The Royce Funds

August 30, 2006March 6, 2007

Dear Shareholder:

    Enclosed is a Proxy Statement describing proposed changes to the fundamental and non-fundamental investment policies of Royce SelectMicro-Cap Fund, III (the "Fund")Royce Heritage Fund and Royce Financial Services Fund to be voted on at a Special Meeting of Shareholders of the Fund.Funds.Your vote is extremely important, regardless of the number of shares that you own.

        The Fund'sOne of the Funds’ fundamental investment restrictions currently limit the Fund's investmentslimits investment in foreign securities to no more than 10% of the Fund's assets. The proposed changes wouldWe propose to eliminate this investment restriction and establish in its place a non-fundamental investment restriction limiting such investments to no more than 25% of the Fund'seach Fund’s respective net assets. Any future change to this non-fundamental investment restriction would be subject to the approval of theThe Board of Trustees of the Fund andcould change this investment restriction in the future with not less than 30 days prior written notice to the Fund'sFund’s shareholders. We also propose to eliminate the fundamental investment restrictions of Royce Micro-Cap Fund and Royce Heritage Fund that prohibit the Funds from investing in restricted securities and the securities of other investment companies.  

    I believe that the proposed change ischanges are important to the Fund'sFunds’ operations and that the greater flexibility will be beneficial to shareholders. These Proposals are discussed more fully in the Proxy Statement. Please vote your shares promptly

by usingfollowing the instructions on the enclosed proxy card and postage-paid envelope.card. Be sure to complete and sign each proxy card.

    If we have not received your vote as the date of the meeting approaches, you may receive a call from a representative of the FundFunds or The Altman Group, a professional proxy solicitation firm that has been retained by the Funds to assist in the solicitation of proxies, to request that you vote and assist you in the voting process. If you have any questions, please call Investor Informationthe proxy information line at 1-800-221-4268.1-800-332-6179.

Sincerely,
/s/ Charles M. Royce
CHARLES M. ROYCE
President

IMPORTANT INFORMATION

Enclosed is a Proxy Statement for an upcoming special shareholder meeting. While we encourage you to carefully read the full text of the enclosed Proxy Statement, here is a brief overview of matters to be voted on:

Q. What am I being asked to vote “FOR” on this proxy?

A. This proxy has one proposal, to approve certain changes to the fundamental investment restrictions of Royce Micro-Cap Fund, Royce Heritage Fund and Royce Financial Services Fund as set forth below:

Q. Why am I being asked to vote on changes to the fundamental investment restrictions?

A. Royce & Associates, LLC (“Royce”) believes that these changes would benefit shareholders because they will give Royce more flexibility to seek to achieve the Funds’ investment goals and earn additional income for the Funds.

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Q. How does the Board of Trustees recommend shareholders vote on the proposal?

A. The Board of Trustees has unanimously recommended that shareholders vote “FOR” the proposal. The Board believes that the proposed changes are in the best interests of the Funds and their shareholders.

Q. How can I vote my proxy?

A. For your convenience, there are several ways you can vote. Please see your proxy card for specific instructions on how to vote via telephone, facsimile or the internet. It is important that you vote your proxy promptly.

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ROYCE SELECTMICRO-CAP FUND III
ROYCE HERITAGE FUND
ROYCE FINANCIAL SERVICES FUND
1414 Avenue of the Americas
New York, NY 10019

____________

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

____________

TO BE HELD ON  OCTOBER 4, 2006APRIL 9, 2007

To the Shareholders of
ROYCE SELECTMICRO-CAP FUND, III:
ROYCE HERITAGE FUND AND
ROYCE FINANCIAL SERVICES FUND:

    NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "Meeting"“Meeting”) of ROYCE SELECTMICRO-CAP FUND, III (the "Fund"ROYCE HERITAGE FUND and ROYCE FINANCIAL SERVICES FUND (each a “Fund” and collectively, the “Funds”), each a series of The Royce Fund (the "Trust"“Trust”), will be held at the offices of the Trust, 1414 Avenue of the Americas, New York, New YorkNY 10019 (10th Floor), on October 4, 2006April 9, 2007 at 12:3:00 p.m. (Eastern Time), for the following purposes:

    The Board of Trustees has fixed the close of business on August 18, 2006February 28, 2007 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.

    A complete list of the shareholders of the FundFunds entitled to vote at the Meeting will be available and open to the examination ofby any shareholder of the FundFunds for any purpose relevant to the Meeting during ordinary business hours from and after September 14, 2006,March 20, 2007, at the office of the Trust, 1414 Avenue of the Americas, New York, New York.NY 10019.

IMPORTANT

To save the FundFunds 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), or utilize the methods as indicated on the enclosed Proxy, 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.

Dated: August 30, 2006March 6, 2007

PROXY STATEMENT

ROYCE SELECTMICRO-CAP FUND III
ROYCE HERITAGE FUND
ROYCE FINANCIAL SERVICES FUND
1414 Avenue of the Americas
New York, NY 10019

SPECIAL MEETING OF SHAREHOLDERS
October 4, 2006APRIL 9, 2007

INTRODUCTION

    The enclosed Proxy is solicited on behalf of the Trustees of The Royce Fund (the "Trust"“Trust”) for use at a Special Meeting of Shareholders (the "Meeting"“Meeting”) of Royce SelectMicro-Cap Fund, III (the "Fund"Royce Heritage Fund and Royce Financial Services Fund (each a “Fund,” collectively the “Funds”), each a series of the Trust, to be held at the offices of the Trust, 1414 Avenue of the Americas, New York, New YorkNY 10019 (10th Floor), at 12:3:00 p.m., Eastern Time, on October 4, 2006April 9, 2007 and at any adjournments thereof. The approximate mailing date of this Proxy Statement is August 30, 2006.

March 12, 2007.

    The purpose of the Meeting is to vote on a proposed change to the elimination of certain fundamental investment restrictions of the Fund.Funds. The Board of Trustees of the Trust asks that shareholders approve the elimination of certain of the Fund'sFunds’ fundamental investment restriction limiting its investmentrestrictions to permit the Funds to invest in the securities of foreign issuers.

issuers without limitation, to allow Royce Micro-Cap Fund and Royce Heritage Fund to each invest in restricted securities and to allow Royce Micro-Cap Fund and Royce Heritage Fund to invest in the securities of other investment companies to the extent permitted by the Investment Company Act of 1940, as amended.

    All properly executed Proxies received prior to the Meeting will be voted at the Meeting in accordance with the instructions marked thereon or otherwise as provided therein. Unless instructions to the contrary are marked, Proxies will be voted "FOR"“FOR” the approval of the proposed changes to the Fund'sFunds’ fundamental investment restrictions.

    You may revoke your Proxy at any time before it is exercised by sending written instructions to the Secretary of the Trust at the Trust'sTrust’s address indicated aboveon page one of this proxy or by filing a new Proxy with a later date, and any shareholder attending the Meeting may vote in person, whether or not he or she has previously filed a Proxy.

    The Trust has retained The Altman Group, 60 E. 42^nd Street, Suite 405, New York, NY 10165, to aid in the solicitation of Proxies, at an estimated cost of soliciting proxies will be borne by Royce & Associates, LLC ("Royce"), the Fund's investment adviser, which will reimburse brokerage firms, custodians, nominees and fiduciaries for their expenses in forwarding proxy material$23,700 to the beneficial owners of the Fund's shares.$58,900. Some officers and employees of the Trust, Royce and/or Royce Fund Services, Inc. ("RFS"(“RFS”), the Fund'sFunds’ distributor, and The Altman Group may solicit proxies personally and by telephone, if deemed desirable. Shareholders vote at the 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.

     The Board of Trustees has set the close of business on August 18, 2006February 28, 2007 as the record date (the "Record Date"“Record Date”) for determining those shareholders of the FundFunds entitled to notice of and to vote at the Meeting or any adjournment thereof, and only holders of record at the close of business on that day will be entitled to vote. Each share is entitled to one vote on each item of business at the Meeting (proportional voting rights for fractional shares held). The vote required for approval of the Proposal (change to aProposals 1(a)-(c) (elimination of certain fundamental investment restriction)restrictions) is a majority of the Fund'sa Fund’s outstanding voting securities as defined in the Investment Company Act of 1940, as amended, which is the lesser of (i) more than 50% of a majority of the Fund'sFund’s outstanding voting securitiesshares or (ii) 67% or more of those representeda Fund’s shares present at the Meeting, if the holders of more than 50% of the Fund'sa Fund’s shares are present or represented at the Meeting.

    The Board of Trustees knows of no business other than that stated in the Proposal in the Notice of Special Meeting that will be presented for consideration at the Meeting. If any other matter is properly presented at the Meeting or any adjournment thereof, it is the intention of the persons named on the enclosed proxy card to vote in accordance with their best judgment.

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Information About Share Ownership

    As of the Record Date, there were 96,283each Fund had outstanding the number of shares of beneficial interest ofas indicated in the Fund outstanding.table below:

    As of that date, the persons listed in Appendix 1 to this Proxy Statement were known to the Trust to be beneficial owners or owners of record of 5% or more of the Fund'seach Fund’s outstanding shares. In addition, Appendix 1 contains information regarding the ownership of the Fund'sFunds’ shares by the Trustees and officers of the Trust.

    As of the Record Date, all of the Trustees and officers of the Trust as a group owned 47,993 shares of the Fund (49.8%less than 1% of the outstanding shares).

shares of Royce Micro-Cap Fund, 5% of the outstanding shares of Royce Heritage Fund and 38% of the outstanding shares of Royce Financial Services Fund.

    W. Whitney George,Charles M. Royce, Chairman of the Fund'sBoard of Trustees of the Trust and Royce Financial Services Fund’s portfolio manager, who beneficially held approximately 44.6%36% of the Fund'sRoyce Financial Services Fund’s outstanding shares as of the Record Date, has indicated he intends to vote his shares in favor of the Proposal.

SUMMARY OF VOTING RIGHTS ON PROXY PROPOSALS
1(a), 1(b) and 1(c)

PROPOSAL:

PROPOSAL 1:APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF CERTAIN OF THE FUND'SFUNDS’ FUNDAMENTAL INVESTMENT RESTRICTION LIMITING ITS INVESTMENTRESTRICTIONS TO PERMIT THE FUNDS TO ENGAGE IN THE SECURITIES OF FOREIGN ISSUERSCERTAIN TRANSACTIONS

The Board of Trustees of the Trust has approved, and unanimously recommends to the Fund'sFunds’ shareholders for their approval, a proposal toto: (a) eliminate the fundamental investment restriction limiting the Fund'seach Fund’s investment in the securities of foreign issuers to no more than 10% of itstheir respective total assets.assets; (b) eliminate the fundamental investment restriction that prohibits Royce Micro-Cap Fund and Royce Heritage Fund from investing in restricted securities; and (c) eliminate the fundamental investment restriction that prohibits Royce Micro-Cap Fund and Royce Heritage Fund from investing in the securities of other investment companies. Please see Appendix 2 for a list of these existing and proposed fundamental investment restrictions for the Funds. In addition, the Board of Trustees has approved, subject to shareholder approval of the Proposal,Proposals 1(a) and 1(b), respectively, the establishment of a non-fundamental investment restrictionrestrictions that would prohibit theeach Fund from (i) investing more than 25% of itstheir respective net assets in the securities of foreign issuers.issuers (For purposes of this restriction, securities issued by a foreign domiciled company that are registered with the SEC under Section 12(b) or (g) of the Securities Exchange Act of 1934 are not treated as securities of foreign issuers.)Thisissuers) and (ii) investing more than 15% of their respective net assets in restricted securities. These non-fundamental investment restrictionrestrictions would only be subject t oto elimination or change by action of the Trust'sTrust’s Board of Trustees (without shareholder approval) after not less than 30 days prior written notice to the Fund'sFunds’ shareholders. Royce and the Trust's Trust’s

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Board of Trustees believe the proposed change ischanges are appropriate and in the best interests of the Fund'sFunds’ shareholders because it will give Royce more flexibility to seek to achieve the Fund'sFunds’ investment goal of long-term growth of capital.

    Current Fundamental Policies

    Currently, as a matter of fundamental policy: (a) each Fund may not invest more than 10% of their total assets in the securities of foreign issuers; (b) Royce Micro-Cap Fund and Royce Heritage Fund may not invest in restricted securities; and (c) Royce Micro-Cap Fund and Royce Heritage Fund may not invest in securities of other investment companies.

Proposed Fundamental Policies

Foreign Investments

     If Proposal 1(a) is approved, by each Fund’s shareholders, the Funds will be permitted to invest in the securities of foreign issuers in amounts greater than 10% of their total assets. Royce believes that the ability to invest a higher percentage of the Fund'sFunds’ assets in the securities of foreign issuers may provide enhanced investment opportunities including increased diversification to the FundFunds by giving itthem the ability to add securities from various foreign countries (i) which offer different investment opportunities, (ii) that generally are affected by different economic trends and (iii) whose stock markets do not generally move in a manner parallel to U.S. markets. At the same time, these opportunities and trends involve risks that may not be encountered in U.S. investments, including adverse political, social, economic or other developments that are unique to a particular region or country. Therefore, the prices of foreign companies in particular countries or regions may, at times, move in a different direction than those of the securities of U.S. issuers. From time to time, foreign capital markets may exhibit more volatility than those in the United States. It is expected that the Fund'sFunds’ investments in foreign companies will usually be denominated in or tied to the currencies of the countries in which they are primarily traded. Because the Fund doesFunds do not intend to hedge itstheir foreign currency exposure, the U.S. dollar value of the Fund'sFunds’ investments may be harmed by declines in the value of foreign currencies in relation to the U.S. dollar. This may occur even if the

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value of the investment in the currency'scurrency’s home country has not declined. These risk factors may affect the prices of foreign securities issued by companies domiciled in developing countries more than those domiciled in developed countries. For example, many developing countries have, in the past, experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries, and there may be delays in settlement procedures.

    There may be less information available about a foreign company than a domestic company; foreign companies may not be subject to accounting, auditing and reporting standards and requirements comparable to those applicable to domestic companies; and foreign markets, brokers and issuers are generally subject to less extensive government regulation than their domestic counterparts. Markets for foreign securities may be less liquid and may be subject to greater price volatility than those for domestic securities. Foreign brokerage commissions and custodial fees are generally higher than those in the United States. Foreign markets also have different clearance and settlement procedures, and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, thereby making it difficult to conduct such transactions. Delays or problems with settlements might affect the liquidity of t he Fund'sa Fund’s portfolio. Foreign investments may also be subject to local economic and political risks, political, economic and social instability, military action or unrest or adverse diplomatic developments, and possible nationalization of issuers or expropriation of their assets, which might adversely affect the Fund'sa Fund’s ability to realize on its investment in such securities. Royce may not be able to anticipate these potential events or counter their effects. Furthermore, some foreign securities are subject to brokerage taxes levied by foreign governments, which have the effect of increasing the cost of such investment and reducing the realized gain or increasing the realized loss on such securities at the time of sale.

        Although changes in foreign currency rates may adversely affect the Fund's foreign investments, Royce does not expect to purchase or sell foreign currencies for the Fund to hedge against declines in the U.S. dollar or to lock in the value of any foreign securities they purchase. Consequently, the risks associated with such investments may be greater than if the Fund was to engage in foreign currency transactions for hedging purposes.

    Exchange control regulations in such foreign markets may also adversely affect the Fund'sFunds’ foreign investments and the Fund'sFunds’ ability to make certain distributions necessary to maintain their eligibility as regulated investment companies and avoid the imposition of income and excise taxes may, to that extent, be limited.

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    The risks describe above for foreign investments, including the risks of nationalization and expropriation of assets, would generally be increased to the extent that a Fund invests in companies located in developing countries.

    Current Fundamental PolicyRestricted Securities

        Currently, the     Royce Micro-Cap Fund and Royce Heritage Fund are currently subject to a fundamental restriction stating that they may not invest in restricted securities. If Proposal 1(b) is approved, this fundamental investment restriction would be eliminated and a non-fundamental investment restriction would go into effect that would permit each Fund to invest up to 15% of their respective net assets in restricted securities.  Royce believes that the ability to invest in restricted securities may provide enhanced investment opportunities that would not otherwise be available to the Funds. In addition, Royce believes that allowing the Funds to invest in restricted securities may provide the Funds with the opportunity to realize more income from its securities lending transactions than it would if the cash collateral consisted of U.S. government securities. The Funds currently may each loan up to 25% of their assets to qualified brokers, dealers or institutions for their use relating to short sales or other security transactions (provided that such loans are secured by collateral equal at all times to at least 100% of the value of the securities loaned). Loans of the Funds’ portfolio securities must be fully collateralized by securities issued or guaranteed by the U.S. government or its agencies or instrumentalities or by cash. When the collateral is cash, the Funds are responsible for investing it. If the Funds engage in securities lending transactions, they will have the opportunity to invest such cash collateral in a money market fund sponsored by its custodian bank. Although the money market fund is registered under the Investment Company Act of 1940, its shares are offered for sale only in private placement transactions to certain institutional investors such as the Funds. Its shares are not registered under the Securities Act of 1933 (the “Securities Act”) and, therefore, constitute restricted securities. Allowing the Funds to invest in the shares of such a mattermoney market fund will enable the Funds to realize more income from their securities lending transactions than they would if the collateral consisted of U.S. government securities.

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    In addition to the money market fund discussed above, the elimination of the investment restriction will also allow the Funds to invest in other restricted securities. Restricted securities include securities subject to contractual or legal restrictions on resale because they are not registered under the Securities Act. Securities which are not registered under the Securities Act are referred to as private placements or restricted securities and are purchased directly from the issuer, a control person of the issuer or another investor holding such securities. Such securities may have to be held for a substantial period of time because of market or industry conditions, the developmental stage at which they are purchased and/or legal restrictions on sale. The Trust does not consider securities to be “restricted” if they may be sold by the Funds without restriction in the market in which they are primarily traded outside the United States.

Securities of Other Investment Companies

    Royce Micro-Cap Fund’s and Royce Heritage Fund’s fundamental policy "invest more thaninvestment restrictions currently state that they may not invest in securities of other investment companies. If Proposal 1(c) is approved, this fundamental investment restriction would be eliminated and each Fund would be permitted to invest in other investment companies to the extent permitted under the Investment Company Act of 1940, as amended. In general, this means that each Fund will be permitted to invest up to 10% of its total assets in the securities of foreign issuers."other investment companies (open or closed-end), including up to 5% of its total assets in the securities in any one other investment company, provided that the Fund does not own more than 3% of the total outstanding voting stock of such investment company. The Securities and Exchange Commission (the “SEC”) has adopted a rule to permit investments in money market funds in excess of the above described limits. The SEC has also granted orders for exemptive relief to certain exchange-traded funds that permit investments in those exchange-traded funds by other investment companies, such as the Funds, in excess of the above-described limits. Royce believes that the ability to invest in the securities of other investment companies may provide enhanced investment opportunities, and as discussed above under Proposal 1(b), enable the Funds to invest collateral received on their securities lending activities in other investment companies.

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    The other investment companies in which each Fund may invest usually have their own management fees and other expenses, and Royce will also earn its own fee on Fund assets invested in such other companies, which would result in a duplication of fees to the extent of any such investment. However, Royce will waive its management fee on any Fund net assets invested in investment companies (other than exchange-traded funds, closed-end funds, and any cash collateral received in connection with securities lending activities that may be invested in money market funds).  The Funds have no basis to estimate what the increase in their expenses, if any, would be due to their investment in securities issued by other investment companies. It is anticipated that the Funds will invest in money market funds primarily as a means to invest cash collateral received from securities lending activities which will not negatively impact the Funds’ expense ratios. The Funds do not believe that other investments in investment companies would have a material impact on the overall expense ratio of any of the Funds.

    ReasonReasons for the Proposal

Proposals

    Royce has proposed that the FundFunds change itscertain of their fundamental investment restrictions as described above.above in Proposal 1(a) - (c) of this Proxy Statement. Royce advised the Board that this change isthese changes are not a means to alter the overall investment strategy of the FundFunds but rather isare an opportunity that Royce believes would benefit shareholders because itthey will give Royce more flexibility to seek to achieve the Fund'sFunds’ investment goal of long-term growth of capital.

goals.

    At a meeting of the Board of Trustees held on August 8, 2006,February 13, 2007, the Board considered the impact of the proposed changechanges to the Fund'sFunds’ fundamental investment restrictions and weighed the potential advantages of expanded investment flexibility and additional income with the possibility that the changes would cause the FundFunds to engage in investment strategies that involve increased risk and could result in lower returns for Fundthe Funds’ shareholders.  The Board concluded that recommending approval of the Proposal 1(a) - (c) was in the best interests of shareholders because the proposalProposal potentially benefits shareholders with improved performance by allowing Royce to seek broader investment opportunities to achieve the Fund'sFunds’ investment goal of long-term growth of capital.goals.

       In addition, the Board of Trustees has approved, subject to shareholder approval of the Proposal, the establishment of a non-fundamental investment restriction that would prohibit the Fund from investing more than 25% of its net assets in the securities of foreign issuers. This non-fundamental investment restriction would be subject to elimination or change only (i) by action of the Trust's Board of Trustees, and (ii) with at least 30 days prior written notice to the Fund's shareholders.9

 Recommendation of the Trustees; Required Votes

The Trustees unanimously recommend that the Fund'seach Fund’s shareholders vote to approve the change to the Fund'sFunds’ fundamental investment restrictions. Such approval must be by the favorable vote of the lesser of (i) more than 50% of the Fund'sa Fund’s outstanding shares or (ii) 67% or more of the Fund'sa Fund’s shares present at the Meeting, if the holders of more than 50% of the Fund'sa Fund’s shares are present or represented at the Meeting.

    Adjournment of Meeting; Other Matters

    A quorum of shareholders is necessary to hold a valid meeting. Under the By-laws of the Trust, a quorum will exist if shareholders entitled to vote more than 50% of the issued and outstanding shares of thea Fund on the Record Date are present at the Meeting in person or by proxy. Abstentions are counted for the purposes of determining both the presence or absence of a quorum at the Meeting and the total number of shares present at the Meeting. In the event that sufficient votes in favor of the Proposal 1 (a) - (c) 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 the Proposal.Proposal 1(a) - (c). They will vote against any such adjournment those proxies required to be voted against the Proposal.

Proposal 1 (a) - (c).

    While the Meeting has been called to transact any business that may properly come before it, the only matters which the Trustees intend to present are the matters 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.

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Under the New York Stock Exchange rules that govern brokers who have record ownership of shares that are held in "street name"“street name” for their customers, who are the beneficial owners of the shares, brokers have the discretion to vote such shares on routine matters, but do not have the discretion to vote such shares on non-routine matters. With respect to the Proposals,Proposal, it is not expected that brokers will be permitted to vote Fund shares in their discretion. Proxies that are returned but that are marked "abstain"“abstain” or on which a broker-dealer has declined to vote on any proposal ("(“broker non-votes"non-votes”) will be counted as present for the purposes of a quorum. Abstentions and broker non-votes will not be counted as votes cast. Therefore, abstentions and broker non-votes will have the same effect as a vote against the Proposals.

Proposal.

    Address of the Investment Adviser

        Royce's    Royce’s principal office is located at 1414 Avenue of the Americas, New York, New YorkNY 10019.

Address of the Distributor

        RFS's    RFS’s principal office is located at 1414 Avenue of the Americas, New York, New YorkNY 10019.

    Annual Report Delivery

    The Fund'sFunds’ Annual Report to Shareholders for the year ended December 31, 20052006 was previously mailed to shareholders and its Semi-Annual Report to Shareholders for the six months ended June 30, 2006 will be mailed to shareholders in late August 2006.February 2007. Copies of the Annual Report are available and copies of the Semi-Annual Report will be available in late August, upon request, without charge, by writing to the Trust at 1414 Avenue of the Americas, New York, New YorkNY 10019 or calling toll-free at
1-800-221-4268.

    Shareholder Proposals

    Neither the FundFunds nor the Trust holds annual shareholder meetings. Shareholders wishing to submit proposals for inclusion in a proxy statement for a subsequent Trust or Fund shareholder meeting should send their written proposals to the Secretary of the Trust, 1414 Avenue of the Americas, New York, New YorkNY 10019.

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Proxy Delivery

     If you and another shareholder share the same address, the Trust may send only one proxy statement unless you or the other shareholder(s) request otherwise. Call or write to the Trust if you wish to receive a separate copy of the proxy statement, and the Trust will promptly mail a copy to you. You may also call or write to the Trust if you wish to receive a separate proxy in the future, or if you are receiving multiple copies now, and wish to receive a single copy in the future. For such requests, call 1-800-221-4268, or write the Trust at 1414 Avenue of the Americas, New York, New YorkNY 10019.

    PLEASE FILL IN, DATE AND SIGN THE PROXY AND RETURN IT IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE.

Dated: August 30, 2006March 6, 2007

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Appendix 1

    The following persons were known to the Trust to be beneficial owners or owners of record of 5% or more of the Fund's outstanding shares of beneficial interest of each of Royce Micro-Cap Fund (“RMC”), Royce Heritage Fund (“RHF”) and Royce Financial Services Fund (“RFS”) as of the Record Date:

A1-1

    Information regarding the ownership of each Fund’s shares, and the Fund's shares of other funds in the group of registered investment companies comprising The Royce Funds, by the Trust'sTrust’s Trustees and officers as of the Record Date is set forth in the table below:

A1-2

A1-3

Appendix 2

A2-1