The graph set forth below compares, for the last five years, the cumulative return on Trust Units, the securities in a peer group index, and the S&P 500 Composite Index. Because no published peer group index exists, the Trustees have developed a peer group consisting of the following three domestic oil royalty trusts: Mesa Royalty Trust, Sabine Royalty Trust and San Juan Basin Royalty Trust (the ”Royalty"Royalty Peer Group”Group"). The composition of the Royalty Peer Group has been the same since the Trust’sTrust's proxy statement for its 1993 Annual Meeting of Unit Owners.

The reserves and sales attributed to the royalty trusts comprising the Royalty Peer Group are located in the United States, while the reserves and sales attributed to North European Oil Royalty Trust are located in Germany. There are fundamental and significant differences between the energy markets in the United States and Germany that affect commodity pricing and as a result severely restrict the usefulness of any comparison of their cumulative returns. The Trust has been unable to locate any oil royalty trusts publicly traded in the U.S. with reserves and sales in either Germany or Europe. In determining the cumulative returnsreturn on investment, it has been assumed that on October 31, 2000,2001, an equal dollar amount was invested in the Trust Units, in the securities of the trusts of the Royalty Peer Group, and in the S&P 500 Composite Index. The comparisons assume in all cases the reinvestment of all dividends or distributions on the respective payment dates. The cumulative returns shown for the Trust and the Royalty Peer Group do not reflect any differences between the tax treatment of Trust distributions, due to permitted cost depletion, and dividends on securities in the S&P 500 Composite Index.

All of the Trustees, exceptwith the Managing Trustee,exception of Lawrence A. Kobrin, constitute the Audit Committee of the Trustees of North European Oil Royalty Trust. The Audit Committee meets the definition of an audit committee set forth in Section 3(a)(58)(A) of the Exchange Act. All of the members of the Audit Committee are “independent” as that term is defined in the rules of the Securities and& Exchange Commission applicable to audit committee members and the applicable listing standards of New York Stock Exchange. The Trustees have determined that both Robert P. Adelman and Rosalie J. Wolf are ”audit committee financial experts,” as the term is defined in the Commission rules. The Audit Committee is chaired by Robert P. Adelman.Samuel M. Eisenstat. The Trustees of North European Oil Royalty Trust have adopted a written Charter outlining the duties and responsibilities of the Audit Committee. Mr. Eisenstat serves on the audit committees of several funds managed by AIG SunAmericaSun America Asset Management Corp. The Trustees have determined that such service by Mr. Eisenstat does not impair his ability to effectively serve on the Trust’s Audit Committee.

Pursuant to the Audit Committee Charter and the requirements of the Securities and Exchange Commission, the Audit Committee has provided the following report for inclusion in this proxy statement:

A representative of Ernst & Young LLPWeiser is expected to attend the annual meeting and to be available to respond to appropriate questions from unit owners. The representative from Ernst & Young LLPWeiser will also have the opportunity to make a statement at the meeting if hehe/she chooses to do so.

With respect to the audits of the Trust’s financial statements for the fiscal years ended October 31, 2005 and 2004 and the subsequent interim periods through April 30, 2006 and through the date of replacement, there were no disagreements with E&Y on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of E&Y, would have caused E&Y to make reference to the subject matter of the disagreements in connection with its report. Further, the audit reports of E&Y on the financial statements of the Trust for the years ended October 31, 2005 and 2004 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or, except as noted in the following sentence, as to accounting principles. E&Y noted in its opinion that the Trust’s financial statements have been prepared on the modified cash basis of accounting, which is a comprehensive basis of accounting other than U.S. generally accepted accounting principles. In the opinion of the Trustees and the Trust’s management the use of the cash basis provides a more meaningful presentation to unit owners of the results of operations of the Trust.

For the fiscal year ended October 31, 2005, the Trust agreed to pay $45,500 and $47,800 respectively as the aggregate amount for audit services andto E&Y. For the fiscal year ended October 31, 2006, E&Y proposed a significantly higher audit fee of $75,000-$80,000. Following subsequent discussions, E&Y agreed to bill the trust at the prior year’s rate pending the retention of a new auditor. At the time of the replacement of E&Y prior to the third quarter review, the Trust had already paid $23,900 to E&Y. With respect to fiscal 2006, the Trust agreed to pay Weiser $49,000 for the review of the first three fiscal quarters, the year-end audit and the attestation to the sufficiency of the Trust’s internal controlscontrol over financial reporting to be performed by Ernst & Young LLP.

Weiser.