PRELIMINARY PROXY MATERIAL
DRAFT
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
THE ROYCE FUND
To the Shareholders of
Royce Global Services Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Royce Global
Services Fund (the "Fund"), a 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 10019 (10th Floor), on November 10, 1997 at 3:00 p.m. (Eastern Time),
for the following purposes:
1. To approve a change in the Fund's investment objective and in a related
policy to permit the Fund to concentrate its investments in the financial
services industry.
2. To transact such other business as may come before the meeting or any
adjournment thereof.
The Board of Trustees has fixed the close of business on October 13, 1997 as
the record date for the determination of those shareholders entitled to vote
at the meeting, and only holders of record at the close of business on that
date will be entitled to vote.
The Fund's Annual Report to Shareholders for the year ended December 31, 1996
and its Semi-Annual Report to Shareholders for the six months ended June 30,
1997 were previously mailed to shareholders. Copies of these Reports are
available upon request, without charge, by writing to the Trust at 1414
Avenue of the Americas, New York, New York 10019 or calling toll-free at
1-800-221-4268.
IMPORTANT
To save the Trust the expense of additional proxy solicitation, please insert
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), even if you expect to be present at the meeting. The Proxy is
solicited on behalf of the Board of Trustees, is revocable and will not
affect your right to vote in person in the event that you attend the meeting.
By order of the Board of Trustees.
John E. Denneen,
Secretary
October , 1997
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PROXY STATEMENT FOR SPECIAL MEETING OF
SHAREHOLDERS OF THE ROYCE FUND
The enclosed Proxy is solicited on behalf of the Trustees of The Royce Fund
for use at a Special Meeting of Shareholders of Royce Global Services Fund
(the "Fund"), a series of the Trust, to be held at the offices of the Trust,
1414 Avenue of the Americas, New York, New York 10019 (10th Floor), at 3:00
p.m., Eastern Time, on November 10, 1997 and at any adjournments thereof.
The purpose of the meeting is the approval of a change in the investment
objective of the Fund which will change the Fund's primary focus to
investments in companies principally engaged in the financial services
industry and in a related policy to permit the Fund to concentrate its
investments in that industry.
Shares represented by all properly executed Proxies received in time for the
meeting will be voted. Where a shareholder has specified a choice on the
Proxy with respect to Proposal 1 in the Notice of Special Meeting, his or her
shares will be voted accordingly. If no directions are given, the
shareholder's shares will be voted in favor of this Proposal. The Proxy may
be revoked at any time before it is exercised by written instructions to the
Trust or by filing a new Proxy with a later date, and any shareholder
attending the meeting may vote in person, whether or not he or she has
previously filed a Proxy. The cost of soliciting proxies will be borne by
Royce & Associates, Inc. ("Royce"), the Fund's investment adviser, which will
reimburse brokerage firms, custodians, nominees and fiduciaries for their
expenses in forwarding proxy material to the beneficial owners of the Fund's
shares. Some officers and employees of the Trust, Royce, and/or Royce Fund
Services, Inc. ("RFS"), the Fund's distributor, may solicit proxies
personally and by telephone, if deemed desirable. Shareholders vote at the
Special Meeting by casting ballots (in person or by proxy) which are tabulated
by one or two persons, appointed by the Board of Trustees before the meeting,
who serve as Inspectors and Judges of Voting at the meeting and who have
executed an Inspectors and Judges Oath. Neither abstentions nor broker
non-votes are counted in the tabulation of such votes.
On October 13, 1997, the record date for the meeting, there was _______ shares
of the Fund outstanding. The shareholders entitled to vote are those of
record on that date. Each share is entitled to one vote on each item of
business at the meeting. The following persons were known to the Trust to be
beneficial owners or owners of record of 5% or more of the Fund's outstanding
shares of beneficial interest as of the record date.
Name and Address Amount and Nature Percentage
of Owner of Ownership of Class
[ ] ________ shares ____%
1414 Avenue of the Americas (Record and
New York, NY 10019 beneficial--
sole investment and voting power)
As of such date, all of the Trustees and officers of the Trust as a group
owned _______ shares of the Fund (____% of the outstanding shares).
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Approval or Disapproval of a
Change in the Fund's Investment Objective
and in a Related Policy to Permit the
Fund to Concentrate Its Investments
in the Financial Services Industry
(Proposal 1)
The Board of Trustees of the Fund has approved, and recommends to the Fund's
shareholders for their approval, a proposal to change the Fund's investment
objective to allow the Fund to narrow its focus from "global services" to
"financial services" and to concentrate its investments in the financial
services industry. The Board has also approved other related actions,
including changing the name of the Fund to Royce Financial Services Fund and
certain changes in the Fund's non-fundamental investment policies and
restrictions, which will be implemented only if shareholders approve the
change in the Fund's investment objective and concentration policy.
Current Investment Objective and Concentration Policy
The Fund's current investment objective is "long-term capital appreciation by
investing primarily in common stocks and convertible securities of domestic
and foreign companies in service industries." The Fund does not currently
concentrate its investments by investing more than 25% of its assets in
companies principally engaged in any one industry.
Proposed New Investment Objective, Concentration Policy and Certain Other
Investment Policies
If this proposal is approved by its shareholders, the Fund would change its
investment objective to "long-term capital appreciation by investing
primarily in common stocks and convertible securities of companies
principally engaged in the financial services industry." In seeking to
achieve its proposed new investment objective, the Fund would concentrate its
investments by investing more than 25% of its assets in companies principally
engaged in the financial services industry.
The Fund would continue to seek investment opportunities in both foreign and
domestic securities markets and would continue to have no restriction on the
amount of its assets that may be invested in foreign securities. Thus, under
normal circumstances, the Fund would invest at least 65% of its assets in
common stocks, convertible securities and warrants of domestic and foreign
companies principally engaged in the financial services industry. Examples
of such companies include: commercial and industrial banks, savings and loan
associations, companies engaged in consumer and industrial finance, insurance,
securities brokerage, and investment management, other financial
intermediaries and other companies as Royce may from time to time determine
to be principally engaged in the financial services industry. For these
purposes, a company would be treated as principally engaged in the financial
services industry if at least 50% of its consolidated assets, revenues or net
income are committed to, or are dervied from, financial services-related
activities or if,
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based on available financial information, a question exists
as to whether a company meets one of these standards, Royce determines that
the company's principal activities are within the financial services
industry.
The Fund's new financial services industry focus will result in its being less
diversified than other funds investing in a number of industries, and the
Fund's net asset value could, therefore, experience increased volatility.
Rising interest rates may be viewed as a negative for certain companies in
the financial services area, and a rising inflation rate may also be viewed
as a negative. Compared to the broader market, an individual sector, such as
financial services, may be more strongly affected by changes in the U.S.
and/or foreign economies, moves in a particular dominant stock or regulatory
changes.
If shareholders approve Proposal 1, the Fund's name will be changed to Royce
Financial Services Fund, and the Fund will no longer be required to normally
invest more than 65% of its assets in securities of companies from at least
three countries, which may include the United States. The Fund will,
however, continue in most instances to make investments in companies
principally based in the United States or the other developed countries of
North America, Europe, Asia and Australia and not in emerging market
countries. In restructuring its portfolio to increase its investments in the
financial services industry, the Fund will realize additional capital gains
in 1997.
Reasons for the Proposal
The Fund's current concentration policy permits it to invest without limit in
financial services companies so long as not more than 25% of its assets are
invested in any one financial services industry classification such as
banking or insurance. Both the Fund and other registered investment company
accounts managed by Royce have historically invested significant percentages
of their respective assets in financial services companies, with the Fund
having approximately 35% of its assets invested in such companies at
September 30, 1997. As a result of this experience, Royce desires to have a
fund which concentrates by name and objective in financial services
companies. Instead of commencing operations with a newly- created fund,
Royce and the Board believe that it is more appropriate to change the
investment objective and policies of the Fund, which commenced operations in
December 1994 and, as of September 30, 1997, had less than $2.5 million net
assets, for that purpose. Royce and the Board also believe that the Fund
when converted into a financial services fund should have greater prospects
for attracting new investors, increasing Fund assets and thereby reducing its
expense ratio.
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Recommendation of the Trustees; Required Votes
The Trustees recommend that the Fund's shareholders vote to approve the
change in the Fund's investment objective and to concentrate its investments
in the financial services industry. These changes involve fundamental
policies of the Fund and will, therefore, require approval by the favorable
vote of the lesser
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of (i) more than 50% of the Fund's outstanding shares and
(ii) 67% or more of the Fund's shares present at the meeting, if the holders
of more than 50% of the Fund's shares are present or represented at the
meeting.
Charles M. Royce, the owner of approximately 49% of the Fund's outstanding
shares, has advised the Trust that he expects to vote such shares For the
Proposal.
Adjournment of Meeting; Other Matters
In the event that sufficient votes in favor of Proposal 1 in the Notice of
Special Meeting are not received by the time scheduled for the meeting, the
persons named as proxies may propose one or more adjournments of the meeting
to permit further solicitation of proxies for such Proposal. Any such
adjournment will require the affirmative vote of a majority of the shares
present in person or by proxy at the session of the meeting to be adjourned.
The persons named as proxies will vote in favor of such adjournment those
proxies which they are entitled to vote in favor of Proposal 1. They will
vote against any such adjournment those proxies required to be voted against
Proposal 1.
While the meeting has been called to transact any business that may properly
come before it, the only matter which the Trustees intend to present is the
matter stated in the Notice of Special Meeting. However, if any additional
matter properly comes before the meeting and on all matters incidental to the
conduct of the meeting, it is the intention of the persons named in the
enclosed proxy to vote the proxy in accordance with their judgment on such
matters unless instructed to the contrary.
Royce
Royce's principal office is located at 1414 Avenue of the Americas, New York,
New York 10019. Charles M. Royce is the President, Secretary, Treasurer,
sole director and sole voting shareholder of Royce. Mr. Royce is also the
President, Treasurer and a Trustee of the Trust.
Shareholder Proposals
The Trust does 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.
PLEASE FILL IN, DATE AND SIGN THE PROXY AND RETURN IT IN THE
ACCOMPANYING POSTAGE-PAID ENVELOPE.
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PROXY
PROXY ROYCE GLOBAL SERVICES FUND PROXY
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 John E. Denneen, or
either of them, acting in 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 shares of the Fund held of record
by the undersigned on October 13, 1997, at the Special Meeting of
Shareholders to be held on November 10, 1997, or at any adjournment thereof.
This Proxy, when properly executed, will be voted in the manner directed by
the undersigned shareholder. If no direction is made, this Proxy will be
voted FOR Proposal 1.
PLEASE VOTE , DATE AND SIGN ON REVERSE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE.
Please sign exactly as your name(s) appear(s) on reverse. 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?
________________________________ ________________________________
________________________________ ________________________________
________________________________ ________________________________
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X PLEASE MARK VOTES
AS IN THIS EXAMPLE
ROYCE GLOBAL SERVICES FUND
For Against Abstain
1. PROPOSAL TO APPROVE A CHANGE IN
THE FUND'S INVESTMENT OBJECTIVE
AND IN A RELATED POLICY TO PERMIT
THE FUND TO CONCENTRATE ITS
INVESTMENTS IN THE FINANCIAL SERVICES
INDUSTRY.
2. THE PROXIES ARE AUTHORIZED TO VOTE
UPON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING.
Please be sure to sign and date this Proxy. Date:
Mark box at right if an address change or []
comment has been noted on the reverse
side of this card.
Shareholder sign here Co-owner sign here RECORD DATE SHARES:
