Royce Is Moving to GICS and Changing Some Benchmark Indexes

Conversion to GICS

Royce is pleased to announce that, effective for all data as of March 31, 2011, our financial reports and other portfolio information sources will begin to use GICS (Global Industry Classification Standard) sector and industry categories. You will begin to see this change on our website in mid-April and in our Q1 2011 materials.

Widely accepted among investment researchers, portfolio and asset managers and developed by Standard & Poor's and MSCI Barra, GICS consists of 10 sectors, 24 industry groups, 68 industries and 154 sub-industries. (We do not currently plan on using the GICS industry groups and sub-industry categories.)

There are some changes worth noting: Under our previous system, financials were broken into two sectors, Financial Services and Financial Intermediaries, whereas under the GICS system, Financials are a single sector. Similarly, we used to classify industrials in two sectors, Industrial Products and Industrial Services, while GICS has one Industrials sector.

The industries within Royce's Natural Resources sector, the precious metals and mining, oil and gas, and energy services industries, are reclassified. The first is slotted in the Materials sector while the latter two find their home in the Energy sector. Technology companies are split into two GICS sectors—Information Technology and Telecommunications.

Finally, consumer businesses, which we categorized as Consumer Products and Consumer Services, are re-categorized into the Consumer Discretionary and Consumer Staples sectors.

This conversion will provide financial professionals with the most convenient way to compare our portfolios with those of our peers and competitors. More importantly, it will allow them to fully assess sector weightings within a client's total portfolio.

Benchmark Index Changes

When we first introduced our global/international portfolios more than four years ago, we chose appropriate MSCI benchmark indexes for performance comparison. While these have served us well, we wanted to go beyond performance comparisons to address both portfolio impact and attribution.

With Russell Investment's introduction of numerous global and international indexes with readily available underlying constituent data, we have decided to begin including the corresponding Russell global and international indexes with our performance and impact and attribution data as of March 31, 2011. (Our research shows that the Russell indexes are closely correlated, in terms of performance and underlying constituents, with their MSCI counterparts.) This data will be sorted using GICS. You will begin to see this change on our website in mid-April and in our Q1 2011 materials.

• Royce Global Value Fund, Royce Global Select Fund and Royce Global Dividend Value Fund will use the Russell Global Small Cap Index
• Royce International Smaller Companies Fund, Royce International Premier Fund and Royce International Micro-Cap Fund will use the Russell Global ex-U.S. Small Cap Index
• Royce European Smaller-Companies Fund will use the Russell Europe Small Cap Index

We are also making a change to one of our domestic benchmarks. Royce Micro-Cap Fund, which has historically used the small-cap Russell 2000 Index for performance and attribution, will now also use the Russell Microcap. We will continue to report Russell 2000 performance because the Russell Microcap Index has only 10 years of history, and Royce Micro-Cap Fund's inception date is December 31, 1991.