SEMI-ANNUAL REPORT
June 30, 1995
[Logo]
The REvest
Growth & Income
Fund
A No-Load Mutual Fund
An Investment in Small And
Medium-Sized Company Equities
A Series of the Royce Fund
<PAGE>
Profile of the Fund
The REvest Growth & Income Fund ("REvest" or the "Fund"), is a series of
The Royce Fund, a Massachusetts business trust registered with the
Securities and Exchange Commission as an open-end, diversified management
investment company. The objective of the Fund is primarily long-term
capital growth and secondarily current income.
Thomas R. Ebright, President of Royce, Ebright & Associates, Inc. (RE&A), a
registered investment adviser, is responsible for the management of the
Fund's portfolio, subject to the authority of The Royce Fund's Trustees.
OUR STRATEGY FOR WEALTH BUILDING
The foundation of our strategy is the use of small and mid-sized companies
with growth prospects that are owned in a carefully controlled pool of
capital deemed practical to manage. This combined with our value
orientation allows us to buy what we think are "great companies" at "great
prices". The Fund is best used as part of a well-planned and diversified
team of long-term investments.
GREAT COMPANIES GREAT PRICES
Defined as having above Defined as having a perceived
average returns on assets & valuation discrepency between
equity, lower than average business value and market
leverage plus growth price at the time of
prospects. purchase.
[Graphic of One Dollar
Coins and arrows]
SMALL & MID-CAP STOCKS
These securities have, we believe, more potential for
growth, have historically generated higher returns for
investors, and are generally less well-known and more likely
to be improperly priced.
CONTROLLED SIZE OF FUND A MIX OF GROWTH & VALUE
Designed to allow the Fund to We look for companies that have
maintain a constant character over growth prospects that will allow
its lifetime. The Fund will them to increase their long-term
automatically close to new business value. We combine a
investors when its assets reach value-oriented selection approach
$350 million to make it more with this expectation of business
practical for the adviser to growth to select our portfolio.
actively manage the Fund's
portfolio.
<PAGE>
REvest [Logo]
Manager's Letter Growth & Income Fund
July 23, 1995
Dear Friends:
Led by large-cap, growth-oriented stocks, the overall market represented by
the S&P 500 went on a tear, up 20.2%, during the first half of 1995.
The Russell 2000 Index, representative of all small-cap stocks was also up
but clearly trailed larger-cap stocks at +14.4%. High growth and high-tech
stocks dominated this phase of the market. Significantly out of favor was
our small and medium-cap value approach which generally avoids such stocks.
In this environment, REvest gained 10.2%. (See footnotes on page 3).
Looking back, there have been many periods when either small-cap or value-
oriented stocks have been out of favor. We believe that our brand of small-
cap/medium-cap value is not dead, only resting, and that its time will come
although the exact turn is unpredictable. Our job is to be prepared with a
portfolio that is well-constructed and consistent with the Fund's stated
approach.
To this end, we constantly review the quality, value, growth and income
aspects of our portfolio in an attempt to make it better. In 1995's first
half, we had in-depth personal visits with 30% of our companies, and added
nineteen new companies to the portfolio. In addition, one of our
companies, Best Power Technology was taken over, resulting in a 55%+ profit
to the Fund. One benefit of the recent sluggish returns from our type of
stocks is that we have been able to both add new companies and build
existing positions at favorable prices.
Net sales of the Fund amounted to $7.1 million in 1995's first half and the
Fund finished with over $31 million in assets at 6/30/95, up $10 million
over its 12/31/94 year-end. This growth resulted in a drop in the Fund's
expense ratio from 1.42% to 1.36% for the first six months of the year. The
Fund continues to experience modest but steady asset growth and practices
careful expense control.
On a more personal note, RE&A gained two new staff members
this Summer. Both of my daughters, Jennifer (left) and
Ellen (right) have indicated an interest in the business
and started their careers in the firm. In addition to [Photo of Tom,
this Summer work, both are graduate MBA students, Jen at Jennifer, and
Columbia University and Ellen at Vanderbilt University. I Ellen Ebright.]
am hopeful that both will want to be a permanent part of
RE&A after graduation.
We remain confident in the Fund's future and have continued to make regular
purchases ourselves each month. We believe our companies are vibrant,
under-valued and under-appreciated. In addition, we believe that our
sector, which has been under-performing the market, is due for a change. We
intend to stay the course to what we believe will work the best for our
shareholders over the long-term. Your continued confidence in, and
ownership of, REvest is much appreciated.
Sincerely,
/s/ Thomas R. Ebright
Thomas R. Ebright
Portfolio Manager
President, Royce, Ebright & Associates, Inc. ("RE&A")
<PAGE>
Portfolio Summary
The following information is provided as a "bird's eye" view of The REvest
Growth and Income Fund portfolio as of June 30, 1995. For a more complete
picture, the full portfolio and accompanying financial statements should be
read in their entirety.
Portfolio Composition Value % of Net Assets
Common Stocks $29,453,235 92.7%
Convertible Bonds 1,150,450 3.6%
Cash & Other Net Assets 1,166,410 3.7%
Total Net Assets $31,770,095 100.0%
Industry Concentration % of Net Assets
Retail 13.2%
Consumer Products 12.9%
Industrial Cyclicals 12.6%
Financial 11.7%
Technology 11.3%
Health 9.2%
Services 8.9%
Energy 8.4%
Real Estate 8.1%
Cash 3.7%
Average Financial Characteristics of Portfolio Companies
Market Capitalization $662 Million
P/E Ratio 19.0x
P/B Ratio 2.5x
Return on Assets 7.0%
Return on Equity 14.0%
Compound 5-Year Growth Rate 11.0%
Gross Portfolio Yield 2.9%
Top Twenty Positions Market Value % of Net Assets
1.Claire's Stores, Inc. $821,063 2.6%
2.Snap-on Tools Corporation 794,375 2.5%
3.Diebold, Incorporated 717,750 2.3%
4.Seagate Technology, Inc. 6.75% Conv. 719,250 2.3%
Sub. Deb. due 5/1/12
5.Haemonetics Corporation 712,250 2.2%
6.Teleflex Incorporated 709,500 2.2%
7.Leggett & Platt, Incorporated 704,000 2.2%
8.CLARCOR Inc. 690,825 2.2%
9.Zero Corporation 687,000 2.2%
10.New Plan Realty Trust 666,775 2.1%
11.Peoples Heritage Financial Group, Inc. 652,500 2.1%
12.National Presto Industries, Inc. 644,325 2.0%
13.Cousins Properties Incorporated 639,000 2.0%
14.Kansas City Southern Industries, Inc. 610,900 1.9%
15.Tecnol Medical Products, Inc. 605,000 1.9%
16.The Standard Register Company 600,400 1.9%
17.Hadco Corporation 597,000 1.9%
18.Equitable Resources, Inc. 591,938 1.9%
19.Plains Petroleum Company 556,950 1.8%
20.Cracker Barrel Old Country Stores, Inc. 556,875 1.8%
<PAGE> REvest [Logo]
Growth & Income Fund
Performance Discussion
[Chart of 1st Quarter, 2nd Quarter and 1st Half of 1995 performance
for S&P 500, Russell 2000, and REvest, matching data shown in table below]
1st Quarter As 30-year Treasury yields decreased from 7.9% to
S&P 500 = +9.74% 7.4%, reversing 1994's increases, large-cap
Russell 2000 = +4.61% stocks enjoyed a continuation of their bull
REvest = +3.99% market which started in December. Small-cap
stocks, including REvest, played tag along, up
less than half of the market's large-cap leaders.
2nd Quarter Led by Intel (up 60%+) and Microsoft (up 40%+),
S&P 500 = +9.52% technology stocks, large and small-cap, dominated
Russell 2000 = +9.27% this time period. Value-oriented small-cap
REvest = +5.95% stocks, which include few technology issues,
trailed this new market leadership, posting
positive returns but sharing in only about 60% of
the gains.
1st Half Lacking large-cap stocks completely and
S&P 500 = +20.19% under-weighted in technology, but consistent with
Russell 2000 = +14.31% its small-cap/medium-cap value approach, REvest
REvest = +10.18% was very much out-of-sync with the major market
trends of early 1995. REvest built positions in
"cheap" sectors such as retail, energy and real
estate, more in line with its value tenets in
expectation that these sectors would recover and
provide future returns.
The unmanaged S&P 500 Index is representative of large company stocks. The
unmanaged Russell 2000 is representative of small capitalization stocks.
REvest invests primarily in small and medium capitalization stocks. All
numbers shown are "total return" and include the reinvestment of dividends.
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 only provided to give an historical perspective
of the Fund. The investment return and principal value of Fund shares will
fluctuate so that the shares may be worth more or less than their original
cost when redeemed.
<PAGE>
Schedule of Investments (at 6/30/95 - unaudited)
Common Stocks and Bonds - 96.3% Value
Shares or Principal Value Cost (Note 1)
CONSUMER PRODUCTS - 12.9 %
18,000 *First Team Sports, Inc. $194,306 $413,992
19,500 La-Z-Boy Chair Company 597,456 514,313
16,000 Leggett & Platt, Incorporated 599,620 704,000
14,200 National Presto Industries, Inc. 599,534 644,325
15,500 Oxford Industries, Inc. 303,648 282,875
33,500 Russ Berrie and Company, Inc. 450,433 464,813
45,000 The Stride Rite Corporation 597,288 466,875
10,000 Tambrands Inc. 448,825 427,500
17,300 *Wholesale & Hearty Foods, Inc. 203,448 198,950
TOTAL 3,994,558 4,117,643
ENERGY - 8.4%
18,000 Apache Corporation 451,023 492,750
20,500 Equitable Resources, Inc. 601,023 591,938
15,800 Helmerich & Payne, Inc. 449,281 466,100
2,500 KCS Energy, Inc. 54,238 53,438
18,000 Penn Virginia Corporation 601,537 506,250
18,800 Plains Petroleum Company 450,579 556,950
TOTAL 2,607,681 2,667,426
FINANCIAL - 11.7%
10,950 W. R. Berkley Corp. 395,224 388,725
10,325 Keystone Financial, Inc. 298,689 291,036
17,566 Keystone Heritage Group, Inc. 460,229 452,325
21,700 Mercantile Bankshares Corporation 450,102 488,250
43,500 Peoples Heritage Financial Group,Inc. 600,469 652,500
20,600 Protective Life Corporation 450,771 561,350
19,625 Susquehanna Bancshares, Inc. 452,319 461,188
20,200 Washington National Corporation 414,089 416,625
TOTAL 3,521,892 3,711,999
RETAIL - 13.2%
14,500 Blair Corporation 598,490 498,438
58,000 Charming Shoppes, Inc. 399,703 304,500
45,300 Claire's Stores, Inc. 501,071 821,063
27,000 Cracker Barrel Old Country Store,Inc. 599,126 556,875
40,500 *The Dress Barn, Inc. 397,556 394,875
34,000 Family Dollar Stores, Inc. 394,238 501,500
36,500 Handleman Company 397,630 351,313
11,500 Hannaford Brothers Company 302,118 327,750
44,000 *National Record Mart, Inc. 199,301 104,500
43,000 Sun Television and Appliances, Inc. 396,919 322,500
TOTAL 4,186,152 4,183,314
HEALTH - 9.2%
34,100 *Biomet, Inc. 396,775 528,550
37,000 *Haemonetics Corporation 598,590 712,250
24,000 *MedCath Incorporated 299,858 270,000
21,500 *Pyxis Corporation 457,169 486,438
22,000 *Respironics, Inc. 318,726 313,500
27,500 *Tecnol Medical Products, Inc. 497,231 605,000
TOTAL 2,568,349 2,915,738
The accompanying notes are an integral part of the financial statements.
<PAGE> REvest [Logo]
Growth & Income Fund
Value
Cost (Note 1)
INDUSTRIAL CYCLICALS - 12.6%
30,200 CLARCOR Inc. $598,380 $690,825
32,900 Crompton & Knowles Corporation 512,978 464,713
20,000 Greif Brothers Corporation Class A 462,625 467,500
17,000 Kimball International, Inc. Class B 404,728 463,250
4,500 Matthews International Corporation 68,216 84,375
20,500 Skyline Corporation 393,051 371,563
20,500 Snap-on Tools Corporation 674,085 794,375
45,800 Zero Corporation 603,831 687,000
TOTAL 3,717,894 4,023,601
REAL ESTATE - 8.1%
36,000 Cousins Properties Incorporated 600,182 639,000
23,300 Manufactured Home Communities, Inc. 451,119 358,238
29,800 New Plan Realty Trust 600,799 666,775
14,400 Pennsylvania Real Estate Investment 300,845 293,400
Trust
20,500 The Ryland Group, Inc. 300,810 330,563
23,700 Western Investment Real Estate Trust 299,874 281,438
TOTAL 2,553,629 2,569,414
SERVICES - 8.9%
12,700 Alexander & Baldwin, Inc. 297,926 282,575
3,000 Arnold Industries, Inc. 54,000 52,500
16,400 Kansas City Southern Industries, Inc. 600,549 610,900
40,000 *Lucor, Inc. Class A 205,000 240,000
12,300 PHH Corporation 450,399 547,350
31,600 The Standard Register Company 597,295 600,400
23,000 UGI Corporation 449,823 485,875
TOTAL 2,654,992 2,819,600
TECHNOLOGY - 11.3%
2,000 *C-Tec Corporation 51,000 50,250
16,500 Diebold, Incorporated 596,852 717,750
24,000 *Hadco Corporation 199,123 597,000
16,000 National Data Corporation 300,183 370,000
$685,000 Seagate Technology, Inc.
6.75% Conv. Sub. Deb. due 5/1/12 611,462 719,250
$440,000 Storage Technology Corporation
8% Conv. Sub. Deb. due 5/31/15 397,650 431,200
16,500 Teleflex Incorporated 609,205 709,500
TOTAL 2,765,475 3,594,950
TOTAL COMMON STOCKS AND CORPORATE BONDS 28,570,622 30,603,685
U.S. TREASURY OBLIGATION - 3.2%
$1,000,000 U.S. Treasury Notes 6.75% due 2/28/97 982,969 1,014,220
TOTAL INVESTMENTS - 99.5% 29,553,591 31,617,905
CASH AND OTHER ASSETS LESS
LIABILITIES - 0.5% 152,190
TOTAL NET ASSETS - 100.0% $31,770,095
*Non-income producing.
Income Tax Information - The cost for federal income tax purposes was
$29,553,591. At June 30, 1995, net unrealized appreciation for all
securities amounted to $2,064,314, consisting of aggregate gross unrealized
appreciation of $3,016,845 and aggregate gross unrealized depreciation of
$952,531.
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Assets and Liabilities (at 6/30/95 - unaudited)
ASSETS:
Investment at value (identified cost $29,553,591) (Note 1) $31,617,905
Cash 128,535
Receivable for shares of beneficial interest sold 9,000
Receivable for dividends and interest 88,620
Prepaid expenses and other assets 1,723
TOTAL ASSETS 31,845,783
LIABILITIES:
Payable for shares of beneficial interest redeemed 16,562
Investment advisory fee payable (Note 2) 25,881
Dividend payable 6,664
Accrued expenses 26,581
TOTAL LIABILITIES 75,688
NET ASSETS $31,770,095
ANALYSIS OF NET ASSETS:
Distribution in excess of net investment income ($11,978)
Accumulated net realized gain (loss) on investments (23,753)
Net unrealized appreciation on investments 2,064,314
Shares of beneficial interest (Note 3) 3,010
Additional paid-in capital 29,738,502
NET ASSETS $31,770,095
PRICING OF SHARES:
Net asset value, offering and redemption price per share
($31,770,095 / 3,010,268 shares outstanding) (Note 3) $10.55
Statements of Changes in Net Assets
Six Months ended Period ended
June 30, 1995 December 31, 1994
(unaudited) (Note 1)
From Investment Activities:
Net investment income $282,979 $80,390
Net realized gain on investments 9,035 (32,788)
Net unrealized appreciation on investments 2,618,173 (553,859)
Increase (decrease) in net assets resulting
from operations 2,910,187 (506,257)
Dividends paid from net investment income (267,721) (107,626)
From Capital Share Transactions:
Increase in net assets from capital share
transactions (Note 3) 7,451,289 22,270,223
Increase in net assets 10,093,755 21,656,340
Net Assets:
Beginning of period (Note 1) 21,676,340 20,000
End of period (including distributions in
excess of net investment income of $11,978
and $27,236, respectively) $31,770,095 $21,676,340
The accompanying notes are an integral part of the financial statements.
<PAGE>
REvest [Logo]
Growth & Income Fund
Statement of Operations (for the six months ended 6/30/95 - unaudited)
INVESTMENT INCOME:
Income:
Dividends $408,700
Interest 68,077
Total Income 476,777
Expenses:
Investment advisory fee (Note 2) 144,507
Custodian and transfer agent fees 19,417
Federal and state registration fees 7,846
Miscellaneous 8,558
Administrative and clerical services 6,516
Auditing and legal fees 5,785
Trustees' fees 1,169
Total Expenses 193,798
Net Investment Income 282,979
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (Note 1):
Net realized gain on investments 9,035
Net unrealized appreciation on investments 2,618,173
Net realized and unrealized gain on investments 2,627,208
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,910,187
The accompanying notes are an integral part of the financial statements.
Financial Highlights
This table is presented to show selected data for a share outstanding
throughout each period and to assist shareholders in evaluating the Fund's
performance.
Six Months ended Period ended
June 30, 1995 December 31, 1994
(unaudited) (Note 1)
Net Asset Value, Beginning of Period $9.66 $10.00
Income From Investment Operations:
Net Investment Income (a) 0.10 0.04
Net Gains or Losses on Investments
(both realized and unrealized) 0.88 (0.33)
Total From Investment Operations 0.98 (0.29)
Less Distributions:
Dividends (from net investment income) (0.09) (0.05)
Distributions (from net capital gains) - -
Total Distributions (0.09) (0.05)
Net Asset Value, End of Period $10.55 $9.66
Total Return 10.2% -2.9%
Ratios/Supplemental Data:
Net Assets, End of Period $31,770,095 $21,676,340
Ratio of Expenses to Average Net Assets (b) 1.36%* 1.42%*
Ratio of Net Investment Income
to Average Net Assets (c) 1.99%* 1.45%*
Portfolio Turnover Rate 26% 5%
* Annualized.
(a) Net investment income is shown after waiver of fees by the investment
adviser. The per share effect of this waiver is $0.01 for the period ended
December 31, 1994.
(b) The ratio of expenses to average net assets before waiver of fees by
the investment adviser would have been 1.78% for the period ended December
31, 1994.
(c) The ratio of net investment income to average net assets before waiver
of fees by the investment adviser would have been 1.09% for the period
ended December 31, 1994.
The accompanying notes are an integral part of the financial statements.
<PAGE>
Notes To Financial Statements (unaudited)
1. Summary of Significant Accounting shareholder distributions will
Policies: The REvest Growth & result in reclassifications to
Income Fund (the "Fund") is a series paid-in capital and may affect net
of The Royce Fund (the "Trust"), a investment income per share.
diversified open-end management Undistributed net investment income
investment company established as a may include temporary book and tax
business trust under the laws of basis differences which will reverse
Massachusetts. On July 29, 1994, in a subsequent period. Any
the Fund issued 2,000 shares of taxable income or gain remaining at
beneficial interest for $20,000 to fiscal year end is distributed in
effect the Fund's initial the following year.
capitalization. The Fund commenced
operations on August 1, 1994. e. Repurchase agreements:
The Fund enters into repurchase
a. Valuation of investments: agreements with respect to its
Securities listed on an exchange or portfolio securities solely with
on the Nasdaq National Market State Street Bank and Trust Company
System are valued on the basis of ("SSB&T"), the custodian of its
the last reported sale prior to the assets. The Fund restricts
time the valuation is made or, if repurchase agreements to maturities
no sale is reported for such day, of no more than seven days.
at their bid price for Securities pledged as collateral
exchange-listed securities and at for repurchase agreements are held
the average of their bid and asked by SSB&T until maturity of the
prices for Nasdaq securities. repurchase agreements. Repurchase
Quotations are taken from the agreements could involve certain
market where the security is risks in the event of default or
primarily traded. Other insolvency of SSB&T, including
over-the-counter securities for possible delays or restrictions
which market quotations are readily upon the ability of the Fund to
available are valued at their bid dispose of the underlying
price. Securities for which market securities.
quotations are not readily available
are valued at their fair value 2. Investment Adviser:
under procedures established and Under the Trust's investment
supervised by the Trustees. Bonds advisory agreement with Royce,
and other fixed income securities Ebright & Associates, Inc.
may be valued by reference to other ("RE&A"), the Fund accrued and paid
securities with comparable ratings, RE&A fees totaling $144,507 for the
interest rates and maturities, six months ended June 30, 1995. The
using established independent agreement provides for fees equal
pricing services. to 1.0% per annum of the Fund's
average net assets. Such fees are
b. Investment transactions and computed daily and are payable
related investment income: monthly to RE&A.
Investment transactions are
accounted for on the trade date and
dividend income is recorded on the 3. Fund Shares:
ex-dividend date. Interest income is The Trustees have authority to issue
recorded on the accrual basis. an unlimited number of shares of
Realized gains and losses from beneficial interest of the Fund,
investment transactions and with a par value of $.001. Share
unrealized appreciation and transactions were as follows:
depreciation of investments are
determined on the basis of For the period
identified cost for book and tax For the six months August 1, 1994
purposes. ended (commencement of
June 30, 1995 operations) through
c. Taxes: (unaudited) December 31, 1994
The Fund intends to qualify as a Shares Amount Shares Amount
regulated investment company under Sold
Subchapter M of the Internal Revenue 875,374 $8,552,721 2,244,020 $22,301,090
Code. The Fund is not subject to
income taxes to the extent that it Issued as
distributes substantially all of reinvested
its taxable income for its fiscal dividends and
year. The schedule of investments distributions
includes information regarding 35,474 356,702 - -
income taxes under the caption
"Income Tax Information". Redeemed
(143,436)(1,458,134) (3,164) (30,867)
d. Distributions to shareholders:
Distributions are recorded on the 4. Purchases and Sales of Securities:
ex-dividend date. Income and
capital gain distributions are For the six months ended June 30,
determined in accordance with income 1995, the cost of purchases and the
tax regulations which may differ proceeds from sales of portfolio
from generally accepted accounting securities, other than short-term
principles. Permanent book and tax securities, amounted to $15,616,724
basis differences relating to and $7,228,021, respectively.
<PAGE>
Customer Service REvest [Logo]
Growth & Income Fund
1. If I have questions or need literature about the Fund who may I call?
Call RE&A's customer service office, at 800-277-5573. We are open from 9:00 am
to 5:30 pm (Eastern Time) every business day.
2. If I have questions about the Fund's investments who should I call?
Call Tom Ebright, the portfolio manager, at 800-277-5573. We're one of a
small number of funds where the manager is available to talk directly to
investors. If Tom's traveling he'll return your call when he returns to the
office. We try to treat our investors as true partners, with us, in the
Fund.
[Photo of Andrew J. Wigzell, Vice President, Customer Service]
3. How often does the Fund mail out statements?
Cumulative statements are mailed out after each transaction and after
each dividend. Tax information is mailed by January 31st of each year. The
Fund distributes formal Semi-Annual and Annual Reports which are mailed to
each shareholder in August and February.
4. Does the Fund maintain a mailing list for the benefit of its "street
name" shareholders?
Yes, if your shares are held in a brokerage account and you would like
to receive your mailings directly from the Fund call RE&A's office and we
will add your name to the Fund's mailing list. This will get Fund material to
you much faster and allow us to contact you directly by mail.
5. Is it correct that there are no sales charges or 12b-1 fees?
Yes, not one penny of your investment goes to any sales charge or 12b-1
fee. The Fund is one of the so-called "pure" no-load Funds. You will rarely,
if ever, see the Fund advertised to investors. We believe that the Fund
should sell itself because it does a good job for its investors.
[Photo of the Royce, Ebright & Associates, Inc. "Staff"
Andrew Wigzell, Jennifer Ebright, and Ellen Ebright.]
6. Is the Fund available for IRA investments and other retirement plans?
Yes, the Fund offers both IRA and 403(b)7 plans to its investors.
Because of the Fund's philosophy and long-term approach to investing we
believe that it may be an appropriate vehicle for all types of retirement
plans.
7. When does the Fund pay income & capital gain distributions?
The Fund makes quarterly income distributions and an annual capital gain
distribution at the end of December. A preliminary, non-binding estimate of
the amount of the year-end distributions is available to shareholders by
calling the RE&A office any time after the Thanksgiving holiday.
Distributions are automatically reinvested unless we receive other
instructions from the shareholder.
8. Why does the Fund impose a 1% redemption fee during the first year of
ownership?
This fee is charged to discourage short-term trading in the Fund's shares.
When short-term investors trade in and out of a mutual fund they increase the
costs of operations for the permanent shareholders. This activity can also
disrupt the investment plan for the portfolio and reduce overall returns.
When charged, the 1% fee recovers the costs of this disruption for the rest of
the shareholders.
<PAGE>
This report must be accompanied or preceded by a current Prospectus of the
Fund.
Royce, Ebright & Associates, Inc.
Investment Adviser
8 Sound Shore Drive
Greenwich, CT 06830
(203)862-9712 (800)277-5573
Fax(203)862-9419
REvest
Growth & Income Fund
1414 Avenue of the Americas
New York, New York 10019
(800) 221-4268
A Series of the Royce Fund
