UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act File Number: 811-05379

Name of Registrant: Royce Focus Trust, Inc.

Address of Registrant: 745 Fifth Avenue
New York, NY 10151

Name and address of agent for service:   John E. Denneen, Esquire
    745 Fifth Avenue
    New York, NY 10151




Registrant’s telephone number, including area code: (212) 508-4500
Date of fiscal year end: December 31
Date of reporting period: January 1, 2013 – December 31, 2013




Item 1.   Reports to Shareholders.

 

ANNUAL
REVIEW AND REPORT

TO STOCKHOLDERS

 

Royce Value Trust

Royce Micro-Cap Trust

Royce Focus Trust

Royce Global Value Trust
     
 
 
 
 


www.roycefunds.com





A Few Words on Closed-End Funds


Royce & Associates, LLC manages four closed-end funds: Royce Value Trust, the first small-cap value closed-end fund offering; Royce Micro-Cap Trust, the only micro-cap closed-end fund; Royce Focus Trust, a closed-end fund that invests in a limited number of primarily small-cap companies; and Royce Global Value Trust, the first global closed-end offering that invests in a broadly diversified portfolio of both U.S. and non-U.S. small-cap stocks.
 
A closed-end fund is an investment company whose shares are listed and traded on a stock exchange. Like all investment companies, including open-end mutual funds, the assets of a closed-end fund are professionally managed in accordance with the investment objectives and policies approved by the Fund’s Board of Directors. A closed-end fund raises cash for investment by issuing a fixed number of shares through initial and other public offerings that may include shelf offerings and periodic rights offerings. Proceeds from the offerings are invested in an actively managed portfolio of securities. Investors wanting to buy or sell shares of a publicly traded closed-end fund after the offerings must do so on a stock exchange, as with any publicly traded stock. This is in contrast to open-end mutual funds, in which the fund sells and redeems its shares on a continuous basis.

A Closed-End Fund Offers Several Distinct Advantages Not Available from an Open-End Fund Structure
   
Since a closed-end fund does not issue redeemable securities or offer its securities on a continuous basis, it does not need to liquidate securities or hold uninvested assets to meet investor demands for cash redemptions, as an open-end fund must.
   
In a closed-end fund, not having to meet investor redemption requests or invest at inopportune times is ideal for value managers who attempt to buy stocks when prices are depressed and sell securities when prices are high.
   
A closed-end fund may invest more freely in less liquid portfolio securities because it is not subject to potential stockholder redemption demands. This is particularly beneficial for Royce-managed closed-end funds, which invest in small- and micro-cap securities.
   
The fixed capital structure allows permanent leverage to be employed as a means to enhance capital appreciation potential.
   
Unlike Royce’s open-end funds, our closed-end funds are able to distribute capital gains on a quarterly basis. Each of the Funds other than Royce Global Value Trust has adopted a quarterly distribution policy for its common stock. Please see pages 18-20 for more details.
   
 
We believe that the closed-end fund structure is very suitable for the long-term investor who understands the benefits of a stable pool of capital.

Why Dividend Reinvestment is Important
A very important component of an investor’s total return comes from the reinvestment of distributions. By reinvesting distributions, our investors can maintain an undiluted investment in a Fund. To get a fair idea of the impact of reinvested distributions, please see the charts on pages 11, 13, and 15. For additional information on the Funds’ Distribution Reinvestment and Cash Purchase Options and the benefits for stockholders, please see page 20 or visit our website at www.roycefunds.com.
 
The Board of Directors for each of Royce Value Trust, Royce Micro-Cap Trust and Royce Focus Trust has authorized a managed distribution policy (“MDP”) paying quarterly distributions at an annual rate of 5% of the average of the prior four quarter-end net asset values. With each distribution, these Funds will issue a notice to stockholders and an accompanying press release which will provide detailed information regarding the amount and composition of the distribution and other information required by a Fund’s MDP. You should not draw any conclusions about a Fund’s investment performance from the amount of distributions or from the terms of a Fund’s MDP. A Fund’s Board of Directors may amend or terminate the MDP at any time without prior notice to stockholders; however, at this time, there are no reasonably foreseeable circumstances that might cause the termination of any of the MDPs.

This page is not part of the 2013 Annual Report to Stockholders



Table of Contents  

   
Annual Review  

   
Performance Table 2
   
Letter to Our Stockholders 3
   
2013: In Quotes 75
   
Postscript: It’s a Small World Inside Back Cover

   
Annual Report to Stockholders 9
   
   
 
   
For more than 40 years, we have used a value approach to invest in small-cap securities. We focus primarily on the quality of a company’s balance sheet, its ability to generate free cash flow, and other measures of profitability or sound financial condition. We then use these factors to assess the company’s current worth, basing the assessment on either what we believe a knowledgeable buyer might pay to acquire the entire company or what we think the value of the company should be in the stock market.
   
   
   

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Performance Table  


NAV Average Annual Total Returns   Through December 31, 2013

    Royce   Royce   Royce   Royce Global   Russell   Russell   Russell   Russell Global
    Value Trust   Micro-Cap Trust   Focus Trust   Value Trust   2000 Index   Microcap Index   2500 Index   Small Cap Index

One-Year     34.14 %     44.52 %     19.73 %     n.a.       38.82 %     45.62 %     36.80 %     24.77 %

Three-Year     11.66       16.11       6.08       n.a.       15.67       16.52       16.28       8.09  

Five-Year     21.27       24.12       17.49       n.a.       20.08       21.05       21.77       18.49  

10-Year     8.95       9.64       9.38       n.a.       9.07       6.99       9.81       9.23  

15-Year     10.04       11.60       11.01       n.a.       8.42       n.a.       9.67       8.67  

20-Year     10.80       11.93       n.a.       n.a.       9.27       n.a.       10.77       n.a.  

25-Year     11.55       n.a.       n.a.       n.a.       10.20       n.a.       11.62       n.a.  

Since Inception     11.13       11.92       10.58       2.76 %1     n.a.       n.a.       n.a.       n.a.  

Inception Date   11/26/86     12/14/93     11/1/962     10/17/13       n.a.       n.a.       n.a.       n.a.  

1 Not annualized, cumulative since inception on 10/17/13.
2 Date Royce & Associates, LLC assumed investment management responsibility for the Fund.


Important Performance and Risk Information
All performance information in this Review and Report reflects past performance, is presented on a total return basis, and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when sold. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at www.roycefunds.com. Certain immaterial adjustments were made to the net assets of Royce Micro-Cap Trust at 12/31/12 for financial reporting purposes, and as a result the net asset value originally calculated on that date and the total return based on that net asset value differs from the adjusted net asset value and total return reported in the Financial Highlights. The Funds are closed-end registered investment companies whose shares of common stock trade at a discount to their net asset value. Shares of each Fund’s common stock are also subject to the market risks of investing in the underlying portfolio securities held by each Fund, respectively. All indexes referenced are unmanaged and capitalization-weighted. Each index’s returns include net reinvested dividends and/or interest income. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. The Russell 2000 Index is an index of domestic small-cap stocks that measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 Index. The Russell Microcap Index includes 1,000 of the smallest securities in the small-cap Russell 2000 Index, along with the next smallest eligible securities as determined by Russell. The Russell 2500 Index is an index of the 2,500 smallest publicly traded U.S. companies in the Russell 3000 Index. The Russell Global Small Cap Index is an unmanaged, capitalization-weighted index of global small-cap stocks. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index. Index returns include net reinvested dividends and/or interest income. Royce Fund Services, Inc (“RFS”) is a member of FINRA and has filed this Review and Report with FINRA on behalf of each Fund. RFS is not an underwriter or distributor of any of the Funds.

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Letter to Our Stockholders

 
 

“Everybody Had a Good Year”

   
2013 will enter the annals of history as one of the stock market’s better years. Not only were there healthy double-digit returns for all of the major U.S. indexes, there were also no major corrections along the way. The closest the market came to a bearish phase was during the second quarter, when the rate on the 10-year Treasury began to rise off its calendar-year low in early May, mostly as a result of talk that the Federal Reserve would begin to reduce its $85 billion monthly bond-buying program. The Fed’s intentions to taper, made official by an announcement in June, then sent markets across the globe into a tailspin, while the 10-year Treasury rate mostly kept rising. (From its low on May 2 through the end of the year, it climbed more than 83%.) Yet by mid-summer, all or most of this seemed to be forgotten. Share prices climbed more or less uninterruptedly into December, where a couple of unsettled weeks in the middle of the month failed to put a Scrooge-like face on returns. Stocks quietly rallied through the last weeks of the year, making the fourth quarter as solidly bullish as the first and third.
    The market’s ability to shrug off negative news—potential or otherwise—may have been its most salient trait in 2013. Here at home, investors had to cope with the sequester, the government shutdown, questions about Fed policy, and who would succeed Federal Reserve Chairman Ben Bernanke. Outside the U.S., it was not much quieter. There was economic uncertainty in Europe, China, Brazil, among other places, unrest in the Mideast, and a significant, still-brewing political scandal in Turkey. Yet none of these things, taken alone or in concert, possessed enough force to slow the pace of the rally. Even murmurings later in the year about overvalued stocks and a market bubble gave investors little pause.
  The market’s ability to shrug off negative
news—potential or otherwise—may have been
its most salient trait in 2013.

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Charles M. Royce, President



In addition to staying on top of the
performance of The Royce Funds,
we also regularly review returns for
the major indexes, especially those
that invest mostly or exclusively in
small-cap stocks. Each month, we also
carefully look over long-term results
on an annualized basis. For the period
ended December 31, 2013, the returns
both for our portfolios and for the
small-cap Russell 2000 Index were
of particular interest to us. (These
results can be found on page 5.)

Seen from the perspective of long-
term market history, we think the
results look improbable, even absurd,
and certainly counterintuitive. We
have always been fond of the idea
that a healthy target for absolute
long-term returns should be low-
to-mid double digits. So what does
it mean when these results are in
the range of the high teens to the
mid-twenties? Did we and others
do something different or unusually
smart to achieve these results?





Continued on page 6...
    Letter to Our Stockholders

     The rally seemed to gain strength from the notion that the U.S. economy was finally entering a faster, more historically typical expansion after five years of slow and uncertain growth. This would be more than welcome news. Consider for a moment how strange and singular our present situation is. The economy has received unprecedented levels of federal stimulus in the form of both quantitative easing and historically low interest rates even as the economy has looked strong enough to stand more firmly on its own for more than a year. However, we still face stubbornly high, only slowly declining unemployment, still-stagnant levels of demand, and lower consumer confidence. On the other hand, we also have robust markets in housing and auto sales, record corporate revenues, and companies sitting on piles of cash. This complicated economic picture is set against the political background of a falling federal deficit, a national healthcare plan that refuses to be anything less than wildly controversial, and a culture in Washington so dysfunctional that it now plays like a bleak tragicomedy worthy of Samuel Beckett. (Or at least it would if politicians weren’t so verbose.) All of this makes the question of what happens next even harder to answer than it would be in more sanguine times. Resisting the temptation to prognosticate at length on larger matters, we’ll say only that we agree with the consensus that the economy is indeed growing faster and stronger. For reasons we’ll detail later, we think this is good news both for small-cap stocks and our own disciplined approach to stock selection.
     As measured by the Russell 2000 Index, the small-cap market has been on a remarkable run since the bottom in March 2009. However, there were a number of notable twists prior to last year’s mostly smooth ascent. The three years prior to 2013 all exhibited a similar performance pattern in the first half of the year. During 2010, 2011, and 2012, the opening quarter extended a bull run that had gotten underway no later than the previous year’s fourth quarter. These gains were then eroded to varying degrees by a bearish second quarter, with the market starting to reverse course in April, making it indeed the cruelest month. The motive force behind each reversal was macro oriented—recurring fears about the uneasy state of the U.S., Chinese, and/or developed European economies. (The persistence of macro factors influencing sell-offs at the expense of company fundamentals was the most troubling element to us.) In 2010 and 2012, the third quarter saw a resumption of rising stock prices, while in 2011 the third quarter was the year’s worst—political dithering in Europe and contention in the U.S. exacerbating the economic and fiscal concerns. The fourth quarter was positive for small-caps in all three years (as it was in 2009), though in 2011 its gains were not enough to keep the major indexes from finishing the year in the red.
     This pattern is worth mentioning because we saw a more muted version of it play out in 2013. The critical difference was that initially rattled investors recovered their confidence in equities before the second quarter had ended and before quarterly returns turned negative. This suggests perhaps not so much a new-found confidence as it does a steadier sense of conviction. With the economy improving and our fiscal situation increasingly more manageable, investors appear to be seeing the value of staying invested. We see this as one of
 
 
       

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several encouraging signs for active management as we enter 2014. It makes sense to us that longer investment horizons will lead larger numbers of investors to higher-quality companies.
   
 
   
“Everybody Saw the Sunshine”
   

Small-caps were once again leaders in what was a magnificent year for equities. For the full year, the Russell 2000 (+38.8%) and the tech-centric Nasdaq Composite (+38.3%) outpaced the large-cap Russell 1000 (+33.1%) and S&P 500 (+32.4%) Indexes. The Russell 2000 enjoyed its best calendar-year performance since 2003. 2013 was also the best since 1995 for the Russell 1000, since 1997 for the S&P 500, and since 2009 for the Nasdaq Composite. The latter index, however, has not yet topped the high it made back on March 10, 2000. By contrast, the small-cap index, the Russell 1000, and the S&P 500 all established new highs on the last day of 2013. It was also the first year since 1996 in which the Russell 2000 posted positive returns in all four quarters.

  Small-caps were once again leaders in what
was a magnificent year for equities. For the
full year, the Russell 2000 (+38.8%) and the
tech-centric Nasdaq Composite (+38.3%)
outpaced the large-cap Russell 1000
(+33.1%) and S&P 500 (+32.4%) Indexes.
     After a strong first half, in which all the major domestic indexes were positive both through the end of June and for the more volatile second quarter, both small-cap and large-cap stocks sailed through the rest of the year. As it did in the second quarter, the Nasdaq led in the third, up an impressive 10.8% compared to a 10.2% gain for the Russell 2000 and respective increases of 5.2% and 6.0% for the S&P 500 and Russell 1000. As mentioned, December saw a brief squall of volatility, though fourth-quarter results for all four indexes wound up solidly positive. The Nasdaq marked its third consecutive quarter of market leadership, advancing 10.7% for the fourth quarter versus 8.7% for the Russell 2000 Index, 10.2% for the Russell 1000, and 10.5% for the S&P 500. It was also notable that from the 10-year Treasury yield low of 1.66% on May 2, 2013 through the end of the year small-caps were strong. The Russell 2000 gained 25.0% during this period versus respective gains of 17.9% and 17.4% for the Russell 1000 and S&P 500. (The 10-year yield finished 2013 at 3.04%.)
   
     Outside the U.S., life was generally less bullish in 2013. Most non-U.S. indexes finished behind their stateside cousins in the first quarter and were in the red for the second. Results improved significantly in the second half, with European indexes turning in conspicuously high returns. For the third quarter, the Russell Global ex-U.S. Small Cap Index advanced 10.7% while the Russell Global ex-U.S. Large Cap Index increased 10.4%. The indexes also ended the year on a high note. For the fourth quarter, the Russell Global ex-U.S. Small Cap rose 4.0% while the Russell Global ex-U.S. Large Cap was up 5.0%. Calendar-year results were solid, though each index lagged its domestic peers. For 2013, the Russell Global ex-U.S. Small Cap Index climbed 17.2% while its large-cap sibling gained 16.1%.
     The Russell Microcap Index posted impressive results for both the third (+11.6%) and fourth (+10.3%) quarters of 2013. This second-half strength helped the micro-cap index achieve an eye-catching 45.6% return for the calendar year. Results for both the second half and full year were not quite as robust for mid-cap stocks, as measured by the Russell
  Along with the onset of tapering, rising rates—
though still historically low on an absolute basis—
strongly suggest to us that we are moving closer, if
at times by fits and starts, to a stock market that
will reward quality businesses, especially those
poised to benefit from a healthy, growing economy.

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  We suspect that the answer is both a
lot simpler and less flattering to our
stock-picking acumen. The high five-
year returns are in part a consequence
of the market’s recent strength
(especially in 2013) and, more
important, the result of dropping
some unusually bad results from the
fourth quarter of 2008—the onset
of the Financial Crisis. The five-year
average annual total return for the
Russell 2000 as of December 31, 2012
was 3.6% (+19.1% on a cumulative
basis). Yet when we fast-forward to
the end of December 2013, we see
the five-year return for the Russell
2000 jump to 20.1% (+149.7% on a
cumulative basis).

Most of the time, a five-year
period would capture a variety of
experiences, perhaps an entire market
cycle or two. But occasionally it does
not, and the result is a distortion
springing from an uncommonly
steady, mostly bullish period. So as
wonderful as they are, it seems clear
to us that the five-year returns for
several mutual funds, indexes, and
ETFs are simply too good to last.
Markets simply do not move
up forever, or even for several
years in a row.

We believe in reversion to the mean;
the cyclical nature of markets is
very real to us. Of course, we do not
pretend to know how to time market
cycles. All we know is that at some
point, the current cycle will change.


Continued on page 8...
 
 
 
Letter to Our Stockholders

 
Midcap Index, though they were more than respectable on an absolute basis. For the third quarter, the mid-cap index advanced 7.7% before rising 8.4% in the fourth, leading to a terrific 34.8% return for the full year.
   
 
Fixing A Hole
For the most part, calendar-year returns for our three oldest closed-end funds left us with mixed emotions (Royce Global Value Trust had less than three full months of performance). We were pleased, for the most part, with the Funds’ absolute results. However, on both an NAV (net asset value) and market price basis both Royce Value Trust and Focus Trust lagged their respective benchmarks, in the latter case by a sizable margin. Royce Micro-Cap Trust outpaced the small-cap Russell 2000 Index on both an NAV and market price basis for the calendar year. The Fund also beat the Russell Microcap Index on a market price basis in 2013 while it very narrowly trailed that index on an NAV basis.
     Our disciplined, risk-averse approach has often left us looking up at benchmarks during dynamic bull markets. In a more historically typical market cycle, 2013’s results would have given us less to explain or complain about. But these calendar-year results came after several portfolios underperformed their benchmarks in 2012 and 2011. The last three years, then, have left us increasingly frustrated, even as the reasons behind these underperformances are clear. Small-cap companies with high returns on invested capital (ROIC) and low-debt balance sheets have, as a group, underperformed their more leveraged counterparts. In addition, more economically sensitive cyclical sectors, including Energy, Industrials, Materials, and Technology, have trailed more defensive areas (such as Utilities) and less conservatively-capitalized, higher-yielding vehicles (e.g., REITs and MLPs) where we have little if any exposure. Over the last several years, we have found many of what we think are highly attractive opportunities in cyclical stocks and/or in companies with strong balance sheets and high ROIC. Most have had only limited participation in the rally that began in March 2009. There have also been industries, such as precious metals & mining, that did very well in the initial phase of the recovery following the Financial Crisis before they began to correct sharply in 2011 and are yet to recover. So while nearly all sectors and industries across all asset classes did well in 2013, companies with many of the qualities that we look for have not yet led for long. Our approach leads us to conservatively capitalized companies with high ROIC and strong cash flow characteristics, among other attributes. Investors have still not gravitated to these kinds of companies in comparatively large numbers. However, it’s worth mentioning that many quality small-cap companies did very well on an absolute basis in 2013, particularly in the year’s last eight months.


Let It Be
There have also been signs over the last year-and-a-half that this leadership pattern is beginning to change. Two dates stand out to us as significant. The first was June 4, 2012. From that date through the end of December 2012, investors showed a preference for companies with those quality characteristics mentioned earlier at the expense of high-yield

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2013 NAV TOTAL RETURNS FOR ROYCE’S CLOSED-END FUNDS VS. RUSSELL 2000, RUSSELL MICROCAP, RUSSELL 2500 AND THE RUSSELL GLOBAL SMALL-CAP as of 12/31/13    

   
   
     
1 Not annualized, cumulative since RGTs inception on 10/17/13.    
     
vehicles, highly leveraged stocks, and explosive growth stories. (This helps to explain why many of our portfolios outpaced their benchmarks in the final half of 2012.) Unfortunately, this quality rally was short lived, petering out early in the first quarter of 2013. But we saw it as a significant step in the right direction. After all, we have been arguing for some time now that many quality stocks underperformed over the last several years because the Fed’s zero-interest-rate policies and multiple rounds of quantitative easing led to an outsized hunger for high yield and too few consequences for businesses carrying a lot of debt. This in turn led to a comparative neglect of companies with more pristine balance sheets and those with steady, but lower, dividends. We have also insisted, however, that these advantages have largely played themselves out in the context of a strengthening economy.
    So it probably comes as no surprise that our second important date is the May 2, 2013 low for the 10-year Treasury yield, which marked the beginning of a rising interest-rate environment. Along with the onset of tapering, rising rates—though still historically low on an absolute basis—strongly suggest to us that we are moving closer, if at times by fits and starts, to a stock market that will reward quality businesses, especially those poised to benefit from a healthy, growing economy. In addition to the mini-rally in 2012, we saw improved results for many cyclical companies in the second half of 2013, especially compared to more defensive sectors. We have also seen a recovery in M&A and IPO activity. Most important, there have been increased levels of overall business activity, evidenced by the final revision of third-quarter GDP, which leaped from 3.6% to 4.1%.


We’ve Got a Feeling
Of course, considering where we have been over the last five-plus, even 13-plus, years, it seems fair to ask what a return to an “Old Normal” would look like in the market. Our sense is that small-caps are not on a collision course with a sustained decline or a catastrophic correction such as we saw in late 2008-early 2009. It seems more likely to us that the market will undergo a series of small corrections that will slow the current breakneck pace of returns. From our perspective, this would be part of the larger normalization process affecting the economy and the financial markets. Corrections are a fact of life, and we have
 




In our position as bottom-up stock-pickers,
we have always thought less about markets
and indexes than we do about stocks and
businesses. As has always been the case,
our daily work focuses squarely on finding
what we think are great companies at
attractive prices.

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No one knows exactly when or to what
degree, but it will shift. This helps to
explain why we think it’s important
to never get too excited during bullish
phases like the current period, just as
we believe investors should not get
too upset during corrections.

Markets are always changing.
We work hard to be prepared for
these changes, which is why we use
volatility and falling share prices to
our advantage. Related to this is the
idea of rotation. We cannot say for
sure what part of the equity market
will lead next—we are obviously
hoping that it’s high quality—but
it’s clear that a move will come. So
we do not expect five-year returns to
remain this robust, but we are still
enthusiastic about the potential for
small-cap returns.

Equally important, we have always
thought that any evaluation of
returns must be both long-term
and multi-dimensional in order to
measure more accurately what is
being accomplished. For example,
rolling returns are an excellent tool
to examine mutual fund performance.
It allows us to look at returns over
multiple time periods and to gauge
the experience of investors who enter
the market at different points of time.
We always try to keep in mind the
following maxim: If the number looks
too high, it probably is.

   
Letter to Our Stockholders


not seen one in more than a year. So there will be some pullback, but we believe it will be manageable, at least for those of us with a disciplined, long-term approach.
     As of this writing, the Russell 2000 Index may have hit, or may be nearing, another peak. Nonetheless, we see opportunity in our chosen asset class. So while the index as a whole looked overvalued to us at year-end, the primary selection universe for our domestic small-cap portfolios is much wider than the Russell 2000. It encompasses more than 4,000 companies with market caps up to $2.5 billion; we are also active in mid-cap stocks, a segment where the market caps fall between $2.5 billion and $5 billion. This area provides more than 400 additional names. Indeed, no small-cap index, including the Russell 2000, takes in the full measure of small-cap valuations or offers the most appropriate selection space. In these days of ETFs and strong relative results for index-based investing, we think the enormous breadth of the small-cap world has been forgotten to some degree. In our position as bottom-up stock-pickers, we have always thought less about markets and indexes than we do about stocks and businesses. As has always been the case, our daily work focuses squarely on finding what we think are great companies at attractive prices. Our goal remains strong absolute returns over long-term periods. We cannot say for sure when conservatively capitalized, well-managed, and fundamentally sound businesses might assume market leadership. However, we are confident that they will in the not-too-distant future as the expanding economy leads investors to focus once more on fundamentals, particularly those that reveal high quality.


Sincerely,

       
Charles M. Royce
President

W. Whitney George
Vice President

Jack E. Fockler, Jr.
Vice President
       

January 31, 2014
   

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Table of Contents    

     
Annual Report to Stockholders    

Managers’ Discussions of Fund Performance    
     
Royce Value Trust   10
     
Royce Micro-Cap Trust   12
     
Royce Focus Trust   14
     
Royce Global Value Trust   16

History Since Inception   18
     
Distribution Reinvestment and Cash Purchase Options   20
     
Schedules of Investments and Other Financial Statements    
     
Royce Value Trust   21
     
Royce Micro-Cap Trust   37
     
Royce Focus Trust   52
     
Royce Global Value Trust   62
     
Directors and Officers   72
     
Notes to Performance and Other Important Information   73
     
Results of Stockholders Meeting   74
 


2013 Annual Report to Stockholders  |  9



Royce Value Trust


 


AVERAGE ANNUAL NAV TOTAL RETURNS
Through 12/31/13

July–December 20131   19.32 %  

One-Year         34.14    

Three-Year         11.66    

Five-Year         21.27    

10-Year         8.95    

15-Year         10.04    

20-Year         10.80    

25-Year         11.55    

Since Inception (11/26/86)         11.13    

1 Not annualized  
       
CALENDAR YEAR NAV TOTAL RETURNS  

Year   RVT     Year     RVT    

2013   34.1 %   2005     8.4 %  

2012   15.4     2004     21.4    

2011   -10.1     2003     40.8    

2010   30.3     2002     -15.6    

2009   44.6     2001     15.2    

2008   -45.6     2000     16.6    

2007   5.0     1999     11.7    

2006   19.5     1998     3.3    

                     
TOP 10 POSITIONS % of Net Assets  

HEICO Corporation   1.4 %  

Tejon Ranch   1.0    

On Assignment   0.9    

Reliance Steel & Aluminum   0.9    

Wabtec Corporation   0.9    

Federated Investors Cl. B   0.8    

E-L Financial   0.8    

Coherent   0.8    

Helmerich & Payne   0.8    

Kennametal   0.8    

                     
PORTFOLIO SECTOR BREAKDOWN % of Net Assets  

Industrials   28.5 %  

Information Technology   18.2    

Financials   12.4    

Consumer Discretionary   11.4    

Materials   6.5    

Health Care   4.8    

Energy   4.4    

Consumer Staples   1.1    

Telecommunication Services   0.7    

Diversified Investment Companies   0.3    

Miscellaneous   4.9    

Preferred Stock   0.1    

Cash and Cash Equivalents,
Net of Outstanding Line of Credit
  6.7    

 
 
 

 
Manager’s Discussion
Royce Value Trust (RVT) gained 34.1% on an NAV (net asset value) basis and 35.6% on a market price basis in 2013, capturing most of the respective gains of 38.8% and 41.3% for its unleveraged small-cap benchmarks, the Russell 2000 Index and S&P SmallCap 600 Index, for the same period.
     Equities came off a subdued, in some cases bearish, fourth quarter of 2012 and kicked off 2013 with a dynamic first quarter. RVT gained 10.6% on an NAV basis and 13.7% on a market price basis to finish this bullish quarter, in the latter case outperforming the Russell 2000 (+12.4%) and S&P SmallCap 600 (+11.8%). The second quarter was more volatile and uncertain. Macro concerns once again influenced market sentiment as the globe’s capital markets fell precipitously in late June following the announcement by Fed Chairman Ben Bernanke that the central bank was likely to slow the pace of its monthly bond purchases later in the year. Along with less-than-stellar news out of China, Brazil, Turkey, and Europe, and the rapidly rising yield on the 10-year Treasury, these negative headlines helped drive share prices lower. The markets stabilized, however, before the end of June, which enabled most major domestic indexes to finish the period in the black. RVT trailed both of its benchmarks in the second quarter, gaining 1.7% on an NAV basis and 1.9% on a market price basis compared to the Russell 2000’s 3.1% increase and the 3.9% gain for the S&P SmallCap 600.
     The second half of the year saw a resumption of the first’s quarter’s feverish pace. The third quarter was another strong bullish period for equities, especially small-caps, which maintained their dynamic showing. On an NAV basis, RVT’s 10.5% gain was enough to outperform the Russell 2000’s 10.2% increase though it was not enough to match the S&P SmallCap 600’s 10.7% return. On a market price basis, the Fund increased 7.6%. Fourth-quarter results were in general a bit more muted than those in the first and third, but remained generally robust. During this period, RVT gained 7.9% on an NAV basis and 8.8% on a market price basis, in the latter case beating the Russell 2000’s 8.7% advance but falling short of the S&P SmallCap 600’s 9.8% increase.
     While we have generally been pleased with the Fund’s recent performances on an absolute basis, relative results were not as consistent. On an NAV and market price basis, RVT outperformed the Russell 2000 for the five-, 15-, 20-, 25-year, and since inception (11/26/86) periods ended December 31, 2013 but only outpaced the S&P SmallCap 600 for the 25-year and since inception periods on an NAV basis and the 25-year period on a market price basis. RVT’s average annual NAV total return for the since inception period ended December 31, 2013 was 11.1%.
     Ten of the Fund’s 12 equity sectors finished the year in the black. Industrials made by far the largest positive impact on calendar-year performance, followed by Information

  GOOD IDEAS THAT WORKED
  Top Contributors to 2013 Performance1  

E-L Financial   0.49%

HEICO Corporation   0.48   

On Assignment   0.47   

PAREXEL International   0.46   

Wabtec Corporation   0.43   

1 Includes dividends    
     
Important Performance and Risk Information
All performance information reflects past performance, is presented on a total return basis, and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the most recent month-end may be obtained at www.roycefunds.com. The market price of the Fund’s shares will fluctuate, so that shares may be worth more or less than their original cost when sold. The Fund invests primarily in securities of small- and micro-cap companies, which may involve considerably more risk than investing in a more diversified portfolio of larger-cap companies. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013.

10  |  2013 Annual Report to Stockholders



Performance and Portfolio Review


Technology, Financials, and Consumer Discretionary. Materials and Diversified Investment Companies detracted from performance, but their net losses were relatively tiny. At the industry level, metals & mining was the Fund’s leading detractor, as businesses could not cope with the respective 36% and 28% drops in silver and gold prices in 2013. Two of RVT’s top five, and half of its 20, worst performers came from this category. Three other holdings that posted net losses came from outside the industry but nonetheless had significant exposure to it, including two of the Fund’s largest detractors, Central Fund of Canada, and ASA Gold and Precious Metals—both are closed-end funds. After adding shares of each throughout much of the year, we trimmed our positions in December. We parted ways with Hochschild Mining in June and added shares of Canadian gold miner IAMGOLD Corporation. Outside the precious metals area, we significantly built our stake in Daphne International Holdings, a maker and retailer of Chinese footwear that sells Aerosole shoes in China. China’s economic slowdown has hurt its share price as a cutback in consumer spending has contributed to declining sales and revenues. The company’s strong management and market position give us confidence in its long-term potential.
     E-L Financial, an investment and insurance holding company based in Toronto, was the Fund’s top contributor and a top-ten holding at the end of 2013. We like its core business and dividend and were pleased to see other investors take note of the company. We trimmed our position in January and then again in December. HEICO Corporation is a tech-driven aerospace, industrial, defense, and electronics company located in Florida. The company benefited from both a recovery and a positive long-term outlook for the airline industry as well as ongoing profitability in its more space and defense-oriented Electronic Technologies Group. This resulted not only in improved margins and earnings, but also better free cash flows. It’s a long-time Royce holding that we think is well managed and a leader in its field. On Assignment runs a global business that provides in-demand, skilled professionals in the technology, healthcare, and life sciences fields. We like its steady earnings and cash flows as well as its niche in staffing industries that we think have very strong growth potential.

  GOOD IDEAS AT THE TIME
  Top Detractors from 2013 Performance1  


Daphne International Holdings -0.22%

Central Fund of Canada Cl. A -0.19   

ASA Gold and Precious Metals -0.15   

Hochschild Mining -0.12   

IAMGOLD Corporation -0.11   

1 Net of dividends
 
MARKET PRICE PERFORMANCE HISTORY SINCE INCEPTION (11/26/86) through 12/31/13

1 Reflects the cumulative total return of an investment made by a stockholder who purchased one share at inception ($10.00 IPO), reinvested all annual distributions and fully participated in primary subscriptions of the Fund’s rights offerings.

2 Reflects the actual market price of one share as it traded on the NYSE.

 
FUND INFORMATION AND PORTFOLIO DIAGNOSTICS

Fund Total Net Assets $1,308 million   

Number of Holdings 539   

Turnover Rate 33%   

Symbol  
   Market Price RVT   
   NAV XRVTX   

Average Market Capitalization2 $1,782 million   

Weighted Average P/E Ratio3,4 21.6x   

Weighted Average P/B Ratio3 2.1x   

U.S. Investments (% of Net Assets) 78.1%   

Non-U.S. Investments (% of Net Assets) 15.2%   

1  Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.

2  Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.

3  The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (24% of portfolio holdings as of 12/31/13).

 

DOWN MARKET PERFORMANCE COMPARISON
All Down Periods of 7.5% or Greater
Over the Last 7 Years, in Percentages (%)





 



2013 Annual Report to Stockholders  |  11



Royce Micro-Cap Trust

 


AVERAGE ANNUAL NAV TOTAL RETURNS
Through 12/31/13

July-December 20131   27.42 %  

One-Year         44.52    

Three-Year         16.11    

Five-Year         24.12    

10-Year         9.64    

15-Year         11.60    

20-Year         11.93    

Since Inception (12/14/93)         11.92    

1 Not annualized  
       
CALENDAR YEAR NAV TOTAL RETURNS  

Year   RMT     Year     RMT    

2013   44.5 %   2005     6.8 %  

2012   17.3     2004     18.7    

2011   -7.7     2003     55.5    

2010   28.5     2002     -13.8    

2009   46.5     2001     23.4    

2008   -45.5     2000     10.9    

2007   0.6     1999     12.7    

2006   22.5     1998     -4.1    

                     
TOP 10 POSITIONS % of Net Assets  

Integrated Electrical Services   1.2 %  

Mesa Laboratories   1.1    

Drew Industries   1.1    

Computer Task Group   1.1    

Patriot Transportation Holding   1.1    

Raven Industries   1.1    

Quaker Chemical   1.0    

Sun Hydraulics   1.0    

Seneca Foods   1.0    

Tejon Ranch   1.0    

                     
PORTFOLIO SECTOR BREAKDOWN % of Net Assets  

Industrials   28.9 %  

Information Technology   21.0    

Financials   16.1    

Consumer Discretionary   12.2    

Health Care   8.7    

Materials   5.8    

Energy   3.5    

Consumer Staples   2.4    

Telecommunication Services   0.4    

Utilities   0.1    

Miscellaneous   4.8    

Preferred Stock   0.3    

Outstanding Line of Credit, Net of Cash and Cash Equivalents   -4.2    

 
 
 

 
Manager’s Discussion
Royce Micro-Cap Trust (RMT) gained 44.5% on an NAV (net asset value) basis and 49.4% on a market price basis in 2013 compared to its unleveraged benchmarks, the Russell 2000 Index and Russell Microcap Index, which had respective gains of 38.8% and 45.6%, for the same period. During the highly bullish first quarter, RMT gained 11.4% on an NAV basis, falling behind both the Russell 2000 and the Russell Microcap, which rose 12.4% and 12.6%, respectively. On a market price basis, RMT outpaced both indexes, gaining 14.6% during the first quarter. The second quarter was more volatile. Market sentiment soured in late June after the Fed announced that it would likely begin winding down its quantitative easing policies later in the year. Adding to the uncertainty was the less-than-stellar news out of China, Brazil, Turkey, and Europe, which led to a drop in stock prices for several sessions before the markets stabilized here in the U.S. just before the end of June. RMT trailed both the Russell 2000 and Russell Microcap Indexes in the second quarter, gaining 1.8% on an NAV basis and 2.4% on a market price basis compared to respective gains of 3.1% and 5.1%.
     The Fund enjoyed a particularly strong third quarter, outpacing each of its benchmarks. RMT advanced 13.9% on an NAV basis (and gained 9.6% based on market price) while the small-cap index was up 10.2% and the micro-cap index rose 11.6% in the third quarter. The fourth quarter saw mostly lower though still positive returns, though micro-caps were something of an exception to this rule. The Fund increased 11.9% on an NAV basis and an impressive 16.2% on a market price basis versus respective gains of 8.7% and 10.3% for the Russell 2000 and Russell Microcap Indexes.
     On a long-term NAV basis, we were pleased that the Fund outperformed the Russell 2000 for the three-, five-, 10-, 15-, 20-year, and since inception (12/14/93) periods ended December 31, 2013. The Fund also outpaced the Russell Microcap for the one-, five-, and 10-year periods on an NAV basis. On a market price basis, RMT outperformed the Russell 2000 for the one-, three-, five-, 20-year, and since inception (12/14/93) periods ended December 31, 2013; the Fund also outpaced the Russell Microcap for the one-, three-, five-, and 10-year periods. (Data for the Russell Microcap only goes back to 2000.) RMT’s average annual NAV total return for the since inception period was 11.9%. We are proud of the Fund’s long-term record and are pleased that RMT celebrated 20 years of history in December 2013.
     Nine of the Fund’s 10 equity sectors made net contributions to performance in 2013. Industrials led comfortably, though strong net gains also came from Information Technology and Financials. At the position level, the largest contributions came from companies in the Financials and Industrials sectors. San Diego-based BofI Holding has been a holding in the

  GOOD IDEAS THAT WORKED
  Top Contributors to 2013 Performance1  

BofI Holding   0.99%

Altisource Asset Management   0.87   

Virtus Investment Partners   0.82   

Kennedy-Wilson Holdings   0.79   

AAON   0.76   

1 Includes dividends    
     
Important Performance and Risk Information
All performance information reflects past performance, is presented on a total return basis, and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the most recent month-end may be obtained at www.roycefunds.com. Certain immaterial adjustments were made to the net assets of Royce Micro-Cap Trust at 12/31/12 for financial reporting purposes, and as a result the net asset value originally calculated on that date and the total return based on that net asset value differs from the adjusted net asset value and total return reported in the Financial Highlights. The market price of the Fund’s shares will fluctuate, so that shares may be worth more or less than their original cost when sold. The Fund normally invests in micro-cap companies, which may involve considerably more risk than investing in a more diversified portfolio of larger-cap companies. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013.

12  |  2013 Annual Report to Stockholders



Performance and Portfolio Review


portfolio since late August of 2006. BofI saw its web-based banking services in both the consumer and commercial markets in high demand. We liked its long-term prospects, but its soaring stock price convinced us to greatly reduce our position. Altisource Asset Management provides asset management and corporate governance services to investment vehicles that own real estate related assets. We began to sell our stake in September when its share price rose well beyond our price target. A rising stock price also led us to take gains in Virtus Investment Partners, a financial advisory and consulting firm, and Kennedy-Wilson Holdings, a vertically-integrated real estate investment and services company. The latter benefited from investing aggressively in West Coast commercial real estate when those markets were in distress, and the firm’s performance in 2013 reflected their much healthier condition.
     Five out of the Fund’s top 10 detractors, and 10 of its top 20, came from the metals & mining industry. Respective commodity price declines of 28% and 36% for gold and silver in 2013 were the primary cause of the industry’s woes. After adding to our stake in the first half, we chose to sell our shares in Vista Gold in the fall after further alarming share price declines. We also parted ways with Golden Star Resources. Confident that it could benefit from an eventual turnaround, we added shares in closed-end fund ASA Gold and Precious Metals, which invests primarily in companies involved in gold mining. After initiating a position in March, we substantially built our position in Sprott, a Canadian investment management company that saw its share price slide as assets and fees declined, in large part the result of its significant exposure to the precious metals mining and energy industries. Coming from the Health Care sector, Celsion Corporation develops heat-based cancer treatments, currently focused on breast and liver cancer. After gains in the stock led us to reduce our stake between July 2012 and January 2013, we held a small position throughout the year, though it was not small enough to keep the stock from hurting performance. Its share price cratered late in January on news that its liver cancer treatment, ThermoDox, failed to meet efficacy expectations in the final stage of clinical testing. We still like its core business and were reasonably hopeful that it could recover.

  GOOD IDEAS AT THE TIME
  Top Detractors from 2013 Performance1  


Vista Gold -0.48%

Celsion Corporation -0.41   

ASA Gold and Precious Metals -0.25   

Golden Star Resources -0.21   

Sprott -0.14   

1 Net of dividends
 
MARKET PRICE PERFORMANCE HISTORY SINCE INCEPTION (12/14/93) through 12/31/13

1 Reflects the cumulative total return of an investment made by a stockholder who purchased one share at inception ($7.50 IPO), reinvested distributions and fully participated in the primary subscription of the 1994 rights offering.

2 Reflects the actual market price of one share as it traded on the NYSE and, prior to 12/1/03, on the Nasdaq.

 
FUND INFORMATION AND PORTFOLIO DIAGNOSTICS

Fund Total Net Assets $433 million   

Number of Holdings 392   

Turnover Rate 29%   

Symbol  
   Market Price RMT   
   NAV XOTCX   

Net Leverage1 4%   

Average Market Capitalization2 $453 million   

Weighted Average P/E Ratio3,4 21.0x   

Weighted Average P/B Ratio3 1.9x   

U.S. Investments (% of Net Assets) 91.5%   

Non-U.S. Investments (% of Net Assets) 12.7%   

1 Net leverage is the percentage, in excess of 100%, of the total value of equity type investments, divided by net assets.

2  Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.

3  Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.

4  The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (24% of portfolio holdings as of 12/31/13).

 

DOWN MARKET PERFORMANCE COMPARISON
All Down Periods of 7.5% or Greater
Over the Last 7 Years, in Percentages(%)





 



2013 Annual Report to Stockholders  |  13



Royce Focus Trust

 


AVERAGE ANNUAL NAV TOTAL RETURNS
Through 12/31/13

July-December 20131   16.69 %  

One-Year         19.73    

Three-Year         6.08    

Five-Year         17.49    

10-Year         9.38    

15-Year         11.01    

Since Inception (11/1/96)2         10.58    

1 Not annualized  
2 Royce & Associates assumed investment management responsibility for the Fund on 11/1/96.
       
CALENDAR YEAR NAV TOTAL RETURNS  

Year   FUND     Year     FUND    

2013   19.7 %   2005     13.3 %  

2012   11.4 %   2004     29.3 %  

2011   -10.5     2003     54.3    

2010   21.8     2002     -12.5    

2009   54.0     2001     10.0    

2008   -42.7     2000     20.9    

2007   12.2     1999     8.7    

2006   15.8     1998     -6.8    

                     
TOP 10 POSITIONS % of Net Assets  

Western Digital   5.0 %  

Franklin Resources   3.8    

Berkshire Hathaway Cl. B   3.7    

Helmerich & Payne   3.5    

Exxon Mobil   3.2    

Microsoft Corporation   3.1    

Thor Industries   3.0    

Apple   2.9    

Buckle (The)   2.7    

Myriad Genetics   2.5    

                     
PORTFOLIO SECTOR BREAKDOWN % of Net Assets  

Financials   18.7 %  

Materials   18.7    

Information Technology   18.7    

Energy   11.9    

Consumer Discretionary   11.2    

Industrials   8.7    

Consumer Staples   6.3    

Health Care   3.7    

Cash and Cash Equivalents   2.1    

 
 
 

 
Manager’s Discussion
     Following rough first- and second-quarter results, disappointing absolute and relative performance continued for Royce Focus Trust (FUND). For the year, FUND rose 19.7% on an NAV (net asset value) basis and 22.0% on a market price basis, lagging the 36.8% gain for its benchmark, the Russell 2500 Index.
     The Fund could not keep pace through the first quarter of 2013, a more or less consistently bullish period that lifted share prices across asset classes. The Fund climbed 2.3% on an NAV basis and 7.3% on a market price basis in the first quarter, lagging behind the 12.8% advance for the Russell 2500. Following this bull run, the markets shifted to a more volatile and unsettled mode. The second quarter saw declines in the emerging markets and a slowdown in China that, combined with Fed Chairman Ben Bernanke’s announcement that the pace of the central bank’s $85 billion monthly bond purchase program was likely to slow by the end of the year, further distorted valuations and depressed asset prices. The market’s reaction to these macro headlines was swift and dramatic, though U.S. stocks generally did a better job of pushing through these challenges than many non-U.S. stocks. Most U.S. indexes finished the quarter in the black. FUND lagged its benchmark in the second quarter, gaining 0.2% on an NAV basis and 1.3% on a market price basis versus a gain of 2.3% for the Russell 2500.
     The third quarter was only slightly less bullish than the first, with returns for most of the major indexes demonstrating the market’s resilience. Indeed, strong third-quarter results were a convincing sign that investors were happy to shrug off macro developments that were potentially similar to those that had hampered results in the previous three years. The Fund’s NAV performance was a bit stronger during this quarter, though it continued to trail its benchmark. FUND advanced 8.9% on an NAV basis and 4.9% on a market price basis in the third quarter while the benchmark rose 9.1%. The markets were a bit less dynamic in the year’s final quarter, though returns were still solidly in the black. FUND posted 7.0% on an NAV basis and 7.1% on a market price basis to finish the year, underperforming the Russell 2500’s 8.7% increase. While we were pleased that the Fund outpaced its benchmark for the 15-year and since inception of our management (11/1/96) periods ended December 31, 2013, relative results over other long-term periods were disappointing. The Fund’s average annual NAV total return for the since inception period ended December 31, 2013 was 10.6%.
     Six of the Fund’s eight equity sectors contributed positively to calendar-year performance. Information Technology led by a wide margin, followed by notable net gains from the Consumer Staples, Financials, and Consumer Discretionary sectors. Materials was the Fund’s most significant detractor, with most losses coming from the metals & mining industry. This group accounted for all five of FUND’s five-largest detractors, as well as seven of its top 10.

  GOOD IDEAS THAT WORKED
  Top Contributors to 2013 Performance1  

Western Digital   3.67%

Nu Skin Enterprises Cl. A   3.57   

GameStop Corporation Cl. A   1.86   

Helmerich & Payne   1.53   

Microsoft Corporation   1.51   

1 Includes dividends    
     
Important Performance and Risk Information
All performance information reflects past performance, is presented on a total return basis, and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the most recent month-end may be obtained at www.roycefunds.com. The market price of the Fund’s shares will fluctuate, so that shares may be worth more or less than their original cost when sold. The Fund normally invests primarily in small-cap companies, which may involve considerably more risk than investing in a more diversified portfolio of larger-cap companies. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013.

14  |  2013 Annual Report to Stockholders



Performance and Portfolio Review


Plummeting revenue and share prices were mostly the result of significant drops in silver and gold prices in 2013—36% and 28%, respectively—as well as increased operating costs for many mining companies. In many cases, valuations have reached what we view as rock-bottom levels that have not been seen since the late 2008-early 2009 lows. For the most part, we have chosen to hold those companies that we think look best positioned for an eventual turnaround. We sold our positions in Allied Nevada Gold and Newmont Mining and added shares of Seabridge Gold and Fresnillo. We also held on to our shares in Pretium Resources.
     Irvine, C.A.-based Western Digital was FUND’s top contributor and a number one position at year-end. One of two firms that dominate disk drive production worldwide, Western Digital’s core business—solutions for the collection, storage, management, and protection of digital content—grabbed our attention back in 2010 when we first began building a position in the portfolio. The company made some smart acquisitions in 2013, including Virident, sTec, and VeloBit, which strengthened its position in the hard disk drive and flash technology markets. A developer and distributor of personal care skin products worldwide, Nu Skin Enterprises was the Fund’s second-largest contributor to 2013 performance. Its share price gained momentum from stronger-than-anticipated third-quarter earnings and improved full-year guidance for 2013 in October, driven by the success of a limited-time offer for its new weight management system, helped its share price gain momentum. We took gains throughout much of the year. GameStop Corporation is a video game retailer that sells new and pre-owned gaming products, including hardware and software. In contrast to Wall Street’s prediction that GameStop would be the next Blockbuster Video, we have long been attracted to the company’s management and buy-sell-trade model. Earlier in the year, announcements came from Microsoft and Sony that each would be introducing updated gaming consoles mollified worries. In addition to the updated consoles, the company’s video game exchange business should continue to thrive as new games are introduced with the release of the new consoles and older games from outdated systems should be harder to find. The firm also enjoyed increased net sales in the third quarter and saw high demand for the new consoles. We reduced our position in 2013.

  GOOD IDEAS AT THE TIME
  Top Detractors from 2013 Performance1  


Allied Nevada Gold -2.15%

Seabridge Gold -1.13   

Pretium Resources -1.10   

Fresnillo -0.99   

Newmont Mining -0.81   

1 Net of dividends
 
MARKET PRICE PERFORMANCE HISTORY SINCE INCEPTION (11/1/96)3 through 12/31/13

1 Reflects the cumulative total return experience of a continuous common stockholder who reinvested all distributions and fully participated in the primary subscription of the 2005 rights offering.

2 Reflects the actual market price of one share as it traded on Nasdaq.

3 Royce & Associates assumed investment management responsibility for the Fund on 11/1/96.

 
FUND INFORMATION AND PORTFOLIO DIAGNOSTICS

Fund Total Net Assets $191 million   

Number of Holdings 52   

Turnover Rate 23%   

Symbol  
   Market Price FUND   
   NAV XFUNX   

Average Market Capitalization1 $6,747 million   

Weighted Average P/E Ratio2,3 16.7x   

Weighted Average P/B Ratio2 2.1x   

U.S. Investments (% of Net Assets) 71.2%   

Non-U.S. Investments (% of Net Assets) 26.7%   

1  Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.

2  Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings, or book value, as the case may be, of its underlying stocks.

3  The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (13% of portfolio holdings as of 12/31/13).

 

DOWN MARKET PERFORMANCE COMPARISON
All Down Periods of 7.5% or Greater
Over the Last 7 Years, in Percentages(%)





 



2013 Annual Report to Stockholders  |  15



Royce Global Value Trust

 


CUMULATIVE NAV TOTAL RETURN
Through 12/31/13
Since Inception (10/17/13)1         2.76 %  

1 Not annualized  
       
TOP 10 POSITIONS % of Net Assets  

Stallergenes   1.7 %  

New World Department Store China   1.6    

Lazard Cl. A   1.6    

Midland Holdings   1.6    

Television Broadcasts   1.6    

Mayr-Melnhof Karton   1.6    

Semperit AG Holding   1.6    

Vaisala Cl. A   1.6    

Daphne International Holdings   1.5    

Lewis Group   1.4    

                     
PORTFOLIO SECTOR BREAKDOWN % of Net Assets  

Consumer Discretionary   18.2 %  

Industrials   15.7    

Materials   13.5    

Information Technology   12.8    

Financials   12.8    

Health Care   7.1    

Energy   2.0    

Consumer Staples   2.0    

Cash and Cash Equivalents   15.9    

 
 
 

 
Manager’s Discussion
Royce Global Value Trust (RGT), our newest offering, rose 2.8% on an NAV (net asset value) basis in its inaugural performance period versus a 3.3% gain for its benchmark, the Russell Global Small Cap Index, for the same period, which ran from October 17, 2013 through the end of 2013. We were pleased with the portfolio’s early showing, especially considering that as 2013 closed, RGT held a relatively large cash percentage. These results also come with a caveat, however—we believe that such a short-term span is not terribly relevant in evaluating any investment’s merits. This period covered most of the year’s bullish fourth quarter, which was generally less robust for non-U.S. stocks than it was for their domestic cousins. Results for both RGT and its benchmark reflected this.
     The Fund came into existence as a spin-off from Royce Value Trust (RVT) in which the distribution of shares of RGT to its stockholders was done at the rate of one share of Global Trust common stock for every seven shares of RVT common stock owned. RGT’s investment goal is long-term growth of capital. The Fund invests in a broadly diversified portfolio of both U.S. and non-U.S. small-cap stocks. Chuck Royce manages the Fund while Royce veterans Chris Flynn and David Nadel serve as assistant portfolio managers. We are very excited to be introducing a closed-end portfolio that seeks to take advantage of the growing opportunities among global small-caps, which we think remain outstanding. The Fund finished 2013 with 97 equity holdings and approximately 84% of its common stock positions were invested in countries located outside the U.S., which nonetheless remained the nation to which the portfolio had the most exposure at the end of December. RGT also had a good-sized amount of exposure to Hong Kong, Canada, Japan, the UK, and France at year-end.
     The portfolio’s best-performing equity sectors were also two of its largest at the end of 2013—Industrials and Information Technology. Financials, Health Care, and Materials rounded out the list of sectors that posted net gains while Energy was flat and Consumer Staples and Consumer Discretionary each posted comparably modest net losses for the opening performance period. Trading companies & distributors, from the Industrials sector, led all of RGT’s industry groups by a sizable margin, though the electronic equipment,

  GOOD IDEAS THAT WORKED
  Top Contributors to 2013 Performance1  

AerCap Holdings   0.86%

GrafTech International   0.36   

Vaisala Cl. A   0.33   

EPS Corporation   0.31   

Lazard Cl. A   0.28   

1 Includes dividends    
     
Important Performance and Risk Information
All performance information reflects past performance, is presented on a total return basis, and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the most recent month-end may be obtained at www.roycefunds.com. The Fund invests primarily in securities of small-cap and micro-cap companies, which may involve considerably more risk than investing in larger-cap companies. The Fund’s broadly diversified portfolio does not ensure a profit or guarantee against loss. From time to time, the Fund may invest a significant portion of its net assets in foreign securities, which may involve political, economic, currency and other risks not encountered in U.S. investments. The Fund invests primarily in securities of small-cap and micro-cap companies, which may involve considerably more risk than investing in larger-cap companies. The Fund’s broadly diversified portfolio does not ensure a profit or guarantee against loss. From time to time, the Fund may invest a significant portion of its net assets in foreign securities, which may involve political, economic, currency and other risks not encountered in U.S. investments. The market price of the Fund’s shares will fluctuate, so that shares may be worth more or less than their original cost when sold. The Fund normally invests primarily in small-cap companies, which may involve considerably more risk than investing in a more diversified portfolio of larger-cap companies. Regarding the two “Good Ideas” tables shown above, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2013.

16  |  2013 Annual Report to Stockholders



Performance and Portfolio Review


instruments & components group and capital markets stocks also chipped in with good-sized gains. Among those groups that detracted from results, the textiles, apparel & luxury goods group led, followed by net losses for construction & engineering companies and the metals & mining group.
     AerCap Holdings led all of the Fund’s top contributors by a wide margin. The Netherlands-based company has a global business in aircraft leasing and aviation finance. It share price soared in mid-December on news that it would be buying American International Group’s International Lease Finance, which stood to make AerCap the world’s second-largest aircraft lessor. We sold our position in the dramatic run-up. GrafTech International is a long-time Royce favorite. It’s a U.S. business that manufactures synthetic and natural graphite and carbon based products that are used to produce steel. The company had been enduring slowing demand for steel and capacity utilization before announcing plans for a turnaround that focuses on profitability, cash flow, and growth while also offering a sturdier outlook for steel demand in 2014.
     Shanghai-based Daphne International Holdings led all of the portfolio’s “Good Ideas at the Time” by a wide margin. In December, we used its slumping share price to add to our position. The overall slowdown in the Chinese economy has taken its toll on Daphne’s business as lower levels of consumer spending in particular caused sales and revenues to decline. The company is a Chinese footwear maker and retailer that sells Aerosole shoes in China. Its strong management and market position gave us confidence in the company’s long-term potential, though we recognize that this investment is likely to require patience. We had less confidence in the long-term prospects for Ekornes, a Norwegian home furnishings manufacturer that specializes in recliners and sofas. Declining sales and revenues left us less comfortable, so we reduced our position.
     Daily NAVs (net asset values) for the Fund are available on our website and online through most ticker symbol lookup services, as well as on broker terminals under the symbol XRGTX. The Fund trades on the New York Stock Exchange under the symbol RGT. Of course, investors should consider the Fund’s investment objectives, risks, fees, charges, and expenses carefully before investing.

  GOOD IDEAS AT THE TIME
  Top Detractors from 2013 Performance1  


Daphne International Holdings -0.37%

Ekornes -0.19   

Mardin Cimento Sanayii -0.17   

Raubex Group -0.17   

Fresnillo -0.15   

1 Net of dividends
 
 
FUND INFORMATION AND PORTFOLIO DIAGNOSTICS

Fund Total Net Assets $103 million   

Number of Holdings 97   

Turnover Rate 7%   

Symbol  
   Market Price RGT   
   NAV XRGTX   

Average Market Capitalization1 $1,230 million   

Weighted Average P/E Ratio2,3 16.4x   

Weighted Average P/B Ratio2 2.0x   

1  Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Royce believes offers a more accurate measure of average market cap than a simple mean or median.

2  Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks.

3  The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (12% of portfolio holdings as of 12/31/13).

 



PORTFOLIO COUNTRY BREAKDOWN1,2
% of Net Assets


United States 15.7%

Hong Kong 10.6   

Canada 7.5   

Japan 7.1   

United Kingdom 6.3   

France 5.4   

South Africa 4.2   

Austria 3.2   

1 Represents countries that are 3% or more of net assets.
2 Securities are categorized by the country of their headquarters.
 

2013 Annual Report to Stockholders  |  17



History Since Inception


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

      Amount     Purchase           NAV     Market
History
    Invested     Price1     Shares     Value2     Value2
Royce Value Trust
11/26/86     Initial Purchase     $ 10,000     $ 10.000       1,000     $ 9,280     $ 10,000
10/15/87     Distribution $0.30               7.000       42                
12/31/87     Distribution $0.22               7.125       32       8,578       7,250
12/27/88     Distribution $0.51               8.625       63       10,529       9,238
9/22/89     Rights Offering       405       9.000       45                
12/29/89     Distribution $0.52               9.125       67       12,942       11,866
9/24/90     Rights Offering       457       7.375       62                
12/31/90     Distribution $0.32               8.000       52       11,713       11,074
9/23/91     Rights Offering       638       9.375       68                
12/31/91     Distribution $0.61               10.625       82       17,919       15,697
9/25/92     Rights Offering       825       11.000       75                
12/31/92     Distribution $0.90               12.500       114       21,999       20,874
9/27/93     Rights Offering       1,469       13.000       113                
12/31/93     Distribution $1.15               13.000       160       26,603       25,428
10/28/94     Rights Offering       1,103       11.250       98                
12/19/94     Distribution $1.05               11.375       191       27,939       24,905
11/3/95     Rights Offering       1,425       12.500       114                
12/7/95     Distribution $1.29               12.125       253       35,676       31,243
12/6/96     Distribution $1.15               12.250       247       41,213       36,335
1997     Annual distribution total $1.21               15.374       230       52,556       46,814
1998     Annual distribution total $1.54               14.311       347       54,313       47,506
1999     Annual distribution total $1.37               12.616       391       60,653       50,239
2000     Annual distribution total $1.48               13.972       424       70,711       61,648
2001     Annual distribution total $1.49               15.072       437       81,478       73,994
2002     Annual distribution total $1.51               14.903       494       68,770       68,927
1/28/03     Rights Offering       5,600       10.770       520                
2003     Annual distribution total $1.30               14.582       516       106,216       107,339
2004     Annual distribution total $1.55               17.604       568       128,955       139,094
2005     Annual distribution total $1.61               18.739       604       139,808       148,773
2006     Annual distribution total $1.78               19.696       693       167,063       179,945
2007     Annual distribution total $1.85               19.687       787       175,469       165,158
2008     Annual distribution total $1.723               12.307       1,294       95,415       85,435
3/11/09     Distribution $0.323               6.071       537       137,966       115,669
12/2/10     Distribution $0.03               13.850       23       179,730       156,203
2011     Annual distribution total $0.783               13.043       656       161,638       139,866
2012     Annual distribution total $0.80               13.063       714       186,540       162,556
2013     Annual distribution total $2.194               16.647       1,658                
 
12/31/13           $ 21,922               13,771     $ 250,219     $ 220,474
 

1  The purchase price used for annual distribution totals is a weighted average of the distribution reinvestment prices for the year.

2  Other than for initial purchase, values are stated as of December 31 of the year indicated, after reinvestment of distributions.

3  Includes a return of capital.

4  Includes Royce Global Value Trust spin-off of $1.40 per share.



18  |  2013 Annual Report to Stockholders





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

      Amount     Purchase           NAV     Market
History
    Invested     Price1     Shares     Value2     Value2
Royce Micro-Cap Trust
12/14/93     Initial Purchase     $ 7,500     $ 7.500       1,000     $ 7,250     $ 7,500
10/28/94     Rights Offering       1,400       7.000       200                
12/19/94     Distribution $0.05               6.750       9       9,163       8,462
12/7/95     Distribution $0.36               7.500       58       11,264       10,136
12/6/96     Distribution $0.80               7.625       133       13,132       11,550
12/5/97     Distribution $1.00               10.000       140       16,694       15,593
12/7/98     Distribution $0.29               8.625       52       16,016       14,129
12/6/99     Distribution $0.27               8.781       49       18,051       14,769
12/6/00     Distribution $1.72               8.469       333       20,016       17,026
12/6/01     Distribution $0.57               9.880       114       24,701       21,924
2002     Annual distribution total $0.80               9.518       180       21,297       19,142
2003     Annual distribution total $0.92               10.004       217       33,125       31,311
2004     Annual distribution total $1.33               13.350       257       39,320       41,788
2005     Annual distribution total $1.85               13.848       383       41,969       45,500
2006     Annual distribution total $1.55               14.246       354       51,385       57,647
2007     Annual distribution total $1.35               13.584       357       51,709       45,802
2008     Annual distribution total $1.193               8.237       578       28,205       24,807
3/11/09     Distribution $0.223               4.260       228       41,314       34,212
12/2/10     Distribution $0.08               9.400       40       53,094       45,884
2011     Annual distribution total $0.533               8.773       289       49,014       43,596
2012     Annual distribution total $0.51               9.084       285       57,501       49,669
2013     Annual distribution total $1.38               11.864       630                
 
12/31/13           $ 8,900               5,886     $ 83,110     $ 74,222
 
Royce Focus Trust
10/31/96     Initial Purchase     $ 4,375     $ 4.375       1,000     $ 5,280     $ 4,375
12/31/96                                     5,520       4,594
12/5/97     Distribution $0.53               5.250       101       6,650       5,574
12/31/98                                     6,199       5,367
12/6/99     Distribution $0.145               4.750       34       6,742       5,356
12/6/00     Distribution $0.34               5.563       69       8,151       6,848
12/6/01     Distribution $0.14               6.010       28       8,969       8,193
12/6/02     Distribution $0.09               5.640       19       7,844       6,956
12/8/03     Distribution $0.62               8.250       94       12,105       11,406
2004     Annual distribution total $1.74               9.325       259       15,639       16,794
5/6/05     Rights offering       2,669       8.340       320                
2005     Annual distribution total $1.21               9.470       249       21,208       20,709
2006     Annual distribution total $1.57               9.860       357       24,668       27,020
2007     Annual distribution total $2.01               9.159       573       27,679       27,834
2008     Annual distribution total $0.473               6.535       228       15,856       15,323
3/11/09     Distribution $0.093               3.830       78       24,408       21,579
12/31/10                                     29,726       25,806
2011     Annual distribution total $0.413               6.894       207       26,614       22,784
2012     Annual distribution total $0.46               6.686       255       29,652       25,549
2013     Annual distribution total $0.40               7.222       219                
 
12/31/13           $ 7,044               4,090     $ 35,501     $ 31,166
 
Royce Global Value Trust
10/17/13     Initial Purchase     $ 8,975     $ 8.975       1,000     $ 9,780     $ 8,975
 
12/31/13           $ 8,975               1,000     $ 10,050     $ 8,890

1  The purchase price used for annual distribution totals is a weighted average of the distribution reinvestment prices for the year.

2  Other than for initial purchase, values are stated as of December 31 of the year indicated, after reinvestment of distributions.

3  Includes a return of capital.


2013 Annual Report to Stockholders  |  19


Distribution Reinvestment and Cash Purchase Options


Why should I reinvest my distributions?
By reinvesting distributions, a stockholder can maintain an undiluted investment in the Fund. The regular reinvestment of distributions has a significant impact on stockholder returns. In contrast, the stockholder who takes distributions in cash is penalized when shares are issued below net asset value to other stockholders.


How does the reinvestment of distributions from the Royce closed-end funds work?
The Funds automatically issue shares in payment of distributions unless you indicate otherwise. The shares are generally issued at the lower of the market price or net asset value on the valuation date.

How does this apply to registered stockholders?
If your shares are registered directly with a Fund, your distributions are automatically reinvested unless you have otherwise instructed the Funds’ transfer agent, Computershare, in writing, in which case you will receive your distribution in cash. A registered stockholder also may have the option to receive the distribution in the form of a stock certificate.

What if my shares are held by a brokerage firm or a bank?
If your shares are held by a brokerage firm, bank, or other intermediary as the stockholder of record, you should contact your brokerage firm or bank to be certain that it is automatically reinvesting distributions on your behalf. If they are unable to reinvest distributions on behalf, you should have your shares registered in your name in order to participate.

What other features are available for registered stockholders?
The Distribution Reinvestment and Cash Purchase Plans also allow registered stockholders to make optional cash purchases of shares of a Fund’s common stock directly through Computershare on a monthly basis, and to deposit certificates representing your RVT, RMT and FUND shares with Computershare for safekeeping. (RGT does not issue shares in certificated form). Plan participants are subject to a $0.75 service fee for each voluntary cash purchase under the Plans. The Funds’ investment adviser is absorbing all commissions on optional cash purchases under the Plans through December 31, 2014.

How do the Plans work for registered stockholders?
Computershare maintains the accounts for registered stockholders in the Plans and sends written confirmation of all transactions in the account. Shares in the account of each participant will be held by Computershare in non-certificated form in the name of the participant, and each participant will be able to vote those shares at a stockholder meeting or by proxy. A participant may also send stock certificates for RVT, RMT and FUND held by them to Computershare to be held in non-certificated form. RGT does not issue shares in certificated form. There is no service fee charged to participants for reinvesting distributions. If a participant elects to sell shares from a Plan account, Computershare will deduct a $2.50 service fee from the sale transaction. The Funds’ investment adviser is absorbing all commissions on optional sales under the Plans through December 31, 2014. If a nominee is the registered owner of your shares, the nominee will maintain the accounts on your behalf.

How can I get more information on the Plans?
You can call an Investor Services Representative at (800) 221-4268 or you can request a copy of the Plan for your Fund from Computershare. All correspondence (including notifications) should be directed to: [Name of Fund] Distribution Reinvestment and Cash Purchase Plan, c/o Computershare, PO Box 43078, Providence, RI 02940-3078, telephone (800) 426-5523 (from 9:00 A.M. to 5:00 P.M.).


20  |  2013 Annual Report to Stockholders



Royce Value Trust December 31, 2013

   
Schedule of Investments  
   
    SHARES     VALUE  
COMMON STOCKS – 93.2%              
               
Consumer Discretionary – 11.4%              
Auto Components - 0.5%              

Cooper Tire & Rubber

  41,500     $ 997,660  

Drew Industries

  18,091       926,259  

Gentex Corporation 1

  76,300       2,517,137  

Lear Corporation

  14,000       1,133,580  

Minth Group

  356,100       739,359  
         
 
            6,313,995  
         
 
Automobiles - 0.9%              

Thor Industries 1

  117,600       6,495,048  

Winnebago Industries 2

  211,400       5,802,930  
         
 
            12,297,978  
         
 
Distributors - 1.0%              

Genuine Parts

  7,700       640,563  

LKQ Corporation 2

  297,200       9,777,880  

Weyco Group

  97,992       2,883,905  
         
 
            13,302,348  
         
 
Diversified Consumer Services - 1.1%              

Benesse Holdings

  32,500       1,303,888  

Career Education 2

  28,900       164,730  

MegaStudy

  15,000       1,107,216  

Regis Corporation 1

  233,800       3,392,438  

Sotheby’s 1

  118,700       6,314,840  

Strayer Education 2

  7,000       241,290  

Universal Technical Institute

  125,432       1,744,759  
         
 
            14,269,161  
         
 
Hotels, Restaurants & Leisure - 0.2%              

Ambassadors Group

  32,100       149,265  

Carrianna Group Holdings

  570,200       123,536  

CEC Entertainment

  60,900       2,696,652  

Tropicana Entertainment 2,3

  6,000       103,500  
         
 
            3,072,953  
         
 
Household Durables - 2.4%              

Ekornes

  60,000       813,645  

Ethan Allen Interiors

  320,800       9,758,736  

Forbo Holding

  1,500       1,281,318  

Hanssem

  49,100       2,340,200  

Harman International Industries 1

  77,300       6,327,005  

Mohawk Industries 1,2,4

  53,400       7,951,260  

NVR 2

  3,100       3,180,631  
         
 
            31,652,795  
         
 
Internet & Catalog Retail - 0.2%              

Manutan International

  20,000       1,259,315  

Takkt

  40,000       742,328  
         
 
            2,001,643  
         
 
Leisure Equipment & Products - 0.3%              

Beneteau 2

  50,000       933,412  

Nautilus 2

  138,400       1,166,712  

Shimano

  13,400       1,149,008  
         
 
            3,249,132  
         
 
Media - 1.3%              

Global Mediacom

  4,753,000       742,046  

Media Chinese International

  5,079,400       1,511,957  

Morningstar 1

  84,600       6,606,414  

Pico Far East Holdings

  6,517,000       2,277,584  

Television Broadcasts

  479,800       3,198,955  

Wiley (John) & Sons Cl. A

  58,300       3,218,160  
         
 
            17,555,116  
         
 
Multiline Retail - 0.3%              

Dollar Tree 2

  11,850       668,577  

Golden Eagle Retail Group

  933,300       1,232,476  

New World Department Store China

  4,215,700       2,370,356  
         
 
            4,271,409  
         
 
Specialty Retail - 1.9%              

Advance Auto Parts

  6,700       741,556  

Aeropostale 2

  10,000       90,900  

American Eagle Outfitters

  70,900       1,020,960  

Asahi Company

  49,300       687,232  

Ascena Retail Group 1,2

  121,100       2,562,476  

Beter Bed Holding

  49,300       1,194,006  

Bonjour Holdings

  5,892,000       1,284,124  

Children’s Place Retail Stores 2

  9,300       529,821  

DSW Cl. A

  19,800       846,054  

Finish Line (The) Cl. A

  21,900       616,923  

GameStop Corporation Cl. A

  17,900       881,754  

Genesco 2

  25,700       1,877,642  

Hour Glass (The)

  75,000       99,251  

Lewis Group

  200,000       1,351,764  

L’Occitane International

  400,000       852,172  

Luk Fook Holdings (International)

  48,400       184,130  

Oriental Watch Holdings

  543,000       143,553  

OSIM International

  1,200,000       2,187,091  

Ross Stores

  4,730       354,419  

Stein Mart

  167,800       2,256,910  

Systemax 2

  194,000       2,182,500  

TravelCenters of America LLC 2

  11,600       112,984  

West Marine 2

  131,100       1,865,553  

Wet Seal (The) Cl. A 2

  63,200       172,536  
         
 
            24,096,311  
         
 
Textiles, Apparel & Luxury Goods - 1.3%              

Daphne International Holdings

  5,887,600       2,649,849  

Gildan Activewear

  7,200       383,832  

Grendene

  175,000       1,341,846  

J.G. Boswell Company 3

  2,292       2,016,960  

Makalot Industrial

  160,000       864,328  

Pacific Textiles Holdings

  2,420,000       3,688,844  

Stella International Holdings

  467,000       1,190,039  

Texwinca Holdings

  26,300       27,676  

Van de Velde

  27,500       1,377,075  

Wolverine World Wide 1

  95,000       3,226,200  
         
 
            16,766,649  
         
 
Total (Cost $99,621,045)           148,849,490  
         
 
               
Consumer Staples – 1.1%              
Beverages - 0.0%              

Crimson Wine Group 2,3

  8,925       78,897  
         
 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.   2013 Annual Report to Stockholders  |  21



Royce Value Trust

 
Schedule of Investments
 
    SHARES     VALUE  
Consumer Staples (continued)              
Food & Staples Retailing - 0.1%              

FamilyMart

  27,800     $ 1,268,436  
         
 
Food Products - 1.0%              

Alico

  27,000       1,049,490  

Cal-Maine Foods

  39,948       2,406,068  

Seneca Foods Cl. A 2

  148,103       4,723,005  

Seneca Foods Cl. B 2

  13,751       401,254  

Super Group

  280,000       843,139  

Tootsie Roll Industries

  130,520       4,247,121  

Waterloo Investment Holdings 2,5

  598,676       89,203  
         
 
            13,759,280  
         
 
Total (Cost $10,355,125)           15,106,613  
         
 
               
Diversified Investment Companies – 0.3%              
Closed-End Funds - 0.3%              

Central Fund of Canada Cl. A 1

  289,800       3,839,850  

RIT Capital Partners

  13,500       281,677  
         
 
Total (Cost $4,445,531)           4,121,527  
         
 
               
Energy – 4.4%              
Energy Equipment & Services - 3.5%              

Cal Dive International 2

  456,250       917,062  

Era Group 1,2,4

  13,100       404,266  

Helmerich & Payne 1

  125,300       10,535,224  

ION Geophysical 2

  361,500       1,192,950  

Key Energy Services 2

  58,500       462,150  

Oil States International 2

  45,023       4,579,740  

Pason Systems

  115,500       2,498,649  

SEACOR Holdings 1,2

  93,775       8,552,280  

Steel Excel 2,3

  156,880       4,627,960  

Superior Energy Services 1,2

  40,300       1,072,383  

TGS-NOPEC Geophysical

  80,300       2,128,871  

Tidewater

  64,300       3,811,061  

Trican Well Service

  65,200       796,701  

Unit Corporation 2

  88,500       4,568,370  
         
 
            46,147,667  
         
 
Oil, Gas & Consumable Fuels - 0.9%              

Africa Oil 2

  74,800       649,945  

Cimarex Energy 1

  61,300       6,430,983  

Contango Oil & Gas 2

  8,700       411,162  

Green Plains Renewable Energy

  7,800       151,242  

Lundin Petroleum 2

  24,100       469,871  

Resolute Energy 1,2

  317,234       2,864,623  
         
 
            10,977,826  
         
 
Total (Cost $44,227,343)           57,125,493  
         
 
               
Financials – 12.4%              
Capital Markets - 5.4%              

Affiliated Managers Group 1,2

  34,700       7,525,736  

AllianceBernstein Holding L.P. 1,4

  142,000       3,030,280  

AP Alternative Assets L.P. 2

  64,752       1,829,244  

Artisan Partners Asset Management Cl. A

  45,900       2,992,221  

ASA Gold and Precious Metals

  188,601       2,312,248  

Ashmore Group

  566,000       3,761,255  

Aurelius

  9,300       377,423  

Cowen Group 2

  853,458       3,337,021  

Eaton Vance 1

  81,000       3,465,990  

Federated Investors Cl. B 1,4

  384,200       11,064,960  

GAMCO Investors Cl. A

  28,900       2,513,433  

Jupiter Fund Management

  75,000       478,155  

Lazard Cl. A

  114,800       5,202,736  

MVC Capital

  254,200       3,431,700  

Paris Orleans

  33,513       820,648  

RHJ International 2

  520,000       2,639,692  

SEI Investments

  231,500       8,039,995  

Sprott

  590,000       1,455,213  

U.S. Global Investors Cl. A

  661,751       1,680,848  

Value Partners Group

  4,503,000       3,490,067  

Westwood Holdings Group

  23,460       1,452,409  
         
 
            70,901,274  
         
 
Commercial Banks - 1.7%              

Bank of N.T. Butterfield & Son

  1,784,161       2,658,400  

Farmers & Merchants Bank of Long

             

Beach 3

  1,200       6,240,000  

Fauquier Bankshares

  160,800       2,196,528  

First Citizens BancShares Cl. A

  36,527       8,132,006  

Mechanics Bank 3

  200       2,570,000  
         
 
            21,796,934  
         
 
Consumer Finance - 0.0%              

EZCORP Cl. A 2

  13,000       151,970  
         
 
Diversified Financial Services - 0.6%              

Banca Finnat Euramerica

  560,000       244,214  

HF2 Financial Management Cl. A 2

  292,300       2,972,691  

Moody’s Corporation

  9,530       747,819  

Pargesa Holding

  4,300       346,584  

PICO Holdings 2

  67,500       1,559,925  

Sofina

  19,000       2,163,989  
         
 
            8,035,222  
         
 
Insurance - 2.4%              

Alleghany Corporation 2

  6,499       2,599,340  

eHealth 2

  27,350       1,271,502  

E-L Financial

  16,500       11,028,477  

Erie Indemnity Cl. A 1

  50,000       3,656,000  

Independence Holding Company

  349,423       4,713,716  

Platinum Underwriters Holdings

  56,900       3,486,832  

Primerica

  95,000       4,076,450  

Validus Holdings

  14,100       568,089  
         
 
            31,400,406  
         
 
Real Estate Management & Development - 1.9%              

Consolidated-Tomoka Land

  60,564       2,197,867  

Forestar Group 1,2,4

  102,000       2,169,540  

Kennedy-Wilson Holdings

  97,100       2,160,475  

Midland Holdings

  5,027,100       2,424,636  

St. Joe Company (The) 1,2,4

  167,000       3,204,730  

Tejon Ranch 2

  342,600       12,593,976  
         
 
            24,751,224  
         
 
Thrifts & Mortgage Finance - 0.4%              

Timberland Bancorp 6

  444,200       4,273,204  

22  |  2013 Annual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



December 31, 2013

 
    SHARES     VALUE  
Financials (continued)              
Thrifts & Mortgage Finance (continued)              

Vestin Realty Mortgage II 2

  214,230     $ 355,622  
         
 
            4,628,826  
         
 
Total (Cost $129,633,964)           161,665,856  
         
 
               
Health Care – 4.8%              
Biotechnology - 0.4%              

Genomic Health 2

  33,000       965,910  

Green Cross

  7,500       884,778  

Myriad Genetics 1,2,4

  140,650       2,950,837  

ZIOPHARM Oncology 1,2,4

  68,000       295,120  
         
 
            5,096,645  
         
 
Health Care Equipment & Supplies - 1.7%              

Allied Healthcare Products 2

  140,225       329,529  

Analogic Corporation 1

  38,875       3,442,770  

AngioDynamics 1,2

  52,123       895,994  

Atrion Corporation

  16,235       4,809,619  

bioMerieux

  8,500       891,859  

CONMED Corporation

  81,500       3,463,750  

DiaSorin

  20,000       937,952  

IDEXX Laboratories 1,2

  43,711       4,649,539  

Invacare Corporation

  27,000       626,670  

Kossan Rubber Industries

  610,406       805,054  

Nihon Kohden

  20,100       700,475  

Synergetics USA 1,2

  85,125       308,152  

Top Glove

  475,000       816,440  

Urologix 2,3

  142,648       25,677  
         
 
            22,703,480  
         
 
Health Care Providers & Services - 0.5%              

Bangkok Chain Hospital

  1,250,000       230,143  

Landauer 1

  75,500       3,972,055  

MWI Veterinary Supply 1,2

  10,000       1,705,900  

Schein (Henry) 2

  4,820       550,733  

VCA Antech 1,2

  21,500       674,240  
         
 
            7,133,071  
         
 
Life Sciences Tools & Services - 1.3%              

Bio-Rad Laboratories Cl. A 2

  19,688       2,433,634  

EPS Corporation

  758       993,296  

Furiex Pharmaceuticals 2

  4,400       184,844  

PAREXEL International 2

  165,800       7,490,844  

PerkinElmer 1

  39,000       1,607,970  

Techne Corporation

  46,614       4,412,947  
         
 
            17,123,535  
         
 
Pharmaceuticals - 0.9%              

Boiron

  20,000       1,409,817  

Kalbe Farma

  3,996,000       410,435  

Medicines Company (The) 2

  67,700       2,614,574  

Recordati

  90,000       1,295,083  

Santen Pharmaceutical

  26,000       1,210,996  

Stallergenes

  20,000       1,492,634  

Vetoquinol

  30,000       1,267,019  

Virbac

  6,500       1,388,700  
         
 
            11,089,258  
         
 
Total (Cost $36,469,322)           63,145,989  
         
 
               
Industrials – 28.5%              
Aerospace & Defense - 2.3%              

Alliant Techsystems 1

  1,800       219,024  

Cubic Corporation

  26,454       1,393,068  

Curtiss-Wright

  18,600       1,157,478  

Ducommun 2

  117,200       3,493,732  

HEICO Corporation 1

  262,938       15,237,257  

HEICO Corporation Cl. A

  80,808       3,403,633  

Hexcel Corporation 2

  47,500       2,122,775  

Moog Cl. A 2

  25,000       1,698,500  

Teledyne Technologies 2

  20,600       1,892,316  
         
 
            30,617,783  
         
 
Air Freight & Logistics - 1.8%              

Expeditors International of Washington

  162,050       7,170,712  

Forward Air

  209,750       9,210,123  

Hub Group Cl. A 1,2,4

  149,400       5,958,072  

UTi Worldwide

  100,400       1,763,024  
         
 
            24,101,931  
         
 
Building Products - 1.2%              

American Woodmark 2

  117,135       4,630,346  

Burnham Holdings Cl. B 3

  36,000       676,800  

Simpson Manufacturing

  275,300       10,111,769  
         
 
            15,418,915  
         
 
Commercial Services & Supplies - 2.3%              

Brink’s Company (The)

  206,320       7,043,765  

CompX International Cl. A

  211,100       2,972,288  

Copart 2

  178,360       6,536,894  

Kaba Holding

  3,000       1,457,878  

Kimball International Cl. B

  286,180       4,301,286  

Moshi Moshi Hotline

  11,700       125,210  

Ritchie Bros. Auctioneers 1

  325,384       7,461,055  

Tetra Tech 2

  18,900       528,822  
         
 
            30,427,198  
         
 
Construction & Engineering - 1.7%              

EMCOR Group

  149,400       6,340,536  

Foster Wheeler 2

  35,000       1,155,700  

Integrated Electrical Services 2

  351,960       1,897,064  

Jacobs Engineering Group 1,2

  93,620       5,897,124  

KBR

  198,393       6,326,753  
         
 
            21,617,177  
         
 
Electrical Equipment - 3.1%              

EnerSys

  43,400       3,041,906  

Franklin Electric

  209,200       9,338,688  

Global Power Equipment Group

  105,482       2,064,282  

GrafTech International 2

  327,938       3,682,744  

Graphite India

  261,700       338,469  

Hubbell Cl. B 1

  7,000       762,300  

Powell Industries

  92,400       6,189,876  

Preformed Line Products

  91,600       6,701,456  

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.   2013 Annual Report to Stockholders  |  23



Royce Value Trust


Schedule of Investments

      SHARES     VALUE  

Industrials (continued)

               

Electrical Equipment (continued)

               

Regal-Beloit

    100,000     $ 7,372,000  

Vicor 2

    42,402       569,035  
           
 
              40,060,756  
           
 

Industrial Conglomerates - 0.7%

               

Carlisle Companies 1

    24,200       1,921,480  

Raven Industries 1

    192,400       7,915,336  
           
 
              9,836,816  
           
 

Machinery - 9.2%

               

Astec Industries

    28,200       1,089,366  

Burckhardt Compression Holding

    8,400       3,681,856  

CB Industrial Product Holding

    189,000       185,221  

Chen Hsong Holdings

    1,159,000       361,706  

CIRCOR International

    45,600       3,683,568  

CLARCOR 1

    92,500       5,952,375  

Columbus McKinnon 2

    86,800       2,355,752  

Donaldson Company 1

    199,959       8,690,218  

EVA Precision Industrial Holdings

    3,476,000       488,611  

FAG Bearings India

    25,300       661,019  

Graco

    116,376       9,091,293  

Haitian International Holdings

    430,000       978,193  

IDEX Corporation

    67,400       4,977,490  

Kennametal 1

    202,100       10,523,347  

Lincoln Electric Holdings

    58,685       4,186,588  

Middleby Corporation 2

    19,500       4,679,415  

NN

    197,100       3,979,449  

Nordson Corporation

    24,296       1,805,193  

Pfeiffer Vacuum Technology

    5,000       680,490  

PMFG 2

    388,352       3,514,586  

Rational

    2,000       663,362  

RBC Bearings 2

    47,000       3,325,250  

Rotork

    30,000       1,425,773  

Sarin Technologies

    1,018,600       1,493,253  

Semperit AG Holding

    25,000       1,237,957  

Spirax-Sarco Engineering

    20,000       990,258  

Sun Hydraulics

    14,500       592,035  

Timken Company (The)

    41,700       2,296,419  

Valmont Industries

    44,000       6,561,280  

WABCO Holdings 2

    97,700       9,126,157  

Wabtec Corporation

    155,850       11,574,979  

Woodward 1

    208,400       9,505,124  
           
 
              120,357,583  
           
 

Marine - 0.5%

               

Clarkson

    42,900       1,421,515  

Kirby Corporation 1,2,4

    50,100       4,972,425  
           
 
              6,393,940  
           
 

Professional Services - 3.7%

               

Acacia Research

    55,341       804,658  

Advisory Board (The) 1,2,4

    150,277       9,568,137  

CRA International 2

    32,138       636,333  

Heidrick & Struggles International

    225,431       4,540,180  

JobStreet Corporation

    1,446,800       1,095,425  

ManpowerGroup

    91,000       7,813,260  

Nihon M&A Center

    19,700       1,326,303  

On Assignment 2

    350,400       12,235,968  

Robert Half International

    51,972       2,182,304  

Towers Watson & Co. Cl. A

    59,700       7,618,317  

TrueBlue 2

    32,700       843,006  
           
 
              48,663,891  
           
 

Road & Rail - 1.3%

               

Landstar System 1

    99,400       5,710,530  

Patriot Transportation Holding 2

    212,958       8,839,887  

Universal Truckload Services

    68,916       2,102,627  
           
 
              16,653,044  
           
 

Trading Companies & Distributors - 0.5%

               

Lawson Products 2

    5,100       62,475  

MISUMI Group

    47,500       1,490,718  

MSC Industrial Direct Cl. A 1

    61,948       5,009,735  
           
 
              6,562,928  
           
 

Transportation Infrastructure - 0.2%

               

Wesco Aircraft Holdings 2

    113,400       2,485,728  
           
 

Total (Cost $172,148,070)

            373,197,690  
           
 
                 

Information Technology – 18.2%

               

Communications Equipment - 0.9%

               

ADTRAN 1

    280,475       7,575,630  

Bel Fuse Cl. B

    14,063       299,682  

Comba Telecom Systems Holdings 2

    450,000       155,527  

Comtech Telecommunications 1

    30,000       945,600  

Emulex Corporation 2

    20,000       143,200  

EVS Broadcast Equipment

    20,000       1,292,882  

Plantronics

    9,711       451,076  

Sonus Networks 2

    424,000       1,335,600  
           
 
              12,199,197  
           
 

Computers & Peripherals - 0.8%

               

Diebold

    253,200       8,358,132  

Intevac 2

    20,000       148,600  

Western Digital 1

    24,230       2,032,897  

Xyratex

    5,600       74,424  
           
 
              10,614,053  
           
 

Electronic Equipment, Instruments & Components - 8.3%

     

Agilysys 2

    165,125       2,298,540  

Anixter International 1

    62,595       5,623,535  

Avnet

    16,400       723,404  

Benchmark Electronics 1,2

    156,900       3,621,252  

Broadway Industrial Group 2

    832,400       148,413  

Chroma ATE

    219,982       461,318  

Cognex Corporation 2

    139,600       5,329,928  

Coherent 2

    148,016       11,010,910  

Dolby Laboratories Cl. A 1,2

    90,400       3,485,824  

Domino Printing Sciences

    85,000       1,076,781  

DTS 2

    207,000       4,963,860  

FEI Company 1

    88,900       7,944,104  

FLIR Systems

    296,000       8,909,600  

Hollysys Automation Technologies 2

    49,482       936,694  

IPG Photonics 1,2,4

    78,020       6,055,132  

Maxwell Technologies 2

    101,677       790,030  

Methode Electronics

    11,147       381,116  

24  |  2013 Annual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



December 31, 2013

 

      SHARES     VALUE  

Information Technology (continued)

               

Electronic Equipment, Instruments & Components (continued)

     

National Instruments

    251,850     $ 8,064,237  

Newport Corporation 2

    523,500       9,459,645  

Perceptron

    357,700       4,961,299  

Plexus Corporation 2

    176,100       7,623,369  

Richardson Electronics

    469,832       5,337,292  

Rofin-Sinar Technologies 2

    240,888       6,508,794  

TTM Technologies 1,2

    211,400       1,813,812  

Vaisala Cl. A

    40,320       1,287,417  
           
 
              108,816,306  
           
 

Internet Software & Services - 0.9%

               

comScore 2

    85,384       2,442,836  

QuinStreet 2

    153,128       1,330,682  

RealNetworks 2

    162,350       1,225,743  

Support.com 2

    236,567       896,589  

ValueClick 2

    137,800       3,220,386  

Vistaprint 1,2,4

    52,000       2,956,200  
           
 
              12,072,436  
           
 

IT Services - 2.7%

               

Computer Task Group

    3,400       64,260  

Convergys Corporation

    121,000       2,547,050  

CSE Global

    779,500       472,537  

DST Systems

    8,600       780,364  

eClerx Services

    60,900       1,043,634  

Fiserv 2

    9,080       536,174  

Hackett Group (The)

    655,000       4,067,550  

Innodata 2

    89,973       220,434  

ManTech International Cl. A

    35,400       1,059,522  

MAXIMUS

    179,000       7,874,210  

NeuStar Cl. A 2

    29,287       1,460,250  

Sapient Corporation 2

    553,102       9,601,851  

Sykes Enterprises 2

    103,824       2,264,401  

Unisys Corporation 2

    94,000       3,155,580  
           
 
              35,147,817  
           
 

Office Electronics - 0.1%

               

Zebra Technologies Cl. A 1,2

    20,658       1,117,184  
           
 

Semiconductors & Semiconductor Equipment - 3.4%

     

Aixtron ADR 2

    37,758       548,246  

ATMI 2

    66,845       2,019,388  

Cabot Microelectronics 2

    24,909       1,138,341  

CEVA 2

    19,044       289,850  

Diodes 2

    234,750       5,530,710  

Entegris 2

    164,200       1,904,720  

Entropic Communications 2

    102,000       480,420  

Exar Corporation 2

    157,576       1,857,821  

Integrated Silicon Solution 2

    206,200       2,492,958  

International Rectifier 2

    185,000       4,822,950  

Miraial

    74,400       1,112,008  

MKS Instruments

    106,000       3,173,640  

Nanometrics 2

    105,300       2,005,965  

Power Integrations 1

    49,000       2,735,180  

Teradyne 1,2,4

    234,300       4,128,366  

Tessera Technologies

    44,000       867,240  

TriQuint Semiconductor 2

    675,467       5,633,395  

Veeco Instruments 1,2

    102,100       3,360,111  
           
 
              44,101,309  
           
 

Software - 1.1%

               

Accelrys 2

    21,455       204,681  

ANSYS 1,2,4

    95,000       8,284,000  

Aspen Technology 2

    42,100       1,759,780  

Blackbaud 1

    31,400       1,182,210  

Mentor Graphics

    9,453       227,534  

MICROS Systems 2

    19,900       1,141,663  

SimCorp

    20,000       787,423  

TeleNav 2

    43,597       287,304  
           
 
              13,874,595  
           
 

Total (Cost $154,744,381)

            237,942,897  
           
 
                 

Materials – 6.5%

               

Chemicals - 1.4%

               

Cabot Corporation 1

    58,000       2,981,200  

Fufeng Group

    300,000       122,642  

Hawkins

    86,178       3,204,960  

Huchems Fine Chemical

    73,856       1,679,579  

Intrepid Potash 1,2,4

    110,000       1,742,400  

LSB Industries 2

    25,500       1,046,010  

Minerals Technologies 1

    71,060       4,268,574  

OM Group 2

    33,500       1,219,735  

Valspar Corporation (The)

    1,200       85,548  

W.R. Grace & Co. 1,2

    17,500       1,730,225  
           
 
              18,080,873  
           
 

Construction Materials - 0.8%

               

Ash Grove Cement Cl. B 3

    50,518       9,901,528  

Mardin Cimento Sanayii

    500,000       991,159  
           
 
              10,892,687  
           
 

Containers & Packaging - 0.9%

               

Greif Cl. A

    137,344       7,196,825  

Mayr-Melnhof Karton

    38,000       4,704,892  
           
 
              11,901,717  
           
 

Metals & Mining - 3.2%

               

AuRico Gold

    132,000       483,120  

Central Steel & Wire 3

    5,262       3,893,880  

Fresnillo

    22,500       277,765  

Globe Specialty Metals

    20,000       360,200  

Hecla Mining

    890,000       2,741,200  

IAMGOLD Corporation

    510,000       1,698,300  

Kinross Gold

    24,600       107,748  

Kirkland Lake Gold 2

    90,000       217,745  

Maharashtra Seamless

    781,300       2,073,404  

Major Drilling Group International

    116,800       845,556  

Medusa Mining 2

    90,000       163,936  

Pan American Silver

    240,430       2,813,031  

Pretium Resources 2

    196,000       1,011,137  

Randgold Resources ADR

    8,000       502,480  

Reliance Steel & Aluminum 1

    154,820       11,741,549  

Saracen Mineral Holdings 2

    200,600       33,136  

Schnitzer Steel Industries Cl. A 1

    100,000       3,267,000  

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.   2013 Annual Report to Stockholders  |  25



Royce Value Trust December 31, 2013


Schedule of Investments
      SHARES     VALUE  

Materials (continued)

               

Metals & Mining (continued)

               

Sims Metal Management ADR 2,3

    16,000     $ 154,240  

Synalloy Corporation

    178,800       2,746,368  

Village Main Reef 2

    986,600       35,740  

Worthington Industries

    157,500       6,627,600  
           
 
              41,795,135  
           
 

Paper & Forest Products - 0.2%

               

Glatfelter

    10,800       298,512  

Qunxing Paper Holdings 5

    3,296,000       42,506  

Schweitzer-Mauduit International

    27,600       1,420,572  
           
 
              1,761,590  
           
 

Total (Cost $65,222,364)

            84,432,002  
           
 
                 

Telecommunication Services – 0.7%

               

Wireless Telecommunication Services - 0.7%

               

Telephone and Data Systems

    338,270       8,720,601  
           
 

Total (Cost $8,279,046)

            8,720,601  
           
 
                 

Miscellaneous 7 – 4.9%

               

Total (Cost $57,293,524)

            64,169,786  
           
 
                 

TOTAL COMMON STOCKS

               

(Cost $782,439,715)

            1,218,477,944  
           
 
                 

PREFERRED STOCK – 0.1%

               

Seneca Foods Conv. 2,5

               

(Cost $796,469)

    55,000       1,578,555  
           
 

REPURCHASE AGREEMENT – 14.7%

               

Fixed Income Clearing Corporation,
0.00% dated 12/31/13, due 1/2/14,
maturity value $191,909,000 (collateralized
by obligations of various U.S. Government
Agencies, 1.00% due 5/31/18, valued at
$195,750,000)
(Cost $191,909,000)

            191,909,000  
           
 
                 

TOTAL INVESTMENTS – 108.0%

               

(Cost $975,145,184)

            1,411,965,499  
                 

LIABILITIES LESS CASH

               

AND OTHER ASSETS – (8.0)%

            (104,136,210 )
           
 
                 

NET ASSETS – 100.0%

          $ 1,307,829,289  
           
 
   

New additions in 2013.
1
All or a portion of these securities were pledged as collateral in connection with the revolving credit agreement at December 31, 2013. Total market value of pledged securities at December 31, 2013, was $292,993,324.
2
Non-income producing.
3
These securities are defined as Level 2 securities due to fair value being based on quoted prices for similar securities. See Notes to Financial Statements.
4
At December 31, 2013, a portion of these securities were rehypothecated in connection with the Fund’s revolving credit agreement in the aggregate amount of $58,400,416.
5
Securities for which market quotations are not readily available represent 0.1% of net assets. These securities have been valued at their fair value under procedures approved by the Fund’s Board of Directors. These securities are defined as Level 3 securities due to the use of significant unobservable inputs in the determination of fair value. See Notes to Financial Statements.
6
At December 31, 2013, the Fund owned 5% or more of the Company’s outstanding voting securities thereby making the Company an Affiliated Company as that term is defined in the Investment Company Act of 1940. See Notes to Financial Statements.
7
Includes securities first acquired in 2013 and less than 1% of net assets.
   
 
Bold indicates the Fund’s 20 largest equity holdings in terms of December 31, 2013, market value.
   
 
TAX INFORMATION: The cost of total investments for Federal income tax purposes was $970,034,475. At December 31, 2013, net unrealized appreciation for all securities was $441,931,024, consisting of aggregate gross unrealized appreciation of $484,622,277 and aggregate gross unrealized depreciation of $42,691,253. The primary difference between book and tax basis cost is the timing of the recognition of losses on securities sold.


26  |  2013 Annual Report to Stockholders   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



Royce Value Trust   December 31, 2013


Statement of Assets and Liabilities        
         
ASSETS:        
Investments at value        

Non-Affiliated Companies (cost $777,803,618)

    $ 1,215,783,295

Affiliated Companies (cost $5,432,566)

      4,273,204

Total investments at value       1,220,056,499
Repurchase agreements (at cost and value)       191,909,000
Cash and foreign currency       18,085
Receivable for investments sold       7,196,684
Receivable for dividends and interest       1,626,534
Prepaid expenses and other assets       478,689

Total Assets

      1,421,285,491

LIABILITIES:        
Revolving credit agreement       110,000,000
Payable for investments purchased       2,357,951
Payable for investment advisory fee       797,907
Payable for interest expense       7,313
Accrued expenses       293,031

Total Liabilities

      113,456,202

Net Assets

    $ 1,307,829,289

ANALYSIS OF NET ASSETS:        
Paid-in capital - $0.001 par value per share; 71,974,264 shares outstanding (150,000,000 shares authorized)     $ 830,172,619
Undistributed net investment income (loss)       6,453,789
Accumulated net realized gain (loss) on investments and foreign currency       34,377,036
Net unrealized appreciation (depreciation) on investments and foreign currency       436,825,845

Net Assets (net asset value per share - $18.17)

    $ 1,307,829,289

Investments at identified cost

    $ 783,236,184

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2013 Annual Report to Stockholders  |  27



Royce Value Trust   Year Ended December 31, 2013


Statement of Operations

INVESTMENT INCOME:          
Income:          

Dividends

         

Non-Affiliated Companies

    $ 18,543,812  

Affiliated Companies

      53,304  

Foreign withholding tax

      (813,797 )

Interest

      48,182  

Rehypothecation income

      397,874  

Total income       18,229,375  

Expenses:          

Investment advisory fees

      6,588,821  

Interest expense

      1,674,582  

Stockholder reports

      452,063  

Custody and transfer agent fees

      300,136  

Directors’ fees

      144,837  

Administrative and office facilities

      129,145  

Professional fees

      91,209  

Other expenses

      281,249  

Total expenses       9,662,042  
Compensating balance credits       (202 )

Net expenses       9,661,840  

Net investment income (loss)       8,567,535  

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:          
Net realized gain (loss):          

Investments

      171,576,941  

Foreign currency transactions

      (140,920 )
Net change in unrealized appreciation (depreciation):          

Investments and foreign currency translations

      191,159,619  

Other assets and liabilities denominated in foreign currency

      17,973  

Net realized and unrealized gain (loss) on investments and foreign currency       362,613,613  

NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS     $ 371,181,148  


28  |  2013 Annual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



Royce Value Trust


Statement of Changes in Net Assets Applicable to Common Stockholders

    Year ended   Year ended
    12/31/13   12/31/12
INVESTMENT OPERATIONS:                    
Net investment income (loss)     $ 8,567,535       $ 16,207,117  
Net realized gain (loss) on investments and foreign currency       171,436,021         62,897,553  
Net change in unrealized appreciation (depreciation) on investments and foreign currency       191,177,592         75,702,882  

Net increase (decrease) in net assets from investment operations       371,181,148         154,807,552  

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:                    
Net investment income               (2,356,525 )
Net realized gain on investments and foreign currency               (9,000,970 )

Total distributions to Preferred Stockholders               (11,357,495 )

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS                    
   FROM INVESTMENT OPERATIONS       371,181,148         143,450,057  

DISTRIBUTIONS TO COMMON STOCKHOLDERS:                    
Net investment income       (7,723,525 )       (11,444,608 )
Net realized gain on investments and foreign currency       (148,307,278 )       (43,713,673 )

Total distributions to Common Stockholders       (156,030,803 )       (55,158,281 )

CAPITAL STOCK TRANSACTIONS:                    
Reinvestment of distributions to Common Stockholders       26,224,892         27,494,847  
Depreciation of securities contributed to Royce Global Value Trust spinoff       (15,972,444 )        

Total capital stock transactions       10,252,448         27,494,847  

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS       225,402,793         115,786,623  

NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:                    

Beginning of year

      1,082,426,496         966,639,873  

End of year (including undistributed net investment income (loss) of $6,453,789 at 12/31/13 and $2,818,184 at 12/31/12)

    $ 1,307,829,289       $ 1,082,426,496  

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2013 Annual Report to Stockholders  |  29



Royce Value Trust


Statement of Cash Flows

CASH FLOWS FROM OPERATING ACTIVITIES:          
Net increase (decrease) in net assets from investment operations     $ 371,181,148  
Adjustments to reconcile net increase (decrease) in net assets from operations to net cash provided by operating activities:          

Purchases of long-term investments

      (409,153,816 )

Proceeds from sales and maturities of long-term investments

      703,361,694  

Net purchases, sales and maturities of short-term investments

      (117,262,000 )

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

      (671,297 )

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

      344,416  

Net change in unrealized appreciation (depreciation) on investments

      (191,159,619 )

Net realized gain on investments and foreign currency

      (171,436,021 )

Cash provided by operating activities       185,204,505  

CASH FLOWS FROM FINANCING ACTIVITIES:          
Net increase (decrease) in revolving credit agreement       (40,000,000 )
Distributions paid to Common Stockholders       (156,030,803 )
Reinvestment of distributions to Common Stockholders       26,224,892  
Depreciation of securities contributed to Royce Global Value Trust spinoff       (15,972,444 )

Cash used for financing activities       (185,778,355 )

INCREASE (DECREASE) IN CASH:       (573,850 )

Cash and foreign currency at beginning of year

      591,935  

Cash and foreign currency at end of year

    $ 18,085  

30  |  2013 Annual Report to Stockholders THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



Royce Value Trust


Financial Highlights

This table is presented to show selected data for a share of Common Stock outstanding throughout each period, and to assist stockholders in evaluating the Fund’s performance for the periods presented.

    Years ended December 31,
   
    2013   2012   2011   2010   2009  

NET ASSET VALUE, BEGINNING OF PERIOD     $ 15.40       $ 14.18       $ 16.73       $ 12.87       $ 9.37  

INVESTMENT OPERATIONS:                                                  

Net investment income (loss)

      0.12         0.23         0.10         0.24         0.17  

Net realized and unrealized gain (loss) on investments and

                                                 

foreign currency

      4.89         2.02         (1.62 )       3.85         3.87  

Total investment operations

      5.01         2.25         (1.52 )       4.09         4.04  

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS:                                                  

Net investment income

              (0.04 )       (0.03 )       (0.20 )       (0.18 )

Net realized gain on investments and foreign currency

              (0.13 )       (0.16 )                

Return of capital

                                      (0.02 )

Total distributions to Preferred Stockholders

              (0.17 )       (0.19 )       (0.20 )       (0.20 )

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON

                                                 

STOCKHOLDERS FROM INVESTMENT OPERATIONS

      5.01         2.08         (1.71 )       3.89         3.84  

DISTRIBUTIONS TO COMMON STOCKHOLDERS:                                                  

Net investment income

      (0.11 )       (0.17 )       (0.08 )       (0.03 )        

Net realized gain on investments and foreign currency

      (2.08 )       (0.63 )       (0.43 )                

Return of capital

                      (0.27 )               (0.32 )

Total distributions to Common Stockholders

      (2.19 )       (0.80 )       (0.78 )       (0.03 )       (0.32 )

CAPITAL STOCK TRANSACTIONS:                                                  

Effect of reinvestment of distributions by Common Stockholders

      (0.05 )       (0.06 )       (0.06 )       (0.00 )       (0.02 )

Total capital stock transactions

      (0.05 )       (0.06 )       (0.06 )       (0.00 )       (0.02 )

NET ASSET VALUE, END OF PERIOD     $ 18.17       $ 15.40       $ 14.18       $ 16.73       $ 12.87  

MARKET VALUE, END OF PERIOD     $ 16.01       $ 13.42       $ 12.27       $ 14.54       $ 10.79  

TOTAL RETURN:1                                                  
Market Value       35.63 %       16.22 %       (10.46 )%       35.05 %       35.39 %
Net Asset Value       34.14 %       15.41 %       (10.06 )%       30.27 %       44.59 %
RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO                                                  

COMMON STOCKHOLDERS:

                                                 

Investment advisory fee expense2

      0.54 %       0.56 %       0.86 %       0.11 %       0.00 %

Other operating expenses

      0.25 %       0.15 %       0.12 %       0.12 %       0.16 %
Total expenses (net)3       0.79 %       0.71 %       0.98 %       0.23 %       0.16 %
Expenses net of fee waivers and excluding interest expense       0.65 %       0.68 %       0.98 %       0.23 %       0.16 %
Expenses prior to fee waivers and balance credits       0.79 %       0.71 %       0.98 %       0.23 %       0.16 %
Expenses prior to fee waivers       0.79 %       0.71 %       0.98 %       0.23 %       0.16 %
Net investment income (loss)       0.70 %       1.57 %       0.63 %       1.69 %       1.66 %
SUPPLEMENTAL DATA:                                                  
Net Assets Applicable to Common Stockholders,                                                  

End of Period (in thousands)

    $ 1,307,829       $ 1,082,426       $ 966,640       $ 1,105,879       $ 849,777  
Liquidation Value of Preferred Stock,                                                  

End of Period (in thousands)

                        $ 220,000       $ 220,000       $ 220,000  
Portfolio Turnover Rate       33 %       25 %       26 %       30 %       31 %
PREFERRED STOCK:                                                  
Total shares outstanding                           8,800,000         8,800,000         8,800,000  
Asset coverage per share                         $ 134.88       $ 150.67       $ 121.57  
Liquidation preference per share                         $ 25.00       $ 25.00       $ 25.00  
Average month-end market value per share                         $ 25.37       $ 25.06       $ 23.18  
REVOLVING CREDIT AGREEMENT:                                                  
Asset coverage       1289 %       822 %                              
Asset coverage per $1,000     $ 12,889       $ 8,216                                


1

The Market Value Total Return is calculated assuming a purchase of Common Stock on the opening of the first business day and a sale on the closing of the last business day of each period. Dividends and distributions are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund’s Distribution Reinvestment and Cash Purchase Plan. Net Asset Value Total Return is calculated on the same basis, except that the Fund’s net asset value is used on the purchase and sale dates instead of market value.

2

The investment advisory fee is calculated based on average net assets over a rolling 60-month basis, while the above ratios of investment advisory fee expenses are based on the average net assets applicable to Common Stockholders over a 12-month basis.

3

Expense ratios based on total average net assets including liquidation value of Preferred Stock were 0.60%, 0.82%, 0.18% and 0.12% for the years ended December 31, 2012, 2011, 2010 and 2009, respectively.


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2013 Annual Report to Stockholders  |  31



Royce Value Trust

 
Notes to Financial Statements

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 accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

Valuation of Investments:
     Securities are valued as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq's Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their bid price. Other over-the-counter securities for which market quotations are readily available are valued at their highest bid price, except in the case of some bonds and other fixed income securities which may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. The Fund values its non-U.S. dollar denominated securities in U.S. dollars daily at the prevailing foreign currency exchange rates as quoted by a major bank. Securities for which market quotations are not readily available are valued at their fair value in accordance with the provisions of the 1940 Act, under procedures approved by the Fund's Board of Directors, and are reported as Level 3 securities. As a general principle, the fair value of a security is the amount which the Fund might reasonably expect to receive for the security upon its current sale. However, in light of the judgment involved in fair valuations, there can be no assurance that a fair value assigned to a particular security will be the amount which the Fund might be able to receive upon its current sale. In addition, if, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. The Fund uses an independent pricing service to provide fair value estimates for relevant non-U.S. equity securities on days when the U.S. market volatility exceeds a certain threshold. This pricing service uses proprietary correlations it has developed between the movement of prices of non-U.S. equity securities and indices of U.S.-traded securities, futures contracts and other indications to estimate the fair value of relevant non-U.S. securities. When fair value pricing is employed, the prices of securities used by the Fund may differ from quoted or published prices for the same security. Investments in money market funds are valued at net asset value per share.
Various inputs are used in determining the value of the Fund’s investments, as noted above. These inputs are summarized in the three broad levels below:
Level 1 – quoted prices in active markets for identical securities.
Level 2 – other significant observable inputs (including quoted prices for similar securities, foreign securities that may be fair valued and repurchase agreements). The table below includes all Level 2 securities. Level 2 securities with values based on quoted prices for similar securities are noted in the Schedule of Investments.
Level 3 – significant unobservable inputs (including last trade price before trading was suspended, or at a discount thereto for lack of marketability or otherwise, market price information regarding other securities, information received from the company and/or published documents, including SEC filings and financial statements, or other publicly available information).
     The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
     The following is a summary of the inputs used to value the Fund’s investments as of December 31, 2013. For a detailed breakout of common stocks by sector classification, please refer to the Schedule of Investments.

    Level 1   Level 2   Level 3   Total
Common Stocks     $ 1,188,056,794       $ 30,289,441       $ 131,709       $ 1,218,477,944  
Preferred Stocks                       1,578,555         1,578,555  
Cash Equivalents               191,909,000                 191,909,000  

     For the year ended December 31, 2013, certain securities have transferred in and out of Level 1 and Level 2 measurements as a result of the fair value pricing procedures for international equities. The Fund recognizes transfers between levels as of the end of the reporting period. At December 31, 2013, securities valued at $8,989,917 were transferred from Level 1 to Level 2 and securities valued at $109,375,273 were transferred from Level 2 to Level 1 within the fair value hierarchy.

     Level 3 Reconciliation:
              Realized and Unrealized          
    Balance as of 12/31/12   Gain (Loss)1   Balance as of 12/31/13
Common Stocks     $ 263,067       $ (131,358 )     $ 131,709  
Preferred Stocks       1,504,800         73,755         1,578,555  

1

The net change in unrealized appreciation (depreciation) is included in the accompanying Statement of Operations. Change in unrealized appreciation (depreciation) includes net unrealized appreciation (depreciation) resulting from changes in investment values during the reporting period and the reversal of previously recorded unrealized appreciation (depreciation) when gains or losses are realized. Net realized gain (loss) from investments and foreign currency transactions is included in the accompanying Statement of Operations.


32  |  2013 Annual Report to Stockholders    



Royce Value Trust

 
Notes to Financial Statements (continued)

Repurchase Agreements:
     The Fund may enter into repurchase agreements with institutions that the Fund’s investment adviser has determined are creditworthy. The Fund restricts repurchase agreements to maturities of no more than seven days. Securities pledged as collateral for repurchase agreements, which are held until maturity of the repurchase agreements, are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). Repurchase agreements could involve certain risks in the event of default or insolvency of the counter-party, including possible delays or restrictions upon the ability of the Fund to dispose of its underlying securities.

Foreign Currency:
     Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, expiration of currency forward contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, including investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.

Taxes:
     As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the Fund is not subject to income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. The Schedule of Investments includes information regarding income taxes under the caption “Tax Information”.

Distributions:
     The Fund pays quarterly distributions on the Fund’s Common Stock at the annual rate of 5% of the rolling average of the prior four calendar quarter-end NAVs of the Fund’s Common Stock, with the fourth quarter distribution being the greater of 1.25% of the rolling average or the distribution required by IRS regulations. Prior to November 15, 2012, distributions to Preferred Stockholders were accrued daily and paid quarterly. Distributions to Common Stockholders are recorded on ex-dividend date. Distributable capital gains and/or net investment income were first allocated to Preferred Stockholder distributions, with any excess allocable to Common Stockholders. If capital gains and/or net investment income were allocated to both Preferred and Common Stockholders, the tax character of such allocations was proportional. To the extent that distributions are not paid from long-term capital gains, net investment income or net short-term capital gains, they will represent a return of capital. Distributions are determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United States of America. Permanent book and tax differences relating to stockholder distributions will result in reclassifications within the capital accounts. Undistributed net investment income may include temporary book and tax basis differences, which will reverse in a subsequent period. Any taxable income or gain remaining undistributed at fiscal year end is distributed in the following year.
     On June 19, 2013, the Fund purchased 10,160 common shares of Royce Global Value Trust, Inc. (“RGT”) for $100,076. On October 18, 2013, the Fund contributed $99,899,924 in cash and securities in exchange for shares of RGT, and on the same date distributed all shares of RGT valued at $100,000,000 to Fund stockholders of record as of October 10, 2013, at the rate of one share of RGT for every seven shares of the Fund’s Common Stock outstanding. In connection with the spinoff of RGT, the securities contributed included $15,972,444 in unrealized depreciation.

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

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

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

Capital Stock:
     The Fund issued 1,699,025 and 2,103,737 shares of Common Stock as reinvestment of distributions by Common Stockholders for the years ended December 31, 2013 and December 31, 2012, respectively.

  2013 Annual Report to Stockholders  |  33



Royce Value Trust

 
Notes to Financial Statements (continued)

Borrowings:
     The Fund had entered into a $150,000,000 revolving credit agreement (the credit agreement) with BNP Paribas Prime Brokerage Inc. (BNPP) on November 14, 2012 and reduced this line to $110,000,000 on August 21, 2013. The Fund pays a commitment fee of 0.50% per annum on the unused portion of the credit agreement. The credit agreement has a 360-day rolling term that resets daily; however, if the Fund exceeds certain net asset value triggers, the credit agreement may convert to a 60-day rolling term that resets daily. The Fund is required to pledge portfolio securities as collateral in an amount up to two times the loan balance outstanding and has granted a security interest in the securities pledged to, and in favor of, BNPP as security for the loan balance outstanding. If the Fund fails to meet certain requirements, or maintain other financial covenants required under the credit agreement, the Fund may be required to repay immediately, in part or in full, the loan balance outstanding under the credit agreement necessitating the sale of portfolio securities at potentially inopportune times. The credit agreement also permits, subject to certain conditions, BNPP to rehypothecate portfolio securities pledged by the Fund up to the amount of the loan balance outstanding. The Fund continues to receive payments in lieu of dividends and interest on rehypothecated securities. The Fund also has the right under the credit agreement to recall the rehypothecated securities from BNPP on demand. If BNPP fails to deliver the recalled security in a timely manner, the Fund will be compensated by BNPP for any fees or losses related to the failed delivery or, in the event a recalled security will not be returned by BNPP, the Fund, upon notice to BNPP, may reduce the loan balance outstanding by the amount of the recalled security failed to be returned. The Fund will receive a portion of the fees earned by BNPP in connection with the rehypothecation of portfolio securities.
     As of December 31, 2013, the Fund has outstanding borrowings of $110,000,000. During the year ended December 31, 2013, the Fund borrowed an average daily balance of $135,424,658 at a weighted average borrowing cost of 1.22%. As of December 31, 2013, the aggregate value of rehypothecated securities was $58,400,416. During the year ended December 31, 2013, the Fund earned $397,874 in fees from rehypothecated securities.

Investment Advisory Agreement:
     As compensation for its services under the Investment Advisory Agreement, Royce receives a fee comprised of a Basic Fee (“Basic Fee”) and an adjustment to the Basic Fee based on the investment performance of the Fund in relation to the investment record of the S&P SmallCap 600 Index (“S&P 600").
     The Basic Fee is a monthly fee equal to 1/12 of 1% (1% on an annualized basis) of the average of the Fund’s month-end net assets applicable to Common Stockholders, plus the liquidation value of outstanding Preferred Stock, for the rolling 60-month period ending with such month (the "performance period"). The Basic Fee for each month is increased or decreased at the rate of 1/12 of .05% for each percentage point that the investment performance of the Fund exceeds, or is exceeded by, the percentage change in the investment record of the S&P 600 for the performance period by more than two percentage points. The performance period for each such month is a rolling 60-month period ending with such month. The maximum increase or decrease in the Basic Fee for any month may not exceed 1/12 of .5%. Accordingly, for each month, the maximum monthly fee rate as adjusted for performance is 1/12 of 1.5% and is payable if the investment performance of the Fund exceeds the percentage change in the investment record of the S&P 600 by 12 or more percentage points for the performance period, and the minimum monthly fee rate as adjusted for performance is 1/12 of .5% and is payable if the percentage change in the investment record of the S&P 600 exceeds the investment performance of the Fund by 12 or more percentage points for the performance period.
     Notwithstanding the foregoing, Royce is not entitled to receive any fee for any month when the investment performance of the Fund for the rolling 36-month period ending with such month is negative. In the event that the Fund’s investment performance for such a performance period is less than zero, Royce will not be required to refund to the Fund any fee earned in respect of any prior performance period.
     For the twelve rolling 60-month periods in 2013, the Fund’s investment performance ranged from 3% to 29% below the investment performance of the S&P 600. Accordingly, the net investment advisory fee consisted of a Basic Fee of $11,158,067 and a net downward adjustment of $4,569,246 for the performance of the Fund relative to that of the S&P 600. For the year ended December 31, 2013, the Fund accrued and paid Royce investment advisory fees totaling $6,588,821.

Purchases and Sales of Investment Securities:
     For the year ended December 31, 2013, the costs of purchases and proceeds from sales of investment securities, other than short-term securities, amounted to $411,168,675 and $635,873,886, respectively.

Distributions to Stockholders:
  The tax character of distributions paid to common stockholders   The tax character of distributions paid to preferred stockholders
  during 2013 and 2012 was as follows:   during 2012 was as follows:
       
  Distributions paid from:   2013   2012   Distributions paid from:       2012
  Ordinary income     $ 32,048,727       $ 17,311,826     Ordinary income               $ 3,655,160  
  Long-term capital gain       123,982,076         37,846,455     Long-term capital gain                 7,990,784  
                           
        $ 156,030,803       $ 55,158,281                     $ 11,645,944  
       

34  |  2013 Annual Report to Stockholders    



Royce Value Trust

 
Notes to Financial Statements (continued)

Distributions to Stockholders (continued):
  As of December 31, 2013, the tax basis components of distributable earnings included in stockholders’ equity were as follows:

   
  Net unrealized appreciation (depreciation)     $ 441,936,581  
  Post October loss*       (36,769 )
  Undistributed ordinary income       7,731,090  
  Undistributed capital gains       28,025,768  
         
        $ 447,656,670  
   

*

Under the current tax law, capital losses and foreign currency losses after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of December 31, 2013, the Fund had $36,769 of post October currency losses.


     The difference between book and tax basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral on wash sales, partnership investments and the unrealized gains on Passive Foreign Investment Companies.
     For financial reporting purposes, capital accounts and distributions to stockholders are adjusted to reflect the tax character of permanent book/tax differences. These differences are primarily due to differing treatments of income and gains on various investment securities and foreign currency transactions held by the Fund, timing differences and different characterization of distributions made by the Fund. For the year ended December 31, 2013, the Fund recorded the following permanent reclassifications. Results of operations and net assets were not affected by these reclassifications.

 
  Undistributed Net   Accumulated Net     Paid-in  
  Investment Income   Realized Gain (Loss)     Capital  
  $2,791,594   $(2,342,883)     $(448,711)  
 

     Management has analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years (2010-2013) and has concluded that as of December 31, 2013, no provision for income tax is required in the Fund’s financial statements.

Transactions in Affiliated Companies:
     An “Affiliated Company” as defined in the Investment Company Act of 1940, is a company in which a fund owns 5% or more of the company’s outstanding voting securities at any time during the period. The Fund effected the following transactions in shares of such companies for the year ended December 31, 2013:

    Shares   Market Value   Cost of   Cost of   Realized   Dividend   Shares   Market Value
Affiliated Company   12/31/12   12/31/12   Purchases   Sales   Gain (Loss)   Income   12/31/13   12/31/13
Timberland Bancorp   444,200   $3,082,748         $53,304   444,200   $4,273,204
        $3,082,748               $53,304       $4,273,204

  2013 Annual Report to Stockholders  |  35



Royce Value Trust  

 
Report of Independent Registered Public Accounting Firm

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

We have audited the accompanying statement of assets and liabilities of Royce Value Trust, Inc., (“Fund”) including the schedule of investments, as of December 31, 2013, and the related statement of operations and statement of cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five 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.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2013, 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 present fairly, in all material respects, the financial position of Royce Value Trust, Inc. at December 31, 2013, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

TAIT, WELLER, & BAKER LLP

Philadelphia, Pennsylvania
February 19, 2014

36  |  2013 Annual Report to Stockholders  



Royce Micro-Cap Trust December 31, 2013

  Schedule of Investments

        SHARES     VALUE  
COMMON STOCKS – 103.9%                  
                   
Consumer Discretionary – 12.2%                  
Auto Components - 1.9%                  

China Zenix Auto International ADR 1

      50,000     $ 130,000  

Drew Industries 2

      93,700       4,797,440  

Fuel Systems Solutions 1

      76,000       1,054,120  

Motorcar Parts of America 1

      50,000       965,000  

Spartan Motors

      42,300       283,410  

Standard Motor Products

      30,400       1,118,720  
             
 
                8,348,690  
             
 
Distributors - 0.7%                  

Core-Mark Holding Company

      13,500       1,025,055  

Weyco Group

      59,600       1,754,028  
             
 
                2,779,083