As filed with the Securities and Exchange Commission on March 20, 1997.
1933 Act Registration No. 33 -
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SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
{ } Pre-Effective Amendment No. ___
{ } Post-Effective Amendment No. ___
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THE ROYCE FUND
Telephone Number: (212) 355-7311
1414 Avenue of the Americas, New York, N. Y. 10019
- ---------------------------------------------------------------------
Charles M. Royce, President
The Royce Fund
1414 Avenue of the Americas
New York, N. Y. 10019
(Agent for Service)
- ---------------------------------------------------------------------
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date
until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to Section 8(a), may determine.
Registrant has elected to register pursuant to Rule 24f-2 an
indefinite number of shares of beneficial interest. Accordingly,
no fee is payable herewith because of reliance upon Rule 24f-2.
The Rule 24f-2 Notice for the fiscal year ended December 31, 1996
was filed on February 27. 1997.
Page 1 of __ pages
The Exhibit Index is located on page __
Cross-Reference Sheet
Form N-14 Item Caption in Prospectus/Proxy Statement
1
Beginning of Registration Statement Cross-Reference Sheet;
and Outside Front Cover Page Front Cover
of Prospectus
2
Outside Back Cover Page of Prospectus Back Cover
3
Fee Table, Synopsis Information, Summary of Proposed Transaction; Fee
Risk Factors Table; Comparison of Royce Total
Return Fund and Royce Equity Income
Fund; Reasons for the Proposed
combination; and Determination by the
Trustee Regarding the Combination
4
Information about the Transaction Information about the Combination;
Comparison of Royce Total Return
Fund and Royce Equity Income Fund;
Reasons for the Proposed Combination;
and Tax Consequences of the
Combination. See also Prospectus for
Royce Total Return Fund dated
_______________, 1997
5, 6
Information about Registrant, Comparison of Royce Total Return Fund
Information about Acquired Series and Royce Equity Income Fund; Reasons
for the Proposed Combination; and
Capitalization
7
Voting Information Statement Concerning the Special
Meeting; and Required Vote
8
Interests of Certain Persons Not applicable
Form N-14 Item Caption in Statement of Additional Information
9 Not applicable
Additional Information
For Reoffering by Persons
Deemed to be Underwriters
10, 11
Cover Page; Table of Contents Cover Page; Back Cover
12, 13
Additional Information about Statement of Additional Information
Registrant and about Series of The Royce Fund dated ________, 1997;
being Acquired Prospectus of Royce Total Return Fund
dated __________, 1997
14
Financial Statements 1996 Annual Report to Shareholders and
Schedules of Investments of Royce Total
Return Fund, which includes audited
financial statements as of and for
the year ended December 31, 1996;
1996 Annual Report to Shareholders
and Schedules of Investments of
Royce Equity Income Fund, which includes
audited financial statements as of and for
the year ended December 31, 1996; and Pro-
Forma Combining Financial Statements of Royce
Total Return Fund as of and for the year ended
December 31, 1996 (unaudited)
THE ROYCE FUND
1414 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
_______________, 1997
Dear Shareholder:
The Board of Trustees of The Royce Fund recently approved
and unanimously endorsed a proposal for Royce Equity Income Fund
("Equity Income") to be acquired by Royce Total Return Fund
("Total Return"), each a series of The Royce Fund, in exchange
for shares of Total Return.
As a result of this transaction, Equity Income would be
combined with Total Return and you would become a shareholder of
Total Return. The aggregate net asset value of your shares of
Equity Income will be equal to the aggregate net asset value of
the Total Return shares that you will receive as a result of the
Combination. The Combination is anticipated to be tax-free for
Federal income tax purposes.
The investment objectives of the two funds are different
from one another. Total Return seeks both long-term growth of
capital and current income, while Equity Income seeks reasonable
income and considers the capital appreciation potential of its
portfolio securities. THE COMBINATION IS BEING PROPOSED BECAUSE
WE BELIEVE THAT THE TOTAL RETURN APPROACH SHOULD BE A MORE
ATTRACTIVE INVESTMENT STRAGEGY FOR A LONG-TERM INVESTOR THAN THE
EQUITY INCOME ONE, WHICH HAS A PRIMARY FOCUS ON YIELD. In
addition, a combined Total Return should have a lower operating
expense ratio before fee waivers than either Equity Income or
Total Return would have as a separate series.
The Board has called a Special Meeting of Shareholders to be
held on ____________________, 1997, to consider this transaction.
YOUR VOTE IS VERY IMPORTANT! If the Fund does not receive a
sufficient number of votes prior to the meeting date, it will
have additional expenses for proxy solicitation, and the meeting
may have to be postponed.
PLEASE COMPLETE, SIGN AND MAIL YOUR PROXY CARD AS SOON AS
POSSIBLE. IF YOU HAVE ANY QUESTIONS REGARDING THE PROXY
MATERIAL, PLEASE CALL INVESTOR INFORMATION AT 1-800-221-4268.
An outside firm that specializes in proxy solicitation has
been retained to assist the Fund with any necessary follow-up.
If the Fund has not received your vote as the meeting date
approaches, you may receive a telephone call from Shareholder
Communications Corporation to ask for your vote. We hope that
their call does not inconvenience you.
Sincerely,
CHARLES M. ROYCE
President
THE ROYCE FUND
PROSPECTUS
This Prospectus/Proxy Statement is being furnished in
connection with a Special Meeting of Shareholders of Royce Equity
Income Fund ("Equity Income"), a series of The Royce Fund (the
"Trust"), to be held on _____, 1997, at which Equity Income
shareholders will be asked to vote on the proposed combination of
such series with and into Royce Total Return Fund ("Total
Return"), a separate series of the Trust. Under the proposed
combination (the "Combination"), Equity Income will transfer all
of its assets to Total Return in exchange for shares of Total
Return and the assumption by Total Return of all of its
liabilities, which shares will stand to the credit of the persons
who are shareholders of Equity Income immediately prior to the
time of the Combination. At the time the Combination is
effected, each person who, immediately prior to such time, is a
shareholder of Equity Income, (a) will become a shareholder of
Total Return and (b) will cease to be a shareholder of Equity
Income. If approved by the shareholders of Equity Income, the
Combination is expected to be effected on or about ____, 1997.
This Prospectus/Proxy Statement, which should be retained
for future reference, sets forth concisely the information about
Total Return that a prospective investor should know before
investing and is accompanied by a copy of Total Return's
Prospectus dated ____, 1997, which is incorporated herein by
reference. Additional information about the Trust is contained
in the Statement of Additional Information of the Trust dated
_____, 1997. Additional information relating to the transaction
described in this Prospectus/Proxy Statement is contained in a
Statement of Additional Information also dated _____, 1997. Each
such Statement of Additional Information has been filed with the
Securities and Exchange Commission, is incorporated herein by
reference, is available without charge and may be obtained 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.
The Trust is an open-end diversified management investment
company whose shares are currently offered in eleven series
("Series"). Each Series generally operates as a separate fund,
with its own investment objectives and policies designed to meet
its specific investment goals. Total Return's investment
objective is long-term growth of capital and current income. It
seeks to achieve this objective primarily by investing its assets
in a broadly diversified portfolio of dividend-paying common
stocks of small companies selected on a value basis.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES
COMMISSION, NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
-------------------------------------------------
Prospectus dated _____, 1997
SUMMARY OF THE PROPOSED TRANSACTION
This summary is qualified by reference to the more complete
information contained elsewhere in this Prospectus/Proxy
Statement, in the Prospectuses of Equity Income and Total Return
and in the Plan of Reorganization attached to this
Prospectus/Proxy Statement as Exhibit A.
PROPOSED TRANSACTION
The Board of Trustees of The Royce Fund, including the
Trustees who are not "interested persons" (the "Independent
Trustees"), as defined in the Investment Company Act of 1940, as
amended (the "1940 Act"), has unanimously approved the Plan
providing for the acquisition of all of the assets of Equity
Income, a separate series of The Royce Fund, by Total Return, and
the assumption by Total Return of all of the liabilities of
Equity Income. The aggregate net asset value of the shares of
Total Return issued in the exchange will equal the aggregate net
asset value of Equity Income shares then outstanding. In
connection with the Combination, shares of Total Return will be
distributed to shareholders of Equity Income, and Equity Income
will be terminated. As a result of the Combination, each
shareholder of Equity Income will cease to be a shareholder of
Equity Income and will receive that number of full and fractional
shares of Total Return having an aggregate net asset value equal
to the aggregate net asset value of such shareholder's shares of
Equity Income. No sales charge will be imposed on the
transaction, and, following the Combination, shareholders will
own shares of Total Return. As a condition to closing, Equity
Income and Total Return will obtain an opinion of Rosenman &
Colin LLP, counsel to the Trust, to the effect that the
Combination will qualify as a tax-free reorganization for Federal
income tax purposes. See "Information about the Combination."
INVESTMENT OBJECTIVES AND POLICIES
Total Return and Equity Income have different investment
objectives and policies. The objective of Total Return is long-
term growth of capital and current income, while the objective of
Equity Income is reasonable income. See "Comparison of the
Series" below.
REASONS FOR THE TRANSACTION
For the reasons set forth below, the Board of Trustees of
The Royce Fund, including all of the Independent Trustees, has
unanimously concluded that the Combination will be in the best
interests of the shareholders of Equity Income, and that the
interests of existing shareholders of Equity Income will not be
diluted as a result of the Combination. The Board of Trustees
therefore has submitted the Combination for approval by the
shareholders of Equity Income at a Special Meeting of
Shareholders to be held on _____________, 1997. Approval of the
Combination requires the vote of a majority of the outstanding
shares of Equity Income. The Combination will not be effected
unless the requisite approval is obtained . See "Required Vote"
below.
The Trustees of The Royce Fund have approved the Combination
because they believe it would benefit shareholders of Equity
Income. In reaching their decision to recommend Equity Income
shareholder approval of the Combination, the Trustees took into
account a variety of factors discussed below in greater detail,
including management's belief that Total Return's investment
objective is a more attractive strategy for a long-term investor,
since it emphasizes both growth and income, than the reasonable
income objective of Equity Income which focuses on yield and only
considers the capital appreciation potential of its portfolio
securities. See "Determination by the Trustees Regarding the
Combination" below.
THE BOARD OF TRUSTEES OF THE ROYCE FUND, INCLUDING THE
INDEPENDENT TRUSTEES, UNANIMOUSLY RECOMMENDS APPROVAL OF THE PLAN
OF REORGANIZATION.
FEE TABLE
The table below sets forth information with respect to
Equity Income and Total Return as well as pro forma information
for Total Return after giving effect to the Combination. The
table was prepared by the Trust's management based on the net
asset, fee and expense levels of Equity Income and Total Return
as of December 31, 1996.
<TABLE>
Pro Forma
Combined
Equity (i.e., Total
Income Total Return following
Fund Return the Transaction)
<S> <C> <C> <C>
Shareholder Transaction Expenses
Sales Load None None None
Deferred Sales Load None None None
Redemption Fee - on purchases held
for 1 year or more None None None
Early Redemption Fee - on purchases
held for less than 1 year 1% 1% 1%
Annual Expenses
Management Fees (after waivers) .92% .30% .83%
12b-1 Fees (after waivers) None None None
Other Expenses .45% .95% .42%
Total Fund Operating Expenses 1.37% 1.25% 1.25%
</TABLE>
The purpose of the above table is to assist you in understanding
the various relative costs and expenses that are borne by shareholders
of Equity Income and Total Return. Management fees for Equity Income
and Total Return would have been 1.00%, 12b-1 fees for Total Return
would have been .25% and total operating expenses would have been 1.44%
for Equity Income and 2.23% for Total Return without waivers. Quest
Advisory Corp. ("Quest"), the Funds' investment adviser, has voluntarily
committed to reduce Total Return's management fees to the extent
necessary to maintain total operating expenses at or below 1.25% for the
year ending December 31, 1997.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
THE ROYCE FUND
To the Shareholders of
Royce Equity Income Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of
Royce Equity Income Fund, a series of The Royce Fund, will be held at
the offices of the Trust, 1414 Avenue of the Americas, New York, New
York, on _____________, 19__ at ____ .m. (Eastern Time), for the
following purposes:
1. To approve a Plan of Reorganization providing for (a) the
acquisition of all of the assets and the assumption of all
liabilities of Royce Equity Income Fund by Royce Total Return Fund
in exchange for Royce Total Return Fund shares, and (b) the
liquidation of Royce Equity Income Fund and the pro rata
distribution of its Royce Total Return Fund shares to its
shareholders.
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
__________, 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.
Royce Equity Income Fund's Annual Report to Shareholders and the
accompanying Schedules of Investments for the year ended December 31,
1996 was previously mailed to shareholders, and copies of them 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
____________, 1997
STATEMENT CONCERNING THE SPECIAL MEETING OF
SHAREHOLDERS OF THE ROYCE FUND
The enclosed Proxy is solicited on behalf of the Trustees of The
Royce Fund (the "Trust"), for use at the Special Meeting of Shareholders
of Royce Equity Income 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 ___m., Eastern Time, on _______, 1997 and at any
adjournments thereof.
The purpose of the meeting is the approval or disapproval of the
proposed Combination of Equity Income with and into Total Return.
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.
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 cost of soliciting proxies will be borne by Quest
Advisory Corp. ("Quest"), the Trust's principal investment adviser,
which will reimburse brokerage firms, custodians, nominees and
fiduciaries for their expenses in forwarding proxy material to the
beneficial owners of Equity Income's shares. Some officers and
employees of the Trust and/or Quest may solicit proxies personally and
by telephone, if deemed desirable. Quest may engage the services of a
professional solicitor, such as Shareholder Communications Corporation,
for help in securing shareholder representation at the meeting.
On ____, 1997, the record date for the meeting, there were ________
shares of Equity Income 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. 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.
The following persons were known to the Trust to be beneficial
owners or owners of record of 5% or more of Equity Income'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 ---%
As of such date, all of the Trustees and officers of the Trust as a
group owned less 1% of the shares of Equity Income and shares of
Total Return ( % of the outstanding shares).
APPROVAL OR DISAPPROVAL OF THE COMBINATION OF
ROYCE EQUITY INCOME FUND
WITH AND INTO ROYCE TOTAL RETURN FUND
INFORMATION ABOUT THE COMBINATION
The Trustees of the Trust are proposing that the net assets of
Equity Income be acquired by and combined with those of Total Return.
The proposed Plan of Reorganization (the "Plan"), attached hereto as
Exhibit A, provides that Total Return will acquire all of the assets and
assume all of the liabilities of Equity Income in exchange for shares of
Total Return at the Closing, which is defined in the Plan to be __ .m
(Eastern Time) on ______, 1997 or such later date as may be set by the
Board of Trustees or President of the Trust. The discussion of the Plan
contained herein is qualified in its entirety by the full text of the
Plan.
As a result of the Combination, the shareholders of Equity Income
will receive that number of full and fractional shares of Total Return
which are equal in value, as of 4:00 p.m. (Eastern Time) on the date of
the Closing, to the respective values of their pro rata shares of the
net assets of Equity Income transferred to Total Return. Portfolio
securities of Equity Income and Total Return will be valued in
accordance with the valuation policies of the Trust, which are described
under "Net Asset Value Per Share" at page __ of the enclosed Prospectus
of Total Return. The Combination is being accounted for as a tax-free
business combination.
The Trustees of the Trust have determined that the interests of
existing shareholders of Equity Income will not be diluted as a result
of the transaction contemplated by the reorganization.
The distribution of Total Return shares to Equity Income
shareholders will be effected by establishing accounts on the share
records of Total Return in the names of Equity Income's shareholders,
with each account representing the respective numbers of full and
fractional shares of Total Return due such shareholders. New
certificates for shares of Total Return will not be issued as part of
the Combination. Rather, after the Combination, issued and outstanding
share certificates of Equity Income will represent the number of full
and fractional shares of Total Return which the holders thereof were
entitled to receive under the Plan.
The Plan may be terminated and the reorganization abandoned at any
time, before or after approval by Equity Income's shareholders, prior to
the Closing by the Board of Trustees of the Trust.
All fees and expenses, including legal, accounting, printing,
filing and proxy solicitation expenses, portfolio transfer taxes (if
any) or other similar expenses incurred in connection with the
consummation by Equity Income and Total Return of the transaction
contemplated by the Plan will be paid directly by Quest.
COMPARISON OF THE SERIES AND REASONS FOR THE PROPOSED COMBINATIONS
Total Return
Total Return's investment objective is long-term growth of capital
and current income.
In accordance with its dual objective of seeking both capital
appreciation (realized and unrealized) and current income, Total Return
normally invests at least 80% of its assets in common stocks. At least
90% of these securities are dividend-paying, and at least 65% of these
securities are issued by companies with stock market capitalizations
under $1 billion at the time of investment. The remainder of Total
Return's assets may be invested in securities with higher stock market
capitalizations, non-dividend-paying common stocks and convertible and
non-convertible securities. While most of Total Return's securities are
income-producing, the composite yield of Total Return will vary and may
be either higher or lower than the composite yield of the stocks in the
Standard & Poor's 500 Index.
Equity Income
Equity Income's investment objective is to seek reasonable income
by investing primarily in dividend-paying common and preferred stocks
and debt securities convertible into common stocks. The potential for
capital appreciation is also considered when selecting its portfolio
holdings.
In accordance with its objective of seeking reasonable income,
Equity Income normally invests at least 80% of its assets in common
stocks, convertible preferred stocks and convertible bonds. At least
90% of these securities are income-producing, and at least 65% of these
securities are issued by companies with stock market capitalizations
under $1 billion at the time of investment. The remainder of Equity
Income's assets may be invested in securities of companies with higher
stock market capitalizations, non-dividend-paying common stocks and non-
convertible preferred stocks and debt securities. Equity Income seeks a
portfolio that produces a composite yield which is higher than the
composite yield of the stocks in the Standard & Poor's 500 Index and
considers the capital appreciation potential of the securities it
selects for the Trust's portfolio.
INVESTMENT RISKS
Equity Income and Total Return are subject to substantially similar
risks, including (a) the risk that common stock prices will decline over
short or even extended periods and (b) the risk of investing in small-
cap companies that may be more volatile in price than larger
capitalization companies.
FUNDAMENTAL INVESTMENT RESTRICTIONS
Except as set forth below, Equity Income and Total Return have
identical fundamental investment restrictions (which may not be changed
without shareholder approval).
Investment Restriction Equity Income Total Return
Diversification May not invest more than With respect to
5% of its assets in the 75% of its total
securities of any one issuer assets, may not
except U.S. Government invest more than
securities 5% of its assets
in the securities
of any one issuer
except U.S.
Goverment
securities
_____________________________
The preceding description of the investment objectives and policies
of Equity Income and Total Return is qualified in its entirety by the
information relating to both series contained in their respective
Prospectuses and in the Trust's Statement of Additional Information
dated _______, 1997. The Prospectus for Total Return is enclosed
herewith, and copies of Equity Income's Prospectus and the Trust's
Statement of Additional Information are available upon request by
writing to the Trust at 1414 Avenue of the Americas, New York, New York
10019 or by calling toll-free at (800) 221-4268.
Both Equity Income and Total Return also have identical redemption
and purchase features and identical brokerage practices. For 1996, the
respective portfolio turnover rates of Equity Income and Total Return
were 36% and 111%. As of ___, 1997, the record date, Equity Income had
net assets of approximately $_____million, and Total Return had net
assets of approximately $______million.
MANAGEMENT
Quest, the Funds' investment adviser, manages the portfolios of
both Equity Income and Total Return. As compensation for its services,
Quest is entitled to receive 1.00% of average net assets from both
Equity Income and Total Return. These fees are payable monthly from the
assets of the series involved. For 1996, the fees paid to Quest were
.92% (after waivers) of Equity Income's, and .30% (after waivers) of
Total Return's average total net assets for such year.
DISTRIBUTION AND 12B-1 FEE
The Trust has adopted a Distribution Plan pursuant to Rule 12b-1 to
provide for orderly growth and stabilization of Fund assets. The
Distribution Plan provides for payment by Total Return to Quest
Distributors, Inc. ("QDI"), the distributor of the Trust's shares, of
.25% per annum of Total Return's average net assets. Any such fees paid
to QDI may be used to pay sales commissions and other fees to those
broker-dealers who introduce investors to Total Return and various
other promotional, sales-related and shareholder servicing costs and
expenses. QDI has waived its fees since Total Return's inception and
has voluntarily committed to waive its fees through 1997.
DIVIDENDS
Equity Income distributes substantially all of its net investment
income to shareholders on a quarterly basis and net realized capital
gains, if any, are distributed to its shareholders annually in December.
If the Combination is approved, in order to maintain its tax status as a
regulated investment company and avoid the imposition of taxes on
undistributed income, Equity Income will make its final distribution of
net investment income and capital gains immediately prior to the
Combination. The distribution will be taxable to those persons who are
shareholders of Equity Income on the record date for such distributions.
Total Return distributes substantially all of its net investment
income and net realized capital gains, if any, to its shareholders
annually in December.
TAX CONSEQUENCES OF THE COMBINATION
It is anticipated that the transaction contemplated by the Plan
will be tax-free for Federal income tax purposes. The consummation of
the Combination is conditioned upon the receipt by the Trust of an
opinion of counsel to the effect that, for Federal income tax purposes,
(a) no gain or loss will be recognized by (i) Equity Income upon the
transfer of all of its assets and liabilities to Total Return in
exchange solely for shares of Total Return and the assumption of Equity
Income's liabilities by Total Return, or (ii) Total Return upon its
receipt of the assets of Equity Income in exchange for shares of Total
Return, (b) no gain or loss will be recognized by the shareholders of
Equity Income on the distribution to them of such shares of Total Return
in exchange for their Equity Income shares, (c) the basis of the shares
of Total Return received by a shareholder of Equity Income in place of
his Equity Income shares will be the same as the basis of his Equity
Income shares surrendered in exchange therefor and (d) a shareholder's
holding period for such shares of Total Return will include the period
for which he held the Equity Income shares surrendered in exchange
therefor, provided that he held such Equity Income shares as a capital
asset. Such opinion will rely on certain representations of Equity
Income and Total Return that are anticipated to be true as of the date
of the proposed Combination, and will reflect counsel's analysis and
interpretation of existing statutory and other authority in the absence
of any court decision or published regulation or ruling addressing these
questions in comparable circumstances. The Internal Revenue Service or
a court could interpret the applicable Federal income tax law
differently. The Trust has not made any investigation as to the state
or local tax consequences of the proposed Combination. Each Equity
Income shareholder should consult his own tax adviser with respect to
the Federal, state and local tax consequences to him of the Combination.
CAPITALIZATION
The capitalizations of Total Return and Equity Income as of
December 31, 1996, and the pro forma capitalization of Total Return as
of that date, after giving effect to the Combination, are as follows:
<TABLE>
Equity Income
Equity Total Combined into
Income Return Total Return
<S> <C> <C> <C>
Net assets $35,996,441 $6,233,537 $42,229,978
Shares outstanding 6,308,587 990,877 6,713,682
Share value 5.71 6.29 6.29
</TABLE>
DETERMINATIONS BY THE TRUSTEES REGARDING THE COMBINATION
The Trustees of the Trust unanimously determined that Equity
Income's and Total Return's participation in the Combination is in the
best interests of each such series, and that the interests of existing
shareholders of each such series will not be diluted as a result of its
effecting the Combination. At the meeting of the Board of Trustees that
considered the proposed Combination, management advised the Board that,
after comparing the performances of Equity Income and Total Return for
the three years ended December 31, 1996 and the volatility of those
returns, it had concluded that the Total Return approach emphasizing
both growth and income and using a more concentrated portfolio of high
quality companies generating free cash flows should be a more attractive
investment strategy for a long-term investor than the "reasonable
income" objective of Equity Income, with its primary focus on yield and
lack of emphasis on capital appreciation. The Board agreed with
management's conclusion, which was based on the following total return
and risk information for the three year period ended December 31, 1996:
<TABLE>
Three Year
One Year Average Annual Standard Morningstar
Total Return Total Return Total Return Deviation Beta Risk Score
<S> <C> <C> <C> <C> <C>
Equity Income 16.50% 9.45% 6.83 .43 .62
Total Return 25.50% 18.72% 6.90 .30 .27
</TABLE>
Total returns are historical measures of past performance and are
not intended to indicate future performance. They assume the
reinvestment of all net investment income dividends and capital gains
distributions. Investors evaluating the above measures of risk should
understand that the risk profiles of Equity Income and Total Return may
change over time, and that such measures are not predictive of future
volatility. The Prospectuses of Equity Income and Total Return dated
_______, 1997, and the Statement of Additional Information of the Trust
dated _______, 1997, contain further information on total return,
Standard Deviation, Beta and Morningstar Risk Scores.
In recommending to shareholders that Equity Income be combined into
Total Return, the Trustees also recognized that the Combination would
result in a substantially larger fund, which should result in a reduced
expense ratio due to the spreading of certain operating expenses over a
larger asset base. In particular, the Trustees reviewed the unaudited
pro forma combining financial statements, including the pro forma
schedule of investments of Total Return as of and for the year ended
December 31, 1996. Such pro forma combining financial statements, which
are included in the Statement of Additional Information relating to the
transaction described in this Prospectus/Proxy Statement, show the
separate assets, liabilities and operations of Equity Income and Total
Return and the effect of combining them as of and for the year ended
December 31, 1996. Based on these financial statements and on other
information presented to them, the Trust's management estimated that,
for the year ending December 31, 1997, the proposed Combination should
reduce the annual expense ratio for Equity Income shareholders from
approximately 1.37% to approximately 1.25%, as set forth in the Fee
Table on page 4 of this Prospectus/Proxy Statement. There is, however,
no assurance that operating expenses will be reduced to the extent set
forth in such combining financial statements and Fee Table.
RECOMMENDATION OF THE TRUSTEES; REQUIRED VOTES
THE TRUSTEES RECOMMEND THAT EQUITY INCOME SHAREHOLDERS VOTE TO
APPROVE THE PROPOSED COMBINATION. Approval of the Combination will
require the favorable vote of more than 50% of the outstanding shares of
Equity Income.
Shareholder Communications Corporation ("SCC") has been retained by
Quest to assist shareholders with the voting process. Certain
shareholders of Equity Income may receive a call from a representative
of SCC if the Trust has not yet received their vote. Authorization to
permit SCC to execute proxies may be obtained by telephonic or
electronically transmitted instructions from shareholders of Equity
Income.
In all cases where a telephonic proxy is solicited, the SCC
representative is required to ask the shareholder for such shareholder's
full name, address, social security or employer identification number,
title (if the person giving the proxy is authorized to act on behalf of
an entity such as a corporation) and the number of shares owned and to
confirm that the shareholder has received the Prospectus/Proxy Statement
in the mail. If the information solicited agrees with the information
provided to SCC by the Trust, then the SCC representative has the
responsibility to explain the process, read the proposals listed on the
card and ask for the shareholder's instructions on each proposal. The
SCC representative, although he or she is permitted to answer questions
about the process, is not permitted to recommend to the shareholder how
to vote, other than to read any recommendations set forth in the
Prospectus/Proxy Statement. SCC will record the shareholder's
instructions on the card. Within 72 hours, SCC will send the
shareholder a letter or mailgram to confirm the shareholder's vote and
asking the shareholder to call SCC immediately if the shareholder's
instructions are not correctly reflected in the confirmation.
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.
INFORMATION FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
The Trust is subject to the informational requirements of the
Investment Company Act of 1940, as amended, and, in accordance
therewith, files reports and other information with the Securities and
Exchange Commission. Such reports and other information can be
inspected and copied at the Public Reference Room maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of
such material can be obtained at prescribed rates from the Public
Reference Section of the Commission, Washington D.C. 20549.
EXPERTS
The audited financial statements and schedules of investments of
Royce Equity Income and Total Return Funds are incorporated by reference
into the Statement of Additional Information relating to the transaction
described in this Prospectus/Proxy Statement and have been so included
in reliance upon the reports of Coopers & Lybrand L.L.P., given on the
authority of such firm as experts in auditing and accounting.
Exhibit A
PLAN OF REORGANIZATION
This Plan of Reorganization (the "Plan") pursuant to Section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the
"Code") is hereby adopted by The Royce Fund, a Delaware business trust
(the "Trust"), as of this ____ day of March, 1997, on behalf of its
series designated as Royce Equity Income Fund (the "Acquired Series")
and Royce Total Return Fund (the "Acquiring Series"), such Series
constituting separate corporations for purposes of Code Section 851(h).
1. At the Closing (as defined below), the Acquired Series shall,
in exchange solely for shares of the Acquiring Series and the assumption
by the Acquiring Series of the liabilities of the Acquired Series,
transfer all of its assets and liabilities to the Acquiring Series; the
Trust shall issue, on behalf of the Acquiring Series, and shall
distribute to each shareholder of the Acquired Series, in complete
liquidation of the Acquired Series, shares of beneficial interest of the
Acquiring Series (including any fractional share rounded to the nearest
one-thousandth of a share) equal in aggregate value to the aggregate
value of the shares of beneficial interest of the Acquired Series
(including any fractional share rounded to the nearest one-thousandth of
a share) then owned by such shareholder, such values to be determined by
the net asset values per share of the Acquired Series and the Acquiring
Series at the time of the Closing.
2. The distribution on behalf of the Acquiring Series to the
shareholders of the Acquired Series shall be accomplished by the Trust's
establishing an account on the share records of the Acquiring Series in
the name of each registered shareholder of the Acquired Series, and
crediting that account with a number of shares of the Acquiring Series
having a value at the Closing equal to the value of the shares of the
Acquired Series (including any fractional share rounded to the nearest
one-thousandth of a share) then owned by such shareholder, as determined
on that date. Each outstanding certificate representing shares of the
Acquired Series will be deemed after the Closing to represent that
number of shares of the Acquiring Series equal to the product of (a) the
quotient of the net asset value of the Acquired Series divided by the
net asset value of the Acquiring Series, each taken at the Closing, and
multiplied by (b) the number of shares of the Acquired Series
represented by the certificate immediately prior to the Closing.
3. The Acquired Series shall liquidate, and the foregoing
distribution of shares of the Acquiring Series shall be made to the
shareholders of the Acquired Series in complete liquidation of the
Acquired Series. The Acquired Series shall automatically terminate
immediately thereafter, and shall be dissolved.
4. The distribution to shareholders of the Acquired Series of
shares of the Acquiring Series at the Closing under this Plan shall not
be subject to any front-end sales load, and the termination of the
interest of shareholders of the Acquired Series in such Series at the
Closing under this Plan shall not be subject to any contingent deferred
sales charge or redemption fee.
5. The completion of the transaction in Section 1 above (the
"Closing") shall occur on , 1997 at .m., Eastern Time, at the
office of the Trust in New York, New York or such other date, time or
place as may be determined by the Board of Trustees or the President.
At the Closing, the Trust shall receive an opinion of Rosenman & Colin
LLP or other special tax counsel to the Trust, to the effect that, for
Federal income tax purposes, (a) no gain or loss will be recognized by
(i) the Acquired Series upon the transfer of all of its assets and
liabilities to the Acquiring Series in exchange solely for shares of the
Acquiring Series and the assumption of its liabilities by the Acquiring
Series, or (ii) the Acquiring Series upon its receipt of the assets of
the Acquired Series in exchange for shares of the Acquiring Series, (b)
no gain or loss will be recognized by the shareholders of the Acquired
Series on the distribution to them of such shares of the Acquiring
Series in exchange for their shares of the Acquired Series, (c) the
basis of the shares of the Acquiring Series received by a shareholder of
the Acquired Series in place of his shares of the Acquired Series will
be the same as the basis of his shares of the Acquired Series
surrendered in exchange therefor, and (d) a shareholder's holding period
for such shares of the Acquiring Series will include the period for
which he held the shares of the Acquired Series surrendered in exchange
therefor, provided that he held such Acquired Series shares as a capital
asset.
6. This Plan may be amended at any time, and may be terminated at
any time before the completion of the transaction described in Section
1, whether or not this Plan has been approved by the shareholders of the
Acquired Series, by action of the Trust, provided that no amendment
shall have a material adverse effect upon the interests of shareholders
of the Acquired Series or the Acquiring Series.
7. A copy of the Trust's Certificate of Trust is on file with the
Secretary of State of the State of Delaware, and notice is hereby given
that this Plan is executed on behalf of the Trustees of the Trust as the
trustees of the Trust and not individually, and that the obligations
under this instrument are not binding upon any of the trustees, officers
or shareholders of the Trust individually, but binding only upon the
assets and property of the Acquired Series and the Acquiring Series.
8. At any time after the Closing, the Trust on behalf of the
Acquired Series shall execute and deliver such additional instruments of
transfer or other written assurances and take such other action as may
be necessary in order to vest in the Acquiring Series title to the
assets transferred by the Acquired Series under this Plan.
9. This Plan shall be construed in accordance with applicable
Federal laws and the laws of the State of New York, except as to the
provisions of Section 7 hereof which shall be construed in accordance
with the laws of the State of Delaware.
THE ROYCE FUND
By: /s/ Charles M. Royce
Charles M. Royce, President
Attest:
/s/ John E. Denneen
John E. Denneen, Secretary
TABLE OF CONTENTS Page
Cover Page
Summary of the Proposed Transaction
Notice of Meeting
Statement Concerning the Special Meeting
Information about the Combination
Comparison of the Series and Reasons for
the Proposed Combination
Investment Risks
Fundamental Investment Restrictions
Management
Distribution and 12b-1 Fee
Dividends
Tax Consequences of the Combination
Capitalization
Determination by the Trustees Regarding
the Combination
Recommendation of the Trustees; Required
Votes
Adjournment of Meeting
Information Filed with the Securities
and Exchange Commission
Experts
Exhibit A: Plan of Reorganization
PROXY ROYCE EQUITY INCOME 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 , 1997, at the
Special Meeting of Shareholders to be held on ,
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, pleas 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?
- ------------------------- -------------------------
- ------------------------- -------------------------
- ------------------------- -------------------------
X PLEASE MARK VOTES
AS IN THIS EXAMPLE
ROYCE EQUITY INCOME FUND
For Against Abstain
1. PROPOSAL TO APPROVE A PLAN
OF REORGANIZATION PROVIDING
FOR (A) THE ACQUISITION OF THE
FUND'S ASSETS AND THE ASSUMPTION
OF ITS LIABILITIES BY ROYCE
TOTAL RETURN FUND AND (B) THE
LIQUIDATION OF THE FUND AND THE
PRO RATA DISTRIBUTION OF ROYCE
TOTAL RETURN FUND SHARES TO ITS SHAREHOLDERS.
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:
THE ROYCE FUND
Statement of Additional Information
_________, 1997
This Statement of Additional Information contains material
which may be of interest to investors in connection with the
proposed transfer of assets of Royce Equity Income Fund to Royce
Total Return Fund in exchange for shares of Royce Total Return
Fund. This Statement is not a Prospectus and is authorized for
distribution only when it accompanies or follows delivery of the
Prospectus/Proxy Statement of the Trust dated __________, 1997.
This Statement consists of this cover page and the following
described documents. Copies of the Prospectus/Proxy Statement
and of the 1996 Annual Reports to Shareholders and Schedules of
Investments of Royce Total Return and Equity Income Funds
referred to in I and II below, can be obtained by writing to the
Trust at 1414 Avenue of the Americas, New York, New York 10019 or
by calling toll-free at (800) 221-4268.
Table of Contents
I. Financial Statements and accompanying Schedules of
Investments of Royce Total Return Fund as of and for the
year ended December 31, 1996, with Report of Independent
Accountants.
II. Financial Statements and accompanying Schedules of
Investments of Royce Equity Income Fund as of and for the
year ended December 31, 1996, with Report of Independent
Accountants.
III. Pro Forma Combining Financial Statements and Schedule of
Investments of Royce Total Return Fund as of and for the
year ended December 31, 1996 (unaudited).
I. The financial statements and schedules of investments of
Royce Total Return Fund as of and for the year ended December 31,
1996, with Report of Independent Accountants, are included in
Royce Total Return Fund's 1996 Annual Report to Shareholders.
Such Annual Report has been filed with the Securities and
Exchange Commission pursuant to Rule 30b2-1 under the Investment
Company Act of 1940, as amended, and such financial statements
and schedules of investments are incorporated herein by
reference.
II. The financial statements and schedules of investments of
Royce Equity Income Fund as of and for the year ended December
31, 1996, with Report of Independent Accountants, are included in
Royce Equity Income Fund's 1996 Annual Report to Shareholders.
Such Annual Report has been filed with the Securities and
Exchange Commission pursuant to Rule 30b2-1 under the Investment
Company Act of 1940, as amended, and such financial statements
and schedules of investments are incorporated herein by
reference.
III. Pro Forma Combining Financial Statements and Schedule of
Investments of Royce Total Return Fund as of and for the year
ended December 31, 1996 (unaudited).
Royce Total Return Fund
Pro Forma Combining Financial Statements
The Pro Forma Combining Financial Statements, including the Pro-forma Schedule
of Investments, should be read in conjunction with the separate financial
statements of Royce Total Return Fund and Royce Equity Income Fund, which are
incorporated by reference in this Statement of Additional Information.
Pro Forma Combining Statement of Net Assets
December 31, 1996
(unaudited)
<TABLE>
Royce Royce Pro Forma
Total Return Equity Income Pro Forma Combined
Fund Fund Adjustments Fund
<S> <C> <C> <C> <C>
Investments at value (Cost $6,049,797 $6,474,550 $35,767,730 $42,242,280
and $32,081,032, respectively)
Cash and Other Assets
less Liabilities (241,013) 228,711 $49,310 37,008
---------- ---------- ----------- ----------
Net Assets $6,233,537 $35,996,441 $49,310 $42,279,288
--------- ---------- ----------- ----------
--------- ---------- ----------- ----------
Analysis of Net Assets:
Capital Shares at par $991 $6,309 $7,300
Additional paid-in capital 5,751,416 32,512,675 38,264,091
Undistributed net investment income - 14,671 $49,310 63,981
Accumulated net realized gain on investments 56,377 (223,912) (167,535)
Net unrealized appreciation on investments 424,753 3,686,698 4,111,451
--------- ---------- ----------- -----------
Net Assets $6,233,537 $35,996,441 $49,310 $42,279,288
--------- ---------- ----------- ----------
--------- ---------- ----------- ----------
Pro Forma Combining Statement of Operations
For the year ended December 31, 1996
(unaudited)
Royce Royce Pro Forma
Total Return Equity Income Pro Forma Combined
Fund Fund Adjustments Fund
Investment Income:
Dividends $110,789 $1,039,088 $1,149,877
Interest 39,563 646,349 685,912
------- --------- ---------
Total Income 150,352 1,685,437 1,835,789
Expenses:
Investment advisory fee 40,947 386,487 427,434
Other fees and expenses 48,330 179,181 ($36,000)(a) 191,511
------ ------- --------- -------
Total Expenses 89,277 565,668 (36,000) 618,945
Fees waived by investment adviser and distributor (38,994) (25,696) (13,310)(b) (78,000)
-------- -------- -------- --------
Net Expenses 50,283 539,972 (49,310) 540,945
-------- -------- -------- --------
Net Investment Income 100,069 1,145,465 49,310 1,294,844
Realized and Unrealized Gain on Investments:
Net realized gain on investments 651,408 3,859,793 4,511,201
Net change in unrealized appreciation on investments 183,687 584,279 767,966
------- --------- ---------
Net realized and unrealized gain on investments 835,095 4,444,072 5,279,167
Net Increase in Net Assets from Investment Operations $935,164 $5,589,537 $49,310 $6,574,011
------- --------- ------ ---------
------- --------- ------ ---------
</TABLE>
See accompanying Notes to Pro Forma Combining Financial Statements.
ROYCE TOTAL RETURN FUND
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
DECEMBER 31, 1996
(unaudited)
- ------------------------------------------------------------
1. Basis of Combination
The Pro Forma Combined Financial Statements reflect the
accounts of Royce Total Return Fund and Royce Equity Income
Fund at December 31, 1996 and for the year then ended. Such
pro-forma financial statements give effect to the proposed
transfer of all assets to and the assumption of all
liabilities of Royce Equity Income Fund by Royce Total
Return Fund in exchange for shares of Royce Total Return
Fund.
The Pro Forma Adjustments to the Pro Forma Combining
Financial Statements are comprised of the following:
(a) Elimination and reduction of certain other
expenses which are duplicative as a result of combining
Royce Total Return Fund and Royce Equity Income Fund.
(b) Additional waiver of fees by the investment
adviser to maintain total operating expenses at 1.25% for
Royce Total Return Fund after the combination.
ROYCE TOTAL RETURN FUND
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
December 31, 1996
(unaudited)
<TABLE>
Royce Royce
Equity Total Royce Royce
Income Return Equity Total
Fund Fund Combined Income Return
Shares/Princ. Shares/Princ. Shares/Princ. Fund Fund Combined
Amount Amount Amount Security Name Value Value Value
COMMON STOCKS
INDUSTRIAL PRODUCTS
<C> <C> <C> <S> <C> <C> <C>
0.00 4,000.00 4,000.00 American Filtrona Corporation $0 $169,500 $169,500
0.00 12,000.00 12,000.00 Blessings Corporation 0 111,750 111,750
1,162.00 0.00 1,162.00 Central Steel & Wire Company 668,150 0 668,150
6,800.00 0.00 6,800.00 Curtiss-Wright Corporation 342,550 0 342,550
60,000.00 0.00 60,000.00 Delta Woodside Industries, Inc.* 382,500 0 382,500
10,000.00 4,000.00 14,000.00 Fab Industries, Inc. 275,000 110,000 385,000
34,400.00 0.00 34,400.00 P. H. Glatfelter Company 619,200 0 619,200
26,500.00 2,000.00 28,500.00 International Aluminum Corporation 675,750 51,000 726,750
9,100.00 0.00 9,100.00 Kimball International, Inc. (Class B) 376,513 0 376,513
36,100.00 0.00 36,100.00 Lawter International, Inc. 455,762 0 455,762
43,400.00 5,800.00 49,200.00 Lilly Industries, Inc. (Class A) 792,050 105,850 897,900
30,000.00 0.00 30,000.00 Minuteman International, Inc. 270,000 0 270,000
15,000.00 2,500.00 17,500.00 Paul Mueller Company 562,500 93,750 656,250
25,000.00 5,000.00 30,000.00 Oregon Steel Mills, Inc. 418,750 83,750 502,500
24,900.00 0.00 24,900.00 Oshkosh Truck Corporation (Class B) 264,562 0 264,562
37,400.00 8,300.00 45,700.00 The Standard Register Company 1,215,500 269,750 1,485,250
7,100.00 1,000.00 8,100.00 Woodward Governor Company 937,200 132,000 1,069,200
--------- ------- ---------
8,255,987 1,127,350 9,383,337
INDUSTRIAL SERVICES --------- --------- ---------
35,300.00 10,000.00 45,300.00 Arnold Industries, Inc. 560,388 158,750 719,138
20,200.00 2,600.00 22,800.00 Bowne & Co., Inc. 497,425 64,025 561,450
23,400.00 10,000.00 33,400.00 DIMON Incorporated 541,125 231,250 772,375
28,000.00 0.00 28,000.00 Ecology and Environment, Inc. (Class A) 218,750 0 218,750
61,900.00 15,000.00 76,900.00 Ennis Business Forms, Inc. 696,375 168,750 865,125
12,800.00 0.00 12,800.00 Lufkin Industries, Inc. 320,000 0 320,000
55,700.00 15,000.00 70,700.00 New England Business Service, Inc. 1,197,550 322,500 1,520,050
20,700.00 0.00 20,700.00 REFAC Technology Development Corporation 121,613 0 121,613
--------- ------- ---------
4,153,226 945,275 5,098,501
--------- ------- ---------
CONSUMER PRODUCTS
20,000.00 2,000.00 22,000.00 Bassett Furniture Industries,
Incorporated 490,000 49,000 539,000
8,300.00 0.00 8,300.00 Burnham Corporation (Class A) 244,850 0 244,850
42,800.00 10,000.00 52,800.00 A.T. Cross Company (Class A) 497,550 116,250 613,800
52,000.00 0.00 52,000.00 Flexsteel Industries, Inc. 676,000 0 676,000
48,500.00 7,000.00 55,500.00 Garan Incorporated 939,687 135,625 1,075,312
33,300.00 5,000.00 38,300.00 Juno Lighting, Inc. 532,800 80,000 612,800
16,900.00 0.00 16,900.00 La-Z-Boy Chair Company 498,550 0 498,550
13,300.00 0.00 13,300.00 National Presto Industries, Inc. 497,088 0 497,088
18,700.00 3,000.00 21,700.00 Skyline Corporation 462,825 74,250 537,075
35,000.00 8,000.00 43,000.00 Sturm, Ruger & Company, Inc. 678,125 155,000 833,125
0.00 2,000.00 2,000.00 Weyco Group, Inc. 0 80,500 80,500
--------- ------- ---------
5,517,475 690,625 6,208,100
--------- ------- ---------
FINANCIAL INTERMEDIARIES
20,700.00 0.00 20,700.00 Argonaut Group, Inc. 636,525 0 636,525
39,600.00 8,000.00 47,600.00 The Commerce Group, Inc. 999,900 202,000 1,201,900
0.00 5,000.00 5,000.00 PXRE Corporation 0 123,750 123,750
0.00 12,000.00 12,000.00 Pennsylvania Manufacturers Corporation
(Non-Vtg) 0 189,000 189,000
0.00 2,000.00 2,000.00 Trenwick Group Inc. 0 93,500 93,500
37,400.00 6,500.00 43,900.00 Zenith National Insurance Corp. 1,023,825 177,937 1,201,762
--------- ------- ---------
2,660,250 786,187 3,446,437
--------- ------- ---------
FINANCIAL SERVICES
16,100.00 10,000.00 26,100.00 E.W. Blanch Holdings, Inc. 324,012 201,250 525,262
28,200.00 0.00 28,200.00 Crawford & Company (Class A) 609,825 0 609,825
24,000.00 6,000.00 30,000.00 Arthur J. Gallagher & Co. 744,000 186,000 930,000
5,000.00 0.00 5,000.00 The John Nuveen Company 132,500 0 132,500
71,800.00 22,700.00 94,500.00 Phoenix Duff & Phelps Corporation 511,575 161,738 673,313
10,000.00 0.00 10,000.00 The Pioneer Group, Inc. 237,500 0 237,500
74,100.00 20,000.00 94,100.00 Willis Corroon Group plc 852,150 230,000 1,082,150
--------- ------- ---------
3,411,562 778,988 4,190,550
--------- ------- ---------
NATURAL RESOURCES
30,400.00 5,000.00 35,400.00 CalMat Co. 570,000 93,750 663,750
20,400.00 500.00 20,900.00 Florida Rock Industries, Inc. 668,100 16,375 684,475
26,600.00 0.00 26,600.00 The Newhall Land and Farming Company 448,875 0 448,875
--------- ------ ---------
1,686,975 110,125 1,797,100
--------- ------- ---------
TECHNOLOGY
0.00 8,000.00 8,000.00 BGS Systems, Inc. 0 219,000 219,000
11,500.00 0.00 11,500.00 Helix Technology Corporation 333,500 0 333,500
13,400.00 0.00 13,400.00 Landauer Inc 328,300 0 328,300
60,900.00 8,500.00 69,400.00 Scitex Corporation Limited 578,550 80,750 659,300
0.00 5,000.00 5,000.00 Woodhead Industries, Inc. 0 68,750 68,750
--------- ------- ---------
1,240,350 368,500 1,608,850
--------- ------- ---------
RETAIL
16,700.00 0.00 16,700.00 Blair Corporation 321,475 0 321,475
40,600.00 0.00 40,600.00 Family Dollar Stores, Inc. 827,225 0 827,225
35,800.00 10,000.00 45,800.00 Stanhome Inc. 948,700 265,000 1,213,700
--------- ------- ---------
2,097,400 265,000 2,362,400
--------- ------- ----------
BONDS
364,000,00 150,000.00 514,000.00 AnnTaylor Stores Corporation
(8.75% Sub. Db. 6/15/00) 355,810 146,625 502,435
611,000.00 0.00 611,000.00 J. Baker, Inc. (7.00% Due 6/01/02) 497,965 0 497,965
500,000.00 0.00 500,000.00 Charming Shoppes, Inc. Cv. Db. 7.50%
Due 7/15/06 492,500 0 492,500
290,000.00 0.00 290,000.00 Continental Pacific Bank (Con. Var.
Rt. Db 4/30/03) 304,500 0 304,500
601,000.00 0.00 601,000.00 Dixie Yarns, Inc. (7% Cv. Sb. Db. 5/15/12)477,795 0 477,795
281,000.00 0.00 281,000.00 Fieldcrest Cannon, Inc. (6% Cv. Sb.
Db. 3/15/12) 213,560 0 213,560
400,000.00 0.00 400,000.00 Figgie International Inc. (9.875%
Sr. Nt. 10/1/99) 416,000 0 416,000
0.00 100,000.00 100,000.00 International Semi-Tech Corp. Sr Secs
Dsc Nt. 0%/11.5% 0 65,000 65,000
340,000.00 0.00 340,000.00 RLI Corp. (6% Cv. Sb. Db. 7/15/03) 441,150 0 441,150
855,000.00 0.00 855,000.00 Richardson Electronics, Ltd. (7 1/4%
Cv. Sb. Db. 12/15/06) 726,750 0 726,750
620,000.00 0.00 620,000.00 Shoney's, Inc. (0% Sb. Cv. Db. 4/11/04) 254,975 0 254,975
400,000.00 100,000.00 500,000.00 Standard Commercial Corp. (7.25%
Cv Sb Db 3/31/07) 363,500 90,875 454,375
--------- ------- ---------
4,544,505 302,500 4,847,005
--------- ------- ---------
REPURCHASE AGREEMENT
State Street Bank & Trust Company,
4.90% due 1/02/97, maturity value
$1,100,299 (collateralized by U.S.
Treasury Notes 7.25% due 8/15/04 and
U.S. Treasury Bonds 10.625% due
8/15/15 valued at $1,122,757 and
$2,245,688, respectively) 2,200,000 1,100,000 3,300,000
--------- --------- ---------
TOTAL INVESTMENTS $35,767,730 $6,474,550 $42,242,280
---------- --------- ----------
---------- --------- ----------
* Non-income producing.
</TABLE>
PART C -- OTHER INFORMATION
Item 15. Indemnification
(a) Article XI of the Declaration of Trust of the
Registrant provides as follows:
"ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
LIMITATION OF LIABILITY
Section l. Provided they have exercised
reasonable care and have acted under the belief that
their actions are in the best interest of the Trust,
the Trustees shall not be responsible for or liable in
any event for neglect or wrongdoing of any other
Trustee or any officer, employee, agent or Investment
Adviser, Principal Underwriter, transfer agent,
custodian or other independent contractor of the Trust,
but nothing contained herein shall protect any Trustee
against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith,
gross negligence in the performance of his duties or
reckless disregard of the obligations and duties
involved in the conduct of his office.
Every note, bond, contract, instrument,
certificate or undertaking and every other act or thing
whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with
the Trust shall be conclusively deemed to have been
executed or done only in or with respect to their or
his capacity as Trustees or Trustee, and such Trustees
or Trustee shall not be personally liable thereon.
INDEMNIFICATION
Section 2.
(a) Subject to the exceptions and
limitations contained in Section 2(b) below:
(i) Every person who is, or has been,
a Trustee or officer of the Trust (including persons
who serve at the Trust's request as directors, officers
or trustees of another entity in which the Trust has
any interest as a shareholder, creditor or otherwise)
(hereinafter referred to as a "Covered Person") shall
be indemnified by the appropriate Fund to the fullest
extent not prohibited by law against liability and
against all expenses reasonably incurred or paid by him
in connection with any claim, action, suit or
proceeding in which he becomes involved as a party or
otherwise by virtue of his being or having been a
Trustee or officer and against amounts paid or incurred
by him in the settlement thereof; and
(ii) The words "claim", "action",
"suit" or "proceeding" shall apply to all claims, actions, suits
or proceedings (civil, criminal, administrative, investigatory or
other, including appeals), actual or threatened, while in office
or thereafter, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided
hereunder to a Covered Person:
(i) Who shall, in respect of the
matter or matters involved, have been adjudicated by a
court or body before which the proceeding
was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad
faith, gross negligence in the performance of his
duties or reckless disregard of the obligations and
duties involved in the conduct of his office or (B) not
to have acted in the belief that his action was in the
best interest of the Trust; or
(ii) In the event of a settlement,
unless there has been a determination that such Trustee
or officer did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office,
(A) By the court or other body
approving the settlement;
(B) By a majority of those
Trustees who are neither Interested Persons of the
Trust nor are parties to the matter, based upon a
review of readily available facts (as opposed to a full
trial-type inquiry); or
(C) By written opinion of
independent legal counsel, based upon a review of
readily available facts (as opposed to a full
trial-type inquiry).
(c) The rights of indemnification herein
provided may be insured against by policies maintained
by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any
Covered Person may now or hereafter be entitled, shall
continue as to a person who has ceased to be such
Trustee or officer and shall inure to the benefit of
the heirs, executors and administrators of such a
person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel,
other than Trustees and officers, and other persons may
be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation
and presentation of a defense to any claim, action, suit or
proceeding of the type described in subsection (a) of this
Section 2 may be paid by the applicable Fund from time to time
prior to final disposition thereof upon receipt of an undertaking
by or on behalf of such Covered Person that such amount will be
paid over by him to the applicable Fund if and when it is
ultimately determined that he is not entitled to indemnification
under this Section 2; provided, however, that either (i) such
Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out
of any such advance payments or (iii) either a majority of the
Trustees who are neither Interested Persons of the Trust nor
parties to the matter, or independent legal counsel in a written
opinion, shall have determined, based upon a review of readily
available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered
Person will be found entitled to indemnification under this
Section 2."
(b)(1) Paragraph 8 of the Investment Advisory
Agreements by and between the Registrant and Quest Advisory Corp.
provides as follows:
"8. Protection of the Adviser. The Adviser
shall not be liable to the Trust or to any portfolio
series thereof for any action taken or omitted to be
taken by the Adviser in connection with the performance
of any of its duties or obligations under this
Agreement or otherwise as an investment adviser of the
Trust or such series, and the Trust or each portfolio
series thereof involved, as the case may be, shall
indemnify the Adviser and hold it harmless from and
against all damages, liabilities, costs and expenses
(including reasonable attorneys' fees and amounts
reasonably paid in settlement) incurred by the Adviser
in or by reason of any pending, threatened or completed
action, suit, investigation or other proceeding
(including an action or suit by or in the right of the
Trust or any portfolio series thereof or its security
holders) arising out of or otherwise based upon any action
actually or allegedly taken or omitted to be taken by the
Adviser in connection with the performance of any of its
duties or obligations under this Agreement or otherwise as
an investment adviser of the Trust or such series. Notwithstanding
the preceding sentence of this Paragraph 8 to the contrary,
nothing contained herein shall protect or be deemed to protect
the Adviser against or entitle or be deemed to entitle the Adviser
to indemnification in respect of, any liability to the Trust or
to any portfolio series thereof or its security holders to which
the Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
its duties or by reason of its reckless disregard of its
duties and obligations under this Agreement.
Determinations of whether and the extent to which the Adviser
is entitled to indemnification hereunder shall be made by reasonable
and fair means, including (a) a final decision on the merits by a
court or other body before whom the action, suit or other proceeding
was brought that the Adviser was not liable by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
its duties or (b) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the Adviser
was not liable by reason of such misconduct by (i) the vote of a
majority of a quorum of the Trustees of the Trust who are neither
"interested persons" of the Trust (as defined in Section 2(a)(19)
of the Investment Company Act of 1940) nor parties to the action,
suit or other proceeding or (ii) an independent legal counsel in a
written opinion."
(c) Paragraph 9 of the Distribution Agreement made
October 31, 1985 by and between the Registrant and Quest
Distributors, Inc. provides as follows:
"9. Protection of the Distributor. The
Distributor shall not be liable to the Trust or to any
series thereof for any action taken or omitted to be
taken by the Distributor in connection with the
performance of any of its duties or obligations under
this Agreement or otherwise as an underwriter of the
Shares, and the Trust or each portfolio series thereof
involved, as the case may be, shall indemnify the
Distributor and hold it harmless from and against all
damages, liabilities, costs and expenses (including
reasonable attorneys' fees and amounts reasonably paid
in settlement) incurred by the Distributor in or by
reason of any pending, threatened or completed action,
suit, investigation or other proceeding (including an
action or suit by or in the right of the Trust or any
series thereof or its security holders) arising out of or
otherwise based upon any action actually or allegedly
taken or omitted to be taken by the Distributor in connection
with the performance of any of its duties or obligations
under this Agreement or otherwise as an underwriter of
the Shares. Notwithstanding the preceding sentences of
this Paragraph 9 to the contrary, nothing contained herein
shall protect or be deemed to protect the Distributor against,
or entitle or be deemed to entitle the Distributor to
indemnification in respect of, any liability to the Trust or
to any portfolio series thereof or its security holders to which
the Distributor would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
its duties or by reason of its reckless disregard of its duties
and obligations under this Agreement.
Determinations of whether and to the extent to which the
Distributor is entitled to indemnification hereunder shall be
made by reasonable and fair means, including (a) a final decision
on the merits by a court or other body before whom the action,
suit or other proceeding was brought that the Distributor was not
liable by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of its duties or (b) in the absence of such a
decision, a reasonable determination, based upon a review of the facts,
that the Distributor was not liable by reason of such misconduct by
(a) the vote of a majority of a quorum of the Trustees of the Trust
who are neither "interested persons" of the Trust (as defined in
Section 2(a)(19) of the 1940 Act) nor parties to the action, suit
or other proceeding or (b) an independent legal counsel in a written
opinion."
Item 16. Exhibits:
The Exhibits required by Item 16(1) through (4),
(5), (7), (8), (13), (16) and (17), to the extent
applicable to the Registrant, have been filed with
Registrant's initial Registration Statement (No. 2-
80348) and Post-Effective Amendment Nos. 4, 5, 6, 8, 9,
11, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 26, 27,
28, 29, 30, 31, 32, 33, 34 and 35 thereto
(4) Form of Plan of Reorganization.
(12) Opinion and Consent of Counsel as to tax matters
and consequences to shareholders.*
(14) Consent of Coopers & Lybrand L.L.P. relating to
Equity Income and Royce Total Return Funds.
(17) Financial Data Schedule.
____________
* To be filed by amendment.
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to
any public reoffering of the securities registered
through the use of a prospectus which is a part of this
registration statement by any person or party who is
deemed to be an underwriter within the meaning of Rule
145(c) of the Securities Act [17 CFR 230.145c], the
reoffering prospectus will contain the information
called for by the applicable registration form for the
reofferings by persons who may be deemed underwriters,
in addition to the information called for by the other
items of the applicable form.
(2) The undersigned Registrant agrees that every
prospectus that is filed under paragraph (1) above will
be filed as a part of an amendment to the registration
statement and will not be used until the amendment is
effective, and that, in determining any liability under
the 1933 Act, each post-effective amendment shall be
deemed to be a new registration statement for the
securities offered therein, and the offering of the
securities at that time shall be deemed to be the
initial bona fide offering of them.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on
the 18th day of March, 1997.
THE ROYCE FUND
By: S/CHARLES M. ROYCE
Charles M. Royce, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
S/CHARLES M. ROYCE President, Treasurer and 3/18/97
Charles M. Royce Trustee
(Principal Executive,
Accounting
and Financial Officer)
S/HUBERT L. CAFRITZ
Hubert L. Cafritz Trustee 3/18/97
S/THOMAS R. EBRIGHT
Thomas R. Ebright Trustee 3/18/97
S/RICHARD M GALKIN
Richard M. Galkin Trustee 3/18/97
S/STEPHEN L. ISAACS
Stephen L. Isaacs Trustee 3/18/97
S/WILLIAM L. KOKE
William L. Koke Trustee 3/18/97
S/DAVID L. MEISTER
David L. Meister Trustee 3/18/97
NOTICE
A copy of the Trust Instrument of The Royce Fund is available for
inspection at the office of the Registrant, and notice is hereby given that
this instrument is executed on behalf of the Registrant by an officer of
the Registrant as an officer and not individually and that the obligations
of or arising out of this instrument are not binding upon any of the
Trustees or shareholders individually but are binding only upon the assets
and property of the Registrant
PLAN OF REORGANIZATION
This Plan of Reorganization (the "Plan") pursuant to Section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the
"Code") is hereby adopted by The Royce Fund, a Delaware business trust
(the "Trust"), as of this ____ day of March, 1997, on behalf of its
series designated as Royce Equity Income Fund (the "Acquired Series")
and Royce Total Return Fund (the "Acquiring Series"), such Series
constituting separate corporations for purposes of Code Section 851(h).
1. At the Closing (as defined below), the Acquired Series shall,
in exchange solely for shares of the Acquiring Series and the assumption
by the Acquiring Series of the liabilities of the Acquired Series,
transfer all of its assets and liabilities to the Acquiring Series; the
Trust shall issue, on behalf of the Acquiring Series, and shall
distribute to each shareholder of the Acquired Series, in complete
liquidation of the Acquired Series, shares of beneficial interest of the
Acquiring Series (including any fractional share rounded to the nearest
one-thousandth of a share) equal in aggregate value to the aggregate
value of the shares of beneficial interest of the Acquired Series
(including any fractional share rounded to the nearest one-thousandth of
a share) then owned by such shareholder, such values to be determined by
the net asset values per share of the Acquired Series and the Acquiring
Series at the time of the Closing.
2. The distribution on behalf of the Acquiring Series to the
shareholders of the Acquired Series shall be accomplished by the Trust's
establishing an account on the share records of the Acquiring Series in
the name of each registered shareholder of the Acquired Series, and
crediting that account with a number of shares of the Acquiring Series
having a value at the Closing equal to the value of the shares of the
Acquired Series (including any fractional share rounded to the nearest
one-thousandth of a share) then owned by such shareholder, as determined
on that date. Each outstanding certificate representing shares of the
Acquired Series will be deemed after the Closing to represent that
number of shares of the Acquiring Series equal to the product of (a) the
quotient of the net asset value of the Acquired Series divided by the
net asset value of the Acquiring Series, each taken at the Closing, and
multiplied by (b) the number of shares of the Acquired Series
represented by the certificate immediately prior to the Closing.
3. The Acquired Series shall liquidate, and the foregoing
distribution of shares of the Acquiring Series shall be made to the
shareholders of the Acquired Series in complete liquidation of the
Acquired Series. The Acquired Series shall automatically terminate
immediately thereafter, and shall be dissolved.
4. The distribution to shareholders of the Acquired Series of
shares of the Acquiring Series at the Closing under this Plan shall not
be subject to any front-end sales load, and the termination of the
interest of shareholders of the Acquired Series in such Series at the
Closing under this Plan shall not be subject to any contingent deferred
sales charge or redemption fee.
5. The completion of the transaction in Section 1 above (the
"Closing") shall occur on , 1997 at .m., Eastern Time, at the
office of the Trust in New York, New York or such other date, time or
place as may be determined by the Board of Trustees or the President.
At the Closing, the Trust shall receive an opinion of Rosenman & Colin
LLP or other special tax counsel to the Trust, to the effect that, for
Federal income tax purposes, (a) no gain or loss will be recognized by
(i) the Acquired Series upon the transfer of all of its assets and
liabilities to the Acquiring Series in exchange solely for shares of the
Acquiring Series and the assumption of its liabilities by the Acquiring
Series, or (ii) the Acquiring Series upon its receipt of the assets of
the Acquired Series in exchange for shares of the Acquiring Series, (b)
no gain or loss will be recognized by the shareholders of the Acquired
Series on the distribution to them of such shares of the Acquiring
Series in exchange for their shares of the Acquired Series, (c) the
basis of the shares of the Acquiring Series received by a shareholder of
the Acquired Series in place of his shares of the Acquired Series will
be the same as the basis of his shares of the Acquired Series
surrendered in exchange therefor, and (d) a shareholder's holding period
for such shares of the Acquiring Series will include the period for
which he held the shares of the Acquired Series surrendered in exchange
therefor, provided that he held such Acquired Series shares as a capital
asset.
6. This Plan may be amended at any time, and may be
terminated at any time before the completion of the
transaction described in Section 1, whether or not this Plan
has been approved by the shareholders of the Acquired
Series, by action of the Trust, provided that no amendment
shall have a material adverse effect upon the interests of
shareholders of the Acquired Series or the Acquiring Series.
7. A copy of the Trust's Certificate of Trust is on
file with the Secretary of State of the State of Delaware,
and notice is hereby given that this Plan is executed on
behalf of the Trustees of the Trust as the trustees of the
Trust and not individually, and that the obligations under
this instrument are not binding upon any of the trustees,
officers or shareholders of the Trust individually, but
binding only upon the assets and property of the Acquired
Series and the Acquiring Series.
8. At any time after the Closing, the Trust on behalf
of the Acquired Series shall execute and deliver such
additional instruments of transfer or other written
assurances and take such other action as may be necessary in
order to vest in the Acquiring Series title to the assets
transferred by the Acquired Series under this Plan.
9. This Plan shall be construed in accordance with
applicable Federal laws and the laws of the State of New
York, except as to the provisions of Section 7 hereof which
shall be construed in accordance with the laws of the State
of Delaware.
THE ROYCE FUND
By: /s/ Charles M. Royce
Charles M. Royce, President
Attest:
/s/ John E. Denneen
John E. Denneen, Secretary
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of The Royce Fund: Royce Total
Return Fund and Royce Equity Income Fund:
We consent to the incorporation by reference of our reports
dated February 14, 1997 accompanying the Funds' Annual
Report to Shareholders, and accompanying Schedules of
Investments for the year ended December 31, 1996, in the
Funds' Statement of Additional Information in the
Registration Statement under the Securities Act of 1933 of
The Royce Fund on Form N-14. We further consent to the
reference to our Firm under the heading "Experts" such
Statement of Additional Information.
COOPERS & LYBRAND
Boston, Massachusetts
March 17, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000709364
<NAME> THE ROYCE FUND
<SERIES>
<NUMBER> 8
<NAME> ROYCE TOTAL RETURN FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 34830829
<INVESTMENTS-AT-VALUE> 42242280
<RECEIVABLES> 246048
<ASSETS-OTHER> 85790
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 42755803
<PAYABLE-FOR-SECURITIES> 341165
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 184660
<TOTAL-LIABILITIES> 525825
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38264091
<SHARES-COMMON-STOCK> 7300
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 63981
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (167535)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4111451
<NET-ASSETS> 42279288
<DIVIDEND-INCOME> 1149877
<INTEREST-INCOME> 685912
<OTHER-INCOME> 0
<EXPENSES-NET> 540945
<NET-INVESTMENT-INCOME> 1294844
<REALIZED-GAINS-CURRENT> 4511201
<APPREC-INCREASE-CURRENT> 767966
<NET-CHANGE-FROM-OPS> 6574011
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 427434
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 540945
<AVERAGE-NET-ASSETS> 43335736
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
