SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
THE ROYCE FUND
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a- 6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date filed:
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Preliminary Proxy Material
__________________, 1997
Dear Royce GiftShares Fund Beneficiary:
As beneficiary of a trust (or beneficiary representative of a
trust) which is invested in shares of Royce GiftShares Fund, you
have the right to vote the shares held in your trust on matters
submitted for vote at meetings of the Fund's shareholders.
A shareholder meeting has been called by the The Royce Fund's
Board of Trustees for the purpose of approving a Plan of
Distribution for shares of Royce GiftShares Fund. The Plan
provides for payments by the Fund at a maximum annual rate of
.25% of the average daily net assets of the Fund's current
shares. WHEN THE DISTRIBUTION FEES ARE IMPOSED, THE FUND'S
MANAGEMENT FEE WILL BE DECREASED BY .25%, SO THAT THERE WILL BE
NO NET CHANGE IN THE MAXIMUM EXPENSES IMPOSED ON YOUR SHARES.
Quest Advisory Corp., the Fund's investment adviser, has
committed to waive its fees and reimburse expenses to the extent
necessary to maintain the Fund's expense ratio at or below 1.49%
until December 31, 1997.
The Board of Trustees has approved the proposed Plan. In
approving the Plan, the Trustees determined that there was a
reasonable likelihood that the Plan would benefit the Fund and
its shareholders. The Trustees believe that it is in the best
interests of the Fund and its shareholders to increase the Fund's
net assets to a level that will substantially reduce the Fund's
expense ratio before fee waivers and expense reimbursements and
increase the Fund's investment options. It is anticipated that
the Plan of Distribution will facilitate the growth of net
assets.
Your vote is very important. Please complete, sign and mail your
proxy card as soon as possible. State Street Bank and Trust
Company, as trustee for your trusts investing in the Fund, will
vote all shares for which no proxies are returned in the same
proportion as the shares for which proxies are returned. If you
have any questions regarding the proxy material, please call
Investor Information at 1-800-221-4268.
Sincerely,
Charles M. Royce
President
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
THE ROYCE FUND
To the Shareholders of
Royce GiftShares Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of
Shareholders of Royce GiftShares 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, on
_____________, 1997 at ____ .m. (Eastern Time), for the following
purposes:
1. To approve the Trust's Plan of Distribution for
shares of Royce GiftShares Fund (the "Distribution Plan" or
the "Plan"), providing for payments by the Fund at a maximum
annual rate of .25% of the average daily net assets of the
Fund's shares.
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 GiftShares Fund's Annual Report to Shareholders for
the year ended December 31, 1996 was previously mailed to
shareholders, and copies 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
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 the Special Meeting of Shareholders of
Royce GiftShares 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 of the
Distribution Plan for shares of the Fund in order to facilitate
the distribution of the Fund's shares.
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 Distributors, Inc.
("QDI"), the distributor of the Trust's shares, 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, QDI and/or Quest Advisory Corp. ("Quest"), the Fund's
investment adviser, 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 ____, 1997, the record date for the meeting, there were
________ 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.
<TABLE>
Name and Address Amount and Nature Percentage
of Owner of Ownership of Class
- ---------------- ----------------- ----------
<S> <C> <C>
W. Whitney George, Trustee 146,369 shares 72.6%
The Royce 1992 GST Trust (Record and
1414 Avenue of the Americas beneficial -
New York, NY 10019 sole investment and voting power)
</TABLE>
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).
APPROVAL OR DISAPPROVAL OF THE
DISTRIBUTION PLAN
FOR THE FUND'S SHARES
(PROPOSAL 1)
The Fund is a no-load fund, and its shareholders do not
currently incur any 12b-1 fees. Management fees are 1.25%. In
order to facilitate the distribution of the Fund's shares without
increasing the total fees payable by the Fund's current
shareholders to QDI and Quest, it is proposed (i) to impose a
.25% 12b-1 fee on the Fund's current shares and (ii) when the 12b-1
fee is imposed, to reduce the Fund's management fee by .25% to 1.00%.
These actions will facilitate the distribution of the Fund's
shares by enabling the Fund to divide its shares into two
separate classes. The first class, to be called the Investment
Class, would include the Fund's currently outstanding shares and
any additional Investment Class shares that may be purchased in
the future by current and/or new shareholders. The second class,
to be called the Consultant Class, would be available through
certain broker/dealers who enter into agreements with QDI; they
would have a sales charge and a higher 12b-1 fee and be converted
into Investment Class shares after a number of years from the
date of purchase. Information about QDI, the Distribution Plan
and the Distribution Agreement under it is set forth below.
QDI
QDI, the distributor of the shares of each series of the
Trust, has its office at 1414 Avenue of the Americas, New York,
New York 10019. It was organized in November 1982 and is a
member of the National Association of Securities Dealers, Inc.
QDI is or may be compensated as the distributor of the
shares of certain series of the Trust or of certain classes of
shares of such series pursuant to a Distribution Agreement
between QDI and the Trust and the Distribution Plan. Set forth
below is a summary of the material terms of the Distribution
Agreement and the Distribution Plan.
DISTRIBUTION AGREEMENT AND PLAN
Under the Proposal, the Fund's Investment Class shares would
become obligated to pay fees to QDI under QDI's Distribution
Agreement for the Fund with the Trust at the rate of up to .25%
of the Class's average daily net assets. Except to the extent
that they may be waived by QDI, these fees would not be subject
to any required reductions.
Under the Distribution Agreement, QDI (i) seeks to promote
the sale and/or continued holding of shares of the series or
class of shares of the series involved through a variety of
activities, including advertising, direct marketing and servicing
investors and introducing parties on an on-going basis; (ii) pays
sales commissions and other fees to those broker-dealers,
investment advisers and others (excluding banks) who have
introduced investors to such series/class (which commissions and
other fees may or may not be the same amount as, or otherwise
comparable to, the 12b-1 fees payable to QDI); (iii) pays the
cost of preparing, printing and distributing any advertising or
sales literature and the cost of printing and mailing the
series'/class' prospectus to persons other than shareholders of
the series/class; and (iv) pays all other expenses incurred by it
in promoting the sale and/or continued holding of the shares of
such series/class and in rendering such services under the
Distribution Agreement. The Trust bears the expense of
registering its shares with the Securities and Exchange
Commission and the cost of qualifying and maintaining the
qualification of its shares for sale under the securities laws of
the various states.
The Trust entered into the Distribution Agreement with QDI
pursuant to the Distribution Plan which, among other things,
permits each series or class of shares of a series covered by the
Plan to pay the monthly 12b-1 fee out of its net assets. As
required by Rule 12b-1 under the Investment Company Act of 1940,
the Plan has been approved by the Trust's Board of Trustees
(which also approved the Distribution Agreement pursuant to which
the 12b-1 fees are paid), including a majority of the Trustees
who are not interested persons of the Trust and who have no
direct or indirect financial interest in the operation of the
Plan or the Distribution Agreement.
In approving the Plan, the Trustees, in accordance with the
requirement of Rule 12b-1, considered various factors (including
the amount of the 12b-1 fees) and determined that there was a
reasonable likelihood that the Plan would benefit each series and
its shareholders or class of shares of each series covered by the
Plan.
The Plan may be terminated as to any series or any class of
shares of any series by vote of a majority of the non-interested
Trustees who have no direct or indirect financial interest in the
Plan or in the Distribution Agreement or by vote of a majority of
the outstanding shares of such series or class. Any change in
the Plan that would materially increase the distribution cost to
a series or class requires approval by the shareholders of such
series or class; otherwise, the Plan may be amended by the
Trustees, including a majority of the non-interested Trustees, as
described above.
The Distribution Agreement may be terminated as to any
series or class at any time on 60 days' written notice and
without payment of any penalty by QDI, by the vote of a majority
of the outstanding shares of such series or class or by the vote
of a majority of the Trustees who are not interested persons of
the Trust and who have no direct or indirect financial interest
in the operation of the Plan or in any agreements related to it.
The Distribution Agreement and the Plan, if not sooner
terminated in accordance with their terms, will continue in
effect for successive one-year periods, provided that each such
continuance is specifically approved (i) by the vote of a
majority of the Trustees who are not parties to the Agreement or
interested persons of any such party and who have no direct or
indirect financial interest in the Plan or the Agreement and (ii)
either by the vote of a majority of the outstanding shares of the
series or class of shares of the series involved or by the vote
of a majority of the entire Board of Trustees.
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While the Plan is in effect, the selection and nomination of
those Trustees who are not interested persons of the Trust is
committed to the discretion of the Trustees who are not
interested persons.
As indicated above, the Proposal contemplates that the
Investment Advisory Agreement for the Fund between the Trust and
Quest will be amended by reducing the fee payable by the Fund to
Quest from 1.25% to 1% per annum of the Fund's average daily net
assets. Such reduction would become effective following approval
of the Proposal by the Fund's shareholders, when the Fund's
outstanding shares become Investment Class shares and the 12b-1
fee is first imposed on such shares.
The Trustees believe that it is in the best interests of the
Fund and its shareholders to increase the Fund's net assets
($1,063,589 as of December 31, 1996) to a level that will (i)
substantially reduce the ratio of the Fund's total operating
expenses to its average net assets (6.53% for 1996, before
management fee waiver and other expense reimbursement; 1.49%
after waiver and reimbursement) and (ii) increase the Fund's
investment options. Because the Proposal will not increase the
combined total of the management fees and 12b-1 fees payable by
the Fund's current shareholders (whose shares will become
Investment Class shares), the Board concluded that there is a
reasonable likelihood that the proposed Distribution Plan for the
Fund's shares will benefit the Fund and its shareholders.
RECOMMENDATION OF THE TRUSTEES; REQUIRED VOTES
THE TRUSTEES RECOMMEND THAT THE FUND'S SHAREHOLDERS VOTE TO
APPROVE THE DISTRIBUTION PLAN FOR SHARES OF THE FUND. Such approval
will require the favorable vote of the lesser 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 by proxy.
W. Whitney George, the owner of approximately 72.6% 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.
QUEST
Quest'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 Quest. W. Whitney George is a Vice President of
Quest. Mr. Royce is also the President, Treasurer and a Trustee
of the Trust, and Mr. George is also a Vice President of the
Trust.
SHAREDHOLDER 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.
APPENDIX 1
PROXY ROYCE GIFTSHARES 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?
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X PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ---------------------
ROYCE GIFTSHARES FUND
- --------------------- For Against Abstain
1. PROPOSAL TO APPROVE THE
ROYCE FUND'S PLAN OF
DISTRIBUTION FOR ROYCE
GIFTSHARES FUND SHARES.
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:
