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SEMI-ANNUAL REPORT
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THE TRAUTMAN KRAMER TRUST
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Trautman Kramer Value Plus Fund
April 30, 1998
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TABLE OF CONTENTS
Page
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Shareholder Letter.......................................... 1
Schedule of Investments..................................... 2
Statement of Assets and Liabilities......................... 3
Statement of Operations..................................... 4
Statement of Changes in Net Assets.......................... 5
Financial Highlights........................................ 6
Notes to the Financial Statements........................... 7
________________________________________________
NOTICE TO INVESTORS
This report is not authorized for distribution to prospective
investors unless preceded or accompanied by a currently
effective prospectus of the Trautman Kramer Trust. Please
call 1-888-852-6825 for a free prospectus. Read it carefully
before you invest.
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Dear Fellow Shareholder:
This is our first shareholder letter since the Trautman Kramer Value Plus
Fund became effective on April 1, 1998 and I would like to take this opportunity
to welcome you to the Fund.
For the one-month period ended April 30, 1998, the Trautman Kramer Value
Plus Fund generated a return of -1.7%. Over the same period, the S&P 500
registered a 1.01% return. During this initial commencement period, as the
Fund's long term portfolio is being constructed, we would expect greater than
normal volatility. As the Fund grows in size and the portfolio becomes more
diversified, our value approach should produce portfolio returns less volatile
than those of the broader market.
In these early days, we have sought value in out of favor companies or
overlooked stocks that have not participated in the enormous market rally of the
past few years. Obviously, if the market continues its dramatic rally, these
shares will under perform. We believe the case for a continued, unprecedented
rally in the stock market is not a strong one and would more likely expect that
a cautious approach to stocks is warranted. As value investors, our method
focuses on the individual characteristics of each potential investment, rather
than basing our investments on our perception of the overall market. "It's a
market of stocks, not a stock market," as the saying goes. Nonetheless, at
current lofty valuations, the market environment for a value investor is
challenging. We will strive to meet that challenge by focusing on individual
companies whose long term outlook is favorable while the near term downside risk
appears minimal.
As the Fund grows in size, we will augment our value investments with
positions in promising private placement opportunities. While the Fund is
limited to no more than 10% of its assets to be invested in private placements,
we believe that well-chosen private placement investments could have a
significant positive impact on portfolio returns.
As your fellow shareholder, I am looking forward to an exciting future with
the Trautman Kramer Value Plus Fund and encourage you to visit our newly updated
Web Site at www.tkco.com.
Robert Kramer
Chairman
1
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TRAUTMAN KRAMER VALUE PLUS FUND
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SCHEDULE OF INVESTMENTS
April 30, 1998 (Unaudited)
COMMON STOCKS - 66.5% NUMBER OF SHARES MARKET VALUE
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CONSUMER NON-DURABLES - 14.2%
Burlington Industries, Inc.* 1,000 $17,500
Kmart Corporation* 1,000 17,438
Polaroid Corporation 500 22,000
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56,938
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ENERGY - 6.4%
Murphy Oil Corporation 500 25,719
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25,719
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FORESTRY - 7.1%
Deltic Timber Corporation 1,000 28,563
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28,563
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INSURANCE - 3.3%
Frontier Adjusters of America Inc. 5,000 13,125
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13,125
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MEDICAL SERVICES - 4.8%
Integrated Health Services, Inc. 500 19,160
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19,160
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METALS & MINERALS - 12.0%
Broken Hill Proprietary Company Limited ADR 1,000 19,750
Inco Limited 1,000 17,562
Kaiser Aluminum Corporation* 1,000 10,642
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47,954
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PAPER PRODUCTS - 4.2%
Longview Fibre Company 1,000 16,937
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16,937
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PUBLISHING - 4.2%
Golden Books Family Entertainment, Inc.* 1,500 16,969
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16,969
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REAL ESTATE - 4.5%
Catellus Development Corporation* 1,000 17,812
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17,812
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TECHNOLOGY - 5.8%
UNOVA, Inc.* 1,000 23,250
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23,250
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TOTAL COMMON STOCKS (COST OF $272,948) 266,427
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PRINCIPAL
AMOUNT
SHORT TERM INVESTMENTS - 24.7% ------
U.S. Treasury Bill, 4.70% due 07/02/98 $100,000 99,178
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TOTAL SHORT TERM INVESTMENTS (COST $99,182) 99,178
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TOTAL INVESTMENTS (COST $372,130) - 91.2% 365,605
OTHER ASSETS LESS LIABILITIES - 8.8% 35,262
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TOTAL NET ASSETS - 100.0% $400,867
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* Non-income producing security.
See Notes to Financial Statements
2
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TRAUTMAN KRAMER VALUE PLUS FUND
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STATEMENT OF ASSETS AND LIABILITIES
April 30, 1998
(Unaudited)
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ASSETS:
Investments, at value (Cost of $372,130 ) $ 365,605
Dividends receivable 21
Organizational expenses, net of accumulated amortization 41,013
Cash 65,344
Prepaid Assets 13,197
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Total assets 485,180
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LIABILITIES:
Payable for securities purchased 29,802
Payable to Investment Adviser 40,301
Accrued expenses and other liabilities 14,210
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Total Liabilities 84,313
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NET ASSETS $ 400,867
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NET ASSETS CONSIST OF:
Paid in Capital $ 407,119
Accumulated undistributed net investment income 273
Net unrealized depreciation on investments (6,525)
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Total Net Assets $ 400,867
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CLASS A:
Net Assets $ 108,044
Shares outstanding (unlimited number of shares
authorized, $.001 par value) 10,996
Net asset value and redemption price per share $ 9.83
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Maximum offering price per share $ 10.24
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CLASS B:
Net Assets $ 292,823
Shares outstanding (unlimited number of shares
authorized, $.001 par value) 29,792
Net asset value and offering price per share $ 9.83
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Redemption price per share, assuming 1% contingent
deferred sales charge $ 9.73
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See Notes to the Financial Statements
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3
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TRAUTMAN KRAMER VALUE PLUS FUND
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STATEMENT OF OPERATIONS
For the period April 1, 1998(1) through April 30, 1998
(Unaudited)
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INVESTMENT INCOME:
Dividend Income (Net of withholding taxes of $4) $ 21
Interest Income 554
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Total investment income 575
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EXPENSES:
Investment advisory fees 153
Administration fees 3,538
Custodian fees 638
Fund Accounting fees 2,523
Transfer Agent fees and expenses 4,031
Audit fees 870
Legal fees 1,595
Distribution fees 76
Printing and mailing expense 812
Registration fees 464
Insurance expense 899
Amortization of organizational expenses 894
Shareholder servicing fees 38
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Total expenses before waiver and reimbursement 16,531
Less: Fees waived and reimbursed by Adviser (16,229)
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Net expenses 302
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NET INVESTMENT INCOME 273
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 0
Change in unrealized depreciation on investments (6,525)
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Net realized and unrealized gain (loss)
on investments (6,525)
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NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ (6,252)
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(1)Commencement of Operations
See Notes to the Financial Statements
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4
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TRAUTMAN KRAMER VALUE PLUS FUND
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STATEMENT OF CHANGES IN NET ASSETS
For the period April 1, 1998(1) through April 30, 1998
(Unaudited)
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OPERATIONS:
Net investment income $ 273
Net realized gain on investments 0
Change in unrealized depreciation on investments (6,525)
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Net decrease in net assets from operations (6,252)
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CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 407,119
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Net increase in net assets from capital
share transactions 407,119
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TOTAL INCREASE IN NET ASSETS 400,867
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NET ASSETS:
Beginning of period 0
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End of period (including undistributed net
investment income of $273) $ 400,867
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(1)Commencement of Operations
See Notes to the Financial Statements
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5
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TRAUTMAN KRAMER VALUE PLUS FUND
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FINANCIAL HIGHLIGHTS
For the period April 1, 1998(1) through April 30, 1998
(Unaudited)
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CLASS A CLASS B
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD $10.00 $10.00
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INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.01
Net realized and unrealized loss
on investments (0.18) (0.18)
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Total from investment operations (0.17) (0.17)
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NET ASSET VALUE, END OF PERIOD $9.83 $9.83
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TOTAL RETURN(2) (1.70%) (1.70%)
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period $108,044 $292,823
Ratio of net expenses to average
net assets(3) (5) 1.98% 1.98%
Ratio of net investment income to
average net assets(3) (5) 1.80% 1.80%
Portfolio turnover rate(4) --- ---
1 Commencement of Operations.
2 Not annualized - The total return calculation does not reflect the 4.50%
front end sales charge for Class A, or the 1.00%CDSC on Class B.
3 Annualized.
4 During the period ended April 30, 1998, there were no sales of securities.
5 Net of fees waived or reimbursed amounting to 106.53% of average net assets
for the period ended April 30, 1998.
See Notes to the Financial Statements
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6
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TRAUTMAN KRAMER VALUE PLUS FUND
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NOTES TO THE FINANCIAL STATEMENTS
April 30, 1998
(Unaudited)
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1. ORGANIZATION
Trautman Kramer Trust (the "Trust") was organized as a Delaware business trust
on May 1, 1997, and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end, non-diversified management investment
company. Trautman Kramer Value Plus Fund ("the Fund") is currently the only
series of the Trust. The investment objective of the Fund is long-term capital
appreciation. The Fund commenced operations on April 1, 1998.
The costs incurred in connection with the organization, initial registration
and public offering of shares aggregated $69,710. These costs are being
amortized over the period of benefit, but not to exceed sixty months from the
Fund's commencement of operations. These costs were advanced by the Investment
Adviser and will be reimbursed by the Fund.
The Trust is authorized to issue an unlimited number of shares, which are units
of beneficial interest, with $.001 par value. The Trust has issued two
classes of shares in the Fund: Class A and Class B. Both classes of shares are
subject to shareholder servicing fees of 0.25% and distribution fees of 0.50%,
pursuant to Rule 12b-1. Class A and Class B shares are subject to a front-end
sales charge imposed at the time of purchase in accordance with the Fund's
prospectus. The maximum front-end sales charge, for Class A, is 4.50% of the
offering price or 4.67% of the net asset value. The maximum front-end sales
charge, for Class B, is 1.00% of the offering price or 1.01% of the net asset
value. Class B shares are subject to a contingent deferred sales charge (CDSC)
upon redemption from the Fund within 18 months from the time of original
purchase. Each class of shares of the Fund has identical rights and
privileges.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
a) Investment Valuation - Securities traded on the New York Stock Exchange or
the American Stock Exchange will be valued at the last sale price, or if no
sale, at the mean between the latest bid and asked price. Securities traded
in any other U.S. or foreign market shall be valued in a manner as similar
as possible to the above, or if not so traded, on the basis of the latest
available price. Where there are no readily available quotations for
securities they will be valued at a fair value as determined by the Board
of Trustees.
b) Federal Income Taxes - The Fund intends to qualify as a regulated
investment company for federal income tax purposes by satisfying the
requirements under subchapter M of the Internal Revenue Code of 1986, as
amended, including the requirements with respect to diversification of
assets, distribution of income and sources of income.
c) Income and Expenses - The Fund is charged for those expenses that are
directly attributable to the portfolio, such as advisory, administration
and certain shareholder service fees. Net investment income and realized
and unrealized gains and losses are allocated daily to each class of shares
based upon the relative net asset value of outstanding shares of each class
of shares at the beginning of the day (after adjusting for the current
day's capital share activity of the respective class).
d) Distributions to Shareholders - Dividends from net investment income of the
Fund are declared and paid at least annually. Distributions of the Funds'
net realized capital gains, if any, will be declared at least annually.
e) Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the
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7
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TRAUTMAN KRAMER VALUE PLUS FUND
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NOTES TO THE FINANCIAL STATEMENTS
April 30, 1998
(Unaudited)
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reporting period. Actual results could differ from those estimates.
f) Other - Investment and shareholder transactions are recorded on the trade
date. The Fund determines the gain or loss realized from the investment
transactions by comparing the original cost of the security lot sold with
the net sales proceeds. Dividend income is recognized on the ex-dividend
date or as soon as information is available to the Fund, and interest
income is recognized on an accrual basis. Generally accepted accounting
principles require that permanent financial reporting and tax differences
be reclassified to capital stock.
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund for the period April 1, 1998 through
April 30, 1998 were as follows:
CLASS A CLASS B
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Shares sold 10,996 29,792
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Net increase 10,996 29,792
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4. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investments, excluding short-term
investments, by the Fund for the period April 1, 1998 through April 30, 1998,
were as follows:
Purchases
U.S. Government.................................$0
Other.....................................$272,948
Sales
U.S. Government.................................$0
Other...........................................$0
At April 30, 1998, gross unrealized appreciation and depreciation of
investments for tax purposes were as follows:
Appreciation.................................$1,143
(Depreciation)..............................($7,668)
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Net depreciation on investments.............($6,525)
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At April 30, 1998, the cost of investments for federal income tax purposes was
$372,130.
5. INVESTMENT ADVISORY AND OTHER AGREEMENTS
The Trust, on behalf of The Fund, has entered into an Investment Advisory
Agreement (the "Advisory Agreement") with Trautman Kramer Capital Management,
Inc. (the "Investment Adviser"). Pursuant to its advisory agreement, the
Investment Adviser is entitled to receive a fee, calculated daily and payable
monthly, for the performance of its services at an annual rate of 1.00% of
average daily net assets.
For the period April 1, 1998 through April 30, 1998, the adviser has waived or
reimbursed the following fees:
Advisory Fees Waived $153
Service Fees Waived 38
12b-1 Fees Waived 76
Reimbursement by Adviser 15,962
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$16,229
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The Adviser has retained Tocqueville Asset Management L.P. (the "Sub-Adviser)
to provide sub-advisory services to the Fund pursuant to a sub-advisory
agreement. For its services under the sub-advisory agreement, the Adviser pays
the Sub-Adviser a fee at an annual rate of .50% of average daily net assets.
Firstar Trust Company, a subsidiary of Firstar Corporation, a publicly held
bank holding company, serves as custodian, transfer agent, administrator and
accounting services agent for the Funds.
The Fund has adopted a written plan of distribution (the "Plan") for each class
of shares, pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended. Pursuant to the plan, the Fund pays for distribution activities
related to the sale of its shares up to an annual amount equal to 50% of the
average daily net assets of Class A and Class B shares.
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8
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INVESTMENT ADVISER
Trautman Kramer Capital Management, Inc.
500 Fifth Avenue
New York, New York 10110
Phone: (212) 575-5500 or (800) 895-4800
fax: (212) 575-6589
INVESTMENT SUB-ADVISER
Tocqueville Asset Management L.P.
1675 Broadway
New York, New York 10019
Phone: (212) 698-0800
Fax: (212) 262-0154
DISTRIBUTOR
Trautman Kramer & Company, Inc.
500 Fifth Avenue
New York, New York 10110
Phone: (212) 575-5500 or (800) 895-4800
Fax: (212) 575-6589
www.tkco.com
SHAREHOLDERS' SERVICING, CUSTODIAN
AND TRANSFER AGENT
Firstar Trust Company
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
Phone: (888) 852-6825
BOARD OF TRUSTEES
James A. Arcara
Michael Asch
Robert A. DeFruscio
Robert J. Kramer
Gregory O. Trautman
John W. Wilson, III
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