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Bow-tied fund manager Charles Royce has specialized in small and micro-cap stocks for as long as I can remember. His results have been outstanding. Despite his superior track record his three closed-end funds [Royce Value Trust, Royce Micro-Cap Trust (NYSE:RMT) and Royce Focus Trust (NASDAQ:FUND)] now trade at substantial discounts to their NAVs.

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Here are their net asset values, discounts and 52-week market returns as of Dec. 6, 2009:

Fund / Symbol

NAV

Market Price

% Discount

52- Week Mkt. Return

Value Trust - RVT

12.52

10.42

-16.8%

+48.0%

Micro-Cap – RMT

8.58

7.04

-17.9%

+48.8%

Focus Trust - FUND

6.97

5.99

-14.1%

+53.9%

Not only have these funds performed well recently, they have excellent long-term results, too. These are their annualized NAV total returns versus their Russell 2000 benchmark [through September 30, 2009].

5 – Years

10 - Years

15 - Years

20 – Years

Since Incept.

RVT*

2.66%

8.12%

9.62%

9.90%

10.12%

RMT*

2.70%

9.62%

10.21%

N/A

10.10%

FUND*

6.52%

11.59%

N/A

N/A

10.45%

Russell 2000

2.41%

4.88%

7.33%

7.87%

N/A

* Incept. Dates RVT – 11/26/86, RMT – 12/14/93, FUND – 11/1/96

The ‘since inception’ return of the Royce Value Trust is especially impressive as it was started just 11 months prior to the Crash of 1987 – an inauspicious time to be measuring from. Having all three of his closed-end funds averaging better than 10%/year over their lifetimes (after last year’s market debacle) is truly remarkable.

Barron's lists 10 Royce open-end mutual funds in their weekly mutual fund performance tables and each one has shown excellent YTD results. The worst one was up 22.8% and the best one was plus 53.9% YTD through Dec. 6, 2009.

Buy and hold investors have been served very well by just riding out the cycles and letting Charles Royce and his staff work on their behalf. Buyers today, at $82.10 to $85.90 per $100 of current NAV should do well in the future also.

Disclosure: Author is long RVT and RMT shares.

Source: Royce Closed-End Funds: Fine Performance at Deep Discount