<PAGE>
A N N U A L R E P O R T
October 31, 1996
THE TOCQUEVILLE TRUST
MUTUAL FUNDS
The Tocqueville Fund
The Tocqueville Small Cap Value Fund
The Tocqueville Asia-Pacific Fund
The Tocqueville Europe Fund
The Tocqueville Government Fund
[LOGO]
<PAGE>
The Tocqueville Fund
- --------------------------------------------------------------------------------
DEAR FELLOW SHAREHOLDERS:
For the twelve month period ended October 31, 1996, the Fund generated a
total return of 22.7%. This compares with a 24.1% rise in the S&P 500 and a
16.9% increase for the average growth fund as measured by Lipper Analytical
Services, the standard in the mutual fund industry.
We are well pleased by these results. Our strong performance was driven by
sharp gains in most of our largest holdings, particularly IBM, our largest po-
sition, as well as by Citibank and BankAmerica, our second and fifth largest
holdings, Bristol-Myers, our third largest position, and by Varco Internation-
al, our fourth largest single issue. With the exception of Varco, which was
purchased last year as part of a package of (then) out-of-favor oil service
companies, these shares were all purchased in the 1992-93 time period, lending
credence to the old adage that you make most of your money in bear markets.
OUTLOOK
Recent trading activity suggests that we may get another chance to invest
in a bear market. After a robust performance that caught many, including us, by
surprise, markets appear to be entering a new stage in which stock picking and
capital preservation will be of greater importance. While we do not cheerfully
anticipate a bear market, we do believe that a less ebullient atmosphere would
be healthy. Investor expectations are far too high and complacency regarding
risk is rampant. Typically, these are the conditions that exist at a market
top. While market timing is not our practice, we have turned even more cautious
than usual and have tightened our valuation standards. Also, because a number
of our positions have reached valuation targets, our cash levels have in-
creased. Higher cash levels will not protect the portfolio in a market down-
draft but they will provide the working capital necessary to take advantage of
lower price levels, when they become available.
Having been fooled by the direction of the market more than once, we con-
tinue to rely on our evaluation of the risk/reward ratio in individual stocks.
Here, as usual, we are more sanguine. Good opportunities in some large capital-
ization companies developed during the past six months. Two examples of these
"black and blue chip" companies are AT&T and Motorola, both of which were pur-
chased by the Fund. We have also included new positions and added to positions
in so-called "empty file" stocks: companies that are not widely followed or
largely ignored by Wall Street and the media. Over the period, we added to our
position in Measurex, a systems company servicing the paper and other process
industries which sports a very clean balance sheet and is trading at less than
ten times next year's earnings estimate. Since the end of our fiscal year, we
have initiated positions in companies such as Bindley Western, Safety Kleen and
Zeigler Coal which fit our definition of neglected stocks.
We have also (wholly or partially) liquidated a number of positions in
which our valuation objectives were (wholly or partially) achieved or where we
no longer had conviction on our investment thesis. Among the former, companies
like Deluxe, Digicon, Newpark Resources, NaPro
1
<PAGE>
- --------------------------------------------------------------------------------
BioTherapeutics and National Education stand out. In the latter category,
Systemed, Omi Corp., Hanson, Golden Books and especially FoxMeyer, our only
significant loser in 1996, come to mind. We also eliminated positions in some
cyclical stocks like Alumax, Longview Fibre and, more recently, Inco and
Giddings & Lewis because of the tepid outlook for the domestic economy in 1997.
Finally, in December we took some money off the table on some of our biggest
winners--stocks like IBM, Citicorp, BankAmerica and Bristol-Myers--companies
which still rank as the Fund's largest holdings but which, due to their very
strong performance, had become considerably overweighted compared to the rest
of the portfolio.
CONCLUSION
In the period ahead, we believe funds and fund managers will be judged and
rewarded for how well they preserve the spectacular gains of the last two
years. Our primary goal to preserve capital will be put to the test in this pe-
riod. While the temptation to make a bet on the market--in this case by selling
stocks wholesale--will have to be resisted every day, we will concentrate on
stock picking and risk aversion. Short of a bonafide severe bear market, the
likes of which has not been seen since 1973-74, we are confident of our ability
and experience to manage your Fund and preserve your capital through the less
exuberant period we envisage for 1997.
Robert W. Kleinschmidt
Francois Sicart
Portfolio Managers
- --------------------------------------------------------------------------------
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a currently effective prospectus of The Tocqueville
Trust.
2
<PAGE>
THE TOCQUEVILLE FUND
<TABLE>
<CAPTION>
Tocqueville Fund (at Net Asset Value) Tocqueville Fund (assuming a 4% front-end load S&P 500
at inception)
<S> <C> <C> <C>
1/13/87 10000 9597 10000
10/31/87 8630 8282 9260
10/31/88 10450 10030 10640
10/31/89 12200 11705 13441
10/31/90 11790 11307 12431
10/31/91 13880 13308 16607
10/31/92 15950 15291 18263
10/31/93 19390 18915 20991
10/31/94 21246 20371 21795
10/31/95 24647 23632 27552
10/31/96 30237 28992 34192
</TABLE>
This chart assumes an initial investment of $10,000 made on 1/13/87 (incep-
tion). Performance reflects fee waivers in effect. In the absence of fee waiv-
ers, total return would be reduced. Returns shown include the reinvestment of
all dividends and other distributions. Past performance is not predictive of
future performance. Investment return and principal value will fluctuate, so
that your shares, when redeemed, may be worth more or less than their original
cost.
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED OCTOBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 3 YEAR 5 YEAR 1/13/87
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tocqueville Fund--Net Asset Value 22.68% 15.30% 16.86% 11.94%
Tocqueville Fund--Load 17.74% 13.74% 15.91% 11.47%
Standard & Poor's 500 Stock Index 24.10% 17.68% 15.55% 13.61%
</TABLE>
- -------------------------------------------------------------------------------
3
<PAGE>
The Tocqueville Small Cap Value Fund
- -------------------------------------------------------------------------------
DEAR FELLOW SHAREHOLDER:
I am pleased to report that the Tocqueville Small Cap Value Fund has con-
tinued its strong performance. For the year ended October 31, 1996, your risk-
averse portfolio of value stocks posted a 19.71% increase in Net Asset Value
to $13.37 per share. These results compare favorably with the 16.60% return of
the Russell 2000 Index, which is the most widely accepted benchmark for small
cap stocks.
As you know, one facet of our investment strategy is to invest in finan-
cially-strong, very proprietary businesses. As had been the case last year,
this strategy had its unexpected rewards. Three of our portfolio companies
were acquired during the course of the year. Westcott Communications, Univar
Corp. and American Travelers Corp. were subjects of takeover bids at prices
which were substantially higher than our cost.
Overall, we had a good year, even though small cap stocks generally lagged
other stocks. I will try my best to maintain that performance in the future.
DIVIDEND DECLARED
Shareholders of the Fund on the Record Date of December 12, 1996 received a
capital gains distribution of $1.46 per share, payable December 13, 1996 as
follows:
<TABLE>
<S> <C>
Long-term capital gain................. $0.95
Short-term capital gain................ 0.51
-----
Total............................. $1.46
</TABLE>
CAUTIOUS OPTIMISM MAINTAINED
Investors are bombarded daily with unprecedented amounts of business and
economic facts and opinions. They are subjected daily to heavy doses of self-
serving hype and well-packaged promotional half-truths. They also face stock
market valuations which appear to be somewhat "rich" by nearly all traditional
valuation standards. Taking all this into account, one can only conclude that
caution is warranted. In that context, here is a brief overview of how the
Fund is positioned for the next 12 to 18 months:
FIRST, taking into account increasing stock market volatility in general, I
reduced the Fund's exposure to OTC markets. Our ten largest positions are now
listed on national exchanges and 57% of our equity investments are listed.
SECOND, I lowered the Fund's exposure to sectors of the economy which I per-
ceived to be vulnerable to deteriorating earnings prospects next year. I elim-
inated some technology stocks where I felt that prices had gotten ahead of
themselves. I also cut back the Fund's exposure to apparel manufacturing, due
to diminishing recovery prospects in that sector. THIRD, I increased the
Fund's exposure to "sunrise industries" that provide computer software, CATV
and telephone hardware, computer learning, home security products or services.
LASTLY, I slightly increased the fund's exposure to severely depressed con-
sumer non durable sectors.
4
<PAGE>
- -------------------------------------------------------------------------------
SECTOR EXPOSURE
To be more specific, 62% of the Fund's assets are now invested in companies
which I hope should not to be overly sensitive to the economy: Computer Soft-
ware (16.3%), Healthcare (15.6%), Communications (13.1%), Consumer Non-
Durables (10%), Financial Services (4.9%) and Database Services (2.3%).
Our next two largest sectors are industries which have only recently
emerged from profound economic downturns, where I believe current stock market
valuations are still well below intrinsic replacement values or potential
earning power valuations. These sectors include leading providers of oil and
gas exploration and production services under the caption Drilling Equipment &
Services (13.8%), and a leading producer of moderately-priced ready-to-assem-
ble home and office furniture under the caption Furniture (RTA) (7.6%).
Following is a listing of our ten largest positions. These represent 42.5%
of assets, and all are listed on national exchanges.
TEN LARGEST POSITIONS
<TABLE>
<S> <C>
O'Sullivan Industries Hldgs.
(7.6%) Producer of Ready-To-Assemble furniture
Oceaneering International
(5.5%) Offshore diving equipment and services
Unisys Corp. (4.9%) Computers and computer network services
Western National Corporation
(3.9%) Tax-deferred annuities & related products
Bindley Western Industries
(3.7%) Wholesale prescription drug distribution
Owens & Minor Corporation
(3.6%) Medical/surgical supplies distributor
Nabors Industries, Inc.(3.5%) World's largest land drilling company
Scientific-Atlanta (3.4%) CATV, telephone and satellite communications
Franklin Electronic Publishing
(3.3%) Electronic books and reference manuals
Ballard Medical Products
(3.1%) Surgical and critical care disposables
</TABLE>
For the benefit of our new shareholders, I will review the basic tenets of
my investment strategy.
LONG TERM ORIENTATION
I believe that successful investing requires considerable attention to "how
much you pay for what you buy," considerable patience coupled with the will-
ingness to accept some temporary discomfort, and lastly, true long-term com-
mitment. Central to my thinking is the belief that whatever is taking place
today at a company is the result of strategies implemented many months and
possibly years ago. Consequently, most of my analytical attention centers on
long-term issues, on the theory that if I am correct in my long-term assess-
ment of the business prospects of an enterprise, short-term market fluctua-
tions are relatively less important.
5
<PAGE>
- -------------------------------------------------------------------------------
ENTREPRENEURIAL BEND
In addition, I believe that successful long-term investments are those made
first in good businesses and secondarily in good managements. Consequently,
most of my bottom-up analytical work centers on picking good businesses from
an entrepreneurial perspective.
INVESTING WISELY
My concept of "Investing Wisely" means investing in good businesses when
they are already down significantly in price. To that end, I follow these
time-tested guidelines:
RULE # 1: RESTRICT THE MAJORITY OF NEW PURCHASES TO STOCKS THAT ARE ALREADY
DOWN SUBSTANTIALLY IN PRICE. I very rarely violate that value-oriented strat-
egy when making new purchases, but I have occasionally added to my winning po-
sitions. For example, when purchased, the 47 stocks which we own were down on
average 37% and 39% from their 12 months' and prior 60 months' highs, respec-
tively. The implication is that these stocks already had some significant
price correction and had gone through a period of economic hardship. Conse-
quently, many were receiving scant coverage from Wall Street, some were even
receiving negative coverage, and most represented good value when we bought
them.
RULE # 2: SYSTEMATICALLY SCREEN THESE "DOWN AND OUT" STOCKS FOR FINANCIAL
STRENGTH. I believe that financial weakness is most often indicative of poor
business fundamentals. I avoid investing in poor businesses, no matter how in-
expensive they get. Conversely, I have a strong affinity for self-reliant and
practically debt-free companies. I believe that people who properly manage
their finances are least likely to disappoint me. The average debt-to-total-
capital ratio of the portfolio is a very conservative 20%, and the average
quick ratio (cash + receivables/current liabilities) is 2.43.
RULE # 3: "INVEST TO WIN." This is by far the most difficult rule to fol-
low. Its logic is quite appealing. Starting from a selection of stocks that
have declined substantially in price and retained their financial strength, I
attempt to single out the so-called "good businesses" that I want to own for
the long term. What constitutes "good businesses" is obviously hard to define.
However, I believe that they should have some of these features, ranked in or-
der of importance:
. MANAGEMENT INTEGRITY, REPUTATION AND SOCIAL RESPONSIBILITY. I can't iden-
tify a single successful long-term investment lacking these complementary
qualities. I view the level of integrity at the top of any organization as the
single most critical ingredient required for success over the long term. In-
tegrity directly sets the tone for the organization's strategies, and it indi-
rectly raises the intensity of management's commitment to the business. Integ-
rity defuses most adversarial labor-management conflicts, and thus improves
productivity. Reputation allows organizations to hire and retain the best peo-
ple available, and to move ahead of their competition. I view social responsi-
bility as the necessary foundation of all worthy investment activities.
6
<PAGE>
- -------------------------------------------------------------------------------
. GROWTH POTENTIAL. A good investment should offer its owner some prospects
of long-term growth, profitability, and financial security. It has already
been well publicized that over the very long term, the fastest growing seg-
ments of the maturing US economy may very well be the so-called service indus-
tries. This is reflected in a 25% mix of service businesses in the Fund's
portfolio, excluding our 13.9% exposure to the Drilling Equipment & Services
sector. Three of our ten largest positions are broadly defined service provid-
ers (Bindley Western Industries, Owens & Minor, Western National Corp.)
. NEW PRODUCTS. Good businesses are invariably built around very successful
products. At the moment, ten of our companies have new products under develop-
ment which, if successful over the long term, could very significantly improve
their overall potential. Three of these are among our ten largest holdings:
Scientific-Atlanta, Franklin Electronic Publishing, Ballard Medical Products.
. PROPRIETARY STRENGTHS. Good businesses often fashion proprietary skills
into strong competitive tools. For example, nearly all of the emergency room
supplies manufactured by Ballard Medical Products are protected by patents or
proprietary know-how. The company seems well positioned for the future and
presently enjoy very strong profit margins.
. MARKET SHARE POSITION. Good businesses often hold high market share posi-
tions. Current portfolio examples are Cone Mills, which is the world's largest
denim producer; Nabors Industries, the world's largest land driller, Telxon
Corp., the leading US bar-code and wireless data capture systems integrator;
O'Sullivan Industries, the largest non-private US producer of ready-to-assem-
ble furniture.
. HIGH INSIDER OWNERSHIP. I am comfortable with high levels of insider own-
ership, as long as I see little insider selling. My theory is that insiders
with money at risk are most eager to tend to the business, and to truly manage
the enterprise for the long term. On average, insiders owned 21.5% of the
stocks in the Fund's portfolio, and nine of our stocks had insider ownership
levels of 40% or more.
. REPEAT SALES AND CUSTOMER BASE. Good businesses generally have a close
day-to-day working relationship with their customers. Over many years, such
businesses end up servicing a large installed base of satisfied "pre-sold"
customers by continually providing value-added services. Such businesses even-
tually benefit from a fairly steady flow of repeat sales, as well as growing
maintenance, repair and overhaul (MRO) activities. Eleven of our 47 stocks
have a relatively high mix of repeat sales, and one of these is among our ten
largest positions: Western National Corp.
In closing, I welcome questions or comments which you may have, and I thank
you for choosing the Tocqueville Small Cap Value Fund to realize your long-
term investment objectives.
Jean-Pierre Conreur
Portfolio Manager
7
<PAGE>
THE TOCQUEVILLE SMALL CAP VALUE FUND
<TABLE>
<CAPTION>
Tocqueville Small Cap Tocqueville Small Cap Value
Value Fund (at Net Fund (assuming a 4% front-end load at
Asset Value) inception) Russell 2000 Index
<S> <C> <C> <C>
8/1/94 10000 9597 10000
10/31/94 10220 9808 10406
10/31/95 12184 11693 12089
10/31/96 14586 13998 14096
</TABLE>
This chart assumes an initial investment of $10,000 made on 8/1/94 (incep-
tion). Performance reflects fee waivers in effect. In the absence of fee waiv-
ers, total return would be reduced. Returns shown include the reinvestment of
all dividends and other distributions. Past performance is not predictive of
future performance. Investment return and principal value will fluctuate, so
that your shares, when redeemed, may be worth more or less than their original
cost.
AVERAGE ANNUAL RATE OF RETURN (%) FOR PERIODS ENDED OCTOBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 8/1/94
- -------------------------------------------------------------------------
<S> <C> <C>
Tocqueville Small Cap Value Fund--Net Asset Value 19.71% 18.22%
Tocqueville Small Cap Value Fund--Load 14.92% 16.08%
Russell 2000 Index 16.60% 17.79%
- -------------------------------------------------------------------------
</TABLE>
8
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
9
<PAGE>
The Tocqueville Asia-Pacific Fund
- -------------------------------------------------------------------------------
DEAR FELLOW SHAREHOLDERS:
The past year has proven a turbulent one for our principal markets and our
fund, as well as the leading regional indexes, ended the fiscal year with only
a nominal gain. It is hard to say which had the most negative impact on the
region -- the weakening economies or the growing size of social stress and un-
rest.
The economic slowdown was initially planned, in the form of policies de-
signed to calm down overheating, such as special taxes to discourage real-es-
tate speculation in Malaysia and Singapore. At mid-year, however, the downturn
accelerated sharply with the sharp inventory correction in the global semi-
conductor industry. This evidence proves how dependent many Asian economies
have remained on exports to the United States (in spite of widespread claims
of growing regional integration and independence.) It also brought to light
the region's sensitivity to the health of one or two economic sectors-- elec-
tronics in particular.
The social problems that could be expected are a normal consequence of the
collision between the social expectations of a fast growing middle class and
rigid or inadequate political and physical infrastructures. These problems,
illustrated by the riots in Jakarta, a political crisis in Thailand and crime
waves here and there, were clearly compounded by the economic slowdown.
As a result, the perception of the Asia "tiger" economics among investors
and in the press has shown a dramatic reversal from euphoria to deep gloom.
Paradoxically, the two markets where serious long-term problems remain are
those where investors feel most comfortable today:
. Japan, where the financial bubble of the 1980s is finally being worked
out, is faced with large budget deficits and extremely unfavorable de-
mographic trends. Yet, in spite of sharply lower levels (compared to
the early 1990s), the stock market still supports extremely high multi-
ples of earnings and cash flows that can only be justified in a high
growth environment.
. Hong Kong, where nothing is assured about the future, is riding to rapid
levels on the back of an unprecedented speculative bubble in the local
real estate market.
We see the drastic reassessment of the Asian economies as a major opportu-
nity to accumulate shares on companies catering to primarily domestic needs:
changes in the diets and the housing needs of the budding middle class, a need
to catch up on infrastructures, etc. The current problems are not so well ad-
vertised as to hide the incredibly powerful dynamics of local demographics and
industrialization. One need only remember that the Philippines, one of the few
markets retaining industrial markets favor, was considered "the sick man of
Asia" only a few years ago.
As a result, the Tocqueville Asia-Pacific Fund is now almost fully invest-
ed, with a special emphasis on economies with significant long-term develop-
ment potential (Indonesia, the Philippines, Thailand) and a growing focus and
concentration on companies positioned to benefit from these economies.
Francois Sicart
Portfolio Manager
10
<PAGE>
THE TOCQUEVILLE ASIA-PACIFIC FUND
LOGO
This chart assumes an initial investment of $10,000 made on 11/12/91 (incep-
tion). Performance reflects fee waivers in effect. In the absence of fee waiv-
ers, total return would be reduced. Returns shown include the reinvestment of
all dividends and other distributions. Past performance is not predictive of
future performance. Investment return and principal value will fluctuate, so
that your shares, when redeemed, may be worth more or less than their original
cost.
AVERAGE ANNUAL RATE OF RETURN (%) FOR PERIODS ENDED OCTOBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 3 YEAR 11/12/91
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Tocqueville Asia-Pacific Fund--Net Asset Value 0.11% (0.07%) 3.83%
Tocqueville Asia-Pacific Fund--Load (3.92%) (1.42%) 2.97%
Morgan Stanley Pacific Index 3.31% 0.01% 4.47%
- -------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
The Tocqueville Europe Fund
- --------------------------------------------------------------------------------
DEAR FELLOW SHAREHOLDERS:
After a slow start in the final quarter of 1995, the Tocqueville Europe Fund
has had a strong performance during the last three quarters, allowing it to end
our fiscal year with a gain of 16.07%.
Some of that performance can be traced to our decision to significantly
increase our investment in France when general strikes depressed the general
market; much of it is due to the performance of individual companies.
We are becoming concerned about the British economy and its stock market
which, after several years of overperformance, exhibit late-cycle
characteristics similar to those of the United States.
Continental Europe, however, continues to represent fertile grounds for
stock picking. It is true that the stock markets have largely anticipated an
economic recovery which is, at best, budding. The budgetary pressures
associated with governments' commitment to meet the Maastricht deficit and debt
criteria are leaving only monetary ease as a policy tool against record-high
unemployment rates and social discontent. Fortunately, Germany's own problems
have convinced the Bundesbank that the D-mark was overvalued against the
dollar, allowing for lower interest rates that have been promptly replicated
throughout Europe. To the extent that France, with its "Franc-Fort" strategy,
had been hurt most by its dependence on Germany's interest rates, it stands to
benefit the most from the new, more relaxed environment.
This being said, the financial markets have disproportionately benefited
from the fact that the economies' hesitant recoveries are not absorbing the
rising money supplies. The stock markets, in particular, seem well ahead of the
expected recoveries in corporate profits. Selectivity in stock-picking will
therefore become increasingly important, because any acceleration of the conti-
nental economies will absorb more of the money supply, as will the rush to re-
pay public debt through privatization programs. Thus, market valuation multi-
ples may decrease somewhat as the economies expand and it will be important to
own shares of companies that deliver on their earnings promises during the re-
covery.
Fortunately, we believe that there remains considerable operating leverage
in many companies which, in spite of the regulatory obstacles and societal ri-
gidities, have accomplished significant restructurings. One example of the pro-
gress which has been made is that many medium-sized French companies have been
able to significantly increase their export sales in spite of the French
franc's gross overvaluation.
For many such companies, not only in France but also in other countries,
such as Spain, that received a boost from early currency devaluations, the po-
tential earnings leverage is comparable to what was the case in the United
States in the early 1990s.
Francois Sicart
Portfolio Manager
12
<PAGE>
THE TOCQUEVILLE EUROPE FUND
LOGO
This chart assumes an initial investment of $10,000 made on 8/1/94 (incep-
tion). Performance reflects fee waivers in effect. In the absence of fee waiv-
ers, total return would be reduced. Returns shown include the reinvestment of
all dividends and other distributions. Past performance is not predictive of
future performance. Investment return and principal value will fluctuate, so
that your shares, when redeemed, may be worth more or less than their original
cost.
AVERAGE ANNUAL RATE OF RETURN (%) FOR PERIODS ENDED OCTOBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 8/1/94
- ----------------------------------------------------------------
<S> <C> <C>
Tocqueville Europe Fund--Net Asset Value 16.07% 10.68%
Tocqueville Europe Fund--Load 11.44% 8.68%
Morgan Stanley Europe 14 Index 17.47% 15.20%
- ----------------------------------------------------------------
</TABLE>
13
<PAGE>
The Tocqueville Government Fund
- --------------------------------------------------------------------------------
DEAR FELLOW SHAREHOLDERS:
We are pleased to report returns for the fiscal year ended October 31, 1996.
The Tocqueville Government Fund generated a return of 5.87% as compared to the
Lehman Brothers Intermediate Government Bond Index, which returned 5.67%.
It is clear that 1996 will be remembered as a generally pedestrian perfor-
mance year for bonds, particularly in contrast to the dramatic returns of the
equity markets. We have been gratified with the strategic positioning of the
fund and the attendant results. Our returns reflect, as previously stated in
shareholder reports, our taking issue, not with the economic forecasts of the
market, but with the valuation of the bond market and its implied risk/reward.
It is sometimes said that the most difficult time to invest is now. Being
contrarian by nature, we do not subscribe to this axiom. If you are comfortable
with your analysis of decision making variables, both macro and micro, then it
should be, at least, comfortable to invest. Stated differently, if you are sat-
isfied with your process, your investment should be without hesitation. This is
not to say that you will not sometimes be wrong.
Current valuation of fixed income markets, both in the U.S. and overseas,
seem high in our estimation. The risk of capital exposure does not warrant, in
our judgment, longer maturities in hopes of capital appreciation. The U.S.
economy is operating above its non-inflationary supply potential, in our view,
and credit demand growth should resume an above-trend pace soon. Monetary pol-
icy is expansive and spot commodity prices have shown continuous upward pres-
sure, particularly in energy related products. Household income and balance
sheet fundamentals are sound. The wealth effect of the equity markets can only
inspire consumption. Continued monetary stimulus in Japan and Europe suggest
that world GDP growth should be higher, not lower, in 1997.
There are many well documented secular shifts which are non-inflationary and
still very much at work. These include just-in-time inventory management, cor-
porate downsizing, changing demographics, lower budget deficits, increased sav-
ings rates and slack in the labor market from the technology revolution. None
of these will be grinding to a halt in the near term, however, most of the de-
flationary impact has already been felt.
We will be investing defensively, on balance, and for income for the fore-
seeable future.
Robert W. Kleinschmidt
Christopher P. Culp
Portfolio Managers
14
<PAGE>
THE TOCQUEVILLE GOVERNMENT FUND
LOGO
This chart assumes an initial investment of $10,000 made on 9/4/95 (inception).
Performance reflects fee waivers in effect. In the absence of fee waivers, to-
tal return would be reduced. Returns shown include the reinvestment of all div-
idends and other distributions. Past performance is not predictive of future
performance. Investment return and principal value will fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost.
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 SINCE INCEPTION
YEAR 9/4/95
- --------------------------------------------------------------------
<S> <C> <C>
Tocqueville Government Fund--Net Asset Value 5.87% 5.92%
Tocqueville Government Fund--Load 1.62% 2.22%
Lehman Brothers Intermediate Government Index 5.67% 6.43%
- --------------------------------------------------------------------
</TABLE>
15
<PAGE>
THE TOCQUEVILLE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
YEAR ENDED OCTOBER 31, PERIOD FROM PERIOD FROM
---------------------- NOVEMBER 1, AUGUST 14,
PER SHARE OPERATING 1995 TO 1995 TO
PERFORMANCE AUGUST 16, OCTOBER 31,
(FOR A SHARE OUTSTANDING 1996 1995 1994 1993 1992 1996 (g) 1995
THROUGHOUT THE PERIOD) ---- ---- ---- ---- ---- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period $ 14.07 $ 13.74 $ 13.67 $ 11.83 $ 11.33 $14.01 $14.68
------- ------- ------- ------- ------- ------ ------
Income from investment
operations:
Net investment income 0.07 0.15 0.12 0.11 0.17 0.12 --
Net realized and
unrealized gain (loss) 2.92 1.70 0.88 2.55 1.33 2.15 (0.67)
------- ------- ------- ------- ------- ------ ------
Total from investment
operations 2.99 1.85 1.00 2.66 1.50 2.27 (0.67)
------- ------- ------- ------- ------- ------ ------
Less distributions
Dividends from net in-
vestment income (0.15) (0.11) (0.14) (0.16) (0.36) (0.15) --
Distributions from net
realized gains (1.06) (1.41) (0.79) (0.66) (0.64) (1.06) --
------- ------- ------- ------- ------- ------ ------
Total distributions (1.21) (1.52) (0.93) (0.82) (1.00) (1.21) --
------- ------- ------- ------- ------- ------ ------
Change in net asset
value for the period 1.78 0.33 0.07 1.84 0.50 1.06 (0.67)
------- ------- ------- ------- ------- ------ ------
Net asset value, end of
period $ 15.85 $ 14.07 $ 13.74 $ 13.67 $ 11.83 $15.07 $14.01
------- ------- ------- ------- ------- ------ ------
Total Return (b)(c) 22.7% 16.0% 7.7% 23.7% 14.9% 17.2 % (4.6)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of pe-
riod (000 for Class A) $42,414 $33,438 $29,140 $27,745 $19,496 $ 0 $ 191
Ratio to average net as-
sets:
Expenses (a)(d) 1.49% 1.54% 1.54% 1.56% 1.74% 1.98 %(f) --
Net investment income
(loss) (a)(d) .44% 1.07% 0.87% 0.96% 1.44% (0.21)%(f) --
Portfolio turnover rate 48% 47% 52% 54% 89% 48 % --
Average commission rate
paid (e) $ .0596 $.0596
</TABLE>
- --------
(a) Net of fees waived amounting to 0.16% and 0.02% of average net assets for
the periods ended October 31, 1996 and October 31, 1995, respectively, for
Class A Shares.
(b) Does not include maximum sales charge of 4% for Class A Shares.
(c) Does not include contingent deferred sales charge for Class B Shares. Not
annualized.
(d) Net of fees waived amounting to 0.16% of average net assets for the period
ended October 31, 1996 for Class B Shares.
(e) Average per share amounts of brokerage commissions on portfolio transac-
tions. Required by regulations issued in 1995.
(f) Annualized.
(g) On August 16, 1996, all Class B Shares were converted into Class A Shares.
16
<PAGE>
THE TOCQUEVILLE SMALL CAP VALUE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
YEAR ENDED
OCTOBER 31,
----------- PERIOD FROM PERIOD FROM PERIOD FROM
PER SHARE OPERATING AUGUST 1, 1994 NOVEMBER 1, 1995 AUGUST 14, 1995
PERFORMANCE TO TO TO
(FOR A SHARE OUTSTANDING 1996 1995 OCTOBER 31, 1994 AUGUST 16, 1996(g) OCTOBER 31, 1995
THROUGHOUT THE PERIOD) ---- ---- ---------------- ------------------ ----------------
<S> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period $ 11.91 $10.22 $10.00 $11.87 $12.35
------- ------ ------ ------ ------
Income from investment
operations:
Net investment income
(loss) (0.10) (0.05) 0.02 (0.07) --
Net realized and
unrealized gain (loss) 2.33 1.96 0.20 1.18 (0.48)
------- ------ ------ ------ ------
Total from investment
operations 2.23 1.91 0.22 1.11 (0.48)
------- ------ ------ ------ ------
Less distributions
Dividends from net in-
vestment income -- (0.03) -- -- --
Distributions from net
realized gains (0.77) (0.19) -- (0.77) --
------- ------ ------ ------ ------
Total distributions (0.77) (0.22) -- (0.77) --
------- ------ ------ ------ ------
Change in net asset
value for the period 1.46 1.69 0.22 0.34 (0.48)
------- ------ ------ ------ ------
Net asset value, end of
period $ 13.37 $11.91 $10.22 $12.21 $11.87
------- ------ ------ ------ ------
Total Return (b)(c) 19.7 % 19.2 % 2.2% 9.7 % (3.9)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of pe-
riod (000 for Class A) $11,545 $9,383 $6,755 $ 0 $ 192
Ratio to average net as-
sets:
Expenses (a)(d) 2.36 % 2.50 % 2.08%(f) 2.92 %(f) --
Net investment income
(a)(d) (1.18)% (0.53)% 0.85%(f) (1.79)%(f) --
Portfolio turnover rate 107 % 88 % 9% 107 %
Average commission rate
paid(e) $ .0599 $.0599
</TABLE>
- --------
(a) Net of fees waived amounting to 0.33%, 0.33% and 0.75% of average net as-
sets for the periods ended October 31, 1996, October 31, 1995, and October
31, 1994, respectively, for Class A Shares.
(b) Does not include maximum sales charge of 4% for Class A Shares. For the pe-
riod ended October 31, 1994, not annualized.
(c) Does not include contingent deferred sales charge for Class B Shares. Not
annualized.
(d) Net of fees waived amounting to 0.37% of average net assets for the period
ended October 31, 1996 for Class B Shares.
(e) Average per share amounts of brokerage commissions on portfolio transac-
tions. Required by regulations issued in 1995.
(f) Annualized.
(g) On August 16, 1996, all Class B Shares were converted into Class A Shares.
17
<PAGE>
THE TOCQUEVILLE ASIA-PACIFIC FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
YEAR ENDED OCTOBER 31, PERIOD FROM PERIOD FROM PERIOD FROM
---------------------- NOVEMBER 12, NOVEMBER 1, AUGUST 14,
PER SHARE OPERATING 1991 TO 1995 TO 1995 TO
PERFORMANCE OCTOBER 31, AUGUST 16, OCTOBER 31,
(FOR A SHARE OUTSTANDING 1996 1995 1994 1993 1992 1996 (g) 1995
THROUGHOUT THE PERIOD) ---- ---- ---- ---- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period $ 9.07 $12.16 $11.26 $10.50 $10.00 $ 9.03 $9.35
------- ------ ------ ------ ------ ------ -----
Income from investment
operations:
Net investment income
(loss) -- (0.01) (0.05) (0.21) (0.07) 0.15 --
Net realized and
unrealized gain (loss) 0.01 (1.39) 1.45 1.62 0.57 0.26 (0.32)
------- ------ ------ ------ ------ ------ -----
Total from investment
operations 0.01 (1.40) 1.40 1.41 0.50 0.41 (0.32)
------- ------ ------ ------ ------ ------ -----
Less distributions
Dividends from net in-
vestment income -- -- -- -- -- -- --
Distributions from net
realized gains -- (1.69) (0.50) (0.65) -- -- --
------- ------ ------ ------ ------ ------ -----
Total distributions -- (1.69) (0.50) (0.65) -- -- --
------- ------ ------ ------ ------ ------ -----
Change in net asset
value for the period .01 (3.09) 0.90 0.76 0.50 0.41 --
------- ------ ------ ------ ------ ------ -----
Net asset value, end of
period $ 9.08 $ 9.07 $12.16 $11.26 $10.50 $ 9.44 $9.03
------- ------ ------ ------ ------ ------ -----
Total Return (b)(c) 0.1% (11.6)% 12.8 % 15.0 % 5.0 % 4.5% (3.4)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of pe-
riod (000 for
Class A) $18,138 $4,686 $5,187 $3,886 $1,898 $ 0 $ 193
Ratio to average net as-
sets:
Expenses (a)(d) 2.63% 3.55 % 2.82 % 4.63 % 4.90 %(f) 2.51%(f) --
Net investment income
(loss) (a)(d) (0.06)% (0.26)% (0.87)% (2.42)% (0.73)%(f) 1.25%(f) --
Portfolio turnover rate 61% 106 % 168 % 216 % 101 % 61% --
Average commission rate
paid (e) $ .0060 $.0060
</TABLE>
- --------
(a) Net of fees waived amounting to 0.66%, 1.27%, 1.00% and 0.28% of average
net assets for the periods ended October 31, 1996, October 31, 1995, Octo-
ber 31,1994, and October 31, 1992, respectively, for Class A Shares.
(b) Does not include maximum sales charge of 4% for Class A Shares. For the pe-
riod ended October 31, 1992, not annualized.
(c) Does not include contingent deferred sales charge for Class B Shares. Not
annualized.
(d) Net of fees waived amounting to 0.62% of average net assets for the period
ended October 31, 1996 for Class B Shares.
(e) Average per share amounts of brokerage commissions on portfolio transac-
tions. Required by regulations issued in 1995.
(f) Annualized.
(g) On August 16, 1996, all Class B Shares were converted into Class A Shares.
18
<PAGE>
THE TOCQUEVILLE EUROPE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
YEAR ENDED
OCTOBER 31,
----------- PERIOD FROM PERIOD FROM PERIOD FROM
PER SHARE OPERATING AUGUST 1, 1994 NOVEMBER 1, 1995 AUGUST 14, 1995
PERFORMANCE TO TO TO
(FOR A SHARE OUTSTANDING 1996 1995 OCTOBER 31, 1994 AUGUST 16, 1996(g) OCTOBER 31, 1995
THROUGHOUT THE PERIOD) ---- ---- ---------------- ------------------ ----------------
<S> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period $ 10.83 $10.02 $10.00 $10.81 $10.93
------- ------ ------ ------ ------
Income from investment
operations:
Net investment income
(loss) 0.16 (0.01) (0.04) 0.18 --
Net realized and
unrealized gain (loss) 1.58 0.82 0.06 0.93 (0.12)
------- ------ ------ ------ ------
Total from investment
operations 1.74 0.81 0.02 1.11 (0.12)
------- ------ ------ ------ ------
Less distributions
Dividends from net in-
vestment income -- -- -- -- --
Distributions from net
realized gains -- -- -- -- --
------- ------ ------ ------ ------
Total distributions -- -- -- -- --
------- ------ ------ ------ ------
Change in net asset
value for the period 1.74 0.81 0.02 1.11 (0.12)
------- ------ ------ ------ ------
Net asset value, end of
period $ 12.57 $10.83 $10.02 $11.92 $10.81
------- ------ ------ ------ ------
Total Return (b)(c) 16.1% 8.1 % 0.2 % 10.3% (1.1)%
RATIOS TO SUPPLEMENTAL
DATA
Net assets, end of pe-
riod (000 for Class A) $23,932 $6,270 $2,516 $ 0 $ 198
Ratio to average net as-
sets:
Expenses (a)(d) 1.98% 4.43 % 6.18 %(f) 1.26%(f) --
Net investment income
(loss) (a)(d) 1.45% (0.53)% (2.47)%(f) 1.89%(f) --
Portfolio turnover rate 135% 109 % 0 % 135% --
Average Commission rate
paid (e) $ .0040 $.0040
</TABLE>
- --------
(a) Net of fees waived amounting to 0.55%, 1.28% and 1.00% of average net as-
sets for the periods ended October 31, 1996, October 31, 1995 and October
31, 1994, respectively, for Class A Shares.
(b) Does not include maximum sales charge of 4% for Class A Shares. For the pe-
riod ended October 31, 1994, not annualized.
(c) Does not include contingent deferred sales charge for Class B Shares. Not
annualized.
(d) Net of fees waived amounting to 0.63% of average net assets for the period
ended October 31, 1996 for Class B Shares.
(e) Average per share amounts of brokerage commissions on portfolio transac-
tions. Required by regulations issued in 1995.
(f) Annualized.
(g) On August 16, 1996, all Class B Shares were converted into Class A Shares.
19
<PAGE>
THE TOCQUEVILLE GOVERNMENT FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
PER SHARE OPERATING PERIOD FROM PERIOD FROM PERIOD FROM
PERFORMANCE YEAR ENDED SEPTEMBER 4, 1995 NOVEMBER 1, 1995 SEPTEMBER 4, 1995
(FOR A SHARE OCTOBER 31, TO TO TO
OUTSTANDING THROUGHOUT 1996 OCTOBER 31, 1995 AUGUST 16, 1996(F) OCTOBER 31, 1995
THE PERIOD) ----------- ----------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Net asset value, begin-
ning of period $10.05 $10.00 $10.05 $ 9.97
------ ------ ------ ------
Income from investment
operations:
Net investment income 0.49 0.05 0.32 0.04
Net realized and
unrealized gain (loss) 0.08 0.05 (0.05) 0.08
------ ------ ------ ------
Total from investment
operations 0.57 0.10 0.27 0.12
------ ------ ------ ------
Less distributions
Dividends from net in-
vestment income (0.49) (0.05) (0.32) (0.04)
Distributions from net
realized gains -- -- -- --
------ ------ ------ ------
Total distributions (0.49) (0.05) (0.32) (0.04)
------ ------ ------ ------
Change in net asset
value for the period 0.08 0.05 (0.05) 0.08
------ ------ ------ ------
Net asset value, end of
period $10.13 $10.05 $10.00 $10.05
------ ------ ------ ------
Total Return (b)(c) 5.9% 6.3% 2.8% 8.4%
RATIOS/SUPPLEMENTAL
DATA
Net assets, end of pe-
riod (000 for Class A) $9,788 $6,506 $ 0 $ 201
Ratio to average net
assets:
Expenses (a)(d) 1.47% 2.74%(e) 0.64%(e) --
Net investment income
(a)(d) 4.94% 3.08%(e) 5.14%(e) --
Portfolio turnover rate 85% 0% 85% --
</TABLE>
- --------
(a) Net of fees waived amounting to 1.25% and 0.77% of average net assets for
the periods ended October 31, 1996 and October 31, 1995, respectively, for
Class A Shares.
(b) Does not include maximum sales charge of 4% for Class A Shares. For the pe-
riod ended October 31, 1995, not annualized.
(c) Does not include contingent deferred sales charge for Class B Shares. Not
annualized.
(d) Net of fees waived amounting to 1.29% of average net assets for the period
ended October 31, 1996 for Class B Shares.
(e) Annualized.
(f) On August 16, 1996, all Class B Shares were converted into Class A Shares.
20
<PAGE>
THE TOCQUEVILLE FUND
INVESTMENTS AS OF OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
COMMON STOCKS--92.4% Shares Value
- ---------------------------------------------------------------
<S> <C> <C>
BASIC INDUSTRIES--3.6%
Champion International Corporation 25,000 $ 1,087,500
Newmont Mining Corporation 10,000 462,500
- ---------------------------------------------------------------
1,550,000
- ---------------------------------------------------------------
CAPITAL GOODS--5.1%
Giddings & Lewis, Inc. 50,000 587,500
Measurex Corporation 40,000 1,030,000
ZERO Corp. 30,000 551,250
- ---------------------------------------------------------------
2,168,750
- ---------------------------------------------------------------
CONSUMER BASICS--17.0%
Bristol Myers Squibb Company 20,000 2,115,000
Foxmeyer Health Corp. 41,050 523,388
Heinz (H.J.) Company 30,000 1,065,000
PepsiCo, Inc. 30,000 888,750
RJR Nabisco Holdings Corporation 50,000 1,443,750
R. P. Scherer Corporation* 25,000 1,159,375
- ---------------------------------------------------------------
7,195,263
- ---------------------------------------------------------------
CONSUMER NON-DURABLES--7.5%
Burlington Industries, Inc.* 150,000 1,706,250
Kmart Corporation 150,000 1,462,500
- ---------------------------------------------------------------
3,168,750
- ---------------------------------------------------------------
ENERGY--18.5%
Baker Hughes, Inc. 40,000 1,425,000
Murphy Oil Corporation 25,000 1,234,375
Tesoro Petroleum Corporation* 100,000 1,475,000
Varco International, Inc.* 100,000 1,975,000
Veritas DGC Inc.* 50,000 1,025,000
Western Atlas, Inc.* 10,000 693,750
- ---------------------------------------------------------------
7,828,125
- ---------------------------------------------------------------
FINANCE--18.9%
BankAmerica Corporation 20,000 1,830,000
Citicorp 25,000 2,475,000
Coast Savings Financial, Inc.* 30,000 986,250
Financial Security Assurance Holdings Ltd. 40,000 1,120,000
Hartford Seam Boiler Inspection &
Insurance Company 20,000 862,500
Zurich Reinsurance Centre Holdings, Inc. 25,000 750,000
- ---------------------------------------------------------------
8,023,750
- ---------------------------------------------------------------
</TABLE>
* Non-income producing security
See Notes to the Financial Statements.
<TABLE>
<CAPTION>
COMMON STOCKS Market
(CONTINUED) Shares Value
- ----------------------------------------------------------------------------
<S> <C> <C>
MEDICAL SERVICES--1.2%
Integrated Health Services, Inc. 20,000 $ 492,500
- ----------------------------------------------------------------------------
492,500
- ----------------------------------------------------------------------------
MINERALS AND METALS--1.1%
Inco, Ltd. 15,000 476,250
- ----------------------------------------------------------------------------
476,250
- ----------------------------------------------------------------------------
MISCELLANEOUS--1.2%
Cattellus Development Corporation* 50,000 493,750
- ----------------------------------------------------------------------------
493,750
- ----------------------------------------------------------------------------
TECHNOLOGY--13.5%
Adobe Systems, Inc. 20,000 692,500
Amdahl Corporation* 50,000 512,500
The Boeing Company 10,000 953,750
International Business Machines Corporation 20,000 2,580,000
Lucent Technologies, Inc. 6,481 304,607
Motorola, Inc. 15,000 690,000
- ----------------------------------------------------------------------------
5,733,357
- ----------------------------------------------------------------------------
UTILITIES--4.8%
AT&T Corporation 25,000 871,875
Sprint Corporation 30,000 1,177,500
- ----------------------------------------------------------------------------
2,049,375
- ----------------------------------------------------------------------------
Total Common Stocks
(Cost $27,711,854) 1,397,531 39,179,870
- ----------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--7.6% Amount
----------
U.S. Treasury Bills, 5.31%, 1/09/97 $3,000,000 2,971,307
Repurchase Agreement with State Street Bank & Trust
Company, 2.0%, dated 10/31/96, due 11/01/96,
collateralized by U.S. Treasury Notes valued at
$281,429. Repurchase proceeds of $271,015.
(Cost $271,000) 271,000 271,000
- ----------------------------------------------------------------------------
Total Short-Term Investments
(Cost $3,240,511) 3,242,307
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST $30,952,365)--100.0% 42,422,177
OTHER ASSETS & LIABILITIES (8,215)
- ----------------------------------------------------------------------------
TOTAL NET ASSETS--100.0% $42,413,962
-----------
</TABLE>
21
<PAGE>
THE TOCQUEVILLE SMALL CAP VALUE FUND
INVESTMENTS AS OF OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
COMMON STOCKS--93.5% Shares Value
- --------------------------------------------------------------
<S> <C> <C>
COMMUNICATIONS RELATED--13.1%
Aliant Communications, Inc. 10,000 $ 162,500
Boston Technology, Inc.* 15,000 249,375
California Amplifier, Inc.* 10,000 82,500
California Microwave, Inc.* 10,000 147,500
C-COR Electronics, Inc.* 10,000 155,000
DMX, Inc.* 75,000 112,500
Orbital Sciences Corporation* 10,000 210,000
Scientific-Atlanta, Inc. 27,000 391,500
- --------------------------------------------------------------
1,510,875
- --------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES--16.3%
Alphanet Solutions, Inc.* 20,000 240,000
Cerner Corporation* 10,000 121,250
National Computer Systems, Inc. 10,000 215,000
Progress Software Corporation* 4,000 62,500
Symantec Corporation* 10,000 108,750
Systems & Computer Technology Corporation* 10,000 140,000
Timberline Software Corporation 11,250 98,438
Unisys Corporation* 90,000 562,500
Wave Technologies International, Inc.* 65,000 333,125
- --------------------------------------------------------------
1,881,563
- --------------------------------------------------------------
CONSUMER NON-DURABLE--10.0%
Cone Mills Corporation* 14,000 110,250
Franklin Electronic Publishers, Inc.* 30,000 382,500
Tasty Baking Company 19,400 271,600
Thomas Nelson, Inc. 10,000 122,500
Ultrak, Inc.* 10,000 263,750
- --------------------------------------------------------------
1,150,600
- --------------------------------------------------------------
DATABASE SERVICES--2.3%
American Business Information, Inc.* 8,000 154,000
American List Corporation 4,000 110,000
- --------------------------------------------------------------
264,000
- --------------------------------------------------------------
DRILLING EQUIPMENT & SERVICES--13.8%
Global Industries Ltd.* 6,000 108,000
Nabors Industries, Inc.* 24,000 399,000
Oceaneering International, Inc.* 35,000 630,000
Offshore Logistics, Inc.* 10,000 166,250
Pool Energy Services Co.* 20,000 295,000
- --------------------------------------------------------------
1,598,250
- --------------------------------------------------------------
FINANCIAL SERVICES--4.9%
Life USA Holdings, Inc.* 12,500 118,750
Western National Corporation 25,000 450,000
- --------------------------------------------------------------
568,750
- --------------------------------------------------------------
FURNITURE (RTA)--7.6%
O'Sullivan Industries Holdings, Inc.* 75,000 871,875
- --------------------------------------------------------------
871,875
- --------------------------------------------------------------
</TABLE>
* Non-income producing security
See Notes to the Financial Statements.
<TABLE>
<CAPTION>
COMMON STOCKS Market
(CONTINUED) Shares Value
- ---------------------------------------------------------------------------
<S> <C> <C>
HEALTH CARE--15.6%
Ballard Medical Products 20,000 $ 352,500
Bindley Western Industries, Inc. 25,000 428,125
Medex, Inc. 5,000 74,375
Mylan Laboratories 10,000 151,250
Owens & Minor, Inc. Holding Company 44,000 412,500
STAAR Surgical Company* 10,000 123,750
Utah Medical Products, Inc.* 10,000 127,500
Vital Signs, Inc. 6,000 127,500
- ---------------------------------------------------------------------------
1,797,500
- ---------------------------------------------------------------------------
INDUSTRIAL SERVICES--2.1%
Unifirst Corporation 12,000 241,500
- ---------------------------------------------------------------------------
241,500
- ---------------------------------------------------------------------------
MANUFACTURING--6.4%
Gorman-Rupp Company 13,000 178,750
Holophane Corporation* 8,000 152,000
Juno Lighting, Incorporated 7,000 108,937
Stewart & Stevenson Services, Inc. 5,000 106,250
Telxon Corporation 16,000 196,000
- ---------------------------------------------------------------------------
741,937
- ---------------------------------------------------------------------------
SPECIALTY CHEMICALS--1.4%
Sybron Chemicals, Inc.* 10,000 165,000
- ---------------------------------------------------------------------------
165,000
- ---------------------------------------------------------------------------
Total Common Stocks
(Cost $9,330,657) 10,791,850
- ---------------------------------------------------------------------------
Principal
U.S. GOVERNMENT AGENCY BONDS--6.1% Amount
---------
U.S. Treasury Notes:
5.5% due 7/31/97 $ 200,000 200,109
6.3% due 6/30/98 500,000 504,688
- ---------------------------------------------------------------------------
Total U.S. Government Agency Bonds
(Cost $699,250) 704,797
- ---------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--1.5%
Repurchase Agreement with State Street Bank & Trust
Company, 2.0%, dated 10/31/96, due 11/01/96,
collateralized by U.S. Treasury Notes valued at
$177,196. Repurchase proceeds of $171,010.
(Cost $171,000) 171,000 171,000
- ---------------------------------------------------------------------------
Total Short-Term Investments
(Cost $171,000) 171,000
- ---------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST $10,200,907)--101.1% 11,667,647
OTHER ASSETS LESS LIABILITIES--(1.1)% (122,622)
- ---------------------------------------------------------------------------
TOTAL NET ASSETS--100.0% $11,545,025
-----------
</TABLE>
22
<PAGE>
THE TOCQUEVILLE ASIA-PACIFIC FUND
INVESTMENTS AS OF OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
US$
COMMON STOCKS AND Market
WARRANTS--92.4% Shares Value
- -----------------------------------------------------
<S> <C> <C>
AUSTRALIA--4.1%
Crown Limited* 75,000 $ 162,862
Normandy Mining Limited 78,500 107,006
QNI Limited 35,000 70,455
Resolute Samantha Limited 58,571 118,832
Woodside Petroleum Limited 40,000 282,137
- -----------------------------------------------------
741,292
- -----------------------------------------------------
HONG KONG--5.2%
ASM Pacific Technology 450,000 337,550
Guangdong Investments 610,000 437,844
Manhattan Card Company, Ltd. 340,000 168,193
- -----------------------------------------------------
943,587
- -----------------------------------------------------
INDONESIA--21.2%
Astra International 500,000 1,041,085
Bukaka Teknik Utam 882,000 681,578
Chareon Pokhand Indonesia* 180,000 200,919
Citra Marga Nusaphala Persada 900,000 656,850
Hero Supermarket 330,000 205,426
Japfa Comfeed Indonesia 800,000 532,349
Pabrik Kertas Tjiwi Kimia 84,700 87,271
Steady Safe 455,267 444,654
- -----------------------------------------------------
3,850,132
- -----------------------------------------------------
JAPAN--15.8%
Bank of Tokyo--Mitsubishi 15,250 310,951
FCC Company Limited 8,000 235,542
H.I.S. Company Limited 3,300 175,180
Honda Motor Company, Ltd. 15,000 358,587
Meitec Corp. 5,000 102,830
Mitsui O.S.K. Lines* 33,000 92,231
Oiles Corp. 14,400 485,990
Paramount Bed 10,000 690,807
Rohm Company 7,000 415,275
- -----------------------------------------------------
2,867,393
- -----------------------------------------------------
MALAYSIA--8.8%
ACP Industries 54,000 354,799
Commerce Asset Holdings Bhd 40,000 261,231
Cycle & Carriage Ltd. 30,000 173,363
Ekran Berhad 65,000 272,709
Road Builder (m) Holding Bhd 105,000 540,273
- -----------------------------------------------------
1,602,375
- -----------------------------------------------------
SOUTH KOREA--5.7%
Samsung Disposal Devices Company 6,000 377,609
Samsung Electronic 9,420 662,393
- -----------------------------------------------------
1,040,002
- -----------------------------------------------------
</TABLE>
* Non-income producing security
See Notes to the Financial Statements.
<TABLE>
<CAPTION>
US$
COMMON STOCKS AND Market
WARRANTS (CONTINUED) Shares Value
- ------------------------------------------------------------------------------
<S> <C> <C>
NEW ZEALAND--1.4%
Carter Holt Harvey Limited 50,000 $ 112,495
Telecom Corporation of New Zealand Limited 25,000 130,005
- ------------------------------------------------------------------------------
242,500
- ------------------------------------------------------------------------------
PHILIPPINES--9.5%
DMCI Holdings, Inc.* 600,000 433,625
House of Investments Inc. 1,200,000 168,885
Ionics Circuit Inc.* 300,000 193,990
Universal Rightfield Properties
Holding Inc.* 5,500,000 543,933
Universal Robina Corporation 460,000 209,966
Vitarich Corporation* 2,015,000 164,021
- ------------------------------------------------------------------------------
1,714,420
- ------------------------------------------------------------------------------
SINGAPORE--14.5%
Development Bank of Singapore 33,000 395,869
Clipsal Industries, Ltd. 160,000 512,000
Crompton Greaves Ltd.* 41,500 186,542
Elec & Eltek International Company Ltd. 220,000 664,400
GPE Industries Limited 953,000 481,265
United Overseas Bank Ltd. 40,000 388,984
- ------------------------------------------------------------------------------
2,629,060
- ------------------------------------------------------------------------------
THAILAND--6.2%
Krung Thai Bank Public Company Limited 120,000 324,770
Siam City Bank Public Company Limited 300,000 344,185
Thai Farmers Bank Public Company Limited 59,000 451,265
Thai Farmers Bank warrants 9/02* 800 784
- ------------------------------------------------------------------------------
1,121,004
- ------------------------------------------------------------------------------
Total Common Stocks and Warrants
(Cost $17,789,501) 16,751,765
- ------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--7.8% Amount
----------
Repurchase Agreement with State Street Bank & Trust
Company, 4.0%, dated 10/31/96, due 11/01/96, collat-
eralized by U.S. Treasury Notes valued at
$1,454,048. Repurchase proceeds of $1,419,158 (Cost
$1,419,000) $1,419,000 1,419,000
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST $19,208,501)--100.2% 18,170,765
OTHER ASSETS & LIABILITIES,
NET--(0.2)% (33,107)
- ------------------------------------------------------------------------------
TOTAL NET ASSETS--100.0% $18,137,658
-----------
</TABLE>
23
<PAGE>
THE TOCQUEVILLE EUROPE FUND
INVESTMENTS AS OF OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
US$
COMMON STOCKS AND Market
WARRANTS--66.3% Shares Value
- -----------------------------------------------------------------
<S> <C> <C>
FRANCE--35.5%
Andre Trigano 2,000 $ 62,600
APEM 4,000 168,630
Carbone Lorraine 4,000 594,702
Cie Europenne de Telesecurite C.E.T. 2,000 160,413
Credit National 2,000 105,638
Distriborg Distributes 8,000 522,556
Ducros Services Rapides SA rights* 10 6
Ducros Services Rapides SA* 10 117
Eaux (Cie Generale) 2,000 239,055
Emin Leydier 5,400 411,988
Europeene de Propulsion 1,800 169,725
Europeenne d'Extincteurs 12,000 706,600
Faiveley SA 9,700 573,066
Faiveley warrants 7/99* 700 5,560
Fraikin 8,000 424,117
GFI Industries 1,500 199,538
Infra Plus 6,210 410,615
JAJ Distribution SA 3,750 173,129
Lapeyre SA 6,500 318,146
Mediascience SA 1,900 185,845
Musee Grevin* 20,000 342,345
Societe Anonyme Francaise de Reassurances 2,600 407,410
Roberter SA 1,130 218,847
Rubis et Cie 12,500 379,270
SGS Thomson Microelectronics NV* 3,000 158,985
Sidergie SA 300 29,168
Societe Industrielle D'Aviations Latecoere SA 4,415 403,774
Sport Elec SA 4,220 296,369
Thompson CSF 20,000 624,046
Vilmorin et Cie 2,200 207,872
- -----------------------------------------------------------------
8,500,132
- -----------------------------------------------------------------
NETHERLANDS--11.0%
ABN Amro Holdings NV 5,300 299,599
Draka Holdings NV 10,000 330,091
Elsevier NV 20,000 332,449
IHC Caland NV 2,500 139,552
Kon PTT Nederland 5,000 180,961
Royal Dutch Petroleum Company 3,700 611,105
Volker Stevin 8,150 748,465
- -----------------------------------------------------------------
2,642,222
- -----------------------------------------------------------------
SPAIN--7.3%
Aumar--Autopistas del Mare Nostrum SA 28,000 399,550
Centros Com Pryca 8,220 188,834
Const. Y Aux Ferr 8,400 329,299
Europistas CE SA 47,000 399,824
- -----------------------------------------------------------------
</TABLE>
* Non-income producing security
See Notes to the Financial Statements.
<TABLE>
<CAPTION>
US$
COMMON STOCKS AND Market
WARRANTS (CONTINUED) Shares Value
- ------------------------------------------------------------------------------
<S> <C> <C>
SPAIN (CONTINUED)
Gupo Anaya SA 15,000 $ 296,958
OMSA Alimentacion 30,000 129,368
- ------------------------------------------------------------------------------
1,743,833
- ------------------------------------------------------------------------------
UNITED KINGDOM--12.5%
British Telecom 31,000 179,254
Cairn Energy PLC * 38,000 224,984
Cairn Energy Rights* 12,666 412
Glaxo Wellcome 14,000 219,746
Hardy Oil & Gas PLC 80,000 345,478
Hays PLC 10,000 83,767
Jarvis PLC* 150,000 280,579
Linx Printing Tech 100,000 182,173
SEMA Group 59,090 856,363
Shanks & McEwan GP 200,000 374,106
Williams Holdings 40,000 236,174
- ------------------------------------------------------------------------------
2,983,036
- ------------------------------------------------------------------------------
Total Common Stocks and Warrants
(Cost $14,147,522) 15,869,223
- ------------------------------------------------------------------------------
Number of
FOREIGN CURRENCY OPTIONS--0.1% Contracts
- ------------------------------------------------------------------------------
Put 250 French Franc
December 96 18.50 10 400
Put 625 German Mark
December 96 67.00 22 14,988
- ------------------------------------------------------------------------------
Total Foreign Currency Options
(Cost $25,583) 15,388
- ------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--33.2% Amount
----------
U.S. Treasury Bills, 5.30%, 1/23/97 $3,000,000 2,965,278
U.S. Treasury Bills, 5.06%, 2/20/97 3,000,000 2,953,750
Repurchase Agreement with State Street Bank & Trust
Company,4.0%, dated 10/31/96, due 11/01/96, collater-
alized by U.S. Treasury Notes valued at $2,084,656.
Repurchase proceeds of $2,042,227.
(Cost $2,042,000) 2,042,000 2,042,000
- ------------------------------------------------------------------------------
Total Short-Term Investments
(Cost $7,958,603) 7,961,028
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST $22,131,708)--99.6% 23,845,639
OTHER ASSETS & LIABILITIES--0.4% 86,695
- ------------------------------------------------------------------------------
TOTAL NET ASSETS -100.0% $23,932,334
-----------
</TABLE>
24
<PAGE>
THE TOCQUEVILLE GOVERNMENT FUND
INVESTMENTS AS OF OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Market
Value Value
- --------------------------------------------------
<S> <C> <C>
MORTGAGE RELATED--30.7%
Federal Home Loan
Mortgage Corporation:
6.38%, due 10/24/2000 $ 750,000 $ 747,068
7.085%, due 3/27/2001 1,500,000 1,500,045
7.13%, due 10/02/2001 750,000 751,642
- --------------------------------------------------
2,998,755
- --------------------------------------------------
U.S. TREASURY NOTES--50.4%
5.50%, due 4/15/2000 1,000,000 984,530
5.88%, due 6/30/2000 1,000,000 995,312
5.63%, due 2/15/2006 3,100,000 2,949,839
- --------------------------------------------------
4,929,681
- --------------------------------------------------
U.S. TREASURY STRIPS--16.6%
due 5/15/2006* 3,000,000 1,628,370
- --------------------------------------------------
1,628,370
- --------------------------------------------------
</TABLE>
* Principal only
See Notes to the Financial Statements.
<TABLE>
<CAPTION>
Par Market
Value Value
- -------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENTS--3.1%
Repurchase Agreement with State Street Bank & Trust
Company, 2.0%, dated 10/31/96, due 11/01/96,
collateralized by U.S. Treasury Notes valued at
$317,910. Repurchase proceeds of $307,017.
(Cost $307,000) $307,000 $ 307,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST $9,774,073)--100.8% $9,863,806
OTHER ASSETS & LIABILITIES,
NET--(0.8)% (75,576)
- -------------------------------------------------------------------------------
TOTAL NET ASSETS--100% $9,788,230
----------
</TABLE>
25
<PAGE>
THE TOCQUEVILLE TRUST
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE SMALL CAP ASIA-
TOCQUEVILLE VALUE PACIFIC EUROPE GOVERNMENT
FUND FUND FUND FUND FUND
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at value* $42,422,177 $11,667,647 $18,170,765 $23,845,639 $9,863,806
Foreign currency** 0 0 2,528 0 0
Cash 359 0 274 686 153
Receivable for
investments sold 0 141,650 0 150,511 0
Dividends, interest and
other receivables 37,315 15,655 16,741 85,592 74,711
Due from Advisor 0 0 0 0 35,906
Other assets 575 17,365 119 16,409 20,746
----------- ----------- ----------- ----------- ----------
42,460,426 11,842,317 18,190,427 24,098,837 9,995,322
----------- ----------- ----------- ----------- ----------
LIABILITIES
Payable for investments
purchased 0 246,862 0 99,561 0
Payable for fund shares
repurchased 15,527 0 0 0 110,000
Dividends payable 0 0 0 0 48,141
Accrued distribution fee 8,974 2,543 3,915 4,995 2,062
Accrued expenses and
other liabilities 21,963 47,887 48,854 61,947 46,889
----------- ----------- ----------- ----------- ----------
46,464 297,292 52,769 166,503 207,092
----------- ----------- ----------- ----------- ----------
NET ASSETS $42,413,962 $11,545,025 $18,137,658 $23,932,334 $9,788,230
----------- ----------- ----------- ----------- ----------
Net assets consisted of:
Paid in capital $28,951,937 $ 8,851,771 $19,588,802 $20,962,113 $9,690,496
Undistributed net
investment income
(loss) 137,132 (128,517) 0 242,163 0
Accumulated net realized
gain (loss) 1,855,081 1,355,031 (413,294) 1,013,931 8,001
Net unrealized
appreciation
(depreciation) 11,469,812 1,466,740 (1,037,850) 1,714,127 89,733
----------- ----------- ----------- ----------- ----------
Net assets $42,413,962 $11,545,025 $18,137,658 $23,932,334 $9,788,230
----------- ----------- ----------- ----------- ----------
Shares outstanding
(unlimited shares of
$0.01 par value
authorized) 2,676,566 863,238 1,997,849 1,903,992 966,239
Net asset value and
redemption price per
share $ 15.85 $ 13.37 $ 9.08 $ 12.57 $ 10.13
----------- ----------- ----------- ----------- ----------
Maximum offering price $ 16.51 $ 13.93 $ 9.46 $ 13.09 $ 10.55
----------- ----------- ----------- ----------- ----------
* Cost of Investments $30,952,365 $10,200,907 $19,208,501 $22,131,708 $9,774,073
** Cost of Foreign
Currency $ 0 $ 0 $ 2,528 $ 0 $ 0
</TABLE>
See Notes to the Financial Statements.
26
<PAGE>
THE TOCQUEVILLE TRUST
STATEMENTS OF OPERATIONS
Year Ended October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE SMALL CAP ASIA-
TOCQUEVILLE VALUE PACIFIC EUROPE GOVERNMENT
FUND FUND FUND FUND FUND
----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends* $ 576,640 $ 69,818 $ 176,468 $ 421,555 $ 0
Interest 181,342 58,114 89,292 151,909 572,260
---------- ---------- ----------- ---------- --------
757,982 127,932 265,760 573,464 572,260
---------- ---------- ----------- ---------- --------
EXPENSES: (NOTE 3)
Investment adviser's fee 292,466 81,813 103,394 167,277 44,692
Custodian and fund
accounting 61,975 67,710 84,180 78,690 54,900
Transfer agent and
shareholder services 36,600 31,110 31,110 31,110 31,110
Professional fees 51,415 43,997 53,545 49,825 49,015
Distribution:
Class A 97,578 27,120 25,849 41,819 22,346
Class B 198 42 1 1 1
Administration fee 58,762 16,272 15,509 25,092 13,407
Printing 3,660 3,660 3,660 3,660 1,830
Registration 21,025 10,990 12,810 12,810 15,289
Trustee fee 7,856 1,830 1,830 1,830 1,830
Fidelity bond 5,124 1,830 1,830 1,830 1,830
Amortization of
organization costs 0 5,570 2,804 5,375 4,394
Other 11,668 3,660 3,660 3,660 1,830
---------- ---------- ----------- ---------- --------
Total expenses 648,327 295,604 340,182 422,979 242,474
Less: Fees waived (63,307) (39,155) (68,727) (91,678) (111,451)
---------- ---------- ----------- ---------- --------
Net expenses 585,020 256,449 271,455 331,301 131,023
---------- ---------- ----------- ---------- --------
NET INVESTMENT INCOME
(LOSS) 172,962 (128,517) (5,695) 242,163 441,237
---------- ---------- ----------- ---------- --------
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain
(loss):
Investments 2,100,811 1,355,990 (61,664) 1,116,998 8,831
Foreign currency
translation 0 0 (27,035) (111,649) 0
Net change in
unrealized
appreciation
(depreciation) 5,298,485 708,913 (996,841) 1,432,158 61,953
---------- ---------- ----------- ---------- --------
Net gain (loss) 7,399,296 2,064,903 (1,085,540) 2,437,507 70,784
---------- ---------- ----------- ---------- --------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS $7,572,258 $1,936,386 $(1,091,235) $2,679,670 $512,021
---------- ---------- ----------- ---------- --------
*Net of Foreign Taxes
Withheld 4,348 0 19,839 73,945 0
---------- ---------- ----------- ---------- --------
</TABLE>
See Notes to the Financial Statements.
27
<PAGE>
THE TOCQUEVILLE TRUST
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE TOCQUEVILLE FUND SMALL CAP VALUE FUND
------------------------ ------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
OCTOBER 31, OCTOBER 31,
------------------------ ------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss) $ 172,962 $ 343,526 $ (128,517) $ (41,698)
Net realized gain (loss) 2,100,811 2,506,947 1,355,990 646,730
Net change in unrealized
appreciation
(depreciation) 5,298,485 2,103,502 708,913 756,936
----------- ----------- ----------- -----------
Net increase (decrease)
in net assets resulting
from operations 7,572,258 4,953,975 1,936,386 1,361,968
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment income
Class A (354,776) (233,851) 0 (3,482)
Class B (2) 0 0 0
Net realized gain
Class A (2,505,796) (2,995,036) (600,818) (142,447)
Class B (14) 0 (12) 0
FUND SHARE TRANSACTIONS
Class A 4,265,807 2,572,904 827,265 1,411,298
Class B (1,507) 200 (297) 200
----------- ----------- ----------- -----------
Net increase (decrease)
in net assets 8,975,970 4,298,192 2,162,524 2,627,537
NET ASSETS:
Beginning of period 33,437,992 29,139,800 9,382,501 6,754,964
----------- ----------- ----------- -----------
End of period* $42,413,962 $33,437,992 $11,545,025 $ 9,382,501
----------- ----------- ----------- -----------
* Including undistributed
net investment income
(loss) of: $ 137,132 $ 318,948 $ (128,517) $ (32,254)
----------- ----------- ----------- -----------
</TABLE>
See Notes to the Financial Statements.
28
<PAGE>
THE TOCQUEVILLE TRUST
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASIA-PACIFIC FUND EUROPE FUND GOVERNMENT FUND
- ------------------------ ----------------------- ----------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
- ------------------------ ----------------------- ----------------------
1996 1995 1996 1995 1996 1995*
- ----------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ (5,695) $ (12,765) $ 242,163 $ (18,930) $ 441,237 $ 21,145
(88,699) (355,199) 1,005,349 20,664 8,831 (830)
(996,841) (208,980) 1,432,158 258,755 61,953 27,780
- ----------- ---------- ----------- ---------- ---------- ----------
(1,091,235) (576,944) 2,679,670 260,489 512,021 48,095
0 0 0 0 (441,229) (21,144)
0 0 0 0 (8) (1)
0 (720,093) 0 0 0 0
0 0 0 0 0 0
14,542,402 796,982 14,983,225 3,492,707 3,211,933 6,478,561
(202) 200 (218) 200 (199) 201
- ----------- ---------- ----------- ---------- ---------- ----------
13,450,965 (499,855) 17,662,677 3,753,396 3,282,518 6,505,712
4,686,693 5,186,548 6,269,657 2,516,261 6,505,712 0
- ----------- ---------- ----------- ---------- ---------- ----------
18,137,658 4,686,693 23,932,334 6,269,657 9,788,230 6,505,712
- ----------- ---------- ----------- ---------- ---------- ----------
$ 0 $ 0 $ 242,163 $ (18,930) $ 0 $ 0
- ----------- ---------- ----------- ---------- ---------- ----------
</TABLE>
* Period from September 4, 1995 through October 31, 1995.
See Notes to the Financial Statements.
29
<PAGE>
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
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION
The Tocqueville Trust (the "Trust") was organized as a Massachusetts business
trust registered under the Investment Company Act of 1940 as amended, as a di-
versified, open-end management investment company. The Trust consists of five
separate Funds: The Tocqueville Fund, The Tocqueville Small Cap Value Fund, The
Tocqueville Asia-Pacific Fund, The Tocqueville Europe Fund and The Tocqueville
Government Fund (the "Funds"). The objective of The Tocqueville Fund is long-
term capital appreciation, primarily through investments in securities of
United States issuers. The objective of The Tocqueville Small Cap Value Fund is
long-term capital appreciation primarily through investments in securities of
small capitalization United States issuers. The objective of The Tocqueville
Asia-Pacific Fund is long-term capital appreciation primarily through invest-
ments in securities of issuers located in Asia and the Pacific Basin. The ob-
jective of The Tocqueville Europe Fund is long-term capital appreciation pri-
marily through investment in securities of issuers located in Europe. The ob-
jective of the Tocqueville Government Fund 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 or agencies of the
U.S. Government. The following is a summary of significant accounting princi-
ples followed by the Trust in the preparation of its financial statements.
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES
A) SECURITY VALUATION
Investments in securities, including foreign securities, traded on an ex-
change or quoted on the over-the-counter market are valued at the last sale
price or, if no sale occurred during the day, at the mean between closing bid
and asked prices, as last reported by a pricing service approved by the Trust-
ees. When market quotations are not readily available, or when restricted secu-
rities or other assets are being valued, such assets are valued at fair value
as determined in good faith by or under procedures established by the Trustees.
Short-term investments are stated at cost which, together with accrued inter-
est, approximates market value.
- --------------------------------------------------------------------------------
B) FEDERAL INCOME TAX
It is the Trust's policy to comply with the provisions of the Internal Reve-
nue Code ("Code") applicable to regulated investment companies and to distrib-
ute all of its taxable income to its shareholders. It is also the Trust's in-
tention to distribute amounts sufficient to avoid imposition of any excise tax
under Section 4982 of the Code. Therefore, no federal income or excise tax pro-
vision is required.
- --------------------------------------------------------------------------------
C) DEFERRED ORGANIZATION EXPENSES
Expenses incurred in connection with the organization of The Tocqueville
Small Cap Value Fund, The Tocqueville Europe Fund and The Tocqueville Govern-
ment Fund are being amortized on a straight-line basis over a five-year period
from each Fund's commencement of operations.
30
<PAGE>
- -------------------------------------------------------------------------------
D) FOREIGN CURRENCY TRANSLATION
Investments and other assets and liabilities denominated in foreign curren-
cies are translated to U.S. dollars at the prevailing rates of exchange. The
Tocqueville Asia-Pacific Fund and The Tocqueville Europe Fund are engaged in
transactions in securities denominated in foreign currencies and, as a result,
enter into foreign exchange contracts. The Tocqueville Asia-Pacific Fund and
The Tocqueville Europe Fund are exposed to additional market risk as a result
of changes in the value of the underlying currency in relation to the U.S.
dollar. The value of foreign currency contracts are "marked to market" on a
daily basis, which reflects the changes in the market value of the contract at
the close of each day's trading, resulting in daily unrealized gains and/or
losses. When the contracts are closed, the Fund recognizes a realized gain or
loss.
The Funds do not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations
are included with the net realized and unrealized gain or loss from invest-
ments.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books, and the U.S. dollar equivalent of the amounts actually received
or paid. Net unrealized foreign exchange gains and losses arise from changes
in the value of assets and liabilities other than investments in securities at
the end of the fiscal period, resulting from changes in the exchange rates.
- -------------------------------------------------------------------------------
E) USE OF ESTIMATES
The preparation of financial statements in conformity with generally ac-
cepted accounting principles requires management to make estimates and assump-
tions that effect the reported amounts of assets and liabilities and disclo-
sure of contingent assets and liabilities at the date of the financial state-
ments and the reported amounts of increases and decreases in net assets from
operations during the reporting period. Actual results could differ from those
estimates.
- -------------------------------------------------------------------------------
F) OTHER
Investment and shareowner transactions are recorded no later than the first
business day after the trade date. Dividend income is recognized on the ex-
dividend date or at the time the Fund becomes aware. Interest income is recog-
nized on the accrual basis and market discount is accounted for on a straight-
line basis from settlement date. The Trust uses the first-in, first-out method
for determining realized gain or loss on investments sold for both financial
reporting and federal tax purposes. Distributions to shareholders are recorded
on the ex-dividend date. Expenses incurred by the Trust not specifically iden-
tified to a Fund are allocated on a basis relative to the size of each Fund's
daily net asset value. It is the Trust's policy to take possession of securi-
ties as collateral under repurchase agreements and to determine on a daily ba-
sis that the value of such securities are sufficient to cover the value of the
repurchase agreements.
31
<PAGE>
- --------------------------------------------------------------------------------
3. INVESTMENT ADVISORY AND OTHER AGREEMENTS
Tocqueville Asset Management L.P. ("Tocqueville"), is the investment adviser
to the Trust under an Investment Advisory Agreement approved by shareholders on
February 26, 1990. For its services, Tocqueville receives a fee from The
Tocqueville Fund, payable monthly, at an annual rate of .75% on the first $100
million of its average daily net assets, .70% of the next $400 million of
average daily net assets, and .65% of average daily net assets in excess of
$500 million. Tocqueville receives a fee from The Tocqueville Small Cap Value
Fund, payable monthly, at an annual rate of .75% on the first $100 million of
its average daily net assets, .70% of the next $400 million of average daily
net assets, and .65% of average daily net assets in excess of $500 million.
Tocqueville receives a fee from The Tocqueville Asia-Pacific Fund, payable
monthly, at an annual rate of 1.00% on the first $50 million of its average
daily net assets, .75% of the next $50 million of average daily net assets, and
.65% of average daily net assets in excess of $100 million. Tocqueville
receives a fee from The Tocqueville Europe Fund, payable monthly, at an annual
rate of 1.00% on the first $50 million of its average daily net assets, .75% of
the next $50 million of average daily net assets, and .65% of average daily net
assets in excess of $100 million. Tocqueville receives a fee from The
Tocqueville Government Fund, payable monthly, at an annual rate of .50% on the
first $500 million of the fund's average daily net assets, .40% of the next
$500 million of average daily net assets, and .30% of average daily net assets
in excess of $1 billion.
FOR THE PERIOD ENDED OCTOBER 31, 1996, THE ADVISER WAIVED THE FOLLOWING FEES BY
FUND:
<TABLE>
<CAPTION>
TOCQUEVILLE SMALL CAP ASIA PACIFIC EUROPE GOVERNMENT
FUND VALUE FUND FUND FUND FUND
----------- ---------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C>
Fees waived $36,154 $19,096 $56,680 $68,161 $44,692
Reimbursement by Advisor $ 0 $ 0 $ 0 $ 0 $45,068
</TABLE>
Tocqueville Securities L.P. (the "Distributor") acts as distributor for
shares of the Fund and purchases shares of the Fund at net asset value to fill
orders as received from investment dealers. For the year ended October 31,
1996, the Distributor received net commissions of $10,279 from the sale of the
Trust's shares.
The Fund has adopted distribution plans related to the sale of shares
pursuant to which the Fund may incur distribution expenses in amounts not to
exceed 0.25% per annum of the average daily net assets. Such expenses may
include, but are not limited to, advertising, printing, and distribution of
sales literature, prospectuses and other materials, and payments to dealers and
shareholders servicing agents including the Distributor. Under the distribution
plans, the Distributor is permitted to carry forward expenses not reimbursed by
the distribution fees to subsequent fiscal years for submission to the Fund for
payment, subject to the continuation of the Plan. For the year ended October
31, 1996, the Distributor has waived distribution fees of $12,525, $7,530,
$14,698 and $14,288 for The Tocqueville Small Cap Value Fund, The Tocqueville
Asia-Pacific Fund, The Tocqueville Europe Fund and The Tocqueville Government
Fund, respectively. The distributor has informed the trust that, as
32
<PAGE>
- --------------------------------------------------------------------------------
of October 31, 1996, there were $96,670, $78,055, $66,730, $71,716 and $22,255
in unreimbursed expenses for The Tocqueville Fund, The Tocqueville Small Cap
Value Fund, The Tocqueville Asia-Pacific Fund, The Tocqueville Europe Fund, and
The Tocqueville Government Fund, respectively.
Commissions earned by the Distributor for services rendered as a registered
broker-dealer in securities transactions for The Tocqueville Fund, The
Tocqueville Small Cap Value Fund, The Tocqueville Asia-Pacific Fund, The
Tocqueville Europe Fund and The Tocqueville Government Fund for the year ended
October 31, 1996, were $63,555, $47,933, $175, $1,509 and $9,213, respectively.
Pursuant to an Administrative Services Agreement, effective September 15,
1995, the Fund pays to the Adviser a fee computed and paid monthly at an annual
rate of 0.15% of the average daily net assets of the Fund. During the year
ended October 31, 1996, the Adviser waived administration fees of $27,153,
$7,534, $4,517, $8,819 and $7,403 for The Tocqueville Fund, The Tocqueville
Small Cap Value Fund, The Tocqueville Asia-Pacific Fund, The Tocqueville Europe
Fund and The Tocqueville Government Fund, respectively.
4. CAPITAL LOSS CARRY FORWARD
At October 31, 1996, The Tocqueville Asia-Pacific Fund had tax basis capital
losses of $410,000 available to offset future capital gains. Such losses expire
between October 31, 2003 and 2004.
33
<PAGE>
- --------------------------------------------------------------------------------
5. CAPITAL SHARE TRANSACTIONS
The Fund currently offers only one class of shares of beneficial interest,
Class A Shares. On August 16, 1996, all previously existing shares of Class B
shares of each Fund were converted at net asset value without the imposition of
a deferred sales charge, into Class A shares of an equivalent value. Transac-
tions in capital shares for the Funds were as follows:
<TABLE>
<CAPTION>
THE THE TOCQUEVILLE
TOCQUEVILLE SMALL CAP VALUE
FUND FUND
--------------------- --------------------
AMOUNT SHARES AMOUNT SHARES
----------- -------- ---------- --------
<S> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31, 1996:
Class A shares:
Shares sold $ 7,400,012 497,009 $2,925,368 240,431
Shares issued to owners in
reinvestment of dividends 2,596,698 191,069 523,199 45,103
Shares redeemed (5,743,803) (388,402) (2,632,401) (210,711)
Shares issued from conversion of
Class B 12,900 848 11,099 902
----------- -------- ---------- --------
Net increase $ 4,265,807 300,524 $ 827,265 75,725
----------- -------- ---------- --------
PERIOD FROM NOVEMBER 1, 1995 TO
AUGUST 16, 1996:
Class B shares:
Shares sold $ 72,498 4,899 $ 11,000 909
Shares issued to owners in
reinvestment of dividends 12 1 9 1
Shares redeemed (61,117) (4,058) (207) (17)
Conversion to Class A (12,900) (856) (11,099) (909)
----------- -------- ---------- --------
Net increase (decrease) $ (1,507) (14) $ (297) (16)
----------- -------- ---------- --------
FOR THE YEAR ENDED OCTOBER 31,
1995(1):
Class A shares:
Shares sold $ 5,664,101 448,435 $1,651,218 146,814
Shares issued to owners in
reinvestment of dividends 2,634,292 230,270 125,021 13,078
Shares redeemed (5,725,489) (422,865) (364,941) (33,611)
----------- -------- ---------- --------
Net increase $ 2,572,904 255,840 $1,411,298 126,281
----------- -------- ---------- --------
PERIOD FROM AUGUST 14, 1995 TO OC-
TOBER 31, 1995:
Class B shares:
Shares sold $ 200 14 $ 200 16
Shares issued to owners in
reinvestment of dividends -- -- -- --
Shares redeemed -- -- -- --
----------- -------- ---------- --------
Net increase $ 200 14 $ 200 16
----------- -------- ---------- --------
</TABLE>
- --------
(1) For the period September 4, 1995 to October 31, 1995 for the Tocqueville
Government Fund.
34
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE TOCQUEVILLE THE TOCQUEVILLE THE TOCQUEVILLE
ASIA-PACIFIC EUROPE GOVERNMENT
FUND FUND FUND
- ------------------------ ------------------------- -----------------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
- ----------- --------- ----------- --------- ---------- --------
<S> <C> <C> <C> <C> <C>
$14,962,597 1,525,330 $15,071,859 1,332,335 $6,770,116 672,706
0 0 0 0 342,832 34,393
(420,195) (43,921) (88,634) (7,382) (3,901,015) (388,010)
0 0 0 0 0 0
- ----------- --------- ----------- --------- ---------- --------
$14,542,402 1,481,409 $14,983,225 1,324,953 $3,211,933 319,089
- ----------- --------- ----------- --------- ---------- --------
$ 0 0 $ 0 0 $ 0 0
0 0 0 0 7 1
(202) (21) (218) (18) (206) (21)
0 0 0 0 0 0
- ----------- --------- ----------- --------- ---------- --------
$ (202) (21) $ (218) (18) (199) (20)
- ----------- --------- ----------- --------- ---------- --------
$ 1,243,264 140,708 $3,693,929 346,755 $6,457,874 645,088
461,895 50,479 -- -- 20,687 2,062
(908,177) (101,157) (201,222) (18,942) -- --
- ----------- --------- ----------- --------- ---------- --------
$ 796,982 90,030 $3,492,707 327,813 $6,478,561 647,150
- ----------- --------- ----------- --------- ---------- --------
$ 200 21 $ 200 18 $ 200 20
-- -- -- -- 1 --
-- -- -- -- -- --
- ----------- --------- ----------- --------- ---------- --------
$ 200 21 $ 200 18 $ 201 20
- ----------- --------- ----------- --------- ---------- --------
</TABLE>
35
<PAGE>
- --------------------------------------------------------------------------------
6. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term instru-
ments) for the year ended October 31, 1996 were as follows:
<TABLE>
<CAPTION>
THE THE TOCQUEVILLE THE THE THE
TOCQUEVILLE SMALL CAP TOCQUEVILLE TOCQUEVILLE TOCQUEVILLE
FUND VALUE FUND ASIA-PACIFIC FUND EUROPE FUND GOVERNMENT FUND
----------- --------------- ----------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
PURCHASES
U.S. Government $ -- $ 701,422 $ -- $ -- $9,288,107
Other 17,224,264 10,699,219 18,673,128 27,156,656 --
----------- ----------- ----------- ----------- ----------
$17,224,264 $11,400,641 $18,673,128 $27,156,656 $9,288,107
----------- ----------- ----------- ----------- ----------
SALES
U.S. Government $ 2,008,438 $ 615,250 $ -- $ -- $6,149,707
Other 15,461,691 10,197,006 4,647,286 17,751,079 --
----------- ----------- ----------- ----------- ----------
$17,470,129 $10,812,256 $ 4,647,286 $17,751,079 $6,149,707
----------- ----------- ----------- ----------- ----------
</TABLE>
- --------------------------------------------------------------------------------
Unrealized appreciation at October 31, 1996 based on cost of securities for
Federal tax purposes is as follows:
<TABLE>
<CAPTION>
THE THE TOCQUEVILLE THE THE THE
TOCQUEVILLE SMALL CAP TOCQUEVILLE TOCQUEVILLE TOCQUEVILLE
FUND VALUE FUND ASIA-PACIFIC FUND EUROPE FUND GOVERNMENT FUND
----------- --------------- ----------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Gross unrealized appre-
ciation $12,100,946 $ 1,793,395 $ 1,145,157 $ 1,905,802 $ 94,999
Gross unrealized depre-
ciation (872,114) (364,104) (2,186,367) (210,443) (7,693)
----------- ----------- ----------- ----------- ----------
Net unrealized apprecia-
tion (depreciation) $11,228,832 $ 1,429,291 $(1,041,210) $ 1,695,359 $ 87,306
----------- ----------- ----------- ----------- ----------
Cost of investments $31,193,345 $10,238,356 $19,211,975 $22,150,280 $9,776,500
----------- ----------- ----------- ----------- ----------
</TABLE>
- --------------------------------------------------------------------------------
7. SUBSEQUENT EVENTS
The following dividends were declared for Shareholders of record on December
12, 1996, payable December 13, 1996:
<TABLE>
<CAPTION>
THE THE TOCQUEVILLE THE THE
TOCQUEVILLE SMALL CAP TOCQUEVILLE TOCQUEVILLE
FUND VALUE FUND EUROPE FUND GOVERNMENT FUND
----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
Income Dividend $0.06 $ -- $0.06 $ --
Short-Term Capital Gain 0.17 0.51 0.44 0.03
Long-Term Capital Gain 0.62 0.95 0.18 --
----- ----- ----- -----
$0.85 $1.46 $0.68 $0.03
</TABLE>
36
<PAGE>
- --------------------------------------------------------------------------------
On November 29, 1996, The Tocqueville Government Fund acquired all of the net
assets of Ivy Short Term Bond Fund pursuant to a plan of reorganization
approved by Ivy Short Term Bond shareholders on November 15, 1996. The
acquisition was accomplished by a tax free exchange of shares of The
Tocqueville Government Fund for the net assets of Ivy Short Term Bond Fund
which aggregated $5,720,387. The combined net assets of The Tocqueville
Government Fund immediately after the merger were $15,696,605.
37
<PAGE>
THE TOCQUEVILLE TRUST
- --------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
To the Board of Trustees and Shareholders
The Tocqueville Trust
We have audited the accompanying statements of assets and liabilities, includ-
ing the investment portfolios, of The Tocqueville Trust, including, The
Tocqueville Fund, The Tocqueville Small Cap Value Fund, The Tocqueville Asia-
Pacific Fund, The Tocqueville Europe Fund and The Tocqueville Government Fund,
as of October 31, 1996, and the related statements of operations, the state-
ments of changes in net assets, and the financial highlights for the periods
indicated in the accompanying financial statements. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and fi-
nancial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial high-
lights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of Oc-
tober 31, 1996, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement pre-
sentation. We believe that our audits provide a reasonable basis for our opin-
ion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Tocqueville Fund, The Tocqueville Small Cap Value Fund, The Tocqueville Asia-
Pacific Fund, The Tocqueville Europe Fund, and The Tocqueville Government Fund
series of The Tocqueville Trust as of October 31, 1996, the results of their
operations, the changes in their net assets, and their financial highlights,
for the periods indicated, in conformity with generally accepted accounting
principles.
/s/ McGladrey & Pullen, LLP
New York, New York
December 13, 1996
38
<PAGE>
INVESTMENT ADVISER
Tocqueville Asset Management L.P.
1675 Broadway
New York, NY 10019
Phone: (212) 698-0800
DISTRIBUTOR
Tocqueville Securities L.P.
1675 Broadway
New York, NY 10019
Phone: (212) 698-0800
SHAREHOLDERS' SERVICING,
CUSTODIAN AND TRANSFER AGENT
Firstar Trust Company
Mutual Fund Services
P.O. Box 701
Milwaukee, WI 53201-0701
Toll Free Phone: (800) 697-3863
BOARD OF TRUSTEES
Francois Sicart - Chairman
Bernard F. Combemale
James B. Flaherty
Inge Heckel
Robert W. Kleinschmidt
Francois Letaconnoux
