. We have audited the accompanying statement of assets and liabilities of Royce Global Trust, Inc., including the schedule of investments, as of December 31, 1996, and the related statement of operations, the statement of changes in net assets and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The statement of changes in net assets for the year ended December 31, 1995 and the financial highlights for each of the four years in the period ended December 31, 1995 were audited by other auditors whose report dated January 24, 1996 expressed an unqualified opinion on that statement and financial highlights. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 1996, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above and audited by us present fairly, in all material respects, the financial position of Royce Global Trust, Inc. at December 31, 1996, the results of its operations changes in its net assets and the financial highlights for the year then ended, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP New York, New York February 25, 1997 29 STATEMENT OF DIFFERENCES ------------------------ The dagger symbol shall be expressed as.........`D' The division symbol shall be expressed as.....[div] -----END PRIVACY-ENHANCED MESSAGE-----