This table is presented to show selected
data for a share of Common Stock outstanding throughout each period, and to assist
stockholders in evaluating the Funds performance for the periods presented.
|
|
Years ended December 31
,
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
|
NET ASSET
VALUE, BEGINNING OF PERIOD
|
|
|
$
|
15.40
|
|
|
|
$
|
14.18
|
|
|
|
$
|
16.73
|
|
|
|
$
|
12.87
|
|
|
|
$
|
9.37
|
|
|
INVESTMENT
OPERATIONS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss)
|
|
|
|
0.12
|
|
|
|
|
0.23
|
|
|
|
|
0.10
|
|
|
|
|
0.24
|
|
|
|
|
0.17
|
|
Net
realized and unrealized gain (loss) on investments and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
foreign
currency
|
|
|
|
4.89
|
|
|
|
|
2.02
|
|
|
|
|
(1.62
|
)
|
|
|
|
3.85
|
|
|
|
|
3.87
|
|
|
Total
investment operations
|
|
|
|
5.01
|
|
|
|
|
2.25
|
|
|
|
|
(1.52
|
)
|
|
|
|
4.09
|
|
|
|
|
4.04
|
|
|
DISTRIBUTIONS
TO PREFERRED STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income
|
|
|
|
|
|
|
|
|
(0.04
|
)
|
|
|
|
(0.03
|
)
|
|
|
|
(0.20
|
)
|
|
|
|
(0.18
|
)
|
Net
realized gain on investments and foreign currency
|
|
|
|
|
|
|
|
|
(0.13
|
)
|
|
|
|
(0.16
|
)
|
|
|
|
|
|
|
|
|
|
|
Return
of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.02
|
)
|
|
Total
distributions to Preferred Stockholders
|
|
|
|
|
|
|
|
|
(0.17
|
)
|
|
|
|
(0.19
|
)
|
|
|
|
(0.20
|
)
|
|
|
|
(0.20
|
)
|
|
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS FROM INVESTMENT OPERATIONS
|
|
|
|
5.01
|
|
|
|
|
2.08
|
|
|
|
|
(1.71
|
)
|
|
|
|
3.89
|
|
|
|
|
3.84
|
|
|
DISTRIBUTIONS
TO COMMON STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income
|
|
|
|
(0.11
|
)
|
|
|
|
(0.17
|
)
|
|
|
|
(0.08
|
)
|
|
|
|
(0.03
|
)
|
|
|
|
|
|
Net
realized gain on investments and foreign currency
|
|
|
|
(2.08
|
)
|
|
|
|
(0.63
|
)
|
|
|
|
(0.43
|
)
|
|
|
|
|
|
|
|
|
|
|
Return
of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.27
|
)
|
|
|
|
|
|
|
|
|
(0.32
|
)
|
|
Total
distributions to Common Stockholders
|
|
|
|
(2.19
|
)
|
|
|
|
(0.80
|
)
|
|
|
|
(0.78
|
)
|
|
|
|
(0.03
|
)
|
|
|
|
(0.32
|
)
|
|
CAPITAL
STOCK TRANSACTIONS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of reinvestment of distributions by Common Stockholders
|
|
|
|
(0.05
|
)
|
|
|
|
(0.06
|
)
|
|
|
|
(0.06
|
)
|
|
|
|
(0.00
|
)
|
|
|
|
(0.02
|
)
|
|
Total
capital stock transactions
|
|
|
|
(0.05
|
)
|
|
|
|
(0.06
|
)
|
|
|
|
(0.06
|
)
|
|
|
|
(0.00
|
)
|
|
|
|
(0.02
|
)
|
|
NET ASSET
VALUE, END OF PERIOD
|
|
|
$
|
18.17
|
|
|
|
$
|
15.40
|
|
|
|
$
|
14.18
|
|
|
|
$
|
16.73
|
|
|
|
$
|
12.87
|
|
|
MARKET
VALUE, END OF PERIOD
|
|
|
$
|
16.01
|
|
|
|
$
|
13.42
|
|
|
|
$
|
12.27
|
|
|
|
$
|
14.54
|
|
|
|
$
|
10.79
|
|
|
TOTAL RETURN:
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Value
|
|
|
|
35.63
|
%
|
|
|
|
16.22
|
%
|
|
|
|
(10.46
|
)%
|
|
|
|
35.05
|
%
|
|
|
|
35.39
|
%
|
Net Asset
Value
|
|
|
|
34.14
|
%
|
|
|
|
15.41
|
%
|
|
|
|
(10.06
|
)%
|
|
|
|
30.27
|
%
|
|
|
|
44.59
|
%
|
RATIOS
BASED ON AVERAGE NET ASSETS APPLICABLE TO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
advisory fee expense
2
|
|
|
|
0.54
|
%
|
|
|
|
0.56
|
%
|
|
|
|
0.86
|
%
|
|
|
|
0.11
|
%
|
|
|
|
0.00
|
%
|
Other
operating expenses
|
|
|
|
0.25
|
%
|
|
|
|
0.15
|
%
|
|
|
|
0.12
|
%
|
|
|
|
0.12
|
%
|
|
|
|
0.16
|
%
|
Total expenses
(net)
3
|
|
|
|
0.79
|
%
|
|
|
|
0.71
|
%
|
|
|
|
0.98
|
%
|
|
|
|
0.23
|
%
|
|
|
|
0.16
|
%
|
Expenses net
of fee waivers and excluding interest expense
|
|
|
|
0.65
|
%
|
|
|
|
0.68
|
%
|
|
|
|
0.98
|
%
|
|
|
|
0.23
|
%
|
|
|
|
0.16
|
%
|
Expenses prior
to fee waivers and balance credits
|
|
|
|
0.79
|
%
|
|
|
|
0.71
|
%
|
|
|
|
0.98
|
%
|
|
|
|
0.23
|
%
|
|
|
|
0.16
|
%
|
Expenses prior
to fee waivers
|
|
|
|
0.79
|
%
|
|
|
|
0.71
|
%
|
|
|
|
0.98
|
%
|
|
|
|
0.23
|
%
|
|
|
|
0.16
|
%
|
Net investment
income (loss)
|
|
|
|
0.70
|
%
|
|
|
|
1.57
|
%
|
|
|
|
0.63
|
%
|
|
|
|
1.69
|
%
|
|
|
|
1.66
|
%
|
SUPPLEMENTAL
DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Assets
Applicable to Common Stockholders,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End
of Period (in thousands)
|
|
|
$
|
1,307,829
|
|
|
|
$
|
1,082,426
|
|
|
|
$
|
966,640
|
|
|
|
$
|
1,105,879
|
|
|
|
$
|
849,777
|
|
Liquidation
Value of Preferred Stock,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End
of Period (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
220,000
|
|
|
|
$
|
220,000
|
|
|
|
$
|
220,000
|
|
Portfolio
Turnover Rate
|
|
|
|
33
|
%
|
|
|
|
25
|
%
|
|
|
|
26
|
%
|
|
|
|
30
|
%
|
|
|
|
31
|
%
|
PREFERRED
STOCK:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shares
outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,800,000
|
|
|
|
|
8,800,000
|
|
|
|
|
8,800,000
|
|
Asset coverage
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
134.88
|
|
|
|
$
|
150.67
|
|
|
|
$
|
121.57
|
|
Liquidation
preference per share
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
25.00
|
|
|
|
$
|
25.00
|
|
|
|
$
|
25.00
|
|
Average month-end
market value per share
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
25.37
|
|
|
|
$
|
25.06
|
|
|
|
$
|
23.18
|
|
REVOLVING
CREDIT AGREEMENT:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset coverage
|
|
|
|
1289
|
%
|
|
|
|
822
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset coverage
per $1,000
|
|
|
$
|
12,889
|
|
|
|
$
|
8,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
The Market
Value Total Return is calculated assuming a purchase of Common Stock on the opening
of the first business day and a sale on the closing of the last business day of
each period. Dividends and distributions are assumed for the purposes of this calculation
to be reinvested at prices obtained under the Funds Distribution Reinvestment
and Cash Purchase Plan. Net Asset Value Total Return is calculated on the same basis,
except that the Funds net asset value is used on the purchase and sale dates
instead of market value.
|
2
|
The investment
advisory fee is calculated based on average net assets over a rolling 60-month basis,
while the above ratios of investment advisory fee expenses are based on the average
net assets applicable to Common Stockholders over a 12-month basis.
|
3
|
Expense ratios
based on total average net assets including liquidation value of Preferred Stock
were 0.60%, 0.82%, 0.18% and 0.12% for the years ended December 31, 2012, 2011,
2010 and 2009, respectively.
|
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
|
2013 Annual Report to Stockholders | 31
|
Royce Value Trust
|
|
|
|
Notes to Financial Statements
|
Summary of Significant Accounting Policies:
Royce Value Trust, Inc. (the "Fund"), was incorporated under the laws of the State of Maryland on July 1, 1986, as a diversified closed-end
investment company. The Fund commenced operations on November 26, 1986.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results
could differ from those estimates.
Valuation of Investments:
Securities are valued as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on the valuation date.
Securities that trade on an exchange, and securities traded on Nasdaq's Electronic Bulletin Board, are valued at their last reported sales price or
Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their bid price.
Other over-the-counter securities for which market quotations are readily available are valued at their highest bid price, except in the case of some
bonds and other fixed income securities which may be valued by reference to other securities with comparable ratings, interest rates and maturities,
using established independent pricing services. The Fund values its non-U.S. dollar denominated securities in U.S. dollars daily at the prevailing
foreign currency exchange rates as quoted by a major bank. Securities for which market quotations are not readily available are valued at their fair
value in accordance with the provisions of the 1940 Act, under procedures approved by the Fund's Board of Directors, and are reported as Level 3
securities. As a general principle, the fair value of a security is the amount which the Fund might reasonably expect to receive for the security upon
its current sale. However, in light of the judgment involved in fair valuations, there can be no assurance that a fair value assigned to a particular
security will be the amount which the Fund might be able to receive upon its current sale. In addition, if, between the time trading ends on a
particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price
unreliable, the Fund may fair value the security. The Fund uses an independent pricing service to provide fair value estimates for relevant non-U.S.
equity securities on days when the U.S. market volatility exceeds a certain threshold. This pricing service uses proprietary correlations it has
developed between the movement of prices of non-U.S. equity securities and indices of U.S.-traded securities, futures contracts and other
indications to estimate the fair value of relevant non-U.S. securities. When fair value pricing is employed, the prices of securities used by the Fund
may differ from quoted or published prices for the same security. Investments in money market funds are valued at net asset value per share.
Various inputs are used in
determining the value of the Funds investments, as noted above. These inputs are summarized in the three broad levels
below:
Level 1 quoted prices in
active markets for identical securities.
Level 2 other
significant observable inputs (including quoted prices for similar securities, foreign securities that may be fair
valued and
repurchase agreements). The table below includes all Level 2 securities. Level 2 securities with values based on
quoted prices for similar
securities are noted in the Schedule of Investments.
Level 3 significant
unobservable inputs (including last trade price before trading was suspended, or at a discount thereto for lack of
marketability or otherwise, market price information regarding other securities, information received from the
company and/or published
documents, including SEC filings and financial statements, or other publicly available information).
The inputs or methodology used for valuing
securities are not necessarily an indication of the risk
associated with investing in those securities.
The following is a summary of the
inputs used to value the Funds investments as of December 31, 2013. For a detailed breakout of common
stocks by sector classification, please refer to the Schedule of Investments.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Common Stocks
|
|
|
$
|
1,188,056,794
|
|
|
|
$
|
30,289,441
|
|
|
|
$
|
131,709
|
|
|
|
$
|
1,218,477,944
|
|
Preferred
Stocks
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,578,555
|
|
|
|
|
1,578,555
|
|
Cash Equivalents
|
|
|
|
|
|
|
|
|
191,909,000
|
|
|
|
|
|
|
|
|
|
191,909,000
|
|
For the year ended December 31, 2013, certain securities have transferred in and out of Level 1 and Level 2 measurements as a result of the fair
value pricing procedures for international equities. The Fund recognizes transfers between levels as of the end of the reporting period.
At December 31, 2013, securities valued at $8,989,917 were transferred from Level 1 to Level 2 and securities valued at $109,375,273 were
transferred from Level 2 to Level 1 within the fair value hierarchy.
Level 3 Reconciliation:
|
|
|
|
|
|
|
Realized and Unrealized
|
|
|
|
|
|
|
|
Balance as of 12/31/12
|
|
Gain (Loss)
1
|
|
Balance as of 12/31/13
|
Common Stocks
|
|
|
$
|
263,067
|
|
|
|
$
|
(131,358
|
)
|
|
|
$
|
131,709
|
|
Preferred
Stocks
|
|
|
|
1,504,800
|
|
|
|
|
73,755
|
|
|
|
|
1,578,555
|
|
1
|
The net change in unrealized appreciation (depreciation) is included in the accompanying Statement of Operations. Change in unrealized appreciation
(depreciation) includes net unrealized appreciation (depreciation) resulting from changes in investment values during the reporting period and the reversal of
previously recorded unrealized appreciation (depreciation) when gains or losses are realized. Net realized gain (loss) from investments and foreign currency
transactions is included in the accompanying Statement of Operations.
|
32 | 2013 Annual Report to Stockholders
|
|
|
Royce Value Trust
|
|
|
|
Notes to Financial Statements (continued)
|
Repurchase Agreements:
The Fund may enter into repurchase agreements with institutions that the Funds investment adviser has determined are creditworthy. The Fund
restricts repurchase agreements to maturities of no more than seven days. Securities pledged as collateral for repurchase agreements, which are held
until maturity of the repurchase agreements, are marked-to-market daily and maintained at a value at least equal to the principal amount of the
repurchase agreement (including accrued interest). Repurchase agreements could involve certain risks in the event of default or insolvency of the
counter-party, including possible delays or restrictions upon the ability of the Fund to dispose of its underlying securities.
Foreign Currency:
Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, expiration of
currency forward contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference
between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities,
including investments in securities at the end of the reporting period, as a result of changes in foreign currency exchange rates.
Taxes:
As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the Fund is not subject to income taxes to the
extent that it distributes substantially all of its taxable income for its fiscal year. The Schedule of Investments includes information regarding
income taxes under the caption Tax Information.
Distributions:
The Fund pays quarterly distributions on the Funds Common Stock at the annual rate of 5% of the rolling average of the prior four calendar
quarter-end NAVs of the Funds Common Stock, with the fourth quarter distribution being the greater of 1.25% of the rolling average or the
distribution required by IRS regulations. Prior to November 15, 2012, distributions to Preferred Stockholders were accrued daily and paid quarterly.
Distributions to Common Stockholders are recorded on ex-dividend date. Distributable capital gains and/or net investment income were first
allocated to Preferred Stockholder distributions, with any excess allocable to Common Stockholders. If capital gains and/or net investment income
were allocated to both Preferred and Common Stockholders, the tax character of such allocations was proportional. To the extent that distributions
are not paid from long-term capital gains, net investment income or net short-term capital gains, they will represent a return of capital.
Distributions are determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United
States of America. Permanent book and tax differences relating to stockholder distributions will result in reclassifications within the capital
accounts. Undistributed net investment income may include temporary book and tax basis differences, which will reverse in a subsequent period.
Any taxable income or gain remaining undistributed at fiscal year end is distributed in the following year.
On June 19, 2013, the Fund purchased 10,160 common shares of Royce Global Value Trust, Inc. (RGT) for $100,076. On October 18, 2013, the
Fund contributed $99,899,924 in cash and securities in exchange for shares of RGT, and on the same date distributed all shares of RGT valued at
$100,000,000 to Fund stockholders of record as of October 10, 2013, at the rate of one share of RGT for every seven shares of the Funds Common
Stock outstanding. In connection with the spinoff of RGT, the securities contributed included $15,972,444 in unrealized depreciation.
Investment Transactions and Related Investment
Income:
Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date. Non-cash dividend income is
recorded at the fair market value of the securities received. Interest income is recorded on an accrual basis. Premium and discounts on debt
securities are amortized using the effective yield-to-maturity method. Realized gains and losses from investment transactions are determined on the
basis of identified cost for book and tax purposes.
Expenses:
The Fund incurs direct and indirect expenses. Expenses directly attributable to the Fund are charged to the Funds operations, while expenses
applicable to more than one of the Royce Funds are allocated equitably. Certain personnel, occupancy costs and other administrative expenses
related to the Royce Funds are allocated by Royce & Associates, LLC (Royce) under an administration agreement and are included in administrative
and office facilities and professional fees. The Fund has adopted a deferred fee agreement that allows the Directors to defer the receipt of all or a
portion of directors fees otherwise payable. The deferred fees are invested in certain Royce Funds until distributed in accordance with the
agreement.
Compensating Balance Credits:
The Fund has an arrangement with its custodian bank, whereby a portion of the custodian's fee is paid indirectly by credits earned on the Fund's
cash on deposit with the bank. This deposit arrangement is an alternative to purchasing overnight investments. Conversely, the Fund pays interest
to the custodian on any cash overdrafts, to the extent they are not offset by credits earned on positive cash balances.
Capital Stock:
The Fund issued 1,699,025 and 2,103,737 shares of Common Stock as reinvestment of distributions by Common Stockholders for the years ended
December 31, 2013 and December 31, 2012, respectively.
|
|
2013 Annual Report to Stockholders | 33
|
Royce Value Trust
|
|
|
|
Notes to Financial Statements (continued)
|
Borrowings:
The Fund had entered into a $150,000,000 revolving credit agreement (the credit agreement) with BNP Paribas Prime Brokerage Inc. (BNPP) on
November 14, 2012 and reduced this line to $110,000,000 on August 21, 2013. The Fund pays a commitment fee of 0.50% per annum on the unused
portion of the credit agreement. The credit agreement has a 360-day rolling term that resets daily; however, if the Fund exceeds certain net asset
value triggers, the credit agreement may convert to a 60-day rolling term that resets daily. The Fund is required to pledge portfolio securities as
collateral in an amount up to two times the loan balance outstanding and has granted a security interest in the securities pledged to, and in favor
of, BNPP as security for the loan balance outstanding. If the Fund fails to meet certain requirements, or maintain other financial covenants required
under the credit agreement, the Fund may be required to repay immediately, in part or in full, the loan balance outstanding under the credit
agreement necessitating the sale of portfolio securities at potentially inopportune times. The credit agreement also permits, subject to certain
conditions, BNPP to rehypothecate portfolio securities pledged by the Fund up to the amount of the loan balance outstanding. The Fund continues
to receive payments in lieu of dividends and interest on rehypothecated securities. The Fund also has the right under the credit agreement to recall
the rehypothecated securities from BNPP on demand. If BNPP fails to deliver the recalled security in a timely manner, the Fund will be compensated
by BNPP for any fees or losses related to the failed delivery or, in the event a recalled security will not be returned by BNPP, the Fund, upon notice
to BNPP, may reduce the loan balance outstanding by the amount of the recalled security failed to be returned. The Fund will receive a portion of
the fees earned by BNPP in connection with the rehypothecation of portfolio securities.
As of December 31, 2013, the Fund has outstanding borrowings of $110,000,000. During the year ended December 31, 2013, the Fund borrowed
an average daily balance of $135,424,658 at a weighted average borrowing cost of 1.22%. As of December 31, 2013, the aggregate value of
rehypothecated securities was $58,400,416. During the year ended December 31, 2013, the Fund earned $397,874 in fees from rehypothecated
securities.
Investment Advisory Agreement:
As compensation for its services under the Investment Advisory Agreement, Royce receives a fee comprised of a Basic Fee (Basic Fee) and an
adjustment to the Basic Fee based on the investment performance of the Fund in relation to the investment record of the S&P SmallCap 600 Index
(S&P 600").
The Basic Fee is a monthly fee equal to 1/12 of 1% (1% on an annualized basis) of the average of the Funds month-end net assets applicable to
Common Stockholders, plus the liquidation value of outstanding Preferred Stock, for the rolling 60-month period ending with such month (the
"performance period"). The Basic Fee for each month is increased or decreased at the rate of 1/12 of .05% for each percentage point that the
investment performance of the Fund exceeds, or is exceeded by, the percentage change in the investment record of the S&P 600 for the performance
period by more than two percentage points. The performance period for each such month is a rolling 60-month period ending with such month. The
maximum increase or decrease in the Basic Fee for any month may not exceed 1/12 of .5%. Accordingly, for each month, the maximum monthly fee
rate as adjusted for performance is 1/12 of 1.5% and is payable if the investment performance of the Fund exceeds the percentage change in the
investment record of the S&P 600 by 12 or more percentage points for the performance period, and the minimum monthly fee rate as adjusted for
performance is 1/12 of .5% and is payable if the percentage change in the investment record of the S&P 600 exceeds the investment performance of
the Fund by 12 or more percentage points for the performance period.
Notwithstanding the foregoing, Royce is not entitled to receive any fee for any month when the investment performance of the Fund for the
rolling 36-month period ending with such month is negative. In the event that the Funds investment performance for such a performance period is
less than zero, Royce will not be required to refund to the Fund any fee earned in respect of any prior performance period.
For the twelve rolling 60-month periods in 2013, the Funds investment performance ranged from 3% to 29% below the investment performance of
the S&P 600. Accordingly, the net investment advisory fee consisted of a Basic Fee of $11,158,067 and a net downward adjustment of $4,569,246
for the performance of the Fund relative to that of the S&P 600. For the year ended December 31, 2013, the Fund accrued and paid Royce
investment advisory fees totaling $6,588,821.
Purchases and Sales of Investment
Securities:
For the year ended December 31, 2013, the costs of purchases and proceeds from sales of investment securities, other than short-term securities,
amounted to $411,168,675 and $635,873,886, respectively.
Distributions to Stockholders:
|
|
The tax character of distributions paid to common stockholders
|
|
The tax character of distributions paid to preferred stockholders
|
|
during 2013 and 2012 was as follows:
|
|
during 2012 was as follows:
|
|
|
|
|
|
Distributions paid from:
|
|
2013
|
|
2012
|
|
Distributions paid from:
|
|
|
|
2012
|
|
Ordinary
income
|
|
|
$
|
32,048,727
|
|
|
|
$
|
17,311,826
|
|
|
Ordinary income
|
|
|
|
|
|
|
|
$
|
3,655,160
|
|
|
Long-term
capital gain
|
|
|
|
123,982,076
|
|
|
|
|
37,846,455
|
|
|
Long-term
capital gain
|
|
|
|
|
|
|
|
|
7,990,784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
156,030,803
|
|
|
|
$
|
55,158,281
|
|
|
|
|
|
|
|
|
|
|
$
|
11,645,944
|
|
|
|
|
|
34 | 2013 Annual Report to Stockholders
|
|
|
Royce Value Trust
|
|
|
|
Notes to Financial Statements (continued)
|
Distributions to Stockholders (continued):
|
As of December 31, 2013, the tax basis components of distributable earnings included
in stockholders equity were as follows:
|
|
|
|
Net
unrealized appreciation (depreciation)
|
|
|
$
|
441,936,581
|
|
|
Post October loss*
|
|
|
|
(36,769
|
)
|
|
Undistributed ordinary income
|
|
|
|
7,731,090
|
|
|
Undistributed capital gains
|
|
|
|
28,025,768
|
|
|
|
|
|
|
|
|
|
|
$
|
447,656,670
|
|
|
|
*
|
Under the current tax law, capital losses and foreign currency losses after October 31 may be deferred and treated as occurring on the first day of
the following fiscal year. As of December 31, 2013, the Fund had $36,769 of post October currency losses.
|
The difference between book and tax basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral on wash sales,
partnership investments and the unrealized gains on Passive Foreign Investment Companies.
For financial reporting purposes, capital accounts and distributions to stockholders are adjusted to reflect the tax character of permanent
book/tax differences. These differences are primarily due to differing treatments of income and gains on various investment securities and foreign
currency transactions held by the Fund, timing differences and different characterization of distributions made by the Fund. For the year ended
December 31, 2013, the Fund recorded the following permanent reclassifications. Results of operations and net assets were not affected by these
reclassifications.
|
|
Undistributed
Net
|
|
Accumulated
Net
|
|
|
Paid-in
|
|
|
Investment
Income
|
|
Realized
Gain (Loss)
|
|
|
Capital
|
|
|
$2,791,594
|
|
$(2,342,883)
|
|
|
$(448,711)
|
|
|
Management has analyzed the Funds tax positions taken on federal income tax returns for all open tax years (2010-2013) and has concluded that
as of December 31, 2013, no provision for income tax is required in the Funds financial statements.
Transactions in Affiliated Companies:
An Affiliated Company as defined in the Investment Company Act of 1940, is a company in which a fund owns 5% or more of the companys
outstanding voting securities at any time during the period. The Fund effected the following transactions in shares of such companies for the year
ended December 31, 2013:
|
|
Shares
|
|
Market
Value
|
|
Cost
of
|
|
Cost
of
|
|
Realized
|
|
Dividend
|
|
Shares
|
|
Market
Value
|
Affiliated
Company
|
|
12/31/12
|
|
12/31/12
|
|
Purchases
|
|
Sales
|
|
Gain
(Loss)
|
|
Income
|
|
12/31/13
|
|
12/31/13
|
Timberland
Bancorp
|
|
444,200
|
|
$3,082,748
|
|
|
|
|
|
|
|
$53,304
|
|
444,200
|
|
$4,273,204
|
|
|
|
|
$3,082,748
|
|
|
|
|
|
|
|
$53,304
|
|
|
|
$4,273,204
|
|
|
2013 Annual Report to Stockholders | 35
|
Royce Value Trust
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
To the Board of Directors and Stockholders
of
Royce Value Trust, Inc.
New York, New York
We have audited the accompanying statement of assets and liabilities of Royce Value Trust, Inc., (Fund) including the schedule of investments, as
of December 31, 2013, and the related statement of operations and statement of cash flows for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the Funds management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free
of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2013, by correspondence with the
custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of
Royce Value Trust, Inc. at December 31, 2013, the results of its operations and its cash flows for the year then ended, the changes in its net assets
for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity
with accounting principles generally accepted in the United States of America.
TAIT, WELLER, & BAKER LLP
Philadelphia, Pennsylvania
February 19, 2014
36 | 2013 Annual Report to Stockholders
|
|