SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
THE ROYCE FUND
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A..
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0- 11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing. 1) Amount
Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date filed:
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The Royce Funds
1414 Avenue of the Americas
New York, NY 10019
(212) 355-7311
(800) 221-4268
May__, 1996
Dear Shareholder:
Enclosed is a Proxy Statement describing the items to be
voted on at a Special Meeting of Shareholders of The Royce Fund.
Certain of the items apply to only one or several Funds, while
others apply to The Royce Fund overall. In all cases, your vote
in extremely important, regardless of the number of shares that
you own.
The items include proposed changes to the investment
policies of certain of the Funds to bring them current with the
other Funds and a proposed change for all but one of the Funds to
permit investment of up to 5% of a Fund's assets in warrants,
rights and options. This change will give these Funds (with one
exception) the ability to invest in, among other things, index
options in order to be fully invested in the market while holding
cash for specific opportunities or for redemption protection.
A change in the Trust's state of organization from
Massachusetts to Delaware is also proposed. This change, coupled
with the planned merger of Pennsylvania Mutual Fund into The
Royce Fund (Delaware), should enhance the Trust's operating
abilities and present significant cost saving to the combined
entities.
I believe that each of the proposals is important to the
Funds' operations and will be beneficial to the shareholders.
Please vote your shares promptly by using the enclosed proxy card
and postage-paid envelope. Be sure to complete and sign each
proxy card. As the date of the meeting approaches, if we have
not received your vote, you may receive a call from Shareholder
Communications Corporation, which has been retained to assist
shareholders in the voting process.
Sincerely,
Charles M. Royce
President
PS: If you have any questions, please call Investor Information
at 1-800-221-4268.
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THE ROYCE FUND
Royce Value Fund Royce Low-Priced Stock Fund Royce Total Return Fund
Royce Premier Fund Royce Micro-Cap Fund Royce Global Services Fund
Royce Equity Income FundRoyce GiftShares Fund The REevest Growth & Income Fund
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of
The Royce Fund: All Series
Notice Is Hereby Given that a Special Meeting of Shareholders of
all series (the "Funds" or "series") of The Royce Fund (the "Trust")
will be held at the offices of the Trust, 1414 Avenue of the
Americas, New York, New York, on Wednesday, June 26, 1996, at _____
p.m. The purpose of the Special Meeting is to consider and act on
the following proposals, and to transact such other business as may
properly come before the meeting or any adjournments. Unless
otherwise specified, each proposal relates to all series of the
Trust:
1. To permit Royce Value Fund to borrow money temporarily for
certain purposes (Royce Value Fund shareholders only);
2. To permit loans of portfolio securities (Royce Value, Premier
and Micro-Cap Fund shareholders);
3. To amend the investment restriction relating to warrants,
rights and options to permit investment of up to 5% of total
assets in warrants, rights and options (shareholders of all
Funds except REvest Growth & Income Fund);
4. To approve the conversion of the Trust from a Massachusetts
business trust to a Delaware business trust (shareholders of
all Funds);
5. To elect a board of seven trustees for the Trust (shareholders
of all Funds); and
6. To ratify the selection of Coopers & Lybrand LLP as
independent certified public accountants of the Trust
(shareholders of all Funds).
Please note that the form of proxy provides a space on which
you may grant or withhold authority to vote in the election of
trustees and act on each of the other proposals.
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Proxies which are properly executed but not otherwise marked
will be voted in favor of the election of the proposed trustees and
in favor of each of the other proposals.
The Board of Trustees has fixed the close of business on May
16, 1996 as the record date for the determination of shareholders
entitled to notice of, and to vote at, the Special Meeting and any
adjournments.
The Funds' Annual Reports to Shareholders for the year ended
December 31, 1995 were previously mailed to shareholders, and
copies are available upon request, without charge, by writing to
The Royce Fund at 1414 Avenue of the Americas, New York, New York
10019 or calling toll free at 1-800-221-4268.
By order of the Board of Trustees.
Daniel A. O'Byrne
Assistant Secretary
May _____, 1996
YOUR VOTE IS IMPORTANT
Please spare the Trust and your Fund the unnecessary expense and
delay of additional proxy solicitations. If you do not now expect
to attend the Special Meeting, please indicate your instructions on
the enclosed proxy, date and sign it, and return it in the enclosed
envelope (which requires no postage if mailed in the United
States). The proxy is revocable and will not affect your right to
vote in person if you attend the meeting.
<PAGE>
Preliminary Proxy Material
SPECIAL MEETING OF SHAREHOLDERS
OF
THE ROYCE FUND
1414 Avenue of the Americas, New York, New York 10019
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Trustees of The Royce
Fund (the "Trust"), to be used at the Special Meeting of
Shareholders of all of its series (the "Funds" or "series"). The
meeting will be held at the offices of the Trust, 1414 Avenue of
the Americas, New York, New York 10019 on June 26, 1996 at [time
p].m. for the purposes set forth in the Notice of Meeting.
The purpose of the meeting is to vote on certain proposed changes
to be made with respect to the Trust and its Funds. The Board
asks that shareholders approve changes to the investment policies
of one or more of the Funds to permit certain borrowings,
securities lending and investment in warrants, rights and
options. In addition, shareholders of all of the Funds are being
asked to approve a change in the Trust's state of organization,
using an Agreement and Plan of Merger to convert the Trust to a
Delaware business trust, which should enhance the Trust's
operating abilities. In connection with the merger, another
Quest Advisory Corp.-advised mutual fund, Pennsylvania Mutual
Fund, ("PMF"), will merge into the new Delaware business trust
and become a separate series of the new trust. Finally,
shareholders of all of the Funds will vote on seven nominees for
Trustees and to ratify the Board's selection of independent
accountants for the Funds.
Your proxy is being solicited by the Board of Trustees of The
Royce Fund, and you are asked to vote on the following matters,
depending on which Fund(s) you own:
ITEM PROPOSAL SHAREHOLDERS VOTING
1 Permit temporary borrowing for Value Fund
extraordinary or emergency
purposes
2 Permit collateralized securities Value, Premier and Micro-Cap Funds
lending
3 Permit investment of 5% of assets All Fund except REvest Growth &
in warrants, rights and options Income Fund
4 Conversion to Delaware business All Funds
trust
5 Elect Board of Trustees All Funds
6 Ratify selection of accountants All Funds
<PAGE>
Timely, properly-executed proxies will be voted as you instruct.
If you give no voting instructions, your shares will be voted for
the election of all the nominees named, and in favor of each of
the proposals described, in this Proxy Statement. Each proposal
being considered at the Meeting will be approved only if a
sufficient number of votes are cast in favor of that proposal.
Accordingly, votes to abstain and votes against will have the
same effect.
Please do not write on the proxy card except for voting, dating
and signing. A proxy may be revoked at any time prior to its
exercise by written notice to the Fund, by executing a subsequent
proxy or by voting in person at the Meeting, whether or not a
previous proxy has been filed. The Meeting may be adjourned to a
later date in the event a quorum or sufficient votes have not
been obtained by the date of the Meeting.
The costs of the Meeting, including the solicitation of proxies,
will be paid by the Funds. The Funds will reimburse brokerage
firms, custodians, nominees, fiduciaries and others, where
applicable, for their expenses in forwarding solicitation
material to the beneficial owners of shares. The principal
solicitation of proxies will be by the mailing of this Proxy
Statement on or about May __, 1996, but proxies may also be
solicited by telephone and personal contact by representatives of
the Trust and by regular employees of Quest Advisory Corp. The
Trust may also engage the services of a professional solicitor,
such as Shareholder Communications Corporation, for help in
securing shareholder representation at the Meeting.
Shareholders of record at the close of business on May 16, 1996,
will be entitled to vote at the Meeting. Each shareholder will
be entitled to one vote for each share held on that date. The
vote required for the approval of Items 1 through 3 (changes to
fundamental investment policies) is a majority of each affected
Fund's outstanding voting securities, which is the lesser of (i)
a majority of the Fund's outstanding voting securities or (ii)
67% or more of those present if more than 50% of the Fund's
shares are represented at the meeting. Item 4 requires the
affirmative vote of a majority of the issued and outstanding
shares of all of the Funds voting together as if the Trust had no
separate series. Items 5 and 6 require the affirmative vote of a
majority of the shares of all of the Funds so voting that are
present in person or represented by proxy at the meeting.
Information About Share Ownership
On May 16, 1996, the Trust had ____ shares of beneficial interest
of all of the Funds issued and outstanding, and there were issued
and outstanding the following number of shares of beneficial
interest for each of the Funds: Value - _______; Premier -
_______; Equity Income - ________; Low-Priced Stock - _______;
Micro-Cap - _________; GiftShares - _______; Total Return -
_______; Global Services - ________; and REvest Growth & Income
_________.
<PAGE>
As of the same date, the persons listed in Appendix 1 to this
Proxy Statement were known to the Trust to be the record or
beneficial owners of 5% or more of the outstanding shares of
certain Funds.
As of May 16, 1995, all of the trustees, nominees and officers of
the Trust as a group beneficially owned less than 1% of the
outstanding shares of each of Royce Value, Equity Income, Premier
and Micro-Cap Funds and The REvest Growth & Income Fund. The
group beneficially approximately owned _____% of the outstanding
shares of Royce Low-Priced Stock, _____% of the outstanding
shares of Total Return and _____% of the outstanding shares of
Global Services Funds. In addition, W. Whitney George, as
trustee for members of Charles M. Royce's immediate family, owned
_____% of the outstanding shares of Royce GiftShares Fund.
ITEM 1.To Permit Royce Value Fund to Borrow Money Temporarily for
Certain Purposes
Voting Fund: Value
The Board recommends that the Fund's shareholders approve a
change in the fundamental investment policy of the Fund
concerning the borrowing of money. Specifically, Royce Value
Fund, which is currently prohibited from borrowing money for any
purpose, would be permitted to "borrow money from banks as a
temporary measure for extraordinary or emergency purposes in an
amount not exceeding 5% of the Fund's total assets."
This change would conform the Royce Value Fund's policy on
borrowing to the standard for all of the other Funds. Having a
uniform policy on borrowing would aid management's administration
of the Trust. In addition, the Board believes this change is in
the best interests of shareholders since it affords the Fund
greater flexibility to meet shareholder redemption requests
should the need arise. This flexibility would help the Fund
avoid liquidating securities at unfavorable prices or times in
the unlikely event it were faced with substantial shareholder
redemptions. Adoption of the proposal is not expected to affect
the way in which the Fund is managed.
The Board of Trustees recommends that shareholders vote FOR the
proposal.
ITEM 2. To Permit Loans of Portfolio Securities
Voting Funds: Value, Premier and Micro-Cap
Royce Value, Premier and Micro-Cap Funds are currently prohibited
from making "loans, except for purchases of portions of issues of
publicly-distributed bonds, debentures and other securities,
whether or not such purchases are made upon the original issuance
of such securities."
<PAGE>
The Board proposes to amend this investment
restriction to enable the Funds to lend their portfolio
securities to brokers, dealers and other permissible
institutions. Such loans would be continuously secured by cash or
other allowable forms of collateral equal at all times to at
least 100% of the value of the securities loaned. No securities
loans would be made if, as a result, the aggregate of such loans
would exceed 25% of the value of the Fund's total assets.
The purpose of lending portfolio securities would be to attempt
to increase a Fund's income. The advantage of such loans is that
the Fund continues to receive the equivalent of the interest
earned or dividends paid by the issuers on the loaned securities
while at the same time earning interest on the cash or equivalent
collateral. Securities loans are usually made to broker-dealers
and other financial institutions to facilitate their delivery of
such securities.
Loans of portfolio securities by a Fund would be subject to
certain guidelines prescribed, and from time to time modified, by
the staff of the Securities and Exchange Commission. Under
present guidelines, for example, the borrower must provide the
Fund with collateral equal at all times to at least 100% of the
value of the securities loaned. If the market value of the
loaned securities increases beyond the value of the collateral,
the borrower must provide the Fund with additional collateral; if
that value declines, the borrower is entitled to the return of
its collateral to the extent of the decline. Under present
guidelines, the types of collateral permitted are cash, short-
term Government securities, letters of credit and trust receipts.
A Fund could increase its income in connection with portfolio
securities loans in several ways. First, the Fund could receive
a negotiated loan fee from the borrower. The second method (not
available when letters of credit and/or trust receipts are used
as collateral) is to invest cash collateral in certain securities
and receive interest on them or to receive interest on the
securities held as collateral; in either case, the interest
received may be shared with the borrower.
The Trust expects to enter into an agreement with State Street
Bank and Trust Company, the custodian of the Funds' assets, which
will provide finders, custodial and administrative services to
the Funds in connection with securities lending activities. For
these services, State Street will be entitled to receive
reasonable fees which may include a portion of the loan fee paid
by the borrower and a portion of earnings from investments of
cash collateral or earnings on the securities held as collateral.
The risks of lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in
receiving additional collateral or in the recovery of the loaned
securities or the possible loss of rights in the collateral
should the borrower fail financially. Loans of portfolio
securities would be made to firms deemed by Quest to be of good
credit standing and would not be made unless, in Quest's
judgment, the earnings from such loans would justify the risk.
Under the terms of the securities loans the Funds would make,
each Fund would have the right to call the loan at any time. At
the present time, the guidelines permit the voting rights
<PAGE>
attendant to the securities loaned to pass to the borrower,
although they require that such loans be called so that the
securities may be voted by the Fund if a material event affecting
the investment occurs.
The Board of Trustees believes that the authority to lend
portfolio securities may enhance each Fund's earnings potential
and is, therefore, in the best interests of the Funds and their
shareholders. The Board therefore proposes that the current
investment restriction be revised, consistent with the provisions
for Royce Equity Income, Low-Priced Stock, GiftShares, Total
Return and Global Services Funds, to allow the Royce Value,
Premier and Micro-Cap Funds each to "loan up to 25% of their
respective assets to qualified brokers, dealers or institutions
for their use relating to short sales or other securities
transactions, provided that such loans are fully collateralized
at all times."
The Board of Trustees recommends that shareholders vote FOR the
proposal.
ITEM 3. To Permit Investment of up to 5% of Assets in Warrants,
Rights and Options
Voting Funds: All Funds Except The REvest Growth & Income Fund
The current investment restriction provides that the Funds may
not purchase "any warrants, rights or options, except that (i)
all of the Funds other than Royce Value Fund may, if no value is
assigned thereto, acquire warrants in units with or attached to
debt securities or non-convertible preferred stock, and (ii)
Royce Low-Priced Stock, GiftShares, Total Return and Global
Services Funds may also invest up to 5% of their respective net
assets in warrants, valued at the lower of cost or market,
provided that warrants that are not listed on the New York or
American Stock Exchanges shall not exceed 2% of such Funds'
respective net assets."
The Board has determined that this policy unnecessarily restricts
the Funds from taking advantage of potential investment
opportunities and risk management techniques, and the change
recommended below is designed to provide greater flexibility to
the Funds.
It is proposed that this restriction be revised uniformly to
provide that no Fund may "invest more than 5% of its total assets
in warrants, rights and options."
Warrants, Rights and Options
A warrant, right or call option entitles the holder to purchase a
given security within a specified period for a specified price
and does not represent an ownership interest. A put option gives
the holder the right to sell a particular security at a specified
price during the term of the option. These securities have no
voting rights, pay no dividends and have no liquidation rights.
In addition, their market prices do not necessarily move parallel
to the market prices of the underlying securities.
<PAGE>
The sale of warrants, rights or options held for more than one
year generally results in a long-term capital gain or loss to the
Fund, and the sale of warrants, rights or options held for less
than one year generally results in a short-term capital gain or
loss. The holding period for securities acquired upon exercise
of a warrant, right or call option, however, generally begins on
the day after the date of exercise, regardless of how long the
warrant, right or option was held. The securities underlying
warrants, rights and options could include shares of common stock
of a single company or securities market indices representing
shares of the common stocks of a group of companies, such as the
S&P 600.
Reasons for Proposed Changes
The Board believes that having the ability to invest in warrants,
rights and call options on a given security would allow the Funds
to hold an interest in a security without having to commit assets
equal to the market price of the underlying security and, in the
case of securities market indices, to participate in a market
without having to purchase all of the securities comprising the
index. Put options, whether on shares of common stock of a
single company or on a securities market index, would permit the
Funds to protect the value of a portfolio security against a
decline in its market price and/or to benefit from an anticipated
decline in the market price of a given security or of a market.
Thus, investing in warrants, rights and options would permit the
Funds to incur additional risk and/or to hedge against risk and,
therefore, represents a useful investment technique. By limiting
the amount of its total assets that may be invested in warrants,
rights and options to 5%, a Fund would not put a substantial
portion of its assets at risk in those cases where the purpose of
such investments is speculative rather than hedging.
Notwithstanding any approval granted by shareholders, the
securities or "Blue Sky" laws of several states may limit the
extent to which the Funds may invest in unlisted warrants and
options, and the Funds may still be precluded from taking maximum
advantage of the techniques described above until such time as
the states remove any barriers that may now exist. The operating
policies of the Funds will reflect any such limitations on
investment.
The Board of Trustees recommends that shareholders vote FOR the
proposal.
ITEM 4. Conversion of the Trust's Form of Organization to a
Delaware Business Trust
Voting Funds: All
The Royce Fund Merger into a Delaware Business Trust
The Board has approved a proposal to convert the Trust from a
Massachusetts business trust to a Delaware business trust. The
purpose of the conversion is to modernize the Trust's governing
and operating structure and thereby to allow the Trust to avail
itself, for the benefit of its Funds and their shareholders, of
various provisions that either do not exist or are not
<PAGE>
explicit
under the laws governing Massachusetts business trusts. For
example, while the risk of shareholder liability is not great,
Delaware law appears to provide shareholders with greater
protection from liabilities incurred by the Trust. In addition,
there are provisions of Delaware law that should serve to reduce
costs of operation as new technologies become available, such as
electronic communications. Other provisions include the ability
of the Trust or its Fund series to merge or consolidate with
other entities and to deal with noninvestment-related operational
issues without a shareholder vote, which affords enhanced
flexibility and saves costs the Funds would otherwise incur.
If approved by shareholders, the conversion would be effected at
the close of business on June 28, 1996, through a merger of the
Trust and its Funds with and into a newly-organized Delaware
business trust also named The Royce Fund (the "New Trust") and
having Fund series identical to and having the same names as
those of the Trust (each such Fund series of the New Trust, a
"New Fund" and collectively, the "New Funds"). The New Trust was
formed on April 12, 1996. The merger is described in an
Agreement and Plan of Merger (the "Plan") in the form attached to
this Proxy Statement as Exhibit A.
When the merger of the Trust with and into the New Trust becomes
effective, each Fund will automatically be merged with and into
its respective New Fund counterpart, and the then outstanding
shares of beneficial interest of each Fund will automatically
become identical shares of beneficial interest of its respective
New Fund counterpart. These mergers will be tax-free
reorganizations under Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended, so that neither the Funds nor
their shareholders will recognize any income, gain or loss as a
result of the mergers, and the tax bases or costs of the Funds'
portfolio securities and other assets and of their shareholders'
shares will carry over unchanged. The mergers will not require
action by any shareholder, so that shareholder accounts in the
Funds will automatically become shareholder accounts in their
respective New Fund counterparts, and certificates representing
shares of a Fund will automatically represent shares of its New
Fund counterpart.
As a result of the merger, the assets and liabilities of the
Trust and of each Fund will be automatically transferred to and
assumed by, respectively, the New Trust and each New Fund
counterpart. The Funds' present investment advisory agreements
and distribution arrangements with their respective investment
advisers and distributor will therefore continue in full force
and effect, and the newly-elected trustees of the Trust, who are
also trustees of the New Trust and PMF, will automatically become
trustees of the New Trust. The officers of the New Trust, who
are also the officers of the Trust and PMF, will also continue in
office. Following these mergers, each New Fund will continue to
have the same stated investment objectives, policies and
limitations as its Fund counterpart currently has, subject to the
changes in investment policy being voted on in this Proxy
Statement.
<PAGE>
Pennsylvania Mutual Fund Merger and Cost Savings
If the Trust's shareholders approve its conversion into a
Delaware business trust, PMF, an open-end management investment
company that invests in the equity securities of small and micro-
cap companies and whose investment adviser is Quest Advisory
Corp., will concurrently merge with and into its own separate
counterpart series of the New Trust.
As of March 31, 1996, PMF had net assets of approximately
$581,172,836 and 22,696 shareholders, and the Funds had aggregate
net assets of approximately $657,746,367 and 29,865 shareholders.
It is expected that both the Funds and PMF will together realize
substantial cost savings as a result of the mergers and be able
to take advantage of greater economies of scale in their
operations.
The Funds and PMF will share the costs and expense of the mergers
in proportion to their respective net assets.
General Information on Delaware Business Trusts
As a Massachusetts business trust, the Trust is governed by a
Declaration of Trust under Massachusetts law. Under Delaware
law, a business trust has a Trust Instrument as its governing
document. New Trust and New Fund operations will continue to be
subject to the Investment Company Act of 1940 (the "1940 Act")
and other laws and rules which the Securities and Exchange
Commission has been charged with overseeing for the benefit of
public investors. The business and affairs of the New Trust
will, like those of the Trust, be managed by or under the
direction of the trustees, who serve indefinite terms and who
have all powers necessary to carry out that responsibility. The
responsibilities, powers and fiduciary duties of the trustees of
the New Trust will be substantially the same as those of the
trustees of the Trust.
Delaware law appears to provide somewhat greater protection to
shareholders from personal liability for obligations of the New
Trust and their respective New Funds than does Massachusetts law.
For example, although Massachusetts law is silent on the subject,
Delaware law states that a shareholder of a Delaware business
trust is entitled to the same limitation of personal liability
that accrues to stockholders of Delaware for-profit corporations.
Because of this and other safeguards, such as recognizing the
efficacy of a statement in contracts of a Delaware business trust
that the trust's obligations under the contract may be enforced
only against the trust's assets and not its trustees, officers or
shareholders, the Board believes that Delaware law should make
the risk of personal liability to shareholders even more remote
than it is under Massachusetts law.
The Royce Fund as a Delaware business trust will not hold annual
shareholder meetings, just as it does not currently hold such
meetings as a Massachusetts business trust. Shareholders will
have the power to vote only with respect to the election or
removal of trustees, the approval of any new or amended
investment advisory contract for their respective New Funds and
on other
<PAGE>
matters relating to the New Trust and/or their
respective New Funds as may be required or authorized by law, the
Trust Instrument or the Bylaws or as determined by the trustees,
such as changes in a New Fund's fundamental investment policies.
Future transactions such as mergers of the New Trust or of a New
Fund may not require a shareholder vote.
The business and affairs of the New Trust will be managed under
the direction of the newly-elected trustees. The trustees of the
New Trust will hold office without limit in time except that: (i)
any trustee may resign; (ii) any trustee may be removed with or
without cause at any time by written instrument signed by at
least two-thirds of the other trustees; (iii) any trustee who
requests to be retired, or who has become physically or mentally
incapacitated or is otherwise unable to serve, may be retired by
written instrument signed by a majority of the other trustees;
and (iv) any trustee may be removed with or without cause at any
meeting of shareholders by a vote of two-thirds of the
outstanding shares of the New Trust at a meeting duly called for
the purpose, which meeting will be held upon the written request
of the holders of at least 10% of the New Trust's outstanding
shares. Whenever a vacancy shall exists among the trustees, the
remaining trustees may appoint any person as they determine in
their sole discretion to fill that vacancy, consistent with the
limitations under the 1940 Act. These procedures are similar
(but not identical) to the procedures for the Trust.
With respect to the removal of a trustee initiated by a
shareholder, upon the written request by 10 or more shareholders
of the New Trust's series, who have been shareholders for at
least 6 months and who hold shares constituting at least 1% of
the outstanding shares of the New Trust's series, stating that
such shareholders wish to communicate with the New Trust's other
shareholders for the purpose of obtaining the signatures
necessary to demand a meeting to consider the removal of a
trustee, like the Trust, the then Trust is required to provide a
list of its shareholders or to disseminate appropriate materials
(at the expense of the requesting shareholders). Except as
provided above, the trustees may continue to hold office and
appoint their successors.
The Board of Trustees recommends that shareholders vote FOR the
proposal. In the event the required vote is not achieved, the
Trust will continue operations as a Massachusetts business trust.
ITEM 5. Election of Trustees
Voting Funds: All
Seven individuals have been nominated for election as trustees of
the Trust. Each nominee has consented to serve if elected at the
Special Meeting.
If elected, the trustees will hold office for an unlimited period
of time. However, any trustee may resign, and any trustee may be
removed with or without cause at any time by a
<PAGE>
written instrument
signed by at least two-thirds of the other trustees. In case of
a vacancy on the Board, the remaining trustees may, in their
discretion, appoint any person to fill the vacancy. If at any
time less than a majority of the trustees have been elected by
shareholders, the trustees then in office will promptly call a
meeting of shareholders for the purpose of electing trustees.
Other than when that situation occurs, no shareholder meetings
will be held for the purpose of electing trustees unless
otherwise required.
Business Experience
Each of the nominees for trustee is listed below. Messrs. Royce,
Galkin, Isaacs and Meister currently serve as trustees to the
Trust. An asterisk (*) next to a name indicates that the nominee
is an "interested person" of the Trust and/or Quest, as defined
in the 1940 Act.
Charles M. Royce* (age 56), is the President, Secretary,
Treasurer and sole director and sole voting shareholder of Quest,
the Trust's principal investment adviser. He became affiliated
with Quest in June 1972, and has served as its President and
Treasurer since November 1972. Mr. Royce also manages three
private investment partnerships through Quest Management Company
("QMC"), a registered investment adviser, of which he is the
managing general partner.
Thomas R. Ebright* (age 51), has been a Vice President of Quest
since September 1981. He has also been President, Treasurer, a
director and principal shareholder of Royce, Ebright &
Associates, Inc., the investment adviser to a series of The Royce
Fund, since June 1994. He was a general partner of QMC and its
predecessor until June 1994. Mr. Ebright is also a director of
Atlantic Pro Sports, Inc. and of the Strasburg Rail Road Co.
since March 1993 and was the President and principal owner of
Baltimore Professional Hockey, Inc. until May 1993.
Hubert L. Cafritz (age 72) is a financial consultant.
Richard M. Galkin (age 57) is a private investor and President of
Richard M. Galkin Associates, Inc., telecommunications
consultants.
Stephen L. Isaacs (age 56) is an attorney, Director of Columbia
University Development Law and Policy Program, a Professor at
Columbia University and President of Stephen L. Isaacs
Associates, Consultants.
William L. Koke (age 61) is a registered investment adviser and
financial planner with Shoreline Financial Consultants.
David L. Meister (age 56) has been consultant to the
communications industry since January 1993 and executive officer
of Digital Planet Inc. from April 1991 to December 1992.
<PAGE>
All of the nominees are also trustees of PMF and, except for
Messrs. Cafritz and Koke, directors of Royce Value Trust, Inc.
and Royce Micro-Cap Trust, Inc.
The Board of Trustees has an Audit Committee to review the scope
and results of each Fund's annual audit with the Trust's
independent accountants. The Audit Committee is also responsible
for the selection and nomination of independent auditors for the
Funds. Messrs. Galkin, Isaacs and Meister have previously served
on the Audit Committee
The Board met five times during the year ended December 31, 1995,
and each trustee attended each of the meetings.
For the year ended December 31, 1995, the following trustees
received compensation from the Trust and the three other funds in
the group of registered investment companies comprising The Royce
Funds for services as a trustee/director on the funds' Boards:
Total Compensation
Compensation from
Name from TrustThe Royce Funds
Richard M. Galkin$17,500$60,000
Stephen L. Isaacs 17,500 60,000
David L. Meister 17,500 60,000
It is intended that the enclosed proxy card will be voted in
favor of the election as trustees of the nominees listed above,
unless such authority has been withheld on the proxy card.
Shareholders may withhold authority on any of the nominees by
striking through his name on the proxy card.
The Board of Trustees recommends that shareholders vote FOR all
nominees.
ITEM 6. Ratification of Independent Accountants
Voting Funds: All
At the meeting, the shareholders will be asked to ratify the
selection by the Board of Trustees, including a majority of the
trustees who are not "interested persons" (as such term is
defined in the 1940 Act), of Coopers & Lybrand LLP, independent
certified public accountants, to serve as the Funds' auditors for
the year ending December 31, 1996.
Coopers & Lybrand LLP has informed the Trust that neither Coopers
& Lybrand LLP nor any of its partners has any direct or indirect
financial interest in any of the Funds except as
<PAGE>
auditors and
independent public accountants. Coopers & Lybrand LLP has served
as the Funds' independent public accountants since the Funds
commenced operations. Representatives of Coopers & Lybrand LLP
are not expected to be present at the meeting, but have been
given an opportunity to make a statement if they so desire, and
will be available should any matter arise requiring their
participation.
The Board of Trustees recommends that shareholders vote FOR the
proposal.
OTHER MATTERS
The trustees do not know of any other matters to be brought
before the meeting. If any matters not referred to in the Notice
of Meeting should be presented for consideration and/or action, the
persons named in the proxy intend to take such action in regard to
such matters as in their judgment seems advisable.
SHAREHOLDER PROPOSALS
The Trust does do not hold annual shareholder meetings.
Shareholders wishing to submit proposals for inclusion in a proxy
statement for a subsequent shareholder meeting should send their
written proposals to the Secretary of the Trust, 1414 Avenue of the
Americas, New York, New York 10019.
<PAGE>
APPENDIX 1
Fund Number Type of Percentage of
of Shares Ownership Outstanding Shares
Royce Premier Fund
Charles Schwab & Co., Record
Inc.
101 Montgomery Street
San Francisco, CA 94104
Royce Equity Income Fund
Charles Schwab & Co., Record
Inc.
101 Montgomery Street
San Francisco, CA 94104
Royce Low-Priced Stock
Fund
Charles M. Royce Record
1414 Avenue of the and
Americas Beneficial
New York, NY 10019
Record
Charles Schwab & Co.,
Inc.
101 Montgomery Street
San Francisco, CA 94104
Bruce Museum Inc. Beneficial
Museum Drive (Held of
Greenwich, CT 06830 record by
Charles
Schwab &
Co.)
National Financial Record
Services
200 Liberty Street
New York, NY 10281
W. Whitney George, Record
Trustee
The Royce 1992 GST Trust
1414 Avenue of the
Americas
New York, NY 10019
Royce Micro-Cap Fund
Charles Schwab & Co., Record
Inc.
101 Montgomery Street
San Francisco, CA 94104
Royce GiftShares Fund Record
W. Whitney George,
Trustee
The Royce 1992 GST Trust
1414 Avenue of the
Americas
New York, New York
10019
<PAGE>
Fund Number Type of Percentage of
of Shares Ownership Outstanding Shares
Donaldson, Lufkin Record
Jenrette
Securities Corp.
Pershing Division
P.O. Box 2052
Jersey City, NJ 07303
National Financial Record
Services
200 Liberty Street
New York, NY 10281
Royce Total Return Fund Record
Integra Trust Company
National
Assn.
300 Fourth Avenue
Pittsburgh, PA 15278
James M. Novak Record
Mark Stadler Trustees
Cindrich & Titus Profit
Sharing
Plan
FBO Thomas O. Arbogast
2000 Gateway Center
Pittsburgh, PA 15222
State Street Bank & Record
Trust Co.
Custodian for IRA of
Becky L. O'Connor
10 St. James Place
Pittsburgh, PA 15215
Charles M. Royce, Record
Trustee
N. Holmes Clare Trust
FBO Barbara K. Clare
c/o Quest Advisory Corp.
1414 Avenue of the
Americas
New York, NY 10019
Delaware Charter Record
Guarantee
Trust Co.
FBO Alice M. Harvey
P.O. Box 8963
Wilmington, DE 19899
<PAGE>
Fund Number Type of Percentage of
of Shares Ownership Outstanding Shares
Royce Global Services
Fund
Charles M. Royce Record
1414 Avenue of the and
Americas Beneficial
New York, NY 10019
Bruce Museum Inc. Record
Museum Drive
Greenwich, CT 06830
Integra Trust Company Record
National
Assn.
300 Fourth Avenue
Pittsburgh, PA 15278
The REvest Growth &
Income Fund
The Carlisle Companies Beneficial
Defined Benefit
Retirement Plan
250 South Clinton Street
Suite 201
Syracuse, NY 13202
AZ Ritzman Associates Beneficial
Profit Sharing Trust
1714 North Second Street
Harrisburg, PA 17102
Jackson Clinic PA Beneficial
Restated Money Purchase
Plan
111 Highway 70 East
Dickson, TN 30755
<PAGE>
Exhibit A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Plan") dated as of
April 16, 1996 by and among The Royce Fund, a Massachusetts
business trust ("TRF"), Pennsylvania Mutual Fund, a Delaware
business trust ("PMF"), and The Royce Fund, a Delaware business
trust (the "New Trust"). The principal business address of all
parties is 1414 Avenue of the Americas, New York, New York 10019.
1. Purpose and Terms of the Mergers
This Plan is intended (i) to effect the merger of TRF with and
into the New Trust, with the New Trust being the surviving entity,
and (ii) to effect the merger of PMF with and into a separate
series of the New Trust, with such series surviving the merger. In
order to effect the mergers, the New Trust has established separate
series, each of which has the same name, investment objectives,
policies and restrictions as a corresponding series of TRF and PMF
("New Fund" or collectively, "New Funds"). Each series of TRF
shall automatically be merged with and into its respective New Fund
counterpart, and PMF shall automatically be merged with and into
its New Fund counterpart, with the New Fund being the surviving
series, and the then outstanding shares of beneficial interest of
each series of TRF and of PMF shall automatically be converted into
and become identical shares of beneficial interest of its
respective New Fund counterpart.
2. Consummation of the Mergers
a. The mergers contemplated by Section 1 shall
be consummated on the Effective Date
according to the terms and subject to the
conditions stated in this Plan. When the
mergers are consummated and, as a result
thereof, the assets and liabilities of TRF
and of each series of TRF and of PMF shall
automatically be transferred to and assumed
by, respectively, the New Trust and each New
Fund counterpart, and each of TRF and PMF
shall thereupon cease to exist.
b. Following consummation of the mergers, the
names of the New Trust and of each New Fund
will continue unchanged; the Certificate of
Trust, Trust Instrument and Bylaws of the
New Trust will continue in full force and
effect; the trustees and officers of the New
Trust shall continue in their respective
positions; and the New Trust will continue
to have its principal place of business in
New York, New York.
c. The Trustees and/or officers of the New
Trust shall take all such actions as may be
necessary or appropriate to consummate the
mergers and the other matters and
transactions contemplated by this Plan, so
<PAGE>
that TRF's and PMF's investment company and
related operations may continue without
interruption.
3. Effective Date of Mergers
a. The mergers have been approved by the Boards
of Trustees of TRF, PMF and the New Trusts
and, in the case of TRF, are subject to
approval by the shareholders of TRF at a
special meeting of shareholders being called
for this and other purposes.
b. If approved by the shareholders of TRF, the
mergers shall be consummated on the
Effective Date upon and by the filing of
certificates of mergers covering the mergers
of TRF and PMF with and into the New Trust
in the State of Delaware, as provided by
Section 3815 of Delaware Code, and the
filing of a certificate of merger in the
Commonwealth of Massachusetts covering the
merger of TRF with and into the New Trust,
as provided by Massachuesetts law.
c. The "Effective Date" shall be the close of
business on June 28, 1996 or on such later
date as may be established by the parties.
4. Representations and Warranties
a. TRF represents and warrants with respect to
itself and, where applicable, with respect
to each of its series, and PMF represents
and warrants with respect to itself, as
follows:
i. TRF is a business trust duly organized,
validly existing and in good standing
under the laws of the Commonwealth of
Massachusetts;
ii. PMF is a business trust duly organized,
validly existing and in good standing
under the laws of the State of Delaware;
iii. TRF and PMF are each duly registered
with the Securities and Exchange
Commission ("the SEC") as a diversified
open-end management investment company
under the Investment Company Act of
1940 ("1940 Act"), and such
registration is in full force and
effect;
iv. TRF has created several series, each of
which is treated as a separate entity
taxable as a corporation for Federal
income tax purposes. Each series offers
and sells redeemable shares of
<PAGE>
beneficial interest to investors as part
of its ordinary business operations;
v. All liabilities incurred by TRF's series
and by PMF have been incurred in the
course of their respective businesses;
vi. Each series of TRF and PMF has qualified
for treatment as a regulated investment
company ("RIC") under Subchapter M of
the Internal Revenue Code of 1986, as
amended (the "Code"), for each past year
since it commenced operations, and will
continue to meet all the requirements
for such qualification for its current
taxable year;
vii. Each series of TRF and PMF,
respectively, satisfies the
diversification test of Section
368(a)(1)(F)(ii) of the Code;
viii. Neither TRF nor PMF are under the
jurisdiction of a court in a
proceeding under Title 11 of the
United States Code or similar case
within the meaning of Section
368(a)(3)(A) of the Code;
ix. To the best of TRF's knowledge, each of
its series is in compliance with its
stated investment objective, policies
and restrictions, and will continue to
be in compliance through the Effective
Date;
x. To the best of PMF's knowledge, it is in
compliance with its stated investment
objective, policies and restrictions,
and will continue to be in compliance
through the Effective Date; and
xi. Neither TRF nor PMF have outstanding
warrants, options, convertible
securities or other types of rights
pursuant to which any person could
acquire shares of TRF or PMF, and
neither TRF nor PMF have any plan or
intention to issue additional shares
prior to the Effective Date, except for
shares issued in the ordinary course of
its business as an open-end management
investment company.
b. The New Trust represents and warrants as
follows:
i. The New Trust is a business trust duly
organized, validly existing and in good
standing under the laws of the State of
Delaware; its Certificate of Trust is on
file with the Secretary of State of
Delaware; and copies of its Certificates
of Trust
<PAGE>
and Trust Instrument are
available with the New Trust's records;
ii. The New Trust, as successor to the
registrations of TRF and PMF, will, upon
the Effective Date, become and
thereafter be duly registered with the
SEC as a diversified open-end management
investment company under the 1940 Act;
iii. The New Trust has created New Fund
counterparts for each series of TRF
and for PMF. Each such New Fund
will be treated as a separate entity
taxable as a corporation for Federal
income tax purposes. From and after
the Effective Date, each such New
Fund will offer and sell redeemable
shares of beneficial interest to
investors as part of its ordinary
business operations;
iv. Each such New Fund will meet all the
requirements necessary to qualify as a
RIC under Subchapter M of the Code for
its current tax year;
v. No New Fund will issue shares or
otherwise commence operations until
after the Effective Date;
vi. The New Trust does not have any plan or
intention to issue additional shares
following the Effective Date, except for
shares issued in the ordinary course of
business; nor does the New Trust have
any plan or intention to redeem or
otherwise reacquire any shares issued to
shareholders of TRF or PMF prior to the
Effective Date, other than through
redemptions arising in the ordinary
course of business;
vii. The New Trust will actively continue
TRF's and PMF's historic businesses
in substantially the same manner
that TRF and PMF conducted them
before the Effective Date. The New
Trust has no plan or intention to
sell or otherwise dispose of any of
the assets which it will acquire
upon the mergers except for
dispositions to be made in the
ordinary course of its business and
dispositions necessary to maintain
the New Funds' status as RICs under
Subchapter M of the Code; and
viii. There is no plan or intention for
the New Trust or any New Fund to be
dissolved following the Effective
Date; however, neither the New Trust
nor any New Fund shall be precluded
from merging with any other
<PAGE>
entity
or series subsequent to the
Effective Date.
c. TRF, PMF and the New Trust each represents
and warrants as to itself and, where
applicable, as to each of its series, as
follows:
i. The respective net asset values of the
shares to which the New Funds will
succeed as issuers will be equal to the
respective net asset values of the
shares of the corresponding series of
TRF and of PMF immediately prior to the
Effective Date;
ii. Its management is (a) unaware of any
plan or intention of TRF or of PMF to
redeem or otherwise dispose of any
portion of its shares, (b) does not
anticipate dispositions at the time of
or soon after the Effective Date to
exceed the usual rate and frequency of
redemptions of its shares and (c)
expects that the percentage of its
shares that will be redeemed as a result
of the mergers or at the Effective Date
will be de minimus;
iii. Immediately following the Effective
Date, TRF's and PMF's shareholders
will own all of the New Trust's
shares, and will own such shares
solely by reason of their ownership
of TRF's and PMF's shares
immediately prior to the Effective
Date;
iv. Immediately following the Effective
Date, each New Fund will hold the same
assets and be subject to the same
liabilities that each series of TRF and
PMF held or were subject to immediately
prior to the Effective Date, plus any
liabilities or expenses incurred in
connection with the mergers. The total
amount of the liabilities and expenses
to be incurred in connection with the
mergers that will be assumed by the New
Trust and the New Funds will be less
than 1% of the net assets of TRF and its
series and PMF immediately prior to the
Effective Date; and
v. There is no inter-company indebtedness
between or among TRF, PMF and the New
Trust that was issued or acquired, or
will be settled, at a discount.
5. Covenants of TRF, PMF and the New Trust
a. TRF covenants to call a special meeting of
its shareholders to consider and act on this
Plan, to prepare a proxy statement in
compliance with the Securities Exchange Act
of 1934 and the 1940 Act in connection with
the special meeting of its shareholders
<PAGE>
and
to take all other action necessary to obtain
shareholder approval of the transactions
contemplated by this Plan;
b. TRF and PMF severally covenant that they
will assist the New Trust in obtaining such
information as the New Trust reasonably
requests concerning the beneficial ownership
of their shares;
c. Each of TRF and PMF will share the costs and
expenses of this Plan and of the
transactions contemplated by it in
proportion to its respective assets; and
d. Each party will, from time to time, as and
when requested by the other party or
parties, execute and deliver or cause to be
delivered all such assignments, certificates
and other instruments, and will take or
cause to be taken such further actions, as
the other party or parties may deem
necessary or desirable in order to
consummate the transactions contemplated by
this Plan.
6. Termination - This Plan may be terminated at any time prior to
the Effective Date by mutual consent of the parties. In
addition, any party may terminate this Plan by written notice
to the other parties in either of the following events:
a. if the shareholders of TRF do not approve
this Plan; or
b. if any other event occurs which, in the
judgment of such party, makes consummation
of the mergers inadvisable.
7. Amendment - This Plan may be amended, modified or supplemented
at any time, notwithstanding approval of this Plan by TRF's
shareholders, in such manner as may be mutually agreed on in
writing by the parties; provided, however, that following the
special meeting of TRF's shareholders, no such amendment may
have a material adverse effect on the interests of the
shareholders of any of its series.
8. Miscellaneous
a. This Plan will be governed by and construed
in accordance with the laws of the State of
Delaware applicable to contracts made and to
be performed wholly within that State;
provided that in the case of any conflict
between the 1940 Act and the laws of
Delaware, the 1940 Act will govern;
<PAGE>
b. Nothing expressed or implied in this Plan is
intended or will be construed to confer on
or give anyone other than the parties and
their respective successors and assigns any
rights or remedies under or by reason of
this Plan;
c. The parties recognize that each is a
business trust, that this Plan is executed
by their officers on their behalfs solely in
their capacities as such, and not
individually, and that their obligations
under this instrument are not binding on or
enforceable against any of their respective
trustees, officers or shareholders, but are
binding on and enforceable against only
their respective assets and property; and
d. A copy of this Plan will be furnished by the
New Trust, on request and without cost, to
any beneficial owner of shares of PMF or any
series of TRF.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Plan
to be executed by its duly authorized officer.
ATTEST: THE ROYCE FUND
a Massachusetts business trust
BY:
Assistant Secretary President
ATTEST: PENNSYLVANIA MUTUAL FUND
a Delaware business trust
BY:
Assistant Secretary President
ATTEST: THE ROYCE FUND
a Delaware business trust
BY:
Assistant Secretary President
<PAGE>
THE ROYCE FUND
1414 Avenue of the Americas
New York, NY 10019
This Proxy is solicited on behalf of the Board of Trustees
The undersigned hereby appoints Charles M. Royce and Stephen L.
Isaacs, or either of them acting in the absence of the other, as
Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated on the
reverse, all the shares of the Trust's shares held of record by the
undersigned on May 16, 1996, at the Special Meeting of Shareholders
to be held on June 26, 1996, or at any adjournment thereof.
PLEASE VOTE, DATE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE
Please sign exactly as name appears on other side. When shares are
held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate
name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
__________________________________
_______________________________________
__________________________________
_______________________________________
__________________________________
_______________________________________
<PAGE>
X PLEASE MARK VOTES
AS IN THIS EXAMPLE
THE ROYCE FUND
1. Proposal to approve temporary borrowing of money (Page _) (Value)
For Against Abstain
[ ] [ ] [ ]
2. Proposal to permit loans of portfolio securities (Page _)
(Value, Premier and Micro-Cap)
For Against Abstain
[ ] [ ] [ ]
3. Proposal to permit investment of up to 5% of total assets in
warrants, rights and options (Page _) (All except REvest)
For Against Abstain
[ ] [ ] [ ]
4. Proposal to approve conversion of the Trust to a Delaware
business trust (Page _) (All)
For Against Abstain
[ ] [ ] [ ]
5. Election of Directors (Page_)
If you do not wish your shares voted for a particular nominee,
mark the "For All Except" box and strike a line through the
appropriate name. Your shares will be voted for the remaining
nominee(s).
For Withhold For All Except
[ ] [ ] [ ]
Charles M. Royce
Thomas R. Ebright
Hubert L. Cafritz
Richard M. Galkin
Stephen L. Isaacs
William L. Koke
David L. Meister
6. Proposal to ratify the selection of Coopers & Lybrand LLP as
independent public accountants (Page _) (All)
For Against Abstain
[ ] [ ] [ ]
This proxy when properly executed will be voted in the manner
directed by the undersigned stockholder. If no direction is made,
this Proxy will be voted for Proposals 1 through 6, and for any
other matter properly coming before the meeting.
Please be sure to sign and date this Proxy. Date _______________
Shareholder sign here____________ Co-owner sign here ___________
Mark box at the right if comments or address changes have been
noted on the reverse.
RECORD DATE SHARES:
<PAGE>
The Royce Funds
1414 Avenue of the Americas
New York, NY 10019
(212) 355-7311
(800) 221-4268
May 3, 1996
Securities and Exchange Commmission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: The Royce Fund: File Nos. 811-3599 and 2-80348
Ladies and Gentlemen:
Please find enclosed a preliminary proxy statement of The
Royce Fund for filing pursuant to 17 C.F.R. 240.14a-6.
Included with this preliminary filing are the Notice of Meeting,
Proxy Statement (including attachments) and form of proxy
proposed to be sent to shareholders of all series of The Royce
Fund in connection with a Special Meeting of Shareholders
scheduled to be held on June 26, 1996.
The proxy statement asks shareholders to approve changes
to the investment policies of several of the series. With respect
to Items 1 and 2 of the proxy statement, we hereby request a
limited review due to the fact that permission is being sought
to extend the ability (1) temporarily to borrow funds and (2) to
lend portfolio securities to additional series, and the relevant
disclosure is in large part already in the Statements of
Additional Information for the Fund and therefore already
available to shareholders.
In addition to those items, approval is sought to invest up
to 5% of assets in warrants, rights and options, convert the
trust to a Delaware business trust, elect trustees and ratify the
selection of accountants.
The $125 fee required in connection with this filing was
previously sent to Mellon Bank for credit to the Fund's
account. The Fund expects to mail its definitive proxy
materials to shareholders promptly after the May 16, 1996
record date for the Meeting.
If you have any questions or comments, please contact
either Beth-ann Roth at (202) 463-4640, or Howard J. Kashner
at (212) 508-4529.
Sincerely,
Susan I. Grant
Secretary
cc: Richard Pfordte
Division of Investment Management
<PAGE>
