The Royce Funds
1414 Avenue of the Americas
New York, NY 10019
(212) 355-7311
(800) 221-4268
Dear Shareholder:
Harold Geneen, former CEO of the giant conglomerate ITT Corp.,
once offered the following advice: "In the business world, everyone is
paid in two coins: cash and experience. Take the experience first;
the cash will come later." In 1995, however, the formula seemed to be
reversed as investors were paid with "cash" in the form of high stock
market returns. One can only wonder when investors will be paid with
"experience."
"Able To Leap Tall Buildings [cartoon of flying man with cape]
In A Single Bound"
This familiar phrase describes popular superhero Superman,
but it could also reflect 1995's U.S. stock market performance. 1995,
like Superman, was extraordinary by any standard of measurement. The
large-cap oriented S&P 500, which was up 37.5%, had its best calendar
year return since 1958. Propelled by strong performance in 1995's
first two quarters, the S&P 500 took a breather in the third quarter
only to resume a leadership role in the final quarter of the year.
Small-cap securities emerged as performance leaders in the middle of
the year, but were unable to keep up with the "faster than a speeding
bullet" S&P 500. For the year, the Russell 2000 index of small-cap
companies was up 28.4%.
Royce Global Services Fund's ("RGS") value oriented approach to
investing in domestic and foreign companies in service industries was no
match for the performance of the domestic raging bull market of 1995.
The Fund's smaller-cap bias was a hindrance (small-cap under-performed
large-cap), as was its value orientation (value under-performed growth
within the small-cap category). Also, a low exposure to the U.S.
market's best performing sector, technology, acted like kryptonite in
holding back the Fund's relative short-term performance. Nevertheless,
RGS's risk-averse style produced a 20.8% return in 1995. However, when
compared to the Morgan Stanley World Index ("MSWI"), RGS's return was in
line as the globally oriented index produced a 20.7% return.
The Fund has $1.6 million in assets and a little more than one
year worth of performance history. Average annual total return for
the Fund since inception (12/15/94) was 21.2%.
The Relevance of Relative Performance [graphic of Einstein]
At some point in every modern bull market, generally at the
later stages, the concept of relative performance becomes dominant in
any discussion of investment results. As prospects of financial loss
become distant memories, investors shift their focus from absolute
gains to relative rewards. Investment strategies are changed,
portfolio managers are replaced and solid results are ignored in the
quest for better relative performance. The problem is ....... you
can't eat relative performance! The whole concept dies quickly in a
period of negative returns. When markets turn south, new car
purchases are deferred and vacation plans are canceled, relative
performance soon becomes irrelevant. While relative performance may
make a great conversation topic at the cocktail party, it is positive
absolute returns, compounded at reasonable rates, which put dinner on
the table.
<PAGE>
The Value In Value Investing
A basic premise of value investing is that stocks, like other
goods and services, should be purchased at the most attractive prices
possible, preferably at a discount to their "intrinsic worth." The
reality for most investors is just the opposite. In other words,
investor comfort levels and, therefore, demand increase when prices
rise, and diminish as prices decline. The higher a stock rises, the
greater the perceived opportunity.
Value investing, on the other hand, takes a contrary view to this
highly emotional process. By systematically reducing risk when others
ignore it and taking risk when it is feared, one can capitalize on
valuation discrepancies (opportunities) which develop from time to
time. The greatest risk that the value investor confronts is the loss
of either patience or discipline when faced with the prospect of being
out-of-sync with the market. The value in "value investing" is to
provide a coherent system for rational decision making ... the purpose
of which is to compound wealth while minimizing risk. Its basic
premise is that the price one pays for an investment makes a
significant difference in the return one receives.
What We Do [graphic of balance weighing factory vs. $]
Royce Global Services Fund uses a risk-averse approach to invest in
domestic and foreign common in service industries. Service industries
include banking, insurance, securities, investment management,
advertising, publishing, consulting, communication, etc. Experience
tells us that paying attention to risk does not diminish long-term
results, although individual market phases may not always confirm this
assumption's validity.
Our approach attempts to understand and value a company's "private
worth." Private worth is what we believe the company would bring if the
entire enterprise were sold in a private transaction to a rational
buyer. The price we will pay for a security must be significantly under
our appraisal of its private worth. The consistent use of this
discipline, applied to less well- known securities, is the source of our
performance.
How It Works [cartoon of man in lab coat with pointer]
Our approach to investing in individual small-cap companies has
proven long-term benefits, but can be both unpredictable and
frustrating in the near-term. We believe that the stock market in the
short-term is a polling place, and in the long-term, a highly
efficient weighing device. Ultimately, our success is driven by the
process of "weighing the true value" of the companies in which we
invest.
Anything But Typical
What do you get when interest rates fall precipitously,
inflation is low, demand for equities is strong and corporate earnings
outpace analysts' estimates? Answer: the LAST FIVE YEARS (actually
the last 5 1/4 years)! The last five years have been an exceptional
period for equity investing, one in which all the "right stuff" was in
place. Consider the following:
There has not been a correction of 10% or more for the S&P 500 or
15% or more for the Russell 2000 since October of 1990, the longest
stretch ever for both indices.
The last five years were an anomaly in that a full market cycle
did not take place, but rather a trough (bottom) to peak (top)
experience only.
<PAGE>
It was the best (in terms of return and duration) trough to peak
period in the 17-year history of the Russell 2000.
It was only the 8th time out of 49 quarterly trailing five year
return periods that the Russell 2000 generated a 20%+ average annual
return.
Within this market cycle, short-term interest rates had one of
their most significant declines - three month T-bills went from 8.2% in
September 1989 to 2.7% in September 1992.
It was one of the least volatile periods on record, and especially
so in the years 1993, 1994 and 1995.
Very simply, the last five years was a period in which risk and reward
were synonymous and one in which risk management provided virtually no
benefit. It's highly likely that we have completed the best five year
performance period for this decade.
Cause or Effect [cartoon of smiling character with thought baloon]
An interesting aspect of this five year rise in both stocks and
bonds is the ever increasing participation of individual investors.
Demand for liquid securities has grown to proportions that now cloud
our understanding as to whether it is the cause or the effect of this
bull market. While it seemed clear several years ago that repeated
and uninterrupted gains in stocks and bonds would heighten mass
appeal, few predicted the growing appetite we have today. Now, armed
with demographic studies and a healthy dose of 20-20 hindsight, it is
the consensus belief that our population has become a nation of savers
and that demand for stocks will remain steady, if not grow. In fact,
it is that very same demand which is believed to ensure future success
and prevent any major reversal in market fortunes.
We are a bit uncomfortable with this widely held assumption of
continuous prosperity. Just as rising markets initially created
greater demand for equities, corrections could dampen enthusiasm. We
think there may be limits as to how long individuals will forgo
consumption in pursuit of savings. Furthermore, we know there are
alternative investments, like real estate or natural resources, at
times more attractive, for individuals to pursue. Finally, we are
certain, particularly in a global economy, that an ample supply of
securities can be created to meet and even exceed investors' demands.
The suggestion that continued success is nearly guaranteed by demand
is an absurd proposition. We remain most astonished, not with the
magnitude of investor appetite for stocks, but the nearly universal
assumption of its permanence. The real world is cyclical and so are
its markets.
A New Era ? [cartoon of cavemen hammering on rocket]
As the bull market enters its sixth year uninterrupted by normal
corrections, we find ourselves asking (and more to the point, others
asking us) is this a new era in investing? Have changes in national
demographics and attitudes and, therefore, investing patterns evolved
to the point where traditional assumptions are obsolete? By sticking
to our own time tested and cycle proven discipline, have we become the
"Clark Kent" of the investment world, permanently nerdy within the new
order?
We believe fundamental economic principles and human nature remain
unchanged in the '90s. Our national economy has not entered a new era
of accelerated growth. In
<PAGE>
fact, we would argue the opposite. American corporations, despite
restructuring and down-sizing, are not measurably more profitable if
cumulative retained earnings are any gauge. We still believe that
individual investors are motivated by fear and greed. In the current
environment, greed has driven fear from the investment dictionary.
Before long, we expect some normal balance in people's spending
habits to resume. Appetites for mutual fund investing may moderate in
favor of consumption or debt repayments. Weak sectors of our economy
like apparel retailing and infrastructure construction will recover.
Basic commodity prices could rise and equities would once again
represent long-term interests in business, as opposed to trading
vehicles. Absolute return goals, previously forgotten, will regain
the spotlight.
The Next Five Years Will Be Different
"It is not the going out of port, but the coming in, that
determines the success of a journey." Henry Ward Beecher
It's not likely that the next five years will rival the previous
five in terms of "ideal wind conditions" or "spectacular performance."
History tells us that periods of high valuation and high return are
usually followed by periods of lower, less dynamic returns.
Historical performance returns are built with periods of over-
performance and periods of under-performance and we see no reason why
performance should not revert to the mean and, thus, a period of lower
five year returns is likely.
The primary driver behind the most recent rally (and almost 15
years of soaring markets) has been interest rates. Although short-
term rates remain at the lower end of their trading range, it's the
change in interest rates and not the absolute level, which drives
price earnings multiples and stock prices. The magnitude of the
decline in interest rates is virtually not repeatable. Consequently,
a further decline in interest rates will not have the same favorable
impact on stock prices, no matter how bullish one is on rates.
[Graph of long-term government bond yields over time since Dec. 75
with indication of Dow average passing 1000 and 5000]
The last five years were also unique in that never in our
nation's history have so many traditional bank savers become stock
market investors. The primary reason for the massive level of CD
conversions has been the high returns afforded stock market investors
compared to the declining returns available in traditional bank
products. A strong contributing factor has been the stock market's
lack of volatility. Volatility has been so low that new investors
have been lulled by the apparent "safety" of equity investing.
Volatility, which has always been a part of the investment equation,
is likely to resurface and resume a more normal course as background
conditions change.
Time For Change ... We Think Not
We have been discussing what has happened. Now it's time to talk
about what has not happened. [graphic of jubilant alarm clock]
First, we have not changed our investment time horizon even
though it seems
<PAGE>
the rest of the world has. We view companies and investment performance
with the same long-term horizon because attractive valuations and
returns, like the planting and harvesting seasons, are never one and the
same. Although our risk-averse approach has worked against us in the
most recent performance period, it has provided very decent returns in
the context of history.
Second, we have not changed our underlying investment premise,
that a disciplined approach to investing in high quality companies
using absolute valuation standards can provides attractive long-term
returns. Experience tells us that failure to "stay the course"
results in failure.
Third, the natural laws of gravity and market cycles have not
been rescinded.
And finally, our confidence in the ultimate outcome of our approach
has not changed. We expect our value oriented approach to investing to
have both an absolute and relative pay-off. Your continued confidence
is appreciated.
Yours faithfully,
Charles M. Royce Jack E. Fockler, Jr.
President W. Whitney George
Vice Presidents
February 15, 1996
NOTE: S&P 500, Russell 2000 and Morgan Stanly World Index are
unmanaged indices and include the reinvestment of dividends.
<PAGE>
FINANCIAL REVIEW
Period Total Return Average Annual Total Return
1995 ......21.2% Since Inception*......21.7%
Royce Global Services Fund
Value of $10,000 Invested on 12/15/94
[Graph of RGS Returns vs. MS World Index, since inception of RGS]
* Inception date - December 15, 1994
The results presented in this Annual Report 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. Redemption fees are not
included because they apply only to accounts open for less than one
year.
The Morgan Stanley World Index is an arithmatic average, weighted by
market value, of the performance of approximately 1450 securities
listed on the stock exchanges of 20 countries including the U.S.A.,
Europe, Canada, Australia, New Zealand and the Far East. The average
company in the index has a market capitalization of about $3.5
billion.
<PAGE>
ROYCE GLOBAL SERVICES FUND
Schedule of Investments at December 31, 1995
COMMON STOCKS - 89.3%
Value
Shares (Note 1)
CLOSED-END FUNDS - 3.2%
2,000 Clemente Global Growth Fund 16,750
2,000 * Global Small Cap Fund, Inc. 17,750
2,000 Japan OTC Equity Fund, Inc. 17,500
52,000
CONSUMER DURABLES - 6.2%
1,000 * Ethan Allen Interiors Inc. $20,371
1,000 K-Swiss Inc. Cl. A 10,875
1,000 Reebok International Ltd. 28,250
800 The Singer Company N.V. 22,300
2,500 The Stride Rite Corporation 18,750
100,546
CONSUMER STAPLES - 8.8%
1,000 + Coca-Cola FEMSA, S.A. de C.V. ADS 18,500
1,000 Cott Corporation 5,500
1,000 Panamerican Beverages Inc. 32,000
1,000 + South African Brewereies ADR 36,750
1,500 Stanhome Inc. 43,688
100 Velcro Industries N.V. 6,125
142,563
FINANCIAL - 33.5%
Banking - 7.5%
1,000 * Banca Quadrum, S.A. Institucion
de Banca Multiple 5,125
300 Barclays PLC 13,575
1,000 BHI Corporation 15,750
1,500 Comdisco, Inc. 33,938
2,000 * Grupo Financiero Ser Fin S.A. 6,750
700 Mellon Bank Corporation 37,625
625 Oriental Federal Savings Bank 10,313
123,076
Insurance - 18.9%
2,000 Alexander & Alexander Services Inc. 38,000
300 Aon Corporation 14,963
2,500 E.W. Blanch Holdings, Inc. 58,438
1,100 Fremont General Corporation 40,425
500 MacKenzie Financial Corporation 4,628
2,000 PXRE Corporation 53,000
1,100 PartnerRe Holdings Ltd. 30,250
4,000 + Willis Corroon Group plc ADR 46,500
1,000 Zenith National Insurance Corp. 21,375
307,579
The accompanying notes are an integral part of the financial statements.
<PAGE>
Securities and Investment Management Industries - 7.1%
100 Alex. Brown Incorporated 4,200
1,000 American Express Company 41,375
1,000 C.I. Fund Management Inc. 8,432
500 Dean Witter, Discover & Co. 23,500
300 Invesco PLC 11,625
500 The Pioneer Group, Inc. 13,625
900 Piper Jaffray Companies Inc. 12,375
115,132
HEALTH - 3.0%
1,000 *+Elan Corp. PLC 48,625
INDUSTRIAL CYCLICALS - 9.3%
1,000 * Concordia Paper Holdings Limited 7,875
2,000 * Devcon International Corp. 16,000
10,000 * MK Gold Company 25,000
1,000 * J. Ray McDermott, S.A. 17,875
700 * Nordson Corporation 39,375
2,000 * Simpson Manufacturing Co., Inc. 27,000
900 * Vallen Corporation 17,663
150,788
RETAIL - 2.1%
2,000 * InterTAN Inc. 14,500
9,300 * Suzy Shier Ltd. 20,116
34,616
SERVICES - 12.7%
1,300 * ADT Limited 19,500
500 Amway Asia Pacific Ltd. 17,813
1,000 Amway Japan Limited 20,875
200 Bowne & Co., Inc. 4,000
4,000 *+Cordiant, Inc. PLC ADR 16,000
400 Crawford & Company Cl. A 6,400
7,000 * FCA International Ltd. 15,911
500 + Grupo Televisa, S.A. de C.V. GDS 11,250
2,000 * Heidemij N.V. 18,500
1,000 * Marshall Industries 32,125
1,200 Sotheby's Holdings, Inc. Cl. A 17,100
1,000 Telefonica De Argentina SA ADS 27,250
206,724
TECHNOLOGY - 6.1%
3,500 Nam Tai Electronics, Inc. 41,125
1,500 Nokia Corporation 58,313
99,438
The accompanying notes are an integral part of the financial statements.
<PAGE>
UTILITIES - 4.4%
500 + Telecomunicacoes Brasileiras S.A. - 23,688
1,500 + Telefonos de Mexico, S.A. de C.V., C 47,812
71,500
Total Common Stocks (Cost $1,360,824) 1,452,587
PREFERRED STOCK - .5%
5,000 * United Services Advisors, Inc. 5% Non Cum. 8,125 0.50%
(Cost $13,750)
REPURCHASE AGREEMENT - 14.8%
State Street Bank and Trust Company, 5.25% due 1/2/96,
collateralized by U.S. Treasury Bond, valued at $246,715,
7.25% due 5/15/16 (Cost 240,000)
240,000
TOTAL INVESTMENTS - 104.6%
(Cost $1,614,574) 1,700,712
LIABLITIES LESS CASH AND OTHER
ASSETS - 4.6% (74,055)
NET ASSETS -100.0% 1,626,657
*Non-income producing.
+The abbreviations ADR, ADS and GDS refer to American Depository Receipt,
American Depository Share and Global Depository Share, respectively.
Income Tax InformaThe cost for federal income tax purposes was $1,614,574.
At December 31, 1995, net unrealized appreciation for all securities was
$86,138, consisting of aggregate gross unrealized apprecation of $180,193
and aggregate gross unrealized depreciation of $94,055.
The accompanying notes are an integral part of the financial statements.
<PAGE>
ROYCE GLOBAL SERVICES FUND
Statement of Assets and Liabilities at December 31, 1995
ASSETS:
Investments at value (identified cost $1,614,574) $1,700,712
Receivable for dividends and interest 3,767
Prepaid expenses and other assets 15,432
TOTAL ASSETS 1,719,911
LIABILITIES:
Payable for investments purchased 91,753
Accrued expenses 1,501
TOTAL LIABILITIES 93,254
NET ASSETS $1,626,657
ANALYSIS OF NET ASSETS:
Net realized gain on investments $42,027
Net unrealized appreciation on investments 86,138
Shares of beneficial interest 286
Additional paid-in capital 1,498,206
NET ASSETS $1,626,657
PRICING OF SHARES:
Net asset value, offering and redemption price per share
($1,626,657 / 286,227 shares outstanding) $5.68
STATEMENTS OF CHANGES IN NET ASSETS
For the year For the period
ended ended
December 31, December 31,1994
1995 (Note 1)
From Investment Activities:
Net investment loss ($7,845) ($251)
Net realized gain on investments 169,118 --
Net unrealized appreciation on investment 79,372 6,766
Increase in net assets resulting
from operations 240,645 6,515
Distributions paid from net
realized gains (119,246)
From Capital Share Transactions:
Increase in net assets from
capital share transactions 990,766 506,977
Increase in Net Assets 1,112,165 513,492
Net Assets:
Beginning of period 514,492 1,000
End of period $1,626,657 $514,492
The accompanying notes are an integral part of the financial statements.
<PAGE>
ROYCE GLOBAL SERVICES FUND
Statement of Operations for the year ended December 31, 1995
INVESTMENT INCOME:
Income:
Dividend income $18,755
Expenses:
Investment advisory fee 20,261
Custodian and transfer agent fees 14,250
Organizational costs 3,806
Distribution fees 3,377
Legal and auditing fees 3,055
Federal and state registration fees 2,106
Supplies and postage 1,690
Miscellaneous 835
Administrative and clerical services 571
Office facilities 162
Trustees' fees 125
Fees waived by investment adviser and distributor (23,638)
Total Expenses 26,600
Net Investment Loss (7,845)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments $169,118
Net unrealized appreciation on investments 79,372
Net realized and unrealized gain on investments 248,490
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $240,645
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 through shareholders in evaluating the Fund's performance
over the period.
For the period
December 15, 1994
through
For the year ended December 31, 1994
December 31, 1995 (Note 1)
Net Asset Value, Beginning of Period $5.06 $5.00
Income From Investment Operations:
Net investment loss - -
Net realized and unrealized gain on 1.07 0.06
Total from investment operations 1.07 0.06
Less Distributions:
Distributions paid from net realized (0.45) -
Total distributions (0.45) 0.00
Net Asset Value, End of Period $5.68 $5.06
Total Return 21.2% 1.2%
Ratios/Supplemental Data:
Net Assets, End of Period $1,626,657 $514,492
Ratio of Expenses to Average Net Assets 1.97% 1.78%*
Ratio of Net Investment Loss to Average -0.58% 0%
Portfolio Turnover Rate 106% 0%
*Annualized.
(a) Expenses are shown after waivers by the investment adviser and
distributor. Absent such waivers, the ratio of expenses to average
net assets would have been 3.72% for the year ended December 31,
1995, and 3.69% for the period ended December 31, 1994.
The accompanying notes are an integral part of the financial statements
<PAGE>
ROYCE GLOBAL SERVICES
Notes to Financial Statements
1. Summary of Significant Accounting Policies:
Royce Global Services (the "Fund") is a series of The Royce
Fund (the "Trust"), a diversified open-end management investment
company established as a business trust under the laws of
Massachusetts The Fund, commenced operations on December 15, 1994.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
a. Valuation of Investments:
Securities listed on an exchange or on the Nasdaq National
Market System are valued on the basis of the last reported sale
prior to the time the valuation is made or, if no sale is reported
for such day, at their bid price for exchange-listed securities and
at the average of their bid and asked prices for Nasdaq securities.
Quotations are taken from the market where the security is
primarily traded. Other over-the-counter securities for which
market quotations are readily available are valued at their bid
price. Securities for which market quotations are not readily
available are valued at their fair value under procedures
established and supervised by the Board of Trustees. Bonds and
other fixed income securities may be valued by reference to other
securities with comparable ratings, interest rates and maturities,
using established independent pricing services.
b. Investment transactions and related investment income:
Investment transactions are accounted for on the trade date
and dividend income is recorded on the ex-dividend date. Interest
income is recorded on the accrual basis. Realized gains and losses
from investment transactions and unrealized appreciation and
depreciation of investments are determined on the basis of
identified cost for book and tax purposes.
c. Taxes:
As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the Fund is not subject to income
taxes to the extent that it distributes substantially all of its
taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption
"Income Tax Information".
<PAGE>
ROYCE GLOBAL SERVICES
Notes to Financial Statements (continued)
d. Distributions to shareholders:
Any dividend and capital gain distributions are recorded on
the ex-dividend date and paid annually in December. Dividend and
capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting
principles. Permanent book and tax basis differences relating to
shareholder distributions will result in reclassifications to paid-
in capital and may affect net investment income per share.
Undistributed investment income may include temporary book and tax
basis differences which will reverse in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed
in the following year.
e. Repurchase agreements:
The Fund enters into repurchase agreements with respect to its
portfolio securities solely with State Street Bank and Trust
Company ("SSB&T"), the custodian of its assets. The Fund restricts
repurchase agreements to maturities of no more than seven days.
Securities pledged as collateral for repurchase agreements are held
by SSB&T until maturity of the repurchase agreements. Repurchase
agreements could involve certain risks in the event of default or
insolvency of SSB&T, including possible delays or restrictions upon
the ability of the Fund to dispose of the underlying securities.
f. Organizational expenses:
Costs incurred by the Fund in connection with its organization
and initial registration of shares of $5,952 have been deferred and
are being amortized on a straight line basis over a five-year
period from the date of commencement of operations.
2. Investment Adviser and Distributor:
Under its investment advisory agreement with Quest Advisory
Corp. ("Quest"), advisory fees of $20,261 were voluntarily waived
by Quest for the year ended December 31, 1995. The agreement
provides for fees equal to 1.50% per annum of the Fund's average
total net assets. Such fees are computed daily and are payable
monthly to Quest.
Quest Distributors, Inc. ("QDI"), the distributor of the
Fund's shares, is an affiliate of Quest. QDI voluntarily waived
the Fund's distribution fee of $3,377 for the year ended December
31, 1995. The distribution agreement provides for maximum fees of
.25% per annum of the Fund's average total net assets.
<PAGE>
ROYCE GLOBAL SERVICES
Notes to Financial Statements (continued)
3. Fund Shares:
The Board of Trustees has authority to issue an unlimited
number of shares of beneficial interest of the Fund, with a par
value of $.001. Share transactions were as follows:
For the period ended
Year Ended December 15, 1994 through
December 31, 1995 December 31, 1994 (Note 1)
Shares Amount Shares Amount
Sold ............... 166,855 $892,138 101,588 $506,977
Issues as reinvested
dividends and
distributions ...... 21,147 119,060 --- ---
Redeemed ........... (3,362) (20,431) --- ---
Shares redeemed within one year are subject to a 1% redemption fee,
payable to the Fund, is used to offset cost asssociated with the
redemption.
4. Purchases and Sales of Securities:
During the year ended December 31, 1995, the cost of purchases
and the proceeds from sales of portfolio securities, other than
short-term securities, amounted to $2,032,876 and $1,093,218,
respectively.
<PAGE>
ROYCE GLOBAL SERVICES FUND
Report of Independent Accountants
To the Board of Trustees and Shareholders of Royce Global Services Fund:
We have audited the accompanying statement of assets and
liabilities of Royce Global Services Fund, including the schedule of
investments as of December 31, 1994, and the related statements of
operations and changes in net assets, and the financial highlights for
the period December 15, 1994 (commencement of operations) to December
31, 1994. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of December 31, 1994 by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the financial position of Royce Global Services Fund as of
December 31, 1994, the results of its operations and changes in its
net assets, and the financial highlights for the period December 15,
1994 (commencement of operations) to December 31, 1994, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 1, 1995
<PAGE>
[ARTICLE] 6
[CIK] 0000709364
[NAME] THE ROYCE FUND
[SERIES]
[NUMBER] 10
[NAME] ROYCE GLOBAL SERVICES FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-END] DEC-31-1995
[INVESTMENTS-AT-COST] 1614574
[INVESTMENTS-AT-VALUE] 1700712
[RECEIVABLES] 3767
[ASSETS-OTHER] 15432
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1719911
[PAYABLE-FOR-SECURITIES] 91753
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1501
[TOTAL-LIABILITIES] 93254
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1498206
[SHARES-COMMON-STOCK] 286
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 42027
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 86138
[NET-ASSETS] 1626657
[DIVIDEND-INCOME] 18755
[INTEREST-INCOME] 0
[OTHER-INCOME] 0
[EXPENSES-NET] 26600
[NET-INVESTMENT-INCOME] (7845)
[REALIZED-GAINS-CURRENT] 169118
[APPREC-INCREASE-CURRENT] 79372
[NET-CHANGE-FROM-OPS] 240645
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 119246
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 892138
[NUMBER-OF-SHARES-REDEEMED] 20431
[SHARES-REINVESTED] 119060
[NET-CHANGE-IN-ASSETS] 1112165
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 20261
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 50238
[AVERAGE-NET-ASSETS] 1350762
[PER-SHARE-NAV-BEGIN] 5.06
[PER-SHARE-NII] 0
[PER-SHARE-GAIN-APPREC] 1.07
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] .45
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 5.68
[EXPENSE-RATIO] 1.97
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
