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<SEC-DOCUMENT>0000949377-05-000406.txt : 20050427
<SEC-HEADER>0000949377-05-000406.hdr.sgml : 20050427
<ACCEPTANCE-DATETIME>20050427172453
ACCESSION NUMBER:		0000949377-05-000406
CONFORMED SUBMISSION TYPE:	N-2/A
PUBLIC DOCUMENT COUNT:		7
FILED AS OF DATE:		20050427
DATE AS OF CHANGE:		20050427

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ROYCE FOCUS TRUST INC
		CENTRAL INDEX KEY:			0000825202
		IRS NUMBER:				592876580
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-123047
		FILM NUMBER:		05777432

	BUSINESS ADDRESS:	
		STREET 1:		1414 AVENUE OF THE AMERICAS
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10019
		BUSINESS PHONE:		2125084578

	MAIL ADDRESS:	
		STREET 1:		C/O ROYCE & ASSOCIATES, LLC
		STREET 2:		1414 AVENUE OF THE AMERICAS
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10019

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ROYCE GLOBAL TRUST INC
		DATE OF NAME CHANGE:	19961203

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ALL SEASONS GLOBAL FUND INC
		DATE OF NAME CHANGE:	19950803

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	AMERICAS ALL SEASON FUND INC
		DATE OF NAME CHANGE:	19920703

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ROYCE FOCUS TRUST INC
		CENTRAL INDEX KEY:			0000825202
		IRS NUMBER:				592876580
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-05379
		FILM NUMBER:		05777433

	BUSINESS ADDRESS:	
		STREET 1:		1414 AVENUE OF THE AMERICAS
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10019
		BUSINESS PHONE:		2125084578

	MAIL ADDRESS:	
		STREET 1:		C/O ROYCE & ASSOCIATES, LLC
		STREET 2:		1414 AVENUE OF THE AMERICAS
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10019

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ROYCE GLOBAL TRUST INC
		DATE OF NAME CHANGE:	19961203

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ALL SEASONS GLOBAL FUND INC
		DATE OF NAME CHANGE:	19950803

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	AMERICAS ALL SEASON FUND INC
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
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<TYPE>N-2/A
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<html>
<head>
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<body>
<p align="center"><font face="Times New Roman" size="2">As filed with the Securities and Exchange
 Commission on April 27, 2005</font></p>
<p align="right"><font face="Times New Roman" size="2">Securities Act File No. 333-123047
<br>Investment Company Act File No. 811-05379</font></p>
<hr size="2" color="#000000" noshade>
<p align="center"><font face="Times New Roman" size="2">UNITED STATES<br>SECURITIES
 AND EXCHANGE COMMISSION<br>Washington, D.C. 20549</font></p>
<hr size="1" color="#000000" noshade width="15%">
<p align="center"><font face="Times New Roman" size="2">FORM N-2</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="10%"><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">REGISTRATION
 STATEMENT UNDER THE SECURITIES ACT OF 1933</font></td>
<td width="10%" valign="bottom" align="left"><font face="Times New Roman" size="2">/ X /</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">Pre-Effective
 Amendment No. 1</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">/ X /</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">Post-Effective Amendment No.</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">/&#160;&#160;&#160;&#160;/</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">and/or</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">REGISTRATION STATEMENT UNDER THE</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">INVESTMENT COMPANY ACT OF 1940</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">/ X /</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">Amendment No. 14</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">/ X /</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td align="center"><hr size="1" color="#000000" noshade width="19%"></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
</table>
<br>
<p align="center"><font face="Times New Roman" size="2">Royce Focus Trust, Inc.
<br>(Exact Name of Registrant as Specified In Charter)</font></p>
<hr size="1" color="#000000" noshade width="15%">
<p align="center"><font face="Times New Roman" size="2">1414 Avenue of the Americas, New York,
 New York 10019<br>(Address of Principal
 Executive Offices)<br>(800) 221-4268<br>(Registrant&#146;s Telephone Number, including
 Area Code)<br><br>Charles M. Royce, President<br>Royce Focus Trust, Inc.<br>1414
 Avenue of the Americas<br>New York, New York 10019<br>(Name and Address of Agent
 for Service)</font></p>
<hr size="1" color="#000000" noshade width="15%">
<p align="center"><font face="Times New Roman" size="2">Copies to:</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="50%" valign="bottom" align="center"><font face="Times New Roman" size="2">John E. Denneen, Esq.</font></td>
<td width="50%" valign="bottom" align="center"><font face="Times New Roman" size="2">Frank P. Bruno, Esq.</font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">Royce Focus Trust, Inc.</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">Sidley Austin Brown &#038; Wood LLP</font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">1414 Avenue of the Americas</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">787 Seventh Avenue</font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">New York, New York 10019</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">New York, New York 10019</font></td>
</tr>
</table>
<br>
<hr size="1" color="#000000" noshade width="19%">
<div align="center"><font face="Times New Roman" size="2">Approximate Date
 of Proposed Public Offering:<br>As soon as practicable after the
 effective date of this Registration Statement.</font></div><hr size="1" color="#000000" noshade width="19%">
<p><font face="Times New Roman" size="2">If any of the securities being registered
 on this form are to be offered on a delayed or continuous basis pursuant to Rule
 415 under the Securities Act of 1933, as amended (the &#147;Securities Act&#148;),
 other than securities offered only in connection with dividend or interest reinvestment
 plans, check the following box. / X /</font></p>

<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td colspan="9" valign="bottom" align="center"><font face="Times New Roman" size="2"><b>CALCULATION
 OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933</b></font></td>
</tr>
<tr>
<td colspan="9"><hr size="2" color="#000000" noshade></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">Title of Securities Being Registered</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">Amount Being
 Registered<sup><a href="#facing_one">(1)</a></sup></font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">Proposed Maximum
 Offering Price Per Unit<sup><a href="#facing_one">(1)</a></sup></font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">Proposed
 Maximum Aggregate Offering<br>Price<sup><a href="#facing_one">(1)</a></sup></font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">Amount of
 Registration Fee<sup><a href="#facing_two">(2)</a></sup></font></td>
</tr>
<tr>
<td colspan="9"><hr size="1" color="#000000" noshade></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Common Stock ($.001 par value)</font></td>
<td width="3%"><font face="Times New Roman" size="1">&#160;</font></td>
<td width="10%" valign="bottom" align="center"><font face="Times New Roman" size="2">2,627,398 shares</font></td>
<td width="3%"><font face="Times New Roman" size="1">&#160;</font></td>
<td width="9%" valign="bottom" align="center"><font face="Times New Roman" size="2">$8.71</font></td>
<td width="3%"><font face="Times New Roman" size="1">&#160;</font></td>
<td width="10%" valign="bottom" align="center"><font face="Times New Roman" size="2">$22,884,637</font></td>
<td width="3%"><font face="Times New Roman" size="1">&#160;</font></td>
<td width="8%" valign="bottom" align="center"><font face="Times New Roman" size="2">$2,693.52</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td colspan="9"><hr size="2" color="#000000" noshade></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td colspan="9" valign="bottom" align="left"><font face="Times New Roman" size="2"><a name="facing_one"></a>(1) Estimated
 solely for the purpose of calculating the registration fee.</font></td>
</tr>
<tr>
<td colspan="9" valign="bottom" align="left"><font face="Times New Roman" size="2"><a name="facing_two"></a>(2) Transmitted
 to the Commission&#146;s designated lockbox at Mellon Bank in Pittsburgh, PA.$117.70
 was previously paid.$2,575.82 was transmitted in connection with this filing.</font></td>
</tr>
</table>
<br>
<hr size="1" color="#000000" noshade width="15%">
<p align="center"><font face="Times New Roman" size="2">THE REGISTRANT HEREBY AMENDS
 THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS
 EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY
 STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
 WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
 SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
 PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="center"><font face="Times New Roman" size="5"><b>ROYCE FOCUS TRUST, INC.</b></font>
<br><font face="Times New Roman" size="2"><b>2,189,498 Shares of Common Stock<br>Issuable upon Exercise of Non-Transferable
<br>Rights to Subscribe for such Shares of Common Stock</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Royce Focus
 Trust, Inc. (the &#147;Fund&#148;) is offering to its Common Stockholders of record as of
 May 6, 2005 non-transferable Rights. These Rights will allow you to subscribe for
 one (1) share of the Fund&#146;s Common Stock for each five (5) Rights held. You
 will receive one Right for each whole share of Common Stock that you hold of record
 as of May 6, 2005, rounded up to the nearest number of Rights evenly divisible by
 five. The Rights will not be listed for trading on the Nasdaq National Market (&#147;Nasdaq&#148;)
 or on any exchange. <b>The Subscription Price will be the lower of (i) $0.25 below
 the last reported sale price of a share of the Fund&#146;s Common Stock on Nasdaq
 on the Pricing Date, which is June 13, 2005, or (ii) the net asset value of a share
 of the Fund&#146;s Common Stock at the close of business on that date.</b></font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><b>Rights
 may be exercised at any time until 5:00 p.m., Eastern time, on June 10, 2005, unless
 the subscription period is extended. Since the Offer closes prior to the Pricing
 Date, stockholders who exercise their Rights will not know the Subscription Price
 at the time they exercise their Rights.</b></font></p>
<p align="right">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">(Continued
 on following page)</font></p>
<p><font face="Times New Roman" size="2"><b>INVESTING IN THE FUND&#146;S COMMON STOCK
 INVOLVES RISKS. SEE &#147;PROSPECTUS SUMMARY &#151; RISK FACTORS AND SPECIAL CONSIDERATIONS
 AT A GLANCE&#148; BEGINNING ON PAGE 5 AND &#147;INVESTMENT GOAL, POLICIES AND RISKS BEGINNING
 ON PAGE 15.</b></font></p>
<p align="center"><font face="Times New Roman" size="2"><b>__________________________
</b></font></p>
<p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund may
 increase the number of shares of Common Stock subject to subscription by up to 20%,
 or up to an additional 437,899 Shares, for an aggregate total of 2,627,397 Shares.
</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="12%"><font face="Times New Roman" size="2">&#160;</font></td>
<td width="8%"><font face="Times New Roman" size="2">&#160;</font></td>
<td width="3%"><font face="Times New Roman" size="2">&#160;</font></td>
<td width="20%" valign="bottom" align="center"><font face="Times New Roman" size="2">Estimated<br><u>Subscription Price</u></font></td>
<td width="3%"><font face="Times New Roman" size="2">&#160;</font></td>
<td width="20%" valign="bottom" align="center"><font face="Times New Roman" size="2"><u>Sales Load</u></font></td>
<td width="3%"><font face="Times New Roman" size="2">&#160;</font></td>
<td width="20%" valign="bottom" align="center"><font face="Times New Roman" size="2">Proceeds,
 before<br>expenses, to the<br><u>Fund<a href="#page1_(1)">(1)</a><a href="#page1_(2)">(2)</a></u></font></td>
<td width="12%"><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Per Share</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><p style="margin-left:80px; text-indent:-10px;"><font face="Times New Roman" size="2">$8.50</font></p></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><p style="margin-left:90px; text-indent:-10px;"><font face="Times New Roman" size="2">None</font></p>
</td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><p style="margin-left:80px; text-indent:-10px;"><font face="Times New Roman" size="2">$8.50</font></p></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Total</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><p style="margin-left:80px; text-indent:-10px;"><font face="Times New Roman" size="2">$18,610,733</font></p></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><p style="margin-left:90px; text-indent:-10px;"><font face="Times New Roman" size="2">None</font></p>
</td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><p style="margin-left:80px; text-indent:-10px;"><font face="Times New Roman" size="2">$18,610,733</font></p></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
</table>
<font face="Times New Roman" size="2">____________________</font>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="1"><a name="page1_(1)"></a>(1)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Before
 deduction of expenses payable by the Fund, estimated at$200,000, which will be charged
 against paid-in capital of the Fund.</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="1"><a name="page1_(2)"></a>(2)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;If the
 Fund increases the number of shares subject to subscription by 20%, the Proceeds,
 before expenses, to the Fund will be $22,332,875.</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
</table>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Neither the
 SEC nor any state securities commission has approved or disapproved of these securities
 or determined if this Prospectus is truthful or complete. Any representation to
 the contrary is a criminal offense.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Shares will be ready for delivery on or about June 28, 2005.</font></p>
<p align="center"><font face="Times New Roman" size="2">____________________</font></p>
<p align="center"><font face="Times New Roman" size="2">The date of this Prospectus is May __, 2005.</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">(Continued
 from previous page)</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund is
 a closed-end registered investment company, whose shares of Common Stock are listed
 and traded on Nasdaq under the symbol &#147;FUND.&#148; The Fund&#146;s primary investment
 goal is long-term capital growth. The Fund normally invests at least 65% of its
 assets in equity securities. The net asset value per share of the Fund&#146;s Common
 Stock at the close of business on April 15, 2005 was $8.49, and the last reported
 sales price of a share of the Fund&#146;s Common Stock on Nasdaq on that date was
 $8.74.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">This Prospectus
 sets forth concisely the information about the Fund you should know before investing,
 including information about risks. Please read it before you invest and keep it
 for future reference.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">A Statement
 of Additional Information dated May __, 2005 (the &#147;SAI&#148;) has been filed with the
 Securities and Exchange Commission (the &#147;SEC&#148;) and is incorporated by reference
 in this Prospectus. A copy of the SAI and copies of the Fund&#146;s semi-annual and annual reports
 may be obtained without charge by writing to the Fund at its address at 1414 Avenue
 of the Americas, New York, New York 10019, or by calling the Fund toll-free at (800)
 221-4268. In addition, you may request other information about the Fund or make
 stockholder inquiries by calling the Fund toll-free at (800) 221-4268. Copies of
 the SAI and the Fund&#146;s annual report are also available free of charge on the
 Fund&#146;s Web site (http://www.roycefunds.com). In addition, the SEC maintains
 a Web site (http://www.sec.gov) that contains the Statement of Additional Information,
 material incorporated by reference, and other information regarding registrants
 that file electronically with the Commission.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Stockholders
 who do not fully exercise their Rights will own a smaller proportional interest
 in the Fund. In addition, because the Subscription Price may be less than the net
 asset value per share as of the Pricing Date, the Offer may result in an immediate
 dilution of the net asset value per share for all stockholders. See &#147;Risk Factors
 and Special Considerations at a Glance&#148; on page 5 of this Prospectus.</font></p>
<p align="center"><font face="Times New Roman" size="2">2</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="center"><font face="Times New Roman" size="2"><b>PROSPECTUS SUMMARY</b>
</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>You should
 consider the matters discussed in this summary before investing in the Fund through
 the Offer. This summary is qualified in its entirety by reference to the detailed
 information included in this Prospectus and the related Statement of Additional
 Information.</i></font></p>
<p align="center"><font face="Times New Roman" size="2"><b>THE OFFER AT A GLANCE</b>
</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>The Offer</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund is
 offering to its Common Stockholders of record as of May 6, 2005 non-transferable
 Rights. These Rights will allow you to subscribe for one (1) share of Common Stock
 for each five (5) Rights held. You will receive one Right for each whole share of
 Common Stock that you hold of record as of May 6, 2005, rounded up to the nearest
 number of Rights evenly divisible by five. The Rights will not be listed for trading
 on Nasdaq or on any exchange. Rights may be exercised at any time from May 10, 2005
 through 5:00 p.m., Eastern time, on June 10, 2005, unless extended. Since the Expiration
 Date is prior to the Pricing Date, stockholders who exercise their Rights will not
 know the Subscription Price at the time they exercise their Rights. The Fund may
 increase the number of shares of Common Stock subject to subscription (the &#147;Shares&#148;)
 by up to 20% of the Shares (any such additional Shares are referred to as &#147;Additional
 Shares&#148;). See &#147;The Offer.&#148;</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Subscription Price</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Subscription
 Price will be the lower of (i) $0.25 below the last reported sale price of a share
 of the Fund&#146;s Common Stock on Nasdaq on the Pricing Date or (ii) the net asset
 value of a share of the Fund&#146;s Common Stock at the close of business on that
 date. See &#147;The Offer - Subscription Price.&#148;</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Over-Subscription Privilege</b></font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">If you fully
 exercise all Rights issued to you, you will be entitled to subscribe for additional
 Shares that were not subscribed for by other stockholders. If sufficient Shares
 are available, all stockholders&#146; over-subscription requests will be honored
 in full. If these requests for additional Shares exceed the Shares available, the
 available Shares, including any Additional Shares, will be allocated pro rata among
 stockholders who over-subscribe based on the number of Rights originally issued
 to them by the Fund. See &#147;The Offer - Over-Subscription Privilege.&#148;</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Use of Proceeds</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">We estimate
 the net proceeds of the Offer to be approximately $18,410,733 ($22,132,875 if all
 of the Additional Shares are available for subscription). These figures assume (i)
 all Rights are exercised in full, (ii) a Subscription Price of $8.50 and (iii) payment
 of offering expenses of approximately $200,000.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Royce &#038;
 Associates, LLC (&#147;Royce&#148;), the Fund&#146;s investment adviser, anticipates that
 investment of the net proceeds of the Offer in accordance with the Fund&#146;s investment
 goal and policies will take up to six months from their receipt by the Fund, depending
 on market conditions and the availability of appropriate securities. See &#147;Use of
 Proceeds.&#148;</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Obtaining Subscription Information</b>
</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">If you have
 any questions or requests for assistance, please contact Georgeson Shareholder Communications,
 Inc., the Information Agent, (toll free) at (866) 328-5443. You may also call the
 Fund (toll free) at (800) 221-4268, or contact your broker or Nominee for information
 with respect to the Offer. See &#147;The Offer - Information Agent.&#148;</font></p>
<p align="center"><font face="Times New Roman" size="2">3</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="center"><font face="Times New Roman" size="2"><b>Important Dates to Remember
</b></font></p>
<table border="0" cellpadding="0" cellspacing="0" width="90%">
<tr>
<td valign="bottom" align="center"><font face="Times New Roman" size="2"><u>Event</u></font></td>
<td width="8%"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2"><u>Date</u></font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Record Date
</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">May 6, 2005
</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Subscription
 Period</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">May 10, 2005
 through June 10, 2005<a href="#page4_star">*</a></font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Expiration
 Date</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">June 10, 2005<a href="#page4_star">*</a>
</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Pricing Date
</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">June 13, 2005<a href="#page4_star">*</a>
</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><p style="margin-left:10px; text-indent:-10px;"><font face="Times New Roman" size="2">Nominee Subscription
 Certificate and Payment for Shares Due Pursuant to Notice of Guaranteed Delivery
</font></p></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">June 15, 2005<a href="#page4_star">*</a>
</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Confirmation
 to Participants</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">June 20, 2005<a href="#page4_star">*</a>
</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Final Payment
 for Shares</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">June 28, 2005<a href="#page4_star">*</a>
</font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2"><a name="page4_star"></a>*Unless the
 Offer is extended.</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
</table>
<p align="justify"><font face="Times New Roman" size="2"><b>Tax Consequences</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">For Federal
 income tax purposes, neither the receipt nor the exercise of the Rights will result
 in taxable income to you. You will not realize a taxable loss if your Rights expire
 without being exercised. See &#147;The Offer - Federal Income Tax Consequences of the
 Offer.&#148;</font></p>
<p align="center"><font face="Times New Roman" size="2"><b>THE FUND AT A GLANCE</b>
</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>The Fund</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund is
 a registered closed-end diversified management investment company.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Investment Goal and Policies</b></font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund&#146;s
 primary investment goal is long-term capital growth. Royce normally invests more
 than 65% of the Fund&#146;s assets in equity securities. The Fund may also invest
 up to 35% of its assets in non-convertible fixed income securities. Royce uses a
 value approach to invest the Fund&#146;s assets in a limited number of domestic
 and foreign companies. While the Fund is not restricted as to stock market capitalization,
 Royce focuses the Fund&#146;s investments primarily in small-cap companies (companies
 with stock market capitalizations between $500 million and $2.5 billion) and micro-cap
 companies (companies with stock market capitalizations below $500 million) with
 significant business activities in the United States. See &#147;Investment Goal, Policies
 and Risks&#148;. An investment in the Fund is not appropriate for all investors. There
 can be no assurance that the Fund&#146;s investment goal will be realized.</font>
</p>
<p align="justify"><font face="Times New Roman" size="2"><b>Capital Stock</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund&#146;s
 Common Stock is listed and traded on Nasdaq. As of April 15, 2005, the Fund had
 10,947,490 shares of Common Stock, par value $0.001 per share and 1,000,000 shares
 of 6.00% Cumulative Preferred Stock, par value $0.001 per share (the &#147;6.00% Preferred
 Stock&#148;) issued and outstanding. The 6.00% Preferred Stock has an initial aggregate
 liquidation preference of $25 million. See &#147;Description of Capital Stock.&#148;</font>
</p>
<p align="justify"><font face="Times New Roman" size="2"><b>Distributions</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund&#146;s
 policy is to make quarterly distributions to its Common Stockholders at the annual
 rate of 5% of the rolling average of the prior four calendar quarter-end net asset
 values of the Fund&#146;s Common Stock, with the fourth quarter distribution being
 the greater of 1.25% of the rolling average or the distribution required for treatment
 as a regulated investment company under the Internal Revenue Code of 1986 (the &#147;Code&#148;).
 These quarterly distributions are generally reinvested in additional full and fractional
 shares of Common Stock through the Fund&#146;s Dividend Reinvestment and Cash Purchase
 Plan. The Fund&#146;s quarterly distribution policy may be changed by the Board
 of Directors without stockholder approval. See &#147;Dividends, Distributions and Reinvestment
 Plan.&#148;</font></p>
<p align="center"><font face="Times New Roman" size="2">4</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify"><font face="Times New Roman" size="2"><b>Investment Adviser</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Royce has
 served as the investment adviser to the Fund since November 1, 1996. Royce also
 serves as investment adviser to other registered management investment companies,
 privately offered funds and institutional accounts. As of December 31, 2004, Royce
 managed approximately $22.7 billion in assets, including $20.9 billion in open-end
 and closed-end fund assets.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">As compensation
 for its services under the Investment Advisory Agreement, Royce is entitled to receive
 a monthly fee equal to 1/12 of 1% (1% on an annualized basis) of the Fund&#146;s
 average net assets (which includes net assets applicable to both Common Stock and
 Preferred Stock) for each month during the term of such Agreement.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Royce has
 voluntarily committed to waive the portion of its investment advisory fee attributable
 to an issue of the Fund&#146;s Preferred Stock for any month in which the Fund&#146;s
 average annual NAV total return since issuance of the Preferred Stock fails to exceed
 the applicable Preferred Stock&#146;s dividend rate. See &#147;Investment Advisory and
 Other Services - Advisory Fee&#148;</font></p>
<p align="center"><font face="Times New Roman" size="2"><b>RISK FACTORS AND SPECIAL
 CONSIDERATIONS AT A GLANCE</b></font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Dilution - Net Asset Value and Non-Participation
 in the Offer</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">If you do
 not fully exercise your Rights, you should expect that you will, at the completion
 of the Offer, own a smaller proportional interest in the Fund than would otherwise
 be the case had you exercised your Rights. Further, if you do not submit a subscription
 request pursuant to the Over-Subscription Privilege, you may also experience dilution
 in your Fund ownership if the Fund offers Additional Shares for subscription. The
 Fund will sell Additional Shares to stockholders only if and to the extent that
 shares sold through the Offer would not dilute (reduce) the net asset value of its
 Common Stock by 2.0% or more. We cannot state precisely the amount of any dilution
 because we do not know at this time how many Shares will be subscribed for or what
 the net asset value or market price per Share will be at the Pricing Date. As of
 April 15, 2005, the Fund&#146;s shares traded at a 2.9% premium above net asset
 value. If the Fund&#146;s shares trade at a premium above net asset value as of
 the Pricing Date, the Fund estimates that such dilution would be minimal. See &#147;The
 Offer.&#148;</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Market Risk</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">As with any
 investment company that invests in common stocks, the Fund is subject to market
 risk - the possibility that common stock prices will decline over short or extended
 periods of time. As a result, the value of an investment in the Fund&#146;s Common
 Stock will fluctuate with the market, and you could lose money over short or long
 periods of time.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Small- and Micro-Cap Risk</b></font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The prices
 of small- and micro-cap companies are generally more volatile and their markets
 are generally less liquid relative to larger-cap companies. Therefore, the Fund
 may involve more risk of loss and its returns may differ significantly from funds
 investing in larger-cap companies or other asset classes. See &#147;Investment Goal and
 Policies - Risk Factors - Investing in Small- and Micro-Cap Companies.&#148;</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Selection Risk</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Different
 types of stocks tend to shift into and out of favor with stock market investors,
 depending on market and economic conditions. The performance of funds that invest
 in value-style stocks may at times be better or worse than the performance of stock
 funds that focus on other types of stocks or that have a broader investment style.
</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Market Price of Shares</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Although the
 Fund&#146;s shares of Common Stock have recently traded on Nasdaq at a market price
 above their net asset value (a premium), the Fund&#146;s shares have traded in the
 market below (a discount), at and above net asset value since the commencement of
 the Fund&#146;s operations. There can be no assurance that the Fund&#146;s shares
 will trade at a premium in the future, or that any such premium is sustainable.
 The Fund&#146;s shares have traded at discounts of as much as 25.66% in the past
 five years. Market price risk is a risk separate and distinct from the risk that
 the Fund&#146;s net asset value will decrease. In the year ended December 31, 2004,
 the Fund&#146;s shares traded in the market at an average discount to net asset
 value of 2.95%. As of December 31, 2004, the premium above net asset value was 7.38%.
 In the quarter ended March 31, 2005, the Fund&#146;s shares traded in the market
 at an average premium to net asset value of 6.6%. As of March 31, 2005, the premium
 above net asset value was 8.3%.</font></p>
<p align="center"><font face="Times New Roman" size="2">5</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify"><font face="Times New Roman" size="2"><b>Risk Factors - Risk of Investment in
 a Limited Number of Companies</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Because the
 Fund invests in a limited number of companies, developments affecting an individual
 issuer are likely to have a greater impact on the Fund&#146;s net asset value and
 the market price of its Common Stock.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Risk Factors - Foreign Investments</b>
</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund invests
 a portion of its assets in securities of foreign issuers. Foreign investments involve
 certain risks which typically are not present in securities of domestic issuers.
 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. Foreign securities may be
 less liquid and may be subject to greater price volatility than domestic securities.
 Foreign investments also may be subject to local economic and political risks which
 might adversely affect the Fund&#146;s ability to realize on its investments in
 such securities. No assurance can be given that Royce will be able to anticipate
 these potential events or counter their effects.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Leverage and Borrowing</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund is
 authorized to borrow money. So long as the Fund&#146;s 6.00% Preferred Stock is
 rated by Moody&#146;s, the Fund cannot borrow for investment leverage purposes.
 Borrowings create an opportunity for greater capital appreciation with respect to
 the Fund&#146;s investment portfolio, but at the same time such borrowing is speculative
 in that it will increase the Fund&#146;s exposure to capital risk. In addition,
 borrowed funds are subject to interest costs that may offset or exceed the return
 earned on the borrowed funds. See &#147;Investment Goal and Policies - Risks to Common
 Stockholders of Borrowing Money and Issuing Senior Securities.&#148;</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Preferred Stock - Leverage Risk</b></font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund&#146;s
 leverage resulting from the issuance of 6.00% Preferred Stock and any other Preferred
 Stock creates risks for holders of Common Stock, including higher volatility of
 both the net asset values and market prices of the Common Stock. If the Fund is
 able to realize a net return on its investment portfolio in excess of the dividend
 rate of the Preferred Stock, the effect of leverage permits holders of Common Stock
 to realize a higher current rate of return than if the Fund were not leveraged.
 On the other hand, if the dividend rate on the Preferred Stock exceeds the net return
 on the Fund&#146;s investment portfolio, the Fund&#146;s leveraged capital structure
 will result in a lower rate of return to holders of Common Stock than if the Fund
 were not leveraged. Similarly, because any decline in the value of the Fund&#146;s
 investments will be borne entirely by holders of Common Stock, the effect of leverage
 in a declining market results in a greater decrease in net asset value to holders
 of Common Stock than if the Fund were not leveraged, which would likely be reflected
 in a greater decline in the market price for shares of Common Stock. See &#147;Investment
 Goal and Policies - Risks to Common Stockholders of Borrowing Money and Issuing
 Senior Securities.&#148; Leveraging through the issuance of Preferred Stock requires
 that the holders of the Preferred Stock have class voting rights on various matters
 that could make it more difficult for the holders of the Common Stock to change
 the investment goal or other fundamental policies of the Fund, to convert the Fund
 to an open-end fund or make certain other changes. See &#147;Investment Goal and Policies
 - Changes in Investment Goal and Methods/Policies&#148; and &#147;Description of Capital Stock
 - Certain Corporate Governance Provisions.&#148;</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
<font face="Times New Roman" size="2">Because Royce&#146;s fee is based on the average net assets of the Fund (which include net assets
 applicable to both Common Stock and Preferred Stock), Royce has generally benefited
 from the Fund&#146;s issuance of the Preferred. See &#147;Investment Advisory and Other
 Services - Advisory Fee.&#148;</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Certain Corporate Governance Provisions
</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The seven
 Fund Directors who are elected by the holders of Common Stock and 6.00% Preferred
 Stock voting together are divided into three classes, each having a staggered term
 of three years. The two Directors elected only by the holders of 6.00% Preferred
 Stock stand for election at each annual meeting of stockholders. Accordingly, it
 likely would take a number of years to change a majority of the Board of Directors.
 Vacancies on the Board of Directors for one or more of the classified positions
 may be filled by the remaining Directors for the balance of the term of the class.
 In addition, the Fund&#146;s Bylaws permit stockholders to call a special meeting
 of stockholders only if certain procedural requirements are met and the request
 is made by stockholders entitled to cast at least a majority of the votes entitled
 to be cast at such a meeting. These provisions may have the effect of maintaining
 the continuity of management and thus may make it more difficult for the Fund&#146;s
 stockholders to change the majority of Directors. See &#147;Certain Corporate Governance
 Provisions.&#148;</font></p>
<p align="center"><font face="Times New Roman" size="2">6</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="center"><font face="Times New Roman" size="2"><b>FUND EXPENSES</b></font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The following
 tables are intended to assist investors in understanding the various costs and expenses
 that a stockholder of the Fund will bear, directly or indirectly.</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Stockholder
 Transaction Expenses</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><p style="margin-left:40px; text-indent:-10px;"><font face="Times New Roman" size="2">Sales Load
</font></p></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">None</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><p style="margin-left:40px; text-indent:-10px;"><font face="Times New Roman" size="2">Distribution
 Reinvestment and Cash Purchase Plan Fees</font></p></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">None</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><p style="margin-left:10px; text-indent:-10px;"><font face="Times New Roman" size="2">Annual Expenses
 (as a percentage of average net assets applicable to Common Stock)</font></p></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><p style="margin-left:40px; text-indent:-10px;"><font face="Times New Roman" size="2">Investment
 Advisory Fees<a href="#page7_(1)">(1)</a></font></p></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.22</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">%</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><p style="margin-left:40px; text-indent:-10px;"><font face="Times New Roman" size="2">Other Expenses<a href="#page1_(1)">(1)</a>
</font></p></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.21</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">%</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="2"><hr size="1" color="#000000" noshade></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><p style="margin-left:80px; text-indent:-10px;"><font face="Times New Roman" size="2">Total Annual
 Expenses(<a href="#page1_(1)">1</a>,<a href="#page1_(2)">2</a>)</font></p></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.43</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">%</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="2"><hr size="2" color="#000000" noshade></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
</table>
<font face="Times New Roman" size="2">____________________</font>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="6%" valign="top" align="left"><font face="Times New Roman" size="1"><a name="page1_(1)"></a>(1)</font></td>
<td><font face="Times New Roman" size="1">Assumes
 the Issued Preferred remains outstanding for the year ending December 31, 2005.
 See &#147;Risk Factors and Special Considerations at a Glance &#150; Preferred Stock
 &#150; Leverage Risk.&#148; If the Fund redeems the Issued Preferred, it is estimated
 that, as a percentage of net assets attributable to Common Stock, the Investment
 Advisory Fees would be 1.0%. Other Expenses would be 0.21% and Total Annual Expenses
 would be 1.21%.</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="1"><a name="page1_(2)"></a>(2)</font></td>
<td><font face="Times New Roman" size="1">The indicated 1.43% expense ratio assumes that the Offer (including
 the Over-Subscription Privilege) is fully subscribed and assumes estimated net proceeds
 from the Offer of approximately $22.1 million (assuming an estimated Subscription
 Price of $8.50).</font></td>
</tr>
</table>
<p align="justify"><font face="Times New Roman" size="2"><b>Example</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The following
 Example demonstrates the projected dollar amount of total cumulative expense that
 would be incurred over various periods with respect to a hypothetical investment
 in the Fund&#146;s Common Stock. These amounts are based upon payment by the Fund
 of investment advisory fees and other expenses at the levels set forth in the above
 table.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">An investor
 would directly or indirectly pay the following expenses on a $1,000 investment in
 shares of the Fund&#146;s Common Stock, assuming (i) the market price at the time
 of investment was equal to the net asset value (&#147;NAV&#148;) per share, (ii) a 5% annual
 return and (iii) reinvestment of all distributions at NAV:</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td valign="bottom" align="center"><font face="Times New Roman" size="2"><b>One Year
</b></font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2"><b>Three Years
</b></font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2"><b>Five Years
 </b></font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2"><b>Ten Years
</b></font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Times New Roman" size="2"><b>$15</b>
</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2"><b>$45</b>
</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2"><b>$78</b>
</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2"><b>$171</b>
</font></td>
</tr>
</table>
<p><font face="Times New Roman" size="2">This Example assumes that the percentage
 amounts listed under Annual Expenses remain the same in the years shown. The above
 tables and the assumption in the Example of a 5% annual return and reinvestment
 at NAV are required by regulation of the SEC and are applicable to all registered
 management investment companies, and the assumed 5% annual return is not a prediction
 of, and does not represent, the projected performance of the Fund&#146;s Common
 Stock. Actual expenses and annual rates of return may be more or less than those
 allowed for purposes of this Example. This Example assumes that the Offer (including
 the Over-Subscription Privilege) is fully subscribed. If the Fund issues fewer shares
 of its Common Stock, all other things being equal, these expenses would increase.
 In addition, while the Example assumes reinvestment of all distributions at NAV,
 the Fund&#146;s Distribution Reinvestment and Cash Purchase Plan contemplates payment
 of net investment income dividends and capital gain distributions in shares of the
 Fund&#146;s Common Stock (unless a stockholder elects to receive payments in cash),
 based on the lower of the market price or NAV on the valuation date, except that
 distributions may not be reinvested for less than 95% of the market price.</font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><b>This Example
 should not be considered a representation of future expenses. The Fund&#146;s actual
 expenses may be more or less than those shown.</b></font></p>
<p align="center"><font face="Times New Roman" size="2"><b>FINANCIAL HIGHLIGHTS</b>
</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The financial
 highlights table is intended to help you understand the Fund&#146;s financial performance
 for the periods presented and reflects financial results for a single share of the
 Fund&#146;s Common Stock. The total returns in the table represent the rate that
 an investor would have earned on an investment in the Fund&#146;s Common Stock (assuming
 reinvestment of all dividends and distributions and full primary participation in
 all rights offerings). The information for each of the five years in the period
 ended December 31, 2004 has been audited by Tait, Weller &#038; Baker, whose report,
 along with the Fund&#146;s financial statements, is included in the Fund&#146;s
 2004 Annual Report to Stockholders, which is available upon request.</font></p>
<p align="center"><font face="Times New Roman" size="2">7</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center" colspan="39"><font face="Times New Roman" size="2">Years ended December 31,</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center" colspan="39"><hr size="1" noshade color="#000000"></td>
</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2">2004</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2">2003</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2">2002</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2">2001</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2">2000</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2">1999</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2">1998</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2">1997</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2">1996<a href="#facing_plus">+</a></font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2">1995</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
</tr>
<tr>
<td valign="bottom" align="left"><p style="margin-left:10px; text-indent:-10px;"><font face="Times New Roman" size="2"><b>NET ASSET
 VALUE, BEGINNING OF PERIOD</b></font></p></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$9.00</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$6.27</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$7.28</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$6.77</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$5.94</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$5.63</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$6.04</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$5.52</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$5.09</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$4.70</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><hr size="1" noshade color="#000000"></font></td>
</tr>
<tr>
<td valign="bottom" align="left"><p style="margin-left:10px; text-indent:-10px;"><font face="Times New Roman" size="2"><b>INVESTMENT
 OPERATIONS:</b></font></p></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2"><p style="margin-left:40px; text-indent:-10px;">Net
 investment income (loss)</font></p></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.02</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.08</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.01</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.05</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.12</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.08</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.12</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.08</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.06</font></td>
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<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.38</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.66</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.20</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center" colspan="39"><hr size="1" noshade color="#000000"></td>
</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.03</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.01</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.16</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.15</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.14</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.13</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.13</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.14</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.17</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.02</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.01</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.15</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.16</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.17</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.17</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.18</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.01</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">3.49</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.91</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.67</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.21</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.48</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.41</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.19</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.41</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.49</font></td>
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<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.06</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.01</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.12</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.16</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">(1.72</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.07</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.11</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.28</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.14</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.41</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.01</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center" colspan="39"><hr size="1" noshade color="#000000"></td>
</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.62</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.09</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.14</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.34</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.15</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.53</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.17</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center" colspan="39"><hr size="1" noshade color="#000000"></td>
</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.01</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.03</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.01</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.02</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.04</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.02</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.04</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.11</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">(0.10</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">)</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.02</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.07</font></td>
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<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">9.6</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">22.3</font></td>
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</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">29.2</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">54.3</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">(12.5</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">10.0</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">20.9</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">8.7</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">20.5</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
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</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.53</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.57</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.88</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.47</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.44</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.51</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.62</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.94</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.91</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">2.14</font></td>
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</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.27</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.14</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.13</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.11</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.00</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">%</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.00</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.14</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.39</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.83</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.26</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.43</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.75</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.36</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.44</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.51</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">1.14</font></td>
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</tr>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">0.24</font></td>
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</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$87,012</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$57,956</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$66,654</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$60,933</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$51,003</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$47,457</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$50,893</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$44,154</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$41,385</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><p style="margin-left:10px; text-indent:-10px;"><font face="Times New Roman" size="2">Liquidation
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$25,000</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$25,000</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$20,000</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$20,000</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$20,000</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$20,000</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$20,000</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$20,000</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">52</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">49</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">%</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">61</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">%</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">54</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">%</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">69</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">%</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">60</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">%</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">90</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">%</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">74</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">%</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">159</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">%</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">76</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">%</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><p style="margin-left:10px; text-indent:-10px;"><font face="Times New Roman" size="2">Average Commission
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">.0500</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">.0486</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$0.0482</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$0.0517</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$0.0597</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$0.0607</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$0.0620</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$0.0610</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$0.0396 </font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><p style="margin-left:10px; text-indent:-10px;"><font face="Times New Roman" size="2">Total shares
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">1,000,000
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">1,000,000
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">800,000</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">800,000</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">800,000</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">800,000</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">800,000</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">800,000</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><p style="margin-left:10px; text-indent:-10px;"><font face="Times New Roman" size="2">Asset coverage
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$130.85</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$112.01</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$97.44</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$108.32</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$101.17</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$88.75</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$84.32</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$88.62</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$25.00</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$25.00</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$25.00</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$25.00</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$25.00</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$25.00</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$25.00</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$25.00</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><p style="margin-left:10px; text-indent:-10px;"><font face="Times New Roman" size="2">Average market
 value per share<a href="#page8_(e)">(e)</a></font></p></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2"><p style="margin-left:20px; text-indent:-10px;">6.00%
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$24.83</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$25.45</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2"><p style="margin-left:20px; text-indent:-10px;">7.45%
 Cumulative</font></p></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$25.53</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$25.64</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$25.09</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$22.23</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$24.00</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$25.16</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$25.25</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#150;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
</table>
<font face="Times New Roman" size="2">__________________________________________________________________________________________________</font>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="6%" valign="bottom" align="left"><font face="Times New Roman" size="1"><a name="facing_plus"></a>+</font></td>
<td><font face="Times New Roman" size="1">Royce has
 served as the investment adviser to the Fund since November 1, 1996.</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="1"><a name="page8_(a)"></a>(a)</font></td>
<td><font face="Times New Roman" size="1">The Market
 Value Total Return is calculated assuming a purchase of Common Stock on the opening
 of the first business day and a sale on the closing of the last business day of
 each period reported. Dividends and distributions, if any, are assumed for the purposes
 of this calculation, to be reinvested at prices obtained under the Fund&#146;s Distribution
 Reinvestment and Cash Purchase Plan. Net Asset Value Total Return is calculated
 on the same basis, except that the Fund&#146;s net asset value is used on the purchase
 and sale dates instead of market value. For years prior to 1997, the Net Asset Value
 Total Return is not available.</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="1"><a name="page8_(b)"></a>(b)</font></td>
<td><font face="Times New Roman" size="1">Expense
 ratios based on total average net assets including liquidation value of Preferred
 Stock were 1.21%, 1.20%, 1.43%, 1.11%, 1.05%, 1.06%, 1.16%, 0.90%, 1.91% and 2.14%,
 for the years ended December 31, 2004, 2003, 2002, 2001, 2000, 1999, 1998, 1997,
 1996 and 1995, respectively.</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="1"><a name="page8_(c)"></a>(c)</font></td>
<td><font face="Times New Roman" size="1">Expense ratios based on average net assets applicable to Common Stockholders before waivers
 of fees by the investment adviser would have been 1.73%, 2.06%, 1.69%, 1.81%, 1.93%,
 1.88%, 1.60% and 2.08% for the years ended December 31, 2003, 2002, 2001, 2000,
 1999, 1998, 1997 and 1996, respectively.</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="1"><a name="page8_(d)"></a>(d)</font></td>
<td><font face="Times New Roman" size="1">For fiscal
 years beginning after October 1, 1995, the Fund is required to disclose its average
 commission rate paid per share for purchases and sales of investments.</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="1"><a name="page8_(e)"></a>(e)</font></td>
<td><font face="Times New Roman" size="1">The average
 of month-end market values during the period that the preferred stock was outstanding.</font></td>
</tr>
</table>
<p align="center"><font face="Times New Roman" size="2">8</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="center"><font face="Times New Roman" size="2"><b>THE OFFER</b></font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Terms of the Offer</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund is
 offering (the &#147;Offer&#148;) to its Common Stockholders of record (&#147;Stockholders&#148;) as
 of the close of business on May 6, 2005 (the &#147;Record Date&#148;) non-transferable rights
 (the &#147;Rights&#148;) to subscribe for an aggregate of 2,189,498 shares of Common Stock
 (the &#147;Shares&#148;) of the Fund. The Fund may increase the number of shares of Common
 Stock subject to subscription by up to 20% of the Shares, or up to 437,899 Additional
 Shares, for an aggregate total of 2,627,397 shares. However, the Fund will sell
 Additional Shares to Stockholders only if and to the extent that shares issued through
 the Offer would not dilute (reduce) the net asset value of its Common Stock by 2.0%
 or more. The Shares and the Additional Shares are sometimes referred to herein as
 the &#147;Shares&#148;.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Each Stockholder
 is being issued one (1) Right for each whole share of Common Stock owned on the
 Record Date. The Rights entitle a Stockholder to acquire at the Subscription Price
 one (1) Share for each five (5) Rights held, rounded up to the nearest number of
 Rights evenly divisible by five. Fractional Shares will not be issued upon the exercise
 of Rights. In the case of shares held of record by a broker-dealer, bank or other
 financial intermediary (each, a &#147;Nominee&#148;), the number of Rights issued to such
 Nominee will be adjusted to permit rounding up (to the nearest number of Rights
 evenly divisible by five) of the Rights to be received by each of the beneficial
 owners for whom it is the holder of record only if the Nominee provides to the Fund,
 on or before the close of business on June 3, 2005, a written representation of
 the number of Rights required for such rounding.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Rights may
 be exercised at any time during the Subscription Period, which commences on May
 10, 2005 and ends as of 5:00 p.m., Eastern time, on June 10, 2005, unless extended
 by the Fund (such date, as it may be extended, is referred to in this Prospectus
 as the &#147;Expiration Date&#148;). A Stockholder&#146;s right to acquire one (1) additional
 Share for each five (5) Rights held during the Subscription Period at the Subscription
 Price is referred to as the &#147;Primary Subscription.&#148; The Rights are evidenced by
 Subscription Certificates, which will be mailed to Stockholders.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">In addition,
 any Stockholder who fully exercises all Rights issued to him or her is entitled
 to subscribe for additional Shares, which were not otherwise subscribed for in the
 Primary Subscription, at the Subscription Price (the &#147;Over-Subscription Privilege&#148;).
 Shares acquired pursuant to the Over-Subscription Privilege are subject to allotment
 and may be subject to increase, which is more fully discussed below under &#147;The Offer
 - Over-Subscription Privilege.&#148;</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Subscription
 Price will be the lower of (i) $0.25 below the last reported sale price of a share
 of the Fund&#146;s Common Stock on Nasdaq on June 13, 2005 (the &#147;Pricing Date&#148;)
 or (ii) the net asset value (&#147;NAV&#148;) of a share of the Fund&#146;s Common Stock at
 the close of business on the Pricing Date. Since the time of the close of the Offer
 on the Expiration Date is prior to the Pricing Date, holders who choose to exercise
 their Rights will not know the Subscription Price at the time they exercise their
 Rights.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Rights
 are non-transferable. Therefore, only the underlying Shares, and not the Rights,
 will be listed for trading on Nasdaq.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Purposes of the Offer</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Board
 of Directors of the Fund has determined that it would be in the best interests of
 the Fund and its stockholders to continue to increase the assets of the Fund available
 for current and future investment opportunities. In addition, the Offer seeks to
 reward the long-term stockholder by giving existing Stockholders Rights to purchase
 additional Shares at a below market price. Increasing the size of the Fund also
 might result in lowering the Fund&#146;s expenses as a percentage of average net
 assets applicable to Common Stockholders. Royce expects to take up to six months
 from the Fund&#146;s receipt of the proceeds of the Offer following the Expiration
 Date to fully invest them in accordance with the Fund&#146;s investment goal and
 policies.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Subscription
 Price will be determined at the close of the first business day subsequent to the
 Expiration Date in order to ensure that the Offer will attract maximum Stockholder
 participation with minimum dilution to non-participating Stockholders.</font></p>
<p align="center"><font face="Times New Roman" size="2">9</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund&#146;s
 Board of Directors voted unanimously to approve the terms of the Offer. Two of the
 Fund&#146;s Directors who voted to authorize the Offer are affiliated with Royce
 and, therefore, could benefit indirectly from the Offer. The other seven directors
 are not &#147;interested persons&#148; of the Fund within the meaning of the Investment Company
 Act of 1940, as amended (the &#147;1940 Act&#148;). Royce may also benefit from the Offer
 because its fee is based on the net assets of the Fund. See &#147;Investment Advisory
 and Other Services - Advisory Fee.&#148; It is not possible to state precisely the amount
 of additional compensation Royce might receive as a result of the Offer because
 it is not known how many Shares will be subscribed for and because the proceeds
 of the Offer will be invested in additional portfolio securities, which will fluctuate
 in value.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund may,
 in the future, choose to make additional rights offerings from time to time for
 a number of shares and on terms that may or may not be similar to this Offer. Any
 such future rights offerings will be made in accordance with the then applicable
 requirements of the 1940 Act and the Securities Act of 1933, as amended.</font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">There can
 be no assurance that the Fund or its stockholders will achieve any of the foregoing
 objectives or benefits through the Offer.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Over-Subscription Privilege</b></font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">If some Stockholders
 do not exercise all of the Rights initially issued to them, any Shares for which
 subscriptions have not been received from Stockholders will be offered by means
 of the Over-Subscription Privilege to those Stockholders who have exercised all
 of the Rights initially issued to them and who wish to acquire additional Shares.
 Stockholders who exercise all of the Rights initially issued to them should indicate
 on the Subscription Certificate how many Shares they are willing to acquire through
 this Over-Subscription Privilege. If sufficient Shares remain after completion of
 the Primary Subscription, all over-subscription requests will be honored in full.
 However, if sufficient Shares are not available to honor all over-subscription requests,
 the Fund may issue up to an additional 20% of the initial Shares (the &#147;Additional
 Shares&#148;), in order to honor such over-subscription requests. However, the Fund will
 sell Additional Shares to stockholders only if and to the extent that shares issued
 through the Offer would not dilute (reduce) the net asset value of its Common Stock
 by 2.0% or more. To the extent that there are not sufficient Shares to honor all
 over-subscription requests, the available Shares will be allocated among those who
 over-subscribe based on the number of Rights originally issued to them by the Fund,
 so that the number of Shares issued to Stockholders who subscribe through the Over-Subscription
 Privilege will generally be in proportion to the number of Shares of the Fund owned
 by them on the Record Date. The percentage of remaining Shares each over-subscribing
 Stockholder may acquire may be rounded up or down to result in delivery of whole
 Shares. The allocation process may involve a series of allocations in order to ensure
 that the total number of Shares available for over-subscriptions is distributed,
 as nearly as may be practicable, on a pro rata basis. The combination of the Over-Subscription
 Privilege and the Fund&#146;s election to issue Additional Shares may result in
 additional dilution of interest and voting rights to Stockholders, and additional
 reduction in the Fund&#146;s NAV per share.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Charles M.
 Royce, W. Whitney George and certain other officers and employees of Royce may purchase
 Shares in the Primary Subscription and the Over-Subscription Privilege. Any such
 purchases will be made on the same terms applicable to other Stockholders.</font>
</p>
<p align="justify"><font face="Times New Roman" size="2"><b>Subscription Price</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Subscription
 Price for the Shares to be issued pursuant to the Offer will be the lower of (i)
 $0.25 below the last reported sale price of a share of the Fund&#146;s Common Stock
 on Nasdaq on the Pricing Date or (ii) the NAV of a share of the Fund&#146;s Common
 Stock at the close of business on the Pricing Date. For example, if the last reported
 sale price of a share of the Fund&#146;s Common Stock on Nasdaq on the Pricing Date
 is $8.74 and the NAV of a share of the Fund&#146;s Common Stock on that date is
 $8.48, the Subscription Price will be $8.48. However, if the NAV of a share of the
 Fund&#146;s Common Stock on that date is $8.60, then the Subscription Price will
 be $8.49.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund announced
 the Offer after the close of trading on Nasdaq on February 16, 2005. The NAV per
 share of the Fund&#146;s Common Stock at the close of business on December 31, 2004
 and April 15, 2005 were</font></p>
<p align="center"><font face="Times New Roman" size="2">10</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify"><font face="Times New Roman" size="2">$9.75 and $8.49, respectively, and the last
 reported sales prices of a share of the Fund&#146;s Common Stock on Nasdaq on those
 dates were $10.47 and $8.74, respectively.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Expiration of the Offer</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Expiration
 Date is 5:00 p.m., Eastern time, on June 10, 2005, unless extended by the Fund.
 The Rights will expire on the Expiration Date and may not be exercised after that
 date. Since the time of the close of the Offer on the Expiration Date is prior to
 the Pricing Date, Stockholders who choose to exercise their Rights will not know
 the Subscription Price when they decide whether to acquire Shares in the Primary
 Subscription or through the Over-Subscription Privilege.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Subscription Agent</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Subscription
 Agent for the Offer is Equiserve Trust Company, N.A. (&#147;Equiserve&#148;), which will receive,
 for its administrative, processing, invoicing and other services as Subscription
 Agent, an estimated fee of $15,000 as well as reimbursement for all out-of-pocket
 expenses related to the Offer. The Subscription Agent is also the Fund&#146;s Transfer
 Agent. Stockholder inquiries may be directed to Georgeson Shareholder Communications,
 Inc., the Information Agent, (toll free) at (866) 328-5443. <b>SIGNED SUBSCRIPTION
 CERTIFICATES SHOULD BE SENT TO EQUISERVE TRUST COMPANY, N.A.</b>, by one of the
 following methods:</font></p>
<table border="0" cellpadding="1" cellspacing="1" width="100%">
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(1)</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">BY FIRST CLASS
 MAIL:</font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Equiserve
 Trust Company, N.A.</font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Attn: Corporate
 Actions</font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">P.O. Box 859208
</font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Braintree, MA 02185</font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(2)</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">BY EXPRESS
 MAIL OR OVERNIGHT COURIER:</font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Equiserve
 Trust Company, N.A.</font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Attn: Corporate
 Actions</font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">161 Baystate
 Drive</font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Braintree,
 MA 02184</font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(3)</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">BY HAND:</font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">EquiServe
 Trust Company, N.A.</font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Attn: Corporate
 Actions</font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">17 Battery Park Place,
11<sup>th</sup> Floor
</font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">New York, NY 10004</font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2"><b>Delivery
 to an address other than the above does not constitute good delivery.</b></font></td>
</tr>
</table>
<p align="justify"><font face="Times New Roman" size="2"><b>Information Agent Coordinator</b></font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Any questions
 or requests for assistance may be directed to the Information Agent at its telephone
 number listed below:</font></p>
<p align="center"><font face="Times New Roman" size="2"><b>Georgeson Shareholder
 Communications, Inc.<br>Toll Free: (866) 328-5443</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Stockholders
 may also call the Fund (toll free) at (800) 221-4268 or contact their Nominees,
 who hold shares for the account of others, for information with respect to the Offer.
</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund will
 pay a fee of $12,000 to Georgeson Shareholder Communications, Inc. and will reimburse
 it for all out-of-pocket expenses related to its services as Information Agent.</font></p>
<p align="center"><font face="Times New Roman" size="2">11</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify"><font face="Times New Roman" size="2"><b>Method for Exercising Rights</b></font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
<font face="Times New Roman" size="2">Rights may
 be exercised by Stockholders who fill in and sign the accompanying Subscription
 Certificate and mail it in the envelope provided or deliver the completed and signed
 Subscription Certificate to the Subscription Agent, together with any required payment
 for the Shares as described below under &#147;Payment for Shares.&#148; Rights may also be
 exercised by a Stockholder&#146;s contacting his or her broker, bank, trust company
 or other nominee, which can arrange, on the Stockholder&#146;s behalf, to guarantee
 delivery (using a &#147;Notice of Guaranteed Delivery&#148;) of a properly completed and executed
 Subscription Certificate and payment for the Shares. The broker, bank, trust company
 or other nominee may charge a fee for this service. Fractional Shares will not be
 issued. Completed Subscription Certificates must be received by the Subscription
 Agent prior to 5:00 p.m., Eastern time, on the Expiration Date (unless payment is
 to be effected by means of a Notice of Guaranteed Delivery (see &#147;Payment for Shares&#148;))
 at the offices of the Subscription Agent.</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="6%"><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2"><i>Stockholders
 who are Record Owners</i>. Stockholders who are record owners can choose between
 either option set forth below under &#147;Payment for Shares.&#148; If time is of the essence,
 option (1) will permit delivery of the Subscription Certificate and payment after
 the Expiration Date.</font></td>
</tr>
<tr>
<td colspan="2"><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2"><i>Investors
 Whose Shares Are Held Through A Nominee</i>. Stockholders whose shares are held
 by a Nominee such as a broker, bank or trust company, must contact that Nominee
 to exercise their Rights. In that case, the Nominee will complete the Subscription
 Certificate on behalf of the Stockholder and arrange for proper payment by one of
 the methods set forth below under &#147;Payment for Shares.&#148;</font></td>
</tr>
<tr>
<td colspan="2"><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2"><i>Nominees</i>.
Nominees, who hold shares for the account of others, should notify the respective
 beneficial owners of such shares as soon as possible to ascertain such beneficial
 owners&#146; intentions and to obtain instructions with respect to the Rights. If
 the beneficial owner so instructs, the Nominee should complete the Subscription
 Certificate and submit it to the Subscription Agent, together with the proper payment
 described below under &#147;Payment for Shares.&#148;</font></td>
</tr>
</table>
<p align="justify"><font face="Times New Roman" size="2"><b>Payment for Shares</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Stockholders
 who acquire Shares in the Primary Subscription or pursuant to the Over-Subscription
 Privilege may choose between the following methods of payment:</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="8%" valign="top" align="right"><font face="Times New Roman" size="2">(1)</font></td>
<td width="4%" valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><p align="justify"><font face="Times New Roman" size="2">If, prior
 to 5:00 p.m., Eastern time, on the Expiration Date, the Subscription Agent has received
 a Notice of Guaranteed Delivery by facsimile or otherwise, from a bank, trust company
 or New York Stock Exchange (&#147;NYSE&#148;) member firm, guaranteeing delivery of (a) payment
 of the full Subscription Price for the Shares subscribed for in the Primary Subscription
 and any additional Shares subscribed for through the Over-Subscription Privilege
 and (b) a properly completed and executed Subscription Certificate, the subscription
 will be accepted by the Subscription Agent. The Subscription Agent will not honor
 a Notice of Guaranteed Delivery if a properly completed and executed Subscription
 Certificate together with full payment is not received by the Subscription Agent
 by the close of business on the third (3<sup>rd</sup>) business day after the Expiration
 Date (June 15, 2005 unless the offer is extended).</font></p></td>
</tr>
<tr>
<td colspan="4" valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="right"><font face="Times New Roman" size="2">(2)</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="left"><p align="justify"><font face="Times New Roman" size="2">Alternatively,
 a record owner can send payment for the Shares acquired in the Primary Subscription
 and any additional Shares subscribed for pursuant to the OverSubscription Privilege,
 together with the Subscription Certificate, to the Subscription Agent based on an
 assumed Subscription Price of $8.50 per Share. To be accepted, such payment, together
 with the Subscription Certificate, must be received by the Subscription Agent prior
 to 5:00 p.m., Eastern time, on the Expiration Date.</font></p></td>
</tr>
</table>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><b>IF THE
 SECOND METHOD DESCRIBED ABOVE IS USED, PAYMENT BY CHECK CERTIFICATE OR MONEY ORDER
 MUST ACCOMPANY ANY SUBSCRIPTION CERTIFICATE FOR THE SUBSCRIPTION TO BE ACCEPTED.</b></font></p>
<p align="center"><font face="Times New Roman" size="2">12</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><b>Stockholders
 will have no right to rescind their subscription after receipt by the Subscription
 Agent of a Notice of Guaranteed Delivery or their payment for Shares, except as
 provided below under &#147;Notice of Net Asset Value Decline / Possible Suspension or
 Withdrawal of the Offer.&#148;</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><b>The method
 of delivery of Subscription Certificates and payment of the Subscription Price to
 the Fund will be at the election and risk of the Rights holders, but if sent by
 mail it is recommended that such Subscription Certificates and payment be sent by
 registered mail, properly insured, with return receipt requested, and that a sufficient
 number of days be allowed to ensure delivery to the Fund and clearance of payment
 prior to 5:00 p.m., Eastern time, on the Expiration Date. Because uncertified personal
 checks may take at least five business days to clear and may, at the discretion
 of the Fund, not be accepted if not cleared prior to the Expiration Date, you are
 strongly encouraged to pay, or arrange for payment, by means of certified or bank
 cashier&#146;s check or a money order.</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">A confirmation
 will be sent by the Subscription Agent to each Stockholder (or, if the Fund&#146;s
 Shares on the Record Date are held by a Nominee, to such Nominee) by June 20, 2005,
 showing (i) the number of Shares acquired pursuant to the Primary Subscription;
 (ii) the number of Shares, if any, acquired through the Over-Subscription Privilege;
 (iii) the per Share and total purchase price for the Shares; and (iv) any additional
 amount payable by the Stockholder to the Fund or any excess to be refunded by the
 Fund to the Stockholder, in each case based on the Subscription Price as determined
 on the Pricing Date. Any additional payment required from a Stockholder must be
 received by the Subscription Agent within ten (10) days after the Confirmation Date.
 Any excess payment to be refunded by the Fund to a Stockholder will be mailed by
 the Subscription Agent to such Stockholder as promptly as possible within ten (10)
 business days after the Confirmation Date. All payments by a Stockholder must be
 made in United States dollars by money order or check drawn on a bank located in
 the United States of America and payable to ROYCE FOCUS TRUST, INC.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Issuance and
 delivery of certificates for the Shares purchased are subject to collection of checks
 and actual payment through any Notice of Guaranteed Delivery.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">If a Stockholder
 who acquires Shares pursuant to the Primary Subscription or Over-Subscription Privilege
 does not make payment of all amounts due by the 10<sup>th</sup> day after the Confirmation
 Date, the Fund reserves the right to (i) find other purchasers for such subscribed
 and unpaid Shares; (ii) apply any payment actually received by it toward the purchase
 of the greatest number of whole Shares which could be acquired by such Stockholder
 upon exercise of the Primary Subscription and/or Over-Subscription Privilege; and/or
 (iii) exercise any and all other rights and/or remedies to which it may be entitled,
 including, without limitation, the right to set-off against payments actually received
 by it with respect to such subscribed Shares.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">All questions
 concerning the timeliness, validity, form and eligibility of any exercise of Rights
 will be determined by the Fund, whose determinations will be final and binding.
 The Fund in its sole discretion may waive any defect or irregularity, or permit
 a defect or irregularity to be corrected within such time as it may determine, or
 reject the purported exercise of any Right. Subscriptions will not be deemed to
 have been received or accepted until all irregularities have been waived or cured
 within such time as the Fund determines in its sole discretion. The Fund will not
 be under any duty to give notification of any defect or irregularity in connection
 with the submission of Subscription Certificates or incur any liability for failure
 to give such notification.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Notice of Net Asset Value Decline / Possible
 Suspension or Withdrawal of the Offer</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund has,
 as required by the SEC&#146;s registration form, undertaken to suspend the Offer
 until it amends this Prospectus if, subsequent to April 28, 2005, the effective
 date of the Fund&#146;s Registration Statement, the Fund&#146;s NAV declines more
 than 10% from its NAV, adjusted for any distributions, as of April 28, 2005. Accordingly,
 the Fund will notify Stockholders of any such decline and thereby permit them to
 cancel their exercise of Rights.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Delivery of Share Certificates</b></font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Participants
 in the Fund&#146;s Distribution Reinvestment and Cash Purchase Plan (the &#147;Plan&#148;)
 will have any Shares acquired in the Primary Subscription and pursuant to the Over-Subscription
 Privilege credited to their</font></p>
<p align="center"><font face="Times New Roman" size="2">13</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify"><font face="Times New Roman" size="2">accounts in the Plan. Stock certificates will not be
 issued for Shares credited to Plan accounts. Stockholders whose Shares are held of record by a Nominee on
 their behalf will have any Shares acquired in the Primary Subscription and pursuant
 to the Over-Subscription Privilege credited to the account of such Nominee. For
 all other Stockholders, stock certificates for all Shares acquired will be mailed
 promptly after full payment for the subscribed Shares has been received and cleared.
</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Federal Income Tax Consequences of the
 Offer</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Stockholders
 who receive Rights pursuant to the Offer will not recognize taxable income for U.S.
 Federal income tax purposes upon their receipt of the Rights. If Rights issued to
 a Stockholder expire without being exercised, no basis will be allocated to such
 Rights, and such stockholder will not recognize any gain or loss for U.S. Federal
 income tax purposes upon such expiration.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The tax basis
 of a Stockholder&#146;s Common Stock will remain unchanged, and the Stockholder
&#146;s basis in the Rights will be zero. A Stockholder who exercises Rights will
 not recognize any gain or loss for U.S. Federal income tax purposes upon the exercise.
 The basis of the newly acquired Common Stock will equal the Subscription Price paid
 for the Common Stock. Upon a sale or exchange of the Common Stock so acquired, the
 Stockholder will recognize gain or loss measured by the difference between the proceeds
 of the sale or exchange and the cost basis of such Common Stock. Assuming the Stockholder
 holds the Common Stock as a capital asset, any gain or loss realized upon its sale
 will generally be treated as a capital gain or loss, which gain or loss will be
 short-term or long-term, depending on the length of the Stockholder&#146;s holding
 period for such Common Stock. However, any loss recognized upon the sale of shares
 of Common Stock with a tax holding period of 6 months or less will be treated as
 a long-term capital loss to the extent of any capital gain distribution previously
 received by the Stockholder with respect to such Shares, and a loss may be disallowed
 under wash sale rules to the extent that the Stockholder purchases additional Common
 Stock (including by reinvestment of distributions) within 30 days before or after
 the sale date. The holding period for Common Stock acquired upon the exercise of
 Rights will begin on the date of exercise of the Rights.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The foregoing
 is a summary of the material U.S. Federal income tax consequences of the Offer under
 the provisions of the U.S. Internal Revenue Code of 1986, as amended (the &#147;Code&#148;),
 and applicable existing and proposed regulations thereunder, all as currently in
 effect and all subject to change at any time, perhaps with retroactive effect. It
 does not include any state, local or foreign tax consequences of the Offer. This
 summary is generally applicable to Stockholders that are United States persons as
 defined in the Code. Further, this summary is not intended to be, nor should it
 be, construed as legal or tax advice, and stockholders are urged to consult their
 own tax advisors to determine the tax consequences to them of the Offer and their
 ownership of Rights and Common Stock.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Dilution</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">If you do
 not fully exercise your Rights, you should expect that you will, at the completion
 of the Offer, own a smaller proportional interest in the Fund than would otherwise
 be the case if you exercised your Rights. We cannot determine the extent of this
 dilution at this time because we do not know what proportion of the Fund&#146;s
 Shares will be purchased as a result of the Offer.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">You may experience
 dilution in your holdings because you will indirectly bear the expenses of the Offer.
 Further, if you do not submit subscription requests pursuant to the Over-Subscription
 Privilege, you may also experience dilution in your holdings if the Fund offers
 Additional Shares for subscription. We cannot state precisely the amount of any
 such decrease in NAV because we do not know at this time how many Shares will be
 subscribed for or what the NAV or market price per share will be at the Pricing
 Date. As of April 15, 2005, the Fund&#146;s shares traded at a 2.9% premium above
 NAV. If the Fund&#146;s shares trade at a premium above NAV as of the Pricing Date,
 the Fund estimates that such dilution would be minimal. See &#147;Risk Factors and Special
 Considerations at a Glance - Dilution - Net Asset Value and Non-Participation in
 the Offer.&#148; Except as described in this Prospectus, you will have no right to rescind
 your subscription requests after receipt by the Subscription Agent of your payment
 for Shares or a Notice of Guaranteed Delivery.</font></p>
<p align="center"><font face="Times New Roman" size="2">14</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify"><font face="Times New Roman" size="2"><b>Other Rights Offerings</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund may
 have similar rights offerings in the future. Any such future rights offerings would
 be separately registered with the SEC and made by means of separate prospectuses.
</font></p>
<p align="center"><font face="Times New Roman" size="2"><b>USE OF PROCEEDS</b></font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">We estimate
 the net proceeds of the Offer to be approximately $18,410,733 ($22,132,875 if all
 of the Additional Shares are available for subscription). These figures assume (i)
 all Rights are exercised in full, (ii) a Subscription Price of $8.50 and (iii) payment
 of offering expenses of approximately $200,000. Royce expects to invest the net
 proceeds of the Offer in accordance with the Fund&#146;s investment goal and policies
 and anticipates that such investment will take up to six months from June 30, 2005,
 depending on market conditions and the availability of appropriate securities. Pending
 investment, the net proceeds of the Offer will be held in the types of short-term
 debt securities and instruments in which the Fund may invest. See &#147;Investment Goal
 and Policies - Investment Methods/Policies.&#148; As a result of this short-term investment
 of the proceeds, a lower yield may be realized.</font></p>
<p align="center"><font face="Times New Roman" size="2"><b>THE FUND</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund is
 a closed-end diversified management investment company. It was incorporated under
 the name &#147;America&#146;s All Season Fund, Inc.&#148; under the laws of the State of Maryland
 on October 30, 1987 and registered under the 1940 Act. The Fund commenced operations
 in March 1988. Since November 1, 1996, when Royce became its investment adviser,
 the Fund&#146;s investment goal has been long-term capital growth. The Fund&#146;s
 principal office is located at 1414 Avenue of the Americas, New York, New York 10019,
 and its telephone number is (800) 221-4268.</font></p>
<p align="center"><font face="Times New Roman" size="2"><b>INVESTMENT GOAL, POLICIES
 AND RISKS</b></font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Investment Goal</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund&#146;s
 investment goal and one of its fundamental policies is long-term capital growth.
 Royce normally invests at least 65% of the Fund&#146;s assets in equity securities.
 Royce uses a value approach to invest the Fund&#146;s assets in a limited number
 of domestic and foreign companies. While the Fund is not restricted as to stock
 market capitalization, Royce focuses the Fund&#146;s investments primarily in small-cap
 companies (companies with stock market capitalizations between $500 million and
 $2.5 billion) and micro-cap companies (companies with stock market capitalizations
 below $500 million) with significant business activities in the United States. Stock
 market capitalization is calculated by multiplying the total number of common shares
 issued and outstanding by the per share market price of the common stock.</font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund may
 invest up to 35% of its assets in direct obligations of the U.S. Government or its
 agencies and in the non-convertible preferred stocks and debt securities of domestic
 and foreign companies.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">There are
 market risks inherent in any investment, and no assurance can be given that the
 Fund&#146;s investment goal will be achieved.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Investment Policies</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Royce invests
 the Fund&#146;s assets primarily in a limited number of companies selected using
 a value approach. While it does not limit the stock market capitalizations of the
 companies in which the Fund may invest, Royce has historically focused on small-cap
 and micro-cap equity securities.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Royce uses
 a value method in managing the Fund&#146;s assets. In selecting equity securities
 for the Fund, Royce evaluates the quality of a company&#146;s balance sheet, the
 level of its cash flows and various measures of a company&#146;s profitability.
 Royce then uses these factors to assess the company&#146;s current worth, basing
 this assessment on either what it believes a knowledgeable buyer might pay to acquire
 the entire company or what it thinks the value</font></p>
<p align="center"><font face="Times New Roman" size="2">15</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify"><font face="Times New Roman" size="2">of the company should be in the stock market. This analysis takes a number of factors into consideration, including the
 company&#146;s future growth prospects and current financial condition.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Royce invests
 in the equity securities of companies that are trading significantly below its estimate
 of the company&#146;s &#147;current worth&#148; in an attempt to reduce the risk of overpaying
 for such companies. Royce&#146;s value approach strives to reduce some of the other
 risks of investing in small-cap companies (for the Fund&#146;s portfolio taken as
 a whole) by evaluating various other risk factors. Royce attempts to lessen financial
 risk by buying companies with strong balance sheets. While no assurance can be given
 that this risk-averse value approach will be successful, Royce believes that it
 can reduce some of the risks of investing in the securities of small-cap companies,
 which are inherently fragile in nature and whose securities have substantially greater
 market price volatility. Although Royce&#146;s approach to security selection seeks
 to reduce downside risk to the Fund&#146;s portfolio, especially during periods
 of broad small-cap market declines, it may also potentially have the effect of limiting
 gains in strong small-cap up markets.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>Foreign
 Investments</i>. The Fund invests a portion of its assets in securities of foreign
 issuers. In most instances, investments will be made in companies principally based,
 or whose securities are traded in, the United States or the other developed countries
 of North America, Europe, Asia, Australia and New Zealand and not in emerging markets
 countries.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Foreign investments
 involve certain risks which typically are not present in securities of domestic
 issuers. 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. Foreign securities
 may be less liquid and may be subject to greater price volatility than domestic
 securities. Foreign investments also may be subject to local economic and political
 risks which might adversely affect the Fund&#146;s ability to realize on its investment
 in such securities. No assurance can be given that Royce will be able to anticipate
 these potential events or counter their effects.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund does
 not expect to purchase or sell foreign currencies to hedge against declines in the
 U.S. dollar or to lock in the value of the foreign securities it purchases, and
 its foreign investments may be adversely affected by changes in foreign currency
 rates. Consequently, the risks associated with such investments may be greater than
 if the Fund did engage in foreign currency transactions for hedging purposes.</font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Income earned
 or received by the Fund from sources within foreign countries may be subject to
 withholding and other taxes imposed by such countries. See &#147;Taxation&#148; below and
 in the Statement of Additional Information.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>Depositary
 Receipts</i>. The Fund may invest in the securities of foreign issuers in the form
 of sponsored or unsponsored ADRs, European Depositary Receipts (&#147;EDRs&#148;) and Global
 Depositary Receipts (&#147;GDRs&#148;) (collectively, &#147;Depositary Receipts&#148;) or other securities
 exchangeable for securities of foreign issuers. Depositary Receipts may not necessarily
 be denominated in the same currency as the underlying securities for which they
 may be exchanged. ADRs are receipts typically issued by an American bank or trust
 company that evidence ownership of underlying securities issued by a foreign corporation.
 EDRs are receipts issued in Europe that evidence a similar ownership arrangement.
 GDRs are receipts issued throughout the world that evidence a similar arrangement.
 Generally, ADRs, in registered form, are designed for use in the U.S. securities
 markets, and EDRs, in bearer form, are designed for use in European securities markets.
 GDRs are tradeable both in the U.S. and in Europe and are designed for use throughout
 the world. Depositary Receipts are alternatives to the purchase of the underlying
 foreign securities in their national markets and currencies. The Fund may invest
 in unsponsored Depositary Receipts. The issuers of unsponsored Depositary Receipts
 are not obligated to disclose material information in the United States and, therefore,
 there may be less information available regarding such issuers and there may not
 be a correlation between such information and the market value of the Depositary
 Receipts. Depositary Receipts also involve the risks associated with other investments
 in foreign securities, as discussed above.</font></p>
<p align="center"><font face="Times New Roman" size="2">16</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>Fixed Income
 Securities</i>. Up to 35% of the Fund&#146;s assets may be invested in direct obligations
 of the U.S. Government or its agencies and in non-convertible preferred stocks and
 debt securities of various domestic and foreign issuers, including up to 5% of its
 assets in below investment-grade debt securities, also known as high-yield/high-risk
 securities. There are no limits on the maturity or duration of the fixed income
 securities in which the Fund may invest.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Two of the
 main risks of investing in fixed income securities are credit risk and interest
 rate risk. Below investment-grade debt securities may be in the lowest-rated categories
 of recognized rating agencies (C in the case of Moody&#146;s or D in the case of
 S&#038;P) or may be unrated. Such high-yield/high-risk investments are primarily
 speculative and may entail substantial risk of loss of principal and non-payment
 of interest, but may also produce above-average returns for the Fund. Debt securities
 rated C or D may be in default as to the payment of interest or repayment of principal.
 As of the date of this Prospectus, interest rates are near historical lows, which
 makes it more likely that they will increase in the future, which could, in turn,
 result in a decline in the market value of the fixed income securities held by the
 Fund.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>Warrants,
 Rights or Options</i>. The Fund may invest up to 5% of its assets in warrants, rights
 or 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 in the underlying security. A put option gives the holder
 the right to sell a particular security at a specified price during the term of
 the option. These securities have no voting rights, pay no dividends and have no
 liquidation rights. In addition, market prices of warrants, rights or call options
 do not necessarily move parallel to the market prices of the underlying securities;
 market prices of put options tend to move inversely to the market prices of the
 underlying securities.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>Securities
 Lending</i>. The Fund may lend up to 25% of its assets to brokers, dealers and other
 financial institutions. However, under the Rating Agency Guidelines, the Fund may
 not lend portfolio securities in excess of 15% of its total assets. See &#147;Preferred
 Stock - Rating Agency Guidelines&#148; below. The Rating Agency Guidelines may in the
 future be amended to permit the Fund to lend a greater percentage of its total assets.
 Securities lending allows the Fund to retain ownership of the securities loaned
 and, at the same time, to earn additional income. Since there may be delays in the
 recovery of loaned securities or even a loss of rights in collateral supplied should
 the borrower fail financially, loans will be made only to parties that participate
 in a global securities lending program organized and monitored by the Fund&#146;s
 custodian and who are deemed by it to be of good standing. Furthermore, such loans
 will be made only if, in Royce&#146;s judgment, the consideration to be earned from
 such loans would justify the risk.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The current
 view of the staff of the SEC is that a fund may engage in such loan transactions
 only under the following conditions: (i) the fund must receive 100% collateral in
 the form of cash or cash equivalents (e.g., U.S. Treasury bills or notes) from the
 borrower; (ii) the borrower must increase the collateral whenever the market value
 of the securities loaned (determined on a daily basis at the close of regular trading)
 rises above the value of the collateral; (iii) after giving notice, the fund must
 be able to terminate the loan at any time; (iv) the fund must receive reasonable
 interest on the loan or a flat fee from the borrower, as well as amounts equivalent
 to any dividends, interest or other distributions on the securities loaned; (v)
 the fund may pay only reasonable custodian fees in connection with the loan; and
 (vi) the fund must be able to vote proxies on the securities loaned, either by terminating
 the loan or by entering into an alternative arrangement with the borrower.</font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>Reverse
 Repurchase Agreements</i>. The Fund is also authorized to enter into reverse repurchase
 agreements. However, the Rating Agency Guidelines prohibit such transactions. Such
 agreements involve the sale of securities held by the Fund pursuant to an agreement
 to repurchase the securities at an agreed-upon price, date and interest payment.
 When effecting reverse repurchase transactions, liquid securities of a dollar amount
 equal in value to the securities subject to the agreement are required to be maintained
 in a segregated account with the Fund&#146;s custodian bank, and the reverse repurchase
 agreement is required to be marked to market each day.</font></p>
<p align="center"><font face="Times New Roman" size="2">17</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>Temporary
 Investments</i>. The assets of the Fund are normally invested as described above.
 However, for temporary defensive purposes (i.e., when Royce determines that market
 conditions warrant) or when it has uncommitted cash balances, the Fund may also
 invest in U.S. Treasury bills, domestic bank certificates of deposit, repurchase
 agreements with recognized securities dealers and banks covering U.S. Treasury and
 agency obligations having a term of not more than one week, high-quality commercial
 paper and money market funds registered under the 1940 Act or retain all or part
 of its assets in cash. Accordingly, the composition of the Fund&#146;s portfolio
 may vary from time to time.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Repurchase
 agreements are in effect loans by the Fund to a securities dealer or bank counterparty,
 and the agreements for such transactions require the counterparty to maintain securities
 having a value at least equal to the amount loaned as collateral. Repurchase agreements
 could involve certain risks if the counterparty defaults or becomes insolvent, including
 possible delays or restrictions upon the Fund&#146;s ability to dispose of collateral.
</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Changes in Investment Goal and Policies
</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund&#146;s
 investment goal of long-term capital growth is a fundamental policy of the Fund
 and may not be changed without approvals of the holders of a majority of the Fund
&#146;s outstanding shares of Common Stock and 6.00% Preferred Stock and any other
 Preferred Stock, voting together as a single class, and a majority of the 6.00%
 Preferred Stock and any other Preferred Stock, voting as a separate class (which
 for this purpose and under the 1940 Act means the lesser of (i) 67% or more of the
 relevant shares of capital stock of the Fund present or represented at a meeting
 of stockholders, at which the holders of more than 50% of the outstanding relevant
 shares of capital stock are present or represented, or (ii) more than 50% of the
 outstanding relevant shares of capital stock of the Fund). Except as indicated under
 &#147;Investment Restrictions&#148; in the Statement of Additional Information, the Fund does
 not consider its other policies to be fundamental, and such policies may be changed
 by the Board of Directors without stockholder approval or prior notice to stockholders.
</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund&#146;s
 investment policies are subject to certain restrictions. See &#147;Investment Restrictions&#148;
 in the Statement of Additional Information.</font></p>
<p align="center"><font face="Times New Roman" size="2">________________</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Risk Factors - Investing in Small- and
 Micro-Cap Companies</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Royce views
 the large and diverse universe of small-cap companies as having two investment segments
 or tiers. Royce defines small-cap as those companies with market capitalizations
 between $500 million and $2.5 billion; it refers to the segment with market capitalizations
 less than $500 million as micro-cap.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The securities
 of small- and micro-cap companies offer investment opportunities and additional
 risks. They may not be well known to the investing public, may not be significantly
 owned by institutional investors and may not have steady earnings growth. In addition,
 the securities of such companies may be more volatile in price, have wider spreads
 between their bid and ask prices and have significantly lower trading volumes than
 larger capitalization stocks. As a result, the purchase or sale of more than a limited
 number of shares of a small- or micro-cap security may affect its market price.
 Royce may need a considerable amount of time to purchase or sell its positions in
 these securities, particularly when other accounts managed by Royce or other investors
 are also seeking to purchase or sell them. Accordingly, Royce&#146;s investment
 focus on small- and micro-cap companies generally requires it to have a long-term
 (at least three years) investment outlook for a portfolio security.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The micro-cap
 segment consists of more than 5,900 companies. These companies are followed by relatively
 few, if any, securities analysts, and there tends to be less publicly available
 information about them. Their securities generally have even more limited trading
 volumes and are subject to even more abrupt or erratic market price movements than
 are the securities in the upper tier, and Royce may be able to deal with only a
 few market-makers when purchasing and selling these securities. Such companies may
 also have limited markets, financial resources or product lines, may lack management
 depth and may be more vulnerable to adverse business or market developments. These
 conditions, which create greater opportunities to find securities trading well below
 Royce&#146;s estimate of the company&#146;s current worth, also involve increased
 risk. This may lead Royce to hold proportionately smaller positions in more companies
 in the micro-cap segment.</font></p>
<p align="center"><font face="Times New Roman" size="2">18</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The upper
 tier of the small-cap universe of securities consists of approximately 1,800 companies.
 In this segment, there is a relatively higher level of ownership by institutional
 investors and more research coverage by securities analysts than generally exists
 for micro-cap companies. This greater attention makes the market for these securities
 more efficient than that of micro-cap companies because they have somewhat greater
 trading volumes and narrower bid/ask spreads. As a result, Royce normally holds
 proportionately larger positions in a relatively limited number of securities in
 the upper-tier of small-caps.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Risk Factors - Risk of Investing in a
 Limited Number of Companies</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Because the
 Fund invests in a limited number of companies, developments affecting an individual
 issuer are likely to have a greater impact on the Fund&#146;s net asset value and
 the market price of its Common Stock.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Risks to Common Stockholders of Borrowing
 Money and Issuing Senior Securities</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>General</i>. The 1940 Act and the Fund&#146;s fundamental policies (see &#147;Investment Restrictions&#148;
 in the Statement of Additional Information) permit the Fund to issue and sell senior
 securities representing indebtedness or consisting of Preferred Stock if various
 requirements are met. Such requirements include initial asset coverage tests of
 300% for indebtedness (see &#147;Risk Factors and Special Considerations - Risks to Common
 Stockholders of Borrowing Money and Issuing Senior Securities - Asset Coverage Test&#148;
 in the Statement of Additional Information) and 200% for Preferred Stock and restrictive
 provisions concerning Common Stock dividend payments, other Common Stock distributions,
 stock repurchases and maintenance of asset coverage and giving certain senior security
 holders the right to elect directors in the event specified asset coverage tests
 are not met or dividends are not paid. As of December 31, 2004, the aggregate
 involuntary liquidation preference of the 6.00% Preferred Stock was $25 million.
 At this level, a decrease of 62% of the Fund&#146;s total assets (including preferred
 assets) or 53% of its net assets applicable to common stockholders would be necessary
 to reduce the asset coverage for the 6.00% Preferred Stock to less than 200%. The
 issuance and sale of senior securities allows the Fund to raise additional cash
 for investments. It is a speculative investment technique, involving the risk considerations
 of leverage and increased share price volatility. So long as the 6.00% Preferred
 Stock is rated by Moody&#146;s, the Fund cannot borrow for investment leverage purposes.
</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>Borrowings</i>.
The following factors could increase the investment risk and the volatility
 of the price of the Fund&#146;s shares of Common Stock: (i) leveraging exaggerates
 any increase or decrease in the value of the Fund&#146;s portfolio; (ii) the costs
 of borrowing may exceed the income from the portfolio securities purchased with
 the borrowed money; (iii) a decline in NAV results if the investment performance
 of the additional securities purchased fails to cover their cost to the Fund (including
 any interest paid on the money borrowed); (iv) a decline in NAV could affect the
 ability of the Fund to make Common Stock dividend payments; (v) a failure to pay
 net investment income dividends or make capital gains distributions could result
 in the Fund&#146;s ceasing to qualify as a regulated investment company under the
 Code, or in its having to pay certain entity level taxes even if it maintains its
 status as a regulated investment company (see &#147;Taxation&#148; in this Prospectus and
 in the Statement of Additional Information); and (vi) if the asset coverage for
 debt securities declines to less than 300% (as a result of market fluctuations or
 otherwise), the Fund may be required to sell a portion of its investments when it
 may be disadvantageous to do so.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>Preferred
 Stock</i>. The 6.00% Preferred Stock and any other Preferred Stock issued by the
 Fund may result in higher volatility of the NAV of the Common Stock and potentially
 more volatility in the market price of the Common Stock. Holders of Common Stock
 will realize a higher current rate of return than if the Fund were not leveraged
 only so long as the Fund, after accounting for its costs and operating expenses,
 is able to realize a higher net return on its investment portfolio than the then
 current dividend rates paid on Preferred Stock. To the extent that the dividend
 rates on Preferred Stock approach the net return on the Fund&#146;s investment portfolio,
 the benefit of leverage to holders of Common Stock will be decreased. (If the dividend
 rates on Preferred Stock were to exceed the net return on the Fund&#146;s portfolio,
 holders of Common Stock would receive a lower rate of return than if the Fund were
 not leveraged.) Similarly, since both the cost of issuing Preferred Stock and any
 decline in the value of the Fund&#146;s investments (including investments purchased
 with the proceeds from Preferred Stock offerings) is borne entirely by holders of
 Common Stock, the effect of leverage in a declining market would result in a greater
 decrease in NAV to holders of Common Stock than if the Fund were not leveraged.
 Such decrease in NAV likely would be reflected in a greater decline in the market
 price for shares of the Fund&#146;s Common Stock. If the Fund is liquidated, holders
 of Preferred Stock will be entitled to receive liquidating distributions before
 any distribution is made to holders of Common Stock. Redemption of Preferred Stock
 or insufficient investment income to make dividend</font></p>
<p align="center"><font face="Times New Roman" size="2">19</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify"><font face="Times New Roman" size="2">payments may reduce the NAV of
 the Common Stock by requiring the Fund to liquidate a portion of its investments
 at a time when it may be disadvantageous to do so.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">In an extreme
 case, a decline in NAV could affect the Fund&#146;s ability to pay dividends on
 the Common Stock. Failure to make such dividend payments could adversely affect
 the Fund&#146;s qualification as a regulated investment company under the Code.
 See &#147;Taxation&#148; in this Prospectus and in the Statement of Additional Information.
 However, the Fund intends to take all measures necessary to make such Common Stock
 dividend payments. If the Fund&#146;s current investment income is ever insufficient
 to meet dividend payments on either the Common Stock or the Preferred Stock, the
 Fund may have to liquidate certain of its investments. In addition, the Fund will
 have the authority to redeem the 6.00% Preferred for any reason on or after October
 17, 2008, and may redeem all or part of the Preferred prior to such dates to the
 extent required by the 1940 Act and the terms of the Preferred. See &#147;Description
 of Capital Stock - Preferred Stock - Redemption.&#148;</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The class
 and other voting rights of the Preferred Stock could make it more difficult for
 the Fund to take certain actions that may, in the future, be proposed by the Board
 of Directors and/or the holders of Common Stock, such as (i) a merger, exchange
 of securities, liquidation or alteration of the rights of a class of the Fund&#146;s
 securities if such actions would be adverse to the Preferred Stock, (ii) converting
 the Fund to an open-end investment company or acting inconsistently with its fundamental
 investment restrictions or other fundamental policies or (iii) seeking to operate
 other than as an investment company.</font></p>
<p align="center"><font face="Times New Roman" size="2">________________</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">On December
 31, 2004, the Fund had 10,855,871 shares of Common Stock issued and outstanding,
 with an aggregate NAV of $9.75, and 1,000,000 shares of the 6.00% Preferred Stock,
 with an aggregate initial liquidation preference of $25,000,000, issued and outstanding,
 and no outstanding indebtedness. Accordingly, as of such date, the Fund could have,
 under the above policies and restrictions, issued and sold senior securities representing
 indebtedness of up to $65,426,296 or additional shares of Preferred Stock having
 an aggregate involuntary liquidation preference of up to $80,852,592 or various
 combinations of lesser amounts of both securities representing indebtedness and
 Preferred Stock.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>Effects
 of Preferred Stock Leverage on Common Stockholders</i>. Dividends are payable on
 the 6.00% Preferred Stock at the annual rate of 6.00%. The Fund&#146;s portfolio
 must experience a return of 1.1% after expenses for the year ending December 31,
 2005 in order to cover that year&#146;s dividend on the Preferred.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The fees paid
 to Royce for investment advisory services are higher than if the Fund did not have
 Preferred Stock outstanding because they are calculated on the basis of the Fund
&#146;s average net assets applicable to Common Stockholders plus the liquidation
 value of the Fund&#146;s outstanding Preferred Stock. See &#147;Investment Advisory and
 Other Services.&#148;</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The following
 table is designed to illustrate the effect on the return to a holder of the Fund&#146;s Common Stock of the leverage obtained with the 6.00% Preferred Stock, assuming
 hypothetical annual returns on the Fund&#146;s portfolio of minus 15% to plus 15%.
 As the table shows, leverage generally increases the return to stockholders when
 portfolio return is positive and decreases the return when portfolio return is negative.
 The figures appearing in the following table are hypothetical. Actual returns may
 be greater or less than those appearing in the table.</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td valign="bottom" align="left"><p style="margin-left:10px; text-indent:-10px;"><font face="Times New Roman" size="2">Assumed return
 on portfolio (net of expenses)</font></p></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td width="7%" valign="bottom" align="center"><font face="Times New Roman" size="2">-15%</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td width="7%" valign="bottom" align="center"><font face="Times New Roman" size="2">-10%</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td width="7%" valign="bottom" align="center"><font face="Times New Roman" size="2">-5%</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td width="7%" valign="bottom" align="center"><font face="Times New Roman" size="2">0%</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td width="7%" valign="bottom" align="center"><font face="Times New Roman" size="2">5%</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td width="7%" valign="bottom" align="center"><font face="Times New Roman" size="2">10%</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td width="7%" valign="bottom" align="center"><font face="Times New Roman" size="2">15%</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><p style="margin-left:10px; text-indent:-10px;"><font face="Times New Roman" size="2">Corresponding
 NAV return to Common Stockholder</font></p></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">-19.96</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">-13.78</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">-7.60</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">-1.42</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">4.76</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">10.94</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">17.13</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
</table>
<p align="center"><font face="Times New Roman" size="2"><b>INVESTMENT ADVISORY AND
 OTHER SERVICES</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Royce &#038;
 Associates, LLC (which term as used in this Prospectus includes its corporate predecessor)
 (&#147;Royce&#148;), a Delaware limited liability company, is an investment advisory firm
 whose predecessor was organized in February 1967. Royce is registered as an investment
 adviser under Investment Advisers Act of 1940, as amended. Royce became investment
 adviser of the Fund in November 1996. Royce also serves as investment adviser to
 other registered management investment companies and institutional accounts. As
 of December 31, 2004,</font></p>
<p align="center"><font face="Times New Roman" size="2">20</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify"><font face="Times New Roman" size="2">Royce managed approximately $22.7 billion in assets, including
 approximately $20.9 billion in open-end and closed-end fund assets. Substantially
 all of Royce&#146;s client accounts are managed as small- and micro-cap investment
 products.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">On October
 1, 2001, Royce became an indirect wholly-owned subsidiary of Legg Mason, Inc. (&#147;Legg Mason&#148;). On March 31, 2002, Royce&#146;s corporate predecessor was merged into Royce
 Holdings, LLC (a wholly-owned subsidiary of Legg Mason), which then changed its
 name to Royce &#038; Associates, LLC. As a result of this merger, Royce &#038; Associates,
 LLC became the Fund&#146;s investment adviser and a direct wholly-owned subsidiary
 of Legg Mason. Founded in 1899, Legg Mason is a publicly-held financial services
 company primarily engaged in providing asset management, securities brokerage, investment
 banking and related financial services through its subsidiaries. As of December
 31, 2004, Legg Mason&#146;s asset management subsidiaries had aggregate assets under
 management of approximately $360 billion.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Under the
 Fund&#146;s Articles of Incorporation, as amended and supplemented (the &#147;Charter&#148;),
 and Maryland law, the Fund&#146;s business and affairs are managed under the direction
 of its Board of Directors. Investment decisions for the Fund are made by Royce,
 subject to any direction it may receive from the Fund&#146;s Board of Directors,
 which periodically reviews the Fund&#146;s investment performance.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Portfolio Management</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Royce is responsible
 for the management of the Fund&#146;s assets. Royce has been investing in small-cap
 companies with a value approach for more than 30 years. Its offices are located
 at 1414 Avenue of the Americas, New York, NY 10019. Charles M. Royce has been the
 firm&#146;s President and Chief Investment Officer during this period.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Royce&#146;s
 investment staff includes Senior Portfolio Manager, Managing Director and Vice President,
 W. Whitney George, who is the Fund&#146;s portfolio manager. Mr. George has been
 a Portfolio Manager at Royce since 2000, and prior thereto was a Senior Analyst.
 He has been employed by Royce since 1991. Royce&#146;s investment staff also includes
 two other Senior Portfolio Managers, and 11 portfolio managers, assistant portfolio
 managers and analysts.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Statement
 of Additional Information provides additional information about the Fund&#146;s
 portfolio manager&#146;s compensation, other accounts managed by the portfolio manager
 and the portfolio manager&#146;s ownership of securities in the Fund.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Investment Advisory Agreement</b></font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Under the
 Investment Advisory Agreement between the Fund and Royce, Royce determines the composition
 of the Fund&#146;s portfolio, the nature and timing of the changes in it and the
 manner of implementing such changes; provides the Fund with investment advisory,
 research and related services for the investment of its assets; and pays all expenses
 incurred in performing its investment advisory duties under the Agreement.</font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund pays
 all of its own administrative and other costs and expenses attributable to its operations
 and transactions (except those set forth above), including, without limitation,
 registrar, transfer agent and custodian fees; legal, administrative and clerical
 services; rent for its office space and facilities; auditing; preparation, printing
 and distribution of its proxy statements, stockholder reports and notices; Federal
 and state registration fees; listing fees and expenses; Federal, state and local
 taxes; non-affiliated directors fees; interest on its borrowings; brokerage commissions;
 and the cost of issue, sale and repurchase of its shares. Thus, unlike most other
 investment companies, the Fund is required to pay substantially all of its expenses,
 and Royce does not incur substantial fixed expenses.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Advisory Fee</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">As compensation
 for its services under the Investment Advisory Agreement, Royce is entitled to receive
 a monthly fee equal to 1/12 of 1% (1% on an annualized basis) of the average of
 the net assets of the Fund (which includes net assets applicable to both Common
 Stock and Preferred Stock) for each month during the term of the agreement. Because
 the fee is computed based on the Fund&#146;s net assets and not on its total assets,
 Royce will not receive any fee in respect of those assets of the Fund equal to the
 aggregate unpaid principal amount of any</font></p>
<p align="center"><font face="Times New Roman" size="2">21</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify"><font face="Times New Roman" size="2">indebtedness of the Fund. However, because
 Preferred Stock is a form of equity for these purposes, Royce will receive a fee
 in respect of any assets of the Fund equal to the initial liquidation preference
 of and any potential redemption premium for any Preferred Stock that may be issued
 and sold by the Fund, including the 6.00% Preferred Stock.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Royce has
 voluntarily committed to waive the portion of its investment advisory fee attributable
 to an issue of the Fund&#146;s Preferred Stock for any month in which the Fund&#146;s
 average annual NAV total return since issuance of the Preferred Stock fails to exceed
 the applicable Preferred Stock&#146;s dividend rate.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Because Royce&#146;s
fee is based on the average net assets of the Fund (including net assets
 applicable to both Common Stock and Preferred Stock), Royce has generally benefited
 from the Fund&#146;s issuance of Preferred Stock.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Code of Ethics</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund&#146;s
 Board of Directors has approved a Code of Ethics under Rule 17j-1 of the 1940 Act
 that covers the Fund and Royce. The Code of Ethics establishes procedures for personal
 investing and restricts certain transactions. Employees subject to the Code of Ethics
 may invest in securities for their personal investment accounts, including, in certain
 cases, securities that may be purchased or held by the Fund. See &#147;Code of Ethics
 and Related Matters&#148; in the Statement of Additional Information.</font></p>
<p align="center"><font face="Times New Roman" size="2"><b>DESCRIPTION OF CAPITAL
 STOCK</b></font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>General</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund is
 authorized to issue 100,000,000 shares of Common Stock, par value $.001 per share,
 certain shares of which have been classified and designated as a series of Preferred
 Stock, as discussed below.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The following
 table shows as of April 15, 2005, the number of shares of: (i) capital stock authorized,
 (ii) capital stock held by the Fund for its own account and (iii) capital stock
 outstanding for each class of authorized securities of the Fund.</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2"><b>Title of
 Class</b></font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td width="18%" valign="bottom" align="center"><font face="Times New Roman" size="2"><b>Amount Authorized</b></font></td>
<td width="3%"><font face="Times New Roman" size="2">&#160;</font></td>
<td width="18%" valign="bottom" align="center"><font face="Times New Roman" size="2"><b>Amount
 Held by Fund for its Own Account</b></font></td>
<td width="3%"><font face="Times New Roman" size="2">&#160;</font></td>
<td width="18%" valign="bottom" align="center"><font face="Times New Roman" size="2"><b>Amount
 Outstanding (Exclusive of Amount Held by Fund for its Own Account)</b></font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><hr size="1" noshade color="#000000"></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><hr size="1" noshade color="#000000"></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><hr size="1" noshade color="#000000"></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Common Stock
</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom"><p style="margin-left:70px; text-indent:-10px;"><font face="Times New Roman" size="2">99,000,000
</font></p></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom"><p style="margin-left:95px; text-indent:-10px;"><font face="Times New Roman" size="2">0</font></p></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom"><p style="margin-left:70px; text-indent:-10px;"><font face="Times New Roman" size="2">10,947,490
</font></p></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">6.00% Cumulative
 Preferred Stock</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom"><p style="margin-left:76px; text-indent:-10px;"><font face="Times New Roman" size="2">1,000,000
</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom"><p style="margin-left:95px; text-indent:-10px;"><font face="Times New Roman" size="2">0</font></p></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom"><p style="margin-left:76px; text-indent:-10px;"><font face="Times New Roman" size="2">1,000,000
</font></p></td>
</tr>
</table>
<p align="justify"><font face="Times New Roman" size="2">See &#147;Investment Goal, Policies and Risks
 - Risks to Common Stockholders of Borrowing Money and Issuing Senior Securities.&#148;
</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Common Stock</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
<font face="Times New Roman" size="2"><i>General</i>. Each share of Common Stock has equal voting, dividend, distribution and liquidation
 rights. The shares of Common Stock outstanding are fully paid and non-assessable.
 The shares of Common Stock are not redeemable and have no preemptive, exchange,
 conversion or cumulative voting rights. Under Maryland law and the rules of the
 Nasdaq National Market System, the Fund generally is required to hold annual meetings
 of its stockholders.</font></p>
<p align="center"><font face="Times New Roman" size="2">22</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>Net Asset
 Values and Sales Prices. </i>The Fund&#146;s shares of Common Stock are listed and
 traded on Nasdaq under the symbol &#147;FUND.&#148; The following table sets forth for the
 periods indicated the high and low sales prices at the close of business on Nasdaq
 per share of Common Stock of the Fund, the NAV per share at the close of business
 on the dates of the market highs and lows and the number of shares traded.</font>
</p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center" colspan="9"><font face="Times New Roman" size="2"><b>Market Price Per Share
and Related<br> Discount (-)/Premium (+) <a href="#page23_(1)">(1)</a><a href="#page23_(2)">(2)</a>
</b></font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center" colspan="3"><font face="Times New Roman" size="2"><b>Net Asset Value Per Share on<br> Date of Market High and Low <a href="#page23_(3)">(3)</a></b></font></td>
<td width="3%"><font face="Times New Roman" size="2">&#160;</font></td>
<td width="10%" align="center"><font face="Times New Roman" size="2"><b>Reported Nasdaq Volume (mill sh.)</b></font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center" colspan="9"><hr size="1" noshade color="#000000"></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center" colspan="3"><hr size="1" noshade color="#000000"></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center"><hr size="1" noshade color="#000000"></td>
</tr>
<tr>
<td width="36%"><font face="Times New Roman" size="2"><b>Quarter Ended</b></font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center" colspan="4"><font face="Times New Roman" size="2"><b>High</b></font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center" colspan="4"><font face="Times New Roman" size="2"><b>Low</b></font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center"><font face="Times New Roman" size="2"><b>High</b></font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center"><font face="Times New Roman" size="2"><b>Low</b></font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center" colspan="4"><hr size="1" noshade color="#000000"></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center" colspan="4"><hr size="1" noshade color="#000000"></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center"><hr size="1" noshade color="#000000"></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center"><hr size="1" noshade color="#000000"></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td width="6%" valign="bottom" align="right"><font face="Times New Roman" size="2">-7.8</font></td>
<td width="1%" valign="bottom" align="left"><font face="Times New Roman" size="2">%</font></td>
<td width="2%"><font face="Times New Roman" size="2">&#160;</font></td>
<td width="6%" valign="bottom" align="right"><font face="Times New Roman" size="2">$4.98</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td width="1%" valign="bottom" align="left"><font face="Times New Roman" size="2">%</font></td>
<td width="3%"><font face="Times New Roman" size="2">&#160;</font></td>
<td width="9%" valign="bottom" align="center"><font face="Times New Roman" size="2">$6.39</font></td>
<td width="2%"><font face="Times New Roman" size="2">&#160;</font></td>
<td width="9%" valign="bottom" align="center"><font face="Times New Roman" size="2">$5.48</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">0.59</font></td>
</tr>
<tr>
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</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">-9.9</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">5.07</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">-13.8</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">7.66</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">5.88</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">2.45</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">September
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">6.73</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">-10.5</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">8.78</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">7.52</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">-5.2</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">7.68</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">-10.5</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">9.56</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">8.58</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">+0.9</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">-8.7</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">9.63</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">9.30</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">7.95</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">-12.0</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">9.94</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">9.03</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">1.66</font></td>
</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">-5.1</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">-7.7</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">9.96</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">9.22</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">1.83</font></td>
</tr>
<tr>
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
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<td valign="bottom" align="right"><font face="Times New Roman" size="2">+5.3</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">9.53</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">+1.2</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">11.05</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">9.42</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">3.74</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">March 31,
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<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">10.96</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">+12.5</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">9.32</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">+2.4</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">9.74</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">9.18</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td valign="bottom" align="center"><font face="Times New Roman" size="2">2.48</font></td>
</tr>
</table>
<font face="Times New Roman" size="2">_____________________________</font>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="4%" valign="top"><font face="Times New Roman" size="1"><a name="page23_(1)"></a>(1)</font></td>
<td valign="top" align="left"><font face="Times New Roman" size="1">Highest
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</tr>
<tr>
<td valign="top"><font face="Times New Roman" size="1"><a name="page23_(2)"></a>(2)</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="1">&#147;Related
 Discount (-) / Premium (+)&#148; represents the discount or premium from NAV of the shares
 on the close of business on the date of the high and low market price for the respective
 quarter.</font></td>
</tr>
<tr>
<td valign="top"><font face="Times New Roman" size="1"><a name="page23_(3)"></a>(3)</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="1">Based
 on the Fund&#146;s computations.</font></td>
</tr>
</table>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">As evidenced
 by the above table, the Fund&#146;s Common Stock has generally traded in the market
 below NAV. On February 16, 2005, when the Offer was publicly announced, the NAV
 per share of Common Stock at the close of business was $9.74, and the closing price
 on Nasdaq was $10.96, representing a premium of 12.5% above NAV. On April 15, 2005,
 such NAV was $8.49, and such closing price was $8.74, representing a premium of
 2.9% above NAV.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">There can
 be no assurance that the Common Stock will trade in the future at, above or below
 NAV.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>Distributions.</i> So long as any
shares of Preferred Stock are outstanding, holders of the Fund&#146;s Common Stock will not be entitled
 to receive any dividends or other distributions
 from the Fund unless all accumulated dividends on outstanding shares of Preferred
 Stock have been paid, and unless asset coverage (as defined in the 1940 Act) with
 respect to such Preferred Stock would be at least 200% after giving effect to such
 distributions.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>Net Asset
 Value. </i>The NAV of the Fund&#146;s shares of Common Stock is calculated at the
 close of regular trading on the NYSE (generally 4:00 p.m. Eastern time) every day
 that the NYSE is open. The Fund makes this information available daily by telephone
 (800-221-4268), via its web site (www.roycefunds.com) and through electronic distribution
 for media publication, including major internet-based financial services web sites
 and portals (bloomberg.com, yahoo.com, cbsmarketwatch.com, etc.) under the symbol
 XFUNX. Currently, <i>The Wall Street Journal</i>, <i>The New York Times</i> and
 <i>Barron&#146;s</i> publish NAVs for closed-end investment companies weekly.</font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The NAV per
 share of the Common Stock is calculated by dividing the current value of the Fund
&#146;s total assets less the sum of all of its liabilities and the aggregate liquidation
 preferences of its outstanding shares of Preferred Stock, by the total number of
 outstanding shares of Common Stock. The Fund&#146;s investments are valued based
 on market prices or, if market quotations are not readily available, at their fair
 value as determined in good faith under procedures established by the Fund&#146;s
 Board of Directors.</font></p>
<p align="justify"><font face="Times New Roman" size="2"><b>Preferred Stock</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>General</i>. The Fund&#146;s Board of Directors has authority to classify and reclassify
 any authorized but unissued shares of stock into other classes or series of stock,
 including Preferred Stock, and to cause the Fund to issue such shares. The terms
 of such Preferred Stock would be fixed by the Board of Directors and would materially
 limit and/or qualify the rights of the holders of the Fund&#146;s Common Stock.
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<p align="center"><font face="Times New Roman" size="2">23</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify"><font face="Times New Roman" size="2">classified and designated 1,000,000 shares
 of Common Stock as the 6.00% Cumulative Preferred Stock, par value $.001 per share.
 As of the date of this Prospectus, all 1,000,000 shares of the 6.00% Preferred Stock
 are issued and outstanding, constituting the only authorized series of Preferred
 Stock. The Board of Directors reserves the right to issue additional shares of the
 6.00% Preferred Stock or other Preferred Stock from time to time, subject to the
 restrictions in the Charter and the 1940 Act. The shares of the 6.00% Preferred
 Stock are fully paid and nonassessable and have no appraisal, preemptive, exchange
 or conversion rights. Any shares of the 6.00% Preferred Stock repurchased or redeemed
 by the Fund will be returned to the status of authorized but unissued Common Stock.
 The Fund may not issue any class of stock senior to the shares of the 6.00% Preferred
 Stock.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Under the
 1940 Act, the Fund is permitted to have outstanding more than one series of Preferred
 Stock so long as no single series has priority over another series as to the distribution
 of assets of the Fund or the payment of dividends. Holders of the Fund&#146;s Preferred
 do not have preemptive rights to purchase any shares of Preferred Stock that might
 be issued.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
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 as and if declared by the Board of Directors of the Fund out of funds legally available
 therefor, cumulative cash dividends at the annual rate of 6.00% per share of their
 initial liquidation preference of $25.00 per share, payable quarterly. The 6.00%
 Preferred Stock is listed and traded on the NYSE. If the Fund fails to pay dividends
 for two years or more, holders of the 6.00% Preferred Stock will acquire certain
 additional voting rights. See &#147;- Voting Rights&#148; below. Such rights will be their
 exclusive remedy for any such failure.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
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Prior to October 17, 2008, the Fund may not redeem the 6.00% Preferred Stock
 unless failure to do so would cause the Fund to fail to (i) satisfy the asset coverage
 test, (ii) maintain the discounted asset coverage required by Moody&#146;s or (iii)
 continue to qualify for tax treatment as a regulated investment company under the
 Code.</font></p>
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 October 17, 2008, shares of the 6.00% Preferred Stock will generally be redeemable
 at the option of the Fund at a price equal to their initial liquidation preference
 of $25.00 per share plus an amount equal to all unpaid dividends accumulated to
 and including the date fixed for such redemption (whether or not earned or declared)
 (the &#147;Redemption Price&#148;). Shares of the 6.00% Preferred Stock are subject to mandatory
 redemption at the Redemption Price upon the occurrence of certain specified events,
 such as the failure of the Fund to satisfy the asset coverage test or to maintain
 the discounted asset coverage for the 6.00% Preferred Stock required by Moody&#146;s
 in connection with their issuance of a rating on the 6.00% Preferred Stock.</font>
</p>
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 Rights</i>. Upon a liquidation, dissolution or winding up of the affairs of the
 Fund (whether voluntary or involuntary), holders of then outstanding shares of the
 6.00% Preferred Stock will be entitled to receive out of the assets of the Fund
 available for distribution to stockholders, after satisfying claims of creditors
 but before any distribution or payment of assets is made to holders of the Common
 Stock, a liquidation distribution in the amount of $25.00 per share plus an amount
 equal to all unpaid dividends accumulated to and including the date fixed for such
 distribution or payment (whether or not earned or declared by the Fund, but excluding
 interest thereon) (the &#147;Liquidation Preference&#148;), and such holders will be entitled
 to no further participation in any distribution payment in connection with any such
 liquidation, dissolution or winding up. If, upon any liquidation, dissolution or
 winding up of the affairs of the Fund, whether voluntary or involuntary, the assets
 of the Fund available for distribution among the holders of all outstanding shares
 of the 6.00% Preferred Stock and any other outstanding class or series of Preferred
 Stock ranking on a parity with the 6.00% Preferred Stock as to payment upon liquidation
 will be insufficient to permit the payment in full to such holders of the 6.00%
 Preferred Stock of the Liquidation Preference and the amounts due upon liquidation
 with respect to such other Preferred Stock, then such available assets will be distributed
 among the holders of the 6.00% Preferred Stock and such other Preferred Stock ratably
 in proportion to the respective preferential amounts to which they are entitled.
 Unless and until the Liquidation Preference has been paid in full to the holders
 of the 6.00% Preferred Stock, no dividends or distributions will be made to holders
 of the Common Stock or any other stock of the Fund ranking junior to the 6.00% Preferred
 Stock as to liquidation.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Upon any liquidation,
 the holders of the Common Stock, after required payments to the holders of Preferred
 Stock, will be entitled to participate equally and ratably in the remaining assets
 of the Fund.</font></p>
<p align="center"><font face="Times New Roman" size="2">24</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>Rating
 Agency Guidelines</i>. The Fund intends that, so long as shares of the 6.00% Preferred
 Stock are outstanding, the composition of its portfolio will reflect guidelines
 established by Moody&#146;s in connection with the Fund&#146;s receipt of a rating
 for the 6.00% Preferred Stock of Aaa from Moody&#146;s. Moody&#146;s issues ratings
 for various securities reflecting the perceived creditworthiness of those securities.
 The guidelines are designed to ensure that assets underlying outstanding debt or
 preferred stock will be sufficiently varied and will be of sufficient quality and
 amount to justify investment grade ratings. The guidelines do not have the force
 of law but have been adopted by the Fund in order to receive the above-described
 rating for shares of the 6.00% Preferred Stock, which rating is generally relied
 upon by investors in purchasing such securities. The guidelines provide a set of
 tests for portfolio composition and asset coverage that supplement (and in some
 cases are more restrictive than) the applicable requirements under the 1940 Act.
</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund intends
 to maintain a portfolio value at least equal to the discounted value of the assets
 in its portfolio which satisfies minimum values set by Moody&#146;s. Upon any failure
 to do this, the Fund will seek to alter the composition of its portfolio to satisfy
 Moody&#146;s. To the extent it is not able to do so in a timely basis, the Fund
 must redeem shares of the 6.00% Preferred Stock in accordance with their terms.
 Although there is no current intention to do so, under certain circumstances, without
 the vote of Stockholders, the Board of Directors may determine that it is not in
 the best interest of the Fund to continue to comply with the Moody&#146;s guidelines
 and in such event the 6.00% Preferred Stock will no longer be rated by Moody&#146;s.
</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">A securities
 rating is not a recommendation to buy, sell or hold securities and is subject to
 revision or withdrawal at any time by the assigning rating agency. Each rating should
 be evaluated independently of any other rating.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>Voting
 Rights. </i>Except as otherwise stated in this Prospectus and as otherwise required
 by applicable law, holders of shares of 6.00% Preferred Stock and any other Preferred
 Stock will be entitled to one vote per share on each matter submitted to a vote
 of stockholders and will vote together with holders of shares of Common Stock as
 a single class. Also, except as otherwise required by the 1940 Act, (i) holders
 of outstanding shares of 6.00% Preferred Stock will be entitled as a series, to
 the exclusion of the holders of all other securities, including any other hereafter
 issued Preferred, Common Stock and other classes of capital stock of the Fund, to
 vote on matters affecting the 6.00% Preferred Stock that do not materially adversely
 affect any of the contract rights of holders of such other securities, including
 other Preferred Stock, Common Stock and other classes of capital stock, as expressly
 set forth in the Fund&#146;s Charter, and (ii) holders of outstanding shares of
 the 6.00% Preferred Stock will not be entitled to vote on matters affecting any
 other Preferred Stock that do not materially adversely affect any of the contract
 rights of holders of such 6.00% Preferred Stock, as expressly set forth in the Charter.
 The foregoing voting provisions will not apply to any shares of the 6.00% Preferred
 Stock if, at or prior to the time when the act with respect to which such vote otherwise
 would be required will be effected, such shares will have been (i) redeemed or (ii)
 called for redemption and sufficient Funds set aside to effect such redemptions
 as required by the Charter.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">In connection
 with the election of the Fund&#146;s Directors, holders of shares of the 6.00% Preferred
 Stock and any other Preferred Stock, voting as a separate class, will be entitled
 at all times to elect two of the Fund&#146;s Directors, and the remaining Directors
 will be elected by holders of shares of Common Stock and holders of shares of the
 6.00% Preferred Stock and any other Preferred Stock, voting together as single class.
 In addition, if at any time dividends on outstanding shares of the 6.00% Preferred
 Stock and/or any other Preferred Stock are unpaid in an amount equal to at least
 two full years&#146; dividends thereon or if at any time holders of any shares of
 other Preferred Stock are entitled, together with the holders of shares of 6.00%
 Preferred Stock, to elect a majority of the Directors of the Fund under the 1940
 Act, then the number of Directors constituting the Board of Directors automatically
 will be increased by the smallest number that, when added to the two Directors elected
 exclusively by the holders of shares of the 6.00% Preferred Stock and any other
 Preferred Stock as described above, would constitute a majority of the Board of
 Directors as so increased by such smallest number. Such additional Directors will
 be elected at a special meeting of stockholders which will be called and held as
 soon as practicable, and at all subsequent meetings at which Directors are to be
 elected, the holders of shares of the 6.00% Preferred Stock and any other Preferred
 Stock, voting as a separate class, will be entitled to elect the smallest number
 of additional Directors that, together with the two Directors which such holders
 in any event will be entitled to elect, constitutes a majority of the total number
 of Directors of the Fund as so increased. The terms of office of the persons who
 are Directors at the time of that election will continue. If the Fund thereafter
 pays, or declares and sets apart for payment in full, all dividends payable on all
 outstanding shares of the 6.00% Preferred Stock and any other Preferred Stock for
 all past dividend periods, the additional voting rights of the holders of shares
 of the 6.00% Preferred Stock and any other Preferred Stock as described above will
 cease, and the terms of office of all of the additional Directors elected by the
 holders</font></p>
<p align="center"><font face="Times New Roman" size="2">25</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify"><font face="Times New Roman" size="2">of shares of the 6.00% Preferred Stock and any other Preferred Stock (but
 not of the Directors with respect to whose election the holders of shares of Common
 Stock were entitled to vote or the two Directors the holders of shares of the 6.00%
 Preferred Stock and any other Preferred Stock have the right to elect in any event)
 will terminate and the number of directors constituting the Board of Directors will
 automatically decrease accordingly.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">So long as
 shares of the 6.00% Preferred Stock are outstanding, the Fund may not, without the
 affirmative vote of the holders of a majority of the shares of the 6.00% Preferred
 Stock outstanding at the time, voting separately as one class, amend, alter or repeal
 the provisions of the Charter, whether by merger, consolidation or otherwise, so
 as to materially adversely affect any of the contract rights expressly set forth
 in the Charter of holders of shares of the 6.00% Preferred Stock. The Board of Directors,
 however, without stockholder approval, may modify the interpretation or applicability
 of the rating agency guidelines applicable to the 6.00% Preferred Stock in the event
 the Fund receives confirmation from Moody&#146;s that any such modification would
 not impair the rating then assigned to the 6.00% Preferred Stock. Furthermore, under
 certain circumstances, without the vote of stockholders, the Board of Directors
 may determine that it is not in the best interests of the Fund to continue to comply
 with the rating agency guidelines. See &#147;- Rating Agency Guidelines&#148; above. The affirmative
 vote of a majority of the votes entitled to be cast by holders of outstanding shares
 (as defined under &#147;Investment Goal, Policies and Risks - Changes in Investment Goal
 and Policies&#148;) of the 6.00% Preferred Stock and any other Preferred Stock, voting
 as a separate class, will be required to approve any plan of reorganization adversely
 affecting such shares or any action requiring a vote of security holders under Section
 13(a) of the 1940 Act, including, among other things, changes in the Fund&#146;s
 primary investment goal or changes in the investment restrictions described as fundamental
 policies under &#147;Investment Restrictions&#148; in the Statement of Additional Information.
 The class vote of holders of shares of the 6.00% Preferred Stock and any other Preferred
 Stock described above in each case will be in addition to a separate vote of the
 requisite percentage of shares of Common Stock, 6.00% Preferred Stock and any other
 Preferred Stock, voting together as a single class, necessary to authorize the action
 in question.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>Issuance
 of Additional Preferred Stock. </i>So long as any shares of the 6.00% Preferred
 Stock are outstanding, the Fund may issue and sell one or more other series of Preferred
 Stock, provided that the Fund maintains the asset coverage requirements of the 6.00%
 Preferred Stock and any other outstanding Preferred Stock and no such additional
 Preferred Stock will have any preference or priority over any other Preferred Stock
 of the Fund upon the distribution of the assets of the Fund or in respect of the
 payment of dividends as required by the Charter.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"><i>Repurchase
 of Preferred. </i>The Fund is a closed-end investment company and, as such, holders
 of the 6.00% Preferred Stock do not, and will not, have the right to redeem their
 shares of the Fund. The Fund may, however, repurchase shares of the 6.00% Preferred
 Stock and/or any other Preferred Stock when it is deemed advisable by the Board
 of Directors in compliance with the requirements of the 1940 Act and the rules and
 regulations thereunder.</font></p>
<p align="center"><font face="Times New Roman" size="2"><b>CERTAIN CORPORATE GOVERNANCE
 PROVISIONS</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The seven
 Fund Directors who are elected by the holders of Common Stock and Preferred Stock
 voting together are divided into three classes, each serving a staggered term of
 three years and until a successor is elected and qualifies. The two Directors elected
 only by the holders of Preferred Stock stand for election at each annual meeting
 of stockholders. Accordingly, it likely would take a number of years for stockholders
 to change a majority of the Board of Directors. Vacancies on the Board of Directors
 for one or more of the classified positions may be filled by the remaining Directors
 for the balance of the term of the class and until a successor is elected and qualifies.
</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund&#146;s
 Bylaws permit stockholders to call a special meeting of stockholders only if certain
 procedural requirements are met and the request is made by stockholders entitled
 to cast at least a majority of the votes entitled to be cast at such a meeting.
 The Bylaws also require that advance notice be given to the Fund in the event a
 stockholder desires to nominate a person for election to the Board of Directors
 or to transact any other business at an annual meeting of stockholders. With respect
 to an annual meeting of stockholders, notice of any such nomination or business
 must be delivered to or received at the principal executive offices of the Fund
 not less than 90 calendar days nor more than 120 calendar days prior to the anniversary
 of the date of mailing of the notice for the preceding year&#146;s annual meeting
 (subject to certain exceptions). Any advance notice by a stockholder must</font></p>
<p align="center"><font face="Times New Roman" size="2">26</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify"><font face="Times New Roman" size="2">be accompanied by certain information as provided in the Bylaws. The Bylaws contain similar advance
 notice provisions with respect to special meetings of stockholders.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Certain provisions
 of the 1940 Act and the Charter require a separate additional vote of the holders
 of Preferred Stock to approve certain transactions, including certain mergers, asset
 dispositions and conversion of the Fund to open-end status.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">These provisions
 may have the effect of maintaining the continuity of management and thus may make
 it more difficult for the Fund&#146;s stockholders to change the majority of Directors.
</font></p>
<p align="center"><font face="Times New Roman" size="2"><b>REPURCHASES OF SECURITIES
</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund is
 a closed-end diversified management investment company and, as such, its stockholders
 do not, and will not, have the right to redeem their shares of the Fund. Although
 the Fund will not offer to repurchase shares of its Common Stock and/or Preferred
 on a periodic basis, it may repurchase shares of its Common Stock and/or Preferred
 on such occasions when it is deemed advisable by the Fund. Under the 1940 Act, the
 Fund may repurchase its securities (i) on a securities exchange or such other open
 market designated by the SEC (provided that the Fund has, in the case of purchases
 of its stock, informed holders of the class of stock involved within the preceding
 six months of its intention to repurchase such stock), (ii) by a tender offer open
 to all holders of the class of securities involved or (iii) as otherwise permitted
 by the SEC. Where a repurchase of shares of the Fund is to be made that is not to
 be effected on a securities exchange or an open market or by the making of a tender
 offer, the 1940 Act provides that certain conditions must be met regarding, among
 other things, distribution of net income, identity of the seller, price paid, brokerage
 commissions, prior notice to holders of the class of its securities involved of
 an intention to purchase such securities and the purchase not being made in a manner
 or on a basis which discriminates unfairly against the other holders of such class.
 The Fund may incur debt, in an amount not exceeding 10% of its total assets, to
 finance share repurchase transactions. Any related interest charges will be paid
 by the Fund and borne pro rata by the stockholders indirectly through their interest
 in the Fund. See &#147;Investment Goal and Policies - Risks to Common Stockholders of
 Borrowing Money and Issuing Senior Securities.&#148;</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">If the Fund
 repurchases shares of its Common Stock for a price below their NAV, the NAV of those
 shares of Common Stock that remain outstanding would be enhanced, but this does
 not necessarily mean that the market price of those outstanding shares would be
 affected, either positively or negatively. Repurchases of shares of Common Stock
 by the Fund would also decrease its total assets and accordingly may increase its
 expenses as a percentage of average net assets. Further, interest on any borrowings
 to finance any such share repurchase transactions would reduce the Fund&#146;s net
 income.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Board
 of Directors of the Fund has authorized the Fund to repurchase up to 300,000 shares
 of its Common Stock and up to 10% of the Preferred during the year ending December
 31, 2005. Any such repurchases would take place at then prevailing prices in the
 open market or in other transactions. Common Stock repurchases would be effected
 at a price per share that is less than the share&#146;s then current NAV, and Preferred
 Stock repurchases would be effected at a price per share that is less than the share
&#146;s liquidation preference.</font></p>
<p align="center"><font face="Times New Roman" size="2"><b>DIVIDENDS, DISTRIBUTIONS AND REINVESTMENT PLAN</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund currently
 has a policy of paying quarterly distributions to its Common Stockholders. Distributions
 are currently being made at the annual rate of 5% of the rolling average of the
 prior four calendar quarter-end NAVs of the Fund&#146;s Common Stock, with the fourth
 quarter distribution being the greater of 1.25% of the rolling average or the distribution
 required for treatment as a regulated investment company under the Code. The Fund&#146;s
 final distribution for each calendar year will include any remaining net
 investment income and net realized capital gains deemed, for Federal income tax
 purposes, undistributed during the year, and may, but need not, include all net
 long-term capital gains realized during the year. If, for any calendar year, the
 total distributions exceed net investment income and net realized capital gains,
 the excess will generally be treated as a tax-free return of capital (up to the
 amount of the stockholder&#146;s tax basis in his or her shares). The amount treated
 as a tax-free return of capital will reduce a stockholder&#146;s adjusted basis
 in his or her shares, thereby increasing his or her potential gain or reducing his
 or her potential loss on the sale of his or her shares. Pursuant to the requirements
 of the 1940 Act and other applicable laws, a notice will accompany each quarterly
 distribution with respect to the estimated</font></p>
<p align="center"><font face="Times New Roman" size="2">27</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify"><font face="Times New Roman" size="2">source of the distribution made. Such
 distribution policy may, under certain circumstances, have certain adverse consequences
 to the Fund and its stockholders. In addition, in order to make such distributions,
 the Fund may have to sell a portion of its investment portfolio at a time when independent
 investment judgment might not dictate such action. The Fund&#146;s quarterly distribution
 policy may be changed by the Board of Directors without stockholder approval.</font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund has
 adopted a Distribution Reinvestment and Cash Purchase Plan (the &#147;Plan&#148;), through
 which all such net investment income dividends and capital gains distributions are
 paid to Common Stockholders in the form of additional shares of the Fund&#146;s
 Common Stock (plus cash in lieu of any fractional shares which otherwise would have
 been issuable), unless a stockholder elects to receive cash as provided below. In
 this way, a stockholder can maintain an undiluted investment in the Fund and still
 allow the Fund to pay out the required distributable income.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">No action
 is required on the part of a registered stockholder to receive a distribution in
 shares of Common Stock of the Fund. A registered stockholder may elect to receive
 an entire distribution in cash by notifying Equiserve, the Plan Agent and the Fund
&#146;s transfer agent and registrar, in writing so that such notice is received
 by Equiserve no later than 10 days prior to the record date for distributions to
 stockholders. Equiserve will set up an account for shares acquired through the Plan
 for each stockholder who has not elected to receive distributions in cash (&#147;Participant&#148;)
 and hold such shares in non-certificated form. Upon request by a Participant, received
 in writing not less than 10 days prior to the record date, Equiserve will, instead
 of crediting shares to the Participant&#146;s account, issue a certificate registered
 in the Participant&#146;s name for the number of whole shares of the Fund&#146;s
 Common Stock and a check for any fractional share. Contact information for the Plan
 Agreement is set forth under &#147;Custodian, Transfer Agent and Registrar.&#148;</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Those stockholders
 whose shares are held by a broker or other financial intermediary may receive distributions
 in cash by notifying their broker or other financial intermediary.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund uses
 only newly-issued shares to implement the Plan, whether its shares are trading at
 a premium or at a discount to NAV. The number of shares to be issued to a stockholder
 is determined by dividing the total dollar amount of the distribution payable to
 such stockholder by the market price per share of the Fund&#146;s Common Stock at
 the close of regular trading on Nasdaq on the valuation date for such distribution.
 Market price per share on that date will be the closing price for such shares on
 Nasdaq or, if no sale is reported for such day, at the average of their electronically-reported
 bid and asked prices. The number of shares of the Fund&#146;s Common Stock to be
 outstanding after giving effect to payment of the distribution cannot be established
 until the value per share at which additional shares will be issued has been determined
 and elections of the Fund&#146;s stockholders have been tabulated.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">There is no
 charge to stockholders for receiving their distributions in the form of additional
 shares of the Fund&#146;s Common Stock. Equiserve&#146;s fees for handling distributions
 in stock are paid by the Fund. There are no brokerage charges with respect to shares
 issued directly by the Fund as a result of distributions payable in stock. If a
 Participant elects by written notice to Equiserve to have Equiserve sell part or
 all of the shares held by Equiserve in the Participant&#146;s account and remit
 the proceeds to the Participant, Equiserve is authorized to deduct a $2.50 transaction
 fee plus brokerage commissions from the proceeds.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Stockholders
 who receive distributions in the form of stock are subject to the same Federal,
 state and local tax consequences as are stockholders who elect to receive their
 distributions in cash. A stockholder&#146;s basis for determining gain or loss upon
 the sale of stock received in a distribution from the Fund will be equal to the
 total dollar amount of the distribution paid to the stockholder in the form of additional
 shares.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Distributions
 to Preferred Stockholders are recorded on an accrual basis and paid quarterly. See
 &#147;Description of Capital Stock - Preferred Stock - Distributions.&#148;</font></p>
<p align="center"><font face="Times New Roman" size="2"><b>TAXATION</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund intends
 to continue to qualify for the special tax treatment afforded regulated investment
 companies (&#147;RICs&#148;) under the Code. As long as it so qualifies, in any
 taxable year in which it distributes at least 90% of its investment company taxable
 income (&#147;ICTI&#148;) (as that term is defined in the Code without regard to the</font></p>
<p align="center"><font face="Times New Roman" size="2">28</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify"><font face="Times New Roman" size="2">deduction for dividends paid) for such taxable year, the Fund will not be subject to Federal
 income tax on the part of its ICTI and net capital gains (i.e., the excess of the
 Fund&#146;s net realized long-term capital gains over its net realized short-term
 capital losses), if any, that it distributes to its stockholders in each taxable
 year. The Fund intends to distribute substantially all of such income.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Fund distributions
 comprised of dividends from domestic corporations and certain foreign corporations
 (generally, corporations incorporated in a possession of the United States, some
 corporations eligible for treaty benefits under a treaty with the United States
 and corporations whose stock is readily tradable on an established securities market
 in the United States) are eligible for taxation at a maximum tax rate of 15% also
 applicable to capital gains in the hands of non-corporate shareholders. Capital
 gain dividends likewise, are taxed at the reduced maximum rate of 15% for non-corporate
 taxpayers. These tax rates are scheduled to apply through 2008. Not later than 60
 days after the close of its taxable year, the Fund will provide its stockholders
 with a written notice designating the amounts of any long-term capital gains, qualified
 dividend income and other ordinary income.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">If the Fund
 does not meet the asset coverage requirements of the 1940 Act or the Charter, the
 Fund will be required to suspend distributions to holders of its Common Stock until
 the asset coverage is restored. Such a suspension of distributions might prevent
 the Fund from distributing 90% of its ICTI, as is required in order to avoid Fund-level
 taxation of such income. Upon any failure to meet the asset coverage requirements
 of the 1940 Act or the Charter, the Fund may, and in certain circumstances will
 be required to, partially redeem shares of its 6.00% Preferred Stock in order to
 maintain or restore the requisite asset coverage and avoid the adverse consequences
 to the Fund and its stockholders of failing to qualify as a RIC. If asset coverage
 were restored, the Fund would again be able to pay dividends and might be able to
 avoid Fund-level taxation of its income.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Internal
 Revenue Service (the &#147;IRS&#148;) currently requires that a RIC that has two or more classes
 of stock allocate to each class proportionate amounts of each type of its income
 (<i>e.g</i>., capital gains, qualified dividend income and other ordinary income).
 Accordingly, the Fund intends to designate dividends paid to holders of each class
 of the Fund&#146;s stock as comprised of capital gains, qualified dividend income
 and/or other ordinary income, as applicable, in proportion to such class&#146;s
 share of total dividends paid during the year.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">If the Fund
 pays a dividend in January which was declared in the previous October, November
 or December to stockholders of record on a specified date in one of such months,
 then such dividend will be treated for tax purposes as being paid by the Fund and
 received by its stockholders on December 31 of the year in which such dividend was
 declared.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Stockholders
 may be entitled to offset their capital gain dividends with capital losses. There
 are a number of statutory provisions affecting when capital losses may be offset
 against capital gains, and limiting the use of losses from certain investments and
 activities. Accordingly, stockholders with capital losses are urged to consult their
 tax advisers.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Ordinary income
 dividends (but not capital gain dividends) paid to stockholders who are non-resident
 aliens or foreign entities generally will be subject to a 30% United States withholding
 tax unless a lower treaty rate applies.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Dividends
 and interest received by the Fund may give rise to withholding and other taxes imposed
 by foreign countries. Tax conventions between certain countries and the United States
 may reduce or eliminate such taxes. Stockholders may be able to claim a credit or
 take a deduction for foreign taxes paid by the Fund if certain requirements are
 met.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">By law, unless
 you qualify for an exemption from backup withholding (for instance, if you are a
 corporation), your dividends and redemption proceeds will be subject to a backup
 withholding tax if you have not provided a tax identification number or social security
 number or if the number you have provided is incorrect.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">This section
 summarizes some of the consequences under Federal tax law of an investment in the
 Fund. It is not a substitute for personal tax advice. Consult your personal tax
 adviser about the potential tax consequences of purchasing and holding Common Stock
 in the Fund under all applicable tax laws. For additional tax discussion, see &#147;Taxation&#148;
 in the Statement of Additional Information.</font></p>
<p align="center"><font face="Times New Roman" size="2">29</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="center"><font face="Times New Roman" size="2"><b>CUSTODIAN, TRANSFER AGENT AND REGISTRAR</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">State Street
 Bank and Trust Company, Two Heritage Drive, North Quincy, Massachusetts 02171, acts
 as custodian of the cash and other assets of the Fund. Equiserve Trust Company,
 N.A., 225 Franklin Street, Boston, Massachusetts 02110, acts as transfer agent and
 registrar for the Fund&#146;s shares and as Plan Agent under its Plan. Stockholder
 inquiries should be directed to P.O. Box 8200, Boston, Massachusetts 02266-8200
 (Tel. No. (800) 426-5523).</font></p>
<p align="center"><font face="Times New Roman" size="2"><b>LEGAL MATTERS</b></font>
</p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Certain matters
 concerning the legality under Maryland law of the Shares will be passed on by Sidley
 Austin Brown &#038; Wood LLP, Washington, D.C.</font></p>
<p align="center"><font face="Times New Roman" size="2"><b>EXPERTS</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">Tait, Weller
 &#038; Baker, independent registered public accountants, are the independent registered
 public accountants of the Fund. The audited financial statements of the Fund and
 certain of the information appearing under the caption &#147;Financial Highlights&#148; included
 in this Prospectus have been audited by Tait, Weller &#038; Baker and Ernst &#038;
 Young LLP for the periods indicated in their reports with respect thereto, and are
 included in reliance upon such reports and upon the authority of such firms as experts
 in accounting and auditing. Tait, Weller &#038; Baker has an office at 1818 Market
 Street, Suite 2400, Philadelphia, Pennsylvania 19103, and also performs tax and
 other professional services for the Fund.</font></p>
<p align="center"><font face="Times New Roman" size="2"><b>ADDITIONAL INFORMATION
</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">The Fund is
 subject to the informational requirements of the Exchange Act and the 1940 Act and,
 in accordance therewith, files reports and other information with the SEC. Reports,
 proxy statements and other information filed by the Fund with the SEC pursuant to
 the information requirements of such Acts can be inspected and copied at the public
 reference facilities maintained by the SEC, 450 Fifth Street, N.W., Washington,
 D.C. 20549. The SEC maintains a Web site at http://www.sec.gov containing reports,
 proxy and information statements and other information regarding registrants, including
 the Fund, that file electronically with the SEC.</font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2">This Prospectus
 constitutes part of a Registration Statement filed by the Fund with the SEC under
 the Securities Act and the 1940 Act. This Prospectus omits certain of the information
 contained in the Registration Statement, and reference is hereby made to the Registration
 Statement and related exhibits for further information with respect to the Fund
 and its Common Stock. Any statements contained herein concerning the provisions
 of any document are not necessarily complete and, in each instance, reference is
 made to the copy of such document filed as an exhibit to the Registration Statement
 or otherwise filed with the SEC. Each such statement is qualified in its entirety
 by such reference. The complete Registration Statement may be obtained from the
 SEC upon payment of the fee prescribed by its rules and regulations or free of charge
 through the SEC&#146;s web site (http://www.sec.gov).</font></p>
<p align="center"><font face="Times New Roman" size="2">30</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="center"><font face="Times New Roman" size="2"><b>TABLE OF CONTENTS OF STATEMENT
 OF ADDITIONAL INFORMATION</b></font></p>
<p align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Times New Roman" size="2"> A Statement of Additional
 Information dated May __, 2005 has been filed with the SEC and is incorporated by
 reference in this Prospectus. The Table of Contents of the Statement of Additional
 Information is as follows:</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr><td valign="bottom"><font face="Times New Roman" size="2">&#160;
</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2"><u>Page</u></font></td>
<td width="6%"><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Risk Factors
 and Special Considerations</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">B-2</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Investment
 Restrictions</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">B-4</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Principal
 Stockholders</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">B-6</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Directors
 and Officers</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">B-7</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Code of Ethics
 and Related Matters</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">B-14</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Investment
 Advisory and Other Services</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">B-15</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Taxation</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">B-18</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Brokerage
 Allocation and Other Practices</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">B-21</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Proxy Voting
 Policies and Procedures</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">B-22</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Net Asset
 Value</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">B-23</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Financial
 Statements</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">B-24</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
</table>
<p align="center"><font face="Times New Roman" size="2">31</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td colspan="3"><p align="justify"><font face="Times New Roman" size="2">&#160;&#160;&#160;&#160;&#160;<b>You should
 rely only on the information contained in this Prospectus and the related Statement
 of Additional Information. We have not authorized any other person to provide you
 with different information. If anyone provides you with different or inconsistent
 information, you should not rely on it. We are not making an offer to sell these
 securities in any jurisdiction where the offer or sale is not permitted. You should
 assume that the information appearing in this Prospectus and the related Statement
 of Additional Information is accurate only as of the date on the front cover pages
 of this Prospectus and the related Statement of Additional Information. Our business,
 financial condition, results of operations and prospects may have changed since
 that date.</b></font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td align="center" valign="top"><font face="Times New Roman" size="3"><b>2,189,498 Shares of<br>Common Stock Issuable<br>Upon Exercise of<br> Non-Transferable
 Rights<br>to Subscribe for such<br> Shares of Common Stock</b></font></td>
</tr>
<tr>
<td colspan="5"><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td colspan="3"><hr color="#000000" size="1" noshade width="28%" align="center"></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td colspan="5"><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td colspan="3" align="center"><font face="Times New Roman" size="2"><b>TABLE OF CONTENTS</b></font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td colspan="5"><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td colspan="2" align="right"><font face="Times New Roman" size="2"><b><u>Page</u></b></font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td rowspan="22" align="center" valign="top"><font face="Times New Roman" size="5"><br><br><b>ROYCE FOCUS TRUST, INC.</b></font>
<div align="center"><br><br><br><br><br><br>_______________</div>
<div align="center"><font face="Times New Roman" size="3"><b>PROSPECTUS</b></font></div>
<div align="center">_______________</div>
<p align="center"><font face="Times New Roman" size="2"><b>May ___, 2005</b></font></td>
</tr>
<tr>
<td width="38%" valign="bottom" align="left"><font face="Times New Roman" size="2">Prospectus Summary</font></td>
<td width="8%" align="right"><font face="Times New Roman" size="2">3</font></td>
<td width="1%"><font face="Times New Roman" size="2">&#160;</font></td>
<td width="8%"><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">The Offer at a Glance</font></td>
<td align="right"><font face="Times New Roman" size="2">3</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">The Funds
 at a Glance</font></td>
<td align="right"><font face="Times New Roman" size="2">4</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Risk Factors
 and Special Considerations at a Glance</font></td>
<td align="right"><font face="Times New Roman" size="2">5</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Fund Expenses</font></td>
<td align="right"><font face="Times New Roman" size="2">7</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Financial Highlights</font></td>
<td align="right"><font face="Times New Roman" size="2">7</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">The Offer</font></td>
<td align="right"><font face="Times New Roman" size="2">9</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Use of Proceeds</font></td>
<td align="right"><font face="Times New Roman" size="2">15</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">The Fund</font></td>
<td align="right"><font face="Times New Roman" size="2">15</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Investment Goal, Policies and Risks</font></td>
<td align="right"><font face="Times New Roman" size="2">15</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Investment
 Advisory and Other Services</font></td>
<td align="right"><font face="Times New Roman" size="2">20</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Description
 of Capital Stock</font></td>
<td align="right"><font face="Times New Roman" size="2">22</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Certain Corporate
 Governance Provisions</font></td>
<td align="right"><font face="Times New Roman" size="2">26</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Repurchases
 of Securities</font></td>
<td align="right"><font face="Times New Roman" size="2">27</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Dividends,
 Distributions and Reinvestment Plan</font></td>
<td align="right"><font face="Times New Roman" size="2">27</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Taxation</font></td>
<td align="right"><font face="Times New Roman" size="2">28</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Custodian,
 Transfer Agent and Registrar</font></td>
<td align="right"><font face="Times New Roman" size="2">30</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Legal Matters</font></td>
<td align="right"><font face="Times New Roman" size="2">30</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Experts</font></td>
<td align="right"><font face="Times New Roman" size="2">30</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Additional Information</font></td>
<td align="right"><font face="Times New Roman" size="2">30</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Table of Contents
 of Statement of Additional Information</font></td>
<td align="right"><font face="Times New Roman" size="2">31</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
<td><font face="Times New Roman" size="2">&#160;</font></td>
</tr>
</table>
<br><br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="center"><font face="Serif" size="4"><b>ROYCE FOCUS TRUST, INC.
</b></font></p>
<p align="center"><font face="Serif" size="2"><b>STATEMENT OF ADDITIONAL
 INFORMATION</b></font></p>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">ROYCE FOCUS
 TRUST, INC. (the &#147;Fund&#148;) is a registered closed-end diversified management investment
 company, whose shares of Common Stock are listed and traded on the Nasdaq National
 Market under the symbol &#147;FUND.&#148; Its primary investment goal is long-term capital
 growth.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">This Statement
 of Additional Information is not a prospectus, but should be read in conjunction
 with the Fund&#146;s Prospectus dated May __, 2005. Please retain this document
 for future reference. To obtain a copy of the Prospectus or the Fund&#146;s Annual
 Report to Stockholders for the year ended December 31, 2004 please call Investor
 Information at 1-800-221-4268.</font></div>
<p align="center"><font face="Serif" size="2"><b>TABLE OF CONTENTS</b></font></p>
<table border="0" cellpadding="0" cellspacing="0" width="72%">
<tr><td valign="bottom"><font face="Serif" size="2">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2"><u>Page</u></font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Risk Factors
 and Special Considerations</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="13%" valign="bottom" align="left"><font face="Serif" size="2"><a href="#sai_pageB_2">B-2</a></font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Investment
 Restrictions</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2"><a href="#sai_pageB_4">B-4</a></font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Principal
 Stockholders</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2"><a href="#sai_pageB_6">B-6</a></font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Directors
 and Officers</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2"><a href="#sai_pageB_7">B-7</a></font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Code of Ethics
 and Related Matters</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2"><a href="#sai_pageB_14">B-14</a></font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Investment
 Advisory and Other Services</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2"><a href="#sai_pageB_15">B-15</a></font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Taxation</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2"><a href="#sai_pageB_18">B-18</a></font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Brokerage
 Allocation and Other Practices</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2"><a href="#sai_pageB_21">B-21</a></font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Proxy Voting
 Policies and Procedures</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2"><a href="#sai_pageB_22">B-22</a></font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Net Asset
 Value</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2"><a href="#sai_pageB_23">B-23</a></font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Financial
 Statements</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2"><a href="#sai_pageB_24">B-24</a></font></td>
</tr>
</table>
<br><br><br><br><br>
<p align="center"><font face="Serif" size="2"><b>May __, 2005</b></font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_2"></a>
<p align="center"><font face="Serif" size="2"><b>RISK FACTORS AND SPECIAL CONSIDERATIONS</b></font></p>
<div align="justify"><font face="Serif" size="2"><b>Fund&#146;s Rights as Stockholder
</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Fund may
 not invest in a company for the purpose of exercising control or management. However,
 the Fund may exercise its rights as a stockholder and communicate its views on important
 matters of policy to management, the board of directors and/or stockholders if Royce
 &#038; Associates, LLC (which term as used in this Statement of Additional Information
 includes its corporate predecessor) (&#147;Royce&#148; or the &#147;Investment Adviser&#148;) or the
 Board of Directors determines that such matters could have a significant effect
 on the value of the Fund&#146;s investment in the company. The activities that the
 Fund may engage in, either individually or in conjunction with others, may include,
 among others, supporting or opposing proposed changes in a company&#146;s corporate
 structure or business activities; seeking changes in a company&#146;s board of directors
 or management; seeking changes in a company&#146;s direction or policies; seeking
 the sale or reorganization of a company or a portion of its assets; or supporting
 or opposing third party takeover attempts. This area of corporate activity is increasingly
 prone to litigation, and it is possible that the Fund could be involved in lawsuits
 related to such activities. Royce will monitor such activities with a view to mitigating,
 to the extent possible, the risk of litigation against the Fund and the risk of
 actual liability if the Fund is involved in litigation. However, no assurance can
 be given that litigation against the Fund will not be undertaken or liabilities
 incurred.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Fund may,
 at its expense or in conjunction with others, pursue litigation or otherwise exercise
 its rights as a security holder to seek to protect the interests of security holders
 if Royce and the Board of Directors determine this to be in the best interests of
 the Fund&#146;s stockholders.</font></div>
<div align="justify"><font face="Serif" size="2"><b><br>High-Yield and Investment Grade Debt
 Securities</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Up to 25%
 of the Fund&#146;s assets may be invested in non-convertible debt securities of
 various domestic issuers. Within this category, up to 5% of the Fund&#146;s assets
 may be invested in below investment-grade debt securities, also known as high-yield/high
 risk securities. These securities may be rated from Ba to Ca by Moody&#146;s or
 from BB to D by Standard &#038; Poor&#146;s (&#147;S&#038;P&#148;) or unrated. These securities
 have poor protection with respect to the payment of interest and repayment of principal
 and may be in default as to the payment of principal or interest. These securities
 are often speculative and involve greater risk of loss or price changes due to changes
 in the issuer&#146;s capacity to pay. The market prices of high-yield debt securities
 may fluctuate more than those of higher-rated debt securities and may decline significantly
 in periods of general economic difficulty, which may follow periods of rising interest
 rates.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The market
 for high-yield debt securities may be thinner and less active than that for higher-rated
 debt securities, which can adversely affect the prices at which the former are sold.
 If market quotations cease to be readily available for a high-yield debt security
 in which the Fund has invested, the security will then be valued in accordance with
 procedures established by the Board of Directors. Judgment may play a greater role
 in valuing high-yield debt securities than is the case for securities for which
 more external sources for quotations and last sale information are available. Adverse
 publicity and changing investor perceptions may affect the Fund&#146;s ability to
 dispose of high-yield debt securities.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Since the risk of default is higher for
 high-yield debt securities, Royce&#146;s research and credit analysis may play an
 important part in managing securities of this type for the Fund. In considering
 such investments for the Fund, Royce will attempt to identify those issuers of high-yield
 debt securities whose financial condition is adequate to meet future obligations,
 has improved or is expected to improve in the future. Royce&#146;s analysis may
 focus on relative values based on such factors as interest or dividend coverage,
 asset coverage, earnings prospects and the experience and managerial strength of
 the issuer.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Fund may
 also invest in non-convertible debt securities in the lowest rated category of investment
 grade debt. Such securities may have speculative characteristics, and adverse changes
 in economic conditions or other circumstances are more likely to lead to a weakened
 capacity to make principal and interest payments than is the case with higher grade
 securities.</font></div><br>
<br>
<p align="center"><font face="Serif" size="2">B-2</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_3"></a>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Fund may
 also invest in higher rated investment grade non-convertible debt securities. Such
 securities include those rated Aaa by Moody&#146;s or AAA by S&#038;P (which are
 considered to be of the highest credit quality and where the capacity to pay interest
 and repay principal is extremely strong), those rated Aa by Moody&#146;s or AA by
 S&#038;P (where the capacity to repay principal is considered very strong, although
 elements may exist that make risks appear somewhat larger than expected with securities
 rated Aaa or AAA), securities rated A by Moody&#146;s or A by S&#038;P (which are
 considered to possess adequate factors giving security to principal and interest)
 and securities rated Baa by Moody&#146;s or BBB by S&#038;P (which are considered
 to have an adequate capacity to pay interest and repay principal, but may have some
 speculative characteristics).</font></div><br>
<div align="left"><font face="Serif" size="2"><b>Repurchase Agreements</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">In a repurchase
 agreement, the Fund in effect makes a loan by purchasing a security and simultaneously
 committing to resell that security to the seller at an agreed upon price on an agreed
 upon date within a number of days (usually not more than seven) from the date of
 purchase. The resale price reflects the purchase price plus an agreed upon incremental
 amount which is unrelated to the coupon rate or maturity of the purchased security.
 A repurchase agreement requires or obligates the seller to pay the agreed upon price,
 which obligation is in effect secured by the value (at least equal to the amount
 of the agreed upon resale price and marked to market daily) of the underlying security.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Fund may
 engage in repurchase agreements, provided that such agreements are collateralized
 by cash or securities issued by the U.S. Government or its agencies having a value
 at least equal to the amount loaned. Repurchase agreements could involve certain
 risks if the counterparty defaults or becomes insolvent, including possible delays
 or restrictions upon the Fund&#146;s ability to dispose of collateral. While it
 does not presently appear possible to eliminate all risks from these transactions
 (particularly the possibility of a decline in the market value of the underlying
 securities, as well as delays and costs to the Fund in connection with bankruptcy
 proceedings), it is the policy of the Fund to enter into repurchase agreements only
 recognized securities dealers and banks determined by Royce to represent minimal
 credit risk, and having a term of seven days or less.</font></div><br>
<div><font face="Serif" size="2"><b>Warrants, Rights and Options</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Fund may
 invest up to 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. 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.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The sale of
 warrants, rights or options held for more than 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 to the
 Fund. 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 common stocks of a group
 of companies, such as the Russell 2000.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Investing
 in warrants, rights and call options on a given security allows the Fund to hold
 an interest in that 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 comprising
 the index. Put options, whether on shares of common stock of a single company or
 on a securities market index, would permit the Fund to 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 the Fund to incur additional risk and/or
 to hedge against risk.</font></div>
<br>
<p align="center"><font face="Serif" size="2">B-3</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_4"></a>
<div align="justify"><font face="Serif" size="2"><b>Investment in Other Investment Companies</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Fund also
 may indirectly invest in the securities of domestic and foreign companies by investing
 in the securities of other investment companies that invest primarily in such companies.
 The other investment companies in which the Fund may invest may be domestic companies
 registered under the 1940 Act or foreign companies that are not so registered or
 otherwise regulated. Such investment companies usually have their own management
 fees and 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
 assets invested in open-end investment companies (other than exchange-traded funds),
 and no sales charge will be incurred on such an investment. See &#147;Investment Advisory
 and Other Services - Advisory Fee&#148; in the Prospectus.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">In accordance
 with the 1940 Act, the Fund may invest up to 10% of its total assets in securities
 of other investment companies. In addition, under the 1940 Act the Fund may not
 own more than 3% of the total outstanding voting stock of any investment company
 and not more than 5% of the value of the Fund&#146;s total assets may be invested
 in securities of any one investment company. See also &#147;Investment Restrictions&#148;
 below.</font></div><br>
<div align="justify"><font face="Serif" size="2"><b>Risks to Common Stockholders of Borrowing
 Money and Issuing Senior Securities</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2"><i>Asset Coverage
 Test</i>. Section 18(a)(1) of the 1940 Act permits a registered closed-end company
 such as the Fund to issue and sell a class of senior securities (such as the Preferred)
 only if, immediately after such issuance and sale, the net asset value (&#147;NAV&#148;) of
 the Fund&#146;s portfolio is at least 200% of the liquidation preference of the
 6.00% Preferred Stock. Section 18(g) of the 1940 Act defines a senior security to
 mean any stock of a class having priority over any other class as to distribution
 of assets or payment of dividends. Under Section 18(h) of the 1940 Act, asset coverage
 of a class of senior securities of an issuer which is a stock means the ratio which
 the value of the issuer&#146;s total assets, less all of its liabilities and indebtedness
 not represented by senior securities, bears to the aggregate amount of the issuer&#146;s senior securities representing indebtedness plus the aggregate of the involuntary
 liquidation preference of such class of senior security which is a stock. Section
 18(a)(1) of the 1940 Act also prevents the Fund from declaring any cash or other
 non-stock dividends or distributions on its Common Stock or purchasing any shares
 of its capital stock if, immediately thereafter, the NAV of the Fund&#146;s portfolio
 (determined after deducting the amount of such dividend or distribution) is at least
 200% of the liquidation preference of its outstanding Preferred Stock.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">If the asset
 coverage for outstanding Preferred Stock as of the last day of March, June, September
 or December in any calendar year should fall below 200%, the Fund would redeem such
 Preferred Stock at a price equal to its liquidation preference plus accumulated
 but unpaid dividends to the date of redemption and/or any other senior securities
 of the Fund then outstanding to the extent necessary to restore such asset coverage
 to at least 200%. See &#147;Description of Capital Stock - Preferred Stock - Redemption&#148;
 in the Prospectus.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Articles
 Supplementary (the &#147;Articles Supplementary&#147;) governing the outstanding 6.00% Cumulative
 Preferred Stock (the &#147;6.00% Preferred Stock&#148;) contains more restrictive
 provisions concerning the Fund&#146;s obligation to maintain asset coverage for
 the 6.00% Preferred Stock than those required by Section 18(a)(1) of the 1940 Act.
 See &#147;Description of Capital Stock-Preferred Stock-Rating Agency Guidelines&#148; in the
 Prospectus.</font></div><br>
<div align="center"><font face="Serif" size="2">________________</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Royce believes
 that the Fund is suitable for investment only by persons who can invest without
 concern for current income and who are in a financial position to assume above-average
 risks in search for long-term capital appreciation.</font></div><br>
<div align="center"><font face="Serif" size="2"><b>INVESTMENT RESTRICTIONS
</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The policies
 set forth below are fundamental policies of the Fund and may not be changed without
 the affirmative vote of the holders of a majority of the Fund&#146;s outstanding
 voting securities, as indicated in the</font></div><br>
<br>
<p align="center"><font face="Serif" size="2">B-4</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_5"></a>
<div align="justify"><font face="Serif" size="2">Prospectus under &#147;Investment Goal, Policies
 and Risks - Changes in Investment Goal and Policies&#148;. The Fund may not:</font></div><br>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="3%" valign="top" align="left"><font face="Serif" size="2">1.</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">As to 75%
 of the Fund&#146;s total assets, invest more than 5% of its total assets in the
 securities of any one issuer. (This limitation does not apply to cash and cash items
 or to obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities.)</font></p></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">2.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">Invest in
 any investment company if a purchase of its shares would result in the Fund and
 its affiliates owning more than 3% of the total outstanding stock of such company.</font></p></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">3.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">Purchase more
 than 10% of the voting securities or more than 10% of any class of securities of
 any issuer. For purposes of this restriction, all outstanding fixed income securities
 of an issuer are considered as one class.</font></p></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">4.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">Purchase or
 sell commodities or commodity future contracts. (This restriction does not limit
 the Fund&#146;s use of financial futures and options thereon, or the investment
 of not more than 25% of the Fund&#146;s assets in gold and silver bullion or certificates
 for such precious metals. Illiquid investments in either gold, silver or certificates
 for gold or silver are limited to 10% of the Fund&#146;s assets.)</font></p></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">5.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">Make loans
 of money or securities, except (i) by the purchase of fixed income obligations in
 which the Fund may invest consistent with its investment objective and policies;
 (ii) by entering into securities lending transactions described in &#147;Investment Goal,
 Policies and Risks&#148; in the Prospectus; and (iii) by entering into repurchase agreements,
 as described in &#147;Investment Goal, Policies and Risks&#148; in the Prospectus.</font></p></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">6.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">Invest in
 the securities of any company if, to the knowledge of the Fund, any officer or director
 of the Fund or the investment adviser owns more than .5% of the outstanding securities
 of such company and such officers and directors (who own more than .5%) in the aggregate
 own more than 5% of the outstanding securities of such company.</font></p></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">7.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">Borrow money,
 except to the extent that it may (i) borrow from banks for temporary or emergency
 purposes in an amount not exceeding 5% of the Fund&#146;s assets or (ii) borrow
 in an amount up to 33 1/3% of the value of the Fund&#146;s total assets (including
 the amount borrowed) valued at market less liabilities (not including the amount
 borrowed) at the time the borrowing was made; provided that the Fund is authorized
 to enter into reverse repurchase agreements (but may not do so under the Rating
 Agency Guidelines), as set forth in &#147;Investment Goal, Policies and Risks&#148; in the
 Prospectus.</font></p></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">8.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">Pledge, hypothecate,
 mortgage or otherwise encumber its assets, except in an amount up to 33 1/3% of
 the value of its net assets, but only to secure borrowings authorized by Restriction
 7 above.</font></p></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">9.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">Engage in
 the underwriting of securities, except insofar as the Fund may be deemed an underwriter
 under the Securities Act of 1933 in disposing of a portfolio security.</font></p></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">10.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">Purchase or
 sell real estate or interests therein, although it may purchase securities of issuers
 which engage in real estate operations and securities which are secured by real
 estate or interests therein.</font></p></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">11.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">Invest for
 the purpose of exercising control or management of another company.</font></p></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">12.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">Purchase oil,
 gas or other mineral leases, rights or royalty contracts or exploration or development
 programs, except that the Fund may invest in the securities of companies which invest
 in or sponsor such programs.</font></p></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">13.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">Concentrate
 its investments in any industry.</font></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">14.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">Make purchases
 of securities on &#147;margin&#148; from an affiliated person, provided that the Fund may
 engage in short sales and may satisfy margin requirements with respect to futures
 transactions.</font></p></td>
</tr>
</table>
<br>
<p align="center"><font face="Serif" size="2">B-5</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_6"></a>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td valign="top" align="left"><font face="Serif" size="2">15.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">Issue any
 class of senior security, or sell any such security of which it is the issuer, except
 as permitted by the 1940 Act.</font></p></td>
</tr>
</table>
<br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Notwithstanding
 Restriction 4 above, the Fund has no current intention of investing in financial
 futures and options thereon, gold and silver bullion or certificates for such precious
 metals.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The policies
 set forth below are operating policies of the Fund and may be changed by the Board
 of Directors without stockholder approval or prior notice to stockholders. The Fund
 may not:</font></div><br>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="3%"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">a.&#160;&#160;&#160;&#160;&#160;&#160;&#160;Make investments
 which would cause more than 50% of the Fund&#146;s assets to be invested in equity
 securities traded exclusively in markets outside the United States.</font></p></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">b.&#160;&#160;&#160;&#160;&#160;&#160;&#160;Invest
 in emerging market countries.</font></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Limitations
 a. and b. above do not prevent the Fund from purchasing sponsored or unsponsored
 depository receipts trading within the U.S. and/or developed markets in Europe which
 represent an interest in foreign equity securities trading in other markets, including
 securities of issuers located or trading in emerging market countries.</font></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">c.&#160;&#160;&#160;&#160;&#160;&#160;&#160;Make investments
 which would cause more that 25% of the Fund&#146;s assets to be invested in non-equity
 securities traded exclusively in markets outside the U.S.</font></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">d.&#160;&#160;&#160;&#160;&#160;&#160;&#160;Make investments
 which would cause more than 5% of the Fund&#146;s assets to be invested in below
 investment grade non-convertible debt securities.</font></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">e.&#160;&#160;&#160;&#160;&#160;&#160;&#160;Deal in
 foreign currency futures, either for speculative or hedging purposes.</font></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">f.&#160;&#160;&#160;&#160;&#160;&#160;&#160;Engage
 in &#147;swaps,&#148; or invest more than 10% of its assets in illiquid securities.</font></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">g.&#160;&#160;&#160;&#160;&#160;&#160;&#160;Make short
 sales of securities, other than short sales against-the-box in which, at the time
 of the short sale, the Fund holds or has an unrestricted right to receive the security
 to be sold short.</font></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">h.&#160;&#160;&#160;&#160;&#160;&#160;&#160;Invest
 in derivative securities of a speculative nature. (This limitation is not intended
 to prevent the Fund from making investments in repurchase agreements, reverse repurchase
 agreements, warrants, rights, options and convertible securities.)</font></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">i.&#160;&#160;&#160;&#160;&#160;&#160;&#160;Borrow
 from banks for leveraging purposes. (The Fund may, however, issue other senior securities
 under Section 18 of the 1940 Act.)</font></td>
</tr>
</table>
<br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">If a percentage
 restriction is met at the time of investment, a later increase or decrease in percentage
 resulting from a change in values of portfolio securities or amount of total assets
 is not considered a violation of any of the above restrictions.</font></div><br>
<div align="center"><font face="Serif" size="2"><b>PRINCIPAL STOCKHOLDERS
</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">As of April
 15, 2005, there were 10,947,490 shares of Common Stock and 1,000,000 shares of 6.00%
 Preferred Stock of the Fund outstanding. The following persons were known to the
 Fund to be beneficial owners or owners of record of 5% or more of its outstanding
 shares of Common Stock or 6.00% Preferred Stock as of the Record Date:</font></div><br>
<br>
<p align="center"><font face="Serif" size="2">B-6</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_7"></a>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Name
 and Address</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Amount
 and Nature</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td colspan="2" valign="bottom" align="center"><font face="Serif" size="2"><b>Percent
 of</b></font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>of Owner
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Class/Series
 of Stock</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>of Ownership
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td colspan="2" valign="bottom" align="center"><font face="Serif" size="2"><b>Class/Series
</b></font></td>
</tr>
<tr>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td colspan="2" valign="bottom"><hr size="1" color="#000000" noshade></td>
</tr>
<tr>
<td width="24%" valign="top" align="left"><font face="Serif" size="2">Charles M. Royce 1414 Avenue
 of the Americas New York, NY 10019</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="24%" valign="top" align="center"><font face="Serif" size="2">Common Stock</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="33%" valign="top" align="left"><font face="Serif" size="2">1,252,497
 shares - Beneficial <a href="#b-7_star">*</a> (sole voting and investment power)</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="16%" valign="top" align="center"><font face="Serif" size="2">11.44%</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">W. Whitney
 George 1414 Avenue of the Americas New York, NY 10019</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Common Stock</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">724,528 shares
 - Beneficial (sole voting and investment power)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">6.62%</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">Cede &#038;
 Co.<a href="#b-7_twostar">**</a> Depository Trust Company P.O. Box #20</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Common Stock</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">10,211,006
 shares-Record</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">93.27%</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">Bowling Green
 Station New York, NY 10028</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">6.00% Preferred
 Stock</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">1,000,000
 shares -Record</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">&#160;100%</font></td>
</tr>
</table>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td colspan="3" valign="bottom" align="left"><font face="Serif" size="2">_____________________</font></td>
</tr>
<tr>
<td width="1%" valign="top" align="right"><font face="Serif" size="2"><a name="b-7_star"></a>*</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">Includes
 246,143 shares held by Royce Family Fund, Inc., a charitable foundation established
 by Mr. Royce and members of his family.</font></p></td>
</tr>
<tr>
<td valign="top" align="right"><font face="Serif" size="2"><a name="b-7_twostar"></a>**</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Serif" size="2">Shares
 held by brokerage firms, banks and other financial intermediaries on behalf of beneficial
 owners are registered in the name of Cede &#038; Co.</font></p></td>
</tr>
</table>
<br>
<div align="center"><font face="Serif" size="2"><b>DIRECTORS AND OFFICERS
</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Board
 of Directors of the Fund is comprised of the nine individuals named below. Two of
 the Directors, Stephen Isaacs and David L. Meister, are elected annually by the
 holders of the 6.00% Preferred Stock, voting as a separate class. The remaining
 seven Directors are divided into three classes and are elected by the holders of
 Common Stock and 6.00% Preferred Stock, voting together as a single class. The Class
 I Directors, Charles M. Royce and G. Peter O&#146;Brien, have terms that expire
 in 2006; the Class II Directors, Mark R. Fetting, Richard M. Galkin and Arthur S.
 Mehlman, have terms that expire in 2007; and the Class III Directors, Donald R.
 Dwight and William L. Koke, have terms that expire in 2005. To the extent permitted
 by the 1940 Act and Maryland law, vacancies on the Board can be filled by the remaining
 Directors for the remainder of the term of the respective Board position.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">There are
 no family relationships between any of the Fund&#146;s Directors and officers. Each
 Director will hold office until his term expires and his successor has been duly
 elected or until his earlier resignation or removal. Each of the Fund&#146;s Directors
 is also a director/trustee of the other management investment companies comprising
 The Royce Funds, which have twenty portfolios.</font></div><br>
<div align="justify"><font face="Serif" size="2"><b>Directors</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2"><i>Interested
 Directors</i>. Certain biographical and other information concerning the Directors
 who are &#147;interested persons&#148; as defined in the 1940 Act, of the Fund, including
 their designated classes, is set forth below. Officers are elected by and serve
 at the pleasure of the Board of Directors. Each officer will hold office for the
 year ending December 31, 2005, and thereafter until his respective successor is
 duly elected and qualified.</font></div>
<br>
<p align="center"><font face="Serif" size="2">B-7</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_8"></a>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr><td valign="bottom"><font face="Serif" size="2">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Term
 Of</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Number
 of</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Office
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Portfolios
 in</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Other
 Public</b></font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>And</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Fund</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Company
</b></font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Name,
 Age</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Position(s)
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Length
 Of</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Complex
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Directorships
</b></font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>And</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>With
 The</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Time</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Overseen
 by</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Held
 By</b></font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Address<a href="#b-8_star">*</a>
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Fund</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Served
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Director
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2"><b>Principal
 Occupations During Past Five Years</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Director
</b></font></td>
</tr>
<tr>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td width="10%" valign="top" align="center"><font face="Serif" size="2">Charles
 M. Royce<a href="#b-8_twostar">**</a> (65)</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="12%" valign="top" align="center"><font face="Serif" size="2">Class I
 Director and President</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="12%" valign="top" align="center"><font face="Serif" size="2">Term as
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<td width="1%"><font face="Serif" size="1">&#160;</font></td>
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<td width="1%"><font face="Serif" size="1">&#160;</font></td>
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 Chief Investment Officer and Member of Board of Managers of Royce; and Director/Trustee
 and President of The Royce Funds.</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="15%" valign="top" align="center"><font face="Serif" size="2">Director
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</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="center"><font face="Serif" size="2">Mark R.
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<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Class II
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<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Term as
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<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">21</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">Executive
 Vice President of Legg Mason; Member of Board of Managers of Royce; and Division
 President and Senior Officer of Prudential Financial Group, Inc. and related companies,
 including Fund Boards and consulting services to subsidiary companies (from 1991
 to 2000). Mr. Fetting&#146;s prior business experience also includes having served
 as Partner, Greenwich Associates, and Vice President, T. Rowe Price Group, Inc.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Director/Trustee
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</tr>
</table>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td colspan="2" valign="top" align="left"><font face="Serif" size="2">_______________________</font></td>
</tr>
<tr>
<td width="5%"><font face="Serif" size="1">&#160;</font></td>
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 Mr. Fetting&#146;s address is c/o Legg Mason, 100 Light Street, Baltimore, Maryland
 21202.</font></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2"><a name="b-8_twostar"></a>**Messrs.
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 2(a)(19) of the 1940 Act due to the positions they hold with Royce and, for Mr.
 Fetting, Legg Mason, and their ownership of Legg Mason stock.</font></td>
</tr>
</table>
<br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2"><i>Non-Interested
 Directors</i>. Certain biographical and other information concerning the Fund Directors
 who are not &#147;interested persons,&#148; as defined in the 1940 Act, of the Fund, including
 their designated classes, is set forth below. Each non-interested Director is also
 a member of the Fund&#146;s audit committee.</font></div><br>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr><td valign="bottom"><font face="Serif" size="2">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
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<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Number
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<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Office
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Portfolios
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<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
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<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
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<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Fund</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Company
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</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Name,
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<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Position(s)
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Length
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<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Complex
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<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
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</tr>
<tr>
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<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>With
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<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Time</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Overseen
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<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Held
 By</b></font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Address<a href="#b-10_star">*</a>
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<td><font face="Serif" size="1">&#160;</font></td>
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<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Director
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<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2"><b>Principal
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<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Director
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</tr>
<tr>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td width="10%" valign="top" align="center"><font face="Serif" size="2">Donald R.
 Dwight (73)</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="12%" valign="top" align="center"><font face="Serif" size="2">Class III
 Director</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
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<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="15%" valign="top" align="center"><font face="Serif" size="2">21</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">President
 of Dwight Partners, Inc., corporate communications consultants; and Chairman (from
 1982 until March 1998) and Chairman Emeritus (since March 1998) of Newspapers of
 New England, Inc. Mr. Dwight&#146;s prior experience includes having served as Lieutenant
 Governor of the Commonwealth of Massachusetts, as President and Publisher of Minneapolis
 Star and Tribune Company and as a trustee of the registered investment companies
 constituting the Eaton Vance Funds.</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="15%" valign="top" align="center"><font face="Serif" size="2">None</font></td>
</tr>
</table>
<br>
<p align="center"><font face="Serif" size="2">B-8</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_9"></a>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr><td valign="bottom"><font face="Serif" size="2">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Term
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<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Number
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<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
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<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Office
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Portfolios
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<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
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</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
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<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Company
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</tr>
<tr>
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<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Position(s)
</b></font></td>
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<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Complex
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<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Directorships
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</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>And</b></font></td>
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<td valign="bottom" align="center"><font face="Serif" size="2"><b>With
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<td><font face="Serif" size="1">&#160;</font></td>
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<td valign="bottom" align="center"><font face="Serif" size="2"><b>Overseen
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<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
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</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Address<a href="#b-10_star">*</a>
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<td><font face="Serif" size="1">&#160;</font></td>
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</tr>
<tr>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
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<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td width="10%" valign="top" align="center"><font face="Serif" size="2">Richard
 M. Galkin (66)</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="12%" valign="top" align="center"><font face="Serif" size="2">Class II
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<td width="1%"><font face="Serif" size="1">&#160;</font></td>
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 of Richard M. Galkin Associates, Inc., telecommunications consultants, President
 of Manhattan Cable Television (a subsidiary of Time Inc.), President of Haverhills
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<td width="1%"><font face="Serif" size="1">&#160;</font></td>
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</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
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</tr>
<tr>
<td valign="top" align="center"><font face="Serif" size="2">Stephen
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<td><font face="Serif" size="1">&#160;</font></td>
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</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
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<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="center"><font face="Serif" size="2">William
 L. Koke (70)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Class III Director</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Term as
 Director expires 2005; Director since 2001</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">21</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">Private investor.
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 Shoreline Financial Consultants, Director of Financial Relations of SONAT, Inc.,
 Treasurer of Ward Foods, Inc. and President of CFC, Inc.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">None</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="center"><font face="Serif" size="2">Arthur S.
 Mehlman (63)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Class II
 Director</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Term as
 Director expires 2007; Director since 2004</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">21</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">Director of
 The League for People with Disabilities, Inc.; Director of University of Maryland
 Foundation and University of Maryland College Park Foundation (non-profits); Formerly:
 Partner, KPMG LLP (international accounting firm) (1972-2002). Formerly, Director
 of Maryland Business Roundtable for Education (July 1984 &#150; June 2002).</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Director/Trustee
 of the registered investment companies constituting the 23 Legg Mason Funds; Director
 of Municipal Mortgage &#038; Equity, LLC</font></td>
</tr>
</table>
<br>
<p align="center"><font face="Serif" size="2">B-9</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_10"></a>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr><td valign="bottom"><font face="Serif" size="2">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Term
 Of</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Number
 of</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Office
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Portfolios
 in</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Other
 Public</b></font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>And</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Fund</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Company
</b></font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Name,
 Age</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Position(s)
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Length
 Of</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Complex
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Directorships
</b></font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>And</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>With
 The</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Time</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Overseen
 by</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Held
 By</b></font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Address<a href="#b-10_star">*</a>
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Fund</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Served
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Director
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2"><b>Principal
 Occupations During Past Five Years</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Director
</b></font></td>
</tr>
<tr>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td width="10%" valign="top" align="center"><font face="Serif" size="2">David L.
 Meister (65)</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="12%" valign="top" align="center"><font face="Serif" size="2">Director
 elected by 6.00% Preferred Stockholders</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="12%" valign="top" align="center"><font face="Serif" size="2">Term as
 Director expires annually; Director since 1996</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="15%" valign="top" align="center"><font face="Serif" size="2">21</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">Private investor.
 Chairman and Chief Executive Officer of The Tennis Channel (June 2000 &#150; March
 2005); and Chief Executive Officer of Seniorlife.com (from December 1999 to May
 2000). Mr. Meister&#146;s prior business experience includes having served as a
 consultant to the communications industry, President of Financial News Network,
 Senior Vice President of HBO, President of Time-Life Films and Head of Broadcasting
 for Major League Baseball.</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="15%" valign="top" align="center"><font face="Serif" size="2">None</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="center"><font face="Serif" size="2">G. Peter
 O&#146;Brien (58)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Class I
 Director</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Term as
 Director expires 2006; Director since 2001</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">21</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">Trustee of
 Colgate University; President of Hill House, Inc.; and Managing Director/Equity
 Capital Markets Group of Merrill Lynch &#038; Co. (from 1971 to 1999).</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Director/
 Trustee of the registered investment companies constituting the 23 Legg Mason Funds;
 Director of Renaissance Capital Greenwich Funds; Director of Technology Investment
 Capital Corp.</font></td>
</tr>
</table>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td colspan="2" valign="bottom" align="left"><font face="Serif" size="2">________________________</font></td>
</tr>
<tr>
<td width="5%"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2"><a name="b-10_star"></a>*&#160;&#160;&#160;&#160;&#160;&#160;&#160;Messrs.
 Dwight, Galkin, Isaacs, Koke, Mehlman, Meister and O&#146;Brien&#146;s address is
 c/o Royce, 1414 Avenue of the Americas, New York, New York 10019.</font></td>
</tr>
</table>
<br>
<div align="justify"><font face="Serif" size="2"><b>Officers</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Certain biographical
 and other information concerning the officers of the Fund is set forth below. Officers
 are elected by and serve at the pleasure of the Board of Directors. Each officer
 will hold office for the year ending December 31, 2005, and thereafter until his
 respective successor is duly elected and qualified.</font></div><br>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr><td valign="bottom"><font face="Serif" size="2">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2"><b>Term
 Of</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2"><b>Position(s)
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2"><b>Office
 And</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="center"><font face="Serif" size="2"><b>Name,
 Age And</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2"><b>With
 The</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Length
 Of</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Principal
 Occupations During</b></font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Address<a href="#b-11_star">*</a>
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Fund</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Time
 Served</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Past
 Five Years</b></font></td>
</tr>
<tr>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td width="20%" valign="top" align="left"><font face="Serif" size="2">John D. Diederich
 (53)</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="20%" valign="top" align="center"><font face="Serif" size="2">Vice President,
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<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="20%" valign="top" align="center"><font face="Serif" size="2">Officer
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<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">Member of
 Board of Managers, Chief Operating Officer (since October 2001), Chief Financial
 Officer (since March 2002) and Managing Director of Royce; Vice President, Treasurer
 and Director of Administration of the other Royce Funds; and President of Royce
 Fund Services, Inc.</font></td>
</tr>
</table>
<br>
<p align="center"><font face="Serif" size="2">B-10</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_11"></a>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr><td valign="bottom"><font face="Serif" size="2">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2"><b>Term
 Of</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2"><b>Position(s)
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2"><b>Office
 And</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="center"><font face="Serif" size="2"><b>Name,
 Age And</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2"><b>With
 The</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Length
 Of</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Principal
 Occupations During</b></font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Address<a href="#b-11_star">*</a>
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Fund</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Time
 Served</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><b>Past
 Five Years</b></font></td>
</tr>
<tr>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td width="20%" valign="top" align="left"><font face="Serif" size="2">Jack E. Fockler,
 Jr. (45)</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="20%" valign="top" align="center"><font face="Serif" size="2">Vice President</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="20%" valign="top" align="center"><font face="Serif" size="2">Officer
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<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">Managing Director
 and Vice President of Royce; Vice President of The Royce Funds.</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">W. Whitney
 George (46)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Vice President
 and Senior Portfolio Manager</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Officer
 since 1995</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">Managing Director
 and Vice President of Royce; Vice President of The Royce Funds.</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">Daniel A.
 O&#146;Byrne (42)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Vice President
 and Assistant Secretary</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Officer
 since 1994</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">Principal
 and Vice President of Royce; Vice President of The Royce Funds.</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">John E. Denneen
 (38)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Secretary
 and Chief Legal Officer</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Officer
 from 1996 to 2001 and since April 2002</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">General Counsel
 of Royce (since January 2003); Deputy General Counsel, Principal, Chief Compliance
 Officer and Secretary of Royce (since March 2002); Secretary of The Royce Funds
 (1996-2001 and since April 2002); Associate General Counsel, Principal and Chief
 Compliance Officer of Royce (1996-2001); and Principal of Credit Suisse First Boston
 Private Equity (2001-2002).</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">Lisa Curcio
 (45)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Chief Compliance
 Officer</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="center"><font face="Serif" size="2">Officer
 since 2004</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">Vice President,
 The Bank of New York (February 2001-June 2004); Director of Compliance, Lord Abbett
 (August 2000-February 2001); Senior Vice President, Compliance Officer and Secretary,
 Lexington Global Asset Managers, Inc. (April 1985-August 2000).</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">_______________</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
</table>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2"><a name="b-11_star"></a>* The address
 of each officer is c/o Royce, 1414 Avenue of the Americas, New York, New York 10019.</font></div><br>
<div align="justify"><font face="Serif" size="2"><b>Ownership of Securities</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Information
 relating to each Director&#146;s share ownership in the Fund and in The Royce Funds
 as of December 31, 2004 is set forth in the tables below.</font></div><br>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Aggregate
 Dollar Range of Equity</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Aggregate
 Dollar Range of Equity</font></td>
</tr>
<tr>
<td colspan="2" valign="bottom" align="center"><font face="Serif" size="2"><u>Name</u></font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><u>Securities
 in the Fund</u></font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><u>Securities
 in The Royce Funds</u></font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" colspan="2" align="left"><font face="Serif" size="2">
<i>Interested Directors</i></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td width="3%" align="left"><font face="Serif" size="1">&#160;</font></td>
<td width="15%" valign="bottom" align="left"><font face="Serif" size="2">Charles M.
 Royce</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Over $100,000</font></td>
<td width="32%" valign="bottom" align="center"><font face="Serif" size="2">Over $100,000</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">Mark R. Fetting</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$10,001-$50,000</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Over $100,000</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" colspan="2" align="left"><font face="Serif" size="2">
<i>Non-Interested Directors</i></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">Donald R.
 Dwight</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$1-$10,000</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Over $100,000</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">Richard M.
 Galkin</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$1-$10,000</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Over $100,000</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">Stephen L.
 Isaacs</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$1-$10,000</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Over $100,000</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">William L.
 Koke</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$10,001-$50,000</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Over $100,000</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">Arthur S.
 Mehlman</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$10,001-$50,000</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Over $100,000</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">David L. Meister</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">None</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Over $100,000</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">G. Peter O&#146;Brien</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$10,001-$50,000</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Over $100,000</font></td>
</tr>
</table>
<br>
<p align="center"><font face="Serif" size="2">B-11</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_12"></a>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Mr. Royce
 has sole voting power and sole investment power as to the shares beneficially owned
 by him. As of December 31, 2004, all Directors and officers of the Fund as a group
 (15 persons) beneficially owned 1,977,007 shares of the Fund&#146;s Common Stock,
 constituting 18.21% of the outstanding shares, and no shares of its 6.00% Preferred
 Stock. As of the date of this Statement of Additional Information, none of the non-interested
 Directors of the Fund nor any of their immediate family members owned beneficially
 or of record any securities issued by Legg Mason or any of its affiliates (other
 than registered investment companies).</font></div><br>
<div align="justify"><font face="Serif" size="2"><b>Board Committees and Meetings</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Board
 of Directors has an Audit Committee, comprised of Donald R. Dwight, Richard M. Galkin,
 Stephen L. Isaacs, William L. Koke, David L. Meister, Arthur S. Mehlman (since April
 15, 2004) and G. Peter O&#146;Brien. The Audit Committee is responsible for, among
 other things, the appointment, compensation and oversight of the work of the Fund&#146;s independent accountants, including the resolution of disagreements regarding
 financial reporting between Fund management and such independent accountants. The
 Fund has adopted an Audit Committee charter. Mr. Galkin serves as Chairman of the
 Audit Committee and Mr. Mehlman is designated as the Audit Committee Financial Expert,
 as defined under SEC regulations. The members of the Audit Committee are &#147;independent&#148;
 within the meaning of the 1940 Act and the New York Stock Exchange and Nasdaq corporate
 governance standards for audit committees. The Fund&#146;s Audit Committee held
 three meetings during the year ended December 31, 2004.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Board
 of Directors has a Nominating Committee comprised of seven Directors who are not
 &#147;interested persons&#148; as defined in the 1940 Act, namely Messrs. Dwight, Galkin,
 Isaacs, Koke, Mehlman (since April 15, 2004), Meister and O&#146;Brien. The Nominating
 Committee is responsible for identifying and recommending to the Board of Directors
 individuals believed to be qualified to become Board members in the event that a
 position is vacated or created. The Nominating Committee will consider Director
 candidates recommended by stockholders. In considering potential Nominees, the Nominating
 Committee will take into consideration (i) the contribution which the person can
 make to the Board, with consideration given to the person&#146;s business and professional
 experience, education and such other factors as the Committee may consider relevant;
 (ii) the character and integrity of the person; (iii) whether or not the person
 is an &#147;interested person&#148; of the Fund, as defined in the applicable laws and regulations;
 (iv) whether or not the person has any relationships that might impair his independence,
 such as any business, financial or family relationships with Fund management, the
 investment adviser of the Fund, Fund service providers or their affiliates; (v)
 whether or not the person is financially literate pursuant to the New York Stock
 Exchange&#146;s audit committee membership standards; (vi) whether or not the person
 serves on boards of, or is otherwise affiliated with, competing financial service
 organizations or their related investment company complexes; (vii) whether or not
 the person is willing to serve as, and willing and able to commit the time necessary
 for the performance of the duties of, a Director of the Fund; and (viii) whether
 or not the selection and nomination of the person would be consistent with the requirements
 of the Fund&#146;s retirement policies. The Fund&#146;s Nominating Committee held
 three meetings during the year ended December 31, 2004.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">To have a
 candidate considered by the Nominating Committee, a stockholder must submit the
 recommendation in writing and must include biographical information and set forth
 the qualifications of the proposed nominee. The stockholder recommendation and information
 described above must be sent to the Fund&#146;s Secretary, John E. Denneen, c/o
 Royce Focus Trust, Inc., 1414 Avenue of the Americas, New York, NY 10019.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Although the
 Board of Directors does not have a standing compensation committee, the Directors
 who are not &#147;interested persons&#148; review compensation annually.</font></div><br>
<div align="justify"><font face="Serif" size="2"><b>Compensation of Directors</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">For the
 year ended December 31, 2004, the following Directors of the Fund received compensation
 from the Fund and The Royce Funds, as follows:</font></div><br>
<br>
<p align="center"><font face="Serif" size="2">B-12</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_13"></a>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Aggregate</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Pension
 or Retirement</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Estimated</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Total Compensation</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Compensation</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Benefits
 Accrued as</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Annual Benefits</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">from The
 Royce Funds</font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2"><u>Name</u></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><u>from
 Fund</u></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><u>Part
 of Fund Expenses</u></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><u>upon
 Retirement</u></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><u>paid
 to Directors</u></font></td>
</tr>
<tr>
<td width="19%" valign="bottom" align="left"><font face="Serif" size="2">Donald R.
 Dwight, Director<sup><a href="#b-13_one">1</a></sup></font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="19%" valign="bottom" align="center"><font face="Serif" size="2">$2,900</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="19%" valign="bottom" align="center"><font face="Serif" size="2">None</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="19%" valign="bottom" align="center"><font face="Serif" size="2">None</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="19%" valign="bottom" align="center"><font face="Serif" size="2">$75,600</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Richard
 M. Galkin, Director</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$2,900</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">None</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">None</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$75,600</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Stephen
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<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$2,900</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">None</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">None</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$75,600</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">William
 L. Koke, Director<sup><a href="#b-13_two">2</a></sup></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$2,900</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">None</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">None</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$75,600</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Arthur S.
 Mehlman, Director</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$2,173</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">None</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">None</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$56,971</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">David L.
 Meister, Director</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$2,900</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">None</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">None</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$75,600</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">G. Peter
 O&#146;Brien, Director</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$2,900</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">None</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">None</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$75,600</font></td>
</tr>
</table>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td colspan="3" valign="bottom" align="left"><font face="Serif" size="2">______________</font></td>
</tr>
<tr>
<td width="1%" valign="top" align="left"><font face="Serif" size="2"><a name="b-13_one"></a>1</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="justify"><font face="Serif" size="2">Includes
 $435 from the Fund ($10,350 from the Fund and other Royce Funds) deferred during
 2004 at the election of Mr. Dwight under The Royce Funds&#146; Deferred Compensation
 Plan for Trustees/Directors.</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2"><a name="b-13_two"></a>2</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="justify"><font face="Serif" size="2">Includes
 $40,000 from other Royce Funds deferred during 2004 at the election of Mr. Koke
 under The Royce Funds&#146; Deferred Compensation Plan for Trustees/Directors.</font></td>
</tr>
</table>
<br>
<div align="justify"><font face="Serif" size="2"><b>Directors&#146; Consideration of Investment
 Advisory Agreement</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Board
 of Directors determined at meetings held on June 10 and 11, 2004, to approve the
 continuance of the Fund&#146;s current Investment Advisory Agreement with Royce.
 In making their determination, the Directors considered a wide range of information
 of the type they regularly consider when determining whether to continue a fund&#146;s advisory arrangements as in effect from year to year. In its consideration
 of the current Investment Advisory Agreement, the Board of Directors focused on
 information it had received relating to, among other things: (a) the nature, quality
 and extent of the advisory and other services to be provided to the Fund by Royce,
 (b) comparative data with respect to advisory fees paid by other funds with similar
 investment objectives, (c) the operating expenses and expense ratio of the Fund
 compared to funds with similar investment objectives, (d) the performance of the
 Fund as compared to such comparable funds, including risk-adjusted performance information
 prepared by Morningstar Inc., (e) the relative profitability of the arrangements
 to Royce, (f) information about the services to be performed and the personnel performing
 such services under the current Investment Advisory Agreement, (g) the general reputation
 and financial resources of Royce and Legg Mason, (h) any compensation payable by
 the Fund to affiliates of Royce for other services and (i) Royce&#146;s practices
 regarding the selection and compensation of brokers that execute portfolio transactions
 for the Fund and the brokers&#146; provision of brokerage and research services
 to Royce.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">In particular,
 the Board of Directors compared the investment advisory fee rate, the annual net
 expense ratio and the risk-adjusted investment performance of the Fund to a peer
 group selected by Morningstar that consisted of 14 other funds with substantially
 similar investment objectives and policies and 391 funds in Morningstar&#146;s small
 blend category. As set forth in the Prospectus under the heading &#147;Investment Advisory
 and Other Services - Advisory Fee,&#148; Royce is entitled to receive a monthly fee equal
 to 1/12 of 1% (1% on an annualized basis) of the Fund&#146;s average net assets
 (which include net assets applicable both to Common Stock and Preferred Stock) for
 each month during the term of the agreement.</font></div><br>
<br>
<p align="center"><font face="Serif" size="2">B-13</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_14"></a>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Board
 of Directors noted that the Fund&#146;s annual net expense ratio applicable to total
 net assets (which includes net assets applicable to both Common Stock and Preferred
 Stock) was lower than 10 of the 15 funds in its peer group. The Board of Directors
 also considered the fact that Royce has voluntarily committed to waive the portion
 of its investment advisory fee attributable to an issue of the Fund&#146;s Preferred
 Stock for any month in which the Fund&#146;s average annual NAV total return since
 issuance of the Preferred Stock fails to exceed the applicable Preferred Stock&#146;s
 dividend rate.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Because the
 Fund uses a risk-averse approach to investing, the Board of Directors believed that
 risk-adjusted performance continued to be an appropriate measure of the Fund&#146;s
 investment performance. For the most recent one-year and five-year period, the Fund&#146;s risk-adjusted investment performance exceeded the averages for the peer group
 and Morningstar&#146;s small blend category, placing the Fund within the second
 quartile for funds in the peer group and Morningstar&#146;s small blend category.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">After its
 review of the above-described matters, the Board of Directors approved the continuation
 of the Investment Advisory Agreement between the Fund and Royce. The Board of Directors
 was advised by separate legal counsel in connection with its review of the investment
 advisory arrangements of the Fund.</font></div><br>
<div align="justify"><font face="Serif" size="2"><b>Information Concerning Royce</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">On October
 1, 2001, Royce became an indirect wholly-owned subsidiary of Legg Mason. On March
 31, 2002, Royce&#146;s corporate predecessor was merged into Royce Holdings, LLC
 (a wholly-owned subsidiary of Legg Mason), which then changed its name to Royce
 &#038; Associates, LLC. As a result of this merger, Royce &#038; Associates, LLC
 became the Fund&#146;s investment adviser and a direct wholly-owned subsidiary of
 Legg Mason.</font></div><br>
<div align="center"><font face="Serif" size="2"><b>CODE OF ETHICS AND RELATED
 MATTERS</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Royce and
 the Fund have adopted a Code of Ethics under which directors (other than non-management
 directors), officers and employees of Royce (&#147;Royce-related persons&#147;) and interested
 trustees/directors, officers and employees of the Fund are generally prohibited
 from personal trading in any security which is then being purchased or sold or considered
 for purchase or sale by the Fund or any other Royce client account. The Code of
 Ethics permits such persons to engage in other personal securities transactions
 if (i) the securities involved are certain debt securities, money market instruments,
 shares of non-affiliated registered open-end investment companies or shares acquired
 from an issuer in a rights offering or under an automatic dividend reinvestment,
 employer-sponsored automatic payroll deduction cash purchase plan or other automatic
 investment plan, (ii) the transactions are either non-volitional or are effected
 in an account over which such person has no direct or indirect influence or control
 or (iii) they first obtain permission to trade from Royce&#146;s Compliance Officer
 and either an executive officer or Senior Portfolio Manager of Royce. The Code of
 Ethics contains standards for the granting of such permission, and permission to
 trade will usually be granted only in accordance with such standards.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Royce&#146;s
 client accounts include several private investment companies in which Royce, Royce-related
 persons and/or other Legg Mason affiliates have (and, therefore, may be deemed to
 beneficially own) a share of up to 15% of the company&#146;s realized and unrealized
 net capital gains from securities transactions, but less than 25% of the company&#146;s equity interests. The Code of Ethics does not restrict transactions effected
 by Royce for such private investment company accounts, and transactions for such
 accounts are subject to Royce&#146;s allocation policies and procedures. See &#147;Brokerage
 Allocation and Other Practices.&#148;</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">As of March
 31, 2005, Royce-related persons, interested trustees/directors, officers and employees
 of The Royce Funds and members of their immediate families beneficially owned shares
 of The Royce Funds having a total value of over $87.9 million, and such persons
 beneficially owned equity interests in Royce-related private investment companies
 totaling approximately $11.8 million.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Code of
 Ethics may be reviewed and copied at the SEC&#146;s Public Reference Room in Washington,
 D.C. Call 1-202-942-8090 for information on the operation of the Public Reference
 Room. The Code of Ethics is also available on the EDGAR Database on the SEC&#146;s
 Internet site at http://www.sec.gov, and copies may be</font></div><br>
<br>
<p align="center"><font face="Serif" size="2">B-14</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_15"></a>
<div align="justify"><font face="Serif" size="2">obtained upon payment of a duplicating fee by electronic request at the following E-mail address: publicinfo@sec.gov,
 or by writing the SEC&#146;s Public Reference Section, Washington, D.C. 20549-0102.</font></div><br>
<div align="center"><font face="Serif" size="2"><b>INVESTMENT ADVISORY AND
 OTHER SERVICES</b></font></div><br>
<div align="justify"><font face="Serif" size="2"><b>Advisory Fee</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">As set forth
 in the Prospectus under the heading &#147;Investment Advisory and Other Services - Advisory
 Fee,&#148; Royce is entitled to receive a monthly fee equal to 1/12 of 1% (1% on an annualized
 basis) of the Fund&#146;s average net assets (which includes net assets applicable
 to both Common Stock and Preferred Stock) for each month during the term of the
 agreement. For the years ended December 31, 2004, 2003 and 2002, Royce received
 investment advisory fees from the Fund of $1,197,732, $784,090 and $715,813 (net
 of $0, $116,163 and $117,259 voluntarily waived by Royce), respectively.</font></div><br>
<div align="justify"><font face="Serif" size="2"><b>Other</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Investment
 Advisory Agreement provides that the Fund may use &#147;Royce&#148; as part of its name only
 for as long as the Investment Advisory Agreement remains in effect. The name &#147;Royce&#148;
 is a property right of Royce, and it may at any time permit others, including other
 investment entities, to use such name.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Investment Advisory Agreement protects
 and indemnifies Royce against liability to the Fund, its stockholders or others
 for any action taken or omitted to be taken by Royce in connection with the performance
 of any of its duties or obligations under Investment Advisory Agreement or otherwise
 as an investment adviser to the Fund. However, Royce is not protected or indemnified
 against liabilities to which it would otherwise be subject by reason of willful
 malfeasance, bad faith or gross negligence in the performance of its duties or by
 reason of its reckless disregard of its duties and obligations under the Investment
 Advisory Agreement.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Royce&#146;s services to the Fund are not deemed to be exclusive,
 and Royce or any of its affiliates may provide similar services to other investment
 companies and other clients or engage in other activities.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Investment Advisory
 Agreement will remain in effect until June 30, 2005 and may be continued in effect
 from year to year thereafter if such continuance is specifically approved at least
 annually by the Board of Directors or by the vote of a majority of the Fund&#146;s
 outstanding voting securities and, in either case, by a majority of the directors
 who are not parties to the Agreement or interested persons of any such party. The
 Investment Advisory Agreement will automatically terminate if it is assigned (as
 defined by the 1940 Act and the rules thereunder) and may be terminated without
 penalty by vote of a majority of the Fund&#146;s outstanding voting securities or
 by either party thereto on not less than 60 days&#146; written notice.</font></div><br>
<div align="justify"><font face="Serif" size="2"><b>PORTFOLIO MANAGER</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">W. Whitney
 George beneficially owned over $1,000,000 of the Fund&#146;s shares as of December
 31, 2004.</font></div><br>
<div align="justify"><font face="Serif" size="2"><b>DESCRIPTION OF PORTFOLIO MANAGER COMPENSATION
 STRUCTURE</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Royce
 seeks to maintain a compensation program that is competitively positioned to attract
 and retain high-caliber investment professionals. The Fund&#146;s Portfolio Manager,
 W. Whitney George, receives from Royce a base salary, a performance bonus, a Firm
 Bonus based primarily on registered investment company and other client account
 revenues generated by Royce, other compensation described below and a benefits package.
 Mr. George&#146;s compensation is reviewed and may be modified from time to time
 as appropriate to reflect changes in the market, as well as to adjust the factors
 used to determine bonuses. Mr. George&#146;s compensation consists of the following
 elements:</font></div><br>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="1%" valign="top" align="justify"><font face="Serif" size="2">-</font></td>
<td width="2%" valign="top" align="justify"><font face="Serif" size="2">&#160;</font></td>
<td valign="bottom"><div align="justify"><font face="Serif" size="2">BASE SALARY.
 Mr. George is paid a base salary. In setting the base salary, Royce seeks to be
 competitive in light of the particular Portfolio Manager&#146;s experience and responsibilities.</font></div></td>
</tr>
</table>
<br>
<p align="center"><font face="Serif" size="2">B-15</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_16"></a>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="1%" valign="top" align="justify"><font face="Serif" size="2">-</font></td>
<td width="2%" valign="top" align="justify"><font face="Serif" size="2">&#160;</font></td>
<td valign="bottom"><div align="justify"><font face="Serif" size="2">PERFORMANCE
 BONUS. Mr. George receives a quarterly Performance Bonus that is revenue-based, and therefore determined in part
 on the value of the accounts&#146; net assets,
 determined with reference to each of the registered investment company and other
 client accounts he is managing. The revenue-based Performance Bonus applicable to
 the Fund and the other registered investment company accounts managed by Mr. George
 is subject to upward or downward adjustment or elimination based on a combination
 of 3-year and 5-year risk-adjusted pre-tax returns of such accounts relative to all
 small-cap objective funds with three years of listings tracked by Morningstar (as of December 31, 2004 there were 387 such funds tracked by Morningstar)
 and the 5-year absolute returns of such accounts
 relative to 5-year U.S. Treasury Notes. The revenue-based Performance Bonus applicable
 to non-registered investment company accounts managed by Mr. George is not subject
 to performance-related adjustment.</font></div></td>
</tr>
</table>
<br>
<div align="justify"><font face="Serif" size="2">Payment of the Performance Bonus may be deferred, and any amounts deferred are forfeitable,
 if Mr. George is terminated by Royce with or without cause or resigns. The amount
 of the deferred Performance Bonus will appreciate or depreciate during the deferral
 period, based on the total return performance of one or more Royce-managed registered
 investment company accounts selected by Mr. George at the beginning of the deferral
 period. The amount deferred will depend on Mr. George&#146;s total direct, indirect,
 beneficial and deferred unvested bonus investments in the Royce registered investment
 company account for which he is receiving portfolio management compensation.</font></div><br>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="1%" valign="top" align="justify"><font face="Serif" size="2">-</font></td>
<td width="2%" valign="top" align="justify"><font face="Serif" size="2">&#160;</font></td>
<td valign="bottom"><div align="justify"><font face="Serif" size="2">FIRM BONUS.&#160;&#160;
 Mr. George receives a bonus relating to Royce&#146;s operating revenues.</font></div></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td width="1%" valign="top" align="justify"><font face="Serif" size="2">-</font></td>
<td width="2%" valign="top" align="justify"><font face="Serif" size="2">&#160;</font></td>
<td valign="bottom"><div align="justify"><font face="Serif" size="2">BENEFIT PACKAGE. &#160;&#160;Mr. George receives benefits standard for all Royce employees, including
 health care and other insurance benefits, and participation in Royce&#146;s 401(k)
 Plan and Money Purchase Pension Plan.</font></div></td>
</tr>
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td width="1%" valign="top" align="justify"><font face="Serif" size="2">-</font></td>
<td width="2%" valign="top" align="justify"><font face="Serif" size="2">&#160;</font></td>
<td valign="bottom"><div align="justify"><font face="Serif" size="2">ADDITIONAL COMPENSATION. &#160;&#160;Mr. George receives a bonus based on Royce&#146;s
 retained pre-tax operating profit. This bonus, along with the Performance Bonus, generally
 represents the most significant element of his compensation. Finally, Mr. George
 also receives bonuses from Royce relating to the sale of Royce to Legg Mason, Inc.
 on October 1, 2001. Such bonuses are payable pursuant to an Employment Agreement
 entered into with Royce in connection with the sale.</font></div></td>
</tr>
</table>
<br>
<div align="justify"><font face="Serif" size="2"><b>Other Portfolio Manager Accounts</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The following
 chart contains information, as of December 31, 2004,
 regarding all Royce client accounts for which the Fund&#146;s Portfolio Manager, W. Whitney George, has day-to-day management responsibilities.
 Accounts are grouped into three categories: (i) registered investment companies,
 (ii) private pooled investment vehicles and (iii) other accounts. To the extent
 that any of these accounts pay advisory fees that are based on account performance
 (&#147;performance-based fees&#148;), information on those accounts is specifically broken
 out.</font></div><br>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Number of</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Accounts</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Managed
 for</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Value of</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">which Advisory</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Managed
 Accounts</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Number of</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Fee is</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">for which
 Advisory</font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2">Name of</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Type of</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Accounts</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Total Assets</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Performance-</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Fee is Performance-</font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2">Portfolio
 Manager</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Account</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Managed</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Managed</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Based</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Based</font></td>
</tr>
<tr>
<td valign="bottom" colspan="11"><hr size="1" color="#000000" noshade></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">W. Whitney
 George</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td width="16%" align="left"><font face="Serif" size="1">&#160;</font></td>
<td width="1%" align="left"><font face="Serif" size="1">&#160;</font></td>
<td width="20%" valign="bottom" align="left"><font face="Serif" size="2">Registered
 investment companies</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="11%" valign="bottom" align="center"><font face="Serif" size="2">9</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="16%" valign="bottom" align="center"><font face="Serif" size="2">$11,318,933,281</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="16%" valign="bottom" align="center"><font face="Serif" size="2">1</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="16%" valign="bottom" align="center"><font face="Serif" size="2">$1,000,000</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">Private pooled
 investment vehicles</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">1</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$87,220,624</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">1</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$87,220,624</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">Other accounts</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">1</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">$3,055,073</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">None</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">-</font></td>
</tr>
</table>
<br>
<p align="center"><font face="Serif" size="2">B-16</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_17"></a>
<div align="justify"><font face="Serif" size="2"><b>Potential Conflicts of Interest</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The fact that
 the Fund&#146;s Portfolio Manager has day-to-day management responsibility for more
 than one Royce client account may create actual, potential or only apparent conflicts
 of interest. For example, the Portfolio Manager may have an opportunity to purchase
 securities of limited availability. In this circumstance, the Portfolio Manager
 is expected to review each account&#146;s investment guidelines, restrictions, tax
 considerations, cash balances, liquidity needs and other factors to determine the
 suitability of the investment for each account and to ensure that his or her managed
 accounts are treated equitably. The Portfolio Manager may also decide to purchase
 or sell the same security for multiple managed accounts at approximately the same
 time. To address any conflicts that this situation may create, the Portfolio Manager
 will generally combine managed account orders (i.e., enter a &#147;bunched&#148; order) in
 an effort to obtain best execution or a more favorable commission rate. In addition,
 if orders to buy or sell a security for multiple accounts managed by the same Portfolio
 Manager on the same day are executed at different prices or commission rates, the
 transactions will generally be allocated by Royce to each of such managed accounts
 at the weighted average execution price and commission. In circumstances where a
 bunched order is not completely filled, each account will normally receive a pro-rated
 portion of the securities based upon the account&#146;s level of participation in
 the order. Royce may under certain circumstances allocate securities in a manner
 other than pro-rata if it determines that the allocation is fair and equitable under
 the circumstances and does not discriminate against any account. See also, &#147;Portfolio
 Transactions&#148; below.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">As described
 above, there is a revenue-based component of Mr. George&#146;s Performance Bonus and
 he also receives a &#147;Partners Pool&#148; participation based on revenues (adjusted
 for certain imputed expenses) generated by Royce. In addition, he receives a bonus
 based on Royce&#146;s retained pre-tax profits from operations. As a result, Mr.
 George may receive a greater relative benefit from activities that increase the
 value to Royce of the Funds and/or other Royce client accounts, including, but not
 limited to, increases in sales of Fund shares and assets under management.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Also, as described
 above, Mr. George, and other Royce Portfolio Managers, generally manage more than
 one Royce client account, including, among others, registered investment company
 accounts, separate accounts and private pooled accounts managed on behalf of institutions
 (e.g., pension funds, endowments and foundations) and for high-net-worth individuals.
 The appearance of a conflict of interest may arise where Royce has an incentive,
 such as a performance-based management fee (or any other variation in the level
 of fees payable by Funds or other Royce client accounts to Royce), which relates
 to the management of one or more Funds or accounts with respect to which the same
 Portfolio Manager has day-to-day management responsibilities. Mr. George receives
 no compensation tied to performance fees earned by Royce for the management of any
 one client account. Although bonuses and other compensation derived from Royce revenues
 or profits are impacted to some extent, the impact is relatively minor given the
 small percentage of Royce firm assets under management for which Royce receives
 performance-measured compensation.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Finally, conflicts
 of interest may arise when a Portfolio Manager personally buys, holds or sells securities
 held or to be purchased or sold for a Fund or other Royce client account or personally
 buys, holds or sells the shares of one or more of The Royce Funds. To address this,
 Royce has adopted a written Code of Ethics designed to prevent and detect personal
 trading activities that may interfere or conflict with client interests (including
 Fund shareholders&#146; interests). See &#147;Code of Ethics and Related Matters&#148; below.
 Royce generally does not permit its Portfolio Managers to purchase small- or micro-cap
 securities in their personal investment portfolios.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Royce and
 The Royce Funds have adopted certain compliance procedures which are designed to
 address the above-described types of conflicts. However, there is no guarantee that
 such procedures will detect each and every situation in which a conflict arises.</font></div><br>
<div align="justify"><font face="Serif" size="2"><b>Service Contract with State Street
</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">State Street
 Bank and Trust Company (&#147;State Street&#148;), the custodian of the Fund&#146;s assets,
 provides certain management-related services to the Fund. Such services include
 keeping books of accounts and rendering such financial and other statements as may
 be requested by the Fund from time to time, generally assisting in the preparation
 of reports to the Fund&#146;s stockholders, to the SEC and others and in the auditing
 of accounts and in other ministerial matters of like nature, as agreed to between
 the Fund and State Street. For the fiscal years ended December 31, 2004, 2003 and
 2002, the Fund paid $52,202, $47,517 and $46,083 in fees to the Fund&#146;s custodian.</font></div><br>
<br>
<p align="center"><font face="Serif" size="2">B-17</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_18"></a>
<div align="center"><font face="Serif" size="2"><b>TAXATION</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Fund has
 elected to be treated as a regulated investment company (&#147;RIC&#148;) under
 the Internal Revenue Code of 1986, as amended (the &#147;Code&#148;), and has qualified
 and intends to continue to qualify for the special tax treatment afforded RICs under
 the Code. As long as it so qualifies, in any taxable year in which it distributes
 at least 90% of its investment company taxable income (&#147;ICTI&#148;) (as that term is
 defined in the Code without regard to the deduction for dividends paid) for such
 taxable year, the Fund will not be subject to Federal income tax on the part of
 its ICTI and net capital gains (i.e., the excess of the Fund&#146;s net realized
 long-term capital gains over its net realized short-term capital losses), if any,
 that it distributes to its stockholders in each taxable year. The Fund intends to
 distribute substantially all of such income.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Code requires
 RIC to pay a non-deductible 4% excise tax to the extent the RIC does not distribute,
 during each calendar year, 98% of its ordinary income, determined on a calendar
 year basis, and 98% of its capital gains, determined, in general, on an October
 31 year end, plus 100% of undistributed amounts from previous years. For these purposes,
 the Fund will be deemed to have distributed any income or gains on which it paid
 corporate income tax. While the Fund intends to distribute its ordinary income and
 capital gains in the manner necessary to minimize imposition of the 4% excise tax,
 there can be no assurance that sufficient amounts of the Fund&#146;s ordinary income
 and capital gains will be distributed to avoid entirely the imposition of the tax.
 In such event, the Fund will be liable for the tax only on the amount by which it
 does not meet the foregoing distribution requirements.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Dividends
 paid by the Fund from its ICTI (such dividends are referred to in this section as
 &#147;ordinary income dividends&#148;) are taxable to stockholders as ordinary income (some
 of which may represent qualified dividend income, taxable at a reduced rate, as
 discussed below) to the extent of the Fund&#146;s earnings and profits. Distributions
 made from net capital gains (including gains or losses from certain transactions
 in warrants, rights and options) and properly designated by the Fund (such distributions
 are referred to in this section as &#147;capital gain dividends&#148;) are taxable to stockholders
 as long-term capital gains, regardless of the length of time the stockholder has
 owned Fund shares. Distributions in excess of the Fund&#146;s earnings and profits
 will first reduce the adjusted tax basis of a holder&#146;s shares and, after such
 adjusted tax basis is reduced to zero, will constitute capital gains to such holder
 (assuming the shares are held as a capital asset).</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Fund may
 elect to retain its net capital gains or a portion thereof for investment and be
 taxed at corporate rates on the amount retained. In such case, it may designate
 the retained amount as undistributed capital gains in a notice to its stockholders,
 who will be treated as if each received a distribution of his pro rata share of
 such gains, with the result that each stockholder will (i) be required to report
 his pro rata share of such gains on his tax return as long-term capital gain, (ii)
 receive a refundable tax credit for his pro rata share of tax paid by the Fund on
 the gains and (iii) increase the tax basis for his shares by an amount equal to
 the deemed distributions less the tax credit.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Gain or loss,
 if any, recognized on the sale or other disposition of shares of the Fund will be
 taxed as a capital gain or loss if the shares are capital assets in the stockholder&#146;s hands. Such gain or loss will be long-term or short-term, depending upon
 the stockholder&#146;s holding period for the shares. Generally, a stockholder&#146;s
 gain or loss will be a long-term gain or loss if the shares have been held for more
 than one year. Any loss realized upon the sale or exchange of Fund shares will be
 disallowed to the extent the shares disposed of are replaced within a period of
 61 days beginning 30 days before and ending 30 days after disposition of the original
 shares. In such case, the basis of the shares acquired will be adjusted to reflect
 the disallowed loss. Any loss realized upon the sale or exchange of Fund shares
 held for six months or less will be treated as long-term capital loss to the extent
 of any capital gain dividends received by the stockholder (or amounts credited to
 the stockholder as undistributed capital gains) with respect to such shares.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Fund distributions
 comprised of dividends from domestic corporations and certain foreign corporations
 (generally, corporations incorporated in a possession of the United States, some
 corporations eligible for treaty benefits under a treaty with the United States
 and corporations whose stock is readily tradable on an established securities market
 in the United States) are eligible for taxation at a maximum tax rate of 15% also
 applicable to capital gains in the hands of individual stockholders, provided holding
 period and other requirements are satisfied. Capital gain dividends likewise, are
 taxed at the reduced maximum rate of 15% for non-corporate</font></div><br>
<br>
<p align="center"><font face="Serif" size="2">B-18</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_19"></a>
<div align="justify"><font face="Serif" size="2">taxpayers. The 15% income
 tax rate applicable to capital gains and qualified dividend income is scheduled
 to expire after December 31, 2008. After this date, absent extension or modification
 of the relevant legislative provisions, long-term capital gain dividends paid by
 the Fund generally will be taxable at the previously applicable maximum 20% rate
 and distributions attributable to qualified dividend income will be taxed to the
 stockholder at his or her marginal Federal income tax rate (which generally will
 be higher than 15%).</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">A portion
 of the Fund&#146;s ordinary income dividends may be eligible for the dividends received
 deduction (&#147;DRD&#148;) allowed to corporations under the Code, if certain requirements
 are met. For these purposes, the Fund will allocate any dividends eligible and any
 other Preferred Stock for the DRD between the holders of Common Stock, 6.00% Preferred
 and any other Preferred Stock in proportion to the total dividends paid to each
 class during the taxable year, or otherwise as required by applicable law. A holder
 of shares of Common Stock (a) that is taxed as a corporation for Federal income
 tax purposes, (b) meets applicable holding period and taxable income requirements
 of section 246 of the Code, (c) is not subject to the &#147;debt-financed portfolio stock&#148;
 rules of section 246A of the Code with respect to an investment in the Fund and
 (d) is otherwise entitled to the DRD can claim a deduction equal to 70% of the dividends
 received on the 6.00% Preferred which are designated by the Fund as qualifying for
 the DRD.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The IRS has
 taken the position in Revenue Ruling 89-81 that if a RIC has more than one class
 of shares, it may designate distributions made to each class in any year as consisting
 of no more than such class&#146;s proportionate share of particular types of income,
 such as long-term capital gains and qualified dividend income. A class&#146;s proportionate
 share of a particular type of income is determined according to the percentage of
 total dividends paid by the RIC during such year that was paid to such class. Consequently,
 the Fund will designate distributions made to the Common Stock and 6.00% Preferred
 and any other Preferred Stock as consisting of particular types of income in accordance
 with the classes&#146; proportionate shares of such income. The amount of long-term
 capital gains, qualified dividend income, and other ordinary income allocable among
 the 6.00% Preferred, other Preferred Stock, and the Common Stock will depend upon
 the amount of such long-term capital gains, qualified dividend income, and other
 ordinary income realized by the Fund and the total dividends paid by the Fund on
 shares of Common Stock, 6.00% Preferred and other Preferred Stock during a taxable
 year.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">In the opinion
 of Sidley Austin Brown &#038; Wood LLP, under current law, the manner in which the
 Fund intends to allocate long-term capital gains, qualified dividend income and
 other ordinary income among shares of Common Stock, 6.00% Preferred and other Preferred
 Stock will be respected for Federal income tax purposes. However, there is currently
 no direct guidance from the IRS or other sources specifically addressing whether
 the Fund&#146;s method of allocation will be respected for Federal income tax purposes,
 and it is possible that the IRS could disagree with counsel&#146;s opinion and attempt
 to reallocate the Fund&#146;s long-term capital gains, qualified dividend income
 or other ordinary income. Sidley Austin Brown &#038; Wood LLP has advised the Fund
 that, in its opinion, if the IRS were to challenge in court the Fund&#146;s allocations,
 the IRS would be unlikely to prevail. The opinion of Sidley Austin Brown &#038;
 Wood LLP, however, represents only its best legal judgment and is not binding on
 the IRS or courts.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">If the Fund
 does not meet the asset coverage requirements of the 1940 Act or the Charter, the
 Fund will be required to suspend distributions to the holders of the Common Stock
 until the asset coverage is restored. Such a suspension of distributions might prevent
 the Fund from distributing 90% of its ICTI, as is required in order to avoid Fund-level
 taxation of such income, or might prevent it from distributing enough ordinary income
 and capital gains to avoid completely imposition of the excise tax. Upon any failure
 to meet the asset coverage requirements of the 1940 Act or the Charter, the Fund
 may, and in certain circumstances will be required to, partially redeem shares of
 6.00% Preferred in order to maintain or restore the requisite asset coverage and
 avoid the adverse consequences to the Fund and its stockholders of failing to qualify
 as a RIC. If asset coverage were restored, the Fund would again be able to pay dividends
 and might be able to avoid Fund-level taxation of its income.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Qualification
 as a RIC requires, among other things, that at least 90% of the Fund&#146;s gross
 income in each taxable year consist of certain types of income, including dividends,
 interest, gains from the disposition of stocks and securities and other investment-type
 income. In addition, the Fund&#146;s investments must meet certain diversification
 standards. If the Fund were unable to satisfy the 90% distribution requirement or
 otherwise were to fail to qualify to be taxed as a RIC in any year, it would be
 subject to tax in such year on all of its taxable income,</font></div><br>
<br>
<p align="center"><font face="Serif" size="2">B-19</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_20"></a>
<div align="justify"><font face="Serif" size="2">whether or not the Fund
 made any distributions. To qualify again to be taxed as a RIC in a subsequent year,
 the Fund would be required to distribute to 6.00% Preferred Stockholders and Common
 Stockholders as an ordinary income dividend, its earnings and profits attributable
 to non-RIC years reduced by an interest charge on 50% of such earnings and profits
 payable by the Fund to the IRS. In addition, if the Fund failed to qualify as a
 RIC for a period greater than one taxable year, the Fund would be required to recognize
 and pay tax on any net built-in gains (the excess of aggregate gains, including
 items of income, over aggregate losses that would have been realized if the Fund
 had been liquidated) or, alternatively, to elect to be subject to taxation on such
 built-in-gains recognized for a period of 10 years, in order to qualify as a RIC
 in a subsequent year.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Fund may
 invest in debt obligations purchased at a discount with the result that the Fund
 may be required to accrue income (and to distribute such income in accordance with
 the distribution requirements of the Code) for Federal income tax purposes before
 amounts due under the obligations are paid. The Fund may also invest in securities
 rated in the medium to lower rating categories of nationally recognized rating organizations,
 and in unrated securities (&#147;high yield securities&#148;). A portion of the interest payments
 on such high yield securities may be treated as dividends for Federal income tax
 purposes.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Certain transactions
 entered into by the Fund are subject to complex federal income tax provisions that
 may, among other things, a) affect the character of gains and losses realized, b)
 disallow, suspend or otherwise limit the allowance of certain losses or deductions,
 and c) accelerate the recognition of income. Operation of these rules could, therefore,
 affect the character, amount and timing of distributions to stockholders. The Fund
 will monitor its transactions and may make certain tax elections in order to mitigate
 the effect of these provisions.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Foreign currency
 gains or losses from certain debt instruments or arising from delays between accrual
 and receipt of investment income will generally be treated as ordinary income or
 loss, and will therefore generally increase or decrease the amount of the Fund&#146;s
 net investment income available for distribution as ordinary income dividends. If
 substantial in relation to net investment income, such foreign currency losses could
 affect the ability of the Fund to distribute ordinary income dividends in a taxable
 year, and could require all or a portion of distributions made before the losses
 were realized, but in the same taxable year, to be recharacterized as a return of
 capital.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">If the Fund
 invests in stock of a passive foreign investment company (&#147;PFIC&#148;), it may be subject
 to Federal income tax at ordinary rates and an additional charge in the nature of
 interest, on a portion of its distributions from the PFIC and on gain from the disposition
 of the shares of the PFIC, even if such distributions and gain are paid by the Fund
 as a dividend to its stockholders. In some cases, the Fund may be able to elect
 to include annually in income its pro rata share of the ordinary earnings and capital
 gains (whether or not distributed) of the PFIC. Alternatively, the Fund could elect
 to mark to market at the end of each taxable year its shares in PFICs; in this case,
 the Fund would recognize as ordinary income any increase in the value of such shares,
 and as ordinary loss any decrease in such value to the extent it did not exceed
 prior increases included in income. Under either election, the Fund might be required
 to recognize in a year income in excess of its distributions from PFICs and its
 proceeds from dispositions of PFIC stock during that year. Dividends paid by PFICs
 will not qualify as qualified dividend income eligible for taxation at reduced rates.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Under certain
 provisions of the Code, some stockholders may be subject to a withholding tax on
 ordinary income dividends, capital gain dividends and redemption payments (&#147;backup
 withholding&#148;). A stockholder, however, may generally avoid becoming subject to this
 requirement by filing an appropriate form with the payor (i.e., the financial institution
 or brokerage firm where the stockholder maintains his or her account), certifying
 under penalties of perjury that such stockholder&#146;s taxpayer identification
 number is correct and that such stockholder (i) has never been notified by the IRS
 that he or she is subject to backup withholding, (ii) has been notified by the IRS
 that he or she is no longer subject to backup withholding, or (iii) is exempt from
 backup withholding. Corporate stockholders and certain other stockholders are exempt
 from backup withholding. Backup withholding is not an additional tax. Any amounts
 withheld under the backup withholding rules from payments made to a stockholder
 may be refunded or credited against such stockholder&#146;s Federal income tax liability,
 provided the required information is furnished to the IRS.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Ordinary income
 dividends (but not capital gain dividends) paid to stockholders who are non-resident
 aliens or foreign entities generally will be subject to a 30% United States withholding
 tax under existing provisions of the Code applicable to foreign individuals and
 entities unless a reduced rate of withholding or a withholding</font></div><br>
<br>
<p align="center"><font face="Serif" size="2">B-20</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_21"></a>
<div align="justify"><font face="Serif" size="2">exemption is provided
 under applicable treaty law. However, if ordinary income dividends or capital gain
 dividends received by a non-resident stockholder are effectively connected with
 the conduct by such stockholder of a trade or business in the United States, the
 dividends will be subject to United States federal income tax at regular income
 tax rates. Non-resident stockholders are urged to consult their own tax advisers
 concerning the applicability of the United States withholding and income taxes.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Dividends
 and interest received by the Fund may give rise to withholding and other taxes imposed
 by foreign countries. Tax conventions between certain countries and the United States
 may reduce or eliminate such taxes. Stockholders may be able to claim a deduction
 or United States foreign tax credit with respect to such taxes, subject to certain
 conditions and limitations contained in the Code. For example, certain retirement
 accounts cannot claim foreign tax credits on investments in foreign securities held
 in the Fund. In addition, a foreign tax credit may be claimed with respect to withholding
 tax on a dividend paid by the Fund only if the stockholder meets certain holding
 period requirements with respect to its Fund stock. The Fund also must meet these
 holding period requirements with respect to its foreign securities in order to be
 able to &#147;pass through&#148; to stockholders the ability to claim a credit or a deduction
 for the related foreign taxes paid by the Fund. If the Fund satisfies the holding
 period requirements, qualifies for the special treatment afforded RICs under the
 Code and more than 50% in value of its total assets at the close of its taxable
 year consists of securities of foreign corporations, the Fund will be eligible,
 and intends, to file an election with the IRS pursuant to which stockholders of
 the Fund (i) will be required to include their proportionate shares of such foreign
 taxes in their United States income tax returns as gross income, (ii) will treat
 such proportionate shares as taxes paid by them, and (iii) will deduct such proportionate
 shares in computing their taxable incomes or, alternatively, use them as foreign
 tax credits against their United States income taxes. No deductions for foreign
 taxes, however, may be claimed by noncorporate stockholders who do not itemize deductions.
 A stockholder that is a nonresident alien individual or a foreign corporation may
 be subject to United States withholding tax on the income resulting from the Fund&#146;s election described in this paragraph but may not be able to claim a credit
 or deduction against such United States tax for the foreign taxes treated as having
 been paid by such stockholder. The Fund will report annually to its stockholders
 the amount per share of such foreign taxes and other information needed to claim
 the deduction or foreign tax credit.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Under Treasury
 regulations, if a stockholder recognizes a loss on the disposition of shares of
 stock of $2 million or more for an individual stockholder or $10 million or more
 for a corporate stockholder in any single taxable year (or a greater loss over a
 combination of years), the stockholder must file with the IRS a disclosure statement
 on Form 8886. The fact that a loss is reportable under these regulations does not
 affect the legal determination of whether the taxpayer&#146;s treatment of the loss
 is proper. Stockholders should consult their tax advisers to determine the applicability
 of these regulations in light of their individual circumstances.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The foregoing
 is a general and abbreviated summary of the applicable provisions of the Code and
 Treasury regulations presently in effect and discusses some of the consequences
 under Federal tax law of an investment in Common Stock of the Fund. For the complete
 provisions, reference should be made to the pertinent Code sections and the Treasury
 regulations promulgated thereunder. The Code and the Treasury regulations are subject
 to change by legislative, judicial or administrative action, either prospectively
 or retroactively. The discussion above is not a substitute for personal tax advice.
 Distributions may also be subject to additional state, local and foreign taxes,
 depending on each stockholder&#146;s particular situation. Stockholders are advised
 to consult their own tax advisers with respect to the particular tax consequences
 to them of an investment in the Common Stock.</font></div><br>
<div align="center"><font face="Serif" size="2"><b>BROKERAGE ALLOCATION AND
 OTHER PRACTICES</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Royce is responsible
 for selecting the brokers who effect the purchases and sales of the Fund&#146;s
 portfolio securities. No broker is selected to effect a securities transaction for
 the Fund unless such broker is believed by Royce to be capable of obtaining the
 best price for the security involved in the transaction.&#160;Best price and execution
 is comprised of several factors, including the liquidity of the security, the commission
 charged, the promptness and reliability of execution, priority accorded the order
 and other factors affecting the overall benefit obtained. In addition to considering
 a broker&#146;s execution capability, Royce generally considers the brokerage and
 research services which the broker has provided to it, including any research relating
 to the security involved in the transaction and/or to other securities. Such services
 may include general economic research, market and statistical information, industry
 and technical research, strategy and company research and performance measurement,
 and</font></div><br>
<br>
<p align="center"><font face="Serif" size="2">B-21</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_22"></a>
<div align="justify"><font face="Serif" size="2">may be written, electronic or oral. Brokers that provide both research and execution
 services are generally paid higher commissions than those paid to brokers who do
 not provide such research and execution services. Royce determines the overall reasonableness
 of brokerage commissions paid, after considering the amount another broker might
 have charged for effecting the transaction and the value placed by Royce upon the
 brokerage and/or research services provided by such broker, viewed in terms of either
 that particular transaction or Royce&#146;s overall responsibilities with respect
 to its accounts.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Royce is authorized,
 under Section 28(e) of the Securities Exchange Act of 1934 and under its Investment
 Advisory Agreement with the Fund, to pay a broker a commission in excess of that
 which another broker might have charged for effecting the same transaction, in recognition
 of the value of brokerage and research services provided by the broker.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Brokerage
 and research services furnished by brokers through whom the Fund effects securities
 transactions may be used by Royce in servicing all of its accounts, and not all
 of such services may be used by Royce in connection with the Fund.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Even though
 investment decisions for the Fund are made independently from those for the other
 accounts managed by Royce, securities of the same issuer are frequently purchased,
 held or sold by more than one Royce account because the same security may be suitable
 for all of them. When the same security is being purchased or sold for more than
 one Royce account on the same trading day, Royce may seek to average the transactions
 as to price and allocate them as to amount in a manner believed to be equitable
 to each. Such purchases and sales of the same security are generally effected pursuant
 to Royce&#146;s Trade Allocation Guidelines and Procedures. Under such Guidelines
 and Procedures, unallocated orders are placed with and executed by broker-dealers
 during the trading day. The securities purchased or sold in such transactions are
 then allocated to one or more of Royce&#146;s accounts at or shortly following the
 close of trading, using the average net price obtained. Such allocations are done
 based on a number of judgmental factors that Royce believes should result in fair
 and equitable treatment to those of its accounts for which the securities may be
 deemed suitable. In some cases, this procedure may adversely affect the price paid
 or received by the Fund or the size of the position obtained for the Fund. In addition,
 from time to time, certain other Royce accounts managed by Royce portfolio managers
 other than W. Whitney George, may establish short positions in securities in which
 the Fund has a long position.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The Fund may
 effect brokerage transactions on a securities exchange with Legg Mason Wood Walker,
 Incorporated (&#147;Legg Mason Wood Walker&#148;) and any other affiliated broker-dealers
 in accordance with the procedures and requirements set forth in Rule 17e-1 under
 the 1940 Act. Any such transactions would involve the use of the affiliated broker-dealer
 for execution purposes only and/or for locating the purchasers or sellers involved
 in the transaction. The affiliated broker-dealer would not be compensated because
 of any other research-related service or product provided or to be provided by it
 and may not be used to effect brokerage transactions in Nasdaq or other over-the-counter
 securities. Although the Fund will not effect any principal transactions with any
 affiliated broker-dealers, they may purchase securities that are offered in certain
 underwritings in which an affiliated broker-dealer is a participant in accordance
 with the procedures and requirements set forth in Rule 10f-3 under the 1940 Act.
 Charles M. Royce and/or trusts primarily for the benefit of members of his family
 may own or acquire substantial amounts of Legg Mason common stock.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">During the
 year ended December 31, 2004, the Fund did not acquire any securities of any of
 its regular brokers (as defined in Rule 10b-1 under the 1940 Act) or of any of their
 parents.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">During each
 of the three years ended December 31, 2004, 2003 and 2002, the Fund paid brokerage
 commissions of approximately $183,848, $227,138 and $263,061, respectively, none
 of which the Fund paid to Legg Mason Wood Walker or to any other affiliates of Legg
 Mason.</font></div><br>
<div align="center"><font face="Serif" size="2"><b>PROXY VOTING POLICIES
 AND PROCEDURES</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Royce has
 adopted written proxy voting policies and procedures (the &#147;Proxy Voting Procedures&#148;)
 for itself, the Fund, and all other Royce Funds and clients accounts for which Royce
 is responsible for voting proxies.</font></div><br>
<br>
<p align="center"><font face="Serif" size="2">B-22</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_23"></a>
<div align="justify"><font face="Serif" size="2">The Board of Directors of the Fund has delegated
 all proxy voting decisions to Royce. In voting proxies, Royce is guided by general
 fiduciary principles. Royce&#146;s goal is to act prudently, solely in the best
 interest of the beneficial owners of the accounts it manages. Royce attempts to
 consider all factors of its vote that could affect the value of the investment and
 will vote proxies in the manner it believes will be consistent with efforts to enhance
 and/or protect stockholder value.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Royce personnel
 are responsible for monitoring receipt of all proxies and ensuring that proxies
 are received for all securities for which Royce has proxy voting responsibility.
 Royce divides proxies into &#147;regularly recurring&#148; and &#147;non-regularly recurring&#148; matters.
 Examples of regularly recurring matters include non-contested elections of directors
 and non-contested approvals of independent auditors. Regularly recurring matters
 are usually voted as recommended by the issuer&#146;s board of directors or management.
 Non-regularly recurring matters are brought to the attention of portfolio manager(s)
 for the applicable account(s) and, after giving consideration to advisories provided
 by an independent third party research firm, the portfolio manager(s) directs that
 such matters be voted in a way that he believes should better protect or enhance
 the value of the investment. If the portfolio manager determines that information
 relating to a proxy requires additional analysis, is missing, or is incomplete,
 the portfolio manager will give the proxy to an analyst or another portfolio manager
 for review and analysis. Under certain circumstances, Royce may vote against a proposal
 from the issuer&#146;s board of directors or management. Royce&#146;s portfolio
 managers decide these issues on a case-by-case-basis. A Royce portfolio manager
 may, on occasion, decide to abstain from voting a proxy or a specific proxy item
 when he or she concludes that the potential benefit of voting is outweighed by the
 cost or when it is not in the client account&#146;s best interest to vote.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">In furtherance
 of Royce&#146;s goal to vote proxies in the best interests of its client accounts,
 Royce follows specific procedures outlined in the Proxy Voting Procedures to identify,
 assess and address material conflicts that may arise between Royce&#146;s interests
 and those of its client accounts before voting proxies on behalf of such client
 accounts. In the event such a material conflict of interest is identified, the proxy
 will be voted by Royce in accordance with the recommendation given by the third
 party research firm.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">Information
 regarding how the Fund voted proxies relating to portfolio securities during the
 12-month period ended June 30, 2004 is available without charge upon request, by
 calling the Fund toll-free at (800) 221-4268 and on the SEC&#146;s Internet site
 at http://www.sec.gov.</font></div><br>
<div align="center"><font face="Serif" size="2"><b>NET ASSET VALUE</b></font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The net asset
 value (&#147;NAV&#148;) of the Fund&#146;s shares of Common Stock is calculated at the close
 of regular trading on the New York Stock Exchange ("NYSE") (generally 4:00 p.m.
 Eastern time) every day that the NYSE is open. The Fund makes this information available
 daily by telephone (800-221-4268) and via its web site (www.roycefunds.com) and
 through electronic distribution for media publication, including major internet-based
 financial services web sites and portals (bloomberg.com, yahoo.com, cbsmarketwatch.com,
 etc.) Currently,<i>The Wall Street Journal</i>,<i>The New York Times</i> and
<i>Barron&#146;s</i> publish NAVs for closed-end investment companies weekly.</font></div><br>
<div align="justify">&#160;&#160;&#160;&#160;&#160;<font face="Serif" size="2">The NAV per
 share of the Fund&#146;s Common Stock is calculated by dividing the current value
 of the Fund&#146;s total assets less the sum of all of its liabilities and the aggregate
 liquidation preferences of its outstanding shares of Preferred Stock, by the total
 number of outstanding shares of Common Stock. The Fund&#146;s investments are valued
 based on market value or, if market quotations are not readily available, at their
 fair value as determined in good faith under procedures established by the Fund&#146;s Board of Directors. The Fund may also use fair value pricing instead of market
 quotations to value securities if, because of special circumstances, the Fund believes
 that the fair value pricing would more accurately reflect the price it could expect
 to obtain on a current sale of the securities. The Fund will value its foreign securities
 in U.S. dollars on the basis of foreign currency exchange rates provided to the
 Fund by its custodian, State Street Bank &#038; Trust Company. The foreign currency
 exchange rates are determined by the Fund&#146;s custodian prior to the close of
 trading on the New York Stock Exchange, generally at 12:00 p.m. Eastern time.</font></div><br>
<br>
<p align="center"><font face="Serif" size="2">B-23</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<a name="sai_pageB_24"></a>
<div align="center"><font face="Serif" size="2"><b>FINANCIAL STATEMENTS</b></font></div><br>
<div align="justify"><font face="Serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The audited financial statements
 included in the Annual Report to the Fund&#146;s Stockholders for the fiscal year
 ended December 31, 2004, together with the report of Tait, Weller &#038; Baker thereon, are incorporated herein by reference.</font></div><br><br>
<p align="center"><font face="Serif" size="2">B-24</font></p>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="center"><font face="Times New Roman" size="2"><b>PART C<br><br>OTHER INFORMATION</b></font></p>
<p><font face="Times New Roman" size="2"><b>Item 25. Financial Statements and Exhibits</b></font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="2%" valign="top" align="left"><font face="Times New Roman" size="2">1.</font></td>
<td width="2%"><font face="Times New Roman" size="1">&#160;</font></td>
<td width="4%"><font face="Times New Roman" size="1">&#160;</font></td>
<td width="2%"><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">The following
 audited financial statements of Royce Focus Trust, Inc. (the &#147;Fund&#148;) are
 included in the Fund&#146;s Annual Report to Stockholders for the fiscal year ended
 December 31, 2004, filed with the Securities and Exchange Commission (&#147;SEC&#148;)
 under Section 30(b)(1) of the Investment Company Act of 1940, as amended
 (&#147;1940 Act&#148;), and are incorporated in Part B hereof by reference:</font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">The Schedule
 of Investments, December 31, 2004; Statement of Assets and Liabilities, December
 31, 2004; Statement of Operations for the fiscal year ended December 31, 2004; Statement
 of Changes in Net Assets for the years ended December 31, 2004 and 2003; Notes to
 Financial Statements at December 31, 2004; Financial Highlights for the five fiscal
 years ended December 31, 2004; and Report of Independent Registered Public Accountants.</font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">2.</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td colspan="3" valign="bottom" align="left"><font face="Times New Roman" size="2">Exhibits</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(a) (1)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Articles of
 Amendment and Restatement to the Articles of Incorporation dated October 30, 1996. <a href="#facing_2_one">(1)</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(2)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Articles of
 Correction dated November 5, 1996. <a href="#facing_2_two">(2)</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(3)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Articles of
 Amendment dated April 28, 1999. <a href="#facing_2_three">(3)</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(4)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Form of Articles
 Supplementary creating the 7.45% Cumulative Preferred Stock (&#147;7.45% Preferred&#148;). <a href="#facing_2_four">(4)</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(5)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Form of Articles
 Supplementary dated January 31, 2003.<a href="#facing_2_five">(5)</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(6)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Form of Articles
 Supplementary creating the 6.00% Cumulative Preferred Stock (the &#147;6.00% Preferred
 Stock&#148;). <a href="#facing_2_six">(6)</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(7)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Form of Articles
 Supplementary designating the 7.45% Cumulative Preferred Stock as Common Stock. <a href="#facing_2_seven">(7)</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(b)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Amended and
 Restated By-laws. <a href="#facing_2_eight">(8)</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(c)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Not applicable.</font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(d)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Form of share
 certificate for Common Stock. <a href="#facing_2_nine">(9)</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(e)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Amended and
 Restated Distribution Reinvestment and Cash Purchase Plan. <a href="#facing_2_ten">(10)</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(f)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Not applicable.</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(g)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Investment
 Advisory Agreement dated October 1, 2001 between the Fund and Royce &#038; Associates,
 LLC (&#147;R &#038; A&#148;). <a href="#facing_2_eleven">(11)</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(h)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Not applicable.</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(i)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Not applicable.</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(j) (1)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Custodian
 Contract with State Street Bank and Trust Company (&#147;State Street&#148;). <a href="#facing_2_twelve">(12)</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(2)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Amendment
 to Custodian Contract dated September 14, 2000. <a href="#facing_2_thirteen">(13)</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(3)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Amendment
 to Custodian Contract dated April 16, 2003. <a href="#facing_2_fourteen">(14)</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(k) (1)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Registrar,
 Transfer Agency and Service Agreement with State Street (Common Stock). <a href="#facing_2_fifteen">(15)</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(2)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Registrar,
 Transfer Agency and Paying Agency Agreement with State Street (7.45% Preferred). <a href="#facing_2_sixteen">(16)</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(3)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Form of Amendment
 to Registrar, Transfer Agency and Paying Agency Agreement with State Street (6%
 Preferred). <a href="#facing_2_seventeen">(17)</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(4)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Form of Subscription
 Certificate<a href="#facing_star">*</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(5)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Form of Subscription
 Agent Agreement<a href="#facing_star">*</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(6)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Form of
 Notice of Guaranteed Delivery.<a href="#facing_star">*</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(7)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Form of Information
 Agent Agreement<a href="#facing_star">*</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(l)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Opinion and
 Consent of Sidley Austin Brown &#038; Wood LLP.<a href="#facing_star">*</a></font></p></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(m)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Not applicable.</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(n)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom"><p align="justify"><font face="Times New Roman" size="2">Consent of
 Tait, Weller &#038; Baker, independent registered public accountants for the Fund.<a href="#facing_star">*</a></font></p></td>
</tr>
</table>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="2%"><font face="Times New Roman" size="1">&#160;</font></td>
<td width="2%"><font face="Times New Roman" size="1">&#160;</font></td>
<td width="4%" valign="bottom" align="left"><font face="Times New Roman" size="2">(o)</font></td>
<td width="2%"><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Not applicable.</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(p)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Not applicable.</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(q)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Not applicable.</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(r)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Code of Ethics. <a href="#facing_2_eighteen">(18)</a></font></td>
</tr>
</table>
<br>
<hr size="1" color="#000000" noshade width="5%" align="left">
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="2%" valign="top" align="left"><font face="Times New Roman" size="2"><a name="facing_2_one"></a>(1)</font></td>
<td width="2%"><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Incorporated
 by reference to Exhibit 2(a)(i) to Amendment No. 8 to the Fund&#146;s Registration
 Statement on Form N-2, filed with the SEC on November 21, 1996 (File No. 811-5397).</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="2"><a name="facing_2_two"></a>(2)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Incorporated
 by reference to Exhibit 2(a)(ii) to Amendment No. 8 to the Fund&#146;s Registration
 Statement on Form N-2, filed with the SEC on November 21, 1996 (File No. 811-5397).</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="2"><a name="facing_2_three"></a>(3)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Incorporated
 by reference to Exhibit (2)(a)(3) to Pre-Effective Amendment No. 1 to the Fund&#146;s
 Registration Statement on Form N-2 (File No. 333-107928), filed with the Commission
 on October 9, 2003.</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="2"><a name="facing_2_four"></a>(4)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Incorporated
 by reference to Exhibit 2(a)(3) to Pre-Effective Amendment No. 1 to the Fund&#146;s
 Registration Statement on Form N-2, filed with the SEC on November 14, 1997 (File
 No. 333-34325).</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="2"><a name="facing_2_five"></a>(5)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Incorporated
 by reference to Exhibit 99.A to the Fund&#146;s Annual Report for Management Investment
 Companies on Form NSAR-B, filed with the SEC on February 27, 2003 (File No. 811-05379).</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="2"><a name="facing_2_six"></a>(6)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Incorporated
 by reference to Exhibit 77(Q1) to the Fund&#146;s Annual Report for Management Investment
 Companies on Form NSAR-B, filed with the SEC on February 27, 2004 (File No. 811-05379).</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="2"><a name="facing_2_seven"></a>(7)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Incorporated
 by reference to the Fund&#146;s Semi-Annual Report for Management Investment Companies
 on Form NSAR-A, filed with the SEC on August 26, 2004 (File No. 811-05379).</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="2"><a name="facing_2_eight"></a>(8)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Incorporated
 by reference to Exhibit 99.B to the Fund&#146;s Annual Report for Management Investment
 Companies on Form NSAR-B, filed with the SEC on February 27, 2003 (File No. 811-05379).</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="2"><a name="facing_2_nine"></a>(9)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Incorporated
 by reference to Exhibit 2(d) to Amendment No. 8 to the Fund&#146;s Registration
 Statement on Form N-2, filed with the SEC on November 21, 1996 (File No. 811-5397).</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="2"><a name="facing_2_ten"></a>(10)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Incorporated
 by reference to Exhibit 2(e) to the Fund&#146;s Registration Statement on Form N-2,
 filed with the SEC on August 25, 1997 (File No. 333-34325).</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="2"><a name="facing_2_eleven"></a>(11)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Incorporated
 by reference to the Fund&#146;s Annual Report for Management Investment Companies
 on Form NSAR-B, filed with the SEC on February 28, 2002 (File No. 811-05379).</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="2"><a name="facing_2_tweleve"></a>(12)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Incorporated
 by reference to Exhibit 2(j) to the Fund&#146;s Registration Statement on Form N-2,
 filed with the SEC on August 25, 1997 (File No. 333-34325).</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="2"><a name="facing_2_thirteen"></a>(13)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Incorporated
 by reference to Exhibit 2(j)(2) to Pre-Effective Amendment No. 1 to the Registrant&#146;s
 Registration Statement on Form N-2 (File No. 333-107928), filed with the
 Commission on October 9, 2003.</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="2"><a name="facing_2_fourteen"></a>(14)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Incorporated
 by reference to Exhibit 2(j)(3) to Pre-Effective Amendment No. 1 to the Registrant&#146;s
 Registration Statement on Form N-2 (File No. 333-107928), filed with the
 Commission on October 9, 2003.</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="2"><a name="facing_2_fifteen"></a>(15)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Incorporated
 by reference to Exhibit 2(k)(1) to the Fund&#146;s Registration Statement on Form
 N-2, filed with the SEC on August 25, 1997 (File No. 333-34325).</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="2"><a name="facing_2_sixteen"></a>(16)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Incorporated
 by reference to Exhibit 2(k)(2) to Pre-Effective Amendment No. 1 to the Fund&#146;s
 Registration Statement on Form N-2, filed with the SEC on November 14, 1997 (File
 No. 333-34325).</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="2"><a name="facing_2_seventeen"></a>(17)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Incorporated
 by reference to Exhibit 2(k)(3) to Pre-Effective Amendment No. 1 to the Registrant&#146;s
 Registration Statement on Form N-2 (File No. 333-107928), filed with the
 Commission on October 9, 2003.</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Times New Roman" size="2"><a name="facing_2_eighteen"></a>(18)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Incorporated
 by reference to Exhibit 2(r) to the Fund&#146;s Registration Statement on Form N-2,
 filed with the SEC on March 1, 2005 (File No. 333-123047).</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2"><a name="facing_star"></a>*</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2"> Filed herewith</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
</table>
<p><font face="Times New Roman" size="2"><b>Item 26. Marketing Arrangements</b></font></p>
<p><font face="Times New Roman" size="2">&#160;&#160;&#160;&#160;&#160;Not applicable.</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p><font face="Times New Roman" size="2"><b>Item 27. Other Expenses of Issuance and
 Distribution</b></font></p>
<p><font face="Times New Roman" size="2">&#160;&#160;&#160;&#160;&#160;The following
 table sets forth the estimated expenses to be incurred in connection with the offering
 described in this Registration Statement:</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="80%" align="center">
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Category</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td colspan="3" valign="bottom" align="center"><font face="Times New Roman" size="2">Estimated Expenses</font></td>
</tr>
<tr>
<td><hr size="1" color="#000000" noshade></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td colspan="3"><hr size="1" color="#000000" noshade></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Registration fees</font></td>
<td width="3%"><font face="Times New Roman" size="1">&#160;</font></td>
<td width="1%" valign="bottom" align="right"><font face="Times New Roman" size="2">$</font></td>
<td width="2%" valign="bottom" align="right"><font face="Times New Roman" size="2"> 2,694</font></td>
<td width="1%"><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Nasdaq listing
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<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">26,274</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Printing expenses</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">28,250</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Subscription
 Agent fees and expenses</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">30,000</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Information
 Agent fees and expenses</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">30,000</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Accounting
 fees and expenses</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">4,500</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Legal fees
 and expenses</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">50,000</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Miscellaneous</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">71,882</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td colspan="2"><hr size="1" color="#000000" noshade></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Total</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">200,000</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td colspan="2"><hr size="2" color="#000000" noshade></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><hr size="1" color="#000000" noshade width="20%"></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
</table>
<p><font face="Times New Roman" size="2"><b>Item 28. Person Controlled by or Under
 Common Control with Fund</b></font></p>
<p><font face="Times New Roman" size="2">&#160;&#160;&#160;&#160;&#160;None.</font></p>
<p><font face="Times New Roman" size="2"><b>Item 29. Number of Holders of Securities</b></font></p>
<p><font face="Times New Roman" size="2">&#160;&#160;&#160;&#160;&#160;The following
 information is given as of April 15, 2005:</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Title of Class</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td colspan="2" valign="bottom" align="center"><font face="Times New Roman" size="2">Number of Record Holders</font></td>
</tr>
<tr>
<td colspan="4"><hr size="1" color="#000000" noshade></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Common Stock, $.001 par value</font></td>
<td width="5%"><font face="Times New Roman" size="1">&#160;</font></td>
<td width="16%" valign="bottom" align="right"><font face="Times New Roman" size="2">919</font></td>
<td width="2%"><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">6.00% Cumulative
 Preferred Stock, $.001 par value</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="right"><font face="Times New Roman" size="2">1&#160;&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
</table>
<p><font face="Times New Roman" size="2"><b>Item 30. Indemnification</b></font></p>
<p align="justify"><font face="Times New Roman" size="2">&#160;&#160;&#160;&#160;&#160;Reference
 is made to Section 2-418 of the Maryland General Corporation Law, Article VI and
 VII of the Fund&#146;s Articles of Incorporation, as amended, Article V of the Fund&#146;s
 Amended and Restated By-laws, and the Investment Advisory Agreement, each of which provide
 for indemnification.</font></p>
<p align="justify"><font face="Times New Roman" size="2">&#160;&#160;&#160;&#160;&#160;The Investment
 Advisory Agreement between the Fund and R &#038; A obligates the Fund to indemnify
 R &#038; A and hold it harmless from and against all damages, liabilities, costs
 and expenses (including reasonable attorneys&#146; fees) incurred by R &#038; A
 in or by reason of any action, suit, investigation or other proceeding arising out
 of or otherwise based upon any action actually or allegedly taken or omitted to
 be taken by R &#038; A in connection with the performance of any of its duties or
 obligations under the Agreement or otherwise as an investment adviser of the Fund.
 R &#038; A is not entitled to indemnification in respect of any liability to the
 Fund or its security holders to which it would otherwise be subject by reason of
 its willful misfeasance, bad faith or gross negligence.</font></p>
<p align="justify"><font face="Times New Roman" size="2">&#160;&#160;&#160;&#160;&#160;Insofar as
 indemnification for liability arising under the 1933 Act, may be permitted to directors,
 officers and controlling persons of the Fund pursuant to the foregoing provisions
 or otherwise, the Fund has been advised that, in the opinion of the SEC, such indemnification
 is against public policy as expressed in the 1933 Act</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="justify"><font face="Times New Roman" size="2">and is, therefore, unenforceable.
 In the event that a claim for indemnification against such liabilities (other than
 the payment by the Fund of expenses incurred or paid by a director, officer or controlling
 person of the Fund in the successful defense of any action, suit or proceeding)
 is asserted by such director, officer or controlling person in connection with the
 securities being registered, the Fund will, unless in the opinion of its counsel
 the matter has been settled by controlling precedent or such claim is to be paid
 under insurance policies, submit to a court of appropriate jurisdiction the question
 whether such indemnification by it is against public policy as expressed in the
 Securities Act and will be governed by the final adjudication of such issue.</font></p>
<p align="justify"><font face="Times New Roman" size="2">&#160;&#160;&#160;&#160;&#160;The Fund,
 its officers and directors, R &#038; A and certain others are presently insured
 under a Directors and Officers/Errors and Omissions Liability Insurance Policy issued
 by ICI Mutual Insurance Company, which generally covers claims by the Fund&#146;s
 stockholders and third persons based on or alleging negligent acts, misstatements
 or omissions by the insureds and the costs and expenses of defending those claims,
 up to a limit of $20,000,000, with a deductible amount of $400,000.</font></p>
<p><font face="Times New Roman" size="2"><b>Item 31. Business and other Connections
 of Investment Adviser</b></font></p>
<p><font face="Times New Roman" size="2">&#160;&#160;&#160;&#160;&#160;Reference
 is made to Schedules D and F to Royce&#146;s amended Form ADV (File No. 801-8268),
 which are incorporated herein by reference.</font></p>
<p><font face="Times New Roman" size="2"><b>Item 32. Location of Accounts and Records
</b></font></p>
<p><font face="Times New Roman" size="2">&#160;&#160;&#160;&#160;&#160;Records are
 located at:</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="5%"><font face="Times New Roman" size="2">&#160;</font></td>
<td width="8%" valign="bottom" align="left"><font face="Times New Roman" size="2">1.</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Royce Focus
 Trust, Inc.</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">10th Floor</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">1414 Avenue
 of the Americas</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">New York,
 New York 10019</font></td>
</tr>
</table>
<p><font face="Times New Roman" size="2">(Corporate records and records relating
 to the function of Royce as investment adviser)</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="5%"><font face="Times New Roman" size="2">&#160;</font></td>
<td width="8%" valign="bottom" align="left"><font face="Times New Roman" size="2">2.</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">State Street
 Bank and Trust Company</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Two Heritage
 Drive</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">North Quincy,
 Massachusetts 02171</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Attention:
 Royce Focus Trust, Inc.</font></td>
</tr>
</table>
<p><font face="Times New Roman" size="2">(Records relating to its functions as Custodian
 for the Fund)</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="5%"><font face="Times New Roman" size="2">&#160;</font></td>
<td width="8%" valign="bottom" align="left"><font face="Times New Roman" size="2">3.</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Equiserve
 Trust Company, N.A.</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">PO Box 43011</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Providence,
 RI 02940-3011</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Attention:
 Royce Focus Trust, Inc.</font></td>
</tr>
</table>
<p><font face="Times New Roman" size="2">(Records relating to its functions as Registrar
 and Transfer Agent and Dividend Paying Agent for the Fund)</font></p>
<p><font face="Times New Roman" size="2"><b>Item 33. Management Services</b></font></p>
<p><font face="Times New Roman" size="2">&#160;&#160;&#160;&#160;&#160;Not applicable.</font></p>
<p><font face="Times New Roman" size="2"><b>Item 34. Undertakings</b></font></p>
<p><font face="Times New Roman" size="2">(1) The Fund undertakes to suspend the offering
 of its shares until it amends the prospectus if (a) subsequent to the</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p><font face="Times New Roman" size="2">effective date of its registration statement,
 the net asset value, adjusted for any distributions,
 declines more than ten percent from its net asset value as of the effective date
 of the registration statement or (2) the net asset value increases to an amount
 greater than its net proceeds as stated in the prospectus.</font></p>
<p><font face="Times New Roman" size="2">(2) Not applicable.</font></p>
<p><font face="Times New Roman" size="2">(3) Not applicable.</font></p>
<p><font face="Times New Roman" size="2">(4) The Fund undertakes:</font></p>
<p style="text-indent:20px"><font face="Times New Roman" size="2">(a) to file,
 during any period in which offers or sales are being made, a post-effective amendment
 to the registration statement:</font></p>
<p style="text-indent:40px"><font face="Times New Roman" size="2">(1) to include
 any prospectus required by Section 10(a)(3) of the Securities Act;</font></p>
<p style="text-indent:40px"><font face="Times New Roman" size="2">(2) to reflect
 in the prospectus any facts or events after the effective date of the registration
 statement (or the most recent post-effective amendment thereof) which, individually
 or in the aggregate, represent a fundamental change in the information set forth
 in the registration statement; and</font></p>
<p style="text-indent:40px"><font face="Times New Roman" size="2">(3) to include
 any material information with respect to the plan of distribution not previously
 disclosed in the registration statement or any material change to such information
 in the registration statement.</font></p>
<p style="text-indent:20px"><font face="Times New Roman" size="2">(b) that,
 for the purpose of determining any liability under the Securities Act, each such
 post effective amendment shall be deemed to be a new registration statement relating
 to the securities offered therein, and the offering of those securities at that
 time shall be deemed to be the initial bona fide offering thereof; and</font></p>
<p style="text-indent:20px"><font face="Times New Roman" size="2">(c) to remove
 from registration by means of a post-effective amendment any of the securities being
 registered which remain unsold at the termination of the offering.</font></p>
<p><font face="Times New Roman" size="2">(5) Not applicable.</font></p>
<p><font face="Times New Roman" size="2">(6) The Fund undertakes to send by first
 class mail or other means designed to ensure equally prompt delivery, within two
 business days of receipt of a written or oral request, any Statement of Additional
 Information.</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="center"><font face="Times New Roman" size="2"><b>SIGNATURES</b></font></p>
<p align="justify"><font face="Times New Roman" size="2">&#160;&#160;&#160;&#160;&#160;Pursuant to
 the requirements of the Securities Act of 1933 and the Investment Company Act of
 1940, the Registrant has duly caused this Registration Statement to be signed on
 its behalf by the undersigned, thereunto duly authorized, in the City of New York,
 and State of New York, on the 26<sup>th</sup> day of April, 2005.</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td colspan="2" valign="bottom" align="left"><font face="Times New Roman" size="2">ROYCE FOCUS TRUST, INC.</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td colspan="2" valign="bottom" align="left"><font face="Times New Roman" size="2">(Registrant</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td width="60%"><font face="Times New Roman" size="1">&#160;</font></td>
<td width="2%" valign="bottom" align="left"><font face="Times New Roman" size="2">By:&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">/s/ Charles M. Royce</font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td align="left"><hr size="1" color="#000000" width="50%"></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Charles M.
 Royce, President</font></td>
</tr>
</table>
<p align="justify"><font face="Times New Roman" size="2">&#160;&#160;&#160;&#160;&#160;Pursuant to the requirements
 of the Securities Act of 1933, this Registration Statement has been signed by the
 following persons in the capacities and on the dates indicated.</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="27%" valign="bottom" align="left"><font face="Times New Roman" size="2"><b>Signature</b></font></td>
<td width="3%"><font face="Times New Roman" size="1">&#160;</font></td>
<td width="48%" valign="bottom" align="left"><font face="Times New Roman" size="2"><b>Title</b></font></td>
<td width="3%"><font face="Times New Roman" size="1">&#160;</font></td>
<td width="20%" valign="bottom" align="left"><font face="Times New Roman" size="2"><b>Date</b></font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">/s/ Charles M. Royce</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">President (Principal Executive Officer) and Director</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">April 26, 2005</font></td>
</tr>
<tr>
<td><hr size="1" color="#000000" noshade></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Charles M. Royce</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td colspan="5"><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">/s/ John D.
 Diederich</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Vice President
 and Treasurer (Principal Financial and Accounting Officer)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">April 26,
 2005</font></td>
</tr>
<tr>
<td><hr size="1" color="#000000" noshade></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">John D. Diederich</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td colspan="5"><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">/s/ Donald
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<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Director</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">April 26,
 2005</font></td>
</tr>
<tr>
<td><hr size="1" color="#000000" noshade></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Donald R.
 Dwight</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td colspan="5"><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">/s/ Richard M. Galkin</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Director</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">April 26, 2005</font></td>
</tr>
<tr>
<td><hr size="1" color="#000000" noshade></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Richard M.
 Galkin</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td colspan="5"><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">/s/ Stephen L. Isaacs</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Director</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">April 26, 2005</font></td>
</tr>
<tr>
<td><hr size="1" color="#000000" noshade></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Stephen L.
 Isaacs</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td colspan="5"><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">/s/ William
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<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Director</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">April 26,
 2005</font></td>
</tr>
<tr>
<td><hr size="1" color="#000000" noshade></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">William L.
 Koke</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td colspan="5"><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">/s/ David
 L. Meister</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Director</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">April 26,
 2005</font></td>
</tr>
<tr>
<td><hr size="1" color="#000000" noshade></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">David L. Meister</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td colspan="5"><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">/s/ Arthur
 S. Mehlman</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Director</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">April 26,
 2005</font></td>
</tr>
<tr>
<td><hr size="1" color="#000000" noshade></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Arthur S.
 Mehlman</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td colspan="5"><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">/s/ G. Peter
 O&#146;Brien</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Director</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">April 26,
 2005</font></td>
</tr>
<tr>
<td><hr size="1" color="#000000" noshade></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">G. Peter O&#146;Brien</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
</table>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="center"><font face="Times New Roman" size="2"><b>EXHIBIT INDEX</b></font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="10%" valign="bottom" align="left"><font face="Times New Roman" size="2"><u>Exhibit Number</u></font></td>
<td width="2%"><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2"><u>Document</u></font></td>
</tr>
<tr>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(k)(4)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Form of Subscription
 Certificate</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(k)(5)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Form of Subscription
 Agent Agreement</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(k)(6)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Form of Notice
 of Guaranteed Delivery</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(k)(7)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Form of Information
 Agent Agreement</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(l)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Opinion and
 Consent of Sidley Austin Brown &#038; Wood LLP</font></td></tr>
<tr>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">(n)</font></td>
<td><font face="Times New Roman" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Times New Roman" size="2">Counsel of Tait, Weller &#038; Baker,
independent registered public accountants for the Fund</font></td>
</tr>
</table>
<p align="center"><font face="Times New Roman" size="2"><b>++++++++</b></font></p>
</body>
</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-1
<SEQUENCE>2
<FILENAME>exhibit_k4.htm
<TEXT>
<html>
<body>
<p align="center"><font face="Serif" size="2"><b>VOID IF NOT RECEIVED BY
 THE SUBSCRIPTION AGENT BEFORE 5:00 P.M.<br>EASTERN TIME ON THE EXPIRATION DATE</b></font></p>

<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2"><b>Control
 No.</b></font></td>
<td valign="bottom" align="right"><font face="Serif" size="2"><b>Maximum
 Primary Subscription Shares Available</b></font></td>
</tr>
</table>
<p align="center"><font face="Serif" size="2"><b>ROYCE FOCUS TRUST, INC.
<br>SUBSCRIPTION RIGHTS FOR COMMON STOCK</b></font></p>
<p><font face="Serif" size="2">Dear Stockholder:</font></p>
<p><font face="Serif" size="2">&#160;&#160;&#160;&#160;&#160;<b>IN ORDER
 TO EXERCISE YOUR RIGHTS, YOU MUST COMPLETE BOTH SIDES OF THE TEAR OFF CARD.</b></font></p>
<p><font face="Serif" size="2">&#160;&#160;&#160;&#160;&#160;As the registered
 owner of the Subscription Certificate below, you are entitled to subscribe for the
 number of shares of Common Stock, $.001 par value per share, of Royce Focus Trust,
 Inc. (the "Fund"), shown above pursuant to the Primary Subscription Right and upon
 the terms and conditions and at the Subscription Price for each share of Common
 Stock specified in the Prospectus relating thereto. The Rights represented hereby
 include the Over-Subscription Privilege for Rights holders, as described in the
 Prospectus. Under the Privilege, any number of additional shares may be purchased
 by a Rights holder if such shares are available, or if Secondary Over-Subscription
 Shares are issued by the Fund, and the holder&#146;s Primary Subscription Rights
 have been fully exercised to the extent possible.</font></p>
<p><font face="Serif" size="2">&#160;&#160;&#160;&#160;&#160;Registered
 owners who are participants in the Royce Focus Trust, Inc. Distribution Reinvestment
 and Cash Purchase Plan will receive their primary and oversubscription shares via
 an uncertificated share credit to their existing accounts. Registered owners who
 are not participants in the plan will be automatically issued stock certificates.
 Stock certificates for primary share subscriptions will be delivered as soon as
 practicable after receipt of the required completed Subscription Certificate and
 after full payment has been received and cleared, including payment of any additional
 amounts that would be due if the Subscription Price exceeds the Estimated Subscription
 Price of $8.50. Stock certificates for oversubscriptions and confirmation statements
 reflecting uncertificated share credits for distribution reinvestment accounts will
 be delivered as soon as practicable after the Expiration Date (June 10, 2005, unless
 extended) and after all allocations have been effected.</font></p>
<p align="center"><font face="Serif" size="2"><b>THE SUBSCRIPTION RIGHT
 IS NON-TRANSFERABLE</b></font></p>
<p><font face="Serif" size="2">&#160;&#160;&#160;&#160;&#160;<b>Payment
 must be in United States dollars. Only money orders or checks drawn on a bank located
 in the continental United States and made payable to Royce Focus Trust, Inc. will
 be accepted. Please reference your rights card control number on your check, money
 order or notice of guaranteed delivery. Please read the Prospectus carefully before
 investing or sending money.</b></font></p>
<hr size="5" color="gray" noshade>
<p align="center"><font face="Serif" size="2"><b>VOID IF NOT RECEIVED BY
 THE SUBSCRIPTION AGENT BEFORE 5:00 P.M.<br>EASTERN TIME ON THE EXPIRATION DATE</b></font></p>

<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2"><b>Control
 No.</b></font></td>
<td valign="bottom" align="right"><font face="Serif" size="2"><b> Rights
 Represented by this Subscription Certificate</b></font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="right"><font face="Serif" size="2"><b> Maximum
 Primary Subscription Shares Available</b></font></td>
</tr>
</table>
<p align="center"><font face="Serif" size="2"><b>ROYCE FOCUS TRUST, INC.
<br>SUBSCRIPTION RIGHTS FOR COMMON STOCK<br>(Complete appropriate section on reverse
 side of this form)</b></font></p>
<p><font face="Serif" size="2">&#160;&#160;&#160;&#160;&#160;The registered
 owner of this Subscription Certificate named below, or assigns, is entitled to the
 number of Rights shown above to subscribe for the Common Stock, $.001 par value,
 of Royce Focus Trust, Inc. (the "Fund"), in the ratio of one share of Common Stock
 for each five Rights, pursuant to the Primary Subscription Right and upon the terms
 and conditions and at the price for each share of Common Stock specified in the
 Prospectus relating thereto. The Rights represented hereby include the Over-Subscription
 Privilege for Record Date Stockholders only, as described in the Prospectus. Under
 this Privilege, any number of additional shares may be purchased by a Record Date
 Stockholder if such shares are available, or if Secondary Over-Subscription Shares
 are issued by the Fund, and the owner&#146;s Primary Subscription Rights have been
 fully exercised to the extent possible and the pro rata allocation requirements
 have been satisfied. Stock certificates for the shares subscribed for pursuant to
 the Primary Subscription Right will be delivered as soon as practicable after receipt
 of the required completed Subscription Certificate and after full payment has been
 received and cleared, including payment of any additional amounts that would be
 due if the Subscription Price exceeds the Estimated Subscription Price of $8.50.
 Stock certificates for the shares subscribed for pursuant to the Over-Subscription
 Privilege will be delivered as soon as practicable after the Expiration Date and
 after all allocations have been effected. Registered owners who are participants
 in the Royce Focus Trust, Inc. Distribution Reinvestment and Cash Purchase Plan
 will receive their primary and oversubscription shares via an uncertificated share
 credit to their existing accounts. Any refund in connection with an over-subscription
 will be delivered as soon as practicable after the Expiration Date and after all
 allocations have been effected. To subscribe pursuant to the Primary Subscription
 Right five Rights and the Estimated Subscription Price are required for each share
 of Common Stock. To subscribe for additional Shares pursuant to the Over-Subscription
 Privilege, the Estimated Subscription Price is required for each share of Common
 Stock, subject to the terms of the Over-Subscription Privilege as described in the
 Prospectus. Payment of $8.50 per share must accompany the Subscription Certificate.
<b>See reverse side of forms.</b></font></p>
<page>
<p><font face="Serif" size="2">To subscribe for your primary shares please
 complete line "A" on the card below.</font></p>
<p><font face="Serif" size="2">Example:</font></p>
<p><font face="Serif" size="2">88 shares = 88 rights (88 rights will be
 AUTOMATICALLY rounded up to 90 rights, the nearest number of rights divisible by
 five)</font></p>
<p><font face="Serif" size="2">90 rights divided by 5 = 18 primary shares</font></p>
<p><font face="Serif" size="2">The maximum number of primary subscription
 shares would be 18</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="40%" valign="bottom"><font face="Serif" size="2">&#160;</font></td>
<td width="2%" valign="bottom" align="left"><font face="Serif" size="2">A.</font></td>
<td width="2%"><font face="Serif" size="1">&#160;</font></td>
<td width="2%" valign="bottom" align="center"><font face="Serif" size="2">18</font></td>
<td width="2%"><font face="Serif" size="1">&#160;</font></td>
<td width="2%" valign="bottom" align="left"><font face="Serif" size="2">x</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td width="20%" valign="bottom" align="center"><font face="Serif" size="2">$8.50</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">= $153.00</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" colspan="5" align="center"><font face="Serif" size="2">
(No. of shares)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">(Estimated
 Subscription Price)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
</table>
<p><font face="Serif" size="2">To subscribe for any over-subscription shares
 please complete line "B" below.</font></p>
<p><font face="Serif" size="2"><b>Please Note</b>: Only Record Date Stockholders
 who have exercised their Primary Subscription in full may apply for shares pursuant
 to the Over-Subscription Privilege.</font></p>
<p><font face="Serif" size="2"><b>Payment of Shares</b>: Full payment of
 the Estimated Subscription Price for both the primary and over-subscription shares
 or a notice of guaranteed delivery must accompany this subscription. Please reference
 your rights card control number on your check, money order or notice of guaranteed
 delivery.<br>If the Subscription Price exceeds the Estimated Subscription Price,
 additional amounts will be payable with respect to primary and over-subscription
 shares subscribed for by a Stockholder, as described in the Prospectus.</font></p>
<p><font face="Serif" size="2">If the aggregate Subscription Price paid
 by a Record Date Stockholder (including payment of any additional amounts due if
 the Subscription Price exceeds the Estimated Subscription Price of $8.50) is insufficient
 to purchase the number of shares of Common Stock that the holder indicates are being
 subscribed for, or if a Record Date Stockholder does not specify the number of shares
 of Common Stock to be purchased, then the Record Date Stockholder will be deemed
 to have exercised first, the Primary Subscription Right (if not already fully exercised)
 and second, the Over-Subscription Privilege to purchase shares of Common Stock to
 the full extent of the payment rendered. If the aggregate Subscription Price paid
 by a Record Date Stockholder exceeds the amount necessary to purchase the number
 of shares of Common Stock for which the Record Date Stockholder has indicted an
 intention to subscribe, then the Record Date Stockholder will be deemed to have
 exercised first, the Primary Subscription Right (if not already fully exercised)
 and second, the Over-Subscription Privilege to the full extent of the excess payment
 tendered.</font></p>
<hr size="5" color="gray" noshade>
<p align="center"><font face="Serif" size="2">Expiration Date June 10,
 2005 (unless extended)</font></p>
<table border=1 cellpadding="0" cellspacing="0" width="34%" align="center" rules="groups" bordercolor="#000000">
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2">PLEASE FILL
 IN ALL APPLICABLE INFORMATION</font></td>
</tr>
</table>
<br>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td valign="bottom"><font face="Serif" size="2">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">To:</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2"><b>EquiServe
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left" colspan="3"><font face="Serif" size="2">Attention:
 Corporate Actions</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td width="2%" align="left"><font face="Serif" size="1">&#160;</font></td>
<td width="2%" align="left"><font face="Serif" size="1">&#160;</font></td>
<td width="7%" align="left"><font face="Serif" size="1">&#160;</font></td>
<td width="3%"><font face="Serif" size="1">&#160;</font></td>
<td width="12%" valign="bottom" align="center"><font face="Serif" size="2"><i>By Mail
</i>:</font></td>
<td width="35%"><font face="Serif" size="1">&#160;</font></td>
<td width="15%"><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">P.O. Box 859208</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Braintree,
 MA 02185</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><i>By Overnight
 Courier</i>:</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2"><i>By Hand</i>:</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">161 Baystate
 Drive</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">EquiServe
 Trust Company, N.A.</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Braintree,
 MA 02184</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Attn. Corporate
 Actions</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">17 Battery
 Park Place, 11<sup>th</sup> Floor</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">New York,
 NY 10004</font></td>
</tr>
</table>
<br>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td  width="2%" valign="bottom" align="left"><font face="Serif" size="2">A.</font></td>
<td width="1%"><font face="Serif" size="1">&#160;</font></td>
<td width="18%" valign="bottom" align="left"><font face="Serif" size="2">Primary Subscription</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">______________x</font></td>
<td width="4%"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">$8.50</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">= $______________</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">(5 Rights
 = 1 share)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">(No. of
 Shares)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td colspan="5" valign="bottom" align="left"><font face="Serif" size="2">(Estimated
 Purchase Price)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">B.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">Over-Subscription
 Privilege</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">______________x</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">$8.50</font></td>
<td width="3%"><font face="Serif" size="1">&#160;</font></td>
<td width="17%" valign="bottom" align="left"><font face="Serif" size="2">= $______________(1)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="right"><font face="Serif" size="2">&#160;</font></td>
<td width="3%"><font face="Serif" size="1">&#160;</font></td>
<td width="2%" valign="top" align="left"><font face="Serif" size="2">(1)</font></td>
<td valign="top" align="left" rowspan="3"><div align="justify"><font face="Serif" size="2">The Over-Subscription
 Privilege can be exercised only by a Record Date Stockholder,
 and only if the Rights initially issued to him are exercised to the fullest
 extent possible, as described in the Prospectus.</font></div></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">(Shares)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td  colspan="5" valign="bottom" align="left"><font face="Serif" size="2">(Estimated
 Purchase Price)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">C.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td colspan="5" valign="bottom" align="left"><font face="Serif" size="2">Amount of
 Check Enclosed</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">= $______________</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td colspan="5" valign="bottom" align="left"><font face="Serif" size="2">(or amount
 in Notice of Guaranteed Delivery)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
</table>
<br>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td valign="bottom" colspan="3"><hr size="1" color="#000000" noshade></td>
</tr>
<tr>
<td valign="bottom" colspan="3" align="left"><font face="Serif" size="2">
TO SUBSCRIBE: I hereby irrevocably subscribe for the face amount of Common Stock
 indicated as the total of A and B hereon upon the terms and conditions specified
 in the Prospectus relating thereto, receipt of which is acknowledged. I hereby agree
 that if I fail to pay for the shares of Common Stock for which I have subscribed,
 the Fund may exercise any of the remedies set forth in the Prospectus.</font></td>
</tr>
<tr>
<td width="50%" align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Signature(s)
 of Subscriber(s)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Address for
 delivery of Shares if other than shown on front</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">If permanent
 change of address, check here <font face="wingdings" size="2">o</font></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Please give
 your telephone number: ( &#160; )______________________________</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">Please give
 your e-mail address:______________________________</font></td>
</tr>
</table>
</body>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>3
<FILENAME>exhibit_k5.htm
<TEXT>
<html>
<head>
<title></title>
</head>
<body>
<p align="right"><font face="Times New Roman" size="2">Exhibit (k)(5)</font></p>
<p align="center"><font face="serif" size="2"><b><u>SUBSCRIPTION AGENT AGREEMENT</u></b></font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;This Subscription
 Agent Agreement (the &#147;Agreement&#148;) is made as of __________________ , 200_ between
 Royce Focus Trust, Inc. (the &#147;Company&#148;), EquiServe, Inc., a Delaware corporation
 and its fully owned subsidiary EquiServe Trust Company, N.A., a national banking
 association (collectively, the &#147;Agent&#148; or individually &#147;EQI&#148;
 and the &#147;Trust Company&#148;, respectively). All terms not defined herein shall
 have the meaning given in the prospectus (the &#147;Prospectus&#148;) included in the Registration
 Statement on Form N-2, File No. 123047 filed by the Company with the Securities
 and Exchange Commission on March 1, 2005, as amended by any amendment filed with
 respect thereto (the &#147;Registration Statement&#148;).</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;WHEREAS, the
 Company proposes to make subscription offer by issuing certificates or other evidences
 of subscription rights, in the form designated by the Company (the &#147;Subscription
 Certificates&#148;) to shareholders of record (the &#147;Shareholders&#148;) of its Common Stock,
 par value $0.001 per share (&#147;Common Stock&#148;), as of a record date specified by the
 Company (the &#147;Record Date&#148;), pursuant to which each Shareholder will have certain
 rights (the &#147;Rights&#148;) to subscribe for shares of Common Stock, as described in and
 upon such terms as are set forth in the Prospectus, a final copy of which has been
 or, upon availability will promptly be, delivered to the Agent; and</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;WHEREAS, the
 Company wishes the Agent to perform certain acts on behalf of the Company, and the
 Agent is willing to so act, in connection with the distribution of the Subscription
 Certificates and the issuance and exercise of the Rights to subscribe therein set
 forth, all upon the terms and conditions set forth herein.</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;NOW, THEREFORE,
 in consideration of the foregoing and of the mutual agreements set forth herein,
 the parties agree as follows:</font></p>
<p><font face="serif" size="2"><b>1.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Appointment.</b></u><br>
&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The Company
 hereby appoints the Agent to act as subscription agent in connection with the distribution
 of Subscription Certificates and the issuance and exercise of the Rights in accordance
 with the terms set forth in this Agreement and the Agent hereby accepts such appointment.</font></p>
<p><font face="serif" size="2"><b>2.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Form and Execution of Subscription
 Certificates.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;A. Each Subscription
 Certificate shall be irrevocable and non-transferable. The Agent shall, in its capacity
 as Transfer Agent of the Company, maintain a register of Subscription Certificates
 and the holders of record thereof (each of whom shall be deemed a &#147;Shareholder&#148;
 hereunder for purposes of determining the rights of holders of Subscription Certificates).
 Each Subscription Certificate shall, subject to the provisions thereof, entitle
 the Shareholder in whose name it is recorded to the following:</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(1) With respect
 to Record Date Shareholders only, the right to acquire during the Subscription Period,
 as defined in the Prospectus, at the Subscription Price, as defined in the Prospectus,
 a number of shares of Common Stock equal to one share of Common Stock for every
 five Rights (the &#147;Primary Subscription Right&#148;); and</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(2) With respect
 to Record Date Shareholders only, the right to subscribe for additional shares of
 Common Stock, subject to the availability of such shares and to the allotment of
 such shares as may be available among Record Date Shareholders who exercise Over-Subscription
 Rights on the basis specified in the Prospectus; provided, however, that such Record
 Date Shareholder has exercised all Primary Subscription Rights issued to him or
 her (the &#147;Over-Subscription Privilege&#148;). Fractional Shares will not be issued upon
 the exercise of Rights.</font></p>
<p><font face="serif" size="2"><b>3.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Rights and Issuance of Subscription
 Certificates.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;A. Each Subscription
 Certificate shall evidence the Rights of the Shareholder therein named to purchase
 Common Stock upon the terms and conditions therein and herein set forth.</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;B. Upon the
 written advice of the Company, signed by any of its duly authorized officers, as
 to the Record Date, the Agent shall, from a list of the Company Shareholders as
 of the Record Date to be prepared by the Agent in its capacity as Transfer Agent
 of the Company, prepare and record Subscription Certificates in the names of the
 Shareholders, setting forth the number of Rights to subscribe for the Company&#146;s
 Common Stock calculated on the basis of one Right for each share of Common Stock
 recorded on the books in the name of each such Shareholder as of the Record Date.
 The number of Rights that are issued to Record Date Shareholders will be rounded
 up by the Agent to the nearest number of Full Rights as Fractional Rights will not
 be issued. Each Subscription Certificate shall be dated as of the Record Date and
 shall be executed manually or by facsimile signature of a duly authorized officer
 of the Subscription Agent. Upon the written advice, signed as aforesaid, as to the
 effective date of the Registration Statement, the Agent shall promptly countersign
 and deliver the Subscription Certificates, together with a copy of the Prospectus,
 instruction letter and any other document as the Company deems necessary or appropriate,
 to all Shareholders with record addresses in the United States (including its territories
 and possessions and the District of Columbia). Delivery shall be by first class
 mail (without registration or insurance), except for those Shareholders having a
 registered address outside the United States (who will only receive copies of the
 Prospectus, instruction letter and other documents as the Company deems necessary
 or appropriate, if any), delivery shall be by air mail (without registration or
 insurance) and by first class mail (without registration or insurance) to those
 Shareholders having APO or FPO addresses. No Subscription Certificate shall be valid
 for any purpose unless so executed.</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;C. The Agent
 will mail a copy of the Prospectus, instruction letter, a special notice and other
 documents as the Company deems necessary or appropriate, if any, but not Subscription
 Certificates to Record Date Shareholders whose record addresses are outside the
 United States (including its territories and possessions and the District of Columbia
 ) (&#147;Foreign Record Date Shareholders&#148;). The Rights to which such Subscription Certificates
 relate will be held by the Agent for such Foreign Record Date Shareholders&#146;
 accounts until instructions are received to exercise the Rights.</font></p>
<p><font face="serif" size="2"><b>4.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Exercise.</b></u>
<br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;A. Record
 Date Shareholders may acquire shares of Common Stock on Primary Subscription and
 pursuant to the Over-Subscription Privilege by delivery to the Agent as specified
 in the Prospectus of (i) the Subscription Certificate with respect thereto, duly
 executed by such Shareholder in accordance with and as provided by the terms and
 conditions of the Subscription Certificate, together with (ii) the estimated purchase
 price, as disclosed in the Prospectus, for each share of Common Stock subscribed
 for by exercise of such Rights, in U.S.</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p><font face="serif" size="2">dollars by money order or check drawn on
 a bank in the United States, in each case payable to the order of the Company.</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;B. Rights
 may be exercised at any time after the date of issuance of the Subscription Certificates
 with respect thereto but no later than 5:00 P.M. New York time on such date as the
 Company shall designate to the Agent in writing (the &#147;Expiration Date&#148;). For the
 purpose of determining the time of the exercise of any Rights, delivery of any material
 to the Agent shall be deemed to occur when such materials are received at the Shareholder
 Services Division of the Agent specified in the Prospectus.</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;C. Notwithstanding
 the provisions of Section 4 (A) and 4 (B) regarding delivery of an executed Subscription
 Certificate to the Agent prior to 5:00 P.M. New York time on the Expiration Date,
 if prior to such time the Agent receives a Notice of Guaranteed Delivery by facsimile
 (telecopy) or otherwise from a bank, a trust company or a New York Stock Exchange
 member guaranteeing delivery of (i) payment of the full Subscription Price for the
 shares of Common Stock subscribed for on Primary Subscription and any additional
 shares of Common Stock subscribed for pursuant to the Over-Subscription Privilege,
 and (ii) a properly completed and executed Subscription Certificate, then such exercise
 of Primary Subscription Rights and Over-Subscription Rights shall be regarded as
 timely, subject, however, to receipt of the duly executed Subscription Certificate
 and full payment for the Common Stock by the Agent within three Business Days (as
 defined below) after the Expiration Date (the &#147;Protect Period&#148;) and full payment
 for their Common Stock within ten Business Days after the Confirmation Date (as
 defined in Section 4(D)). For the purposes of the Prospectus and this Agreement,
 &#147;Business Day&#148; shall mean any day on which trading is conducted on the New York
 Stock Exchange.</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;D. The Company
 will determine the Subscription Price by taking the lower of (i) $0.25 below the
 last reported sale price of a share of the Company&#146;s Common Stock on the Nasdaq
 National Market on [ ], 2005 (the &#147;Pricing date&#148;) or (ii) the net asset value of
 a share of the Company&#146;s Common Stock at the close of business on that date.
 Within [ ] business days following the Expiration Date (the &#147;Confirmation Date&#148;),
 EQI shall send to each exercising shareholder (or, if shares of Common Stock on
 the Record Date are held by Cede &#038; Co. or any other depository or nominee,
 to Cede &#038; Co. or such other depository or nominee) a confirmation showing the
 number of shares of Common Stock acquired pursuant to the Primary Subscription,
 and, if applicable, the Over-Subscription Privilege, the per share and total purchase
 price for such shares, and any additional amount payable to the Company by such
 shareholder or any excess to be refunded by the Company to such shareholder in the
 form of a check and stub, along with a letter explaining the allocation of shares
 of Common Stock pursuant to the Over-Subscription Privilege.</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;E. Any additional
 payment required from a shareholder must be received by EQI within ten Business
 Days after the Confirmation Date and any excess payment to be refunded by the Company
 to a shareholder will be mailed by EQI within ten Business Days after the Confirmation
 Date. If a shareholder does not make timely payment of any additional amounts due
 in accordance with Section 4(D), EQI will consult with the Company in accordance
 with Section 5 as to the appropriate action to be taken. EQI will not issue or deliver
 certificates or Statements of Holding for shares subscribed for until payment in
 full therefore has been received, including collection of checks and payment pursuant
 to notices of guaranteed delivery.</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p><font face="serif" size="2"><b>5.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Validity of Subscriptions.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Irregular
 subscriptions not otherwise covered by specific instructions herein shall be submitted
 to an appropriate officer of the Company and handled in accordance with his or her
 instructions. Such instructions will be documented by the Agent indicating the instructing
 officer and the date thereof.</font></p>
<p><font face="serif" size="2"><b>6.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Over-Subscription.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;If, after
 allocation of shares of Common Stock to Record Date Shareholders, there remain unexercised
 Rights, then the Agent shall allot the shares issuable upon exercise of such unexercised
 Rights (the &#147;Remaining Shares&#148;) to shareholders who have exercised all the Rights
 initially issued to them and who wish to acquire more than the number of shares
 for which the Rights issued to them are exercisable. The Fund may also increase
 the number of Shares subject to the Over-Subscription Privilege by up to 20% of
 the Shares. Shares subscribed for pursuant to the Over-Subscription Privilege will
 be allocated in the amounts of such over-subscriptions. If the number of shares
 for which the Over-Subscription Privilege has been exercised is greater than the
 Remaining Shares, the Agent shall allocate the Remaining Shares to Record Date Shareholders
 exercising Over-Subscription Privilege based on the number of shares of Common Stock
 owned by them on the Record Date. The percentage of Remaining Shares each over-subscribing
 Record Date Shareholder may acquire will be rounded up or down to result in delivery
 of whole shares of Common Stock. The Agent shall advise the Company immediately
 upon the completion of the allocation set forth above as to the total number of
 shares subscribed and distributable.</font></p>
<p><font face="serif" size="2"><b>7.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Delivery of Shares.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The Agent
 will deliver (i) certificates or Statement of Holding reflecting new shares of Company
 Common Stock in the Direct Registration System,representing those shares of Common
 Stock purchased pursuant to exercise of Primary Subscription Rights as soon as practicable
 after the corresponding Rights have been validly exercised and full payment for
 such shares has been received and cleared and (ii) certificates or Statements of
 Holding representing those shares purchased pursuant to the exercise of the Over-Subscription
 Privilege as soon as practicable after the Expiration Date and after all allocations
 have been effected. Participants in the Company&#146;s Distribution Reinvestment
 and Cash Purchase Plan (the &#147;Plan&#148;) will have an Shares acquired in the Primary
 Subscription and pursuant to the Over-Subscription Privilege credited to their accounts
 in the Plan. Stock certificates will not be issued for Shares credited to the Plan
 accounts.</font></p>
<p><font face="serif" size="2"><b>8.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Holding Proceeds of Rights
 Offering.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;A. All proceeds
 received by EQI from Shareholders in respect of the exercise of Rights shall be
 held by EQI, on behalf of the Company, in a segregated, interest bearing account
 (the &#147;Account&#148;). Such interest shall accrue to the Company (and not to the benefit
 of the Shareholders who have submitted Subscription Certificates) pending disbursement
 in the manner described in Section 8(B) below.</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;B. EQI shall
 deliver all proceeds received in respect of the exercise of Rights to the Company
 as promptly as practicable, but in no event later than ten business days after the
 Confirmation Date. Proceeds held in respect of excess payments (including interest
 earned thereon) shall belong to the Fund.</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;C. The Company
 acknowledges that the bank accounts maintained by EQI in connection with the services
 provided under this Agreement will be in EQI&#146;s name.</font></p>
<p><font face="serif" size="2"><b>9.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Reports.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Daily, during
 the period commencing on __________, until termination of the Subscription Period,
 the Agent will report by telephone or telecopier, confirmed by letter, to an Officer
 of the Company, data regarding Rights exercised, the total number of shares of Common
 Stock subscribed for, and payments received therefor, bringing forward the figures
 from the previous day&#146;s report in each case so as to show the cumulative totals
 and any such other information as may be mutually determined by the Company and
 the Agent.</font></p>
<p><font face="serif" size="2"><b>10.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Loss or Mutilation.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;If any Subscription
 Certificate is lost, stolen, mutilated or destroyed, the Agent may, on such terms
 which will indemnify and protect the Company and the Agent as the Agent may in its
 discretion impose (which shall, in the case of a mutilated Subscription Certificate
 include the surrender and cancellation thereof), issue a new Subscription Certificate
 of like denomination in substitution for the Subscription Certificate so lost, stolen,
 mutilated or destroyed.</font></p>
<p><font face="serif" size="2"><b>11.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Compensation for Services.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The Company
 agrees to pay to the Agent compensation for its services hereunder in accordance
 with its Fee Schedule to act as Agent attached hereto as Exhibit A. The Company
 further agrees that it will reimburse the Agent for its reasonable out-of-pocket
 expenses incurred in the performance of its duties as such.</font></p>
<p><font face="serif" size="2"><b>12.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Instructions, Indemnification
 and Limitation of Liability.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The Agent
 undertakes the duties and obligations imposed by this Agreement upon the following
 terms and conditions:</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;A. The Agent
 shall be entitled to rely upon any instructions or directions furnished to it by
 an appropriate officer of the Company, whether in conformity with the provisions
 of this Agreement or constituting a modification hereof or a supplement hereto.
 Without limiting the generality of the foregoing or any other provision of this
 Agreement, the Agent, in connection with its duties hereunder, shall not be under
 any duty or obligation to inquire into the validity or invalidity or authority or
 lack thereof of any instruction or direction from an officer of the Company which
 conforms to the applicable requirements of this Agreement and which the Agent reasonably
 believes to be genuine and shall not be liable for any delays, errors or loss of
 data occurring by reason of circumstances beyond the Agent&#146;s control.</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;B. The Company
 will indemnify the Agent and its nominees against, and hold it harmless from, all
 liability and expense which may arise out of or in connection with the services
 described in this Agreement or the instructions or directions furnished to the Agent
 relating to this Agreement by an appropriate officer of the Company, except for
 any liability or expense which shall arise out of the gross negligence, bad faith
 or willful misconduct of the Agent or such nominees.</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;In order for
 a person (the &#147;indemnified party&#148;) to be entitled to any indemnification provided
 for under Section 12(B) in respect of,f arising out of or involving a claim made
 by any person against the indemnified party (a &#147;Third Party</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p><font face="serif" size="2">Claim&#148;), the indemnified
 party must notify the indemnifying party in writing (and in reasonable detail) of
 the Third Party Claim promptly following receipt by such indemnified party of notice
 of such Third Party Claim; provided, however, that failure to give such notification
 shall not affect the indemnification provided hereunder except to the extent the
 indemnifying party shall have been actually and materially prejudiced as a result
 of such failure (except that the indemnifying party shall not be liable for any
 expenses incurred during the period in which the indemnified party failed to give
 such notice). Thereafter, the indemnifying party shall deliver to the indemnifying
 party, promptly following the indemnified party&#146;s receipt thereof, copies of
 all notices and documents (including court papers) received by the indemnified party
 relating to the Third Party Claim. Should the indemnifying party so elect to assume
 the defense of a Third Party Claim, the indemnifying party shall not be liable to
 the indemnified party for any legal expenses subsequently incurred by the indemnified
 party in connection with the defense thereof. The Company shall be entitled to participate
 as its own expense in the defense of any such Third Party Claim, and, if it so elects
 at any time after receipt of such notice, it may assume the defense of any suit
 brought to enforce any such claim or of any other legal action or proceeding. For
 the purposes of this Section 12, the term &#147;liability and expense&#148; means any amount
 paid or payable to satisfy any Third Party Claim in compliance with this Section
 12, and all reasonable costs and expenses, including, but not limited to, reasonable
 counsel fees and disbursements, paid or incurred in investigating or defending against
 any such Third Party Claim in compliance with this Section 12. If the Company chooses
 to assume the defense of the Third Party Claim, the Agent shall cooperate in the
 defense thereof. Whether or not the Company assumes the defense of the Third Party
 Claim, the Agent shall not admit any liability with respect to, or settle, compromise
 or discharge, such Third Party Claim without waiving in writing all rights to indemnification
 under this Agreement with respect to such Third Party Claim or, if Agent is seeking
 indemnification from Company, without the Company&#146;s prior written consent (which
 consent shall not be unreasonably withheld). If the Company assumes the defense
 of the Third Party Claim, the Agent shall agree to any settlement, compromise or
 discharge of a Third Party Claim that the Company may recommend and that by its
 terms obligates the Company to pay the full amount of the liability in connection
 with such Third Party Claim, which releases the Agent completely in connection with
 such Third Party Claim and that would not otherwise adversely affect the Agent.</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;C. The Agent
 shall be responsible for and shall indemnify and hold the Company harmless from
 and against any and all losses, damages, costs, charges, counsel fees, payments,
 expenses and liability arising out of or attributable to Agent&#146;s refusal or
 failure to comply with the terms of this Agreement, or which arise out of Agent&#146;s negligence or willful misconduct or which arise out of the breach of any
 representation or warranty of Agent hereunder, for which Agent is not entitled to
 indemnification under this Agreement; provided, however, that Agent&#146;s aggregate
 liability during any term of this Agreement with respect to, arising from, or arising
 in connection with this Agreement, or from all services provided or omitted to be
 provided under this Agreement, whether in contract, or in tort, or otherwise, is
 limited to, and shall not exceed, the amounts paid hereunder by the Company to Agent
 as fees and charges, but not including reimbursable expenses.</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p><font face="serif" size="2"><b>13.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Changes in Subscription
 Certificate.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The Agent
 may, without the consent or concurrence of the Shareholders in whose names Subscription
 Certificates are registered, by supplemental agreement or otherwise, concur with
 the Company in making any changes or corrections in a Subscription Certificate that
 it shall have been advised by counsel (who may be counsel for the Company) is appropriate
 to cure any ambiguity or to correct any defective or inconsistent provision or clerical
 omission or mistake or manifest error therein or herein contained, and which shall
 not be inconsistent with the provision of the Subscription Certificate except insofar
 as any such change may confer additional rights upon the Shareholders.</font></p>
<p><font face="serif" size="2"><b>14.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Assignment/Delegation.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;A. Except
 as provided in Section 14(C) below, neither this Agreement nor any rights or obligations
 hereunder may be assigned or delegated by either party without the written consent
 of the other party.</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;B. This Agreement
 shall inure to the benefit of and be binding upon the parties and their respective
 permitted successors and assigns. Nothing in this Agreement is intended or shall
 be construed to confere upon any other person any right, remedy or claim or to impose
 any other person any duty, liability or obligation.</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;C. The Agent
 may, without further consent on the part of the Company, subcontract with other
 subcontractors for systems, processing, telephone and mailing services, and post-exchange
 activities, as may be required from time to time;&#160;provided, however, that the
 Agent shall be as fully responsible to the Company for the acts and omissions of
 any subcontractor as it is for its own acts and omissions.</font></p>
<p><font face="serif" size="2"><b>15.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Governing Law.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The validity,
 interpretation and performance of this Agreement shall be governed by the law of
 the Commonwealth of Massachusetts.</font></p>
<p><font face="serif" size="2"><b>16.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>No Joint Venture; Third
 Party Beneficiaries.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;This Agreement
 does not constitute an agreement for a partnership or joint venture between the
 Agent and the Company. Neither party shall make any commitments with third parties
 that are binding on the other party without the other party&#146;s prior written
 consent.</font></p>
<p><font face="serif" size="2"><b>17.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Force Majeure.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;In the event
 either party is unable to perform its obligations under the terms of this Agreement
 because of acts of God, strikes, terrorist acts, equipment or transmission failure
 or damage reasonably beyond its control, or other cause reasonably beyond its control,
 such party shall not be liabile for damages to the other for any damages resulting
 from such failure to perform or otherwise from such causes. Performance under this
 Agreement shall resume when the affected party or parties are able to perform substantially
 that party&#146;s duties.</font></p>
<p><font face="serif" size="2"><b>18.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Consequential Damages.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Neither party
 to this Agreement shall be liable to the other party for any consequential, indirect,
 special or incidental damages under any provisions of this Agreement or for any
 consequential, indirect, penal, special or incidential damages arising out of any
 act or failure to act hereunder even if that party has been advised of or has foreseen
 the possibility of such damages.</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p><font face="serif" size="2"><b>19.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Severability.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;If any provision
 of this Agreement shall be held invalid, unlawful, or unenforceable, the valididty,
 legality, and enforceability of the remaining provisions shall not in any way be
 affected or impaired.</font></p>
<p><font face="serif" size="2"><b>20.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Counterparts.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;This Agreement
 may be executed in one or more counterparts, each of which shall be deemed an original
 and all of which together shall be considered one and the same agreement.</font></p>
<p><font face="serif" size="2"><b>21.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Facsimile Signatures.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Any facsimile signature of
any party hereto shall constitute a legal, valid and binding execution hereof by such party.</font></p>
<p><font face="serif" size="2"><b>22.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Captions.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The captions
 and descriptive headings herein are for the convenience of the parties only. They
 do not in any way modify, amplify, alter or give full notice of the provisions hereof.</font></p>
<p><font face="serif" size="2"><b>23.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Confidentiality.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The Agent
 and the Company agree that all books, records, informtion and data pertaining to
 the business of the other party which are exchanged or received pursuant to the
 negotiation or the carrying out of this Agreement including the fees for services
 set forth in the attached schedule shall remain confidential, and shall not be voluntarily
 disclosed to any other person, except as may be required by law.</font></p>
<p><font face="serif" size="2"><b>24.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Term and Termination.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;This Agreement
 shall remain in effect until 30 days&#146; written notice has been provided by either
 party to the other. Upon termination of the Agreement, the Agent shall retain all
 canceled Certificates and related documentation as required by applicable law.</font></p>
<p><font face="serif" size="2"><b>25.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Notices.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Until further
 notice in writing by either party hereto to the other party, all written reports, notices and other communications
 between the Exchange Agent and the Company required or permitted hereunder shall
 be delivered or mailed by first class mail, postage prepaid, telecopier or overnight
 courier guaranteeing next day delivery,addressed as follows:</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="30%">
<tr>
<td valign="bottom" colspan="3" align="center"><font face="serif" size="2">
If to the Company, to:</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td width="10%" align="left"><font face="serif" size="1">&#160;</font></td>
<td width="10%" align="left"><font face="serif" size="1">&#160;</font></td>
<td width="45%"><font face="serif" size="1">&#160;</font></td>
<td width="15%"><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Royce Focus
 Trust, Inc.</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">1414 Avenue
 of the Americas</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">New York,
 NY 10019</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Attn: John
 D. Diederich</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="serif" size="2">Vice President</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
</table>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<table border="0" cellpadding="0" cellspacing="0" width="30%">
<tr>
<td width="10%" align="left"><font face="serif" size="1">&#160;</font></td>
<td width="10%" align="left"><font face="serif" size="1">&#160;</font></td>
<td width="45%"><font face="serif" size="1">&#160;</font></td>
<td width="15%"><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">With a copy
 to:</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Royce &#038;
 Associates, LLC</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">1414 Avenue
 of the Americas</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">New York,
 NY 10019</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Attn: John
 D. Diederich</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="serif" size="2">Chief Operating
 Officer</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" colspan="3" align="center"><font face="serif" size="2">
If to the Agent, to:</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">EquiServe
 Trust Company, N.A.</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" colspan="3" align="left"><font face="serif" size="2">
c/o EquiServe, Inc.</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">150 Royall
 Street</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Canton, MA
 02021</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Attn: Reorganization
 Department</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="serif" size="2">or</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">525 Washington
 Boulevard</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Jersey City,
 NJ 07310</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" colspan="3" align="center"><font face="serif" size="2">
Attn: Reorganization Department</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
</table>
<p><font face="serif" size="2"><b>26.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Survival.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The provisions
 of Paragraphs 12, 15, 17-27 shall survive any termination, for any reason, of this
 Agreement.</font></p>
<p><font face="serif" size="2"><b>27.&#160;&#160;&#160;&#160;&#160;&#160;</b><u><b>Merger of Agreement.</b></u><br>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;This Agreement
 constitutes the entire agreement between the parties hereto and supercedes any prior
 agreement with respect to the subject matter hereof whether oral or written.</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;IN WITNESS
 WHEREOF, the parties hereto have caused this Agreement to be executed by their respective
 officers, hereunto duly authorized, as of the day and year first above written.</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td valign="bottom" align="left"><font face="serif" size="2"><b>EQUISERVE
 TRUST COMPANY, N.A.</b></font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2"><b>ROYCE FOCUS
 TRUST, INC.</b></font></td>
</tr>
<tr>
<td width="45%" align="left"><font face="serif" size="1">&#160;</font></td>
<td width="10%" align="left"><font face="serif" size="1">&#160;</font></td>
<td width="45%"><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="serif" size="2">By:______________________________</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">By:_______________________</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="serif" size="2">Date:____________________________</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Date:______________________</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="serif" size="2">Title:____________________________</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Title:______________________</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="serif" size="2"><b>EQUISERVE,
 INC.</b></font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="serif" size="2">By:______________________________</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="serif" size="2">Date:_____________________________</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="serif" size="2">Title:_____________________________</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
</table>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p align="center"><font face="serif" size="2"><b>EQUISERVE TRUST COMPANY,
 N.A.<br>PROPOSAL<br></b><i><b>to serve as<br></b></i><b>SUBSCRIPTION AGENT FOR<br>
ROYCE FOCUS TRUST, INC.</b></font></p>
<p><font face="serif" size="2"><b>A.</b>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<b>FEES FOR SERVICES
<sup><a href="#name_star">*</a></sup></b></font></p>
<table border="1" cellpadding="3" cellspacing="2" width="90%" rules="groups" bordercolor="#000000" align="center">
<tr>
<td width="4%" valign="bottom" align="right"><font face="serif" size="2">$</font></td>
<td width="6%" valign="bottom" align="right"><font face="serif" size="2">10,000.00</font></td>
<td width="5%"><font face="serif" size="1">&#160;</font></td>
<td width="85%" valign="bottom" align="left"><font face="serif" size="2">Project Management
 Fee</font></td>
</tr>
<tr>
<td valign="bottom" align="right"><font face="serif" size="2">$</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">2.00</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Per subscription
 form issued</font></td>
</tr>
<tr>
<td valign="bottom" align="right"><font face="serif" size="2">$</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">9.50</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Per subscription
 form processed (registered and beneficial)</font></td>
</tr>
<tr>
<td valign="bottom" align="right"><font face="serif" size="2">$</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">15.00</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Per defective
 subscription form received</font></td>
</tr>
<tr>
<td valign="bottom" align="right"><font face="serif" size="2">$</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">15.00</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Per notice
 of guaranteed delivery received</font></td>
</tr>
<tr>
<td valign="bottom" align="right"><font face="serif" size="2">$</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">2.00</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Per broker
 split certificate issued</font></td>
</tr>
<tr>
<td valign="bottom" align="right"><font face="serif" size="2">$</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">3.00</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Per sale of
 right (if applicable)</font></td>
</tr>
<tr>
<td valign="bottom" align="right"><font face="serif" size="2">$</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">4.50</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Per invoice
 mailed (if applicable)</font></td>
</tr>
<tr>
<td valign="bottom" align="right"><font face="serif" size="2">$</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">1.75</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Per refund
 check issued and mailed (if applicable)</font></td>
</tr>
<tr>
<td valign="bottom" align="right"><font face="serif" size="2">$</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">5.00</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Per solicitation
 check processed and mailed (if applicable)</font></td>
</tr>
<tr>
<td valign="bottom" align="right"><font face="serif" size="2">$</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">15.00</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Per withdrawal
 of subscription certificate (if applicable)</font></td>
</tr>
<tr>
<td valign="bottom" align="right"><font face="serif" size="2">$</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">50.00</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Per wire (if
 applicable)</font></td>
</tr>
<tr>
<td valign="bottom" align="right"><font face="serif" size="2">$</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">2,500.00</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">New York window
 fee for Midnight expiration (if applicable)</font></td>
</tr>
<tr>
<td valign="bottom" align="right"><font face="serif" size="2">$</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">2,500.00</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">For all Pro-rations
 (if applicable) 1 charge shall apply</font></td>
</tr>
<tr>
<td valign="bottom" align="right"><font face="serif" size="2">$</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">3,000.00</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Per offer
 extension</font></td>
</tr>
<tr>
<td valign="bottom" align="right"><font face="serif" size="2">$</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">5,000.00</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Minimum charge
 should the project be canceled for any reason prior to the mailing of the subscription
 form</font></td>
</tr>
</table>
<p><font face="serif" size="2"><b>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<sup><a name="name_star"></a>*</sup>Excludes out-of-pocket expenses as described
 in Section C, &#147;Items Not Covered&#148;</b></font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td valign="bottom" align="left"><font face="serif" size="2"><b>B.</b></font></td>
<td valign="bottom" align="left" colspan="3"><font face="serif" size="2"><b>SERVICES COVERED</b></font></td>
</tr>
<tr>
<td width="5%" align="left"><font face="serif" size="1">&#160;</font></td>
<td width="2%" valign="top" align="left"><font face="serif" size="2">&#149;</font></td>
<td width="2%"><font face="serif" size="1">&#160;</font></td>
<td width="90%" valign="bottom" align="left"><font face="serif" size="2">Designating
 an operational team to carry out Subscription Agent duties, including document review
 and execution of legal agreement, review of subscription form and communication
 materials, project management, and on-going project updates and reporting</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Calculating
 Rights to be distributed to each shareholder and printing shareholder information
 on the subscription form</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Issuing and
 mailing subscription forms to registered shareholders</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Tracking and
 reporting the number of exercises made, as required</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Processing
 Rights received and exercised</font></td>
</tr>
</table>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="5%" align="left"><font face="serif" size="1">&#160;</font></td>
<td width="2%" valign="bottom" align="left"><font face="serif" size="2">&#149;</font></td>
<td width="2%"><font face="serif" size="1">&#160;</font></td>
<td width="90%" valign="bottom" align="left"><font face="serif" size="2">Deposit participant
 checks daily and forward all participant funds to Royce at the end of the offering
 period</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Providing
 receipt summation of checks received</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Affixing
 legends to appropriate stock certificates, where applicable</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Issuing and
 mailing stock certificates and/or checks</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Interfacing
 with the Information Agent</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Calculating,
 issuing and mailing of proration and/or over-subscription checks if applicable</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Calculating,
 issuing and mailing of solicitation checks if applicable</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="serif" size="2"><b>C.</b></font></td>
<td valign="bottom" align="left" colspan="3"><font face="serif" size="2"><b>ITEMS NOT
 COVERED</b></font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Items not
 specified in the &#147;Services Covered&#148; section set forth in this Agreement, including
 any services associated with new duties, legislation or regulatory fiat which become
 effective after the date of this Agreement (these will be provided on an appraisal
 basis)</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">All out-of-pocket
 expenses such as telephone line charges, overprinting, certificates, checks, postage,
 stationery, wire transfers, and excess material disposal (these will be billed as
 incurred)</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Reasonable
 legal review fees if referred to outside counsel</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Overtime charges
 assessed in the event of late delivery of material for mailings unless the
 target mail date is rescheduled</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="serif" size="2"><b>D.</b></font></td>
<td valign="bottom" align="left" colspan="3"><font face="serif" size="2"><b>ASSUMPTIONS</b></font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Proposal based
 upon document review and information known at this time about the transaction.</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Significant
 changes made in the terms or requirements of this transaction could require modifications
 to this proposal</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Proposal must
 be executed prior to the initial mailing</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Company responsible
 for printing of materials(Rights Card, Prospectus and ancillary documents)</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#149;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Material to
 be mailed to shareholders must be received no less than five (5) business days
 prior to the start of the mailing project</font></td>
</tr>
</table>
<p><font face="serif" size="2"><b>
E.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</b><b>PAYMENT FOR SERVICES</b></font></p>
<p style="margin-left:48px; text-indent:0px"><font face="serif" size="2">The Project
 Management Fee will be rendered and payable on the effective date of the transaction.
 An invoice for any out-of-pockets and per item fees realized will be rendered and
 payable on a monthly basis, except for postage expenses in excess of $5,000. Funds
 for such mailing expenses must be received one (1) business day prior to the scheduled
 mailing date.</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<b>EquiServe Trust
 Company, N.A.</b><b>
Royce Focus Trust, Inc.</b></font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">EquiServe
 Trust Company, N.A.</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Royce Focus
 Trust, Inc.</font></td>
</tr>
<tr>
<td width="5%" align="left"><font face="serif" size="1">&#160;</font></td>
<td width="28%" align="left"><font face="serif" size="1">&#160;</font></td>
<td width="10%" align="left"><font face="serif" size="1">&#160;</font></td>
<td width="53%" align="left"><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="serif" size="2">By: ___________________________</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="serif" size="2">By: ___________________________</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Title:__________________________</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Title:__________________________</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>

<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Date: __________________________</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Date: __________________________</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">11</font></p>
</body>
</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3
<SEQUENCE>4
<FILENAME>exhibit_k6.htm
<TEXT>
<html>
<body>
<p align="right"><font face="Serif" size="2">Exhibit (k)(6)</font></p>
<p align="center"><font face="Serif" size="2"><b>NOTICE OF GUARANTEED DELIVERY
<br>For Shares of Common Stock of</b></font></p>
<p align="center"><font face="Serif" size="2"><b>ROYCE FOCUS TRUST, INC.
<br>Subscribed for under Primary Subscription<br>and the Over-Subscription Privilege
</b></font></p>
<p><font face="Serif" size="2">As set forth in the Prospectus, this form
 or one substantially equivalent hereto may be used as a means of effecting subscription
 and payment for all shares of the Fund&#146;s Common Stock (the "Shares") subscribed
 for under the Primary Subscription and the Over-Subscription Privilege. Such form
 may be delivered by hand or sent by facsimile transmission, overnight courier or
 first class mail to the Subscription Agent.</font></p>
<p align="center"><font face="Serif" size="2"><b>The Subscription Agent
 is:</b></font></p>
<p align="center"><font face="Serif" size="2">EQUISERVE<br>Attention: Corporate
 Actions</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="15%" valign="bottom" align="center"><font face="Serif" size="2"><b>By Mail:
</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td width="15%" valign="bottom" align="center"><font face="Serif" size="2"><b>By Facsimile:
</b></font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2">P.O. Box
 859208</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">(781) 380-3388</font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2">Braintree,
 MA 02185</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
</table>
<p align="center"><font face="Serif" size="2"><b>Confirm by Telephone to:
<br></b>(781) 843-1833 x 200</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="17%" valign="bottom" align="center"><font face="Serif" size="2"><b>By Overnight
 Courier:</b></font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td width="20%" valign="bottom" align="center"><font face="Serif" size="2"><b>By Hand:
</b></font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2">161 Baystate
 Drive</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">EquiServe
 Trust Company, N.A.</font></td>
</tr>
<tr>
<td valign="bottom" align="center"><font face="Serif" size="2">Braintree,
 MA 02184</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">Attn: Corporate
 Actions</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">17 Battery
 Park Place, 11<sup>th</sup> Floor</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="center"><font face="Serif" size="2">New York,
 NY 10004</font></td>
</tr>
</table>
<p><font face="Serif" size="2">DELIVERY OF THIS INSTRUMENT TO AN ADDRESS,
 OR TRANSMISSION OF INSTRUCTIONS VIA A TELECOPY FACSIMILE NUMBER, OTHER THAN AS SET
 FORTH ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY.</font></p>
<p><font face="Serif" size="2">The New York Stock Exchange member firm
 or bank or trust company which completes this form must communicate this guarantee
 and the number of Shares subscribed for in connection with this guarantee (separately
 disclosed as to the Primary Subscription and the Over-Subscription Privilege) to
 the Subscription Agent and must deliver this Notice of Guaranteed Delivery of Payment,
 guaranteeing delivery of (a) payment in full for all subscribed Shares and (b) a
 properly completed and signed copy of the Subscription Certificate (which certificate
 and full payment must then be delivered no later than the close of business of the
 third business day after the Expiration Date, unless extended) to the Subscription
 Agent prior to 5:00 p.m., Eastern time, on the Expiration Date, unless extended.
 Failure to do so will result in a forfeiture of the Rights.</font></p>
<p align="center"><font face="Serif" size="2">GUARANTEE</font></p>
<p><font face="Serif" size="2">The undersigned, a member firm of the New
 York Stock Exchange or a bank or trust company having an office or correspondent
 in the United States, guarantees delivery to the Subscription Agent by no later
 than 5:00 p.m., New York time, on June 15, 2005 (unless extended as described in
 the Prospectus) of (a) a properly completed and executed Subscription Certificate
 and (b) payment of the full Subscription Price for Shares subscribed for on Primary
 Subscription and for any additional Shares subscribed for pursuant to the Over-Subscription
 Privilege, as subscription for such Shares is indicated herein or in the Subscription
 Certificate.</font></p>
<hr size="5" color="gray" noshade>
<page>
<p align="right"><font face="Serif" size="2"><b>Broker Assigned Control
 # __________</b></font></p>
<p align="center"><font face="Serif" size="2"><b>ROYCE FOCUS TRUST, INC.
</b></font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="20%" valign="top" align="left"><font face="Serif" size="2">1. &#160;Primary
 Subscription</font></td>
<td width="4%"><font face="Serif" size="1">&#160;</font></td>
<td width="20%" valign="top" align="left"><font face="Serif" size="2">Number of
 Rights to be exercised</font></td>
<td width="4%"><font face="Serif" size="1">&#160;</font></td>
<td width="25%" valign="top" align="left"><font face="Serif" size="2">Number of
 Primary Shares requested for which you are guaranteeing delivery of Rights and Payment</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td width="4%"><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">Payment to
 be made in connection with Primary Shares</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">________ Rights</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">________ Shares</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">$ ___________</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">(Rights /5)</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">2. &#160;Over Subscription</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">Number of
 Over-Subscription Shares requested for which you are guaranteeing payment</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">Payment to
 be made in connection with Over-Subscription Shares</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">________ Rights</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">________ Shares</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">$ ___________</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="top" align="left"><font face="Serif" size="2">3. &#160;Totals</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">Total Number
 of Rights to be Delivered</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">Total Number
 of Shares to be Delivered</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">________ Rights</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">________ Shares</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">$ ___________</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="top" align="left"><font face="Serif" size="2">Total Payment</font></td>
</tr>
</table>
<p><font face="Serif" size="2">Method of delivery (circle one)</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">A.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">Through DTC</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">B.</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">Direct to
 EquiServe, as Subscription Agent. Please reference below the registration of the
 Rights to</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">be delivered.</font></td>
</tr>
</table>
<p align="center"><font face="Serif" size="2">______________________________
<br><br>______________________________<br><br>______________________________</font></p>
<p><font face="Serif" size="2"><b>Please assign a unique control number
 for each guarantee submitted.</b> This number needs to be referenced on any direct
 delivery of Rights or any delivery through DTC.</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="60%">
<tr><td valign="bottom"><font face="Serif" size="2">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
</tr>
<tr>
<td width="15%" valign="bottom" align="left"><font face="Serif" size="2">Name of Firm</font></td>
<td width="5%"><font face="Serif" size="1">&#160;</font></td>
<td width="15%" valign="bottom" align="left"><font face="Serif" size="2">Authorized
 Signature</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">DTC Participant
 Number</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">Title</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Address</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">Name (Please
 Type or Print)</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
</tr>
<tr>
<td valign="bottom" align="right"><font face="Serif" size="2">Zip Code</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">Phone Number</font></td>
</tr>
<tr>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td align="left"><font face="Serif" size="1">&#160;</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom"><hr size="1" color="#000000" noshade></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="Serif" size="2">Contact Name</font></td>
<td><font face="Serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="Serif" size="2">Date</font></td>
</tr>
</table>
</body>
</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4
<SEQUENCE>5
<FILENAME>exhibit_k7.htm
<TEXT>
<html>
<head>
<title></title>
</head>
<body>
<p align="right"><font face="Times New Roman" size="2">Exhibit (k)(7)</font></p>
<p align="justify"><font face="serif" size="2"><u><b>INFORMATION AGENT AGREEMENT</b></u></font></p>
<p align="justify"><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;This document
 will constitute the agreement between Royce Focus Trust, Inc. (the &#147;Fund&#148;), with
 its principal executive office at 1414 Avenue of the Americas, New York, NY 10019
 and GEORGESON SHAREHOLDER COMMUNICATIONS INC. (&#147;GSC&#148;), with its principal executive
 offices at 17 State Street, New York, NY 10004, relating to a Rights Offer (the
 &#147;OFFER&#148;) by the Fund.</font></p>
<p align="justify"><font face="serif" size="2">The services to be provided by GSC will
 be as follows:</font></p>
<p><div align="justify" style="margin-left:30px; text-indent:45px;">
<font face="serif" size="2">(1)&#160;&#160;&#160;&#160;<u>INDIVIDUAL
 HOLDERS OF RECORD AND BENEFICIAL OWNERS</u></font></div></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2"><u>Target Group</u>.
 GSC estimates that it may initiate outbound or receive inbound telephone inquiries
 to or from approximately 837 to 1,171 of the approximately 5,580 outstanding beneficial
 and registered shareholders. The estimate number is subject to adjustment and GSC
 may actually receive more or less telephone inquiries depending on the response
 to the OFFER.</font></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2"><u>Inbound
 Telephone Calls to Provide Information</u>. GSC will maintain toll-free inbound
 &#147;800&#148; lines for shareholder inquiries about the OFFER and GSC customer service representatives
 will answer any questions relating to information provided in the offer documents
 and will assist them in properly executing the Rights documents. The &#147;800&#148; lines
 will be staffed Monday through Friday between 9:00 a.m. and 11:00 p.m. Eastern time.</font></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2"><u>Re-mails</u>. GSC will coordinate re-mails of offering materials to the shareholders who
 advise us that they have discarded or misplaced the originally mailed materials.</font></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2"><u>Reminder/Extension
 Mailing</u>. GSC will help to coordinate any targeted or broad-based reminder mailing
 at the request of the FUND. GSC will mail only materials supplied by the FUND or
 approved by the FUND in advance in writing.</font></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2"><u>Subscription
 Reporting</u>. GSC will provide extensive reporting beginning one week prior to
 expiration of the OFFER or any extensions thereafter, which will measure shareholder
 participation and the number/percentage of shares being tendered. This reporting
 will be based solely on previously established contacts within the reorganization
 departments of participating broker/dealers.</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p><div align="justify" style="margin-left:30px; text-indent:45px;"><font face="serif" size="2">(2)&#160;&#160;&#160;&#160;<u>BANK/BROKER
 SERVICING</u></font></div></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2">GSC will contact
 all banks, brokers and other nominee shareholders (&#147;intermediaries&#148;) holding stock
 as shown on appropriate portions of the shareholder lists to ascertain quantities
 of offering materials needed for forwarding to beneficial owners.</font></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2">GSC will deliver
 offering materials by messenger to New York City based intermediaries and by Federal
 Express or other means to non-New York City based intermediaries. GSC will also
 follow-up by telephone with each intermediary to insure receipt of the offering
 materials and to confirm timely re-mailing of materials to the beneficial owners.</font></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2">GSC will maintain
 frequent contact with intermediaries to monitor shareholder response and to insure
 that all liaison procedures are proceeding satisfactorily.</font></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2">GSC will report
 to the FUND the date all material was shipped, received and distributed by participating
 intermediaries.</font></p>
<p><div align="justify" style="margin-left:30px; text-indent:45px;"><font face="serif" size="2">(3)&#160;&#160;&#160;&#160;<u>PROJECT
 FEE</u></font></div></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2">In consideration
 for acting as Information Agent GSC will receive a project fee of $8,500. Terms
 of payment are outlined in section 7 of this agreement.</font></p>
<p><div align="justify" style="margin-left:30px; text-indent:45px;"><font face="serif" size="2">(4)&#160;&#160;&#160;&#160;<u>ESTIMATED
 EXPENSES</u></font></div></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2">GSC will be
 reimbursed by the FUND for its reasonable out-of-pocket expenses incurred provided
 that GSC submits to the FUND an expense report, itemizing such expenses and providing
 copies of all supporting bills in respect of such expenses. If the actual expenses
 incurred are less than the portion of the estimated high range expenses paid in
 advance by the FUND, the FUND will receive from GSC a check payable in the amount
 of the difference at the time that GSC sends its final invoice for the second half
 of the project fee.</font></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2">GSC&#146;s
 expenses are estimated as set forth below and the estimates are based largely on
 data provided to GSC by the FUND. In the course of the OFFER, the expenses and expense
 categories may change due to changes in the OFFER schedule or due to events beyond
 GSC&#146;s control, such as delays in receiving offering material and related items.
 In the event of significant change or new expenses not originally contemplated,
 GSC will notify the FUND by phone and/or by letter for approval of such expenses.</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="11%" valign="bottom"><font face="serif" size="2">&#160;</font></td>
<td width="72%" valign="bottom" align="left"><font face="serif" size="2"><u>Estimated
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<td width="7%" valign="bottom" align="center"><font face="serif" size="2"><u>Low Range</u></font></td>
<td width="3%"><font face="serif" size="1">&#160;</font></td>
<td width="7%" valign="bottom" align="center"><font face="serif" size="2"><u>High Range</u></font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Data Handling
 and Preparation</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Telephone
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<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Computer Match
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<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">2,085 @ $0.45</font></td>
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<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">$938.00</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Outbound Telephone
 Calls</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">725 to 948
 @ $3.50 (registered and NOBO holders)</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">2,537.50</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">3,318.00</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">825 to 1025
 @ $4.00 (brokers, banks and intermediaries)</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">3,300.00</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">4,100.00</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Incoming &#147;800&#148;
 calls (shareholders, banks, brokers)</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">112 to 223
 @ $3.50</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">392.00</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">780.00</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Distribution
 Expenses (includes messengers,</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Freight, FedEx
 for all offering documents)</font></td>
<td valign="bottom" align="right"><font face="serif" size="2"> 2,100.00</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="right"><font face="serif" size="2"> 3,900.00</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">Miscellaneous,
 data processing, street search,</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">fax and FedEx</font></td>
<td valign="bottom" align="right"><font face="serif" size="2"> 350.00</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">500.00</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;Total Estimated
 Expenses</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">$9,617.00</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="right"><font face="serif" size="2">$13,536.00</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
</table>
<p><div align="justify" style="margin-left:30px; text-indent:45px;"><font face="serif" size="2">(5)&#160;&#160;&#160;&#160;<u>PERFORMANCE
</u></font></div></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2">GSC will use
 its best efforts to achieve the goals of the FUND but GSC is not guaranteeing a
 minimum success rate. GSC&#146;s Project Fee as outlined in Section 3 or Expenses
 as outlined in Section 4 are not contingent upon a specific level of participation
 in the OFFER.</font></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2">GSC&#146;s
 strategies revolve around an inbound telephone information campaign. The purpose
 of the telephone information campaign is to assist in raising the overall awareness
 amongst shareholders of the OFFER and help shareholders better understand the transaction.
 This in turn may result in higher overall response.</font></p>
<p><div align="justify" style="margin-left:30px; text-indent:45px;"><font face="Serif" size="2">(6)&#160;&#160;&#160;&#160;<u>COMPLIANCE
</u></font></div></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2">The FUND will
 be responsible for compliance with any regulations required by the Securities and
 Exchange Commission, National Association of Securities Dealers or any applicable
 federal or state agencies.</font></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2">In rendering
 the services contemplated by this Agreement, GSC agrees not to make any representations,
 oral or written, to any shareholders or prospective shareholders of the FUND that
 are not contained in the FUND&#146;s Rights Offer material, unless previously authorized
 to do so in writing by the FUND.</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p><div align="justify" style="margin-left:30px; text-indent:45px;"><font face="Serif" size="2">(7)&#160;&#160;&#160;&#160;<u>PAYMENT
</u></font></div></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2">Payment for
 the full fee and expenses, as outlined in sections 3 and 4 of this agreement, will
 be made by the FUND and due thirty days after GSC sends its final invoice.</font></p>
<p><div align="justify" style="margin-left:30px; text-indent:45px;"><font face="Serif" size="2">(8)&#160;&#160;&#160;&#160;<u>MISCELLANEOUS
</u></font></div></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2">GSC will hold
 in confidence and will not use nor disclose to third parties information we receive
 from the FUND or as authorized by the FUND, or information developed by GSC based
 upon such information we receive, except for information which was public at the
 time of disclosure or becomes part of the public domain without disclosure by GSC
 or information which we learn from a third party which does not have an obligation
 of confidentiality to the FUND.</font></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2">In the event
 the project is canceled for an indefinite period of time after the signing of this
 contract and before the expiration of the OFFER, GSC will be reimbursed by the FUND
 for any expenses incurred and a pro rata portion of the project fee based on the
 number of days between the initial public announcement of the OFFER to the originally
 planned expiration of the OFFER.</font></p>
<p align="justify" style="margin-left:100px; text-indent:0px"><font face="serif" size="2">The Fund agrees to indemnify
 and hold harmless GSC and its stockholders, officers, directors, employees, agents
 and affiliates against any and all claims, costs, damages, liabilities, judgments
 and expenses, including the fees, costs and expenses of counsel retained by GSC
 (&#147;Losses&#148;), which result from claims, actions, suits, subpoenas, demands
 or other proceedings brought against or involving GSC which directly relate to or
 arise out of GSC&#146;s performance of the Services (except for costs, damages,
 liabilities, judgments or expenses which shall have been determined by a court of
 law pursuant to a final and nonappealable judgment to have directly resulted from
 GSC&#146;s negligence or willful misconduct. To the extent the Fund suffers Losses
 as a direct result of GSC&#146;s negligence or willful misconduct, GSC agrees to
 indemnify and hold harmless the Fund and its stockholders, officers, directors,
 employees, agents and affiliates. In addition the prevailing party shall be entitled
 to reasonable attorneys&#146; fees and court costs in any action between the parties
 to enforce the provisions of this Agreement, including the indemnification rights
 contained in this paragraph. The indemnity obligations set forth in this shall survive
 the termination of this Agreement.</font></p>
<br>
<hr size="5" color="gray" noshade>
<br>
<page>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;This agreement
 will be governed by and construed in accordance with the laws of the State of New
 York. This AGREEMENT sets forth the entire AGREEMENT between GSC and the FUND with
 respect to the agreement herein and cannot be modified except in writing by both
 parties.</font></p>
<p><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160;&#160;IN WITNESS
 WHEREOF, the parties have signed this AGREEMENT this 6th day of April, 2005.</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="25%" valign="bottom" align="left"><font face="serif" size="2">ROYCE FOCUS
 TRUST, INC.</font></td>
<td width="20%" align="left"><font face="serif" size="1">&#160;</font></td>
<td width="55%" valign="bottom" align="left"><font face="serif" size="2">GEORGESON
 SHAREHOLDER</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">COMMUNICATIONS
 INC.</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="serif" size="2">By_________________________</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">By_________________________</font></td>
</tr>
<tr>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td align="left"><font face="serif" size="1">&#160;</font></td>
<td><font face="serif" size="1">&#160;</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="serif" size="2">&#160;&#160;&#160;&#160;John D. Diederich</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#160;&#160;&#160;&#160;Robert S.
 Brennan</font></td>
</tr>
<tr>
<td valign="bottom" align="left"><font face="serif" size="2">&#160;&#160;&#160;&#160;Vice President</font></td>
<td><font face="serif" size="1">&#160;</font></td>
<td valign="bottom" align="left"><font face="serif" size="2">&#160;&#160;&#160;&#160;Executive
 Vice President</font></td>
</tr>
</table>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5
<SEQUENCE>6
<FILENAME>exhibit_l.htm
<TEXT>
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<title></title>
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<body>
<p align="right"><font face="Times New Roman" size="2">Exhibit (l)</font></p>
<p align="center"><font face="serif" size="3"><b>S<small>IDLEY</small> A<small>USTIN</small> B<small>ROWN</small> <small>&#038;</small>
W<small>OOD</small> <small>LLP</small></b></font></p>
<table border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="9%" valign="top" align="center"><font face="serif" size="2">BEIJING<br>
<hr size="1" color="#000000" noshade width="50%" align="right">
BRUSSELS<br><hr size="1" color="#000000" noshade width="50%" align="right">CHICAGO<br><hr size="1" color="#000000" noshade width="50%"
align="right">DALLAS<br><hr size="1" color="#000000" noshade width="50%" align="right">GENEVA<br>
<hr size="1" color="#000000" noshade width="50%" align="right">HONG KONG<br><hr size="1" color="#000000" noshade width="50%" align="right">
LONDON</font></td>
<td width="26%"><font face="serif" size="1">&#160;</font></td>
<td width="15%" valign="top" align="center"><font face="serif" size="2">
 1501 K STREET, N.W.<br>
 WASHINGTON, D.C. 20005<br>TELEPHONE 202 736 8000<br>FACSIMILE 202 736 8711
<br>www.sidley.com<br><br>FOUNDED 1866</font></td>
<td width="24%"><font face="serif" size="1">&#160;</font></td>
<td width="11%" valign="top" align="center"><font face="serif" size="2">LOS ANGELES
<br><hr size="1" color="#000000" noshade width="50%" align="right">NEW YORK<br><hr size="1" color="#000000" noshade width="50%"
align="right">SAN FRANCISCO<br><hr size="1" color="#000000" noshade width="50%" align="right">SHANGHAI<br><hr size="1" color="#000000" noshade width="50%" align="right">SINGAPORE<br><hr size="1" color="#000000" noshade width="50%" align="right">TOKYO
<br><hr size="1" color="#000000" noshade width="50%" align="right">WASHINGTON, D.C.</font></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">April 25,
 2005</font></p>
<p><font face="serif" size="2">Royce Focus Trust, Inc.<br>1414 Avenue of
 the Americas<br>New York, NY 10019</font></p>
<p align="justify"><font face="serif" size="2">Dear Sir or Madam:</font></p>
<p align="justify"><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;We refer to
 the Registration Statement on Form N-2 (File Nos. 333-123047 and 811-5379) (the
 &#147;Registration Statement&#148;) to be filed by Royce Focus Trust, Inc., a Maryland
 corporation (the &#147;Fund&#148;), with the Securities and Exchange Commission
 and relating to the registration by the Fund under the Securities Act of 1933, as
 amended, of the aggregate number of shares of the Fund&#146;s common stock, par
 value $.001 per share (the &#147;Shares&#148;), as set forth under &#147;Amount
 Being Registered&#148; on the facing page of Registration Statement.</font></p>
<p align="justify"><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;As special
 counsel for the Fund, we are familiar with the proceedings taken by it and to be
 taken by it in connection with the authorization, issuance and sale of the Shares
 in the manner referred to in the Registration Statement. In addition, we have examined
 and are familiar with the Charter of the Fund, the Bylaws of the Fund, as amended,
 and such other documents as we have deemed relevant to the matters referred to in
 this opinion.</font></p>
<p align="justify"><font face="serif" size="2">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Based upon
 the foregoing, we are of the opinion that the Shares, when issued, sold and paid
 for pursuant to the terms described in the Registration Statement, will be validly
 issued, fully paid and non-assessable shares of common stock of the Fund. We hereby
 consent to the filing of this opinion as an exhibit to the Registration Statement.</font></p>
<p align="center"><font face="serif" size="2">Very truly yours,</font></p>
<p align="center"><font face="serif" size="2">/s/ Sidley
 Austin Brown &#038; Wood LLP</font></p>
<p align="center"><font face="serif" size="1">SIDLEY AUSTIN BROWN & WOOD LLP IS A DELAWARE LIMITED LIABILITY PARTNERSHIP<br>
PRACTICING IN AFFILIATION WITH OTHER SIDLEY AUSTIN BROWN & WOOD PARTNERSHIPS
</font></p>
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<DOCUMENT>
<TYPE>EX-7
<SEQUENCE>7
<FILENAME>exhibit_n.htm
<TEXT>
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<P align="center">
<B><FONT face="serif">CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</FONT></B></P>
<P>
<FONT size=2 face="serif">We consent to the references to our firm in the Registration Statement (Form N-2, File Nos. 333-123047 and 811-05379) of Royce Focus Trust, Inc. and the use of our report dated January 21, 2005 on the financial statements
and financial highlights of Royce Focus Trust, Inc. Such financial statements and financial highlights appear in the December 31, 2004 Annual Report to Shareholders which is incorporated by reference in the Statement of Additional Information in the
Registration Statement.</FONT></P>
<P align="right">
<TABLE><TR><TD nowrap>
<B><FONT face="serif">TAIT, WELLER &amp; BAKER</FONT></B><BR>
</TD></TR></TABLE>
</P>
<TABLE><TR><TD nowrap>
<B><FONT size=2 face="serif">Philadelphia, Pennsylvania</FONT></B><BR>
<B><FONT size=2 face="serif">April 27, 2005</FONT></B><BR>
</TD></TR></TABLE>

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