Royce Special Equity Fund open only to existing shareholders and existing relationships as of February 29, 2012

Effective after the close of business (4:00 p.m. EST) on Wednesday, February 29, 2012, Royce Special Equity Fund will be open only to existing shareholders and existing relationships.

The Fund is making this change in an effort to moderate cash flows. Stable cash flows are critical to managing the Fund's portfolio. Thus, we think it is in the best interests of the Fund's existing shareholders and relationships to moderate net cash flows into the Fund at this time. (Royce Special Equity Multi-Cap Fund, also managed by Charles Dreifus, remains open to all investors.)

All investments received or postmarked on or before the Fund's closing on Wednesday, February 29 at 4:00 p.m. Eastern time will be processed.

The Fund will remain open to the following:

• Registered Investment Advisors with existing clients in the Fund. Registered Investment Advisors who currently have clients in the Fund may open new accounts as well as add to existing accounts;
• Existing investors—in their own name or as beneficial owner of shares held in someone else's name—for example, a nominee, custodian or omnibus account holding shares for the benefit of an investor would not be eligible to open a new account for its own benefit or for the benefit of another investor, but the investor would be eligible to open a new account in the Fund;
• Certain pre-approved asset allocation based investment programs and, for a limited time, initial investments by certain institutional investors approved by the Fund's investment adviser;
• Certain pre-approved "Retirement Plans" offered through certain broker-dealers with accounts held on the books of the Fund through omnibus account arrangements (either at the plan level or at the level of the financial intermediary). "Retirement Plans" include 401(k) plans, 457 plans, employer sponsored 403(b) plans, defined benefit pension plans, profit sharing plans, nonqualified deferred compensation plans, other similar employer-sponsored retirement plans and rollover accounts from such plans to individual retirement vehicles such as Traditional and Roth IRAs.

Existing shareholders in other Royce Funds will not be permitted to open new accounts in Royce Special Equity Fund after Wednesday, February 29, 2012, nor will they be permitted to acquire shares of the Fund by exchange. Fund distributions will continue to be reinvested, unless a shareholder has elected otherwise.

Royce Special Equity Fund uses an intensive value approach rooted in the ideas of Benjamin Graham and Abraham Briloff to invest primarily in the equity securities of small-cap and micro-cap companies (those with market capitalizations up to $2.5 billion). As of December 31, 2011, the Fund had total net assets of $2.4 billion.

Any changes to the Fund's status will be posted at www.roycefunds.com.

Please contact Royce's Client Services Group at (800) 33-ROYCE (800-337-6923) with any questions.