<PAGE> PAGE 1
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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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SIGNATURE DANIEL A. O'BYRNE
TITLE VICE PRESIDENT
<PAGE>
SIGNATURE PAGE
For period ending 06/30/96
File number 811--4875
This report is signed on behalf of the registrant in the City of
New York and State of New York on the 30th day of August, 1996.
ROYCE VALUE TRUST, INC.
By: /s/ Daniel A. O'Byrne Witness:/s/ John E. Denneen
Daniel A. O'Byrne John E. Denneen
Vice President Secretary
<PAGE>
<PAGE>
Exhibit (1)
At the June 26, 1996, Annual Meeting of Stockholders of the
Registrant, the stockholders approved: (i) a new Investment
Advisory Agreement between the Registrant and Quest Advisory
Corp., and (ii) a change in the Registrant's fundamental
investment policy.
The new Investment Advisory Agreement changed, among other
things, the benchmark index, against which the Registrant's
performance is measured, from the S&P 500 Index to the S&P
600 SmallCap Stock Price Index. Additionally, the
performance measurement period has lengthened from three
years to five years.
The change in the fundamental investment policy permits the
Registrant to invest up to 5% of its total assets in
warrants, rights and options.
(i) Votes Casted Votes Casted
For Against Votes Abstained
19,036,178 595,061 370,906
(ii) Votes Casted Votes Casted
For Against Votes Abstained
13,330,499 634,457 537,072
<PAGE>
Exhibit (2)
INVESTMENT ADVISORY AGREEMENT
BETWEEN
ROYCE VALUE TRUST, INC.
AND
QUEST ADVISORY CORP.
Agreement dated as of June 30, 1996 by and between ROYCE VALUE TRUST, INC.,
a Maryland corporation (the 'Fund'), and QUEST ADVISORY CORP., a New York
corporation (the 'Adviser').
The Fund and the Adviser hereby agree as follows:
1. Duties of the Adviser. The Adviser shall, during the term and subject to
the provisions of this Agreement, (a) determine the composition of the portfolio
of the Fund, the nature and timing of the changes therein and the manner of
implementing such changes and (b) provide the Fund with such investment
advisory, research and related services as the Fund may, from time to time,
reasonably require for the investment of its assets. The Adviser shall perform
such duties in accordance with the applicable provisions of the Fund's Articles
of Incorporation, By-laws and stated investment objectives, policies and
restrictions and any directions it may receive from the Fund's Board of
Directors.
2. Expenses Payable by the Fund. Except as otherwise provided in Paragraphs
1 and 3 hereof, the Fund shall be responsible for determining the net asset
value of its shares and for all of its other operations and shall pay all
administrative and other costs and expenses attributable to its operations and
transactions, including, without limitation, registrar, transfer agent and
custodian fees; legal, administrative and clerical services; rent for its office
space and facilities; auditing; preparation, printing and distribution of its
proxy statements, stockholders' reports and notices; supplies and postage;
Federal and state registration fees; securities exchange listing fees and
expenses; Federal, state and local taxes; non-affiliated directors' fees;
interest on its borrowings; brokerage commissions; and the cost of issue, sale
and repurchase of its shares.
3. Expenses Payable by the Adviser. The Adviser shall furnish, without
expense to the Fund, the services of those of its executive officers and
full-time employees who may be duly elected executive officers or directors of
the Fund, subject to their individual consent to serve and to any limitations
imposed by law, and shall pay all the salaries and expenses of such persons. For
purposes of this Agreement, only a president, a treasurer or a vice-president in
charge of a principal business function shall be deemed to be an executive
officer. The Adviser shall also pay all expenses which it may incur in
performing its duties under Paragraph 1 hereof and shall reimburse the Fund for
any space leased by the Fund and occupied by the Adviser.
4. Compensation of the Adviser.
(a) The Fund agrees to pay to the Adviser, and the Adviser agrees to
accept, as compensation for the services provided by the Adviser hereunder,
a fee comprised of a basic fee (the 'Basic Fee') and an adjustment to the
Basic Fee based on the investment performance of the Fund in relation to
the investment record of the Standard & Poor's SmallCap 600 Stock Price
Index (as the same may be constituted from time to time, the 'Index'). Such
fee shall be calculated and payable as follows:
(1) Beginning with the month of July 1997 and for each succeeding
month, the Basic Fee shall be a monthly fee equal to 1/12 of 1% (1% on
an annualized basis) of the average of the net assets of the Fund at the
end of each month included in the applicable performance period. (The
net assets of
<PAGE>
the Fund shall be computed by subtracting the amount of any indebtedness
and other liabilities of the Fund from the value of the total assets of
the Fund, and the liquidation preference of and any potential redemption
premium for any Preferred Stock of the Fund that may hereafter be issued
and outstanding shall not be treated as an indebtedness or other
liability of the Fund for this purpose.) The performance period for each
such month shall be from July 1, 1996 to the most recent month-end,
until this Agreement has been in effect for sixty (60) full calendar
months, when it shall become a rolling sixty (60) month period ending
with the most recent calendar month.
The Basic Fee rate for each such month shall be increased at the
rate of 1/12 of .05% for each percentage point in excess of two (2),
rounded to the nearer point (the higher point if exactly one-half a
point), that the investment performance of the Fund for the performance
period then ended exceeds the percentage change in the investment record
of the Index for such performance period (subject to a maximum of twelve
(12) percentage points). If, however, the investment performance of the
Fund for such performance period shall be exceeded by the percentage
change in the investment record of the Index for such performance
period, then such Basic Fee rate shall be decreased by 1/12 of .05% for
each percentage point in excess of two (2), rounded to the nearer point
(the higher point if exactly one-half a point), that the percentage
change in the investment record of the Index exceeds the investment
performance of the Fund for such performance period (subject to a
maximum of twelve (12) percentage points).
The maximum increase or decrease in the Basic Fee for any month may
not exceed 50%, and the Fund shall pay such Basic Fee, as so adjusted,
to the Adviser at the end of each performance period.
(2) For the initial performance period of twelve (12) calendar
months ending June 30, 1997, the Basic Fee for such performance period
shall be equal to 1/12 of 1% of the net assets of the Fund at the end of
each month included in such period, and such Basic Fee shall be subject
to adjustment, as described in subparagraph (a)(1) above, with the rate
of such adjustment being applied on an annualized basis. Any portion of
the fee for such period, as adjust, in excess of .5 shall be paid at the
end of the initial performance period.
(3) Notwithstanding the preceding provisions of this subparagraph
(a) to the contrary, for each of the eighteen (18) calendar months
ending December 31, 1997, the Basic Fee, as so adjusted, shall be
reduced if and to the extent necessary so that such fee does not exceed
the fee that would have been payable to the Adviser for such month under
the Investment Advisory Agreement dated as of October 21, 1992 (the
'Prior Agreement') by and between the Fund and the Adviser.
(b) Notwithstanding the provisions of subparagraph (a) above to the
contrary, the Adviser shall not be entitled to receive any monthly fee in
respect of any performance period consisting of a rolling thirty-six (36)
month period ending with the most recent calendar month for which the
investment performance of the Fund shall be negative on an absolute basis
(i.e., the investment performance of the Fund, rounded to the nearer whole
point, is less than zero).
(c) The investment performance of the Fund for any period shall be
expressed as a percentage of the Fund's net asset value per share of Common
Stock at the beginning of such period and shall mean and be the sum of: (i)
the change in the Fund's net asset value per share of Common Stock during
such period; (ii) the value of the Fund's cash distributions per share of
Common Stock accumulated to the end of such period; and (iii) the value of
capital gains taxes per share of Common Stock paid or payable on
undistributed realized long-term capital gains accumulated to the end of
such period. For this purpose, the value of distributions per share of
Common Stock of realized capital gains, of dividends per share of
2
<PAGE>
Common Stock paid from investment income and the capital gains taxes per
share of Common Stock paid or payable on undistributed realized long-term
capital gains shall be treated as reinvested in shares of Common Stock of
the Fund at the net asset value per share of Common Stock in effect at the
close of business on the record date for the payment of such distributions
and dividends and the date on which provision is made for such taxes, after
giving effect to such distributions, dividends and taxes. Notwithstanding
any provisions of this subparagraph (c) or of the other subparagraphs of
Paragraph 4 hereof to the contrary, the investment performance of the Fund
for any period shall not include, and there shall be excluded from the
change in the Fund's net asset value per share of Common Stock during such
period and the value of the Fund's cash distributions per share of Common
Stock accumulated to the end of such period shall be adjusted for, any
increase or decrease in the investment performance of the Fund for such
period computed as set forth in the preceding two sentences and resulting
from the Fund's capital stock transactions.
(d) The investment record of the Index for any period, expressed as a
percentage of the Index level at the beginning of such period, shall mean
and be the sum of (i) the change in the level of the Index during such
period; and (ii) the value, computed consistently with the Index, of cash
distributions made by companies whose securities comprise the Index
accumulated to the end of such period. For this purpose, cash distributions
on the securities which comprise the Index shall be treated as reinvested
in the Index at the end of each calendar month following the payment of the
dividend.
(e) Any calculation of the investment performance of the Fund and the
investment record of the Index shall be in accordance with any then
applicable rules of the Securities and Exchange Commission.
(f) In the event of any termination of this Agreement, the fee
provided for in this Paragraph 4 shall be calculated on the basis of a
period ending on the last day on which this Agreement is in effect, subject
to a pro rata adjustment based on the number of days elapsed in the current
period as a percentage of the total number of days in such period.
5. Excess Brokerage Commissions. The Adviser is hereby authorized, to the
fullest extent now or hereafter permitted by law, to cause the Fund to pay a
member of a national securities exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of such exchange, broker or dealer would have charged
for effecting that transaction, if the Adviser determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and/or research services provided by such member, broker or dealer,
viewed in terms of either that particular transaction or its over-all
responsibilities with respect to the Fund and its other accounts.
6. Limitations on the Employment of the Adviser. The services of the
Adviser to the Fund shall not be deemed exclusive, and the Adviser may engage in
any other business or render similar or different services to others so long as
its services to the Fund hereunder are not impaired thereby, and nothing in this
Agreement shall limit or restrict the right of any director, officer or employee
of the Adviser to engage in any other business or to devote his time and
attention in part to any other business, whether of a similar or dissimilar
nature. So long as this Agreement or any extension, renewal or amendment remains
in effect, the Adviser shall be the only investment adviser to the Fund, subject
to the Adviser's right to enter into sub-advisory agreements. The Adviser
assumes no responsibility under this Agreement other than to render the services
called for hereunder, and shall not be responsible for any action of or directed
by the Board of Directors of the Fund, or any committee thereof, unless such
action has been caused by the Adviser's gross negligence, willful malfeasance,
bad faith or reckless disregard of its obligations and duties under this
Agreement.
3
<PAGE>
7. Responsibility of Dual Directors, Officers and/or Employees. If any
person who is a director, officer or employee of the Adviser is or becomes a
director, officer and/or employee of the Fund and acts as such in any business
of the Fund pursuant to this Agreement, then such director, officer and/or
employee of the Adviser shall be deemed to be acting in such capacity solely for
the Fund, and not as a director, officer and/or employee of the Adviser or under
the control or direction of the Adviser, although paid by the Adviser.
8. Protection of the Adviser. The Adviser shall not be liable to the Fund
for any action taken or omitted to be taken by the Adviser in connection with
the performance of any of its duties or obligations under this Agreement or
otherwise as an investment adviser of the Fund, and the Fund shall indemnify the
Adviser and hold it harmless from and against all damages, liabilities, costs
and expenses (including reasonable attorneys' fees and amounts reasonably paid
in settlement) incurred by the Adviser in or by reason of any pending,
threatened or completed action, suit, investigation or other proceeding
(including an action or suit by or in the right of the Fund or its security
holders) arising out of or otherwise based upon any action actually or allegedly
taken or omitted to be taken by the Adviser in connection with the performance
of any of its duties or obligations under this Agreement or otherwise as an
investment adviser of the Fund. Notwithstanding the preceding sentence of this
Paragraph 8 to the contrary, nothing contained herein shall protect or be deemed
to protect the Adviser against or entitle or be deemed to entitle the Adviser to
indemnification in respect of, any liability to the Fund or its security holders
to which the Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its duties and obligations under this
Agreement.
Determinations of whether and the extent to which the Adviser is entitled
to indemnification hereunder shall be made by reasonable and fair means,
including (a) a final decision on the merits by a court or other body before
whom the action, suit or other proceeding was brought that the Adviser was not
liable by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties or (b) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the Adviser was not liable
by reason of such misconduct by (i) the vote of a majority of a quorum of the
directors of the Fund who are neither 'interested persons' of the Fund (as
defined in Section 2(a)(19) of the Investment Company Act of 1940) nor parties
to the action, suit or other proceeding or (ii) an independent legal counsel in
a written opinion.
9. Effectiveness, Duration and Termination of Agreement. The Prior
Agreement (other than the provisions of Paragraph 8 thereof, which shall remain
in full force and effect) shall terminate at the close of business on June 30,
1996. This Agreement shall become effective on July 1, 1996, and shall remain in
effect until April 30, 1998 and thereafter shall continue automatically for
successive annual periods from May 1 to April 30, provided that such continuance
is specifically approved at least annually by (a) the vote of the Fund's
directors, including a majority of such directors who are not parties to this
Agreement or 'interested persons' (as such term is defined in Section 2(a)(19)
of the Investment Company Act of 1940) of any such party, cast in person at a
meeting called for the purpose of voting on such approval, or (b) the vote of a
majority of the outstanding voting securities of the Fund and the vote of the
Fund's directors, including a majority of such directors who are not parties to
this Agreement or 'interested persons' (as so defined) of any such party. This
Agreement may be terminated at any time, without the payment of any penalty, on
sixty (60) days' written notice by the vote of a majority of the outstanding
voting securities of the Fund or by the vote of a majority of the Fund's
directors or by the Adviser, and will automatically terminate in the event of
its 'assignment' (as such term is defined for purposes of Section 15(a)(4) of
the Investment Company Act of 1940); provided, however, that the provisions of
Paragraph 8 of this Agreement shall remain in full force and effect, and the
Adviser shall remain entitled to the benefits thereof, notwithstanding any such
termination.
4
<PAGE>
10. Name. The Fund may, so long as this Agreement remains in effect, use
'Royce' as part of its name. The Adviser may, upon termination of this
Agreement, require the Fund to refrain from using the name 'Royce' in any form
or combination in its name or in its business, and the Fund shall, as soon as
practicable following its receipt of any such request from the Adviser, so
refrain from using such name.
11. Notices. Any notice under this Agreement shall be given in writing,
addressed and delivered or mailed, postage prepaid, to the other party at its
principal office.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed the day and year first above written.
ROYCE VALUE TRUST, INC.
By: /s/ CHARLES M. ROYCE
..................................
Charles M. Royce, President
QUEST ADVISORY CORP.
By: /s/ CHARLES M. ROYCE
..................................
Charles M. Royce, President
5
<PAGE>
Exhibit (3)
[ARTICLE] 6
[CIK] 0000804116
[NAME] ROYCE VALUE TRUST, INC.
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] JUN-30-1996
[INVESTMENTS-AT-COST] 320604132
[INVESTMENTS-AT-VALUE] 405938772
[RECEIVABLES] 997135
[ASSETS-OTHER] 240064
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 407175971
[PAYABLE-FOR-SECURITIES] 2584619
[SENIOR-LONG-TERM-DEBT] 38685014
[OTHER-ITEMS-LIABILITIES] 1478134
[TOTAL-LIABILITIES] 42747767
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 254574002
[SHARES-COMMON-STOCK] 24836
[SHARES-COMMON-PRIOR] 24836
[ACCUMULATED-NII-CURRENT] 2181080
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 22313646
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 85334640
[NET-ASSETS] 364428204
[DIVIDEND-INCOME] 3172647
[INTEREST-INCOME] 687359
[OTHER-INCOME] 0
[EXPENSES-NET] 2256179
[NET-INVESTMENT-INCOME] 1603827
[REALIZED-GAINS-CURRENT] 19234136
[APPREC-INCREASE-CURRENT] 41619890
[NET-CHANGE-FROM-OPS] 25457853
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 0
[NUMBER-OF-SHARES-REDEEMED] 0
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 25457853
[ACCUMULATED-NII-PRIOR] 577253
[ACCUMULATED-GAINS-PRIOR] 3079510
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 704547
[INTEREST-EXPENSE] 1150000
[GROSS-EXPENSE] 2300835
[AVERAGE-NET-ASSETS] 0
[PER-SHARE-NAV-BEGIN] 13.56
[PER-SHARE-NII] .07
[PER-SHARE-GAIN-APPREC] .85
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 14.48
[EXPENSE-RATIO] 1.29
[AVG-DEBT-OUTSTANDING] 38643882
[AVG-DEBT-PER-SHARE] 1.56
</TABLE>
