PROSPECTUS Rule 497(c)
Registration No. 33-8746
THE TOCQUEVILLE TRUST
THE TOCQUEVILLE FUND
THE TOCQUEVILLE SMALL CAP VALUE FUND
THE TOCQUEVILLE ASIA-PACIFIC FUND
THE TOCQUEVILLE EUROPE FUND
THE TOCQUEVILLE GOVERNMENT FUND
The Tocqueville Trust (the "Trust") is a Massachusetts business trust
consisting of five separate funds (each, a "Fund," and collectively, the
"Funds"). Each Fund of the Trust is an open-end, diversified management
investment company with the following investment objective:
THE TOCQUEVILLE FUND - This Fund's investment objective is long-term
capital appreciation primarily through investments in securities of
United States issuers. There is minimal emphasis on current income.
THE TOCQUEVILLE SMALL CAP VALUE FUND - This Fund's investment objective
is long-term capital appreciation primarily through investments in
securities of small capitalization United States issuers. For purposes
of this prospectus, a small capitalization issuer is a company with
market capitalization of less than $1 billion. There is minimal
emphasis on current income.
THE TOCQUEVILLE ASIA-PACIFIC FUND - This Fund's investment objective is
long-term capital appreciation consistent with preservation of capital
primarily through investments in securities of issuers located in Asia
and the Pacific Basin.
THE TOCQUEVILLE EUROPE FUND - This Fund's investment objective is
long-term capital appreciation consistent with preservation of capital
primarily through investments in securities of issuers located in
Europe.
THE TOCQUEVILLE GOVERNMENT FUND - This Fund's investment objective is
to provide high current income consistent with the maintenance of
principal and liquidity through investments in obligations issued or
guaranteed by the U.S. Treasury, agencies of the U.S. Government or
instrumentalities that have been established or sponsored by the U.S.
Government.
Tocqueville Asset Management L.P. provides each Fund with investment
advisory and certain administrative services.
This Prospectus sets forth concisely the information that a prospective
investor should know before investing in shares of each Fund and should be read
and retained for future reference. A Statement of Additional Information, dated
February 28, 1996, containing additional information about each Fund has been
filed with the Securities and Exchange Commission and is hereby incorporated by
reference into this Prospectus. A copy of the Statement of Additional
Information can be obtained without charge by calling (800) 697-3863 or writing
the Trust at 1675 Broadway, New York, N.Y. 10019.
---------------------------
INVESTMENTS IN THE FUNDS ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS
OF PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUNDS ARE NOT BANK
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY A BANK AND ARE NOT
INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTA-
TION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------
The date of this Prospectus is February 28, 1996.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page Page
<S> <C> <C> <C>
Highlights....................................2 Reduced Initial Sales Charges.............28
Fee Table.....................................5 Methods of Payment........................29
Selected Financial Information................9 Redemption of Shares.........................29
Performance Calculation......................15 Contingent Deferred Sales Charges.........30
Investment Objective, Policies and Risks.....18 Shareholder Privileges.......................31
Additional Investment Policies and Dividends, Distributions and Tax Matters.....31
Risk Considerations.......................20 Organization and Description of Shares of
Investment Advisor and Investment Advisory the Trust.................................33
Agreements................................23 Custodian, Transfer Agent and Dividend
Distribution Plans...........................23 Paying Agent..............................33
Administrative Services Agreements...........24 Counsel and Independent Accountants..........33
Brokerage Allocation.........................24 Shareholder Inquiries........................33
Purchase of Shares...........................24 Other Information............................34
Initial Sales Charges.....................26
Purchases at Net Asset Value..............27
</TABLE>
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HIGHLIGHTS
WHAT IS THE TOCQUEVILLE TRUST?
The Tocqueville Trust, a business trust formed under the laws of the
Commonwealth of Massachusetts, is currently comprised of five series. The
Tocqueville Fund, The Tocqueville Small Cap Value Fund, The Tocqueville
Asia-Pacific Fund, The Tocqueville Europe Fund and The Tocqueville Government
Fund are each open-end, diversified management investment companies, as defined
by the Investment Company Act of 1940, as amended (the "1940 Act"). Each Fund
offers two classes of shares which may be purchased at a price equal to the next
determined net asset value per share plus a charge which, at the election of the
purchaser, may be imposed (i) at the time of purchase (the "Class A shares"), or
(ii) on a deferred basis (the "Class B shares"). As open-end investment
companies, the Funds have an obligation to redeem their respective shares held
by an investor at the net asset value of the shares next determined after
receipt of a redemption request in proper form. (See "Organization and
Description of Shares of the Trust.")
WHAT IS THE TOCQUEVILLE FUND AND HOW IS ITS INVESTMENT OBJECTIVE ACHIEVED?
The Tocqueville Fund is an open-end, diversified management investment
company whose investment objective is long-term capital appreciation primarily
through investments in securities of United States issuers. The Fund will invest
in common stocks of companies that are considered by its investment advisor to
be out of favor and undervalued in relation to their potential growth or earning
power. The Fund does not intend to engage on an ongoing basis in short-term
trading. (See "Investment Objective, Policies and Risks.")
WHAT IS THE TOCQUEVILLE SMALL CAP VALUE FUND AND HOW IS ITS INVESTMENT OBJECTIVE
ACHIEVED?
The Tocqueville Small Cap Value Fund is an open-end, diversified
management investment company whose investment objective is long-term capital
appreciation primarily through investments in securities of small capitalization
United States issuers. The Fund will invest substantially all and normally no
less than 65% of its total assets in a diversified portfolio consisting of
common stocks of small capitalization United States companies that are
considered by the Investment Advisor to be strong proprietary businesses, to be
either out of favor or less well known in the financial community, or to be
undervalued in relation to either their potential long-term growth or earning
power. The Fund does not intend to engage on an ongoing basis in short-term
trading. A small capitalization issuer is a company with market capitalization
of less than $1 billion. (See "Investment Objective, Policies and Risks.")
- 2 -
<PAGE>
WHAT IS THE TOCQUEVILLE ASIA-PACIFIC FUND AND HOW IS ITS INVESTMENT OBJECTIVE
ACHIEVED?
The Tocqueville Asia-Pacific Fund is an open-end, diversified
management investment company which seeks long-term capital appreciation
consistent with preservation of capital primarily through investments in
securities of issuers located in Asia and the Pacific Basin. The Fund will
invest at least 65% of its total assets in securities of issuers located in Asia
and the Pacific Basin, including common stock, investment grade debt convertible
into common stock, depository receipts for these securities and warrants. (See
"Investment Objective, Policies and Risks.")
WHAT IS THE TOCQUEVILLE EUROPE FUND AND HOW IS ITS INVESTMENT OBJECTIVE
ACHIEVED?
The Tocqueville Europe Fund is an open-end, diversified management
investment company which seeks long-term capital appreciation consistent with
preservation of capital primarily through investments in securities of issuers
located in Europe. The Fund will invest at least 65% of its total assets in
securities of issuers located in Europe, including common stock, investment
grade debt convertible into common stock, depository receipts for these
securities and warrants. (See "Investment Objective, Policies and Risks.")
WHAT IS THE TOCQUEVILLE GOVERNMENT FUND AND HOW IS ITS INVESTMENT OBJECTIVE
ACHIEVED?
The Tocqueville Government Fund is an open-end, diversified management
investment company whose investment objective is to provide high current income
consistent with the maintenance of principal and liquidity through investments
in obligations issued or guaranteed by the U.S. Treasury, agencies of the U.S.
Government or instrumentalities that have been established or sponsored by the
U.S. Government.
The Fund will invest at least 85% of its assets in short and
intermediate-term securities backed by the full faith and credit of the U.S.
Government. Also, at least 65% of the Fund's assets will be invested in U.S.
Treasury bills, notes and bonds. The dollar-weighted average maturity of the
Fund is expected to range from 0 to 12 years.
The balance of the Fund's assets may be invested in obligations issued
or guaranteed by the U.S. Treasury, agencies of the U.S. Government or
instrumentalities that have been established or sponsored by the U.S.
Government, as well as in repurchase agreements collateralized by such
securities. The Fund may also invest in bond (interest rate) futures and options
to a limited extent. (See "Investment Objective, Policies and Risks.")
WHO MANAGES THE FUNDS?
Tocqueville Asset Management L.P. (the "Investment Advisor") serves as
each Fund's investment advisor pursuant to an Investment Advisory Agreement.
Under terms of each Agreement, the Investment Advisor supervises all aspects of
a Fund's operations and provides investment advisory services. As compensation,
the Investment Advisor receives a fee based on each Fund's average daily net
assets. The Investment Advisor also is engaged in the business of acting as
investment advisor to private accounts with combined assets of approximately
$500 million. (See "Investment Advisor and Investment Advisory Contracts.")
DISTRIBUTION PLANS
Each Fund has adopted a distribution plan for Class A shares and a
distribution plan for Class B shares. The Class A Plan provides that a Fund may
incur distribution expenses related to the sale of Class A shares of up to .25%
per annum of the Fund's average daily net assets. The Class B Plan provides that
a Fund may incur distribution expenses related to the sale of Class B shares of
up to .75% per annum of the Fund's average daily net assets. (See "Distribution
Plans").
SPECIAL RISK CONSIDERATIONS
An investor should be aware that there are risks associated with
certain investment techniques and strategies employed by the Funds, including
those relating to investments in foreign securities and option transactions. In
addition, an investor in The Tocqueville Small Cap Value Fund should be aware
that investments in small capitalization issuers may be more volatile than
investments in issuers with market capitalization greater than $1 billion due to
the lack of diversification in the business activities, and corresponding
greater susceptibility to
- 3 -
<PAGE>
changes in the business cycle of small capitalization issuers. An investor in
The Tocqueville Government Fund should be aware that the net asset value of the
Fund will fluctuate as general levels of interest rates fluctuate. When interest
rates decline, the net asset value of the Fund can be expected to rise, and,
conversely, when interest rates rise, the net asset value of the Fund can be
expected to fall. (See "Investment Objective, Policies and Risks" and
"Additional Investment Policies and Risk Considerations.")
Each class of shares of a Fund not only imposes the sales charge at a
different time, but also has differing levels of sales charges and other
expenses, which may affect performance. (See "Fee Table" and "Purchase of
Shares.")
- 4 -
<PAGE>
FEE TABLE
<TABLE>
<CAPTION>
CLASS A CLASS A CLASS B CLASS B
TOCQUEVILLE FUND SMALL CAP FUND TOCQUEVILLE FUND SMALL CAP FUND
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load on Purchases (as
a % of offering price)............. 4.00% 4.00% None None
Deferred Sales Charge (as a percentage
of original purchase price or
redemption proceeds, as applicable) None None 5.00%* 5.00%*
ANNUAL FUND OPERATING EXPENSES:
(as a % of average net assets)
Management Fee..................... .75% .75% .75% .75%
12b-1 Fee+......................... .25% .25% .75% .75%
Other Expenses (after fee waivers). .54%++ 1.80%++ .54%++ 1.80%++
--- ---- --- ----
Total Operating Expenses (after fee
waivers) 1.54%+++ 2.80%+++ 2.04%+++ 3.30%+++
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS A CLASS B CLASS B
ASIA-PACIFIC FUND EUROPE FUND ASIA-PACIFIC FUND EUROPE FUND
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load on Purchases
(as a % of offering price)......... 4.00% 4.00% None None
Deferred Sales Charge (as a percentage
of original purchase price or
redemption proceeds, as applicable) None None 5.00%* 5.00%*
ANNUAL FUND OPERATING EXPENSES: (as
a % of average net assets)
Management Fee (after fee waivers). .00%** .00%** .00%** .00%**
12b-1 Fees (after fee waivers)+.... .00%*** .00%*** .00%*** .00%***
Other Expenses (after fee waivers). 3.55%++ 4.43%++ 3.55%++ 4.43%++
---- ---- ---- ----
Total Operating Expenses (after fee
waivers)........................... 3.55%+++ 4.43%+++ 3.55%+++ 4.43%+++
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B
GOV'T FUND GOV'T FUND
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load (as a % of offering price)............... 4.00% None
Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable)......................... None 5.00%*
ANNUAL FUND OPERATING EXPENSES:
(as a % of average net assets)
Management Fee ............................................. .50% .50%
12b-1 Fee+.................................................. .25% .75%
Other Expenses (after fee waivers).......................... .50%++ .50%++
--- ---
Total Operating Expenses (after fee waivers)................ 1.25% 1.75%
</TABLE>
- ------------------
* The maximum 5% contingent deferred sales charge on Class B shares is
applied to redemptions during the first year after purchase; the charge
declines to 4% for redemptions during the second and third year after
purchase, to 3% for redemptions during the fourth and fifth year after
purchase, to 2% for redemptions during the sixth year after purchase,
thereafter reaching zero after six years.
** With regard to The Tocqueville Asia-Pacific Fund and Europe Fund, the
management fee of 1.00% on the first $50 million of the average daily
net assets is currently being waived.
*** The Rule 12b-1 fees of up to .25% for Class A shares and .75% for Class
B shares are currently being paid by the Advisor without charge to the
Fund. Under the Fund's Distribution Plan, the Advisor is permitted to
carry forward expenses not reimbursed by the distribution fee to
subsequent fiscal years for submission by the Fund for payment, subject
to the continuation of the Plan. Such amounts are not recognized in the
Fund's financial statements as expenses and liabilities, since the
Distribution Plan can be terminated on an annual basis without further
liability to the Fund.
+ The Rule 12b-1 fee may represent the equivalent of an annual
asset-based sales charge to an investor. As a result of distribution
fees, a long-term shareholder in the Funds may pay more than the
economic equivalent of the maximum front-end sales charge permitted by
the Rules of the National Association of Securities Dealers, Inc.
++ These expenses include legal fees, accounting fees, transfer agent,
custodial fees and the administrative services fee. The administrative
services fee is accrued at an annual rate equal to .15% of average
daily net assets which is currently being waived.
+++ At this point, expenses as a percentage of average net assets are
significantly higher than those incurred by comparable investment
companies. However, in the event that the Fund's assets continue to
grow and attain an industry wide average size, then such expenses as a
percentage of average net assets would decrease to the industry median.
-5-
<PAGE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
---------------- ---------------- ----------------- ----------------
EXAMPLE FOR THE TOCQUEVILLE FUND Class A Class B Class A Class B Class A Class B Class A Class B
-------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
You would pay the following expenses on a $1000
investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period: $55 $61 $87 $ 94 $121 $130 $216 $237
You would pay the following expenses on the
same investment, assuming no redemption:.... $55 $21 $87 $ 64 $121 $110 $216 $237
</TABLE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
---------------- ---------------- ----------------- ----------------
EXAMPLE FOR THE TOCQUEVILLE SMALL CAP VALUE FUND Class A Class B Class A Class B Class A Class B Class A Class B
------------------------------------------------ ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
You would pay the following expenses on a $1000
investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period: $67 $73 $123 $132 $182 $192 $340 $359
You would pay the following expenses on the
same investment, assuming no redemption:.... $67 $33 $123 $102 $182 $172 $340 $359
</TABLE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
---------------- ---------------- ----------------- ----------------
EXAMPLE FOR THE TOCQUEVILLE ASIA-PACIFIC FUND Class A Class B Class A Class B Class A Class B Class A Class B
--------------------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
You would pay the following expenses on a $1000
investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period: $74 $76 $144 $139 $217 $204 $407 $382
You would pay the following expenses on the
same investment, assuming no redemption:.... $74 $36 $144 $109 $217 $184 $407 $382
</TABLE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
---------------- ---------------- ----------------- ----------------
EXAMPLE FOR THE TOCQUEVILLE EUROPE FUND Class A Class B Class A Class B Class A Class B Class A Class B
--------------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
You would pay the following expenses on a $1000
investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period: $83 $84 $169 $164 $256 $245 $478 $456
You would pay the following expenses on the
same investment, assuming no redemption:.... $83 $44 $169 $134 $256 $225 $478 $456
</TABLE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
---------------- ---------------- ----------------- ----------------
EXAMPLE FOR THE TOCQUEVILLE GOVERNMENT FUND Class A Class B Class A Class B Class A Class B Class A Class B
------------------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
You would pay the following expenses on a $1000
investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period: $52 $58 $78 $85
You would pay the following expenses on the
same investment, assuming no redemption:.... $52 $18 $78 $55
</TABLE>
The purpose of the expense summary provided above is to assist
investors in understanding the various costs and expenses that a shareholder in
a Fund will bear directly or indirectly. The "Annual Fund Operating Expenses"
summary shows the management fee, Rule 12b-1 fee, and other operating expenses
incurred by each Fund. "Other Expenses" for the Class A shares of The
Tocqueville Government Fund and the Class B shares for The Tocqueville Fund, The
Tocqueville Small Cap Value Fund, The Tocqueville Asia-Pacific Fund, The
Tocqueville Europe Fund, and The Tocqueville Government Fund are based on
estimated amounts for the current fiscal year. If the administrative services
fee had not been waived, then total operating expenses for The Tocqueville Fund
would have been 1.69% for Class A shares and 2.19% for Class B shares. If the
administrative services fee had not been waived, total operating expenses for
The Tocqueville Small Cap Value Fund would have been 2.95% for Class A shares
and 3.45% for Class B shares. If the management fee and administrative services
fee had not been waived and the Rule 12b-1 expenses had not been paid by the
Investment Advisor, total operating expenses would have been 5.83% for Class A
shares and 6.33% for Class B shares of The Tocqueville Europe Fund and 4.95% for
Class A shares and 5.45% for Class B shares of The Tocqueville Asia-Pacific
Fund. If the administrative services fee had not been waived, then total
operating expenses for The Tocqueville Government Fund would have been 1.40% for
Class A shares and 1.90% for Class B shares. The "Example" set forth above
-6-
<PAGE>
assumes all dividends and other distributions are reinvested and that the
percentages under "Annual Fund Operating Expenses" remain the same in the years
shown. The Class A shares example includes the initial sales charge and the
Class B shares example includes the contingent deferred sales charge. The
expenses you pay would increase if the administrative services fee waivers are
removed.
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
-7-
<PAGE>
SELECTED FINANCIAL INFORMATION
The following is selected, audited, financial information relating to
the Class A shares and Class B shares of the Funds. The financial statements
related thereto and the independent accountants' unqualified reports thereon are
incorporated by reference in the Statement of Additional Information.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE TOCQUEVILLE FUND--CLASS A SHARES
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987**
---- ---- ---- ---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per share operating performance
(For a share outstanding
throughout the period)
Net asset value, beginning of period... $13.74 $13.67 $11.83 $11.33 $10.21 $11.33 $9.98 $8.63 $10.00
------ ------ ------ ------ ------ ------ ----- ----- ------
Income (loss) from investment operations:
Net investment income (loss)......... 0.15(a) 0.12 0.11 0.17 0.33 0.56 0.33 0.08(a) 0.00(a)
Net realized and unrealized gain (loss) 1.70 0.88 2.55 1.33 1.41 (0.90) 1.29 1.68 (1.37)
---- ---- ---- ---- ---- ------ ---- ---- ------
Total from investment operations... 1.85 1.00 2.66 1.50 1.74 (0.34) 1.62 1.76 (1.37)
---- ---- ---- ---- ---- ------ ---- ---- ------
Less distributions:
Dividends from net investment income. (0.11) (0.14) (0.16) (0.36) (0.51) (0.37) (0.06) (0.02) .00
Distributions from net realized gains (1.41) (0.79) (0.66) (0.64) (0.11) (0.41) (0.21) (0.39) .00
----- ------ ------ ------ ------ ------ ------ ------ ---
Total Distributions................ (1.52) (0.93) (0.82) (1.00) (0.62) (0.78) (0.27) (0.41) .00
---- ------ ------ ------ ------ ------ ------ ------ ---
Change in net asset value for the period 0.33 0.07 1.84 0.50 1.12 (1.12) 1.35 1.35 (1.37)
---- ---- ---- ---- ---- ------ ---- ---- ------
Net asset value, end of period......... $14.07 $13.74 $13.67 $11.83 $11.33 $10.21 $11.33 $9.98 $8.63
====== ====== ====== ====== ====== ====== ====== ===== =====
Total Return (b)....................... 16.0% 7.7% 23.7% 14.9% 17.7% (3.4)% 16.7% 21.1% (13.70)%
Ratios/supplemental data:
Net assets, end of period (000)...... $33,438 $29,140 $27,745 $19,496 $17,388 $13,377 $17,014 $15,515 $9,477
Ratio to average net assets of
Expenses............................... 1.54%(a) 1.54% 1.56% 1.74% 1.96% 1.61% 1.70% 2.09%(a) 2.50%(a)*
Ratio to average net assets of
Net investment income.................. 1.07% 0.87% 0.96% 1.44% 3.38% 4.71% 2.86% 0.85%(a) (0.03)%(a)*
Portfolio turnover rate................ 47% 52% 64% 89% 97% 125% 34% 65% 73%
</TABLE>
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(a) Net of fees waived amounting to 0.02%, 0.61% and 0.16% of average net
assets, for the periods ended October 31, 1995, 1988 and 1987, respectively.
(b) Does not include maximum sales load of 4%.
* Annualized.
** From commencement of operations, January 13, 1987.
THE TOCQUEVILLE FUND--CLASS B SHARES
AUGUST 14, 1995 TO OCTOBER 31, 1995
-------------------------------------
Per share operating performance
(For a share outstanding
throughout the period)
Net asset value, beginning of period... $14.68
Income (loss) from investment operations:
Net investment income (loss)......... --
Net realized and unrealized gain (loss) (0.67)
Total from investment operations... (0.67)
------
Less distributions:
Dividends from net investment income. --
Distributions from net realized gains --
Total distributions................ --
Change in net asset value for the period (0.67)
------
Net asset value, end of period......... $14.01
======
Total return (c)...................... (4.56)%
Ratios/supplemental data:
Net assets, end of period............ $191
Ratio to average net assets of
Expenses............................... --
Ratio to average net assets of
Net investment income.................. --
Portfolio turnover rate................ --
- ---------------------------
(c) Does not include contingent deferred sales charge. Not annualized.
-8-
<PAGE>
THE TOCQUEVILLE SMALL CAP VALUE FUND -- CLASS A SHARES
PERIOD FROM
YEAR ENDED AUGUST 1, 1994
OCTOBER 31, 1995 TO OCTOBER 31, 1994
Per share operating performance
(For a share outstanding
throughout the period)
Net asset value, beginning of period.......... $10.22 $ 10.00
------ -------
Income (loss) from investment operations:
Net investment income (loss)................ (0.05)(a) 0.02(a)
Net realized and unrealized gain (loss)..... 1.96 0.20
-------- -------
Total from investment operations.......... 1.91 0.22
-------- -------
Less Distributions:
Dividends from net investment income........ (0.03) 0.00
Distributions from net realized gains....... (0.19) 0.00
--------- -------
Total Distributions....................... (0.22) 0.00
--------- -------
Change in net asset value for the period...... 1.69 0.22
---- ------
Net asset value, end of period................ $11.91 $ 10.22
====== =======
Total Return (b).............................. 19.22% 2.20%
Ratios/supplemental data:
Net assets, end of period (000)............. $9,383 $ 6,755
Ratio to average net assets of
Expenses...................................... 2.50%(a) 2.08%*(a)
Ratio to average net assets of
Net investment income......................... (0.53)% 0.85%*
Portfolio turnover rate....................... 87.91% 9.40%
- -------------------
(a) Net of fees waived amounting to 0.33% and 0.75% of average net assets for
the periods ended October 31, 1995, and 1994, respectively.
(b) Does not include maximum sales load of 4%.
* Annualized.
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<PAGE>
THE TOCQUEVILLE SMALL CAP VALUE FUND -- CLASS B SHARES
PERIOD FROM
AUGUST 14, 1995
TO OCTOBER 31, 1995
Per share operating performance (For a share outstanding
throughout the period)
Net asset value, beginning of period......................... $12.35
------
Income (loss) from investment operations:
Net investment income (loss)............................... --
Net realized and unrealized gain (loss).................... (0.48)
------
Total from investment operations......................... (0.48)
------
Less Distributions:
Dividends from net investment income....................... --
Distributions from net realized gains...................... --
Total distributions...................................... --
Change in net asset value for the period..................... (0.48)
------
Net asset value, end of period............................... $11.87
======
Total Return (a)............................................. (3.89%)
Ratios/supplemental data:
Net assets, end of period.................................. $192
Ratio to average net assets of
Expenses..................................................... --
Ratio to average net assets of
Net investment income........................................ --
Portfolio turnover rate...................................... --
(a) Does not include contingent deferred sales charge. Not annualized.
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<PAGE>
THE TOCQUEVILLE ASIA-PACIFIC FUND(A)--CLASS A SHARES
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED YEAR ENDED YEAR ENDED NOVEMBER 12, 1991
OCTOBER 31, 1995 OCTOBER 31, 1994 OCTOBER 31, 1993 TO OCTOBER 31, 1992
---------------- ---------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Per share operating performance (For a
share outstanding
throughout the period)
Net asset value, beginning of period.. $12.16 $11.26 $10.50 $10.00
------- ------ ------ ------
Income (loss) from investment operations:
Net investment income (loss)........ (0.01)(d) (0.05)(d) (0.21) (0.07)(b)
Net realized and unrealized gain (loss) (1.39) 1.45 1.62 0.57
------ ---- ---- ----
Total from investment operations.. (1.40) 1.40 1.41 0.50
------ ---- ---- ----
Less Distributions:
Dividends from net investment income 0.00 0.00 0.00 0.00
Distributions from net realized gains (1.69) (0.50) (0.65) (0.00)
------ ---- ---- ----
Total distributions............... (1.69) (0.50) (0.65) (0.00)
------ ---- ---- ----
Change in net asset value for the period (3.09) 0.90 0.76 0.50
------ ---- ---- ----
Net asset value, end of period........ $9.07 $12.16 $11.26 $10.50
===== ====== ====== ======
Total Return (e)...................... (11.63%) 12.81% 15.0% 5.0%
Ratios/supplemental data:
Net assets, end of period (000)..... $4,686 $ 5,187 $3,886 $ 1,898
Ratio to average net assets of
Expenses.............................. 3.55%(f) 2.82%(d) 4.63% 4.90%*(b)
Ratio to average net assets of
Net investment income loss............ (0.26)%(f) (0.87)%(d) (2.42)% (0.73)%*(b)
Portfolio turnover rate............... 106% 168% 216%(c) 101%*
</TABLE>
* Annualized.
(a) Effective April 29, 1994, The Tocqueville Euro-Pacific Fund changed its
investment policies to invest primarily in the securities of issues located
in Asia and the Pacific Basin. In addition, the name of the Fund was changed
to The Tocqueville Asia-Pacific Fund.
(b) Net of fees waived amounting to 0.28% of average net assets, for the period
ended October 31, 1992.
(c) The portfolio turnover rate doubled from the previous year because the Fund
shifted its asset allocation from primarily Hong Kong to several other
markets, including Australia, Singapore and Malaysia. Notwithstanding the
possibility of unforeseen events that may require the movement of assets,
the Fund does not anticipate an annual turnover rate of 200% in future
years.
(d) Net of fees waived amounting to 1.00% of average net assets for the year
ended October 31, 1994.
(e) Does not include maximum front-end sales load of 4.00%.
(f) Net of fees waived amounting to 1.27% of average net assets for the year
ended October 31, 1995.
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<PAGE>
THE TOCQUEVILLE ASIA-PACIFIC FUND - CLASS B SHARES
PERIOD FROM
AUGUST 14, 1995
TO OCTOBER 31, 1995
Per share operating performance (For a share outstanding
throughout the period)
Net asset value, beginning of period...................... $9.35
-----
Income (loss) from investment operations:
Net investment income (loss)............................ --
Net realized and unrealized gain (loss)................. (0.32)
------
Total from investment operations...................... (0.32)
------
Less Distributions: --
Dividends from net investment income.................... --
Distributions from net realized gains................... --
Total distributions...................................
Change in net asset value for the period.................. (0.32)
------
Net asset value, end of period............................ $9.03
=====
Total Return (e).......................................... (3.42%)
Ratios/supplemental data:
Net assets, end of period............................... $193
Ratio to average net assets of
Expenses.................................................. --
Ratio to average net assets of
Net investment income..................................... --
Portfolio turnover rate................................... --
- -----------------
(e) Does not include contingent deferred sales charge. Not annualized.
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<PAGE>
THE TOCQUEVILLE EUROPE FUND -- CLASS A SHARES
PERIOD FROM
YEAR ENDED AUGUST 1, 1994
OCTOBER 31, 1995 TO OCTOBER 31, 1994
Per share operating performance
(For a share outstanding
throughout the period)
Net asset value, beginning of period.......... $10.02 $ 10.00
------- -------
Income (loss) from investment operations:
Net investment income (loss)................ 10.01.(a) (0.04)(a)
Net realized and unrealized gain (loss)..... 0.82 0.06
------ -------
Total from investment operations.......... 0.81 0.02
------- -------
Less distributions:
Dividends from net investment income........ -- 0.00
Distributions from net realized gains....... -- 0.00
-------
Total distributions....................... -- 0.00
-------
Change in net asset value for the period...... 0.81 0.02
------- -------
Net asset value, end of period................ $10.83 $10.02
====== ======
Total return (b).............................. 8.08% 0.20%
Ratios/supplemental data:
Net assets, end of period (000)............. $6,270 $2,516
Ratio to average net assets of
Expenses...................................... 4.43%(a) 6.18%(a)
Ratio to average net assets of
Net investment income......................... (0.53)% (2.47)%
Portfolio turnover rate....................... 109.48% 0.00%
- -------------------
(a) Net of fees waived amounting to 1.28% and 1.00% of average net assets for
the periods ended October 31, 1995, and 1994, respectively.
(b) Does not include maximum front-end sales load of 4%.
* Annualized.
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<PAGE>
THE TOCQUEVILLE EUROPE FUND -- CLASS B SHARES
PERIOD FROM
AUGUST 14, 1995
TO OCTOBER 31, 1995
Per share operating performance (For a share outstanding
throughout the period)
Net asset value, beginning of period....................... $10.93
------
Income (loss) from investment operations:
Net investment income (loss)............................. --
Net realized and unrealized gain (loss).................. (0.12)
------
Total from investment operations....................... (0.12)
------
Less Distributions:
Dividends from net investment income..................... --
Distributions from net realized gains.................... --
Total distributions.................................... --
Change in net asset value for the period................... (0.12)
------
Net asset value, end of period............................. $10.81
======
Total Return (a)........................................... (1.10%)
Ratios/supplemental data:
Net assets, end of period................................ $198
Ratio to average net assets of
Expenses................................................... --
Ratio to average net assets of
Net investment income...................................... --
Portfolio turnover rate.................................... --
(a) Does not include contingent deferred sales charge. Not annualized.
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<PAGE>
THE TOCQUEVILLE GOVERNMENT FUND -- CLASS A SHARES
PERIOD FROM
AUGUST 14, 1995
TO OCTOBER 31, 1995
Per share operating performance (For a share outstanding
throughout the period)
Net asset value, beginning of period....................... $10.00
------
Income (loss) from investment operations:
Net investment income (loss)............................. 0.05(a)
Net realized and unrealized gain (loss).................. 0.05
----
Total from investment operations....................... 0.10
Less Distributions:
Dividends from net investment income..................... (0.05)
Distributions from net realized gains.................... -
----
Total distributions.................................... (0.05)
------
Change in net asset value for the period................... 0.05
----
Net asset value, end of period (000)....................... $10.05
======
Total Return (b)........................................... 6.26%*
Ratios/supplemental data:
Net assets, end of period................................ $6,506
Ratio to average net assets of
Expenses................................................... 2.74%(a)
Ratio to average net assets of
Net investment income...................................... 3.08%*
Portfolio turnover rate.................................... 0.00
- ---------------------------
(a) Net of fees waived amounting to 0.77% of average net assets, for the period
ended October 31, 1995.
(b) Does not include maximum front-end sales load of 4%
* Annualized.
-15-
<PAGE>
THE TOCQUEVILLE GOVERNMENT FUND -- CLASS B SHARES
PERIOD FROM
AUGUST 14, 1995
TO OCTOBER 31, 1995
Per share operating performance (For a share outstanding
throughout the period)
Net asset value, beginning of period........................ $9.97
-----
Income (loss) from investment operations:
Net investment income (loss).............................. 0.04
Net realized and unrealized gain (loss)................... 0.08
------
Total from investment operations.......................... 0.12
-------
Less distributions:
Dividends from net investment income...................... (0.04)
Distributions from net realized gains..................... -
------
Total distributions..................................... (0.04)
------
Change in net asset value for the period.................... (0.08)
------
Net asset value, end of period.............................. $10.05
======
Total return (a)............................................ 8.42%*
Ratios/supplemental data:
Net assets, end of period................................. $201
Ratio to average net assets of
Expenses.................................................... --
Ratio to average net assets of
Net investment income....................................... --
Portfolio turnover rate..................................... --
- --------------------
(a) Does not include contingent deferred sales charge.
* Annualized.
PERFORMANCE CALCULATION
Each Fund calculates performance on a total return basis for various
periods. The total return basis combines changes in principal and dividends and
distributions for the periods shown, as well as the deduction of all charges and
expenses. The total return basis for Class A shares reflects the deduction of
the maximum initial sales charge at the time of purchase, and the total return
basis for Class B shares reflects the deduction of the maximum contingent
deferred sales charge upon redemption of shares held for the period. Principal
changes are based on the difference between the beginning and closing net asset
value for the period. Calculations assume reinvestment of all dividends and
distributions paid by each Fund. Dividends and distributions are comprised of
net investment and net realized capital gains, respectively.
Performance will vary from time to time and past results are not
necessarily representative of future results. A shareholder should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Comparative performance information may be used from time to time in
the advertising or marketing of each Fund's Class A and Class B shares,
including data from Lipper Analytical Services, Inc. and Morningstar Mutual
Funds. Such comparative performance information will be stated in the same terms
in which the comparative data and indices are stated. All advertisements of a
Fund will disclose the maximum sales charge (including deferred sales charge) to
which investments in shares of the Fund may be subject.
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<PAGE>
The Tocqueville Government Fund will provide 30-day "yield" quotations.
The "yield" quotations of the Fund will be based upon a hypothetical net
investment income earned by the Fund over a thirty day or one month period
(which period shall be stated in any advertisement or communication with a
shareholder). The "yield" is then "annualized" by assuming that the income
generated over the period will be generated over a one year period. A "yield"
quotation, unlike a total rate of return quotation, does not reflect changes in
net asset value.
INVESTMENT OBJECTIVE, POLICIES AND RISKS
THE TOCQUEVILLE FUND
The investment objective of The Tocqueville Fund is long-term capital
appreciation. Toward this end the Fund invests in a diversified portfolio
consisting of common stocks of United States companies that are considered by
the Investment Advisor to be out of favor and undervalued in relation to their
potential growth or earning power. Generally, stocks which have under performed
market indices such as Standard & Poor's Composite Index for at least one year
and companies which have a historically low stock price in relation to such
factors as sales, potential earnings or underlying assets will be considered by
the Investment Advisor to be out of favor. The Investment Advisor searches for
companies based on its judgment of relative value and growth potential. The
potential growth and earning power of a company will be evaluated by the
Investment Advisor either on the basis of past growth and profitability, as
reflected in their financial statements, or on the Investment Advisor's
conclusion that the company has achieved better results than similar companies
in a depressed industry which the Investment Advisor believes will improve
within the next two years. There is no assurance that the Investment Advisor's
evaluation will be accurate in its selection of stocks for the Fund's portfolio
or that the Fund's objective will be achieved. If the stocks in which the Fund
invests never attain their perceived potential or the valuation of such stocks
in the marketplace does not in fact reflect significant undervaluation, there
may be little or no appreciation or a depreciation in the value of such stocks.
The Fund may invest up to 25% of its total assets in common stock of
foreign companies which are traded in the United States or purchase American
Depository Receipts (ADR's). The Fund also may invest up to 10% of its total
assets in gold bullion from U.S. institutions. Gold bullion assists the Fund in
its goal of capital appreciation because the price of gold bullion tends to rise
during periods of economic or political instability. In addition, the Fund may
invest up to 5% of its net assets in repurchase agreements which are fully
collateralized by obligations of the U.S. Government or U.S. Government
agencies. The Fund may also invest up to 5% of its total assets in debt
instruments convertible into common stock. The Fund may, from time to time,
borrow up to 10% of the value of its total assets from banks at prevailing
interest rates as a temporary measure for extraordinary or emergency purposes.
The Fund may not purchase securities while borrowings exceed 5% of the value of
its total assets.
Special Considerations. The Investment Advisor will manage the Fund's
portfolio to assure that the Fund will not acquire or dispose of gold bullion if
such acquisition or disposition would risk the Fund's status as a regulated
investment company under the Internal Revenue Code. In general, the Fund could
fail to qualify as a regulated investment company if the Fund derived 10% or
more of its gross income from gains from sales or other dispositions of gold
bullion. The Fund may be required to make less than optimal investment
decisions, including foregoing the opportunity to realize gains, if necessary to
permit the Fund to qualify as a regulated investment company. In addition, the
Fund's investments in gold bullion subject the Fund to the following risks: the
price of gold bullion may be subject to wide fluctuation; the market for gold
bullion is relatively limited; the sources of gold bullion are concentrated in
countries with potential instability; and currently the market for gold bullion
is unregulated. Investments in gold bullion will cause the Fund to incur
additional costs for insurance, shipping and storage.
THE TOCQUEVILLE SMALL CAP VALUE FUND
The Tocqueville Small Cap Value Fund's investment objective is
long-term capital appreciation primarily through investments in securities of
small capitalization United States issuers. While the Fund expects to receive
some dividends and interests from its portfolio investments, income generation
is only an incidental objective of the Fund. In the pursuit of its objective,
the Fund intends to invest substantially all and normally no less than 65% of
-17-
<PAGE>
its total assets in a diversified portfolio consisting of common stocks of small
capitalization United States companies that are considered by the Investment
Advisor to be strong proprietary businesses, to be either out of favor or less
well known in the financial community, or to be undervalued in relation to
either their potential long-term growth or earning power. Companies with market
capitalizations of less than $1 billion are deemed to have a small
capitalization and to be generally less well known. Generally, stocks which have
underperformed market indices such as the Standard & Poor's Composite Index for
at least one year and companies which have a historically low stock price in
relation to such factors as sales, potential earnings or underlying assets will
be considered by the Investment Advisor to be out of favor. Strong proprietary
businesses generally have some but not necessarily all of the following
characteristics: capable management; good finances; strong manufacturing; broad
distribution; and, lastly, products which are somewhat differentiated from their
competitors.
The Investment Advisor will identify companies that are undervalued
based on its judgment of relative value and growth potential. The growth
potential and earning power of a company will be evaluated by the Investment
Advisor on the basis of past growth and profitability, as reflected in its
financial statements, on the basis of potential new products resulting from
research and development spending, or on the Investment Advisor's conclusion
that the company has achieved better results than similar companies in a
depressed industry which the Investment Advisor believes will improve within the
next two years. There is no assurance that the Investment Advisor's evaluation
will be accurate in its selection of stocks for the Fund's portfolio or that the
Fund's objective will be achieved. If the stocks in which the Fund invests never
attain their perceived potential of if the valuation of such stocks in the
marketplace does not in fact reflect significant undervaluation, there may be
little or no appreciation or, instead, a depreciation in the value of such
stocks.
The Fund may invest up to 25% of its total assets in common stock of
foreign companies which are traded in the United States or purchase American
Depository Receipts (ADR's). The Fund also may invest: (1) up to 5% of its net
assets in repurchase agreements which are fully collateralized by U.S.
Government obligations or obligations of its agencies or instrumentalities, or
short-term money market securities; and (2) up to 10% of its total assets in
investment grade debt instruments convertible into common stock. The Fund may,
from time to time, borrow up to 10% of the value of its total assets from banks
at prevailing interest rates as a temporary measure for extraordinary or
emergency purposes. The Fund, however, may not purchase securities while
borrowings exceed 5% of the value of its total assets.
Special Considerations. An investor should be aware that investment in
small capitalization issuers carry more risks than issuers with market
capitalization greater than $1 billion. Generally, small companies rely on
limited product lines, financial resources, and business activities that may
make them more susceptible to setbacks or downturns. In addition, the stock of
such companies may be more thinly traded. Accordingly, the performance of small
capitalization issuers may be more volatile.
THE TOCQUEVILLE ASIA-PACIFIC FUND AND THE TOCQUEVILLE EUROPE FUND
THE TOCQUEVILLE ASIA-PACIFIC FUND. The investment objective of The
Tocqueville Asia-Pacific Fund is long-term capital appreciation consistent with
preservation of capital primarily through investments in securities of issuers
located in Asia and the Pacific Basin. While the Investment Advisor may invest
the Fund's assets in securities of issuers in any country, under normal
conditions at least 65% of the Fund's total assets will be invested in Asia and
the Pacific Basin countries. Pacific Basin countries are Australia, Hong Kong,
Indonesia, Japan, Malaysia, New Zealand, Republic of Korea, Singapore, Taiwan,
Thailand and the Philippines. Asian countries are India and the People's
Republic of China, which is accessed through Pacific Basin countries (as
described above), most notably Hong Kong. The Investment Advisor believes that
it will usually have assets invested in most of the countries located in Asia
and the Pacific Basin; however, under normal market conditions the Fund will be
invested in a minimum of five countries. Investments will not normally be made
in securities of issuers located in the United States or Canada. The Fund may
from time to time borrow money in an amount up to 5% of its total assets from
banks for temporary or emergency purposes or to meet redemptions and pledge up
to 10% of its assets for such borrowings. The Fund may, from time to time,
borrow up to 10% of the value of its total assets from banks at prevailing
interest rates as a temporary measure for extraordinary or emergency purposes.
The Fund may not purchase securities while borrowings exceed 5% of the value of
its total assets.
-18-
<PAGE>
THE TOCQUEVILLE EUROPE FUND. The investment objective of The
Tocqueville Europe Fund is long-term capital appreciation consistent with
preservation of capital primarily through investments in securities of issuers
located in Europe. While the Investment Advisor may invest the Fund's assets in
securities of issuers in any country, under normal conditions at least 65% of
the Fund's total assets will be invested in Europe. European countries are
Austria, Belgium, Denmark, England, Finland, France, Germany, Greece, Ireland,
Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and
Turkey. The Investment Advisor believes that it will usually have assets
invested in most of the countries of Europe; however, under normal market
conditions the Fund will be invested in a minimum of five countries. Investments
will not normally be made in securities of issuers located in the United States
or Canada. The Fund may from time to time borrow money in an amount up to 5% of
its total assets from banks for temporary or emergency purposes or to meet
redemptions and pledge up to 10% of its assets for such borrowings. The Fund
may, from time to time, borrow up to 10% of the value of its total assets from
banks at prevailing interest rates as a temporary measure for extraordinary or
emergency purposes. The Fund may not purchase securities while borrowings exceed
5% of the value of its total assets.
INVESTMENT POLICIES AND RISKS CONCERNING THE TOCQUEVILLE ASIA-PACIFIC FUND
AND THE TOCQUEVILLE EUROPE FUND
The Tocqueville Asia-Pacific Fund and The Tocqueville Europe Fund may
invest in all types of securities, most of which will be denominated in foreign
currencies. Since opportunities for long-term growth are primarily expected from
equity securities, each Fund will normally invest substantially all of its
assets in such securities, including common stock, investment grade debt
convertible into common stock, depository receipts for these securities and
warrants. Each Fund may, however, invest in preferred stock and investment grade
debt securities if the Investment Advisor believes that the capital appreciation
available from an investment in such securities will equal or exceed the capital
appreciation available from an investment in equity securities. Each Fund's
objective is capital appreciation, placing emphasis on dividends or interest
income only when it believes that such income will have a favorable influence on
the market value of a security.
All common stock in which each Fund will invest will be listed on a
foreign stock exchange or traded in an over-the-counter market. There is no
minimum capitalization requirement for a security to be eligible for inclusion
in a Fund's portfolio. Each Fund will generally purchase securities of medium to
large size companies in the principal international markets, although it may
purchase securities of companies which have a lower market capitalization on the
smaller regional markets.
By investing in foreign securities, the Investment Advisor will attempt
to take advantage of differences between economic trends and performance of
securities markets in various countries. When allocating investments among
individual countries, the Investment Advisor will consider various criteria that
in its view are deemed relevant based on its experience, such as the relative
economic growth potential of the various economies and the performance of
securities markets in the region, expected levels of inflation, government
policies influencing business conditions, and the outlook for currency
relationships. To date, the market values of securities of issuers located in
different countries have moved relatively independently of each other and during
certain periods the return on equity investments in some countries has exceeded
the return on similar investments in the United States. The Investment Advisor
believes that, in comparison with investment companies investing solely in
domestic securities, it may be possible to obtain significant appreciation from
a portfolio of foreign investments and also achieve increased diversification.
Each Fund will gain increased diversification by combining securities from
various markets that offer different investment opportunities and are affected
by different economic trends. International diversification reduces the effect
that events in any one country will have on a Fund's entire investment holdings.
Of course, a decline in the value of a Fund's investments in one country may
offset potential gains from investments in another country.
THE TOCQUEVILLE GOVERNMENT FUND
The Tocqueville Government Fund's investment objective is to provide
high current income consistent with the maintenance of principal and liquidity
through investments in obligations issued or guaranteed by the U.S.
-19-
<PAGE>
Treasury, agencies of the U.S. Government or instrumentalities that have been
established or sponsored by the U.S. Government.
In pursuit of its objective, the Fund intends to invest at least 85% of
its assets in short and intermediateterm securities backed by the full faith and
credit of the U.S. Government. Also, at least 65% of the Fund's assets will be
invested in U.S. Treasury bills, notes and bonds. The dollar-weighted average
maturity of the Fund is expected to range from 0 to 12 years.
The balance of the Fund's assets may be invested in obligations issued
or guaranteed by the U.S. Treasury, agencies of the U.S. Government or
instrumentalities that have been established or sponsored by the U.S.
Government, as well as in repurchase agreements collateralized by such
securities. The Fund may also invest in bond (interest rate) futures and options
to a limited extent.
The Fund may invest up to 20% of its assets in Government National
Mortgage Association pass-through certificates ("GNMA"). GNMA pass-through
certificates are mortgage-backed securities representing part ownership of a
pool of mortgage loans. Monthly mortgage payments of both interest and principal
"pass through" from homeowners to certificate investors, such as the Fund. The
Fund reinvests the principal portion in additional securities and distributes
the interest portion as income to the Fund's shareholders. Under normal
circumstances, GNMA certificates are expected to provide higher yields than U.S.
Treasury securities of comparable maturity.
The mortgage loans underlying GNMA certificates--issued by lenders such
as mortgage bankers, commercial banks, and savings and loan associations--are
either insured by the Federal Housing Administration (FHA) or guaranteed by the
Veterans Administration (VA). Each pool of mortgage loans must also be approved
by GNMA, a U.S. Government corporation within the U.S. Department of Housing and
Urban Development. Once GNMA approval is obtained, the timely payment of
interest and principal on each underlying mortgage loan is guaranteed by the
"full faith and credit" of the U.S. Government.
Although stated maturities on GNMA certificates generally range from 25
to 30 years, effective maturities are usually shorter due to the prepayment of
the underlying mortgages by homeowners. On average, GNMA certificates are repaid
within 12 years and so are classified as intermediate-term securities.
The Fund also may invest up to 15% of its assets in: (i) fixed rate or
adjustable rate mortgage-backed securities issued or guaranteed by the Federal
National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage
Corporation ("FHLMC"), and (ii) collateralized mortgage obligations ("CMOs").
FNMA mortgage securities are pass-through mortgage-backed securities
that are issued by FNMA, a U.S. Government sponsored corporation owned by
private stockholders. FNMA mortgage securities are guaranteed as to timely
payment of principal and interest by FNMA but are not backed by the full faith
and credit of the U.S.
Government.
FHLMC mortgage securities are mortgage-backed securities representing
interests in residential mortgage loans pooled by FHLMC, a U.S. Government
sponsored corporation. FHLMC mortgage securities are guaranteed as to timely
payment of interest and ultimate collection of principal but are not backed by
the full faith and credit of the U.S. Government.
CMOs are mortgage securities that are collateralized by the original
mortgage loan or mortgage pass-through security and redirect the cash flow of
such loan or pass-through security to the individual bond holders. The cash
flows may show very different market characteristics than the original loan
depending on how the CMO is structured. The Fund may only invest in CMOs that
are backed by the full faith and credit of the U.S. Government, FNMA or FHLMC
and are determined not to be "high-risk" under guidelines issued by the Federal
Financial Institutions Examination Council ("FFIEC"). The test established by
FFIEC determines whether additional capital is required by the institution to
cover potential market risk. In order to qualify as an eligible investment, a
CMO must meet each of the following criteria: (i) the weighted average life
("WAL") is under 10 years; (ii) the WAL cannot shorten more than 6 years or
lengthen more than 4 years in a 300 basis point interest rate movement;
-20-
<PAGE>
and (iii) the price cannot move more than 17% in a 300 basis point interest rate
movement. FFIEC requires independent verification of this test.
Special Considerations. Shares of the Fund are neither insured or
guaranteed by the U.S. Government or its agencies or instrumentalities.
Moreover, the net asset value of the shares of an open-end investment company
such as the Fund, which invests in fixed income securities, changes as the
general levels of interest rates fluctuate. When interest rates decline, the net
asset value of the Fund can be expected to rise. Conversely, when interest rates
rise, the net asset value of the Fund can be expected to decline and the
expected maturity of its mortgaged backed securities may increase, which will
have the effect of increasing the duration of the Fund's portfolio, resulting in
greater price volatility and investment risk.
The investment policies of the Fund would allow up to 35% of its net assets to
be invested in mortgage-backed securities, such as GNMA certificates, FNMA
mortgage securities, FHLMC mortgage securities, and CMOs. Unlike other
government securities, mortgage-backed securities are subject to "prepayment
risk" and "extensions risk". Prepayment risk is the possibility that, as
interest rates fall, homeowners are more likely to refinance their home
mortgages, thereby repaying the principal prior to the scheduled payment date to
the holders of the securities. The Fund must then reinvest the unanticipated
principal in government or agency securities, at a time when interest rates are
falling. Prepayment risk has two important effects on the Fund:
o When interest rates fall and additional mortgage payments must
be reinvested at lower interest rates, the income of the Fund
will be reduced; and
o When interest rates fall, prices on mortgage-backed securities
will not rise as much as comparable Treasury bonds, as bond
market investors anticipate an increase in mortgage
prepayments and a likely decline in income.
Extension risk is the possibility that, as interest rates rise, prepayments of
mortgages will decrease, thereby increasing the expected duration of the Fund's
mortgage-backed securities. As the duration of a mortgage security increases,
its market value decreases at an accelerating rate. Accordingly, in an upwardly
moving interest rate environment, mortgage-backed securities may depreciate more
quickly than other types of debt instruments.
An investor in the Fund should carefully consider the affects of prepayment risk
and extension risk created by large exposures to mortgage-backed securities when
comparing this Fund to other government funds.
ADDITIONAL INVESTMENT POLICIES AND RISK CONSIDERATIONS
REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements subject to resale to a
bank or dealer at an agreed upon price which reflects a net interest gain for
the Fund. Each Fund will receive interest from the institution until the time
when the repurchase is to occur.
A Fund will always receive collateral (i.e., U.S. Government
obligations or obligations of its agencies or instrumentalities, or short-term
money market securities) acceptable to it whose market value is equal to at
least 100% of the amount invested by the Fund, and the Fund will make payment
for such securities only upon the physical delivery or evidence of book entry
transfer to the account of its custodian. If the seller institution defaults,
the Fund might incur a loss or delay in the realization of proceeds if the value
of the collateral securing the repurchase agreement declines and the Fund might
incur disposition costs in liquidating the collateral. Each Fund attempts to
minimize such risks specifying the required value of the underlying collateral.
The Funds will not invest in repurchase agreements with maturities in excess of
seven days.
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ILLIQUID SECURITIES
Each Fund will not invest more than 10% of its net assets in illiquid
securities, including repurchase agreements with maturities in excess of seven
days.
RESTRICTED SECURITIES
Each Fund may invest in securities that are subject to restrictions on
resale because they have not been registered under the Securities Act of 1933
(the "1933 Act"). These securities are sometimes referred to as private
placements. Although securities which may be resold only to "qualified
institutional buyers" in accordance with the provisions of Rule 144A under the
1933 Act are technically considered "restricted securities," the Funds may each
purchase Rule 144A securities without regard to the limitation on investments in
illiquid securities described above in the "Illiquid Securities" section,
provided that a determination is made that such securities have a readily
available trading market. The Investment Advisor will determine the liquidity of
Rule 144A securities under the supervision of the Trustees of the Funds. The
liquidity of Rule 144A securities will be monitored by the Investment Advisor,
and if as a result of changed conditions, it is determined that a Rule 144A
security is no longer liquid, a Fund's holdings of illiquid securities will be
reviewed to determine what, if any, action is required to assure that the Fund
does not exceed its applicable percentage limitation for investments in illiquid
securities.
TEMPORARY INVESTMENTS
The Tocqueville Fund, The Tocqueville Small Cap Value Fund, The
Tocqueville Asia-Pacific Fund, and The Tocqueville Europe Fund do not intend to
engage in short-term trading on an ongoing basis. Current income is not an
objective of the Funds, and any current income derived from a Fund's portfolio
will be incidental. However, when in the Investment Advisor's opinion, economic
or market conditions warrant a temporary defensive position, a Fund may invest
up to 100% of its assets in U.S. Government securities such as Treasury bills,
notes and bonds; cash; or certificates of deposit, time deposits, bankers'
acceptances and other short-term debt instruments. It is anticipated that the
annual turnover rate for each Fund should not exceed 150%. A higher rate of
portfolio turnover will result in higher transaction costs, including brokerage
commissions. Also, to the extent that higher portfolio turnover results in a
higher rate of net realized capital gains to a Fund, the portion of the Fund's
distributions constituting taxable capital gains may increase.
INVESTMENTS IN DEBT SECURITIES
With respect to The Tocqueville Small Cap Value Fund's, The Tocqueville
Asia-Pacific Fund's, and The Tocqueville Europe Fund's investment in debt
securities, there is no requirement that all such securities be rated by a
recognized rating agency. However, it is the policy of each Fund that
investments in debt securities, whether rated or unrated, will be made only if
they are, in the opinion of the Investment Advisor, of equivalent quality to
"investment grade" securities. "Investment grade" securities are those rated
within the four highest quality grades as determined by Moody's Investors
Service, Inc. ("Moody's") or Standard & Poor's Corporation ("Standard &
Poor's"). Securities rated Aaa by Moody's and AAA by Standard & Poor's are
judged to be of the best quality and carry the smallest degree of risk.
Securities rated Baa by Moody's and BBB by Standard & Poor's lack high quality
investment characteristics and, in fact, have speculative characteristics as
well. Debt securities are interest-rate sensitive, therefore their value will
tend to decrease when interest rates rise and increase when interest rates fall.
Such increase or decrease in value of longer-term debt instruments as a result
of interest rate movement will be larger than the increase or decrease in value
of shorter-term debt instruments.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
The Tocqueville Small Cap Value Fund, The Tocqueville Asia-Pacific
Fund, and The Tocqueville Europe Fund may invest in other investment companies.
As a shareholder in an investment company, a Fund would bear its ratable share
of that investment company's expenses, including its advisory and administration
fees. The Investment Advisor has agreed to waive its management fees with
respect to the portion of a Fund's assets invested in shares of other investment
companies.
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SHORT SALES
The Tocqueville Fund and The Tocqueville Small Value Cap Fund will not
make short sales of securities or maintain a short position unless, at all times
when a short position is open, the Fund owns an equal amount of such securities
or securities convertible into or exchangeable, without payment of any further
consideration, for securities of the same issue as, and equal in amount to, the
securities sold short. This a technique known as selling short "against the
box." Such a transaction serves to defer a gain or loss for Federal income tax
purposes.
OPTIONS TRANSACTIONS
The Tocqueville Asia-Pacific Fund and The Tocqueville Europe Fund may
purchase put and call options on securities and on stock indices to attempt to
hedge a Fund's portfolio and to increase the Fund's total return. Each Fund may
purchase call options when, in the opinion of the Investment Advisor, the market
price of the underlying security or index will increase above the exercise
price. Each Fund may purchase put options when the Investment Advisor expects
the market price of the underlying security or index to decrease below the
exercise price. When a Fund purchases a call option it will pay a premium to the
party writing the option and a commission to the broker selling the option. If
the option is exercised by a Fund, the amount of the premium and the commission
paid may be greater than the amount of the brokerage commission that would be
charged if the security were to be purchased directly.
Each Fund may purchase puts and calls on foreign currencies that are
traded on a securities or commodities exchange or quoted by major recognized
dealers in such options for the purpose of protecting against declines in the
dollar value of foreign securities and against increases in the dollar cost of
foreign securities to be acquired. If a decline in the dollar value of a foreign
currency is anticipated, the decline in value of portfolio securities
denominated in that currency may be partially offset by purchasing puts on that
foreign currency. If a rise is anticipated in the dollar value of a foreign
currency in which securities to be acquired are denominated, the increased cost
of such securities may be partially offset by purchasing calls on that foreign
currency. However, in the event of rate fluctuations adverse to a Fund's
position, it would lose the premium it paid and transactions costs. The Funds
are not purchasing options on foreign currency futures contracts or entering
foreign currency future contracts. This discussion is a general summary. See the
Statement of Additional Information for information concerning each Fund's
options transactions and strategies.
FUTURES AND OPTIONS ON FUTURES TRANSACTIONS
The Tocqueville Government Fund may enter into futures contracts which
provide for the future acquisition or delivery of fixed income securities or
which are based on indexes of fixed income securities. This investment technique
is designed only to hedge against anticipated future changes in interest rates
which otherwise might either adversely affect the value of the Fund's portfolio
securities or adversely affect the prices of long-term bonds which are intended
to be purchased at a later date. If interest rates move in an unexpected manner,
the Fund will not achieve the full anticipated benefits of futures contracts or
may realize a loss. The Fund may also purchase options on futures contracts for
hedging purposes.
Although the Fund is permitted to engage in the purchase and sale of
futures contracts and options thereon solely for hedging purposes, the use of
such instruments does involve certain transaction costs and risks. The Fund's
ability effectively to hedge all or a portion of its portfolio through
transactions in futures, options on futures or options on related indexes
depends on the degree to which movements in the value of the securities or index
underlying such hedging instrument correlate with movements in the value of the
relevant portion of the Fund's portfolio. The trading of futures and options on
indexes involves the additional risk of imperfect correlation between movements
in the futures or option price and the value of the underlying index. While the
Fund will establish a future or option position only if there appears to be a
liquid secondary market therefor, there can be no assurance that such a market
will exist for any particular futures or option contract at any specific time.
In such event, it may not be possible to close out a position held by the Fund,
which could require the Fund to purchase or sell the instrument underlying the
position, make or receive a cash settlement, or meet ongoing variation margin
requirements. Investments in futures contracts on fixed income securities and
related indexes involve the risk that
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if the Investment Adviser's judgment concerning the general direction of
interest rates is incorrect, the Fund's overall performance may be poorer than
if it had not entered into any such contract.
WRITING COVERED CALL OPTION CONTRACTS
The Tocqueville Government Fund may write (sell) covered call options
in order to hedge against changes in the market value of the Fund's securities
caused by fluctuating interest rates. The Tocqueville Asia-Pacific Fund and The
Tocqueville Europe Fund may write covered call options on securities or stock
indices, but will not write such options if immediately after such sale the
aggregate value of the obligations under the outstanding options would exceed
25% of the Fund's net assets. A call option is "covered" if the Fund owns the
underlying security covered by the call. The Funds will not write covered call
option contracts for speculative purposes.
When a covered call option expires unexercised, the writer realizes a
gain in the amount of the premium received. If the covered call option is
exercised, the writer realizes either a gain or loss from the sale or purchase
of the underlying security with the proceeds to the writer being increased by
the amount of the premium. Any gain or loss from such transaction will depend on
whether the amount paid is more or less than the premium received for the option
plus related transaction costs.
Risks associated with writing covered call option contracts are similar
to the risks discussed in the section concerning "Futures and Options on Futures
Transactions," above.
RISKS ASSOCIATED WITH FOREIGN INVESTMENTS
GENERAL. Consistent with their respective investment objectives and
policies, The Tocqueville Fund and The Tocqueville Small Cap Value Fund may
invest indirectly in foreign assets through ADR's, which are certificates issued
by U.S. banks representing the right to receive securities of a foreign issuer
deposited with that bank or a correspondent bank, and The Tocqueville
Asia-Pacific Fund and The Tocqueville Europe Fund may directly or indirectly
invest in securities of foreign issuers. Direct and indirect investments in
securities of foreign issuers may involve risks that are not present with
domestic investments and there can be no assurance that a Fund's foreign
investments will present less risk than a portfolio of domestic securities.
Compared to United States issuers, there is generally less publicly available
information about foreign issuers and there may be less governmental regulation
and supervision of foreign stock exchanges, brokers and listed companies.
Foreign issuers are not generally subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic issuers. Securities of some foreign issuers are less
liquid and their prices are more volatile than securities of comparable domestic
issuers. Settlement of transactions in some foreign markets may be delayed or
less frequent than in the United States, which could affect the liquidity of
each Fund's portfolio. Fixed brokerage commissions on foreign securities
exchanges are generally higher than in the United States. Income from foreign
securities may be reduced by a withholding tax at the source or other foreign
taxes. In some countries, there may also be the possibility of expropriation or
confiscatory taxation, limitations on the removal of funds or other assets of a
Fund, political or social instability or revolution, or diplomatic developments
which could affect investments in those countries.
The value of each Fund's investments denominated in foreign currencies
may depend in part on the relative strength of the U.S. dollar, and a Fund may
be affected favorably or unfavorably by exchange control regulations or changes
in the exchange rate between foreign currencies and the U.S. dollar. When a Fund
invests in foreign securities they will usually be denominated in foreign
currency, and the Fund may temporarily hold funds in foreign currencies. Thus,
each Fund's net asset value per share will be affected by changes in currency
exchange rates. Changes in foreign currency exchange rates may also affect the
value of dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and gains, if any, to be distributed to
shareholders by each Fund. The rate of exchange between the U.S. dollar and
other currencies is determined by the forces of supply and demand in the foreign
exchange markets.
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SPECIAL RISKS ASSOCIATED WITH THE TOCQUEVILLE ASIA-PACIFIC FUND. In
addition to the risks described above, there are risks inherent in any
investment in Hong Kong. In 1984 China and Britain signed the Sino-British
Declaration which allowed for the termination of British rule in Hong Kong in
July 1997. The Declaration, however, provided that the existing capitalist
economic and social system of Hong Kong would be maintained for 50 years beyond
the date. The Investment Advisor believes that given the degree of current
interdependence between China and Hong Kong, China will not dramatically alter
the operation of Hong Kong's economy and Hong Kong will continue to offer
attractive investment opportunities after China takes control of Hong Kong.
There also are risks inherent in investing in emerging markets. An
emerging market is any country that the World Bank has determined to have a low
or middle income economy and may include every country in the world except the
United States, Australia, Canada, Japan, New Zealand and most countries in
Western Europe such as Belgium, Denmark, France, Germany, Great Britain, Italy,
the Netherlands, Norway, Spain, Sweden and Switzerland. Specifically, any change
in the leadership or policies of the governments of emerging market countries in
which the Funds invest or in the leadership or policies of any other government
which exercises a significant influence over those countries, may halt the
expansion of or reverse certain beneficial economic policies of such countries
and thereby eliminate any investment opportunities which may currently exist.
SPECIAL RISKS ASSOCIATED WITH THE TOCQUEVILLE EUROPE FUND. In addition
to the risks described above, the economies of European countries may differ
unfavorably from the United States economy in such respects as growth of
domestic product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Further, such economies
generally are heavily dependent upon international trade and, accordingly, have
been and may continue to be adversely affected by any trade barriers, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by countries with which they trade. These economies also have been
and may continue to be adversely affected by economic conditions in countries
with which they trade.
The investment objective of each Fund set forth above and the noted
investment restrictions set forth in the Statement of Additional Information are
fundamental policies and may not be changed without prior shareholder approval.
However, the investment strategies and techniques described above and the noted
investment restrictions set forth in the Statement of Additional Information are
not fundamental policies of the Funds and may be changed without prior
shareholder approval. Each Fund will notify shareholders in writing and amend
the Prospectus accordingly should any such modifications in investment
strategies or techniques occur. Currently, the Funds do not contemplate making
any such changes.
INVESTMENT ADVISOR AND INVESTMENT ADVISORY AGREEMENTS
Tocqueville Asset Management L.P., 1675 Broadway, New York, New York
10019, acts as Investment Advisor to each Fund under a separate investment
advisory agreement (the "Agreements") which provides that the Investment Advisor
identify and analyze possible investments for each Fund, and determine the
amount, timing, and form of such investments. The Investment Advisor has the
responsibility of monitoring and reviewing each Fund's portfolio, on a regular
basis, and recommending the ultimate disposition of such investments. It is the
Investment Advisor's responsibility to cause the purchase and sale of securities
in each Fund's portfolio, subject at all times to the policies set forth by the
Board of Trustees. The Investment Advisor is an affiliate of Tocqueville
Securities L.P., each Fund's distributor.
Francois Sicart serves the Investment Advisor as the co-manager of The
Tocqueville Fund, The Tocqueville Europe Fund and The Tocqueville Asia-Pacific
Fund. Mr. Sicart, the majority shareholder of Tocqueville Management
Corporation, the general partner of the Investment Advisor, has been a principal
manager of The Tocqueville Fund since its inception in 1987. Prior to forming
the Investment Advisor, and for the 18 year period from 1969 to 1986, he held
various senior positions within Tucker Anthony, Incorporated, where he managed
private accounts.
Robert W. Kleinschmidt serves the Investment Advisor as the co-manager
of The Tocqueville Fund and The Tocqueville Government Fund. Mr. Kleinschmidt is
the President of Tocqueville Management Corporation.
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He previously held executive positions at the investment management firm David
J. Greene & Co. since 1978, resigning as a partner in 1991.
Jean-Pierre Conreur is the portfolio manager of The Tocqueville Small
Cap Value Fund's portfolio. Mr. Conreur, a graduate of Lycee Chanzy in 1954, was
employed as a research analyst at Tucker Anthony, Incorporated from April 1976
to December 1983. From December 1983 to March of 1990, he held the position of
Vice President--Foreign Department at Tucker Anthony. Since the formation of the
Investment Advisor, Mr. Conreur has held the title of Executive Vice President
and Director of Tocqueville Management Corporation. He is also a trustee of the
Investment Advisor's retirement plan.
Christopher P. Culp serves the Investment Advisor as co-manager of The
Tocqueville Government Fund. He was a Vice President of Belle Haven Investments
L.P. from 1994 to 1995, before joining the Investment Advisor, and was (i) an
independent financial consultant from 1993 to 1994, and (ii) a bond trader with
Swiss Bank Corp. from 1991 to 1993 and with Carroll McEntee, a subsidiary of
HSBC Corp., from 1990 to 1991.
Under the terms of the Agreements, each Fund pays the cost of all its
expenses (other than those expenses specifically assumed by the Investment
Advisor or the Fund's distributor), including the pro rata costs incurred in
connection with each Fund's maintenance of its registration under the Securities
Act of 1933, as amended, and the 1940 Act, printing of prospectuses distributed
to shareholders, taxes or governmental fees, brokerage commissions, custodial,
transfer and shareholder servicing agent costs, expenses of outside counsel and
independent accountants, preparation of shareholder reports, trustees' fees and
shareholder meetings.
The Investment Advisor receives a fee from: (1) both The Tocqueville
Fund and The Tocqueville Small Cap Value Fund, payable monthly, for the
performance of its services at an annual rate of .75% on the first $100 million
of the average daily net assets of each Fund, .70% of average daily net assets
in excess of $100 million but not exceeding $500 million, and .65% of average
daily net assets in excess of $500 million; (2) both The Tocqueville
Asia-Pacific Fund and The Tocqueville Europe Fund, payable monthly, for the
performance of its services at an annual rate of 1.00% on the first $50 million
of the average daily net assets of each Fund, respectively, .75% of the average
daily net assets in excess of $50 million but not exceeding $100 million, and
.65% of the average daily net assets in excess of $100 million; and (3) The
Tocqueville Government Fund, payable monthly, for the performance of its
services at an annual rate of .50% on the first $500 million of the average
daily net assets of the Fund, .40% of average daily net assets in excess of $500
million but not exceeding $1 billion, and .30% of average daily net assets in
excess of $1 billion. Each fee is accrued daily for the purposes of determining
the offering and redemption price of such Fund's shares.
DISTRIBUTION PLANS
Each Fund has adopted a distribution plan for Class A and a
distribution plan for Class B shares (each a "Plan"). Pursuant to the Class A
Plan, a Fund may incur distribution expenses related to the sale of Class A
shares of up to .25% per annum of the Fund's average daily net assets. The Class
B Plan provides that a Fund may incur distribution expenses related to the sale
of Class B shares of up to .75% per annum of such Fund's average daily net
assets, of which (i) up to .25% of the average daily net assets attributable to
the Class B shares is payable as service fees to the distributor, brokers and
servicing agents having agreements with the distributor or Investment Advisor
for the provision of continuing shareholder services to customers of such
financial intermediaries who own Class B shares, and (ii) any amount remaining
(being at least .50% of average daily net assets attributable to the Class B
shares) is payable to the distributor or brokers during a fiscal year. With
respect to its Class B shares, because of the .75% annual limitation on the
compensation paid during a fiscal year, compensation relating to a large portion
of the commissions attributable to sales of Class B shares in any one year may
be paid by a Fund in fiscal years subsequent thereto. In determining whether to
purchase Class B shares, investors should consider that daily compensation
payments could continue until the Distributor (as herein defined) has been
reimbursed for the commissions paid on sales of Class B shares.
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The Plans provide that a Fund may finance activities which are
primarily intended to result in the sale of the Fund's shares, including, but
not limited to, advertising, printing of prospectuses and reports for other than
existing shareholders, preparation and distribution of advertising material and
sales literature and payments to dealers and shareholder servicing agents
including Tocqueville Securities L.P. ("Tocqueville Securities" or the
"Distributor"), the Fund's distributor, who enter into agreements with the Fund
or Tocqueville Securities. The Plans will only make payments for expenses
actually incurred on a first-in, first-out basis. The Plans may carry forward
for an unlimited number of years any unreimbursed expenses. If a Plan is
terminated in accordance with its terms, the obligations of the Fund to make
payments pursuant to the Plan will cease and the Fund will not be required to
make any payments past the date the Plan terminates; however, Tocqueville
Securities will be entitled to receive all contingent deferred sales charges
paid or payable with respect to any day subsequent to termination of the Class B
Plan. (See the Statement of Additional Information--"Distribution Plan" for
further information about the Plan.)
As of October 31, 1995, The Tocqueville Fund, The Tocqueville Small Cap
Value Fund, The Tocqueville Asia-Pacific Fund, The Tocqueville Europe Fund, and
The Tocqueville Government Fund had $59,065, $62,300, $58,702, $52,487, $8,110,
respectively, of unreimbursed distribution expenses for Class A shares and $0,
$0, $0, $0, $0, respectively of unreimbursed distribution expenses for Class B
Shares. (See the Statement of Additional Information--"Distribution Plans" for
further information about the Plans.)
ADMINISTRATIVE SERVICES AGREEMENTS
Under an Administrative Services Agreement, Tocqueville Asset
Management L.P. supervises the administration of all aspects of a Fund's
operations, including the Fund's receipt of services for which the Fund is
obligated to pay, provides the Fund with general office facilities and provides,
at the Fund's expense, the services of persons necessary to perform such
supervisory, administrative and clerical functions as are needed to effectively
operate the Fund. Those persons, as well as certain employees and Trustees of
the Funds, may be directors, officers or employees of (and persons providing
services to a Fund may include) Tocqueville Asset Management L.P. and its
affiliates. For these services and facilities, Tocqueville Asset Management L.P.
receives with respect to a Fund a fee computed and paid monthly at an annual
rate of .15% of the average daily net assets of the Fund.
BROKERAGE ALLOCATION
Subject to the supervision of the Board of Trustees, decisions to buy
and sell securities for each Fund are made by the Investment Advisor. The
Investment Advisor, subject to obtaining the best price and execution, may
allocate brokerage transactions in a manner that takes into account the sale of
shares of each Fund. Generally, the primary consideration in placing portfolio
securities transactions with broker-dealers for execution is to obtain, and
maintain the availability of, execution at the best net price available and in
the most effective manner possible. The Funds' brokerage allocation policies may
permit each Fund to pay a broker-dealer which furnishes research services a
higher commission than that which might be charged by another broker-dealer
which does not furnish research services, provided that such commission is
deemed reasonable in relation to the value of the services provided by such
broker-dealer. For a complete discussion of portfolio transactions and brokerage
allocation, see "Portfolio Transactions and Brokerage" in the Statement of
Additional Information.
PURCHASE OF SHARES
GENERAL INFORMATION
Class A shares are sold to investors at the net asset value next
determined after a purchase order becomes effective (as described below) plus a
varying initial sales charge. Class B shares of the Fund are sold without an
initial sales charge but are subject to higher ongoing expenses than Class A
shares and a contingent deferred sales charge payable upon certain redemptions.
Class B shares automatically convert to Class A shares in the seventh year after
issuance.
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The minimum initial investment in each Fund is $5,000 except for
401(k), IRA, Keogh and other pension or profit sharing plan accounts where the
minimum is $2,000. The minimum subsequent investment in a Fund for all accounts
is $1,000. The Distributor may, in its discretion, waive the minimum investment
requirements for purchases made via the Pre-Authorized Investment Plan, which is
discussed below in this Prospectus.
Both Class A and Class B shares of a Fund may be purchased from the
following entities: (a) the Fund's distributor, Tocqueville Securities; (b)
authorized securities dealers which have entered into sales agreements with
Tocqueville Securities (the "Selling Brokers") on a best efforts basis; and (c)
each Fund's transfer agent, State Street Bank and Trust Company (the "Transfer
Agent"). Purchases may also be made directly through each Fund by forwarding
payment, together with the detachable stub from an account statement or a letter
containing the account number to the Transfer Agent. When placing orders,
investors shall specify whether the order is for Class A or Class B shares. All
share purchases that fail to specify a class will automatically be invested in
Class A shares. Each Fund reserves the right to cease offering shares for sale
at any time or to reject any order for the purchase of shares.
A purchase order becomes effective upon receipt of the order by
Tocqueville Securities, a Selling Broker or the Transfer Agent. Purchase orders
received prior to 4:00 p.m. New York time are priced according to the net asset
value per share next determined on that day. Purchase orders received after 4:00
p.m. New York time are priced according to the net asset value per share next
determined on the following day.
The net asset value per share is determined by dividing the market
value of a Fund's investments as of the close of trading plus any cash or other
assets (including dividends receivable and accrued interest) less all
liabilities (including accrued expenses) by the number of Fund shares
outstanding. Each Fund will determine the net asset value of its shares once
daily as of the close of trading on the New York Stock Exchange on each "Fund
business day" which is any day on which the Exchange is open for business.
Investors who already have a brokerage account with Tocqueville
Securities or a Selling Broker may purchase a Fund's shares through such broker.
Payment for purchase orders through Tocqueville Securities or the Selling Broker
must be made to Tocqueville Securities or the Selling Broker within three
business days of the purchase order. All dealers are responsible for forwarding
orders for the purchase of a Fund's shares on a timely basis.
Each Fund's shares normally will be maintained in book entry form and
share certificates will be issued only on request. The Distributor reserves the
right to refuse to sell shares of the Funds to any person.
INITIAL SALES CHARGES ON CLASS A SHARES
The initial sales charge, imposed upon a sale of Class A shares, varies
according to the size of the purchase as follows:
CONCESSION
INITIAL SALES CHARGE TO DEALERS
% OF % OF NET % OF
OFFERING AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
Less than $100,000........... 4.00 4.16 3.50
$100,000 to $249,999......... 3.50 3.63 3.00
$250,000 to $499,999......... 2.50 2.56 2.00
$500,000 to $999,999......... 1.50 1.52 1.00
$1,000,000 and over.......... 1.00 1.01 0.50
The reduced initial charges apply to the aggregate of purchases of
Class A shares of a Fund made at one time by "any person", which term includes
an individual, spouse and children under the age of 21, or a trustee or other
fiduciary of a trust, estate or fiduciary account.
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Upon notice to dealers with whom it has sales agreements, Tocqueville
Securities may reallow up to the full applicable initial sales charge on Class A
shares and such dealer may therefore be deemed an "underwriter" under the
Securities Act of 1933, as amended, during such periods. The Distributor may,
from time to time, provide promotional incentives to certain dealers whose
representatives have sold or are expected to sell significant amounts of one or
all of the funds in the Trust. At various times the Distributor may implement
programs under which a dealer's sales force may be eligible to win cash or
material awards for certain sales efforts or under which the Distributor will
reallow an amount not exceeding the total applicable initial sales charges on
the sales of Class A shares or the maximum contingent deferred sales charge of
Class B shares generated by the dealer during such programs to any dealer that
sponsors sales contests or recognition programs conforming to criteria
established by the Distributor or participates in sales programs sponsored by
the Distributor. The Distributor may provide marketing services to dealers with
whom it has sales agreements, consisting of written informational material
relating to sales incentive campaigns conducted by such dealers for their
representatives.
PURCHASES OF CLASS A SHARES AT NET ASSET VALUE
SHAREHOLDERS AS OF JANUARY 1, 1994. Shareholders who held shares of a
Fund within the Tocqueville Trust prior to January 1, 1994, may purchase Class A
shares of any Fund in the Trust at net asset value without an initial sales
charge for as long as they continue to own shares of any Fund in the Trust,
provided that there is no change in the account registration. However, once a
shareholder has closed his account by redeeming all of his Fund shares for a
period of more than thirty days he will no longer be able to purchase Class A
shares of the Fund at net asset value without an initial sales charge.
QUALIFIED PERSONS. There is no initial sales charge on Class A shares
for "Qualified Persons", which are the following (a) active or retired Trustees,
Directors, officers, partners or employees (their spouses and children under age
21) of (i) the Investment Advisor and Distributor or any affiliates or
subsidiaries thereof (the Directors, officers or employees of which shall also
include their parents and siblings for all purchases of Fund shares), (ii)
dealers having a selected dealer agreement with the Distributor, or (iii) trade
organizations to which the Investment Advisor belongs and (b) trustees or
custodians of any qualified retirement plan or IRA established for the benefit
of a person in (a) above.
PURCHASES THROUGH INVESTMENT ADVISERS AND STATE AUTHORITIES. Purchases
of Class A shares also may be made with no initial sales charge through a
registered investment adviser who has registered with the Securities and
Exchange Commission or appropriate state authorities and who (a) clears such
Fund share transaction through a broker/dealer, bank or trust company, (each of
whom may impose transaction fees with respect to such transaction), or (b)
purchases Class A shares for its own account, or an account for which the
investment adviser has discretion and is authorized to make investment
decisions.
QUALIFIED AND OTHER RETIREMENT PLANS. In addition, no initial sales
charge will apply to any purchase of Class A shares by an investor (a) through a
401(k) Plan sponsored by the Investment Advisor or the Distributor, through a
401(k) Plan sponsored by an institution which has a custodial relationship with
the Funds' Custodian or through a discount broker-dealer which imposes a
transaction charge with respect to such purchase or (b) through a tax-free
rollover or transfer of assets provided, (i) the IRA is sponsored by the Funds'
Custodian and the contribution for the tax-free rollover or transfer of assets
is a distribution from any tax qualified retirement plan sponsored by an
institution for which the Funds' Custodian serves as trustee or custodian of
such plan or of any other qualified or nonqualified retirement or deferred
compensation plan maintained by such institution, or (ii) the contribution for
the tax-free rollover or transfer of assets is a distribution from any tax
qualified retirement plan where any portion of the investor-participant's
account was invested in any fund of the Trust.
RECENTLY REDEEMED SHARES. Class A shares of a Fund may be purchased at
net asset value by persons who have, within the previous 30 days, redeemed their
Class A shares of the Fund. The amount which may be purchased at net asset value
is limited to an amount up to, but not exceeding, the net amount of redemption
proceeds. Such purchases may also be handled by a securities dealer, who may
charge the shareholder a fee for this service. In addition, Class B shareholders
who have redeemed Class B shares and paid a contingent deferred sales charge in
connection with such redemption may purchase Class A shares with no initial
sales charge (in an amount not exceeding redemption proceeds) if the purchase
occurs within 30 days of redemption of the Class B shares. This privilege is
subject to modification or discontinuance at any time.
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REDUCED INITIAL SALES CHARGES ON CLASS A SHARES
CUMULATIVE QUANTITY DISCOUNT. Class A shares of a Fund may be purchased
by any person at a reduced initial sales charge which is determined by (a)
aggregating the dollar amount of the new purchase and the greater of the
purchaser's total (i) net asset value or (ii) cost of all Class A shares of the
Fund and the other Funds in the Trust, acquired by exchange from such other
Fund, provided such fund charged an initial sales load at the time of the
exchange then held by such person and (b) applying the initial sales charge
applicable to such aggregate. The privilege of the cumulative quantity discount
is subject to modification or discontinuance at any time with respect to all
shares purchased thereafter.
GROUP PURCHASES. An individual who is a member of a qualified group (as
hereinafter defined) may also purchase Class A shares of a Fund at the reduced
initial sales charge applicable to the group taken as a whole. The reduced
initial sales charge is based upon the aggregate dollar value of Class A shares
previously purchased and still owned by the group plus the securities currently
being purchased and is determined as stated above under "Cumulative Quantity
Discount". For example, if members of the group had previously invested and
still held $90,000 of Class A shares and now were investing $15,000, the initial
sales charge would be 3.50%. In order to obtain such discount, the purchaser or
investment dealer must provide the Transfer Agent with sufficient information,
including the purchaser's total cost, at the time of purchase to permit
verification that the purchaser qualifies for a cumulative quantity discount,
and confirmation that the order is subject to such verification. Information
concerning the current initial sales charge applicable to a group may be
obtained by contacting the Transfer Agent.
A "qualified group" is one which: (a) has been in existence for more
than six months; (b) has a purpose other than acquiring Class A shares at a
discount; and (c) satisfies uniform criteria which enables the Distributor to
realize economies of scale in its costs of distributing Class A shares. A
qualified group must have more than 10 members, must be available to arrange for
group meetings between representatives of the Funds and the members, must agree
to include sales and other materials related to the Funds in its publications
and mailings to members at reduced or no cost to the Distributor, and must seek
to arrange for payroll deduction or other bulk transmission of investments in
the Funds. This privilege is subject to modification or discontinuance at any
time with respect to all Class A shares purchased thereafter.
LETTER OF INTENT. Investors in Class A shares may also qualify for
reduced initial sales charges by signing a Letter of Intent (the "LOI"). This
enables the investor to aggregate purchases of Class A shares of a Fund with
purchases of Class A shares of any other fund in the Trust acquired by exchange,
during a 13-month period. The initial sales charge is based on the total amount
invested in Class A shares during the 13-month period. All Class A shares of the
funds currently owned by the investor including the Funds, if any, will be
credited as purchases (at their current offering prices on the date the LOI is
signed) toward completion of the LOI. A 90-day back-dating period can be used to
include earlier purchases at the investor's cost. The 13-month period would then
begin on the date of the first purchase during the 90-day period. No retroactive
adjustment will be made if purchases exceed the amount indicated in the LOI. A
shareholder must notify the Transfer Agent or Distributor whenever a purchase is
being made pursuant to a LOI.
The LOI is not a binding obligation on the investor to purchase the
full amount indicated; however, on the initial purchase, if required (or
subsequent purchases if necessary), 5% of the dollar amount specified in the LOI
will be held in escrow by the Transfer Agent in Class A shares registered in the
shareholder's name in order to assure payment of the proper initial sales
charge. If total purchases pursuant to the LOI (less any dispositions and
exclusive of any distributions on such shares automatically reinvested) are less
than the amount specified, the investor will be requested to remit to the
Transfer Agent an amount equal to the difference between the initial sales
charge paid and the initial sales charge applicable to the aggregate purchases
actually made. If not remitted within 20 days after written request, an
appropriate number of escrowed shares will be redeemed in order to realize the
difference. This privilege is subject to modification or discontinuance at any
time with respect to all shares purchased thereunder. Shareholders will be paid
distributions, either in additional shares or cash, upon such escrowed shares.
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METHODS OF PAYMENT
BY CHECK. Investors who wish to purchase Class A or Class B shares
directly from the Transfer Agent may do so by sending a completed purchase
application (included with this Prospectus or obtainable from the Trust) to
State Street Bank and Trust Company, Attn. [name of Fund], at P.O. Box 8507,
Boston, Massachusetts 02266- 8507, accompanied by a check payable to the Fund,
whose shares are being purchased, or the Transfer Agent for the account of the
Fund in payment for the shares. Purchase applications sent to the Funds will be
forwarded to the Transfer Agent, and will not be effective until received by the
Transfer Agent.
BY PRE-AUTHORIZED INVESTMENT PLAN. Investors who purchase Class A or
Class B shares directly from the Transfer Agent may do so by pre-authorized
investment plan (see "Pre-Authorized Investment Plan" on the Purchase
Application) whereby your personal bank account is automatically debited and the
appropriate Fund account is automatically credited with a periodic subsequent
investment. Additional full and fractional shares are credited to your account
on the date your personal bank checking account is debited. The minimum monthly
investment is $100, and investors may choose to make their investment on or
about the 5th or 15th day of each month.
While investors may use this option to purchase Class A or Class B
shares in their IRA or other retirement plan accounts, neither the Distributor
nor State Street Bank and Trust Company will monitor the amount of contributions
to ensure that they do not exceed the amount allowable for Federal tax purposes.
State Street Bank and Trust Company will assume that all retirement plan
contributions are being made for the tax year in which they are received.
BY WIRE. Investors who purchase Class A or Class B shares directly from
the Transfer Agent may also purchase shares by sending wire instructions to
State Street Bank and Trust Company, ABA #0011 000 028, Beneficiary Information
BNF--"The Tocqueville Trust", Demand Deposit Account Number--AC-99046260, Other
Beneficiary Information OBI--"[name of Fund], Shareholder Name, and Shareholder
Account Number. Purchases by wire may be subject to a service charge by the
investor's bank. For additional instructions as to how to purchase by wire call
(800) 626-9402.
REDEMPTION OF SHARES
GENERAL INFORMATION
A shareholder may redeem his Class A shares in a Fund at any time
without charge. Class B shares are subject to the contingent deferred sales
charge upon redemption.
In order to redeem Class A or Class B shares purchased through
Tocqueville Securities or a Selling Broker, the broker must be notified by
telephone or mail to execute a redemption. A properly completed order to redeem
Class A or Class B shares received by the broker's office will be executed at
the net asset value next determined after receipt by the broker of the order.
Redemption proceeds, minus any applicable contingent deferred sales charge, will
be held in a shareholder's account with Tocqueville Securities unless the broker
is instructed to remit all proceeds directly to the shareholder.
Class A and Class B shares purchased through the Transfer Agent may be
redeemed by the Transfer Agent at the next determined net asset value upon
receipt of a request in good order. Payment will be made for redeemed shares,
minus any applicable contingent deferred sales charge, as soon as practicable,
but in no event later than three business days after receipt of a redemption
notification in good order. If the shares being redeemed were purchased directly
from the Transfer Agent by check, payment may be delayed for the minimum time
needed to verify that the purchase check has been honored. This is not normally
more than 15 days from the time of receipt of the check by the Transfer Agent.
"Good order" means that the request complies with the following: (a) the request
must be in writing, specifying the number of shares or amount of investment to
be redeemed and sent to the Transfer Agent, Attn. [name of Fund] at P.O. Box
8507, Boston, Massachusetts 02266-8507; (b) where share certificates have been
issued, a shareholder must endorse the certificates and include them in the
redemption request; (c) signatures on the redemption request and on endorsed
certificates submitted for redemption must be guaranteed by a commercial bank
which is a member of the Federal Deposit Insurance Corporation, a trust company
or a member firm (broker-
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dealer) of a national securities exchange (a notary public or a savings and loan
association is not an acceptable guarantor); and, (d) the request must include
any additional legal documents concerning authority and related matters in the
case of estates, trusts, guardianships, custodianships, partnerships and
corporations. Shares may not be redeemed by telephone. Any written requests sent
to a Fund will be forwarded to the Transfer Agent and the effective date of a
redemption request will be when the request is received by the Transfer Agent.
Shareholders who purchased shares through the Transfer Agent may arrange for the
proceeds of redemption requests to be sent by Federal Fund wire to a designated
bank account by sending wiring instructions to State Street Bank and Trust
Company, P.O. Box 8507, Boston, Massachusetts 02266-8507. Additional information
regarding redemptions may be obtained by calling (800) 626-9402.
Redemption of the Funds' shares or payments therefore may be suspended
at such times (a) when the New York Stock Exchange is closed, (b) when trading
on the New York Stock Exchange is restricted, (c) when an emergency exists which
makes it impractical for a Fund to either dispose of securities or make a fair
determination of net asset value, or (d) for such other period as the Securities
and Exchange Commission may permit for the protection of a Fund's shareholders.
There is no assurance that the net asset value received upon redemption will be
greater than that paid by a shareholder upon purchase.
The Funds reserve the right to close an account that has dropped below
$5,000 in value for a period of three months or longer other than as a result of
a decline in the net asset value per share. Shareholders are notified at least
60 days prior to any proposed redemption and are invited to add to their account
if they wish to continue as shareholders of the Fund.
CONTINGENT DEFERRED SALES CHARGES ON CLASS B SHARES
A contingent deferred sales charge is imposed upon certain redemptions
of Class B shares. The amount of any applicable contingent deferred sales charge
will be calculated by multiplying the net asset value of such shares at the time
of redemption by the applicable percentage shown in the table below:
CONTINGENT DEFERRED SALES
CHARGE AS A PERCENTAGE OF NET
REDEMPTION DURING ASSET VALUE AT REDEMPTION
1st Year Since Purchase....... 5%
2nd Year Since Purchase....... 4%
3rd Year Since Purchase....... 4%
4th Year Since Purchase....... 3%
5th Year Since Purchase....... 3%
6th Year Since Purchase....... 2%
7th Year Since Purchase....... 0%
In determining the applicability and rate of any contingent deferred
sales charge, Class B shares are redeemed on a first-in/first-out basis. The
amount of the charge is determined as a percentage of the lesser of the current
market value or the cost of the shares being redeemed. Accordingly, redemption
of Class B shares are not subject to a contingent deferred sales charge to the
extent that the value of such shares represents capital appreciation of Fund
assets.
If a redeeming shareholder owns shares of both Class A and Class B,
unless the shareholder specifically requests otherwise, the Class A shares will
be redeemed before any Class B shares.
The holding period of Class B shares acquired through an exchange with
another fund of the Tocqueville Trust will be calculated from the date that the
Class B shares were initially acquired in such fund and those Class B shares
being redeemed will be considered to represent (i) capital appreciation in other
funds to the extent applicable and (ii) then of shares held for the longest
period of time. As a result, the contingent deferred sales charge imposed should
be at the lowest possible rate. The amount of any contingent deferred sales
charge imposed will reduce the gain or increase the loss on the amount realized
on redemption for purposes of federal income taxes.
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WAIVER OF THE CONTINGENT DEFERRED SALES CHARGE. The contingent deferred
sales charge for Class B shares will be waived, subject to confirmation of a
shareholder's status, for: (i) a total or partial redemption made within one
year of the death of the shareholder; (ii) a redemption in connection with a
minimum required distribution from an IRA, Keogh or custodial account under
section 403(b) of the Internal Revenue Code; (iii) redemptions made from an IRA,
Keogh or custodial account under section 403(b) of the Internal Revenue Code
through an established Automatic Redemption Plan, as discussed below; (iv)
distributions from a qualified plan upon retirement; and (v) a redemption
resulting from an over-contribution to an IRA.
CONVERSION OF CLASS B SHARES. A shareholder's Class B shares will
automatically convert to Class A shares (and thus be subject to the lowest
expenses borne by Class A shares) in the seventh year after the date of
purchase, together with the pro rata portion of all Class B shares representing
dividends and other distributions paid in additional Class B shares. The
conversion will be effected at the relative net asset values per share of the
two classes on the first business day of the month following the sixth
anniversary of the original purchase occurs. If any exchanges of Class B shares
during the six-year period occurred, the holding period for the shares exchanged
will be counted toward the six-year period. At the time of the conversion the
net asset value per share of the Class A shares may be higher or lower than the
net asset value per share of the Class B shares; as a result, depending on the
relative net asset values per share, a shareholder may receive fewer or more
Class A shares than the number of Class B shares converted. A shareholder will
not recognize gain or loss upon the conversion of Class B shares to Class A
shares.
SHAREHOLDER PRIVILEGES
AUTOMATIC REDEMPTION PLAN. A shareholder owning $10,000 or more of
Class A or Class B shares of a Fund as determined by the then current net asset
value may provide for the payment monthly or quarterly of any requested dollar
amount (subject to limits) from his account. A sufficient number of full and
fractional shares will be redeemed so that the designated payment is received on
approximately the 1st day of the month following the end of the selected payment
period. Class B shares will be subject to any contingent deferred sales charge.
EXCHANGE PRIVILEGE. Subject to certain conditions, Class A and Class B
shares of a Fund may be exchanged for the Class A and Class B shares,
respectively, of another Fund of The Tocqueville Trust at such Fund's then
current net asset value. No initial sales charge is imposed on the Class A
shares being acquired, and no contingent deferred sales charge is imposed on the
Class B shares being redeemed, through an exchange. The dollar amount of the
exchange must be at least equal to the minimum investment applicable to the
shares of the Fund acquired through such exchange. You should note that any such
exchange, which may only be made in states where shares of the Funds in the
Tocqueville Trust are qualified for sale, may create a gain or loss to be
recognized for federal income tax purposes. Exchanges must be made between
accounts having identical registrations and addresses. Exchanges may be
authorized by telephone. In order to protect itself and shareholders from
liability for unauthorized or fraudulent telephone transactions, the Funds will
use reasonable procedures in an attempt to verify the identity of a person
making a telephone exchange request. The Funds reserve the right to refuse a
telephone exchange request if it believes that the person making the request is
not the record owner of the shares being exchanged, or is not authorized by the
shareholder to request the exchange. Shareholders will be promptly notified of
any refused request for a telephone exchange. As long as these normal
identification procedures are followed, neither the Funds nor its agents will be
liable for loss, liability or cost which results from acting upon instructions
of a person believed to be a shareholder with respect to the telephone exchange
privilege. You will not automatically be assigned this privilege unless you
check the box on the Application which indicates that you wish to have the
privilege. The exchange privilege may be modified or discontinued at any time.
DIVIDENDS, DISTRIBUTIONS, AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS. The Tocqueville Government Fund declares
and pay dividends monthly. The Tocqueville Fund, The Tocqueville Small Cap Value
Fund, The Tocqueville Asia-Pacific Fund, and The Tocqueville Europe Fund pay
dividends annually. The Funds also distribute net capital gains (if any)
annually. Dividends and distributions of both Class A and Class B shares may be
reinvested in Class A shares at net asset value without an initial sales charge.
Shareholders should indicate on the purchase application whether they wish to
receive dividends and distributions in cash. Otherwise, all income dividends and
capital gains distributions are
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automatically reinvested in the Fund making the distribution at the next
determined net asset value unless the Transfer Agent receives written notice
from an individual shareholder prior to the record date, requesting that the
distributions and dividends be distributed to the investor in cash.
TAX MATTERS. Each Fund intends to qualify as a regulated investment
company by satisfying the requirements under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), including requirements with
respect to diversification of assets, distribution of income and sources of
income. It is each Fund's policy to distribute to shareholders all of its
investment income (net of expenses) and any capital gains (net of capital
losses) in accordance with the timing requirements imposed by the Code so that
the Fund will satisfy the distribution requirement of Subchapter M and not be
subject to federal income taxes or the 4% excise tax. If a Fund fails to satisfy
any of the Code requirements for qualification as a regulated investment
company, it will be taxed at regular corporate tax rates on all of its taxable
income (including any capital gains) without any deduction for distributions to
shareholders, and distributions to shareholders will be taxable as ordinary
dividends (even if derived from a Fund's net long-term capital gains) to the
extent of that Fund's current and accumulated earnings and profits.
Distributions by a Fund of its net investment income and the excess, if
any, of its net short-term capital gain over its net long-term capital loss are
generally taxable to shareholders as ordinary income. These distributions are
treated as dividends for federal income tax purposes. Because it is anticipated
that The Tocqueville Asia-Pacific Fund's, The Tocqueville Europe Fund's and The
Tocqueville Government Fund's investment income will not include dividends from
domestic corporations, none of the ordinary income dividends paid by such Fund
should qualify for the 70% dividends-received deduction for corporate
shareholders. Distributions by a Fund of the excess, if any, of its net
long-term capital gain over its net short-term capital loss are designated as
capital gain dividends and are taxable to shareholders as long-term capital
gains, regardless of the length of time a shareholder has held his shares.
Portions of each Fund's investment income may be subject to foreign
income taxes withheld at source. The economic effect of such withholding taxes
or the total return of each Fund cannot be predicted. The Tocqueville
Asia-Pacific Fund and The Tocqueville Europe Fund may elect to "pass through" to
its shareholders these foreign taxes, in which event each shareholder will be
required to include his pro rata portion thereof in his gross income, but will
be able to deduct or (subject to various limitations) claim a foreign tax credit
for such amount.
Distributions by a Fund to shareholders will be treated in the same
manner for federal income tax purposes whether received in cash or reinvested in
additional shares of the Fund. In general, distributions by a Fund are taken
into account by the shareholders in the year in which they are made. However,
certain distributions made during January will be treated as having been paid by
the Fund and received by the shareholders on December 31 of the preceding year.
A statement setting forth the federal income tax status of all distributions
made or deemed made during the year, including any amount of foreign taxes
"passed through", will be sent to shareholders promptly after the end of each
year. A shareholder who purchases shares of a Fund just prior to the record date
will be taxed on the entire amount of the dividend received, even though the net
asset value per share on the date of such purchase may have reflected the amount
of such dividend.
A shareholder will recognize gain or loss upon the sale or redemption
of shares of a Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
Any loss recognized upon a taxable disposition of shares within six months from
the date of their purchase will be treated as a long-term capital loss to the
extent of any capital gain dividends received on such shares. All or a portion
of any loss recognized upon a taxable disposition of shares of a Fund may be
disallowed if other shares of the Fund are purchased within 30 days before or
after such disposition.
Ordinary income dividends paid to non-resident alien or foreign entity
shareholders generally will be subject to United States withholding tax at a
rate of 30% (or lower rate under an applicable treaty). Foreign shareholders are
urged to consult their own tax advisers concerning the applicability of United
States withholding taxes.
Under the backup withholding rules of the Code, certain shareholders
may be subject to 31% withholding of federal income tax on ordinary income
dividends, capital gain dividends and redemption payments made by the Funds. In
order to avoid this backup withholding, a shareholder must provide the Funds
with a correct taxpayer
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identification number (which for most individuals is their Social Security
number) and certify that it is a corporation or otherwise exempt from or not
subject to backup withholding.
The foregoing discussion of federal income tax consequences is based on
tax laws and regulations in effect on the date of this Prospectus, and is
subject to change by legislative or administrative action. As the foregoing
discussion is for general information only, a prospective shareholder should
also review the more detailed discussion of federal income tax considerations
relevant to the Funds that is contained in the Statement of Additional
Information. In addition, each prospective shareholder should consult with his
own tax adviser as to the tax consequences of investments in the Funds,
including the application of state and local taxes which may differ from the
federal income tax consequences described above.
ORGANIZATION AND DESCRIPTION OF SHARES OF THE TRUST
The Trust was organized as a Massachusetts business trust under the
laws of the Commonwealth of Massachusetts. The Trust's Declaration of Trust
filed September 17, 1986, permits the Trustees to issue an unlimited number of
shares of beneficial interest with a par value of $0.01 per share in the Trust
in an unlimited number of series of shares. On August 19, 1991, the Declaration
of Trust was amended to change the name of the Trust to "The Tocqueville Trust,"
and on August 4, 1995, the Declaration of Trust was amended to permit the
division of a series into classes of shares. Each share of beneficial interest
has one vote and shares equally in dividends and distributions when and if
declared by a Fund and in a Fund's net assets upon liquidation. All shares, when
issued, are fully paid and nonassessable. There are no preemptive or conversion
rights. Fund shares do not have cumulative voting rights and, as such, holders
of at least 50% of the shares voting for trustees can elect all trustees and the
remaining shareholders would not be able to elect any trustees. The Board of
Trustees may classify or reclassify any unissued shares of the Trust into shares
of any series by setting or changing in any one or more respects, from time to
time, prior to the issuance of such shares, the preference, conversion or other
rights, voting powers, restrictions, limitations as to dividends, or
qualifications of such shares. Any such classification or reclassification will
comply with the provisions of the 1940 Act.
There will not normally be annual shareholder meetings. Shareholders
may remove trustees from office by votes cast at a meeting of shareholders or by
written consent.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND PAYING AGENT
State Street Bank and Trust Company, 2 Heritage Drive, North Quincy,
Massachusetts 02171, serves as Custodian for each Fund's portfolio securities
and cash, and as Transfer and Dividend Paying Agent, and in those capacities
maintains certain financial and accounting books and records pursuant to
agreements with the Trust. Its mailing address is P.O. Box 8507, Boston,
Massachusetts 02266-8507.
Transfer and Dividend Paying Agent functions have been delegated to and
are being performed by Boston Financial Data Services, Inc., an affiliate of
State Street Bank and Trust Company.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, 919 Third Avenue, New
York, N.Y. 10022, is counsel for the Trust. McGladrey & Pullen, LLP, 555 Fifth
Avenue, New York, N.Y. 10017-2416, has been appointed independent accountants
for the Trust.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to 1675 Broadway, New York,
New York 10019, Attention: [name of Fund], or may be made by calling (800)
626-9402.
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OTHER INFORMATION
This Prospectus omits certain information contained in the registration
statement filed with the Securities and Exchange Commission. Copies of the
registration statement, including items omitted herein, may be obtained from the
Commission by paying the charges prescribed under its rules and regulations. The
Statement of Additional Information included in such registration statement may
be obtained without charge from the Trust.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and information
or representations not herein contained, if given or made, must not be relied
upon as having been authorized by the Trust. This Prospectus does not constitute
an offer or solicitation in any jurisdiction in which such offering may not
lawfully be made.
The Code of Ethics of the Investment Advisor and the Funds prohibits
all affiliated personnel from engaging in personal investment activities which
compete with or attempt to take advantage of a Fund's planned portfolio
transactions. The objective of the Code of Ethics of both the Funds and
Investment Advisor is that their operations be carried out for the exclusive
benefit of a Fund's shareholders. Both organizations maintain careful monitoring
of compliance with the Code of Ethics.
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THE TOCQUEVILLE FUND
THE TOCQUEVILLE SMALL CAP VALUE FUND
THE TOCQUEVILLE
ASIA-PACIFIC FUND
THE TOCQUEVILLE
EUROPE FUND
AND
INVESTMENT ADVISOR
Tocqueville Asset Management L.P. THE TOCQUEVILLE GOVERNMENT FUND
1675 Broadway
New York, New York 10019 Series of
Telephone: (212) 698-0800 The Tocqueville Trust
Telecopier: (212) 262-0154
DISTRIBUTOR
Tocqueville Securities L.P.
1675 Broadway
New York, New York 10019
Telephone: (800) 697-3863
Telecopier: (212) 262-0154
February 28, 1996
SHAREHOLDERS' SERVICING,
CUSTODIAN AND TRANSFER AGENT Prospectus
State Street Bank and Trust Company
P.O. Box 8507
Boston, Massachusetts 02266-8507
Telephone: (800) 626-9402
BOARD OF TRUSTEES
Francois Sicart -- Chairman
Bernard F. Combemale
James B. Flaherty
Inge Heckel
Robert W. Kleinschmidt
Francois Letaconnoux
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION - February 28, 1996
THE TOCQUEVILLE TRUST
The Tocqueville Trust (the "Trust") is a Massachusetts business trust
consisting of five separate funds (the "Fund" or the "Funds"). Each Fund is an
open-end, diversified management investment company with a different investment
objective. The Tocqueville Fund's investment objective is long-term capital
appreciation primarily through investments in securities of United States
issuers. The Tocqueville Small Cap Value Fund's (the "Small Cap Fund")
investment objective is long-term capital appreciation primarily through
investments in securities of small-capitalization United States issuers. The
Tocqueville Asia-Pacific Fund's (the "Asia-Pacific Fund") investment objective
is long-term capital appreciation consistent with preservation of capital
primarily through investment in securities of issuers located in Asia and the
Pacific Basin. The Tocqueville Europe Fund's (the "Europe Fund") investment
objective is long-term capital appreciation consistent with preservation of
capital primarily through investment in securities of issuers located in Europe.
The Tocqueville Government Fund's (the "Government Fund") investment objective
is to provide high current income consistent with the maintenance of principal
and liquidity through investments in obligations issued or guaranteed by the
U.S. Treasury, agencies of the U.S. Government or instrumentalities that have
been established or sponsored by the U.S. Government. In each Fund, there is
minimal emphasis on current income.
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Trust's current Prospectuses, copies of which
may be obtained by writing The Tocqueville Trust, 1675 Broadway, New York, New
York 10019 or calling (800) 697-3863.
This Statement of Additional Information relates to Trust's Prospectus
which is dated February 28, 1996.
TABLE OF CONTENTS
PAGE
Investment Objective, Policy and Risks............................... 2
Investment Restrictions.............................................. 6
Management........................................................... 8
Investment Advisor and Investment Advisory Agreements................ 10
Distribution Plans................................................... 11
Administrative Services Plan......................................... 12
Portfolio Transactions and Brokerage................................. 13
Allocation of Investments............................................ 13
Computation of Net Asset Value....................................... 13
Purchase and Redemption of Shares.................................... 14
Tax Matters.......................................................... 14
Performance Calculation.............................................. 21
General Information.................................................. 22
Reports ............................................................ 23
Financial Statements................................................. 23
<PAGE>
INVESTMENT OBJECTIVE, POLICY AND RISKS
THE TOCQUEVILLE FUND
As described in the Trust's Prospectus, The Tocqueville Fund invests
in common stocks of United States issuers. The Tocqueville Fund will invest not
only in major corporations whose shares are listed on the New York Stock
Exchange or the American Stock Exchange, but it will also invest in securities
traded on regional exchanges or in the over-the-counter market.
The Fund may invest up to 25% of its total assets in common stock of
foreign companies which are traded in the United States or purchase American
Depository Receipts (ADR's) which are certificates issued by U.S. banks
representing the right to receive securities of a foreign issuer deposited with
that bank or a correspondent bank. The Fund also may invest up to 10% of its
total assets in gold bullion only from U.S.
institutions.
The Fund may enter into repurchase agreements with domestic
broker-dealers, banks and financial institutions, but may not invest more than
5% of its net assets in repurchase agreements. A repurchase agreement is a
contract pursuant to which the Fund, against receipt of securities of at least
equal value, agrees to advance a specified sum to a broker-dealer, bank or
financial institution which agrees to reacquire the securities at a mutually
agreed upon time and price. Repurchase agreements, which are usually for short
periods of one week or less, enable the Fund to invest its cash reserves at
fixed rates of return. The Fund may enter into repurchase agreements with
domestic broker-dealers, banks and other financial institutions, provided the
Fund receives as collateral securities whose market value at least equals the
amount of the institution's repurchase obligation and provided the Fund's
custodian always has physical possession of such securities or there is evidence
of a book entry transfer to the account of the custodian. To minimize the risk
of loss, the Fund will enter into repurchase agreements only with institutions
and dealers which the Board of Trustees consider to be creditworthy. The
Investment Advisor will monitor the creditworthiness of such institutions and
dealers. If an institution enters into an insolvency proceeding, the resulting
delay in liquidation of securities serving as collateral could cause the Fund
some loss, as well as legal expense, if the value of the securities declined
prior to liquidation.
THE TOCQUEVILLE SMALL CAP VALUE FUND
In the pursuit of its objective, the Fund invests substantially all
and normally no less than 65% of its assets in a diversified portfolio
consisting of common stocks of small capitalization United States companies that
are considered by the Investment Advisor to be strong proprietary businesses, to
be either out of favor or less well known in the financial community, or to be
undervalued in relation to either their potential long-term growth or earning
power. Companies with market capitalizations of less than $1 billion are deemed
to have a small capitalization and to be generally less well known. Strong
proprietary businesses generally have some but not necessarily all of the
following characteristics: capable management, good finances, strong
manufacturing, broad distribution, and, lastly, products which are somewhat
differentiated from their competitors. Generally, stocks which have
underperformed market indices such as the Standard & Poor's Composite Index for
at least one year and companies which have a historically low stock price in
relation to such factors as sales, potential earnings or underlying assets will
be considered by the Investment Advisor to be out of favor.
The Investment Advisor searches for companies based on its judgment
of relative value and growth potential. The growth potential and earning power
of a company will be evaluated by the Investment Advisor on the basis of past
growth and profitability, as reflected in its financial statements, on the basis
of potential new products resulting from research and development spending, or
on the Investment Advisor's conclusion that the company has achieved better
results than similar companies in a depressed industry which the Investment
Advisor believes will improve within the next two years. There is no assurance
that the Investment Advisor's evaluation will be accurate in its selection of
stocks for the Fund's portfolio or that the Fund's objectives will be
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<PAGE>
achieved. If the stocks in which the Fund invests never attain their perceived
potential or if the valuation of such stocks in the marketplace does not in fact
reflect significant undervaluation, there may be little or no appreciation or,
instead, a depreciation in the value of such stocks.
The Fund does not intend to engage in short-term trading on an
ongoing basis. Current income is not an objective of the Fund, and any current
income derived from the portfolio will be incidental. However, when in the
Investment Advisor's opinion, economic or market conditions warrant a temporary
defensive position, the Fund may invest up to 100% of its assets in U.S.
government securities such as Treasury bills, notes and bonds; cash; or
certificates of deposit, time deposits, bankers' acceptances and other
short-term debt instruments.
The Fund may invest up to 25% of its total assets in common stock of
foreign companies which are traded in the United States or purchase American
Depository Receipts (ADR's), which are certificates issued by U.S. banks
representing the right to receive securities of a foreign issuer deposited with
such banks or correspondent banks. In addition, the Fund may invest up to 5% of
its net assets in repurchase agreements which are fully collateralized by
obligations of the U.S. Government or obligations of its agencies or
instrumentalities, or short-term money market securities. The Fund will not
invest in repurchase agreements with maturities in excess of seven days. The
Fund may also invest up to 10% of its total assets in investment grade debt
instruments convertible into common stock. The Fund may, from time to time,
borrow up to 10% of the value of its total assets from banks at prevailing
interest rates as a temporary measure for extraordinary or emergency purposes.
THE TOCQUEVILLE ASIA-PACIFIC FUND AND THE TOCQUEVILLE EUROPE FUND
The investment objective of the Asia-Pacific Fund is long-term
capital appreciation consistent with preservation of capital primarily through
investment in securities of issuers located in Asia and the Pacific Basin. As
more fully described in the Trust's Prospectus, the Investment Advisor may
invest the Fund's assets in securities of issuers domiciled in any country.
However, under normal conditions investments will be made in Asia and the
Pacific Basin countries. Pacific Basin countries are Australia, Hong Kong,
Indonesia, Japan, Malaysia, New Zealand, Republic of Korea, Singapore, Taiwan,
Thailand and the Philippines. Asian countries are India and the Peoples Republic
of China, which is accessed through Pacific Basin countries (as described
above), most notably Hong Kong. The Investment Advisor believes that it will
usually have assets invested in most of the countries located in Asia and the
Pacific Basin; however, under normal market conditions the Fund will be invested
in a minimum of five countries. Investments will not normally be made in
securities of issuers located in the United States or Canada.
The investment objective of the Europe Fund is long-term capital
appreciation consistent with preservation of capital primarily through
investment in securities of issuers located in Europe. As more fully described
in the Trust's Prospectus, the Investment Advisor may invest the Fund's assets
in securities of issuers domiciled in any country. However, under normal
conditions investments will be made in Europe. The European countries are
Austria, Belgium, Denmark, England, Finland, France, Germany, Greece, Ireland,
Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and
Turkey. The Investment Advisor believes that it will usually have assets
invested in most of Europe; however, under normal market conditions the Fund
will be invested in a minimum of five countries. Investments will not normally
be made in securities of issuers located in the United States or Canada.
When allocating investments among individual countries, the
Investment Advisor will consider various criteria that in its view are deemed
relevant based on its experience, such as the relative economic growth potential
of the various economies and securities regions, expected levels of inflation,
government policies influencing business conditions, and the outlook for
currency relationships.
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THE TOCQUEVILLE GOVERNMENT FUND
The Tocqueville Government Fund's investment objective is to provide
high current income consistent with the maintenance of principal and liquidity
through investments in obligations issued or guaranteed by the U.S. Treasury,
agencies of the U.S. Government or instrumentalities that have been established
or sponsored by the U.S. Government. In pursuit of its objective, the Fund
intends to invest at least 85% of its assets in short and intermediate-term
securities backed by the full faith and credit of the U.S. Government. Also, at
least 65% of the Fund's assets will be invested in U.S. Treasury bills, notes
and bonds. The dollar-weighted average maturity of the Fund is expected to range
from 0 to 12 years. The balance of the Fund's assets may be invested in
obligations issued or guaranteed by the U.S. Treasury, agencies of the U.S.
Government or instrumentalities that have been established or sponsored by the
U.S. Government, as well as in repurchase agreements collateralized by such
securities. The Fund may also invest in bond (interest rate) futures and options
to a limited extent.
The Fund may invest up to 20% of its assets in Government National
Mortgage Association pass-through certificates ("GNMA"). GNMA pass-through
certificates are mortgage-backed securities representing part ownership of a
pool of mortgage loans. Monthly mortgage payments of both interest and principal
"pass through" from homeowners to certificate investors, such as the Fund. The
Fund reinvests the principal portion in additional securities and distributes
the interest portion as income to the Fund's shareholders. Under normal
circumstances, GNMA certificates are expected to provide higher yields than U.S.
Treasury securities of comparable maturity.
The mortgage loans underlying GNMA certificates--issued by lenders
such as mortgage bankers, commercial banks, and savings and loan
associations--are either insured by the Federal Housing Administration (FHA) or
guaranteed by the Veterans Administration (VA). Each pool of mortgage loans must
also be approved by GNMA, a U.S. Government corporation within the U.S.
Department of Housing and Urban Development. Once GNMA approval is obtained, the
timely payment of interest and principal on each underlying mortgage loan is
guaranteed by the "full faith and credit" of the U.S. Government.
The Fund also may invest up to 15% of its assets in: (i) fixed rate
or adjustable rate mortgage-backed securities issued or guaranteed by the
Federal National Mortgage Association ("FNMA") and the Federal Home Loan
Mortgage Corporation ("FHLMC"), and (ii) collateralized mortgage obligations
("CMOs").
1. WRITING COVERED CALL OPTIONS ON SECURITIES AND STOCK INDICES
The Asia-Pacific Fund, the Europe Fund and the Government Fund may
write covered call options on optionable securities or stock indices of the
types in which they are permitted to invest from time to time as their
Investment Advisor determines is appropriate in seeking to attain their
objective. Call options written by a Fund gives the holder the right to buy the
underlying securities or index from the Fund at a stated exercise price. Options
on stock indices are settled in cash.
The Asia-Pacific Fund, the Europe Fund and the Government Fund may
write only covered call options, which means that, so long as a Fund is
obligated as the writer of a call option, it will own the underlying securities
subject to the option (or comparable securities or cash satisfying the cover
requirements of securities exchanges).
The Asia-Pacific Fund, the Europe Fund and the Government Fund will
receive a premium for writing a covered call option, which increases the return
of a Fund in the event the option expires unexercised or is closed out at a
profit. The amount of the premium will reflect, among other things, the
relationship of the market price of the underlying security or index to the
exercise price of the option, the term of the option and the volatility of the
market price of the underlying security or index. By writing a covered call
option, a Fund limits its opportunity to profit from any increase in the market
value of the underlying security or index above the exercise price of the
option.
-4-
<PAGE>
The Asia-Pacific Fund, the Europe Fund and the Government Fund may
terminate an option that they have written prior to the option's expiration by
entering into a closing purchase transaction in which an option is purchased
having the same terms as the option written. A Fund will realize a profit or
loss from such transaction if the cost of such transaction is less or more than
the premium received from the writing of the option. Because increases in the
market price of a call option will generally reflect increases in the market
price of the underlying security or index, any loss resulting from the
repurchase of a call option is likely to be offset in whole or in part by
unrealized appreciation of the underlying security (or securities) owned by a
Fund.
2. PURCHASING PUT AND CALL OPTIONS ON SECURITIES AND STOCK INDICES
The Asia-Pacific Fund and the Europe Fund may purchase put options to
protect their portfolio holdings in an underlying stock index or security
against a decline in market value. Such hedge protection is provided during the
life of the put option since a Fund, as holder of the put option, is able to
sell the underlying security or index at the put exercise price regardless of
any decline in the underlying market price of the security or index. In order
for a put option to be profitable, the market price of the underlying security
or index must decline sufficiently below the exercise price to cover the premium
and transaction costs. By using put options in this manner, a Fund will reduce
any profit it might otherwise have realized in its underlying security or index
by the premium paid for the put option and by transaction costs, but it will
retain the ability to benefit from future increases in market value.
The Asia-Pacific Fund and the Europe Fund may also purchase call
options to hedge against an increase in prices of stock indices or securities
that they want ultimately to buy. Such hedge protection is provided during the
life of the call option since a Fund, as holder of the call option, is able to
buy the underlying security or index at the exercise price regardless of any
increase in the underlying market price of the security or index. In order for a
call option to be profitable, the market price of the underlying security or
index must rise sufficiently above the exercise price to cover the premium and
transaction costs. By using call options in this manner, a Fund will reduce any
profit it might have realized had it bought the underlying security or index at
the time it purchased the call option by the premium paid for the call option
and by transaction costs, but it limits the loss it will suffer if the security
or index declines in value to such premium and transaction costs.
3. BORROWING
Each Fund may, from time to time, borrow up to 10% of the value of
its total assets from banks at prevailing interest rates as a temporary measure
for extraordinary or emergency purposes. A Fund may not purchase securities
while borrowings exceed 5% of the value of its total assets.
4. REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements subject to resale to a
bank or dealer at an agreed upon price which reflects a net interest gain for
the Fund. The Funds will receive interest from the institution until the time
when the repurchase is to occur.
The Funds will always receive as collateral U.S. Government or
short-term money market securities whose market value is equal to at least 100%
of the amount invested by a Fund, and the Funds will make payment for such
securities only upon the physical delivery or evidence by book entry transfer to
the account of its custodian. If the seller institution defaults, a Fund might
incur a loss or delay in the realization of proceeds if the value of the
collateral securing the repurchase agreement declines and it might incur
disposition costs in liquidating the collateral. The Funds attempt to minimize
such risks by entering into such transactions only with well-capitalized
financial institutions and specifying the required value of the underlying
collateral. The Funds will not invest in repurchase agreements with maturities
in excess of seven days.
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<PAGE>
CONCLUSION
Unlike the fundamental investment objective of each Fund set forth on
the cover page of this Statement and the investment restrictions set forth
below, which may not be changed without shareholder approval, the Funds have the
right to modify the investment policies described above without shareholder
approval.
INVESTMENT RESTRICTIONS
The following fundamental policies and investment restrictions have
been adopted by the Funds and except as noted, such policies and restrictions
cannot be changed without approval by the vote of a majority of the outstanding
voting securities of a Fund, as defined by the Investment Company Act of 1940,
as amended (the "1940 Act").
The Funds may not:
(1) issue senior securities;
(2) concentrate their investments in particular industries. No
more than 25% of the value of a Fund's assets will be invested in any
one industry;
(3) with respect to 75% of the value of a Fund's assets, purchase
any securities (other than obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities) if, immediately after
such purchase, more than 5% of the value of the Fund's total assets
would be invested in securities of any one issuer, or more than 10% of
the outstanding voting securities of any one issuer would be owned by
the Fund;
(4) make loans of money or securities other than (a) through the
purchase of publicly distributed bonds, debentures or other corporate
or governmental obligations, (b) by investing in repurchase agreements,
and (c) by lending its portfolio securities, provided the value of such
loaned securities does not exceed 33-1/3% of its total assets;
(5) borrow money in excess of 10% of the value of a Fund's total
assets from banks. A Fund may not purchase securities while borrowings
exceed 5% of the value of its total assets;
(6) buy or sell real estate, commodities, or commodity contracts,
except a Fund may purchase or sell futures or options on futures;
(7) underwrite securities;
(8) invest in precious metals other than in accordance with a
Fund's investment objective and policy, if as a result the Fund would
then have more than 10% of its total assets (taken at current value)
invested in such precious metals;
(9) participate in a joint investment account.
The following restrictions are non-fundamental and may be changed by
the Funds' Board of Trustees. Pursuant to such restrictions, the Funds will not:
(1) make short sales of securities, other than short sales
"against the box," or purchase securities on margin except for
short-term credits necessary for clearance of portfolio transactions,
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<PAGE>
provided that this restriction will not be applied to limit the use of
options, futures contracts and related options, in the manner otherwise
permitted by the investment restrictions, policies and investment
program of a Fund;
(2) invest for purposes of exercising control or management;
(3) purchase or retain securities of an issuer when one or more
officers and Trustees of the Fund or of the Fund's Investment Advisor,
or a person owning more than 10% of the shares of either, own
beneficially more than 1/2 of 1% of the securities of such issuer and
such persons owning more than 1/2 of 1% of such securities together own
beneficially more than 5% of the securities of such issuer;
(4) purchase the securities of any other investment company, if a
purchasing Fund, immediately after such purchase or acquisition, owns
in the aggregate, (i) more than 3% of the total outstanding voting
stock of such investment company, (ii) securities issued by such
investment company having an aggregate value in excess of 5% of the
value of the total assets of the Fund, or (iii) securities issued by
such investment company and all other investment companies having an
aggregate value in excess of 10% of the value of the total assets of
the Fund;
(5) purchase interests in oil, gas or other mineral exploration
programs; however, this limitation will not prohibit the acquisition of
securities of companies engaged in the production or transmission of
oil, gas, or other minerals;
(6) invest more than 10% of a Fund's total assets in the
securities of any company which, including its predecessors, has not
been in business for at least three years;
(7) invest more than 10% of its total net assets in illiquid
securities. Illiquid securities are securities that are not readily
marketable or cannot be disposed of promptly within seven days and in
the usual course of business without taking a materially reduced price.
Such securities include, but are not limited to, time deposits and
repurchase agreements with maturities longer than seven days.
Securities that may be resold under Rule 144A or securities offered
pursuant to Section 4(2) of the Securities Act of 1933, as amended,
shall not be deemed illiquid solely by reason of being unregistered.
The Investment Advisor shall determine whether a particular security is
deemed to be liquid based on the trading markets for the specific
security and other factors;
(8) except The Tocqueville Asia-Pacific Fund and The Tocqueville
Europe Fund, invest in securities of foreign issuers other than in
accordance with the respective Fund's investment objective and policy,
if as a result a Fund would then have more than 25% of its total assets
(taken at current value) invested in such foreign securities; and
(9) except The Tocqueville Fund and The Tocqueville Small Cap
Value Fund, invest in warrants if, at the time of acquisiton, the
investment in warrants, valued at the lower of cost or market value,
would exceed 5% of a Fund's net assets. For purposes of this
restriction, warrants acquired by a Fund in units or attached to
securities may be deemed to be without value.
STATE AND FEDERAL RESTRICTIONS
In order to comply with certain federal and state statutes and
regulatory policies, as a matter of operating policy, each Fund will not: (1)
invest in oil, gas and other mineral leases; (2) purchase or sell real property,
including limited partnership interests; and (3) invest more than 2% of its net
assets in warrants which are not listed on the New York or American Stock
Exchange nor more than 5% of its net assets in warrants. Such warrants will be
valued at the time of acquisition at the lower of cost or market value. Although
these
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<PAGE>
policies are not fundamental and may be changed by The Tocqueville Trust's Board
of Trustees without shareholder approval, these policies will remain in effect
until the federal government or a state either amends or appeals applicable
statutes and regulatory policies.
MANAGEMENT
The overall management of the business and affairs of each Fund is
vested with the Board of Trustees. The Board of Trustees approves all
significant agreements between the Trust or each Fund and persons or companies
furnishing services to the Funds, including a Fund's agreement with an
investment advisor, custodian and transfer agent. The day-to-day operations of
the Funds are delegated to each Fund's officers subject always to the investment
objectives and policies of each Fund and to general supervision by the Trust's
Board of Trustees.
The Trustees and officers and their principal occupations are noted
below. Unless otherwise indicated the address of each Trustee and executive
officer is 1675 Broadway, New York, New York 10019.
FRANCOIS DANIEL SICART,* CHAIRMAN, PRINCIPAL EXECUTIVE OFFICER AND TRUSTEE.
Chairman and Chief Executive Officer, Tocqueville Management Corporation, the
General Partner of Tocqueville Asset Management L.P. and Tocqueville Securities
L.P. from January, 1990 to present; Chairman and Chief Executive Officer,
Tocqueville Asset Management Corp. from December, 1985 to January, 1990; Vice
Chairman of Tucker Anthony Management Corporation, from 1981 to October 1986;
Vice President (formerly general partner) and other positions with Tucker
Anthony, Inc. from 1969 to January, 1990.
JAMES B. FLAHERTY, TRUSTEE. President and Partner, Troutbeck Conference Center
and Country Inn from October, 1979 to present; Vice President, Leedsville Realty
and Construction Corp. from 1980 to present; Associate Creative Director, Young
and Rubicam Advertising, and Dentsu, Young and Rubicam from March, 1983 to
February, 1985; Creative Director and Senior Vice President, Tinker Campbell
Ewald from October, 1977 to November, 1980; Partner/owner of Freshfields
Restaurant, W. Cornell, CT; President/Creative Director of JBF Ltd., an
advertising company.
INGE HECKEL, TRUSTEE. Management Consultant, 1988 to present; Executive
Director, Princess Grace Foundation U.S.A. from June, 1986 to September, 1988;
Vice President and Assistant Secretary, The Asia Society from September, 1984 to
June, 1986; Executive Director, Metropolitan Boston Zoos from September, 1982 to
July, 1984; President, Bradford College, Bradford, Massachusetts from September,
1979 to June, 1982; Trustee of Bradford College; Former Director and Chairman,
Public Relations Committee, International Counsel of Museums (UNESCO); Former
Director, BayBank/Merrimack Valley; Member, Art Advisory Board, Mount Holyoke
College Art Museum.
ROBERT KLEINSCHMIDT,* PRESIDENT, PRINCIPAL OPERATING OFFICER AND TRUSTEE.
President, Tocqueville Asset Management L.P. from January, 1994 to present and
Managing Director from July, 1991 to January, 1994. Partner, David J. Greene &
Co., May, 1978 to July, 1991. Assistant Vice President, Irving Trust Co., July,
1976 to May, 1978.
FRANCOIS LETACONNOUX, TRUSTEE. President, Lepercq de Neuflize & Co. from July,
1993 to present; Director, Lepercq 99 First Management Inc. from 1988 to
present; Director, Lepercq de Neuflize & Co., Inc. from 1988 to present
(investment bank); Managing Director, Lepercq Capital Partners (real estate
investment firm), from 1974 to present.
- --------
* Interested person of the Funds as defined in the 1940 Act.
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BERNARD F. COMBEMALE, TRUSTEE. Investment Management Consultant, 1981 to
present; Chairman and Chief Executive Officer, Trusthouse Forte Inc., 1984 to
1988; Chairman of the Executive Committee & Director, Western World Insurance
Company, 1981 to present; Director, Westco Holding Corporation, 1981 to present;
Director, The French-American Foundation, 1980 to present; Trustee, The Princess
Grace Foundation U.S.A., 1980 to present.
JOSEPH COOPER, SECRETARY AND TREASURER. Vice President and Treasurer,
Tocqueville Management Corporation, the General Partner of Tocqueville Asset
Management L.P. and Tocqueville Securities L.P. from January, 1990 to present.
Vice President, Treasurer and Chief Financial Officer, Tocqueville Asset
Management Corporation from December, 1985 to February, 1990. Self-employed as a
public accountant.
KIERAN LYONS, VICE PRESIDENT AND PRINCIPAL FINANCIAL OFFICER. Chief Financial
Officer, Tocqueville Management Corporation, the General Partner of Tocqueville
Asset Management L.P. and Tocqueville Securities L.P. from January, 1992 to
present. Certified Public Accountant, Pegg & Pegg, February, 1985 to January,
1992.
Under the terms of the Massachusetts General Corporation Law, the
Funds may indemnify any person who was or is a Trustee, officer or employee of
each Fund to the maximum extent permitted by the Massachusetts General
Corporation Law; provided, however, that any such indemnification (unless
ordered by a court) shall be made by the Funds only as authorized in the
specific case upon a determination that indemnification of such persons is
proper in the circumstances. Such determination shall be made (i) by the Board
of Trustees, by a majority vote of a quorum which consists of Trustees who are
neither "interested persons" of the Trust, as defined in Section 2(a)(19) of the
1940 Act, nor parties to the proceeding, or (ii) if the required quorum is not
obtained or if a quorum of such Trustees so directs, by independent legal
counsel in a written opinion. No indemnification will be provided by a Fund to
any Trustee or officer of the Fund for any liability to a Fund or it
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of duty.
The Funds do not pay direct remuneration to any officer of a Fund. As
of February 28, 1996, the Trustees and officers as a group owned beneficially
2.63% of The Tocqueville Fund's outstanding shares, 2.22% of the Asia-Pacific
Fund's outstanding shares, 0.94% of the Europe Fund's outstanding shares, 2.73%
of the Small Cap Fund's outstanding shares, and 3.16% of the Government Fund's
outstanding shares, all of which were acquired for investment purposes. Certain
of the Trustees and officers may have investment discretion for institutional
and private accounts which own shares of the Funds, however the Trustees and
officers do not have the power to vote such shares and have disclaimed
beneficial ownership of such shares. For the fiscal year ended October 31, 1995,
the Trust paid the "disinterested" Trustees $12,000; each disinterested Trustee
received $750 per quarter, notwithstanding the number of Board Meetings and
Audit Committee Meetings attended. "Interested" Trustees do not receive
Trustees' fees. The Trust did not reimburse Trustee expenses.
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The table below illustrates the compensation paid to each Trustee for
the Trust's most recently completed fiscal year:
<TABLE>
<CAPTION>
Pension or Total
Retirement Compenation
Aggregate Benefits Accrued Estimated Annual from Fund and
Name of Person, Compensation as Part of Fund Benefits Upon Fund Complex
Position from Fund Expenses Retirement Paid to Trustees
<S> <C> <C> <C> <C>
Francois Sicart $0 $0 $0 $0
Bernard F. Combemale $3,000 $0 $0 $3,000
James B. Flaherty $3,000 $0 $0 $3,000
Inge Heckel $3,000 $0 $0 $3,000
Robert Kleinschmidt $0 $0 $0 $0
Francois Letaconnoux $3,000 $0 $0 $3,000
</TABLE>
INVESTMENT ADVISOR AND INVESTMENT ADVISORY AGREEMENTS
Tocqueville Asset Management L.P. (the "Investment Advisor"), 1675
Broadway, New York, New York 10019, acts as the Investment Advisor to each Fund
under a separate investment advisory agreement (the "Agreement" or
"Agreements"). Each Agreement provides that the Investment Advisor identify and
analyze possible investments for each Fund, determine the amount and timing of
such investments, and the form of investment. The Investment Advisor has the
responsibility of monitoring and reviewing each Fund's portfolio, and, on a
regular basis, to recommend the ultimate disposition of such investments. It is
the Investment Advisor's responsibility to cause the purchase and sale of
securities in each Fund's portfolio, subject at all times to the policies set
forth by the Trust's Board of Trustees. In addition, the Investment Advisor also
provides certain administrative and managerial services to the Funds.
The Investment Advisor receives a fee from The Tocqueville Fund and
the Small Cap Fund, payable monthly, for the performance of its services at an
annual rate of .75% on the first $100 million of the average daily net assets of
such Fund, .70% of average daily net assets in excess of $100 million but not
exceeding $500 million, and .65% of average daily net assets in excess of $500
million. The Investment Advisor receives a fee from the Asia-Pacific Fund and
the Europe Fund, payable monthly, for the performance of its services at an
annual rate of 1.00% on the first $50 million of the average daily net assets of
each Fund, respectively, .75% of the average daily net assets in excess of $50
million but not exceeding $100 million and .65% of such assets in excess of $100
million. The Investment Advisor receives a fee from the Government Fund, payable
monthly, for the performance of its services at an annual rate of .50% on the
first $500 million of the average daily net assets of the Fund, .40% of average
daily net assets in excess of $500 million but not exceeding $1 billion, and
.30% of average daily net assets in excess of $1 billion. The fee is accrued
daily for the purposes of determining the offering and redemption price of such
Fund's shares. Each fee is accrued daily for the purposes of determining the
offering and redemption price of such Fund's shares. The advisory fees are
higher than that paid by most investment companies but the Board of Trustees
believes it to be reasonable in light of the services each Fund receives
thereunder. For the years ended October 31, 1993, 1994 and 1995, The Tocqueville
Fund paid advisory fees to the Investment Advisor of $181,449, $219,470, and
$240,219, respectively. For the years ended October 31, 1993, 1994 and 1995, the
Asia-Pacific Fund paid advisory fees to the Investment Advisor of $30,063, $0
and $0, respectively. For the fiscal years ended October 31, 1994 and 1995, the
Investment Advisor waived the advisory fee. If the Investment Advisor had not
waived its fee,
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the Asia-Pacific Fund would have paid advisory fees to the Investment Advisor of
$44,646 and $48,530, respectively. For the period August 1, 1994 to October 31,
1994 and the fiscal year ended October 31, 1995, the Europe Fund paid advisory
fees to the Investment Advisor of $0 and $0, respectively, because the
Investment Advisor waived its advisory fee. If the Investment Advisor had not
waived its fee, the Europe Fund would have paid advisory fees to the Investment
Advisor of $4,201 and $35,890. For the period August 1, 1994 to October 31, 1994
and the fiscal year ended October 31, 1995, the Small Cap Fund paid investment
advisory fees to the Investment Advisor of $0 and $58,456, respectively, because
the Investment Advisor waived either part or all of its advisory fee. If the
Investment Advisor had not waived its fee, the Small Cap Fund would have paid
advisory fees to the Investment Advisor of $11,420 and $62,603, respectively.
Finally, for the period August 14, 1995 to October 31, 1995, the Government Fund
paid advisory fees to the Investment Advisor of $0, because the Investment
Advisor waived its advisory fee. If the Investment Advisor had not waived its
fee, the Government Fund would have paid advisory fees to the Investment Advisor
of $3,453.
The Investment Advisor's fees will be reduced for any fiscal year by
any amount necessary to prevent each Fund's expenses from exceeding the most
restrictive expense limitation imposed by the securities laws or regulations of
any state or jurisdiction in which each Fund's shares are registered or
qualified for sale. Currently, the most restrictive of such expense limitations
would require the Investment Advisor to reduce its fee so that ordinary expenses
(excluding interest, taxes, brokerage commissions and fees, international
custody fees and extraordinary expenses such as litigation) for any fiscal year
do not exceed 2.5% of the first $30 million of a Fund's average daily net
assets, plus 2.0% of the next $70 million, plus 1.5% of a Fund's average daily
net assets in excess of $100 million. Any expense reduction will be estimated
and accrued daily and will be subject to readjustment during the year. The
amount of any such reduction shall be deducted from the monthly advisory fee, or
if such amount exceeds the monthly fee otherwise payable, the Investment Advisor
will repay such excess promptly.
Under the terms of the Agreements, each Fund pays all of its expenses
(other than those expenses specifically assumed by the Investment Advisor and
each Fund's distributor) including the costs incurred in connection with the
maintenance of its registration under the Securities Act of 1933, as amended,
and the 1940 Act, printing of prospectuses distributed to shareholders, taxes or
governmental fees, brokerage commissions, custodial, transfer and shareholder
servicing agents, expenses of outside counsel and independent accountants,
preparation of shareholder reports, and expenses of Trustee and shareholder
meetings.
Each Agreement may be terminated without penalty on 60 days' written
notice by a vote of the majority of the Trust's Board of Trustees or by the
Investment Advisor, or by holders of a majority of each Fund's outstanding
shares. Each Fund's Agreement will continue for two years from its effective
date and from year-to-year thereafter provided it is approved, at least
annually, in the manner stipulated in the 1940 Act. This requires that each
Agreement and any renewal thereof be approved by a vote of the majority of the
Fund's Trustees who are not parties thereto or interested persons of any such
party, cast in person at a meeting specifically called for the purpose of voting
on such approval.
DISTRIBUTION PLANS
Each Fund has adopted a distribution plan for Class A and a
distribution plan for Class B shares (each a "Plan"). The Class A Plan provides
that a Fund may incur distribution expenses related to the sale of Class A
shares of up to .25% per annum of such Fund's average daily net assets. The
Class B Plan provides that a Fund may incur distribution expenses related to the
sale of Class B shares of up to .75% per annum of such Fund's average daily net
assets, of which (i) up to .25% of the average daily net assets attributable to
the Class B shares is payable as service fees to the distributor, brokers and
servicing agents having agreements with the distributor or Investment Advisor
for the provision of continuing shareholder services to customers of such
financial intermediaries who own Class B shares, and (ii) any amount remaining
(being at least .50% of average daily net assets attributable to the Class B
shares) is payable to the distributor or brokers during a fiscal year. With
respect to Class B shares, because of the .75% annual limitation on the
compensation paid during a fiscal
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year, compensation relating to a large portion of the commissions attributable
to sales of Class B shares in any one year will be paid by a Fund to the
distributor in fiscal years subsequent thereto. In determining whether to
purchase Class B shares, investors should consider that daily compensation
payments and continue until the Distributor has been reimbursed for the
commissions paid on the sales of Class B shares.
Each plan provides that a Fund may finance activities which are
primarily intended to result in the sale of each Fund's shares, including, but
not limited to, advertising, printing of prospectuses and reports for other than
existing shareholders, preparation and distribution of advertising material and
sales literature and payments to dealers and shareholder servicing agents
including Tocqueville Securities L.P. ("Tocqueville Securities") who enter into
agreements with each Fund or its distributor. The Class B Plan also provides
that a Fund may finance any other expenses primarily intended to result in the
sale of the Fund's Class B shares, including, without limitation, payments to
brokers at the time of the sale of Class B shares, if applicable, continuing
fees to each such broker, which fee shall begin to accrue immediately after the
sale of such shares, and accruals for interest. The Tocqueville Fund paid
$33,888, $73,157 and $80,011 in distribution expenses for Class A Shares for the
years ended October 31, 1993, 1994, and 1995, respectively. The Asia-Pacific
Fund paid $401, $37, and $0 in distribution expenses for Class A Shares for the
years ended October 31, 1993, 1994, and 1995, respectively. The Europe Fund and
Small Cap Fund did not pay distribution expenses for Class A Shares during the
period August 1, 1994 to October 31, 1994 and the fiscal year ended Octover 31,
1995. The Tocqueville Government Fund also did not pay distribution expenses for
Class A Shares for the period from August 14, 1995 to October 31, 1995. The
Tocqueville Fund, Small Cap Fund, Asia-Pacific Fund, Europe Fund, and Government
Fund did not pay distribution expenses for Class B Shares for the period from
August 14, 1995 to October 31, 1995.
As of October 31, 1995 The Tocqueville Fund, Small Cap Fund,
Asia-Pacific Fund, Europe Fund, and Government Fund had $59,065, $62,300,
$58,702, $52,487, and $8,110, respectively, or unreimbursed distribution
expenses for Class A Shares and $0, $0, $0, $0, and $0, respectively of
unreimbursed distribution expenses for Class B shares.
In approving the Plans in accordance with the requirements of Rule
12b-1 under the 1940 Act, the Trustees (including the Qualified Trustees)
considered various factors and determined that there is a reasonable likelihood
that each Plan will benefit its Fund and its shareholders. Each Plan will
continue in effect from year to year if specifically approved annually (a) by
the majority of such Fund's outstanding voting shares or by the Board of
Trustees and (b) by the vote of a majority of the Qualified Trustees. While the
Plans remain in effect, each Fund's Principal Financial Officer shall prepare
and furnish to the Board of Trustees a written report setting forth the amounts
spent by each Fund under the Plan and the purposes for which such expenditures
were made. The Plans may not be amended to increase materially the amount to be
spent for distribution without shareholder approval and all material amendments
to each of the Plans must be approved by the Board of Trustees and by the
Qualified Trustees cast in person at a meeting called specifically for that
purpose. While the Plans are in effect, the selection and nomination of the
Qualified Trustees shall be made by those Qualified Trustees then in office.
ADMINISTRATIVE SERVICES PLAN
Tocqueville Securities supervises administration of the Fund pursuant to
an Administrative Services Agreement with the Fund. Under the Administrative
Services Agreement, Tocqueville Securities supervises the administration of all
aspects of the Fund's operations, including the Fund's receipt of services for
which the Fund is obligated to pay, provides the Fund with general office
facilities and provides, at the Fund's expense, the services of persons
necessary to perform such supervisory, administrative and clerical functions as
are needed to effectively operate the Fund. Those persons, as well as certain
employees and Trustees of the Fund, may be directors, officers or employees of
(and persons providing services to the Fund may include) Tocqueville Securities
and its affiliates. For these services and facilities, Tocqueville Securities
receives with
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respect to the Fund a fee computed and paid monthly at an annual rate of 0.15%
of the average daily net assets of the Fund.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Board of Trustees, decisions to buy
and sell securities for each Fund are made by the Investment Advisor. The
Investment Advisor is authorized to allocate the orders placed by it on behalf
of a Fund to such unaffiliated brokers who also provide research or statistical
material, or other services to the Fund or the Investment Advisor for the Fund's
use. Such allocation shall be in such amounts and proportions as the Investment
Advisor shall determine and the Investment Advisor will report on said
allocations regularly to the Board of Trustees indicating the unaffiliated
brokers to whom such allocations have been made and the basis therefor. In
addition, the Investment Advisor may consider sales of shares of each Fund and
of any other funds advised or managed by the Investment Advisor as a factor in
the selection of unaffiliated brokers to execute portfolio transactions for each
Fund, subject to the requirements of best execution.
In selecting a broker to execute each particular transaction, the
Investment Advisor will take the following into consideration: the best net
price available; the reliability, integrity and financial condition of the
broker; the size and difficulty in executing the order; and, the value of the
expected contribution of the broker to the investment performance of the Funds
on a continuing basis. Accordingly, the cost of the brokerage commissions to a
Fund in any transaction may be greater than that available from other brokers if
the difference is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies and procedures as the Board
of Trustees may determine, the Investment Advisor shall not be deemed to have
acted unlawfully or to have breached any duty solely by reason of its having
caused a Fund to pay an unaffiliated broker that provides research services to
the Investment Advisor for each Fund's use an amount of commission for effecting
a portfolio investment transaction in excess of the amount of commission another
broker would have charged for effecting the transaction, if the Investment
Advisor determines in good faith that such amount of commission was reasonable
in relation to the value of the research service provided by such broker viewed
in terms of either that particular transaction of the Investment Advisor's
ongoing responsibilities with respect to the Funds. For the fiscal year ended
October 31, 1994, The Tocqueville Fund, Small Cap Fund, Asia-Pacific Fund, and
Europe Fund paid total brokerage commissions on portfolio transactions in the
amount of $84,586, $25,057, $83,423 and $1,116, respectively, and for the fiscal
year ended October 31, 1995, The Tocqueville Fund, Small Cap Fund, Asia-Pacific
Fund, Europe Fund, and Government Fund paid total brokerage commissions on
portfolio transactions in the amount of $71,728, $71,128, $26,286, $39,142, and
$7,913, respectively.
ALLOCATION OF INVESTMENTS
The Investment Advisor has other advisory clients which include
individuals, trusts, pension and profit sharing funds, some of which have
similar investment objectives to the Funds. As such, there will be times when
the Investment Advisor may recommend purchases and/or sales of the same
portfolio securities for each Fund and its other clients. In such circumstances,
it will be the policy of the Investment Advisor to allocate purchases and sales
among the Funds and its other clients in a manner which the Investment Advisor
deems equitable, taking into consideration such factors as size of account,
concentration of holdings, investment objectives, tax status, cash availability,
purchase cost, holding period and other pertinent factors relative to each
account. Simultaneous transactions may have an adverse effect upon the price or
volume of a security purchased by each Fund.
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<PAGE>
COMPUTATION OF NET ASSET VALUE
Each Fund will determine the net asset value of its shares once daily
as of the close of trading on the New York Stock Exchange on each day that the
Exchange is open for business. It is expected that the Exchange will be closed
on Saturdays and Sundays and on New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Each Fund may make or cause to be made a more frequent determination of the net
asset value and offering price, which determination shall reasonably reflect any
material changes in the value of securities and other assets held by a Fund from
the immediately preceding determination of net asset value. The net asset value
is determined by dividing the market value of a Fund's investments as of the
close of trading plus any cash or other assets (including dividends receivable
and accrued interest) less all liabilities (including accrued expenses) by the
number of the Fund's shares outstanding. 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. Securities sold short "against the box" will be valued
at market as determined above; however, in instances where a Fund has sold
securities short against a long position in the issuer's convertible securities,
for the purpose of valuation, the securities in the short position will be
valued at the "asked" price rather than the mean of the last "bid" and "asked"
prices. Investments in gold bullion will be valued at their respective fair
market values determined on the basis of the mean between the last current bid
and asked prices based on dealer or exchanges quotations. Where there are no
readily available quotations for securities they will be valued at a fair value
as determined by the Board of Trustees acting in good faith.
PURCHASE AND REDEMPTION OF SHARES
A complete description of the manner by a which a Fund's shares may
be purchased and redeemed, including discussions concerning the front-end sales
load on Class A shares and contingent deferred sales charge on Class B shares,
appears in the Prospectus under the headings "Purchase of Shares" and
"Redemption of Shares" respectively.
TAX MATTERS
The following is only a summary of certain additional tax
considerations generally affecting each Fund and its shareholders that are not
described in the Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of each Fund or its shareholders, and the
discussions here and in the Prospectus are not intended as substitutes for
careful tax planning.
Qualification as a Regulated Investment Company
Each Fund has elected to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). As a regulated investment company, a Fund is not subject to federal
income tax on the portion of its net investment income (i.e., taxable interest,
dividends and other taxable ordinary income, net of expenses) and capital gain
net income (i.e., the excess of capital gains over capital losses) that it
distributes to shareholders, provided that it distributes at least 90% of its
investment company taxable income (i.e., net investment income and the excess of
net short-term capital gain over net long-term capital loss) for the taxable
year (the "Distribution Requirement"), and satisfies certain other requirements
of the Code that are described below. Distributions by a Fund made during the
taxable year or, under specified circumstances, within twelve months after the
close of the taxable year, will be considered distributions of income and gains
of the taxable year and can therefore satisfy the Distribution Requirement.
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In addition to satisfying the Distribution Requirement, a regulated
investment company must: (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities) and
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "Income Requirement"); and (2) derive less
than 30% of its gross income (exclusive of certain gains on designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from the sale or other disposition of stock, securities or foreign
currencies (or options, futures or forward contracts thereon) held for less than
three months (the "Short-Short Gain Test"). However, foreign currency gains,
including those derived from options, futures and forwards, will not in any
event be characterized as Short-Short Gain if they are directly related to the
regulated investment company's investments in stock or securities (or options or
futures thereon). Because of the Short-Short Gain Test, a Fund may have to limit
the sale of appreciated securities that it has held for less than three months.
However, the Short-Short Gain Test will not prevent a Fund from disposing of
investments at a loss, since the recognition of a loss before the expiration of
the three-month holding period is disregarded for this purpose. Interest
(including original issue discount) received by a Fund at maturity or upon the
disposition of a security held for less than three months will not be treated as
gross income derived from the sale or other disposition of such security within
the meaning of the Short-Short Gain Test. However, income that is attributable
to realized market appreciation will be treated as gross income from the sale or
other disposition of securities for this purpose.
In general, gain or loss recognized by a Fund on the disposition of
an asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by a Fund at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the Fund held the debt obligation. In
addition, under the rules of Code Section 988, gain or loss recognized on the
disposition of a debt obligation denominated in a foreign currency or an option
with respect thereto (but only to the extent attributable to changes in foreign
currency exchange rates), and gain or loss recognized on the disposition of a
foreign currency forward contract, futures contract, option or similar financial
instrument, or of foreign currency itself, except for regulated futures
contracts or non-equity options subject to Code Section 1256 (unless a Fund
elects otherwise), will generally be treated as ordinary income or loss.
In general, for purposes of determining whether capital gain or loss
recognized by the Asia-Pacific Fund or the Europe Fund on the disposition of an
asset is long-term or short-term, the holding period of the asset may be
affected if (1) the asset is used to close a "short sale" (which includes for
certain purposes the acquisition of a put option) or is substantially identical
to another asset so used, (2) the asset is otherwise held by the Fund as part of
a "straddle" (which term generally excludes a situation where the asset is stock
and the Fund grants a qualified covered call option (which, among other things,
must not be deep-in-the-money) with respect thereto) or (3) the asset is stock
and the Fund grants an in-the-money qualified covered call option with respect
thereto. However, for purposes of the Short-Short Gain Test, the holding period
of the asset disposed of may be reduced only in the case of clause (1) above. In
addition, the Asia-Pacific Fund or the Europe Fund may be required to defer the
recognition of a loss on the disposition of an asset held as part of a straddle
to the extent of any unrecognized gain on the offsetting position.
Any gain recognized by the Asia-Pacific Fund or the Europe Fund on
the lapse of, or any gain or loss recognized by the Asia-Pacific Fund or the
Europe Fund from a closing transaction with respect to, an option written by the
Fund will be treated as a short-term capital gain or loss. For purposes of the
Short-Short Gain Test, the holding period of an option written by a Fund will
commence on the date it is written and end on the date it lapses or the date a
closing transaction is entered into. Accordingly, a Fund may be limited in its
ability to write options which expire within three months and to enter into
closing transactions at a gain within three months of the writing of options.
Transactions that may be engaged in by the Asia-Pacific Fund and the
Europe Fund (such as regulated futures contracts, certain foreign currency
contracts, and options on stock indexes and futures
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<PAGE>
contracts) will be subject to special tax treatment as "Section 1256 contracts."
Section 1256 contracts are treated as if they are sold for their fair market
value on the last business day of the taxable year, even though a taxpayer's
obligations (or rights) under such contracts have not terminated (by delivery,
exercise, entering into a closing transaction or otherwise) as of such date. Any
gain or loss recognized as a consequence of the year-end deemed disposition of
Section 1256 contracts is taken into account for the taxable year together with
any other gain or loss that was previously recognized upon the termination of
Section 1256 contracts during that taxable year. Any capital gain or loss for
the taxable year with respect to Section 1256 contracts (including any capital
gain or loss arising as a consequence of the year-end deemed sale of such
contracts) is generally treated as 60% long-term capital gain or loss and 40%
short-term capital gain or loss. A Fund, however, may elect not to have this
special tax treatment apply to Section 1256 contracts that are part of a "mixed
straddle" with other investments of the Fund that are not Section 1256
contracts. The IRS has held in several private rulings (and Treasury Regulations
now provide) that gains arising from Section 1256 contracts will be treated for
purposes of the Short-Short Gain Test as being derived from securities held for
not less than three months if the gains arise as a result of a constructive sale
under Code Section 1256.
The Asia-Pacific Fund and the Europe Fund may purchase securities of
certain foreign investment funds or trusts which constitute passive foreign
investment companies ("PFICs") for federal income tax purposes. If a Fund
invests in a PFIC, it may elect to treat the PFIC as a qualifying electing fund
(a "QEF") in which event the Fund will each year have ordinary income equal to
its pro rata share of the PFIC's ordinary earnings for the year and long-term
capital gain equal to its pro rata share of the PFIC's net capital gain for the
year, regardless of whether the Fund receives distributions of any such ordinary
earning or capital gain from the PFIC. If the Fund does not (because it is
unable to, chooses not to or otherwise) elect to treat the PFIC as a QEF, then
in general (1) any gain recognized by the Fund upon sale or other disposition of
its interest in the PFIC or any excess distribution received by the Fund from
the PFIC will be allocated ratably over the Fund's holding period of its
interest in the PFIC, (2) the portion of such gain or excess distribution so
allocated to the year in which the gain is recognized or the excess distribution
is received shall be included in the Fund's gross income for such year as
ordinary income (and the distribution of such portion by the Fund to
shareholders will be taxable as an ordinary income dividend, but such portion
will not be subject to tax at the Fund level), (3) the Fund shall be liable for
tax on the portions of such gain or excess distribution so allocated to prior
years in an amount equal to, for each such prior year, (i) the amount of gain or
excess distribution allocated to such prior year multiplied by the highest tax
rate (individual or corporate) in effect for such prior year plus (ii) interest
on the amount determined under clause (i) for the period from the due date for
filing a return for such prior year until the date for filing a return for the
year in which the gain is recognized or the excess distribution is received at
the rates and methods applicable to underpayments of tax for such period, and
(4) the distribution by the Fund to shareholders of the portions of such gain or
excess distribution so allocated to prior years (net of the tax payable by the
Fund thereon) will again be taxable to the shareholders as an ordinary income
dividend.
Under recently proposed Treasury Regulations the Asia-Pacific Fund
and the Europe Fund can elect to recognize as gain the excess, as of the last
day of its taxable year, of the fair market value of each share of PFIC stock
over the Fund's adjusted tax basis in that share ("mark to market gain"). Such
mark to market gain will be included by the Fund as ordinary income, such gain
will not be subject to the Short-Short Gain Test, and the Fund's holding period
with respect to such PFIC stock commences on the first day of the next taxable
year. If a Fund makes such election in the first taxable year it holds PFIC
stock, the Fund will include ordinary income from any mark to market gain, if
any, and will not incur the tax described in the previous paragraph.
Treasury Regulations permit a regulated investment company, in
determining its investment company taxable income and net capital gain (i.e.,
the excess of net long-term capital gain over net short-term capital loss) for
any taxable year, to elect (unless it has made a taxable year election for
excise tax purposes as discussed below) to treat all or any part of any net
capital loss, any net long-term capital loss or any net foreign currency loss
incurred after October 31 as if it had been incurred in the succeeding year.
In addition to satisfying the requirements described above, each Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each
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quarter of a Fund's taxable year, at least 50% of the value of the Fund's assets
must consist of cash and cash items, U.S. Government securities, securities of
other regulated investment companies, and securities of other issuers (as to
which the Fund has not invested more than 5% of the value of the Fund's total
assets in securities of such issuer and as to which the Fund does not hold more
than 10% of the outstanding voting securities of such issuer), and no more than
25% of the value of its total assets may be invested in the securities of any
one issuer (other than U.S. Government securities and securities of other
regulated investment companies), or in two or more issuers which the Fund
controls and which are engaged in the same or similar trades or businesses.
Generally, an option (call or put) with respect to a security is treated as
issued by the issuer of the security not the issuer of the option.
If for any taxable year a Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (a "taxable year election")). The
balance of such income must be distributed during the next calendar year. For
the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall:
(1) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year; and (2) exclude
foreign currency gains and losses incurred after October 31 of any year (or
after the end of its taxable year if it has made a taxable year election) in
determining the amount of ordinary taxable income for the current calendar year
(and, instead, include such gains and losses in determining ordinary taxable
income for the succeeding calendar year).
Each Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax. However,
investors should note that a Fund may in certain circumstances be required to
liquidate portfolio investments to make sufficient distributions to avoid excise
tax liability.
Fund Distributions
Each Fund anticipates distributing substantially all of its
investment company taxable income for each taxable year. Such distributions will
be taxable to shareholders as ordinary income and treated as dividends for
federal income tax purposes. Such dividends paid by the Tocqueville Fund and the
Small Cap Fund will qualify for the 70% dividends-received deduction for
corporate shareholders only to the extent discussed below. Such dividends paid
by the Asia-Pacific Fund and the Europe Fund generally should not qualify for
the 70% dividends-received deduction for corporate shareholders.
A Fund may either retain or distribute to shareholders its net
capital gain for each taxable year. Each Fund currently intends to distribute
any such amounts. If net capital gain is distributed and designated as a capital
gain dividend, it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or whether
such gain was recognized by a Fund prior to the date on which the shareholder
acquired his shares. The Code provides, however, that under certain conditions
only
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50% of the capital gain recognized upon a Fund's disposition of domestic "small
business" stock will be subject to tax.
Conversely, if a Fund elects to retain its net capital gain, the Fund
will be taxed thereon (except to the extent of any available capital loss
carryovers) at the 35% corporate tax rate. If a Fund elects to retain its net
capital gain, it is expected that the Fund also will elect to have shareholders
of record on the last day of its taxable year treated as if each received a
distribution of his pro rata share of such gain, with the result that each
shareholder will be required to report his pro rata share of such gain on his
tax return as long-term capital gain, will receive a refundable tax credit for
his pro rata share of tax paid by the Fund on the gain, and will increase the
tax basis for his shares by an amount equal to the deemed distribution less the
tax credit.
Ordinary income dividends paid by the Tocqueville Fund and the Small
Cap Fund with respect to a taxable year will qualify for the 70%
dividends-received deduction generally available to corporations (other than
corporations, such as S corporations, which are not eligible for the deduction
because of their special characteristics and other than for purposes of special
taxes such as the accumulated earnings tax and the personal holding company tax)
to the extent of the amount of qualifying dividends received by the Fund from
domestic corporations for the taxable year. A dividend received by the Fund will
not be treated as a qualifying dividend (1) if it has been received with respect
to any share of stock that the Fund has held for less than 46 days (91 days in
the case of certain preferred stock), excluding for this purpose under the rules
of Code Section 246(c)(3) and (4): (i) any day more than 45 days (or 90 days in
the case of certain preferred stock) after the date on which the stock becomes
ex-dividend and (ii) any period during which the Fund has an option to sell, is
under a contractual obligation to sell, has made and not closed a short sale of,
is the grantor of a deep-in-themoney or otherwise nonqualified option to buy, or
has otherwise diminished its risk of loss by holding other positions with
respect to, such (or substantially identical) stock; (2) to the extent that the
Fund is under an obligation (pursuant to a short sale or otherwise) to make
related payments with respect to positions in substantially similar or related
property; or (3) to the extent the stock on which the dividend is paid is
treated as debt-financed under the rules of Code Section 246A. Moreover, the
dividends-received deduction for a corporate shareholder may be disallowed or
reduced (1) if the corporate shareholder fails to satisfy the foregoing
requirements with respect to its shares of the Fund or (2) by application of
Code Section 246(b) which in general limits the dividends-received deduction to
70% of the shareholder's taxable income (determined without regard to the
dividends-received deduction and certain other items). Since an insignificant
portion of the Asia-Pacific Fund and the Europe Fund will be invested in stock
of domestic corporations, the ordinary dividends distributed by the Fund will
not qualify for the dividends-received deduction for corporate shareholders.
Alternative minimum tax ("AMT") is imposed in addition to, but only
to the extent it exceeds, the regular tax and is computed at a maximum marginal
rate of 28% for noncorporate taxpayers and 20% for corporate taxpayers on the
excess of the taxpayer's alternative minimum taxable income ("AMTI") over an
exemption amount. In addition, under the Superfund Amendments and
Reauthorization Act of 1986, a tax is imposed for taxable years beginning after
1986 and before 1996 at the rate of 0.12% on the excess of a corporate
taxpayer's AMTI (determined without regard to the deduction for this tax and the
AMT net operating loss deduction) over $2 million. For purposes of the corporate
AMT and the environmental superfund tax (which are discussed above), the
corporate dividends-received deduction is not itself an item of tax preference
that must be added back to taxable income or is otherwise disallowed in
determining a corporation's AMTI. However, corporate shareholders will generally
be required to take the full amount of any dividend received from the Fund into
account (without a dividends-received deduction) in determining its adjusted
current earnings, which are used in computing an additional corporate preference
item (i.e., 75% of the excess of a corporate taxpayer's adjusted current
earnings over its AMTI (determined without regard to this item and the AMT net
operating loss deduction)) includable in AMTI.
Investment income that may be received by the Asia-Pacific Fund and
the Europe Fund from sources within foreign countries may be subject to foreign
taxes withheld at the source. The United States has entered into tax treaties
with many foreign countries which entitle a Fund to a reduced rate of, or
exemption from, taxes
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on such income. It is impossible to determine the effective rate of foreign tax
in advance since the amount of each Fund's assets to be invested in various
countries is not known. If more than 50% of the value of a Fund's total assets
at the close of its taxable year consist of the stock or securities of foreign
corporations, a Fund may elect to "pass through" to the Fund's shareholders the
amount of foreign taxes paid by the Fund. If a Fund so elects, each shareholder
would be required to include in gross income, even though not actually received,
his pro rata share of the foreign taxes paid by the Fund, but would be treated
as having paid his pro rata share of such foreign taxes and would therefore be
allowed to either deduct such amount in computing taxable income or use such
amount (subject to various Code limitations) as a foreign tax credit against
federal income tax (but not both). For purposes of the foreign tax credit
limitation rules of the Code, each shareholder would treat as foreign source
income his pro rata share of such foreign taxes plus the portion of dividends
received from a Fund representing income derived from foreign sources. No
deduction for foreign taxes could be claimed by an individual shareholder who
does not itemize deductions. Each shareholder should consult his own tax adviser
regarding the potential application of foreign tax credits.
Distributions by a Fund that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of his shares, as discussed
below.
Distributions by a Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date. In addition, if the net asset value at
the time a shareholder purchases shares of a Fund reflects undistributed net
investment income or recognized capital gain net income, or unrealized
appreciation in the value of the assets of the Fund, distributions of such
amounts will be taxable to the shareholder in the manner described above,
although such distributions economically constitute a return of capital to the
shareholder.
Ordinarily, shareholders are required to take distributions by a Fund
into account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by a Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
Each Fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of ordinary income dividends and capital gain dividends,
and the proceeds of redemption of shares, paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the IRS for failure to report the
receipt of interest or dividend income properly, or (3) who has failed to
certify to the Fund that it is not subject to backup withholding or that it is a
corporation or other "exempt recipient."
Sale or Redemption of Shares
A shareholder will recognize gain or loss on the sale or redemption
of shares of a Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss so recognized may be disallowed if the shareholder
purchases other shares of a Fund within 30 days before or after the sale or
redemption. In general, any gain or loss arising from (or treated as arising
from) the sale or redemption of shares of a Fund will be considered capital gain
or loss and will be long-term capital gain or loss if the shares were held for
longer than one year. However, any capital loss arising from the sale or
redemption of shares held for six months or less will be treated as a long-term
capital loss to the extent of the amount of capital gain dividends received on
such shares. For this purpose, the special holding period rules of Code Section
246(c)(3) and (4) (discussed above in connection with the dividends-received
deduction for corporations) generally will apply in determining the holding
period of
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shares. Long-term capital gains of noncorporate taxpayers are currently taxed at
a maximum rate 11.6% lower than the maximum rate applicable to ordinary income.
Capital losses in any year are deductible only to the extent of capital gains
plus, in the case of a noncorporate taxpayer, $3,000 of ordinary income.
If a shareholder (1) incurs a sales load in acquiring Class A shares
of a Fund, (2) disposes of such shares less than 91 days after they are acquired
and (3) subsequently acquires shares of the Fund or another fund at a reduced
sales load pursuant to a right to reinvest at such reduced sales load acquired
in connection with the acquisition of the shares disposed of, then the sales
load on the shares disposed of (to the extent of the reduction in the sales load
on the shares subsequently acquired) shall not be taken into account in
determining gain or loss on the shares disposed of but shall be treated as
incurred on the acquisition of the shares subsequently acquired.
Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a
nonresident alien individual, foreign trust or estate, foreign corporation, or
foreign partnership ("foreign shareholder"), depends on whether the income from
a Fund is "effectively connected" with a U.S. trade or business carried on by
such shareholder.
If the income from a Fund is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, ordinary income dividends
paid to a foreign shareholder will be subject to U.S. withholding tax at the
rate of 30% (or lower treaty rate) upon the gross amount of the dividend.
Furthermore, such a foreign shareholder may be subject to U.S. withholding tax
at the rate of 30% (or lower treaty rate) on the gross income resulting from the
Asia-Pacific Fund's or the Europe Fund's election to treat any foreign taxes
paid by it as paid by its shareholders, but may not be allowed a deduction
against this gross income or a credit against this U.S. withholding tax for the
foreign shareholder's pro rata share of such foreign taxes which it is treated
as having paid. Such a foreign shareholder would generally be exempt from U.S.
federal income tax on gains realized on the sale of shares of a Fund, capital
gain dividends and amounts retained by the Fund that are designated as
undistributed capital gains.
If the income from a Fund is effectively connected with a U.S. trade
or business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of shares of the
Fund will be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or domestic corporations.
In the case of foreign noncorporate shareholders, a Fund may be
required to withhold U.S. federal income tax at a rate of 31% on distributions
that are otherwise exempt from withholding tax (or taxable at a reduced treaty
rate) unless such shareholders furnish the Fund with proper notification of its
foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in a Fund,
including the applicability of foreign taxes.
Effect of Future Legislation; Local Tax Considerations
The foregoing general discussion of U.S. federal income tax
consequences is based on the Code and the Treasury Regulations issued thereunder
as in effect on the date of this Statement of Additional Information. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and
capital gain dividends from regulated investment companies often differ from the
rules for U.S. federal income taxation described above.
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<PAGE>
Shareholders are urged to consult their tax advisers as to the consequences of
these and other state and local tax rules affecting investment in a Fund.
PERFORMANCE CALCULATION
For purposes of quoting and comparing the performance of each Fund to
that of other mutual funds and to other relevant market indices in
advertisements or in reports to shareholders, performance may be stated in terms
of total return. Under rules promulgated by the Securities and Exchange
Commission ("SEC"), a fund's advertising performance must include total return
quotations calculated according to the following formula:
P(1 + T)^n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1, 5 or 10)
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of the 1,5 or 10 year
period, at the end of such period (or fractional
portion thereof.)
Under the foregoing formula, the time periods used in advertising
will be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertising for publication, and will
cover 1, 5 and 10 year periods of a Fund's existence or such shorter period
dating from the effectiveness of the Fund's Registration Statement. In
calculating the ending redeemable value, all dividends and distributions by a
Fund are assumed to have been reinvested at net asset value as described in the
Prospectus on the reinvestment dates during the period. Total return, or "T" in
the formula above, is computed by finding the average annual compounded rates of
return over the 1, 5 and 10 year periods (or fractional portion thereof) that
would equate the initial amount invested to the ending redeemable value. Any
recurring account charges that might in the future be imposed by a Fund would be
included at that time.
In addition to the total return quotations discussed above, a Fund
may advertise its yield based on a 30-day (or one month) period ended on the
date of the most recent balance sheet included in the Fund's Post-Effective
Amendment to its Registration Statement, computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period, according to the following formula:
a-b
YIELD = 2[( ----- + 1)^6 - 1]
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the
period.
Under this formula, interest earned on debt obligations for purposes
of "all above, is calculated by (1) computing the yield to maturity of each
obligation held by the Fund based on the market value of the obligation
(including actual accrued interest) at the close of business on the last day of
each month, or, with respect to obligations purchased during the month, the
purchase price (plus actual accrued interest), (2) dividing that figure by 360
and multiplying the quotient by the market value of the obligation (including
actual accrued interest as referred to above) to determine the interest income
on the obligation for each day of the subsequent month that the obligation is in
the Fund's portfolio (assuming a month of 30 days) and (3) computing the total
of the interest earned on all debt obligations and all dividends accrued on all
equity securities during the 30-day or one month period. In computing dividends
accrued, dividend income is recognized by accruing 1/360 of the stated
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dividend rate of a security each day that the security is in the Fund's
portfolio. For purposes of "b" above, Rule 12b-1 expenses are included among the
expenses accrued for the period. Undeclared earned income, computed in
accordance with generally accepted accounting principles, may be subtracted from
the maximum offering price calculation required pursuant to "d" above.
Any quotation of performance stated in terms of yield will be given
no greater prominence than the information prescribed under the SEC's rules. In
addition, all advertisements containing performance data of any kind will
include a legend disclosing that such performance data represents past
performance and that the investment return and principal value of an investment
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
Calculated pursuant to the SEC's formula and assuming an ending
redeemable value of an initial $1,000 investment, The Tocqueville Fund's Class A
total return for the 1 year, 5 year and since inception periods ended October
31, 1995 was 16.01%, 15.89%, and 10.81%, respectively; the Class A total return
for the Asia-Pacific Fund for the 1 year and since inception periods ended
October 31, 1995 was 11.63% and 4.79%; the Class A total return for the Europe
Fund for the 1 year and since inception periods ended October 31, 1995 was 8.08%
and 6.59%; the Class A total return for the Small Cap Fund for the 1 year and
since inception periods ended October 31, 1995 was 19.22% and 17.12%; and the
Class A total return for the Government Fund for the since inception period to
October 31, 1995 was 0.96%. For the 30 day period ended on the date of the most
recent balance sheet included in this registration statement, the Government
Fund's yield was 3.46% for Class A shares and 3.07% for Class B shares. For the
period from August 14, 1995 to October 31, 1995, the total return of The
Tocqueville Fund, Class B, was -4.56%, the total return of the Asia-Pacific
Fund, Class B, was -3.42%, the total return of the Europe Fund, Class B, was
- -1.10%, and the total return of the Small Cap Value Fund, Class B, was -3.89%,
and the total return of the Government Fund, Class B, was 1.14%.
GENERAL INFORMATION
ORGANIZATION AND DESCRIPTION OF SHARES OF THE TRUST
The Trust was organized as a Massachusetts business trust under the
laws of The Commonwealth of Massachusetts. The Trust's Declaration of Trust
filed September 17, 1986, permits the Trustees to issue an unlimited number of
shares of beneficial interest with a par value of $0.01 per share in the Trust
in an unlimited number of series of shares. The Trust consists of five series,
The Tocqueville Fund, The Tocqueville Small Cap Value Fund, The Tocqueville
Asia-Pacific Fund, The Tocqueville Europe Fund and The Tocqueville Government
Fund. On August 19, 1991, the Declaration of Trust was amended to change the
name of the Trust to "The Tocqueville Trust," and on August 4, 1995, the
Declaration of Trust was amended to permit the division of a series into classes
of shares. Each share of beneficial interest has one vote and shares equally in
dividends and distributions when and if declared by a Fund and in the Fund's net
assets upon liquidation. All shares, when issued, are fully paid and
nonassessable. There are no preemptive, conversion or exchange rights. Fund
shares do not have cumulative voting rights and, as such, holders of at least
50% of the shares voting for Trustees can elect all Trustees and the remaining
shareholders would not be able to elect any Trustees. The Board of Trustees may
classify or reclassify any unissued shares of the Trust into shares of any
series by setting or changing in any one or more respects, from time to time,
prior to the issuance of such shares, the preference, conversion or other
rights, voting powers, restrictions, limitations as to dividends, or
qualifications of such shares. Any such classification or reclassification will
comply with the provisions of the 1940 Act. Shareholders of each series as
created will vote as a series to change, among other things, of a fundamental
policy of each Fund and to approve the Investment Advisory Agreement and
Distribution Plan.
The Trust is not required to hold annual meetings of shareholders but
will hold special meetings of shareholders when, in the judgment of the
Trustees, it is necessary or desirable to submit matters for a shareholder vote.
Shareholders have, under certain circumstances, the right to communicate with
other
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shareholders in connection with requesting a meeting of shareholders for the
purpose of removing one or more Trustees. Shareholders also have, in certain
circumstances, the right to remove one or more Trustees without a meeting. No
material amendment may be made to the Trust's Declaration of Trust without the
affirmative vote of the holders of a majority of the outstanding shares of each
series affected by the amendment.
Under Massachusetts law, shareholders of a Massachusetts business
trust may, under certain circumstances, be held personally liable as partners
for its obligations. However, the Trust's Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations of the Trust
and provides for indemnification and reimbursement of expenses out of the Trust
property for any shareholder held personally liable for the obligations of the
Trust. The Trust's Declaration of Trust further provides that obligations of the
Trust are not binding upon the Trustees individually but only upon the property
of the Trust and that the Trustees will not be liable for any action or failure
to act, errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he would
otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
PRINCIPAL HOLDERS
As of January 31, 1996, the following shareholders owned 5% or more
of a fund's shares:
- - The Tocqueville Fund, Class A Tocqueville Asset Management L.P. held
discretion over 853,234.109 shares (32.7%)
- - The Tocqueville Fund, Class B Boston Financial Data Services, Inc. held 14
shares (100%)
- - The Tocqueville Small Cap Value Fund, Class A Tocqueville Asset Management
L.P. held discretion over 353,269.422 shares (41.2%)
- - The Tocqueville Small Cap Value Fund, Class B Boston Financial Data
Services, Inc. held 16 shares (100%)
- - The Tocqueville Europe Fund, Class A Tocqueville Asset Management L.P.
held discretion over 948,839.98 (89.5%)
- - The Tocqueville Europe Fund, Class B Boston Financial Data Services, Inc.
held 18 shares (100%)
- - The Tocqueville Asia-Pacific Fund, Class A Tocqueville Asset Management
L.P. held discretion over 377,418.873 shares (71.6%)
- - The Tocqueville Asia-Pacific, Class B Boston Financial Data Services, Inc.
held 21 shares (100%)
- - The Tocqueville Government Fund, Class A Tocqueville Asset Management L.P.
held discretion over 442,071.825 shares (52.8%)
- - The Tocqueville Government Fund, Class B Boston Financial Data Services,
Inc. held 20 shares (100%)
The address of Tocqueville Asset Management L.P. is 1675 Broadway, New York, New
York 10019. The address of Boston Financial Data Services, Inc. is Two Heritage
Drive, Quincy MA 02171.
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REPORTS
Shareholders receive reports at least semi-annually showing each
Fund's holdings and other information. In addition, shareholders receive
financial statements examined by the Trust's independent accountants.
FINANCIAL STATEMENTS
The Financial Statements for each Fund for the fiscal year ended
October 31, 1995 are incorporated by reference from the Annual Reports to
Shareholders dated October 31, 1995.
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