Royce Micro-Cap Trust

Key Figures — H1 2026 vs. H1 2025

Metric	H1 2026	H1 2025	Change ($)	Change (%)
Total Investment Income	$16,238,672	$2,602,611	+$13,636,061	+524.1%
Net Investment Income (Loss)	$1,718,149	-$2,552,213	+$4,270,362	N/M
Net Realized Gain on Investments	$186,113,658	$86,243,734	+$99,869,924	+115.8%
Net Change in Unrealized Appreciation	$326,172,923	$203,309,980	+$122,862,943	+60.4%
Net Increase in Net Assets from Operations	$513,981,785	$262,202,095 (FY2025)	+$251,779,690	+96.0%
Total Distributions Paid	$74,938,991	$169,517,553 (FY2025)	N/M (half-year vs full-year)	N/M
NAV per Share (period-end)	$16.75 (30 Jun 2026)	$10.98 (31 Dec 2024)	+$5.77	+52.5%
NAV per Share — Most Recent (31 Aug 2026)	$15.55	$11.77 (31 Aug 2025 est.)	+$3.78	~+32.1%
Q3 2026 Distribution per Share (Sep 29 pay date)	$0.23	$0.21 (Q2 2026)	+$0.02	+9.5%
YTD Total Return — NAV (through 31 Aug 2026)	+36.14%	+0.3% (H1 2025)	+35.84 ppts	N/M
YTD Total Return — Market Price (through 31 Aug 2026)	+38.56%	-1.0% (H1 2025)	+39.56 ppts	N/M
Net Assets	$842.5M (31 Aug 2026)	$907.5M (30 Jun 2026)	-$65.0M	-7.2%
Weighted Avg. Price-to-Book (portfolio)	2.2x (31 Aug 2026)	2.4x (30 Jun 2026)	-0.2x	-8.3%
Market Price Discount to NAV	~13.8% (2 Oct 2026 est.)	~12.5% (30 Jun 2026)	~-1.3 ppts	Wider

Note: H1 2026 income statement figures (Total Investment Income, NII, Realized Gain, Unrealized Appreciation, Net Increase from Operations) are drawn from the Form N-CSRS filed for the six months ended 30 June 2026. The column labelled "H1 2025" for income statement lines reflects the comparative six-month period figures disclosed in the same filing. The "H1 2025" column for NAV and distributions uses 31 Dec 2024 as the prior year-end reference. NII per share and EPS per share are not separately disclosed in monthly press releases; the fund reports aggregate operating data in its semi-annual financial statements.

Summary

For the year-to-date period ended 30 June 2026, Royce Micro-Cap Trust advanced 46.7% on a NAV basis and 44.9% based on market price, easily outperforming its small-cap benchmark, the Russell 2000 Index, which was up 22.6% for the same period. The fund generated a net increase in net assets from investment operations of $513.98 million in H1 2026, underpinned by $186.1 million in net realised gains and $326.2 million in net unrealised appreciation. Seven of the fund's 10 equity sectors made positive contributions in the first half of 2026, with Financials and Information Technology leading by wide margins, followed by Industrials, while Real Estate, Health Care, and Communication Services detracted. By 31 August 2026 net assets had settled back to $842.5 million, and year-to-date total returns measured 36.14% on NAV and 38.56% on market price, reflecting a sharp pullback from the June peak. The board declared a Q3 distribution of $0.23 per share, paid 29 September 2026, of which an estimated 97% ($0.2225) derives from net realised long-term capital gains.

Detailed Analysis

Q1. Financial Performance for the Period

For the six months ended 30 June 2026, the fund reported total investment income of $16,238,672 (comprising dividends of $14,895,975, interest of $1,755,338, less foreign withholding tax of $412,641), total expenses of $14,520,523, and net investment income of $1,718,149. This compares sharply with H1 2025, when the fund recorded a net investment loss of $2,552,213 on total income of just $2,602,611 — the dramatic increase in gross income reflects significantly higher dividend receipts from portfolio holdings. On the investment side, net realised gains of $186.1 million and net unrealised appreciation of $326.2 million combined to produce a net increase in net assets from operations of $513,981,785. Year-to-date total returns through 30 June 2026 were 46.65% at NAV and 44.89% at market price (not annualised). Average annual total returns at NAV were 70.39% for one year, 28.56% for three years, 13.09% for five years, and 16.00% for ten years. Post period-end, net assets were $842.5 million at 31 August 2026, with net leverage of 3.0%, and year-to-date total returns of 36.14% on NAV and 38.56% on market price.

Q2. Top Contributors Identified by Management

Seven of the fund's 10 equity sectors made positive contributions in the first half of 2026, with Financials and Information Technology leading by wide margins, followed by Industrials. At the industry level, capital markets (Financials), semiconductors and semiconductor equipment (Information Technology), and electronic equipment, instruments and components (Information Technology) had the biggest positive impacts. The fund's top contributor at the position level was Tel Aviv Stock Exchange (TASE), Israel's only public equity and debt exchange operator, which benefits from a high-margin, infrastructure-light platform model; despite the war with Iran and the ongoing situation in Gaza, Israeli markets experienced high trading volumes in the first half of 2026, which drove higher transaction-fee revenue and clearing income for the exchange. A second key contributor was a semiconductor-adjacent holding where investors continued to reprice the Q1 2026 earnings beat into a broader AI electronics and packaging inflection, with specific June support from analyst upgrades and the Penang Supercenter opening. Ichor Holdings, which designs and manufactures gas and chemical delivery systems critical to semiconductor manufacturing, was also identified as a top position-level contributor.

Q3. Key Detractors and Explanation

Real Estate, Health Care, and Communication Services were the three sectors that detracted from performance in H1 2026. At the industry level, the most significant detractors were real estate management and development (Real Estate), health care equipment and supplies (Health Care), and professional services (Industrials). Management did not single out a prominent position-level detractor by name in the publicly available H1 2026 commentary with the same prominence as prior periods, though the pattern of health care equipment weakness is consistent with prior cycles. For context, in the H1 2025 semiannual, Richardson Electronics was identified as the fund's top detractor, underperforming amid trade tension-related volatility and customer project delays that drove a sequential decline in backlog. The July 2026 pullback — the fund's NAV dropped 8.66% in July alone — suggests that the semiconductor and AI-adjacent positions that drove H1 outperformance experienced profit-taking or sector rotation as Q3 progressed.

Q4. Current Market Outlook — Bullish, Cautious, or Selective?

Management's tone in the H1 2026 Semiannual Review was constructively bullish, noting that small-cap stocks are reasserting leadership after one of the longest periods of underperformance versus large-caps in nearly a century — from 2011 through 2025, small-caps beat larger peers in just two calendar years — and that from the 8 April 2025 low through 30 June 2026, the Russell Microcap Index gained 108.4% and the Russell 2000 rose 74.5%, versus 52.8% for the large-cap Russell 1000. Portfolio Managers Jim Stoeffel and Andrew Palen stated that they remain constructive on the micro-cap asset class, with the portfolio underpinned by durable thematic drivers including reindustrialization, reshoring, and electrification, and holdings supporting next-generation computing platforms and power generation assets benefiting from multi-year project visibility. Royce's broader small-cap team noted that small-caps trade at historically low EV/EBIT multiples relative to large-caps and are expected to deliver higher earnings growth in 2026, reinforcing their market leadership potential.

Q5. Notable New Positions, Exits, or Strategic Shifts

The fund's top 10 holdings rotated materially across the period, reflecting active stock selection within the core micro-cap mandate. At 31 January 2026, the top positions included 5N Plus, Ichor Holdings, Ultra Clean Holdings, Sprott, Bel Fuse Cl. B, Camtek, CECO Environmental, and NPK International. By 30 June 2026, the top positions had shifted to Ichor Holdings (1.8%), Ultra Clean Holdings (1.8%), Cohu (1.7%), Graham Corporation (1.5%), and NWPX Infrastructure (1.5%). By 31 August 2026, the top 10 had rotated further to EZCORP Cl. A (1.4%), CareDx (1.4%), AMN Healthcare Services (1.2%), Citi Trends (1.2%), Lindblad Expeditions Holdings (1.2%), Sprott (1.2%), Graham Corporation (1.2%), and IMAX Corporation (1.1%). This reflects a notable rotation away from semiconductor supply-chain names (Ichor, Ultra Clean, Cohu) toward more consumer- and healthcare-oriented holdings during Q3 2026, consistent with sector-level rebalancing after the tech-driven H1 surge. The fund held 177 positions as of 31 March 2026, with annual portfolio turnover of 41% as of 31 December 2025.

Q6. Risks Flagged for Next 6–12 Months

Management flagged that Q1 2026 performance was influenced by the Supreme Court's landmark ruling striking down IEEPA tariffs — which structurally narrows executive tariff authority — as well as continued fiscal stimulus from the Infrastructure Investment and Jobs Act, creating an uncertain backdrop for trade policy even as small-caps benefited from the rotation. In the prior half-year commentary (H1 2025), Royce noted that while the long-term outlook remains constructive, the near-term forecast for equities remains murky, and that tariffs, inflation, and falling consumer confidence are legitimate concerns. Key ongoing risks include: (1) geopolitical volatility — the war with Iran and the ongoing situation in Gaza created volatility for Israeli-listed holdings; (2) sector-specific weakness in Health Care and Real Estate; (3) the persistent market price discount to NAV, which at current levels (~13–14%) represents both a structural risk and a potential opportunity; and (4) the inherent illiquidity premium risk of micro-cap investing, where the fund normally invests in micro-cap companies, which carry considerably more risk than investing in larger-cap companies, and its broadly diversified portfolio does not ensure a profit or guarantee against loss.

Q7. Direct URL to Earnings Release / Investor Presentation

The most recent formal filing is the H1 2026 Semiannual Report (Form N-CSRS) filed with the SEC: https://www.sec.gov/Archives/edgar/data/0000912147/000094937726000070/g118197_rmt.htm. The full Semiannual Report to Stockholders is available in PDF at Royce's website: https://www.royceinvest.com/pdf/semi-annual-report/semiannual_report_ce.pdf. The August 31, 2026 monthly performance press release (published 30 September 2026) is available at: https://www.prnewswire.com/news-releases/royce-micro-cap-trust-nyse-rmt-as-of-aug-31-2026-302895071.html.

Call Transcript / Management Commentary

Royce Micro-Cap Trust does not hold earnings calls; no earnings call transcripts are available for this ticker. As a registered closed-end fund, RMT communicates with investors exclusively through its SEC-filed semiannual and annual reports, monthly press releases, and periodic manager commentary published on royceinvest.com. The following represents the most extensive direct management commentary available from the H1 2026 Semiannual Report (Form N-CSRS, filed August 2026) and the Q2 2026 fund update (royceinvest.com), attributed to Portfolio Manager Jim Stoeffel and Assistant Portfolio Manager Andrew Palen.

Source: Royce Closed-End Funds 2026 Semiannual Report to Stockholders (period ended 30 June 2026) — Manager's Discussion, Royce Micro-Cap Trust. Portfolio Managers: Jim Stoeffel, Andrew Palen.

On Fund Performance (H1 2026): "For the year-to-date period ended 6/30/26, Royce Micro-Cap Trust (RMT) advanced 46.7% on a net asset value (NAV) basis and 44.9% based on market price, easily outperforming its small-cap benchmark, the Russell 2000 Index, which was up 22.6% for the same period."

On Sector and Industry Drivers: Seven of the fund's 10 equity sectors made positive contributions in the first half of 2026, with Financials and Information Technology leading by wide margins, followed by Industrials, while Real Estate, Health Care, and Communication Services were the sectors that detracted. At the industry level, capital markets (Financials), semiconductors and semiconductor equipment (Information Technology), and electronic equipment, instruments and components (Information Technology) had the biggest positive impacts, while the most significant detractors were real estate management and development (Real Estate), health care equipment and supplies (Health Care), and professional services (Industrials).

On the Top Contributor (Tel Aviv Stock Exchange): The fund's top contributor at the position level was Tel Aviv Stock Exchange (TASE), Israel's only public equity and debt exchange operator, which benefits from a high-margin, infrastructure-light platform model with revenue derived from trading commissions, listings, clearing fees, and technology services. Despite the war with Iran and the ongoing situation in Gaza, Israeli markets experienced high trading volumes in the first half of 2026. The heightened volumes helped drive higher transaction-fee revenue and clearing income for the exchange.

On the Macro and Small-Cap Cycle: Management noted that the big news is that the current cycle has seen small-cap stocks reassert leadership after one of the longest periods of underperformance versus large-caps in nearly a century; this pattern began to shift as share prices rebounded in early April of last year, and from 4/8/25 through 6/30/26, the Russell Microcap Index gained 108.4% and the small-cap Russell 2000 gained 74.5%, while the large-cap Russell 1000 was up 52.8%.

On the Long-Term Outlook (Jim Stoeffel, Q2 2026 Fund Update): "First-quarter performance was buoyed by the Supreme Court's landmark ruling in February striking down IEEPA tariffs — which structurally narrows executive tariff authority even as the administration pivoted to Section 122 replacement duties — continued fiscal stimulus rollout from the Infrastructure Investment and Jobs Act and 'One Big, Beautiful Bill,' and an overdue rotation into small- and micro-caps trading at historically wide valuation discounts."

"Despite these crosscurrents, we remain constructive on the micro-cap asset class. Our portfolio remains underpinned by durable thematic drivers, including reindustrialization, reshoring, and electrification. Our holdings in the supply chain supporting the buildout and densification of next-generation computing platforms and power generation assets are benefiting from multi-year project visibility."

On Investment Philosophy (Chuck Royce, standing quote, royceinvest.com): "Our task is to scour the large and diverse universe of micro-cap companies for businesses that look mispriced and underappreciated, with the caveat being that they must also have a discernible margin of safety. We are looking for stocks trading at a discount to our estimate of their worth as businesses."

On the 2025 Annual Report Outlook into 2026 (Christopher D. Clark, CEO / Co-CIO, and Francis D. Gannon, Co-CIO): "In our view, by far the most compelling case for small-cap leadership in 2026 comes from a relatively rare and promising confluence of factors: relatively low valuations for small-cap versus large-cap and the forecast for higher earnings for small-cap companies." Management noted entering 2026 with ample levels of uncertainty for both the U.S. economy and on the geopolitical front, yet investment teams remain confident that small-cap can attain and sustain market leadership, and see the current period as an opportune time to invest in select small-caps for the long run.

Transcript Source Note: Royce Micro-Cap Trust (RMT) does not conduct earnings calls. The commentary above is sourced from: (1) the Form N-CSRS filed with the SEC for the period 1 January – 30 June 2026 (https://www.sec.gov/Archives/edgar/data/0000912147/000094937726000070/g118197_rmt.htm); (2) the Royce Closed-End Funds 2026 Semiannual Report PDF (royceinvest.com/pdf/semi-annual-report/semiannual_report_ce.pdf); (3) the Royce Micro-Cap Fund Update and Outlook published on royceinvest.com for Q2 2026; and (4) the Royce Closed-End Funds 2025 Annual Report. No third-party transcript services (Seeking Alpha, Motley Fool) carry RMT earnings call transcripts, as none exist. All management quotes are attributed to Jim Stoeffel (Portfolio Manager), Andrew Palen (Assistant Portfolio Manager), and senior Royce leadership where identified.