As filed with the Securities and Exchange Commission on April 29, 1997.
1933 Act Registration No. 333-23639
- -----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
{X} Pre-Effective Amendment No. _1_
{ } Post-Effective Amendment No. ___
- ------------------------------------------------------------------------
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;
Risk Factors Fee Table; Comparison of Pennsylvania
Mutual Fund and Royce Value Fund;
and Reasons for the Proposed
Combination; and Determination by
the Trustees Regarding the Combination
4
Information about the Transaction Information about the Combination;
Comparison of Pennsylvania Mutual
Fund and Royce Value Fund; Reasons
for the Proposed Combination; and
Consequences of the Combination.
See also Prospectus for Pennsylvania
Mutual Fund's Consultant Class dated
April 30, 1997
5, 6
Information about Registrant, Comparison of Pennsylvania Mutual
Fund and Royce Information about
Acquired Series Value Fund; Reasons
for the Proposed Combination; and
Capitalizations
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 April 30, 1997;
being Acquired Prospectus of Pennsylvania Mutual Fund's
Consultant Class dated April 30, 1997
14
Financial Statements 1996 Annual Report to Shareholders including
Schedule of Investments of Pennsylvania
Mutual Fund, which includes audited
financial statements as of and for the
year ended December 31, 1996; 1996 Annual
Report to Shareholders including Schedule of
Investments of Royce Value Fund, which
includes audited financial statements as
of and for the year ended December 31,
1996; and Pro-Forma Combining Financial
Statements of Pennsylvania Mutual 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
May 2, 1997
Dear Shareholder:
The Board of Trustees of The Royce Fund has recently
approved and unanimously endorsed a proposal for Royce Value
Fund, a series of The Royce Fund, to be acquired by Pennsylvania
Mutual Fund, a series of The Royce Fund, in exchange for shares
of a newly-created Consultant Class of Pennsylvania Mutual Fund
("Pennsylvania Mutual"). Pennsylvania Mutual, which has more
than 20 years of operating history and $456,867,950 million of
net assets as of December 31, 1996, has the same investment objective
and substantially identical investment policies and restrictions as
Royce Value Fund.
As a result of this transaction, Royce Value Fund would be
combined with Pennsylvania Mutual and you would become a
shareholder of Pennsylvania Mutual. The aggregate net asset
value of your shares of Royce Value Fund will be equal to the
aggregate net asset value of the Pennsylvania Mutual Consultant
Class 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 COMBINATION IS BEING PROPOSED BECAUSE IT IS BELIEVED
THAT THE COMBINED PENNSYLVANIA MUTUAL WILL HAVE LOWER ADVISORY
AND OTHER OPERATING EXPENSE RATIOS, BEFORE FEE WAIVERS, THAN
ROYCE VALUE FUND OR THE INVESTMENT CLASS OF PENNSYLVANIA MUTUAL.
The Board has called a Special Meeting of Shareholders to be
held on May 28, 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/PROXY
This Prospectus/Proxy Statement is being furnished in
connection with a Special Meeting of Shareholders of Royce Value
Fund ("Value Fund"), a series of The Royce Fund (the "Trust"), to
be held on May 28, 1997, at which Value Fund shareholders will be
asked to vote on the proposed combination of Value Fund with and
into Pennsylvania Mutual Fund ("Pennsylvania Mutual"), a separate
series of the Trust. Under the proposed combination (the
"Combination"), Value Fund will transfer all of its assets to
Pennsylvania Mutual in exchange for shares of Pennsylvania
Mutual's Consultant Class and for the assumption by Pennsylvania
Mutual of all of its liabilities, which shares will stand to the
credit of the persons who are shareholders of Value Fund
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 Value Fund, (a) will become a
shareholder of Pennsylvania Mutual's Consultant Class and (b)
will cease to be a shareholder of Value Fund. If approved by the
shareholders of Value Fund, the Combination is expected to be
effected on or about June 17, 1997.
This Prospectus/Proxy Statement, which should be retained
for future reference, sets forth concisely the information about
Pennsylvania Mutual that a prospective investor should know
before investing and is accompanied by a copy of Pennsylvania
Mutual's Consultant Class Prospectus dated April 30, 1997, which is
incorporated herein by reference. Additional information about
the Trust is contained in the Statement of Additional Information
of the Trust dated April 30, 1997. Additional information is
contained in a Statement of Additional Information also dated
April 30, 1997 relating to the transaction described in this
Prospectus/Proxy Statement. Each such Statement of Additional
Information has been filed with the Securities and Exchange
Commission, is incorporated herein by reference and is available
without charge and may be obtained, together with Pennsylvania Mutual's
1996 Annual Report to Shareholders (which was previously mailed to both
Value Fund and Pennsylvania Mutual shareholders) 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. Pennsylvania Mutual's investment
objective is long-term capital appreciation. It seeks to achieve
this objective primarily by investing in common stocks and
convertible securities of small companies. Production of income
is incidental to this objective.
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 April 30, 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 Value Fund and Pennsylvania
Mutual's Consultant Class 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 Value Fund,
a separate series of The Royce Fund, by Pennsylvania Mutual, and
the assumption by Pennsylvania Mutual of all of the liabilities
of Value Fund. The aggregate net asset value of the Consultant
Class shares of Pennsylvania Mutual issued in the exchange will
equal the aggregate net asset value of the Value Fund shares then
outstanding. In connection with the Combination, Consultant
Class shares of Pennsylvania Mutual will be distributed to
shareholders of Value Fund, and Value Fund will be terminated.
As a result of the Combination, each shareholder of Value Fund
will cease to be a shareholder of Value Fund, and will receive
that number of full and fractional shares of the Consultant Class
of Pennsylvania Mutual having an aggregate net asset value equal
to the aggregate net asset value of such shareholder's shares of
Value Fund. No sales charge will be imposed on the transaction,
and, following the Combination, shareholders will own Consultant
Class shares of Pennsylvania Mutual. As a condition to closing,
Value Fund and Pennsylvania Mutual 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
Pennsylvania Mutual and Value Fund have substantially
similar investment objectives and policies. The risks of
investing in the two Funds are substantially the same, although
the investment restrictions of Pennsylvania Mutual are slightly
different from the investment restrictions of Value Fund. These
differences are not expected to affect the manner in which the
assets of Pennsylvania Mutual will be managed compared to Value
Fund. 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 Value Fund, and that the
interests of existing shareholders of Value Fund 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 Value Fund at a Special Meeting of Shareholders
to be held on May 28, 1997. Approval of the Combination
requires the vote of a majority of the outstanding shares of
Value Fund. The Combination will not be effected unless the
requisite approval is provided . See "Required Vote" below.
The Trustees of The Royce Fund have approved the Combination
because they believe it would benefit shareholders of Value Fund
and Pennsylvania Mutual. In reaching their decision to recommend
Value Fund shareholder approval of the Combination, the Trustees
took into account a variety of factors discussed below in greater
detail, including the fact that the Combination would permit
Value Fund shareholders to pursue substantially identical
investment goals in a larger fund, which should result in a
reduced expense ratio due to the spreading of certain operating
expenses over a larger asset base. See "Determination by the
Trustees Regarding the Combination" below. The Trustees also
considered the fact that the investments of Pennsylvania Mutual
have been and will continue to be managed in a manner similar to
Value Fund. As mutual funds investing in common stocks of small
and/or micro-cap companies, both Pennsylvania Mutual and Value Fund
are generally subject to the same investment risks. Shareholders of
each Fund also have identical redemption, exchange and other rights.
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 Value
Fund and Pennsylvania Mutual as well as pro forma information for
Pennsylvania Mutual's Consultant Class 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 Value Fund and
Pennsylvania Mutual as of December 31, 1996.
<TABLE>
Pro Forma
Combined(i.e.,
Pennsylvania
Mutual
Consultant Class
Value Pennsylvania following the
Fund Mutual 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) .87% .76% .74%
12b-1 Fees (after waivers) .67% None .67%
Other Expenses .32% .23% .24%
Total Fund Operating Expenses 1.86% .99% 1.65%
</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 Value Fund and Pennsylvania Mutual.
Value Fund 12b-1 fees would have been 1.00% and its total
operating expenses would have been 2.19% without such fee waiver.
Pennsylvania Mutual's Consultant Class would bear a 12b-1 fee
equal to that of Value Fund. A portion of Pennsylvania Mutual's
management fee was waived in 1996. Pennsylvania Mutual's
management fees would have been .80% and its total operating
expenses would have been 1.03% without such waiver. The Pro
Forma Combined Financial Statements do not reflect such waiver as
it may not continue into 1997.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
THE ROYCE FUND
To the Shareholders of
Royce Value Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of
Shareholders of Royce Value 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 May 28, 1997 at 3:00 p.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 of the liabilities of Royce Value Fund by
Pennsylvania Mutual Fund in exchange for Pennsylvania Mutual
Fund's Consultant Class shares, and (b) the liquidation of
Royce Value Fund and the pro rata distribution of its
Pennsylvania Mutual Fund Consultant Class 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
April 18, 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 Value Fund's Annual Report to Shareholders, including
the accompanying Schedule of Investments, 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
May 2, 1997
STATEMENT CONCERNING THE SPECIAL MEETING OF
SHAREHOLDERS OF THE ROYCE FUND
This Prospectus/Proxy is solicited on behalf of the Trustees of
The Royce Fund (the "Trust"), for use at the Special Meeting of
Shareholders of Royce Value Fund, a series of the Trust, to be
held at the offices of the Trust, 1414 Avenue of the Americas,
New York, New York 10019 (10th Floor), at 3:00 p.m., Eastern Time,
on May 28, 1997 and at any adjournments thereof.
The purpose of the meeting is the approval or disapproval of
the proposed Combination of Value Fund with and into Pennsylvania
Mutual.
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 Value Fund'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 April 18, 1997, the record date for the meeting, there were
14,148,196 shares of Value 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.
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.
No one was known to the Trust to be the beneficial owner or
owner of record of 5% or more of Value Fund's outstanding shares
of beneficial interest as of the record date. As of such date,
all of the Trustees and officers of the Trust as a group owned
less than 1% of the outstanding shares of Pennsylvania Mutual and
of Value Fund.
APPROVAL OR DISAPPROVAL OF THE COMBINATION OF
ROYCE VALUE FUND
WITH AND INTO PENNSYLVANIA MUTUAL FUND
INFORMATION ABOUT THE COMBINATION
The Trustees of the Trust are proposing that the net assets
of Value Fund be acquired by and combined with those of
Pennsylvania Mutual. The proposed Plan of Reorganization (the
"Plan"), attached as Exhibit A, provides that Pennsylvania Mutual
will acquire all of the assets and assume all of the liabilities
of Value Fund in exchange for shares of the Consultant Class of
Pennsylvania Mutual at the Closing, which is defined in the Plan
to be 4:00 p.m. (Eastern Time) on June 17, 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 Value
Fund will receive that number of full and fractional shares of
the Consultant Class of Pennsylvania Mutual 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 Value Fund transferred to Pennsylvania Mutual.
Portfolio securities of Value Fund and Pennsylvania Mutual will
be valued in accordance with the valuation policies of the Trust,
which are described under "Net Asset Value Per Share" at page 8
of the enclosed Prospectus of the Consultant Class of
Pennsylvania Mutual. 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 Value Fund will not be diluted as a
result of the transaction contemplated by the reorganization.
The distribution of Pennsylvania Mutual's Consultant Class
shares to Value Fund shareholders will be effected by
establishing accounts on the share records of Pennsylvania Mutual's
Consultant Class in the names of Value Fund's shareholders, with each
account representing the respective number of full and fractional shares
of Pennsylvania Mutual's Consultant Class due such shareholders
and issued and outstanding share certificates of Value Fund being
automatically cancelled. New certificates for Pennsylvania Mutual's
Consultant Class shares will not be issued as part of the Combination,
but may be obtained upon request after the Combination.
The Plan may be terminated and the reorganization abandoned
at any time, before or after approval by Value Fund'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 Value Fund and Pennsylvania
Mutual of the transaction contemplated by the Plan will be paid
directly by Quest.
COMPARISION OF THE SERIES AND REASONS FOR THE PROPOSED COMBINATION
Pennsylvania Mutual
- -------------------
Pennsylvania Mutual's investment objective is long-term
capital appreciation, primarily through investments in common
stocks and convertible securities of small companies. Production
of income is incidental to this objective.
Normally, Pennsylvania Mutual will invest at least 65% of
its assets in common stocks, convertible preferred stocks and
convertible bonds of small companies with stock market
capitalizations under $1 billion at the time of investment. In
the upper end of this range, $300 million to $1 billion in stock
market capitalization, Pennsylvania Mutual focuses on a limited
number of companies with superior financial characteristics
and/or unusually attractive business prospects, companies Quest
classifies as "premier." Pennsylvania Mutual also focuses on
companies in the lower end of the range, below $300 million, the
sector known as "micro-cap." The remainder of its assets may be
invested in securities of companies with higher stock market
capitalizations and non-convertible preferred stocks and debt
securities.
Value Fund
- ----------
Value Fund's investment objective is long-term capital
appreciation, primarily through investment in securities of small
companies. Production of income is incidental to this objective.
Normally, Value Fund invests at least 65% of its assets in
common stocks, convertible preferred stocks and convertible bonds
of small companies with stock market capitalizations under $750
million at the time of investment. The remainder of its assets
may be invested in securities of companies with higher stock
market capitalizations, non-convertible preferred stocks and debt
securities.
INVESTMENT RISKS
Value Fund and Pennsylvania Mutual 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, Value Fund and Pennsylvania
Mutual have identical fundamental investment restrictions (which
may not be changed without shareholder approval).
Investment Restriction Value Fund Pennsylvania Mutual
---------------------- ---------- -------------------
Illiquid Securities May not invest more May invest in illiquid
than 10% of its securities to the extent
assets in securities permitted by Securities
without readily and Exchange guidelines
available market (currently, up to 15%
quotations of net assets)
Diversification May not invest more With respect to 75%
than 5% of its of its total assets,
assets in the may not invest more
securities of any than 5% of its assets
one issuer except in the securities of any
U.S. Government one issuer except U.S.
securities Government securities
Other Investment
Companies May not invest in May invest in
securities of other securities of other
investment companies investment companies
to the extent permitted
by applicable law
________________________
The preceding description of the investment objectives and
policies of Value Fund and Pennsylvania Mutual 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 April 30, 1997. The Prospectus for
Pennsylvania Mutual's Consultant Class is enclosed herewith, and
copies of Value Fund's Prospectus and the Trust's Statement of
Additional Information dated April 30, 1997 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 Value Fund and Pennsylvania Mutual also have identical
redemption and purchase features and identical brokerage
practices. For 1996, the respective portfolio turnover rates of
Value Fund and Pennsylvania Mutual were 30% and 29%. As of April 18,
1997, the record date, Value Fund had net assets of approximately
$136.8 million, and Pennsylvania Mutual had net assets of approximately
$$423.5 million.
MANAGEMENT
Quest, the Trust's principal investment adviser, manages the
portfolios of both Value Fund and Pennsylvania Mutual. As
compensation for its services, Quest is entitled to receive the
following fees per annum from each series:
1.00% of first $50 million of average net assets
.875% of next $50 million
.75% of average net assets over $100 million
These fees are payable monthly from the assets of the series
involved. For 1996, the fees paid to Quest were .87% (after
waivers) of Value Fund's and .76% (after waivers) of Pennsylvania
Mutual's average net assets for such year.
DISTRIBUTION AND 12B-1 FEE
Value Fund and the Pennsylvania Mutual Consultant Class each
has a Distribution Plan pursuant to Rule 12b-1 to provide for the
orderly growth and stabilization of its assets. Under the
Distribution Plan, Value Fund pays, and Pennsylvania Mutual's
Consultant Class will pay, a fee to Quest Distributors, Inc.
("QDI"), the distributor of the Trust's shares, not to exceed
1.00% per annum of its average net assets. The fees paid to QDI
may be used by QDI to pay sales commissions and other fees to
those broker-dealers who introduce investors to Value Fund and
Pennsylvania Mutual's Consultant Class and various other
promotional, sales-related and servicing costs and expenses. The
fees payable to QDI are allocated between asset-based sales
charges and personal service and/or account maintenance fees.
For 1996, the fees paid to QDI were .67% (after waivers) of Value
Fund's average net assets.
DIVIDENDS
Value Fund and Pennsylvania Mutual distribute substantially
all of their net investment income and net realized capital
gains, if any, to their 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, Value Fund 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 Value Fund on
the record date for such distribution.
TAX CONSEQUENCES OF THE COMBINATION
It is anticipated that the transaction contemplated by the
Plan will be a reorganization described in Section 368(a)(1)(C)
of the Internal Revenue Code and, as such, 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) Value Fund upon
the transfer of all its assets and liabilities to Pennsylvania
Mutual in exchange solely for shares of Pennsylvania Mutual's
Consultant Class and the assumption of Value Fund's liabilities
by Pennsylvania Mutual or (ii) Pennsylvania Mutual upon its receipt
of the assets of Value Fund in exchange for shares of Pennsylvania
Mutual's Consultant Class, (b) no gain or loss will be recognized by
the shareholders of Value Fund on the distribution to them of such shares
of Pennsylvania Mutual's Consultant Class in exchange for their
Value Fund shares, (c) the basis of the shares of Pennsylvania
Mutual's Consultant Class received by a shareholder of Value Fund
in place of his Value Fund shares will be the same as the basis
of his Value Fund shares surrendered in exchange therefor and (d)
a shareholder's holding period for such shares of Pennsylvania
Mutual's Consultant Class will include the period for which he
held the Value Fund shares surrendered in exchange therefor,
provided that he held such Value Fund shares as a capital asset.
Such opinion will rely on certain representations of the Trust as
to Value Fund and Pennsylvania Mutual 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 law differently. The Trust has
not made any investigation as to the state or local tax
consequences of the proposed Combination.
At the time of the Combination, Pennsylvania Mutual's net asset
value may reflect undistributed income or capital gains or net
unrealized appreciation in the value of its securities. Any
distribution by Pennsylvania Mutual of these amounts after the
Combination will be taxable to its shareholders, including the
former shareholders of Value Fund. Each Value Fund 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 Value Fund and Pennsylvania Mutual's
Consultant Class as of December 31, 1996, and the pro forma
capitalization of Pennsylvania Mutual as of that date, after
giving effect to the Combination, are as follows:
<TABLE>
Value Fund
Combined into
Value Pennsylvania Pennsylvania
Fund Mutual Mutual's
---- ------ --------
<S> <C> <C> <C>
Net assets $145,410,680 $456,867,950 $602,536,130
Shares outstanding 15,152,732 64,250,277 84,744,885
Share value 9.60 7.11 7.11
</TABLE>
DETERMINATION BY THE TRUSTEES REGARDING THE COMBINATION
The Trustees of the Trust have unanimously determined that
Value Fund's and Pennsylvania Mutual'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.
In recommending to Value Fund shareholders that Value Fund be
combined into Pennsylvania Mutual, the Trustees of the Trust,
including the Independent Trustees, concluded that the
Combination would permit Value Fund shareholders to pursue
substantially identical investment goals in a 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 Pennsylvania Mutual 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 Value Fund and Pennsylvania Mutual and the effect of combining
them as of and for the year ended December 31, 1996. Based on
such pro forma combining 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 Value Fund
shareholders from approximately 1.86% to approximately 1.65%, 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 VOTE
THE TRUSTEES RECOMMEND THAT VALUE FUND 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 Value Fund.
Shareholder Communications Corporation ("SCC") has been
retained by Quest to assist shareholders with the voting process.
Certain shareholders of Value Fund 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 Value Fund.
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 obtained 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 ask 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.
SHAREHOLDER PROPOSALS
The Trust does not hold annual shareholder meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a
subsequent shareholder meeting should send their written proposals to the
Secretary of the Trust, 1414 Avenue of the Americas, New York, New
York 10019
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 Value Fund and Pennsylvania Mutual Fund 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 13th day of March, 1997,
on behalf of its series designated as Royce Value Fund (the
"Acquired Series") and Pennsylvania Mutual 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 Consultant Class 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
Consultant Class 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 Consultant Class 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. Outstanding shares of
the Acquiring Series to be issued at the Closing will be determined
by multiplying outstanding shares of the Acquired Series by the
quotient of the Net Asset Value of the Acquired Series divided by
the Net Asset Value of the Acquiring Series. Issued and outstanding
share certificates of the Acquired Series will be deemed to have been
automatically cancelled at the Closing.
3. The Acquired Series shall liquidate, and the foregoing
distribution of shares of the Consultant Class 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 Consultant Class 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 June 17, 1997 at 4:00 p.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 its assets and
liabilities to the Acquiring Series solely in exchange for shares
of the Consultant Class 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 Consultant Class,
(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
Consultant Class of the Acquiring Series in exchange for their
shares of the Acquired Series, (c) the basis of the shares of the
Consultant Class 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 Consultant
Class 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 1
Summary of the Proposed Transaction 2
Notice of Meeting 5
Statement Concerning the Special Meeting 6
Information about the Combination 7
Comparison of the Series and Reasons for
the Proposed Combination 8
Investment Risks 8
Fundamental Investment Restrictions 9
Management 10
Distribution and 12b-1 Fee 10
Dividends 10
Tax Consequences of the Combination 11
Capitalization 11
Determination by the Trustees Regarding
the Combination 12
Recommendation of the Trustees; Required Vote 12
Adjournment of Meeting 13
Shareholder Proposals 13
Information Filed with the Securities and
Exchange Commission 13
Experts 14
Exhibit A: Plan of Reorganization 15
APPENDIX 1
PROXY ROYCE VALUE 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 April 18, 1997, at the
Special Meeting of Shareholders to be held on May 28,
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 VALUE 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 PENNSYLVANIA MUTUAL FUND
AND (B) THE LIQUIDATION OF
THE FUND AND THE PRO RATA
DISTRIBUTION OF PENNSYLVANIA
MUTUAL FUND CONSULTANT CLASS
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
April 30, 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 Value Fund to Pennsylvania
Mutual Fund in exchange for shares of the Consultant Class of
Pennsylvania Mutual 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 April 30, 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 Pennsylvania Mutual
and Royce Value 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 Pennsylvania Mutual 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 Value Fund as of and for the year ended
December 31, 1996, with Report of Independent Accountants.
III. Statement of Additional Information of The Royce Fund dated
April 30, 1997.
IV. Pro Forma Combining Financial Statements and Schedule of
Investments of Pennsylvania Mutual Fund as of and for the
year ended December 31, 1996 (unaudited).
I. The financial statements and schedules of investments of
Pennsylvania Mutual Fund as of and for the year ended December
31, 1996, with Report of Independent Accountants, are included in
Pennsylvania Mutual 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, together with the management discussion of Pennsylvania
Mutual Fund's performance included in such Annual Report.
II. The financial statements and schedules of investments
of Royce Value Fund as of and for the year ended December 31,
1996, with Report of Independent Accountants, are included in
Royce Value 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. The Statement of Additional Information of The Royce Fund
dated April 30, 1997, has been filed with the Securities and
Exchange Commission as part of Post-Effective Amendment No. 41 to
The Royce Fund's Registration Statement on Form N-1A and is
incorporated herein by reference.
IV. Pro Forma Combining Financial Statements and Schedule of
Investments of Pennsylvania Mutual Fund as of and for the year
ended December 31, 1996 (unaudited).
Pennsylvania Mutual 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 Pennsylvania Mutual Fund and Royce Value Fund, which are
incorporated by reference in this Statement of Additional Information.
Pro Forma Combining Statement of Net Assets
December 31, 1996
(unaudited)
<TABLE>
Pennsylvania Royce Pro Forma
Mutual Value Pro Forma Combined
Fund Fund Adjustments Fund
<S> <C> <C> <C> <C>
Investments at value (Cost $302,844,886 and $105,421,809 $449,969,127 $144,546,068 $594,515,195
Cash and Other Assets
less Liabilities 6,898,823 864,612 257,500 8,020,935
---------- ----------- ----------- -----------
Net Assets $456,867,950 $145,410,680 $257,500 $602,536,130
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Analysis of Net Assets:
Capital Shares at par $64,250 $15,153 $79,403
Additional paid-in capital 285,116,930 103,032,355 388,149,285
Undistributed net investment income - - $257,500 257,500
Accumulated net realized gain on investments 24,562,529 3,238,913 27,801,442
Net unrealized appreciation on investments 147,124,241 39,124,259 186,248,500
----------- ----------- ----------- -----------
Net Assets $456,867,950 $145,410,680 $257,500 $602,536,130
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Pro Forma Combining Statement of Operations
For the year ended December 31, 1996
(unaudited)
Pennsylvania Royce Pro Forma
Mutual Value Pro Forma Combined
Fund Fund Adjustments Fund
Investment Income:
Dividends $9,911,040 $2,703,864 $12,614,904
Interest 1,174,006 332,511 1,506,517
----------- ----------- -----------
Total Income 11,085,046 3,036,375 14,121,421
Expenses:
Investment advisory fee 4,302,768 1,322,009 ($187,500)(a) 5,437,277
Distribution fee - 1,518,249 1,518,249
Other fees and expenses 1,292,957 491,271 (70,000)(b) 1,714,228
----------- ----------- ------------ -----------
Total Expenses 5,595,725 3,331,529 (257,500) 8,669,754
Fees waived by investment adviser and distributor (198,074) (505,034) - (703,108)
----------- ----------- ------------ -----------
Net Expenses 5,397,651 2,826,495 (257,500) 7,966,646
----------- ----------- ------------ -----------
Net Investment Income 5,687,395 209,880 257,500 6,154,775
Realized and Unrealized Gain on Investments:
Net realized gain on investments 107,094,818 26,488,833 133,583,651
Net change in unrealized appreciation on investments (50,091,647) (6,780,188) (56,871,835)
------------ ------------ ------------
Net realized and unrealized gain on investments 57,003,171 19,708,645 76,711,816
Net Increase in Net Assets from Investment Operations $62,690,566 $19,918,525 $257,500 $82,866,591
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See accompanying Notes to Pro Forma Combining Financial Statements.
PENNSYLVANIA MUTUAL 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 Pennsylvania Mutual Fund and Royce Value 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 and to the assumption of all
liabilities of Royce Value Fund by Pennsylvania Mutual Fund
in exchange for shares of a newly-created Consultant Class
of Pennsylvania Mutual Fund. The pre-existing shares of
Pennsylvania Mutual Fund will become Investment Class shares.
The Pro Forma Adjustments to the Pro Forma Combining
Financial Statements are comprised of the following:
(a) Reduction of investment advisory fee as a result
of greater average net assets reaching the lowest breakpoint
of 0.75 on the sliding fee scale.
(b) Certain operating expenses will be reduced due to
economics of scale resulting from the combination of Funds.
PENNSYLVANIA MUTUAL FUND
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
December 31, 1996
(unaudited)
<TABLE>
Pennsylvania Royce Pennsylvania Royce
Mutual Value Mutual Value
Fund Fund Combined Fund Fund Combined
Shares Shares Shares Security Name Value Value Value
<C> <C> <C> <S> <C> <C> <C>
INDUSTRIAL PRODUCTS
114,600 35,400 150,000 Ag-Chem Equipment Co., Inc.* $2,091,450 $646,050 $2,737,500
126,100 23,400 149,500 American Filtrona Corporation 5,343,487 991,575 6,335,062
2,800 9,500 12,300 Ameron International Corporation 144,550 490,437 634,987
31,018 17,000 48,018 Ash Grove Cement Company 1,760,271 964,750 2,725,022
105,887 14,905 120,792 BHA Group, Inc. (Class A) 1,707,428 240,343 1,947,771
0 16,500 16,500 BW/IP, Inc. (Class A) 0 272,250 272,250
94,000 42,000 136,000 Blessings Corporation 875,375 391,125 1,266,500
0 36,500 36,500 W. H. Brady Co. (Class A) 0 898,812 898,812
23,000 0 23,000 CFC International, Inc.* 258,750 0 258,750
45,200 0 45,200 Carbo Ceramics, Inc. 949,200 0 949,200
126,000 25,000 151,000 Cascade Corp. 2,031,750 403,125 2,434,875
1,874 78 1,952 Central Steel & Wire Company 1,077,550 44,850 1,122,400
60,250 15,200 75,450 CLARCOR Inc. 1,333,031 336,300 1,669,331
5,330 1,500 6,830 ConBraCo Industries, Inc. 2,318,550 652,500 2,971,050
0 10,800 10,800 Core Industries Inc. 0 178,200 178,200
78,800 22,800 101,600 Curtiss-Wright Corporation 3,969,550 1,148,550 5,118,100
165,848 47,388 213,236 Delta Woodside Industries, Inc.* 1,057,281 302,099 1,359,380
0 38,000 38,000 DeVlieg-Bullard, Inc.* 0 105,688 105,688
0 15,800 15,800 Donaldson Company, Inc. 0 529,300 529,300
0 3,000 3,000 Eastern Co. 0 39,375 39,375
147,332 0 147,332 Fab Industries, Inc. 4,051,630 0 4,051,630
30,000 0 30,000 Falcon Products, Inc. 427,500 0 427,500
0 47,800 47,800 Fansteel Inc.* 0 298,750 298,750
0 3,433 3,433 Federal Signal Corporation 0 88,829 88,829
0 7,600 7,600 Giddings & Lewis, Inc. 0 97,850 97,850
148,000 46,200 194,200 P. H. Glatfelter Company 2,664,000 831,600 3,495,600
61,912 19,087 80,999 Gorman-Rupp Company 843,551 260,060 1,103,611
0 20,400 20,400 Greif Bros. Corporation (Class A) 0 576,300 576,300
59,400 14,512 73,912 C. H. Heist Corp.* 460,350 112,468 572,818
0 3,600 3,600 Holophane Corporation* 0 68,400 68,400
129,700 23,800 153,500 International Aluminum Corporation 3,307,350 606,900 3,914,250
0 16,800 16,800 Kaman Corporation (Class A) 0 218,400 218,400
97,900 27,800 125,700 Kaydon Corporation 4,613,538 1,310,075 5,923,613
68,600 36,700 105,300 Kimball International, Inc. (Class B) 2,838,325 1,518,462 4,356,787
0 12,370 12,370 Knape & Vogt Manufacturing Company 0 204,105 204,105
41,325 8,325 49,650 Lancer Corporation* 841,997 169,622 1,011,619
24,920 23,221 48,141 Lawter International, Inc. 314,615 293,165 607,780
38,960 23,412 62,372 LeaRonal, Inc. 896,080 538,476 1,434,556
323,112 81,149 404,261 Lilly Industries, Inc. (Class A) 5,896,794 1,480,969 7,377,763
98,190 22,500 120,690 The Lincoln Electric Company 2,970,248 680,625 3,650,873
51,700 7,900 59,600 Liqui-Box Corporation 1,680,250 256,750 1,937,000
0 3,500 3,500 Lydall, Inc.* 0 78,750 78,750
0 20,400 20,400 MacDermid, Incorporated 0 561,000 561,000
0 14,200 14,200 Mine Safety Appliances Company 0 756,150 756,150
62,000 18,100 80,100 Minuteman International, Inc. 558,000 162,900 720,900
0 14,405 14,405 The Monarch Cement Company 0 212,474 212,474
0 14,405 14,405 The Monarch Cement Company Cl. B* 0 212,474 212,474
0 10,000 10,000 The Monarch Machine Tool Company 0 82,500 82,500
0 14,300 14,300 Moore Products Co.* 0 257,400 257,400
32,900 5,200 38,100 Paul Mueller Company 1,233,750 195,000 1,428,750
136,820 34,755 171,575 Myers Industries, Inc. 2,308,837 586,491 2,895,328
22,400 9,900 32,300 Nordson Corporation 1,428,000 631,125 2,059,125
42,550 12,366 54,916 Oil-Dri Corporation of America 638,250 185,490 823,740
0 13,400 13,400 The Oilgear Company 0 201,000 201,000
182,900 38,800 221,700 Oregon Steel Mills, Inc. 3,063,575 649,900 3,713,475
198,500 58,500 257,000 Oshkosh Truck Corporation (Class B) 2,109,062 621,562 2,730,624
177,350 44,400 221,750 Penn Engineering and Manufacturing
Inc. (Non-Voting) 3,635,675 910,200 4,545,875
49,550 0 49,550 Penn Engineering and Manufacturing
Inc. (Class A) 1,028,163 0 1,028,163
0 1,000 1,000 Pioneer Metals, Inc.* 0 215,000 215,000
73,693 21,200 94,893 Preformed Line Products Company 2,892,450 832,100 3,724,550
123,400 6,700 130,100 Puerto Rican Cement Company, Inc. 3,856,250 209,375 4,065,625
107,064 0 107,064 Quaker Chemical Corporation 1,753,173 0 1,753,173
0 12,600 12,600 Regal-Beloit Corporation 0 247,275 247,275
73,310 21,225 94,535 Robroy Industries, Inc. (Class A) 1,374,562 397,969 1,772,531
0 9,600 9,600 Sealed Air Corporation* 0 399,600 399,600
160,700 20,200 180,900 Simpson Manufacturing Co., Inc.* 3,696,100 464,600 4,160,700
212,510 66,400 278,910 The Standard Register Company 6,906,575 2,158,000 9,064,575
0 37,000 37,000 Steel of West Virginia, Inc.* 0 277,500 277,500
70,100 0 70,100 Synalloy Corporation 1,104,075 0 1,104,075
0 59,500 59,500 Tab Products Co. 0 528,063 528,063
63,700 18,300 82,000 Tecumseh Products Company (Class A) 3,654,788 1,049,963 4,704,751
0 3,800 3,800 Tennant Company 0 104,500 104,500
96,500 32,750 129,250 Todd Shipyards Corporation* 627,250 212,875 840,125
0 36,500 36,500 UNC, Inc.* 0 438,000 438,000
76,500 0 76,500 Unifi, Inc. 2,457,562 0 2,457,562
95,132 15,800 110,932 Versa Technologies, Inc. 1,236,716 205,400 1,442,116
43,500 17,800 61,300 Watts Industries, Inc. (Class A) 1,038,563 424,975 1,463,538
36,418 0 36,418 Woodward Governor Company 4,807,176 0 4,807,176
105,800 34,600 140,400 Zero Corporation 2,116,000 692,000 2,808,000
----------- ---------- -----------
110,249,003 33,408,746 143,657,749
----------- ---------- -----------
INDUSTRIAL SERVICES
56,500 53,100 109,600 ABM Industries Incorporated 1,045,250 982,350 2,027,600
64,094 15,270 79,364 Aceto Corporation 893,310 212,826 1,106,136
136,900 45,987 182,887 Air Express International Corporation 4,415,025 1,483,081 5,898,106
64,400 0 64,400 AirNet Systems, Inc.* 949,900 0 949,900
0 8,500 8,500 Angelica Corporation 0 162,562 162,562
287,600 83,948 371,548 Arnold Industries, Inc. 4,565,650 1,332,674 5,898,324
131,200 46,000 177,200 Guy F. Atkinson Company of California 1,377,600 483,000 1,860,600
0 16,425 16,425 Banta Corporation 0 375,722 375,722
98,400 27,500 125,900 Bowne & Co., Inc. 2,423,100 677,187 3,100,287
0 13,500 13,500 Camco International Inc. 0 622,687 622,687
0 32,800 32,800 Dames & Moore 0 479,700 479,700
31,600 32,900 64,500 Devcon International Corp.* 193,550 201,513 395,063
5,000 10,400 15,400 Devon Group, Inc.* 137,500 286,000 423,500
77,700 26,200 103,900 DIMON Incorporated 1,796,813 605,875 2,402,688
213,800 42,700 256,500 Ennis Business Forms, Inc. 2,405,250 480,375 2,885,625
22,800 54,300 77,100 FCA International Ltd.* 35,768 85,185 120,953
0 280 280 Fisher Companies Inc. 0 27,440 27,440
321,521 62,846 384,367 Frozen Food Express Industries, Inc. 2,893,689 565,614 3,459,303
0 13,250 13,250 G & K Services, Inc. (Class A) 0 500,188 500,188
0 4,400 4,400 Global Industries, Ltd.* 0 81,950 81,950
0 4,100 4,100 Gulfmark International Inc.* 0 237,800 237,800
190,737 57,337 248,074 The Harper Group 4,530,004 1,361,754 5,891,758
70,800 0 70,800 Kenan Transport Company 1,398,300 0 1,398,300
0 24,400 24,400 Lawson Products, Inc. 0 533,750 533,750
108,600 29,500 138,100 Lufkin Industries, Inc. 2,715,000 737,500 3,452,500
95,400 30,900 126,300 Merrill Corporation 2,194,200 710,700 2,904,900
165,500 0 165,500 Morrison Knudsen Corporation* 1,489,500 0 1,489,500
223,100 70,000 293,100 New England Business Service, Inc. 4,796,650 1,505,000 6,301,650
0 2,100 2,100 Nichols Research Corporation* 0 53,550 53,550
0 15,600 15,600 Offshore Logistics, Inc.* 0 302,250 302,250
0 42,600 42,600 Perini Corporation* 0 332,813 332,813
0 6,000 6,000 Pittston Burlington Group Brinks Group 0 162,000 162,000
94,650 20,800 115,450 Plenum Publishing Corporation 3,312,750 728,000 4,040,750
147,500 0 147,500 Rush Enterprises, Inc.* 1,770,000 0 1,770,000
201,656 54,200 255,856 Rykoff-Sexton, Inc. 3,201,289 860,425 4,061,714
103,200 0 103,200 Sevenson Environmental Services Inc. 1,883,400 0 1,883,400
0 42,400 42,400 Standard Commercial Corporation* 0 858,600 858,600
29,300 25,000 54,300 Stone & Webster, Inc. 922,950 787,500 1,710,450
264,377 67,500 331,877 TBC Corporation* 1,982,828 506,250 2,489,078
0 7,500 7,500 Treadco, Inc. 0 78,750 78,750
0 32,800 32,800 The Turner Corporation* 0 336,200 336,200
0 11,300 11,300 The Union Corporation* 0 258,488 258,488
194,200 53,800 248,000 Vallen Corporation* 3,228,575 894,425 4,123,000
0 2,700 2,700 Werner Enterprises, Inc. 0 48,937 48,937
91,900 27,200 119,100 Willbros Group, Inc.* 896,025 265,200 1,161,225
---------- ---------- ----------
57,453,876 21,205,821 78,659,697
---------- ---------- ----------
CONSUMER PRODUCTS
171,800 5,300 177,100 Aldila, Inc. 832,156 25,672 857,828
58,711 16,500 75,211 Allen Organ Company (Class B Non-Voting)2,333,762 655,875 2,989,637
18,900 11,800 30,700 Baldwin Piano & Organ Company 212,625 132,750 345,375
73,675 19,800 93,475 Bassett Furniture Industries,
Incorporated 1,805,037 485,100 2,290,137
37,506 6,370 43,876 Burnham Corporation (Class A) 1,106,427 187,915 1,294,342
0 4,040 4,040 Burnham Corporation Cl. B * 0 119,180 119,180
144,225 0 144,225 Conso Products Co.* 1,856,897 0 1,856,897
79,200 25,100 104,300 Ethan Allen Interiors Inc. 3,049,200 966,350 4,015,550
25,350 6,325 31,675 Farmer Bros. Co. 3,853,200 961,400 4,814,600
126,700 0 126,700 Fedders Corporation (Class A Non-Voting) 633,500 0 633,500
36,600 0 36,600 Flexsteel Industries, Inc. 475,800 0 475,800
77,300 26,700 104,000 Garan Incorporated 1,497,687 517,312 2,014,999
0 5,300 5,300 Genesee Corporation (Class B) 0 223,925 223,925
30,100 9,500 39,600 Gibson Greetings, Inc.* 590,713 186,437 777,150
0 15,350 15,350 Guilford Mills, Inc. 0 408,694 408,694
61,200 18,600 79,800 Haggar Corp. 971,550 295,275 1,266,825
50,100 3,000 53,100 J & J Snack Foods Corp.* 676,350 40,500 716,850
0 8,400 8,400 Jean-Philippe Fragrances, Inc.* 0 54,600 54,600
56,470 26,900 83,370 Johnson Worldwide Associates, Inc. Cl 748,227 356,425 1,104,652
273,200 66,300 339,500 Juno Lighting, Inc. 4,371,200 1,060,800 5,432,000
9,900 0 9,900 Justin Industries, Inc. 113,850 0 113,850
94,100 12,600 106,700 K-Swiss Inc. (Class A) 929,237 124,425 1,053,662
70,900 23,600 94,500 La-Z-Boy Chair Company 2,091,550 696,200 2,787,750
0 1,700 1,700 Lady Baltimore Foods, Inc.* 0 83,725 83,725
124,600 38,300 162,900 Lazare Kaplan International, Inc.* 2,133,775 655,887 2,789,662
114,450 25,900 140,350 Liberty Homes, Inc. (Class A) 1,530,769 346,413 1,877,181
0 21,950 21,950 Liberty Homes, Inc. (Class B) 0 289,466 289,466
273,929 41,162 315,091 Lifetime Hoan Corporation* 3,218,666 483,653 3,702,319
38,000 0 38,000 Lund International Holdings, Inc.* 465,500 0 465,500
0 11,700 11,700 Marisa Christina, Incorporated* 0 96,525 96,525
16,100 2,800 18,900 Matthews International Corporation (C 454,825 79,100 533,925
203,300 71,822 275,122 Midwest Grain Products, Inc.* 3,456,100 1,220,974 4,677,074
9,800 24,700 34,500 National Presto Industries, Inc. 366,275 923,162 1,289,437
84,000 15,200 99,200 Oshkosh B'Gosh, Inc. (Class A) 1,281,000 231,800 1,512,800
38,200 40,800 79,000 The Rival Company 950,225 1,014,900 1,965,125
0 11,500 11,500 Russ Berrie and Company, Inc. 0 207,000 207,000
0 1,850 1,850 Seaboard Corporation 0 492,100 492,100
83,100 0 83,100 Semi-Tech Corporation* 306,431 0 306,431
153,800 29,000 182,800 Skyline Corporation 3,806,550 717,750 4,524,300
0 8,400 8,400 The L. S. Starrett Company (Class A) 0 238,350 238,350
0 32,700 32,700 The Stride Rite Corporation 0 327,000 327,000
156,200 51,000 207,200 Sturm, Ruger & Company, Inc. 3,026,375 988,125 4,014,500
172,900 22,500 195,400 Thomaston Mills, Inc. (Class A
Non-Voting) 1,945,125 253,125 2,198,250
152,600 48,800 201,400 Thor Industries, Inc. 3,853,150 1,232,200 5,085,350
0 25,900 25,900 Thorn Apple Valley, Inc.* 0 343,175 343,175
484,000 94,900 578,900 The Topps Company, Inc.* 1,936,000 379,600 2,315,600
65,000 16,400 81,400 Velcro Industries N.V. 4,062,500 1,025,000 5,087,500
37,900 26,450 64,350 WLR Foods, Inc. 469,013 327,319 796,332
38,500 7,200 45,700 Weyco Group, Inc. 1,549,625 289,800 1,839,425
---------- ---------- ----------
62,960,872 19,744,983 82,705,855
CONSUMER SERVICES
82,700 38,600 121,300 ASA Holdings, Inc.* 1,809,063 844,375 2,653,438
0 3,200 3,200 Bob Evans Farms, Inc. 0 43,200 43,200
102,300 19,200 121,500 Bowl America Incorporated (Class A) 677,737 127,200 804,937
157,500 50,300 207,800 Buffets, Inc.* 1,437,188 458,987 1,896,175
36,100 0 36,100 Comair Holdings, Inc. 866,400 0 866,400
0 18,800 18,800 Cornell Corrections, Inc.* 0 166,850 166,850
143,900 41,200 185,100 Jenny Craig, Inc.* 1,277,113 365,650 1,642,763
12,259 4,272 16,531 Grey Advertising Inc. 3,101,527 1,080,816 4,182,343
0 5,200 5,200 IHOP Corp.* 0 122,850 122,850
118,800 37,600 156,400 International Dairy Queen, Inc. Cl. A 2,376,000 752,000 3,128,000
83,600 0 83,600 International Dairy Queen, Inc. Cl. B 1,609,300 0 1,609,300
45,250 0 45,250 The Marcus Corporation 961,562 0 961,562
68,600 22,000 90,600 PCA International, Inc.* 1,114,750 357,500 1,472,250
0 12,000 12,000 Earl Scheib, Inc.* 0 84,000 84,000
301,882 34,700 336,582 Shoney's, Inc.* 2,113,174 242,900 2,356,074
0 8,300 8,300 True North Communications Inc. 0 181,562 181,562
---------- --------- ----------
17,343,814 4,827,890 22,171,704
FINANCIAL INTERMEDIARIES
16,975 7,931 24,906 Alleghany Corporation* 3,598,700 1,681,372 5,280,072
126,050 39,925 165,975 ALLIED Group, Inc. 4,112,380 1,302,553 5,414,933
21,700 5,100 26,800 ALLIED Life Financial Corporation 379,750 89,250 469,000
0 18,100 18,100 Argonaut Group, Inc. 0 556,575 556,575
26,020 5,280 31,300 Baker Boyer Bancorp (Walla Walla, WA) 969,245 196,680 1,165,925
0 16,800 16,800 Baldwin & Lyons, Inc. (Class A) 0 298,200 298,200
83,978 41,700 125,678 Baldwin & Lyons, Inc. (Class B) 1,543,096 766,237 2,309,333
0 5,700 5,700 Bar Harbor Bankshares 0 206,625 206,625
0 12,750 12,750 W. R. Berkley Corp. 0 647,062 647,062
0 10,172 10,172 CU Bancorp 0 118,250 118,250
27,000 0 27,000 Capitol Transamerica Corporation 830,250 0 830,250
171,142 29,900 201,042 The Commerce Group, Inc. 4,321,336 754,975 5,076,311
38,349 10,890 49,239 Community Banks, Inc. (Millersburg, PA) 997,074 283,140 1,280,214
0 5,670 5,670 Dauphin Deposit Corp. (Harrisburg, PA) 0 187,110 187,110
0 5,700 5,700 Equitable of Iowa Companies 0 261,487 261,487
0 1,580 1,580 Exchange Bank (Santa Rosa, CA)* 0 102,305 102,305
13,800 0 13,800 F & M Bancorporation (Tulsa, OK) 607,200 0 607,200
1,042 264 1,306 Farmers & Merchants Bank of Long Beach 1,927,700 488,400 2,416,100
715 120 835 The First National Bank of Anchorage 1,147,575 192,600 1,340,175
74,850 31,920 106,770 Fremont General Corporation 2,320,350 989,520 3,309,870
0 2,500 2,500 Fund American Enterprises Holdings, Inc. 0 239,375 239,375
189,800 30,000 219,800 Gryphon Holdings Inc.* 2,680,925 423,750 3,104,675
0 20,737 20,737 Hanmi Bank (Los Angeles, CA)* 0 243,660 243,660
140,900 0 140,900 Highlands Insurance Group, Inc.* 2,853,225 0 2,853,225
59,200 9,500 68,700 Intercargo Corporation 506,900 81,344 588,244
37,249 0 37,249 Keystone Heritage Group, Inc. (Lebanon) 856,727 0 856,727
167,672 40,356 208,028 Leucadia National Corporation 4,485,226 1,079,523 5,564,749
57,609 15,704 73,313 MAIC Holdings, Inc.* 1,951,505 531,973 2,483,478
0 19,400 19,400 NYMAGIC, INC. 0 349,200 349,200
11,671 7,594 19,265 National Bancorp of Alaska,
Inc. (Anchorage) 799,464 520,189 1,319,653
74,400 0 74,400 Nobel Insurance Limited 934,650 0 934,650
0 6,311 6,311 ONBANCorp, Inc. (Syracuse, NY.) 0 234,296 234,296
18,806 16,587 35,393 Orion Capital Corporation 1,149,517 1,013,880 2,163,397
132,321 18,220 150,541 PXRE Corporation 3,274,957 450,945 3,725,902
297,150 15,700 312,850 Pennsylvania Manufacturers Corporation 4,680,113 247,275 4,927,388
193,500 33,600 227,100 Piper Jaffray Companies Inc. 3,023,438 525,000 3,548,438
27,825 0 27,825 RLI Corp. 928,659 0 928,659
19,591 8,251 27,842 Reliance Group Holdings, Inc. Warrant 47,214 19,885 67,099
0 12,600 12,600 Student Loan Corporation 0 469,350 469,350
0 13,600 13,600 Surety Capital Corporation* 0 55,250 55,250
0 4,200 4,200 Transatlantic Holdings, Inc. 0 338,100 338,100
90,300 23,200 113,500 Trenwick Group Inc. 4,176,375 1,073,000 5,249,375
16,757 4,800 21,557 TriCo Bancshares 364,465 104,400 468,865
0 9,460 9,460 Webster Financial Corporation (Waterbury) 0 347,655 347,655
19,400 5,900 25,300 Wesco Financial Corporation 3,627,800 1,103,300 4,731,100
212,500 29,200 241,700 Zenith National Insurance Corp. 5,817,188 799,350 6,616,538
---------- ---------- ----------
64,913,004 19,373,041 84,286,045
FINANCIAL SERVICES
170,500 34,000 204,500 E.W. Blanch Holdings, Inc. 3,431,313 684,250 4,115,563
45,307 26,732 72,039 Comdisco, Inc. 1,438,497 848,741 2,287,238
56,400 21,050 77,450 Crawford & Company (Class B) 1,290,150 481,519 1,771,669
175,050 43,700 218,750 Crawford & Company (Class A) 3,785,456 945,012 4,730,468
99,433 10,866 110,299 DUFF & PHELPS CREDIT RATING CO. 2,398,821 262,142 2,660,963
55,700 16,300 72,000 Eaton Vance Corp. 2,652,713 776,288 3,429,001
153,700 38,800 192,500 Arthur J. Gallagher & Co. 4,764,700 1,202,800 5,967,500
178,500 2,000 180,500 Hilb, Rogal & Hamilton Company 2,365,125 26,500 2,391,625
47,834 10,570 58,404 Investors Financial Services Corporation1,327,393 293,318 1,620,711
54,800 13,000 67,800 The John Nuveen Company 1,452,200 344,500 1,796,700
49,700 6,300 56,000 New England Investment Companies, L.P. 1,205,225 152,775 1,358,000
239,900 27,800 267,700 Phoenix Duff & Phelps Corporation 1,709,288 198,075 1,907,363
176,100 51,800 227,900 The Pioneer Group, Inc. 4,182,375 1,230,250 5,412,625
0 4,800 4,800 Poe & Brown, Inc. 0 127,200 127,200
0 5,000 5,000 T. Rowe Price Associates, Inc. 0 217,500 217,500
0 6,200 6,200 SEI Corporation 0 137,950 137,950
333,900 89,300 423,200 Willis Corroon Group plc 3,839,850 1,026,950 4,866,800
----------- --------- ----------
35,843,106 8,955,770 44,798,876
---------- --------- ----------
NATURAL RESOURCES
0 20,000 20,000 Alamco, Inc.* 0 225,000 225,000
0 30,676 30,676 Alico, Inc. 0 575,175 575,175
0 5,000 5,000 Apco Argentina Inc. 0 127,500 127,500
0 15,952 15,952 Avatar Holdings Inc.* 0 510,464 510,464
0 5,000 5,000 Belden & Blake Corporation* 0 127,500 127,500
237,100 71,100 308,200 CalMat Co. 4,445,625 1,333,125 5,778,750
39,800 12,000 51,800 Consolidated-Tomoka Land Co. 661,675 199,500 861,175
0 11,300 11,300 Cousins Properties Incorporated 0 317,812 317,812
32,700 13,000 45,700 Devon Energy Corporation 1,136,325 451,750 1,588,075
50,100 0 50,100 Dreco Energy Services Ltd. Cl. A * 1,834,912 0 1,834,912
0 16,200 16,200 Equity Oil Company* 0 49,613 49,613
85,900 0 85,900 FRP Properties, Inc.* 2,190,450 0 2,190,450
166,500 50,300 216,800 Florida Rock Industries, Inc. 5,452,875 1,647,325 7,100,200
59,800 0 59,800 MK Gold Company* 89,700 0 89,700
0 10,600 10,600 McFarland Energy, Inc.* 0 128,525 128,525
172,600 57,600 230,200 The Newhall Land and Farming Company 2,912,625 972,000 3,884,625
0 9,950 9,950 Penn Virginia Corporation 0 465,162 465,162
0 5,250 5,250 Vornado Realty Trust 0 275,625 275,625
0 7,200 7,200 Western Investment Real Estate Trust 0 93,600 93,600
---------- --------- ----------
18,724,187 7,499,676 26,223,863
---------- --------- ----------
HEALTH
0 5,400 5,400 Diagnostic Products Corporation 0 139,725 139,725
248,800 72,800 321,600 HAEMONETICS CORPORATION* 4,696,100 1,374,100 6,070,200
50,100 37,860 87,960 Life Technologies, Inc. 1,252,500 946,500 2,199,000
10,000 0 10,000 Nitinol Medical Technologies, Inc.* 125,000 0 125,000
--------- --------- ---------
6,073,600 2,460,325 8,533,925
--------- --------- ---------
TECHNOLOGY
0 5,900 5,900 American Power Conversion Corporation 0 160,775 160,775
0 18,900 18,900 Astrosystems, Inc.* 0 89,775 89,775
128,200 0 128,200 BGS Systems, Inc. 3,509,475 0 3,509,475
0 12,064 12,064 Bell Industries, Inc.* 0 257,868 257,868
62,300 7,700 70,000 CEM Corporation* 498,400 61,600 560,000
0 2,100 2,100 Cohu, Inc. 0 48,825 48,825
18,887 7,775 26,662 DH Technology, Inc.* 453,288 186,600 639,888
108,500 5,500 114,000 Dallas Semiconductor Corporation 2,495,500 126,500 2,622,000
52,838 12,800 65,638 Dionex Corporation* 1,849,330 448,000 2,297,330
171,200 29,000 200,200 Electroglas, Inc.* 2,760,600 467,625 3,228,225
77,200 73,900 151,100 Exar Corporation* 1,196,600 1,145,450 2,342,050
49,205 5,156 54,361 Hach Company 934,895 97,964 1,032,859
18,900 0 18,900 ILC Technology, Inc.* 245,700 0 245,700
9,600 3,200 12,800 MacNeal-Schwendler Corporation* 75,600 25,200 100,800
174,100 53,500 227,600 Marshall Industries* 5,331,813 1,638,438 6,970,251
0 15,600 15,600 Milgray Electronics, Inc.* 0 230,100 230,100
46,400 9,200 55,600 Modern Controls, Inc. 487,200 96,600 583,800
164,703 47,200 211,903 National Computer Systems, Inc. 4,199,926 1,203,600 5,403,526
138,900 0 138,900 Newport Corporation 1,232,737 0 1,232,737
83,200 23,800 107,000 PCD Inc.* 1,081,600 309,400 1,391,000
0 16,925 16,925 Pioneer-Standard Electronics, Inc. 0 222,141 222,141
107,862 18,200 126,062 Richardson Electronics, Ltd. 889,862 150,150 1,040,012
248,900 102,100 351,000 Scitex Corporation Limited 2,364,550 969,950 3,334,500
0 12,600 12,600 Sunair Electronics, Inc.* 0 26,775 26,775
53,150 11,100 64,250 Woodhead Industries, Inc. 730,812 152,625 883,437
0 10,000 10,000 XATA Corporation* 0 71,250 71,250
---------- --------- ----------
30,337,888 8,187,211 38,525,099
---------- --------- ----------
RETAIL
0 5,000 5,000 J. Baker, Inc. 0 26,563 26,563
0 20,500 20,500 Blair Corporation 0 394,625 394,625
91,900 0 91,900 CATHERINES STORES CORPORATION* 505,450 0 505,450
73,000 0 73,000 Cato Corporation (Class A) 365,000 0 365,000
229,400 57,200 286,600 Charming Shoppes, Inc.* 1,161,337 289,575 1,450,912
35,800 11,500 47,300 Claire's Stores, Inc. 465,400 149,500 614,900
0 5,700 5,700 Crown Books Corporation* 0 66,975 66,975
0 4,900 4,900 Dart Group Corporation (Class A) 0 455,700 455,700
0 50,800 50,800 Deb Shops Inc. 0 215,900 215,900
270,800 86,700 357,500 The Dress Barn, Inc.* 4,062,000 1,300,500 5,362,500
206,700 82,000 288,700 Family Dollar Stores, Inc. 4,211,513 1,670,750 5,882,263
120,000 37,300 157,300 Mikasa, Inc.* 1,230,000 382,325 1,612,325
160,555 58,905 219,460 Pier 1 Imports, Inc. 2,829,781 1,038,201 3,867,982
183,300 66,200 249,500 Sotheby's Holdings, Inc. (Class A) 3,413,963 1,232,975 4,646,938
172,000 47,500 219,500 Stanhome Inc. 4,558,000 1,258,750 5,816,750
89,600 21,800 111,400 The Talbots, Inc. 2,564,800 624,025 3,188,825
---------- --------- ----------
25,367,244 9,106,364 34,473,608
UTILITIES ---------- --------- ----------
83,829 17,889 101,718 Southern Union Company 1,844,258 393,558 2,237,815
36,600 9,638 46,238 Southwest Water Company 507,825 133,733 641,558
--------- ------- ---------
2,352,083 527,291 2,879,374
PREFERRED STOCKS --------- ------- ---------
28,600 4,100 32,700 Bird Corp. ($1.85 Cv. Pfd.) 450,450 64,575 515,025
0 12,500 12,500 Sterling Financial Corporation $1.812
Conv. 0 384,375 384,375
------- ------- -------
450,450 448,950 899,400
------- ------- -------
REPURCHASE AGREEMENT
State Street Bank and Trust Company, 4.90% dated
12/31/96, due 1/02/97, maturity value $17,904,872
and $8,802,396, respectively (collateralized by
U.S. Treasury Notes, 5.75%, due 12/31/98,
valued at $18,260,002 and $8,980,165, respectively) 17,900,000 8,800,000 26,700,000
---------- --------- ----------
TOTAL INVESTMENTS $449,969,127 $144,546,068 $594,515,195
----------- ----------- -----------
----------- ----------- -----------
</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 Items 16(1) through (4),
(5), (7), (8), (10), (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 and, with
respect to Pennsylvania Mutual Fund, its initial
Registration Statement (No. 2-19995) and Post-Effective
Amendment Nos. 43, 45, 46, 47, 48, 49, 51, 52, 53, 56,
and 58 and with the Registrant's Registration Statement
(No. 333-23639) thereto, and are incorporated by reference
herein.
(11) Opinion and Consent of Counsel as to the legality of the
securities being registered.
(12) Opinion and Consent of Counsel as to tax matters
and consequences to shareholders.
(14) Consent of Coopers & Lybrand L.L.P. relating to
Royce Value Fund and Pennsylvania Mutual Fund.
(17) Financial Data Schedule.
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.
(3) The undersigned Registrant agrees that an opinion
as to the tax consequences of the Combination will be
filed as part of a post-effective amendment to this
Registration Statement once the Combination has been
completed.
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 28th day of April, 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 4/28/97
Charles M. Royce Trustee
(Principal Executive,
Accounting
and Financial Officer)
S/HUBERT L. CAFRITZ
Hubert L. Cafritz Trustee 4/28/97
S/THOMAS R. EBRIGHT
Thomas R. Ebright Trustee 4/28/97
S/RICHARD M GALKIN
Richard M. Galkin Trustee 4/28/97
S/STEPHEN L. ISAACS
Stephen L. Isaacs Trustee 4/28/97
S/WILLIAM L. KOKE
William L. Koke Trustee 4/28/97
S/DAVID L. MEISTER
David L. Meister Trustee 4/28/97
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
THE ROYCE FUNDS
1414 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
April 28, 1997
The Royce Fund
1414 Avenue of the Americas
New York, NY 10019
Dear Sirs:
I am General Counsel to The Royce Fund, a Delaware business
trust (the "Trust"). In connection with the proposed combination
(the "Combination") of Royce Value Fund, a series of the Trust,
into Pennsylvania Mutual Fund, another series of the Trust, and
the registration under the Securities Act of 1933, as amended, of
shares of beneficial interest of the Trust in Pennsylvania Mutual
Fund, to be issued in exchange for shares of beneficial interest
of the Trust in Royce Value Fund, I have examined such matters as
I have deemed necessary, including the Plan of Reorganization for
the Combination adopted by the Trust as of March 13, 1997 and
resolutions of the Trust's Board of Trustees pertaining thereto.
Based on the foregoing, I am of the opinion that:
(i) The Trust is a Delaware business trust duly formed
and existing under the laws of the State of Delaware;
and
(ii) Each of the shares of the Trust in Pennsylvania
Mutual Fund to be issued at the closing of the
Combination in exchange for shares of the Trust in
Royce Value Fund, will, if issued in accordance with
the provisions of such Plan of Reorganization, be
legally and validly issued, fully paid and non-
assessable.
I hereby consent to the use of this opinion as an exhibit to
the Trust's Registration Statement on Form N-14, to be filed with
the Securities and Exchange Commission for the registration under
the Securities Act of 1933, as amended, of shares of the Trust.
Very truly yours,
S/HOWARD J. KASHNER
Howard J. Kashner
General Counsel
April 29, 1997
The Royce Fund
1414 Avenue of the Americas
New York, New York 10019
Gentlemen:
You have requested our opinion regarding the discussion of
U.S. federal income tax consequences under the captions
"SUMMARY OF THE PROPOSED TRANSACTION -- Proposed
Transaction" and "Tax Consequences of the Combination" in
the Prospectus/ Proxy Statement (the "Prospectus/Proxy
Statement") that is included in Pre-Effective Amendment No.
1 to the Registration Statement on Form N-14 (the
"Registration Statement") of The Royce Fund (the "Trust")
filed on April 29, 1997 with the Securities and Exchange
Commission (the "Commission") under the Securities Act of
1933, as amended (the "Securities Act"). The
Prospectus/Proxy Statement relates to the proposed
combination of Royce Value Fund, a series of the Trust, with
and into Pennsylvania Mutual Fund, a separate series of the
Trust. This opinion is being delivered in accordance with
the requirements of Item 601(b)(8) of Regulation S-K under
the Securities Act.
We have reviewed the Prospectus/Proxy Statement and such
other materials as we have deemed necessary or appropriate
as a basis for our opinion described therein, and have
considered the applicable provisions of the Internal Revenue
Code of 1986, as amended, Treasury Regulations, pertinent
judicial authorities, rulings of the Internal Revenue
Service, and such other authorities as we have considered
relevant to such opinion.
Based upon the foregoing, it is our opinion that the
statements made under the captions "SUMMARY OF THE PROPOSED
TRANSACTION -- Proposed Transaction" and "Tax Consequences
of the Combination" in the Prospectus/Proxy Statement, to
the extent that they involve matters of federal income tax
law, are correct in all material respects as of the date
hereof. We have not, however, independently verified any of
the financial statements or assumptions set forth under such
headings or elsewhere in the Registration Statement.
In accordance with the requirements of Item 601(b)(23) of
Regulation S-K under the Securities Act, we hereby consent
to the use of our name under the caption "SUMMARY OF THE
PROPOSED TRANSACTION -- Proposed Transaction" in the
Prospectus/Proxy Statement and to the filing of this opinion
as an Exhibit to the Registration Statement. In giving this
consent, we do not admit that we come within the category of
persons whose consent is required under Section 7 of the
Securities Act or the rules and regulations of the
Commission thereunder.
Very truly yours,
Rosenman & Colin LLP
By:_________________
A Partner
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of The Royce Fund: Pennsylvania
Mutual Fund and Royce Value 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 Pre-Effective
Amendment No. 1 to the Registration Statement under the
Securities Act of 1933 of The Royce Fund on Form N-14 (File
No. 333-23639). We further consent to the reference to our
Firm under the heading "Experts" such Statement of
Additional Information.
COOPERS & LYBRAND
Boston, Massachusetts
April 28, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000709364
<NAME> THE ROYCE FUND
<SERIES>
<NUMBER> 12
<NAME> PENNSYLVANIA MUTUAL FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 381566695
<INVESTMENTS-AT-VALUE> 594515195
<RECEIVABLES> 9453743
<ASSETS-OTHER> 34116
<OTHER-ITEMS-ASSETS> 74037
<TOTAL-ASSETS> 604077091
<PAYABLE-FOR-SECURITIES> 489736
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1008725
<TOTAL-LIABILITIES> 1798461
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 388149285
<SHARES-COMMON-STOCK> 79403
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 337486
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 27801442
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 186248500
<NET-ASSETS> 602616116
<DIVIDEND-INCOME> 12614904
<INTEREST-INCOME> 1506517
<OTHER-INCOME> 0
<EXPENSES-NET> 7886660
<NET-INVESTMENT-INCOME> 6234761
<REALIZED-GAINS-CURRENT> 133583651
<APPREC-INCREASE-CURRENT> (56871835)
<NET-CHANGE-FROM-OPS> 82946577
<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> 5437277
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8669754
<AVERAGE-NET-ASSETS> 695149170
<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> 1.13
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
