July 29, 1997
To the Shareholders of
The REvest Growth & Income Fund
Dear Friends:
In the days since my father Tom Ebright passed away, we have
taken certain steps to help preserve the continuity and stability
of The REvest Growth & Income Fund.
I am pleased to report that on July 22, the Board of Trustees of
The Royce Fund (of which REvest is one series) voted unanimously
to approve a new Investment Advisory Agreement between REvest and
Royce, Ebright & Associates, Inc. REvest's fees and
responsibilities under the contract are unchanged from those of
the prior contract. As mandated by Federal law, the prior
contract was deemed to terminate as of the date of my father's
death, and the new contract will expire 120 days after that date
unless approved by vote of the REvest shareholders. To that end,
I expect that notice of a REvest shareholders' meeting will be
sent to you by early October.
As an interim measure, the Board has appointed Charles M. Royce
to monitor REvest's portfolio management activities, and to
report to the Board as need be. Chuck is the President of The
Royce Fund, a Trustee, and a long-time friend and business
colleague of my father's. Before joining Royce, Ebright &
Associates, I had the privilege of working for Chuck at his
investment advisory firm in New York. Chuck and my father were
pioneers in the field of small cap value investing, and I feel
fortunate to have had both of them as mentors over the years. I
am grateful to Chuck for his support and availability during this
interim period.
As I reported to the Trustees at their recent meeting, I
anticipate no change in the investment objectives and strategies
that REvest has followed for the past three years. Moreover, I
anticipate no change in the style of fund management which my
father developed over the past sixteen years. In other words,
you can expect that I will:
Maintain our small company, value-oriented approach to
investing. Prospective portfolio investments will continue to be
selected on a value basis and will be limited to small and medium
sized companies viewed by the fund's adviser as having attractive
financial characteristics and/or growth prospects.
Maintain a limited number of portfolio companies. REvest
typically has 50-65 companies in the portfolio at any given time
-- a size that enables the adviser to closely follow each company
in the portfolio. I will continue our practice of regular on-
site visits to existing and prospective portfolio companies.
Maintain a high degree of service to REvest shareholders.
As portfolio manager, I will continue to be personally available
to handle questions and comments from shareholders.
Maintain the long-term interests of shareholders as our
primary concern. As a sign of my continued dedication to REvest
shareholders, I am committed to a current expense ratio of not
more than 1.30% (approximately the expense ratio for the six
months ended this past June 30, 1997) through June 30 of next
year, and have agreed to waive our investment advisory fees if
and to the extent necessary to do so.
I appreciate the outpouring of support from REvest shareholders
since my father's death. Within a few weeks, you will be
receiving the REvest semi-annual report that details the
performance of the fund through June 30, 1997, and sets forth our
analysis of the current portfolio and market.
As always, if you have any questions regarding REvest, please do
not hesitate to call me.
Sincerely yours,
S/JENNIFER E. GOFF
Jennifer E. Goff
President
Royce, Ebright & Associates, Inc.
This letter is a supplement to the Fund's Prospectus dated February 18, 1997.
July 29, 1997
Dear REvest Shareholder:
As you know, our good friend and colleague Tom Ebright passed
away July 14th. Tom made many contributions to The Royce Fund
and our profession. We will miss him very much.
Tom was the President and controlling shareholder of Royce,
Ebright & Associates, Inc. (REA), which has served as the
investment adviser to The REvest Growth & Income Fund since its
inception in 1994. As required by the Investment Company Act of
1940, the Investment Advisory Agreement between REA and REvest
terminated automatically upon Tom's death.
On July 22, the Board of Trustees of The Royce Fund (of which
REvest is one series) met to consider whether to continue to
retain REA as investment adviser to REvest. The Board heard a
presentation from Jennifer Goff on her desires and plans for
continued management of REvest. Jennifer is Tom's daughter and
had been serving as REvest's assistant portfolio manager.
After a thorough consideration of Jennifer's qualifications,
business experience and role in REA, and her approach to managing
REvest's portfolio (among other factors), the Trustees voted
unanimously to approve a new Investment Advisory Agreement with
REvest, on essentially the same terms as the prior contract.
Under the SEC rule for such contingencies, the new contract will
automatically expire on November 11, 1997 unless, prior thereto,
it has been submitted by the Board of Trustees for approval by
the REvest shareholders and approved by the vote of a majority of
the outstanding shares of REvest.
In approving the new contract, the Trustees also decided to have
me monitor REvest's management activities and to report to the
Board. I will be performing this function in my capacity as a
Trustee and President of The Royce Fund, and without cost to
REvest or REA. I view this as an interim arrangement.
I have confidence in Jennifer's abilities, having worked with her
in the past. Prior to attending Columbia University's Graduate
School of Business, Jennifer was an investment analyst for my
firm, Royce & Associates, Inc. (formerly named Quest Advisory
Corp.). After receiving her M.B.A. from Columbia, she went to
work for REA, and was later promoted to assistant portfolio
manager in February 1997.
I recently informed Jennifer that I will be investing an
additional $850,000 in REvest over the next several weeks,
thereby bringing my total investment in the Fund to approximately
$1,000,000
The other Trustees join me in wishing Jennifer every success for
the future.
S/CHARLES M. ROYCE
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Charles M. Royce
President
The Royce Fund
This letter is a supplement to the Fund's Prospectus dated February 18, 1997.
