PROXY STATEMENT

THE ROYCE MICRO-CAP FUND (8 Series)

ROYCE HERITAGE

ROYCE FINANCIAL SERVICES FUND

1414 Avenue of the Americas
New York, NY 10019

SPECIAL MEETING OF SHAREHOLDERS
APRIL 9,SEPTEMBER 6, 2007

INTRODUCTION

The enclosed Proxy is solicited on behalf of the Trustees of The Royce Fund (the “Trust”) for use at a Special Meeting of Shareholders (the “Meeting”) of each of Pennsylvania Mutual Fund (“Pennsylvania Mutual”), Royce Micro-CapPremier Fund (“Premier”), Royce Low-Priced Stock Fund (“Low-Priced Stock”), Royce Total Return Fund (“Total Return”), Royce Value Fund, Royce HeritageValue Plus Fund, Royce 100 Fund and Royce Financial ServicesDividend Value Fund (“Dividend Value”) (each a “Fund,”“Fund” and 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, NY 10019 (10th Floor), at 3:00 p.m., Eastern Time,(Eastern time), on April 9,September 6, 2007 and at any adjournments thereof. The approximate mailing date of this Proxy Statement is March 12,July 20, 2007.

The purpose of the Meeting is to vote on the elimination and/or amendment of certain fundamental investment restrictions of the Funds. The Board of Trustees of the Trust asks that shareholders approve the elimination of certain of the Funds’ fundamental investment restrictions to permit the Funds to invest in the securities of foreign 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” the approval of the proposed changes to the Funds’ 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’s address indicated on page one of this proxyabove 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,Computershare Fund Services, Inc. (“Computershare”), 280 Oser Avenue, Hauppauge, NY 10165,11788, to aid in the solicitation of Proxies, at an estimated cost of $23,700$645,000 to $58,900.$1,060,000. Some officers and employees of the Trust, Royce and/or Royce Fund Services, Inc.& Associates, LLC (“RFS”Royce”), the Funds’ distributor, and The Altman GroupComputershare 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 FebruaryJune 28, 2007 as the record date (the “Record Date”) for determining those shareholders of the Funds 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 Proposals 1(a)1 -(c) 5 (elimination or amendment of certain fundamental investment restrictions) is a majority of a Fund’s outstanding voting securities as defined in the Investment Company Act of 1940, as amended (the “1940 Act”), which is the lesser of (i) more than 50% of a Fund’s outstanding shares or (ii) 67% or more of a Fund’s shares present at the Meeting, if the holders of more than 50% of a Fund’s shares are present or represented at the Meeting.

The Board of Trustees knows of no business other than that stated in the ProposalProposals 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.

2

Information About Share Ownership

As of the Record Date, each Fund had outstanding the number of shares as indicated in the table below:

    As of that date, the persons listed in Appendix 1 to this Proxy Statement were knownStatement.   Except as set forth in Appendix 1, to the Trust to beTrust’s knowledge, as of the Record Date, no person is the beneficial ownersowner of five percent of more of the Trust’s outstanding shares or owners of record of 5%five percent or more of each Fund’s outstanding shares.the shares of any Fund.  In addition, Appendix 1 contains information regarding the ownership of the Funds’ shares by the Trustees and officers of the Trust.

    Asas of the Record Date, all of the Trustees and officers of the Trust, individually and as a group, owned less than 1%the approximate percentage of shares of the outstanding 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.Funds as indicated on Appendix 1 to this Proxy Statement.  

Charles M. Royce, Chairman of the Board of Trustees of the Trust, and Royce Financial Services Fund’s portfolio manager, who beneficially held approximately 36%20% of Royce Financial Services Fund’sDividend Value’s outstanding

2

shares as of the Record Date, has indicated he intends to vote his shares in favor of the Proposal.Proposal 1.

The Board of Other Investment Companies

    Royce Micro-Cap Fund’sTrustees of the Trust has approved, and Royce Heritage Fund’sunanimously recommends to Pennsylvania Mutual’s shareholders for their approval, a proposal to amend the fundamental investment restrictions currently staterestriction that theyprohibits Pennsylvania Mutual from owning more than 10% of the outstanding voting securities of any one issuer.  Royce and the Trust’s Board of Trustees believe that this proposed change is appropriate and in the best interests of the Fund’s shareholders because it may avoid the need for the Fund to sell voting securities of one issuer because of that issuer’s repurchase of its own securities or due to some other corporate action of the issuer beyond the Fund’s control that has caused the Fund’s ownership in such issuer to increase above 10% of its outstanding voting securities.  

Current Fundamental Restriction

As a matter of fundamental policy, Pennsylvania Mutual may not invest in“own” more than 10% of the outstanding voting securities of any one issuer.  

Proposed Amendment

Unlike other investment companies.series of the Trust, Pennsylvania Mutual currently is subject to a fundamental restriction stating that it may not “own” more than 10% of the outstanding voting securities of any one issuer.  If Proposal 1(c)4 is approved by the Fund’s shareholders, this fundamental investment restriction would be eliminated and each Fundamended to state that Pennsylvania Mutual may not “acquire” more than 10% of the outstanding voting securities of any one issuer.  Therefore, it would be permittedpossible for the Fund to own more than 10% of the outstanding voting securities of one issuer, if the number of such outstanding securities is reduced by the issuer subsequent to the Fund’s most recent purchase. Currently, the Fund may not take on the risk of such a high level of ownership in one issuer and would be forced to sell its shares to reduce its exposure to such issuer.  Royce believes that this amendment would benefit the Fund by eliminating the necessity to reduce a holding of a particular security when the Fund’s ownership in such security exceeds 10% of the issuing company’s outstanding voting securities through actions outside the control of the Fund.  

9

PROPOSAL 5:  TOAPPROVE THE AMENDMENT OF PENNSYLVANIA MUTUAL’S FUNDAMENTAL INVESTMENT RESTRICTION THAT PROHIBITS PURCHASES OF WARRANTS, RIGHTS OR OPTIONS IN ORDER TO ALLOW IT TO INVEST UP TO 5% OF ITS TOTAL ASSETS IN WARRANTS, RIGHTS AND OPTIONS

The Board of Trustees of the Trust has approved, and unanimously recommends to Pennsylvania Mutual’s shareholders for their approval, a proposal to amend a fundamental investment restriction prohibiting Pennsylvania Mutual from purchasing warrants, rights or options.  Royce and the Trust’s Board of Trustees believe that this proposed change is appropriate and in the best interests of the Fund’s shareholders because it will give Royce more flexibility to seek to achieve the Fund’s investment goal of long-term growth of capital.

Current Fundamental Restriction

As a matter of fundamental policy, Pennsylvania Mutual may not purchase any warrants, rights or options.

Proposed Amendment

If Proposal 5 is approved by the Fund’s shareholders, the above current fundamental investment restriction would be amended to permit Pennsylvania Mutual 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 other investment companies (open or closed-end), including up tono more than 5% of its total assets in warrants, rights and options.

A warrant, right or call option entitles the holder to purchase a given security within a specified period for a specified price and does not represent an ownership interest. A put option gives the holder the right to sell a particular security at a specified price during the term of the option.  The purchase price of an option is called the “premium.”  The potential loss to an option buyer is limited to the amount of the premium plus transaction costs. These securities have no voting rights, pay no dividends and have no liquidation rights.  In addition, their market prices do not necessarily move parallel to the market prices of the underlying securities.  For example, the value of a warrant may decline because of a decrease in the value of the underlying security, passage of time or change in the perception as to the potential of the underlying security or any combination thereof. If the market price of the underlying security is below the exercise price set forth in the warrant on the expiration date, the warrant will expire worthless. Investing in warrants, rights and call options on a given security will allow the Fund to hold an interest in that

10

security without having to commit assets equal to the market price of the underlying security and, in the case of securities market indices, to participate in a market without having to purchase all of the securities in any one other investmentcomprising the index.  Put options, whether on shares of common stock of a single company provided thator on a securities market index, would permit the Fund does not ownto protect the value of a portfolio security against a decline in its market price and/or to benefit from an anticipated decline in the market price of a given security or of a market.  Thus, investing in warrants, rights and options permits a Fund to incur additional risk and/or to hedge against risk.

The sale of warrants, rights or options held for more than 3%one year generally results in a long-term capital gain or loss to the Fund, and the sale of warrants, rights or options held for one year or less generally results in a short-term capital gain or loss.  The holding period for securities acquired upon exercise of a warrant, right or call option, however, generally begins on the day after the date of exercise, regardless of how long the warrant, right or option was held.  The securities underlying warrants, rights and options could include shares of common stock of a single company or securities market indices representing shares of the total outstanding voting stockcommon stocks of such investment company. The Securities and Exchange Commission (the “SEC”) has adopted a rule to permit investments in money market funds in excessgroup 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.S&P Small-Cap 600.

8REASONS FOR THE PROPOSALS

    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.

    Reasons for the Proposals

Royce has proposed that the Funds change certain of their fundamental investment restrictions as described above in Proposal 1(a)Proposals 1 - (c)5 of this Proxy Statement.  Royce advised the Board that these changes are not a means to alter the overall investment strategy of the Funds but rather are an opportunity that Royce believes would benefit shareholders because they will give Royce more flexibility to seek to achieve the Funds’ investment goals.

At a meeting of the Board of Trustees held on February 13,June 7, 2007, the Board considered the impact of the proposed changes to the Funds’ fundamental investment restrictions and weighed the potential advantages of expanded investment flexibility and additional income, as applicable, with the possibility that the changes would cause the Funds to engage in investment strategies that involve increased risk and could result in lower returns for the Funds’ shareholders.   The Board concluded that recommending approval of Proposal 1(a)Proposals 1 - (c)5 was in the best interests of shareholders because the ProposalProposals potentially benefitsbenefit shareholders with improved performance by allowing Royce to seek broader investment opportunities to achieve the Funds’ investment goals.

9

11

 Recommendation of the Trustees; Required VotesRECOMMENDATION OF THE TRUSTEES; REQUIRED VOTES

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

    Adjournment of Meeting; Other Matters

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 a 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 ProposalProposals 1 (a) - (c)5 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.Proposals.  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(a)Proposals 1 - (c).5.  They will vote against any such adjournment those proxies required to be voted against ProposalProposals 1 (a) - (c).5.

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.

10

Under the New York Stock Exchange rules that govern brokers who have record ownership of shares that are held in “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 Proposal,Proposals, 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” or on which a broker-dealer has declined to vote on any proposal (“broker non-votes”) will be counted as present for the purposes of a quorum.  

12

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 Proposal.Proposals.

    Address of the Investment Adviser

ADDRESS OF THE INVESTMENT ADVISER

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

Address of the Distributor

    RFS’sADDRESS OF THE DISTRIBUTOR

Royce Fund Services, Inc.’s principal office is located at 1414 Avenue of the Americas, New York, NY  10019.

    Annual Report Delivery

ANNUAL REPORT DELIVERY

The Funds’ Annual Report to Shareholders for the year ended December 31, 2006 was previously mailed to shareholders in late February 2007.  Copies of the Annual Report are available upon request, without charge, by writing to the Trust at 1414 Avenue of the Americas, New York, NY 10019 or calling toll-free at
1-800-221-4268.

    Shareholder Proposals

SHAREHOLDER PROPOSALS

Neither the Funds 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, NY 10019.

PROXY DELIVERY

11

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, NY 10019.

13

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

Dated: March 6,July 13, 2007

12

Appendix 1

As of the Record Date, Pennsylvania Mutual Fund (“Pennsylvania Mutual”), Royce Premier Fund (“Premier”), Royce Low-Priced Stock Fund (“Low-Priced Stock”), Royce Total Return Fund (“Total Return”), Royce Value Fund (“Value”), Royce Value Plus Fund (“Value Plus”), Royce 100 Fund (“100 Fund”) and Royce Dividend Value Fund (“Dividend Value”) each had outstanding the number of shares as indicated in the table below:

A1-1

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

A1-1A1-2

A1-3

A1-4

A1-5

A1-6

A1-7

A1-8

A1-9

A1-10

A1-11

A1-12

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