ROYCE GIFTSHARES FUND
Schedule of Investments at June 30, 1996 (Unaudited)
COMMON STOCKS- 85.7%
Value
Shares (Note 1)
CONSUMER DURABLES- 12.9%
2,000 Aldila, Inc.* $8,375
400 Bassett Furniture Industries, Incorporated 10,700
500 Ethan Allen Interiors Inc. 12,375
600 Juno Lighting, Inc. 10,200
900 Justin Industries, Inc. 11,813
1,500 Lifetime Hoan Corporation* 16,125
1,000 Mity-Lite, Inc.* 7,750
77,338
CONSUMER STAPLES- 2.1%
1,000 Midwest Grain Products, Inc.* 13,000
FINANCIAL- 19.0%
500 The Commerce Group, Inc. 10,437
500 Arthur J. Gallagher & Co. 16,000
500 Nobel Insurance Limited 5,812
1,300 Pennsylvania Manufacturers Corporation 22,100
1,000 Phoenix Duff & Phelps Corporation 7,500
1,000 Piper Jaffray Companies Inc. 12,500
1,500 Willis Corroon Group plc+ 17,813
800 Zenith National Insurance Corp. 21,900
114,062
HEALTH- 3.0%
1,000 HAEMONETICS CORPORATION* 18,250
INDUSTRIAL CYCLICALS- 19.3%
600 P. H. Glatfelter Company 11,025
500 Kaydon Corporation 21,500
300 Kimball International, Inc. (Class B) 8,288
800 Lilly Industries, Inc. (Class A) 13,600
400 The Lincoln Electric Company (Class A) 12,100
1,000 Oregon Steel Mills, Inc. 13,750
800 Simpson Manufacturing Co., Inc.* 16,000
100 Tecumseh Products Company (Class A) 5,375
500 Unifi, Inc. 14,062
115,700
The accompanying notes are an integral part of the financial statements.
<PAGE>
ROYCE GIFTSHARES FUND
Schedule of Investments at June 30, 1996 (Unaudited)
COMMON STOCKS- 85.7%
RETAIL- 7.9%
1,200 CATHERINES STORES CORPORATION* 11,850
1,000 The Dress Barn, Inc.* 10,500
1,000 Family Dollar Stores, Inc. 17,375
700 Mikasa, Inc.* 7,700
47,425
SERVICES- 16.2%
700 Arnold Industries, Inc. 9,975
1,000 Dimon Inc.* 18,500
200 Marshall Industries* 5,600
1,000 New England Business Service, Inc. 19,500
1,200 Sotheby's Holdings, Inc. (Class A) 17,400
1,500 Vallen Corporation* 26,250
97,225
TECHNOLOGY- 5.3%
400 BGS Systems, Inc. 15,600
300 Exar Corporation* 3,900
700 Scitex Corporation Limited 12,075
31,575
TOTAL INVESTMENTS- 85.7%
(Cost $474,856) 514,575
CASH AND OTHER ASSETS
LESS LIABILITIES- 14.3% 85,993
NET ASSETS- 100.0% $600,568
*Non-income producing.
+American Depository Receipt
Income Tax Information- The cost for federal income tax purposes was
$474,856. At June 30, 1996, net unrealized appreciation for all securities
amounted to $39,719, consisting of aggregate gross unrealized appreciation of
$48,736 and aggregate gross unrealized depreciation of $9,017.
The accompanying notes are an integral part of the financial statements.
<PAGE>
ROYCE GIFTSHARES FUND
Statement of Assets and Liabilities at June 30, 1996(unaudited)
Assets:
Investments at value (identified cost $474,856) $514,575
Cash 74,481
Deferred organizational expenses 15,843
Dividend receivable 824
Total Assets 605,723
Liabilities:
Accrued expenses 5,155
Total Liabilities 5,155
Net Assets $600,568
Analysis of Net Assets:
Net investment loss (2,113)
Net realized capital gain 36,917
Net unrealized appreciation on investments 39,719
Shares of beneficial interest 4
Additional paid-in capital 526,041
Net Assets $600,568
Pricing of Shares:
Net asset value, offering and redemption price per share
($600,568 \ 104,536 shares outstanding) $5.75
Statements of Changes in Net Assets
Six months Period ended
ended June 30 December 31
1996 1995
(unaudited) (Note 1)
From Investment Operations:
Net investment income ($2,113) -
Net realized gain on investments 36,917 -
Net unrealized appreciation on investments 38,880 $839
Increase in net assets resulting from operations 73,684 839
From Capital Share Transactions:
Increase in net assets from capital share
transactions 25,045 500,000
Increase in Net Assets 98,729 500,839
Net Assets:
Beginning of period 501,839 1,000
End of period $600,568 $501,839
The accompanying notes are an integral part of the financial statements.
<PAGE>
ROYCE GIFTSHARES FUND
Statement of Operations at June 30(unaudited)
INVESTMENT INCOME:
Dividend income $3,082
Expenses
Investment management fee $3,368
Custody and transfer agent fees 6,260
Audit and legal fees 3,500
State registration and filing fees 2,500
Organizational expenses 1,751
Miscellaneous 1,460
Administrative services and office facilities 128
Expenses before reimbursement and waiver by investment adviser 18,967
Fee waived by investment adviser (3,368)
Expense reimbursement by investment adviser (10,404)
Total expenses 5,195
Net investment loss (2,113)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 36,917
Net unrealized appreciation on investments 38,880
Net realized and unrealized gain on investments 75,797
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $73,684
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 Period ended
ended December 31,
June 30, 1996 1995
(unaudited) (Note 1)
Net Asset Value, Beginning of Period $5.01 $5.00
Income From Investment Operations:
Net investment loss (a) (0.02) 0.00
Net realized and unrealized gain on investments 0.76 0.01
Total from investment operations 0.74 0.01
Dividends and distributions:
Net investment income 0.00 0.00
Net realized gain 0.00 0.00
Total Distributions 0.00 0.00
Net Asset Value, End of Period $5.75 $5.01
Total Return 14.8% 0.2%
Ratios/Supplemental Data:
Net Assets, End of Period $600,568 $501,839
Ratio of Expenses to Average Net Assets (b) 1.93%* 0.70%*
Ratio of Net Investment Income to Average Net Assets -0.78%* 0%*
Portfolio Turnover Rate 18% 0%
* Annualized.
(a)Net investment income is shown after reimbursement and waiver by the
investment adviser. Absent such reimbursement and waiver, net investment
income would have been ($0.15) per share for the six months ended June 30,
1996.
(b)Expenses are shown after reimbursement and waiver by the investment
adviser. Absent such reimbursement and waiver, expense ratios would have
been 7.04% and 1.95% for the six months ended June 30, 1996 and for the
period from inception to December 31, 1995, respectively.
The accompanying notes are an integral part of the financial statements.
<PAGE>
ROYCE GIFTSHARES FUND
Notes to Financial Statements (Unaudited)
1. Summary of Significant Accounting Policies:
Royce GiftShares (the "Fund"), a series of The Royce Fund (the
"Trust"), is a diversified open-end management investment company.
The Trust, originally established as a business trust under the
laws of Massachusetts, converted to a Delaware business trust at
the close of business on June 28, 1996. The Fund commenced
operations on December 27, 1995.
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:
The Fund intends to continue to qualify as a qualified
regulated investment company under Subchapter M of the Internal
Revenue Code and 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 GIFTSHARES FUND
Notes to Financial Statements (Unaudited) (continued)
d. Distributions to shareholders:
Any dividend and capital gain distributions are recorded on
the ex-dividend date and paid annually in December. These
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 net 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 may enter 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 approximately $17,500 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:
Under its investment advisory agreement with Quest Advisory
Corp. ("Quest"), Quest voluntarily waived total advisory fees of
$3,368 for the six months ended June 30, 1996. The agreement
provides for fees equal to 1.25% per annum of the Fund's average
total net assets. Such fees are computed daily and are payable
monthly to Quest.
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
Six Months Ended December 27, 1995 through
June 30, 1996 December 31, 1995 (Note 1)
Shares Amount Shares Amount
Sold............ 4,340 $25,070 100,000 $500,000
Issued as reinvested
dividends and distributions 0 0 0 0
Redeemed........ (4) (25) 0 0
<PAGE>
ROYCE GIFTSHARES FUND
Notes to Financial Statements (Unaudited) (continued)
4. Purchases and Sales of Securities:
For the six months ended June 30, 1996, the cost of purchases
and proceeds from sales of investment securities, other than short-
term securities, amounted to $327,651 and $65,201, respectively.
At the Special Meeting of Shareholders held on June 26, 1996, Trust
shareholders approved a conversion of the Trust to a Delaware business trust,
elected trustees and ratified the Board's selection of the Trust's
independent public accountants.
Proposals/ Votes Votes Votes Cast Votes
Name of Trustee Cast For Withheld Against Abstained
Convert the Trust to a
Delaware Business Trust 37,472,360 N/A 845,090 3,121,147
Ratification of independent
public accounts 51,370,026 N/A 442,499 2,816,187
Charles M. Royce 52,309,497 2,319,215 N/A N/A
Thomas R. Ebright 52,314,207 2,314,505 N/A N/A
Hubert L. Cafritz 52,219,769 2,408,943 N/A N/A
Richard M.Galkin 52,305,456 2,323,256 N/A N/A
Stephen L. Isaacs 52,258,406 2,370,306 N/A N/A
William L. Koke 52,300,723 2,327,989 N/A N/A
David L. Meister 52,282,477 2,346,235 N/A N/A
<PAGE>
[ARTICLE] 6
[CIK] 0000709364
[NAME] ROYCE GIFTSHARES FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] JUN-30-1996
[INVESTMENTS-AT-COST] 474856
[INVESTMENTS-AT-VALUE] 514575
[RECEIVABLES] 824
[ASSETS-OTHER] 90324
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 605723
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 5155
[TOTAL-LIABILITIES] 5155
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 526041
[SHARES-COMMON-STOCK] 4
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] (2113)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 36917
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 39719
[NET-ASSETS] 600568
[DIVIDEND-INCOME] 3082
[INTEREST-INCOME] 0
[OTHER-INCOME] 0
[EXPENSES-NET] 5195
[NET-INVESTMENT-INCOME] (2113)
[REALIZED-GAINS-CURRENT] 36917
[APPREC-INCREASE-CURRENT] 38880
[NET-CHANGE-FROM-OPS] 73684
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 25070
[NUMBER-OF-SHARES-REDEEMED] 25
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 98729
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 3368
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 18967
[AVERAGE-NET-ASSETS] 541834
[PER-SHARE-NAV-BEGIN] 5.01
[PER-SHARE-NII] (.02)
[PER-SHARE-GAIN-APPREC] .76
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 5.75
[EXPENSE-RATIO] 1.93
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
