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Royce Value Trust
ANNUAL REPORT
December 31, 1995
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The Royce Funds
1414 Avenue of the Americas
New York, NY 10019
(212) 355-7311
(800) 221-4268
Dear Stockholder:
Harold Geneen, former CEO of the giant conglomerate ITT Corp., once offered
the following advice: 'In the business world, everyone is paid in two coins:
cash and experience. Take the experience first; the cash will come later.' In
1995, however, the formula seemed to be reversed as investors were paid with
'cash' in the form of high stock market returns. One can only wonder when
investors will be paid with 'experience.'
'ABLE TO LEAP TALL BUILDINGS
IN A SINGLE BOUND'
This familiar phrase describes popular superhero Superman,
[GRAPHIC] but it could also reflect 1995's stock market performance.
1995, like Superman, was extraordinary by any standard of
measurement. The large-cap oriented S&P 500, which was up 37.5%, had its best
calendar year return since 1958. Propelled by strong performance in 1995's first
two quarters, the S&P 500 took a breather in the third quarter only to resume a
leadership role in the final quarter of the year. Small-cap securities emerged
as performance leaders in the middle of the year, but were unable to keep up
with the 'faster than a speeding bullet' S&P 500. For the year, the Russell 2000
index of small-cap companies was up 28.4%.
ROYCE VALUE TRUST, INC.'S ('RVT') small-cap value orientation, which has
served its shareholders well over the long-term, was no match for the
performance of the raging bull market of 1995. Just as 'small-cap'
under-performed large-cap, 'value' under-performed growth within the small-cap
category. Also, a low exposure to the market's best performing sector,
technology, and an above-average exposure to the consumer and service sectors
acted like kryptonite in holding back the Fund's relative short-term
performance. Nevertheless, RVT's risk-averse style produced a 22.6% return in
1995 on a net asset value basis, quite reasonable on an absolute basis. RVT's
market value total return in 1995 was 20.5%.
The Fund has $339 million in net assets and nine years of performance
history. Average annual NAV total returns during the preceding five year and
since inception periods were 19.6% and 12.3%, respectively. NAV average annual
total return performance for the Fund since the issuance of convertible notes on
June 15, 1994, was 15.5%, well in excess of the 5 3/4% interest on the notes.
According to mutual fund evaluation service Morningstar, RVT had one of the
lowest risk profiles of the 34 domestic closed-end equity funds in the category,
as measured by Morningstar's risk ratio, standard deviation and beta for the
last three years*. We believe that managing risk is critical to delivering above
average long-term returns.
THE RELEVANCE OF RELATIVE PERFORMANCE
At some point in every modern
bull market, generally at the later [GRAPHIC]
stages, the concept of relative
performance becomes dominant in any
discussion of investment results. As prospects of financial loss become distant
memories, investors shift their focus from absolute gains to relative rewards.
Investment strategies are changed, portfolio managers are replaced and solid
results are ignored in the quest for better relative performance. The problem
is . . . . you can't eat relative performance! The whole concept
dies quickly in a period of negative returns. When markets turn south, new car
purchases are deferred and vacation plans are canceled, relative performance
soon becomes irrelevant. While relative performance may
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make a great conversation topic at the cocktail party, it is positive absolute
returns, compounded at reasonable rates, which put dinner on the table.
THE VALUE IN VALUE INVESTING
A basic premise of value investing is that stocks, like other goods and
services, should be purchased at the most attractive prices possible, preferably
at a discount to their 'intrinsic worth.' The reality for most investors is just
the opposite. In other words, investor comfort levels and, therefore, demand
increase when prices rise, and diminish as prices decline. The higher a stock
rises, the greater the perceived opportunity.
Value investing, on the other hand, takes a contrary view to this highly
emotional process. By systematically reducing risk when others ignore it and
taking risk when it is feared, one can capitalize on valuation discrepancies
(opportunities) which develop from time to time. The greatest risk that the
value investor confronts is the loss of either patience or discipline when faced
with the prospect of being out-of-sync with the market. THE VALUE IN 'VALUE
INVESTING' IS TO PROVIDE A COHERENT SYSTEM FOR RATIONAL DECISION MAKING . . . .
THE PURPOSE OF WHICH IS TO COMPOUND WEALTH WHILE MINIMIZING RISK. ITS BASIC
PREMISE IS THAT THE PRICE ONE PAYS FOR AN INVESTMENT MAKES A SIGNIFICANT
DIFFERENCE IN THE RETURN ONE RECEIVES.
WHAT WE DO
Royce Value Trust uses a risk-averse approach to invest in the
[GRAPHIC] securities of small-cap companies. Experience tells us that paying
attention to risk does not diminish long-term results, although
individual market phases may not always confirm this assumption's validity.
Our approach attempts to understand and value a company's 'private worth.'
Private worth is what we believe the company would bring if the entire
enterprise were sold in a private transaction to a rational buyer. The price we
will pay for a security must be significantly under our appraisal of its private
worth. The consistent use of this discipline, applied to less well-known
securities, is the source of our performance.
NO OTHER PLACE WE WOULD RATHER BE
While the Fund focuses on companies with market caps below $1 billion, our
weighted average and median market caps are actually much lower; $339 million
and $180 million, respectively, at December 31, 1995. Although our orientation
is small-cap stocks, the capitalization of our picking universe is by no means
small. The small-cap segment is huge in numbers, with over 10,000 companies
valued at more than $900 billion in total market capitalization. It is both
robust and perpetuating; IPO's, spin-offs and reorganizations create hundreds of
new prospects each year. The small-cap sector is rich in opportunity and easily
accommodates our strategy given the size of the investable universe.
HOW IT WORKS
Our approach to investing in
individual small-cap companies has [GRAPHIC]
proven long-term benefits, but can
be both unpredictable and frustrating in the
near-term. We believe that the stock market in the short-term is a polling
place, and in the long-term, a highly efficient weighing device. While our
ultimate success will continue to be driven by the
process of 'weighing the true value' of the small companies in which we have
invested, the following provides a brief glimpse of some of last year's
'election results.'
IDEAS THAT WORKED
During calendar 1995, the usual but somewhat arbitrary
[GRAPHIC] measurement period of choice, each of these companies made
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meaningful positive contributions to our overall performance. More importantly,
they represent specific examples of our discipline at work. Royce Value Trust's
BEST PERFORMERS, as measured by dollar impact to the portfolio, were:
<TABLE>
<CAPTION>
SECURITY % GAIN $ GAIN
- ----------------------------- ------ ----------
<S> <C> <C>
Indigo, N.V. 250% $2,311,663
Comdisco, Inc. 47% $1,901,383
Ash Grove Cement Company 69% $1,821,673
Cohu, Inc. 200% $1,534,906
Wesco Financial Corporation 58% $1,436,051
</TABLE>
Comdisco and Wesco Financial were relatively large, high confidence
investments we knew well and regarded as 'premier' companies in their respective
industries. In both cases, we built our positions when business conditions were
difficult and the investment community had voted negatively on future prospects.
Ash Grove Cement and Cohu were successful for different reasons. Both of these
companies have been long-term 'micro-cap' investments of the Fund's portfolio
that finally caught the attention of others. Finally, in the case of Indigo, we
took advantage of a cold response to this company's initial public offering.
Later, we sold our position to a frenzied crowd who had become enamored with
this company's new printing technology.
GOOD IDEAS AT THE TIME
Our greatest opportunities often occur when we identify good
[GRAPHIC] businesses which have fallen from favor due to some sort of short-
term, but correctable, problem. Even the best small-cap companies
are not immune to the flu. Usually, if their balance sheets are strong and they
have a solid history of high internal returns, these companies will rebound.
Although recoveries can take longer than we anticipate, we are generally
rewarded for our persistence. Unfortunately, a few of our investments never
recover. The five WORST PERFORMERS in 1995, as measured by dollar impact, were:
<TABLE>
<CAPTION>
SECURITY % LOSS $ LOSS
- ------------------------------- ------ --------
<S> <C> <C>
Midwest Grain Products, Inc. 79% $889,995
K-Swiss, Inc. 45% $814,147
The Stride Rite Corporation 33% $690,799
Quaker Chemical Corporation 25% $532,187
Charming Shoppes, Inc., 57% $514,043
</TABLE>
Of these five losers, Midwest Grain Products appears to have the best
prospects for a quick and full recovery. Its problems and performance stem from
a difficult year in the prices and quantities of the grains it processes. We
sold our position to realize the loss but have since repurchased the stocks.
While the weatherman may have more insight to Midwest's short-term prospects, we
remain confident in the long-run. Quaker Chemical lost its President and CEO and
then reported disappointing results. We are hopeful that new management can turn
around this once successful specialty chemical company. Lastly, K-Swiss, Stride
Rite, and Charming Shoppes have all suffered so deeply from current conditions
in the retailing and apparel industries that they now reside in the intensive
care ward of our portfolio. Needless to say, a full recovery in
these positions may stretch even our patience. The good news is that our biggest
winners more than overshadowed our largest mistakes. Further, in aggregate, our
five worst investments combined had less than a 1.3% impact on the Fund's 1995
performance.
ANYTHING BUT TYPICAL
What do you get when interest rates fall precipitously, inflation is low,
demand for equities is strong and corporate earnings outpace analysts'
estimates? Answer: the LAST FIVE YEARS (actually the last 5 1/4 years)! The last
five years have been an exceptional period for equity investing, one in which
all the 'right stuff' was in place. Consider the following:
There has not been a correction of 10% or more for the S&P 500 or 15% or more
for the Russell 2000 since October of 1990, the longest stretch ever for both
indices.
The last five years were an anomaly in that a full market cycle did not take
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place, but rather a trough (bottom) to peak (top) experience only.
It was the best (in terms of return and duration) trough to peak period in
the 17 year history of the Russell 2000.
It was only the 8th time out of 49 quarterly trailing five year return
periods that the Russell 2000 generated a 20%+ average annual return.
Within this market cycle, short-term interest rates had one of their most
significant declines -- three month T-bills went from 8.2% in September 1989
to 2.7% in September 1992.
It was one of the least volatile periods on record, and especially so in the
years 1993, 1994 and 1995.
Very simply, the last five years were a period in which risk and reward were
synonymous and one in which risk management provided virtually no benefit. It's
highly likely that we have completed the best five year performance period for
this decade.
CAUSE OR EFFECT
An interesting aspect of this five year rise in both stocks
[GRAPHIC] and bonds is the ever increasing participation of individual
investors. Demand for liquid securities has grown to
proportions that now cloud our understanding as to whether it is the cause or
the effect of this bull market. While it seemed clear several years ago that
repeated and uninterrupted gains in stocks and bonds would heighten mass appeal,
few predicted the growing appetite we have today. Now, armed with demographic
studies and a healthy dose of 20-20 hindsight, it is the consensus belief that
our population has become a nation of savers and that demand for stocks will
remain steady, if not grow. In fact, it is that very same demand which is
believed to ensure future success and prevent any major reversal in market
fortunes.
We are a bit uncomfortable with this widely held assumption of continuous
prosperity. Just as rising markets initially created greater demand for
equities, corrections could dampen enthusiasm. We think there may be limits as
to how long individuals will forgo consumption in pursuit of savings.
Furthermore, we know there are alternative investments, like real estate or
natural resources, at times more attractive, for individuals to pursue. Finally,
we are certain, particularly in a global economy, that an ample supply of
securities can be created to meet and even exceed investors' demands. The
suggestion that continued success is nearly guaranteed by demand is an absurd
proposition. WE REMAIN MOST ASTONISHED, NOT WITH THE MAGNITUDE OF INVESTOR
APPETITE FOR STOCKS, BUT THE NEARLY UNIVERSAL ASSUMPTION OF ITS PERMANENCE. THE
REAL WORLD IS CYCLICAL AND SO ARE ITS MARKETS.
A NEW ERA ?
As the bull market enters its sixth year
uninterrupted by normal corrections, we find [GRAPHIC]
ourselves asking (and more to the point,
others asking us) is this a new era in investing? Have changes in
national demographics and attitudes and, therefore, investing patterns evolved
to the point where traditional assumptions are obsolete? By sticking to our own
time tested and cycle proven discipline, have we become the 'Clark Kent' of the
investment world, permanently nerdy within the new order?
We believe fundamental economic principles and human nature remain unchanged
in the '90s. Our national economy has not entered a new era of accelerated
growth. In fact, we would argue the opposite. American corporations, despite
restructuring and down-sizing, are not measurably more profitable if cumulative
retained earnings are any gauge. We still believe that individual investors are
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motivated by fear and greed. In the current environment, greed has driven fear
from the investment dictionary.
Before long, we expect some normal balance in people's spending habits to
resume. Appetites for mutual fund investing may moderate in favor of consumption
or debt repayments. Weak sectors of our economy like apparel retailing and
infrastructure construction will recover. Basic commodity prices could rise and
equities would once again represent long-term interests in business, as opposed
to trading vehicles. Absolute return goals, previously forgotten, will regain
the spotlight.
THE NEXT FIVE YEARS WILL BE DIFFERENT
'It is not the going out of port, but the coming in, that determines the
success of a journey.' Henry Ward Beecher
It's not likely that the next five years will rival the previous five in
terms of 'ideal wind conditions' or 'spectacular performance.' History tells us
that periods of high valuation and high return are usually followed by periods
of lower, less dynamic returns. Historical performance returns are built with
periods of over-performance and periods of under-performance and, over the
long-term, small-cap stocks have averaged approximately 12.5% per annum, not the
20% provided by the last five years. (1926 - 1995; source: Ibbotson and
Associates). We see no reason why performance should not revert to the mean and,
thus, a period of lower five year returns is likely.
The primary driver behind the most recent rally (and almost 15 years of a
strong market) has been interest rates. Although short-term rates remain at the
lower end of their trading range, it's the change in interest rates and not the
absolute level, which drives price earnings multiples and stock prices. The
magnitude of the decline in interest rates is virtually not repeatable.
Consequently, a further decline in interest rates will not have the same
favorable impact on stock prices, no matter how bullish one is on rates.
IMPACT OF INTEREST RATES ON STOCK MARKET PERFORMANCE
[DOW JONES GRAPH GOES HERE]
LONG-TERM GOVERNMENT BOND YIELDS AND DOW JONES INDUSTRIAL AVERAGE
The last five years were also unique in that never in our nation's history
have so many traditional bank savers become stock market investors. The primary
reason for the massive level of CD conversions has been the high returns
afforded stock market investors compared to the declining returns available in
traditional bank products. A strong contributing factor has been the stock
market's lack of volatility. Volatility has been so low that new investors have
been lulled by the apparent 'safety' of equity investing. Volatility, which has
always been a part of the investment equation, is likely to resurface and resume
a more normal course as background conditions change.
TIME FOR CHANGE . . . WE THINK NOT
We have been discussing what has
happened. Now it's time to [GRAPHIC]
talk about what has not happened.
First, we have not changed our investment time horizon even though it seems
the rest of the world has. We view companies and investment performance with the
same long-term horizon because attractive valuations and returns, like the
planting and harvesting seasons, are never one and the same. Although our
risk-averse approach has worked against us in the most recent per-
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formance period, it has provided very decent returns in the context of history.
Second, we have not changed our underlying investment premise, that a
disciplined approach to investing in high quality, small-cap companies using
absolute valuation standards can provide attractive long-term returns.
Experience tells us that failure to 'stay the course' results in failure.
Third, the natural laws of gravity and market cycles have not been rescinded.
And finally, our confidence in the ultimate outcome of our approach has not
changed. We expect our approach to small-cap investing to have both an absolute
and relative pay-off as it has in the past. Your continued confidence is
appreciated.
Yours faithfully,
<TABLE>
<C> <S>
CHARLES M. ROYCE Jack E. Fockler, Jr.
Charles M. Royce W. Whitney George
President Vice Presidents
</TABLE>
February 15, 1996
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NOTE: S&P 500 and Russell 2000 are unmanaged indices and include the
reinvestment of dividends.
* Morningstar proprietary risk ratio, beta and standard deviation are measures
of a fund's relative risk and are calculated for the trailing 36-month period.
Morningstar risk ratio measures a fund's downside volatility relative to all
equity funds which have an average score of 1.00. Beta is a measure of
sensitivity to market movements compared to the unmanaged S&P 500 index, with
the Beta of the S&P 500 equal to 1.00. Standard deviation is a statistical
measure within which a fund's total return falls. The average Morningstar risk
ratio, beta and standard deviation for the 33 domestic equity closed end funds
with a three-year history as of 12/31/95 were: 0.60, 0.85 & 11.97,
respectively. The Morningstar risk ratio, beta and standard deviation for
Royce Value Trust over the same period were: 0.27, 0.56 & 6.49, respectively.
Source: Morningstar, Inc.
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<TABLE>
<CAPTION>
FUND HIGHLIGHTS December 31, 1995
------------------
<S> <C> <C>
Net Assets $338,970,351
Net Asset Value Per Share $13.56
Market Price Per Share $11.875
Shares Outstanding 24,836,018
</TABLE>
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FINANCIAL REVIEW
The table below represents the total returns of the Fund on two separate bases.
NAV total return is the compound rate of return, using net asset values, on an
amount invested in the Fund throughout the stated period and assumes
reinvestment of dividend and capital gain distributions and primary
participation in rights offerings. Stockholders are able to reinvest
distributions, and purchase shares through rights offerings, at prices which
have historically been below NAV, and without commission costs. NAV return is
the most meaningful measurement of a continuous stockholder's progress. Market
Value total return presents similar information, but values the Fund at market
rather than NAV and therefore, reflects the actual experience of a stockholder,
before commission costs, who bought and sold shares of the Fund at the beginning
and ending dates.
<TABLE>
<CAPTION>
NAV Market Value S&P Russell S&P Small-
Total Return Total Return 500`D' 2000`D' Cap 600`D'
------------ ------------ ----- --------- ----------
<S> <C> <C> <C> <C> <C>
Total Returns
3 months ended 12/31/95 0.8% -1.8% 5.9% 2.2% 0.4%
6 months ended 12/31/95 8.6 10.5 14.4 12.3 13.3
1995 22.6 20.5 37.5 28.4 30.0
1994 1.1 -5.6 1.3 -1.8 -4.8
1993 17.9 14.8 10.0 18.9 18.8
1992 19.9 26.8 7.7 18.4 21.0
1991 39.5 35.3 30.5 46.1 48.5
1990 -13.1 -10.8 -3.2 -19.5 -23.7
Average Annual Total Returns (ended December 31, 1995)
3-year 13.5% 9.3% 15.3% 14.5% 13.7%
5-year 19.6 17.5 16.6 21.0 21.5
Since inception* 12.3 9.5 13.9 11.5 9.6
</TABLE>
`D' The S&P 500, Russell 2000 and S&P SmallCap 600 are unmanaged indices and
include the reinvestment of dividends. Source: Frank Russell Co.
* Inception date - November 26, 1986
The results presented in this report represent past performance and should not
be considered representative of the 'total return' from an investment in the
Fund today. They are provided only to give an historical perspective of the
Fund. The investment return and net asset and market values of Fund shares will
fluctuate, so that the shares may be worth more or less than their original cost
when sold.
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HISTORY SINCE INCEPTION
The following table details the share accumulation history of an initial
investor in the Fund who reinvested all distributions and participated fully in
the rights offering. By reinvesting all distributions and fully participating in
the rights offerings, an investor maximizes his returns. This table should be
read in conjunction with the Financial Review of the Fund (see page 8).
<TABLE>
<CAPTION>
Amount Purchase NAV MKT
History Invested Price Shares Value* Value*
------------------- -------- -------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
11/26/86 Initial Purchase $10,000 $10.000 1,000 $ 9,280 $10,000
10/15/87 Distribution $.30 7.000 42
12/31/87 Distribution $.22 7.125 32 8,578 7,250
12/27/88 Distribution $.51 8.625 63 10,529 9,238
09/22/89 Rights Offering 405 9.000 45
12/29/89 Distribution $.52 9.125 67 12,942 11,866
09/24/90 Rights Offering 457 7.375 62
12/31/90 Distribution $.32 8.000 52 11,713 11,074
09/23/91 Rights Offering 638 9.375 68
12/31/91 Distribution $.61 10.625 82 17,919 15,697
09/25/92 Rights Offering 825 11.000 75
12/31/92 Distribution $.90 12.500 114 21,999 20,874
09/24/93 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
11/03/95 Rights Offering 1,425 12.500 114
12/07/95 Distribution $1.29 12.125 253
- ---------------------------------------------------------------------------------------------
12/31/95 $16,322 2,631 $35,676 $31,243
- ---------------------------------------------------------------------------------------------
</TABLE>
* Other than for initial purchase, values are stated as of December 31 of the
year indicated, after reinvestment of distributions.
The Board of Directors has given the Fund's management the discretionary
authority to cause the Fund to repurchase up to 300,000 shares of its common
stock in open market and other transactions through December 31, 1996. Such
repurchases would be effected at a price per share less than the then current
net asset value, but not in excess of the then prevailing market price.
------------------------
The Board of Directors of the Fund is authorized to offer stockholders an
opportunity to subscribe for additional shares of common stock of the Fund
through rights offerings at a price per share that may be less than the then
current net asset value of the Fund's common stock. The timing and terms of any
such offerings are left to the Board's discretion.
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DISTRIBUTION REINVESTMENT AND CASH PURCHASE PLAN
WHAT IS THE DISTRIBUTION REINVESTMENT AND CASH PURCHASE PLAN?
Distributions of net investment income, if any, and capital gains are
normally made in December. The Fund's Distribution Reinvestment and Cash
Purchase Plan (the 'Plan') offers you an automatic way to reinvest your
dividends and capital gains distributions in additional shares of the Fund,
increasing your holdings in the Fund. Reinvestment of the annual distribution is
done at market price, without commissions. The number of shares to be issued to
a stockholder will be determined by dividing the amount of the distribution
payable to the stockholder by the last reported sale price of a share of the
Fund's common stock on the valuation date, which follows the record date.
The plan also allows registered stockholders to make optional cash
investments in shares of the Fund's common stock through the Plan Agent and to
deposit certificates representing Fund shares with the Plan Agent for
safekeeping. Stockholders should refer to the Plan document for information on
these options.
HOW DO REGISTERED STOCKOLDERS PARTICIPATE IN THE PLAN?
If your shares are registered directly with the Fund, you are automatically
a participant in the Plan unless you have instructed the Plan Agent in writing
otherwise. The Plan Agent must receive the instructions not less than 10 days
prior to the record date for a distribution in order to be effective for that
distribution. A registered stockholder may also receive the distribution in the
form of a stock certificate for the full shares and a check for the fractional
share if the Plan Agent is properly notified. Stockholders who elect to not
participate in the Plan will receive all distributions in cash, paid by check
and mailed directly to the stockholder by State Street Bank and Trust Company,
dividend paying agent and Plan Agent.
WHAT IF MY SHARES ARE HELD BY A BROKERAGE FIRM, BANK OR OTHER NOMINEE?
If your shares are held in the name of a brokerage firm, bank, or other
nominee as the stockholder of record, we still expect them to automatically
reinvest distributions on your behalf. Please consult with your brokerage firm,
bank or other nominee to be certain that it is reinvesting distributions on your
behalf. If your nominee is unable to reinvest distributions on your behalf, you
should instruct your nominee to have your shares registered in your name in
order to participate.
HOW WILL I KNOW HOW MANY SHARES I HAVE?
The Plan Agent maintains the account for registered stockholders in the
Plan and sends written confirmation of all transactions in the account,
including information needed by participants for personal and tax records.
Shares in the account of each participant will be held by the Plan Agent in
non-certificated form in the name of the participant, and each participant will
be able to vote those shares at a shareholder meeting or by proxy. A participant
may also send other stock certificates held by them to the Plan Agent to be held
in non-certificated form. There is no service fee charged to participants for
reinvesting distributions. The Plan Agent's fees for the processing of the
distribution reinvestment are paid for by the Fund. A participant may terminate
his account under the Plan by written notice to the Plan Agent. Termination will
be effective as described in the Plan. If a participant elects to sell his
shares before the Plan is terminated, the Plan will deduct a $2.50 fee plus
brokerage commissions from the sale transaction. If a nominee is the registered
owner of your shares, the nominee will maintain the accounts on your behalf.
WHAT IF I NEED MORE INFORMATION?
You may obtain more detailed information by requesting a copy of the Plan
from the Plan Agent. All correspondence (including notifications) should be
directed to: Royce Value Trust, Inc. Distribution Reinvestment and Cash Purchase
Plan, c/o State Street Bank and Trust Company, PO Box 8200, Boston MA
02266-8200, (800) 426-5523.
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PORTFOLIO SUMMARY
The following information is provided as a 'bird's eye' view of the RVT
portfolio. For a more complete picture, the full portfolio and accompanying
financial statements should be read in their entirety.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
% of Common % of Total
Stocks Value Investments
------------- --------------- ---------------
<S> <C> <C> <C>
Top 100 Stocks.................................. 63.7% $ 224,883,905 59.1%
Other Stocks.................................... 36.3 128,232,963 33.7
------------- --------------- ---------
Common Stocks................................... 100.0% 353,116,868 92.8
-------------
-------------
Bonds & Preferred Stocks........................ 5,461,828 1.5
Repurchase Agreement............................ 21,748,000 5.7
--------------- ---------
Total Investments............................... $ 380,326,696 100.0%
--------------- ---------
--------------- ---------
</TABLE>
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PORTFOLIO DIAGNOSTICS
<TABLE>
<S> <C>
Weighted Average Market Capitalization (Total Portfolio).......... $339 Million
Median Market Capitalization (Total Portfolio).................... $180 Million
Weighted Average P/E Ratio (100 Largest Positions)................ 13.6x
Weighted Average P/B Ratio (100 Largest Positions)................ 1.6x
Weighted Average Portfolio Yield (100 Largest Positions).......... 1.7%
</TABLE>
- --------------------------------------------------------------------------------
COMMON STOCK SECTORS
<TABLE>
<CAPTION>
% of Net Assets
----------------
<S> <C>
Financial......................................................... 27.0%
Industrial Cyclicals.............................................. 24.5
Services.......................................................... 14.7
Consumer Durables................................................. 12.7
Retail............................................................ 8.8
Technology........................................................ 5.8
Consumer Staples.................................................. 4.7
Energy............................................................ 3.7
Health............................................................ 2.2
Utilities......................................................... 0.1
</TABLE>
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TOP TWENTY POSITIONS
<TABLE>
<CAPTION>
Market Value % of Net Assets
--------------- ---------------
<C> <S> <C> <C>
1. Ash Grove Cement Company..................................... $6,349,035 1.9%
2. Comdisco,Inc................................................. 5,928,881 1.7
3. Wesco Financial Corporation.................................. 3,913,000 1.2
4. Florida Rock Industries, Inc................................. 3,644,550 1.1
5. Baldwin & Lyons, Inc. Cl. B.................................. 3,508,375 1.0
6. E.W. Blanch Holdings, Inc.................................... 3,356,650 1.0
7. Alleghany Corporation........................................ 3,343,824 1.0
8. Vallen Corporation........................................... 3,283,832 1.0
9. Pennsylvania Manufacturers Corporation....................... 3,274,050 1.0
10. National Bancorp of Alaska, Inc.............................. 3,235,050 1.0
11. The Standard Register Company................................ 3,135,475 0.9
12. Fab Industries, Inc.......................................... 3,123,750 0.9
13. Trenwick Group Inc........................................... 3,121,875 0.9
14. The Rival Company............................................ 3,119,625 0.9
15. Transnational Re Corporation Cl. A........................... 3,072,300 0.9
16. Juno Lighting, Inc........................................... 3,070,400 0.9
17. W.R. Berkley Corp............................................ 3,004,625 0.9
18. The Pioneer Group, Inc....................................... 2,921,200 0.9
19. Stanhome Inc................................................. 2,883,375 0.9
20. Curtiss-Wright Corporation................................... 2,870,250 0.8
</TABLE>
11
<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
12
<PAGE>
<PAGE>
ROYCE VALUE TRUST, INC.
Financial Statements
13
<PAGE>
<PAGE>
ROYCE VALUE TRUST, INC.
SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1995
- --------------------------------------------------------------------------------
COMMON STOCKS -- 104.2%
<TABLE>
<CAPTION>
Value
Shares (Note 1)
- ---------- ------------
<C> <S> <C>
CONSUMER DURABLES -- 12.7%
31,590 Allen Organ Company Cl.
B........................ $ 1,330,706
49,600 Arctco, Inc................ 644,800
77,309 *Bell Industries, Inc....... 1,739,453
46,500 Delta Woodside Industries,
Inc...................... 308,063
124,400 *Ethan Allen Interiors
Inc...................... 2,534,650
95,536 First Years Inc............ 2,077,908
41,000 Flexsteel Industries,
Inc...................... 420,250
99,400 Garan Incorporated......... 1,677,375
65,700 *Johnson Worldwide
Associates, Inc. Cl. A... 1,478,250
191,900 Juno Lighting, Inc......... 3,070,400
148,400 K-Swiss Inc. Cl. A......... 1,613,850
20,000 Kinetic Concepts, Inc...... 240,000
120,800 *Lazare Kaplan
International, Inc....... 958,850
191,336 *Lifetime Hoan
Corporation.............. 1,769,858
25,000 *Marisa Christina,
Incorporated............. 425,000
54,700 Matthews International
Corporation Cl. A........ 1,066,650
35,500 National Presto Industries,
Inc...................... 1,411,125
63,375 Rauch Industries, Inc...... 800,109
34,500 Reebok International
Ltd...................... 974,625
141,000 The Rival Company.......... 3,119,625
3,000 *River Oaks Furniture....... 18,750
30,700 Russ Berrie and Company,
Inc...................... 387,588
43,700 The Singer Company N.V..... 1,218,138
115,700 Skyline Corporation........ 2,400,775
168,400 The Stride Rite
Corporation.............. 1,263,000
83,600 Sturm, Ruger & Company,
Inc...................... 2,288,550
158,400 Thomaston Mills, Inc. Cl.
A........................ 1,999,800
2,000 Thomaston Mills, Inc. Cl.
B........................ 27,000
125,700 Thor Industries, Inc....... 2,435,438
30,500 Tiffany & Co............... 1,536,438
129,500 *The Topps Company, Inc..... 663,688
30,200 Weyco Group, Inc........... 1,185,350
------------
43,086,062
------------
CONSUMER STAPLES -- 4.7%
68,000 Alico, Inc................. 1,785,000
11,500 Farmer Bros. Co............ 1,569,750
19,350 Flowers Industries, Inc.... 234,619
79,800 *Fuqua Enterprises, Inc..... 1,486,275
30,000 Golden Enterprises, Inc.... 243,750
563 Hershey Creamery Company... 928,950
52,200 *J & J Snack Foods Corp..... 574,200
157,600 *Midwest Grain Products,
Inc...................... 2,206,400
99,600 *Pentech International,
Inc...................... 199,200
4,050 Seaboard Corporation....... 1,073,250
99,000 Stanhome Inc............... 2,883,375
1,000 *Thorn Apple Valley,
Inc...................... 16,750
8,996 Tootsie Roll Industries,
Inc. Cl. A............... 356,467
35,600 Velcro Industries N.V...... 2,180,500
<CAPTION>
Value
Shares (Note 1)
- ---------- ------------
<C> <S> <C>
20,000 WLR Foods, Inc............. $ 330,000
------------
16,068,486
------------
ENERGY -- 3.7%
144,200 *American Oilfield Divers,
Inc...................... 1,027,425
70,000 *Belden & Blake
Corporation.............. 1,225,000
69,400 *Tom Brown, Inc............. 1,014,975
76,100 Camco International Inc.... 2,130,800
87,500 *Cliffs Drilling Company.... 1,301,563
31,400 Devon Energy Corporation... 800,700
28,000 *Gulfmark International
Inc...................... 693,000
64,200 Lufkin Industries, Inc..... 1,452,525
6,700 *Nabors Industries, Inc..... 74,538
59,100 *Noble Drilling
Corporation.............. 531,900
54,300 Penn Virginia
Corporation.............. 1,751,175
17,500 *Pool Energy Services
Co....................... 166,250
6,700 *Tide West Oil Company...... 89,613
19,900 Western Gas Resources,
Inc...................... 320,888
------------
12,580,352
------------
FINANCIAL -- 27.0%
10,000 Alexander & Alexander
Services Inc............. 190,000
16,888 *Alleghany Corporation...... 3,343,824
50,750 ALLIED Group, Inc.......... 1,827,000
94,000 ALLIED Life Financial
Corporation.............. 1,703,750
45,474 Argonaut Group, Inc........ 1,477,905
36,856 *Avatar Holdings Inc........ 1,289,960
15,000 BHC Financial, Inc......... 270,000
46,100 BHI Corporation............ 726,075
60,000 Baker, Fentress &
Company.................. 1,005,000
215,900 Baldwin & Lyons, Inc. Cl.
B........................ 3,508,375
50,000 *Benson Financial
Corporation.............. 937,500
55,900 W. R. Berkley Corp......... 3,004,625
143,600 E.W. Blanch Holdings,
Inc...................... 3,356,650
12,500 CB Bancshares, Inc......... 362,500
13,600 CMAC Investment
Corporation.............. 598,400
28,475 California Bancshares,
Inc...................... 756,367
91,850 Capitol Transamerica
Corporation.............. 1,859,963
262,050 Comdisco, Inc.............. 5,928,881
95,518 The Commerce Group, Inc.... 1,970,059
7,800 Consolidated-Tomoka Land
Co....................... 132,600
8,282 County Bank Corp........... 246,390
65,100 Eaton Vance Corp........... 1,839,075
40,000 Fidelity National
Financial, Inc........... 745,000
215 The First National Bank of
Anchorage................ 328,950
38,500 Fremont General
Corporation.............. 1,414,875
45,400 Arthur J. Gallagher &
Co....................... 1,691,150
73,645*`D'General Builders
Corporation.............. 55,234
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
<PAGE>
ROYCE VALUE TRUST, INC.
SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 1)
- ---------- ------------
FINANCIAL-(CONT'D)
<C> <S> <C>
114,000 *Gryphon Holdings Inc....... $ 2,194,500
104,700 Guaranty National
Corporation.............. 1,609,763
28,015 Harleysville Group, Inc.... 906,986
202,475 Hilb, Rogal & Hamilton
Company.................. 2,708,103
31,081 Independence Holding
Company.................. 116,554
131,100 Intercargo Corporation..... 1,311,000
23,221 Investors Financial
Services Corp............ 481,836
3,502 Investors Financial
Services Corp. Cl. A..... 72,674
7,400 The John Nuveen Company.... 183,150
20,712 Keystone Heritage Group,
Inc...................... 631,716
47,500 Lawyers Title
Corporation.............. 908,438
26,000 Leucadia National
Corporation.............. 650,000
33,500 *MAIC Holdings, Inc......... 1,139,000
200 THE MECHANICS BANK......... 1,100,000
23,800 NYMAGIC, INC............... 404,600
49,770 National Bancorp of Alaska,
Inc...................... 3,235,050
59,500 New England Investment
Companies, L.P........... 1,256,938
79,300 The Newhall Land and
Farming Company.......... 1,348,100
114,500 Nobel Insurance Limited.... 1,302,438
45,600 Oriental Federal Savings
Bank..................... 752,400
55,987 Orion Capital
Corporation.............. 2,428,436
179,400 Pennsylvania Manufacturers
Corporation.............. 3,274,050
98,100 Phoenix Duff & Phelps
Corporation.............. 674,438
107,200 The Pioneer Group, Inc..... 2,921,200
43,512 Poe & Brown, Inc........... 1,082,361
19,250 RLI Corp................... 481,250
75,000 *Rand Capital
Corporation.............. 262,500
6,400 Raymond James Financial,
Inc...................... 135,200
15,356 *Reliance Group Holdings,
Inc...................... 30,712
27,700 Student Loan Corporation... 941,800
26,400 Susquehanna Bancshares,
Inc...................... 699,600
36,750 Titan Holdings, Inc........ 528,281
129,600 *Toreador Royalty
Corporation.............. 340,200
5,000 Transatlantic Holdings,
Inc...................... 366,875
125,400 Transnational Re
Corporation Cl. A........ 3,072,300
55,500 Trenwick Group Inc......... 3,121,875
26,200 U. S. Trust Corp........... 1,303,450
7,550 Vornado Realty Trust....... 283,125
21,500 Wesco Financial
Corporation.............. 3,913,000
124,800 **Willis Corroon Group plc
ADR...................... 1,450,800
62,700 Zenith National Insurance
Corp..................... 1,340,213
------------
91,535,020
------------
<CAPTION>
Value
Shares (Note 1)
- ---------- ------------
<C> <S> <C>
HEALTH -- 2.2%
53,700 Diagnostic Products
Corporation.............. $ 2,033,888
54,200 *HAEMONETICS CORPORATION.... 962,050
104,800 Life Technologies, Inc..... 2,855,800
47,200 *Spacelabs Medical, Inc..... 1,357,000
10,000 *Unison HealthCare
Corporation.............. 93,750
------------
7,302,488
------------
INDUSTRIAL CYCLICALS -- 24.5%
28,490 Aceto Corporation.......... 455,840
2,501 R. P. Adams Company,
Inc...................... 57,523
50,200 American Filtrona
Corporation.............. 1,731,900
27,800 Ameron, Inc................ 1,045,975
45,000 *Art's-Way Manufacturing
Co., Inc................. 236,250
16,450 Ash Grove Cement Company... 1,891,750
38,759 Ash Grove Cement Company
Cl. B.................... 4,457,285
19,300 Guy F. Atkinson Company of
California............... 193,000
42,900 BHA Group, Inc. Cl. A...... 568,425
15,300 Banister Foundation Inc.... 93,713
25,200 *Bird Corp.................. 116,550
116,600 Blessings Corporation...... 1,209,725
83,100 W. H. Brady Co. Cl. A...... 2,243,700
24,000 Burnham Corporation Cl.
A........................ 588,000
18,000 *Burnham Corporation Cl.
B........................ 441,000
68,000 CalMat Co.................. 1,241,000
36,400 Cascade Corp............... 509,600
76,646 *Chemfab Corporation........ 1,609,566
19,700 CLARCOR Inc................ 401,388
2,000 ConBraCo Industries,
Inc...................... 1,100,000
52,950 *Conso Products Co.......... 966,338
53,400 Curtiss-Wright
Corporation.............. 2,870,250
6,022 Decker Manufacturing
Corporation.............. 225,825
19,432 *Detection Systems, Inc..... 114,163
98,000 Fab Industries, Inc........ 3,123,750
124,600 Florida Rock Industries,
Inc...................... 3,644,550
30,300 *Fruit of The Loom, Inc.
Cl. A.................... 738,563
31,400 Gilbert Associates, Inc.
Cl. A.................... 392,500
87,300 P. H. Glatfelter Company... 1,495,013
24,800 Gorman-Rupp Company........ 384,400
25,000 Haskel International, Inc.
Cl. A.................... 146,875
119,019 Hawkins Chemical, Inc...... 1,100,926
12,500 *Hirsch International Corp.
Cl. A.................... 159,375
28,800 *Insituform Technologies,
Inc. Cl. A............... 334,800
43,600 International Aluminum
Corporation.............. 1,253,500
105,800 Kimball International, Inc.
Cl. B.................... 2,671,450
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
<PAGE>
ROYCE VALUE TRUST, INC.
SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 1)
- ---------- ------------
INDUSTRIAL CYCLICALS-(CONT'D)
<C> <S> <C>
60,800 *Kinark Corporation......... $ 178,600
79,750 Knape & Vogt Manufacturing
Company.................. 1,385,656
12,900 *Kreisler Manufacturing
Corp..................... 61,275
70,650 LeaRonal, Inc.............. 1,624,950
150,583 Lilly Industries, Inc. Cl.
A........................ 1,919,933
63,900 The Lincoln Electric
Company.................. 1,533,600
52,878 Liqui-Box Corporation...... 1,566,511
118,200 *MK Gold Company............ 295,500
39,553 MacDermid, Incorporated.... 2,353,404
40,000 *Mail-Well, Inc............. 490,000
20,100 Mine Safety Appliances
Company.................. 964,800
38,300 Paul Mueller Company....... 1,311,775
38,400 NCH Corporation............ 2,217,600
16,100 Nordson Corporation........ 905,625
37,600 Oil-Dri Corporation of
America.................. 587,500
68,700 Oshkosh Truck Corporation
Cl. B.................... 1,047,675
57,800 Peerless Mfg. Co........... 541,875
10,000 *Pegasus Gold Inc........... 138,750
1,000 Penn Engineering and
Manufacturing Corp....... 97,000
75,800 *Perini Corporation......... 625,350
23,400 Precision Castparts
Corp..................... 930,150
29,300 Preformed Line Products
Company.................. 1,025,500
83,300 Puerto Rican Cement
Company, Inc............. 2,759,313
103,750 Quaker Chemical
Corporation.............. 1,400,625
51,270 Robroy Industries, Inc. Cl.
A........................ 756,233
78,500 *Rollins Environmental
Services, Inc............ 225,688
4,000 Roto-Rooter, Inc........... 132,000
87,600 *Shorewood Packaging
Corporation.............. 1,248,300
126,700 *Simpson Manufacturing Co.,
Inc...................... 1,710,450
28,000 *Sinter Metals Sinter
Metals................... 346,500
59,500 The L. S. Starrett Company
Cl. A.................... 1,539,563
26,300 Tecumseh Products Company
Cl. A.................... 1,361,025
44,286 *Thermal Industries,
Inc...................... 398,574
67,000 *Total Containment, Inc..... 268,000
109,400 Treadco, Inc............... 629,050
59,800 *The Turner Corporation.... 500,825
4,308 United Screw and Bolt
Corporation.............. 295,098
167,329 *Vallen Corporation......... 3,283,832
73,700 Versa Technologies, Inc.... 1,123,925
900 Wausau Paper Mills
Company.................. 24,525
<CAPTION>
Value
Shares (Note 1)
- ---------- ------------
<C> <S> <C>
5,000 Wellman, Inc............... $ 113,750
33,800 Woodward Governor Company.. 2,484,300
52,900 Zero Corporation........... 938,975
------------
83,158,048
------------
RETAIL -- 8.8%
5,000 *Alexander's, Inc........... 347,500
13,000 J. Baker, Inc.............. 74,750
44,400 Blair Corporation.......... 1,404,150
26,900 *The Buckle, Inc............ 477,475
212,400 *CATHERINES STORES
CORPORATION.............. 1,752,300
1,200 Cato Corporation Cl. A..... 9,300
278,600 *Charming Shoppes, Inc...... 800,975
129,500 Claire's Stores, Inc....... 2,282,438
173,800 *The Clothestime, Inc....... 108,625
73,000 *Crown Books Corporation.... 894,250
17,400 Dart Group Corporation Cl.
A........................ 1,626,900
130,400 Deb Shops Inc.............. 448,250
283,200 *The Dress Barn, Inc........ 2,796,600
154,600 Family Dollar Stores,
Inc...................... 2,125,750
80,500 Frederick's of Hollywood,
Inc. Cl. A............... 342,125
188,632 Frederick's of Hollywood,
Inc. Cl. B............... 730,949
57,000 *InterTAN Inc............... 413,250
155,800 *Little Switzerland,
Inc...................... 603,725
144,600 *Mikasa, Inc. Cl. B......... 1,952,100
47,457 *Monro Muffler Brake,
Inc...................... 658,466
49,000 *Orchard Supply Hardware
Stores Corporation....... 1,010,625
15,900 Oshkosh B'Gosh, Inc. Cl.
A........................ 278,250
9,000 Oshkosh B'Gosh, Inc. Cl.
B........................ 168,750
185,805 Pier 1 Imports, Inc........ 2,113,532
28,000 Rykoff-Sexton, Inc......... 490,000
191,300 *Stein Mart, Inc............ 2,104,300
27,183 Strawbridge & Clothier Cl.
A........................ 652,392
116,600 *Suzy Shier Ltd............. 252,207
226,800 *TBC Corporation............ 1,956,150
154,100 *The Wet Seal, Inc. Cl.
A........................ 1,040,175
------------
29,916,259
------------
SERVICES -- 14.7%
79,712 Air Express International
Corporation.............. 1,833,376
21,500 AMRESCO Holdings, Inc...... 274,125
132,048 Arnold Industries, Inc..... 2,294,334
82,800 Atlantic Southeast
Airlines, Inc............ 1,780,200
52,700 Bowl America Incorporated
Cl. A.................... 401,838
5,000 Comair Holdings, Inc....... 133,313
10,000 Cracker Barrel Old Country
Store, Inc............... 172,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
<PAGE>
ROYCE VALUE TRUST, INC.
SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 1)
- ---------- ------------
SERVICES-(CONT'D)
<C> <S> <C>
19,200 *Jenny Craig, Inc........... $ 189,600
100,100 Crawford & Company Cl. A... 1,601,600
31,800 Crawford & Company Cl. B... 516,750
115,600 Dames & Moore.............. 1,401,650
93,800 Ennis Business Forms,
Inc...................... 1,149,050
99,700 *FRP Properties, Inc........ 2,043,850
167,800 *FCA International Ltd...... 381,408
2,600 Fisher Companies Inc....... 195,000
16,900 Florida East Coast
Industries, Inc.......... 1,153,425
220,935 Frozen Food Express
Industries, Inc.......... 1,933,181
13,817 Grey Advertising Inc....... 2,763,400
20,304 Hardinge Brothers, Inc..... 527,904
56,325 The Harper Group........... 999,769
35,700 *Hornbeck Offshore
Services, Inc............ 700,613
27,500 *IHOP Corp.................. 715,000
76,100 *International Dairy Queen,
Inc. Cl. A............... 1,731,275
10,000 *International Family
Entertainment, Inc. Cl.
B........................ 163,750
92,850 *JOULE' Inc................. 464,250
10,000 *KLLM Transport Services,
Inc...................... 105,000
39,500 Kenan Transport Company.... 849,250
40,300 Lawson Products, Inc....... 987,350
32,500 *Marshall Industries........ 1,044,063
53,400 McClatchy Newspapers, Inc.
Cl. A.................... 1,221,525
123,700 Merrill Corporation........ 1,979,200
99,000 *MovieFone, Inc. Cl. A..... 544,500
13,500 New England Business
Service, Inc............. 295,313
9,300 *Nichols Research
Corporation.............. 239,475
166,400 *Offshore Logistics,
Inc...................... 2,100,800
9,900 *PAYCO AMERICAN
CORPORATION.............. 89,100
72,600 Plenum Publishing
Corporation.............. 2,831,400
173,500 Richardson Electronics,
Ltd...................... 1,865,125
56,350 *SEATTLE FILMWORKS, Inc..... 1,169,263
167,900 Sotheby's Holdings, Inc.
Cl. A.................... 2,392,575
155,800 The Standard Register
Company.................. 3,135,475
30,000 *Steck-Vaughn Publishing
Corporation.............. 221,250
52,600 Stone & Webster, Inc....... 1,887,025
66,800 *The Union Corporation...... 1,235,800
------------
49,714,650
------------
TECHNOLOGY -- 5.8%
19,000 AAR CORP................... 418,000
12,700 *American Power Conversion
Corporation.............. 120,650
<CAPTION>
Value
Shares (Note 1)
- ---------- ------------
<C> <S> <C>
71,850 Astro-Med, Inc............. $ 664,613
34,081 BEI Electronics, Inc....... 251,347
16,500 Baldor Electric Company.... 332,063
129,605 *CSP Inc.................... 1,166,445
32,000 Communications Systems,
Inc...................... 504,000
50,200 *Comptek Research, Inc...... 423,563
16,200 *Dionex Corporation......... 919,350
103,950 *Exar Corporation........... 1,533,263
98,400 *Figgie International Inc.
Cl. A.................... 1,020,900
57,100 *Giga-tronics
Incorporated............. 449,663
97,500 *Group Technologies
Corporation.............. 243,750
15,000 Hach Company............... 258,750
25,289 *IFR Systems, Inc........... 233,923
64,400 *ILC Technology, Inc........ 595,700
26,300 *Integral Systems, Inc...... 670,650
41,700 Kaman Corporation Cl. A.... 463,913
105,000 Landauer Inc............... 2,283,750
67,400 *MDL Information Systems,
Inc...................... 1,550,200
9,400 MacNeal-Schwendler
Corporation.............. 150,400
20,350 Modern Controls, Inc....... 221,306
1,000 *National Instruments
Corp..................... 20,250
28,500 Newport Corporation........ 231,563
31,200 *Phoenix Technologies
Ltd...................... 491,400
67,200 *Programming & Systems,
Inc...................... 16,800
104,000*`D'Sage Laboratories,
Inc...................... 2,080,000
91,100 Scitex Corporation
Limited.................. 1,241,238
55,800 *Technical Communications
Corporation.............. 445,528
39,300 Woodhead Industries,
Inc...................... 560,025
------------
19,563,003
------------
UTILITIES -- .1%
10,000 *Compression Labs,
Incorporated............. 62,500
10,000 *Digital Systems
International Inc........ 130,000
------------
192,500
------------
Total Common Stocks
(Cost $273,502,941)...... 353,116,868
------------
PREFERRED STOCKS -- 0.5%
3,000 Bird Corp. $1.85 Conv. .... 57,000
10,000 Cliffs Drilling Company
$2.3125 Conv. Ex......... 275,000
41,000 Manville Corporation
$2.70 Ser. B Cum......... 1,030,125
249,205*`D'United Services
Advisors,
Inc. 5% Non Cum.......... 404,958
------------
Total Preferred Stocks
(Cost $1,337,017)........ 1,767,083
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
<PAGE>
ROYCE VALUE TRUST, INC.
SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
- ---------- ------------
CORPORATE BONDS -- 1.1%
<C> <S> <C>
$ 380,000 Ag Services Of America,
Inc.
7% Conv. Deb. Due
5/31/03.................. $ 421,800
824,000 Dixie Yarns, Inc.
7% Conv. Sub. Deb. due
5/15/12.................. 638,600
300,000 Figgie International Inc.
9.875% Sr. Note due
10/01/99................. 298,500
1,500,000 National Education
Corporation 6.50% Conv.
Sub. Deb. due 5/15/11.... 1,061,250
314,000 Reliance Group Holdings,
Inc.
9% Sr. Note due
11/15/00................. 324,990
1,073,000 Richardson Electronics,
Ltd.
7.25% Conv. Sub. Deb. due
12/15/06................. 949,605
------------
Total Corporate Bonds
(Cost $3,023,988)........ 3,694,745
------------
<CAPTION>
Value
(Note 1)
------------
<C> <S> <C>
REPURCHASE AGREEMENT -- 6.4%
State Street Bank and Trust Company,
5.25% due 1/02/96, collateralized by
U.S. Treasury Notes, 7.25% due
5/15/96, valued at $22,187,178 (Cost $ 21,748,000
$21,748,000)..........................
------------
TOTAL INVESTMENTS -- 112.2% (COST
$299,611,946)......................... 380,326,696
LIABILITIES LESS CASH AND OTHER
ASSETS -- (12.2%)..................... (41,356,345)
------------
NET ASSETS -- 100.0%.................... $338,970,351
------------
------------
</TABLE>
* Non-income producing.
** American Depository Receipt.
`D' At December 31, 1995, the Fund owned 5% or more of the Company's
outstanding shares thereby making the Company an affiliated person as that
term is defined in the Investment Company Act of 1940.
INCOME TAX INFORMATION -- The cost of total investments for federal income tax
purposes was $299,617,558. At December 31, 1995, net unrealized appreciation for
all securities was $80,709,138, consisting of aggregate gross unrealized
appreciation of $96,942,708 and aggregate gross unrealized depreciation of
$16,233,570.
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
<PAGE>
ROYCE VALUE TRUST, INC.
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1995
-----------------
<S> <C>
ASSETS:
Investments at value (identified cost $299,611,946).................................... $380,326,696
Receivable for investments sold........................................................ 2,545,663
Receivable for dividends and interest.................................................. 659,367
Prepaid expenses and other assets...................................................... 54,772
------------
Total Assets...................................................................... 383,586,498
------------
LIABILITIES:
Notes payable.......................................................................... 38,602,750
Interest payable....................................................................... 1,150,000
Payable for investments purchased...................................................... 4,510,920
Investment advisory fee payable........................................................ 92,076
Accrued expenses....................................................................... 260,401
------------
Total Liabilities................................................................. 44,616,147
------------
Net Assets........................................................................ $338,970,351
------------
------------
ANALYSIS OF NET ASSETS:
Undistributed net investment income.................................................... $ 577,253
Accumulated net realized gain on investments........................................... 3,079,510
Net unrealized appreciation on investments............................................. 80,714,750
Capital Stock (24,836,018 shares outstanding).......................................... 24,836
Additional paid-in capital............................................................. 254,574,002
------------
Net Assets........................................................................ $338,970,351
------------
------------
PRICING OF SHARES:
Net asset value per share, assuming conversion of Notes ($377,573,101[div]27,843,537
fully converted shares).............................................................. $13.56
------
------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
<PAGE>
ROYCE VALUE TRUST, INC.
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1995
-----------------
<S> <C>
INVESTMENT INCOME:
Income:
Dividends......................................................................... $ 6,052,705
Interest.......................................................................... 1,105,035
-----------
Total Income................................................................. 7,157,740
-----------
Expenses:
Investment advisory fee........................................................... 3,055,531
Interest expense.................................................................. 2,300,000
Amortization of underwriting discount and offering costs.......................... 164,980
Custodian and transfer agent fees................................................. 129,940
Administrative and clerical....................................................... 129,870
Legal and auditing fees........................................................... 122,057
Supplies and postage.............................................................. 109,947
Shareholder reports and notices................................................... 73,375
Miscellaneous..................................................................... 62,122
Directors' fees................................................................... 47,191
Facilities and office space....................................................... 36,608
Fees waived by investment adviser................................................. (104,206)
-----------
Total Expenses............................................................... 6,127,415
-----------
Net Investment Income........................................................ 1,030,325
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments.................................................. 32,580,075
Net unrealized appreciation on investments........................................ 29,032,226
-----------
Net realized and unrealized gain on investments................................... 61,612,301
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... $62,642,626
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
<PAGE>
ROYCE VALUE TRUST, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------
1995 1994
------------ ------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Net investment income.............................................. $ 1,030,325 $ 785,924
Net realized gain on investments................................... 32,580,075 21,004,491
Net unrealized appreciation (depreciation) on investments.......... 29,032,226 (19,255,498)
------------ ------------
Increase in net assets resulting from operations................... 62,642,626 2,534,917
Dividends paid from net investment income.......................... (693,347) (205,729)
Distributions paid from net realized gains......................... (29,124,623) (21,395,807)
FROM CAPITAL STOCK TRANSACTIONS:
Increase in net assets from capital stock transactions (Note 5).... 37,113,835 41,540,833
------------ ------------
INCREASE IN NET ASSETS.................................................. 69,938,491 22,474,214
NET ASSETS:
Beginning of year.................................................. 269,031,860 246,557,646
------------ ------------
End of year (including undistributed net investment income of
$577,253 and $240,275, respectively)............................. $338,970,351 $269,031,860
------------ ------------
------------ ------------
</TABLE>
STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
December 31, 1995
-----------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Investment income received........................................................ $ 7,160,221
Interest paid..................................................................... (2,300,000)
Payment of operating expenses..................................................... (3,833,393)
Purchases of investments.......................................................... (126,086,940)
Proceeds from sales and maturities of investments................................. 117,601,407
-------------
Cash used for operating activities........................................... $ (7,458,705)
-------------
-------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from rights offering (Note 5)............................................ 16,354,838
Cash dividends and distributions paid (net of reinvestments)...................... (8,949,065)
-------------
Cash provided by financing activities........................................ 7,405,773
-------------
Decrease in cash............................................................. (52,932)
Cash at beginning of year.................................................... 52,932
-------------
Cash at end of year.......................................................... $ 0
-------------
-------------
RECONCILIATION OF NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS TO CASH USED FOR
OPERATING ACTIVITIES:
Net increase in net assets resulting from operations.............................. $ 62,642,626
Net increase in investments....................................................... (47,836,941)
Net increase in unrealized appreciation on investments............................ (29,032,226)
Decrease in dividends and interest receivable..................................... 2,481
Decrease in receivable for investments sold....................................... 5,280,688
Accretion of organization costs................................................... 164,980
Increase in payable for investments purchased..................................... 1,476,100
Decrease in accrued expenses and other assets..................................... (156,413)
-------------
Cash used for operating activities........................................... $ (7,458,705)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
<PAGE>
ROYCE VALUE TRUST, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
This table is presented to show selected data for a share outstanding
throughout each period, and to assist stockholders in evaluating the Fund's
performance over the last five years.
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR...... $ 12.34 $ 13.47 $ 12.50 $ 11.23 $ 8.58
INCOME FROM INVESTMENT ACTIVITIES:
Net investment income................. 0.04 0.04 0.09 0.15 0.17
Net realized and unrealized gains or
losses on investments............... 2.79 0.09 2.12 2.12 3.20
-------- -------- -------- -------- --------
Total from investment activities.... 2.83 0.13 2.21 2.27 3.37
-------- -------- -------- -------- --------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income................. (0.03) (0.01) (0.09) (0.15) (0.17)
Net realized gain on investments...... (1.26) (1.04) (1.06) (0.75) (0.44)
-------- -------- -------- -------- --------
Total dividends and distributions... (1.29) (1.05) (1.15) (0.90) (0.61)
-------- -------- -------- -------- --------
CAPITAL STOCK TRANSACTIONS:
Effect of rights offering............. (0.12) (0.14) (0.08) (0.06) (0.10)
Effect of reinvestment of
distributions....................... (0.11) (0.07)* (0.01) (0.04) (0.01)
Effect of potential conversion of
Notes(a)............................ (0.09) -- -- -- --
-------- -------- -------- -------- --------
Total capital stock transactions.... (0.32) (0.21) (0.09) (0.10) (0.11)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR (A)........ $ 13.56 $ 12.34 $ 13.47 $ 12.50 $ 11.23
-------- -------- -------- -------- --------
MARKET VALUE, END OF YEAR............... $ 11.875 $ 11.000 $ 12.875 $ 12.250 $ 10.375
-------- -------- -------- -------- --------
TOTAL RETURN (B):
Net Asset Value(a).................... 22.6% 1.1% 17.9% 19.9% 39.5%
Market Value.......................... 20.5% -5.6% 14.8% 26.8% 35.3%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (in
thousands).......................... $338,970 $269,032 $246,558 $202,483 $166,550
Ratio of Expenses to Average Net
Assets (including management fee and
interest expense)................... 2.01% 2.01% 1.33% 0.81% 0.79%
Ratio of Management Fee to Average Net
Assets.............................. 0.97% 1.21% 1.09% 0.53% 0.43%
Ratio of Interest Expense to Average
Net Assets.......................... 0.75% 0.46% -- -- --
Ratio of Net Investment Income to
Average Net Assets.................. 0.34% 0.31% 0.74% 1.31% 1.52%
Portfolio Turnover Rate............... 32% 35% 33% 40% 34%
</TABLE>
- ------------
* Includes distributions paid January 31, 1994 and distributions paid December
30, 1994.
(a) For periods ended June 22, 1994, Net Asset Value per share and Net Asset
Value Total Return are calculated assuming the Notes had been fully
converted unless the effect of doing so would result in a higher Net Asset
Value per share than would be calculated without such assumption.
(b) The Net Asset Value and Market Value Total Return assume a continuous
stockholder who reinvested all net investment income dividends and capital
gains distributions and fully participated in primary rights offerings.
(c) Expense ratios before waiver of fees by the investment adviser would have
been 2.04% and 2.02% for the years ended December 31, 1995 and 1994,
respectively.
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
<PAGE>
ROYCE VALUE TRUST, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Royce Value Trust, Inc. (the 'Fund') was incorporated under the laws of the
State of Maryland on July 1, 1986 as a diversified closed-end investment
company. The Fund commenced operations on November 26, 1986.
Valuation of investments:
Securities listed on an exchange or on the Nasdaq National Market System
are valued on the basis of the last reported sale prior to the time the
valuation is made or, if no sale is reported for such day, at their bid price
for exchange-listed securities and at the average of their bid and asked prices
for Nasdaq securities. Quotations are taken from the market where the security
is primarily traded. Other over-the-counter securities for which market
quotations are readily available are valued at their bid price. Securities for
which market quotations are not readily available are valued at their fair value
under procedures established and supervised by the Fund's Board of Directors.
Bonds and other fixed income securities may be valued by reference to other
securities with comparable ratings, interest rates and maturities, using
established independent pricing services.
Investment transactions and related investment income:
Investment transactions are accounted for on the trade date and dividend
income is recorded on the ex-dividend date. Interest income is recorded on the
accrual basis. Realized gains and losses from investment transactions and
unrealized appreciation and depreciation of investments are determined on the
basis of identified cost for book and tax purposes.
Taxes:
As a qualified regulated investment company under Subchapter M of the
Internal Revenue Code, the Fund is not subject to income taxes to the extent
that it distributes substantially all of its taxable income for its fiscal year.
The schedule of investments includes information regarding income taxes under
the caption 'Income Tax Information'.
Distributions:
Dividend and capital gains distributions are recorded on the ex-dividend
date and paid annually in December. These distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Permanent book and tax basis differences relating to
shareholder distributions will result in reclassification to paid-in capital and
may affect net investment income per share. Undistributed net investment income
may include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end is
distributed in the following year.
Repurchase agreements:
The Fund enters into repurchase agreements with respect to its portfolio
securities solely with State Street Bank and Trust Company ('SSB&T'), the
custodian of its assets. The Fund restricts repurchase agreements to maturities
of no more than seven days. Securities pledged as collateral for repurchase
agreements are held by SSB&T until maturity of the repurchase agreements.
Repurchase agreements could involve certain risks in the event of default or
insolvency of SSB&T, including possible delays or restrictions upon the ability
of the Fund to dispose of the underlying securities.
23
<PAGE>
<PAGE>
ROYCE VALUE TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
NOTE 2. INVESTMENT COMPANY CONVERTIBLE NOTES:
The Fund issued $40,000,000 aggregate principal amount of Investment
Company Convertible Notes (the 'Notes') on June 22, 1994. The Fund received
proceeds of $38,350,000 after the deduction of the underwriting discount and
offering costs incurred by the Fund in connection with the issuance of the
Notes. The underwriting discount and the offering costs of $1,200,000 and
$450,000, respectively, are being accreted on a straight line basis over the
term of the Notes.
The Notes, which are unsecured obligations of the Fund, mature on June 30,
2004 and bear interest payable on June 30 and December 31 of each year
commencing with June 30, 1994 at the rate of 5 3/4% per annum. The Notes have a
Aaa rating from Moody's Investor Service, Inc. ('Moody's').
The Notes are convertible into shares of Common Stock of the Fund at the
option of the holder, at any time prior to maturity, except during the period
from the second trading day prior to the ex-dividend date through the last day
of each year unless an earlier date is selected by the Fund, and unless
previously redeemed at the option of the Fund. The conversion price at December
31, 1995 was $13.30 per share. This conversion price reflects a $0.56 per share
reduction as a result of the rights offering and annual net adjustments. Annual
net adjustments which involve an escalation of 6.75% and a reduction for the
impact on net asset value per share of distributions to stockholders resulted in
a constructive distribution to the Noteholders of $31.56 per $1,000 principal
amount of Notes for the year ended December 31, 1995.
Under the Investment Company Act of 1940, the Fund is required to maintain
an asset coverage of at least 300% for the Notes. In addition, the Indenture
governing the Notes requires the Fund to maintain a certain discounted asset
coverage for its portfolio that equals or exceeds the Basic Maintenance Amount
under the guidelines established by Moody's. The Fund has met these requirements
since the issuance of the Notes.
Commencing July 1, 1997, and any time thereafter prior to maturity, the
Fund may, at its option, redeem the Notes in whole or in part for cash at a
price equal to 100% of their principal amount, together with accrued interest
thereon. Prior to July 1, 1997, the Fund will have the option to redeem the
Notes for cash at a price equal to 100% of their principal amount, together with
accrued interest, only if a redemption is necessary for the Fund to maintain the
required asset coverage for the Notes and/or continue to qualify as a regulated
investment company.
On July 1, 1999, if the average market price per $1,000 principal amount of
Notes for the 45 trading days ending May 31, 1999 is less than $950, the Fund
will either call all of the Notes for redemption or reset one or more of the
terms of the Notes so that the market value of the Notes is at or as close as
possible to par.
NOTE 3. INVESTMENT ADVISORY AGREEMENT:
Under the Investment Advisory Agreement between Quest Advisory Corp.
('Quest') and the Fund, the Basic Fee is a monthly fee equal to 1/12 of 1% (1%
on an annualized basis) of the average of the total net assets of the Fund at
the end of each month included in the applicable performance period, which is a
rolling 36 month period ending with the most recent calendar month.
The Basic Fee for such monthly period is subject to increase or decrease,
depending on the extent, if any, by which the investment performance of the Fund
exceeds by more than 2 percentage points, or is exceeded by more than 1
percentage point, by the percentage change in the investment record of the S&P
500 for such performance period. For each percentage point
24
<PAGE>
<PAGE>
ROYCE VALUE TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
in excess of two that the investment performance of the Fund exceeds the
percentage change in the investment record of the S&P 500, such Basic Fee is
increased at the rate of 1/12 of .05%. For each percentage point in excess of
one that the percentage change in the investment record of the S&P 500 exceeds
the investment performance of the Fund, such Basic Fee is decreased at the rate
of 1/12 of .1%.
The maximum increase or decrease in the Basic Fee for any month may not
exceed 1/12 of .5%. Accordingly, the maximum monthly fee rate as adjusted for
performance is 1/12 of 1.5% and would be payable if the investment performance
of the Fund exceeded the percentage change in the investment record of the S&P
500 by 12 or more percentage points for the performance period. The minimum
monthly fee rate as adjusted for performance is 1/12 of .5% and would be payable
if the percentage change in the investment record of the S&P 500 exceeded the
investment performance of the Fund by 6 or more percentage points for the
performance period.
The Investment Advisory Agreement also provides that Quest will not be
entitled to receive any fees for any performance period in which the investment
performance of the Fund, rounded to the nearest whole point, is less than zero.
In the event that the Fund's investment performance for a performance period,
rounded to the nearest whole point, is less than zero, Quest will not be
required to refund to the Fund any fees earned for any prior performance period.
In calculating the investment performance of the Fund and the percentage
change in the investment record of the S&P 500, all dividends and other
distributions during the performance period are treated as having been
reinvested and gain (loss) from transactions in Fund shares is eliminated.
Fractions of a percentage point are rounded to the nearest whole point (to the
higher whole point if exactly one-half).
For the year ended December 31, 1995, the Fund paid Quest advisory fees
totalling $2,951,325, which is net of $104,206 voluntarily waived by Quest.
NOTE 4. TRANSACTIONS IN SHARES OF AFFILIATED COMPANIES:
An 'Affiliated Company', as defined in the Investment Company Act of 1940,
is a company in which the Fund owns at least 5% of the company's outstanding
voting securities. The Fund effected the following transactions in shares of
such companies during the year ended December 31, 1995.
<TABLE>
<CAPTION>
Purchases Sales
------------------- ------------------ Realized Dividend
Affiliated Company Shares Cost Shares Cost Gain/Loss Income
- ------------------------------ ------- -------- ------ -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
General Builders
Corporation................. -- -- -- -- -- --
The Logan Clay Products
Company..................... -- -- 12,038 $246,779 ($4,083) --
Sage Laboratories, Inc........ -- -- -- -- -- --
United Services
Advisers, Inc............... 249,205 $436,109 -- -- -- --
</TABLE>
25
<PAGE>
<PAGE>
ROYCE VALUE TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
NOTE 5. FUND SHARES:
At December 31, 1995, there were 150,000,000 shares of common stock and
50,000,000 shares of preferred stock, $.001 par value, authorized. Only common
stock has been issued, and transactions were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1995 December 31, 1994
------------------------ -------------------------
Shares Amount Shares Amount
--------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Net proceeds from rights offerings........... 1,308,387 $16,244,838 1,119,159 $12,590,539
Dividends and distributions reinvested in
additional shares.......................... 1,721,155 20,868,997 2,381,336 28,950,294
</TABLE>
During the quarter ended December 31, 1995, the Fund completed a rights
offering of 1,308,387 shares to its stockholders at the rate of one share for
each twenty rights held by stockholders of record on September 20, 1995. These
shares were priced at $12.50, which was $.25 below the last reported sale price
on the New York Stock Exchange on November 6, 1995. Sixty percent of the
offering was subscribed for through primary subscription. The remaining shares
were purchased by those stockholders who subscribed with their primary rights
and who also elected to purchase additional shares using over-subscription
rights.
NOTE 6. PURCHASES AND SALES OF SECURITIES:
For the year ended December 31, 1995, the cost of purchases and proceeds
from sales of investment securities, other than short-term securities, amounted
to $105,815,040 and $106,234,467, respectively.
NOTE 7. QUARTERLY RESULTS OF OPERATIONS: (unaudited)
<TABLE>
<CAPTION>
Net Realized and Increase (Decrease)
Net Unrealized in Net Assets
Investment Investment Gain (Loss) Resulting from
Income Income on Investments Operations
------------------- ------------------- --------------------- ---------------------
Per Per Per Per
1995 Total Share Total Share Total Share Total Share
- ---------------------- ---------- ----- ---------- ----- ----------- ------ ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31.............. $1,748,732 $0.08 $ 161,195 $0.01 $14,547,443 $ 0.66 $14,708,638 $ 0.67
June 30............... 1,613,589 0.07 174,460 0.01 21,447,351 0.97 21,621,811 0.98
September 30.......... 1,667,500 0.08 (92,235) (0.01) 26,763,729 1.21 26,671,494 1.20
December 31........... 2,127,919 0.09 786,905 0.03 (1,146,222) (0.05) (359,317) (0.02)
---------- ----- ---------- ----- ----------- ------ ----------- ------
$7,157,740 $0.32 $1,030,325 $0.04 $61,612,301 $ 2.79 $62,642,626 $ 2.83
---------- ----- ---------- ----- ----------- ------ ----------- ------
---------- ----- ---------- ----- ----------- ------ ----------- ------
<CAPTION>
1994
- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31.............. $1,267,705 $0.07 $ 288,569 $0.01 ($2,911,824) ($0.15) ($2,623,255) ($0.13)
June 30............... 1,235,331 0.06 273,029 0.01 (8,890,935) (0.46) (2,794,258) (0.14)
September 30.......... 1,637,652 0.08 77,308 0.01 22,441,970 1.15 16,129,579 0.83
December 31........... 1,914,577 0.10 147,018 0.01 (8,890,218) (0.45) (8,177,149) (0.43)
---------- ----- ---------- ----- ----------- ------ ----------- ------
$6,055,265 $0.31 $ 785,924 $0.04 $ 1,748,993 $ 0.09 $ 2,534,917 $ 0.13
---------- ----- ---------- ----- ----------- ------ ----------- ------
---------- ----- ---------- ----- ----------- ------ ----------- ------
</TABLE>
26
<PAGE>
<PAGE>
ROYCE VALUE TRUST, INC.
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Directors and Stockholders of Royce Value Trust, Inc.:
We have audited the accompanying statement of assets and liabilities of
Royce Value Trust, Inc. as of December 31, 1995, including the schedule of
investments and the related statements of operations, cash flows and changes in
net assets and the financial highlights for the year then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit. The financial statements
of Royce Value Trust, Inc. for the year ended December 31, 1994 and the
financial highlights for each of the four years in the period then ended, were
audited by other auditors whose report dated February 13, 1995, expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, 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 audit provides a reasonable basis for our
opinion.
In our opinion, the 1995 financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Royce Value Trust, Inc. as of December 31, 1995, the results of its
operations, cash flows, changes in its net assets, and the financial highlights
for the year then ended, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
New York, New York
February 12, 1996
<PAGE>
<PAGE>
OFFICERS
Charles M. Royce, President and Treasurer
Jack E. Fockler, Jr., Vice President
W. Whitney George, Vice President
Daniel A. O'Byrne, Vice President
& Assistant Secretary
Susan I. Grant, Secretary
INDEPENDENT ACCOUNTANTS
Ernst & Young LLP
CUSTODIAN, TRANSFER AGENT
AND REGISTRAR
State Street Bank and Trust Company
DIRECTORS
Thomas R. Ebright
Quest Advisory Corp., Vice President
Royce, Ebright & Associates, Inc., President
Richard M. Galkin
Richard M. Galkin Associates Inc.,
President
Stephen L. Isaacs
Columbia University Development Law and
Policy Program, Director; Attorney
David L. Meister
Communications Industry, Consultant
Charles M. Royce
Quest Advisory Corp., President
Royce Value Trust, Inc.
Annual Report 1995
1414 Avenue of the Americas
New York, New York 10019
(800) 221-4268
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as `D'
The division sign shall be expressed as [div]
GRAPHIC APPENDIX
On page 2 of the paper format Royce Value Trust report:
Picture of a man in a cape flying
Picture of Albert Einstein
On page 3 of the paper format Royce Value Trust report:
A picture of a scale balancing a dollar sign and a factory
A picture of a man in a long white coat pointing with a pointer
A bullseye
On page 4 of the paper format Royce Value Trust report:
A picture of a sad face
On page 5 of the paper format Royce Value Trust report:
A picture of a boy daydreaming
A picture of two Stone-Age men building a rocket
On page 6 of the paper format Royce Value Trust report:
A line graph showing the Dow Jones Industrial Average's performance from
December 1975 to December 1995
A picture of a happy alarm clock ringing
